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REG - Dolphin Capital Inv - Half-year Report




 



RNS Number : 3541A
Dolphin Capital Investors Limited
29 September 2020
 

29 September 2020

 

DOLPHIN CAPITAL INVESTORS LIMITED

("DCI" or "Dolphin" or the "Company"

and together with its subsidiaries the "Group")

 

Half Year Results for the six months ended 30 June 2020 and

Trading Update

 

 

Summary

·    Total Group Net Asset Value ("NAV") of €174 million and €164 million before and after Deferred Tax Liabilities ("DTL"). This represents a decrease of €6.3 million and €5.6 million (3.5% and 3.3%) respectively compared to 31 December 2019. NAV reduction principally due to operational, finance, corporate and management expenses, together with a €2.1 million reduction in the value of investment property.

 

·    Sterling NAV per share as at 30 June 2020 stood at 18p before DTL and 17p after DTL, versus 17p and 16p, a 3.1% and 3.3% increase before and after DTL respectively, compared to 31 December 2019. The increase in Sterling NAV has resulted from the 6.9% depreciation of Sterling versus the Euro during the period that has fully offset the decrease in Euro NAV.

 

·    Total Debt of €6.6 million with a Group total debt to gross asset ratio of 3% as at 30 June 2020 (31 December 2019: 3%). DCI itself does not have any borrowings. Operating expenses for the period have declined by €0.7 million (17%) compared for the same period of 2019.

 

·    The COVID-19 pandemic impact is ongoing across all our business activities, restricting our ability to market and sell plots and villas in our development projects, and Aristo. It has also dampened investor interest in the acquisition of large-scale greenfield development projects in the residential/hospitality sector, consequently pushing back potential portfolio asset disposals. Nevertheless, we have engaged advisers to identify potential purchasers of the Company's key projects.

 

·    After a pause due to lock-down measures imposed in mid-March 2020, construction works at One&Only at Kea Island ("OOKI") resumed on 25 May. To date, all internal roads have been constructed, site infrastructure has advanced, and approximately 25% of the concrete works is complete. In addition, the resort mock-up room is progressing at an accelerated pace to be completed within Q4 2020. Following discussions with our partners at One&Only, we have decided, in light of both the construction delays and the expected time lag before hospitality market conditions return to normal, to target the commencement of resort operations for the 2022 season. Meanwhile, through dedicated social media campaigns and related PR activities in co-operation with One&Only, demand for the Private Homes is very encouraging. We have already signed two sales reservations on an off-plan basis and we are in advanced discussions with several other potential purchasers.

 

·   Following the Kilada ground-breaking ceremony which was held on-site on 19 June 2020, earthworks continue as scheduled. A tender process is under way to select contractors to progress to the next phase of the works, which includes site and residential infrastructure works, golf course and country club construction. A full rebranding of the project was completed during Q2 2020. Following the project's website (www.mykilada.com) going live, selective advertising was conducted in the UK and Greece. This resulted in a number of enquiries for homes and plots at Kilada. Additionally, on 11 June 2020, we executed the sale of a land plot which fell outside the project development perimeter at a price of €1.5 million.

 

·    On 9 June 2020 an agreement was announced between the governments of the United Kingdom and Cyprus regulating development in the non-military Sovereign Base Areas ("SBA"), which includes the largest part of Apollo Heights. The period for the filing of environmental related objections in the public consultation process has now expired. During Q4 2020, the Company will be lodging its formal comments and proposals for the improvement of the provisional zoning granted and will seek to increase the overall buildable capacity of the project. The final SBA zoning is expected to be published, after consideration of comments filed by land owners within the area, in early 2021.

 

·    On 3 September 2020, the Company realized the sale a c. 11,000 m2 land plot in the northern border of the LaVanta project to a local investor for €0.8 million.

 

·    Gross sales of Aristo Developers Ltd ("Aristo"), a 47.9% DCI affiliate, during the six months to June 2020 declined by 69% compared to the 2019 corresponding period, primarily due to the worldwide travel restrictions imposed following the COVID-19 pandemic which made it impossible for Chinese and other Asian purchasers (Aristo's core client market) to travel to Cyprus. Since July, we have seen an improvement in the situation with some international flights resuming.

 

 

Andrew Coppel CBE, Chairman of Dolphin Capital Investors, commented:

"The travel restrictions and border closures put in place due to the COVID-19 pandemic, have had an adverse impact on our ability to achieve all our business goals within the first six months of the year. In particular, this affected our sales efforts both on a project and on a retail basis at Aristo and hindered our development works in OOKI and Kilada. We are delighted that there has since been a full resumption of works at OOKI as well as that construction has commenced at Kilada. In parallel we have continued working towards the implementation of the Company's divestment strategy and have engaged advisors to assist us in this process on an asset by asset basis."

 

Miltos Kambourides, Founder of Dolphin and Managing Partner of Dolphin Capital Partners, commented:

"Our ability to execute two off-plan residential sales at OOKI despite adverse market conditions validates both the potential of the project as well as the resilience of our integrated hospitality and residential project portfolio composition. In the new social-distancing and remote working landscape that prevails after the COVID-19 outbreak, we have witnessed that the demand for quality second-homes remains healthy, as affluent and increasingly mobile individuals are looking for fully serviced properties, offering privacy and longer term use potential. We believe that this trend will continue and enable us to monetize our project portfolio in accordance with our divestment strategy."

 

For further information, please contact:

 

Dolphin Capital Investors

Andrew M Coppel, CBE

 

 

+44 (0) 7785 577023

 

Dolphin Capital Partners

Miltos E Kambourides

 

 

miltos@dolphincp.com

 

Panmure Gordon (Broker)

Dominic Morley

 

 

+44 (0) 20 7886 2500

 

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett

 

 

+44 (0) 20 7383 5100

 

Instinctif (PR Communications Adviser)

Mark Garraway

 

 

+44 (0) 20 7457 2007

 

 

A. Chairman's Statement

 

I am pleased to report Dolphin's interim financial results for the six months ended 30 June 2020, and to provide a trading update.

 

During the first half year, the Board and the Investment Manager have focused their efforts on resuming and progressing construction at OOKI, commencing works at Kilada and dealing with the effects of the COVID-19 outbreak in our business. This resulted in deferment of ongoing asset-disposal discussions, delays across all our permitting activities, weaker Aristo sales, as well as the need to redefine our sales and marketing strategy in view of the lock-down measures and travel restrictions.

 

The loss after tax for the period ended 30 June 2020, attributable to owners of the Company, amounted to €5.4 million, of which €2.1 million was due to the write down in value of property, compared to a loss of €4.9 million for the period ended 30 June 2019.

 

Despite the adverse market conditions, we were able to execute two off-plan residential sales reservations at OOKI on an off-plan basis and advance several other discussions.

 

Furthermore, we achieved to sell two land plots outside the project perimeters at Kilada and LaVanta for an aggregate consideration of €2.3 million.

 

Aristo's new sales in 2020 have been significantly impacted by COVID-19. As its main market is China, it has felt the impact of the pandemic from the beginning of the year due to travel restrictions imposed on Chinese residents which further culminated in the global inbound travel ban enacted by the Cyprus government from March onwards. This resulted into a 69% drop in sales revenue on a year-on-year basis. Since July, we have seen an improvement in the situation with some international flights resuming. The 3-month lockdown also caused delays in construction. However from May onwards, Aristo has been able to complete and deliver a number of already sold units thus becoming entitled to the corresponding delivery payments from purchasers. We are monitoring the Aristo financial and cashflow situation closely and working with Aristo management to ensure that we take advantage to the fullest extent possible of the policy measures introduced by the Cyprus government and meet the operational challenges faced by the business on a day-to-day basis.

 

We are encouraged by the agreement of the governments of the United Kingdom and Cyprus on regulating development in the non-military SBAs on the island, which has already resulted in provisional zoning permissions granted to our Apollo Heights project. We will be filing our formal comments, seeking to improve these provisional zoning entitlements, by the end of the year. In all cases the final zoning permissions, which are expected to be granted to the project in early 2021 following the conclusion of the consultation period, would increase both its value as well as its short-term sale potential.

 

COVID-19 added a material headwind to the already challenging markets for greenfield real estate developments in Greece, Cyprus, Croatia and Turkey. We have been able to address the fundamental operational challenges that the pandemic caused to our developments in OOKI and Kilada as well as generate actionable sales leads during the lockdown period by refocusing our sales and marketing strategy. Importantly, we are now, in parallel, actively exploring available options to achieve the disposal of our portfolio assets to both real estate and private equity investors and have engaged advisers to assist us throughout the process on a project by project basis. We are acutely aware of the time limitations set in our disposal strategy and are working with the Investment Manager and the Company's advisers to achieve tangible divestment results.

 

 

Andrew M Coppel CBE

Chairman

Dolphin Capital Investors

29 September 2020

 

 

 

 

B. Investment Manager's Report

 

B.1.        Business Overview

 

During the first nine months of 2020 we focused on enhancing the value of our portfolio assets, while addressing the day-to-day challenges of COVID-19:

·    progressing construction works at OOKI and Kilada;

·    refocusing our sales and marketing strategy at a time of travel restrictions and social distancing measures;

·   making permitting advances across our asset portfolio, including the improvement of zoning conditions at Apollo Heights;

·    monitoring our operational budgets and reducing overhead costs where possible; and,

·    re-activating divestment discussions which were deferred due to COVID-19 and engaging advisers to generate new leads for the sale of our portfolio assets.

 

We continue to focus on the implementation of the Company's strategy to realise the value of our diverse asset portfolio in order to maximise cash returns for our shareholders.

 

B.2.        Portfolio Review

·    One&Only at Kea Island, Greece

o Following the COVID-19 outbreak, the Greek government enforced drastic measures to mitigate the virus risk on all island destinations, which included the complete lockdown of all island hotels and restaurants as well as restrictions on inbound and outbound transportation to islands, which was limited to permanent residents only. These measures were lifted on 25 May 2020, at which point we were able to resume the project construction.

o Due to the pandemic related construction delays as well as the uncertainty over the hospitality industry performance in 2021, the project shareholders decided to postpone the OOKI resort opening until the 2022 season.

o The OOKI project will comprise 75 standalone hotel guest rooms with private pools, two restaurants, an extensive beach club, spa facilities, a yacht pier as well as a number of private homes, which will be sold on an off-plan basis.

o During the lockdown period we created dedicated social media campaigns, alongside PR activities, and undertook online actions jointly with the One&Only marketing teams to generate awareness of the residential offering of the project. Leveraging on these initiatives, and in spite of the practical travelling difficulties caused by the COVID-19 measures, we have been able to close during this summer two off-plan villa sales at OOKI with an aggregate value in line with the project sales budget.

 

 

·    Kilada, Greece (www.mykilada.com) 

o Following the issuance on 1 November 2019 of the final construction permit for the first phase of this project in the Porto Heli area, which includes the 18-hole Jack Nicklaus Signature Golf Course, the Kilada country club and infrastructure for the first 90 residential lots, earthworks have commenced on-site.

o A tendering process is underway for the other key components of the project which include site and residential infrastructure works as well as the golf course and country club construction which are scheduled to commence once the earthworks have advanced. The finalization of the tenders through the award of these construction contracts to individual contractors is expected within Q4 2020, while the completion of the first phase of Kilada is expected in the second half of 2022.

o To mark the progress in development a ground-breaking ceremony was held on-site on 19 June 2020, which was attended by a number of senior government and municipal officials due to the project's Strategic Investment status.

o In parallel we have completed the full rebranding of the project and, following the launch of a dedicated website (www.mykilada.com), we have conducted a marketing campaign in the UK and Greece through a number of media outlets which resulted to a significant number of sales leads.

o On 11 June 2020, we achieved the sale of a 49,682 m2 land site, located outside the project perimeter for €1.5 million which was fully paid in cash on closing.

 

·    La Vanta, Turkey

o A c. 11,000 m2 land plot on the northern part of LaVanta was sold on 3 September 2020, for €0.8 million which was fully paid in cash on closing.

 

·    Aristo (a 47.9% affiliate)

o The travel restrictions imposed in both China and Cyprus in the aftermath of the COVID-19 breakout created a major obstacle to Aristo's sales efforts and resulted in a drastic reduction of its 2020 sales.

o 34 homes and plots were sold during the first six months of 2020, representing total sales of €10.5 million, down 69.38% compared to €34 million for the same period in 2019.

o 43 homes and plots were sold in total up to the end of August 2020, representing total sales of €14 million, down 67% compared to €42.5 million for the same period in 2019.

 

Six months

to 30 June 2020

Six months

to 30 June 2019

Eight months

to 31 August 2020

Eight months

to 31 August 2019

RETAIL SALES

 

 

 

 

New sales booked

10.5m

€34.2m

€13.9m

€42.5m

% change

(69)%

 

(67)%

 

Units sold

34

62

43

76

% change

(45)%

 

(43)%

 

CLIENT ORIGIN

 

 

 

 

China & Other Asia

76%

72%

82%

74%

MENA

17%

26%

12%

22%

Russia

7%

--

5%

--

Cyprus & Other EU

--

4%

--

4%

 

o The substantial majority of Aristo's sales continue to be under the Cyprus citizenship investment programme, which offers Cypriot citizenship to foreign nationals investing at least €2 million in real estate. Consequently, the bulk of the relevant sales proceeds remains in blocked or escrow accounts until the citizenship is awarded to the applying customer and /or the construction of the relevant property progresses (for off-plan sales). Aristo had a total of €15 million in blocked/escrowed funds as at 30 June 2020 (€18.8 million at YE 2019). As the relevant applications mature and properties are delivered, its available cash balances are expected to increase. However, both Aristo's capacity to complete and deliver homes and the purchasers' ability to travel to Cyprus and take delivery of their properties have been materially impaired due to the COVID-19 related lockdowns, travel bans and quarantine measures imposed both in Cyprus and in Aristo's key markets. As such, the timely release of escrowed funds, which was key to the company's cashflow generation, was also adversely impacted. As the travel restrictions began to ease from July onwards, the Aristo management expects that the orderly completion of sold properties and cash collection will progressively ensue.

o DCI has received during the period €0.5 million from the deferred consideration due to it, from the sale of its Venus Rock related preferred shares to Aristo Ktimatiki (an entity controlled by Theodore Aristodemou, Chairman of Aristo) which was executed on 23 August 2019. The pending consideration of €3.5 million is expected to be settled within Q4 2020.

 

 

 

C. Group Assets

A summary of Dolphin's current investments is presented below.

 

PROJECT

Land site
(hectares)

DCI's
stake

Debt
(€m) *

Real estate value
(€m)

Loan to real estate
asset value (%)

1

OOKI

65

33%

--

 

 

2

Kilada

230

97%

--

 

 

3

Scorpio Bay

172

100%

--

 

 

4

Lavender Bay

310

100%

--

 

 

5

Plaka Bay

442

100%

--

 

 

6

Apollo Heights

447

100%

--

 

 

7

Livka Bay

63

100%

6.6

 

 

8

LaVanta

7

100%

--

 

 

 

TOTAL

1,736

 

6.6

172

4%

 

Aristo

473

47.9%

--

43

 

 

Itacaré

n/a

13%

--

1

 

 

GRAND TOTAL

2,209

 

6.6

216**

3%

*Further information on debt maturities are set out under note 22 of the financial statements.

**Total real estate value includes equity investment in OOKI, Aristo and Itacare.

 

A breakdown of Dolphin's portfolio, as at 30 June 2020, for certain key metrics is provided below:

 

COUNTRY

Land size (hectares)

Debt
(€ million)

Real Estate Value
(€ million)

% Loan to real estate asset value

Net Asset Value

1

Greece

1,219

--

124

--

52%

2

Cyprus***

920

--

63

--

36%

3

Other

70

6.6

29

23%

12%

 

Grand Total

2,209

6.6

216

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

The COVID-19 has had a major impact on the travel, real estate and hospitality industries. We have witnessed a significant reduction in international travel, governmental lock-down measures imposed on hotels and resorts in Greece and Cyprus and supply chain delays which impacted our ongoing development activities as well as our portfolio divestment initiatives.

 

We have tried to tackle these operational challenges in all the countries where the DCI group operates. We are working closely with our partners, contractors and key stakeholders to find actionable ways enabling us to push forward the development of our ongoing projects, enhance the digitization of our sales and marketing efforts which was needed to remain relevant in a social distancing environment, and engage key advisers whom we expect to source new leads for the disposal of our asset portfolio.

 

However, beyond the immediate challenges, the pandemic is likely to create transformative and lasting changes in our industry. The hospitality and real estate sectors were already materially impacted during 2020 and the persistence of travel restrictions may permanently affect demand for hospitality assets going forward. On the other hand, we have seen that the affluent investors' demand for quality second homes during this crisis has remained resilient, if not enhanced, helped by remote-working arrangements and social distancing considerations.

 

Notwithstanding the above, the uncertainty created by the COVID-19 outbreak has not as yet faded and the disruption that it will cause to our disposal efforts and our development, permitting and sales activities cannot be quantified at this juncture. We are constantly reviewing our actions and strategies to adapt to this new landscape and attain the divestment strategy objectives for the benefit of our shareholders.

 

E. Outlook

The Company's main objectives for the remainder of 2020 remain to:

1.    Execute portfolio asset disposals;

2.    Progress construction at OOKI and achieve more residential sales;

3.    Progress construction at Kilada and generate plot / villa sales;

4.    Progress planning and permitting selectively for the remaining portfolio to maximize sales proceeds and expedite divestments; and

5.    Effectively manage COVID-19 related challenges.

 

Miltos Kambourides

Managing Partner

Dolphin Capital Partners

29 September 2020

Pierre Charalambides

Founding Partner

Dolphin Capital Partners

29 September 2020

 

F. Financial results for the first half of 2020

F.1. Consolidated statement of profit or loss for the first half of 2020

Financial Results

Loss after tax for the period ended 30 June 2020 attributable to owners of the Company amounted to €5.4 million (H1 2019: loss of €4.9 million). Loss per share was €0.006 compared to €0.005 in the same period last year.

Consolidated statement of profit or loss and other comprehensive income

For the six-month period ended 30 June 2020   

 

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

 

€'000

€'000

CONTINUING OPERATIONS

 

 

 

Continuing operations

 

 

 

Revenue

 

2,007

382

Cost of sales

 

(1,697)

(14)

Gross profit

 

310

368

Disposal of investments in subsidiaries

 

336

630

Change in valuations

 

(2,144)

90

Investment Manager remuneration

 

(1,800)

(2,000)

Directors' remuneration

 

(205)

(246)

Depreciation charge

 

(19)

(19)

Professional fees

 

(1,061)

(1,542)

Administrative and other expenses

 

(505)

(532)

Total operating and other expenses

 

(5,398)

(3,619)

Results from operating activities

 

(5,088)

(3,251)

 

Finance costs

 

 

(623)

 

(789)

Share of losses of equity-accounted investees, net of tax

 

(515)

(751)

Loss before taxation

 

(6,226)

(4,791)

Taxation

 

641

(2)

Loss

 

(5,585)

(4,793)

Other comprehensive income

 

 

 

Items that are or may be reclassified subsequently to profit or loss

 

 

 

Foreign currency translation differences

 

(271)

364

Other comprehensive income, net of tax

 

(271)

364

Total comprehensive income

 

(5,856)

(4,429)

Loss attributable to:

 

 

 

Owners of the Company

 

(5,375)

(4,940)

Non-controlling interests

 

(210)

147

 

 

(5,585)

(4,793)

Total comprehensive income attributable to:

 

 

 

Owners of the Company

 

(5,646)

(4,576)

Non-controlling interests

 

(210)

147

 

 

(5,856)

(4,429)

Loss per share

 

 

 

Basic and diluted loss per share (€)

 

(0.006)

(0.005)

Further analysis of individual revenue and expense items is provided below.

 

Revenue

Revenues of €2.0 million (31 June 2019: €0.4 million), were derived from the following sources:

 

H1 2020

€ million

H1 2019

€ million

Sale of trading & investment properties

1.5

--

Other income

0.5

0.4

TOTAL

2.0

0.4

 

Sale of trading & investment properties is attributable to a sale of a land plot located outside the Kilada development perimeter at a price of €1.5 million.

Other income in H1 2020 consists of €0.5 million proceeds from the sale of Venus Rock related preferred shares to Aristo Ktimatiki.

Cost of sales

Cost of sales comprises the following:

 

H1 2020

€ million

H1 2019

€ million

Cost of sales related to:

 

 

 Sales of trading and investment properties

1.7

0.0

TOTAL

1.7

0.0

 

Professional Fees

The charge for the period was €1.1 million (H1 2019: €1.6million) and comprises the following:

 

H1 2020

€ million

H1 2019

€ million

Legal & Administrator fees

0.3

0.3

Auditors' remuneration

0.1

0.1

Accounting expenses

0.1

0.1

Project design and development fees

0.4

0.8

Consultancy fees

0.1

0.1

Other professional fees

0.1

0.2

TOTAL

1.1

1.6

 

Administrative and other expenses

The administrative and other expenses amounted to €0.5 million (H1 2019: €0.5 million) and are analysed as follows:

 

 

H1 2020

€ million

 

H1 2019

€ million

Marketing and advertising expenses

0.1

--

Personnel expenses

0.2

0.2

Other

0.2

0.3

TOTAL

0.5

0.5

 

 

F.2. Consolidated statement of financial position as at 30 June 2020

 

 

30 June 2020

 

30 June 2019

 

 

€'000

€'000

Assets

 

 

 

 

 

 

 

Property, plant and equipment

 

3,351

2,647

Investment property

 

92,392

96,601

Equity-accounted investees

 

59,428

59,943

Other investments

 

913

-

Non-current assets

 

156,084

159,191

Trading properties

 

60,826

60,826

Receivables and other assets

 

1,308

1,452

Cash and cash equivalents

 

2,460

2,854

Assets held for sale

 

-

2,139

Current assets

 

64,594

67,271

Total assets

 

220,678

226,462

Equity

 

 

 

Share capital

 

9,046

9,046

Share premium

 

569,847

569,847

Retained deficit

 

(423,280)

(417,905)

Other reserves

 

8,288

8,559

Equity attributable to owners of the Company

 

163,901

169,547

Non-controlling interests

 

5,885

5,681

Total equity

 

169,786

175,228

Liabilities

 

 

 

Loans and borrowings

 

1,558

-

Lease liabilities

 

3,036

3,028

Deferred tax liabilities

 

10,341

11,027

Trade and other payables

 

20,483

20,529

Deferred income

 

619

433

Non-current liabilities

 

36,037

35,017

Loans and borrowings

 

6,630

6,644

Lease liabilities

 

8

8

Trade and other payables

 

8,175

6,289

Deferred income

 

42

-

Liabilities held for sale

 

-

3,276

Current liabilities

 

14,855

16,217

Total liabilities

 

50,892

51,234

Total equity and liabilities

 

220,678

226,462

Net asset value ('NAV') per share (€)

 

0.18

0.19

 

The reported NAV as at 30 June 2020 is presented below:

 

As at

30 June 2020

As at

31 December 2019

Variation since

31 December 2019

 

£

£

%

%

Total NAV before DTL (million)

174

159

181

154

(3.5%)

3.2%

Total NAV after DTL (million)

164

150

170

145

(3.3%)

3.3%

NAV per share before DTL

0.19

0.18

0.20

0.17

(3.5%)

3.2%

NAV per share after DTL

0.18

0.17

0.19

0.16

(3.3%)

3.3%

___________

Notes:

1.   Euro/GBP rate 0.91263 as at 30 June 2020 and 0.85369 as at 31 December 2019.

2.   NAV per share has been calculated on the basis of 904,626,856 issued shares as at 30 June 2020 and as at 31 December 2019.

 

Total Group NAV as at 30 June 2020 was €174 million and €164 million before and after DTL respectively. This represents a decrease of €6.3 million (3.5%) and €5.6 million (3.3%) respectively, from the 31 December 2019 figures. Given that no valuation of the Company's portfolio took place as at 30 June 2020, apart from the Livka Bay investment property, for which the fair value was adjusted downwards by €2.1 million due to market conditions prevailing in the property market of Croatia, the NAV reduction is mainly due to Dolphin's regular operational, corporate, finance and management expenses.

Sterling NAV per share as at 30 June 2020 was 0.18p before DTL and 0.17p after DTL and increased by 3.2% and 3.3% before and after DTL respectively, compared to the 31 December 2019 figures. The depreciation of Sterling versus the Euro during the period of approximately 6.9% has fully offset the Euro decrease in NAV.

The Company's consolidated assets of €221 million include €157 million of real estate assets, €60 million of equity-accounting investees (which reflects our 33% shareholding in OOKI as well as the Company's 47.9% interest in Aristo), €1 million of trade and other receivables, €1 million of other investments (which represents the Company's investment in Itacare) and €2 million in cash.

The figure of €157 million of real estate assets (property, plant and equipment, trading properties and investment property) represents the fair market valuations conducted as at 31 December 2019 for both freehold and long leasehold interests.

The Company's consolidated liabilities (excluding DTL) total €41 million and mainly comprise €29 million of trade and other payables as well as €11 million of interest bearing loans and finance lease obligations. All loans are held by Group subsidiaries and are non-recourse to Dolphin. Trade and other payables comprise mainly €21 million of option contracts to acquire land in the Company's Lavender Bay project.

The consolidated financial statements have been reviewed by KPMG in accordance with the International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'.

 

 

Condensed consolidated interim statement of financial position

As at 30 June 2020

 

 

30 June 2020

31 December 2019

(Restated)

 

Note

€'000

€'000

Assets

 

 

 

Property, plant and equipment

14

3,351

2,647

Investment property

15

92,392

96,601

Equity-accounted investees

17

59,428

59,943

Other investments

16

913

-

Non-current assets

 

156,084

159,191

Trading properties

18

60,826

60,826

Receivables and other assets

19

1,308

1,452

Cash and cash equivalents

20

2,460

2,854

Assets held for sale

16

-

2,139

Current assets

 

64,594

67,271

Total assets

 

220,678

226,462

Equity

 

 

 

Share capital

21

9,046

9,046

Share premium

21

569,847

569,847

Retained deficit

 

(423,280)

(417,905)

Other reserves

 

8,288

8,559

Equity attributable to owners of the Company

 

163,901

169,547

Non-controlling interests

 

5,885

5,681

Total equity

 

169,786

175,228

Liabilities

 

 

 

Loans and borrowings

22

1,558

-

Lease liabilities

23

3,036

3,028

Deferred tax liabilities

24

10,341

11,027

Trade and other payables

25

20,483

20,529

Deferred income

 

619

433

Non-current liabilities

 

36,037

35,017

Loans and borrowings

22

6,630

6,644

Lease liabilities

23

8

8

Trade and other payables

25

8,175

6,289

Deferred income

 

42

-

Liabilities held for sale

16

-

3,276

Current liabilities

 

14,855

16,217

Total liabilities

 

50,892

51,234

Total equity and liabilities

 

220,678

226,462

Net asset value ('NAV') per share (€)

26

0.18

0.19

 

 

Condensed consolidated interim statement of profit or loss and other comprehensive income

For the six-month period ended 30 June 2020

 

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

Note

€'000

€'000

Continuing operations

 

 

 

Revenue

6

2,007

382

Cost of sales

7

(1,697)

(14)

Gross profit

 

310

368

Disposal of investments in subsidiaries

8A

336

630

Change in valuations

8B

(2,144)

90

Investment Manager remuneration

27.2

(1,800)

(2,000)

Directors' remuneration

27.1

(205)

(246)

Depreciation charge

 

(19)

(19)

Professional fees

10

(1,061)

(1,542)

Administrative and other expenses

11

(505)

(532)

Total operating and other expenses

 

(5,398)

(3,619)

Results from operating activities

 

(5,088)

(3,251)

 

Finance costs

 

 

(623)

 

(789)

Share of losses of equity-accounted investees, net of tax

 

(515)

(751)

Loss before taxation

 

(6,226)

(4,791)

Taxation

12

641

(2)

Loss

 

(5,585)

(4,793)

Other comprehensive income

 

 

 

Items that are or may be reclassified subsequently to profit or loss

 

 

 

Foreign currency translation differences

 

(271)

364

Other comprehensive income, net of tax

 

(271)

364

Total comprehensive income

 

(5,856)

(4,429)

Loss attributable to:

 

 

 

Owners of the Company

 

(5,375)

(4,940)

Non-controlling interests

 

(210)

147

 

 

(5,585)

(4,793)

Total comprehensive income attributable to:

 

 

 

Owners of the Company

 

(5,646)

(4,576)

Non-controlling interests

 

(210)

147

 

 

(5,856)

(4,429)

Loss per share

 

 

 

Basic and diluted loss per share (€)

13

(0.006)

(0.005)

 

 

Condensed consolidated interim statement of changes in equity

For the six-month period ended 30 June 2020

 

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 2019

9,046

569,847

7,566

279

(422,222)

164,516

5,752

170,268

TOTAL COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

(Loss)/profit

-

-

-

-

(4,940)

(4,940)

147

(4,793)

Other comprehensive income

 

 

 

 

 

 

 

 

 Foreign currency translation differences

-

-

364

-

-

364

-

364

Total other comprehensive income

-

-

364

-

-

364

-

364

Total comprehensive income

-

-

364

-

(4,940)

(4,576)

147

(4,429)

Balance at 30 June 2019

9,046

569,847

7,930

279

(427,162)

159,940

5,899

165,839

Balance at 1 January 2020

9,046

569,847

8,233

326

(417,905)

169,547

5,681

175,228

TOTAL COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

Loss

-

-

-

-

(5,375)

(5,375)

(210)

(5,585)

Other comprehensive income

 

 

 

 

 

 

 

 

 Foreign currency translation differences

-

-

(271)

-

-

(271)

-

(271)

Total other comprehensive income

-

-

(271)

-

-

(271)

-

(271)

Total comprehensive income

-

-

(271)

-

(5,375)

(5,646)

(210)

(5,856)

TRANSACTIONS WITH OWNERS OF THE COMPANY

 

 

 

 

 

 

 

 

Changes in ownership interests in subsidiaries

 

 

 

 

 

 

 

 

Disposal of interests without a change in control

-

-

-

-

-

-

414

414

Total transactions with owners of the Company

-

-

-

-

-

-

414

414

Balance at 30 June 2020

9,046

569,847

7,962

326

(423,280)

163,901

5,885

169,786

 

 

 

Condensed consolidated interim statement of cash flows

For the six-month period ended 30 June 2020

 

 

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

(Restated)

 

 

€'000

€'000

Cash flows from operating activities

 

 

 

Loss

 

(5,585)

(4,793)

Net change in fair value of investment property

 

2,144

(90)

Gain on disposal of investment in subsidiaries

 

(336)

(630)

Share of losses in equity-accounted investees

 

515

751

Other adjustments

 

(256)

652

 

 

(3,518)

(4,110)

Changes in:

 

 

 

Receivables

 

144

1,460

Payables

 

157

(112)

Prepayments from clients

 

228

-

Cash used in operating activities

 

(2,989)

(2,762)

Tax paid

 

(46)

(11)

Net cash used in operating activities

 

(3,035)

(2,773)

Cash flows from investing activities

 

 

 

Proceeds from disposal of subsidiaries, net of cash disposed of

 

(1)

3,577

Net change in net assets held for sale

 

-

537

Net disposals of investment property

 

1,602

-

Net acquisitions of property, plant and equipment

 

(723)

(82)

Net change in trading properties

 

-

(11)

Net cash from investing activities

 

878

4,021

Cash flows from financing activities

 

 

 

Change in loans and borrowings

 

1,925

(1,600)

Change in lease liabilities

 

8

7

Interest paid

 

(170)

(155)

Net cash from/(used in) financing activities

 

1,763

(1,748)

Net decrease in cash and cash equivalents

 

(394)

(500)

Cash and cash equivalents at the beginning of the period

 

2,854

8,294

Cash and cash equivalents at the end of the period

 

2,460

7,794

For the purpose of the condensed consolidated interim statement of cash flows, cash and cash equivalents consist of the following:

 

 

 

Cash in hand and at bank

 

2,460

7,794

Cash and cash equivalents at the end of the period

 

2,460

7,794

Notes to the condensed consolidated interim financial statements

For the six-month period ended 30 June 2020

 

1. REPORTING ENTITY

Dolphin Capital Investors Limited (the 'Company') was incorporated and registered in the British Virgin Islands ('BVIs') 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 condensed consolidated interim financial statements of the Company as at and for the six-month period ended 30 June 2020 comprise the financial statements of the Company and its subsidiaries (together referred to as the 'Group') and the Group's interests in associates.

 

2. Basis of preparation

(a) Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2019. They are presented in euro (€), rounded to the nearest thousand.

These condensed consolidated interim financial statements were authorised for issue by the Board of Directors on 28 September 2020.

(b) Basis of preparation

The condensed consolidated interim financial statements of the Company for the six-month period ended 30 June 2020 have been prepared taking into account the Company's intention to dispose of all of its assets by 31 December 2021, as further explained below. The basis of preparation used continues to be in accordance with IAS 34.

Based on the Company's asset strategy, the Company's objective is to dispose of all of the Company's assets by 31 December 2021. The allocation of any additional capital investment into any of the Company's projects will be substantially sourced from third party capital providers and with the sole objective of enhancing the respective asset's realisation potential until 31 December 2021. The Board expects to return the proceeds from asset disposals to shareholders as the orderly realisation of the Company's assets progresses after taking into account the Company's liquidity position and working capital requirements. In the event that any assets are still held by the Company shortly before 31 December 2021, the Board will convene a shareholders' meeting at which appropriate resolutions for the future of the Company will be proposed.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2019. A number of new standards are effective from 1 January 2020, but they do not have a material effect on the Group's financial statements.

Comparatives

Comparative figures have been reclassified to reflect the required changes in presentation in relation to the reclassification of Azurna Uvala D.o.o (owner of 'Livka Bay') in Croatia and DCI Holdings Two Limited (owner of 'Aristo') out of disposal groups held for sale (see note 16).

4. USE OF JUDGEMENTS AND ESTIMATES

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation and uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2019.

Going concern assumptions

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 is confident that it can secure additional banking facilities and/or obtain waivers on existing ones, until planned asset sales are realised and proceeds received.

 

As stated in note 9, the slowdown in economic activity and transportation restrictions in all the countries where the Group operates due to COVID-19 outbreak, is expected to have a significant impact on both its ability to complete the construction of its ongoing projects in a timely manner as well as hinder its efforts to realise transactions for the disposal of its portfolio assets.

 

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 condensed consolidated interim financial statements.

5. PRINCIPAL SUBSIDIARIES

As at 30 June 2020, the Group's most significant subsidiaries were the following:

 

 

Country of

Shareholding

Name

Project

incorporation

interest

Scorpio Bay Holdings Limited

Cyprus

100%

Scorpio Bay Resorts S.A.

Greece

100%

Xscape Limited

Cyprus

100%

Golfing Developments S.A.

Greece

100%

MindCompass Overseas S.A.

Greece

97%

MindCompass Overseas Two S.A.

Greece

100%

MindCompass Parks S.A.

Greece

100%

Dolphin Capital Greek Collection Limited

Cyprus

100%

DCI Holdings One Limited ('DCI H1')

BVIs

100%

D.C. Apollo Heights Polo and Country Resort Limited

Apollo Heights Resort

Cyprus

100%

Symboula Estates Limited ('Symboula')

Cyprus

100%

Azurna Uvala D.o.o. ('Azurna')

Croatia

100%

Eastern Crete Development Company S.A.

Greece

100%

DolphinLux 2 S.a.r.l.

Luxembourg

100%

Kalkan Yapi ve Turizm A.S. ('Kalkan')

Turkey

100%

Single Purpose Vehicle Ten Limited ('SPV 10')

Cyprus

67%

The above shareholding interest percentages are rounded to the nearest integer.

6. revenue

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

 to 30 June 2019

 

€'000

€'000

Sale of trading and investment properties

1,500

-

Rental income

7

6

Other income

500

376

Total

2,007

382

 

7. COST OF SALES

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Cost of sales related to:

 

 

 Sales of trading and investment properties

1,697

-

Other operating expenses

-

14

Total

1,697

14

 

 

8. INCOME AND EXPENSES

Α. Disposal of investments in subsidiaries

 

 

Note

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

 

€'000

€'000

Gain on disposal of investment in subsidiaries

28

336

630

Total

 

336

630

Β. Change in valuations

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Net change in fair value of investment property

(2,144)

90

Total

(2,144)

90

9. SEGMENT REPORTING

Operating segments

As at 30 June 2020 and 30 June 2019, due to the latest disposals that took place in its asset portfolio, the Group is not considered to have reportable operating segments that require disclosure.

Country risk developments

The general economic environment prevailing in the south-east Europe area and internationally may affect the Group's operations. Factors such as inflation, unemployment, public health crises, international trade and development of the gross domestic product directly impact the economy of each country. Variations in those factors and the economic environment in general affect the Group's performance to a certain extent.

On 11 March 2020, the World Health Organisation declared the Coronavirus COVID-19 outbreak to be a pandemic in recognition of its rapid spread across the globe. Many governments are taking increasingly stringent steps to help contain, and in many jurisdictions, now delay, the spread of the virus, including: requiring self-isolation/ quarantine by those potentially affected, implementing social distancing measures, and controlling or closing borders and 'locking-down' cities/regions or even entire countries.

The COVID-19 outbreak is already having a major effect on the travel, real estate and hospitality industry. The Group has witnessed a significant reduction in foreign travel intent, complied with governmental lock-down measures imposed on hotels and resorts in Greece and been affected by supply chain delays which have impacted the Group' s ongoing construction activities.

The slowdown in economic activity and transportation restrictions in all the countries where the Group operates is expected to have a significant impact on both its ability to complete the construction of its ongoing projects in a timely manner as well as hinder its efforts to realise transactions for the disposal of its portfolio assets.

The size of the impact cannot be fully quantified at this stage and will depend on how quickly the outbreak fades and normal conditions resume. The situation is being closely monitored and strategies will be adjusted including implementation of any emergency measures needed.

 

10. PROFESSIONAL FEES

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Legal fees

231

281

Auditors' remuneration (see below)

125

113

Accounting expenses

106

109

Project design and development fees

373

756

Consultancy fees

60

91

Administrator fees

29

28

Other professional fees

137

164

Total

1,061

1,542

 

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Auditors' remuneration comprises the following fees:

 

 

Audit and other audit related services

105

113

Tax and advisory

20

-

Total

125

113

 

11. ADMINISTRATIVE AND OTHER EXPENSES

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Personnel expenses (see below)

229

151

Travelling and accommodation

26

45

Insurance

17

19

Repairs and maintenance

3

5

Marketing and advertising expenses

72

44

Rents

32

30

Other

126

238

Total

505

532

Personnel expenses

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Wages and salaries

178

131

Compulsory social security contributions

45

15

Other personnel costs

6

5

Total

229

151

The average number of employees during the period was

16

5

 

12. Taxation

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Income tax

2

2

Net deferred tax

(643)

-

Total

(641)

2

13. 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 period.

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

'000

'000

Loss attributable to owners of the Company (€)

(5,375)

(4,940)

Number of weighted average common shares outstanding

904,627

904,627

Basic loss per share (€)

(0.006)

(0.005)

 

Weighted average number of common shares outstanding

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

'000

'000

Outstanding common shares at the beginning and end of the period

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 30 June 2020 and 30 June 2019, 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 periods.

 

14. Property, plant and equipment

 

Land and buildings

€'000

 Other

€'000

 Total

€'000

30 June 2020

 

 

 

Cost or revalued amount

 

 

 

At beginning of period

20,181

386

20,567

Direct acquisitions

721

2

723

At end of period

20,902

388

21,290

Depreciation and impairment losses

 

 

 

At beginning of period

17,550

370

17,920

Depreciation charge for the period

16

3

19

At end of period

17,566

373

17,939

Carrying amounts

3,336

15

3,351

 

 

 

 

Land &

 buildings

€'000

 

Other

€'000

 

Total

€'000

31 December 2019

 

 

 

Cost or revalued amount

 

 

 

At beginning of year

19,975

384

20,359

Direct acquisitions

117

2

119

Recognition of right-of-use asset on initial application of IFRS16

89

-

89

At end of year

20,181

386

20,567

Depreciation and impairment losses

 

 

 

At beginning of year

7,720

366

8,086

Depreciation charge for the year

34

4

38

Impairment loss

9,796

-

9,796

At end of year

17,550

370

17,920

Carrying amounts

2,631

16

2,647

Fair value hierarchy

The fair value of land and buildings 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 valuation techniques used in measuring the fair value of land and buildings, as well as the significant unobservable inputs used, are the same as those used as at 31 December 2019.

 

 

15. Investment property

 

 

30 June 2020

31 December 2019

(Restated)

 

Note

€'000

€'000

At beginning of period/year

 

96,601

145,356

Net direct disposals

 

(1,602)

(671)

Transfers to trading properties

18

-

(56,516)

Fair value adjustment

 

(2,144)

8,528

Exchange differences

 

(463)

(96)

At end of period/year

 

92,392

96,601

Fair value hierarchy

The fair value of investment property 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 valuation techniques used in measuring the fair value of investment property, as well as the significant unobservable inputs used, are the same as those used as at 31 December 2019, apart from the investment property held by Azurna (Croatia), for which the fair value was adjusted downwards.

16. DISPOSAL GROUPS HELD FOR SALE

In 2019, the Group completed the sale of six out of seven Seafront Villas in Greece (owned by the Collection Group) and was in the process of finalising the sale of the one remaining Villa. Accordingly, the remaining assets and liabilities of the Collection Group as at 31 December 2019, were presented as a disposal group held for sale. As shown in note 28, the Group as of 30 June 2020 has completed the disposal of the one remaining Seafront Villa.

As at 31 December 2019, Azurna (owner of 'Livka Bay') in Croatia and DCI Holdings Two Limited ('DCI H2') (owner of 'Aristo') were also presented as held for sale, but as the disposals did not materialise, they were classified out of held for sale as of 30 June 2020.

Impairment losses relating to the disposal group

No impairment losses have been recognised during the period ended 30 June 2020 and 30 June 2019 for write-downs of the disposal groups to the lower of their carrying amount and their fair value less costs to sell.

Assets and liabilities of disposal group held for sale

As at 31 December 2019, the disposal groups comprised the following assets and liabilities:

 

 

Collection disposal group

 

Total

(Restated)

 

€'000

€'000

Trading properties

 

1,124

1,124

Trade and other receivables

 

110

110

Cash and cash equivalents

 

54

54

 

 

1,288

1,288

Other investments

 

 

851

Assets held for sale

 

 

2,139

Trade and other payables

 

3,276

3,276

Liabilities held for sale

 

3,276

3,276

 

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 now owns two development sites which it is seeking to sell. Itacare was presented as held for sale as at 31 December 2019, but as the disposal did not materialise, as of 30 June 2020 it was classified out of held for sale.

 

 

Cumulative income or expenses included in other comprehensive income

No cumulative income or expenses relating to the disposal groups is included in other comprehensive income (30 June 2019: Νil).

17. equity-accounted investees

30 June 2020

 

 

Single Purpose Vehicle

 

 

 

DCI H2

Fourteen Limited

('SPV 14')

Total

 

 

€'000

€'000

€'000

Balance as at 1 January 2020

 

42,694

17,249

59,943

Share of losses, net of tax

 

-

(515)

(515)

Balance as at 30 June 2020

 

42,694

16,734

59,428

 

31 December 2019

 

 

 

 

(Restated)

 

 

DCI H2

 

SPV 14

Total

 

Note

€'000

€'000

€'000

Balance as at 1 January 2019

 

42,694

-

42,694

Additions

28

-

18,655

18,655

Share of losses, net of tax

 

-

(1,478)

(1,478)

Share of revaluation surplus

 

-

72

72

Balance as at 31 December 2019

 

42,694

17,249

59,943

SPV14

As stated in note 28, 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 30 June 2020 and 31 December 2019, the Company's holding of 47.9% in DCI H2, has been classified as an equity accounted investee (as already stated in note 16). 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 30 June 2020 received €0.5 million (31 December 2019: €5 million) cash consideration from Aristo Ktimatiki. The remaining €3.5 million that was due by 30 June 2020 is expected to be received during the fourth quarter of 2020. 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.

As of 30 June 2020, the Group has not recognised losses totaling €2,420 thousand (2019: €239 thousand profit) in relation to its interest in DCI H2, as the investment in DCI H2 is already impaired and is presented at its recoverable amount €42.7 million (2019: €42.7 million).

The recoverable amount of DCI H2 was based on its fair value less cost of disposal. Following the impairment loss recognised in 2016, the recoverable amount is equal to the carrying amount.

The details of the above investments are as follows:

 

 

 

Shareholding interest

Name

Country of incorporation

Principal activities

30 June 2020

31 December 2019

SPV 14

Cyprus

Development of Kea Resort (Greece)

33%

33%

DCI H2

BVIs

Acquisition and holding of real estate investments in Cyprus

48%

48%

           

The above shareholding interest percentages are rounded to the nearest integer.

As at 30 June 2020, SPV 14 had €35,892 thousand (31 December 2019: €38,292 thousand) contractual capital commitments on property, plant and equipment. Also, as at 30 June 2020, DCI H2 had €3,500 thousand (31 December 2019: €3,500 thousand) contractual capital commitments on investment property.

 

 

Summary of financial information for equity-accounted investees as at 30 June 2020 and 31 December 2019, not adjusted for the percentage of ownership held by the Group:

 

 

DCI H2

SPV 14

Total

30 June 2020

 

€'000

€'000

€'000

Current assets

 

145,970

9,119

155,089

Non-current assets

 

224,480

26,976

251,456

Total assets

 

370,450

36,095

406,545

 

 

 

 

 

Current liabilities

 

121,792

711

122,503

Non-current liabilities

 

51,055

1,916

52,971

Total liabilities

 

172,847

2,627

175,474

Net assets

 

197,603

33,468

231,071

 

 

 

 

 

Carrying amount of interest in investee

 

42,694

16,734

59,428

 

 

 

 

 

Revenues

 

8,127

-

8,127

Loss

 

(5,052)

(1,030)

(6,082)

Other comprehensive income

 

-

-

-

Total comprehensive income

 

(5,052)

(1,030)

(6,082)

Group's share of loss and total comprehensive income

 

(2,420)

(515)

(2,935)

 

 

 

DCI H2

SPV 14

Total

31 December 2019

(Restated)

 

€'000

€'000

€'000

Current assets

 

147,531

11,692

159,223

Non-current assets

 

224,293

24,981

249,274

Total assets

 

371,824

36,673

408,497

 

 

 

 

 

Current liabilities

 

121,285

258

121,543

Non-current liabilities

 

48,092

1,916

50,008

Total liabilities

 

169,377

2,174

171,551

Net assets

 

202,447

34,499

236,946

Carrying amount of interest in investee

 

42,694

17,249

59,943

 

 

 

 

 

Revenues

 

50,574

-

50,574

Profit / (loss)

 

501

(1,831)

(1,330)

Other comprehensive income

 

-

139

139

Total comprehensive income

 

501

(1,692)

(1,191)

Group's share of profit /(loss) and total comprehensive income

 

239

(1,406)

(1,167)

 

 

18. Trading properties

 

 

30 June 2020

31 December 2019

 

Note

€'000

€'000

At beginning of period/year

 

60,826

4,699

Net direct acquisitions

 

-

424

Net transfers from investment property

15

-

56,516

Impairment loss

 

-

(813)

At end of period/year

 

60,826

60,826

 

19. RECEIVABLES AND OTHER ASSETS

 

30 June 2020

31 December 2019

(Restated)

 

€'000

€'000

Trade receivables

76

75

VAT receivables

746

1,215

Other receivables

471

141

Total trade and other receivables

1,293

1,431

Prepayments and other assets

15

21

Total

1,308

1,452

 

20. Cash and cash equivalents

 

30 June 2020

31 December 2019

(Restated)

 

€'000

€'000

Bank balances

2,451

2,846

Cash in hand

9

8

Total

2,460

2,854

During the period, the Group had no fixed deposits.

 

21. CAPITAL AND RESERVES

Capital

Authorised share capital

 

30 June 2020

 

31 December 2019

 

'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 2019 and 30 June 2020

904,627

9,046

569,847

Reserves

Translation reserve

Translation reserve comprises all foreign currency differences arising from the translation of the interim 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.

 

 

22. LOANS AND BORROWINGS

 

Total

 

Within one year

 

Within two to five years

 

 

30 June

31 December

30 June

31 December

 

30 June

31 December

 

 

2020

2019

2020

2019

 

2020

2019

 

 

 

(Restated)

 

 

(Restated)

 

 

(Restated)

 

 

€'000

€'000

 

€'000

€'000

 

€'000

€'000

 

Loans in Euro

6,630

6,644

 

6,630

6,644

 

-

-

 

Redeemable preference shares

1,558

-

 

-

-

 

1,558

-

 

Total

8,188

6,644

 

6,630

6,644

 

1,558

-

 

                           

 

As of 30 June 2020, there were no significant changes in terms and conditions of the outstanding loans, compared to 31 December 2019.

 

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 30 June 2020, 2.8% of the ordinary shares have been transferred to the investor.

 

As of 30 June 2020, 2,000 redeemable preference shares were issued as fully paid with value of €1,000 per share (2019: nil). 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 30 June 2020 the fair value of the redeemable preference shares was €1,558 thousand.

 

 

1 January 2020

New

issues

Capital repayments

Interest

paid

Other movements

30 June 2020

 

€'000

€'000

€'000

€'000

€'000

€'000

Loans in Euro

6,644

-

-

(170)

156

6,630

Redeemable preference shares

-

2,000

-

-

(442)

1,558

Total

6,644

2,000

-

(170)

(286)

8,188

Securities

As at 30 June 2020, the Group's loans and borrowings were secured as follows:

·      Mortgage against the immovable property of the Croatian subsidiary, Azurna, with a carrying amount of €23.2 million (2019: €25.8 million), two promissory notes, a debenture note and a letter of support from its parent company Single Purpose Vehicle Four Limited.

·      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 (2019: nil).

23. lease LIABILITIES

 

30 June 2020

 

31 December 2019

 

Future minimum lease payments

Interest

Present value of minimum lease payments

 

Future minimum lease payments

Interest

 Present value of minimum lease payments

 

€'000

€'000

€'000

 

€'000

€'000

€'000

Less than one year

32

24

8

 

8

-

8

Between two and five years

423

117

306

 

245

5

240

More than five years

3,732

1,002

2,730

 

3,963

1,175

2,788

Total

4,187

1,143

3,044

 

4,216

1,180

3,036

The major lease liabilities comprise leases in Greece with 99-year lease terms.

 

24. Deferred tax liabilities

 

30 June 2020

31 December 2019

(Restated)

 

€'000

€'000

Balance at the beginning of the period/year

11,027

11,314

Recognised in profit or loss

(643)

(305)

Exchange differences

(43)

18

Balance at the end of the period/year

10,341

11,027

Deferred tax liabilities are attributable to the following:

 

30 June 2020

31 December 2019

(Restated)

 

€'000

€'000

Investment property

5,979

6,665

Trading properties

4,299

4,299

Property, plant and equipment

63

63

Total

10,341

11,027

25. Trade and other payables

 

30 June 2020

31 December 2019

(Restated)

 

€'000

€'000

Trade payables

11

19

Land creditors

20,688

20,740

Investment Manager fees

1,935

1,932

Other payables and accrued expenses

6,024

4,127

Total

28,658

26,818

 

 

30 June 2020

31 December 2019

 (Restated)

 

€'000

€'000

 

Non-current

20,483

20,529

 

Current

8,175

6,289

 

Total

28,658

26,818

 

         

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.

26. NAV per share

 

30 June 2020

31 December 2019

 

'000

'000

Total equity attributable to owners of the Company (€)

163,901

169,547

Number of common shares outstanding at end of period/year

904,627

904,627

NAV per share (€)

0.18

0.19

 

27. Related party transactions 

27.1        Directors' interest and remuneration

Directors' interest

Miltos Kambourides is the founder and managing partner of the Investment Manager.

The interests of the Directors as at 30 June 2020, 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

Mark Townsend

1,532

Andrew Coppel

942

 

 

 

Directors' remuneration

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.

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Remuneration

205

246

Total remuneration

205

246

The Directors' remuneration details for the six-month periods ended 30 June 2020 and 30 June 2019 were as follows:

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Andrew Coppel

96

117

Graham Warner

73

87

Mark Townsend

36

42

Total

205

246

Mr. Miltos Kambourides has waived his fees.

27.2        Investment Manager remuneration

 

From 1 January 2020

to 30 June 2020

From 1 January 2019

to 30 June 2019

 

€'000

€'000

Fixed management fee

1,800

2,000

Total remuneration

1,800

2,000

On 9 April 2019, the Company signed an Amended and Restated Investment Management Agreement ('IMA'), effective from 1 January 2019, as follows:

i. Fixed management fee

The annual management fees for the period from 1 January 2019 to 31 December 2019 were €4 million and have been further reduced to €3.6 million per annum for 2020 and 2021.

Additionally, the IMA will expire at the earlier of 31 December 2021 or the sale of all of the Company's assets. There will be no fixed management fee due after 31 December 2021.

ii. Variable management fee

The variable management fee for the period from 1 January 2020 to 31 December 2021 shall be 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 under the terms of the previous IMA. There is no change to this entitlement. However, any performance fees earned under this arrangement will be fully deducted from any future annual management fees and variable management fees payable over the term of the IMA.

 

27.3 Other related parties

During the period ended 30 June 2020 and 30 June 2019, the Group did not enter into any significant related party transactions.

 

28. Business combinations

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 (see note 16).

 

 

 

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)

On 11 December 2018, the Company entered into a binding agreement for the sale of its interest in five Seafront Villas (owned by the Collection group) for a gross consideration of €4.05 million. The Group received €3.4 million on 2 January 2019 whilst the balance has been retained in escrow to cover any potential and contingent liabilities of the respective companies. During 2019, the Group also completed the sale of another Seafront Villa for a cash consideration of €0.4 million.

On 1 November 2017, the Company along with the project's current minority shareholder entered into an agreement through its relevant project subsidiary companies, for a €16 million equity investment by One&Only Resorts Limited ('One&Only') in exchange for a 40% shareholding in SPV 14, 100% holding company of Kea Resort. The consideration will be deployed in the development of the Kea Resort, with the transaction including the operation of the Kea Resort and its residences by One&Only through long-term management and branding agreements. In May 2019, following the satisfaction of all relevant conditions precedent included in the One&Only at Kea Island ('OOKI') Subscription Agreement, the Group signed the completion documents with Kerzner International Management FZ LLC (current owner of 40% of the project) and Kea Assets Limited (current owner of 10% of the project). As a result, the Company's percentage holding in the project fell from 67% to 33%, which is retained as an equity-accounted investee (see note 17). The turn-key construction contract for the development of OOKI was executed on 9 August 2019.

 

 

Collection

Kea

Total

 

€'000

€'000

€'000

Investment property

-

(10,361)

(10,361)

Property, plant and equipment

-

(10,737)

(10,737)

Trading properties

(4,489)

-

(4,489)

Receivables and other assets

-

(28)

(28)

Cash and cash equivalents

(11)

(181)

(192)

Deferred tax liabilities

-

2,132

2,132

Trade and other payables

15

1,866

1,881

Net assets

(4,485)

(17,309)

(21,794)

Net assets disposed of - 100%

(4,485)

(17,309)

(21,794)

Net proceeds on disposal

3,769

-

3,769

Investment in equity-accounted investee (note 17)

-

18,655

18,655

 (Loss)/ gain on disposal recognised in profit or loss

(716)

1,346

630

Cash effect on disposal:

 

 

 

Net proceeds on disposal

3,769

-

3,769

Cash and cash equivalents

(11)

(181)

(192)

Net cash inflow/(outflow) on disposal

3,758

(181)

3,577

 

                                                                                                  

29. 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 2019.

Fair values

The fair values of the Group's financial assets and liabilities approximate their carrying amounts at the statement of financial position date.

30. Commitments

As of 30 June 2020, the Group had a total of €893 thousand contractual capital commitments on property, plant and equipment (31 December 2019: €45 thousand).

31. 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 condensed consolidated interim 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.

32. SUBSEQUENT EVENTS

There were no material events after the reporting period which have a bearing on the understanding of the condensed consolidated interim financial statements as at 30 June 2020.

 

 

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