DCI Dci Advisors Ltd

CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2023		31 December 2023	31 December 2022
	Note	€'000	€'000
Cash flows from operating activities
Profit/(loss)		1,991	(5,796)
Adjustments for:
(Gain)/Loss in fair value of investment property	16	(6,252)	6,316
Gain on disposal of investment in associates/subsidiaries	17	-	(5,411)
Reversal of impairment loss on property, plant and equipment	15	(5,502)	(2,944)
Reversal of impairment loss on equity-accounted investments	8	(12,923)	(388)
Depreciation charge	15	50	48
Interest expense	22	1,327	2,891
Interest income		-	(4)
Exchange difference		(68)	(76)
Share of losses on equity-accounted investments, net of tax	17	12,923	1,785
Taxation		2,292	(12)
		(6,162)	(3,591)
Changes in:
Receivables		(1,102)	(8,974)
Payables		6,106	568
Cash used in operating activities		(1,158)	(11,997)
Tax paid		-	-
Net cash used in operating activities		(1,158)	(11,997)
Cash flows from investing activities
Proceeds from disposal of associate	17	-	26,875
Acquisitions of investment property	16	(77)	(75)
Acquisitions of property, plant and equipment	15	(2,469)	(3,264)
Proceeds from other investments		-	99
Interest received		-	4
Net cash (used in)/from investing activities		(2,546)	23,639
Cash flows from financing activities
Repayment of loans and borrowings		(500)	(12,370)
New loans		2,760	-
Proceeds from issue of redeemable preference shares		-	3,000
Payment of lease liabilities		(50)	(8)
Interest paid		(261)	(2,363)
Dividend paid to non-controlling interests		-	(2,250)
Net cash from/(used in) financing activities	22	1,949	(13,991)
Net (decrease)/increase in cash and cash equivalents		(1,755)	(2,349)
Cash and cash equivalents at 1 January		2,226	4,575
Cash and cash equivalents at 31 December		471	2,226
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of the following:
Cash in hand and at bank (see note 20)		471	2,226
Cash and cash equivalents at the end of the year		471	2,226

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2023

 

1.      REPORTING ENTITY

DCI Advisors Ltd (the 'Company') was incorporated and registered in the British Virgin Islands ('BVI') on 7 June 2005. The Company is a real estate investment company focused on the early-stage, large-scale leisure-integrated residential resorts in the Eastern Mediterranean, and managed, until 20 March 2023, by Dolphin Capital Partners Ltd (the 'Investment Manager'), an independent private equity management firm that specialises in real estate investments, primarily in south-east Europe, and thereafter self-managed. The shares of the Company were admitted to trading on the AIM market of the London Stock Exchange ('AIM') on 8 December 2005.

With effect from 1 June 2023, the name of the Company was changed from Dolphin Capital Investors Ltd to DCI Advisors Ltd.

The consolidated financial statements of the Group as at 31 December 2023 comprise the financial statements of the Company and its subsidiaries (together referred to as the 'Group') and the Group's interests in equity-accounted investments.

The consolidated financial statements of the Group as at and for the year ended 31 December 2023 are available at www.dciadvisorsltd.com.

2.      basis of preparation

a.      Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU').

The consolidated financial statements were authorised for issue by the Board of Directors on 15 January 2025.

b.      Basis of preparation

The consolidated financial statements have been prepared on a going concern basis, which assumes that the Group will be able to discharge its liabilities in the normal course of business.

On 22 December 2021, an Extraordinary General Meeting was held and the Shareholders approved a continuation of the Company without setting a termination date or a date for a further continuation vote in order to provide time to optimise for Shareholders the value that can be realised from the Company's investments by removing potentially commercially prejudicial deadlines from negotiations with potential buyers. Notwithstanding the absence of a formal date for Shareholders to consider a continuation of the Company, the Board may, at any time, propose a further continuation vote to Shareholders.

The Group faced liquidity issues during 2023 and 2024 and resolved to finance its operations during those years largely through shareholder loans. This is a temporary measure as the Group is currently negotiating the sale of its immovable properties to improve its liquidity.  More specifically, the Group is close in finalizing the sale of the immovable property of its Croatian subsidiary ('Livka Bay Resort'). The sale is expected to generate €22m to the Group.  The Group is also in negotiations for the sale of other immovable properties included in its property portfolio although none of these negotiations has yet resulted in signed sale documents.

 In order to meet its short-term commitments and be in a position to cover the operating expenses for 2025, the Group will need more than €10m in sales proceeds. Current discussions for the disposal of investments are expected to generate more than the amount needed, referred to above, however as of this date no legally binding agreement has been executed. In the scenario where the Group will experience further delays in completing the respective sales of its property portfolio, the directors will have to take additional measures to secure financing for the business. The Group is also in negotiations to obtain a €15m loan from a financial institution.

These liquidity issues indicate the existence of material uncertainty that may cast doubt on the ability of the Group to continue as a going concern.

Continuation as a going concern is greatly dependent on the successful outcome from the sale of the Group's assets and the ability of the Group to secure additional financing.  The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.

 

c.      Basis of measurement

The consolidated financial statements have been prepared under the historical cost convention, with the exception of property (investment property and property, plant and equipment), which are stated at their fair values.

d.      New and amended International Financial Reporting Standards ("IFRSs") and Interpretations

As from 1 January 2023, the Group adopted all changes to IFRSs as adopted by the European Union ("EU") which are relevant to its operations. This adoption did not have a material effect on the financial statements of the Group.

The following New IFRSs, Amendments to IFRSs and Interpretations have been issued by International Accounting Standards Board ("IASB") but are not yet effective for annual periods beginning on 1 January 2023. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these New IFRSs, Amendments to IFRSs and Interpretations early.

(i)      Standards and interpretations adopted by the EU

IAS 1 Presentation of Financial Statements (Amendments): Classification of Liabilities as Current or Non-current and Non-current Liabilities with covenants (effective for annual periods beginning on or after 1 January 2024)

In 2020, the IASB has amended IAS 1 to promote consistency in application and clarify the requirements on determining if a liability is current or non-current. Under existing IAS 1 requirements, companies classify a liability as current when they do not have an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period. As part of its amendments, the IASB has removed the requirement for a right to be unconditional and instead, now requires that a right to defer settlement must have substance and exist at the end of the reporting period. Similar to existing requirements in IAS 1, the classification of liabilities is unaffected by management's intentions or expectations about whether the company will exercise its right to defer settlement or will choose to settle early.

 

On 31 October 2022 the IASB issued further amendments to IAS 1 i.e. Non-current liabilities with covenants. The new amendments aim to improve the information an entity provides when its right to defer settlement of a liability is subject to compliance with covenants within twelve months after the reporting period. The amendments clarify that only covenants with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which the company must comply after the reporting date (i.e. future covenants) do not affect a liability's classification at that date. However, when non-current liabilities are subject to future covenants, companies will now need to disclose information to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date.

The amendments also clarify how a company classifies a liability that can be settled in its own shares (e.g. convertible debt). When a liability includes a counterparty conversion option that involves a transfer of the company's own equity instruments, the conversion option is recognised as either equity or a liability separately from the host liability under IAS 32 Financial Instruments: Presentation. The IASB has now clarified that when a company classifies the host liability as current or non-current, it can ignore only those conversion options that are recognised as equity. Companies may have interpreted the existing IAS 1 requirements differently when classifying convertible debt. Therefore, convertible debt may become current.

IFRS 16 Leases (Amendments): Lease Liability in Sale and Leaseback (effective for annual for annual periods beginning on or after 1 January 2024)

 

The IASB has issued amendments to IFRS 16 Leases, which add to requirements explaining how a company accounts for a sale and leaseback after the date of the transaction. A sale and leaseback is a transaction for which a company sells an asset and leases that same asset back for a period of time from the new owner. IFRS 16 includes requirements on how to account for a sale and leaseback at the date the transaction takes place. However, IFRS 16 had not specified how to measure the transaction when reporting after that date. The amendments issued in September 2022 impact how a seller-lessee accounts for variable lease payments that arise in a sale and leaseback transaction. The amendments introduce a new accounting model for variable payments and will require seller-lessees to reassess and potentially restate sale and leaseback transactions entered into since 2019.

 

The amendments confirm the following: (1) On initial recognition, the seller-lessee includes variable lease payments when it measures a lease liability arising from a sale and leaseback transaction. (2) After initial recognition, the seller-lessee applies the general requirements for subsequent accounting of the lease liability such that it recognises no gain or loss relating to the right of use it retains.

d.      Adoption of new and revised standards and interpretations continued

(ii)     Standards and interpretations not adopted by the EU

IAS 7 Statement of Cash Flows (Amendments) and IFRS 7 Financial Instruments: Disclosures (Amendments) - Supplier Finance Arrangements (effective for annual periods beginning on or after 1 January 2024)

 

The amendments introduce two new disclosure objectives - one in IAS 7 and another in IFRS 7 - to enable the users of the financial statements in understanding and assessing the effects of supplier finance arrangements on an entity's liabilities, cash flows and exposure to liquidity risk as well as the impact to the entity if supplier finance arrangements were no longer available.

 

The amendments do not define the supplier finance arrangements. Instead, the amendments describe the characteristics of an arrangement for which an entity is required to provide the information. Specifically, all the following characteristics should apply:

-       a finance provider pays amounts that the entity owes to its suppliers;

-       the entity agrees to pay under the terms and conditions of the arrangements on the same date or at a later date than its suppliers are paid; and

-       the entity is provided with extended payment terms or suppliers benefit from early payment terms, compared with the related invoice payment due date.

 

IAS 21 The Effects of Changes in Foreign Exchange Rates (Amendments):  Lack of Exchangeability (effective for annual periods beginning on or after 1 January 2025)

 

The amendments, as issued in August 2023, aim to clarify when a currency is exchangeable into another currency and how a company estimates a spot rate when a currency lacks exchangeability. According to the amendments, a currency is exchangeable into another currency when a company is able to exchange that currency for the other currency at the measurement date and for a specified purpose. When a currency is not exchangeable at the measurement date, the company will be required to estimate a spot rate as the rate that would have been applied to an orderly exchange transaction between market participants under prevailing economic conditions. The amendments contain no specific requirements for estimating a spot rate, but they set out a framework under which an entity can determine the spot rate at the measurement date using an observable exchange rate without adjustment or another estimation technique. 

 

Companies will be required to provide also new disclosures to help users assess the impact of a currency not being exchangeable to the entity's financial performance, financial position, and cash flows. To achieve this objective, entities will disclose information about the nature and financial impacts of a lack of exchangeability, the spot exchange rate(s) used, the estimation process and risks to the company because the currency is not exchangeable.

 

IFRS 10 Consolidated Financial Statements (Amendments) and IAS 28 Investments in Associates and Joint Ventures (Amendments): Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective date postponed indefinitely; early adoption continues to be permitted)

 

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (as defined in IFRS 3). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business. In December 2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting.

e.      Use of estimates and judgements

In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting principles and the related amounts of assets and liabilities, income and expenses.  The estimates and underlying assumptions are based on historical experience and various other factors that are deemed to be reasonable based on knowledge available at that time.  Actual results may deviate from such estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

 

2.      basis of preparation CONTINUED

e.      Use of estimates and judgements continued

Impairment of investment in equity-accounted investments

The Company follows the requirements of IAS 36 to determine whether the investments in equity-accounted investments are impaired and calculates the amount of the impairment. An impairment loss is recognised for the difference between the carrying amount and the recoverable amount of the asset. The recoverable amount is the greater of the fair value less costs to sell and value in use. As at 31 December 2023, the Group assessed whether the carrying amount of equity-accounted investments is impaired, by comparing it with its fair value less cost to sell.

Measurement of fair values

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. 

The Group has an established control framework with respect to the measurement of fair values.  This includes the Managing Directors who have overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.

 

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible.  Significant unobservable inputs and valuation adjustments are regularly reviewed and changes in fair value measurements from period to period are analysed.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

·    Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

·    Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

·   Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

When applicable, further information about the assumptions made in measuring fair values is included in the notes specific to that asset or liability. Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 3 and 15: Property, plant and equipment;

- Note 3 and 16: Investment property.

f.       Functional and presentation currency

These consolidated financial statements are presented in Euro (€), which is the Company's functional currency.  All amounts have been rounded to the nearest thousand, unless otherwise indicated.

3.      MEASUREMENT of fair values

Properties

The fair value of investment property and land and buildings classified as property, plant and equipment is determined at the end of each reporting period. External, independent valuation companies, having appropriate recognised professional qualifications and recent experience in the location and category of the properties being valued, value the Group's properties at the end of each year and where necessary, semi-annually.

The Directors have appointed American Appraisal and Avison Young, two internationally recognised valuation firms, to conduct valuations of the Group's acquired properties to determine their fair value.  These valuations are prepared in accordance with generally accepted appraisal standards, as set out by the Royal Institute of Chartered Surveyors ('RICS').  Furthermore, the valuations are conducted on an 'as is condition' and on an open market comparative basis.

3.      MEASUREMENT of fair values CONTINUED

Properties continued

The valuation analysis of properties is based on all the pertinent market factors that relate both to the real estate market and, more specifically, to the subject properties. The valuation analysis of a property typically uses four approaches: the cost approach, the direct sales comparison approach, the income approach and the residual value approach. The cost approach measures value by estimating the Replacement Cost New or the Reproduction Cost New of property and then determining the deductions for accrued depreciation that should be made to reflect the age, condition and situation of the asset during its past and proposed future economic working life.  The direct sales comparison approach is based on the premise that persons in the marketplace buy by comparison. It involves acquiring market sales/offerings data on properties similar to the subject property. The prices of the comparables are then adjusted for any dissimilar characteristics as compared to the subject's characteristics. Once the sales prices are adjusted, they can be reconciled to estimate the fair value for the subject property. Based on the income approach, an estimate is made of prospective economic benefits of ownership.  These amounts are discounted and/or capitalised at appropriate rates of return in order to provide an indication of value.  The residual value approach is used for the valuation of the land and depends on two basic factors: the location and the total value of the buildings developed on a site.  Under this approach, the residual value of the land is calculated by subtracting the development cost from the estimated sales value of the completed development.

 

Each of the above-mentioned valuation techniques results in a separate valuation indication for the subject property.  A reconciliation process is then performed to weigh the merits and limiting conditions of each approach.  Once this is accomplished, a value conclusion is reached by placing primary weight on the technique, or techniques, that are considered to be the most reliable, given all factors.

4.      PRINCIPAL subsidiaries

The Group's most significant subsidiaries were the following:

		Country of	Shareholding interest
Name	Project	incorporation	2023	2022
Scorpio Bay Holdings Limited	Scorpio Bay Resort	Cyprus	100%	100%
Scorpio Bay Resorts S.A.	Scorpio Bay Resort	Greece	100%	100%
Xscape Limited	Lavender Bay Resort	Cyprus	100%	100%
Golfing Developments S.A.	Lavender Bay Resort	Greece	100%	100%
MindCompass Overseas One Limited	Kilada Hills Golf Resort	Cyprus	85%	85%
MindCompass Overseas S.A.	Kilada Hills Golf Resort	Greece	85%	85%
MindCompass Overseas Two S.A.	Kilada Hills Golf Resort	Greece	100%	100%
MindCompass Parks S.A.	Kilada Hills Golf Resort	Greece	100%	100%
Dolphin Capital Greek Collection Limited	Kilada Hills Golf Resort	Cyprus	100%	100%
DCI Holdings One Limited *	Aristo Developers	BVI	100%	100%
D.C. Apollo Heights Polo and Country Resort Limited	Apollo Heights Resort	Cyprus	100%	100%
Symboula Estates Limited	Apollo Heights Resort	Cyprus	100%	100%
Azurna Uvala D.o.o.	Livka Bay Resort	Croatia	100%	100%
Eastern Crete Development Company S.A.	Plaka Bay Resort	Greece	100%	100%
Single Purpose Vehicle Ten Limited **	One&Only Kea Resort	Cyprus	100%	67%

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

*     This entity holds a 48% shareholding interest in DCI Holdings Two Ltd ("DCI H2") which is the owner of Aristo Developers Ltd.

**   The Company disposed of its interest in the One&Only Kea Resort in December 2022. During 2023 an application was made to reduce the capital of SPV 10 in return for settlement of the outstanding loan with the non-controlling interest and this was successful so the loan has been eliminated.

5.      MATERIAL accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented in these consolidated financial statements unless otherwise stated.

5.1    Subsidiaries

Subsidiaries are the entities controlled by the Group. The Group 'controls' an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

5.2    Non-controlling interests ('NCI')

NCI are measured initially at their proportionate share of the acquiree's identifiable net assets at the date of acquisition. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

5.3    Loss of control

When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related Non-controlling Interest ("NCI") and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

5.4    Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investments are eliminated to the extent of the Group's interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

5.5    Business combinations

The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group (see Note 5.1). In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not re-measured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

5.6    Interest in equity-accounted investments

The Group's interests in equity-accounted investments comprise interests in associates and a joint venture. Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies.  A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. Interests in associates and the joint venture are accounted for using the equity method and are initially recognised at cost, which includes transaction costs. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the income and expenses and equity movements of equity-accounted investments, after adjustments to align the accounting policies with those of the Group, until the date that significant influence or joint control ceases. When the Group's share of losses exceeds its interest in an equity-accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

5.      MATERIAL accounting policies CONTINUED

5.6    Interest in equity-accounted investments continued

After application of the equity method, the Group assess the recoverable amount for each associate or joint venture, unless the associate or joint venture does not generate cash inflows from continuing use that are largely independent of those from other assets of the entity. An impairment loss is recognised for the difference between the carrying amount and the recoverable amount of the equity-accounted investments. The recoverable amount is the greater of the fair value less costs to sell and value in use.

5.7    Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of the business, use in the production or supply of goods or services or for administration purposes.  Investment property is initially measured at cost and subsequently at fair value with any change therein recognised in profit or loss.

Cost includes expenditure that is directly attributable to the acquisition of the investment property.  The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.  When an investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings.

When the use of property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

5.8   Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis. Impairment losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in profit or loss. Once classified as held for sale, property, plant and equipment is no longer depreciated, and any equity-accounted investee is no longer equity accounted.

5.9   Property, plant and equipment

Land and buildings are carried at fair value, based on valuations by external independent valuers, less subsequent accumulated depreciation for buildings and the subsequent accumulated impairment losses. Revaluations are carried out at the end of each year and where necessary, semi-annually. Properties under construction are stated at cost less any accumulated impairment losses. All other property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

Increases in the carrying amount arising on revaluation of property, plant and equipment are credited to revaluation reserve in shareholders' equity. Decreases that offset previous increases of the same asset are charged against that reserve; all other decreases are recognised in profit or loss. Increase is recognised to the profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for their intended use.

Depreciation charge is recognised in profit or loss on a straight-line basis over the estimated useful lives of items of property, plant and equipment. Freehold land is not depreciated.

The annual rates of depreciation are as follows:

Buildings                                         3%

Machinery and equipment                 10% - 33.33%

Motor vehicles and other                  10% - 20%

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

5.      MATERIAL accounting policies CONTINUED

5.9    Property, plant and equipment continued

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably.  All other costs are recognised in profit or loss as incurred.

5.10 Trading properties

Trading properties (inventory) are shown at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost of trading properties is determined on the basis of specific identification of their individual costs and represents the fair value paid at the date that the land was acquired by the Group.

5.11       Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

-       fixed payments, including in-substance fixed payments;

-       variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

-       amounts expected to be payable under a residual value guarantee; and

-       the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

5.     MATERIAL accounting policies CONTINUED

5.11       Leases continued

The Group presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'loans and borrowings' in the statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

5.12         Financial instruments

Recognition and initial measurement

Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI - debt investment; FVOCI - equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

-       it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

-       its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

-       it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

-       its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment‑by‑investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Cash and cash equivalents

Cash and cash equivalents comprise cash deposited with banks and bank overdrafts repayable on demand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.  Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

 

5.             MATERIAL accounting policies CONTINUED

5.12       Financial instruments continued

Financial assets - Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

-       the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management's strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

-       how the performance of the portfolio is evaluated and reported to the Group's management;

-       the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

-       how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

-       the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group's continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

-              contingent events that would change the amount or timing of cash flows;

-              terms that may adjust the contractual coupon rate, including variable‑rate features;

-              prepayment and extension features; and

-              terms that limit the Group's claim to cash flows from specified assets (e.g. non‑recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

·    Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

·    Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

·    Debt investments at FVOCI: These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in Other Comprehensive Income ("OCI") are reclassified to profit or loss.

5.      MATERIAL accounting policies CONTINUED

5.12 Financial instruments continued

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest continued

·    Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Financial liabilities - Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective

interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

The financial liabilities of the Group are measured as follows:

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

Trade payables

Trade payables are initially recognised at fair value and are subsequently measured at amortised cost, using the effective interest rate method.

Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognised in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

 

 

 

Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

5.13 Share capital and premium

Share capital represents the issued amount of shares outstanding at their par value. Any excess amount of capital raised is included in share premium. External costs directly attributable to the issue of new shares, other than on a business combination, are shown as a deduction, net of tax, in share premium from the proceeds. Share issue costs incurred directly in connection with a business combination are included in the cost of acquisition.

5.      MATERIAL accounting policies CONTINUED

5.14 Dividends

Dividends are recognised as a liability in the period in which they are declared and approved and are subtracted directly from retained earnings.

5.15 Contract liabilities

Payments received in advance on development contracts for which no revenue has been recognised yet are recorded as contract liabilities as at the statement of financial position date.

5.16 Provisions and contingent assets

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Contingent assets

Contingent assets are not recognised in the statement of financial position because doing so may result in the recognition of income that may never be realised. When realisation of a contingent asset is virtually certain, it is no longer considered contingent and is recognised as an asset. The asset is recognised in the period in which this change from contingent asset to asset occurs.

5.17 Expenses

Investment Manager remuneration, Directors' remuneration, operational expenses, professional fees, administrative and other expenses are accounted for on an accrual basis. Expenses are charged to profit or loss, except for expenses incurred on the acquisition of an investment property, which are included within the cost of that investment.  Expenses arising on the disposal of an investment property are deducted from the disposal proceeds.

5.18 Impairment

Financial instruments and contract assets

The Group recognises loss allowances for expected credit losses ('ECLs') on:

-        financial assets measured at amortised cost;

-        debt investments measured at FVOCI; and

-        contract assets.

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12‑month ECLs:

-       debt securities that are determined to have low credit risk at the reporting date; and

-       other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment and including forward‑looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Group considers a financial asset to be in default when:

-       the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or

-       the financial asset is more than 90 days past due.

 

Non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than investment property and trading properties) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Goodwill is tested annually for impairment.

5.      MATERIAL accounting policies CONTINUED

5.18 Impairment continued

Non-financial assets continued

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of 'investment grade'.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12‑month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

Measurement of ECLs

ECLs are a probability‑weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit‑impaired. A financial asset is 'credit‑impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit‑impaired includes the following observable data:

·       significant financial difficulty of the borrower or issuer;

·       a breach of contract such as a default or being more than 90 days past due;

·       the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;

·       it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

·       the disappearance of an active market for a security because of financial difficulties.

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.

Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write‑off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

5.      MATERIAL accounting policies CONTINUED

5.19 Revenue recognition

Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue at a point in time, which is when it transfers control over the property to the buyer. The buyer obtains control when the sale consideration is fully settled, and the ownership of the property is then transferred to the buyer.

5.20 Finance income and costs

The Group's finance income and finance costs include:

-      interest income;

-      interest expense;

-      dividend income.

 

Interest income or expense is recognised using the effective interest method. Dividend income is recognised in profit or loss on the date on which the Group's right to receive payment is established.

The 'effective interest rate' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

-      the gross carrying amount of the financial asset; or

-      the amortised cost of the financial liability.

 

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

5.21 Foreign currency translation

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.  Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within finance costs.

5.22 Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Euro at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Euro at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI.

When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

5.23 Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (operating segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment results that are reported to the Group's chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

5.             MATERIAL accounting policies CONTINUED

5.24 Earnings per share

The Group presents basic and diluted (if applicable) earnings per share ('EPS') data for its shares. Basic EPS is calculated by dividing the profit or loss attributable to shareholders of the Company by the weighted average number of shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of shares outstanding for the effects of all dilutive potential shares.

5.25 NAV per share

The Group presents NAV per share by dividing the total equity attributable to owners of the Company by the number of shares outstanding as at the statement of financial position date.

5.26 Taxation

Income tax

Taxation comprises current and deferred tax. Taxation is recognised in profit or loss, except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the statement of financial position date, and any adjustment to tax payable or receivable in respect of previous years. Current tax also includes any tax arising from dividends.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for:

 - temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

- taxable temporary differences arising on the initial recognition of goodwill.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the Group has not rebutted this presumption.

Deferred tax assets and liabilities are offset only if certain criteria are met.

5.27 Fair value measurement

'Fair value' is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities (Note 2e and Note 3).

When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as 'active' if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

5.      MATERIAL accounting policies CONTINUED

5.27 Fair value measurement continued

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.

The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Group determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

5.28 Discontinued operation

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

 - represent a separate major line of business or geographic area of operations;

 - is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations;

 - is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year.

5.29 Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

6.      revenue

	2023 €'000	2022 €'000
Revenue from contracts with customers:
Sale of trading properties	-	-
Other revenue
Other income	162	318
Total	162	318

 

7.      COST OF SALES

	2023 €'000	2022 €'000
Sales of trading properties	-	-
Total	-	-

 

8.             Change in valuation

			Note	2023 €'000	2022 €'000
Gain/(loss) in fair value of investment property			16	1,062	(7,016)
Reversal of impairment loss on equity-accounted investments			17	12,923	388
Reversal of impairment loss of property, plant and equipment			15	5,502	2,944
Total				19,487	(3,684)

9.      SEGMENT REPORTING

As at 31 December 2023 and 31 December 2022, the Group is not considered to have reportable operating segments that require disclosure. The Group has one business segment focusing on achieving capital growth through investing in residential resort developments primarily in south-east Europe.

The geographic information analyses the Group's non-current assets by the Company's country of domicile. The Croatian asset was moved from non-current assets to assets held for sale in 2023. In presenting the geographic information, segment assets were based on the geographic location of the assets.

Non-current assets

	2023 €'000	2022 €'000
Greece	64,623	36,469
Croatia	-	19,180
Cyprus	48,214	48,214
At end of year	112,837	103,863

Assets held for sale

	2023 €'000	2022 €'000
Croatia	24,370	-
At end of year	24,370	-

Country risk developments

Greece

According to the OECD, the GDP of Greece was projected to increase by 1.8% in 2023 and 2.0% in 2024 and 2.5% in 2025 as increased employment, real wage growth and strong tourist activity bolster consumption.

According to the Bank of Greece, in 2023, the balance of travel services showed a surplus of €18.0bn in 2023, €15.7bn in 2022 and €9.4bn in 2021.

Inflation in Greece is now estimated to have peaked in 2022 and to have been 4.2% in 2023 according to the European Commission and is forecast to fall to 2.8% in 2024 and 2.1% in 2025.

Cyprus

The IMF praised Cyprus for its robust economic recovery and fiscal discipline and it forecasts a 2.6% increase in GDP during 2024, 2.8% for 2025 and 3.1% for 2027.

Inflation in Cyprus is now estimated to have peaked in 2022 and to have been 3.9% in 2023 according to the European Commission and is forecast to fall to 2.4% in 2024 and 2.1% in 2025.

Croatia

According to the European Commission, GDP growth continued to recover strongly and grew by 3.1% in 2023 and is forecast to grow 3.3% in 2024 and 2.9% in 2025 and inflation peaked at 8.4% in 2023 and is forecast to fall to 3.5% in 2024 and 2.2% in 2025. 

Economic activity and tourism arrival numbers continued to benefit strongly from the adoption of the Euro currency and the admission of Croatia into the Schengen passport zone at the start of 2023. 

 

10.          PROFESSIONAL FEES

				2023 €'000	2022 €'000
Legal fees				1,728	383
Auditors' remuneration (see below)				267	261
Accounting expenses				642	241
Appraisers' fees				83	9
Project design and development fees				259	133
Consultancy fees				112	338
Administrator fees				310	270
Other professional fees				298	288
Total				3,699	1,923

 

		2023	2022
		€'000	€'000
Auditors' remuneration comprises the following fees:
Audit and other audit related services		267	261
Total		267	261

The total for auditors' remuneration all relate to continuing operations.

11.    ADMINISTRATIVE AND OTHER EXPENSES

				2023	2022
				€'000	€'000
Travelling and accommodation				94	132
Insurance				63	75
Marketing and advertising expenses				37	66
Personnel expenses including social security and other costs				528	568
Immovable property and other taxes				123	243
Third party expenses				124	-
Prior year expenses underprovided				21	-
Irrecoverable VAT				9	-
Rents				97	120
Other				961	359
Total				2,057	1,563

Personnel expenses

	2023	2022
	€'000	€'000
Wages and salaries	394	423
Compulsory social security contributions	60	50
Other personnel costs	74	95
Total	528	568
The average number of employees employed by the Group	18*	27*

*The vast majority consists of workers/archaeologists at Kilada

12.          Finance costS

			2023	2022
Recognised in profit or loss			€'000	€'000
Interest income			-	4
Exchange difference			-	69
Finance income			-	73
Interest expense			(999)	(2,641)
Transaction costs and other financing expenses			(24)	(43)
Bank charges			(26)	(63)
Exchange difference			(20)	(85)
Finance costs			(1,069)	(2,832)
Net finance costs recognised in profit or loss			(1,069)	(2,759)
			2023	2022
			€'000	€'000
Recognised in other comprehensive income
Foreign currency translation differences			(69)	(56)
Finance costs recognised in other comprehensive income			(69)	(56)

 

13.    Taxation

			2023	2022
			€'000	€'000
RECOGNISED IN PROFIT OR LOSS
Income tax expense
Current year			68	1
Other			-	6
			68	7
Deferred tax expense
On valuation gains of investment properties (see note 23)			1,359	(164)
			1,359	(164)
Taxation recognised in profit or loss			1,427	(157)

Reconciliation of taxation based on taxable loss and taxation based on accounting loss:

			2023	2022
			€'000	€'000
Loss before taxation			(523)	(6,228)
Taxation using domestic tax rates			2,160	(892)
Effect of valuation gain/(loss) on properties			1,359	(164)
Non-deductible expenses			(3,336)	738
Tax-exempt income			-	(562)
Current year losses for which no deferred tax is recognised			1,176	716
Other			68	7
Total			1,427	(157)

13.    Taxation CONTINUED

As a company incorporated under the BVI International Business Companies Act (Cap. 291), the Company is exempt from taxes on profits, income or dividends. Each company incorporated in the BVI is required to pay an annual government fee, which is determined by reference to the amount of the company's authorised share capital.

In Greece, the corporation tax rate applicable to profits is 22% (22% in 2022). Tax losses of Greek companies are carried forward to reduce future profits for a period of five years.

The profits of the Cypriot companies of the Group are subject to a corporation tax rate of 12.50% on their total taxable profits. Tax losses of Cypriot companies are carried forward to reduce future profits for a period of five years. In addition, the Cypriot companies of the Group are subject to a 3% special contribution tax on rental income. Under certain conditions, interest income may be subject to a special contribution tax at the rate of 30%. In such cases, this interest is exempt from corporation tax.

In Croatia, the corporation tax rate is 18%. Tax losses of Croatian companies are carried forward to reduce future profits for a period of five years.

 

14.    earnings/(loss) per share

Basic earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to owners of the Company by the weighted average number of common shares outstanding during the year

.

		2023		2022
		'000		'000
Loss attributable to owners of the Company from continuing operations		(2,194)		(7,199)
Profit attributable to owners of the Company from discontinued operation		3,941		275
Total profit/(loss) attributable to owners of the Company (€)		1,747		(6,924)
Number of weighted average common shares outstanding		904,627		904,627
Basic loss per share - continuing operations (€)		(0.002)		(0.008)
Basic earnings per share - discontinued operation (€)		0.004		0.000
Basic earnings/(loss) per share - total (€)		0.002		(0.008)
Weighted average number of common shares outstanding			2023		2022
			'000		'000
Outstanding common shares at the beginning and end of the year			904,627		904,627

Diluted earnings/(loss) per share

As at 31 December 2023 and 2022, the diluted earnings per share is the same as the basic earnings per share, as there were no outstanding dilutive potential ordinary shares (a financial instrument or other contract that, when converted to ordinary shares, would decrease earnings per share) during these years.

 

15.    Property, plant and equipment

	Property under construction €'000	Land &  buildings €'000	Machinery & equipment €'000	Other €'000	Total €'000
2022
Cost or revalued amount
At beginning of year	5,683	20,445	366	45	26,539
Direct acquisitions	3,241	12	11	-	3,264
At end of year	8,924	20,457	377	45	29,803
Depreciation and impairment
At beginning of year	-	17,080	357	33	17,470
Depreciation charge for the year	-	38	9	1	48
Reversal of impairment loss (note 8)	-	(2,944)	-	-	(2,944)
Exchange difference	-	-	(1)	4	3
At end of year	-	14,174	365	38	14,577
Carrying amounts	8,924	6,283	12	7	15,226

 

	Property under construction €'000	Land &  buildings €'000	Machinery & equipment €'000	Other €'000	Total €'000
2023
Cost or revalued amount
At beginning of year	8,924	20,457	377	45	29,803
Revaluation	-	19,093	-	-	19,093
Direct acquisitions	2,468	1	-	-	2,469
At end of year	11,392	39,551	377	45	51,365
Depreciation and impairment
At beginning of year	-	14,174	365	38	14,577
Depreciation charge for the year	-	47	2	1	50
Reversal of impairment loss (note 8)	-	(5,502)	-	-	(5,502)
Exchange difference	-	-	-	-	-
At end of year	-	8,719	367	39	9,125
Carrying amounts	11,392	30,833	10	6	42,240

The carrying amount at year end of land and buildings, if the cost model was used, would have been €6.3 million (2022: €6.3 million). Land and buildings include right-of-use assets of €442 thousand (2022: €442 thousand) related to leased properties that do not meet the definition of investment property.

Fair value hierarchy

The fair value of land and buildings, amounting to €30,833 thousand (2022: €6,283 thousand), has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used.

 

 

 

15.    Property, plant and equipment - continued

The following table shows a reconciliation from opening to closing balances of Level 3 fair value.

	2023	2022
	€'000	€'000
At beginning of year	6,283	3,365
Acquisitions	1	12
Gains/(losses) recognised in profit or loss
Reversal of impairment loss and write offs in 'Change in valuations'	5,502	2,944
Revaluation in excess of amounts previously impaired	19,094	-
Depreciation in 'Depreciation charge'	(47)	(38)
At end of year	30,833	6,283

 

The effect of the valuation change was an increase of € 24.6 million of which €19.1 million has been recognised on other comprehensive income and €5.5 million has been recognised in profit or loss as a reversal of a previous impairment on this property.

 

The increase of € 24.6 million relates to the hotel complex at Kilada Hills. This increase in valuation was mainly the result of strong interest from top luxury hotel operators in the project. This increased the feasibility of adding 36 privately owned suites to the hotel complex as well as adding the development 42 branded villas. In addition, a number of branded villas were included in the rental pool of the hotel operation with the related owner share expenses.

 

As at 31 December 2023 and 31 December 2022, part of the Group's property, plant and equipment is held as security for bank loans (see note 22).

 

 

Valuation techniques and significant unobservable inputs

The following table shows the valuation techniques used in measuring land and buildings, as well as the significant unobservable inputs used.

 

Property Location	Valuation methodology (note 3)	Significant unobservable inputs		Inter-relationship between key valuation inputs and Fair Value measurement
Property in Greece - "Kilada Hills Golf Resort"	Discounted Cash Flow (DCF) Method       (Development Perimeter - Hotel component)	Room occupancy rate (annual):     Average Daily Rate per occupied room:     Gross operating margin rate:     Terminal capitalisation rate:   Risk-adjusted discount rate (WACC):	2023: 31% to 40% (avg.: 37%) 2022: 32% to 44% (avg.: 42%)   2023: €1,190 to €1,486 (avg.: €1,333) 2022: €950 to €1,186 (avg.: €1,064)   2023: 36% to 50% (avg.: 48%) 2022: 20% to 35% (avg.: 33%)   2023: 8.34% [12x multiple] 2022: 8.34% [12x multiple]   2023: 12% 2022: 12%	The estimated Fair Value of the Hotel component of the project would increase/(decrease) if: Room occupancy rate was higher/(lower);   Average daily rate per occupied room was higher/lower;     Gross operating margin was higher/(lower);   Terminal capitalisation rate was lower/(higher);   Risk-adjusted discount rate was lower/(higher).
	Combined Discounted Cash Flow (DCF) Method & Residual       (Development Perimeter - Residential component)	Residence selling price (€/m2):     Residence construction cost (€/m2):   Cash flow velocity (years):     Selling curve (% p.a.) of total available stock:	2023: €2,900 to €7,500 (wavg.: €4,472) 2022: €2,600 to €5,000 (wavg.: €3,875)   2023: €2,400 to €5,000 (wavg.: €2,943) 2022: €2,200 to €3,500 (wavg.: €2,604)   2023: 2 to 9 years 2022: 2 to 9 years   2023: 0% to 40% 2022: 5% to 20%	The estimated Fair Value of the Residential component of the project would increase/(decrease) if:   Selling prices increase (decrease);   Construction cost decrease (increase);     Cash flow velocity was shorter/(longer);   Selling curves

 

 

15.    Property, plant and equipment - continued

Valuation techniques and significant unobservable inputs -continued

Property Location	Valuation methodology (note 3)	Significant unobservable inputs		Inter-relationship between key valuation inputs and Fair Value measurement
Property in Greece - "Kilada Hills Golf Resort"	Combined Discounted Cash Flow (DCF) Method & Residual       (Development Perimeter - Hotel component)	Entrepreneurial Profit (% construction cost as new):   Depreciation rate (%):     Useful life (years):     Net operating Income (NOI) (€ thousands p.a.):     Terminal capitalisation rate:     Replacement cost missing    Risk-adjusted discount rate (WACC):	2023: 20.0% 2022: 20.0%   2023: 42% 2022: 40%   2023: 60 years 2022: 60 years   2023: €53k to €328k 2022: €53k to €328k   2023: 9.34% [10.7x multiple] 2022: 11% [9.1X multiple]   2023: €700 to €1,800 2022: €600 to €1,500    2023: 12.% 2022: 12%	The estimated Fair Value of the Hotel component of the project would increase/(decrease) if: Entrepreneurial profit rate was higher/(lower);   Depreciation rate was lower/(higher)         Net operating income per m2 was higher/(lower);     Terminal capitalisation rate was lower/(higher).   Replacement cost per m2 was higher/(lower);   Risk-adjusted discount rate was lower/(higher))

 

Sensitivity of fair value measurement to change in unobservable inputs

Given the uncertainties in the market, any changes in unobservable inputs may lead to measurement with significantly higher or lower fair value. A variation of the discount rate would affect the fair value of property in Greece - Hotel complex as follows:

	Change in	Impact on fair value
	Assumption	2023
		Increase	(Decrease)
Discount Rate	%	€'000	€'000
-       Hotel Complex in Greece	1.00%	(5,050)	5,780

 

	Change in	Impact on fair value
	Assumption	2022
		Increase	(Decrease)
Discount Rate	%	€'000	€'000
-       Hotel Complex in Greece	1.00%	(2,232)	2,672

16.    Investment property

		2023	2022
	Note	€'000	€'000
At beginning of year		45,943	52,188
Capital subsequent expenditure		77	75
Fair value adjustment	30	6,252	(6,316)
Transfer to Assets held for sale		(24,371)	-
Exchange differences		2	(4)
At end of year		27,903	45,943

 

As at 31 December 2023 and 31 December 2022, part of the Group's immovable property is held as security for bank loans (see note 22).

Changes in fair value are recognised as gain/(losses) in profit or loss and included in "Change in Valuation" (see note 8). All such gains/(losses) are unrealised.

Part of investment property includes land acquired by Golfing Developments S.A. ("Golfing"), a subsidiary company and owner of the Lavender Bay Resort, from third parties and also right-of-use assets on land leased by third parties. It should be noted that in 2010, the Greek State Real Estate Service disputed part of this land owned by Golfing as belonging to the Greek State. In 2011, the vendor of the land lodged an objection (administrative appeal) to the Directorate of Public Property of the Ministry of Finance, requesting the review of the conclusion of the Real Estate Service report, as well as the Final report of the inspector of the Ministry of Finance. Golfing proceeded to various legal actions in order to indicate its ownership of the land at that time. As part of these legal proceedings, the Courts

16.    Investment property cONTINUED

had issued a decision in 2019 as part of a criminal law procedure, indicating that there were no grounds indicating the public nature of Golfing's land.

In September 2021, the Greek Council for Public Properties issued an Opinion claiming that a part of the overall land comprising 843,114m², amounting to €3.2 million as at 31 December 2023 (2022: €2.4 million) and included in Investment Property as of 31 December 2023 and 2022 respectively, that was sold from the Archdiocese of Dimitriada ('Vendor') to Golfing in 2006 and 2007, belonged to the Greek State disputing the private character of the land. This Opinion was adopted by the Ministry of Finance in January 2022, who took steps to register the property in the name of the Greek State at the local land registries in April and May 2022. This adoption constitutes a unilateral administrative act and if it is found to be incorrect or illegal, it can be revoked. The Company intends to proceed to an appeal to the Greek courts claiming its ownership of the disputed land, based on Golfing's and the Company's relevant Board of Directors decision that was taken at its meetings on 15 June 2022 and 22 June 2022, respectively.

In addition, the Greek Council for Public Properties disputed the ownership rights of the Vendor on the land leased to Golfing in 2006 and 2007 of 2,097,443 m², from which 1,746,334 m² are activated leased contracts, of an amount of €1.3 million included in Investment Property as of 31 December 2023 (2022: €1.2 million), for which, though, no final opinion was issued by this Council. Golfing and the Vendor proceeded to legal actions relating to this dispute as well in January 2022.

he Group believes, based on legal assessments, that the unilateral registration of the property in the name of the Greek State, does not establish and does not constitute a title deed or a court decision and, therefore does not lead to the loss of property rights of Golfing but the Greek State disputes the private character of the above land of 843,114m² of Golfing, indicating its public character.

Although the dispute is considered as a significant obstacle to the continuation of the investment in the project, Golfing continues to recognize the respective land under its assets as investment property of Golfing, on the basis of legal evidence of ownership of the land as described above.

Golfing, based on third party valuation experts, proceeded to the assessment of fair value of the respective land included in investment property and recorded a positive adjustment of €1.0 million as at 31 December 2023 (2022: negative €1.5 million) in 'Loss in fair value of investment property' in profit or loss in 2023 and 2022.

Golfing and the Greek Church have started discussions on renegotiating the current agreements in place in order to replace these with new ones which better reflect current situation.

During 2023, the Company appointed an agent to actively seek buyers for Azurna Uvala d.o.o. which owns the property at Livka Bay. Heads of terms for the sale were signed in February 2024 and a Sale & Purchase Agreement was signed in June 2024. As a consequence, the disposal group has been accounted for in accordance with IFRS 5 whereby the disposal group's asset and liabilities have been categorised as Assets held for sale and Liabilities held for sale in the consolidated statement of financial position. In accordance with IFRS 5 the operation has been shown as discontinued.    

Fair value hierarchy

The fair value of investment property, amounting to €27.9 million and (2022: €45.9 million), has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used.

 

16.    Investment property continued

Valuation techniques and significant unobservable inputs

The following table shows the valuation techniques used in measuring the fair value of investment property, as well as the significant unobservable inputs used.

Property location	Valuation technique (see note 3)	Significant unobservable inputs		Inter-relationship between key valuation inputs and fair value measurement
Property in Greece	Combined approach (Market and Income)	Market approach - 60% weight		The estimated fair value would increase/(decrease) if:
		Asking prices per m2:	2023: €13 to €29	Asking prices per m2 were higher/(lower);
			2022: €13 to €29
		Premiums/(discounts) on the following:		Premiums were higher/(lower);
		Location:	2023: 0%	Discounts were lower/(higher);
			2022: 0%
		Site size:	2023: 0%
			2022: 0%
		Asking vs transaction:	2023: -30% to -20%
			2022: -30% to -20%
		Frontage sea view:	2023: 0%
			2022: 0%
		Maturity/development potential:	2023: 0% to +20%
			2022: 0% to +30%
		Weight allocation:	2023: 15% to +20%	Weights on comparables with premiums were higher/(lower);
			2022: +15% to +20%	Weights on comparables with discounts were lower/(higher);
		Discount on market approach value:
		Legal status:	2023: -85% (2022: -85%)
		Income approach - 40% weight
		Quantity of villas:	2023: 447 (2022: 447)	Quantity of villas was higher/(lower);
		Selling price per m2:	2023: €3,500	Selling price per m2 was higher/(lower);
			2022: €2,900
		Expected annual growth in selling price:	2023: from year 3: 3%	Expected annual growth in selling price was higher/(lower);
			2022: from year 3: 3%
		Cash flow velocity (years):	2023:14 (2022: 14)	Cash flow velocity was shorter/(longer);
		Risk-adjusted discount rate:	2023: 18% (2022: 18%)	Risk-adjusted discount rate was lower/(higher).
		Discount on combined approach value:
		Legal status:	2023: -80% (2022: -85%)
Property in Greece	Market approach	Asking prices per m2:	2023: €7 to €88	The estimated fair value would increase/(decrease) if:
			2022: €1 to €88	Asking prices per m2 were higher/(lower);
		Premiums/(discounts) on the following:
		Location:	2023: -30% to +20%	Premiums were higher/(lower);
			2022: -40% to +30%	Discounts were lower/(higher);
		Site size:	2023: -50% to +20%
			2022: -50% to +20%
		Asking vs transaction:	2023: -35% to 0%
			2022: -30% to 0%
		Frontage sea view:	2023: -20% to +30%
			2022: -30% to +30%
		Maturity/development potential:	2023: -50% to +40%
			2022: -50% to +30%
		Weight allocation:	2023: +10% to +40%	Weights on comparables with premiums were higher/(lower);
			2022: +10% to +40%	Weights on comparables with discounts were lower/(higher).
		Zoning:	2023: -30%
			2022: -30%

 

 

 

Property Location	Valuation methodology (note 3)	Significant unobservable inputs		Inter-relationship between key valuation inputs and Fair Value measurement
Property in Cyprus - "Apollo Heights"	Comparative Method (Market Approach)	Market comparables range (zone Z1) (€/ buildable m2):   Market comparables range (zones Z2 & Z3) (€/ buildable m2):   Market comparables range (zone Γ-Τ4α) (€/ buildable m2):   Market comparables range (zone Γ3-Τ4α) (€/ buildable m2)   For all land-use Zones Premium/(discounts) on the following Adjustment factor for "Location":   Adjustment factor for "site size":     Adjustment factor for "asking price":   Adjustment factor for "frontage/view":   Adjustment factor for "Maturity/potential for development":	2023: €22.25 to €44.72 2022: €24.91 to €52.55   2023: €8.23 to €114.56 2022: €8.50 to €114.56     2023: €162.87 to €238.90 2022: €162.54 to €238.90     2023: €163.00 to €492.00 2022: €204.00 to €658.00     2023: -10% to +20% 2022: -10% to +20%   2023: -40% to 0% 2022: -40% to 0%   2023: -15% to 0% 2022: -20% to 20%   2023: -10% to +30% 2022: -10% to +30%   2023: -20% to +10% 2022: -20% to 0%	The estimated Fair Value of the Apollo Heights asset would increase/(decrease) if:   Asking prices per m2 were higher/(lower); Premiums were higher/(lower); Discount were (lower)/higher   Adjustment Premium factors were higher/(lower);   Adjustment Discount factors were lower/(higher);
Property in Croatia	Market approach	Asking prices per m2: Premiums/(discounts) on the following: Location: Site size: Asking vs transaction:   Quality factor Capacity Weight allocation	2023: €13 to €348 2022: €3 to €96         2023: 0% 2022: -5% to 0%   2023: -25% to 0% 2022: -20% to -15%   2023: 0% 2022: 0%   2023: -5% 2022: -5% to +15%   2023: 0% to 40% 2022: -5% to +10%   2023:  25% 2022: +10% to +33%	The estimated fair value would increase/(decrease) if: Asking prices per m2 were higher/(lower); Premiums were higher/(lower); Discount were (lower)/higher           Three comparable properties were smaller than the subject   No asking used     All comparables had slightly better infrastructure     Three comparables had less bed density hence the premium   All comparables had equal weight

16.    Investment property continued

Valuation techniques and significant unobservable inputs continued

 

Sensitivity of fair value measurement to change in unobservable inputs

Given the uncertainties in the market, any changes in unobservable inputs may lead to measurement with significantly higher or lower fair value. A variation of the annual estimated fair value per square meter would affect the fair value of investment properties per square meter as follows:

	Change in	Impact on fair value
	Assumption	2023			2022
Annual estimated asking price		Increase	Decrease	Increase		(Decrease)
per square meter	%	€'000	€'000	€'000		€'000
-       Property in Greece	10%	2,238	(2,238)	2,023		(2,023)
-       Property in Croatia	10%	2,289	(2,289)	1,770		(1,770)
-       Property in Cyprus	10%	552	(552)	552		(552)

 

 

17.    equity-accounted investMENTs

		DCI H2	SPV14	Total
	Note	€'000	€'000	€'000
2023
At beginning of year		42,694	-	42.694
Share of loss, net of tax		(12,923)	-	(12,923)
Disposal of Associate		-	-	-
Reversal of impairment loss	8	12,923	-	12,923
At end of year		42,694	-	42,694
2022
At beginning of year		42,694	22,861	65,555
Share of loss, net of tax		(388)	(1,397)	(1,785)
Disposal of Associate		-	(21,464)	(21,464)
Reversal of impairment loss	8	388	-	388
At end of year		42,694	-	42,694

Single Purpose Vehicle Fourteen Limited ('SPV 14')

On 23 December 2022 it was announced that the Company had completed the disposal of its entire interest in the One&Only at Kea Island ('OOKI') Project. Prior to the sale, the Company was the owner of 66.67% of Single Purpose Vehicle Ten Ltd ('SPV10') which, in turn, indirectly owned 50% of SPV 14, thereby providing the Company with an effective equity interest of 33.33% in SPV 14 and the OOKI project.

Under the share purchase agreement ("SPA") signed on 13 October 2022 SPV10 received €26.9 million for the 50% ownership of SPV14. At the time of the disposal the value of the associate was €21.5 million, following a €1.4 million share of losses recognised, as a result the gain on the disposal was €5.4 million.

Pursuant to the sale, the Company received a net consideration, in aggregate of €17.9 million. From these disposal proceeds, an amount of €13 million was applied towards the repayment in full by 31 December 2022 of the existing loan facility that Company drew down on 7 June and 16 July 2021. All remaining proceeds from the sale of SPV10 was retained by the Company for use as working capital.

DCI Holdings Two Limited ("DCI H2")

Since 31 December 2020, the Company's holding of 47.9% in DCI H2 (owner of Aristo Developers Ltd, 'Aristo'), has been classified as an associate. An impairment loss was recognised in 2016, based on an agreement to dispose of the entire 49.75% shareholding in DCI H2 then owned, for the amount of €45 million. The Group subsequently disposed of 1.82% and as a result the Company's investment in DCI H2 reduced to 47.9% at a value of €42.7 million, which the Group estimates to be the recoverable amount as at the end of the reporting period. The recoverable amount is calculated based on the NAV of DCI H2 group at the reporting date adjusted by an approximately 34% discount on the DCI H2 group's real estate properties. The fair value of the investment in DCI H2 has been categorised as a Level 3 fair value asset based on the inputs to the valuation techniques used.

Pursuant to the terms of a 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 remaining €3.5 million that was due by 30 June 2020 is now expected to be received during 2025. The corresponding preferred shares have been transferred by the Company to Aristo Ktimatiki on a prorated basis in line with the receipt of the commensurate instalments but the underlying land has not yet been transferred pending the receipt of full payment.

The details of the above investments are as follows:

	Country of		Shareholding interest
Name	Incorporation	Principal activities	2023	2022
SPV 14	Cyprus	Development of OOKI Resort	-	-
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.

 

17.    equity-accounted investments continued

The following table summarises the financial information of DCI H2 and SPV 14 as included in their own financial statements, the table also reconciles the summarised financial information to the carrying amount of the Group's interest in equity-accounted investments:

	DCI H2	SPV 14	Total
	€'000	€'000	€'000
Percentage ownership interest	48%	-%	48%
31 December 2023
Current assets	105,253	-	105,253
Non-current assets	182,494	-	182,494
Total assets	287,747	-	287,747
Current liabilities	90,202	-	90,202
Non-current liabilities	37,819	-	37,819
Total liabilities	128,021	-	128,021
Net assets	159,726	-	159,726
Group's share of net assets	76,557	-	76,557
Impairment	(33,863)	-	(33,863)
Carrying amount of interest in investee	42,694	-	42,694
Revenues	25,468	-	25,468
Loss	(27,130)	-	(27,130)
Other comprehensive income	168	-	168
Total comprehensive income	(26,962)	-	(26,962)
Group's share of total comprehensive income	(12,923)	-	(12,923)
	DCI H2	SPV 14	Total
	€'000	€'000	€'000
Percentage ownership interest	48%	50%	48%
31 December 2022
Current assets	105,293	-	105,293
Non-current assets	208,873	-	208,873
Total assets	314,166	-	314,166
Current liabilities	69,943	-	69,943
Non-current liabilities	57,367	-	57,367
Total liabilities	127,310	-	127,310
Net assets	186,856	-	186,856
Group's share of net assets	89,560	-	89,560
Impairment	(46,866)	-	(46,866)
Carrying amount of interest in investee	42,694	-	42,694
Revenues	46,986	-	46,986
Loss	(810)	(2,793)	(3,603)
Other comprehensive income	-	-	-
Total comprehensive income	(810)	(2,793)	(3,603)
Group's share of total comprehensive income	(388)	(1,397)	(1,785)

 

 

18.    Trading properties

		2023	2022
		€'000	€'000
At beginning of year		56,516	56,516
At end of year		56,516	56,516

Trading properties comprise land to be sold and to be developed into villas and holiday houses.

19.    RECEIVABLES AND OTHER ASSETS

		2023	2022
	Note	€'000	€'000
Trade receivables		-	90
Other receivables		1,717	939
Loan Receivable	27.3.1	-	6,637
VAT receivables		915	509
Total Trade and other receivables		2.632	8,175
Amounts Receivable from Investment Manager	27.2	1,898	1,898
Prepayments and other assets		-	10
Total		4,530	10,083

The amount receivable from the Investment Manager relates to €3.0 million of advance payments made during 2022. As mentioned in note 32 as part of its counterclaim DCI is seeking repayment from DCP of advance payments totaling €3.0 million made to DCP pursuant to the Investment Management Agreement dated 1 December 2021. Management considers that the recovery of this amount is virtually certain and therefore, the amount is recognized in full as an amount receivable and it is presented net of variable management fees payable of €1.1 million relating to previous years.

20.    Cash and cash equivalents

	2023	2022
	€'000	€'000
Bank balances (see note 29)	471	2,226
Total	471	2,226

21.    capital and reserves

Capital

Authorised share capital

	2023			2022
	'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 2023 and to 31 December 2023	904,627	9,046	569,847

All shares are fully paid.

Reserves

Translation reserve: Translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.

Revaluation reserve: Revaluation reserve relates to the revaluation of property, plant and equipment from both subsidiaries and equity-accounted investments, net of any deferred tax.

 

22.    loans AND BORROWINGS

	Total			Within one year			Two to five years
	2023	2022		2023	2022		2023	2022
	€'000	€'000		€'000	€'000		€'000	€'000
Loans in Euro	2,893	4,611		2,893	4,611		-	-
Redeemable preference shares	11,298	10,434		-	-		11,298	10,434
Total	14,191	15,045		2,893	4,611		11,298	10,434

 

Loans denominated in Euros

In the prior year, the maturity date of the outstanding loan of Azurna (the owner of "Livka Bay") was extended to 31 December 2022. This maturity date was further extended to 31 December 2023 and since then is tied to being repaid from the sale of the asset.

During the year, the Company borrowed € 2.76 million from shareholders at a simple interest rate of 12% per annum. The loans are of a fixed duration being 12 months from receipt of the funds. 

Redeemable preference shares

On 18 December 2019, the Company signed an agreement with an international investor for a €12.0 million investment in the Kilada Hills Project. The investor agreed to subscribe for both common and preferred shares. The total €12.0 million investment was payable in 24 monthly instalments of €0.5 million each. Under the terms of the agreement, the investor is entitled to a priority return of the total investment amount from the net disposal proceeds realised from the project and retains a 15% shareholding stake in Kilada. As of 31 December 2023, 15.00% (2022: 15.00%) of the ordinary shares have been transferred to the investor.

As of 31 December 2023, 12,000 redeemable preference shares (2022: 12,000) were issued as fully paid with value of €1,000 per share. The redeemable preference shares were 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 Kilada Project. As at 31 December 2023, the fair value of the redeemable preference shares was €11.3 million (2022: €10.4 million).

Terms and conditions of the loans

The terms and conditions of outstanding loans were as follows:

Secured loan	Currency	Interest rate	Maturity dates	2023 €'000	2022 €'000
Livka Bay*	Euro	Euribor plus 4.25% p.a.	2023	4,155	4,611
Shareholder loans **	Euro/USD	12% per annum	2024	2,893	-
Total interest-bearing liabilities				7,048	4,611

*The loan on Livka Bay has been categorised within liabilities held for sale. The Loan from PBZ was due to be paid on 31 December 2023. The bank has agreed to extend the repayment date until the date on which the sale of Livka Bay completes and this arrangement remains ongoing.

** When any of the shareholder loans reached the 12-month maturity date, the lender has agreed to extend tits maturity via a loan extension agreement pending the completion of the sale of one of the Company's assets.

Security given to lenders

As at 31 December 2023, the Group's loans were secured as follows:

·      Regarding the Kilada preference shares, upon transfer of the entire amount of €12 million from the investor in accordance with the terms of the agreement, a mortgage is set against the immovable property of the Kilada Hills Project, in the amount of €15.0 million (2022: €15.0 million).

·      Regarding the Livka Bay loan, a mortgage against the immovable property of the Croatian subsidiary, Azurna (the owner of "Livka Bay"), with a carrying value of €24.4 million (2022: €19.2 million), two promissory notes, a debenture note and a letter of support from its parent company Single Purpose Vehicle Four Limited.

22.    loans AND BORROWINGs continued

Security given to lenders - continued

·      In addition, the development at One&Only Kea was partly funded by a construction loan which was secured over its assets and those of the Scorpio Bay asset. Steps are being taken to remove the security over Scorpio Bay now that we have sold our interest in One&Only Kea.

·      The shareholders loans are being secured against the issued share capital of the wholly owned subsidiary Eastern Crete Development Company Limited.

Reconciliation of movements of liabilities to cash flows arising from financing activities

	Loans and borrowings €'000	Lease liabilities €'000	Non-controlling interests €'000	Total €'000
2023
Balance at the beginning of the year	15,045	3,435	8,440	26,920
Changes from financing cash flows:
New loans from shareholders	2,760	-	-	2,760
Repayment of loans and borrowings	(500)	-	-	(500)
Payment of lease liability	-	(50)	-	(50)
Interest paid	(261)	-	-	(261)
Other movements	-	-	-	-
Total changes from financing cash flows	1,999	(50)	-	1,949
Other changes- Liability-related
Interest expense	1,302	25	-	1,327
Other movements		-	2,478	2,478
Transfer to liabilities held for sale	(4,155)	-	-	(4,155)
Capital reduction and settlement of non-controlling interest	-	-	(6,637)	(6,637)
Total liability-related other changes	(2,853)	25	(4,159)	(6,987)
Balance at the end of the year	14,191	3,410	4,281	21,882

 

	Loans and borrowings €'000	Lease liabilities €'000	Non-controlling interests €'000	Total €'000
2022
Balance at the beginning of the year	24,868	3,420	8,942	37,230
Changes from financing cash flows:
Issue of redeemable preference shares	3,000	-	-	3,000
New loans	-	-	-	-
Transaction costs related to loans and borrowings	-	-	-	-
Repayment of loans and borrowings	(12,370)	-	-	(12,370)
Payment of lease liability	-	(8)	-	(8)
Dividends Paid	-	-	(2,250)	(2,250)
Interest paid	(2,363)	-	-	(2,363)
Other movements	(620)	-	620	-
Total changes from financing cash flows	(12,353)	(8)	(1,630)	(13,991)

 

22.    loans AND BORROWINGs continued

Reconciliation of movements of liabilities to cash flows arising from financing activities continued

	Loans and borrowings €'000	Lease liabilities €'000	Non-controlling interests €'000	Total €'000
Other changes- Liability-related
Interest expense	2,535	23	-	2,558
Other movements	(5)	-	1,128	1,123
Total liability-related other changes	2,530	23	1,128	3,681
Balance at the end of the year	15,045	3,435	8,440	26,920

23.    Deferred tax liabilities

	2023	2022
	€'000	€'000
Balance at the beginning of the year	6,577	6,609
Recognised in profit or loss (see note 13)	1,359	(19)
Recognised in discontinued operations (see note 30)	933
Recognised in OCI	4,201
Transferred to held for sale assets	(2,071)	-
Exchange differences	(1)	(13)
Balance at the end of the year	10,998	6,577

Deferred tax liabilities are attributable to the following:

	2023	2022
	€'000	€'000
Investment properties	1,121	2,215
Trading properties	4,299	4,299
Property, plant and equipment	5,578	63
Total	10,998	6,577

24     Lease liabilities

The major lease obligations comprise leases in Greece with 99-year lease terms, for which, as mentioned in note 16, the Greek State disputed the ownership rights of the lessor.

 

	2023	2022
	€'000	€'000
Non-current	3,322	3,347
Current	88	88
Total	3,410	3,435

25.    Trade and other payables

	2023	2022
	€'000	€'000
Land creditor	20,752	20,752
Investment Management fees (see note 27.2)	-	-
Other payables and accrued expenses	11,488	6,332
Total	32,240	27,084

 

 

25.    Trade and other payables - CONTINUED

 

	2023	2022
	€'000	€'000
Non-current	21,004	19,795
Current	11,236	7,289
Total	32,240	27,084

Land creditors relate to contracts in connection with the purchase of land at Lavender Bay from the Church. The above outstanding amount bears an annual interest rate equal to the inflation rate, which cannot exceed 2% p.a. Full settlement is due on 31 December 2025. As mentioned in note 16, the Group is in negotiations with the land creditor with a view to ensuring that no additional funds are paid to them under the sale and purchase contracts until the resolution of the legal dispute with the Greek State and, also to reduce the overall quantum of the Group's deferred liabilities to them, potentially swapping all or part of the deferred payments against equity in the project.

Included with other payables is an amount of €1.93m due to the holder of the 15% non-controlling interest in Mindcompass Overseas One Limited. This consists of payments to the subsidiaries Mindcompass Overseas SA and Mindcompass Overseas Two SA.  This funding provided is interest free and repayable on demand to the extent that the subsidiary has sufficient means to repay the borrowing.

26.    NAV per share

	2023	2022
	'000	'000
Total equity attributable to owners of the Company (€)	126,444	112,107
Number of common shares outstanding at end of year	904,627	904,627
NAV per share (€)	0.14	0.12

27.    Related party transactions

27.1        Directors' interest and remuneration

Directors' interests

Miltos Kambourides is the founder and managing partner of the Investment Manager whose IMA was terminated on 18 March 2023.

Martin Adams, Nick Paris and Nicolai Huls were non-executive Directors throughout 2022, with Martin Adams serving as Chairman of the Board of Directors. On 10 February 2023, Martin Adams resigned as a Director and on 13 February 2023 Sean Hurst was appointed as a non-executive Director and Chairman.

The interests of the Directors as at 31 December 2023, all of which are beneficial, in the issued share capital of the Company as at this date were as follows:

	Shares
	'000
Sean Hurst	475
Nicolai Huls	775
Nick Paris	1,634

Miltos Kambourides is 75% shareholder of Dolphin Capital Partners that previously held 88,025,342 shares. Dolphin Capital Partners disposed of all their shares in the Company during April 2023.

Save as disclosed in this Note, none of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Group. Although the Directors believe that DCP with whom Miltos Kambourides is connected acquired an undisclosed option after the sale of Amanzoe by the Company in August 2018.

 

27.    Related party transactions continued

27.1 Directors' interest and remuneration continued

Directors' remuneration

	2023	2022
	€'000	€'000
Remuneration	374	205
Total remuneration	374	205

The Directors' remuneration details for the years ended 31 December 2023 and 31 December 2022 were as follows:

	2023	2022
	€'000	€'000
Martin Adams	8	75
Sean Hurst	66	-
Nick Paris	150	65
Nicolai Huls	150	65
Total	374	205

Miltos Kambourides waived his fees for both 2023 and 2022. The Executive Directors have been entitled to receive remuneration of €250,000 per annum in total with effect from 1 March 2024 but they have undertaken in writing not to draw such additional fees for the time being.   

27.2 Investment Manager remuneration (in place until March 2023)

	2023	2022
	€'000	€'000
Fixed management fee	-	-
Total remuneration	-	-
Variable management fee payable	(1,075)	(1,075)
Project Fees	(2)	(2)
Incentive fee advance payments	2,975	2,975
Amount Receivable from Investment Manager	1,898	1,898

On 9 April 2019, the Company signed an Amended and Restated Investment Management Agreement ('IMA'), which was effective from 1 January 2019. The details of it were as follows:

i. Fixed investment management fee

No fixed management fee was due after 31 December 2021.The annual investment management fees for 2021 was previously €3.6 million per annum.

On 22 December 2021, a new IMA was approved by the Shareholders at the Extraordinary General Meeting, which is effective from 1 January 2022, which was terminated on 20 March 2023. The details were as follows:

A. INCENTIVE FEES AND BONUS

I. The Investment Manager is entitled to be paid Incentive Fees which are calculated as follows based on the aggregate Distributions made by the Company to its Shareholders:

Aggregate Distributions(1)	Incentive Fees (as a percentage of Aggregate Distributions)
Up to and including €40 million	0%
In excess of €40 million	15%

(1)     For the avoidance of doubt, the different percentages set out below shall be applied incrementally and not as against the total aggregate Distributions.

27.    Related party transactions CONTINUED

27.2        Investment Manager remuneration (in place until March 2023) continued

II. In addition to the fees payable to the paragraph above, and subject to paragraphs B and C once aggregate Distributions of €80 million have been made, the Investment Manager shall be entitled to be paid a further bonus (the "Bonus") on the following basis:

Aggregate Distributions	Bonus payment
€80 million	€1 million
For each amount of €5 million of Distributions paid in excess of €80 million up to and including €100 million(1)	€1 million

(1)   For the avoidance of doubt, the total aggregate Bonus payments which may be paid to the Investment Manager shall not exceed a maximum of €5 million.

 

III. Any Incentive Fees and/or Bonus payable by the Company to the Investment Manager shall be set off against and shall be reduced (to not less than zero) by the amount of any fees (including but not limited to asset management fees and villa sales fees) collected in cash by the Investment Manager under the terms of the Kea Asset Management Agreement accruing from 1 January 2022 onwards (to the extent that these have not already been off set against the Incentive Fee Advance Payments pursuant to paragraph B.II. below).

B. INCENTIVE FEE ADVANCE PAYMENTS

I. As an advance against future Incentive Fees, the Investment Manager shall be entitled to receive the following annual advances, which shall be payable in equal quarterly instalments in advance:

Year	Incentive Fee Advance Payment
2022	€2.4 million
2023	€2.3 million
2024	€1.3 million

II. The Incentive Fee Advance Payments payable by the Company to the Investment Manager shall, (i) be set off against and shall reduce (to not less than zero) the entitlement of the Investment Manager to any Incentive Fees and/or Bonus payable pursuant to paragraphs A.I and A.II above, and (ii) be set off against and shall be reduced (to not less than zero) by the amount of any fees (including but not limited to asset management fees and villa sales fees) collected in cash by the Investment Manager under the terms of the Kea Asset Management Agreement accruing  from 1 January 2022 onwards.

III. For the avoidance of doubt, the Company shall not be obliged to take active steps to generate funding to pay any Incentive Fee Advance Payments and, consequently, the payment of any Incentive Fee Advance Payments shall be deferred, partly or wholly as required, by the Company in the case where:

(i) the Company does not have freely transferable funds available to pay such Incentive Fee Advance Payments due, or

(ii) the Company's readily accessible consolidated cash balance (excluding (a) cash that is not readily available to the Company, (b) cash held at Kilada and the One&Only at Kea, and (c) any cash deposited in the interest retention account in connection with the CastleLake Loan Agreement or any subsequent lender to the Company) after the payment of any Incentive Fee Advance Payments due would be less than €1.0 million.

 

27.    Related party transactions CONTINUED

27.2        Investment Manager remuneration (in place until March 2023) continued

C ESCROW ACCOUNT

I. An amount equal to 25 per cent of the aggregate of any Incentive Fees and/or Bonus in excess of the aggregate Incentive Fee Advance Payments to which the Investment Manager may become entitled shall be placed in the Escrow Account.

II. The amount held in the Escrow Account from time to time shall become payable to the Investment Manager on the earlier to occur of:

(i) the date of completion of the disposal of the last Relevant Investment;

(ii) the date of commencement of the formal liquidation of the Company under BVI law; and

(iii) the date of effective termination of this Agreement by the Company.

III. If the Investment Manager serves notice to terminate this Agreement, any amounts held in the Escrow Account shall be forfeited and shall become due and payable to the Company.

27.3 Other related party transactions

27.3.1 Exactarea Holdings Limited

On 15th December 2022 SPV10 entered into a bridge loan facility with its 33% shareholder Exacterea Holding Limited, making available of a principle amount up to €6.6 million. The loan was interest-free and repayable at the latest six months from the date of the agreement.

This loan was in connection with the sale of the interest in One&Only Kea, and was deemed to be fully repaid when the courts in Cyprus approved an application to reduce the share premium reserve account of SPV10 on 16 January 2023.

27.3.2 One&Only Kea

The Investment Manager (DCP) owned an effective 5% equity interest in SPV14 (an equity-accounted investee and the holding company of the One&Only Kea at the time that the Company sold its interest in SPV14. Under the relevant shareholders agreement dated 27 May 2019, the Investment Manager, One&Only Kea and Exactarea had priority returns for an amount equal to 75% of their equity investment, following the payment of which the Company became entitled to a priority catch-up for the same amount. The Investment Manager also had an asset management agreement dated 1 November 2017 with One&Only Kea and provided management services.

27.3.3 Amanzoe resort

The Investment Manager (DCP) retained a 4.9% equity interest in AZOE Holdings Ltd, the company that owns Amanzoe resort ('AZOE') and it also had an asset management agreement dated 3 October 2018 for the resort. However, the Directors believe that DCP also retained an option over a further 15% of the equity in AZOE. Amanzoe Resort S.A. entered on 2 August 2021 into a contract to buy 24 founder plots in the Company's Kilada project for a price of €10.0 million payable in instalments subject to the achievement of certain construction milestones but this contract was unwound by both parties in February 2023. The Directors believe that DCP sold all of its interests in AZOE Holdings Ltd during March 2023.

27.3.3 AXIA

AXIA Ventures Group Limited ('Axia'), an investment banking operation with offices in Cyprus and Athens was 20% owned by an affiliate of the Investment Manager (DCP) and Miltos Kambourides served on its Board of Directors. However, the affiliate sold its interest during 2022. Axia was appointed by the Company to undertake a process for the sale of its equity interest in OOKI dated 29 September 2020. No transaction was concluded and therefore no fee was due or paid. Axia was also appointed by the Company in December 2022 to undertake a process for the sale of its equity interest in Aristo Developers Limited but no transaction has been concluded. This process is ongoing and no fees have yet been paid but they are believed by the Directors to be under normal commercial terms.

27.3.4 Discover Investment Company

The Company has borrowed €2.8 million from 9 shareholders during the year. The loans are for a 12 month term bearing an interest rate of 12% p.a. with no fees payable on disbursement or repayment. The shareholders loans have been secured against the issued share capital of the wholly owned subsidiary Eastern Crete Development Company Limited. Nicolai Huls is a director of Discover Investment Company.   

28.          Non-Controlling interests

The following tables summarise the information relating to each of the Group's subsidiaries that have material non-controlling interests, before any intra-group eliminations.

2023		MCO 1  €'000	SPV 10  €'000
Non-controlling interests' percentage		15.00%	0.00%
Non-current assets		46,129	-
Current assets		58,940	-
Non-current liabilities		(66,270)	-
Current liabilities		(10,259)	-
Net assets		28,540	-
Carrying amount of non-controlling interests		4,281	-
Revenue		125	-
Profit		1,632	-
Other comprehensive income		14,893	-
Total comprehensive income		16,650	-
Dividends Paid		-	-
Profit allocated to non-controlling interests		244	-
Other comprehensive income allocated to non-controlling interests		2,234	-
Dividends paid to non-controlling interest		-	-
Cash flow from/(used in) operating activities		972	-
Cash flow (used in)/from investing activities		(2,470)	-
Cash flow from/(used in) financing activities		1,750	-
Net increase in cash and cash equivalents		252	-

 

 

2022		MCO 1  €'000	SPV 10  €'000
Non-controlling interests' percentage		15.00%	33.33%
Non-current assets		18,293	-
Current assets		57,509	19,921
Non-current liabilities		(57,443)	-
Current liabilities		(6,343)	(8)
Net assets		12,016	19,913
Carrying amount of non-controlling interests		1,803	6,637
Revenue		37	-
(Loss)/profit		(588)	4,001
Other comprehensive income		-	-
Total comprehensive income		(588)	4,001
Dividends Paid		-	6,750
(Loss)/profit allocated to non-controlling interests		(206)	1,334
Other comprehensive income allocated to non-controlling interests		-	-
Dividends paid to non-controlling interest		-	2,250
Cash flow from/(used in) operating activities		2,329	(8)
Cash flow (used in)/from investing activities		(6,285)	3,195
Cash flow from/(used in) financing activities		3,885	(3,183)
Net (decrease)/increase in cash and cash equivalents		(71)	4

 

 

29.    FINANCIAL RISK MANAGEMENT

Financial risk factors

The Group is exposed to credit risk, liquidity risk and market risk from its use of financial instruments. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group's overall strategy remains unchanged from last year.

(i)      Credit risk

Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the statement of financial position date.  The Group has policies in place to ensure that sales are made to customers with an appropriate credit history and monitors on a continuous basis the ageing profile of its receivables. The Group's trade receivables are secured with the property sold. Cash balances are mainly held with high credit quality financial institutions and the Group has policies to limit the amount of credit exposure to any financial institution.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the end of the reporting year was as follows:

		2023	2022
		€'000	€'000
Trade and other receivables (see note 19)		2,632	8,175
Cash and cash equivalents (see note 20)		471	2,226
Total		3,103	10,401

Trade and other receivables

Credit quality of trade and other receivables

The Group's trade and other receivables are unimpaired.

Cash and cash equivalents

Exposure to credit risk

The table below shows an analysis of the Group's bank deposits by the credit rating of the bank in which they are held:

	2023		2022
	No. of Banks	€'000	No. of Banks	€'000
Bank group based on credit ratings by Moody's
Rating Aaa to A	1	67	-	-
Rating Baa to B	3	404	3	1,967
Rating Caa to C	-	-	-	-
Not rated	-	-	1	259
Total bank balances		471		2,226

 

There is a further deposit of €537,000 within a restricted account at a bank with the rating of Baa2. The restrictions were released on this balance during 2024. This balance has been included within other receivables.

(ii)     Liquidity risk

Liquidity risk is the risk that arises when the maturity of assets and liabilities do not match. An unmatched position potentially enhances profitability but can also increase the risk of losses. The Group has procedures with the objective of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.

The following tables present the contractual maturities of financial liabilities. The tables have been prepared based on contractual undiscounted cash flows of financial liabilities, and on the basis of the earliest date on which the Group might be forced to pay.

29.    FINANCIAL RISK MANAGEMENT CONTINUED

Financial risk factors continued

(ii)     Liquidity risk continued

2023	Carrying amounts	Contractual cash flows	Within one year	Two to three years	Three to five years	Over five years
	€'000	€'000	€'000	€'000	€'000	€'000
Loans and borrowings	14,191	(15,091)	(3,091)	-	(12,000)	-
Loan included in disposal group	4,155	(4,155)	(4,155)	-	-	-
Lease obligations	3,410	(4,692)	(89)	(89)	(184)	(4,330)
Land creditors	20,752	(26,977)	(7,112)	(19,865)	-	-
Trade and other payables	11,488	(11,488)	(9,890)	(1,598)	-	-
Trade and other payables included in disposal group	952	(952)	(952)
	54,948	(63,355)	(25,289)	(21,552)	(12,184)	(4,330)

 

2022	Carrying amounts	Contractual cash flows	Within one year	Two to three years	Three to five years	Over five years
	€'000	€'000	€'000	€'000	€'000	€'000
Loans and borrowings	15,045	(16,611)	(7,611)	(3,000)	(6,000)	-
Lease obligations	3,435	(4,705)	(91)	(91)	(193)	(4,330)
Land creditors	20,752	(23,661)	(1,280)	(1,265)	(21,116)	-
Trade and other payables	6,332	(6,332)	(6,332)	-	-	-
	45,564	(51,309)	(15,314)	(4,356)	(27,309)	(4,330)

(iii)    Market risk

Market risk is the risk that changes in market prices, such as interest rates, equity prices and foreign exchange rates, will affect the Group's income or the value of its holdings of financial instruments.

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group's income and operating cash flows are substantially independent of changes in market interest rates as the Group has no significant interest-bearing assets. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.

At the reporting date the interest rate profile of interest- bearing financial instruments was:

 

	2023	2022
	€'000	€'000
Fixed rate instruments
Financial liabilities	2,760	-
Variable rate instruments
Financial liabilities	4,155	4,611

Sensitivity analysis

An increase of 100 basis points in interest rates at 31 December would have decreased equity and profit or loss by €42 thousand (2022: €46 thousand). This analysis assumes that all other variables, in particular foreign currency rates, remain constant. For a decrease of 100 basis points there would be an equal and opposite impact on the profit or loss and other equity.

29.    FINANCIAL RISK MANAGEMENT CONTINUED

Financial risk factors continued

Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's measurement currency. The Group has minimal exposure to foreign exchange risk as the majority of the assets and liabilities are now within the Euro zone.

Capital management

The Group manages its capital to ensure that it will be able to continue as a going concern while improving the return to shareholders.  The Board of Directors is committed to implementing a package of measures that is expected to focus on the achievement of the Group's investment objectives, achieve cost efficiencies and strengthen its liquidity.  Notably, these measures include the completion of certain Group asset divestment transactions, as well as the conclusion of additional working capital facilities at the Group and/or Company level.

30.    discontinued operation and DISPOSAL GROUP HELD FOR SALE

As of 31 December 2023, the disposal group comprised the following assets and liabilities all of which relate to the land at Livka Bay held by the subsidiary Azurna Uvala d.o.o. This has been regarded as meeting the criteria for the results to be regarded as a discontinued operation.  All of the profits arising on the disposal group during the year are attributable to the owners of the parent.

 

This subsidiary was not previously classified as a discontinued operation and disposal group held for sale. The comparative consolidated statement of profit or loss and other comprehensive income has been re-presented to show the discontinued operation separately from continued operations.

		2023	2022
		€'000	€'000
Investment property		24,371	-
Other assets		8	-
Cash and cash equivalents (see note 20)		9	-
Assets held for sale		24,388	-

 

		2023	2022
		€'000	€'000
Interest bearing loans with third parties		4,155	-
Deferred tax		2,071	-
Trade and other payables		952	-
Liabilities directly associated with the assets held for sale		7,178	-

 

  Results of discontinued operations 

		2023	2022
		€'000	€'000
Net change in fair value of investment property		5,190	700
Professional fees		(55)	(64)
Administration and other expenses		(51)	(51)
Total operating and other expenses		5,084	585
Results from operating activities		(5,084)	(585)
Interest expense		(278)	(250)
Realised foreign exchange gain		68	85
Net finance costs		(210)	(165)
Loss before taxation		4,874	420
Taxation		(933)	(145)
Profit from discontinued operations net of tax		3,941	275
Basic earnings per share - discontinued operation (€)		0.004	0.000

30.          discontinued operation and DISPOSAL GROUP HELD FOR SALE - continued

Results of discontinued operations - continued
		2023	2022
		€'000	€'000
Cash flow used in operating activities		(80)	(62)
Cash flow used in investing activities		-	-
Cash flow from financing activities		(170)	315
Net decrease in cash and cash equivalents		(250)	253

31.    CoMMITMENTS

As of 31 December 2023, the Group had a total of €15.2 million contractual capital commitments on property, plant and equipment (2022: €16.5 million).

32.    Contingent liabilities

Legal actions related to the former investment manager

The Company is currently involved in litigation in the British Virgin Islands (BVI), Greece, and the United Kingdom (UK), all relating to the former Investment Manager or DCP's close business partner Zoniro.

On 20 March 2023 it was announced that the Investment Management Agreement ("IMA") dated 1 December 2021 between the Company and Dolphin Capital Partners Ltd ("DCP") was terminated with immediate effect based on repudiatory breach of the contract by DCP further coming into Directors' attention that DCP entered into an undisclosed option agreement with the purchaser of the Amanzoe resort in Porto Helli, Greece. The said option agreement had not been disclosed to the Company by DCP at the time of the sale of DolphinCI Fourteen Limited (the special purpose vehicle holding Amazoe resort). The failure by DCP, as agent of the Company under the terms of the IMA, to disclose the existence of the undisclosed option agreement, and to fulfil its other duties as an agent, constitutes a repudiatory breach of the IMA that has resulted in the termination of the IMA by the Company.

UK: In April 2023, following the above-mentioned termination, DCP filed a claim in the High Court of Justice of England and Wales against DCI for alleged breach of contract and unpaid fees for €10.245.000. The Company filed its defence and counterclaim in June 2023. As part of its counterclaim, DCI is seeking repayment from DCP of advanced payments totaling €2.975.000, made to DCP pursuant to the investment management agreement dated 1 December 2021 between DCI and DCP (see note 19). A reverse summary judgement hearing on 21 March 2024 determined that a full trial is needed. The hearing is expected late 2025 or early 2026.

Greece: On 12 December 2023 DCI filed criminal charges in Greece against Miltos Kambourides, Michael Tsirikos, and some members of staff of DCP and DCP's close business partner Zoniro SA in Greece. These criminal charges involve allegations of money laundering, and the abuse of corporate governance. In total 9 individual cases were filed as part of these criminal charges.

In March 2024 DCI also filed civil claims against 10 individuals/companies in order to seek to recover approximately €50.0 million in damages and the cancellation of a transaction against one company in Cyprus. DCI's investigations into potential wrongdoing are continuing.

In September 2023, Zoniro SA issued a payment order against one of Kilada's Greek companies and blocked its bank account. A judgment in September 2024 ruled in favour of DCI, and the bank account was released since.

In June 2024 the Board of the Company received notification that Miltos Kambourides and Michael Tsirikos have filed a counterclaim against the Company in the Greek Court for €12.0 million. The Company believes the Counterclaim to be a response to the Company's criminal and civil claims against these and seven other people. They claim that the accusations made against them are false and were known to be false by the complainants (DCI) when they made their complaint. In July 2024 the Board of the Company has been informed that Miltos Kambourides, Michael Tsirikos and some other people who worked for or were associated with Dolphin Capital Partners ("DCP"), they have filed a criminal lawsuit against Nicolai Huls, Nick Paris and certain other individuals connected to the current management of DCI. DCP also claims that the accusations made against them are false and were known to be false by the complainants (DCI) when they made their complaint. DCI is fully convinced these actions are an attempt by DCP to intimidate DCI and to distract from the fact that DCP was terminated for serious reasons in March 2023.

 

32.    Contingent liabilities - continued

Legal actions related to the former investment manager -continued

BVI: In August 2023, Zoniro Ltd issued a statutory demand for payment from DCI and another DCI group company. DCI initiated proceedings to set aside these demands, citing collusion between DCP and Zoniro. A hearing took place on May 3, 2024. The Company was successful in the applications to set aside the two demands. In the judgement the judge upheld our argument that there was a substantial dispute that would need to be resolved before a statutory demand could be issued. He has also ordered Zoniro to pay 75% of the costs incurred.

Each of the above cases are in the early stages within the legal process and as such it is difficult to predict the outcomes of any of the cases with any degree of certainty nor is it possible to add any expected outflow form these while the legal process is in progress. Management believes that the defence against each of the actions will be in their favour. As a consequence, there is no provision within the financial statements for any liability which may arise in the event of an unfavourable judgment on any of the cases.

other matters

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 Directors believe that there is sufficient defence against any claim and does not expect that the Group will suffer any material loss. All provisions in relation to these matters which are considered necessary have been recorded in these consolidated financial statements.

In addition to the tax liabilities that have already been provided for in the consolidated financial statements based on existing evidence, there is a possibility that additional tax liabilities may arise after the examination of the tax and other matters of the companies of the Group in the relevant tax jurisdictions.

The Group, under its normal course of business, guaranteed the development of properties in line with agreed specifications and time limits in favour of other parties.

33.    SUBSEQUENT EVENTS

Since 31 December 2023, the Company has borrowed a total of €1.565 million from a further seven shareholders on the same terms as the previous loans. In addition, the first four loans that were borrowed in 2023 reached their 12 month anniversaries in 2024 and the lenders each agreed to roll them forward. The intention is to repay them from asset sales proceeds. 

Subsequent events in regards to litigations relating to the former Investment Manager or DCP's close business partner Zoniro are disclosed in Note 32.

In April 2024, the Company announced that an agreement had been reached with a Family Office investor for additional funding for the Kilada Hills resort for up to €2.5 million.

In June 2024, the Company signed a Memorandum of Understanding with a potential buyer of the Company's investment in the Kilada Hills resort giving them an initial 90 day exclusivity period to undertake due diligence. In addition, the Company signed a Sale and Purchase Agreement to sell its land at Livka Bay in Croatia for €22 million.  

On 1 July 2024, the Company announced that the publication of these audited Annual Accounts to 31 December 2023 had been delayed and as a result the listing of the Company's shares was temporarily suspended from trading on the AIM market.

 

 

 

33.    SUBSEQUENT EVENTS - continued

On 8 November 2024, the Company announced the proposed migration of the Company from the British Virgin Islands to Guernsey. This should be seen a continuation of the Company. There will be no change to the investment strategy following the migration. At the same time the Directors announced the adoption of a new management incentive plan through the creation of an Employee Stock Option Plan ("ESOP"). The Directors have also announced the intention to create B shares in the Guernsey entity which allow a more favourable mechanism for the return of Capital. This change was subject to the approval of the shareholders at an extraordinary general meeting held on 19 December 2024. At the meeting, the migration and B share creation were approved but the ESOP was not. The migration took place on 23 December 2024.

On 9 December, the Company announced that it was changing its accounting reference date from 31 December to 30 June and as a result the next set of audited financial statements will be published for the eighteen-month period ending 30 June 2025.

There were no other material events after the end of the reporting period which have a bearing on the understanding of the consolidated financial statements as at 31 December 2023.