27 September 2021

 

DOLPHIN CAPITAL INVESTORS LIMITED

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

and together with its subsidiaries the "Group")

 

Half Year Results for the six months ended 30 June 2021 and

Trading Update

 

 

Summary

·    Total Group Net Asset Value ("NAV") of €152.0 million and €145.0 million before and after Deferred Tax Liabilities ("DTL"). This represents a decrease of €4.2 million and €3.9 million (2.7% and 2.6%) respectively compared to 31 December 2020. The NAV reduction is principally due to operational, finance, corporate and management expenses.

 

·    Sterling NAV per share as at 30 June 2021 stood at 15p before DTL and 14p after DTL, versus 16p and 15p, a 7.6% and 7.5% decrease before and after DTL respectively, compared to 31 December 2020. The Sterling NAV per share reduction mainly reflects the factors mentioned above and was enhanced by the 5.0% depreciation of the Euro versus the Sterling during the period.

 

·    Total Debt of €7.7 million with a Group total debt to gross asset ratio of 3.7% as at 30 June 2021 (31 December 2020: 3.0%).

 

·    On 3 June 2021 Dolphin entered into a loan facility of €15.0 million with two institutional private credit providers. The first tranche of €1.75 million was drawn down on 4 June 2021 and the second tranche of €13.25 million was drawn down on 16 July 2021. An amount of €1.5 million has been already repaid through the proceeds generated from the sale of the Company's interests in the LaVanta project.

 

·    Construction works at the One&Only Kea Island ("OOKI") continue with a target of completion for the 2022 tourist season. Internal roads, and structural works are well advanced and the works have shifted to mechanical, electrical and architectural finishes. Furthermore, procurement for FF&E and OS&E has also begun. In parallel, we have been able to source significant demand for the Private Homes available at the project through real estate agents, DCP's network, as well as dedicated social media campaigns and related PR activities in co-operation with One&Only. We have already signed and received deposits from nine sales on an off-plan basis. We are currently in advanced discussions with several other potential purchasers and expect a number of additional sales to be signed by the end of the year.

 

·    At our Kilada Country Club, Golf and Residences development ("Kilada"), construction works continued with all key contractors having been appointed. Earthworks in approximately half the project area are complete with the specialized golf contractor working in those areas. Most roads of the first phase have also been opened and key infrastructure works have also been installed. In addition to the above, the final notarial Deed for the acquisition of 24 founder plots in Kilada by Amanzoe for a €10.0 million consideration was concluded on 2 August 2021 which, together with the preferred equity investment agreement entered into on 19 December 2019, fully cover the Kilada first phase development costs. During the period, two new reservation agreements for the sale of residential plots have been signed.

 

·    Gross sales of Aristo Developers Ltd ("Aristo"), a 47.9% DCI affiliate, during the six months to June 2021 declined by 12% compared to the 2020 corresponding period, primarily due to the termination of the Cyprus citizenship investment programme and the worldwide travel restrictions imposed following the COVID-19 pandemic which made it impossible for Chinese and other Asian purchasers (formerly Aristo's core client market) to travel to Cyprus.

 

·    For the remaining assets progress is being made to advance permitting.

 

·    As reported on 1 July 2021, the Company's Board of Directors was changed with the appointment of three new Board members, namely Martin Adams, Nicholas Paris and Nicolai Huls, who joined the Board as non-executive Directors, with Martin Adams becoming Chairman. In addition, the composition of the following Board committees has been revised:

o  Audit Committee: to provide oversight of the financial reporting process, the audit process, the system of internal controls, overall compliance with laws and regulations and the review of the budgetary process. The Audit Committee is chaired by Nick Paris.

o  Nomination and Corporate Governance Committee: to evaluate the Company's corporate governance policies and programmes and principles. The Corporate Governance Committee is chaired by Nicolai Huls.

 

·    Since their appointment, the Directors have also undertaken, in co-operation with the Company's Investment Manager, a strategic review of DCI's overall investment portfolio and realisation processes, the investment management arrangements, corporate governance, operating costs and cash flows. The strategic review has progressed and its conclusions will be disclosed in the coming weeks.

 

 

 

For further information, please contact:

 

Dolphin Capital Investors Martin Adams	[email protected]
Dolphin Capital Partners Miltos E Kambourides	[email protected]
Panmure Gordon (Broker) Dominic Morley	+44 (0) 20 7886 2500
Grant Thornton UK LLP (Nominated Adviser) Philip Secrett	+44 (0) 20 7383 5100

 

 

 

A. Chairman's Statement

 

Dear Shareholder,

 

Three new independent directors, Nicolai Huls, Nick Paris and I, were appointed to the Board of Dolphin Capital Investors Plc (the "Company" or "DCI") on 30 June 2021 to replace the three resigning directors. The first three months of our appointment has been somewhat of a baptism of fire. We have climbed a steep learning curve thanks in large part to our colleague, Miltos Kambourides, who has been a non-independent director since DCI's launch in 2005, and his colleagues at Dolphin Capital Partners ("DCP"), the investment manager. We have already travelled to Greece and Cyprus on several occasions, including visits to the key assets, met with the auditors and valuers and held two board meetings, two audit committee meetings and a corporate governance committee meeting as well as many informal discussions with DCP's senior management team.

 

As we were not board members during the 6 month period to which the half year financial statements relate, we have relied on the valuations carried out for the 2020 annual report, updated for developments reported to the Company by DCP. As DCP, in effect, prepares the Group's consolidated financial statements, we have relied on their systems and processes to ensure integrity and consistency with past practice.

 

Summary of Financial Performance & Challenges

 

The half year financial statements show a 7.6% decline in Sterling net asset value ("NAV") per share before DTL from 16p per share on 31 December 2020 to 15p per share on 30 June 2021. The net loss after tax in the first half of 2021 was €3.0 million (first half of 2020: €5.4 million). Net cash inflow in the first half of 2021 was €1.8 million.

 

As at 30 June 2021, the DCI Group had three principal liabilities:

·    €1.7 million (now €13.5 million following a further drawdown and partial repayment in July 2021) under a term loan facility, repayable no later than 3 December 2022, unless extended by a further 6 months at the option of the Company;

·    €4.3 million owed to DCP in the form of accrued but unpaid investment management fees (now €3.2 million); and

·    €6.3 million owed to PBZ, the Croatian lender to the Livka Bay investment (now €5.1 million).

 

The principal immediate financial challenge facing DCI is meeting the Company's cash flow obligations towards creditors while maximising the equity value upon realisation of the individual assets. The €15.0 million term loan facility signed in June 2021 is expensive and has a relatively short maturity. DCP remains optimistic that a balance can be struck between early realisations of investments to raise funds to meet liabilities; and disposals at attractive prices.  

 

 

Investment Environment

 

Greece

After a decade in which Greece found itself enduring three bail-out programmes and economic collapse, the pragmatic policies advocated by centre-right prime minister Kyriakos Mitsotakis since 2019 have significantly bolstered Brussels' confidence in the Greek economy.

 

Fitch has affirmed Greece's long term debt rating at 'BB' with a stable outlook. Much of Greece's public debt is concessional in nature, resulting in relatively low debt-servicing costs and a long average maturity of 19 years. The inclusion by the European Central Bank of Greek government bonds in its pandemic emergency purchase programme, will support availability and low cost of finance for the Greek Government.

 

The European Commission projects that Greece's economy will grow by 4.3% in 2021 and 6.0% in 2022, with inflation remaining muted. The easing of travel restrictions and social distancing measures are supporting services activity, in particular tourism, and exports. The importance of tourism to the Greek economy makes Greece's economic outlook especially reliant on the successful rollout of vaccination campaigns in the EU and internationally. Substantial disbursements under the EU-funded €31 billion Recovery and Resilience Plan for Greece are expected to underpin investment in 2021 and 2022. Greek initiatives such as a common COVID-19 certificate were readily taken up throughout the European Union.

 

On the downside, the financial system remains weak and the high levels of non-performing loans ("NPLs") will continue to constrain new bank lending to the private sector. The Greek economic recovery could stall if there is a renewed rise in COVID-19 infections, which will discourage foreign tourism, and if labour market reforms are rolled back.

 

Cyprus

The European Commission projects that Cyprus' economy will grow by 4.3% in 2021 and 3.8% in 2022. The easing of travel restrictions and social distancing measures are providing a boost to tourism, which occupies a dominant position in the economy. The EU's €1.2 billion Recovery and Resilience Plan for Cyprus will provide significant support for Cyprus' continued economic growth. Downside risks to the economic recovery are mainly related to COVID-19 infections, new variants and vaccination coverage, which could exacerbate pressures on public finances and banks' NPLs. Fitch continues to rate Cypriot long term bonds and banks at BBB-, with a stable outlook for public debt and a negative outlook for banks. Cyprus' open economy makes it vulnerable to external shocks, but, in the past, this flexibility has also contributed to quick economic turnarounds and recovery.

 

Unlike elsewhere in the EU, residential property prices in Cyprus fell during the pandemic, largely because of a collapse in foreign demand caused by the difficulties of international travel and the scrapping of the country's controversial citizenship scheme in late 2020. Residential property prices in Cyprus fell by an average of 2.7% in the first quarter of 2021. Given attractive rental yields, there are positive indications of a recovery in residential property prices as the number of foreign visitors picks up.

 

Croatia

According to the European Commission, the Croatian economy is projected to grow by 5.4% in 2021 and 5.9% in 2022. Rising domestic and foreign demand are underpinning Croatia's economic recovery. The service sector represents almost 60% of Croatia's economy, of which tourism is by far the most important component, comprising almost a quarter of GDP.

 

Croatia is entitled to draw up to €6.3 billion (12.8% of 2020 GDP) in grants and loans from the EU Recovery and Resilience Facility, in addition to €1 billion (2% of GDP) from the EU Solidarity Fund for earthquake reconstruction and EUR €12.6 billion (25.6% of GDP) in the 2021-27 Multi-Annual Funding Facility. As such, annual EU fund inflows could reach up to 5% of Croatia's GDP. However, the rapidly tightening labour market and a stalled economic reform programme could delay Croatia's ability to draw on the EU funds. There is also increasing concern that Croatia's capacity to absorb the funds lags behind the EU average. Fitch rates Croatia's long term debt at 'BBB-' with a stable outlook.

 

Despite the pandemic and the two major earthquakes that struck the Zagreb area in 2020, a limited supply of new residential property in Croatia and low transaction volumes have caused property prices to remain resilient.

 

Investment Portfolio

 

During the short period since the board changes occurred, we have witnessed first-hand the economic effects summarised above on the investment portfolio.

 

From a portfolio perspective, the Board is of the view that DCI's real value lies in the One&Only Kea Island ("OOKI") and the Kilada Hills Golf Resort ("Kilada") developments. The optimum time to sell each of these investments will be following the completion and opening of the first phase of each of the developments and after a significant number of individual property sales have been completed to evidence the level of achievable disposal prices, which is currently expected to be from mid to late 2022 onwards. To date, the demand to purchase villas at OOKI has been promising and there is increasing interest from potential buyers of land plots at Kilada.

 

Aristo Developers has an enviable track record in Cyprus and remains one of the island's principal residential property developers. The slump in foreign purchases of property in Cyprus under the now-suspended citizenship scheme hit Aristo Developers hard and demand and prices have yet to recover. As long term residency for foreign property buyers in Cyprus remains available, there is some hope of a recovery in demand from overseas for higher-end properties. The Company's relationship with Aristo Developers is long and complicated. DCI owns a 48.3% minority interest in the company. In order to capture the most value from a sale of the investment, the Board and DCP are working with the controlling shareholder, Mr. Theodoros Aristodemou, with a view to aligning the interests of the two shareholders. The relationship is further complicated by a final payment of €3.5 million from Aristo Ktimatiki, a company owned by Mr. Aristodemou, in respect of the sale by DCI of its investment in Venus Rock being in default. Discussions to collect this balance are ongoing.

 

The OOKI, Kilada and Aristo Developers investments were together valued at €112.0 million at 30 June 2021.

 

Each of the Company's picturesque land holdings at Scorpio Bay, Lavender Bay, Apollo Heights, Plaka Bay and Livka Bay are at various stages of permitting. The special purpose companies holding each asset are clean, well-documented and unencumbered by long term contracts, which should allow for straightforward sales processes after buyers have been identified and prices agreed. A non-recourse loan of €5.1 million from Croatian bank PBZ to the Livka Bay investment remains outstanding. These investments were together valued at €36.0 million at 30 June 2021.

 

Given the ongoing process for Greek and Cypriot banks to resolve their NPLs, debt financing for development of these assets is currently unavailable for a financial investor such as DCI. However, given the economic significance of the tourism sector and the revival of demand from foreign visitors to Greece, Cyprus and Croatia, debt finance for credible new resort developers and/ or owner-operators on land currently held by DCI are an attractive prospect for lenders' growing capacity as the NPLs are gradually resolved. 

 

Further details of the developments with respect to each investment are provided in the Investment Manager's report under section C.

 

There is no easy solution to realising any of DCI's investments. However, since our appointment, the Board and DCP have been working together to try to formulate strategies to achieve realisations that will enable the Company's liabilities gradually to be extinguished. The Company and DCP intend to initiate formal realisation processes in relation to at least two investments before the end of 2021.

 

Operations of the Company

 

The structure and operations of DCI have changed little since the Company was launched in 2005. Internal systems and controls are centralised and entrenched within DCP in Athens. The independent non-executive Directors are of the view that, after 16 years, fresh oversight is desirable, both in terms of bringing best practices to the operation and control of DCI and to reducing the Group's cost base. The Company will be announcing in the near future various changes in this regard.

 

New valuations of all investments will be carried out effective 31 December 2021 in the context of revised instructions provided by the audit committee. The valuation approaches and proposed carrying values/ ranges, will be closely scrutinised by the audit committee before being incorporated into the Company's annual report for 2021.

 

Strategic Review, Extraordinary General Meeting ("EGM") and Shareholder Consultations

 

Immediately following the appointment of the new independent non-executive Directors, the Company announced that a strategic review would be undertaken, focused principally on:

o  the investment portfolio and realisation processes;

o  the investment management arrangements;

o  corporate governance;

o  operating costs; and

o  cash flows.

 

The strategic review, which also includes consideration of the Company's operating structure and service providers,  has progressed and its conclusions will be disclosed in the coming weeks.

 

The Company has committed to holding an EGM before the end of 2021. The Board is proposing that Shareholders consider, inter alia:

-    The length of life of the Company in order to maximize recoverability of value for Shareholders;

-    Amendments to the Investment Management Agreement, with a view to better aligning the interests of DCP and Shareholders;

-    An amended Realisation Resolution to provide clarity as to the investment strategy and framework for the Company during its remaining life; and

-    Adoption of new Memorandum and Articles of Association to provide Shareholders with increased powers and oversight over the Board.

 

Lengthy discussions have been held with DCP since July with a view to reaching a consensus on the possible future terms, structure and operations of the Company. The Board intends to consult with Shareholders in the coming weeks on the outline proposals, with a view to holding the EGM in late November or December 2021.

 

The Board is most appreciative of the confidence and support expressed to date by Shareholders and we look forward to our discussions in the coming weeks.

 

Martin M. Adams 

Chairman 

Dolphin Capital Investors

27 September 2021
 

B. Directors' report

The Directors present their report together with the unaudited financial statements of the Company and its subsidiary undertakings (together the "Group") for the six months ended 30 June 2021.

 

Principal Activities

 

The principal activity of the Group is the development of beachfront properties in the Eastern Mediterranean - Greece, Cyprus and Croatia.

 

Business Review for the period and Future Developments

 

The consolidated statement of comprehensive income for the six month period and the statement of net assets as at 30 June 2021 are set out under section G of this report. The assets of the Group are principally development properties and these are valued twice a year by the Directors based on recommendations from the Investment Manager. In addition, external valuers are contracted in each relevant country at the financial year end to assess the current value of those properties.

 

A review of the development and performance of the Group and of expected future developments has been set out in the Chairman's Statement.

 

No dividends were declared or paid during the financial period under review.

 

Principal Risks and Uncertainties

 

The Group's business is property development in the Eastern Mediterranean. Its principal risks are therefore related to the property market in these countries in general, and also the particular circumstances of the property development projects that it is undertaking.

 

The Directors seek to mitigate and manage these risks through continual review, policy setting and enforcement of contractual rights and obligations. They also regularly monitor the economic and investment environment in countries that the Group operates in and the management of the Group's property development portfolio.

 

Directors
 

The Directors of the Company who held office throughout the financial period and up to the date of this report were as follows:

·    Andrew Coppel - appointed 5 October 2015, resigned 30 June 2021

·    Miltos Kambourides

·    Mark Townsend - appointed 24 February 2015, resigned 30 June 2021

·    Graham Warner - appointed 24 February 2015, resigned 30 June 2021

·    Martin Adams - appointed 30 June 2021

·    Nicolai Huls - appointed 30 June 2021

·    Nicholas Paris - appointed 30 June 2021
 

On 30 June 2021, Andrew Coppel resigned as Chairman of the Board of Directors and Martin Adams was elected to that role.

 

All Directors are or were independent non-executive Directors except Miltos Kambourides, who is considered to be non-independent because of his role as the founder and majority owner of Dolphin Capital Partners Limited, the Company's Investment Manager.

 

Directors' remuneration during the six months ended 30 June 2021

 

The Directors remuneration details during the period of this report were as follows:

 

Director	Director's fees (Euros)	Termination payment (Euros)	Total (Euros)
Andrew Coppel *	71,455	32,155	103,610
Miltos Kambourides **	--	--	--
Mark Townsend *	25,009	3,750	28,759
Graham Warner *	53,592	8,039	61,631

 

*Andrew Coppel, Mark Townsend and Graham Warner resigned as Directors on 30 June 2021 and the Board on which they served awarded them termination payments in exchange for each of them waiving any rights that they had to make claims against the Company.

 

**Miltos Kambourides continued to waive his right to collect a Director's fee from the Company in light of his involvement as the founder and majority owner of the Company's Investment Manager.

 

*** Martin Adams, Nicola Huls and Nicholas Paris were appointed as Directors by the outgoing Directors on 30 June 2021 and therefore no fees were due to them in the period under review. On 1 July 2021, the new Directors announced that the aggregate remuneration henceforth of all Directors would be limited to Euros 200,000 compared to remuneration paid of Euros 379,000 in the year ended 31 December 2020 and Euros 496,000 in the year ended 31 December 2019.

 

Directors' interests 

 

The interests of the Directors in the Company's shares as at 20 September 2021 were as follows:

 

Director	Numbers of Common Shares of Euros 0.01 each held
Nicolai Huls - direct shareholding - Director of Discover Investment Company which owns 30,026,849 shares     Miltos Kambourides - indirect shareholding*  *75% shareholder of Dolphin Capital Partners that owns 88,025,342 shares	775,000     66,019,006

 

Board committees

 

The Directors have appointed an Audit Committee to oversee the financial reporting of the Group and ensure that adequate internal controls are in place to manage the risks associated with the business. Until their resignation as Directors on 30 June 2021, Graham Warner and Mark Townsend served on the Audit Committee with Graham Warner being the Chair of it. From 1 July 2021, Nicholas Paris and Nicolai Huls have served on the Audit Committee with Nicholas Paris being its Chair.

 

In addition, the Directors have appointed a Nomination & Corporate Governance Committee to review the effectiveness of the Board and recommend any changes to it and oversee the corporate governance policies of the Company. Until their resignations as Directors, Mark Townsend and Andrew Coppel served on the Committee with Mark Townsend being the Chairman. From 1 July 2021, Nicola Huls, Martin Adams and Nicholas Paris have served on the Committee with Nicola Huls being the Chairman.

 

Management of the Group

 

The Directors delegated the investment management of the Group to Dolphin Capital Partners Limited in accordance with an agreement dated 9 April 2019, which is due to expire on 31 December 2021.

 

Substantial Shareholders

 

The Directors are aware of the following direct and indirect interests comprising more than 3% of the issued share capital of the Company as at 31 August 2021, which is the latest practicable date before the publication of this report:

	Number of Common Shares held	Percentage of issued Share Capital (%)
JO Hambro Capital Mgt Ltd	93,386,413	10.32%
Fortress Investment Group	88,997,152	9.84%
Dolphin Capital Holdings*	88,025,342	9.73%
683 Capital Mgt LLC	83,210,181	9.20%
Peter Gyllenhammar	70,000,000	7.74%
Forager Funds Mgt	64,100,000	7.09%
Progressive Capital Partners Ltd	53,787,814	5.95%
Lars Bader	50,480,600	5.58%
Oak Hill Advisors	39,924,828	4.41%
Discover Investment Company**	30,026,849	3.32%
*Miltos indirectly holds 66,019,006 shares **Nicolai Huls is a Director of Discover Investment Company

 

 

 

 

Continuation of the Company

 

At an Extraordinary General Meeting ("EGM") of Shareholders held on 2 May 2019, Shareholders approved the continuation of the Company until 31 December 2021 in order to continue to pursue the New Asset Strategy, which had been adopted in December 2016, of disposing of all of the assets of the Company. In addition, they approved a revised Investment Management Agreement ("IMA") reducing the fixed management fees to €3.6 million per annum and introducing a variable management fee whose level would be tied to distributions made to Shareholders. A performance fee arrangement from the previous IMA also continues to apply.

 

The Board intends to convene an EGM before 31 December 2021, at which a number of resolutions will be proposed. 

 

 

On behalf of the Board                 

 

Dolphin Capital Investors

27 September 2021

 

 

 

C. Investment Manager's Report

 

C.1.        Business Overview

During the first nine months of 2021 we focused on enhancing the value of our portfolio assets, while addressing the day-to-day challenges of COVID-19:

·    progressing construction works at OOKI and Kilada;

·    adjusting our retail and project sales and marketing strategies at a time of travel restrictions and social distancing measures;

·    securing liquidity at the DCI level to meet all our operational expenses for at least 12 months;

·    making permitting advances across our asset portfolio; and

·    monitoring our operational budgets and reducing overhead costs.

 

Following the drawdown of the €15.0 million bridge financing, Dolphin's liquidity is secured for at least 12 months, allowing us to focus on the implementation of the Company's strategy to realise the value of our diverse asset portfolio in order to maximise cash returns for our shareholders.

 

C.2.        Major Assets Review

·    One&Only at Kea Island, Greece - www.oneandonlyresorts.com/kea-island

o  Works continued in all areas of the project. The majority of the structural works related to the hotel area of the project have been completed, with the structure of the main building having been completed with only the roof remaining to be poured. Approximately two thirds of the guest room structural works are complete, with an aim to complete all guest room structures prior to the end of 2021. Within the guest room structures the mechanical, electrical and finishes works are underway, while in the site areas infrastructure services are being installed as well as stone steps and walls are being erected. Following the approval of the mock up room, procurement of loose and fixed furniture has also begun. The marine works of the dock are complete. In addition, the construction works of the spa commenced in Q2 2021 with excavation and foundation works in progress. The beach club design is progressing in coordination with the operator requirements, with an aim to commence on site works prior to the end of 2021, while works for the first sold villas also commenced, and will proceed in conjunction with the construction of the resort.

 

o  The raising of the profile of the project and more specifically of the One&Only Kea Island Private Homes ("OOKI PHs") continues, in close co-operation with the One&Only sales and marketing teams and through several marketing activities. A website has been created within the general One&Only website (www.oneandonlyresorts.com/kea-island), including online enquiries, alongside a series of marketing collateral (printed and digital) showcasing the OOKI PHs available for sale as well as the destination. The international PR campaign is underway with ongoing extensive publicity in high profile publications such as The Times, Robb Report, Vogue and Tatler. A number of initiatives are underway in collaboration with Sotheby's Realty UK, who act as advisors. Furthermore, several promotional activities for the OOKI PH are underway in collaboration with One&Only and their resorts which are currently in operation. Most activities are online targeted promotional sales actions, via social media, newsletters, EDMs, webinars, presentations to journalists and digital presentations to potential clients. Several site visits have been conducted in the last few months.

o  A total of nine sales of Private Homes have been concluded to date, including all five one-bedroom units available for sale with a guaranteed yield. Most buyers come from Western European countries and are very familiar with the One & Only brand. Sales officially launched in June 2020 and a number of promotional activities to showcase the OOKI Private Homes have been undertaken with One & Only, agents and via connectors. An additional four Private Homes are expected to be signed by the end of the year which will bring total aggregate sales value to over €45 million.

 

·    Kilada, Greece - www.mykilada.com

o Construction works at the Kilada golf course are progressing, albeit there were some delays due to the presence of antiquities for which coordination with the archaeological department was required. The rough earthworks in approximately half the golf fairways have been completed, together with the excavation and lining of the irrigation lake. In parallel, the infrastructure works for the residential lots have advanced. Furthermore, the specialized golf contractor has been mobilized and is working in the areas where rough earthworks are complete. The golf clubhouse contractor has also been appointed and expected to mobilize on site within Q3 2021.

o The notarial Deed for the acquisition of 24 founder plots in Kilada by Amanzoe for a consideration of €10.0 million was concluded on 2 August 2021. Together with the €12.0 million preferred equity investment into Kilada injected by an international family office, these are expected to fully meet all project development costs for phase one.

o The project's PR, sales and marketing activities commenced in May 2021 and are underway with our network of consultants as well as with specific real estate agents. An advertising campaign is also underway.

 

·    Aristo (a 47.9% affiliate) - www.aristodevelopers.com 

o The termination of the Cyprus citizenship investment programme and the travel restrictions imposed in both China and Cyprus in the aftermath of the COVID-19 breakout continue to create a major obstacle to Aristo's sales efforts.

o 42 homes and plots were sold during the first six months of 2021, representing total sales of €8.6 million, down 12% compared to €9.8 million for the same period in 2020.

o 50 homes and plots were sold in total up to the end of August 2021, representing total sales of €11.7 million, up 8% compared to €10.8 million for the same period in 2020.

	Six months to 30 June 2021	Six months to 30 June 2020	Eight months to 31 August 2021	Eight months to 31 August 2020
RETAIL SALES
New sales booked	€8.6m	€9.8m	€11.7m	€10.8m
% change	(12)%		8%
Units sold	42	31	50	34
% change	35%		47%
CLIENT ORIGIN
Cyprus & Other EU	81%	--	68%	--
China & Other Asia	8%	81%	9%	83%
MENA	5%	11%	11%	10%
UK	6%	--	4%	--
Russia	--	8%	8%	7%

 

o As announced on 15 October 2020, the Cyprus government cancelled the Cyprus citizenship investment programme with effect from 1 November 2020. The programme allowed foreign investors to apply for Cypriot citizenship upon making a minimum €2.0 million investment in, inter alia, Cyprus property. Aristo had a total of €6.1 million in blocked/escrowed funds as at 30 June 2021 (€9.6 million at YE 2020) relating to the sale of properties under the Cyprus citizenship investment programme and expects to deliver the respective properties to purchasers so that it can draw on these funds within the next 18 months.

 

 

 

D. Group Assets

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

 

	PROJECT	Land site	DCI's	Debt	Real estate value	Loan to real estate	Net Asset Value
		(hectares)	stake	(€m) *	(€m)	asset value (%)	(% of total)
GREECE
1	OOKI	65	33%	--
2	Kilada	224	93%	--
3	Scorpio Bay	172	100%	--
4	Lavender Bay	310	100%	--
5	Plaka Bay	442	100%	--
TOTAL GREECE		1,213		--	122	--	55%
CYPRUS
6	Apollo Heights	447	100%	--
	Aristo	474	47.90%	--
TOTAL CYPRUS		921		--	55**	--	35%
OTHER
7	Livka Bay	63	100%	6.2
8	LaVanta***	7	100%	--
	Itacaré	n/a	13%	--
TOTAL OTHER		70		6.2	24	26%	10%
GRAND TOTAL		2,204		6.2	201****	3%	100%

 

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

**DCI's portfolio in Cyprus includes its equity investment in Aristo Developers Ltd (book value), which owns assets in Cyprus that are subject to Aristo's debt and other obligations.

*** LaVanta was sold on 10 March 2021, to a local investor for a net consideration of €3.2 million.

****Total real estate value includes equity investments (book value) in OOKI, Aristo and Itacare.

 

E. Market Dynamics

The COVID-19 pandemic adverse effect on the travel, real estate and hospitality industry continues during 2021, although recovery is on track as the vaccination programmes picked up.

 

During the first nine months of the year, the foreign travel intent picked up. International travel restrictions and governmental lock-down measures imposed on hotels and resorts in Greece and Cyprus and supply chain delays which impacted our ongoing construction activities continued albeit in milder forms.

 

Provisional data for the summer tourism traffic in Greece are positive and the recent figures released by the Bank of Greece - showing that more than 6 million tourists from abroad have visited Greece - confirm the gradual increase in arrivals and recovery of the sector. In January-June 2021, the balance of travel services marked a surplus of €826 million up from a surplus of €256.0 million in the same period in 2020, while travel receipts rose by 51% compared to the same period of 2020, reaching to €1,108 million.

 

International arrivals in July and August exceeded 65% and 80% respectively, compared to arrivals recorded during the respective months of 2019.

 

In addition to the above, according to the Alpha Bank's bulletin, strong activity was recorded in the short-term rental market since April 2021 along with the countless guest reviews of excellent feedback. The bulletin also stated that business expectations in the sectors related to tourism (accommodation, F&B, travel agencies, etc.) have returned to positive ground and even to levels recorded before the pandemic.

 

In Cyprus, for the period of January - June 2021, tourist arrivals totalled 340,984, increased by 33.4% compared to the 2020 corresponding period, while tourism revenue is estimated at €259.0 million (112% higher than 2020 corresponding period of 2020).

 

With regards to real estate industry, the PWC Emerging Trends Europe report reveals that COVID-19 and the widespread problems around have encouraged increasing numbers of investors and investment managers to look beyond real estate's bond-like credentials and to assess the underlying operational risk of the occupiers. And though it is too early to draw conclusions on the consequences for values, it is clear that the movement towards property as a service, or operational asset class, is an accelerating trend.

 

In addition to that and according to Savills (Impacts, 2021), the pandemic has had an impact on what High-net-worth individuals s and Ultra-High-Net-Worth Individuals have wanted from their primary residences and second homes and outlines the desire for more space, both inside and out.

 

F. Outlook

The Company's main objectives for the remainder of 2021 remain to:

1.    execute further portfolio asset disposals;

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

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

4.    progress planning and permitting selectively for the remaining portfolio; and

5.    effectively manage COVID-19 related challenges.

 

Miltos Kambourides Managing Partner Dolphin Capital Partners 27 September 2021

 

G. Financial results for the first half of 2021

G.1. Consolidated statement of profit or loss for the first half of 2021

Financial Results

Loss after tax for the period ended 30 June 2021 attributable to owners of the Company amounted to €3.0 million (H1 2020: loss of €5.4 million). Loss per share was €0.003 compared to €0.006 in the same period last year.

Consolidated statement of profit or loss and other comprehensive income

For the six-month period ended 30 June 2021   

		From 1 January 2021 to 30 June 2021	From 1 January 2020 to 30 June 2020
		€'000	€'000
CONTINUING OPERATIONS
Revenue		3,049	2,007
Cost of sales		(2,046)	(1,697)
Gross profit		1,003	310
Disposal of investments in subsidiaries		-	336
Change in valuations		(228)	(2,144)
Investment Manager remuneration		(1,800)	(1,800)
Directors' remuneration		(194)	(205)
Depreciation charge		(38)	(19)
Professional fees		(1,045)	(1,061)
Administrative and other expenses		(517)	(505)
Total operating and other expenses		(3,822)	(5,398)
Results from operating activities		(2,819)	(5,088)
Finance income		112	-
Finance costs		(819)	(623)
Share of losses of equity-accounted investees, net of tax		12	(515)
Loss before taxation		(3,514)	(6,226)
Taxation		360	641
Loss		(3,154)	(5,585)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Share of revaluation on equity-accounted investees		6	-
Foreign currency translation differences		(886)	(271)
Other comprehensive income, net of tax		(880)	(271)
Total comprehensive income		(4,034)	(5,856)
Loss attributable to:
Owners of the Company		(3,007)	(5,375)
Non-controlling interests		(147)	(210)
		(3,154)	(5,585)
Total comprehensive income attributable to:
Owners of the Company		(3,889)	(5,646)
Non-controlling interests		(145)	(210)
		(4,034)	(5,856)
Loss per share
Basic and diluted loss per share (€)		(0.003)	(0.006)

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

 

Revenue

Revenues of €3.0 million (31 June 2020: €2.0 million), were derived from the following sources:

	H1 2021 € million	H1 2020 € million
Sale of trading & investment properties	3.0	1.5
Other income	-	0.5
TOTAL	3.0	2.0

 

 Sale of trading & investment properties is attributable to Lavanta sales while in H1 2020 it was attributable to the sale of a land plot located outside the Kilada development perimeter.

Cost of sales

Cost of sales comprises the following:

	H1 2021 € million	H1 2020 € million
Cost of sales related to:
Sales of trading and investment properties	2.0	1.7
TOTAL	2.0	1.7

 

Professional Fees

The charge for the period was €1.0 million (H1 2019: €1.1 million) and comprises the following:

	H1 2021 € million	H1 2020 € million
Legal & Administrator fees	0.3	0.3
Auditors' remuneration	0.1	0.1
Accounting expenses	0.1	0.1
Project design and development fees	0.3	0.4
Consultancy fees	0.1	0.1
Other professional fees	0.1	0.1
TOTAL	1.0	1.1

 

Administrative and other expenses

The administrative and other expenses amounted to €0.5 million (H1 2020: €0.5 million) and are analysed as follows:

	H1 2021 € million	H1 2020 € million
Marketing and advertising expenses	0.0	0.1
Personnel expenses	0.3	0.2
Other	0.2	0.2
TOTAL	0.5	0.5

 

 

G.2. Consolidated statement of financial position as at 30 June 2021

		30 June 2021	31 December 2020
		€'000	€'000
Assets
Property, plant and equipment		5,864	4,855
Investment property		76,326	76,303
Equity-accounted investees		60,696	60,674
Other investments		445	655
Non-current assets		143,331	142,487
Trading properties		57,632	59,769
Receivables and other assets		1,171	1,330
Cash and cash equivalents		3,525	1,661
Current assets		62,328	62,760
Total assets		205,659	205,247
Equity
Share capital		9,046	9,046
Share premium		569,847	569,847
Retained deficit		(442,054)	(439,047)
Other reserves		7,922	8,802
Equity attributable to owners of the Company		144,761	148,648
Non-controlling interests		6,895	6,523
Total equity		151,656	155,171
Liabilities
Loans and borrowings		4,861	2,802
Lease liabilities		3,384	3,376
Deferred tax liabilities		7,652	8,000
Trade and other payables		20,225	20,366
Prepayments from clients		-	109
Non-current liabilities		36,122	34,653
Loans and borrowings		7,657	6,244
Lease liabilities		28	29
Trade and other payables		10,083	9,150
Prepayments from clients		113	-
Current liabilities		17,881	15,423
Total liabilities		54,003	50,076
Total equity and liabilities		205,659	205,247
Net asset value ('NAV') per share (€)		0.16	0.16

 

The reported NAV as at 30 June 2021 is presented below:

	As at 30 June 2021		As at 31 December 2020		Variation since 31 December 2020
	€	£	€ £		€%	£%
Total NAV before DTL (million)	152	131	157	142	(2.7)	(7.6)
Total NAV after DTL (million)	145	124	149	135	(2.6)	(7.5)
NAV per share before DTL	0.17	0.15	0.17	0.16	(2.7)	(7.6)
NAV per share after DTL	0.16	0.14	0.16	0.15	(2.6)	(7.5)

___________

Notes:

1.   Euro/GBP rate 0.85946 as at 30 June 2021 and 0.90453 as at 31 December 2020.

2.   NAV per share has been calculated on the basis of 904,626,856 issued shares as at 30 June 2021 and as at 31 December 2020.

 

Total Group NAV as at 30 June 2021 was €152.0 million and €145.0 million before and after DTL respectively. This represents a decrease of €4.2 million (2.7%) and €3.9million (2.6%) respectively, from the 31 December 2020 figures. Given that no valuation of the Company's portfolio took place as at 30 June 2021, the NAV reduction is mainly due to Dolphin's regular operational, corporate, finance and management expenses.

Sterling NAV per share as at 30 June 2021 was 0.15p before DTL and 0.14p after DTL and decreased by 7.6% and 7.5% before and after DTL respectively, compared to the 31 December 2020 figures. The depreciation of Euro versus the Sterling during the period of approximately 5.0% enhanced the Euro decrease in NAV.

The Company's consolidated assets of €206.0 million include €140.0 million of real estate assets, €61.0 million of equity-accounting investees (which reflects our 33% shareholding in OOKI as well as the Company's 47.9% interest in Aristo), €1.0 million of trade and other receivables, and €4.0 million in cash.

The figure of €140.0 million of real estate assets (property, plant and equipment, trading properties and investment property) represents the fair market valuations conducted as at 31 December 2020 for both freehold and long leasehold interests.

The Company's consolidated liabilities (excluding DTL) total €46.0 million and mainly comprise €30.0 million of trade and other payables as well as €16.0 million of interest bearing loans and finance lease obligations. Trade and other payables comprise mainly €21.0 million of option contracts to acquire land in the Company's Lavender Bay project.

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

 

 

Condensed consolidated interim statement of financial position

As at 30 June 2021

		30 June 2021	31 December 2020
	Note	€'000	€'000
Assets
Property, plant and equipment	14	5,864	4,855
Investment property	15	76,326	76,303
Equity-accounted investees	17	60,696	60,674
Other investments	16	445	655
Non-current assets		143,331	142,487
Trading properties	18	57,632	59,769
Receivables and other assets	19	1,171	1,330
Cash and cash equivalents	20	3,525	1,661
Current assets		62,328	62,760
Total assets		205,659	205,247
Equity
Share capital	21	9,046	9,046
Share premium	21	569,847	569,847
Retained deficit		(442,054)	(439,047)
Other reserves		7,922	8,802
Equity attributable to owners of the Company		144,761	148,648
Non-controlling interests		6,895	6,523
Total equity		151,656	155,171
Liabilities
Loans and borrowings	22	4,861	2,802
Lease liabilities	23	3,384	3,376
Deferred tax liabilities	24	7,652	8,000
Trade and other payables	25	20,225	20,366
Prepayments from clients		-	109
Non-current liabilities		36,122	34,653
Loans and borrowings	22	7,657	6,244
Lease liabilities	23	28	29
Prepayments from clients		113	-
Trade and other payables	25	10,083	9,150
Current liabilities		17,881	15,423
Total liabilities		54,003	50,076
Total equity and liabilities		205,659	205,247
Net asset value ('NAV') per share (€)	26	0.16	0.16

 

 

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

For the six-month period ended 30 June 2021

		From 1 January 2021 to 30 June 2021	From 1 January 2020 to 30 June 2020
	Note	€'000	€'000
Continuing operations
Revenue	6	3,049	2,007
Cost of sales	7	(2,046)	(1,697)
Gross profit		1,003	310
Disposal of investments in subsidiaries	8A	-	336
Change in valuations	8B	(228)	(2,144)
Investment Manager remuneration	27.2	(1,800)	(1,800)
Directors' remuneration	27.1	(194)	(205)
Depreciation charge		(38)	(19)
Professional fees	10	(1,045)	(1,061)
Administrative and other expenses	11	(517)	(505)
Total operating and other expenses		(3,822)	(5,398)
Results from operating activities		(2,819)	(5,088)
Finance income		112	-
Finance costs		(819)	(623)
Share of profits/(losses) of equity-accounted investees, net of tax		12	(515)
Loss before taxation		(3,514)	(6,226)
Taxation	12	360	641
Loss		(3,154)	(5,585)
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Share of revaluation on equity-accounted investees		6	-
Foreign currency translation differences		(886)	(271)
Other comprehensive income, net of tax		(880)	(271)
Total comprehensive income		(4,034)	(5,856)
Loss attributable to:
Owners of the Company		(3,007)	(5,375)
Non-controlling interests		(147)	(210)
		(3,154)	(5,585)
Total comprehensive income attributable to:
Owners of the Company		(3,889)	(5,646)
Non-controlling interests		(145)	(210)
		(4,034)	(5,856)
Loss per share
Basic and diluted loss per share (€)	13	(0.003)	(0.006)

 

Condensed consolidated interim statement of changes in equity

For the six-month period ended 30 June 2021

	Attributable to owners of the Company
	Share	Share	Translation	Revaluation	Retained		Non-controlling	Total
	capital	premium	reserve	reserve	deficit	Total	interests	equity
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Balance at 1 January 2020	9,046	569,847	8,233	326	(417,905)	169,547	5,681	175,228
TOTAL COMPREHENSIVE INCOME
Loss	-	-	-	-	(5,375)	(5,375)	(210)	(5,585)
Other comprehensive income
Foreign currency translation differences	-	-	(271)	-	-	(271)	-	(271)
Total other comprehensive income	-	-	(271)	-	-	(271)	-	(271)
Total comprehensive income	-	-	(271)	-	(5,375)	(5,646)	(210)	(5,856)
TRANSACTIONS WITH OWNERS OF THE COMPANY
Changes in ownership interests in subsidiaries
Disposal of interests without a change in control	-	-	-	-	-	-	414	414
Total transactions with owners of the Company	-	-	-	-	-	-	414	414
Balance at 30 June 2020	9,046	569,847	7,962	326	(423,280)	163,901	5,885	169,786
Balance at 1 January 2021	9,046	569,847	8,337	465	(439,047)	148,648	6,523	155,171
TOTAL COMPREHENSIVE INCOME
Loss	-	-	-	-	(3,007)	(3,007)	(147)	(3,154)
Other comprehensive income
Share of revaluation on equity accounted investees	-	-	-	6	-	6	2	8
Foreign currency translation differences	-	-	(886)	-	-	(886)	-	(886)
Total other comprehensive income	-	-	(886)	6	-	(880)	2	(878)
Total comprehensive income	-	-	(886)	6	(3,007)	(3,887)	(145)	(4,032)
TRANSACTIONS WITH OWNERS OF THE COMPANY
Changes in ownership interests in subsidiaries
Disposal of interests without a change in control	-	-	-	-	-	-	517	517
Total transactions with owners of the Company	-	-	-	-	-	-	517	517
Balance at 30 June 2021	9,046	569,847	7,451	471	(442,054)	144,761	6,895	151,656

 

 

Condensed consolidated interim statement of cash flows

For the six-month period ended 30 June 2021

		From 1 January 2021 to 30 June 2021	From 1 January 2020 to 30 June 2020
		€'000	€'000
Cash flows from operating activities
Loss		(3,154)	(5,585)
Net change in fair value of investment property		-	2,144
Gain on disposal of investment in subsidiaries		-	(336)
Share of (profits)/losses in equity-accounted investees		(12)	515
Other adjustments		(594)	(256)
		(3,760)	(3,518)
Changes in:
Receivables		159	144
Payables		792	157
Prepayments from clients		4	228
Cash used in operating activities		(2,805)	(2,989)
Tax paid		(3)	(46)
Net cash used in operating activities		(2,808)	(3,035)
Cash flows from investing activities
Proceeds from disposal of subsidiaries, net of cash disposed of		-	(1)
Net (acquisitions)/disposals of investment property		(23)	1,602
Net acquisitions of property, plant and equipment		(1,047)	(723)
Net change in trading properties		2,100	-
Net cash from investing activities		1,030	878
Cash flows from financing activities
Change in loans and borrowings		3,656	1,925
Change in lease liabilities		(14)	8
Interest paid		-	(170)
Net cash from financing activities		3,642	1,763
Net increase/(decrease) in cash and cash equivalents		1,864	(394)
Cash and cash equivalents at the beginning of the period		1,661	2,854
Cash and cash equivalents at the end of the period		3,525	2,460
For the purpose of the condensed consolidated interim statement of cash flows, cash and cash equivalents consist of the following:
Cash in hand and at bank		3,525	2,460
Cash and cash equivalents at the end of the period		3,525	2,460