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Lanitis Golf Public Co Ltd
Annual / Quarterly Financial Statement • Apr 26, 2023
2517_10-k_2023-04-26_b82eb07f-a638-4264-8a74-431ea9cd8ecc.pdf
Annual / Quarterly Financial Statement
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Γεωργίου Γενναδίου αρ. 10 Αγαθάγγελος Κωρτ, 3ος΄οροφος Γραφείο 303 3041 Λεμεσός – Κύπρος
Τηλ.: +357 25871600 Φαξ: +357 25362001
Ανακοίνωση
κ. Νίκο Τρυπάτσα Αναπληρωτή Γενικό Διευθυντή Χ.Α.Κ. Λευκωσία
26 Απριλίου, 2023
Αγαπητέ κ. Τρυπάτσα,
Θέμα: Έγκριση και ανακοίνωση των Ελεγμένων Οικονομικών Καταστάσεων της Lanitis Golf Public Co Limited, για το έτος που έληξε στις 31 Δεκεμβρίου 2022
Συμφώνως των κανονισμών της Αναδυομένης Αγοράς του Χρηματιστηρίου Αξιών Κύπρου («Χ.Α.Κ.»), δια της παρούσης μας επιθυμούμε να σας πληροφορήσουμε ότι το διοικητικό συμβούλιο της Lanitis Golf Public Co Limited (η «Εταιρεία»), μελέτησε και έχει εγκρίνει τις Ετήσιες Οικονομικές Καταστάσεις για το έτος που έληξε στις 31 Δεκεμβρίου 2022 (η «Έκθεση»), η οποία ετοιμάστηκε σύμφωνα με τα Διεθνή Λογιστικά Πρότυπα και τα Διεθνή Πρότυπα Οικονομικής Αναφοράς, η οποία επισυνάπτεται στην παρούσα ανακοίνωση.
Η πλήρης Έκθεση θα είναι διαθέσιμη στα γραφεία της Εταιρείας που βρίσκονται στο Αγρόκτημα Λανίτη, στο Φασούρι, Λεμεσός και στην ιστοσελίδα του Χρηματιστηρίου Αξιών Κύπρου (www.cse.com.cy).
Με εκτίμηση, Εκ μέρους της Εταιρείας
Παναγιώτης Μ. Χαραλάμπους για P&D Secretarial Services Ltd Γραμματέας
Report and financial statements 31 December 2022
Contents
| Page | |
|---|---|
| Board of Directors and other officers | 1 |
| Declaration of the members of the Board of Directors and the Company Officials for the drafting of the financial statements |
2 |
| Management Report | 3 – 5 |
| Independent Auditor's Report | 6 – 10 |
| Statement of profit and loss and other comprehensive income | 11 |
| Balance sheet | 12 |
| Statement of changes in equity | 13 |
| Statement of cash flows | 14 |
| Notes to the financial statements | 15 – 43 |
Board of Directors and other officers
Board of Directors
Platon E. Lanitis (Chairman) Marios E. Lanitis Costas Charitou Demetris Solomonides Kevin Valenzia Mark Gasan Alec Mizzi Matthew Portelli
Company Secretary
P & D Secretarial Services Limited
10 Georgiou Gennadiou Street Agathangelos Court, 3rd Floor, 3041, Limassol, Cyprus
Registered office
10 Georgiou Gennadiou Street Agathangelos Court, 3rd Floor 3041, Limassol, Cyprus
Auditors
PricewaterhouseCoopers Limited PwC Central 43 Demostheni Severi Avenue CY-1080 Nicosia P O Box 21612 CY-1591 Nicosia, Cyprus Telephone: + 357 - 22555000 www.pwc.com/cy
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Management Report
1 The Board of Directors presents its report together with the audited financial statements of the Company for the year ended 31 December 2022.
Principal activities and nature of operations of the Company
2 The principal activities of the Company are the development of a special leisure and residential golf course project. The application of the town planning permit with terms and conditions, was approved on 14 November 2012. On 26 July 2019, the Company has also obtained a building permit for the construction of its golf development project. Following a change in group structure on 15 January 2020, the Company has secured sufficient funds to enable it to commence its development plan. In 2021, the Company has begun the construction of the golf project and has also entered into agreements with buyers for the reservation and sale of plots and apartments. During 2022, the Company has entered into an additional agreement for the construction of the golf course. Additionally, agreements have also been entered with new buyers for the sale of apartments, villas and townhouses.
Review of developments, position and performance of the Company's business
3 The Company is the owner of land of about 1.400 decares near the villages of Tserkezoi and Asomatos, in Limassol. The land is located next to the shopping center, My Mall Limassol, the Fasouri Waterpark and the Casino.
4 The Company aims to develop a fully integrated golf and real estate development project on its land. One of the main goals of the master plan is to create a contemporary designed, integrated leisure and residential community project that includes luxurious villas, townhouses and appartments, an 18 hole championship golf course, a golf club, spa and sports center and commercial and retail facilities, such as restaurants and shops.
5 The loss attributable to the shareholders for the year ended 31 December 2022 is €1.318.303 (2021: loss of €1.626.922). During 2022, the Company had no income relating to its business activities since the project is under development. The consultancy fees, financing and other expenses related to the development of the project, are capitalized in the Balance Sheet, under Property, Plant and Equipment and Inventory to the extend that such capitalization is allowed under the Company's accounting policy.
6 During the year ended 31 December 2022, the Company incurred golf development expenditure amounting to €5.437.096 (2021: €5.243.242), which was financed by borrowings from related parties and prepayments received from reservation of plots, appartments, villas and townhouses. As at 31 December 2022, the Company's total assets amounted to €106.464.371 (2021: €94.557.772) and its net assets amounted to €67.974.552 (2021: €69.292.855). The financial position, development and performance of the Company as presented in these financial statements are considered satisfactory.
Principal risks and uncertainties
7 The principal risks and uncertainties faced by the Company are disclosed in Notes 1, 6 and 7 of the financial statements.
Management Report (continued)
Use of financial instruments by the Company
8 The Company's activities expose it to a variety of financial risks: credit risk and liquidity risk.
9 The Company does not have a formal risk management policy programme. Instead the susceptibility of the Company to financial risks such as credit risk and liquidity risk is monitored as part of its daily management of the business.
Credit risk
10 Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments carried at amortised cost and deposits with banks and financial institutions.
11 Credit risk is managed on a group basis. For banks and financial institutions, only independently rated parties with a minimum rating of 'C' are accepted. The utilisation of credit limits is regularly monitored. The company's investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.
12 The Company's credit risk arises from financial assets at amortised cost amounting to €385.223 (2021: €333.907) and bank balances amounting to €10.128.354 (2021: €7.006.640). As of 31 December 2022, all financial assets subject to credit risk were fully performing (stage 1).
Liquidity risk
13 Management monitors the current liquidity position of the Company based on expected cash flows and expected revenue receipts. On a long-term basis, liquidity risk is defined based on the expected future cash flows at the time of entering into new credit facilities or leases and based on budgeted forecasts. Management believes that it is successful in managing the Company's liquidity risk.
Future developments of the Company
14 During the first quarter of 2023, the Company continued with the sale of appartments, villas and townhouses. Furthermore, the Company continues with the construction of the project's infrastructure which is expected to be completed over the next two years. During 2023, the construction of the first residential units are expected to be commenced.
Results
15 The Company's results for the year are set out on page 11. The loss for the year is carried forward.
Independent Auditor's Report
To the Members of Lanitis Golf Public Co Limited
Report on the Audit of the Financial Statements
Our opinion
In our opinion, the accompanying financial statements of Lanitis Golf Public Co Limited (the "Company") give a true and fair view of the financial position of the Company as at 31 December 2022, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
What we have audited
We have audited the financial statements which are presented in pages 11 to 43 and comprise:
- the balance sheet as at 31 December 2022;
- the statement of profit and loss and other comprehensive income for the year then ended;
- the statement of changes in equity for the year then ended;
- the statement of cash flows for the year then ended; and
- the notes to the financial statements, which include a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Cyprus and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
PricewaterhouseCoopers Ltd, PwC Central, 43 Demostheni Severi Avenue, CY-1080 Nicosia P O Box 21612, CY-1591 Nicosia, Cyprus
T: +357 - 22 555 000, F:+357 - 22 555 001, www.pwc.com.cy
PricewaterhouseCoopers Ltd is a private company registered in Cyprus (Reg. No.143594). Its registered office is at PwC Central, 43 Demostheni Severi Avenue, CY-1080 Nicosia. A list of the company's directors, including for individuals the present and former (if any) name and surname and nationality, if not Cypriot and for legal entities the corporate name, is kept by the Secretary of the company at its registered office. PwC refers to the Cyprus member firm, PricewaterhouseCoopers Ltd and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
| Key Audit Matter | How our audit addressed the Key Audit Matter |
|---|---|
| Impairment assessment of Property, Plant and | |
| Equipment and determination of net realisable | |
| value for inventories |
Refer to Note 4, "Summary of Significant Accounting Policies", Note 7, "Critical Accounting Estimates and Judgements", Note 13, "Property, Plant and Equipment" and Note 18, "Inventories".
The Company has begun the development of its land to a special leisure and residential golf course project and has also entered into agreements with buyers for the reservation and sale of plots, appartments, villas and townhouses.
As at 31 December 2022 the carrying value of Inventories amounted to €85.302.433 representing approximately 80% of Company's total assets and the carrying value of land for the construction of the golf course and commercial activities amounted to €6.130.866 representing approximately 6% of the Company's total assets. Inventories are stated at the lower of cost and net realisable value in accordance with the provisions of IAS 2 whilst land for the construction of the golf course and commercial activities is classified as Property, Plant and Equipment and is stated at cost less impairment in accordance with the provisions of IAS 16.
For the purposes of assessing the net realisable value / recoverable amount the Board of Directors utilised the valuation prepared by management using the discounted cash flow approach. Our audit procedures focused on assessing any need to write down the above assets to their net realisable value / recoverable amount at 31 December 2022 due to the size of these assets and the level of judgement required in making these assessments.
We have performed the following audit procedures to address the risks of material misstatement associated with this Key Audit Matter:
- We obtained an understanding of the process followed by management to determine whether there is a need to write down Property, Plant and Equipment and Inventories to recoverable amount/net realisable value and have assessed the design and implementation of the relevant internal controls.
- We evaluated the competency and capabilities of the Company's management in the context of preparing the discounted cash flow model in relation to the project.
- We confirmed the existence and ownership of land by obtaining and reviewing the title deeds and visiting the site. We obtained and verified the validity of the licenses issued to the Company by various Government departments in relation to the development of the Golf Course. The ownership of the land and the validity of the licenses form important parameters in the valuation of the project.
- We assessed, with the involvement of auditor's experts, the appropriateness of the methodology used for the impairment assessment and whether the critical assumptions made by management were reasonable. Furthermore, we verified the mathematical accuracy of the calculations.
| Key Audit Matter | How our audit addressed the Key Audit Matter |
|---|---|
| • We evaluated the adequacy of the disclosures in the relevant notes to the financial statements. |
|
| The results of the above procedures were considered satisfactory for the purposes of our audit. |
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the information included in the Management Report and the Declaration of the members of the Board of Directors and the Company Officials for the drafting of the financial statements, but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged with governance for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Auditor's Responsibilities for the Audit of the Financial Statements (continued)
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.
- Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats on safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
- • Ιn our opinion, the management report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given is consistent with the financial statements.
- • ln our opinion and in the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit we have not identifιed material misstatements in the management report.
Other Matter
This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor's report is Nicos Α. Theodoulou.
�-�-�kL.
Nicos Α. Theodoulou Certified Public Accountant and Registered Auditor for and on behalf of
PricewaterhouseCoopers Limited Certified Public Accountants and Registered Auditors PwC Central, 43 Demostheni Severi Avenue CY-1080 Nicosia Cyprus
Nicosia, 26 April 2023
Statement of profit and loss and other comprehensive income for the year ended 31 December 2022
| Note | 2022 € |
2021 € |
|
|---|---|---|---|
| Administration expenses | 9 | (1.607.052) | (1.846.047) |
| Operating loss | (1.607.052) | (1.846.047) | |
| Finance costs | 11 | (10.320) | (9.846) |
| Loss before income tax | (1.617.372) | (1.855.893) | |
| Income tax credit | 12 | 299.069 | 228.971 |
| Loss and total comprehensive loss for the year | (1.318.303) | (1.626.922) | |
| Other comprehensive income: | |||
| Loss per share attributable to the equity holders of the Company during the year (expressed in cents per share) (Note 21) |
|||
| - Basic | (47,74) | (58,91) |
The notes on pages 15 to 43 are an integral part of these financial statements.
| AURZ | 2011 | ||
|---|---|---|---|
| Note | を | を | |
| Assers | |||
| Non-current assets | 6.208.236 | 4.475.812 | |
| Property plant and equipment | 13 14 |
154.638 | 135.978 |
| Right of use assets | 15 | 1.083 | 2.085 |
| Intangible assets | 23 | 759.534 | 460,465 |
| Deferred income tax assets | 7.123.441 | 5.074.318 | |
| Current assets | 18 | 85.302.433 | 81.163.491 |
| Inventories | 17 | 3.524.868 | 978 863 |
| Other non-financial assets | 16 | 385 778 | 33 907 |
| Financial assets at amonised cost | 19 | 10.128.406 | 7.007.188 |
| Cash and cash equivalents | 99,340,930 | 89.483.454 | |
| Total assets | 106.464.371 | 94.557.772 | |
| Equity and liabilities | |||
| Capital and reserves | |||
| Share capital | 20 | 4.722.462 | 4.722.462 |
| Capital contribution | 20 | 2,556,501 | 2.556.501 |
| Share premium | 20 | 25.730.893 | 25 7 6 0 393 |
| Retained eamings | 34.964.696 | 36.282.999 | |
| Total equity | 67.974.552 | 69.292.855 | |
| Non-current liabilities | 8 246 613 | ||
| Borrowings | 22 | 8.678.531 32,482 |
85.176 |
| Lease liabilities | 14 | 5,988.947 | 5,988.947 |
| Deferred income tax liabilities | 23 | 14.320.736 | |
| 14.749,960 | |||
| Current liabilities | ুর্গা | 2.716.385 | 1.271.737 |
| Trade and other payables | 90 | 20.265.489 | 8.931.541 |
| Contract liabilities | 14 | 74.85 | 57.237 |
| Lease liabilities | 22 | GB3.666 | 685.605 |
| Borrowings | 27789.859 | 10,944.181 | |
| Total liabilities | 38.489.819 | 25.264.917 | |
| Total enuty and liabilities | 106.464.3741 | 94,557,772 | |
Statement of changes in equity for the year ended 31 December 2022
| Share capital € |
Capital contribution € |
Share premium € |
Retained earnings(1) € |
Total € |
|
|---|---|---|---|---|---|
| Balance at 1 January 2021 | 4.722.462 | 2.556.501 | 25.730.893 | 37.909.921 | 70.919.777 |
| Comprehensive income Loss for the year |
- | - | - | (1.626.922) | (1.626.922) |
| Total comprehensive income for the year | - | - | - | (1.626.922) | (1.626.922) |
| Balance at 31 December 2021/1 January 2022 | 4.722.462 | 2.556.501 | 25.730.893 | 36.282.999 | 69.292.855 |
| Comprehensive income Loss for the year |
- | - | - | (1.318.303) | (1.318.303) |
| Total comprehensive income for the year | - | - | - | (1.318.303) | (1.318.303) |
| Balance at 31 December 2022 | 4.722.462 | 2.556.501 | 25.730.893 | 34.964.696 | 67.974.552 |
(1) Companies which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence of the Republic Law, by the end of the two years after the end of the year of assessment to which the profits refer, will be deemed to have distributed this amount as dividend. Special contribution for defence at the rate of 17% will be payable on such deemed dividend to the extent that the shareholders for deemed dividend distribution purposes at the end of the period of two years from the end of the year of assessment to which the profits refer, are Cyprus tax residents and domiciled. From 1 March 2019, the deemed dividend distribution is subject to a 1,70% contribution to the National Health System, increased to 2,65% from 1 March 2020, with the exception of April 2020 until June 2020 when the 1,70% rate was applicable.The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of the relevant year by the end of the period of two years from the end of the year of assessment to which the profits refer. This special contribution for defence is paid by the Company for the account of the shareholders.
The notes on pages 15 to 43 are an integral part of these financial statements.
Statement of cash flows for the year ended 31 December 2022
| Note | 2022 € |
2021 € |
|
|---|---|---|---|
| Cash flows from operating activities | |||
| Loss before income tax | (1.617.372) | (1.855.893) | |
| Adjustments for: | |||
| Depreciation of property, plant and equipment | 13 | 25.411 | 22.131 |
| Depreciation of right-of-use assets | 14 | 60.665 | 49.412 |
| Amortisation of intangible assets | 15 | 1.032 | 1.033 |
| Interest expense - bank borrowings | 11 | 314 | 205 |
| Interest expense - Lease Liabilities | 11 | 9.969 | 9.451 |
| Gain from lease modifications | (4.942) | - | |
| (1.524.923) | (1.773.661) | ||
| Changes in working capital: | |||
| Inventories | 18 | (3.728.455) | (4.986.187) |
| Other non-financial assets | (2.546.000) | (852.144) | |
| Financial assets at amortised costs | (51.316) | (185.697) | |
| Trade and other payables | 1.444.646 | 611.876 | |
| Contract liabilities | 11.333.928 | 8.931.541 | |
| Cash generated from operations | 4.927.880 | 1.745.728 | |
| Cash flows from investing activities | |||
| Purchases of property, plant and equipment | 13 | (1.738.524) | (335.755) |
| Proceeds from sale of property, plant and equipment | 13 | 2.121 | - |
| Purchases of intangibles | 15 | - | (3.098) |
| Principal elements of lease payments | 14 | (69.945) | (56.407) |
| Net cash used in investing activities | (1.806.348) | (395.260) | |
| Cash flows from financing activities | |||
| Interest paid | (314) | (205) | |
| Net cash used in financing activities | (314) | (205) | |
| Net increase in cash and cash equivalents | 3.121.218 | 1.350.263 | |
| Cash and cash equivalents at beginning of year | 7.007.188 | 5.656.925 | |
| Cash and cash equivalents at end of year | 19 | 10.128.406 | 7.007.188 |
The notes on pages 15 to 43 are an integral part of these financial statements.
Notes to the financial statements
1 General information
Country of incorporation
Lanitis Golf Public Co Limited (the "Company" ) was incorporated in Cyprus on 18 April 2007 as a limited liability company in accordance with the provisions of the Cyprus Companies Law, Cap. 113. On 28 February 2014, the Company was converted from a private limited liability company to a public limited liability company under the Cyprus Companies Law, Cap. 113 and is listed on the Emerging Companies Market of the Cyprus Stock Exchange ("CSE"). Its registered office is at 10 Georgiou Gennadiou Street, Agathangelos Court, 3041, Limassol, Cyprus.
Principal activities
The principal activities of the Company are the development of a special leisure and residential golf course project. The application of the town planning permit with terms and conditions, was approved on 14 November 2012. On 25 July 2019, the Company has also obtained a building permit for construction of its golf development project. In 2021, the Company has begun the construction of the golf project and has also entered into agreements with buyers for the reservation and sale of plots and apartments. During 2022, the Company has entered into an additional agreement for the construction of the golf course. Additionally, agreements have also been entered with new buyers for the sale of apartments, villas and townhouses.
Operating environment of the Company
Covid-19 pandemic
The year 2022 continued to be marked by the effects of the COVID-19 pandemic, the emergence of new variants and the associated measures implemented by various governments globally with a view to delay the spread of the disease, safeguard public health and ensure the economic survival of working people, businesses, vulnerable groups and the economy at large.
To this end, the government of the Republic of Cyprus continued to have in place certain of the measures introduced in 2020 and 2021, and in some cases, introduced new, economically costly measures with the aim of protecting the population from further spread of the disease.
The measures were continuously revised (lifted or tightened) by the Republic of Cyprus during the year taking into consideration the epidemic status in the country.
Industries such as tourism, hospitality and entertainment have been directly and significantly disrupted by these measures. Other industries, such as manufacturing and financial services, have also been indirectly affected.
1 General information (continued)
Operating environment of the Company (continued)
These measures have further restricted the economic activity both in Cyprus and globally and have severely impacted and could continue to negatively impact, businesses, market participants as well as the Cyprus and global economies as they persist for an unknown period of time. Some of those measures were subsequently relaxed, however, as of 31 December 2022, there remains a risk that the authorities may impose additional restrictions in 2023 as a response to possible new variants of the virus.
As a result of the measures imposed by the government, the Company did not face any major implications.
Conflict between Russia and Ukraine
During 2021, the Russian economy continued to be negatively impacted by the ongoing political tension in the region and international sanctions against certain Russian companies and individuals, with the tension intensifying towards the end of 2021 as a result of further developments of the situation with Ukraine. From late February 2022 the conflict between Russia and Ukraine escalated further and the situation remains highly unstable.
In response to the conflict, a number of sanctions have been imposed on Russian entities to restrict them from having access to foreign financial markets, including removing access of several Russian banks to the international SWIFT system.
The EU, UK and US (amongst others) have also imposed sanctions against the Russian central bank, restricting the access of the Russian state to foreign currency reserves, and introduced further asset freezes against designated individuals/entities and sectoral sanctions.
The situation is still evolving and further sanctions and limitations on business activity of companies operating in the region, as well as consequences on the Russian economy in general, may arise but the full nature and possible effects of these are unknown.
Nonetheless, the Company is not significantly impacted from the conflict, as its operations are not affected by the situation however it will continue monitoring the situation and take action if required.
Management has taken and continues to take necessary measures to ensure minimum disruption and sustainability of the Company's operations.
2 Basis of preparation
The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), and the requirements of the Cyprus Companies Law, Cap. 113.
As of the date of the authorization of the financial statements, all International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) that are effective as of 1 January 2022 and are relevant to the Company's operations have been adopted by the EU through the endorsement procedure established by the European Commission.
2 Basis of preparation (continued)
The principal accounting policies applied in the preparation of these financial statements are set out below in Note 4. Apart from the accounting policy changes resulting from the adoption of the new standards, amendments to existing standards and interpretations effective from 1 January 2022, as set out in Note 3, these policies have been consistently applied to all the years presented, unless otherwise stated (refer to Notes 3 and 4).
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and requires management to exercise its judgment in the process of applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 7.
3 Adoption of new or revised standards and interpretations
During the current year the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning 1 January 2022. This adoption did not have a material effect on the accounting policies of the Company.
4 Summary of significant accounting policies
Land development and resale
The Company develops and sells residential properties. Revenue is recognised when control over the property has been transferred to the customer. The properties have generally no alternative use for the Company due to contractual restrictions. However, an enforceable right to payment does not arise until legal title has passed to the customer. Therefore, revenue is recognised at a point in time when the legal title has passed to the customer.
The revenue is measured at the transaction price agreed under the contract. In most cases, the consideration is due when legal title has been transferred. While deferred payment terms may be agreed in rare circumstances, the deferral never exceeds twelve months. The transaction price is therefore not adjusted for the effects of a significant financing component.
Contract assets and contract liabilities
In case the goods transferred or services rendered by the Company as of the reporting date exceed the payments made by the customer as of that date and the Company does not have the unconditional right to charge the client for the services rendered, a contract asset is recognised. The Company assesses a contract asset for impairment in accordance with IFRS 9 using the simplified approach permitted by IFRS 9 which requires expected lifetime losses to be recognised from initial recognition of the contract asset. An impairment of a contract asset is measured, presented and disclosed on the same basis as a financial asset that is within the scope of IFRS 9. The Company recognises any unconditional rights to consideration separately from contract assets as a trade receivable because only the passage of time is required before the payment is due. If the payments made by a customer exceed the services rendered under the relevant contract, a contract liability is recognised.
4 Summary of significant accounting policies (continued)
Contract assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Company, and a failure to make contractual payments for a period of greater than 180 days past due.
Employee benefits
The Company and the employees contribute to the Government Social Insurance Fund based on employees' salaries. In addition, the Company operates a defined contribution scheme the assets of which are held in a separate trustee-administered fund. The scheme is funded by payments from employees and by the Company. The Company's contributions are expensed as incurred and are included in staff costs. The Company has no further payment obligations once the contributions have been paid. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognized termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of IAS37 an involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.
Foreign currency translation
(i) Functional and presentation currency
Items included in the Company's financial statements are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in Euro (€), which is the Company's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
4 Summary of significant accounting policies (continued)
Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the country in which the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. If applicable tax regulation is subject to interpretation, it establishes provision where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of transaction affects neither accounting nor taxable profit or loss. In accounting for the tax effects of on-balance sheet leases, the Company views the right-of-use asset and lease liability separately and considers that the temporary difference on each item does not give rise to deferred tax since the initial recognition exception applies. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the property will be recovered entirely through sale.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on the Company where there is an intention to settle the balances on a net basis.
4 Summary of significant accounting policies (continued)
Current and deferred income tax (continued)
Uncertain tax positions
The Company's uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the end of the reporting period, and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes other than on income are recognised based on management's best estimate of the expenditure required to settle the obligations at the end of the reporting period. Adjustments for uncertain income tax positions, other than interest and fines, are recorded within the income tax charge. Adjustments for uncertain income tax positions in respect of interest and fines are recorded within finance costs and other gains/(losses), net, respectively.
Property, plant and equipment
Land and buildings comprising mainly golf courses under construction and other development activities are shown as costs less subsequent depreciation. Historical cost included expenditure that is directly attributable to the acquisition of property, plant and equipment.
Land and buildings under construction that are not ready for their indented use are not depreciated. Depreciation on other property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values, over their estimated useful lives. The annual depreciation rates are as follows:
| % | |
|---|---|
| Signages | 33 |
| Prefab house | 10 |
| Computer Hardware | 20 |
| Plant and machinery | 10 |
| Furniture and fittings | 10 |
| Motor vehicles | 20 |
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
4 Summary of significant accounting policies (continued)
Property, plant and equipment (continued)
Expenditure for repairs and maintenance of property, plant and equipment is charged to the profit or loss of the year in which they were incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with carrying amount and are recognised in "other gains/(losses) – net" in profit or loss.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to prepare for its intended use, are capitalised as part of the cost of that asset, when it is probable that they will result in future economic benefits to the Company and the costs can be measured reliably.
Leases
The Company is the lessee
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company, with limited exceptions as set out below.
Contracts may contain both lease and non-lease components. The Company has elected not to separate lease and non-lease components and instead accounts for these as a single lease component.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the fixed lease payments (including in-substance fixed payments).
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Company's incremental borrowing rate is used, being the rate that the Company would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Company:
- where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received
- uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by Company, which does not have recent third party financing, and
- makes adjustments specific to the lease, e.g. term, country, currency and security.
4 Summary of significant accounting policies (continued)
Leases (continued)
The Company is the lessee (continued)
The Company is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
- the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date less any lease incentives received;
- any initial direct costs; and
- restoration costs
Any remeasurement of the lease liability arising if the cash flows change based on the original terms and conditions of the lease results in a corresponding adjustment to the right-of-use asset. The adjustment can be positive or negative.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset's useful life. Depreciation on the items of the right-of-use assets is calculated using the straight-line method over their estimated useful lives.
In determining the lease term, management of the Company considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the Company.
Right-of-use assets are reviewed for impairment in accordance with the Company's accounting policy for impairment of non-financial assets.
As an exception to the above, payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
4 Summary of significant accounting policies (continued)
Computer software
Costs that are directly associated with identifiable and unique computer software products controlled by the Company and that will probably generate economic benefits exceeding costs beyond one year are recognised as intangible assets. Subsequently computer software is carried at cost less any accumulated amortisation and any accumulated impairment losses. Expenditure, which enhances or extends the performance of computer software programmes beyond their original specifications is recognised as a capital improvement and added to the original cost of the computer software. Costs associated with maintenance of computer software programmes are charged to the profit or loss of the year in which they were incurred. Computer software costs are amortised using the straight line method over their estimated useful lives, not exceeding a period of five years. Amortisation commences when the computer software is available for use and is included within administrative expenses.
Impairment of non-financial assets
Intangibles that have an indefinite useful life, including goodwill, are not subject to amortisation and are tested annually for impairment or more frequently if events and changes in circumstances indicate that they might be impaired. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets, other than goodwill, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial assets
Financial assets - Classification
The classification depends on the Company's business model for managing the financial assets and the contractual cash flow characteristics of the assets. Management determines the classification of financial assets at initial recognition.
The Company classifies its financial assets at amortised cost. Financial assets at amortised cost are held for collection of contractual cash flows and their cash flows represent solely payments of principal and interest. They are included in current assets, except for maturities greater than twelve months after the balance sheet date. These are classified as non-current assets. The Company's financial assets measured at amortised cost (AC) comprise cash and cash, bank deposits with original maturity over 3 months, trade receivables and financial assets at amortised cost.
4 Summary of significant accounting policies (continued)
Financial assets (continued)
Financial assets - Recognition and derecognition
All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention ("regular way" purchases and sales) are recorded at trade date, which is the date when the Company commits to deliver a financial instrument. All other purchases and sales are recognized when the entity becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in "other gains/(losses)" together with foreign exchange gains and losses.
Financial assets - Measurement
At initial recognition, the Company measures financial assets classified at amortised cost at their fair value plus incremental transaction costs that are directly attributable to the acquisition of the financial assets. Subsequently, these are measured at amortised cost.
Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets.
Financial assets – impairment – credit loss allowance for expected credit losses
The Company assesses on a forward-looking basis the expected credit losses (ECL) for debt instruments measured at AC. The Company measures ECL and recognises credit loss allowance at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within "net impairment losses on financial and contract assets". Subsequent recoveries of amounts for which loss allowance was previously recognised are credited against the same line item.
Debt instruments measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of financial asset assessed for impairment.
Financial assets - Reclassification
Financial instruments are reclassified only when the business model for managing those assets changes. The reclassification has a prospective effect and takes place from the start of the first reporting period following the change.
4 Summary of significant accounting policies (continued)
Financial assets (continued)
Financial assets – write-off
Financial assets are written-off, in whole or in part, when the Company exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. The Company may write-off financial assets that are still subject to enforcement activity when the Company seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
Financial assets – modification
The Company sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Company assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: [any new contractual terms that substantially affect the risk profile of the asset (e.g. profit share or equity-based return), significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Company derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised expected cash flows to assets whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate, and recognises a modification gain or loss in profit or loss.
Classification as cash and cash equivalents
In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. In the balance sheet bank overdrafts are shown within borrowings in current liabilities. Cash and cash equivalents are carried at AC because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at fair value through profit or loss.
4 Summary of significant accounting policies (continued)
Financial assets (continued)
Classification as financial assets at amortised cost
These amounts generally arise from transactions outside the usual operating activities of the Company. These are held with the objective to collect their contractual cash flows and their cash flows represent solely payments of principal and interest. Accordingly, these are measured at amortised cost using the effective interest method, less provision for impairment. Financial assets at amortised cost are classified as current assets if they are due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current assets.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset. Borrowings are classified as current liabilities, unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment (for liquidity services) and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e. when the obligation specified in the contract is discharged, cancelled or expires). The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. Inventories consist of the cost of land and work in progress in connection with the construction of the residential units and infrastructure works, and include raw materials, direct labour, other direct costs and expenses associated with the construction work including borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business less costs to complete.
4 Summary of significant accounting policies (continued)
Share capital and share premium
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Share premium is the difference between the fair value of the consideration receivable for the issue of shares and the nominal value of the shares. Share premium account can only be resorted to for limited purposes, which do not include the distribution of dividends, and is otherwise subject to the provisions of the Cyprus Companies Law on reduction of share capital.
Capital contribution
Capital contribution constitutes contributions made by the Company's shareholders other than for the issue of shares by the Company in their capacity as equity owners of the Company for which the Company has no contractual obligation to repay them. Such contributions are recognised directly in equity as they constitute transactions with equity owners in their capacity as equity owners of the Company.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses.
Prepayments
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Company has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Company. Other prepayments are written off to profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in the income statement.
5 New accounting pronouncements
At the date of approval of these financial statements a number of new standards interpretations and amendments to existing standards are effective for annual periods beginning after 1 January 2022, and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the financial statements of the Company.
6 Financial risk management
(i) Financial risk factors
The Company's activities expose it to a variety of financial risks: credit risk and liquidity risk.
The Company does not have a formal risk management policy programme. Instead the susceptibility of the Company to financial risks such as interest rate risk, credit risk and liquidity risk is monitored as part of its daily management of the business.
• Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation Credit risk arises from cash and cash equivalents, contractual cash flows of debt investments carried at amortised cost and deposits with banks and financial institutions.
(i) Risk management
Credit risk is managed on a individual basis
For banks and financial institutions, the Company has established policies whereby the majority of bank balances are held with independently rated parties with a minimum rating of 'C'.
The Company's investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.
These policies enable the Company to reduce its credit risk significantly.
(ii) Impairment of financial assets
The Company has two types of financial assets/instruments that are subject to the expected credit loss model:
- financial assets at amortised cost (receivables from related parties and other receivables)
- cash and cash equivalents
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of financial asset assessed for impairment. Specifically:
For all financial assets that are subject to impairment under IFRS 9, the Company applies general approach – three stage model for impairment. The Company applies a three-stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter ("12 Months ECL"). If the Company identifies a significant increase in credit risk ("SICR") since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any ("Lifetime ECL"). If the Company determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL.
6 Financial risk management (continued)
(i) Financial risk factors (continued)
• Credit risk (continued) Financial assets at amortised cost
The Company assesses, on an individual basis, its exposure to credit risk arising from financial assets at amortised cost. This assessment takes into account, amongst others, the period the loan receivable or other receivable balance is past due (in days) and history of defaults in the past, adjusted for forward looking information. The Company uses two categories for loans, receivables and other receivables, debt securities which reflect their credit risk and how the loss provision is determined for each of those categories.
The estimated loss allowance for financial assets at amortised cost as at 31 December 2022 and 31 December 2021 was immaterial. All financial assets at amortised cost were performing (Stage 1) as at 31 December 2022 and 31 December 2021.
Cash and cash equivalents
The Company assesses, on an individual basis, its exposure to credit risk arising from cash at bank. This assessment takes into account, ratings from external credit rating institutions and internal ratings, if external are not available.
The gross carrying amounts below represent the Company's maximum exposure to credit risk on these assets as at 31 December 2022 and 31 December 2021:
| Rating | 2022 € |
2021 € |
|
|---|---|---|---|
| Moody's | Baa3 | - | 18.367 |
| Moody's | B1 | - | 6.988.273 |
| Moody's | Ba2 | 10.128.354 | - |
| Total cash at bank | 10.128.354 | 7.006.640 |
The rest of the balance sheet item 'cash and cash equivalents' is cash on hand.
All cash and bank balances were performing (Stage 1) as at 31 December 2022 and 31 December 2021.
The Company does not hold any collateral as security for any cash at bank balances.
The estimated loss allowance on cash and cash equivalents as at 31 December 2022 and 31 December 2021 was immaterial. All cash and cash equivalents were performing (Stage 1) as at 31 December 2022 and 31 December 2021.
• Liquidity risk
The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months, with the exception of borrowings, equal their carrying balances as the impact of discounting is not significant.
6 Financial risk management (continued)
(i) Financial risk factors (continued)
| Less than 1 year € |
Between 1 and 2 years € |
Between 2 to 5 years € |
|
|---|---|---|---|
| At 31 December 2021 | |||
| Borrowings | 683.666 | - | 10.000.000 |
| Trade and other payables (excluding statutory | |||
| liabilities) | 822.627 | - | - |
| Lease liabilities | 63.624 | 105.743 | 32.692 |
| 1.569.917 | 105.743 | 10.032.692 | |
| Less than 1 year € |
Between 1 and 2 years € |
Between 2 to 5 years € |
|
| At 31 December 2022 | |||
| Borrowings | 683.666 | - | 10.000.000 |
| Trade and other payables (excluding statutory | |||
| liabilities) | 2.170.037 | - | - |
| Lease liabilities | 82.180 | 53.575 | 35.125 |
(ii) Capital risk management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 'current and non-current borrowings' as shown in the balance sheet) less cash and cash equivalents. Total capital is calculated as 'equity' as shown in the balance sheet plus net debt.
During 2022, the Company's strategy, which was unchanged from 2021, was to maintain the gearing ratio at low levels. The gearing ratios at 31 December 2022 and 2021 were as follows:
| 2022 € |
2021 € |
|
|---|---|---|
| Total borrowings (Note 22) | 9.362.197 | 8.930.279 |
| Less: cash and cash equivalents (Note 19) | (10.128.406) | (7.007.188) |
| Net (cash and cash equivalents) / debt | (766.209) | 1.923.091 |
| Total equity | 67.974.552 | 69.292.855 |
| Total capital as defined by management | 67.208.343 | 71.215.946 |
| Gearing ratio | 0% | 3% |
7 Critical accounting estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the company's accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
• Impairment test for inventories and property, plant and equipment
Refer to note 13 for the relevant disclosure for the impairment assessment made by the Company's management. A sensitivity analysis has been performed on the key assumption used by management in carrying its assessment. If the selling prices of units were 5% lower then an impairment of €14.947.611 would have been recognised on inventories and property, plant and equipment. If WACC increased from 12% to 13% then an impairment of €2.338.427 would have been recognised on inventories and property, plant and equipment. If construction costs were 5% higher then an impairment of €5.340.097 would have been recognised on inventories and property, plant and equipment. If the sales velocity is extended by one year then no impairment should be recognised on inventories and property, plant and equipment.
8 Revenue
(a) Disaggregation of revenue from contracts with customers
| 2022 € |
2021 € |
|
|---|---|---|
| Revenue from contracts with customers | - | - |
| Total revenue from contracts with customers | - | - |
| (b) Assets and liabilities related to contracts with customers | ||
| 2022 | 2021 | |
| € | € | |
| Current contract liabilities – Sale of inventories (plots, apartments, | ||
| townhouses, villas) not yet delivered | 20.265.469 | 8.931.541 |
| Total contract liabilities | 20.265.469 | 8.931.541 |
9 Expenses by nature
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Depreciation of right-of-use assets(Note 14) | 60.665 | 49.412 |
| Depreciation and amortisation of property, plant and equipment and | ||
| intangibles (Notes 13 and 15) | 26.443 | 23.164 |
| Repairs and maintenance | 22.510 | 20.420 |
| Insurance | 544 | 865 |
| Auditors' remuneration charged by statutory audit firm | 22.000 | 20.000 |
| Auditors' remuneration prior year | 2.167 | 11.000 |
| Staff costs (Note 10) | 702.803 | 679.352 |
| Advertising and promotion | 346.562 | 362.516 |
| Transportation and hospitality expenses | 20.719 | 787 |
| Other expenses | 12.715 | 18.908 |
| Bank charges | 88.408 | 28.753 |
| Municipal and property taxes | 5.180 | 5.177 |
| Motor vehicle expenses | 21.909 | 18.374 |
| Legal Fees | 16.230 | 23.500 |
| Head office administration expenses | 18.000 | 24.000 |
| Mortgages expenses | - | 80.000 |
| Commitment fees | 144.500 | 314.200 |
| Professional Services | 52.252 | 136.433 |
| Entertaining expenses | 13.672 | 11.467 |
| Subscriptions, donations and gifts | 13.572 | 5.447 |
| Utilities expenses | 16.201 | 12.272 |
| Total administrative expenses | 1.607.052 | 1.846.047 |
The total fees charged by the Company's statutory auditor for the statutory audit of the annual financial statements of the Company for the year ended 31 December 2022 amounted to €22.000 (2021: €20.000). The total fees charged by the Company's statutory auditor for the year ended 31 December 2022 for other non-assurance services amounted to €11.500 (2021: €31.000).
10 Staff costs
| 2022 € |
2021 € |
|
|---|---|---|
| Salaries | 564.577 | 555.550 |
| Bonus | 28.245 | 29.331 |
| Social insurance and other costs | 73.708 | 63.759 |
| Provident fund contributions | 24.617 | 19.188 |
| Social cohension fund | 11.656 | 11.524 |
| 702.803 | 679.352 | |
| Average number of staff employed during the year | 11 | 11 |
The Company participates in an external provident fund scheme run by an independent party, which is funded separately and prepares its own financial statements whereby employees are entitled to payment of certain benefits upon retirement or prior termination of service.
11 Finance costs
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Interest and finance charges paid/payable for lease liabilities and financial | ||
| liabilities not at fair value through profit or loss: | ||
| Bank borrowings | 314 | 205 |
| Lease liabilities (Note 14) | 9.969 | 9.451 |
| Total interest and finance charges | 10.283 | 9.656 |
| Net foreign exchange loss | 37 | 190 |
| Total finance costs | 10.320 | 9.846 |
12 Income tax credit
| 2022 € |
2021 € |
|
|---|---|---|
| Deferred tax (Note 23): Tax losses carried forward Income tax credit |
(299.069) (299.069) |
(228.971) (228.971) |
| 2022 € |
2021 € |
|
| Loss before tax | (1.617.372) | (1.855.893) |
| Tax calculated at the applicable corporation tax rate of 12.5% Tax effect of expenses not deductible for tax purposes Tax effect of allowances and income not subject to tax Tax effect of tax losses for which no deferred tax asset was recognised in the |
(202.172) 14.275 (10.885) |
(231.987) 11.581 (8.565) |
| past but it was foreseen in the current year that the Company will be able to utilise them Income tax credit |
(100.287) (299.069) |
- (228.971) |
The Company is subject to income tax on taxable profits at the rate of 12,5% .
Brought forward losses of only five years may be utilized.
Under certain conditions, interest may be exempt from income tax and be subject only to special contribution for defence at the rate of 30%.
In certain cases, dividends received from abroad may be subject to special contribution for defence at the rate of 17%. In addition, in certain cases, dividends received from other Cyprus tax resident companies may also be subject to special contribution for defence.
Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon, etc) are exempt from Cyprus income tax.
13 Property, plant and equipment
| Plant and machinery € |
Computer Hardware and Furniture and fittings € |
Motor vehicles € |
Land and Golf Developme nt € |
Prefab house € |
Signages € |
Total € |
|
|---|---|---|---|---|---|---|---|
| At 1 January 2021 Cost |
5.276 | 19.967 | - | 4.123.327 | - | - | 4.148.570 |
| Accumulated depreciation | (3.694) | (3.100) | - | - | - | - | (6.794) |
| Net book amount | 1.582 | 16.867 | - | 4.123.327 | - | - | 4.141.776 |
| Year ended 31 December 2021 Opening net book amount Additions Interest capitalised during the year Depreciation charge (Note 9) |
1.582 713 - (599) |
16.867 26.559 - (6.910) |
- 3.500 - (700) |
4.123.327 257.055 20.411 - |
- 8.800 - (880) |
- 39.128 - (13.042) |
4.141.776 335.755 20.411 (22.131) |
| Closing net book amount | 1.696 | 36.516 | 2.800 | 4.400.793 | 7.920 | 26.087 | 4.475.812 |
| At 31 December 2021 Cost Accumulated depreciation Net book amount |
5.989 (4.293) 1.696 |
46.527 (10.010) 36.517 |
3.500 (700) 2.800 |
4.400.793 - 4.400.793 |
8.800 (880) 7.920 |
39.128 (13.042) 26.086 |
4.504.737 (28.925) 4.475.812 |
| At 1 January 2022 Opening net book amount Additions Disposals – net book value Interest capitalised during the year Depreciation charge (Note 9) |
1.696 - - - (600) |
36.517 15.805 (2.121) - (8.780) |
2.800 - - - (700) |
4.400.793 1.708.641 - 21.432 - |
7.920 14.078 - - (2.288) |
26.086 - - - (13.043) |
4.475.812 1.738.524 (2.121) 21.432 (25.411) |
| Closing net book amount | 1.096 | 41.421 | 2.100 | 6.130.866 | 19.710 | 13.043 | 6.208.236 |
| At 31 December 2022 Cost Accumulated depreciation |
5.989 (4.893) |
59.681 (18.260) |
3.500 (1.400) |
6.130.866 - |
22.878 (3.168) |
39.128 (26.085) |
6.262.042 (53.806) |
| Net book amount | 1.096 | 41.421 | 2.100 | 6.130.866 | 19.710 | 13.043 | 6.208.236 |
13 Property, plant and equipment (continued)
Interest amounting to €21.432 (2021: €20.411) relating to loans granted to the Company for financing the cost of construction and development of the project, were capitalised during the year and were included in the cost of development. The effective interest rate used for the capitalisation is 5% (2021: 5%) and represents the borrowing cost of the project in 2022. The total interest capitalised in inventories since the commencement of the project in 2022 is €61.282 (2021: €39.850).
The management of the Company carried out an assessment of the net realisable value / recoverable amount of its inventories and property, plant and equipment. The exercise utilised valuations prepared by management. The valuation methodology used by management was that of the Discounted Cash Flows. The results of the measurement depend largely on management's assessment of future cashflows and is subject to considerable variability and material estimation uncertainty, particularly as a result of the fact that the project is at an early stage of development. The result of management's assessment did not indicate that there is any impairment of property, plant and equipment or that net realisable value of inventories is below the carrying amount as at the balance sheet date.
Depreciation expense of €25.411 (2021: €22.131) has been charged in "administrative expenses".
In the cash flow statement, proceeds from sale of property, plant and equipment comprise:
| 2022 € |
2021 € |
|
|---|---|---|
| Net book amount | 2.121 | - |
| Profit on sale of property, plant and equipment | - | - |
| Proceeds from sale of property, plant and equipment | 2.121 | - |
14 Leases
This note provides information for leases where the Company is a lessee.
(i) The Company's leasing arrangements
The Company leases buildings and motor vehicles. Rental contracts are typically made for fixed periods of 1 year to 4 years, but may have extension options.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
(ii) Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Right-of-use assets | ||
| Motor vehicle | 99.797 | 74.528 |
| Buildings | 54.841 | 61.718 |
| 154.638 | 135.976 | |
| Lease liabilities | ||
| Current | 74.339 | 57.237 |
| Non-current | 82.482 | 85.176 |
| 156.821 | 142.413 |
Additions to the right-of-use assets and lease liabilities during the 2022 financial year were €109.986 (2021: €58.596).
Modifications to the right-of-use assets and lease liabilities during the 2022 financial year were €30.659 (2021: €nil).
The net gain on lease modifications during the year was €4.942 (2021: €nil).
(iii) Amounts recognised in profit or loss
The income statement shows the following amounts relating to leases:
| 2022 € |
2021 € |
|
|---|---|---|
| Depreciation of right-of-use assets(Note 9) | ||
| Motor vehicles | 31.506 | 21.607 |
| Buildings | 29.159 | 27.805 |
| 60.665 | 49.412 | |
| Interest expense(Note 11) | 9.969 | 9.451 |
| 9.969 | 9.451 |
The total cash outflow for leases in 2022 was €69.945 (2021: €56.407).
15 Intangible assets
| Computer software |
Total | |
|---|---|---|
| At 1 January 2021 | € | € |
| Cost | 3.303 | 3.303 |
| Accumulated amortisation and impairment | (3.303) | (3.303) |
| Net book amount | - | - |
| Year ended 31 December 2021 Opening net book amount |
- | - |
| Additions | 3.098 | 3.098 |
| Amortisation charge (Note 9) | (1.033) | (1.033) |
| Closing net book amount | 2.065 | 2.065 |
| At 31 December 2021 | ||
| Cost | 6.401 | 6.401 |
| Accumulated amortisation and impairment | (4.336) | (4.336) |
| Net book amount | 2.065 | 2.065 |
| Year ended 31 December 2022 | ||
| Opening net book amount | 2.065 | 2.065 |
| Amortisation charge (Note 9) | (1.032) | (1.032) |
| Closing net book amount | 1.033 | 1.033 |
| At 31 December 2022 | ||
| Cost | 6.401 | 6.401 |
| Accumulated amortisation and impairment | (5.368) | (5.368) |
| Net book amount | 1.033 | 1.033 |
16 Financial assets
Financial assets at amortised cost
Financial assets at amortised cost include the following debt investments:
| 2022 € |
2021 € |
|
|---|---|---|
| Current | ||
| Receivables from parent entity(Note 26(ii)) | 158.286 | 150.129 |
| Other receivables | 226.937 | 183.778 |
| Total current | 385.223 | 333.907 |
| Financial assets at amortised cost – net | 385.223 | 333.907 |
(i) Current financial assets at amortised cost
Due to the short-term nature of the current financial assets at amortised cost, their carrying amount is considered to be the same as their fair value.
The carrying amounts of the Company's financial assets at amortised cost are denominated in the following currencies:
| 2022 € |
2021 € |
|
|---|---|---|
| Euro – functional and presentation currency | 385.223 | 333.907 |
| 385.223 | 333.907 | |
(ii) Impairment and risk exposure
Note 6 sets out information about the impairment of financial assets and the company's exposure to credit risk.
17 Other non-financial assets
| 2022 € |
2021 € |
|
|---|---|---|
| Prepayments Deferred expenses |
859.766 2.665.102 |
57.864 921.004 |
| 3.524.868 | 978.868 |
18 Inventories
| 2022 € |
2021 € |
|
|---|---|---|
| Opening balance | 81.163.491 | 75.786.364 |
| Interest capitalised during the year | 410.487 | 390.940 |
| Development costs capitalised during the year | 3.728.455 | 4.986.187 |
| Closing balance | 85.302.433 | 81.163.491 |
Capitalised costs of €3.728.455 (2021: €4.986.187) includes costs which were incurred in relation to the construction and development of residential premises.
Interest amounting to €410.487 (2021: €390.940) relating to loans granted to the Company for financing the cost of construction and development of the project, were capitalised during the year and were included in the cost of development. The effective interest rate used for the capitalisation is 5% (2021: 5%) and represents the borrowing cost of the project in 2022. The total interest capitalised in inventories since the commencement of the project in 2022 is €1.173.751 (2021: €763.264).
All inventories items are stated at cost with the exception of inventory that was transferred on 15 January 2020 from investment property which is presented at its fair value at the date of transfer. For information regarding the management assessment of the net realisable value of inventories refer to Note 13.
19 Cash and cash equivalents
| 2022 € |
2021 € |
|
|---|---|---|
| Cash at bank and in hand | 10.128.406 | 7.007.188 |
Cash and cash equivalents are denominated in the following currencies:
| 2022 € |
2021 € |
|
|---|---|---|
| Euro – functional and presentation currency | 10.128.406 | 7.007.188 |
Principal non-cash investing and financing transactions
The principal non-cash investing and financing transactions during the current and the prior year were the acquisition of right-of-use assets using leases for €109.986 (2021: €58.596).
20 Share capital and share premium
| Number of shares |
Share capital € |
Capital Contribution € |
Share premium € |
Total € |
|
|---|---|---|---|---|---|
| At 31 December 2021 / 31 December 2022 | 2 761 674 | 4.722.462 | 2.556.501 | 25.730.893 | 33.009.856 |
The total authorized number of ordinary shares is 3 000 000 shares (2021: 3 000 000 shares) with a par value of €1,71 per share. All issued shares are fully paid.
21 Basic loss per share attributable to equity holders of the Company
| 2022 | 2021 | |
|---|---|---|
| Loss attributable to shareholders (€) Weighted average number of ordinary shares in issue during the year Basic loss per share attributable to equity holders of the parent (cent per share) |
(1.318.303) 2.761.674 (47,74) |
(1.626.922) 2.761.674 (58,91) |
| 22 Borrowings |
||
| 2022 € |
2021 € |
|
| Current Borrowings from related parties(Note 26(iii)) |
683.666 | 683.666 |
| Non-current Borrowings from related parties (Note 26(iii)) Total borrowings |
8.678.531 9.362.197 |
8.246.613 8.930.279 |
| Maturity of non-current borrowings Between 2 and 5 years |
8.678.531 | 8.246.613 |
Current
The current borrowings from related parties are repayable as follows:
- 50% of the Loan, within 60 days from the drawdown of the loan from Hellenic Bank; and
- any remaining balance of the loan plus accrued interest, if any within 210 days from the drawdown of the loan from Hellenic Bank.
The weighted average effective interest rates at the balance sheet date were as follows:
| 2022 % |
2021 % |
|
|---|---|---|
| Borrowings from related parties (Note 26(iii)) | 5 | 5 |
The Company has the following undrawn borrowing facilities from borrowings with related parties:
| 2022 € |
2021 € |
|
|---|---|---|
| Floating rate: Expiring beyond one year |
1.316.334 | 1.316.334 |
22 Borrowings (continued)
Non-current
As part of the share purchase agreement concluded on 15 January 2020, the Company received an interest free loan from a related party amounting €10.000.000 which is repayable during 2025. The interest free loan was fair valued at initial recognition using the market interest rate (5%) for bank borrowings available to the Company. The fair value gain recognised at initial recognition of €2.556.501, was credited in the statement of changes in equity as Capital Contribution. The unwinding of interest expense following the initial recognition, is capitalised against inventories and property, plant and equipment as apportioned by the building coefficient of the project. During the year total interest expense of €21.432 and €410.487 (2021: €21.411 and €390.940) was capitalised as part of property, plant and equipment and inventories respectively.
Undrawn facilities
On 24 September 2020, the Company has signed an agreement with Hellenic Bank for a €34m loan term facility related to the construction of the infrastructure of the resort and €3.15m ancillary facilities in the form of bank guarantees and overdraft facility. The loan term facility will be available to the Company for utilisation once the Company has reached €30m of confirmed sales.
On 21 October 2022, the Company has signed an amended and restated agreement with Hellenic Bank to which the confirmed sales have been reduced to €25m and the loan repayment period has been extended to 2026.
The carrying amounts of the Company's borrowings are denominated in the following currencies:
| 2022 € |
2021 € |
|
|---|---|---|
| Euro - functional and presentation currency 9.362.197 |
8.930.279 |
23 Deferred income tax liabilities
The gross movement on the deferred income tax account is as follows:
| Tax losses € |
Investment Property Fair value gains € |
Total € |
|
|---|---|---|---|
| At 1 January 2021 Charged/(credited) to: |
(231.494) | 5.988.947 | 5.757.453 |
| Profit or loss (Note 12) | (228.971) | - | (228.971) |
| At 31 December 2021/1 January 2022 | (460.465) | 5.988.947 | 5.528.482 |
| Charged/(credited) to: | |||
| Profit or loss (Note 12) | (299.069) | - | (299.069) |
| At 31 December 2022 | (759.534) | 5.988.947 | 5.229.413 |
Deferred income tax assets are recognised for the tax losses carried forward to the extend that the realisation of the related tax benefit through future taxable profits is probable.
23 Deferred income tax liabilities (continued)
As at 31 December 2022, the Company had tax losses carried forward amounting to €6.076.271 for which a deferred tax asset was recognised. From these losses an amount of €449.616 expires in 2023, €418.903 expires in 2024, €1.585.728 expires in 2025, €2.031.769 expires in 2026 and €1.590.255 expires in 2027.
24 Trade and other payables
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Payables to related parties (Note 26(ii)) | 370.130 | 219.841 |
| Other payables | 1.379.988 | 578.752 |
| Accrued expenses | 419.919 | 24.034 |
| Total financial payables within trade and other payables at amortised cost | 2.170.037 | 822.627 |
| Social insurance and other taxes | 44.509 | 271.265 |
| VAT Payable | 501.839 | 177.845 |
| Total other payables | 546.348 | 449.110 |
| Trade and other payables | 2.716.385 | 1.271.737 |
The fair value of trade and other payables which are due within one year approximates their carrying amount at the balance sheet date.
The carrying amounts of the Company's trade and other payables are denominated in the following currencies:
| 2022 | 2021 € € |
|---|---|
| Euro - functional and presentation currency 2.716.385 |
1.271.737 |
25 Commitments
(a) An amount of €913.824 is payable to the Electricity Authority of Cyprus upon the completion of the relevant installation and connection of the electricity supply.
(b) An amount of €830.000 is payable to Water Development Department for potable water pipeline construction. This is is repayable upon request and issuance of invoice by the Government of Cyprus.
(c) The Company has entered in a contract for the construction of golf course in 2022 for the amount of €14 million. The remaining commitments from the Company related to this contract as at 31 December 2022 are €13 million, which is expected to be paid according to construction progress. Expected completion of this contract is December 2024.
(d) On 20 March 2023 the Company has entered in an agreement for the construction of the two blocks of apartments. The amount of the agreement is €16,8 million and is payable according to the construction progress. Expected completion date for this agreement is 31 December 2024.
26 Related party transactions
Up to 15 January 2020, the Company was controlled by Lanitis Farm Limited, incorporated in Cyprus, which owned 99,99% of the Company's shares. The ultimate shareholder of the company was Lanitis E.C. Holdings Limited.
On 15 January 2020, MCY Development Limited has purchased all the shares of the Company owned by Lanitis Farm Limited. As a result MCY Development Limited now owns the 99.99% of the issued share capital of the Company. The share capital of MCY Development Limited is equally owned by Lanitis Farm Limited and AMOL Enterprises Limited.
(i) Related party transactions
| 2022 | 2021 | |
|---|---|---|
| Purchases of services: | € | € |
| Lanitis E.C. Holdings (Management Fees) | 18.000 | 24.000 |
| Cybarco Contracting Ltd (IT Services) | 6.114 | 4.142 |
| Cybarco Contracting Ltd (Construction Services) | 3.877.398 | 1.949.976 |
| Cybarco Development Ltd (Promotional Services) | 1.371.036 | 921.004 |
| 5.272.548 | 2.899.122 |
Contract liabilities
During the year ended 31 December 2021, the Company has entered into agreements with related parties for the sale of inventories. The total amounts paid are €1.556.549 and are included as part of the contract liabilities in Note 8 of the financial statements.
(ii) Year-end balances with related parties
| 2022 | 2021 | |
|---|---|---|
| € | € | |
| Receivables from related parties (Note 16): | ||
| MCY Development Limited (Parent Company) | 158.286 | 150.129 |
| Payables to related parties (Note 24): | ||
| Amol Enterprises Limited | 120.762 | 6.454 |
| Cybarco Development Limited | 2.776 | 202.367 |
| Lanitis E.C Holdings Limited | - | 7.140 |
| Cybarco Contracting Limited | 243.381 | 2.497 |
| Lanitis Farm Limited | 3.211 | 1.383 |
| 370.130 | 219.841 |
The above balances bear no interest and are repayable on demand.
(iii) Borrowings from related parties
| 2022 € |
2021 € |
|
|---|---|---|
| Borrowings from related parties: At beginning of year Unwinding of interest expense |
8.930.279 431.918 |
8.518.927 411.352 |
| At end of year (Note 22) | 9.362.197 | 8.930.279 |
26 Related party transactions (continued)
(iii) Borrowings from related parties (continued)
As part of the share purchase agreement concluded on 15 January 2020, the Company received an interest free loan from a related party amounting €10.000.000 which is repayable during 2025. The interest free loan was fair valued at initial recognition using the market interest rate (5%) for bank borrowings available to the Company. The fair value gain recognised at initial recognition of €2.556.501, was credited in the statement of changes in equity as Capital Contribution.
27 Events after the balance sheet date
There were no material events after the balance sheet date, which have a bearing on the understanding of the financial statements, except as disclosed in Note 25 of the financial statements.
Independent Auditor's Report on pages 6 to 10.