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Lanitis Golf Public Co Ltd
Annual Report • Apr 29, 2021
2517_10-k_2021-04-29_124afe62-87d7-4455-938e-0aa3b1cbe898.pdf
Annual Report
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Report and financial statements 31 December 2020
Contents
| r dye | |
|---|---|
| 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 = 6 |
| Independent Auditor's Report | 7 = 11 |
| Statement of profit and loss and other comprehensive income | 12 |
| Balance sheet | 13 |
| Statement of changes in equity | 14 |
| Statement of cash flows | 15 |
| Notes to the financial statements |
Board of Directors and other officers
Board of Directors
Platon E. Lanitis (Chairman) Marios E. Lanitis Costas Charitou (appointed 15 January 2020) Demetris Solomonides (appointed 15 January 2020) Kevin Valenzia (appointed 15 January 2020) Mark Gasan (appointed 15 January 2020) Alec Mizzi (appointed 15 January 2020) Mathew Portelli (appointed 15 January 2020) Costas E. Lanitis (resigned 15 January 2020) Valentina Panagi Pappou (resigned 30 August 2019)
Company Secretary
P & D Secretarial Service 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
Declaration of the members of the Board of Directors and the Company Officials for the drafting of the financial statements
According to Article 9, subsections (3) (c) and (7) of the Transparency Requirements (Traded Securities on a Regulated Market) Act of 2007 ('Act'). we the members of the Board of Directors and other officers responsible for the financial statements of Lanitis Golf Public Co Limited for the year ended 31 December 2020, we comfirm that, to the best of our knowledge:
(a) the annual financial statements presented on pages 12 to 46 ware:
(i) prepared in accordance with International Financial Reporting Standards as adopted by the European Union and in accordance with the provision of subsection (4) of the Act, and
(ii) give a true and fair view of assets and liablittes, financial position and the loss of Lanitis Golf Public Co Limited for the year ended 31 December 2020, and
(b) The Management report provides a fair overview of the developments and performance of the business and financial position of of Lanitis Golf Public Co Limited for the year ended 31 December 2020, together with a description of the principal risks and uncertainties faced by the Company.
Members of the Board of Directors
| Chairman |
|---|
| Platon E. Lanitis |
| Directors |
| Marios E. Lanitis |
| Costas Charilou |
| Demetris Solomonides |
| Kevin Valenzia |
| Mark Gasan |
| Alec Mizzi |
| Mathew Portelli |
| Responsible for Preparation of Financial Statements |
| Demos Panayiotou · Financial Controller |
| Limassol, 29 April 2021 |
(2)
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 2020.
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. During the year, the Company carried out no trading activities. Following a change in group structure on 15 January 2020, the Company has secured sufficient funds to enable it to commence its development plan.
Changes in group structure
3 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 owned by Lanitis Farm Limited at 50% and by AMOL Enterprises Limited also at 50%.
Review of developments, position and performance of the Company's business
4 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 forthcoming development of the Casino.
5 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 and apartments, an 18 hole championship golf club, spa and sports center and commercial and retail facilities, such as restaurants and shops.
မ The loss attributable to the shareholders for the year ended 31 December 2020 is €1.173.589 (2018: loss of €288.668). During 2020, 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.
During the year ended 31 December 2020, the Company incurred golf 7 development expenditure amounting to €2.320.033, which was financed by borrowings from related parties. As at 31 December 2020, the Company's total assets amounted to €86.218.285 (2019: €77.448.724) and its net assets amounted to €70.919.777 (2019: €62.471.965). The financial position, development and performance of the Company as presented in these financial statements are considered satisfactory.
Management Report (continued)
Principal risks and uncertainties
8 The principal risks and uncertainties faced by the Company are disclosed in Notes 1, 6 and 7 of the financial statements.
Use of financial instruments by the Company
9 The Company's activities expose it to a variety of financial risks: credit risk and liquidity risk.
10 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
11 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.
12 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.
The Company's credit risk arises from financial assets at amortised cost amounting 13 to €148.210 and bank balances amounting to €5.656.925. As of 31 December 2020, all financial assets subject to credit risk were fully performing (stage 1).
Liquidity risk
14 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.
Management Report (continued)
Future developments of the Company
15 In early 2021 the Company proceeded with the sale of a restricted number of plots. From April 2021 the Company commissioned the construction of the project's infrastructure which is expected to completed over the next 3 years.
Results
16 The Company's results for the year are set out on page 12. The loss for the year is carried forward.
Dividends
17 The Board of Directors does not recommend the payment dividend.
Share capital
18 At the board of directors meeting held on 28 May 2020 the Company's directors approved the issuance of 261 663 shares of nominal value €1,71 per share at the price of €27 per share. As a result of this transaction an amount of €447.443 and €6.617.457 was credited to the share capital and share premium accounts respectively in equity. These shares were issued to MCY Development Limited, in accordance with the share purchase agreement.
Board of Directors
19 The members of the Board of Directors at 31 December 2020 and at the date of this report are shown on page 1. All of them were members of the Board throughout the year 2020, except as stated in the board of directors and other officers section on page 1.
Events after the balance sheet date
20 There were no material post balance sheet events, which have a bearing on the understanding of the financial statements other than matters referred to in note 28.
Management Report (continued)
Branches
21 The Company did not operate through any branches during the year.
Independent Auditors
22 The Independent Auditors, PricewaterhouseCoopers Limited, have expressed their willingness to continue in office. A resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General Meeting.
By Order of the Board
11
P & D Secretarial Service Limited Company Secretary
Limassol, 29 April 2021
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 2020, 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 12 to 46 and comprise:
the balance sheet as at 31 December 2020;
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, Cyprus T: +357 22 - 555 000, F:+357 - 22 555 001, www.pwc.com.cy
PricewateriouseCoppers Ltd is a private conpary registered in Cyptus (Rey at 3 Thernist one Street, Charisonal A lites, Micsel, A licosia, A licesta A lites an A or name, is kept by the Secelary of the company at its refers to the Cyous member firm, and may somelimes refer o the PvC network. Each merher
firm is a separale legal ently. P
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 12, "Property, Plant and Equipment" and Note 18, "Inventories". |
We have performed the following audit procedures to address the risks of material misstatement associated with this Key Audit Matter: |
| The Company is planning the development of its land to a special leisure and residential golf course project with real estate development activities. |
· We obtained an understanding of the process followed by management to determine whether there is a need to write down Property, Plant and |
| As at 31 December 2020 the carrying value of Inventories amounted to €75.786.364 representing approximately 88% of Company's total assets and the carrying value of land for the construction of the golf course and commercial activities amounted to €4.123.327 representing |
Equipment and Inventories to recoverable amount/net realisable value and have assessed the design and implementation of the relevant internal controls. |
| approximately 5% of the Company's total assets. Inventories are stated at the lower of cost and net |
· We have evaluated the independence and competency of the external valuer |
We have confirmed the existence and ownership of land by obtaining and reviewing the title deeds and the various licenses issued to the Company by various Government departments in relation to the development of the Golf Course.
used by the Company.
We have assessed, with the involvement of auditor's experts, the appropriateness of the impairment assessment and whether the assumptions used by the valuers and the management were reasonable.
We evaluated the adequacy of the disclosures in the relevant notes to the financial statements. These notes explain that there is significant estimation uncertainty relating to the future cash flows of the project arising from the uncertainty imposed by the Covid-19 pandemic and the abolition of the Cyprus Investment Program.
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 an independent professionally qualified valuer, the transaction that took place on 15 January 2020 between the Company's founders and independent investors and the actual sales of plots and apartments that took place in 2021. Our audit procedures have focused on assessing any need to write down the above assets to their net realisable value / recoverable amount at 31 December 2020, due to the size of these assets, the level of judgement required in making these assessments and the uncertainties due to the Covid-19 pandemic and the abolition of the Cyprus Investment Program.
| Key Audit Matter | How our audit addressed the Key Audit Matter |
||
|---|---|---|---|
| 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.
Auditor's Responsibilities for the Audit of the Financial Statements (continued)
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.
- · 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:
- In 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.
- In 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 identified material misstatements in the management report.
Other Matters
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 financial statements of the Company for the year ended 31 December 2019 were audited by another auditor who expressed an unmodified opinion on those financial statements on 29 June 2020.
The engagement partner on the audit resulting in this independent auditor's report is Nicos A. Theodoulou.
Nicos A. 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, 29 April 2021
Statement of profit and loss and other comprehensive income for the year ended 31 December 2020
| Note | 2020 (S |
2019 ਵ |
|
|---|---|---|---|
| Administration expenses Operating loss |
8 | (1.394.749) (1.394.749) |
(159.554) (159.554) |
| Finance costs Loss before income tax |
10 | (10 332) (1.405.083) |
(129,114) (288.668) |
| Income tax credit Loss and total comprehensive loss for the year |
11 | 749 494 (1.173.589) |
(288.668 |
| Loss per share attributable to the equity holders of the Company during the year (expressed in cents per share) (Note 21) - Basic |
(44,19) | (11.55) |
The notes on pages 16 to 46 are an integral part of these financial statements.
Balance sheet at 31 December 2020
| Note | 2020 ਵ |
2019 113 |
|
|---|---|---|---|
| Assets | |||
| Non-current assets | 12 | 4.141.776 | 6.289.431 |
| Property plant and equipment | 13 | 126.757 | |
| Right of use assets | 14 | 70.911.576 | |
| Investment property | 23 | 231.494 | |
| Deferred income tax assets | 4.500.062 | 77.201.007 | |
| Current assets | 18 | 75.786.364 | |
| Inventories | 17 | 128.772 | 77.454 |
| Other non-financial assets | 16 | 148.210 | 104.911 |
| Financial assets at amortised cost | 19 | 5.656.925 | 65.352 |
| Cash in hand and at bank | 81.718.223 | 247.717 | |
| Total assets | 86.218.285 | 77.448.724 | |
| Equity and liabilities Capital and reserves |
20 | 4.722.487 | 4.275.019 |
| Share capital | 20 | 2.556.501 | |
| Capital contribution | 20 | 25.730.893 | 19.113.436 |
| Share premium | 37.909.921 | 39.083.510 | |
| Retained earnings | 70.919.777 | 62.471.985 | |
| Total equity | |||
| Non-current liabilities | 22 | 8.518.927 | |
| Borrowings Lease liabilities |
13 | 90.542 | |
| Deferred income tax liabilities | 23 | 5.988.947 | 5.988.947 |
| Trade and other payables | 24 | 405.572 | |
| 14.598.416 | 6.394.519 | ||
| Current liabilities | 25 | 659,861 | 5.098.146 |
| Trade and other payables | 13 | 40.231 | |
| Lease liabilities | 22 | 3.486.094 | |
| Borrowings | 700.092 | 8.582.240 | |
| Total liabilities | 15.298.508 | 14.976.759 | |
| Total equity and liabilities | 86.218.285 | 77.448.724 | |
On 29 April 2021the Board of Directors of Lanitis Golf Public Co authorised these financial statements for issue.
Platon E. Lanitis , Chairman
Kevin Valenzia , Director
The notes on pages 16 to 46 are an integral part of these financial statements.
Statement of changes in equity for the year ended 31 December 2020
| Note | Share capital ਵ |
Capital contribution € |
Share premium ਦ |
Retained eamings(1) € |
Total € |
|
|---|---|---|---|---|---|---|
| Balance at 1 January 2019 | 4.275.019 | 19.113.436 | 39.372.178 | 62.760.633 | ||
| Comprehensive income Loss for the year |
(288.668) | (288.668) | ||||
| Balance at 31 December 2019 / 1 January 2020 |
4.275.019 | 19.113.436 | 39.083.510 | 62.471.965 | ||
| Comprehensive income Loss for the year |
(1.173.589) | (1.173.589) | ||||
| Total comprehensive income for the year | (1.173.589) | (1.173.589) | ||||
| Transactions with owners Issue of shares Capital contribution |
20 20 |
447.443 | 2.556.501 | 6.617.45% | 7.064.900 2.558.501 |
|
| Total transactions with owners | 447.443 | 2.556.501 | 6.617.457 | 9.621.401 | ||
| Balance at 31 December 2020 | 4.722.462 | 2.556.501 | 25.730.893 | 37.909.921 | 70.919.777 |
(1) Defence of the Republic Law, by the end of the two years after 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 shareholders for deemed dividend distribution purposes at the end 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 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 16 to 46 are an integral part of these financial statements.
Statement of cash flows for the year ended 31 December 2020
| Note | AUZU € |
2019 e |
|
|---|---|---|---|
| Cash flows from operating activities | |||
| Loss before income tax | (1.405.083) | (288.668) | |
| Adjustments for: | |||
| Depreciation of property, plant and equipment | 12 | 3.777 | 779 |
| Depreciation of right-of-use assets | 13 | 29.890 | |
| Interest income calculated using the effective interest rate method | 1.971 | 129.114 | |
| Interest expense - bank borrowings | 10 10 |
7.834 | |
| Interest expense - Lease Liabilities | |||
| (1.362.011) | (158.775) | ||
| Changes in working capital: | |||
| Inventories | 18 | (2.046.661) | |
| Other non-financial assets | (49.270) | ||
| Financial assets at amortised costs | (43.299) | (138.797) | |
| Trade and other payables | (579.386) | 30.016 | |
| Cash used in operations | (4.080.627) | (267.556) | |
| Cash flows from investing activities | |||
| Purchases of property, plant and equipment | 12 | (292.086) | (540.886) |
| Principal elements of lease payments | (33.749) | ||
| Net cash used in investing activities | (325.829) | (540.886) | |
| Cash flows from financing activities | |||
| Proceeds from borrowings | 10.000.000 | 500.490 | |
| Interest paid | (1.971) | ||
| Net cash from financing activities | 9.998.029 | 500.490 | |
| Net increase (decrease) in cash and cash equivalents | 5-5-1 576 | (307.952) | |
| Cash and cash equivalents at beginning of year | SE 5% | 373.304 | |
| Cash and cash equivalents at end of year | 19 | 5.656.925 | 65.352 |
The notes on pages 16 to 46 are an integral part of these financial statements.
Non-cash transactions
The additional share capital and premium contributed during the year of €7.064.900 was not cash settled but it was in the form of capitalisated borrowings from related parties (€2.971.658) and trade payables (€4.093.242).
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. During the year, the Company carried out no trading activities.
Operating environment of the Company
The Cyprus economy has been adversely affected by the outbreak of the new coronavirus (COVID-19). On 11 March 2020, the World Health Organisation declared the outbreak of COVID-19 a global pandemic recognising its rapid spread across the globe. In response to the pandemic, the government of the Republic of Cyprus and various governments globally implemented and continue to implement numerous measures attempting to contain and now delay the spreading and impact of COVID-19, such as requiring selfisolation by those potentially affected, implementing social distancing measures and mass quarantines, controlling or closing borders and imposing limitations on business activity, including closure of non-essential businesses.
These measures have, among other things, severely restricted economic activity both in Cyprus and globally and they have negatively 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.
As a result of the measures imposed by the government, the Company did not face any major implication as the Company carried no trading activities during the year.
Management has taken and continues to take necessary measures to ensure minimum disruption to and sustainability of the Company's future plans in relation to the construction and development of the residential golf course project.
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, Cao. 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 2020 and are relevant to the Company's operations have been adopted by the EU through the endorsement procedure established by the European Commission.
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 interpretions effective from 1 January 2020, as set out in Note 3, these policies have been consistently applied to all the years presented, unless otherwise stated (refer to Notes and 4).
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment property.
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.
ಳು 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 offective for accounting periods beginning 1 January 2020. This adoption did not have a material effect on the accounting policies of the Company.
বা Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented in the financial statements, unless otherwise stated.
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 cootribution 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. Tre oo contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
4 Summary of significant accounting policies (continued)
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.
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.
4 Summary of significant accounting policies (continued)
Current and deferred income tax (continued)
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-ofuse 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.
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.
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:
| 0/0 |
|---|
| 20 |
| 10 |
| 10 |
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 companing 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 propare 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 insubstance 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 defermined, 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 .
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)
Investment property
Property that is held for long-term rental yields or for capital appreciation or both and that is not occupied by the Company, is classified as investment property. Investment property also includes property that is being constructed or developed for future use as investment property. Investment property is carried at fair value, representing open market value determined annually by external valuers.
The land owned by the Company was temporarily categorised as investment property, as it is held for a currently undetermined future use and is regarded as held for capital appreciation, and when the final decision will be taken as to the part of the land to be used for development and the part to be used for the golf course and other relevant activities, it wIll be transferred to the relevant categories according to their intended use.
Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. After initial recognition, investment property is canied at fair value. Investment property that is being redeveloped for continuing use as investment property or for which the market has become less active continues to be measured at fair value. Changes in fair value are recognised in the statement of profit or loss.
If an Investment property becomes owner-occupied, it is reclassified as property, plant and equipment. Its fair value at the date of reclassification becomes its cost for subsequent accounting purposes. Where an investment property undergoes a change in use, evidenced by commencement of development with a view to sale, the property is transferred to inventories. A property's deemed cost for subsequent accounting as Inventories is its fair value at the date of change in use.
An investment property is derecognised upon disposal or when the Investment property is permanently withdrawn from use and no future economic benefits are expected from the continued use of the asset. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.
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.
4 Summary of significant accounting policies (continued)
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 (cashgenerating 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.
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.
4 Summary of significant accounting policies (continued)
Financial assets (continued)
Financial assets - Measurement (continued)
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 ammortised 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.
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. [Indicators that there is no reasonable expectation of recovery include ... specify]. 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.
4 Summary of significant accounting policies (continued)
Financial assets (continued)
Financial assets - modification (continued)
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.
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.
Interest income
Interest income on financial assets at amortised cost calculated using the effective interest method is recognised in the income statement as "Other income". Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit impaired. For credit impaired financial assets - Stage 3 the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).
4 Summary of significant accounting policies (continued)
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 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.
Financial guarantee contracts
Financial guarantee contracts are contracts that require the Company to make specified payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of debt instrument. Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans, overdrafts and other banking facilities,
Financial guarantees are recognised as a financial liability at the time the guarantee is issued.
Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received. In the absence of fees received, the fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and the payments that would be required without the quarantee, or the estimated amount that would be payable to a third party for assuming the obligations. Where guarantees in relation to loans or other payables of subsidiaries are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.
4 Summary of significant accounting policies (continued)
Financial guarantee contracts (continued)
Financial guarantees are subsequently measured at the higher of (i) the amount determined in accordance with the expected credit loss model under IFRS 9 "Financial Instruments", and (ii) the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 "Revenue from Contracts with Customers".
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 include raw materials, direct labour, other direct costs and expenses associated wiht the construction work including borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business less costs to complete.
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.
4 Summary of significant accounting policies (continued)
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.
Comparatives
Where necessary, comparative figures have been adjusted to conform with changes in the presentation for the current year.
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 2020, 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'.
Financial risk management (continued) (0
Financial risk factors (continued) (1)
Credit risk (continued)
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/instuments 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 threestage 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.
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 2020 and 31 December 2019 was immaterial. All financial assets at amortised cost were performing (Stage 1) as at 31 December 2020 and 31 December 2019.
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 2020 and 31 December 2019:
6 Financial risk management (continued)
(i) Financial risk factors (continued)
Credit risk (continued)
| Rating 11 |
2020 ਵ |
2019 는 |
|
|---|---|---|---|
| Moody's ਡੂਡੇ Other external non-rated banks - |
5.656.747 | 59.870 | |
| satisfactory credit quality (performing) | 184 | 5.482 | |
| Total cash at bank | 5.656.851 | 65.352 |
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 2020 and 31 December 2019.
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 2020 and 31 December 2019 was immaterial. All cash and cash equivalents were performing (Stage 1) as at 31 December 2020 and 31 December 2019.
Liquidity risk o
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.
| Less | Between | Between | ||
|---|---|---|---|---|
| than 1 | 1 and 2 | 2 to 5 | Over 5 | |
| year | years | years | years | |
| = | € | ( | € | |
| At 31 December 2019 | ||||
| Borrowings | 3.486.094 | |||
| Trade and other payables | 5.089.418 | 405.572 | ||
| 8.575.512 | 405.572 | |||
| Less | Between | Between | ||
| than 1 | 1 and 2 | 2 to 5 | Over 5 | |
| year | years | years | years | |
| ( | ਡ | = | ਵ | |
| At 31 December 2020 | ||||
| Borrowings | 683.666 10.000.000 | |||
| Trade and other payables | 633.356 | D | ||
| Lease liabilities | 46.756 | 88.875 | 8.607 | |
| 680.112 | 772.541 | 10.008.607 |
(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.
ﻭ Financial risk management (continued)
(ii) Capital risk management (continued)
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 2020, the Company's strategy, which was unchanged from 2019, was to maintain the gearing ratio at low levels. The gearing ratios at 31 December 2020 and 2019 were as follows:
| 2020 (5 |
2019 ਵ |
|
|---|---|---|
| Total borrowings (Note 22) Less: cash and cash equivalents (Note 19) Net debt |
8-5 3 377 (5.656.925) 2.862.002 |
3.486.094 (65.352) 3.420.742 |
| Total equity | 70.919.777 | 62.471.965 |
| Total capital as defined by management | 73.781.779 | 65.892.707 |
| Gearing ratio | 4% | 5% |
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.
(i) 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 12 for the relevant disclosure for the impairment assessment made by the Company's management. If the selling prices of plots were 5% lower then an impairment of €4.940.000 would have been recognised on inventories and property, plant and equipment. If WACC increased from 10% to 11% then an impairment of €2.700.000 would have been recognised on inventories and property, plant and equipment.
- 7 Critical accounting estimates and judgements (continued)
- (i) Critical accounting estimates and assumptions (continued)
- Fair value of investment property
The fair value of the investment property is determined using valuation techniques. Refer to Note 14 for the relevant disclosure of valuation technique used for the determination of the fair value of the Company's Investment Properties as at 31 December 2019.
Golf Licences
In accordance with the provisions of contracts signed during 2012 between the Company and the planning authority department of the Cyprus Government, the Company has undertaken to pay an aggregate amount of €5.000.000 to the Government over a period of 10 years from the signing date of the contracts during 2012. Management has assessed that no financial, legal or contstructive obligation arises for this amount as of 31 December 2020 as the company may avoid these costs prior to commencement of the development of the project. The company has disclosed these amounts as capital commitments in Note 26
(ii) Critical judgements in applying the Company's accounting policies
Taxation ●
Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain. The Company recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
Determination of the lease term
In determining the lease term, management 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).
For leases of warehouses, retail stores and equipment, the following factors are normally the most relevant:
- · If there are significant penalties to terminate (or not extend), the Company is typically reasonably certain to extend (or not terminate).
- · If any leasehold improvements are expected to have a significant remaining value, the Company is typically reasonably certain to extend (or not terminate).
- · Otherwise, the Company considers other factors including historical lease durations and the costs and business disruption required to replace the leased asset.
7 Critical accounting estimates and judgements (continued)
(ii) Critical judgements in applying the Company's accounting policies (continued)
Most extension options in offices and vehicles leases have been included in the lease liability, because the Company could not replace the assets without significant cost or business disruption.
As at 31 December 2020 , potential future cash outflows of €32.786 have been included in the lease liability because it is reasonably certain that the leases will be extended.
8 Expenses by nature
| 2020 | 2019 | |
|---|---|---|
| (in) | ਵ | |
| Depreciation - property, plant and equipment (Notes 12 and 13) | 33.267 | 779 |
| Repairs and maintenance | 38-489 | 965 |
| Insurance | 1.14.3 | |
| Auditors' remuneration charged by statutory audit firm | 9.000 | 6.750 |
| Staff costs (Note 9) | 469,282 | 19.950 |
| Advertising and promotion | 139763 | 1.662 |
| Transportation expenses | 3.663 | 390 |
| Other expenses | 9.063 | 463 |
| Bank charges | 30.176 | 654 |
| Municipal and property taxes | 5.177 | 5.177 |
| Motor vehicle expenses | 7.360 | |
| Legal Fees | 105,250 | |
| Head office administration expenses | 24.000 | 20.000 |
| Mortgages expenses | 378.850 | |
| Commitment fees | 76 800 | |
| Professional Services | 492614 | 95.195 |
| Entertaining expenses | 14.242 | 4.249 |
| Subscriptions, donations and gifts | 3.396 | 3.045 |
| Utilities expenses | 8.221 | 275 |
| Total administrative expenses | 1.394.749 | 159.554 |
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 2020 amounted to €9.000 (2019: €6.750). The total fees charged by the Company's statutory auditor for the year ended 31 December 2020 for other assurance services, non assurance services and tax advisory services amounted to €nil (2019: €Nil).
Staff costs 9
| 2020 ਸਾ |
2019 ਵ |
|
|---|---|---|
| Salaries | 407.132 | 18.333 |
| Social insurance and other costs | 43.716 | 1.250 |
| Provident fund contributions | 10-292 | |
| Social cohension fund | 8.142 | 367 |
| 469.282 | 19.950 | |
| Average number of staff employed during the year | 10 |
9 Staff costs (continued)
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.
10 Finance costs
| 2020 ਵ |
2019 ਵ |
|
|---|---|---|
| Interest and finance charges paid/payable for lease liabilities and financial liabilities not at fair value through profit or loss: |
||
| Bank borrowings Lease liabilities (Note 13) |
1 : 779 7-8-644 |
129 114 |
| Total interest and finance charges | 9 805 | 129.114 |
| Net foreign exchange loss | 5979 | |
| Total finance costs | 10.334 | 129.114 |
11 Income tax expense
| 2020 ਵ |
2019 e |
|
|---|---|---|
| Deferred tax (Note 23): Tax losses carried forward ncome tax credit |
(28) 494) (73 494) |
|
| 21720 (5 |
2019 e |
|
| Loss before tax | (1.405.083) | (288.668) |
| 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 Effect of tax losses not recognised Effect of tax losses brought forward recognised in the current year |
(175.635) 2011 50 (4.574) (71.435) |
(36.084) 3.449 (31) 32 366 |
| Income tax credit | (231,494) |
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.
12 Property, plant and equipment
| At 1 January 2019 Cost |
Plant and machinery ਵ 5.276 (2.639) |
Computer Hardware and Furniture and fittings ਵ |
Land and Golf Development € 5.246.687 |
Total € 5.251.963 (2.639) |
|---|---|---|---|---|
| Accumulated depreciation Net book amount |
2.637 | 5.246.687 | 5.249.324 | |
| Year ended 31 December 2019 Opening net book amount Additions Depreciation charge (Note 8) |
2.637 (528) |
1.254 (251) |
5.246.687 1.039.632 |
5.249.324 1.040.886 (779) |
| Closing net book amount | 2.109 | 1.003 | 6.286.319 | 6.289.431 |
| At 31 December 2019 Cost Accumulated depreciation Net book amount |
5.275 (3.166) 2.109 |
1.254 (251) 1.003 |
6.286.319 6.286.319 |
6.292.848 (3.417) 6.289.431 |
| At 1 January 2020 Opening net book amount Additions Interest capitalised during the year Depreciation charge (Note 8) Transfer from investment property (Note 14) Transfer to inventories (Note 18) Closing net book amount |
2 109 (527) 1.582 |
1.003 18.714 (2.850) 16.867 |
6.286.319 273.372 19.439 3.518 592 (5.974.395) 4,123,327 |
6-239,437 292-086 19.439 (3.377) 3.518.392 (5.974.395) 4.141.776 |
| At 31 December 2020 Cost Accumulated depreciation |
5.276 (3.694) |
19-967 (3.100) |
4.123.327 | 4.148.570 (6.794) |
| Net book amount | 1.582 | 16.867 | 4.123.327 | 4.141.776 |
On 15 January 2020, the Board of Directors decided to proceed with the development of the Company's land with the construction of a golf resort, including the development of golfcourse clubhouse and other commercial areas as well as engage in building development activites for residential premises. The Company has already obtained the required permits for the construction of the golfcourse and residential premises. Following this decision an amount of €67.392.984 representing the carrying value of the land at 15 January 2020, that will be used for the construction and development of residential premises, was transferred from Investment Property (Note 14) to Inventory (Note 18) and an amount of €3.518.592 which was included as Investment Property has been transferred to Property, Plant and Equipment within Land and Golf development category. Additionally, an amount of €5.974.395 which was included in the Land and Golf development category within Property, Plant and Equipment was transferred to Inventory. The carrying value of the land transferred under Property, Plant and Equipment and Inventory from Investment Property and the Land and Golf development costs incurred up to the date of transfer have been allocated on the basis of their respective estimated buildable square meters.
Interest amounting to €19.439 (2019: €Nil) 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% (2019: ENli) and represents the borrowing cost of the project in 2020. The total interest capitalised in inventories since the commencement of the project in 2020 is €19.439 (2019: €Nil).
12 Property, plant and equipment (continued)
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 independent professionally qualified valuers for the current and last year audits, the actual transaction that took place on 15 January 2020 between the Company's founders and independent investors participating in the share capital of the Company and the actual sales of plots that took place in 2021 (refer to note 28, event after the balance sheet date). 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 and the uncertainties arising from the Covid-19 pandemic and the abolition of the Cyprus Investment Program. 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. Sensitivity analysis has been disclosed in note 7 of the financial statements.
Depreciation expense of €3.777 (2019: €779) has been charged in "administrative expenses".
13 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:
| 2020 | 2019 | |
|---|---|---|
| (p | € | |
| Right-of-use assets | ||
| Motor vehicle | 37.7269 | |
| Buildings | 89,523 | |
| 126.792 | ||
| Lease liabilities | ||
| Current | 40-231 | |
| Non-current | 90.542 | |
| 130.773 |
Additions to the right-of-use assets during the 2020 financial year were €156.682.
13 Leases (continued)
(iii) Amounts recognised in profit or loss
The income statement shows the following amounts relating to leases:
| 2020 ਵ |
2019 € |
|
|---|---|---|
| Depreciation of right-of-use assets | ||
| Motor vehicles | 7-454 | |
| Buildings | 22.436 | |
| 29.890 | ||
| Interest expense (Note 10) | 7.834 | |
| 7.834 |
The total cash outflow for leases in 2020 was €33.743.
14 Investment property
| 2020 ਵ |
2019 e |
|
|---|---|---|
| At beginning of year Transfer to property, plant and equipment (Note 12) Transfer to inventories (Note 18) |
70 ST 576 (3.518.592) (67,392,984) |
70.911.576 |
| At end of year | 70.911.576 |
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, and the Fasouri Waterpark and the forthcoming development of the casino. 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 and apartments, an 18 hole championship golf course, a golf club, spa and sports center and commercial and retail facilities, such as restaurants and shops.
On 15 January 2020, the Board of Directors decided to proceed with the development of the Company's land with the construction of a golf resort, including the development of golfcourse clubhouse and other commercial areas as well as engage in building development activites for residential premises. The Company has already obtained the required permits for the construction of the golfcourse and residential premises. Following this decision an amount of €67.392.984 representing the carrying value of the land at 15 January 2020, that will be used for the construction and development of residential premises, was transferred from Investment Property to Inventory (Note 18) and an amount of €3.518.592 which was included as Investment Property has been transferred to Property, Plant and Equipment (Note 12) within Land and Golf development category . Additionally, an amount of €5.974.395 which was included in the Land and Golf development category within Property, Plant and Equipment was transferred to Inventory. The carrying value of the land transferred under Property, Plant and Equipment and Inventory from Investment Property and the Land and Golf development costs incurred up to the date of the transfer have been allocated on the basis of their respective estimated buildable square meters.
14 Investment property (continued)
Valuation processes
The fair value of the Company's investment property as at 31 December 2019 has been arrived at on the basis of a valuation carried out during the year by an Independent valuer not connected with the Company. The independent valuer, who is a member of the Royal Institution of Chartered Surveyors (R.I.C.S.) and the Technical Chamber of Cyprus (ETEK), has appropriate qualifications and recent experience In the valuation of properties in the relevant locations. The valuation, which conforms to International Valuation Standards. was arrived at by reference to the Income Approach (Discounted Cashilow), on the basis that potential real estate development entrepreneur will acquire the whole project with the purpose of developing, selling and gaining profits (residual value approach). Considering the said valuation as well as other factors, the management of the Company determined the value of the land on which a fully integrated golf and real estate development will be developed, to be €77.197.895. This amount included the up to date Golf Development Expenses of €6.286.319, which were presented under property, plant and equipment (Note 12).
Information about fair value measurement using significant unobservable inputs (Level 3) - 31 December 2019
| Property |
|---|
Land
Valuation Valuation technique Income Approach (Discounted 70.911.676 cash flows)
Significant unobservable Inputs
- · Phase I:Gross Development Value (GOV) €159.310.000 (from March 2022 to December 2029)
- · Phase II: GOV €239.845.000 (from November 2023 to December 2033)
- · Phase III: GDV €247.005.000(from March 2025 to August 2039)
- · Phase IV: GOV €216.840.000 {from January 2026 to July 2046}
- · Cost to complete 26% -42%
- · Selling and marketing costs of 10%
- · Developers profit and other expenses of 34%
- . Funding costs of 5%
- Discount rate of 20% .
- · Period of development: Golf and Commercial shops: Construction phase up to last quarter of 2023
- · Realisation phase: during 10th year of operations
Sensitivity analysis
Any increase / decrease in the fair value per square meter for plots for development and / or the bulldable area for mixed developments or any increase / decrease of the sales prices & growth rate, discount rate and the promotional expenses and developers profit would affect the fair value of the investment property accordingly.
14 Investment property (continued)
+- of 5% in sale prices would have an impact of +- €8,9 million to the Fair value
+- of 5% in construction cost would have an impact of -- €3,6 million to Fair value
15 Intangible assets
| Computer | ||
|---|---|---|
| software | Total | |
| At 31 December 2019 | ਵ | € |
| Cost | 3.303 | 3.303 |
| Accumulated amortisation and impairment | (3.303) | (3.303) |
| Net book amount | ||
| At 31 December 2020 | ||
| Cost | 3.303 | 3.303 |
| Accumulated amortisation and impairment | (3.303) | (3.303) |
| Net book amount |
16 Financial assets
(a) Financial assets at amortised cost
Financial assets at amortised cost include the following debt investments:
| 20220 | 2019 | |
|---|---|---|
| (5 | € | |
| Current | ||
| Receivables from parent entity(Note 27(ii)) | 125.672 | 104.911 |
| Receivables from related party(Note 27(ii)) | 1 328 | |
| Other receivables | 1.261 | |
| Total current | 148.210 | 104.911 |
| Less: Loss allowance for debt investments at amortised cost | ||
| Current - net carrying amount | 148.210 | 104.911 |
| Financial assets at amortised cost - net | 148.210 | 104.911 |
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:
| 20220 5 |
2019 | |
|---|---|---|
| Euro - functional and presentation currency | 148.210 | 104.911 |
| (ii) Immolymont and wall surversion | 148.210 | 104.911 |
(III) Impairment and risk exposure
Note 6 sets out information about the impairment of financial assets and the company's exposure to credit risk.
Other non-financial assets 17
| 2020 e |
2019 を |
|
|---|---|---|
| Prepayments VAT recoverable |
4.078 122.645 |
77.454 |
| 126.724 | 77.454 |
18 Inventories
| 2020 = |
2019 を |
|
|---|---|---|
| Transfer from investment property (Note 14) | 67.382.984 | |
| Transfer from property, plant and equipment (Note 12) | 5.974.395 | |
| Interest capitalised during the year | 377 394 | |
| Development costs capitalised during the year | 2.046.661 | |
| 75.786.364 |
On 15 January 2020, the Board of Directors decided to proceed with the development of the Company's land with the construction of a golf resort, including the development of golfcourse clubhouse and other commercial areas as well as engage in building development activites for residential premises. The Company has already obtained the required permits for the construction of the golfcourse and residential premises. Following this decision an amount of €67.392.984 representing the carrying value of the land at 15 January 2020, that will be used for the construction and development of residential premises, was transferred from Investment Property (Note 14) to Inventory and an amount of €3.518.592 which was included as Investment Property has been transferred to Property, Plant and Equipment (Note 12) within Land and Golf development category . Additionally, an amount of €5.974.395 which was included in the Land and Golf Development category within Property, Plant and Equipment was also transferred to Inventory. The carrying value of the land transferred under Property, Plant and Equipment and Inventory from Investment Property and the Land and Golf Development costs incurred up to the date of transfer have been allocated on the basis of their respective estimated buildable square meters.
Capitalised costs of €2.046.661 includes costs which were incurred in relation to the construction and development of residential premises.
Interest amounting to €372.324 (2019: €Nil) 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% (2019: €Nil) and represents the borrowing cost of the project in 2020. The total interest capitalised in inventories since the commencement of the project in 2020 is €372.324 (2019: €Nil).
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 see Note 12.
19 Cash and cash equivalents
| 2020 (1) |
2019 e |
|
|---|---|---|
| Cash at bank and in hand | 5.656.925 | 65.352 |
| Cash and cash equivalents are denominated in the following currencies: | ||
| 2020 € |
2019 ਵ |
|
| Euro - functional and presentation currency | 5.656.925 | 65.352 |
Principal non-cash investing and financing transactions
The principal non-cash investing and financing transactions during the current and prior year were the acquisition of right-of-use assets using leases for €156.682.
20 Share capital and share premium
| Number of shares |
Share capital ਵ |
Share premium € |
Total ਵ |
|
|---|---|---|---|---|
| At 1 January 2019/ At 31 December 2019/ At 1 January 2020 |
2 500 011 | 4.275.019 19.113.436 23.388.455 | ||
| Issue of shares | 261 663 | 447.443 | 6.617.457 7.064.900 | |
| At 31 December 2020 | 2 761 674 4.722.462 25.730.893 33.009.856 |
The total authorized number of ordinary shares is 3 000 000 shares (2019: 3 000 000 shares) with a par value of €1,71 per share. All issued shares are fully paid.
At the board of directors meeting held on 28 May 2020 the Company's directors approved the issuance of 261 663 shares of nominal value €1,71 per share at the price of €27 per share. As a result of this transaction an amount of €447.443 and €6.617.457 was credited to the share capital and share premium accounts respectively in equity. These shares were issued to MCY Development Limited, in accordance with the share purchase agreement.
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.
21 Basic loss per share attributable to equity holders of the Company
| 20220 | 2019 | |
|---|---|---|
| Loss attributable to shareholders (€) Weighted average number of ordinary shares in issue during the year |
(1.173.589) 2.655.575 |
(288.668) 2.500.011 |
| Basic loss per share attributable to equity holders of the parent (cent per share) |
(44.19) | (11.55) |
22 Borrowings
| 20920 은 |
2019 p |
|
|---|---|---|
| Current | ||
| Borrowings from related parties(Note 27(iii)) | 2.234.133 | |
| Bank borrowings | 1.251.961 | |
| 3.486.094 | ||
| Non-current | ||
| Borrowings from related parties (Note 27(iii)) | 8.518.927 | |
| Total borrowings | 8.518.977 | 3.486.094 |
| Maturity of non-current borrowings | ||
| Between 1 and 2 years | 683.666 | |
| Over 4 years | 7.835.262 | |
| 8.518.927 | ||
The borrowings from related parties are repayable by 31 December 2025.
On 30 December 2015, the previous ultimate parent company, Lanitis E.C. Holdings Limited, together with its subsidiaries, Lanitis Farm Limited and Lanitis Golf Public Co Limited, signed an agreement with their key lender, a bank, to restructure their credit facilities. The total credit facilities of Lanitis E.C. Holdings Limited, Lanitis Fam Limited and Lanitis Golf Public Co Limited (together the "Co-Obligors") of an amount of €165,8 million were restructured in accordance to two loan agreements. The first loan agreement, the senior term facility, covers credit facilities of an amount of €100 million and the second loan agreement, the subordinated term facility, covers credit facilities of an amount of €65,8 million. Lanitis E.C. Holdings Group Limited (the company and its subsidiaries) effected repayments of the bank loan and the remaining group bank loan at year end amounted to €58.221.000. The bank borrowing of €1.251.961 included in the financial position of the company forms part of the loans referred above.
As at the year ended 31 December 2019, the above credit facilities are secured through corporate guarantees, pledges and mortgages of assets and floating charges over the net assets of the Obligors, including the immovable property of the Company (Note 12 and Note 14). The repayment of bank loans comprised schedule repayments of the total senior and subordinated loan amounts referred to above. The main source of repayment of these loans would be the sale of assets of the Lanitls E.C. Holdings Limited Group, including real estate assets of the Co-Obligors. In accordance to the schedule repayment of Lanitis Group as of year-end the bank's repayment of the loan of €1.251.961 would be effected in 2020.
During the year ended 31 December 2020, Lanitis E.C. Holdings Limited and the Co-Obligors made significant loan repayments towards the senior and the subordinated term facility. Furthermore as a result of the latest payment towards the key lender, on 15 January 2020, the Company and its Co-Obligors have settled bank borrowings of the Co-Obligors towards the key lender, including full settlement of the bank facilities of the Company. On the same date, the key lender has released the Company from being a Co-Obligor and or guarantor and further all pledges and guarantees relating to the Company's shares and immovable property assets have been released.
22 Borrowings (continued)
The weighted average effective interest rates at the balance sheet date were as follows:
| 2020 | 2019 | |
|---|---|---|
| 0/0 | % | |
| Bank borrowings | n/a | 3,5 |
| Borrowings from related parties (Note 27(iii)) |
The Company has the following undrawn borrowing facilities from borrowings with related parties:
| 2020 | 2019 | |
|---|---|---|
| ਵ | ||
| Floating rate: | ||
| Expiring beyond one year | 1.316.334 |
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.
The fair value of non-current borrowings between 1-2 years, equals their carrying amounts, as the impact of discounting is not significant.
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 intial 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 €19.439 and €372.324 was capitalised as part of property, plant and equipment and inventories respectively.
The carrying amounts of the Company's borrowings are denominated in the following currencies:
| 2020 | 2019 | |
|---|---|---|
| Euro - functional and presentation currency | 8.518.927 | 3.486.094 |
Deferred income tax liabilities 23 -
The gross movement on the deferred income tax account is as follows:
| Tax losses € |
Investment Property Fair value gains ਵ |
Total ਵ |
|
|---|---|---|---|
| At 1 January 2019 | 5.988.947 | 5.988.947 | |
| At 31 December 2019 | 5,988,947 | 5.988.947 | |
| At 1 January 2020 Charged/(credited) to: |
5.988.947 | 5.988.947 | |
| Profit or loss (Note 11) | (231,494) | (231,494) | |
| At 31 December 2020 | (231.494) | 5.988.947 | 5.757.453 |
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.
As at 31 December 2020, the Company had tax losses carried forward amounting to €1.893.931 for which a deferred tax asset was recognised. From these losses an amount of €310.148 expires in 2023, €261.328 expires in 2024 and €1.280.478 expires in 2025.
24 Non-Current Trade and other payables
| 2020 (T |
2019 ਵ |
|
|---|---|---|
| Payable to related party (Note 27(ii)) | 405.572 | |
| Trade and other payables 25 |
||
| 2020 € |
2019 を |
|
| Payables to related parties (Note 27(ii)) Other payables Accrued expenses Total financial payables within trade and other payables at amortised cost Social insurance and other taxes Total other payables |
5.305 332494 95,557 633.356 26.505 26 -505 |
4.470.456 601.709 17.253 5.089.418 6.728 6.728 |
| Trade and other payables | 659.861 | 5.096.146 |
The fair value of trade and other payables which are due within one year approximates their carrying amount at the balance sheet date.
As per the shareholder purchase agreement concluded on 15 January 2020, the payable balance oustanding as of that effective date to Cybarco Development Limited and Lanitis E.C Holdings Limited, being €4.093.242 were capitalised instead of cash settled.
26 Commitments
(a) An amount of €5 million is payable to the Town Planning and housing Department of the Ministry of interior in the period of 10 years for the permit to develop the golf resort project of the Company.
In accordance with the resolution taken by the Ministry Cabinet of the Republic on 22 June 2016, the Company need to pay annual instalments of €0.5 million each, until full repayment of the above noted €5 million.
The Company has already settled the liabilities for the years 2013 to 2019. The commitment for the year 2020 was not settled up to date of the approval of the financial statements.
(b) An amount of €2.175.450 is payable to the Limassol water board upon the commencement of any construction work.
27 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
(ii)
| 2020 15 |
2019 € |
|
|---|---|---|
| Purchases of goods: Lanitis Farm Limited (Interest Expense) |
69.463 | |
| Lanitis E.C. Holdings (Management Fees) | 24.000 | 20.000 |
| 24.000 | 89.463 | |
| Year-end balances with related parties | ||
| 20220 | 2019 | |
| C | € | |
| Receivables from related parties (Note 16): | ||
| MCY Development Limited (Parent Company) | 145.621 | 104 911 |
| Lanitis Farm Limited | 1-328 | |
| 146.949 | 104.911 | |
| Payables to related parties(Note 24) and (Note 25) | ||
| Carobmill Restaurants Limited | 876 | |
| Heaven's Garden Waterpark Limited | 143 | |
| Cybarco Development Limited ( 1 ) | 1.500.000 | |
| Lanitis E.C Holdings Limited | 33.653 | |
| Cybarco Contracting Limited | 30.000 | |
| I anitis Farm imited | 405.572 | |
| Lanitis E.C. Holdings Limited ( 1 ) | 2.905.784 | |
| Amol Enterprises Limited | 5.305 | |
| 5.305 | 4.876.028 |
The above balances bear no interest and are repayable on demand.
27 Related party transactions (continued)
(ii) Year-end balances with related parties (continued)
( 1 ) As per the shareholder purchase agreement concluded on 15 January 2020, the payable balance oustanding as of that effective date to Cybarco Development Limited and Lanitis E.C Holdings Limited, being €4.093.242 were capitalised instead of cash settled.
As at 31 December 2019, the credit facilities of the Company, Lanitis Farm Limited and Lanitis E.C Holding Limited were secured through corporate guarantees, pledges and mortgages of assets and floating charges over the net assets of the Companies, including the immovable property of the Company as disclosed in Note 22.
(iii) Borrowings from related parties
| 2020 | 2019 | |
|---|---|---|
| € | ਵ | |
| Borrowings from related parties: | ||
| At beginning of year | 2-234 KB | 1.647.797 |
| Borrowings advanced during year | 11 7 - 3 309 | 586.336 |
| Borrowings capitalised during the year | (2.974 657) | |
| Fair value gain at initial recognition ( 2 ) | (2,556,501) | |
| Transfer from payable balance | 1677232 | |
| Unwinding of interest expense | 391.761 | |
| At end of year (Note 22) | 8.518.927 | 2.234.133 |
( 1 ) As per the shareholder purchase agreement concluded on 15 January 2020, the loan balance oustanding as of that effective date from Lanitis Farm Limited, being €2.971.658 was capitalised instead of cash settled.
( 2 ) 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.
28 - 1 Events after the balance sheet date
In February 2021 the Company released a limited number of plots to the market, by the end of February all available plots have been reserved from potential buyers and the first sales contracts have been signed and submitted to the land registry within April 2021. The Company has officially appointed a contractor for the construction of the first phase of infrastructure on 25 February 2021, the contractor has officially mobilised and started works on 5 April 2021.
There were no other material events after the balance sheet date, which have a bearing on the understanding of the financial statements.
Independent Auditor's Report on pages 7 to 11.