Annual Report • Jun 9, 2021
Annual Report
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| Page | |
|---|---|
| Board of Directors and other officers | 1 |
| Declaration of Directors and other responsible officers of the Company for the preparation of the financial statements |
2 |
| Management Report | 3 – 8 |
| Independent auditor's report | 9 – 15 |
| Consolidated income statement and other comprehensive income | 16 |
| Company's income statement and other comprehensive income | 17 |
| Consolidated balance sheet | 18 |
| Company's balance sheet | 19 |
| Consolidated statement of changes in equity | 20 |
| Company's statement of changes in equity | 21 |
| Consolidated statement of cash flows | 22 |
| Company's statement of cash flows | 23 |
| Notes to the financial statements | 24 – 69 |
George St. Galatariotis, Executive Chairman Costas St. Galatariotis, Director Stavros G. St. Galatariotis, Director Michalis Christoforou, Director Michalis Mousiouttas, Director Antonis Antoniou Latouros, Director
Elena Stylianou
197 Makarios III Avenue Gala Tower CY-3030 Limassol Cyprus
PriceWaterhouseCoopers Ltd City House Karaiskaki 6 3032 Limassol
197 Makarios III Avenue Gala Tower CY-3030 Limassol Cyprus
In accordance with Article 9 sections 3 (c) and (7) of the Transparency Requirements (Traded Securities in Regulated Markets) Law of 2007 (N190(I) 2007) as this was amended, we, the members of the Board of Directors and the other responsible officers of the Company for the preparation of the consolidated and separate financial statements of K+G Complex Public Company Limited for the year ended 31 December 2020 we confirm that, to the best of our knowledge:
| Name and surname | Signature |
|---|---|
| George St. Galatariotis (Executive Chairman) | |
| Costas St. Galatariotis (Director) | |
| Stavros G. St. Galatariotis (Director) | |
| Michalis Christoforou (Director) | |
| Michalis Mousiouttas (Director) | |
| Antonis Antoniou Latouros (Director) |
| Name and surname | Position | Signature |
|---|---|---|
| Elena Stylianou | Financial Manager |
1 The Board of Directors of Κ+G Complex Public Company Limited (the "Company"), and its subsidiary collectively referred to as the 'Group', presents its management report together with the audited consolidated financial statements of the Group and the audited separate financial statements of the Company for the year ended 31 December 2020.
2 The principal activities of the Company and the Group, which are unchanged from last year, are the following:
3 There has been no change in the structure of the Company/Group during the year. The Company/Group does not intend to make any redemption or merger.
4 The Group's operating profit for 2020 amounts to €246 thousand compared to operating loss of €397 thousand in 2019. This is due to sales realised in 2020 compared to to 2019, where the Group didn't realise any sales.
The Group's net profit for the year 2020 amounted to €13.987 thousand compared to €806 thousand in 2019. This is due to the increased results from its associated, The Cyprus Cement Public Company Limited. The increase in net profit is due to the profit on revaluation of the investment property at fair value.
At 31st December 2020, the Group's total assets amounted to €114.610 thousand (2019: €100.585 thousand) and the net assets amounted to €104.448 thousand (2019: €90.150 thousand).
5 The Company's net profit for the year 2020 amounted to €227 thousand compared to net loss of €25 thousand for the year 2019. This is due to sales realised in 2020 compared to 2019, where the Group didn't realise any sales. During the year 2020 the Company received dividends from its associated, The Cyprus Cement Public Company Ltd of €309 thousand, and from its subsidiary Galatex Tourist Enterprises Ltd of €63 thousand (2019: dividends from the associated amounted to €772 thousand).
At 31st December 2020, the total assets of the Company amounted to €47.184 thousand (2019: €47.275 thousand) and the total net assets amounted to €34.249 thousand (2019: €34.080 thousand).
6 The financial position, development and performance of the Company and the Group as presented in these financial statements are considered as expected.
7 The Company/Group takes into account and complies with all health, safety and environmental regulations that affect the operations in which the Company/Group operates. In this context, the Board of Directors monitors on an ongoing basis non-financial Key Performance Indicators in relation to health, safety and environmental regulations. Until now, the Company/Group has not violated any of the aforementioned regulations. The Company/Group is not involved in any legal, governmental or arbitral proceedings that will result in any material obligations to the Company/Group. This is in line with the general culture and vision of the Company/Group.
8 The Group's/Company's major risks and uncertainties are disclosed in Notes 1, 6 and 28. The Group's and the Company's activities are subject to various risks and uncertainties, the most significant of which are the risks connected to the construction and tourist industry. These activities are influenced by a number of factors which include, but are not limited to:
The Group/Company monitors these risks through various mechanisms and revises its strategy in order to mitigate, to the extent this is possible, the impact of such risks.
Furthermore, the Group's/Company's Board of Directors closely monitors the local and international developments and takes all necessary measures it can in order to mitigate the negative impact from the spread of COVID-19.
9 The Group's/Company's operations expose it to a variety of financial risks: market risk (including fair value interest rate risk), credit risk and liquidity risk.
10 The Company's and the Group's risk management program focuses on the unpredictability of the financial markets and seeks to minimise the potential adverse effects on the Company's and the Group's financial performance. Risk management is carried out by the Management.
11 The Group's/Company's interest rate risk arises from interest-bearing assets and long term borrowings. Interest-bearing assets and long term borrowings issued at fixed rates, expose the Group and the Company to fair value interest rate risk. Interest-bearing assets and long term borrowings issued at floating interest rates, expose the Group and the Company to Liquidity risk.
12 At 31st December 2020, the Group's/Company's interest-bearing assets and liabilities issued at fixed interest rate amounted to €7.479/€7.479 thousand and €0/€3.102 thousand respectively. The Group's/Company's liabilities bearing floating interest rate amounted to €9.631/€9.631 thousand, respectively. The Group's/Company's management monitors the fluctuations in interest rates on a continuous basis and acts accordingly. The Group/Company does not apply hedge accounting for fair value interest rate risk.
13 Credit risk arises from deposits with banks and financial institutions as well as from exposure to credits from sales to customers and balances with related companies, including outstanding receivables and binding transactions. The Management does not expect any damages from non-fulfilment of obligations on behalf of these parties.
14 For banks and financial institutions, only organizations that are rated by independent parties are accepted. The Management estimates the customer's credit quality, taking into account his financial situation, past experience and other factors.
15 The Management controls current liquidity on the basis of expected cash flows. Prudent liquidity risk management involves the management of sufficient cash and the availability of finance through a sufficient amount of blocked credit facilities. The Group/Company Management believes that it is successful in managing the Group/Company exposure to liquidity risk.
16 The Board of Directors does not expect any significant changes or developments in Company's and the Group's operations, financial position and performance for the foreseeable future.
17 With the rapid development of the Coronavirus (COVID-19) the Cyprus economy and the world economy have entered a period of unprecedented health care crisis that has already caused significant global disruption in business activities and everyday life. The extend of this pandemic and its impact Group's /Company's financial results cannot be predicted with certainty. It is clear however that the draconian regulatory measures imposed by the authorities in order to reduce and mitigate the impact on citizen's health have a significant impact on the real economy, the hotel sector, the real estate and the construction industry.
18 The results of the Group and the Company for the year are set out on pages 16 and 17 respectively. After the evaluation of the availability of profits distribution and the liquidity of the Group/Company the shareholders approved the dividends distribution as shown below.
19 At the Annual General Meeting of Company's Shareholders on 30th July 2020, the Board of Directors did not propose any dividend payment.
20 There were no changes to the share capital of the Company during the year 2020.
21 The members of the Board of Directors as at 31 December 2020 and at the date of this report are presented on page 1. All of them were members of the Board of Directors throughout the year 2020.
22 In accordance with the Company's Articles of Association Messrs. Costas Galatariotis and Michalis Mousiouttas, retire at the next Annual General Meeting and, being eligible, offer themselves for re-election.
23 There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors.
24 The Board of Directors has not adopted the provisions of the Corporate Governance Code. The Company is not obliged to adopt the provisions of the code as its titles are traded at the Alternative Market of the Cyprus Stock Exchange. The main reason for the non- adoption of the Corporate Governance Code is that the costs to be incurred by the adoption of the Corporate Governance Code would be disproportionately higher than any anticipated benefits that may be derived from its adoption.
25 The Board of Directors, is responsible, for the establishment of sufficient internal control procedures and risks control mechanisms, for the drafting, preparation, content and publication of all periodical information that is required for listed companies. The responsible person for the preparation of the financial statements is the Financial Manager.
26 The Audit Committee consists of the following members:
The Committee meet with external auditors for independent discussion without the presence of Executive Directors. The Audit Committee review a wide range of financial issues, including annual and semi-annual results, statements and accompanying reports, before submitting them to the Board of Directors, as well as overseeing the procedures for choosing accounting principles and accounting calculations for the Company's financial statements. Also, the Audit Committee advises the Board of Directors on the appointment of external auditors and their fees for audit and non-audit work. The Audit Committee discusses extensively with the auditors the findings that have arisen during the audit as well as the auditors' report.
Shareholders holding more than 5% of the Company's share capital
28 The shareholders who held more than 5% of the issued share capital of the Company with voting rights on 10th May 2021, are as follows:
% holding
C.C.C. Holdings & Investments Limited * 83,81
* Included in the interest of George St. Galatariotis as presented in the Directors' interest below.
29 The Company has not issued any titles with special control rights and there are no restrictions on voting rights.
30 The appointment and replacement of the members of the Board of Directors is done at its Annual General Meeting in accordance with the provisions of the Company's Articles of Association. The Company's Articles of Association provides that the Board of Directors has the power to appoint, at any time, any person as Director and such person that is appointed by the Board of Directors will hold his office until the next Annual General Meeting of the Company.
31 The Company's Articles of Association can be modified by the passing of a special resolution at an Extraordinary General Meeting of the shareholders.
32 The Board of Directors, subject to approval by the Company's shareholders, can proceed with the issue or the purchase of the Company's shares. The issue of any new shares is further subject to the provisions of the Company's Articles of Association, the prevailing law and the principle of fair treatment to all existing shareholders.
33 The Board of Directors consists of 6 members and meetings are convened at regular intervals. The Board of Directors approves the Company's and Group's strategy and supervises the adoption and realization of the Company's and Group's strategic development.
34 The beneficial interest in the Company's share capital held by each Director, their spouse, children and companies in which they hold directly or indirectly at least 20% of the shares with voting rights in a general meeting, at 31 December 2020 and on 10th May 2021 was as follows:
| 10th May 2021 |
31 December 2020 |
|
|---|---|---|
| % | % | |
| George St. Galatariotis (1) | 83,81 | 83,81 |
| Costas St. Galatariotis (1) | - | - |
| Stavros G. St. Galatariotis (1) | - | - |
| Michalis Christoforou | - | - |
| Antonis Antoniou Latouros | - | - |
| Michalis Mousiouttas | - | - |
(1) The participation percentage share held by Mr. George St. Galatariotis includes his indirect participation resulting from family relationships between himself and Stavros G. St. Galatariotis and Costas St. Galatariotis and their indirect participation in C.C.C. Holdings & Investments Limited.
35 Other than the transactions and the balances with the Directors and related parties referred to in Note 27 of the financial statements, there were no other significant contracts with the Company, or its subsidiaries at 31 December 2020 in which the Directors or related parties had a material interest. Related persons include the spouse, minor children and companies in which Directors hold directly or indirectly at least 20% of the voting rights in a general meeting.
36 The important events occurred after the reporting period are disclosed on note 29. There were no other material events after the reporting period, which have a bearing on the understanding of the financial statements.
37 The Company and Group did not operate through any branches during the year.
38 The independent auditors of the Company, Pricewaterhousecoopers Ltd, have expressed their willingness to continue in office. A Resolution authorising the Board of Directors to fix their fee will be proposed at the Annual General Meeting.
C.C.C. Secretarial Limited Secretary
Limassol, 10th May 2021
To the Members of The K + G Complex Public Company Limited
In our opinion, the accompanying consolidated financial statements of K + G Complex Public Company Limited (the "Company") and its subsidiary (together the "Group") and the accompanying separate financial statements of the Company give a true and fair view of the consolidated and separate financial position of the Group and Company respectively as at 31 December 2020, and of the consolidated and separate financial performance and the consolidated and separate cash flows of the Group and the Company respectively, 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.
We have audited the consolidated and separate financial statements which are presented in pages 18 to 78 and comprise:
The financial reporting framework that has been applied in the preparation of the consolidated and separate financial statements is International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
PricewaterhouseCoopers Ltd, City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus P O Box 53034, CY-3300 Limassol, Cyprus T: +357 25 - 555 000, F:+357 - 25 555 001, www.pwc.com.cy
PricewaterhouseCoopers Ltd is a private company registered in Cyprus (Reg. No.143594). Its registered office is at 3 Themistocles Dervis Street, CY-1066, Nicosia. A list of the company's directors, including for individuals the present and former (if any) name and surname and nationality, if not Cypriot and for legal entities the corporate name, is kept by the Secretary of the company at its registered office. PwC refers to the Cyprus member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
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 Consolidated and Separate 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.
We remained independent of the Group and the Company throughout the period of our appointment 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 consolidated and separate financial statements in Cyprus and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We focused on this matter due to the size of the carrying value of the investment in associate of €103.088 thousands compared to the total assets of the Group, given that the profit of the Group is significantly affected from the share of the associate's profit as well as by the main characteristics that affect the above.
In particular, the significant matter that has affected the carrying value of the investment is as follows:
We discussed with the Group's management and assessed the data, assumptions, valuation methodology and calculations made by the associate's management for the estimation of the fair value of the property, based on data and assumptions of high subjectivity, particularly in relation to the separation of the property into notional zones.
We have evaluated the independence and competence of the external valuer used by the associate.
We focused on this matter due to the size of the fair value of the land for development of the associate amounting to €283.858 thousands at 31 December 2020 and due to the complexity and high degree of subjectivity of the associate's management's assessment of the fair value of the property, including the high degree of subjectivity in the method used to separate the property into notional zones.
The separation of the notional zones from the associate's management was done to take into account the planning permit that was obtained, the plan for possible development of the property, the non-uniformity in the shape and the geographical advantages of each zone.
On 31 December 2020, the associate's management proceeded to a revaluation of the investment property, following receipt of the planning permission. The revaluation of investment property at fair value resulted in a gain of €45.700 thousands, which has been recognized as "gain from revaluation of investment property" in the associate's consolidated income statement.
The estimate of the associate's management for the determination of the fair value of land for development at 31 December 2020 was based on the independent assessment carried out by independent certified valuers.
The independent valuers, who were appointed by the associate's management, have stated in their report that the property valuations as at 31 December 2020 are subject to "material valuation uncertainty". This statement indicates less certainty and therefore imposes a higher degree of attention on property valuations as a result of the impact of the COVID-19 pandemic. This represents a material valuation uncertainty in relation to the appraisal of the fair value of investment property.
Refer to Notes 7 and 19 of the consolidated and separate financial statements for further information.
Internal experts of our office, with the required knowledge and skills, have been involved to support us in our assessment of the fair value measurement of the property performed by the associate's management which was based on the independent valuation performed by the external valuer.
More specifically, with the support of internal experts, we examined the calculations made by the associate's management and the technical and mathematical accuracy of the valuation model. We also evaluated the reasonableness of the significant assumptions made by the associate's management through a comparison with observable market data.
In addition, we evaluated the sensitivity analysis in relation to the effect on the fair value of the property arising from the change in the separation of the property into notional zones and the change in the price per square meter per zone.
Finally, we evaluated the adequacy of the disclosures made in Notes 7 and 19 of the consolidated and separate financial statements in relation to the data, key assumptions and sensitivity analysis on specific key assumptions. Note 7 explains that there is material valuation uncertainty in relation to the assessment of the fair value of investment property of the associate at 31 December 2020.
The results of the above procedures were satisfactory for the purposes of our audit.
The Board of Directors is responsible for the other information. The other information comprises the information included in the Declaration of the Board of Directors and other Company officials responsible for the financial statements and in the Management Report, but does not include the consolidated and separate financial statements and our auditor's report thereon.
Our opinion on the consolidated and separate 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 consolidated and separate 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 consolidated and separate 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.
The Board of Directors is responsible for the preparation of the consolidated and separate 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 consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the Board of Directors is responsible for assessing the Group's and 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 Group and the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group's and the Company's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the consolidated and separate 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 consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
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, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters.
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in our Independent Auditor's Report, which is required in addition to the requirements of International Standards on Auditing.
We were first appointed as auditors of the Company in 1996 by the Board of Directors for the audit of the financial statements for the year ended 31 December 1996. Our appointment was renewed annually, since then, by shareholder resolution. On 12 May 2005, the Cyprus Stock Exchange was first included in the list of regulated markets prepared by the European Commission and published in the Official Journal of the European Union and as a result, the first financial year in which the Company was designated as a Public Interest Entity (PIE) in the European Union was the year ended 31 December 2005. Since then, including our reappointment following the tendering process for the year ended 31 December 2018, the total period of uninterrupted engagement appointment was 16 years.
We confirm that our audit opinion on the consolidated and separate financial statements expressed in this report is consistent with the additional report to the Audit Committee of the Company, which we issued on 10 May 2021 in accordance with Article 11 of the EU Regulation 537/2014.
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72 of the Auditors Law of 2017 were provided. In addition, there are no nonaudit services which were provided by us to the Group and the Company and which have not been disclosed in the consolidated and separate financial statements or the management report.
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
This report, including the opinion, has been prepared for and only for the Company's members as a body in accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor's report is Mr. Elias M. Theodorou.
Elias M. Theodorou Certified Public Accountant and Registered Auditor for and on behalf of
PricewaterhouseCoopers Limited Certified Public Accountants and Registered Auditors City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus
Limassol, 10 May 2021
| Note | 2020 €000 |
2019 €000 |
|
|---|---|---|---|
| Sales | 9 | 675 | - |
| Cost of sales | 11 | (71) _____ |
- _____ |
| Gross profit | 604 | - | |
| Administrative expenses | (444) | (485) | |
| Selling and marketing expenses | (163) | (170) | |
| Other income | 10 | 249 _____ |
258 _____ |
| Operating profit/(loss) | 246 | (397) | |
| Finance costs | 14 | (314) | (320) |
| Share of profit of investment in associates | 19 | 14.055 _____ |
1.523 _____ |
| Profit before tax | 13.987 | 806 | |
| Tax | 15 | - | - |
| Profit for the year | _____ 13.987 |
_____ 806 |
|
| Other comprehensive income | =========== | =========== | |
| Items that will not be reclassified to profit or loss | |||
| Share of movement of reserves of associates | 19 | 370 | (6) |
| Total comprehensive income for the year | _____ 14.357 =========== |
_____ 800 =========== |
|
| Profit per share (cents per share): | |||
| - Basic and fully diluted | 16 | 10,88 =========== |
0,63 =========== |
| Note | 2020 €000 |
2019 €000 |
|
|---|---|---|---|
| Sales Cost of sales |
9 11 |
675 (71) |
- - |
| Gross profit | _____ 604 |
_____ - |
|
| Administrative expenses Selling and marketing expenses Other income |
10 | (435) (163) 620 |
(475) (170) 1.030 |
| Operating profit Finance costs |
14 | _____ 626 (399) |
_____ 385 (410) |
| Profit/(loss) before tax Tax |
15 | _____ 227 - |
_____ (25) - |
| Profit/(loss) for the year | _____ 227 =========== |
_____ (25) =========== |
|
| Other comprehensive income | - | - | |
| Total comprehensive income/(loss) for the year | _____ 227 =========== |
_____ (25) =========== |
| Note | 2020 €000 |
2019 €000 |
|
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Property, plant and equipment Investments in associates |
18 19 |
27 103.088 |
36 88.972 |
| __ 103.115 __ |
__ 89.008 __ |
||
| Current assets | |||
| Inventories | 21 | 3.824 | 3.862 |
| Current receivables | 22 | 7.575 | 7.633 |
| Tax refundable Cash and cash equivalents |
23 | 10 86 |
17 65 |
| _____ 11.495 |
_____ 11.577 |
||
| Total assets | _____ 114.610 |
_____ 100.585 |
|
| =========== | =========== | ||
| Equity and liabilities Capital and reserves |
|||
| Share capital | 24 | 21.860 | 21.860 |
| Share premium | 24 | 1.757 | 1.757 |
| Reserve of changes in equity of associate company | 609 | 239 | |
| Reserve arising on translation of share capital into Euro Retained earnings |
86 80.136 |
86 66.208 |
|
| Total equity | _____ 104.448 |
_____ 90.150 |
|
| _____ | _____ | ||
| Non-current liabilities Borrowings |
25 | - | 9.961 |
| _____ - |
_____ 9.961 |
||
| Current liabilities | _____ | _____ | |
| Trade and other payables Borrowings |
26 25 |
532 9.631 |
474 - |
| _____ 10.162 |
_____ 474 |
||
| Total liabilities | _____ 10.162 |
_____ 10.435 |
|
| Total equity and liabilities | _____ 114.610 |
_____ 100.585 |
|
| =========== | =========== |
On 10th May 2021 the Board of Directors of K + G Complex Public Company Limited authorised these financial statements for issue.
George St. Galatariotis, Executive Chairman
Costas St. Galatariotis, Director
| Note | 2020 €000 |
2019 €000 |
|
|---|---|---|---|
| Assets | |||
| Non current assets | |||
| Property, plant and equipment | 18 | 27 | 36 |
| Investments in subsidiaries Investments in associates |
20 19 |
2.722 32.958 |
2.722 32.958 |
| _____ 35.707 |
_____ 35.716 |
||
| Current assets | _____ | _____ | |
| Inventories | 21 | 3.824 | 3.862 |
| Financial assets held at amortised cost | 22 | 7.574 | 7.633 |
| Cash and cash equivalents at bank | 23 | 79 _____ |
64 _____ |
| 11.477 | 11.559 | ||
| Total assets | _____ 47.184 =========== |
_____ 47.275 =========== |
|
| Equity and liabilities Capital and reserves Share capital |
24 | 21.860 | 21.860 |
| Share premium | 24 | 1.757 | 1.757 |
| Reserve arising on translation of share capital into Euro | 86 | 86 | |
| Retained earnings | 10.545 _____ |
10.377 _____ |
|
| 34.248 _____ |
34.080 _____ |
||
| Non current liabilities | |||
| Borrowings | 25 | 3.102 _____ |
13.049 _____ |
| 3.102 _____ |
13.049 _____ |
||
| Current liabilities | |||
| Borrowings Trade and other payables |
25 26 |
9.631 203 |
- 146 |
| _____ | _____ | ||
| 9.834 _____ |
146 _____ |
||
| Total liabilities | 12.935 _____ |
13.195 _____ |
|
| Total equity and liabilities | 47.184 | 47.275 | |
| =========== | =========== |
On 10th May 2021 the Board of Directors of K + G Complex Public Company Limited authorised these financial statements for issue.
George St. Galatariotis, Executive Chairman
Costas St. Galatariotis, Director
| Reserve arising on translation of |
Reserve of changes in equity of |
|||||
|---|---|---|---|---|---|---|
| Share capital €000 |
Share premium (2) €000 |
share capital into Euros(2) €000 |
associated company (2) €000 |
Retained earnings (1) €000 |
Total €000 |
|
| Balance at 1 January 2019 | 21.860 ___ |
1.757 __ |
86 __ |
245 __ |
66.302 ___ |
90.250 ___ |
| Comprehensive income Profit for the year |
- ___ |
- __ |
- __ |
- __ |
806 ___ |
806 ___ |
| Other comprehensive income Share of reserves of associates (Note 19) |
- | - | - | (6) | - | (6) |
| Total comprehensive profit for the year 2019 |
___ - |
__ - |
__ - |
__ (6) |
___ 806 |
___ 800 |
| Transactions with owners Dividend paid out of profits of 2018 (Note 17) |
___ - |
__ - |
__ - |
__ - |
___ (900) |
___ (900) |
| Total transactions with owners | ___ - |
__ - |
__ - |
__ - |
___ (900) |
___ (900) |
| Balance at 31 December 2019/ 1 January 2020 |
_ 21.860 _ |
_ 1.757 _ |
_ 86 _ |
_ 239 _ |
_ 66.208 _ |
_ 90.150 _ |
| Comprehensive income Profit for the year |
- ___ |
- __ |
- __ |
- __ |
13.987 ___ |
13.987 ___ |
| Other comprehensive income Share of reserves of associates (Note 19) |
- ___ |
- __ |
- __ |
370 __ |
- ___ |
370 ___ |
| Total comprehensive income for the year 2020 |
- | - | - | 370 | 13.987 | 14.357 |
| Transactions with owners Defence/GHS on deem dividend distribution -out of profits of 2018 |
___ - |
__ - |
__ - |
__ - |
___ (59) |
___ (59) |
| Total transactions with owners | ___ - |
__ - |
__ - |
__ - |
___ (59) |
___ (59) |
| Balance at 31 December 2020 | ___ 21.860 ========= |
__ 1.757 ========= |
__ 86 ======== |
__ 609 ========= |
___ 80.136 ========= |
___ 104.448 ========= |
(1) Companies which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence of the Republic Law, by the end of the two years after the end of the year of assessment to which the profits refer, will be deemed to have distributed this amount as dividend. Special contribution for defence will be payable on such deemed dividend to the extent that the shareholders for deemed dividend distribution purposes at the end of the period of two years from the end of the year of assessment to which the profits refer, are Cyprus tax residents. The special contribution for defence rate is 17% in respect of profits of years of assessment 2012 onwards. The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of the relevant year by the end of the period of two years from the end of the year of assessment to which the profits refer. This special contribution for defence is paid by the Company for the account of the shareholders.
(2) The share premium reserve, the reserve of changes in equity of associates and the reserve arising on translation of share capital into Euro are not available for distribution in the form of dividends.
| Share Capital €000 |
Share premium (2) €000 |
Reserve arising on translation of share capital into Euro (2) €000 |
Retained earnings (1) €000 |
Total €000 |
|
|---|---|---|---|---|---|
| Balance at 1 January 2019 | 21.860 ____ |
1.757 ____ |
86 ____ |
11.302 ___ |
35.005 ____ |
| Comprehensive income Loss for the year |
- | - | - | (25) | (25) |
| Total comprehensive profit for the year 2019 |
____ - |
____ - |
____ - |
___ (25) |
____ (25) |
| Transactions with owners Dividend paid out of profits of 2018 (Note 17) |
____ - |
____ - |
____ - |
___ (900) |
____ (900) |
| Total transactions with owners | ____ - |
____ - |
____ - |
___ (900) |
____ (900) |
| Balance at 31 December 2019/ 1 January 2020 |
_ 21.860 _ |
_ 1.757 _ |
_ 86 _ |
_ 10.377 _ |
_ 34.080 _ |
| Comprehensive income Profit for the year |
- ____ |
- ____ |
- ____ |
227 ___ |
227 ____ |
| Total comprehensive profit for the year 2020 |
- | - | - | 227 | 227 |
| Transactions with owners Defence/GHS on deem dividend distribution- out of profits of 2018 |
____ - |
____ - |
____ - |
___ (59) |
____ (59) |
| Total transactions with owners | ____ - |
____ - |
____ - |
___ (59) |
____ (59) |
| Balance at 31 December 2020 | ____ 21.860 ========== |
____ 1.757 ========== |
____ 86 ========== |
___ 10.545 ========= |
____ 34.248 ========== |
(1) Companies which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence of the Republic Law, by the end of the two years after the end of the year of assessment to which the profits refer, will be deemed to have distributed this amount as dividend. Special contribution for defence will be payable on such deemed dividend to the extent that the shareholders for deemed dividend distribution purposes at the end of the period of two years from the end of the year of assessment to which the profits refer, are Cyprus tax residents. The special contribution for defence rate is 17% in respect of profits of years of assessment 2012 onwards. The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of the relevant year by the end of the period of two years from the end of the year of assessment to which the profits refer. This special contribution for defence is paid by the Company for the account of the shareholders.
(2) The share premium reserve, the reserve arising on translation of share capital into Euro are not available for distribution in the form of dividends.
| Note | 2020 €000 |
2019 €000 |
|
|---|---|---|---|
| Cash flows from operating activities | |||
| Profit before tax | 13.987 | 806 | |
| Interest expense | 14 | 314 | 320 |
| Interest income Depreciation of property, plant and equipment |
10 12 |
(249) 9 |
(252) 9 |
| Share of profit of associates | 19 | (14.055) ____ |
(1.523) ____ |
| 6 | (639) | ||
| Changes in working capital: Inventories |
38 | (3) | |
| Financial assets held at amortised cost | 74 | (125) | |
| Trade and other payables | (1) ____ |
(382) ____ |
|
| Cash generated from/(used in) operations | 117 | (1.149) | |
| Tax paid | 6 ____ |
- ____ |
|
| Net cash generated from/(used in) operating activities | 123 ____ |
(1.149) ____ |
|
| Cash flows from investing activities | |||
| Loans granted to related parties | 27 (vi) | (15) | (13) |
| Repayments of loans from related parties | 27 (vi) | 240 | 150 |
| Interest received Dividend received |
19 | 8 309 |
- 772 |
| Additions Property, plant and equipment | 18 | - | (45) |
| Net cash generated from investing activities | ____ 542 |
____ 864 |
|
| Cash flows from financing activities | ____ | ____ | |
| Repayments of bank loan | 23 | (331) | - |
| Interest paid | 23 | (314) | - |
| Dividend paid to the shareholders | - ____ |
(146) ____ |
|
| Net cash used in financing activities | (645) ____ |
(146) ____ |
|
| Net increase/(decrease) in cash, cash equivalents and bank | |||
| overdrafts Cash, cash equivalents and bank overdrafts at the |
21 | (431) | |
| beginning of the year | 65 ____ |
496 ____ |
|
| Cash, cash equivalents and bank overdrafts at the end | |||
| of the year | 23 | 86 ========== |
65 ========== |
For non-cash transactions refer to note 23.
| Note | 2020 €000 |
2019 €000 |
|
|---|---|---|---|
| Cash flows from operating activities Profit/(loss) before tax |
227 | (25) | |
| Adjustments for: Interest income Interest expense Dividend Income Depreciation of property, plant and equipment |
10 14 10, 27 (iii) 12 |
(248) 399 (373) 9 ____ |
(252) 410 (772) 9 ____ |
| Changes in working capital: | 14 | (630) | |
| Inventories Financial assets held at amortised cost Trade and other payables |
38 76 (1) ____ |
(3) 1 (382) ____ |
|
| Cash generated from/(used in) operations Tax paid |
127 - |
(1.139) - |
|
| Net cash generated from operating activities | ____ 127 |
____ (1.139) |
|
| Cash flows from investing activities Loans granted to related parties Proceeds from repayment of loans from related parties Additions Property, plant and equipment Interest received Dividend received |
27 (vi) 27 (vi) 18 |
_ (15) 240 - 7 309 ______ |
_ (13) 150 (45) - 772 ______ |
| Net cash from investing activities | 541 ___ |
864 ___ |
|
| Cash flows from financing activities Repayment of loans from related parties Repayment of bank loan Interest paid Dividend paid to shareholders |
27 (v) 23 23 |
(8) (331) (314) - |
(10) - - (146) |
| Net cash used in financing activities | ____ (653) |
____ (156) |
|
| Net increase in cash, cash equivalents and bank overdrafts Cash, cash equivalents and bank overdrafts at the beginning of the year |
____ 15 64 |
____ 365 495 |
|
| Cash, cash equivalents and bank overdrafts at the end of the year |
23 | ____ 79 ========== |
____ 64 ========== |
For non-cash transactions refer to note 23.
K+G Complex Public Company Limited (the "Company") was incorporated in Cyprus in June 1980, as a private limited liability company in accordance with the provisions of the Cyprus Companies Law, Cap. 113, and in May 1981 became a public company. The Company is listed on the Cyprus Stock Exchange. Its registered office of the Company is at 197 Makarios III Avenue, Gala Tower, CY-3030 Limassol, Cyprus.
The principal activities of the Company and the Group, which are unchanged from last year, are the following:
On 11th March 2020, the World Health Organization declared the rise of the Coronavirus COVID-19 as a pandemic, recognising its rapid spread around the world.
With the recent and rapid development of Coronavirus (COVID-19) disease, the global economy has entered a period of unprecedented crisis in the field of health care, which has already caused significant global disruption in business activities and daily life. Many countries have adopted extraordinary and costly restraint measures. Some countries have required companies to limit or even suspend their usual business activities. Governments, including the Republic of Cyprus, have imposed travel restrictions as well as strict quarantine measures.
Industries such as tourism, hospitality and entertainment are directly affected by these measures. Other industries such as construction are also indirectly affected and their results are also negatively affected.
The financial effect of the current crisis on the global economy and the Cypriot economy since the spread of Coronavirus (COVID-19) cannot be assessed with reasonable certainty at this stage due to the rate of expansion of the disease and the high level of uncertainty arising from the inability to predict the outcome.
The Group's/Company's Board of Directors closely monitors domestic and international developments and takes all appropriate measures within its capabilities in order to mitigate the negative effects of the spread of Coronavirus (COVID-19).
The consolidated financial statements of K+G Complex Public Company Limited and its subsidiary (together the "Group") and the separate financial statements of the Company have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), and the requirements of the Cyprus Companies Law, Cap. 113.
As of the date of the authorisation 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 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.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and requires management to exercise its judgement in the process of applying the Company's and Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 7.
The consolidated and separate financial statements have been prepared on a going concern basis, which provides the realization of assets and fulfilment of liabilities in the normal course of business.
During the year ended 31 December 2020, the Group realized profit for the year of €13.987 thousand, and on 31 December 2020, the Group's total net current assets amounted to €1.333 thousand.
During the year ended 31 December 2020, the Company realized profit for the year of €227 thousand, and on 31 December 2020 the Company's net current assets amounted to €1.643 thousand.
At 31 December 2020, there is a loan of €9.631 thousand, which is repayable in November 2021. The Group/Company has entered into preliminary discussions with Alpha bank Cyprus Ltd for loan restructuring in case it is not possible to repay it in full at maturity. The bank has confirmed its intention to proceed with the restructuring of the loan in case it not possible to repay it at maturity.
The Group and the Company, take all measures to develop/improve the land it owns, and intensify the efforts to dispose this land to interested buyers, in order to proceed with the repayment of bank loan.
In view of the above, the Board of Directors of the Group and the Company considers that the restructuring of the loan will be finalized soon, and considers that there are not any factors indicating the existence of uncertainty about the Group and the Company ability to continue as going concern, and that the preparation of these consolidated and separate financial statements on a going concern basis is appropriate
During the current year the Group/Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2020. This adoption did not have a material effect on the accounting policies of the Group/Company.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented in these financial statements unless otherwise stated.
Revenue represents the amount of consideration to which the Group/Company expects to be entitled in exchange for transferring the promised goods or services to the customer, excluding amounts collected on behalf of third parties (for example, value-added taxes); the transaction price. The Group/Company includes in the transaction price an amount of variable consideration as a result of rebates/discounts only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The Group/Company recognises revenue when the parties have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations, the Group/Company can identify each party's rights and the payment terms for the goods or services to be transferred, the contract has commercial substance (i.e. the risk, timing or amount of the Group's/Company's future cash flows is expected to change as a result of the contract), it is probable that the Group/Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer and when specific criteria have been met for each of the Group's/Company's contracts with customers.
The Group/Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration is probable, the Company considers only the customer's ability and intention to pay that amount of consideration when it is due.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimates are reflected in the income statement in the period in which the circumstances that give rise to the revision become known by management.
The Group/Company assesses whether contracts that involve the provision of a range of goods and/or services contain one or more performance obligations (that is, distinct promises to provide a service) and allocates the transaction price to each performance obligation identified on the basis of its stand-alone selling price. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service, either on its own or together with other resources that are readily available to the customer (that is the good or service is capable of being distinct) and the Group's/Company's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the good or service is distinct within the context of the contract).
Revenue is recognised when control over the property has been transferred to the customer. The properties have generally no alternative use for the Group/Company due to contractual restrictions. However, an enforceable right to payment does not arise until legal title has passed to the customer. Therefore, revenue is recognised at a point in time when the legal title has passed to the customer.
The revenue is measured at the transaction price agreed under the contract. In most cases, the consideration is due when legal title has been transferred. While deferred payment terms may be agreed in rare circumstances, the deferral never exceeds twelve months. The transaction price is therefore not adjusted for the effects of a significant financing component.
The Group/Company does not have any material contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group/Company elects to use the practical expedient and does not adjust any of the transaction prices for the time value of money.
Interest income on financial assets at amortised cost calculated using the effective interest method is recognised as "Other income" in the Income statement and other comprehensive 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). For Stage 1 and Stage 2 the effective interest rate is applied to the gross amount of financial assets.
Dividend income is recognised as "other income" in the Company's and Group's results when the Company's/Group's right to receive payment is established.
The classification depends on the Group/Company's business model for managing the related assets portfolio and the contractual cash flow of the financial assets. The management determines the classification of assets on initial recognition.
The Group/Company classifies its financial assets at amortised cost. Financial assets at amortised cost are held to collect contractual cash flows and their cash flows represent only capital and interest payments. They are included in current assets other than those which have expired more than 12 months after the balance sheet date. These are classified as non-current assets.
The Group/Company's financial assets at amortised costs include: cash and equivalents, loan receivables and other receivables.
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 Group/Company commits to deliver a financial instrument. All other purchases and sales are recognized when the Group/Company 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 Group/Company has transferred substantially all the risks and rewards of ownership. Any gain or loss resulting from the writeoff shall be recognised directly in the profit and loss.
At initial recognition, the Group/Company measures a financial asset at its fair value and additionally adds transaction costs that are directly attributable to the acquisition of the financial asset. These are then measured at amortized costs.
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 valuation techniques whose inputs include only data from observable markets.
The Group/Company assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost. The Group/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 recognized in the income statement and other comprehensive income.
Debt assets measured at amortised cost are presented in the balance sheet net of the allowance for ECL.
The impairment methodology applied by the Group / Company for the calculation of expected credit losses depends on the type of financial asset estimated for impairment. See Note 6, in the Credit Risk section, for a description of the impairment methodology used by the Company / Group to calculate the expected credit losses for debit financial assets at amortized cost.
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 are written-off, in whole or in part, when the Group/Company exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. The Group/Company may write-off financial assets that are still subject to enforcement activity when the Group/Company seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
The Group/Company sometimes renegotiates or modifies the contractual cash flow of financial assets. The Group/Company assesses whether the modification of contractual cash flows is significant.
If the amended terms are material, the cash flow rights from the original asset expire and the Group/Company deletes the original financial asset and recognises a new asset at fair value. The renegotiation date shall be considered as the date of initial recognition for the purposes of calculating a subsequent impairment, including the determination of whether a significant increase in credit risk ("SICR") has occurred. The Group/Company also assesses whether a new loan or debit financial asset meets the SICR criterion. Any difference between the carrying value of the original asset written off and the fair value of the new significantly modified asset shall be recognised in the profit or loss, unless the substance of the modification is attributed to capital transactions with the owners.
If the renegotiation was due to the counterparty's financial difficulties and an inability to execute the initially agreed payments, the Group/Company shall compare the initial and revised expected cash flows to assess whether the risks and benefits of the asset have significantly diversified as a result of the contractual modification. If the risks and benefits do not change, the modified asset is not substantially different from the original asset and the modification does not lead to write-off. The Group/Company recalculates the gross book value by discounting the modified contractual cash flows at the initial effective interest rate and recognises the change profit or loss in the results.
In the statement of cash flows of the Group/Company, 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 Group's/Company's balance sheet, bank overdrafts are included in the current asset liabilities (short-term liabilities). Cash and cash equivalents are carried at amortised cost: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL.
Amounts arising from transactions not in Group's/Company's ordinary operational cycle are held for the purpose of collecting their contractual cash flows and these represent only capital and interest payments. Consequently, they are measured at amortised cost using the effective interest rate method, excluding any provision for impairment. Financial assets at amortised cost are classified as current assets if they are due within one year or less (or based on the ordinary operational cycle of the Group's/Company's turnover if higher). If not, they are classified as non-current assets.
The consolidated financial statements include the financial statements of K+G Complex Public Company Limited (the "Company"), and its subsidiary company, which are collectively referred to as the "Group".
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the following;
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and the fair value of any previous equity interest in the acquired entity at the date of acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill. If those amounts are less than the fair value of the identifiable net assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquire is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss.
Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated. Profit and losses resulting from inter-company transactions that are recognised in assets are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated balance sheet.
When the Group ceases to have control over an entity, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that investment are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group's investment in associates includes goodwill identified on acquisition net of any accumulated impairment losses.
Dividends received or receivable from associate are recognised as a reduction in carrying amount of the investment.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.
The Group's share of post-acquisition profits or losses is recognised in the income statement and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary, to ensure consistency with the accounting policies adopted by the Group. Dilution gains and losses arising in investments in associates are recognised in profit or loss.
After application of the equity method, including recognising the associates' losses, the carrying amount of the investment in associate which includes the goodwill arising on acquisition is tested for impairment by comparing its recoverable amount with its carrying amount whenever there is an indication of impairment and recognizes the amount adjacent to 'share of profit/(loss)' of associates in the profit or loss.
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
Investments in subsidiaries are measured at cost less impairment. Investments in subsidiaries are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised through profit or loss 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. An impairment loss recognised in prior years is reversed where appropriate if there has been a change in the estimates used to determine the recoverable amount.
Associates are all entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are measured at cost less impairment. Investments in associates are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised through profit or loss 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. An impairment loss recognised in prior years is reversed where appropriate if there has been a change in the estimates used to determine the recoverable amount.
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors of the Group (the chief operating decision-maker). The Board of Directors, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions.
Items included in the Group's and Company's financial statements are measured using the currency of the primary economic environment in which the Group and Company operate ("the functional currency"). The financial statements are presented in Euro (€), which is the Group's and Company's functional and presentation currency.
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 recognized in profit or loss.
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 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/the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. If applicable tax regulation is subject to interpretation, it establishes provision where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax 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/the Group where there is an intention to settle the balances on a net basis.
Dividend distribution to the Group's/Company's shareholders is recognised as a liability in the Group's financial statements in the year in which the dividends are appropriately authorised and are no longer at the discretion of the Group/Company. More specifically, interim dividends are recognised as a liability in the period in which these are authorised by the Board of Directors and in the case of final dividends, these are recognised in the period in which these are approved by the Group's/Company's shareholders.
All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of property, plant and equipment.
Depreciation on 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:
| % | |
|---|---|
| Motor vehicles | 20 |
| Furniture and office equipment | 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.
Expenditure for repairs and maintenance of property, plant and equipment is charged to 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 Group/Company and the cost of the item can be measured reliably.
Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with carrying amount and are recognized in "other gains/(losses) – net" in profit or loss.
Assets that have an indefinite useful life, including goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets, other than goodwill, that have suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company/Group or the counterparty.
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses.
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.
Basic earnings per share are calculated as follows: The profits attributable to the Company's shareholders are divided by the weighted average number of ordinary shares issued during the year.
Provisions are recognised when the Company/Group 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.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings, using the effective interest method, unless they are directly attributable to the acquisition, construction or production of a qualifying asset, in which case they are capitalised as part of the cost of that asset.
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 noncash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
An exchange between the Company/Group and the original lenders of the debt instruments on substantially different terms, as well as substantial changes to the terms and conditions of the existing financial obligations, shall be deemed to be a termination of the initial financial obligation and recognition of a new financial liability. Terms are considered substantially different if the discounted present value of cash flows under the new terms, including any fees paid after deduction of any fees received and discounted at the initial effective interest rate, is at least 10% different from the discounted present value of the cash flows remaining from the original financial liability.
If an exchange of debt instruments or a modification of the terms is deemed to be redemption, any cost or fee is recognised as part of the profit or loss from the repayment. If the exchange or modification is not deemed to be repayment, any costs or fees incurred shall adjust the carrying amount of the obligation and shall be amortised throughout the remainder of the amended obligation.
Amendments to liabilities which do not result in repayment shall be accounted for as a change in the estimate using the cumulative cover method, with any gain or loss recognised in the results, unless the economic substance of the difference in book values is attributed to capital differences with the owners and is recognised directly in own funds.
Lending cost are interest and other expenses incurred by the Company/Group in connection with the borrowing of funds, including interest on borrowing, amortization of loan-related deductions or bonuses, amortization of additional costs related to the settlement of borrowing, financial lease charges and foreign exchange differences arising from foreign currency lending if they are considered as an adjustment to interest.
Lending Costa loans directly related to the purchase, construction or production of an asset that meets the criteria, an asset that compulsorily takes a significant amount of time to prepare for its intended use or sale, are capitalized as part of the cost of that asset, when it is likely that they will bring future economic benefits to the Company/Group and the costs can be reliably calculated.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 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 payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
At the date of approval of these financial statements a number of new standards and amendments to standards and interpretations 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/Group.
The Group's/Company's activities expose it to a variety of financial risks: market risk (including fair value interest rate risk), credit risk and liquidity risk.
The Company's and the Group's risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's and the Group's financial performance. Risk management is carried out by the Board of Directors.
(i) Financial risk factors (continued)
The Group's/Company's interest rate risk arises from interest-bearing assets and long-term borrowings. The interest bearing assets represent loans receivable from related parties and bank deposits. Long term borrowings represent bank borrowings and borrowings from related parties. Interest-bearing assets and borrowings at variable rates expose the Group/Company to cash flow interest rate risk. Interest bearing assets and borrowings issued at fixed rates expose the Group/Company to fair value interest rate risk.
The exposure of the Group/Company into fair value interest rate risk is not significant.
The Company's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
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.
Credit risk is managed by the Group and the Company on a group basis.
For banks and financial institutions, only independently rated parties are accepted.
If customers are independently rated, these ratings are used. Otherwise, if there is no independent rating, management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors.
The Group/Company has the following types of financial assets that are subject to the expected credit loss model:
The impairment methodology applied by the Group/Company for the calculation of expected credit losses depends on the type of financial asset estimated for impairment. More specifically:
For all other financial asset that are subject to impairment under IFRS 9, the Group/Company applies general approach – three stage model for impairment. The Group/Company applies a three stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter ("12 Months ECL"). If the Group/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 Group/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.
Impairment losses are presented as "net losses of impairment of financial assets" on operating profits. Subsequent recoveries of previously deleted amounts are credited to the same item where they were originally presented.
Significant increase in credit risk. The Group/Company shall consider the likelihood of default at the initial recognition of the asset and whether there has been a significant increase in credit risk on an ongoing basis throughout the reporting period. In order to assess whether there is a significant increase in credit risk, the Group/Company compares the default risk on the reference date with the default risk at the date of initial recognition.
The assessment shall take into account the available reasonable and supportive information relating to the future. Especially the following indicators are incorporated:
Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the internal rating model. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.
Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a contractual payment.
Default. The default of a financial asset is where the counterparty has not made contractual payments within 90 days of the maturity date of the debt.
Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the company. The Group/Company categorises a loan or receivable for write off when a debtor fails to make contractual payments greater than 180 days past due. Where loans or receivables have been written off, the Group/Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
A summary of the assumptions underpinning the Group's/Company's expected credit loss model for the loans receivable from related parties is as follows:
| Category | Group/Company | Basis for recognition of | Basis for |
|---|---|---|---|
| definition of category | expected credit loss provision |
calculation of interest revenue |
|
| Performing (Stage 1) | Counterparties have a low risk of default and a strong capacity to meet contractual cash flows |
For loans to related parties that are payable on the first demand, the expected credit losses are measured on the assumption that the loan will be demanded at the balance sheet date. When the counterparties have the ability to cover the conventional cash flows then the expected provision for credit losses will be limited to the effect of the repayment of the amount due on the loan (at the actual interest rate of the loan). For receivables from related parties and other receivables, expected credit losses are measured at 12 months expected losses. When the expected life of an asset is less than 12 months, the expected loss is measured at its expected life. |
Gross carrying amount |
Based on the above table the expected credit loss for the loans receivable from related parties as at 31 December 2019 and 31 December 2020 was not significant.
The Company/Group has no financial assets which are subject to the impairment requirements of IFRS 9 and which have had modifications to their contractual cash flows.
Loans to related parties amounted to €7.479 thousand (2019: €7.463 thousand) and other receivables amounted to €95 thousand (2019: €170 thousand) represent the maximum exposure of the Company at credit risk for the assets as at 31 December 2020 and 31 December 2019.
Loans to related parties amounted to €7.479 thousand (2019: €7.463 thousand), and other receivables amounted to €96 thousand (2019: €170 thousand) represent the maximum exposure of the Group at credit risk for the assets as at 31 December 2020 and 31 December 2019.
The Group/Company assess on individual basis its exposure to the credit risk as a result of cash and cash equivalents based on external credit ratings.
The following tables contains an analysis of the credit risk exposure of cash and cash equivalents based on external credit rating by Moody's Investors Service which represents the Group's/Company's maximum exposure to credit risk on these assets as at 31 December 2020 and 31 December 2019:
| The Group External credit rating |
Carrying amount (net of impairment provision) €000 |
|---|---|
| As at 31 December 2020 Β3 Caa1 |
9 77 |
| Total cash and cash equivalents | ___ 86 |
| As at 31 December 2019 Β3 Caa1 |
___ 64 1 |
| Total cash and cash equivalents | _ 65 _ |
• Credit risk (continued)
The Company
| External credit rating | Carrying amount (net of impairment provision) €000 |
|---|---|
| As at 31 December 2020 | |
| Β3 | 2 |
| Caa1 | 77 |
| Total cash and cash equivalents | ___ 79 |
| As at 31 December 2019 | ___ |
| Β3 | 63 |
| Caa1 | 1 |
| Total cash and cash equivalents | _ 64 _ |
The Group/Company has no mortgage as a guarantee.
The cash and cash equivalents are subject to the impairment model of IFRS 9. In accordance with the general credit loss model, the expected credit loss as at 31 December 2020 and 31 December 2019 was not significant. The cash and cash equivalents are classified as Stage 1 as at 31 December 2020 and 31 December 2019.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. The Board of Directors maintains flexibility in funding by maintaining availability under committed credit lines.
The Board of Directors monitors rolling forecasts of the Company's and the Group liquidity reserve (comprises undrawn borrowing facility (Note 25) and cash and cash equivalents (Note 23) on the basis of expected cash flow.
The Company and the Group have the following unused credit facilities:
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Floating rate: - Within one year |
1.518 | 1.518 | 1.500 | 1.500 |
| =========== | =========== | ========== | ========== |
The facilities that expire within one year are annual facilities that are subject to revision at different dates.
The table below analyses the Company's and the Group'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 and 2 | 2 to 5 | |
| 1 year | years | years | |
| €000 | €000 | €000 | |
| At 31 December 2019 | |||
| Borrowings | - | 10.592 | - |
| Trade and other payables | 474 | - | - |
| ___ | ___ | ____ | |
| 474 | 10.592 | - | |
| At 31 December 2020 | ========= | ========= | ========== |
| Borrowings | 9.918 | - | - |
| Trade and other payables | 532 | - | - |
| ___ | ___ | ____ | |
| 10.450 | - | - | |
| ========= | ========= | ========== | |
| The Company | Less | Between | Between |
| than | 1 and 2 | 2 to 5 | |
| 1 year | Years | Years | |
| €000 | €000 | €000 | |
| At 31 December 2019 | |||
| Borrowings | - | 10.592 | 3.475 |
| Trade and other payables | 146 | - | - |
| ___ | ___ | ____ | |
| 146 | 10.592 | 3.475 | |
| At 31 December 2020 | ========= | ========= | ========== |
| Borrowings | 9.918 | - | 3.365 |
| Trade and other payables | 203 | - | - |
| ___ | ___ | ____ |
The Company's and the Group's objectives when managing capital are to safeguard the Company's/Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders of the Company/Group and to maintain an optimal capital structure to reduce the cost of capital.
========= ========= ==========
10.121 - 3.365
In order to maintain or adjust the capital structure, the Company/Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Company and the Group 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.
The gearing ratios as at 31 December 2020 and 2019 were as follows:
| Τhe Group | The Company | ||||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||
| €000 | €000 | €000 | €000 | ||
| Total borrowings (Note 25) Less: cash and cash equivalents |
9.631 | 9.961 | 12.733 | 13.049 | |
| (Note 23) | (86) | (65) | (79) | (64) | |
| Net debt | _____ 9.545 |
_____ 9.896 |
____ 12.654 |
____ 12.985 |
|
| Total equity | 104.448 _____ |
90.150 _____ |
34.248 ____ |
34.080 ____ |
|
| Total capital as defined by the | |||||
| board | 113.993 =========== |
100.046 =========== |
46.902 ========== |
47.065 ========== |
|
| Gearing ratio | 8% | 10% | 27% | 28% |
There were no financial assets and financial liabilities that are measured at fair value at 31 December 2020 and 31 December 2019.
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.
The Company and the Group make 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.
The fair value of its associated company's investment property is based on observable comparable information of the market, including expected selling prices. Where observable comparable information is not available, the fair values are determined through significant judgements by the associate's management who have the relevant expertise, knowledge and recent experience that are necessary in the valuation of the investment property.
On 31 December 2020, the associate's management proceeded to a revaluation of the investment property, following the receipt of the planning permission. The revaluation of investment property at fair value resulted in a profit of €45.700 thousands. The estimate of associates' management for the determination of the fair value of land for development at 31 December 2020 was based on the independent assessment carried out by independent certified valuers.
The independent valuers, who were appointed by the associate's management, have stated in their report that the property valuations as at 31 December 2020 are subject to «material valuation uncertainty». This report indicates less certainty and therefore imposes a higher degree of attention on property valuations as a result of the impact of the COVID-19 pandemic.
At 31 December 2020 and 31 December 2019, the fair value estimates of the investment property by the associate's management, were based on valuation techniques which incorporate observable comparable sale prices, where these are available, adjusted to reflect the uniqueness, nature and the size of the properties, and their urban planning characteristics.
For the purposes of the comparative method for estimating the fair value of the investment property by the associate's management, the zoning method was used where the property was divided into notional zones for the estimation of the fair value as at 31 December 2020 (2019 divided into three zones), taking into account the terms of the planning permission, the development prospects of the land, the plan for possible development of the land according the usages determined by the development chapters of the Limassol District Plan, the nonuniformity of the land and the geographical advantages of each zone. Due to the high degree of subjectivity in the division of the land into the notional zones, the associate's management presents a sensitivity analysis in Note 19, to show the impact on the fair value of the investment property due to the change on the allocation of the total surface of the land to the different zones.
The main assumptions used for the valuation of the investment property are disclosed in Note 19.
As a result, the associate's management considers that the valuation of the investment is subject to a significant degree of subjectivity and an increased likelihood that the value of the investment property will be different.
Any changes in the assumptions used will result in a significant change in the fair value of the investment property (Note 19).
The fair value of the investment (which is classified as an investment at fair value through other comprehensive income) that is not traded in an active market is determined using valuation techniques. The associate's management uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at each reporting date.
For the year ended 31 December 2020, the associate's management sets the fair value of the investment using the current exit price method, based on the sale price, as stated in Note 19 of the consolidated and separate financial statements. Therefore, the associate's management considers that the assessment of the fair value of the investment as at 31 December 2020 is not subject to a significant degree of subjectivity.
For the year ended 31 December 2019, the fair value of the investment was estimated by the associate's management based on the comparable method for the valuation of the extra building coefficient for future development of residential apartments and the EBITDA multiple method for valuation of the hotel complex. The fair value was adjusted taking into consideration the fair value of the borrowings related to the renovation of the hotel complex.
For the year ended 31 December 2019 the associate's management assessed the different techniques and selected the fair value method which was based on the operational profit (EBITDA multiple) for hotel complex and comparable method for the extra building coefficient for future development of residential apartments, as the most appropriate taking into account the characteristics and particularities of the investment, the available information and the maximization of the observable data used in the estimation.
In estimating operating profitability, the associate's management should make assumptions about expected operating profitability. These assumptions are based on historical trends as well as on future expectations. Although the associate's management believes that the assumptions used to calculate the fair value of the investment are reasonable and appropriate, these assumptions may be largely subjective, taking into account that the associated company is not in a position to have a significant influence on decision-making. The principal assumptions used to estimate the fair value of financial assets at 31 December 2019 and the sensitivity analysis of these key assumptions are disclosed in Note 19 of the financial statements.
The Company and the Group follows the guidance of IAS 36 "Impairment of assets" in determining whether a non-current asset is impaired. The Company and the Group review the carrying value for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.
As at 31 December 2020, the Company assessed whether the investments in subsidiary companies have been impaired, in accordance with the accounting policies disclosed in Note 4. The recoverable amounts of the assets or the cash generating units have been determined based on their fair value. The fair value calculations are based on the fair value of the subsidiary companies' net assets. The recoverable amounts have been compared with the carrying values of the investments as at 31 December 2020. Following the impairment test, the Company did not recognise any impairment charge for 2020.
As per management approach in relation to IFRS 8, operating segments are presented in accordance with the internal reporting provided to the Board of Directors (the chief operating decision-maker), which is responsible for allocating resources and assessing performance of the operating segment. All operating segments used by the Group, meet the definition of a reportable segment as per IFRS 8.
The basic operating segments of the Group for which segment information is presented are as follows:
The Board of Directors of the Company assesses the performance of the operating segments based on a measure of losses before interest, taxes, depreciation and amortization (EBITDA). This measurement basis excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs and impairments when the impairment is the result of an isolated, non-recurring event. Interest income and expenditure are not allocated to segments. Other information presented, is accounted as per the financial statements. All the assets of the Group are situated in Cyprus.
The segment information provided to the Board of Directors of the Company/Group for the reportable segments is as follows:
| Development and sale of |
Holding of | ||
|---|---|---|---|
| land | investments | Total | |
| €000 | €000 | €000 | |
| Sales | 675 | - | 675 |
| Profit before interest, taxes, and depreciation | ========== 5 |
========== 249 |
========= 255 |
| Depreciation | ========== 9 |
========== - |
========= 9 |
| Share of profit of associates | ========== - ========== |
========== 14.055 ========== |
========= 14.055 ========= |
| Total segment assets | 4.030 ========== |
110.580 ========== |
114.610 ========= |
| Total assets include: | |||
| Investments in associates | - ========== |
103.088 ========== |
103.088 ========= |
| Total segment liabilities | 531 | 9.631 | 10.162 |
| ========== | ========== | ========= |
| Development | |||
|---|---|---|---|
| and sale of | Holding of | ||
| land | investments | Total | |
| €000 | €000 | €000 | |
| Sales | - | - | - |
| (Loss)/Profit before interest, taxes, and depreciation | ========== (645) |
========== 258 |
========== (387) |
| Depreciation | ========== 9 |
========== - |
========== 9 |
| Share of profit of associates | ========== - ========== |
========== 1.523 ========== |
========== 1.523 ========== |
| Total segment assets | 4.025 ========== |
96.561 ========== |
100.586 ========== |
| Total assets include: | |||
| Investments in associates | - ========== |
88.972 ========== |
88.972 ========== |
| Total segment liabilities | 474 | 9.961 | 10.435 |
| ========== | ========== | ========== |
Results before interest, taxes, depreciation and amortization differs from the profit before tax as follows:
| 2020 €000 |
2019 €000 |
|---|---|
| 255 | (388) |
| (9) ____ |
|
| 246 | (397) |
| (320) | |
| 14.055 | 1.523 |
| 13.987 | ____ 806 ========== |
| (9) _ (314) _ ========== |
Analysis of Revenue by Category based on recognition policies in place before 1st January 2020:
| The Group | The Company | ||||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||
| €000 | €000 | €000 | €000 | ||
| Sale of plots | 675 | - | 675 | - | |
| ========== | ========== | ========== | ========== |
| The Company | |||
|---|---|---|---|
| 2019 | |||
| €000 | |||
| 250 | |||
| 8 | 2 | 7 | 2 ____ |
| 249 | 252 | 248 | 252 |
| - | - | 372 | 772 |
| - | 6 | - | 6 ____ |
| 249 | 258 | 620 | 1.030 ========== |
| 2020 €000 241 _ _ ========== |
Τhe Group 2019 €000 250 _ _ ========== |
2020 €000 241 _ _ ========== |
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Cost of sales | 71 | - | 71 | - |
| ======== | ======== | ======== | ======== |
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Tax and licences | 22 | 9 | 21 | 8 |
| Legal and professional fees | 5 | 27 | 5 | 27 |
| Management and other administrative services | ||||
| fees (Note 27 (i)) | 328 | 351 | 323 | 346 |
| Directors' fees (Note 27 (iv)) | 4 | 4 | 4 | 4 |
| Staff and related costs (Note 13, 27 (iv)) | 33 | 33 | 33 | 33 |
| Auditor's remuneration | 19 | 19 | 17 | 17 |
| Depreciation of property, plant and equipment | ||||
| (Note 18) | 9 | 9 | 9 | 9 |
| Other expenses | 25 | 33 | 23 | 31 |
| Selling and distribution expenses (Note 27 (i)) | 163 | 170 | 163 | 170 |
| Cost of sales (Note 11) | 71 | - | 71 | - |
| Total cost of sales, selling costs and | ____ | ____ | ____ | ____ |
| administrative expenses | 679 ========== |
655 ========== |
669 ========== |
645 ========== |
The total fees charged by the statutory audit firm for the statutory audit of the annual financial statements of the Group/Company for the year ended 31 December 2020 amounted to €19 thousand/€17 thousand (2019: €19 thousand/€17 thousand).
The total fees charged by the statutory audit firm of the Group/Company for the year ended 31 December 2020 for non-audit services amounted to €0 thousand (2019: €16 thousand).
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Salaries Employer's contributions |
32 2 ____ |
32 1 ____ |
32 2 ___ |
32 1 ___ |
| Total (Note 27 (iv)) | 34 | 33 | 34 | 33 |
| ========== | ========== | ========= | ========= | |
| Average number of staff during the year | 1 | 1 | 1 | 1 |
| ========== | ========== | ========= | ========= |
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Interest expense: | ||||
| Bank borrowings and overdrafts | 314 | 320 | 314 | 320 |
| Loan from subsidiary company (Note 27 (ii)) | - ____ |
- ____ |
85 ___ |
90 ___ |
| 314 ========== |
320 ========== |
399 ========= |
410 ========= |
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Current tax charge: | ||||
| Defence tax | - | - | - | - |
| Prior year tax charge: | ||||
| Income tax | - | - | - | - |
| Tax charge | ___ - |
___ - |
__ - |
__ - |
| ========= | ========= | ======== | ======== |
The tax on the Group's and the Company's profit before tax differs from the theoretical amount that would arise using the applicable tax rate as follows:
| Τhe Group | The Company | |||
|---|---|---|---|---|
| 2020 €000 |
2019 €000 |
2020 €000 |
2019 €000 |
|
| Profit before tax | 13.987 ========== |
806 ========== |
227 ========== |
(25) ========== |
| Tax calculated at the applicable corporation tax rate of 12,5% |
1.748 | 101 | 28 | (3) |
| Tax effect of expenses not deductible for tax purposes |
4 | 11 | 4 | 11 |
| Tax effect of allowances and income not subject to tax Tax effect on share of profit from associated |
(65) | - | (122) | (97) |
| companies | (1.757) | (190) | - | - |
| Special contribution for defence Tax effect of losses for which no deferred |
- | - | - | - |
| tax asset has been recognised | 80 | 88 | 80 | 99 |
| Tax of previous years Tax effect of Group relief |
- (10) |
- (10) |
- (10) |
- (10) |
| Tax charge | ____ 0 ========== |
____ 0 ========== |
___ 0 ========= |
___ 0 ========= |
The Company/Group is subject to income tax on taxable profits at the rate of 12,5%.
As from tax year 2012 brought forward losses of only 5 years may be utilised. From 1 January 2009 onwards, under certain conditions, interest may be exempt from income tax and be subject only to special contribution for defence at the rate of 30% as from 29 April 2013.
In certain cases dividends received from abroad may be subject to special contribution for defence at the rate of 17% as from 1 January 2014. In certain cases dividends received from 1 January 2012 onwards 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.
Under the Cyprus Tax Law, the Company and its subsidiaries, of which the Company holds directly or indirectly at least 75% of the voting shares; are collectively referred to as the "Group" for tax purposes. A Company of the "Group" can set off its losses with the profits of the other companies of the Group.
The tax (charge)/credit relating to components of other comprehensive income as follows:
| Year ended 31 December | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Tax (charge)/ |
Tax (charge)/ |
|||||
| Before tax €000 |
credit €000 |
After tax €000 |
Before tax €000 |
credit €000 |
Before tax €000 |
|
| Associated companies: Share of other |
||||||
| comprehensive income | 370 ____ |
- _____ |
370 ____ |
(6) ____ |
- _____ |
(6) ____ |
| Other comprehensive income |
370 ========== |
- =========== |
370 ========== |
(6) ========== |
- =========== |
(6) ========== |
Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
| Basic and fully diluted | 2020 | 2019 |
|---|---|---|
| Profit attributable to the equity holders of the Company (€000) | 13.987 =========== |
806 =========== |
| Weighted average number of ordinary shares in issue | 128.586.161 =========== |
128.586.161 =========== |
| Profit per share - Basic and diluted (cent per share) | 10,88 =========== |
0,63 =========== |
At the Annual General Meeting of Company's Shareholders on 30th July 2020, the Board of Directors did not propose any dividend payment.
On 21st June 2019, the Annual General Meeting approved the payment of a dividend of €0,007 per share, amounted to €900 thousand out of the profits of 2018. The dividend was paid to the shareholders on 25 July 2019.
| Furniture and office equipment €000 |
Total €000 |
|
|---|---|---|
| At 1 January 2019 | ||
| Cost Accumulated depreciation |
44 (44) |
44 (44) |
| ___ | ___ | |
| Net book amount | - | - |
| ========= | ========= | |
| Year ended 31 December 2019 | ||
| Opening net book amount | - | - |
| Write off cost | (44) | (44) |
| Write off accumulated depreciation Additions |
44 45 |
44 45 |
| Depreciation (Note 12) | (9) | (9) |
| ___ | ___ | |
| Net book amount at the end of the year | 36 ========= |
36 ========= |
| At 31 December 2019/1 January 2020 | ||
| Cost Accumulated depreciation |
45 (9) |
45 (9) |
| ___ | ___ | |
| Net book amount | 36 ========= |
36 ========= |
| Year ended 31 December 2020 | ||
| Net book amount | 36 | 36 |
| Depreciation (Note 12) | (9) | (9) |
| ___ | ___ | |
| Net book amount | 27 ========= |
27 ========= |
| At 31 December 2020 | ||
| Cost | 45 | 45 |
| Accumulated depreciation | (18) ___ |
(18) ___ |
| Net book amount | 27 | 27 |
| ========= | ========= |
| Furniture and office equipment €000 |
Total €000 |
|
|---|---|---|
| At 1 January | ||
| Cost Accumulated depreciation |
44 (44) __ |
44 (44) ___ |
| Net book amount | - ======== |
- ========= |
| Year ended 31 December 2019 Opening net book amount |
- | - |
| Write off cost | (44) | (44) |
| Write off accumulated depreciation | 44 | 44 |
| Additions Depreciation (Note 12) |
(45) (9) |
(45) (9) |
| Net book amount | ___ 36 ========= |
___ 36 ========= |
| Year ended 31 December 2019/1 January 2020 | ||
| Cost Accumulated depreciation |
45 (9) |
45 (9) |
| Net book amount | ___ 36 ========= |
___ 36 ========= |
| Year ended 31 December 2020 | ||
| Opening net book amount Depreciation (Note 12) |
36 (9) |
36 (9) |
| Net book amount | ___ 27 |
___ 27 |
| At 31 December 2020 | ========= | ========= |
| Cost Accumulated depreciation |
45 (18) |
45 (18) |
| Net book amount | ___ 27 |
___ 27 |
| ========= | ========= |
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 2019 |
2020 | 2019 | ||
| €000 | €000 | €000 | €000 | |
| At beginning of year | 88.972 | 88.228 | 32.958 | 32.958 |
| Share of profit after tax | 14.055 | 1.523 | - | - |
| Share of changes in reserves | 370 | (6) | - | - |
| Dividends (Note 27 (iii)) | (309) _____ |
(772) _____ |
- ____ |
- ____ |
| At end of year | 103.088 =========== |
88.972 =========== |
32.958 ========== |
32.958 ========== |
The increase in the share of profit after tax is due to the profit recognized in associate's consolidated income statement and other comprehensive income for the revaluation of the investment property at fair value.
Set out below are the associates of the Company and the Group, as at 31 December 2020. The associates listed below have share capital consisting exclusively of ordinary shares, held directly by the Company and the Group; the country of incorporation or registration is the place of business.
| Name | Place of operations/ Country of incorporation |
% of ownership interest |
Principal Activities |
Measurement Method in Consolidated Financial statement |
Measurement Method in Company's Financial Statement |
|---|---|---|---|---|---|
| 2019 C.C.C. Secretarial Limited |
Cyprus | 30,00 | Note 1 | Equity Method | Cost Method |
| The Cyprus Cement Public Company Ltd |
Cyprus | 32,07 | Note 2 | Equity Method | Cost Method |
| 2020 C.C.C. Secretarial Limited |
Cyprus | 30,00 | Note 1 | Equity Method | Cost Method |
| The Cyprus Cement Public Company Ltd |
Cyprus | 32,07 | Note 2 | Equity Method | Cost Method |
Note 1: C.C.C. Secretarial Limited is acting as the secretary of companies and meanwhile providing management and administrative services.
Note 2: The principal activities of The Cyprus Cement Public Company Limited are the development/exploitation of land and the undertaking of strategic investments in companies operating in hotel and tourism industry and in the production and sale of cement and related business.
As a 31 December 2020, the fair value of the Company's/Group interest in The Cyprus Cement Public Company Limited (the "associate"), which is listed on the Cyprus Stock Exchange, was €15.889 thousand (2019: €17.125 thousand). The market price listed on the stock exchange is not representative since these shares are not traded in an active market.
There are no significant restrictions as a result of borrowing, regulatory requirements or contractual arrangements between investors with significant influence on affiliated companies as to the ability of affiliated companies to transfer money to the Company/the Group in the form of cash dividends or to repay loans or Advances made by the Company/the Group.
On February 5th, 2021, the Town Planning Department has issued the Planning Permit, ΛΕΜ/00184/2017, for the "Master Plan" of the land belonging to the 100% subsidiary of its associated company.
The Planning Permit, concerns the construction of the basic public road network (roads, pedestrian walkways, coastal pedestrian walkways), the location of the public green areas, public areas of social/community facilities and public parking spaces.
The permit covers and includes all the necessary conditions and infrastructure for the development of the area, according to the provisions of Chapter 14.15 (Policy for the Annulment of the Old Industrial Zones) and Chapter 23 (Special Developments) of the Limassol Local Plan. It is noted that depending on the usages deriving from the mentioned chapters of the Local Plan, and from other incentives, a higher building coefficient can be ensured with the corresponding urban characteristics.
Key issues that have affected the carrying amount of the investment in the associated company The Cyprus Cement Public Company Limited (continued)
At 31 December 2020, the associate's management proceeded with a revaluation of property investment based on the independent assessment carried out by an approved valuer, taking into account the terms of the Planning Permit and the prospects of the investment property. The revaluation of the investment property at fair value resulted in a profit of €45.700 thousand.
The estimate of the associate's management for the determination of the fair value of land for development at 31 December 2020 was based on the independent assessment carried out by independent certified valuers.
The estimate of associate's management for the fair value of investment property as at 31 December 2020 has been differentiated from the fair value as determined by the associate's management at 31 December 2019, after the estimate for the fair value of investment property at 31 December 2020 the Planning Permit issued by the Town Planning Department, the Planning Permit ΛΕΜ / 00184/2017 for the "Master Plan" of the land plots but also the prospects of the land which are excellent were taken into account. The estimate of the associate's management for the determination of the fair value of land for development as at 31 December 2020 was based on the independent assessment carried out by independent approved valuers who are recognized and holders of professional qualifications and experience in the assessment of real estate investments in the area and in the real estate sector.
The independent assessment of the plots of land has been carried out using the comparable method taking into account comparable sales which have been made in the year 2018, 2019 and 2020 at a short distance from the land of its associate and with very comparable characteristics. For the purposes of the comparable method, and based on the independent valuation carried out by an independent approved valuer, the associate's management has divided the property into five notional zones for the estimation of the fair value as at 31 December 2020 (2019 into three notional zones), taking into account the terms of the Planning Permit that was received, the development prospects of investment property, the plan for possible property development according to the usage determined by the development chapters of the Limassol Local Plan, the non-uniformity in the shape as well as the geographical advantages of each zone. As a result, the comparable method is mainly based on the observable values set for Zone A and adjustments were made to estimate the values of the remaining zones using the zoning method.
The issuance of the planning permit after the year ended 31 December 2020, based on the pre-existing development plan submitted to the Town Planning Department for the issuance of the planning permit, confirms the use of the development plan to assess the fair value of investment property by the associate's management as at 31 December 2020 (Note 29).
Key issues that have affected the carrying amount of the investment in the associated company The Cyprus Cement Public Company Limited (continued)
The area of each notional zone, the price per square meter of each notional zone and the price ratio per zone have been determined by the Management, based on the independent assessment conducted by an independent approved valuer, as at 31 December 2020 are as follows:
| Notional Zone | Area (square meters '000/ %) | Price per square meter (€) |
|---|---|---|
| Zone Α | 300 / 29% | 400 |
| Zone Β | 73 / 7% | 320 (80% of Zone A's price) |
| Zone C | 157 / 15% | 280 (70% of Zone A's price) |
| Zone D | 110 / 10% | 200 (50% of Zone A's price) |
| Zone E | 415 / 39% | 180 (45% of Zone A's price) |
The valuation of the associate's investment property has been classified as level 3 valuation since the valuation techniques used incorporate unobservable inputs.
The area of each notional zone, the price per square meter of each notional zone and the price relation per zone have been determined by the associate's management at 31 December 2019 as follows:
| Notional Zone | Area (square meters '000/ %) | Price per square meter (€) |
|---|---|---|
| Zone Α | 175 / 17% | 494 |
| Zone Β | 82 / 8% | 247 (1/2 of Zone A's price) |
| Zone C | 799 / 75% | 165 (1/3 of Zone A's price) |
The valuation of the investment property has been classified as level 3 since the valuation techniques used incorporate unobservable inputs.
The table below shows the possible impact of the fair value of the investment property due to a change in the non-observable inputs (level 3).
| Property | Valuation (€000) |
Valuation method |
Non-observable inputs |
Change in input |
Deviation/ Sensitivity |
|---|---|---|---|---|---|
| Land for development | 283.858 | Comparative | Area allocation | Zone A – 211/ 20% Zone B – 106/ 10% Zone C – 106/ 10% Zone D – 158/ 15% Zone E – 475/ 45% |
€19.100 thousands decrease |
| In Cyprus | method | into notional zones ('000/ %) |
Zone A – 211/ 20% Zone B – 53/ 5% Zone C – 158/ 15% Zone D – 211/ 20% Zone E – 422/ 40% |
€20.100 thousands decrease |
|
| Land for development | 283.858 | Comparative | Price per square | Zone A – 380 Zone B – 304 Zone C – 266 Zone D – 190 Zone E – 171 |
€14.100 thousands increase |
| In Cyprus | method | meter € | Zone A – 360 Zone B – 288 Zone C – 252 Zone D – 180 Zone E – 162 |
€28.300 thousands decrease |
|
| Land for development In Cyprus |
283.858 | Comparative method |
Price per Zone (%/€) |
Zone A – 100%/ 400 Zone B – 75%/ 300 Zone C – 50%/ 200 Zone D – 40%/ 160 Zone E – 33%/ 132 |
€38.200 thousands increase |
Information about valuation of investment property at fair value using non-observable inputs (Level 3) – 31 December 2019
| Property | Valuation (€000) |
Valuation method |
Non-observable inputs |
Change in input Zone A – |
Deviation/ Sensitivity |
|---|---|---|---|---|---|
| Land for development 238.131 in Cyprus |
Comparative | Allocation of area | 106/ 10% Zone B – 106/ 10% Zone C – 844/ 80% |
€20.946 thousands decrease |
|
| method | into zones ('000/ %) | Zone A – 106/ 10% Zone B – 53/ 5% Zone C – 897/ 85% |
€25.287 thousands decrease |
||
| Land for development | Comparative | Price per | Zone A – 519 Zone B – 259 Zone C – 173 |
€12.061 thousands increase |
|
| In Cyprus | 238.131 method |
square meter (€) | Zone A – 469 Zone B – 235 Zone C – 156 |
€11.754 thousands decrease |
For the valuation of the investment in Parklane Hotels Limited on 31st December 2020 the associate's management took into account the following: On the 23rd of October 2020, the associate's subsidiary, signed a Memorandum of Understanding with Emerald Properties Limited, which owns the remaining issued shares of Parklane Hotels Limited, and the potential investor for the acquisition of 100% of the issued shares of Parklane Hotels Limited.
The valuation of the investment in Parklane Hotels Limited at fair value on 31st December 2020 was made by the associate's management, which was based on the method of the current exit price based on the sale price, as defined in the Memorandum of Understanding (the "Memorandum"). The associate's management estimated that the sale price reflects the fair value of the investment at 31 December 2020. The fair value valuation has therefore been reclassified to Level 2 as it uses significant observable data.
The completion of the sale agreement after the year end at the selling price set in the Memorandum of Understanding confirms the valuation of the associate's management at fair value on 31st December 2020.
The valuation of the investment in Parklane Hotels Limited on 31st December 2019 includes the valuation of the hotel complex and the extra building coefficient for the development of residential apartments. The associate's management have used the comparative method to measure the fair value of the extra building coefficient for the future development of residential apartments and the fair value on the expected operating method (Earnings Before Interest and Depreciation, known as EBITDA) for the valuation of the hotel complex. For the final estimation of the value of the investment, the fair value of the borrowings which is connected with the renovation of the hotel unit is taken into consideration.
| Description | Fair value method | Non – observable data | Connection between non – observable data and fair value |
|---|---|---|---|
| 2019 | 2019 | 2019 | |
| Hotel complex: | Fair value method based on operating profit |
Multiplier: 16 | The higher are the multiplier and the expected operating profit, the |
| (EBITDA multiple) | Expected operating profit (EBITDA): €8.750.000 |
higher the fair value |
Οn 20 June 2019, C.C.C. Tourist Enterprises Public Company Ltd has signed an agreement with Emerald Coast Properties Ltd, which holds 75,01% of the shares of Parklane Hotels Limited. The agreement, amongst others, covers the restructuring and repayment schedule of the credit facilities of the company Parklane Hotels Limited which relate to: (a) the renovation of the hotel complex and operating expenses until the date of operation of the hotel and (b) the development and sale of the luxury apartments under construction.
As per the terms of the agreement, the loan for the renovation has been agreed at a fixed amount which reflects the initial forecasts of the investment, whereas the proceeds from the sale of the luxury apartments are to be used to repay the remaining part of the loans of Parklane Hotels Limited.
As a result, the development and sale of luxury apartments, is not included in the valuation of investment for the year ended 31 December 2019. However, this is offset from the benefit from interest free and long term loan for the renovation of the hotel.
The table below shows the possible impact on the fair value of the investment in Parklane Hotels Ltd in other comprehensive income, from the change in significant assumptions. The positive amount reflects the net possible profit and the negative amount the net possible loss to other comprehensive income.
| Change in assumptions | Impact in other comprehensive income 2019 |
|---|---|
| Operating profit method (Hotel complex) | €000 |
| Increase by 10% in the expected operating profit (EBITDA) | 3.148 |
| Decrease by 10% in the expected operating profit (EBITDA) | (3.148) |
| Increase by 1 unit in the multiplier | 1.967 |
| Decrease by 1 unit in the multiplier | (1.967) |
The fair value of the investment is included in level 2 for the year 31 December 2020 as it is based on significant observable data and in level 3 for the year 31 December 2019 as the valuation method is based on significant non-observable market data (unobservable import data).
The table below presents the summarised financial information for the associated companies.
| C.C.C Secretarial Limited |
The Cyprus Cement Public Company Limited |
Total | ||||
|---|---|---|---|---|---|---|
| As at 31 December 2020 €000 |
2019 €000 |
As at 31 December 2020 €000 |
2019 €000 |
As at 31 December 2020 €000 |
2019 €000 |
|
| Current Assets Cash and cash at banks |
15 | 41 | 1.697 | 1.578 | 1.712 | 1.619 |
| Other current assets | 127 __ |
157 __ |
11.950 | 11.020 | 12.077 ___ |
11.177 ______ |
| Total current assets | 142 __ |
198 __ |
_ 13.647 _ |
_ 12.598 _ |
13.789 ___ |
12.796 ______ |
| Other current liabilities (including trade payables) |
(283) | (362) | (110) | (217) | (393) | (579) |
| Total current liabilities | _ (283) _ |
_ (362) _ |
__ (110) __ |
__ (217) __ |
_ (393) _ |
_ (579) _ |
| Non-current assets Assets Right of use asset |
54 541 __ |
69 692 __ |
366.384 - _____ |
317.244 - _____ |
366.438 541 ____ |
317.313 692 __ |
| Other liabilities | (406) | (556) | (51.226) | (45.513) | (51.632) | (46.069) |
| Total non-current liabilities | _ (406) _ |
_ (556) _ |
__ (51.226) __ |
__ (45.513) __ |
_ (51.632) _ |
_ (46.069) _ |
| Net assets | 48 __ |
42 __ |
328.695 _____ |
284.112 _____ |
328.743 ____ |
284.154 __ |
| Net assets distributed to shareholders |
48 ======== |
42 ======== |
321.372 =========== |
277.356 =========== |
321.420 ========== |
277.398 ======== |
| C.C.C. Secretarial Limited | The Cyprus Cement Public Company Limited |
Total | ||||
|---|---|---|---|---|---|---|
| As at 31 December 2020 €000 |
2019 €000 |
As at 31 December 2020 €000 |
2019 €000 |
As at 31 December 2020 €000 |
2019 €000 |
|
| Revenue | 1.202 | 1.171 | 328 | 336 | 1.530 | 1.507 |
| ____ | ____ | ____ | ____ | ____ | ____ | |
| Depreciation | (170) | (171) | (9) | (9) | (179) | (192) |
| Finance costs | (17) | - | - | - | (17) | - |
| Profit before tax | ____ | ____ | ____ | ____ | ____ | ____ |
| 14 | 2 | 49.518 | 4.732 | 49.532 | 4.744 | |
| ____ | ____ | ____ | ____ | ____ | ____ | |
| Tax charge | (4) | (5) | (5.713) | (6) | (5.717) | (11) |
| ____ | ____ | ____ | ____ | ____ | ____ | |
| Profit for the year | 10 | 3 | 43.805 | 4.726 | 43.815 | 4.732 |
| ____ | ____ | ____ | ____ | ____ | ____ | |
| Other comprehensive | - | - | 1.741 | (19) | 1.741 | (19) |
| income/(losses) | ____ | ____ | ____ | ____ | ____ | ____ |
| Total comprehensive | 10 | 3 | 45.547 | 4.707 | 45.557 | 4.710 |
| income for the year | ____ | ____ | ____ | ____ | ____ | ____ |
The above information reflects the amounts presented in the financial statements of the associates (and not the Group's share of those amounts).
Reconciliation of the summarised financial results are presented at the currying amount of investments in associates that are accounted using the equity method in the consolidated financial statements of the Group are as follows:
| The Cyprus Cement Public C.C.C. Secretarial Limited Company Limited |
Total | |||||
|---|---|---|---|---|---|---|
| As at 31 December | As at 31 December | As at 31 December | ||||
| 2020 €000 |
2019 €000 |
2020 €000 |
2019 €000 |
2020 €000 |
2019 €000 |
|
| Summarised financial information |
||||||
| Opening net assets 1 January |
42 | 45 | 277.356 | 275.040 | 277.398 | 275.085 |
| Profit/(loss) for the year Other comprehensive |
10 | (3) | 43.826 | 4.743 | 43.836 | 4.740 |
| income | - | - | 1.153 | (19) | 1.153 | (19) |
| Dividend distribution | (4) | - | (963) | (2.408) | (967) | (2.408) |
| Closing net assets attributable to shareholders |
___ 48 |
___ 42 |
_____ 321.372 |
_____ 277.356 |
_____ 321.420 |
_____ 277.407 |
| Interests in associates (2020, 2019: 30%, 32,07%) |
_ 14 _ |
_ 13 _ |
__ 103.064 __ |
__ 88.948 __ |
__ 103.078 __ |
__ 88.961 __ |
| 2020 €000 |
2019 €000 |
|
|---|---|---|
| At the beginning of the year | 2.722 | 2.722 |
| At the end of the year | ____ 2.722 ========== |
____ 2.722 ========== |
Set out below is presented the subsidiary, which is registered in Cyprus. The subsidiary has a share capital consisting exclusively of ordinary share held directly by the Company, and voting rights equal to the percentage of ownership rights that Company holds.
The country of Incorporation is also its principal place of business.
| Name | Participation | Country of incorporation |
Principal activities |
|---|---|---|---|
| Galatex Tourist Enterprises Limited | 100% | Cyprus | Property development |
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Land and development costs | 3.824 _____ |
3.862 _____ |
3.824 ____ |
3.862 ____ |
| 3.824 =========== |
3.862 =========== |
3.824 ========== |
3.862 ========== |
The cost of inventories recognized as expense in the cost of sales amounts to €71 thousand and €71 thousand in Group and Company's result respectively.
Inventories are stated at cost. There were no inventories for which the net book value should decrease to the net realizable value.
The Company's/Group's borrowings are secured on inventories for the amount of €20.000 thousand (Note 25).
The financial assets at amortised cost includes the following debt investments:
| The Company | |||
|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 |
| €000 | €000 | €000 | €000 |
| 7.479 | 7.463 | 7.479 | 7.463 |
| 96 | 170 | 95 | 170 |
| 7.575 | 7.633 | 7.574 | ____ 7.633 ========== |
| ____ ========== |
The Group ____ ========== |
____ ========== |
All loan receivables are receivable on demand, bear annual interest rate 3,25% (2019: 3,25%) and are secured (Note 27 (vi)).
Due to the short-term nature of the current financial assets at amortised cost, their carrying amount at the balance sheet date is considered to be at fair value.
The carrying amounts of the Company's and Group's loan receivables are denominated in the following currencies:
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Euro | 7.575 ========== |
7.633 ========== |
7.574 ========= |
7.633 ========= |
Note 6 provides information on the impairment of financial assets at amortised cost and the exposure of Group's/Company's Credit Risk.
The maximum exposure to credit risk at the balance sheet date is the carrying value of receivables mentioned above. The Group's/Company's loan receivables are secured with Corporate Guarantees.
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Cash at bank and in hand | 86 | 65 | 79 | 64 |
| ____ | ____ | ____ | ____ | |
| 86 | 65 | 79 | 64 | |
| ========== | ========== | ========== | ========== |
All cash and cash equivalents are denominated in Euro.
There were not any non-cash transactions of the Group for the current year.
The non-cash transactions of the Company for the current year were the following:
• The payment of dividend of €63 thousand against loan receivable from the parent company (Note 27 (vi)).
The non-cash transactions of the Group for the year 2019 were the following:
• The payment of dividend of €754 thousand against loan receivable from the parent company (Note 27 (vi)).
The non-cash transactions of the Company for the year 2019 were the following:
• The payment of dividend of €754 thousand against loan receivable from the parent company (Note 27 (vi)).
| Bank loans €000 |
Loans from related parties €000 |
Total borrowings from financing activities €000 |
|
|---|---|---|---|
| Balance at 1 January 2020 Cash transactions: |
9.962 | 3.088 | 13.050 |
| Repayment of borrowings | (331) | (8) | (339) |
| Repayment of interest | (314) | - | (314) |
| Dividends | - | (63) | (63) |
| Interest expenses | 314 | 85 | 399 |
| Balance at 31 December 2020 | ___ 9.631 ========= |
__ 3.102 ======== |
___ 12.733 ========= |
| Total borrowings from financing |
|
|---|---|
| activities | |
| €000 | €000 |
| 9.962 | 9.962 |
| (331) | (331) |
| (314) | (314) |
| 314 | 314 |
| 9.631 | ___ 9.631 ========= |
| Bank loans ___ ========= |
| Bank loans €000 |
Loans from related parties €000 |
Total borrowings from financing activities €000 |
|
|---|---|---|---|
| Balance at 1 January 2019 Cash transactions: |
9.641 | 3.008 | 12.649 |
| Repayment of borrowings | - | (10) | (10) |
| Interest expenses | 320 | 90 | 410 |
| Balance at 31 December 2019 | ___ 9.961 ========= |
__ 3.088 ======== |
___ 13.049 ========= |
| Bank loans €000 |
Total borrowings from financing activities €000 |
|
|---|---|---|
| Balance at 1 January 2019 | 9.641 | 9.641 |
| Cash transactions: Interest expenses |
320 | 320 |
| Balance at 31 December 2019 | ___ 9.961 ========= |
___ 9.961 ========= |
| Number of shares |
Share capital €000 |
Share premium €000 |
Total €000 |
|
|---|---|---|---|---|
| At 1 January 2019/31 December 2019/ | 128.586.161 | 21.860 | 1.757 | 23.617 |
| 31 December 2020 | =========== | =========== | =========== | =========== |
The total authorized number of ordinary shares is 500.000.000 shares (2019: 500.000.000 shares) with a par value of €0,17 per share (2019: €0,17 per share).
All issued shares are fully paid and carry equal voting rights.
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Current | ||||
| Bank borrowings | 9.631 | - | 9.631 | - |
| ____ | ____ | _____ | _____ | |
| 9.631 | - | 9.631 | - | |
| ____ | ____ | _____ | _____ | |
| Non-current | ||||
| Bank borrowings Borrowings from related parties |
- | 9.961 | - | 9.961 |
| (Note 27 (v)) | - | - | 3.102 | 3.088 |
| ____ | ____ | _____ | _____ | |
| 9.631 | 9.961 | 3.102 | 13.049 | |
| ____ | ____ | _____ | _____ | |
| Total borrowings | 9.631 | 9.961 | 12.733 | 13.049 |
| ========== | ========== | =========== | =========== | |
| Maturities on non-current borrowings | ||||
| Between 1 to 2 years | - | 9.961 | - | 9.961 |
| Between 2 to 5 years | - | - | 3.102 | 3.088 |
| ____ | ____ | _____ | _____ | |
| - | 9.961 | 3.102 | 13.049 | |
| ========== | ========== | =========== | =========== | |
The bank loans of €9.631 thousand (2019: €9.961 thousand) are repayable in one instalment in November 2021. The Group/Company has entered into preliminary discussions with Alpha bank Cyprus Ltd for loan restructuring in case it is not possible to repay it in full at maturity. The bank has confirmed its intention to proceed with the restructuring of the loan in case it not possible to repay it at maturity.
The loan from the subsidiary company amounting to €3.102 thousand (2019: €3.088 thousand) is repayable in 2023, has an interest rate of 2.75% and is not secured.
The bank loans and overdrafts of the Company/Group are secured as follows:
The weighted average effective interest rates at the balance sheet date were as follows:
| 2020 % |
2019 % |
|
|---|---|---|
| Borrowings from subsidiary | 2,75 | 3,00 |
| Bank borrowings | 3,25 | 3,25 |
| Bank overdrafts | 4,00 | 4,00 |
The Company's and Group's bank borrowings and bank overdrafts are arranged at floating rates. For borrowings at floating rates the interest rate reprises on a monthly basis exposing the Company and the Group to cash flow interest rate risk.
The exposure of the Company's and Group's borrowings to interest rate changes and the contractual reprising dates at the balance sheet dates are as follows:
| The Group | The Company | ||||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||
| €000 | €000 | €000 | €000 | ||
| 6 months or less | 9.631 ____ |
9.961 ____ |
9.631 ____ |
9.961 ____ |
|
| 9.631 ========== |
9.961 ========== |
9.631 ========== |
9.961 ========== |
The carrying amounts of short term bank overdrafts and bank loans approximate their fair value.
The carrying amounts of the Company's and the Group's borrowings are denominated in the following currencies:
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2019 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Euro | 9.631 =========== |
9.961 =========== |
12.733 ========== |
13.049 ========== |
The Company and the Group have the following undrawn borrowing facilities:
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Floating rate: | ||||
| - Expiring within one year | 1.518 | 1.518 | 1.500 | 1.500 |
| =========== | =========== | ========== | ========== |
The credit facilities which expires within one year, are annual facilities and are subject to review at various dates.
| The Group | The Company | ||||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||
| €000 | €000 | €000 | €000 | ||
| Trade payables | 346 | 326 | 20 | - | |
| Other payables and accrued expenses | 185 ___ |
148 ___ |
183 ____ |
146 ____ |
|
| 532 | 474 | 203 | 146 | ||
| ========= | ========= | ========== | ========== |
The fair value of trade and other payables which are due within one year approximates their carrying amount at the balance sheet date.
The Company is controlled by C.C.C. Holdings & Investments Limited, which is registered in Cyprus and holds 83,81% of the share capital of the Company. The remaining issued share capital is widely held. The ultimate parent company of the Group is George S. Galatariotis & Sons Limited.
The related companies are companies under common control and companies controlled by the Directors of the Company.
The following transactions were carried out with related parties:
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Management services (Note 12) Selling and marketing services (Note |
328 | 351 | 323 | 346 |
| 12) | 163 | 169 | 163 | 169 |
| ___ | ___ | ___ | ___ | |
| 491 | 520 | 486 | 515 | |
| ========= | ========= | ========= | ========= |
The services are charged from C.C.C. Secretarial Limited and are based on the time spent by its employees on the affairs of the Company and office space allocated to the Company/Group.
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Interest payable (Note 14): | ||||
| Subsidiary company | - ____ |
- ____ |
85 ___ |
90 ___ |
| - | - | 85 | 90 | |
| Interest receivable from loans and balances (Note 10): |
========== | ========== | ========= | ========= |
| Parent company Ultimate parent company |
53 188 |
36 214 |
53 188 |
36 214 |
| ____ 241 ========== |
____ 250 ========== |
___ 241 ========= |
___ 250 ========= |
| The Company | ||
|---|---|---|
| 2020 | 2019 | |
| €000 | €000 | |
| Dividends receivable (Note 10): | ||
| Subsidiary company | 63 | - |
| Associate company | 309 | 772 |
| ____ 372 |
____ 772 |
|
| ========== | ========== |
The total remuneration of the key management personnel and Directors was as follows:
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 €000 |
2019 €000 |
2020 €000 |
2019 €000 |
|
| Director and Audit Committee Fees (Note 12) Emoluments in their executive |
4 | 4 | 4 | 4 |
| capacity (Note 12) | 33 | 33 | 33 | 33 |
| __ 37 ======== |
__ 37 ======== |
__ 37 ======== |
__ 37 ======== |
| Wages €000 |
Employer's contributions €000 |
Fees €000 |
Total €000 |
|---|---|---|---|
| 32 | 1 | 4 | 37 |
| 32 ======= |
1 ======== |
4 ======= |
___ 37 ========= |
| 32 | 2 | 4 | 37 |
| 32 | 2 | 4 | ___ 37 ========= |
| _ _ ======= |
_ _ ======== |
_ _ ======= |
(1) The Director who has a remuneration is Mr. George St. Galatariotis and the Directors who has annual fee for their services as members of the Board of Directors and Audit Committee are Mr. George St. Galatariotis (€400), Michalis Christoforou (€800), Costas Galatariotis (€400), Stavros G. St. Galatariotis (€400), Michalis Mousiouttas (€800) and Antonis Antoniou Latouros (€800).
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Borrowings from subsidiary company: | ||||
| At beginning of year | - | - | 3.088 | 3.008 |
| Loans repaid during the year | - | - | (8) | (10) |
| Loans offset against balance from | ||||
| dividends (Note 27 (iii)) | - | - | (63) | - |
| Interest charged (Note 14) | - | - | 85 | 90 |
| At end of year (Note 25) | ___ - ========= |
___ - ========= |
____ 3.102 ========== |
____ 3.088 ========== |
The loan from the subsidiary Company amounted to €3.088 thousand bears annual interest rate at 2,75% (2019: 3%), is unsecured and is repayable until 2023.
| The Group | The Company | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| €000 | €000 | €000 | €000 | |
| Loans granted to the parent company, | ||||
| ultimate parent company and associated | ||||
| company: | ||||
| At beginning of year | 7.463 | 8.104 | 7.463 | 8.104 |
| Loans repaid during the year | (240) | (150) | (240) | (150) |
| Loans granted during the year | 15 | 13 | 15 | 13 |
| Loan set off against dividend payable | ||||
| (Note 23) | - | (754) | - | (754) |
| Amount assigned from ultimate parent | ||||
| company to the parent company | 1.137 | - | 1.137 | - |
| Amount taken by the parent company | (1.137) | - | (1.137) | - |
| Interest credit (Note 10) | 241 | 250 | 241 | 250 |
| At end of year (Note 22) | ___ 7.479 |
___ 7.463 |
___ 7.479 |
___ 7.463 |
| ========= | ========= | ========= | ========= |
The loan to the ultimate parent company amounted to €4.648 thousand (2019: €5.838 thousand), is secured by corporate guarantee from Galatariotis Enterprises Ltd, is repayable on demand and bears annual interest rate of 3,25% (2019: 3,25%).
The loan to the parent company, C.C.C. Holdings & Investment Limited amounted to €2.831 thousand (2019: €1.625 thousand), is secured by corporate guarantee from George S. Galatariotis & Sons Ltd, is repayable on demand and bears annual interest rate of 3,25% (2019: 3,25%).
The parent company C.C.C. Holdings & Investments Limited, has guaranteed a loan and a bank overdraft provided to the Company/Group for the amount of €9.631 thousand and €1.500 thousand respectively (Note 25).
The Board of Directors of the Company/Group does not expect to have any significant liabilities to the Company/Group.
There were no material post balance sheet events, which have a bearing on the understanding of the financial statements.
Independent auditor's report on pages 9 to 15.
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