Annual / Quarterly Financial Statement • Nov 29, 2021
Annual / Quarterly Financial Statement
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REPORT AND FINANCIAL STATEMENTS 30 June 2021
| CONTENTS | PAGE |
|---|---|
| Board of Directors and other officers | 1 |
| Management Report | 2 - 3 |
| Declaration of the members of the Board of Directors and the company officials responsible for the preparation of the financial statements |
4 |
| Statement of profit or loss and other comprehensive income | 5 |
| Statement of financial position | 6 |
| Statement of changes in equity | 7 |
| Cash flow statement | 8 |
| Notes to the financial statements | 9 - 24 |
| Board of Directors: | Peter G. Economides Androulla Zavou Economides |
|---|---|
| Company Secretary: | Totalserve Management Ltd |
| Independent Auditors: | Ekkeshis Ierodiakonou Ltd Certified Public Accountants and Registered Auditors 39 Themistocles Dervis Str. Off. 102 1066, Nicosia |
| Registered office: | 17 Gr. Xenopoulou Str. 3106, Limassol Cyprus |
Registration number:
HE27549
1
The Board of Directors presents its report and audited financial statements of the period ended 30 June period 2021.
The principal activity of the Company, which are unchanged from last year, is the development of land. On 10 November 2020 the Company obtained a licence for its shares to be listed to the Emerging Companies Market.
On 15 July 2020, the Company changed its name from P.G. Economides Properties Ltd to P.G. Economides Properties Plc.
The Company's development to date, financial results and position as presented in the financial statements are not considered satisfactory and the Board of Directors is making an effort to reduce the Company's losses.
The Company is exposed to interest rate risk and credit risk from the financial instruments it holds.
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Company's income and operating cash flows are substantially independent of changes in market interest rates as the Company has no significant interest-bearing assets. The Company is exposed to interest rate risk in relation to its non-current borrowings issued at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company's Management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Credit risk arises from cash and cash equivalents as well as credit exposures to customers including outstanding receivables.
Credit risk is managed on a group basis. For banks and financial institutions, the Company has established policies whereby the majority of bank balances are held with independently rated parties with a minimum rating of ['C]]
If wholesale 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. Individual credit limits and credit terms are set based on the credit quality of the customer in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.
The Company's investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Company has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.
There were no changes in the share capital of the Company during the year under review.
The Company recognises the importance of implementing sound corporate governance policies, practices and procedures. As a company listed on the Cyprus Stock Exchange (CSE), P.G. Economides Properties Plc has adopted CSE's Corporate Governance Code and applies its principles.
In March 2006 the CSE issued a revised Code of Corporate Governance. The Company complies with all the provisions of the revised Code
Board of Directors r ne members of the Company of the Board of Directors throughout the period ended 30 June 2021.
In accordance with the Company's Articles of Association all Directors presently members of the Board continue in office.
There were no significant changes in the assignment of responsibilities and remuneration of the Board of Directors.
The Independent Auditors, Ekkeshis Ierodiakonou Ltd, have expressed their willingness to continue in office and a The Intelligencinent Nations) Extrement of Directors to fix their remuneration will be proposed at the Annual General Meeting.
By order of the Board of Directors,
Totalserve Management Ltd Secretary
Nicosia,
In accordance with Article 9 sections (3c) and (7) of the Transparency Requirements (Traded Securities in Regulated Markets) Law 2007 (N 190 (I)/2007) ("the Law") we, the members of the Board of Directors and the Company official responsible for the financial statements of P.G. Economides Properties Plc (the "Company") for the period ended 30 June 2021, on the basis of our knowledge, declare that:
(a) The annual financial statements of the Company which are presented on pages 9 to 28:
(i) have been prepared in accordance with the applicable International Financial Reporting Standards as adopted by the European Union and the provisions of Article 9, section (4) of the law, and
(ii) provide a true and fair view of the particulars of assets and liabilities, the financial position and profit or loss of the Company and the entities included in the financial statements as a whole and
b) The management report provides a fair view of the developments and the performance as well as the financial position of the Company as a whole, together with a description of the main risks and uncertainties which they face.
Peter G. Fconomides
Androulla Zavou Economides
(Financial Manager)
Nicosia,
| Note | 30.06.2074 € |
2020 € |
|
|---|---|---|---|
| Selling and distribution expenses Administration expenses |
(17,646) | (14,895) | |
| Operating loss | (17,646) | (14,895) | |
| Finance costs Net finance costs |
10 | (14,507) (14,507) |
(1,020) (1,020) |
| Net loss for the year | (32,153) | (15,915) | |
| Other comprehensive income | |||
| Total comprehensive income for the year | CPALES | (15.915) |
| Note | 30.06.2021 6 |
2020 € |
|
|---|---|---|---|
| ASSETS | |||
| Current assets Inventories Trade and other receivables Cash at bank and in hand |
12 13 14 |
17,998,923 86,856 385 |
17,915,096 86,543 52 |
| 18,086,164 | 18,001,691 | ||
| Total assets | 18,086,164 | 18,001,691 | |
| EQUITY AND LIABILITIES | |||
| Equity Share capital Accumulated (losses) |
15 | 11,934,065 (78,812) |
11,934,065 (46,659) |
| Total equity | 11,855,253 | 11,887,406 | |
| Non-current liabilities Borrowings |
16 | 5,388,378 | 5,469,513 |
| 5,388,378 | 5,469,513 | ||
| Current liabilities Trade and other payables Borrowings Current tax liabilities |
17 16 18 |
389,214 453,268 51 |
191,453 453,268 51 |
| 842 555 | 644,772 | ||
| Total liabilities | 6,230,911 | 6,114,285 | |
| Total equity and liabilities | 18,086,164 | 18,001,691 |
On ........................................................................................................................................................................... for issue.
..............................................................................................................................................................................
Peter G. Economides Director
Androulla Zavou Economides Director
| Note | Share capital 3 |
Share premium ਵ |
Fair value reserve - land and buildings 15 |
Accumulated losses ਵ |
Total S |
|
|---|---|---|---|---|---|---|
| Balance at 1 January 2020 | 11,934,065 | (30,744) | 11,903,321 | |||
| Comprehensive income Net loss for the year Total comprehensive income for the year |
(15,915) (15,915) |
(15,915) (15,915) |
||||
| Balance at 31 December 2020/ 1 January 2021 |
11,934,065 | (46,659) 11,887,406 | ||||
| Comprehensive income Net loss for the period Total comprehensive income for |
(32,153) | (32,153) (32,153) |
||||
| the year Balance at 30 June 2021 |
11,934,065 | (32,153) | (78,812) 11,855,253 |
Companies which do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits. Special contribution for defence at the rate of 17% will be payable on such deemed dividend to the extent that the shareholders for deemed dividend distribution purposes at the end of the period of two years from the end of the year of assessment to which the profits refer, are Cyprus tax residents and domiciled. From 1 March 2019, the deemed dividend distribution is subject to a 1,70% contribution to the General Healthcare System, increased to 2,65% from 1 March 2020, with the exception of April 2020 until June 2020 when the 1,70% rate was applicable. The amount of deemed distribution is reduced by any actual dividends paid out of the relevant year at any time. This special contribution for defence is payable by the Company for the account of the shareholders.
| CASH FLOWS FROM OPERATING ACTIVITIES | Note | 30.06.2024 3 |
2020 € |
|---|---|---|---|
| Loss before tax | (32,153) | (15,915) | |
| Adjustments for: | |||
| Interest expense | 10 | 14,507 | 679 |
| (17,646) | (15,236) | ||
| Changes in working capital: Increase in inventories Decrease/(increase) in trade and other receivables Increase in trade and other payables |
(83,827) (313) 197,761 |
(158,570) 12,117 178,421 |
|
| Cash generated from/ (used in) operations | 95,975 | 16,732 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| CASH FLOWS FROM FINANCING ACTIVITIES Repayments of borrowings Proceeds from borrowings Interest paid |
81,135 (14,507) |
54,165 (679) |
|
| Net cash generated from/(used in) financing activities | (95,642) | 53,486 | |
| Net increase/(decrease) in cash and cash equivalents | 333 | 70,218 | |
| Cash and cash equivalents at beginning of the year | 52 | (70,166) | |
| Cash and cash equivalents at end of the period | 14 | 385 | 52 |
The Company P.G. Economides Properties Plc (the "Company") was incorporated in Cyprus on 09 August 1986 as a private limited liability company under the provisions of the Cyprus Companies Law, Cap. 113. Its registered office is at 17 Gr. Xenopoulou Str., 3106, Limassol, Cyprus.
The principal activity of the Company, which are unchanged from last year, is the development of land. On 10 November 2020 the Company obtained a licence for its shares to the Emerging Companies Market.
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap. 113. The financial statements have been prepared under the historical cost convention.
During the current year the Company adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2020. This adoption did not have a material effect on the accounting policies of the Company.
The principal accounting policies adopted 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.
The Company is organised by business segments and this is the primat for segmental reporting. Each business segment provides products or services which are subject to risks and returns that are different from those of other business segments. The Company operates only in Cyprus and for this reason operations are not analysed by geographical segment.
Interest expense and other borrowing costs are charged to profit or loss as incurred.
The Company classifies its financial assets in the following measurement categories:
The classification and subsequent measurement of debt financial assets depends on: (i) the Company's business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset. On initial recognition, the Company may irrevocably designate a debt financial asset that otherwise meets the reguirements to be measured at amortized cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
For investments in equity instruments that are not held for trading, the classification will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). This election is made on an investment hasis
All other financial assets are classified as measured at FVTPL.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention ("regular way" purchases and sales) are recorded at trade date, which is the date when the Company commits to deliver a financial instrument. All other purchases and sales are recognised when the entity becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial as FVTPL are expensed in profit or loss. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
The Company assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at amortised cost and FVOCI and exposure arising from loan commitments and financial guarantee contracts. The Company measures ECL and recognises credit loss allowance at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of profit or loss and other comprehensive income within "het impairment losses on financial and contract assets. Subsequent recoveries of amounts for which loss allowance was previously recognised are credited against the same line item.
Debt instruments carried at amortised cost are presented in the statement of financial position net of the allowance for ECL. For loan commitments and financial guarantee contracts, a separate provision for ECL is recognised as a liability in the statement of financial position.
For debt instruments at FVOCI, an allowance for ECL is recognised in profit or loss and it affects fair value gains or losses recognised in OCI rather than the carrying amount of those instruments.
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of financial asset assessed for impairment. Specifically:
For trade receivables and contract assets, including trade receivables and contract assets with a significant financing component, and lease receivables the Company applies the simplified approach permitted by IFRS 9, which requires lifetime expected credit losses to be recognised from initial recognition of the financial assets.
For all other financial instruments that are subject to impairment under IFRS 9, the Company applies general approach - three stage model for impairment. The Company applies a three stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1.
Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter ("12 Months ECL"). If the Company identifies a significant increase in credit risk ("SICR") since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any ("Lifetime ECL"). Refer to note 6, Credit risk section, for a description of how the Company determines when a SICR has occurred. If the Company determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Company's definition of credit impaired assets and definition of default is explained in note 6, Credit risk section.
Additionally the Company has decided to use the low credit risk assessment exemption for investment grade financial assets. Refer to note 6, Credit risk section for a description of how the Company determines low credit risk financial assets.
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 Company exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. The Company may write-off financial assets that are still subject to enforcement activity when the Company seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery.
The Company sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Company assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset (e.g. profit share or equity-based return), significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Company derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Company also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Company compares the original and revised cash flows to assets whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate, and recognises a modification gain or loss in profit or loss.
For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks and bank overdrafts. In the statement of financial position, bank overdrafts are included in borrowings in current liabilities. Cash and cash equivalents are carried at amortised cost because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL.
These amounts generally arise from transactions outside the usual operating activities of the Company. They are held with the objective to collect their contractual cash flows represent solely payments of principal and interest. Accordingly, these are measured at amortised cost using the effective interest method, less provision for impairment. Financial assets at amortised cost are classified as current assets if they are due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current assets.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, in which case they are recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.
Trade receivables are also subject to the impairments of IFRS 9. The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. See note 6, Credit risk section.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Company, and a failure to make contractual payments for a period of greater than 180 days past due.
Financial quarantee contracts that require the Company to make specified payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of debt instrument. Such financial guarantees are given to banks, financial institutions and others on behalf of customers to secure loans, overdrafts and other banking facilities.
Financial guarantees are recognised as a financial liability at the time the guarantee is issued.
Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received. In the absence of fees received, the fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.
Financial quarantees are subsequently measured at the higher of (i) the amount determined in accordance with the expected credit loss model under IFRS 9 "Financial Instruments", and (ii) the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15 "Revenue from Contracts with customers".
Financial liabilities are initially recognised at fair value and classified as subsequently measured at amortised cost, except for (i) financial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securities), contingent consideration recognised by an acquirer in a business combination and other financial liabilities designated as such at initial recognition and (i) financial guarantee contracts and loan commitments.
A financial liability is derecognised when the obligation under the liability is discharged or expires.
Borrowings are recorded initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated 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 effective interest method.
An exchange between the Company and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. (In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.)
If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners and is recognised directly to equity,
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds, including interest on borrowings, amortisation of discounts or premium relating to borrowings, amortisation of ancillary costs incurred in connection with the arrangement of borrowings, finance lease charges and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
Borrowing costs that are directly attributable to the acquisition or production of a qualifying asset, being an asset that necessarily takes a substantial period of time to get ready for its intended use or sale, are capitalised as part of that asset, when it is probable that they will result in future economic benefits to the Company and the costs can be measured reliably.
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and intention to settle on a net basis, or to realise the liability simultaneously. This is not generally the case with master netting agreements, and the related assets and liabilities are presented gross in the statement of financial position.
Inventories are stated at the lower of cost and net realisable value. The cost is determined using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business, less the costs to completion and selling expenses.
Ordinary shares are classified as equity.
Non-current liabilities represent amounts that are due more than twelve months from the reporting date.
At the date of approval of these financial statements, standards and interpretations were issued by the International Accounting Standards Board which were not yet effective. Some of them were adopted by the European Union and others not yet. The Board of Directors expects that the adoption of these accounting standards in future periods will not have a material effect on the financial statements of the Company.
The Company is exposed to interest rate risk, iquidity risk and capital risk management arising from the financial instruments it holds. The risk management policies employed by the Company to manage these risks are discussed below:
Interest rate risk is the risk the value of financial instruments will fluctuate due to changes in market interest rates. The Company's income and operating cash flows are substantially independent of changes in market interest rates as the Company has no significant interest-bearing assets. The Company is exposed to interest rate risk in relation to its non-current borrowings issued at variable rates expose the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. The Company's Management monitors the interest rate fluctuations on a continuous basis and acts accordingly.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Credit risk arises from [cash and cash equivalents, contractual cash flows of debt investments carried at amortised cost, at fair value through other comprehensive income (FVOCI) and at fair value through profit or loss (FVTPL), favourable derivative financial instruments and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables and contract assets as well as lease receivables. Further, credit risk arises from financial guarantees and credit related commitments.]
Credit risk is managed on a group basis. For banks and financial institutions, the Company has established policies whereby the majority of bank balances are held with independently rated parties with a minimum rating of ['C'].
If wholesale 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. [Individual credit limits and credit terms are set based on the credit quality of the customer in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. Sales to retail customers are settled in cash or using major credit cards.]
There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry sectors and/or regions.
The Company's investments in debt instruments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.
These policies enable the Company to reduce its credit risk significantly.
The Company has the following types of financial assets that are subject to the expected credit loss model:
The impairment methodology applied by the Company for calculating expected credit losses depends on the type of financial asset assessed for impairment. Specifically:
Impairment losses are presented as net impairment losses on financial and contract assets within operating profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
The Company considers the probability of default upon initial recognition of the asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring on the financial asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information. 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. The Company has identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors. No significant changes to estimation techniques or assumptions were made during the reporting period.
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.
(ii) Impairment of financial assets (continued)
The Company has decided to use the low credit risk assessment exemption for investment grade financial assets. Management consider 'low credit risk' for listed bonds to be an investment grade credit rating with at least one major rating agency. Other instruments are considered to be low credit risk when they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term.
A default on a financial asset is when the counterparty fails to make contractual payments within 90 days of when they fall due.
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 Company categorises a debt financial asset for write off when a debtor fails to make contractual payments greater than 180 days past due. Where debt financial assets have been written off, the Company continues to engage in enforcement activity to recover the receivable due. Where recoveries are made, these are recognised in profit or loss.
The Company's exposure to credit risk for each class of (asset/instrument) subject to the expected credit loss model is set out helow:
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables (including those with a significant financing component, and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The expected loss rates are based on the payment profiles of sales over a period of 36 months before 30 June 2021 or 1 January 2020 respectively and the corresponding historical credit losses experienced within this period. 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. The Company has identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in these factors.
The average credit period on sales of goods is 60 days. No interest is charged on outstanding trade receivables.
The Company always measures the loss allowance for trade receivables at an amount equal to lifetime ECL.
There were no significant trade receivable and contract asset balances written off during the year that are subject to enforcement activity.
(ii) Impairment of financial assets (continued)
The Company assesses, on a group basis, its exposure to credit risk arising from cash at bank. This assessment takes into account, ratings from external credit rating institutions and internal ratings, if external are not available.
Bank deposits held with banks with investment grade rating are considered as low credit risk.
The gross carrying amounts below represent the Company's maximum exposure to credit risk on these assets as at 30 June 2021 and 31 December 2019:
The ECL on current accounts is considered to be approximate to 0, unless the bank is subject to capital controls. The ECL on deposits accounts is calculated by considering published PDs for the rating as per Moody's and an LGD of 40-60% as published by ECB.
The Company does not hold any collateral as security for any cash at bank balances.
There were no significant cash at balances written off during the year that are subject to enforcement activity.
The primary purpose of these instruments is to ensure that funds are available to a borrower as required. Guarantees which represent irrevocable assurances that the Company will make payments in the event that a counterparty cannot meet its obligations to third parties, carry the same credit risk as loans receivable. Commitments to extend credit represent unused portions of authorisations to extend credit in the form of loans or guarantees. With respect to credit risk on commitments to extend credit, the Company is potentially exposed to loss in an amount equal to the total unused commitments, if the unused amounts were to be drawn down. The Company monitors the term to maturity of credit related commitments, because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments.
Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Company has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.
Capital includes equity shares and share premium, convertible preference shares and loan from parent company.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Company's overall strategy remains unchanged from last year.
Estimates and judgments 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 makes estimates and assumptions concerning the future. The resulting estimates will, by definition, sedom 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.
When measuring expected credit losses the Company uses reasonable and supportable forward looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other.
Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
The Company reviews its inventory records for evidence regarding the saleability of inventory and its net realizable value on disposal. The provision for obsolete and slow-moving inventory is based on Management's past experience, taking into consideration the value of inventory as well as the movement and the level of stock of each category of inventory.
The amount of provision is recognised in profit or loss. The review of the net realisable value of the inventory is continuous and the methodology and assumptions used for estimating the provision for obsolete and slow-moving inventory are reviewed regularly and adjusted accordingly.
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are disclosed in note 6, Credit risk section.
| 30.06.2021 | Total | ||
|---|---|---|---|
| e | |||
| Profit before tax | (32,153) | (32,153) | |
| Assets | 18,086,164 | 18,086,164 | |
| Liabilities | 6,230,911 | 6,230,911 | |
| 2020 | Total | ||
| € | € | ||
| Profit before tax | (15,915) | (15,915) | |
| Assets | 18,001,691 | 18,001,691 | |
| Liabilities | 6,114,285 | 6,114,285 | |
| 30.06.2021 | 2020 | |
|---|---|---|
| ਡ | ਵ | |
| Auditors' remuneration | 1,200 | |
| Other expenses | 17,646 | 13,695 |
| Total expenses | 17-646 | 14,895 |
| 10. Finance costs | ||
| 30.06.2021 | 2020 | |
| 6 | € | |
| Interest expense | 679 | |
| Sundry finance expenses | 14,507 | 341 |
| Finance costs | 14,507 | 1.020 |
The corporation tax rate is 12,5%.
Under certain conditions interest income may be subject to defence contribution at the rate of 30%. In such cases this interest will be exempt from corporation tax. In certain cases, dividends received from abroad may be subject to defence contribution at the rate of 17%.
Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon etc) are exempt from Cyprus income tax.
Due to tax losses sustained in the year, no tax liability arises on the Company. Under current legislation, tax losses may be carried forward and be set off against taxable income of the five succeeding years.
| 30.06.2021 | 2020 | |
|---|---|---|
| Assets for resale | ||
| 17,998,923 17,915,096 | ||
| 17,998,923 17,915,096 |
During the previous year, the value of €17.756.526 (plus capitalised interest for 2020 of €158.570), previously recognised as assets held for sale, has been reclassified to inventory, since there is change in the intention of the Board, which intends to develop and sell a planned project of its own land in the future. The Company actively started activities for development of its land including obtaining relevant permits for the planned project and undertaking feasibility studies of its business plan etc.
On the basis of assessment by external parties, the Company is also considering to invite investors to participate in the Company in order to develop the project as a whole and sell it as a project.
During the period the interest amount of €83.827 was capitalised.
Assets are stated at the lower of cost and net realisable value.
| 30.06.2021 | 2020 | |
|---|---|---|
| e | ||
| Trade receivables | 2,395 | 2,395 |
| Receivables from parent (Note 20.1) | ||
| Refundable VAT | 84,461 | 84,148 |
| 86.356 | 86.543 |
The Company does not hold any collateral over the trading balances.
The fair values of trade and other receivables due within one year approximate to their carrying amounts as presented above.
The exposure of the Company to credit risk and impairment losses in relation to trade and other receivables is reported in note 6 of the financial statements.
| 30.06.2021 | 2020 | |
|---|---|---|
| e | u | |
| Cash at bank and in hand | 335 | 52 |
| 385 | S |
The exposure of the Company to credit risk and impairment losses in relation to cash and cash equivalents is reported in note 6 of the financial statements.
| 30.06 2021 Number of |
30.06.2021 | 2020 Number of |
20220 | |
|---|---|---|---|---|
| shares | 0 | shares | € | |
| Authorised Ordinary shares of €1 each |
12,000,000 12,000,000 12,000,000 | 12.000 000 | ||
| Issued and fully paid Balance at 1 January Change in denomination of share capital (from |
11,934,065 | 11,934,065 | 11,934,065 | 11,934,065 |
| €1,00 to €1,71) | ||||
| Issue of shares Balance at 31 December |
11,934,065 11,934,065 11,934,065 11,934,065 |
| 30.06.2021 0 |
2020 ਵ |
|
|---|---|---|
| Current borrowings Bank overdrafts (Note 14) |
453,268 | 453,268 |
| Bank loans | 453,268 | 453,268 |
| Non-current borrowings Bank loans |
5,388,378 | 5,469,513 |
| Total | 5,841,646 | 5,922,781 |
| Maturity of non-current borrowings: | ||
| 30.06.2021 3 |
2020 e |
|
| Between one to two years Between two and five years After five years |
453,268 1,220,339 4,168,039 |
453,268 1,220,339 3,795,906 |
| 5841 646 | 5 469 513 |
Bank loan 1: The bank loan in the original amount of €8.713.868 is repayable by monthly installments of €22.097 each until 2037 and a final balloon payment of €26.690. The loan is subject to a fixed interest rate of 2,83% per annum.
Bank loan 2: The bank loan in the original amount of €2.500.000 is repayable by monthly installments of €12,770 each until 2038 and a final balloon payment of €12.989. The loan is subject to a 3-month floating rate equal to Euribor plus a margin of 2,83% per annum.
The bank loans and overdrafts are secured as follows:
| 30.06.2021 | 2020 | |
|---|---|---|
| e | ||
| Shareholders' current accounts - credit balances (Note 20.2) | 388,964 | 190,002 |
| Accruals | 250 | 1,451 |
| Other creditors | 1 | |
| 389,214 | 191.453 |
The fair values of trade and other payables due within one year approximate to their carrying amounts as presented above.
| 30.06.2021 | 2020 |
|---|---|
| 51 | 51 |
| r | |
On 11 March 2020, the World Health Organisation declared the Coronavirus COVID- 19 outbreak to be a pandemic in recognition of its rapid spread across the globe. Many governments are taking increasingly stringent steps to help contain, and in many jurisdictions, now delay, the virus, including: requiring self-isolation/ quarantine by those potentially affected, implementing social distancing measures, and controlling or closing borders and "locking-down" cities/regions or even entire countries. These measures have slowed down the economies both in Cyprus but globally as well with the potential of having wider impacts on the respective economies as the measures persist for a greater period of time.
This operating environment may have a significant impact on the Company's operations and financial position. Management is taking necessary measures to ensure sustainability of the Company's operations. However, the future effects of the current economic situation are difficult to predict and Management's current expectations and estimates could differ from actual results.
The Company's Management is unable to predict all developments which could have an impact on the Cyprus economy and consequently, what effect, if any, they could have on the future financial performance, cash flows and financial position of the Company.
On the basis of the evaluation performed, the Company's management has concluded that no provisions or impairment charges are necessary. The Company's Management believes that it is taking all the necessary measures to maintain the viability of the Company and the smooth conduct of its operations in the current business and economic environment.
The following transactions were carried out with related parties:
| 30.06.2021 | 2020 | |
|---|---|---|
| P | ||
| P.G. Economides Holdings Ltd | 388,964 | 190.002 |
| 388.964 | 190.0002 |
The directors/shareholders' current accounts are interest free, and have no specified repayment date.
The percentage of share capital of the Company held directly by each member of the Board of Directors (in accordance with Article (4) (b) of the Directive DI 190-2007-04), as at 30 June 2021 and 31 December 2020.
30 June 2021 24 April 2021 0/0 0/0
The persons holding more than 5% of the share capital as at 30 June 2021 and 31 December 2020.
| 31 December | |||
|---|---|---|---|
| 30 June 2021 | 2020 | ||
| 0/0 | 0/0 | ||
| P.G. Economides Holdings Ltd | 99.99 | 99.99 |
The shareholding interest of P.G. Economides Holdings Ltd includes his direct participation with a percentage of €11,934,053 99.99%.
At the end of the year, no significant agreements existed between the Company and its Management.
The Company had no contingent liabilities as at 30 June 2021.
The Company had no capital or other commitments as at 30 June 2021.
There were no material events after the reporting period, which have a bearing on the understanding of the financial statements.
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