Dci Advisors Regulatory News (DCI)

6 April 2020

DOLPHIN CAPITAL INVESTORS LIMITED

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

and together with its subsidiaries the "Group")

Annual Financial Results for

the year ended 31 December 2019

and Trading Update

Dolphin, an investor in high-end residential resort developments in the eastern Mediterranean, announces results for the year ended 31 December 2019 and a trading update.

Financial Highlights:

· Gross Assets of €226 million (31 December 2018: €244 million).

· Total Group Net Asset Value ("NAV") of €181 million and €170 million before and after Deferred Tax Liabilities ("DTL") respectively. This represents an increase of €3 million and €5 million (1.5% and 3.1%) respectively, against the 2018 year-end figures. NAV uplift is principally due to a gain of €9.6 million from the discounted prepayment of the €15.7 million Apollo Heights loan for €6.1 million and the €5.0 million sale of preferred shares relating to the Venus Rock project. This is counter balanced by valuation write-downs on certain portfolio assets, depreciation charges and other operational, corporate, finance and management expenses as detailed in section F below.

· Sterling NAV per share as at 31 December 2019 stood at 17p before DTL and 16p after DTL, versus 18p and 16.4p, a 3.8% and 2.3% decrease before and after DTL respectively, compared to 31 December 2018. The Sterling NAV per share reduction is attributable to the 5.2% appreciation of Sterling versus the Euro during the period, which fully offset the Euro increase in NAV.

· Total debt of €7 million with a Group total debt to gross asset ratio of 3% (2018: 10%). DCI itself does not have any borrowings. The Group debt is at a project level on a non-recourse basis.

· Reflecting a continued focus on reducing overhead costs, the Group's professional and administrative expenses for the year of €4 million showed a decline of €1.7 million (approximately 30%) compared to 2018.

· Total Group cash as of 31 December 2019 stood at €3 million.

Operations and Finance:

· The COVID-19 outbreak is having a significant impact across our business activities, affecting the pace of our construction progress, our ability to market and sell plots and villas in our development projects and Aristo as well as undermining our potential to execute portfolio asset disposals. The extent of the disruption that it will cause in our operations cannot be quantified at this stage. We are monitoring the situation and will adjust our strategies, as well as implement any necessary measures, such as further reducing our corporate costs and temporarily suspending development expenses, as may be required over the coming months.

· Construction works at One&Only at Kea Island ("OOKI") commenced in the second half of 2019 and were progressing on schedule, until travel restrictions to all Greek islands were adopted by the government on 20 March 2020. These measures will cause delays to the construction progress and, should they persist beyond 30 April 2020, could create uncertainty over the planned resort opening during the 2021 season. To date, contractor mobilization has been completed, all internal roads have been opened, and construction of approximately a third of the guest rooms and the main building is in progress. A marketing campaign for the resort has been planned and will be initiated during the season, depending on market circumstances.

· On 18 December 2019, Dolphin signed an agreement with an international investor for a €12 million preferred equity investment into Kilada Hills Golf Resort ("Kilada"). The total €12 million investment is payable in 24 monthly instalments, of which an amount of €1.5 million has been received to date. Under the terms of the agreement, the investor will be entitled to a priority return of the total investment amount from the net disposal proceeds realised from the project, and will retain a 15% shareholding stake in Kilada. Together with the €10 million commitment from Grivalia Hospitality to acquire 20 founder lots in Kilada, the project's first phase development is now fully financed.

· The construction permit for the Kilada golf course was issued on 1 November 2019. This was the first construction permit to be issued in Greece for a real estate project falling within the ambit of the Strategic Development legislation. It is expected that the project tendering process for the golf course and site infrastructure works, which are fully permitted, will take place during Q2 2020 with works commencing shortly thereafter. Site clearing and rough earthworks in the area of the front nine holes of the golf course commenced on site in March 2020. The club house and other components of the project will proceed once the design is complete and the relevant permit issued. The target opening date for the project is the summer season of 2022.

· On 25 September 2019, the Group completed the discounted repayment of the Apollo Heights loan for €6.15 million against a nominal value of €15.7 million, which resulted in a €9.6 million gain.

· Gross sales of Aristo Developers Ltd ("Aristo"), a 47.9% DCI affiliate, during the twelve months to December 2019 increased by 21% on a year-on-year basis representing total sales revenue of €66 million. In August 2019, Dolphin entered into a preferred share transaction with Aristo Ktimatiki (an entity controlled by Theodore Aristodemou, chairman of Aristo) through which DCI sold its 47.9% share of the beneficial ownership and control over 37 hectares in the area referred to as "Atlantis" in the north of the Venus Rock project for a €9 million cash consideration, of which an amount of €5 million has been paid, with the balance due by 30 June 2020. Following the execution of this transaction, DCI fully retains its 47.9% common shareholding and its respective voting rights in the Aristo Group.

· On 6 September 2019, the Company executed the sale of a land parcel comprising c. 135,000 m2 within the Group's Apollo Heights project for €0.6 million.

· Three villa sales were made during the year at LaVanta, Turkey for consideration of €0.7 million.

Strategy:

Whilst mindful of the impact of Covid-19 in the short-term, the Board is continuing its strategy of optimising the disposal of the Company's asset portfolio in order to return capital to shareholders.

Since the adoption of the initial disposal strategy in 2016, DCI has been able to execute six significant asset disposals at an aggregate enterprise value of c. €344 million, reduce the Group debt by more than €210 million and achieve important permitting and entitlements decisions for its remaining asset portfolio. The extension of the Company's divestment period to 31 December 2021, as approved by the shareholders on 2 May 2019, has enabled the Board and the Investment Manager to design and implement a divestment strategy on an asset by asset basis, in the light of prevailing market conditions and circumstances, which will maximise returns to shareholders.

The Board anticipates that meaningful distributions for shareholders can be achieved, predominantly from the sale of the Company's three major projects: Kilada, OOKI and Aristo. The Board intends to make distributions on the receipt of the net proceeds of sale of each of these three major assets.

Commenting, Andrew Coppel CBE, Chairman of Dolphin's Board of Directors, said:

"The development progress made both in OOKI and Kilada during 2019 is encouraging, as it enhances both their tangible value and divestment potential. Whilst the impact of the Covid-19 pandemic will likely slow immediate progress across a number of projects, we believe that the quality of our portfolio will enable us to deliver the implementation of the Company's divestment strategy."

Miltos Kambourides, Founder of Dolphin and Managing Partner of Dolphin Capital Partners said:

"We are pleased to have finally reached the construction stage for both OOKI and Kilada. We remain focussed on the completion of their development as, together with the Company's strategic shareholding in Aristo Developers, their monetisation is of fundamental importance for generating distributions to shareholders."

For further information, please contact:

A. Chairman's Statement

I am pleased to report Dolphin's financial results for the year ended 31 December 2019 and to provide a trading update.

Results

Total Group NAV as at 31 December 2019 was €181 million and €170 million before and after DTL respectively. This represents an increase of €3 million (1.5%) and €5 million (3.1%), respectively, from the 31 December 2018 figures.

The profit for the year was mainly due to the €9.6 million gain realised through the Apollo loan discounted repayment deal and the €5 million collected during 2019 for the sale of DCI's 47.9% share in certain land parcels at Venus Rock which were partly offset by €2 million in valuation reductions and impairment charges, as well as the Company's ongoing overhead and finance expenses.

Further details on the financial performance of the Company during the period are included in the Financial Position, section F of the report.

Portfolio

During 2019:

· we initiated construction of the OOKI;

· we received the construction permit for the Kilada golf course and completed the project's financing sources through a €12 million preferred investment, thus paving the way for the commencement of the project construction during Q2 2020 ; and

· we achieved permitting advances in the remaining portfolio of assets.

In parallel, we concluded:

· the sale of our share of c. 37 hectares owned by an Aristo subsidiary for €9 million in cash, of which €5 million has been collected, while the remainder will be paid by 30 June 2020 without diluting in any way our common overall shareholding and voting rights in Aristo;

· the sale of c. 135,000 m2 of land within the Apollo Heights project for €0.6 million and three residences in LaVanta for €0.7 million; and

· the discounted pre-payment of the Apollo Heights loan for €6.15 million against a nominal value of €15.7 million, resulting in a €9.6 million gain.

Strategy

Our portfolio comprises two basic categories:

· Kilada, OOKI and Aristo, the three projects that we predominantly rely upon to facilitate material distributions to shareholders; and

· our remaining asset portfolio, which we intend to opportunistically monetise as soon as practicable taking into account, inter alia, permitting and zoning status as well as overall market conditions.

In relation to our two projects under development, OOKI and Kilada, the Board believes that in order to maximize our divestment returns, we should aim to sell our share of these assets when their construction has made significant progress in order to minimize development risk and be able to appeal to a larger investment audience.

Our shareholding position in Aristo, although representing a significant underlying value in a leading development company with a substantial property portfolio and growing sales, remains a minority stake in a privately held company and, as such, has proven difficult to monetise. We have been able to receive over the past two years a total of €11 million through distributions and the sale of our stake in our share of c. 37 hectares owned by an Aristo subsidiary; however, to date, we have not been able to monetise our overall position in Aristo. We are continuing our efforts to structure and implement a divestment transaction either with our partner at Aristo or with potential third party investors.

Our remaining portfolio includes Scorpio Bay, Lavender Bay and Plaka Bay in Greece, Apollo Heights in Cyprus, Livka Bay in Croatia and LaVanta in Turkey.

· Scorpio Bay, Lavender Bay, Plaka Bay and Apollo Heights have not reached permitting maturity as yet and remain essentially greenfield projects. We have been working to achieve planning and permitting advances in all four projects and market them to other developers and/or land investors.

· Livka Bay and LaVanta are fully permitted and are currently being marketed through local and international real estate agents to potential acquirers.

COVID-19 Impact

COVID-19 is having and will continue to have an impact on our business activities. The main areas of concern are the following:

a. weaker Aristo sales;

b. delay in the ongoing construction and permitting activities;

c. postponement of sales & marketing activities; and

d. a deferment of certain disposal conversations.

We are closely monitoring the situation and will adjust our strategies as well as implement any necessary measures that may be required over the coming months. The Board will continue to keep shareholders informed as appropriate.

Outlook

We made significant progress in advancing our portfolio assets during the year. Our attention is now focussed on the timely and on budget construction of OOKI and the first phase of Kilada which, together with the Company's strategic shareholding in Aristo Developers, are considered critical in our efforts to realise tangible value for our shareholders.

We will continue to work with the Investment Manager and the Company's advisers to explore opportunities to monetise all our assets and take advantage of any opportunistic deals as they may arise.

Andrew M Coppel CBE

Chairman

Dolphin Capital Investors

6 April 2020

B. Investment Manager's Report

B.1. Business Overview

During 2019 we focused on making progress on certain key portfolio assets, namely:

· the commencement of construction at OOKI;

· the permitting of the first phase of Kilada and securing the financing for its development;

· the structuring and implementation of the €9 million transaction at Aristo; and

· the discounted final settlement of the Group's €15.7 million outstanding loan facility at Apollo Heights.

We continue to focus on the implementation of the Company's strategy to realise the value of our diverse asset portfolio in order to maximise cash returns for our shareholders.

B.2. Portfolio Review

· One&Only at Kea Island, Greece

o Following a competitive tender process a prominent local contractor, Redex SA, was appointed in August 2019 for the construction works at OOKI. The contractor mobilized immediately upon contract signing and proceeded initially with excavating internal roads and, subsequently, foundations for the main building and the guest rooms. To date, progress has been recorded on approximately one third of the guest room foundations and the main building. The contractor will subsequently proceed with superstructure works in all buildings and accelerate the construction of one guest room, to be completed towards the end of Q2 2020 which will serve as the project's Mock-Up Room for villa sales. Works have been progressing on schedule in order for the resort to open in time for the 2021 season. However, the effect of the COVID-19 pandemic began to have a direct impact on the progress of the works as on 20 March 2020, the government imposed measures restricting access to the Greek islands solely to permanent residents, so as to prevent the spread of the virus and protect the local residents. This will directly prevent the contractor in bringing labour and material to the project site, thus preventing the ability to advance the construction works. The restriction is for 30 days and we are working closely with the contractor to ensure compliance with all government ordinances and be prepared to resume normal operations when restrictions are lifted.

o The creation of awareness for the project and more specifically the One & Only Kea Island Private Homes ("OOKI PH") continues in close co-operation with the One&Only sales and marketing teams and through a number of marketing activities. A website has been created within the general One&Only website, including online enquiries, alongside a series of marketing collateral (printed and digital) showcasing the OOKI PH available for sale as well as the destination. An international PR campaign commenced in October 2019, which has resulted in extensive publicity in a number of highly prestigious international publications, including The Times, Vogue and Tatler. Sotheby's Realty UK has been appointed as an advisor and a series of actions are underway in collaboration with them. Targeted promotional sales actions are also underway, including social media promotion of the OOKI PHs, newsletters and one-on-one meetings with potential clients.

· Kilada Hills Golf Resort, Greece

o The final construction permit for the first phase of the project, including the Jack Nicklaus Signature Golf Course and infrastructure for the first residential lots, was issued on 1 November 2019. The issuance of the construction permit enables us to start the pre-sale process of the residential lots, which at full development will comprise c. 230 units. Together with the golf course, a luxury Country Club with amenities to cater for the entire family, such as restaurants, a gym, spa and swimming pool, will be built and an exclusive Beach Club will also be available for the lot owners of the golf community.

o On 18 December 2019, Dolphin signed an agreement with an international investor for a €12 million preferred equity investment into Kilada. The total €12 million investment is payable in 24 monthly instalments, of which an amount of €1.5 million has been received to date. Under the terms of the agreement, the investor would be entitled to a priority return of the total investment amount from the net disposal proceeds realised from the project and will retain a 15% shareholding stake in Kilada. Together with the €10 million commitment from Grivalia Hospitality to acquire 20 founder lots in Kilada, the project development is now fully financed.

o The project tendering process for the golf course and site infrastructure works is underway so that construction works can commence shortly thereafter. The club house and other components of the project will proceed in a subsequent phase, once design is complete.

o The construction strategy includes commencement of bulk earthworks for the golf course through a large earthworks contractor and, subsequently, appointment of a golf course construction specialist, while in parallel proceeding with the infrastructure works through local contractors.

o The targeted commencement of operations is during 2022.

o The project's PR, sales and marketing activities are underway with the assistance of strategic consultants. A branding /marketing firm is currently creating all marketing and sales collateral and a PR Agency has been engaged. A series of specific sales activities are in planning and will commence once the material is ready and the project is officially launched.

· Plaka Bay, Greece

o Plaka Bay received pre-approval of the Special Spatial Planning on 14 October 2019, which represents a major step towards its permitting advancement.

· LaVanta, Turkey

o Three residences were sold during 2019, for a total gross consideration of €0.7 million.

· Aristo (a 47.9% affiliate)

o Operating Performance

§ 126 homes and plots were sold during 2019, representing total sales of €66 million, up 21% compared to €55 million in 2018.

§ 31 homes and plots were sold in total up to the end of February 2020, representing total sales of €9.9 million, down 14.5% compared to €11.5 million for the same period in 2019.

§ Strong sales momentum continued from China during 2019, representing c. 58% of sales.

§ The substantial majority of Aristo's sales continue to be under the Cyprus citizenship investment programme, which offers Cypriot citizenship to foreign nationals investing at least €2 million into real estate. Consequently, the bulk of the relevant sales proceeds remains in escrow until the citizenship is awarded to the applying customer and the construction of the relevant property progresses (for off-plan sales); the full sales proceeds release typically ranges between 8 to 20 months from the signing of each sale transaction. Aristo had a total of €18.2 million in blocked/escrowed funds as at 31 December 2019 (€21.5 million at YE 2018).

o Sale of Preferred Shares

§ In August 2019, DCI agreed to transfer all its Class A Preferred Shares in DCI Holdings Two Ltd to Aristo Ktimatiki Ltd (an entity controlled by Theodore Aristodemou, chairman of Aristo) in consideration for €9 million in cash.

§ €5 million has been paid while the remainder is due by 30 June 2020, with the transfer of the corresponding shares being made upon each payment being made.

§ The Class A Preferred Shares have the beneficial ownership rights over 37 hectares of land in the north of the Venus Rock Project.

§ Following the execution of this transaction, DCI fully retains its 47.9% shareholding and its respective voting rights in the Aristo Group.

C. Group Assets

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

*Residual investment cost, including amounts paid in shares.

**Further details on debt maturities are set out under note 24 of the financial statements.

A breakdown of Dolphin's portfolio, as at 31 December 2019, with certain key metrics is provided below:

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

D. Market Dynamics

The COVID-2019 outbreak has been declared a pandemic by the World Health Organization and is already having a major effect on the travel, real estate and hospitality industry. We have witnessed a significant reduction in foreign travel intent, governmental lock-down measures imposed on hotels and resorts in Greece and supply chain delays which impact our ongoing construction activities.

Measures including the suspension of immediate tax and loan payments and the provision of share terms financing for companies affected have been announced by the governments of Greece, Cyprus, Croatia and Turkey. Notwithstanding these measures, the slowdown in economic activity-and transportation restrictions-in all the countries where the DCI group operates will likely have an impact on both our ability to complete the construction of our ongoing projects in a timely manner as well as hinder our efforts to realise transactions for the disposal of our portfolio assets in the planned timescale.

The extent of the impact is uncertain at this stage and will depend on how quickly the outbreak fades and the disruption that it will cause in our operations in the interim. We are, of course, closely monitoring the situation and will adjust our strategies, as well as implement any necessary measures that may be required over the coming months.

E. Future Objectives

The Company's main objectives for the remainder of 2020 are to:

1. Manage and minimize the adverse effects that COVID-19 will have on our Group business activities;

2. Execute further asset disposals;

3. Progress construction at the One&Only Kea Island and achieve villa sales;

4. Initiate and progress construction at Kilada Hills Golf Resort; and

5. Progress planning and permitting selectively for the remaining portfolio to maximize sales proceeds and expedite divestments. 

F. Financial Position for the year ended 31 December 2019

F.1. Consolidated statement of profit or loss for the year ended 31 December 2019

Financial Results

Profit after tax for the period ended 31 December 2019 attributable to owners of the Company amounted to €4 million (2018: loss of €41 million). Profit/ (loss) per share was €0.01 and €(0.05) in 2019 and 2018 respectively. The principal factors affecting the 2019 result were:

- €9.6 million gain achieved through the Apollo loan discounted repayment deal;

- €5 million from the sale of 37 hectares in the north of the Venus Rock project, which was formerly owned by Aristo and represent DCI 47.9% share;

 which were partly offset by:

- the year-end net valuation losses and impairment charges of €2 million; and,

- the Group's depreciation costs and other operational, corporate, finance and management expenses as further explained below.

Consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2019

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

Revenue

Revenues from continuing operations of €6.4 million (31 December 2018: €4.4 million), were derived from the following sources:

Other income in 2019 is mainly attributable to €5 million from the sale of 37 hectares in the north of the Venus Rock project, which was formerly owned by Aristo while in 2018 a distribution from Aristo of €2 million took place.

Professional Fees

The charge for the period from continuing operations was €3.0 million (31 December 2018: €3.9 million) and comprises the following:

Administrative and other expenses

The administrative and other expenses from continuing operations amounted to €1.0 million (31 December 2018: €1.8 million) and are analysed as follows:

Change in valuations

Change in valuations from continuing operations amounted to €1.8 million (31 December 2018: €19.0 million) and are analysed as follows:

F.2. Consolidated statement of financial position as at 31 December 2019

The reported NAV as at 31 December 2019 is presented below:

___________

Notes:

1. Euro/GBP rate 0.85369 as at 31 December 2019 and 0.90053 as at 31 December 2018.

2. NAV per share has been calculated on the basis of 904,626,856 issued shares as at 31 December 2019 and as at 31 December 2018.

Total Group NAV as at 31 December 2019 was €181 million and €170 million before and after DTL respectively. This represents an increase of €3 million (1.5%) and €5 million (3.1%), respectively, from the 31 December 2018 figures.

Sterling NAV per share as at 31 December 2019 was 17p before DTL and 16p after DTL and decreased by 3.8% and 2.3%, before and after DTL respectively compared to the 31 December 2018 figures. The appreciation of Sterling versus the Euro during the period of approximately 5.2% has fully offset the Euro increase in NAV.

The Company's consolidated assets of €226 million include €133 million of real estate assets, €72 million of assets held for sale, €17 million of equity- accounting investees (which represents the 33% investment in Kea Resort, €1 million of other assets (trade and other receivables) and €3 million in cash.

The figure of €133 million of real estate assets (property, plant and equipment, trading properties and investment property) represents the independent property valuations conducted as at 31 December 2019 by American Appraisal (for the Greek and Cypriot projects) for both freehold and long leasehold interests of Kilada, Scorpio Bay, Lavender Bay, Apollo Heights and Plaka Bay projects as well as the appraised value of LaVanta (Colliers International conducted the independent property valuation for Turkey) .

The €72 million of assets held for sale includes €28 million of real estate assets (investment property and trading properties), €43 million of investment in equity accounted investees (the Company's 47.9% interest in Aristo as at 31 December 2019) and €1 million of available-for-sale financial assets which represents the Company's investment in Itacare. The €28 million figure comprises the appraised value of Livka Bay (Colliers International conducted the independent property valuation also for Croatia).

The Company's consolidated liabilities (excluding DTL) total €40 million and mainly comprise €10 million of interest bearing loans and finance lease obligations (of which €7 million are classified as liabilities held for sale). All loans are held by Group subsidiaries and are non-recourse to Dolphin. The €30 million of trade and other payables (including €4 million of trade and other payables held for sale) comprise mainly €21 million of option contracts to acquire land in the Company's Lavender Bay project.

The consolidated financial statements have been audited by KPMG.

Consolidated statement of profit or loss and other comprehensive income

For the year ended 31 December 2019

Consolidated statement of financial position

As at 31 December 2019

Consolidated statement of changes in equity

For the year ended 31 December 2019

Consolidated statement of cash flows

For the year ended 31 December 2019

Notes to the consolidated financial statements

For the year ended 31 December 2019

1. REPORTING ENTITY

Dolphin Capital Investors Limited (the 'Company') was incorporated and registered in the British Virgin Islands ('BVIs') on 7 June 2005. The Company is a real estate investment company focused on the early-stage, large-scale leisure-integrated residential resorts in south-east Europe, and managed by Dolphin Capital Partners Limited (the 'Investment Manager'), an independent private equity management firm that specialises in real estate investments, primarily in south-east Europe. The shares of the Company were admitted to trading on the AIM market of the London Stock Exchange ('AIM') on 8 December 2005.

The consolidated financial statements of the Company as at 31 December 2019 comprise the financial statements of the Company and its subsidiaries (together referred to as the 'Group') and the Group's interests in associates.

2. basis of preparation

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union ('EU').

The consolidated financial statements were authorised for issue by the Board of Directors on 03 April 2020.

Details of the Group's accounting policies are included in note 5.

This is the first set of the Group's annual financial statements in which IFRS 16 'Leases' has been applied. The related changes to significant accounting policies are described in note 2(g).

b. Basis of preparation

The consolidated financial statements of the Company for the year ended 31 December 2019 have been prepared taking into account the Company's intention to dispose of all of its assets by 31 December 2021, as further explained below. The basis of preparation used continues to be in accordance with IFRS as adopted by the EU.

Based on the Company's asset strategy, the Company's objective is to dispose of all of the Company's assets by 31 December 2021. The allocation of any additional capital investment into any of the Company's projects will be substantially sourced from third party capital providers and with the sole objective of enhancing the respective asset's realisation potential until 31 December 2021. The Board expects to return the proceeds from asset disposals to shareholders as the orderly realisation of the Company's assets progresses after taking into account the Company's liquidity position and working capital requirements. In the event that any assets are still held by the Company shortly before 31 December 2021, the Board will convene a shareholders' meeting at which appropriate resolutions for the future of the Company will be proposed.

c. Basis of measurement

The consolidated financial statements have been prepared under the historical cost convention, with the exception of property (investment property and property, plant and equipment), which are stated at their fair values and assets and liabilities held for sale, which are stated at their fair value less costs to sell.

d. Adoption of new and revised standards and interpretations

As from 1 January 2019, the Group adopted all changes to IFRS which are relevant to its operations. This adoption did not have a material effect on the consolidated financial statements of the Company, except for the adoption of IFRS 16 'Leases' (see note 2(g)).

The following standards, amendments to standards and interpretations have been issued but are not yet effective for annual periods beginning on 1 January 2019. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early. The Group continues to assess the potential impact on its consolidated financial statements resulting from the application of the following standards.

(i) Standards and interpretations adopted by the EU

Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning on or after 1 January 2020)

In March 2018 the IASB issued a comprehensive set of concepts for financial reporting, the revised 'Conceptual Framework for Financial Reporting' (Conceptual Framework), replacing the previous version issued in 2010. The main changes to the framework's principles have implications for how and when assets and liabilities are recognised and derecognized in the financial statements, while some of the concepts in the revised Framework are entirely new (such as the 'practical ability' approach to liabilities. To assist companies with the transition, the IASB issued a separate accompanying document 'Amendments to References to the Conceptual Framework in IFRS Standards'. This document updates some references to previous versions of the Conceptual Framework in IFRS Standards, their accompanying documents and IFRS Practice Statements. The Group is currently evaluating the expected impact of adopting the amendment on its financial statements. As such, the expected impact of the amendment is not yet known or reasonably estimable.

IAS 1 and IAS 8 (amendments): Definition of Material (effective for annual periods beginning on or after 1 January 2020)

The amendments clarify and align the definition of 'material' and provide guidance to help improve consistency in the application of that concept whenever it is used in IFRS Standards. The amendments include definition guidance that until now has featured elsewhere in IFRS Standards. In addition, the explanations accompanying the definition have been improved. Finally, the amendments ensure that the definition of material is consistent across all IFRS Standards.

- Old definition: Omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements (IAS 1 'Presentation of Financial Statements').

- New definition: Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

The Group is currently evaluating the expected impact of adopting the amendments on its financial statements. As such, the expected impact of the amendments is not yet known or reasonably estimable.

 (ii) Standards and interpretations not adopted by the EU

IFRS 3 'Business Combinations' (amendments): Definition of a Business (effective for annual periods beginning on or after 1 January 2020)

The amendments narrow and clarify the definition of a business. They also permit a simplified assessment of whether an acquired set of activities and assets is a group of assets rather than a business. The amended definition emphasises that the output of a business is to provide goods and services to customers, whereas the previous definition focused on returns in the form of dividends, lower costs or other economic benefits to investors and others. In addition to amending the wording of the definition, the Board has provided supplementary guidance. Distinguishing between a business and a group of assets is important because an acquirer recognises goodwill only when acquiring a business. The Group is currently evaluating the expected impact of adopting the amendment on its financial statements. As such, the expected impact of the amendment is not yet known or reasonably estimable.

e. Use of estimates and judgements

In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting principles and the related amounts of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are deemed to be reasonable based on knowledge available at that time. Actual results may deviate from such estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively - that is, in the period during which the estimate is revised, if the estimate affects only that period, or in the period of the revision and future periods, if the revision affects the present as well as future periods. In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements are described below:

Going concern assumptions

The Group's cash flow forecasts for the foreseeable future involve uncertainties related primarily to the exact disposal proceeds and timing of disposals of the assets expected to be disposed of. Management believes that the proceeds from forecast asset sales will be sufficient to maintain the Group's cash flow at a positive level. Should the need arise, management is confident that it can secure additional banking facilities and/or obtain waivers on existing ones, until planned asset sales are realised and proceeds received.

As stated in note 37, the slowdown in economic activity and transportation restrictions in all the countries where the Group operates due to COVID-19 outbreak, is expected to have a significant impact on both its ability to complete the construction of its ongoing projects in a timely manner as well as hinder its efforts to realise transactions for the disposal of its portfolio assets.

If for any reason the Group is unable to continue as a going concern, then this could have an impact on the Group's ability to realise assets at their recognised values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements.

Measurement of fair values

A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Significant unobservable inputs and valuation adjustments are regularly reviewed and changes in fair value measurements from period to period are analysed.

Further information about judgements, estimates and assumptions made in applying accounting policies that have the most material effects on the amounts recognised in the financial statements is included in the following notes:

- Note 5.18 - revenue recognition;

- Note 5.26 - taxation.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

· Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

When applicable, further information about the assumptions made in measuring fair values is included in the notes specific to that asset or liability.

f. Functional and presentation currency

These consolidated financial statements are presented in Euro (€), which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

g. Changes in significant accounting policies

The Group initially applied IFRS 16 Leases from 1 January 2019. A number of other new standards are also effective from 1 January 2019, but they do not have a material effect on the Group's financial statements.

The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 January 2019. Accordingly, the comparative information presented for 2018 is not restated - i.e. it is presented, as previously reported, under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below. Additionally, the disclosure requirements in IFRS 16 have not generally been applied to comparative information.

A. Definition of a lease

The Group now assesses whether a contract is or contains a lease based on the definition of a lease, as explained in note 5.9.

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 were not reassessed for whether there is a lease under IFRS 16. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 January 2019.

B. As a lessee

As a lessee, the Group leases some assets including property and equipment. The Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most of these leases - i.e. these leases are on-balance sheet.

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price. However, for leases of property the Group has elected not to separate non-lease components and account for the lease and associated non-lease components as a single lease component.

i. Leases classified as operating leases under IAS 17

Previously, the Group classified one property lease as operating lease under IAS 17. On transition, for this lease, lease liability was measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing rate as at 1 January 2019 (see 2(g) D). Right-of-use assets are measured at either:

- their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the Group's incremental borrowing rate at the date of initial application: the Group applied this approach to one property lease; or

- an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments: the Group applied this approach to all other leases.

The Group has tested its right-of-use assets for impairment on the date of transition and has concluded that there is no indication that the right-of-use assets are impaired.

The Group used a number of practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17. In particular, the Group:

- did not recognise right-of-use assets and liabilities for leases for which the lease term ends within 12 months of the date of initial application;

- did not recognise right-of-use assets and liabilities for leases of low value assets (e.g. IT equipment);

- excluded initial direct costs from the measurement of the right-of-use asset at the date of initial application; and

- used hindsight when determining the lease term.

ii. Leases classified as finance leases under IAS 17

The Group leases a number of items of property. These leases were classified as finance leases under IAS 17. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at 1 January 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

C. As a lessor

The Group is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor, except for a sub-lease. During the year ended 31 December 2019 the Group did not sub-lease any properties or equipment.

D. Impact on financial statements

On transition to IFRS 16, the Group recognised additional right-of-use assets and additional lease liabilities. The main impact on transition is summarised below:

When measuring lease liabilities for leases that were classified as operating leases, the Group discounted lease payments using its incremental borrowing rate at 1 January 2019. The weighted average rate applied is 3.8%.

3. Determination of fair values

Properties

The fair value of investment property and land and buildings classified as property, plant and equipment is determined at the end of each reporting period. External, independent valuation companies, having appropriate recognised professional qualifications and recent experience in the location and category of the properties being valued, value the Group's properties at the end of each year and where necessary, semi-annually.

The Directors have appointed Colliers International and American Appraisal, two internationally recognised firms of surveyors, to conduct valuations of the Group's acquired properties to determine their fair value. These valuations are prepared in accordance with generally accepted appraisal standards, as set out by the Royal Institute of Chartered Surveyors ('RICS'). Furthermore, the valuations are conducted on an 'as is condition' and on an open market comparative basis.

The valuation analysis of properties is based on all the pertinent market factors that relate both to the real estate market and, more specifically, to the subject properties. The valuation analysis of a property typically uses four approaches: the cost approach, the direct sales comparison approach, the income approach and the residual value approach. The cost approach measures value by estimating the Replacement Cost New or the Reproduction Cost New of property and then determining the deductions for accrued depreciation that should be made to reflect the age, condition and situation of the asset during its past and proposed future economic working life. The direct sales comparison approach is based on the premise that persons in the marketplace buy by comparison. It involves acquiring market sales/offerings data on properties similar to the subject property. The prices of the comparables are then adjusted for any dissimilar characteristics as compared to the subject's characteristics. Once the sales prices are adjusted, they can be reconciled to estimate the fair value for the subject property. Based on the income approach, an estimate is made of prospective economic benefits of ownership. These amounts are discounted and/or capitalised at appropriate rates of return in order to provide an indication of value. The residual value approach is used for the valuation of the land and depends on two basic factors: the location and the total value of the buildings developed on a site. Under this approach, the residual value of the land is calculated by subtracting the development cost from the estimated sales value of the completed development.

Each of the above-mentioned valuation techniques results in a separate valuation indication for the subject property. A reconciliation process is then performed to weigh the merits and limiting conditions of each approach. Once this is accomplished, a value conclusion is reached by placing primary weight on the technique, or techniques, that are considered to be the most reliable, given all factors.

Equity-settled share-based payment arrangements

The fair value of equity-settled share-based payment arrangements are measured at grant date using the Trinomial Tree Option Pricing Model and Monte Carlo simulations. Service and non-market performance conditions attached to the arrangements are not taken into account in measuring fair value.

4. PRINCIPAL subsidiaries

As at 31 December 2019, the Group's most significant subsidiaries were the following:

The above shareholding interest percentages are rounded to the nearest integer.

5. Significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented in these consolidated financial statements unless otherwise stated.

5.1 Subsidiaries

Subsidiaries are those entities, including special purpose entities, controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

5.2 Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group's interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

5.3 Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable.

The Group measures goodwill at the acquisition date as the fair value of the consideration transferred, plus the recognised amount of any non-controlling interests in the acquiree, plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not re-measured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling shareholders' proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

5. Significant accounting policies

5.4 Interest in equity-accounted investees

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Associates (equity-accounted investees) are accounted for using the equity method (unless they are classified as assets held for sale - see accounting policy 5.7) and are initially recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group's share of the income and expenses and equity movements of equity-accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an equity accounted-investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

5.5 Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of the business, use in the production or supply of goods or services or for administration purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognised in profit or loss.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss. When an investment property that was previously classified as property, plant and equipment is sold, any related amount included in the revaluation reserve is transferred to retained earnings.

When the use of property changes such that it is reclassified as property, plant and equipment, its fair value at the date of reclassification becomes its cost for subsequent accounting.

5.6 Property, plant and equipment

Land and buildings are carried at fair value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Revaluations are carried out with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the statement of financial position date. All other property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Increases in the carrying amount arising on revaluation of property, plant and equipment are credited to fair value reserve in shareholders' equity. Decreases that offset previous increases of the same asset are charged against that reserve; all other decreases are recognised in profit or loss.

The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and appropriate proportion of production overheads.

Depreciation charge is recognised in profit or loss on a straight-line basis over the estimated useful lives of items of property, plant and equipment, unless it constitutes part of the cost of another asset in which case is included in this asset's carrying amount. Freehold land is not depreciated.

The annual rates of depreciation are as follows:

Buildings 3%

Machinery and equipment 10% - 33.33%

Motor vehicles and other 10% - 20%

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in profit or loss as incurred.

5.7 Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis. Impairment losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in profit or loss.

Once classified as held for sale, property, plant and equipment is no longer depreciated, and any equity-accounted investee is no longer equity accounted.

5.8 Trading properties

Trading properties (inventory) are shown at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of the business less the estimated costs of completion and the estimated costs necessary to make the sale. Cost of trading properties is determined on the basis of specific identification of their individual costs and represents the fair value paid at the date that the land was acquired by the Group.

5.9 Leases

The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17.

Policy applicable from 1 January 2019

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16. This policy is applied to contracts entered into, on or after 1 January 2019.

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

- fixed payments, including in-substance fixed payments;

- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

- amounts expected to be payable under a residual value guarantee; and

- the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'loans and borrowings' in the statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Policy applicable before 1 January 2019

Leases under the terms of which the Group assumed substantially all the risks and rewards of ownership were classified as finance leases. Property held under operating leases that would otherwise meet the definition of investment property may be classified as investment property on a property-by-property basis. Such property was accounted for as if it were a finance lease and the fair value model was used for the asset recognised. Minimum lease payments on finance leases were apportioned between the finance charge and the reduction of the outstanding liability. The finance charge was allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

5.10 Financial instruments

Recognition and initial measurement

Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI - debt investment; FVOCI - equity investment; or FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

- it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment‑by‑investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Cash and cash equivalents

Cash and cash equivalents comprise cash deposited with banks and bank overdrafts repayable on demand. Cash equivalents are short-term, highly-liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.

Financial assets - Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management's strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;

- how the performance of the portfolio is evaluated and reported to the Group's management;

- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

- how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group's continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

- contingent events that would change the amount or timing of cash flows;

- terms that may adjust the contractual coupon rate, including variable‑rate features;

- prepayment and extension features; and

- terms that limit the Group's claim to cash flows from specified assets (e.g. non‑recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

Financial assets - Subsequent measurement and gains and losses

· Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

· Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

· Debt investments at FVOCI: These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

· Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Financial liabilities - Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

The financial liabilities of the Group are measured as follows:

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

Financial liabilities - Classification, subsequent measurement and gains and losses continued

Trade and other payables

Trade and other payables are stated at their cost.

Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

5.11 Share capital and premium

Share capital represents the issued amount of shares outstanding at their par value. Any excess amount of capital raised is included in share premium. External costs directly attributable to the issue of new shares, other than on a business combination, are shown as a deduction, net of tax, in share premium from the proceeds. Share issue costs incurred directly in connection with a business combination are included in the cost of acquisition.

5.12 Dividends

Dividends are recognised as a liability in the period in which they are declared and approved and are subtracted directly from retained earnings.

5.13 Prepayments from clients

Payments received in advance on development contracts for which no revenue has been recognised yet are recorded as prepayments from clients as at the statement of financial position date and carried under deferred income. Payments received in advance on development contracts for which revenue has been recognised are recorded as prepayments from clients to the extent that they exceed revenue that was recognised in profit or loss as at the statement of financial position date.

5.14 Provisions

A provision is recognised in the consolidated statement of financial position when the Group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

5.15 Expenses

Investment Manager remuneration, Directors' remuneration, operational expenses, professional fees, administrative and other expenses are accounted for on an accrual basis. Expenses are charged to profit or loss, except for expenses incurred on the acquisition of an investment property, which are included within the cost of that investment. Expenses arising on the disposal of an investment property are deducted from the disposal proceeds.

5.16 Impairment

Financial instruments and contract assets

The Group recognises loss allowances for expected credit losses ('ECLs') on:

- financial assets measured at amortised cost;

- debt investments measured at FVOCI; and

- contract assets.

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12‑month ECLs:

- debt securities that are determined to have low credit risk at the reporting date; and

- other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment and including forward‑looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Group considers a financial asset to be in default when:

- the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or

- the financial asset is more than 90 days past due.

The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of 'investment grade'. The Group considers this to be Baa3 or higher per Moody's rating agency.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12‑month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

Measurement of ECLs

ECLs are a probability‑weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit‑impaired. A financial asset is 'credit‑impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit‑impaired includes the following observable data:

· significant financial difficulty of the borrower or issuer;

· a breach of contract such as a default or being more than 90 days past due;

· the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;

· it is probable that the borrower will enter bankruptcy or other financial reorganisation; or

· the disappearance of an active market for a security because of financial difficulties.

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.

Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write‑off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

5.17 Discontinued operation

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group. A discontinued operation has either been disposed of or is classified as held for sale and:

(a) represents a separate major line of business or geographical area of operations;

(b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operation; or

(c) is a subsidiary acquired exclusively with a view to resale.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year.

5.18 Revenue recognition

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a customer.

Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control - at a point in time or over time - requires judgement.

5.19 Equity-settled share-based payment arrangements

The grant-date fair value of equity-settled share-based arrangements is generally recognised as an expense, with a corresponding increase in equity, over the vesting period of the awards. The grant-date fair value is measured to reflect market performance conditions and there is no true-up for differences between expected and actual outcomes. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

5.20 Finance income and costs

Finance income comprises interest income on funds invested, dividend income and gains on the disposal of and increase in the fair value of financial assets at fair value through profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and losses on the disposal of and reduction in the fair value of financial assets at fair value through profit or loss.

The interest expense component of finance lease payments is recognised in profit or loss using the effective interest method.

5.21 Foreign currency translation

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss.

5.22 Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Euro at exchange rates at the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to Euro at exchange rates at the dates of the transactions.

The income and expenses of foreign operations in hyperinflationary economies are translated to Euro at the exchange rate at the reporting date. Prior to translating the financial statements of foreign operations in hyperinflationary economies, their financial statements for the current period are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the reporting date.

Foreign currency differences are recognised directly in equity in the foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency translation reserve is transferred to profit or loss.

5.23 Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (operating segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment results that are reported to the Group's chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

5.24 Earnings per share

The Group presents basic and diluted (if applicable) earnings per share ('EPS') data for its shares. Basic EPS is calculated by dividing the profit or loss attributable to shareholders of the Company by the weighted average number of shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of shares outstanding for the effects of all dilutive potential shares.

5.25 NAV per share

The Group presents NAV per share by dividing the total equity attributable to owners of the Company by the number of shares outstanding as at the statement of financial position date.

5.26 Taxation

Taxation comprises current and deferred tax. Taxation is recognised in profit or loss, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the statement of financial position method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. This assessment relies on estimates and assumptions and may involve a series of significant judgements about future events. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to the tax liabilities will impact the income tax and deferred tax expense in the period that such a determination is made.

5.27 Comparatives

Comparative figures have been reclassified to reflect the required changes in presentation in relation to the classification of Kalkan out of disposal groups held for sale (see note 18).

6. revenue

No revenue has been recognised during 2019, that was included in deferred revenue at 31 December 2018.

7. COST OF SALES

Personnel expenses

8. INCOME AND EXPENSES

a. Disposal of investments

b. Change in valuations

c. Other gains

9. SEGMENT REPORTING

Operating segments

As at 31 December 2019, the Group is not considered to have reportable operating segments that require disclosure.

As at 31 December 2018, the Group had two reportable operating segments, the 'Hotel & leisure operations' and 'Construction & development' segments. Information related to each operational reportable segment is set out below. Segment loss before tax was used to measure performance as management believes such information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

Country risk developments

The general economic environment prevailing in the south-east Europe area and internationally may affect the Group's operations. Factors such as inflation, unemployment, public health crises, international trade and development of the gross domestic product directly impact the economy of each country. Variations in those factors and the economic environment in general affect the Group's performance to a certain extent.

The global fundamentals of the hospitality sector remained strong during 2018 and 2019, with both international tourism and wealth continuing to grow, even though economic activity in two of the Group's primary markets, Greece and Cyprus, continued to face significant challenges.

The above does not take into account the impact that the COVID-19 outbreak will have on the travel and hospitality industry in all these jurisdictions in 2020 and beyond (see Note 37).

10. DISCONTINUED OPERATION

On 1 August 2018, as also mentioned in note 32, the Group entered into an agreement for the disposal of DCI 14 (owner of 'Amanzoe' project, in Greece). Part of Amanzoe constituted the 'Hotel & Leisure' operations of the Group, which as at 31 December 2018, was presented as a discontinued operation.

Results of discontinued operation