Untitled document

Company Registration No.: C 65702

CENTRAL BUSINESS CENTRES p.l.c.

Financial Statements

31 December 2022

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

General information2

Directors’ report3 - 6

Corporate governance - Statement of compliance7 - 10

Statement of comprehensive income11

Statement of financial position12

Statement of changes in equity13

Statement of cash flows14

Notes to the financial statements15 - 36

Independent auditors’ report37 - 43

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

GENERAL INFORMATION

Central Business Centres is registered in Malta as a public limited liability company under the Companies Act

(Cap. 386). The Company’s registration number is C 65702.

Petramay Attard Cortis

Adriana Cutajar

Joseph M Formosa

Crystielle Farrugia Cortis(appointed on 27 May 2022)

Company secretary

Dr. Desiree Cassar

Dr. Katia Cachia

(resigned on 23 February 2023)

(appointed on 20 March 2023)

Registered office

Cortis Group, Cortis Buildings

Zebbug ZBG 4211

APS Bank p.l.c.

Birkirkara BKR 4012

Bank of Valletta p.l.c.

10 Misrah San Filippu

Zebbug ZBG 1011

Zebbug ZBG 9015

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

DIRECTORS’ REPORT

The directors submit their annual report and the audited financial statements for the year ended 31 December

Principal activity

The principal activity of the Company is to act as a finance, investment and property-holding company.

Properties owned by the Company are leased to third parties.

Results and dividends

The results for the year are set out in the statement of comprehensive income on page 11.

Review of the business

The Company made a profit after tax of €178,202 for the year ended 31 December 2022 (2021: €3,394,983). The

Company’s financial position remains satisfactory and the directors expect the general level of operating activity to

be sustained in the foreseeable future.

During the year, the Company repurchased and cancelled €15,000 of its 5.25% Unsecured 2025 S2T1 bonds. In

accordance with section 10 of the Further issues in Tranches, Purchases and Cancellation Note forming part of the

Company’s Prospectus dated 5th December 2014, all bonds so purchased by the Company will be cancelled

and will not be re-issued or re-sold.

Financial risk management

The Company is exposed to a variety of financial risks, including market risk, credit risk and liquidity risk. The

Company’s risk management is disclosed in Note 3 to the financial statements.

Events after the end of reporting period

No significant events have occurred after the end of the reporting period which require mention in this report.

Future developments

The Company is not envisaging any changes in operating activities for the forthcoming year.

During the year ended 31 December 2022, the directors were as listed on page 2.

In accordance with the Company’s Memorandum and Articles of Association, the directors are required to seek

re-election on a yearly basis.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

DIRECTORS’ REPORT

Statement of directors’ responsibilities

The Companies Act (Cap. 386), enacted in Malta, requires the directors to prepare financial statements for each

financial period which give a true and fair view of the financial position of the Company as at the end of the

financial year and of the profit or loss for that year.

In preparing the financial statements, the directors are required to:

adopt the going concern basis unless it is inappropriate to presume that the Company will continue in

select suitable accounting policies and apply them consistently;

make judgements and estimates that are reasonable and prudent;

account for income and charges relating to the accounting period on the accrual basis;

value separately the components of asset and liability items;

report comparative figures corresponding to those of the preceding accounting period; and

prepare the financial statements in accordance with generally accepted accounting principles as defined in

the Companies Act (Cap. 386) and in accordance with the provision of the same Act.

The directors are also responsible for keeping proper accounting records which disclose with reasonable

accuracy at any time the financial position of the Company and to enable the directors to ensure that the

financial statements comply with the Companies Act (Cap. 386). This responsibility includes designing,

implementing and maintaining such internal control as the directors determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error. The

directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps

for the prevention and detection of fraud and other irregularities.

The financial statements of Central Business Centres p.l.c. for the year ended 31 December 2022 are included in

the Annual Report 2022, which is made available on the Company’s website. The directors are responsible for the

maintenance and integrity of the Annual Report on the website in view of their responsibility for the controls over,

and the security of, the website. Access to information published on the Company’s website is available in other

countries and jurisdictions, where legislation governing the preparation and dissemination of financial

statements may differ from requirement or practice in Malta.

Going concern statement pursuant to Capital Markets Rule 5.62

After making enquiries and having taken into consideration the future plans of the Company, the directors have

reasonable expectation that the Company has adequate resources to continue in operational existence for the

foreseeable future. For this reason, they adopt the going concern basis in the preparation of the financial

RSM Malta have expressed their willingness to continue in office and a resolution for their re-appointment will be

proposed at the Annual General Meeting.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

DIRECTORS’ REPORT

Principal risks and uncertainties faced by the Company

The Company is subject to market and economic conditions in general

The Company is subject to general market and economic risks which include factors such as condition of the local

property market, inflation prices for the rental of commercial properties and other economic and social factors

affecting demand for real estate generally. In the event that general economic conditions and property market

conditions experience a downturn, this may have an adverse impact on the financial conditions of the company

and its ability to meet its obligations set out within the Bond Prospectus.

Based on the outcome of cash flow projections prepared by the Company which factor possible strain on rental

streams and occupancy driven the cost of living increases, the directors and senior management consider the

going concern assumption in the preparation of the Company’s financial statements as appropriate as at the date

of the authorisation for issue of the 2022 financial statements. They also believe that no material uncertainty that may

cast significant doubt about the Company’s ability to continue honouring liabilities as and when they fall due and to

continue operating as a going concern for the next twelve months exist as at that date.

Risks associated with the property market

Risks associated with the property development and real estate industry generally include, but are not limited to,

risks of cost over-runs and risks of delay in completion of the Villa in St. Julians, the new Zebbug business

premises and The Savoy, Valletta. In the event that these risks were to materialise, they could have a significant

impact on the financial position of the Company.

The property market is a very competitive market that can influence the lease of space

The real estate market in Malta is very competitive in nature. An increase in supply and/or decrease in demand in

the commercial property segment in which the Company operates and targets to lease, may cause the lease of

such spaces to be leased at lower lease contributions or at a slower pace than that originally anticipated by the

Company. If these risks were to materialise, they could have an adverse material impact on the ability of the

Company to repay the bond and interest.

Share capital structure

The Company’s authorised and issued share capital amounts to €250,000 divided into 250,000 Ordinary shares of

€1 each. The share capital consists of one class of ordinary shares with equal voting rights attached. Transfers

of shares are restricted within family members.

Holding in Excess of 5% of the Share Capital

On the basis of the information available to the Company as at 31 December 2022, Petramay Attard Cortis,

Eman Cortis and Joelle Cortis each hold 13,890 shares, whereas Jeanelle Bonello Cortis, Claudia Borg, Alexia

Camilleri Cortis, Tiziana Cortis, Adriana Cutajar and Crystielle Farrugia Cortis each hold 20,833 shares. The

cumulative shares of these aforementioned shareholders are equivalent to 67% of the Company’s issued share

capital. The remaining 33% is also held by members of the Cortis family in individual portions of less than 5%.

Shareholders holding in aggregate more than 50% of the issued share capital, shall be entitled to appoint the

directors. Other limitations of the voting rights of holders are contained in the Company’s Articles of Association,

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

DIRECTORS’ REPORT

Appointment and Replacement of Directors

Board members are appointed for one year and are eligible for re-appointment at the Annual General Meeting.

Board Member Powers

The powers of the Board members are contained in the Company’s Articles of Association. The Articles of

Association grant the Company the power to buy back its own shares in terms of the Maltese Companies Act (Cap.

Contracts with Board Members and Employees

The Company has no contract with any of its Board members that include a severance payment clause. The

Company had no employees during the period ended 31 December 2022.

No disclosures are being made pursuant to Capital Markets Rules 5.64.4, 5.64.5, 5.64.6, 5.64.7 and 5.64.10 as

these are not applicable to the Company.

Pursuant to Capital Markets Rule 5.70.1

At the year-end, the Company had various agreements for the lease of office, retail, warehousing and car

spaces as applicable in the Central Business Centre Zebbug, Central Business Centre Gudja, Central Business

Centre St. Julians, and Central Business Centre Valletta. As at 31 December 2022, the Central Business Centre

Zebbug was operating at full capacity, Central Business Centre Gudja was operating at 90% capacity, the

Central Business Centre St. Julians was operating at 67% capacity and Central Business Centre Valletta was

operating at 28% capacity.

Pursuant to Capital Markets Rule 5.68

Statement by the Directors on the Financial Statements and Other Information included in the Annual

The directors declare that to the best of their knowledge, the financial statements included in the Annual Report are

prepared in accordance with the requirements of International Financial Reporting Standards as adopted by the EU

and give a true and fair view of the assets, liabilities, financial position and results of the Company and that this

report includes a fair review of the development and performance of the business and position of the Company,

together with a description of the principal risks and uncertainties that it faces.

Signed on behalf of the Company’s Board of Directors on 4 April 2023 by Mr. Joseph Cortis (Director,

Chairman of the Board) and Mr. Alfred Sladden (Director) as per the Directors’ Declaration on ESEF Annual

Financial Report submitted in conjunction with the Annual Report and Financial Statements.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

Corporate Governance - Statement of Compliance

The Capital Market Rules issued by the Malta Financial Services Authority, require listed companies to observe The

Code of Principles of Good Corporate Governance (the “Code”). Although the adoption of the Code is not

obligatory, listed companies are required to include, in their Annual Report, a Directors’ Statement of

Compliance which deals with the extent to which the Company has adopted the Code of Principles of Good

Corporate Governance and the effective measures that the Company has taken to ensure compliance with the

Code, accompanied by a report of the auditors thereon.

The Board of Directors (the “Board”) of Central Business Centres p.l.c. (the “Company”) believes in the adoption of

the Code and has endorsed it except where the size and/or particular circumstances of the Company are deemed

by the Board not to warrant the implementation of specific recommendations. In this context it is relevant to

note that the Company has issued bonds to the public and has no employees. Accordingly, some of the provisions

of the Code are not applicable whilst others are applicable to a limited extent.

The Board of Directors is responsible for the Company’s affairs, in particular in giving direction to the Company and

being actively involved in overseeing the systems of control and financial reporting. The Board has discussed

the Code and all directors are aware of their responsibilities as such, including those arising from such Code.

More specifically, in the ordinary course of its business and affairs, the Board of Directors of the Company is

responsible for:

defining the Company’s strategy, policies, and business policies.

establishing internal and external reporting systems so that it can continuously access accurate, relevant,

and timely information to discharge its duties, exercise objective judgement and make decisions.

continuously assessing and monitoring the Company’s present and future operations, opportunities, threats,

evaluating the management’s implementation of corporate strategy and financial objectives.

reviewing the strategy, processes, and policies adopted for implementation.

ensuring that the Company has appropriate policies and procedures in place to assure that the Company

maintains the highest standards of corporate conduct, including compliance with applicable laws,

regulations, business, and ethical standards.

providing the market with regular, timely, and accurate announcements where appropriate and in terms of

the applicable rules and laws governing the affairs of the Company.

The Board of the Company meets at least quarterly and more frequently if necessitated by the business and/or

the general circumstances of the Company.

Chairman and Chief Executive Officer

The functions of the Chairman and Chief Executive Officer are vested by the same individual. The Chairman’s main

function is to lead the Board, set the agenda, and ensure that all board members partake in discussions of complex

and contentious issues.

The Chief Executive Officer has specific authorities from the Board to manage the Company’s operational

activities within the strategy and parameters set by it.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

Corporate Governance - Statement of Compliance - continued

Complement of the Board

The Board is composed of one executive and five non-executive directors, as listed below:

Executive Director

Mr. Joseph Cortis (Chairman and Chief Executive Officer)

Non-Executive Directors

Mr. Alfred Sladden

Dr. Petramay Attard Cortis

Mr. Joseph M Formosa

Ms. Adriana Cutajar

Ms. Crystielle Farrugia Cortis

Directors are appointed during the Company’s Annual General Meeting for periods of one year, at the end of

which term they may stand again for re-election. The Articles of Association of the Company clearly set out the

procedures to be followed in the appointment of directors.

Mr. Alfred Sladden, and Mr. Joseph M Formosa are considered independent non-executive Directors.

Internal Control

The Board is responsible for the Company’s system of internal controls and for reviewing its effectiveness. Such a

system is designed to achieve business objectives and to manage rather than to eliminate the risk of failure to

achieve business objectives and can only provide reasonable assurance against material error, losses, or fraud.

Authority to manage the Company is delegated to the Chief Executive Officer within the limits set by the Board of

Directors. Systems and procedures are in place for the Company to control, report, monitor and assess risks and

their financial implications, and to take timely corrective actions where necessary. Regular financial budgets and

strategic plans are prepared, and performance against these plans is actively monitored and reported to the directors

on a regular basis.

The approval of credit to customers is made by the Chief Executive Officer, in strict adherence to a Board-

approved limit. Proposals falling outside the limit are referred, together with the supporting documentation and the

Chief Executive Officer’s recommendations, to the Board. The Board also approves, after review and

recommendation by the Audit Committee, the transfer of funds and other amounts payable to related companies and

ensures that these are subject to terms and conditions which are on an arm’s length basis.

Directors’ Attendance at Board Meetings

The Board believes that it has systems in place to fully comply with the principles of the Code. Directors meet

regularly, mainly to review the financial performance of the Company and to review internal control processes.

Board members are notified of forthcoming meetings by the Company Secretary with the issue of an agenda and

supporting Board papers, which are circulated well in advance of the meeting. All the directors have access to

independent professional advice at the Company’s expense should they so require.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

Corporate Governance - Statement of Compliance - continued

Directors’ Attendance at Board Meetings - continued

The Board met formally nine (9) times during the period under review. The number of Board meetings attended

by directors for the year ended 31 December 2022 is as follows:

Mr. Joseph Cortis

Mr. Alfred Sladden

Dr. Petramay Attard Cortis

Ms. Adriana Cutajar

Mr. Joseph M Formosa

Ms. Crystielle Farrugia Cortis (appointed 27 May 2022)

The Directors believe that, due to the Company’s size and operations, the remuneration, evaluation, and

nominations committees that are suggested in the Code are not required, and that the function of these can

efficiently be undertaken by the Board itself. However, the Board on an annual basis undertakes a review of the

remuneration paid to the Directors and carries out an evaluation of their performance and of the audit

committee. The shareholders approve the remuneration paid to the directors at the annual general meeting.

Audit Committee

The Board has established an Audit Committee (the “Committee”) and has formally set out Terms of Reference as

outlined in the Principles laid out in the Capital Markets Rules. The purpose of the Committee is to protect the

interest of the Company’s share and bond holders and assist the directors in conducting their role effectively. In the

absence of an internal audit department, the Audit Committee also monitors the financial reporting process,

the effectiveness of internal control and the audit of the annual financial statements. Additionally, it is responsible

for monitoring the performance of the entities borrowing funds from the Company, to ensure that budgets are

achieved and if not, corrective action is taken as necessary. It also scrutinises and supervises related party

transactions for materiality and ensures that these are carried out at arm’s length basis. The Malta Financial

Services Authority considered the Terms of Reference as having sufficient safeguards to ensure the independence

of the Audit Committee.

The Members of the Audit Committee are:

Mr. Alfred Sladden (Chairman)

Dr. Petramay Attard Cortis

Mr. Joseph M Formosa

All the directors forming the Audit Committee are non-executive directors. Mr. Alfred Sladden is considered by the

Board to be competent in accounting and auditing in terms of the Capital Market rules. The Company Secretary

acts as secretary to the Committee.

Remuneration Statement

In terms of the Company’s Memorandum and Articles of Association, it is the shareholders of the Company in the

General Meeting who determine the maximum annual aggregate remuneration of the directors. The aggregate

amount approved for this purpose during the last Annual General Meeting was €14,000.

None of the directors are employed or have a service contract with the Company.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

Corporate Governance - Statement of Compliance - continued

Remuneration Statement - continued

No part of the remuneration paid per annum to the directors is performance based, and the Chief Executive

Officer receives remuneration of €30,000. None of the directors, in their capacity as a Director of the Company, is

entitled to profit sharing, share options or pension benefits. The directors do not receive any other form of perks or

During 2022, the directors received €13,460 for services rendered.

Remuneration Committees

Since the remuneration of the directors of the Company is not performance-related, the functions of the

Remuneration Committee are carried out by the Board of Directors. No new proposals on the remuneration

policy for directors and senior executives, or on the individual remuneration attributed to any of the directors or of the

senior executives, were put forward to the Board of Directors in 2022. Monitoring will continue in 2023 and

proposals will be put forward to the Board of Directors in 2023 should it be necessary.

Relations with bondholders and the market

The Company publishes interim and annual financial statements and when required company announcements.

The Board feels these provide the market with adequate information about its activities.

Conflicts of Interest

On joining the Board and regularly thereafter, directors and officers of the Company are informed and reminded of

their obligations on dealing in securities of the Company within the parameters of law and Capital Markets

Rules. The Company has also set reporting procedures in line with the Capital Markets Rules, Code of Principles,

and code internal dealing.

Signed on behalf of the Company’s Board of Directors on 4 April 2023 by Mr. Joseph Cortis (Director,

Chairman of the Board) and Mr. Alfred Sladden (Director) as per the Directors’ Declaration on ESEF Annual

Financial Report submitted in conjunction with the Annual Report and Financial Statements.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

STATEMENT OF COMPREHENSIVE INCOME

Administrative expenses(248,169)(176,655)

Operating profit

Fair value movement relating to investment property

Profit before tax

277,2455,301,922

Taxation9(99,043) (1,906,939)

Profit for the financial year

178,2023,394,983

Total comprehensive income for the year 178,202 3,394,983

Earnings per share

The notes on pages 15 to 36 are an integral part of these financial statements.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

STATEMENT OF FINANCIAL POSITION

As at 31 December

Non-current assets

Property, plant and equipment

Investment property

1157,291,650 56,713,496

57,593,558 56,891,803

Financial assets at fair value through profit or loss

Trade and other receivables

Cash and cash equivalents

21195,7401,053,035

566,670 1,266,835

TOTAL ASSETS 58,160,228 58,158,638

EQUITY AND LIABILITIES

Capital reserve

Capital reserve

Revaluation reserve

Retained earnings

TOTAL EQUITY 23,789,094 23,610,892

Non-current liabilities

Deferred tax liabilities

Current liabilities

33,534,622 33,510,072

Trade and other payables

Current tax payable

TOTAL LIABILITIES

836,512 1,037,674

TOTAL EQUITY AND LIABILITIES

34,371,134 34,547,746

58,160,228 58,158,638

The notes on pages 15 to 36 are an integral part of these financial statements.

The financial statements on pages 11 to 36 were approved and authorised for issue by the Board of Directors

on 4 April 2023. The financial statements were signed on behalf of the Company’s Board of Directors by

Mr. Joseph Cortis (Director, Chairman of the Board) and Mr. Alfred Sladden (Director) as per the Directors’

Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

STATEMENT OF CHANGES IN EQUITY

ShareCapital RevaluationAccumulatedTotal

profits/(losses)equity

Financial year ended 31 December 2021

Balance at 01 January 2021250,000 16,100,0004,954,440(1,088,531) 20,215,909

Total comprehensive income for the year:

Profit for the financial year---3,394,9833,394,983

Transfer of revaluation surplus on investment property, net of deferred tax16--4,231,214(4,231,214)-

Balance at 31 December 2021

250,000 16,100,0009,185,654(1,924,762) 23,610,892

Financial year ended 31 December 2022

Balance at 01 January 2022250,000 16,100,0009,185,654(1,924,762) 23,610,892

Total comprehensive income for the year:

Profit for the financial year---178,202178,202

Transfer of revaluation surplus on investment property, net of deferred tax16--(9,185,654)9,185,654-

Balance at 31 December 2022

250,000 16,100,000-7,439,094 23,789,094

The notes on pages 15 to 36 are an integral part of these financial statements.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

STATEMENT OF CASH FLOWS

Cash from operating activities:

Profit before tax

Adjustment for:

Interest expense and amortisation of bond issue costs

Interest income

Fair value movements on investment property

Profit from operations

Increase in trade and other receivables

Increase in financial instruments

(Decrease)/increase in trade and other payables

Cash from operating activities

Income taxes paid

Net cash flows generated from operating activities 1,124,222 1,676,943

Cash flows from investing activities:

Payments to acquire property, plant and equipment10(165,932)(24,673)

Payments to acquire investment property11(538,779) (17,972,772)

Interest received 7 743 311

Net cash flows used in investing activities (703,968)

Cash flows from financing activities:

Proceeds from issuance of bonds19- 20,687,138

Repayment of other financial liabilities

Net cash flows (used in)/generated from financing activities (1,277,549) 17,012,842

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

195,740 1,053,035

The notes on pages 15 to 36 are an integral part of these financial statements.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS

1.GENERAL INFORMATION

Central Business Centres (“the Company”) is a public limited liability company and is incorporated in Malta

with its registered address at Cortis Group, Cortis Buildings, Mdina Road, Zebbug ZBG 4211, Malta.

The ownership of the Company’s share capital and voting rights related to such holdings, are such that no

particular individual or identifiable group of individuals could exercise ultimate control over the Company.

The principal activity of the Company is to act as a finance, investment and property-holding company.

Properties owned by the Company are leased to third parties.

2.SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation and statement of compliance

These financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS) as adopted by the European Union (EU) and the requirements of the Companies Act

(Cap. 386) enacted in Malta. The financial statements have been prepared under the historical cost

convention, except as modified by the fair valuation of investment property.

The Company made a profit of €178,202 for the year ended 31 December 2022 (2021 €3,394,983). As at

31 December 2022, the Company’s net assets amounted to €23,789,094 (2021: €23,610,892) and its current

liabilities exceeded its current assets by €269,842 (2021: current assets exceeded its current liabilities by

The Company’s principal activity is to act as a finance company for the development of various commercial

blocks which once completed, will be retained by the Company for rental to third parties for the generation of

future rental income streams. In this context, the Company’s trading prospects are dependent on the timely

development of such properties and on the performance of the related projected rental streams. While the

location of such developments is spread over different locations on the island, the Company is exposed to risks

of negative economic trends that may, from time to time, impact Malta.

In assessing the going concern assumption, the directors of the Company have made reference to the cash flow

forecast of the Company for 2023. The cash flow forecast assumes that the Company will complete the

respective developments as planned and generate the required cash flows from its trading activities from

property rentals.

Based on the foregoing, the directors believe that it is appropriate to prepare the financial statements on a

going concern basis. The financial statements, however, do not include any adjustments in the event that the

forecast and assumptions as set out above do not materialise as planned.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

2.SIGNIFICANT ACCOUNTING POLICIES - continued

Basis of preparation and statement of compliance - continued

The preparation of financial statements in conformity with IFRS as adopted by EU requires the use of

certain accounting estimates. It also requires directors to exercise their judgement in the process of applying

the Company’s accounting policies (Note 4).

The accounting policies set out below have been applied consistently to all periods presented in these

financial statements.

Functional and presentation currency

The financial statements are presented in Euro (€) which is also the Company’s functional currency.

New or revised standards, interpretations and amendments adopted

The Company adopted several new or revised standards, interpretations and amendments issued by the

International Accounting Standards Board (IASB) and the IFRS Interpretations Committee and endorsed by the

EU. The adoption of these new or revised standards, interpretations and amendments did not have a material

impact on these financial statements.

New or revised standards, interpretations and amendments issued but not yet effective

At the end of the reporting period, certain new standards, interpretations or amendments thereto, were in

issue and endorsed by the EU, but not yet effective for the current financial period. There have been no

instances of early adoption of standards, interpretations or amendments ahead of their effective date. The

directors anticipate that the adoption of the new standards, interpretations or amendments thereto, will not

have a material impact on the financial statements upon initial application.

Foreign currencies

Transactions underlying items in these financial statements are measured in the Company’s functional

currency, which is the currency of the primary economic environment in which the entity operates.

Transactions in foreign currencies have been converted into Euro at the rates of exchange ruling on the date

of the transaction. Monetary assets and liabilities denominated in foreign currencies have been translated

into Euro at the rates of exchange ruling at the end of reporting period. All resulting differences are taken to

profit or loss.

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable from the rental of property in the

ordinary course of the Company’s activities. The Company recognises revenue when the amount of revenue

can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific

criteria have been met for each of the Company’s activities as described below:

Rental income from investment property is recognised in the statement of comprehensive income on a

straight-line basis over the term of the lease.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

2.SIGNIFICANT ACCOUNTING POLICIES - continued

The tax charge/credit in the profit or loss for the year normally comprises current and deferred tax.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the

end of the reporting period, and any adjustments to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, for all temporary differences arising

between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. The

amount of deferred tax provided is based on the expected manner of realisation or settlement of the

carrying amount of assets and liabilities, based on tax rates that have been enacted or substantively

enacted at the end of the reporting period.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be

available against which the assets can be utilised and/or sufficient taxable temporary differences are

available. Deferred tax assets are reduced to the extent that is no longer probable that the related tax

benefit will be realised.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if

Property, plant and equipment are initially measured at cost, which comprises their purchase prices, as well as

other expenditures directly attributable to bringing the assets to the location and condition for their intended

use. Subsequent expenditure relating to the assets is added to the carrying values of the assets when it is

probable that future economic benefits associated with the asset, in excess of the originally assessed

standards of performance, will flow back to the company. All other subsequent expenditure is recognised in

profit or loss.

Depreciation is calculated on the straight-line method to write off the cost of each asset to its residual value

over its estimated useful life as follows:

Plant and machinery

Furniture and fixtures

The estimated useful life and depreciation methods are reviewed at the end of each reporting period to

ensure that such estimated useful life and depreciation methods are consistent with the expected pattern of

economic benefits from those assets.

When an asset is disposed of, or is permanently withdrawn from use and no future economic benefits are

expected from its disposal or retirement, the cost and the related accumulated depreciation and impairment

losses, if any, are removed from the accounts and the resulting gain or loss arising from the disposal or

retirement is recognised in profit or loss.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

2.SIGNIFICANT ACCOUNTING POLICIES - continued

Investment property

Investment property, comprising commercial premises including offices, shops, showrooms, warehouses and

car spaces, is held for long-term rental yields or for capital appreciation or both, and is not occupied by the

Company. Investment property, which comprises land and buildings, is initially recognised at cost, including

transaction costs and borrowing costs. Historical cost includes expenditure that is directly attributable

to the acquisition of the items. Borrowing costs which are incurred for the purpose of acquiring or constructing

a qualifying investment property are capitalised as part of its cost. Borrowing costs are capitalised while

acquisition or construction is actively underway. Capitalisation of borrowing costs is ceased once the asset is

substantially complete and is suspended if the development of the asset is suspended.

After initial recognition, investment property is carried at fair value. Fair value is based on active market

prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this

information is not available, the Company uses alternative valuation methods such as recent prices on less

active markets or discounted cash flow projections. The fair value of investment property reflects, among

other things, rental income from current leases and assumptions about rental income from future leases in

the light of current market conditions. The fair value also reflects, on a similar basis, any cash outflows that

could be expected in respect of the property. If this information is not available, the Company uses alternative

valuation methods such as recent prices on less active markets or discounted cash flow projections.

Valuations are reviewed annually by the directors, and every three years by a professional valuer.

Investment property that is being redeveloped for continuing use as investment property or for which the

market has become less active continues to be measured at fair value. Fair value measurement on property

under construction is only applied if the fair value is considered to be reliably measurable.

Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future

economic benefits associated with the item will flow to the Company and the cost of the item can be

measured reliably. All other repairs and maintenance costs are charged to the profit or loss during the

financial period in which they are incurred. When part of an investment property is replaced, the carrying

amount of the replaced part is derecognised.

The fair value of investment property does not reflect future capital expenditure that will improve or enhance the

property and does not reflect the related future benefits from this future expenditure other than those a rational

market participant would take into account when determining the value of the property. Changes in fair values

are recorded in the profit or loss for the year.

Investment properties are derecognised when disposed of or when the investment property is permanently

withdrawn and there is no future economic benefit expected from its disposal. The cost and related

accumulated depreciation and impairment losses, if any are derecognised and the difference between the

disposal proceeds and the carrying amount is recognised in profit or loss within “other income/(loss)”.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment. Its fair

value at the date of the reclassification becomes its cost for subsequent accounting purposes. When the

Company decides to dispose of an investment property without development, the Company continues to treat

the property as an investment property. Similarly, if the Company begins to redevelop an existing investment

property for continued future use as investment property, it remains an investment property during the

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

2.SIGNIFICANT ACCOUNTING POLICIES - continued

Investment property - continued

If an item of property, plant and equipment becomes an investment property because its use has changed, any

difference resulting between the carrying amount and the fair value of this item at the date of transfer is treated

in the same way as a revaluation under IAS 16. Any resulting increase in the carrying amount of the property is

recognised in profit or loss to the extent that it reverses a previous impairment loss; with any remaining

increase recognised in other comprehensive income, directly to revaluation surplus within equity.

Any resulting decrease in the carrying amount of the property is initially charged to other comprehensive

income against any previously recognised revaluation surplus, with any remaining decrease charged to

profit or loss. Upon the disposal of such investment property, any surplus previously recorded in equity is

transferred to retained earnings; the transfer is not made through profit or loss.

Impairment of non-financial assets

The carrying amount of the Company’s assets are reviewed at the end of each reporting period to determine

whether there is any indication of impairment. If such indication exists then the asset’s recoverable amount is

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its

recoverable amount. Impairment losses are recognised in profit or loss.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value

less cost to sell. In assessing value in use, the estimated future cash flows are discounted to their present

value using a pre-tax discount rate that reflects current market assessments of the time value of money and

the risks specific to the asset.

Impairment losses recognised in prior periods are assessed at the end of each reporting period for any

indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a

change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying amount that would have been

determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or

equity instrument of another entity. Financial assets and financial liabilities are recognised when the

Company becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset

expire, or when the financial asset and all substantial risks and rewards are transferred. Financial liabilities are

derecognised when they are extinguished, discharged, cancelled or expire.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

2.SIGNIFICANT ACCOUNTING POLICIES - continued

Financial instruments - continued

Financial assets

Financial assets are classified at initial recognition in accordance with how they are subsequently measured,

financial assets at amortised cost;

financial assets at fair value through other comprehensive income; and

financial assets at fair value through profit or loss.

The Company’s financial assets are mainly financial assets at amortised cost.

Financial assets at amortised cost

Financial assets at amortised costs are financial assets that are held within the business model whose

objective is to collect contractual cash flows (“hold to collect”) and the contractual terms give rise to cash flows

that are solely payments of principal and interest.

On initial recognition, financial assets at amortised cost are recognised at fair value plus transaction costs that

are directly attributable to the acquisition of the financial asset. Discounting is omitted where the effect of

discounting is immaterial.

Financial assets at amortised cost are subsequently carried at amortised cost using the effective interest

method less impairment losses, if any. Gains or losses are recognised in profit or loss when the asset is

derecognised, modified, or impaired.

The Company’s financial assets under this classification include cash and cash equivalents and trade and

other receivables.

Impairment of financial assets

The Company recognises an allowance for expected credit losses (ECLs) on financial assets that are

measured at amortised cost. Equity instruments are not subject to impairment assessment.

ECLs are based on the difference between the contractual cash flows due in accordance with the contract and

all the cash flows that the Company expects to receive, discounted at an approximation of the original effective

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in

credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are

possible within the next 12-months (12-month ECL). For those credit exposures for which there has been

a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses

expected over the remaining life of the exposure, irrespective of the timing of the default (lifetime ECL).

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

2.SIGNIFICANT ACCOUNTING POLICIES - continued

Financial instruments - continued

The Company considers a financial asset in default when contractual payments are 90 days past due.

However, in certain cases, the Company may also consider a financial asset to be in default when internal or

external information indicates that the Company is unlikely to receive the outstanding contractual amounts

in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual

cash flows and usually occurs when past due for more than one year and not subject to enforcement

For trade receivables, the Company applies a simplified approach to measuring ECLs which recognises

lifetime ECLs. The ECLs on these financial assets are estimated using a provision matrix based on the

Company’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the

economic environment.

Financial liabilities

Financial liabilities are classified at initial recognition in accordance with how they are subsequently

measured, as follows:

financial liabilities at amortised cost; and

financial liabilities at fair value through profit or loss.

The Company’s financial liabilities are mainly financial liabilities at amortised cost.

Financial liabilities at amortised cost

Financial liabilities at amortised cost are initially recognised at fair value, net of transaction cost and are

subsequently measured at amortised cost using the effective interest method. All interest-related charges

under the interest amortisation process are recognised in profit or loss.

On derecognition, the difference between the carrying amount of the financial liability (or part of a financial

liability) extinguished or transferred to another party and the consideration paid, including any non-cash

assets transferred or liabilities assumed, are recognised in profit or loss.

Financial liabilities under this category include borrowings, and trade and other payables.

Offsetting of financial assets and financial liabilities

Financial assets and liabilities are offset and the net amount reported in the statement of financial position

when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a

net basis, or realise the asset and settle the liability simultaneously.

Cash and cash equivalents

Cash in hand and at banks and short-term deposits which are held to maturity are carried at cost.

Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid

investments readily convertible to known amounts of cash and subject to insignificant risk of changes in

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

2.SIGNIFICANT ACCOUNTING POLICIES - continued

Cash and cash equivalents - continued

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash in hand, deposits

at banks and short-term investments, net of outstanding bank overdrafts.

Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial

statements in the period in which the dividends are approved by the Company’s shareholders.

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares

are recognised as a deduction, net of tax, from proceeds.

Provisions are recognised when the Company has a present legal or constructive obligation as a result of a part

event; it is probable that an outflow or resources embodying economic benefits will be required to settle the

obligation; and a reliable estimate can be made of the amount of the obligation. The amount recognised as a

provision shall be the best estimate of the expenditure required to settle the present obligation at the end of

the reporting period.

Contingent liabilities

Contingent liabilities are not recognised in the financial statements but are disclosed in the notes to the

financial statements, unless the possibility of an outflow of resources embodying economic benefits is

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or

exercise significant influence over the other party in making financial and operating decisions. Parties are also

considered to be related if they are subject to common control or common significant influence. Related

parties may be individuals or corporate entities.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

3.FINANCIAL RISK MANAGEMENT

The Company’s activities potentially expose it to a variety of financial risks: market risk (including foreign

exchange risk and cash flow interest rate risk), credit risk and liquidity risk. The Company’s overall risk

management focuses on the unpredictability of financial markets and seeks to minimise potential adverse

effects on the Company’s financial performance. The Board provides principles for overall risk

management, as well as policies covering risks referred to above, and specific areas such as investment of

excess liquidity. The Company did not make use of derivative financial instruments to hedge risk exposures

during the current and preceding financial years.

(i) Foreign currency risk

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities

which are denominated in a currency that is not the entity’s functional currency. The Company has no

significant currency risk since substantially all assets and liabilities are denominated in Euro.

(ii) Cash flow and fair value interest rate risk

The Company is exposed to risks associated with the effects of fluctuations in the prevailing levels of the

market interest rates on its financing position and cash flows.

As at reporting date, the Company has fixed rate interest-bearing liabilities and loans owed to related

companies, which are interest free. Accordingly, operating cash flows are substantially independent of

changes in market interest rates.

As at the statement of financial position date, the Company’s exposure to changes in interest rates on bank

accounts held with financial institutions was limited as the Company is subject to fixed interest rates.

Based on the above, the Board considers the potential impact on profit or loss of a defined interest rate shift

that is reasonably possible at the reporting date to be immaterial.

Credit risk arises from credit exposures to customers and amounts held with financial institutions.

Trade and other receivables

Cash and cash equivalents

The maximum credit exposure to credit risk at the reporting date in respect of the financial assets was as

Credit risk on funds advanced to related entities and amounts deposited with local financial institutions is

considered as limited, since cash at bank and fixed term deposits are placed with local financial institutions

having a high-quality standing.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

3.FINANCIAL RISK MANAGEMENT - continued

(b) Credit risk - continued

With regards to amounts receivable arising from rental income, the Company assesses the credit quality of the

third-party tenants on an ongoing basis, taking into account financial position, past experience and others

factors. The Company manages credit limits and exposures actively in a practicable manner such that there is

no material past due amounts receivable from third-party tenants as at the reporting date. The Company has

no significant concentration of credit risk arising from third-parties.

As at 31 December 2022, trade receivables of €32,455 (2021: €32,455) were impaired. Provisions for

impairment in this respect are equivalent to the amounts disclosed. The impaired receivables relate to a

previous tenant which is in unexpectedly difficult economic situations.

The movement in provisions for expected credit losses of trade receivables is disclosed in Note 13 to the

financial statements.

The Company is exposed to liquidity risk in relation to meeting future obligations associated with its

financial liabilities, which comprise principally interest-bearing borrowings and trade and other payables

(Notes 19 and 20). Prudent liquidity risk management includes maintaining sufficient cash to ensure the

availability of an adequate amount of funding to meet the Company’s obligations and ensuring that

alternative funding is available when the bonds are due for repayment.

The following table analyses the Company’s financial liabilities into relevant maturity groupings based on the

remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the tables

below are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying

balances, as the impact of discounting is not significant.

Carrying Contractual

amount cash flow

years After 5 years

€€€€€€

31 December 2022

Borrowings 29,611,882 40,766,211 1,260,713 1,264,167 12,314,098 25,927,233

Trade and other payables 756,424 756,424 756,424 - - -

30,368,306 41,522,635 2,017,137 1,264,167 12,314,098 25,927,233

31 December 2021

Trade and other payables

The Company continues to assess its funding requirements to ensure that adequate funds are in place to

meet its financial liabilities when they fall due.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

3.FINANCIAL RISK MANAGEMENT - continued

Fair value of financial instruments

The fair values of non-current borrowings is based on amortised cost representing proceeds received net of

transaction costs incurred. The amortisation of transaction costs is calculated using the effective yield

As at 31 December 2022 and 2021, the carrying amounts of other financial instruments, comprising cash at

bank, trade and other receivables, trade and other payables and accrued expenses approximated their fair

values due to their short-term maturities.

Capital risk management

The Company’s objectives when managing capital are:

to safeguard the Company’s ability to continue as a going concern in order to provide returns for

shareholders and benefits for other stakeholders;

to maintain an optimal capital structure to reduce the cost of capital; and

to comply with requirements of the Prospectus issued in relation to the 5.25%, 4.40% and 4.00% bonds.

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market

confidence to sustain future development of business. The Board of Directors monitors the return on capital,

which the Company defines as the profit for the year divided by total equity. The Board of Directors also

monitors the level of dividends to ordinary shareholders.

4.SIGNIFICANT JUDGEMENTS AND CRITICAL ESTIMATION UNCERTAINTIES

The preparation of financial statements in conformity with IFRS as adopted by the EU requires management to

make judgements, estimates and assumptions that affect the application of policies and reported amounts

of assets and liabilities, income and expenses. The directors have considered the development, selection and

disclosure of the Company’s critical accounting policies and estimates and the application of these policies

and estimates. Estimates and judgements are continually evaluated and are based on historical and other

factors, including expectations of future events that are believed to be reasonable under the circumstances.

In the opinion of the Company’s directors, except for the matters disclosed below and the disclosures made

under Note 2 - Significant accounting policies, Basis of preparation and compliance, and Note 24 -

Contingent liabilities, the accounting estimates and judgements made in the course of preparing these

financial statements are not difficult, subjective or complex to a degree which would warrant their disclosure in

terms of the requirements of IAS 1.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

4.SIGNIFICANT JUDGEMENTS AND CRITICAL ESTIMATION UNCERTAINTIES - continued

Valuation of investment property

The Company reviews the valuation of the investment property on an annual basis. In 2021, management

determined the fair value of the investment property by referring to the valuation reports prepared by

independent third party qualified valuers. The Company adjusted the book value to its revalued amount and

recognised the resultant surplus in the statement of comprehensive income. Further disclosures on key

assumptions in this regard are included in Note 11.

During the year, the Audit Committee and the Board of Directors agreed that the current value of the

Company’s properties reflect the fair value.

Revenue relates to the lease of offices, warehousing and car spaces in Central Business Centres Zebbug, the

Central Business Centre Gudja, the Central Business Centre St. Julian’s and the Central Business Centre

Valletta. When works on Villa Fieres are complete, rental income will be generated on the basis of contracts

finalised with tenants.

6.OPERATING PROFIT

The operating profit is stated after charging:

Directors’ remuneration (i)

Chief Executive Officer’s fees (i)

i. The directors’ remuneration was paid to the non-executive directors, whereas the Chief Executive Officer

received payments amounting to €30,000 (2021: €30,000). The directors do not receive any form of

monetary or non-monetary perks or benefits.

Auditors’ remuneration

Annual statutory audit

Fees charged by the auditor for services rendered during the financial years ended 31 December 2022 and

2021 were related to the following:

Tax compliance and other services

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

7.FINANCE INCOME

Interest income from banks

8.FINANCE COSTS

Interest payable on bonds

Amortisation of bond issue costs (Note 19)

Finance costs capitalised within investment property (Note 11)

1,261,065 713,786

The tax charged to profit or loss comprised of the following:

Current tax charge

Deferred tax charge

99,043 1,906,939

Profit before tax

The tax on the Company’s profit before tax differs from the theoretical tax expense that would arise using

the applicable tax rate in Malta of 35% as follows:

Theoretical expense at 35%

Non-deductible expenses

Absorbed capital allowances

Income subject to different tax rate

Rental income subject to a reduced rate of tax

Revaluation of investment property subject to a different rate of tax

Non-taxable income

99,043 1,906,939

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

10. PROPERTY, PLANT AND EQUIPMENT

At 1 January 2022

Balance at 31 December 2022

Accumulated depreciation

At 1 January 2022

Balance at 31 December 2022

Carrying amount

At 31 December 2021

At 31 December 2022

11. INVESTMENT PROPERTY

Increase in fair value

Capitalised interest

Fair valuation of the investment property

On 2 September 2021, the Company’s investment property, which spans four localities in Zebbug, Gudja, St.

Julian’s, and Valletta, were revalued by an independent professionally qualified valuer. The book value was

adjusted to the revalued amount and the resultant surplus, net of applicable deferred income taxes, was

credited to the statement of comprehensive income.

Valuations were made on the basis of open market value taking cognisance of the specific location of the

property, the size of the site together with its development potential, the availability of similar properties in the

area, and whenever possible, having regard to recent market transactions for similar properties in the same

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

11. INVESTMENT PROPERTY - continued

Fair valuation of the investment property - continued

The Company is required to analyse non-financial assets carried at fair value by level of the fair value

hierarchy within which the recurring fair value measurements are categorised in their entirety (Level 1, 2 or 3).

The different levels of the fair value hierarchy have been defined as fair value measurements using:

Quoted prices (unadjusted) in active markets for identical assets (Level 1);

Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly

(that is, as prices) or indirectly (that is, derived from prices) (Level 2);

Inputs for the asset that are not based on observable market data (that is, unobservable inputs) (Level

The Company’s investment property comprises the properties described above. The Central Business

Centres Zebbug, the Central Business Centre Gudja, the Central Business Centre St. Julian’s and the

Central Business Centre Valletta are complete and being leased out, whilst finishing of the Villa Fieres is

almost complete and will start operating in the third quarter of 2023. Property fair value measurements at 31

December 2022 use significant unobservable inputs and are accordingly categorised within Level 3 of the fair

valuation hierarchy.

The Company’s policy is to recognise transfers into and out of fair value hierarchy levels as of the beginning of

the reporting period. There were no transfers between different levels of the fair value hierarchy during the

year ended 31 December 2022.

A reconciliation from the opening balance to the closing balance of land and building for recurring fair value

measurements categorised within Level 3 of the value hierarchy, is reflected in the table above.

Valuation processes

The valuation of these properties is performed on the basis of the valuation reports prepared by an

independent third party qualified valuer. These reports are based on both:

information provided by the Company; and

assumptions and valuation models used by the valuers with assumptions being typically market

related and based on professional judgement and market observation.

The information provided to the valuers, together with the underlying assumptions and valuation models

used by the valuers, are reviewed by the Board of Directors. The Board then considers the valuation report as

part of its overall responsibilities.

Valuation techniques

The valuation was performed using the guidelines of the "Valuation Standards for accredited Valuers"

published by the Kamra tal-Periti.

Given the specific nature of these assets, the valuations of the Level 3 property have been performed by

reference to valuation models. These valuation models include:

in the case of the completed properties, namely those located in Zebbug (both properties), Gudja and St.

Julian’s, the sales comparison approach, factoring in adjustments for the respective properties to cater

for differences in the size, age, location and condition; and

in the case of Villa Fieres, where work is still ongoing, the valuation is based on the contract price on

acquisition during 2014, together with additional capitalised amounts covering construction and

restoration costs carried out to date and property location value.

The respective valuations include observable inputs extracted from recent market transactions and property

marketed in a similar location and having a similar level of finishing.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Quoted securities

13. TRADE AND OTHER RECEIVABLES

Trade receivables

289,930 213,800

Trade receivables are stated net of an allowance for expected credit losses amounting to €32,455 (2021:

€32,455). The Company’s exposure to credit risk and impairment losses related to trade receivables are

disclosed in Note 3.

14. SHARE CAPITAL

Authorised, issued and fully paid up

250,000 ordinary shares of €1 each

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are

entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the

Company’s residual assets.

15. CAPITAL RESERVE

Other capital reserves

Subordinated loan

In 2014, 2017 and 2018, the Company entered into various subordinated loans with related parties to partly

finance the acquisition of Central Business Centre Zebbug, the Central Business Centre Gudja and the

Central Business Centre St. Julian’s for total of €16,100,000.

These subordinated loans, apart from the €250,000, were waived in 2021.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

16. REVALUATION RESERVE

At the beginning of year

Transfer of revaluation surplus arising during the year - net of deferred tax

Transfer of revaluation reserve to retained earnings

At the end of the year

As at 31 December 2022, the Company transferred its revaluation reserve to retained earnings through the

statement of changes in equity to provide reliable and more relevant information on the Company’s financial

17. EARNINGS PER SHARE

Earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted

average number of ordinary shares in issue during the period.

Profit for the year

Weighted average number of ordinary shares in issue

Earnings per share

€0.71 €13.58

18. DEFERRED TAX

The movement in deferred tax for the year is analysed as follows:

At beginning of the year

Deferred taxes on temporary differences arising from the revaluation of the

investment properties

At end of the year (3,922,740) (3,922,740)

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

18. DEFERRED TAX - continued

Deferred income taxes are calculated on all temporary differences under the liability method using a

principal rate of 35%. The balance as at 31 December represents:

Tax effect of temporary differences arising from:

- Revaluation, net of related depreciation

- Provisions for impairment of trade receivables

(3,922,740)(3,922,740)

The recognised deferred tax assets and liabilities are expected to be recovered or settled principally after

more than twelve months.

Due after more than one year

The interest rate exposure of the Company’s borrowings are as follows:

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

19. BORROWINGS - continued

Bonds outstanding

Gross amount of bond issue costs

Amortisation of gross amount of bond issue costs:

Amortisation charge for the year

Release of bond issue costs on repaid bond

Accumulated amortisation at end of period 124,029 84,591

Unamortised bond issue costs

Amortised cost and closing carrying amount

On 5 December 2014, the Company issued a Prospectus for the issue of a 6,000,000 Bond having a

nominal value of €1 each. The Bond was issued in two tranches of €3,000,000 each. The first tranche was

issued on 22 December 2014, and was fully subscribed, while the second tranche was issued on 24

December 2015, and was also fully subscribed. The Company’s bonds are included on the official list of the

Malta Stock Exchange. The first tranche was admitted to trading in 2014 and was redeemable at par on 30

December 2021. The second tranche was admitted to trading with effect from 29 December 2015 and is

redeemable at par on 30 December 2025.

Interest on the bonds issued as part of the first tranche was payable every six months in arrears, on 30 June

30 December of each year. The first payment was made on 30 June 2015. The net proceeds have been

used to acquire the Central Business Centres in Zebbug, St. Julian’s and Gudja to finance the demolition

and excavation works of the Central Business Centre St. Julian’s as well as to finish works on the Central

Business Centre Gudja.

Interest on bonds issued as part of the second tranche is payable annually in arrears, on 30 June and 30

December of each year. The first payment was made on 30 June 2016. The net proceeds were used for the

development and construction of the St. Julian’s Central Business Centre.

On 7 July 2017, the Company issued a Prospectus for the issue of a 10,000,000 Bond having a nominal value

of €1 each. The Bond was issued in two tranches, the first tranche amounting to €6,000,000 was issued on

12 June 2017, and was fully subscribed, while the second tranche of €4,000,000 was not issued.

Interest on the bonds issued as part of the first tranche is payable annually in arrears on 7 July of each year,

the first payment was made on 7 July 2018. The net proceeds were utilised to acquire the new Zebbug site.

On 24 September 2021, the Company issued a Prospectus for the issue of a 210,000 Bond having a

nominal value of €100 each. The Bond was issued in one tranche amounting to €21,000,000 on 10

November 2021, and was fully subscribed.

Interest on the bonds issued is payable annually in arrears on 10 November of each year, the first payment

was on 10 November 2022. The net proceeds were utilised to acquire the Valletta property.

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

19. BORROWINGS - continued

On May 2022, the Company repurchased and cancelled €15,000 of its 5.25% Unsecured 2025 S2T1 bonds.

The bonds constitute the general, direct, unconditional, unsecured, unsubordinated obligations of the

Company, and rank equally without any priority or preference with all other present and future unsecured and

unsubordinated obligations of the Company.

Borrowings as at 1 January

Additional bond issue costs

Amortisation of bond issue costs

Repayment of bonds

Borrowings as at 31 December

20. TRADE AND OTHER PAYABLES

Deferred income

Bond interest payable (Note 19)

756,424 877,048

21. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash in hand and balances with banks. Cash and cash equivalents

included in the statement of cash flows reconcile to the amounts shown in the statement of financial position

195,740 1,053,035

Included with the bank balances is a restricted amount of €35,130 (2021: €77,290) which is pledged as

security against the guarantee issued in favour of a third party (Note 24).

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

22. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details the changes in the Company’s liabilities arising from financing activities, including both

cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or

future cash flows will be, classified in the Company’s statement of cash flows as cash flows from financing

Borrowings (Note 19)

Borrowings (Note 19)

23. RELATED PARTY TRANSACTIONS

The companies forming part of the Cortis Group are considered by the directors to be related parties as these

companies are under a common directorship of Mr. Joseph Cortis. All members of the Cortis family are

deemed to be related parties.

The following transactions were carried out with related parties:

Maintenance fees

Administration and management fees paid

Directors’ remuneration

Chief Executive Officer's fees

CENTRAL BUSINESS CENTRES p.l.c.

Annual Report and Financial Statements - 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS - continued

24. CONTINGENT LIABILITIES

As at 31 December 2022, the Company was involved in one ongoing legal claim amounting to less than

€120,000 which is being repudiated. The Board of Directors, based on legal advice obtained, does not

expect any financial losses to be incurred from such claims, and have consequently not made any

provisions in that regard.

Moreover, the Company has provided a guarantee of €35,130 (2021: €77,290) in favour of a third party.

25. COMPARATIVE INFORMATION

Certain amounts in the comparative information have been presented to align with the current year

THE POWER OF BEING UNDERSTOOD

AUDIT | TAX | CONSULTING

RSM Malta is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an

independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.The firm is registered as a partnership of

Certified Public Accountants in terms of the Accountancy Profession Act. A list of partners of the firm is available at RSM Malta, Mdina Road, Zebbug, Malta

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Central Business Centres p.l.c.

Report on the Audit of the Financial Statements

We have audited the accompanying financial statements of Central Business Centres p.l.c. ("the

Company"), set out on pages 11 - 36, which comprise the statement of financial position as at 31 December

2022, the statement of comprehensive income, statement of changes in equity and statement of cash flows

fortheyearthenended,andnotestothefinancialstatements,includingasummary ofsignificantaccounting

In our opinion, the financial statements give a true and fair view of the financial position of the Company as at

31 December 2022, and of its financial performance and its cash flows for the year then ended in

accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union

(EU), and have been properly prepared in accordance with the requirements of the Companies Act (Cap.

Our opinion is consistent with our additional report to the Audit Committee in accordance with the provision of

Article 11 of the EU Regulation No. 537/2014 on specific requirements regarding statutory audits of public-

interest entities.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities

under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial

Statements section of our report. We are independent of the Company in accordance with the ethical

requirements of both the International Ethics Standards Board for Accountants’ International Code of Ethics for

Professional Accountants (including International Independence Standards) (IESBA Code) and the

Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy

Profession Act (Cap. 281) in Malta that are relevant to our audit of the financial statements, and we have

fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Code of Ethics for

Warrant Holders in Malta. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

To the best of our knowledge and belief, we declare that the non-audit services that we have provided to the

Company are in accordance with the applicable laws and regulations in Malta and that we have not provided

non audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281). The

non-audit services that we have provided to the Company for the year ended 31 December 2022 are disclosed

in Note 6 to the financial statements.

INDEPENDENT AUDITORS’ REPORT - continued

Report on the Audit of the Financial Statements - continued

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our

audit of the financial statements of the current period. These matters were addressed in the context of our

audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters.

Valuation of investment properties

The carrying amount of investment property in the statement of financial position represents the value of the

land, development and borrowing costs attributable to commercial blocks located in Zebbug, Gudja, St.

Julian’s and Valletta, which are either held for lease or property under development as at 31 December

In 2022, an assessment was carried out by the directors in conjunction with the audit committee, which

concluded that there were no significant changes to the underlying assumptions of the detailed valuation

carried out by professional qualified valuers in previous years. The current value of the Company’s

investment properties is reflected of the fair value as at 31 December 2022, and is made on the basis of open

market values taking cognizance of the specific location of the property, the size of the site together with its

development potential, the availability of similar properties in the area, and whenever possible, having

regard to recent market transactions for similar properties in the same location.

Valuation of the Company’s property portfolio is inherently subjective principally due to the judgemental

nature of the factors mentioned above. The significance of the estimates and judgements involved, coupled

with the fact that a small percentage difference in individual property valuations, when aggregated, could

result in a material misstatement, warrants specific audit focus in this area.

Further disclosure is included in the Note 11 to these financial statements.

We understood and evaluated the assessment performed by management to ascertain the fair value of

investment property.

Our audit procedures included, amongst other, challenging the significant unobservable inputs that were

applied in the previous years’ valuation reports for Zebbug, Gudja, and St. Julian’s to ensure that these

continued to apply during the year under review. With respect to property under development, we carried out

testing to ensure that the costs were supported by available third-party data, such as invoices and work-in-

progress reports.

We concluded, based on our audit work, that the outcome of the assessment is reasonable.

In addition, we reviewed the adequacy of disclosures made in Note 11 to these financial statements and

concluded that these are adequate.

INDEPENDENT AUDITORS’ REPORT - continued

Report on the Audit of the Financial Statements - continued

Other Information

The directors are responsible for the other information. The other information comprises the general

information, directors’ report, and the corporate governance statement of compliance. Our opinion on the

financial statements does not cover the other information and we do not express any forms of assurance

conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.

In connection with our audit of the financial statements, our responsibility is to read the other information

identified above and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or our knowledge obtained in the audit, or otherwise appears to be materially

misstated. If, based on the work we have performed on the other information that we have obtained prior to

the date of this auditors’ report, we conclude that there is a material misstatement of this other

information, we are required to report that fact. We have nothing to report in this regard.

Under Article 179(3) of the Companies Act (Cap. 386), we are required to consider whether the information

given in the directors’ report is compliant with the disclosure requirements of Article 177 of the same Act.

Based on the work we have performed, in our opinion:

•the directors’ report has been prepared in accordance with the Companies Act (Cap. 386);

• the information given in the directors’ report for the financial year on which the financial statements

are had been prepared is consistent with the financial statements; and

• in light of our knowledge and understanding of the Company and its environment obtained in the

course of the audit, we have not identified material misstatements in the directors’ report.

Responsibilities of the Directors and those charged with governance for the Financial

The directors are responsible for the preparation of financial statements that give a true and fair view in

accordance with IFRS as adopted by the EU and the requirements of the Companies Act (Cap. 386), and for

such internal control as the directors determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the

going concern basis of accounting unless the directors either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting

INDEPENDENT AUDITORS’ REPORT - continued

Report on the Audit of the Financial Statements - continued

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes

our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conductedinaccordancewithISAs willalwaysdetecta materialmisstatementwhenitexists.Misstatements

can arise from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If

we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report

to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify

our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’

report. However, future events or conditions may cause the Company to cease to continue as a going

•Evaluate the overall presentation, structure, and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in

a manner that achieves fair presentation.

INDEPENDENT AUDITORS’ REPORT - continued

Report on the Audit of the Financial Statements - continued

Auditors’ Responsibilities for the Audit of the Financial Statements - continued

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal control that

we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence and communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the financial statements of the current period and are therefore the key

audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public

disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not

be communicated in our report because the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Report on the Statement of Compliance with the Code of Principles of Good Corporate Governance

The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and

include in their Annual Report a Statement of Compliance providing an explanation of the extent to

whichthey have adoptedtheCodeof Principles ofGoodCorporateGovernance andthe effectivemeasures

that they have taken to ensure compliance throughout the accounting period with those Principles. The

Capital Markets Rules also require the auditor to include a report on the Statement of Compliance prepared by

We read the Statement of Compliance and consider the implications for our report if we become aware of

any apparent misstatements or material inconsistencies with the financial statements included in the Annual

Report. Our responsibilities do not extend to considering whether this statement is consistent with any other

information included in the Annual Report.

We are not required to, and we do not, consider whether the Board’s statements on internal control included in

the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the

Company’s corporate governance procedures or its risk and control procedures. In our opinion, the

Statement of Compliance set out on pages 7 – 10 has been properly prepared in accordance with the

requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.

INDEPENDENT AUDITORS’ REPORT - continued

Report on Other Legal and Regulatory Requirements - continued

Report on the Remuneration Statement

TheCapitalMarketsRules issuedby theMaltaFinancialServices Authorityrequires thedirectorstoprepare a

remuneration statement. We are required to consider whether the information that should be provided under

the Remuneration Statement has been included.

In our opinion, the Remuneration Statement has been properly prepared in accordance with the

requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.

Report on compliance with the requirements of the European Single Electronic Format

Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6

We have undertaken a reasonable assurance engagement in accordance with the requirements of

Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the

Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on

the annual financial report of Central Business Centres p.l.c. for the year ended 31 December 2022, entirely

prepared in a single electronic reporting format.

Responsibilities of the directors

The directors are responsible for the preparation of the annual financial report, including the financial

statements, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF

Auditors’ responsibilities

Our responsibility is to obtain reasonable assurance about whether the annual financial report, including the

financial statements, comply in all material respects with the ESEF RTS based on the evidence we have

obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF

Our procedures included:

• Obtaining an understanding of the entity’s financial reporting process, including the preparation of the

annual financial report, in XHTML format.

•Examining whether the annual financial report has been prepared in XHTML format.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our

In our opinion, the annual financial report for the year ended 31 December 2022 has been prepared in

XHTML format in all material respects.

INDEPENDENT AUDITORS’ REPORT - continued

Report on Other Legal and Regulatory Requirements - continued

Other matters on which we are required to report by exception

Under the Companies Act (Cap. 386), we are required to report to you if, in our opinion:

•proper accounting records have not been kept; or

•proper returns have not been received from branches we have not visited; or

•the financial statements are not in agreement with the accounting records and returns; or

• we were unable to obtain all the information and explanations which, to the best of our knowledge and

belief, are necessary for the purposes of our audit.

We also have responsibilities under the Capital Markets Rules to review the statement made by the

directors that the business is a going concern together with supporting assumptions or qualifications as

We have nothing to report in this regard.

We were first appointed to act as statutory auditors of the Company by the shareholders of the Company on

13 November 2020 for the year ended 31 December 2020, and we were subsequently reappointed by the

shareholders at the Company’s general meeting for the financial years thereafter. The period of

uninterrupted engagement as statutory auditor of the Company is three financial years.

Certified Public Accountants

Zebbug ZBG 9015

Roberta West Falzon

CENTRAL BUSINESS CENTRES p.l.c.

Supplementary Statement - 31 December 2022

ADMINISTRATIVE EXPENSES

Administration and management fees - related party

Auditors’ remuneration

Consulting and professional fees

Directors’ remuneration

Chief Executive Officer’s fees