Company Registration Number: C 53047
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements
31 December 2023
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
Pages
Directors’ report 1 - 5
Statement of compliance with code of principles of good corporate governance 6 - 13
Remuneration statement 14 - 16
Statement of financial position 17
Statement of comprehensive income 18
Statement of changes in equity 19
Statement of cash flows 20
Notes to the financial statements 21 - 53
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
1
Directors’ report
The Directors present their thirteenth annual report together with the audited financial statements for the
year ended 31 December 2023.
Principal activities
The principal activities of Malita Investments p.l.c. (the Company) include the financing, acquisition,
development, management and operation of immovable property, in particular, projects of national and/or
strategic importance.
Review of the business
The Company continued to receive ground rents from the MIA and VCP in respect of properties on which
Malita owns the dominium directum. The ground rent receivable from VCP is partly dependent on the
revenues flowing to VCP from the letting of buildings and facilities, and other activities including passenger
and cruise liner operations. As at 31 December 2023, Malita is due to receive an additional amount of rent
of €255,896 (2022: nil) in relation to the prior year where the percentage revenue arising from other activities
was higher than the set minimum annual ground rent due to Malita.
Furthermore, the Company receives lease income in respect of the Open Air Theatre and the Parliament
Building in City Gate, Valletta. In 2023, lease payments for Oper Air Theatre and Parliament Building have
contractually increased by the index of inflation.
As set out in Note 6, the result for the period includes a positive movement in the fair value of the MIA and
VCP properties of €10,900,000 (2022: fair value loss of €14,135,000) and a positive movement in the fair
value of the Parliament Building and Open Air Theatre of €7,210,634 (2022: fair value gain of €16,987,021).
The positive movement in the fair value of investment property has been transferred to the fair value reserve
in equity.
Achieving significant milestones, the Affordable Housing project has made noteworthy strides. Further to
the accomplishment in August 2022 with the completion of seventy-three (73) units at the Birkirkara site,
additional sites in various locations were successfully completed and leased in the year under review. In
2023, the Company completed the development of a total of eighty (80) residential units, thirty-nine (39)
lock-up garages and three (3) parking spaces on the sites in Attard, Kirkop B, Kirkop C, Qrendi, Zebbug
and Zurrieq. The breakdown of these locations is as follows: Eight (8) units and three (3) car spaces in
Attard, twenty-six (26) units and six (6) lock-up garages spread across two (2) sites in Kirkop, eleven (11)
units and seven (7) lock-up garages in Qrendi, eight (8) units and six (6) lock-up garages in Zebbug, along
with twenty seven (27) units and twenty (20) lock-up garages in Zurrieq which were made available for rent
in January 2024.
Further sites’ three hundred and eight (308) units, one hundred fifty-eight (158) lock-up garages and one
hundred forty-one (141) car spaces will be completed and available for rent during 2024. The locations are:
Cospicua sixty-nine (69) units and hundred and seven (107) car spaces, twenty-seven (27) units and
twenty-one (21) lock-up garages and eight (8) car spaces spread across two (2) sites in Kirkop, hundred
and two (102) units and twenty-two (22) lock-up garages in Msida, twenty-six (26) units and twenty (20)
lock-up garages in Qrendi and eighty-four (84) units, ninety-five (95) lock-up garages and twenty-six (26)
car spaces in Siggiewi.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
2
Directors’ report - continued
Review of the business - continued
Heightened spending attributed to the construction of more units than initially budgeted, elevated service
rates compared to the original budget, and increased costs stemming from supply chain constraints within
the construction industry, have necessitated raising of future capital and additional funding from financial
institution.
Moreover, the termination of significant contractors and the subsequent appointments played a pivotal role
in inflating the rates.
During the year under review, the Board and management have looked into addressing the financing gap
of approximately €63 million attributable to capital expenditure required for completion of the Affordable
Housing Project. The Company has tapped into the following funding streams for the purpose of financing
the completion of the Affordable Housing Project:
(i) Raising finance through a rights issue, following completion of which, the Company has received
approximately €29.9 million (net of sales commission) from the offer;
(ii) A credit facility from the European Investment Bank (EIB), in terms of which, EIB, by virtue of a credit
agreement entered into with the Company on 15 March 2024, has undertaken to provide the Company with
funding amounting to €22 million;
(iii) A loan amounting to €7 million, which has been approved in principle by the Council of Europe
Development Bank, subject to the conclusion of legally binding documentation;
(iv) Additional loan financing from another financial institution to bridge the remaining €4 million. In this
respect discussions are at an advanced stage and management has correspondence in hand indicating
that the remaining funds have been in principle approved by the said financial institution.
On 14 December 2023, an Extraordinary General Meeting of the Company was held whereby the
Company’s shareholders approved, amongst other things, the Re-Designation of the Authorised and Issued
Share Capital of the Company, the Increase of the Company’s Authorised Share Capital and granted
authorisation to the Board of Directors to give effect to a rights issue. The Malta Financial Services Authority
(MFSA) granted approval for the rights issue on 14 February 2024, with the offer period spanning from 28
February to 5 April, 2024.
Pursuant to the abovementioned rights issue, which issue saw 91.3% of the offered shares being
subscribed to by both existing and new shareholders, 60,098,530 ordinary shares of a nominal value of
€0.50 per share have been issued. As a result, Malita Investments plc has successfully raised the amount
of €30,049,265. These funds are expected to be made available to the Company by Q2 2024 and will be
used to finalise the affordable housing project which now has 10 out of 15 sites which are complete.
Furthermore, on 15 March 2024, the Company entered into a credit agreement with the European
Investment Bank, in terms of which the EIB has undertaken to provide the Company with funding amounting
to €22,000,000. Other discussions with financial institutions are at an advanced level and management has
correspondence in hand indicating that the remaining funds have been conceptually approved, providing
assurance for completion across all sites.
A critical development in the Company's long-term strategy was the extension of the Affordable Housing
emphyteutical deed by 8 years until 2053. This extension, approved by the National Audit Public Accounts
Committee in October 2023 was formally signed at 28 November 2023. Simultaneously, availability
agreements were also extended for 8 years across all sites.
Result and dividends
The statement of comprehensive income is set out on page 18.
An interim gross dividend of €1,955,026 or €0.0132 per share resulting in an interim net dividend of
€1,270,767 or €0.00858 per share was paid on 26 September 2023. The Directors recommend the payment
of a final gross dividend of €4,538,904 or €0.0218 per share (December 2022: €3,228,756 or €0.0218 per
share), equating to a final net dividend of €3,858,068 or €0.0185 per share (December 2022: €2,098,691
or €0.0142).
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
3
Directors’ report - continued
Review of the business - continued
Directors
The Directors who served the Company during the year were:
Marlene Mizzi
Robert Suban
David Mallia (appointed 27 April 2023)
Victor Carachi
Tania Brown
Miguel Borg
Desiree Cassar (appointed 4 April 2023)
Eric Schembri (resigned 28 February 2023)
Paul Mercieca (not re-elected 28 April 2023)
Unless they resign or are removed, Directors shall hold office up until the end of the AGM next following
their appointment. Each Director shall retire from office at each annual general meeting of the Company but
shall be eligible for re-appointment or re-election. Directors who resign or are removed, are eligible for re-
appointment.
Statement of Directors’ responsibilities for the financial statements
The Directors are required by the Companies Act (Chapter 386 of the laws of Malta) to prepare financial
statements which give a true and fair view of the state of affairs of the Company as at the end of each
reporting period and of the profit or loss for that period.
In preparing the financial statements, the Directors are responsible for the following matters:
• ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
• selecting and applying appropriate accounting policies;
• making accounting estimates that are reasonable in the circumstances;
• ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate
to presume that the Company will continue in business as a going concern.
The Directors are also responsible for designing, implementing and maintaining internal controls as the
Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatements, whether due to fraud or error, and that comply with the Companies Act, 1995.
They 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 Malita Investments p.l.c. for the year ended 31 December 2023 are included in
the Annual Report and Statutory Financial Statements - 31 December 2023, which is 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 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 requirements
or practice in Malta.
Going concern
After making enquiries, the Directors, at the time of approving the financial statements, have determined
that there is reasonable expectation that the Company has adequate resources to continue operating for
the foreseeable future. For this reason, the Directors have adopted the going concern basis in preparing
the financial statements.
Financial key performance indicators
The Company is focused on its financial performance. The Directors monitor the health and progress of
the business and apart from profitability, use a range of financial measures which collectively form an
integral part of building value for the shareholders on a consistent basis and over the long term.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
4
Directors’ report - continued
Financial key performance indicators - continued
Key Performance Indicators (KPIs) used in managing the Company’s business include:
2023
2022
Working capital ratio
0.5:1
2.0:1
Operating profit
€8,503,325
€8,191,385
Debt to assets ratio
43.0%
46.5%
Debt to equity ratio
75.4%
86.8%
Interest coverage
4.9 times
4.9 times
The bank remains with a positive balance. Capital expenditure for the Affordable Housing Project continued
in the year under review and is being settled through the loan disbursements.
Non-financial key performance indicators
Environmental and social risks
In addition to strengthening governance and controls, the Company seeks to provide value to society. The
Directors believe that being economically successful is important to generate value to stakeholders, whilst
also considering the environmental and social impact of the actions, to support a sustainable future.
Financial risk management and exposures
For the risk management and exposures refer to Note 2 - Financial risk management that details the key
risk factors including market risk, credit risk and liquidity risk and the Company's approach towards
managing these risks.
Information pursuant to Capital Markets Rules 5.64
Share capital information of the Company is disclosed in Note 11 to the financial statements. The issued
share capital of the Company was previously divided into two classes of ordinary shares: Ordinary A Shares
and Ordinary B Shares. In anticipation of the Rights Issue, the Company converted the said two classes of
shares into one class of ordinary shares.
No person may, whether directly or indirectly, and in any manner whatsoever, acquire or hold a beneficial
interest in the Ordinary shares in excess of five per cent (5%) of the total issued share capital of the
Company having voting rights. This clause does not apply to shares held by:
• the Government of Malta;
• an underwriter or sub-underwriter under the provisions of an underwriting or sub-underwriting agreement;
• custodians in their custodian capacity provided such custodians can only exercise the voting rights
attached to such shares under instructions given in writing or by electronic means by the beneficial
owner/s.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
5
Directors’ report - continued
Information pursuant to Capital Markets Rules 5.64 - continued
The Government of Malta, whether directly or indirectly (through an entity or body corporate wholly owned
and controlled by the Government of Malta), shall hold at least seventy per cent (70%) of the issued share
capital of the Company.
Any transfer of shares by the Government of Malta or any issuance of shares by the Company which has
the effect of reducing the holding or otherwise diluting the holding of the Government of Malta, shall be null
and void unless such transfer or issuance is made pursuant to the prior approval of the House of
Representatives and evidence of such approval is submitted to the Company.
The rules governing the appointment or election of Directors are contained in Article 55 of the Company’s
Articles of Association. An extraordinary resolution approved by the shareholders in the general meeting is
required to amend the Articles of Association.
The proceedings of Directors are outlined in Articles 70 to 77 of the Company’s Articles of Association.
Pursuant to Capital Markets Rules, 5.64.5, 5.64.6, 5.64.7, 5.64.10, 5.64.11 it is hereby declared that, as at
31 December 2023, none of the provisions set out therein apply to the Company.
Statement of responsibility pursuant to Capital Markets Rules 5.68
The Directors confirm that, to the best of their knowledge:
• the financial statements give a true and fair view of the financial position of the Company as at 31
December 2023, and of the financial performance and the cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU; and
• the annual report includes a fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks and uncertainties that the
Company may face.
Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their
reappointment will be proposed at the Annual General Meeting (AGM).
Signed on behalf of the Board of Directors on 18 April 2024 by Marlene Mizzi (Chairperson) and Robert
Suban (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in
conjunction with the Annual Financial Report.
Registered office:
Clock Tower
Level 1
Tigne` Point
Sliema
Malta
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
6
Statement of compliance with code of principles of good corporate governance
Introduction
Pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority (MFSA), Malita
Investments p.l.c. whose equity securities are listed on a regulated market endeavours to adopt the Code of
Principles of Good Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Capital Markets
Rules (the “Code”). In terms of Capital Markets Rules 5.94, the Company hereby reports on the extent of its
adoption of the principles of the Code for the financial year being reported upon.
The Code does not dictate or prescribe mandatory rules but recommends principles of good practice.
However, the Directors strongly believe that such practices are generally in the best interests of the Company
and its shareholders. Compliance with the Principles of Good Corporate Governance is not only expected
by investors but also evidences the Directors’ and the Company’s commitment to a high standard of
governance.
The Board of Directors (the “Board”) has carried out a review of the Company’s compliance with the Code
for the financial year under review, and hereby provides its report thereon.
General
The Company’s governance principally lies in its Board which is responsible for the overall setting of the
Company’s policies and business strategies. The Company’s principal activity is the financing, acquisition,
development and management of immovable property, the leveraging of revenue streams arising therefrom
and the reinvestment of undistributed profits in national and/or strategic real estate projects as well as in
commercial property opportunities.
The Directors are of the view that it has employed structures which are most suitable for the size, nature and
operations of the Company. Accordingly, in general, the Directors believe that the Company has adopted
appropriate structures to achieve an adequate level of good corporate governance, together with an
adequate system of controls in line with the Company’s requirements.
This Corporate Governance Statement (the “Statement”) sets out the structures and processes in place
within the Company and how these effectively achieve the goals set out in the Code. For this purpose, this
Statement makes reference to the pertinent principles of the Code and then sets out the manner in which
the Directors believe that these have been adhered to. Where the Company has not complied with any of
the principles of the Code, this Statement gives an explanation for non-compliance.
For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code means
compliance with the Code’s main principles and the Code provisions.
Compliance
Principle 1: The Board
Throughout the year under review, the Board has provided the necessary leadership in the overall direction
of the Company and the administration of its resources to enhance the prosperity of the business over time,
and therefore the value of the shareholders’ investment. The Board is currently composed of seven non-
executive Directors (one of whom is the Chairman). The Directors, individually and collectively, are of the
appropriate calibre, with the necessary skills and experience to contribute effectively to the decision-making
process. The Directors have determined the Company’s strategic aims and organisational structure and
always ensure that the Company has the appropriate mix of financial and human resources to meet its
objectives.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
7
Statement of compliance with code of principles of good corporate governance
- continued
Compliance - continued
Principle 1: The Board - continued
The process of appointment of Directors is transparent and it is conducted during the Company’s AGM
where all the shareholders of the Company are entitled to participate in the voting process to elect the Board
Directors. Furthermore, in terms of the Company’s Memorandum and Articles of Association, a Director is
prohibited from voting on any contract or arrangement or any other proposal in which he has a material
interest.
Principle 2: Chairman and Chief Executive
The Chairman is responsible to lead the board and set its agenda, ensures that the Board achieves its full
potential by giving precise, timely and objective information in order for them to make informed decisions
and effectively monitor the performance of the Company. The Chairman also ensures effective
communication with shareholders and involves all Board members in discussions of Company matters. On
the other hand, the day-to-day management of the Company is vested with the Chief Executive Officer who
reports to the Board of Directors. The Company appointed a Chief Executive Officer on 1 January 2021.
Principle 3: Composition of the Board
The Board is composed of seven non-executive Directors. The members of the Board for the year under
review were Ms Marlene Mizzi, Dr Robert Suban, Mr Paul Mercieca (director till 27 April 2023, nomination
for re-election not submitted), Mr Eric Schembri (resigned 28 February 2023), Mr Victor Carachi, Ms Tania
Brown, Mr Miguel Borg, Dr Desiree Cassar (appointed on 4 April 2023) and Mr David Mallia (appointed on
27 April 2023). Pursuant to generally accepted practices, as well as the Company’s Articles of Association,
the appointment of Directors to the Board is reserved exclusively to the Company’s shareholders, except in
so far as an appointment is made to fill a vacancy on the Board, and which appointment would expire at the
Company’s subsequent AGM.
Unless they resign or are removed, Directors shall hold office up until the end of the AGM next following
their appointment. Each Director shall retire from office at each annual general meeting of the Company but
shall be eligible for re-appointment or re-election. Directors who resign or are removed, are eligible for re-
appointment.
The Board usually meets on a bi-monthly basis or as may be determined by the Board and in general the
meetings usually focus on strategy, operational and financial performance and the consideration of
investment opportunities wherein the Board decides on the nature, direction and framework of the activities
of the Company.
None of the non-executive Directors:
(a) are or have been employed in any capacity by the Company;
(b) have, or had within the last three years, a significant business relationship with the Company;
(c) have received or receive significant additional remuneration from the Company;
(d) have close family ties with any of the executive members of the Board;
(e) have served on the board for more than twelve consecutive years; or
have been within the last three years an engagement partner or a member of the audit team of the
present or past external auditors of the Company.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
8
Statement of compliance with code of principles of good corporate governance
- continued
Compliance - continued
Principle 3: Composition of the Board - continued
For the purposes of Code Provision 3.2, the Board considers each of the non-executive Directors as being
independent within the meaning of the Code, notwithstanding the relationship disclosed hereunder: (i)
Miguel Borg – resigned as Chief Risk Officer of Bank of Valletta p.l.c. on 5 April 2023 with whom the
Company has banking facilities.
Principle 4: The Responsibilities of the Board
In terms of Principle four, it is the Board’s responsibility to ensure a system of accountability, monitoring,
strategy formulation and policy development. The Board regularly reviews and evaluates major operational
and financial plans, risk policy, performance objectives and monitor implementation and corporate
performance within the parameters of all relevant laws, regulations and codes of best business practice. The
Board delegates specific responsibilities to various Board Committees including the Audit Committee, the
Remuneration and Nominations Committee and the Investment Committee.
Board Committees
Audit Committee
The Audit Committee for the year under review was composed of Paul Mercieca (director till 27 April 2023,
nomination for re-election not submitted), Eric Schembri (resigned on 28 February 2023) and Robert Suban.
Following the resignation of Eric Schembri, the Company’s Board appointed Victor Carachi and Tania Brown
as members of the Audit Committee. Following the non-reappointment of Mr Paul Mercieca as director, the
Board appointed Mr David Mallia (appointed as director 27 April 2023) as a member of the Audit Committee.
The Audit Committee’s primary objective is to assist the Board in dealing with issues of risk, control and
governance; and in reviewing the Company’s reporting processes, financial policies and internal control
structure. The Audit Committee also oversees the conduct of the external audit and facilitates communication
between the Company’s Board, management and external auditors. The Board has set formal terms of
reference of the Audit Committee that establish its composition, role and function, the parameters of its remit
as well as the basis for the processes that it is required to comply with. The Audit Committee is a sub-
committee of the Board. During the financial year under review, the Audit Committee held six meetings.
The following is the attendance at Audit Committee meetings of each of the Directors:
Robert Suban (Committee Chairman) 6
Eric Schembri (resigned 28 February 2023) 1
Paul Mercieca (director till 27 April 2023, nomination for re-election not submitted) 2
Tania Brown (Committee member) 4
Victor Carachi (Committee member) 5
David Mallia (Committee member) 4
Investment Committee
The Company has set up an Investment Committee where the primary purpose is to determine what
investments the Company should undertake within the investment policies parameters as determined from
the Board, giving due consideration to the Company’s funding requirements as these may vary from time to
time. The Investment Committee is currently chaired by Miguel Borg.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
9
Statement of Compliance with Code of Principles of Good Corporate Governance
- continued
Compliance – continued
Principle 4: The Responsibilities of the Board – continued
Board Committees – continued
Investment Committee - continued
The Investment Committee is also responsible for considering proposed ethical positions with respect to
appropriate projects and investments. It oversees the management of the Company’s investments in
accordance with such policies and reviews, where necessary, the Company’s investment policies.
During the financial year under review, the Investment Committee held three meetings.
The following is the attendance at Investment Committee meetings of each of the Directors:
Miguel Borg (Committee Chairman) 3
Robert Suban (Committee member) 3
Desiree Cassar (Committee member) 2
In exercising its functions, the Investment Committee is required to ensure that any investment proposed to
the Board of Directors does not materially and negatively disrupt the dividend policy adopted by the Board
from time to time.
Remuneration and Nominations Committee
The Remuneration and Nominations Committee is dealt with under the Remuneration Statement in terms of
Code Provisions 8.A.3 and 8.A.4.
Rights Issue Committee
A Rights Issue Committee was formed during 2023 in order to oversee the Rights Issue process carried out
over the course of 2023 and 2024.
The members appointed are the following:
Miguel Borg (Committee Chairman)
Robert Suban (Committee member)
David Mallia (Committee member)
Principle 5: Board Meetings
The Board believes that it complies fully with the requirements of this Principle and the relative Code
Provisions. Directors receive Board and Committee papers in advance of meetings and have access to the
advice and services of the Company Secretary. After each Board meeting and before meetings, minutes
that faithfully record attendance and decisions are prepared and circulated to all Directors as soon as
practicable. The Directors are aware of their responsibility to always act in the best interests of the Company
and its shareholders as a whole, irrespective of whoever appointed or elected them to serve on the Board.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
10
Statement of Compliance with Code of Principles of Good Corporate Governance
- continued
Compliance - continued
Principle 5: Board Meetings - continued
During the financial year under review, the Board held thirteen meetings.
The following is the attendance at Board meetings of each of the Directors:
Marlene Mizzi 13
Robert Suban 11
Paul Mercieca (director till 27 April 2023, nomination for re-election not submitted) 4
Eric Schembri (resigned 28 February 2023) 1
Victor Carachi 12
Tania Brown 11
Miguel Borg 13
Desiree Cassar (appointed on 4 April 2023) 10
David Mallia (appointed on 27 April 2023) 8
Principle 6: Information and Professional development
The Board is responsible for the appointment of senior management and ensures that there is adequate
training in the Company for Directors, management and employees as may be necessitated from time to
time.
The Board also ensures that all Directors are supplied with precise, timely and clear information so that they
can effectively contribute to board decisions. The Directors receive monthly management accounts on the
Company’s financial performance and position.
Principle 7: Evaluation of the Board’s performance
Over the year under review it is the Board’s opinion that all members of the Board, individually and
collectively, have contributed in line with the required levels of diligence and skill. In addition, the Board
believes that its current composition endows the Board with a cross-section of skills and experience and
achieves the appropriate balance required for it to function effectively. In view of the size and nature of the
Company, it was not considered necessary to carry out a formal evaluation of the Board’s performance.
Principle 8: Committees
The Remuneration and Nominations Committee is dealt with under the Remuneration Statement in terms of
Code Provisions 8.A.3 and 8.A.4.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
11
Statement of compliance with code of principles of good corporate governance
- continued
Compliance - continued
Principles 9 and 10: Relations with Shareholders and with the Market, and Institutional Shareholders
The Company recognises the importance of keeping investors informed to ensure that they are able to make
informed investment decisions. The Board is of the opinion, that over the year under review, the Company
has communicated effectively and informed the market of significant events relevant to the Company through
its Company announcements.
The Company will be holding its tenth AGM where in a similar manner to the previous year, the Board intends
to communicate directly with shareholders on the performance of the Company over the last financial year.
Business at the Company’s AGM is in line with the Company’s statutory obligations and covers the approval
of the Annual Report and Audited Financial Statements, the declaration and approval of a dividend, the
election of Directors, the appointment of auditors and the authorisation of the Directors to set the auditor’s
remuneration.
Apart from the AGM, the Company communicates with its shareholders and the market by way of the Annual
Report and Financial Statements, by publishing its results on a six-monthly basis during the year, and by
way of Company announcements to the market in general when necessary. These reports are also available
on the Company’s website (www.malitainvestments.com) which also contains information about the
Company and its projects. The Company’s website also contains a notifications and publications section
which includes press releases and investor information sub-sections.
Principle 11: Conflicts of Interest
The Directors of the Company recognise their responsibility to act in the interest of the Company and its
shareholders as a whole irrespective of who appointed them to serve on the Board. It is the practice of the
Board that when a potential conflict of interest arises in connection with any transaction or other matter, the
potential conflict of interest is declared so that steps may be taken to ensure that such items are appropriately
dealt with. Directors who have a conflict of interest do not participate in discussions concerning such matters
unless the Board find no objection to the presence of such Director. The Directors are obliged to keep the
Board advised, on an on-going basis, of any interest that could potentially conflict with that of the Company.
In any event, Directors refrain from voting on the matters where conflicts of interest arise. There were no
such matters in the year under review.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
12
Statement of Compliance with Code of Principles of Good Corporate Governance
- continued
Compliance - continued
Principle 11: Conflicts of Interest- continued
Directors are informed of their obligations on dealing in securities of the Company within the parameters of
law, including the Capital Markets Rules, and Directors follow the required notification procedures.
As at the date of this Statement, the interests of the Directors in the shares of the Company were as follows
(shares held):
Director Number of shares held as at 31 December 2023
Marlene Mizzi nil
Paul Mercieca nil
Robert Suban nil
Eric Schembri nil
Victor Carachi nil
Tania Brown nil
Miguel Borg nil
Desiree Cassar nil
David Mallia nil
There were no changes in the Directors’ interest in the shareholding of the Company between year-end and
18 April 2024.
Principle 12: Corporate Social Responsibility
The Directors are committed to behave ethically and contribute to economic development while improving
the quality of life of the work force and their families as well as of the local community and society at large.
Non-compliance with the code
Principle 3: Executive and Non-Executive Directors on the Board
The Board is currently composed entirely of non-executive Directors. However, it is considered that the
current composition of the Board provides for sufficiently balanced skills and experience to enable it to
discharge its duties and responsibilities effectively. Moreover, executive management is invited to attend
most of the board meetings and regularly reports to the Board.
Principle 7: Evaluation of the Board’s performance
In view of the size and nature of the Company, it was not considered necessary to carry out an evaluation
of the Board’s performance.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
13
Statement of Compliance with Code of Principles of Good Corporate Governance
- continued
Compliance - continued
Principle 9.3: Conflicts
Currently there is no established mechanism disclosed in the Company’s Memorandum and Articles of
Association, as recommended in Code Provision 9.3, to trigger arbitration in the case of conflict between the
minority shareholders and the controlling shareholders.
The Board believes, taking into account the current shareholder profile, the measures currently available for
shareholders, such as the right to ask questions, and the continuous dialogue with shareholders provide the
necessary safeguards for the protection of the shareholders’ interests.
Internal Control
The Board is ultimately responsible for the Company’s system of internal controls and for reviewing its
effectiveness. Such a system is designed to manage risk to achieve business objectives and provides
reasonable assurance against normal business risks.
The Company has an appropriate organisational structure for planning, executing, controlling and monitoring
business operations in order to achieve its objectives.
Lines of responsibility and delegation of authority are documented. The Company also has procedures to
ensure completeness and accurate accounting for financial transactions and to limit the potential exposure
to fraud.
General Meetings
Shareholders’ influence is exercised at the AGM, which is the highest decision-making body of the Company.
All shareholders registered in the Shareholders’ Register, have the right to participate in the meeting and to
vote for the full number of their respective shares. Shareholders who cannot participate in the meeting can
be represented by proxy. Shareholders’ meetings are called with sufficient notice to enable the use of proxies
to attend, vote or abstain.
General Meetings - continued
Business at the Company’s AGM covers the approval of the Annual Report and Audited Financial
Statements, the declaration and approval of a dividend, the election of Directors, the appointment of auditors
and the authorisation of the Directors to set the auditor’s remuneration.
Approved by the Board on 18 April 2024.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
14
Remuneration Statement
The Company has set up a Remuneration and Nominations Committee and the Board has established a
remuneration policy for Directors and senior management. The terms of reference of this Committee are set
out below:
The Remuneration and Nominations Committee is composed of three persons as shall be appointed from
time to time by the Board of Directors. The members appointed by the Board of Directors to sit on the
Remuneration and Nominations Committee are Marlene Mizzi (Chairperson of the Committee), Robert
Suban and Desiree Cassar.
The primary purpose of the Remuneration and Nominations Committee is to:
• make proposals to the board on the remuneration policy for Directors and senior executives;
• make proposals and review the setting of remuneration levels within the Company, including
remuneration levels for the Executive Directors if any, ensuring that they are consistent with the
remuneration policy adopted by the Company;
• to evaluate the performance of the individual Directors;
• to monitor the level and the structure of the remuneration of non-executive Directors; and
to approve or otherwise any performance related bonus awards and long-term incentive plan awards
paid to employees.
Meetings
During the year under review the Committee held two meetings. All Committee members attended the
meeting. The members of the Committee have also discussed various matters related to the composition
of the board and internal human resources matters during the meetings held.
Remuneration report - Directors
The Board is composed exclusively of non-executive Directors. The maximum annual aggregate
emoluments that may be paid to Directors is approved by the shareholders at the General Meeting in terms
of Article 63 of the Articles of Association.
The remuneration of the Directors is fixed. The current Directors’ fees are set at €7,500 per annum for
Directors and €20,000 per annum for the Chairperson. The Chairpersons of Board Committees are entitled
to an additional remuneration of €5,000 for each Committee chaired and Committee members are entitled
to an additional remuneration of €2,500 per annum for each Committee they sit on.
During 2023 the aggregate amount of remuneration paid to all Directors of the Company was €98,642 (2021:
€89,023). Details of the remuneration of each individual director are set out in note 21 to the financial
statements. There was no variable remuneration received by the directors (2022: Nil)
The remuneration of the directors is not linked to performance.
None of the Directors have any service contracts with the Company and none of the Directors, in their
capacity as Director of the Company, are entitled to profit sharing, share options, pension benefits or non-
cash benefits.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
15
Remuneration Statement - continued
Remuneration report - Senior Management
The Board notes that the organisational set-up of the Company consists of 5 employees, 2 of whom are
considered to be senior officers (CEO and CFO). The terms and conditions of employment of the senior
officers are set out in the contract of employment with the Company.
The senior officers are not entitled to profit sharing, share options or pension benefits. On 1 January 2021
the Board appointed Jennifer Falzon as CEO of the Company.
The CEO of the company is not a member of the Board, although she attends and participates at board
meetings. The CEO has a contract with the Company of an indefinite duration that entitles her to a fixed
salary and a variable element. The fixed component constitutes a basic remuneration awarded for the CEO’s
executive function, reflecting her experience and knowledge, together with the responsibilities and assigned
functions of this role. The variable element is structured as a performance related bonus aimed at rewarding
the CEO’s performance during the year which is reviewed by the remuneration committee and approved by
the board of directors.
For the year under review, the CEO received a fixed remuneration of €91,600 per annum. She is also
covered by health insurance, paid mobile phone service and company car. She also received a variable
remuneration of €2,748 in respect of year 2023.
Remuneration Analysis
The total remuneration of the directors of the Company amounted to €98,642 and €89,023 for the years
2023 and 2022 respectively. The remuneration for members of the Board, Board chairmanship and members
of the Company’s committees and chairmanship remained the same from 2020 onwards.
The average remuneration on a full-time equivalent basis of employees of the Company other than directors
amounted to €280,359 and €254,334 for 2023 and 2022 respectively. The change in the average
remuneration amounted to 3.01% for 2022 when compared to 2021 and 6.30% for 2023 when compared to
2022.
The annual change in the performance of the Company amounts to 1.03% for 2022 when compared to 2021
and 3.8% for 2023 when compared to 2022. The operating profit has been chosen as the basis of
measurement for the performance of the Company.
Remuneration policy
This Remuneration policy was last reviewed on 3 September 2020. This policy shall be reviewed regularly,
and any material amendments thereto shall be submitted to a vote by the annual general meeting of the
Company before adoption, and in any case at least every four (4) years.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
16
Remuneration Statement - continued
Remuneration Policy for Directors
1. Introduction
1.1 Following the adoption in Capital Markets Rule 12.26 of the new EU Shareholders’ Rights Directive
in July 2019, the remuneration policy of the Company was revised to satisfy the requirements of the
applicable Capital Markets Rules.
2. Scope
2.1 This Policy determines the basis for remuneration of all members of the board of directors of the
Company.
2.2 The Policy defines the principles and guidelines that apply to the remuneration of directors.
3. Board Remuneration
3.1 The Board makes all efforts to ensure that the remuneration of Directors takes into consideration
Board members’ required competencies, skills, effort and scope of the Board’s role including the
number of meetings and the preparation required by Directors to attend and usefully contribute during
meetings. Due consideration is also given to market demands, the size of the Company and the
complexity of its business as well as to the Directors’ responsibilities.
3.2 The aggregate emoluments of all Directors are from time to time determined by the Company in the
general meeting. Accordingly, it is the shareholders that determine the aggregate amount of
remuneration that Directors may receive in any one financial year. This policy is intended to determine
the principles upon which those aggregate emoluments are distributed amongst the Directors.
3.3 The Chairman and other members of the Board of Directors receive a fixed cash amount (basic
remuneration) as stated in the annual report. Such compensation is determined by the Remuneration
Committee from time to time and shall form part of the limit of the aggregate emoluments which are
approved by the general meeting.
3.4 None of the Directors receive any variable remuneration.
3.5 In addition to the basic remuneration, Directors who are also appointed as members of one of the
Board Committees shall receive additional compensation. Such compensation shall be determined
by the Remuneration Committee from time to time. The committee remuneration shall be stated in
the annual report and shall form part of the limit of the aggregate emoluments which are approved
at the general meeting.
3.6 The basis upon which such remuneration is paid shall take into account the skills, experience,
technical knowledge that members of such committees require and the responsibility which such
Directors are to take in the context of the committees on which they sit.
3.7 All Directors are awarded their remuneration from one financial year to the next during their term of
office.
This Directors’ Remuneration Report, drawn up in accordance with the Capital Markets Rules, is being put
forward for the advisory vote of the Annual General Meeting of the Company to be held in 2024.
The contents of this Remuneration Report have been reviewed by the external auditor to ensure that the
information required in terms of Appendix 12.1 of the Capital Markets Rules has been included.
Approved by the Board on 18 April 2024.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
17
Statement of financial position
As at 31 December
2022
Notes
€
ASSETS
Non-current assets
Property, plant and equipment
5
45,944
Investment property
6
202,998,186
Contract asset
8
49,513,997
252,558,127
Current assets
Trade and other receivables
9
2,308,042
Cash and cash equivalents
10
17,363,936
19,671,978
Total assets
272,230,105
EQUITY AND LIABILITIES
Capital and reserves
Share capital
11
73,295,143
Retained earnings
12
12,334,978
Non-distributable reserve - fair value movements
13
55,765,420
Non-distributable reserve - other
14
4,345,257
Total equity
145,740,798
Non-current liabilities
Borrowings
15
89,576,786
Lease liability
7
3,333,023
Capital creditors
16
2,423,435
Provision for liabilities and charges
18
-
Provision on restoration
7
5,550,299
Deferred tax liabilities
26
15,805,664
116,687,207
Current liabilities
Borrowings
15
2,316,014
Lease liability
7
57,881
Capital creditors
16
5,690,306
Trade and other payables
17
1,357,312
Current tax liabilities
378,587
9,800,100
Total liabilities
126,489,307
Total equity and liabilities
272,230,105
The notes on pages 21 to 53 are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 18 April 2024.
The financial statements were signed on behalf of the Board of Directors by Marlene Mizzi (Chairperson)
and Robert Suban (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted
in conjunction with the Annual Financial Report.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
18
Statement of comprehensive income
Year ended
Year ended
31 December
31 December
2023
2022
Notes
€
€
Revenue
19
9,211,050
8,300,478
Revenue from service concession arrangements
8
14,779,624
17,291,721
Costs related to service concession arrangements
8
(14,283,356)
(16,777,952)
Administrative expenses
20
(902,404)
(622,862)
Provision for liabilities and charges
18
(301,590)
-
Operating profit
8,503,324
8,191,385
Change in fair value of investment property
6,7
18,110,634
2,852,021
Finance income
23
3,129,494
1,291,723
Finance costs
24
(1,726,310)
(1,676,228)
Profit before tax
28,017,142
10,658,901
Tax expense
25
(3,363,828)
(1,881,836)
Profit for the year - total comprehensive income
24,653,314
8,777,065
Earnings per share (cents)
27
16.65
5.93
The notes on pages 21 to 53 are an integral part of these financial statements.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
19
Statement of changes in equity
Non-distributable reserves
Share
Retained
Fair value
capital
earnings
movements
Other
Total
Notes
€
€
€
€
€
Balance at 1 January 2022
73,295,143
10,403,860
53,145,073
3,880,120
140,724,196
Comprehensive income
Profit for the year - total
comprehensive income
-
8,777,065
-
-
8,777,065
Transactions with owners
Transfer within owners’ equity,
net of deferred tax
13
-
(2,620,347)
2,620,347
-
-
Transfer within owners’ equity,
net of deferred tax
14
-
(465,137)
-
465,137
-
Dividends to equity shareholders
28
-
(3,760,463)
-
-
(3,760,463)
-
1,931,118
2,620,347
465,137
5,016,602
Balance at 31 December 2022
73,295,143
12,334,978
55,765,420
4,345,257
145,740,798
Balance at 1 January 2023
73,295,143
12,334,978
55,765,420
4,345,257
145,740,798
Comprehensive income
Profit for the year - total
comprehensive income
-
24,653,314
-
-
24,653,314
Transactions with owners
Transfer within owners’ equity,
net of deferred tax
13
-
(16,709,763)
16,709,763
-
-
Transfer within owners’ equity,
net of deferred tax
14
-
(545,695)
-
545,695
-
Dividends to equity shareholders
28
-
(3,369,456)
-
-
(3,369,456)
73,295,143
4,028,400
16,709,763
545,695
21,283,858
Balance at 31 December 2023
73,295,143
16,363,378
72,475,183
4,890,952
167,024,656
The notes on pages 21 to 53 are an integral part of these financial statements.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
20
Statement of cash flows
The notes on pages 21 to 53 are an integral part of these financial statements.
Year ended
Year ended
31 December
31 December
2023
2022
Notes
€
€
Cash flows from operating activities
Cash generated from operations
29
10,249,546
6,169,121
Income taxes paid
(1,674,247)
(1,675,291)
Payments on lease liability
7
(55,973)
(115,762)
Net cash generated from operating activities
8,519,326
4,378,068
Cash flows from investing activities
Purchase for property, plant and equipment
5
(19,747)
(38,434)
Payments to acquire contract asset
8
(12,963,470)
(8,799,583)
Proceeds from affordable housing rentals
1,139,277
206,642
Net cash used in investing activities
(11,843,940)
(8,631,375)
Cash flows from financing activities
Repayments of borrowings
15
(2,305,322)
(2,162,591)
Interest paid on borrowings
24
(3,401,877)
(2,718,302)
Dividends paid to equity holders
28
(3,358,301)
(5,065,108)
Payments to rights issue
(275,970)
-
Proceeds from borrowings
15
-
20,600,000
Proceeds from interest
87,811
Net cash (used in) / from financing activities
(9,253,659)
10,653,999
Net movement in cash and cash equivalents
(12,578,273)
6,400,692
Cash and cash equivalents at beginning of year
17,363,936
10,963,244
Cash and cash equivalents at end of year
10
4,785,663
17,363,936
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
21
Notes to the financial statements
1. Summary of material accounting policies
The Board has adopted the following principal accounting policies which it believes cover most of the
type of activities it will undertake in the foreseeable future. Accordingly, not all the accounting policies
set out below would necessarily apply as at the date of this report.
1.1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU and the requirements of the Maltese Companies Act, 1995.
They have been prepared under the historical cost convention as modified by the fair valuation of
investment property.
At 31 December 2023, the company's net current liabilities exceeded current assets by €6,786,138.
The Company has addressed the financing gap in relation to the Affordable Housing project which is
being further disclosed in Note 8. The financial statements have been prepared on a going concern
basis that assumes that the company will continue in operational existence for the foreseeable future.
The preparation of financial statements in conformity with IFRSs as adopted by the 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 (see Note 3 – Critical accounting estimates
and judgements).
Standards, interpretations and amendments to published standards effective 1 January 2023
The Company adopted new standards, amendments and interpretations to existing standards that are
mandatory for the Company’s accounting period beginning on 1 January 2023. The adoption of these
revisions to the requirements of IFRSs as adopted by the EU did not result in substantial changes to
the Company’s accounting policies.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published
by the date of authorisation for issue of these financial statements but are mandatory for the
Company’s accounting periods beginning after 1 January 2023. The Company has not early adopted
these revisions to the requirements of IFRSs as adopted by the EU.
1.2 Foreign currency translation
Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The financial statements are
presented in euro, which is the Company’s functional and presentation currency.
1.3 Property, plant and equipment
All property, plant and equipment is initially recorded at cost. All property, plant and equipment is
subsequently stated at historical cost less depreciation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
22
1. Summary of material accounting policies - continued
1.3 Property, plant and equipment - continued
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the company and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are charged to profit or loss during the
financial period in which they are incurred.
Depreciation on owner occupied tangible assets and other assets are calculated using the straight-
line method to allocate their cost to their residual values over their estimated useful lives.
All the property, plant and equipment of the Company are assumed to have a useful life of four years.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (Note 1.5).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount
and are recognised in profit or loss.
1.4 Investment property
Investment property is held for long-term rental yields or for capital appreciation or both, and is not
occupied by the Company. Investment property also includes property that is being constructed or
developed for future use as investment property, when such identification is made.
Investment property is measured initially at its historical cost, including related 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, in accordance with Note 1.19. After initial
recognition, investment property is carried at fair value. Given that there is no active market for the
investment property held by the Company, the Company establishes fair value by using valuation
techniques, particularly, discounted cash flow analysis.
Investment property that is being redeveloped for continuing use as investment property 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. 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.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that
future economic benefits associated with the expenditure will flow to the Company and the cost of the
item can be measured reliably. All other repairs and maintenance costs are charged to 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.
Changes in fair values are recognised in the statement of comprehensive income. Investment
properties are derecognised either when they have been disposed of or when the investment property
is permanently withdrawn from use and no future economic benefit is expected from its disposal.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
23
1. Summary of material accounting policies - continued
1.5 Impairment of non-financial assets
Non-financial assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered
impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
1.6 Contract asset
The Company is recognising a contract asset in its statement of financial position to account for the
Affordable housing project during its construction period. The carrying amount of the contract asset is
equal to the total costs incurred on this project, profit on the completed construction and financing
revenue.
1.7 Financial assets
1.7.1 Classification, Recognition and measurement and impairment
The Company classifies its financial assets as those to be measured at amortised cost. The
classification depends on the entity's business model for managing the financial assets and the
contractual terms of the cash flows.
At initial recognition, the Company measures a financial asset at its fair value plus transaction costs
that are directly attributable to the acquisition of the financial asset.
Subsequent measurement of debt instruments depends on the Company's business model for
managing the asset and the cash flow characteristics of the asset. Assets that are held for collection
of contractual cash flows, where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial assets is included in finance
income using the effective interest rate method.
The Company assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. For trade receivables, the group applies
the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised
from initial recognition of the receivables, see Note 2 for further details. Impairment losses are
presented as separate line item in the statement of comprehensive income.
Financial assets are derecognised when the rights to receive cash flows from the financial asset have
expired or have been transferred and the Company has transferred substantially all the risks and
rewards of ownership. Any gain or loss arising on derecognition is recognised directly in profit or loss
and presented in Note 20.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
24
1. Summary of material accounting policies - continued
1.7 Financial assets- continued
1.7.2 Trade and other receivables
Trade receivables comprise amounts due from customers for ground rents and lease of property. If
collection is expected in one year or less (or in the normal operating cycle of the business if longer),
they are classified as current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less provision for impairment. In the opinion of the
Directors, the recorded book value in the company’s books of trade and other receivables and their
value measured at amortised cost using the effective interest method, less provision for impairment
are not materially different. The carrying amount of the asset is reduced through the use of an
allowance account, and the amount of the loss is recognised in the income statement. When a
receivable is uncollectible, it is written off against the allowance account for trade and other
receivables. Subsequent recoveries of amounts previously written off are credited against profit or
loss.
1.7.3 Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at face value. In the
statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with
banks and when applicable bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the statement of financial position.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
25
1. Summary of material accounting policies - continued
1.8 Service Concession Arrangements
Under the terms of IFRIC 12, ‘Service Concession Arrangements’, a concession operator has a
twofold activity:
- a construction activity in respect of its obligations to design, build and finance a new asset that it
delivers to the grantor: revenue is recognized over time in accordance with IFRS 15;
- an operating and maintenance activity in respect of concession assets: revenue is recognised in
accordance with IFRS 15.
In return for its activities as operator, the Company will receive remuneration from the grantor and
therefore IFRIC 12’s financial asset model applies. Under this model, the operator has an
unconditional contractual right to receive payments from the concession grantor, irrespective of the
amount of use made of the infrastructure.
The operator recognises a financial asset, attracting interest, in its Statement of financial position, in
consideration for the services it provides (design, construction, etc.). Such financial assets are
recognised in the Statement of financial position as a contract asset, in an amount corresponding to
the fair value of the infrastructure on first recognition and subsequently at amortised cost. The
receivable will in substance, be settled by the operator’s right to retain all rental payments to be
affected by users upon completion of construction; such payments will be received partly from users
and partly from the grantor. Finance income calculated on the basis of the effective interest method
is recognised under finance income in the Statement of comprehensive income.
The part of the investment that is covered by an unconditional contractual right to receive payments
from the grantor (in the form of rental) is recognised as a contract asset up to the amount
guaranteed. Once the development is completed, the Company will have a right to invoice tenants
based on the contractual price. In line with the IFRIC 12 model and IFRS 15, the amount which the
company has a right to invoice will be presented as a financial asset (receivable) with a corresponding
entry against the contract asset recognised during the construction phase.
1.9 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.
1.10 Financial liabilities
The Company recognises a financial liability in its statement of financial position when it becomes a
party to the contractual provisions of the instrument. The Company’s financial liabilities are classified
as financial liabilities which are not at fair value through profit or loss under IFRS 9. Financial liabilities
not at fair value through profit or loss are recognised initially at fair value, being the fair value of
consideration received, net of transaction costs that are directly attributable to the acquisition or the
issue of the financial liability.
These liabilities are subsequently measured at amortised cost. In the opinion of the Directors, the
recorded book value in the company’s books of financial liabilities and their value measured at
amortised cost for impairment are not materially different.
The Company derecognises a financial liability from its statement of financial position when the
obligation specified in the contract or arrangement is discharged, is cancelled or expires.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
26
1. Summary of material accounting policies - continued
1.10 Financial liabilities -continued
1.10.1 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised as finance cost in income
statement over the period of the borrowings using the effective interest method. In the opinion of the
Directors, the recorded book value in the company’s books of borrowings and their value measured
at amortised cost using the effective interest method, are not materially different. Borrowings are
classified as current liabilities unless the Company has an unconditional right to defer settlement of
the liability for at least twelve months after the end of the reporting period.
1.10.2 Trade and other payables
Trade payables comprise obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating cycle of the business if longer). If
not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
1.11 Current and deferred tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the income
statement, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case, tax is also recognised in other comprehensive income or in equity.
Deferred tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. However,
deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting, nor
taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the end of the reporting period and are expected to apply when the related
deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances on a net basis.
1.12 Provisions
Provisions for legal claims, should they arise are recognised when the Company has a present legal
or constructive obligation as a result of past events, it is probable that an outflow of resources will be
required to settle the obligation, and the amount has been reliably estimated. Provisions are not
recognised for future operating losses.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
27
1. Summary of material accounting policies - continued
1.13 Revenue recognition
Revenue comprises the fair value for ground rents received or receivable as per contracts entered
into, leases of the Parliament Building on the initial and additional investment and the lease of the
Open Air Theatre. Moreover, the Company is recognising revenue in relation to the Service
concession arrangement (Note 8) as performance obligations are satisfied.
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.
(a) Finance income
Interest income is recognised for all interest-bearing instruments using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial asset and of
allocating the interest income over the relevant period. The company recognises revenue from service
concession arrangements and adjusts amounts receivable for any significant financing component.
The difference between the contractual price receivable and the revenue recognised in accordance
with IFRS 15 is recognised as Finance income.
(b) Rental income from investment property
Rental income from investment property is recognised in statement of comprehensive income on a
straight-line basis over the term of the lease.
(c) Revenue from Service concession arrangements
Revenue related to construction or upgrade services under a service concession arrangement is
recognised over time, consistent with the Company’s accounting policy on recognising revenue on
construction contracts. The company considers that the satisfaction of the performance obligation is
concluded once units are made available to the Housing Authority for renting to tenants. Thereafter
operation or service revenue is recognised in the period in which the services are provided by the
Company. If the service concession arrangement contains more than one performance obligation,
then the consideration received is allocated with reference to the relative stand-alone selling prices of
the services delivered.
1.14 Leases
(a) The company is a lessee
IFRS 16 requires an entity to assess whether a contact is, or contains, a lease at the inception date. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for a consideration. Leases are recognised as a right of use asset and
corresponding liability at the commencement date, being the date at which the leased asset is available
for use by the company.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payments that are based on an index or a rate, initially measured using the index
or rate as at the commencement date
• amounts expected to be payable by the Group under residual value guarantees
• the exercise price of a purchase option if the Group is reasonably certain to exercise that
option, and
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising
that option.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
28
1. Summary of material accounting policies - continued
1.14 Leases- continued
Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for leases in the Group, the lessee’s incremental
borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the company:
• where possible, uses recent third-party financing received by the lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received;
• makes adjustments specific to the lease, e.g. term, country, currency and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to
profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives
received; and
• any initial direct costs.
• restoration costs
Right of use assets are subsequently measured at cost, less accumulated depreciation and any
accumulated impairment losses, except as highlighted below. Right-of-use assets are generally
depreciated over the shorter of the asset's useful life and the lease term on a straight line basis.
Depreciation is recognised in profit or loss.
Payments associated with short-term leases of buildings and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with
a lease term of 12 months or less.
(b) The company is a lessor
Assets leased out under operating leases are included in investment property in the statement of
financial position and are accounted for in accordance with Note 1.4.
Receipts made under operating leases (net of any incentives paid by the Company) are charged to
statement of comprehensive income on a straight-line basis over the period of the lease. The
Company did not make any adjustments to the accounting for assets held as lessor as a result of
adopting the new leasing standard.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
29
1. Summary of material accounting policies - continued
1.15 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production
of qualifying assets, which are assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale. All other borrowing costs are expensed.
Borrowing costs are recognised for all interest-bearing instruments on an accrual basis using the
effective interest method. Borrowing costs include the effect of amortising any difference between
initial net proceeds and redemption value in respect of interest-bearing borrowings.
1.16 Dividend distributions
Dividend distributions to the Company’s shareholders are recognised as a liability in the Company’s
financial statements in the period in which the dividends are approved by the Company’s Directors.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
30
2. Financial risk management
2.1 Financial risk factors
The Company’s activities potentially expose it to a variety of financial risks: market risk (including
interest rate risk and other price 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. It is the responsibility of the Board of
Directors to provide 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 certain risk exposures during the current and preceding
financial periods.
(a) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices.
The Company’s cash and cash equivalents (Note 10) are subject to floating interest rates.
Management sets limits on the exposure to interest rate risk that may be accepted and monitors the
impact of changes in market interest rates on amounts reported in the statement of comprehensive
income in respect of these instruments. The Company’s interest-bearing instruments are short-term
in nature and accordingly the level of interest rate risk is contained. The Company’s operating cash
flows are substantially independent of changes in market interest rates. Fixed interest instruments
comprise borrowings (Note 15) which are measured at amortised cost and accordingly the Company
is not exposed to fair value interest rate risk. Based on this analysis, management considers the
potential impact on income statement of a defined interest rate shift that is reasonably possible at the
end of the reporting year to be immaterial.
(b) Credit risk
Credit risk arises from cash and cash equivalents and credit exposures to customers, including
outstanding receivables, contract assets and committed transactions. The Company’s exposures to
credit risk as at the end of the reporting years are analysed as follows:
2023
2022
€
€
Financial assets:
- Contact asset (Note 8)
66,283,697
49,513,997
- Trade and other receivables (Note 9)
322,927
2,203,088
- Cash and cash equivalents (Note 10)
4,785,663
17,363,936
71,392,287
69,081,021
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
31
2. Financial risk management - continued
2.1 Financial risk factors - continued
The maximum exposure to credit risk at the end of the reporting period in respect of the financial
assets mentioned above is equivalent to their carrying amount as disclosed in the respective notes to
the financial statements. The company does not hold any collateral as security in this respect. The
figures disclosed above in respect of trade and other receivables, exclude prepaid expenses.
The Company banks only with local financial institutions licensed by the Malta Financial Services
Authority with high quality standing and/or rating. Management considers the probability of default to
be close to zero as the financial institutions have a strong capacity to meet their contractual obligation
on the near term. As a result, while cash and cash equivalents are subject to the impairment
requirements of IFRS 9, the identified impairment loss is insignificant.
Receivables (including contact assets)
To measure the expected credit losses management performed an assessment of the recoverability
of trade and other receivables and contract assets and has concluded that such impairment loss is
insignificant. The group monitors the performance of its receivables on a regular basis to identify
incurred collection losses, which are inherent in the company’s receivables, taking into account
historical experience. The maximum exposure to credit risk at the end of the reporting period in respect
of the financial assets mentioned above is equivalent to their carrying amount as disclosed in the
respective note to the financial statement.
(c) Liquidity risk
The Company is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities, which comprise borrowings (Note 15), capital creditors (Note 16) and trade and
other payables (Note 17). Prudent liquidity risk management includes maintaining sufficient cash and
committed credit lines to ensure the availability of an adequate amount of funding to meet the
Company’s obligations.
Note 8 gives detail in relation to contract asset and service concession arrangements, and the related
financing available to date. Note 8 and Note 15 also explain the work that management is currently
undertaking to obtain the remaining financing to be able to conclude the project. Should this liquidity
not be available in 2023, the Company may face liquidity strains, however, based on proceeds from
the Rights Issue in 2024 and credit by financial institutions conceptually agreed, but not yet committed,
management and the Board of Directors are confident that the Company will continue to meet
commitments as planned.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
32
2. Financial risk management - continued
2.1 Financial risk factors - continued
Management monitors liquidity risk by reviewing expected cash flows and ensures that its own
resources are adequate and new facilities are in place when new projects are approved. The Board
of Directors considers that the Company’s liquidity risk is adequately balanced in view of the matching
of cash inflows and outflows arising from expected maturities of financial instruments when compared
with the Company’s committed bank borrowing facilities and further borrowings that are approved in
principle by financial institutions but not yet committed. The Company plans to conclude agreements
with financial institutions during 2024 with a view of accessing funds to meet liquidity needs when
these arise.
The table below analyses the Company’s financial liabilities into relevant maturity groupings, based
on the remaining period to the relevant maturity date. The amounts disclosed in the table are the
contractual discounted cash flows.
Within 1
year
From 1
year to 2
years
From 2
years to 5
years
Later than
5 years
Total
Liabilities
31 December 2023
€
€
€
€
€
Borrowings
5,788,451
6,175,513
20,881,626
74,999,732
107,845,322
Lease liability
121,551
121,551
376,805
9,499,326
10,119,235
Capital creditors
4,983,818
1,640,888
688,865
-
7,313,571
Trade and other payables
1,400,383
-
-
-
1,400,383
Total
12,294,203
7,937,952
21,947,298
84,499,053
126,678,506
This compares to the maturity of the financial liabilities in the previous reporting period as follows:
Within 1
year
From 1 year
to 2 years
From 2
years to 5
years
Later than
5 years
Total
Liabilities
31 December 2022
€
€
€
€
€
Borrowings
4,061,466
5,728,378
19,830,393
68,220,195
97,840,432
Lease liability
57,881
121,551
370,729
9,626,949
10,177,110
Capital creditors
5,690,306
2,094,026
329,409
-
8,113,741
Trade and other payables
1,133,468
-
-
-
1,133,468
Total
10,943,121
7,943,955
20,530,531
77,847,144
117,264,751
As explained in the basis of preparation, the capital creditors are being settled from the disbursements
of the borrowings that the Company has secured.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
33
2. Financial risk management - continued
2.2 Capital risk management
Capital is managed by reference to the level of equity and borrowings. The Company’s objectives
when managing capital are to safeguard the Company’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal
capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the
Company may issue new shares or adjust the amount of dividends paid to shareholders.
The Company’s equity, as disclosed in the statement of financial position, constitutes its capital. The
Company maintains the level of capital by reference to its financial obligations and commitments
arising from operational requirements.
In view of the nature of the Company’s activities and the extent of borrowings or debt, the capital level
as at the end of the reporting year is deemed adequate by the Directors.
2.3 Fair values of financial instruments
At 31 December 2023 and 31 December 2022, the carrying amounts of other financial instruments
comprising loans and receivables, cash at bank and accrued expenses reflected in the financial
statements are reasonable estimates of fair value in view of the nature of these instruments, the
relatively short period of time between the origination of the instruments and their expected realisation
or the interest rates to which they are exposed.
For the non-current contract assets, the fair values are also not significantly different from their carrying
amounts.
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and other
factors including expectations of future events that are believed to be reasonable under the
circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are addressed below.
(a) Valuation of investment properties
The Company's investment property comprises the MIA and VCP properties as well as the Parliament
Building and Open Air Theatre. The fair value of the Company’s investment property has been
determined based on projected future cash flows, appropriately discounted by a risk adjusted discount
rate. As explained in Note 6 – Investment Property, the valuation was determined using discounted
cash flow projections considering, inter alia, the projected future cash flows to be generated from the
transfer of the dominium directum in respect of the MIA and VCP properties, the Parliament Building
and Open Air Theatre, ongoing maintenance needs, and other relevant market factors.
A key variable used in the determination of the fair value of the Investment Property is the discount
rate. The discount rate used for fair valuing the Investment Property is primarily based on the yield to
maturity on the longest term available Malta Government Stock (MGS), which as at 31 December
2023 was 3.76% (2022: 4.22%), plus a risk and conditional premium. When interest rates decrease,
the fair value of the investment properties will increase. On the contrary, when interest rates increase,
the fair value of the investment properties will decrease. Movements resulting from the said revaluation
process are treated as non-distributable fair value gains (see Note 13). For the period under review,
the decrease in interest rates has in fact led to a positive fair value movement for the MIA and VCP
properties. Other variables also come into play, including inflation rates (applied using a rolling five
year average), and conditional and risk premia which have been revised in the current year to reflect
better current market conditions (Note 6). For the Parliament Building and the Open Air theatre, the
combination of the movement in rates described above has resulted in a positive fair value movement.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
34
3. Critical accounting estimates and judgements - continued
(a) Valuation of investment properties - continued
The Audit Committee and the Board continues to hold continuous discussions around the estimates
and judgements applied to the fair value mechanism and related inputs mainly due to changes in
interest rates and other variables feeding into the fair value model. The Board continues to be confident
that the mechanism, applied by the Company, is the most appropriate method to derive fair valuation
of the respective investment properties in the Statement of Financial Position. As explained in Note 6,
the Board had elected to include a conditional premium to counter the current volatility in interest rates
that is having a significant impact on the fair value movements.
(b) Service concession arrangements
The analysis on whether the IFRIC 12, Service Concession Arrangements, applies to certain contracts
and activities involves various complex factors and it is significantly affected by legal interpretation of
certain contractual agreements or other terms and conditions with public sector entities.
The application of IFRIC 12 requires extensive judgment in relation with, amongst other factors, (i) the
identification of certain infrastructures (and not contractual agreements) in the scope of IFRIC 12, (ii)
the understanding of the nature of the payments in order to determine the classification of the
infrastructure as a financial asset or as an intangible asset and (iii) the recognition of the revenue from
construction and concessionary activity.
Other variables used in the accounting for IFRIC 12 include estimated project management fees
during the construction phase and discount rates applied by reference to the average cost of capital
for the entity to ensure that the project remains profitable and viable in the long term.
Note 8 gives detail in relation to the related financing available to date and also explains the work that
management is currently undertaking to obtain the remaining financing to be able to conclude the
project. Should this liquidity not be available in 2024, the Company may face liquidity strains, including
potential impairment of the asset.
Changes in one or more of the factors described above may significantly affect the conclusions as to
the appropriateness of the application of IFRIC 12 and, therefore, the results of operations or our
financial position (Note 8). Note 8 gives detail in relation to contract asset and service concession
arrangements, and the related financing available to date.
4. Segment reporting
The Directors have reviewed the disclosure requirements of IFRS 8, ‘Operating Segments’ and
determined that the Company effectively has one operating segment, taking cognisance of the
information utilised within the Company for the purpose of assessing performance.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
35
5. Property, plant and equipment
Furniture, fixtures
& fittings and
office equipment
€
At 1 January 2022
Cost or valuation
60,747
Accumulated depreciation
(38,553)
Net book amount
22,194
Year ended 31 December 2022
Opening net book amount
22,194
Additions
38,434
Depreciation charge
(14,684)
Closing net book amount
45,944
At 31 December 2022
Cost or valuation
99,181
Accumulated depreciation
(53,237)
Net book amount
45,944
Year ended 31 December 2023
Opening net book amount
45,944
Additions
19,747
Depreciation charge
(20,395)
Closing net book amount
45,296
At 31 December 2023
Cost or valuation
118,928
Accumulated depreciation
(73,632)
Net book amount
45,296
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
36
6. Investment property
2023
2022
€
€
MIA and VCP properties
81,612,000
70,712,000
Parliament Building and Open Air Theatre
139,496,820
132,286,186
Carrying amount
221,108,820
202,998,186
i. MIA and VCP properties
2023
2022
€
€
At 1 January
70,712,000
84,847,000
Fair value movement
10,900,000
(14,135,000)
Carrying amount
81,612,000
70,712,000
ii. Parliament Building and Open Air Theatre
2023
2022
€
€
At 1 January
132,286,186
115,299,165
Fair value movement
7,210,634
16,987,021
Carrying amount
139,496,820
132,286,186
The Company has rental income of €9,211,050 (2022: €8,300,478) from investment properties as at
31 December 2023.
Fair values of investment property
The movement in the fair value of investment property comprises the movement in the fair value of
the dominium directum of the MIA and VCP properties, as well as the Parliament Building and Open
Air Theatre.
The fair value of investment property is calculated with reference to the cash flows receivable by the
Company in terms of its contractual agreements, discounted to present value as at 31 December
2023.
Accordingly, the fair value of the investment property is subject to variation owing to, amongst other
things, movements in market interest rates, expected inflation rates and changes in the contractual
cash flows owing to the passage of time.
The Company is required to disclose fair value measurements of the following fair value measurement
hierarchy for non-financial assets carried at fair value by level:
- 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 for similar properties (that is,
unobservable inputs) (level 3).
The Company’s recurring fair value measurements are categorised as level 3 as they are based on
significant unobservable inputs. There has been no movement in level 3 during the year.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
37
6. Investment property - continued
Valuation process
a) MIA and VCP
Management assesses on a yearly basis the valuation of the MIA and VCP properties is based on the
present value of ground rents up to the expiry of the temporary emphyteutical grants and the estimated
freehold value thereafter discounted to present value. The fair value of investment property is
calculated by management with reference to the cash flows receivable by the Company in terms of its
contractual agreements, discounted to present value as at 31
December 2023. The discount rate is
based on the yield to maturity on the longest term available MGS (Malta Government Stock) in issue
as at year end, a premium reflecting the risk inherent in the underlying cash flows and a conditional
premium. Management presents respective workings including relative assumptions and judgments
to the Audit Committee and Board of Directors for approval on a bi-annual basis.
During the year ended 31 December 2023, the MGS benchmark referred to above decreased and as
a result a fair value gain of €10,900,000 (2022: fair value loss of €14,135,000) has been recognised
in these financial statements.
In accordance with the fair value measurement hierarchy explained above, the significant
unobservable inputs applied in the valuation of the Company’s assets are the following:
- Ground rent, as contractually agreed which for the coming year is estimated at €2.1 million (2022:
€2.1 million);
- Growth rate, as contractually agreed at an average of 2.53% p.a. (2022: 2.53% p.a.) represents
the estimated average growth of the Company’s rentals;
- Discount rate of 5.26% (2022: 5.72%) based on:
o the risk-free rate of return being the YTM on the longest term available MGS at year end 3.76%
(2022: 4.22%);
o risk premium taking into account factors such as, property illiquidity, management limitations,
type, size and location of property, competition, country risk, counter-party risks and resource
risks 1% (2022: 1%). This risk premium was adjusted by the Company in December 2022
following a review of the discount rate used for the valuation of the investment property. This
adjustment results from the review of the various elements of commercial and market risk
inherent to the investment properties; and
o conditional premium of 0.5% (2022: 0.5%). Due to the abnormally low level of interest rates
that were prevalent in the past this conditional premium had been introduced. This premium is
set at 0.75% when the YTM on the longest term available MGS is lower than 2% and at 0.5%
when it is 2.00% or higher.
If the discount rate used in the discounted future cash flows for the MIA and VCP properties had been
0.50% higher/lower, all other things being equal, the fair value of the MIA and VCP properties would
decrease by €9.7 million (2022: €8.1 million) or increase by €11.6 million (2022: €9.6 million)
respectively.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
38
6. Investment property - continued
Valuation process - continued
b) Parliament Building and Open Air Theatre
The valuation of the Parliament Building and Open Air Theatre is based on the present value of the
lease income to the expiry of the temporary emphyteutical grant discounted to present value. The fair
value of investment property is calculated with reference to the cash flows receivable by the Company
in terms of its contractual agreements over the period to 2077, discounted to present value as at 31
December 2023. The discount rate is based on the yield to maturity on the longest term available MGS
in issue as at year end, a premium reflecting the risk inherent in the underlying cash flows and a
conditional premium. In accordance with IFRS 16 “Leases”, the Company recognised a Right-of-use
asset (see Note 7). The fair value of this asset is being included with the Investment property.
Hence, the carrying amount of €139,496,820 (2022: €132,286,186) for the Parliament Building and
Open Air Theatre includes the fair value of the Right-of-use asset for such properties.
During the year ended 31 December 2023, the MGS benchmark referred to above decreased and as
a result, a fair value gain of €7,210,634 (2022: fair value gain of €16,987,021) has been recognised
in these financial statements during this year. This fair value gain includes the fair value movement
for the Right-of-use asset.
In accordance with the fair value measurement hierarchy explained above the significant
unobservable inputs applied in the valuation of the Company’s assets are the following:
- Rents, as contractually agreed which for the coming year is estimated at €6.8 million (2022: €6.8
million);
- Growth rate, at an average of 2.02% (2022: 2.24%), represents the estimated average growth of
the Company’s rentals. The growth rate is impacted by changes to inflation, calculated by the
company using a five-year rolling average;
- Discount rate of 6.26% (2022: 6.72%) based on:
o the risk-free rate of return being the YTM on the longest term available MGS at year end of
3.76% (2022: 4.22%);
o risk premium taking into account factors such as, property illiquidity, management limitations,
type, size and location of property, competition, country risk, counter-party risks and resource
risks of 2.0% (2022: 2.0%).; and
o conditional premium of 0.50% (2022: 0.50%). When the YTM on the longest term available
MGS is 2.0% or higher this conditional premium is set at 0.50%. When the YTM on the longest-
term available MGS is lover than 2.00% this conditional premium is set at 0.75%
If the discount rate used in the discounted future cash flows for the Parliament Building and Open Air
Theatre properties had been 0.50% higher/lower, all other things being equal, the fair value of the
Parliament Building and Open Air Theatre properties would decrease by €10.7 million (2022: €9.9
million) or increase by €12.3 million (2022: €11.6 million) respectively.
Minimum lease payments receivable on leases of investment properties are as follows:
2023
2022
€
€
Within 1 year
121,550
57,881
Between 1 and 2 years
121,550
121,550
Between 2 and 3 years
121,550
121,550
Between 3 and 4 years
127,630
121,550
Between 4 and 5 years
127,627
127,630
Later than 5 years
9,499,326
9,626,949
10,119,233
10,177,110
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
39
7. Right-of-use asset, lease liability and provision on restoration
a) Measurement of lease liabilities
The company leases buildings which relates to the Open Air Theatre and Parliament Building in City
Gate, Valletta included within the Investment property in the Statement of financial position.
2023
2022
€
€
Lease liability recognised as at 1 January
3,390,904
3,363,397
Interest on lease liability for the period ended 31 December
144,452
143,269
Ground rents payable for the period
(55,973)
(115,762)
Lease liability recognised as at 31 December
3,479,383
3,390,904
2023
2022
€
€
Of which are:
Current lease liabilities
121,551
57,881
Non-current lease liabilities
3,357,832
3,333,023
Carrying amount
3,479,383
3,390,904
2023
2022
€
€
Maturity analysis - contractual undiscounted cash flows
Less than one year
121,551
57,881
One to five years
498,356
492,280
More than five years
9,499,326
9,626,949
Total undiscounted lease liabilities at 31 December
10,119,233
10,177,110
2023
2022
€
€
Amounts recognised in profit or loss
Interest on lease liabilities
144,452
143,269
Interest on provision on restoration
238,663
228,823
383,115
372,092
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
40
7. Right-of-use asset, lease liability and provision on restoration - continued
b) Measurement of right-of-use assets
The recognised right-of-use assets relate to investment properties and are being measured at fair
value in line with the underlying investment properties.
2023
2022
€
€
Balance as at 1 January
5,428,303
5,471,282
Fair value gain / (loss)
599,634
(42,979)
Carrying amount at 31 December
6,027,937
5,428,303
c) Measurement of provision on restoration
This is the provision for restoration costs being provided for in relation to the Open Air Theatre and
Parliament Building in City Gate, Valletta.
2023
2022
€
€
Balance as at 1 January
5,550,299
5,321,476
Interest on restoration provision
238,663
228,823
Carrying amount at 31 December
5,788,962
5,550,299
8. Contract asset and service concession arrangements
On 29 December 2017, the Company entered into a contractual arrangement with the Housing
Authority to make available sixteen residential blocks, totalling around six hundred and eighty-four
units that will be used for affordable housing purposes. During the construction phase, plans have
been amended and a decision was taken to abandon the plan to develop one of the sites and further
units were in turn added to another site. The updated number of units has hence changed to seven
hundred fifty-two and this revised design and number of units has been formally captured in a new
agreement with the Housing Authority. Excavation of the sites is substantially complete. The
construction and finishing phases of all the sites are expected to be fully completed by 2026 and
thereafter the operating phase will follow with a duration of twenty-five years. As at 31 December 2023,
a hundred twenty six units have been completed and made available to tenants.
In line with the agreed terms, the Company has entitlement to cash flows from rental of the respective
units. Rates are contractually agreed and will be paid by the tenant, with the remaining portion being
received through a subsidy given by the Housing Authority.
The IFRIC 12 model prepared by management continues to be updated with the latest actual and
projected costs and expected revenues to provide management and the Board with updated
profitability projections, compared with original estimates. The model is discounted applying rates by
reference to the average overall cost of capital for the Company, including consideration for rates
used in the market for construction projects of a similar magnitude, and also considering the likelihood
of increased interest rates due to the current global climate. The Board has successfully negotiated
an increase in the revenue streams to ensure that the project remains profitable and suitable returns
are generated despite the increase in the capital cost of the project.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
41
8. Contract asset and service concession arrangements - continued
The current model incorporates the latest estimates supplied by specialised architectural firms and
also applies further precautionary overlays ranging from 5% to 15% for contracted and not finalised
and non-contracted phases and assumes negotiations are successful. The resulting project internal
rate of return (IRR) is deemed acceptable by the Board of Directors.
Applying a further sensitivity on the costs of 5% for the unfinished phases and 10% on the
uncontracted phases would result in an increase in costs amounting to €3.2 million (2022: €5.3
million).The resulting stress testing would still return a positive project IRR.
Upon termination of the emphyteutical grant, the Company is required to hand-over ownership,
management and operation of all assets relating to all the revised 15 construction sites to the Housing
Authority. During the term of the agreement, the Company is entitled to cash-flows relating to
residential units even if these are vacant, with the only condition that entitles Malita Investments plc to
cash-flows, being making such units available for use to the Housing Authority. The Company may
not however dispose, or change the use of, the properties during the period of the concession.
Pursuant to IFRIC 12, when the operator has an unconditional right to receive cash or other financial
assets from the grantor in remuneration for concession services, the financial asset model applies.
In this context, the infrastructure managed under these contracts cannot be recorded in assets of the
operator as property, plant and equipment, but is recorded as a financial asset. During the construction
phase, the financial asset is recorded as a contract asset. During the construction phase revenue is
recognised in the Statement of Comprehensive Income. The stage of completion of works was
determined as the percentage of cost incurred up until the end of the reporting period relative to the
total estimated cost (cost-to-cost method).
Income amounting to €14,675,105 (2022: €17,261,698) from the construction activity was recognised
during the period ended 31 December 2023 and €66,283,697 (2022: €49,513,997 and 2021:
€31,810,603) is cumulatively recognised in the Statement of Financial Position as a contract
asset. The operational phase of six sites has been initiated, with the first site successfully completed
in the third quarter of 2022. Subsequently, five additional sites have commenced operations during
the current year, resulting in monthly cash flows being consistently received. As at the end of the year,
rents earned from tenants and Housing Authority amount to €1,045,190 (2022: €300,225), out of which
revenue recognised in the Statement of Comprehensive Income for the year ended 31 December
2023 is €104,519 (2022: €30,023) representing the portion of rents earned. The IFRIC 12 Model
requires the remaining portion of rental streams to be accounted for as a recovery of contract asset
development costs.
Costs in relation to construction amounting to €14,283,356 (2022: €16,777,952) were recognised in
the Statement of Comprehensive Income for the year ended 31 December 2023. The difference
between revenue and cost from the construction project during the period represents, in substance,
project management fees as required by IFRIC 12.
Financial receivables are initially recognised at fair value and subsequently recognised at amortised
cost using the effective interest method. The implied interest rate on the financial receivable is based
on the derived rate implicit in the discounted cash flow model encompassing related terms and
conditions within the Housing contract.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
42
8. Contract asset and Service concession arrangements - continued
All the sites will be completed by 2024 except for two sites. One of these sites will be completed by
2025 and the largest site will be completed by 2026. Contract of works for almost all the sites have
been entered into and hence the cost for completion can be reliably estimated. The Company has
secured financing for the project based on initial estimates. Variations to the initial plans for various
sites and additional number of units being constructed compared to the original plans have
necessitated an increased estimated spend which has been approved by the Project Board. The
current liquidity arrangements cover agreements contracted to date on the respective sites.
During the year, the Board and management actively addressed the financing gap, whereby the
Company entered into a credit agreement with the European Investment Bank, in terms of which EIB
has undertaken to provide the Company with funding amounting to €22m along with a further €30m
raised through the rights issue. Discussions with financial institutions for the remaining €11m are at
an advanced level and management has correspondence in hand indicating that funds have been
conceptually approved, providing assurance for the completion of the construction and finishing
phases across all mentioned sites.
Revenue from service concession arrangements is split as follows:
2023
2022
€
€
Service concession arrangements
Construction and finishing of blocks
14,675,105
17,261,698
Provision of housing facilities
104,519
30,023
14,779,624
17,291,721
Unsatisfied long-term contracts
The following table shows unsatisfied performance obligations resulting from the Company’s service
concession arrangements.
2023
2022
€
€
Aggregate amount of the transaction price allocated to:
Construction and finishing of blocks
57,482,306
68,305,486
Provision of housing facilities
30,298,828
22,158,488
Management expects that the revenue with respect to the unsatisfied performance obligations noted
above will be recognised in the following accounting periods:
Within 1
From 1 year
Later than
year
to 5 years
5 years
Performance obligation
Construction and finishing of blocks
37,302,969
20,179,337
-
Provision of housing facilities
395,253
2,944,973
26,958,602
Liquidity streams covering the performance obligations will be spread over the course of the thirty-
three year concession agreements reflecting payments from tenants and the Housing Authority for
the use of residential units.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
43
9. Trade and other receivables
2023
2022
€
€
Current
Ground rent receivable from third parties
255,426
4,116
Ground rent receivable from related parties
3,259
89,265
Term Deposit account
-
2,000,000
Prepaid expenses
451,868
104,954
Other receivables
64,242
109,707
774,795
2,308,042
Amounts owed by related parties are unsecured, interest free and repayable on demand.
10. Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:
2023
2022
€
€
Cash at bank and in hand
4,785,663
17,363,936
11. Share capital
2023
2022
€
€
Authorised
200,000,000 Ordinary shares of €0.50 each
100,000,000
100,000,000
50,000,000 Ordinary shares of €0.50 each
25,000,000
-
125,000,000
100,000,000
Issued and fully paid
148,108,064 Ordinary shares of €0.50 each
74,054,032
74,054,032
Issue costs
(758,889)
(758,889)
73,295,143
73,295,143
On 14th December, 2023, at an extraordinary general meeting of the Company, the existing
shareholders of the Company resolved to approve the increase of the authorised share capital of the
Company to two hundred million (250,000,000) Ordinary shares of a nominal value of fifty Euro cents
(€0.50) each. All Ordinary shares rank pari passu for all intents and purposes of the law.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
44
12. Retained earnings
The retained earnings include non-distributable earnings as a result of the Revenue from service
concession arrangements recognised on the Affordable Housing project as per IFRIC 12. These
earnings will become distributable once the Company starts earning lease income.
2023
2022
€
€
Distributable
9,966,638
8,424,851
Non-distributable
6,396,740
3,910,127
16,363,378
12,334,978
13. Non-distributable reserve - fair value movements
The reserve represents the cumulative fair value gains, net of applicable deferred tax liabilities on the
Company’s investment properties. These gains were initially recognised in the statement of
comprehensive income and because of their nature, were subsequently transferred to a non-
distributable reserve.
14. Non-distributable reserve - other
As per article 82 of the Company’s Articles of Association, the directors have set aside €545,695
(2022: €465,137) which equals 10% of the net profit of the Company excluding fair value movements
net of deferred tax (see Note 25) and net contract asset revenue and allocated them to a non-
distributable reserve. The directors may employ the reserve in the furtherance of the business of the
Company as the directors may from time to time think fit.
15. Borrowings
2023
2022
€
€
Bank loans
Non-current
85,885,646
89,576,786
Current
3,701,832
2,316,014
89,587,478
91,892,800
The weighted average effective interest rates for the company’s bank borrowings as at the end of the
reporting period are as follows:
2023
2022
Bank loans
2.10%
2.13%
The Company’s loan facilities as at 31 December 2023 amounted to €89,587,478 (2022:
€91,932,800), and these were fully utilised.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
45
15. Borrowings - continued
The Company retained its guarantee facility in favour of CEB and EIB amounting to €61.76m (2022:
€61.76m) to secure the performance of its financial obligations as prescribed in the loan agreements.
The Company entered into a credit agreement with the European Investment Bank, in terms of which
the European Investment Bank (EIB) has undertaken to provide the Company with funding amounting
to €22m. The Company has also received in principle approval from the Council of Europe
Development Bank concerning the provision of a €7m loan, subject to the conclusion of legally
binding documentation, and the company has also obtained approval in principle from another
financial institution to bridge the remaining €4m, providing the required financing for the ongoing
Affordable Housing project.
As at 31 December 2023 and 2022, the bank facilities were mainly secured as follows:
(a) General hypothec of €66,355,000 over the residential properties being financed;
(b) Special hypothec of €66,355,000 over the emphyteutical lease of the Housing Authority on the
sites being developed;
(c) Pledge on Receivables amounting to €750,000 per annum;
(d) Guarantee of €62,055,000 obtained from Bank of Valletta in favour of other financial institutions.
Maturity of non-current borrowings:
2023
2022
€
€
Between 1 and 2 years
4,359,653
3,856,789
Between 2 and 5 years
15,880,490
14,846,222
Over 5 years
65,645,503
70,873,775
85,885,646
89,576,786
16. Capital creditors
2023
2022
€
€
Capital creditors
Non-current
1,086,455
2,423,435
Current
6,227,116
5,690,306
7,313,571
8,113,741
The non-current balance amounting to € 1,086,455 (2022: €2,423,435) represents amounts owed to
contractors for works carried out in relation to the Affordable Housing project that are repayable after
more than one year as per signed contractual agreements. Hence, it is classified as a non-current
liability.
The current balance amounting to €6,227,116 (2022: €5,690,306) relates to the Affordable Housing
project and is due within the coming year. Hence, it is classified as a current liability. During the year
under review, the development advanced considerably. The works on these sites which have not yet
been billed as at 31 December 2023, have been accrued for. The current capital creditors also
include €76,956 (2022: €110,514) which are due to related parties. These balances are unsecured,
interest free and repayable on demand.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
46
17. Trade and other payables
2023
2022
€
€
Current
Trade payables
129,305
45,413
Dividends payable
68,532
57,375
Social security
17,627
24,393
Interest payable on borrowings
981,180
921,796
Other payables
221,366
108,884
Deferred ground rent
210,789
199,451
1,628,799
1,357,312
18. Provision for liabilities and charges
2023
2022
€
€
Opening balance
-
-
Movement
301,590
-
Closing balance
301,590
-
As part of its ongoing commitment to the project, the Company recognises a provision of €301,590
(2022: Nil) for maintenance costs to account for future expenses associated with the upkeep and
preservation of the constructed properties. The provision is established based on management’s best
estimate of the expected maintenance costs over the economic life of the properties. The provision
is reviewed and increased regularly to reflect any changes in the assessment of future expenses. The
provision is included in administrative expenses in the Statement of Comprehensive Income.
19. Revenue
Revenue comprises the consideration payable by MIA and VCP by way of an annual ground rent in
respect of the temporary emphyteusis granted.
Lease for the Open Air Theatre is receivable by the Company pursuant to a lease agreement. Also
included in the revenue figure is a lease payable by Government of Malta for the Parliament Building
whose certificate of completion was issued in January 2019. Lease payments for the Parliament
Building started in the 2019 as prior to the certificate of completion being issued, the Company
received a daily penalty broadly in line with the rental income due, had the project been completed on
time.
On 20 April 2017, a lease agreement was entered into between the Government of Malta and the
Company to reflect an additional investment in the Parliament Building and as from 1 June 2017
additional rent is payable semi-annually to the Company.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
47
20. Expenses by nature
Auditor’s fees
Fees charged by the audit firm for services rendered during the financial years ended 31 December
2023 and 2022 relate to the following:
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Annual statutory audit
33,600
32,000
Other assurance services
17,180
4,500
50,780
36,500
Other non-assurance services amounting to €111,605 (2022: €38,950) have been charged to the
Company by separate affiliated entities of the audit firm.
21. Employee benefit expenses
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Wages and salaries
285,359
244,334
Fees
11,140
9,563
Social security costs
13,726
11,196
e
310,225
265,093
The average number of persons employed during the year by the Company amounted to 5 (2022:4).
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Directors’ emoluments (Note 22)
98,642
89,023
Professional fees
135,980
115,503
Printing & advertising
5,612
14,134
Employee benefit expenses (Note 21)
310,225
265,093
Depreciation of property, plant and equipment (Note 5)
20,395
14,684
Lease of premises
20,000
8,542
Other expenses
311,550
115,883
902,404
622,862
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
48
22. Directors’ emoluments
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Marlene Mizzi (Chairperson)
25,000
17,500
Kenneth Farrugia (Chairman - resigned 22 June 2022)
-
12,500
Paul Mercieca (Not re-elected 28 April 2023)
4,892
15,000
Eric Schembri (Director – resigned 28 February 2023)
1,667
10,000
Robert Suban (Director – appointed 9 April 2014)
16,458
15,000
Victor Carachi (Director – appointed 12 May 2021)
11,042
7,500
Tania Brown (Director – appointed 12 May 2021)
11,042
6,523
Miguel Borg (Director – appointed 22 June 2022)
13,125
5,000
Desiree Cassar (Director – appointed 4 April 2023)
7,292
-
David Mallia (Director – appointed 27 April 2023)
8,124
-
98,642
89,023
23. Finance income
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Bank Interest Income
91,970
-
Finance income – Affordable Housing
3,035,535
1,291,723
Other Income
1,989
-
3,129,494
1,291,723
24. Finance costs
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Finance cost on lease liability and restoration provision
383,115
372,092
Loan interest expense
1,235,305
1,183,470
Bank charges and fees
107,890
120,666
1,726,310
1,676,228
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
49
25. Tax expense
The tax charge for the year is made up as follows:
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Current tax expense
1,962,958
1,650,163
Deferred tax expense
1,400,870
231,673
Tax expense
3,363,828
1,881,836
The tax on the Company’s profit before tax differs from the theoretical amount that would arise using
the basic tax rate as follows:
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Profit before tax
28,017,142
10,658,901
Tax expense on profit at 35%
9,806,000
3,730,615
Tax effect of:
Income subject to 15% final withholding tax
(502,629)
(406,865)
Income subject to 5% final withholding tax
-
(90,068)
Income subject to 10% final withholding tax
(261,298)
-
Income not chargeable for tax purposes
(1,446,003)
(631,922)
Expenses not deductible for tax purposes
962,926
489,673
Tax rules applicable to immovable property
(4,727,980)
(781,577)
Maintenance allowance
(467,188)
(430,527)
Under provision in prior year
-
2,507
Tax expense in the accounts
3,363,828
1,881,836
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
50
26. Deferred tax
Deferred tax is provided using the liability method for temporary differences arising on movements in
the fair value of immovable investment property. The calculation of the deferred tax provision for the
year ended 31 December 2023 is calculated on the taxation rules on capital gains upon a transfer of
immovable property implemented through Act XIII of 2015. With effect from 1 January 2015, the rate of
capital gains tax applicable is a final withholding tax of 8% on the value of the property.
The deferred tax balance represents:
31 December
31 December
2023
2022
€
€
Temporary differences on:
Fair value gains
17,206,534
15,805,664
The movement for the year comprising the recognition of the above deferred tax liability has been
credited to Statement of comprehensive income.
27. Earnings per share
Earnings per share is calculated by dividing the profit attributable to owners of the Company by the
total weighted average number of ordinary shares in issue during the year.
Year ended
Year ended
31 December
31 December
2023
2022
Profit for the year (€)
24,653,314
8,777,065
Total number of ordinary shares in issue
148,108,064
148,108,064
Earnings per share (cents)
16.65
5.93
As disclosed in Note 32, after the reporting period, the Company has pursued raising additional capital from
the current shareholders through a Right Issue.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
51
28. Dividends
2022
2023
Final
Interim
dividend
dividend
Total
€
€
€
Dividends paid on ordinary shares:
Gross
3,228,756
1,955,025
5,183,781
Tax at source
(1,130,065)
(684,260)
(1,814,325)
Net
2,098,691
1,270,767
3,369,456
Dividends per share (cents)
1.42
0.86
2.28
A final gross dividend of €4,538,904 or €0.0218 per share (December 2022: €3,228,756 or €0.0218
per share), equating to a final net dividend of €3,858,068 or €0.0185 per share (December 2021:
€2,098,691 or €0.0142 per share) is to be proposed at the forthcoming annual general meeting.
These financial statements do not reflect this dividend payable, which will be accounted for in
shareholders’ equity as an appropriation of retained earnings in the year ending 31 December 2023.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
52
29. Cash generated from operations
Reconciliation of operating profit to cash generated from operations:
Year ended
Year ended
31 December
31 December
2023
2022
€
€
Operating profit
8,503,324
8,191,385
Adjustments for:
Net contract asset revenue
(496,268)
(513,769)
Depreciation of property, plant and equipment (Note 5)
20,396
14,684
Maintenance cost
301,590
-
Changes in working capital:
Trade and other receivables
1,719,558
(1,764,891)
Trade and other payables
200,946
241,712
Cash generated from operations
10,249,546
6,169,121
30. Related party transactions
The only major shareholder of the Company is the Government of Malta through its 79.75% (2022:
79.75%) shareholding. The remaining 20.25% (2022: 20.25%) of the shares are held by the public.
Other related entities are the following:
- Malta Investment Management Company Limited
- Projects Plus Limited
- Housing Authority
- Social Projects Management Limited
The above entities are deemed to be related parties due to the fact that they are all owned and
managed by Government.
MALITA INVESTMENTS P.L.C.
Annual Report and Financial Statements - 31 December 2023
53
30. Related party transactions - continued
Except for transactions disclosed or referred to previously, the following significant operating
transactions have a material effect on the operating results and financial position of the company:
2023
2022
€
€
Government of Malta
City Gate ground rent to Government
(115,763)
(115,763)
Parliament lease income from Government
5,030,225
4,617,286
Open Air Theatre lease income from Government
1,827,946
1,648,868
Projects Plus Limited
Professional service fees to Projects Plus Limited
(726,953)
(214,795)
Housing Authority
Ground rent to Housing Authority
(150,248)
(146,583)
Affordable Housing rent
915,034
262,016
Social Projects Management Limited
Professional fees to SPM limited
(17,053)
(313,392)
Year end balances with related parties, arising principally from the transactions referred to previously,
are disclosed in Notes 9,16 and 17 to these financial statements. Such balances are unsecured,
interest free and repayable on demand, unless stated otherwise in the respective notes.
Key management personnel comprise of the directors of the company. Key management
compensation, consisting of directors’ remuneration has been disclosed in note 22.
31. Statutory information
Malita Investments p.l.c. is a public limited liability Company and is incorporated in, with its registered
address at Clock Tower, Level 1, Tigne Point, Sliema, Malta. The ultimate controlling party of Malita
Investment p.l.c. is the Government of Malta.
32. Subsequent events
After the year under review, the Company made available further units in relation to the Affordable
Housing project and entered into lease agreements with tenants for the site in Kirkop D, Msida and
Zurrieq, while the site in Kirkop A has been completed and is expected to be handed over in the
coming weeks.
As of 14 December 2023, an Extraordinary General Meeting was held by the Company whereby
shareholders approved the Re-Designation and Increase of the Authorised Share Capital of the
Company authorisation of the Board of Directors to give effect to a rights issue. The Malta Financial
Services Authority (MFSA) granted approval for the rights issue on 14 February 2024, with the offer
period spanning from 28 February to 5 April, 2024.
Following the issuance of a rights issue of 60,098,530 ordinary shares of a nominal value of €0.50 per
share on the market, the issue has been subscribed with 91.3% of the offered shares being subscribed
by both existing and new shareholders. As a result, Malita Investments plc has successfully raised the
amount of €30,049,265. These funds are expected to be made available to the Company by Q2 2024
and will be used to finalise the affordable housing project which now has 10 out of 15 sites which are
complete.

Logo

Independent auditor’s report

To the Shareholders of Malita Investments p.l.c.

 

Report on the audit of the financial statements

Our opinion

 

In our opinion:

 

●       The financial statements give a true and fair view of the financial position of Malita Investments p.l.c. (the Company) as at 31 December 2023, and of the company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and

●       The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).

 

Our opinion is consistent with our additional report to the Audit Committee.

 

What we have audited

 

Malita Investments p.l.c.’s financial statements comprise:

 

●       the statement of financial position as at 31 December 2023;

●       the statement of comprehensive income for the year then ended;

●       the statement of changes in equity for the year then ended;

●       the statement of cash flows for the year then ended; and

●       the notes to the financial statements, comprising material accounting policy information and other explanatory information.

 

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

 

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

 

Independence

 

We are independent of the company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.

 

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the company are in accordance with the applicable law 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, in the period from 1 January 2023 to 31 December 2023, are disclosed in note 20 to the financial statements.

 

 

Our audit approach

 
Overview

 

Materiality

·        Overall materiality: €1,460,000, which represents 0.5% of total assets.

Key audit matters

·         Accounting for service concession arrangements

·         Valuation of investment properties  
 
 
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

 

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which the company operates.

 

Materiality

 

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

 

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

 

Overall materiality

€1,460,000

How we determined it

0.5% of total assets

Rationale for the materiality benchmark applied

The Company’s principal activities include the financing, acquisition, development, management and operation of immovable property, in particular, projects of national and/or strategic importance. The statement of financial position is deemed to be the driver of this asset-based entity and we thus selected total assets as a benchmark for determining materiality. We chose 0.5% of total assets as a benchmark for determining materiality which is within the range of quantitative materiality thresholds that we consider acceptable.

 

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €146,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

Key audit matter

How our audit addressed the Key audit matter

Accounting for service concession arrangements

 

During 2017, the Company entered into an agreement with the Housing Authority to develop a number of residential blocks, including car spaces for affordable housing purposes.

 

IFRIC 12 covers public-to-private service concession arrangements and as disclosed in Note 8, the Company will be responsible for the construction, operation and maintenance of this project to 2053.

 

Once the development is completed, the Company will have a right to invoice tenants based on the contractual price. In line with the IFRIC 12 model and IFRS 15, the amount which the company has a right to invoice will be presented as a financial asset (receivable) with a corresponding entry against the contract asset recognised after the construction phase.

 

During the construction phase, management determines the stage of completion and actual costs incurred and capitalised based on experts’ reports. Throughout this period, the Company recognises income for project management in the Statement of Comprehensive Income and once the units are completed and handed to tenants, the Company recognises revenue from the provision of housing facilities, also in the Statement of Comprehensive Income. A master agreement has been entered into with the Housing Authority and specific agreements will follow once tenants are assigned. Management intends to optimise revenues based on variations to original designs and to also cover the construction of additional units.  The IFRIC 12 model prepared by management continues to be updated with the latest actual and projected costs and expected revenues to provide management and the Board with updated profitability projections, compared with the original estimates.

 

As at 31 December 2023, a total of six sites have been completed, delivered and rented out. Moreover, the Company agreed with the Housing Authority to extend delivery dates of the remaining sites and also agreed on revised rates. Construction of all sites is expected to be fully completed by December 2026.

 

Significant variations for various sites, including additional number of units constructed compared to original plans, has necessitated an increased spend which has been approved by the Board. Management has pursued raising additional capital from current shareholders through a Rights Issue and is also pursuing options for the required additional financing. The offer period for the Rights Issue closed on 5 April 2024. Note 8 and 15 explain the current financing arrangements and related plans to bridge approximately €11 million in the coming months to cover capital expenditure and working capital requirements.

 

As the directors have described in the accounting policies, estimating future cash flows requires the application of significant judgement, especially during the construction phase.

 

The key judgements made by the directors include estimating future returns, discount rates and the bridging of financing needs. The estimation of future cash flows and the level to which they are discounted is inherently uncertain and requires judgement. The extent of judgement around future revenue streams, discounting rates, liquidity needs and the size of the related asset, resulted in this matter being identified as an area of audit focus.

 

Relevant reference in the Annual Report and Financial Statements:

-       Critical accounting estimates and judgements; Note 3

-       Contract asset and service concession arrangements; Note 8

-       Borrowings; Note 15

 

 

We carried out the following procedures in relation to service concession arrangements:

 

- We selected a sample of costs incurred, and capitalised, which we agreed to supporting documentation. We also reviewed minutes of the Project Board and Evaluation Committee and correspondence with the Company’s appointed specialists.

 

- We tested cut-off by obtaining correspondence from the company’s specialists to assess whether accruals for works have been made appropriately and in the correct accounting period.

 

- We also reviewed inputs to the IFRIC 12 model prepared by management and we challenged management in relation to updated inputs. We ensured that the IFRIC 12 model has been updated to reflect management’s budgeted cost to completion and revenue streams. We also reviewed the discount rate applied by reference to the overall cost of capital for the Company.

 

- We reviewed agreements in relation to the determination of revenue streams from the Housing Authority in combination with revenues from tenants.  We also tested other variables used in the accounting for IFRIC 12 including estimated project management fees during the construction phase and the estimated split between the income statement and the contract asset.

 

- We have physically inspected a sample of units under construction. We also physically inspected a number of units made available to tenants.

 

- The viability of the project and the assessment of the internal rate of return percentage were discussed with management and the Board. We also engaged in discussions with management and obtained representations on their conclusions around additional financing that is required based on committed costs.

 

- We tested the arithmetic accuracy and computation of the model and reviewed the accounting treatment.

 

- We assessed the appropriateness of the disclosures within the financial statements.

  

Based on the work performed, we found the accounting for the IFRIC 12 model and the related disclosures to be consistent with the explanations and the evidence obtained.

 

Valuation of investment properties

 

The Company’s investment property measured at fair value comprises the Malta International Airport (“MIA”) and Valletta Cruise Port (“VCP”) properties as well as the Parliament Building and Open-Air Theatre. The fair value of the investment property has been determined based on projected future cash flows, discounted by a risk adjusted discount rate.

 

The valuation of the MIA and VCP properties, which was carried out by management, is based on the present value of ground rents up to the expiry of the temporary emphyteutical grants and the estimated freehold value thereafter discounted to present value. The discount rate is based on the yield to maturity on the longest-term available MGS (Malta Government Stock) in issue as at year end plus a premium reflecting the risk inherent in the underlying cash flows and a conditional premium reflecting the current market conditions.

 

 The valuation of the Parliament Building and Open-Air Theatre, which was carried out by management, is based on the present value of the lease income that is projected to be generated from these properties up to the expiry of the emphyteutical grant. Lease income is adjusted for inflation in line with the contracts. The fair value of the Parliament Building and Open-Air Theatre is calculated with reference to the cash flows receivable by the Company in terms of its contractual agreements, discounted to present value as at 31 December 2023.

 

The discount rate is based on the yield to maturity on the longest-term available MGS in issue as at year end plus a premium reflecting the risk inherent in the underlying cash flows and a conditional premium reflecting the current market conditions.

 

The existence of significant estimates referred to previously could result in material misstatement, which is why we have given specific focus and attention to this area.

 

Relevant reference in the Annual Report and Financial Statements:

-         Critical accounting estimates and judgements; Note 3

-         Investment property; Note 6

 

 

 

We engaged our own in-house valuation experts to critique and challenge the model and assumptions used by management.

 

Our procedures in relation to management’s valuation of the properties included:

 

- Assessing the methodologies used by management to estimate the fair value of the properties. We confirmed that the valuation approach for the properties was in accordance with professional valuation standards and suitable for use in determining their carrying values as at 31 December 2023;

 

- Assessing key inputs in the calculations such as ground rent and other cash inflows, by reference to management’s forecasts and contractual arrangements in place;

 

- Assessing inputs considered to be significantly judgemental in the valuation of investment properties workings including the growth rate, discount rate, and other variables in the valuation model by reference to data external to the Company and the expertise of in-house subject matter experts to challenge and assess the reasonableness of results of workings approved by Audit Committee and the Board;

 

- Testing the mathematical accuracy of the calculations derived from each forecast model;

 

- Assessing the appropriateness of the disclosures within the financial statements.

 

We discussed the valuations with the Audit Committee and concluded, based on our audit work that the Company’s property valuation is within an acceptable range.

 

 

 

 

Other information

 

The directors are responsible for the other information. The other information comprises the Directors’ Report, the Statement of Compliance with the Code of Principles of Good Corporate Governance and the Remuneration Statement (but does not include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the Madam Chairman’s Statement which is expected to be made available to us after that date.

 

Our opinion on the financial statements does not cover the other information and we do not and will not express any form 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 obtained prior to the date of this auditor’s 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.

 

When we read the Madam Chairman’s Statement, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance in accordance with International Standards on Auditing.

 

Responsibilities of the directors and those charged with governance for the financial statements

 

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese 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 process.

 

Auditor’s responsibilities for the audit of the financial statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

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 auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

●       Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

Report on other legal and regulatory requirements

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 Malita Investments p.l.c. for the year ended 31 December 2023, 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 RTS.

Our responsibilities

Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the financial statements, complies 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 Directive 6.

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 opinion.

Opinion

In our opinion, the Annual Financial Report for the year ended 31 December 2023 has been prepared in XHTML format in all material respects.

 

Other reporting requirements

 

The Annual Financial Report and Financial Statements 2023 contains other areas required by legislation or regulation on which we are required to report.  The Directors are responsible for these other areas.

 

The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.

Area of the Annual Financial Report and Financial Statements 2023 and the related Directors’ responsibilities

Our responsibilities

Our reporting

Directors’ report

The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act.

We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.    

 

We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.

 

In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements.

In our opinion:

●        the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

●        the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).

 

We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.

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 the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules.  The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97.  The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.

 

We are required to report on the Statement of Compliance by expressing an opinion as to whether,   in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.

 

We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.

 

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 has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.

 

We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.

Remuneration report

The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules.

We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included.

In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.

 

Other matters on which we are required to report by exception

We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion:

●        adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us.

●        the financial statements are not in agreement with the accounting records and returns.

●        we have not received all the information and explanations  which, to the best of our knowledge and belief, we require for 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 necessary.

We have nothing to report to you in respect of these responsibilities.

 

 

Other matter – use of this report

 

Our report, including the opinions, has been prepared for and only for the Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.

 

Appointment

 

We were first appointed as auditors of the Company on 20 October 2011. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 13 years. The company became listed on a regulated market on 7 August 2012, thereby having PwC engaged in an uninterrupted manner to serve as the Company’s auditor, in its listed status, for the last 12 years.

 

 

 

 

 

Stephen Mamo

Principal

 

For and on behalf of

PricewaterhouseCoopers

78, Mill Street

Zone 5, Central Business District

Qormi

Malta

 

18 April 2024