M&Z p.l.c.
(Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements
31 December 2023
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
General information
Directors’ report
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with
the Code of principles for Good Corporate Governance
Remuneration Report
Statement of financial position
Statement of comprehensive income
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
1
General information
Directors:
Mr. Paul S. Camilleri
Mr. Thomas Agius Vadala
Ms. Greta Camilleri Avallone
Mrs. Erika Pace Bonello
Ms. Emma Pullicino
Mr. Charles J. Farrugia
Mr. Matthew A. Camilleri
Mr. Kevin Rapinett
Mrs. Frances Fenech
Company Secretary:
Ganado Services Limited (C 10785)
171, Old Bakery Street,
Valletta VLT 1455, Malta.
Registered Office:
MMGH Complex,
Industrial Estate,
Marsa MRS 3000
Malta
Company Registration Number:
C 23061
Auditors:
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
Legal Counsel:
Ganado Advocates
171, Old Bakery Street,
Valletta VLT 1455, Malta.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
2
Directors’ report
The Directors present their report and the audited financial statements for the year ended 31 December
2023.
Principal activities
M&Z p.l.c is a market-leading Company dealing in importation and distribution of a vast array of renowned
fast-moving consumer goods (‘FMCG’). The M&Z portfolio is comprised of over 100 brands, spread across
10 product categories as follows: ambient, chilled, frozen, fresh, ice-cream, baby and kids, home and
personal care, wines and spirits, pet care and confectionary segments.
Review of the business
During 2023, the sector in which M&Z p.l.c operates has continued to encourage consolidation in the supply
chain and this trend is expected to continue in the months to come. Financial year 2023 has been a year
where the Company has continued to take the necessary steps to diversify its business risk and strengthen
its market presence. During 2023, the Company has further diversified its revenue stream through the
addition of pet care distribution to its portfolio of clients. The Company will remain focused on scaling the
current brand portfolio whilst also being prepared for new opportunities.
Financial position
Trading performance
Company turnover for the year ending 31 December 2023 amounted to €31,317,687 (2022: €28,399,658)
representing growth of 10.3%. The increase in turnover is mainly attributable to the Company’s organic
growth initiatives.
Inflation and cost of living pressures together with increased competition have continued to dominate our
sector in 2023, and we expect these challenges to remain present in the coming months. Moreover, given
that our portfolio is highly dominated by UK heritage brands, the Company has continued to face the ongoing
cost of Brexit where most of our products are subject to tariff charges. Due to market pressures it may not
be possible to pass on all cost increases to the consumer. We will continue in our efforts both with our
suppliers and with the authorities to hopefully begin to minimise the effect that Brexit has had on our costs.
Administrative expenses for 2023 amounted to €3,736,488 (2022: €3,316,672), an increase of
approximately 13% when compared to last year. This is mainly coming from an increase in the loss
allowance in relation to trade receivables attributed to the challenges the FMCG market is presently facing
in Malta. Market saturation, the introduction of heavy discounters in the industry, high operating costs
together with evolving consumer preferences have intensified the financial strain on the sector. In response,
we have applied a percentage uplift to the loss allowance that underscores our commitment to managing
credit risk aligned with our assessment of the financial stability of operations in the face of industry
challenges. These characteristics coupled with higher turnover, resulted in an increase of 9.7% in total
operating expenses for the year ending 31 December 2023 which amounted to €28,457,644. This increase
is predominantly coming from higher costs of purchases. The Company will continue working towards
growing its revenue organically with an efficient cost base to achieve consistent and sustainable growth.
After taking into consideration administrative costs, the Company registered an EBITDA of €3,855,824
(2022: €3,404,234), a 13.3% growth compared to last year.
Net finance costs amounted to €360,067 (2022: 257,061) which represents an increase of 40% when
compared to 2022. The increase is due to higher bank interest and charges during 2023 as a result of
higher interest rates.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
3
Directors’ report - continued
Despite the challenges faced, the Company’s profit before tax for the year amounted to €2,500,404 (2022:
€2,205,523) an increase of 13.4% over the prior year. Profit after tax increased by approximately 26% to
€1,765,292 (2022: €1,395,723) and earnings per share amounted to €0.04 (2022: €0.03).
Cash flows
Cash flow from operating activities for the full year 2023 amounted to €1,819,779 (2022: €495,822), out of
which €635,684 (2022: €1,124,897) was used to pay income tax.
Cash flow from investing activities amounted to -€330,777 (2022: -€1,848,421) pertaining to the continuous
investment in capital expenditure. The higher amount in 2022 is attributable to the acquisition in 2022.
Cash flow from financing activities during 2023 amounted to -€1,993,083 (2022: €1,188,556), which
consisted primarily of dividends paid to shareholders, payments on lease liabilities and movement in the
trade factoring facility.
Equity
Equity increased to €9,650,889 as per 31 December 2023, from €9,168,934 on 31 December 2022 as a
result of the retained profits for the year 2023 netted off with the dividends distributed to shareholders.
Balance Sheet
The Company’s total asset base stands at €19,440,563 (2022: 19,021,077). The non-current assets
comprise intangible assets amounting to €1,297,129 (2022: €1,519,256), which have decreased with
amortisation for the year, right-of-use assets of €1,535,668 (2022: €1,815,008), which have decreased with
amortisation for the year and property, plant and equipment of €923,873 (2022: €1,178,882) which have
decreased with depreciation for the year. At 31 December 2023, the Company’s current assets amounted
to €15,157,868 (2022: €14,287,363) which primarily include trade and other receivables of €8,935,233
(2022: €8,564,980), which have increased in line with the Company’s operations and inventories of
€5,415,965 (2022: €4,688,328) which increased due to a strategic decision by the Company to optimise
procurement pricing management in line with our principles. As at year end, non-current liabilities which
include lease liabilities amounted to €1,367,829 (2022: €1,663,277). The Company’s current liabilities
amounted to €8,421,845 (2022: €8,188,866) which mainly consist of borrowings of €4,635,401 (2022:
€4,643,521), including the new factoring facility, and trade and other payables of €3,167,208 (2022:
€3,262,356).
Risks and uncertainties
Trade credit exposure risk
The Company is exposed to trade credit risk in relation to the non-payment and non-performance of its
customers resulting from the favorable payment terms provided by the Company. Any future financial
market disruptions or tightening of the credit markets could result in some of the Company’s customers
experiencing a significant decline in profits and/or reduced liquidity. A significant adverse change in the
financial position of a customer could require the Company to assume greater credit risk relating to that
customer and could limit the Company’s ability to collect receivables.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
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Directors’ report - continued
Labour market conditions
The Company is also concerned and is flagging the prevalent, tight labour market conditions that are
weighing on the sector, particularly since the shortage of human resources is especially acute in distribution
to the extent that it is experiencing significant wage inflation and difficulty in servicing demand within regular
time frames.
Hard discounters
As in recent years, this year has seen an increase in foreign and local hard discounters that import and sell
their own products and that are vying for market share with the Company’s retail client base. As a result of
the diversified product offerings and permanently lower-priced products, improved shopping experience,
and the increasingly price-sensitive shopper, the Company expects that the presence of hard discounters
will continue to challenge the sale of the Company’s branded products.
The impact of Brexit
The impact of Brexit continues to cast a significant shadow over our operations, persistently introducing
uncertainty across regulatory frameworks, trade dynamics, and market conditions. This has triggered a
heightened demand for accurate and timely documentation from our suppliers, leading to increased
administrative efforts and subsequent rises in operational costs. Furthermore, the imposition of duty tariffs
on certain products has further compounded our cost pressures. It is important to acknowledge the potential
risks posed by Brexit-induced uncertainty, particularly in terms of price stability. The fluctuating market
conditions driven by Brexit can pose challenges in managing prices effectively, impacting our revenue
streams and profitability.
Tourism
Notwithstanding the recent increase in inbound tourism, the current international geo-political climate may
still affect inbound tourism. This, in turn may have a bearing on the demand for some of the Company’s
product categories, such as ice-creams, wines and spirits.
Further information on the Company’s financial risk management is set out in note 4.4 to the financial
statements.
Sustainability Reporting
In 2023 the Company established an Environmental, Social and Governance (ESG) Steering Committee
made up of Managing Director, Chief Financial Officer and Chief Operating Officer who with support from
sustainability experts and industry leaders are responsible for setting strategic direction and goals related
to environmental, social, and governance issues for the Company. They will also oversee the
implementation of ESG initiatives, monitor progress, and report to the board of directors on a regular basis.
The Audit Committee provides oversight and guidance to the ESG Steering Committee, ensuring that ESG
initiatives are aligned with the Company's overall goals and objectives. By working together, these
committees will help to ensure that the Company remains compliant with all relevant regulations and
standards, while also making best use of the positive impact of its ESG efforts.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
5
Directors’ report - continued
Outlook for 2024
Looking ahead to the current financial year, despite the prevailing uncertainties, we are projecting a
moderate increase in revenues, driven by strategic market positioning and continued innovation across our
product offering. The Company will continue working hard to enhance cost efficiencies through rigorous
cost-saving initiatives.
M&Z p.l.c. remains focused on driving operational efficiency, enhancing customer satisfaction, and
maximising shareholder value. The Directors expect to continue to pursue a policy of recommending a
strong dividend distribution.
Results and dividends
Results for the year are stated in the Statement of Comprehensive Income. The Directors are
recommending the payment of a final net dividend of €873,840 equivalent to €0.01986 per share. This is
over and above the interim net dividend of €396,000 equivalent to €0.009 per share paid to shareholders in
August 2023. The total dividend amount paid for the year will amount to €1,269,840 or €0.02886 per share
which represents a net dividend yield of 4.01% on the issue price of €0.72 when the shares were listed on
the Malta Stock Exchange in March of 2022.
The Directors have also confirmed the payment of a gross dividend of €45,000 on preference shares for
the year ended 31 December 2023.
Going Concern Basis
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.
Information pursuant to Capital Markets Rule 5.70.1
In terms of Capital Markets Rule 5.70.1 the Company states that on 1 March 2022, after following all
pertinent procedures, it entered into a lease agreement with Mr Thomas Agius Vadala’ (an executive
director of the Company) and Mr John Agius Vadala’ for a commercial store in the Central Business District,
Mriehel (the “Lease Agreement”). The Lease Agreement was entered into for a period of five years at a cost
of €24,000 (plus VAT) per annum and was deemed to be in the best commercial interests of the Company.
The Lease Agreement shall terminate on 28 February 2027 or at any earlier date where the Company gives
written notice of its intention to terminate said lease.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
6
Directors’ report - continued
Additional Information pursuant to Capital Markets Rule 5.64
Details of the company’s share capital are disclosed in note 6 to the financial statements. The Company’s
authorised share capital is €50,000,000, divided into 360,000,000 Ordinary Shares of €0.125 each and
5,000,000 Preference Shares of €1 each. The Company’s issued share capital is €7,000,0000 divided into
44,000,000 Ordinary Shares of €0.125 each and 1,500,000 Preference Shares of €1 each. All shares in the
Company rank pari passu in all respects (save as otherwise provided in the Memorandum and Articles of
Association). The rights attached to the Preference Shares are identical to those attached to the Ordinary
Shares, except for the following:
i.
Voting Rights: the holders of Preference Shares shall not have a vote at general meetings except
on a resolution convened for the purpose of: a) reducing the capital of the Company; or b) winding
up of the Company; or c) a proposal to be submitted to the meeting that directly affects their rights
and privileges; or d) a proposal affecting the dividend on Preference Shares when the dividend on
their Shares is in arrears for more than 6 months
ii.
Dividends: Preference Shares are entitled to a fixed cumulative preferred dividend distribution of
three percent (3%) of its nominal value per annum. The Shares are entitled to receive dividends
when, as and if declared by the Board out of the assets lawfully available for such a purpose. No
dividend shall be paid to the Ordinary Shares in any given year, unless the preferred dividend for
that year and any cumulative preferred dividend from previous years would have been paid to the
holders of the Preference Shares.
iii.
Rights upon liquidation, dissolution or winding-up: each Preference Share shall, on a winding up of
the Company, carry the right to receive the return of the paid-up nominal value of such share
together with any accrued but unpaid cumulative preferred dividends in priority to any amounts of
capital paid to the holders of other classes of shares, but shall not carry any other right to participate
in any surplus assets of the Company following the payment of such amount.
iv.
Redemption Rights Subject to the provisions of the applicable law of Malta, the Board shall have
the right to redeem the Preference Shares, at any time by giving not less than one (1) month notice
of the intention to redeem said shares. The Preference Shares may be redeemed by not later than
31 December 2030 and should any such shares not be redeemed within the same time frame, the
unredeemed shares shall thereafter not be redeemable. The amount payable on the redemption
shall be the nominal value of the Preference Shares being redeemed, together with any accrued
but unpaid cumulative preferred dividends.
The only registered shareholders holding 5% or more of the equity share capital as at 31 December 2023
are as follows:
Shareholder
Approx. % Shareholding (total share capital by
nominal value)
M&Z Group Limited (C 9208)
59%
Bank Of Valletta plc (C 2833) obo Wealth
Management Discretionary Customers
6%
Rizzo Farrugia & Co (stk) Ltd obo Clients
6%
Additional information in terms of Para 3(e)(ii) of the Sixth Schedule of the Companies Act
Information on the Company’s exposure to credit risk, liquidity risk and cash flow risk is contained in Note
4 of the Financial Statements for the financial year ended 31 December 2023.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
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Directors’ report - continued
Directors & Company Secretary
The Directors of the Company who held office during the year were:
Mr. Matthew A. Camilleri
Mr. Paul S. Camilleri
Mrs. Erika Pace Bonello
Mr. Thomas Agius Vadala
Ms. Greta Camilleri Avallone
Mr. Charles J. Farrugia
Dr. Emma Pullicino
Mr. Kevin Rapinett
Mrs. Frances Fenech
The Company’s Articles of Association do not require any Directors to retire.
Ganado Services Limited (C 10785) of 171, Old Bakery Street, Valletta VLT 1455, Malta acts as Company
Secretary.
Information on the rules governing the appointment and replacement of Directors is contained in Section A
of the Statement by the Directors on compliance by the Company with the Code of principles for Good
Corporate Governance, whilst information on the amendments of the Memorandum and Articles of
Association and the Powers of Directors is contained in Section E of the Statement by the Directors on
compliance by the Company with the Code of principles for Good Corporate Governance.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
8
Statement of Directors’ responsibilities for the financial statements
The Directors are required by the Maltese Companies Act (Cap. 386) 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:
• ensuring that the financial statements have been drawn up in accordance with International
Financial Reporting Standards (‘IFRSs’) as adopted by the EU;
• selecting and applying appropriate accounting policies;
• making accounting estimates that are reasonable in the circumstances; and
• 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 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, and that comply with the Maltese Companies Act
(Cap. 386). 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 M&Z p.l.c. for the year ended 31 December 2023 are included in the Annual
Report 2023 which is published on the Company’s website (www.mz.com.mt) and available in hard copy
printed form upon request. The Directors are responsible for the maintenance and integrity of the Annual
Report on the website in view of their responsibility for the controls over, and the security of, the website.
Access to information published on the Company’s website is available in other countries and jurisdictions,
where legislation governing the preparation and dissemination of financial statements may differ from
requirements or practice in Malta.
Statement of Responsibility pursuant to Capital Markets Rule 5.68
We confirm that to the best of our knowledge:
•
the financial statements, prepared in accordance with the applicable accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
•
The Directors’ report includes a fair review of the performance of the business and the position of the
Company, together with a description of the principal risks and uncertainties that it faces.
Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their re-
appointment will be proposed at the Annual General Meeting.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
9
Statement by the Directors on the Financial Statements and Other Information included in the
Annual Financial Report
The Directors declare that to the best of their knowledge, the financial statements included in the Annual
Financial Report are prepared in accordance with the requirements of International Financial Reporting
Standards as adopted by the EU and give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company and that this report includes a fair review of the development and performance
of the business and position of the Company, together with a description of the principal risks and
uncertainties that it faces.
Signed on behalf of the Board of Directors on 25 April 2024 by Charles J. Farrugia (Chairman) and Paul S.
Camilleri (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in
conjunction with the Annual Financial Report.
Registered Office:
MMGH Complex,
Industrial Estate,
Marsa MRS 3000
Malta
25 April 2024
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
10
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance
The Company acknowledges that the Code of Principles of Good Corporate Governance contained in
Appendix 5.1 to Chapter 5 of the Capital Markets Rules (the ‘Code’) does not prescribe mandatory rules
but recommends principles of good practice for the Board of Directors (each a “Director” and collectively
the “Board”) and the Company’s management to pursue in the best interests of the Company and its
shareholders. The Board believes that compliance with the Code and the governance arrangements
proposed thereby is not only expected by stakeholders but evidences the Boards’ and the Company’s
commitment to a high standard of good governance. The Company endorses the Code and is hereby
reporting its compliance with the provisions thereof.
The Board restates its full support of the Corporate Governance Code and undertakes to fully comply with
the Code to the extent that this is considered complementary to its size, nature and operations. As at the
date of this statement, the Board considers the Company to be in compliance with the Corporate
Governance Code, save for three exceptions as explained in Section B below. The Company is hereby
reporting on the extent of its adoption of and compliance with the Code for the period covering financial
year ended 31 December 2023.
A. Compliance with the Corporate Governance Code
Principle 1 – The Board
In terms of Article 116 of the Company’s Memorandum and Articles of Association (“M&As”) administration
and management of the Company shall be vested in the Board. The Board is responsible for devising the
Company’s values, standards and strategy, setting policies and the management of the Company as well
as reviewing internal control procedures, financial performance and the business risks facing the Company.
The Board is composed of individuals who are fit and proper to direct the business of the company with
honesty, competence and integrity and individuals who are diverse in their experience, knowledge, skills
and values, resulting in an optimum Board set-up. Moreover, the Directors have been made fully aware of
statutory and regulatory requirements connected to the business of the Company. The Directors attend the
majority of Board meetings and are provided with the relative information in advance of said meetings in
order to permit them to allocate sufficient time to the performance of their responsibilities.
The Board delegates specific responsibilities to the Audit Committee and the Executive Committee
(collectively the “Committees”), the former operates under its own formal terms of reference approved by
the Board. Further detail on said Committees and the responsibilities of the Board is contained in the below
subsections of this statement entitled “Principle 4” and “Principle 5”.
Appointment and Removal of Directors
The right to appoint a Director to the Board is reserved to the shareholders of the Company, save for where
an appointment is made to fill a vacancy on the Board, where the Director may be appointed by the Board
in terms of Article 130 – such Director would then hold office until the next annual general meeting. Any one
or more shareholder holding (individually or in the aggregate) shares carrying the voting rights equal to
11.11% of the total number of shares carrying the right to attend and vote at a general meeting, shall for
every 11.11% so held be entitled to appoint one Director in the Company. The procedures for the election
of Directors shall be established by the Company in general meeting from time to time. The removal of
Directors is governed by Article 133 of the Articles of Association.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
11
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance - continued
A. Compliance with the Corporate Governance Code - continued
Principle 2 – Chairman and Chief Executive
The clear division of responsibilities at the head of the Company between the running of the Board and the
executive responsibility for the running of the Company’s business is evident in the fact that the Company
has both a Chairman of the Board (Mr. Charles Farrugia) and a Managing Director (Mrs. Greta Camilleri
Avallone). This separation of roles serves to avoid concentration of authority and power in a single individual
and moreover differentiates the leadership on matters of the Board from leadership on matters relating to
the operations of the business of the Company.
The responsibilities of both the Chairman of the Board and the Managing Director are clearly established
and approved by the Board. The responsibilities of the Chairman of the Board reflect those set out in Code
Provision 2.2, while the Managing Director heads the Executive Committee which is responsible for
management decisions in relation to business of the Company.
Principle 3 – Composition of the Board
The Board believes that it fully complies with the requirements of Principle 3 and the relative Code
Provisions. The Company is managed by a Board of nine (9) Directors who are responsible for the overall
direction, management and strategy of the Company.
Pursuant to generally accepted practices, as well as the M&As, 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.
The Board is currently composed of the following persons:
• Mr Charles Farrugia - Independent Non-Executive Director & Chairman
• Mr Kevin J. Rapinett - Independent Non-Executive Director
• Mr Matthew Camilleri - Non-Executive Director
• Ms Greta Camilleri Avallone - Managing Director
• Mr Paul Camilleri - Executive Director
• Mr Thomas Agius Vadala’ - Executive Director
• Mrs Erika Pace Bonello - Executive Director
• Mrs Frances Fenech - Executive Director
• Dr Emma Pullicino - Executive Director
The Board comprises a mix of individuals with a diverse array of skills and experience which is appropriate
for the requirements of the business. The Board deems that in its current composition, currently comprising
a third of the Board being non-executive directors, has the required diversity of knowledge, judgement and
experience to complete its tasks.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
12
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance – continued
A. Compliance with the Corporate Governance Code – continued
Principle 3 – Composition of the Board – continued
Mr Charles Farrugia and Mr Kevin J. Rapinett are the Independent Non-Executive Directors which are
deemed to be independent in line with the requirements of Code Provision 3.2. Neither of the independent
non-executive directors:
a. are or have been employed in any capacity by the Company within the last three (3) years;
b. have or had a significant business relationship with the Company;
c. received or receives significant additional remuneration from the Company;
d. have close family ties with any of the executive members of the Board or senior management of
the Company;
e. has served on the board for more than twelve (12) consecutive years; or
f. is or has been within the last three (3) years an engagement partner or a member of the audit team
of the present or former external auditor of the Company.
For the purposes of Code Provision 3.4 each Non-Executive Director has declared in writing to the Board
that he undertakes:
a. to maintain in all circumstances his independence of analysis, decision and action;
b. not to seek or accept any unreasonable advantages that could be considered as compromising his
independence; and
c. to clearly express his opposition in the event that he finds that a decision of the board may harm
the company.
(a)
Principle 4 – The Responsibilities of the Board
The Board believes that it fully complies with the requirements of this Principle and the relative Code
Provisions. As required by Principle 4 of the Code the foremost responsibility of the Board is to establish
and maintain a system of accountability, monitoring, strategy formulation and policy development for the
Company. The Board Members apply high ethical standards and take into account the interests of all
relevant stakeholders in their discussions and decisions.
The Board also takes upon itself the responsibility to regularly review and evaluate corporate strategy, 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. Furthermore, the Board is responsible for the identification, assessment and management of the
business risks facing the Company, oversight of the Company’s internal control systems and its financial
performance, determination of the Company’s strategy and strategic aims.
In the performance of such functions the Board has delegated certain functions to the Committees as further
detailed below.
Executive Committee
In the later part of 2021 the Company set up the Executive Committee, made up of eight core employees
who are collectively responsible for decision-making on day-to-day issues whilst steering the Company
forward to ensure the maintenance, growth, evolution and prosperity of the business acting on behalf of and
in line with the long-term vision for the Company established by the Board. The Executive Committee is
composed of the Managing Director (who is also the link to the Board) of the Company, the Chief Finance
Officer, the Chief Operations Officer and senior representatives from the following segments within the
Company: finance, operations, cost control, human resources, marketing, brand management and sales
management.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
13
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance - continued
A. Compliance with the Corporate Governance Code - continued
Principle 4 – The Responsibilities of the Board - continued
Executive Committee - continued
The members of the Committee for the year under review are Ms Greta Camilleri Avallone, Mrs Erika Pace
Bonello, Mrs Frances Fenech, Dr Emma Pullicino, Mr Christian Giordimaina, Mr George Zammit, Ms
Natasha Saliba and Ms Charmaine Sciberras. During the financial year ended 31 December 2023 the
Executive Committee met 4 times.
Audit Committee
The Board has established an Audit Committee to assist it fulfilling its supervisory and monitoring
responsibilities, according to detailed terms of reference that reflect the requirements of the CMRs as well
as current good corporate governance best practices. The terms of reference of the Audit Committee
established by the Board set out its role and function, composition, the parameters of its remit, as well as
the basis for the processes that it is required to comply with.
The Audit Committee, which meets at least four times a year, is a sub-committee of the Board and is directly
responsible and accountable to the Board. During the year under review the Audit Committee met eight
times. The primary purpose of the Audit Committee is to assist the Directors in conducting their role
effectively so that the Company’s decision-making capability and the accuracy of its reporting and financial
results are maintained at a high level at all times.
The members of the Audit Committee for the year under review are: Mr Kevin J. Rapinett (Chairperson of
the Audit Committee) and Mr Charles Farrugia who are independent non-executive Directors (each of whom
satisfies the independence criteria set out in the CMRs) and Mr Matthew Camilleri as non-executive
Director. In accordance with the CMRs, the members of the Audit Committee that are designated as
competent in auditing and/ or accounting are Mr Kevin J. Rapinett and Mr Charles Farrugia.
Principle 5 – Board Meetings
The Board believes that it fully complies with the requirements of Principle 5 and the relative Code
Provisions. In line with the nature and demands of the Company’s business the Board endeavours to meet
on a regular basis and at said meetings the Directors are given ample opportunity to discuss and give their
opinion on the various issues placed on the respective Board agendas.
The Chairman is responsible for the preparation of the Board agenda, which seeks to strike a balance
between long-term strategic and shorter-term performance issues, and for the general conduct of the Board
meetings. Minutes of the meetings are taken by the Company secretary (the “Company Secretary”) which
are subsequently circulated to the Board, as soon as practicable after the meeting, for their review prior to
approval at the following Board Meeting.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
14
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance - continued
A. Compliance with the Corporate Governance Code - continued
Principle 5 – Board Meetings - continued
During the financial year ended 31 December 2023 the Board met eight times, attendance at these meetings
was as follows:
Board Member Meetings Attended
Mr Charles Farrugia 7
Mr Kevin J. Rapinett 8
Mr Matthew Camilleri 8
Ms Greta Camilleri Avallone 8
Mr Paul Camilleri 8
Mr Thomas Agius Vadala’ 8
Mrs Erika Pace Bonello 8
Dr Emma Pullicino 6
Mrs Frances Fenech 7
Principle 6 – Information and Professional Development
The Managing Director and the Board are closely involved in the recruitment and selection of any member
of senior management. The Board ensures that that all Directors are supplied with precise, timely and clear
information so that they can effectively contribute to the Board’s decisions.
The Board is also responsible to ensure that adequate training is provided to the Company’s Directors,
management and employees. The Board will organise and/or attend professional development sessions as
required to develop and update the Directors’ knowledge and capabilities.
The Directors have direct access to the advice and services of Ganado Services Limited (C10785), the
Company Secretary, who is responsible for advising the Board, through the Chairman, on all corporate
governance matters. Where and as necessary the Board is also advised by its legal advisors.
Principle 8A – Remuneration Committee/Policy
The Company’s Remuneration Policy was approved by the Board on 27 May 2022 and was put to a binding
shareholder vote at the 2022 Annual General Meeting of the Company. The policy determines the basis for
remuneration of all members of the Board. The principles of the Company’s Remuneration Policy for
Directors reflect a sound governance process, regulatory compliance as well as sustained and long-term
value creation for the Company’s shareholders. The Policy defines the principles and guidelines that apply
to both fixed and variable remuneration, including all bonuses and benefits, which can be awarded to
directors and, in the case of variable remuneration, indicates the relative proportion between fixed and
variable components. It is the Company’s overall intention that the implementation of this policy will
constitute an adequate measure to attract and retain suitable people, calculated to provide the Company
with the appropriate skills, technical knowledge experience and expertise both for the determination of
policies and strategies of the Company as well as the supervisory role of the Board.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
15
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance - continued
A. Compliance with the Corporate Governance Code - continued
Principles 9 & 10– Relations with Shareholders and with the Market, and Institutional Shareholders
The Company recognises the importance of maintaining effective communication with the market and its
stakeholders in order to ensure that all stakeholders can clearly understand the Company’s objectives.
Besides using the general meeting to communicate with its shareholders the Company intends to issue
periodical company announcements for such purpose of communicating with the market, preparation and
presentation of the Annual Financial Report and Financial Statements as well as through publications on
the Company’s website (https://mz.com.mt/
). The latter contains information on the Company and its
business as well as a dedicated “Investors’’ section.
The Chairman of the Board shall ensure that all Directors (including Mr. Kevin Rapinett as Chairman of the
Audit Committee) shall be present at the annual general meeting (“AGM”) to answer any questions which
may be posed thereat.
Principle 11 – Conflicts of Interest
The Directors acknowledge that, irrespective of who appointed them to the Board, their primary
responsibility is always to act in the best interest of the Company and its stakeholders and that they are
never to allow their personal interests to take precedence over those of the Company and its stakeholders.
The M&As of the Company require any conflicted Director to declare such a conflict and subsequently:
prohibit said Director from being counted in the quorum for the meeting at which such matter is to be
discussed or participating in the discussion concerning a matter in respect of which he has declared a direct
or indirect interest; and requiring the Director to withdraw from or, if applicable, not attend the Board meeting
at which such matter is discussed. Furthermore, such a conflicted Director is prohibited from voting on any
matter in which he has an interest. Any conflict of interest is to be accurately recorded in the Board minutes.
A Director having a continuing material interest that conflicts with the interests of the Company should take
effective steps to eliminate the grounds of conflict.
The Directors are aware of their obligations when dealing in securities of the Company. The Directors have
declared their beneficial interests in the capital of the Company as at 31 December 2023: Mr Paul Camilleri;
Mr Matthew Camilleri; Ms Greta Camilleri Avallone; Mr Thomas Agius Vadala’; Mrs Erika Pace Bonello, Dr
Emma Pullicino, Mrs Frances Fenech, Mr Charles Farrugia and Mr Kevin Rapinett.
Principle 12 – Corporate Social Responsibility
The Board ensures that the Company adheres to accepted principles of corporate social responsibility in all
practices of the Company. The Board believes that adherence to such principle benefits not only the
Company’s stakeholders (including its shareholders, employees and customers) but society at large. The
Company continuously works on adopting and using environmentally friendly technologies in the various
aspects and processes of its business, works ethically, considering human rights as well as the social,
economic and environmental impact of the business of the Company. The Company has initiated efforts
towards Environmental, Social, and Governance (ESG) reporting. Recognizing the importance of
sustainability and responsible business practices, we have commenced work on implementing frameworks
and processes to effectively capture and report our ESG performance.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
16
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance - continued
B. Non-Compliance with the Corporate Governance Code
Principle 7 – Evaluation of the Board’s Performance:
The Board does not consider it necessary to appoint a committee to carry out a performance evaluation of
its role, as the Board’s performance is evaluated on an ongoing basis by, and is subject to the constant
scrutiny of the Board itself (two of which are independent non-executive Directors), the Company’s
shareholders, the market and all of the rules and regulations which the Company is subject to, as a
company, with its securities listed on a regulated market. In March 2023, the Board carried out an evaluation
of its own performance together with that of the Committees and the Chairman. The Board delegated the
carrying out of the evaluation exercise to the Company Secretary, who circulated to the Board for its review
and completion a comprehensive Board Effectiveness Questionnaire. The results of said questionnaire
were subsequently analysed by the Company Secretary and then discussed by the Board. The review has
not resulted in any material changes in the Company’s internal organisation or in its governance structures.
Principle 8 – Committees, Partial Non-Compliance with Code Provisions 8.A.4.2, 8.A.4.7 and 8.A.5
The Board considers that the size and operations of the Company do not warrant the setting up of
remuneration and nomination committees. The Board believes that the size of the Company and the Board
itself does not warrant the setting up of a separate committee to establish the remuneration packages of
individual directors. The Company relies on the constant scrutiny of the Board itself, the Shareholders, the
market and the rules by which the Company is regulated as a listed company.
The Company does not believe it is necessary to establish a nomination committee as appointments to the
Board are determined by the shareholders of the Company in accordance with nomination and appointment
process set out in the M&A. The Company considers that the members of the Board possess the level of
skill, knowledge and experience expected in terms of the Corporate Governance Code. The Board shall
retain these matters under review over the coming years.
Code Provisions 8.A.4.2, 8.A.4.7 and 8.A.5 – These Code Provisions refer to disclosures being required to
be made in relation to “senior executives” (being any person reporting directly to the Board). The Company’s
Remuneration Policy does not cover senior executives and consequently no disclosures in this regard were
included in the Remuneration Statement given that the senior executive functions are effectively carried out
by the respective Executive Directors.
Principle 9 – Relations with Shareholders and with the Market – Code Provisions 9.3 and 9.4
Code Provision 9.3 – The M&As do not provide for a mechanism which would trigger arbitration proceedings
in the event of non-resolution of conflicts between minority shareholders and controlling shareholders.
Should any such conflict arise this will be handled by the Board in its meetings with the assistance of the
Company Secretary to liaise with the relevant shareholder(s).
Code Provision 9.4 – The Company does not have in place a formal procedure by which a minority
shareholder can present an issue to the Board. The Company however shall endeavour to have in place
an open line of communication between the minority shareholders and the Company.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
17
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance – continued
C. Internal Controls
Company Structure
The Board reviews and is ultimately responsible for the Company’s system of internal controls and for
reviewing its effectiveness. Such a system is designed to manage rather than eliminate risk to achieve
business objectives, and can provide only reasonable, and not absolute, assurance against normal
business risks or loss. The company operates through the Board and the Audit Committee, supported by
the Executive Committee. The Company has clear reporting lines and delegation of powers.
Control Environment
The Company is committed to the highest standards of business conduct and seeks to maintain these
standards across all its operations. Policies and procedures are in place for reporting and dealing with
improper activities. The Company has an appropriate organizational structure which enables it to plan,
execute, control and monitor business operations in order to reach the company’s objectives.
Risk identification
The Board of Directors, with the assistance of the Executive Committee, is responsible for the identification
and assessment of key risks applicable to the business. The risks are assessed on an ongoing basis, and
may be associated with a variety of internal and external sources.
Information and communication
The Board engages in regular strategic reviews on long-term financial projections, as well as other potential
business opportunities. The Audit Committee meets on a regular basis, and reviews the effectiveness of
the Company’s systems of internal financial controls. The Committee receives report from management
and the external auditors. Regular budgets are prepared and performance against these plans is actively
monitored and reported to the Board.
D. General Meetings
As set out in Article 74 of the M&As, all shareholders of the Company included in the Register of Members
of the Company on the Record Date relative to the AGM are entitled to receive notice of, participate in and
vote at the general meeting, whether in person or by proxy. Each shareholder is entitled to appoint a person
to act as their proxy holder to attend and vote at an AGM.
Voting at the AGM may take place either by a show of hands or by a poll, where such is demanded. Subject
to any rights or restrictions attaching to any class or classes of Shares, on a show of hands each shareholder
is entitled to one vote and in a poll each shareholder is entitled to one vote per share (carrying voting rights)
held. Furthermore, each shareholder has the right to ask questions pertinent and related to agenda items
and has the right to have such questions answered by the Directors or such person which may be delegated
this task.
Adequate notice of the AGM, of at least twenty-one (21) days, is to be provided to all shareholders in terms
of Article 69 of the M&A. The business of AGM includes the consideration of the Company’s Annual Report
and financial statements, the directors’ and auditors’ report for the previous financial year, the appointment
or election of Directors (if necessary), the appointment or re-appointment of auditors and the fixing of the
remuneration of Directors and Auditors. Any other business dealt with at the AGM is deemed to be “special
business”.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
18
Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the
Code of principles for Good Corporate Governance - continued
D. General Meetings - continued
The Chairman arranges for all directors to attend the AGM, where shareholders are provided with a
presentation on the performance and operations of the Company over the past financial year, in light of
prevailing market and economic conditions, and in light of any disruptive events, and will also provide an
overview of the future outlook of the Company.
E. Other Disclosures in terms of the Capital Markets Rules
Matters relating to the share capital of the Company are contained in the section entitled “Additional
Information pursuant to Capital Markets Rule 5.64” in the Directors’ Report.
Amendments to the M&A - In terms of the Companies Act (Cap. 386 of the Laws of Malta) the Company
may by extraordinary resolution at a general meeting amend its M&A.
Powers of Directors – the Powers of Directors are set out in Articles 143 – 151 of the of the Company’s
Articles. For the purpose of this section, “Equity Securities” means shares, another class of shares, or any
other securities or instruments (including but not limited to warrants or options in relation to shares), that
can be converted or exchanged into, or which carry the right to subscribe for, shares or another class of
shares. In terms of article 5 of the Articles the Board is authorised to exercise the power of the Company to
issue and allot Equity Securities up to the amount of the authorised but unissued share capital of the
Company from time to time (in respect of each class), and that the Board of Directors may offer, allot, grant,
or otherwise dispose of such Equity Securities to such persons on such terms and in such manner as they
think fit. This authorisation is valid until the date of the Company’s AGM to be held in 2023 unless previously
renewed, varied or revoked by the Company in general meeting. Accordingly, in terms of Article 88 of the
Companies Act, and Article 4 of the Articles, the Board is authorised to withdraw or restrict all pre-emption
rights of the Shareholders and will remain so authorised for as long as the Board remains so authorised to
issue Equity Securities.
Approved by the Board of Directors on 25 April 2024.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
17
Remuneration Report
A. Introduction
This remuneration report (the “Report”) is being prepared in satisfaction of the requirements of Code
Provisions 8.A.3 and 8.A.4 of the Code of Principles of Good Corporate Governance (the “Code”) and the
requirements of Chapter 12 of the Capital Markets Rules (the “CMRs”). During the period under review the
Board of Directors of the Company (the “Board”) was responsible for performing the functions of the
Remuneration Committee.
The main function of the Remuneration Committee is to devise appropriate remuneration packages for the
Board taking into consideration Board members’ required competencies, skills, effort and the scope of the
Board’s role including the number of meetings and the preparation required by Directors to attend and
actively contribute during meetings. In establishing said packages 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.
B. Remuneration Policy
The Company’s Remuneration Policy (the “Policy”) was approved by the Board on 27 May 2022 and
subsequently approved by shareholders at the 2022 Annual General Meeting held on 24 June 2022, the
Policy became effective from the date of said annual general meeting for a maximum period of 4 years.
The Policy is available for viewing on the Company’s website:
https://mz.com.mt/app/uploads/2024/04/remuneration-policy-2022.pdf
. Any material amendment to the
Policy shall be submitted to the Annual General Meeting for a shareholders vote before adoption thereof
and shall remain to be subject to confirmation every 4 years.
The Policy provides different criteria for the remuneration of Non-Executive Directors (“NEDs”) and
Executive Directors, based on the management and operational structure of the Company, the Board’s
view is that fixed remuneration is appropriate for the NEDs, whilst the Executive Directors are to be provided
a combination of both fixed and annual performance-based remuneration. For the year under review all
Directors’ remuneration was in conformity with the Policy. Due to the difference in nature of the
remuneration of Executive Directors and NEDs the reporting on Directors’ remuneration shall also be split
accordingly in this Report.
C. Directors Emoluments
On a general basis, the aggregate emoluments of all directors are from time to time determined by the
Company in general meeting. In terms of the Director service contracts, Directors are appointed from one
annual general meeting to the next, unless appointed or elected for a longer or shorter period and subject
to a maximum term of three (3) years, renewable for further terms of up to three (3) years at the relevant
annual general meeting at which their term expires. The relevant notice period for the termination of the
Directors Service Contract is that of three (3) months and this may be given by either party in writing for
whatever reason.
None of the Directors are offered any share-based remuneration nor paid any benefits linked to the
termination of their office and they do not benefit from any pension or early retirement schemes by virtue
of their office. As disclosed in the Policy, Directors may also benefit from non-cash benefits, such as, but
not limited to, health insurance and other insurance schemes as well as Company discounts on products
and services of the Company as the Board may from time to time determine.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
18
Remuneration Report - continued
In terms of the adopted Policy the total remuneration of the Directors is calculated on the basis of whether
a Director holds an executive or a non-executive position. The remuneration of NEDs is fixed on the basis
of their expected contribution to the Company and on the basis of their relevant experience, knowledge and
expertise, and additional remuneration is also provided to NEDs for their forming part of Board committees.
Also as set out in the Policy the remuneration of the Executive Directors comprises a fixed element and a
variable element for three (3) of the Directors who are responsible for certain brands which the Company
represents. This variable element fluctuates in accordance with the monthly performance of the Company
and of the respective brands falling within the remit of said Executive Director. Such a performance-based
element of remuneration is not applicable to the two (2) senior Executive Directors and the Director
responsible for human resources. The Company has found that its current (and past) remuneration
structure of linking variable remuneration to the attainment of certain goals and results contributes well to
the long-term performance of the company.
i. Non-Executive Directors
In terms of the Policy, NEDs are not entitled to variable remuneration and each of the NEDs receive the
same fixed remuneration for their respective duties as Directors, save for the following exceptions: the
Chairman of the Board receives a different fixed fee commensurate with the added responsibilities of the
role of the Chairman and NEDs who are also appointed as members of one of the Board committees shall
be entitled to receive additional compensation for the work performed on such committees. Compensation
due for performance of duties on a Board committee is of a fixed nature determined by the Board from time
to time within the limit of the aggregate emoluments approved by Shareholders in the general meeting.
Fixed
(€)
Variable (€)
Other* (€)
Aggregate
2023 (€)
Aggregate
2022 (€)
Charles J. Farrugia
16,000
N.A.
14,000
30,000
30,000
Kevin Rapinett
15,000
N.A.
9,000
24,000
24,000
Matthew Camilleri
15,000
N.A.
14,000
29,000
29,000
* remuneration for forming part of a Board committee.
ii. Executive Directors
The Executive Directors of the Company are the Managing Director (Greta Camilleri Avallone) and all other
Directors of the Company who are actively involved in the day-to-day management of the Company. The
role of the Executive Directors on the Board is considered as direct a consequence of their executive office
in the Company. Accordingly in order that remuneration reflect such executive positions within the Company
taking into account their competence, technical knowledge, experience and expertise in discharging their
executive functions within the Company, said Executive Directors are entitled to a combination of fixed and
variable remuneration.
The Executive Directors receive a fixed fee as remuneration for their respective duties as Directors in
addition to a fixed monthly salary as remuneration for their employment as company executives. As
indicated in C above the remuneration package of certain Executive Directors also includes a variable
component (as part of their monthly salary) in the form of a monthly performance bonus, which is linked to
the monthly performance of the Company and of the respective brands falling within the remit of the
respective Executive Director.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
19
Remuneration Report - continued
Fixed (€)
Variable (€)
Aggregate
2023 (€)
Aggregate
2022 (€)
Greta Camilleri Avallone
78,276
27,542
105,818
105,372
Paul Camilleri
108,846
-
108,846
120,391
Erika Pace Bonello
80,776
-
80,776
76,761
Emma Pullicino
56,594
21,212
77,806
75,854
Frances Fenech
63,276
22,907
86,183
84,299
Thomas Agius Vadala
81,433
-
81,433
83,391
D. Other information on remuneration required by Appendix 12.1 of the CMRs
As required by bullet (b) of Appendix 12.1 of the CMRs, the below table presents the annual change of
remuneration, of the performance of the company, and of average remuneration on a full-time equivalent
basis of employees of the company other than Directors over the last couple of financial years.
2023
2022
2021
Directors Emoluments
(0.83%)
16.51%
48.11%
Average Employee Remuneration
(0.97%)
7.73%
10.56%
Performance of the Company – EBITDA
13.27%
(4.38%)
14.16%
E. Contents of the Remuneration Report
As required by the CMRs the contents of the Report have been duly checked by the Company’s external
auditors to ensure compliance with the requirements of Appendix 12.1 of Chapter 12 of the CMRs.
Approved by the Board of Directors on 25 April 2024.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
20
Statement of financial position
As at 31 December
2023
2022
Notes
€
€
ASSETS
Non-current assets
Intangible assets
3.3
1,297,129
1,519,256
Property, plant and equipment
3.4
923,873
1,178,882
Right-of-use assets
3.4(b)(b)
1,535,668
1,815,008
Deferred tax assets
5.5(c)
525,975
220,518
Equity instruments at fair value through
other comprehensive income
4.1.1
50
50
Total non-current assets
4,282,695
4,733,714
Current assets
Inventories
3.2
5,415,965
4,688,328
Trade and other receivables
4.1.2
8,935,233
8,564,980
Current tax asset
-
80,217
Cash and cash equivalents
4.1.3
806,670
953,838
Total current assets
15,157,868
14,287,363
Total assets
19,440,563
19,021,077
EQUITY AND LIABILITIES
Equity
Ordinary share capital
6.1
5,500,000
5,500,000
Preference share capital
6.1
1,500,000
1,500,000
Retained earnings
2,650,889
2,168,934
Total equity
9,650,889
9,168,934
LIABILITIES
Non-current liabilities
Lease liabilities
4.2.1
1,367,829
1,663,277
Total non-current liabilities
1,367,829
1,663,277
Current liabilities
Borrowings
4.2.2
4,635,401
4,643,521
Trade and other payables
4.2.3
3,167,208
3,262,356
Current tax liabilities
324,668
-
Lease liabilities
4.2.1
294,568
282,989
Total current liabilities
8,421,845
8,188,866
Total liabilities
9,789,674
9,852,143
Total equity and liabilities
19,440,563
19,021,077
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
21
Statement of comprehensive income
Year ended 31 December
2023
2022
Notes
€
€
Revenue
2.1
31,317,687
28,399,658
Cost of sales
2.2
(24,721,156)
(22,625,577)
Gross profit
6,596,531
5,774,081
Administrative expenses
2.2
(3,736,488)
(3,316,672)
Other operating income
5.3
428
5,175
Operating profit
2,860,471
2,462,584
Finance costs
5.4
(360,067)
(257,061)
Profit before tax
2,500,404
2,205,523
Tax expense
5.5
(735,112)
(809,800)
Profit for the year – total comprehensive income
1,765,292
1,395,723
Earnings per share for the year attributable to
ordinary shareholders
6.4
0.04
0.03
The accompanying notes in pages 24 to 52 are an integral part of these financial statements.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
22
Statement of changes in equity
Ordinary share
capital
Preference
share
capital
Retained
earnings
Total
Note
€
€
€
€
Balance at 1 January 2022
5,500,000
1,500,000
1,214,211
8,214,211
Profit for the year -
total comprehensive income
-
-
1,395,723
1,395,723
Transactions with owners:
Dividends
6.3
-
-
(441,000)
(441,000)
Total transactions with owners
-
-
(441,000)
(441,000)
Balance at 31 December 2022
5,500,000
1,500,000
2,168,934
9,168,934
Balance at 1 January 2023
5,500,000
1,500,000
2,168,934
9,168,934
Profit for the year -
Total comprehensive income
-
-
1,765,292
1,765,292
Transactions with owners:
Dividends
6.3
-
-
(1,283,337)
(1,283,337)
Total transactions with owners
-
-
(1,283,337)
(1,283,337)
Balance at 31 December 2023
5,500,000
1,500,000
2,650,889
9,650,889
The accompanying notes in pages 24 to 52 are an integral part of these financial statements.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
23
Statement of cash flows
Year ended 31 December
Notes
2023
2022
€
€
Cash flows from operating activities
Cash generated from operations
7
2,741,191
1,794,253
Interest paid
5.4
(285,728)
(173,534)
Income tax paid
(635,684)
(1,124,897)
Net cash generated from operating activities
1,819,779
495,822
Cash flows from investing activities
Purchases of property, plant and equipment
3.4
(333,926)
(361,670)
Proceeds from disposal of property, plant and
equipment
3,149
6,249
Acquisition of representation rights
3.3
-
(1,493,000)
Net cash used in investing activities
(330,777)
(1,848,421)
Cash flows from financing activities
Principal and interest payments of lease liabilities
4.2.1
(358,211)
(341,552)
Movement in factoring facility
4.2.2
(365,033)
1,926,108
Dividends paid
6.3
(1,269,839)
(396,000)
Net cash (used in)/generated from financing activities
(1,993,083)
1,188,556
Net movement in cash and cash equivalents
(504,081)
(164,043)
Cash and cash equivalents at beginning of year
(1,763,575)
(1,599,532)
Cash and cash equivalents at end of year
4.1.3
(2,267,656)
(1,763,575)
The accompanying notes in pages 24 to 52 are an integral part of these financial statements.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
24
Notes to the financial statements
1. General information
1.1 Information about the company
M&Z p.l.c. is a public limited liability company and is incorporated in Malta.
The immediate and ultimate parent company of M&Z p.l.c. is M&Z Group Limited, a company
registered in Malta, with its registered address at MMGH Complex, Industrial Estate, Marsa MRS
3000.
1.2 Basis of preparation
(a) Compliance with IFRS and with the Maltese Companies Act
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 (Cap.
386).
(b) Standards, interpretations and amendments to published standards effective in 2023
In 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 have a
material effect on the Company’s recognition, measurement and presentation of items within these
financial statements. Disclosures have been impacted as described below.
The IASB amended IAS 1 ‘Presentation of Financial Statements’ to require entities to disclose their
material rather than their significant accounting policies. The amendments define what is ‘material
accounting policy information’ (being information that, when considered together with other
information included in an entity’s financial statements, can reasonably be expected to influence
decisions that the primary users of general purpose financial statements make on the basis of those
financial statements) and explain how to identify when accounting policy information is material. They
further clarify that immaterial accounting policy information does not need to be disclosed. If it is
disclosed, it should not obscure material accounting information.
To support this amendment, the IASB also amended IFRS Practice Statement 2 ‘Making Materiality
Judgements’ to provide guidance on how to apply the concept of materiality to accounting policy
disclosures.
Consequently, with effect from these financial statements, the Company is disclosing accounting
policy information that is material.
(c) 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 and the directors are of the
opinion that there are no requirements that will have a possible significant impact on the Company’s
financial statements in the period of initial application.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
25
1. General information - continued
(d) Use of estimates and judgements
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.
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.
In the opinion of the directors, the other accounting estimates and judgements made in the course
of preparing these financial statements, except as disclosed in notes 4.1.2 and 4.1.5, are not difficult,
subjective or complex to a degree which would warrant their description as critical in terms of the
requirements of IAS 1.
(e) Cost convention and presentation currency
These financial statements have been prepared under the historical cost convention as modified by
the fair valuation of equity instruments at fair value through other comprehensive income and
derivative financial instruments that are measured at fair value through profit or loss.
These financial statements are presented in euro (“€”), which is also the Company’s functional
currency and the currency in which its share capital is denominated. All figures are rounded to the
nearest €1.
(f) Presentation of notes to the financial statements
With effect from these financial statements, the notes to the financial statements are grouped in a
manner that gives prominence to the areas of the Company’s activities that are most relevant.
2. Revenue and segmental information
2.1 Revenue from contracts with customers
Revenue comprises all revenues from the Company’s ordinary business activities, being the
importation, marketing and distribution of fast-moving consumer goods in the food sector that include
ambient, ambient, chilled, frozen, fresh, ice-cream, baby and kids, home and personal care, wines
and spirits, pet care and confectionary segments.
Management has determined that the Company does not have any material performance obligations
other than the promise to transfer control over these products to its customers. Revenue from the
sale of such products is recognised when the Company transfers control over those products to its
customers; management has determined that control is transferred at a single point in time, which is
when the Company has delivered products to the customer and there is no unfulfilled obligation that
could affect the customer’s acceptance of the products. Delivery does not occur until the risks of
obsolescence and loss have been transferred to the customer, and the customer has accepted the
products.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
26
2. Revenue and segmental information - continued
2.1 Revenue from contracts with customers - continued
All the Company's revenue was derived from the sale of food products together with the provision of
other ancillary services, in the local market.
2023
2022
€
€
Sale of goods
31,317,687
28,399,658
2.2 Expenses by nature
2023
2022
€
€
Purchases (including movement in inventory)
18,986,353
17,041,087
Selling and distribution expenses
2,373,981
2,429,288
Employee benefit expense (note 5.1)
4,766,854
4,768,776
Amortisation of intangible assets (note 3.3)
129,800
129,798
Depreciation on property, plant and equipment (note 3.4)
586,213
537,338
Depreciation on right-of-use assets (note 3.4(b)(b))
279,340
274,513
Professional fees
109,379
123,543
Repairs and maintenance
85,961
111,554
Costs associated with short term leases
-
10,500
Insurance and licenses
182,430
184,081
Utilities
114,986
131,735
Impairment losses on financial and contract assets
792,600
139,300
Other expenses
49,747
60,736
Total cost of sales and administrative expenses
28,457,644
25,942,249
2.3 Segment reporting
The Company determines and presents operating segments based on the information that is
provided internally to the board of directors, which is the Company’s chief operating decision maker
in accordance with the requirements of IFRS 8 ‘Operating Segments’.
An operating segment is a component of the Company that engages in business activities from which
it may earn revenues and incur expenses, including revenues and expenses that relate to
transactions with any of the Company’s other components, and for which discrete financial
information is available. An operating segment’s operating results are reviewed regularly by the board
of directors to make decisions about resources to be allocated to the segment and to assess its
performance executing the function of the chief operating decision maker.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
27
2. Revenue and segmental information - continued
2.3 Segment reporting - continued
The directors assess the operations of the Company as one reporting segment on the basis that the
Company has one line of activity based in Malta. Accordingly, no segment disclosures are being
presented.
3. Inventory and non-current assets
3.1 Impairment of non-financial assets
Intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other 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 other than goodwill that suffered impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
3.2 Inventories
Inventories are stated at the lower of cost and net realisable value, where cost is determined using
the first-in, first-out method.
2023
2022
€
€
Finished goods and goods for resale
5,415,965
4,688,328
Inventory write-downs during the year amounted to €308,767 (2022: €181,247).
3.3 Intangible assets
(a) Measurement of different classes of intangible assets
Goodwill
Goodwill represents the excess of the consideration transferred over the fair value of the identifiable
net assets acquired. Goodwill is tested annually for impairment and carried at cost less accumulated
impairment losses.
Brand representations
Brand representations are carried at cost less accumulated amortisation. They are amortised using
a straight line method over their estimated useful life of 10 years.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
28
3. Inventory and non-current assets
3.3 Intangible assets - continued
Other
Other intangible assets are carried at cost less accumulated amortisation. Other intangible assets
are amortised using the straight-line method over their estimated useful life of 3 years.
(b) Analysis of balances
Brand
representations
Goodwill
Others
Total
€
€
€
€
At 1 January 2022
Cost
-
156,054
700,000
856,054
Accumulated amortisation
-
-
(700,000)
(700,000)
Net book amount
-
156,054
-
156,054
Year ended 31 December 2022
Opening net book amount
-
156,054
-
156,054
Acquisitions through business
combinations (note 3.3(c))
1,298,000
195,000
-
1,493,000
Amortisation
(129,798)
-
-
(129,798)
Closing net book amount
1,168,202
351,054
-
1,519,256
At 31 December 2022
Cost
1,298,000
351,054
700,000
2,349,054
Accumulated amortisation
(129,798)
-
(700,000)
(829,798)
Net book amount
1,168,202
351,054
-
1,519,256
Year ended 31 December 2023
Opening net book amount
1,168,202
351,054
-
1,519,256
Impairment
-
(92,327)
-
(92,327)
Amortisation
(129,800)
-
-
(129,800)
Closing net book amount
1,038,042
258,727
-
1,297,129
At 31 December 2023
Cost
1,298,000
258,727
700,000
2,256,727
Accumulated amortization
(259,598)
-
(700,000)
(959,598)
Net book amount
1,038,402
258,727
-
1,297,129
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
29
3. Inventory and non-current assets – continued
3.3 Intangible assets - continued
(c) Acquisition of intangible assets through business combinations
On 22 December 2021, the Company concluded negotiations for the acquisition of the representation
rights of various brands and related assets from Red October Company Limited. Through this
transaction, the Company has expanded its range of product categories through the acquisition of a
number of wine, confectionery, spirits and tobacco brands. The final contract was signed on 22
December 2021, with an effective date of 15 January 2022 and the representation rights relating to
the portfolio of brands held by Red October Company Limited was consolidated within the Company’s
portfolio as from the first quarter of 2022. This acquisition has aided the Company to increase its
presence in the market and strengthen the Company’s HORECA offering. The purchase
consideration for this acquisition was initially €1,493,000 and was partly funded by bank debt
amounting to €1.0 million, drawn down in 2022, with the remaining consideration amounting to €0.5
million funded through accumulated reserves. During January 2023 (within the measurement period
allowed by IFRS3), new information obtained by the company resulted in an adjustments of €92,327
to goodwill.
(d) Impairment tests for goodwill
The goodwill relates to the Company’s acquisition of brand representations from third parties.
Management continued to conduct impairment assessment of the Company’s single cash generating
unit (CGU). Management has determined that the value of goodwill is not considered to be significant
when taking into consideration the Company’s profits and that no reasonably possible changes in
the Company’s earnings would cause the CGU’s carrying amount to exceed its recoverable amount.
Based on this, it is not considered necessary to perform a detailed goodwill impairment assessment.
3.4 Property, plant and equipment
(a) Measurement of different classes of property, plant and equipment
All property, plant and equipment is initially recorded at cost, and subsequently stated at historical
cost less depreciation and impairment losses.
Depreciation is calculated using the straight-line method to allocate their cost to their residual values
over their estimated useful lives, as follows:
%
IT software and equipment
25
Freezers and equipment
20 - 33
Fixtures and fittings
10
Office furniture
6 - 10
Motor vehicles
20
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
30
3. Inventory and non-current assets – continued
3.4 Property, plant and equipment - continued
(b) Analysis of balances
Fixtures,
IT software
and
equipment
fittings and
office
furniture
Freezers
and
equipment
Motor
vehicles
Total
€
€
€
€
€
At 1 January 2022
Cost
361,011
288,597
2,322,148
2,133,768
5,105,524
Accumulated depreciation
(224,778)
(81,680)
(1,733,576)
(1,709,865)
(3,749,899)
Net book amount
136,233
206,917
588,572
423,903
1,355,625
Year ended 31 December 2022
Opening net book amount
136,233
206,917
588,572
423,903
1,355,625
Additions
81,497
19,362
149,700
111,111
361,670
Disposals
-
-
(1,932)
(1,791)
(3,723)
Depreciation charge
(86,971)
(28,937)
(271,499)
(149,931)
(537,338)
Depreciation released on disposal
-
-
1,932
716
2,648
Closing net book amount
130,759 197,342 466,773 384,008
1,178,882
At 31 December 2022
Cost
442,508
307,959
2,469,916
2,243,088
5,463,471
Accumulated depreciation
(311,749)
(110,617)
(2,003,143)
(1,859,080)
(4,284,589)
Net book amount
130,759
197,342
466,773
384,008
1,178,882
Year ended 31 December 2023
Opening net book amount
130,759
197,342
466,773
384,008
1,178,882
Additions
27,764
-
37,216
268,946
333,926
Disposals
-
-
-
(6,805)
(6,805)
Depreciation charge
(75,588)
(28,739)
(248,313)
(233,573)
(586,213)
Depreciation released on disposal
-
-
-
4,083
4,083
Closing net book amount
82,935
168,603
255,676
416,659
923,873
At 31 December 2023
Cost
470,272
307,959
2,507,132
2,505,229
5,790,592
Accumulated depreciation
(387,337)
(139,356)
(2,251,456)
(2,088,570)
(4,866,719)
Net book amount
82,935
168,603
255,676
416,659
923,873
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
31
3. Inventory and non-current assets – continued
3.5 Lease arrangements
(a) The Company’s leasing activities
As a lessee, the Company recognises a right-of-use asset and a lease liability for all lease
arrangements other than as described below.
The Company leases three properties – an office space and warehouses. Rental contracts are
typically made for fixed periods of up to 12 years and between 5 to 8 years, respectively. Lease terms
are negotiated on an individual basis and contain a wide range of different terms and conditions.
Contracts may contain both lease and non-lease components. The Company allocates the
consideration in the contract to the lease and non-lease components based on their relative stand-
alone prices. However, for leases of real estate for which the Company is a lessee, it has elected not
to separate lease and non-lease components and instead accounts for these as a single lease
component. The lease agreements do not impose any covenants, and leased assets may not be
used as security for borrowing purposes.
The Company’s property lease arrangements include extension and termination options. These
terms are used to maximise operational flexibility in respect of managing contracts. The majority of
extension and termination options held are exercisable only by the Company and not by the
respective lessor. In determining the lease term, management considers all facts and circumstances
that create an economic incentive to exercise an extension option, or not exercise a termination
option. Extension options (or periods after termination options) are only included in the lease term if
the lease is reasonably certain to be extended (or not terminated). Lease payments to be made
under reasonably certain extension options are also included in the initial measurement of the lease
liability.
For leases of properties, management considers the following factors when carrying out this
assessment of the lease term:
•
If there are significant penalties to terminate (or not extend), the Company is typically
reasonably certain to extend (or not terminate);
•
If any leasehold improvements are expected to have a significant remaining value, the
Company is typically reasonably certain to extend (or not terminate);
•
Otherwise, the Company considers other factors including historical lease durations and the
costs and business disruption required to replace the leased asset.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Company
becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only
revised if a significant event or a significant change in circumstances occurs, which affects this
assessment, and that is within the Company’s control.
As an exception to the general rule of recognition of lease arrangements, payments associated with
short-term leases of equipment and vehicles and all leases of low-value assets are recognised by
the Company 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.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
32
3. Inventory and non-current assets – continued
3.5 Lease arrangements - continued
(b) Amounts recognised in the statement of financial position, statement of profit and loss and
statement of cash flows
The statement of financial position reflects the following balances relating to leases:
Right-of-use assets
Property
leases
Total
€
€
Year ended 31 December 2022
Opening net book amount
2,089,521
2,089,521
Depreciation charge
(274,513)
(274,513)
Closing net book amount
1,815,008
1,815,008
Year ended 31 December 2023
Opening net book amount
1,815,008
1,815,008
Depreciation charge
(279,340)
(279,340)
Closing net book amount
1,535,668
1,535,668
Lease liabilities
2023
2022
€
€
Non-current
1,367,829
1,663,277
Current
294,568
282,989
1,662,397
1,946,266
The incremental borrowing rate used for the discounting of the lease payments is 4% (2022: 4%).
The statement of profit or loss shows the following amounts relating to leases:
2023
2022
€
€
Depreciation charge on right-of-use assets
279,340
274,513
Interest expense (included in finance cost) (Note 5.4)
74,339
83,526
Expense relating to short term leases (Note 2.2)
-
10,500
353,679
368,539
The total cash outflows for leases in 2023 was €358,211 (2022: €341,552). The contractual
undiscounted cash flows attributable to lease liabilities as at 31 December are analysed in Note 4.2.5.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
33
4. Financial assets and liabilities
The Company’s financial assets comprise trade and other receivables, cash and cash equivalents,
and an investment in an equity instrument, and its financial liabilities comprise lease liabilities,
borrowings, and trade and other payables.
The Company also uses derivative instruments to manage foreign exchange risk exposures related
to GBP. Derivatives are carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position when there is a legally enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
4.1 Financial assets
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at
FVPL are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments (comprising trade and other receivables and cash and
cash equivalents) depends on the Company’s business model for managing the asset and the cash
flow characteristics of the asset. The Company classifies all its debt instruments at amortised cost
as they are held for collection of contractual cash flows and those cash flows represent solely
payments of principal and interest.
Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as
separate line item in the statement of profit or loss.
Equity instruments
The Company has elected to subsequently measure its equity investment at fair value through other
comprehensive income (OCI).
4.1.1 Equity instruments at fair value through other comprehensive income
2023
2022
€
€
Year ended 31 December
Opening and closing cost and net book amount
50
50
Equity instruments at FVOCI relate to an investment in Greenpak shares which are not listed and the
directors consider this investment to be insignificant and that additional disclosures are not deemed
necessary.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
34
4. Financial assets and liabilities - continued
4.1.2 Trade and other receivables
Trade receivables comprise amounts due from customers for merchandise sold or services
performed in the ordinary course of business. The Company presents these assets as current as
collection is expected in one year or less.
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, i.e. expected credit
loss allowances. The carrying amount of the asset is reduced through the use of an allowance
account, and the amount of the loss is recognised in profit or loss. 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. Impairment of financial assets is
described in Note 4.1.5.
2023
2022
€
€
Current
Trade receivables – gross
7,956,813
6,965,809
Less: loss allowance
(839,748)
(445,075)
Trade receivables – net
7,117,065
6,520,734
Other receivables
1,144,105
1,369,402
Indirect taxation
47,404
24,373
Advance payments to suppliers
343,089
426,710
Prepayments and contract assets
283,570
223,761
Total trade and other receivables
8,935,233
8,564,980
The Company derecognises financial assets when the rights to receive cash flows from the financial
assets have expired or have been transferred and the Company has also transferred substantially
all the risks and rewards of ownership.
The carrying amounts of trade receivables includes receivables which are subject to a factoring
arrangement, under which M&Z p.l.c has transferred the relevant receivables to the factor in
exchange for cash. However, as the Company has retained the late payment and credit risk, it
therefore continues to recognise the transferred assets in their entirety in its statement of financial
position; the amount repayable under the factoring agreement is presented as borrowings (Note
4.2.2). As the Company continues to recognise these receivables, management has determined that
the hold to collect business model remains appropriate for these assets and hence continues
measuring them at amortised cost. The Company presents the cash inflows received from the bank
as financing cash inflows and the subsequent payments by the debtors as operating cashflows.
Other receivables include marketing contributions receivable, advances and loans to employees and
third parties amounting to €1,144,105 (2022: €1,369,402). Other receivables are net of provisions for
impairment amounting to €398,222 (2022: NIL).
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
35
4. Financial assets and liabilities - continued
4.1.2 Trade and other receivables - continued
The net carrying amount of trade receivables is considered a reasonable approximation of fair value.
In determining the recoverability of trade receivables the Company considers any change in the credit
quality of each trade receivable from the date credit was initially granted up to the reporting date.
The Company’s exposure to credit and currency risks relating to trade and other receivables is
disclosed in Notes 4.1.5 and 4.4.
4.1.3 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 include cash in hand and deposits held at call
with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in
the statement of financial position.
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:
2023
2022
€
€
Cash at bank and in hand
806,670
953,838
Bank overdraft (Note 4.2.2)
(3,074,326)
(2,717,413)
(2,267,656)
(1,763,575)
4.1.4 Derivative financial assets
Information about derivative financial assets is disclosed in note 4.4.2(a)
4.1.5 Credit risk
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as
well as credit exposures to outstanding receivables. The maximum exposure to credit risk at the
reporting date was:
2023
2022
€
€
Trade and other receivables (note 4.1.2)
8,651,663
7,915,009
Cash and cash equivalents (note 4.1.3)
806,670
953,838
9,458,333
8,868,847
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
36
4. Financial assets and liabilities - continued
4.1.5 Credit risk - continued
Recognition and measurement of loss allowances
The Company assesses on a forward-looking basis the expected credit losses (ECLs) associated
with the above assets. The impairment methodology applied depends on whether there has been a
significant increase in credit risk.
The Company applies IFRS 9’s simplified approach to measuring expected credit losses for all trade
receivables. Under this approach, the Company recognises an allowance for lifetime ECLs. It applies
IFRS 9’s general approach to measuring expected credit losses for other financial assets, resulting
in a loss allowance for the 12-month ECLs unless the credit risk on a financial asset has increased
significantly since initial recognition; in this case, the Company recognises a loss allowance that
represents the lifetime ECLs.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Company considers reasonable and supportable
information that is relevant and available without undue cost or effort. The Company assumes that
the credit risk on a financial asset has increased significantly if it is more than 90 days past due, and
it considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations
to the Company in full, without recourse by the Company to actions such as realising security (if any
is held); or the financial asset is more than 180 days past due.
Trade and other receivables
The credit quality of customers is assessed, taking into account financial position, past experience
and other factors.
The Company assesses the credit quality of its trade customers, the majority of which are unrated,
taking into account financial position, past experience and other factors. The Company’s exposure
to credit risk is influenced mainly by the individual characteristics of each customer. It has policies in
place to ensure that sales of services are affected to customers with an appropriate credit history.
Standard credit terms are in place for individual clients, however, wherever possible, new customers
are analysed individually for creditworthiness before the Company’s standard payment and service
delivery terms and conditions are offered. The creditworthiness analysis for new customers includes
a review through external creditworthiness databases when available. The Company monitors the
performance of its trade and other receivables on a regular basis to identify incurred collection losses,
which are inherent in the Company’s debtors, taking into account historical experience in collection
of accounts receivable.
The Company manages credit limits and exposures actively in a practicable manner such that past
due amounts receivable from customers are within controlled parameters.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
37
4. Financial assets and liabilities - continued
4.1.5 Credit risk - continued
Impairment of trade receivables
To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of time before the
reporting date and the corresponding historical credit losses experienced within this period. The
historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables. Based on
management’s assessment of current economic conditions an uplift of up to 10% has been applied
to the historical credit losses of certain debtor portfolios. On that basis, the loss allowance was
determined to be as follows:
Current
and up to
30 days
past due
31 to 60
days
past due
61 to 90
days past
due
91 to 180
days past
due
+ 180
days past
due
Total
€
€
€
€
€
€
As at 31 December 2023
Expected loss rate
(weighted average)
7%
10%
13%
36%
100%
Gross carrying amount
6,863,728
447,454
239,650
237,096
168,885
7,956,813
Loss allowance – provision
(509,800)
(43,359)
(31,696)
(86,008)
(168,885)
(839,748)
As at 31 December 2022
Expected loss rate
(weighted average)
2%
8%
30%
100%*
-
Gross carrying amount
7,388,618
219,212
93,657
262,705
-
7,964,192
Loss allowance – provision
(135,776)
(18,562)
(28,032)
(262,705)
-
(445,075)
*2022 balance amounting to EUR262,705 included the brackets 91 – 180 and 180+ days past due
Impairment of other receivables
The Company applies the general model to measuring expected credit losses for all other
receivables. To measure the expected credit losses, loans and other receivables have been grouped
based on shared credit risk characteristics and the days past due. The Company assesses the credit
quality of these loans considering financial position, repayment patterns, past experience and other
factors including history of default from the credit terms issued.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
38
4. Financial assets and liabilities - continued
4.1.5 Credit risk - continued
On that basis, the loss allowance for the Company as at 31 December was determined by applying:
• An expected loss rate averaging 3% (2022: 0%) on all other receivables classified under
stage 1 (other receivables where management has no concern of recoverability) resulting in
a loss allowance of €40,936 (2022: NIL).
• An expected loss rate averaging 50% (2022: 0%) on all other receivables classified under
stage 2 (other receivables where management has some concern of recoverability) resulting
in a loss allowance of €16,241 (2022: NIL).
• An expected loss rate of 100% (2022: 0%) on all outstanding other receivables classified
under stage 3 (other receivables where management has serious concerns about
recoverability) resulting in a loss allowance of €341,045 (2022: NIL).
Credit loss allowances include specific provisions against credit impaired individual exposures with
the amount of the provisions being equivalent to the balances attributable to credit impaired
receivables. The closing loss allowances for trade receivables and contract assets as at 31
December reconcile to the opening loss allowances as follows:
2023
2022
€
€
Trade receivables
Balance at 1 January
445,075
305,775
Increase in loss allowance recognised in profit or loss
during the year
394,673
139,300
Balance at 31 December
839,748
445,075
Other receivables
Balance at 1 January
-
-
Increase in loss allowance recognised in profit or loss
during the year
398,222
-
Balance at 31 December
398,222
-
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to
engage in a repayment plan with the Company.
Impairment losses on trade receivables are presented as net impairment losses on financial and
contract assets within administrative expenses. Subsequent recoveries of amounts previously written
off are credited against the same line item.
Cash and cash equivalents
The credit risk for cash and cash equivalents is considered negligible since the counterparties are
reputable banks with high quality external credit ratings. While cash and cash equivalents are also
subject to the impairment requirements of IFRS 9, the identified impairment loss was insignificant.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
39
4. Financial assets and liabilities - continued
4.2 Financial liabilities
All financial liabilities other than derivatives are subsequently measured at amortised cost.
4.2.1 Lease liabilities
Information about lease liabilities is disclosed in note 3.4(b)(b).
4.2.2 Borrowings
2023
2022
€
€
Current
Bank overdraft
3,074,326
2,717,413
Factoring facility (Note 4.1.2)
1,561,075
1,926,108
4,635,401
4,643,521
The Company’s borrowings are subject to floating rates of interest.
The Company’s banking facilities as at 31 December amounted to €9,750,000 (2022: €9,750,000)
and were secured by a general hypothec over all assets of the company.
The weighted average effective interest rates at the year end was 5% (2022: 3%).
During 2022, the Company entered into a €3,500,000 factoring facility agreement to factor the debts
of the Company. In accordance with the provisions of the agreement, the Company has retained the
late payment and credit risk (Note 4.1.2). The Company therefore continues to recognise the
transferred assets in their entirety in its statement of financial position. The amount repayable under
the factoring agreement is presented as borrowings.
4.2.3 Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. The Company presents these liabilities as current liabilities as
payment is due within one year or less.
2023
2022
€
€
Current
Trade payables
1,195,896
934,997
Amounts due to related parties
6,000
51,000
Indirect taxation
100,377
110,034
Accruals
1,864,935
2,166,325
Total trade and other payables
3,167,208
3,262,356
Amounts due to related parties are unsecured, interest free and repayable on demand.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
40
4. Financial assets and liabilities - continued
4.2.4 Derivative financial liabilities
Information about derivative financial assets is disclosed in note 4.4.2(a)
4.2.5 Liquidity risk
The Company is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities, which comprise lease liabilities, borrowings and trade and other payables (Notes
4.2.1, 4.2.2 and 4.2.3). 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.
Management monitors liquidity risk by reviewing expected cash flows, and ensures that no additional
financing facilities are expected to be required over the coming year.
The following table analyses the Company’s financial liabilities into relevant maturity groupings based
on the remaining period at the statement of financial position to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within
twelve months equal their carrying balances, as the impact of discounting is not significant.
Carrying
amount
Contractual
cash flows
Within one
year
Two to five
years
Over five
years
€
€
€
€
€
At 31 December 2023
Lease liabilities
1,662,397
1,867,074
357,436
1,247,660
261,978
Borrowings
4,635,401
4,635,401
4,635,401
-
-
Trade and other
payables
3,167,208
3,167,208
3,167,208
-
-
9,465,006
9,669,683
8,160,045
1,247,660
261,978
Carrying
amount
Contractual
cash flows
Within one
year
Two to five
years
Over five
years
€
€
€
€
€
At 31 December 2022
Lease liabilities
1,946,266
2,237,277
355,610
1,445,141
436,526
Borrowings
4,643,521
4,643,521
4,643,521
-
-
Trade and other
payables
3,262,356
3,262,356
3,262,356
-
-
9,852,143
10,143,154
8,261,487
1,445,141
436,526
4.3 Fair values of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using
valuation techniques. The Company uses a variety of methods and makes assumptions that are
based on market conditions existing at the end of each reporting period.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
41
4. Financial assets and liabilities - continued
4.3 Fair values of financial instruments - continued
Financial instruments are carried at fair value, by valuation method. The different levels have been
defined as follows:
•
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
•
Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
•
Inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs) (level 3).
The Company’s financial asset classified as FVOCI is included in level 3.
At 31 December 2023 and 2022 the carrying amounts of cash at bank, trade receivables (net of
provision), payables, accrued expenses and borrowings reflected in the financial statements are
reasonable estimates of fair values in view of the nature of these instruments or the relatively short
period of time between the organisation of the instruments and the expected realisation.
As at 31 December 2023, the Company did not have any other financial instruments categorized in
level 2 of the hierarchy. Information about the fair values of derivative financial instruments is
disclosed in note 4.4.2(a).
4.4 Financial risk management
4.4.1 Risk management framework
The Company’s activities potentially expose it to a variety of financial risks: market risk (including
foreign exchange risk, cash flow and fair value interest rate risk), credit risk (note 4.1.5) and liquidity
risk (note 4.2.5). The company’s overall risk management focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Company’s financial performance.
The Board provides principles for overall risk management, as well as policies covering specific
areas, such as foreign exchange risk, interest rate risk, credit risk, and investment of excess liquidity.
4.4.2 Market risk
(a) Foreign exchange risk
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss within ‘administrative expenses’.
Consequently, foreign exchange risk arises from future commercial transactions and recognised
assets and liabilities which are denominated in currencies other than the euro.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
42
4. Financial assets and liabilities - continued
4.4 Financial risk management - continued
4.4.2 Market risk - continued
Monetary financial assets and liabilities denominated in GBP and USD amounted to:
2023
2022
€
€
USD
Trade and other receivables
62,104
70,479
Bank balances
270,089
(119,111)
GBP
Trade and other receivables
404,955
426,730
Trade payables
(163,211)
(187,361)
Bank balances
417,361
834,929
(a) Hedging activities and derivatives
During the financial year ended 31 December 2023, GBP purchases amounted to approximately
34% (2022: 34%) of the total purchases of the Company. As a result, any fluctuations in the GBP
rate may have a significant effect on the Company’s results. In order to manage the exchange rate
risk subsequent to 2023 management was led to the decision to enter into forward contracts with
respect to the foreign exchange rate for GBP which will directly impact the Company’s future
purchase cost.
These contracts are expected to reduce the volatility attributable to exchange rates for GBP. Hedging
the exchange rate volatility of forecast GBP rates is in accordance with the risk management strategy
outlined by the directors. The Company’s derivative instruments are governed by contracts with the
Company’s bank.
These derivatives are initially measured at fair value on the date a derivative contract is entered into,
and they are subsequently remeasured to their fair value at the end of each reporting date. The
Company did not apply hedge accounting and as a result, these derivatives are classified as financial
assets or liabilities at fair value through profit or loss. Changes in the fair value of the derivatives are
recognised in profit or loss.
The fair value of the derivative instruments is derived from exchange rates and readily observable
information and falls into the Level 2 hierarchy of IFRS 13.
As at 31 December 2023, the Company entered into forward contracts which will be settled on a date
in 2024 amounting to €2,024,167 (2022: NIL). As at the reporting date, the Company made a gain of
approximately €47,060 (2022: NIL) on the fair value on these contracts. In accordance with the
Company’s accounting policy, the fair value gain on derivative financial instruments is recognised in
profit or loss. The directors believed that the fair value of the derivative financial instruments was
insignificant at the reporting date and additional disclosures on the Company’s hedging activities and
derivatives were not deemed necessary.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
43
4. Financial assets and liabilities - continued
4.4 Financial risk management - continued
4.4.2 Market risk - continued
With the exception of what has been disclosed above in relation to exposures to GBP and USD,
management does not normally consider foreign exchange risk attributable to recognised liabilities
arising from purchase transactions to be significant since balances are settled within very short
periods in accordance with the negotiated credit terms and the Company. In addition, the Company
manages the risk arising on its largest exposure, the GBP, by entering into forward contracts as
disclosed above.
Accordingly, a sensitivity analysis for foreign exchange risk disclosing how profit or loss and equity
would have been affected by changes in foreign exchange rates that were reasonably possible at
the end of the reporting period is not deemed necessary.
(b) Cash flow and fair value interest rate risk
The Company is exposed to risks associated with the effects of fluctuations in the prevailing levels
of the market interest rates on its financing position and cash flows. As at the reporting date, the
Company did not have fixed rate interest-bearing assets. Accordingly, its revenue and operating cash
flows are substantially independent of changes in market interest rates.
The Company's bank balances and borrowings are subject to an interest rate that varies according
to revision made to the Bank's Base Rate. Bank borrowings issued at variable rates, expose the
group to cash flow interest rate risk. Management monitors the level of floating rate borrowings as a
measure of cash flow risk taken on.
At the reporting date, a reasonably possible change of 200 basis points in interest rates would not
increase/(decrease) equity and profit or loss materially.
Based on the above, the board considers the potential impact on profit or loss of a defined interest
rate shift that is reasonably possible at the reporting date to be immaterial.
5. Other income and expense items, assets, and liabilities
5.1 Employee benefit expense
2023
2022
€
€
Wages and salaries
4,538,729
4,546,136
Social security costs
228,125
222,640
4,766,854
4,768,776
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
44
5. Other income and expense items, assets, and liabilities - continued
5.1 Employee benefit expense - continued
Employee benefit expenses has been classified as follows in the statement of comprehensive
income:
2023
2022
€
€
Cost of sales
2,889,515
2,746,268
Administrative expenses
1,877,399
2,022,508
4,766,854
4,768,776
The average number of persons employed by the Company during the financial reporting period was:
2023
2022
Direct
109
105
Administration
44
48
153
153
5.2 Directors’ emoluments
2023
2022
€
€
Salaries and other emoluments
623,863
629,069
5.3 Other operating income
2023
2022
€
€
Gain on disposal of property, plant and equipment
428
5,175
5.4 Finance costs
2023
2022
€
€
Interest on lease liabilities
74,339
83,526
Bank interest and charges
285,728
173,535
360,067
257,061
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
45
5. Other income and expense items, assets, and liabilities - continued
5.5 Income tax
(a) Amounts recognised in profit or loss
2023
2022
€
€
Current tax expense
1,079,705
754,268
(Over)/under provision of current tax in prior year
(39,136)
25,326
Deferred tax (credit)/charge (note 5.5(c))
(305,457)
30,206
735,112
809,800
(b) Reconciliation of income tax
The tax on the Company’s results before tax differs from the theoretical amount that would arise
using the basic tax rate as follows:
2023
2022
€
€
Profit before tax
2,500,404
2,205,523
Tax on profit at 35%
875,141
771,933
Tax effect of:
Disallowed expenses for tax purpose
(3,818)
3,474
Unrecognised deferred tax in prior year
(96,874)
(2,636)
(Over)/under provision of current tax in prior year
(39,136)
25,326
Other differences
(201)
11,703
Tax expense
735,112
809,800
(c) Deferred tax balances
Deferred income taxes are calculated on temporary differences under the liability method and are
measured at the tax rates that are expected to apply to the period when the asset is realised or the
liability is settled based on tax rates (and tax laws) that have been enacted by the end of the reporting
period. The principal tax rate used is 35% (2022: 35%).
The movement on the deferred tax account is as follows:
2023
2022
€
€
At beginning of year
220,518
250,724
Recognised directly in profit or loss
Deferred tax credit/(charge)
305,457
(30,206)
At end of year
525,975
220,518
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
46
5. Other income and expense items, assets, and liabilities - continued
5.5 Income tax - continued
The balance of deferred tax assets at 31 December represents:
2023
2022
€
€
Temporary differences arising on property, plant and
equipment
199,889
164,975
Temporary differences on intellectual property
(212,007)
(106,004)
Temporary differences arising on provisions for impairment of
trade receivables
433,289
155,776
Temporary differences on leases
104,804
5,771
525,975
220,518
The movement in recognised deferred tax balances on each of the above temporary differences has
been recognised in profit or loss (note 5.5(a)).
The deferred tax assets and liabilities have been offset in the statement of financial position as they
relate to income taxes levied by the same taxation authority and there is an intention to settle the
balances on a net basis.
The recognised deferred tax assets are expected to be recovered principally after more than twelve
months.
5.6 Other items of expense
(a) Items included in profit or loss
2023
2022
€
€
Costs of inventories recognised as an expense, and included
within cost of sales
18,986,353
17,041,087
Net foreign exchange differences
(212,818)
(181,529)
(b) Auditor’s fees
Fees charged by the auditor and/or its connected undertakings for services rendered during the
financial years ended 31 December 2023 and 2022 relate to the following:
2023
2022
€
€
Annual statutory audit
35,000
35,000
Other assurance services
3,075
3,000
Other non-audit services
7,900
10,100
45,975
48,100
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
47
5. Other income and expense items, assets, and liabilities - continued
5.6 Other items of expense - continued
The following non-audit services have been provided by the auditor to the Company:
2023
2022
€
€
Assurance services related to the half yearly report
1,575
1,500
During the current year fees amounting to €7,900 (2022: €10,100) have been charged by connected
undertakings of the Company’s auditor to the Company, for tax advisory and compliance services
and for advisory services related to a business acquisition.
6. Equity
6.1 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.
The Company classified instruments issued as financial liabilities or equity instruments in accordance
with the substance of the contractual terms of the instruments. The Company’s other equity
instruments are redeemable by holders through decisions of the board of directors, and bear
entitlement to coupons at the sole discretion of the board of directors. Accordingly, they are presented
within equity. Distributions thereon are recognised in equity. Based on the Company’s assessment
of the terms of the instruments, the coupon payments meet the definition of dividends. Therefore, the
related tax impacts are recognised in profit or loss in accordance with IAS 12, unless the transactions
or events that generated those distributable profits were recognised outside profit or loss.
2023
2022
€
€
Authorised
360,000,000 ordinary shares of €0.125 each
45,000,000
45,000,000
5,000,000 3% cumulative redeemable
preference shares of €1 each
5,000,000
5,000,000
50,000,000
50,000,000
Issued and fully paid up
44,000,000 ordinary shares of €0.125 each
5,500,000
5,500,000
1,500,000 3% cumulative redeemable
preference shares of €1 each
1,500,000
1,500,000
7,000,000
7,000,000
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
48
6. Equity - continued
6.1 Share capital - continued
On 10 January 2022, the Company resolved to change the nominal value of the Ordinary shares
from €1 to €0.125 each. Pursuant to the re-nominalisation, the Company’s issued share capital
consisted of €7,000,000 divided into 44,000,000 fully paid ordinary shares having a nominal value of
€0.125 each and 1,500,000 cumulative redeemable preference share capital of €1 each.
On 13 January 2022 M&Z (Marketing) Limited changed its name to M&Z p.l.c. and converted its
status from a private to a public limited liability company. Certain shareholders of the Company
offered for sale 11,550,000 ordinary shares of the Company at an offer price of €0.72, pursuant to a
prospectus dated 25 January 2022 for the listing of the Company’s ordinary shares on the official list
of the Malta Stock Exchange.
The share offer was over-subscribed and on 11 March 2022, the Company officially listed 11,550,000
ordinary shares of a nominal value of €0.125 per share on the official list of the Malta Stock Exchange.
6.2 Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other stakeholders,
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 monitors the level of capital on the basis of the ratio of aggregated net debt to total
capital. Net debt is calculated as total borrowings including lease liabilities less cash and cash
equivalents. Total capital is calculated as equity, as shown in the statement of financial position, plus
net debt. The aggregated figures in respect of the Company’s equity and borrowings are reflected
below:
2023
2022
€
€
Total borrowings and lease liabilities (notes 4.2.2 and 4.2.1)
6,297,798
6,589,787
Less: Cash at bank and in hand (note 4.1.3)
(806,670)
(953,838)
Net borrowings and lease liabilities
5,491,128
5,635,949
Total equity
9,650,889
9,168,934
Total capital
15,142,017
14,804,883
Gearing
36.3%
38.1%
The Company manages the relationship between equity injections and borrowings, being the
constituent elements of capital as reflected above from period to period, with a view to managing the
cost of capital. The level of capital of the Company, as reflected in the statement of financial position,
is maintained by reference to its respective 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 at the end of the reporting period is deemed adequate by
management.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
49
6. Equity - continued
6.3 Dividends
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s
financial statements in the period in which the dividends are approved by the Company’s
shareholders.
2023
2022
€
€
Gross dividends paid or declared on ordinary shares
1,953,598
609,231
Tax at source
(683,759)
(213,231)
Net dividend
1,269,839
396,000
Dividends per ordinary share
0.23
0.07
2023
2022
€
€
Gross dividends paid or declared on preference shares
20,766
69,231
Tax at source
(7,268)
(24,231)
Net dividend
13,498
45,000
Results for the year are stated in the Statement of Comprehensive Income. The Directors are
recommending the payment of a final net dividend of €873,840 equivalent to €0.01986 per share.
This is over and above the interim net dividend of €396,000 equivalent to €0.009 per share paid to
shareholders in August 2023. The total dividend amount paid for the year will amount to €1,269,839
or €0.02886 per share which represents a net dividend yield of 4.01% on the issue price of €0.72
when the shares were listed on the Malta Stock Exchange in March of 2022.
The Directors have also confirmed the payment of a gross dividend of €45,000 on preference shares
for the year ended 31 December 2023.
6.4 Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing profit attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue during the period.
(b) Diluted earnings per share
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume exercise of all dilutive potential ordinary shares.
Earnings per share is based on the profit for the financial year attributable to the shareholders of
M&Z p.l.c. divided by the weighted average number of ordinary shares in issue during the year and
ranking for dividend.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
50
6. Equity - continued
6.4 Earnings per share - continued
2023
2022
Profit for the year (€)
1,765,292
1,395,723
Less dividends on preference shares (€)
(13,498)
(45,000)
Profit attributable to ordinary equity holders of the Company (€)
1,751,794
1,350,723
Weighted average number of ordinary shares in issue
42,794,521
42,945,205
Basic and diluted earnings per share for the year
attributable to shareholders
€0.04
€0.03
The Company does not have any dilutive contracts on own shares in issue.
7. Cash flow information
(a) Reconciliation of operating profit to cash generated from operations:
2023
2022
€
€
Operating profit
2,860,471
2,462,584
Adjustments for:
Movement in impairment of financial and contract assets
792,600
139,300
Depreciation of property, plant and equipment (note 3.44)
586,213
537,338
Depreciation on right-of-use assets (note 3.4(b)(b))
279,340
274,513
Amortisation of intangible assets (note 3.3)
129,800
129,798
Gain on disposal of property, plant and equipment
(427)
(5,175)
Bad debts (written off)/recovered
(294)
17,120
Changes in working capital:
Inventories
(727,637)
(1,141,634)
Trade and other receivables
(1,070,232)
(1,930,803)
Trade and other payables
(108,643)
1,311,212
Cash generated from operations
2,741,191
1,794,253
(b) Non-cash transactions
During 2022, the Company entered into a lease agreement for an additional warehouse and store.
A right-of-use asset and lease liability were recorded accordingly.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
51
7. Cash flow information - continued
(c) Reconciliation of liabilities from financing activities
The table below presents the year’s change in the Company’s liabilities associated with financing of
the business. The table includes current and non-current liabilities. The opening and closing balances
include the liability for accrued interest.
Bank
overdrafts
Lease liabilities
Total
€
€
€
Balance at 1 January 2023
4,643,521
1,946,266
6,589,787
Payment of lease liabilities
-
(358,208)
(358,211)
Interest expense and other charges
285,728
74,339
360,067
Movement in bank overdraft
(293,848)
-
(293,848)
Balance at 31 December 2023
4,635,401
1,662,397
6,297,798
Balance at 1 January 2022
2,051,653
2,022,759
4,074,412
Payment of lease liabilities
-
(341,549)
(341,549)
New lease
-
181,530
181,530
Interest expense and other charges
173,535
83,526
257,061
Movement in bank overdraft
2,418,333
-
2,418,333
Balance at 31 December 2022
4,643,521
1,946,266
6,589,787
8. Other disclosure items
8.1 Related party transactions and balances
M&Z p.l.c. forms part of M&Z Group Limited. M&Z Group Limited and its subsidiaries are considered
by the directors to be related parties of M&Z p.l.c. Due to common shareholding, PSC Limited and
its subsidiary are also considered to be related parties of M&Z p.l.c.
The ultimate controlling party is Mr. Paul S. Camilleri and his immediate family.
The following transactions were entered into with related parties during the financial reporting period:
2023
2022
€
€
Purchases and services:
- Other related parties
24,000
24,000
Dividends paid to shareholders
1,283,337
441,000
Year-end balances owed to fellow subsidiaries and other related parties, arising principally from
purchases transactions, are disclosed in note 4.2.3 to these financial statements.
Senior management compensation, consisting of directors’ remuneration, has been disclosed in
note 5.2.
M&Z p.l.c. (Formerly M&Z (Marketing) Limited)
Annual Report and Financial Statements - 31 December 2023
52
8. Other disclosure items - continued
8.2 Comparative information
Comparative figures disclosed in the main components of these financial statements have been
reclassified to conform with the current year’s presentation format for the purpose of fairer
presentation.
Independent auditor’s report
To the Shareholders of M&Z 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 M&Z 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
M&Z 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 5.6 to the financial statements.
Our audit approach
Overview
|
Materiality |
· Overall materiality: €125,000, which represents 5% of profit before tax. |
|
Key audit matters |
· Valuation and existence of inventory · Expected credit loss allowance in relation to trade receivables |
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 |
€125,000 |
|
How we determined it |
5% of profit before tax |
|
Rationale for the materiality benchmark applied |
We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Company is most commonly measured by users, and is a generally accepted benchmark. We chose 5% 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 €12,500 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 |
|
|
|
|
Valuation and existence of inventory
Inventory of the Company as at 31 December 2023 amounted to €5.4 million and represented 36% of total current assets.
Inventory is valued at the lower of cost and net realisable value. The valuation of inventory at cost is based on the first-in, first-out method.
We focused on this area because of the magnitude of this balance and the related impact on working capital, as well as the subjectivity in the assessment of impairment. Further information is provided in note 3.2 to the financial statements.
|
We tested the existence of inventory by attending the year-end count of inventory held in the Company’s warehouses and performing test counts on a sample basis. We compared the quantities counted by us with the results of the counts by the entity. We also tested whether any related variances were followed up by management and reflected in the accounting records.
As part of our assessment of the valuation of inventory, we considered, inter alia, the basis of management’s impairment assessment, an independent comparison of cost and net realisable value for all inventory products, as well as other enquiries on low margin, damaged or expired products. As part of our work, we also compared inventory holdings to past and expected turnover and enquired on unexpected ratios.
Inventory cut-off testing was designed to assess whether the transfer of rights and obligations over inventory had been correctly reflected in the accounting records of the Company.
Based on the procedures performed, we concluded that inventories as at year end are reasonably stated in the financial statements. |
|
Expected credit loss allowance in relation to trade receivables
As at 31 December 2023, trade receivables amounted to €7.1 million, net of a loss allowance of €840 thousand, as disclosed in note 4.1.2.
The Company applies the IFRS 9 simplified approach to measuring the expected credit loss allowance for trade receivables. The Company establishes the risk of default using historical expected credit losses, as adjusted for qualitative factors based on forward-looking macroeconomic data. During 2023, the loss allowance on trade receivables increased by €395 thousand, also as a result of a higher default risk factor applied to certain components of the debtor portfolio. Further information is provided in notes 4.1.2 and 4.1.5 to the financial statements. The inherent uncertainty in the judgements required, as well as the magnitude of the Company’s trade receivables, resulted in this matter being identified as an area of audit focus.
|
We evaluated the suitability and appropriateness of the methodology applied by management in establishing the loss allowance. As part of this process, using audit knowledge gained from testing settlements for a sample of debtors and the analysis of overdue receivables, we challenged management on the judgements made as part of the impairment allowance, including discussions held around the uplift adjustment reflected in 2023. The calculations underlying the loss impairment assessment were also tested for accuracy.
The appropriateness of disclosures made in relation to the loss allowance assessment for trade receivables was also considered.
Based on the work performed, we found the recorded loss allowance to be consistent with the explanations and evidence obtained. |
Other information
The directors are responsible for the other information. The other information comprises the General information, the Directors’ report, the Statement by the Directors on compliance by M&Z p.l.c. (the “Company”) with the Code of principles for Good Corporate Governance and the Remuneration Report (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do 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, 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.
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 M&Z 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 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 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 by the Directors on compliance by M&Z p.l.c. (the “Company”) with the Code for 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. |
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 for the period ended 31 December 2006. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 18 years. The Company became listed on a regulated market on 11 March 2022.
Romina Soler
Principal
For and on behalf of
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
25 April 2024
