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A Member of Eden Leisure Group Limited Company No. C-26843 | ||||||||||||||||||
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Report and Financial Statements for the year ended 31 December 2023 | ||||||||||||||||||
CONTENTS ____________________________________________________________________________________________ REPORT OF THE DIRECTORS STATEMENT OF COMPLIANCE WITH PRINCIPLES OF GOOD CORPORATE GOVERNANCE STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS OF GOOD CORPORATE GOVERNANCE | ||||||||||||||||||
REPORT OF THE DIRECTORS ____________________________________________________________________________________________ Directors' Report The Directors present their report, together with the audited financial statements of the Company for the financial year ended Principal Activity Review of Business Development During the year, the Company registered a profit before taxation amounting to €1,240 (loss before taxation 2022: €3,301) the profit for the year after taxation amounted to €800 (loss for the year 2022: €2,146). During the financial year 2017, the Company successfully issued a €40,000,000 4% bond, the proceeds of which were used to redeem the remaining maturing bonds of 6.6% 139,840 with a nominal value of €100 each bond. The remaining proceeds were loaned to the parent company which were in turn used to repay bank facilities and to part finance various redevelopment and refurbishment works. During the financial year, interest income earned on advances to the parent company, Eden Leisure Group Limited totalled €1,680,000 (2022: €1,680,000), while interest payable to the bondholders amounted to €1,600,000 (2022: €1,600,000). Results and Dividends The results for the year are presented in the statement of comprehensive income. The directors do not recommend the payment of a dividend and propose to transfer the profit for the year to reserves. Group Results The Group continued with swift recovery post pandemic with an increase in its revenues of 37%, an increase from €33.2M to €45.4M for the year. The Group registered a profit for the year before tax of €5.6M an increase of 140% over pre-tax profit of 2022. On the strength of the increased revenue, the Group registered an operating profit of €7.8m, an increase of 79% from 2022 results. The results reflect the continuing improvement in all the sectors of the Group's interests. Increased travel and tourism post COVID, with a rebound in local consumerism resulted in a significantly improved outlook. Statement pursuant to Capital Markets Rule 5.68 issued by the Malta Financial Services Authority We confirm that to the best of our knowledge: The financial statements give a true and fair view of the financial position of the Company as at 31st December 2023, and of its financial performance and its cashflows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. The annual report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces. Directors Mr. Ian De Cesare (Chairman) Mr. Kevin De Cesare (Chief Executive Officer) Mr. Simon De Cesare Mr. David Vella Dr. Andrea Gera de Petri Testaferrata Mr. Paul Mercieca Mr. Victor Spiteri Company Secretary Dr. David Zahra In accordance with the Company's articles of association, all remaining directors retire from the board and are eligible for re-election. Statement pursuant to Capital Markets Rule 5.64 issued by the Malta Financial Services Authority We confirm that direct shareholdings of the Company are as follows:
Indirect shareholdings of the Company through the shares held in Eden Leisure Group Limited are as follows:
The directors confirm that as at 31st December 2023, there were no holders of the 4% Eden Finance plc debt securities who have special control rights and that there were no restrictions or limitations on voting rights. No disclosures are being made pursuant to Capital Markets Rules 5.64.10 and 5.64.11 as these are not applicable to the Company. Going concern As required by Capital Markets Rule 5.62 issued by the Malta Financial Services Authority, the Directors confirm that, having reviewed the Company's and the Group's operational budgets and cash flow forecasts for 2024, and as described in the notes to the financial statements 2.1.2, the directors confirm that the Group and the Company have adequate resources to continue in operation and existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing these financial statements. Principal risks and uncertainties faced by the company The Company is essentially a special purpose vehicle set up for financial transactions of Eden Leisure Group of Companies. The Company's revenue is derived from interest charges to its parent company, therefore the Company is heavily dependent on the Eden Leisure Group. Contracts of significance with the parent company The Company has advanced amounts borrowed by way of bonds listed on the Malta Stock Exchange to its parent company, Eden Leisure Group Limited. The terms of the relevant agreement are set out in the Company's financial statements. The Group is exposed to various risks arising through the use of financial instruments including market risk, credit risk and liquidity risk, which result from both its operating activities and investing activities. The most significant financial risks as well as an explanation of the risk management policies employed by the Group are included in the Group's financial statements. Statement of Directors' Responsibilities Company law requires the directors to prepare financial statements for each financial year end which give a true and fair view of the state of the affairs of the company and of the profit or loss of the company for that year. In preparing these the directors are required to:
The directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the company and which enable the directors to ensure that the financial statements comply with the Companies Act (Chap. 386), enacted in Malta. This responsibility includes 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. The directors are also responsible for safeguarding the assets of the company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The financial statements of Eden Finance p.l.c. for the year ended 31 December 2023 are included in the Annual Report 2023, which is published and made available on the parent company's website. The Directors are responsible for the maintenance and integrity of the Annual Report on the website in view of their responsibility for the controls over, and the security of the website. Access to information published on the parent 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. Auditors The Company has this year carried out a tendering process for the external audit contract. The tender process was overseen by the Audit Committee and resulted in a recommendation to appoint Mazars as the company's external auditors, which recommendation was endorsed by the Board. The appointment of Mazars as the Company's external auditors will be proposed at the forthcoming AGM. Subject to the approval of the shareholders, Mazars will undertake the audit of the Company for the year ending 31st December 2024. Signed on behalf of the Board of Directors on 23 April 2024 by Mr. Ian De Cesare (Chairman and Director) and Mr. Kevin De Cesare (Chief Executive Officer and Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statement. Registered office: Eden Place, Saint Augustine Street, St. George's Bay, San Giljan. | ||||||||||||||||||
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STATEMENT OF COMPLIANCE WITH PRINCIPLES OF GOOD CORPORATE GOVERNANCE ____________________________________________________________________________________________ Finance p.l.c. (the "Company" or "Issuer") should endeavour to adopt the Code of Principles of Good Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Capital Markets Rules (the "Code"). In terms of Capital Markets Rule 5.94, the Company hereby reports on the extent of its adoption of the principles of the Code for the financial year being reported upon. The Board of Directors of the Company (the "Board") resolved to adopt the Code. The Company . has been in compliance with the Code, except where, given circumstances, the implementations of specific recommendations were not deemed to be applicable because of the inherent non-operational function of the Company. The Company acts as a finance company to Eden Leisure Group Limited (the "Guarantor" or "Parent Company") and as such has minimal operations emanating from this task. Its primary function is the lending and monitoring of the proceeds of bonds issued to the public to its Parent Company. The Company has no employees other than the directors and the company secretary. Principle 1: The Board The Board is responsible for the Company's affairs, in particular in giving direction to the Company and being actively involved in overseeing the systems of control and financial reporting, whilst effectively striking a balance between enterprise and control. The Board has discussed the Code and all directors are aware of their responsibilities as such. The Memorandum and Articles of Association of the Company set out the procedures to be followed in the appointment of directors to the Board in a very extensive manner. Shareholders, having voting rights and owning no less than 20% of the issued share capital of the Company, are entitled to appoint one director for every such 20% shareholding in the Company. Appointed directors hold office for a period of one year on the lapse of which period, they are eligible for re-election. Principle 2: Chairman and Chief Executive Officer The role of Chairman is carried out by Mr. Ian De Cesare and the role of Chief Executive Officer is carried out by Mr. Kevin De Cesare. The Chairman is responsible to:
Principle 3: Composition of the Board The Board consists of three Executive Directors and four Non-Executive Directors: Chairman Mr. Ian De Cesare Executive Directors Mr. Kevin De Cesare (Chief Executive Officer) Mr. Simon De Cesare Mr. David Vella Non-Executive Directors Mr. Paul Mercieca Dr. Andrea Gera de Petri Mr. Victor Spiteri Company Secretary Dr. David Zahra Mr. Paul Mercieca and Mr. Victor Spiteri are considered to be independent from the Company and any related company within the meaning provided by the Code. Each non-executive director has submitted a declaration to the Board declaring their independence as stipulated under the Code Provision 3.4. The present mix of Executive and Non-executive directors is considered to create a healthy balance and serves to unite all shareholders' interests, whilst providing direction to the Company's management to help maintain a sustainable organisation. Directors are appointed to the Board during the Company's Annual General Meeting for a period of one year, at the end of which term they may stand again for re-election. The Articles of Association of the Company clearly set out the procedures to be followed in the appointment of directors. Principle 4: The Responsibilities of the Board The Board acknowledges its statutory mandate to conduct the administration and management of the Company. The Board, in fulfilling this mandate and discharging its duty of stewardship of the Company, assumes responsibility for the Company's strategy and decisions with respect to the issue, servicing and redemption of its bonds in issue, and for monitoring that its operations are in conformity with its commitments towards bondholders, shareholders, and all relevant laws and regulations. The Board is also responsible for ensuring that the Company establishes and operates effective internal control and management information systems and that it communicates effectively with the market. The executive officers of Eden Leisure Group Limited may be asked to attend Board meetings or general meetings of the Company, although they do not have the right to vote there, until such time as they are also appointed to the Board. The directors may entrust to and confer upon the executive officers any of the powers exercisable by them upon such terms and conditions and with such restrictions as they may think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. In fulfilling its mandate, the Board:
The Board does not feel the need to establish and implement a succession plan for senior management considering its existing organizational structure. Principle 5: Board Meetings The Board meets as required but at least [-] a year to discharge its duties effectively and discuss policy decisions and to discuss the operations of its Parent Company. The Board is notified, in accordance with the Articles of Association of the Company, of forthcoming meetings by the company secretary with the issue of an agenda and supporting board papers, which are circulated in advance of the meeting. Minutes are taken during board meetings, recording faithfully attendance, and resolutions taken at the meeting. After the meetings, minutes are circulated to the Board. The Chairman ensures that all relevant issues on the agenda are supported by all available information, whilst encouraging the presentation of views pertinent to the subject matter and giving all directors every opportunity to contribute to relevant issues on the agenda. The agenda seeks to achieve a balance between long-term strategic and short-term performance issues. The following directors attended meetings as follows: Mr. Ian De Cesare (Chairman) - 5 meetings Mr. Kevin De Cesare (Chief Executive Office) - 5 meetings Mr. Simon De Cesare - Director - 5 meetings Mr. David Vella - Director - 5 meetings Mr. Paul Mercieca - Non-executive Director - 5 meetings Dr. Andrea Gera de Petri Testaferrata - Non-executive Director - 5 meeting Mr. Victor Spiteri - Non-executive Director - 5 meetings
Principle 6: Information and professional development Under the present circumstances, full adherence by the Issuer with the provisions of Principle 6 of the Code is not deemed necessary considering the size, nature and operations of the Issuer. The Issuer does not feel the need to establish and implement a succession plan for senior management considering its existing organizational structure. The Board will maintain the existing arrangement and review continuously to ensure that it meets the changing demands of the business and to strengthen the checks and balances necessary for better corporate governance. With the exception of the above, the Company adheres to the provisions of Principle 6 of the Code. Principle 7: Evaluation of the Board's performance The current composition of the Board allows for a cross-section of skills and experience and achieves the appropriate balance required for it to function effectively. Under the present circumstances, the Board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role. Principle 8: Committees Audit Committee In accordance with Capital Markets Rules 5.117 to 5.134A,the Company established an Audit Committee. The terms of reference of the Audit Committee have been formally set out in a separate charter. The Committee's primary objective is to assist the Board in fulfilling the oversight responsibilities over the financial reporting processes, financial policies and internal control structure. The Committee oversees the conduct of the external audit and acts to facilitate communication between the Board, management and the external auditors' team. The external auditors are invited to attend the Audit Committee meetings. The Audit Committee reports directly to the Boards. The terms of reference of the Audit Committee include providing support to the Board and the board of directors of the Guarantor in its responsibilities in dealing with issues of risk, control and governance, and the associated assurance. The Board has set formal terms of establishment and the terms of reference of the Audit Committee which set out its composition, role and function, the parameters of its remit as well as the basis for the processes that it is required to comply with. Briefly, the Committee is expected to deal with and advise the Board on the following matters on a group-wide basis:
In addition, the Audit Committee also has the role and function of evaluating any proposed transaction to be entered into by the Company or the Guarantor and a related party, to ensure that the execution of any such transaction is at arm's length, on a commercial basis and ultimately in the best interest of the Company or Guarantor as the case may be. The Audit Committee is composed of three Non-Executive Directors. The following directors sit on the committee:
The Audit Committee pursuant to its terms of reference has been appointed to, and additionally has a remit that covers the Guarantor, apart from the Issuer. During the financial year ended 31 December 2023 the Committee met on 4 occasions. Remuneration Committee Due to the nature of the Company's restricted operational functions, the Board does not consider it necessary to set up a remuneration committee. The Board members received in aggregate €24,000 for services rendered during 2023. This remuneration has been approved by the Board. The Board has resolved to disclose these fees in aggregate rather than as separate figures for each Board member as recommended by the Code. Principle 9: Commitment to Maintain an Informed Market The Company communicates with bondholders by way of the Annual Report and Financial Statements. The Company also communicates with bondholders via company announcements made through the Malta Stock Exchange as well as by entertaining queries and requests made by individual bondholders on an ad hoc basis. The Board has gone further in requesting that the Guarantor's board of directors meet with financial intermediaries and institutional investors on an annual basis to update them on its performance thereby giving significant details on the prospects of the Company as a "going concern" as well as offering information that they can make their buying decisions on. The Board has also continued to implement the annual investor relations programme, which aims at giving bond holders rewards to be used within the Company to foster loyalty. Principle 10: Institutional Shareholders The Company has no institutional shareholders. Principle 11: Conflicts of Interest The Board always acts in the interest of the Company and its shareholders. If any Board member has a private interest or duty unrelated to the Company which would be likely to place him in conflict with any interests in, or duties towards, the Company, then he must disclose such conflict to the Board and shall not be allowed to vote on the matter. No such instances were noted during the financial year under review. Principle 12: Corporate Social Responsibility The Company seeks to adhere to sound Principles of Corporate Social Responsibility in its management practices and is committed to enhance the quality of life of all stakeholders and of the employees of the Company. In carrying on its business the Company is fully aware and at the forefront to preserving the environment, promoting healthy lifestyles and supporting charitable causes, and continuously reviews its policies aimed at achieving these goals. Internal Control System The Company's internal control system is designed to ensure, as much as possible, transparency, independence and segregation of duties. The process is also designed to ensure reliable financial reporting, effective and efficient operations and compliance with applicable laws and regulations. Whilst the Board is responsible for an effective internal control system, it relies on its effectiveness on the Group's financial controller and the audit committee. The Group's management is responsible for the identification and evaluation of key risks applicable to their respective areas of business. Through these channels, the Board has reasonable assurance that risk factors are managed properly and that material misstatements in the financial statements are not likely to occur. Risk Management The objective of the risk management function of the Company is to minimise the cost of risk and to maximise return on assets. The Company endeavours to achieve this objective through a procedure that involves a co-ordinated approach across the operations of the Group, designed to identify and measure potential risks. Appropriate action is taken to mitigate these risks. In order to manage the above-mentioned risks, quarterly risk management reports are compiled by the financial controller and presented to the audit committee. These periodic reports comment on areas likely to have elements of risk, highlighting any weaknesses or possible threats. The audit committee makes recommendations, as necessary, to the Board. Dealings by Directors and Senior Officers in the Company's Bonds Conscious of its responsibility for monitoring dealings by directors and senior officers in the Company's bonds, the Board approved a code of conduct for the transactions by directors and senior officers in compliance with the Capital Markets Rules. The structured code of dealing which includes names of directors and senior officials who must comply with such code has been filed with the Malta Financial Services Authority. The information as provided above is a fair summary of the Company's adoption of the Code. Overall, the Company has broadly implemented the Code where the Board believes that it would add value to the stakeholders. In certain areas, it was felt that the Code was more suited to companies who held equity on the exchange and therefore, its implementation would not be useful for a limited operating company like the Company. The Board will continue to monitor the Code in future years and will decide on an annual basis if the position stated above will apply. Signed on behalf of the Board on 23rd April 2024 by Mr. Ian De Cesare (Chairman and Director) and Mr. Kevin De Cesare (Chief Executive Officer and Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statement. |
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 ____________________________________________________________________________________________ | |||
2023 | 2022 | ||
Notes | € | € | |
Interest income | 4 | ||
Finance costs | 5 | ( | ( |
Net interest income | _________ _________ | _________ _________ | |
Administrative expenses | 6 | ( | ( |
Profit/(loss) before taxation | _________ | _________ ( | |
Income tax (charge)/credit | 7 | ( | |
Profit/(loss) for the year - total comprehensive income | _________ | _________ ( | |
_________ | _________ | ||
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 ____________________________________________________________________________________________ | |||
2023 | 2022 | ||
Notes | € | € | |
ASSETS | |||
Non-current assets | |||
Financial assets at amortised cost | 8 | ||
Deferred tax asset | 9 | ||
_________ _________ | _________ _________ | ||
Current assets | |||
Financial assets at amortised cost | 8 | ||
Cash and cash equivalents | |||
_________ _________ | _________ _________ | ||
Total Assets | ________ | ________ | |
EQUITY AND LIABILITIES | |||
Capital and reserves | |||
Share capital | 13 | ||
Retained earnings | |||
_________ _________ | _________ _________ | ||
Non-current liabilities | |||
Borrowings | 10 | ||
_________ | _________ | ||
Current liabilities | |||
Other payables | 11 | ||
Borrowings | 10 | ||
Current income tax | 12 | ||
_________ _________ | _________ _________ | ||
Total Liabilities | ________ | ________ | |
Total Equity and Liabilities | ________ | ________ | |
The financial statements were approved and authorised for issue by the Board of Directors on | |||
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 ____________________________________________________________________________________________ | |||
Share Capital | Retained Earnings | Total | |
€ | € | € | |
Balance at 1 January 2022 | |||
Profit for the year - total comprehensive income | ( | ( | |
________ | ________ | ________ | |
Balance as at 31 December 2022 | |||
________ | ________ | ________ |
Balance at 1 January 2023 | |||
Profit for the year - total comprehensive income | |||
________ | ________ | ________ | |
Balance at 31 December 2023 | |||
________ | ________ | ________ |
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023 ____________________________________________________________________________________________ |
2023 | 2022 | ||
Notes | € | € | |
Cash flows from operating activities | |||
Profit/(Loss) before taxation | ( | ||
Adjustments for: | |||
Finance costs | 4 | ||
Interest income | 5 | ( | ( |
________ | ________ | ||
Operating loss before working capital movements | ( | ( | |
Movement in receivables/related company balances | 8 | ( | ( |
Movement in payables | 11 | ( | |
Income tax paid | 12 | ( | |
________ | ________ | ||
Cash used in operations | ( | ( | |
________ | ________ | ||
Cash flows from investing activities | |||
Interest received | 5 | ||
________ | ________ | ||
Net cash flows generated from investing activities | |||
________ | ________ | ||
Cash flows from financing activities | |||
Interest paid to bond holders | 4 | ( | ( |
________ | ________ | ||
Net cash flows used in financing activities | ( | ( | |
________ | ________ | ||
Net movement in cash and cash equivalents | ( | ( | |
Cash and cash equivalents at the beginning of the year | |||
________ | ________ | ||
Cash and cash equivalents at the end of the year | 14 | ||
________ | ________ |
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023 ____________________________________________________________________________________________ | |||||||||||||||||||||||||||||
1. | Reporting Entity | ||||||||||||||||||||||||||||
2. | Basis of Preparation | ||||||||||||||||||||||||||||
These financial statements are prepared under the historical cost convention, as modified to include fair values where it is stated in the accounting policies below. These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and with the requirements of the Companies Act, (Chap. 386), enacted in Malta. The preparation of financial statements in conformity with International Financial Reporting Standards as adopted by the EU requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at balance sheet date and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates. 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. The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in substantial changes to the Company's accounting policies. Standards, interpretations and amendments to published standards that are not yet effective Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements but are mandatory for the Company's accounting periods beginning after 1st January 2024. The Company has not early adopted these revisions to the requirements of IFRS's 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. | |||||||||||||||||||||||||||||
2.1 | Basis of measurement | ||||||||||||||||||||||||||||
The financial statements have been prepared on the historical cost basis and on the going concern basis. | |||||||||||||||||||||||||||||
2.2 | Critical accounting estimates and judgements | ||||||||||||||||||||||||||||
The preparation of financial statements in conformity with IFRS's as adopted by the EU requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Except as disclosed below, in the opinion of the directors, the accounting estimates and judgements made in the course of preparing these financial statements are not difficult to reach, subjective or complex to a degree which would warrant their description as significant and critical in terms of the requirements of IAS 1 (revised). Expected credit loss allowances on loans and advances Credit loss allowance represent management's best estimate of expected credit losses in the financial assets subject to IFRS 9 impairment requirements at the balance sheet date. In this respect the directors are required to exercise judgement in defining what is considered to be a significant increase in credit risk and in making assumptions and estimates to incorporate relevant information about past events, current conditions and forecasts of economic conditions. Detail on the Company's methodology in making its impairment assessment in relation to loans and advances is disclosed in note 16. Under this method the ECL were deemed to be immaterial and hence no adjustments were made to these financial statements. | |||||||||||||||||||||||||||||
3. | Principal accounting policies | ||||||||||||||||||||||||||||
Financial instruments Financial assets The Company recognises a financial asset initially at fair value in its statement of financial position when it becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. Debt instruments Subsequent measurement of debt instruments depends on the Company's business model for managing the asset and the cash flow characteristics of the asset. The Company's debt instruments principally comprise a loan to the Company's parent and an investment in a related party's preference shares, which have been assessed as having the characteristics of debt instruments. The Company's financial assets are measured at amortised cost in their entirety. Debt instruments that meet the following conditions are subsequently measured at amortised cost when:
The Group reclassifies debt investments when and only when its business model for managing those assets changes. The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance. Changes in the carrying amount as a result of foreign exchange gains or losses, impairment gains or losses and interest income are recognised in profit or loss. On derecognition, any difference between the carrying amount and the consideration received is recognised in profit or loss and is presented separately in the line item 'Gains and losses arising from the derecognition of financial assets measured at amortised cost'. Impairment of financial assets In terms of IFRS 9, the Company applies an expected credit loss ("ECL") model in determining whether an impairment is required. The Company has to assess on a forward-looking basis the expected credit loss associated with its debt instruments carried at amortised cost. The Company uses the general approach, which requires an assessment as to whether the counterparty has experienced a significant increase in credit risk since initial recognition. This assessment forms the basis as to whether lifetime ECL should be recognised and is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring. As at reporting date, the credit risk on the Company's financial instruments has not increased significantly since initial recognition and consequently the Company measures the loss allowance at an amount equal to 12-month ECL ('12m ECL'). Financial liabilities The Company recognises a financial liability on its statement of financial position when it becomes a party to the contractual provision of the instrument. The Company's financial liabilities are classified as financial liabilities which are not at fair value through profit or loss. These financial liabilities are recognised initially at fair value, being the fair value of consideration received, net of transactions costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. The Company derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, cancelled or expires. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Other payables Other payables are classified with current liabilities and are stated at their nominal value unless the effect of discounting is material, in which case trade payables are measured at amortised cost using the effective interest method. Shares issued by the Company Ordinary shares issued by the Company are classified as equity instruments. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at face value. For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand and deposits held at call with banks. Related parties Related parties are those persons or bodies of persons having relationships with the Company as defined in International Accounting Standard No. 24. | |||||||||||||||||||||||||||||
4. | Interest income | ||||||||||||||||||||||||||||
The amounts recognised within this line item includes interest income recognised using the effective interest method on loans advanced the Company's parent. The effective interest rate on the instrument is 4.2%. | |||||||||||||||||||||||||||||
5. | Finance cost | ||||||||||||||||||||||||||||
This amount represents interest expense on the debt securities in issue, as set out in note 10 to these financial statements. | |||||||||||||||||||||||||||||
6. | Expenses by nature | ||||||||||||||||||||||||||||
Administrative expenses are classified by their nature as follows: | |||||||||||||||||||||||||||||
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Profit before tax for the Company is stated after charging the following fees in relation to services provided by the external auditors of the Company: |
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7. | Taxation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax has been provided for at the rate of 35% on the taxable income for the year.
The income tax expense for the year is calculated on the Company's taxable income at the rate of 35% applicable in Malta, the Company's country of incorporation.
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8. | Financial assets at amortised cost | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
i) Loan granted to parent company These represent the funds raised by the bond issue (note 10) in 2017 which have been advanced to Eden Leisure Group Limited at an annual interest rate of 4.2% per annum (2022: 4.2% p.a). The loan is unsecured. This loan represents a €40,000,000 4% bond, the proceeds of which were used to redeem the remaining maturing bonds of 6.6% 139,840 with a nominal value of €100 each bond. The remaining proceeds were loaned to the parent company. The loan will be repaid in full by the 28 April 2027. Eden Leisure Group Limited, the guarantor in respect of the Company's bond issue has undertaken to pay all amounts of principal and interest that will become due and payable by the Company to bondholders under the bonds. These loans rank pari passu without any priority or preference within all other present and future unsecured and unsubordinated obligations of the parent company to which the loans have been advanced. The carrying amount of the loan is considered a reasonable approximation of their fair value. No loss allowance has been recognised as any such impairment would be insignificant (note 16.1). ii) Redeemable preference shares This investment represents 100% holding of the 5.5% redeemable preference shares of €2.329373 each within Eden Entertainment Limited, a commonly controlled entity. iii) Other receivables owed by parent company These advances are interest free, unsecure and repayable on demand. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
9. | Deferred taxation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred taxes are calculated on all temporary differences under the liability method using a principal tax rate of 35%.
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10. | Borrowings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Following a company announcement made on 28 March 2017, Eden Finance p.l.c. issued an aggregate principal amount of €40 million Bonds (2027), having a nominal value of €100 each, bearing interest at 4.0%. These bonds are unsecured pursuant and subject to the terms and conditions in the prospectus dated 27th March 2017. The quoted market price as at 31st December 2023 for the 4.0% Bonds (2027) was €97.01 (2022: €99.45). The directors are of the opinion that this price represents the fair value of these liabilities; as at balance sheet date, the fair value of the bonds therefore amounts to €38,804,000 (2022: €39,780,000). The fair value calculation is classified within Level 1 of IFRS 13's fair value hierarchy. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11. | Other payables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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12. | Current income tax asset/(liability) | ||||||||||||||||||||||||
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13. | Called up issued share capital | ||||||||||||||||||||||||
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14. | Cash and cash equivalents | |||||||||||||||||||||||||||
Cash and cash equivalents included in the statement of cash flows comprise the following amounts in the statement of financial position:
The balances of cash and cash equivalents are available for use by the Company in their entirety. | ||||||||||||||||||||||||||||
15. | Fair values of financial assets and financial liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||
At 31 December 2023 and 2022, the carrying amounts of financial assets and financial liabilities classified with current assets and current liabilities respectively approximated their fair values due to the short-term maturities of these assets and liabilities. The fair value information for the Company's non-current borrowings is disclosed in note 10. | |||||||||||||||||||||||||||||||||||||||||||||||||
16. | Financial risk management | ||||||||||||||||||||||||||||||||||||||||||||||||
Overview The Company is exposed to various risks in relation to financial instruments. The main types of risks are credit risk, liquidity risk and market risk. This note presents information about the Company's exposure to each of the above risks, the Company's objectives and policies and processes for measuring and managing risk. The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. | |||||||||||||||||||||||||||||||||||||||||||||||||
16.1 | Credit risk | ||||||||||||||||||||||||||||||||||||||||||||||||
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises primarily from the loan advanced to the parent company and accrued interest charges thereon, the investment in redeemable preference shares of a commonly controlled entity and cash and cash equivalents. The carrying amount of the financial assets, as disclosed in notes 8 represents the maximum credit exposure. The Board retains direct responsibility for affecting and monitoring the investments made by the Company. In view of the significant concentration of risk on its exposure to the loan with its parent entity, comprising 97% (2022: 97% of its financial assets), the Board monitors, on an on-going basis, the financial affairs of its parent and takes into account factors such as financial position, performance and cash flows. The Company takes cognisance of the related party relationship with these entities and management do not expect any losses from non-performance or default. Accordingly, credit risk with respect to these receivables is expected to be limited. Eden Leisure Group Limited is also the guarantor of the Company's bonds. Financial assets at amortised cost As disclosed above, the Company's main exposures are a loan to the Company's parent, representing the advance of the bonds raised by the Company, as well as an investment in redeemable preference shares of a commonly controlled entity. The Company's management monitor intra-group credit exposures on a regular basis and ensure timely performance of these assets in the context of its overall liquidity management. The loss allowances for these financial assets are based on assumptions about risk of default and expected loss rates. The Company's management uses judgement in making these assumptions, based on the counterparty's past history, existing market conditions, as well as forward-looking estimates at the end of each reporting period. As at year-end, the Directors considered its counterparties' equity position. Given its related party relationship with its debtors, the Directors assessed recoverability of these balances by leveraging on cash flow projections prepared by the respective counterparties. The cash flow projections, which stretch over the term of each respective loan, consider whether the counterparty could meet its obligations under different, forward-looking scenarios. After taking into account the results of their assessment, together with the fact that the counterparty has met its obligations as and when due, the resultant impairment charge required was deemed immaterial, and accordingly is not recognised in these financial statements. Cash and cash equivalents The Company's cash is placed with reputable financial institutions, such that management does not expect any institution to fail to meet repayments of amounts held in the name of the Company. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was insignificant. | |||||||||||||||||||||||||||||||||||||||||||||||||
16.2 | Liquidity risk | ||||||||||||||||||||||||||||||||||||||||||||||||
The Company is exposed to liquidity risk in relation to meeting future obligations associated with its financial liabilities, which comprise principally debt securities in issue and trade and other payables disclosed in notes 10 and 11. Prudent liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure the availability of an adequate amount of funding to meeting the Company's obligations. The Company forms part of Eden Leisure Group. The Company has advanced amounts borrowed by way of bonds to its parent company. This implies that the Company will receive settlement of interest receivable from the parent company in order to be able to meet its interest payable as they fall due. The Directors monitor liquidity risk by means of cash flow forecasts on the basis of expected cash flows over a twelve-month period, in order to ensure that adequate funding is in place in order for the Company to be in a position to meet its commitments as and when they will fall due. The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
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16.3 | Market risk | ||||||||||||||||||||||||||||||||||||||||||||||||
Market risk is the risk that changes in market prices, such as interest rates, will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. | |||||||||||||||||||||||||||||||||||||||||||||||||
16.4 | Interest rate risk | ||||||||||||||||||||||||||||||||||||||||||||||||
In view of the nature of its activities, the Company's transactions mainly consist of earning interest income on the loan affected from the proceeds of the secured bonds issue and servicing its borrowings. However, the Company's income and operating cash flows are substantially independent of changes in market interest rates. The Company's principal interest-bearing financials instruments, which consist of a loan to a group undertaking and secured bonds issued to financial institutions and the general public, are subject to fixed interest rates. Although these instruments expose the Company to fair value interest rate risk, a change in market interest rates will not have an impact in the Company's profit or loss since these instruments are measured at amortised cost. The Company has secured a spread between the return on its investments and its cost of borrowings and these instruments have similar terms and maturity profiles as disclosed in Notes 8 and 10 to these financial statements. | |||||||||||||||||||||||||||||||||||||||||||||||||
16.5 | Capital risk management | ||||||||||||||||||||||||||||||||||||||||||||||||
The Company's objectives when managing capital are to safeguard its ability to continue as a going concern and to maximise the return to stakeholders through the optimisation of the debt and equity balance. The capital structure consists of items presented within equity in the statement of financial positions. The Company's directors manage the Company's capital structure and make adjustments to it, in light of changes in economic conditions. The capital structure is reviewed on an ongoing basis. Based on recommendations of the directors, the Company balances its overall capital structure through the payments of dividends, new share issues as well as the issue of new debt or the redemption of existing debt. The Company's overall strategy remains unchanged from the prior year. | |||||||||||||||||||||||||||||||||||||||||||||||||
17. | Reconciliation of liabilities arising from financing activities | ||||||||||||||||||||||||||||||||||||||||||||||||
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18. | Related party transactions | ||||||||||||||||||||||||||||||||||||||||||||||||
Related party transactions are entered into on a commercial basis with entities which are related by way of common shareholders who are able to exercise significant influence over the Company's operations. Transactions with these companies principally include advances affected by the Company out of the bond issue proceeds as disclosed in Note 8 to the financial statements. Interest receivable earned from these transactions is disclosed in Note 4 and year end balances in this respect are disclosed in Note 10 to the financial statements. | |||||||||||||||||||||||||||||||||||||||||||||||||
19. | Parent company | ||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated financial statements are prepared by Eden Leisure Group Limited. | |||||||||||||||||||||||||||||||||||||||||||||||||
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