Malta International Airport p.l.c.
Contents
General Information
2
Directors’ Report
3-13
Statement of Directors’ Responsibilities
14
Corporate Governance – Statement of Compliance
15-27
Remuneration Report
28-30
Income Statements and Statements of Comprehensive Income
31
Statements of Financial Position
32-33
Statements of Changes in Equity
34
Statements of Cash Flows
35-36
Notes to the Financial Statements
37-91
Independent Auditor’s Report
Malta International Airport plc
General Information
Year Ended 31 December 2022
2
Directors:Mr Nikolaus Gretzmacher (Chairman)
Mr Alan Borg (Chief Executive Officer)
Mr Karl Dandler (Chief Financial Officer)
Dr. Cory Greenland
Ms Rita Heiss
Dr. Wolfgang Koeberl
Mr Florian Nowotny
Company secretary:Dr. Louis de Gabriele LL.D.
Registered office:Malta International Airport,
Luqa,
Malta.
Tel. (+356) 2124 9600
Country of incorporation:Malta
Company registration
number:C 12663
Auditor:PricewaterhouseCoopers,
78 Mill Street,
Zone 5,
Central Business District,
Qormi, Malta.
Legal advisors:Camilleri Preziosi Advocates,
Level 2 - Valletta Buildings,
South Street,
Valletta,
Malta.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
3
The directors present their report together with the audited financial statements for the year ended 31 December 2022.
Principal Activities
Malta International Airport p.l.c.’s (“the Company”) principal activities are the development, operation and management of Malta International Airport, for which the Company has a 65-year concession that came into effect in July 2002.
The Company has three 100% owned operating subsidiaries: Airport Parking Limited, SkyParks Development Limited and SkyParks Business Centre Limited. Airport Parking Limited operates all car parks situated on the land leased to Malta International Airport p.l.c., whilst SkyParks Development Limited and SkyParks Business Centre Limited manage the SkyParks Business Centre building. The Company and these subsidiaries are together referred to as “the Group”.
Malta International Airport p.l.c. also has another 100% owned subsidiary: Kirkop PV Farm Limited, set up with the intention to explore opportunities in the generation of electricity using photovoltaic technologies. Kirkop PV Farm Limited, however, did not trade in 2022.
Review of the Business
Traffic Development
In 2022, Malta International Airport (MIA) registered 5,851,079 passenger movements, handling more than double the traffic registered during the previous year, which translated to a recovery rate of 80% of 2019 figures. During the same year, a total of 40,355 aircraft movements were registered, marking an increase of 64.6% over 2021 and a recovery rate of 77.7% compared to 2019. Similarly, with a recovery of 79.4% over 2019, seat capacity stood at 7,093,600.
Following a slow start to the year resulting mainly from travel restrictions, traffic improved gradually with the launch of the summer 2022 flight schedule. While passenger traffic peaked in August with 712,122 passenger movements, Malta International Airport registered its strongest recovery rates in November and December. The overall seat load factor for 2022 stood at 82.5%. This was marginally higher than the seat load factor for 2019, which had stood at 81.8%.
Traffic Highlights
2022
2021
+/-
% Change
Passenger Movements
5,851,079
2,540,335
3,310,744
130.3%
Aircraft Movements
40,355
24,516
15,839
64.6%
Seat Capacity
7,093,600
4,135,138
2,958,462
71.5%
Seat Load Factor
82.5%
61.4%
21.1 pp
MTOW (in tonnes)
1,564,392
923,341
641,051
69.4%
Cargo and Mail (in tonnes)
17,552
15,997
1,555
9.7%
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
4
(continued)
Q1 2022
Q1 2021
% Change
Q2 2022
Q2 2021
% Change
Passenger Movements
672,965
98,493
583.3%
1,672,329
305,317
447.7%
Aircraft Movements
5,990
1,563
283.2%
11,639
3,499
232.6%
Seat Capacity
1,028,045
196,154
424.1%
2,048,569
539,587
279.7%
Seat Load Factor
65.5%
50.2%
15.3 pp
81.6%
56.6%
25.0 pp
MTOW (in tonnes)
230,583
55,777
313.4%
446,678
125,673
255.4%
Cargo and Mail (in tonnes)
3,716
3,981
(6.7%)
4,145
3,888
6.6%
Q3 2022
Q3 2021
% Change
Q4 2022
Q4 2021
% Change
Passenger Movements
2,059,920
1,137,600
81.1%
1,445,865
998,925
44.7%
Aircraft Movements
12,939
10,612
21.9%
9,787
8,842
10.7%
Seat Capacity
2,304,195
1,850,634
24.5%
1,712,791
1,548,763
10.6%
Seat Load Factor
89.4%
61.5%
27.9 pp
84.4%
64.5%
19.9 pp
MTOW (in tonnes)
501,517
403,030
24.4%
385,614
338,861
13.8%
Cargo and Mail (in tonnes)
4,968
4,020
23.6%
4,722
4,108
14.9%
Operational Performance Indicators
Airports Council International’s (ACI) Airport Service Quality (ASQ) survey is a benchmarking programme measuring passengers’ satisfaction while they are at the airport with the objective to provide participating airports with the research tools and management information to better understand passengers’ views on an airport’s products and services. MIA has been participating in this programme since 2005 and has consistently ranked in the top 5 airports in Europe, being awarded the ’Best Airport in Europe’ title in the 5 to 15 million passenger category in 2018, 2019, 2020 and 2021.
In 2022, the ASQ Departures Questionnaire was revamped to reflect airport guests’ satisfaction in relation to service quality and the customer experience, which are both crucial to the creation of memorable airport experiences.
The survey gathers information from passengers just before they board their flight, providing airport operators with valuable feedback on the surveyed passengers’ experience at the airport. The analysis of the feedback collected enables Malta International Airport to continue improving the terminal facilities and the services it provides to guests, with the aim to continue increasing passengers’ overall satisfaction with their experience at the airport.
Participation in the ASQ survey also allows MIA to benchmark its results against the results achieved by other airports of different sizes and in different regions. There are currently around 270 worldwide airports participating in this survey with 98 of them being in Europe.
Malta International Airport’s scores for the four quarters of 2022 are tabulated below. Key performance indicators (KPIs), including terminal cleanliness, waiting times and staff courtesy, are measured using a five-point range, with five being the highest score. The overall average satisfaction score for 2022 was 4.41, which is slightly lower (-0.02) than the score achieved in 2021. However, this score is still very positive considering the fast-paced increase in passenger traffic together with other challenges faced throughout the past year.
Led by a vision of service excellence, the Company will continue working towards maintaining high overall satisfaction scores, which again would place Malta International Airport among the top five European performers on the ASQ surveys in the coming years.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
5
(continued)
2022
2021
+/-
1st Quarter
4.38
4.45
(0.07)
2nd Quarter
4.40
4.46
(0.06)
3rd Quarter
4.43
4.40
0.03
4th Quarter
4.41
4.42
(0.01)
Average for the year
4.41
4.43
(0.02)
In December 2022, Malta International Airport was re-accredited at Level 3 of ACI’s Customer Experience Accreditation Programme and received extensive praise for the Company’s initiatives and commitment to consistently improve the customer experience. The ACI Airport Customer Experience Accreditation Programme is the only worldwide customer experience management accreditation designed specifically to recognise the efforts and enhancements airports make to create a better customer experience.
During the coming twelve months, the Company plans to continue improving the customer experience in order to be able to apply for the next level - Level 4 – of this accreditation programme. Reaching the next level of accreditation would constitute a significant accomplishment for Malta International Airport as it testifies to the commitment of the Company to improve the customer experience, whilst also collaborating further with its stakeholders and supporting the community it serves.
Infrastructural Investments
The overall capital expenditure during the year under review amounted to EUR 12.4 million.
Within the non-aviation segment, the upgrade of the Food Court (2022: EUR 1.6 million) was an important project with a phased re-opening during 2022. The relocation of the fuel station (2022: EUR 1.2 million) is also progressing, being an important phase in creation of space for the SkyParks 2 development. Works on the construction of the business centre are expected to start by the end of 2023.
Phase 3 of the cargo village project, providing a 900 m2 warehouse for TNT, neared completion at year end (2022: EUR 1.3 million) and is planned to become operational in Q1 2023.
During the year under review, works on the Apron X project commenced. Apron X will increase the Company’s aircraft parking capacity by seven stands (2022: EUR 2.3 million). The expansion will allow the handling of additional narrow and widebody aircraft. The first three new stands are planned to start being utilised by 2024.
The Group also continued to invest in digitalisation, laying the groundwork for increased automation together with the modernisation of the existing hardware, as well as the replacement and upgrade of the network and servers (2022: EUR 1.6 million).
The year 2023 will see the start of the Group’s ambitious five-year investment programme aimed at transforming the airport campus and laying the groundwork for the terminal expansion through an investment of over EUR 175 million, EUR 39 million of which will be disbursed in 2023.
The approval of the design concept for the first phase of the Terminal Expansion Project, which will entail the westward extension of the terminal building, has been received. Other upgrades include a covered walkway between the terminal and Park East, a digital infrastructure upgrade, a new photovoltaic farm as well as a new HVAC system and LED lighting upgrades. With regard to investment in retail and property, works on SkyParks 2 are expected to start in 2023.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
6
(continued)
Other investments include an increase of the number of existing baggage reclaims and an increase of the current footprint of the customs area. Over the next two years, the company will also be investing heavily in the maintenance of its airfield infrastructure, mainly through extensive runway resurfacing works.
Principal Risk and Uncertainties
The Board, as a whole, including the Audit Committee members, is responsible for evaluating the nature and extent of the Risk Management Framework, as well as the risk profile that is acceptable to the Board. The Audit Committee periodically reviews the work carried out by the Company’s Risk Management Committee and evaluates the impact that identified risks pose to the Company’s strategic objectives.
The main strategic, corporate and operational risks and uncertainties identified during the year under review are listed below.
Aviation Environment: Airlines continue to navigate a challenging landscape characterised by industrial actions, staff shortages and other operational constraints. Apart from industry-specific challenges, worsening macro-economics and geopolitical factors are expected to continue affecting consumer confidence. Pent-up demand is also expected to continue levelling off in 2023, meaning that the seat load factor is unlikely to continue to register the record highs observed in 2022.
Additionally, business travel is predicted to continue recovering at a slower pace than leisure travel. This could lead carriers that were traditionally associated with corporate travel to explore opportunities to foray into the leisure market.
Given Malta’s geopolitical position, external shocks leading to a drop in demand cannot be excluded. Comparable events experienced in other regions or countries have shown that external shocks, such as terrorism, political crises, refugee movements and environmental threats, could have a strong impact on tourism demand even if they do not originate locally. With revenues primarily stemming from activities related to air traffic, even a small reduction in inbound tourism could negatively impact the financial performance of the company.
Reduced demand and/or reduced supply could potentially curb estimated traffic and profit growth. In light of this, the Company remains committed to working closely with airlines and other key industry stakeholders in order to identify the best opportunities to restore Malta International Airport’s year-round connectivity in a sustainable manner, whilst prioritising the achievement of a balanced business mix.
Pandemic Outbreak: Malta International Airport has a robust Health and Safety management framework in place. Following the COVID-19 outbreak, tailored emergency response plans as well as protocols enabling effective case management, were implemented in order to ensure that business continuity could be maintained throughout the crisis.
To safeguard its financial stability and preserve its liquidity, the Company also carries out regular analysis of the potential impact on financial results and going concern. Additionally, the Company maintains a close relationship with financial institutions to strengthen its liquidity position should the need arise.
Long-Term Capacity Constraints: Malta International Airport achieved strong traffic development over the past years, with significant growth rates for the four years rolling from 2016 to 2019. As a result, the capacity of aprons and the terminal had been experiencing phases of saturation at peak times, prompting the Company to bolster its measures to actively mitigate the impact of such peak-driven demand. The situation suffered a major downturn due to the COVID-19 impact on international travel. The impact was a significant one, with short to medium-term repercussions on passenger and aircraft movement demand. Following the reinstatement of unrestricted operations in June 2022, recovery to pre-COVID levels has been better than expected, with 2019 figures likely to be exceeded in 2025.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
7
(continued)
During the year under review, the EU Commission strengthened its resolve to implement stronger Border Controls by introducing the Entry Exit System (EES). The terminal footprint required to introduce EES infrastructure and the significantly increased immigration processing times will have a significant impact on the available terminal capacity. Thus, the Company must retain its focus on ensuring that the current capacity remains sufficient, not only to bridge the gap for developing short-term requirements brought about by a re-stabilised demand recovery profile, but also to assure that the terminal and airside infrastructure can sustain future growth over the longer term.
Given the envisaged substantial investment volumes in terminal and airfield infrastructure, it remains crucial that such projects are executed in a timely manner and in a cost-effective way. Infrastructure development is key to meeting the strategic objectives of the Company. Failure to develop infrastructure to the appropriate extent could result in facilities that are capacity-constrained shortly after their inauguration or too large and costly.
To address these concerns, the Company regularly updates its traffic projections using a proven and reliable forecasting model and conducts extensive capacity studies combined with regular scenario analysis. At the same time, it is ensured that the setting of financial and operational goals is in line with the Company’s strategy and aligned with the required resources.
The Group employed an average of 355 employees during 2022, which was an increase of 7.9% from the previous year. This increase reflected the busier operation during the year under review, particularly from the second quarter onwards. The total headcount at year end stood at 370, which included eight employees working for Airport Parking Limited and four employees working for SkyParks Business Centre. Nine out of ten employees were employed on a full-time basis, whilst the remaining 10% were employed on a part-time basis, bringing the full-time equivalent (FTE) figure for employees at year end to 346 employees. Compared to year end 2021, the increase in FTE was of 11.5%. Female employees accounted for 37% of the Company’s workforce, up from 35.2% in the preceding two years.
In 2022, the employee turnover rate for the Group was 12.1%, which was an improvement compared to the previous two years (14.0% in 2021 and 13.9% in 2020), whilst the average length of service stood at nine years.
Training expenses for the year slightly exceeded EUR 220,000 as the Company restarted its training programme, which had been put on hold during the pandemic. Most of the training provided during 2022 was about safety, including Occupational Health and Safety, and amounted to 3,799 hours. This was followed by training provided to the Company’s Fire and Rescue Department, that benefitted from 2,213 hours. The rest of the training, which ranged from professional courses and crisis management to technical skills and service excellence, amounted to 5,451 hours. The total of 11,463 hours of training that were delivered across the year, equated to an average of 31 hours per employee.
During the year under review, more than half of the Company’s office workers availed themselves from the opportunity to work from home up to twice per week, in line with the Company’s Work from Home Policy. The Company Leave Bank which was set up to assist employees who are going through particularly challenging circumstances and require additional leave, was used to the benefit of 10 employees during 2022.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
8
(continued)
The following table shows the HR related indicators:
2022
2021
+/-
% Change
Headcount - 31 December
370
324
46
14.2%
Headcount - Average
355
329
26
7.9%
FTE - 31 December
346
310
36
11.5%
FTE - Average
336
315
21
6.7%
Average age (in years)
39.1
39.7
(0.6)
(1.5%)
Length of service (in years)
9.0
10.8
(1.8)
(16.7%)
Share of women in workforce
37.0%
35.2%
-
1.8 pp
Employee turnover rate
12.1%
14.0%
-
(1.9pp)
Training expenses (EUR)
221,166
72,120
149,046
206.7%
Reportable accidents
7
3
4
133.3%
Corporate Responsibility
As the people, planet and profit equation becomes increasingly important to the responsible running of organisations, MIA continued to seek out opportunities to base its day-to-day operation on these three pillars. Besides focusing on its recovery and supporting its employees as well as the community, the Company continued to work towards reaching its environmental targets.
The Environmental Working Group, which was established in 2021 to discuss the company’s environmental KPIs, met four times during the year under review. The year 2022 saw the introduction of a new company-wide environmental KPI, through which Malta International Airport committed itself to limiting its landfill waste per passenger to 0.2 kilos in 2022, as part of its waste-management efforts. Full-year data for 2022 showed that the Company had decreased the share of landfill waste by 11% compared to the same period in 2019.
In parallel, the Company continued working towards its net zero ambition, with over 300 taxiway and taxilane light fittings being replaced with more efficient LED lighting in the first quarter of 2022 alone. During the year under review, MIA satisfied ACI’s criteria to be able to retain its place at Level 2 of the Airport Carbon Accreditation (ACA) Programme. Members of the Company’s management team and the Environmental Working Group were given the opportunity to garner a better understanding of the importance of the airport-specific programme through training delivered by external sustainability consultants.
In 2022, the company started laying the groundwork to be able to progress to Level 3 of the ACA Programme by rolling out the Airport Commute Survey among its employees. The roll-out of this survey constituted part of the process, which will enable MIA to start calculating and reporting Scope 3 emissions in addition to Scope 1 and 2 emissions, which have been reported for the past years.
The year 2022 was also important in terms of the Company’s philanthropic contributions to different segments of the community. The Company’s Corporate Responsibility (CR) Committee continued to lead MIA’s effort in this regard, and, during the year under review, donations to the tune of EUR 87,000 were given to several organisations whose missions vary from safeguarding the environment to offering rehabilitation services to persons with disabilities and offering support to families of young cancer patients.
The Malta Airport Foundation, on the other hand, inaugurated a conservation and restoration project in Żurrieq, works on which had been initiated in 2021. The inauguration event of the newly restored Saints Roque, Blaise, Dominic and Nicholas of Tolentino interceding for the Plague Stricken by Mattia Preti was attended by several distinguished guests, including the Minister for National Heritage, the Arts and Local Government, parishioners and a number of airport employees hailing from Żurrieq.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
9
(continued)
In the last quarter of the year, the Foundation kicked off the underwater mini-documentary series Submerged World with the release of the first episode out of six instalments. Another five episodes will be released throughout 2023, each focusing on a different diveable wreck from around the Maltese Islands, with the aim of promoting Malta’s underwater offering to local and foreign divers. Hot on the heels of the launch of this series, the Foundation announced its support of Heritage Malta’s pioneering work to declare an underwater site, found just off Xlendi Bay in Gozo, the world’s first deep-water archaeological park.
As has become customary, the Foundation also organised two underwater clean-ups in collaboration with two local dive clubs. A total of 3.6 tonnes of waste were elevated from the seabed in Senglea and Tigné, which were the two clean-up locations chosen for 2022.
Financial Performance
The earnings before interest, taxation, depreciation and amortisation (EBITDA) of the Group increased by EUR 30.8 million; from EUR 24.1 million in 2021 to EUR 54.9 million in 2022. Moreover, the EBITDA margin improved by 11.6 percentage points; from 50.8% to 62.4%.
On 27 June 2022, the European Commission approved a EUR 12 million Maltese aid measure to recompense the Company for the losses suffered due to the coronavirus pandemic. The measure provides for the compensation for the material losses suffered by the Company during the airport closure to all commercial passenger traffic between 21 March and 30 June 2020. Following the approval by the European Commission, it was established through Legal Notice 247 of 2022 that the approved sum of EUR 12 million would be granted in the form of tax credit.
The tax credit is allowed against the tax on the profits and was fully utilised during the year under review.
While net profit for 2021 amounted to EUR 7.0 million, the Group posted a net profit before tax credit of EUR 26.9 million in 2022.
Net profit after tax credit amounted to EUR 38.9 million. The total comprehensive income for the year attributable to shareholders of the Company (net of tax) reached EUR 39.1 million, driven by actuarial gains on defined benefit pension plans (net of deferred taxes) of EUR 0.2 million for the year under review. No other comprehensive income or expenses had to be reported in the previous year.
Revenues
The total revenue of the Group increased by 85.6% or EUR 40.6 million compared to 2021; up from EUR 47.4 million to EUR 88.0 million. Aviation-related revenues are the most important income stream of the Group, greatly benefitting from the recovery of the demand in air traffic. In 2022, the airport segment contributed a share of 66.3% of total revenues (2021: 58.6%), showing an increase of 109.8% or EUR 30.5 million over the previous year. Revenues from the Retail and Property segment totalled EUR 29.5 million (2021: EUR 19.5 million), which represents an increase of 51.1%. The remaining portion of EUR 0.2 million of revenues originated from the other activities and contributed a 0.3% share.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
10
(continued)
Staff Costs
The staff costs of the Group amounted to EUR 10.1 million in 2022, representing an increase of EUR 3.3 million or 48.8% over 2021. This reflects the recovery of the business from Q2 onwards, leading to an increased head-count in all operational areas of the Group. Between January and May of the reporting period, the Company continued to benefit from the COVID-19 Wage Supplement, which had been introduced in March 2020, whereby EUR 800 per each full-time employee were received. Consequently, the increase in the staff costs was also the result of the termination of the Wage Supplement Benefit as from June 2022.
Other Operating Expenses
The costs for customer services, passenger screening, VIP and cleaning reflect the recovery in demand as these services are passenger-related costs. The increase in maintenance expenses was driven by catch-up effects, given that during the crisis years (2020-2021), as a means by which to preserve liquidity, maintenance was strictly limited to operational needs and areas affecting guests. IT costs increased due to transaction volumes as well as a result of having more applications and software tools in use.
However, the effects of the cost-saving initiatives launched in 2020 are still visible as the majority of the measures taken have led to sustainable cost advantages. This led the other operating expenses of the Group to increase by 40.0%; from EUR 16.4 million in 2021 to EUR 22.9 million in 2022, compared to an increase in passenger numbers of 130.3%.
Depreciation and Amortisation
Depreciation and amortisation remained stable and amounted to EUR 11.4 million in the year under review, compared with EUR 11.3 million in the previous year.
Comprehensive Income and Dividends
The financial results of the Group and the Company for the year ended 31 December 2022 are shown in the Statement of Comprehensive Income on page 31. The Group’s total comprehensive profit for the year after taxation amounted to EUR 39.1 million (2021: EUR 7.0 million).
The Board of Directors is recommending the payment of a final net dividend of EUR 0.12 per share (Gross EUR 0.1846) on all shares settled as at close of business on 10 April 2023, which dividend shall be paid by no later than 26 May 2023.
Financial Position
The profit for the year, together with shareholders’ funds brought forward from the previous year, resulted in shareholders’ funds as at 31 December 2022 of EUR 170.9 million and EUR 168.8 million for the Group and the Company, respectively. These totals were up from EUR 131.8 million and EUR 130.4 million, respectively, at year end 2021.
Going Concern
After reviewing the Company’s budget for the next financial year and its long-term plans, the Directors are of the opinion that, at the time of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the Financial Statements.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
11
(continued)
Financial Risk Management
The financial risks of the Group and the Company identified during the year and their financial risk management objectives are outlined in detail in Note 37 of the Financial Statements.
Financial Key Performance Indicators
Variance
Financial Indicators (EUR mn)
2022
2021
abs.
in %
Total Revenue
88.0
47.4
40.6
85.6%
thereof Aviation Revenue
58.3
27.8
30.5
109.8%
thereof Non-Aviation Revenue
29.7
19.6
10.1
51.3%
EBITDA
54.9
24.1
30.8
128.0%
EBITDA Margin (in %)
62.4%
50.8%
11.6 pp
EBIT
43.5
12.8
30.7
239.4%
EBIT Margin (in %)
49.4%
27.0%
22.4 pp
Net Profit / (Loss)
38.9
7.0
31.9
457.3%
ROCE (in %) *
17.0%
5.0%
12.0 pp
Cash (incl. term deposits) & Treasury Bills
68.7
32.7
36.0
110.0%
Equity
170.9
131.8
39.1
29.7%
Balance Sheet Total
285.1
242.7
42.5
17.5%
Capital Expenditure
12.4
9.2
3.2
35.2%
Taxes on Income
2.9
4.1
(1.3)
(30.3%)
Average Employees (No.)
355
329
26
7.9%
* EUR 12mn tax credit not included in ROCE calculation
Share Capital
The share capital of the Company is EUR 33,825,000 divided into three classes of shares as follows:
•81,179,990 Ordinary ‘A’ Shares representing approximately 60% of the total issued share capital;
•54,120,000 Ordinary ‘B’ Shares representing 40% of the total issued share capital; and
•10 Ordinary ‘C’ Shares.
All shares issued have a nominal value of EUR 0.25 and are fully paid up and allotted.
The Ordinary ‘A’ Shares are admitted to the official list of the Malta Stock Exchange, whilst the Ordinary ‘B’ and Ordinary ‘C’ Shares are not admitted or traded on an exchange.
The Ordinary ‘A’ Shares and Ordinary ‘B’ Shares shall entitle their holders to the same rights, benefits and powers in the Company save for the transferability thereof. The Ordinary ‘A’ Shares shall be freely transferable whilst the Ordinary ‘B’ Shares were non-transferable for a period of fifteen (15) years from 26 July 2002, upon which date they automatically became fully and freely transferable without the need of any formality.
The Ordinary ‘C’ Shares are held by and, in terms of the Memorandum of Association, may only be held by the Government of Malta. This share category does not carry any right to receive dividends or assets on a winding up or other return of capital but entitles the Government of Malta to appoint members on the National Interest Matters Committee pursuant to Article 58.10 of the Articles of Association of the Company.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
12
(continued)
Save for the above, there are no other restrictions attached to the shares of the Company.
No changes in the share capital of the Company were made nor did the Company acquire ownership of, or any rights over, any portion of its own share capital.
The following shareholders have an interest in more than 5% of the issued share capital of the Company:
•Malta Mediterranean Link Consortium Ltd
•Government of Malta
•VIE (Malta) Ltd
Directors
Appointment and Replacement of Directors
The Board of Directors of the Company is composed of a maximum of eight (8) directors. Five (5) directors are non-executive directors and a maximum of three (3) directors, amongst whom is the CEO, are executive directors.
Any shareholder holding not less than 20% of the issued share capital of the Company having voting rights is entitled to appoint one director for each 20% shareholding by a letter addressed to the Company. In this respect, Malta Mediterranean Link Consortium Limited is entitled to appoint two (2) non-executive directors and the Government of Malta is entitled to appoint one (1) non-executive director. The remaining non-executive directors are appointed by the shareholders in a general meeting pursuant to the Articles of Association.
Unless appointed for a longer term, a director holds office from one Annual General Meeting to the next and is eligible for re-appointment. The maximum period for which a director may be appointed is a term of three (3) years, following the lapse of which such director shall be eligible for re-appointment.
In terms of the Articles of Association, the CEO of the Company shall occupy one of the executive director positions. The other executive directors to be co-opted to the Board are the Chief Financial Officer and the Chief Commercial Officer.
Powers of Directors
The directors of the Company have all the powers necessary to manage and direct the Company. The Company is empowered to buy back any of its shares, subject to the limitations and restrictions at law and the capital market rules. Subject to the authority of shareholders, to be given at three (3) year intervals, the directors are also empowered to issue further shares in the Company.
Directors
The directors who served during the year under review were:
Director
Title
Director since
Mr Nikolaus Gretzmacher
Chairman & Non-Executive Director
2012
Ms Rita Heiss
Non-Executive Director
2015
Dr. Cory Greenland
Non-Executive Director
2015
Dr. Wolfgang Koeberl
Non-Executive Director
2016
Mr Florian Nowotny
Non-Executive Director
2017
Mr Alan Borg
CEO and Executive Director
2012
Mr Karl Dandler
CFO and Executive Director
2014
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2022
13
(continued)
In accordance with paragraph 56.1 of the Company’s Articles of Association, all the present directors are to retire at the forthcoming Annual General Meeting. The appointment of the new directors will take place in accordance with paragraphs 55 and 56 of the same Articles of Association at the Annual General Meeting.
Directors’ Interests in Material Contracts
The following directors have declared their interests in the share capital of the Group:
•Mr Nikolaus Gretzmachera non-beneficial interest1
•Ms Rita Heissa non-beneficial interest2
•Dr Cory Greenlanda beneficial interest
No other director has a beneficial or non-beneficial interest in the Company’s share capital.
Auditor
A resolution to reappoint PricewaterhouseCoopers as auditor of the Company will be proposed at the forthcoming Annual General Meeting.
Outlook
Traffic Development
The Company’s outlook for 2023 is cautiously optimistic notwithstanding any extraordinary events, and it is expected that a number of airlines will continue to recover their Malta schedules to 2019 levels. Malta International Airport is therefore expected to register 6.3 million passengers in 2023, translating to a recovery of circa 86% of 2019 traffic.
Financial Performance
Based on the projected passenger numbers for 2023, the total revenue of the Group for 2023 is expected to reach EUR 97 million. Projected EBITDA and Net Profit are to be at EUR 59 million and EUR 29 million, respectively. The capital expenditure of the Group during the year is expected to reach EUR 39 million.
Signed on behalf of the Company's Board of Directors on 22 February 2023 by Nikolaus Gretzmacher (Chairman), Alan Borg (Chief Executive Officer) and Karl Dandler (Chief Financial Officer) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2022.
1 These shares are held by MMLC and VIE Malta Limited, companies of which Mr Gretzmacher is a director.
2 These shares are held by MMLC and VIE Malta Limited, companies of which Ms Heiss is a director.
Malta International Airport p.l.c.
Statement of Directors’ Responsibilities
14
The directors are required by the Companies Act (Cap. 386) to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the EU which give a true and fair view of the state of affairs of the Company and the Group at the end of each financial year, and of the profit or loss of the Company and the Group for the year then ended.
In preparing the financial statements, the directors should:
•select suitable accounting policies and apply them consistently;
•make judgments and estimates that are reasonable; and
•prepare the financial statements on a going concern basis, unless it is inappropriate to presume that the Company and the Group will continue in business as a going concern.
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 the Group and which enable the directors to ensure that the financial statements comply with the Companies Act (Cap. 386). This responsibility includes designing, implementing and maintaining such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The directors are also responsible for safeguarding the assets of the Company and the Group, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Additionally, the directors are responsible for:
•the preparation and publication of the Annual Financial Report, including the consolidated financial statements and the relevant tagging requirements therein, as required by Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS,
•designing, implementing, and maintaining internal controls relevant to the preparation of the Annual Financial Report that is free from material non-compliance with the requirements of the ESEF RTS, whether due to fraud or error, and consequently, for ensuring the accurate transfer of the information in the Annual Financial Report into a single electronic reporting format.
Statement of responsibility pursuant to the Capital Market Rules issued by MFSA
We confirm that to the best of our knowledge:
a)in accordance with the Capital Market Rules, the financial statements give a true and fair view of the financial position of the Company and the Group as at 31 December 2022 and of their financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the EU; and
b)in accordance with the Capital Market Rules, the Directors’ Report includes a fair review of the performance of the business and the financial position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Approved by the Board of directors on 22 February 2023.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
15
Introduction
Pursuant to the Capital Markets Rules issued by the Capital Markets Authority, Malta International Airport p.l.c. (the “Company”) 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 Company acknowledges that the Code does not dictate or prescribe mandatory rules but recommends principles of good practice. However, the directors strongly believe that such practices are generally in the best interests of the Company and its shareholders and that compliance with the principles of good corporate governance is not only expected by investors but also evidences the directors’ and the Company’s commitment to a high standard of governance.
The Board of Directors (the “Board”) has carried out a review of the Company’s compliance with the Code for the financial year being reported upon, namely the year ended 31 December 2022.
General
The directors believe that good corporate governance is a function of a mix of checks and balances that best suit the Company and its business. Accordingly, whilst there are best practices that can be of general application, the structures that may be required within the context of larger companies are not necessarily and objectively the best structures for companies whose size and/or business dictate otherwise. It is in this context that the directors have adopted a corporate governance framework within the Company that is designed to better suit the Company, its business, scale and complexity whilst still ensuring proper checks and balances.
The Company has a corporate decision-making and supervisory structure that is tailored to suit the Company’s requirements and designed to ensure the existence of adequate checks and balances within the Company, whilst retaining an element of flexibility.
In general, the directors believe that the Company has adopted appropriate structures to achieve an adequate level of good corporate governance, together with an adequate system of checks and balances in line with the Company’s requirements.
This corporate governance statement (the “Statement”) will now set out the structures and processes in place within the Company and how these effectively achieve the goals set out in the Code. For this purpose, this Statement will make reference to the pertinent principles of the Code and then set out the manners in which the directors believe that these have been adhered to. Where the Company has not complied with any of the principles of the Code, this Statement will give an explanation for non-compliance.
For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code means compliance with the Code’s main principles, and the Code Provisions.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
16
(continued)
Compliance with the Code
Principle One: The Board
The directors believe that for the period under review the Company has generally complied with the requirements of this principle and the relative code provisions.
The Board is composed of members who are fit and proper to direct the business of the Company with honesty, competence, and integrity. All the members of the Board are fully aware of, and conversant with, the statutory and regulatory requirements connected to the business of the Company. The Board is accountable for its performance and that of its delegates too.
The Board is responsible for determining the Company’s strategic direction and organisational requirements, whilst ensuring that the Company has the appropriate mix of financial and human resources to meet its objectives and improve its performance. Throughout the period under review, the Board provided the necessary leadership in the overall direction of the Company and has adopted prudent and effective systems whereby it obtains timely information from the Chief Executive Officer (the “CEO”) as the head of the Executive Committee to ensure an open dialogue between the CEO and directors at regular intervals and not only at meetings of the Board. The Company has a structure that ensures a mix of Executive and Non-Executive Directors that enables the Board, and particularly the Non-Executive Directors to have direct information about the Company’s performance and business activities from the head of executive management that is also a director on the Board.
Principle Two: Chairman and Chief Executive Officer
In line with the requirements of Principle Two, the Company has segregated the functions of the CEO and the Chairman. Whilst the CEO heads the Executive Committee, the Chairman’s main function is to lead the Board and set its agenda. The Chairman is also responsible to ensure that the Board receives accurate, timely and objective information so that the directors can take sound decisions and effectively monitor the performance of the Company. The Chairman exercises independent judgement and ensures that, during Board meetings, there is effective communication with stakeholders as well as active engagement by all directors for the discussion of complex and/or contentious issues.
The CEO is accountable to the Board of the Company for all business operations. He has the power and authority to appoint the persons to fill in the post of each member of the Executive Committee. He also has the discretion to ask any one or more of such members, from time to time, to address the Board on matters relating to the operations of the Company and its Subsidiaries. The Board, of course, is entitled to call in, at its discretion, any one or more of the executives of the Company.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
17
(continued)
Principle Three: Composition of the Board
The full maximum complement of the Board, in line with Principle Three is of five (5) Non-Executive Directors and three (3) Executive Directors, a balance that is entrenched in the Company’s Memorandum and Articles of Association, which requires that the CEO is an ex ufficio director together with a maximum of two (2) other senior executives of the Company. The presence of top executives on the Board is designed to ensure that all the members of the Board, including Non-Executive Directors, have direct access at meetings of directors to the individuals having the prime responsibility for day-to-day operations and executive management of the Company and to the implementation of policies that allow effective discussion and the availability of all the information necessary to carry out their functions in the best possible manner.
The members of the Board for the year under review were:
Director
Title
Director since
Mr Nikolaus Gretzmacher
Chairman & Non-Executive Director
2012
Ms Rita Heiss
Non-Executive Director
2015
Dr Cory Greenland
Non-Executive Director
2015
Mr Wolfgang Koeberl
Non-Executive Director
2016
Mr Florian Nowotny
Non-Executive Director
2017
Mr Alan Borg
CEO and Executive Director
2012
Mr Karl Dandler
CFO and Executive Director
2014
Pursuant to generally accepted practices, as well as the Company's Articles of Association, the appointment of non-executive 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 normally meets every eight (8) weeks and as a matter of Board policy, a guideline was established whereby at its first meeting, meetings are scheduled for the full year. Board meetings concentrate mainly on strategy, operational performance, and financial performance. The Board also delegates specific responsibilities to the CEO and the Committees, notably the Executive Committee and the Audit Committee which operate under their respective formal terms of reference. Directors may, in the furtherance of their duties, take independent professional advice on any matter at the Company's expense.
For the purposes of Code Provision 3.2, requiring the Board to report on whether it considers each Non-Executive Director as independent in line with the requirements of that Code Provision, the Board considers each of the Non-Executive Directors as independent within the meaning of the Code.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
18
(continued)
Save for what is stated hereunder, none of the Non-Executive Directors:
(a)are or have been employed in any capacity by the Company;
(b)have or have had a significant direct or indirect relationship with the Company;
(c)receive significant additional remuneration from the Company;
(d)have close family ties with any of the executive members of the Board;
(e)have served on the Board for more than twelve consecutive years;
(f)have been within the last three years an engagement partner or a member of the audit team of the present or past external auditor of the Company or any Company forming part of the same group; and
(g)have a significant business relationship with the Company.
Mr Nikolaus Gretzmacher, and Ms Rita Heiss (Non-Executive Directors) are currently members of the Board of Directors of Malta Mediterranean Link Consortium Limited, a Company holding 40 per cent of the issued and voting capital of the Company, and, together with Mr Wolfgang Koeberl are also employees of Flughafen Wien AG, the company’s ultimate parent company. Notwithstanding the above relationship the Board still considers Mr Gretzmacher, Ms Heiss and Mr Koeberl as having the required skills, experience and integrity to retain their impartiality in acting as directors of the Company.
In terms of Principle 3.4, each Non-Executive Director has declared in writing to the Board that he/she undertakes:
•to maintain in all circumstances his/her independence of analysis, decision and action;
•not to seek or accept any unreasonable advantages that could be considered as compromising his/her independence; and
•to clearly express his/her opposition in the event that he/she finds that a decision of the Board may harm the Company.
Principle Four: The Responsibilities of the Board
In line with the requirements of Principle Four, it is the Board’s responsibility to ensure a system of accountability, monitoring, strategy formulation and policy development.
The Board believes that this responsibility includes the appropriate delegation of powers to management and the organization of the executive team in a manner that is designed to provide high levels of comfort to the directors that there is proper monitoring and accountability apart from appropriate implementation of policies. The Board delegates specific responsibilities to committees, which operate under their respective formal Terms of Reference.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
19
(continued)
Executive Committee
The Board’s link to the Executive Committee is principally the CEO, together with the other Executive Director on the Board, both of whom are members of the Executive Committee.
The Executive Committee comprises the Executive Directors and the heads of each business unit of the Group. The role of the Executive Committee is to implement the Company`s strategy and policies, through the various departments within the organisation. It also makes recommendations to the Board on matters which are beyond its remit. The Chief Executive Officer chairs the Executive Committee.
The members of the Committee for the period under review were:
•Mr Alan Borg (Chief Executive Officer)
•Mr Karl Dandler (Chief Financial Officer)
•Ing Martin Dalmas (Airport Operations & Business Continuity)
•Mr George Mallia (Retail & Property)
•Mr Ian Maggi (Innovation & Technology)
•Mr Patrick Murgo (Safety, Security, Fire Services & Procurement)
•Ms Tina Lombardi (Human Resources, Strategy & Marketing)
•Mr Alex Cardona (Traffic Development, Customer Services & Administration)
•Ing Kevin Alamango (Technical Services)
•Mr Robert Mizzi (Aerodrome Safety & Compliance)
The Executive Committee has met 35 times during the year under review.
The Company has also established three cross-functional Committees, the ‘Corporate Responsibility (CR) Committee, the Customer Experience (CE) Committee and the Finance Committee, which meet on a regular basis.
The CR Committee is responsible for the company’s overall CR policy and strategy including the respective formulation and implementation thereof as well as the company’s environmental planning, Airport Carbon Management and supervises the Malta Airport foundation.
The CE Committee systematically deals with how to improve the airport’s Customer Experience with a special focus on customer journeys, touch points, pain points and delighters as well as ASQ benchmarking, customer feedback and ASQ’s Customer Experience Accreditation programme.
The Finance Committee analyses and interprets the company’s financial information on a monthly and quarterly basis with a special focus on current and future income streams, cost drivers and margins to secure a sustainable growth for the Company.
The Chief Executive Officer chairs these cross-functional Committees and all meetings are minuted.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
20
(continued)
Audit Committee
As part of its corporate governance structures the Company has an Audit Committee in line with the requirements of the Capital Markets Rules. The principal roles of the Audit Committee are in line with the requirements of Capital Markets Rule 5.127 and include the following:
•monitoring the financial reporting process and submitting recommendations or proposals to ensure its integrity;
•monitoring of the effectiveness of the company’s internal quality control and risk management system and, where applicable, its internal audit, regarding the financial reporting of the Issuer, without breaching its independence;
•monitoring of the audit of the annual and consolidated financial statements;
•reviewing additional reports prepared by the statutory auditor/s or audit firm/s;
•reviewing and monitoring the independence of the statutory auditors or the audit firms;
•taking responsibility for the procedure for the selection of statutory auditor/s or audit firm/s; and
•recommending the statutory auditor/s or the audit firm/s to be appointed.
During the year ended 31 December 2022 the Committee consisted of three (3) Non-Executive Directors, namely Mr Florian Nowotny, Ms Rita Heiss, and Dr Cory Greenland. The Committee has the power and authority under its Terms of Reference to summon any person to assist it in the performance of its duties. The directors believe that, during the year under review, Mr Florian Nowotny was independent and competent in accounting and/or auditing in terms of Capital Markets Rule 5.117. Mr Nowotny is considered as competent in accounting and/or auditing in view of his qualifications and experience.
When the Audit Committee’s monitoring and review activities reveal cause for concern or scope for improvement, it shall make recommendations to the Board on the action needed to address the issue or make improvements. In the period under review the Audit Committee has held 7 meetings.
Company Executives participate in periodic strategic reviews, which include consideration of long-term projections and the revaluation of the business objectives in the short term. Regular budgets and strategic plans are prepared, which are incorporated into a comprehensive strategic plan for the Company. Performance against these plans is actively monitored and reported to the Board using key risk and performance indicators so that corrective measures can be taken to address any deficiencies and to ensure the future sustainability of the Company. These key risk and performance indicators are benchmarked against industry norms so that the Company’s performance can be effectively evaluated.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
21
(continued)
In view of the number of members of the Board, the directors believe that its size is manageable to be able to address most issues as a Board rather than create sub-committees of the Board that may be more suitable in the case of companies having larger Boards. Indeed, the Board feels that its size and membership allow directors the opportunity to discuss matters directly and that this is a more effective and efficient manner to conduct its business.
The directors, however, are aware that there may be situations that require the delegation to certain committees of certain tasks or assignments and the Board has on occasion composed ad hoc committees for this purpose.
Notwithstanding that the board has established no formal policy on the matter, as part of succession planning, the Board and CEO ensure that the Company implements appropriate schemes to recruit, retain and motivate employees and senior management.
In ensuring compliance with other statutory requirements and with continuing listing obligations, the Board is advised directly, as appropriate, by its appointed broker, legal advisor and external auditors. The Board also ensures that appropriate policies and procedures are in place to assure that the highest standards of corporate conduct are maintained.
Directors are entitled to seek independent professional advice at any time on any aspect of their duties and responsibilities at the Company’s expense.
Principle Five: Board Meetings
The Board believes that it complies fully with the requirements of this principle and the relative Code Provisions, in that it has systems in place to ensure the reasonable notice of meetings of the Board and the circulation of discussion papers in advance of meetings so as to provide adequate time for directors to prepare themselves for such meetings. Minutes are prepared during Board meetings recording faithfully attendance, discussions and resolutions. These minutes are subsequently circulated to all directors as soon as practicable after the meeting.
The Board meets as often and as frequently as required in line with the nature and demands of the business of the Company. During the financial year under review the Board held six (6) meetings:
Director
Attendance Board Meetings 2022
Mr Nikolaus Gretzmacher
5/6
Ms Rita Heiss
6/6
Dr Cory Greenland
5/6
Mr Wolfgang Koeberl
6/6
Mr Florian Nowotny
6/6
Mr Alan Borg
6/6
Mr Karl Dandler
6/6
The Chairman ensures that all relevant issues are on the agenda and 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 on the Board strikes a balance between long-term strategic and short-term performance issues.
Directors attend meetings on frequent and regular basis and dedicate the necessary time and attention to their duties as directors of the Company.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
22
(continued)
Principle Six: Information and Professional Development
The CEO is appointed by the directors and enjoys the full confidence of the Board. The CEO, although responsible for the selection of the Executive Committee and the recruitment of senior executives, regularly updates the directors on the appointment of senior executives. The Board is satisfied that the current schemes for executive compensation and professional development are designed to render the Company an attractive proposition for the retention of top executives within the Company and to motivate the Executive Committee.
Following the comprehensive training session undertaken over the course of last year and given that the board composition did not change it was not necessary to have a full training session to bring the directors up to date with their obligations at law. A brief refresher as to the obligations under MAR and the Capital Market Rules during a board meeting were considered sufficient to refresh the directors’ attention to some of those obligations, as part of the professional development of directors.
The board intends to organise other professional development sessions for directors and executives designed specifically to enable them to discharge their functions more efficiently and in line with the high standards expected of them.
Directors have access to the advice and services of the Company Secretary who is also the legal counsel to the Board and the Company. As part of succession planning and employee retention, the Board and CEO ensure that the Company implements appropriate schemes to attract, retain and develop the best talent and keep employees engaged and motivated.
Principle Seven: Evaluation of the Board’s Performance
The Board has not appointed a committee for the purpose of undertaking an evaluation of the Board’s performance in accordance with the requirements of Code Provision 7.1 but has conducted an informal review of its own performance over the period under review. Refer to the note under the Section on ‘Non-Compliance with the Code’.
Principle Eight: Committees
A.Remuneration Committee
The Company has no performance-related remuneration payable to its Non-Executive Directors and accordingly, as allowed by Code Provision 8.A.2, it has not appointed a Remuneration Committee. Instead, the functions of the Remuneration Committee are vested in the Board, which itself establishes the remuneration policies of the Company. The Non-Executive members of the Board establish the policies and decide on the performance related remuneration of its Executive Directors. Further details on remuneration of the directors are set out in the Remuneration Report for the financial year under review and is in compliance with the requirements of Capital Markets Rule 12.26 and contains the information required by Appendix 12.1 of the Capital Markets Rules.
The Board notes that the organizational set-up of the Company and the size of the Board itself, together with the fact that Non-Executive Directors are not entitled to performance related remuneration, does not, in the opinion of the directors, warrant the establishment of a Remuneration Committee. Remuneration policies have therefore been retained within the remit of the Board itself, and as already stated in the case of the Executive Directors, it is the Non-Executive members of the Board that decide on their performance related remuneration.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
23
(continued)
The directors believe that certain committees that are suggested in the Code are either not required by the Company, or the functions of a number of committees may efficiently be merged or undertaken by the Board itself. In addition, the Board believes that its size and composition is sufficient for the proper direction and management of the Company and its business and that there would be no value added to the Company and its shareholders to increase the number of Board members simply to be able to have separate committees of the Board – when the same functions can properly be undertaken by the Board itself. The directors will retain the need of such committees under review and as in the past, may appoint ad hoc committees of directors to deal with specific issues as and when these arise.
For the purposes of the provisions of Article 63 of the Company’s Articles of Association, the aggregate emoluments paid to the directors is EUR 606,746 which is within the amount approved by the shareholders of EUR 989,160 for the purpose of that article. The aggregate emoluments paid to the members of the Executive Committee excluding executive directors amount to EUR 662,427.
A.Nomination Committee
The Board believes that the main principle has been duly complied with, in that it is the Articles of Association themselves that establish a formal and transparent procedure for the appointment of directors. The Company has, however, not established a Nominations Committee as suggested by the Code.
Principle Nine: Relations with Shareholders and with the Market
The Board serves the legitimate interests of the Company, accounts to shareholders fully and ensures that the Company communicates with the market effectively through a number of Company announcements, informing the market of significant events happening within the Company.
The Company also communicates with its shareholders through the Annual General Meeting (AGM), where the Board communicates directly with shareholders on the performance of the Company over the last financial year and informs shareholders of the challenges that lie ahead.
Business at the Company's AGM will cover the approval of the Annual Financial Report and the audited Financial Statements, the declaration of a dividend, if any, the election of directors, the determination of the maximum aggregate emoluments that may be paid to directors, the appointment of auditors and the authorisation of the directors to set the auditors' remuneration. Any other matter that may be placed by the directors before the AGM will be dealt with as “Special Business”.
Apart from the AGM, the Company has continued to communicate with its shareholders and the market by way of the Annual Financial Report and Financial Statements, by publishing its results on a six-monthly basis during the year and through the directors’ statements, which are also published on a six-monthly basis, as well as the publication of results for each of quarter 1 and quarter 3 in a financial year. Generally, the company also communicates with the market through Company announcements to the market in general. Regular meetings are carried out between Malta International Airport plc and Malta Association of Small Shareholders (MASS) to discuss matters of mutual interest.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
24
(continued)
The Company recognises the importance of maintaining a dialogue with the market to ensure that its strategies and performance are well understood. The Company's website (www.maltairport.com) also contains information about the Company and its business and is a source of further information to the market.
The Company’s Articles of Association allow minority shareholders to call special meetings on matters of importance to the Company, provided that the minimum threshold of ownership established in the Articles of Association is met.
Principle Ten: Institutional Shareholders
This Principle is specifically applicable to the institutional shareholders of the Company and their responsibilities, including their evaluation of governance disclosures.
Principle Eleven: Conflicts of Interest
The Board has established procedures on how conflicts are to be handled, if and when they arise. A director having a personal conflict on any matter is bound to inform the other members of the Board of such a conflict whether it is an actual, potential or a perceived conflict. It is then the other members of the Board that would decide on whether there exists such a conflict, actual or potential. By virtue of the Memorandum and Articles of Association, in the event that, in the opinion of the Board such a conflict exists, then the conflicted director is invited to leave the meeting when it proceeds to the vote, if any, on the matter concerned. As a matter of practice, discussions of such matters are normally conducted in the absence of the conflicted director. The Board feels that this is a procedure that achieves compliance with both the letter and the rationale of principle eleven.
Commercial relationships between the Company and other companies may be related by way of common directors and shareholders (“Related Party Transactions”). Contracts are entered into in the ordinary course of business with shareholders and other parties in which the directors have a beneficial interest. Terms and conditions of contracts negotiated with related parties are reviewed by the Company’s Audit Committee. Full disclosure of Related Party Transactions entered into during the financial year under review is made in note 33 to the Financial Statements.
The following directors have declared their interests in the share capital of the Company:
•Nikolaus Gretzmachera non-beneficial interest3
•Rita Heissa non-beneficial interest4
•Cory Greenlanda beneficial interest
No other director has a beneficial or non-beneficial interest in the Company’s share capital.
Principle Twelve: Corporate Social Responsibility
The directors are committed to high standards of Corporate Responsibility specifically in the social, economic and environmental fields both internally and externally. This is being done for the benefit of its key stakeholders which include its shareholders, employees, customers as well as the local community at large.
3 These shares are held by MMLC and VIE (Malta) Limited, companies of which Mr Gretzmacher is a director.
4 These shares are held by MMLC and VIE (Malta) Limited, companies of which Ms Heiss is a director.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
25
(continued)
Non-Compliance with Code Provisions
The directors set out below the code provisions with which they do not comply and a careful explanation as to the reasons for such non-compliance:
CodeProvision
Explanation
2.1
Whilst the Company has segregated the functions of the Chairman and the CEO, in that the two posts are occupied by different persons, the division of responsibilities between them has not been established in writing, although there is significant experience and practice that determines the two roles.
4.2
The Board has not formally developed a succession policy for the future composition of the Board of Directors as recommended by Code Provision 4.2.7. In practice, however, the Board and CEO are actively engaged in succession planning and in ensuring that appropriate schemes to recruit, retain and motivate employees and senior management are in place.
7.1
The Board believes that the size of the Company and the Board itself does not warrant the establishment of a committee specifically for the purpose of carrying out a performance evaluation of its role. Whilst the requirement under Code Provision 7.1 might be useful in the context of larger companies having a more complex set-up and a larger Board, the size of the Board is such that it should enable it to evaluate its own performance without the requirement of setting up an ad hoc committee for this purpose. The Board shall retain this matter under review over the coming year.
Having conducted an informal review of its own performance over the period under review it is the Board’s view that all members of the Board, individually and collectively, have contributed in line with the required levels of diligence and skill. In addition, the Board believes that its current composition endows the Board with a cross-section of skills and experience, not only with respect to the specific business of the Company, but also in a wider range of business areas and skills. This process was conducted by the Board itself rather than by a Committee chaired by a Non-Executive Director as required by the Code.
8B
The Board has not appointed a Nominations Committee in line with Code Provision 8B, particularly in the light of the specific manner in which the Articles of Association require that Non-Executive Directors be appointed by a shareholding qualification to the Board. The Executive Directors are, in accordance with the Articles, appointed by the Non-Executive Directors after their appointment, as aforesaid. The Board believes that the current Articles of Association do not allow the Board itself to make any recommendations to the shareholders for appointments of directors and that if this function were to be undertaken by the Board itself or a Nominations Committee, they would only be able to make a non-binding recommendation to the shareholders having the necessary qualification to appoint directors pursuant to the Articles of Association.
The Board intends to keep under review the utility and possible advantages of having a Nominations Committee and following an evaluation may, if the need arises, make recommendations to the shareholders for a change to the Articles of Association.
9.3
The Memorandum and Articles of Association does not provide any mechanism for the resolution of conflicts between shareholders or any process that would trigger arbitration in these instances. This is mitigated by ongoing open dialogue between executive management and Non-Executive Directors of the Company, to ensure that such conflicts do not arise.
9.4
The Company does not have a policy in place to allow minority shareholders to present an issue to the Board.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
26
(continued)
Internal Control
The Board is ultimately responsible for the Company's system of internal controls and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate risk to achieve business objectives, and can provide only reasonable, and not absolute, assurance against normal business risks or loss.
Through the Audit Committee, the Board reviews the effectiveness of the Company's system of internal controls, which are monitored by the Internal Auditors on a regular basis.
The key features of the Company’s system of internal control are as follows:
Organisation
The Company operates through the CEO and Executive Committee with clear reporting lines and delegation of powers.
Control Environment
The Company is committed to standards of business ethics that emulate best practice and seeks to maintain these standards across all of its operations. Company policies and employee procedures are in place for the reporting and resolution of improper activities.
The Company has an appropriate organisational structure for planning, executing, controlling, and monitoring business operations in order to achieve Company objectives.
Risk Identification
Company management is responsible for the identification and evaluation of key risks applicable to their respective areas of business. A Risk Management Committee serve as a primary champion of risk management at a strategic and operational level to ensure that a sound system is in place that identifies, assesses, manages, and monitors risk. In addition, through regular checks the internal auditors test the Company’s internal control systems and processes and make recommendations to management and the audit committee on any deficiency in such systems.
General Meetings
The general meeting is the highest decision-making body of the Company and is regulated by the Company’s Articles of Association. All shareholders registered on the register of members of the Company on a particular record date are entitled to attend and vote at general meetings. A general meeting is called by twenty-one (21) days’ notice.
At an Annual General Meeting what is termed as “ordinary business” is transacted, namely, the declaration of a dividend, the consideration of the accounts, balance sheets and the reports of the directors and the auditors, the election of directors, the appointment of auditors and the fixing of remuneration of directors and auditors. Other business which may be transacted at a general meeting (including at the Annual General Meeting) will be dealt with as “Special Business”.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2022
27
(continued)
Voting at any general meeting takes place by a show of hands or a poll where this is demanded. Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands each shareholder is entitled to one vote and on a poll each shareholder is entitled to one vote for each share carrying voting rights of which he is a holder. Shareholders who cannot participate in the general meeting may appoint a proxy by written or electronic notification to the Company. Appointed proxy holders enjoy the same rights to participate in the general meeting as those to which the shareholder they represent is entitled.
Every shareholder represented in person or by proxy is entitled to ask questions which are pertinent and related to the items on the agenda of the general meeting and to have such questions answered by the directors or such persons as the directors may delegate for such purpose.
The directors’ statement of responsibilities for preparing the Financial Statements is set out on page 14.
The information required by:
(a)Capital Markets Rule 5.97.5 is found in the Directors’ Report;
(b)Capital Markets Rule 12.26 and Appendix 12.1 will be found in the Remuneration Report.
Malta International Airport p.l.c.
Remuneration Report
Year ended 31 December 2022
28
This Report on the remuneration of Malta International Airport plc’s (the “Company” or “MIA”) Board of Directors, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), has been drawn up in compliance with the requirements of Chapter 12 of the Captital Markets Rules and contains information required by the provisions of Appendix 12.1 of the Capital Markets Rules.
The Company’s remuneration of its Board of Directors and executive management is based on the Remuneration Policy adopted and approved by shareholders at the annual general meeting of 11 November 2020. This policy may be viewed on the Company’s website at https://www.maltairport.com/corporate/investors/publications/.
The Remuneration Policy
The Company’s Remuneration Policy determines the basis for remuneration of all members of the Board of Directors of the Company. It 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, indicate the relative proportion between fixed and variable components.
The Company’s Remuneration Policy is intended as a measure to attract and retain suitable candidates to serve as directors and 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.
The overall remuneration of the Board distinguishes between the remuneration of the non-executive directors and executive directors. In the case of the non-executive directors, including the Chairman, the only component of remuneration is the fixed honorarium received by the non-executive directors, whilst in the case of the executive directors the remuneration consists of two components:
•The basic salary for the role as executive, and;
•A bonus linked to individual performance and the performance of the Company.
The decision-making process with respect to remuneration
The aggregate emoluments that may be paid to the directors, including the executive directors, is decided upon by the shareholders in general meeting following a recommendation made to shareholders by the Board.
The Board then decides on the remuneration of the Chairman and the other non-executive directors consisting of a fixed honorarium to each director. The Board also establishes and approves the remuneration of the CEO and CFO with respect to their executive roles within the Company.
Key principles of remuneration
The Board of Directors of the Company consists of seven (7) individuals. Five (5) are non-executive directors and two (2) are executive directors, including the CEO.
The aggregate remuneration approved by shareholders for the financial year ended 31 December 2022 was set at € 989,160. This includes components of remuneration of both non-executive and executive directors.
In accordance with Capital Markets Rule 12.26 transposing the requirements of the new EU Shareholders’ Rights Directive (2019), the Remuneration Policy was approved by the shareholders at the annual general meeting 11 November 2020.
Accordingly, this is the third year that the Company is publishing a Remuneration Statement in line with the Remuneration Policy adopted by shareholders at the AGM 11 November 2020.The comparable figures refer to the financial years 2021 and 2020 for comparability.
Malta International Airport p.l.c.
Remuneration Report
Year ended 31 December 2022
29
(continued) 
The Chairman and the non-executive directors
Fixed Component
The Board believes that, in line with local practice, the fixed honorarium for non-executive directors is the principal component that compensates directors for their contribution as members of the Board. The Chairman’s honorarium reflects the role as the most senior non-executive director on the Board and as the person responsible, amongst others, for chairing Board meetings and co-ordinating Board assignments.
Non-executive directors who are also delegated to sit on a sub-committee of the Board or otherwise chair such a sub-committee, are paid additional fixed honoraria for each such assignment.
None of the directors have service contracts with the Company and each non-executive director serves from one annual general meeting to the next, when the appointment of directors is conducted at the annual general meeting. Accordingly, none of the non-executive directors are entitled to any compensation if they are removed from office. Such removal would require an ordinary resolution of the shareholders at a general meeting.
The directors are entitled to be paid travelling and other reasonable expenses incurred by them in the performance of their duties as directors. The Company does not remunerate the Chairman or the other non-executive directors in any other manner, nor does it provide any loans or other guarantees to them.
Variable Component
The Chairman and non-executive directors of the Company do not receive any variable component of remuneration.
Table 1 shows the overall remuneration of the Chairman and non-executive directors for the financial year ended 31 December 2022, 2021 and 2020.
Office
Fixed Honorarium
Remuneration for sitting on subcommittees
Total 2022
Total 2021
Total 2020
Paid 2021
Paid 2020
Mr. Nikolaus Gretzmacher
€ 23,294
€ 23,294
€ 23,294
€ 23,294
€ 22,420
€ 20,964
Ms. Rita Heiss
€ 13,000
€ 3,300
€ 16,300
€ 11,647
€ 11,647
€ 11,210
€ 10,482
Dr. Cory Greenland
€ 13,000
€ 3,300
€ 16,300
€ 11,647
€ 11,647
€ 11,210
€ 10,482
Mr. Wolfgang Koeberl
€ 13,000
€ 13,000
€ 9,318
€ 9,318
€ 8,968
€ 8,386
Mr. Florian Nowotny
€ 13,000
€ 3,300
€ 16,300
€ 11,647
€ 11,647
€ 11,210
€ 10,482
Total
€ 75,294
€ 9,900
€ 85,194
€ 67,553
€ 67,553
€ 65,018
€ 60,796
Table 1: Remuneration of non-executive directors
Due to the COVID crises and the material adverse impact which these had on the Company the non-executive directors offered to have their salary reduced by 30% between April and July 2020 and again by 15% between February and April 2021. This reductions in remuneration are shown in Table 1. Effective 1st January 2022 the remuneration for a Non-Executive Director and a Non-Executive Director and Committee Member was increased from Euro 9.318 to Euro 13,000 and from Euro 11,647 to 16,300 respectively, whereas the remuneration for the Chairman remained unchanged. The last review of the remuneration of Non-Executive Directors was in 2005.
Malta International Airport p.l.c.
Remuneration Report
Year ended 31 December 2022
30
(continued)
Executive Directors
The Company has two executives that are appointed members of the Board. The executive directors are the CEO and the CFO, both of whom have service contracts with the Company of a definite duration, which entitle them to a fixed salary.
Fixed Remuneration – Salary
The CEO was entitled to receive a gross salary for the financial year ended 31 December 2022 of €206,866 (2021: €201,210; 2020: €200,794). During 2020, due to the events occasioned by the COVID-19 crisis and the material adverse impact which these had on the Company, the CEO offered to have his salary reduced by 30% between April and July 2020. During 2021, due to the ongoing COVID-19 crisis the CEO offered again a salary reduction of 15% between February and April 2021, and consequently the remuneration received for the year 2021 was of €193,696 (2020: €180,766). The CEO also receives the following benefits: Insurance (Health-Private Hospital Scheme, Accident & Disability Insurance, and Directors & Officers’ Insurance), a Company car and a fully expensed mobile phone service.
The CFO was entitled to receive a gross salary for the financial year ended 31 December 2022 of €161,357 (2021: €157,054; 2020: €156,963). During 2020, due to the events caused by the COVID-19 crisis and the material adverse impact which these had on the Company, the CFO offered to have his salary reduced by 30% between April and July 2020. During 2021, due to the ongoing COVID-19 crisis the CFO also offered again a salary reduction of 15% between February and April 2021, and consequently the remuneration received for the year 2021 was of €151,184 (2020: €141,318). The CFO also receives the following additional benefits: Insurance (Health-Private Hospital Scheme, Accident & Disability Insurance, and Directors & Officers’ Insurance), a Company car and a fully expensed mobile phone service.
Variable Remuneration – Bonus
Both the CEO and the CFO are entitled to a bonus scheme which is linked to the performance of the Company and their individual performance over the course of the financial year. The Chairman sets targets at the beginning of the year to be reached by each executive, and then assesses the performance of each executive against the benchmarks set at the beginning of each year and awards the bonus accordingly. The variable component of the executive directors’ remuneration is based on a balance scoring system which includes both financial and non-financial Key Performance Indicators (KPIs) and targets. The Chairman has full discretion in evaluating the performance and attainment of such KPIs and targets.
In the year 2022, the CEO received a bonus of €100,186 (2021: €50,070; 2020: €98,844), whilst the CFO received a bonus of €46,963 (2021: €23,468; 2020: €46,316), both in respect of the year 2021.
In terms of the requirements within Appendix 12.1 of the Capital Market Rules, the annual change of the average remuneration on a full-time equivalent basis of employees other than directors was 1.7% (2022 vs 2021) and 3.8% (2021 vs 2020). In relation to the performance of the Company we refer to page 11 of the Directors’ Report: ‘Financial Key Performance Indicators’.
The foregoing Remuneration Statement is being put forward to an advisory vote of the 2023 AGM in accordance with the requirements of the MFSA Capital Markets Rule 12.26 L.
The contents of this remuneration report have been checked by the auditors as required by Capital Markets Rule 12.26N and their report is appended herewith.
Approved by the Board of directors on 22 February 2023.
Malta International Airport p.l.c.
Income Statements and Statements of Comprehensive Income
Year Ended 31 December 2022
31
Income Statements 88,016,852 47,433,032 283,603 283,603 70,636 15,431 41,750,521 11,109,874 38,866,311 6,973,954 0.287 0.052 38,866,311 6,973,954 359,133 - - 233,436 - 39,099,747 6,973,954
The Group
The Company
(in EUR)
Notes
2022
2021
2022
2021
Revenue
6
83,644,230
43,510,486
Staff costs
11
(10,082,051 )
(6,774,849 )
(9,810,124)
(6,556,906)
Other operating expenses
9
(22,925,386 )
(16,371,370 )
(22,441,167)
(15,928,350)
Impairment losses on financial assets
21
(121,639 )
(208,132 )
(89,724)
(61,471)
Depreciation
15/16
(11,411,003 )
(11,267,027 )
(9,605,555)
(9,389,448)
Release of deferred income arising on the sale of terminal buildings upon privatisation
23
283,603
283,603
Investment income
7
824,218
633,059
Finance cost
8
(2,080,491 )
(2,000,814 )
(2,080,491)
(2,099,272)
Profit before tax
40,724,990
10,391,701
Income tax expense
13
(2,884,210 )
(4,135,920 )
(2,524,543)
(3,897,306)
Profit for the year attributable to the ordinary equity holders of the Company, net of tax
38,200,447
6,494,395
Earnings per share attributable to the ordinary equity holders of the Group
30
-
-
Statements of Comprehensive Income
The Group
The Company
(in EUR)
Notes
2022
2021
2022
2021
Profit for the year attributable to the ordinary equity holders of the Company, net of tax
38,200,447
6,494,395
Items that will not be reclassifiedsubsequently to profit or loss:
Actuarial gain on defined benefitpension plans
24/25
359,133
-
Deferred tax credit
19
(125,697 )
(125,697)
-
Other comprehensive income for the year attributable to the ordinary equity holders of the Company, net of tax
233,436
-
Total comprehensive income for the year attributable to the ordinary equity holders of the Company, net of tax
38,433,883
6,494,395
Malta International Airport p.l.c.
Statements of Financial Position
As at 31 December 2022
32
The Group
The Company
(in EUR)
Notes
2022
2021
2022
2021
Assets
Property, plant and equipment
15
154,231,504
152,558,288
Investment property
16
313,584
320,553
Investment in subsidiaries
17
2,004,800
2,004,800
Loans receivable
18
26,533,318
27,824,038
Other receivables
21
1,977,871
1,737,155
Deferred tax assets
19
5,395,516
5,594,763
Non-current assets
190,456,593
190,039,597
Inventories
20
1,162,402
885,064
Loans receivable
18
1,290,720
1,290,720
Trade and other receivables
21
25,167,482
19,205,573
Short-term Treasury Bills
27
24,789,438
-
Term deposits
28
19,500,000
10,500,000
Cash and cash equivalents
29
19,421,903
17,506,837
Current assets
91,331,945
49,388,194
Total Assets
281,788,538
239,427,791
Malta International Airport p.l.c.
Statements of Financial Position
As at 31 December 2022
33
(continued)
The financial statements on pages 31 to 91 were approved and authorised for issue by the Board of Directors on 22 February 2023. The financial statements were signed on behalf of the Company’s Board of Directors by Nikolaus Gretzmacher (Chairman), Alan Borg (Chief Executive Officer) and Karl Dandler (Chief Financial Officer) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2022.
The Group
The Company
(in EUR)
Notes
2022
2021
2022
2021
Equity and Liabilities
Equity attributable to ordinary equity holders of the Company
Share capital
26
33,825,000
33,825,000
Retained earnings
135,013,665
96,579,782
Total Equity
168,838,665
130,404,782
Lease liability
34
54,042,492
53,644,065
Deferred income
23
5,372,926
5,696,794
Other payables
22
996,394
607,538
Employee benefit obligations
24
2,964,300
3,954,173
Provision for MIA benefit fund
25
359,188
337,437
Non-current liabilities
63,735,300
64,240,007
Trade and other payables
22
47,320,812
42,265,903
Current tax liabilities
1,893,761
2,517,099
Current liabilities
49,214,573
44,783,002
Total Liabilities
112,949,873
109,023,009
Total Equity and Liabilities
281,788,538
239,427,791
Malta International Airport p.l.c.
Statements of Changes in Equity
Year Ended 31 December 2022
34
The Group
Equity attributable to ordinary equity holders of the Company
Share
Retained
(in EUR)
capital
earnings
Total
Balance at 1 January 2021
Profit for the year
Total comprehensive income for the year
Balance at 31 December 2021
Balance at 1 January 2022
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Balance at 31 December 2022
The Company
Equity attributable to ordinary equity holders of the Company
Share
Retained
(in EUR)
capital
earnings
Total
Balance at 1 January 2021
33,825,000
90,085,387
123,910,387
Profit for the year
-
6,494,395
6,494,395
Total comprehensive income for the year
-
6,494,395
6,494,395
Balance at 31 December 2021
33,825,000
96,579,782
130,404,782
Balance at 1 January 2022
33,825,000
96,579,782
130,404,782
Profit for the year
-
38,200,447
38,200,447
Other comprehensive income
-
233,436
233,436
Total comprehensive income for the year
-
38,433,883
38,433,883
Balance at 31 December 2022
33,825,000
135,013,665
168,838,665
Malta International Airport p.l.c.
Statements of Cash Flows
Year Ended 31 December 2022
35
The Group
The Company
(in EUR)
Notes
2022
2021
2022
2021
Cash flows from operating activities
Profit before tax
40,724,990
10,391,701
Adjustments for:
Depreciation
15/16
9,605,555
9,389,448
Investment income
7
(70,636 )
(15,431 )
(824,218)
(633,059)
Finance cost
8
2,131,404
2,114,256
Gain on sale of PPE
(24,650 )
(16,430 )
(24,650)
(16,430)
Release of deferred income arising on the sale of terminal buildings upon privatisation
23
(283,603 )
(283,603 )
(283,603)
(283,603)
Amortisation of grants
23
(40,255 )
(40,255 )
(40,255)
(40,255)
Provision for employee benefit obligations
24
36,419
33,451
Provision for MIA benefit plan
25
46,597
25,186
Provision for impairment of trade receivables
21
89,725
61,471
51,461,964
21,042,166
Working capital movements:
Movement in inventories
20
(277,338 )
(50,176 )
(277,338)
(50,176)
Movement in trade and other receivables
21
(5,968,383 )
(9,698,183 )
(5,795,416)
(8,802,403)
Movement in trade and other payables
22
(1,672,959 )
5,305,445
116,507
Cash flows from operations
50,694,655
12,306,094
Lease interest paid
34
(1,732,798 )
(1,794,466 )
(1,732,798)
(1,794,466)
Income taxes paid
(2,933,820 )
(428,181 )
(3,074,325)
(212,315)
Receipts of deposit from
tenants
300,000
-
Retirement benefit paid
24
(692,005 )
(7,600 )
(692,005)
(7,600)
Net cash flows from operating activities
45,495,527
10,291,714
Malta International Airport p.l.c.
Statements of Cash Flows
Year Ended 31 December 2022
36
(continued) 24,650 40,000 - - - - - 12,963 25,416 2,205,040 22,215,002 26,047,282 24,420,042 22,215,002
The Group
The Company
Notes
2022
2021
2022
2021
Cash flows from investing activities
Purchase of PPE
15
(12,178,991 )
(8,355,741 )
(11,433,677)
(7,326,029)
Additions to investment property
16
(1,637,454 )
(835,634 )
-
-
Proceeds from sale of property, plant & equip.
15
24,650
40,000
Investments in short-term
treasury bills
27
(24,789,438 )
(24,789,438)
-
Investments in term deposits
28
(9,000,000 )
(5,500,000 )
(9,000,000)
(5,500,000)
Payments for intracompany loans
18
-
(3,583,000)
Receipts from intracompany loans
18
1,290,720
1,290,720
Interest received
7
327,284
365,911
Net cash flows used in investing activities
(47,568,270 )
(14,625,959 )
(43,580,461)
(14,712,399)
Net movement incash and cash equivalents
(3,832,280 )
1,915,066
(4,420,684)
Cash and cash equivalentsat the beginning of the year
17,506,837
21,927,521
Cash and cash equivalentsat the end of the year
29
19,421,903
17,506,837
Net Debt Reconciliation
All the movements in the Group’s and the Company’s net debt (Lease liability net of cash and cash equivalents)
related only to cash flow movements and disclosed as part of the operating activities in the Statements of Cash Flows above (refer to Note 34).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
37
The Company is a public limited liability company whose shares are publicly listed and traded on the Malta Stock Exchange. The Company’s registration number is C12663, the country of incorporation is Malta and the Company’s registered office is Malta International Airport, Luqa, Malta .
The principal activities of the Company are the development, operation and management of Malta’s airport. On 11 February 2008, the Company set up a wholly owned subsidiary, Sky Parks Limited, to take over the operations of the car park business. The name of this subsidiary was changed to Airport Parking Limited on 27 October 2009. Another subsidiary, Sky Parks Development Limited, was set up by the Company on 29 October 2009. The main activity of Sky Parks Development Limited is to manage real estate projects within the land which is currently under the management of the Group. Another subsidiary Sky Parks Business Centre Limited was set up by the Company on 26 April 2012. The principal activity of the subsidiary is to operate the Business Centre within the limits of the airport. On 20 June 2013, the Company set up another wholly owned subsidiary, Kirkop PV Farm Limited. The main activity of this company is to explore opportunities in the generation of electricity using photovoltaic technologies.
2.Basis of preparation
Under the Companies Act, Cap. 386 of the Laws of Malta , the Company is required to present individual and consolidated financial statements. The financial statements of the Group and the Company have been prepared on a historical cost basis except for the subsequent measurement of the employee benefit obligations and the provision for the MIA Benefit fund and are in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and comply with the Companies Act, Cap. 386 of the Laws of Malta .
The consolidated financial statements comprise the financial statements of Malta International Airport p.l.c, and its subsidiaries, as mentioned in Note 1 above. For more details on the scope of consolidation see Note 40.
COVID-19 Impact
Due to the spread of the Omicron variant the number of passengers who passed through the terminal in January and February was lower than expected, but much higher than the comparative period in 2021. From March onwards restrictions started to be eased around Europe and Malta and as a result the number of passengers rose significantly over the comparative year. The increase in passengers had a positive impact on the Group’s and Company’s revenues which rose by 86% and 92% respectively over the prior year.
Staff costs also saw a sharp increase of 49% when compared to 2021. The main reason for this increase was the discontinuation of the COVID-19 wage supplement in May (see Note 12) and also the employment of new staff to meet the increased operations at the airport. Also, in the months between February and April of the comparative period a salary reduction came into effect whereby the Board of Directors, the Chief Executive Officer and the Chief Financial Officer took a 15% cut in their remuneration and members of the management team had a 10% reduction in their salaries. The remaining employees worked a four and a half day working week and 5% of their salaries were deducted.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
38
With the airport operations much busier, operational costs also rose significantly registering an increase of 39% over the prior year with the Group taking a less stringent approach in managing its operational costs.
The European Commission has approved a EUR 12 million aid measure to compensate Malta International Airport p.l.c. for part of the losses suffered due to the coronavirus pandemic as stipulated in “Legal Notice 247 of 2022 Tax Credit”. This measure aims at compensating Malta International Airport p.l.c. for the material losses suffered during the period between 21 March and 30 June 2020 due to the coronavirus pandemic and the travel ban imposed by Malta to limit the spread of the virus, together with the closure of non-essential shops which had an impact on the Company’s retail and property segment. In October Malta International Airport p.l.c. received confirmation from the Government of Malta whereby the EUR 12 million aid can be applied as a tax credit against the tax payable on the profits generated by the Company.
3.Judgments in applying accounting policies and key sources of estimation uncertainty
Except as discussed below and in the remaining notes to the financial statements, the directors did not make any significant judgments in the process of applying the Company’s and the Group’s accounting policies which can significantly affect the amounts recognised in the consolidated and the individual financial statements and, at the end of the reporting period, there were no key assumptions concerning the future, or any other key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
3.1.Service Concession Arrangements in terms of IFRIC 12
IFRIC 12 Service Concession Arrangements was endorsed by the EU for financial years beginning after 29 March 2009. The Interpretation, which is limited in scope, clarifies the accounting of service concession arrangements by private sector operators which provide public services on behalf of government or other public sector entities.
The Interpretation of IFRIC 12 provides guidance on the scope of arrangements based on the influence of the guarantor in regulating what services the operator must provide with the infrastructure, to whom it must provide services, and at what price. For arrangements falling within the Interpretation’s scope, the infrastructure assets are not recognised as property, plant and equipment of the operator. Rather, depending on the terms of the arrangement, the operator will recognise:
(i)a financial asset (where the operator has an unconditional right to receive a specified amount of cash or other financial asset over the life of the arrangement); or
(ii)an intangible asset (where the operator’s future cash flows are not specified, for example, where they will vary according to usage of the infrastructure asset); or
both a financial asset and an intangible asset where the operator’s return is provided partially by a financial asset and partially by an intangible asset.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
39
3.1.Service Concession Arrangements in terms of IFRIC 12 (continued)
3.2.Lessee accounting in terms of IFRS 16
Judgments and estimates with regards to IFRS 16 Leases that warrant additional disclosures in terms of IAS 1 comprise (a) the judgment in connection with the inclusion of the aerodrome licence within the scope of IFRS 16 and (b) the estimate in connection with the determination of the incremental borrowing rate upon the implementation of IFRS 16 on 1 January 2019.
The Group concluded that the licence over the aerodrome which includes the Airfield, falls within the scope of IFRS 16 and the contractual payments in this respect have therefore been included within right-of-use assets and lease liabilities, amounting to EUR 10.7 million upon the adoption of IFRS 16 on 1 January 2019. The Group arrived at this conclusion by taking into consideration the following factors - (a) the management of the Airfield is considered to be integral to the use of the land and buildings held as temporary emphyteusis, with the Group having an obligation to manage the Airfield for the same duration of the emphyteusis, (b) the Group considers the licence as being inseparable from the right to use the Airfield (being the tangible component), (c) it is not possible to split the right to operate the Airfield from the right to use the Airfield and (d) the Group considers the use of the Airfield to be the most significant element of the transaction.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
40
4.Application of new and revised IFRS
4.1.New and revised IFRS in issue but not yet effective
IAS 1 Amendments – Classification of Liabilities as Current or Non-current
The amendment affects only the presentation of liabilities in the statement of financial position — not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. They:
•clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period and align the wording in all affected paragraphs to refer to the "right" to defer settlement by at least twelve months and make explicit that only rights in place "at the end of the reporting period" should affect the classification of a liability;
•clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and
•make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.
The changes in ‘Classification of Liabilities as Current or Non-current — Deferral of Effective Date’ issued on 15 July 2020 defer the effective date of Classification of Liabilities as Current or Non-current (Amendments to IAS 1) to annual reporting periods beginning on or after 1 January 2023.
IAS 8 Amendments – Definition of Accounting Estimates
This amendment was issued to distinguish between changes in accounting policies from changes in accounting estimates. The amendment shall be effective for periods beginning on or after 1 January 2023.
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
The amendments are intended to help preparers in deciding which accounting policies to disclose in their financial statements. The amendment shall be effective for periods beginning on or after 1 January 2023.
IAS 12 Amendment – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Prior to the amendments, there had been some uncertainty about whether the IAS 12 exemption from recognising deferred tax applied to transactions for which companies recognise both an asset and liability, for example leases. The amendments clarify that the exemption does not apply and that companies are required to recognise deferred tax on such transactions. The amendments are effective for annual reporting period beginning on or after 1 January 2023.
At the date of approval of these financial statements, a number of other International Financial Reporting Standards were either not yet endorsed by the EU or were not yet applicable to the Group. The Board of Directors anticipate that the adoption of these Standards will have no material impact on the financial statements of the Group in the period of initial application.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
41
5.Operating Segments
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.
For management purposes the Group is organised into operating segments based on the nature of its operations and has the reportable segments as shown below.
Management monitors the operating results of its segments separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on earnings before interest, tax and deferred income arising from the sale of terminal buildings upon privatisation (EBIT). Revenues and certain costs are allocated in full to particular segments. The remaining costs are allocated across the different segments on the basis of square meters or revenues, as applicable. The Group and the Company financing (including finance income and finance costs), deferred income arising from the sale of terminal buildings upon privatisation and income tax are managed on a Group and Company basis and are not allocated to operating segments.
Airport Segment
The Airport Segment comprises of the activities usually carried out by an airport. These services include revenue from airport regulated fees, aviation concessions and PRMs (persons with reduced mobility) and their associated costs. This segment also includes the operations and maintenance of the terminal, runways, taxiways and aircraft parks.
Retail and Property Segment
The Retail and Property Segment includes various services that support the airport operations. These include the operations of the various retail outlets within the airport perimeter, advertising sites and rental of offices, warehouses and income from the running of the VIP lounges. Income and costs from Airport Parking Limited, Sky Parks Business Centre Limited and Sky Parks Development Limited are also allocated within the Retail and Property Segment.
Other Segment
This comprises services that do not fall under the Airport and the Retail and Property Segments, which include miscellaneous income and disbursement fees from third parties as well as any costs associated with this income.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
42
5.Operating Segments (continued)
The results of the operating segments are reported below:
2022
Retail &
(in EUR)
Airport
Property
Other
The Group
Revenue (external)
58,327,579
29,457,009
232,264
88,016,852
Staff costs
(8,545,001)
(1,537,050)
-
(10,082,051)
Other operating costs
(18,473,144)
(4,452,242)
-
(22,925,386)
Impairment losses on financial assets
(65,499)
(56,140)
-
(121,639)
EBITDA
31,243,935
23,411,577
232,264
54,887,776
Depreciation
(6,880,184)
(4,530,819)
-
(11,411,003)
EBIT
24,363,751
18,880,758
232,264
43,476,773
Investment income
70,636
Finance cost
(2,080,491)
Release of deferred income arising on the sale of terminal buildings upon privatisation
283,603
Profit before tax
41,750,521
2021
Retail &
(in EUR)
Airport
Property
Other
The Group
Revenue (external)
27,804,885
19,494,291
133,856
47,433,032
Staff costs
(5,685,758)
(1,089,091)
-
(6,774,849)
Other operating costs
(13,069,878)
(3,301,492)
-
(16,371,370)
Impairment losses on financial assets
(44,874)
(163,258)
-
(208,132)
EBITDA
9,004,375
14,940,450
133,856
24,078,681
Depreciation
(6,740,411)
(4,526,616)
-
(11,267,027)
EBIT
2,263,964
10,413,834
133,856
12,811,654
Investment income
15,431
Finance cost
(2,000,814)
Release of deferred income arising on the sale of terminal buildings upon privatisation
283,603
Profit before tax
11,109,874
Airport segment revenues generated from two clients with each generating 10% or more of revenues amounted to EUR 22,477,640 and EUR 16,056,395 (2021: EUR 10,094,407 and EUR 6,380,431).
The impact of COVID-19 on the financial performance of the Group and the Company is disclosed in more detail in Note 2.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
43
In the following table, revenue of the Group is disaggregated by revenue category. The table also includes a reconciliation of the disaggregated revenue with the Group’s operating segments (see Note 5).
The Group
2022
Retail and
(in EUR)
Airport
Property
Other
Total
Revenue from Servicesprovided
Regulated revenue
53,925,556
-
-
53,925,556
Unregulated revenue
4,402,023
7,440,984
232,264
12,075,271
Revenue from Contracts with Customers
58,327,579
7,440,984
232,264
66,000,827
Revenue from leases (note 34)
-
22,016,025
-
22,016,025
Total Revenue
58,327,579
29,457,009
232,264
88,016,852
The Group
2021
Retail and
(in EUR)
Airport
Property
Other
Total
Revenue from Servicesprovided
Regulated revenue
25,358,535
-
-
25,358,535
Unregulated revenue
2,446,350
5,195,230
133,856
7,775,436
Revenue from Contracts with Customers
27,804,885
5,195,230
133,856
33,133,971
Revenue from leases (note 34)
-
14,299,061
-
14,299,061
Total Revenue
27,804,885
19,494,291
133,856
47,433,032
In the following table, revenue of the Company is disaggregated by revenue category:
The Company
(in EUR)
2022
2021
Revenue from Servicesprovided
Regulated revenue
53,925,556
25,358,535
Unregulated revenue
10,837,084
7,131,904
Revenue from Contracts with Customers
64,762,640
32,490,439
Revenue from leases (note 34)
18,881,590
11,020,047
Total Revenue
83,644,230
43,510,486
All the Group’s revenues and its non-current assets other than financial assets are attributable to the Company’s country of domicile.
Revenue generated with entities under government control is disclosed in note 33 and 35.
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period either relates to contracts that have an original expected duration of one year or less or is in relation to contracts for which the Company and the Group provide a daily service of access that is distinct, with the uncertainty related to the consideration receivable being also resolved on that basis.
The impact of COVID-19 on the revenue of the Group and the Company is disclosed in more detail in Note 2.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
44
The Group
The Company
(in EUR)
2022
2021
2022
2021
Interest income on loans receivable
-
-
753,582
617,628
Interest income on treasury bills
19,867
-
19,867
-
Interest income on term deposits
50,769
15,431
50,769
15,431
Investment income
70,636
15,431
824,218
8.Finance Cost
The Group
The Company
(in EUR)
2022
2021
2022
2021
Lease interest
2,080,491
2,000,814
2,080,491
2,099,272
Finance cost
2,080,491
2,000,814
2,080,491
9.Other Operating Expenses
The Group
The Company
(in EUR)
Notes
2022
2021
2022
2021
Air traffic services
35
929,611
929,611
929,611
929,611
Bad debts
21
17,031
-
14,701
-
Cleaning
1,462,374
856,127
1,394,416
798,361
Ground handling services
35
1,172,302
506,431
1,172,302
506,431
Insurance
486,328
364,888
470,538
348,605
IT Expenses
2,777,227
2,340,687
2,777,227
2,340,687
Legal and professional fees
951,529
941,181
930,139
911,661
Lease payments on low-value items
34
6,766
7,492
6,766
7,492
Marketing and communication costs
5,624,496
2,766,183
5,787,753
2,977,514
Miscellaneous operating expenses
1,752,221
1,175,207
1,563,679
1,038,494
Other security services
144,298
98,505
87,446
54,650
Airport security costs
35
3,062,148
2,688,976
3,062,148
2,688,976
Repairs and maintenance
2,083,615
1,505,123
1,799,033
1,142,710
Net exchange differences
4,601
14,926
4,211
14,747
Telecommunications
108,854
102,590
107,156
100,599
Utilities
2,341,985
2,073,443
2,334,041
2,067,812
Other operating expenses
22,925,386
16,371,370
22,441,167
15,928,350
The impact of COVID-19 on the operating expenses of the Group and the Company is disclosed in more detail in Note 2.
Expenses incurred with entities under government control are disclosed in note 33 and 35.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
45
Included in the legal and professional fees are amounts that are payable to the parent Company’s auditor:
The Group
The Company
(in EUR)
2022
2021
2022
2021
Audit of the financial statements
110,000
119,500
96,500
100,000
Other assurance
22,800
15,500
22,800
15,500
Tax services
-
31,300
-
166,300
119,300
139,500
10.Key Management Personnel Compensation
Directors' compensation
The Group
The Company
(in EUR)
2022
2021
2022
2021
Short-term benefits:
Fees
85,195
65,019
85,195
65,019
Management remuneration
521,552
398,578
521,552
398,578
Social security costs
2,598
2,526
2,598
2,526
609,345
466,123
609,345
466,123
In addition, during the year under review, the Company granted other benefits to its directors. The aggregate amount of benefits, which includes monetary and non-monetary benefits, amounted to EUR 28,738 (2021: EUR 24,391). These amounts are included with other operating expenses.
11.Staff Costs and Employee Information
Staff Costs
The Group
The Company
(in EUR)
2022
2021
2022
2021
Wages and salaries
9,182,929
6,146,183
8,929,029
5,944,098
Recharge from parent
200,000
200,000
200,000
200,000
Social security costs
616,106
370,029
598,079
354,171
Retirement benefit costs (note 24 & 25)
83,016
58,637
83,016
58,637
10,082,051
6,774,849
9,810,124
6,556,906
The above amounts include the directors’ compensation disclosed in Note 10.
The average number of persons employed during the year, including Executive Directors, was made up as follows:
Average No. of Employees
The Group
The Company
(Number)
2022
2021
2022
2021
Business development, operations and marketing
208
192
198
183
Finance, IT and IM
25
24
25
24
Firemen
47
46
47
46
Met office
13
13
13
13
Technical and engineering
62
54
62
329
345
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
46
In 2020 the Maltese Government announced the COVID Wage Supplement Scheme which was still in effect in the current year until May. Malta International Airport was eligible to benefit from the COVID Wage Supplement, receiving EUR 800 on a monthly basis per full-time employee starting from 9 March 2020 until May 2022.
During the reporting period, the Company received EUR 1,138,040 (2021: EUR 2,851,899) in government grants under the COVID Wage Supplement. These amounts were deducted from the line item ‘Staff Costs’ in the Consolidated Statement of Comprehensive Income.
13.Income Tax Expense
Income tax recognised in profit or loss is as follows:
The Group
The Company
(in EUR)
2022
2021
2022
2021
Current tax expense
2,309,317
2,693,006
2,450,993
2,517,093
Deferred tax
574,893
1,442,914
73,550
1,380,213
Income tax expense for the year
2,884,210
4,135,920
2,524,543
3,897,306
Tax applying the statutory domestic income tax rate and the income tax expense for the year is reconciled as follows:
The Group
The Company
(in EUR)
2022
2021
2022
2021
Profit before Tax
41,750,521
11,109,874
40,724,990
10,391,701
Tax at applicable rate of 35 %
14,612,682
3,888,456
14,253,747
3,637,095
Tax effect of:
Depreciation charges not deductible by way of capital allowances in determining taxable income
380,200
352,519
321,458
293,777
Other net difference between accounting and tax deductible items of expenditure
(54,642)
(53,232)
(5,171)
(4,925)
Tax credit
(12,000,000)
-
(12,000,000)
-
Other differences
(54,030)
(51,823)
(45,491)
(28,641)
Income tax expense for the year
2,884,210
4,135,920
During 2022 the European Commission and Government of Malta approved a EUR 12 million aid measure to compensate Malta International Airport p.l.c. for part of the losses suffered due to the coronavirus pandemic. This measure was aimed at compensating Malta International Airport p.l.c. for the material losses suffered during the period between 21 March and 30 June 2020 due to the coronavirus pandemic and the travel ban imposed by Malta to limit the spread of the virus, together with the closure of non-essential shops which had an impact on the Group and Company’s retail and property segment. Malta International Airport p.l.c. has received the compensation for the losses directly caused by the pandemic, as stipulated in “Legal Notice 247 of 2022 Tax Credit”.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
47
In the current and previous year no net final dividend and interim dividend payments were made to the ordinary shareholders of the Company.
15.Property, Plant and Equipment
Total
259,912,816
8,355,741
(150,510)
268,118,047
11,024,921
(13,983)
279,128,985
88,154,918
10,449,767
(126,940)
98,477,745
10,586,550
(13,983)
109,050,312
169,640,302
170,078,670
Motor
vehicles
2,052,911
45,703
(150,510)
1,948,104
96,991
(13,983)
2,031,112
1,348,166
193,347
(126,940)
1,414,573
168,687
(13,983)
1,569,277
533,530
461,836
Furniture,
fixtures,
plant and
equipment
92,009,590
6,284,224
-
98,293,814
10,916,110
-
109,209,924
41,692,498
7,081,357
-
48,773,855
7,239,156
-
56,013,011
49,519,959
53,196,913
Not subjectto operatingleases
62,482,200
1,424,316
-
63,906,516
8,735
-
63,915,251
24,442,484
1,178,690
-
25,621,174
1,181,383
-
26,802,557
38,285,342
37,112,694
Buildings
Subject to operating leases - The Group as lessor
16,067,525
601,498
-
16,669,023
3,085
-
16,672,108
6,889,701
416,290
-
7,305,991
417,241
-
7,723,232
9,363,032
8,948,877
Related
Aerodrome
Licence
10,746,985
-
-
10,746,985
-
-
10,746,985
443,174
221,587
-
664,761
221,587
-
886,348
10,082,224
9,860,637
Not subjectto operatingleases
58,567,090
-
-
58,567,090
-
-
58,567,090
10,586,597
1,084,080
-
11,670,677
1,084,080
-
12,754,757
46,896,413
45,812,333
Land held ontemporary emphyteusis
Subject to operating leases - The Group as lessor
17,986,515
-
-
17,986,515
-
-
17,986,515
2,752,298
274,416
-
3,026,714
274,416
-
3,301,130
14,959,801
14,685,385
The Group
(in EUR)
Cost
At 1 January 2021
Additions
Disposals
At 1 January 2022
Additions
Disposals
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Provision for the year
Disposal Adjustments
At 1 January 2022
Provision for the year
Disposal Adjustments
At 31 December 2022
Carrying amount
At 31 December 2021
At 31 December 2022
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
48
Total
241,738,456
7,326,029
(150,510)
248,913,975
11,271,802
(13,983)
260,171,794
87,100,148
9,382,479
(126,940)
96,355,687
9,598,586
(13,983)
105,940,290
152,558,288
154,231,504
Motorvehicles
2,030,556
45,703
(150,510)
1,925,749
96,991
(13,983)
2,008,757
1,325,812
193,348
(126,940)
1,392,220
168,688
(13,983)
1,546,925
533,529
461,832
Furniture,fixtures,plant andequipment
81,877,458
7,139,113
-
89,016,571
11,162,992
-
100,179,563
40,695,429
6,226,414
-
46,921,843
6,462,235
-
53,384,078
42,094,728
46,795,485
Not subjectto operatingleases
55,154,584
110,711
-
55,265,295
9,266
-
55,274,561
24,476,814
1,083,985
-
25,560,799
1,087,863
-
26,648,662
29,704,496
28,625,900
Buildings
Subject to operating leases - The Group as lessor
15,375,268
30,502
-
15,405,770
2,553
-
15,408,323
6,820,023
298,649
-
7,118,672
299,717
-
7,418,389
8,287,098
7,989,934
RelatedAerodromeLicence
10,746,985
-
-
10,746,985
-
-
10,746,985
443,174
221,587
-
664,761
221,587
-
886,348
10,082,224
9,860,637
Not subjectto operatingleases
50,239,420
-
-
50,239,420
-
-
50,239,420
9,069,115
892,532
-
9,961,647
892,532
-
10,854,179
40,277,773
39,385,241
Land held ontemporary emphyteusis
Subject to operating leases - The Group as lessor
26,314,185
-
-
26,314,185
-
-
26,314,185
4,269,781
465,964
-
4,735,745
465,964
-
5,201,709
21,578,440
21,112,476
The Company
(in EUR)
Cost
At 1 January 2021
Additions
Disposals
At 1 January 2022
Additions
Disposals
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Provision for the year
Disposal Adjustments
At 1 January 2022
Provision for the year
Disposal Adjustments
At 31 December 2022
Carrying amount
At 31 December 2021
At 31 December 2022
In addition, the cost of fully depreciated plant and equipment amounts to EUR 21,015,919 (2021: EUR 19,469,702) for both the Group and the Company.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
49
The Group’s assets under construction as at 31 December 2022 amounted to EUR 13,649,300 (2021: EUR 5,572,173) and includes EUR 13,484,524 of furniture, fixtures, plant & equipment, EUR 81,132 of buildings and EUR 83,644 of motor vehicles. No depreciation is being charged on these assets.
The Company’s assets under construction as at 31 December 2022 amounted to EUR 12,358,067 (2021: EUR 5,572,173) and includes EUR 12,193,291 of furniture, fixtures, plant & equipment, EUR 81,132 of buildings and EUR 83,644 of motor vehicles. No depreciation is being charged on these assets.
16.Investment Property
The investment property relates to the business centre which is located on a portion of the land held on temporary emphyteusis. The carrying amount of the property includes the cost of construction and the cost of items that are an integral part of the building. The carrying amount also includes the portion of the right-of-use asset in relation to the temporary emphyteusis of the leasehold land classified as investment property, as further disclosed in note 34.
(in EUR)
The Group
The Company
Cost
At 1 January 2021
21,880,546
341,460
Additions from subsequent expenditure
835,634
-
At 1 January 2022
22,716,180
341,460
Additions from subsequent expenditure
1,401,785
-
At 31 December 2022
24,117,965
341,460
Accumulated depreciation
At 1 January 2021
6,601,034
13,938
Provision for the year
817,261
6,969
At 1 January 2022
7,418,295
20,907
Provision for the year
824,454
6,969
At 31 December 2022
8,242,749
27,876
Carrying amount
At 31 December 2021
15,297,885
320,553
At 31 December 2022
15,875,216
313,584
The Company’s investment property comprises the portion of the right-of-use asset in relation to the temporary emphyteusis of the leasehold land classified as investment property with a carrying amount of EUR 320,553 at 1 January 2022 (2021: EUR 327,522) less depreciation charge for the year of EUR 6,969 (2021: EUR 6,969) resulting in the carrying amount of EUR 313,584 at 31 December 2022 (2021: EUR 320,553).
During the year, direct operating expenses of EUR 951,693 (2021: EUR 968,088), which arose from the investment property, were incurred. Such expenses were incurred in generating rental income during the year.
The operating lease income generated from the investment property is disclosed under note 34.
Fair Value
Based on an internal valuation carried out by the directors of the Company, the fair value of the Group’s investment property was in the region of EUR 31 million at the balance sheet date (2021: EUR 37 million).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
50
The fair value measurement is categorised within Level 3 of the fair value hierarchy. The model is based on the present value of the net cash flows expected to be generated by the property on the basis of market expectations and includes the rates stipulated in the existing contracts with tenants, expected increase in rents after the non-cancellable period, occupancy rates and all other costs attributable to these assets. The expected net cash flows are discounted using a discount factor representing a weighted average cost of capital that is considered appropriate in the circumstances. The net cash flows reflect the amounts in the 2023 budget and long-term corporate planning.
In estimating fair value, the highest and best use of the property is its current use.
17.Investment in Subsidiaries
The Company’s investment in subsidiaries is stated at cost and comprises:
Share Capital
The Company
(in EUR)
2022
2021
Airport Parking Limited
1,200
1,200
Sky Parks Development Limited
2,001,200
2,001,200
Sky Parks Business Centre Limited
1,200
1,200
Kirkop PV Farm Limited
1,200
1,200
Investment in subsidiaries
2,004,800
2,004,800
The Company holds a 100% (2021: 100%) ownership in the ordinary share capital of Airport Parking Limited, a limited liability company incorporated in Malta, whose principal activity is the operation of car parks within the limits of the airport.
The Company holds a 100% (2021: 100%) ownership in the ordinary share capital of Sky Parks Development Limited, a limited company incorporated in Malta, whose principal activity is to manage real estate projects within the land which is currently under the management of the Group.
The Company holds a 100% (2021: 100%) ownership in the ordinary share capital of Sky Parks Business Centre Limited, a limited liability company incorporated in Malta, whose principal activity is to operate the Business Centre within the limits of the airport.
The Company holds a 100% (2021: 100%) ownership in the ordinary share capital of Kirkop PV Farm Limited, a limited liability company incorporated in Malta. The principal activity of this company is to explore opportunities in the generation of electricity using photovoltaic technologies.
The principal place of business of the company’s subsidiaries is Malta. The registered offices for these subsidiaries are as follows:
Airport Parking Ltd
Level 2
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
51
Sky Parks Development Ltd
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
Sky Parks Business Centre Ltd
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
Kirkop PV Farm Limited
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
The following table shows financial information for the consolidated subsidiaries:
Airport Parking Ltd
(in EUR)
2022
2021
Profit/(Loss) for the year
27,670
(186,405)
Share Capital
1,200
1,200
Retained earnings
1,615,195
1,587,525
Total Equity
1,616,395
1,588,725
Sky Parks Development Ltd
(in EUR)
2022
2021
Profit for the year
517,545
491,536
Share Capital
2,001,200
2,001,200
Accumulated Losses
(1,193,552)
(1,711,097)
Total Equity
807,648
290,103
Sky Parks Business Centre Ltd.
(in EUR)
2022
2021
Profit for the year
120,647
75,966
Share Capital
1,200
1,200
Retained earnings
1,649,721
1,529,074
Total Equity
1,650,921
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
52
The Company
Loans to
(in EUR)
subsidiary
Amortised cost
At 31 December 2022
27,824,038
Less: Amount expected to be settled within12 months (shown under current assets)
(1,290,720)
Amount expected to be settled after 12 months
26,533,318
The Company
Loans to
(in EUR)
subsidiary
Amortised cost
At 31 December 2021
29,114,758
Less: Amount expected to be settled within12 months (shown under current assets)
(1,290,720)
Amount expected to be settled after 12 months
27,824,038
The Company has granted four unsecured loans to subsidiaries. One of these loans was granted in 2019 and represents a loan commitment of EUR 20 million which was partly drawn down during the prior years (EUR 14.2 million). The interest rates of all loans are at arm’s length and comprise a margin which is over and above the EURIBOR.
Two loans with a total amount outstanding as at the end of the reporting period of EUR 9.0 million (2021: EUR 10.3 million) are being repaid on equal annual instalments until 2029. The loan amounting to EUR 14.2 million is repayable from 2025 and shall be repaid in full by the year 2044. Repayments of the fourth loan with an amount outstanding of EUR 4.6 million (2021: EUR 4.6 million) will commence in 2030.
The following table shows a reconciliation from the opening to the closing balances for the loans to the subsidiaries:
The Company
Loans to
(in EUR)
subsidiary
Carrying amount
At 31 December 2020
26,822,478
Additions
3,583,000
Repayments
(1,290,720)
At 31 December 2021
29,114,758
Repayments
(1,290,720)
At 31 December 2022
27,824,038
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
53
19.Deferred Taxation
The Group
Movement
Movement
(in EUR)
31.12.2020
for the year
31.12.2021
for the year
31.12.2022
Assets / (Liabilities)
Assets / (Liabilities)
Assets / (Liabilities)
Arising on:
Recognised in Total Comprehensive Income:
Accelerated tax depreciation
(1,214,516)
(1,960,185)
(3,174,701)
25,596
(3,149,105)
Provision for pension costs
1,294,746
17,845
1,312,591
(338,843)
973,748
Deferred income
1,565,452
(73,068)
1,492,384
(73,068)
1,419,316
Unabsorbed capital allowances
2,132,298
211,174
2,343,472
(592,816)
1,750,656
Leases
2,755,048
369,595
3,124,643
361,976
3,486,619
Future deductions of refinancing costs
718,178
(82,077)
636,101
(82,077)
554,024
Other temporary differences
306,233
73,802
380,035
(1,358)
378,677
Subtotal
7,557,439
(1,442,914)
6,114,525
(700,590)
5,413,935
Arising on:
Other movements:
Provision for pension costs
206,204
-
206,204
-
206,204
Subtotal
206,204
-
206,204
-
206,204
Total
7,763,643
(1,442,914)
6,320,729
(700,590)
5,620,139
The Company
Movement
Movement
(in EUR)
31.12.2020
for the year
31.12.2021
for the year
31.12.2022
Assets / (Liabilities)
Assets / (Liabilities)
Assets / (Liabilities)
Arising on:
Recognised in Total Comprehensive Income:
Accelerated tax depreciation
851,552
(1,783,008)
(931,456)
(106,051)
(1,037,507)
Provision for pension costs
1,294,746
17,845
1,312,591
(338,843)
973,748
Deferred income
1,565,452
(73,068)
1,492,384
(73,068)
1,419,316
Leases
2,755,049
436,502
3,191,551
366,235
3,557,786
Other temporary differences
301,973
21,516
323,489
(47,520)
275,969
Subtotal
6,768,772
(1,380,213)
5,388,559
(199,247)
5,189,312
Arising on:
Other movements:
Provision for pension costs
206,204
-
206,204
-
206,204
Subtotal
206,204
-
206,204
-
206,204
Total
6,974,976
(1,380,213)
5,594,763
(199,247)
5,395,516
Included in Total Comprehensive Income is an amount of EUR 125,697 deferred tax credit recorded in Other Comprehensive Income during the year for both the Group and the Company in connection with the provision for pension costs.
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The amount of deferred tax assets that can be recognised is based upon the likely timing and level of future taxable profits together with future tax-planning strategies.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
54
The Group
The Company
(in EUR)
2022
2021
2022
2021
Consumables
1,162,402
885,064
1,162,402
885,064
The cost of inventories recognised as an expense during the year was of EUR 748,133 (2021: EUR 328,095).
21.Trade and Other Receivables
The Group
The Company
(in EUR)
2022
2021
2022
2021
Short-term receivables
Trade receivables
10,221,210
9,134,723
9,457,594
8,062,368
Receivables from other related parties
8,656,393
4,342,368
8,318,209
4,289,493
Receivables from subsidiaries
-
-
5,193,271
4,923,117
Other receivables
613,491
282,175
325,399
137,632
Prepayments
2,215,818
2,107,468
1,873,009
1,792,963
21,706,912
15,866,734
25,167,482
19,205,573
Long-term receivables
Other receivables
1,992,558
1,928,319
1,977,871
Total receivables
23,699,470
17,795,053
27,145,353
20,942,728
The terms and conditions of the receivables from subsidiaries and related parties are disclosed in Note 33. Trade receivables are non-interest bearing and are generally on 30-day terms.
The receivables from other related parties of the Group and the Company of EUR 8,656,393(2021: EUR 4,342,368) and EUR 8,318,209 (2021: EUR 4,289,493) respectively, is made up entirely from balances owed from entities under government control. Receivables from other related parties are non-interest bearing and are generally on 30-to-90-day terms.
Impairment of Trade Receivables
For details on the accounting policies with respect to trade receivables and impairment of trade receivables refer to Note 40.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
55
The movement in the credit loss allowance in respect of trade receivables during the year for the Group and the Company was as follows:
Loss Allowance
The Group
Individual
Collective
(in EUR)
Assessment
Assessment
Total
At 1 January 2021
299,591
384,343
683,934
Credit loss allowances
-
208,132
208,132
At 31 December 2021
299,591
592,475
892,066
Credit loss allowances
35,536
86,102
121,638
At 31 December 2022
335,127
678,577
1,013,704
The Company
Individual
Collective
(in EUR)
Assessment
Assessment
Total
At 1 January 2021
252,473
384,343
636,816
Credit loss allowances
-
61,471
61,471
At 31 December 2021
252,473
445,814
698,287
Credit loss allowances
61,727
27,997
89,724
At 31 December 2022
314,200
473,811
788,011
The Group
LT-ECL(in EUR)
Collective(not credit-impaired)
Collective(credit-impaired, but not POCI)
Individual(credit-impaired, but not POCI)
Total
Balance as at 1 January 2021
222,256
162,085
299,591
683,932
Addition
198,480
9,652
-
208,132
Balance as at 31 December 2021
420,736
171,737
299,591
892,064
Addition
60,322
25,782
35,536
121,640
Balance as at 31 December 2022
481,058
197,519
335,127
1,013,704
The Company
LT-ECL(in EUR)
Collective(not credit-impaired)
Collective(credit-impaired, but not POCI)
Individual(credit-impaired, but not POCI)
Total
Balance as at 1 January 2021
222,256
162,085
252,473
636,814
Addition
94,906
(33,435)
-
61,471
Balance as at 31 December 2021
317,162
128,650
252,473
698,285
Addition
87,516
(59,517)
61,727
89,726
Balance as at 31 December 2022
404,678
69,133
314,200
788,011
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
56
22.Trade and Other Payables 34,435,699 607,538
The Group
The Company
(in EUR)
2022
2021
2022
2021
Short-term payables
Trade payables
4,133,140
2,604,257
3,932,785
2,314,970
Other payables
376,517
736,493
275,263
706,156
Payables due to other related party
3,031,086
1,624,175
3,031,086
1,624,175
Payables due to subsidiaries
-
-
66,375
559,685
Contract liabilities
367,649
165,384
367,649
165,384
Deferred income & related payables
2,726,224
2,479,082
2,211,289
2,135,956
Other Deferred income
323,888
323,878
323,888
323,878
Accruals
37,420,595
35,952,638
37,112,477
48,379,099
43,885,907
47,320,812
42,265,903
Long-term payables
Other payables
1,184,025
607,538
996,394
49,563,124
44,493,445
48,317,206
42,873,441
Contract liabilities represent prepayments from contracts with customers in relation to VIP services. The balance as at 31 December 2021 of EUR 165,384 was fully recognised as revenue during the reporting period and the balance as at 31 December 2020 of EUR 195,037 was fully recognised as revenue during the comparative period.
Accruals at the end of the year, amounting to EUR 16.4 million (2021: EUR 14.3 million) are in respect to related parties.
Terms and conditions of the above financial liabilities:
•Trade payables are non-interest bearing and are normally settled on 30-day terms.
•Other payables are non-interest bearing and have an average term of three months.
•The terms and conditions of the payables due to the related party and the subsidiaries are disclosed in Note 33.
•Long-term other payables are non-interest bearing and are expected to be settled in between one and five years.
All the above amounts are unsecured.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2022
57
The Group
Movement for the year
(in EUR)
2021
Additions
Amortisation
2022
Deferred income arising on the sale of terminal buildings upon privatisation
5,779,122
-
(283,603)
5,495,519
European Commission grant
241,550
-
(40,255)
201,295
Total deferred income as at 31 December
6,020,672
-
(323,858)
5,696,814
Less amounts included in trade and other payables
(323,878)
(323,888)
Amounts included in non-current liabilities
5,696,794
5,372,926
The Group
Movement for the year
(in EUR)
2020
Transfer
Amortisation
2021
Deferred income arising on the sale of terminal buildings upon privatisation
6,062,725
-
(283,603)
5,779,122
European Commission grant
281,805
-
(40,255)
241,550
Total deferred income as at 31 December
6,344,530
-
(323,858)
6,020,672
Less amounts included in trade and other payables
(333,859)
(323,878)
Amounts included in non-current liabilities
6,010,671
5,696,794
The Company
Movement for the year
(in EUR)
2021
Additions
Amortisation
2022
Deferred income arising on the sale of terminal buildings upon privatisation
5,779,122
-
(283,603)
5,495,519
European Commission grant
241,550
-
(40,255)
201,295
Total deferred income as at 31 December
6,020,672
-
(323,858)
5,696,814
Less amounts included in trade and other payables
(323,878)
(323,888)
Amounts included in non-current liabilities
5,696,794
5,372,926
The Company
Movement for the year
(in EUR)
2020
Transfer
Amortisation
2021
Deferred income arising on the sale of terminal buildings upon privatisation
6,062,725
-