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Annual Report and Consolidated Financial Statements
31 December 2024
Directors’ Report
The Board of Directors present their annual report and the audited consolidated and separate financial statements of the Group and the Company for the year ended 31 December 2024.
Principal activities
The parent company and any of its subsidiaries do not hold any branches in Malta or abroad.
Review of the business, results and dividends
The Group and the Company continued its trading operations during the year. The consolidated and separate statement of profit or loss and other comprehensive income is set out below.
In 2024, the Group’s revenue increased by 29% (2023: 80%) to €1,349,592 (2023: €1,045,058). Rental spaces of the commercial properties forming part of the Group’s investment properties that were leased for only a portion of the previous financial year generated a full year of rental income in the current year. Furthermore, the rental rates continued to increase in line with the contractual operating lease agreements and market conditions. These were the main factors contributing to a notable increase in revenue during 2024.
Total expenditure increased by 18% to €1,422,228 (2023: €1,205,314). During the year, increases in advertising and professional fees incurred by the Group were outweighed by decreases in repairs and maintenance and depreciation charge for the year. Furthermore, the cost of property sold during the year was lower than previous year. Lastly, finance costs have increased due to the increase in interest-bearing borrowings.
The Group generated a profit before income tax for the year ended 31 December 2024 of €108,481 (2023: €2,448,224). The financial results for the year ended 31 December 2023 included a fair value gain on investment properties amounting to €2,135,334.
The Group’s total assets increased to €65,947,122 (2023: €54,077,770), a significant portion of which constitutes investment properties. At the same time, the Group’s total liabilities increased from €23,240,863 in 2023 to €35,213,415 in 2024. Following the bond listing in 2024, as further explained below, interest-bearing borrowings increased to €21,965,907 (2023: €12,730,285). The bond proceeds were partly utilised to repay some of the Group’s outstanding bank loans and the zero-coupon secured callable notes during the year with the rest being allocated for the construction and development of one of the Group’s investment properties.
During the year ended 31 December 2024, the Company incurred a loss before tax of €207,444 (2023: €164,188). The increase in costs is mainly attributable to interest on the issuance of bonds listed on the Malta Stock Exchange amounting in total to €21,000,000. There bonds were issued in two tranches as follows:
In terms of the draft terms of merger dated 1 April 2024, J. Zammit Estates Limited, De Rohan Business Centre Limited, Zammit Business Centre Limited and Car-Sun Limited, all of which form part of the Group, were merged in accordance with the provisions of section 358 of the Companies Act (Cap. 386). All the assets and liabilities of De Rohan Business Centre Limited, Zammit Business Centre Limited and Car-Sun Limited were transferred to J. Zammit Estates Limited and the acquired companies have been dissolved. The merger became effective on 26 December 2024. For accounting purposes, as from 1 January 2024, the transactions of De Rohan Business Centre Limited, Zammit Business Centre Limited and Car-Sun Limited were treated as transactions of J. Zammit Estates Limited.
The Group’s and the Company’s business performance and financial position remain satisfactory. The Board of Directors expects the current level of activity to improve in the foreseeable future. The Group plans to continue developing its ongoing construction projects and anticipates completion in the immediate future. The Board of Directors did not propose or declare any dividend during the year ended 31 December 2024 (2023: Nil).
Events after the reporting period
As noted in Note 27 of these consolidated and separate financial statements, there were no other adjusting or other significant non-adjusting events between the end of reporting year and the date of authorisation by the Board of Directors.
Board of Directors
The Board of Directors of the Company who held office during the year ended 31 December 2024 and as at the date of this report are:
In accordance with the Company’s Articles of Association, the present Board of Directors are appointed every year and are eligible for re-appointment at the Annual General Meeting.
Statement of Board of Directors’ responsibilities
The Board of Directors is required by the Companies Act (Cap. 386) to prepare consolidated and separate financial statements which give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of the profit or loss for that year.
In preparing the consolidated and separate financial statements, the Board of Directors is responsible for:
The Board of Directors is also responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and the Company and to enable them to ensure that the consolidated and separate financial statements comply with the Companies Act (Cap. 386). This responsibility includes designing, implementing, and maintaining such internal controls, as the Board of Directors determines the necessary procedures to enable the preparation of the consolidation and separate financial statements that are free from material misstatement, whether due to fraud or error. They are also responsible for safeguarding the assets of the Group and the Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The financial statements of Agora Estates p.l.c. for the year ended 31 December 2024 are included in the Annual Report 2024 which is published in iXBRL format, in line with the ESEF requirements, and are made available on the Group’s website: https://agora-estates.com/investor-relations/. In view of their responsibility for the controls over, and the security of, the website, the Board of Directors is responsible for the maintenance and integrity of the Annual Report on the website. Access to information published on the Group’s website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of financial statements may differ from requirements or practice in Malta.
Financial reporting framework
The Board of Directors has resolved to prepare the Group’s consolidated financial statements and the Company’s separate financial statements for the year ended 31 December 2024 in accordance with International Financial Reporting Standards as adopted by the European Union.
Disclosures in terms of the Capital Market Rules
Pursuant to the Capital Market Rule 5.62
Going Concern
The Board of Directors, as required by Capital Market Rule 5.62, has considered the Group’s operational performance, the statement of financial position as at year end as well as the business plan for the coming year, and declare that they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, in preparing the financial statements, the Group is in a position to continue operating as a going concern for the foreseeable future.
Pursuant to the Capital Market Rule 5.64
Share Capital Structure
The Company’s authorised and issued share capital amounts to €10,360,000 Ordinary shares of €1 each. There are no shares admitted to trading on a regulated market in Malta or any EU member state. Except as otherwise provided, all ordinary shares shall rank equally in all respects, including without limitation, equal participation in profits distributed by the Company and equal rights upon distribution of the Company’s assets upon its winding up. Each ordinary share shall entitle the holder to 1 vote at each general meeting. No restrictions apply to the transfer of shares, except for the fact that upon issuing and allotting new shares for consideration in cash the Company shall not allot any of them on any terms to any person unless an offer has first been made to existing shareholders. The offer shall be made by a notice in writing specifying the number of shares offered and their price and stating a time, being not less than 28 days, within which the offer, if not accepted, shall be deemed to have been declined. Any remaining shares may then be offered to non-existing shareholders. Also, shareholders shall have the right to assign to another person his right to accept an offer to subscribe to new shares.
Holding in excess of 5% of the Share Capital
On the basis of the information available to the Company as at 31 December 2024, Zammit Holdings Limited held 10,359,998 ordinary shares of €1 each, which is equivalent to 99.99% of the Company’s authorized and issued share capital. The ultimate beneficial owner is James Zammit.
Appointment and Replacement of Directors
Board members are appointed every 1 year and are eligible for re-appointment at the Annual General Meeting. All Directors shall retire from office, at each annual general meeting shall be eligible for re-election or re-appointment.
Board Member Powers
The powers of the Board members are contained in Article 15 of the Company’s Articles of Association.
Contracts with Board Members and Employees
The Company has no agreements between the Company and the Directors of the Company’s Board or employees providing for compensation on termination or cessation of their office for any reason whatsoever.
It is hereby declared that as at 31 December 2024, information required under Capital Market Rules 5.64.2, 5.64.4, 5.64.5, 5.64.6, 5.64.7 and 5.64.10 are not applicable to the Company.
Pursuant to the Capital Market Rule 5.68
We confirm that to the best of our knowledge:
Pursuant to the Capital Market Rule 5.70.1
There were no material contracts in relation to which a Director of the Group and the Company was directly or indirectly interested.
Pursuant to the Capital Market Rule 5.70.2
The Company secretary is Ms Audrey-Anne Hughes.
Disclosure of information to auditors
At the date of making this report the Board of Directors confirms the following:
Principal risks and uncertainties faced by the Group and the Company
The Board as a whole considers the nature and extent of the risk management framework and risk profile that is acceptable to the Board of Directors. The Board of Directors regularly reviews the work carried out and ensures that risks are identified and mitigated in a timely manner so as not to have any adverse impact on the Group and the Company. The Group and the Company’s principal risk and uncertainties are included in Note 26 of these consolidated and separate financial statements.
Auditor
The auditor, Equis Assurance Limited, has intimated its willingness to continue in office and a resolution to reappoint them as auditor of the Group and the Company will be proposed at the forthcoming Annual General Meeting.
Registered address:
The registered office of the Group and the Company is Agora Business Centre, Level 3, Valley Road, Msida, MSD 9020, Malta.
By Order of the Board
Signed on behalf of the Group’s and the Company’s Board of Directors on 23 April 2025 by Mr. James Zammit and Mr Joseph Schembri as per the Director’s Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Accounts 2024.
Corporate Governance - Statement of Compliance
The Capital Market Rules issued by the Malta Financial Services Authority, require listed companies to observe The Code of Principles of Good Corporate Governance (the "Code"). Although the adoption of the Code is not obligatory, Listed Companies are required to include, in their Annual Report, a Directors' Statement of Compliance which deals with the extent to which Agora Estates plc (the ‘Company’) has adopted the Code of Principles of Good Corporate Governance and the effective measures that the Company has taken to ensure compliance with the Code, accompanied by a report of the auditors thereon.
Compliance
The Company’s Board of Directors (the "Board") believes in the adoption of the Code and has endorsed them except where the size and/or circumstances of the Company are deemed by the Board not to warrant the implementation of specific recommendations. In this context, it is relevant to note that the Company has issued bonds to the public and has no employees. Accordingly, some of the provisions of the Code are not applicable whilst others are applicable to a limited extent.
The Board
The Board of Directors is responsible for devising a strategy, setting policies and the management of the Company. It is also responsible for reviewing internal control procedures, financial performance and business risks facing the Company. The Board is also responsible for decisions relating to the redemption of the Bond, and for monitoring that its operations are in conformity with the Prospectus and all relevant rules and regulations.
Throughout the year under review, the Board regularly reviewed management performance. The Company has in place systems whereby the Board of Directors obtains timely information from the Managing Director, not only at meetings of the Board but at regular intervals or when the need arises.
Chairperson and Chief Executive Officer
The Chairperson's main function is to lead the Board, set the agenda and ensure that all board members partake in discussions of complex and contentious issues.
The Company did not appoint any Chief Executive Officer, however, the day-to-day operations of the Group is under the responsibility of the Managing Director.
Composition of the Board
The Board is composed of two executive and three non-executive directors, as listed below. The directors were appointed on 9 April 2019, upon incorporation of the Company, while Ms. Isabella Vella, was appointed on 31 January 2023. All directors can be reappointed to their posts on a yearly basis
Directors are appointed during the Company's Annual General Meeting for periods of one year, at the end of which term they may stand again for re-election. All Directors shall retire from office every year but shall be eligible for re-election. The Articles of Association of the Company clearly set out the procedures to be followed in the appointment of directors.
Internal Control
The Board is responsible for the Company's system of internal controls and for reviewing its effectiveness. Such a system is designed to achieve business objectives and to manage rather than to eliminate the risk of failure to achieve business objectives and can only provide reasonable assurance against material error, losses or fraud.
Authority to manage the Company is delegated to the Managing Director within the limits set by the Board of Directors. Systems and procedures are in place for the Company to control, report, monitor and assess risks and their financial implications, and to take timely corrective actions where necessary. Regular financial budgets and strategic plans are prepared, and performance against these plans is actively monitored and reported to the Board of Directors on a regular basis.
The Board also approves, after review and recommendation by the Audit Committee, the transfer of funds and other amounts payable to companies within the same group and ensures that these are subject to terms and conditions which are on an arm's length basis.
Directors' Attendance at Board Meetings
The Board believes that it has systems in place to fully comply with the principles of the Code. Board of Directors meets regularly, mainly to review the financial performance of the Company and to review internal control processes. Board members are notified of forthcoming meetings by the Company Secretary with the issue of an agenda and supporting Board papers, which are circulated well in advance of the meeting. All the directors have access to independent professional advice at the Company's expense should they so require.
The Board met formally five times during the year under review. The number of board meetings attended by Directors for the year ended 31 December 2024 is as follows:
Committees
The Board of Directors believes that, due to the Company's size and operation, the remuneration, evaluation and nominations committees that are suggested in the Code are not required, and that the function of these can efficiently be undertaken by the board itself. However, the Board on an annual basis undertakes a review of the remuneration paid to the Board of Directors and carries out an evaluation of their performance and of the audit committee. The shareholders approve the remuneration paid to the Board of Directors at the annual general meeting.
Audit Committee
The Board established an Audit Committee (the "Committee") in 2019 and has formally set out Terms of Reference as outlined in the principles laid out in the Capital Markets Rules. The purpose of the Committee is to protect the interest of the Company's shareholders and bondholders and assist the Board of Directors in conducting their role effectively. The Audit Committee also monitors the financial reporting process, the effectiveness of internal control and the audit of the annual financial statements. Additionally, it is responsible for monitoring the performance of the entities borrowing funds from the Company, to ensure that budgets are achieved and if not that corrective action is taken as necessary. It also scrutinises and supervises related party transactions for materiality and ensures that these are carried out at arm's length basis.
The Members of the Audit Committee are:
Mr. Joseph Schembri qualified as an accountant in 1973 and in 1977 he was appointed audit partner of Joseph Tabone & Co. In 1998, he was appointed senior partner at KPMG Malta. During the period 2013 and 2014 he was seconded to Libya to set up the Libyan firm of KPMG acting as audit engagement leader and risk management principal for the firm. In 2014, Mr. Joseph Schembri joined Baker Tilly Malta as a consultant and audit engagement leader. His auditing experience spans across a number of industries including banking and finance, insurance and funds. He has carried out assignments in the United Kingdom, Libya, Egypt and Malta. He has acted as non-executive director on a number of companies and currently sits as a non-executive director on a number of listed companies. He also chairs a number of audit committees for such companies and sits as director on a private finance company which owns manufacturing subsidiaries in several European countries, other than acting as Chairman of the Issuer.
Mr. Silvio Mifsud obtained a Bachelor of Arts degree with Honours in Business Management from the University of Malta in 1990. He is also a certified PRINCE2 practitioner and completed Stage 1 of the Association of the Chartered Institute of Bankers and completed his Certificate in Investment Migration – Cert (IM). Throughout his career, Mr. Silvio Mifsud has been involved in the banking sector, having been employed by two of the leading banks in Malta. He was employed as a Business Analyst for Bank of Valletta p.l.c. and Head of the Foreign Department at BOVI Limited. He headed the implementation of various banking IT structures such as the full automation of Payment Orders Process at BOVI Limited and Bank of Valletta p.l.c., the Foreign Exchange and Funds Transfer module of Profits Banking System previously in use at Bank of Valletta p.l.c. He subsequently occupied the positions of Executive Vice President and Chief Investment Officer and Head of Administration at FIMBANK Group. He was also the founding director of FIM Property Investment Limited and FIM Business Solutions Limited, and a member of the executive management meeting and deputy chairman of the bank’s IT Steering Committee. He was also responsible for introducing Flexcube, Oracle’s Universal Banking System at FIMBANK p.l.c. Mr. Silvio Mifsud has also managed the full process, from negotiations to operations, of the 15-storey Mercury Tower, the Head Office of the FIMBANK Group in St. Julian’s. He was also for some time involved in the anti-money laundering departments of FIMBANK p.l.c. as the first MLRO of the bank. He also set up and managed the Due Diligence Department at the Residency Malta Agency, previously Malta Residency Visa Agency, where he later also acted as an IT Advisor. He sits on the board and audit committee of a number of listed and regulated entities. Until the end of 2024, he also served as director and audit committee member of Finance House p.l.c., a subsidiary of the ultimate parent company of the Company.
Ms. Isabella Vella has accumulated a wealth of experience through her involvement in banking, construction, real estate and hospitality sectors. She started off her career in banking where she held both supervisory as well as lecturing roles. Ms. Isabella Vella then spent over 24 years in various managerial positions in the construction, real estate and hospitality fields and contributed to the success of a variety of projects undertaken by these sectors through her communication, marketing and business acumen. For nearly two decades she held a directorship on Peninsula Holdings Limited as well as Peninsula Investments Limited both pertaining to owners of the Westin Dragonara Hotel & Resort. She also held an alternate directorship in Bajja Holdings Limited and Bajja Investments Limited, the owners of which also own The Marriott Hotel & Spa in St. Julians. She acted as a non-executive director for a few years for Malta Communication Authority and as President of The Maltese-Chinese Chamber of Commerce. She presently also sits as a non-executive director on two companies listed on the MSE, namely Main Street p.l.c. and VBL p.l.c..
The Committee met formally five times during the year to 31 December 2024.
The Audit Committee is independent and is constituted in accordance with the requirements of the Capital Market Rules. The Head of Finance and the external auditors of the Company attend the meetings of the Committee by invitation. Other executive directors and external consultants are requested to attend when required. The Company Secretary also acts as Secretary to the Audit Committee.
Remuneration Statement
In terms of the Company's Memorandum and Articles of Association, it is the shareholders of the Company in the General Meeting who determine the maximum annual aggregate remuneration of the Board of Directors.
None of the Board of Directors is employed or has a service contract with the Company.
No part of the remuneration paid to the Board of Directors is performance-based. The Directors of the Company are not entitled to profit sharing, share options or pension benefits.
The Board of Directors of the Group and the Company received €34,000 (2023: €33,367) in aggregate for services rendered to the Group during 2024.
Relations with bondholders and the market
The Company publishes interim and annual financial statements, and when required, Company announcements. The Board feels these provide the market with adequate information about its activities.
Conflicts of Interest
On joining the Board and regularly thereafter, directors and officers of the Company are informed and reminded of their obligations on dealing in securities of the Company within the parameters of law and Capital Markets Rules. The Company has also set reporting procedures in line with the Capital Markets Rules, the Code, and internal code of dealing.
Signed on behalf of the Group’s and the Company’s Board of Directors on 23 April 2025 by Mr. Joseph Schembri (Chairman) and Mr. James Zammit (Managing Director) as per the Director’s Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Accounts 2024
The accounting policies and explanatory notes below form an integral part of the consolidated and separate financial statements.
The accountancy policies and explanatory notes below form an integral part of the consolidated and separate financial statements.
The consolidated and separate financial statements were approved and authorised for issue by the Board of Directors on 23 April 2025 and signed on behalf of the Group’s and the Company’s Board of Directors by Mr. James Zammit and Mr Joseph Schembri as per the Director’s declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Accounts 2024.
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Included in the Group’s retained earnings are fair value gains net of deferred tax on investment properties amounting to €20,736,859 (2023: €20,736,859) which are not distributable to the Group’s ultimate parent company. |
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The Company |
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Share capital |
Retained earnings |
Shareholder’s contribution |
Total |
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|
|
|
|
€ |
€ |
€ |
€ |
|
|
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Balance at 1 January 2023 |
|
942,501 |
604,013 |
6,730,306 |
8,276,820 |
|
|
|
Capitalisation of retained earnings |
|
187,499 |
(187,499) |
- |
- |
|
|
|
Capitalisation of shareholder’s contribution |
|
6,730,000 |
- |
(6,730,000) |
- |
|
|
|
Capitalisation of amounts due to ultimate parent company |
|
2,500,000 |
- |
- |
2,500,000 |
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
Total comprehensive loss for |
|
|
|
|
|
|
|
|
the financial year |
- |
(164,188) |
- |
(164,188) |
|
|
|
|
Other movements |
|
- |
- |
(306) |
(306) |
|
|
|
Balance at 31 December 2023 |
|
10,360,000 |
252,326 |
- |
10,612,326 |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2024 |
|
10,360,000 |
252,326 |
- |
10,612,326 |
|
|
|
Comprehensive loss |
|
|
|
|
|
|
|
|
Total comprehensive loss for the financial year |
|
- |
(209,070) |
- |
(209,070) |
|
|
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Balance at 31 December 2024 |
|
10,360,000 |
43,256 |
- |
10,403,256 |
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|
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The accountancy policies and explanatory notes below form an integral part of the consolidated and separate financial statements. |
Notes to the Financial Statements
1. Accounting policies
a. Going concern
The Board of Directors has at the time of approving the consolidated and separate financial statements, a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the consolidated and separate financial statements.
b. Basis of preparation
The consolidated and separate financial statements are prepared under the historical cost convention, except for the revaluation of investment properties that are measured at revalued amounts, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The nature of the Group’s operations and its principal activities is to hold investment properties for capital appreciation and long-term rental yields or to hold properties for resale. The nature of the Company’s operations and its principal activities is to hold shares in subsidiary companies registered in Malta.
i. Use of estimates and judgements
In preparing the financial statements, the Board of Directors is required to make judgements (other than those involving estimates) that have significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future period.
Critical judgements in applying the Group’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the Board of Directors has made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.
Capitalisation of borrowing costs
As described in Note 1(k), the Group capitalises borrowing costs directly attributable to the acquisition, construction or production of qualifying assets. Capitalisation of the borrowing costs relating to development of the Group’s various investment properties is made in proportion to the purpose of the original borrowings. Management exercises judgments to determine the appropriate allocation of borrowing costs to investment properties, based on the specific use of the funds. Capitalisation ceases when the investment property is substantially ready for its intended use or when development activities are suspended for an extended period.
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below.
Fair value of investment properties
The Group uses the services of professional valuers to revalue investment properties. The professional valuers take into account the market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The highest and best use of a non-financial asset takes into account the use of the asset that is physically possible, legally permissible and financially feasible, as follows:
As described in Note 12, the Group uses valuation techniques that include inputs that are not always based on observable market data in order to estimate the fair value of investment properties. This Note also provides detailed information regarding these valuation methods and the key assumptions used in performing such valuations.
Calculation of loss allowance
When measuring ECL the group uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other. Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements.
Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions.
Impairment of Goodwill
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, the Board of Directors estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary and may cause significant adjustments to the Group's assets within the next financial year.
In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired. Determining whether the carrying amount of this asset can be realised requires an estimation of the recoverable amount of the cash generating units. The value in use calculation requires the Board of Directors to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value.
The recoverable amount of the CGUs is determined from the value in use calculation. The key assumptions for the value in use calculations are those regarding the discount rates and expected changes to rental rates and direct costs during the period. The Board of Directors estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in rental rates and direct costs are based on past practices and expectations of future changes in the market.
The assessment of recoverability of the carrying amount of goodwill was performed using an adjusted sales comparison approach, given that the CGU comprises a site which is still in development phase. An increase in the adjusted sales prices per square metre would result in a higher fair value.
Based on the above assessment, the Board of Directors expects the carrying amount of goodwill to be recovered.
ii. New and amended IFRS Standards that are effective for the current year
In 2024, the Group and the Company has applied a number of amendments to IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) that are mandatory for the Group and the Company’s accounting year beginning on 1 January 2024. The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in changes to the Group and the Company’s accounting policies impacting the financial performance and position.
iii. New and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these consolidated and separate financial statements, the Group and the Company has not applied the following new and revised IFRS Standards that have been issued but are not yet effective had not yet been adopted by the EU:
The Board of Directors does not expect that the adoption of the Standards listed above will have a material impact on the consolidated and separate financial statements of the Group and the Company in future years, except for the below.
IFRS 18 Presentation and Disclosures in Financial Statements
IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with new requirements. In addition, some IAS 1 paragraphs have been moved to IAS 8 and IFRS 7. Furthermore, the IASB has made minor amendments to IAS 7 and IAS 33 Earnings per Share.
IFRS 18 introduces new requirements to:
An entity is required to apply IFRS 18 for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. The amendments to IAS 7 and IAS 33, as well as the revised IAS 8 and IFRS 7, become effective when an entity applies IFRS 18. IFRS 18 requires retrospective application with specific transition provisions.
The Board of Directors of the Group and the Company anticipates that the application of these amendments may have an impact on the Group's consolidated and Company’s separate financial statements in future periods. IFRS 18 will redefine financial performance reporting.
c. Basis of consolidation
The Group’s consolidated financial statements consolidate those of the parent Company and all of its subsidiaries as of 31 December each year. The subsidiaries have a reporting date of 31 December. Control is achieved when the Company:
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Company’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Company’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.
When the Company loses control of a subsidiary, the gain or loss on disposal recognised in profit or loss is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as required/permitted by applicable IFRS Accounting Standards). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments when applicable, or the cost on initial recognition of an investment in an associate or a joint venture.
d. Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss.
e. Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
f. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for services provided provided in the normal course of business, net of value-added tax and discounts, where applicable.
To determine whether to recognise revenue, the Group follows a 5-step process:
The Group recognises revenue from the following major sources:
g. Foreign currencies
(i) Functional and presentation currency
Items included in the Group’s consolidated and the Company’s separate financial statements are measured using the currency of the primary economic environment in which the entity operates. The Euro is the Group’s and the Company’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency (Euro) using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated and separate statement of profit or loss and other comprehensive income
h. Intangible assets
Intangible assets comprise computer software.
Computer software are intangible assets with finite useful lives that are acquired separately. These are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives of 4 years. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is deerecognised.
Impairment
Where an indication of impairment exists, in that the carrying amount of an intangible asset is greater than its estimated recoverable amount, a charge is made to write down the value of the asset to its estimated recoverable amount (Accounting policy (m)).
i. Leases
The Group as lessor
The Group enters into lease agreements as a lessor with respect to some of its investment properties.
Leases for which the Group is a lessor are classified as finance or operating leases. Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Under a finance lease, the lessee has substantially transferred all of the risks and rewards of ownership. The following considerations are made by the Board of Directors in determining whether a lease transfers substantially all the risk and rewards:
All the Group’s leases are operating leases. Lease agreements entered into by the Group do not include an option for the lessee to purchase the asset hance the risk and rewards incidental to ownership are not substantially transferred to the lessee, classifying the lease as an operating lease.
Subsequent to initial recognition, the Group regularly reviews the estimated unguaranteed residual value and applies the impairment requirements of IFRS 9, recognising an allowance for expected credit losses on the lease receivables. When a contract includes both lease and non-lease components, the Company applies IFRS 15 to allocate the consideration under the contract to each component.
j. Property, plant and equipment
Property, plant and equipment, comprising buildings improvement, motor vehicles, fixture and fittings, plant and machinery and computer and electronic equipment, are initially recorded at cost and are subsequently stated at cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of items.
Subsequent costs are included in the asset’s carrying amount, or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group, and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial year in which they are incurred.
Depreciation is calculated on the straight-line method to allocate the cost of the assets to their residual values over their estimated useful lives as follows:
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting year.
Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with the carrying amount, and are taken into account in determining operating profit.
An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount (Accounting policy (m)).
k. Investment properties
Investment properties are properties held to earn rentals or for capital appreciation or both. Investment properties are recognized as an asset when it is probable that the future economic benefits that are associated with the investment properties will flow to the entity and the cost can be measured reliably.
Investment properties are initially measured at cost, including transaction costs, less impairment losses. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in fair values of investment properties are included in profit and loss in the period in which they arise, including the corresponding tax effect. Fair values are determined by a professionally qualified architect on the basis of market values.
Investment properties are derecognised either when they have been disposed of (i.e. at the date the recipient obtains control) or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit and loss in the period of derecognition. The amount of consideration to be included in the gain or loss arising from the derecognition of investment properties is determined in accordance with the requirements for determining the transaction price in IFRS 15.
Transfers are made to or from investment properties only when there is a change in use. For transfers from inventory to investment properties at fair value, any difference between the fair value at the date of the transfer and its previous carrying amount should be recognised in profit or loss. For transfers from investment property carried at fair value to inventory the fair value at the change of use is the ‘cost’ of the property under its new classification.
l. Investments in subsidiaries
In the Company’s separate financial statements, investments in subsidiaries are accounted for by the cost method of accounting. The dividend income from such investments is included in the separate statement of profit or loss and other comprehensive income in the accounting year in which the Company’s rights to receive payment of any dividend is established. The Company gathers objective evidence that an investment is not impaired. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the separate statement of profit or loss and other comprehensive income.
m. Impairment of non-financial assets
At each reporting date, the Group and the Company reviews the carrying amounts of its intangible assets, investment properties and property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group and the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Group’s and Company’ cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus, the excess impairment loss is recognised in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which has been recognised for the asset in prior years. Any increase in excess of this amount is treated as a revaluation increase.
n. Inventories
Property held for development and resale
When the main object of a property project is the development for resale purposes, the asset is classified in the financial statements as inventory. Any elements of a project which are identified for business operation or long-term investment purposes are transferred at their carrying amount or fair value to property, plant and equipment or investment property when such identification is made and the cost thereof can be reliably segregated.
Property held for development is carried at the lower of cost and net realisable value.
Cost comprises the purchase cost of acquiring the property together with other costs incurred during its subsequent development, including:
Net realisable value is the estimated selling price in the ordinary course of business, less the cost of completion and selling expenses.
Gains and losses on disposal of property inventories are determined by reference to their carrying amount and are taken into account in determining gross profit.
o. Fair value measurement
The Group measures non-financial assets such as investment properties at fair value every two years.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
p. Financial instruments
Financial assets and financial liabilities are recognised in the Group’s and the Company’s consolidated and separate statement of financial position when the Group and the Company becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value, except for trade receivables that do not have a significant financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
i) Financial assets
Financial assets are classified, at initial recognition either at amortised cost, fair value through other comprehensive income (“OCI”) or fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s and Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, or for which the Group and the Company has applied the practical expedient, the Group and the Company initially measures a financial asset at its fair value.
Trade and other receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The Group’s and the Company’s business model for managing financial assets refer to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both
For purposes of subsequent measurement, financial assets are classified in four categories:
The Group and the Company holds financial assets at amortised costs.
Financial assets at amortised cost
The Group and the Company measures financial assets at amortised cost if both of the following conditions are met:
Financial assets at amortised cost are subsequently measured using the effective interest rate (“EIR”) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The Groups and the Company’s cash and cash equivalents and trade and other receivables fall into this category of financial instruments.
For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. For financial assets other than purchased or originated credit-impaired financial assets, interest income is calculated by applying effective interest rate to the gross carrying amount of a financial asset.
Interest income is recognised in profit or loss and is included in the “finance income” line item (Note 5).
A financial asset is primarily derecognised when:
The Group and the Company recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group and the Company expects to receive, discounted at an approximate of the original effective interest rate. The expected cash flows will include cash flows from the sale of a collateral held or other credit enhancements that are integral to the contractual terms.
For trade and other receivables, the Group and the Company applies a simplified approach in calculating ECLs. Therefore, the Group and the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and the Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to debtors and the economic environment.
The Group and the Company considers a financial asset in default when contractual payments are thirty (30) days past due. However, in certain cases, the Group and the Company may also consider a financial asset to be in default when internal or external information indicates that the Group and the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group and the Company. A financial asset is written-off when there is no reasonable expectation of recovering the contractual cash flows.
ii) Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Group’s and the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s and the Company’s own equity instruments.
All financial liabilities are measured subsequently at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, and financial guarantee contracts issued by the Group and the Company, are measured in accordance with the specific accounting policies set out below.
Financial liabilities at amortised cost
Financial liabilities that are not (i) contingent consideration of an acquirer in a business combination, (ii) held-for-trading, or (iii) designated as at FVTPL, are measured subsequently at amortised cost using the effective interest method.
Financial liabilities are classified, at initial recognition, as loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
The Group’s and Company’s financial liabilities also include trade and other payable, and interest-bearing borrowings.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate, the “EIR” method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. The EIR amortisation is included as finance costs in the consolidated and separate statement of profit or loss and other comprehensive income.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
q. Cash and cash equivalents and restricted cash
In the statement of financial position, cash and cash equivalents are comprised of cash (i.e. cash on hand and on-demand deposits) and cash equivalents. Cash equivalents are short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.
Restricted cash refers to cash and cash equivalents that are subject to legal or contractual restrictions, which limit the Group’s and the Company’s ability to use the funds for general operations. These restrictions can arise from interest-bearing borrowings agreements. Restricted cash is recognised when the Group and the Company has control over the funds and the restriction on the use of cash is legally enforceable. The restricted cash is initially recorded at its nominal value. Any interest or change in the value of the restricted cash is measured based on the applicable exchange rate or interest terms.
For the purposes of the consolidated and separate statement of cash flows, cash and cash equivalents consist of cash and cash equivalents and restricted cash as defined above, net of outstanding bank overdrafts which are repayable on demand and form an integral part of the group’s cash management. Such overdrafts are presented as short-term interest-bearing borrowings in the consolidated and separate statement of financial position.
r. Current and deferred taxation
The tax expense for the year comprises current and deferred taxation.
Taxation is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or equity, respectively.
Deferred taxation is provided using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred taxation is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting year and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
s. Share capital and dividends
Ordinary shares are classified as equity.
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the year in which the dividends are approved by the Company’s shareholders.
t. Borrowings costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. To the extent that variable rate borrowings are used to finance a qualifying asset and are hedged in an effective cash flow hedge of interest rate risk, the effective portion of the derivative is recognised in other comprehensive income and reclassified to profit or loss when the qualifying asset affects profit or loss. To the extent that fixed rate borrowings are used to finance a qualifying asset and are hedged in an effective fair value hedge of interest rate risk, the capitalised borrowing costs reflect the hedged interest rate.
u. Employee benefits
The Group contributes towards the state pension in accordance with local legislation. The only obligation is to make the required contributions. Costs are expensed in the year in which they are incurred.
v. Operating costs
Operating expenses are recognised in the statement of profit or loss and other comprehensive income upon utilisation of service or at the date of their origin.
w. Segment reporting
The Group determines and presents operating segments based on the information that internally is provided to the Board of Directors, which is the Group’s chief operating decision-maker in accordance with the requirements of IFRS 8, Operating Segments.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components, and for which discrete financial information is available. An operating segment’s operating results are reviewed regularly by the Board of Directors to make decisions about resources to be allocated to the segment and to assess its performance executing the function of the chief-operating decision-maker.
The Board of Directors considers the Group to constitute one reporting segment in view of its activities.
x. Contingent liabilities
Contingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, are possible obligations that arise from past events whose existence will be confirmed only by the occurrence, or non-occurrence, of one or more uncertain future events not wholly within the control of the local group; or are present obligations that have arisen from past events but are not recognised because it is not probable that settlement will require the outflow of economic benefits.
2. Revenue
The above fall under IFRS 15 and are recognised as follows:
3. Expenses by nature
The major items included with profit and loss are included below:
Cost of sales by category of activity:
Auditor’s fees
Fees charged, including any irrecoverable VAT, by the auditor for the services rendered during the financial years ended 31 December 2024 and 2023 relate to the following:
4. Staff costs
5. Finance income
6. Other income
7. Finance costs
8. Income tax
The tax expense and the result of accounting profit/(loss) multiplied by the statutory domestic income tax rate is reconciled as follows:
9. Intangible assets
Amortisation charge of €4,427 (2023: €4,177) is included in administrative expenses.
Amortisation charge of €1,766 (2023: €2,165) is included in administrative expenses.
10. Property, plant and equipment
Depreciation charge of €24,556 (2023: €65,754) are included in the administrative expenses
11. Goodwill
The Board of Directors has determined that the Group constitutes a single reporting segment based on its activities; therefore, the carrying amount of goodwill has been wholly allocated to this segment, which is the only cash generating unit. The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amount of this cash generating unit is determined based on a value in use calculations. The key assumptions for the value-in-use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. The Board of Directors estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the operations. The growth rates are based on industry growth forecasts whilst changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.
The assessment of recoverability of the carrying amount of goodwill includes:
Based on the above assessment, the Board of Directors expects the carrying amount of goodwill to be recoverable and there is no impairment in value of the goodwill. The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount for cash generated unit to which goodwill is allocated. The Board of Directors believe that any reasonable possible change in the key assumption on which the recoverable amount of goodwill is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the related cash generating unit.
12. Investment properties
The transfers from property, plant and equipment and inventory during the current year relate to the transfer of properties resulting from a change in use, following management’s assessment of whether the property meets the definition of investment property.
As at 31 December 2024, the Company’s debt securities in issue were secured by a number of investment properties owned by the Group, the fair value of which as at 31 December 2024 amounted to €28,452,923 (2023: €Nil).
As at 31 December 2024, investment properties with a total fair value of €4,516,037 (2023: €3,520,000) were pledged against facilities held by Zammit Holdings Limited, the Company’s immediate parent company.
As at 31 December 2024, facilities held by the Group and other related parties were secured by investment properties owned by the Group, the fair value of which as at 31 December 2024 amounted to €9,021,112 (2023: €7,973,437).
At 31 December 2024, the Group had entered into contractual commitments for the acquisition of investment properties amounting to €8,520,000 (2023: €Nil).
Fair value of investment properties
The Group’s investment properties were revalued by an independent architect in prior year. It is the Group’s policy to revalue its investment properly every two years. The architect is qualified and has experience in valuation of properties. The valuations conform to International Valuation Standards and the fair value was determined using the income capitalisation approach and the comparative method of valuation for similar properties. Any revaluation gain/loss net of applicable deferred income taxes is credited/charged to profit or loss for the year. At the reporting date, the Board of Directors reassessed the fair value of the properties and was of the opinion that their fair value had not altered significantly since the external valuations were performed in 2023.
The Group’s investment properties, comprising mainly of commercial properties, have been determined to fall within Level 3 of the fair valuation hierarchy. The different levels in the fair value hierarchy are defined in Note 1. The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. There were no transfers between levels during the year.
In estimating the fair value of the properties the highest and best use of the properties is their current use.
In arriving at the fair value of the properties, rental values were used and capitalised to determine the open market value. Valuers also considered all factors affecting the property’s value, including size, location and finishes, in order to arrive at an accurate property valuation. There has been no change to the valuation technique during the year.
Sites for development and vacant properties with a fair value of €19,190,892 (2023: €19,775,416) have been measured using an adjusted sales comparison approach. The adjusted sales prices are considered significant unobservable inputs used in determining the valuation.
Sensitivity
A slight increase in the capitalisation rate used would result in a significant decrease in fair value and vice versa and a significant increase in the market rent used would result in a significant increase in fair value, and vice versa.
The following amounts have been recognised in the consolidated statement of profit or loss and other comprehensive income in respect of investment properties:
13. Investments in subsidiaries
Notes:
i: On 11 December 2023, the Company’s investment in one of its subsidiaries increased following an allotment of 35,799,950 Ordinary shares of €0.10 each. This was paid by way of capitalisation of amounts due from the same subsidiary.
ii: During the year, the Company issued new loans to J. Zammit Estates Limited, a wholly-owned subsidiary (Note 15). These loans are recorded using the effective-interest method. The difference between the nominal amount of the loans and their present value has been capitalised.
iii: On 31 January 2025, the Company acquired 70.09% of the shares in Zammit Business Centre Limited.
The subsidiaries, all of which are unlisted at 31 December are shown below:
In terms of the provisions of section 358 of the Companies Act (Cap. 386), the merger between J. Zammit Estates Limited, De Rohan Business Centre Limited, Zammit Business Centre Limited and Car-Sun Limited became effective on 26 December 2024.
All the assets and liabilities of De Rohan Business Centre Limited, Zammit Business Centre Limited and Car-Sun Limited were transferred to J. Zammit Estates Limited and the acquired companies were subsequently dissolved. For accounting purposes, as from 1 January 2024 the transactions of De Rohan Business Centre Limited, Zammit Business Centre Limited and Car-Sun Limited shall be treated to be transactions of J. Zammit Estates Limited .
14. Inventories – property held for development and resale
Inventories of €874,730 (2023: 1,104,751) are expected to be recovered after more than twelve months from the statement of financial position date.
The Group has pledged inventories amounting to €1,362,805 (2023: €Nil) as security for one of the Group’s bank loans. Similarly, the Group has pledged 80% of the future sale proceeds of inventories amounting to €1,338,995 (2023: €1,104,751) as collateral for the bank loan obtained by one the Group’s bank loans.
15. Trade and other receivables
Notes:
16. Investment in financial assets
Notes:
17. Share capital
18. Retained earnings
The Group and the Company’s retained earnings represent accumulated profits and losses since incorporation date. Included in the Group’s retained earnings are undistributable reserves amounting to €20,736,859 (2023: €20,736,859) relating to the fair value gains on investment property net of deferred tax.
19. Interest-bearing borrowings
Note i: Debt securities in issue
As noted in Note 24, in accordance with the provisions of the prospectus, a portion of the proceeds from the bond issue is held by a Trustee and will be drawn down against the presentation of agreements, requests for payments and/or invoices. Amounts held by the Trustee are classified as restricted cash.
The bonds are measured at the amount of the net proceeds adjusted for the amortisation of the difference between the net proceeds and the redemption value of such bonds, using the effective interest rate as follows:
Note ii: Zero-coupon secured callable notes
By virtue of a prospectus dated 15 February 2023, Agora Estates plc (the ‘Issuer’) issued €3,500,000 zero-coupon secured callable notes with a nominal value of €100 each. Such notes were offered at a discounted price of €96 per note and were redeemable on 27 February 2024 at €101 per note. Only 93.7% of such issue was taken up with total proceeds amounted to €3,148,800. The notes were not listed on an active market as at 31 December 2023. Noteholders had the option to convert the notes into debt securities in issue issued in 2024. 72% of the noteholders exercised the option of conversion.
The zero-coupon callable notes were redeemed during the year through proceeds of the debt security in issue.
The notes were secured through:
Note iii: Bank loan I
The Bank Loan I facility bears effective interest at the rate of 4.25% per annum plus the applicable base rate, i.e. variable rate which is 3 months Euribor. The amount is repayable from 80% of the sale proceeds of properties owned by one of the Group’s subsidiaries by 30 November 2026 and is secured by:
Note iv: Bank loan II
The Bank Loan II facility bears effective interest at the rate at 4.75% per annum. Interest shall accrue on a quarterly basis on 25 March, 25 June, 25 September and 25 December of every respective year. The loan amount is repayable through 75% of the proceeds from the sale of properties as per bank facility letter or 75% of the final contract selling price, whichever is higher, by not later than 19 June 2028.
The Bank Loan II is secured by the following:
Note v: Other bank loans
Other bank loans bore an interest rate between 4% and 5.15% per annum and were repaid during the year ended 31 December 2024.
The bank loans were secured by:
Apart from the above bank borrowings, the Group has undrawn loan facilities amounting to €591,000 (2023: €593,310), which are available until 20 December 2026. Furthermore, as at 31 December 2024 the Group also had undrawn committed borrowings facilities of €1,424,000 which facility was cancelled by the Group in January 2025.
Weighted average effective interest rates during the reporting year:
Maturity of bank loans falling due after more than one year:
Covenants
Bank Loan I
The Group and the Company are subject to a non-financial covenant which requires bank approval to:
The Group is further subject to a non-financial covenant requiring that any Company’s loan and related interest payments due by the Group will be subordinated to the facility. Repayment of such a Company’s loan and interest will be deferred until the full repayment of the Bank Loan I.
Bank Loan II
The Group and the Company are subject to a non-financial covenant which requires bank approval to:
The Company is also required to make good for any shortfall in the quarterly interest and principal repayments the Group from their own personal resources.
20. Trade and other payables
Note:
Amounts due to other related parties, ultimate parent company and ultimate beneficial owner are unsecured, interest free and are repayable on demand. In prior year, amounts due to subsidiary were unsecured, interest free and repayable on demand.
21. Deferred taxation
Deferred income taxes are calculated on temporary differences under the liability method using a principal tax rate of 35%, with the exception of deferred tax on the revalued amount of investment properties which is computed on the basis applicable to disposals of immovable property, that is, tax effect of 8% or 10% of the transfer value.
The Group’s deferred taxation is split between deferred tax asset of €19,166 (2023: €27,277) and deferred tax liabilities of €4,174,449 (2023: €4,001,930). Deferred income tax is as follows:
Deferred tax is analysed as follows:
Deferred tax attributable to the above categories were charged to profit or loss. At reporting date, the Group had unutilised tax losses of €54,761 (2023: €77,934) available for offset against future profits. A deferred tax asset has been recognised in respect of €19,166 (2023: €27,277) of such losses.
22. Current taxation
Income tax payable is made up as follows:
23. Cash (used in)/generated from operations
Reconciliation of operating profit/(loss) to cash (used in)/generated from operations:
24. Cash and cash equivalents and restricted cash
For the purposes of the consolidated and separate statement of cash flows, the cash and cash equivalents at the end of the year comprise the following:
As noted in Note 19, the Group and the Company has an amount of €4,960,807 (2023: €Nil) restricted cash with the Trustee in line with the final terms of the debt securities in issue. Such amount will be drawn down against the presentation of agreements, requests for payment and/or invoices in accordance with the provisions of the said final terms.
During the year the Group entered into the following significant non-cash transactions:
During the year the Company entered into the following significant non-cash transactions:
25. Related party transactions
Year end balances due from or to other related parties, subsidiaries, ultimate parent company and ultimate beneficial owner are disclosed in notes 15 and 20 to these consolidated and separate financial statements. Other related parties consist of related parties other than the parent, entities with joint control or significant influence over the Company, subsidiaries, associates, joint ventures in which the Company is venture and key management personnel of the Company or its parent.
The Group and the Company also entered into related party transactions on an arm’s length basis with related parties. Any transactions between the Group and the Company have been eliminated on consolidation.
The following transactions were carried out with related parties:
Investments in subsidiaries have been disclosed in note 13.
No expense has been recognised in the period for bad or doubtful debts in respect of amounts due from other related parties, subsidiaries, parent company and ultimate beneficial owner and there are no provision for doubtful debts in respect of outstanding amounts due from these related parties.
During 2024, the loss amounting to €236,678 (2023: €Nil), was surrendered to a subsidiary by the Company at no consideration.
Except as mentioned in Note 28, no further guarantees have been given or received. The terms and conditions in respect of the related parties balances do not specify the nature of the consideration to be provided in settlement.
26. Financial risk management
Overview
The Group and the Company have an exposure to the following risks arising from the use of financial instruments within its activities:
This note presents information about the Group’s and the Company’s exposure to each of the above risks, policies and processes for measuring and managing risk, and the Group’s and the Company’s management of capital. Further quantitative disclosures are included in these consolidated and separate financial statements.
The responsibility for the management of risk is vested in the Board of Directors. Accordingly, it is the Board of Directors who has the overall responsibility for establishing an appropriate risk management framework.
Credit risk
Credit risk is the risk of financial loss to the Group and the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group and the Company’s trade and other receivables and cash and cash equivalents held at banks. The carrying amounts of financial assets represent the maximum credit exposure.
The Group and the Company assesses the credit quality of its customers by taking into account their financial standing, past experience, any payments made post reporting date and other factors, such as bank references and the customers’ financial position.
Management is responsible for the quality of the Group’s and the Company’s credit portfolios and has established credit processes involving delegated approval authorities and credit procedures, the objective of which is to build and maintain assets of high quality.
The Group’s and the Company’s policy is to deal only with credit worthy counterparties. The credit terms are generally 30 days. The Group and the Company regularly review the ageing analysis together with the credit limits per customer.
Impairment of Trade and other receivables
To measure the expected credit losses, trade and other receivables have been grouped based on shared credit risk characteristics and the days past due. Management considers the probability of default from such trade and other receivables as not material. In view of this, the amount calculated using the 12-month expected credit loss model is considered to be insignificant. Therefore, based on the above, no loss allowance has been recognized by the Group and the Company.
Cash and cash equivalents
The cash and cash equivalents held with banks as at 31 December 2024 and 2023 are callable on demand and held with local financial institutions with high quality standing or rating. Management considers the probability of default from such banks to be insignificant. Therefore, based on the above, no loss allowance has been recognized by the Group and the Company.
Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they fall due. The Group’s and the Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Generally, the Group and the Company ensure that it has sufficient cash on demand to meet expected operational expenditure, including the servicing of financial obligations.
The table below analyses the Group’s and the Company’s financial liabilities into relevant maturity grouping based on the remaining period at the end of the reporting period to the contractual maturity date.
The Group
The Company
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates or interest rates, will affect the fair value or future cash flows of a financial instrument. The objective of market risk is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. There has been no changes to the Group’s and the Company’s exposure to credit risks or the manner in which these risks are managed and measured.
i) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities which are denominated in a currency that is not the respective Group’s and the Company’s functional currency. The Group and the Company are not exposed to significant foreign exchange risk arising from the Group’s and Company’s financing transactions as assets and liabilities are principally denominated in Euro and the Group and the Company are not exposed to foreign exchange risk arising on trading transactions as these are principally conducted in Euro.
The Company’s cash and cash equivalents, restricted cash, interest-bearing borrowings, loans and receivables, finance lease and payables are denominated in Euro.
Accordingly, a sensitivity analysis for foreign exchange risk disclosing how profit or loss and equity would have been affected by changes in foreign exchange rates that were reasonably possible at the end of the reporting period is not deemed necessary.
ii) Cash flow and fair value interest rate risk
The Group and the Company are exposed to interest rate risk since both the Group and the Company borrow funds at both fixed and floating interest rates. The risk is managed by the Group and the Company by maintaining an appropriate mix between fixed and floating rate borrowings.
The Group’s and the Company’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.
The Group is exposed to the EURIBOR risk-free rates.
The sensitivity analysis was determined based on the Group’s exposure to interest rates for non-derivatives instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year. A one per cent increase or decrease is used when reporting interest risk internally to the key management personnel and represents management’s assessment of the reasonably possible change in interest rate.
The exposure to interest rates is not deemed material to these financial statements and accordingly, no sensitivity analysis has been disclosed. Furthermore, during the current financial year, the Group's and the Company's sensitivity to interest rates has decreased due to the reduction in variable rate debt instruments.
iii) Other price risks
The Group and the Company is not exposed to equity price risks as it does not have any equity investments.
Capital management
The Group’s and the Company’s objective is to maintain an adequate capital base through the optimisation of debt and equity balance in order to sustain the future development of the business and safeguard the ability of the Group and the Company to continue as a going concern. The Group’s and the Company’s overall strategy remains unchanged from 2023.
The capital structure of the Group and the Company consists of net debt and equity of the Group and the Company.
The capital structure of the Group and the Company consists of debt, which includes the interest-bearing borrowings disclosed in Note 19. Net debt is defined as debt after deducting cash and cash equivalents as disclosed in Note 24. Equity includes all items presented within equity in the statement of financial position and further disclosed in Notes 17 and 18.
The Group and the Company are not subject to any externally imposed capital requirements.
The Group and the Company's Board of Directors manages the capital structure through reviews on an ongoing basis and adjustments are made in light of changes in economic conditions. Based on recommendations of the Board of Directors, the Group and the Company balance the overall capital structure through the payments of dividends, new share issues as well as the issue of new debt or the redemption of existing debt.
Fair values
At 31 December 2024 and 2023 the carrying amounts of cash at bank, receivables, payables and accrued expenses and interest-bearing borrowings reflected in the consolidated and separate financial statements are reasonable estimates of fair value. The fair values of loans are not materially different from their carrying amounts.
27. Events after the reporting period
There were no other adjusting or significant non-adjusting events between the end of the reporting year and the date of authorisation by the Board of Directors.
28. Guarantees
One of the Group’s subsidiary, J. Zammit Developments Limited, holds bank guarantees in favour of third parties for any applications or permits granted to the subsidiary and to other related parties amounting to €22,400 (2023: €16,124). The pledged amount is restricted and not available for general use until the guarantee is released or expired. The Group also held a guarantee of €Nil (2023: €1,550,000) covering the facilities in the name of other related parties.
29. Contingencies
As at the end of the reporting period, the Group has contingent liabilities amounting to €1,650,000 (2023: €2,020,000) in respect of guarantees given to secure the banking facilities of other related parties.
30. Commitments
Operating lease commitments - the Group is the lessor
The operating leases relating to investment properties owned by the Group have terms between 1 and 10 years. The lessees do not have the option to purchase the properties at the expiry of the lease period. The income earned under the operating leases amounted to €1,167,219 (2023: €845,058).
At the end of the reporting period, the lessees had outstanding commitments under non-cancellable operating leases, which fall due as follows:
Operating lease commitments - Group as lessee
In 2024, the Group leased commercial premises consisting of showroom and offices under a non-cancellable operating lease agreement. The commencement date of the lease is 1 January 2025.
The future aggregate minimum lease payments under the non-cancellable operating lease are as follows:
Other commitments
In 2024, one of the subsidiaries of the Company entered into a loan agreement with a local bank which precludes the Company to request repayment of loan and request dividends without the prior approval of the bank. Also, the Company has committed to make good for any payment of interest or principal for such loan which as at 31 December 2024 amounted to €819,000 (2023: €Nil).
31. Statutory information
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the information given in the Directors’ report for the financial year for which the consolidated and separate financial statements are prepared is consistent with the financial statements; and |
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the Directors’ Report has been prepared in accordance with the Maltese Companies Act (Cap.386). |
In addition, in light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Directors’ Report. We have nothing to report in this regard.
With respect to the Corporate Governance – Statement of Compliance, the Capital Market Rules issued by the Malta Listing Authority require the Board of Directors to prepare and include in the Annual Report, the Corporate Governance - Statement of Compliance within Appendix 5.1 to Chapter 5 of the Capital Market Rules. The Statement’s required minimum contents are determined by reference to Capital Market Rule 5.97. The Statement provides explanation as to how the Group has complied with the provisions of the Code, presenting the extent to which the Group has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.
We are also required to assess whether the Corporate Governance - Statement of Compliance includes all the other information required to be presented as per Capital Market Rule 5.97.
We are not required to, and we do not consider whether the Board’s statements on internal control included in the Corporate Governance - Statement of Compliance cover all risks and controls or form an opinion on the effectiveness of the Group’s corporate governance procedures or its risk and control procedures.
In our opinion, the Corporate Governance - Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Market Rules issued by the Malta Listing Authority.
Responsibilities of the Board of Directors and the Audit Committee of the Financial Statements
The Board of Directors is responsible for the preparation of the consolidated and separate financial statements that give a true and fair view in accordance with EU IFRSs, and for such internal control as the Board of Directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the Board of Directors is responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and the Company or to cease operations, or have no realistic alternative but to do so.
The Board of Directors has delegated the responsibility for overseeing the Company’s and the Group’s financial reporting process to the Audit Committee.
Auditor’s Responsibilities for the Audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
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Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
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Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control. |
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Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. |
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Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern. |
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Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
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Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. |
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the Annual Financial Report of Agora Estates plc. for the year ended 31 December 2024, entirely prepared in a single electronic reporting format.
Responsibilities of the Board of Directors
The Board of Directors is responsible for the preparation of the Annual Financial Report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the consolidated financial statements and the relevant electronic tagging therein, comply in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included :
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Obtaining an understanding of the Group’s financial reporting process, including the preparation of the Annual Financial Report, in accordance with the requirements of the ESEF RTS. |
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Obtaining the Annual Financial Report and performing validations to determine whether the Annual Financial Report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS. |
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Examining the information in the Annual Financial Report to determine whether all the required taggings therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS. |
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2024 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
Report on the Statement of Compliance with the Principles of Good Corporate Governance
The Capital Market Rules issued by the Malta Listing Authority (the “Capital Market Rules”) require the Board of Directors to prepare and include in their Annual Report a Statement of Compliance providing an explanation of the extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures that they have taken to ensure compliance throughout the accounting period with those Principles.
The Capital Market Rules also require us, as the auditor of the Group, to include a report on the Statement of Compliance prepared by the Board of Directors.
We read the Corporate Governance - Statement of Compliance with the Code of Principles of Good Corporate Governance and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the consolidated financial statements included in the Annual Report. Our responsibilities do not extend to considering whether this statement is consistent with any other information included in the Annual Report.
Our responsibilities and opinion over the Corporate Governance - Statement of Compliance is disclosed in the Other Information section of our report.
Other reporting requirements
Under the Maltese Companies Act (Cap. 386) we are required to report to you if, in our opinion:
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We have not received all the information and explanations we require for our audit. |
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Adequate accounting records have not been kept, or that returns adequate for our audit have not been received from branches not visited by us. |
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The consolidated and separate financial statements are not in agreement with the accounting records and returns. |
We have nothing to report to you in respect of these responsibilities.
Appointment
We were first appointed as auditors of the Group and the Company by the members of the Company on 21 January 2022. Our total period of uninterrupted engagement appointment is 4 calendar years. The Company was listed on a regulated market on 8 March 2024.
Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee in accordance with the provisions of Article 11 of the EU Audit Regulation No. 537/2014.
Non-audit services
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Group and the Company are in accordance with the applicable law and regulations in Malta and we have not provided non-audit services that are prohibited under Article 18A(1) of the Accountancy Profession Act, Cap. 281 of the Laws of Malta were provided by us to the Group and the Company. We remain independent of the Group and the Company as described in the Basis for Opinion section of our report. No other services besides statutory audit services and services disclosed in the annual report and in the consolidated and separate financial statements were provided by us to the Group and the Company and its controlled undertakings.
Nicholas Vella
Director
For and on behalf of
Equis Assurance Limited
Certified Public Accountants
NOUV
MRO Frank Galea Road
Zebbug ZBG 9019
Malta
23 April 2025