AST GROUP P.L.C.
Annual Report and Consolidated Financial Statements 31 December 2023
Company Registration Number C 66811
CONTENTS
Corporate Governance - Statement of Compliance
Statement of Consolidated Comprehensive Income
Statement of Consolidated Financial Position
Statement of Consolidated Changes in Equity
Statement of Consolidated Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Report
The directors present the
annual report together with the audited consolidated financial
statements of the
Performance Review
As the Group expanded its operations following the acquisition of two vessels during 2023, combined with ongoing geopolitical conflicts in the Middle East, the Group encountered various transportation, logistical and operational issues. During the year, the Group acquired two vessels which Management incurred additional expenditure to upgrade the vessels and integrate them within the Group’s operations. Testament of this, is the vessel revaluation which was accounted for in FY2024, following vessel upgrades. Furthermore, as the vessels acquired were positioned in China and South Korea, it took a significant amount of time and money to bring them to the Mediterranean region. This resulted in the vessels being non-operational for some time, impacting revenue and profitability. Likewise, M/V AST Malta was due for a special survey which resulted in the vessel being non-operational for a month. As a result, during the year under review the Group generated revenue amounting to €28,040,798 (2022: €45,021,839) and incurred a loss before taxation of €2,138,903 (2022: profit before tax of €520,451).
As at the date of this report, all vessels are operating in the Mediterranean region and are integrated into the Group’s operations. Management is confident that the Group will revert to profitability in FY2024.
The total comprehensive loss for the year after accounting for taxation amounted to €1,351,313 (2022: total comprehensive income of €1,101,516). At year end, the Group has revalued all its motor vessel which increased the by €641,738 (2022: €722,847). The motor vessels were valued at €10.25m by an independent valuer on 18 December 2023 (2022: at €4m), on an open market existing use basis that reflects recent transactions for similar vessels.
The Company generated finance income from loans granted to its subsidiary companies amounting to €273,635 (2022: €137,717). During the year, no dividends were received by the parent from its subsidiaries. Interest expense on bond amounted to €288,186 (2022: €100,925). The Company’s loss before taxation amounted to €165,586 (2022: profit before tax of €661,454). After accounting for taxation, the loss for the year amounted to €165,586 (2022: profit after tax of €52,839).
Position Review
The Group’s asset base amounted to €15,319,364 as at 31 December 2023 (2022: €9,506,226), consisting principally of property, plant and equipment, inventories and trade and other receivables.
The Group’s total liabilities amounted to €12,312,124 as at 31 December 2023 (2022: €5,147,673).
At 31 December 2023, the Group reported a positive working capital of €0.5 million compared to €4.3 million at 31 December 2022.
During the year, the Company issued €8,500,000 6.25% Secured Bonds 2033 as per Prospectus dated 20 April 2023 . Part of the proceeds were used to redeem the €1,835,000 Prospects MTF Bond, whilst the remaining money was used to acquire two vessels – M/V AST Rising and M/V AST Eco. The Company’s asset base increased from €2,893,787 as at 31 December 2022 to €11,066,143 as at 31 December 2023. Likewise, loans due from subsidiary companies increased to €8,251,439 as at 31 December 2023 (2022: €2,236,628).
The Company’s main liabilities consist of €8,500,000 6.25% Secured Bonds 2033 (2022: €1,835,000 5.5% Unsecured Bonds 2028).
Dividends and Reserves
The accumulated losses of the Group at the end of the year amounted to €2,011,119 (2022: €18,068) and the accumulated losses of the Company amounted to €131,472 (2022: retained earnings of €34,114). The Board of Directors does not recommend the distribution of a dividend and proposes to charge the loss for the year to reserves.
Financial Risk Management
The Group’s activities expose it to a variety of financial risks, including credit risk and liquidity risk. Financial risks are explained in detail in Note 30 in these financial statements.
Events Subsequent to the Balance Sheet Date
The directors assessed subsequent events from 1 January 2024 through 29 April 2024, the date these financial statements were approved. As noted in note 31 to these financial statements, the directors have determined that no events subsequent to balance sheet date occurred.
Future Developments
The directors intend to continue to operate in line with the current business plan.
Directors
The Board meets on a regular basis to discuss performance, position and other matters. The Company’s Articles of Association do not require any of the directors to retire.
Statement of Directors’ Responsibilities
The Maltese Companies Act, (Cap 386) requires the directors to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the Company and the Group at the end of the financial period and of the profit or loss of the Company and the Group for that period.
In preparing the financial statements, the directors are required to: -
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the Company and the Group and to enable the directors to ensure that the financial statements have been properly prepared in accordance with the Maltese Companies Act, (Cap 386). The directors are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Disclosure of information to the auditor
As at the date of making of this report, the directors confirm the following:
Additional disclosures
Principal risks and uncertainties associated with the Company
The Company’s main objective is that of a finance company. Given that the Company does not carry out any trading activities, it is economically dependent on the business prospects of its subsidiaries. As a matter of fact, the Company is dependent on the receipt of income from its subsidiaries which are listed in note 17. The Group’s operations with respect to animal feed are concentrated in the Mediterranean region and as such it is highly susceptible to consumer demand which may have a negative impact on the Group’s business. The Group’s dependencies on a small number of suppliers and customers poses a risk due to competitions within the industry. A fall in demand on animal feed could affect negatively on the Group’s operations, earnings and financial position. With respect to the shipping industry, this is subject to external risk factors, that may not be within the Group’s control. Example of external risk factors in the shipping industry include susceptibility to local and global competition, increase in fuel prices, changes in laws and regulations effecting directly the Group or increase in operating costs. The shipping industry is highly competitive and volatile in nature.
Management and the board of directors remain confident that the Company will remain operating as a going concern and will continue to honour liabilities as and when they fall due.
A detailed review of the risk management policies adopted by the Group is included in Note 30 to these financial statements.
Share Capital Structure pursuant to Capital Markets Rule 5.64.1
The Company’s authorised and issued share capital is €250,000 divided into 250,000 Ordinary Shares of €1 each.
Each Ordinary Share is entitled to one vote. The Ordinary Share in the Company shall rank pari passu for all intents and purposes at law. There are currently no different classes of Ordinary Shares in the Company and accordingly all Ordinary Shares have the same rights, voting rights and entitlements in connection with any distribution whether of dividends or capital.
Holdings in excess of 5% of Share Capital pursuant to Capital Markets Rule 5.64.3
AFTL Group AG holds 249,999 shares in the Company, equivalent to 99.999% of its total issued share capital. There are no arrangements in place as at 31 December 2023, the operation of which may at a subsequent date result in a change in control of the Company.
Appointment and removal of directors pursuant to Capital Markets Rule 5.64.8
Appointment of directors shall be made at the Annual General Meeting of the Company.
In terms of the Articles of Association, the directors shall hold office for a period of one year and are eligible for re-election. An election of the directors shall take place every year at the Annual General Meeting of the Company.
Powers of the Directors pursuant to Capital Markets Rule 5.64.9
By virtue of the provision of the Articles of Association of the Issuer, the directors are empowered to transact all business which is not by the Articles expressly reversed for the shareholders in the general meeting.
Directors’ Interests
As at 31 December 2023, all directors do not have a beneficial interest in the share capital of the Company.
Contracts with Board Members and Employees
The Company does not have service contracts with any of its Board Members. All directors may be removed from their posts of director by ordinary resolution of the shareholders in a general meeting.
Material Contracts pursuant to Capital Market Rule 5.70.1
The Company entered into several loan agreements with its subsidiaries for the transfer of funds received from the Bond issue. Details of such contract are set out in Note 18 to the financial statements.
Auditors
The auditors, Horwath Malta, have expressed their willingness to remain in office and a resolution proposing their reappointment will be put before the members at the annual general meeting.
Statement of responsibility pursuant to the Capital Markets Rules 5.68
The directors confirm that, to the best of their knowledge:
Signed on behalf of the Board of Directors on 29 April 2024 by Dr Kristian Balzan and Mr Giuseppe Muscat.
Registered Address: 31,32,33
Corporate Governance - Statement of Compliance
The Code adopted by the Company
Pursuant to the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority, (“MFSA”) AST Group p.l.c. (the “Issuer” or the “Company”) hereby reports on the extent to which the Company has adopted the “Code of Principles of Good Corporate Governance” (the “Code”) appended to Chapter 5 of the Capital Markets Rules as well as the measures adopted to ensure compliance with these same Principles.
The Board of Directors of AST Group p.l.c. (the “Board") acknowledges that although the Code does not dictate or prescribe mandatory rules, compliance with the principles of good corporate governance recommended in the Code is in the best interests of the Company, its shareholders and other stakeholders. The Board considers compliance with the Code to be an integral part of operations so as to ensure transparency and responsible corporate governance which will in turn yield a positive reputation for the Company. Effective measures have been taken to ensure compliance to these principles and for the implementation of the Code as detailed hereunder.
The Board recognises that in line with Capital Markets Rules 5.101, the Company is exempt from making available the information set out in Capital Markets Rules 5.97.1 to 5.97.3; 5.97.6 and 5.97.8.
General
Good corporate governance is the responsibility of the Board as a whole and has been, and remains a priority for the Company. In deciding on the most appropriate manner in which to implement the Code, the Board took cognizance of the Company’s size, nature and operations, and formulated the view that the adoption of certain mechanisms and structures which may be suitable for companies with extensive operations may not be appropriate for the Company. The limitations of size and scope of operations inevitably impact on the structures required to implement the Code, without however diluting the effectiveness thereof.
The Board considers that, the Company save as indicated herein in the section entitled Non-Compliance with the Code, has been in compliance with the Code throughout the financial year under review.
This Statement shall now set out the structures and processes in place within the Company and how these effectively achieve the goals set out in the Code for the financial year under review. For this purpose, this Statement will make reference to the pertinent principles of the Code and then set out the manner in which the Board considers that these have been adhered to, and in the Non-Compliance with the Code Section, the Board then indicates and explains the instances where it has been departed from or where it has not applied the provisions of this Code, as allowed by the same Code.
For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code means compliance with the Code’s main principles.
Compliance with the Code
Principle 1: The Board
The Board sets the strategy of the Company and retains direct responsibility for appraising and monitoring the Company’s financial statements and its annual report. The duties of the Board are exercised in a manner designed to ensure that it can effectively supervise the operations of the Company so as to protect the interests of Bondholders, amongst other stakeholders.
The Directors report that for the financial year under review, the Directors have provided the necessary leadership in the overall direction of the Company and have performed their responsibilities for the efficient and smooth running of the Company with honesty, competence and integrity. Both on an individual level and collectively, the Directors possess the necessary skills and experience to make an effective contribution to the leadership and decision-making processes of the Company as reflected by the Company’s strategy and policies. All the members of the Board are fully aware of, and conversant with, the statutory and regulatory requirements connected to the business of the Company. The Board is accountable for its performance and that of its delegates to shareholders and other relevant stakeholders.
The Company has a structure whereby although the Chief Executive Officer is not a member of the Board, he is invited to all board meetings in order to enable the Board to have direct information about the Company's performance and business activities.
Principle 2: The Company’s Chairperson and Chief Executive Officer
The functions of the Chairman and the CEO of the Company are segregated and are occupied by different individuals.
The Chairman is responsible for leadership of the Board and for setting its agenda. The Chairman ensures that the Board’s discussions on any issue put before it are addressed with adequate depth, that the opinions of all the Directors are taken into account, and that all the Board’s decisions are supported by adequate and timely information. The Chairman also ensures that the CEO develops a strategy for subsequent approval by the Board.
Principle 3: Composition of the Board
The Board is composed of one (1) executive director and three (3) non-executive Directors. The maximum permitted in terms of the Company’s Memorandum of Association is seven (7). The three non-executive Directors are independent from the Company. The Board is responsible for the overall long-term strategy of the Group and general policies of the Company and its subsidiaries (the Company and its subsidiaries listed in note 17, collectively the “Group”) of monitoring the Company’s systems of control and financial reporting and communicating effectively with the market as and when necessary.
The Articles of Association of the Company clearly set out the procedures to be followed in the appointment of directors. As at 31 December 2023, the Board is made up as follows:
In assessing the independence of Messrs Wait, Balzan, and Demajo, due notice has been taken of Section 5.117 of the Capital Markets Rules.
Principle 4: The Responsibilities of the Board
The Board acknowledges its statutory mandate to conduct the administration and management of the Company. The Board, in fulfilling this mandate and discharging its duty of stewardship of the Company, assumes responsibility for the Company’s and Group's strategy and decisions with respect to the issue, servicing and redemption of its bonds in issue, and for monitoring that its operations are in conformity with its commitments towards bondholders, shareholders, and all relevant laws and regulations. The Board is also responsible for ensuring that the Company establishes and operates effective internal control and management information systems and that it communicates effectively with the market.
Principle 5: Board Meetings
Directors meet regularly to review the financial performance and the overall strategy of the Company. Board members are notified of meetings by the Company Secretary with the issue of an agenda, which is circulated in advance of the meeting. Minutes are prepared during the Board meetings recording inter alia attendance, and resolutions taken at the meeting. The Chairman ensures that all relevant issues are on the agenda supported by all available information, whilst encouraging the presentation of views pertinent to the subject matter and giving all Directors every opportunity to contribute to relevant issues on the agenda. The agenda for the meeting seeks to achieve a balance between long-term strategic and short-term performance issues.
The Board meets as frequently required in line with the nature and demands of the business of the Company. Directors attend meetings on a frequent and regular basis and dedicate the necessary time and attention to their duties as Directors of the Company. The Board met formally 6 times during the year 2023. The following Directors attended Board meetings as follows:
Principle 6: Information and Professional Development
Each Director is made aware of the Company’s on-going obligations in terms of the Companies Act (Cap. 386 of the Laws of Malta) (the “Act”) and the Rules. Directors have access to the advice and services of (i) the Company Secretary, who is responsible for ensuring adherence to Board procedures as well as good information flows within the Board and the Audit Committee.
Directors are entitled to seek independent professional advice at any time on any aspect of their duties and responsibilities, at the Company's expense.
Principle 8: Committees
Internal Control
The Board is responsible for the internal control system of the Company and for reviewing its effectiveness. The internal control system is designed to achieve business objectives and to manage the risk of failure to achieve business objectives and can only provide reasonable assurance against material error, losses and fraud. Systems and procedures are in place to control, monitor, report and assess risks and their financial implications. Management accounts and strategic plans are prepared on a regular basis and are presented to the Board to monitor the performance of the Company on an on-going basis.
During the financial year under review the Company operated a system of internal controls which provided reasonable assurance of effective and efficient operations covering all controls, including financial and operational controls and compliance with laws and regulations. Processes are in place for identifying, evaluating and managing the significant risks facing the Company.
Other key features of the system of internal controls adopted by the Company in respect of its own internal control as well as the control of the other companies forming part of the Group are as follows:
Audit Committee
The primary objective of the Audit Committee consists of supporting the Board in their responsibilities in dealing with issues of risks, control and governance and associated assurance; and in reviewing the financial reporting processes, financial policies and internal control structure. The Audit Committee oversees the conduct of the external audit and acts to facilitate communication between the Board, management and the external auditors. The internal and external auditors are invited to attend the Audit Committee meetings. The Audit Committee reports directly to the Board of Directors. Although the Audit Committee is set up at the level of the Company its main tasks are also related to the activities of the Group.
The Board set formal terms of engagement and terms of reference of the Audit Committee that establish its composition, role and function, the parameter of its remit and the basis for the processes that it is required to comply with. The Audit Committee is a sub-committee of the respective board and is directly responsible and accountable to the respective board.
The Board reserves the right to change the Committee’s terms of reference from time to time with the prior notification of the Exchange.
The Audit Committee has the role to deal with and advise the Board on;
The Audit Committee also has the role and function of considering and evaluating the arm’s length nature of proposed transactions to be entered into by the Company and a related party.
The Audit Committee will always be composed of not fewer than three members. The quorum for the transaction of business at a meeting of the Audit Committee will be the majority of members appointed at the Committee, present in person
The Committee shall be chaired by an independent, non-executive director and the Chairperson of the Board shall not be the Chairperson of the Audit Committee. The Audit Committee is presently composed of:
The Audit Committee is chaired by Mr. William Wait, whilst Dr Kristian Balzan and Mr Austin Demajo act as members. Mr. Willaim Wait is an independent, non- executive director and a qualified accountant, who the Board considers as independent and competent in accounting and auditing in terms of the Capital Markets Rules.
The Audit Committee met 3 times during the year under review.
As stipulated in the terms of reference of the Audit Committee, the Chairman shall have a casting vote in the case of deadlock. However, where the Chairperson is him/herself conflicted, the consideration of the relevant matter (in respect of which an interest has been declared) shall be chaired by another independent nonexecutive director or member (as the case maybe), who shall also have a casting vote.
The Directors believe that the current set-up is sufficient to enable to Company to fulfil the objective of the Rules’ terms of reference in this regard.
Principle 9: Relations with bondholders and the market
Pursuant to the Company’s statutory obligations in terms of the Act, the Annual Report and Financial Statements, the election of Directors and approval of Directors’ fees, the appointment of the auditors and the authorisation of the Directors to set the auditors’ fees, and other special business, are proposed and approved at the Company’s Annual General Meeting.
With respect to the Company’s bondholders and the market in general, during the financial year under review, the Company made a number of announcement in line with its continuing obligations in terms of the Capital Markets Rules.
Principle 11: Conflicts of Interest
Directors should always act in the best interest of the Company and its shareholders and investors. Any actual, potential or perceived conflict of interest must be immediately declared by a Director to the other members of the Board and to the Audit Committee who decides on whether such a conflict exists. The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the best interests of the Company. Directors are informed and reminded of their obligations on dealing in securities of the Company within the parameters of law and subsidiary legislation and Capital Market Rules Rules. During the financial year under review, any private interests or duties unrelated to the Company were disclosed by the directors and it has been ensured that these do not place any of them in conflict with any interests in, or duties towards, the Company.
Principle 12: Corporate Social Responsibility
The Company seeks to adhere to sound Principles of Corporate Social Responsibility in its management practices, and is committed to enhance the quality of life of all stakeholders of the Company and the Group.
The Board is mindful of the environment and its responsibility within the community in which it operates.
In carrying on its business the Group is fully aware of and at the forefront in preserving the environment and continuously reviews its policies aimed at respecting the environment and encouraging social responsibility and accountability.
Non-compliance with the Code
Principle 7: Evaluation of the Board’s Performance
The Code recommends that “the board should appoint a committee chaired by a non-executive Director in order to carry out a performance evaluation of its role.” The Board does not consider it necessary to appoint a committee to carry out performance evaluation of its role, as the Board’s performance is always under the scrutiny of the shareholders of the Company.
Principle 8A: Remuneration Committee
The Code recommends that “the board should establish a remuneration policy for Directors and senior executives. It should also set up formal and transparent procedures for developing such a policy and for establishing the remuneration packages of individual Directors.” In view of the size and type of operation of the Company, the Board does not believe that the Company requires a remuneration committee, and the Board itself carries out the functions of the remuneration committee specified in, and in accordance with, Principle Eight A of the Code, given that the remuneration of the Directors is not performance-related.
The maximum annual aggregate emoluments that may be paid to the Directors is, pursuant to the Company’s Memorandum and Articles of Association, approved by the shareholders in general meeting.
The fee payable to directors is not a fixed amount per annum and does not include any variable component relating to profit sharing, share options or pension benefits.
None of the directors is employed or has a service contract with the Company.
Total fees of €22,100 (2022: €11,358) was paid to directors during the year under review.
Principle 8B: Nomination Committee
The Code recommends that “there should be a formal and transparent procedure for the appointment of new directors to the board. The procedure shall ensure, inter alia, adequate information on the personal and professional qualifications of the candidates.” In view of the size and type of operation of the Company, the Board does not believe that the Company requires a nomination committee. Reference is also made to the information provided under the subheading ‘Principle Three’ above, which provides for a formal and transparent procedure for the appointment of new Directors to the Board.
Principle 10: Institutional Shareholders
The Company does not have any institutional shareholders.
Signed on behalf of the Board of Directors by Mr. William Wait and Dr Kristian Balzan.
The financial statements were approved and authorised for issue by the Board of Directors on 29 April 2024. The financial statements were signed on behalf of the Board of Directors by Dr Kristian Balzan and Mr Giuseppe Muscat as per Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.
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The Company |
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` |
Share |
Retained |
Other |
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Capital |
Earnings |
Reserve |
Total |
||||
€ |
€ |
€ |
€ |
||||
Balance at 1 January 2022 |
50,000 |
181,275 |
- |
231,275 |
|||
Transactions with owners |
|||||||
Capitalisation of retained earnings |
200,000 |
(200,000) |
- |
- |
|||
Total comprehensive income for the year |
|||||||
Loss for the year |
- |
52,839 |
- |
52,839 |
|||
Total comprehensive loss for the year |
- |
52,839 |
- |
52,839 |
|||
Balance at 31 December 2022 |
250,000 |
34,114 |
- |
284,114 |
|||
Balance at 1 January 2023 |
250,000 |
34,114 |
- |
284,114 |
|||
Other reserve from group restructuring |
- |
- |
2,197,994 |
2,197,994 |
|||
Total comprehensive loss for the year |
|||||||
Loss for the year |
- |
(165,586) |
- |
(165,586) |
|||
Total comprehensive loss for the year |
- |
(165,586) |
- |
(165,586) |
|||
Balance at 31 December 2023 |
250,000 |
(131,472) |
2,197,994 |
2,316,522 |
Notes to the Consolidated Financial Statements
AST Group p.l.c (the
“Company”) is a
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INDEPENDENT AUDITOR’S REPORTTo the Shareholders of AST Group plc _____________________________________________________________________________
Report on the Audit of the Financial Statements
Opinion We have audited the separate and consolidated financial statements of AST Group p.l.c. (the “Company”) and its subsidiaries (the “Group”), which comprise the separate and consolidated statements of financial position as at 31 December 2023, and the separate and consolidated statements of comprehensive income, the separate and consolidated statements of changes in equity and the separate and consolidated statements of cash flows for the year then ended, and notes to the separate and consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying separate and consolidated financial statements give a true and fair view of the financial position of the Company and the Group, as at 31 December 2023 and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”) and the Companies Act, Cap. 386 of the Laws of Malta (the “Companies Act”).
Our audit opinion on the financial statements expressed herein is consistent with the additional report to the audit committee of the Company and the Group, which was issued on the same date as this report.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) in Malta, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
No prohibited non-audit services referred to in Article 18A (1) of the Accountancy Profession Act, Cap. 281 of the Laws of Malta were provided by us to the Company and the Group and we remain independent of the Company and the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of financial statements for the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Revaluation of motor vessels
The Group’s motor vessels amounting to €10,749,999, classified as property, plant and equipment, which are being further described in note 15 to the accompanying financial statements, account for 70% of total assets as at 31 December 2023. Motor vessels are measured at fair value at the date of revaluation, less any subsequent accumulated depreciation and impairment losses.
A fair value assessment was carried out on these motor vessels in accordance with accounting policy note 4.5. In determining the fair value of the Group’s motor vessels as at 31 December 2023, the directors utilised the services of an independent external valuer through the use of the market approach. Through this process the independent valuer compares the selling price of similar vessels on the market during the date of the revaluation.
Therefore, due to the significance of the balances and the estimation uncertainty involved in the fair valuation of motor vessels, we have considered the fair valuation of motor vessels classified as property, plant and equipment as a key audit matter.
How the scope of our audit responded to the risk
Our procedures in relation to the valuation of these motor vessels included:
We have also assessed the relevance and adequacy of the disclosures the fair valuation of motor vessels classified as property, plant and equipment in accounting policy 4.5 and in note 15 to the financial statements.
Recoverability of group balances at Company level
Loans receivable, as disclosed in Note 18, include funds advanced to subsidiary companies amounting to €8,251,439 as at 31 December 2023, and which carry an agreed rate of interest of 7.25% to 8% per annum. As explained in accounting policy 4.8, the recoverability of these loans is assessed at the end of each financial year in order to ensure that the amounts are recoverable. The loans are the principal asset of the Company and as such are considered to be material.
How the scope of our audit responded to the risk
Our procedures in relation to the recoverability of these loans to subsidiaries included:
On the basis of our work, we determined that management’s assessment that the loans advanced to subsidiaries are recoverable is reasonable.
Other Information
The Directors are responsible for the other information. The other information comprises the Directors’ Report and Corporate Governance - Statement of Compliance (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover this information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
With respect to the Directors’ Report, we also considered whether the Directors’ Report includes the disclosures required by Article 177 of the Companies Act.
Based on the work we have performed, in our opinion:
In addition, in light of the knowledge and understanding of the Company and the Group 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.
Responsibilities of the Directors and those charged with governance for the Financial Statements
The directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with IFRS and the requirements of the Companies Act, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or the Group or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with the requirements of the European Single electronic Format Regulatory Technical Standard (the “ESEF RTS), by reference to the Capital Markets Rules 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issues by the Accountancy Board in terms of the Accountancy Professional Act (Cap 281) – the Accountancy Professional (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6’) on the annual financial report of AST Group plc for the year ended 31 December 2023, entirely prepared in a single electronic reporting format.
Responsibilities of directors
The directors are 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 Market 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 tagging therein comply in all material respects with the ESEF RTF 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:
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the annual financial report for the year ended 31 December 2023 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
Report on the Corporate Governance Statement
The Listing Rules issued by the Malta Listing Authority require the 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 Listing Rules also require the auditor to include a report on the statement of compliance prepared by the Directors. We are also required to express an opinion as to whether, in the light of the knowledge and understanding of the Company and the Group and its environment obtained in the course of the audit, we have identified material misstatements with respect to the information referred to in Listing Rules 5.97.4 and 5.97.5.
We read the statement of compliance and consider the implication for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements included in the annual report. Our responsibilities do not extend to considering whether this statement is consistent with the other information included in the annual report.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the statement of compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s and the Group’s governance procedures or its risk and control procedures.
In our opinion:
Under the Listing Rules we also have the responsibility to:
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
Other matters on which we are required to report by exception under the Companies Act
Under Maltese Companies Act (Cap. 386) we are required to report to you if, in our opinion:
We have nothing to report to you in respect of these responsibilities.
Other matter – use of this report
Our report, including the opinions, has been prepared for and only for the Company’s and the Group’s members as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Auditor tenure
We were appointed by the members of the Company to act as auditors of the Group and the Company on 20 January 2020 for the financial year ended 31 December 2019. Our appointment has been renewed by shareholders’ resolution representing a total period of uninterrupted appointment of 5 years.
John Abela (Partner) for and on behalf of
Horwath Malta Member Crowe Global
La Provvida Karm Zerafa Street Birkirkara BKR1713 Malta
29 April 2024
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