Company Registration No.: C 65702
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report
and
Financial Statements
31 December 2021
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
CONTENTS
Page
General information
2
Directors' report
3 - 6
Corporate governance - Statement of compliance
7 - 10
Statement of comprehensive income
11
Statement of financial position
12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15 - 36
Independent auditors' report
37 - 43
1
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
GENERAL INFORMATION
Registration
Central Business Centres p.l.c. is registered in
Malta as a public limited liability company under the Companies
Act (Cap. 386). The Company’s registration
number is C 65702.
Directors
Joseph Cortis
Petramay Attard Cortis
Adriana Cutajar
(appointed on 16 April 2021)
Joseph M Formosa
Alfred Sladden
Raymond Cortis
(resigned on 16 April 2021)
Company secretary
Desiree Cassar
Registered office
Cortis Group, Cortis Buildings
Mdina Road
Zebbug ZBG 4211
Malta
Bankers
APS Bank p.l.c.
APS Centre
Tower Street
Birkirkara BKR 4012
Malta
Bank of Valletta p.l.c.
10 Misrah San Filippu
Zebbug ZBG 1011
Malta
Auditors
RSM Malta
Mdina Road
Zebbug ZBG 9015
Malta
2
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
DIRECTORS' REPORT
The directors submit their annual report and the
financial statements for the year ended 31 December 2021.
Principal activity
The principal activity of the Company is to act as
a finance, investment and property-holding company.
Properties owned by the Company are leased to
third parties.
Results and dividends
The results for the year are set out in the
statement of comprehensive income on page 11. The directors do not
recommend the payment of a dividend.
Review of the business
The Company made a profit after tax of
€3,394,983 for the year ended 31 December 2021 (2020: €3,663,214).
The Company’s financial position remains
satisfactory and the directors expect the general level of operating
activity to be sustained in the foreseeable
future.
During 2021, the Zebbug premises and Central
Business Centre and the Gudja Central Business Centre were
fully occupied by tenants while the St. Julian's
Central Business Centre was 57% occupied.
During the year, the Company issued €21 million
4% unsecured bonds having a nominal value of €100. Following
which, the Company acquired the Savoy in Valletta
for around €17.5 million. The Valletta premises was 39%
occupied during 2021.
Financial risk management
The Company is exposed to a variety of financial
risks, including market risk, credit risk and liquidity risk. The
Company’s risk management is disclosed in Note 3
to the financial statements.
Events after the end of reporting period
No significant events have occurred after the end
of the reporting period which require mention in this report,
except as disclosed in Note 23 to the financial
statements.
Future developments
The Company is not envisaging any changes in
operating activities for the forthcoming year.
Directors
During the year ended 31 December 2021, the
Directors were as listed on page 2. In accordance with the
Company’s Memorandum and Articles of
Association, the Directors are required to seek re election on a yearly
basis.
3
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
DIRECTORS' REPORT -
continued
Statement of directors' responsibilities
The Companies Act (Cap. 386), enacted in Malta,
requires the Directors to prepare financial statements for each
financial period which give a true and fair view
of the financial position of the Company as at the end of the financial
year and of the profit or loss for that period.
In preparing the financial statements, the
directors are required to:
•
adopt the going concern basis unless it is
inappropriate to presume that the Company will continue in
business;
•
select suitable accounting policies and apply them
consistently;
•
make judgements and estimates that are reasonable
and prudent;
•
account for income and charges relating to the
accounting period on accruals basis;
•
value separately the components of asset and
liability items;
•
report comparative figures corresponding to those
of the preceding accounting period; and
•
prepare the financial statements in accordance
with generally accepted accounting principles as defined
in the Companies Act (Cap. 386) and in accordance
with the provision of the same Act.
The directors are also responsible for keeping
proper accounting records which disclose with reasonable accuracy
at any time the financial position of the Company
and to enable the directors to ensure that the financial statements
comply with the Companies Act (Cap. 386). This
responsibility includes designing, implementing and maintaining
such internal control as the directors determine
is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due
to fraud or error. The directors are also responsible for
safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The financial statements of Central Business
Centres p.l.c. for the year ended 31 December 2021 are included in
the Annual Report 2021, which is made available on
the Company's website. The directors are responsible for
the maintenance and integrity of the Annual Report
on the website in view of their responsibility for the controls
over, and the security of, the website. Access to
information published on the Company's website is available in
other countries and jurisdiction, where
legislation governing the preparation and dissemination of financial
statements may differ from requirement or practice
in Malta.
Going concern statement pursuant to Capital
Markets Rule 5.62
After making enquiries and having taken into
consideration the future plans of the Company, the directors have
reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future. For this reason, they adopt
the going concern basis in the preparation of the financial
statements.
Auditors
RSM Malta, Certified Public Accountants, have
expressed their willingness to continue in office and a resolution for their reappointment will be proposed at the
Annual General Meeting.
4
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
DIRECTORS' REPORT -
continued
Principal risks and uncertainties faced by the
Company
The Company is subject to market and economic
conditions in general
The Company is subject to general market and
economic risks which include factors such as the condition of the
local property market, inflation prices for the
rental of commercial properties and other economic and social factors
affecting demand for real estate generally. In the
event that general economic conditions and property market
conditions experience a downturn, this may have an
adverse impact on the financial conditions of the Company
and its ability to meet its obligations set-out
within the Bond Prospectus.
In view of the developments pertaining to the
COVID-19 pandemic that occurred during and continued after the
reporting period, the directors have prepared
budgets and projections to assess the impact that the pandemic
may have on the profitability, liquidity and going
concern of the Company. Based on the outcome of cash flow
projections prepared by the Company which factor
possible strain on rental streams and occupancy driven by the
pandemic, the directors and senior management
consider the going concern assumption in the preparation of the
Company's financial statements is as appropriate
as at the date of the authorisation for issue of the 2021 financial
statements. They also believe that no material
uncertainty that may cast significant doubt about the Company's
ability to continue honouring liabilities as and
when they fall due and to continue operating as a going concern for
the next twelve months exists as at that date.
Risks associated with the property market
Risks associated with the property development and
real estate industry generally include, but are not limited to,
risks of cost over-runs and risks of delay in
completion of the Villa in St. Julian's, the Zebbug premises and the
new Valletta business premises. In the event that
these risks were to materialise, they could have a significant
impact on the financial position of the Company.
The property market is a very competitive market
that can influence the lease of space
The real estate market in Malta is very
competitive in nature. An increase in supply and/or decrease in demand
in
the commercial property segment in which the
Company operates and targets to lease, may cause the lease of
such spaces to be leased at lower lease
contributions or at a slower pace than that originally anticipated by
the
Company. If these risks were to materialise, they
could have a material adverse impact on the ability of the
Company to repay the bond and interest.
Share capital structure
The Company's authorised and issued share capital
amounts to €250,000 divided into 250,000 Ordinary shares
of €1 each. The share capital consists of one
class of ordinary shares with equal voting rights attached. Transfers
of shares are restricted within family members.
Holding in Excess of 5% of the Share Capital
On the basis of the information available to the
Company as at 31 December 2021, Petramay Attard Cortis, Eman
Cortis and Joelle Cortis each hold 13,890 shares,
whereas Jeanelle Bonello Cortis, Claudia Borg, Alexia Camilleri
Cortis, Tiziana Cortis, Adriana Cutajar and
Crystielle Farrugia each hold 20,833 shares. The cumulative shares
of these aforementioned shareholders are
equivalent to 67% of the Company's issued share capital. The
remaining 33% is also held by members of the
Cortis family in individual portions of less than 5%.
Shareholders holding in aggregate more than 50% of
the issued share capital, shall be entitled to appoint the
directors. Other limitations of the voting rights
of holders are contained in the Company's Articles of Association,
Clause 55.
5
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
DIRECTORS' REPORT -
continued
Appointment and Replacement of Directors
Board members are appointed for one year and are
eligible for re-appointment at the Annual General Meeting.
Board Member Powers
The powers of the Board members are contained in
the Company's Articles of Association. The Articles of
Association grant the Company the power to buy
back its own shares in terms of the Maltese Companies Act
(Cap. 386).
Contracts with Board Members and Employees
The Company has no contract with any of its Board
members that include a severance payment clause. The
Company had no employees during the period ended
31 December 2021.
No disclosures are being made pursuant to Capital
Markets Rules 5.64.4, 5.64.5, 5.64.6, 5.64.7 and 5.64.10 as
these are not applicable to the Company.
Pursuant to Capital Markets Rule 5.70.1
At year-end, the Company had various agreements
for the lease of office and car spaces in the Zebbug premises
and Central Business Centre, Gudja Central
Business, St. Julian's Central Business Centre and Valletta Savoy.
As at 31 December 2021, the Zebbug premises and
Central Business Centre and Gudja Central Business Centre
were operating at full capacity, the St. Julian's
Central Business Centre was operating at 57% capacity and the
Valletta Savoy was operating at 39%.
Pursuant to Capital Markets Rule 5.68
Statement by the Directors on the Financial
Statements and Other Information included in the Annual
Report
The directors declare that to the best of their
knowledge, the financial statements included in the Annual Report
are prepared in accordance with the requirements
of International Financial Reporting Standards as adopted by
the EU and give a true and fair view of the
assets, liabilities, financial position and results of the Company and
that this report includes a fair review of the
development and performance of the business and position of the
Company, together with a description of the
principal risks and uncertainties that it faces.
Signed on behalf of the Company’s Board of
Directors on 8 April 2022 by Mr. Joseph Cortis (Director, Chairman
of the Board) and Mr. Alfred Sladden (Director) as
per the Directors’ Declaration on ESEF Annual Financial Report
submitted in conjunction with the Annual Report
and Financial Statements.
6
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
Corporate Governance - Statement of Compliance
The Capital Markets Rules issued by 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 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 Board of Directors (the “Board”) of
Central Business Centres p.l.c. (the “Company”) believes in the
adoption
of the Code and has endorsed it except where the
size and/or particular circumstances of the Company are
deemed by the Board not to warrant the
implementation of the 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 the
Company's affairs, in particular in giving direction to the Company
and being actively involved in overseeing the
systems of control and financial reporting. The Board has discussed
the Code and all directors are aware of their
responsibilities as such, including those arising from such Code.
More specifically, in the ordinary course of its
business and affairs, the Board of Directors of the Company is
responsible for:
• defining the
Company's strategy, policies and business policies.
• establishing
internal and external reporting systems so that it can continuously
access accurate, relevant
and timely information to discharge its duties,
exercise objective judgement and make decisions.
• continuously
assessing and monitoring the Company's present and future operations,
opportunities,
threats and risks.
• evaluating the
management’s implementation of corporate strategy and financial
objectives.
• reviewing the
strategy, processes and policies adopted for implementation.
• ensuring that the
Company has appropriate policies and procedures in place to assure that
the Company
maintain the highest standards of corporate
conduct, including compliance with applicable laws,
regulations, business, and ethical standards.
• providing the
market with regular, timely and accurate announcements where appropriate
and in terms of
the applicable rules and laws governing the
affairs of the Company.
The Board of the Company meets at least quarterly
and more frequently if necessitated by the business and/or
the general circumstances of the Company.
Chairman and Chief Executive Officer
The functions of the Chairman and Chief Officer
are vested in the same individual. The Chairman’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 Chief Executive Officer has specific
authorities from the Board to manage the Company’s operational
activities within the strategy and parameters set
by it.
7
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
Corporate Governance - Statement of Compliance -
continued
Complement of the Board
The Board is composed of one executive and four
non-executive directors, as listed below:
Executive Director
Mr. Joseph Cortis (Chairman and Chief Executive
Officer)
Non-Executive Directors
Mr. Alfred Sladden
Ms. Adriana Cutajar
Dr. Petramay Attard Cortis
Mr. Joseph M Formosa
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.
The Articles of Association of the Company clearly set out the
procedures to be followed in the appointment of
Directors.
Mr. Alfred Sladden, and Mr. Joseph M Formosa are
considered independent non-executive 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 Chief Executive Officer 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
directors on a regular basis.
The approval of credit to customers is made by the
CEO, in strict adherence to a Board - approved limit. Proposals
falling outside the limit are referred, together
with the supporting documentation and the CEO’s recommendations,
to the Board. The Board also approves, after
review and recommendation by the Audit Committee, the transfer of
funds and other amounts payable to related
companies 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. Directors meet
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.
8
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
Corporate Governance - Statement of Compliance -
continued
Directors’ Attendance at Board Meetings -
continued
The Board met formally ten times during the period
under review. The number of Board meetings attended by
directors for the year ended 31 December 2021 is
as follows:
Attended
Members
Mr. Joseph Cortis
10
Mr. Alfred Sladden
10
Ms. Adriana Cutajar
8
Dr. Petramay Attard Cortis
10
Mr. Joseph M Formosa
9
Chev. Raymond Cortis (attended as consultant
thereafter)
2
Committees
The directors believe that, due to the Company’s
size and operations, the remuneration, evaluation, and
nominations committees that are suggested in the
Code are not required, and that the function of these can be
undertaken by the Board itself. However, the Board
on an annual basis undertakes a review of the remuneration
paid to the directors and carries out an
evaluation of their performance and of the audit committee. The
shareholders approve the remuneration paid to the
directors at the annual general meeting.
Audit Committee
The Board has established an Audit Committee (the
“Committee”) 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 share and bond holders
and assist the directors in conducting their role effectively. In
the absence of an internal audit department, the
Audit Committee also monitors the financial reporting processes,
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, 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 Malta Financial
Services Authority considered the Terms of
Reference as having sufficient safeguards to ensure the
independence of the Audit Committee.
The Members of the Audit Committee are:
Mr. Alfred Sladden (Chairman)
Dr. Petramay Attard Cortis
Mr. Joseph M Formosa
All the directors forming the Audit Committee are
non-executive directors. Mr. Alfred Sladden is considered by the
Board to be competent in accounting and auditing
in terms of the Capital Market rules. The Company Secretary
acts as secretary to the committee.
9
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
Corporate Governance - Statement of Compliance -
continued
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 directors. The aggregate
amount approved for this purpose during the last
Annual General Meeting was €12,000.
None of the directors is employed or has a service
contract with the Company.
No part of the remuneration paid per annum to the
directors is performance based, the Chief Executive Officer
receives remuneration of €30,000. None of the
directors, in their capacity as a director of the Company, is entitled
to profit sharing, share options or pension
benefits. The directors do not receive any form of monetary or
non-monetary perks or benefits.
Remuneration Committees
Since the remuneration of the directors of the
Company is not performance-related, the functions of the
Remuneration Committee are carried out by the
Board of Directors. No new proposals on the remuneration policy
for directors and senior executives or on the
individual remuneration attributed to any of the directors or of the
senior executives were put forward to the Board of
Directors in 2021. Monitoring will continue in 2022 and
proposals will be put forward to the Board of
Directors in 2022 should it be necessary.
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, Code of Principles,
and internal code of dealing.
Signed on behalf of the Board of Directors on 8
April 2022:
Signed on behalf of the Company’s Board of
Directors on 8 April 2022 by Mr. Joseph Cortis (Director, Chairman
of the Board) and Mr. Alfred Sladden (Director) as
per the Directors’ Declaration on ESEF Annual Financial Report
submitted in conjunction with the Annual Report
and Financial Statements.
10
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
STATEMENT OF COMPREHENSIVE INCOME
2021
2020
€
€
Note
Revenue
5
1,490,703
1,252,162
Administrative expenses
(176,655)
(137,449)
Operating profit
6
1,314,048
1,114,713
Other income
-
2,500
Finance income
7
311
172
Finance costs
8
(713,786)
(628,535)
Fair value movement relating to investment
property
10
4,701,349
4,842,531
Profit before tax
5,301,922
5,331,381
Taxation
9
(1,906,939)
(1,668,167)
Profit for the financial year
3,394,983
3,663,214
Total comprehensive income for the year
3,394,983
3,663,214
Earnings per share
16
13.58
14.65
The notes on pages 15 to 36 are an integral part
of these financial statements.
11
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
STATEMENT OF FINANCIAL POSITION
As at 31 December
2021
2020
Note
€
€
ASSETS
Non-current assets
Property, plant and equipment
11
178,307
179,354
Investment property
10
56,713,496
34,000,000
56,891,803
34,179,354
Current assets
Trade and other receivables
12
213,800
210,468
Cash and cash equivalents
20
1,053,035
360,384
1,266,835
570,852
TOTAL ASSETS
58,158,638
34,750,206
EQUITY AND LIABILITIES
Capital reserve
Share capital
13
250,000
250,000
Capital reserve
14
16,100,000
16,100,000
Revaluation reserve
15
9,185,654
4,954,440
Accumulated losses
(1,924,762)
(1,088,531)
TOTAL EQUITY
23,610,892
20,215,909
Non-current liabilities
Borrowings
18
29,587,332
8,878,994
Deferred tax liabilities
17
3,922,740
2,238,641
33,510,072
11,117,635
Current liabilities
Borrowings
18
-
2,981,710
Trade and other payables
19
877,048
318,477
Current tax payable
160,626
116,475
1,037,674
3,416,662
TOTAL LIABILITIES
34,547,746
14,534,297
TOTAL EQUITY AND LIABILITIES
58,158,638
34,750,206
The notes on pages 15 to 36 are an integral part
of these financial statements.
The financial statements on pages 11 to 36 were
approved and authorised for issue by the Board of Directors on
8 April 2022. The financial statements were signed
on behalf of the Company’s Board of Directors by Mr. Joseph
Cortis (Director, Chairman of the Board) and Mr.
Alfred Sladden (Director) as per the Directors’ Declaration on
ESEF Annual Financial Report submitted in
conjunction with the Annual Report and Financial Statements.
12
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
STATEMENT OF CHANGES IN EQUITY
Share
Capital
Revaluation
Accumulated
Total
capital
reserve
reserve
losses
equity
Note
€
€
€
€
€
Financial year ended 31 December 2020
Balance at 01 January 2020
250,000
16,100,000
596,162
(393,467)
16,552,695
Total comprehensive income for the year:
Profit for the financial year
-
-
-
3,663,214
3,663,214
Transfer of revaluation surplus on investment
property, net of deferred tax
15
-
-
4,358,278
(4,358,278)
-
Balance at 31 December 2020
250,000
16,100,000
4,954,440
(1,088,531)
20,215,909
Financial year ended 31 December 2021
Balance at 01 January 2021
250,000
16,100,000
4,954,440
(1,088,531)
20,215,909
Total comprehensive income for the year:
Profit for the financial year
-
-
-
3,394,983
3,394,983
Transfer of revaluation surplus on investment
property, net of deferred tax
15
-
-
4,231,214
(4,231,214)
-
Balance at 31 December 2021
250,000
16,100,000
9,185,654
(1,924,762)
23,610,892
The notes on pages 15 to 36 are an integral part
of these financial statements.
13
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
STATEMENT OF CASH FLOWS
2021
2020
Note
€
€
Cash from operating activities:
Profit before tax
5,301,922
5,331,381
Adjustment for:
Interest expense and amortisation of bond issue
costs
713,786
628,535
Interest income
-
(172)
Depreciation charge
25,720
23,271
Fair value movements on investment property and
capitalised interest
(4,740,724)
(4,842,531)
Profit from operations
1,300,704
1,140,484
Movements in trade and other receivables
(3,332)
(119,205)
Movements in trade and other payables
558,571
33,969
Cash from operating activities
1,855,943
1,055,248
Interest received
-
172
Income taxes paid
(178,689)
(188,640)
Net cash flows generated from operating activities
1,677,254
866,780
Cash flows from investing activities:
Payments to acquire property, plant and equipment
(24,673)
(8,097)
Payments to acquire investment property
(17,972,772)
(35,952)
Net cash flows used in investing activities
(17,997,445)
(44,049)
Cash flows from financing activities:
Proceeds from issuance of bonds
20,687,138
-
Repayment of other financial liabilities
(3,000,000)
-
Interest paid
(674,296)
(594,000)
Net cash flows generated from/(used in) financing
activities
17,012,842
(594,000)
Net cash increase in cash and cash equivalents
692,651
228,731
Cash and cash equivalents at beginning of year
360,384
131,653
Cash and cash equivalents at end of year
20
1,053,035
360,384
The notes on pages 15 to 36 are an integral part
of these financial statements.
14
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Central Business Centres p.l.c. (“the
Company”) is a public limited liability company and is incorporated in
Malta with its registered address at Cortis Group,
Cortis Buildings, Mdina Road, Zebbug ZBG 4211, Malta.
The ownership of the Company's share capital and
voting rights related to such holdings, are such that no
particular individual or identifiable group of
individuals could exercise ultimate control over the Company.
The principal activity of the Company is to act as
a finance, investment and property-holding company.
Properties owned by the Company are leased to
third parties.
2.
SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation and statement of compliance
These financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union
(EU) and the requirements of the Companies Act (Cap.
386) enacted in Malta. The financial statements
have been prepared under the historical cost convention,
except as modified by the fair valuation of
investment property.
Going Concern
The Company made a profit of €3,394,983 for the
year ended 31 December 2021 (2020: profit of €3,663,214).
As at 31 December 2021, the Company's net assets
amounted to €23,610,892 (2020: €20,215,909) and its
current assets exceeded its current liabilities by
€229,161 (2020: current liabilities exceeded its current assets
by €2,845,810).
The Company's principal activity is to act as a
finance company for the development of various commercial
blocks which once completed, will be retained by
the Company for rental to third parties for the generation of
future rental income streams. In this context, the
Company's trading prospects are dependent on the timely
development of such properties and on the
performance of the related projected rental streams. While the
location of such developments is spread over
different locations on the island, the Company is exposed to
risks of negative economic trends that may, from
time to time, impact Malta.
In assessing the going concern assumption, the
directors of the Company have made reference to the cash
flow forecast of the Company for 2022. The cash
flow forecast assumes that the Company will complete the
respective developments as planned and generate
the required cash flows from its trading activities from
property rentals. The cash flow forecast also
factors, as noted further above in this note, the possible
implications on rental streams brought about by
COVID-19.
Based on the foregoing, the directors believe that
it is appropriate to prepare the financial statements on a
going concern basis. The financial statements,
however, do not include any adjustments in the event that the
forecast and assumptions as set out above do not
materialise as planned.
15
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
SIGNIFICANT ACCOUNTING POLICIES - continued
Basis of preparation and statement of compliance -
continued
The preparation of financial statements in
conformity with IFRS as adopted by EU requires the use of certain
accounting estimates. It also requires Directors
to exercise their judgement in the process of applying the
Company's accounting policies (Note 4).
The accounting policies set out below have been
applied consistently to all periods presented in these
financial statements.
Functional and presentation currency
The financial statements are presented in Euro
(€) which is also the Company's functional currency.
New or revised standards, interpretations and
amendments adopted
The Company adopted several new or revised
standards, interpretations and amendments issued by the
International Accounting Standards Board (IASB)
and the IFRS Interpretations Committee and endorsed by
the EU. The adoption of these new or revised
standards, interpretations and amendments did not have a
material impact on these financial statements.
New or revised standards, interpretations and
amendments issued but not yet effective
At the end of the reporting period, certain new
standards, interpretations or amendments thereto, were in
issue and endorsed by the EU, but not yet
effective for the current financial period. There have been no
instances of early adoption of standards,
interpretations or amendments ahead of their effective date. The
Directors anticipate that the adoption of the new
standards, interpretations or amendments thereto, will not
Foreign currencies
Transactions underlying items in these financial
statements are measured in the Company’s functional
currency, which is the currency of the primary
economic environment in which the entity operates.
Transactions in foreign currencies have been
converted into Euro at the rates of exchange ruling on the date
of the transaction. Monetary assets and
liabilities denominated in foreign currencies have been translated
into Euro at the rates of exchange ruling at the
end of reporting period. All resulting differences are taken to
profit or loss.
Revenue recognition
Revenue comprises the fair value of the
consideration received or receivable from rental of property in the
ordinary course of the Company's activities. The
Company recognises revenue when the amount of revenue
can be reliably measured, it is probable that
future economic benefits will flow to the entity and when specific
criteria have been met for each of the Company's
activities as described below:
Rental income
Rental income from investment property is
recognised in the statement of comprehensive income on a
straight-line basis over the term of the lease.
16
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
SIGNIFICANT ACCOUNTING POLICIES - continued
Tax
The tax charge/(credit) in the profit or loss for
the year normally comprises current and deferred tax.
Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted at the
end of the reporting period, and any adjustments
to tax payable in respect of previous years.
Deferred income tax is provided using the balance
sheet liability method, for all temporary differences arising
between the tax bases of assets and liabilities
and their carrying values for financial reporting purposes. The
amount of deferred tax provided is based on the
expected manner of realisation or settlement of the carrying
amount of assets and liabilities, based on tax
rates that have been enacted or substantively enacted at the
end of the reporting period.
A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be
available against which the assets can be utilised
and/or sufficient taxable temporary differences are
available. Deferred tax assets are reduced to the
extent that is no longer probable that the related tax benefit
will be realised.
Property, plant and equipment
Property, plant and equipment are stated at cost
less accumulated depreciation and impairment losses, if any.
Property, plant and equipment are initially
measured at cost, which comprises their purchase prices, as well
as other expenditures directly attributable to
bringing the assets to the location and condition for their intended
use. Subsequent expenditure relating to the assets
is added to the carrying values of the assets when it is
probable that future economic benefits associated
with the asset, in excess of the originally assessed
standards of performance, will flow back to the
company. All other subsequent expenditure is recognised in
profit or loss.
Depreciation is calculated on the straight-line
method to write off the cost of each asset to its residual value
over its estimated useful life as follows:
%
Plant and machinery
10
Furniture and fixtures
10
The estimated useful life and depreciation methods
are reviewed at the end of each reporting period to ensure
that such estimated useful life and depreciation
methods are consistent with the expected pattern of economic
benefits from those assets.
When an asset is disposed of, or is permanently
withdrawn from use and no future economic benefits are
expected from its disposal or retirement, the cost
and the related accumulated depreciation and impairment
losses, if any, are removed from the accounts and
the resulting gain or loss arising from the disposal or
retirement is recognised in profit or loss.
17
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
SIGNIFICANT ACCOUNTING POLICIES - continued
Investment property
Investment property, comprising commercial
premises including offices, shops, showrooms, warehouses and
car spaces, is held for long-term rental yields or
for capital appreciation or both, and is not occupied by the
Company. Investment property, which comprises land
and buildings, is initially recognised at cost, including
transaction costs and borrowing costs. Historical
cost includes expenditure that is directly attributable to the
acquisition of the items. Borrowing costs which
are incurred for the purpose of acquiring or constructing a
qualifying investment property are capitalised as
part of its cost. Borrowing costs are capitalised while
acquisition or construction is actively underway.
Capitalisation of borrowing costs is ceased once the asset is
substantially complete and is suspended if the
development of the asset is suspended.
After initial recognition, investment property is
carried at fair value. Fair value is based on active market prices,
adjusted, if necessary, for any difference in the
nature, location or condition of the specific asset. If this
information is not available, the Company uses
alternative valuation methods such as recent prices on less
active markets or discounted cash flow
projections. The fair value of investment property reflects, among
other things, rental income from current leases
and assumptions about rental income from future leases in
the light of current market conditions. The fair
value also reflects, on a similar basis, any cash outflows that
could be expected in respect of the property. If
this information is not available, the Company uses alternative
valuation methods such as recent prices on less
active markets or discounted cash flow projections.
Valuations are reviewed annually by the directors,
and every three years by a professional valuer. Investment
property that is being redeveloped for continuing
use as investment property or for which the market has
become less active continues to be measured at
fair value. Fair value measurement on property under
construction is only applied if the fair value is
considered to be reliably measurable.
Subsequent expenditure is charged to the asset's
carrying amount only when it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of the item can be measured
reliably. All other repairs and maintenance costs
are charged to the profit or loss during the financial period
in which they are incurred. When part of an
investment property is replaced, the carrying amount of the
replaced part is derecognised.
The fair value of investment property does not
reflect future capital expenditure that will improve or enhance
the property and does not reflect the related
future benefits from this future expenditure other than those a
rational market participant would take into
account when determining the value of the property. Changes in
fair values are recorded in the profit or loss for
the year and then transferred to "fair value gains reserve"
through the statement of changes in equity. Gains
or losses on disposal are determined by comparing
proceeds with carrying amount and are included in
surplus or deficit.
Investment properties are derecognised when
disposed of or when the investment property is permanently
withdrawn and there is no future economic benefit
expected from its disposal. The cost and related
accumulated depreciation and impairment losses, if
any are derecognised and the difference between the
disposal proceeds and the carrying amount is
recognised in profit or loss within “other income/(loss)”.
If an investment property becomes owner-occupied,
it is reclassified as property, plant and equipment. Its fair
value at the date of the reclassification becomes
its cost for subsequent accounting purposes. When the
Company decides to dispose of an investment
property without development, the Company continues to treat
the property as an investment property. Similarly,
if the Company begins to redevelop an existing investment
property for continued future use as investment
property, it remains an investment property during the
redevelopment.
18
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
If an item of property, plant and equipment
becomes an investment property because its use has changed,
any difference resulting between the carrying
amount and the fair value of this item at the date of transfer is
treated in the same way as a revaluation under IAS
16. Any resulting increase in the carrying amount of the
property is recognised in profit or loss to the
extent that it reverses a previous impairment loss; with any
remaining increase recognised in other
comprehensive income, directly to revaluation surplus within equity.
Any resulting decrease in the carrying amount of
the property is initially charged to other comprehensive
income against any previously recognised
revaluation surplus, with any remaining decrease charged to profit
or loss. Upon the disposal of such investment
property, any surplus previously recorded in equity is
transferred to retained earnings; the transfer is
not made through profit or loss.
Impairment of non-financial assets
The carrying amount of the Company's assets are
reviewed at the end of each reporting period to determine
whether there is any indication of impairment. If
such indication exists then the asset's recoverable amount
is estimated.
An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are
recognised in profit or loss.
The recoverable amount of an asset or
cash-generating unit is the greater of its value in use and its fair
value
less cost to sell. 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.
Impairment losses recognised in prior periods are
assessed at the end of each reporting period for any
indications that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been
a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to
the extent that the asset's carrying amount does
not exceed the carrying amount that would have been
determined, net of depreciation or amortisation,
if no impairment loss had been recognised.
Financial instruments
A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial liability
or equity instrument of another entity. Financial
assets and financial liabilities are recognised when the
Company becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the
contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all
substantial risks and rewards are transferred. Financial liabilities
are derecognised when they are extinguished,
discharged, cancelled or expire.
19
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial assets
Financial assets are classified at initial
recognition in accordance with how they are subsequently measured,
as follows:
• financial assets
at amortised cost;
• financial assets
at fair value through other comprehensive income; and
• financial assets
at fair value through profit or loss.
The Company's financial assets are mainly
financial assets at amortised cost.
Financial assets at amortised cost
Financial assets at amortised costs are financial
assets that are held within the business model whose
objective is to collect contractual cash flows
(“hold to collect”) and the contractual terms give rise to cash
flows that are solely payments of principal and
interest.
On initial recognition, financial assets at
amortised cost are recognised at fair value plus transaction costs
that are directly attributable to the acquisition
of the financial asset. Discounting is omitted where the effect
of discounting is immaterial.
Financial assets at amortised cost are
subsequently carried at amortised cost using the effective interest
method less impairment losses, if any. Gains or
losses are recognised in profit or loss when the asset is
derecognised, modified, or impaired.
The Company’s financial assets under this
classification include trade and other receivables.
Impairment of financial assets
The Company recognises an allowance for expected
credit losses (ECLs) on financial assets that are
measured at amortised cost. Equity instruments are
not subject to impairment assessment.
ECLs are based on the difference between the
contractual cash flows due in accordance with the contract
and all the cash flows that the Company expects to
receive, discounted at an approximation of the original
effective interest rate.
ECLs are recognised in two stages. For credit
exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are
provided for credit losses that result from default events that
are possible within the next 12-months (12-month
ECL). For those credit exposures for which there has been
a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure,
irrespective of the timing of the default (lifetime ECL).
20
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
The Company considers a financial asset in default
when contractual payments are 90 days past due.
However, in certain cases, the Company may also
consider a financial asset to be in default when internal or
external information indicates that the Company is
unlikely to receive the outstanding contractual amounts in
full. A financial asset is written off when there
is no reasonable expectation of recovering the contractual cash
flows and usually occurs when past due for more
than one year and not subject to enforcement activity.
For trade receivables, the Company applies a
simplified approach to measuring ECLs which recognises
lifetime ECLs. The ECLs on these financial assets
are estimated using a provision matrix based on the
Company’s historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and
the economic environment.
Financial liabilities
Financial liabilities are classified at initial
recognition in accordance with how they are subsequently
measured, as follows:
• financial
liabilities at amortised cost; and
• financial
liabilities at fair value through profit or loss.
The Company’s financial liabilities are mainly
financial liabilities at amortised cost.
Financial liabilities at amortised cost
Financial liabilities at amortised cost are
initially recognised at fair value, net of transaction cost and are
subsequently measured at amortised cost using the
effective interest method. All interest-related charges
under the interest amortisation process are
recognised in profit or loss.
On derecognition, the difference between the
carrying amount of the financial liability (or part of a financial
liability) extinguished or transferred to another
party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, are
recognised in profit or loss.
Financial liabilities under this category include
borrowings, and trade and other payables.
Offsetting of financial assets and financial
liabilities
Financial assets and liabilities are offset and
the net amount reported in the statement of financial position
when there is a legally enforceable right to set
off the recognised amounts and there is an intention to settle
on a net basis, or realise the asset and settle
the liability simultaneously.
Cash and cash equivalents
Cash in hand and at banks and short-term deposits
which are held to maturity are carried at cost.
Cash and cash equivalents are defined as cash in
hand, demand deposits and short-term, highly liquid
investments readily convertible to known amounts
of cash and subject to insignificant risk of changes in value.
21
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
SIGNIFICANT ACCOUNTING POLICIES - continued
Cash and cash equivalents - continued
For the purpose of the statement of cash flows,
cash and cash equivalents consist of cash in hand and
deposits at banks, net of outstanding bank
overdrafts.
Dividends
Dividend distribution to the Company's
shareholders is recognised as a liability in the Company's financial
statements in the period in which the dividends
are approved by the Company's directors.
Equity
Ordinary shares
Ordinary shares are classified as equity.
Incremental costs directly attributable to issue of ordinary shares
are recognised as a deduction, net of tax, from
proceeds.
Provisions
Provisions are recognised when the Company has a
present legal or constructive obligation as a result of a
part event; it is probable that an outflow or
resources embodying economic benefits will be required to settle
the obligation; and a reliable estimate can be
made of the amount of the obligation. The amount recognised
as a provision shall be the best estimate of the
expenditure required to settle the present obligation at the
end of the reporting period.
Related parties
Parties are considered to be related if one party
has the ability, directly or indirectly, to control the other party
or exercise significant influence over the other
party in making financial and operating decisions. Parties are
also considered to be related if they are subject
to common control or common significant influence. Related
parties may be individuals or corporate entities.
Related party accounts are carried at cost, net of any
impairment charge.
3. FINANCIAL RISK MANAGEMENT
The Company's activities potentially expose it to
a variety of financial risks: market risk (including foreign
exchange risk and cash flow interest rate risk),
credit risk and liquidity risk. The Company's overall risk
management focuses on the unpredictability of
financial markets and seeks to minimise potential adverse
effects on the Company's financial performance.
The Board provides principles for overall risk management,
as well as policies covering risks referred to
above, and specific areas such as investment of excess liquidity.
The Company did not make use of derivative
financial instruments to hedge risk exposures during the current
and preceding financial years.
22
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
3. FINANCIAL RISK MANAGEMENT - continued
(a) Market risk
(i) Foreign currency risk
Foreign exchange risk arises from future
commercial transactions and recognised assets and liabilities
which are denominated in a currency that is not
the entity's functional currency. The Company has no
significant currency risk since substantially all
assets and liabilities are denominated in Euro.
(ii) Cash flow and fair value interest rate risk
The Company is exposed to risks associated with
the effects of fluctuations in the prevailing levels of the
market interest rates on its financing position
and cash flows.
As at reporting date, the Company has fixed rate
interest-bearing liabilities and loans owed to related
companies, which are interest free. Accordingly,
operating cash flows are substantially independent of
changes in market interest rates.
As at the statement of financial position date,
the Company's exposure to changes in interest rates on
bank accounts held with financial institutions was
limited as the Company is subject to fixed interest rates.
Based on the above, the Board considers the
potential impact on profit or loss of a defined interest rate
shift that is reasonably possible at the reporting
date to be immaterial.
(b) Credit risk
Credit risk arises from credit exposures to
customers and amounts held with financial institutions.
The maximum credit exposure to credit risk at the
reporting date in respect of the financial assets was as
follows:
2021
2020
Note
€
€
Trade and other receivables
12
198,555
160,996
Cash and cash equivalents
20
1,053,035
360,384
1,251,590
521,380
Credit risk on funds advanced to related entities
and amounts deposited with local financial institutions is
considered as limited, since cash at bank and
fixed term deposits are placed with local financial institutions
having a high-quality standing.
With regards to amounts receivable arising from
rental income, the Company assesses the credit quality
of the third-party tenants on an ongoing basis,
taking into account financial position, past experience and
others factors. The Company manages credit limits
and exposures actively in a practicable manner such
that there is no material past due amounts
receivable from third-party tenants as at the reporting date.
The Company has no significant concentration of
credit risk arising from third-parties.
As at 31 December 2021, trade receivables of
€32,455 (2020: €32,455) were impaired. Provisions for
impairment in this respect are equivalent to the
amounts disclosed. The impaired receivables relate to a
previous tenant which is in unexpectedly difficult
economic situations.
23
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
3. FINANCIAL RISK MANAGEMENT - continued
Capital risk management
Credit risk - continued
The movement in provisions for expected credit
losses of trade receivables is disclosed in Note 12 to the
financial statements.
(c) Liquidity risk
The Company is exposed to liquidity risk in
relation to meeting future obligations associated with its
financial liabilities, which comprise principally
interest-bearing borrowings and trade and other payables
(Notes 18 and 19). Prudent liquidity risk
management includes maintaining sufficient cash to ensure the
availability of an adequate amount of funding to
meet the Company's obligations and ensuring that
alternative funding is available when the bonds
are due for repayment.
The following table analyses the Company's
financial liabilities into relevant maturity groupings based on
the remaining period at the reporting date to the
contractual maturity date. The amounts disclosed in the
tables below are the contractual undiscounted cash
flows. Balances due within 12 months equal their
carrying balances, as the impact of discounting is
not significant.
Due
Between 1
Between 2
Carrying
Contractual
within
and 2
and 5
amount
cash flow
one year
years
years After 5 years
€
€
€
€
€
€
31 December 2021
Borrowings
29,587,332
41,741,803
1,261,500
1,261,500
6,627,000
32,591,803
Trade and other payables
877,048
877,048
877,048
-
-
-
30,464,380
42,618,851
2,138,548
1,261,500
6,627,000
32,591,803
31 December 2020
Borrowings
11,860,704
14,808,000
3,594,000
843,000
10,371,000
-
Trade and other payables
318,477
318,477
318,477
-
-
-
12,179,181
15,126,477
3,912,477
843,000
10,371,000
-
The Company continues to assess its funding
requirements to ensure that adequate funds are in place to
meet its financial liabilities when they fall due.
Fair values
The fair values of non-current borrowings is based
on amortised cost representing proceeds received net of
transaction costs incurred. The amortisation of
transaction costs is calculated using the effective yield method.
As at 31 December 2021 and 2020, the carrying
amounts of other financial instruments, comprising cash at
bank, trade and other receivables, trade and other
payables and accrued expenses approximated their fair
values due to their short-term maturities.
24
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
3.
FINANCIAL RISK MANAGEMENT - continued
Capital risk management
The Company's objectives when managing capital
are:
• to safeguard the
Company's ability to continue as a going concern in order to provide
returns for
shareholders and benefits for other stakeholders;
• to maintain an
optimal capital structure to reduce the cost of capital; and
• to comply with
requirements of the Prospectus issued in relation to the 5.25%, 4.40%
and 4.00% bonds.
The Board's policy is to maintain a strong capital
base so as to maintain investor, creditor and market
confidence to sustain future development of
business. The Board of Directors monitors the return on capital,
which the Company defines as the profit for the
year divided by total equity. The Board of Directors also
monitors the level of dividends to ordinary
shareholders.
4.
SIGNIFICANT JUDGEMENTS AND CRITICAL ESTIMATION
UNCERTAINTIES
The preparation of financial statements in
conformity with IFRS as adopted by the EU requires management
to make judgements, estimates and assumptions that
affect the application of policies and reported amounts
of assets and liabilities, income and expenses.
The directors have considered the development, selection
and disclosure of the Company’s critical
accounting policies and estimates and the application of these
policies and estimates. Estimates and judgements
are continually evaluated and are based on historical and
other factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
In the opinion of the Company’s directors,
except for the matters disclosed below and the disclosures made
under Note 2 - Significant accounting policies,
Basis of preparation and compliance, and Note 22 - Contingent
liabilities, the accounting estimates and
judgements made in the course of preparing these financial
statements are not difficult, subjective or
complex to a degree which would warrant their disclosure in terms
of the requirements of IAS 1.
Valuation of investment property
The Company reviews the valuation of the
investment property on an annual basis. In 2021, management
determined the fair value of the investment
property by referring to the valuation reports prepared by
independent third party qualified valuers. The
Company adjusted the book value to its revalued amount and
recognised the resultant surplus in the statement
of comprehensive income. Further disclosures on key
assumptions in this regard are included in Note
10.
25
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
5. REVENUE
Revenue relates to the lease of office,
warehousing and car spaces in Zebbug premises and Central Business
Centre, the Gudja Central Business Centre, the St.
Julian's Central Business Centre and the Valletta Savoy.
When works on Villa Fieres are complete, rental
income will be generated on the basis of contracts finalised
with tenants.
2021
2020
€
€
Rental income
1,490,703
1,252,162
6.
OPERATING PROFIT
The operating profit is stated after charging:
2021
2020
€
€
Depreciation
25,720
23,271
Directors' remuneration (i)
12,000
10,500
CEO fees
30,000
26,500
i. The Directors' remuneration was paid to the
non-executive Directors, whereas the CEO received
payments amounting to €30,000 (2020: €26,500).
The costs are presented as part of consulting and
professional fees. The directors do not receive
any form of monetary or non-monetary perks or benefits.
Auditors' remuneration
Fees charged by the auditor for services rendered
during the financial years ended 31 December 2021 and
2020 related to the following:
2021
2020
€
€
Annual statutory audit
6,450
5,950
Tax compliance and other services
2,350
1,000
8,800
6,950
7.
FINANCE INCOME
2021
2020
€
€
Interest income from banks
311
172
26
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
8. FINANCE COSTS
2021
2020
€
€
Interest payable on bonds
713,671
594,000
Amortisation of bond issue costs (Note 18)
39,490
34,535
Finance costs capitalised within investment
property (Note 10)
(39,375)
-
713,786
628,535
9. TAXATION
The tax charged to profit or loss comprised of the
following:
2021
2020
€
€
Current tax charge
222,840
168,167
Deferred tax charge
1,684,099
1,500,000
1,906,939
1,668,167
The tax on the Company's profit before tax differs
from the theoretical tax expense that would arise using the
applicable tax rate in Malta of 35% as follows:
2021
2020
€
€
Profit before tax
5,301,922
5,331,381
Theoretical expense at 35%
1,855,673
1,865,983
Tax effect of:
Rental income subject to a reduced rate of tax
(298,141)
(270,089)
Non-deductible expenses
312,566
268,094
Revaluation of investment property subject to a
different rate of tax
38,627
(194,886)
Non-taxable income
(1,786)
(935)
1,906,939
1,668,167
27
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
10.
INVESTMENT PROPERTY
2021
2020
€
€
Year ended 31 December
At 1 January
34,000,000
29,121,517
Additions
17,972,772
35,952
Increase in fair value
4,701,349
4,842,531
Capitalised interest
39,375
-
At 31 December
56,713,496
34,000,000
Fair valuation of the property
On 2 September 2021, the Company's investment
property, which comprises five office blocks located in
Zebbug, Gudja, St. Julian's, and Valletta, were
revalued by an independent professionally qualified valuer.
The book value was adjusted to the revalued amount
and the resultant surplus, net of applicable deferred
income taxes, were credited to the statement of
comprehensive income. The surplus, net of deferred tax was
transferred to the revaluation reserve through the
statement of changes in equity (see Note 15).
Valuations were made on the basis of open market
value taking cognisance of the specific location of the
property, the size of the site together with its
development potential, the availability of similar properties in the
area, and whenever possible, having regard to
recent market transactions for similar properties in the same
location.
The Company is required to analyse non-financial
assets carried at fair value by level of the fair value
hierarchy within which the recurring fair value
measurements are categorised in their entirety (Level 1, 2 or
3). The different levels of the fair value
hierarchy have been defined as fair value measurements using:
• Quoted prices
(unadjusted) in active markets for identical assets (Level 1);
• Inputs other than
quoted prices included within Level 1 that are observable for the asset,
either directly
(that is, as prices) or indirectly (that is,
derived from prices) (Level 2);
• Inputs for the
asset that are not based on observable market data (that is,
unobservable inputs) (Level
3).
The Company's investment property comprises the
properties described above. The Zebbug premises and
Central Business Centres, the Gudja Central
Business Centre and the St. Julian's Business Centre are
complete and being leased out, whilst finishing of
the Villa Fieres is projected to be completed by 2nd quarter
of 2022. Property fair value measurements at 31
December 2021 use significant unobservable inputs and
are accordingly categorised within Level 3 of the
fair valuation hierarchy.
The Company's policy is to recognise transfers
into and out of fair value hierarchy levels as of the beginning
of the reporting period. There were no transfers
between different levels of the fair value hierarchy during the
year ended 31 December 2021.
A reconciliation from the opening balance to the
closing balance of land and building for recurring fair value
measurements categorised within Level 3 of the
value hierarchy, is reflected in the table above.
Valuation processes
The valuation of these properties is performed on
the basis of the valuation reports prepared by an
independent third party qualified valuer. These
reports are based on both:
• information
provided by the Company; and
• assumptions and
valuation models used by the valuers with assumptions being typically
market
related and based on professional judgment and
market observation.
28
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
10. INVESTMENT PROPERTY - continued
Fair valuation of the property - continued
The information provided to the valuers, together
with the underlying assumptions and valuation models used
by the valuers, are reviewed by the Board of
Directors. The Board then considers the valuation report as part
of its overall responsibilities.
Valuation techniques
The valuation was performed using the guidelines
of the "Valuation Standards for accredited Valuers"
published by the Kamra tal-Periti.
Given the specific nature of these assets, the
valuations of the Level 3 property have been performed by
reference to valuation models. These valuation
models include:
• in the case of
the completed properties, namely those located in Zebbug (both
properties), Gudja and St.
Julian's, the sales comparison approach, factoring
in adjustments for the respective properties to cater
for differences in the size, age, location and
condition; and
• in the case of
Villa Fieres, where work is still ongoing, the valuation is based on the
contract price on
acquisition during
2014, together with additional capitalised amounts
covering construction and
restoration costs carried out to date and property
location value.
The respective valuations include observable
inputs extracted from recent market transactions and property
marketed in a similar location and having a
similar level of finishing.
29
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
11. PROPERTY, PLANT AND EQUIPMENT
Plant and
machinery
€
Cost
Balance as at 31 December 2020
232,708
Additions
24,673
Balance at 31 December 2021
257,381
Accumulated depreciation
Balance as at 31 December 2020
(53,354)
Depreciation
(25,720)
Balance at 31 December 2021
(79,074)
Carrying amount
At 31 December 2020
179,354
At 31 December 2021
178,307
12. TRADE AND OTHER RECEIVABLES
2021
2020
€
€
Trade receivables
193,501
142,165
Prepayments
15,245
49,472
VAT refundable
5,054
18,831
213,800
210,468
Trade receivables are stated net of an allowance
for expected credit losses amounting to €32,455 (2020:
€32,455). The Company's exposure to credit risk
and impairment losses related to trade receivables are disclosed in Note 3.
30
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
13. SHARE CAPITAL
2021
2020
€
€
Authorised, issued and fully paid up
250,000 ordinary shares of €1 each
250,000
250,000
The holders of ordinary shares are entitled to
receive dividends as declared from time to time and are entitled
to one vote per share at meetings of the Company.
All shares rank equally with regard to the Company's
residual assets.
14. CAPITAL RESERVE
2021
2020
€
€
Subordinated loans
At the end of the year
16,100,000
16,100,000
On 20 November 2014, the Company entered into
three subordinated loans with related parties to part finance
the acquisition of the Zebbug premises and Central
Business Centre, the Gudja Central Business Centre, the
St. Julian's Business Centre and the Villa Fieres
Site.
On 14 July 2017, the Company entered into another
subordinated loan with the same terms and conditions
to part finance the acquisition of the Zebbug
property located across the completed Zebbug Business Centre.
During 2018, the Company utilised a further
€250,000 of one of the €400,000 of subordinated loans entered
into on 20 November 2014.
The parties have agreed that the loans are
interest-free unless otherwise agreed from time to time, provided
that a two-year moratorium from date of the
Subordinated Loan Agreement will automatically apply and that
the rate of interest, if any, will not exceed 5%.
The loan agreements stipulate that the Company has the
discretion to settle the subordinated loans by way
of issue of a fixed number of shares at par value.
The settlement of these loans will not be made
unless the Company has sufficient funds to repay the principal
and interest on the Bonds in issue in full, in
accordance with the terms of the Bond Issuance Programme.
During 2021, these subordinated loans, apart from
the €250,000, were waived.
31
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
15. REVALUATION RESERVE
2021
2020
€
€
At the beginning of year
4,954,440
596,162
Transfer of revaluation surplus arising during the
year - net of deferred tax
4,231,214
4,358,278
At the end of the year
9,185,654
4,954,440
The revaluation reserve is non-distributable.
16. EARNINGS PER SHARE
Earnings per share is calculated by dividing the
profit attributable to owners of the Company by the weighted
average number of ordinary shares in issue during
the period.
2021
2020
Profit for the year
€ 3,394,983
€ 3,663,214
Weighted average number of ordinary shares in
issue
250,000
250,000
Earnings per share
€
13.58
€
14.65
17. DEFERRED TAX
The movement in deferred tax for the year is
analysed as follows:
2021
2020
€
€
At beginning of year
(2,238,641)
(738,641)
Deferred taxes on temporary differences arising
from the revaluation of the
investment properties
(1,684,099)
(1,500,000)
At end of year
(3,922,740)
(2,238,641)
Deferred income taxes are calculated on all
temporary differences under the liability method using a principal
rate of 35%. The balance as at 31 December
represents:
2021
2020
€
€
Tax effect of temporary differences arising from:
- Revaluation, net of related depreciation
(3,934,099)
(2,250,000)
- Provisions for impairment of trade receivables
11,359
11,359
(3,922,740)
(2,238,641)
The recognised deferred tax assets and liabilities
are expected to be recovered or settled principally after
more than twelve months.
32
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
18.
BORROWINGS
2021
2020
€
€
Due within one year
Bonds 2021
-
2,981,710
Due after more than one year
Bonds 2025
2,972,715
2,966,771
Bonds 2027
5,924,507
5,912,223
Bonds 2033
20,690,110
-
29,587,332
8,878,994
29,587,332
11,860,704
The interest rate exposure of the Company's
borrowings are as follows:
2021
2020
Bonds 2021
-
5.75%
Bonds 2025
5.25%
5.25%
Bonds 2027
4.40%
4.40%
Bonds 2033
4.00%
-
2021
2020
€
€
Bonds outstanding
Proceeds
30,000,000
12,000,000
Gross amount of bond issue costs
497,259
291,759
Amortisation of gross amount of bond issue costs:
At 1 January
152,463
117,928
Amortisation charge for the year
39,490
34,535
Release of bond issue costs on repaid bond
(107,362)
-
Accumulated amortisation at end of period
84,591
152,463
Unamortised bond issue costs
412,668
139,296
Amortised cost and closing carrying amount
29,587,332
11,860,704
33
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
18.
BORROWINGS - continued
On 5 December 2014, the Company issued a
Prospectus for the issue of a 6,000,000 Bond having a nominal
value of €1 each. The Bond was issued in two
tranches of €3,000,000 each. The first tranche was issued on
22 December 2014, and was fully subscribed, while
the second tranche was issued on 24 December 2015,
and was also fully subscribed. The Company's bonds
are included on the official list of the Malta Stock
Exchange. The first tranche was admitted to
trading in 2014 and was redeemable at par on 30 December
par on 30 December 2025.
Interest on the bonds issued as part of the first
tranche was payable every six months in arrears, on 30 June
and 30 December of each year. The first payment
was made on 30 June 2015. The net proceeds have been
used to acquire the Zebbug, St. Julian's and Gudja
Central Business Centres, to finance the demolition and
excavation works of the St. Julian's Central
Business Centre as well as to finish works on the Gudja Central
Business Centre.
Interest on bonds issued as part of the second
tranche is payable annually in arrears, on 30 June and 30
December of each year. The first payment was made
on 30 June 2016. The net proceeds were used for the
development and construction of the St. Julian's
Central Business Centre.
On 7 July 2017, the Company issued a Prospectus
for the issue of a 10,000,000 Bond having a nominal value
of €1 each. The Bond was issued in two tranches,
the first tranche amounting to €6,000,000 was issued on
12 June 2017, and was fully subscribed, while the
second tranche of €4,000,000 was not issued.
Interest on the bonds issued as part of the first
tranche is payable annually in arrears on 7 July of each year,
the first payment was made on 7 July 2018. The net
proceeds were utilised to acquire the new Zebbug site.
On 24 September 2021, the Company issued a
Prospectus for the issue of a 210,000 Bond having a nominal
value of €100 each. The Bond was issued in one
tranche amounting to €21,000,000 on 10 November 2021,
and was fully subscribed.
Interest on the bonds issued is payable annually
in arrears on 10 November of each year, the first payment
will be on 10 November 2022. The net proceeds were
utilised to acquire the Savoy in Valletta.
The bonds constitute the general, direct,
unconditional, unsecured, unsubordinated obligations of the
Company, and rank equally without any priority or
preference with all other present and future unsecured and
unsubordinated obligations of the Company.
2021
2020
€
€
Borrowings as at 1 January
11,860,704
11,826,169
Bond issue
21,000,000
-
Additional bond issue costs
(312,862)
-
Amortisation of bond issue costs
39,490
34,535
Repayment of bonds
(3,000,000)
-
Borrowings as at 31 December
29,587,332
11,860,704
34
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
19. TRADE AND OTHER PAYABLES
2021
2020
€
€
Trade payables
620,632
183,132
Accruals
7,100
6,600
Bond interest payable (Note 18)
249,316
128,745
877,048
318,477
20. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash in hand
and balances with banks, net of bank overdraft. Cash
and cash equivalents included in the statement of
cash flows reconcile to the amounts shown in the statement
of financial position as follows:
2021
2020
€
€
Cash on hand
29
159
Bank balances
1,053,006
360,225
1,053,035
360,384
Included with the bank balances is a restricted
amount of €77,290 which is pledged as security against the
guarantee issued in favor of a third party (Note
22).
21. RELATED PARTY TRANSACTIONS
The companies forming part of the SMW Cortis
Limited Group are considered by the Directors to be related
parties as these companies are under a common
directorship of Mr. Joseph Cortis. All members of the Cortis
family are deemed to be related parties.
The following transactions were carried out with
related parties:
2021
2020
€
€
Administration and management fees paid
46,327
38,140
Professional fees
42,000
37,000
35
CENTRAL BUSINESS CENTRES p.l.c.
Annual Report and Financial Statements - 31
December 2021
NOTES TO THE FINANCIAL STATEMENTS - continued
22. CONTINGENT LIABILITIES
As at 31 December 2021, the Company was involved
in one ongoing legal claim amounting to less than
€120,000 which is being repudiated. The Board of
Directors, based on legal advice obtained, does not expect
any financial losses to be incurred from such
claims, and have consequently not made any provisions in that
regard.
Moreover, the Company has provided a guarantee of
€77,290 in favour of a third party.
23. EVENTS AFTER THE END OF THE REPORTING PERIOD
Subsequent to year-end, the conflict between
Russia and Ukraine. As a result, multiple countries have
imposed economic sanctions on Russia and a growing
number of companies have announced restrictions to
business activities with Russia and certain areas
of Belarus. The conflict between the two countries has
significantly impacted and continuously affecting
the economy and global financial markets.
For financial reporting purposes, the conflict
between Russia and Ukraine is deemed to be a non-adjusting
subsequent event.
The directors assessed that there were no
significant effects to the Company's operation as a result of the
conflict. Nevertheless, they will continue to
monitor the situation as events continue to evolve.
36
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Central Business Centres
p.l.c.
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial
statements of Central Business Centres p.l.c. ("the
Company"), set out on pages 11 - 36, which
comprise the statement of financial position as at 31
December 2021, the statement of comprehensive
income, statement of changes in equity and statement
of cash flows for the year then ended, and notes
to the financial statements, including a summary of
significant accounting policies.
In our opinion, the financial statements give a
true and fair view of the financial position of the Company
as at 31 December 2021, and of its financial
performance and its cash flows for the year then ended in
accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union
(EU), and have been properly prepared in
accordance with the requirements of the Companies Act (Cap.
386).
Our opinion is consistent with our additional
report to the Audit Committee in accordance with the provision
of Article 11 of the EU Regulation No. 537/2014 on
specific requirements regarding statutory audits of
public-interest entities.
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 Auditors’ Responsibilities for the Audit
of the Financial Statements section of our report.
We are independent of the Company in accordance with
the ethical requirements of both the International
Ethics Standards Board for Accountants' International
Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA
Code) and the Accountancy Profession (Code of
Ethics for Warrant Holders) Directive issued in terms of
the Accountancy Profession Act (Cap. 281) in Malta
that are relevant to our audit of the financial
statements, and we have fulfilled our other
ethical responsibilities in accordance with the IESBA Code
and the Code of Ethics for Warrant Holders in
Malta. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis
for our opinion.
To the best of our knowledge and belief, we
declare that the non audit services that we have provided to
the Company are in accordance with the applicable
laws and regulations in Malta and that we have not
provided non audit services that are prohibited
under Article 18A of the Accountancy Profession Act (Cap.
281). The non audit services that we have provided
to the Company for the year ended 31 December
2021 are disclosed in Note 6 to the financial
statements.
37
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements -
continued
Key Audit Matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the financial statements of the current
period. These matters were addressed in the context of
our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Valuation of Investment Properties
The carrying amount of investment property in the
statement of financial position represents the value of
the land, development and borrowing costs
attributable to commercial blocks located in Zebbug, Gudja,
St. Julian's and Valletta, which are either held
for lease or property under development as at 31 December
2021.
In 2021, the Company's investment properties were
revalued by an independent professional qualified
valuer. The current value of the investment
properties is determined on the basis of open market values
taking cognisance of the specific location of the
property, the size of the site together with its development
potential, the availability of similar properties
in the area, and whenever possible, having regard to recent
market transactions for similar properties in the
same location.
Valuation of the Company's property portfolio is
inherently subjective principally due to the judgemental
nature of the factors mentioned above. The
significance of the estimates and judgements involved,
coupled with the fact that a small percentage
difference in individual property valuations, when
aggregated, could result in a material
misstatement, warrants specific audit focus in this area.
Further disclosure is included in the Note 10 to
these financial statements.
Audit response
We understood and evaluated the assessment
performed by management on the basis of the revaluations
performed by an independent professional qualified
valuer to ascertain the fair value of investment
property.
Our audit procedures included, amongst other,
challenging the significant unobservable inputs that were
applied in the valuations made, including those
with respect to previous years' valuation reports for
Zebbug, Gudja, and St. Julian's. With respect to
property under development, we carried out testing to
ensure that the costs were supported by available
third-party data, such as invoices and work-in-progress
reports.
We concluded, based on our audit work, that the
outcome of the assessment is reasonable.
In addition, we reviewed the adequacy of
disclosures made in Note 10 to these financial statements and
concluded that these are adequate.
38
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements -
continued
Other Information
The directors are responsible for the other
information. The other information comprises the general
information, directors’ report, and the
corporate governance statement of compliance. Our opinion on
the financial statements does not cover the other
information and we do not express any forms of
assurance conclusion thereon except as explicitly
stated within the Report on other legal and regulatory
requirements.
In connection with our audit of the financial
statements, our responsibility is to read the other information
identified above and, in doing so, consider
whether the other information is materially inconsistent with
the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed
on the other information that we have obtained prior
to the date of this auditors’ report, we
conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Under Article 179(3) of the Companies Act (Cap.
386), we are required to consider whether the
information given in the directors’ report is
compliant with the disclosure requirements of Article 177 of the
same Act.
Based on the work we have performed, in our
opinion:
•
the directors’ report has been prepared in
accordance with the Companies Act (Cap. 386);
•
the information given in the directors’ report
for the financial year on which the financial statements
are had been prepared is consistent with the
financial statements; and
•
in light of our knowledge and understanding of the
Company and its environment obtained in the
course of the audit, we have not identified
material misstatements in the directors’ report.
Responsibilities of the Directors and those
charged with governance for the Financial Statements
The directors are responsible for the preparation
of financial statements that give a true and fair view in
accordance with IFRS as adopted by the EU and the
requirements of the Companies Act (Cap. 386), and
for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the
directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but
to do so.
Those charged with governance are responsible for
overseeing the Company’s financial reporting
process.
39
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements -
continued
Auditors’ 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 auditors’ report that
includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these financial statements.
As part of an audit in accordance with ISAs, we
exercise professional judgement and maintain
professional scepticism throughout the audit. We
also:
•
Identify and assess the risks of material
misstatement of the financial statements, whether due to
fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal
control.
•
Obtain an understanding of internal control
relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
•
Evaluate the appropriateness of accounting
policies used and the reasonableness of accounting
estimates and related disclosures made by the
directors.
•
Conclude on the appropriateness of the
directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a
material uncertainty exists related to events or
conditions that may cast significant doubt on the
Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists,
we are required to draw attention in our auditors’
report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our
auditors’ report. However, future events or
conditions may cause the Company to cease to continue
as a going concern.
•
Evaluate the overall presentation, structure, and
content of the financial statements, including the
disclosures, and whether the financial statements
represent the underlying transactions and events
in a manner that achieves fair presentation.
40
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements -
continued
Auditors’ Responsibilities for the Audit of the
Financial Statements - continued
We communicate with the directors 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 directors with a statement
that we have complied with relevant ethical requirements
regarding independence and 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 the directors,
we determine those matters that were of most
significance in the audit of the financial
statements of the current period and are therefore the key audit
matters. We describe these matters in our
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 the Statement of Compliance with the
Code of Principles of Good Corporate
Governance
The Capital Markets Rules issued by the Malta
Financial Services 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 Capital Markets Rules also require
the auditor to include a report on the Statement of
Compliance prepared by the directors.
We read the Statement of Compliance and consider
the implications 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 any 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 corporate
governance procedures or its risk and control procedures. In
our opinion, the Statement of Compliance set out
on page 7 to 10 has been properly prepared in
accordance with the requirements of the Capital
Markets Rules issued by the Malta Financial Services
Authority.
41
INDEPENDENT AUDITORS’ REPORT - continued
Report on Other Legal and Regulatory Requirements
- continued
Report on the Remuneration Statement
The Capital Markets Rules issued by the Malta
Financial Services Authority requires the directors to
prepare a remuneration statement. We are required
to consider whether the information that should be
provided within the Remuneration Statement has
been included.
In our opinion, the Remuneration Statement has
been properly prepared in accordance with the
requirements of the Capital Markets Rules issued
by the Malta Financial Services Authority.
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 Central
Business Centres p.l.c. for the year ended 31 December 2021,
entirely prepared in a single electronic reporting
format.
Responsibilities of the directors
The directors are responsible for the preparation
of the annual financial report, including the financial
statements, by reference to Capital Markets Rule
5.56A, in accordance with the requirements of the ESEF
RTS.
Auditors’ responsibilities
Our responsibility is to obtain reasonable
assurance about whether the annual financial report, including
the financial statements, 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:
•
Obtaining an understanding of the entity's
financial reporting process, including the preparation of
the annual financial report, in XHTML format.
•
Examining whether the annual financial report has
been prepared in XHTML format.
We believe that the evidence we have obtained is
sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion, the annual financial report for
the year ended 31 December 2021 has been prepared in
XHTML format in all material respects.
42
INDEPENDENT AUDITORS’ REPORT - continued
Report on Other Legal and Regulatory Requirements
- continued
Other matters on which we are required to report
by exception
Under the Companies Act (Cap. 386), we are
required to report to you if, in our opinion:
•
proper accounting records have not been kept; or
•
proper returns have not been received from
branches we have not visited; or
•
the financial statements are not in agreement with
the accounting records and returns; or
•
we were unable to obtain all the information and
explanations which, to the best of our knowledge
and belief, are necessary for the purposes of our
audit.
We also have responsibilities under the Capital
Markets Rules to review the statement made by the
directors that the business is a going concern
together with supporting assumptions or qualifications as
necessary.
We have nothing to report in this regard.
Appointment
We were first appointed to act as statutory
auditors of the Company by the shareholders of the Company
on 13 November 2020 for the year ended 31 December
2020, and we were subsequently reappointed by
the shareholders at the Company's general meeting
for the financial year thereafter. The period of
uninterrupted engagement as statutory auditor of
the Company is two financial years.
RSM Malta
Certified Public Accountants
Mdina Road
Zebbug ZBG 9015
Malta
Roberta West Falzon
Principal
8 April 2022
43
CENTRAL BUSINESS CENTRES p.l.c.
Supplementary Statement - 31 December 2021
ADMINISTRATIVE EXPENSES
2021
2020
€
€
Administration and management fees
46,327
38,140
Auditors' remuneration
6,450
5,950
Consulting and professional fees
45,142
45,131
Depreciation
25,720
23,271
Directors' remuneration
12,000
10,500
Insurance
13,685
10,138
Other expenses
27,331
4,319
176,655
137,449
I