Company Registration No.: C 65702
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report
and
Financial Statements
31 December 2023
1
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
CONTENTS
Pages
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
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
GENERAL INFORMATION
2
Registration
Central Business Centres p.l.c. is registered in Malta as a public limited liability company under the Maltese
Companies Act (Cap. 386) with company registration number C 65702.
Directors
Joseph Cortis
Petra May Attard Cortis
Adriana Cutajar
Joseph M Formosa
Alfred Sladden
Crystielle Farrugia Cortis
Company secretary
Dr. Desiree Cassar
(resigned on 23 February 2023)
Dr. Katia Cachia
(appointed on 20 March 2023)
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
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
DIRECTORS' REPORT
3
The directors present the annual financial report and the audited financial statements of Central Business
Centres p.l.c. ("the Company") for the year ended 31 December 2023.
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.
Performance Review
During the year
under
review, the Company
made
a profit
after
tax
of €38,388 (2022:
€178,202).
The
Company’s financial position remains satisfactory and the directors expect the general level of operating activity
to be sustained in the foreseeable future. The directors have proposed that the balance of accumulated profits
amounting to €7,474,982
(2022: €7,439,094) be carried forward to the next financial year.
In 2023, the Company enjoyed 100% occupancy rate at Central Business Centre Zebbug and Central Business
Centre Gudja, as well as improved occupancy rates at Central Business Centre St. Julians. Nevertheless,
during the year, the Company reported a decrease in revenue when compared to 2022 due to a one-off
concession provided to a tenant, relating to property development.
During the year, the Company repurchased and cancelled €5,000 of its 5.25% unsecured 2025 S2T1 bonds. In
accordance with the Terms and Conditions of the Company's Prospectus dated 5th December 2014, section 10
of the Further issues in Tranches, Purchases and Cancellation Note, all bonds purchased by the Company will
be cancelled and will not be re-issued or re-sold.
Results and dividends
The results for the year are set out in the statement of comprehensive income on page 11.
On 02 June 2023, the directors declared a net dividend of €2,500 (2022: €nil).
Events after the end of reporting period
There are no events after the end of the reporting period which require mention in this report except as
disclosed in Note 26 to the financial statements.
Future developments
The Company is not envisaging any changes in operating activities for the forthcoming year.
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
DIRECTORS' REPORT - continued
4
Directors
The directors of the Company who held office during the year are 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.
Statement of directors' responsibilities for the financial statements
The Companies Act (Cap. 386), enacted in Malta, requires the directors to prepare financial statements 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 year.
In preparing the financial statements, the directors are responsible for::
•
adopting the going concern basis unless it is inappropriate to presume that the Company will continue in
business as a going concern;
•
selecting suitable accounting policies and applying them consistently;
•
making judgements and accounting estimates that are reasonable and prudent;
•
accounting for income and charges relating to the accounting period on the accrual basis;
•
valuing separately the components of asset and liability items;
•
reporting comparative figures corresponding to those of the preceding accounting period; and
•
preparing the financial statements in accordance with International Financial Reporting Standards as
adopted by the EU.
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 Maltese 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 the Company for the year ended 31 December 2023 are included in the Annual
Financial Report 2023, which will be made available on the Company's website. The directors are responsible
for the maintenance and integrity of the Annual Financial 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 jurisdictions, where legislation governing the preparation and dissemination of
financial statements may differ from requirement or practice in Malta.
Additionally, the directors are responsible for the preparation of the annual financial report, as required by
Capital Markets Rule 5.56A, in accordance with the requirements of the European Single Electronic Format
Regulatory Technical Standard as specified in the Commission Delegated Regulation (EU) 2019/815 (the
“ESEF RTS”).
Going concern statement pursuant to Capital Markets Rule 5.62
The directors have reviewed the Company's operational cashflow forecast. Based on this review, after making
inquiries 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, the directors have adopted the going concern basis in the preparation of the financial
statements.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
DIRECTORS' REPORT - continued
5
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 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.
Based on the outcome of cash flow projections prepared by the Company which factor possible strain on rental
streams and occupancy driven by the cost of living increases, the directors and senior management consider
the going concern assumption in the preparation of the Company’s financial statements as appropriate as at the
date of the authorisation for issue of the 2023 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 exist 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 Central Business Centre Zebbug and Central
Business Centre Valletta. 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 an adverse material 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 2023, Petra May 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 Cortis 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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
DIRECTORS' REPORT - continued
6
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 year ended 31 December 2023.
No disclosures are being made pursuant to Capital Markets Rules 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 the year-end, the Company had various agreements for the lease of office, retail stores, warehousing and car
spaces as applicable in the Central Business Centre Zebbug, Central Business Centre Gudja, Central Business
Centre St. Julian's, and Central Business Centre Valletta. As at 31 December 2023, Central Business Centre
Zebbug and Central Business Centre Gudja were operating at 100% capacity, Central Business Centre St.
Julian's was operating at 78% capacity and Central Business Centre Valletta was operating at 29% capacity.
Pursuant to Capital Markets Rule 5.68
Statement by the Directors on the Financial Statements and Other Information included in the Annual
Financial Report
The directors declare that to the best of their knowledge, the financial statements included in the Annual
Financial
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 19 April 2024 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 Financial Report 2023.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
7
CORPORATE GOVERNANCE - STATEMENT OF COMPLIANCE
The Capital Market Rules issued by the Malta Financial Services Authority, require listed companies to observe
The Code of Principles of Good Corporate Governance (the “Code”). Although the adoption of the Code is not
obligatory, listed companies are required to include, in their Annual Financial 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 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
maintains
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 Executive Officer are vested by 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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
8
CORPORATE GOVERNANCE - STATEMENT OF COMPLIANCE - continued
Complement of the Board
The Board is composed of one executive and five non-executive directors, as listed below:
Executive Director
Mr. Joseph Cortis (Chairman and Chief Executive Officer)
Non-Executive Directors
Mr. Alfred Sladden
Dr. Petra May Attard Cortis
Mr. Joseph M Formosa
Ms. Adriana Cutajar
Ms. Crystielle Farrugia Cortis
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
Chief
Executive
Officer,
in
strict
adherence
to
a
Board-approved
limit.
Proposals
falling
outside
the
limit
are
referred,
together
with
the
supporting
documentation and the Chief Executive Officer’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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
9
CORPORATE GOVERNANCE - STATEMENT OF COMPLIANCE - continued
Directors’ Attendance at Board Meetings
- continued
The Board met formally eight (8) times during the period under review. The number of Board meetings attended
by directors for the year ended 31 December 2023 is as follows:
Members
Attended
Mr. Joseph Cortis
8
Mr. Alfred Sladden
8
Dr. Petra May Attard Cortis
8
Ms. Adriana Cutajar
8
Mr. Joseph M Formosa
8
Ms. Crystielle Farrugia Cortis
8
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
efficiently 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 process, the effectiveness
of internal control and the audit
of the annual financial statements.
Additionally, it is responsible for monitoring the performance of the entities borrowing funds from the Company,
to ensure that budgets are achieved and if not, 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. Petra May 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.
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 €14,000.
None of the directors are employed or have a service contract with the Company.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
10
CORPORATE GOVERNANCE - STATEMENT OF COMPLIANCE - continued
Remuneration Statement - continued
No part of the remuneration paid per annum to the directors is performance based, and 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 other form of
perks or benefits.
During 2023, the directors received €14,500 for services rendered. The increase was approved during the Audit
Committee meeting on 22 March 2024.
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 2023. Monitoring will continue in 2024 and
proposals will be put forward to the Board of Directors in 2024 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.
Auditors
RSM Malta have expressed their willingness to continue in office and a resolution for their re-appointment will be
proposed at the Annual General Meeting.
Signed on behalf of the Company’s Board of Directors on 19 April 2024 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 Financial Report 2023.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December
11
Notes
2023
€
2022
€
Revenue
5
1,754,707
1,786,919
Administrative expenses
(419,020)
(250,150)
Operating profit
6
1,335,687
1,536,769
Finance income
7
20,005
1,541
Finance costs
8
(1,301,923)
(1,261,065)
Profit before tax
53,769
277,245
Taxation
9
(15,381)
(99,043)
Profit for the financial year
38,388
178,202
Total comprehensive income for the year
38,388
178,202
Earnings per share
18
0.15
0.71
The notes on pages 15 to 36 are an integral part of these financial statements.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
STATEMENT OF FINANCIAL POSITION
As at 31 December
12
Notes
2023
€
2022
€
ASSETS
Non-current assets
Investment property
10
62,922,286
57,593,558
Deferred tax asset
11
1,873,843
-
64,796,129
57,593,558
Current assets
Financial assets at fair value through profit or loss
12
81,000
81,000
Trade and other receivables
13
402,782
289,930
Cash and cash equivalents
14
371,971
195,740
855,753
566,670
TOTAL ASSETS
65,651,882
58,160,228
EQUITY AND LIABILITIES
Capital reserve
Share capital
15
250,000
250,000
Capital reserve
16
16,100,000
16,100,000
Retained earnings
7,474,982
7,439,094
TOTAL EQUITY
23,824,982
23,789,094
Non-current liabilities
Borrowings
19
29,648,248
29,611,882
Lease liabilities
20
5,086,458
-
Deferred tax liabilities
21
5,803,576
3,922,740
Trade and other payables
22
115,881
137,156
40,654,163
33,671,778
Current liabilities
Lease liabilities
20
267,379
-
Trade and other payables
22
904,584
619,268
Current tax payable
774
80,088
1,172,737
699,356
TOTAL LIABILITIES
41,826,900
34,371,134
TOTAL EQUITY AND LIABILITIES
65,651,882
58,160,228
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 19 April 2024
. 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 Financial Report 2023.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
STATEMENT OF CHANGES IN EQUITY
13
Notes
Share
capital
€
Capital
reserve
€
Revaluation
reserve
€
Retained
earnings
€
Total
equity
€
Financial year ended 31 December 2022
Balance at 01 January 2022
250,000
16,100,000
9,185,654
(1,924,762)
23,610,892
Total comprehensive income for the year:
Profit for the financial year
-
-
-
178,202
178,202
Transfer of revaluation surplus on investment property, net of deferred tax
17
-
-
(9,185,654)
9,185,654
-
Balance at 31 December 2022
250,000
16,100,000
-
7,439,094
23,789,094
Financial year ended 31 December 2023
Balance at 01 January 2023
250,000
16,100,000
-
7,439,094
23,789,094
Total comprehensive income for the year:
Profit for the financial year
-
-
-
38,388
38,388
Transactions with owners in their capacity as owners
Dividends declared during the year
24
-
-
-
(2,500)
(2,500)
Balance at 31 December 2023
250,000
16,100,000
-
7,474,982
23,824,982
The notes on pages 15 to 36 are an integral part of these financial statements.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
STATEMENT OF CASH FLOWS
For the year ended 31 December
14
Note
2023
€
2022
€
Cash flows from operating activities:
Profit before tax
53,769
277,245
Adjustment for:
Finance costs
8
1,301,923
1,263,431
Finance income
7
(20,005)
(743)
Depreciation charge
56,513
42,331
Profit from operations
1,392,200
1,582,264
Increase in trade and other receivables
(88,076)
(76,130)
Increase in financial instruments
-
(81,000)
(Decrease)/increase in trade and other payables
279,141
(121,331)
Cash from operating activities
1,583,265
1,303,803
Income taxes paid
(107,573)
(179,581)
Net cash flows generated from operating activities
1,475,692
1,124,222
Cash flows from investing activities:
Finance income received
7
-
743
Payments to acquire investment property
10
(390,237)
(704,711)
Refund on duty paid on the purchase of investment property
398,500
-
Payments on finance lease
(39,800)
-
Net cash flows used in investing activities
(31,537)
(703,968)
Cash flows from financing activities:
Repayment of borrowings
(5,000)
(15,476)
Finance costs paid
8
(1,260,424)
(1,262,073)
Dividends paid
(2,500)
-
Net cash flows (used in)/generated from financing activities
(1,267,924)
(1,277,549)
Net increase/(decrease) in cash and cash equivalents
176,231
(857,295)
Cash and cash equivalents at beginning of year
195,740
1,053,035
Cash and cash equivalents at end of year
14
371,971
195,740
The notes on pages 15 to 36 are an integral part of these financial statements.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS
15
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.
MATERIAL ACCOUNTING POLICY INFORMATION
The accounting policies that are material to the financial statements are set out below. The accounting
policies adopted are consistent with those of the previous financial year, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS Accounting Standards) 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 €38,388 for the year ended 31 December 2023 (2022: profit of €178,202).
As at 31 December 2023, the Company's net assets amounted to €23,824,982 (2022: €23,789,094) and its
current liabilities exceeded its current assets by €316,984 (2022: €132,686).
The Company executed the Deed of Emphyteusis with LIDL Immobiliare Malta Ltd for one of its properties
in Zebbug on the 21st of December 2023 but became effective in 2024 as disclosed in Note 26. Moreover,
the directors are looking into the purchase of further properties to compliment the Company’s portfolio. The
sentiment from financial institutions to support the Company in its vision is encouraging.
In assessing the going concern assumption, the directors of the Company have made reference to the cash
flow forecast of the Company for 2024. 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.
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.
The preparation of financial statements in conformity with IFRS Accounting Standards 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).
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
16
Functional and presentation currency
The financial statements are presented in Euro (€) which is also the Company's functional currency.
New or amended accounting standards and interpretations adopted
The following amended standards became applicable for the current reporting period:
Amendments to IAS 1 and IFRS Practice Statement 2
–
Disclosure of Accounting Policies
The amendments are intended to help preparers in deciding which accounting policies to disclose in their
financial
statements.
The
term
‘significant’
was
replaced
with
‘material’
in
the
context
of
disclosing
accounting
policy
information.
In
assessing
the
materiality
of
the
accounting
policy
information,
the
Company considers the size of transactions, other events or conditions and their nature.
Amendments to IAS 12
–
Deferred tax related to Assets and Liabilities arising from a Single Transaction
Prior to the amendments, there had been some uncertainty about whether the IAS 12 exemption from
recognising deferred tax applied to transactions for which companies recognise both an asset and liability,
for example leases. The amendments clarify that the exemption does not apply and that companies are
required to recognise deferred tax on such transactions. The Company now discloses the deferred tax on
lease
liabilities
and
right-of-use
assets
separately
arising
from
the
application
of
IFRS
16.
The Company adopted all of the new or amended Accounting Standards and Interpretations issued by the
International Accounting Standards Board (‘IASB’) and the IFRS Interpretations Committee and endorsed
by the EU that are mandatory for the current reporting period. The adoption of these amendments to the
requirements of IFRS Accounting Standards as adopted by the EU did not result in substantial changes to
the Company’s accounting policies impacting the Company’s financial performance and position.
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
have a material impact on the financial statements upon initial application.
Revenue from contracts with customers
Revenue from contracts with customer is recognised at an amount that reflects the consideration to which
the Company is expected to be entitled when performance obligation is satisfied in a manner that depicts
the transfer of control over the goods or services promised to the customer. A performance obligation may
be satisfied either at a point in time or over time.
The consideration relates to the transaction price allocated to each performance obligation as defined in the
contract with the customer. The transaction price reflects discounts, rebates, refunds, granted to customers
and excludes sales taxes, if any.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Revenue from contracts with customers - continued
17
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.
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 tax is provided using the liability method, for all temporary differences arising between the tax
bases of assets and liabilities and their carrying values for financial reporting purposes. 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.
Investment property
Investment property also includes right-of-use assets in terms of IFRS 16. Accounting policy for right-of-use
assets is included in the section entitled 'Leases'.
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.
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Investment property - continued
18
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.
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.
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.
Depreciation commences when the depreciable assets are available for use and is charged to profit or loss
so as to write off the fair valued amount, less any estimated residual value, over their estimated useful lives,
on the following bases:
Improvements
10% straight line
Furniture and fixtures
10% straight line
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
19
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.
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Financial instruments - continued
20
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 cash and cash equivalents and 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).
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Financial instruments - continued
21
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.
Leases
Right-of-use
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is
measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement date net of any lease incentives received, any initial
direct costs incurred.
Right-of-use assets are subsequently measured at fair value and depreciated on a straight-line basis over
the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where
the Company expects to obtain ownership of the leased asset at the end of the lease term, the depreciation
is
over
its
estimated
useful
life. Right-of
use assets
are
subject
to
impairment
or
adjusted for
any
remeasurement of lease liabilities.
The Company has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on
these assets are expensed to profit or loss as incurred.
Lease liability
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised
at the present value of the lease payments to be made over the term of the lease, discounted using the
interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity's
incremental
borrowing
rate.
Lease
payments
comprise
of
fixed
payments
less
any
lease
incentives
receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under
residual
value
guarantees,
exercise
price
of
a
purchase
option
when
the
exercise
of
the
option
is
reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do
not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts
are remeasured if there is a change in the following: future lease payments arising from change in an index
or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties.
When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to
profit or loss if the carrying amount of the right-of-use asset is fully written down.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
22
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.
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 bonds. 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 in profit or loss of a defined interest rate shift
that is reasonably possible at the reporting date to be immaterial.
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:
2023
€
2022
€
Trade and other receivables
198,777
282,585
Cash and cash equivalents
371,858
195,441
570,635
478,026
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
3.
FINANCIAL RISK MANAGEMENT - continued
(b) Credit risk - continued
23
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 2023, trade receivables of €32,455 (2022: €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.
The movement in provisions for expected credit losses of trade receivables is disclosed in Note 13 to the
financial statements.
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 19 and 22). 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.
Carrying
amount
€
Contractual
cash flow
€
Due
within
one year
€
Between 1
and 2
years
€
Between 2
and 5
years
€
After 5 years
€
31 December 2023
Borrowings
29,648,248
39,748,900
1,260,450
4,240,450
9,048,000
25,200,000
Trade and other payables
421,181
421,181
305,300
115,881
-
-
30,069,429
40,170,081
1,565,750
4,356,331
9,048,000
25,200,000
31 December 2022
Borrowings
29,611,882
41,015,139
1,260,713
1,260,713
12,453,713
26,040,000
Trade and other payables
430,103
430,103
292,947
137,156
-
-
30,041,985
41,445,242
1,553,660
1,397,869
12,453,713
26,040,000
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
3.
FINANCIAL RISK MANAGEMENT - continued
24
Fair value of financial instruments
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 2023 and 2022, 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.
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.
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
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 Directors, with the exception of the fair valuation of investment properties in Note 10, 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 description as critical in terms of the
requirements of IAS 1.
5.
REVENUE
Revenue relates to the lease of offices, retail stores, warehousing and car spaces in Central Business
Centres Zebbug, the Central Business Centre Gudja, the Central Business Centre St. Julian's and the
Central Business Centre Valletta.
2023
€
2022
€
Rental income
1,643,793
1,786,919
Maintenance income
110,914
-
1,754,707
1,786,919
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
25
6.
OPERATING PROFIT
The operating profit is stated after charging:
2023
€
2022
€
Depreciation charge (Note 10)
56,513
42,331
Directors' remuneration (i)
14,500
13,460
Chief Executive Officer's fees (i)
30,000
30,000
i. The directors' remuneration was paid to the non-executive directors, whereas the Chief Executive Officer
received payments amounting to €30,000 (2022: €30,000). 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 relate to
the following:
2023
€
2022
€
Annual statutory audit
8,000
6,775
Tax compliance
1,450
650
Interim review
950
950
Other services
500
500
10,900
8,875
7.
FINANCE INCOME
2023
€
2022
€
Interest income from banks and quoted securities
4,654
3,008
Investment income from treasury bills
15,351
-
20,005
3,008
8.
FINANCE COSTS
2023
€
2022
€
Interest payable on bonds
1,260,424
1,260,890
Amortisation of bond issue costs (Note 19)
41,366
39,550
Interest expense on lease liabilities (Note 20)
19,821
-
Finance costs capitalised within investment property (Note 10)
(19,688)
(39,375)
1,301,923
1,261,065
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
26
9.
TAX
The tax charged to profit or loss comprised of the following:
2023
€
2022
€
Current tax charge
8,388
99,043
Deferred tax charge
6,993
-
15,381
99,043
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:
2023
€
2022
€
Profit before tax
53,769
277,245
Theoretical expense at 35%
18,819
97,036
Tax effect of:
Non-taxable income
(468)
-
Non-deductible expenses
34,258
29,072
Absorbed capital allowances
(33,505)
(26,949)
Income subject to different tax rate
(3,723)
(116)
15,381
99,043
10.
INVESTMENT PROPERTY
Fair value
Right-of-use
assets
€
Improvements,
furniture and
fixtures
€
Investment
properties
€
Total
€
At 1 January
-
301,908
57,291,650
57,593,558
Additions
5,373,816
141,807
248,430
5,764,053
Refund of stamp duty
-
-
(398,500)
(398,500)
Capitalised interest
-
-
19,688
19,688
Depreciation charge
-
(56,513)
-
(56,513)
At 31 December
5,373,816
387,202
57,161,268
62,922,286
The investment property includes the right-of-use assets acquired during the year in relation to the
temporary emphyteusis of the leasehold land classified as investment property.
Depreciation relates to the depreciation of improvements and furniture on the investment properties. The
depreciable amount is allocated on a systematic basis to each accounting period over its useful life.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
10.
INVESTMENT PROPERTY - continued
27
Lessor commitments
2023
€
Minimum lease commitments receivable but not recognised in the financial statements:
Between 1 and 5 years
1,866,581
Over 5 years
12,161,985
14,028,566
Fair valuation of the investment property
On 2 September 2021, the Company's investment property, which spans four localities 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,
was credited to the statement of comprehensive income.
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 Central Business
Centres Zebbug, the Central Business Centre Gudja, the Central Business Centre St. Julian's and the
Central Business Centre Valletta are complete and being leased. Villa Fieres restoration was almost
complete. It has a restaurant licence and is ready for occupancy at the end of the year.
Property fair value
measurements at 31 December 2023 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 2023.
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
10.
INVESTMENT PROPERTY - continued
Fair valuation of the investment property - continued
28
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 judgement and market observation.
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, the capitalisation approach, factoring in adjustments for the
respective properties to cater for differences in the size, age, location and condition; and
•
in the case of the Valletta Central Business Centre acquired during 2021 and the right-of-use assets
acquired during the year in relation to the temporary emphyteusis of the leasehold land, it was deemed
that the purchase price as at date of transfer approximates the market 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.
11.
DEFERRED TAX ASSETS
The asset for deferred tax is analysed as follows:
2023
€
2022
€
Lease liabilities
1,873,843
-
The deferred tax asset movement is made up of:
2023
€
2022
€
Balance at beginning of the year
-
-
Recognition of deferred tax asset on lease liabilities
1,873,843
-
1,873,843
-
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
29
12.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2023
€
2022
€
Quoted securities
81,000
81,000
13.
TRADE AND OTHER RECEIVABLES
2023
€
2022
€
Trade receivables
198,777
282,525
VAT refundable
-
7,405
Other receivables
204,005
-
402,782
289,930
Trade receivables are stated net of an allowance for expected credit losses amounting to €32,455 (2022:
€32,455). The Company's exposure to credit risk and impairment losses related to trade receivables are
disclosed in Note 3.
14.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash in hand, balances with banks and short term treasury bills with a
maturity date of 3 months and which will mature between a month and two months. Cash and cash
equivalents included in the statement of cash flows reconcile to the amounts shown in the statement of
financial position as follows:
2023
€
2022
€
Cash in hand
113
299
Cash at banks
221,858
95,909
Treasury bills
150,000
99,532
371,971
195,740
Included with the
bank balances is a restricted amount of €39,098 (2022: €76,164) which is pledged as
security against guarantees issued in favour of a third party (Note 25).
15.
SHARE CAPITAL
2023
€
2022
€
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.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
30
16.
CAPITAL RESERVE
2023
€
2022
€
Other capital reserves
15,850,000
15,850,000
Subordinated loan
250,000
250,000
16,100,000
16,100,000
In 2014, 2017 and 2018, the Company entered into various subordinated loans with related parties to partly
finance the acquisition of Central Business Centre Zebbug, the Central Business Centre Gudja and the
Central Business Centre St. Julian's for total of €16,100,000.
These subordinated loans, apart from the €250,000, were waived in 2021.
17.
REVALUATION RESERVE
2023
€
2022
€
At the beginning of year
-
9,185,654
Transfer of revaluation reserve to retained earnings
-
(9,185,654)
At the end of the year
-
-
During 2022, the Company transferred its revaluation reserve to retained earnings through the statement of
changes in equity to provide reliable and more relevant information on the Company's financial position.
18.
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.
2023
2022
Profit for the year
€
38,388
€
178,202
Weighted average number of ordinary shares in issue
250,000
250,000
Earnings per share
€
0.15
€
0.71
There is no difference between the basic and diluted earnings per share as the Company has no potential
dilutive ordinary shares.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
31
19.
BORROWINGS
2023
€
2022
€
Due after more than one year
Bonds 2025
2,965,617
2,963,991
Bonds 2027
5,950,845
5,937,372
Bonds 2033
20,731,786
20,710,519
29,648,248
29,611,882
The interest rate exposure of the Company's borrowings are as follows:
2023
2022
Bonds 2025
5.25%
5.25%
Bonds 2027
4.40%
4.40%
Bonds 2033
4.00%
4.00%
2023
€
2022
€
Bonds outstanding
Proceeds
29,980,000
29,985,000
Gross amount of bond issue costs
(497,049)
(497,147)
Amortisation of gross amount of bond issue costs:
At 1 January
124,029
84,591
Amortisation charge for the year
41,366
39,550
Release of bond issue costs on repaid bond
(98)
(112)
Accumulated amortisation at end of period
165,297
124,029
Unamortised bond issue costs
331,752
373,118
Amortised cost and closing carrying amount
29,648,248
29,611,882
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 redeemed at par on 30
December 2021. The second tranche was admitted to trading with effect from 29 December 2015 and is
redeemable at par on 30 December 2025.
The net proceeds from the first tranche have been used to acquire the Central Business Centres in Zebbug,
St. Julian's and Gudja to finance the demolition and excavation works of the Central Business Centre St.
Julian's as well as to finish works on the Central Business Centre Gudja.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
19.
BORROWINGS - continued
32
The net proceeds from the second tranche have been used for the development and construction of the St.
Julian's 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.
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
was on 10 November 2022. The net proceeds were utilised to acquire the Valletta property.
On May 2022, the Company repurchased and cancelled €15,000 of its 5.25% Unsecured 2025 S2T1
bonds.
On October 2023, the Company repurchased and cancelled €5,000 of its 5.25% Unsecured 2025 S2T1
bonds.
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.
2023
€
2022
€
Borrowings as at 1 January
29,611,882
29,587,332
Amortisation of bond issue costs
41,366
39,550
Repayment of bonds
(5,000)
(15,000)
Borrowings as at 31 December
29,648,248
29,611,882
20.
LEASE LIABILITIES
2023
€
2022
€
Gross lease payments:
Due after more than five years
9,731,932
-
Due after one year but within five years
1,244,431
-
Due within one year
249,630
-
11,225,993
-
Discounting
(5,872,156)
-
Lease liabilities
5,353,837
-
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
20.
LEASE LIABILITIES - continued
33
Movements in lease liabilities during the year are as follows:
2023
€
2022
€
At 1 January
-
-
Additions
5,353,836
-
Interest expense
19,821
-
Lease payments
(39,800)
-
At December 31
5,333,857
-
Under the terms of lease agreements, no contingent rents are payable.
21.
DEFERRED TAX LIABILITIES
2023
€
2022
€
Effect of fair value movement on investment property
3,911,381
3,911,381
Right-of-use assets
1,880,836
-
Provisions
(11,359)
(11,359)
5,803,576
3,922,740
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:
2023
€
2022
€
Tax effect of temporary differences arising from:
- Recognition of deferred tax liability on right-of-use assets
1,880,836
-
- Movement of investment property fair value
3,911,381
3,911,381
- Provisions for impairment of trade receivables
11,359
11,359
5,803,576
3,922,740
The recognised deferred tax assets and liabilities are expected to be recovered or settled principally after
more than twelve months.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
34
22.
TRADE AND OTHER PAYABLES
Non-current
2023
€
2022
€
Trade payables
30,164
120,656
Deposits
85,717
16,500
115,881
137,156
Current
2023
€
2022
€
Trade payables
119,644
120,038
Deposits
185,656
172,909
VAT payable
32,823
-
Deferred income
306,620
63,576
Accruals
10,525
13,429
Bond interest payable (Note 19)
249,316
249,316
904,584
619,268
23.
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details the changes in the Company’
s liabilities arising from financing activities, including
both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows
were, or future cash flows will be, classified in the Company’s statement of cash flows as cash flows from
financing activities.
Balance at
01.01.2023
€
Cash flows
used in
financing
activities
€
Non-cash
changes
€
Balance at
31.12.2023
€
Borrowings (Note 19)
29,611,882
(5,000)
41,366
29,648,248
Balance at
01.01.2022
€
Cash flows
used in
financing
activities
€
Non-cash
changes
€
Balance at
31.12.2022
€
Borrowings (Note 19)
29,587,332
(15,000)
39,550
29,611,882
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
35
24.
RELATED PARTY TRANSACTIONS
The companies forming part of the S.M.W. 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:
2023
€
2022
€
Purchases
173,643
169,547
Maintenance fees
100,995
100,995
Administration and management fees
41,470
37,824
Directors' remuneration
14,500
13,460
Chief Executive Officer's fees
30,000
30,000
On 02 June 2023, the directors declared a net dividend of €2,500 (2022: €nil).
In 2023, the Company entered into two contracts of lease with S.M.W. Cortis Limited, a related party within
the Cortis Group, for two portions of land with a lease term of 30 years.
25.
CONTINGENT LIABILITIES
As at 31 December 2023, the Company has provided guarantees amounting to €39,098 (2022: €76,164) in
favour of a third party.
26.
SUBSEQUENT EVENTS
On 21 December 2023, the Company entered into a deed of emphyteusis pursuant to the promise of
emphyteutical grant agreement with LIDL Immobiliare Malta Ltd (''Grantee'') for the divided part of the
divided portion of land in Zebbug, Malta to be used by the Grantee as a supermarket.
Part of the agreement includes a clause whereby in the event that by 20 January 2024, no written response
is received from the Lands Authority in reference to a letter dated 10 August 2023, or if a reply is received
but
not
to
a
reasonable
satisfaction
of
the Grantee, the
Grantee can
demand
a
dissolution
of
the
emphyteutical grant not later than 30 January 2024.
The original delivery date of the emphyteutical site is within thirty days from 30 January 2024 or from the
date when the Grantee gives notice to the Company that it shall not be exercising its rights as specified in
previous paragraph.
CENTRAL BUSINESS CENTRES p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
26.
SUBSEQUENT EVENTS - continued
36
On 29 January 2024, the Company entered into a modification of a clause from the original agreement by
extending the date of receipt of written notice from Lands Authority from 20 January 2024 to 09 February
2024, to allow more time by when the reply from Lands Authority is to be received.
Further, the modification agreement extended the delivery date of emphyteutical site to thirty days from 15
February 2024 and the Grantee's right to demand dissolution not later than 15 February 2024.
Lastly, on 30 January 2024, the Company received a written response from Lands Authority that is found to
be of the satisfaction of the Grantee. Therefore, the deed of emphyteusis was confirmed and the site was
handed over to the Grantee.
In March 2024, the Company signed a promise of sale for the addition of a commercial property located in
Central Business District, Birkirkara, Malta.
27.
COMPARATIVE INFORMATION
Comparative figures disclosed in the main components of these financial statements have been reclassified
to conform with the current year’s disclosure format for the purpose of fairer presentation.
Items presented in prior years as property, plant and equipment relate to assets which are included in the
investment properties. Consequently, it was decided to reclassify these assets to investment property to
provide a fairer presentation.
RSM Malta is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network.
Each member of the RSM network is an independent accounting and consulting firm which practices in its own right.
The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Malta
Mdina Road,
Ħaż
-
Żebbuġ
, Malta
ZBG 9015
T: 356 2278 7000
www.rsm.com.mt
37
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
2023,
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 material accounting policy information.
In our opinion, the financial statements give a true and fair view of the financial position of the
Company as at 31 December 2023, and of its financial performance and its cash flows for the year
then
ended
in
accordance
with
International
Financial
Reporting
Standards
(IFRS
Accounting
Standards) as adopted by the European Union (EU), and have been properly prepared in accordance
with the requirements of the Maltese 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 2023 are disclosed in Note 6 to the financial statements.
38
INDEPENDENT AUDITORS’ REPORT –
continued
To the Shareholders of Central Business Centres p.l.c.
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 2023. It also includes the right-of-use asset in relation to the temporary emphyteusis of the
leasehold land classified as investment property.
In 2023, an assessment was carried out by the directors in conjunction with the audit committee, which
concluded that there were no significant changes to the underlying assumptions of the detailed
valuation carried out by professional qualified valuers in previous years. The current value of the
Company’s investment properties is reflective of the fair value as at 31 December 2023, and is
inherently subjective to, among other factors the individual nature of the property, its location and the
expected revenue to be derived from the property.
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 to ascertain the fair value
of investment property.
Our audit procedures included, amongst other, challenging the significant unobservable inputs that
were applied in the previous years’ valuation reports for Zebbug, Gudja, and St. Julian's and Valleta to
ensure that these continued to apply during the year under review. 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.
39
INDEPENDENT AUDITORS' REPORT
–
continued
To the Shareholders of Central Business Centres p.l.c.
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, the directors’ report and the corporate governance - statement of compliance, but does
not include the financial statements and out auditors' report thereon.
Our opinion on the financial
statements does not cover the other information and we do not express any form 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 Maltese 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 Maltese Companies Act (Cap.
386);
•
the information given in the directors’ report for the financial year for which the financial
statements are 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 Accounting Standards as adopted by the EU and the requirements of the
Maltese 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.
40
INDEPENDENT AUDITORS' REPORT
–
continued
To the Shareholders of Central Business Centres p.l.c.
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.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
41
INDEPENDENT AUDITORS' REPORT
–
continued
To the Shareholders of Central Business Centres p.l.c.
Report on the Audit of the Financial Statements - continued
Auditors' Responsibilities for the Audit of the Financial Statements - continued
From the matters communicated with those charged with governance, 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 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 Financial
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 Financial lReport.
Our responsibilities do not extend to considering whether this statement is
consistent with any other information included in the Annual Financial 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.
42
INDEPENDENT AUDITORS' REPORT
–
continued
To the Shareholders of Central Business Centres p.l.c.
Report on Other Legal and Regulatory Requirements - continued
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 2023, 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, complies 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 2023 has been prepared in
XHTML format in all material respects.
43
INDEPENDENT AUDITORS' REPORT
–
continued
To the Shareholders of Central Business Centres p.l.c.
Report on other legal and regulatory requirements - continued
Other matters on which we are required to report by exception
Under the Maltese 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 adequate for our 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 to you in respect of these responsibilities.
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 years thereafter.
The period of uninterrupted engagement as statutory auditor of the Company is four financial years.
RSM Malta
Registered Auditors
Mdina Road
Zebbug ZBG 9015
Malta
Roberta West Falzon
Principal
19 April 2024