CPHCL FINANCE P.L.C.

(formerly known as Corinthia Finance p.l.c.)

Annual Financial Report and Financial Statements

For the year ended 28 February 2023

Contents

Directors’ Report

Statement by the directors on the financial statements and other information included in the annual financial report

Directors’ statement of compliance with the Code of Principles of Good Corporate Governance

Other disclosures in terms of Capital Markets Rules

Statement of total comprehensive income

Statement of financial position

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Independent auditor’s report

Company registration number C 25104

Directors’ report

The directors present their report of CPHCL Finance p.l.c. formerly known as Corinthia Finance p.l.c. (the “ Company ”), for the year ended 28 February 2023 .

Principal activities

The principal activity of the Company is to finance the ownership, development, operation and financing of hotels, resorts and leisure facilities, forming part of the Corinthia Group of Companies, of which it is a member.

The Company is essentially a special purpose vehicle set up for financing transactions of the Corinthia Group of Companies. It raised such finance mainly through the issue of bonds, which are quoted on the Malta Stock Exchange and guaranteed by CPHCL Company Limited, formerly known as Corinthia Palace Hotel Company Limited (CPHCL), to whom the proceeds from their issue have been advanced.

Review of the business

During the year under review, the Company registered a profit of €2,373. The Company’s financial position as at 28 February 2023 is set out in the statement of financial position.

Directors

The following have served as directors of the Company:

Mr Joseph Fenech (Chairman) (deceased 3 August 2022)

Mr Frank Xerri de Caro (Chairman)

Dr Joseph J . Vella

Mr Mario P. Galea

Mr Alfred Camilleri (appointed 4 August 2022)

Ms Rachel Stilon (appointed 3 April 2023)

In accordance with the Company’s Articles of Association, the present directors remain in office.

Events after the end of the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.

Future developments

The Company intends to continue acting as a finance company on behalf of its parent company, CPHCL.

Risk and uncertainties

The main risk of the Company is that CPHCL, as borrower, does not repay its loans and interest. The Directors of the Company are provided with oversight of CPHCL’s cash flow forecasts on a regular basis enabling them to monitor the evolution of these cash flows. The most significant financial risks as well as risk management policies are included in Note 16 of these financial statements.

Key performance indicators

The Company earned interest income from the loans made to the parent company, CPHCL in accordance with the loan agreements in place.

Going concern

As required by Capital Markets Rule 5.62 issued by MFSA, upon due consideration of the Company’s state-of-affairs, capital adequacy and solvency, the directors confirm the Company’s ability to continue in operational existence for the foreseeable future. For this reason, in preparing the financial statements, they continue to adopt the going concern basis.

Disclosure of information to the auditor

At the date of making this report, the directors confirm the following:

As far as each director is aware, there is no relevant information needed by the independent auditor in connection with preparing the audit report of which the independent auditor is unaware, and

Each director has taken all steps that he ought to have taken as a director in order to make himself aware of any relevant information needed by the independent auditor in connection with preparing the audit report and to establish that the independent auditor is aware of that information.

Statement of directors’ responsibilities

The Companies Act, Cap 386 requires the directors to prepare financial statements for each financial year which give a true and fair view of the state-of-affairs of the Company as at the end of the financial year and of the profit or loss of the Company for that year. In preparing these financial statements, the directors are required to:

-	adopt the going concern basis unless it is inappropriate to presume that the Company will continue in business;
-	select suitable accounting policies and then apply them consistently;
-	make judgements and estimates that are reasonable and prudent;
-	account for income and charges relating to the accounting period on the accruals basis;
-	value separately the components of asset and liability items; and
-	report comparative figures corresponding to those of the preceding accounting period.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements have been properly prepared in accordance with the Companies Act, Cap 386. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. They are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Auditor

A resolution proposing the appointment of the auditor of the Company will be submitted at the forthcoming Annual General Meeting.

Signed on behalf of the Board of Directors on 26 April 2023 by Frank Xerri de Caro (Chairman) and Joseph J. Vella (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.

Registered Office:

22, Europa Centre

John Lopez Street

Floriana FRN 1400

Malta

Statement by the directors on the financial statements and other information included in the annual financial report

Pursuant to Capital Markets Rule 5.68, we, the undersigned, declare that to the best of our knowledge, the financial statements included in the Annual Financial Report, and prepared in accordance with the requirements of International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit 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.

Directors’ statement of compliance with the Code of Principles of Good Corporate Governance

Listed companies are subject to The Code of Principles of Good Corporate Governance (the “Code”). The adoption of the Code is not mandatory, but listed companies are required under the Capital Markets Rules issued by MFSA to include a Statement of Compliance with the Code in their Annual Financial Report, accompanied by a report of the independent auditor.

The board of directors (the “directors” or the “board”) of CPHCL Finance p.l.c. (the “Company”) restate their support for the Code and note that the adoption of the Code has resulted in positive effects to the Company.

The board considers that during the reporting period, the Company has been in compliance with the Code to the extent that was considered adequate with the size and operations of the Company. Instances of divergence from the Code are disclosed and explained below.

COMPLIANCE WITH THE CODE

Principles 1 and 4: The board

The board of directors is entrusted with the overall direction and management of the Company, including the establishment of strategies for future development, and the approval of any proposed acquisitions by the Company in pursuing its investment strategies.

Its responsibilities also involve the oversight of the Company’s internal control procedures and financial performance, and the review of business risks facing the Company, ensuring that these are adequately identified, evaluated, managed and minimised. All the directors have access to independent professional advice at the expense of the Company, should they so require.

Further to the relevant section in Appendix 5.1 to the Capital Markets Rules the board of directors acknowledge that they are stewards of the Company’s assets and their behaviour is focused on working with management to enhance value to the shareholders.

The board is composed of persons who are fit and proper to direct the business of the Company with the shareholders as the owners of the Company.

All directors are required to:

•	Exercise prudent and effective controls which enable risk to be assessed and managed to achieve continued prosperity to the company;
•	Be accountable for all actions or non-actions arising from discussion and actions taken by them or their delegates;
•	Determine the Company’s strategic aims and the organizational structure;
•	Regularly review management performance and ensure that the Company has the appropriate mix of financial and human resources to meet its objectives and improve the economic and commercial prosperity of the company;
•	Acquire a broad knowledge of the business of the Company;
•	Be aware of and be conversant with the statutory and regulatory requirements connected to the business of the Company;
•	Allocate sufficient time to perform their responsibilities; and
•	Regularly attend meetings of the board.

In terms of Capital Markets Rules 5.117 – 5.134 the board has established an Audit committee to monitor the Company’s present and future operations, threats and risks in the external environment and current and future strengths and weaknesses. The Audit committee ensures that the Company has the appropriate policies and procedures in place to ensure that the Company and its employees maintain the highest standards of corporate conduct, including compliance with applicable laws, regulations, business and ethical standards. The Audit committee has a direct link to the board and is represented by the Chairman of the Audit committee in all board meetings.

Principle 2: Chairman and chief executive

The roles of Chairman of the Board of Directors is carried out by Mr Frank Xerri de Caro, an independent, non-executive director. The functions and duties of the former chief executive officer have been assumed by the executive director of the Company, currently Ms Rachel Stilon.

The Chairman is responsible to:

•	Lead the Board and set its agenda;
•	Ensure that the directors of the board receive precise, timely and objective information so that they can take sound decisions and effectively monitor the performance of the company;
•	Ensure effective communication with shareholders; and
•	Encourage active engagement by all members of the board for discussion of complex or contentious issues.

Principle 3: Composition of the board

The board of directors consists of one executive director and four non-executive directors. The present mix of executive and non-executive directors is considered to create a healthy balance and serves to unite all shareholders’ interests, whilst providing direction to the Company’s management to help maintain a sustainable organisation.

The non-executive directors constitute a majority on the board and their main functions are to monitor the operations of the executive director and her performance as well as to analyse any investment opportunities that are proposed by the executive director. In addition, the non-executive directors have the role of acting as an important check on the possible conflicts of interest of the executive director, which may exist as a result of her dual role as executive director of the Company and her role as officer of the Company’s parent company, CPHCL’s other subsidiaries.

For the purpose of Capital Markets Rules 5.118 and 5.119, Mr Frank Xerri de Caro, Dr Joseph J. Vella and Mr Mario Galea are the non-executive directors who are deemed independent. The board believes that the independence of its directors is not compromised because of long service or the provision of any other service to the Corinthia Group. Each director is mindful of maintaining independence, professionalism and integrity in carrying out his duties, responsibilities and providing judgement as a director of the Company.

The board considers that none of the independent directors of the Company:

a)	are or have been employed in any capacity by the Company;
b)	have or have had, over the past three years, a significant business relationship with the Company;
c)	have received or receives significant additional remuneration from the Company in addition to its director’s fee;
d)	have close family ties with any of the Company’s executive directors or senior employees;
e)	have been within the last three years an engagement partner or a member of the audit team or past external auditor of the Company.

Each of the Directors hereby declares that he undertakes to:

a)	maintain in all circumstances his independence of analysis, decision and action;
b)	not to seek or accept any unreasonable advantages that could be considered as compromising his independence; and
c)	clearly express his opposition in the event that he finds that a decision of the Board may harm the Company.

The board is made up as follows:

Executive director	Date of first appointment
Rachel Stilon	3 April 2023

Non-executive directors	Date of first appointment
Dr Joseph J . Vella	9 September 1999
Mr Alfred Camilleri	4 August 2022
Mr Frank Xerri de Caro	25 April 2005
Mr Mario P. Galea	15 February 2017

Ms Rachel Stilon acts as secretary to the board of directors.

In accordance with the requirements of the Articles of Association, the term of office of the directors lapsed at the Annual General Meeting held on 26 April 2023, at which date they were re-appointed for a further term.

Principle 5: Board meetings

The board met four times during the period under review. The number of board meetings attended by directors for the period under review is as follows:

Mr Joseph Fenech	1
Dr Joseph J . Vella	4
Mr Alfred Camilleri	3
Mr Frank Xerri de Caro	4
Mr Mario P. Galea	4

Principle 6: Information and professional development

The Company ensures that it provides directors with relevant information to enable them to effectively contribute to board decisions. The Company is committed to provide adequate and detailed induction training to directors who are newly appointed to the Board. The Company pledged to make available to the directors all training and advice as required.

Principle 8: Committees

Audit committee

The audit committee’s primary objective is to assist the board in fulfilling its oversight responsibilities over the financial reporting processes, financial policies and internal control structure. The committee is made up of a majority of non-executive directors and reports directly to the board of directors. The committee oversees the conduct of the internal and external audits and acts to facilitate communication between the board, management and, upon the direct request of the audit committee, the internal audit team and the external auditor.

During the period under review, the committee met four times. The internal and external auditors were invited to attend these meetings. The number of audit committee meetings attended by members for the period under review is as follows:

Mr Joseph Fenech	1
Dr Joseph J . Vella	4
Mr Alfred Camilleri	3
Mr Frank Xerri de Caro	4
Mr Mario P. Galea	4

Mr Mario P. Galea, a non-executive director, acts as Chairman, whilst Dr Joseph J. Vella, Mr Frank Xerri de Caro and Mr Alfred Camilleri act as members. The Company Secretary, Ms Rachel Stilon acts as secretary to the committee .

The board of directors, in terms of Capital Markets Rule 5.118, has indicated Mr Mario P. Galea as the independent non-executive member of the audit committee who is considered to be competent in accounting and/or auditing in view of his considerable experience at a senior level in the banking field.

The Audit committee is also responsible for the overview of the internal audit function. The role of the internal auditor is to carry out systematic risk-based reviews and appraisals of the operations of the Company (as well as of the subsidiaries and associates of the Group) for the purpose of advising management and the board, through the Audit committee, on the efficiency and effectiveness of management policies, practices and internal controls. The function is expected to promote the application of best practices within the organisation.

The directors are fully aware that the close association of the Company with CPHCL and its other subsidiaries is central to the attainment by the Company of its investment objectives and implementation of its strategies. The Audit committee ensures that transactions entered into with related parties are carried out on an arm’s length basis and are for the benefit of the Company, and that the Company and its subsidiaries accurately report all related party transactions in the notes to the financial statements.

Pursuant to Articles 16 and 17 of Title III of the provisions of the Statutory Audit Regulations, the Audit committee has been entrusted with overseeing the process of appointment of the statutory auditors or audit firms.

Principle 9: Relations with shareholders and with the market

The Company is highly committed to having an open and communicative relationship with its bondholders and investors. In this respect, over and above the statutory and regulatory requirements relating to the Annual General Meeting, the publication of interim and annual financial statements, the Company seeks to address the diverse information needs of its bondholders and investors by providing the market with regular, timely, accurate, comparable and comprehensive information.

Principle 10: Institutional shareholders

The Company ensures that it is constantly in close touch with its principal institutional investors. The Company is aware that institutional investors who are mainly bondholders have the knowledge and expertise to analyse market information and make their independent and objective conclusions of the information available.

Institutional investors are expected to give due weight to relevant factors drawn to their attention when evaluating the Company’s governance arrangements in particular those relating to board structure and composition and departure from the Code of Corporate Governance.

Principle 11: Conflicts of interest

The directors are fully aware of their obligations regarding dealings in securities of the Company as required by the Capital Markets Rules in force during the year. Moreover, they are notified of blackout periods, prior to the issue of the Company’s interim and annual financial information, during which they may not trade in the Company’s bonds.

None of the other Directors of the Company have any interest in the shares of the Company or the Company’s subsidiaries or investees or any disclosable interest in any contracts or arrangements either subsisting at the end of the last financial year or entered into during this financial year.

Principle 12: Corporate social responsibility

The Company understands that it has an obligation towards society at large to put into practice sound principles of Corporate Social Responsibility (CSR). This responsibility is carried out by its parent company, CPHCL.

NON-COMPLIANCE WITH THE CODE

Principle 7: Evaluation of the board’s performance

Under the present circumstances, the board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role, as the board’s performance is always under the scrutiny of the shareholders.

Other disclosures in terms of Capital Markets Rules

Statement by the directors pursuant to Capital Markets Rule 5.70.1

Contracts of significance with parent company

In 2016, the Company provided its parent company, CPHCL Company Limited with a loan, the funds of which were obtained through a bond issued on the Malta Stock Exchange.

Pursuant to Capital Markets Rule 5.70.2

Company secretary and registered office

Rachel Stilon

22 Europa Centre, Floriana FRN 1400, Malta

Telephone (+356) 21 233 141

Statement of total comprehensive income

		Year ended	Year ended
		28 February 2023	28 February 2022
	Notes	€	€

Finance income	5	1,760,000	1,750,000
Finance costs	5	(1,700,000)	(1,700,000)

Net interest earned		60,000	50,000

Administrative expenses	6	(36,627)	(40,030)

Profit before tax		23,373	9,970
Tax expense	7	(21,000)	(3,491)

Profit for the year		2,373	6,479

Total comprehensive income for the year		2,373	6,479

The notes to the financial statements are an integral part of these financial statements.

Statement of financial position

		28 February	28 February
		2023	2022
	Notes	€	€
ASSETS
Non-current
Loans owed by parent company	8	39,910,000	39,910,000

Total non-current assets		39,910,000	39,910,000

Current
Receivables	9	1,926,734	1,912,222
Other financial assets		20,150	20,150
Cash and cash equivalents	10	83,710	83,059

Total current assets		2,030,594	2,015,431

Total assets		41,940,594	41,925,431

EQUITY
Share capital	11	250,000	250,000
Retained earnings		18,480	16,107

Total equity		268,480	266,107

Non-current liabilities
Bonds in issue	12	40,000,000	40,000,000

Total non-current liabilities		40,000,000	40,000,000

Current liabilities
Payables	13	1,672,114	1,659,324

Total liabilities		41,672,114	41,659,324

Total equity and liabilities		41,940,594	41,925,431


The notes to the financial statements are an integral part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 26 April 2023. The financial statements were signed on behalf of the Board of Directors by Frank Xerri de Caro (Chairman) and Joseph J. Vella (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.

Statement of changes in equity

	Share	Retained
	capital	earnings	Total
	€	€	€

At 1 March 2021	250,000	9,628	259,628

Comprehensive income:
Profit for the year	-	6,479	6,479

Total comprehensive income for the year	-	6,479	6,479

At 28 February 2022	250,000	16,107	266,107


At 1 March 2022	250,000	16,107	266,107

Comprehensive income:
Profit for the year	-	2,373	2,373

Total comprehensive income for year	-	2,373	2,373

At 28 February 2023	250,000	18,480	268,480

The notes to the financial statements are an integral part of these financial statements.

Statement of cash flows

		Year ended	Year ended
		28 February 2023	28 February 2022
	Notes	€	€

Cash flows from operating activities
Cash used in operating activities	14	(39,853)	(38,236)
Tax paid		(9,496)	(1,874)

Net cash used in operating activities		(49,349)	(40,110)

Cash flows from investing activities
Interest received		1,750,000	1,750,000

Net cash generated from investing activities		1,750,000	1,750,000

Cash flows from financing activities
Interest paid		(1,700,000)	(1,700,000)

Net cash used in financing activities		(1,700,000)	(1,700,000)

Net change in cash and cash equivalents		651	9,890

Cash and cash equivalents at beginning of year		83,059	73,169

Cash and cash equivalents at end of year	10	83,710	83,059

The notes to the financial statements are an integral part of these financial statements.

Notes to the financial statements

1. General information and nature of operations

CPHCL Finance p.l.c. (the ‘Company') is a public limited company incorporated and domiciled in Malta. On 25 July 2022, the Company changed its name from Corinthia Finance p.l.c. to CPHCL Finance p.l.c. The address of the company’s registered office and principal place of business is 22, Europa Centre, Floriana, FRN 1400, Malta. The Company is a fully owned subsidiary of CPHCL Company Limited (CPHCL) C257 of the same address.

The principal activity of CPHCL Finance p.l.c. is to finance the ownership, development, operation and financing of hotels, resorts and leisure facilities, forming part of the Corinthia Group of Companies, of which it is a member.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union, and in accordance with the Companies Act, Cap 386.

The financial statements are presented in euro (€), which is also the functional currency of the Company.

Standards and amendments to existing standards effective 1 March 2022

There are no standards, amendments to standards or interpretations that are effective for annual periods beginning on 1 March 2022 that have a material effect on the financial statements of the Company.

Standards, interpretations and amendments to published standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements but are mandatory for the Company’s accounting periods beginning after 1 March 2022. The Company had not early adopted these revisions to the requirements of IFRSs as adopted by the EU.

3. Summary of accounting policies

3.1 Overall considerations

The significant accounting policies that have been used in the preparation of these financial statements are summarised below.

The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described below.

The accounting policies have been consistently applied by the company and are consistent with those used in previous years.

3.2 Revenue recognition

Revenue is measured at fair value. Amounts disclosed as revenue are interest income from loans and other financial assets.

3.2.1 Finance income/cost

Finance income is recognised in profit or loss for all interest-bearing instruments as it accrues using the effective interest method.

Finance cost is reported on an accrual basis using the effective interest method.

3.3 Administrative expenses

Administrative expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.

3.4 Financial assets

3.4.1 Classification

The company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through OCI or through profit or loss), and

- those to be measured at amortised cost.

The classification of debt instruments depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI.

The Company reclassifies debt investments when and only when its business model for managing those assets changes.

3.4.2 Recognition and derecognition

The Company recognises a financial asset in its statement of financial position when it becomes a party to the contractual provisions of the instrument.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

3.4.3 Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset. Financial assets carried at fair value through profit or loss are initially recognised at fair value. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. The Company’s debt instruments principally comprise loans and advances to other undertakings.

The Company classifies its debt instruments using the following measurement category:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other operating expenses together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

3.4.4 Impairment

The Company assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The recoverability of the loan is assessed at the end of each financial year. Refer to Note 8 for further details.

3.5 Financial liabilities

The Company recognises a financial liability in its statement of financial position when it becomes a party to the contractual provisions of the instrument. Financial liabilities not at fair value through profit or loss are recognised initially at fair value, being the fair value of consideration received, net of transaction costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. Financial liabilities at fair value through profit or loss would be initially recognised at fair value through profit or loss with transaction costs in profit or loss and would be subsequently measured at fair value. The Group derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.

3.6 Income tax

The income tax expense for the year is the tax payable on the current year’s taxable income based on the current laws of Malta adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

3.7 Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes deposits held at call with financial institutions.

3.8 Receivables

Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

3.9 Payables

These amounts represent liabilities for goods and services provided to the company prior to the end of financial period which are unpaid. Payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

4. Critical accounting estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company’s accounting policies.

Estimates and judgements are continually evaluated and based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.

In the opinion of the directors, 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. Finance income and finance costs

Finance income and finance costs consist of the following:

	28 February 2023	28 February 2022
	€	€

Interest charged on loans owed by parent company	1,760,000	1,750,000
Finance income	1,760,000	1,750,000

Interest on bonds	(1,700,000)	(1,700,000)
Finance costs	(1,700,000)	(1,700,000)

6. Expenses by nature

	28 February 2023	28 February 2022
	€	€

Directors’ remuneration	18,083	21,000
Other expenses	18,544	19,030
	36,627	40,030

Auditor’s fees

Fees charged by the auditor for services rendered during the financial year ended 2023 and 2022 relate to the following:

	28 February 2023	28 February 2022
	€	€

Annual statutory audit	11,025	10,500
Other assurance services	4,500	4,000
	15,525	14,500

During the current year, fees in relation to non-assurance services amounting to €1,665 (2022: €1,035) have been charged by connected undertakings of the Company’s auditor.

7. Tax expense

The relationship between the expected tax expense based on the effective tax rate of the Company at 35% (2022: 35%) and the tax expense actually recognised in the statement of total comprehensive income can be reconciled as follows:

	28 February 2023	28 February 2022
	€	€

Profit before tax	23,373	9,970
Tax on profit at 35%	(8,181)	(3,491)

Tax effect of:
Disallowed expenses	(12,819)	-
Actual tax expense	(21,000)	(3,491)

Comprising:
Current tax	(21,000)	(3,491)

8. Loans owed by parent company

				28 February	28 February
	Security	Interest rate	Repayable by	2023	2022
				€	€

Loan VI	None	4.375% - 4.425%	5 April 2026	39,910,000	39,910,000

The interest rate on loan was changed beginning 1 September 2022 to 4.425% (as at 28 February 2022: 4.375%).

The loan ranks pari passu, without any priority or preference within all other present and future unsecured and unsubordinated obligations of the parent company, to which the loans have been advanced.

Based on the current market prices of the issued bond, the fair value of Loan VI is €39,753,000 .

9 . Receivables

	28 February	28 February
	2023	2022
	€	€
Current
Amounts owed by parent company	336,873	331,520
Accrued interest income	1,589,861	1,579,861
Financial assets	1,926,734	1,911,381

Prepayments	-	841
Non-financial assets	-	841

Total receivables	1,926,734	1,912,222

The carrying value of financial assets is considered a reasonable approximation of fair value.

The amounts owed by parent company are unsecured, interest free and repayable on demand.

10. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position and statement of cash flows include the following component:

	28 February	28 February
	2023	2022
	€	€

Cash at bank	83,710	83,059

11 . Share capital

The share capital of CPHCL Finance p.l.c. consists of fully paid ordinary shares with a par value of €1 each. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders’ meeting of CPHCL Finance p.l.c .

	28 February	28 February
	2023	2022
	€	€

Shares issued and fully paid
250,000 ordinary shares of € 1 each	250,000	250,000

Shares authorised
2,500,000 ordinary shares of € 1 each	2,500,000	2,500,000

12 . Bonds in issue

			28 February	28 February
	Interest rate	Repayable by	2023	2022
			€	€

Bond V	4.25 %	12 April 2026	40,000,000	40,000,000

The bond issue costs on the bonds have been borne by the parent company. The payment of these bonds and interest thereon are guaranteed by the parent company which has bound itself jointly and severally with the Company.

The carrying value of the bonds in issue is considered a reasonable approximation of their fair values. The quoted market price as at 28 February 2023 for Bond V was €99.99 (as at 28 February 2022: €100.04).

13 . Payables

Payables recognised in the statement of financial position can be analysed as follows:

	28 February	28 February
	2023	2022
	€	€

Current
Accrued interest on bonds in issue	1,506,389	1,506,389
Other accruals	20,445	24,893
Other payables	145,280	128,042
	1,672,114	1,659,324

The carrying value of these financial liabilities is considered a reasonable approximation of fair value.

14 . Cash flow adjustments and changes in working capital

The following non-cash flow adjustments and adjustments for changes in working capital have been effected to profit before tax to arrive at operating cash flows:

	28 February	28 February
	2023	2022
	€	€

Operating profit	23,373	9,970

Adjustments:
Interest income	(1,760,000)	(1,750,000)
Interest expense	1,700,000	1,700,000

Changes in working capital:
Change in receivables	(4,512)	11,907
Change in payables	1,286	(10,113)

Cash used in operations	(39,853)	(38,236)

15. Related party transactions

The Company’s related parties include its parent company, fellow subsidiaries , key management personnel (the directors) and all other parties forming part of the Corinthia Group of Companies .

Unless otherwise stated, none of the transactions incorporates special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash.

15.1 Transactions with key management personnel

Other than the remuneration paid to the directors included in note 6, there were no other transactions with key management personnel.

15.2 Transactions with parent company

Transactions with parent company are included in note 5 whilst balances are shown separately in notes 8 and 9 .

15.3 The individual Directors’ holdings in the bonds were as follows:

As at 28 February 2023, Mr Frank Xerri De Caro held 11,700 units in the € 40 million bond.

As at 28 February 2023, Mr Joseph J. Vella held 28,000 units in the € 40 million bond.

As at 28 February 2023, Ms Rachel Stilon held 6,900 units in the €40 million bond.

16. Financial instruments risk

Risk management objectives and policies

The Company is exposed to various risks in relation to financial instruments. The Company’s financial assets and liabilities by category are summarised in note 16.4. The main types of risks are credit risk and liquidity risk.

The Company’s risk management is co-ordinated at its head office, in close co-operation with the board of directors.

The Company does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Company is exposed are described below.

16.1 Credit risk

The Company’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the end of the reporting period, as summarised below:

		28 February	28 February
	Notes	2023	2022
		€	€
Financial assets at amortised cost - carrying amounts
Loans owed by parent company	8	39,910,000	39,910,000
Receivables	9	1,926,734	1,911,381
Other financial assets		20,150	20,150
Cash and cash equivalents	1 0	83,710	83,059

		41,940,594	41,924,590

The Company does not have significant exposure with respect to loans and receivables since the major debtor is the parent company. With the adoption of IFRS 9 ‘Financial Instruments’ as from 1st January 2018, the Company reviewed the risks associated with its loans receivable from its parent and in view of the latter’s history, prudent gearing ratio and level of reserves, it applied judgement in determining an appropriate expected credit loss provision of €90,000 .

The credit risk for liquid funds is considered negligible since the counterparty is a reputable bank with high quality external credit rating.

None of the Company’s assets is secured by collateral or other credit enhancements.

16.2 Liquidity risk

Management manages the Company’s liquidity needs by carefully monitoring cash flows on a regular basis. Liquidity needs for 6 monthly and yearly periods are identified on a monthly basis.

The Company maintains cash to meet its liquidity requirements for the short-term. Funding for long-term liquidity needs is secured by the parent company.

In view of the nature of activities, the company manages the timing and extent of inflows from its key financial asset, the loans to the parent, to match demands for liquidity in respect of its bond obligations.

As at the period end, the Company’s liabilities have contractual maturities (including interest payments where applicable) as summarised below:

	Current		Non-current
	within 6 months	6 to 12 months	1 to 5 y ears	later than 5 years
28 February 2023	€	€	€	€

Bonds in issue	-	-	40,000,000	-
Interest on bonds in issue	1,700,000	-	5,100,000	-
Payables	165,725	-	-	-

	1,865,725	-	45,100,000	-

	Current		Non-current
	within 6 months	6 to 12 months	1 to 5 y ears	later than 5 years
28 February 2022	€	€	€	€

Bonds in issue	-	-	40,000,000	-
Interest on bonds in issue	1,700,000	-	6,800,000	-
Payables	152,935	-	-	-

	1,852,935	-	46,800,000	-

The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the liabilities at the reporting date.

16.3 Market risk

Foreign currency risk

The Company’s transactions are carried out in euro and all financial assets and liabilities are denominated in euro. Therefore, the company is not exposed to foreign currency risk.

Interest rate risk

The Company is not significantly exposed to interest rate risk since its interest-bearing financial assets and liabilities are at fixed rates of interest. The company secured a spread between its fixed interest income of loans to the parent and fixed interest expense on bonds issued to the public.

16.4 Categories of financial assets and liabilities

The carrying amounts presented in the statement of financial position relate to the following categories of financial assets and liabilities:

	Notes	28 February	28 February
		2023	2022
		€	€
Financial assets measured at amortised cost
Non-current
- Loans owed by parent company	8	39,910,000	39,910,000

Current
- Receivables	9	1,926,734	1,911,381
- Other financial assets		20,150	20,150
- Cash and cash equivalents	10	83,710	83,059


		41,940,594	41,924,590

Financial liabilities measured at amortised cost
Non-current
- Bonds in issue	12	40,000,000	40,000,000

Current
- Payables	13	1,672,114	1,659,324

		41,672,114	41,659,324

17. Capital management policies and procedures

The board’s objective is to raise funds through the issue of bonds to the general public, as may be required by the parent company from time to time.

The Company is not subject to externally imposed capital requirements.

18. Events after the end of the reporting period

No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation for issue of these financial statements.

Independent auditor’s report

Logo

Independent auditor’s report

To the Shareholders of CPHCL Finance p.l.c. (formerly Corinthia Finance p.l.c.)

Report on the audit of the financial statements

Our opinion

In our opinion:

· The financial statements give a true and fair view of the financial position of CPHCL Finance p.l.c. (the Company) as at 28 February 2023, and of the company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and

· The financial statements have been 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.

What we have audited

CPHCL Finance p.l.c.’s financial statements comprise:

· the statement of total comprehensive income for the year ended 28 February 2023;

· the statement of financial position as at 28 February 2023;

· the statement of changes in equity for the year then ended;

· the statement of cash flows for the year then ended; and

· the notes to the financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the company are in accordance with the applicable law 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, in the period from 1 March 2022 to 28 February 2023, are disclosed in Note 6 to the financial statements.

Our audit approach

Overview

	· Overall materiality: €419,400, which represents 1% of total assets.
	· Recoverability of balance with parent company.

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which the company operates.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall materiality	€419,400
How we determined it	1% of total assets
Rationale for the materiality benchmark applied	We chose total assets as the benchmark because in our view, this benchmark is an appropriate measure for this type of entity. We chose 1% which is within the range of quantitative materiality thresholds that we consider acceptable.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €41,900 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

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.

Key audit matter

How our audit addressed the Key audit matter

Recoverability of balance with parent company

Loan and receivables include a loan balance with the parent company, CPHCL Company Limited, amounting to €39,910,000 as at 28 February 2023. Refer to Note 8.

As explained in accounting policy Note 3.4, the recoverability of the loan is assessed at the end of each year.

The loan represents the principal asset of the company, which is why we have given additional attention to this area.

We have agreed the terms surrounding the loan to the supporting loan agreement and agreed the outstanding balance as at year end with results of procedures carried out at a Group level.

We have assessed the financial soundness of the parent company, CPHCL Company Limited, which is also the guarantor of the company’s bond. In doing this, we made reference to the management accounts for the current year, the audit procedures carried out on the consolidated financial statements of the Group, cash flow projections and other information.

Based on the evidence and explanations obtained, we concur with management’s view with respect to the recoverability of this loan.

Other information

The directors are responsible for the other information. The other information comprises the Directors’ Report, the Statement by the directors on the financial statements and other information included in the annual financial report, the Directors’ statement of compliance with the Code of Principles of Good Corporate Governance and the Other disclosures in terms of Capital Markets Rules (but does not include the financial statements and our auditor’s 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, 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.

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 IFRSs 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.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

· 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 auditor’s 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 auditor’s 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, actions taken to eliminate threats or safeguards applied.

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 auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to 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 CPHCL Finance p.l.c. for the year ended 28 February 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.

Our 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 28 February 2023 has been prepared in XHTML format in all material respects.

Other reporting requirements

The Annual Financial Report and Financial Statements 2023 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.

The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.

Area of the Annual Financial Report and Financial Statements 2023 and the related Directors’ responsibilities

Our responsibilities

Our reporting

Directors’ report and Statement by the directors on the financial statements and other information included in the annual financial report

The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act.

We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.

We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.

In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements.

In our opinion:

· 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

· the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).

We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.

Directors’ 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 the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.

We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.

We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.

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 has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.

We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.

Other matters on which we are required to report by exception

We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion:

· adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us.

· the financial statements are not in agreement with the accounting records and returns.

· we have not received all the information and explanations which, to the best of our knowledge and belief, we require for 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.

Other matter – use of this report

Our report, including the opinions, has been prepared for and only for the Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.

Appointment

We were first appointed as auditors of the Company on 20 July 2015. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 8 years.

PricewaterhouseCoopers

78, Mill Street

Zone 5, Central Business District

Qormi

Malta

Lucienne Pace Ross

Partner

26 April 2023