Report & Consolidated Financial Statements
31 December 2021
Company registration number: C 37513
Directors’ statement of compliance with the Code of Principles Of Good Corporate Governance
Other disclosures in terms of capital markets rules
Statements of total comprehensive income
Statements of financial position
Statements of changes in equity
Notes to the financial statements
|
Group |
Company |
||||
|
Notes |
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
||
|
Revenue |
6, 7 |
|
|
232,699 |
221,618 |
|
Dividend income |
- |
- |
53,713,904 |
62,144,286 |
|
|
Operating expenses |
( |
( |
- |
- |
|
|
Gross profit |
|
|
53,946,603 |
62,365,904 |
|
|
Other income |
9 |
|
|
555,828 |
464,139 |
|
Administrative expenses |
( |
( |
(692,803) |
(649,310) |
|
|
Marketing expenses |
( |
( |
(211,914) |
(307,060) |
|
|
Operating profit |
|
|
53,597,714 |
61,873,673 |
|
|
Finance income |
10 |
|
|
3,084,665 |
23,820 |
|
Finance costs |
10 |
( |
( |
(4,657,117) |
(4,896,609) |
|
Share of gain of equity accounted investment |
|
|
- |
- |
|
|
Profit before tax |
11 |
|
|
52,025,262 |
57,000,884 |
|
Tax (expense) income |
|||||
|
- Current tax |
12 |
( |
( |
(3,713,904) |
(2,144,286) |
|
- Deferred tax on fair value of investment property |
12 |
- |
|
- |
- |
|
- Deferred tax – other |
12 |
|
( |
- |
(249,465) |
|
Profit for the year |
|
|
48,311,358 |
54,607,133 |
|
|
Other comprehensive income: |
|||||
|
Items that will be reclassified subsequently to profit or loss |
|||||
|
Fair value through other comprehensive income: |
|||||
|
- current year losses |
- |
- |
(37,633,060) |
(32,915,805) |
|
|
Difference on exchange |
( |
( |
(6,874,800) |
(607,398) |
|
|
Income tax relating to components of other comprehensive (loss) income |
12, 27 |
|
( |
12,659,430 |
11,520,533 |
|
Other comprehensive loss for the year, net of tax |
( |
( |
(31,848,430) |
(22,002,670) |
|
|
Total comprehensive income for the year |
|
|
16,462,928 |
32,604,463 |
|
|
|
|
|
|
||
|
Earnings per share (basic and diluted) |
13 |
|
|
1.01 |
1.14 |
|
Group |
Company |
||||
|
Notes |
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
||
|
Assets |
|||||
|
Non-current |
|||||
|
Intangible assets |
14 |
|
|
- |
- |
|
Property, plant and equipment |
15 |
|
|
1,151 |
- |
|
Investment property |
16 |
|
|
- |
- |
|
Investment accounted for using the equity method |
17 |
|
|
- |
- |
|
Investments in subsidiaries |
18 |
- |
- |
178,303,065 |
218,648,120 |
|
Investment in associate |
17 |
- |
- |
8,022,973 |
12,185,778 |
|
|
|
186,327,189 |
230,833,898 |
||
|
Current |
|||||
|
Inventories |
20 |
|
|
- |
- |
|
Trade and other receivables |
21 |
|
|
77,023,369 |
35,123,128 |
|
Cash and cash equivalents |
22 |
|
|
1,770,068 |
14,589,840 |
|
Tax recoverable |
|
|
1,019,967 |
773,501 |
|
|
|
|
79,813,404 |
50,486,469 |
||
|
Total assets |
|
|
266,140,593 |
281,320,367 |
|
|
Equity |
|||||
|
Share capital |
23 |
|
|
48,002,000 |
48,002,000 |
|
Other components of equity |
( |
( |
51,657,214 |
83,505,644 |
|
|
Retained earnings |
|
|
53,233,713 |
4,922,355 |
|
|
Total equity |
|
|
152,892,927 |
136,429,999 |
|
|
Liabilities |
|||||
|
Non-current |
|||||
|
Bank and other borrowings |
24 |
- |
|
- |
- |
|
Bonds |
25 |
|
|
30,740,648 |
70,382,973 |
|
Shareholders’ loan |
26 |
|
|
5,203,300 |
5,203,300 |
|
Deferred tax liability |
27 |
|
|
31,538,673 |
44,198,103 |
|
Other non-current liabilities |
28 |
|
|
- |
- |
|
|
|
67,482,621 |
119,784,376 |
||
|
Current |
|||||
|
Bank and other borrowings |
24 |
|
|
- |
- |
|
Bonds |
25 |
|
|
39,929,870 |
11,950,000 |
|
Trade and other payables |
28 |
|
|
5,835,175 |
13,155,992 |
|
Current taxation |
- |
|
- |
- |
|
|
|
|
45,765,045 |
25,105,992 |
||
|
Total liabilities |
|
|
113,247,666 |
144,890,368 |
|
|
Total equity and liabilities |
|
|
266,140,593 |
281,320,367 |
|
|
The financial statements were approved and authorised for issue by the Board of Directors on 28 April 2022. The financial statements were signed on behalf of the Board of Directors by Alfred Pisani (Chairman) and Ahmed Wahedi (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report. |
| Statements of changes in equity |
|
||||
|
Group |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
Share |
components |
Retained |
Total |
|
|
|
capital |
of equity |
earnings |
equity |
|
|
|
€ |
€ |
€ |
€ |
|
|
|
|
|
|
|
|
|
Balance at 1 January 2020 |
|
( |
|
|
|
|
Total recognised income for the year |
|
|
|
|
|
|
Profit for the year |
- |
- |
|
|
|
|
Other comprehensive loss |
- |
( |
- |
( |
|
|
Total comprehensive (loss) income for the year |
- |
( |
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
Dividend |
- |
- |
( |
( |
|
|
Balance at 31 December 2020 |
|
( |
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2021 |
|
( |
|
|
|
|
Total recognised income for the year |
|
|
|
|
|
|
Profit for the year |
- |
- |
|
|
|
|
Other comprehensive loss |
- |
( |
- |
( |
|
|
Total comprehensive (loss) income for the year |
- |
( |
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2021 |
|
( |
|
|
|
|
|
|
|
|
|
|
|
Company |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
Share |
components |
Retained |
Total |
|
|
|
capital |
of equity |
earnings |
e quity |
|
|
|
€ |
€ |
€ |
€ |
|
|
|
|
|
|
|
|
|
Balance at 1 January 2020 |
48,002,000 |
105,508,314 |
(39,684,778) |
113,825,536 |
|
|
Total recognised income for the year |
|
|
|
|
|
|
Profit for the year |
- |
- |
54,607,133 |
54,607,133 |
|
|
Other comprehensive loss |
- |
(22,002,670) |
- |
(22,002,670) |
|
|
Total comprehensive (loss) income for the year |
- |
(22,002,670) |
54,607,133 |
32,604,463 |
|
|
Transactions with owners |
|
|
|
|
|
|
Dividend |
- |
- |
(10,000,000) |
(10,000,000) |
|
|
Balance at 31 December 2020 |
48,002,000 |
83,505,644 |
4,922,355 |
136,429,999 |
|
|
|
|
|
|
|
|
|
Balance at 1 January 2021 |
48,002,000 |
83,505,644 |
4,922,355 |
136,429,999 |
|
|
Total recognised income for the year |
|
|
|
|
|
|
Profit for the year |
- |
- |
48,311,358 |
48,311,358 |
|
|
Other comprehensive loss |
- |
(31,848,430) |
- |
(31,848,430) |
|
|
Total comprehensive (loss) income for the year |
- |
(31,848,430) |
48,311,358 |
16,462,928 |
|
|
|
|
|
|
|
|
|
Balance at 31 December 2021 |
48,002,000 |
51,657,214 |
53,233,713 |
152,892,927 |
|
|
|
|
|
|
|
|
|
Group |
Company |
||||
|
Notes |
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
||
|
Operating activities |
|||||
|
Profit before tax |
|
|
52,025,262 |
57,000,884 |
|
|
Adjustments |
29 |
|
|
(52,696,536) |
(57,735,507) |
|
Net changes in working capital |
29 |
( |
|
11,246,119 |
14,326,893 |
|
Tax paid |
( |
( |
- |
- |
|
|
Tax refunded |
|
- |
309,361 |
- |
|
|
Net cash generated from operating activities |
|
|
10,884,206 |
13,592,270 |
|
|
Investing activities |
|||||
|
Payments to acquire property, plant and equipment |
15 |
( |
( |
(1,534) |
- |
|
Payments to acquire investment property |
16 |
- |
( |
- |
- |
|
Interest received |
- |
|
- |
23,820 |
|
|
Net cash (used in) generated from investing activities |
( |
( |
(1,534) |
23,820 |
|
|
Financing activities |
|||||
|
Repayment of bank loan |
- |
( |
- |
- |
|
|
Dividends paid |
( |
- |
(7,000,000) |
- |
|
|
Proceeds from issue of bond |
- |
|
- |
30,530,276 |
|
|
Repayment of bonds |
( |
( |
(11,950,000) |
(29,457,800) |
|
|
Payments to lease |
- |
( |
- |
- |
|
|
Interest paid |
( |
( |
(4,752,444) |
(4,707,067) |
|
|
Net cash used in financing activities |
( |
( |
(23,702,444) |
(3,634,591) |
|
|
Net change in cash and cash equivalents |
( |
|
(12,819,772) |
9,981,499 |
|
|
Cash and cash equivalents, beginning of year |
|
|
14,589,840 |
4,608,650 |
|
|
Cash and cash equivalents before effect of foreign |
|
|
1,770,068 |
14,590,149 |
|
|
Effect of foreign exchange rate changes |
( |
|
- |
(309) |
|
|
Cash and cash equivalents, end of year |
22 |
|
|
1,770,068 |
14,589,840 |
|
|
Notes to the financial statements |
|
|
|
|
|
|
|
|
|
|
|
|
2 General information and statement of compliance with IFRSs |
|
|
|
The financial statements of the group and the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and as 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 group and its subsidiaries. |
|
|
3 Going concern |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.1 Overall considerations |
|
The consolidated and separate financial statements have been prepared using the significant accounting policies and measurement bases summarised below. The accounting policies have been consistently applied by the group and the Company and are consistent with those in previous years. |
|
5.2 Presentation of financial statements |
|
The consolidated and separate financial statements are presented in accordance with IAS 1 Presentation of Financial Statements (Revised 2007). The group and the Company have elected to present the ‘statement of total comprehensive income’ in one statement. |
5.3 Basis of consolidation |
|
|
|
Intra-group balances, transactions and unrealised gains and losses on transactions between the group companies are eliminated. Where unrealised losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from the group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the group. |
|
Profit or loss and other comprehensive income of subsidiaries acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as applicable. |
|
Non-controlling interests represent the portion of a subsidiary’s profit or loss and net assets that is not held by the group. The group attributes total comprehensive income or loss of subsidiaries between the owner of the parent and the non-controlling interests based on their respective ownership interests. |
|
The consolidated financial statements have been prepared from the financial statements of the following companies comprising the group. |
|
Company |
Nature of business |
% ownership |
|
|
|
|
|
Mediterranean Investments Holding p.l.c. |
Holding company |
|
|
|
|
|
|
Palm City Ltd |
Owns, operates and rents a residential compound |
100% |
|
|
|
|
|
Palm City Waterfront Ltd |
Invest, develop and operate real estate projects |
99.9% |
5.4 Revenue |
||
|
Revenue is mainly derived from leasing out the investment property owned by the subsidiary, and the sales generated from the food and beverage outlets within the Palm City residential complex. |
||
To determine whether to recognise revenue, the group follows a 5-step process:1. Identifying the contract with a customer 2. Identifying the performance obligations 3. Determining the transaction price 4. Allocating the transaction price to the performance obligations 5. Recognising revenue when/as performance obligation(s) are satisfied. |
||
|
The group often enters into transactions involving a range of products and services. In all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties. |
||
|
Revenue is recognised either at a point in time or over time, when (or as) the group satisfies performance obligations by transferring the promised goods or services to its customers. |
||
|
The group recognises deferred income for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position. Similarly, if the group satisfies a performance obligation before it receives the consideration, the group recognises either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due. |
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|
Interest income is reported on an accrual basis using effective interest rate method. Dividend income, other than those from investments in associates, is recognised at the time to receive payment is established. |
||
5.5 Investments in associates |
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|
Associates are those entities over which the group is able to exert significant influence but which are neither subsidiaries nor joint ventures. Investments in associates are initially recognised at cost and subsequently accounted for using the equity method. Any goodwill or fair value adjustment attributable to the group’s share in the associate is not recognised separately and is included in the amount recognised as investment in associates. |
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|
The carrying amount of the investments in associates is increased or decreased to recognise the group’s share of the profit or loss and other comprehensive income of the associate. These changes include subsequent depreciation, amortisation or impairment of the fair value adjustment of assets and liabilities. |
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|
Unrealised gains and losses on transactions between the group and its associates are eliminated to the extent of the group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment. |
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|
Amounts reported in the financial statements of associates have been adjusted where necessary to ensure consistency with the accounting policies of the group. |
||
5.6 Foreign currency translation |
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Functional and presentation currency |
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|
The separate and consolidated financial statements are presented in euro, which is also the functional currency of the parent company.
Foreign currency transactions and balances
Foreign currency transactions are translated into the functional currency of the respective group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in profit or loss.
Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined. 5.7 Operating expensesOperating expenses are recognised in profit or loss upon utilisation of the service or as incurred.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset and is recognised in profit or loss within ‘other income’ or ‘administrative expenses’.5.8 Borrowing costsBorrowing costs primarily comprise interest on the group’s borrowings. Borrowing costs incurred on specific fixed asset projects prior to their commissioning are capitalised as part of the cost of the asset. The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is based on the average rate of interest on bank borrowings. All other borrowing costs are amortised on an effective interest basis over the life of the loan facility agreement.5.9 Employee benefitsContributions towards the state pension in accordance with local legislation are recognised in profit or loss when they are due.5.10 Intangible assetsTrademarks are measured initially at purchase cost. Subsequent to initial recognition, intangible assets are stated at cost less any accumulated amortisation and impairment losses.5.11 Property, plant and equipmentAll items of property, plant and equipment are initially recognised at acquisition cost including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management. They are subsequently measured at acquisition cost or manufacturing cost less subsequent depreciation and impairment losses.Depreciation is calculated, using the straight-line method, to write off the cost or valuation of assets over their estimated useful lives on the following bases:
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5.12 Investment property |
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Investment property is property held to earn rentals and/or for capital appreciation and is accounted for using the fair value model. |
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Investment property is revalued annually and is included in the statement of financial position at its fair value. This is determined by the directors based either on management’s estimates of expected future cash flows or market values. When based on management’s estimates of future cash flows, the value of the property is determined by applying a suitable discount rate. |
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Any gain or loss resulting from either a change in the fair value or the sale of an investment property is immediately recognised in profit or loss within ‘fair value gain on investment property’. |
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Rental income and operating expenses from investment property are reported within ‘revenue’ and ‘operating expenses’ and are recognised as described in notes 5.4 and 5.7 respectively. |
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5.13 Leased assets |
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The Group as a lessee The group considers whether a contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’. To apply this definition, the group assesses whether the contract meets three key evaluations which are whether: |
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Measurement and recognition of leases as a lessee At lease commencement date, the group recognises a right-of-use asset and a lease liability on the statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the commencement date (net of any incentives received). The group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The group also assesses the right-of-use asset for impairment when such indicators exist. At lease commencement date, the group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Company’s incremental borrowing rate. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised. Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between repayments of principal and finance costs. The lease liability is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments. When the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. On the statement of financial position, right-of-use asset has been included in property, plant and equipment and lease liabilities disclosed separately.
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5.14 Impairment testing of tangible and intangible assets |
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For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. |
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All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. |
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An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of its fair value less costs to sell and its value in use. To determine the value in use, the group ’s management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profiles as assessed by the group ’s management. |
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Impairment losses are recognised in the profit or loss. Impairment losses for cash-generating units are charged pro rata to the assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge that has been recognised is reversed if the cash-generating unit’s recoverable amount exceeds its carrying 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. |
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5.15 Investment in subsidiaries |
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Investment in subsidiaries is included in the Company’s financial statements at fair value (refer to note 5.16). |
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5.16 Financial instruments |
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Recognition and derecognition |
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Financial assets and financial liabilities are recognised when the group and the Company become a party to the contractual provisions of the financial instrument. |
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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. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. |
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Classification and initial measurement of financial assets |
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Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). |
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Financial assets are classified into the following categories: • amortised cost • fair value through profit or loss (FVTPL) • fair value through other comprehensive income (FVOCI). |
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In the periods presented the group and the Company do not have any financial assets categorised at FVTPL. |
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The classification is determined by both: • the entity’s business model for managing the financial asset; and • the contractual cash flow characteristics of the financial asset. |
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All income and expenses relating to financial assets that are recognised in profit or loss are presented within ‘finance costs’ or ‘finance income’, except for impairment of trade receivables which is presented in ‘administrative expenses’. |
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Subsequent measurement of financial assets |
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Financial assets at amortised cost |
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|
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
|
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After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The group’s and the Company’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. |
|||||
|
Financial assets at fair value through other comprehensive income (FVOCI) |
|||||
|
The group and the Company accounts for financial assets at FVOCI if the assets meet the following conditions:
The Company made the irrevocable election to account for the investment in subsidiaries and associate at FVOCI. Any gains or losses recognised in other comprehensive income will be recycled upon derecognition of the asset. |
|||||
|
Impairment of financial assets |
|||||
|
IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’. Instruments within the scope of the new requirements included FVOCI, trade receivables and contract assets recognised and measured under IFRS 15. |
|||||
|
Recognition of credit losses is no longer dependent on the group and Company first identifying a credit loss event. Instead the group and Company consider a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. |
|||||
|
In applying this forward-looking approach, a distinction is made between:
|
|||||
|
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. |
|||||
|
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category. |
|||||
|
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. |
|||||
|
Trade and other receivables |
|||||
|
The group and Company make use of a simplified approach in accounting for trade and other receivables as well as contract assets and record the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the group and Company use their historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix. |
|||||
|
The group and Company assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics. Refer to note 31.1 for a detailed analysis of how the impairment requirements of IFRS 9 are applied. |
|||||
|
Classification and measurement of financial liabilities |
|||||
|
The group’s and the Company’s financial liabilities include borrowings, bonds, trade and other payables. |
|||||
|
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Company designates a financial liability at fair value through profit or loss. |
|||||
|
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). |
|||||
|
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within ‘finance costs’ or ‘finance income’. |
|||||
5.17 Inventories |
|||||
|
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses. |
|||||
|
The cost of inventories is based on the weighted average principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. |
|||||
|
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised directly in the statement of comprehensive income or equity. |
|||||
|
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period and any adjustment to tax payable in respect of previous years. |
|||||
|
Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the group and it is probable that reversal will not occur in the foreseeable future. |
|||||
|
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in the statement of other comprehensive income or equity (such as the revaluation of land) in which case the related deferred tax is also recognised in the statement of other comprehensive income or equity respectively. |
|||||
|
5.19 Cash and cash equivalents |
|||||
|
For the purposes of the statements of cash flows, cash and cash equivalents comprise cash in hand and demand deposits, net of bank balance overdrawn. In the statement of financial position the bank balance overdrawn is included within bank borrowings in current liabilities. |
|||||
|
5.20 Equity, reserves and dividend payments |
|||||
|
Share capital represents the nominal value of shares that have been issued. |
|||||
|
Other components of equity include movements in fair value of financial assets at FVOCI. |
|||||
|
Retained earnings/accumulated losses include all current and prior period results, less dividend distributions. |
|||||
|
All transactions with owners are recorded separately within equity. Dividend distributions payable to equity shareholders are included in 'trade and other payables' when the dividends have been approved in a general meeting prior to the reporting date. |
|||||
|
5.21 Provisions, contingent liabilities and contingent assets |
|||||
|
Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources from the group and Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan's main features to those affected by it. Provisions are not recognised for future operating losses. |
|||||
|
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Where the time value of money is material, provisions are discounted to their present values. |
|||||
|
Any reimbursement that the group and the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. |
|||||
|
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. |
|||||
|
In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised. |
|||||
|
5.22 Significant management judgement in applying accounting policies and estimation uncertainty |
|||||
|
When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The resulting accounting estimates will, by definition, seldom equal actual results. The estimates, assumptions and management judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below. The fair value of investment property is determined by using valuation techniques. Further details of the judgements and assumptions made are disclosed in note 16. This note highlights information about the fair value estimation of the investment property. In the opinion of the directors, the accounting estimates and judgements made in the course of preparing these financial statements are, with the exception of those described hereunder, not difficult, subjective or complex to a degree which would warrant their description as critical in terms of the requirements of IAS 1. |
|||||
|
(a) Income taxes In order to establish the taxation provisions, management exercises significant judgement in view of the fact that the group and the Company operate in various jurisdictions and as a result there are diverse transactions for which the ultimate tax determination is somewhat uncertain. In the event that the amount of actual tax due differs from the original amounts provided for, such variances will have an impact on the taxation charges for future periods. |
|||||
|
(b) Impairment of trade and other receivables |
|
||||
|
The group applies the simplified model of recognising lifetime expected credit losses for all trade receivables. In measuring the expected credit losses, the trade receivables are assessed on a collective basis as they possess shared credit characteristics. They have been grouped according to the past due dates and geographical location. The group has concluded that the expected credit losses for trade receivables is not material. |
|
||||
|
(c) Useful lives of depreciable assets |
|
||||
|
Management reviews the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets to the group and Company . The carrying amounts are analysed in note 15. Actual results, however, may vary due to technical obsolescence, particularly relating to software and IT equipment. |
|||||
|
(d) Inventories |
|||||
|
Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by expiry, obsolescence, future technology or other market-driven changes that may reduce future selling prices. |
|||||
|
(e) Fair value of investment property |
|||||
|
The group’s investment property is situated in Libya which is still experiencing prolonged political instability. The estimated fair values were arrived at using projected cash flows from the operation of the investment property. On the basis of the valuation carried out by the directors, no uplift was recognised in these financial statements. The significant uncertainty which is still prevailing in Libya and the significant judgements surrounding the valuation of the investment property situated in that country render the valuation of any uplift of the property extremely difficult and judgemental. |
|||||
|
5.23 Segment reporting |
|
||||
|
The standard requires a ‘management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes. The chief operating maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the group board of directors. |
|
||||
|
An operating segment is a group of assets and operations engaged in providing services that are subject to risks and returns that are different from that of other segments. The operating segments can be classified as investment property rental, income from food and beverages and others. |
|
||||
|
The group is engaged in the ownership and leasing of its investment property. The group’s country of domicile is Malta and the operation is in Libya. |
|
||||
|
The board of directors assesses performance based on the measure of earnings before interest, tax, depreciation and amortisation (EBITDA). |
|
||||
|
The group is not required to report a measure of total assets and liabilities for each reportable segment since such amounts are not regularly provided to the chief operating decision maker. However, in accordance with IFRS 8, non-current assets (other than financial instruments and deferred tax assets) are divided into geographical areas in note 6. 6 Segment reporting |
|
||||
|
2021 |
2020 |
|
|
€ |
€ |
|
|
Libya |
Libya |
|
|
Revenue (note 1) |
||
|
Investment property rental |
22,385,238 |
23,859,425 |
|
Income from food and beverages operations |
469,205 |
913,654 |
|
Other |
1,123,542 |
822,061 |
|
23,977,985 |
25,595,140 |
|
|
EBITDA |
19,050,923 |
18,789,724 |
|
Depreciation |
(73,019) |
(181,151) |
|
Segment operating profit |
18,977,904 |
18,608,573 |
|
|
|
|
|
Non current assets (note 2) |
273,162,554 |
273,197,228 |
|
During the year, €9,993,235 or 42% (2020: €8,450,347 or 33%) of the group’s revenues depended on three (2020: two) single customer/s in the investment property rental segment. |
|
Note 1: Revenue comprises amounts attributable to the group’s country of domicile, Malta, amounting to €109,728 (2020: €76,679), Libya, amounting to €5,445,705 (2020: €12,627,985), United States of America, amounting to €2,987,799 (2020: €3,006,642) and other foreign countries amounting to €15,434,753 (2020: €9,883,834). |
|
Note 2: All non-current assets are located in Libya. |
7 Revenue |
|||||||
|
|
Group |
Company |
|
||||
|
|
2021 |
2020 |
2021 |
2020 |
|
||
|
|
€ |
€ |
€ |
€ |
|
||
|
|
|
|
|
|
|
||
|
Income from management fees |
- |
- |
232,699 |
221,618 |
|
||
|
Income from residential leases |
21,415,823 |
22,988,300 |
- |
- |
|
||
|
Income from commercial leases |
969,415 |
871,125 |
- |
- |
|
||
|
Income from food and beverage operations |
469,205 |
913,654 |
- |
- |
|
||
|
Administration fees |
522 |
1,510 |
- |
- |
|
||
|
Water, electricity, internet and telephone |
|
|
- |
- |
|
||
|
recharges |
384,107 |
378,828 |
- |
- |
|
||
|
Miscellaneous income |
738,913 |
441,723 |
- |
- |
|
||
|
|
23,977,985 |
25,595,140 |
232,699 |
221,618 |
|
||
8 Staff costs |
||||
|
Group |
Company |
|||
|
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
|
|
Wages and salaries |
1,867,271 |
2,074,220 |
- |
- |
|
Directors’ fees and remuneration |
235,383 |
141,434 |
- |
- |
|
Social security costs |
65,231 |
165,699 |
- |
- |
|
2,167,885 |
2,381,353 |
- |
- |
|
|
|
|
|
||
|
The average number of persons employed by the group during the year was: |
||||
|
2021 |
2020 |
|||
|
No. |
No. |
|||
|
Operating |
77 |
67 |
||
|
Administrative |
15 |
15 |
||
|
92 |
82 |
|||
|
During the years 2021 and 2020, the Company did not have any employees. |
||||
9 Other income |
|||||||
|
|
Group |
Company |
|
||||
|
|
2021 |
2020 |
2021 |
2020 |
|
||
|
|
€ |
€ |
€ |
€ |
|
||
|
|
|
|
|
|
|
||
|
Tax recovery |
555,828 |
464,139 |
555,828 |
464,139 |
|
||
|
Reversal of accrual for interest payable |
1,526,815 |
- |
- |
- |
|
||
|
Reversal of provision for bad debts |
- |
65,327 |
- |
- |
|
||
|
Creditors write-off |
- |
50,000 |
- |
- |
|
||
|
|
2,082,643 |
579,466 |
555,828 |
464,139 |
|
||
10 Finance income and finance costs |
|
Finance income and finance costs may be analysed as follows: |
|
Group |
Company |
|||
|
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
|
|
Interest receivable on short term deposits |
- |
256 |
- |
159 |
|
Interest charged on loan to subsidiary company |
- |
- |
3,084,304 |
- |
|
Other interest |
- |
23,661 |
- |
23,661 |
|
Difference on exchange |
113,522 |
1,413,532 |
361 |
- |
|
Finance income |
113,522 |
1,437,449 |
3,084,665 |
23,820 |
|
|
||||
|
Interest on bonds |
4,099,563 |
4,428,293 |
4,099,563 |
4,428,293 |
|
Interest charged on loan from shareholders |
270,008 |
278,774 |
270,008 |
278,774 |
|
Bank interest |
20,084 |
86,680 |
- |
- |
|
Interest on other loans |
200,000 |
200,000 |
- |
- |
|
Difference on exchange |
3,606,682 |
772,279 |
- |
309 |
|
Interest expense – lease liability |
- |
3,735 |
- |
- |
|
Amortisation of borrowing costs |
- |
2,083 |
- |
- |
|
Amortisation of bond issue costs |
287,546 |
189,233 |
287,546 |
189,233 |
|
Finance costs |
8,483,883 |
5,961,077 |
4,657,117 |
4,896,609 |
11 Profit before tax |
||||
|
The profit before tax is stated after charging: |
||||
|
Group |
Company |
|||
|
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
|
|
Depreciation of property, plant and equipment |
73,402 |
181,280 |
383 |
129 |
|
Auditor’s remuneration |
|
|
|
|
|
- Annual statutory audit |
27,500 |
26,400 |
10,000 |
9,500 |
12 Tax (expense) income
The relationship between the expected tax (expense) income based on the effective tax rate of the group and the Company and the actual tax (expense) income recognised in the statements of total comprehensive income can be reconciled as follows:
See note 27 for information on the group’s and Company’s deferred tax liability
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13 Earnings per share
The calculation of earnings per share is based on the net profit for the year attributable to ordinary shareholders and the weighted average number of ordinary shares (2021 and 2020: 48,002,000) outstanding during the year. There was no dilution of share capital during the reporting periods presented.
14 Intangible asset
Trademarks
|
15 Property, plant and equipment |
|
The group’s and Company’s property, plant and equipment comprise of asset in the course of construction, computer equipment, computer software, motor vehicles, office furniture and equipment, tools and machinery and equipment. The carrying amount can be analysed as follows: |
|
Group |
Asset in the course of construction |
Computer equipment |
Computer software |
Motor vehicles |
Office furniture and equipment |
Tools |
Machinery and equipment |
Right of use asset |
Total |
|
€ |
€ |
€ |
€ |
€ |
€ |
€ |
€ |
€ |
|
|
Gross carrying amount |
|||||||||
|
At 1 January 2020 |
8,783,561 |
247,266 |
217,350 |
219,353 |
552,376 |
120,050 |
595,628 |
638,897 |
11,374,481 |
|
Additions |
114,519 |
83,168 |
- |
- |
- |
- |
- |
- |
197,687 |
|
Disposals |
- |
- |
- |
(28,977) |
(13,000) |
- |
(117,558) |
- |
(159,535) |
|
At 31 December 2020 |
8,898,080 |
330,434 |
217,350 |
190,376 |
539,376 |
120,050 |
478,070 |
638,897 |
11,412,633 |
|
Depreciation |
|||||||||
|
At 1 January 2020 |
- |
232,930 |
212,912 |
139,364 |
531,043 |
119,860 |
499,899 |
127,181 |
1,863,189 |
|
Depreciation for the year |
- |
8,768 |
2,959 |
29,334 |
9,721 |
190 |
3,108 |
127,200 |
181,280 |
|
Release on disposal |
- |
- |
- |
(28,977) |
(13,000) |
- |
(117,558) |
- |
(159,535) |
|
At 31 December 2020 |
- |
241,698 |
215,871 |
139,721 |
527,764 |
120,050 |
385,449 |
254,381 |
1,884,934 |
|
Carrying amount at 31 December 2020 |
8,898,080 |
88,736 |
1,479 |
50,655 |
11,612 |
- |
92,621 |
384,516 |
9,527,699 |
|
Gross carrying amount |
|||||||||
|
At 1 January 2021 |
8,898,080 |
330,434 |
217,350 |
190,376 |
539,376 |
120,050 |
478,070 |
638,897 |
11,412,633 |
|
Additions |
45,608 |
8,056 |
- |
29,525 |
2,299 |
- |
- |
- |
85,488 |
|
Disposals |
- |
(7,071) |
- |
- |
- |
- |
- |
(239,136) |
(246,207) |
|
At 31 December 2021 |
8,943,688 |
331,419 |
217,350 |
219,901 |
541,675 |
120,050 |
478,070 |
399,761 |
11,251,914 |
|
Depreciation |
|||||||||
|
At 1 January 2021 |
- |
241,698 |
215,871 |
139,721 |
527,764 |
120,050 |
385,449 |
254,381 |
1,884,934 |
|
Depreciation for the year |
- |
26,442 |
1,479 |
29,596 |
5,823 |
- |
2,449 |
7,613 |
73,402 |
|
Release on disposal |
- |
(7,071) |
- |
- |
- |
- |
- |
(239,135) |
(246,206) |
|
At 31 December 2021 |
- |
261,069 |
217,350 |
169,317 |
533,587 |
120,050 |
387,898 |
22,859 |
1,712,130 |
|
Carrying amount at 31 December 2021 |
8,943,688 |
70,350 |
- |
50,584 |
8,088 |
- |
90,172 |
376,902 |
9,539,784 |
|
Company |
|
Computer equipment |
|
|
|
€ |
|
|
|
|
|
Gross carrying amount |
|
|
|
At 1 January 2020 |
|
6,033 |
|
Depreciation |
|
|
|
At 1 January 2020 |
|
5,904 |
|
Depreciation for the year |
|
129 |
|
At 31 December 2020 |
|
6,033 |
|
Carrying amount at 31 December 2020 |
|
- |
|
Gross carrying amount |
|
|
|
At 1 January 2021 |
|
6,033 |
|
Additions |
|
1,534 |
|
At 31 December 2021 |
|
7,567 |
|
Depreciation |
|
|
|
At 1 January 2021 |
|
6,033 |
|
Depreciation for the year |
|
383 |
|
At 31 December 2021 |
|
6,416 |
|
Carrying amount at 31 December 2021 |
|
1,151 |
|
|
|
|
|
The group’s property, plant and equipment comprises an asset that is being constructed on land located in Shuhada Sidi Abuljalil, Janzour in Libya. This land is earmarked for development for residential units, tourism, leisure and restaurant facilities by one of the subsidiaries, Palm Waterfront Ltd. Costs directly associated with the development of the land have also been included.
The right to construct the asset was acquired by means of a Build, Operate and Transfer (BOT) agreement with Corinthia Palace Hotel Company Limited was signed on 5 December 2013. The arrangement gives Palm Waterfront Ltd the right to develop the site, construct, implement, manage and operate the project at its discretion. The term of the BOT agreement is for a period of 80 years from date of signing of said agreement.
|
|||||||
|
16 Investment property |
|||||||
|
Group |
|||||||
|
Investment property includes the Palm City Residences in Janzour, Libya, which is held to earn rentals and for capital appreciation . Due to the lack of comparable properties in the market, the determination of fair value cannot be objectively established on the basis of current active market prices. Therefore, the fair value is determined on the basis of the discounted value of future earnings expected from the operation of the property. |
|||||||
|
Changes to the carrying amounts presented in the statement of financial position can be summarised as follows: |
|||||||
|
|
2021 |
2020 |
|||||
|
|
€ |
€ |
|||||
|
|
|
|
|||||
|
Carrying amount as at 1 January |
272,567,609 |
272,541,797 |
|||||
|
Capitalisation of project related expenses |
- |
25,812 |
|||||
|
Carrying amount as at 31 December |
272,567,609 |
272,567,609 |
|||||
|
|
|
|
|||||
In the previous financial year, investment property valued at €272,567,609) was pledged as security for related borrowings. These borrowings have been fully repaid in 2020 , and the relative cancellation of the mortgage encumbering the investment property was effected during the current year .Rental income for 2021 amounting to €23,385,238 (2020: €23,859,425) is included within ‘revenue’. No contingent rents were recognised. Direct operating expenses of €4,368,617 (2020: €5,093,662) were reported within ‘operating expenses’. |
|
||||||
|
The fair value of the investment property was determined by discounting the forecast future cash flows generated by Palm City Residences for the remaining period of 50 years of the Build-Operate-Transfer agreement signed between Corinthia Palace Hotel Company Limited and Palm City Ltd in 2007. A valuation exercise was carried out by the directors to determine the fair value of the investment property, and a composite pre-tax discount rate of 17.21% (2020: 17.13%) in real terms was applied to the projected cash flows. The operating performance of the asset has remained relatively stable when compared to last year even when taking into account the level of uncertainty brought about by the COVID-19 pandemic. The valuation arrived at when using all the above inputs, combined with the projected income streams amounts to €282,846,000 (2020: €293,311,000). This figure is €10,278,000 higher than the carrying value of the investment property as at the end of the reporting period. If the discount rate varies by 100 basis points, the fair value of the investment property would fluctuate by €23 million and €27 million (2020: €24 million and €29 million) respectively. |
|
||||||
|
There are no material contractual obligations pertaining to investment property at the end of the reporting periods presented, except for repairs and maintenance expenses incurred in the normal running of the operation. |
|
||||||
|
|
Leasing arrangements for residential units at the end of the reporting periods presented are as follows: |
|
|||||
|
|
|
2021 |
2020 |
|
|||
|
|
|
% |
% |
|
|||
|
|
|
|
|
|
|||
|
|
Within 1 year |
4 |
6 |
|
|||
|
|
1-5 years |
96 |
94 |
|
|||
|
|
|
100 |
100 |
|
|||
17 Other investments |
|
||||||
|
17.1 Investment accounted for using the equity method |
|
||||||
Group |
|
||||||
In the group financial statements, the investment in MTJSC is accounted for using the equity method. |
|
||||||
|
|
|
|
|
2021 |
2020 |
||
|
|
|
|
|
€ |
€ |
|
|
|
|
|
|
|
|
|
||
|
Shares in associate compan y (unquoted ) |
|
|
|
8,022,973 |
12,185,778 |
||
|
|
|
|
|
|
|
||
|
17.2 Investment in associate |
|
||||||
Company |
|
||||||
|
In the Company financial statements, the investment in MTJSC is shown as FVOCI. The fair value has been derived based on the latest financial information available. |
|
||||||
|
|
|
|
|
2021 |
2020 |
||
|
|
|
|
|
€ |
€ |
|
|
|
|
|
|
|
|
|
||
|
Shares in associate compan y (unquoted ) |
|
|
8,022,973 |
12,185,778 |
|||
|
|
|
|
|
|
|
||
|
The below table sets out the financial information of the associate.
Summarised financial information for MTJSC is as follows:
A reconciliation of the above summarised financial information to the carrying amount of the investment is set out below:
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18 Investments in subsidiaries |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
2021 |
2020 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
Notes |
|
€ |
€ |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Shares in subsidiary companies (unquoted ) |
|
18.1 |
|
171,303,065 |
211,648,120 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Loans to subsidiary companies |
|
18.2 |
|
7,000,000 |
7,000,000 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
178,303,065 |
218,648,120 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
18.1 Shares in subsidiary companies (unquoted)
The shares in Palm Waterfront Ltd were acquired in 2013 . Shares in subsidiary company are being shown at fair value based on the latest available financial statements .
The Company had previously pledged 116,490,000 of its ordinary shares in Palm City Ltd as security for the bank borrowings of said company (note 24). Although the bank borrowings were settled in full durin g 2020, the relative cancellation of the share pledge was completed during 2021 .
18.2 Loan to subsidiary company
The loan to Palm Waterfront Ltd is unsecured, is interest free and is repayable after more than 5 years. The carrying amount of the loans is considered a reasonable approximation of fair value.
19 Leases
Group
The group has leases for the right to operate the Palm City Residences and power generators.
On 2 October 2007, Corinthia Palace Hotel Company Limited entered into a Build-Operate-Transfer agreement with Palm City Ltd effective from 6 July 2006. The arrangement, which gives Palm City Ltd the right to operate the Palm City Residences in Janzour, Libya for a period of 65 years, contains a lease element which is classified as an operating lease. The payment for the operating lease element has been estimated at €494,827 on the basis of the original lease granted by the Government of Libya to Corinthia Palace Hotel Company Limited, and is classified as a lease prepayment. At 1 January 2019, the remaining lease prepayment amounting to €384,516 was classified as right-of-use asset under property, plant and equipment (Note 15).
|
|
20 Inventories |
|
Inventories comprise mainly of food and beverage stocks used by the food and beverage department, together with stock of electrical materials and spare parts used by the maintenance and technical department of Palm City Ltd. |
|
Group |
2021 |
2020 |
|
|
€ |
€ |
|
|
||
|
Food and beverage stocks |
29,399 |
39,477 |
|
Electrical materials and spare parts |
1,182,984 |
1,088,948 |
|
Less: Inventory write-off |
(16,861) |
(16,861) |
|
Total inventories |
1,195,522 |
1,111,564 |
|
|
|
|
|
In 2021, a total of €174,044 (2020: €278,324) of inventories was included in profit and loss as an expense. |
|||||
|
21 Trade and other receivables |
||||||||||
|
|
Group |
Company |
||||||||
|
|
2021 |
2020 |
2021 |
2020 |
||||||
|
|
€ |
€ |
€ |
€ |
||||||
|
|
|
|
|
|
||||||
|
Trade receivables, gross |
6,377,316 |
3,883,733 |
- |
- |
||||||
|
Allowance for credit losses |
(683,323) |
(344,624) |
- |
- |
||||||
|
Trade receivables |
5,693,993 |
3,539,109 |
- |
- |
||||||
|
Amount due by subsidiary |
- |
- |
73,619,753 |
34,762,792 |
||||||
|
Amounts due by other related companies |
265,983 |
312,548 |
262,270 |
262,270 |
||||||
|
Accrued income |
194,934 |
359,033 |
3,084,304 |
- |
||||||
|
Financial assets |
6,154,910 |
4,210,690 |
76,966,327 |
35,025,062 |
||||||
|
|
|
|
|
|
||||||
|
Advance payment s to creditors |
1,162,633 |
132,238 |
- |
- |
||||||
|
VAT refundable |
118,731 |
143,552 |
57,042 |
98,066 |
||||||
|
Deposits |
96,978 |
96,978 |
- |
- |
||||||
|
Other prepayments |
213,250 |
186,950 |
- |
- |
||||||
|
Other receivables |
(36,224) |
10,874 |
- |
- |
||||||
|
Non-financial assets |
1,555,368 |
570,592 |
57,042 |
98,066 |
||||||
|
|
|
|
|
|
||||||
|
Total trade and other receivables |
7,710,278 |
4,781,282 |
77,023,369 |
35,123,128 |
||||||
|
|
|
|
|
|
||||||
|
All amounts are short-term. The net carrying value of trade and other receivables is considered a reasonable approximation of fair value. |
||||||||||
|
The amounts due by group and related parties are unsecured, interest free and repayable on demand. |
||||||||||
|
All of the group’s trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and a provision was recorded accordingly. The impaired trade receivables were with respect to rent receivable. |
||||||||||
|
|
2021 |
2020 |
|
|||||||
|
|
|
€ |
€ |
|
||||||
|
|
|
|
||||||||
|
|
Balance 1 January |
344,624 |
195,024 |
|
||||||
|
|
Reversal of provision for bad debts |
(6,817) |
(65,327) |
|
||||||
|
|
Impairment loss |
457,000 |
214,927 |
|
||||||
|
|
Revaluation adjustment |
(111,484) |
- |
|
||||||
|
|
Balance 31 December |
683,323 |
344,624 |
|
||||||
|
|
|
|
|
|
||||||
|
|
The group continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. The group’s policy is to deal only with creditworthy counterparties. In 2021, the impairment loss included a provision for an amount contested by one client. After the year end, but before the date of these financial statements, management successfully reached an agreement with this client for a discounted amount to be settled, which in retrospect shows that the impairment loss taken in these financial statements was larger than necessary. The necessary reversals will be carried out in 2022 since the over-provision is not material.
An analysis of unimpaired trade receivables that are past due is given in note 31.1. |
|
||||||||
22 Cash and cash equivalents |
Cash and cash equivalents include the following components: |
|
Group |
Company |
|||
|
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
|
|
Cash at bank and in hand: |
||||
|
- euro |
7,907,625 |
19,490,719 |
1,733,672 |
14,556,121 |
|
- Libyan dinar |
2,837,258 |
6,116,722 |
- |
- |
|
- US dollar |
130,676 |
82,572 |
25,589 |
23,618 |
|
- Pound sterling |
10,807 |
10,101 |
10,807 |
10,101 |
|
Cash and cash equivalents in the statement of financial position |
10,886,366 |
25,700,114 |
1,770,068 |
14,589,840 |
|
Bank balance overdrawn (note 24) |
(3,946) |
(68,048) |
- |
- |
|
Cash and cash equivalents in the statement of cashflows |
10,882,420 |
25,632,066 |
1,770,068 |
14,589,840 |
|
The group has a bank deposit amounting to €1,343,269 (2020: €1,645,024) which is specifically designated for security deposits from lessees. This is not available for general use by the group. |
23 Share capital |
||||||
The share capital of Mediterranean Investments Holding p.l.c. consists of fully paid ordinary ‘A’ shares and ‘B’ 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 Mediterranean Investments Holding p.l.c .
|
||||||
|
|
|
Group and Company |
||||
|
|
|
|
2021 |
2020 |
||
|
|
|
|
€ |
€ |
||
|
|
|
|
|
|
||
|
Shares issued and fully paid |
|
|
|
|
||
|
24,001,000 ordinary ‘A’ shares of €1 each |
|
|
24,001,000 |
24,001,000 |
||
|
24,001,000 ordinary ‘B’ shares of €1 each |
|
|
24,001,000 |
24,001,000 |
||
|
|
|
|
48,002,000 |
48,002,000 |
||
|
|
|
|
|
|
||
|
Shares authorised |
|
|
|
|
||
|
50,000,000 ordinary ‘A’ shares of €1 each |
|
|
50,000,000 |
50 ,000,000 |
||
|
50,000,000 ordinary ‘B’ shares of €1 each |
|
|
50,000,000 |
50,000,000 |
||
|
|
|
|
100,000,000 |
100,000,000 |
||
|
|
|
|
|
|
||
24 Bank and other borrowings |
|
Borrowings include the following financial liabilities: |
|
|
Group |
Company |
||
|
|
2021 |
2020 |
2021 |
2020 |
|
|
€ |
€ |
€ |
€ |
|
|
|
|
|
|
|
Bank balance overdrawn |
3,946 |
68,048 |
- |
- |
|
Other borrowings |
5,000,000 |
5,000,000 |
- |
- |
|
|
5,003,946 |
5,068,048 |
- |
- |
|
|
|
|
|
|
|
Comprising: |
|
|
|
|
|
Long-term borrowings |
|
|
|
|
|
- due within 2-5 years |
- |
5,000,000 |
- |
- |
|
|
|
|
|
|
|
Borrowing due within 12 months |
|
|
|
|
|
- Bank balance overdrawn |
3,946 |
68,048 |
- |
- |
|
- Other borrowings |
5,000,000 |
- |
- |
- |
|
|
5,003,946 |
68,048 |
- |
- |
|
Other borrowings comprise of a loan from LAFICO amounting to €5,000,000 to the group. The loan was advanced to support the group in its corporate needs and working capital requirements and was fully repaid after the year end but before the date of these financial statements. |
|||||||
|
The carrying amount of bank borrowings is considered a reasonable approximation of fair value. |
|||||||
|
25 Bonds |
|
Group |
Company |
||||||
|
2021 |
2020 |
2021 |
2020 |
||||
|
Notes |
Interest rate |
€ |
€ |
€ |
€ |
||
|
Bond IV |
25.1 |
6% |
- |
11,950,000 |
- |
11,950,000 |
|
|
Bond VII |
25.2 |
5% |
39,929,870 |
39,793,185 |
39,929,870 |
39,793,185 |
|
|
Bond VIII |
25.3 |
5.50% |
19,761,197 |
19,621,192 |
19,761,197 |
19,621,192 |
|
|
Bond IX |
25.4 |
6% |
10,979,451 |
10,968,596 |
10,979,451 |
10,968,596 |
|
|
70,670,518 |
82,332,973 |
70,670,518 |
82,332,973 |
||||
|
|
|
||||||
|
Comprising: |
|||||||
|
Group |
Company |
||||||
|
2021 |
2020 |
2021 |
2020 |
||||
|
€ |
€ |
€ |
€ |
||||
|
Current |
39,929,870 |
11,950,000 |
39,929,870 |
11,950,000 |
|||
|
Non-current |
30,740,648 |
70,382,973 |
30,740,648 |
70,382,973 |
|||
|
70,670,518 |
82,332,973 |
70,670,518 |
82,332,973 |
||||
|
In 2014 the Company issued a €12 million 6% seven-year bond maturing in 2021 (Bond IV). This bond was redeemed in full during the current financial year.
In 2017, the Company issued a €40 million 5% bond maturing in 2022 (Bond VII).
In 2020, the Company issued a €20 million 5.5% bond maturing in 2023 (Bond VIII), and an €11 million unlisted 6% bond maturing in 2025 (Bond IX).
All of the bonds constitute general, direct, unconditional, unsecured and unsubordinated obligations of the issuer and will rank pari passu, without any priority or preference, with all other present and future unsecured and unsubordinated obligations. Redemption of the bonds shall be made at the face value of the bonds. The Company also reserves the right to purchase from the market at any time after issue, bonds for cancellation.
The carrying amount of bonds issued by the Company is considered a reasonable approximation of fair value. |
25.1 Bond IV |
||
|
|
Group |
Company |
|
|
€ |
€ |
|
|
|
|
|
Balance at 31 December 2020 |
11,950,000 |
11,950,000 |
|
Redemption of bond |
(11,950,000) |
(11,950,000) |
|
Balance at 31 December 20 21 |
- |
- |
|
|
|
|
25.2 Bond VII |
||
|
|
Group |
Company |
|
|
€ |
€ |
|
|
|
|
|
At 31 December 2020 |
39,793,185 |
39,793,185 |
|
Amortisation of transaction costs |
136,685 |
136,685 |
|
Balance at 31 December 2021 |
39,929,870 |
39,929,870 |
|
|
|
|
|
Transaction costs in connection with the Bond VII issue were expensed in the period under review. |
||
25.3 Bond VIII |
||
|
|
Group |
Company |
|
|
€ |
€ |
|
|
|
|
|
At 31 December 2020 |
19,621,192 |
19,621,192 |
|
Amortisation of transaction costs |
140,005 |
140,005 |
|
Balance at 31 December 2021 |
19,761,197 |
19,761,197 |
|
|
|
|
|
Transaction costs in connection with the Bond VIII issue were expensed in the period under review. |
||
25.4 Bond IX |
||
|
|
Group |
Company |
|
|
€ |
€ |
|
|
|
|
|
At 31 December 2020 |
10,968,596 |
10,968,596 |
|
Amortisation of transaction costs |
10,855 |
10,855 |
|
Balance at 31 December 2021 |
10,979,451 |
10,979,451 |
|
|
|
|
|
Transaction costs in connection with the Bond IX issue were expensed in the period under review. |
||
26 Shareholders’ loan |
||
|
The loan from shareholders is unsecured, bears interest at 5% per annum and is repayable between two and five years. The carrying amount of the shareholders’ loan is considered a reasonable approximation of fair value. |
||
27 Deferred tax liability |
Group |
Deferred tax arising from temporary differences can be summarised as follows: |
|
2021 |
2020 |
|
|
€ |
€ |
|
|
Non-current assets |
||
|
Investment property |
25,858,540 |
25,858,540 |
|
Unused tax losses and capital allowances |
(250) |
(1,224,973) |
|
Other temporary differences |
(4,222,652) |
189,747 |
|
21,635,638 |
24,823,314 |
|
|
The movement can be analysed as follows: |
|
|
|
Movement for the year |
3,187,669 |
11,354,069 |
|
Recognised directly in equity: |
||
|
Deferred tax relating to difference on exchange |
3,185,005 |
(212,589) |
|
Recognised in profit or loss: |
||
|
Deferred tax on investment property |
- |
11,847,524 |
|
Deferred tax on unabsorbed capital allowances and unused tax losses |
- |
(249,575) |
|
Deferred tax on other temporary differences |
2,664 |
(31,291) |
|
3,187,669 |
11,354,069 |
|
|
|
||
|
Company |
||
|
2021 |
2020 |
|
|
€ |
€ |
|
|
Non-current assets |
||
|
Investment in subsidiaries and associate |
29,688,415 |
45,266,165 |
|
Unused tax losses and capital allowances |
(250) |
(1,224,973) |
|
Other temporary differences |
1,850,508 |
156,911 |
|
31,538,673 |
44,198,103 |
|
|
2021 |
2020 |
|
|
€ |
€ |
|
|
The movement can be analysed as follows: |
|
|
|
Movement for the year |
12,659,430 |
11,271,068 |
|
Recognised directly in equity |
||
|
Deferred tax on gain on fair value of investment in subsidiaries and associate |
12,659,430 |
11,520,533 |
|
Recognised in profit or loss |
||
|
Deferred tax on other temporary difference |
- |
249,465 |
|
12,659,430 |
11,271,068 |
|
|
See note 12 for information on the group’s and the Company’s tax (expense) income. |
||
28 Trade and other payables |
|
|||||
|
Trade and other payables recognised in the statements of financial position can be analysed as follows: |
|
|||||
|
|
Group |
Company |
||||
|
|
2021 |
2020 |
2021 |
2020 |
||
|
|
€ |
€ |
€ |
€ |
||
|
|
|
|
|
|
||
|
Non-current |
|
|
|
|
||
|
Security deposit |
1,935,934 |
2,402,228 |
- |
- |
||
|
Taxation |
2,886,372 |
970,860 |
- |
- |
||
|
Total non-current |
4,822,306 |
3,373,088 |
- |
- |
||
|
|
|
|
|
|
||
|
Current |
|
|
|
|
||
|
Trade payables |
390,359 |
959,301 |
43,501 |
101,306 |
||
|
Capital creditors |
25,000 |
25,000 |
- |
- |
||
|
Amounts owed to shareholder |
601,467 |
707,593 |
601,467 |
707,593 |
||
|
Amounts owed to other related companies |
202,397 |
469,306 |
205 |
425 |
||
|
Dividend payable |
3,000,000 |
10,000,000 |
3,000,000 |
10,000,000 |
||
|
Accrued expenses |
2,804,237 |
4,454,988 |
1,825,674 |
2,038,116 |
||
|
Financial liabilities |
7,023,460 |
16,616,188 |
5,470,847 |
12,847,440 |
||
|
|
|
|
|
|
||
|
Deferred income |
6,461,433 |
5,764,145 |
- |
- |
||
|
Security deposits |
933,228 |
1,026,371 |
- |
- |
||
|
Other payables |
540,411 |
619,668 |
364,328 |
308,552 |
||
|
Non-financial liabilities |
7,935,072 |
7,410,184 |
364,328 |
308,552 |
||
|
|
|
|
|
|
||
|
Total current |
14,958,532 |
24,026,372 |
5,835,175 |
13,155,992 |
||
|
|
|
|
|
|
||
|
Total trade and other payables |
19,780,838 |
27,399,460 |
5,835,175 |
13,155,992 |
||
|
|
|
|
|
|
||
|
Amounts owed to shareholder and other related companies are unsecured, interest free and repayable on demand. |
||||||
|
The carrying value of financial liabilities is considered a reasonable approximation of fair value. |
||||||
29 Cash flow adjustments and changes in working capital |
|
|||||
|
The following non-cash flow adjustments and adjustments for changes in working capital have been made to profit before tax to arrive at operating cash flow: |
|
|||||
|
|
Group |
Company |
||||
|
|
2021 |
2020 |
2021 |
2020 |
||
|
|
€ |
€ |
€ |
€ |
||
|
Adjustments: |
|
|
|
|
||
|
Depreciation |
73,402 |
181,280 |
383 |
129 |
||
|
Interest receivable |
- |
(23,917) |
(3,084,304) |
(23,820) |
||
|
Interest payable |
4,589,655 |
4,997,482 |
4,369,571 |
4,707,067 |
||
|
Amortisation of borrowing costs |
- |
2,083 |
- |
- |
||
|
Amortisation of bond issue costs |
287,546 |
189,233 |
287,546 |
189,233 |
||
|
Difference on exchange |
3,540,046 |
(1,259,989) |
- |
309 |
||
|
I ncrease (decrease) in allowance for credit losses |
338,699 |
149,600 |
- |
- |
||
|
Dividend income |
- |
- |
(53,713,904) |
(62,144,286) |
||
|
Other income – tax recovery |
(555,828) |
(464,139) |
(555,828) |
(464,139) |
||
|
Other income – creditor write off |
- |
(50,000) |
- |
- |
||
|
Other income – reversal of accrual interest payable |
(1,526,815) |
- |
- |
- |
||
|
Share in net (gain) loss in investment |
(2,711,995) |
(3,385) |
- |
- |
||
|
Inventories write-off |
- |
16,861 |
- |
- |
||
|
Total adjustments |
4,034,710 |
3,735,109 |
(52,696,536) |
(57,735,507) |
||
|
|
|
|
|
|
||
|
Net changes in working capital: |
|
|
|
|
||
|
Change in trade and other receivables |
(4,075,931) |
1,282,852 |
11,184,063 |
14,003,889 |
||
|
Change in trade and other payables |
422,529 |
1,176,201 |
62,056 |
323,004 |
||
|
Change in inventories |
(83,958) |
(123,715) |
- |
- |
||
|
Total changes in working capital |
(3,737,360) |
2,335,338 |
11,246,119 |
14,326,893 |
||
30 Related party transactions |
|
||||||
|
The group's related parties include its associates, key management and others as described below.
The Company’s related parties include its subsidiaries, key management and others as described below.
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.
|
|
||||||
30.1 Transactions with related parties |
|||||||
|
|
Group |
Company |
|
||||
|
|
2021 |
2020 |
2021 |
2020 |
|||
|
|
€ |
€ |
€ |
€ |
|||
|
|
|
|
|
|
|||
|
Consultancy and other services charged to subsidiary |
- |
- |
(232,699) |
(221,618) |
|||
|
Interest charged by shareholder |
270,008 |
278,774 |
270,008 |
278,774 |
|||
|
Consultancy and other fees paid to related parties |
97,540 |
468,881 |
- |
- |
|||
|
Services and expenses recharged to related companies |
4,220 |
42,425 |
- |
- |
|||
|
|
|
|
|
||||
|
Balances with related parties are disclosed in notes 17, 18 , 21, 26 and 28 . |
|
|
|||||
31 Financial instrument risk |
Risk management objectives and policies |
|
Credit risk is the risk that a counterparty fails to discharge an obligation to the group and the Company. The group and Company are exposed to various risks in relation to financial instruments. The group and Company’s financial assets and liabilities by category are summarised in note 31.4. The main types of risks are credit risk, liquidity risk and market risk. |
|
The group’s and the Company’s risk management is coordinated at its head office, in close co-operation with the board of directors, and focuses on actively securing the group’s and the Company’s short to medium-term cash flows by minimising the exposure to financial markets. Long-term financial investments are managed to generate lasting returns. |
|
The group and the Company do not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the group and the Company are exposed are described below. |
|
The group and the Company are exposed to market risk through their use of financial instruments and specifically to currency risk and interest rate risk, which result from their operating, investing and financing activities. |
31.1 Credit risk analysis |
|
Credit risk is the risk that a counterparty fails to discharge an obligation to the group and the Company. The group and 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: |
|
Group |
Company |
||||
|
2021 |
2020 |
2021 |
2020 |
||
|
Notes |
€ |
€ |
€ |
€ |
|
|
Classes of financial assets - carrying amounts |
|||||
|
Shares in subsidiary companies |
18 |
- |
- |
171,303,065 |
211,648,120 |
|
Shares in associate company |
17 |
- |
- |
8,022,973 |
12,185,778 |
|
Loans to subsidiary company |
18 |
- |
- |
7,000,000 |
7,000,000 |
|
Trade and other receivables |
21 |
6,154,910 |
4,210,690 |
76,966,327 |
35,025,062 |
|
Cash and cash equivalents |
22 |
10,886,366 |
25,700,114 |
1,770,068 |
14,589,840 |
|
17,041,276 |
29,910,804 |
265,062,433 |
280,448,800 |
||
|
The credit risk is managed based on the group’s and Company’s credit risk management policies and procedures.
|
|
|
Bank balances at year end are mainly held with a local financial institution which has a credit rating by an international credit rating agency, Standard & Poor’s of BBB-. Such rating translates into an immaterial expected credit loss. Included in cash and cash equivalents is an amount of €2,837,258 (2020: €6,116,722) which is held in Libyan banks for which no credit rating is available.
|
|
|
The Company continuously monitors defaults and the credit quality of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. The Company’s policy is to deal only with creditworthy counterparties. The standard credit terms given to customers is 60 days. The credit terms as negotiated with customers are subject to an internal review process. The ongoing credit risk is managed through regular review of ageing analysis, together with credit limits per customer.
|
|
|
Trade receivables consist of a large number of customers in various industries.
|
|
Trade receivables |
|
|
The group applies IFRS 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component.
|
|
|
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers.
|
|
|
Based on the length of time a trade receivable is outstanding, customer’s payment history as well as current and forward-looking information on macroeconomic factors affecting the customer’s ability to pay, management concluded that the credit quality of trade receivables including those that are past due but not impaired to be good. Furthermore, the Group has taken a full provision against old balances due from local government entities, such that the trade debtors primarily consist of government and non-government agencies situated outside of Libya. Over and above this, there is an amount of €6.5 million (2020: €5.7 million) in deferred income and €2.9 million (2020: €3.4 million) held in security deposits. Credit risk for trade receivables is considered low and expected credit losses for trade receivables are not material.
|
|
|
At 31 December the group had certain trade receivables that have not been settled by the contractual due date but are not considered to be impaired. The amounts at 31 December, analysed by the length of time past due, are: |
|
|
|
2021 |
2020 |
|
|
€ |
€ |
|
|
|
|
|
Not more than 30 days |
1,327,655 |
234,595 |
|
More than 30 days but not more than 120 days |
3,456,359 |
1,699,515 |
|
More than 120 days |
909,979 |
1,604,999 |
|
Total |
5,693,993 |
3,539,109 |
31.2 Liquidity risk |
|
Liquidity risk is that the group and the Company may be unable to meet their obligations. |
|
Management manages the group ’s and the Company’s liquidity needs by carefully monitoring cash flows in day to day business. Liquidity needs are monitored in various time bands, on a daily and weekly basis, as well as on the basis of rolling 30-day projections. Long-term liquidity needs for a 6-monthly and yearly period are identified monthly. |
|
The group and the Company maintain cash to meet their liquidity requirements for the short-term. Funding for long-term liquidity needs is secured by an adequate amount of committed credit facilities. |
|
As at 31 December 2021, the group’s and the Company’s liabilities have contractual maturities (including interest payments where applicable) as summarised below: |
|
Group |
|
|
|||
|
|
Current |
Non-current |
|||
|
|
within 6 months |
6 to 12 months |
2 to 5 years |
later than 5 years |
|
|
31 December 2021 |
€ |
€ |
€ |
€ |
|
|
|
|
|
|
|
|
|
Other borrowings |
5,000,000 |
- |
- |
- |
|
|
Interest on other borrowings |
200,000 |
- |
- |
- |
|
|
Bonds in issue |
- |
39,929,870 |
30,740,648 |
- |
|
|
Interest on bonds in issue |
- |
3,760,000 |
3,080,000 |
- |
|
|
Bank balance overdrawn |
3,946 |
- |
- |
- |
|
|
Trade and other payables |
390,359 |
5,039,989 |
- |
- |
|
|
Shareholders’ loan |
- |
- |
5,203,300 |
- |
|
|
|
5,594,305 |
48,729,859 |
39,023,948 |
- |
|
|
|
|
|
|
|
|
|
Company |
|
|
|||
|
|
Current |
Non-current |
|||
|
|
within 6 months |
6 to 12 months |
2 to 5 years |
later than 5 years |
|
|
31 December 2021 |
€ |
€ |
€ |
€ |
|
|
|
|
|
|
|
|
|
Bonds in issue |
- |
39,929,870 |
30,740,648 |
- |
|
|
Interest on bonds in issue |
- |
3,760,000 |
3,080,000 |
- |
|
|
Trade and other payables |
43,501 |
3,834,234 |
- |
- |
|
|
Shareholders’ loan |
- |
- |
5,203,300 |
- |
|
|
|
43,501 |
47,524,104 |
39,023,948 |
- |
|
|
|
|
|
|
|
|
|
This compares to the maturity of the group’s and the Company’s contractual maturities in the previous reporting period as follows: |
|
Group |
|||||||||||
|
|
Current |
Non-current |
|||||||||
|
|
within 6 months |
6 to 12 months |
2 to 5 years |
later than 5 years |
|||||||
|
31 December 2020 |
€ |
€ |
€ |
€ |
|||||||
|
|
|
|
|
|
|||||||
|
Other borrowings |
- |
- |
5,000,000 |
- |
|||||||
|
Interest on bank loan |
- |
1,419,643 |
- |
- |
|||||||
|
Interest on other borrowings |
200,000 |
- |
200,000 |
- |
|||||||
|
Bonds in issue |
11,950,000 |
- |
70,382,973 |
- |
|||||||
|
Interest on bonds in issue |
717,000 |
3,760,000 |
6,840,000 |
- |
|||||||
|
Bank balance overdrawn |
68,048 |
- |
- |
- |
|||||||
|
Trade and other payables |
959,301 |
11,889,069 |
- |
- |
|||||||
|
Shareholders’ loan |
- |
- |
5,203,300 |
- |
|||||||
|
|
13,894,349 |
17,068,712 |
87,626,273 |
- |
|||||||
|
Company |
||||
|
Current |
Non-current |
|||
|
within 6 |
6 to 12 |
2 to 5 |
later than |
|
|
months |
Months |
years |
5 years |
|
|
30 December 2020 |
€ |
€ |
€ |
€ |
|
Bonds in issue |
11,950,000 |
- |
70,382,973 |
- |
|
Interest on bonds in issue |
717,000 |
3,760,000 |
6,840,000 |
- |
|
Trade and other payables |
101,306 |
10,776,596 |
- |
- |
|
Shareholders’ loan |
- |
- |
5,203,300 |
- |
|
12,768,306 |
14,536,596 |
82,426,273 |
- |
|
31.3 Market risk analysis |
|||||||||||
Foreign currency risk |
|||||||||||
|
Group |
|||||||||||
|
Exposure to currency exchange rates mainly arises from certain transactions and payments denominated in Libyan dinars. Cash inflows and cash outflows in foreign currency are matched at subsidiary level, hence, the group is only exposed to foreign currency risk as shown below.
|
|||||||||||
|
Foreign currency denominated financial liabilities, translated into euro at the closing rate, are as follows: |
|||||||||||
|
|
Short term |
Long term |
|||||||||
|
|
LYD |
LYD |
|||||||||
|
|
€ |
€ |
|||||||||
|
31 December 2021 |
|
||||||||||
|
Financial assets |
4,615,242 |
- |
|||||||||
|
Financial liabilities |
(175,183) |
- |
|||||||||
|
Total exposure |
4,440,059 |
- |
|||||||||
|
|
|
||||||||||
|
31 December 2020 |
|
||||||||||
|
Financial assets |
8,606,289 |
- |
|||||||||
|
Financial liabilities |
(3,548,082) |
- |
|||||||||
|
Total exposure |
5,058,207 |
- |
|||||||||
|
|
|
|
|||||||||
|
The following table illustrates the sensitivity of the net result for the year in regards to the group’s financial liabilities and the LYD/euro exchange rate.
|
|
||||||||||
|
The following table assumes a +/- 14% change of the LYD/euro exchange rate at year end (2020: 5%). This percentage has been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the group’s foreign currency financial instruments held at the end of the reporting period.
|
|
||||||||||
|
If the euro had strengthened or weakened against the LYD by 14% (2020: 5%), then this would have had the following impact on the net result for the year.
The analysis above is considered to be representative of the group’s exposure to currency risk.
Interest rate risk
The Group had no liabilities bearing interest at variable rates at the end of the reporting period under review and therefore is not exposed to any interest rate risk. Interest exposure on its interest-bearing financial assets is considered to be not significant.
31.4 Categories of financial assets and liabilitiesThe carrying amounts presented in the statements of financial position relate to the following categories of assets and liabilities: |
|
||||||||||
|
Group |
Company |
||||
|
2021 |
2020 |
2021 |
2020 |
||
|
Financial assets |
Notes |
€ |
€ |
€ |
€ |
|
Investments |
|||||
|
- Shares in subsidiary company |
18 |
- |
- |
171,303,065 |
211,648,120 |
|
- Shares in associate company |
17 |
- |
- |
8,022,973 |
12,185,778 |
|
- Loans to subsidiary companies |
18 |
- |
- |
7,000,000 |
7,000,000 |
|
- |
- |
186,326,038 |
230,833,898 |
||
|
Loans and receivables |
|||||
|
- Trade and other receivables |
21 |
6,154,910 |
4,210,690 |
76,966,327 |
35,025,062 |
|
- Cash and cash equivalents |
22 |
10,886,366 |
25,700,114 |
1,770,068 |
14,589,840 |
|
17,041,276 |
29,910,804 |
78,736,395 |
49,614,902 |
||
|
Financial liabilities |
|||||
|
Financial liabilities measured at amortised cost |
|||||
|
Non-current |
|||||
|
- Borrowings |
24 |
- |
5,000,000 |
- |
- |
|
- Bonds |
25 |
30,740,648 |
70,382,973 |
30,740,648 |
70,382,973 |
|
- Shareholders’ loan |
26 |
5,203,300 |
5,203,300 |
5,203,300 |
5,203,300 |
|
35,943,948 |
80,586,273 |
35,943,948 |
75,586,273 |
||
|
Current |
|
||||
|
- Borrowings |
24 |
5,003,946 |
68,048 |
- |
- |
|
- Bonds |
25 |
39,929,870 |
11,950,000 |
39,929,870 |
11,950,000 |
|
- Trade and other payables |
28 |
7,023,460 |
16,616,188 |
5,470,847 |
12,847,440 |
|
51,957,276 |
28,634,236 |
45,400,717 |
24,797,440 |
||
|
See note 5.16 for a description of the accounting policies for each category of financial instruments. The fair values are presented in the related notes. A description of the group's risk management objectives and policies for financial instruments is given in note 34.
|
|
|
32 Fair value measurement |
|
|
32.1 Fair value measurement of financial instruments |
|
|
|
The following table presents financial assets and liabilities measured at fair value in the group’s and the Company’s statements of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels: |
|
|
|
- Level 1: based on quoted prices (unadjusted) in active markets for identical assets; - Level 2: based on information other than quoted prices included within Level 1 that are observable for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and - Level 3: information for the asset that is not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.
|
|
|
The financial assets and liabilities measured at fair value in the statements of financial position are grouped into the fair value hierarchy as follows: |
|
|
|
Company |
|
|
|
|
31 December 2021 |
Level 1 |
Level 2 |
Level 3 |
|
|
€ |
€ |
€ |
|
Financial assets |
|
|
|
|
Fair value through other comprehensive income (a) |
- |
- |
179,326,038 |
|
|
|
|
|
|
31 December 2020 |
Level 1 |
Level 2 |
Level 3 |
|
|
€ |
€ |
€ |
|
Financial assets |
|
|
|
|
Fair value through other comprehensive income (a) |
- |
- |
223,833,898 |
|
|
|
|
|
|
Measurement of fair value |
|
The methods and valuation techniques used for the purpose of measuring fair value are as follows: |
|
Financial assets at fair value through other comprehensive income |
|
|
Fair value information for these financial assets has been obtained from the latest available financial information.
|
|
Level 3 fair value measurements |
|
|
The reconciliation of the carrying amounts of financial assets at fair value through other comprehensive income classified within Level 3 is as follows: |
|
|
Company |
2021 |
2020 |
|
|
€ |
€ |
|
|
|
|
|
Balance at 1 January |
223,833,898 |
257,357,101 |
|
Loss recognised in other comprehensive income |
(47,219,855) |
(33,526,588) |
|
Other movement |
2,711,995 |
3,385 |
|
Balance at 31 December |
179,326,038 |
223,833,898 |
|
|
|
|
Changing inputs to the Level 3 valuations to reasonably possible alternative assumptions would not change significantly amounts recognised in profit or loss, total assets or total liabilities or total equity.
|
|
32.2 Fair value measurement of non-financial assets |
|
|
The following table shows the levels within the hierarchy of non-financial assets measured at fair value on a recurring basis at 31 December 2021 and 31 December 2020. |
|
|
Group |
|
|
|
|
31 December 2021 |
Level 1 |
Level 2 |
Level 3 |
|
|
€ |
€ |
€ |
|
Investment property |
- |
- |
272,567,609 |
|
|
|
|
|
|
31 December 2020 |
Level 1 |
Level 2 |
Level 3 |
|
|
€ |
€ |
€ |
|
Investment property |
- |
- |
272,567,609 |
|
|
|
|
|
|
The fair value of the subsidiary’s investment property is estimated based on a valuation exercise carried out by the directors. The significant inputs and assumptions are developed in close consultation with management. The valuation processes and fair value changes are reviewed by the board of directors at each reporting date. During the year under review, the valuation arrived at when using these inputs amounted to €282,846,000 (see note 16).
|
|
33 Capital management policies and procedures |
|
|
The board’s policy is to maintain a strong capital base so as to maintain investors’ and creditors’ and market confidence and to sustain future development of the business. The board of directors monitors the return on capital, which the group defines as the profit for the year divided by total equity. |
|
|
The directors seek to maintain a balance between the higher returns that might be possible with higher levels of borrowings and advantages and security afforded by a sound capital position. The group and the Company seek to maximise the return on shareholders’ equity and to reduce the incidence of interest expenses. |
|
|
There were no changes in the group’s and the Company’s approach to capital management during the year. Neither the Company nor any of its subsidiaries is subject to externally imposed capital requirements. |
|
34 Post-reporting date events |
|
|
No adjusting or significant non-adjusting events have occurred between the end of the reporting period and the date of authorisation by the board. |
|
|
Independent auditor’s report
To the shareholders of Mediterranean Investments Holding p.l.c. Report on the audit of the financial statements Opinion We have audited the financial statements of Mediterranean Investments Holding plc (the “Company”) and of the Group of which it is the parent, which comprise the statements of financial position as at 31 December 2021, and the statements of other comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company and the Group as at 31 December 2021, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) , and have been properly prepared in accordance with the requirements of the Companies Act, Cap. 386 (the “Act”).
Our opinion is consistent with our additional report to the audit committee.
Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional 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 requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. In conducting our audit we have remained independent of the Company and the Group and have not provided any of the non-audit services prohibited by article 18A of the Accountancy Profession Act, Cap. 281. Total remuneration payable to the parent company’s auditors in respect of the audit of the group’s and Company’s financial statements amounted to €27,500 (2020: €26,400) and €10,000 (2020: €9,500) respectively. Other fees payable to the parent company’s auditors in respect of tax compliance services rendered to the group and the Company amounted to €3,575 (2020: €3,575) and €1,100 (2020: €1,100) respectively.
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 and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. 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.
Group’s going concern and significant uncertainty Key audit matter The political situation in Libya, which has remained unstable during the year under review, and the ongoing COVID-19 pandemic are a cause of significant uncertainty. Given that the Group’s business is entirely conducted in Libya, we placed special focus on the Group’s assets in that country. These comprise the Palm City Residences with a carrying amount of €272 million, land under construction owned by Palm Waterfront Ltd with a carrying amount of €8.9 million and a 25% holding in an associate carried at €8.0 million which in turn owns land in Tripoli, Libya earmarked for development.
At balance sheet date the Group had net current liabilities amounting to €39.1 million which is primarily due to an €39.9 million bond maturing in 2022 and which is classified as a current liability. This deficiency also warrants specific audit focus. The future performance and the fair value of group’s property assets are heavily dependent on how the political situation in Libya and the COVID-19 pandemic will develop and on the time required for the situation to return to normality.
The directors are continuing to monitor the situation in Libya closely and are taking immediate and appropriate action in the best interests of all stakeholders. Palm City Residences is still fully operational. Moreover, the directors confirm that all the existing signed contracts are still in full force and effect. Furthermore, as explained in note 3 to these financial statements the directors have taken and are still taking various measures to ensure that the Group will continue to have adequate levels of cash to sustain its operations and to meet its obligations as they fall due.
However, different scenarios in terms of the future political landscape in Libya are plausible, which scenarios, negative and positive, could significantly influence the timing and amount of projected cash flows.
How the key audit matter was addressed in our audit We reviewed the plans prepared by management showing how the working capital deficiency of the Group is to be addressed. As part of this process, we reviewed cash flow projections prepared by management.
We attended meetings with management and those charged with governance and noted that they were able to provide satisfactory responses to our questions relating to the Group’s plans. We also assessed the adequacy of the disclosures made in Note 3, Going concern, which we consider to be of fundamental importance to the users’ understanding of the going concern assumption underlying the preparation of these financial statements.
Based on the audit work done, we concluded that management’s use of the going concern assumption in the preparation of the financial statements is appropriate.
In addition to the above procedures, we have also conducted the procedures explained in the following Key Audit Matter for the valuation of investment property. Valuation of investment property of the Group Key audit matter One of the subsidiaries of the Group has a property situated in Zanzour, Libya, held under a 65-year Build, Operate and Transfer agreement. The property consists of a number of individual units within a gated complex. The units were constructed to be leased out under short-term and long-term leases to third parties for use as accommodation. At 31 December 2021 the property is carried at €272 million. Management has conducted an internal valuation of the property as at 31 December 2021. This valuation is based on the projected rental income streams discounted to present value. The underlying assumptions consist of the projected rental rates and occupancy levels of the units and take into consideration contracted rates for units that are leased out. The valuation of the subsidiary’s investment property is inherently subjective mainly due to the judgemental nature of the factors used in arriving at the value. Moreover, the property is situated in Libya which is still passing through a period of great uncertainty. The significance of the estimates made, the judgement involved and the uncertainty in Libya could result in a material misstatement. Consequently, this warrants specific audit focus. How the key audit matter was addressed in our audit We obtained an understanding of the methodology used by management to arrive at the valuation of the property at 31 December 2021 and tested the arithmetical accuracy of the workings. We also agreed the information in the valuation report to the accounting records. We engaged our internal specialist resources to review and challenge the valuation methodology and the underlying assumptions. We attended meetings with management and those charged with governance and noted that they were able to provide satisfactory responses to our questions. We assessed the adequacy of the disclosures made in Notes 5.22 (e) and 16 of the financial statements including those regarding the key assumptions. Based on the audit work done we concluded that the carrying amount of the investment property falls within a reasonable range of values. The significant uncertainty in Libya and the significant judgements surrounding the valuation of the Group’s Investment Property situated in that country render the fair valuation of the property extremely difficult and judgemental. We consider this matter to be of fundamental importance to the users’ understanding of these financial statements because should the assumptions underlying the valuation not materialise the fair value of the investment property which, at 31 December 2021 is carried at €272 million would vary significantly.
Other information The directors are responsible for the other information. The other information comprises the (i) Chairman’s Statement, (ii) the Directors’ report, (iii) the Statement by the Directors on the Financial Statement and Other Information included in the Annual Report, (iv) the Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance and (v) Other Disclosures in terms of the Capital Markets Rules (amend as required) which we obtained prior to the date of this auditor’s report, 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, including the Directors’ report.
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.
With respect to the Directors’ report, we also considered whether the Directors’ report includes the disclosures required by Article 177 of the Act.
Based on the work we have performed, 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 Act.
In addition, in light of the knowledge and understanding of the Company and the Group and their environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Directors’ report and other information that we obtained prior to the date of this auditor’s report. We have nothing to report in this regard.
Responsibilities of those charged with governance for the financial statements The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS as adopted by the EU and are properly prepared in accordance with the provisions of the Act, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating 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. The directors are responsible for overseeing the Company’s and the Group’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.
In terms of article 179A(4) of the Act, the scope of our audit does not include assurance on the future viability if the audited entity or on the efficiency or effectiveness with which the directors have conducted or will conduct the affairs of the entity.
As part of an audit in accordance with the ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with the relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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 benefit 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 Report and Consolidated Financial Statements of Mediterranean Investments Holding p.l.c. for the year ended 31 December 2021, entirely prepared in a single electronic reporting format. Responsibilities of the directors The directors are responsible for the preparation of the Report and Consolidated Financial Statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS. Our responsibilities Our responsibility is to obtain reasonable assurance about whether the Report and Consolidated Financial Statements and the relevant electronic tagging therein, 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:
Opinion In our opinion, the Report and Consolidated Financial Statements for the year ended 31 December 2021 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS. Report on the statement of compliance with the Principles of Good Corporate Governance The Capital Markets Rules issued by the MFSA (the “Capital Markets Rules”) require the directors to prepare and include in their Annual Report a Corporate governance statement 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 us, as the auditor of the Company, to include a report on the Statement of Compliance prepared by the directors.
We read the Statement of Compliance with the Code of Principles of Good Corporate Governance and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements included in the Annual Report. Our responsibilities do not extend to considering whether this statement is consistent with any other information included in the Annual Report.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance with the Code of Principles of Good Corporate Governance 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 Corporate governance statement has been properly prepared in accordance with the requirements of the Capital Markets Rules.
Other matters on which we are required to report by exception We also have responsibilities
· under the Companies Act, Cap 386 to report to you if, in our opinion: - adequate accounting records have not been kept, or that 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 we require for our audit - certain disclosures of directors’ remuneration specified by law are not made in the financial statements, giving the required particulars in our report.
· in terms of 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.
Auditor tenure
We were first appointed as auditors of the Company and the Group when the Company was registered on 12 December 2005 and our first audit was for the period ended 31 December 2006. Our appointment has been renewed annually by shareholders’ resolutions representing a total period of uninterrupted engagement appointment of 15 years. The Company first issued listed securities on the Malta Stock Exchange on 7 November 2007.
The engagement partner on the audit resulting in this independent auditor’s report is Mark Bugeja.
Grant Thornton Certified Public Accountants Fort Business Centre Triq L-Intornjatur, Zone 1, Central Business District, Birkirkara CBD 1050 Malta
28 April 2022
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