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Report & Consolidated Financial Statements 31 December 2024
Company registration number: C 37513
Contents
Statement by the directors on the financial statements and other information included in the annual report 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 |
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Group |
Company |
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Notes |
2024 |
2023 |
2024 |
2023 |
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€ |
€ |
€ |
€ |
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Revenue |
5, 6 |
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269,380 |
256,551 |
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Operating expenses |
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( |
( |
- |
- |
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Gross profit |
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269,380 |
256,551 |
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Other income |
|
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- |
- |
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Administrative expenses |
|
( |
( |
(894,132) |
(771,401) |
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Marketing expenses |
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( |
( |
(270,965) |
(245,095) |
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Operating profit (loss) |
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(895,717) |
(759,945) |
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Finance income |
8 |
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2,376,864 |
3,037,911 |
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Finance costs |
8 |
( |
( |
(3,604,893) |
(3,740,666) |
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Share in profit / (loss) of investment accounted for using the equity method |
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|
( |
- |
- |
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Profit (loss) before tax |
9 |
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(2,123,746) |
(1,462,700) |
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Tax (expense) income |
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- Current tax |
10 |
( |
( |
(9,134) |
- |
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- Deferred tax |
10 |
( |
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(917,405) |
261,199 |
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Profit (loss) for the year |
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(3,050,285) |
(1,201,501) |
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Other comprehensive income: |
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Items that will be reclassified subsequently to profit or loss |
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Fair value through other comprehensive income: |
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- current year gains |
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- |
- |
16,666,274 |
13,778,781 |
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Difference on exchange |
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( |
273,398 |
(213,755) |
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Income tax relating to components of other comprehensive income (loss) |
10, 23 |
( |
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(5,833,197) |
(4,822,573) |
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Other comprehensive income (loss) for the year, net of tax |
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( |
11,106,475 |
8,742,453 |
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Total comprehensive income for the year |
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8,056,190 |
7,540,952 |
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Earnings (loss) per share (basic and diluted) |
11 |
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(0.06) |
(0.03) |
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Group |
Company |
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Notes |
2024 |
2023 |
2024 |
2023 |
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€ |
€ |
€ |
€ |
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Assets |
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Non-current |
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Intangible assets |
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- |
- |
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Property, plant and equipment |
12 |
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727 |
1,838 |
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Investment property |
13 |
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- |
- |
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Investment accounted for using the equity method |
14 |
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- |
- |
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Investments in subsidiaries |
15 |
- |
- |
220,086,282 |
203,827,691 |
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Investment in associate |
14 |
- |
- |
8,526,553 |
7,845,472 |
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Total non-current assets |
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228,613,562 |
211,675,001 |
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Current |
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Inventories |
17 |
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- |
- |
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Trade and other receivables |
18 |
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31,029,739 |
49,335,469 |
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Financial assets at fair value through profit or loss |
14 |
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5,457,853 |
979,075 |
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Shareholder loans |
19 |
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5,500,000 |
- |
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Cash and cash equivalents |
20 |
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1,282,079 |
1,862,340 |
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Total current assets |
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43,269,671 |
52,176,884 |
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Total assets |
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271,883,233 |
263,851,885 |
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Equity |
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Share capital |
21 |
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48,002,000 |
48,002,000 |
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Other components of equity |
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( |
( |
79,203,575 |
68,097,100 |
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Retained earnings |
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35,066,430 |
45,116,715 |
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Total equity |
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162,272,005 |
161,215,815 |
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Liabilities |
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Non-current |
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Bonds |
22 |
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49,418,678 |
60,245,262 |
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Deferred tax liability |
23 |
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46,742,404 |
39,991,802 |
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Trade and other payables |
24 |
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- |
- |
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Taxation |
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- |
- |
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Total non-current liabilities |
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96,161,082 |
100,237,064 |
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Current |
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Bonds |
22 |
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11,000,000 |
- |
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Trade and other payables |
24 |
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2,450,146 |
2,399,006 |
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Taxation |
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- |
- |
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Total current liabilities |
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13,450,146 |
2,399,006 |
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Total liabilities |
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109,611,228 |
102,636,070 |
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Total equity and liabilities |
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271,883,233 |
263,851,885 |
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The financial statements were approved and authorised for issue by the Board of Directors on 24 April 2025. The financial statements were signed on its behalf by Alfred Pisani (Director) and Ahmad B.A.A.A. Wahedi (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report. |
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Group |
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Share capital |
Other components of equity |
Retained earnings |
Total equity |
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€ |
€ |
€ |
€ |
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Balance at 1 January 2023 |
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( |
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Total recognised income for the year |
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Profit for the year |
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Other comprehensive loss |
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( |
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( |
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Total comprehensive income for the year |
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( |
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Transactions with owners |
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Dividends paid (see note 21) |
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( |
( |
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Balance at 31 December 2023 |
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( |
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Balance at 1 January 2024 |
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( |
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Total recognised income for the year |
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Profit for the year |
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Other comprehensive income |
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Total comprehensive income for the year |
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Transactions with owners |
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Dividends paid (see note 21) |
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( |
( |
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Balance at 31 December 2024 |
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( |
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Company |
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Share capital |
Other components of equity |
Retained earnings |
Total equity |
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€ |
€ |
€ |
€ |
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Balance at 1 January 2023 |
48,002,000 |
59,354,647 |
52,318,216 |
159,674,863 |
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Total recognised income for the year |
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Loss for the year |
- |
- |
(1,201,501) |
(1,201,501) |
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Other comprehensive income |
- |
8,742,453 |
- |
8,742,453 |
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Total comprehensive income (loss) for the year |
- |
8,742,453 |
(1,201,501) |
7,540,952 |
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Transactions with owners |
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Dividends paid (see note 21) |
- |
- |
(6,000,000) |
(6,000,000) |
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Balance at 31 December 2023 |
48,002,000 |
68,097,100 |
45,116,715 |
161,215,815 |
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Balance at 1 January 2024 |
48,002,000 |
68,097,100 |
45,116,715 |
161,215,815 |
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Total recognised income for the year |
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Loss for the year |
- |
- |
(3,050,285) |
(3,050,285) |
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Other comprehensive income |
- |
11,106,475 |
- |
11,106,475 |
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Total comprehensive income (loss) for the year |
- |
11,106,475 |
(3,050,285) |
8,056,190 |
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Transactions with owners |
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Dividends paid (see note 21) |
- |
- |
(7,000,000) |
(7,000,000) |
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Balance at 31 December 2024 |
48,002,000 |
79,203,575 |
35,066,430 |
162,272,005 |
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Group |
Company |
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Notes |
2024 |
2023 |
2024 |
2023 |
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€ |
€ |
€ |
€ |
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Operating activities |
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Profit (loss) before tax |
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(2,123,746) |
(1,462,700) |
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Adjustments |
25 |
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1,242,976 |
703,866 |
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Net changes in working capital |
25 |
( |
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20,471,361 |
18,728,542 |
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Tax paid |
|
( |
( |
(9,135) |
- |
|
Tax refunded |
|
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|
- |
555,828 |
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Net cash generated from operating activities |
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19,581,456 |
18,525,536 |
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Investing activities |
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Payments to acquire property, plant and equipment |
|
( |
( |
- |
- |
|
Payments to acquire financial assets |
|
( |
( |
(11,673,884) |
(975,915) |
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Proceeds on disposal of financial assets |
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7,315,000 |
- |
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Payment to acquire investment property |
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( |
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- |
- |
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Interest received |
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|
128,643 |
2,204 |
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Net cash used in investing activities |
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( |
( |
(4,230,241) |
(973,711) |
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Financing activities |
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Dividends paid |
|
( |
( |
(7,000,000) |
(7,000,000) |
|
Proceeds from issue of bond |
|
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|
- |
19,578,265 |
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Repayment of bonds |
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|
( |
- |
(20,000,000) |
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Repayment of shareholders loans |
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( |
- |
(5,203,300) |
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Loans advanced to shareholders |
|
( |
|
(5,500,000) |
- |
|
Interest paid |
|
( |
( |
(3,431,476) |
(3,759,984) |
|
Net cash used in financing activities |
|
( |
( |
(15,931,476) |
(16,385,019) |
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Net change in cash and cash equivalents |
|
( |
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(580,261) |
1,166,806 |
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Cash and cash equivalents, beginning of year |
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1,862,340 |
695,472 |
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Cash and cash equivalents before effect of foreign exchange rate changes |
|
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1,282,079 |
1,862,278 |
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Effect of foreign exchange rate changes |
|
( |
( |
- |
62 |
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Cash and cash equivalents, end of year |
20 |
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1,282,079 |
1,862,340 |
Notes to the financial statements1 Nature of operations The Group’s principal activity is to directly or indirectly acquire and develop real estate opportunities in Libya and invest in any related trade or business venture. The Company’s principal activity is to act as a holding company and its revenue is derived from management fees and dividends. 2 General information and statement of compliance with International Financial Reporting Standards (IFRS) and going concern 2.1 General information and statement of compliance with International Financial Reporting Standards (IFRS) The financial statements are presented in euro (€), which is also the functional currency of the Group and its subsidiaries. Amounts are rounded to the nearest euro unless otherwise stated. 2.2 Going concern The going concern basis underlying the preparation of these financial statements assumes that the Group’s and the Company’s lenders and creditors will continue to provide the financial support necessary to enable the Group and the Company to meet their debts as and when they fall due. At the reporting date the Group had a working capital deficiency of €1.73 million (2023: excess working capital of €1.6 million and the Company had an excess working capital position of €29.8 million (2023: €49.8 million). In the case of the Group, the working capital deficiency in 2024 is primarily due to the €11 million unlisted bond maturing in September 2025 and thus had been classified as a current liability. As at the date of this report, the Group had already reported a positive working capital position achieved through a strong generation of cash from operating activities. Management has conducted a thorough assessment of the Group's financial outlook, including expected cash flows from operations for the twelve months ending 31 December 2025, as well as anticipated cash outflows such as interest payments and other financial obligations. This assessment, based on the Group’s actual performance and projected revenue growth, provides confidence in its ability to meet obligations and continue operations without interruption. The directors have taken and are still taking various measures to ensure that the group and the Company will continue to have adequate levels of cash to sustain its operations. 3 New or revised standards or interpretations 3.1 New standards adopted as at 1 January 2024 Some accounting pronouncements which have become effective from 1 January 2024 and have therefore been adopted are:
These amendments do not have a significant impact on these financial statements and therefore no disclosures have been made. 3.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group and Company At the date of authorisation of these financial statements, several new, but not yet effective, Standards and amendments to existing Standards, and Interpretations published by the IASB or IFRIC include:
None of these Standards or amendments to existing Standards have been adopted early by the Group and Company. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. With the exception of IFRS 18, these amendments are not expected to have a significant impact on the financial statements in the period of initial application and therefore no disclosures have been made. The Group and Company will assess the impact on disclosures from the initial adoption of IFRS 18. IFRS 18 will be effective for annual reporting periods beginning on or after 1 January 2027. The Group and Company are not expected to early adopt this new Standard. 4 Material accounting policies An entity should disclose its material accounting policies. Accounting policies are material and must be disclosed if they can be reasonably expected to influence the decisions of users of the financial statements. The Group and Company’s management has concluded that the disclosure of the material accounting policies below are appropriate. 4.1 Overall considerations The consolidated and separate financial statements have been prepared using the material 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. 4.2 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. 4.3 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.
4.4 Revenue recognition and expenses 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:
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 statements 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 statements of financial position, depending on whether something other than the passage of time is required before the consideration is due. 4.5 Investments in associate Associates are those entities over which the Group is able to exert significant influence but which are neither subsidiaries nor joint ventures. Investments in associate 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. The carrying amount of the investments in associate 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. 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. Amounts reported in the financial statements of associates have been adjusted where necessary to ensure consistency with the accounting policies of the Group. 4.6 Foreign currency translation Functional and presentation currency 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. 4.7 Borrowing costs Borrowing costs primarily comprise interest on the Group and Company’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. 4.8 Property, plant and equipment All 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. The cost of assets in the course of construction includes the cost of materials, direct labour and an appropriate proportion of overheads, and, where applicable, interest costs incurred in financing, together with any other costs, to the extent that they are incurred prior to the commencement of the use of these assets. 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:
No depreciation is provided on land and on assets in the course of construction and assets that are not yet brought into use. 4.9 Investment property Investment property is property held to earn rentals and/or for capital appreciation and is accounted for using the fair value model. 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. 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’. Rental income and operating expenses from investment property are reported within ‘revenue’ and ‘operating expenses’. 4.10 Leased assets 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:
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 asset 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 Group’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. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis. The Group as a lessor As a lessor, the Group classifies its leases as either operating or finance leases. The Group assessed whether it transfers substantially all the risks and rewards of ownership. Those assets that do not transfer substantially all the risks and rewards are classified as operating leases. Rental income is accounted for on a straight-line basis over the lease term and is included in revenue due to its operating nature. 4.11 Impairment testing of tangible assets 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. 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. 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. 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. 4.12 Investment in subsidiaries Investment in subsidiaries is included in the Company’s financial statements at fair value (refer to note 4.13). 4.13 Financial instruments Recognition and derecognition Financial assets and financial liabilities are recognised when the Group and the Company become a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and initial measurement of financial assets 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). Financial assets are classified into the following categories:
The classification is determined by both:
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’. Subsequent measurement of financial assets Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
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, and trade and most other receivables fall into this category of financial instruments. Financial assets at 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. Financial assets at FVTPL Financial assets held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at FVTPL. Further, irrespective of the business model used, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. 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 broad 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 ECL are recognised for the first category while ‘lifetime ECL’ are recognised for the second category. Measurement of the ECL 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 27.1 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 bonds and most trade and other payables. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group and Company designates a financial liability at FVTPL. 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’. 4.14 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 total 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. 4.16 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. 4.17 Equity Share capital represents the nominal (par) value of shares that have been issued. Other components of equity include the following:
Retained earnings includes all current and prior period retained profits. Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date. All transactions with owners are recorded separately within equity. 4.18 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. 4.19 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 13. 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 (see note 18). (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 12. 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) Recognition of contract revenue over time or at a point in time For some of the Group’s contracts with customers significant judgement is required to assess whether control of the related performance obligation(s) transfers to the customer over time or at a point in time in accordance with IFRS 15. Specifically, for contracts that involve developing a customer-specific asset with no alternative use to the Group, judgement is needed to determine whether the Group is entitled to payment for its performance throughout the contract period if the customer sought to cancel the contract. This relates mainly to residential and commercial leases which represent €29,769,240 (2023: €26,514,400) of the Group’s revenue. The Group assesses it has a right to payment for its performance throughout the contract period and recognises revenue over time. For other revenue sources, the Group assessed that the performance obligations are satisfied at a point in time. (f) Fair value of investment property The Group’s investment property is situated in Libya which is still experiencing prolonged political uncertainty. 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 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 (see note 13). 4.20 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 5. 5 Segment reporting
During the year, €15,688,514 or 50% (2023: €14,377,291 or 52%) of the Group’s revenues depended on four (2023: four) single customers in the investment property rental segment. Note 1: Revenue comprises amounts attributable to Libya, amounting to €4,915,932 (2023: €4,399,551), United States of America, amounting to €4,660,411 (2023: €3,923,625), Italy €3,557,848 (2023: €2,622,747), other European countries €15,286,518 (2023: €13,884,858) and other foreign countries amounting to €2,803,229 (2023: €2,610,599). Note 2: All non-current assets are located in Libya. 6 Revenue
7 Staff costs
The average number of persons employed by the Group during the year was:
During the years presented, the Company did not have any employees. 8 Finance income and finance costs Finance income and finance costs may be analysed as follows:
9 Profit (loss) before tax The profit (loss) before tax is stated after charging:
AUDITORSREMUNERATION
10 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 23 for information on the Group’s and Company’s deferred tax liability. 11 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 (2024 and 2023: 48,002,000) outstanding during the year. There was no dilution of share capital during the reporting periods presented. |
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The Group and Company’s property, plant and equipment and their carrying amounts can be analysed as follows:
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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 CPHCL 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. 13 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. Rental income for 2024 amounting to €29,769,240 (2023: €26,514,400) is included within ‘Revenue’. No contingent rents were recognised. Direct operating expenses of €6,892,707 (2023: €5,613,980) 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 47 years of the Build-Operate-Transfer agreement signed between CPHCL 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 9.7% (2023: 9.6%) 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. The valuation arrived at when using all the above inputs, combined with the projected income streams amounts to €279,556,000 (2023: €278,586,000). This figure is €6,939,000 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 €23.7 million and €45.1 million (2023: €23.5 million and €42.4 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:
14
14.1 Investment accounted for using the equity method Group In the Group financial statements, the investment in Medina Towers Joint Stock Company for Real Estate Investments and Development (‘MTJSC’) is accounted for using the equity method.
14.2 Investment in associate Company In the Company financial statements, the investment in MTJSC is shown as financial asset at FVOCI. The fair value has been derived based on the latest financial information available
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:
14.3 Financial assets at fair value through profit or loss
Group and Company
These financial assets comprise short term investments maturing for more than 3 months but less than 1 year from date of acquisition and are stated at fair value. Company
15.1 Shares in subsidiary companies (unquoted)
Shares in subsidiary company are being shown at fair value based on the latest available financial statements. 15.2 Loan to subsidiary company The loan to Palm Waterfront Ltd is unsecured, interest free and has no fixed date of repayment. The carrying amount of the loans is considered a reasonable approximation of fair value. 16 Leases The Group as a lessee The Group has leases for the right to operate the Palm City Residences and motor vehicles. On 2 October 2007, CPHCL Company Limited entered into a BOT 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 CPHCL 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 12). The Group as a lessor The Group leases out investment properties under operating leases pertaining to Palm City Residences (see note 13). 17 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.
In 2024, a total of €206,908 (2023: €141,953) were included in the statement of total comprehensive income as an expense. 18 Trade and other receivables
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 subsidiary and other related companies 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.
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. An analysis of unimpaired trade receivables that are past due is given in note 27.1. 19 Shareholder loans A shareholders’ loan agreement was signed in 2024 for a total value of €11 million. Under this agreement, MIH agreed to make available to each of the shareholders a loan of €5.5 million to be utilised separately for the shareholders’ respective general corporate and funding purposes. Any drawdowns bear interest at a margin of 2% above the 3-month Euribor. The final maturity date is 15 September 2025. As at the date of these financial statements, CPHCL had exercised the right to withdraw the maximum loan possible. 20 Cash and cash equivalents Cash and cash equivalents include the following components:
The Group has a bank deposit amounting to €1,874,251 (2023: €1,876,111) which is specifically designated for security deposits from lessees. This is not available for general use by the Group. 21 Equity 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.
The interim dividends were declared on 25 April 2024 and 21 November 2024. 22 Bonds
In 2020, the Company issued an €11.0 million unlisted 6% bond maturing in 2025 (Bond IX). In 2022, the Company issued a €30.0 million 5.25% bond maturing in 2027 (Bond X). In 2023, the Company issued a €20.0 million 5.85% bond maturing in 2028 (Bond XI). 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. 22.1 Bond IX
22.2 Bond X
Transaction costs in connection with the Bond X issue were expensed in the year under review. 22.3 Bond XI
Transaction costs in connection with the Bond XI issue were expensed in the year under review. 23 Deferred tax liability Group Deferred tax arising from temporary differences can be summarised as follows:
See note 10 for information on the Group’s and the Company’s tax (expense) income. Trade and other payables recognised in the statements of financial position can be analysed as follows:
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. 25 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 (loss) before tax to arrive at operating cash flow:
26 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. 26.1 Transactions with related parties
Balances with related parties are disclosed in notes 14, 15, 18, 19 and 24. 27 Financial instrument risk Risk management objectives and policies The Group and Company are exposed to various risks through use of financial instruments which result from its operating, investing and financing activities. The Group and Company’s financial assets and liabilities by category are summarised in note 27.4. 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. 27.1 Credit risk 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:
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 of the Group is an amount of €302,475 (2023: €1,503,996) which is held in Libyan banks for which no credit rating is available. The Group 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 Group’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 and company apply IFRS 9 simplified model of recognising lifetime ECL 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 €8.5 million (2023: €8.7 million) in deferred income and €3.4 million (2023: €3.7 million) held in security deposits. Credit risk for trade receivables is considered low and ECL for trade receivables are not material. Trade receivables are written off when there is no reasonable expectation of recovery. Failure to engage with the Group on an alternative payment arrangement amongst others is considered to be an indicator of no reasonable expectation of recovery. 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:
27.2 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 2024, the Group’s and the Company’s liabilities have contractual maturities (including interest payments where applicable) as summarised below:
This compares to the maturity of the Group’s and the Company’s contractual maturities in the previous reporting period as follows:
27.3 Market risk 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 assets and liabilities, translated into euro at the closing rate, are as follows:
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 +/- 3% change of the LYD/euro exchange rate at year end (2023: 2%). 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 3% (2023: 2%), 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. 27.4 Categories of financial assets and liabilitiesThe carrying amounts presented in the statements of financial position relate to the following categories of assets and liabilities:
See note 4.13 for a description of the accounting policies for each category of financial instruments. The fair values are presented in the related notes. 28 Fair value measurement 28.1 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:
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:
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. 28.2 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 2024 and 2023.
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 €279,556,000 (see note 13). 29 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 and the Company 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. 30 Purchase commitments In line with the capital management policy, the Group entered into various purchase commitments during the year related to capital expenditure amounting to €1.6 million (2023: € Nil ). These commitments are expected to be funded through the Group's operating cash flows. The Group continuously monitors its purchase commitments to ensure they align with its strategic objectives and financial capacity. No adjusting or significant non-adjusting events have occurred between the end of the reporting period and the date of authorisation by the board.
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Grant Thornton Malta Fort Business Centre, Level 2 Triq L-Intornjatur, Zone 1 Central Business District Birkirkara CBD1050 Malta T +356 20931000 |
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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 p.l.c. (the “Company”) and of the Group of which it is the parent, which comprise the statements of financial position as at 31 December 2024, and the statements of total comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and notes to the financial statements, including material accounting policies 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 2024, 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 € 32,300 (2023: €30,600) and €11,700 (2023: €11,100), 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 €4,000 (2023: €3,825) and €1,250 (2023: €1,200), 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.
Significant political and economic uncertainty in Libya Key audit matter The political situation in Libya, which has remained unstable during the year under review is 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 €272.6 million, land under construction owned by Palm Waterfront Ltd with a carrying amount of €9.0 million and a 25% holding in an associate carried at €8.5 million which in turn owns land in Tripoli, Libya earmarked for development. 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 and the directors have confirmed that all the existing signed contracts are still in full force and effect. However, different scenarios in terms of the future political landscape in Libya are plausible, which scenarios, negative and positive, could significantly influence the business of the Group and the valuation of its assets. How the key audit matter was addressed in our audit The procedures we have conducted in connection with the valuation of the Group’s Investment Property, which accounts for 86% of the Group’s total assets, are explained in the key audit matter for valuation of investment property of the Group shown below. We have also evaluated the adequacy of the disclosures made in note 4.19 (f) to these financial statements and in the Director’s report regarding the situation in Libya. We discussed this matter with management and those charged with governance and noted that they were able to provide satisfactory responses to our questions. The significant uncertainty in Libya may impact the Group’s business in a significant manner. We consider this matter to be of fundamental importance to the users’ understanding of these financial statements. 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 2024 the property is carried at €272.6 million. Management has conducted an internal valuation of the property as at 31 December 2024. 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 2024 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 4.19 (f) and 13 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 2024 is carried at €272.6 million would vary significantly. Other information The directors are responsible for the other information. The other information comprises the (i) the Directors’ report, (ii) the Statement by the Directors on the Financial Statement and Other Information included in the Annual Report, (iii) the Directors’ Statement of Compliance with the Code of Principles of Good Corporate Governance and (iv) Other Disclosures in terms of the Capital Markets Rules 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:
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 the directors 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 requirement s 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 2024, 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 2024 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS. Report on the Directors’ statement of compliance with the Code of 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 Directors’ 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
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 18 years. The Company first issued listed securities on the Malta Stock Exchange on 7 November 2007.
The Principal on the audit resulting in this independent auditor’s report is Patrizia Cassar.
GRANT THORNTON Certified Public Accountants
Fort Business Centre Triq L-Intornjatur, Zone 1 Central Business District Birkirkara CBD 1050 Malta
24 April 2025 |
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