MEDITERRANEAN MARITIME HUB FINANCE p.l.c.
Annual Financial Report and Financial Statements 31 December 2021
Directors' report
The directors have prepared this report in accordance with Article 177 of the Companies Act (Chapter 386 of the Laws of Malta) ('the Act') including the further provisions as set out in the Sixth Schedule to the Act together with the financial statements of the Company for the year ended 31 December 20 2 1.
Directors, Officers & Other Information
Principal Activities
The Company's business is that of raising funds to support and finance the operations and capital projects of the MMH Group of Companies (hereinafter the 'Group'), which provides offshore and shore-based logistics to the marine and oil and gas industries, as well as technical services, supply chain management and human resources to support the same industries.
Review of the Business
The Company issued bonds to the public in October 2016 for the total amount of EUR 15m (the 'Bonds'). The Company advanced the proceeds of the Bonds to two companies within the Group to finance the development of a site measuring almost 170,000m 2 in Malta's Grand Harbour, formerly known as the Marsa Shipbuilding Site and today known as the Mediterranean Maritime Hub, to serve as a regional hub for the provision of the Group's shore-based services and facilities (hereinafter the 'Mediterranean Maritime Hub' or the 'Site' or' Hub'). Following a public deed published on the 1 August, 2016, the Guarantor (MMH Holdings Limited) took full possession of the Site which is partly operational and partly under development.
The Company recognises that the key risk of its business is that of the potential non-fulfilment by the borrowers (that is, the two Group members) of their obligations under the relative loan agreements ; a nd due to the borrowers' operations, this risk is impacted by developments in the different marine sectors in which the Group operates.
MMH Holdings Limited is the guarantor of the Bonds and is also the parent company of the Group. As such, its performance is dependent on the performance of the Group as a whole.
Guarantor’s Performance for 2021 and Outlook for 2022
The Group's recorded turnover for the end of 2021 was €14,025,196 (2020: €14,866,746). During the year under review, the Group's gross profit was €1,286,101 (2020: €2,468,872) with an operating loss of €656,107 (2020: profit of €1,765,787)
The Group's net assets at the end of 2021 amounted to €2,853,485 (2020: €4,738,420).
The Group measures the achievement of its objectives using the following other key performance indicators.
Financial
The Group's current ratio ("current assets divided by current liabilities") stands at 0.74:1 (2020: 1.09:1).
The Group measures its performance based on EBITDA. EBITDA is defined as the Group profit before depreciation, amortisation, net finance expense and taxation. During the year under review, EBITDA amounted to €1,047,337 (2020: € 3,164,309).
After accounting for investment income and finance costs, the Group registered a pre-tax loss of €1,761,687 (2020: profit of €676,236).
During the year under review, the Group slowed down development on the Site , mainly focusing on consolidating its position and concentrating on the Site’s essential areas . Nonetheless, the investment within the Site continued during the year with a total investment of €1,015,473. This consisted mainly of investment in plant and machinery and improvements to the Site . The total investment by the Group in the Site at cost at the end of 2021 reached €27 million.
Group Operations
The Group's current revenue streams can be segmented as follows:
· Oil and gas and energy services for operators and support vessels · Project equipment storage and logistical support · Provision of trained and qualified personnel for deployment in the oil and gas Industry · Specialised training courses for the oil and gas industry · Maritime services including berthing facilities and shore base support for visiting vessels · Fabrication and engineering works · Repair and maintenance works for vessels and yachts · Vessel hoisting up to 700 tons and hard standing facilities
Oil & Gas Operations
The average price of crude oil for 2021 was $70.68 per barrel compared to $41.96 for 2020. Consequently, activity in the Mediterranean has seen an increased interest in exploration and production projects which will start materialising from 2023 onwards but requests for quotations and planning will start in 2022.
The Group is following on requests for facility support services from leading oil and gas contractors The oil price increase to an average of $94 per barrel, coupled with the sanctions imposed on Russian fuels, is set to increase the resolve of the major oil companies to resume exploration and increased production in the Mediterranean and North African region. Hence previously shelved projects for new onshore and sub sea facilities, requiring fabrication and installation works, as well as substantial logistical support, are being once again considered.
2021 registered a significant increase in personnel recruitment on offshore rigs and platforms for the Group's logistic and personnel operations. Activity in 2020 was heavily restricted and negatively impacted due to travel restrictions imposed by Covid-19. However, as a result of the Group’s incessant pursuing of every possible opportunity, in the latter part of 2021 the Group saw an increase in demand, reaching total revenue of €4m, which continued to spill over into 2020.
Commercial Marine Support Activities
The commercial Marine support activities in the Facility have, as their primary target, the berthing of vessels within the Facility, which in turn require other support services.
This activity has been made possible through the initial multi million investment carried out by the Group to dredge the seabed for the fairway and the berths.
The Covid-19 restrictions on crew movements also had an impact on the number of vessels which bypassed the Maltese ports to other ports where crew movements and entry restrictions were facilitated.
This also affected the overall berthing occupancy rate and hence the related revenues which in 2021 saw a decline of approximately €500K when compared to 2020.
The current situation in ship movements and long-term berthing is still recovering both from the Covid crisis and from the increased number of decommissioned vessels, and the Group anticipates that the revenues from berthing shall start recovering as from 2023.
Notwitstanding this, as with the provision of offshore personnel, the Group plans to follow up on all opportunities to continue attracting vessels and maximising its revenues.
Vessel Hoisting, hard standing and maintenance facilities – Vessel Care
VesselCare is in its third full year of operation, which has spanned the entire period of the pandemic. Activity has experienced growth year on year with 2021 having an increase of approximately €900K over 2020 and the forecasts indicate that 2022 will experience another growth in revenue. Further growth is anticipated with the increase of more services provided through the Group directly and also through the positive response and satisfaction rate of the Facility within the industry, as being the top and best-rated facility.
This activity has an increased seasonality factor which sees activity slowing down over the summer period and to counterbalance this seasonality slow down, the Group is finalising a set of attractive offers for the yachting and commercial vessel industry to avail themselves of the Group’s facilities during the shoulder months.
Cash flow projections
The Group has prepared cash flow forecasts considering a conservative sales mix and maintaining specific cost efficiency measures in 2021.
Cash flow forecasts were prepared for the period ending December 2022 based on several assumptions, which were deemed by management to be as realistic as possible with the information and data in hand at the time of approving these financial statements.
The cash flow forecast presented by the Group indicates that sufficient cash will be generated throughout the year to enable the Group to meet its financial commitments. A major consideration is that 2022 should be the year from Covid recovery and normality restored in free movement of people without ignoring the reality of the war in Ukraine.
Financial risk management
The Company's financial risk management objectives and policies, and the exposure to market risk, credit risk and liquidity risk have been disclosed in Note 2 of these financial statements.
Likely future business developments
The D irectors consider that taking all into consideration, that the Site is still a project in the making, and is not yet fully utilised for revenue generation as well as the effects of the Covid pandemic, the year-end financial position of the Group was satisfactory. Future performance will require focus in seizing every opportunity in a post-pandemic recovering market while keeping a watchful eye on the developing Ukraine war and its possible effects on various economies.
Post balance sheet events on the Group Operations
Towards the end of February 2022, the armed conflict between the Russian Federation and Ukraine set in motion a chain of diplomatic efforts and other major geopolitical events which led several western nations, including the EU Member States and its institutions and the United States government, to impose several sanctions on the Russian Federation and Belarus. The sanctions currently in place include several restrictive measures of a direct financial nature that have a significant direct impact on the broad economy of the affected nations and result in a downgrading of their sovereign and private debt by international credit rating agencies.
The consequences of these restrictive measures are also expected to significantly impact the economies of the countries implementing such trade restrictions, with a spill-over on the world economy, as uncertainty and market volatility remains high across all industries with increasing tensions and rhetoric on both sides. The cost of doing business is expected to rise further, compounded by the remaining effects of the Covid-induced shocks on the global economy seen in the last couple of years, as the ongoing conflict in Ukraine and Covid-related measures continue to rock global supply chains. Both the International Monetary Fund and the World Bank have indicated that the resulting impact of the conflict on global growth and recovery from Covid effects will be significant. As oil and gas prices shift upwards due to the w ar, transport and other procurement costs required for business will also increase. Due to the nature and decisiveness of these restrictive measures, the global economic impact is expected to be long-lasting, even if the conflict ceases in the immediate future. The dynamics of international trade between the EU, the USA and Asia are also significantly impacted, possibly long-term.
It is still too early to quantify the ongoing war in Ukraine on the Group's business and operations in the short and medium-term. Management is preparing itself to implement such measures necessary should a decline in revenue be anticipated and to implement any further course of action as deemed applicable in the circumstances. Management and the directors continue to actively monitor all developments taking place internationally to take any action for unforeseen effects that such conflict might have on the economies and industries in which the Group operates.
War in Ukraine and its Impact on the Company In line with the Public Statement issued by the European Securities and Markets Authority ('ESMA') on 14 March 2022 concerning the disclosure of information by the Company to the market on matters arising from or connected to the War in Ukraine (hereinafter the 'War'), the Company notes that to date its exposure to the effects of War has been of limited or negligible effect. The Company, and indeed the Group as a whole, however are not immune to the likely long-term effects that the War will have on all markets in a generic sense, as described in the preceding section of this report . Following the current raft of sanctions implemented by the member states of the European Union, the Group has assessed the effect these may have on the servicing or b erthing of vessels owned by specific Russian or Bel a rusian individuals. So far, the Group has not had business links with any such sanctioned individuals, nor are there currently any prospects of conducting such business. In recent days, the EU has ramped up sanctions that include a complete ban on offering porting or berthing facilities to vessels sailing under the Russian flag (or which have changed flag from a Russian one after the end of February 2022), which measure could affect the Group's revenue in the form of missed opportunities to offer quayside berthing services and yacht maintenance or servicing. The core business of the Group, however, remains firmly focused on the Mediterranean region and on business opportunities arising in that area, and not on the Ukraine or Russian region s . The economic effects of the War are therefore unlikely to be exclusively endemic to the Group, but – as has been the case with the Covid pandemic – will affect business supply chains and the costs of transport and logistics. Both the Company and the Group are monitoring the War on an ongoing basis, and should any of its effects lead to a situation that requires the publication of information to the market this will be effected promptly by means of a corresponding Company Announcement. Going Concern Statement
Pursuant to Capital Markets Rule 5.62, the Directors declare that after making enquiries, at the time of approving the financial statements, and after having considered the Group's cash flow forecast and the funds available in hand, they have determined that the Company has the needed resources to continue operating for the next twelve months. For this reason, the Directors have adopted the going concern basis in preparing the financial statements.
Results and Dividends
The results for the year ended 31 December 20 2 1 are shown in the Statement of Comprehensive Income hereof. No interim dividend was declared or paid out during the year. No final dividend is being recommended.
Statement of Directors' Responsibilities for the Financial Statements
The directors are required by the Act to prepare financial statements that give a true and fair view of the state of affairs of the Company as at the end of each reporting period and of the profit or loss for that period.
In preparing the financial statements, the directors are responsible for:
The directors are also responsible for designing, implementing and maintaining internal controls. These controls serve to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and that these statements comply with the Act. The directors are also responsible for safeguarding the assets of the Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The financial statements of Mediterranean Maritime Hub Finance p.l.c. for the year ended 31 December 20 2 1 are included in the Annual Financial Report 20 2 1, which is published in hard-copy printed form and may be made available on the Company's website. The directors are responsible for the maintenance and integrity of the Annual Financial Report on the website in view of their responsibility for the controls over, and the security of, the website. Access to information published on the Company's website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of financial statements may differ from requirements or practice in Malta.
Statement of Responsibility pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority
We confirm to the best of our knowledge:
Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their re-appointment will be proposed at the Annual General Meeting.
Signed on behalf of the Board of Directors on 27 April 2022 by Paul Abela (Director) and Angelique Abela (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.
Registered office: Mediterranean Maritime Hub Xatt il-Mollijiet Marsa Malta
27 April 2022
Corporate governance - Statement of compliance
Introduction
Pursuant to the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority, Mediterranean Maritime Hub Finance p.l.c. (the 'Issuer' or the 'Company') (a subsidiary of MMH Holdings Limited – the 'Guarantor') hereby reports on the extent to which the Company has adopted the "Code of Principles of Good Corporate Governance" (the "Code") appended to Chapter 5 of the Capital Markets Rules, as well as the measures adopted to ensure compliance with these same Principles.
The Board of Directors of the Company (the 'Board') notes that the Code does not dictate or prescribe mandatory rules but recommends principles of good practice. Nonetheless, the Board strongly maintains that the Principles are in the best interest of both shareholders as well as investors, since they ensure that the Directors adhere to internationally recognised high standards of corporate governance.
The Board recognises that in line with Capital Markets Rule 5.101, the Company is exempt from making available the information set out in Capital Markets Rules 5.97.1 to 5.97.3, 5.97.6 and 5.97.8.
Roles and responsibilities
The Board acknowledges its statutory mandate to conduct the administration and management of the Company. The Board, in fulfilling this mandate and discharging its duty of stewardship of the Company, assumes responsibility for:
The Board is also responsible for ensuring that the Company installs and operates effective internal control and management information systems and that it communicates effectively with the market.
Board of Directors
The Company has six Directors who are appointed by its ultimate principal shareholder, MMH Holdings Limited.
For the financial year ended 31 December 2021, three of the Directors, Mr Paul Abela, Mr Raymond Ciantar (until 10 th May, 2021) and Ms Angelique Abela, occupied senior executive positions within the Group. The remaining Directors, Mr Anthony Bonnici (from 10 May, 2021), Dr Michael Borg Costanzi, Mr Lino Casapinta and Mr Joshua Zammit ( until 10 May, 2021 ) serve, or have served, as non-executive and independent Directors. These Directors are each free of any business, family or other relationship with the Issuer, its controlling shareholder or the management of either.
In assessing the independence of Mr Bonnici, Dr Borg Costanzi, Mr Casapinta and Mr Zammit, due notice has been taken of Section 5.117 of the Capital Markets Rules.
The exercise of the role of the Board
The activities of the Board are exercised in a manner designed to ensure that it can effectively supervise the operations of the Company and protect the interests of bondholders, external borrowers and the shareholders.
Meetings of the Board were held as frequently as considered necessary. Individual Directors, apart from attendance at formal Board meetings, participate in other informal meetings during the year as may be required, either to assure good corporate governance, or to contribute more effectively to the decision-making process.
The Board members are notified of forthcoming meetings by the Company Secretary with the issue of an agenda and supporting documents as necessary. All agenda items were then discussed during the Board meetings held during 20 2 1.
Apart from setting the strategy and direction of the Company, the Board retains direct responsibility for approving and monitoring:
The Board does not consider necessary to institute separate committees such as the remuneration and the nomination committees, as would be appropriate in an operating company. This is largely due to the fact that the Company does not have any employees.
Risk Management and Internal Control
The Board recognises that the Company must manage a range of risks in the course of its activities and the failure to adequately manage these risks could adversely impact the business. Whilst no system can provide absolute guarantees and protection against material loss, the risk management systems are designed to give the Directors reasonable assurance that problems can be identified promptly and remedial action can be taken as appropriate.
The Board maintains sound risk management and internal control systems. It is responsible for determining the nature and extent of the risks it is willing to take in achieving its strategic objectives. The Board establishes formal and transparent arrangements to apply risk management and internal control principles, as well as maintaining an appropriate relationship with the Company's auditors.
Audit Committee
The Terms of Reference of the Audit Committee, which were approved by the Malta Financial Services Authority, are modelled on the principles set out in the Capital Markets Rules themselves. The Audit Committee assists the Board in fulfilling its supervisory and monitoring responsibility by reviewing the Group financial statements and disclosures, and monitoring the system of internal control established by management, as well as the audit process.
The Audit Committee, established by the Board, meets regularly, with a minimum of four times annually, and is currently composed of the following individuals:
· Mr Lino Casapinta (Chairman) · Mr Anthony Bonnici · Dr Michael Borg Costanzi
Mr Joshua Zammit formed part of the Audit Committee until 10 May, 202 1 when he was replaced by Mr Anthony Bonnici , who has served since that same date.
All three members are non-executive Directors. Furthermore, Mr Lino Casapinta is an independent non-executive Director of the Company who the Board considers to be competent in accounting and/or auditing in terms of the Capital Markets Rules.
The Chief Financial Officer and the Senior Executive of the Finance Function are regularly invited to attend Audit Committee meetings.
The Audit Committee held four meetings throughout 202 1. Communication with and between the Company Secretary, top level management and the Committee is ongoing and considerations that required the Committee's attention are acted upon between meetings and decided by the Members (where necessary) through electronic circulation and correspondence.
As required by the Companies Act (Chapter 386 of the Laws of Malta) and the Malta Financial Services Authority Capital Markets Rules, the financial statements of the Company are subject to annual audit by its external auditors. In addition, the non-executive Directors have direct access to the external auditors of the Company, who attend the Board meetings at which the Company's financial statements are approved. Moreover, in ensuring compliance with other statutory requirements and with continuing listing obligations, the Board is advised directly, as appropriate, by its appointed broker, legal advisor and the external auditors. Directors are entitled to seek independent professional advice at any time on any aspect of their duties and responsibilities, at the Company's expense.
The Company has formal mechanisms to monitor dealings by Directors and senior officials in the Bonds of the Company and has also put in place the appropriate mechanisms for the advance notification of such dealings.
Relations with the Market
The market is kept up to date with all relevant information, and the Company regularly publishes such information on its website to ensure consistent relations with the market.
Remuneration Statement
Pursuant to the Company's Memorandum and Articles of Association, the maximum annual aggregate emoluments that may be paid to the Directors is approved by the shareholders in General Meeting. Furthermore, the remuneration of Directors is a fixed amount per annum and does not include any variable component relating to profit sharing, share options or pension benefits.
During the year under review, the Directors received emoluments amounting in total to €50,000.
Approved by the Board.
The accompanying notes are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 27 April 2022. The financial statements were signed on behalf of the Board of Directors by Paul Abela (Director) and Angelique Abela (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements
Notes to the financial statements
1. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
1.1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of the Maltese Companies Act, 1995. They have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates. It also requires directors to exercise their judgement in the process of applying the company’s accounting policies (Note 3 - Critical accounting estimates and judgements).
Going concern assessment
As at 31 December 2021, the Company registered a profit for the year of €47,246 and net equity of €473,590 in the statement of financial position.
2021 has been challenging for the Group which was not immune to the COVID-19 pandemic. The cost cutting measures implemented during 2021 and the increase in activity in the last quarter help to mitigrate the negative impact of the pandemic.
2022 is still challenging, however activity in Oil and Gas industry is picking up and activity in the Group’s vessel care division is at its maximum capacity. A conservative approach was adopted in the preparation of the group’s 2022 cash flows. Based on such information obtained from the group, the directors have determined that the company will have the required resources to continue operations in the forthcoming twelve months. The company is expected to generate sufficient funds to meet its commitments, including the payment of interest on the 4.8% unsecured bonds which falls due on 14 th October 2022. For this reason, the Directors have adopted a going concern basis in preparing the financial statements.
Standards, interpretations and amendments to published standards effective in 2021
In 2021, the company adopted new standards, amendments and interpretations to existing standards that are mandatory for the company’s accounting period beginning on 1 January 2021. The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in substantial changes to the company’s accounting policies.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements that are mandatory for the Company's accounting periods beginning after 1 January 2022. The Company has not early adopted these revisions to the requirements of IFRSs as adopted by the EU.
The directors are of the opinion that there are no requirements that will have a significant impact on the financial statements of the company in the period of initial application.
1.2 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in euro, which is the company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis within administrative expenses.
1.3 Financial assets
Classification
The company classifies its financial assets as financial assets measured at amortised costs. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. The company classifies its financial assets as at amortised cost only if both the following criteria are met:
- The asset is held within a business model whose objective is to collect the contractual cash flows, and
- The contractual terms give rise to cash flows that are solely payments of principal and interest.
Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.
Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade date, which is the date on which the company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the company has transferred substantially all the risks and rewards of ownership.
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Interest income on debt instruments measured at amortised cost from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition of these instruments is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss. Impairment
The company assesses on a forward-looking basis the expected credit losses (ECL) associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The company’s financial assets are subject to the expected credit loss model.
Expected credit loss model
The company measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs:
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the company considers reasonable and supportable information that is relevant and available without undue cost or effort. The company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due, and it considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the company in full, without recourse by the company to actions such as realising security (if any is held); or the financial asset is more than 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the company is exposed to credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset.
At each reporting date, the company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data such as significant financial difficulty of the borrower or issuer, or a breach of contract such as a default or being more than 90 days past due.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. 1.4 Trade and other receivables
Trade receivables comprise amounts due from parent and fellow subsidiary for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Details about the company’s impairment policies and the calculation of loss allowance are provided in note 1.3.
1.5 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term which are subject to an insignificant risk of changes in value.
1.6 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.
1.7 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
Issue costs incurred in connection with the issue of the bonds include professional fees, publicity, printing, listing, registration, underwriting, management fees, selling costs and other miscellaneous costs.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
1.8 Trade and other payables
Trade payables comprise obligations to pay for services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
1.9 Financial liabilities
The company recognises a financial liability in its statement of financial position when it becomes a party to the contractual provisions of the instrument. The company’s financial liabilities are classified as financial liabilities which are not at fair value through profit or loss (classified as ‘Other liabilities’). These financial liabilities are recognised initially at fair value, being the fair value of consideration received, net of transaction costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. The company derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.
1.10 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
1.11 Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
1.12 Finance income and costs
Finance income and costs are recognised in profit or loss for all interest-bearing instruments on a time-proportion basis using the effective interest method. Finance costs include the effect of amortising any difference between net proceeds and redemption value in respect of the company’s borrowings. Finance income and costs are recognised as they accrue, unless collectability is in doubt. 2. Financial risk management
2.1 Financial risk factors
The company constitutes a financing special purpose vehicle whose bonds are matched by equivalent amounts due from loans receivable from related parties and guaranteed by MMH Holdings Limited. The company’s principal risk exposures relate to credit risk and liquidity risk. The company is not exposed to currency risk and the directors deem interest rate risk exposure to be minimal due to matching of its interest costs on borrowings with finance income from its loans receivable from related parties referred to above.
(a) Credit risk
The company measures credit risk and expected credit losses using probability of default, exposure at default and loss given default. Management consider both historical analysis and forward-looking information in determining any expected credit loss.
The company’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below. The company’s exposures to credit risk as at the end of the reporting period are analysed as follows:
The company does not hold collateral as security on its loans receivable. As disclosed in note 8, MMH Holdings Limited has issued corporate guarantees with respect to the company’s bonds. These borrowings have been loaned to MMH Holdings Limited and MMH Malta Limited through the issue of the company’s loans receivable.
The company assess on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortised cost. Management consider ‘low credit risk’ for instruments, which have a low risk of default, and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term. In case of the loans issued and related advances, the assessment takes into consideration the financial position, performance and other factors of the related parties. Management monitors intra-group credit exposures on a regular basis and ensures timely performance of these assets in the context of overall group liquidity management. The company takes cognisance of the related party relationship with these entities and management does not expect any losses from non-performance or default. The application of the expected credit risk model of IFRS 9, resulted in an immaterial loss allowance on the issuance of the loans receivable and related amounts due, and was therefore not reflected in the financial statements.
At 31 December 2021 and 2020, cash and short-term deposits are held with counterparties with a good credit rating and are due to be settled within a short period of time. Management consider the probability of default to be close to zero as the counterparties have a strong capacity to meet their contractual obligations in the near term. As a result, no loss allowance has been recognised based on 12-month expected credit losses, as any such impairment would be wholly insignificant to the company.
(b) Liquidity risk
The company is exposed to liquidity risk arising primarily from its ability to satisfy liability commitments depending on cash inflows receivable in turn from MMH Holdings Limited and MMH Malta Limited.
Management monitors liquidity risk by means of cash flow forecasts on the basis of expected cash flows over a twelve month period to ensure that no additional financing facilities are expected to be required over the coming period. This process is performed through a rigorous assessment of detailed cash flow projections of the Group headed by its parent company where matching of cash inflows and outflows arising from expected maturities of financial instruments are assessed on an annual basis.
The carrying amounts of the company’s assets and liabilities are analysed into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date in the respective notes to the financial statements.
The following tables analyse the company’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances, as the impact of discounting is not significant.
2.2 Capital risk management
The company’s bonds are guaranteed by MMH Holdings Limited. Related finance costs are also guaranteed by this company. The capital management of the company therefore consists of a process of regularly monitoring the financial position of the guarantor.
2.3 Fair values of financial instruments
At 31 December 2021 and 2020, the carrying amounts of receivables (net of loss allowance, if any) and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.
As at the end of the reporting period, the fair values of financial assets and liabilities, approximate the carrying amounts shown in the statement of financial position.
The fair value of non-current financial instruments for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.
3. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.
In the opinion of the company directors, the accounting estimates and judgements made in the course of preparing these financial statements are not difficult, subjective or complex to a degree which would warrant their description as critical in terms of the requirements of IAS 1.
4. Loans receivable from related parties
Loans receivable reflect the transfer of funds to MMH Holdings Limited and MMH Malta Limited generated by the company from its bond. These loans are repayable in 2026.
Weighted average effective interest rate as at 31 December:
5. Trade and other receivables
Amounts due from parent and fellow subsidiary are unsecured, interest-free and repayable on demand.
6. Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:
7. Share capital
8. Borrowings
The unsecured bonds are measured at the amount of the net proceeds adjusted for the amortisation of the difference between the net proceeds and the redemption value of such bonds, using the effective yield method as follows:
The interest rate exposure of the borrowings of the company was as follows:
The effective interest rates as at the end of the reporting period were as follows:
This note provides information about the contractual terms of the company’s borrowings. For more information about the company’s exposure to interest rate and liquidity risk, refer to note 2.
By virtue of an offering memorandum dated 16 September 2016, the company issued €15,000,000 bonds with a face value of €1,000 each. The bond’s interest is payable annually in arrears on 14 October. The bonds are redeemable at par and are due for redemption on 14 October 2026 but the issuer may at any time purchase Bonds in the open market or otherwise at any price. The bonds are guaranteed by MMH Holdings Limited, which has bound itself jointly and severally liable for the payment of the bonds and interest thereon, pursuant to and subject to the terms and conditions in the offering memorandum. The bonds have been admitted on the Official List of the Malta Stock Exchange on 19 October 2016. The quoted market price as at 31 December 2021 for the bonds was €103 (2020: €100). In the opinion of the directors these market prices fairly represent the fair value of these financial liabilities.
9. Trade and other payables
10. Finance income
11. Finance costs
12. Expenses by nature
Administrative expenses are classified by their nature as follows:
Auditor’s fees
Fees charged by the auditor for services rendered during the financial periods ended 31 December 2021 and 2020 relate to the following:
13. Tax expense
The tax on the company’s profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows:
At 31 December 2021, the company had an unrecognized deferred tax asset of €6,818 (2020: €40,522) arising an unabsorbed group relief that has not been recognized in these financial statements.
14. Directors’ emoluments
15. Cash used in operations
Reconciliation of profit before tax to cash used in operations:
16. Related party transactions
The company forms part of the MMH Group of Companies. All companies forming part of the MMH Group are related parties since these companies are all ultimately owned by MMH Holdings Limited. Trading transactions between these companies include items which are normally encountered in a group context. The group is ultimately fully owned by Paul Abela. Companies owned directly by Paul Abela are also considered to be related parties. The main related parties with whom transactions are entered into by the Company are MMH Malta Limited and MMH Holdings Limited, the guarantor of the borrowings (Note 8).
The following are the transactions that were carried out with related parties:
Key management personnel compensation, consisting of directors’ remuneration, has been disclosed in note 14 to the financial statements.
Year end balances arising from related party transactions are disclosed in notes 4 and 5 to the financial statements.
17. Events after the reporting period
Towards the end of February 2022, the armed conflict between the Russian Federation and Ukraine set in motion a chain of diplomatic efforts and other major geopolitical events which led several western nations, including the EU Member States and its institutions and the United States government, to impose several sanctions on the Russian Federation and Belarus. The sanctions currently in place include several restrictive measures of a direct financial nature that have a significant direct impact on the broad economy of the affected nations.
The consequences of these restrictive measures are also expected to significantly impact the economies of the countries implementing such trade restrictions, with a spill-over on the world economy, as uncertainty and market volatility remains high across all industries with increasing tensions and rhetoric on both sides. The cost of doing business is expected to rise further, compounded by the remaining effects of the Covid-induced shocks on the global economy seen in the last couple of years, as the ongoing conflict in Ukraine and Covid-related measures continue to rock global supply chains.
The Company notes that to date its exposure to the effects of War has been of limited or negligible effect. The Company, and indeed the Group as a whole, however are not immune to the likely long-term effects that the War will have on all markets in a generic sense, as described in the preceding section of this report . It is still too early to quantify the ongoing war in Ukraine on the Group's business and operations in the short and medium-term. Following the current raft of sanctions implemented by the member states of the European Union, the Group has assessed the effect these may have on the servicing or b erthing of vessels owned by specific Russian or Bel a rusian individuals. So far the Group has not had business links with any such sanctioned individuals, nor are there currently any prospects of conducting such business. In recent days, the EU has ramped up sanctions that include a complete ban on offering port or berthing facilities to vessels sailing under the Russian flag (or which have changed flag from a Russian one after the end of February 2022), which measure could affect the Group's revenue in the form of missed opportunities to offer quayside berthing services and yacht maintenance or servicing. The core business of the Group, however, remains firmly focused on the Mediterranean region and on business opportunities arising in that area, and not on the Ukraine or Russian region s . The economic effects of the War are therefore unlikely to be exclusively endemic to the Group, but – as has been the case with the Covid pandemic – will affect business supply chains and the costs of transport and logistics. Management is preparing itself to implement such measures necessary should a decline in revenue be anticipated and to implement any further course of action as deemed applicable in the circumstances. Management and the directors continue to actively monitor all developments taking place internationally to take any action for unforeseen effects that such conflict might have on the economies and industries in which the Group operates.
18. Statutory information
Mediterranean Maritime Hub Finance p.l.c. is a limited liability company and is incorporated in Malta.
The ultimate and immediate parent company of Mediterranean Maritime Hub Finance p.l.c. is MMH Holdings Limited, a company registered in Malta, with its registered address at Head Office Building, Mediterranean Maritime Hub, Xatt il-Mollijiet, Marsa.
The ultimate controlling party of MMH Holdings Limited is Mr. Paul Abela.
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Independent auditor’s report
To the Shareholders of Mediterranean Maritime Hub Finance p.l.c.
Report on the audit of the financial statements
Our opinion
In our opinion:
· The financial statements give a true and fair view of the financial position of Mediterranean Maritime Hub Finance p.l.c. (the Company) as at 31 December 2021, and of the company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and
· The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).
Mediterranean Maritime Hub Finance p.l.c.’s financial statements comprise:
· the statement of financial position as at 31 December 2021;
· the statement of comprehensive income for the year then ended;
· the statement of changes in equity for the year then ended;
· the statement of cash flows for the year then ended; and
· the notes to the financial statements, which include significant accounting policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the company are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the company, in the period from 1 January 2021 to 31 December 2021, are disclosed in note 12 to the financial statements.
Our audit approach
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· Overall materiality: €78,000, which represents 0.5% of total assets
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· Recoverability of loans issued to parent company and fellow subsidiary.
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We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which the company operates.
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Overall materiality |
€78,000 |
How we determined it |
0.5% of total assets |
Rationale for the materiality benchmark applied |
We chose total assets as the benchmark because, in our view, it is an appropriate measure for this type of entity. We chose 0.5% which is within the range of quantitative materiality thresholds that we consider acceptable. |
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €3,900 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter |
How our audit addressed the Key audit matter |
Recoverability of loans issued to parent company and fellow subsidiary
Loans and receivables include funds advanced to the parent company, MMH Holdings Limited (the Guarantor of the bonds), and a fellow subsidiary, MMH Malta Limited. Loan balances with these related parties as at 31 December 2021 amounted to €14.8 million.
As explained in accounting policy note 1.3, the recoverability of the loans is assessed at the end of each financial year.
The loans are the principal asset of the company, which is why we have given additional attention to this area. |
We have agreed the terms of these loans to supporting loan agreements.
We have assessed the financial soundness of the parent company, MMH Holdings Limited, which is also the guarantor of the company’s bonds, and that of the fellow subsidiary, MMH Malta Limited. In doing this, we referred to the latest audited financial statements, management accounts, cash flow projections, forecasts, and other prospective information made available to us.
Based on evidence and explanations obtained, we concur with management’s view with respect to the recoverability of these loans. |
Other information
The directors are responsible for the other information. The other information comprises the Directors’ report and the Corporate governance – Statement of compliance (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the company’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
· Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern. In particular, it is difficult to evaluate all of the potential implications that COVID-19 will have on the company and the disruption to its business and the overall economy.
· Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (“the ESEF Directive 6”) on the Annual Financial Report of Mediterranean Maritime Hub Finance p.l.c. for the year ended 31 December 2021, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the financial statements, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the financial statements, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
· Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report in XHTML format.
· Examining whether the Annual Financial Report has been prepared in XHTML format.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2021 has been prepared in XHTML format in all material respects.
Other reporting requirements
The Annual Financial Report and Financial Statements 2021 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.
The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.
Area of the Annual Financial Report and Financial Statements 2021 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
Directors’ report The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. |
We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.
In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements. |
In our opinion: · the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and · the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
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Corporate governance - Statement of compliance The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.
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We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.
We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate governance procedures or its risk and control procedures. |
In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
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Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion: · adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us. · the financial statements are not in agreement with the accounting records and returns. · we have not received all the information and explanations which, to the best of our knowledge and belief, we require for our audit.
We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. |
We have nothing to report to you in respect of these responsibilities. |
Our report, including the opinions, has been prepared for and only for the Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the Company on 26 July 2016. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of six years.
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
Stefan Bonello
Partner
27 April 2022