MERCURY PROJECTS FINANCE P.L.C.
ANNUAL REPORT AND
FINANCIAL STATEMENTS
31 DECEMBER 2021
Company Reg. No. C 89117
MERCURY PROJECTS FINANCE P.L.C.
ANNUAL REPORT AND FINANCIAL STATEMENTS
31 DECEMBER 2021
Page
Annual Report:
General Information
1
Directors’ Report
2
Corporate Governance
–
Statement of Compliance
6
Financial Statements:
Statement of Comprehensive Income
9
Statement of Financial Position
1
0
Sta
tement of Changes in Equity
1
1
Statement of Cash Flows
1
2
Notes to the Financial Statements
1
3
Independent Auditors’ Report
2
9
1
MERCURY PROJECTS FINANCE P.L.C.
GENERAL INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2021
Board of Directors:
Mr.
J
oseph Portelli
Mr. Peter Portelli
Mr. Stephen Muscat
Mr. Mario Vella
Company Secretary:
Dr. Joseph Saliba
Company Registration Number:
C 89117
Registered Office:
1400, Block 14
Portomaso
St
.
J
ulians
STJ 4014
Malta
Bankers:
Bank
of Valletta Plc
102, Republic Street
Victoria VCT 1017
G
ozo
Legal Advisor:
Saliba
St
afra
ce Legal
9/4
,
Britannia
House
Old Bakery Street
Valletta VLT 1450
Malta
Auditors:
Baker Tilly
M
alta
Level 5
Rosa Marina Building
216
Marina
Seafront
Pieta
’
PTA 9041
Malta
2
MERCURY PROJECTS FINANCE P.L.C.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present herewith their annual report together with the audited financial statements of Mercury Projects
Finance P.L.C. (the “Company”) for the year ended 31 December 2021. The directors have prepared the report in
accordance with Article 177 of the Malta Companies Act (Cap 386) including the further provisions as set out in the
Sixth Schedule to the Act.
Principal Activities
The principal activities of the Company consist in acting as a finance and investment vehicle of the Guarantor and Parent
Company, namely Mercury Towers Ltd.
On 4 March 2019, the Company issued € 11,500,000 3.75% secured bonds maturing in 2027 (Series I Bonds) and a
further € 11,000,000 4.25% secured bonds maturing in 2031 (Series II Bonds). Both bonds were issued at a nominal
value of € 100 per bond. These bonds were admitted to the official list of the Malta Stock Exchange with effect from
29 March 2019 and trading in the bonds commenced on 5 April 2019.
In accordance with the provisions of the Prospectus dated 4 March 2019, the proceeds from the bond issue have been
advanced by way of a loan facility to the Guarantor and Parent company, for the purpose of refinancing existing bank
loans and for the construction and finishing of project elements at the Mercury site in St. Julian’s, which project is owned
by the Guarantor.
On 22 March 2022, the Malta Financial Services Authority approved the issuance of € 50,000,000 4.3% secured bonds to
mature in 2032. On 14
April 2022, the bond was fully subscribed and the proceeds from this bond issue will be advanced
by way of another loan facility to the Guarantor and Parent company, for the purpose of construction and finishing of the
hotel at the Mercury Tower Project and for general corporate funding.
Review of Business
During the year under review, interest income on loans receivable from the parent company amounted to € 1,120,829
(2020: € 1,120,829). After accounting for interest payable on the Company’s borrowings and administrative costs, the
Company registered a profit before taxation amounting to € 142,688 (2020: € 141,655). The Company's financial
position is dependent on the Parent company’s ongoing obligation to pay the annual interest on loans granted which
serves as the primary income to pay out the annual interest on the public bonds, as well as in future years, in paying back
the principal on loan maturity, which proceeds will be used to repay the Bonds to the bondholders, the Guarantor offers
the maximum support to the company, through the strength of its Balance Sheet. The Company’s balance sheet is
primarily made up of the bond issues for € 22.5 million and corresponding loans to the Guarantor amounting to € 22.44
million. The Company’s equity as at the end of the financial period amounted to € 420,137 (2020: € 351,311).
Key Risks
The key risks associated with the Company and the Guarantor as parent and operating company, are currently those
associated with the exposure to the real estate development market, and eventually to an array of competitive pressures in
the operation and management of the hospitality, accommodation and commercial rental markets in Malta. The full list
of all the key risks listed in both the Prospectus for the 2019 bond issue and that of the 2022 prospective bond issue are
still applicable to the Company and the Guarantor.
3
MERCURY PROJECTS FINANCE P.L.C.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Guarantor and Group’s Performance for 2021 and Prospects for 2022
During the current year, the Guarantor acquired the adjacent land on which the second phase of the project will be
constructed. The development permit was approved on 17 December 2020 and became executable as of 22 April 2021.
Works on the development continued progressing within the constraints of the pandemic. The Guarantor continued to
sign new preliminary agreements although only a few contracts were signed during the financial year under review as
construction of the floors of the tower were completed during the previous year. Furthermore, the second phase of
construction was still in its early stages. The Guarantor’s equity at the end of the year was bolstered following an
increase in share capital effected during the year.
By the time of issue of these financial statements, the tower forming part of the Guarantor’s project was completed in
shell form. Finishing of this tower is in its advanced stages and is expected to be completed by the end of 2022.
Following the revised permit, this tower now consists of a 34-storey building above ground which twists on itself at
levels 10, 11 and 12 and which was perhaps the most difficult engineering structure of the entire project.
The project has proceeded without any major interruptions during the most challenging months of COVID-19 and is now
entering the second stage which involves the finishing of the tower. The peripheral block which forms part of the second
phase of the development is still under construction.
To date the funding of this project is mainly emanating from proceeds of units sold which stand at 94% of total units for
sale after the approval of the additional floors for the tower and 65% of total units for sale of the peripheral block.
Property to be retained by the Guarantor is funded from the bonds issued by the Company. Furthermore, the Guarantor
enjoys a number of bank relationships which provide bridge financing from time to time that supplement the funding
from such bonds as and when required.
During the year under review the Guarantor entered into a promise of sale agreement for the acquisition of a further 68%
of Mercury Car Park Ltd. from Bersella Holdings Ltd., the company owning the car park during the first phase of the
development. This strategic re-acquisition was concluded for a price of € 9 million, thus increasing the shareholding of
the Guarantor in Mercury Car Park Ltd. to 93%.
COVID-19
The coronavirus 2019 (COVID-19) pandemic continues affecting economic and financial markets, and virtually all
industries are facing challenges associated with the economic conditions resulting from efforts to address it.
The directors have assessed the effect of the COVID-19 on the Company’s and the Group’s operations and the directors
noted that the Group has been able to continue operating through the prevalent market conditions without significant
disruptions to date, although some increases in costs were noted, and more specifically on steel and aluminum.
However, the Group has managed to fix and secure prices of the main supplies required, thus mitigating the risk of future
increases in prices. Furthermore, though the future business environment may differ from management’s assessment, the
directors believe that the impact of such position is not at present substantially affected by these risks, although during
this period of uncertainty, the project encountered some setbacks due to impositions of certain conditions resulting from
the Coronavirus pandemic. The delays experienced will not influence the overall financial viability of the project.
Russia – Ukraine Conflict
Conflicts between countries will always have a negative effect both economically and globally. The increased
challenges brought about by this situation cannot be ignored. It is noted that there is no reliance on the region for
supplies of construction materials and that the Group has, till now, not been impacted by sanctions on Russian nationals.
The Group continues monitoring the situation as it evolves.
4
MERCURY PROJECTS FINANCE P.L.C.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Results, Dividends and Reserves
The results for the year and the movement on the reserves are as set out on pages 9 and 11 of the financial statements
respectively. No dividends were recommended or paid during the year. The directors do not recommend the distribution
of any final dividends.
Directors
The directors listed on page 1 served in office throughout the year. In accordance with the Company's Articles of
Association, the directors at date of this report offer themselves for re-election.
Statement of Directors’ Responsibilities for the Financial Statements
The Companies Act, 1995 (Chapter 386, Laws of Malta) (the “Act”) requires the directors to prepare financial statements
for each financial period which give a true and fair view of the financial position of the Company as at the end of the
financial period and of the profit or loss of the Company for that period in accordance with the requirements of
International Financial Reporting Standards as adopted by the EU.
In preparing these financial statements, the directors are required to:
adopt the going concern basis unless it is inappropriate to presume that the Company will continue in business;
select suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable and prudent;
account for income and charges relating to the accounting period on the accruals basis;
value separately the components of asset and liability items; and
report comparative figures corresponding to those of the preceding accounting period.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time
the financial position of the Company and to enable them to ensure that the financial statements comply with the
Companies Act (Cap. 386) enacted in Malta. This responsibility includes designing, implementing and maintaining such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error. The directors are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of Responsibility pursuant to the Listing Rules issued by the Listing Authority
The directors confirm that, to the best of their knowledge:
The financial statements give a true and fair view of the financial position of the Company as at 31 December
2021 and of the financial performance and the cash flows for the year then ended in accordance with International
Financial Reporting Standards as adopted by the EU; and
The Annual Report includes a fair review of the development and performance of the business and the position of
the Company, together with its principal risks and uncertainties that the Company and the Guarantor face.
5
MERCURY PROJECTS FINANCE P.L.C.
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
Going Concern Statement pursuant to Listing Rule 5.62
After making enquires, the directors, at the time of approving the financial statements, have determined that it is
reasonable to assume that the Company has adequate resources to continue operating for the foreseeable future. For this
reason, the directors have adopted the going concern basis in preparing the financial statements.
Post Balance Sheet Event
On 24 March 2022, the Company announced the issuance of a further € 50,000,000 secured Bonds maturing in 2032
with a nominal value of € 100 per Bond, issued at par, and with an annual interest of 4.3% per annum.
The Prospectus was published for circulation on the 24 March 2022 and the said Bonds were available for subscription
on 1 April 2022. The fully subscribed new Bonds are expected to be admitted for listing and trading on the Malta Stock
Exchange by the end of the month.
Auditors
Baker Tilly Malta have intimated their willingness to continue in office. A proposal to reappoint Baker Tilly Malta as
auditors of the Company will be put to the General Meeting.
Approved by the Board of Directors on 21 April 2022 and signed on its behalf by:
Mr. Peter Portelli Mr. Mario Vella
Director Director
6
MERCURY PROJECTS FINANCE P.L.C.
CORPORATE GOVERANCE – STATEMENT OF COMPLIANCE
Introduction
Pursuant to the requirements of the Listing Rules issued by the Listing Authority of the Malta Financial Services
Authority, Mercury Projects Finance P.L.C. (the ‘Issuer’ or the ‘Company’) as a wholly owned subsidiary of Mercury
Towers Ltd., (the ‘Guarantor’), hereby reports on the extent to which the Company has adopted the ‘Code of Principles
of Good Corporate Governance’ appended to Chapter 5 of the Listing Rules as well as the measure adopted to ensure
compliance with the same Principles.
The Board of Directors of the Company notes that the Code does not dictate or prescribe mandatory rules but
recommends principles of good governance. Nevertheless, the Board strongly maintains that the Principles are in the best
interest of both the shareholders and investors, since they ensure that the directors adhere to internationally recognised
high standards of corporate governance.
The Board recognises that in line with Listing Rule 5.101, the Company is exempt from making available the
information set out in Listing Rules 5.97.1 to 5.97.3; 5.97.6 and 5.97.8
The Guarantor
The Guarantor, Mercury Towers Ltd., is a private company and, accordingly, is not bound by the provisions of the Code
set out in the Prospects Rules of the Malta Stock Exchange. While the Guarantor is not required to adopt the provision of
the Code, the Audit Committee, which is set up at the level of the Company, has been specifically tasked with keeping a
watchful brief over the performance of the Guarantor and other related Companies.
Compliance with the Code
The Board of Directors (the "Board") of Mercury Projects Finance P.L.C. (the "Company") believes in the adoption of
the Code and has endorsed them except where the size and/or particular circumstances of the Company are deemed by
the Board not to warrant the implementation of specific recommendations. In this context, it is relevant to note that the
Company has issued bonds to the public and has no employees. Accordingly, some of the provisions of the Code are not
applicable whilst others are applicable to a limited extent.
Roles and Responsibilities of the Board
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 Company’s strategy and decisions with respect to the issue, servicing and repayment of the Bonds
Monitoring that its operations are in conformity with its commitments towards the bondholders, shareholders,
other external financiers and all relevant laws and regulations.
The Board is responsible for ensuring that the Company installs and operates effective internal controls and management
information systems and that it communicates effectively with the market.
The Board of Directors
The Board of directors is made up of four directors who were appointed by the ultimate principal shareholder,
Mr. Joseph Portelli.
During the financial year ended 31 December 2021, Mr. Joseph Portelli occupied a senior position within the Mercury
Group of Companies. The remaining directors, namely Mr. Mario Vella, Mr. Stephen Muscat and Mr. Peter Portelli, who
were all appointed from the date of Company registration, act as non-executive and independent directors. Since they are
each free of any business, family or other relationship with the Issuer and its ultimate beneficial shareholder, there are no
conflicts of interest such as to impair their judgement.
7
MERCURY PROJECTS FINANCE P.L.C.
CORPORATE GOVERANCE – STATEMENT OF COMPLIANCE
The Role of the Board of Directors
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 the bondholders and shareholders.
The Board met eight times during the year ended 31 December 2021 and all members attended the said meetings. The
Board members are notified of forthcoming meetings by the Company Secretary with the issue of an agenda and
supporting documents as necessary, which are then discussed during the Board meetings.
Apart from setting out the strategy and direction of the Company, the Board retains direct responsibility for approving
and monitoring:
direct supervision, supported by expert professional advice as appropriate, on the issue and listing of the Bonds;
that the proceeds of the Bonds are applied for the purposes specified in the Offering Memorandum of the Bonds
in issue;
proper authorisation of the resources of the Conmpany;
approval of the annual report and financial statements and the relevant public announcements and for the
Company’s compliance with its continuing listing obligations.
The Board did not consider it necessary to set up a separate remuneration and nominations committee, as it does not have
any employees. However, it did set up an Audit Committee.
The Audit Committee
The Audit Committee established by the Board meets regularly, with a minimum of four times annually, is currently
composed of the following:
Mr. Stephen Muscat (Chairman)
Mr. Mario Vella
Mr. Peter Portelli
All three directors are non-executive and independent. In assessing independence of the three Board members, due notice
has been taken of Section 5.117 of the Listing Rules. Furthermore, Mr. Stephen Muscat is the independent non-executive
director who the Board considers to be competent in accounting and/or auditing in terms of the Listing Rules.
The chief financial officer and other key management officials are regularly invited to attend the Audit Committee
meetings.
The Audit Committee met four times throughout the year ended 31 December 2021. Communication with and between
the Company Secretary and top management is ongoing and considerations that require the Committee’s attention are
acted upon between meetings and decided by the members through electronic circulation and correspondence.
As required by the Companies Act (Cap 386 of the Laws of Malta), and the Malta Financial Services Authority Listing
Rules, the financial statements of the Company are subject to an annual audit by its external auditors. The non-executive
directors have direct access to the external auditors of the Company, who attend the Board meetings at which the
financial statements are approved. In ensuring compliance with other statutory requirements and with continuing listing
obligations, the Board is advised directly, as appropriate, by the appointed broker, legal advisor and the external auditors.
Board members are entitled to seek independent professional advice at any time on any aspect of their duties and
responsibilities, at the Company expense.
The Company has formal mechanisms to monitor dealings by the directors and senior officials in the bonds of the
Company and has put in place appropriate measures for the advance notification of such dealings.
8
MERCURY PROJECTS FINANCE P.L.C.
CORPORATE GOVERANCE – STATEMENT OF COMPLIANCE
Relations with the Market
The market is kept up to date with all relevant information by publishing relevant 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 remuneration that
may be paid to the directors is approved by the shareholders in General Meeting. The remuneration 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, the directors received emoluments amounting to € 45,000 (2020: € 45,000). No remuneration was paid
to the executive director.
Conclusion
The Board considers that the Company has generally been in compliance with the principles throughout the year under
review as befits a company of its size and nature.
Approved by the Board of Directors on 21 April 2022 and signed on its behalf by:
Mr. Peter Portelli Mr. Mario Vella
Director Director
9
MERCURY PROJECTS FINANCE P.L.C.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
The notes on pages 13 to 27 form an integral part of these financial statements.
2021
2020
Note
Euro
Euro
Finance Income
4
1,120,829
1,120,829
Financ
e
Cos
t
5
(898,750)
(
898,750
)
--------------
-
-
----
--------
Net Interest Income
222,079
222,07
9
Administrative Overheads
(79,391)
(
80,423
)
--------------
--------------
Operating Profit
6
142,688
141,655
--------------
--------------
Profit before Taxation
142,688
141,655
Tax Expense
7
(73,862)
(
74,253
)
--------------
--------------
Profit for the Year
68,826
67,402
----
----------
----
----------
Total Comprehensive Income for the Year
68,826
67,40
2
==
====
==
======
==
Earnings Per Share
8
0.2753
0.
2696
======
==
========
10
MERCURY PROJECTS FINANCE P.L.C.
STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2021
The notes on pages 13 to 27 form an integral part of these financial statements.
The financial statements on pages 9 to 27 were approved and authorised for issue by the Board of Directors on 21 April 2022 and
signed on its behalf by:
Mr. Peter Portelli Mr. Mario Vella
Director Director
2021
2020
Note
Euro
Eu
ro
ASSETS
Interest Bearing Receivables
9
22,444,358
22,444,358
----
----------
----
----------
Total Non-Current Assets
22,444,358
22,444,358
--------------
--------------
Other Recei
vab
l
e
s
10
1,211,295
1,047,198
Cash and Cash E
q
uiva
lents
1
1
32,727
141,888
--------------
-------------
-
Total Current Assets
1,244,022
1,
189,086
--------------
---
-------
---
-
Total Assets 23,688,380
23,
633,4
4
4
===
=====
===
=====
EQUITY
Share Capital
1
2
250,000
2
5
0,00
0
Retained Earnings
170,137
10
1,311
--------------
--------------
Total Equity
420,137
3
51
,
311
--------------
--
-------
---
--
LIABILITIES
Interest Bearing Borrowings
1
3
22,500,000
22,500
,000
--------------
----
----------
Total Non-Current Liabilities
22,500,000
22,50
0,000
--------------
--------------
Other Payables
1
4
703,535
707
,
880
T
ax
ati
on Paya
ble
7
64,708
74
,45
3
--------------
--------------
Total Current Liabilities
768,243
7
8
2,133
--------------
-------
-
----
--
Total Liabilities
23,268,243
23,28
2,133
--------------
--------------
Total Equity and Liabilities
23,688,380
23,
633,44
4
===
=====
=
=======
11
MERCURY PROJECTS FINANCE P.L.C.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
Share Retained
Total Capital Earnings
Euro Euro Euro
Balance at 1 January 2021 351,311 250,000 101,311
Comprehensive Income for the Year
Profit for the
Year
68,826
-
68,826
--------
------
--------------
--------------
Balance at 31 December 2021
420,137 250,000 170,137
========
==
==
==
==
========
Balance at 1 January 2020
283,909
250,000
33,909
Comprehensive Income for the Year
Profit for t
h
e
Year
67,402
-
67,402
--------
------
--------------
--------------
Balance at 31 December 2020
35
1,311
250,000
101,311
========
========
========
The notes on pages 13 to 27 form an integral part of these financial statements.
12
MERCURY PROJECTS FINANCE P.L.C.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
2021
2020
Note
Euro
Euro
Cash Flows from Operating Activities
Profit
for the
Year
68,826
67,402
Adjustments
for:
Income Tax Ex
pense
73,862
74,
25
3
------
----
----
----------
----
142,688
141,655
Changes in
Accrued
Finance Income
-
(
75,156
)
Other
Receivables
(1)
-
Other
P
ayables
(4,345)
8,41
2
---
-------
----
--------------
Cash Generated from Operations
138,342
74,9
11
T
a
xation
Paid
(83,407)
(44,389)
----------
----
--------------
Net Cash from Operating Activities
54,935
30,522
----------
----
--------------
Cash Flows from Financing Activities
Movem
ent on
Parent Company Acc
ount
(164,096)
(145,716)
----------
----
-
-------
--
----
Net Cash used in Financing Activities
(164,096)
(145,716)
----------
----
-
-------------
Net Movement in Cash and Cash Equivalents
(109,161)
(115,194)
Cash a
n
d Cash Equivalent
s at Beginning of
Year
141,888
257,082
-
-
-------
-
----
--------------
Cash and Cash Equivalents at End of Year
1
1
32,727
141,888
========
=
=====
==
The notes on pages 13 to 27 form an integral part of these financial statements.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
13
1. Reporting Entity
Mercury Projects Finance P.L.C. (the “Company”) is a limited liability company domiciled and incorporated in
Malta. The Company’s registered office is at 1400, Block 14, Portomaso, St. Julians STJ 4014, Malta.
The principal activity of the Company is to act as a finance vehicle to the parent company, namely Mercury
Towers Ltd. (the “Parent” and the “Guarantor”), which company owns all the shares but one of the issued and
paid up capital of the Company.
2. Basis of Preparation
2.1 Statement of Compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards as
adopted by the EU (“the applicable framework”), which standards were issued by the International Accounting
Standards Board (IASB). All references in these financial statements to IAS, IFRS or SIC/IFRIC
interpretations refer to those adopted by the EU. They have also been drawn up in accordance with the
provisions of the Companies Act, 1995 (Chapter 386, Laws of Malta), to the extent that such provisions do not
conflict with the applicable framework.
2.2 Basis of Measurement
The financial statements have been prepared on the historical cost basis.
2.3 Going Concern Basis
During the financial period ended 31 December 2019, the Company issued € 11,500,000 3.75% Secured Bonds
of € 100 each maturing 2027, and a further € 11,000,000 4.25% Secured Bonds of € 100 each maturing 2031.
The net proceeds were advanced as two loans to the parent company, namely Mercury Towers Ltd.
On 22 March 2022, the Malta Financial Services Authority approved the issuance of € 50,000,000 4.3%
secured bonds to mature in 2032. On 14 April 2022, the bond was fully subscribed and the proceeds from this
bond issue will be advanced by way of another loan facility to the Guarantor and Parent company, namely
Mercury Towers Ltd. With the loan from the new bond proceeds, the Guarantor has secured the funding
necessary for the completion of the Mercury Towers Project in line with the development permits held.
The ability of the Company to meet its obligations both in terms of servicing its debt and ultimately repaying
the bond holders on the redemption date, is dependent on the ability of Mercury Towers Ltd., as Guarantor, to
meet its obligations towards the Company. The directors are satisfied that the Company has sufficient funds in
order to meet its commitments in the foreseeable future and it is therefore appropriate to adopt the going
concern assumption in the preparation of these financial statements.
2.4 Functional and Presentation Currency
These financial statements are presented in Euro (€), which is the Company’s functional currency.
2.5 Use of Estimates and Judgements
The preparation of financial statements in conformity with IFRSs requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the year in which the estimates are revised and in any future years affected.
In the opinion of the directors, the accounting estimates and judgments made in the course of preparing these
financial statements are not difficult to reach, subjective or complex to a degree which would warrant their
description as significant and critical in terms of the requirements of IAS 1 (revised).
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
14
2. Basis of Preparation (Contd.)
2.6 Measurement of Fair Values
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in
the valuation techniques as follows:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3: inputs for the asset or liability that are not based on observable market data.
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
2.7 New Standards and Interpretations Not Yet Adopted
A number of amended standards became applicable for the current period and have been applied as necessary.
The impact of the adoption of these revisions on the Company’s accounting policies and on the financial
results are insignificant.
Certain new standards, amendments and interpretations to existing standards have been published by the date
of the authorisation for issue of these audited financial statements but are not mandatory for the Company’s
accounting period starting 1 January 2021. The Company may early adopt these revisions to the requirements
of IFRSs as adopted by the EU. The Company’s directors are of the opinion that there are no requirements that
will have a significant impact on the financial statements in the period of initial application.
3. Significant Accounting Policies
The accounting policies set out below have been applied throughout the year presented in these financial
statements.
3.1 Foreign Currency Transactions
Transactions in foreign currencies are translated to the Company’s functional currency at exchange rates at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting
date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or
loss on monetary items is the difference between amortised cost in the functional currency at the beginning of
the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign
currency translated at the exchange rate at the end of the year. Foreign currency differences arising on
retranslation are recognised in profit or loss.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
15
3. Significant Accounting Policies (Contd.)
3.2 Revenue
Finance Income
Finance income comprises interest receivable on loans advanced in the ordinary course of business. Interest
receivable is recognised in the income statement on the date of the Company’s right to receive payment is
established.
3.3 Finance Costs
Finance costs represent interest payable on the bonds in issue as set out in the notes to these financial
statements. Finance costs are recognised as an expense in profit and loss as these accrue, using the effective
interest method.
3.4 Bond Issue Costs
Bond issue costs representing fees incurred in connection with the issuance of the bonds by the Company were
recharged to the parent company as the beneficiary of the funding.
3.5 Loans Receivable
Debt instruments representing financial assets where the contractual cash flows are solely principal and interest
and the objective of the Company’s business model is achieved both by collecting contractual cash flows and
where these give rise to cash flows that are solely payments of principal and interest on the principal amounts
outstanding are measured at amortised cost using the effective interest method, less any impairment losses.
On derecognition, impairment or disposal of debt instruments, any gains or losses are recognised within the
profit or loss.
3.6 Receivables
Receivables are recognised initially at the amount of consideration that is unconditional, unless they contain
significant financing components when they are recognised at fair value. They are subsequently measured at
amortised cost using the effective interest method, less expected credit losses.
Receivables are written off or impaired where there is no reasonable expectation of recovery. Indictors that
there is no reasonable expectation of recovery include, amongst others, the failure by the debtor to abide by the
credit terms or failure to engage in a repayment programme with the Company for the settlement of amounts
due.
Impairment losses on trade receivables are presented as net expected credit losses within operating profit.
Subsequent recoveries of amounts previously written off or provided for are credited against the same line
item.
3.7 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, deposits at call with financial institutions, other short-term
liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
16
3. Significant Accounting Policies (Contd.)
3.8 Impairment of Financial Assets
The Company recognises loss allowances for Expected Credit Losses (ECLs) on financial assets at amortised
cost, namely loans due by related parties, other receivables and cash at bank.
The Company measures loss allowances at an amount equal to lifetime ECLs, except for the following, which
are measured at 12-month ECLs:
debt securities that are determined to have low credit risk at the reporting date; and
other debt securities and bank balances for which credit plan (i.e., the risk of default occurring over the
expected life of the financial instrument) has not increased significantly since initial recognition.
The Company measures loss allowances for trade receivables without a significant financing component and
contract assets at an amount equal to lifetime 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. This includes both quantitative and qualitative information
and analysis, based on the Company’s historical experience and informed credit assessment and including
forward-looking information.
The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30
days past due.
The Company 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.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and
the cash flows that the Company expects to receive).
ECLs are discounted at the effective interest rate of the financial asset. In the case of interest-free short-term
financial assets, such as trade receivables, ECLs are not discounted.
Credit-impaired financial assets
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.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
17
3. Significant Accounting Policies (Contd.)
3.8 Impairment of Financial Assets (Contd.)
Evidence that a financial asset is credit-impaired includes the following observable data:
significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or being more than 90 days past due;
the restructuring of a loan or advance by the Company on terms that the Company would not consider
otherwise;
it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for a security because of financial difficulties.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount
of the assets. Impairment losses related to trade and other receivables, including contract assets, are presented
separately in the statement of comprehensive income.
Write-off
The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations
of recovering a financial asset in its entirety or a portion thereof. The Company individually makes an
assessment with respect to the timing and amount of write-off on its financial assets based on whether there is a
reasonable expectation of recovery and with reference to its historical experience of recoveries.
The Company expects no significant recovery from the amount written off. However, financial assets that are
written off could still be subject to enforcement activities in order to comply with the Company’s procedures
for recovery of amounts due.
3.9 Borrowings
Borrowing costs are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised as profit or loss in the statement of comprehensive income over the period of
borrowings using the effective interest rate method. Borrowings are classified as current liabilities unless there
is an unconditional right to defer settlement of the liability for at least one year after the reporting date.
3.10 Other Payables
Other payables comprise obligations to pay for goods and 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. If not, they are presented as non-current liabilities. The carrying amount of trade and
other payables are considered to be the same as their fair values due to their short-term nature.
3.11 Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probably that an outflow of economic benefit will be required
to settle the obligation.
3.12 Share Capital
Ordinary shares are classified as equity.
3.13 Earnings per Share
The Company presents basic earnings per share (EPS) data for ordinary shares. Basic EPS is calculated by
dividing the profit or loss attributable to the ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding at year end.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
18
3. Significant Accounting Policies (Contd.)
3.14 Tax
Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss
except to the extent that it relates to items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for:
(a) temporary differences on the initial recognition of assets or liabilities in a transaction that is not a
business combination and that affects neither accounting nor taxable profit or loss; and
(b) temporary differences relating to investments in subsidiaries, associates and jointly controlled entities to
the extent that it is probable that they will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities
are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes
levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
4. Finance Income
2021
2020
Euro
Euro
Int
erest Recei
vable o
n Parent C
ompany Loans
1,120,829
1,120,
829
========
========
5. Finance Costs
2021
2020
Euro
Euro
Bond Interest E
xpens
e
898,750
898,750
==
=====
=
=
=======
6. Operating Profit
The results from operating activities are stated after charging the following:
2021
2020
Euro
Euro
Auditors' Remune
ration
(inclusive of VAT)
7,080
7,080
Director
s' Remu
ne
ration
45,000
45,000
========
=
======
=
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
19
6.1 Employee Information
The Company did not have any persons employed with it during the accounting year.
7. Tax Expense
2021
2020
Euro
Euro
Current Ta
x E
xpense
73,862
74,253
---
---------
--
---
-
----------
Total Tax Charge
73,862
7
4,253
====
=
===
=====
=
==
7.1 Reconciliation of Effective Tax Rate
The tax expense and the result of the accounting profit multiplied by the applicable tax rate in Malta, the
Company’s country of incorporation, are reconciled as follows:
2021
2020
Euro
Euro
Profit before Taxation
142,688
141,655
========
=====
===
Tax Using the Company’s Domestic Tax R
ate of 35
%
49,941
49,579
Tax Effect of Non
-
Allowable E
xpenses
23,921
24,674
---
--
-------
--
---
-
----------
Tax Expense for the Year 73,862
74,253
======
==
========
7.2 Tax Liability
The liability for taxation is made up as follows:
Euro Euro
Balance
Brought
F
orward
74,253
Settlement Tax Paid
(
65,375
)
-
---
--
--------
8,878
Year of Assessment
202
2
–
Provision
73,862
–
Prov
isional
Tax Paid
(
18,032)
-
------
-------
55,830
-
------
-------
Taxation Due
64,708
========
7.3 Deferred Taxation
No account for deferred taxation has been recognised in these financial statements as there were no losses or
temporary differences which gave rise to deferred tax assets or liabilities.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
20
8. Earnings per Share
Basic earnings per share is based on the profit attributable to the shareholders of Mercury Projects Finance
P.L.C. divided by the number of shares in issue at the year-end.
9. Interest Bearing Receivables
2021
2020
Euro
Euro
Non-Current:
Loan Advanced to Parent Company
11,500,000
11,500,000
Loan Advanced
to Pa
rent Company
10,944,358
1
0,944,358
--------------
--------------
Total Interest Bearing Receivables 22,444,358
2
2,
4
44,358
======== ========
9.1 The loan receivable of € 11,500,000 is subject to an annual interest rate of 4.75% and is receivable by March
2027, whilst the loan receivable of € 10,944,358 is subject to interest at the annual rate of 5.25% and is
receivable by March 2031. Both loans are secured by immoveable property held by the parent company. The
loan balances include costs amounting to € 394,352 incurred by the Company in connection with the Bond
Issues in view that the said costs were exclusively incurred to finance the operations of the Guarantor. The
carrying value of loans advanced classified as interest bearing receivables and measured at amortised cost,
approximates the fair value.
9.2 No provision for Expected Credit Losses was made in the financial statements as both loans are secured over
immovable property held by the Guarantor. The directors have therefore assessed that the Probability of
Default and Loss Given Default are non-existent.
10. Other Receivables
2021
2020
Euro
Euro
Accrued Intere
st on Loans Re
ceivable fr
om
Pa
r
ent Company
899,734
899,734
Pr
epayments
3,070
3,0
69
Amount
s
du
e from Pa
rent
Company
308,491
144,39
5
-
-------------
-
-------------
1,211,295
1,047,198
=
=======
=
=
=
=
=
===
10.1 The accrued interest on loans receivable due from the Guarantor and Parent Company are due for payment on
the anniversary of when the loans were advanced by the Company in terms with conditions listed in the
Company’s Prospectus.
10.2 The amounts due from the parent company are unsecured, interest free and repayable on demand.
10.3 The Company’s exposure to credit risk related to other receivables is disclosed in Note 16.3. No provision for
Expected Credit Losses was considered necessary on the above balance due from the parent company, as the
parent company is acting as Guarantor and is financially solid. The directors have therefore assessed that the
Probability of Default and Loss Given Default are non-existent.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
21
11. Cash and Cash Equivalents
2021
202
0
Euro
Euro
B
ank B
alances
32,727
141,
888
--------------
----------
----
Cash and Cash Equivalents
32,727
141,888
===
=====
========
12. Share Capital
2021
2020
Euro
Euro
Authorised
500,000
Ordinary Sh
ares of
€
1
e
ach
500,000
500,000
========
========
Issued and Fully Paid Up
250,000
Ordinary
Share
s
of
€
1
each
250,000
250,000
========
====
====
The holders of the Ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company.
13. Interest Bearing Borrowings
2021
20
20
Euro
Euro
Non-Current:
3.75%
Series I Bonds 2027
11,500,000
11,500,000
4.
25
%
Series II Bonds 2031
11,000,000
11,
000,000
-
----------
--
-
--------
------
Total Interest Bearing Borrowings
22,500,000
22,500,000
========
======
==
13.1 The Bonds are secured by a first general hypothec on a number of specific areas within the Mercury Towers
project of the parent company, Mercury Towers Ltd., for an amount of € 24,310,965.
14. Other Payables
2021
2020
Euro
Euro
Accrued Interest on Borrowings
689,452
689,452
Othe
r
Payables
4,202
9
,
628
Accrued E
xpenses
9,881
8,
800
--------
----
--
--------
----
--
703,535
700,
880
====
====
========
14.1 The carrying value of other payables classified as financial liabilities measured at amortised cost approximates
fair value.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
22
15. Fair Value Hierarchy
The following table shows financial instruments, including those recognised at fair value, for the year ended
31 December 2021, analysed between those whose fair value is based on:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are
observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not
based upon observable market data.
The following table shows the carrying amounts and fair values of financial assets and financial liabilities,
including their levels in the fair value hierarchy.
Total Level 1 Level 2 Level 3
Euro Euro Euro Euro
31 December 2021
Financial Assets
Interest Be
ari
ng Re
ceivab
les
22,444,358 - - 22,444,358
Other
Receivables
1,211,295 - - 1,211,295
Ca
sh a
nd Ca
sh Equivalents
32,727 - - 32,727
------
--------
-
--
-
----------
--------------
-----------
---
23,688,380 - - 23,688,380
========
====
====
========
=
====
===
Financial Liabilities
I
nterest B
earing
Borrowings
22,500,000 - - 22,500,000
Ot
her Payab
les
703,535 - - 703,535
Taxation Pa
yable
64,708 - - 64,708
--------------
---------
-----
--------------
--------------
23,268,243 - - 23,268,243
===
=====
========
==
===
===
========
31 December 2020
Financial Assets
I
nterest B
earing Re
ceivab
les
22,444,358
-
-
22,444,358
Ot
h
er
Receivables
1,044,129
-
-
1,044,129
Cash and Cash Equivalents
141,888
-
-
141,8
88
------
--------
-
--
-
----------
------
-------
-
--------------
23,
630,375
-
-
23,
630,375
========
====
====
========
========
Financial Liabilities
I
nterest
B
e
a
ring
Borrowings
22,500,000
-
-
22
,
500,000
Other Payables
707
,
880
-
-
707
,
880
Taxation Payable
74
,4
5
3
-
-
74
,45
3
0
---
-------
----
--------------
--------------
--------------
2
3,282,
333
-
-
2
3,282,
333
========
========
=====
===
========
During the reporting year ended 31 December 2021, there was no transfer between Level 1 and Level 2 fair value
measurement.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
23
16. Financial Risk Management
16.1 Overview
The Company activities potentially expose it to a variety of financial risks, including fair value or cash flow
interest rate risk, credit risk, liquidity risks and market risks.
This note presents information about the Company’s exposure to each of the above risks, the Company’s
objectives, policies and processes for measuring and managing risk, and the Company’s management of
capital.
16.2 Risk Management Framework
The Board has overall responsibility for the establishment and oversight of the Company’s risk management
objectives and policies.
The Company’s risk management policies are established to identify and analyse the risks faced by the
Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and the
Company’s activities. The overall objective of the Board is to set policies that seek to reduce risk as far as
possible without unduly affecting the Company’s competitiveness and flexibility. Further details of these
policies are set out below:
16.3 Credit Risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from loans receivable from its parent company, Mercury
Towers Ltd.
Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. The
Company’s policy is to place cash with financial institutions of a high credit rating. The Company’s bankers
currently have a credit rating of BBB.
Exposure to Credit Risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the end of the reporting year was as follows:
2021
2020
Euro
Euro
Loans
Receivable
from P
aren
t
C
ompany
22,444,358
22,444,358
Ot
h
er Receivables
308,491
144,39
5
C
ash and Cash Equivalents
32,727
14
1,8
88
------------
--
----
----------
22,785,576
23,
730,641
========
========
16.3.1 The Company’s loans receivable consists of advances made to its parent company, Mercury Towers Ltd.,
which advances were affected out of the proceeds of the Company’s net bond issue proceeds. The Company
monitors intra-group credit exposures on a regular basis and ensures timely performances of these assets in the
context of overall group liquidity management. The Company’s collateral held as security in respect of the
financial assets is disclosed in Note 13 to the financial statements. The Guarantor in relation to the bond issue
is Mercury Towers Ltd. The Company assesses the credit quality of Mercury Towers Ltd. taking into account
the financial position, performance and other factors. The Company takes cognisance of the related party
relationship with its parent, and the directors do not expect any losses from non-performance or default.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
24
16. Financial Risk Management (Contd.)
16.4 Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with
its financial liabilities that are settled by delivering cash or another financial asset.
The Company is exposed to liquidity risk in relation to meeting the future obligations associated with its
financial liabilities, which comprise principally of the bonds issued to the general public and other payables.
Prudent liquidity risk management includes, maintaining sufficient cash and liquid assets to ensure the
availability of an adequate amount of funding to meet the Company’s obligations.
The Company’s liquidity risk is managed actively by ensuring that cash inflows arising from expected
maturities of the Company’s advances to the parent company effected out of the bond issue proceeds, together
with the related interest receivable, match the cash outflows in respect of the Company’s bond borrowings,
covering principal and interest payments, as referred to in the table hereunder.
The following table analyses the Company’s liabilities into relevant maturity groupings based on the remaining
year at the reporting date to the contractual maturity date. The amounts disclosed in the table below are the
contractual undiscounted cash flows. Balances due within 12 months equal the carrying balances, as the impact
of the discounting is not significant.
Within Between Between Over
1 Year 1-2 Years 2-5 Years 5 Years
Euro Euro Euro Euro
31 December 2021
Interest Bearing
Borrowing
s
898,750 898,750 2,696,250 25,268,750
O
t
her Payables
14,083 - - -
--------
-
---
--
-----
-
--------
-----
-
--------
-----
-
--------
912,833 898,750 2,696,250 25,268,750
====
==
=
=
=
=
======
========
=======
=
31 December 2020
Interest Bearing
Borrowing
s
89
8
,750
898,750
2,69
6,250
2
6,167,500
Other Payables
18,428
-
-
-
--------
-
---
--
-----
-
--------
-----
-
--------
-----
-
--------
917,178
898,750
2,696,
250
26,167,
500
========
========
========
=
=======
16.5 Market Risk
Market risk is the risk that changes in market prices, such as foreign currency and interest rates will affect the
Company’s income on the loans affected from the proceeds of the secured Bonds. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising
the return.
16.5.1 Fair Value Interest Rate Risk
The Company’s transactions consist mainly of earning interest income on advances affected, principally from
the bond issue proceeds, and servicing its borrowings. The Company’s significant interest-bearing instruments,
comprising advances to the parent company and the bonds issued to the general public, are subject to fixed
interest rates. The Company has secured the spread between the return on its investment in the parent company
and its cost of borrowings. Accordingly, the Company is not exposed to cash flow interest rate risk but is
potentially exposed to fair value interest rate risk in view of the nature of the fixed interest nature of its
instruments, which are however measured at amortised cost.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
25
16. Financial Risk Management (Contd.)
16.5 Market Risk (Contd.)
16.5.1 Fair Value Interest Rate Risk (Contd.)
The Company’s operating income and cash flows are substantially independent of changes in market interest
rates, and on this basis, the directors consider the potential impact on the profit or loss of a defined interest rate
shift that is reasonably possible at the end of the reporting period to be insignificant.
16.5.2 Foreign Currency Risk
The Company is not exposed to foreign currency risk because its principal assets and liabilities are
denominated in Euro. The Company’s interest income, interest cost and other operating expenses are also
denominated in Euro. Accordingly, a sensitivity analysis for foreign exchange risk disclosing how profit or loss
and equity would have been affected by changes in foreign exchange rates that were reasonably possible at the
end of the reporting year, is not deemed necessary.
16.6 Capital Risk Management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. The Board of Directors monitors the return on
capital as well as the level of dividends to ordinary shareholders.
The parent company’s objectives when managing capital at the company level is to safeguard the respective
company’s ability to continue as a going concern in order to provide returns to the parent company and
benefits other stakeholders, and to maintain an optimal capital structure to reduce cost of capital. In order to
maintain or adjust the capital structure, the Company may issue new shares or adjust the amount of dividends
paid to shareholders.
The capital equity, as disclosed in the financial statements, constitutes its capital. The Company maintains its
level of capital by reference to its financial obligations and commitments arising from operational
requirements. Taking cognizance of the nature of the Company’s assets, together with collateral held as
security backing the Company’s principal borrowings, the capital level at the end of the reporting year is
deemed adequate by the directors.
17. Related Parties
17.1 Parent and Ultimate Controlling Party
The Company is a subsidiary of Mercury Towers Ltd. (the “Parent Company”) whose registered office is at
J. Portelli Projects, 1400, Block 14, Portomaso, St. Julians, Malta.
Mercury Towers Ltd. is in turn fully owned by Mr. Joseph Portelli.
Mercury Towers Ltd. prepares consolidated financial statements of the Group of which Mercury Projects
Finance P.L.C. forms part. These financial statements are filed and available for public viewing at the Malta
Business Registry.
17.2 Identity of Related Parties
The Company has a related party relationship with its parent company and directors.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
26
17. Related Parties (Contd.)
17.3 Related Party Transactions and Balances
2021
2020
Euro
Euro
Parent Company
Inter
es
t
Income
Rec
eiv
able
f
rom
1,120,829
1,120,8
2
9
Net Fun
ds
Advance
d by/
(
to
)
(164,096)
(145,716)
========
========
Amounts due from and to the parent company are disclosed in Notes 9 and 14 to these financial statements.
The key management of the Company are considered to be the directors. The Directors’ remuneration has been
disclosed in Note 6 to these financial statements.
17.4 Related party transactions are entered into on a commercial basis with entities which are related by way of
common shareholders who are able to exercise significant influence over the Company’s operations.
Transactions with these companies principally include advances affected by the Company from the Bond
proceeds referred to in the notes to the financial statements.
18. Capital Commitments
The Company did not have any commitments to purchase any property, plant and equipment at year end.
19. Contingent Liabilities
At year end, the Company did not have any contingent liabilities.
20. COVID-19
The Coronavirus (COVID-19) pandemic continues affecting economic and financial markets worldwide, and
virtually all industries are facing challenges associated with the economic conditions resulting from efforts to
address it.
As the pandemic increases in duration, entities are experiencing conditions often associated with a general
economic downturn. This includes, but is not limited to, financial market volatility and erosion, deteriorating
credit, liquidity concerns, further increases in government intervention, increasing unemployment, broad
declines in consumer discretionary spending, increasing inventory levels, reductions in production because of
decreased demand, layoffs and leave of absence, and other restructuring activities. The continuation of these
circumstances could result in an even broader economic downturn which could have a prolonged negative
impact on an entity’s financial results.
The directors have assessed the effect of the COVID-19 on the Company’s and the Group’s operations and the
directors noted that the Group has been able to continue operating through the prevalent market conditions
without significant disruptions to date, although some increases in costs were noted specifically on steel and
aluminum. However, the Group has managed to fix and secure prices of the main supplies required, thus
mitigating the risk of future increases in prices. Furthermore, though the future business environment may
differ from management’s assessment, the directors believe that the impact of such position is not at present
substantially affected by these risks, although during a period of uncertainty, the project may encounter some
setbacks due to impositions of certain conditions resulting therefrom. Any delays experienced are not expected
to influence the overall financial viability of the project.
MERCURY PROJECTS FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
27
21. Subsequent Events
21.1 New Bond Issue
On 24 March 2022, the Company announced the issuance of a further € 50,000,000 secured Bonds maturing in
2032 with a nominal value of € 100 per Bond, issued at par, and with an annual interest of 4.3% per annum.
The Prospectus was published for circulation on the 24 March 2022 and the said Bonds were available for
subscription on 1 April 2022. The fully subscribed new Bonds are expected to be admitted for listing and
trading on the Malta Stock Exchange by the end of the month.
21.2 Other
The directors have evaluated other subsequent events since 31 December 2021 up to the date of approval of
these financial statements and concluded that there were no subsequent events which require disclosure in the
financial statements.
MERCURY PROJECTS FINANCE P.L.C.
SCHEDULE TO INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
2021
2020
Euro
Euro
Finance Income
Loan Inter
est Rece
ivable
1,120,829
1,1
20,829
Finance Costs
Bond
Interes
t Expense
898,750
898,750
-
-
-
-----------
----
-------
---
Net Interest Income
222,079
22
2,079
--------------
----
---
-------
Administrative Overheads
Auditors’ Remu
neration
7,080
7
,
080
Bank Charges
288
747
Direct
o
rs’ Remuneration
45,000
45,00
0
General Expenses
-
4
2
Other Charges
13,569
14,236
Professional Fees
9,354
10,337
R
egistrati
on
Fees
3,964
2,84
6
Social Costs
136
1
36
--------------
--------------
79,391
80,42
4
--------------
--------------
Operating Profit 142,688
141,
655
========
====
=
=
==
