Company Registration No.:
C 27835
QAWRA PALACE P.L.C.
Annual Financial Report
and
Financial Statements
31 March 2025
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
CONTENTS
Pages
General information
2
Directors' report
3 - 7
Statement of compliance with the code of principles of good corporate governance
Statement of comprehensive income
14
Statement of financial position
15
Statement of changes in equity
16
Statement of cash flows
17
Notes to the financial statements
18 - 37
Independent auditor's report
38 - 44
1
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
GENERAL INFORMATION
Registration
Qawra Palace p.l.c.
("the Company") is registered in Malta as a public limited liability company under the Maltese
Companies Act (Cap. 386). The Company’s registration number is
C 27835
.
Directors
Edward Vella
Esther Vella
Victor Vella
Robert Ancilleri
Stephen Muscat
Paul Muscat
Company Secretary
Luca Vella
Registered Office and Principal Place of Business
Qawra Palace p.l.c.
Qawra Palace Hotel
Coast Road
St. Paul's Bay SPB 1902
Malta
Bankers
Bank of Valletta p.l.c.
58, Zachary Street
Valletta VLT 1130
Malta
Auditors
RSM Malta
Mdina Road
Zebbug
ZBG 9015
Malta
2
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
DIRECTORS' REPORT
The Directors present their annual  financial  report  and the audited financial statements of Qawra Palace p.l.c.
("the Company") for the financial year ended
31 March 2025
.
Principal activity
The  Company is  a  property holding  company whose  principal  objects  are  as  set  out  in  clause  four  (4)  of  its
Memorandum of Association – namely, to carry on the business of a property holding company and to construct,
maintain,  alter,  equip  or  convert  any buildings  or  amenities  as  may  be  required  in  connection  with  the
establishment of a hotel and/or tourist or leisure centre. The Company owns the Qawra Palace Hotel located on
the Qawra promenade, which has recently undergone a significant refurbishment and which refurbishment has
been fully completed during the year under review.
Given that the Company is not a trading company, it  is economically dependent on the income it derives from
Mallard Co. Ltd. (C 4758), a related party through common shareholding (“Mallard”), the entity entrusted with the
management and operation of the Qawra Palace Hotel, and, separately, the monies on-lent to Mallard Co. Ltd.
from the proceeds of the Bond  Issue (as described below  and detailed in the Prospectus dated 20 December
2022).
In March 2023, the Company raised €25 million from a public bond issue; specifically, the issue by the Company
of €25 million worth of 5.25% secured bonds 2033 (the “Bond Issue”) with a nominal value of €100 per bond and
issued at par  (the  “Bonds”)  in  terms of a  prospectus dated 20 December 2022 (the “Prospectus”). The Bonds
were admitted to listing on the Official List of the Malta Stock Exchange with effect from 8 February 2023.
The bond subscriptions closed in March 2023 with the bonds being fully subscribed. The proceeds of the Bond
Issue  were  utilised  in  line  with  the  Prospectus  dated  20  December  2022,  with  €16.4 million  repaying  existing
bank loans, €6.7 million passed on by way of loan to Mallard Co. Ltd. to upgrade the existing hotel and develop
new  amenities  and  catering  outlets  within  the  complex and  the  remaining  portion  of €1.9  million  allocated  for
general corporate funding purposes.
Review of the business
The  Company’s  total  assets  as  at  31  March  2025  stood  at  €98.5  million  (2024:  €91.6  million).  The  main
change  in  the  asset  composition  was  that  during  the  year  under  review,  the  loans  the  Company
advanced  to  Mallard  have  been  extinguished,  following  the  transfer  of  assets  from  Mallard  to  the
Company.  The  decrease  in  the  finance  income  during  the  year  under  review  reflects  the  charge
calculated from the beginning of the financial year to the date of extinguishment of these loans.
The Company reported a profit before tax of €7.0 million (2024: €6.2 million) for the year ended 31 March 2025.
This was attributable to the revaluation of the investment property which has been recognised in the statement of
comprehensive income, resulting in a gain in fair value amounting to €5.4 million (2024: €4.7 million).
Results and dividends
The statement of comprehensive income is set out on page
14
. The directors do not recommend the payment of
a final dividend  and propose that the balance of retained earnings of the Company amounting to €60.9 million
(2024: €56.6 million) be carried forward to the next financial year.
3
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
DIRECTORS' REPORT
- continued
Corporate social responsibility
As  part  of  the  company’s  core  values,  the  Board  of  Directors  remains  steadfast  in  its  commitment  to
safeguarding the environment and the surrounding communities. The Board exercises diligent oversight
to  ensure  that  Mallard  adopts  and  implements  sustainable  strategies  in  the  operation  of  the  Qawra
Palace Hotel, in line with responsible business practices.
The  Board  ensures  that  the  related  company from  which  income  is  generated,  adheres  to  robust
environmental  and  regulatory  policies.  Comprehensive  procedures  are  in  place  to  guarantee  full
compliance with  all applicable laws, regulations, and standards. These efforts are further reinforced
through continuous training programmes aimed at equipping staff with the necessary knowledge and
skills.  The  Company  regularly  seeks  independent  assurance  that  all  Mallard  employees  remain
informed about current regulatory developments and are thoroughly prepared for routine audits and
inspections that confirm the hotel's continued Eco-certification.
Demonstrating  a  long-term  vision,  the  Company  is  fully  committed  to  investing  in  initiatives  that
preserve, protect, and enhance the natural environment. The Board actively supports environmental
and community-based efforts. Over the coming year, Mallard is set to undertake a range of impactful
community  and  environmental  initiatives.  These  will  include  organised  tree-planting  campaigns  to
support  reforestation  and  biodiversity,  coordinated  clean-up  efforts  along  the  Qawra  coastline  to
protect the marine and coastal ecosystem, and the promotion of life-saving blood donations through
on-site visits by the national blood donation unit at the Hotel.
Beyond  these  initiatives,  the  Hotel  also  contributes  regularly  to  a  variety  of  non-governmental
organisations (NGOs),  offering financial  and in-kind donations  to support causes that align  with the
Company’s  values.  These  combined  efforts  reflect  Mallard’s  holistic  approach  to  corporate
responsibility  one  that  prioritises  both  environmental  preservation  and  the  well-being  of  the  wider
community.
Principal risks and uncertainty
The Company is  exposed to risks relating  to the  management and operations of the Qawra Palace
Hotel, dependency on its related company and the other generic risks emanating from the hospitality
and tourism industry it operates in.
The planned  refurbishment of the hotel  as explained in the  Prospectus is now fully  completed. The
risks and uncertainties are now mainly represented by the business prospects and the well-being of
the tourism industry. Tourism has regained its momentum, the accommodation and leisure industry is
recovering  faster  than  originally  anticipated  and  this  is  reflected  in  the  results  of  the  hospitality
industry  throughout  Malta.  The  results  of  the  hotel  are  better  than  prior  year  with  bookings  and
reviews of customers remaining strong.
Other  risks  include  competition  risk,  risks  relating  to  the  Company’s  indebtedness  and  to  the
hypothecated investment property. Apart from the above, the Company is subject to financial risks as
disclosed in Note 21 to the financial statements.
Events after the end of reporting period
No significant events have occurred after the end of the reporting period which require mention in this report.
4
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
DIRECTORS' REPORT
- continued
Outlook
The Company remains optimistic about the future and is encouraged by Mallard's progress in line with projected
results. This bodes well for Mallard’s ability to meet its financing and other obligations to the Company as they
become due.
Mallard reported a turnover  of over €24 million for the year ended  31 March 2025, compared  to €13 million in
2024. The Hotel exceeded its projected revenue for the year by nearly €1 million, representing a 4.34% increase
over the budgeted figure and an 79% increase compared to the previous year. FY25 was characterised by high
occupancy levels throughout the year and increased average room rates.
These  encouraging  results  have  strengthened  the  Board’s  optimism  for  the  future,  with  Mallard  expected  to
achieve renewed growth in both revenue and profitability for the year ending 31 March 2026.
Material contracts
The following contracts of a material nature which have been entered into by the Company in prior years remain
valid during the year under review:
 Lease agreement with a related company commencing on 1 April 2023;
 Loan facility agreement with a related company.
Directors
The Directors who held office during the year under review were:
 Mr Edward Vella - Executive Director & Managing Director
 Ms Esther Vella - Executive Director
 Mr Victor Vella - Executive Director
 Mr Robert Ancilleri - Independent, Non-Executive Director &Chairman
 Mr Stephen Muscat - Independent, Non-Executive Director
 Mr Paul Muscat - Independent, Non-Executive Director
In  accordance  with  the  Company’s  Memorandum  and  Articles  of  Association,  all  directors  except  for  the
Managing Director shall retire from office at least once every three years, but shall be eligible for re-election.
Company secretary
During  the  year  ended 31  March  2025, Dr  Luca  Vella continued  to  act as  company secretary to the  Board of
Directors and the Audit Committee.
The Company's registered office is at Qawra Palace p.l.c., Qawra Palace Hotel, Coast Road, St. Paul's Bay SPB
1902, Malta.
5
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
DIRECTORS' REPORT
- continued
Statement of directors' responsibilities for the financial statements
The  Directors  are  required  by the  Companies  Act  (Chapter  386  of  the  laws  of  Malta)  to  prepare  financial
statements which 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:
 ensuring  that  the  financial  statements  have  been  drawn  up  in  accordance  with  International  Financial
Reporting Standards (IFRS Accounting Standards) as adopted by the European Union (EU);
 selecting and applying appropriate accounting policies;
 making accounting estimates and judgements that are reasonable in the circumstances;
 valuing separately the components of asset and liability items;
 reporting comparative figures corresponding to those of the preceding accounting period; and
 ensuring that the financial statements are prepared on the going concern basis, unless it is inappropriate to
presume that the Company will continue in business as a going concern.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy,
at  any time,  the  financial  position  of  the  Company and  which  comply with  the  Maltese  Companies  Act.  This
responsibility includes  designing,  implementing  and  maintaining  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,  and  that  comply with  the  Maltese  Companies  Act.  They 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 Qawra Palace p.l.c. for the financial year ended 31 March 2025 are included in the
Annual  Financial  Report 2025,  which  will  be  made available  on the  Company’s website upon  publication.  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  by  directors  on  the  financial  statements  and  other  information  included  in  the  annual
financial report
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 March
2025,  and  of  its  financial  performance  and  its  cash  flows  for  the  period  then  ended  in  accordance  with
International Financial Reporting Standards as adopted by the European Union and with the Companies Act
(Chapter 386 of the laws of Malta); and
 the  annual  report  includes  a  fair  review  of  the  development  and  performance  of  the  business  and  the
position  of  the  Company,  together  with  a  description  of  the  principal  risks  and  uncertainties  that  the
Company faces.
6
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
DIRECTORS' REPORT
- continued
Going concern statement pursuant to Capital Markets Rule 5.62
The Company has generated revenue of €2.4 million (2024: €2.4 million) during the financial year under review.
The Company registered an operating profit before tax for the year of €2.1 million (2024: 2.2 million).
As explained in  the ‘Outlook’, the Company's results for the year to end 31  March 2026 are expected  to keep
improving since Qawra Palace Hotel keeps experiencing significant demand with remarkably positive occupancy
rates.  With  works  fully completed  in  June  2024,  the  Hotel  is  now  better  placed  to  offer  a  complete  service
proposition and expects room and occupancy rates to keep increasing.
After making enquires and having taken into consideration the future plans of the Company, the Directors have
reasonable expectation that the Company has adequate  resources to continue in operational existence for the
foreseeable  future.  For  this  reason,  they continue  to  adopt  the  going  concern  basis  in  the  preparation  of  the
financial statements.
Share Capital Structure
The  Company has  an  authorised  and  issued  share  capital  of  €2,329,373  divided  into  1,000,000  shares  of
€2.329373  each  nominal  value, which  are  fully paid  up, and  subscribed to and  held by three shareholders  as
summarised below:
Angelo  Holdings Ltd  (C  9162)  –  450,000 Ordinary Shares, equivalent  to 45%  of  the Company’s issued  share
capital
Charella  Company Limited  (C  4035)  -  430,000  Ordinary Shares,  equivalent  to  43%  of  the  Company’s  issued
share capital
Edoardo  Company Limited  (C  5062)  -  120,000  Ordinary Shares,  equivalent  to  12%  of  the  Company’s  issued
share capital
All Ordinary Shares are entitled to attend and vote at General meetings, whereupon each Ordinary Share shall
be entitled to one vote. The Ordinary Shares in the Company shall rank pari passu for all intents and purposes at
law. There are currently no different classes of Ordinary Shares in the Company and, accordingly, all Ordinary
Shares  have  the  same  rights,  voting  rights  and  entitlements  in  connection  with  any distribution  whether  of
dividends or capital.
Auditors
RSM  Malta  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 25 July 2025 by Edward Vella (Executive and Managing Director)
and Robert Ancilleri (Non-Executive, Independent Chairman) as per the Directors' Declaration on ESEF Annual
Financial Report submitted in conjunction with the Annual Financial Report.
7
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
The Capital Markets Rules issued by the Malta Financial Services Authority, require listed companies to observe
The Code of Principles of Good Corporate Governance (the “Code”). Although the adoption of the Code is not
obligatory,   listed   companies   are   required   to   include,   in   their   Annual   Financial   Report,   a Directors’
Statement of Compliance which deals with the extent to which the company has adopted the Code and the
effective measures that the company has taken to ensure compliance with the Code, accompanied by a report
of the auditors thereon.
Qawra Palace p.l.c. (the “Company”) is  committed to observing the  principles of transparency and responsible
corporate  governance.  The Board  considers  compliance  with  corporate governance  principles  to constitute  an
important  means  of  maintaining  the  confidence  of  present  and  future  shareholders,  bondholders,  creditors,
employees, business partners and the general public, amongst other stakeholders. Pursuant to the requirements
of the Capital Markets Rules issued by the Malta Financial Services Authority, the Company hereby reports on
how it has complied with the Code contained in Appendix 5.1 of the Capital Markets Rules for the financial year
ended  31  March  2025,  which  report  details  the  extent  to  which  the  Code  has  been  adopted,  as  well  as  the
effective measures taken by the Company to ensure compliance with said Code.
The  Board  recognises  that,  in  virtue  of  Capital  Markets  Rule  5.101,  the  Company is  exempt  from  the
requirement to disclose the information prescribed by Capital Markets Rules 5.97.1 to 5.97.3, 5.97.6 and 5.97.8.
Part I - Compliance with the Code
Principles 1 and 4 - The Board of Directors and its responsibilities
The  Board  is  responsible  for  overseeing  the  Company’s  strategic planning  process,  as  well  as reviewing  and
monitoring management’s execution of the corporate and business plans. The Board delegates certain powers,
authorities and discretions to the Audit Committee, as duly constituted in terms of the Capital Markets Rules, the
role and competence of which committee are regulated in furtherance of Terms of Reference duly implemented
for the purpose and as further described hereunder.
The  Board  of  Directors  has  a  composition  that  ensures  that  the  Company is led  by individuals  who  have  the
necessary skills and diversity of knowledge relative to the Company’s business. It considers strategic issues, key
projects and regularly monitors performance against delivery of the key targets of the annual strategic plans and
forecasts.
In fulfilling its mandate, the Board assumes responsibility for:
1. reviewing  the  Company’s  strategy on  an  on-going  basis,  as  well  as  setting  the  appropriate  business
objectives;
2. reviewing the effectiveness of the Company’s system of internal controls;
3. implementing  an  appropriate organisational  structure for  planning,  executing, controlling  and  monitoring
business operations in order to achieve the Company’s objectives;
4. identifying and ensuring that significant risks are managed satisfactorily; and
5. ensuring that Company policies are being rigorously observed.
Principle 2 - Chairman and Managing Director
The roles of Chairman and Managing Director are occupied by separate individuals, whereby Mr Edward Vella,
an  executive  director  and  joint  founder  of  the  Company,  carries  out  the  role  of  Managing  Director,  while  Mr
Robert Ancilleri, an independent, non-executive director, acts as Chairman of the Board.
The Chairman is responsible to lead the Board and set its agenda. The Chairman ensures that the Board is in
receipt of precise, timely and objective information, encourages active engagement by all members of the Board
for discussion and ensures effective communication with shareholders.
8
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
Principle 3 – Composition of the Board
The Memorandum of Association of the Company provides that the business and affairs of the Company shall
be managed and administered by a Board of not less than two (2) and not more than ten (10) Directors. Every
member of the Company holding at least ten percent (10%) of the Ordinary shares in the Company shall have
the right to appoint a Director to the Board. The remaining members of the Board are appointed by means of an
ordinary resolution taken in a general meeting.
As  at  the  date  of  this  statement  and  during  the  reporting  period  under  review,  the  Board  of  the  Company is
composed  of the  six (6)  individuals  listed  below,  who  are  collectively responsible  for  the  overall direction  and
management of the Company. The Board currently consists of three (3) executive Directors, who are entrusted
with  the  Company’s  day-to-day management,  and  three  (3)  non-executive  Directors,  all  of  whom are  also
independent of the Company, whose main functions are to monitor the operations of the executive Directors and
their performance, as well as to review any proposals tabled by the executive Directors.
Executive Directors:
Edward Vella
Esther Vella
Victor Vella
Independent, non-executive Directors:
Robert Ancilleri - Chairman
Stephen Muscat
Paul Muscat
Luca Vella acts as company secretary to the Board of Directors, as well as secretary to the Audit Committee.
In  compliance  with  the  Capital  Markets  Rules,  the  Board  considers  that  the  independent,  non-executive
Directors  are independent  of management  and free  from  any significant  business,  family or  other  relationship
with the Company, its controlling shareholder or its management that could materially interfere with the exercise
of  their  independent  judgement.  In  assessing  the  independence  of  the  independent,  non-executive  Directors,
due  notice  has  been  taken  of  Capital  Markets  Rule  5.119.  The  composition  of  the  Board  has  a  balance  of
knowledge  and  experience,  as  well  as  a  strong  non-executive  presence,  to  allow  continued  scrutiny of
performance, strategy and governance.
Principle 5 – Board Meetings
Meetings  of  the  Board  are  held  as  frequently as  considered  necessary,  with  a  minimum of  four  (4)  meetings
being held annually – during the reporting period ended 31 March 2025, the Board met three (3) times, with the
fourth annual meeting being held on 1st April 2025, the day immediately following the reporting period, due to a
rescheduling  of  the said  meeting originally set for  March  2025. All  Directors were  present at  all  the meetings.
The Board  members are  notified of forthcoming  meetings  at  least seven  (7)  days  before  the  said meeting. In
addition,  the notification  includes  the  issue  of an  agenda  and  any supporting  documentation  as necessary,  in
order to ensure that all meetings are of a highly effective nature and all participants are well informed and able to
effectively contribute to Board decisions. Attendance with regards to Board meetings is recorded in the minutes
of the meetings. Minutes of all Board and Audit Committee meetings are circulated to all members and kept on
file by the Company Secretary.
Board and Audit Committee meetings are attended by both the Chief Executive Officer, Mr Carmel Pullicino, and
the  Financial  Controller, Mr  Jason  Azzopardi,  of the  Company in order for the Board  of  the  Company to have
direct  access  to  the  operational  performance  and  financial  results  of  the  Company.  This  is  also  intended  to
ensure  that  the policies  and strategies  adopted  by the Board  are  effectively implemented by the  finance  team
and senior management.
9
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
Principle 5 – Board Meetings - continued
All executive Directors  have more than 20 years’ work experience at the  Company, whereas the independent,
non-executive Directors have relevant experience related to the business in which the Company operates. The
remuneration of the Directors is reviewed periodically by the shareholders of the Company.
All  Directors  of  the  Company,  including,  the  independent,  non-executive  Directors,  have  access  to  the
Company’s external legal and financial advisors who keep said Directors adequately informed of all statutory and
regulatory requirements connected to the business of the Company on an on-going basis.
Principle 6 – Information and Professional Development
The Company firmly believes  in the  professional development  of all the  members in the  Company. The  Chief
Executive Officer is responsible for establishing and implementing  incentives which are aimed to maintain and
recruit management personnel. Furthermore, regular training exercises are held for the Company’s executives to
keep  abreast  of  current  technological  and  hospitality standards  and  other  relevant  subject  matter  trends  and
practices.
Principle 8 – Committees
The Board delegates certain powers, authorities and discretions to the Audit Committee. The Company’s Board
established an Audit Committee for the purposes of inter alia:
a) monitoring  the  financial  reporting  process  and  submitting  recommendations  or  proposals  to  ensure  its
integrity;
b) monitoring the effectiveness of the Company’s internal quality control and risk management system;
c) making recommendations to the Board in relation to the appointment of the external auditor and to approve
the  remuneration  and  terms  of  engagement  of  the  external  auditor,  following  appointment  by the
shareholders during the Company’s annual general meeting;
d) reviewing and monitoring the external auditor's independence;
e) evaluating the arm’s length nature of any proposed transactions to be entered into by the Company and a
related  party,  to  ensure  that  the  execution  of  such transaction  is  at  arm’s  length,  conducted  on  a  sound
commercial basis and in the best interests of the Company; and
f) assessing any potential conflicts of interest between the duties of the Directors and their respective private
interests or duties unrelated to the Company, to ensure that any potential abuse is managed, controlled and
resolved in the best interests of the Company and according to law.
As  indicated  above,  the  Company adopts  measures  in  line  with  the  Code  with  a  view  to  ensuring  that  the
relationship  with  its  shareholders  is  retained  at  arm’s  length,  including  adherence  to  rules  on  related  party
transactions set out in Chapter 5 of the Capital Markets Rules. Said rules require the vetting and approval of any
related  party transaction  by the  Audit  Committee,  which  is  constituted  in  its  entirety by  independent,  non-
executive Directors. Robert Ancilleri is the current chairman of the Audit Committee and all members of the Audit
Committee are designated as competent in accounting and/or auditing.
The Audit Committee has, pursuant to the relative terms of reference, been granted express powers to be given
access to the financial position of the Company and Mallard Co Limited (C 4758), the entity entrusted with the
management and operation of the Qawra Palace Hotel.
The Board has formally appointed the following three (3) individuals as the members of the Audit Committee:
Robert Ancilleri – Chairperson and independent, non-executive Director
Stephen Muscat – Independent, non-executive Director
Paul Muscat – Independent, non-executive Director
10
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
Principle 8 – Committees - continued
Audit Committee members are appointed for a one (1) year term of office. Such term is automatically renewed
for further periods of one (1) year each unless otherwise determined by the Board of Directors of the Company.
The Audit Committee meets at least four (4) times a year, with additional meetings to be called at the discretion
of  the  Chairperson  of  the  Audit  Committee.  During  the  reporting  period  ended  31  March  2025,  the  Audit
Committee met three (3) times, with the fourth annual meeting being held on 1st April 2025, the day immediately
following  the  reporting  period,  due  to  a  rescheduling  of  the  said  meeting  originally set  for  March  2025.  All
members were present at all these meetings. The Chairperson will also call a meeting of the Audit Committee if
required  by any Committee  member,  by senior  management  or  by the  external  auditors  of  the  Company.  In
compliance  with  the  Capital  Markets  Rules,  all  members  of  the  Audit  Committee  are  considered  to  be
independent  members  competent  in  accounting  and/or  auditing  matters.  The  Company considers  that  the
members of the Audit Committee have the necessary experience, independence and standing to hold office as
members thereof.
Principle 9 - Relations with bondholders and with the Market
The  Company is  committed  to  having  an  open  and  communicative  relationship  with  its  shareholders  and
bondholders.  The  market  is  kept  updated  with  all  relevant  information  concerning  the  Company via  the
publication of Company Announcements in terms of the Capital Markets Rules and, furthermore, the Company
regularly publishes such information on its website to ensure continuous relations with the market.
Principle 11 - Conflicts of Interest
Directors are expected to always act in  the best interests of the Company and its shareholders and investors.
Actual or potential conflicts of interest that may arise from time-to-time will need to be managed in accordance
with the procedures regulating conflicts of interest situations set out in the Company’s Articles of Association. In
this regard, Directors are required to inform the Board of any matter that may result or has already resulted in a
conflict of interest. A record  of such declaration  is entered into the Company’s minute book and the conflicted
Director  shall  be precluded  from  voting on  any resolution concerning  a matter in  respect  of  which  he/she  has
declared an interest. Unless the other non-conflicted Directors of the Company otherwise resolve, the conflicted
Director  shall:  (a)  not  be  counted  in  the  quorum  present  for  the  relevant  meeting;  (b)  not  participate  in  the
discussion  concerning  a  matter  in  respect  of  which  he/she  has  declared  a  direct  or  indirect  interest;  and  (c)
withdraw from or, if applicable, not attend the meeting at which such matter is discussed.
Principle 12 - Corporate Social Responsibility
The  Board  is  mindful  of  and  seeks  to  adhere  to  sound  principles  of  corporate  social  responsibility in  its
management practices. This helps  the  Company develop strong relationships with its  stakeholders and create
long-term  value for  society and  its  business.  The  Company is  committed to  play an  effective  role in  society’s
sustainable development, whilst tangibly proving itself to be a responsible and caring citizen of the community in
which it operates. The Company continues to support a number of different local initiatives aimed at improving
the quality of life of the local communities it supports.
The  Company supports  its employees  by providing  training  programs,  partnering  with  educational  institutions,
and promoting inclusion, diversity and internal career advancement.
The Company ensures that Mallard Co. Ltd. (“Mallard”) supports charities and causes that are important to the
management team, with  the  declared  goal  of assisting  in  worthwhile endeavours  whenever possible and back
local and national charitable organizations.
Mallard is constantly making investments and improvements to enhance its product offering for guests. As part
of this process, the Company endeavours to recommend alternative solutions that reduce environmental costs
of  hospitality services.  The  Company further  aims  to  promote  transparent  sustainable  purchasing,  ethically
sourced from local suppliers, where possible, that have minimal environmental impact. These include items such
as  packaging,  recyclable  products,  local  sourcing  of  services  and  products  and  energy efficient  electrical
equipment.
11
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
Remuneration Statement
In  terms  of  the  Memorandum  and  Articles  of  Association  of  the  Company,  the  aggregate  emoluments  of  all
Directors in any one financial year, and any increases thereto, shall be such amount as may, from time to time,
be determined by the  shareholders in a general meeting. The remuneration of the Directors  is a fixed amount
per  annum and  does  not  include  any variable  component  relating  to  profit  sharing,  share  options  or  pension
benefits.  For  the  financial  year  ended  on  31  March  2025,  the  Company paid  an  aggregate  of  €42,000  to  its
Directors.
Part II - Non-compliance with the Code
Other than as stated below, the Company has fully implemented the principles set out in the Code.
Principle 7 – Evaluation of the Board’s Performance
Under the present circumstances, the Board does not consider it necessary to appoint a committee to carry out
a  performance  evaluation of its role, as the  Board’s  performance  is  evaluated on  an  ongoing basis  by,  and  is
subject to the constant scrutiny of the Board itself (three (3) directors of which are independent, non-executive
Directors), the Company’s shareholders and all of the rules and regulations to which the Company is subject as
a company with its securities listed on a regulated market.
Principle 8 - Nomination Committee and Remuneration Committee
The Board considers that the size and operations of the Company do not warrant the setting up of remuneration
and nomination committees. The Company does not believe it is necessary to establish a nomination committee
as  appointments  to  the  Board  are  determined  by the  shareholders  of  the  Company in  accordance  with
nomination  and appointment process set out in the  Company’s Memorandum and  Articles of Association. The
Company considers  that  the  members  of  the  Board  possess  the  level  of  skill,  knowledge  and  experience
expected in terms of the Code.
Principle 10 – Institutional Shareholders
The Company is ultimately privately held and has no institutional shareholders, therefore, Principle 10 does not,
at present, apply to the Company.
PART III - Internal Control and Risk Management in relation to the Financial Reporting Process
The  Board,  supported  by the  Audit  Committee  is  ultimately responsible  for  the Company’s system  of  internal
control and risk management and for reviewing its effectiveness. Such a system is designed to manage rather
than eliminate the risk of failure to achieve business objectives, and can only provide a reasonable, as opposed
to absolute assurance against material misstatement or loss.
The Company operates  through  the  Board  of Directors  and  senior  management with  clear  reporting  lines and
delegation of powers. The Board of Directors has adopted and implemented appropriate policies and procedures
to  manage  risks  and  internal  control.  Senior  management  plans,  executes,  controls  and  monitors  business
operations in order to achieve the set objectives.
The Directors, with the assistance of senior management, are responsible for the identification, evaluation and
management of the key risks to which the Company may be exposed. The Company has clear and consistent
procedures in place for monitoring the system of internal financial controls. The Directors also receive periodic
management  information  giving  comprehensive  analysis  of  financial  and  business  performance  including
variances  against  the Company’s  set  targets.The Audit  Committee reviews  and  assesses the  effectiveness  of
the  internal  control  systems,  including  financial  reporting,  and  determines  whether  significant  internal  control
recommendations made by external auditors have been implemented. The Committee plays an important role in
initiating  discussions  with  the  Board  with  respect  to  risk  assessment  and  risk  management  and  reviews
contingent liabilities and risks that may be material to the Company.
12
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
PART IV - General Meetings
General  meetings  are  called  and  conducted  in  accordance  with  the  provisions  contained  in  the  Company’s
Articles of Association and in accordance with any applicable laws or regulations as may be applicable from time
to time.
The  report  above  is  a  summary of  the  views  of  the  Board  on  the  Company’s  compliance  with  the  Code.
Generally, the Board is of the opinion that, in the context of the applicability of the various principles of the Code
to the Company and in the context of the Company’s business  operations and save as indicated herein in the
section  entitled  “Non-Compliance”  the  Company has  applied  the  principles  and  has  complied  with  the  Code
throughout the financial year under review. The Board shall keep these principles under review and shall monitor
any developments  in  the  Company’s  business  to  evaluate  the  need  to  introduce  new  corporate  governance
structures or mechanisms as and when the need arises.
Signed on behalf of the Board of Directors  on  25  July  2025  by Edward Vella (Executive  and Managing
Director) and Robert Ancilleri (Non-Executive, Independent Chairman).
13
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March
Notes
2025
€
2024
€
Revenue 4 2,448,000 2,400,000
Administrative expenses (339,019) (150,366)
Operating profit 2,108,981 2,249,634
Change in fair value of investment property 10 5,380,003 4,698,620
Reversal/(provision) of impairment on receivable from related party 12,13 503,217 (195,393)
Finance income 7 279,739 792,625
Finance costs 8 (1,310,409) (1,312,540)
Profit before tax 5 6,961,531 6,232,946
Taxation 9 (2,685,773) (956,741)
Profit for the
year
4,275,758 5,276,205
Basic earnings per share 19 4.28 5.28
The notes on pages 18 to 37 are an integral part of these financial statements.
14
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF FINANCIAL POSITION
As at
31 March
Notes
2025
€
2024
€
ASSETS
Non-current assets
Investment property 10 94,462,620 70,820,447
Intangible assets 11 - 590
Loan receivable 12 - 18,579,276
Total non-current assets 94,462,620 89,400,313
Current assets
Loan receivable 12 614,644 794,939
Trade and other receivables 13 2,906,510 1,210,552
Cash and cash equivalents 14 562,143 147,035
Total current assets 4,083,297 2,152,526
TOTAL ASSETS
98,545,917 91,552,839
EQUITY AND LIABILITIES
Capital and reserves
Share capital 15 2,329,373 2,329,373
Retained earnings 60,887,703 56,611,945
TOTAL EQUITY 63,217,076 58,941,318
LIABILITIES
Non-current liabilities
Borrowings 16 24,499,752 24,450,240
Deferred tax 17 9,446,262 7,082,045
Total non-current liabilities 33,946,014 31,532,285
Current liabilities
Trade and other payables 18 579,527 597,492
Current tax payable 803,300 481,744
Total current liabilities 1,382,827 1,079,236
TOTAL LIABILITIES 35,328,841 32,611,521
TOTAL EQUITY AND LIABILITIES
98,545,917 91,552,839
The notes on pages
18 to 37
are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on
25 July 2025
. The
financial statements were signed on behalf of the Board of Directors by Edward Vella (Executive and Managing
Director) and Robert Ancilleri (Non-Executive, Independent Chairman) as per the Directors' Declaration on ESEF
Annual Financial Report submitted in conjunction with the Annual Financial Report.
15
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF CHANGES IN EQUITY
Share
capital
€
Retained
earnings
€
Total
equity
€
Balance at 1 April 2023 2,329,373 51,335,740 53,665,113
Total comprehensive income for the year:
Profit
for the year - 5,276,205 5,276,205
Balance at
31 March 2024
2,329,373 56,611,945 58,941,318
Balance at 1 April 2024 2,329,373 56,611,945 58,941,318
Total comprehensive income for the year:
Profit
for the year - 4,275,758 4,275,758
Balance at
31 March 2025
2,329,373 60,887,703 63,217,076
The notes on pages
18 to 37
are an integral part of these financial statements.
16
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
STATEMENT OF CASH FLOWS
For the year ended
31 March
Notes
2025
€
2024
€
Cash flows from operating activities:
Profit before tax  6,961,531 6,232,946
Adjustment for:
Finance costs 8 1,310,409 1,312,540
(Reversal)/provision of impairment on receivable from related party 12,13 (503,217) 195,393
Finance income 7 (279,739) (792,625)
Change in fair value of investment property 10 (5,380,003) (4,698,620)
Depreciation of investment property 10 184,935 -
Amortisation of bond issuance costs 16 49,512 50,581
Amortisation of intangible assets 11 590 590
Cash generated from operating activities before working
capital changes 2,344,018 2,300,805
Increase in trade and other receivables (1,660,494) (1,195,105)
Movement in cash held by trustee - 8,618,062
(Decrease)/increase in trade and other payables (17,965) 313,734
Cash generated from operating activities
665,559
10,037,496
Payments of interest classified as operating (624) (919)
Net cash flows generated from operating activities 664,935 10,036,577
Cash flows from investing activities:
Movement in balances with related company 1,059,958 (8,523,837)
Net cash flows
generated from/(used in)
investing activities
1,059,958
(8,523,837)
Cash flows from financing activities:
Payment of bond interest (1,309,785) (1,423,975)
Net cash flows used in financing activities (1,309,785) (1,423,975)
Net cash increase in cash and cash equivalents 415,108 88,765
Cash and cash equivalents at beginning of year
147,035 58,270
Cash and cash equivalents at end of year
14 562,143 147,035
There  were  non-cash  transactions  during  the  year  ended  31  March  2025  excluded  in  investing  activities
amounting to €18,447,105 (2024: NIL) as disclosed in Note 10.
The notes on pages
18 to 37
are an integral part of these financial statements.
17
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
1.
GENERAL INFORMATION
Qawra  Palace  p.l.c.
(“the  Company”)  is  a
public  limited  liability company
incorporated  in  Malta  with
registration number C 27835 and registered address at
Qawra Palace p.l.c.
,
Qawra Palace Hotel
,
St. Paul's
Bay SPB 1902
,
Malta
. The Company's bonds are listed on the main market of the Malta Stock Exchange.
The Company owns the "Qawra Palace Hotel" which is leased to a related party company, which operates
the hotel.
The  ownership  of  the Company's share  capital and  voting  rights  related to  such holdings is  such that no
particular individual or identifiable group of individuals may be deemed to exercise ultimate control over the
Company.
2.
MATERIAL ACCOUNTING POLICY INFORMATION
The  accounting  policies  that  are  material  to  the  financial  statements  are  set  out  below.  The  accounting
policies adopted are consistent with those of the previous financial year, unless otherwise stated.
Basis of presentation
The  financial  statements  of  the  Company have  been  prepared  in  accordance  with  International  Financial
Reporting  Standards  (IFRS  Accounting  Standards)  as  adopted  by the  European  Union  (EU)  and  the
requirements of the Companies Act (Cap. 386), enacted in Malta.
The  financial  statements  have  been  prepared  under  the  historical  cost  basis,  except  for  the  investment
property which is carried at fair value
Presentation and functional currency
The  financial  statements  are  presented  in  Euro  (€)  which  is  the  Company's  functional  and  presentation
currency.
New or amended accounting standards and interpretations adopted
The Company adopted all of the new or amended Accounting Standards and Interpretations issued by the
International Accounting Standards Board (‘IASB’) and the IFRS Interpretations Committee and endorsed by
the  EU  that  are  mandatory for  the  current  reporting  period.  The  adoption  of  these  amendments  to  the
requirements of IFRS Accounting Standards as adopted by the EU did not result in substantial changes to
the company’s accounting policies impacting the Company’s financial performance and position.
New or amended accounting standards and interpretations issued but not yet effective
Any new or amended Accounting Standards or Interpretations that were in issue and endorsed by the EU
but  not  yet  effective  for  the  current  financial  year,  have  not  been  early adopted.  The directors  are  of  the
opinion  that  the  adoption  of  the  new,  amended  accounting  standards  or  interpretations  will  not  have  a
significant  impact  on  the  Company’s  current  or  future  reporting  periods  and  on  foreseeable  future
transactions.
18
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Leases
The  Company assesses  at  contract  inception  whether  a  contract  is,  or  contains,  a  lease,  that  is,  if  the
contract  conveys  the  right  to  control  the  use  of  an  identified  asset  for  a  period  of  time  in  exchange  for
consideration.
The company as a lessor
Leases  in  which  the  Company does  not  transfer  substantially all  the  risks  and  rewards  incidental  to
ownership  of  an  asset  are  classified  as  operating  leases.  Rental  income  arising  is  accounted  for  on  a
straight-line basis over the lease term and is included in revenue in the statement of profit or loss due to its
operating nature. Initial direct costs incurred in  negotiating and arranging an operating  lease are added to
the carrying amount of the leased asset  and  recognised  over the lease term on the same basis as rental
income. Contingent rents are recognised as revenue in the period in which they are earned.
Tax
The tax charge/credit in the profit or loss for the year normally 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.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the
end of the reporting period, and any adjustments to tax payable in respect to previous years.
Deferred income tax is provided using the liability method, for all temporary differences arising between the
tax bases of assets and liabilities and their carrying values for financial reporting purposes. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, based on tax rates that have been enacted or substantively enacted at 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.
Under this method, the Company is required to make provision for deferred income taxes on the revaluation
of certain property assets and provisions on the difference between the carrying value for financial reporting
purposes and their tax base.
A  deferred  tax  asset  is  recognised  only to  the  extent  that  it  is  probable  that  future  taxable  profits  will  be
available  against  which  the  assets  can  be  utilised  and/or  sufficient  taxable  temporary differences  are
available.   Deferred  tax  assets  are  reduced  to  the  extent  that  is  no  longer  probable  that  the  related  tax
benefit will be realised.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current
tax  assets  against  current  tax  liabilities  and  deferred  tax  assets  against  deferred  tax  liabilities;  and  they
relate  to  the  same  taxable  authority on  either  the  same  taxable  entity or  different  taxable  entities  which
intend to settle simultaneously.
19
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Investment property
Investment property, principally comprise of freehold land and buildings held for long-term rentals and/or for
capital  appreciation  that are  not  occupied by the  Company.  Investment property, including  property under
construction for such purposes, is initially recognised at historical cost, including transaction and borrowing
costs.  Borrowing  costs  which  are  incurred  for  the  purpose  of  acquiring  or  constructing  a  qualifying
investment property are capitalised as part  of its cost. Borrowing costs are capitalised while acquisition or
construction is actively underway. Capitalisation of borrowing costs is ceased once the asset is substantially
complete and is suspended if the development of the asset is suspended.
After  initial  recognition,  investment  property is  carried  at  fair  value,  representing  open  market  value
determined annually. Fair value is based on active market prices, adjusted, if necessary, for any difference
in the nature, location or condition of the specific asset. If the information is not available, the Company uses
alternative  valuation  methods  such  as  recent  prices  on  less  active  markets  or  discounted  cash  flow
projections. Movements in fair value are recognised directly in profit or loss in the period in which they arise.
Subsequent  expenditure is  capitalised  to  the  asset’s carrying amount  only when  it  is probable  that  future
economic benefits associated with the expenditure will flow to the Company and the cost of the item can be
measured reliably. All other repairs and maintenance costs are charged to profit or loss during the financial
period in which they are incurred. When part of an investment property is replaced, the carrying amount of
the replaced part is derecognised.
The fair value of investment property does not reflect future capital expenditure that will improve or enhance
the property and does not reflect the related future benefits from this future expenditure other than those a
rational market participant would take into account when determining the value of the property.
An  investment  property is  derecognised  upon  disposal  or  when  the  investment  property is  permanently
withdrawn  from  use  and  no  future  economic  benefits  are  expected  from  the  disposal.  Any difference
between the net disposal proceeds and the carrying amount of the asset is included in profit or loss in the
period in which the property is derecognised.
Transfers to and from investment properties to property, plant and equipment are determined by a change
in  use  of  owner-occupation.  The  fair  value  on  the  date  of  change  of  use  from  investment  properties  to
property, plant and equipment is used as deemed cost for the subsequent accounting. The existing carrying
amount  of  property,  plant  and  equipment  is  used  for  the  subsequent  accounting  cost  of  investment
properties on the date of change of use.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or  equity instrument  of  another  entity.  Financial  assets  and  financial  liabilities  are  recognised  when  the
Company becomes a party to the contractual provisions of the financial instrument.
Financial  assets  are  derecognised  when  the  contractual  rights  to  the  cash  flows  from  the  financial  asset
expire, or when the financial asset and all substantial risks and rewards are transferred. Financial liabilities
are derecognised when they are extinguished, discharged, cancelled or expired.
20
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Financial instruments - continued
Financial assets
Financial assets are classified at initial recognition in accordance with how they are subsequently measured,
as follows:
 financial assets at amortised cost;
 financial assets at fair value through other comprehensive income; and
 financial assets at fair value through profit or loss.
Financial assets at amortised cost
Financial  assets  at  amortised  cost  are  financial  assets  that  are  held  within  the  business  model  whose
objective is to collect  contractual  cash  flows  (“hold to collect”) and the contractual  terms give rise to cash
flows that are solely payments of principal and interest.
On initial recognition, financial assets at amortised cost are recognised at fair value plus transaction costs
that are directly attributable to the acquisition of the financial asset. Discounting is omitted where the effect
of discounting is immaterial. Trade receivables without a significant financing component are measured at
the transaction price as a practical expedient.
Financial  assets at  amortised  cost are subsequently carried at  amortised  cost  using the  effective  interest
method  less  impairment  losses,  if  any.  Gain  or  losses  are  recognised in  profit  or  loss  when  the  asset  is
derecognised, modified, or impaired.
Financial  assets  are  derecognised  when  the  rights  to  receive  cash  flows  have  expired  or  have  been
transferred  and the  Company has  transferred  substantially all  the  risks and  rewards of  ownership.  When
there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written
off.
Provisions are recorded where, in the opinion of the directors, there is an impairment in value. Where there
has been an impairment in the value of an investment, it is recognised as an expense in the period in which
the diminution is identified.
The Company’s financial assets under this classification include loan receivable, trade and other receivables
and cash and cash equivalents.
Impairment of financial assets
The  Company recognises  an  allowance  for  expected  credit  losses  (ECLs)  on  financial  assets  that  are
measured at amortised cost.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Company expects to receive, discounted at an approximation of the original
effective interest rate. The resulting impairment allowance is insignificant to the company’s financial position
and results.
21
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Financial instruments - continued
Impairment of financial assets - continued
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that
are  possible  within  the  next  12-months  (12-month  ECL).  For  those  credit  exposures  for  which  there  has
been  a  significant  increase  in  credit  risk  since  initial  recognition,  a  loss  allowance  is  required  for  credit
losses  expected over  the  remaining  life  of the  exposure, irrespective  of  the  timing  of  the  default (lifetime
ECL).
For  trade  receivables,  the  Company apply the  simplifies  approach  permitted  by IFRS  9,  which  requires
expected lifetime losses to be recognised from initial recognition of the receivables. See note 21 for further
details.
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified
impairment losses are insignificant.
For related parties, the Company applies the general approach if the financial asset is determined to have
low  credit  risk  at  the  reporting  date  where  the  credit  risk  has  not  increased  significantly since  initial
recognition. The financial asset is deemed to have low credit risk if there is low risk of default and the debtor
has a strong capacity to meet its  contractual  obligations  in the  near term.The Company’s financial assets
are mainly financial assets at amortised cost.
Financial  liabilities  are  classified  at  initial  recognition  in  accordance  with  how  they are  subsequently
measured, as follows:
 financial liabilities at amortised cost; and
 financial liabilities at fair value through profit or loss.
The Company’s financial liabilities are mainly financial liabilities at amortised cost..
Financial liabilities at amortised cost
Financial  liabilities  at  amortised  cost  are  initially recognised  at  fair  value,  net  of  transaction  cost  and  are
subsequently measured  at amortised cost using the effective  interest  method. All interest-related charges
under the interest amortisation process are recognised in profit or loss.
On derecognition, the difference between the carrying amount of the financial liability (or part of a financial
liability)  extinguished  or  transferred  to  another  party and  the  consideration  paid,  including  any non-cash
assets transferred or liabilities assumed, are recognised in profit or loss.
Financial liabilities under this classification include borrowings and trade and other payables.
22
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of
Directors. The Board of Directors considers the Company to be made up of one segment, that is to lease
the investment property.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the  fair value is based on the price that would be received to sell an asset or paid to transfer a
liability in  an orderly transaction between market participants  at the measurement date; and assumes that
the transaction will take place either in the principal market, or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability,  assuming  they act  in  their  economic  best  interests.  For  non-financial  assets,  the  fair  value
measurement  is  based  on  its  highest  and  best  use.  Valuation  techniques  that  are  appropriate  in  the
circumstances and for which sufficient data are available  to measure fair value, are used, maximising the
use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that
reflects  the  significance  of  the  inputs  used  in  making  the  measurements.  Classifications  are  reviewed  at
each reporting date  and  transfers  between  levels are  determined  based on a reassessment of the lowest
level of input that is significant to the fair value measurement.
For  recurring  and  non-recurring  fair  value  measurements,  external  valuers  may  be  used  when  internal
expertise  is  either  not  available  or  when  the  valuation  is  deemed  to  be  significant.  External  valuers  are
selected based on market knowledge and reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is undertaken, which includes a verification of the
major inputs  applied in  the  latest valuation  and  a  comparison, where  applicable,  with  external  sources of
data.
3.
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with IFRS Accounting Standards as adopted by the EU
requires  management  to  make  judgements,  estimates  and  assumptions  that  affect  the  application  of
policies  and  reported  amounts  of  assets  and  liabilities,  income  and  expenses.  The
directors  have
considered  the  development,  selection  and  disclosure  of  the  Company’s  critical  accounting  policies  and
estimates  and  the  application  of  these  policies  and  estimates.  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’s directors, except for the matter disclosed below, 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  disclosure  in  terms  of  the  requirements  of  IAS  1
Presentation of Financial Statements.
23
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
3.
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS - continued
Fair value of investment property
Investment properties are revalued to fair value by using either internal valuations or valuations prepared by
external  independent  valuers.  These  valuations  are  based  upon  assumptions  including  average  rate  per
room and other income, anticipated operating costs, occupancy rate and the appropriate earnings multiplier.
These  estimates are  subjective in  nature  and  involve  uncertainties  and  matters  of significant judgements
and therefore, cannot be determined with precision.
4.
REVENUE
2025
€
2024
€
Rental income
2,448,000 2,400,000
Revenue represents lease income from a related company from the lease of the investment property.
5.
PROFIT BEFORE TAX
The profit before tax is stated after charging:
2025
€
2024
€
Amortisation of bond issuance costs (Note 16)
49,512 50,581
Amortisation of intangible assets (Note 11)
590 590
Statutory audit
9,000 9,000
Employee benefit expense (Note 6)
42,000 42,000
Depreciation of investment property (Note 10)
184,935 -
Fees charged by the auditor for services rendered during the financial year are as follows:
2025
€
2024
€
Auditors' remuneration
Statutory audit
9,000 9,000
Other assurance services
4,000 4,000
Non-assurance services
500 500
24
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
6.
EMPLOYEE BENEFIT EXPENSE
Employee benefit expenses incurred during the
year
were as follows:
2025
€
2024
€
Directors' remuneration
42,000 42,000
The average number of persons employed by the Company during the year was
3
(
2024
:
3
).
7.
FINANCE INCOME
2025
€
2024
€
Interest from loan receivable
279,739 792,625
8.
FINANCE COSTS
2025
€
2024
€
Bank charges and interest
624 919
Interest expense on bonds payable (Note 16)
1,309,785 1,311,621
1,310,409
1,312,540
9.
TAXATION
The tax charged to profit or loss comprised of the following:
2025
€
2024
€
Current tax charge
321,556 486,880
Deferred tax charge
2,364,217 469,861
2,685,773
956,741
25
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
9.
TAXATION - continued
The tax on the
Company
's profit before tax differs from the theoretical tax expense that would arise using
the applicable tax rate in Malta of 35% as follows:
2025
€
2024
€
Profit before tax
6,961,531 6,232,946
Theoretical tax expense at 35%
2,436,536 2,181,531
Tax effect of:
ECL disallowed for tax purposes
(176,126) 68,386
Difference between 10% deferred tax on investment property
and 35% on gain in fair value
481,216 (1,174,655)
Disallowed expenses
115,507 49,479
Maintenance allowance
(171,360) (168,000)
Tax charge
2,685,773
956,741
10.
INVESTMENT PROPERTY
2025
€
2024
€
Opening balance
70,820,447 66,121,827
Additions
18,447,105 -
Change in fair value
5,380,003 4,698,620
Depreciation charge
(184,935) -
Carrying amount
94,462,620
70,820,447
The  investment  property is  a  hotel  which  is  situated  at,  Qawra  Palace  Hotel,  St.  Paul's  Bay SPB  1902,
Malta,  and  is  being  leased  out  to  a  related  company and  is  carried  at  fair  value.  Rental  income  from
investment  property for the  year  ended
31  March  2025
amounted  to
€2,448,000
(
2024
: €2,400,000). The
Company has not incurred direct operating expenses arising from its investment property.
During  the  year  ended  31  March  2025,  the  related  party transferred  portion  of  the  property,  plant  and
equipment ('PPE') within the investment property to the Company as repayment of outstanding loan payable
to the Company. As this transaction did not involve cash, it is considered a non-cash investing activity.
2025
€
2024
€
Cost
32,490,205 14,043,100
Fair value gains
62,157,350 56,777,347
Depreciation of PPE
(184,935) 56,777,347
Carrying amount
94,462,620
127,597,794
26
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
10.
INVESTMENT PROPERTY - continued
The fair value of the investment property as at 31 March 2025 and 31 March 2024 is based on valuations by
an independent architect who has experience in the location and category of the investment property being
valued, as adjusted for the purposes of these financial statements as disclosed below:
2025
€
2024
€
Fair value as per architect's valuation as at end of year
112,861,921
105,532,937
Carrying amount of PPE as at end of year (i)
(18,399,301) (34,712,490)
94,462,620
70,820,447
i. The  carrying  amount  of  property,  plant  and  equipment  relates  to  the  cost  (less  accumulated
depreciation)  of  hotel  assets  incurred  by the  lessee  (a  related  company)  and  recognised  in  its
accounts. Since this factor is being taken into consideration in determining the future rental charges to
the  lessee  and since  the  architect's valuation  considered  the state of the  hotel  including  all property,
plant and equipment held as at 31 March 2025 and 31 March 2024, respectively, the fair value of the
investment property has been adjusted as explained above.
The carrying amounts that would have been recognised had the land and buildings have been carried under
the cost model were as follows:
2025
€
2024
€
Cost
32,490,205 14,043,100
Accumulated depreciation
(2,501,992) (2,177,090)
29,988,213
11,866,010
The Company's investment property is used as a guarantee for a first ranking special hypothec in favour of
the  bank  and  a  second  ranking  special  hypothec  in  favour  of  the  Security Trustee  (for  the  benefit  of
Bondholders).
Minimum lease commitments receivable but not recognised in the financial statements are as follows:
2025
€
2024
€
Within 12 months
2,496,960 2,448,000
After one year but within five years
10,497,320 10,291,490
After five years
26,892,004 29,594,794
39,886,284
42,334,284
The fair value measurement relating to investment property is disclosed in Note 23.
27
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
11.
INTANGIBLE ASSETS
Computer
software
€
Cost
As at 31 March 2024 & 31 March 2025
1,770
Accumulated amortisation
Opening balance
(1,180)
Amortisation for the year
(590)
As at 31 March 2025
(1,770)
Carrying amount
At 31 March 2025
-
At 31 March 2024
590
12.
LOAN RECEIVABLE
2025
€
2024
€
Non-current
Loan receivable (i)
- 18,579,276
Current
Loan receivable (i)
722,993 1,371,041
Impairment of loans to related company (ii)
(108,349) (576,102)
614,644
794,939
i. On  15 December  2022,  the  Company entered  into  an  interest-bearing  loan facility agreement  with  a
related company, with final maturity date of 26 January 2037. Interest of 5.25% per annum is to be paid
on 27 January of every year during the term of the agreement.
ii. The Company recognised a reversal of the impairment provision on the loan receivable from a related
company amounting to €467,753 during the year ended 31 March 2025 (2024: provision of €159,929).
The Company's exposure to credit risk related to loan receivable is disclosed in Note 21.
28
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
13.
TRADE AND OTHER RECEIVABLES
2025
€
2024
€
Trade receivables - related party (i)
2,888,640 1,146,656
Prepayments
17,870 63,896
2,906,510
1,210,552
i. Trade receivables are stated net of allowance for impairment losses amounting to NIL (
2024
: €
35,464
).
The  Company’s  exposure  to  credit  risk  and  impairment  losses  relating  to  trade  and  other  receivables  is
disclosed in Note 21.
14.
CASH AND CASH EQUIVALENTS
Cash  and  cash  equivalents  consist  of  balances  with  banks.  Cash  and  cash  equivalents  included  in  the
statement of cash flows reconcile to the amounts shown in the statement of financial position as follows:
2025
€
2024
€
Bank balances
562,143 147,035
15.
SHARE CAPITAL
2025
€
2024
€
Authorised
, issued and fully paid up
1,000,000 Ordinary Shares at €2.329373 each
2,329,373 2,329,373
All ordinary shares carry identical voting  rights  at  general meeting of the Company, are equally entitled to
any distribution of dividends, and all classes of shares rank equally for any residual assets of the Company
after the settlement of all liabilities in the event of the Company's winding up.
29
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
16.
BORROWINGS
2025
€
2024
€
Non-current
€25,000,000 bonds, 5.25%, 2023-2033
24,499,752 24,450,240
In 2023, the Company issued an aggregate principal amount of €25,000,000 secured bonds with a nominal
amount value of €100 per bond issued at par and with a maturity date of 27 February 2033. The bonds are
secured by a second ranking special hypothec granting the security trustee a right of preference and priority
for  repayment  over  the  hypothecated  property.  The  amount  is  net  of  bond  issuance  cost  amounting  to
€500,248 with amortisation during the year ended 31 March 2025 amounting to €49,512 (2024: €50,581).
17.
DEFERRED TAX LIABILITY
Deferred  taxes  are calculated  on  all temporary differences under the  liability method  using a  principal tax
rate  of  35%  (2024:  35%),  with  the  exception  of  deferred  taxation  on  fair  value  gains  attributable  to
investment  property which is computed utilising a tax  rate  of  10%  (2024:  10%) on  the  basis  applicable to
property disposals.
The balance represents temporary differences attributable to:
Fair value of investment property
2025
€
2024
€
Opening deferred tax
7,082,045 6,612,183
Charged to profit or loss
2,364,217 469,862
Closing deferred tax
9,446,262
7,082,045
The balances at 31 March arose from fair value changes arising on investment property.
Movements  in  deferred  tax  attributable  to  temporary differences  arising  on  changes  in  fair  value  of
investment property are recognised in profit or loss.
The recognised deferred tax liabilities are expected to be settled principally after more than twelve months
from the end of the reporting period.
18.
TRADE AND OTHER PAYABLES
2025
€
2024
€
Trade payables
1,770 1,770
Accruals
141,132 139,239
VAT payable
436,625 456,483
579,527
597,492
The Company's exposure to liquidity risk related to trade and other payables as disclosed in Note
21
.
30
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
19.
EARNINGS PER SHARE
The basic earnings per share  at  31  March is calculated by dividing the profit attributable to  owners of the
Company by the weighted average number of ordinary shares in issue during the year, as follows:
2025
2024
Profit attributable to the owners
€
4,275,758
€
5,276,205
Weighted average number of ordinary shares
1,000,000 1,000,000
Basic earnings per share
€
4.28
€
5.28
20.
RELATED PARTY TRANSACTIONS
The
Company
has  related  party relationships  with  companies under  common control  and  over  which  the
directors exercise significant influence. Transactions are carried out with related parties on a regular basis
and in the ordinary course of the business. The following are the transactions with related parties during the
year:
2025
€
2024
€
Revenue
Company under common control
2,448,000 2,400,000
Interest income
Company under common control
279,739 792,625
Loan receivable
Company under common control
780,219 (8,523,837)
Administrative expenses
Directors' remuneration
42,000 42,000
The outstanding  balances arising  from  the  above transactions  are  disclosed in  Notes
12
and
13
to  these
financial statements.
21.
FINANCIAL RISK MANAGEMENT
The Company’s activities exposed it to a variety of financial risks, including market risk (cash flow and fair
value interest rate risk), credit risk and liquidity risks.
The Company’s directors are responsible for managing the risks faced by the Company. This responsibility
includes identifying, analysing, setting the appropriate risk limits and controls, and monitoring adherence to
such limits and controls. The Company did not make use of derivative financial instruments to hedge certain
risk exposures during the current and preceding financial periods.
31
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT - continued
At  year-end,  the  Company’s  financial  assets  are  comprised  of  financial  assets  at  amortised  cost  namely
loan receivable, trade and other receivables and cash and cash equivalents.
At  year-end,  the  Company’s  financial  liabilities  comprised  of  financial  liabilities  at  amortised  cost  namely
borrowings and trade and other payables.
Market risk
Market risk is the risk that changes in market prices (e.g. foreign exchange rates, interest rates and equity
prices)  will  affect  the  Company and  the  Company’s  income  or  the  value  of  its  holdings  of  financial
instruments. The Company is exposed mainly to changes in interest rates.
Cash flow and fair value interest rate risk
Interest  rate  risk  relates  to  the  risk  that  the  fair  value  or  future  cash  flows  of  a  financial  instrument  will
fluctuate because of changes in market interest rates. The directors manage interest rate risk by minimising
variable-rate long-term borrowings.
The  Company’s  income  and  operating  cash  flows  are  substantially independent  of  changes  in  market
interest  rates. The  Company’s  bonds  payable  are at fixed  interest rates and  therefore do not  expose the
Company to cash flow and fair value interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Company.
Credit risk principally arises from cash and cash equivalents comprising deposits with banks and loans and
trade receivables from a related company. The Company’s principal exposures to credit risk as at the end of
the reporting period are analysed as follows:
2025
€
2024
€
Cash at bank
562,143 147,035
Trade receivables - related party
2,888,640 1,146,656
Loan receivable - related party
722,993 19,950,317
4,173,776
21,244,008
The maximum exposure to  credit risk at  the  end of  the  reporting  period in  respect of  the  financial  assets
mentioned  above  is  equivalent  to  their  carrying  amount,  net  of  any provisions  for  impairment  of  those
assets,  as  disclosed  in  the  statement  of  financial  position  and  in  the  respective  notes  to  the  financial
statements.
32
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT - continued
Credit risk - continued
Cash at Bank
The Company’s cash is placed with reputable financial institutions, such that management does not expect
any institution  to  fail  to  meet repayments  of  amounts  held  in  the name of  the  Company. While  cash and
cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss
was insignificant.
Trade and Loan receivable
The Company's trade receivable and loan receivable balances are with a related company. The Company’s
risk  is  managed  through  assessing  the  credit  quality of  its  related  company by  taking  into  account  the
financial position, past experience and other factors and incorporating forward looking information such as
economic conditions where the related party operates and other macroeconomic factors affecting the ability
of the related company subsidiary to settle the loans receivables.
Impairment of receivables
An impairment analysis is performed at each reporting date for these assets using the simplified approach
to measure the allowance ECL on trade and loan receivables. The trade and loan receivables are with the
same related company. The Company has adopted a 12-month ECL method to its balances with the related
company.  12-month  ECL  are  the  expected  credit  losses  that  result  from  default  events  that  are possible
within 12 months after the reporting date. A loss allowance of NIL (2024: €35,464) was provided as at the
end  of  the year for the trade receivable  balance  and  a loss  allowance  of €108,349  (2024:  €576,102)  was
provided for the loan receivable.
Liquidity risk
The Company is exposed to liquidity risk in relation to meeting future obligations associated with its financial
liabilities, which comprise principally of borrowings and trade and other payables (Note 16 and 18). Prudent
liquidity risk  management  includes  maintaining  sufficient  cash  and  committed  credit  lines  to  ensure  the
availability of an adequate amount of funding to meet the Company’s obligations.
The  directors  manage  liquidity risk  by maintaining  adequate  cash  reserves  and/or  available  borrowing
facilities  by continuously monitoring  actual  and  forecast  cash  flows  as  well  as  the  maturity profiles  of
financial liabilities.
The table below  analyses the company’s non-derivative financial liabilities into relevant maturity groupings
based  on  the  remaining  period  at  the  end  of  the  reporting  period  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 amounts, as the impact of discounting is not significant.
33
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT - continued
Liquidity risk - continued
Weighted
average
interest rate
%
Within one year
€
One to five
years
€
Over five
years
€
Remaining
contractual
maturities
€
31 March 2025
Non-interest bearing:
Trade payables
- 1,770 - - 1,770
Interest-bearing:
Bonds payable
5.25% 1,312,500 5,253,596 28,941,096 35,507,192
1,314,270
5,253,596
28,941,096
35,508,962
Weighted
average
interest rate
%
Within one year
€
One to five
years
€
Over five
years
€
Remaining
contractual
maturities
€
31 March 2024
Non-interest bearing:
Trade payables
- 1,770 - - 1,770
Interest bearing:
Bonds payable
5.25% 1,316,096 5,253,596 30,253,596 36,823,288
1,317,866
5,253,596
30,253,596
36,825,058
Fair value of financial instruments
As  at year-end,  the carrying  amounts  of  the  cash  and  cash equivalents,  trade and other  receivables and
trade and other payables reflected in the financial statements are reasonable estimates of fair value in view
of  the  nature  of  these  instruments  or  the  relatively short  period  of  time  between  the  origination  of  the
instruments  and  their  expected  realisation.  The  fair  value  of  amounts  owed  by subsidiaries  which  are
current or repayable on demand is equivalent to their carrying amount. The fair value of the Company’s non-
current floating interest rate bank borrowings at the end of the reporting period is not significantly different
from the carrying amounts.
Timing of cash flows
The  presentation  of  the  financial  assets  and  liabilities  listed  above  under  the  current  and  non-current
headings within the
statement of financial position
is intended to indicate the timing in which cash flows will
arise.
34
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT - continued
Capital risk management
The capital structure of the Company consists of debt, which includes the borrowings disclosed in Note 16,
and equity attributable to equity holders, comprising issued share capital and retained earnings as disclosed
in Note 15 to these financial statements and in the statement of changes in equity.
The  Company manages  its  capital  to  ensure  that  it  will  be  able  to  continue  as  a  going  concern  while
maximising  the  return  to  shareholders  through  the  optimisation  of  the  debt  and  equity balance.  The
Company's strategy remains unchanged from 2024.
22.
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Company’s liabilities arising from financing activities, including both
cash and non-cash changes. Liabilities arising from financing activities are those which cash flows were, or
future  cash  flows will  be,  classified in  the  Company's statement  of  cash flow  as  cash flow  from  financing
activities.
Balance at 01
April 2024
€
Net cash
proceeds/
(repayments)
€
Non-cash
changes
Effective
interest
€
Balance at 31
March 2025
€
€25,000,000 bonds, 5.25%, 2023-2033
24,450,240 (1,309,785) 1,359,297 24,499,752
Balance at 01
April 2024
€
Net cash
proceeds/
(repayments)
€
Non-cash
changes
Effective
interest
€
Balance at 31
March 2024
€
€25,000,000 bonds, 5.25%, 2023-2033
24,399,659 (1,423,975) 1,474,556 24,450,240
35
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
23.
FAIR VALUE MEASUREMENT
The  Company is  required  to  analyse  non-financial  assets  carried  at  fair  value  by level  of  the  fair  value
hierarchy.
The following table details the Company's assets and liabilities, measured or disclosed at fair value, using a
three-level  hierarchy,  based  on  the  lowest  level  of  input  that  is  significant  to  the  entire  fair  value
measurement, being:
Level  1:  Quoted  prices  (unadjusted)  in  active  markets  for  identical  assets  or  liabilities  that  the  entity can
access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Level 1
Level 2
Level 3
31 March 2025
Assets
Investment property
- - 94,462,620
The Company’s policy is to recognise transfers into and out of fair value hierarchy levels as of the beginning
of  the  reporting  period.  There were  no  transfers between  levels  during the  financial year. A  reconciliation
from  the  opening  balance  to  the  closing  balance  of  property for  recurring  fair  value  measurements
categorised within Level 3 of the value hierarchy, is reflected in Note
10
.
Valuation processes
The Company’s property is valued by the directors, generally taking cognisance of professional advice from
independent  professionally qualified valuers  who  hold a recognised relevant  professional  qualification  and
have the necessary experience in the location and segments of the property being valued.
When external valuations are carried out in accordance with this process, the valuer reports directly to the
Board of Directors and discussions on the valuation technique, the model utilised and its results, including
an  evaluation  of  the  inputs  to  the  valuation  model,  are  held  at  Board  level.  A  new  valuation  is  typically
commissioned to an external valuer, whenever, in the opinion of the Board of Directors, new circumstances
arise which may suggest that a material change in value in the underlying property has occurred.
36
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2025
NOTES TO THE FINANCIAL STATEMENTS
- continued
23.
FAIR VALUE MEASUREMENT - continued
Valuation techniques
The valuation of the investment property is determined on the wealth-generating capacity of the investment
property,  taking  into  consideration  assumptions  including  average  rate  per  room  and  other  income,
anticipated operating costs, occupancy rate and the appropriate earnings multiplier.
Income capitalisation or discounted cash flow (“DCF”) approach: considers the free cash flows arising from
the  projected  income  streams  expected  to  be  derived  from  the  operation  of  the  property,  discounted  to
present value using an estimate of the weighted average cost of capital that would be available to finance
such an operation. The significant unobservable inputs utilised with this technique include:
The level 3 assets unobservable inputs and sensitivity are as follows:
EBITDA
WACC
Growth rate
2025 - 2034
Qawra Palace Hotel
€6.6m - €7.4m 9.7% 2%
24.
CONTINGENT LIABILITY
The  obligations  of  the Company to  the  bondholders  under  the bonds  are secured by means  of  a special
hypothec.  Specifically,  the  Company shall,  pursuant  to  the  Deed  of  Hypothec,  constitute  in  favour  of  the
Security Trustee (for the benefit  of bondholders) the Special  Hypothec over the hypothecated property for
the  full  amount  of  principal  and  interest due  by the Company to the bondholders in  respect  of  the  bonds.
The Special Hypothec may be enforced by the security trustee upon the bonds becoming immediately due
and payable upon  an  event of  default,  following  which bondholders  shall be  paid  out of the Hypothecated
Property in  priority to  other  creditors,  save  for  any prior  ranking  security or  privilege  that  may  arise  by
operation of law.
37
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Qawra Palace p.l.c.
Report on the Audit of the Financial Statements
Opinion
We
have audited the accompanying financial statements of
Qawra Palace p.l.c.
("the Company"), set
out  on pages
14 to 37
,  which comprise the
statement  of  financial position
as at
31  March  2025
,  the
statement of comprehensive income
,
statement of changes in equity
and
statement of cash flows
for
the
year
then ended, and notes to the financial statements, including a summary of material accounting
policy information.
In  our  opinion,  the  financial  statements  give  a  true  and  fair  view  of  the  financial  position  of  the
Company as at
31 March 2025
, and  of its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting Standards (IFRS Accounting Standards) as
adopted  by the  European  Union  (EU),  and  have  been  properly prepared  in  accordance  with  the
requirements of the Maltese Companies Act (Cap. 386).
Our  opinion  is  consistent  with  the  additional  report  to  the  Audit  Committee  in  accordance  with  the
provision of Article 11 of the EU Regulation No. 537/2014 on specific requirements regarding statutory
audits of public-interest entities.
Basis for Opinion
We conducted  our  audit  in  accordance  with  International  Standards  on  Auditing  (ISAs).  Our
responsibilities  under  those  standards  are  further  described  in  the  Auditor's  Responsibilities  for  the
Audit  of  the  Financial  Statements section  of  our  report.  We are  independent  of  the  Company in
accordance  with  the  ethical  requirements  of  both  the  International  Ethics  Standards  Board  for
Accountants'  International  Code  of  Ethics  for  Professional  Accountants  (including  International
Independence Standards) (IESBA Code) and the Accountancy Profession (Code of Ethics for Warrant
Holders)  Directive  issued  in  terms  of  the  Accountancy Profession  Act  (Cap.  281)  in  Malta  that  are
relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities
in accordance with the IESBA Code and the Code of Ethics for Warrant Holders in Malta. We believe
that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our
opinion.
38
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on the Audit of the Financial Statements - continued
Basis for Opinion - continued
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 laws and regulations in Malta and that we have not
provided  any 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 during the year ended 31 March 2025
are disclosed in Note
5
to the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current year. 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.
Valuation of Investment Property
The Company's investment property pertaining to the Qawra Palace Hotel located at Coast Road, St.
Paul's  Bay SPB  1902,  Malta  is  carried  at  its  fair  value  of  €94,462,620.  Valuation  of this  property is
inherently subjected to, among other factors, the individual nature of the property, its location, and the
expected future revenues to be derived from the property.
The existence of significant estimates used to arrive at the fair value of the property, could result in a
potential  material  misstatement  by virtue  of  the  inherent  uncertainties  underlying  the  estimations.
Consequently, specific audit focus and attention was given to this area.
The  fair  value  of  the  investment  property as  at  31  March  2025  and  31  March  2024  is  based  on
valuations  by an  independent  architect  who  has  experience  in  the  location  and  category of  the
investment  property being  valued,  as  adjusted  for  the  purposes  of  these  financial  statements  as
discussed in Note 10.
Our audit procedures in relation to the valuation of the investment property included, amongst others:
 Considering the objectivity, independence, competence and capabilities of the external valuer;
 Reviewing the methodology used by the external valuer  and by management to estimate the fair
value of the investment property;
 Testing the mathematical accuracy of the calculations derived from the forecast model; and
 Assessing the key valuation inputs and assumptions used on which the forecasts were made.
39
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on the Audit of the Financial Statements - continued
Other Information
The directors  are responsible  for  the  other information.  The  other  information  comprises the  general
information, the directors’ report, and the statement of compliance with the code of principles of good
corporate governance, 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 under 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 that we
have  obtained  prior  to  the  date  of  this  auditor's  report,  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.
Under Article 179(3)  of the Maltese Companies Act  (Cap. 386), we are required  to consider whether
the information given in the directors’ report is compliant with the disclosure requirements of Article 177
of the same Act.
Based on the work we have performed, in our opinion:
the directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386);
the information given in the directors’ report for the financial year for which the financial statements are
prepared is consistent with those in the financial statements; and
in  light  of  our  knowledge  and  understanding  of  the  Company and  its  environment  obtained  in  the
course of the audit, we have not identified material misstatements in the directors’ report.
Responsibilities  of  the  Directors  and  Those  Charged  with  Governance  for  the  Financial
Statements
The directors are responsible for the preparation of financial statements that give a true and fair view in
accordance  with  IFRS  Accounting  Standards  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.
40
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on the Audit of the Financial Statements - continued
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements  can  arise  from  fraud  or  error  and  are  considered  material  if,  individually or  in  the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As  part  of  an  audit  in  accordance  with  ISAs,  we  exercise  professional  judgement  and  maintain
professional scepticism throughout the audit. We also:
 Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud  or  error,  design  and  perform  audit  procedures  responsive  to  those  risks,  and  obtain  audit
evidence  that  is  sufficient  and  appropriate  to  provide  a  basis  for  our  opinion.  The  risk  of  not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
 Evaluate  the  appropriateness of  accounting  policies used  and  the reasonableness of accounting
estimates and related disclosures made by the directors.
 Conclude  on the  appropriateness  of  the  directors’ use  of the  going  concern  basis of  accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or  conditions  that  may  cast  significant  doubt  on  the  Company’s  ability to  continue  as  a  going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's  report  to  the  related  disclosures  in  the  financial  statements  or,  if  such  disclosures  are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor's report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
 Evaluate the overall  presentation,  structure  and content of the  financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
41
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on the Audit of the Financial Statements - continued
Auditor's Responsibilities for the Audit of the Financial Statements - continued
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 communicate with them all relationships and other
matters that may  reasonably be thought to bear on  our independence, and where applicable,  related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore
the  key audit  matters.  We describe  these  matters  in  our  auditor's  report  unless  law  or  regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on the Statement of Compliance with the Code of Principles of Good Corporate
Governance
The  Capital  Markets  Rules  issued  by the  Malta  Financial  Services  Authority require  the  directors  to
prepare and include in their Annual Report a Statement of Compliance providing an explanation of the
extent  to  which  they have  adopted  the  Code  of  Principles  of  Good  Corporate  Governance  and  the
effective measures that  they have taken to ensure compliance throughout the accounting period with
those  Principles.  The  Capital  Markets  Rules  also  require  the  auditor  to  include  a  report  on  the
Statement of Compliance prepared by the directors.
We read the Statement of Compliance and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the financial statements included in the
Annual  Financial Report.  Our  responsibilities  do  not extend  to  considering  whether  this  statement is
consistent with any other information included in the Annual Financial Report.
We are  not  required to,  and  we  do  not, consider  whether  the  Board’s statements  on  internal control
included  in  the  Statement  of  Compliance  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 with the Principles of Good Corporate Governance set out
on  pages   has  been  properly prepared  in  accordance  with  the  requirements  of  the  Capital  Markets
Rules issued by the Malta Financial Services Authority.
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INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on Other Legal and Regulatory Requirements - continued
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 Qawra Palace p.l.c. for the year ended 31 March 2025,
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.
Auditor's responsibilities
Our  responsibility is  to  obtain  reasonable  assurance  about  whether  the  annual  financial  report,
including  the financial  statements,  comply 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 report for the year ended 31 March 2025 has been prepared, in all material
aspects, in accordance with the requirements of its ESEF RTS.
43
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Other matters on which we are required to report by exception
Under  the  Maltese  Companies  Act  (Cap.  386),  we  are  also  responsible  to  report  to  you  if,  in  our
opinion:
 proper accounting records have not been kept, or
 proper returns adequate for our audit have not been received from branches not visited by us; or
 the financial statements are not in agreement with the accounting records and returns; or
 we were unable to obtain all the information and explanations which, to the best of our knowledge
and belief, are necessary for the purpose of our audit.
We also  have  responsibilities  under  the  Capital  Market  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.
Appointment
We were  first  appointed  to  act  as  statutory auditors  of  the  Company by  the  shareholders  of  the
Company on 6 April 2023 for the year ended 31 March 2023, and we were subsequently reappointed
by the shareholders at the Company's general meeting for the financial year thereafter. The period of
uninterrupted engagement as statutory auditor of the Company is three financial years.
This copy of the audit report has been signed by
Conrad Borg (Principal)
for and on behalf of
RSM Malta
Registered Auditors
25 July 2025
44