Company Registration No.: C
82218
Contents Page
Chairman’s Statement 1 - 2
Directors' Report 3 - 10
Corporate Governance - Statement of Compliance 11 - 19
Independent Auditor's Report 20 - 28
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
29 - 30
Consolidated Statement of Financial Position 31 - 32
Consolidated Statement of Changes in Equity 33 - 35
Consolidated Statement of Cash Flows 36 - 37
Notes to the Consolidated Financial Statements 38 - 98
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for the year ended
31 December 2021
Annual Report and Consolidated Financial Statements
Chairman’s Statement
for the year ended 31 December 2021
Development Projects
Consequently, the consolidated statement of profit or loss and other comprehensive income for 2021
reflects anet losson major shareholder’s divestitureof €21.1million whichhas beenmitigatedby anuplift
infairvalueofinvestment propertiesof€30.0millionand buildings underproperty,plantandequipment
of €30.3 million (net of deferred tax), respectively.
TheGroup’sbusinessmodelremainsstrongwithapropertyportfoliovaluedat€331million(2020:€325
million).Netborrowingsasat31December2021amountedto€85.2millioncomparedto€83.4milliona
year earlier.
The Group has continued to position itself for growth by investing in its properties. During 2021, the
Group was involved in the following development projects:
Development works are currently underway for the construction of a 15-floor commercial building in
TestaferrataStreet,Ta’Xbiex.Oncompletion,thepropertywillcomprise14floorsofrentableofficespace
andatopfloorearmarkedforcateringpurposes.TheGroupexpectstocompletetheprojectbytheendof
2024 at an estimated cost of €14.5 million.
ST Tower, Ta’ Xbiex
Ponsomby Hotel and School, Gzira
TheGroupis presentlydevelopingahotel andschooloverasite areameasuringcirca400m2.This project
isscheduledtobecompletedby Q12023atanestimatedcostofcirca€7.9million.Theproposed property
willcompriseaschoolastotheinitial4floorsandan82-roomhotelfromthe5thfloortothe10thfloor.
Therooflevelwillincludeapoolanddeckingarea.Theafore-mentionedschoolissettoformpartofan
Italian-based higher education institution specialising in osteopathy and physiotherapy.
Stivala Group Finance p.l.c.
On26April2021,oneofthemajorshareholders,CarloStivala,relinquishedhis25%ownership interest in
theStivalaGroupandinconsideration,€60.0millionofimmovablepropertyowned bytheGroupwas
transferredtoacompanyultimatelyownedby CarloStivalaandhisdescendants.Thedivestmentprocess
was concluded smoothly and as planned. We wish Carlo all the very best in his future endeavours.
Principal Divestment of Major Shareholder
Whilethepandemichasadverselyimpactedourhospitalitybusiness,Iamencouragedbytheimmediate
increaseintravel demandexperiencedduring2021 followingtheeasingoftravelrestrictionsbysource
countries.Therearesignsallaroundusthatpeopleareadaptingtoa“newnormal”–andcertainlythe
returnoftravelisoneofthebestindicators.In2021,ourhospitalityoperationsgenerated€8.6millionin
revenue, a 57% surgeover2020, while grossprofitincreased by169% to€5.3 million,thoughstill36%
below pre-pandemic levels.
ThepropertylettingdivisionoftheGroupremainedstrongthroughout2021atalmostfulloccupancy.In
thisregard,revenuegeneratedbythisdivisionamountedto€6.2million,beingmarginallyhigher ona
comparablebasis(2020:€6.1million). Iampleasedto reportthatthenewly developedSTBalluta Business
Centre in Sliema, comprising 8 floors of office space, has been fully leased.
Performance
1
Chairman’s Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Corporate Social Responsibility
7
Looking Forward
_______________________________
Chairman/CEO and Director
Novotel Hotel (redevelopment of the Blubay Suites & Apartments)
Mr. Michael Stivala
Aswelookoutoverthenextseveralyears,webelieveourproperty portfolioispoisedtocapitaliseon
majortrendsweseeimpactingtheGroup’sbusinessactivities. Focusingonhospitality,webelievefirmly
intheresilienceoftravelwhichleadustobeoptimisticaboutthefutureofourGroupandthetourism
industry in Malta .
I would like to take this opportunity to thank all our employees, business partners, shareholders, our
Board of Directors and other stakeholders for their continued support.
Refer to page 17 for the Group's commitment to corporate social responsibility.
Movenpick hotel (redevelopment of the Sliema Hotel)
TheGroupisplanningtodemolishthe70-roomSliemaHotelanddevelopa165-room5-starhotelatan
estimatedcostof€10.5million.Furthermore,theGrouphasenteredintoafranchiseagreementtooperate
thesaidhotelunderthe“Movenpick”brandname.ClosureoftheSliemaHotelwilltakeplaceafterthe
new Novotel Hotel is completed and fully operational.
Residential units for resale
The Groupis developinga property inSqaq DunAndrea, Msida whichis presently inshell form.On
completion, the project will consist of 54 residential units spread over 4 adjacent blocks.
TheGrouphasbuildingpermitsinhandfortheredevelopmentofthe54-roomBlubayBlock locatedin
PonsombyStreet,Gzira.Worksare scheduledtocommenceinQ42022andwillextendforaperiodof
circa30monthsatacostofapproximately€15million. Theplanistodevelopan11-floorpropertyhaving
292 rooms,alongwith undergroundparking and ancillaryfacilitiessuch asan indoor poolandfitness
area,aswellasapoolanddeckareaatrooflevel.Furthermore,theGrouphasenteredintoafranchise
agreement for the purposes of operating the proposed 4-star hotel under the “Novotel” brand name.
2
Directors' Report
for the year ended 31 December 2021
Principal activities
Review of business
Performance
The Bond Issue
TheCompany'srevenueamounting to€41,142,087(2020:€3,458,801) isderivedfromdividends receivable
fromitssubsidiary.ThemajorcostoftheCompanyisthebondinterestpayableamountingto€2,347,500
(2020:€2,347,500).TheCompanyregisteredalossaftertaxationof€20,380,454(2020:profitaftertaxation
of€200,000)andasatyearend,itstotalequityamountedto netliabilityof€18,751,247(2020:netassetsof
€1,674,207).
Stivala Group Finance p.l.c.
The Board of Directors are hereby presenting their annual report together with the audited financial
statements of the Group and the Company for the year ended 31 December 2021.
By virtueof theprospectusdated25 September2017and 18July 2019,theCompany issued45,000,0004%
securedbondswitha facevalueof€100each,redeemableatparon18 October2027and15,000,0003.65%
securedbondswithafacevalueof€100each,redeemableatparon29July2029,respectively.Thefunds
receivedwereintendedforfurtherpurchaseanddevelopmentofitsproperties,inlinewiththeGroup's
vision of continuous business expansion.
The
principal
activities
of
the
Group
relate
to
the
property
letting,
development
and
hospitality.
The
Group owns and leases a number of commercial, residential and office properties. These include
apartmentsandvarioushotelsnamelyBayviewHotel,BlubayApartments,BlubaySuites, SliemaHotel
and Azur Hotel, majority of which are situated in Gzira and Sliema.
TheCompanyregisteredalossbeforetaxof€21,182,263duringtheyearended31December2021(2020:
profit before tax of €1,020,427).
GiventheGroup’sandCompany’sfinancingstructureandthepositivenetassetspositionoftheGroup
and theCompany atthe end ofthe financialyear, theDirectors consider theGroup’s andCompany’s state
of affairs as at the close of the financial year to be satisfactory.
TheGroupregisteredaconsolidatedprofitbeforetaxof€4,395,177duringtheyearended31December
2021 (2020: €27,472,088).
The Group's revenue forthe yearamounts to €15,065,293 (2020:€11,748,502). Themain revenue streams of
the groupare hospitality and rentalincome. The rentalincome is slightly highercomparedwith prior year
whileasignificant100%increasewasnotedforthehospitalityindustryduetogradualeasingofcovid-19
restrictions.After deductingthe mainexpensesbeing thecost ofsales and distributioncosts related to
hospitalityaswellasadministrativeexpenses,theGroupincurredanoperatinglossof€1,178,984(2020:
registered an operating profit of €1,257,424).
On the other hand, the increase in the Group's total comprehensive income for the year is primarily due to
increasing change in fair value of investment property and property, plant and equipment.
Inprioryear,theGroupcommissionedFalzonandCutajar-ArchitectsandCivilEngineerstocarryouta
thoroughvaluationexerciseofthepropertiesownedbytheGroup.Incurrentyear,thedirectorsassessed
the valuationof their properties atyear endas part ofthe annual reassessment basedon the market values
of similar properties around the area. This has resulted in the reporting of a change in fair value of
investment propertyand property plantand equipment of €27,570,497and €30,355,009,net of deferred tax
in the statement of profit or loss and other comprehensive income, respectively.
3
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Principal risks and uncertainties
CustomercreditriskismanagedbytheGroup'smanagementsubjecttotheGroup'sestablishedpolicy,
procedures and control relating to customer credit risk management. Credit quality of a customer is
assessed based on each customer's credit limits. Outstanding customer receivables are regularly
monitored. An impairment analysis is performed on each reporting date in accordance with the
guidelines set in IFRS 9 Financial Instruments Standard. The Group exercises a prudent credit control
policy,andaccordingly,itisnotsubjecttoanysignificantexposureorconcentrationofcreditrisk.The
Group banks only with local financial institutions with high quality standard or rating. The Group's
operationsareprincipallycarriedoutinMaltaandmostoftheGroup'srevenueoriginatesfromclients
based in Malta.
Operational risk
Operational risk maybe defined as the risk of losses arising from defects or failures in its internal
processes,people,systemsorexternaleventsincludingrisksrelatedtofraud,technologicalandconduct
risk.
Operationalriskisinherentinallprocesses,systemsandactivitiesoftheGroup.Assuch,allemployees
are responsiblefor managingand controlling operationalrisks associated withtheir ownactivitiesand
business processes where they are involved. The Group, in terms of operational risk management and
control, continues toidentify, evaluateand mitigatesuch risks, regardless if theseactually occurredor not.
The Group also assesses at each reporting date(unless immediate evaluation is necessary)areas of concern
for improvement to minimise such operational risks, arising due to the volatile results of each year's
operations.
The key risks faced by the group include credit risk, strategic risk, operational risk, liquidity risk and
legislativerisks.Togetherwithotherrisksanduncertaintiesinherentinthebusiness,theserequirestrong
capital management as safeguard against competent authority requirements and unfavourable events.
Given such, the Group regularly reviews operational and capital targets against actual and forecast
business levelsto minimise such risks ifnecessary, tothe most considerablelevel possible inthe interest of
institutional stakeholders.
TheDirectorsareawareofthevariousrisksfacedbytheGroup asaresultofits diversifiedbusiness lines
primarily on hospitality and property developmentand letting. A number of measures are in place to
ensure that such risks and uncertainties are maintained at acceptable levels and are in line with the
Group’s risk strategy of sustainable, long-term growth and profitability.
The main types of risk types are outlined hereunder:
Credit risk
Strategic risk
This risk relates to the value of Group's assets and local property market in general.
The Group has strict guidelines and engages competent professionals on quality and valuation of its
investment properties and property, plant and equipment. The Group's properties are rented out to
varioustenants,exceptforthosesiteswheredevelopmentisinprogress.TheGroupcurrentlyhaslease
agreementswithin-substancefixedrentalreceivablesin placeafterthenon-cancellableperiod,which will
protecttheGroupfromunforeseen circumstancesandinflation.AlthoughCOVID-19hadanimpacton
deferral of rental collections from some of its tenants, the Group ensures to implement sound capital
management policies and flexible cash flow as disclosed below under liquidity risk, to mitigate such risk.
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating
activities and from its financing activities including deposits with banks.
4
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Financial risk management and exposures
Events after reporting period
TheGroup isheavily dependent ontheoperations ofthehotelsit ownsandtherental market.Itregularly
reviews thefinancial performanceof its revenue streams in order to ensure thatthere is sufficient liquidity
to sustain itsoperations. Given theevolving nature ofCOVID-19,the Group’s immediate cash flow will be
stretched. Througharrangementswithbankers, the Group is seekingto smoothenthe impactoverthis
difficult period. Cost cut practices have also been continuously implemented.
Alleventsoccuringafterthebalancesheetdateuntilthedateofauthorisationforissueofthesefinancial
statementsandthatarerelevantforvaluationandmeasurementasat31December2021fortheGroup
and the Company are included in these consolidated financial statements.
TheGroupisgovernedbyanumberoflawsandregulations.Failuretocomplycouldhavefinancialand
reputational implications and could materially affect the group's ability to operate. The Group has
embedded operating policies and procedures to ensure compliance with existing legislation.
TheGroup mayalsobe subjectto reputation and litigationriskas a result ofits course ofactionsand
operations. This may pose significant effect on the Group’s and the various stakeholders’ wellbeing, if
ignored. The Board of Directors exercises the highest levels of ethical behaviour possible through a
number of appropriate policies, procedures and controls, implemented on its day to day operations.
Legislative risks
Liquidity risk
The
Group
is
exposed
to
liquidity
risk
in
relation
to
meeting
future
obligations
associated
with
its
financial
liabilities. Prudentliquidityriskmanagementincludesmaintainingsufficientcashandcommittedcredit
lines to ensure the availability of an adequate amount of funding to meet the Group's obligations.
ThehotelindustrygloballyismarkedbystrongandincreasingconsolidationandmanyoftheGroup’s
current and potential competitors may thus have bigger name recognition, larger customer bases and
greaterfinancialandotherresourcesthanthecompanieswithin theGroup.Inresponse tothis,theGroup
and the Company's hotels have undergone renovationsthat would cater the taste of the majority, still
being offerred at the most affordable cost.
Theoutbreakofnationorworld-widepandemicssuchasCovid-19mayhinderoccupationalhealthand
safetyoftheemployeesandheavilydisruptnormalbusinessoperations.Suchrisksareadditionaltothe
potentialeconomicimpactoncustomersandtheextentofrecoveryfollowingapossibleoutbreak.Taking
advantageofthelessonslearntfromCovid-19duringthispasttwoyears,byquicklyreactingtohealth
authorities advice and constantly implementing additional measures, the Group managed to maintain
operations. The Group's constant proactive approach to such adversity, will ensure that such risk is
mitigated.
Pandemics
Note32FinancialRiskManagementtothesefinancialstatementsprovidedetailsinconnectionwiththe
Company’s use of financial instruments, its financial risk management objectives and policies and the
financial risks to which it is exposed.
5
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Future developments
Dividends and Reserves
Directors
Company Secretary
Ms. Antoinette Scerri
The Directors of the Company since the beginning of the year up to the date of this report were:
TheresultsfortheyeararesetintheConsolidatedStatementofComprehensiveIncomeonpage29and
30.
The Board of Directors does not propose the payment of dividend in order to further strengthen the
financial position of the Group. Retained profits carried forward at the reporting date amounted to
€5,293,934(2020:€25,639,068)fortheGroupandaccumulatedlossesof €19,006,247(2020:retainedprofits
of €1,374,207) for the Company.
On another note, the geopolitical situation in Eastern Europe intensified on February 24, 2022, with
Russia’sinvasionofUkraine.Thewarbetweenthetwocountriescontinuestoevolveasmilitaryactivity
proceedsandadditional sanctionsareimposed.In additionto thehumantollandimpactoftheeventson
entitiesthathaveoperationsinRussia,Ukraine,orneighboringcountries(e.g.,Belarus)orthatconduct
business withtheir counterparties,the waris increasingly affectingeconomicandglobalfinancial markets
andexacerbatingongoingeconomicchallenges, includingissues suchas rising inflationand global
supply-
chain disruption.
Mr. Mark Bamber - Non-Executive Director (appointed on 1 March 2021 and resigned on 21 April 2022)
The strongupturn in 2022proved that the customerscontinue to trust the Group. While major renovations
took place in 2021 for ST Bayview Hotel, the Group has other projects to refurbishand rebrand other
properties within the Group. These include development projects for ST Tower, Ponsonby Hotel and
School,DunAndrea,MovenpickHotelandNovotelHotel.AllofthesearepartoftheGroup'sultimate
objectivetofocuson creating,acquiring andenhancingits operationsto createshareholdervalueover the
mediumtermtoensuretheclientsgetthebestpossibleserviceandvalue.TheGroupremainstohavean
optimistic outlook for 2022.
Itisveryuncertaintoanticipatethepolitical,economicandhealthhappeningworldwideincludingthe
Russia-Ukraine war and covid-19 pandemic as it continues to evolve. Despite these uncertainties, the
Group started 2022 with an upward trend on its hospitality revenue exceeding its budgets by
approximately 100% while the property letting/development sector continues to operate normally.
Dr. Ann Marie Agius - Non-Executive Director
TheDirectorsarecloselymonitoringthepossibleimpactonitsoperationsandfinancialperformanceand
are committed to take all necessary steps to mitigate the impact. This has no impact on the financial
statements of the Group and the Company as at date of approval.
Mr. Joseph Brincat - Non-Executive Director (resigned on 30 April 2021)
Mr. Francis Gouder - Non-Executive Director
Mr. Ivan Stivala - Executive Director
Mr. Michael Stivala - Chairman/CEO and Executive Director
Mr. Martin John Stivala - Executive Director
Mr. Jean Paul Debono - Non-Executive Director (appointed on 21 April 2022)
6
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Remuneration committee and corporate governance
Statement of Directors’ Responsibilities for the financial statements
-theDirectors'Report includesafairreviewoftheperformanceofthebusinessandthefinancialposition
of the issuer and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that the Group and the Company face.
- thefinancial statementsgive a trueand fair viewof the financialposition of the Groupand theCompany
asat31December2021,andofthefinancialperformanceandthecashflowsfortheyearthenendedin
accordance with International Financial Reporting Standards as adopted by the European Union; and
Statement of responsibility pursuant to the Capital Market Rules issued by Malta Financial Services
Authority
The Directors are also responsible for designing, implementing and maintaining internal control as
necessary to enable the preparation of financial statements that are free from material misstatement,
whetherduetofraudorerror,andthatcomplywiththeMalteseCompaniesAct,1995(Cap.386).They
are also responsible for safeguarding the assets of the Group and the parent Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
TheDirectorsarerequiredbytheMalteseCompaniesAct,1995(Cap.386)topreparefinancialstatements
inaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEUwhichgiveatrue
and fair viewof thestate ofaffairs oftheCompany asat theend ofeach reporting periodand ofthe profit
or loss for that period.
In preparing such financial statements, the Directors are responsible for:
- ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
- selecting and applying consistently appropriate accounting policies;
- making accounting estimates that are reasonable in the circumstances; 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.
- designing, implementin, and maintaining internal controls relevant to the preparation of the Annual
Financial Report that is free from material non-compliance with the requirements of the ESEF RTS,
whetherduetofraudorerror,andconsequently,forensuringtheaccuratetransferoftheinformationin
the Annual Financial Report into a single electronic reporting format.
- the preparation and publication of the Annual FinancialReport, including the consolidated financial
statementsandtherelevanttaggingrequirementstherein,asrequiredbyCapitalMarketsRule5.56A,in
accordance with the requirements of ESEF RTS,
The Directors confirm that in accordance with the Capital Market Rules, to the best of their knowledge:
Additionally, the directors are responsible for:
Thefinancial statements ofStivalaGroup Financep.l.c.for theyearended31December2021areincluded
in the Annual Report 2021, which is published in hard-copy printed form and is available on the
Company’swebsite.TheDirectorsareresponsibleforthemaintenanceandintegrityoftheAnnualReport
onthe websitein viewof theirresponsibilityforthe controlsover,andthe securityof,thewebsite. Access
to information published on the Company’s website is available in othercountries and jurisdictions, where
legislation governing the preparation and dissemination of financial statements may differ from
requirements or practice in Malta.
Duringtheperiodunderreview,thefunctionsoftheRemunerationCommitteewerecarriedoutbythe
Board of Directors in view of the fact that the remuneration of Directors is not performance related.
7
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Shareholder register information pursuant to Capital Market Rule 5.64
- Principal divestment of major shareholder
Pursuant to the Company announcement issued by Stivala Group Finance p.l.c ('the Company') on 27
April2021,one ofthemajor shareholdersMr. CarloStivala, has resigned fromthe boardof directors ofall
companies forming part of the Stivala Group of which he was adirector. The share capital of the Company
hasbeenreducedby€75,000,madeupof€75,000ordinarysharesof€1each,equivalentto25%ofthe
issuedshare capitalof theCompany.Asa result,the indirectshareholding intheCompanyofeachof
MartinStivala,IvanStivalaandMichaelStivalaandtheirrespectivedescendants(the"ultimatebeneficial
owners") has increased from 25% to 33.33% of the Company's issued share capital.
Article 55.1A of the Company’s Memorandum and Articles of Association states that a shareholder
holdingnot lessthan25%oftheissuedsharecapitaloftheCompanyhaving votingrightsoranumber of
shareholders whobetween them hold notless than 25% ofthe issued sharecapital ofthe Company having
voting rights("aqualifying shareholder")shallbe entitledto appoint(1)directorfor everysuchqualifying
shareholding, by letter addressed to the Company. Any shareholder who does not qualify to appoint
directorsintermsoftheprovisionsofparagraph(a)ofthissub-article55.1,andwhohasnotaggregated
his holdings with thoseof othershareholders forthe purposesof appointinga director(s)pursuantthereto
shallbeentitledtoparticipateandvoteinanelectionofdirectorstotakeplaceonceineveryyearatthe
Annual General Meeting of the Company.
The Companyhas an authorisedsharecapital of€500,000Ordinary Sharesof €1eachand issuedand fully
paidupsharecapitalof €255,000with anominalvalueof€1each. EachOrdinaryShareisentitledtoone
vote. The Ordinary Shares in the Company shall rank pari passu for all intents and purposes at law.
TherearecurrentlynodifferentclassesofOrdinarySharesintheCompanyandaccordinglyallOrdinary
Shares have thesame rights, voting rights andentitlements inconnection withany distributionwhether of
dividends or capital.
- Appointment and removal of Directors
Furthermore,theresultantissuedsharecapitalamountingto€225,000hasbeenincreasedby€30,000to
amountto €255,000in accordancewith Capital MarketRule 3.17.The afore-stated€30,000ordinaryshares
of €1 each have been subscribedto as fully paid-up sharesby Carmelo Stivala Trustee Limited on behalf of
each of the ultimate beneficial owners. Information on other financial impact of the shareholder's
divestiture is disclosed further in note 22.
Having made an appropriate assessment of going concern as discussed in Note 2.1 to these financial
statements, the financialstatements of the Group and theCompany are prepared ona going concern basis.
The Directors regard that pursuant to Capital Markets Rule 5.62, this is appropriate, after due
consideration of the Group’s and Company's financial support from the shareholder and ultimate
beneficialowners.Specifically,theDirectorshavepreparedfinancialandcapitalplansforthenexteleven
years which show that the Group and the Company is in a position to continue operatingas a going
concernfortheforeseeablefuture.Theseplanstakeintoaccountrisks and uncertaintiesfacingtheGroup
and the Company, including but not limited to, the effect of the completion of divestment of major
shareholder’s interest in the Group and the Company, as announced last 27 April 2021.
- Structure of Capital
8
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
SubjecttotheprovisionsoftheAct,theCompanyshallineachyearholdanannualgeneralmeetingat
such time and place as the directors shallappoint. All general meetings other thanthe annualgeneral
meetings shall be called extraordinary general meetings. The Directors may convene an extraordinary
generalmeetingwhenevertheythinkfit.Extraordinarygeneralmeetingsmayalsobeconvenedonsuch
requisition,orindefault,maybeconvenedbysuchrequisitionists,asprovidedbythe Act.Ifatanytime,
therearenotinMaltasufficientdirectorscapableofactingtoformaquorum,anydirector,oranytwo
membersoftheCompany,mayconveneanextraordinarygeneralmeetinginthesamemanner,asnearly
as possible, as that in which meetings may be convened by the Directors.
- Powers of Directors
SubjecttoapplicableprovisionsoftheArticles,thedirectorsmayexerciseallthepowersoftheCompany
toborrowmoney andtohypothecateorchargeitsundertaking,propertyanduncalledcapitaloranypart
thereof, and to issue equitysecuritiesand debt securities on such terms, in such mannerand for such
considerationastheythinkfit,whetheroutrightorassecurityforanydebt,liabilityorobligationofthe
Companyorofanythirdparty.Providedthatthemembersingeneralmeetingmay,fromtimetotime,
restrict and limit the aforesaid powers of the directors, in such manner as they may deem appropriate.
The Chairman shall be appointed by the directors at their first meeting following the annual general
meetingineachyear,saveforthefirstchairmanwhoshallretainthepostofchairmanuntilsuchtimeas
heresigns oris earlierremovedin accordancewith theprovisions ofthearticlesregulatingthe removalof
directors.
AnydirectormayberemovedatanytimebytheCompanyingeneralmeeting.Thedirectorwhoistobe
removed shall be given opportunity of making representations to the general meeting at which a
resolution for his removal is to be taken.
- General Meetings
AgeneralmeetingoftheCompanyshallbedeemednottohavebeendulyconvenedunlessatleast14
(fourteen)days notice hasbeen given inwriting, to allthose members entitled toreceivedsuch notice. The
noticeshallbeexclusive ofthedayon whichitisservedor deemedto beservedand ofthedayforwhich
it wasgiven,andshallspecify theplace,the dayand thehour of themeeting,and in case ofextraordinary
businessorspecialbusiness,thegeneralnatureofthebusiness,andshallbeaccompaniedbyastatement
regarding the effect and scope of any proposed resolution in respect of such extraordinary business.
9
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
- Auditors
___________________________________________ _______________________________
Registered Office
Gzira GZR 1026
Mr. Ivan Stivala - DirectorMr. Michael Stivala - Chairman/CEO and Director
These financial statements were approved for issue by the Board and signed on its behalf on 28 April
2022 by:
Pursuant tothe Company’s statutoryobligations in terms of CompaniesAct and Capital MarketRules, the
appointment of the auditors and the authorisation of the Directors to set their remuneration will be
proposed and approved at the Company’s AGM. HLB CA Falzon have expressed their willingness to
continue in office.
10
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Pursuantto theCapital MarketRulesasissued bythe Malta FinancialServicesAuthority(the "Rules"),
StivalaGroupFinancep.l.c.(“theCompany”)isherebyreportingontheextentofitsownadoptionofthe
Code of Principles of Good Corporate Governance (”the Code”) contained with the Capital Market Rules.
TheCompanyhasonly issued debtsecurities whichhave beenadmitted totrading onthe Malta Stock
Exchangeaccordingly itisexempt fromreportingon themattersprescribedinCapital MarketRules5.97.1
to 5.97.3,5.97.6and 5.97.7 inthis corporate governance statement (“the Statement”). It isin the light of this
exemption afforded tothe Company thatthe Directors are herein reporting onthe corporategovernance of
the Company.
Good corporategovernance isthe responsibility ofthe Boardof Directorsof theCompany (“theBoard”)as
a whole, and has been and remains a priority for the Company. In deciding on the most appropriate
mannerinwhichtoimplementtheCode, theBoardtookcognisanceoftheCompany’ssize,natureand
operations, andformulated theview thatthe adoption of certain mechanismsand structures whichmay be
suitable for companies with extensive operations may not be appropriate for the Company. The
limitationsofsizeandscopeofoperationsinevitablyimpactonthestructuresrequiredtoimplementthe
Code, without however diluting the effectiveness thereof.
Introduction
The Company acknowledges that although the Code does not dictate or prescribe mandatory rules,
compliance with the principles of good corporate governance recommended in the Code is in the best
interests of the Company, its shareholders and other stakeholders.
Pursuant to the Capital Market Rules issued by the Malta Financial Services Authority, Stivala Group
Finance p.l.c. (“the Company”) is hereby reporting on the extentof its adoption of theCode of Principles of
Good Corporate Governance (“the Principles”) with respect to the financial year under review.
The Company became subject to the principles when its bonds were admitted to capital market and
subsequenttradingontheMaltaStockExchange. AccordinglythisreportoftheCompanyonthismatter
covers the whole year.
General
The Board considers that, to the extent otherwise disclosed herein, theCompany has generally been in
compliance with the Principles throughout the year under review.
ThisStatementshallnow setoutthestructuresandprocessesin placewithin theCompany andhowthese
effectively achieve the goals set out inthe Code for theyear under review. For this purpose,this Statement
will makereference tothe pertinent principles ofthe Codeand thenset outthe mannerin which the Board
considers that these have been adhered to.
For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code
means compliance with the Code’s main principles and the Code provisions.
TheDirectorsbelievethatforthefinancialyearunderreviewtheCompanyhasgenerallycompliedwith
the requirements for each of these principles. Further information in this respect is provided hereunder.
Compliance with the Code
11
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Principle One - The Board
Principle Two - Chairman and CEO
Principle Three - Composition of the Board
Thepositionof the Chairman and thatof the CEOare occupiedby sameindividual. Exceptionally,the
BoarddecidedthattheChiefExecutiveshouldbecomeChairman.Suchdecisionwasconsultedtomajor
shareholdersinadvance.ThisstructurewassuccessfulasitconcentratedtheleadershipoftheBoardand
ofexecutivemanagementbyasingleperson.TheBoardhasnowdiscussedtheroleoftheChairmanat
somelength, andagreedthatthe roleofthe Chairmanof theBoardshouldbe heldby athirdpartywho is
not the CEO of the Company/Group. However, in the light of thecurrent significant impact ofthe COVID-
19 pandemic onthe tourismindustry, theBoardfelt that a disruptionofleadershipatthecurrent time
would not be in the Company/Group’s best interest.
The CEO provides the rest of the Directors with access to the information on the Company’s financial
position and systems. He acts as the main point of communication between the Board and overall
corporate operations as he is responsible for proper implementation of sustainable business solutions,
effectiveframeworkof internal controlsover risk inrelationto thebusiness andstrategic goalsdevisedby
the Board.
TheDirectorsreportthatforthefinancialyearunderreview,theDirectorshaveprovidedthenecessary
leadership in the overall direction of the Company and have performed their responsibilities for the
efficient and smooth running of the Company with honesty, competence and integrity. The Board is
composed ofmembers who arecompetent andproper to direct thebusiness of theCompany with honesty,
competence and integrity. All the members of the Board are fully aware of, and conversant with, the
statutory and regulatory requirements connected to the business of the Company. The Board is
accountable for its performance and that of its delegates to shareholders and other relevant stakeholders.
The Board has throughout the period under review provided the necessary leadership in the overall
directionoftheCompany,and hasadoptedprudentandeffectivesystemswhichensure anopen dialogue
between the Board and Senior Management.
The Company has a structure that ensures a mix of Executive and Non-Executive Directors and that
enables the Board to have direct information about the Company’s performance and business activities.
TheroleofChairmanexercisesindependent judgementandisresponsibletolead theBoardand setits
agenda, whilstalso ensuringthatthe Directorsreceiveprecise, timelyand objectiveinformationsothat
theycantakesounddecisionsandeffectivelymonitortheperformanceoftheCompany.TheChairmanis
also responsible for ensuring effective communication with shareholders and encouraging active
engagementbyallmembersofthe Boardfordiscussion ofcomplexorcontentiousissues.TheroleofCEO
is then accountable to the Board for all business operations of the Company.
The Board is composed of 6 members, with 3 Executive and 3 Non-Executive Directors. The Board is
responsible for the overall long term strategy and general policies of the Company, of monitoring the
Company’s systems of control andfinancial reporting and thatit communicates effectivelywith the market
as and when necessary.
12
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Mr. Michael Stivala - Chairman/CEO and Executive Director
Mr. Ivan Stivala - Executive Director
Mr. Martin John Stivala - Executive Director
a)
b)
c)
d)
e)
f)
a)
b)
c)
Principle Four - The Responsibilities of the Board
Mr. Jean Paul Debono - Non-Executive Director (appointed on 21 April 2022)
Mr. Mark Bamber - Non-Executive Director (appointed on 1 March 2021 and resigned on 21 April 2022)
Mr. Francis Gouder - Non-Executive Director
Dr. Ann Marie Agius - Non-Executive Director
Mr. Joseph Brincat - Non-Executive Director (resigned on 30 April 2021)
The Board of Directors consists of the following:
None of the independent Non-Executive Directors:
Each Non-Executive Director has declared in writing to the Board that he/she undertakes:
are or have been employed in any capacity with the Company and/or the Group;
have or had a significant business relationship with the Company and/or the Group;
has received or receives significant additional remuneration from the Company and/or the
Group;
has close family ties with any of the Company’s executive Directors or senior employees;
has served on the board for more than twelve consecutive years; or
is or has been within the last three years an engagement partner or a member of the audit team
of the present or former external auditor of the Company and/or the Group.
to maintain in all circumstances his independence of analysis, decision and action;not to seek or
accept any unreasonable advantages that could be considered as compromising his/her
independence; and
to clearly express his/her opposition in the event that he finds that a decision of the Board may
harm the Company.
InaccordancewiththeprovisionsoftheCompany’sArticlesofAssociation,theappointmentofDirectors
to the Board is exclusivelyreserved to the Company’sshareholders, exceptin so far as appointmentis
madebytheBoardtofillacasualvacancy,whichappointmentwouldbevaliduntiltheconclusionofthe
next AGM of the Company following such an appointment. In terms of the Articles of Association, a
director shall hold office for a period of one (1) year from the date of appointment. Provided that no
appointmentmaybemadeforaperiodexceedingthree(3)years.Notwithstandingtheperiodforwhicha
directorhasbeenappointed,on thelapseofsuch period,adirectorwillbe eligibleforre-appointment.Dr.
Ann Marie Agius, Mr. Francis Gouder and Mr. Jean Paul Debono are considered by the Board to be
independentnon-executivemembersoftheBoard,inthattheyhavenoinvolvementorrelationshipwith
the Company or with the majority shareholders.
The Board acknowledges its statutory mandate to conduct the administration and management of the
Company. TheBoard,infulfillingthismandateanddischargingitsdutyofstewardshipoftheCompany,
assumesresponsibilityfortheCompany’sstrategyanddecisionswithrespecttotheissue,servicingand
redemption of its bonds in issue, and for monitoring that its operations are in conformity with its
commitments towardsbondholders,shareholders,and allrelevant lawsand regulations. TheBoard isalso
responsible for ensuring that the Company establishes and operates effective internal control and
management information systems and that it communicates effectively with the market.
13
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
a)
b)
c)
d)
e)
f)
Principle Five - Board meetings
Aspartofsuccessionplanning,theBoardensurethattheCompanyimplementsappropriateschemesto
recruit,retain and motivateemployees andSenior Management.Directors areentitled toseek independent
professional advice at any time on any aspect of their duties and responsibilities, at the Company’s
expense.
has a clearly-defined Company strategy, policies, management performance criteria and
business policies which can be measured in a precise and tangible manner;
hasestablishedaclearinternalandexternalreportingsystemso thattheBoardhascontinuous
accessto accurate,relevant andtimely information such thatthe Board can dischargeits duties,
exerciseobjectivejudgmentoncorporateaffairsandtakepertinentdecisionstoensurethatan
informed assessment can be made of all issues facing the board;
establishes an Audit Committee in terms of Capital Market Rules 5.117 – 5.134;
continuously assesses and monitors the Company`s present and future operations,
opportunities,threatsandrisksintheexternalenvironmentandcurrentandfuturestrengths
and weaknesses;
evaluates management’s implementation of corporate strategy and financial objectives, and
regularlyreviewsthestrategy,processesand policiesadoptedforimplementationusingkey
performance indicators sothat corrective measures can be taken to addressany deficiencies
and ensure the future sustainability of the Company; and
ensuresthattheCompanyhasappropriatepoliciesandproceduresinplacetoassurethatthe
Companyand its employeesmaintain thehigheststandards ofcorporateconduct, including
compliance with applicable laws, regulations, business and ethical standards.
The Directors meet regularly to dispatch the business of the Board. The Directors are notified of
forthcoming meetings by the Company Secretary with the issue of an agenda and supporting board
papers, which are circulated in advance of the meeting. Minutes are prepared during Board meetings
recording faithfully attendance, and resolutions taken at the meeting. These minutes are subsequently
circulatedtoallDirectorsassoonaspracticableafterthemeeting. TheChairmanensuresthatallrelevant
issuesareontheagendasupportedby allavailableinformation,whilstencouragingthe presentationof
viewspertinenttothesubjectmatterandgivingallDirectorseveryopportunitytocontributetorelevant
issues ontheagenda. Theagendaon theBoardseeksto achieveabalancebetween long-termstrategicand
short-term performance issues.
TheExecutiveOfficersoftheCompanymaybeaskedto attendboardmeetingsorgeneralmeetingsofthe
Company,although theydo nothave theright tovotethereat untilsuch timeasthey arealso appointedto
the Board. Therest of theDirectors may entrust to andconfer upon the CEO any of thepowers exercisable
by them upon such terms and conditions and with such restrictions as they may think fit, and either
collaterallywithortotheexclusionoftheirownpowers,andmayfromtimetotimerevoke,withdraw,
alter or vary all or any of such powers.
In fulfilling its mandate, the Board:
14
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Principle Six - Information and Professional Development
TheBoardconfirmsthattherehave been nochangesintheCompany’sremunerationpolicyduring the
yearunderreviewandtheCompanydoesnotintendtoeffectanychangesinitsremunerationpolicyfor
the following financial year.
The maximum annual aggregate emoluments that may be paid to the Directors is, pursuant to the
Company’s Memorandum and Articles of Association, approved by the shareholders in general meeting.
The Board is composed exclusively of executive and non-executive Directors. The determination of
remuneration arrangements for board members is a reserved matter for the Board as a whole.
Duringthefinancialyearunderreview,Mr.MichaelStivala,Mr.IvanStivalaandMr.MartinJohnStivala
each held an indefinite full-time contract of service with ST Hotels Ltd.
The Directors believe that for the financial year under review they conducted sufficient professional
development for its officers. The Company will continue with this commendable practice. As part of
successionplanningandemployeeretention,theBoardensurethattheCompanyimplementsappropriate
schemes to recruit, retain and motivate employees and Senior Management and keep a high morale
amongst employees.
TheBoardmeetsasoftenandasfrequentlyrequiredinlinewiththenatureanddemandsofthebusiness
of the Company. Directors attend meetings on a frequent and regular basis and dedicate the necessary time
andattention to theirduties as Directorsof theCompany. TheBoard met5times during thefinancial year
under review. The following Directors attended meetings as follows:
Mr. Michael Stivala – Chairman, CEO, Executive Director - 5 meetings
Mr. Ivan Stivala – Executive Director - 5 meetings
Mr. Martin John Stivala – Executive Director - 5 meetings
Dr. Ann Marie Agius - Non-Executive Director - 5 meetings
Mr. Francis Gouder - Non-Executive Director - 5 meetings
Mr. Mark Bamber - Non-Executive Director (newly appointed on 1 March 2021) - 3 meetings
Mr. Joseph Brincat - Non-Executive Director (resigned on 30 April 2021) - 1 meeting
Principle Seven - Evaluation of the Board's performance
Principle Eight - Committees
InviewofthesizeandtypeofoperationoftheCompany,theBoarddoesnotconsidertheCompanyto
requirethesettingupofaremunerationcommittee,andtheBoarditselfcarriesoutthefunctionsofthe
remuneration committeespecified in, and inaccordance with,Principle Eight Aof theCode,given thatthe
remuneration of Directors is not performance-related.
The Board has established a remuneration policy for Directors and Senior Executives, underpinned by
formal and transparent procedures for the development of such a policy and the establishment of the
remuneration packages of individual Directors.
ThecurrentcompositionoftheBoardallowsforacross-sectionofskillsandexperienceandachievesthe
appropriatebalancerequiredfor ittofunction effectively.During theyear,theDirectors carriedouta self-
evaluationperformanceanalysis,includingtheChairmanand/ortheCEO.The resultsof thisanalysisdid
not require any material changes in the Company’s corporate governance structure.
Principle Eight A of the Code deals with the establishment of a remuneration committee for the Company
aimed at developing policies on remuneration for Directors and Senior Executives and devising
appropriate remuneration packages.
15
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
AlloftheDirectorsoftheCompany,exceptforDr.AnnMarieAgius,Mr.FrancisGouderandMr.Jean
Paul Debonoare ExecutiveOfficers ofthe Company.The otherExecutive Directorshavea directbeneficial
interestinthesharecapitaloftheCompany,andassucharesusceptibletoconflictsarisingbetweenthe
potentially diverging interests of the shareholders and the Company. During the financial year under
review, noprivate interests or dutiesunrelated to theCompany were disclosed bythe Directors which
wereor couldhavebeen likelyto placeany ofthemin conflictwith anyinterestsin,or dutiestowards,the
Company.
The Directors are of the view that this Principle is not applicable to the Company.
Principle Eleven deals with conflicts of interest and the principle that Directors should always act in the
best interests of the Company
Principle Eight B of the Code deals with the formal and transparent procedure for the appointment of
Directors.
InviewofthesizeandtypeofoperationoftheCompany,theBoarddoesnotconsidertheCompanyto
require the setting up of a nomination committee. Reference is also made to the informationprovided
underthesubheading‘PrincipleThree’above,whichprovidesforaformalandtransparentprocedurefor
the appointment of new Directors to the Board.
WithrespecttotheCompany’sbondholdersandthemarketingeneral,duringthefinancialyearunder
review, a Company announcement has been issued to the market on 27 April 2021 in relation to the
completion of Mr.CarloStivala's divestiture from Stivalagroup.Further information regarding thismatter
was disclosed in note 22 of the financial statements.
PursuanttotheCompany’sstatutoryobligationsintermsoftheCompaniesAct(Cap.386oftheLawsof
Malta)andtheCapitalMarketRulesissuedbytheMaltaFinancialServicesAuthority,theAnnualReport
andFinancialStatements,theelectionofDirectorsandapprovalofDirectors’fees,theappointmentofthe
auditors and the authorisationof the Directorsto set the auditors’ fees, and other special business, are
proposed and approved at the Company’s AGM.
Principle Nine - Relations with shareholders and with the market
Principle Ten - Relations with Institutional shareholders
Principle Eleven - Conflicts of Interest
Fixed remuneration from Sub-subsidiary €157,974
Fixed remuneration from Company €26,385
The remuneration policy for Directors has been consistent since inception; no Director (including the
Chairman)isentitledtoprofitsharing,shareoptionsorpensionbenefits. Thereisnolinkagebetweenthe
remunerationandtheperformanceofDirectors. Afixedhonorariumispayableateachfinancialyearto
the Non-Executive Directors.
ForthefinancialyearunderreviewtheaggregateremunerationoftheDirectorsoftheCompanyandthe
Group (where the Company forms part) were as follows:
TheCompany’sArticlesofAssociationallowminorityshareholderstocallspecialmeetingsonmattersof
importance to the Company, provided that the minimum threshold of ownership established in the
Articles of Association is met.
16
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Furthermore,theAuditCommitteehastheroleandfunctionofscrutinisingandevaluatinganyproposed
transaction tobe enteredinto by the Companyand a related party,to ensure that theexecution of any such
transaction was at arm’s length and on a commercial basis and ultimately in the best interests of the
Company.
The Audit Committee
TheAuditCommittee’sprimaryobjectiveistoassisttheBoardinfulfillingitsresponsibilities:indealing
withissues ofrisk,controlandgovernance;andreviewthefinancialreportingprocesses,financialpolicies
and internal control structure. During the financial year under review, the Audit Committee met 5 times.
AlthoughtheAuditCommitteeissetupattheleveloftheCompanyitsmaintasksarealsorelatedtothe
activities of the subsidiary, sub- subsidiaries and operational companies.
TheBoardhassetformaltermsofestablishmentandthetermsofreferenceoftheAuditCommitteethat
establish its composition, role and function, the parametersof its remit as wellas the basis forthe processes
thatitisrequiredtocomplywith.TheAuditCommitteeisasub-committeeoftheBoardandisdirectly
responsibleandaccountabletotheBoard.TheBoardreservestherighttochangethesetermsofreference
from time to time.
TheAuditCommitteehasthetasktoensurethatanypotentialconflictsofinterestareresolvedinthebest
interestsoftheCompany.Furthermore,inaccordancewiththeprovisionsofarticle145oftheCompanies
Act (Cap. 386 of the Laws of Malta), every Director who isin any way, whether directly or indirectly,
interested in a contract or proposed contract with the Company is under the duty to fully declare his
interestin therelevanttransactionto theBoardatthefirstpossibleopportunityandhe willnotbe entitled
tovoteonmattersrelatingtotheproposedtransactionandonlypartieswhodonothaveanyconflictin
considering the matter will participate in the consideration of the proposed transaction .
Principle Twelve encourages Directors of listed companies to adhere to accepted principles of corporate
social responsibility
In carrying on itsbusiness the Group is fully awareandat theforefront topreserving theenvironment and
continuously review itspolicies aimedat respectingthe environmentand encouragingsocial responsibility
and accountability.
TheBoardisstronglycommittedtotheenvironment,andtothewelfareofthecommunityinwhichwe
operate.Alldirectorsaremindfulthatsustainabledevelopmentandenvironmentalprotectionarecritical,
bothfor thesuccessof ourtourism and developmentactivities,and forthe benefitof ourcommunity’s
quality of life. To this end, the Group has taken initiatives to minimise its consumption of natural
resources,reduceitsgenerationof waste,andtoincorporatesustainabilityprinciples andattractivedesign
in its developments.
TheCompanyseekstoadheretosoundPrinciplesofCorporateSocialResponsibilityinitsmanagement
practices,andiscommittedtoenhancethequalityoflifeofallstakeholdersandoftheemployeesofthe
Company and the Group.
Principle Twelve - Corporate Social Responsibility
17
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
• Mr. Mark Bamber – appointed on 1 March 2021 and resigned on 21 April 2022
• Mr. Joseph Brincat – resigned on 30 April 2021
Otherkey featuresofthesystem ofinternal controladoptedby theCompanyin respectof itsowninternal
control as well as the control of its subsidiaries and affiliates are as follows:
During the financial year under review the Company operated a system of internal controls which
provided reasonable assurance of effective and efficient operations covering all controls, including
financial and operationalcontrolsandcompliance withlawsand regulations.Processes arein placefor
identifying, evaluating and managing the significant risks facing the Company.
Mr.JeanPaulDebonoisaNon-ExecutiveDirectorandaqualifiedaccountant,afounderandmanaging
partnerina firm,whotheBoardconsiders asindependentandcompetentinaccountingas requiredin
termsoftheCapitalMarketRules.Heisspecialisedinaccounts,taxationandfinancialreportingandhas
extensive experience in servicing local and international clients across a wide range of industry sectors.
Internal Control
TheBoardisultimatelyresponsiblefortheCompany’ssystemof internalcontrolsandforreviewingits
effectiveness.TheDirectorsareawarethatinternalcontrolsystemsaredesignedtomanage,ratherthan
eliminate, the risk of failure to achieve business objectives, and can only provide reasonable, and not
absolute, assurance against normal business risks.
The Audit Committee is composed of 3 independent, Non-Executive Directors:
• Mr. Jean Paul Debono – appointed on 21 April 2022
• Mr. Francis Gouder – Chairman of Audit Committee and Member
• Dr. Ann Marie Agius – Member
Risk identification
TheBoardofDirectors,withtheassistanceoftheManagementteam,isresponsiblefortheidentification
andevaluationofkeyrisksapplicabletotheareasofbusinessinwhichtheCompanyanditssubsidiaries
are involved. These risks are assessed on a continual basis.
Inconclusion, theBoardconsidersthatthe CompanyhasgenerallybeenincompliancewiththePrinciples
throughout the period under review as befits a company of this size and nature.
Information and communication
Periodic strategic reviews which include consideration of long-term financial projections and the
evaluation of business alternatives are regularly convened by the Board. Regularbudgets are prepared and
performance against these plans is actively monitored and reported to the Board.
18
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
_______________________________
_______________________________
Mr. Michael Stivala
- Chairman/CEO and Director
Approved by the Board on 28 April 2022 and signed on its behalf by:
8B TheBoardhasnotappointedaNominationsCommittee,
particularlyof the appointment process being specifically
set out in the Articles of Association. The Board,
however, intends to keep under review the utility and
possible advantagesofhaving aNominations Committee
and following an evaluation may, if the need arises,
makerecommendationstotheshareholdersforachange
to the Articles of Association.
7.1 The Board has not appointed a committee for the
purpose of undertaking an evaluation of the Board’s
performance. The Board believes that the size of the
Company and the Board itself does not warrant the
establishmentofacommitteespecifically forthepurpose
ofcarryingoutaperformanceevaluationofitsrole.The
size of the Board is such that it should enable it to
evaluateits own performancewithout the requirement of
setting up an ad-hoc committee for this purpose. The
Board shall retain this matter under review over the
coming year.
4.2 The Board has not formally developed a succession
policy for the future composition of the Board of
Directors as recommended by Code Provision 4.2.7. In
practice, however, the Board is actively engaged in
succession planning and involved in ensuring that
appropriate schemes to recruit, retain and motivate
employees and Senior Management are in place.
Code Provision Explanation
Mr. Ivan Stivala
- Director
Non-compliance with the principles and the reasons therefor have been identified below.
19
Independent Auditor's Report
1.
Going concern
One of the significant events that happened during2021 wasthe completion of Mr. Carlo Stivala's
divestment from Stivala group. In 2021, this event brought the Company to a net loss of
€20,380,454 and a net liabilityof €18,751,247. Ona group level, it made amassive decreaseof
€20,345,134onretainedprofitscomparedwithprioryear.Thefinancialimpactofthedivestiture
hascreatedan uncertain environmentwhich mayimpact significant assumptionsthat areusedin
the Group’s and Company's assessment of its ability to continue as a going concern.
Risk description
AsrequiredbyInternationalFinancialReportingStandardsandasdisclosedintheStatementof
Directors’ Responsibilities, the Directors are required to adopt the going concern basis in the
preparationofthefinancialstatements,unlessitisinappropriatetopresumethattheGroupand
the Company will continue in business in the foreseeable future.
to the shareholders of Stivala Group Finance p.l.c.
Key Audit Matters
Keyaudit mattersarethose mattersthatin our professionaljudgement wereofmostsignificance inouraudit
ofthe financialstatements ofthecurrentperiod. Thesematterswhere addressedin thecontextof our audit of
the financial statements as a whole and in forming our opinion thereon.
We do not provide a separate opinion on these matters.
Report on the Financial Statements for the year ended 31 December 2021
WehaveauditedtheindividualfinancialstatementsofStivalaGroupFinancep.l.c.(“theCompany”)andthe
consolidated financial statements of the Company and its subsidiaries (together, “the Group”), set out on
pages 29 to 98, which comprise the statement of financial position as at 31 December 2021, statement of
comprehensive income, statement of changes in equity and the statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies.
Opinion
In our opinion, the accompanying financial statements give atrue and fair view ofthe financial position of the
Group and the Company as at 31 December 2021, and of the Group’s and the Company’s financial
performance and cash flows for the year then ended inaccordance with International Financial Reporting
Standards as adopted by the European Union and have been properly prepared in accordance with the
requirements of the Companies Act, Cap. 386 of the Laws of Malta.
Basis for Opinion
WeconductedourauditinaccordancewithInternationalStandardsonAuditing(ISAs).Ourresponsibilities
underthosestandardsarefurtherdescribedintheAuditor'sResponsibilitiesforthe AuditoftheFinancial
Statements section of our report.We are independent of the Groupin accordancewith the International Ethics
StandardsBoardforAccountants'CodeofEthicsforProfessionalAccountants(IESBACode),togetherwith
the ethical requirements that are relevant to our audit of the financial statements in accordance with the
AccountancyProfession(CodeofEthicsforWarrantHolders)DirectiveissuedintermsoftheAccountancy
ProfessionAct(Cap.281)inMalta,andwehavefulfilledourotherethicalresponsibilitiesinaccordancewith
the IESBAcode.We believethat theauditevidence wehaveobtainedis sufficientandappropriateto provide
a basis for our opinion.
20
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Relevant references in the annual report and financial statements:
2.
TheGroup’sliquidityforecastunderlyingthegoingconcernassessmentissubjecttosignificant
estimation and therefore represents a key audit matter.
- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3
- Note on Assets held for distribution to owner: note 22
How the scope of our audit responded to the risk
Our
audit
procedures
included
evaluating
the
Directors’
going
concern
assessment
in
order
to
assess whether there areevents and conditions that exist that creatematerial uncertaintythat may
cast significant doubt of the Group’sability to continue as a goingconcern. In obtaining sufficient,
appropriate audit evidence we:
- Obtained theGroup’s cashflow forecastfor the period subsequent tothe reporting date up until
Dec2032 and discussed thesewith management, focusingon updates made to respond to the
continued impacts and uncertainties around COVID-19 ongoing developments and expected
recovery period. We also tested the arithmetical accuracy of the forecast.
- Evaluated the Directors’ ability to accurately forecast by comparing actual to historical
information. As part of our procedures on events after the reporting period, obtained an
understanding of the precision of management’s forecast and to identify any potential
management bias included in such projections.
- Assessed forreasonableness ofthe main inputs andassumptions usedin the projections, such as
operationalcashflows,inflowsfromsalesofproperty,capitalexpenditures,debtfinancingand
otherfundingavailabilityagainstourunderstandingofthebusinessandindustrydevelopments,
historical data and any other available information.
-PerformedananalysisofthecapitalexpenditureforecastedbytheGrouptobeincurredonits
majordevelopmentprojectsandtheavailabilityoffundingtofinancesuchexpenditurefromthe
StivalaGroupfinanceplcplanof debtissueonthelastquarterofthisyearandotherplanned
bank financing for these projects. We have assessed for reasonableness the net cashflows
forecasted on these major development projects.
Wealsoassessedtherelevanceandadequacyofdisclosuresrelatingtogoingconcernpresented
in Note 2.1 to the accompanying financial statements.
Findings
Theresult of ourtestingwassatisfactoryand we concurthat thegoingconcern assumptionis
appropriate.
Investment property and Property, plant and equipment valuations
TheGroup carriesits investment propertyandbuildings underproperty,plantandequipment at
fair value, with changes in fair value being recognised in the profit or loss and other
comprehensive income, respectively. The last market valuation performed by independent
architects on these properties was on 31 May 2020.
Risk description
21
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
2.
Asat31December2021,fairvaluewasbasedonvaluationperformedbythedirectorsaspartof
their responsibility for annual assessment. Investment property and property, plant and
equipmentamountedto€178,713,402and€148,337,079asat31December2021,respectivelyand
are deemed material to the financial statements.
-Performingproceduresovertheaccuracyandcompletenessoftheinputsorrationaleusedin
the valuations in the light of our understanding of the business and industry developments,
historical data and other available information focusing on updates made to respond to the
continued impact and uncertainties around COVID-19 ongoing developments and expected
recovery period.
- We also assessed the relevance and adequacy of disclosures relating to the Group’s fair
valuation of property, plant and equipment, and investment properties presented in various
notes mentioned above.
- Note on Property, Plant and Equipment: note 13
In the years where a valuation is not obtained, management verifies all major inputs to the
independent valuation report, assesses any propertyvaluation movements when comparedto the
previous valuation report and holds discussions with the independent valuer, as necessary.
Investment property and Property, plant and equipment valuations (
continued
)
Findings
Theresult of ourtestingwassatisfactoryand we concurthat the valuations of theinvestment
property and property, plant and equipment are appropriate.
Estimatingthefairvalueisacomplexprocessinvolvinganumberofjudgementsandestimates
regarding various inputs. Consequently, we have determined the valuation of the
aforementioned properties to be a key audit matter.
Relevant references in the annual report and financial statements:
- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3
- Note on Investment Property: note 17
- Accounting policy: notes 2.5, 2.7 and 2.21
How the scope of our audit responded to the risk
-We obtainedanunderstandingofthe Group’sprocessfordetermining fairvaluemeasurements
and disclosures and the relevant control procedures. We assessed inherent and control risk
related to the fair value measurements and disclosures and evaluated whether the fair value
measurementsanddisclosuresarein accordancewiththe Group’sfinancialreportingframework
and are consistently applied.
-WeperformedtestsrelatingtothevaluationoftheGroup’sproperty,focusingonmanagement
reviews over the property valuations by inspecting management analysis and minutes of
meetings of the board and audit committee where such valuation was discussed;
22
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
3.
- Accounting policy: notes 2.19
- Note on Deferred Tax: note 26
- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3
Recoverability of deferred tax asset
Risk description
Asat31December2021,theGrouphas recognisedadeferredtaxassetamountingto€10,573,639
arisingprimarilyfromdeductibletemporarydifferencesinrespectofexcessofcapitalallowance
overdepreciation,unabsorbedcapitalallowancesand unutilizedtax lossesand investmenttax
credit thatitbelievesare recoverable. Therecoverabilityof recogniseddeferred taxasset isin
part dependent on the Group’s ability to generate future taxable profits sufficient to utilise
deductible temporary differences and tax losses. We have determined this to be a key audit
matter,due totheinherentuncertaintyin forecastingthe amountand timingoffuturetaxable
profits and the reversal of temporary difference.
Relevant references in the annual report and financial statements:
Findings
We are satisfiedthat the deferredtax asset has been properly recognised andmeasured in viewof
thefactthattaxableprofitswillbeavailableagainstwhichthedeductibletemporarydifferences
can be utilized.
We assessed the accuracy of forecastfuturetaxable profits by evaluating historicalforecasting
accuracyandcomparingassumptionswithourexpectationsofthoseassumptionsderivedfrom
our knowledge of the industry and our understanding obtained during the audit.
How the scope of our audit responded to the risk
We ensured that IAS 12 Income Taxes has been correctly applied in respect of deferred tax,
paying particular attention to the following situations: (a) the revaluation of an asset (b)
unabsorbed capital allowances and unutilized tax losses and (c) investment tax credits.
Other Information
TheDirectorsareresponsiblefortheotherinformation.TheotherinformationcomprisesoftheChairman’s
Statement, Directors' Report and Corporate Governance Statement of Compliance. Our opinion on the
financial statements does not cover this information. Except for our opinion on the Directors’ Report in
accordance with the Companies Act, Cap. 386 of the Laws of Malta and on the Corporate Governance
StatementofComplianceinaccordancewiththeCapitalMarketRulesissued bythe MaltaFinancialServices
Authority, our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformation
and, in doing so, consider whether the other information is materially inconsistent with the financial
statementsorourknowledgeobtainedintheaudit,orotherwiseappearstobemateriallymisstated.Ifbased
onourworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,
we are required to report that fact. We have nothing to report in this regard.
23
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Intermsofarticle179A(4)oftheCompaniesAct(Cap.386),thescope ofourauditdoesnot includeassurance
on thefutureviability oftheauditedentity oron theefficiencyoreffectiveness with which theDirectorshave
conducted or will conduct the affairs of the entity.
In preparing the financial statements, the Directors are responsible for assessing the Group's ability to
continueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoing
concern basis ofaccounting unless theDirectors eitherintend toliquidate theGroup orto ceaseoperations, or
haveno realisticalternativeto doso.Misstatements can arisefrom fraudorerror andareconsideredmaterial
if,individuallyorin theaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsof
users taken on the basis of these financial statements.
Auditors' Responsibilities for the Audit of the Financial Statements
Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefree
frommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor'sreportthatincludesour
opinion.
Reasonable Assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance withISAswill alwaysdetecta materialmisstatement whenit exists.Misstatements canarisefrom
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.
In addition, in light of the knowledge and understanding of the Company and the Group and their
environment,obtained inthe course of the audit, we are required to report if we have identified material
misstatements in the Directors' Report and other information that we obtained prior to the date of this
auditor’s report. We have nothing to report in this regard.
Responsibilities of the Directors and the Audit Committee for the financial statements
TheDirectorsareresponsibleforthepreparationofthefinancialstatementsthatgiveatrueandfairviewin
accordancewiththeInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion,andfor
such internalcontrols as theDirectors determine isnecessary toenable thepreparation offinancialstatements
that are free from material misstatement, whether due to fraud or error.
With respect to the Directors' Report, we also considered whether the Directors' Report includes the
disclosuresrequiredbyArticle177oftheCompaniesAct,Cap.386oftheLawsofMalta.Basedonthework
we have performed, in our opinion:
TheDirectorshavedelegatedtheresponsibilityforoverseeingtheCompany'sfinancialreportingprocessto
the Audit Committee.
-theinformationgivenintheDirectors'Reportfortheyearended31December2021isconsistentwiththe
financial statements; and
-theDirectors'Reporthasbeenprepared inaccordancewiththeCompaniesAct,Cap.386 ofthe Lawsof
Malta.
24
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
FromthematterscommunicatedwiththeAuditCommittee,wedeterminethosemattersthatwereofmost
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 auditors' report unless law or regulation precludes publicdisclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedto
outweigh the public interest benefits of such communication.
Aspartof anauditinaccordancewithISAs,weexerciseprofessionaljudgmentandmaintainprofessional
skepticism throughout the audit. We also:
- 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.
- Obtain an understanding of internal control relevant to the auditin order to design audit proceduresthat are
appropriatein thecircumstances,butnotforthepurposeofexpressinganopiniononthe effectivenessofthe
Group's internal control.
-Evaluate theappropriatenessof accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Directors.
-Conclude onthe appropriatenessof theDirectors' useof thegoing concern basis ofaccounting andbased on
theauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmay
castsignificantdoubtontheGroup'sabilitytocontinueasagoingconcern.Ifweconcludethatamaterial
uncertaintyexists,wearerequiredtodrawattentioninourauditor'sreporttotherelateddisclosuresinthe
financialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebased
ontheauditevidenceobtaineduptothedateofourauditor'sreport.However,futureeventsorconditions
maycausetheGrouptoceasetocontinueasagoingconcern.Inparticular,itisdifficulttoevaluateallofthe
potential implications that COVID-19 will have on the Company’s and Group's business and the overall
economy.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence,and to communicate with them all relationships and other matters that
may reasonably be thought to bear our independence, and where applicable related safeguards.
- Obtain sufficient appropriate evidence regarding the financial information of the entities or business
activitieswithin theGroupto express an opinion onthe consolidatedfinancial statements. Weare responsible
for thedirection, supervision andperformance ofthe Group audit. Weremain solely responsible for our audit
opinion.
We communicate with the Audit Committee 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.
-Identifyandassesstheriskofmaterialmisstatementofthefinancialstatements,whetherduetofraudor
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide abasis for our opinion. The risk ofnot detecting a materialmisstatement
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.
25
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Matters on which we are required to report by the Capital Market Rules
Wearenotrequiredto,andwedonot,considerwhethertheBoard'sstatementsoninternalcontrolincluded
in the Corporate Governance Statement cover all the risks and controls, or form an opinion on the
effectiveness of the Company's corporate governance procedures or its risks and control procedures.
In our opinion:
TheAnnualReportandConsolidatedFinancialStatementsofStivalaGroupFinancep.l.c.fortheyearended
31 December 2021 contains other areas required by legislation on which we are required to report. The
directors are responsible for these other areas.
- in the light of the knowledge and understanding of the Company and the Group and its environment
obtainedinthecourseoftheaudittheinformationreferredtoinCapitalMarketRules5.97.4and5.97.5are
free from material misstatement.
Under the Capital Market Rules we also have the responsibility to:
-reviewthestatementmadebytheDirectors,setoutonpages3-10,thatthebusinessisagoingconcern,
together with supporting assumptions or qualifications as necessary.
We have nothing to report to you in respect of these responsibilities.
Matters on which we are required to report on compliance with the European Single Electronic Format
Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
WehaveundertakenareasonableassuranceengagementinaccordancewiththerequirementsofDirective6
issuedbytheAccountancyBoardintermsoftheAccountancyProfessionAct(Cap.281)-theAccountancy
Profession(EuropeanSingleElectronicFormat)AssuranceDirective(the“ESEFDirective6”)ontheAnnual
FinancialReportofStivalaGroupFinancep.l.c.fortheyearended31December2021,entirelypreparedina
single electronic reporting format.
Report on other legal and regulatory requirements
- the Corporate Governance Statement setout on pages 11 -19 hasbeen properly prepared in accordance with
the requirements of the Capital Market Rules 5.94 and 5.97.
Wereadthestatementofcomplianceandconsidertheimplicationforourreportifwebecomeawareofany
apparent misstatements or material inconsistencies with the financial statements included in the annual
report.Ourresponsibilitiesdonotextendtoconsideringwhetherthisstatementisconsistentwiththeother
information included in the annual report.
The Capital Market Rulesissuedby the Malta FinancialService Authority require thedirectors to prepare and
includeintheirAnnualReportaCorporateGovernanceStatementprovidinganexplanationoftheextentto
whichtheyhaveadoptedtheCodeofPrinciplesofGoodCorporateGovernanceandtheeffectivemeasures
that they have taken to ensure compliance with those Principles.
The Capital Market Rules also require the auditor to include a reporton the statement of complianceprepared
bythedirectors.Wearealsorequiredtoexpressanopinionastowhether,inthelightoftheknowledgeand
understandingoftheGroupandtheCompanyanditsenvironmentobtainedinthecourseoftheaudit,we
haveidentified materialmisstatementswithrespect totheinformation referredto inCapital Market Rules
5.97.4 and 5.97.5.
26
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Pursuant to articles 179(10) and 179(11) of the Maltese Companies Act (Cap. 386) Act, we also have
responsibilities under the Companies Act to report if in our opinion:
- proper accounting records have not been kept;
Matters on which we are required to report by exception under the Companies Act
We were first appointed by those charged with governance to act as statutory auditor by the board of
Directors on 12 October 2020 for the financial year ended 31 December 2020. Our appointment has been
renewedannuallybyshareholderresolutionrepresentingatotaluninterruptedengagementof2years.The
Company became listed in on the Malta Stock Exchange on 25 September 2017.
Our responsibility isto obtain reasonable assuranceabout whether the Annual Financial Report,including the
consolidatedfinancialstatementsandtherelevantelectronictaggingtherein, compliesin allmaterialrespects
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 accordance with the requirements of the ESEF RTS.
- Obtaining the Annual Financial Report and performing validations to determine whether the Annual
FinancialReporthasbeenpreparedinaccordancewiththerequirementsofthetechnicalspecificationsofthe
ESEF RTS.
-ExaminingtheinformationintheAnnualFinancialReporttodeterminewhetheralltherequiredtaggings
thereinhavebeen appliedandwhether, inallmaterialrespects,they areinaccordancewith therequirements
of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Inouropinion,theAnnualFinancialReportfortheyearended31December2021hasbeenprepared,inall
material respects, in accordance with the requirements of the ESEF RTS.
We have nothing to report to you in respect of these responsibilities.
ThedirectorsareresponsibleforthepreparationoftheAnnualFinancialReport,includingtheconsolidated
financial statements and the relevant mark-up requirementstherein, by reference to Capital Markets Rule
5.56A, in accordance with the requirements of the ESEF RTS.
- we have not received all the information and explanations we require for our audit.
- the financial statements are not in agreement with the accounting records;
Ourauditopiniononthefinancialstatementsexpressedhereinisconsistentwiththeadditionalreporttothe
audit committee of the Company, which was issued on the same date as this report.
Appointment and audit tenure
Consistency of the audit report with the additional report to the Audit Committee
27
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
HLB CA Falzon
Registered Auditors
28 April 2022
The partner in charge of the audit resulting in this independent auditor's report is
Jozef Wallace Galea for and on behalf of
Non-audit services
Noprohibitednon-auditservicesreferredtoinArticle18A(1)oftheAccountancyProfessionAct,Cap.281of
theLawsofMaltawereprovidedbyustotheCompanyandtheGroupandweremainindependentofthe
CompanyandtheGroup.Nootherservicesbesidesstatutoryauditservicesasdisclosedintheannualreport
in note 7 to the financial statements, were provided by us to the Company and its controlled undertakings.
28
for the year ended 31 December 2021
2021
2020
2021
2020
Note
€ € € €
Revenue from contracts with customers 6 6,698,242 3,472,276 - -
Rental income 25 8,367,051 8,276,226 - -
Revenue 15,065,293 11,748,502 - -
Cost of sales and services
7
(3,713,173 ) (3,918,098 ) - -
Gross profit 11,352,120 7,830,404 - -
Distribution and selling costs 7 (46,382 ) (31,410 ) - -
Administrative expenses 7 (13,551,147 ) (7,763,267 ) (48,125) (30,874)
Other operating charges 7 (2,233 ) (3,909 ) - -
Other operating income
8
Operating (loss)/profit (1,178,984 ) 1,257,424 (44,114) (30,874)
Change in fair value of investment
properties
17 29,967,931 29,020,926 - -
Share in (loss)/profit of associates
Gain on transfer of properties 22 38,741,687 - - -
Loss on major shareholder's divestiture
Dividends income - - 41,142,087 3,458,801
Finance and similar income 9 - 1 - -
Finance costs
10
(3,215,421 ) (3,160,107 ) (2,407,500) (2,407,500)
Profit before tax
Income tax credit/(expense) 12
Profit for the year
Stivala Group Finance p.l.c.
The notes on page 38–98 form part of these financial statements.
The Group The Company
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
29
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
2021
2020
2021
2020
Note
€ € € €
Profit for the year
Other comprehensive income
Items that will not be subsequently reclassified
to profit or loss:
Change in fair value of property, plant and
equipment due to revaluation, net of
deferred tax
Total comprehensive income for the year
Earnings per share (cents)
- Basic profit for year attributable to
ordinary equity holders of the parent
28 48.58 89.97 (79.92) 0.67
The notes on page 38–98 form part of these financial statements.
The Group The Company
30
Note
2021
2020
2021
2020
€ € € €
ASSETS
Non-current assets
Property, plant & equipment
13
-
-
Intangible asset
18
-
-
Investment in subsidiaries
14
-
-
60,004,872
60,004,895
Investment in associates
15
-
-
Investment property
17
-
-
Right-of-use assets
25
-
-
Deferred taxation
26
291,410
311,329
Total non-current assets 342,698,579 271,115,370 60,296,282 60,316,224
Current assets
Inventories
19
-
-
Property held-for-sale
20
-
-
Assets held for distribution to
owner
22 - 59,947,736 - -
Trade and other receivables
21
-
-
Current tax recoverable
12
22,095
904,041
Other financial assets
16
-
778,040
Cash and cash equivalents
31
4,597
2,400
Total current assets 20,255,303 82,953,868 26,692 1,684,481
Total assets 362,953,882 354,069,238 60,322,974 62,000,705
Stivala Group Finance p.l.c.
Consolidated Statement of Financial Position
as at 31 December 2021
The notes on page 38–98 form part of these financial statements.
The Group The Company
31
Note
2021
2020
2021
2020
€ € € €
Stivala Group Finance p.l.c.
Consolidated Statement of Financial Position
as at 31 December 2021
The Group The Company
EQUITY AND LIABILITIES
Equity
Issued capital
27
255,000
300,000
Revaluation reserve
29
-
-
Incentives and benefits reserves
30
-
-
Retained earnings
(19,006,247)
1,374,207
Total equity 235,391,856 231,436,832 (18,751,247) 1,674,207
Non-current liabilities
Interest bearing loans
and borrowings
16, 23 80,290,082 79,613,708 59,670,000 59,610,000
Finance lease liability
16, 25
-
-
Deferred taxation
26
-
-
Total non-current liabilities 106,198,646 106,140,433 59,670,000 59,610,000
Current liabilities
Current borrowings
16, 23
18,567,863
-
Finance lease liability
16, 25
-
-
Trade and other payables
24
836,358
716,498
Current tax due
12
-
-
Total current liabilities 21,363,380 16,491,973 19,404,221 716,498
Total liabilities 127,562,026 122,632,406 79,074,221 60,326,498
Total equity and liabilities 362,953,882 354,069,238 60,322,974 62,000,705
_______________________________ _______________________________
Mr. Michael Stivala
- Chairman/CEO and Director
28 April 2022
Mr. Ivan Stivala
- Director
The financial statements set out on pages 29 to 98 were approved and authorized for issue by the Board of
Directors and signed on its behalf by:
The notes on page 38–98 form part of these financial statements.
32
Stivala Group Finance p.l.c.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
The Group
Issued
capital
Revaluation
reserve
Incentives
and benefits
reserves
Retained
earnings
Total
Equity
€
€
€ € €
Balance as at 1 January 2020
Reclassification within equity (in relation to
prior years) - 3,511,484 4,825,440 (8,336,924 )
Profit for the year - - -
Other comprehensive income - 81,337,654 -
Total comprehensive income
for the year
Transfer of fair value gain on
investment property, net of deferred tax - 26,699,252 - (26,699,252 )
Balance as at 31 December 2020
The notes on page 38–98 form part of these financial statements.
33
Stivala Group Finance p.l.c.
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
The Group
Issued
capital
Revaluation
reserve
Incentives
and benefits
reserves
Retained
earnings
Total
Equity
€
€
€ € €
Balance as at 1 January 2021 300,000 200,672,324 4,825,440 25,639,068 231,436,832
Reduction due to major shareholder's
divestiture (see note 22)
Issuance of share capital
Profit for the year
Other comprehensive income/loss
(note 29)
Total comprehensive income
for the year
Transfer of fair value gain on
investment property, net of deferred tax
Balance as at 31 December 2021 255,000 225,017,482 4,825,440 5,293,934 235,391,856
The notes on page 38–98 form part of these financial statements.
34
Stivala Group Finance p.l.c.
Statement of Changes in Equity
for the year ended 31 December 2021
The Company
Issued capital
Retained
earnings
Total
Equity
€ € €
Balance as at 1 January 2020 300,000 1,174,207 1,474,207
Profit for the year
- 200,000 200,000
Other comprehensive income
-
-
-
Total comprehensive income for the year
- 200,000 200,000
Balance as at 31 December 2020 300,000 1,374,207 1,674,207
Balance as at 1 January 2021 300,000 1,374,207 1,674,207
Reduction due to major shareholder's
divestiture (see note 22)
(75,000) - (75,000)
Issuance of share capital 30,000 - 30,000
Loss for the year
- (20,380,454) (20,380,454)
Other comprehensive income
- - -
Total comprehensive loss for the year
- (20,380,454) (20,380,454)
Balance as at 31 December 2021 255,000 (19,006,247) (18,751,247)
The notes on page 38–98 form part of these financial statements.
35
Note 2021
2020
2021
2020
€ € € €
Cash flows from operating activities
Adjustments for:
Change in fair value of investment
properties 17
(29,967,931 ) (29,020,926 ) - -
Gain on transfer of properties 22
(38,741,687 ) - - -
Loss on major shareholder's divestiture
Share in (loss)/profit of associates
Depreciation of right-of-use assets and property,
plant and equipment 7
Amortisation
18
Provision for expected credit losses (ECL)
7, 32
Dividends income
Finance and similar income
9
Finance costs
10
Working capital changes:
(Increase)/decrease in inventories
19
(3,099 ) 9,130 - -
(Increase)/decrease in property held-for-sale 20
(679,099 ) 27,721 - -
Decrease / (increase) in receivables
(783,042 ) 425,432 - -
(Decrease) / increase in payables
Interest paid on overdraft (17,978 ) (5,590 ) - -
Taxation paid 12 (781,519 ) (18,800 ) (840,140) (821,728)
12
(294,247 ) 294,247 1,703,674 294,247
Stivala Group Finance p.l.c.
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
The notes on page 38–98 form part of these financial statements.
The Company The Group
Taxation refunded
Net cash generated from operating activities
Profit before tax
Interest received from banks
36
Note 2021
2020
2021
2020
€ € € €
Stivala Group Finance p.l.c.
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
The Company The Group
13
(5,246,407 ) (7,895,155 ) - -
17
(3,009,870 ) (3,628,977 ) - -
18
- - 23 -
Advances from directors (532,845 ) (528,951 ) - -
(8,789,122 ) (12,303,583 ) 23 -
Cash flows from financing activities
Issuance of share capital
Interest paid on other undertakings - (13,795 ) - -
10
(2,347,500 ) (2,347,500 ) (2,347,500) (2,347,500)
(2,687,345 ) (441,157 ) - -
(3,180,883 ) 1,954,303 58,939,641 551,995
(3,237 ) 3,093 - -
(1,386,556 ) 406,507 2,400 6,040
31
(1,340,153 ) (1,386,556 ) 4,597 2,400
Payments to acquire investment in associate
Cash flows from investing activities
The notes on page 38–98 form part of these financial statements.
Cash and cash equivalents at end of year
Advances from banks loans
Interest paid on bank loans
Net cash (used in)/from financing activities
Advances from/(to) other related companies
Net movement in cash and cash equivalents
Cash and cash equivalents at beginning of year
Payments to acquire property, plant and
equipment
Payments to acquire investment property
Net cash used in investing
activities
Advances to associates
Advances from subsidiary company
Movement of ECL on cash in banks
Interest paid on bonds
Receipts from disposal of non-current financial
assets
Advances to other parties
Repayment of lease liabilities
37
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
1.
0
2.
12.1 Basis of preparation and consolidation
Basis of preparation
0
Assessment of the Appropriateness of the Going Concern Assumption
Corporate information
Significant accounting policies
consolidated financial statements are presented in Euro (€), which is the functional currency of the
Group.
Further information concerning fair value, fair value hierarchy and transfers therein are outlined in
detail in notes 2.21 and 32 to the financial statements.
Stivala Group Finance p.l.c.
TheconsolidatedfinancialstatementsofStivalaGroupFinancep.l.c.anditssubsidiaries(“theGroup”)
fortheyearended31December2021wereauthorizedforissueinaccordancewitharesolutionofthe
Directors on 28 April 2022.
Stivala Group Finance p.l.c. (“the Company”) with registration no. of C 82218 is a limited liability
Cap. 386 of the Laws of Malta. The Company is a holding company of the Carmelo Stivala Group
Limited, which is mainly involved to act as a holding company and to rent out properties to its
subsidiariesforhospitalityandproperty development/letting purposes.Its registered office is at 143,
The Strand, Gzira, Malta.
Afterthe principal divestitureof themajor shareholder 'Mr.Carlo Stivala'as laidout indetail innote 22,
the financial impact on the Group and the Company were summarized as per below.
Asat31December2021,theGroup’scurrentliabilitiesexceededitscurrentassetsby€1,108,077(2020:
currentassetsexceededitscurrentliabilitiesby€66,461,895)whereastheGroup’stotalassetsexceeded
itstotalliabilitiesby€235,391,856(2020:€231,436,832).Thecurrentliabilitiespositionasat31December
2021includeabalanceof€2,734,894(2020:€1,184,961)thatrepresentsdeferredincomewhichdoesnot
have an impact on the Group’s liquidity.
As at 31 December 2021, the Company’s current liabilities exceeded its current assets by €19,377,529
(2020:currentassetsexceedingcurrentliabilitiesof€967,983).GiventhenatureoftheCompanyandits
functionwithintheGroupofwhichitistheultimateparentcompany(“theCompany”or“theultimate
parent”),theCompanyisdependentontheGroupforfinancialsupport.Seesucceedingparagraphsfor
information regarding cash flow forecasts.
Management has concluded that as a result of the strength of the Group's financial position and the
measuresbeingtakenbymanagement toaddressandmitigatetheimpactofthe covid-19pandemic,the
Groupwillbeabletosustainitsoperationsover theforeseaablefuture ina mannerthatis cashflow
positive. Accordingly, basedon information available at thetime ofapproving thesefinancial statements
managementhasreasonableexpectationthattheGroupwillmeetallitsobligationsasandwhenthey
fall due over the foreseaable future and therefore, that the going concern basis adopted for the
preparation of these financial statements is appropriate.
38
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
ir
MajorrefurbishmentofBayviewHotel(oneofthemajoroperatinghotel)oftheGroupwascompleted
during 2021 with improved amenities just in time to welcome customers as restrictions on travel
graduallyeased.WhiletheGroupcontinuestodiversifyitsbusinessportfolio,theothermainrevenue
stream'property development andletting' continuesoperate ina normaloperating cycleas therewas no
significantfluctuationnotedcomparedwithprioryear.TheGrouphaslotsofotherprojectstorefurbish
andrebrandotherpropertieswithinthe Group.AllofthesearepartoftheGroup'sultimateobjectiveto
focusoncreating,acquiringandenhancingitsoperationstocreateshareholdervalueoverthemedium
term to ensure the clients get the best possible service and value.
Liquidity
Cash flow forecast
During theyearunderreview,the Groupsecured€2.3million loantomanageits workingcapitalneeds.
TheGroupowns morethan60propertiesinitsportfoliowhichhavecountlessopportunitiesto generate
future economic benefit tothe Group. In2021 and2020, theGroup has availed itselfof various bankloan
repaymentmoratoriumswithits’bankers.InordertofinancevariousprojectsoftheGroup,theGroup
areconsideringahybridofbankfinancingandbondissuancewhichareexpectedtohappenin2022or
2023.
Management hasprepared aforecast forthe Group covering11 years from thebalancesheet date in
ordertoassesstheimpactofthecurrentsituationonthebusiness.Theassumptionsarebasedonthe
estimatedpotentialimpactofcovid-19restrictionsandregulations,followingasuccessfullvaccineand
boosterroll-outandgradualeasingof restrictions bythegovernment. Thebase casescenarioconsidered
the benefits of measures taken by management to reduce the negative impact of covid-19 on its
operationsespeciallythehospitalitysector,cashinflowsfromdisposalofanimmovablepropertyand
cashnetinflowstobe generated fromrevenueuponcompletionofvariousprojectsmentioned inthe
directors'report.Inadditionto theseprojectswhich willbefinancedthrough ahybridofbank financing
and bond issuance, the Group plans to continue with the developmentof other projects thatare key to its
long-termstrategy. Managementisalsoinadvanced discussionswith aninterested third-party buyer
and expects the asset to be realized through sale within the forecast period.
Managementhascautiouslyplannedtheyearwhentostartandtargetcompletionsofaforementioned
projects in order to facilitate its liquidity. Based on the 11 year forecast of the Group, the Group is
expectedto continue as agoing concern, having sufficient liquidity with anapproximate €64million cash
and cashequivalents (net of bank overdrafts)atthe end ofthe forecastperiod, relative to the hybrid
funding the Group intends to take.
Management has also identified a contingency plan should there be an unpredictable economic
downturn. Certain capital investments that were not deemed critical will be postponed to future dates.
Business update
2021 was a challenging journey for Stivala Group, traversing still the uncertainty of the covid-19
pandemic.Oneofthegroup's main revenuestream,thehospitality sector,hascontinuedtobeunevenly
affectedbythecovid-19.Intheearly partof2021,operationsofthe hospitalitysectorhavecurtaileddue
torules imposedbythe governmentsuch astemporaryclosure ofrestaurantsand non-essentialshop.In
thesecondandthird quarterof 2021 especially thesummer months,however,therewas a noticeable
increaseinhospitality revenueduetogradualeasingofrestrictionsfollowingthesuccessresultingfrom
therolloutofvaccinesinMaltaandacrosstheworld.Thistrackcontinuednotuntilthenewomicron
variantof covid-19cameinto pictureapproachingthe endof 2021,which tosomedegree,contributedto
thedeclineofhospitalitysectorattheendoftheyear.Nevertheless,ultimately,thetotalofhospitality
revenue in 2021 increased by 100% from 2020.
39
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Consolidation
22.2 Current versus non-current classification
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in the normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting date; or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting date.
The Group classifies all other liabilities as non-current.
The
consolidated
financial
statements
comprise
the
financial
statements
of
the
Company
and
its
subsidiariesasat31December2021. ControlisachievedwhentheGroupisexposed,orhasrights,to
variable returns from its involvement with the investee and has the ability to affect thosereturns through
its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:
- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
- Exposure, or rights, to variable returns from its involvement with the investee
- The ability to use its power over the investee to affect its returns
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill),
liabilities,non-controllinginterestandothercomponentsofequity,while anyresultantgainor lossis
recognised in profit or loss. Any investment retained is recognised at fair value.
TheGroup presents assetsandliabilitiesin thestatement offinancial positionbasedoncurrent/non-
current classification. An asset is current when it is:
- Expected to be realised or intended to be sold or consumed in the normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised within twelve months after the reporting date; or
- Cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting date.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policiesin line withthe Group’s accounting policies.All intra-groupassetsand liabilities,
equity, income, expenses and cash flows relating to transactions between members of the Group are
eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction.
The Group re-assesses whether or not it controls an investee iffacts and circumstances indicate thatthere
arechangestooneormoreofthethreeelementsofcontrol.Consolidationofasubsidiarybeginswhen
the Group obtains control overthe subsidiary and ceases when theGroup loses control of thesubsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are
included in the consolidated financial statements from the datethe Group gains control until thedate the
Group ceases to control the subsidiary.
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumptionandwhentheGrouphaslessthanamajorityofthevotingorsimilarrightsofaninvestee,
the Group considers all relevant facts and circumstances in assessing whether it has power over an
investee, including:
- The contractual arrangement(s) with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Group’s voting rights and potential voting rights
40
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
32.3 Investment in associate
42.4 Financial instruments
Financial assets
Initial recognition and measurement
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Uponlossofsignificantinfluenceovertheassociate,theGroupmeasuresandrecognisesanyretained
investmentatitsfairvalue.Anydifferencebetweenthecarryingamountoftheassociateuponlossof
significantinfluence or jointcontroland thefair value of the retained investmentand proceeds from
disposal is recognised in profit or loss.
An associate is an entity over which the group has significant influence but not control, generally
accompanyingashareholdingofbetween20%and50%ofthevotingrights.Significantinfluenceisalso
thepowerto participateinthefinancialandoperatingpolicy decisions oftheinvestee,but isnotcontrol
or joint control over those policies.
Theconsiderationsmadein determining significantinfluence aresimilar tothose necessaryto determine
control over subsidiaries. The Group’s investment in its associate are accounted for using the equity
method.
Under the equity method, the investment in an associate is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the
associatesince theacquisition date. Goodwillrelating totheassociate isincludedin thecarrying amount
of the investment and is not tested for impairment separately.
ThestatementofprofitorlossreflectstheGroup’sshareoftheresultsofoperationsoftheassociate.In
addition, when there has been a change recognised directly inthe equityof the associate, the Group
recognisesitsshareofanychanges,whenapplicable,inthestatementofchangesinequity.Unrealised
gainsandlossesresultingfromtransactionsbetweentheGroupandtheassociateareeliminatedtothe
extent of the interest in the associate.
TheaggregateoftheGroup’sshare ofprofitorlossof anassociateisshown onthefaceofthestatement
of profit or loss outside operating profit and represents profit or loss after tax and noncontrolling
interests in the subsidiaries of the associate.
Thefinancial statements ofthe associatearepreparedfor thesamereporting periodastheGroup. When
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
Afterapplicationoftheequitymethod,theGroupdetermineswhether itisnecessary torecognisean
impairment losson its investmentin its associate.At eachreporting date,the Groupdetermines whether
thereisobjectiveevidencethattheinvestmentin theassociateisimpaired.Ifthereissuchevidence,the
Group calculates the amount of impairmentas the difference between the recoverableamount of the
associate and itscarrying value, and then recognises the loss within ‘Share ofprofit of an associate’ in the
statement of profit or loss.
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.
Financialassetsareclassified,atinitialrecognition,asfinancialassetsmeasuredatamortizedcost,fair
valuethroughprofitorloss(FVTPL)andfairvaluethroughothercomprehensiveincome(FVOCI).All
financialassetsarerecognizedinitiallyatfairvalueplus,inthecaseoffinancialassetsnotrecordedat
FVTPL, transaction costs that are attributable to the acquisition of the financial asset.
41
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Subsequent measurement
Forpurposesofsubsequentmeasurement,financialassetsinthesefinancialstatementsareclassified in
four categories:
- financial assets at amortised cost (debt instruments)
In
order
for
a
financial
asset
to
be
classified
and
measured
at
amortised
cost
or
FVOCI,
it
needs
to
give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
Financial assetswith cash flowsthat are not SPPI are classified andmeasured atfair value through profit
or loss, irrespective of the business model.
TheGroup’s businessmodel formanaging financial assets refersto howit managesits financialassets in
order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
The classification of financial assets at initial recognition depends on thefinancial asset’s contractual cash
flow characteristics and the Group’s businessmodelfor managingthem. With the exception of trade
receivablesthat do notcontain a significantfinancing component or forwhich the Group has applied the
practicalexpedient,theGroupinitiallymeasuresafinancialassetatitsfairvalueplus,inthecaseofa
financialassetnotatfairvaluethroughprofitorloss,transactioncosts.Tradereceivablesthatdonot
contain asignificantfinancing component or forwhich the Group has appliedthe practical expedient are
measuredatthetransactionpricedeterminedunderIFRS15.Refertotheaccountingpoliciesinsection
2.16 (Revenue from contracts with customers).
Purchasesorsalesoffinancialassetsthatrequiredeliveryofassetswithinatimeframeestablishedby
regulationorconventioninthemarketplace(regularwaytrades)arerecognisedonthetradedate,i.e.,
the date that the Group commits to purchase or sell the asset.
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
instruments designated at FVOCI when they meet the definition of equity under IAS 32 Financial
Instruments:Presentation andarenotheldfortrading.Theclassification isdeterminedonaninstrument-
by-instrument basis.
- financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments)
Financial assets at amortised cost (debt instruments)
- financial assets designated at FVOCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
- financial assets at FVTPL
As at 31 December 2021 and 2020, the Group has no debt instruments at FVOCI.
Financial assets designated at FVOCI (equity instruments)
Financialassetsatamortisedcostaresubsequentlymeasuredusingtheeffectiveinterest(EIR)method
and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
The
Group’s
financial
assets
at
amortised
cost
include
cash
in
banks,
trade
and
other
receivables,
and
receivablesfromassociates,directorsandotherrelatedundertakingswhichareincludedundercurrent
financial assets.
Financial assets at FVOCI (debt instruments)
FordebtinstrumentsatFVOCI,interestincome,foreignexchangerevaluationandimpairmentlossesor
reversals are recognised in the statement of profit or loss and computed in the same manner as for
financial assetsmeasured at amortised cost. Theremainingfair value changesarerecognisedinOCI.
Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.
42
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Gains
and
losses
on
these
financial
assets
are
never
recycled
to
profit
or
loss.
Dividends
are
recognised
as
otherincomeinthestatementofprofitorlosswhentherightofpaymenthasbeenestablished,except
when theCompanybenefits fromsuchproceeds asarecoveryof partofthe costof thefinancialasset,in
whichcase,suchgainsarerecordedinOCI.EquityinstrumentsdesignatedatFVOCIarenotsubjectto
impairment assessment.
As at 31 December 2021 and 2020, the Group has no equity instruments at FVOCI.
Financial assets at FVTPL
Financialassets atFVTPLare carriedin thestatement offinancialposition atfairvaluewithnet changes
in fair value recognised in the statement of profit or loss.
ThiscategoryincludesderivativeinstrumentsandlistedequityinvestmentswhichtheGrouphadnot
irrevocablyelectedtoclassifyatFVOCI.Dividendson listedequityinvestmentsarerecognisedasother
income in the statement of profit or loss when the right of payment has been established.
A
derivative
embedded
in
a
hybrid
contract,
with
a
financial
liability
or
non-financial
host,
is
separated
from thehost and accounted for as aseparate derivativeif: theeconomic characteristicsand risksare not
closely related tothe host;a separate instrument withthe sameterms asthe embeddedderivative would
meetthedefinitionofaderivative;andthehybridcontractisnotmeasuredatfairvaluethroughprofit
orloss.Embeddedderivativesaremeasuredatfairvaluewithchangesin fairvaluerecognisedinprofit
orloss.Reassessment onlyoccursifthereiseitherachange inthetermsofthe contractthatsignificantly
modifiesthecashflowsthatwouldotherwiseberequiredorareclassificationofafinancialassetoutof
the fair value through profit or loss category.
As at 31 December 2021 and 2020, the Group has no debt instruments at FVTPL.
Derecognition
A
financial
asset
(or,
where
applicable,
a
part
of
a
financial
asset
or
part
of
a
Group
of
similar
financial
assets) is primarily derecognised (i.e., removed from the Group’s statement of financial position) when:
- the rights to receive cash flows from the asset have expired; or
- the Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
TheGroup recognisesan allowancefor expectedcreditlosses(ECLs)for all debtinstruments notheldat
fairvaluethroughprofitorloss.ECLsarebasedonthedifferencebetweenthecontractualcashflows
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.
Continuinginvolvementthattakestheformofaguaranteeoverthetransferredassetismeasuredatthe
loweroftheoriginalcarryingamountoftheassetandthemaximumamountofconsiderationthatthe
Group could be required to repay.
Impairment
Further
disclosures
relating
to
impairment
of
financial
assets
are
also
provided
in
notes
3
and
31
to
the
consolidated financial statements.
WhentheGrouphastransferreditsrightstoreceivecashflows fromanassetor hasenteredintoapass-
through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership.Whenithasneithertransferrednorretainedsubstantiallyalloftherisksandrewardsofthe
asset,nortransferredcontroloftheasset,theGroupcontinuestorecognisethetransferredassettothe
extentofitscontinuinginvolvement.Inthatcase,theGroupalsorecognisesanassociatedliability.The
transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
43
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
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
defaulteventsthatarepossiblewithinthe next12-months (a12-monthECL).Forthosecreditexposures
forwhichtherehasbeenasignificantincreaseincreditrisksinceinitialrecognition,alossallowanceis
requiredforcreditlossesexpectedovertheremaininglifeoftheexposure,irrespectiveofthetimingof
the default (a lifetime ECL).
Financial liabilities
Financial liabilities at FVTPL
For cashin bank, otherreceivables, receivables from associates, directors and otherrelated undertakings,
theGroupappliesageneral approachin calculatingECLs.Therefore,the Grouptrackschangesin credit
risk,and recognises a loss allowance based on either 12-monthECLs or lifetimeECLs, dependingon
whether there has been a significant increase in credit risk on the financial instrument since initial
recognition. This is being done by considering the change in the risk of default occurring over the
remaining lifeof the financialinstrument. The key elements in thecalculation of ECLsare the Probability
of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD).
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at FVTPL.
Allfinancialliabilitiesarerecognisedinitiallyatfairvalueand,inthecaseofloansandborrowingsand
payables, net of directly attributable transaction costs.
- financial liabilities at FVTPL
- financial liabilities at amortised cost (loans and borrowings)
TheGroup’sfinancialliabilitiesincludetradeandotherpayables,loansandborrowingsincludingbank
overdrafts.
Initial recognition and measurement
Financial
liabilities
are
classified,
at
initial
recognition,
as
financial
liabilities
at
FVTPL,
loans
and
borrowings or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
Subsequent measurement
Financialliabilitiesareclassifiedasheldfortradingiftheyareincurredforthepurposeofrepurchasing
inthenearterm.ThiscategoryalsoincludesderivativefinancialinstrumentsenteredintobytheGroup
thatarenotdesignatedashedginginstrumentsinhedgerelationshipsasdefinedbyIFRS9.Separated
embedded derivatives are also classified as held for trading unless they are designated as effective
hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
The Group considers a financial asset in default when contractual payments are 90 days past due.
However, incertain cases,the Group may also consider afinancial asset tobe in default wheninternal or
externalinformationindicatesthatthe Groupisunlikelytoreceivetheoutstandingcontractualamounts
in full before taking into accountany creditenhancements heldby the Group.A financialasset iswritten
off when there is no reasonable expectation of recovering the contractual cash flows.
For trade receivables, theGroup applies asimplified approach in calculating ECLs. Therefore, theGroup
doesnottrackchangesincreditrisk,butinsteadrecognisesalossallowancebasedonlifetimeECLsat
eachreportingdate.TheGrouphasestablishedaprovisionmatrixthatisbasedonitshistoricalcredit
loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.
44
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
52.5 Property, plant and equipment
Plant and machinery
Commercial and residential properties included in buildings are stated in the statement of financial
position at its revalued amount, being the fair value at the date of revaluation. Revaluations are
performedwith sufficientregularity suchthatthecarrying amount does notdiffermateriallyfromthose
that would be determined using fair values at each reporting date.
Furniture, fittings and office equipment
Offsetting of financial instruments
20%
20%
20%
20%
20%
Computer equipment
Energy saving equipment
Financial assets and financial liabilities are offset and the net amount is reported in the statementof
financial position ifthere is acurrently enforceable legal right tooffset therecognised amounts andthere
is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
ArevaluationsurplusisrecordedinOCIandcreditedtotherevaluationreserveinequity.However,to
theextentthatitreversesarevaluationdeficitofthesameassetpreviouslyrecognisedinprofitorloss,
theincreaseisrecognisedin profitandloss.Arevaluationdeficitis recognisedin thestatementof profit
or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the
revaluation reserve.
Derecognition
Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelledor
expires.When anexisting financialliability isreplacedby anotherfromthesame lenderonsubstantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modificationis treatedasthe derecognition oftheoriginal liability andtherecognition ofanewliability.
The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Kitchen equipment
Electrical installations
Financial liabilities designated upon initial recognitionat FVTPL are designated at the initial date of
recognition,andonlyifthecriteriainIFRS9aresatisfied.TheGrouphasnotdesignatedanyfinancial
liability at FVTPL as at 31 December 2021 and 2020.
Motor vehicles
1%
Theannual ratesusedforthis purpose,whichareconsistent withthose usedintheprevious year,areas
follows:
Buildings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and
borrowingsaresubsequentlymeasured atamortisedcostusingtheEIR method.Gainsand lossesare
recognisedinprofitor losswhentheliabilities arederecognisedaswellasthroughtheEIRamortisation
process.
Amortisedcostiscalculatedbytakingintoaccountanydiscountorpremiumonacquisitionandfeesor
costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the
statement of profit or loss.
Thiscategorygenerallyappliestointerest-bearingloansandborrowings.Formoreinformation,referto
note 32 to the consolidated financial statements.
Financial liabilities at amortised cost (loans and borrowings)
20%
Property, plant and equipment, except for revalued buildings, are stated at cost less accumulated
depreciation.Depreciationiscalculatedusingthestraight-linemethodtowriteoffthecostofproperty,
plant and equipment less any residual value over the expected useful lives.
20%
45
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
62.6 Intangible assets
Computer software 25%
72.7 Investment property
Depreciation methods, useful life and residual values are reassessed at each reporting date.
Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of
intangible assets are assessed as either finite or indefinite. Intangible assets with finite livesare amortised
over the useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewed at least at each reporting date. Changes in the
expectedusefullifeorthe expectedpatternofconsumptionof futureeconomicbenefitsembodiedin the
asset areconsidered to modify the amortisation period ormethod, asappropriate, andare treated as
changes in accounting estimates. The amortisation expense on intangible assets with finite lives is
recognised in the profit or loss in the expense category that is consistent with the function of the
intangible assets. These costs are amortised using a straight line method as follows:
Propertythatisheldforlong-termrentalyieldsorforcapitalappreciationorboth,andisnotoccupied
by the Group, is classified as investment property. Investment property comprises freehold land and
buildings.
Gainsorlossesarisingfromderecognition ofanintangibleassetaremeasuredasthedifferencebetween
thenetdisposal proceedsandthecarryingamountoftheassetandarerecognisedinstatementofprofit
or loss and other comprehensive income when the asset is derecognised.
Investmentproperty ismeasuredinitiallyat itshistoricalcost,including related transactioncostsand
borrowing costs (if any). Historical cost includes expenditure that is directly attributable to the
acquisition of the items. Borrowing costs which are incurred forthe purpose of acquiring or constructing
a qualifying investment propertyare capitalisedas partof its cost. Borrowingcosts arecapitalisedwhile
acquisitionorconstructionisactivelyunderway. Capitalisationofborrowingcostsisceased oncethe
asset is substantially complete and is suspended if thedevelopment of the assetis suspended. After
initial recognition, investment property is carried at fair value representing open market value
determined periodically. Fair value is based on active market prices, adjusted, if necessary, for any
differenceinthenature,location orcondition ofthe specificasset. Ifthe informationis not available,the
Group uses alternative valuation methods such as recentprices on less activemarkets or discounted cash
flow projections.
Thesevaluationsarereviewedannually.Investmentpropertythatisbeingredevelopedforcontinuing
useasinvestmentpropertyorforwhichthemarkethasbecomelessactivecontinuestobemeasuredat
fairvalue. Fairvaluemeasurementonpropertyunderconstructionisonlyappliedifthefairvalueis
considered to be reliably measurable. Thefair value ofinvestment property reflects, among other things,
rentalincome fromcurrentleases andassumptionsabout rentalincome fromfutureleasesin thelight of
currentmarketconditions. Thefairvaluealsoreflects,onasimilarbasis,anycashoutflowsthatcould
be expected in respect of the property.
An
item
of
property,
plant
and
equipment
is
derecognised
upon
disposal
or
when
no
future
economic
benefitsareexpected fromits use or disposal. Anygainorloss arising on derecognitionof theasset
(calculatedasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheasset)is
included in the statement of profit or loss and other comprehensive income when the asset is
derecognised.
46
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
82.8 Inventories
0
92.9 Property held-for-sale
112.10 Cash and cash equivalents
The cost of inventories comprises the invoiced value of goods sold and other direct costs and is
determined by first-in first-out method.
Cashandcashequivalentsinthestatementoffinancial positioncomprisecashatbanksandinhand,
which are subject to an insignificant risk of changes in value.
Subsequentexpenditure iscapitalisedto theasset'scarrying amount only when itisprobablethatfuture
economic benefits associatedwith theexpenditurewill flowto theGroupand thecostof theitemcanbe
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.
Thefairvalueofinvestmentpropertydoesnotreflectfuturecapitalexpenditurethatwillimproveor
enhancethepropertyanddoesnotreflecttherelatedfuturebenefitsfromitsfutureexpenditureother
than those a rational market participant would take into account whendetermining the value of the
property.
Changes in fair value are recognised in profit or loss and tranferred to "Revaluation reserve" under
equity. Investmentpropertiesare derecognisedeither when theyhave been disposed of or whenthe
investmentproperty is permanentlywithdrawn from useand nofuture economicbenefit is expected
fromits disposal.The differencebetweenthe netdisposal proceedsand thecarryingamount ofthe asset
is recognised in profit or loss in the period of derecognition.
Inventories are valued at the lower of cost and net realisable value.
Property held-for-sale isincluded in thefinancial statementsat the lower of costand net realisable value.
Cost comprises the purchase price of acquiringthe property and other costs incurred to develop the
property. Net realisable value is the estimated selling price in the ordinary course of business, less
estimated costs of completion and the estimated costs necessary to make the sale.
Netrealisablevalueistheestimatedselling priceinthe ordinarycourseofbusiness,lessestimatedcosts
of completion and the estimated costs necessary to make the sale.
Ifaninvestmentpropertybecomesowner-occupied,itisreclassifiedasproperty,plantandequipment.
Its fair value at the date of the reclassification becomes its cost for subsequent accounting purposes.
When the Group decides to dispose of an investment property without development, the Group
continues to treat the property asan investment property. Similarly,if the Groupbegins to redevelop an
existinginvestmentpropertyforcontinuedfutureuseasinvestmentproperty,itremainsaninvestment
property during the redevelopment.
Ifanitemofproperty,plant andequipmentand propertyheld-for-salebecomesaninvestment property
becauseitsusehaschanged,anydifferenceresultingbetweenthecarryingamountandthefairvalueof
thisitematthedateoftransferistreatedinthesamewayasrevaluationunderIAS16. Anyresulting
increaseinthecarryingamountofthepropertyisrecognisedinstatementofcomprehensiveincometo
theextentthatitreversesapreviousimpairmentloss;withanyremainingincreaserecognisedinother
comprehensive income, directly to revaluation surplus with equity. Any resulting decrease in the
carrying amount of the property is initially charged to other comprehensive income against any
previouslyrecognisedrevaluation surplus,withanyremainingdecrease charged totheprofit orloss.
Uponthe disposalofsuch investment property,anysurpluspreviously recordedin equityistransferred
to retained earnings; the transfer is not made through statement of comprehensive income.
47
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
0
122.11 Share capital
132.12 Dividend distribution
142.13 Trade payables
152.14 Provisions
162.15 Foreign currency translation
172.16 Revenue recognition
Dividend distribution to theGroup's shareholders is recognised as a liability in the Group's financial
statements in the period in which the dividends are approved by the Group's shareholders.
Ordinaryshares areclassifiedas equity.Incremental costsdirectly attributableto the issueof new shares
are shown in equity as a deduction, net of tax, from the proceeds.
Foreign currency translations are translated into the functional currency using the exchange rates
prevailingatthedatesofthetransactionsorvaluationwhereitemsarere-measured.Foreignexchange
gainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyear-end
exchange rates of monetary assets and liabilitiesdenominated inforeign currenciesare recognised in
profitorloss.All foreignexchangegains andlossesarepresentedin theincomestatementwithin'Other
income' or 'Other expenses'.
Items included in the financial statements of each of the Group's entities are measured using the
currencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(thefunctionalcurrency).
The consolidated financial statements are presented in euro, which is the Company's functional and
presentation currency.
Forthepurposeofthestatementofcashflows,cashandcashequivalentsconsistofcashonhandand
banks asdefined above, netof outstanding bank overdraftsas they areconsidered anintegral partof the
Group's cash management.
Revenue from contracts with customers (under IFRS 15)
Revenuesinclude allrevenuesfrom theordinary business activities ofthegroup andarerecordednetof
valueaddedtax.Theyarerecognisedinaccordancewiththeprovisionforgoodsorservicesprovided
that collectability of the consideration is probable.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
courseof businessfrom suppliers.Accountspayableareclassifiedascurrent liabilitiesifpaymentis due
within one year or less. If not, they are presented as non-current liabilities.
Tradeandotherpayablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortised
cost using the effective interest method.
ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultof
pastevents,itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredto
settle the obligation and a reliable estimate of the amount of the obligation can be made.
Provisionsaremeasuredatthepresentvalueoftheexpendituresexpectedtoberequiredtosettlethe
obligationusingapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyand
therisksspecifictothe obligation.Theincreaseintheprovision duetothepassageoftimeis recognised
as interest expense.
Revenuemainlyrepresentsincomeearnedforaccommodation,foodandbeverageandotherservices.
TheGroup alsosold propertythrough barterduring theyear. The Grouprecognizes revenue whenor as
it satisfies a performance obligation by transferring control of a product or service to a customer.
48
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
0
Sale/barter of property for resale
Revenuefromsale/barterof realproperty is recognised at the pointin time when controlof assetis
transferredto the customer,generally uponsigningof deedof salewhere thecustomer obtainslegal title
to the property. Total fund is paid in full on date of deed.
Thevariableconsiderationisestimatedatcontractinceptionandconstraineduntilitishighlyprobable
thatasignificantrevenuereversalintheamountofcumulativerevenuerecognisedwill notoccurwhen
the associated uncertainty with the variable consideration is subsequently resolved.
Overall, aside from the above mentioned, there are no other known factors or events that could make the
consideration to be variable as at the current financial year end. The validity of this assessment is
reassessed at each reporting date.
Indetermining thetransaction price,theGroup considers theeffectsofvariableconsideration,existence
ofsignificantfinancingcomponent,non-cashconsideration,andconsiderationpayabletothecustomer
(if there is any).
The Group considers whether there are other promises in the contract that are separate performance
obligations to which a portion of the transaction price needs to be allocated (if there is any).
Revenuefromaccommodationisrecognisedoveraperiodoftime.Thecustomersgetthebenefits(i.e.
controloverthepromise)witheverypassingdayofeachyear’sstay attheGroup'shotelrooms.The
revenue stream therefore meets the conditions for revenue recognition over time (i.e. stage of
completion), and revenue is accordingly recognised on a daily basis of accommodation or equally
amortised over the period of stay of the customer.
Theperformanceobligationistoprovideaccommodationservicesasandwhencustomersmakeuseof
the services. The transaction price follows a fee structure which is known at the date of booking or
consumption of service and thus no significant estimates are required in this respect.
Eachoftheservicesrenderedisassessedtobeadistinctperformanceobligation,andifapplicable,the
Groupallocatesthetransactionpriceto each oftheservicesrenderedtothe customeron arelativebasis,
basedontheirstand-alonesellingprice.Normally,thetransactionpricefollowsafeestructurewhichis
known at the date of consumption of service and thus no significant estimates are required in this
respect.
Revenue
from
services
is
generally
recognized
in
the
accounting
period
in
which
the
services
are
rendered,by reference to completion of thespecific transaction assessedon the basis of theactual service
providedasaproportionofthetotalservicestobeprovided. Revenuearisingfrom theseactivitiesis
recognisedwhen theserviceis performedand/orwhen thegoods (primarilyfood andbeveragerelating
to restaurant and/or bar sales) are supplied upon performance of the service.
As at 31December 2021and 2020, variable consideration would be theamountrefundedto a customer if
thecustomercancelsthebookingwithinthe windowprovidedbythehotel.Inthiscase,theGroupuses
the'mostlikely amount'approachsince ithas only2 possibleoutcome,whichis if the customer will
cancelthebookingornot.Theamountofvariableconsiderationonrefundableamountstocustomeris
not that significant as at year end. Should there have been discounts or concessions for goods and
services,thesehavebeenalreadyestablishedwithcustomerattheinception ofthecontract,thusarenot
considered contingent as the amounts agreed are fixed or unavoidable.
i) Variable consideration
If
the
consideration
in
a
contract
includes
a
variable
amount,
the
Group
estimates
the
amount
of
consideration to which it will be entitled in exchange for transferring the goods to the customer.
Revenue from food and beverage, and other services
Revenue from accommodation
49
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
ii) Significant financing component
Contract balances
Cost to obtain a contract
The
Group
applies
the
optional
practical
expedient
to
immediately
expense
costs
to
obtain
a
contract
if
the amortisation period of the asset that would have been recognised is one year or less. As such,
paymentsofcommissionstosalesagencieswhichconstituterelativelysmallamountsareimmediately
recognised as an expense in the consolidated statement of profit or loss and comprehensive income.
A
receivable
represents
the
company’s
right
to
an
amount
of
consideration
that
is
unconditional
(i.e.,
only the passage of time is required before payment of the consideration is due).
Contract assets
Trade receivables
A
contract
asset
is
the
right
to
consideration
in
exchange
for
goods
or
services
transferred
to
the
customer.Ifthecompanyperformsbytransferringgoodsorservicestoacustomerbeforethecustomer
paysconsiderationorbeforepaymentisdue,acontractassetisrecognisedfortheearnedconsideration
that is conditional.
There is no consideration payable to a customer that can be applied against amounts owed to the Group.
TheCompanyappliesthepracticalexpedientforshort-termadvancesreceivedfromcustomers.Thatis,
the promisedamount of considerationis not adjustedfor theeffects ofa significantfinancing component
iftheperiodbetweenthetransferofthepromisedgoodorserviceandthepaymentisoneyearorless.
As at eachyear end,the contractliabilities (if thereis any) werenormally recognised as revenuewithin 1
year. The validity of this assessment is reassessed at each reporting date.
As at 31 December 2021 and 2020, upfront fees and pre-production fees are not applicable.
It is very unlikely for the company to have contract assets since the collection of payment must be
completed immediately after the company performs the service or goods/services and before the
customer leavesthe hotel'spremises. Thisleavesno obligation on thepartof thecustomerto payfurther
consideration.
iii) Non-cash consideration
The Group does not receive non-cash considerations from customers for the sale of goods and services.
This relates to the rentalincome from the rental of immovable property inthe ordinary couse of the
Group'sactivities.Foroperatingleases,itisrecognisedatprofitorlossonastraight-linebasisoverthe
term of the lease and is stated net of value added tax.
Contract liabilities
Acontractliabilityistheobligationtotransfergoodsorservicestoacustomerforwhichthehotelhas
receivedconsideration,orforwhichanamountofconsiderationisduefromthecustomer.Itisnoted
that in extremely rare situations, customers contracts contain a right to right to terminate for
convenience,whereamountspaidbythecustomerarerefundable.Inthesesituations,thecustomerhas
paidforfuturegoodsorservices,butbecauseofthetermination clauseanagreementdoesnotexistand
thustheHoteldoesnothaveanobligationtotransfergoodsorservicesexceptasthecustomerrequests
(i.e. doesn’t terminate).
Other revenue sources (not within the scope of IFRS 15)
The following recognition criteria must also be met before revenue is recognised:
iv) Consideration payable to customer
Rental income
50
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
182.17 Leases
5 - 11 years
5 years
i) Right-of-use assets
Otheroperating incomeare accountedfor whenit isprobablethat theeconomic benefitsassociatedwith
the transaction will flow to the Group and these can be measured reliably.
ii) Lease Liabilities
Atthecommencementdateofthelease,theGrouprecognisesleaseliabilitiesmeasuredatthepresent
value ofleasepayments tobe made overthe lease term.Theleasepaymentsinclude fixedpayments
(including in-substance fixed payments) less any lease incentives receivable, variable lease payments
thatdependonanindexorarate,andamountsexpectedtobepaidunderresidualvalueguarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be
exercisedbytheGroupandpaymentsof penaltiesforterminatingthe lease,iftheleasetermreflectsthe
Groupexercisingtheoptiontoterminate.Variableleasepaymentsthatdonotdependonanindexora
ratearerecognisedasexpenses(unlesstheyareincurredtoproduceinventories)intheperiodinwhich
the event or condition that triggers the payment occurs.
Dividend income
Revenue
from
dividend
income
is
recognised
on
the
date
the
Group's
right
to
receive
payment
is
established.
Interest income
Interest
income
is
accounted
for
when
it
is
probable
that
the
economic
benefits
associated
with
the
transactionwillflowtotheGroupandthesecanbemeasuredreliably.Interestincomeisrecognisedon
an accrual or time proportion basis.
Other operating income
The Group as a lessee
The Groupassesses at contract inceptionwhether acontract is,or contains, alease. 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.
TheGroupappliesasinglerecognitionandmeasurementapproachforallleases,exceptforshort-term
leasesandleasesoflow-valueassets.TheGrouprecognisesleaseliabilitiestomakeleasepaymentsand
right-of-use assets representing the right to use the underlying assets.
Ifownershipof theleasedasset transfersto theGroup at theendof theleaseterm orthecostreflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
Theright-of-useassets are alsosubjectto impairment.Refer tothe accountingpoliciesinsection2.22
(Impairment of non-financial assets).
The
Group
recognises
right-of-use
assets
at
the
commencement
date
of
the
lease
(i.e.,
the
date
the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciationandimpairmentlosses,andadjustedforanyremeasurementofleaseliabilities.Thecostof
right-of-useassetsincludes the amountofleaseliabilitiesrecognised,initialdirectcosts incurred,and
leasepaymentsmadeatorbeforethecommencementdatelessanyleaseincentivesreceived.Right-of-
useassetsaredepreciatedonastraight-linebasisovertheshorteroftheleasetermandtheestimated
useful lives of the assets, as follows:
Buildings
Furnitures and Fittings
51
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
192.18 Assets held for distribution to owner
0
Leases in which the Group 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-linebasisovertheleasetermsandisincludedinrevenueinthestatementofprofitorlossand
othercomprehensiveincomeduetoitsoperatingnature.Initialdirectcostsincurredinnegotiatingand
arranginganoperatingleaseareaddedtothecarryingamountoftheleasedassetandrecognisedover
thelease term onthe same basisasrentalincome.Contingentrentsare recognised asrevenue in the
period in which they are earned.
Incalculatingthepresentvalueofleasepayments,theGroupusesitsincrementalborrowingrateatthe
lease commencement datebecause theinterest rateimplicit inthe lease is not readily determinable. After
the commencement date, theamount of lease liabilitiesis increased toreflect theaccretion ofinterest and
reducedfortheleasepaymentsmade.In addition,thecarryingamountofleaseliabilitiesisremeasured
ifthereisamodification,achangeintheleaseterm,achangeintheleasepayments(e.g.,changesto
future payments resulting froma changein an indexor rate usedto determine such lease payments) or a
change in the assessment of an option to purchase the underlying asset.
Non-currentassetsanddisposalgroupsclassifiedasheldfordistributiontoowneraremeasuredatthe
lower of their carrying amount and fair value less costs to distribute. Costs to distribute are the
incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance
costs and income tax expense.
Inprior year,assetsclassifiedas heldfordistributionto ownerarepresentedseparatelyascurrentitems
in the statement of financial position. Additional disclosures are provided in note 22.
The Group as a lessor
The Group’s lease liabilities are included in Interest-bearing loans and borrowings (see note 16).
iii) Short-term leases and leases of low-value assets
Inaccordancewith IFRS5,a non-current asset(or disposalgroup) isclassifiedasheldfordistribution to
owners when the entity is committed to distribute the asset (or disposal group) to the owners.
TheGroupappliestheshort-termleaserecognitionexemptiontoitsshort-termleases(i.e.,thoseleases
thathavealeasetermof12months orlessfromthecommencementdateanddonot containapurchase
option).Italsoapplies the leaseoflow-valueassetsrecognitionexemptiontoleasesofassetsthatare
consideredto below value(if thereisany). Lease paymentson short-termleases andleases oflow value
assets are recognised as expense on a straight-line basis over the lease term.
There are a number of assetcategories that are excluded from measurement requirements of IFRS 5,
although disclosure requirements still need to be complied with. Among these exclusions, the most
relevanttotheCompanyis"Non-currentassetsthatareaccountedforinaccordancewith thefairvalue
model(IAS40InvestmentProperty)"whichwillbesubsequentlymeasuredunderthesameaccounting
policy as before the classification.
Actionsrequiredtocompletethedistributionshouldindicatethatitisunlikelythatsignificantchanges
to the distribution will be made or that the distribution will be withdrawn. The probability of
shareholders’approval(ifrequiredinthejurisdiction) shouldbeconsideredaspartoftheassessmentof
whether the distribution is highly probable.
Forthistobethecase,theassetsmustbeavailableforimmediatedistributionintheirpresentcondition
and the distribution must be highly probable. For the distribution to be highly probable, actions to
completethedistributionmusthavebeeninitiatedandshouldbeexpectedtobecompletedwithinone
year from the date of classification.
52
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
202.19 Taxation
0
0
1
212.20 Retirement benefits
0
ThenetamountofValueAddedTaxrecoverablefrom,orpayableto,thetaxationauthorityisincluded
as part of receivables or payables in the statement of financial position.
Value Added Tax
Thetax expensefor theyearcomprises current and deferredtax. Tax is recognized inprofit orloss,
exceptwhen itrelatestoitems recognizedinothercomprehensive incomeordirectlyin equity,in which
case it is also dealt with in other comprehensive income or in equity, as appropriate.
Current income tax
Revenue, expenses and assets are recognised net of Value Added Tax, except:
-wheretheValueAddedTaxincurredonapurchaseofassetsorservicesisnotrecoverablefromthe
taxationauthority, inwhich caseValueAddedTaxis recognisedaspart oftheacquisitionof theassetor
as part of the expense item, as applicable;
- where receivables and payables that are stated with the amount of Value Added Tax included.
Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplyin theyear
whenthe asset is realised or the liabilityis settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at each reporting date.
The Group contributes towards the state pension fund in accordance with local legislation. The only
obligationoftheGroupistomaketherequiredcontributionandcarriesnofurtherlegalorconstruction
obligations to make further payments if the fund does not have sufficient assets to pay all of the
employees'entitlementstopost-employmentbenefits.Costsareexpensedintheyearinwhichtheyare
incurred.
Deferred
tax
assets
are
recognised
for
all
deductible
temporary
differences,
carry
forward
of
unused
tax
creditsandunusedtaxlosses,totheextentprobablethattaxableprofitwillbeavailableagainstwhich
the deductibletemporary differences,andthe carryforwardofunusedtax creditsandunusedtaxlosses
can be utilised,except when thedeferredtax asset relatingto the deductible temporarydifferences arises
fromthe initialrecognitionof anassetor liabilityin atransactionthat isnota businesscombination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Unrecogniseddeferredtaxassetsarereassessedateachreportingdateandarerecognisedtotheextent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax liabilities are recongised for all temporary differences,except when the deferred tax liability
arises from the initialrecognition of goodwill oran asset orliability ina transactionthat is nota business
combinationand,atthetime ofthetransaction,affectsneither theaccountingprofitnor taxableprofit or
loss.
Currentincometaxassetsandliabilitiesforthecurrentperiodaremeasuredattheamountexpectedto
berecoveredorpaidtothe taxationauthorities.Thetaxratesandtaxlawsusedtocomputetheamount
arethosethatareenactedorsubstantiallyenacted,atthereportingdate.Currentincometaxrelatingto
items recognised directly in equity is recognised in equity and not in profit or loss.
Deferred tax is provided using the liability method on temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred income tax
53
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
222.21 Fair value measurements and valuation processes
0
0
0
TheGroupmeasuresnon-financialassetssuchasbuildingsunderproperty,plantandequipmentand
investment property at fair value at each reporting date.
TheGroupusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficient
data are available to measure at fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
Impairmentlossesofcontinuingoperationsarerecognisedinthestatementofprofitorlossinexpense
categoriesconsistentwiththefunctionoftheimpairedasset,exceptforpropertiespreviouslyrevalued
withtherevaluationtakentoOCI.Forsuchproperties,theimpairmentisrecognisedinOCIuptothe
amount of any previous revaluation.
Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderly
transactionbetweenthemarket participantsat the measurementdate. Thefairvaluemeasurementis
basedonthepresumptionthatthetransactiontoselltheassetortransfertheliabilitytakesplaceeither
(a)in theprincipalmarket forthe assetor liabilityor (b)in theabsence ofa principal market, inthe most
advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
2.22 Impairment of non-financial assets
The Groupassesses, at each reporting date,whether there isan indication that an asset maybe impaired.
Ifanyindicationexists,or whenannualimpairmenttestingforanasset isrequired,theGroupestimates
theasset’srecoverableamount.Anasset’srecoverableamountisthehigherofanasset’sorCGU’sfair
valuelesscostsofdisposal anditsvaluein use.Therecoverableamountisdetermined foranindividual
asset,unlesstheassetdoesnotgeneratecashinflowsthatarelargelyindependentofthosefromother
assets or groups of assets. Whenthe carrying amount ofan asset or CGUexceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable amount.
Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusinga
pre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisks
specifictotheasset.Indetermining fairvaluelesscosts ofdisposal,recentmarkettransactions aretaken
intoaccount.Ifnosuchtransactionscanbeidentified,anappropriate valuationmodelisused.These
calculationsarecorroboratedbyvaluationmultiples,quotedsharepricesforpubliclytradedcompanies
or other available fair value indicators.
Thefairvalueofanassetorliabilityismeasuredusingtheassumptionsthatmarketparticipantswould
use when pricing the asset or liability, assuming that market participants act in their economic best
interest.
TheGroupbasesitsimpairmentcalculationonmostrecentbudgetsandforecastcalculations,whichare
preparedseparatelyforeachoftheGroup’sCGUstowhichtheindividual assetsareallocated.These
budgets and forecast calculations generally cover a period of five years. A long-term growth rate is
calculated and applied to project future cash flows after the fifth year.
Information
about
the
valuation
techniques
and
inputs
used
in
determining
the
fair
value
of
buildings
and investment properties are disclosed in notes 13, 16, 17 and 32 respectively.
A fair value measurement of non-financial asset takes into account a market participant's ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
participant that would use the asset in its highest and best use.
54
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
0
2.24 Borrowing costs
Borrowingcosts whichare incurred for thepurposeof acquiringorconstructing qualifyingproperty,
plantandequipmentarecapitalisedaspartofitscost.Borrowingcostsarecapitalisedwhileacquisition
orconstruction isactivelyunderway,during theperiodoftime thatisrequiredto completeandprepare
theassetforitsintendeduse.Capitalisationofborrowingcostsisceasedoncetheassetissubstantially
completeandissuspendedifthedevelopmentoftheassetissuspended.Allotherborrowingcostsare
expensed.Borrowingcostsarerecognisedforallinterest-bearinginstruments onanyaccrualbasisusing
the effective interestmethod. Interestcosts includethe effectof amortisingany difference betweeninitial
net proceeds and redemption value in respect of the Group's interest-bearing borrowings.
2.23 Government grants
Governmentgrantsarerecognisedwherethere isreasonableassurancethattheGroupwillcomply with
the conditions attaching to them and that the grants will be received.
Forassetsexcludinggoodwill, anassessment ismadeateachreporting datetodeterminewhetherthere
isanindicationthatpreviouslyrecognisedimpairmentlossesnolongerexistorhavedecreased.Ifsuch
indication exists,the Group estimatesthe asset’sorCGU’s recoverableamount.Apreviously recognised
impairmentlossisreversedonlyiftherehasbeenachangeintheassumptionsusedtodeterminethe
asset’srecoverableamountsincethelastimpairmentlosswasrecognised.Thereversalis limitedsothat
the carrying amount of the asset does not exceed its recoverableamount, nor exceed thecarrying amount
thatwouldhavebeendetermined,netofdepreciation,hadnoimpairmentlossbeenrecognisedforthe
asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is
carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwillis tested for impairment annually and when circumstances indicate that the carrying value
may be impaired.
2.25 Segment reporting
The Group determines and presents operating segments based on the information that internally is
providedtotheBoardofDirectors,whichistheGroup'schiefoperatingdecision-makerinaccordance
with the requirements of IFRS 8 'Operating Segments'.
ImpairmentisdeterminedforgoodwillbyassessingtherecoverableamountofeachCGU(orgroupof
CGUs)towhichthegoodwillrelates.WhentherecoverableamountoftheCGUislessthanitscarrying
amount,animpairmentlossisrecognised.Impairmentlosses relatingtogoodwillcannotbereversedin
future periods.
Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as
appropriate, and when circumstances indicate that the carrying value may be impaired.
Government grants related to income are recognised in profit or loss on a systematic basis over the
periods in which theCompany recognises as expenses therelated costsfor which the grants areintended
tocompensate.Specifically,the governmentgrantsrelatedto assets,whose primaryconditionisthat the
Group should purchase, construct or otherwise acquire noncurrent assets are recognised as deferred
income in thestatement of financialposition and transferred toprofit or loss on a systematic and rational
basis over the useful lives of the related assets.
Government grants that arereceivable as compensation for expenses or losses already incurred or for the
purposeofgivingimmediatefinancialsupporttotheGroupwithnofuturerelatedcostsarerecognised
in profit or loss in the period in which they become receivable.
55
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
3.
The Group has lease contracts that include extension and termination options. The Group applies
judgementinevaluatingwhetheritisreasonablycertainwhetherornottoexercisetheoptiontorenew
orterminatethelease.Thatis,itconsidersallrelevantfactorsthatcreateaneconomicincentiveforitto
exerciseeitherthe renewalor termination. Afterthecommencementdate,the Groupreassessesthelease
termifthereisa significantevent orchange incircumstances thatiswithinitscontroland affectsits
ability to exercise or not to exercise the option to renew or to terminate.
TheGroupdoesnotincludetherenewalperiodsaspartoftheleasetermforleasesofassetswithnon-
cancellableperiodsasthesearenotreasonablycertaintobeexercised.Theeffectofcovid-19pandemic
also contributes to this uncertainty. Furthermore, the periods covered by termination options are
included as part of the lease term only when they are reasonably certain not to be exercised.
TheGroupdeterminesthe leasetermasthenon-cancellabletermofthe lease,togetherwithanyperiods
coveredby an option to extendthe lease ifit is reasonably certain to be exercised,or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.
Recognition of deferred tax assets
Property lease classification – Group as lessor
The
Group
has
entered
into
commercial
and
residential
property
leases
on
its
investment
property
and
property, plant and equipment portfolio. The Group has determined, based on an evaluation of the
termsandconditionsofthearrangements,suchasthelease termnotconstitutingamajorpart ofthe
economiclifeofthepropertiesandthepresentvalueoftheminimumleasepaymentsnotamountingto
substantiallyallofthefairvalueoftheproperties,thatitretainssubstantiallyalltherisksandrewards
incidental to ownership of these properties and accounts for the contracts as operating leases.
An operatingsegment is acomponent of the Groupthat engagesin business activities from which it may
earnrevenuesandincurexpenses,includingrevenuesandexpensesthatrelatetotransactionswithany
ofthe Group'sother components,and forwhichdiscretefinancialinformationisavailable.An operating
segment'soperatingresultsarereviewedregularlybytheBoard ofDirectorstomakedecisionsabout
resourcesto beallocatedto thesegment andtoassessitsperformanceexecuting thefunctionofthe chief
operating decision-maker.
Critical accounting estimates and judgements
Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgements, which have the most significant effect on the amounts recognised in the consolidated
financial statements:
Determining the lease term of contracts with renewal and termination options – Group as lessee
The
extent
to
which
deferred
tax
assets
can
be
recognized
is
based
on
an
assessment
of
the
probability
thatfuturetaxableincomewillbeavailableagainstwhichthedeductibletemporarydifferencesandtax
losscarry-forwardcanbeutilized.Inaddition,significantjudgementisrequiredinassessingtheimpact
of any legal or economic limits or uncertainties in various tax jurisdictions.
In preparing the financial statements, the Directors are required to make judgements, estimates and
assumptionsthataffectreportedincome,expenses,assets,liabilitiesanddisclosureofcontingentassets
and liabilities. Use ofavailable information and application of judgement are inherent in the formation of
estimates. Actual results in the future could differ from such estimates and the differences may be
materialtothefinancialstatements.Theseestimatesarereviewedonaregularbasisandifachangeis
needed,itisaccountedintheperiodthechangesbecomeknown.Themostsignificantjudgementand
estimates are as follows:
56
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Assets held for distribution to owner
- The selected assets are available for immediate distribution in their present condition.
Fair value of investment property and property, plant and equipment
TheGroupcarriesitsinvestmentpropertyatfairvalue,withchangesbeingrecognisedinprofitorloss,
while it carries its buildings within property, plant and equipment at fair value, with changes being
recognised in other comprehensive income. These are based on market valuations performed by
independentprofessionalarchitectatleasteverythreeyears. Inayearwhenmarketvaluationsarenot
performed by the independent professional architect, an internal assessment of the fair value of
investmentpropertyandproperty,plantandequipmentareperformedtoreflectmarketconditionsat
the year-end date bythe management. The Management has assessed the valuation of properties as at 31
December2021byreferencetovalueofsimilarpropertiesinthemarketaswellasthemanagement's
expert knowledge of the industry being in property sector for more than 20 years.
UponadoptionofIFRS9,provisionforECLismaintainedatalevelconsideredadequatetoprovidefor
potentially uncollectible receivables. For trade receivables, the Company applies the Simplified
Approach designed to identify potential charges to the allowance and is performed on a continuous
basisthroughout theperiod.Fortheyearended31December2021,theincreaseinprovisionforECLon
trade receivables amounted to €21,810 (2020: decrease of €32,483) (note 21).
- The actions to complete the distribution were initiated such as the Public announcement, Board
resolutions, Framework agreement and Promise of sale agreement. This is expected to be completed
within 3 months from the date of initial classification.
On 25 November 2020, the Board of Directors publicly announced that Mr. Carlo Stivala, one of the
ultimate beneficial owners, will relinquish all of its ownership interest from the group. The Board
consideredthenoncurrentassetsthatwillbetransferredtotheownerareclassifiedas'Assetsheldfor
distribution to owner' as such assets met the criteria for the following reasons:
For more details on the assets held for distribution to owner, refer to note 22.
Provision for ECL on trade receivables
TheGroup usesa provision matrixto calculateECLsfor tradereceivables. Theprovision ratesarebased
ondayspastdue forgroupingsof variouscustomer segmentsthat havesimilar losspatterns(i.e.,by
geography, product type, customer type and rating).
Estimates and assumptions
Impairment of non-financial assets
ImpairmentexistswhenthecarryingvalueofanassetorCGUexceedsitsrecoverableamount,which is
thehigherofitsfairvaluelesscostsofdisposalanditsvalueinuse.Thefairvalueless costsofdisposal
calculation is based on available data from binding sales transactions,conducted at arm’s length, for
similarassetsorobservablemarketpriceslessincrementalcostsofdisposingoftheasset.Thevaluein
usecalculationisbasedonadiscountedcashflow(DCF)model.Thecashflowsarederivedfromthe
budget for the next five years and do not include restructuring activities that the Group is not yet
committedto orsignificant future investmentsthat willenhance the performanceof the assets of the
CGUbeingtested.TherecoverableamountissensitivetothediscountrateusedfortheDCFmodelas
well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These
estimates are most relevant to goodwill recognised by the Group.
57
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
- Determination of associations between macroeconomic scenarios and, economic inputs, and the
effect on PDs, EADs and LGDs
ItistheGroup’spolicytoregularlyreviewitsmodelinthecontextofactuallossexperienceandadjust
when necessary.
ThemeasurementoftheGroup'sECL oncashinbanks,receivablesfromassociatesandotherrelated
undertakings is a function of the PD, LGD and the EAD. These financialassets are measured under Stage
1 of the impairment model, and therefore ECLs are calculated on 12-month basis.
Provision for ECL on other financial assets
In the opinion of the management, except for the above, the accounting estimates, assumptions and
judgementsmade in the course of preparing these financial statements are not difficult, subjective or
complex toa degreewhich would warranttheir description assignificant in termsof the requirements of
IAS 1 (revised) – ‘Presentation of Financial Statements’.
- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive
the economic inputs into the ECL models
The assessment of thecorrelation betweenhistorical observeddefault rates, forecast economic conditions
andECLsisasignificantestimate.TheamountofECLsissensitivetochangesincircumstancesandof
forecast economic conditions. The Group’s historical credit loss experience and forecast of economic
conditionsmay also notbe representative of customer’sactual default in the future. The information
about the ECLs on the Company's trade receivables is disclosed in notes 21 and 32.
The
provision
matrix
is
initially
based
on
the
Group’s
historical
observed
default
rates.
The
Group
calibratesthe matrixto adjustthe historicalcreditloss experiencewith forward-lookinginformation. For
instance,ifforecasteconomicconditions(i.e.,grossdomesticproduct)areexpectedtodeteriorateover
the next year which can lead to an increased number of defaults in the manufacturing sector, the
historicaldefaultratesare adjusted.At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
- Development of ECL models, including the various formulas and the choice of inputs
Leases - Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its
incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the
Group would have topay to borrowover asimilar term, andwith a similarsecurity, the funds necessary
toobtain anassetofasimilarvalueto theright-of-useassetin asimilareconomicenvironment.TheIBR
thereforereflectswhattheGroup‘wouldhavetopay’,whichrequiresestimationwhennoobservable
ratesareavailable(suchasforsubsidiariesthatdonotenterintofinancingtransactions)orwhenthey
needtobeadjustedtoreflectthetermsandconditionsofthelease(forexample,whenleasesarenotin
the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as
marketinterestratesorratesfrombanksanctionletters)whenavailableandisrequiredtomakecertain
entity-specific estimates (such as the subsidiary’s stand-alone credit rating).
- The Group’s criteria for assessing if there has been a significant increase in credit risk and so
allowances should be measured on a liftetime ECL basis and the qualitative assessment
- The Group's internal credit grading model, which assigns PDs to the individual grades
Elements of the ECL model which are considered accounting judgments and estimates include:
58
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
4.
14.1 New and Revised IFRS effective for current year
The amendments provide temporary reliefs which address the financial reporting effects when an
interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The
amendments include the following practical expedients:
Theseamendments hadno impact onthefinancial statementsofthe Company.The Companyintendsto
use the practical expedients in future periods if they become applicable.
The nature and the impact of each new standard and amendment is described below:
The
amendment
was
intended
to
apply
until
30
June
2021,
but
as
the
impact
of
the
Covid-19
pandemic
is
continuing,on31March2021,theIASBextendedtheperiodofapplicationofthepracticalexpedientto
30June2022.Theamendmentappliestoannualreportingperiodsbeginningonorafter1April2021.
TheseamendmentshadnoimpactonthefinancialstatementsoftheCompany,butmayimpactfuture
periods should the Company enter into any leases.
-
Permit
changes
required
by
IBOR
reform
to
be
made
to
hedge
designations
and
hedge
documentation
without the hedging relationship being discontinued
-Providetemporaryrelieftoentitiesfromhavingtomeettheseparatelyidentifiablerequirementwhen
an RFR instrument is designated as a hedge of a risk component
Application of New and Revised IFRS
TheGroupappliedforthefirsttimecertainstandardsandamendments,whichareeffectiveforannual
periodsbeginningonorafter1January2021. Severalotheramendmentsandinterpretationsapplyfor
the first timein2021,but donot havean impacton thefinancialstatements ofthegroup. TheGroup has
notearlyadoptedanystandards,interpretationsoramendmentsthathavebeenissuedbutarenotyet
effective.
- Apracticalexpedient to requirecontractual changes,or changesto cash flowsthat aredirectly required
bythereform,tobetreatedaschangestoafloatinginterestrate,equivalenttoamovementinamarket
rate of interest
Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
On28May2020,theIASBissuedCovid-19-RelatedRentConcessions-amendmenttoIFRS16Leases.
The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification
accountingforrentconcessions arisingasadirectconsequenceofthe Covid-19pandemic.Asa practical
expedient,alesseemayelectnot toassesswhetheraCovid-19relatedrentconcessionfromalessorisa
leasemodification. Alesseethatmakes thiselection accounts foranychangein leasepayments resulting
fromtheCovid-19relatedrentconcessionthesamewayit wouldaccountforthechangeunderIFRS16,
if the change were not a lease modification.
Covid-19-Related Rent Concessions beyond 30 June 2021 Amendments to IFRS 16
59
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
2
IAS 41 Agriculture – Taxation in fair value measurements
IFRS 17 Insurance Contracts
5. Segment information
Holding
Property development and
letting
Hospitality and
Entertainment
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
1 January 2023
1 January 2023
Definition of Accounting Estimates - Amendments to IAS 8
1 January 2023
1 January 2022
4.2 New and Revised IFRS in issue but not effective
This segment carries works such as construction,plumbing, electrical and
others tobring various propertiesin a state thatcan be leasedto third parties.
In relation to this, the Group leases out various freehold commercial and
residential properties to third parties.
This segment includes hotel operations such as accommodation, food and
beverage and other related services. The Group owns various hotels and
apartmentsuitesnamelyBayviewHotel,BlubayApartments,BlubaySuites,
Sliema Hotel and Azur Hotel.
1 January 2022
1 January 2022
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to
IAS 37
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
This serves as the finance arm of the Group and the principal vehicle for
further expansion of the Group's hospitality business and mixed-use
developments.
1 January 2022
1 January 2023
Property, Plant and Equipment: Proceeds before Intended Use
– Amendments to IAS 16
1 January 2022
Reference to the Conceptual Framework – Amendments to IFRS 3
Effective for annual periods
beginning on or after
Managementmonitorstheoperatingresultsofitsbusinessunitsseparatelyforthepurposeofmaking
decisions about resource allocation and performance assessment. Segment performance is evaluated
based on profit or loss and is measured consistently with profit or loss in the consolidated financial
statements.
The newand amendedstandards andinterpretations that areissued,but notyeteffective,up to thedate
ofissuanceoftheGroup’sfinancialstatementsaredisclosedbelow.TheGroupintendstoadoptthese
standards, if applicable, when they become effective.
IFRS 1 First-time Adoption of International Financial Reporting Standards –
Subsidiary as a first-time adopter
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition
of financial liabilities
1 January 2022
For managementpurposes, the Groupis organised into businessunits based on its products and services
and has two reportable segments, as follows:
Description
60
Notes to the Financial Statements
for the year ended 31 December 2021
5. Segment information (continued)
Year ended 31 December 2021 Holding
Property
development and
letting
Hospitality and
Entertainment Total segments Eliminations Consolidated
€ € € € €
External customers
-
8,563,835
6,501,458
15,065,293
-
15,065,293
Inter-segment
41,142,087
8,286,226
-
49,428,313
(49,428,313)
-
Total revenue
41,142,087 16,850,061 6,501,458 64,493,606 (49,428,313) 15,065,293
Income/(expenses)
Finance and similar income
-
344,702
-
344,702
(344,702)
-
Finance cost
(2,407,500)
(344,945)
(2,327,128)
(5,079,573)
1,864,152
(3,215,421)
Depreciation and amortisation
-
(346)
(5,916,616)
(5,916,962)
2,209,043
(3,707,919)
Share in loss of associates
-
-
(47,300)
(47,300)
-
(47,300)
Income tax expense
801,809
1,412,454
2,432,065
4,646,328
3,345,197
7,991,525
Segment profit/(loss) before tax (21,182,263) 105,259,964 (4,347,608) 79,730,093 (75,334,916) 4,395,177
Total assets 60,322,974 369,883,134 65,204,115 495,410,223 (132,456,341) 362,953,882
Total liabilities 79,074,221 50,213,122 72,252,084 201,539,427 (73,977,401) 127,562,026
Other disclosures
Capital expenditure
-
8,256,277
-
8,256,277
-
8,256,277
61
Inter-segment transactions, assets and liabilites are eliminated upon consolidation and reflected in the ‘eliminations’ column.
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2021
5. Segment information (continued)
Stivala Group Finance p.l.c.
Year ended 31 December 2020 Holding
Property
development and
letting
Hospitality and
Entertainment Total segments Eliminations Consolidated
€ € € € €
External customers
-
8,395,831
3,352,671
11,748,502
-
11,748,502
Inter-segment
3,458,801
7,975,098
-
11,433,899
(11,433,899)
-
Total revenue
3,458,801 16,370,929 3,352,671 23,182,401 (11,433,899) 11,748,502
Income/(expenses)
Finance and similar income
347,922
1
347,923
(347,922)
1
Finance cost
(2,407,500)
(348,425)
(2,216,529)
(4,972,454)
1,812,347
(3,160,107)
Depreciation and amortisation
-
(346)
(5,724,279)
(5,724,625)
(270,597)
(5,995,222)
Share in profit of associates
-
353,844
-
353,844
-
353,844
Income tax expense
(820,427)
(10,182,681)
3,720,750
(7,282,358)
6,802,635
(479,723)
Segment profit before tax 1,020,427 131,550,006 (6,883,928) 125,686,505 (98,214,417) 27,472,088
Total assets 62,000,705 343,589,531 62,114,376 467,704,612 (113,635,374) 354,069,238
Total liabilities 60,326,498 46,262,553 67,246,802 173,835,853 (51,203,447) 122,632,406
Other disclosures
Capital expenditure
-
11,524,132
11,524,132
-
11,524,132
Capital expenditure consists of additions to property, plant and equipment, and investment properties.
62
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
6.
Revenue from contracts with customers
The Group's hospitality revenue is derived locally from the operations of the hotels in Malta.
2021
2020
€
€
Type of goods or service
Hospitality and Entertainment (note 5)
5,652,238
2,867,939
616,423 347,321
232,797 137,411
6,501,458 3,352,671
Property development and letting (note 5)
Sale/barter of property for resale (note 20)
196,784 119,605
6,698,242 3,472,276
Timing of revenue recognition
Services/goods transferred at a point in time
1,046,004 604,337
Services transferred over time
5,652,238 2,867,939
6,698,242 3,472,276
Sale/barter of property for resale
The
performance
obligation
is
satisfied
at
the
point
in
time
when
control
of
the
asset
is
transferred
to
the
customer,generallyuponsigningofdeedofsalewherethecustomerobtainslegaltitletotheproperty.
The normal credit term is 30 to 90 days from date of deed.
There are no contract liabilities or remaining performance obligations as at 31 December 2021 and 2020.
The
Group
assesses
that
there
are
no
other
promises
in
the
contract
of
sale/barter
of
properties
held-for-
salethatare separate performanceobligationstowhicha portionofthetransactionpriceneeds tobe
allocated.Thetransactionprice,whichisequaltothesellingpriceindicatedinthedeedofsale/barter
signedby bothparties,is thereforeallocatedtoonly oneperformance obligation.TheGroup assesses
that there exist no variable considerations and consideration payable to the customer relating to the
sale/barter of properties held-for-sale.
The
performance
obligation
is
satisfied
upon
rendering
the
service
over
time
as
the
hotel's
customers
consumeandreceivethebenefitfromtheseservicesoneachday/throughouttheirstayuntilcheckout.
Thepayment(whichis equaltothetransactionpriceestablishedatthetimeof booking)isgenerally due
immediately on the day of checkout before the customer leaves the hotel's premises.
Accommodation
Performance obligations
The
performance
obligation
is
satisfied
at
a
point
in
time
upon
availment
of
service
by
the
customer.
The
payment(whichisequaltothetransactionpriceestablishedatthetimeofavailment)isgenerallydue
immediately upon completion of services before the customer leaves the hotel's premises.
TheGroup assessesthatthere arenootherpremises inthe contract ofsale that areseparateperformance
obligations to which aa portion oftransaction priceneeds to be allocated. Thetransaction price,which is
equaltothecashsellingpriceindicatedinthesalesinvoicesissued,isthereforeallocatedtoonlyone
performance obligation.
Set out below is the disaggregation of the Group's revenue from contracts with customers:
Disaggregated revenue information
Food and beverage
Accommodation
Information about the Group’s performance obligations are summarised below:
Other services
Food, beverage and other services
63
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
7.
Expenses by nature
2021
2020
2021
2020
€
€
€
€
Cost of sales
Direct wages (note 11) 526,627 670,174 - -
Social security contributions (note 11) 113,806 112,752 - -
Commissions 712,850 519,590 - -
Repairs and maintenance 726,058 911,255 - -
Cost of goods sold (note 19) 469,478 467,083 - -
Licenses and permits 270,593 319,078 - -
Utilities 755,731 747,371 - -
Transport 26,329 76,558 - -
Fuel 111,701 88,155 - -
Other direct costs - 6,082 - -
3,713,173 3,918,098 - -
Distribution and selling costs
Advertising and promotions 46,382 31,410 - -
Administrative expenses
Depreciation (notes 13 and 24) 3,687,024 5,953,883 - -
Amortisation 20,895 41,339 - -
Directors' remuneration (note 11) 184,359 199,477 26,385 18,000
Office salaries (note 11) 497,957 236,162 8,511 -
Social security contributions (note 11) 30,900 22,564 - -
Auditors' remuneration 20,500 20,500 8,500 8,500
Provision for ECL (notes 16, 21 and 32) 7,920,416 - - 207
Legal and professional fees 338,947 615,033 3,450 2,995
Rent (note 25) 40,346 2,200 - -
Computer maintenance 97,073 45,098 - -
133,915 67,288 408 313
Insurance 53,821 103,827 - -
Motor vehicle expenses 91,808 65,249 - -
Other administrative expenses 433,186 390,647 871 859
13,551,147 7,763,267 48,125 30,874
Other operating charges
Exchange fluctuations 2,233 3,909 - -
The CompanyThe Group
Bank charges
64
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
2021
2020
2021
2020
€
€
€
€
Annual statutory audit 20,500 20,500 10,030 10,030
8.
Other operating income
2021
2020
2021
2020
€ € € €
322,506 368,519 - -
Charges to tenants for damages - 2,349
Condominium fees & other charges 284,897 196,641
Recharge of expenses to other parties 210,395 226,989 - -
- 16,026 4,011 -
Litigation settlement
- 62,500 - -
135,634 100,118 - -
6,796 9,000 - -
Government grant
3,296
105,134 188,057 - -
-
55,407
-
-
1,068,658 1,225,606 4,011 -
9.
Finance and similar income
2021
2020
2021
2020
€
€
€
€
- 1 - -
10.
Finance costs
2021
2020
2021
2020
€
€
€
€
17,978 5,590 - -
2,407,500 2,407,500 2,407,500 2,407,500
761,925 700,550 - -
28,018
32,672
-
-
- 13,795 - -
3,215,421 3,160,107 2,407,500 2,407,500
Other interest
Miscellaneous income
Reversal of payable
The Group
Feeschargedbytheauditorforservicesrenderedduringthefinancialyearsended31December2021
and 2020 relate to the following:
The Group
The Company
Management fees
Gain on lease modification
/rent concession
Interest on bonds and amortisation of
bond issue cost
Interest on bank overdrafts
Interest on bank loans
The Group
Auditor's fees
The Company
The Group
Recharge of utilities to tenants
The Company
Interest on lease liability (note 25)
The Company
Interest from banks
Decrease in provision for estimated
credit losses (notes 16, 21 and 32)
65
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
11.
Staff costs and employee information
Staff costs for the year comprised the following:
2021
2020
2021
2020
€
€
€
€
1,208,943 1,105,813 34,896 18,000
144,706 135,316 - -
1,353,649 1,241,129 34,896 18,000
2021
2020
2021
2020
No.
No.
No.
No.
Operational 121 120 - -
Administration 15 15 - -
136 135 - -
The Group
Wages and salaries (including
Directors’ remuneration) (note 7)
The Group
The Company
Social security contributions (note 7)
The
Maltese
government
announced
a
number
of
measures
to
financially
support
businesses
whose
operationwasfinanciallyaffectedbytheCovid-19pandemic.TheGroupwasabletobenefitfromthe
covid wage supplement, receiving €800 on a monthly basis per full-time employee commencing on
March 2020. During the current year ended 31 December 2021, the Group had €1,139,219 (2020:
€813,428) in the form of government grants under the covid wage supplement. These amounts were
deducted from the line item 'direct wages and office salaries' as disclosed in note 7.
The Company
Theaveragenumberofpersons(includingDirectors)employedbythecompanyduringtheyearwasas
follows:
The Maltese government announced a number of measures to financially support businesses whose
operationwasfinanciallyaffectedbytheCovid-19pandemic.STHotelsLtd.wasabletobenefitfrom
MDB covid-19 interest rate subsidy scheme where the Company received €101,048 in the form of
governmentgrantduring 2021.These amounts weredeductedfrom theline item'Interest on bank loans'
as disclosed above.
66
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
12.
Income tax
2021
2020
2021
2020
€ € € €
Income tax expense:
- - - (821,728)
- (803,299) - -
(1,248,657) (918,185) - -
- (18,800) - -
(12,750) - - -
631,785 (731) 821,728 -
(629,622) (1,741,015) 821,728 (821,728)
8,621,147 1,261,292 (19,919) 1,301
7,991,525 (479,723) 801,809 (820,427)
12.
Income tax (continued)
2
2021
2020
2021
2020
€ € € €
4,395,177 27,472,088 (21,182,263) 1,020,427
1,538,311 9,615,230 (7,413,792) 357,149
Tax effect of:
(556,319) (529,744) - -
24,699,665 2,671,942 21,814,926 853,431
(26,936,483) (12,294,924) (14,401,134) (1,210,580)
1,261,407 1,740,284 - 821,728
(834,843) (742,749) - -
(52,860) (1,330,676) - -
(709,828) (923,689) 18,515 103
(3,006,588) 2,321,674 - -
1,854 (5,492) - -
- provision for estimated credit losses (2,764,056) (42,864) 1,404 (1,404)
(631,785) 731 (821,728) -
(7,991,525) 479,723 (801,809) 820,427
- expenses not allowed for tax purposes
The Group
Over/(Under) provision of tax
in prior years
- change in the fair value of
investment property
Income tax (credit)/expense for the year
Final withholding tax at 15%
- unabsorbed tax losses
- effect of adoption of IFRS 16
Taxation charge thereon
Profit before tax
- income taxed at different rates
- unabsorbed capital allowances
Deferred taxation (note 26):
Income tax credit/(expense) for the year
Credit for the year
Current tax charge
Tax at source
Final withholding tax at 8%
Tax expense on profit on ordinary activities
The Group
Tax reconciliation
- excess of carrying amount of property,
plant and equipment over tax base
The Company
The Company
Final withholding tax at 5%
- under provision of prior year tax
charge
Total current tax expense
- income not allowed for tax purposes
Provisionforincometaxhasbeenmadeattherateof35%onthechargeableincomefortheyearexcept
for investment income which is charged at the rates of 15% and 35% and for proceeds from sale of
property taxable at 8% final withholding tax.
- investment tax credit
67
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
3
Current taxation
0
Taxation due/recoverable is made up as follows:
2021
2020
2021
2020
€ € € €
2,982,619 2,158,705 (904,041) (1,198,288)
(631,785) 731 (821,728) -
1,261,407 1,740,284 - 821,728
(294,247) 294,247 2,543,814 294,247
3,317,994 4,193,967 818,045 (82,313)
(768,769) - - -
(12,750) (18,800) - -
- - (840,140) (821,728)
(781,519) (18,800) (840,140) (821,728)
918,185 (1,192,548) - -
3,454,660 2,982,619 (22,095) (904,041)
13.
Property, plant and equipment
Fair value hierarchy disclosures for these buildings are in note 32.
Type of property
Technique
Inputs
Commercial properties
Market approach
Residential properties
Market approach
Settlement tax
Final withholding tax at 5% and 8%
As at 31 December
Tax refund/(excess) tax refund
in prior year
Tax at source
Owner-occupied property is disclosed in property, plant and equipment as Buildings.
The Group
As at 1 January
Payments:
These
consist
mainly
of
residential
and
commercial
buildings
with
a
carrying
amount
of
€24,825,898
(2020: €61,988,419), had these assets been carried at cost less accumulated depreciation. As at 31
December2021and2020,thesepropertieshavebeencategorisedtofallwithinlevel2ofthefairvalue
hierarchy.The different levels in thefair value hierarchyhavebeen definedin note 32. The Grouppolicy
istorecognisetransfersintoandoutoffairvaluehierarchylevelsasofdateoftheeventofchangein
circumstancesthatcausedthetransfer.Therewerenotransfersbetweenlevelsduringtheyear.Forall
properties, their current use equates to the highest and best use.
The Group
For
properties
categorised
under
Level
2
of
the
fair
value
hierarchy
as
at
31
December
2021
and
2020,
the
following techniques and inputs were used:
The Company
Value of the properties are based on the
selling price of similar types of properties.
Reclassification to accrual:
Final withholding tax at 15%
The fair valueof the freehold buildings isbased on avaluation assessed bythe directors on31 December
2021for allexisting properties asat yearend, which includes the considerationof wear and tear. The last
independent architect's valuation of the Company’s properties was performed on 31 May 2020, by
independent external valuers having experience in the location and type of property. The costs of
additions after 31May2020 arebeing consideredby thedirectors as being equivalent to its fair value. As
at31December2021,managementassessedwhetherthereareanysignificantchangestothesignificant
inputs of the valuation. The fair value movement were credited to other comprehensive income and
subsequently transferred to revaluation reserve under equity.
Income tax expense
Fair value
Underprovision of tax in prior years
68
Notes to the Financial Statements
for the year ended 31 December 2021
13.
Property, plant and equipment (continued)
Buildings
Motor
Vehicles
Kitchen
equipment
Computer
equipment
Plant and
machinery
Furniture, fittings
and office
equipment
Electrical
installations
Energy saving
equipment Total
€
€
€
€
€
€
€
€
€
Cost / Valuation
As at 1 January 2020
78,592,613 424,226 67,043 308,446 526,427 6,137,756 3,915,405 1,031,359 91,003,275
Additions
6,080,690 39,615 - 18,580 18,559 735,663 994,446 7,602 7,895,155
Transfer from investment property (note 17)
55,561,976 - - - - - - - 55,561,976
Revaluation surplus (note 29)
86,945,920
- - - - - - -
86,945,920
As at 31 December 2020
227,181,199 463,841 67,043 327,026 544,986 6,873,419 4,909,851 1,038,961 241,406,326
Additions
3,377,383 37,713 55,704 5,401 357,488 630,219 739,414 43,085 5,246,407
Transfer to investment property (note 17)
(112,897,902) (112,897,902)
Revaluation surplus (note 29)
30,676,399 30,676,399
As at 31 December 2021
148,337,079 501,554 122,747 332,427 902,474 7,503,638 5,649,265 1,082,046 164,431,230
Depreciation
As at 1 January 2020
1,464,574 182,825 18,531 81,346 243,404 2,885,940 1,243,935 344,647 6,465,202
Charge for the year
2,318,176 101,104 13,416 77,526 126,720 1,693,420 1,024,869 429,184 5,784,415
Revaluation surplus (note 29)
(1,464,574) - - - - - - - (1,464,574)
As at 31 December 2020
2,318,176 283,929 31,947 158,872 370,124 4,579,360 2,268,804 773,831 10,785,043
Charge for the year
- 101,205 21,424 69,528 198,215 1,694,925 1,121,236 267,195 3,473,728
Revaluation surplus (note 29)
(2,318,176) - - - - - - - (2,318,176)
As at 31 December 2021
- 385,134 53,371 228,400 568,339 6,274,285 3,390,040 1,041,026 11,940,595
Net book amount
As at 31 December 2020
224,863,023 179,912 35,096 168,154 174,862 2,294,059 2,641,047 265,130 230,621,283
As at 31 December 2021
148,337,079 116,420 69,376 104,027 334,135 1,229,353 2,259,225 41,020 152,490,635
69
The Group
Stivala Group Finance p.l.c.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
14.
Investment in subsidiaries
2021
2020
€
€
Cost
60,004,895 60,004,895
(23)
As at 31 December 60,004,872 60,004,895
0
Undertaking / Registered Office Percentage of
issued shares
held
Subsidiary
100%
143, 100%
The Strand,
Sub-subsidiaries
100%
100%
100%
100%
The subsidiary was engaged in operating hotels and hostels. It also rents out properties.
143,
996 Ordinary shares,
ST Hotels Ltd.
The Strand,
As at 1 January
The Strand,
As at 31 December 2021, the Company held the following equity interests:
Stivala Operators Limited
Gzira
of
€1 each
fully paid up
of shares held
Thesubsidiarywasengagedinrentingoutpropertiestorelatedparties.Itisaholdingcompany.The
Company also acts as a guarantor to the bonds issued by Stivala Group Finance p.l.c..
Carmelo Stivala Group Limited
fully paid up
Gzira GZR1026
Gzira
1,200 Ordinary shares,
fully paid up
Gzira
fully paid up
Gzira
fully paid up
The Strand,
of
€1 each
4,872 Ordinary shares,
The subsidiary used to be engaged in renting residential and commercial properties to third parties.
The Company
60,000,000 Redeemable
Preference Shares,
Reduction due to major shareholder's divestiture (see note 22)
143,
nominal value
500,000 Ordinary shares,
1,200 Ordinary shares,
143,
The subsidiary is principally engaged in renting out properties.
Stivala Properties Ltd
143,
of
€2.329373 each
ST Properties Ltd
The Strand,
The subsidiary used to be engaged in operating hotels and hostels.
Number, class and
of
€1 each
of
€1 each
70
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
15.
2021
2020
2021
2020
€ € € €
Cost
354,844 500 - -
Additions - 500 - -
(47,300)
353,844
-
-
307,544 354,844 - -
Undertaking / Registered Office
Percentage of
issued shares
held
Associates
50%
50%
143,
33%
33%
500 'B' Ordinary shares,
Civala Limited
Number 2,
of
€1 each
Geraldu Farrugia Street,
As at 1 January
Zebbug ZBG 4351
The
associate
is
principally
engaged
to
act
as
building
developers,
contractors,
designers
and
ancillary
services to building industry.
Gzira GZR 1026
The
associate
has
been
engaged
to
acquire
and
hold
assets
of
whatsoever
nature,
whether
movable
or
immovable, corporal or incorporal, whether by way of title, real or personal, or on behalf of others.
Share in (loss)/profit
500 'B' Ordinary shares,
Valletta VLT 1432
25/25 Strait Street
Aqualuna Lido Ltd
nominal value
The associate was engaged in operation of a lido.
Sliema Creek Lido Limited
The Strand,
As at 31 December
Platinum Developments Ltd
600 Ordinary shares,
fully paid up
The associate will be engaged in operation of a lido.
fully paid up
600 Ordinary shares,
Investment in associates
As at 31 December 2021, the Company (through its subsidiary) held the following equity interests:
Zebbug ZBG 4351
The Group The Company
of
€1 each
of shares held
Geraldu Farrugia Street,
No. 2,
of
€1 each
of
€1 each
Vincenti Buildings,
Number, class and
20% paid up
20% paid up
71
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Undertaking
Aqualuna Lido Ltd
Civala Limited
Accounting period
31 December 2021
31 December 2021
31 December 2021
31 December 2021
Summarisedfinancial informationoftheassociates, basedontheirlatestaudited financialstatements,
andreconciliationwiththecarryingamountoftheinvestmentsintheconsolidatedfinancialstatements
aresetoutbelow.Theamountspresentedareextractedfromthemostupdatedandavailablefinancial
statements of the associates as at and for the year ended:
Platinum Developments Ltd
Sliema Creek Lido Limited
72
15.
Investment in associates (continued)
#
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Percentage ownership interest 50% 50% 50% 50% 50% 50% 33% 33% 33% 33%
Non-current assets 7,860,160 6,036,569 - - 590 - 65,331 - 7,926,081 6,036,569
Current asset
240
240
399,821 444,222 - - 230,276 156,524 518,469 3,095 1,148,806 604,081
Non-current liabilities (7,060,729) (5,616,107) - - - - - - (7,060,729) (5,616,107)
Current liabilities (8,696) (7,125) (586,403) (157,236) - (850) (237,717) (155,023) (669,167) (1,595) (1,501,983) (321,829)
Net Asset (Liability) (100%) (8,456) (6,885) 612,849 707,448 - (850) (6,851) 1,501 (85,367) 1,500 512,175 702,714
Group's share on net asset (liability)* (4,228) (3,443) 306,424 353,724 - (425) (2,283) 500 (28,171) 500 271,742 350,856
Adjustments 4,228 3,443 120 120 425 2,783 28,671 - 35,802 3,988
Group's carrying amount of the
investment
- - 306,544 353,844 - - 500 500 500 500 307,544 354,844
Net Asset (liabilities) include (100%):
Cash and cash equivalent 240 240 7,558 79,033 - - 16,544 48,698 - - 24,342 127,971
Non-current financial assets - - - - - - - - - -
Revenue and other income - - 165,785 140,044 - - 66,431 61,756 439,158 1,595 671,374 203,395
Cost of sale - - - - - - (63,699) (50,137) (246,234) - (309,933) (50,137)
Interest expense - - - (150) - - - - - - - (150)
Other expense (1,157) (1,161) (260,384) (180,317) - (636) (11,084) (9,108) (279,791) (1,595) (552,416) (192,817)
Change in fair value of investment
property
- 1,707,297
Loss before tax (1,157) (1,161) (94,599) 1,666,874 - (636) (8,352) 2,511 (86,867) - (190,975) (39,709)
Income tax expense - - - (621,007) - - - - - - - (621,007)
Other comprehensive loss - - - - - - - - - - - -
Total comprehensive loss (100%) (1,157) (1,161) (94,599) 1,045,867 - (636) (8,352) 2,511 (86,867) - (190,975) (660,716)
Group’s share of (loss)/
profit for the year
- - (47,300) 522,934 - - - 837 - - (47,300) 523,771
Prior year losses taken up this year - - 353,844 (169,090) - - - (837) - - 353,844 (169,927)
Group’s share in profit at yearend - - 306,544 353,844 - - - - - - 306,544 353,844
73
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2021
Platinum Developments
Limited Quisisana Boutique Co. LtdCivala Limited Sliema Creek Lido Ltd Aqualuna Lido Ltd Total
The aggregate capital and reserves as at the end of the under mentioned accounting period and the results for the said period of the Company were as follows:
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
16.
Financial assets and financial liabilities
16.1 Financial assets
2021
2020
2021
2020
€
€
€
€
Current assets
479,265
281,315
-
-
538,022 384,641 - -
7,182,242 4,784,060 - -
Total trade and other receivables 8,199,529 5,450,016 - -
Other financial assets
- - - 778,040
5,059,446
4,948,891
-
-
2,696,718 10,555,572 - -
248,125 249,062 - -
Total other financial assets 8,004,289 15,753,525 - 778,040
16,203,818 21,203,541 - 778,040
Allowance for ECL on loans to associates, other related undertakingsand other parties amounted to
€72,125, €7,924,119 and €1,875 (2020: €71,267, €60,512 and €938), respectively. Movement in the
allowanceformspartofthetotalprovisionforECLreportedinthestatementofprofitorlossandother
comprehensive income.
Trade receivables - net of ECL (note 21)
Debt instruments at amortised cost:
Other receivables - net of ECL (note 21)
Total debt instuments at amortised cost
Amounts owed by related parties
- net of ECL (note 21)
Loans to subsidiary undertakings
- net of ECL
Loans to other party - net of ECL
All of the above debt instruments at amortised cost are interest free, unsecured and repayable on
demand.The Group's exposureto credit risk related to thesefinancial assets is disclosed in note 32.As at
the reporting date, these financial assets were fully performing and hence do not contain impaired
assets.However, duetotheimplementationofIFRS9,theassetsaremeasured atamortisedcostand
estimated credit losses have to be calculated.
Loans to other related undertakings -
net of ECL
Loans to associates - net of ECL
The Group The Company
74
16.
Financial assets and financial liabilities (continued)
16.2 Financial liabilities: Loans and borrowings
Maturity
2021
2020
2021
2020
Current loans and borrowings € € € €
Bank overdrafts (notes 23 and 32)
4% - 5%
on demand
1,539,387
1,978,579
-
-
Bank loans (notes 23 and 32)
2.50% - 4%
2025 - 2035
3,328,612
1,765,045
-
-
Loans from subsidiary undertakings
no interest
on demand
-
-
18,567,863
-
Finance lease liability (note 25 and 32)
4%
2022 - 2029 232,626 194,992 - -
5,100,625
3,938,616
18,567,863
-
Non-current loans and borrowings
3.65% - 4% 2027 - 2029 59,670,000 59,610,000 59,670,000 59,610,000
Bank loans (notes 23 and 32)
2.50% - 4%
2025 - 2035
20,620,082
20,003,708
-
-
Finance lease liability (note 25 and 32)
4%
2023 - 2029
394,949
646,088
-
-
80,685,031
80,259,796
59,670,000
59,610,000
Other Financial Liabilities at amortised cost, other than loans and borrowings
Trade and other payables (note 24)
12,808,095
9,570,738
836,358
716,498
75
The Company
450,000 and 150,000 (€100 face value) secured bonds
Interest rate
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2021
The Group
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
16.
Financial assets and financial liabilities (
continued
)
16.2 Financial liabilities: Loans and borrowings (continued)
2021
2020
€ €
Face value of the secured bonds 60,000,000 60,000,000
Unamortised bond issue cost (330,000) (390,000)
Amortised cost
59,670,000 59,610,000
The Company
Thebondbearinterestrateof4.00%perannumonthenominalvaluepayableannuallyinarrearsevery
18thofOctoberwithrespecttothe€45millionbondissueand3.65%perannumonthenominalvalue
payable annually in arrears every 18th of July with respect to the €15 million bond issue.
Thesecuredbondsaremeasuredattheamountofthenetproceedsadjustedfortheamortisationofthe
difference between the net proceeds and the redemption value of the bonds, using effective yield method
as follows:
The secured bonds are listed on the Official Companies List of the Malta Stock Exchange and are
guaranteedbyCarmelo StivalaGroup Limited,which has bound itself with theissuer,forthe repayment
ofthebondsandinterestthereon,pursuanttoandsubjecttothe termsandconditionsin theoffering
memorandum.
The Group
Thebankoverdraftandbankloansbearinterestrangingbetween2.50%to5%perannum(2020:0.35%
to5%).Thesefacilitiesaresecuredbya generalhypothecovertheGroup’s assets,specialhypothecand
guarantees oversome of theGroup’s immovableproperties, byjointandseveral personalguarantees
and by pledge over the Group’s insurance policies.
The loans from associate are unsecured, interest-free and repayable on demand.
Byvirtueoftheprospectusdated25September2017and18July2019,theCompanyissued45,000,000
4%securedbondswithafacevalueof€100each,redeemableatparon18October2027and15,000,000
3.65%securedbonds withafacevalueof €100each, redeemableat paron 29July2029,respectively. The
amountismadeupofthetwobondissuesof€45millionand€15millionrespectively,netofthebond
issuecostswhicharebeingamortisedoverthelifetimeofthebonds.Thebondsaresecuredbyafirst-
rankingspecialhypothecovervariousguarantor'sproperty,andpledgeonvariousinsuranceproceeds
(notes 13 and 17), pursuant to and subject to the terms and conditions in the prospectus.
Thebankoverdraftsarerepayableondemand.InformationaboutthecontractualtermsoftheGroup's
loans including interest are disclosed in note 32.
76
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
16.
Financial assets and financial liabilities (
continued
)
16.2 Financial liabilities: Loans and borrowings (continued)
2021
2020
2021
2020
€ € € €
Total borrowings:
At fixed rates 60,297,575 60,451,080 59,670,000 59,610,000
-
4.00% 4.00% 4.00% 4.00%
3.65% 3.65% 3.65% 3.65%
3.25% - 3.99% 3.25% - 3.99%
- -
0
17. Investment property
2021
2020
2021
2020
€
€
€
€
Valuation
34,337,699 116,469,022 - -
3,009,870 3,628,977 - -
(1,500,000) - - -
29,967,931 29,020,926 - -
- (59,219,250) - -
112,897,902 (55,561,976)
As at 31 December
178,713,402 34,337,699 - -
0
The Company
This note provides information about the Company's borrowings. For more information about the
Company's exposure to interest rate and liquidity risk, see note 32.
Transfer from/(to) property, plant and
equipment (note 13)
The Company
As at 1 January
Additions
The Group
Lease liability
Effective interest rates:
The interest rate exposures of borrowings are as follows:
Market valuations are performed by independent professional architects every three years or earlier
whenever their fair values differ materially from their carrying amounts. In the year when a market
valuationisnotperformed,anassessmentofthefairvalueisperformedtoreflectmarketconditionsat
the year-end date.
The Group
150,000 (€100 face value) secured
bonds 2029
Fair value
450,000 (€100 face value) secured
bonds 2027
Transfer to assets held for distribution
to owner (note 22)
Transfer to property held-for-sale
(note 20)
Change in fair value
77
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
17.
Investment property (continued)
Office
properties
Commercial
properties
Residential
properties Total
€ € € €
As at 1 January 2020 32,317,557 27,616,691 56,534,774 116,469,022
Additions 196,629 2,617,414 814,934 3,628,977
(27,422,719) (14,078,990) (14,060,267) (55,561,976)
3,834,012 2,838,077 22,348,837 29,020,926
(1,600,000) (3,200,000) (54,419,250) (59,219,250)
As at 31 December 2020 7,325,479 15,793,192 11,219,028 34,337,699
Additions
321,895 94,051 2,593,924
3,009,870
- - (1,500,000) (1,500,000)
46,310,296 28,575,159 38,012,447 112,897,902
3,265,817 14,636,290 12,065,824 29,967,931
As at 31 December 2021 57,223,487 59,098,692 62,391,223 178,713,402
ir
Type of property Technique Inputs
Commercial properties Market approach
Residential properties Market approach
Office properties Market approach
Fair value change recognised in
profit or loss
Transfer to property, plant and
equipment (note )
Asat31December2021and2020,thesepropertieshavebeencategorisedto fallwithinlevel2ofthefair
valuehierarchy.Thedifferentlevelsinthefairvaluehierarchyhavebeendefinedinnote 32.The Group
policy is torecognise transfers into andout offair valuehierarchy levels as ofdate of theeventof change
in circumstances thatcausedthetransfer. Therewerenotransfers betweenlevelsduringthe year.For all
properties, their current use equates to the highest and best use.
Transfer from property, plant and
equipment (note 13)
Asatyearend,theCompanyhadpreliminaryagreementsforcontractualagreements fortheacquisition
of investment property amounting to €870,000 (2020: €17,503,268).
The fair value of the Group's investment properties as at 31 December 2021 is based on a valuation
assessed by the directors at year end. The last independent architect's valuation of the Company's
investment properties was performed on 31 May 2020, by an independent external valuers having
experience in the location and type of property. the costs of additions after 31 May 2020 are being
consideredbythedirectorsasbeingequivalenttoitsfairvalue.Asat31December2021,management
also assessed whether thereare any significant changes to thesignificantinputs ofthe valuation.Thefair
value movement were credited to profit or loss and subsequently transferred to revaluation reserve
under equity.
Reconciliation of fair value:
Transfer to assets held for distribution
to owner (note 17)
Fair value change recognised in
profit or loss
Value of the properties are
based on the selling price of
similar types of properties.
For investment properties categorised under Level 2 of the fair value hierarchy as at 31 December 2021
and 2020, the following techniques and inputs were used:
Transfer to property held-for-sale
(note 20)
78
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
18. Intangible assets
2021
2020
2021
2020
€
€
€
€
Cost - Computer Software
As at 1 January and 31 December
124,797 124,797 - -
Amortisation
As at 1 January
97,845 56,506 - -
Charge for the year
20,895 41,339 - -
As at 31 December
118,740 97,845 - -
Net book amount
As at 1 January 26,952 68,291 - -
As at 31 December 6,057 26,952 - -
19.
Inventories
2021
2020
2021
2020
€
€
€
€
Goods held for resale 11,657 8,558 - -
20.
Property held-for-sale
2021
2020
2021
2020
Cost
€
€
€
€
- 756,207 - -
737,315 87,674 - -
1,500,000 - - -
(58,216) (115,395) - -
- (728,486) - -
2,179,099 - - - As at 31 December
As at year end, the Company had investment property with a carrying amount of €33,715,651
(2020: €25,880,826) pledged to secure borrowings.
During2021,€469,478(2020:€467,083)wasrecognisedasanexpenseduringtheyearandincludedin
cost of sales (note 7).
Additions
The Company
The Group
Transfer from investment property
(note 17)
Transfer to assets held for distribution to
owner (note 22)
As at 1 January
The Group
The Company
In2021,theGroupsoldpropertiesforresalecosting€58,216andsalevalueconsiderationof€255,000.In
2020, the Group exchanged (through barter) a property for resale costing €115,395 with a new
investmentproperty,atanexchangevalueconsiderationof€235,000.Theprofitfromthesetransactions
were shown in the statement of profit or loss and other comprehensive income under revenue from
contracts with customers (note 6).
Disposals
The Company
The Group
79
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
21.
Trade and other receivables
2021 2020 2021 2020
€
€
€
€
Current
522,668 302,908 - -
7,233,978 4,784,060 - -
1,353 -
541,534 386,001 - -
1,505,978 969,241 - -
124,356 216,658 - -
29,808 40,032 - -
9,959,675
6,698,900
-
-
(43,403) (21,593) - -
(51,736) (23,921) - -
(3,512) (1,360) - -
(98,651) (46,874) - -
9,861,024 6,652,026 - -
2021
2020
2021
2020
€
€
€
€
As at 1 January
46,874
54,076
-
-
Provision for ECL (note 7)
51,777
(7,202)
-
-
As at 31 December
98,651 46,874 - -
22.
Assets held for distribution to owner
2021
2020
2021
2020
€ € € €
- 59,219,250 - -
Property for resale - 728,486 - -
- 59,947,736 - -
Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.
The amounts owed by related parties are unsecured, interest free and repayable on demand.
Other advances
Amounts owed by ultimate beneficial
owners
Other receivables
The Company
The Group
Trade receivables
Indirect taxation
Prepayments and accrued income
Trade receivables
Other receivables
Amounts owed by directors
The Company
Investment property under fair value
model
Total assets held for distribution to
owner
The Group
Total trade and other receivables
The Group
Set out below is the movement in the allowance for ECL on trade and other receivables:
The Company
Amounts owed by directors
Allowance for ECL on (note 35):
Other advances include advance deposits on purchase of properties.
80
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
In terms ofthe clause(iii) aboveforcompanies within Stivala group,dulyfilledforms weresubmitted to
MaltaBusinessRegistrytoeffecthisremovalfromtheboardofdirectorsofallcompaniesformingpart
of Stivala group of which he is a director.
Furthermore,theresultantissuedsharecapitalamountingto€225,000hasbeenincreasedby€30,000to
amountto€255,000inaccordancewithListingRule3.17.Theafore-stated€30,000ordinarysharesof€1
eachhavebeensubscribedtoasfullypaid-upsharesbyCarmeloStivalaTrusteeLimitedonbehalfof
each of the ultimate beneficial owners.
The issued ordinary share capital of Carmelo Stivala Group Limited (CSGL) and the corresponding
investmentoftheCompanyinCSGLhavealsobeenreducedby€24,madeupof€24ordinarysharesof
€1 each.
Such
amount
of
transfer
value
of
the
properties
amounting
to
€59,947,736
less
Carlo
Stivala's
share
capitalamountingto€75,000waspresentedas'Lossonmajorshareholder'sdivestiture'disclosedinthe
ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome.Outofthetransfervalueof
the propertiesmentionedpreviously, the amount of €38,741,687represents fairvalue incrementson such
propertiesoverthecosts.Duetothedivestiture,thesewereconsideredrealisedandpresentedas'Gain
ontransferofproperties'intheStatementofComprehensiveIncomeofCarmeloStivalaGroupLimited
and were declared eventually as dividends to the Company for the sameamount disclosed as 'Dividends
receivable' in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
(ii)
the
final
deed
of
transfer
in
respect
of
the
properties
that
were
agreed
to
in
terms
of
a
promise
of
sale
agreementasconsiderationduetoCarloStivalaandCarmeloStivalaTrusteeLimitedastrusteeofthe
SeasideTrust,thebeneficiariesofwhichareCarloStivalaandhisdescendants,fortheaforesaidparties
torelinquishalloftheirrightsandinterestsinthesharecapitalofthecompaniesformingpartofthe
Stivala group, has been duly executed; and
(iii) CarloStivalahasresignedfrom the boardof directors ofallcompanies formingpart ofStivalagroup
of which he is a director.
In terms ofthe clause(i) above,the sharecapital oftheCompany has beenreducedby€75,000 ,made up
of €75,000ordinary shares of €1 each, equivalentto25%of theissuedsharecapital oftheCompany. As a
result, the indirect shareholdingin the Company of each of Martin Stivala, Ivan Stivala and Michael
Stivala and theirrespectivedescendants(the"ultimate beneficial owners") hasincreasedfrom 25% to
33.33% of the Company's issued share capital.
Intermsoftheclause(ii)above,theimmovablepropertieswiththevalueof€59,947,736asdisclosedin
prior year annual financial report as 'assets held for distribution to owner', were transferred from
CarmeloStivalaGroupLimitedtoCASTHoldingsLtd,acompanythatisultimatelyownedbyTrimer
ServicesLtdastrusteeofCASTTrust,thebeneficiariesofwhichareCarloStivalaandhisdescendants.
SuchvaluewereultimatelyclosedtotheCompanywhereitrepresentspartoftheconsiderationdueto
theTrusteeSeasideTrust,andfullconsiderationduetoCarloStivala,forthesaidpartiesrelinquishing
all of their interests in the share capital of the companies forming part of Stivala group.
In view of this event, the result were as follows:
(i) the sharecapital of each of the Company, Carmelo Stivala Group Limitedand North HarbourLimited
hasbeenreducedpursuanttothecancellationofallsharesheldthereinbyCarloStivalaandCarmelo
StivalaTrusteeLimitedastrusteeoftheSeasideTrust,thebeneficiariesofwhichareCarloStivalaand
his descendants;
Pursuanttotheframeworkagreementandpromiseofsaleagreementmadelast20November2020,the
relinquishment ofownershipofMr.CarloStivalafromStivalagrouphasbeenformallyconcludedon 26
April2021 andwasformally announced byStivala GroupFinance p.l.c.('theCompany')the nextday, 27
April 2021.
Principal divestment of major shareholder
81
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
23.
Borrowings
2021
2020
2021
2020
€ € € €
Current
1,539,387 1,978,579 - -
3,328,612 1,765,045 - -
- - 18,567,863 -
4,867,999 3,743,624 18,567,863 -
Non-current
44,775,000 44,730,000 44,775,000 44,730,000
3.65 % secured bonds 14,895,000 14,880,000 14,895,000 14,880,000
20,620,082 20,003,708 - -
80,290,082 79,613,708 59,670,000 59,610,000
85,158,081 83,357,332 78,237,863 59,610,000
Loans from associate is unsecured, non-interest bearing and repayable on demand.
24.
Trade and other payables
2021
2020
2021
2020
€
€
€
€
Current
470,492 392,729 - -
4,955,875 3,711,913 - 1,770
1,895,243 689,031 6,814 5,273
1,708,971 1,201,119 - -
1,042,620 2,390,985 829,544 709,455
2,734,894 1,184,961 - -
12,808,095 9,570,738 836,358 716,498
0
Loans from subsidiary undertakings
Amount received in advance
Bank loans
FurtherinformationontheeffectonothercompaniesoutsideStivalaGroupnamelyNorthHarbourLtd
and Carmelo Stivala Trustee Limited, are found on the individual financial statements of the
aforementioned companies.
The Group
Total trade and other payables
The Company
Total current borrowings
Indirect taxes and Social Security
Contributions
Accruals
The Group's exposure to liquidity risk related to trade and other payables is disclosed in note 32.
Other payables
Total borrowings
Trade payables
Deferred rental income
Bank overdrafts (note 31)
Bank loans
The Group
Total non-current borrowings
The Company
4% secured bonds
Indirect
taxes
and
social
security
contributions
included
due
from
prior
years,
which
are
being
paid
in
installments in accordance with the agreements entered by the Group with Commission for Revenue.
Tradepayablesarenon-interestbearingandarenormallysettledbetween30to90days.Otherpayables
which includes refundable security and other deposits to tenants.
82
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
25.
Leases
Buildings
Furnitures
and Fittings Total
€
€
€
- 516,745 516,745
Additions
468,235
-
468,235
(42,639)
(126,829)
(169,468)
As at 31 December 2020
425,596
389,916
815,512
Lease modification
(76,181)
-
(76,181)
Additions 81,267 - 81,267
Depreciation expense
(84,110)
(129,186)
(213,296)
As at 31 December 2021
346,572 260,730 607,302
2021
2020
2021
2020
€
€
€
€
As at 1 January
841,080
524,823
-
-
Lease modification
(82,977)
-
-
-
Additions
81,267
475,498
-
-
Payments
(239,813)
(191,913)
-
-
28,018
32,672
-
-
As at 31 December
627,575 841,080 - -
Current 232,626 194,992 - -
Non-current 394,949 646,088 - -
Set out below are the carrying amounts of lease liabilities included under interest-bearing loans and
borrowings (note 16) and the movements during the period:
The Group
Set outbelowarethe carryingamounts ofthe Group'sright-of-use assets recognised andthe movements
during the period:
25.1 The Group as a lessee
Accretion of interest (note 10)
TheGroup has leasecontractsfor various buildingsand furniture and fittingsused in itsoperations.
Leasesofbuilding haslease terms of 5- 11years,while furniture andfittingshavelease termsof5years.
TheGroup’sobligationsunderitsleasesaresecuredbythelessor’stitletotheleasedassets.Generally,
theGroupisnotrestricted from subleasingtheleasedassets (exceptwhen otherwiseagreed withthe
lessor in special terms) and effecting major structural or layout alterations on the leased premises.
Depreciation expense (note 7)
The Company
As at 1 January 2020
TheGroup has a leasecontractwhichincludes in-substance fixed payments. TheGroup has nolease
contracts containing variable lease payments that depend on an index or a rate, residual value
guarantees and sales and leaseback transactions.
TheGrouphasleasesofgaragewithleasetermof12monthsorless.TheGroupappliesthe‘short-term
lease’recognitionexemption for thislease. There areno otherleasesqualifyingforshortterm orlow
value asset recognition exemptions applicable to the Company.
83
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
25.
Leases (continued)
2021
2020
2021
2020
€
€
€
€
213,296 169,468 - -
28,018
32,672
-
-
40,346 2,200 - -
281,660 204,340 - -
2021
2020
2021
2020
€
€
€
€
Within one year 2,744,507 1,452,506 - -
2,326,705 276,479 - -
More than five years 457,169 - - -
5,528,381 1,728,985 - -
TheGrouphadtotalcashoutflowsforleasesof€239,813in2021(€191,913in2020).In2021,theGroup
also had non-cash additions to right-of-use assets and lease liabilities of €81,267 (2020: €468,235 and
€475,498), respectively.
25.1 The Group as a lessee (continued)
The Group
The Company
Total amount recognised in profit or
loss
The Company
Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as
follows:
The following are the amounts reconised in profit or loss:
The maturity analysis of lease liabilities are disclosed in note 32.
25.2 The Group as a lessor
TheGrouphasenteredintooperatingleasesonitspropertyportfolioconsistingofcertaincommercial
andresidentialbuildings(seenotes13and17).Theseleaseshavetermsofbetween1and3yearsforthe
non-cancellableportion,whileupto8yearsforthecancellableportionthereafter.Allleasesincludea
clausetoenableupwardrevision(usually10%)oftherentalchargeatvariousintervalsonacumulative
basis (in-substance fixed payments) as a precaution to prevailing market conditions throughout the
whole lease term. The Group is not exposed to foreign currency risk as a result of the lease
arrangements,as all leasesare denominatedineuro. Rental incomerecognisedbytheGroupduring the
year is €8,367,051 (2020: €8,276,226).
After one year but not more than five
years
Expense relating to short-term leases
and leases of low-value assets
(included in administrative expenses)
(note 7)
The Group
Interest expense on lease liabilities
Depreciation expense of right-of-use
assets
84
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
26.
Deferred taxation
Deferred tax liability
2021
2020
2021
2020
€
€
€
€
(25,880,637) (15,110,009) - -
- (1,376,114) - -
3,006,588 (2,321,674) - -
(2,639,566) (7,072,840) - -
As at 31 December
(25,513,615) (25,880,637) - -
The balance represents:
2021
2020
2021
2020
€
€
€
€
Tax effect of temporary differences relating to:
Asset revaluations (25,513,615) (25,880,637) - -
Deferred tax asset
2021
2020
2021
2020
€
€
€
€
As at 1 January
4,959,080 - 311,329 310,028
- 1,376,114 - -
5,614,559 3,582,966 (19,919) 1,301
As at 31 December
10,573,639 4,959,080 291,410 311,329
2021
2020
2021
2020
€
€
€
€
Tax effect of temporary differences relating to:
1,730,655 1,174,336 - -
Unabsorbed capital allowances 1,941,314 1,106,471 - -
Unrelieved tax losses 2,640,649 1,233,717 291,410 310,028
Allowance for estimated credit losses 2,835,002 69,543 - 1,301
6,465 8,319 - -
Investment tax credit 1,419,554 1,366,694 - -
10,573,639 4,959,080 291,410 311,329
Excess of capital allowances over
depreciation
The Group
The Company
(Charge)/Credit in profit or loss
(note 12)
The balance represents:
As at 1 January
The Group
The Group
The Company
(Charge) in other comprehensive
income
The Company
The Group
Reclass from deferred tax liability
Credit in profit or loss (note 12)
Reclass to deferred tax asset
Leases
The Company
85
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
26.
Deferred taxation (continued)
Deferred tax asset (continued)
27.
Share capital
2021
2020
2021
2020
€
€
€
€
Authorised:
500,000 Ordinary shares of €1 each 500,000 500,000 500,000 500,000
Issued and fully paid up:
300,000 Ordinary shares of €1 each 255,000 300,000 255,000 300,000
28.
Earnings per share
2021
2020
2021
2020
€
€
€
€
12,386,702 26,992,365 (20,380,454) 200,000
255,000 300,000 255,000 300,000
Earnings per share (cents)
48.58 89.97 (79.92) 0.67
The Group and the Company didnot have unrecogniseddeferred income tax assets that could be carried
forward against future taxable income as at 31 December 2021 and 31 December 2020.
EarningspershareisbasedontheprofitfortheyearattributabletotheownersoftheGroupdividedby
the weighted average number of ordinary shares in issue during the year.
Weighted average number of
ordinary shares in issue (note 27)
Profit for the year attributable to
shareholders:
- Basic profit for year attributable to
ordinary equity holders of the parent
The Company
The Group
The Group
The Company
Deferred incometaxesarecalculated onall temporarydifferencesundertheliabilitymethodandare
measured at the tax rates that are expected to apply to the period when the asset is realized or the
liabilityissettledbasedontaxrates(andtaxlaws)thathavebeenenactedbytheendofthereporting
period. Theprincipaltax used is 35% (2020: 35%) with the exception ofdeferred taxationon the fair
valuation of non-depreciable investment property which is computed on the basis applicable to
disposals of immovable property that is tax effect of 8% (2020: 8%) of the transfer value.
- Basic profit for year attributable to
ordinary equity holders of the parent
Thereisnodifferencebetweenthebasicanddilutedearningspershareas theGroupandCompany has
no potential dilutive ordinary shares.
Each ordinary share gives the right to one vote, participates equally in profits distributed by the
company andcarries equalrights upon distribution ofassets bythe company in the eventofwinding up.
See note 22 for more information on the reduction of issued share capital of the Group and the
Company.
86
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
29.
Revaluation reserve
2021
2020
2021
2020
€ € € €
As at 1 January 200,672,324 89,123,934 - -
- 3,511,484 - -
(33,580,348) - - -
30,355,009 81,337,654 - -
27,570,497 26,699,252 - -
As at 31 December
225,017,482 200,672,324 - -
30.
Incentives and benefits reserves
2021
2020
2021
2020
€
€
€
€
As at 1 January
4,825,440
-
-
-
Reclassification from retained earnings
-
4,825,440
-
-
As at 31 December 4,825,440 4,825,440 - -
31.
Cash and cash equivalents
The cash and cash equivalents comprise the following statement of financial position amount:
2021
2020
2021
2020
€
€
€
€
Cash at banks and in hand 202,471 592,023 4,597 2,400
Allowance for ECL (3,237) - - -
Bank overdrafts (note 16, 23) (1,539,387) (1,978,579) - -
As at 31 December
(1,340,153) (1,386,556) 4,597 2,400
Reclassification of revaluation in prior
years related to investment property,
net of deferred tax
The Group
The revaluation reserve comprises the revaluation of property, plant and equipment and investment
properties, net of deferred taxation due to change in fair market value which are unrealised at the
reportingdate.Thechangeinfairvalueofinvestmentpropertiesaretransferredfromretainedearnings
tothisreservesincethese gains arenotconsideredbythedirectorstobeavailablefordistribution. Upon
disposaloftherespectiveinvestmentproperty,realisedfairvaluegainsaretransferredbacktoretained
earnings. This reserve is a non-distributable reserve.
The Group The Company
Revaluation of property, plant and
equipment, net of deferred tax
(note 13 and 26)
The Company
Theincentivesandbenefitsreserverepresentsprofitssetasideforre-investmentintermsofSection6(1)
and36(2)oftheBusinessPromotionAct. Amountsincludedinthisreservecanonlybedistributedby
way of capitalization of profits.
The Company
The Group
Revaluation of investment property,
net of deferred tax
(note 17 and 26)
Reduction due to major shareholder's
divestiture (see note 22)
87
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
2021
2020
2021
2020
€
€
€
€
As at 1 January
-
3,093
-
-
Provision for ECL (note 7)
3,237
(3,093)
-
-
As at 31 December
3,237 - - -
32.
Financial risk management objectives and policies
TheCompany'sexposuretointerestrateriskislimitedtothevariableinterestratesonbankoverdraft
and bankloans. Based on observationsof current market conditions,the directors consider anupwardor
downwardmovementininterestof1%tobereasonable possible.However,thepotential impactofsuch
movementisconsideredimmaterial.Asaresult,theCompanyisnotsubjecttosignificantamountsof
risk due to fluctuations on the prevailing levels of market interest rates.
Exposure to cashflow interest rate risk arises in respect of interest payments relating to bank loans
amounting to €2,687,345 (2020: €441,157).
Credit risk
Creditriskistheriskthatacounterpartywillnotmeetitsobligationsunderafinancialinstrumentor
customercontract,leading toa financial loss. The Group is exposed to creditrisk from its operating
activities (primarily trade receivables and contract assets) and from its financing activities including
deposits with banks and loans to related undertakings.
TheGroup'sprincipalfinancialassetscomprisetradeandotherreceivables,loansreceivableandcash
and cash equivalents. Its principal financial liabilities comprise trade and other payables, borrowings
and lease liabilities.
The Group
The Group is exposed to market risk, credit risk, liquidity risk, fair value risk and capital risk
management.
The Board of Directors reviews and agrees policies for managing each of these risks which are
summarised below.
Market risk
Market riskis the riskthat thefairvalueoffuture cashflowsofa financial instrument willfluctuate
because of changes in market prices. Market prices comprise four types of risk: interest rate risk,
currencyrisk,commoditypriceriskandotherpricerisk. Financialinstrumentsaffectedbymarketrisk
include borrowings. The Group is only exposed to interest rate risk.
Interest rate risk
Interestrate riskistherisk thatthefairvalueof futurecashflowsofafinancialinstrument will fluctuate
because of changes in market interest rates.
Exceptasdisclosed in note16, 23, theGroup's borrowingsarenon-interest bearing.Borrowings issued at
fixedratesconsistprimarilyofbankloans,4%and3.65%securedbondswhicharecarriedatamortised
cost, and therefore do not expose the Group to cash flow and fair value interest rate risk.
The Company
CustomercreditriskismanagedbytheGroup'smanagementsubjecttotheGroup'sestablishedpolicy,
procedures and controlrelatingto customercredit risk management. Credit quality of a customer is
assessed based on each individual's credit limits. Outstanding customer receivables are regularly
monitored. An impairment analysis is performed at the reporting date on an individual basis. The
Group exercises a prudent credit control policy, and accordingly, it is not subject to any significant
exposure or concentration of credit risk.
Set out below is the movement in the allowance for ECL on cash in banks:
88
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Followingtheoutbreakofcovid-19,theGrouphasmonitoredinformationavailableonmacroeconomic
factors,affectingrepaymentability,aswellastheactualandprojectedimpactofthepandemiconthe
businessmodelofthecustomersservicedbytheGroup.PaymentpatternsattributabletotheGroup's
customerspostCOVID-19outbreakwasthoroughlyandregularlyassessedtodeterminewhetherany
deteriorationincollectionrateswasbeingexperienced.TheGroupdeterminedthattheexpectedcredit
losses havenot materially changedtaking cognisance oftheprojectedimpactonthe repayment ability of
the Group's customers, the repayment pattern actually experienced, and the estimated life of the
receivables.
TheGroupbanks onlywithlocalfinancialinstitutions withhighqualitystandardorrating.The Group's
operationsareprincipallycarriedoutinMaltaandmostoftheGroup'srevenueoriginatesfromclients
based in Malta.
89
Notes to the Financial Statements
for the year ended 31 December 2021
32.
Financial risk management objectives and policies (continued)
31 December 2021
Trade receivables
(notes 16 and 21)
Loans to other
related
undertakings
(notes 16 and 21)
Loans to
associates
(notes 16 and 21)
Loans to other
party
(notes 16 and 21)
Other receivables
(notes 16 and 21)
Amounts owed
by directors
(notes 16 and 21)
Cash and cash
equivalents
(note 31) Total
Approach in measuring ECL
Simplified
General
General
General
General
General
General
Probability of default
1.49% - 42.32%
0.57% - 75% 1.34% - 100% 1.00% 0.70% - 1.00% 1.00% 0.06% - 1.34%
Loss given default
N/A
100%
100%
75%
100%
100%
100%
Estimated gross carrying
amount at default 288,825 10,620,837 5,131,571 250,000 389,229 7,233,978 1,179,965
Allowance for ECL
43,403
7,924,119
72,125
1,875
3,512
51,736
3,237
8,100,007
Increase / (decrease) in
provision for ECL (note 8) 21,810 7,863,607 858 937 2,152 27,815 3,237 7,920,416
31 December 2020
Trade receivables
(notes 16 and 21)
Loans to other
related
undertakings
(notes 16 and 21)
Loans to
associates
(notes 16 and 21)
Loans to other
party
(notes 16 and 21)
Other receivables
(notes 16 and 21)
Amounts owed
by directors
(notes 16 and 21)
Cash and cash
equivalents
(note 31) Total
Approach in measuring ECL
Simplified
General
General
General
General
General
General
Probability of default 10.13% - 14.56% 0.57% 1.34% - 100% 0.50% 0.50% - 1.09% 0.50% 0.00%
Loss given default
N/A
100%
100%
75%
75% - 100%
100%
0%
Estimated gross carrying amount
at default 188,768 10,616,084 5,020,158 250,000 208,076 4,784,060 -
Allowance for ECL
21,593
60,512
71,267
938
1,360
23,921
-
179,591
90
Increase / (decrease) in
provision for ECL (note 7) (32,483) (13,803) 7,134 938 1,360 23,921 (3,093) (16,026)
Stivala Group Finance p.l.c.
The Group
The Group
Set out below is the information about the credit risk exposure on the Group and Company's financial assets and contract assets subject to ECL under IFRS 9.
Notes to the Financial Statements
for the year ended 31 December 2021
32.
Financial risk management objectives and policies (continued)
31 December 2021
The Company 31 December 2020 The Company
Loans to
subsidiary
(notes 16 and 21)
Loans to
subsidiary
(notes 16 and 21)
Approach in measuring ECL
General
Approach in measuring ECL General
Probability of default
-
Probability of default
0.0057
Loss given default
-
Loss given default
90%
Estimated gross carrying
amount at default -
782,051
Allowance for ECL
-
Allowance for ECL
4,011
Increase / (decrease) in
provision for ECL (note 7) (4,011)
207
91
Increase / (decrease) in
provision for ECL (note 7)
Stivala Group Finance p.l.c.
Estimated gross carrying
amount at default
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
32.
Financial risk management objectives and policies (
continued
)
As at 31 December 2021
Less than
1 year
1 to 5
years > 5 years Total
€ € € €
1,539,387 - - 1,539,387
Bank loans
3,722,539 13,184,304 11,303,042 28,209,885
Finance lease liabilities
252,714 330,607 99,230 682,551
- - 44,775,000 44,775,000
- - 14,895,000 14,895,000
12,808,095 - - 12,808,095
18,322,735 13,514,911 71,072,272 102,909,918
As at 31 December 2020
Less than
1 year
1 to 5
years > 5 years Total
€ € € €
1,978,579 - - 1,978,579
Bank loans
2,337,506 11,382,392 12,297,275 26,017,173
Finance lease liabilities
223,814 565,629 138,922 928,365
4.00% secured bonds and interest - - 44,730,000 44,730,000
- - 14,880,000 14,880,000
9,570,738 - - 9,570,738
14,110,637 11,948,021 72,046,197 98,104,855
As at 31 December 2021
Bank loans
Less than
1 year
1 to 5
years > 5 years Total
Gross payments
3,722,539 13,184,304 11,303,042 28,209,885
Finance charges
(726,256) (2,165,919) (1,369,016) (4,261,191)
Carrying amount (net
present value)
2,996,283 11,018,385 9,934,026 23,948,694
Trade and other payables
Trade and other payables
3.65% secured bonds and interest
Bank overdrafts
3.65% secured bonds and interest
Thebelowtableshowsgrossundiscountedcashflowsforleaseliabilitiesandbankloans.Thefollowing
shows the corresponding reconciliation of those amounts to the carrying amount (net present value):
Liquidity risk
4.00% secured bonds and interest
The Group is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities. Prudent liquidity risk management includes maintaining sufficient cash and
committedcreditlinestoensuretheavailabilityofanadequateamountoffundingtomeettheGroup's
obligations.
The Group
The Group
The Group
Thetablebelowsummarisesthematurity profileoftheGroup’sfinancialliabilitiesbasedoncontractual
undiscounted payments.
Bank overdrafts
92
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Lease liabilities
Less than
1 year
1 to 5
years > 5 years Total
Gross payments
252,714 330,607 99,230 682,551
Finance charges
(20,088) (29,889) (4,999) (54,976)
Carrying amount
(net present value)
232,626 300,718 94,231 627,575
As at 31 December 2020
Bank loans
Less than
1 year
1 to 5
years > 5 years Total
Gross payments
2,337,506 11,382,392 12,297,275 26,017,173
Finance charges
(572,461) (2,085,799) (1,590,160) (4,248,420)
Carrying amount
(net present value)
1,765,045 9,296,593 10,707,115 21,768,753
Lease liabilities
Less than
1 year
1 to 5
years > 5 years Total
Gross payments
223,814 565,629 138,922 928,365
Finance charges
(28,822) (49,038) (9,425) (87,285)
Carrying amount
(net present value)
194,992 516,591 129,497 841,080
Less than 1
year 1 to 5 years > 5 years Total
€
€
€
€
-
-
44,775,000
44,775,000
-
-
14,895,000
14,895,000
1
836,358 - -
836,358
836,358 - 59,670,000
60,506,358
As at 31 December 2021
The Company
The Group
The Group
Trade and other payables
The Group
3.65% secured bonds and interest
4.00% secured bonds and interest
93
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
32.
Financial risk management objectives and policies (
continued
)
Less than 1
year 1 to 5 years > 5 years Total
€ € € €
1
- - 44,730,000
44,730,000
1
- - 14,880,000
14,880,000
1
716,498 - -
716,498
0
716,498 - 59,610,000
60,326,498
0
Fair value measurement hierarchy:
Level 2
Level 3
Additions
Total
€
€
€
€
As at 31 December 2021
Commercial properties 59,004,641 - 94,051 59,098,692
Residential properties 59,797,299 - 2,593,924 62,391,223
Offices 56,901,592 - 321,895 57,223,487
175,703,532 - 3,009,870 178,713,402
Property, plant and equipment
Commercial properties 105,317,714 - 682,760 106,000,474
Residential properties 39,641,983 - 2,694,622 42,336,605
144,959,697 - 3,377,382 148,337,079
Level2:othertechniquesforwhichallinputswhichhaveasignificanteffectontherecordedfairvalue
are observable, either directly or indirectly; and
Trade and other payables
Level3:techniqueswhichuseinputswhichhaveasignificanteffectontherecordedfairvaluethatare
not based on observable market data.
Fair value risk
Level 1: quoted(unadjusted) prices in active markets for identical assets or liabilities;
Investment property
The Group
Liquidity risk (continued)
3.65% secured bonds and interest
4.00% secured bonds and interest
The Company
As at 31 December 2020
Asat31December2021and2020,thecarryingamountsoftradeandotherreceivables,otherfinancial
assets (loans and receivables), cash and cash equivalents, trade and other payables and current
borrowings 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
instrumentsandtheirexpectedrealisation. Thefairvaluesofnon-currentborrowings arenotmaterially
different from their carrying amounts in the statement of financial position.
The Group used the following hierarchy for determining and disclosing the fair value of investment
property.
There were no transfersbetween level classifications of investmentproperty and property, plant and
equipment during 2021.
94
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
As at 31 December 2020
Commercial properties 14,067,273 - 1,725,919 15,793,192
Residential properties 9,808,990 - 1,410,038 11,219,028
Offices 7,325,479 - - 7,325,479
31,201,742 - 3,135,957 34,337,699
Property, plant and equipment
Commercial properties 163,530,485 - 2,738,500 166,268,985
Residential properties 60,912,214 - - 60,912,214
224,442,699 - 2,738,500 227,181,199
As at 31 December 2021 and 2020, there are no properties owned by the Company.
2021
2020
2021
2020
€ € € €
85,158,081 83,357,332 78,237,863 59,610,000
12,808,095 9,570,738 836,358 716,498
Finance lease liability (notes 23 and 25)
627,575 841,080 - -
(199,234) (592,023) (4,597) (2,400)
Net debt
98,394,517
93,177,127
79,069,624
60,324,098
Equity
235,391,856
231,436,832
(18,751,247)
1,674,207
Net debt to equity ratio
0.4:1 0.4:1 -4.22:1 36.03:1
No changeswere made in the objectives, policies or processes for managing capitalduring the years
ended 31 December 2021 and 2020.
Less: cash and cash equivalents
TheGroupmanagesitscapitalstructureandmakesadjustmentstoitinlightof changes ineconomic
conditions.Tomaintainoradjustthecapitalstructure,theGroupmayadjustthedividendpaymentto
the shareholders, return capital to the shareholders or issue new shares.
TheprimaryobjectiveoftheGroup'scapitalmanagementistoensurethatitmaintainshealthycapital
ratios in order to support its business and maximise shareholder value.
Capital includes the equity attributable to the ultimate shareholders of the Group.
The Group
The Company
Trade and other payables (note 23)
Capital Risk management
Interest-bearing loans and other
borrowings
No changeswere made in the objectives, policies or processes for managing capitalduring the years
ended 31 December 2021 and 2020.
Investment property
95
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
33.
34.
The Group
1 January
2021
Cash flows
Non-cash
changes
31 December
2021
€
€
€
€
Bank overdrafts 1,978,579 (439,192) - 1,539,387
Bank loans
21,768,753
2,179,941
-
23,948,694
4% and 3.65% secured bonds
59,610,000
-
60,000
59,670,000
Finance lease liability
(notes 16, 25 and 32)
841,080 (239,813) 26,308 627,575
84,198,412 1,500,936 86,308 85,785,656
The Group
1 January
2020
Cash flows
Non-cash
changes
31 December
2020
€
€
€
€
Bank overdrafts 475,236 1,503,343 - 1,978,579
Bank loans 16,775,130 4,993,623 - 21,768,753
4% and 3.65% secured bonds 59,550,000 - 60,000 59,610,000
Loans from associate 41,218 (41,218) - -
Finance lease liability
(notes 16, 25 and 32)
524,823 (191,913) 508,170 841,080
77,366,407 6,263,835 568,170 84,198,412
Changes in liabilities arising from financing activities
Non-cashchangesrefertoaccumulatedamortizationofbondissuecost,accretionofinterestexpenseon
finance lease liability, and additional lease liability recognised during the year.
Total liabilities from financing
activities
Total liabilities from financing
activities
Events after the reporting date
All
events
occuring
after
the
balance
sheet
date
until
the
date
of
authorisation
for
issue
of
these
financial
statementsandthatarerelevantforvaluationandmeasurementasat31December2021fortheGroup
and the Company are included in these consolidated financial statements.
On another note, the geopolitical situation in Eastern Europe intensified on February 24, 2022, with
Russia’sinvasionofUkraine.Thewarbetweenthetwocountriescontinuestoevolveasmilitary activity
proceedsandadditionalsanctionsareimposed.Inadditiontothehumantollandimpactoftheevents
on entities that have operations in Russia, Ukraine, or neighboring countries (e.g., Belarus) or that
conduct business with their counterparties, the war is increasingly affecting economic and global
financial markets and exacerbating ongoing economic challenges, including issues such as rising
inflation and global supply-chain disruption.
The Directorsare closelymonitoring the possible impact on its operations and financialperformance and
are committed to take all necessary steps to mitigatethe impact.Thishas no impact on the financial
statements of the Group and the Company as at date of approval.
Supplemental cash flow information
96
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
The Company
1 January
2021 Cash flows
Non-cash
changes
31 December
2021
€
€
€
€
Bank overdraft
-
-
-
-
4% and 3.65% secured bonds
59,610,000
-
60,000
59,670,000
Loans from subsidiary undertakings
-
(1,077,902)
19,645,765
18,567,863
59,610,000 (1,077,902) 19,705,765 78,237,863
1 January
2020 Cash flows
Non-cash
changes
31 December
2020
€
€
€
€
4% and 3.65% secured bonds 59,550,000 - 60,000 59,610,000
59,550,000 - 60,000 59,610,000
35. Contingent liabilities
36.
Related party transactions
The Company
Expenses
recharge to
(from) related
parties
Dividend
income
Interest
income
Amount
owed by (to)
related
parties
€ € € €
Subsidiary of the Company:
2021 (59,947,736) 41,142,087 - -
2020 - 3,458,801 - -
Sub-subsidiaries of the Company:
ST Hotels Ltd.
2021 (34,896) - - -
2020 (18,000) - - -
Non-cashchanges refer toaccumulated amortizationofbondissuecostand lossincurred onowner's
divestiture recognised during the year.
Thefollowingtableprovidesthetotalamountoftransactionsthathavebeenenteredintowithrelated
parties for the relevant financial year.
Carmelo Stivala Group
Limited
Total liabilities from financing
activities
Total liabilities from financing
activities
Some of the companies within the group (where the Company forms part as an ultimate parent
company)areengagedinvariouslegalproceedings.Asatapprovaldateofthesefinancialstatements,it
is difficult to predictexposures of the Group; hence noprovisionhas been made in the consolidated
financial statements accordingly.
97
Notes to the Consolidated Financial Statements
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
37.
TheCompany'sregisteredofficeis143,The StrandGziraGZR1026,Malta.TheCompany'ssharecapital
is fullyownedbyCarmeloStivala Trustee Limitedacting as a trustee, on behalfof theultimate beneficial
owners which are Mr. Michael Stivala, Mr. Ivan Stivala and Martin John Stivala.
Stivala
Group
Finance
p.l.c.,
the
ultimate
parent
company,
is
a
public
limited
company
incorporated
in
Malta.
The
sales
to
and
purchases
from
related
parties
are
made
on
terms
equivalent
to
those
that
prevail
in
arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and
settlementoccurs in cash. There have beenno guaranteesprovided orreceived for any related party
receivables or payables. For the year ended 31 December 2021, the Group recorded impairment of
receivablesrelatingtoamountsowedbyotherrelatedundertakingsdisclosedinnotes16,21and32,in
compliancewithIFRS9.Thisassessmentwillbeundertakeneachfinancialyearthroughexaminingthe
financialpositionoftherelatedpartyandthemarketinwhichtherelatedpartyoperatestogetherwith
other historical data on recovery of amounts due.
Terms and conditions of transactions with related parties
98
