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TUM Finance plc Report & Consolidated Financial Statements 31 December 2024
Company registration number: C 91228 Contents
The directors present their report together with the audited financial statements of TUM Finance plc (the ‘company’) and the consolidated financial statements of the group for the year ended 31 December 2024. Principal activities The company and its
subsidiaries (the ‘group’) are involved in real estate
development, investment and leasing in Performance review During the year, the group generated a loss before tax of € 178,881 (2023 profit: € 2,097,251). The company generated a profit before tax of € 134,498 (2023: € 127,991). Dividends During the years ended 31 December 2024 and 2023, the company did not declare any dividends. Future developments On 15 January 2025, the group settled a loan from TUM Invest Limited, the ultimate parent company, amounting to €500,000 which is related to Edible Oil Property . Directors The following have served as directors of the company during the year under review:
In accordance with the company’s Articles of Association, the present directors remain in office.
Going concern As required by Capital Markets Rule 5.62 issued by MFSA, upon due consideration of the group’s state-of-affairs, capital adequacy and solvency, the directors confirm the group’s ability to continue in operational existence for the foreseeable future. For this reason, in preparing the financial statements, they continue to adopt the going concern basis. Refer to Note 2.1, for the Directors’ assessment of the going concern assumption.
Disclosure of information to the auditor At the date of making this report the directors confirm the following:
Statement of directors’ responsibilities The Companies Act, Cap 386 requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the group and the company as at the end of the financial year and of the profit or loss of the group and the company for that year. In preparing these financial statements, the directors are required to:
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the group and the company and to enable them to ensure that the financial statements have been properly prepared in accordance with the Companies Act, Cap 386. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. They are also responsible for safeguarding the assets of the group and the company and for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditor The auditor Grant Thornton has intimated its willingness to continue in office and a resolution proposing its reappointment will be put to the Annual General Meeting. Information pursuant to Capital Markets Rule 5.70.1 There were no material contracts to which the group, or its subsidiaries were a party, and in which anyone of the group’s Directors were directly or indirectly interested. Signed on behalf of the Board of Directors on 25 April 2025 by Anthony Fenech (Director) and Silvan Fenech (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.
Statement of compliance with the principles of Good Corporate Governance
1. Introduction
The Capital Markets Rules issued by the Malta Financial Services Authority (MFSA) require companies listed on the Official List of the Malta Stock Exchange to endeavour to adopt and observe The Code of Principles of Good Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Capital Markets Rules (the “Code”).
Although the Code sets out (non-mandatory) recommended principles of good practice, the Board of Directors of the Company (the “Board” or the “Directors”) consider that such practices are generally in the best interests of the Company, its shareholders, its bondholders, and other stakeholders, and that compliance with the Code evidences the Company’s and the Directors’ commitment to high standards of good corporate governance.
This Corporate Governance Statement (the “Statement”) sets out the organisational structures, controls practices and processes in place within the Company and explains how these effectively achieve the goals set out in the Code. For this purpose, the Statement will make reference to the pertinent provisions and principles of the Code and set out the manner in which the Directors believe these have been adhered to. Where the Company has not complied with any of the principles of the Code, this Statement provides an explanation for such non-compliance. Reference in this Statement to compliance with the principles of the Code means compliance with the Code’s main principles and provisions.
The Board has carried out a review of the Company’s compliance with the Code during the period under review and is hereby reporting on the extent of its adoption of the provisions and principles of the Code for the financial year being reported, as required in terms of Capital Markets Rule 5.97.
2. Compliance
The Company has adopted a corporate decision-making and supervisory structure that is tailored to suit its requirements and designed to ensure the existence of adequate controls and procedures within the Company, whilst retaining an element of flexibility essential to allow the Company to react promptly and efficiently to circumstances arising in respect of its business, taking into account its size and the economic conditions in which it operates.
The Directors are of the view that the Company has employed structures which are most suitable and complementary for the size, nature, operations and level of complexity of the Company. Accordingly, in general the Directors believe that the Company has adopted appropriate structures to achieve an adequate level of good corporate governance, together with an adequate system of control in line with the Company’s requirements.
In particular, it is pertinent to note that the Company’s principal purpose is to act as a financing and holding vehicle for the Tum Finance Group (as defined hereunder), consisting of the Company and its direct subsidiary Tum Operations Limited (C91301) and indirect subsidiaries San Gwakkin Limited (C102186), Easysell Limited (C9778), Tum Developments Limited (C 84520), TFL Property Development Limited (C 108290), TUM Tal-Pajpaj Properties Ltd. (C 109223), In-Nahal Property Limited (C 108309) and BBT Nigret Properties Ltd. (C 109328) (hereinafter the “Guarantor”) (collectively referred to as the “Tum Finance Group”), in view of which, the Directors deem some of the principles and provisions of the Code to be disproportionate or inapplicable to the Company, as explained further below.
Principle 1: The Board
The Directors believe that for the period under review, the Company has generally complied with the requirements of this principle and the relative Code provisions.
The Board is composed of members who are fit and proper to direct and manage the business of the Company with honesty, competence and integrity. All the members of the Board are aware of, and conversant with, the statutory and regulatory requirements connected to the business of the Company and its status as a listed company and the Board is cognisant of its accountability for its own performance and that of its delegates. The Board of Directors is primarily responsible for:
Throughout the period under review, the Board has maintained systems designed to ensure that the Directors obtain timely information at regular intervals or when the need arises.
The Board has delegated specific responsibilities to the Audit Committee, under formal terms of reference approved by the Board. Further detail in relation to the Audit Committee may be found in the sections headed ‘Principles 4 and 5’ of this Statement hereunder.
Principle 2: Chairman and Chief Executive Officer
Given that the Company acts as the holding and financing arm of the Tum Finance Group and does not carry out other operations of its own, the Company has not appointed a Chief Executive Officer. Nevertheless, it has appointed a Chairperson, whose role is to lead the Board. During the period under review, Mr Anthony Fenech (an executive director of the Company) occupied the post of Chairperson. The Board considers that notwithstanding that the Chairman is not an independent director as recommended by the Code, the means for addressing potential conflicts of interest are suitably addressed in the statute of the company and terms of reference of the Audit Committee of the company. Furthermore, the Board considers the present Chairman to be fit and proper to occupy the role.
Principle 3: Composition of the Board
In terms of the Articles of Association of the Company, the Board of Directors of the Company shall consist of a minimum of three (3) directors and a maximum of six (6) directors.
In terms of the Articles of Association of the Company, the Directors of the Company (save for the managing director, if any) shall retire from office every three (3) years. Retiring Directors shall, however, be eligible for re-appointment. The Company shall give its shareholders, having voting rights, at least fourteen (14) days written notice to submit candidates for the election to Directors, and the appointment (and removal) of Directors shall be made by an ordinary resolution.
The Board of Directors of the Company is comprised of six (6) directors, three (3) of whom are executive directors, and three (3) of whom are independent non-executive directors. All of the present Directors of the Company were originally appointed with effect from the date of registration of the Company, and their tenure was extended for a further period of three years by virtue of a shareholders’ resolution passed on 24 March 2023.
For the purpose of Code Provision 3.2, three (3) of the Directors are considered by the Board to be independent within the meaning of the Capital Markets Rules, such independent Directors being Dr. Stanley Portelli, Mr. Mario Vella, and Mr. William Wait.
The non-executive Directors contribute to the strategic development of the Company and the creation of long-term growth of the Company and are responsible for:
Save as disclosed above, none of the non-executive Directors of the Company:
In terms of Code Provision 3.4, each non-executive Director has declared in writing to the Board that he undertakes:
Each non-executive Director has complied with the aforementioned undertaking for the period under review.
Principle 4 and 5: The Responsibilities of the Board and Board Meetings
The Board of Directors is entrusted with the overall direction, administration and management of the Company and meets on a regular basis to discuss and take decisions on matters concerning the strategy, operational performance and financial performance of the Company. At its meetings, the Board is provided with updates on ongoing performance of the Company and its subsidiaries, supplemented as necessary with management accounts on, as a minimum, a quarterly basis.
In fulfilling its mandate, the Board assumes responsibility to:
In fulfilling its responsibilities, the Board continuously assesses and monitors the Company’s present and future operations, opportunities, threats, and risks in the external environment, and its current and future strengths and weaknesses in its internal environment .
In the course of holding Board meetings, as and when necessary, the Board considers, inter alia, their statutory and fiduciary duties, the Company’s operations and prospects, the skills and competence of senior management, the general business environment, and its own expectations.
Audit Committee
The Board delegates certain specific responsibilities to the Audit Committee. The Board of Directors of the Company has established an Audit Committee and has formally set out Terms of Reference governing the scope of its composition, role, functions, powers, duties and responsibilities, as well as the procedures and processes to be complied with in its activities.
The Audit Committee is a sub-committee of the Board and fulfils an oversight role in connection with the quality and integrity of the Company’s financial statements. Towards this end, the over-arching objective of the Audit Committee is that of assisting the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal controls, the audit process and the process for monitoring compliance with applicable laws and regulations.
The Audit Committee is expected to deal with and advise the Board on issues of financial risk, control and compliance, and associated assurance of the Company, including:
In addition, the Audit Committee has the role and function of evaluating any proposed transaction to be entered into by the Company and a related party (which term shall have the same meaning as in the International Accounting Standards adopted in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council) to ensure that the execution of any such transaction is at arm’s length, on a commercial basis and ultimately in the best interests of the company.
Any proposed transaction which the Company wishes to enter into and which satisfies either of the following conditions shall be referred to the Audit Committee for its consideration and approval:
At the meeting convened for this purpose, the Audit Committee shall consider the proposed transaction and first determine whether it is a transaction that falls within the ambit of the applicable Capital Markets Rules and, if it so determines, shall then consider the merits of the proposed transaction.
The Audit Committee is made up entirely of non-executive Directors, all of whom are deemed to be independent of the Company. Audit Committee members are appointed for as long as they remain independent non-executive Directors, unless terminated earlier by the Board. During the period under review, the Audit Committee was composed of:
The Chairperson of the Audit Committee, appointed by the Board, is entrusted with reporting to the Board on the workings and findings of the Audit Committee. Mr. Mario Vella occupied the post of Chairperson of the Audit Committee during the period under review.
Mr. Mario Vella and Mr. William Wait are considered by the Board to be competent in accounting and/or auditing in terms of the Capital Markets Rules, based on their respective extensive experience occupying financial management and auditing roles within various private and public entities, as well as their respective skills and competencies in financial reporting, financial management, financial auditing and general financial advisory.
In performing its duties, the Audit Committee is to maintain effective working relationships with the Board of Directors, management and the external auditors of the Company.
The Audit Committee has met on ten (10) occasions during the financial period ended 31 December 2024, which meetings were attended by all its members. The Audit Committee is scheduled to meet at least five (5) times in 2025.
The Board believes that it has systems in place to fully comply with Principle 5 and the relative Code Provisions, in that it has systems in place to ensure reasonable notice of meetings of the Board and ensuring that the Directors receive discussion papers in advance of meetings, to the extent possible.
The Directors are assisted by the company secretary, who is consulted to ensure compliance with statutory requirements and with continuing listing obligations. The company secretary keeps minutes of all meetings of the Board and of its committees, which minutes are subsequently circulated to the Board as soon as practicable after the meeting.
The Company also maintains detailed records of all dealings by Directors of the Company and its subsidiaries, as well as senior executives thereof in the Company’s bonds, and assists the Board and senior management in being duly informed of and conversant with their obligations emanating from the Market Abuse Regulation (EU Regulation 596/2014) (“MAR”) and ensuring compliance therewith, to ensure the prevention and detection of insider dealing, unlawful disclosure of inside information and, or market abuse. In particular, cognisant of the material consequences of non-compliance with MAR and the effects thereof on investor confidence and market integrity, the Board has in place written policies and procedures relating to the keeping of insiders’ lists, dealing in bonds of the Company, and procedures for persons in possession of inside information.
The Directors have access to independent professional advice on any aspect of their duties and responsibilities, or the business and activities of the Company, at the Company’s expense should they so require.
The Board of Directors of the Company met formally eight (8) times during the period under review either in its offices in Malta or by video conference. The number of board meetings attended by the individual Directors for the period ended 31 December 2024 is as follows:
Principle 6: Information and Professional Development
The Directors receive periodic information on the Company’s and Tum Finance Group’s financial performance and position, and the company secretary is available for the provision of training programmes as and when necessary.
Principle 7: Evaluation of the Board’s Performance
The Board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role, as the Board’s performance is evaluated on an ongoing basis by, and is subject to the constant scrutiny of, the Board itself, the Company’s shareholders, the market and the rules by which the Company is regulated as a listed company.
Principle 8: Committees
The Directors believe that, due to the Company’s size and operations, it is not necessary to establish committees regarding remuneration, board evaluation and nominations as suggested by the Code and the Directors have formulated the view that these functions can efficiently and effectively be undertaken by the Board itself.
In view of the above, the Board undertakes an annual review of the remuneration structure applicable to Directors and carries out a self-evaluation of the performance of the Board. The aggregate remuneration that may be paid by the Company to its Directors is subject to the approval of the shareholders at the annual general meeting of the Company.
In this respect, it is pertinent to note that the remuneration that may be paid to the Directors is fixed and the Directors are not entitled to any performance based or variable remuneration. Furthermore, the Directors of the Company are not entitled to profit-sharing, share options or pension benefits.
Remuneration statement
In terms of Rule 8A.4 of the Code, the Company is to include a remuneration statement in its annual report which shall include details of the remuneration policy of the Company and the financial packages of the Board of Directors.
In terms of Article 96 of the Articles of Association of the Company, it is the shareholders of the Company in the General Meeting who determine the maximum annual aggregate remuneration payable to the Directors. The aggregate amount to be proposed for approval for this purpose at the next Annual General Meeting is an amount not exceeding €60,000.
None of the Directors of the Company is employed by the Company.
No part of the remuneration paid to the Directors is performance-based. None of the Directors, in their capacity as a director of the Company, is entitled to profit sharing, share options or pension benefits.
The Non-Executive Directors received € 48,000 (2023: €36,000), in aggregate for services rendered during the year ended 31 December 2024.
Principle 9: Relations with shareholders (and bondholders) and the market
The Company is committed to ensuring an open channel of communication with its shareholders, bondholders, other stakeholders and the wider market. The publication of interim and annual financial statements, together with ongoing company announcements, keep the market informed of developments relating to the Company and, in the case of bondholders, of developments pertinent to their investment in the Bonds. The Board feels that such communication provides the market with adequate information about its activities.
In addition, the Company’s website (http://tumfinance.com/index.php/investor-relations/) acts as a central source of information about the Company, its business, and developments relating thereto.
Principle 10: Institutional shareholders
The Company has no institutional shareholders; therefore Principle 10 of the Code does not apply to the Company.
Principle 11: Conflicts of Interest
The Directors are fully aware of their responsibility to always act in the best interests of the Company and its shareholders irrespective of whoever appointed or elected them to serve on the Board.
On joining the Board and regularly thereafter, Directors and officers of the Company are informed and reminded of their obligations on dealing in securities of the Company within the parameters of law and Capital Markets Rules. The Company has also established an internal code of dealing and reporting procedures.
It is the practice of the Board that when a potential conflict of interest arises in connection with any transaction or other matter, the potential conflict of interest is declared, so that steps may be taken to ensure that such items are appropriately addressed. By virtue of the Memorandum and Articles of Association, the Directors are obliged to keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with that of the Company. The Board member concerned shall not take part in the assessment by the Board as to whether a conflict of interest exists. A Director shall not vote in respect of any contract, arrangement, transaction or proposal in which he has a material interest. The Board believes that this is a procedure that achieves compliance with both the letter and rationale of Principle Eleven of the Code.
Save as stated below, the Directors are not aware of any potential conflicts of interest which could relate to their roles within the Company:
Mr. Mario Vella (an independent non-executive director of the Company) sat on the board of directors of all the companies within the Tum Finance Group until his resignation as director of said companies, with effect from the 30 April 2022.
The Executive Directors of the Company are thus susceptible to conflicts between the potentially divergent interests of the Tum Finance Group.
Moreover, conflicts may further arise given the lender-borrower relationship subsisting between the Company and its direct subsidiary (TUM Operations Limited - C91301) and with its indirect subsidiaries San Gwakkin Limited (C102186), Easysell Limited (C9778), TUM Developments Limited (C 84520), TFL Property Development Limited (C 108290), TUM Tal-Pajpaj Properties Ltd. (C 109223), In-Nahal Property Limited (C 108309) and BBT Nigret Properties Ltd. (C 109328) respectively.
Conflicts may also arise in respect of the property co-owned by Easysell Limited at Mdina Road, Qormi (the “Secured Asset”) given that the Company uses part of such property as its registered office, and the Secured Asset is one third owned by Tum Invest Limited (C69572), whose directors are also directors of the Company and the companies forming part of the Tum Finance Group.
Principle 12: Corporate Social Responsibility
The Tum Finance Group makes regular contributions to social and charitable causes and projects and adheres to accepted principles of corporate social responsibility as well as business and ethical standards.
Non-Compliance with the Code
The Directors have adopted a corporate governance framework within the Company that is designed to better suit the Company, its business, scale, and complexity, whilst ensuring proper checks and balances.
Taking the above into account and considering that the Code is not mandatory and that the provisions thereof may be departed from provided that reasonable and justifiable circumstances exist and are adequately explained, the Directors set out below the Code Provisions with which the Company does not comply and what are, in its view, a reasonable and justifiable basis for such departure from the recommendations set out in the Code relating to the composition of the Board.
Principle 2: Chairman and Chief Executive (Code Provisions 2.1, 6.4 and 6.5)
Although the Articles of Association of the Company allow for the appointment of a Chief Executive Officer, no such officer has been appointed for the period under review. In addition, the division of responsibilities between the Chairman and Chief Executive Officer has not been set out in writing as required in terms of Code Provision 2.1. Accordingly, Code Provisions 6.4 and 6.5 which set out the responsibilities of the Chief Executive have not been complied with as these are not applicable at this point in time.
Principle 2: Chairman and Chief Executive (Code Provisions 2.3)
With respect to Code Provision 2.3, the Board notes that the Chairman is also an executive member of the Board. However, the Board is of the view that this function of the Chairman does not impinge on his ability to bring to bear independent judgement to the Board.
Principle 4: The Responsibilities of the Board (Code Provisions 4.2.7)
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.
Principle 7: Evaluation of the Board’s Performance (Code Provisions 7.1)
The Board has not appointed a committee for the purpose of undertaking an evaluation of the Board’s performance in accordance with the requirements of Code Provision 7.1. The Board believes that the size of the company and the Board itself does not warrant the establishment of a committee specifically for the purpose of carrying out a performance evaluation of its role. Whilst the requirement under Code Provision 7.1 might be useful in the context of larger companies having a more complex set-up and a larger Board, the size of the company’s Board is such that it should enable it to evaluate its own performance without the requirement of setting up an ad-hoc committee for this purpose. The Board shall retain this matter under review over the coming year.
Principle 8A and 8B: Remuneration Committee (Code provision 8.A.1) and Nominations Committee (Code provision 8.B.1)
The Board has not established a Remuneration and/or Nominations Committee.
The Board has formulated the view that the size, structure and management of the Company are such that the establishment of an ad hoc Remuneration Committee is not warranted, and the responsibility for the establishment, review and implementation of the Company’s remuneration policies has been retained within the remit of the Board itself. In particular, the Board notes that the current remuneration policy of the Company comprises purely fixed-rate remuneration, with no entitlement to any performance-based remuneration, or any entitlement to share options, retirement pension benefits or other benefits.
Furthermore, the Board believes that the procedure for the nomination and appointment of Directors contained in the Articles of Association are commensurate to the size and operations of the Company, and does not consider the requirement to establish an ad hoc Nominations Committee to be necessary for the Company.
Instead, the Board takes on the role of periodically assessing the skills, knowledge and experience of individual directors for the Board to have the appropriate level of skill, knowledge and experience, that would endow the Board with the requisite collective competence for the proper functioning, management and oversight of the Company by the Board.
The Board intends to keep under review the utility and possible benefits of having a Remuneration Committee and Nominations Committee in due course.
Principle 9: Relations with shareholders and the market (Code provision 9.3)
There are no formal procedures in place within the Company for the resolution of conflicts between minority and controlling shareholders, nor do the Memorandum and Articles of Association of the Company contemplate any mechanism for arbitration in these instances.
Principle 9: Relations with shareholders and the market (Code provision 9.4)
The Company does not have a formal policy in place to allow minority shareholders to present an issue to the Board. In practice, however, the open channel of communication between the Company and minority shareholder, being the Chairman of the Board of Directors, is such that any issue that may merit bringing to the attention of the Board may be transmitted via the company secretary or directly by the said Chairman.
Internal Controls
The key features of the Company’s systems of internal controls are as follows:
The Company’s internal control system is designed to ensure proper annual reporting, implementation of the four-eyes principle to mitigate risks and compliance with local and international laws and regulations.
The Board is responsible for the Company’s system of internal controls and for reviewing its effectiveness. Such a system is designed to achieve business objectives and to manage rather than to eliminate the risk of failure to achieve business objectives and can only provide reasonable assurance against material error, losses or fraud.
The Company’s financial reporting is prepared by the finance team of the Group and the Company’s Directors.
The Company’s financial statements are subject to an audit by the independent auditors of the Company – Grant Thornton Malta. The audited and approved financial statements will be presented to the Company’s shareholders by the Board of Directors of the Company for its formal adoption at the next Annual General Meeting of shareholders of the Company.
General Meetings
Annual General Meeting (AGM)
The AGM is the highest decision-making body of the Company.
All shareholders registered in the shareholders’ register at the relevant registration record date, have the right to participate in the AGM and to vote thereat. A shareholder who cannot participate in at the AGM can be represented by proxy.
A general meeting is deemed to have been duly convened if at least twenty-one (21) days’ notice is given in writing to all persons entitled to receive such notice, which must specify the place, the day and the hour of the meeting, and in case of special business, the general nature of that business, and shall be accompanied by a statement regarding the effect and scope of any proposed resolution in respect of such special business. The notice period may be reduced to fourteen (14) days if certain conditions are satisfied. The quorum of shareholders required is not less than fifty percent (50%) of the nominal value of the issued and paid-up shares entitled to attend and vote at the meeting.
The agenda of the AGM will comprise of the ordinary business of the AGM, covering the presentation and approval of the Annual Report and Financial Statements, the declaration of dividends, election of Directors and the approval of their remuneration, the appointment of the auditors and the authorisation of the Directors to set the auditors’ fees, together with any special business specified in the notice calling the AGM.
Extraordinary General Meetings (EGMs)
The Directors may convene an extraordinary general meeting whenever they think fit. In addition, any member/s of the Company holding at least ten per cent (10%) of the equity securities of the Company conferring a right to attend and vote at general meetings of the Company may convene an extraordinary general meeting.
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Retained earnings include all current and prior period results as disclosed in the statement of profit or loss and other comprehensive income less dividends. |
Independent auditor’s report
To the shareholders of TUM Finance plc
Report on the audit of the separate and consolidated financial statements
Opinion
We have audited the separate and consolidated financial statements of TUM Finance plc [(the “Company”) and its subsidiaries (the “Group”)], set on pages 14 to 50, which comprise the separate and consolidated statements of financial position as at 31 December 2024, the separate and consolidated statements of profit or loss and other comprehensive income, the separate and consolidated statements of changes in equity and the separate and consolidated statements of cash flows for the year then ended, and notes to the separate and consolidated financial statements, including a summary of material accounting policies.
In our opinion, the accompanying separate and consolidated financial statements give a true and fair view of the separate and consolidated financial position of the Company and the Group as at 31 December 2024, and of the separate and consolidated financial performance and the separate and consolidated cash flows of the Company and the Group for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”), and the Companies Act, Cap. 386 of the Laws of Malta (the “Companies Act”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the Companies Act. Our responsibilities under those standards and under the Companies Act are further described in the Auditor’s Responsibilities for the Audit of the Separate and Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) as issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act, Cap. 281 of the Laws of Malta, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of material misstatements due to fraud.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate and consolidated financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the separate and consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the separate and consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying separate and consolidated financial statements.
Valuation of Investment Property – Consolidated financial statements
The group measures its investment property at fair value as described and disclosed in notes 4.8, 4.16, and 11. As at reporting period end, the investment property represents 65% of the total assets of the group. The valuation of the investment properties, undertaken under the income approach, involves significant judgement and is highly dependent on a range of estimates made by management and external valuers relating to rental income, discount rates and rent growth per annum.
Due to the significance of the value of the investment property to the group, and the estimation uncertainty involved in its measurement, we have considered the valuation of investment property as a key audit matter. The directors obtained a valuation from an independent architect dated 31 December 2022. Management determined that this valuation is still valid for the year under review and fairly represents the fair value of its investment property as at 31 December 2024.
Our procedures focused on the valuation process and included the following:
The methods and assumptions used in determining the fair value of the investment property is fully described in note 11.
Recoverability of loans receivable from related companies – Separate financial statements
The loans due from related parties of the company are classified as financial assets at amortised cost and measured using the effective interest method and are subject to impairment as described in note 4.12. As at the reporting period end the loans receivable from related companies represent 57% of the total assets of the Company.
The recoverability assessment of loans receivable considers the financial position and performance of the related borrowers for the reporting period as well as the cash flow projections for such companies.
Due to the significance of the balances of loans due from related parties, and the dependency of the company on the performance and recoverability of such loans to meet its ongoing obligations, we have considered the recoverability of the loans due from related parties as a key audit matter. Our audit procedures over the recoverability of the loans due from related parties included among others:
We have also assessed the relevance and adequacy of disclosures relating to loans due from related companies presented in note 15 to the financial statements.
Other information
The directors are responsible for the other information. The other information comprises the Directors’ report shown on pages 2 to 3 which we obtained prior to the date of this auditor’s report but does not include the separate and consolidated financial statements and our auditor’s report thereon.
Our opinion on the separate and consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon other than our reporting on other legal and regulatory requirements.
In connection with our audit of the separate and consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
With respect to the directors’ report, we also considered whether the directors’ report includes the disclosures required by Article 177 of the Act.
Based on the work we have performed, in our opinion:
In addition, in light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the directors’ report and other information that we obtained prior to the date of this auditor’s report. We have nothing to report in this regard.
Responsibilities of those charged with governance for the separate and consolidated financial statements
The directors are responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance with IFRS and the requirements of the Companies Act, and for such internal control as the directors determine is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate and consolidated financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group and Company’s financial reporting process.
Auditor’s responsibilities for the audit of the separate and consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the separate and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate and consolidated financial statements.
As part of an audit in accordance with the ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Matters on which we are required to report by the Companies Act
Directors’ report
We are required to express an opinion as to whether the directors’ report has been prepared in accordance with the applicable legal requirements. In our opinion the directors’ report has been prepared in accordance with the Companies Act.
In addition, in the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Directors’ report. We have not nothing to report in this regard.
Other requirements
We also have responsibilities under the Companies Act to report if in our opinion:
We have nothing to report to you in respect of these responsibilities
Appointment
This is our second year of appointment as the statutory auditor of the Company. Our re-appointment will be renewed annually by means of a shareholders’ resolution.
Consistency with the additional report to the audit committee
Our audit opinion on the financial statements expressed herein is consistent with the additional report to the audit committee of the Company, which was issued on the same date as this report.
Non-audit services
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the parent company and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the parent company and its subsidiaries, in the period from 1 January 2024 to 31 December 2024, are disclosed in Note 6 to the financial statements.
We also have responsibilities under the Companies Act, Cap. 386 to report to you if, in our opinion:
We have nothing to report to you in respect of these responsibilities.
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) – the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the annual financial report of the Group for the year ended 31 December 2023, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the annual financial report, including the separate and consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the annual financial report, including the separate and consolidated financial statements and the relevant electronic tagging therein comply in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the annual financial report for the year ended 31 December 2024 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
Matters on which we are required to report by the Capital Market Rules
Corporate governance statement
The Capital Market Rules issued by the Malta Financial Services Authority (“MFSA”) require the directors to prepare and include in their annual report a statement of compliance providing an explanation of the extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures that they have taken to ensure compliance throughout the accounting period with those Principles.
The Capital Market Rules also require the auditor to include a report on the statement of compliance prepared by the directors. We are also required to express an opinion as to whether, in the light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we have identified material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5.
We read the statement of compliance and consider the implication for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements included in the annual report. Our responsibilities do not extend to considering whether this statement is consistent with the other information included in the annual report.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the statement of compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s governance procedures or its risk and control procedures.
In our opinion:
Under the Capital Market Rules, we also have the responsibility to review the statement made by the Directors, set out on page 3, that the business is a going concern, together with supporting assumptions or qualifications as necessary.
We have nothing to report to you in respect of these responsibilities.
The Principal on the audit resulting in this independent auditor’s report is Sharon Causon.
Sharon Causon (Principal) for and on behalf of
Grant Thornton Certified Public Accountants Fort Business Centre Triq L-Intornjatur, Zone
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