VON DER HEYDEN GROUP FINANCE P.L.C.
Annual Report and Financial Statements - 31 December 2023
4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS -
continued
Provision for expected credit losses of financial assets
The Company assesses the credit risk of financial instruments within the scope of impairment for significant
increase since initial recognition at the reporting date. If there is a significant increase in credit risk, lifetime
ECL is recognised. The principle of significant deterioration in credit risk is achieved by performing an
assessment to compare the risk of default occurring at the reporting date with the risk of default occurring
at the date of initial recognition, by reference to an analysis of the financial performance and position of
related party borrowers. The assessment of ECLs is a significant estimate since the amount thereof is sensitive
to changes in circumstances and of forecast economic conditions. The Company’s ECLs are disclosed in notes
13 and 18.
5. GOING CONCERN
As at 31 December 2023, the Company has total debt securities in issue amounting to €40 million, which
comprise of €35 million “Listed Bonds” and €5 million “Private Notes”. The Listed Bonds, with nominal value
of €100 each aggregating to €35 million, bear interest of 5% per annum, payable annually every 16 December,
and have a redemption date of 16 December 2032. The Private Notes, which were issued during the year, have
an aggregate principal value €5 million, bear interest of 7.4% per annum payable annually every 22
September, and have a redemption date of 22 September 2026.
As disclosed in notes 12 and 16, TIMAN Investments Holdings Limited (the “Parent Company”) provided a
corporate guarantee in favour of the bondholders and in favour of the Company to affect the due and
punctual performance of all payment obligations undertaken by Von der Heyden Group Finance p.l.c. under
the bonds and all payment obligations by the related party borrowers to the Company, if they fail to do so.
The ability of the Company to meet its obligations, both in terms of servicing its debts and ultimately repaying
the bondholders on the redemption date is dependent on the ability of the Company to collect amounts due
from the parent company and group undertakings (note 12 and 13) and/or the ability of the Parent Company
to perform its obligations under the corporate guarantee. Accordingly, management assesses the going
concern of the Company by reference to the going concern of the Group.
In the year ended 31 December 2023, the Group recorded a €3.0 million loss, an increase of €1.9 million from
the previous year. Whilst, operations in the Accommodation and Catering sector in Germany, Poland and
Malta strove to return to normal trading conditions post the upheaval during the Covid-19 period, recording
a substantial increase in revenue on continued operations, the operating result fell below expectations on
account of the rampant inflationary increase in operating costs across the sector, including in the cost of
human resources, energy and most of the bought-in supplies and services. In line with the Group’s strategy
to move away from 3-star properties, in 2024, the Group will exit the lease of another 3-star property in
Germany while introducing a new leased hotel in IBB Palazzo Bettina at Cospicua in September 2023, which
is expected to lead to a cash breakeven situation for the Group’s Hotel operations.
The real estate development segment delivered a significant contribution to Group results in 2023 on a net
fair value gain of €3.1 million (after provision of deferred tax) on the Villa Diodati project in Tuscany, Italy that
has continued to advance towards targeted completion when the Group will be seeking to dispose of the
property. Also, of note, the results for the year do not reflect any contribution from the AND² project in Poznan,
Poland despite the significant progress achieved during the year on the substantial completion of the shell
and core of the 26-story building. In this regard, given the challenging office real estate market conditions
the expert valuer appointed by the Group established a valuation of the property of €61 million that principally
reflects the asset’s carrying value to date. This includes the €24.4 million construction spend in 2023.
During the year, the Group continued to deploy its resources principally in the development of its core
investment property portfolio and its property, plant, and equipment that in the aggregate, account for 67%
(2022: 52%) of the Group’s total assets.
As of 31 December 2023, the Group’s total assets have increased considerably to €155.9 million (2022: €142.0
million), including a cash balance of €6.5 million (2022: €12.7 million). The total shareholders’ equity position
stood at €32.7 million (2022: €34.9 million).