Company Registration No. C 56012
VBL PLC
Annual Report
and
Consolidated Financial Statements
31 December 2021
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
1
CONTENTS
Pages
General information2
Directors’ report3 – 9
Statement by the Directorson Compliance with the Code of Principles of
Good Corporate Governance 10– 17
Remuneration report18 –19
Statement of comprehensive income20
Statement of financial position21
Statement of changes in equity22
Statement of cash flows 23
Notes to the financial statements24–46
Independent auditors’ report 47 –53
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
2
GENERAL INFORMATION
Registration
The company’s registration number is C56012. Since last publication there were no changes to the name
Place of domiciliation
Principal place of business
Directors
Dr. Andrei Imbroll
Dr. Geza Szephalmi
Mr. Julian Tzvetkov
Mr. Arthur Haze
Dr. Csaba Bato (appointed on 23 March 2021)
Mr. David Galea Souchet (appointed on 23 March 2021)
Ms. Isabella Vella(appointed on 23 March 2021)
Company secretary
Dr. Joe Borg Bartolo and Dr. Mikiel Calleja (appointed on 1 March 2022)
Dr. David Meli (resigned on 1 March 2022)
Registered office
Main Bankers
Bank of Valletta p.l.c.
184 Triq In-Naxxar
San Gwann SGN 9030
Malta
Auditors
RSM Malta
Mdina Road
Zebbug ZBG 9015
Malta
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
3
DIRECTORS’ REPORT
The Directors present theirannual report and the audited consolidated financial statements of VBL Plc
(“the Company”) and its subsidiaries (together, “the Group”or the “VBL Group”) for the year ended 31
December 2021.
Principal activity
Over the course of its ten years of operations, the Group has established itself as one of the most active
investors in immovable property in Valletta (based on the number of acquired and developed units, and
the number of operated/managed properties in Valletta). The VBL Group, has a successful track record
of identifying, acquiring, developing and managing real estate all around Valletta.
The Group’s principal areas of activities are as follows:
A.Identification and acquisition of real estate assets in the city of Valletta, and the consolidation of
acquired properties to achieve sizeable development projects, spanning the planning and
permitting stage to the preparation and development of the projects.
B.Execution, on a project-by-project basis, of the restructuring, conceptualisation, re-development
and renovation of acquired real estate assets,including regeneration and improvement of
related areas, neighbourhoods or districts of the city, improving overall quality of life for the local
community and residents, creating modern, livablecommunity areasand supporting the
development of social and cultural activities.
C.Operation and management of commercial and residential real estate assets with a view to
generating growing recurring rental income; or sale, and occasionally management for the new
owners, of the re-developed assets, where the commercial opportunity to dispose of the asset
secures higher margins than its on-going operation. This operational area also includes the
management of other third-party real estate assets for accommodation, commercial and office
space and the provision of professional operation and management of established hotels and
hostels, by leveraging on VBL Group’s existent operational structures and highly skilled
management team, while providing high value-added services and overall solution to owners of
such assets.
The Group has developed fully integrated skills and management structure with large range of in-house
capabilities in each of the principal activities undertaken by the Group spanningthe asset acquisition,
asset development, management, and operationalactivities. The Group hasestablished a vertically
integrated business process, based on a verywell defined and focused target market, whereit has
proven skills to deliver on all aspects the whole cycle, whereby ensuring the high quality of products
and/or services based on established in-house systems and structures, supported by a selection of
trusted long-term business partners and sub-contractors to ensure efficiency and toreduce dependency
on more vulnerable, short-term commercial relations, thus also ensuring that maximum benefit is derived
from all margins.
Review of business development and financial position of the financial year 2021
The financial performance of the Group and the Company was significantly impacted by the implications
of theuncertainty of repeating COVID-19 restrictions and limitations,throughout the reporting year, most
especially in the first half of 2021. During the reporting period, the Group still managed to increase
significantly its revenues, while the operational profitability was impacted bythe quickly changing
restrictive measures and uncertainty, requiring to maintain fully fledged operations in order to maintain
the ability to immediately respond to the changing market needs.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
4
DIRECTORS’ REPORT - continued
Review of business development and financial position of the financial year 2021 - continued
Irrespective of the restrictive COVID-19 measures, which resulted in significantly lower level of tourist
traffic and therefore short-lets, as incoming tourismand travels as such have been significantly restricted
compared to peer Mediterranean countries, despite that the vaccination reached the declared level, the
Group has continued its market consolidation efforts and the number of third-party managed properties
has been increasedsignificantly during the year.The Group has been successful in terms of the
consolidation of the Valletta hospitality market in several segments, most notably through the acquisition
of Casa Rooms Ltd and the subsequent restructuring of the managed portfolio of the company. The
Group has also entered into the hotel managementmarket in 2021, responding to the emerging and
growing need for reliable professional property operators in this segment. During the year, theGroup
has contracted with three hotels/guesthouses for management and there are negotiations for acquiring
several other management contracts in this market segment.
Overall, the financial performanceof the Group resulted in a consolidated EBITDA of €175,473 (2020:
consolidated EBITDA of€188,309), and the profit on the Group’sactivities for the year after tax
amounted to €5,791,177 (2020: consolidated loss after tax of €362,004).
Adjusted FY2021 EBITDA level excludingIPO costs andCOVID business disruption/change of
the business model related One-Off costs
When comparing FY2021 performance to the previousyear FY2020, the following costs are to be
considered a) One-off non-recurring items (one-time MFSA listing fee), b) increase in expenses directly
related to the Company being listed (increase in insurance with the D&O insurance, re-branding related
to “plc”status),and c) COVID business disruption/changeof business model related expenses (one-
time bank costs related to unused/aborted bank applications, and costs related to VREM Ltd for the set-
up of new business line(hotel management) as a result of covid-related market opportunities).
Altogether, these individual costs items add up to €96,566, and with these adjustments the FY2021
EBITDA-level would have shown €96,566 better performance.
The tablebelow shows the VBL Plc consolidatedProfit and Loss(P&L), showingalso the aboveadjusted
EBITDA, comparing the FY2021 performance to FY2020, with the Year-on-Year variance.
VBL Plc Consolidated Profit and Loss (P&L) FY2021 and FY020 Comparison table(data in €):
VBL Plc Consolidated P&L
2021 Audited
Accounts
2020 Audited
Accounts
Revenues 1,063,113 549,380 513,733 94%
Cost of Sales (509,058) (169,895) (339,163)200%
Gross Profit554,055379,485174,57046%
GOP Margin52%69%-17%
Other Operating Income 174,483 202,546 (28,063)-14%
Total Operating Costs (553,065) (393,722) (159,343)40%
EBITDA 175,473 188,309 (12,836)-7%
EBITDA Margin17%34%-18%-52%
One-Off costs
96,566
Adjusted EBITDA 272,039 188,309 83,730 44%
Adj. EBITDA Margin26%34%-9%-25%
Variance 2021 / 2020
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
5
DIRECTORS’ REPORT - continued
Dividends and Reserves
A final dividend of €160,000 is proposed by the Directors for the year 2021. During the reporting period,
a total dividend of €150,000 was distributed to the shareholders for the year ended 31 December 2020.
Listing and IPO Issue
VBL Plc, as the principal company of the VBL Group, was successfully listed onthe Malta Stock
Exchange on 12
October 2021, with the first trading day ofits ordinary shares being on 13
October 2021
(“IPO”).
The IPO has resulted in the listing of 100% of the Company’s equity andanincrease of the issued share
capital, with the total number of shares in issue standing at 244,471,217. All shares of the Company are
ordinary shares, with a nominal value of €0.20 each, and all have the same shareholders’ rights.
The authorised share capital of the Company remains unchanged at €66,000,000.
Events after the end of the end of reporting period
Besides a new wave of various government restrictions related to COVID-19, which are considered to
result in a general negative impact on the Maltese economy, there were no specific materially important
events affecting the Group’s long-term outlooks adversely which occurred since the end of the
accounting year. The long-term effects however of the COVID-19 pandemic and the local and global
restrictions cannot yet be assessed and might have a continuing impact on the VBL Group’s business
in the course of 2022.
Future developments
The VBL Group plans to continue its dynamic growth, maintain its clear strategy onits core business
areas, and keep its main focus on development of the already owned assets, specifically those already
with full development permit, aswell as improve further the utilisation of developed assets, in line with
its long-term business strategy and financial plans.
Principal risks and uncertainties
The key risk factors VBL Group is facing have been categorised under four main categories: (i) risks
relating to the acquisition and disposal of immovableproperty; (ii) risks relating to construction and
development of immovableproperty; (iii) risks relating to management and operation of immovable
property; and (iv) risks relating to the general business and operations of the Group. The latter category
of risk factors is intended to encapsulate those risk factors that concern the day-to-day operations and
activities of the Group, regardless of the line of operations concerned and are, therefore, considered to
apply equally to each of the individual business lines referred to in categories (i) to (iii). In addition, the
Board of Directors considers that in view ofthe concentration of the Group’s immovable propertiesin
Valletta, it is appropriate to identify those specific risksthat are attributable to, or associated with, the
market for immovable property situated in Valletta, taking into account the unique characteristics of the
Valletta market, its historic and political/administrative background. Those risks relating specifically to
the Valletta immovable property market thatare identifiable at the date hereof have been included within
the main categories referred to above respectively.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
6
DIRECTORS’ REPORT - continued
Principal risks and uncertainties - continued
If any of the risks described were to materialise and could not be mitigated under reasonable terms,
they could have a serious effect on the Company’s and/or Group’s financial results, financial condition,
operational performance, business and/or tradingprospects. The risks and uncertainties discussed
above are those identified assuch by the Board of Directors as at the date of this Report, but these risks
and uncertainties may not be the only ones that the Company and/or Group facesor could face.
Additional risks and uncertainties, including any which the Board of Directors are not currently aware of,
or that the Board of Directors currently deem immaterialor remote, individually or cumulatively,may well
result in a material impact on the financial results, financial condition, operational performance, and/or
trading of the Company and/or the Group.
Board of Directors
The Board of Directors of the Company currently consists of the following Directors:
Dr. Andrei Imbroll, Chairman and Executive Director
Dr. Geza Szephalmi, Executive Director
Mr. Julian Tzvetkov, Executive Director
Mr. Arthur Haze, Non-Executive Director, Member of the Audit Committee
Dr. Csaba Bato, Non-Executive Director, Chairman of the Audit Committee (appointed on 23 March
2021)
Mr. David Galea Souchet, Non-Executive Director, Member of the Audit Committee (appointed on 23
March 2021)
Ms. Isabella Vella, Non-Executive Director, Member of the Audit Committee (appointed on 23 March
2021)
Under the provisions of theCompany’s Memorandum and Articles of Association, the appointment of
the directors happens at the Company’s general meeting.
Statement of directors’ responsibilities
The Companies Act (Cap. 386), enacted in Malta, requires the Directors to preparefinancial statements
for eachfinancial year which give a true and fair view of the financial position of the Company and the
Group as at the end of the financial year and of the profit or loss for that year.
In preparing the financial statements, the Directors are required to:
▪adopt the going concern basis unless it is inappropriate to presume that the Company and the Group
will continue in business;
▪select suitable accounting policies and apply them consistently;
▪make judgements and estimates that are reasonable and prudent;
▪account for income and charges relating to the accounting period on accrual basis;
▪value separately the components of asset and liability items;
▪report comparative figures corresponding to those of the preceding accounting period; and
▪prepare the financial statements in accordance with generally accepted accounting principles as
defined in the Companies Act (Cap. 386) and in accordance with the provision of the same Act.
The Directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Company and the Group and to enable the directors
to ensure that the financial statements comply with the CompaniesAct (Cap.386). This responsibility
includes designing, implementingand maintaining such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error. The Directors are alsoresponsible for safeguarding the assets of the
Company and of the Group and hence for taking reasonablesteps for the prevention and detection of
fraud and other irregularities.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
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DIRECTORS’ REPORT - continued
Auditors
RSM Malta, Certified Public Accountants, have expressed their willingness to continue in office and a
resolution for their reappointment will be proposed at the Annual General Meeting.
Going Concern Statement Pursuant to Listing Rule 5.62
Currently, the Directors are of the opinion that the global and local market restrictions and the various
restrictive government measures, make the short-mid-term forecasts volatile, but will not have a long-
term impact on the Group’s financial performance and that the Group will be able to benefit from inflation-
resistant portfolio of prime real estate assets, while it will recover from the short-term impacts relatively
quickly, once the general economic environment becomes more stable and accountable on a long run.
The development projects are expected to continue as planned, subject to available financing and no
additional external negative factors. The Directorsexpect that the Group will not befacinga going
concern issue due to these current market disruptions.
The current low level of VBLPlc’s total liabilities and high number of unencumbered properties provide
for abetter than average resistance to local and international economic challenges and the increasing
inflationary pressure affecting the companieswith less resistant asset base. At the same time, the
current market situation presents new opportunities, which the VBL Group plans to continue to explore.
Shareholding Structure of the Company Pursuant to Listing Rule 5.64
The issued share capital of the Company as at the date of this report is 244,471,217 ordinary shares
with a nominal value of€0.20per share. All shares are listed on the Malta Stock Exchange and hold the
same rights. The Company’s shareholders holding 5% or more in direct or indirect shareholding are:
Shareholder’s Name
Number of Shares
(owned directly)
VBLM Limited
46,000,010
Raniark Limited
44,010,815
Geza Szephalmi
40,433,395
Andrei Imbroll
36,919,655
Sorbusenco Enterprises Limited
22,635,560
Petrolsped (Malta) Ltd
14,997,045
Julian Tzvetkov
12,005,245
VBLM Limited is a management company, which has entered into a Management Services Agreement
with the Company, pursuant to which VBLM Limited provides the Company, and other entities falling
within the Group, with, inter alia, senior executive and strategic management and other support services.
Shareholders holding 10% or more direct shareholding are locked-in from trading with their shares for a
period of 24 months from the date of Listing, as this is described in detail and defined in the Prospectus
published by the Company, dated 23 July 2021.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
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DIRECTORS’ REPORT - continued
Powers of the Board Members Pursuant to Listing Rule 5.64.9
The powers of the Directors are outlined in Article 49 of the Articles of Association of the Company.
Disclosure of Material Contracts Pursuant to Listing Rule 5.70.1
The Company is party to a number ofmaterial value contracts, including contracts entered into in
connection with the acquisition or disposal of real estate assets, the renovation ordevelopment of real
estate assets, and the subsequent lease and operating agreements in connection with realestate
assets, which are considered contracts in the ordinary course of business. All of those contracts have
been entered into in the ordinary course of the Company’s business and are considered to be at arm’s
length and under the general business and ethical standards applied by peer companies, globally.
As at the date of this Report, the Board of Directors considers that the only material contract entered
into outside the ordinary course of business of the Company is the Management Services Agreement
with VBLM Limited,details of which have beenpublished in Section 4.5of the RegistrationDocument
(Prospectus), published by the Company on the 23 July 2021.
Company Secretary and Registered Office of the Company Pursuant to Listing Rule 5.70.2
Dr. Joe Borg Bartolo and Dr. Mikiel Calleja
54, Marsamxett Road, Valletta VLT 1852 Malta
Statement of Responsibility Pursuant to Listing Rule 5.68
The Directors declare that to the best of their knowledge, the financial statements included in the Annual
Report are prepared in accordance with the requirements of International Financial Reporting Standards
as adopted by the European Union and as amendedfrom time to time and these statements give in all
material aspects a true and fair view of the assets, liabilities, financial position and results of the Group
and that this report includes a fair review of the development and performance of the business and
position of the Group, together with a description of the principal risks and uncertainties that it faces.
Explanatory Notes to the Special Business and Extraordinary Resolutions Proposed to the
Annual General Meeting of the Company
Proposed Resolutionunder Special Business in the Notice and Agenda of the Company–
“Indemnification of the Directors and Senior Management”
The Directorsare proposing atext of the Ordinary Resolution tothe Annual General Meeting(“AGM”)
of the Company asfollows: “It is herebyapproved to indemnify the members of the Board of Directors
and Senior Management ofthe Company fromliabilitiesand expenses to whichany such person(s)may
become a party as a result of such individual’s acts carried out forand on behalf of the Company, or
any of its associated companies, subsidiaries or affiliates, limitedly in sofar as such acts arecarried out
in the individual’s capacity as a Director or Senior Manager, as applicable”.
Explanatory Note: The purpose of this resolution is to obtain shareholder approval in order to allow for
an indemnity to be provided by the Company to Directors and senior management of theCompany. This
results in the said person/s being protected (within the limits of the law) for any liabilities and expenses
that may arise as a result of their duties being exercised for and on behalf of the Company or associated
companies, subsidiaries or affiliates.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
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DIRECTORS’ REPORT - continued
Explanatory Notes to the Special Business and Extraordinary Resolutions Proposed to the
Annual General Meeting of the Company - continued
Proposed Resolution under Special Business in the Notice and Agenda of the Company “Approval of
Remuneration Policy”
The Company has a Remuneration Policy in place, in accordance with the requirements of the
Companies Act and the disclosures made by the Company, which is required to be re-approved at the
first general meeting following the listing,following recent amendments to Chapter 12 ofthe Capital
Markets Rules.The proposed text of the Ordinary Resolution is: “The Remuneration Policy of the
Company as set out in the Notice to Shareholders dated 28
March 2022 be hereby approved.”
Explanatory Note: Following recent amendments toChapter 12 of the Capital Markets Rules, the
Company is required to establish a remuneration policy with respect to its Directors and Chief Executive
Officer as would contribute to the Company’s business strategy, long-term interests and sustainability.
The Shareholders have a right to vote on such policy, and if approved, the Company shall be required
to remunerate its Directors and Chief Executive Officer in accordance with the policy approved by the
general meeting. In furtherance of this requirement, the Company’s Board of Directors has established
and the Company has adopted a Remuneration Policy, relevant to all levels of the Company, and
including the Board of Directors of the Company, which policy is existing and has been duly approved
by the Company prior to the listing. Pursuant to the requirements of Chapter 12 of the Capital Markets
Rules, the Policy is put forward to the Shareholders at the first AGM after the listing for re-approval.
Signed on behalf of the Group’s Board of Directors on 24 March 2022 by Dr. Andrei Imbroll (Director,
Chairman of the Board) and Dr. Geza Szephalmi (Director) asper the Directors’ Declaration on ESEF
Annual Financial Report submitted in conjunction withthe Annual Report and Consolidated Financial
Statements.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
10
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODEOF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE
The Company is subject to the Code of Principles of Good Corporate Governance (the “Code”) forming
part of the Capital Markets Rules. Listed companies are required under the Capital Markets Rulesissued
by the Malta Financial Services Authorityto include a Statement of Compliance with the Code in their
Annual Report, accompanied by a report of the independent auditors.
The Board of Directors of the Company (“BOD”, “Board” or “Directors”) restate their support for the Code
and has taken such measures as are necessary in order for the Company to comply with the
requirements of the Code to the extent that these were considered appropriate and complementary to
the size, nature and operations of the Company.
Basic Principles, in Compliance with Code Provisions:
1.The managing body of the Company is an effective Board in terms of Code Provision 1, which
is responsible for accountability, monitoring, strategy formulation and policy development as
specified in Code Provision 4;
2.The Chairman of the Board does not also occupy the role ofChief Executive Officer, as
envisaged in Code Provision 2;
3.The Board is composed of seven directors, including four (4) non-executives of whom three (3)
are independent in terms of Code Provision 3; thus retaining a healthy mix between executives
and non-executives in the composition of the Board of Directors;
4.Members of the Board of Directors are all seasonedprofessionals, with significant local and
international professional track record and proven experience in applying the highest level of
corporate governance standards, obtained in running large public and private companies;
5.The Board of Directors aims to meet regularly and all Directors are given ample opportunity to
discuss the agenda and convey their opinions as specified in Code Provision 5;
6.The Company recognises the importance of professional developmentand seeks to ensure that
there are adequate schemes in place for professional development of management and
employees in accordance with Code Provision 6;
7.The Audit Committee isappointedby the Board of Directors and shall be composed of not fewer
than three (3) members. The Audit Committee has the task, inter alia,of managing conflicts of
interest in terms of Code Provision 11. Conflicts of interest are also managed in terms of the
Company’s Articles of Association;
8.The Company has not appointed a Remuneration Committee. The Board believes that the size
of the Company and the Board itself does not warrant the setting up of an ad hoc committee to
establish the remuneration packages of individual directors and relies on the constant scrutiny
of the Boarditself, the Company’s shareholders, the market and the rules by whichthe Company
is regulated asa listed company. The Board shall retain this matter under review over the
coming years;
9.The Nomination Committee to be appointed by the Board of Directors is responsible to run a
transparent nomination process for the election/re-election of any members, as required, and
as detailed and specified in the Memorandum and Articles of Association;
10.The Company recognises the importance of its role in the corporate social responsibility arena
and seeks to ensure that in its operations the environment is respected. The Directors are also
aware of the importance of having good relations with stakeholders and strive to work together
with them in order to invest in human capital, health and safety issues and to adopt
environmentally responsible practices, in line with Code Provision 12;
11.Pursuant tothe Company’sstatutory obligations, the annual report and financial statements,
declaration of dividends, election of Directors and appointment of auditors and authorisation of
the Directorsto set the auditors’ feesare proposed and approved atthe Company’s annual
general meeting. The Board of Directorsproperlyserves the legitimate interests of all
shareholders and is accountable to all shareholders, particularly through the representation of
the shareholders on the Board itself. This ensures compliance with Code Provision 9.
In the light of the factors mentioned above, the Board is of the view that the Company is in compliance
with the Code.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
11
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE - continued
Specific Corporate Governance Principles
The Company, its Directors, Management and employees believe that good corporate governance is a
key element for business success and supporting the integrity andefficiencyof the Company and its
Subsidiaries, operations and long-term success. VBL is committed to establishing, maintaining and
following strong corporate governance principles in line with best local and international practices, as a
basic requirement for deliveringthe Company’splanned financial and business goals, achieving its
expected business potential, and protecting the Company’s investors, employees, partners, customers
and reputation.
The Company’s Directors are committed toensurethe openness and willingness to establish andfollow
the basic principles set by the best practices in corporate governance, to regularly disclose financial
performance figures which are truthful and accurate, and to provide timely and accurate information
about the Company’s goals, activities and strategy to the investors and business partners. This is
considered keyin allowingthe market to be able to assess and evaluate the various foreseeable or
unpredicted risks and issues related to the implementation of the Company’s business strategy. Among
others, the Company has adopted and follows the basic principles of the Code, in order to establish
strong business and governance ethics and apply those in its daily practice.
The five key specific principles adopted by VBL’s governing bodies are:
i.Fairness –Fair and ethicalbehavior in alldealings is fundamental tothe success of VBL’s
business. Today, the Company already has an established image and proven operational
principles of which a fundamental part is to act and deal in a fair and correct manner. Asa
result, VBL enjoys the trust and support of its partners, peers, customers and suppliers. The
Company is committed to continue acting in accordance with the highest ethical and
professional standards.
ii.Accountability –The Board’s and management’s commitment to accountability refers to the
obligation and responsibility of VBL to always act responsibly and be able to give clear
explanations or rationale for the Company’s actions and conduct.
iii. Responsibility –The Boardof Directors and management aregivenauthority toact onbehalf
of the Company, therefore they accept full responsibility for the powers that they are given
and the authority that they exercise.
iv. Transparency – This is a key principle of responsible behavior and goodgovernance
expected by a number of stakeholders, particularly the shareholders. The Board of Directors
and management ensure that the various bodies or structures of VBL operate and act in a
transparent and accountable manner, provide timely and accurate reporting, and address in
an open and transparent manner any issues or matters which are faced by the Company.
v.Corporate Social Responsibility–In addition to the above four basic corporate governance
principles, the Board of Directors and management seek to adopt and follow the increasingly
important principles of the corporate social responsibility in the day-to-daymanagement
practices at the Company.
Administrative, Management and Supervisory Bodies and Senior Management
The Board
The Company is managed by the Board of Directors consisting of seven memberswho are entrusted
with the overall direction, administration and management of the Company. The majority of the Directors
are non-executive, of whom three directors are independent within the meaning of the Capital Markets
Rules.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
12
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE - continued
The Board - continued
Each Director declares that he/she undertakes to
i.maintain in all circumstances his/her independence of analysis, decision and action;
ii.not to seek or accept any unreasonable advantages that could be considered as
compromising his/her independence; and
iii. clearly express his/her opposition in the event that he/she finds that a decision of the Board
may harm the Company.
The Board of Directors of the Company consists of the following persons:
Name
Designation
Date of Appointment
Andrei Imbroll (identity card
number 531778M)
Chairman and Executive Director
18 April 2012
Geza Szephalmi (identity
card number 67571A)
Chief Executive Officer and Executive
Director
18 April 2012
Julian Tzvetkov (identity
card number 157717A)
Chief Operating Officer and Executive
Director
31 May 2013
Artur Haze (Swedish passport
number 35393493)
Non-executive Director, member of the
Audit Committee
14 September 2020
David Galea Souchet (identity
card number 0348390M
Independent, Non-executive Director,
member of the Audit Committee
23 March 2021
Csaba Bato (identity card
number 934513TA
Independent non-executive Director,
member of the Audit Committee
23 March 2021
Isabella Vella (identity card
number 564564M)
Independent non-executive Director and
member of the Audit Committee
23 March 2021
Board Meetings
During the year 2021, there have been 6 (six) Board meetings held and several decisionstaken via a
written board resolution. Board members have been re-elected and the Board has been extended in
number as of 23 March 2021.
The number of Board meetings attended by Directors for the year under review is as follows:
Members Attended
Andrei Imbroll 6
Geza Szephalmi 6
Julian Tzvetkov 6
Artur Haze 5
David Galea Souchet 5
Csaba Bato 5
Isabella Vella5
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
13
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE - continued
Information and Professional Development
The Company ensures that it provides its Directorswith relevant information to enable them to effectively
contribute to Board decisions. The Company is committed to provide adequate and detailed information
to the Directors who are newly appointed to the Board. The Company pledges to make available to the
Directors all information as required.
Appointment and Removal of Directors
The Directors of the Company are appointed by the Shareholders in accordance with the provisions of
the Articles of Association of the Company. The procedure for the appointment of the Directors shall be
as detailed and described in the Articles.
The Company shall granta period of at least 14 days toShareholders holdingin aggregate 10%or more
of the Shares to nominate one candidate for appointment as Director for every 10% held as aforesaid.
Such notice may be given by the publication of an advertisement in at least two daily newspapers. All
such nominations, including the candidate’s acceptance to be nominated as Director, shall on pain of
disqualification be made on the form to be prescribed by the Directors from time to time and shall reach
the Office not later than 14 days after delivery of the said notice.
Whenever, in terms of these Articles, an election is necessary amongst candidates nominated for
appointment as Directors, such election shall be conducted in the manner prescribed by the Articles or
in such manner as close as practicably possible thereto as the Directors may consider equitable in the
circumstances.
Any Director may be removed at any time by the Company in generalmeeting pursuant to the provisions
of article 140 of the Act. Without prejudice to the provisions of the Act, the office of a Director shall ipso
facto be vacated:
-if, by notice in writing to the Company, he/she resigns from the office of Director; or
-if he/she violates in a proven way the declaration of secrecy required of him/her under the
Articles and the Board of Directors pass a resolution that he/she has so violated the declaration
of secrecy; or
-if he/she is prohibited by or under any law from being a Director; or
-if he/she is removed from office pursuant to the Articles or the Act.
A retiring Director shall be eligible for re-election or re-appointment.
Powers of Directors
The Directors are empowered to act on behalf of the Company in accordance with the Memorandum
and Articles of Association, which powers may be widened or restricted fromtime to time by the
Shareholders in general meeting.
The general administration and management of the Company is entrusted with the Board of Directors,
who are empowered and authorised to delegate any of its executive functions relating to the Company
to members of the Company’s management.
Any one or more members of the Board of Directorsmay also occupy the position of Chief Executive
Officer of the Company and may also occupy the position of members of the Board of Directors of
subsidiaries or affiliate companies of the Company from time to time.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
14
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE - continued
Evaluation of the Board’s Performance
The Board undertakes an annual evaluation of its performance and of its committees. The performance
evaluation of each Boardmembershall be done by the Board of Directors, excluding the Board member
being evaluated. The Chairman takes action ontheresult of the performance evaluation process in
order to ascertain the strengths andto address the weaknesses, and reports to the Board and where
appropriate to the AGM.
Remuneration of Directors
The remuneration of the Directors in any one financial year, andany increases thereto, is determined
by the general meeting of the Company.
During the current reporting year under review, the Directors were entitled to anaggregatetotal gross
annual remuneration of €70,000, which has been paid pro-rata, from the date of the appointment of the
full board, as of 23 March 2021.
Executive Directors
The Executive Directors have representation and execution rights on behalf of the Company to the
extent permitted by the Memorandum of Association of the Company. In this respect, and in line with
the good governance standards and internal control procedures implemented bythe Company, the
Memorandum of Association ties the legal representation and signatory rights of the Company to
predefined monetary threshold, with enhanced safeguards applicable to transactions of highermonetary
value. The Company applies a dual signatory policy as determined in the Articles of the Company and
other relevant Company regulations.
Any one Executive Director of the Company shall represent the Company in judicial proceedings,
provided that no proceedings maybe instituted by theCompany without the approval of the Board of
Directors of the Company.
Chief Executive Officer
In terms of article 65 of the Articles of Association, the Directors may from time to time appoint any
person to theofficeofChiefExecutiveOfficer(CEO) of the Company for such period andon such terms
as theydeem fit. In the current reporting period, the Board of Directors has appointed Dr. Geza
Szephalmi to occupy the post of CEO of the Company.
The Directors may entrust to and confer upon a CEO any of the powers exercisable by them upon such
terms and conditions and with such restrictions as they may deem fit and may from time to time revoke,
withdraw, alter or vary all or any of such powers.
Currently, the CEO and the executive management are functions which are provided under the
Management Services Agreement with VBLM Limited, as it has been detailed in the Listing Prospectus
of the Company dated 23 July 2021.
The CEO is responsible for the Company’s operative management and direction in accordance with the
Articles, the resolutions adopted by the general meeting and the Board of Directors. The CEO has the
right to decide on the Company’s organisational structure and internal rules and regulations according
to the Articles.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
15
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE - continued
Declaration
None of the Directors, members of the board committees or members of management have, in the last
five years:
i.been the subject of any convictions in relation to fraudulent offences;or
ii.been associated in anyform with bankruptcies, receiverships or liquidations (other than
voluntary) or companies put into administration in respect of entities in respect of which they
were members of administrative, management or supervisory bodies, partners with
unlimited liability (in the case of a limited partnership with a share capital), founders or
members of senior management; or
iii. been the subject of any official public incrimination and/or sanctions by statutory or
regulatory authorities (including designated professional bodies); or
iv. been disqualified by a court from acting as a member of the administrative, management or
supervisory bodies of a company or fromacting in the management or conduct of the affairs
of any company.
Board Practices
The Directors have constituted the following committees, the terms of reference of which are determined
by the Board from time to time with the purpose of fulfilling the below mentioned purposes:
Audit Committee
The primary objective of the Audit committee is to assist the Board in fulfilling its oversight responsibilities
over the financial reportingprocesses, financial policies and internal control structure. The first Audit
Committee of the Company was established bythe Annual General Meeting of the Shareholders held
on 23 March 2021, and the first members have been elected among the Board members. The
Committee oversees the conduct of the internal and external audit and acts to facilitate communication
between the Board, the Management and the external auditors.
The Audit Committee is composedof four members –Mr. Artur Haze, Mr. David Galea Souchet, Ms.
Isabella Vella and Dr. Csaba Bato (Chairman). Mr. Artur Haze, Mr. David GaleaSouchet, and Dr. Csaba
Bato are the Audit Committee members who are considered by the Board of Directors to be competent
in accounting and/or auditing in terms of the Capital Markets Rules. The Committee is responsible for
reviewing the financial reporting processes and policies, the system of internal control and management
of financial risk, the audit process, any transactions with related parties and the Company’s process for
monitoring compliancewithlawsand regulations. When the Audit Committee’s monitoring and review
activities reveal cause for concern or scope for improvement, it makes recommendations to the Board
on the actions needed to address the issue or make improvements.
The Audit Committee has the task to ensure that any potential conflicts of interest are resolved inthe
best interests of the Company. Its primary objective is to assist the Board in dealing with issues of risk,
control and governanceand in reviewing the Company’s reporting processes, financial policies and
internal control structure. The Audit Committee also oversees the conduct of the external audit and
facilitates communication between the Company’s Board, the management and the external auditors.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
16
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE - continued
Audit Committee - continued
The Audit Committee’s main role and responsibilities aredefined in the Audit Committee’s Terms of
Reference.
During 2021, the Audit Committeemet 3 times, out which on 2 meetings the external auditors were
present and attended the meetings.
The number of Audit Committee meetings attended by Membersfor the year under review is as follows:
Members Attended
Csaba Bato 3
Artur Haze 2
David Galea Souchet 3
Isabella Vella3
Nomination Committee
The Board of Directors, the majority of which is composed of by non-executive Directors, from time to
time may form a nomination committee, in compliance with the principle of the Code. The proposals of
the nomination committee shall be put forward for decisions of the Board of Directors.
Executive Management Committee (EMC)
The Executive Management Committee consists of the CEO, the Executive Board Members and any
other managers of the Company appointed by the CEO to the EMC.
The EMC is the main operational body of the Company, ensuring smooth and efficient day-to-day
operations and control, inline with the strategic operational decisions of the Board. The EMC is
responsible to, and reportsto the Chief Executive Officer. Within the EMC, there is a clear division of
responsibilities between the members, covering all areas of the executive responsibility for the running
of the Company’s business. The EMC ensures that no one individual or small group of individuals has
an unlimited power of decision in day-to-day operations.
Relations with Shareholders and with the Market
The Company is highly committed to having an open and communicative relationship with its
shareholders. In this respect, over and above the statutory and regulatory requirements relating to the
annual general meeting, the publication of financial statements and companyannouncements, the
Company seeks to keep an updated informative website and to address any information needs of the
shareholders, in various ways.
The Company has announced a Shareholders’ Programme which is regularly updated and
communicated with the Shareholders.
The Company’s first public issue (“IPO”) was closed in October 2021, following which several company
announcements were issued through the Malta Stock Exchange, at the same time posting information
on the Investors section of the Company’s website as well.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
17
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES
OF GOOD CORPORATE GOVERNANCE - continued
Conflict of Interest
The Board is fully aware of its obligations regarding dealings in securities of the Company as required
by the Capital Markets Rules and therelated required disclosures in case of such dealings. Related
party contracts and dealings are disclosed regularly as required by the applicable rules and presented
in the Annual Financial Statements as well.
Signed onbehalf of the Group’s Board of Directors on 24 March 2022 by Dr. Andrei Imbroll (Director,
Chairman of the Board) and Dr. Geza Szephalmi (Director) asper the Directors’ Declaration on ESEF
Annual Financial Report submitted in conjunction with the Annual Report and Consolidated Financial
Statements.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
18
REMUNERATION STATEMENT OF THE DIRECTORS
The Company is subject to the Code of Principles (the “Code”) forming part of the Capital Markets Rules,
and in terms of the respective Rule (8A.4) the Company is to include a Remuneration Statement in its
Annual Report with the details of the remuneration policy of the Company and the remuneration of the
Directors.
In terms ofthe Remuneration Policy of the Company (“Remuneration Policy”), effective asof
9 February 2021, and aspresented in the Company’s IPO Listing Prospectusdated 23 July 2021, as
approved by the Board of Directors of the Company based on the authorisations provided at the annual
general meeting of the year 2020, and in alignment and compliance with the MFSA Guidelines, the
Board has reviewed the principles and the relevant guidelines and has concluded that based on the
assessment made of the significance of the Company in terms of itssize and thatof its operations, its
clients, the structure of its internal organisation, and the nature, scope and complexityof the activities
of the Company, this Policy does not require a separate Remuneration Committee to be set-up and the
responsibilities attributed to overseeing the Remuneration Policy of the Company shall be performed by
the Board of Directors, which consists inmajority of non-executive Directors. This agreed Remuneration
Policy, to be reviewed regularly or as required, and any material amendments thereto, shall be submitted
to the Board of Directors of the Company for adoption.
Remuneration Policy Related to the Directors
Directors’ Fees
The resolution by the Shareholders of the Company at theAnnual General Meeting held on 23 March
2021, approved the aggregate total annual remuneration of the Board of Directors, and set the Directors’
fees for one year at a total of €70,000.
The directors’ fees have been in place with an effective date of 23 March 2021, in respect to the seven
members of the Board of Directors. Prior to this, no directors’ feeshavebeen paid to any of the Directors
of the Company. During 2021, other than the directors’ feesdeclared hereunder, no other pay or
remuneration was provided to any of the Directors of the Company. The total directors’ fees paid during
the financial year 2021 to the Board ofDirectors was €54,299, which is proportionate for the year.
According to the existing Policy, the Directors are not entitled to other remuneration or benefits related
to their Directors’ position within the Company.
After an assessment of the market conditions and the particularities of the Company, the Directors have
concluded that the remuneration of the Board of Directorsof the Company is considered to be in line
with the size of its operations and general applicable industry standards, and the nature, scope and
complexity of its activities.
Executive Management and Services
Since its foundation, the VBL Group has been managed by a dedicated management company, VBLM
Limited (“VBLM”). As declared before and presented in the Listing Prospectus, VBLM is also a significant
shareholder of the Company and is itself owned, managed and controlled by the Executive Directors of
the Company. Its sole activity is the management of the VBL Group.
The provision of management services byVBLM to the VBL Group is based on the existing and
established practice datingback to foundation of the Group and has been formalised by means of a
management and services agreement (“Management Services Agreement”) entered into between
VBLM and the principal company of the VBL Group. The nature and content of this relationship and the
Agreement itself has been described in detail in the Listing Prospectus. Pursuant to the Management
Services Agreement, VBLM provides the Company and its subsidiaries with executive, operational and
strategic management and support services.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
19
REMUNERATION STATEMENT OF THE DIRECTORS - continued
Executive Management and Services - continued
The remuneration payable by the Company to VBLM under theManagement Services Agreement is
comprised of a combination offixed and variable parts, consisting of a Retainer Fee (fixed annual fee,
adjusted annually in line with the official inflation index published by the NSO), a Variable Fee (ranging
from 50% to 100% of the Retainer Fee, and linked to achievement of pre-defined specific tasks, which
is only payable following evaluation and approval by the non-executive Directors) and a Performance
Fee (related to the achievement of the mid-and long-term value growth realised by the Company, as
described in details in the Listing Prospectus). The terms and conditions of the ManagementServices
Agreement, evaluation and the payable Variable and Performance fees are monitored and controlled by
the non-Executive Directors of the Company, which comprise the majority of the Board of Directors.
The Management ServicesAgreement is aimed at ensuring that the senior Executive Management
team, which has steered VBL in attaining successful growth anddevelopmentsince the inception of the
VBL Group in 2012 and who have been key to establishing sound and stable operations that has resulted
in the prevailing financial and strategic market positioning of the Company, are aligned with the
Shareholders’ and Company’s interests and remains on board during the initial post-IPO phase and is
committed to deliver the strategic objectives of the Company in line with strategic development plans.
This element of continuity is considered by the Board of Directorsto be in the best interest of the
Company and theVBL Group, supporting the continuation and evolvement of its existing well-
established structure, and to further implement the Company’s business strategy and growth, while
mitigating risksassociatedwith key personnel and senior management. The current Management
Services Agreement is effective as from 1st January2021 and is valid for period of three years. This
agreement may be extended thereafter, subject to agreement between the parties.
During 2021, the total management services fees paidto VBLM for the executive,operational and
strategic management and other services provided to the Company were €362,500 exclusive of VAT.
Other than the Directors’ fees and the management services fees, the Company does not provide any
other pay, remuneration or alike to its Directorsfor their services. Any changes to the terms of the
Management Services Agreement are subject to the vetting and approval of theAudit Committee and
the non-executive directors of the Company.
Signed onbehalf of the Group’s Board of Directors on 24 March 2022 by Dr. Andrei Imbroll (Director,
Chairman of the Board) and Dr. Geza Szephalmi (Director) asper the Directors’ Declaration on ESEF
Annual Financial Report submitted in conjunction with the Annual Report and Consolidated Financial
Statements.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
20
STATEMENT OF COMPREHENSIVE INCOME
2021
2020
Notes
€
€
Revenue
3
Cost of sales
8
(509,058 )
(169,895 )
Gross profit
Other operating income
4
Administrative expenses
8
(553,065 )
(393,722 )
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation
8
(300,894 )
(280,729 )
Operating loss
(125,421 )
(92,420 )
Investment income/(loss)
5
(209,852 )
Interest receivable
6
Finance costs
7
(138,286 )
(113,319 )
Profit/(loss) before income tax
(414,038 )
Income tax (expense)/credit
9
(290,626 )
Profit/(loss) for the year
(362,004 )
Total comprehensive income/(loss) for the year
(362,004 )
Earnings per share
-
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
21
STATEMENT OF FINANCIAL POSITION
2021
2020
Notes
€
€
ASSETS
Non-current asset
Intangible assets
12
Property, plant and equipment
13
Investment properties
14
Investment in a subsidiary
15
Loans receivable
Deferred tax assets
10
Current assets
Trade and other receivables
16
Cash and cash equivalents
17
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Share premium
Other reserves
18
General reserves
18
Retained earnings
18
TOTAL EQUITY
Non-current liabilities
Long-term borrowings
20
Deferred tax liabilities
11
Trade and other payables
19
Current liabilities
Short-term borrowings
20
Trade and other payables
19
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Signed on behalf of the Group’s Board of Directors on 24 March 2022 by Dr. Andrei Imbroll (Director,
Chairman of the Board) and Dr. Geza Szephalmi (Director) as per the Directors’ Declaration on ESEF
Annual Financial Report submitted in conjunction with the Annual Report and Consolidated Financial
Statements.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
22
STATEMENT OF CHANGESIN EQUITY
Share
Share
Other
General
Retained
Total
capital
premium
reserves
reserves
earnings
€
€
€
€
€
€
Balance at 1 January 2020
Total comprehensive loss
- Loss for the year
(362,004 )
(362,004 )
(362,004 )
(362,004 )
Transactions with owners
- Issuance of new shares
- Dividends declared during the period (Note 18)
(150,000 )
(150,000 )
(40,721,881 )
(150,000 )
Transfer from revaluation reserve to retained
earnings, net of deferred tax
(22,751 )
Balance at 31 December 2020
Balance at 1 January 2021
Total comprehensive income
- Profit for the year
(22,751 )
Transactions with owners
- Issuance of shares
- Conversion of borrowings to shares
- Dividends declared during the period (Note 18)
(150,000 )
(150,000 )
(150,000 )
Transfer from revaluation reserve to retained
earnings, net of deferred tax
Balance at 31 December 2021
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
23
STATEMENT OF CASH FLOWS
2021
2020
Notes
€
€
Cash flows from operating activities
Profit/(loss) before tax
(414,038 )
Depreciation and amortisation
Fair value movement on investment property
(6,342,211 )
Gain on disposal of subsidiary
(174,483 )
Interest income
(3,299 )
(1,553 )
Interest expense
Cash generated before working capital changes
Increase in trade and other receivables
(1,136,762 )
(171,527 )
Increase/(decrease) in trade and other payables
(239,379 )
Net cash used in operating activities
(919,475 )
(222,597 )
Cash flows from investing activities
Purchase of intangible assets
(150,000 )
Purchase of property, plant and equipment
(43,864 )
(19,481 )
Proceeds from sale of investment
Proceeds from sale of investment property
Interest received
Acquisition of investment properties
(174,630 )
(622,231 )
Acquisition of a subsidiary
(66,517 )
Movement in loans receivable
(104,171 )
Net cash used in investing activities
(339,182 )
(547,523 )
Cash flows from financing activities
Net proceeds from issuance of share capital
Interest paid
(80,790 )
(88,450 )
Income tax paid
(7,576 )
Dividends paid
(150,000 )
(150,000 )
Movement in borrowings
Payment of lease liabilities
(31,555 )
(24,869 )
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the
year
Cash and cash equivalents at end of year
17
Significant non-cash transactions
During the year ended 31 December 2021, the convertible loans paid to the Company in cash before
the listing, amounting to €1,815,000, and the interest accrued thereon amounting to €36,575, were
converted into ordinary shares in accordance with the original loan agreements, as described in the
Prospectus dated 23 July 2021.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These consolidated financial statements (‘financial statements’) are prepared under the historical
cost convention, as modified to include fair values where it is stated in the accounting policies
below. These financial statements arepreparedin accordance with the provisions of the
Companies Act (Cap. 386), enacted in Malta, and with the requirements of International Financial
Reporting Standards(‘IFRS’) as adopted by the European Union (‘EU’).
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date.
For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3
based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirety, which are described as
follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted pricesincluded within Level 1, that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
- Level 3 inputs are unobservable inputs for the asset or liability.
The preparation of financial statements in conformity with IFRS as adopted by the EU requires
the use of estimates and assumptions that affect the reported amounts ofassets and abilities and
disclosure of contingent assets and liabilities atthe end of the reporting periodand the reported
amounts of revenues and expenses during the reporting period. Although these estimatesare
based on management's best knowledge of current events and actions, actual results ultimately
may differ fromthose estimates. The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 2.
Functional and presentation currency
The consolidated financial statements are presented in Euro (€) which is the Group’s functional
and presentation currency.
New or revised standards, interpretations and amendments adopted
The Company adopted several new or revised standards, interpretations and amendments issued
by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee
and endorsed by the EU. The adoption of these new or revised standards, interpretations and
amendments did not have a material impact on these financial statements.
New or revised standards, interpretations and amendments issued but not yet effective
At the end of the reporting period, certain new standards, interpretations or amendments thereto,
were in issue and endorsed by the EU, but not yet effective for the current financial period. There
have been no instances of early adoption of standards, interpretations or amendments ahead of
their effective date. The Directorsanticipatethat the adoption of the new standards,
interpretations or amendments thereto,will not have a material impact on the financial statements
upon initial application.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
25
Basis of consolidation
The consolidatedfinancial statements incorporatethe financial statements of the Company and
all its active subsidiaries that it controls. Subsidiaries are companies in which the Group, directly
or indirectly, has an interest of more than one half of the voting rights or otherwise has the power
to exercise control over the operations, isexposed, or hasrights, to variable returns from its
involvement with the investee, and has the ability to use its power to affect its returns.
These consolidated financial statements comprise the Company andits wholly-owned active
subsidiary, VREM Limited. Silver Horse Block Limited is an inactive project company, not
consolidated and has no impact on the consolidated financial statements.
The financial statements of the subsidiaries are prepared for the same reporting year as the
Group, using uniform accounting policies for like transactions and other events in similar
circumstances. When necessary, adjustments are made to the financial statements of the
subsidiaries to bring their accounting policies inline with theGroup’s accounting policies. All
material intragroup assets and liabilities, equity, income, expenses, and cashflows relating to
transactions between members of the Group are eliminated in full on consolidation.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for the value of
goods sold and services provided, net of sales rebates and taxes in the normal course of
business, net of value added tax and discounts where applicable.
Revenue is recognised to the extent that it is probable that future economic benefits will flow to
the Groupand these can be measured reliably. The followingspecific recognition criteria must
also be met before revenue is recognised:
Sales of investment property
Revenue is normally recognised when legal title passes to the buyer. However, in some
jurisdictions the equitable interests in a property may vest in the buyer before legal title passes
and therefore the risks and rewards of ownership are transferred at that stage. In such cases,
provided that the seller has no further substantial acts to complete under the contract, it may be
appropriate to recognise revenue. In either case, if the seller is obliged to perform any significant
acts after the transfer ofthe equitable and/or legal title, revenue is recognised as the facts are
performed. An example is a building or other facility on which construction has not been
completed.
Rental income
Rental incomefrom investment propertyis recognised in profit or loss on astraight-line basis over
the term of the lease.
Interest income
Interest income is accrued on a time basis, by reference to the principle outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts the estimate future cash
receipts through the expected life of the financial asset to the asset's net carrying amount.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
26
Foreign currencies
Transactions underlying items in these consolidated financial statements are measured in the
Group’s functional currency, which is the currency of the primary economic environment in which
the Group operates.
Transactions in foreign currencies have been converted into Euro at the rates of exchange ruling
on the date of the transaction. There are no monetaryassets and liabilities denominated in foreign
currencies. However, if there would be, they would have been translated into Euro at the rates of
exchange ruling at the end of reporting period. All resulting differences are taken to profit or loss.
Tax
Income tax on profit or loss for the year comprises current anddeferred tax. Income tax is
recognised in profitor loss, except to the extent that it relates to items recognised directly to
equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted
or substantially enacted at the end of the reporting period, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided using the liabilitymethod, providing for temporarydifferences between
the carrying amounts of assets and liabilitiesforfinancial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not provided for: goodwill not
deductible for tax purposes, the initial recognition of assets and liabilities thataffect neither
accounting nor taxable profits, and differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the carrying amount of assets
and liabilities, using tax rates enacted or substantially enacted at the end of the reporting period.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits
will be available against which the unused tax losses and credits can be utilised. Deferred tax
assets are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses todate. Cost includes expenditure directly attributable tothe acquisition of the items as
well as transfersfrom equity of any gains/losses on qualifying cash flow hedges of foreign
currency purchases of property, plant and equipment.
Depreciation is provided on all items of property, plant and equipment, except freehold land and
assets under construction, at rates calculated to write off the cost lessresidual value of each
asset over its expected useful life, as follows:
Building improvements
2% Straight Line
Office equipment
20% Straight Line
Furniture and fixtures
20% Straight Line
Other assets
20% Straight Line
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
27
Property, plant and equipment - continued
Gains and losses on disposal of property, plant and equipment are determined by reference to
their carrying amount and are taken into account in determining operating profit. The residual
values and useful lives of the assets are reviewed and adjustedas appropriate,at each end of
the reporting period. The carrying amount of an asset is written down immediately to its
recoverable amount.
Subsequent costsare included in the carrying amount of the asset or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the income statementduring the financial period in whichtheyare
incurred.
Investment properties
Investment property is property held to earn rentals or for capital appreciation or both. Investment
property is recognised as an asset when it is probable that the future economic benefits that are
associated with the investment property will flow to the entity and the cost can be measured
reliably.
Investment property is measured initially at cost, including related transaction costs. After initial
recognition, investment property is carried at fair value. Fair value is based on active market
prices, adjusted if necessary, for any difference in the nature, location or condition of the specific
asset. The fair value of investment property reflects, among other factors, rental income from
current leases and assumptions about rental income from future leases in light of current market
conditions. It also reflects any cash outflows that could be expected in respect of the property.
Changes in fair values are recorded in profit or loss.
Investment propertyis derecognised on disposal or when it is permanently withdrawn from use
and no future economic benefits are expectedfrom its disposal proceeds, if any, and the carrying
amount and are recognised in profit or loss in the period of derecognition.
Depreciation commences when the depreciable assets are available for use and is charged to
profit or loss so asto write off the fair valued amount, less any estimated residual value, over their
estimated useful lives, using the straight-line method, on the following bases:
Improvements
2% Straight Line
Furniture, fixtures and fittings
20% Straight Line
If an investment property becomes owner occupied, it is reclassified as property, plant and
equipment and its cost or fair value at thereclassification date becomes its cost for accounting
purposes. Property that is being constructed or developed for future use as investment property
is classified as property, plant and equipment and stated at cost until development is complete.
Thereafter it is classified and accounted for as an investment property.
If an item of property, plant and equipment becomes an investment property because its use has
changed, any difference resulting between the carrying amount and the fair value of this item at
the date of transfer is recognised in equity asa revaluation of property, plant andequipment under
International Accounting Standards(‘IAS’)16. However, if a fair value gain reverses a previous
impairment loss, the gain is recognised in the profit or loss.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
28
Intangible assets
Trademark and licences
Trademarks and licences are valued at cost. Trademarks and licences have a definite useful life
and are carried at cost less accumulated amortisation. Amortisationis calculated to write off the
cost in equal annual instalments over their estimated useful life of 10 years.
Non-compete rights
The non-compete rights are valued at cost and are amortised over the period of 5 years.
Amortisation is calculated to write off the costs in equal annual installments, over the duration of
the contract period.
Brand
The value ofbrand name is recognized following acquisition. Brand names acquired over the past
period (together with other assets, in complex transaction), has been valued to assess the actual
incremental value it provides to the Group’s operations and its value has been based on estimated
income. The brand name is being amortised over 5 years.
Investment in subsidiaries
Subsidiaries are all those entities over which the Group has control, i.e., when the Group is
exposed to, or has rights to, variable returnsfrom its involvement with the entity and has the ability
to affect those returns through its power to direct the activities of the entity.
Investment in subsidiaries are initially recognised at cost, being the fair value of the consideration
given, including acquisition costs and are subsequently carried at cost less accumulated
impairment losses, if any.
Dividend income is recognised when the Group’s right to receive payment is established.
Impairment of non-financial assets
Assets that have anindefinite useful life are not subject to amortisationand are tested annually
for impairment. Assets that that are subject to amortisation or depreciation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognisedfor theamountby whichthe carrying amount
by which the carrying amount of the asset exceeds its recoverable amount. The recoverable
amount is the higher of the fair value of the assetless costs to sell and the value in use.
Impairment losses areimmediately recognised as an expense inthe income statement. For the
purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows.
Financial instruments
Financial assets and financial liabilities are recognisedwhen the Group becomes a partyto the
contractual provisions of the instrument. Financial assetsand financial liabilities are initially
recognised at their fair value plus directly attributable transaction costs for all financial assets or
financial liabilities not classified at fair value through profit or loss.
Financial assets and financial liabilities are offset, and the net amount presented in the statement
of financial position when the Group has a legally enforceable right to set off the recognised
amounts and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
29
Financial instruments - continued
Financial assets are derecognised when the contractual rights to the cash flows from the financial
assets expire or when the entity transfers the financial asset and the transfer qualifies for
derecognition.
Financial liabilities arederecognised when they are extinguished. This occurswhen the obligation
specified in the contract is discharged, cancelled or expires.
An equity instrument is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities, Equity instruments are recorded at the proceeds received, net
of direct issue costs.
Trade and other receivables
Trade receivables are classified with current assets and are stated attheir nominal value.
Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when
there is objective evidence that the asset is impaired.
Bank borrowings
Subsequent to initial recognition, interest-bearing bank loans are measured at amortised cost
using the effective interest method, Bank loans are Carried at face value due to their market rate
of interest.
Other borrowings
Subsequent to initial recognition, other borrowings are measured at amortised cost using the
effective interest method unless the effect of discounting is immaterial.
Trade and other payables
Trade payables are classified with current liabilities and are stated at their nominal value unless
the effect of discounting is material, in which case trade payables are measured at amortised cost
using the effective interest method.
Ordinary Shares issued by the Company
Ordinary shares issued by the Company are classified as equity instruments. Incremental costs
directly attributable to the issue of new shares are shown in equity asa deduction, net of tax, from
the proceeds.
Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at face value. For the
purposes of the cash flow statement, cash and cash equivalentscomprise cash in hand and
deposits held atcall with banks, net of bank overdrafts. In the statement of financial position, bank
overdrafts are included as borrowings under current liabilities.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
30
Leases
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset
is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or before the commencement date net of any lease
incentives received,any initial direct costsincurred, and, except where included in the cost of
inventories, an estimate of costs expectedto be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.
Right-of-use assetsare depreciated on a straight-line basis over the unexpired period of the lease
or the estimated useful lifeof the asset,whicheveristhe shorter. Where the Group expects to
obtain ownershipof the leased asset at theend of the leaseterm, the depreciation is over its
estimated useful life. Right-of use assets are subject to impairmentor adjusted for any
remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for
short-term leases with terms of 12 months or less and leases of low-value assets. Lease
payments on these assets are expensed to profit or loss as incurred.
Lease liability
A lease liability is recognised at the commencement date of a lease. The lease liability is initially
recognised at the present value of the lease payments to be made over the term of the lease,
discounted using the interest rate implicit in the lease or, if that rate cannot bereadily determined,
the consolidated entity'sincremental borrowing rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease payments that depend on an index or a rate,
amounts expected to be paid under residualvalue guarantees, exercise priceof apurchase option
when the exercise of the option is reasonably certain to occur, and any anticipated termination
penalties. The variable lease payments that do not depend on an index or a rate are expensed in
the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease payments arising from
a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option
and termination penalties. When a lease liability is remeasured, an adjustment is made tothe
corresponding right-of use asset, or to profit or loss if the carrying amount ofthe right-of-use asset
is fully written down.
Related parties
Related parties are those persons or bodies of persons having relationships with the Group as
defined in IAS 24.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
31
2. SIGNIFICANT JUDGEMENTS AND CRITICAL ESTIMATION UNCERTAINTIES
The preparation of financial statements in conformity with IFRS asadopted by the EUrequires
management to make judgements, estimatesand assumptions that affect the application of
policies andreported amounts of assets and liabilities, income and expenses. The Directorshave
considered the development, selection and disclosureof the Group’s critical accounting policies
and estimates and the application of these policies and estimates. Estimates and judgements are
continually evaluated and are based on historical and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
In the opinion of the Directors, except for the mattersdisclosed below, the accounting estimates
and judgements made in the course of preparing these financial statements are not difficult,
subjective or complex to a degree which would warrant their disclosure in terms of the
requirements of IAS 1.
Fair value of investment properties
Determining the fair value of investment property requires an estimation of the value in use of the
cash-generating units. The value in use calculation requires the Group to estimate the future cash
flows expected to arise from the cash-generating unit and a suitable discount ratein order to
calculate present value. Under the currentcircumstances of market disruption caused by the
COVID-19 Pandemic, to assess the value of its investment property on this basis, the Group has
used its last full year of audited figures under “normaloperation”, as no reliable data wasavailable
in the last year of operation. As fair value of the Investment property the Group uses a
conservative approach and is established based onthe adjustedvaluations of various
independent valuers prepared based on assessment of the ‘’normal market conditions’’, The fair
value of Investment property of the Group at the end of the reporting period was€59,991,129
(2020: €53,659,412) as detailed in Note 14. It isimportant tonote, that in line with IFRS principles,
the above value does not recognise actual market value of the various property-related contracts
(e.g. pre-sale agreements) of the Group, which due to the nature of the Group’s operations might
be significant.Such assets are only reflectedat cost. This incremental value is conservatively left
out of the book value of the Group, and only recognised following final acquisition of the asset.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the continuing impacts that the Coronavirus
(COVID-19)pandemic hashad,ormay have, onthe Group based on experience from the past
period and known information. This consideration extends tothe nature ofthe services offered,
customers and staffing and indirect impacts to the operations potentially arising from
administrative or regulatory factors. Other thanasaddressed inNote 26, theDirectorshave
assessed that following the end of the reporting period there is neither anysignificant impact upon
thefinancial statements noranysignificant uncertainties with respect toeventsorconditions
which may impact the Company unfavourably asat the reporting date or subsequent period as a
result ofthe Coronavirus (COVID-19) pandemic.
3. REVENUE
2021
2020
€
€
Rental income
1,037,090
549,380
Management fees
15,440
-
Other revenue
10,583
-
1,063,113
549,380
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
32
4. OTHER OPERATING INCOME
2021
2020
€
€
Compensation for loss in contract
-
186,624
Miscellaneous income
-
15,922
Gain on sale of investment in subsidiary
174,483
-
174,483
202,546
5. INVESTMENT INCOME/(LOSS)
2021
2020
€
€
Increase/(decrease) in fair value of investment property
6,342,211
(209,852)
The €6,342,211 relates to an increase in fair value of investment property in 2021. The €209,852
relates to a shift due to the cancellation of rental and managed units’ contracts, not accounting
for new additions in 2020 and no changes in valuation of Investment Property, inaccordance with
the applied recommendations of the Chamber of Architects (Kamra tal-Periti) in Malta, Royal
Institution of Chartered Surveyors (RICS) and The European Group of Valuers’ Associations
(TEGova).
6. INTEREST INCOME
2021
2020
€
€
Loan interest
3,299
1,553
7. FINANCE COSTS
2021
2020
€
€
Interest on bank loan
1,256
7,895
Interest on convertible loans
36,575
465
Interest on third party borrowing
79,534
80,000
Interest on related party borrowings
-
3,238
Interest on lease liabilities
20,921
21,721
138,286
113,319
8. EXPENSES BY NATURE
2021
2020
€
€
Direct costs
509,058
169,895
Staff costs (i)
195,922
119,076
Auditors’ remuneration
15,950
7,050
Depreciation and amortisation
300,894
280,729
Other administrative expenses
341,193
267,596
1,363,017
844,346
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
33
8.EXPENSES BY NATURE - continued
(i) Staff costs
2021
2020
€
€
Salaries and wages
207,636
115,024
Social security and maternity fund contributions
10,702
17,878
Outsourced personnel
32,151
-
Capitalised salaries
(54,567)
(13,826)
195,922
119,076
Average number of employees
15
8
During the year 2021, staff salariesof €54,567have been capitalised to investment property (2021:
€13,826).
9. INCOME TAX EXPENSE/(CREDIT)
Tax is provided for at the rate of 35% for Group profits, except for certain bank interest receivable
which is taxed at 15% and sale of property taxed at 5%.
2021
2020
€
€
Current year tax
Income tax on the taxable income for the year
-
-
Deferred tax
Movement in deferred tax asset (Note 10)
(191,368)
40,791
Movement in deferred tax liability (Note 11)
312,352
(112,652)
Movement in revaluation reserve
12,251
12,252
Movement in general reserve
157,391
-
Other taxes
-
7,575
290,626
(52,034)
Tax applying the statutorydomestic income tax rate and the income taxexpense/(credit) for the
year are reconciled as follows:
2021
2020
€
€
Profit/(loss) on ordinary activities before tax
6,081,803
(414,038)
Theoretical tax expense/(credit)at 35%
2,128,631
(144,913)
Tax effect of:
Provisions disallowable for tax purposes
381,769
92,879
Movement in the effect of fair value gain on investment property
(2,219,774)
-
290,626
(52,034)
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
34
10. DEFERRED TAX ASSET
The asset for deferred tax is analysed as follows:
2021
2020
€
€
Excess of capital allowances over depreciation
(2,217)
(39,725)
Unabsorbed tax losses and capital allowances
212,147
58,287
Deferred tax asset
209,930
18,562
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to set
off the recognised amounts and intends either to settle on a net basis or to realise the asset and
settle the liability simultaneously.
Provision was made for deferred tax for all temporary differences, except of fair value adjustment
for investment property, on the basis of the liability method using a principal tax rate of 35%.The
deferred tax asset movement is made up of:
2021
2020
€
€
Balance at beginning of the year
18,562
59,353
Movement in the excess of capital allowances over depreciation
37,508
(43,957)
Movement in unabsorbed tax losses and capital allowances
153,860
3,166
Balance at end of year
209,930
18,562
11. DEFERRED TAX LIABILITY
2021
2020
€
€
Effect of fair value movement on investment property
3,889,901
3,577,549
Deferred tax liability
3,889,901
3,577,549
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to set
off the recognised amounts and intends either to settle on a net basis or to realise the asset and
settle the liability simultaneously.
Provision was made for deferred tax for all temporary differences on the basis of theliability
method using a principal tax rate at 35%/5%.
2021
2020
€
€
Balance at beginning of the year
3,577,549
3,690,201
Movement of investment property fair value
312,352
(112,652)
Balance at end of year
3,889,901
3,577,549
The Group is calculating itsdeferred tax liability on investment property at 5%, being the rate
applied if it had to sell its properties within 5 years of acquisition.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
35
12. INTANGIBLE ASSETS
Licences
Non-
compete
rights
Brand
Total
€
€
€
€
Cost
At 31 December 2019
349
-
-
349
At 31 December 2020
349
-
-
349
At 1 January 2020
349
-
-
349
Additions
-
150,000
41,000
191,000
At 31 December 2021
349
150,000
41,000
191,349
Provision for diminutionvalue
At 1 January 2020
207
-
-
207
Amortisation for the year
28
-
-
28
At 31 December 2020
235
-
-
235
At 1 January 2021
235
-
-
235
Amortisation for the year
35
30,000
8,200
38,235
At 31 December 2021
270
30,000
8,200
38,470
Net book value
At 31 December 2020
114
-
-
114
At 31 December 2021
79
120,000
32,800
152,879
13. PROPERTY, PLANT AND EQUIPMENT
Right-of-
use
assets
Building
improve-
ments
Office
equipment
Furniture
and
fixtures
Other
assets
Total
€
€
€
€
€
€
Cost
At 1 January 2020
987,481
100,806
19,346
38,285
178,911
1,324,829
Additions
-
-
17,481
-
2,000
19,481
At 31 December 2020
987,481
100,806
36,827
38,285
180,911
1,344,310
At 1 January 2021
987,481
100,806
36,827
38,285
180,911
1,344,310
Additions
-
-
-
4,819
39,045
43,864
At 31 December 2021
987,481
100,806
36,827
43,104
219,956
1,388,174
Depreciation
At 1 January 2020
175,549
14,790
15,482
21,750
119,130
346,701
Charge for the year
43,889
2,016
5,236
1,306
33,847
86,294
At 31 December 2020
219,438
16,806
20,718
23,056
152,977
432,995
At 1 January 2021
219,438
16,806
20,718
23,056
152,977
432,995
Charge for the year
43,888
2,016
5,921
1,256
24,454
77,535
At 31 December 2021
263,326
18,822
26,639
24,312
177,431
510,530
Net book value
At 31 December 2020
768,043
84,000
16,109
15,229
27,934
911,315
At 31 December 2021
724,155
81,984
10,188
18,792
42,525
877,644
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
36
14. INVESTMENT PROPERTIES
Right-of-use
Assets
Investment
properties
Total
€
€
€
Fair Value
At 1 January 2020
2,367,834
51,830,354
54,198,188
Additions
622,231
622,231
Disposals
(237,451)
(78,819)
(316,270)
At 31 December 2020
2,130,383
52,373,766
54,504,149
At 1 January 2021
2,130,383
52,373,766
54,504,149
Additions
1,000
173,630
174,630
Fair value movement
15,884
6,326,327
6,342,211
At 31 December 2021
2,147,267
58,873,723
61,020,990
Provision
At 1 January 2020
77,439
586,672
664,111
Depreciation
11,032
183,377
194,409
Disposals
-
(13,783)
(13,783)
At 31 December 2020
88,471
756,266
844,737
At 1 January 2021
88,471
756,266
844,737
Depreciation
9,770
175,354
185,124
At 31 December 2021
98,241
931,620
1,029,861
Net book value
At 31 December 2020
2,130,383
51,529,029
53,659,412
At 31 December 2021
2,137,498
57,853,631
59,991,129
Depreciation relates to the depreciation of improvements and furniture currently included in
Investment Property. Thedepreciable amount is allocated on a systematic basis to each
accounting period over its useful life.
Fair value of investment property
Year 2020 has presented unprecedented challenges to the global economy and several industries
were heavily affected by the Covid-19 pandemic and related government restrictions and
regulations introduced. The Covid-19 pandemic has had a negative effect on the tourism markets
globally, and as such local markets were also impacted.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
37
14.INVESTMENT PROPERTIES - continued
Along the obvious global impacts, the Maltese economy was also affected by the local
Government-imposed restrictions on free movement of people arriving to the country, and
mandatory closing of commercial establishments or significant limitations in the normal course of
operation of such establishments, which havecreated unique operational circumstancesand
major business disruption, resulting in severe extremes of performance indicators in 2020, which
continued in 2021. These developments impacted the property market too, where the number of
property transactions during the yearshave been impacted andalso theway and process such
transactions have been executed, comparing to previousyears, but the actual transactions prices
have not lowered/changed significantly. Buyers’ interest in certain property segments has resulted
in a price increase, which is driven by the fear from increasing inflation. Obviously, due to the
continued market disruption and global developments related to Covid-19,the revenues
generated by rented/leased properties were lower during the year.While these impacts are
considered temporary and short-term by both market players and regulators,the speed of
recovery remains a question. As a result ofall this, the usual propertyvaluation mechanisms, and
techniques, such as comparative prices or DCF-based valuations are challenging andin certain
cases even impossible. Relevant transactional evidence mightshowsignificantdeviance from
long-term trends, or might not exist, or its basis of agreement could reflect the one-off impacts of
special unusual conditions. Rental/lease revenues have also been impacted bythe Covid-19
situation and aresimilarly difficult to assessand considered generally inadequate for long-term
judgements. In 2020 and 2021, they showed extreme deviance, and high volatility, reflecting the
operational conditions. Despite the short-term negative impacts, long-term trends are considered
favourable. In VBL’s experience, the actual (i.e. closed transactions) Valletta property market
prices are reflecting the general inflationary fears of the local and international markets, while ask
prices have continued to increase. It can be concluded that, for the period since the beginning of
the Covid-19 pandemic, property marketshave increased uncertainty in valuation approaches,
and in some cases, valuations are occasionally accompanied by a declaration of material
valuation uncertainty.
These market developments and valuationdifficulties were recognised bythe relevant
professional bodies - suchas Kamara tal-Periti (KtP)in Malta, Royal Institution of Chartered
Surveyors (RICS) and The European Group of Valuers’ Associations (TEGova) (see also below)
and all major professional associations issued relevant guidelines for handlingthe valuation
challenges under the COVID-19situation. These recommendations and guidelines generally
propose a similar approach tothe valuation issues and suggest close monitoring of the market
developments and revaluation of the assets when conditions are more stable and markets return
to normal.
The Group also assumes that when it identifies, acquires, or constructs an investment property,
along the lines of its investment strategy,the fair value of the investment propertyis not always
reliably determinable on a continuing basis and therefore in such cases it values the investment
property at cost until its fair value becomes reliably determinable, or until certain critical
parameters aremet (e.g. clean ownership title, fully paid purchase price and related costs,
established ownership of a development-size property, etc.). As thisprocess is often lengthy
(might take even several years), the recognition of value at cost in the Annual Financial
Statements represents a conservative but fair pictureof the asset value, at that stage of the
acquisition process.
The book value of the property held by the Group hasbeen increasedby €6,342,211 toreflect
the established fair value as at 31 December 2021,reflecting several different factors and
adjustments to the individual property values, including the downward adjustment to certain
property categories resulting from the developments of the past two years, and reflecting
improvements and additions to the portfolio during the year, resulting from the acquisition and
development activity of the Group.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
38
14.INVESTMENT PROPERTIES - continued
It is important to note that the Group has not recognised any value over the costs incurred for its
contracts and promises of sale of property which havenot yet been fully acquired, but binding
contracts are existing. This incremental property value secured by contracts is considered
significant and is conservatively left out of the book value of the Group.
Valuation process
As is usuallydone by the Company, on an annual basis in normal circumstances, during the
reporting year it has carried out a full propertyvaluation exercise, performed byan independent
professional valuer to assess the market value of its assets, whether these are owned, rented, or
managed. The value accepted by the Directors, for the last two categories, is based on the long-
term contractual rights and the assumption of “normal market operations”, which is considered to
be the case for the long-term operation of the finished and operated assets. Notes related to
short-term market disruption and impact of COVID-19pandemic in the hospitality and retail
segments have been also disclosed in this report. This full Valuation Report was completed in
July 2021, as part of the annual asset valuation exercise and also in lieu of the requirements for
listing on the MSE, which the Companyhas successfully completed in October 2021. VBL has
then, completed a full valuation process of all its owned and operated real estateassets, assessed
in part or in full byEdwin Mintoff Architects, as independent asset valuers, to establish a reference
for the Group’s owned and operated properties’ estimated market and investment values of year
2021. A summary of the full valuation report has been published by the Company as part of the
Prospectus of the Company dates 23
rd
July 2021, in accordance with the Capital Markets Rules
and other relevant requirements related to the listing of the Company's shares to the Malta Stock
Exchange. On this basis, the Board of Directors has made its own assessment which has
considered the overall valuation values of the independent reports but was also assessing the
various specific developments of the ongoing development projects, as well as the investment
value potential for the VBL asset portfolio.The assessment of the fair market value of the Group’s
asset portfolio performed by the Board of Directors at the end of the reporting period is considered
conservative and is based on careful assessment of the available independent valuation reports,
market information and consideration of the actual market conditions and forecasts.
Valuation techniques
The Capital Markets Rules require that the valuation be made on basis of an open market value
for existing use or, if necessary, depreciated replacement cost subject to adequate profitability.
An open market value represents an opinion of the best price for which the sale of an interest in
property would have been completed unconditionally for a cash consideration on the date of
valuation. However, RICS Red Book(6"" Edition), amendments of 2009, defines Open Market
Value as no longer relevant and instead adopts Market Value as defined in IVS. While the Malta
Financial Services Authority requires valuers to distinguish between Existing Use Value basis and
Open Market Value basis, the Group, considering that the LR 7.4.4 requires Open Market Value
to be for the current use and not for the highest and best use, orderly liquidation or forced sale,
for the sake of this valuation, considers these to be indistinguishable and equal, and are
collectively referred to as the Market Value of the asset.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
39
14. INVESTMENT PROPERTIES - continued
Valuation techniques - continued
It should be noted that the actual price (liquidation value) which the Group might obtain, if forced
to sell all properties in the short term, might be lower than the estimated figures accepted as fair
market value of the specific assets, as this is usual in similar cases. In addition, there are several
risks and discount factors associated specifically with the nature and operation of VBL’s strategy
and its line of business, which were taken into account in establishing the fair market value of the
properties and related assets reflected in the Directors’ assessment, namely:
-Ability to match the forecasted schedule and development budgets;
-Securing the necessaryfinance for all development related expenses (beyond the currently
available funds) for all the projects within a short time frame might prove difficult;
-Securing the necessary development and operational permits within a relatively short time
frame for all the planned development projectsmight not materialiseintime, resulting in
delays or undue strain on resources and finance and overall increased development costs
and delayed proceeds from operation;
-Finding prospective buyers or partners or operators for some or all the projects within a short
time frame might not be possible at the forecasted terms and conditions;
-The development and execution risks required to make some of these properties operational
(particularly the Silver Horse Block Phase 2 project) are considered high;
-The impact of changing general market conditions and regulatory risks associated with the
operation of finished and managed properties is a risk itself.
Directors’ assessment
As ofthe end of year 2021, the Directors’ Valuation Report of VBL represents conservatively
updated values for each of the assets of the Group covered by the full Valuation Report released
in July 2021, but adjustedfor thespecific developments of some properties which are under
development orchange in legal status (contracts), asalsorecommended by the Guidance Note
of KtP and as usual under the standard industrypractices. The Directors’valuation has not
reflected any additional value of pre-sale agreements, or newmanagement contracts signed in
2021.
Nevertheless, based on independent experts’ opinions and other available information, the
Directors are of the opinion that the Valletta property market is significantly less vulnerable to the
short-term volatility than other property marketsin Malta and there is no material adverse change
experienced in market values as of the date of this report.
Given the above, as of 31 December 2021, the Directors approved a total value of the properties
of the Group amounting to €59,991,129. It is to be noted that the Directors accepted the
recommendations of the independent valuers’ report for reductions of the fair market value in
specific assets of the Group’s owned properties(e.g. leased commercial properties), as a result
of the market impact of the ongoing Covid-19 pandemic. The Directors have also confirmed that
the long-term operational expectations remain unchanged in termsof projected long-term
achievable revenues and operational profitability from operation or sale of the fully developed
assets of the Company. The Group uses the application of IFRS 16 which permitsthe recognition
of leased properties in the statement of financial position. Also, the Group considers managed
properties at the same approach as leased, based on the long-term contractswith ownersand
de facto control of these properties.
It important to note, that in line with the IFRS recommendations, the Group has not recognised
any value over the costs incurred for its contracts andpromises of sale ofproperty which have
not yet been acquired, but binding contracts for the sellers are existing. This incremental value is
conservatively left out of the book value of the Group.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
40
15. INVESTMENT IN SUBSIDIARIES
Subsidiary
Registered address
Class of shares
% of ownership
2021
2020
VREM Ltd
54, Marsamxett Road
Ordinary Shares
100
100
Valletta VLT 1853
Malta
Silver Horse
Block Ltd
54, Marsamxett Road
Ordinary Shares
100
100
Block Ltd
Valletta VLT 1853
Malta
VREM Ltdwas established in 2016 to be the hospitality operator of the Group and manages all
the short-let and long-let propertiesof the Group on retail market. VREM financial results and
financial position are consolidated in these financial statements.
Silver Horse Block Ltd was established in2017 as an SPVfordevelopment projects, and currently
holds no material assets, did not commence anyactivityand isinactive. The Group recognises
the investment in Silver Horse Black Ltd at costof €1,200(immaterial for the groupand hence,
not consolidated).
InJanuary 2021, the Company has acquired 100% of the shares ofCasa Rooms Ltd., a major
property management company, with significant number of assets under management in Valletta
and the rest of Malta.This subsidiary was subsequently disposed on 16 December 2021.
16. TRADE AND OTHER RECEIVABLES
2021
2020
€
€
Trade receivables (i)
70,819
18,888
VAT refundable
82,452
70,141
Other taxes refundable
968
-
Related party receivables
-
50,529
Other receivables
1,286,947
232,653
Prepayments and accrued income
140,593
72,806
1,581,779
445,017
(i) Trade receivables are non-interest bearing and are generally on a 30-day term.
17. CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the statement of cash flows comprisethe following
statement of financial position amounts:
2021
2020
€
€
Cash at bank and in hand
1,947,792
1,711,683
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
41
18. SHARE CAPITAL AND RESERVES
2021
2020
€
€
Share Capital
Authorised:
330,000,000 Ordinary shares of €0.20 each
66,000,000
66,000,000
66,000,000
66,000,000
Issued and fully paid:
244,471,217 Ordinary shares in 2021 and
230,000,000 Ordinary shares in 2020 of €0.20 each
48,894,243
46,000,000
48,894,243
46,000,000
The Company has raised itscapital through an Initial Public Offering and listing onthe Malta Stock
Exchange, and the issuedshare capital currently consists of 244,471,217Ordinary shares of
€0.20 each. The authorised share capital currently consists of 330,000,000 Ordinary sharesof
€0.20 each.
As of 31 December 2021, the market price of the ordinary shares on the Malta Stock Exchange
was €0.30 each.
The Ordinary shares of the Company participate equally in any payment of dividends or any
distribution and return of capital and carry identical rights and voting rights, as specified in the
Memorandum and Articles of Association the Company.
The following describes the nature and purpose of each reserve within equity:
Share premium
The amount subscribed for share capital in excess of normal value.
General reserve
The amount ofthe issued share capital reduction after the
restructuring of the Group completed in 2019,retained in the
Company, not distributed to the shareholders.
Other reserves
Non-distributable reserves for fair value revaluationontheoffice
building.
Retained earnings
All other net gains and losses and transactions with owners.
The Directors propose a final dividend of €160,000 for the year 2021. During the year ended 31
December 2021, dividends amounting to €150,000 (2020: €150,000) were paid.
19.TRADE AND OTHER PAYABLES
2021
2020
€
€
Non-current
Amounts due to third parties (i)
46,385
76,385
Lease liabilities
299,791
312,334
346,176
388,719
Current
Trade payables (ii)
223,727
151,792
Accruals and other payables
312,304
137,941
Amounts due to third parties (i)
30,000
30,000
Lease liabilities
11,443
9,534
577,474
329,267
(i) The amounts due to third parties represent balances due arising from the purchase of
properties. The balance is payable €30,000 per annum.
(ii) Trade payables are non-interest bearing and are normally on 30-day term.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
42
20. BORROWINGS
2021
2020
€
€
Non-current
CLA related borrowings
-
1,600,000
Bank borrowings
1,297,204
1,700,000
Third party borrowings
-
2,000,000
1,297,204
5,300,000
Current
Bank borrowings
328,699
-
Third party borrowings
2,000,000
-
Bank borrowings
2,328,699
-
CLA related borrowings
These amounts related to Convertible Loan Agreements and bore interest at a rate between 1
and 5% p.a.
Third party borrowings
Third-party borrowings bear an interest rate of 4%p.a., are fully secured by a special hypothec
over property owned by the Group and are repayable in 2022.
Bank borrowings
The Group has obtained a bank loan under the MDB-guarantee scheme provided to support
businesses following the Covid-19 outbreak, which has a subsidised interest rate, in compliance
with the MDB loan programme and relevant EU regulations, which results in effective interest rate
significantly below market rate.
21.RELATED PARTY TRANSACTIONS
The Company has related party relationships with some of its investors or companies over which
theDirectorsexercisesignificant influence. Transactions arecarried out with related parties on
a regular basis and in the ordinary course of the business.
In the opinion of the Directors, there is no ultimatecontrolling partyof the group, since no
shareholder of VBL Plc has more than 25% of the voting rights.
During the year ended 31 December 2021, transactions related to VBLM Limited are includedin
the related party transactions detailed below.
During the course of the year, the Group entered into transactions with related parties as set
below.
2021
2020
€
€
Rental Revenue Gold Landlord
31,341
27,812
Office Rental- LSO Services
20,000
20,000
Directors travel reimbursement
1,625
15,000
Property management payments
8,420
5,374
Interest on borrowings
36,575
3,148
Management fees expenses
45,624
87,500
Capitalized property development expenses
316,876
262,500
The outstanding amounts arising from transactions with the related parties are disclosed in Note
16.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
43
22.EARNINGS PER SHARE
Earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue during the year.
2021
2020
Profit/(loss) attributable to equity holders of the Company
€5,791,177
(€362,004)
Weighted average number of shares in issue
233,171,774
128,848,187
Basic and diluted earnings per share
€0.0248
- €0.0028
The Company has no instruments or arrangementswhich give rise to potential ordinary shares
and accordingly diluted earnings per share is equivalent to basic earnings per share.
23. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks such as market risk, credit risk,
liquidity risk and interest rate risk. The Group's overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group's financial performance.
Market risk
Market riskis the risk that changes in market prices (e.g. foreign exchange rates, interest rates
and equity prices) will affect the Group’s income or the value of its holdings of financial
instruments. The Group’s currency of operation is Euro, all revenues and payables are defined,
contracted and accounted in Euro.
The Group is exposed to changes in equity prices.
Price risk
The Group is exposed to price risk in respect of its listed equity securities, which is a relevant risk
from the point of view of the Group’sshareholders, holding the listed securities (not a Group-
specific risk to the Group itself).
The investments in listed equity securities are considered as long-term strategic investments. The
Directors manage price risk by continuous monitoring of the prices. The price risk is significantly
dependent on the equity trading trends, actual trading volumes and other specifics of theequity
market at the Malta Stock Exchange (MSE).
The following table illustrates the sensitivity to a reasonably possible change in price risk based
on the average volatility observed during the year.
Change
Increase/
(decrease)
in profit
for the year
Increase/
(decrease)
in equity
%
€
€
2021
+€0.02
-
€4,889,424
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
44
23.FINANCIAL RISK MANAGEMENT - continued
Credit risk
Financial assets which potentially subject the Group to concentrations of credit risk consist
principally of cashat bankand receivables.The Group's cash is placed with quality financial
institutions as well as it limits the amount of credit exposure with any one financial institution, to
the extent possible. The Group has appropriate policies to ensure that sales of properties and
provision of services are made to customers with appropriate credit history, or where this not
possible or practical, alternative risk mitigation practices are applied. In this respect, credit risk
with respect to receivables is monitored continuously and the Group places aspecific provision
on any debt on which there is doubt of recoverability. Bad debts are therefore negligible, and, in
this respect, the Group has no significant concentration of credit risk.The Group’s calculated
expected credit losses is immaterial.
Aging
2021
Financial Assets
Loan Receivable
June-2024
107,470
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall
due. The Group'sapproach to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity by maintaining adequate reserves and banking facilities to meet its abilities
when due, under both normal and stressedconditions. The Directors do not foresee and are
unaware of any circumstances whereby the Group would not honour its commitment.
Within one
year
One to five
years
More than five
years
€
€
€
2021
Bank borrowings
328,699
1,297,204
-
Third party borrowings
2,000,000
-
-
2,328,699
1,297,204
-
2020
CLA related borrowings
-
1,600,000
-
Bank borrowings
-
1,700,000
-
Third party borrowings
-
2,000,000
-
-
5,300,000
-
Prudent liquidity risk managementimplies maintaining sufficient cashand cashequivalents, the
availability of funding through anadequateamount of credit facilities and the ability to close out
market positions.
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern and to maximise the return to stakeholders through the optimisation ofthe debt and
equity balance.
The capital structure of the Group consists mainly of cash and cash equivalents as disclosed in
Note 17, items presented within equity in the statement of financial position and borrowings as
disclosed in Note 20.
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
45
23.FINANCIAL RISK MANAGEMENT - continued
Capital risk management - continued
The Group's Directors manage theGroup’s capital structure and make adjustments to it,in the
light of changes in economic conditions. The capital structure isreviewed onanongoing basis.
Based on recommendations of the Directors, the Group balances its overall capital structure
through the payments of dividends, new share issues as well as theissue of new debt or the
redemption of existing debt. The Group monitors capital using a gearing ratio. This ratio is
calculated as total net borrowings divided by total capital. The Group considers total capital to be
equity and total net borrowings.
The Group's overall strategy remains unchanged from the prior year.
24.RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details the changes in the Group’s liabilities arising from financing activities,
including both cash and non-cash changes. Liabilities arising from financing activities are those
for which cash flowswere,or future cash flows will be, classified in the Group’s consolidated
statement of cash flows as cash flows from financing activities.
Cash flows from
financing activities
Non-cash transactions
Balance at
01.01.2020
Advances/
(repayment)
Interest
paid
Interest
expense
Conversion
to ordinary
shares
Balance at
31.12.2020
CLA related
borrowings
(Note 20)
818,000
782,000
(465)
465
-
1,600,000
Bank borrowings
(Note 20)
-
1,700,000
(7,985)
7,985
-
1,700,000
Third party
borrowings
(Note 20)
2,080,000
(80,000)
(80,000)
80,000
-
2,000,000
2,898,000
2,402,000
(88,450)
88,450
-
5,300,000
Cash flows from
financing activities
Non-cash transactions
Balance at
01.01.2021
Advances/
(repayment)
Interest
paid
Interest
expense
Conversion
to ordinary
shares
Balance at
31.12.2021
CLA related
borrowings
(Note 20)
1,600,000
215,000
-
36,575
(1,851,575)
-
Bank borrowings
(Note 20)
1,700,000
(74,097)
(1,256)
1,256
-
1,625,903
Third party
borrowings
(Note 20)
2,000,000
-
(79,534)
79,534
-
2,000,000
5,300,000
140,903
(80,790)
117,365
(1,851,575)
3,625,903
VBL Plc
Annual Report and Consolidated Financial Statements - 31 December 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
46
25. FAIR VALUE ESTIMATION
The nominalvalues lessestimated credit adjustments of cash and cash equivalents, trade
receivables and payables are assumed to approximate their fair values, otherwise, these have
been adjusted toapproximate their fair values. Fair value of investment property is disclosed in
Note 14.
26. MATERIAL EFFECTS ON BUSINESS OF CORONA VIRUS
The outbreak ofCorona Virus Pandemic (Covid-19) is affecting most sectors of the global
economy and has caused significant disturbance in the established market practices and
operations across the economy over the past two years. However, thelong-term size and impact
of these events on the Group are expected to be minimal due to the stable asset base and strong
equity position of the Group. In 2021, the Group has once again suffered repeated business
disruptions as result of administrative restrictionsand unusual market volatility, buthas taken
appropriate measures and has maintained stable liquidity levels and secured solid operations
throughout the year. Currently, the Directors are of the opinion that that the Group will not be
facing a going concern issue, even if the speed of recovery from the pandemic is slower than
previously envisioned. In the meantime, the Directors have taken a number ofprecautionary
measures, including but not limited to, temporary reductionof operational expenses and
temporary delay of plannedmajor capital investments. VBL has responded to thechallengesof
the market, by flexibly adjusting its operational and business model to the needs and conditions
and taking advantage of the newly emerged market opportunities (e.g. the launch of the new hotel
management operations in 2021 focusing on third party collective accommodation management).
During 2021, some of the Group’s assets have been operated as long-term rentals, thus reducing
the short-term adverse effects of the COVID-19 situation on the business. VBL Group of
companies operates a “cash pool”, to secureefficient cash management and optimise liquidity
under the current unexpected circumstances. Moreover, the relatively low level of VBL Group
total liabilities, strong equity base and no significant debt compared to its financial position volume
provide for a better than average resistance to internal and external industrial challenges and also
some new opportunities, which the VBL has already started to explore.
27. CAPITAL COMMITMENTS
The Company’s mid-term projected capital commitments are detailed in the Prospectus dated 23
July 2021, under the chapter of Prospective Financial Information, and reflects the Directors
expectation with respect to the future operation of the Group for the 5-year financial period. The
basis of preparation and key underlying assumptions are also detailed in the said Prospectus.
28. COMPARATIVE INFORMATION
Certain amounts in the comparative information have been reclassified to conform with the current
year presentation.
47
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of VBL Plc
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the accompanying consolidated financial statements of VBL Plc (“the Company”) and
its subsidiaries (together, “the Group”) set out on pages 20 -46, which comprise the consolidated
statement of financial position as at 31 December 2021, the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of significant accounting
policies.
In our opinion, the consolidated financial statements give a true and fair view of the financial position of
the Group asat 31 December 2021, and ofthe Group’s financial performance and cash flows for the
year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by
the European Union (EU), and have been properly prepared in accordance with the requirements of the
Companies Act (Cap. 386).
Our opinion is consistent with our additional report to the Audit Committee in accordance with the
provision of Article 11 of the EU Regulation No. 537/2014 on specific requirements regarding statutory
audits of public-interest entities.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities underthose standardsare further described in the Auditors’ Responsibilities for the Audit
of the Financial Statementssection of our report. We are independent of the Group in accordance with
the ethical requirements of both the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA
Code) and the AccountancyProfession (Code ofEthics for Warrant Holders) Directive issued in terms
of the Accountancy Profession Act (Cap. 281) in Malta that are relevant to our audit of the financial
statements, and we have fulfilled our other ethical responsibilitiesin accordance with the IESBA Code
and the Code of Ethics for Warrant Holders in Malta. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, we declare that we have not provided non-audit services to the
Group.
48
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Consolidated Financial Statements - continued
Other Matter
The consolidated financial statements of the Group for the year ended 31 December 2020 were audited
by another auditor who expressed an unmodified opinion on 23 March 2021.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement were of most significance in our
audit ofthe financial statements of the current period. These matters were addressed in the context of
our audit of the financial statements asa whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Valuation of Investment Properties
The Group’s investment properties are carried at fair value of € 59,991,129 as at 31 December 2021.
Further detail is included in Note 14 to these consolidated financial statements.
The existence of significant estimates used to arrive atthe fair value of the property, could result in a
potential material misstatement by virtue ofthe inherent limitations underlying the estimations.
Consequently, specific audit focus and attention wasgiven to this area. Thevaluation of the property
was performed by management on the basis of valuation reports prepared by an independent qualified
valuer.
Audit Response
We understood and evaluated the assessment performed by management on the basis of the
revaluations performed bya professional qualified valuer to ascertain the fair value of the investment
properties.
Our audit procedures included amongst others:
Considering the objectivity, independence, competence and capabilities of the external valuer.
Reviewing the methodology used by the external valuer and management to estimate the value of
the property.
Assessing and challenging the significant unobservable inputs and assumptions that were applied
in the valuations made.
Assessing the reasonableness of the valuations byreference to market evidence of transactions
for similar properties.
We concluded, based on our audit work, that the outcome of the assessment is reasonable.
In addition, we reviewed the adequacy of disclosures made in Note 14 to these consolidated financial
statements and concluded that these are adequate.
49
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Consolidated Financial Statements - continued
Other Information
The directorsare responsible for the other information. The other information comprisesthe general
information and the directors’ report. Our opinion on the financial statements doesnot cover the other
information, including the directors’ report.
In connection with our audit of the financial statements, our responsibility isto read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we have obtained
prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Under Article 179(3) of the Companies Act (Cap. 386), we are required to consider whether the
information given in the directors’ reportis compliant with thedisclosure requirements of Article 177 of
the same Act.
Based on the work we have performed, in our opinion:
• the directors’ report has been prepared in accordance with the Companies Act (Cap. 386);
• the information given in the directors’ report for the financial year on which the financial statements
are had been prepared is consistent with the financial statements; and
• in light of our knowledge and understanding of the Company and its environmentobtained in the
course of the audit, we have not identified material misstatements in the directors’ report.
Responsibilities of the Directors for the Consolidated Financial Statements
The directors are responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with IFRS as adoptedbytheEUand the requirementsofthe Companies
Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the
Group’s ability to continueas 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 to cease operations, or have no realistic alternative but to do so.
The directorshave delegated the responsibility for overseeing the Group's financial reporting process
to the Audit Committee.
50
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Consolidated Financial Statements - continued
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
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. Misstatementscan arise from fraud or error and are consideredmaterial if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, asfraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to designaudit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditors’ report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statementsrepresentthe
underlying transactions and events in a manner that achieves fair presentation.
51
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements - continued
Auditors’ Responsibilities for the Audit of the Financial Statements - continued
We communicate with the directors 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 the directors with a statement that we have complied with relevantethical requirements
regarding independence, and communicate with them all relationships and other mattersthat may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated withthe directors, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditors’reportunless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a mattershould not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on the Statementof Compliance with the Code ofPrinciples of Good Corporate
Governance
The Capital MarketsRules issued by the Malta Financial Services Authority require the directors to
prepare and include in their Annual Report a Statement of Compliance providing an explanation of the
extent to whichthey have adopted the Code of Principles of Good Corporate Governance andthe
effective measures that they have taken to ensure compliance throughout the accounting period with
those Principles. The Capital MarketsRules also require the auditor to include a report on the Statement
of Compliance prepared by the directors.
We read the Statement of Compliance and consider the implications for our report if we become aware
of anyapparent misstatements or material inconsistencies with the consolidated financial statements
included in the Annual Report. Our responsibilities do not extend to considering whether this statement
is consistent with any 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 onthe
effectiveness of the Company's corporate governance procedures or its risk and control procedures. In
our opinion, the Statement of Compliance set out on pages 10 – 17 has been properly prepared in
accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services
Authority.
52
INDEPENDENT AUDITORS’ REPORT - continued
Report on Other Legal and Regulatory Requirements - continued
Report on the Remuneration Statement
The Capital Markets Rules issued by the Malta Financial ServicesAuthority requires the directors to
prepare a remuneration statement. We are required to consider whether the information that should be
provided under the Remuneration Statement has been included.
In our opinion, the Remuneration Statement has beenproperly prepared in accordance with the
requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
Report oncompliance 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 undertakena reasonable assurance engagement in accordancewith therequirements of
Directive 6 issued bythe 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 VBL plc for the year ended 31 December 2021, entirely
prepared in a single electronic reporting format.
Responsibilities of the directors
The directors areresponsible for thepreparationof the annual financial report, including the
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.
Auditors’ responsibilities
Our responsibility is to obtain reasonable assurance about whether the annual financial report, including
the consolidated financial statementsand the relevant electronic tagging therein complyin all material
respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable
assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
• Obtaining an understanding of the entity's financial reporting process, including the preparation of
the annual financial report, in accordance with the requirements of the ESEF RTS.
• Obtaining the annual financial report and performing validationsto determine whether the annual
financial report hasbeenprepared in accordance with the requirementsof the technical
specifications of the ESEF RTS.
• Examiningthe information in the annual financial report to determine whetherall the required
taggings therein have been applied and whether, in all material respects, they are in accordance
with the requirements of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
53
INDEPENDENT AUDITORS’ REPORT - continued
Report oncompliance with the requirements of the European Single Electronic Format
Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6 –
continued
Opinion
In our opinion, the annual financial report for the year ended 31 December 2021 has been prepared, in
all material respects, in accordance with the requirements of the ESEF RTS.
Other matters on which we are required to report by exception
Under the Companies Act (Cap. 386), we are required to report to you if, in our opinion:
• proper accounting records have not been kept; or
• proper returns have not been received from branches we have not visited; or
• the consolidated financial statements are not in agreement with the accounting records and returns;
or
• we were unable to obtain all the information and explanations which, to the best of our knowledge
and belief, are necessary for the purposes of our audit.
We also have responsibilitiesunder the Capital Markets Rules to review the statement made by the
directors that the business is a going concern together with supporting assumptions or qualifications as
necessary
We have nothing to report in this regard.
Appointment
We were first appointedto act as auditors ofthe Group bythe shareholders of the Company on
14 December 2021 for the financial year ended 31 December 2021.
RSM Malta
Certified Public Accountants
Mdina Road
Zebbug ZBG 9015
Malta
Conrad Borg
Principal
24 March 2022
