Company Registration No. C 56012
VBL PLC
Annual Report
and
Financial Statements
31 December 2022
VBL Plc
Annual Report and Financial Statements - 31 December 2022
1
CONTENTS
Pages
General information 2
Directors’ report 3 - 8
Remuneration report and statement of the directors 9 - 11
Statement by the Directors on Compliance with the Code of Principles of
Good Corporate Governance 12 - 18
Statement of comprehensive income 19
Statement of financial position 20
Statement of changes in equity 21
Statement of cash flows 22
Notes to the financial statements 23 - 46
Independent auditors’ report 47 - 53
VBL Plc
Annual Report and Financial Statements - 31 December 2022
2
GENERAL INFORMATION
Registration
VBL Plc is registered in Malta as a public limited liability company under the Companies Act (Cap. 386). The
company’s registration number is C 56012. Since last publication there were no changes to the name of the
reporting entity.
Place of domiciliation
Malta
Principal place of business
Malta
Directors
Dr. Andrei Imbroll
Dr. Geza Szephalmi
Mr. Julian Tzvetkov
Mr. Arthur Haze
Mr. David Galea Souchet
Ms. Isabella Vella
Dr. Csaba Bato (retired on 20 April 2022)
Company secretaries
Dr. Joe Borg Bartolo and Dr. Mikiel Calleja (appointed on 1 March 2022)
Dr. David Meli (resigned on 1 March 2022)
Registered office
54,
Marsamxett Road
Valletta VLT 1852
Malta
Principal 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 Financial Statements - 31 December 2022
3
DIRECTORS’ REPORT
The Directors present their annual report and the audited financial statements of VBL Plc (“the Company”) for the
year ended 31 December 2022.
Principal activities
The Company is involved in the full process of real estate acquisitions, integrated real estate development,
property management, operations, utilisation (rental) and disposal of properties. The Company’s main market of
operation is Valletta, which is a UNESCO world heritage site, and is a protected, unique and fortified city, the
political and administrative centre of Malta.
Over the course of its ten years of operations, the Company 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 Company has a successful track record of identifying,
acquiring, developing and managing real estate all around Valletta.
The Company’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, liveable community areas and supporting 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’s existent operational structures
and highly skilled management team, while providing high value-added services and overall solution to
owners of such assets.
The Company has developed fully integrated skills and management structure with large range of in-house
capabilities in each of the principal activities undertaken by the Company, spanning the asset acquisition, asset
development, management and operation activities. The Company has established a vertically integrated
business process, based on a very well defined and focused target market, where it 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 to reduce 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 2022
The financial performance of the Company has remained stable and has shown fast recovery from the previous
years, which were significantly impacted by the implications of the uncertainty of COVID-19 restrictions and
limitations. In the first 4 months of the reporting year, the operations were still impacted by restricted travel and
other government restrictions impacting operations, however, once these were removed, a fast recovery in all
areas of operations was realised. During the reporting period, the Company managed to increase significantly its
rental revenues compared to the previous year, whilst both the operational profitability and EBITDA volume have
also shown significant growth. The Company’s operations were still dependent on overall market trends, such as
airline seat capacity limitations, consumer prices, services inflation and labour market supply challenges.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
4
DIRECTORS’ REPORT - continued
Review of Business Development and Financial Position of the financial year 2022 - continued
During the reporting period, the Company has remained successful in terms of expanding on the Valletta property
market, adding new properties to its portfolio and continuing with the execution of the development projects.
In the reporting period, the Company has concluded and obtained ownership and possession of a new landmark
asset, the Coliseum Shopping Arcade (also known as “the Coliseum") together with overlaying property, which
has resulted in significant increase in the value of Investment Property.
In the last quarter of 2022, the Company has obtained a long-term bank financing facility, structured to meet the
development financing needs and tailored to the Company’s cash-flow generation ability, and thus allowing the
Company to enter its most intense development phase since inception.
The core activity and the most significant value driver for the Company is real estate acquisitions and
development, which accounts for the most significant value changes in the Company’s accounts. The Company
therefore - similarly to its peer companies - assesses and reflects the investment income under the total revenues,
which in the reporting period has reached €6,874,185 (2021: €6,342,211), representing a 8% growth.
Overall, the financial performance of the Company resulted in total revenues of €672,392 (2021: €413,904) and
an EBITDA of €7,059,687 (2021: €6,584,997). Profit after tax on the Company’s activities for the year amounted
to €6,283,437 (2021: €5,846,256).
ACTUAL
ACTUAL
VARIANCE
Jan - Dec
Jan - Dec
2022 ACTUAL VS 2021
ACTUAL
2022
2021
€
€
%
Revenue
672,392
413,904
62%
Investment Income
6,874,185
6,342,211
8%
Cost of Sales
(10,023)
(18,601)
(46%)
Gross Profit
7,536,554
6,737,514
12%
GOP Margin
99%
99%
Other Operating Income
35,730
211,730
(83%)
Total Operating Costs
(512,597)
(364,247)
41%
EBITDA
7,059,687
6,584,997
7%
EBITDA Margin
94%
97%
EBITDA (Operational)
185,502
242,786
(24%)
EBITDA Margin (Operational)
2%
4%
Notes:
(1) Operational EBITDA and Operational EBITDA margin are calculated without investment income.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
5
DIRECTORS’ REPORT - continued
Dividends and Reserves
A final dividend of €180,000 is proposed by the Directors for the year 2022, which corresponds to 0.0726 Euro
Cents per share dividend. A total dividend of €160,000 was distributed to the shareholders for the year ended 31
December 2021 (corresponding to 0.065 Euro Cents per share).
Listed Company Status and New Share Issue
VBL Plc., as the principal company of the VBL Group, is a listed entity at the Malta Stock Exchange (“MSE”). In
the reporting year, there was a new share issue of 3,571,428 newly issued shares allocated for non-cash
consideration related to the acquisition of an investment property.
As at 31 December 2022, 100% of the Company’s equity and issued share capital is listed on the MSE, with total
number of shares in issue standing at 248,042,645. All shares of the Company are ordinary shares, with nominal
value of €0.20 cents each, and have the same shareholders’ rights.
The authorised share capital of the Company remains unchanged at €66,000,000.
Events After the End of the Reporting Period
There were no specific materially important events affecting the Company’s long-term outlooks which occurred
since the end of the accounting year. However, the long-term effects of the current global economic situation, war
in Ukraine, post-pandemic impacts and related local and global restrictions might have a continuing impact on
the VBL Group’s business recovery to pre-pandemic levels in the course of year 2023.
Future Developments
The Company plans to continue its dynamic growth by implementing its announced development programme of
its owned assets that have full development permits in hand, as well as improve further the utilisation of developed
assets in line with its long-term business strategy and financial plans.
Going Concern Statement Pursuant to Capital Markets Rule 5.62
Currently, the Directors are of the opinion that the global and local market trends deliver a turbulent short and
mid-term forecast. The Company’s financial performance will benefit from its existing inflation-resistant portfolio
of prime real estate assets, located in the historic city of Valletta, which is providing excellent positions for
delivering a solid long-term growth. The Company is on the path of quick recovery from the short-term impact of
the pandemic related restrictions and consecutive operational interruptions, while it is assumed that the general
economic environment will stabilise in mid to long term and the Company’s results will keep on following this
trend.
The currently ongoing development projects are expected to continue as communicated, subject to the current
known market and economic factors remaining constant or improved.
The current relatively low level of the Company’s total debt compared to the Company’s total assets and the
existence of unencumbered properties provide for a better than average resistance to internal and external
industrial or financial challenges, while the increasing inflationary and interest rate pressure is mostly affecting
companies with a less strong balance sheet and less resistant asset base.
The current economic landscape and market conditions present new opportunities, which the VBL Group plans
to continue to explore, to further enhance its core product together with maintaining its very clear strategy and
unique market focus.
Directors expect that the Company will not face a going concern issue due to current market conditions on the
local or international landscape.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
6
DIRECTORS’ REPORT - continued
Principal Risks and Uncertainties
The key risk factors the Company is facing have been categorised under five main categories, according to
whether the risk factors relate to:
(i) risks relating to the acquisition and disposal of immovable property;
(ii) risks relating to construction and development of immovable property;
(iii) risks relating to management and operation of immovable property;
(iv) risks relating to the change of interest rates and the conditions of financing deriving from the overall global
economy, local financial market, European inflationary environment, and Euro-based interest rates; and
(v) risks relating to the general business and operations of the Company. The latter category of risk factors
is intended to encapsulate those risk factors that concern the day-to-day operations and activities of the
Company, 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 of the concentration of the Company's immovable properties in Valletta,
it is appropriate to identify those specific risks that 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 that are identifiable at the date hereof have been included within the main
categories referred to above respectively.
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 financial results, financial condition, operational performance, business
and/or trading prospects. The risks and uncertainties discussed above are those identified as such 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 faces or 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 immaterial or 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.
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
Ms. Isabella Vella, Non-Executive Director, Chairperson of the Audit Committee
Mr. Arthur Haze, Non-Executive Director, Member of the Audit Committee
Mr. David Galea Souchet, Non-Executive Director, Member of the Audit Committee
Dr. Csaba Bato, formerly a Non-Executive Director and Chairperson of the Audit Committee has retired from this
position at the annual general meeting, held on the 20 April 2022.
Under the provisions of the Company’s Memorandum and Articles of Association, the appointment of the Directors
happens at the Company’s general meeting.
Auditors
A proposal will be submitted to the Annual General Meeting to re-appoint RSM Malta as Auditor to the Company
for year 2023 and to set their remuneration for the period.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
7
DIRECTORS’ REPORT - continued
Statement of directors’ responsibilities
The Companies Act (Cap. 386), enacted in Malta, requires the Directors to prepare financial statements for each
financial year which give a true and fair view of the financial position of the Company 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 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 to enable the Directors to ensure that the financial statements
comply with the Companies Act (Cap. 386). This responsibility includes designing, implementing and 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 also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Shareholding Structure of the Company Pursuant to Capital Markets Rule 5.64
The issued share capital of the Company as at the date of this report is 248,042,645 ordinary shares with a
nominal value of €0.20 per 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 Financial Statements - 31 December 2022
8
DIRECTORS’ REPORT - continued
Powers of the Board Members Pursuant to Capital Markets 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 Capital Markets Rule 5.70.1
The Company is party to a number of material value contracts, including contracts entered into in connection with
the acquisition or disposal of real estate assets, the renovation or development of real estate assets, and the
subsequent lease and operating agreements in connection with real estate 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 been published in Section 4.5 of the Registration Document (Prospectus), published by the
Company on the 23 July 2021.
Company Secretary and Registered Office of the Company Pursuant to Capital Markets Rule 5.70.2
Dr. Joe Borg Bartolo and Dr. Mikiel Calleja
54, Marsamxett Road, Valletta VLT 1852 Malta
Statement of Responsibility Pursuant to Capital Markets 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 amended from 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 Company and that this report includes
a fair review of the development and performance of the business and position of the Company, together with a
description of the principal risks and uncertainties that it faces.
Explanatory Note to the Special Business Proposed to the Annual General Meeting of the Company
Proposed Ordinary Resolution – Special Business - Indemnification of the Directors and Senior
Management
Text of the Ordinary Resolution:
“It is hereby approved to indemnify the members of the Board of Directors and Senior Management of the
Company from liabilities and expenses to which any such person(s) may become a party as a result of such
individual’s acts carried out for and on behalf of the Company, or any of its associated companies, subsidiaries
or affiliates, limitedly in so far as such acts are carried 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 the Company. 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.
Signed on behalf of the Company’s Board of Directors on 21 April 2023 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 Financial Statements.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
9
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS
In line with the Capital Markets Rules (“Rules”), as set out in Chapter 12 of the Rules, the Company is subject to
drawing up a Remuneration Report in line with the requirements as detailed in the Appendix 12.1 of the Chapter
12, providing an overview of the remuneration to the directors of the Company.
The Company is also subject to the Code of Principles (the “Code”) forming part of the Capital Markets Rules,
and in terms of the respective Rule (8.A.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 of the effective Remuneration Policy of the Company (“Remuneration Policy”), and the principles
presented in the Company’s IPO Listing Prospectus dated 23rd July 2021, and in alignment and compliance with
the MFSA Guidelines
1
, 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 its size and that of its operations,
clients, the structure of its internal organisation, and the nature, scope and complexity of the activities of the
Company, the Company 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. This Remuneration Policy is reviewed regularly or as required and any material amendments thereto
shall be submitted to the General Meeting as per the relevant regulations. In line with the relevant Rules , the
existing Remuneration Policy of the Company has been presented to the Shareholders, and approved on the 20
April 2022. In the reporting period there were no changes to the Remuneration Policy.
In accordance with the Code provisions 8.A.4.7, the following contracts are in place with each Director, with the
following terms, based on which the received fixed remuneration of each director is as per below:
Name of Director
Contract type
Signed / Valid
Annual fee in 2022
Dr. Andrei Imbroll
Director Service Agreement
14 Jan, 2021
Until the Director is in office
€10,000 gross
Dr. Geza Szephalmi
Director Service Agreement
14 Jan, 2021
Until the Director is in office
€10,000 gross
Mr. Julian Tzvetkov
Director Service Agreement
14 Jan, 2021
Until the Director is in office
€10,000 gross
Mr. Arthur Haze
Director Service Agreement
14 Jan, 2021
Until the Director is in office
€10,000 gross
Mr. David Galea Souchet
Director Service Agreement
14 Jan, 2021
Until the Director is in office
€10,000 gross
Ms. Isabella Vella
Director Service Agreement
14 Jan, 2021
Until the Director is in office
€10,000 gross
The foregoing amounts are all fixed remuneration. There are no variable remuneration considerations nor share
options. Remuneration paid to Directors is not performance-related.
Remuneration related to the Directors, in accordance with the Remuneration Policy
Directors’ Fee
The resolution by the Shareholders of the Company at the Annual General Meeting held on 20 April 2022,
approved the aggregate total annual remuneration of the Board of Directors, set the directors’ fee for one year at
a total of €70,000.
1
https://www.mfsa.mt/wp-content/uploads/2019/02/Code-of-Principles-of-Good-Corporate-Governance-for-
Listed-Entities.pdf, Code provisions 8.A.2
VBL Plc
Annual Report and Financial Statements - 31 December 2022
10
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS - continued
Remuneration related to the Directors, in accordance with the Remuneration Policy - continued
Directors’ Fee - continued
The Company being listed in October 2021, the reporting period ending 31 December 2022 is the first full year
since listing. The directors’ fee is a fixed fee and there has been no change in the individual directors’
remuneration with regards to the fixed fee in the reporting period. There are no variable remuneration
considerations nor share options payable under the directors’ agreements executed.
The total directors’ fees paid during the financial year 2022 to the Board of Directors was €65,000. According to
the existing Policy, the Directors are not entitled to other remuneration or benefits related to their directors’
position within the Company from any parent or sister company in their capacity as directors. Under the disclosure
requirements pursuant to Capital Market Rules 8.A.5., it is hereby reported that the Directors of the Company
have not been granted any shares or shares options, pension benefits, termination payments, annual bonus
schemes and similar, from the Company in the reporting period.
After an assessment of the market conditions and the particularities of the Company, the Directors have
concluded that the remuneration of the Board of Directors of 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
and in compliance with the Remuneration Policy with no deviations from the procedure for the implementation of
the Remuneration Policy. The Company considers that the total remuneration paid to Directors contributes
towards the long-term performance of the Company as it incentivises and promotes their commitment towards
achieving the best interests of the Company.
Since the current period is the first reporting period following the adoption of the Remuneration Policy by the
Company’s annual general meeting in 2022, the comparative analysis required by Appendix 12.2 of the Capital
Markets Rules paragraph (b) cannot be presented to the shareholders yet.
In accordance with Capital Markets Rules, Appendix 12.1 it is hereby disclosed that in the reporting period:
- No remuneration is received by the directors from any undertaking belonging to the same group
(parent and subsidiary)
- No share options were granted or offered to directors and CEO or other executives of the Company;
- No variable remuneration is part of the directors’ remuneration and there is no possibility to reclaim
variable remuneration (if any);
- No deviations from the procedure for the implementation of the Remuneration Policy are relevant in
the reporting period.
Executive Management and Services
Executive management services are provided to the Company under a management agreement, with a dedicated
management company, which remains unchanged to the previous reporting period and has been introduced in
detail in the Listing Prospectus dated 27
th
July 2021 and further disclosed below.
Since its foundation, the VBL Group has been managed by a dedicated management company, VBLM Ltd
(“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 by VBLM to the VBL Group is based on the existing and established
practice dating back 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 Financial Statements - 31 December 2022
11
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS - continued
Executive Management and Services - continued
The remuneration payable by the Company to VBLM under the Management Services Agreement is comprised
of a combination of fixed 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 Management Services Agreement, evaluation and the payable Variable and
Performance fees is monitored and controlled by the non-Executive Directors of the Company.
The Management Services Agreement is aimed at ensuring that the senior Executive Management team, which
has steered VBL in attaining successful growth and development since the inception of the VBL Group a decade
ago, 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 fully committed to deliver the strategic objectives of the Company in line with announced
growth and development plans. This element of continuity is considered by the Board of Directors to be in the
best interest of the Company and the VBL 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
risks associated with key personnel and senior management. The current Management Services Agreement is
effective as from 1st January 2021 and is valid for period of three years. This agreement may be extended
thereafter, subject to agreement between the parties.
For the purposes of the Remuneration Statement and in accordance with the Capital Market Rule provision 8.A.5
and for the purposes of provisions 8.4.8 and 8.4.9., in accordance with the disclosures made in the Prospectus,
and based on the Management Services Agreement, during 2022, the total emoluments paid by the Company
were a fixed fee paid to VBLM for the executive, operational and strategic management and other services
provided to the Company of €400,000 exclusive of VAT. No variable fee has been paid in the reporting period,
nor any shares or shares options granted or due, no pension benefits, no other termination payments or similar
are due from the Company in the reporting period.
Other than the directors’ fee and the management services fee, the Company does not provide any other pay,
remuneration or alike to its directors for their services. Any changes to the terms of the Management Services
Agreement are subject to the vetting and approval of the Audit Committee and the non-executive directors of the
Company.
In terms of Chapter 12, the contents of the remuneration report have been checked by the Auditors of the
Company.
Signed on behalf of the Company’s Board of Directors on 21 April 2023 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 Financial Statements.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
12
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF 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 Rules issued by the Malta
Financial Services Authority to 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
consider that they have 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 of Chief Executive Officer, as envisaged in Code
Provision 2;
3. The Board is originally 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 executive and non-
executives in the composition of the Board of Directors. Following the annual general meeting the number
of directors was six, with one non-executive director not continuing in office;
4. Members of the Board of Directors are all seasoned professionals, 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 development and seeks to ensure that there are
adequate schemes in place for professional development of management and employees in accordance
with Code Provision 6;
7. Of the members of the Board of Directors, the Audit Committee has been set up, previously consisting of
four (4) members. In the reporting year, following the annual general meeting, the Audit Committee members
were three (3). This body 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, as all directors are enumerated equally for their directorship,
and relies on the constant scrutiny of the Board itself, the Company’s shareholders, the market and the rules
by which the Company is regulated as a listed company. The Board shall retain this matter under review
over the coming years;
9. The Nomination Committee has been appointed by the Board of Directors with majority of non-executive
directors, as members. The Nomination Committee 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, health and environment
responsibility arena and seeks to ensure that in its development projects and ongoing operations are
respectful. 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 to the Company’s statutory obligations, the annual report and financial statements, declaration of
dividends, election of Directors and appointment of auditors and authorisation of the Directors to set the
auditors’ fees are proposed and approved at the Company’s annual general meeting. The Board of Directors
properly serves 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 Financial Statements - 31 December 2022
13
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Specific Corporate Governance Principles
The Company, its Directors, its Management and employees believe that good corporate governance is a key
element for business success and supporting the integrity and efficiency of 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 delivering the
Company’s planned 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 to ensure the openness and willingness to establish and follow 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 key in allowing the 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 ethical behavior in all dealings is fundamental to the 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. As a 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 Board of Directors and management are given authority, as defined in the Articles
and relevant regulations, to act on behalf 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 good governance 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 and Environmental 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 and environmental responsibility in the day-
to-day management 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 not less than 4 (four) and not more than 8
(eight) directors. Since the last Annual General Meeting, there have been six directors, of which three are non-
executive, all of whom are entrusted with the overall direction, administration and management of the Company.
Each Director declares that he/she undertakes to
• maintain in all circumstances his/her independence of analysis, decision and action;
• not to seek or accept any unreasonable advantages that could be considered as compromising his/her
independence; and
• clearly express his/her opposition in the event that he/she finds that a decision of the Board may harm
the Company.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
14
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
The Board - continued
As of 31st December 2022, the Board of Directors of the Company consists of the following persons:
Name
Designation
Andrei Imbroll
Chairman and Executive Director
Geza Szephalmi
Chief Executive Officer and Executive Director
Julian Tzvetkov
Chief Financial Officer and Executive Director
Artur Haze
Non-executive Director, member of the Audit Committee
David Galea Souchet
Independent, Non-executive Director, member of the
Audit Committee
Isabella Vella
Independent, Non-executive Director, member of the
Audit Committee, Chairperson
Dr Csaba Bato acted as a non-executive director of the Company as well as Chairperson of the Audit Committee
until 20 April 2022, when he had retired and ceased to be a member of the Board of Directors.
At the end of the reporting period, the Company Secretaries appointed are Dr Joe Borg Bartolo and Dr Mikiel
Calleja.
Board Meetings
During the year 2022, there have been 5 (five) Board meetings held and several decision by written resolution.
The number of Board members has reduced in number from seven to six as of 20 April 2022.
The number of Board meetings attended by Directors for the year under review is as follows:
Members Attended
Andrei Imbroll 5
Geza Szephalmi 5
Julian Tzvetkov 5
Artur Haze 5
David Galea Souchet 5
Isabella Vella 5
Csaba Bato 2 (retired from Board on 20 April 2022)
Information and Professional Development
The Company ensures that it provides its Directors with 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 grant a period of at least 14 days to Shareholders holding in 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.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
15
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Appointment and Removal of Directors - continued
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 general meeting 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 from time 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 Directors may 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.
Evaluation of the Board’s Performance
The Board undertakes an annual evaluation of its performance and of its committees. The performance evaluation
of each Board member shall be done by the Board of Directors, excluding the Board member being evaluated.
The Chairman takes action on the result of the performance evaluation process in order to ascertain the strengths
and to 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, and any changes thereto, is determined by the
general meeting of the Company.
At the time of the current reporting year under review, the Directors are each entitled to a gross annual
remuneration of €10,000 from the date of the appointment.
Executive Directors
The Executive Directors have representation and execution rights on behalf of the Company to the extent
permitted and as defined by the Memorandum of Association of the Company. In this respect, and in line with the
good governance standards and internal control procedures implemented by the Company, the Memorandum of
Association ties the legal representation and the signatory rights of the Company to predefined monetary
threshold, with enhanced safeguards applicable to transactions of higher monetary 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 may be instituted by the Company without the approval of the Board of Directors of the Company.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
16
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Chief Executive Officer
In terms of article 65 of the Articles of Association, the Directors may from time to time appoint any person to the
office of Chief Executive Officer (CEO) of the Company for such period and on such terms as they deem fit. In
the current reporting period, Dr Geza Szephalmi continued 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, as it has been detailed in this report and 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 of the
Company.
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;
ii. been associated in any form 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;
iii. been the subject of any official public incrimination and/or sanctions by statutory or regulatory authorities
(including designated professional bodies);
iv. been disqualified by a court from acting as a member of the administrative, management or supervisory
bodies of a company or from acting 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 reporting processes, financial policies and internal control structure. The first Audit Committee of the
Company was established by the Annual General Meeting of the Shareholders held on 23 March 2021, and the
members have been elected among the Board members, as defined in the Articles and relevant regulation. The
Committee oversees the conduct of the annual audit process and acts to facilitate communication between the
Board, the Management and the Company’s appointed auditors.
The Audit Committee is composed of three members – Ms Isabella Vella (Chairperson), Mr Artur Haze, and Mr
David Galea Souchet. Mr. Artur Haze and Mr. David Galea Souchet 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 compliance with laws and regulations. When the Audit Committee’s monitoring
and review activities reveal cause for concern or scope for improvement, it shall make recommendations to the
Board on the action needed to address the issue or make improvements.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
17
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Audit Committee - continued
The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the best interests
of the Company. Its primary objective is to assist the Board in dealing with issues of risk, control and governance
and in reviewing the Company’s reporting processes, financial policies and internal control structure. The Audit
Committee also oversees the conduct of the annual financial audit and facilitates communication between the
Company’s Board, the management and appointed auditors.
The Audit Committee’s main role and responsibilities are:
a. to review procedures and assess the effectiveness of the internal control systems, including financial
reporting;
b. to assist the Board in monitoring the integrity of the financial statements, the internal control structures,
the financial reporting processes and financial policies of the Company;
c. to make recommendations to the Board in relation to the appointment of the external auditor and to
approve the remuneration and terms of engagement of the external auditor following appointment by the
shareholders in general meeting;
d. to monitor and review the external audit functions, including the external auditor`s independence,
objectivity and effectiveness;
e. to monitor and review the internal procedures and to monitor these on a regular basis;
f. to establish and maintain access between the internal and external auditors of the Company and to
ensure that this is open and constructive;
g. to review and challenge where necessary, the actions and judgements of management, in relation to the
interim (if applicable) and annual financial statements before submission to the Board, focusing
particularly on:
i. critical accounting policies and practices and any changes in them;
ii. decisions requiring a major element of judgement;
iii. the extent to which the financial statements are affected by any unusual transactions in the
year and how they are disclosed;
iv. the clarity of disclosures and compliance with International Financial Reporting Standards;
v. significant adjustments resulting from the audit;
vi. compliance with stock exchange (as applicable) and other legal requirements; and
vii. reviewing the Company’s statement on Corporate Governance prior to endorsement by the
Board;
h. to gain an understanding of whether significant internal control recommendations made by internal and
external auditors have been implemented by management;
i. to establish and exercise oversight upon the internal audit function of the Company, and to review its
plans, activities, staffing and organisational structure;
j. to monitor the statutory audit of the annual and consolidated accounts;
k. to discuss Company policies with respect to risk assessment and risk management, review contingent
liabilities and risks that may be material to the Company; and
l. to consider other matters that are within the general scope of the Committee that are referred to it by the
Board of Directors.
During 2022, the Audit Committee met 7 times in person or via video conference, out which on 3 meetings the
Company’s appointed auditors were present and attended the meetings.
The number of Audit Committee meetings attended by Members for the year under review is as follows:
Members Attended
Artur Haze 7
David Galea Souchet 7
Isabella Vella 7
Csaba Bato 4 (retired from Board on 20 April 2022)
VBL Plc
Annual Report and Financial Statements - 31 December 2022
18
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Nomination Committee
The Board of Directors has formed a nomination committee, which was functional in the reporting period. The
forming and operation of the Nomination Committee was in compliance with the principle of the Code. The
proposals of the nomination committee were put forward for decisions of the Board of Directors and presented to
the shareholders, accordingly.
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 from time to time.
The EMC is the main operational body of the Company, ensuring smooth and efficient day-to-day operations and
control, in line with the strategic operational decisions of the Board. The EMC is responsible to, and reports to
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 all 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 company announcements, the Company seeks to keep an updated
and informative website and to address any information needs of the shareholders, in various ways.
The Company has announced a Shareholders’ Loyalty Programme which is regularly updated and communicated
with the Shareholders.
Since the Company was listed on the Malta Stock Exchange in 2021, the required financial reports and company
announcements are regularly issued and published through the Malta Stock Exchange, and are simultaneously
published on the Investors section of the Company’s website.
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 the related 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 on behalf of the Company’s Board of Directors on 21 April 2023 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 Financial Statements.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
19
STATEMENT OF COMPREHENSIVE INCOME
2022
2021
Notes
€
€
Revenue
3
672,392
413,904
Investment income
5
6,874,185
6,342,211
Cost of sales
8
(10,023)
(18,601)
Gross profit
7,536,554
6,737,514
Other operating income
4
35,730
211,730
Administrative expenses
8
(512,597)
(364,247)
Earnings before interest, tax, depreciation and amortisation
7,059,687
6,584,997
Depreciation and amortisation
8
(268,091)
(283,441)
Operating income
6,791,596
6,301,556
Interest income
6
7,084
3,299
Impairment on inventory
8
(65,618)
-
Finance costs
7
(190,446)
(138,286)
Profit before income tax
6,542,616
6,166,569
Income tax expense
9
(259,179)
(320,313)
Profit for the year
6,283,437
5,846,256
Total comprehensive income for the year
6,283,437
5,846,256
Earnings per share
25
0.0256
0.0251
VBL Plc
Annual Report and Financial Statements - 31 December 2022
20
STATEMENT OF FINANCIAL POSITION
2022
2021
Notes
€
€
ASSETS
Non-current assets
Intangible assets
12
114,644
152,879
Property, plant and equipment
13
832,938
857,010
Investment properties
14
73,663,640
59,991,129
Investment in subsidiaries
15
11,200
11,200
Loans receivable
113,711
107,470
Deferred tax assets
10
213,367
176,523
74,949,500
61,296,211
Current assets
Non-current assets held for sale
16
510,000
-
Inventory
17
270,000
-
Current tax receivable
14,000
-
Trade and other receivables
18
296,073
1,548,461
Cash and cash equivalents
19
1,295,516
1,921,704
2,385,589
3,470,165
TOTAL ASSETS
77,335,089
64,766,376
EQUITY AND LIABILITIES
Capital and reserves
Share capital
20
49,608,529
48,894,243
Share premium
20
1,017,446
731,733
Other reserves
20
352,646
375,397
General reserves
20
1,218
1,218
Retained earnings
20
12,642,038
6,483,600
TOTAL EQUITY
63,621,877
56,486,191
Non-current liabilities
Borrowings
21
7,877,586
1,297,204
Lease liabilities
22
286,253
299,791
Deferred tax liability
11
4,165,673
3,889,901
Trade and other payables
23
88,775
46,385
12,418,287
5,533,281
Current liabilities
Borrowings
21
337,671
2,328,699
Lease liabilities
22
13,538
11,443
Trade and other payables
23
943,716
406,762
1,294,925
2,746,904
TOTAL LIABILITIES
13,713,212
8,280,185
TOTAL EQUITY AND LIABILITIES
77,335,089
64,766,376
Signed on behalf of the Company’s Board of Directors on 21 April 2023 by Julian Tzvetkov (Director) and
Dr. Geza Szephalmi (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in
conjunction with the Annual Report and Financial Statements.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
21
STATEMENT OF CHANGES IN EQUITY
Share
Share
Other
General
Retained
Total
capital
premium
reserves
reserves
earnings
€
€
€
€
€
€
Balance at 1 January 2021
46,000,000
802
398,148
1,218
752,343
47,152,511
Total comprehensive income
- Profit for the year
-
-
-
-
5,846,256
5,846,256
-
-
-
-
5,846,256
5,846,256
Transactions with owners
- Issuance of shares
1,475,640
297,959
-
-
-
1,773,599
- Conversion of borrowings to shares
1,418,603
432,972
-
-
-
1,851,575
- Dividends declared during the period (Note 20)
-
-
-
-
(150,000)
(150,000)
2,894,243
730,931
-
-
(150,000)
3,475,174
Transfer from revaluation reserve to retained
earnings, net of deferred tax
-
-
(22,751)
-
35,001
12,250
Balance at 31 December 2021
48,894,243
731,733
375,397
1,218
6,483,600
56,486,191
Balance at 1 January 2022
48,894,243
731,733
375,397
1,218
6,483,600
56,486,191
Total comprehensive income
- Profit for the year
-
-
-
-
6,283,437
6,283,437
-
-
-
-
6,283,437
6,283,437
Transactions with owners
- Issuance of shares
714,286
285,713
-
-
-
999,999
- Dividends declared during the period (Note 20)
-
-
-
-
(160,000)
(160,000)
714,286
285,713
-
-
(160,000)
839,999
Transfer from revaluation reserve to retained
earnings, net of deferred tax
-
-
(22,751)
-
35,001
12,250
Balance at 31 December 2022
49,608,529
1,017,446
352,646
1,218
12,642,038
63,621,877
VBL Plc
Annual Report and Financial Statements - 31 December 2022
22
STATEMENT OF CASH FLOWS
2022
2021
Notes
€
€
Cash flows from operating activities
Profit before tax
6,542,616
6,166,569
Depreciation and amortisation
8
268,091
283,441
Provision for expected credit losses
18
39,055
-
Investment income
5
(6,874,185)
(6,342,211)
Impairment in inventory
8
65,618
-
Gain on disposal of subsidiary
4
-
(174,483)
Interest income
6
(7,084)
(3,299)
Interest expense
7
190,446
138,286
Cash generated before working capital changes
224,557
68,303
Increase in inventories
(270,000)
-
Decrease/(increase) in trade and other receivables
51,782
(1,135,778)
Increase in trade and other payables
579,344
99,667
Net cash from/(used in) operating activities
585,683
(967,808)
Cash flows from investing activities
Purchase of intangible assets
12
-
(150,000)
Purchase of property, plant and equipment
13
(3,250)
(21,619)
Proceeds from sale of investment
-
200,000
Proceeds from sale of investment property
14
850,000
-
Acquisition of investment properties
14
(6,278,086)
(174,630)
Acquisition of a subsidiary
-
(66,517)
Movement in loans receivable
-
(104,171)
Net cash used in from investing activities
(5,431,336)
(316,937)
Cash flows from financing activities
Net proceeds from issuance of share capital
-
1,616,208
Interest paid
(170,214)
(80,790)
Withholding tax paid
9
(8,000)
-
Dividends paid
(160,000)
(150,000)
Movement in borrowings
4,589,354
140,903
Payment of lease liabilities
22
(31,675)
(31,555)
Net cash from financing activities
4,219,465
1,494,766
Net (decrease)/increase in cash and cash equivalents
(626,188)
210,021
Cash and cash equivalents at beginning of year
1,921,704
1,711,683
Cash and cash equivalents at end of year
17
1,295,516
1,921,704
Significant non-cash transactions
During the year ended 31 December 2022, the Company issued 3,571,428 €0.20 par value ordinary shares at €0.28 each
amounting to €999,999 as non-cash consideration for the acquisition of an investment property.
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 Financial Statements - 31 December 2022
23
NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These financial statements are prepared under the historical cost convention, except for revaluation of
investment properties that are measured at fair value at end of each reporting period. These financial
statements are prepared in 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’).
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgment in the process of applying the Company’s accounting
policies. 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.
These financial statements present information about the Company as an individual undertaking. A
separate consolidated financial statements have been prepared by the Company.
Functional and presentation currency
The financial statements are presented in Euro (€) which is the Company’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
Directors anticipate that the adoption of the new standards, interpretations or amendments thereto, will not
have a material impact on the financial statements upon initial application.
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
Company and these can be measured reliably. The following specific recognition criteria must also be met
before revenue is recognised:
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
24
Revenue recognition - continued
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 of the 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 income from investment property is recognised in profit or loss on a straight-line basis over the term
of the lease.
Rental revenue share - VREM
Rental revenue share from VREM is recognised at a point in time on completion of the service.
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.
Foreign currencies
Transactions underlying items in these financial statements are measured in the Company’s functional
currency, which is the currency of the primary economic environment in which the Company operates.
Transactions in foreign currencies have been converted into Euro at the rates of exchange ruling on the
date of the transaction. As at year end, there are no monetary assets 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 and deferred tax. Income tax is recognised in
profit or 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.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
25
Tax - continued
Deferred tax is provided using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial 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 that affect 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 to
date. Cost includes expenditure directly attributable to the acquisition of the items as well as transfers from
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 less residual 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
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 adjusted as appropriate, at each balance sheet date. The carrying amount of
an asset is written down immediately to its recoverable amount.
Subsequent costs are 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
Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged
to the income statement during the financial period in which they are 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 properties are carried at fair value at the date of the valuation, less any subsequent
accumulated depreciation (Note 13). Gains and losses arising from changes in fair values are recorded in
profit or loss.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
26
Investment properties - continued
The fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties
in an arm’s length transaction. The estimation of fair values does not assume that either the underlying
assets are marketed for sale at the reporting date or that there is an intention to sell it in the near future.
The objective is to estimate the exchange price at which hypothetical market participants would agree to
transact.
The fair value of investment properties is largely based on estimates using property appraisal techniques
as outlined in Note 2 and 14 to these financial statements. Such estimates are inherently subjective and
actual values can only be determined in a sales transaction.
Investment property is derecognised on disposal or when it is permanently withdrawn from use and no
future economic benefits are expected from 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 as to 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 the reclassification 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 as a revaluation of property, plant and equipment 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.
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. Amortisation is 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.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
27
Intangible assets - continued
Brand
The value of brand name is recognised following acquisition. Brand name 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 Company’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 Company has control, i.e., when the Company is exposed
to, or has rights to, variable returns from 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 Company’s right to receive payment is established.
Impairment of non-financial assets
The carrying amounts of the Company’s non-financial assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the 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 asset less costs to sell
and the value in use. Impairment losses are immediately recognised as an expense in the income
statement. For the purpose of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows.
Non-current assets held for sale
Non-current assets (or disposals comprising assets and liabilities) are classified as assets held for sale if
it is highly probable that their carrying amounts will be recovered primarily through a sale transaction which
is expected to be completed within one year from the date of the classification, rather than through
continuing use.
Such assets, or disposals, are generally measured at the lower of their carrying amount and fair value less
costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (or
disposal), excluding finance costs and income tax expense. Impairment losses on initial classification as
held-for-sale or held for-distribution and subsequent gains and losses on remeasurement are recognised
in profit or loss.
Once classified as held-for-sale, investment properties and property, plant and equipment are no longer
amortised or depreciated.
Non-current assets held for sale are presented as current assets in the statement of financial position.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
28
Inventories
Properties are classified as inventory where the objective is for resale purposes or where there is a change
in use of investment property when there is an intention to sell. Such property would be reclassified at the
deemed cost, which is the fair value at the date of reclassification. Inventories are carried at the lower of
cost and net realisable value. Cost comprises the purchase cost of acquiring the property together with
other costs incurred during the subsequent development, including costs incurred on demolition, site
clearance, excavation, construction and other related activities. Net realisable value is the estimated selling
price in the ordinary course of business, less costs of completion and selling expenses.
Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the instrument. Financial assets and 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 Company 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.
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 are derecognised when they are extinguished. This occurs when 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 Company 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 at their 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 considering the market rate of interest or as
otherwise applicable.
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 as a deduction, net of tax, from the proceeds.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
1. SIGNIFICANT ACCOUNTING POLICIES - continued
29
Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at face value. For the purposes of the cash
flow statement, cash and cash equivalents comprise cash in hand and deposits held at call with banks, net
of bank overdrafts. In the balance sheet, bank overdrafts are included as borrowings under current
liabilities.
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 costs incurred, and, except where included in the cost of inventories, an estimate of costs expected
to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the shorter. Where the Company expects to obtain
ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful
life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
The Company 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 be readily determined, the entity's incremental
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 residual value
guarantees, exercise price of a purchase 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 to the corresponding right-of use
asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
Related parties
Related parties are those persons or bodies of persons having relationships with the Company as defined
in IAS 24.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
30
2. SIGNIFICANT JUDGMENTS AND CRITICAL ESTIMATION UNCERTAINTIES
In the application of the Company’s accounting policies, which are described in Note 1, the management
is required to make judgments, estimates and assumptions that affect the reported amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and assumptions are based on
historical and other factors, including expectations of future events that are believed to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects both current
and future periods.
The most significant estimates and judgments made in preparing these financial statements, under IFRS
as adopted by the EU, is as follows:
Fair value of investment properties
Determining the fair value of investment property is established, considering various valuation approaches,
and reflecting the present market conditions. The properties are mainly being valued on a market value
basis, based on the principles defined by the Royal Institute of Chartered Surveyors (‘RICS’) Standards
and applicable adjustments, which are made for property specific conditions, namely development project
status or operational conditions. Where the valuation assessment requires an estimation of the value in
use of the cash-generating units, the value in use calculation requires the Company to estimate the future
cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate
present value. As fair value of the Investment property, the Company uses a conservative approach and
is established based on the valuations prepared regularly by independent valuers and further detailed in
Note 14 in these financial statements. The fair value of Investment property of the Company at the end of
the reporting period was €73,663,640 (2021: €59,991,129) as detailed in Note 14 to these financial
statements. It is important to note, 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 Company,
which due to the nature of the Company’s operations might be significant. Such assets are only reflected
at cost. This incremental value is conservatively left out of the book value of the Company, and only
recognised following final acquisition of the asset.
In the opinion of the Directors, except for matters disclosed above, 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.
3. REVENUE
2022
2021
€
€
Rental income
346,306
198,559
Rental profit share - VREM
326,086
215,345
672,392
413,904
4. OTHER OPERATING INCOME
2022
2021
€
€
Management fees income - VREM
27,500
27,500
Miscellaneous income
8,230
9,747
Gain on sale of investment in subsidiary
-
174,483
35,730
211,730
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
31
5. INVESTMENT INCOME
2022
2021
€
€
Increase in fair value of investment property
7,666,656
6,342,211
Realised loss on sale of investment property
(724,933)
-
Impairment on property held for sale
(67,538)
-
6,874,185
6,342,211
The €7,666,656 (2021: €6,342,211) relates to an increase in fair value of investment property resulting
from concluded acquisitions, ongoing development activity and applicable adjustments, which are
considering property specific conditions, namely development project status or operational conditions.
6. INTEREST INCOME
2022
2021
€
€
Loan interest
7,084
3,299
7. FINANCE COSTS
2022
2021
€
€
Interest on bank loan
102,926
1,256
Interest on convertible loans
-
36,109
Interest on third party borrowing
67,288
80,000
Interest on lease liabilities
20,232
20,921
190,446
138,286
8. EXPENSES BY NATURE
2022
2021
€
€
Direct costs
10,023
18,601
Staff costs (i)
82,214
78,194
Auditor’s remuneration:
Audit fee
11,500
11,500
Other non-assurance services
950
950
Depreciation and amortisation
268,091
283,441
Management fees from related party
100,000
45,624
Impairment on inventory
65,618
-
Other administrative expenses
317,933
227,979
856,329
666,289
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
32
8. EXPENSES BY NATURE – continued
(i) Staff costs include the following:
2022
2021
€
€
Salaries and wages
130,732
123,339
Social security and maternity fund contributions
10,423
7,422
Outsourced personnel
-
2,000
Capitalised salaries
(58,941)
(54,567)
82,214
78,194
Average number of employees
6
6
During the year 2022, staff salaries of €58,941 have been capitalised to investment property
(2021: €54,567).
9. INCOME TAX EXPENSE
Tax is provided for at the rate of 35% for Company profits, except for certain bank interest receivable which
is taxed at 15% and sale of property which is taxed at 5%.
2022
2021
€
€
Current year tax
Income tax on the taxable income for the year
-
-
Final withholding tax
8,000
-
Deferred tax
Movement in deferred tax asset (Note 10)
(36,844)
(161,681)
Movement in deferred tax liability (Note 11)
275,772
312,352
Movement in revaluation reserve
12,251
12,251
Movement in general reserve
-
157,391
259,179
320,313
Tax applying the statutory domestic income tax rate and the income tax expense for the year are reconciled
as follows:
2022
2021
€
€
Profit on ordinary activities before tax
6,542,616
6,166,569
Theoretical tax expense at 35%
2,289,916
2,158,299
Tax effect of:
Provisions disallowable for tax purposes
652,593
381,788
Movement in the effect of fair value gain on investment property
(2,683,330)
(2,219,774)
259,179
320,313
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
33
10. DEFERRED TAX ASSETS
The asset for deferred tax is analysed as follows:
2022
2021
€
€
Excess of capital allowances over depreciation
(72,310)
(12,065)
Unabsorbed tax losses and capital allowances
285,677
188,588
213,367
176,523
Deferred tax assets and liabilities are offset when the Company 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:
2022
2021
€
€
Balance at beginning of the year
176,523
3,562,707
Movement in the excess of capital allowances over depreciation
(15,221)
27,660
Movement in unabsorbed tax losses and capital allowances
52,065
134,021
Balance at end of year
213,367
176,523
11. DEFERRED TAX LIABILITY
2022
2021
€
€
Effect of fair value movement on investment property
4,165,673
3,889,901
Deferred tax assets and liabilities are offset when the Company 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 the liability method using
a principal tax rate at 35%/5%.
2022
2021
€
€
Balance at beginning of the year
3,889,901
3,577,549
Movement of investment property fair value
275,772
312,352
Balance at end of year
4,165,673
3,889,901
The Company is calculating its deferred 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 Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
34
12. INTANGIBLE ASSETS
Licences
Non-
compete
rights
Brand
Total
€
€
€
€
Cost
At 1 January 2022
349
150,000
41,000
191,349
Additions
-
-
-
-
At 31 December 2022
349
150,000
41,000
191,349
Provision for diminution value
At 1 January 2022
270
30,000
8,200
38,470
Amortisation for the year
35
30,000
8,200
38,235
At 31 December 2022
305
60,000
16,400
76,705
Net book value
At 31 December 2021
79
120,000
32,800
152,879
At 31 December 2022
44
90,000
24,600
114,644
13. PROPERTY, PLANT AND EQUIPMENT
Right-of-
use assets
Building
improve-
ments
Office
equipment
Furniture
and
fixtures
Other
assets
Total
€
€
€
€
€
€
Cost
At 1 January 2022
987,481
100,806
39,992
38,285
42,183
1,208,747
Additions
-
-
750
-
2,500
3,250
Transfers from investment
property
47,888
-
-
-
-
47,888
At 31 December 2022
1,035,369
100,806
40,742
38,285
44,683
1,259,885
Depreciation
At 1 January 2022
263,326
18,822
25,141
24,312
20,136
351,737
Charge for the year
46,016
2,016
5,238
1,256
7,914
62,440
Transfers from
investment property
12,770
-
-
-
-
12,770
At 31 December 2022
322,112
20,838
30,379
25,568
28,050
426,947
Net book value
At 31 December 2021
724,155
81,984
14,851
13,973
22,047
857,010
At 31 December 2022
713,257
79,968
10,363
12,717
16,633
832,938
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
35
14. INVESTMENT PROPERTIES
Right-of-use
assets
Investment
properties
Total
€
€
€
Fair Value
At 1 January 2022
2,147,267
58,873,723
61,020,990
Additions
5,316
7,272,769
7,278,085
Transfer from other current assets
-
993,507
993,507
Transfers to non-current assets held for sale
-
(532,236)
(532,236)
Transfers to property, plant and equipment
(47,888)
-
(47,888)
Disposals
-
(1,644,482)
(1,644,482)
Fair value movement
(1,008,026)
8,674,682
7,666,656
At 31 December 2022
1,096,669
73,637,963
58,873,723
74,734,632
Provision
At 1 January 2022
98,241
931,620
1,029,861
Depreciation
16,198
151,218
167,416
Transfers to non-current assets held for sale
-
(22,236)
(22,236)
Transfers to property, plant and equipment
(12,770)
-
(12,770)
Disposals
-
(91,279)
(91,279)
At 31 December 2022
101,669
969,323
1,070,992
Net book value
At 31 December 2021
2,049,026
57,942,103
59,991,129
At 31 December 2022
995,000
72,668,640
73,663,640
Depreciation relates to the depreciation of improvements and furniture currently included in Investment
Property. The depreciable amount is allocated on a systematic basis to each accounting period over its
useful life.
Fair value of investment property
The book value of the property held by the Company has been increased by €7,666,656 to reflect the
established fair value as at 31 December 2022, reflecting several different factors and adjustments to the
individual property values, including the downward adjustment to certain property categories resulting from
the market changes and 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 Company.
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 have not yet been fully acquired, but binding contracts
are existing, and is conservatively left out of the book value of the Group.
Valuation process
As is usually done by the Group, on an annual basis, during the reporting year it has carried out a full
property valuation exercise, performed by an independent professional valuer to assess the market value
of its assets, whether these are owned or leased. The report was prepared by Edwin Mintoff Architects
(EMA) in their capacity of a warranted architect and civil engineers, as independent asset valuers. This full
valuation report was prepared based on the principles defined by the Royal Institute of Chartered Surveyors
(‘RICS’) Standards and applicable adjustments, which are made for property specific conditions, namely
development project status or operational conditions and completed in January 2023, as part of the annual
asset valuation exercise.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
36
14. INVESTMENT PROPERTIES - continued
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 and
adjusted for property-specific status 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 Company’s asset
portfolio performed by the Board of Directors as 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
It should be noted that the actual price (liquidation value) which the Company 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 necessary finance 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 projects might not materialise in time, 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; and
- 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 of the end of year 2022, the Directors’ Valuation Report of VBL Plc. represents conservatively updated
values for each of the assets of the Company, but adjusted for the specific developments of some
properties which are under development or change in legal status (contracts), as also recommended by
the Guidance Note of Kamara tal-Periti (KtP) and as usual under the standard industry practices. The
Directors’ valuation has not reflected any additional value of pre-sale agreements, or new management
contracts signed in 2022.
Nevertheless, based on independent experts’ opinions and other available information, the Directors are
at the opinion that the Valletta property market is significantly less vulnerable to the short-term volatility
than other property markets in 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 2022, the Directors approved a total value of the properties of the
Company amounting to €73,663,640 (2021: €59,991,129). It is to be noted that the Directors established
their valuation report considering the recommendations of the independent valuers’ report for adjustments
of the fair market value in specific assets of the Group’s owned properties, as a result of the market changes
and current conditions experienced in the Valletta property market. Projects under development or
completed but not yet operational at the time of the valuation were reflected based on the actual estimated
project value, at the time, with values of fully developed assets to be realised at full completion. The
Directors have also confirmed that the long-term operational expectations remain unchanged in terms of
projected long-term achievable revenues and operational profitability from operation or sale of the fully
developed assets of the Group.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
37
14. INVESTMENT PROPERTIES - continued
The Company uses the application of IFRS 16 which permits the recognition of leased properties in the
statement of financial position. Also, the Company considers managed properties at the same approach
as leased, based on the long-term contracts with owners and de facto control of these properties.
It is important to note, that in line with the IFRS recommendations, the Company has not recognised any
value over the costs incurred for its contracts and promises of sale of property which has not yet been
acquired, but binding contracts for the sellers are existing. This potentially incremental value is
conservatively left out of the book value of the Company.
15. INVESTMENT IN SUBSIDIARIES
Subsidiary
Registered address
Class of shares
% of ownership
2022
2021
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 Ltd was established in 2016 to be the hospitality operator of the Group and manages all the
short-let and long-let properties of the Group on retail market. The Company recognises the investment in
VREM Ltd at its cost of €10,000.
Silver Horse Block Ltd was established in 2017 as a SPV for development projects, currently holding no
material assets, not commencing any activity and being inactive. The Company recognises the investment
in Silver Horse Block Ltd at its cost of €1,200.
16. NON-CURRENT ASSETS HELD FOR SALE
During the year, the Company has decided to dispose some of its assets in the city of Valletta. For some
of these properties, a promise of sale agreement was signed in December 2022 and transaction closing
envisaged in year 2023.
17. INVENTORY
During the year, the Company has decided to dispose some of its non-core assets, which were not part of
the development plans or not in the city of Valletta, and as such not representing a strategic value. For
some of these properties promises of sale agreements were signed and the transactions closed in the first
quarter of year 2023.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
38
18. TRADE AND OTHER RECEIVABLES
2022
2021
€
€
Trade receivables (i)
180,069
53,395
VAT refundable
15,488
75,134
Other receivables
25,902
1,286,947
Prepayments and accrued income
113,669
132,985
335,128
1,548,461
Provision for expected credit losses
(39,055)
-
296,073
1,548,461
(i) Trade receivables are non-interest bearing and are generally on a 30-day term.
19. CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the statement of cash flows comprise the following balance sheet
amounts:
2022
2021
€
€
Cash at bank and in hand
1,295,516
1,921,704
20. SHARE CAPITAL AND RESERVES
2022
2021
€
€
Share Capital
Authorised:
330,000,000 Ordinary shares of €0.20 each
66,000,000
66,000,000
Issued and fully paid:
248,042,645 Ordinary shares in 2022 and
244,471,217 Ordinary shares in 2021 of €0.20 each
49,608,529
48,894,243
The issued share capital of the Company currently consists of 248,042,645 ordinary shares (2021:
244,471,217), of €0.20 each (2021: €0.20). The authorised share capital currently consists of 330,000,000
ordinary shares of €0.20 each.
During the year ended 31 December 2022, the Company issued 3,571,428 ordinary shares at €0.20 each
as non-cash consideration for the acquisition of an investment property.
As of 31 December 2022, the market price of the ordinary shares on the Malta Stock Exchange was €0.26
(2021: €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.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
39
20. SHARE CAPITAL AND RESERVES - continued
The following describes the nature and purpose of each reserve within equity:
Share premium
The amount subscribed for share capital in excess of par value.
General reserve
The amount of the issued share capital reduction after the restructuring in the
Company completed in 2019, retained in the Company, not distributed to the
shareholders.
Other reserves
Non-distributable reserves for fair value revaluation on the office building.
Retained earnings
All other net earnings or profit after accounting for dividends.
The Directors propose a final dividend of €180,000 for the year 2022. During the year ended 31
December 2022, dividends amounting to €160,000 (2021: €150,000) were paid.
21. BORROWINGS
2022
2021
€
€
Non-current
Bank borrowings
7,877,586
1,297,204
7,877,586
1,297,204
Current
Bank borrowings
337,671
328,699
Third party borrowings
-
2,000,000
337,671
2,328,699
Bank borrowings
The Company 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. The loan is being amortised as planned.
During the year 2022, the Company has secured a long-term loan facility of €14,500,000, structured to
reflect the Company’s financing needs, and to secure the necessary funding for its development and
acquisitions programme. This loan facility is repayable over a period of 15 years, and is structured into
specific, dedicated utilisation purposes. During year 2022, this facility has only been partly drawn. The
facility bears a market rate interest linked to the Euro Interbank Offered Rate (EURIBOR).
The loan facility is secured by a general hypothec over the Company’s assets, and special hypothecs over
the properties developed under the facility.
The applicable costs of the banking facilities (e.g. processing fees, commitment fees, legal and professional
fees directly related to the facility), were recognised in the Statement of Comprehensive Income during the
year.
The carrying amounts of the bank borrowings are reasonable approximations of their fair value.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
40
22. LEASE LIABILITIES
The Company leases properties which are utilised in the operations or operated as investment properties,
under agreements of between ten to twenty-five years, in some cases with options to extend. The lease
contracts have various escalation clauses. On renewal, the terms of the leases are renegotiated.
2022
2021
€
€
Minimum lease payments
Due after more than five years
222,466
237,616
Due after one year but within five years
63,787
62,175
Due within one year
13,538
11,443
299,791
311,234
Movements in lease liabilities during the year are as follows:
2022
2021
€
€
At 1 January
311,234
321,868
Interest expense
20,232
20,921
Gross lease payments
(31,675)
(31,555)
At 31 December
299,791
311,234
23. TRADE AND OTHER PAYABLES
2022
2021
€
€
Non-current
Amounts due to third parties (i)
16,385
46,385
Deposits on lease agreements
72,390
-
88,775
46,385
Current
Trade payables (ii)
344,806
188,653
Accruals and other payables
44,927
35,340
Amounts due to third parties (i)
30,000
30,000
Deposits on properties
51,000
-
Amounts owed to shareholder (iii)
273,000
-
Amounts owed to subsidiary (iv)
199,983
152,769
943,716
406,762
(i) The amounts due to third parties represent - among others - balances due arising from the
purchase of properties. The balance payable is reflected in the Company’s accounts.
(ii) Trade payables are non-interest bearing and are normally on 30 to 60 day term.
(iii) The amounts owed to shareholder are fees owed for executive management services based on a
service contract. These are unsecured, interest-free, and repayable on demand.
(iv) The amounts owed to subsidiary represent the cash portion due to VREM Ltd, due to the fact that
the Group operates a cash pool.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
41
24. RELATED PARTY TRANSACTIONS AND DISCLOSURES
The Company is the parent of the companies listed in Note 15.
The Company has related party relationships with some of its investors or companies over which the
Directors exercise significant influence. Transactions are carried out with related parties on a regular basis
and in the ordinary course of the business.
In the opinion of the Directors, there is no ultimate controlling party of the Company, since no shareholder
of VBL Plc has more than 25% of voting rights.
During the year ended 31 December 2022 transactions related to VBLM Limited and VREM Ltd are
included in the related party transactions as detailed below.
During the year, the Company entered into transactions with related parties as set below.
2022
2021
€
€
Rental revenue share - VREM
326,086
215,345
Management fees income - VREM
27,500
27,500
Rental revenue - Gold Landlord
58,272
31,341
Directors travel reimbursement
1,129
1,625
Management fees expenses - VBLM
100,000
45,624
Capitalised property development expenses - VBLM
300,000
316,876
The outstanding amounts arising from transactions with the related parties are disclosed in Note 23 to
these financial statements.
25. EARNINGS PER SHARE
Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the year.
2022
2021
Profit attributable to equity holders of the Company
€6,283,437
€5,846,256
Weighted average number of shares in issue
245,036,691
233,171,774
Basic and diluted earnings per share
€0.0256
€0.0251
The Company has no instruments or arrangements which give rise to potential ordinary shares and
accordingly diluted earnings per share is equivalent to basic earnings per share.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
42
26. FINANCIAL RISK MANAGEMENT
The Company's activities expose it to a variety of financial risks such as market risk, credit risk, liquidity
risk and interest rate risk. The Company's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's
financial performance.
Market risk
Market risk is the risk that changes in market prices (e.g. foreign exchange rates, interest rates and equity
prices) will affect the Company’s income or the value of its holdings of financial instruments. The
Company’s currency of operation is Euro, all revenues and payables are defined, contracted and
accounted in Euro.
The Company is exposed to changes in equity prices and interest rates.
Equity price change risk
The Company is exposed to changes in equity prices (“price risk") in respect of its listed shares, which is
not a Company-specific risk, but it is a risk of the equity investors and shareholders. Therefore, the price
risk is a relevant risk from the point of view of the Company’s shareholders (investors), holding the listed
securities.
The price risk is significantly dependent on the local and global stock market’s specifics, the equity trading
trends, actual trading volumes and other specifics of the equity market at the Malta Stock Exchange (MSE),
and it is less dependent on the Company’s actual financial or market performance. This fact is proven by
the developments of year 2022, when during the period the Company’s revenues, profitability and net
assets have increased significantly, while the share prices have decreased, amidst negligible trading
volume compared to the Company’s actual book value (the total trade volume in the reporting period was
ca. 0.3% of the Company’s total asset value).
The investments in listed equity securities are considered as long-term strategic investment and is
regulated and monitored by local and EU level regulation and authorities. The Directors continuously
monitor the stock prices of the Company and assess the impact of potential stock price changes to the
Company.
While the experienced trading volumes and cumulative trade in the Company’s shares during the year
were very low compared to the Company’s book value, the following table illustrates the theoretical
sensitivity and change of market capitalisation to a possible change in market price.
Change
Increase/
(decrease)
in profit
for the year
Increase/
(decrease)
in equity
%
€
€
2022
-€0.04
-
(€9,921,706)
2021
+€0.02
-
€4,889,424
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
43
26. FINANCIAL RISK MANAGEMENT - continued
Interest rate risk
The risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Company is exposed to changes in market interest rates through its bank
borrowings which incur variable interest rates.
The following table illustrates the sensitivity to a reasonably possible change in interest rates. These
changes are considered to be reasonably possible based on observation of current market conditions. The
calculations are based on a change in the average market interest rate for each period, and the financial
instruments held at each reporting date that are sensitive to changes in interest rates. All other variables
are held constant.
Change
Increase/
(decrease)
in profit
for the year
Increase/
(decrease)
in equity
Basis points
€
€
EURIBOR
2022
+10
8,215
8,215
-10
(8,215)
(8,215)
Credit risk
Financial assets which potentially subject the Company to concentrations of credit risk consist principally
of cash at bank and receivables. The Company'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 Company
has appropriate policies to ensure that sales of properties and provision of services are made to customers
with appropriate credit history, or where this is not possible or practical, alternative risk mitigating practices
are applied. In this respect, credit risk with respect to receivables is monitored continuously and the
Company places a specific provision on any debt on which there is doubt of recoverability. Bad debts are
therefore negligible, and, in this respect, the Company has no significant concentration of credit risk. The
Company’s calculated expected credit losses is immaterial.
Aging
2022
2021
€
€
Financial asset
Loans receivable
June-2024
113,711
107,470
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
44
26. FINANCIAL RISK MANAGEMENT - continued
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company's approach 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 stressed conditions. The Directors do not foresee and are unaware of any
circumstances whereby the Company would not honour its commitment.
Within one year
One to five years
More than five
years
€
€
€
2022
Financial assets:
Cash and cash equivalents
1,295,516
-
-
Trade and other receivables
296,073
-
-
1,591,589
-
-
Financial liabilities:
Bank borrowings
337,671
-
7,877,586
Third party borrowings
-
-
-
337,671
-
7,877,586
2021
Financial assets:
Cash and cash equivalents
1,921,704
-
-
Trade and other receivables
1,548,461
-
-
3,470,165
-
-
Financial liabilities:
Bank borrowings
328,699
1,297,204
-
Third party borrowings
2,000,000
-
-
2,328,699
1,297,204
-
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability
of funding through an adequate amount of credit facilities and the ability to close out market positions.
Capital risk management
The Company’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 of the debt and equity balance.
The capital structure of the Company consists mainly of cash and cash equivalents as disclosed in
Note 19, items presented within equity in the statement of financial position and borrowings as disclosed
in Note 20 and Note 21, respectively.
The Company's Directors manage the Company’s capital structure and make adjustments to it, in the light
of changes in economic conditions. The capital structure is reviewed on an ongoing basis. Based on
recommendations of the Directors, the Company balances its overall capital structure through the
payments of dividends, new share issues as well as the issue of new debt or the redemption of existing
debt. The Company monitors capital using the gearing ratio. This ratio is calculated as total net borrowings
divided by total capital. The Company considers total capital to be equity and total net borrowings.
The Company's overall strategy remains unchanged from the prior year.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
45
27. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details the changes in the Company’s liabilities arising from financing activities, including
both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows
were, or future cash flows will be, classified in the Company’s statement of cash flows as cash flows from
financing activities.
CLA related
borrowings
Bank
borrowings
(Note 21)
Third party
borrowings
(Note 21)
Total
€
€
€
€
Balance at 01 January 2021
1,600,000
1,700,000
2,000,000
5,300,000
Advances/(repayments)
215,000
(74,097)
-
140,903
Interest paid
-
(1,256)
(79,534)
(80,790)
Non-cash transactions:
Interest expense
36,575
1,256
79,534
117,365
Conversion to ordinary shares
(1,851,575)
-
-
(1,851,575)
Balance at 31 December 2021
-
1,625,903
2,000,000
3,625,903
Bank
borrowings
(Note 21)
Third party
borrowings
(Note 21)
Total
€
€
€
Balance at 01 January 2022
1,625,903
2,000,000
3,625,903
Drawdowns
6,839,234
-
6,839,234
Repayments
(249,880)
(2,000,000)
(2,249,880)
Interest paid
(102,926)
(67,288)
(170,214)
Non-cash transactions:
Interest expense
102,926
67,288
170,214
Balance at 31 December 2022
8,215,257
-
8,215,257
28. FAIR VALUE MEASUREMENT
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: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date;
- Level 2: Inputs, other than quoted prices included within Level 1, that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3: Unobservable inputs for the asset or liability.
There were no transfers between levels during the year.
The valuation of investment properties at fair value is categorised as level 3. Details of the valuation
techniques are disclosed in Note 14.
VBL Plc
Annual Report and Financial Statements - 31 December 2022
NOTES TO THE FINANCIAL STATEMENTS - continued
46
29. 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 Company for the 5-year financial period. The basis of preparation
and key underlying assumptions are also detailed in the said Prospectus. These are materially unchanged
and implemented along the originally projected timeframes, with slight adjustments to reflect the expected
market and other impacts resulting from the development activity.
30. COMPARATIVE INFORMATION
Certain amounts in the comparative information have been reclassified to conform with the current year’s
presentation.
47
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of VBL Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of VBL Plc (“the Company”) set out on pages
19 - 46, which comprise the statement of financial position as at 31 December 2022, the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the financial statements give a true and fair view of the financial position of the Company
as at 31 December 2022, and of its financial performance and its 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 under those standards are further described in the Auditors’ Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Company in accordance
with the ethical requirements of both the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (including International Independence
Standards) (IESBA Code) and the Accountancy Profession (Code of Ethics for Warrant Holders)
Directive issued in terms of the Accountancy Profession Act (Cap. 281) in Malta that are relevant to our
audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance
with the IESBA Code and the Code of Ethics for Warrant Holders in Malta. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to
the Company are in accordance with the applicable laws and regulations in Malta and that we have not
provided any non-audit services that are prohibited under Article 18A of the Accountancy Profession Act
(Cap 281).
The non-audit services that we have provided to the Company during the year are disclosed in Note 8
to these financial statements.
48
INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements - continued
Key Audit Matters
Key audit matters are those matters that, in our professional judgement were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Valuation of Investment Properties
The Company’s investment properties are carried at fair value of €73,663,640 as at 31 December 2022.
Further details are included in Note 14 to these financial statements.
The existence of significant estimates used to arrive at the fair value of the property, could result in a
potential material misstatement by virtue of the inherent limitations underlying the estimations.
Consequently, specific audit focus and attention was given to this area. The valuation of the property
was performed by management on the basis of valuation reports prepared by an independent qualified
valuer and the Board of Directors’ assessment which considers various specific developments and
adjusted for property-specific status of the ongoing development projects, as well as the investment
value potential for the VBL asset portfolio.
Audit Response
We understood and evaluated the assessment performed by management on the basis of the
revaluations performed by a professional qualified valuer and the Board of Directors’ assessment 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.
• Considering the objectivity, competence and capabilities of the management and directors.
• 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 by reference to market evidence of transactions
for similar properties.
• Conducting discussions with the independent professional valuer, management and directors.
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 financial statements
and concluded that these are adequate.
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INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements - continued
Other Information
The directors are responsible for the other information. The other information comprises the general
information, the directors’ report, the remuneration report and the statement by the directors on
compliance with the Code of Principles of Good Corporate Governance. Our opinion on the financial
statements does not cover the other information.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we have obtained
prior to the date of this 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’ report is compliant with the disclosure requirements of Article 177 of
the same Act.
Based on the work we have performed, in our opinion:
• the directors’ report has been prepared in accordance with the 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 environment obtained in the
course of the audit, we have not identified material misstatements in the directors’ report.
Responsibilities of the Directors for the Financial Statements
The directors are responsible for the preparation of financial statements that give a true and fair view in
accordance with IFRS as adopted by the EU and the requirements of the Companies Act (Cap. 386),
and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
The directors have delegated the responsibility for overseeing the Company's financial reporting process
to the Audit Committee.
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INDEPENDENT AUDITORS’ REPORT - continued
Report on the Audit of the Financial Statements - continued
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an 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.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditors’ report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditors’ report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
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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 relevant ethical requirements
regarding independence and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditors’ report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on the Statement of Compliance with the Code of Principles of Good Corporate
Governance
The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to
prepare and include in their Annual Report a Statement of Compliance providing an explanation of the
extent to which they have adopted the Code of Principles of Good Corporate Governance and the
effective measures that they have taken to ensure compliance throughout the accounting period with
those Principles. The Capital Markets Rules also require the auditor to include a report on the Statement
of Compliance prepared by the directors.
We read the Statement of Compliance and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the financial statements included in the
Annual 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 on the
effectiveness of the Company's corporate governance procedures or its risk and control procedures. In
our opinion, the Statement of Compliance with the Principles of Good Corporate Governance set out on
pages 12 - 18 has been properly prepared in accordance with the requirements of the Capital Markets
Rules issued by the Malta Financial Services Authority.
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INDEPENDENT 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 Services Authority 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 been properly prepared in accordance with the
requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
Report on compliance with the requirements of the European Single Electronic Format
Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of
Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) -
the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF
Directive 6”) on the annual financial report of VBL plc for the year ended 31 December 2022, entirely
prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the annual financial report, including the financial
statements, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the
ESEF RTS.
Auditors’ responsibilities
Our responsibility is to obtain reasonable assurance about whether the annual financial report, including
the financial statements, comply in all material respects with the ESEF RTS based on the evidence we
have obtained. We conducted our reasonable assurance engagement in accordance with the
requirements of ESEF Directive 6.
Our procedures included:
• Obtaining an understanding of the entity's financial reporting process, including the preparation of
the annual financial report, in XHTML format.
• Examining whether the annual financial report has been prepared in XHTML format.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion, the annual financial report for the year ended 31 December 2022 has been prepared in
XHTML format in all material respects.
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INDEPENDENT AUDITORS’ REPORT - continued
Report on Other Legal and Regulatory Requirements - continued
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 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 responsibilities under 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 appointed to act as auditors of the Company by the shareholders of the Company on 14
December 2021 for the year ended 31 December 2021, and we were subsequently reappointed by the
shareholders at the Company’s general meeting for the financial year thereafter. The period of
uninterrupted engagement as statutory auditor of the Company is two financial periods.
RSM Malta
Registered Auditors
Mdina Road
Zebbug ZBG 9015
Malta
Conrad Borg
Principal
21
April 2023