Company Registration No. C 56012
Annual Financial Report
and
Consolidated Financial Statements
31 December 2023
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
1
CONTENTS
Pages
General information 2
Directors’ report 3 - 10
Remuneration report and statement of the Directors 11 - 13
Statement by the Directors on Compliance with the Code of Principles of
Good Corporate Governance 14 - 21
Statement of comprehensive income 22
Statement of financial position 23
Statement of changes in equity 24
Statement of cash flows 25
Notes to the consolidated financial statements 26 - 49
Independent auditors’ report 50 - 56
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
2
GENERAL INFORMATION
Registration
VBL Plc is registered in Malta public limited liability company under the Maltese Companies Act (Cap. 386).
The company’s registration number is C 56012. Since last publication, there were no changes to the name of the
Place of domiciliation
Malta
Principal place of business
Malta
Directors
Dr. Andrei Imbroll
Dr. Geza Szephalmi
Mr. Julian Tzvetkov
Mr. Artur Haze
Mr. David Galea Souchet
Ms. Isabella Vella
Dr. John Attard (appointed on 06 July 2023)
Company secretaries
Dr. Joseph Borg Bartolo and Dr. Mikiel Calleja
Registered office
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 Financial Report and Consolidated Financial Statements - 31 December 2023
3
DIRECTORS’ REPORT
The Directors present their annual financial report and audited consolidated financial statements of VBL Plc (“the
Company”) and its subsidiaries (together, “the Group” or the “VBL Gr oup
Review of Business Development and Financial Position of the Financial Year 2023
The financial performance of the Group has remained stable and has shown continuous growth from the previous
years. During the reporting period, the Group managed to increase its revenues compared to the previous year,
resulting in a 40% increase in 2023, whilst operational profitability, i.e. Operational EBITDA, at €532,254, up from
€258,791 and Operational EBITDA Margin at 16% up from 11%, show significant growth. The Group’s operations
continue to be dependent on overall market trends, such as global economy trends, airline seat capacity,
consumer price changes, services inflation and labour market supply challenges.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
4
DIRECTORS’ REPORT - continued
Review of Business Development and Financial Position of the Financial Year 2023 - continued
During the reporting period, the Group has remained successful in terms of progressing with the implementation
of its announced strategy, renovation programme and – as part of its hospitality operations - consolidation of the
Valletta hospitality market adding new units to its hospitality operations, both third party managed and own
developed units. The Group has retained focus on its core market, Valletta.
In the reporting period, the Group has continued to progress with its development programme, which has resulted
to €2,042,475 Investment Income, as the balance of fair value movement of individual portfolio assets and an
overall significant increase in the book value of Investment Property amounting to €3,464,323.
The proportion of renovated operational assets continues to grow, however it remains relatively low compared to
the Group’s total owned portfolio. As of 31 December 2023, only about 30% of the Group’s owned assets, based
on square meters, were operational and revenue generating. The remaining part of the Group owned assets are
under development or are being prepared for development, which projects significant growth opportunities in the
coming years, result from the conversion of the owned non-performing assets into renovated, revenue generating
properties. Along with the conversion of owned but non-operational assets into renovated and revenue-generating
properties, the gross yield of the commercialised properties continues to improve from the current level of 5-6%,
and is expected to exceed this level at mid-term, following completion of current development projects.
The Group continued using its long-term development financing facility, in line with the progress of the
development programme. The Group’s leverage however remains very low (ca 12.6%), as a result of the
conservative management approach.
The core activity and the most significant value driver for the Group is real estate acquisitions and development,
which accounts for the most significant value changes in the Company’s accounts. The Group therefore – similarly
to its peer companies – assesses and reflects the investment income right under total revenues but shown as a
separate line, which in the reporting period has reached €2,042,475 (2022 Investment income was €6,874,185).
Investment property fair value and net book value does not take into account the potential value of the property
at completion. Investment income reflects only the value changes from completed development or other market
adjustment in the reporting period. Project value discounts are not reflected before final completion and handover
of the development, which would then be supported by third-party independent valuation.
ACTUAL
ACTUAL
VARIANCE
Jan – Dec
Jan - Dec
2023 ACTUAL VS 2022
ACTUAL
2023
2022
€
€
€
%
Revenue
3,245,679
2,316,112
929,567
40%
Investment Income
2,042,475
6,874,185
(4,831,710)
(70%)
Cost of Sales
(1,696,305)
(1,168,215)
(528,090)
45%
Gross Profit/(Loss)
3,591,849
8,022,082
(4,430,233)
(55%)
GOP Margin
68%
87%
Other Operating Income
28,403
8,230
20,173
245%
Total Operating Costs
(1,045,523)
(897,336)
(148,187)
17%
EBITDA
2,574,729
7,132,976
(4,558,247)
(64%)
EBITDA Margin
49%
78%
(29%)
EBITDA (Operational)
532,254
258,791
273,463
106%
EBITDA Margin (Operational)
16%
11%
5%
Notes
(1) Operational EBITDA and Operational EBITDA margin is calculated without investment income.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
5
DIRECTORS’ REPORT - continued
Dividends and Reserves
Dividend payment for the year ended 31 December 2023, will be considered and proposed by the Directors for
the decision of the Annual General Meeting. During the reporting period, a total dividend of €180,000 was
distributed to the shareholders for the year ended 31 December 2022 (corresponding to 0.0726 Euro Cents per
share).
The directors have proposed the balance of retained earnings amounting to €14,179,889 (2022: €12,625,816) be
carried forward to the next financial year.
Listed Company Status and New Share Issue
VBL Plc. as the principal company of the Group is a listed entity at the Malta Stock Exchange (“MSE”). In the
reporting year, there was a share issue of 1,136,538 newly issued ordinary shares, allocated via private
placements, at a nominal value of €0.20 per share, and a premium €0.06 per share. The new share issue and
allotment has been registered at the Malta Business Registry with an effective date of 29 December 2023.
As at 31 December 2023, 100% of the Group’s equity and issued share capital is listed on the MSE with the total
number of shares in issue of 249,179,183. All shares of the Group are ordinary shares, with nominal value of
€0.20 each, and have the same shareholders’ rights.
The authorised share capital of the Group is €66,000,000.
Events After the End of the Reporting Period
There were no specific, materially important, events affecting the Group or its long-term outlooks, which occurred
since the end of the reporting year. The long-term effects of the current global economic situation, global
uncertainties and challenges might have an impact on the Group’s long-term business and development strategy.
Future Developments
The Group plans to continue its dynamic growth by implementing its declared strategy and announced
development programme of its owned assets, as well as improve further the operational economies and utilisation
of its already developed assets in line with its long-term business strategy and financial plans. The Group
consistently builds and maintains a proprietary pipeline on the Valletta real-estate market. The Group’s acquisition
focus remains highly opportunistic and is more pronounced towards larger assets or landmark properties. The
Group has proven experience in unlocking complex and difficult ownership situations, which remains a key driver
of future growth in value. The applied business strategy of the Group ensures acquisition of complex properties
at attractive terms, not generally available on the market. Identified pipeline deals are not reflected in the current
valuation of the assets, while they represent a significant additional value potential. Further growth in the Group’s
revenues and asset value shall be achieved through realisation of the existing proprietary pipeline of over 5,000
m
2
of total gross area. Implementation of the acquisition and development strategy is dependent of the available
investment resources and other market factors.
Ongoing developments are valued on a project value basis, where the full value of the asset would be realised
upon final completion of the projects. In this current development cycle, the Group is developing approx. 7,000
m
2
over a number of projects. The projected property value increase upon completion of these ongoing projects
is expected to be in the region of €8-10 Million, in the mid-term. The bulk of this incremental value release will
take place upon completion and start of operation of the Silver Horse Block, one of the largest development
projects in Valletta.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
6
DIRECTORS’ REPORT - continued
Financial Risk Management
The Group is exposed to a variety of financial risks, including - among others - market risk, credit risk and liquidity
risk. The Group’s overall risk management program focuses on the unpredictability of the external market factors
and the financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
The Group uses different methods to assess different types of risk to which it is exposed. These methods include
sensitivity analysis, assumption modelling and ageing analysis for credit risk. Risk management is carried out by
executive management under policies adopted by the Group. These policies include identification and analysis
of the Group and appropriate procedures, controls and risk limits.
Environmental, Social and Governance (ESG) responsibility and commitment
The Group and its stakeholders, including directors, management, employees and investors, are increasingly
emphasising the importance of enforcing environmentally and socially responsible, ethical and sustainable
business practices. As part of this effort, the Group has established a dedicated leadership team, which is
knowledgeable about ESG priorities and can provide continuous guidance and coordinated efforts to all
stakeholder in shaping up the corporate culture, internal and external processes where the Group has influence,
raising the ESG awareness on its core market of operation, and demonstrating a genuine commitment to ethical
and sustainable business practices, along with emphasising environmental and social ethical behaviour. The
Group’s declared commitment to improving all areas of the business, environmental and social ecosystem of the
Group, is aiming to contribute to a better future, while ensuring preservation of the architectural, environment and
historical values, together with ensuring the long-term sustainability and profitability of its operations, based on
the implementation of the defined business strategy. As a result, during the reporting period, the Group has
increased its efforts and awareness of the ESG issues, understanding how essential they are to effectively
navigate the Group and its business in this evolving landscape and ensure the long-term success of the Group.
The Group has been assessing and responding to all three ESG pillars.
Of the three pillars, the most sector specific in the Group’s case is clearly sustainability and the environmental
considerations, both in Development and Real Estate Management, Hospitality.
1. Environmental – 3R Methodology (Reduce-Reuse-Recycle), is the heart of Group’s decision-making
process
In the phase of Development, the key focus areas are:
a. Avoiding green-field development and new construction, using traditional and where possible
recycled construction materials, avoiding taking up new areas and spaces;
b. Regeneration of existing floor slabs reduces the concrete requirements across all of the Group’s
development projects;
c. Applying traditional old Maltese tiles sourced from within the Group’s own portfolio are reused in
all development projects;
d. Restore and reuse wooden beams which are found in historical properties playing a major part
of Group’s recycling program;
e. Reduction of construction waste by repurposing of existing building structure;
f. Storage and eventual reuse of old limestone, cement tiles, xorok (stone slabs), aperture and
other material;
In the field of Real Estate Management, Hospitality, the key focus areas are:
g. Reduce and eliminate where possible the use of single use plastic, installation and application of
dispensers, reusable inventory and alike;
h. Preservation and conservation, with furniture relocation scheme implemented within the Group’s
portfolio, allowing reuse of old traditional furniture based on property class;
i. Recycling of obsolete apertures into artistic elements within the portfolio;
j. RMS (room management system) reduced power requirements in all newer developments; and
k. Application of energy management systems, flow control and similar practices, reducing energy
and water wastage.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
7
DIRECTORS’ REPORT - continued
Environmental, Social and Governance (ESG) responsibility and commitment - continued
2. Social
a. Equal treatment within workforce, whether own or outsourced;
b. Diversity of nationalities, 10 plus nationalities in workforce at all times both local, EU or non-EU;
c. Gender neutral Human Resources (HR) and management setup; and
d. Corporate culture built on open door policy, equality, fairness and transparency.
3. Governance
a. The Group as a listed entity, is under the supervision of the MFSA (Malta Financial Supervisory
Authority);
b. Transparency is in the focus;
c. Follows corporate best practices, rules and regulations;
d. As a public company, follows General Data Protection Regulation (GDPR) and Anti-Money
Laundering (AML) international standards; and
e. The Group has no political engagements.
Going Concern
Currently, the Directors are of the opinion that even though the global and local market trends might deliver
turbulent short- and mid-term forecast, over the long run Management do not see any going concern issues. The
Group’s financial performance is expected to keep on benefiting 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 and sustainable long-term growth. The Group remains on the path of development and growth resulting
from the implementation of its conservative business and financial strategy and ongoing development
programme. The Directors assumed that core market of operation, the industry and the general economic
environment will remain stabilised in mid to long term and the Group’s financial results will keep on following this
trend.
The ongoing development projects are progressing as expected, recovering from the interim delays and are
expected to be successfully concluded in the coming years, as communicated by the Group, subject to the
current, known market and economic factors remaining constant or improving further.
The Group’s current low level of indebtedness and the structure of the long-term development loans, 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 on the core market of the Group present new
opportunities, which the Group plans to continue to explore, aiming to further enhance its core product, together
with maintaining its very clear strategy and focus.
The Directors expect that under the currently known market conditions on the local or international landscape
and expected business developments, the Group will not face a going concern issue.
Principal Risks and Uncertainties
The key risk factors the Group 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 related to the change of interest rates and the conditions of financing deriving from the overall
global economy, local financial market, global and European inflationary environment, and Euro-based
interest rates; and
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
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DIRECTORS’ REPORT - continued
Principal Risks and Uncertainties - continued
(v.) risks relating to the general business and operations of the Group, including global political and economic
instability, cyber threats, or supply chain risks. This category of risk factors is intended to encapsulate
those risk factors that concern the day-to-day operations and activities of the Group, regardless of the
line of operations concerned and are, therefore, considered to apply equally to each of the individual
business lines referred to in categories (i) to (iii). In addition, the Board of Directors considers that in view
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 Group’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
Group 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 and development activities of the Group.
Shareholding Structure of the Group Pursuant to Capital Markets Rule 5.64
The issued share capital of the Group as at the date of this report is 249,179,183 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 Group’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
Group, pursuant to which VBLM Limited provides the Group with, inter alia, senior executive and strategic
management and other support services. There are no restrictions on the transfer of shares of the Company, nor
other limitations on the holding of securities or the need to obtain the approval of the Company or other holders
of securities.
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 Group.
Disclosure of Material Contracts Pursuant to Capital Markets Rule 5.70.1
The Group 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 Group’s business and are considered to be at arm’s length and under the general business and ethical
standards applied by peer companies, globally.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
9
DIRECTORS’ REPORT - continued
Disclosure of Material Contracts Pursuant to Capital Markets Rule 5.70.1 - continued
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 Group is the Management Services Agreement with VBLM Limited, details
of which have been published in Section 4.5 of the Registration Document Listing Prospectus.
Company Secretary and Registered Office of the Company Pursuant to Capital Markets Rule 5.70.2
Dr. Joseph 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 consolidated financial statements included in the
Annual Financial Report are prepared in accordance with the requirements of International Financial Reporting
Standards as adopted by the European Union, 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 Group and that
this report includes a fair review of the development and performance of the business and position of the Group,
together with a description of the principal risks and uncertainties that it faces.
Indemnification of the Directors and Senior Management by the Annual General Meeting
In line with standard international practices and Article 148. Of the Maltese Companies Act, since inception, the
Group’s Directors propose to the Annual General Meeting of the Group, a resolution on the indemnification of the
Directors and Senior Management, related to the year of reporting, to indemnify the members of the Board of
Directors and Senior Management of the Group 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 Group, 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.
The purpose of such resolution, in line with the applicable Maltese laws and governance standards, is to obtain
shareholder approval in order to allow for an indemnity to be provided by the Group to the directors and senior
management. Such indemnification, as per law, is excluding the cases of fraud, criminal act, gross negligence
and alike. This, if proposed and consecutively approved by the Annual General Meeting of the Group, would
result in the said person/s being protected (within the limits of the applicable Maltese laws) for any liabilities and
expenses that may arise as a result of their duties being exercised for and on behalf of the Group or associated
companies, or affiliates.
Board of Directors
The Board of Directors of the Company currently consists of the following Directors:
Dr. Geza Szephalmi, Chairman and Executive Director
Dr. Andrei Imbroll, Executive Director
Mr. Julian Tzvetkov, Executive Director
Mr. Artur Haze, Non-Executive Director, Member of the Audit Committee
Mr. David Galea Souchet, Non-Executive Director, Chairman of the Audit Committee
Ms. Isabella Vella, Non-Executive Director, Member of the Audit Committee
Dr. John Attard, Non-Executive Director, Member of the Audit Committee (appointed as a Board member on 06
July 2023)
Under the provisions of the Company’s Memorandum and Articles of Association, the appointment of the directors
happens at the Company’s General Meeting.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
10
DIRECTORS’ REPORT - continued
Auditors
A proposal will be submitted to the Annual General Meeting to re-appoint RSM Malta as Auditor to the Group for
year 2024 and to set their remuneration for the period.
Statement of Directors’ responsibilities for the financial statements
The Maltese Companies Act (Cap. 386), enacted in Malta, requires the Directors to prepare consolidated financial
statements for each financial year which give a true and fair view of the financial position of the Group as at the
end of the financial year and of the profit or loss for that year.
In preparing the consolidated financial statements, the Directors are responsible for:
▪ adopting the going concern basis unless it is inappropriate to presume that the Group will continue in business
as a going concern;
▪ selecting suitable accounting policies and applying them consistently;
▪ making judgements and accounting estimates that are reasonable and prudent;
▪ accounting for income and charges relating to the accounting period on accrual basis;
▪ valuing separately the components of asset and liability items;
▪ reporting comparative figures corresponding to those of the preceding accounting period; and
▪ preparing the consolidated financial statements in accordance with International Financial Reporting
Standards as adopted by the EU.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at
any time the financial position of the Group and to enable the Directors to ensure that the consolidated financial
statements comply with the Maltese 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 consolidated 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 Group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
Additionally, the directors are responsible for:
• the preparation and publication of the Annual Financial Report, including the consolidated financial
statements and the relevant tagging requirements therein, as required by Capital Markets Rule 5.56A, in
accordance with the requirements of the European Single Electronic Format Regulatory Technical
Standard as specified in the Commission Delegated Regulation (EU) 2019/815 (the “ESEF RTS”)
• designing, implementing and maintaining internal controls relevant to the preparation of the Annual
Financial Report that is free from material non-compliance with the requirements of the ESEF RTS,
whether due to fraud or error, and consequently, for ensuring the accurate transfer of the information in
the Annual Financial Report into a single electronic format.
Signed on behalf of the Group’s Board of Directors on 24 April 2024 by Julian Tzvetkov (Director) and Dr.
Andrei Imbroll (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in
conjunction with the Annual Financial Report and Consolidated Financial Statements.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
11
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS
In line with the Capital Markets Rules (the “Rules”), as set out in Chapter 12 of the Rules, the Group 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 Group.
The Group 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
Financial Report with the details of the remuneration policy of the Group and the remuneration of the Directors.
In terms of the effective Remuneration Policy of the Group (“Remuneration Policy”), and the principles
presented in the Listing Prospectus, and in alignment and compliance with the relevant and applicable guidelines,
the Board has reviewed the principles and the relevant guidelines and has concluded that based on 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 Group, this Policy does not require a
separate Remuneration Committee to be set-up and the responsibilities attributed to overseeing the
Remuneration Policy of the Group 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
of the Company for adoption. In the reporting period, there were no changes to the Remuneration Policy.
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 06 July 2023,
approving the aggregate total annual remuneration of the Board of Directors, set the directors’ fee for one year
at a total of €70,000.
The directors’ fee is a fixed annual fee and there has been no change in the individual directors’ remuneration
with regards to the fixed fee compared to the previous year in the reporting period.
The total directors’ fees paid during the financial year 2023 to the Board of Directors was €64,883. According to
the existing Policy, the Directors are not entitled to variable fee or other remuneration or benefits related to their
directors’ position within the Group or from any undertakings belonging to the same Group, meaning a parent
undertaking and any subsidiary undertaking.
The Directors of the Group have not been granted any shares or shares options in the reporting period, as part
of their remuneration.
After an assessment of the market conditions and the particularities of the Group, the Directors have concluded
that the remuneration of the Board of Directors of the Group 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 Remuneration Policy of the Group is unchanged since its introduction at the Company’s Annual General
Meeting in 2022, and since there are no changes to annual remuneration of directors, there are no differences
which may be presented as comparative analysis required by Appendix 12.1 of the Capital Markets Rules
paragraph (b).
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
12
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS - continued
Remuneration related to the Directors, in accordance with the Remuneration Policy - continued
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 Group;
- 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
Since its foundation, the 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 Group.
The provision of management services by VBLM to the 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.
The remuneration payable by the Group 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 Group, as described in detail 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 Group.
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 Group more than 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 Group, are aligned with the Shareholders’ and Group’s
interests and remains fully committed to deliver the strategic objectives of the Group 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 Group, supporting the continuation and evolvement of its existing well-established structure,
and to further implement the Group’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. Additional details on the Management Services Agreement are presented in the Group’s Listing
Prospectus.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
13
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS - continued
Executive Management and Services - continued
During 2023, the total management services fee due to VBLM for the executive, operational and strategic
management and services provided to the Group was €400,000, exclusive of VAT.
Other than the directors’ fee and the management services fee, the Group does not provide any other pay,
remuneration or alike to its directors for their services. Any changes to the terms of the existing Management
Services Agreement are subject to the vetting and approval of the Audit Committee and the non-executive
directors of the Group.
The contents of this Remuneration Report have been checked by the Auditors of the Group.
Signed on behalf of the Group’s Board of Directors on 24 April 2024 by Julian Tzvetkov (Director) and Dr. Andrei
Imbroll (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction
with the Annual Financial Report and Consolidated Financial Statements.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
14
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE
The Group is subject to the Code of Principles of Good Corporate Governance
1
(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 Financial Report,
accompanied by a report of the independent auditors.
The Board of Directors of the Group (“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 Group 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 Group.
Basic Principles, in Compliance with Code Provisions:
1. The managing body of the Group 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. In the reporting period, until the Annual General Meeting, the
number of Directors was six, from the Annual General Meeting held in July 2023, the Board is composed of
seven Directors, with four (4) non-executives of whom three (3) are independent;
4. Members of the Board of Directors are all seasoned professionals, with significant local and international
professional track record, including that of directors of other listed companies, and proven experience in
applying the highest level of corporate governance standards and best management practices, obtained in
running large public and private companies;
5. The Board of Directors meets regularly and all Directors are given ample opportunity to discuss the agenda
and convey their opinions as specified in Code Provision 5;
6. The Group 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, consisting of four (4)
members. 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 Group's Articles of Association and the Terms of
Reference of the Audit Committee;
8. The Group has not appointed a Remuneration Committee. The Board believes that the size of the Group 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 remunerated equally for their directorship, and relies on
the constant scrutiny of the Board itself, the Group’s shareholders, the nature and the size of the Group, as
well as the market and the rules by which the Group 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 Group recognises the importance of its role in the corporate social, health and environmental
responsibility arena and seeks to ensure that in its development projects and ongoing operations are
respectful and it is committed to comply with the expected ESG principles and directions. 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 sustainable and environmentally
responsible practices, in line with Code Provision 12;
1
https://www.mfsa.mt/wp-content/uploads/2019/02/Code-of-Principles-of-Good-Corporate-Governance-for-Listed-Entities.pdf
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
15
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Basic principles, in Compliance with Code provisions: - continued
11. Pursuant to the Group's statutory obligations, the annual financial 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 Group'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 Group is in compliance with the Code.
Specific Corporate Governance principles
The Group, its Directors, its Management and Employees believe that good corporate governance is a key
element for sustainable business success and supporting the integrity and efficiency of the Company and its
Subsidiaries, operations and long-term success. The Group is committed to establishing, maintaining and
following strong corporate governance principles and best management practices in line with best local and
international practices, as a basic requirement for delivering the Group’s planned financial and business goals,
achieving its expected business potential, and protecting the Group’s investors, employees, partners, customers
and reputation.
The Group’s Directors are committed to ensure the openness and willingness to establish and follow the basic
principles set by the best international practices in corporate governance, regularly disclose financial performance
figures which are truthful and accurate, provide timely and accurate information about the Group’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
Group’s business strategy. Among others, the Group 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 Group’s governing bodies are:
i. Fairness - Fair and ethical behaviour in all dealings is fundamental to the success of Group’s business.
Today, the Group 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, the Group enjoys the
trust and support of its partners, peers, customers and suppliers. The Group 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 the Group to always act responsibly and be able to give clear explanations or
rationale for the Group’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 Group, 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 behaviour 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 the Group 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 Group.
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 Group.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
16
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Administrative, Management and Supervisory Bodies and Senior Management
The Board
The Group 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 seven Directors, of which four are non-
executive, all of whom are entrusted with the overall direction, administration and management of the Group.
Each Director declares that he/she undertakes to
i. maintain in all circumstances his/her independence of analysis, decision and action;
ii. not to seek or accept any unreasonable advantages that could be considered as compromising his/her
independence; and
iii. clearly express his/her opposition in the event that he/she finds that a decision of the Board may harm
the Group.
As of 31 December 2023, the Board of Directors of the Group consists of the following persons:
Name
Designation
Dr. Geza Szephalmi
Chairman and Executive Director
Dr. Andrei Imbroll
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, Chairman of the Audit Committee
Isabella Vella
Independent, non-executive director and member of the Audit Committee
Dr. John Attard
Non-executive Director, member of the Audit Committee (appointed on 06 July 2023)
As of 31 December 2023, the Company Secretaries appointed are Dr Joseph Borg Bartolo and Dr Mikiel Calleja.
Board Meetings
During year 2023, there have been 6 board meetings held and several decision makings in writing. At the Annual
General Meeting of the Group, the previous directors have been re-elected, and the number of directors was
increased to seven.
The number of Board meetings attended by Directors for the year under review is as follows:
Members Attended
Andrei Imbroll 6
Artur Haze 6
David Galea Souchet 6
Geza Szephalmi 6
Isabella Vella 6
Julian Tzvetkov 6
John Attard 3 (appointed on 06 July 2023)
Information and professional development
The Group ensures that it provides its Directors with the necessary detailed and relevant information to enable
them effectively contribute to board decisions. The Group is committed to provide any additional analysis, data,
adequate and detailed information to its Directors, as that might be required to allow for efficient and relevant
discussions prior to decision making. The Group pledges to make available to the Directors all information as
required.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
17
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Appointment and Removal of Directors
The Directors of the Group are appointed at the General Meeting by the Shareholders in accordance with the
provisions of the Articles of Association of the Group. The procedure for the appointment of Directors shall be as
detailed and described in the Articles.
The Group 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. 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 Company not later
than 14 days after delivery of the said notice.
Whenever in terms of these Articles, an election is necessary amongst candidates nominated for appointment as
Directors, such election shall be conducted in the manner prescribed by the Articles or in such manner as close
as practicably possible thereto as the Directors may consider equitable in the circumstances.
Any Director may be removed at any time by the Group 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 Group, 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 Group 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 Group is entrusted with the Board of Directors, who are
empowered and authorised to delegate any of its functions relating to the Group to members of the Group’s
management. The executive directors of the Company are entrusted with the executive management functions,
including the management of the day-to-day operations, as defined in the Articles and described below.
Any one or more members of the Board of Directors may also occupy the position of Chief Executive Officer of
the Group and may also occupy the position of members of the board of directors of subsidiaries or affiliate
companies of the Group from time to time.
Evaluation of the Board’s Performance
According to the statues of the Group and the relevant regulations, the Board regularly 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 Annual General Meeting of the Group.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
18
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
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 Group.
For the current reporting year under review, the Directors are each entitled to a gross annual remuneration of
€10,000 from the date of their appointment.
Executive Directors
Any two of the Executive Directors acting jointly together have representation and execution rights on behalf of
the Group to the extent permitted and as defined by the Memorandum of Association of the Group. In this respect,
and in line with the good governance standards and internal control procedures implemented by the Group, the
Memorandum of Association ties the legal representation and the signatory rights of the Group to predefined
monetary threshold, with enhanced safeguards applicable to transactions of higher monetary value. The Group
applies a dual signatory policy as determined in the Articles of the Group and other relevant Group regulations.
Any one Executive Director of the Group shall represent the Group in judicial proceedings, as defined in the
Articles, provided that no proceedings may be instituted by the Group without the approval of the Board of
Directors of the Group.
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 Group for such period and on such terms as they deem fit.
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 Executive Directors, among which the CEO was nominated, are nominated and provided under the
Management Services Agreement with VBLM, which is a continuous arrangement dating back to the
establishment of the Company and the details of which have been explained in the Listing Prospectus. The
executive directors are also members of the Executive Committee of the Group.
The CEO is responsible for the Group’s operative management and direction in accordance with the Articles, and
the directions of the Executive Committee, the resolutions of the Board of Directors and the resolutions adopted
by the General Meeting. The CEO has the responsibility to decide on the Group’s organisational structure and
relevant internal rules and regulations according to the Articles of the Group.
Declaration
None of the Directors, members of the board committees or members of management have, in the last five years:
- been the subject of any convictions in relation to fraudulent offences;
- 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;
- been the subject of any official public incrimination and/or sanctions by statutory or regulatory
authorities (including designated professional bodies);
- 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.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
19
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
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, the audit process, financial policies and internal control structure, also overview
the Group’s system of internal controls and compliance with laws and regulations, as well as to ensure compliance
with the relevant regulations of the Capital Markets Rules. The Audit Committee of the Group is elected among
the Board members, as defined in the Articles and relevant regulations. The Audit Committee oversees the
conduct of the annual audit process, and acts to facilitate communication between the Board, the Management
and the Group’s appointed auditors.
As at the date of this Report, the Audit Committee is composed of four members – Mr. David Galea Souchet
(Chairman), Ms. Isabella Vella, Mr. Artur Haze, and Dr. John Attard. Mr. David Galea Souchet and Dr. John
Attard 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, management of financial risk, audit
process, any transactions with related parties and the Group’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.
The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the best interests
of the Group. Its primary objective is to assist the Board in dealing with issues of risk, control and governance
and in reviewing the Group’s reporting processes, financial policies and internal control structure. The Audit
Committee also oversees the conduct of the annual financial audit and facilities communication between the
Group’s Board, 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 Group;
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 Group 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
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
20
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Audit Committee - continued
vii. reviewing the Group’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 Group, 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 Group policies with respect to risk assessment and risk management, review contingent
liabilities and risks that may be material to the Group; 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 2023, the Audit Committee met 5 times in person or via video conference, out of which 2 meetings the
Group’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 5
David Galea Souchet 5
Isabella Vella 5
John Attard 2 (appointed on 06 July 2023)
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 is the main operational body of the Group, ensuring smooth and efficient
day-to-day operations and control, in line with the strategic operational decisions of the Board. The EMC consists
of the Executive Directors, senior management including the CEO, CFO and COO and any other managers of
the Group as might be appointed to the EMC, from time to time.
The EMC is represented at the Board of Directors by 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 Group’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 Group 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 Group announcements, the Group seeks to keep an updated and
informative website, and to address any information needs of the shareholders, in various ways.
The Group has announced a Shareholders’ Loyalty Programme which is regularly updated and communicated
with the Shareholders.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
21
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Relations with Shareholders and with the Market - continued
In line with its public status and relevant regulation, the Group regularly releases its financial reports and group
announcements, which are published through the Malta Stock Exchange, and are simultaneously published on
the Investors’ section of the Group’s website.
Conflict of Interest
The Board is fully aware of its obligations regarding dealings in securities of the Group as required by the Capital
Markets Rules and the related disclosures in case of such dealings. Related party transactions and dealings are
also disclosed as required, in compliance with the applicable rules and also disclosed in the relevant section of
the Annual Consolidated Financial Statements.
Signed on behalf of the Company’s Board of Directors on 24 April 2024 by Julian Tzvetkov (Director) and Dr.
Andrei Imbroll (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in
conjunction with the Annual Financial Report and Consolidated Financial Statements.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
22
STATEMENT OF COMPREHENSIVE INCOME
2023
2022
Notes
€
€
Revenue
3
Investment income
4
Cost of sales
5
(1,696,305 )
(1,168,215 )
Gross profit
Other operating income
6
Administrative expenses
5
(1,045,523 )
(897,336 )
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation
5
(312,661 )
(280,459 )
Operating income
Interest income
7
Impairment on inventory
5
(65,618 )
Receivable written off
5
(20,358 )
Finance costs
8
(230,736 )
(190,446 )
Profit before income tax
Income tax expense
9
(321,970 )
(280,502 )
Profit for the year
Total comprehensive income for the year
Earnings per share
The notes on pages 26 to 49 are an integral part of these consolidated financial statements.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
23
STATEMENT OF FINANCIAL POSITION
2023
2022
Notes
€
€
ASSETS
Non-current assets
Intangible assets
10
Property, plant and equipment
11
Investment properties
12
Investment in a subsidiary
13
Loans receivable
14
Deferred tax assets
15
Current assets
Non-current asset held for sale
16
Inventory
17
Current tax receivable
Loans receivable
14
Trade and other receivables
18
Cash and cash equivalents
19
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Share premium
Other reserves
20
General reserves
20
Retained earnings
20
TOTAL EQUITY
Non-current liabilities
Borrowings
21
Lease liabilities
22
Deferred tax liability
23
Trade and other payables
24
Current liabilities
Borrowings
21
Lease liabilities
22
Trade and other payables
24
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
The notes on pages 26 to 49 are an integral part of these consolidated financial statements.
Signed on behalf of the Company’s Board of Directors on 24 April 2024 by Julian Tzvetkov (Director) and
Dr. Andrei Imbroll (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in
conjunction with the Annual Financial Report and Consolidated Financial Statements.
VBL Plc
Annual Financial Report and Consolidated Financial Statements - 31 December 2023
24
STATEMENT OF CHANGES IN EQUITY
Share
capital
Share
premium
Other
reserves
General
reserves
Retained
earnings
Total
€
€
€
€
€
€
Balance at 1 January 2022
Total comprehensive income
- Profit for the year
Transactions with owners in their capacity as owners
- Issuance of shares
- Dividends declared during the period (Note 20)
(160,000 )
(160,000 )
(160,000 )
Transfer from revaluation reserve to retained
earnings, net of deferred tax
(22,751 )
Balance at 31 December 2022
Balance at 1 January 2023
Total comprehensive income
- Profit for the year
Transactions with owners in their capacity as owners
- Issuance of shares
- Dividends declared during the period (Note 20)
(180,000 )
(180,000 )
(180,000 )
Transfer from revaluation reserve to retained
earnings, net of deferred tax
(22,751 )
Balance at 31 December 2023
The notes on pages 26 to 49 are an integral part of these consolidated financial statements
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
25
STATEMENT OF CASH FLOWS
2023
2022
Notes
€
€
Cash flows from operating activities
Profit before tax
Depreciation and amortisation
5
Provision for expected credit losses
18
Receivable written off
5
Investment income
4
(2,042,475 )
(6,874,185 )
Impairment on inventory
Interest income
7
(10,067 )
(7,084 )
Interest expense
8
Cash flows generated before working capital changes
Increase in inventories
(375 )
(271,176 )
Decrease/(increase) in trade and other receivables
(22,225 )
(Increase)/decrease in trade and other payables
(216,103 )
Net cash flows generated from operating activities
Cash flows from investing activities
Purchase of intangible assets
10
(25,000 )
Purchase of property, plant and equipment
11
(22,650 )
(14,664 )
Proceeds from sale of investment property
Acquisition of investment properties
(965,597 )
(6,278,086 )
Net cash flows used in investing activities
(546,147 )
(5,442,750 )
Cash flows from financing activities
Net proceeds from issuance of share capital
Interest paid on borrowings
(514,481 )
(170,214 )
Withholding tax paid
(8,000 )
Dividends paid
(180,000 )
(160,000 )
Movement in borrowings
Principal lease payments
22
(13,000 )
(11,443 )
Interest paid on leases
22
(19,489 )
(20,232 )
Net cash flows (used in)/generated from financing activities
(376,096 )
Net decrease in cash and cash equivalents
(415,482 )
(600,444 )
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of year
21
The notes on pages 26 to 49 are an integral part of these consolidated financial statements.
Significant non-cash transactions
During the year ended 31 December 2023, the Group did not have any significant non-cash transactions.
During the year ended 31 December 2022, the Group 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.
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.
RSM Malta is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network.
Each member of the RSM network is an independent accounting and consulting firm which practices in its own right.
The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Malta
Mdina Road,
Ħaż-Żebbuġ, Malta
ZBG 9015
T: 356 2278 7000
www.rsm.com.mt
50
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of VBL Plc
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the accompanying consolidated financial statements of VBL Plc (“the Company”) and
its subsidiaries (together, “the Group”) set out on pages 22 - 49, which comprise the consolidated
statement of financial position as at 31 December 2023, the consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including a summary of material accounting
policy information.
In our opinion, the consolidated financial statements give a true and fair view of the financial position of
the Group as at 31 December 2023, and of its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting Standards (IFRS Accounting Standards) as
adopted by the European Union (EU), and have been properly prepared in accordance with the
requirements of the Maltese 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 Group in accordance with
the ethical requirements of both the International Ethics Standards Board for Accountants’ International
Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA
Code) and the 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 Group 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 Group are disclosed in Note 5 to these consolidated
financial statements.
51
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
Report on the Audit of the Consolidated 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 Group’s investment properties are carried at fair value of €77,127,963 as at 31 December 2023.
Further detail is included in Note 12 to these consolidated 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 12 to these consolidated financial
statements and concluded that these are adequate.
52
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
Report on the Audit of the Consolidated Financial Statements - continued
Other Information
The directors are responsible for the other information. The other information comprises the general
information, directors’ report, remuneration report and statement of the directors and statement by the
directors on compliance with the Code of Principles of Good Corporate Governance, but does not
include the consolidated financial statements and our auditors’ report thereon. Our opinion on the
financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon, except as explicitly stated within the Report on Other Legal and Regulatory
Requirements.
In connection with our audit of the consolidated 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 Maltese 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 Maltese Companies Act (Cap. 386);
• the information given in the directors’ report for the financial year for which the consolidated
financial statements are prepared is consistent with the consolidated 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 Consolidated Financial Statements
The directors are responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with IFRS Accounting Standards as adopted by the EU and the requirements
of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
The directors have delegated the responsibility for overseeing the Group's financial reporting process
to the Audit Committee.
53
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
Report on the Audit of the Consolidated Financial Statements - continued
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. 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 consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, 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 Group’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 Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditors’ report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
54
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
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 consolidated 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 Financial 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 consolidated financial statements
included in the Annual Financial Report. Our responsibilities do not extend to considering whether this
statement is consistent with any other information included in the Annual Financial 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 Group’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 14 to 21 has been properly prepared in accordance with the requirements of the Capital Markets
Rules issued by the Malta Financial Services Authority.
55
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
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 2023, entirely
prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the annual financial report, including the
consolidated financial statements and the relevant mark-up requirements therein, by reference to
Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Auditors’ responsibilities
Our responsibility is to obtain reasonable assurance about whether the annual financial report, including
the consolidated financial statements and the relevant electronic tagging therein comply in all material
respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable
assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
• Obtaining an understanding of the entity’s financial reporting process, including the preparation of
the annual financial report, in accordance with the requirements of the ESEF RTS.
• Obtaining the annual financial report and performing validations to determine whether the annual
financial report has been prepared in accordance with the requirements of the technical
specifications of the ESEF RTS.
• Examining the information on the annual financial report to determine whether all the required
taggings therein have been applied and whether, in all material respects, they are in accordance
with the requirements of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
56
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
Report on Other Legal and Regulatory Requirements - continued
Opinion
In our opinion, the annual financial report for the year ended 31 December 2023 has been prepared, in
all material respects, in accordance with the requirements of the ESEF RTS.
Other matters on which we are required to report by exception
Under the Maltese 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 adequate for audit have not been received from branches we have not visited; or
• the consolidated financial statements are not in agreement with the accounting records and returns;
or
• we were unable to obtain all the information and explanations which, to the best of our knowledge
and belief, are necessary for the purposes of our audit.
We also have 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 to you in respect of these responsibilities.
Appointment
We were first appointed to act as auditors of the Group 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 Group is three financial periods.
RSM Malta
Registered Auditors
Mdina Road
Zebbug ZBG 9015
Malta
Conrad Borg
Principal
24 April 2024
