Company Registration No. C 56012
VBL PLC
Annual Financial Report
and
Financial Statements
31 December 2023
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
1
CONTENTS
Pages
General information 2
Directors’ report 3 - 10
Remuneration report and statement of the directors 11 - 12
Statement by the Directors on Compliance with the Code of Principles of
Good Corporate Governance 13 - 20
Statement of comprehensive income 21
Statement of financial position 22
Statement of changes in equity 23
Statement of cash flows 24
Notes to the financial statements 25 - 48
Independent auditors’ report 49 - 55
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
2
GENERAL INFORMATION
Registration
VBL Plc is registered in Malta as a 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
reporting entity.
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 and principal place of business
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 Financial Report and Financial Statements - 31 December 2023
3
DIRECTORS’ REPORT
Accounts
The Directors present their annual financial report and audited financial statements of VBL Plc (“the Company”)
for the year ended 31 December 2023.
Principal activities
The Company is involved in property ownership and 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.
During the course of over ten years of operations, the Company has established itself as one of the largest and
most active investors in immovable property in Valletta (based on the number of owned, 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. Property ownership, regeneration and maintenance;
B. 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;
C. Execution, on a project-by-project basis, of the restructuring, conceptualisation, re-development,
re-generation 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.
D. 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 professional skills and management structure with large range of
in-house capabilities in each of the principal activities undertaken by the Company, ranging from the asset
acquisition, asset regeneration/renovation/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 2023
The financial performance of the Company has remained stable and has shown continuous growth from the
previous years. During the reporting period, the Company managed to increase its revenues compared to the
previous year, resulting in a 26% increase in 2023, whilst operational profitability, i.e. Operational EBITDA, at
€434,530, up from €185,502 and Operational EBITDA Margin at 51% up from 28%, show significant growth. The
Company’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. During the
reporting period, the Company 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 Company has retained focus on its core market, Valletta.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
4
DIRECTORS’ REPORT - continued
Review of Business Development and Financial Position of the financial year 2023 - continued
In the reporting period, the Company 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 is amounting to €3,464,323.
The proportion of renovated operational assets continues to grow, however it remains relatively low compared to
the Company’s total owned portfolio. As of 31 December 2023, only about 30% of the Company’s owned assets,
based on square meters, were operational and revenue generating. The remaining part of the Company 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 expected to exceed this level at mid-term, following completion of current
development projects.
The Company continued using its long-term development financing facility, in line with the progress of the
development programme. The Company’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 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 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
844,517
672,392
26%
Investment Income
2,042,475
6,874,185
(70%)
Cost of Sales
(58,291)
(10,023)
482%
Gross Profit
2,828,701
7,536,554
(62%)
GOP Margin
98%
99%
Other Operating Income
192,078
35,730
438%
Total Operating Costs
(543,774)
(512,597)
6%
EBITDA
2,477,005
7,059,687
(65%)
EBITDA Margin
88%
94%
EBITDA (Operational)
434,530
185,502
134%
EBITDA Margin (Operational)
51%
28%
Notes:
(1) Operational EBITDA and Operational EBITDA margin are calculated without investment income.
VBL Plc
Annual Financial Report and 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 €14,139,871 (2022: €12,642,038)
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 Company’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 Company are ordinary shares, with nominal
value of €0.20 each, and have the same shareholders’ rights.
The authorised share capital of the Company is €66,000,000.
Events After the End of the Reporting Period
There were no specific, materially important, events affecting the Company 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 Company’s long-term business and
development strategy.
Future Developments
The Company 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 Company
consistently builds and maintains a proprietary pipeline on the Valletta real-estate market. The Company’s
acquisition focus remains highly opportunistic and is more pronounced towards larger assets or landmark
properties. The Company 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 Company 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 Company’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 Company 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 Financial Statements - 31 December 2023
6
DIRECTORS’ REPORT - continued
Financial Risk Management
The Company is exposed to a variety of financial risks, including - among others - market risk, interest rate risk,
credit risk and liquidity risk. The Company’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
Company's financial performance. The Company 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 Company. These
policies include identification and analysis of the Company and appropriate procedures, controls and risk limits.
Environmental, Social and Governance (ESG) responsibility and commitment
The Company 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 Company has established a dedicated leadership team, which is
knowledgeable about ESG priorities and can provide continuous guidance and coordinated efforts to all
stakeholders in shaping up the corporate culture, internal and external processes where the Company 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 Company’s declared commitment to improving all areas of the business, environmental and social ecosystem
of the Company, 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 Company has increased its efforts and awareness of the ESG issues, understanding how essential they are
to effectively navigate the Company and its business in this evolving landscape and ensure the long-term success
of the Company. The Company has been assessing and responding to all three ESG pillars.
Of the three pillars, the most sector specific in the Company’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 Company’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
Company’s development projects;
c. Applying traditional old Maltese tiles sourced from within the Company’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 Company’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 materials;
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
Company’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 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 Company 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 Company 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
Company’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 Company 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 Company’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 Company, subject to the
current, known market and economic factors remaining constant or improving further.
The Company’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 Company present new
opportunities, which the Company 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 Company will not face a going concern issue.
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 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 Financial Statements - 31 December 2023
8
DIRECTORS’ REPORT - continued
Principal Risks and Uncertainties - continued
(v.) risks relating to the general business and operations of the Company, 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 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 and development activities of the Company.
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 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 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. 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 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.
VBL Plc
Annual Financial Report and 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 Company is the Management Services Agreement with VBLM Limited,
details of which have been published in Section 4.5 of the Registration Document (Listing Prospectus), dated 23
July 2021.
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 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 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.
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
Company’s Directors propose to the Annual General Meeting of the Company, 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 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.
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 Company 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 Company 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 Company or associated
companies, subsidiaries 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 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 Company
for year 2024 and to set their remuneration for the period.
Statement of Directors’ responsibilities for the financial statements
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 responsible for:
▪ adopting the going concern basis unless it is inappropriate to presume that the Company 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 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 Company and to enable the Directors to ensure that the 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 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.
Additionally, the directors are responsible for:
• the preparation and publication of the Annual Financial Report, including the 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 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 Financial Statements.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
11
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS
In line with the Capital Markets Rules (the “Rules”), as defined in Chapter 12 of the Rules, the Company is subject
to draw 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 (8A.4) the Company is to include a Remuneration Statement in its Annual
Financial 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 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 Company, this Policy does not require
a separate Remuneration Committee to be set-up and the responsibilities attributed to overseeing the
Remuneration Policy of the Company shall be performed by the Board of Directors. 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 Company or from any undertakings belonging to the same Company, meaning a
parent undertaking and any subsidiary undertaking.
The Directors of the Company 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 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 Remuneration Policy of the Company 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).
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;
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
12
REMUNERATION REPORT AND STATEMENT OF THE DIRECTORS - continued
Executive Management and Services - continued
Directors’ Fee - continued
- 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 Company 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 Company.
The provision of management services by VBLM to the Company is based on the existing and established
practice dating back to foundation of the Company 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 Company. 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 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 Company 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 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, 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. Additional details on the Management Services Agreement are presented in the Company’s
Listing Prospectus.
During 2023, the total management services fee due to VBLM for the executive, operational and strategic
management and services provided to the Company was €400,000, exclusive of VAT.
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 existing Management
Services Agreement are subject to the vetting and approval of the Audit Committee and the non-executive
directors of the Company.
The contents of this Remuneration Report have been checked by the Auditors of the Company.
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 Financial Statements.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
13
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
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 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. 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 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, 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 Company’s Articles of Association and the Terms of
Reference of the Audit Committee;
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 remunerated equally for their directorship,
and relies on the constant scrutiny of the Board itself, the Company’s shareholders, the nature and the size
of the Company, as well as 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 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 Financial Statements - 31 December 2023
14
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 Company’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 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.
Specific Corporate Governance principles
The Company, 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. VBL plc 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 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 international practices in corporate governance, regularly disclose financial performance
figures which are truthful and accurate, 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 the Company’s governing bodies are:
i. Fairness – Fair and ethical behaviour in all dealings is fundamental to the success of the Company’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, Company 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 Company 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 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 Company 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, Environmental Social Responsibility – In addition to the above four basic corporate
governance principles, the Board of Directors and Management seek to adopt and follow the increasingly
important principles of the corporate, environmental social responsibility in the day-to-day management
practices at the Company.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
15
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 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 seven Directors, of which four 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.
As of 31
st
December 2023, the Board of Directors of the Company 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 Company, 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 Company ensures that it provides its Directors with the necessary detailed and relevant information to enable
them effectively contribute to board decisions. The Company 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 Company pledges to make available to the Directors all information as
required.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
16
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 Company are appointed at the General Meeting, by the Shareholders in accordance with the
provisions of the Articles of Association of the Company. The procedure for the appointment of 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. 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 the 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 a 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 functions relating to the Company to members of the Company’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 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
According to the statues of the Company 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 Company.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
17
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 Company.
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 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, as defined in
the Articles, provided that no proceedings may be instituted by the Company without the approval of the Board
of Directors of the Company.
Chief Executive Officer
In terms of Article 65 of the Articles of Association, the Directors may from time to time appoint any person to the
office of Chief Executive Officer (CEO) of the Company 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 think 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 Company.
The CEO is responsible for the Company’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 Company’s organisational
structure and relevant 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:
- 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 Financial Statements - 31 December 2023
18
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 Company’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 Company 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 Company’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 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.
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 facilities communication between the
Company’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 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
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
19
STATEMENT BY THE DIRECTORS ON COMPLIANCE WITH THE CODE OF PRINCIPLES OF
GOOD CORPORATE GOVERNANCE - continued
Audit Committee - continued
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 2023, the Audit Committee met 5 times in person or via video conference, out of which 2 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 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 Company, 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 Company 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 Company’s business. The EMC ensures that no one individual or small Company 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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
20
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 Company regularly releases its financial reports and
company announcements, which are 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 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 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 Financial Statements.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
21
STATEMENT OF COMPREHENSIVE INCOME
2023
2022
Notes
€
€
Revenue
3
844,517
672,392
Investment income
4
2,042,475
6,874,185
Cost of sales
5
(58,291)
(10,023)
Gross profit
2,828,701
7,536,554
Other operating income
6
192,078
35,730
Administrative expenses
5
(543,774)
(512,597)
Earnings before interest, tax, depreciation and amortisation
2,477,005
7,059,687
Depreciation and amortisation
5
(301,758)
(268,091)
Operating income
2,175,247
6,791,596
Interest income
7
10,067
7,084
Impairment on inventory
5
-
(65,618)
Receivable written off
5
(20,358)
-
Finance costs
8
(230,435)
(190,446)
Profit before income tax
1,934,521
6,542,616
Income tax expense
9
(291,689)
(259,179)
Profit for the year
1,642,832
6,283,437
Total comprehensive income for the year
1,642,832
6,283,437
Earnings per share
26
0.0066
0.0256
The notes on pages 25 to 48 are an integral part of these financial statements.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
22
STATEMENT OF FINANCIAL POSITION
2023
2022
Notes
€
€
ASSETS
Non-current assets
Intangible assets
10
96,409
114,644
Property, plant and equipment
11
781,293
832,938
Investment properties
12
77,127,963
73,663,640
Investment in subsidiaries
13
11,200
11,200
Loans receivable
14
-
113,711
Deferred tax assets
15
142,114
213,367
78,158,979
74,949,500
Current assets
Non-current assets held for sale
16
-
510,000
Inventory
17
-
270,000
Current tax receivable
-
14,000
Loans receivable
14
119,961
-
Trade and other receivables
18
155,618
296,073
Cash and cash equivalents
19
791,063
1,295,516
1,066,642
2,385,589
TOTAL ASSETS
79,225,621
77,335,089
EQUITY AND LIABILITIES
Capital and reserves
Share capital
20
49,835,837
49,608,529
Share premium
20
1,085,638
1,017,446
Other reserves
20
329,895
352,646
General reserves
20
1,218
1,218
Retained earnings
20
14,139,871
12,642,038
TOTAL EQUITY
65,392,459
63,621,877
Non-current liabilities
Borrowings
21
7,842,118
7,877,586
Lease liabilities
22
270,639
286,253
Deferred tax liability
23
4,373,858
4,165,673
Trade and other payables
24
106,485
88,775
12,593,100
12,418,287
Current liabilities
Borrowings
21
428,513
337,671
Lease liabilities
22
16,152
13,538
Trade and other payables
24
795,397
943,716
1,240,062
1,294,925
TOTAL LIABILITIES
13,833,162
13,713,212
TOTAL EQUITY AND LIABILITIES
79,225,621
77,335,089
The notes on pages 25 to 48 are an integral part of these 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 Financial Statements.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
23
STATEMENT OF CHANGES IN EQUITY
Share
Share
Other
General
Retained
Total
capital
premium
reserves
reserves
earnings
€
€
€
€
€
€
Balance at 01 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 in their capacity as 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
Balance at 01 January 2023
49,608,529
1,017,446
352,646
1,218
12,642,038
63,621,877
Total comprehensive income
- Profit for the year
-
-
-
-
1,642,832
1,642,832
-
-
-
-
1,642,832
1,642,832
Transactions with owners in their capacity as owners
- Issuance of shares
227,308
68,192
-
-
-
295,500
- Dividends declared during the period (Note 20)
-
-
-
-
(180,000)
(180,000)
227,308
68,192
-
-
(180,000)
115,500
Transfer from revaluation reserve to retained
earnings, net of deferred tax
-
-
(22,751)
-
35,001
12,250
Balance at 31 December 2023
49,835,837
1,085,638
329,895
1,218
14,139,871
65,392,459
The notes on pages 25 to 48 are an integral part of these financial statements.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
24
STATEMENT OF CASH FLOWS
2023
2022
Notes
€
€
Cash flows from operating activities
Profit before tax
1,934,521
6,542,616
Depreciation and amortisation
5
301,758
268,091
Provision for expected credit losses
18
-
39,055
Receivable written off
5
20,358
-
Investment income
4
(2,042,475)
(6,874,185)
Impairment on inventory
5
-
65,618
Interest income
7
(10,067)
(7,084)
Interest expense
8
230,435
190,446
Cash flows generated before working capital changes
434,530
224,557
Increase in inventories
-
(270,000)
Decrease in trade and other receivables
189,814
51,782
(Decrease)/increase in trade and other payables
(216,519)
579,344
Net cash flows generated from operating activities
407,825
585,683
Cash flows from investing activities
Purchase of intangible assets
10
(25,000)
-
Purchase of property, plant and equipment
11
(12,685)
(3,250)
Proceeds from sale of investment property
467,100
850,000
Acquisition of investment properties
(965,597)
(6,278,086)
Net cash flows used in investing activities
(536,182)
(5,431,336)
Cash flows from financing activities
Net proceeds from issuance of share capital
295,500
-
Interest paid on borrowings
(514,481)
(170,214)
Withholding tax paid
9
-
(8,000)
Dividends paid
20
(180,000)
(160,000)
Movement in borrowings
21
55,374
4,589,354
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)
4,219,465
Net decrease in cash and cash equivalents
(504,453)
(626,188)
Cash and cash equivalents at beginning of year
1,295,516
1,921,704
Cash and cash equivalents at end of year
19
791,063
1,295,516
The notes on pages 25 to 48 are an integral part of these financial statements.
Significant non-cash transactions
During the year ended 31 December 2023, the Company did not have any 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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
25
NOTES TO THE FINANCIAL STATEMENTS
1. MATERIAL ACCOUNTING POLICY INFORMATION
The accounting policies that are material to the financial statements are set out below. The accounting
policies adopted are consistent with those of the previous financial year, unless otherwise stated.
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 Maltese Companies Act (Cap. 386), and
with the requirements of International Financial Reporting Standards (“IFRS Accounting Standards”) 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 to these financial statements.
These financial statements present information about the Company as an individual undertaking. 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 amended standards, interpretations and amendments adopted
The following amended standards became applicable for the current reporting period:
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
The amendments are intended to help preparers in deciding which accounting policies to disclose in their
financial statements. The term ‘significant’ was replaced with ‘material’ in the context of disclosing
accounting policy information. In assessing the materiality of the accounting policy information, the
Company considers the size of transactions, other events or conditions and their nature.
Amendments to IAS 12 – Deferred tax related to Assets and Liabilities arising from a Single Transaction
Prior to the amendments, there had been some uncertainty about whether the IAS 12 exemption from
recognising deferred tax applied to transactions for which companies recognise both an asset and liability,
for example leases. The amendments clarify that the exemption does not apply and that companies are
required to recognise deferred tax on such transactions. The Company now discloses the deferred tax on
lease liabilities and right-of-use assets separately arising from the application of IFRS 16.
The Company adopted all new or amended Accounting Standards and Interpretations issued by the
International Accounting Standards Board (‘IASB’) and the IFRS Interpretations Committee and endorsed
by the EU that are mandatory for the current reporting period. The adoption of these amendments to the
requirements of IFRS Accounting Standards as adopted by the EU did not result in substantial changes to
the Company’s accounting policies impacting the Company’s financial performance and position.
New or amended standards, interpretations and amendments issued but not yet effective
Any new or amended Accounting Standards or Interpretations that were in issue and endorsed by the EU
but not yet effective for the current financial year, have not been early adopted. The directors are of the
opinion that the adoption of the new, amended accounting standards or interpretations will not have a
significant impact on the Company's current or future reporting periods and on foreseeable future
transactions.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
26
1. MATERIAL ACCOUNTING POLICY INFORMATION - continued
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:
Sale of investment property
Sale of investment property is recognised when the significant risks and rewards of ownership of the
property being sold are effectively transferred to the buyer. This is generally considered to occur at the later
of the contract of sale and the date when all the Company's obligations relating to the property are
completed and the possession of the property can be transferred in the manner stipulated by the contract
of sale.
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.
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.
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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
27
1. MATERIAL ACCOUNTING POLICY INFORMATION - continued
Property, plant and equipment - continued
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 12). Gains and losses arising from changes in fair values are recorded in
profit or loss.
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 12 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, on the following bases:
Improvements
2% Straight Line
Furniture, fixtures and fittings
20% Straight Line
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
28
1. MATERIAL ACCOUNTING POLICY INFORMATION - continued
Investment properties - continued
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.
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.
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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
29
1. MATERIAL ACCOUNTING POLICY INFORMATION - continued
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.
Impairment of financial assets
The Company recognises an allowance for expected credit losses (ECLs) on financial assets that are
measured at amortised cost. Equity instruments are not subject to impairment assessment.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Company expects to receive, discounted at an approximation of the original
effective interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that
are possible within the next 12-months (12-month ECL). For those credit exposures for which there has
been a significant increase in credit risk since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of the exposure, irrespective of the timing of the default (lifetime
ECL).
For trade receivables, the Company applies a simplified approach to measuring ECLs which recognises
lifetime ECLs. The ECLs on these financial assets are estimated using a provision matrix based on the
Company’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors
and the economic environment.
Segment reporting
The Board of Directors shall determine the Company’s operating segments, in accordance with the
requirements of IFRS 8 ‘Operating Segments’.
An operating segment is a component of the Company that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions with
any of the Company’s other components, and for which discrete financial information is available. An
operating segment’s operating results are reviewed regularly by the Board of Directors. The Board of
Directors considers the Company to be made up of one operating segment.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
30
1. MATERIAL ACCOUNTING POLICY INFORMATION - continued
Leases
IFRS 16 requires an entity to assess whether a contract is, or contains, a lease at the inception date. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for a consideration. Leases are recognised as a right-of-use asset and a
corresponding liability at the commencement date, being the date at which the leased asset is available for
use by the Company.
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.
2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In the application of the Company’s accounting policies, which are described in Note 1 to these financial
statements, 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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
31
2. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS - continued
In the opinion of the Directors, with the exception of the fair valuation of investment properties (Note12),
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 description as critical in terms of
the requirements of IAS 1.
3. REVENUE
2023
2022
€
€
Rental income
419,314
346,306
Rental revenue share - VREM
425,203
326,086
844,517
672,392
4. INVESTMENT INCOME
2023
2022
€
€
Increase in fair value of investment property
1,965,338
7,666,656
Realised gain/(loss) on sale of investment property
77,137
(724,933)
Impairment on property held for sale
-
(67,538)
2,042,475
6,874,185
The €1,965,338 (2022: €7,666,656) 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.
5. EXPENSES BY NATURE
2023
2022
€
€
Direct costs
58,291
10,023
Employee benefit expense (i)
134,923
82,214
Directors’ fees
64,883
65,000
Auditor’s remuneration:
Audit fee
13,000
11,500
Other non-assurance services
950
950
Depreciation and amortisation
301,758
268,091
Management fees from related party
100,000
100,000
Impairment on inventory
-
65,618
Receivable written off
20,358
-
Other administrative expenses
230,018
252,933
924,181
856,329
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
32
5. EXPENSES BY NATURE - continued
(i) Employee benefit expense include the following:
2023
2022
€
€
Salaries and wages
230,893
130,732
Social security and maternity fund contributions
12,954
10,423
Capitalised salaries
(108,924)
(58,941)
134,923
82,214
Average number of employees
5
6
During the year 2023, staff salaries of €108,924 have been capitalised to investment property
(2022: €58,941).
6. OTHER OPERATING INCOME
2023
2022
€
€
Management fees and professional services
163,675
27,500
Miscellaneous income
28,403
8,230
192,078
35,730
7. INTEREST INCOME
2023
2022
€
€
Loan interest
10,067
7,084
8. FINANCE COSTS
2023
2022
€
€
Interest on bank loan
207,609
102,926
Interest on third party borrowing
-
67,288
Interest on lease liabilities
19,489
20,232
Other finance costs
3,337
-
230,435
190,446
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
33
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%.
2023
2022
€
€
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 15)
71,253
(36,844)
Movement in deferred tax liability (Note 23)
208,185
275,772
Movement in revaluation reserve
12,251
12,251
291,689
259,179
Tax applying the statutory domestic income tax rate and the income tax expense for the year are reconciled
as follows:
2023
2022
€
€
Profit on ordinary activities before tax
1,934,521
6,542,616
Theoretical tax expense at 35%
677,082
2,289,916
Tax effect of:
Expenses disallowable for tax purposes
302,475
652,593
Movement in the effect of fair value gain on investment property
(687,868)
(2,683,330)
291,689
259,179
10. INTANGIBLE ASSETS
Licences
Non-
compete
rights
Brand
Total
€
€
€
€
Cost
At 01 January 2023
349
150,000
41,000
191,349
Additions
-
-
25,000
25,000
At 31 December 2023
349
150,000
66,000
216,349
Provision for diminution value
At 01 January 2023
305
60,000
16,400
76,705
Amortisation for the year
35
30,000
13,200
43,235
At 31 December 2023
340
90,000
29,600
119,940
Net book value
At 31 December 2022
44
90,000
24,600
114,644
At 31 December 2023
9
60,000
36,400
96,409
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
34
11. PROPERTY, PLANT AND EQUIPMENT
Right-of-
use assets
Building
improve-
ments
Office
equipment
Furniture
and
fixtures
Other
assets
Total
€
€
€
€
€
€
Cost
At 01 January 2023
1,035,369
100,806
40,742
38,285
44,683
1,259,885
Additions
-
-
2,519
-
10,166
12,685
At 31 December 2023
1,035,369
100,806
43,261
38,285
54,849
1,272,570
Depreciation
At 01 January 2023
322,112
20,838
30,379
25,568
28,050
426,947
Charge for the year
46,016
2,016
5,095
1,257
9,946
64,330
At 31 December 2023
368,128
22,854
35,474
26,825
37,996
491,277
Net book value
At 31 December 2022
713,257
79,968
10,363
12,717
16,633
832,938
At 31 December 2023
667,241
77,952
7,787
11,460
16,853
781,293
12. INVESTMENT PROPERTIES
Right-of-use
assets
Investment
properties
Total
€
€
€
Fair Value
At 01 January 2023
1,096,669
73,637,963
58,873,723
74,734,632
Additions
3,364
1,339,814
1,343,178
Transfers from non-current assets held for sale
-
350,000
350,000
Fair value movement
(52,656)
2,017,994
1,965,338
At 31 December 2023
1,047,377
77,345,771
78,393,148
Provision
At 01 January 2023
101,669
969,323
1,070,992
Depreciation
10,708
183,485
194,193
At 31 December 2023
112,377
1,152,808
1,265,185
Net book value
At 31 December 2022
995,000
72,668,640
73,663,640
At 31 December 2023
935,000
76,192,963
77,127,963
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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
35
12. INVESTMENT PROPERTIES - continued
Lessor commitments
2023
2022
€
€
Minimum lease commitments receivable but not recognised in the
financial statements:
1 year or less
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Over 5 years
372,545
384,607
384,752
390,053
331,575
763,847
381,454
389,739
402,268
402,944
408,791
1,275,919
2,627,379
3,261,115
Fair value of investment property
The book value of the property held by the Company has been increased by €1,965,338 (2022: €7,666,656)
to reflect the established fair value as at 31 December 2023, 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 Company 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 Company.
The Company considers that the current macroeconomic conditions (e.g. high interest rates, yields and
vacancy expectations) are properly reflected in its fair value measurements.
Valuation process
As is usually done by the Company, 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 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 and completed
in January 2024, as part of the annual asset valuation exercise.
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 Company’s 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
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
36
12. INVESTMENT PROPERTIES - continued
Valuation techniques - continued
associated specifically with the nature and operation of the Company'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 2023, the Directors’ Valuation Report of the Company 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.
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 2023, the Directors approved a total value of the properties of the
Company amounting to €77,127,963 (2022: €73,663,640). 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 Company’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 Company.
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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
37
13. INVESTMENT IN SUBSIDIARIES
Subsidiary
Registered address
Class of shares
% of ownership
2023
2022
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 Company and manages all the
short-let and long-let properties of the Company 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.
The following table summarises the financial information of the Company’s subsidiaries as at and for the
year ended 31 December 2023.
Capital and
reserves
res re
Profit
Subsidiaries
€
€
VREM Ltd
50,011
56,237
Silver Horse Block Ltd
1,200
-
14. LOAN RECEIVABLE
2023
2022
€
€
Loan receivable (non-current) (i)
-
113,771
Loan receivable (current) (i)
119,961
-
119,961
113,371
(i) Loan receivable bears 6% interest rate per annum and is expected to be collected in June 2024.
15. DEFERRED TAX ASSETS
The asset for deferred tax is analysed as follows:
2023
2022
€
€
Excess of capital allowances over depreciation
(82,340)
(72,310)
Unabsorbed tax losses and capital allowances
124,077
285,677
Lease liabilities
100,377
-
142,114
213,367
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
38
15. DEFERRED TAX ASSETS - continued
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:
2023
2022
€
€
Balance at beginning of the year
213,367
176,523
Movement in the excess of capital allowances over depreciation
(10,031)
(15,221)
Movement in unabsorbed tax losses and capital allowances
(161,599)
52,065
Recognition of deferred tax asset on lease liabilities
100,377
-
Balance at end of year
142,114
213,367
16. NON-CURRENT ASSETS HELD FOR SALE
In 2022, 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 was closed 2023.
As at 31 December 2023, the Company does not hold any non-current assets for sale.
17. INVENTORY
In 2022, the Company 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. The sale
was executed during the year under review.
As at 31 December 2023, the Company does not hold any inventory.
18. TRADE AND OTHER RECEIVABLES
2023
2022
€
€
Trade receivables (i)
109,992
180,069
VAT refundable
-
15,488
Other receivables
39,725
25,902
Prepayments and accrued income
44,956
113,669
194,673
335,128
Provision for expected credit losses
(39,055)
(39,055)
155,618
296,073
(i) Trade receivables are non-interest bearing and are generally on a 30-day term.
The Company’s exposure to credit risk and impairment losses relating to trade and other receivables is
disclosed in Note 27.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
39
19. CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the statement of cash flows comprise the following statement of
financial position amounts:
2023
2022
€
€
Cash at bank and in hand
791,063
1,295,516
20. SHARE CAPITAL AND RESERVES
2023
2022
€
€
Share Capital
Authorised:
330,000,000 Ordinary shares of €0.20 each
66,000,000
66,000,000
Issued and fully paid:
249,179,183 Ordinary shares in 2023 and
248,042,645 Ordinary shares in 2022 of €0.20 each
49,835,837
49,608,529
The issued share capital of the Company currently consists of 249,179,183 ordinary shares (2022:
248,042,645), of €0.20 each (2022: €0.20). The authorised share capital currently consists of 330,000,000
ordinary shares of €0.20 each.
During the year ended 31 December 2023, the Company issued 1,136,538 number of ordinary shares,
€0.20 each, at a premium of €0.06 each, for cash consideration.
As at 31 December 2023, the market price of the ordinary shares on the Malta Stock Exchange (“MSE”)
was €0.23 each (based on the last trading of shares prior to the end of the year). The trading volume of
the Company’s shares on MSE is very low compared to the total value of outstanding shares, the free float
and the total asset value, and therefore it is considered non-representative as an indication of fair market
value of the Company.
The Ordinary shares of the Company participate equally in any payment of dividends or any distribution
and return of capital and carry identical rights and voting rights, as specified in the Memorandum and
Articles of Association the Company.
The following describes the nature and purpose of each reserve within equity:
Share premium
The amount subscribed for share capital in excess of 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.
During the year ended 31 December 2023, dividends amounting to €180,000 (0.0726 Euro Cents per
ordinary share) (2022: €160,000) were paid.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
40
21. BORROWINGS
2023
2022
€
€
Non-current
Bank borrowings
7,842,118
7,877,586
Current
Bank borrowings
428,513
337,671
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 2022, the Company 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 the year 2023, the Company continued utilising the facility, as per
planned schedule, while significant portion of the development loan facility remain unutilised.
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 development banking facilities (e.g. processing fees, commitment fees, legal
and professional fees directly related to the facility), were partially recognised in the Statement of
Comprehensive Income during the year, in line with the applicable accounting standards, and partially
capitalised on Investment Property, as considered capital expenditure related to development of the
Company’s properties. The amount of borrowing costs capitalised during the year ended 31 December
2023 was €377,581 (2022: nil).
The carrying amounts of the bank borrowings are reasonable approximations of their fair value.
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.
2023
2022
€
€
Minimum lease payments
Due after more than five years
277,709
308,708
Due after one year but within five years
128,038
131,835
Due within one year
34,796
33,025
Total gross lease liabilities
440,543
473,568
Discounting
(153,752)
(173,777)
Present value of lease liabilities
286,791
299,791
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
41
22. LEASE LIABILITIES - continued
Movements in lease liabilities during the year are as follows:
2023
2022
€
€
At 01 January
299,791
311,234
Interest expense
19,489
20,232
Gross lease payments
(32,489)
(31,675)
At 31 December
286,791
299,791
2023
2022
€
€
Non-current portion
270,639
286,253
Current portion
16,152
13,538
At 31 December
286,791
299,791
The following were the amounts recognised in profit or loss relating to leases:
2023
2022
€
€
Depreciation
56,724
62,214
Interest expense
19,489
20,232
76,213
82,446
23. DEFERRED TAX LIABILITIES
2023
2022
€
€
Effect of fair value movement on investment property
4,290,677
4,165,673
Right-of-use assets
83,181
-
4,373,858
4,165,673
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%.
2023
2022
€
€
Balance at beginning of the year
4,165,673
3,889,901
Movement of investment property fair value
125,004
275,772
Recognition of deferred tax liability on right-of-use assets
83,181
-
Balance at end of year
4,373,858
4,165,673
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 Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
42
24. TRADE AND OTHER PAYABLES
2023
2022
€
€
Non-current
Amounts due to third parties (i)
-
16,385
Deposits on lease agreements
106,485
72,390
106,485
88,775
Current
Trade payables (ii)
142,248
344,806
Accruals and other payables
370,291
44,927
VAT payable
14,986
-
Amounts due to third parties (i)
16,385
30,000
Deposits on properties
-
51,000
Contract liabilities
11,904
-
Amounts owed to shareholder (iii)
34,000
273,000
Amounts owed to subsidiary (iv)
205,583
199,983
795,397
943,716
(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 the 100% owned subsidiary
VREM Ltd, due to the fact that the Company operates a cash pool.
The Company’s exposure to liquidity risk relating to trade and other payables is disclosed in Note 27.
25. RELATED PARTY TRANSACTIONS AND DISCLOSURES
The Company is the parent of the companies listed in Note 13 to these financial statements.
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 an arms-length
basis, 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 2023, transactions related to VBLM Ltd. 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.
2023
2022
€
€
Rental revenue share - VREM
425,203
326,086
Management fees and professional services - VREM
163,675
27,500
Rental revenue - Gold Landlord
5,098
58,272
Directors travel reimbursement
2,015
1,129
Management fees - VBLM
100,000
100,000
Capitalised property development expenses - VBLM
300,000
300,000
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
43
25. RELATED PARTY TRANSACTIONS AND DISCLOSURES - continued
The outstanding amounts arising from transactions with the related parties are disclosed in Note 24 to
these financial statements.
26. 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.
2023
2022
Profit attributable to equity holders of the Company
€1,642,832
€6,283,437
Weighted average number of shares in issue
248,048,873
245,036,691
Basic and diluted earnings per share
€0.0066
€0.0256
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.
27. FINANCIAL RISK MANAGEMENT
The Company's activities potentially expose it to a variety of financial risks such as market risk (including
equity price change risk and interest rate risk), credit risk, and liquidity risk. The Company's overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Company's financial performance. The Company did not make use of derivative
financial instruments to hedge certain risk exposure during the current and preceding financial periods.
The Company uses different methods to measure different types of risk to which it is exposed. These
methods include sensitivity analysis in the case of variable interest rate risks or applying fixed interest
rates, and ageing analysis for credit risk.
Risk management is carried out by senior finance executive (‘finance’) under policies approved by the
Directors. These policies include identification and analysis of the Company and appropriate procedures,
controls and risk limits.
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.
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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
44
27. FINANCIAL RISK MANAGEMENT - continued
Equity price change risk - continued
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. It is to be noted that
the average trading volume of Company’s shares on the stock exchange is very low, both compared to the
Company’s total equity and property value. During the reporting year 2023, the Company’s revenues,
overall financial performance and asset values have improved significantly, while the share prices have
decreased amidst low trading volume compared to the Company’s actual book value. Therefore, the actual
changes in equity prices are considered not representative of the Company’s actual market or asset value.
The investments in listed equity securities are considered as long-term strategic investment and is
regulated and monitored by local authorities, including MFSA, 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
€
€
€
2023
(0.04)
-
(9,967,167)
2022
(0.04)
-
(9,921,706)
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 was exposed to changes in market interest rates through its bank
borrowings which incurred variable interest rates in the first part of year 2023. The Company has
significantly reduced this risk by negotiating and securing a fixed interest on it’s the entire development
loan, applicable from the fourth quarter of year 2023.
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.
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
45
27. FINANCIAL RISK MANAGEMENT - continued
Interest rate risk - continued
Change
Increase/
(decrease)
in profit
for the year
Increase/
(decrease)
in equity
Basis points
€
€
EURIBOR
2023
-
-
-
-
-
-
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
2023
2022
€
€
Financial asset
Loans receivable
June-2024
119,961
113,711
Trade and other receivables
155,618
280,585
Cash and cash equivalents
791,063
1,295,516
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 currently
known circumstances whereby the Company would not honour its commitment.
Unused borrowing facilities as at 31 December were as follows:
2023
2022
€
€
Bank overdrafts
500,000
-
Bank borrowings
7,292,651
7,660,766
7,792,651
7,660,766
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
46
27. FINANCIAL RISK MANAGEMENT - continued
Liquidity risk - continued
Within one
year
One to five
years
More than five
years
€
€
€
2023
Financial assets:
Cash and cash equivalents
791,063
-
-
Trade and other receivables
82,217
-
-
Loans receivable
119,961
-
-
993,241
-
-
Financial liabilities:
Bank borrowings
817,864
1,861,769
8,274,182
Lease liabilities
34,796
132,238
277,709
852,660
1,994,007
8,551,891
2022
Financial assets:
Cash and cash equivalents
1,295,516
-
-
Trade and other receivables
182,404
-
-
Loans receivable
-
113,711
-
1,477,920
113,711
-
Financial liabilities:
Bank borrowings
416,676
2,646,633
8,307,182
Lease liabilities
33,025
131,835
308,708
449,701
2,778,468
8,615,890
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 to these financial statements, items presented within equity in the statement of financial position
and borrowings as disclosed in Note 20 and Note 21 to these financial statements, respectively.
The Company's Directors manage the Company’s capital structure and make adjustments to it, in the light
of changes in economic conditions and according to the originally disclosed strategy. The Company’s
capital structure is reviewed on an ongoing basis. Based on recommendations of the Directors, the
Company aims to balance 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 its capital
structure and targets to maintain at all times a healthy 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, adjusted for deferred tax liabilities. As part of this process, the Company has declared and
continues to explore and perform a comprehensive evaluation of strategic financing options and initiatives
to unlock and maximise shareholder value going forward. This ongoing process includes considering a
number of possible strategic options, including the possibility of raising further capital from strategic and/or
financial investors or carrying out equity transactions, including options which might result in a change to
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
47
27. FINANCIAL RISK MANAGEMENT - continued
Capital risk management - continued
the shareholding or capital structure of the Company. Any decisions on the selection of specific strategic
options are made regularly and adequately communicated to the market, under the applicable rules and
regulations.
The Company's overall business and development strategy remains unchanged from the prior year.
28. 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.
Bank
borrowings
(Note 21)
Lease
liabilities
(Note 22)
Total
€
€
€
Balance at 01 January 2023
8,215,257
299,791
8,515,048
Drawdowns
368,014
-
368,014
Repayments
(312,640)
(13,000)
(325,640)
Interest paid
(514,481)
(19,489)
(533,970)
Non-cash transactions:
Interest expense
207,609
19,489
227,098
Accrued interest
(70,709)
-
(70,709)
Capitalised borrowing costs
377,581
-
377,581
Balance at 31 December 2023
8,270,631
286,791
8,557,422
Bank borrowings
(Note 21)
Third party
borrowings
(Note 21)
Lease
liabilities
(Note 22)
Total
€
€
€
€
Balance at 01 January 2022
1,625,903
2,000,000
311,234
3,937,137
Drawdowns
6,839,234
-
-
6,839,234
Repayments
(249,880)
(2,000,000)
(11,443)
(2,261,323)
Interest paid
(102,926)
(67,288)
(20,232)
(190,446)
Non-cash transactions:
Interest expense
102,926
67,288
20,232
190,446
Balance at 31 December 2022
8,215,257
-
299,791
8,515,048
VBL Plc
Annual Financial Report and Financial Statements - 31 December 2023
NOTES TO THE FINANCIAL STATEMENTS - continued
48
29. 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 12 to these financial statements.
30. CAPITAL COMMITMENTS
The Company’s mid-term projected capital commitments are detailed in the Listing Prospectus, 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. Regular updates and adjustments to these
plans are performed and communicated to align the plans to the market reality and actual conditions, while
the overall strategy remains unchanged. The basis of preparation and key underlying assumptions are also
detailed in the Listing Prospectus, monitored and updated regularly. As of the end of the reporting period,
these are materially unchanged and implemented along the originally projected timeframes, with interim
delays or changes in development plans communicated and slight adjustments implemented to reflect the
expected market and other impacts resulting from the development activity.
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
49
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
21 - 48, which comprise the statement of financial position as at 31 December 2023, 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 material accounting policy
information.
In our opinion, the financial statements give a true and fair view of the financial position of the Company
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 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 5
to these financial statements.
50
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
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 €77,127,963 as at 31 December 2023.
Further details are included in Note 12 to the 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 the financial statements and
concluded that these are adequate.
51
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
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 of the directors, and the
statement by the directors on compliance with the Code of Principles of Good Corporate Governance,
but does not include the 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 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 financial statements
are 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 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 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.
52
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
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.
53
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 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 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 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 13 - 20 has been properly prepared in accordance with the requirements of the Capital Markets
Rules issued by the Malta Financial Services Authority.
54
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 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 2023 has been prepared in
XHTML format in all material respects.
55
INDEPENDENT AUDITORS’ REPORT - continued
To the Shareholders of VBL Plc
Report on Other Legal and Regulatory Requirements - continued
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 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 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 three financial periods.
RSM Malta
Registered Auditors
Mdina Road
Zebbug ZBG 9015
Malta
Conrad Borg
Principal
24 April 2024