Company Registration No.:
C 27835
QAWRA PALACE P.L.C.
Annual Financial Report
and
Financial Statements
31 March 2026
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
CONTENTS
Pages
General information
2
Directors' report
3 - 8
Statement of compliance with the code of principles of good corporate governance
9 - 14
Statement of comprehensive income
15
Statement of financial position
16
Statement of changes in equity
17
Statement of cash flows
18
Notes to the financial statements
19 - 41
Independent auditor's report
42 - 47
1
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
GENERAL INFORMATION
Registration
Qawra Palace p.l.c.
("the Company") is registered in Malta as a public limited liability company under the Maltese
Companies Act (Cap. 386). The Company’s registration number is
C 27835
.
Directors
Edward Vella
Esther Vella
Victor Vella
Robert Ancilleri
Stephen Muscat
Paul Muscat
Company Secretary
Luca Vella
Registered Office and Principal Place of Business
Qawra Palace p.l.c.
Qawra Palace Hotel
Coast Road
St. Paul's Bay SPB 1902
Malta
Bankers
Bank of Valletta p.l.c.
58, Zachary Street
Valletta VLT 1130
Malta
Auditor
RSM Malta
Mdina Road
Zebbug
ZBG 9015
Malta
2
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
DIRECTORS' REPORT
The Directors present their annual financial report and the audited financial statements of Qawra Palace p.l.c.
("the Company") for the financial year ended
31 March 2026
.
Principal activity
The Company is a property holding company whose principal objects are as set out in clause four (4) of its
Memorandum of Association – namely, to carry on the business of a property holding company and to construct,
maintain, alter, equip or convert any buildings or amenities as may be required in connection with the
establishment of a hotel and/or tourist or leisure centre. The Company owns the Qawra Palace Resort & SPA
located on the Qawra promenade, which has recently undergone a significant refurbishment and which
refurbishment has been fully completed during the year under review.
Given that the Company is not a trading company, it is economically dependent on the income it derives from
Mallard Co. Ltd. (C 4758), a company under common control (“Mallard”), the entity entrusted with the
management and operation of the Qawra Palace Resort & SPA, and, separately, the monies on-lent to Mallard
Co. Ltd. from the proceeds of the Bond Issue (as described below and detailed in the Prospectus dated 20
December 2022).
In March 2023, the Company raised €25 million from a public bond issue; specifically, the issue by the Company
of €25 million worth of 5.25% secured bonds 2033 (the “Bond Issue”) with a nominal value of €100 per bond and
issued at par (the “Bonds”) in terms of a prospectus dated 20 December 2022 (the “Prospectus”). The Bonds
were admitted to listing on the Official List of the Malta Stock Exchange with effect from 8 February 2023.
The bond subscriptions closed in March 2023 with the bonds being fully subscribed. The proceeds of the Bond
Issue were utilised in line with the Prospectus dated 20 December 2022, with €16.4 million repaying existing
bank loans, €6.7 million passed on by way of loan to Mallard Co. Ltd. to upgrade the existing hotel and develop
new amenities and catering outlets within the complex and the remaining portion of €1.9 million allocated for
general corporate funding purposes.
Review of the business
The Company reported a profit before tax of €2.5 million for the year ended 31 March 2026 (2025: profit before
tax €7.0 million). This drop is mainly attributable to the movement in the revaluation of the property of €5.38
million during the financial year ended 31 March 2025, compared to the €0.96 million during the financial year
ended 31 March 2026, which movement is recognised in the Statement of Comprehensive Income.
Another notable difference compared to the prior year was the lower provision for Expected Credit Losses
("ECLs") of €43K (2025: €503K). This decrease was driven by the reduction in loans, as the loans previously
advanced by the Company to Mallard were extinguished following the transfer of assets from Mallard to the
Company.
The Company’s total assets broadly remained at prior year’s level. As at 31 March 2026, total assets stood at
€100.2 million (2025: €98.5 million).
Results and dividends
The statement of comprehensive income is set out on page
15
. No dividends were paid during the year (2025:
Nil). The directors do not recommend the payment of a final dividend and propose that the balance of retained
earnings of the Company amounting to €62.9 million (2025: €60.9 million) be carried forward to the next financial
year.
3
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
DIRECTORS' REPORT
- continued
Corporate social responsibility
As a reflection of the Company’s core values, the Board of Directors remains firmly committed to protecting the
environment, supporting the well-being of the communities in which the Company operates and upholding the
highest standards of transparency, accountability and ethical conduct. The Board provides active oversight to
ensure that Mallard Co. Ltd., the Company from which it derives its income, integrates sustainable practices into
the management and operation of the Qawra Palace Resort & SPA, consistent with responsible and ethical
business principles.
To further strengthen its ESG commitments and benchmark operational performance against internationally
recognised standards, the management continued to advance the Hotel’s sustainability agenda. During the year,
the Hotel joined the Global Sustainable Tourism Council (GSTC) eco-certification, underscoring the Company’s
commitment to transparent and independently verified sustainability practices. This milestone represents a
significant step towards formalising and standardising environmental management across the Hotel’s
operations, while enhancing its alignment with globally recognised sustainability standards within the hospitality
industry.
Over its 30 years of operation, the hotel has established strong ties with the local community and embraces the
culture and diversity of the area in which it operates. The hotel conducts its activities responsibly and has
consistently implemented measures to minimise any disruption to the surrounding neighbourhood, particularly
with regard to noise and light pollution.
The hotel remains committed to improving resource efficiency and, in the years ahead, will continue investing in
initiatives aimed at reducing energy and water consumption, as well as lowering greenhouse gas emissions. In
line with previous years, it will also maintain its focus on key social programmes and initiatives, including
employee training and awareness on diversity, equity and inclusion, investment in a diverse workforce, and the
continued promotion of human rights and fair labour practices.
Principal risks and uncertainty
The Company is exposed to risks relating to the management and operations of the Qawra Palace Resort &
SPA, dependency on Mallard and the other generic risks emanating from the hospitality and tourism industry it
operates in.
The Directors recognise that the Company's operations remain exposed to risks arising from geopolitical
developments, macroeconomic conditions, labour market constraints, inflationary pressures, and changes in
financing costs. These factors may influence travel demand, consumer spending patterns, operating costs,
employee availability, and the overall performance of the hospitality sector.
The Company maintains a structured approach to risk management and regularly monitors key operational and
financial indicators, including occupancy levels, average daily rates, forward bookings, liquidity forecasts,
financing obligations, and cost trends. Particular attention is given to developments affecting the Company's
principal source markets in Eastern Europe and to labour availability within the Maltese hospitality sector.
The Directors have considered these factors in their assessment of the Company's prospects, liquidity position,
and ability to continue as a going concern. While uncertainties remain in the broader economic environment, the
Directors believe that the Company's operating performance, cash flow generation, available facilities and capital
structure provide an appropriate basis for the continued operation of the business.
Further information regarding the Company's management of financial risks, including liquidity risk, interest rate
risk and capital management, is set out in Note
21
to the financial statements.
4
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
DIRECTORS' REPORT
- continued
Geopolitical and economic environment
The Directors have continued to monitor geopolitical developments and prevailing economic conditions and
assess their potential impact on the Company's operations, financial performance, liquidity, and future prospects.
During the year, the hospitality sector continued to operate in an environment characterised by geopolitical
uncertainty, inflationary pressures, labour market constraints, and elevated financing costs. Given the
Company's reliance on international tourism, particular attention has been given to developments affecting travel
demand from its principal source markets in Eastern Europe. While geopolitical events have the potential to
influence consumer confidence, travel patterns, and discretionary spending, the Company has not experienced
any material adverse impact on demand during the financial year.
The Company operates a 4-star superior all-inclusive hotel and recorded increases in both occupancy levels and
average daily rates during the year. This performance reflects continued demand for Malta as a tourism
destination and the Company's ability to maintain its market positioning within a competitive environment.
Nevertheless, the Directors remain mindful that geopolitical developments and broader economic conditions may
affect future booking trends and customer spending patterns.
The hospitality sector in Malta continues to experience labour shortages, which have had an impact on
recruitment and employment costs during the year. The Company has implemented measures to support
workforce retention and maintain service standards while managing the resulting cost pressures. In addition,
inflationary trends have continued to affect certain operating expenses, including payroll and supplier costs,
although these have been partially mitigated through operational efficiencies and revenue growth.
The Company is financed through a combination of equity and bank borrowings and maintains a low-to-medium
gearing profile. While higher interest rates have increased financing costs across the market, the Directors
consider the Company's capital structure, liquidity position, and operating cash flow generation to remain
appropriate for its current level of operations and investment requirements.
Having considered the current geopolitical and economic environment, the Directors are satisfied that the
Company remains well positioned to meet its obligations as they fall due and that the preparation of the financial
statements on a going concern basis remains appropriate. The Directors will continue to monitor developments
closely and assess any potential impact on the Company's operations, financial performance, and strategic
objectives.
Events after the end of reporting period
No significant events have occurred after the end of the reporting period which require mention in this report.
5
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
DIRECTORS' REPORT
- continued
Outlook
Malta’s tourism industry continues to achieve record levels in both visitor arrivals and tourism revenue,
reinforcing its position as one of the strongest-performing destinations in the Mediterranean. This positive
momentum is being reflected across the wider tourism sector, including the hospitality industry.
Looking ahead, booking trends remain encouraging, with average room rates expected to register modest
growth. While the continued increase in visitor volumes presents significant opportunities, the Company
recognises that long-term success depends not only on growth in demand but also on operational efficiency,
disciplined cost management, and maintaining a well-positioned and competitive hotel offering.
In the market segment in which the Hotel operates, continuous investment in product enhancement and the
maintenance of high service and quality standards are essential to sustaining competitiveness. To this end, the
Company has identified a number of projects that are currently in the pipeline, which are expected to further
strengthen the Hotel’s market position and ensure its continued relevance and attractiveness within the sector.
The year ended 31 March 2026 was once again marked by consistently high occupancy levels throughout the
period, averaging 96.86%, together with higher overall revenue driven by increased room rates compared with
the year ended 31 March 2025. Hotel management remains confident that both revenue and profitability will
continue to grow in the year ending 31 March 2027.
Material contracts
The following contracts of a material nature which have been entered into by the Company in prior years remain
valid during the year under review:
Lease agreement with Mallard commencing on 1 April 2023; and
Revolving facility agreement with Mallard.
Directors
The Directors who held office during the year under review were:
Mr Edward Vella - Executive Director & Managing Director
Ms Esther Vella - Executive Director
Mr Victor Vella - Executive Director
Mr Robert Ancilleri - Independent, Non-Executive Director &Chairman
Mr Stephen Muscat - Independent, Non-Executive Director
Mr Paul Muscat - Independent, Non-Executive Director
In accordance with the Company’s Memorandum and Articles of Association, all directors except for the
Managing Director shall retire from office at least once every three years, but shall be eligible for re-election.
Company secretary
During the year ended 31 March 2026, Dr Luca Vella continued to act as Company secretary to the Board of
Directors and the Audit Committee.
The Company's registered office is at Qawra Palace p.l.c., Qawra Palace Hotel, Coast Road, St. Paul's Bay SPB
1902, Malta.
6
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
DIRECTORS' REPORT
- continued
Statement of directors' responsibilities for the financial statements
The Directors are required by the Companies Act (Chapter 386 of the laws of Malta) to prepare financial
statements which give a true and fair view of the state of affairs of the Company as at the end of each reporting
period and of the profit or loss for that period.
In preparing the financial statements, the Directors
are
responsible for:
ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards (IFRS Accounting Standards) as adopted by the European Union (EU);
selecting and applying appropriate accounting policies;
making accounting estimates and judgements that are reasonable in the circumstances;
accounting for income and charges relating to the accounting period on the accrual basis;
valuing separately the components of asset and liability items;
reporting comparative figures corresponding to those of the preceding accounting period; and
ensuring that the financial statements are prepared on the going concern basis, unless it is inappropriate to
presume that the Company will continue in business as a going concern.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy,
at any time, the financial position of the Company and which comply with the Maltese Companies Act. This
responsibility includes designing, implementing and maintaining 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, and that comply with the Maltese Companies Act. They 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.
The financial statements of Qawra Palace p.l.c. for the financial year ended 31 March 2026 are included in the
Annual Financial Report 2026, which will be made available on the Company’s website upon publication. The
Directors are responsible for the maintenance and integrity of the Annual Financial Report on the website in view
of their responsibility for the controls over, and the security of, the website. Access to information published on
the Company’s website is available in other countries and jurisdictions, where legislation governing the
preparation and dissemination of financial statements may differ from requirements or practice in Malta.
Statement by directors on the financial statements and other information included in the annual
financial report
The Directors confirm that, to the best of their knowledge:
the financial statements give a true and fair view of the financial position of the Company as at 31 March
2026, and of its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards as adopted by the European Union and with the Companies Act
(Chapter 386 of the laws of Malta); and
the annual report includes a fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks and uncertainties that the
Company faces.
7
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
DIRECTORS' REPORT
- continued
Going concern statement pursuant to Capital Markets Rule 5.62
The Company has generated revenue of €2.8 million (2025: €2.4 million) during the financial year under review.
The Company registered an operating profit before tax for the year of €2.5 million (2025: €7.0 million).
As explained in the ‘Outlook’, the Company's results for the year to end 31 March 2027 are expected to keep
improving since Qawra Palace Resort & SPA keeps experiencing significant demand with remarkably positive
occupancy rates. With the facilities the Hotel has and further planned investments to enhance the
tourist experience, the Hotel remains placed to offer a complete service proposition and expects
room and occupancy rates to keep increasing.
After making enquires and having taken into consideration the future plans of the Company, the Directors have
reasonable expectation that the Company has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern basis in the preparation of the
financial statements.
Share Capital Structure
The Company has an authorised and issued share capital of €2,329,373 divided into 1,000,000 shares of
€2.329373 each nominal value, which are fully paid up, and subscribed to and held by three shareholders as
summarised below:
Angelo Holdings Ltd (C 9162) – 450,000 Ordinary Shares, equivalent to 45% of the Company’s issued share
capital
Charella Company Limited (C 4035) - 430,000 Ordinary Shares, equivalent to 43% of the Company’s issued
share capital
Edoardo Company Limited (C 5062) - 120,000 Ordinary Shares, equivalent to 12% of the Company’s issued
share capital
All Ordinary Shares are entitled to attend and vote at General meetings, whereupon each Ordinary Share shall
be entitled to one vote. The Ordinary Shares in the Company shall rank pari passu for all intents and purposes at
law. There are currently no different classes of Ordinary Shares in the Company and, accordingly, all Ordinary
Shares have the same rights, voting rights and entitlements in connection with any distribution whether of
dividends or capital.
Auditors
RSM Malta have indicated their willingness to continue in office and a resolution for their re-
appointment will be proposed at the Annual General Meeting.
Signed on behalf of the Board of Directors on 24 July 2026 by Edward Vella (Executive and Managing Director)
and Robert Ancilleri (Non-Executive, Independent Chairman) as per the Directors' Declaration on ESEF Annual
Financial Report submitted in conjunction with the Annual Financial Report.
8
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
The Capital Markets Rules issued by the Malta Financial Services Authority, require listed companies to observe
The Code of Principles of Good Corporate Governance (the “Code”). Although the adoption of the Code is not
obligatory, listed companies are required to include, in their Annual Financial Report, a Directors’
Statement of Compliance which deals with the extent to which the company has adopted the Code and the
effective measures that the company has taken to ensure compliance with the Code, accompanied by a report
of the auditors thereon.
Qawra Palace p.l.c. (the “Company”) is committed to observing the principles of transparency and responsible
corporate governance. The Board considers compliance and corporate governance principles to constitute an
important means of maintaining the confidence of present and future shareholders, bondholders, creditors,
employees, business partners and the general public, amongst other stakeholders. Pursuant to the requirements
of the Capital Markets Rules issued by the Malta Financial Services Authority, the Company hereby reports on
how it has complied with the Code of Principles of Good Corporate Governance (the “Code’’) contained in
Appendix 5.1 of the Capital Markets Rules for the financial period ended 31
st
March 2026, which report details
the extent to which the Code has been adopted, as well as the effective measures taken by the Company to
ensure compliance with said Code.
The Board recognises that, in virtue of Capital Markets Rule 5.101, the Company is exempt from the
requirement to disclose the information prescribed by Capital Markets Rules 5.97.1 to 5.97.3, 5.97.6 and 5.97.8
Part I - Compliance with the Code
Principles 1 and 4 - The Board of Directors and its responsibilities
The Board is responsible for overseeing the Company’s strategic planning process, as well as reviewing and
monitoring management’s execution of the corporate and business plans. The Board delegates certain powers,
authorities and discretions to the Audit Committee, as duly constituted in terms of the Capital Markets Rules, the
role and competence of which committee are regulated in furtherance of Terms of Reference duly implemented
for the purpose and as further described hereunder.
The Board of Directors has a composition that ensures that the Company is led by individuals who have the
necessary skills and diversity of knowledge relative to the Company’s business. It considers strategic issues, key
projects and regularly monitors performance against delivery of the key targets of the annual strategic plans and
forecasts.
In fulfilling its mandate, the Board assumes responsibility for:
reviewing the Company’s strategy on an on-going basis, as well as setting the appropriate business
objectives;
reviewing the effectiveness of the Company’s system of internal controls;
implementing an appropriate organisational structure for planning, executing, controlling and monitoring
business operations in order to achieve the Company’s objectives;
identifying and ensuring that significant risks are managed satisfactorily; and
ensuring that Company policies are being rigorously observed.
Principle 2 - Chairman and Managing Director
The roles of Chairman and Managing Director are occupied by separate individuals, whereby Mr Edward Vella,
an executive director and joint founder of the Company, carries out the role of Managing Director of the Qawra
Palace, while Mr Robert Ancilleri, an independent, non-executive director, acts as Chairman of the Board.
The Chairman is responsible to lead the Board and set its agenda. The Chairman ensures that the Board is in
receipt of precise, timely and objective information, encourages active engagement by all members of the Board
for discussion and ensures effective communication with shareholders.
9
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
Principle 3 – Composition of the Board
The Memorandum of Association of the Company provides that the business and affairs of the Company shall
be managed and administered by a Board of not less than two (2) and not more than ten (10) Directors. Every
member of the Company holding at least ten percent (10%) of the Ordinary shares in the Company shall have
the right to appoint a Director to the Board. The remaining members of the Board are appointed by means of an
ordinary resolution taken in a general meeting.
As at the date of this statement and during the reporting period under review, the Board of the Company is
composed of the six (6) individuals listed below, who are collectively responsible for the overall direction and
management of the Company. The Board currently consists of three (3) executive Directors, who are entrusted
with the Company’s day-to-day management, and three (3) non-executive Directors, all of whom are also
independent of the Company, whose main functions are to monitor the operations of the executive Directors and
their performance, as well as to review any proposals tabled by the executive Directors.
Executive Directors:
Edward Vella
Esther Vella
Victor Vella
Independent, non-executive Directors:
Robert Ancilleri - Chairman
Stephen Muscat
Paul Muscat
Luca Vella acts as company secretary to the Board of Directors, as well as secretary to the Audit Committee.
In compliance with the Capital Markets Rules, the Board considers that the independent, non-executive
Directors are independent of management and free from any significant business, family or other relationship
with the Company, its controlling shareholder or its management that could materially interfere with the exercise
of their independent judgment. In assessing the independence of the independent, non-executive Directors, due
notice has been taken of Capital Markets Rule 5.119. The composition of the Board has a balance of knowledge
and experience, as well as a strong non-executive presence, to allow continued scrutiny of performance,
strategy and governance.
Principle 5 – Board Meetings
Meetings of the Board are held as frequently as considered necessary, with a minimum of four (4) meetings
being held annually – during the reporting period, the Board met five (5) times. All directors were present at all
the meetings. The Board members are notified of forthcoming meetings at least seven (7) days before the said
meeting. In addition, the notification includes the issue of an agenda and any supporting documentation as
necessary, in order to ensure that all meetings are of a highly effective nature and all participants are well
informed and able to effectively contribute to Board decisions. Attendance with regards to Board meetings is
recorded in the minutes of the meetings. Minutes of all Board and Audit Committee meetings are circulated to all
members and kept on file by the Company Secretary.
Board and Audit Committee meetings are attended by both the Chief Executive Officer, Mr Carmel Pullicino, and
the Financial Controller, Mr Jason Azzopardi, of the Qawra Palace in order for the Board of the Company to have
direct access to progress reports regarding the operational performance and financial results of the Company.
This is also intended to ensure that the policies and strategies adopted by the Board are effectively implemented
by the finance team and senior management. Senior management are invited to attend Board meetings from
time to time when and as appropriate.
10
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
All executive Directors have more than 20 years’ work experience at the Company, whereas the independent,
non-executive Directors have relevant experience related to the business in which the Company operates. The
remuneration of the Directors is reviewed periodically by the shareholders of the Company.
All Directors of the Company, including, therefore, the independent, non-executive Directors, have access to the
Company’s external legal and financial advisors who keep said Directors adequately informed of all statutory and
regulatory requirements connected to the business of the Company on an on-going basis.
Principle 6 – Information and Professional Development
The Company firmly believes in the professional development of all the members in the Company. The Chief
Executive Officer is responsible for establishing and implementing incentives which are aimed to maintain and
recruit management personnel. Furthermore, regular training exercises are held for the Company’s executives to
keep abreast of current technological and hospitality standards and other relevant subject matter trends and
practices.
Principle 8 – Committees
The Board delegates certain powers, authorities and discretions to the Audit Committee. The Company’s Board
established an Audit Committee for the purposes of inter alia:
monitoring the financial reporting process and submitting recommendations or proposals to ensure its
integrity;
monitoring of the effectiveness of the Company’s internal quality control and risk management system;
making 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 during the Company’s annual general meeting;
reviewing and monitoring the external auditor’s independence;
evaluating the arm’s length nature of any proposed transactions to be entered into by the Company and a
related party, to ensure that the execution of such transaction is at arm’s length, conducted on a sound
commercial basis and in the best interests of the Company; and
assessing any potential conflicts of interest between the duties of the Directors and their respective private
interests or duties unrelated to the Company, to ensure that any potential abuse is managed, controlled and
resolved in the best interests of the Company and according to law.
As indicated above, the Company adopts measures in line with the Code with a view to ensuring that the
relationship with its shareholders is retained at arm’s length, including adherence to rules on related party
transactions set out in Chapter 5 of the Capital Markets Rules. Said rules require the vetting and approval of any
related party transaction by the Audit Committee, which is constituted in its entirety by independent, non-
executive Directors. Robert Ancilleri is the current chairman of the Audit Committee and all members of the Audit
Committee are designated as competent in accounting and/or auditing.
The Audit Committee has, pursuant to the relative terms of reference, been granted express powers to be given
access to the financial position of the Company and Mallard Co. Ltd. (C 4758), the entity entrusted with the
management and operation of the Qawra Palace Resort & SPA.
The Board has formally appointed the following three (3) individuals as the members of the Audit Committee:
Robert Ancilleri – Chairperson and independent, non-executive Director
Stephen Muscat – independent, non-executive Director
Paul Muscat – independent, non-executive Director
11
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
Audit Committee members are appointed for a one (1) year term of office. Such term is automatically renewed
for further periods of one (1) year each unless otherwise determined by the Board of Directors of the Company.
The Audit Committee meets at least four (4) times a year, with additional meetings to be called at the discretion
of the Chairperson of the Audit Committee. During the reporting period, the Audit Committee met five (5) times.
The Chairperson will also call a meeting of the Audit Committee if required by any Committee member, by senior
management or by the external auditors of the Company. In compliance with the Capital Markets Rules, all
members of the Audit Committee are considered to be independent members competent in accounting and/or
auditing matters. The Company considers that the members of the Audit Committee have the necessary
experience, independence and standing to hold office as members thereof.
Principle 9 - Relations with shareholders and with the Market
The Company is committed to having an open and communicative relationship with its shareholders and
bondholders. The market is kept updated with all relevant information concerning the Company via the
publication of Company Announcements in terms of the Capital Markets Rules.
Principle 11 - Conflicts of Interest
Directors are expected to always act in the best interests of the Company and its shareholders and investors.
Actual or potential conflicts of interest that may arise from time-to-time will need to be managed in accordance
with the procedures regulating conflicts of interest situations set out in the Company’s Articles of Association. In
this regard, Directors are required to inform the Board of any matter that may result or has already resulted in a
conflict of interest. A record of such declaration is entered into the Company’s minute book and the conflicted
Director shall be precluded from voting on any resolution concerning a matter in respect of which he/she has
declared an interest. Unless the other non-conflicted Directors of the Company otherwise resolve, the conflicted
Director shall: (a) not be counted in the quorum present for the relevant meeting; (b) not participate in the
discussion concerning a matter in respect of which he has declared a direct or indirect interest; and (c) withdraw
from or, if applicable, not attend the meeting at which such matter is discussed.
Principle 12 - Corporate Social Responsibility
The Board is mindful of and seeks to adhere to sound principles of corporate social responsibility in its
management practices. This helps the Company develop strong relationships with its stakeholders and create
long-term value for society and its business. The Company is committed to play an effective role in society’s
sustainable development. The Company continues to support a number of different local initiatives aimed at
improving the quality of life of the local communities it supports.
The Board acknowledges the Company's obligations to both people and the environment. The Company has
kept using its resources to implement various initiatives and projects that aim to benefit its main stakeholders
(guests, employees and the community at large).
The Company supports its employees by providing training programs, partnering with educational institutions,
and promoting inclusion, diversity and internal career advancement.
The Company supports charities and causes that are important to the management team, with the declared goal
of assisting in worthwhile endeavours whenever possible and back local and national charitable organisations.
The Company is constantly making investments and improvements to enhance its product offering for guests.
As part of this process, the Company endeavours to recommend alternative solutions that reduce environmental
costs of hospitality services. The Company further aims to promote transparent sustainable purchasing, ethically
sourced from local suppliers, where possible, that have minimal environmental impact. These include items such
as packaging, recyclable products, local sourcing of services and products and energy efficient electrical
equipment.
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QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
Remuneration Statement
In terms of the Memorandum and Articles of Association of the Company, the aggregate emoluments of all
Directors in any one financial year, and any increases thereto, shall be such amount as may, from time to time,
be determined by the shareholders in general meeting. The remuneration of Directors is a fixed amount per
annum and does not include any variable component relating to profit sharing, share options or pension benefits.
For the financial year ended on 31
st
March 2026 the Company paid an aggregate of €42,000 in directors’ fees to
its Directors.
Part II - Non-compliance with the Code
Other than as stated below, the Company has fully implemented the principles set out in the Code.
Principle 7 – Evaluation of the Board’s Performance
Under the present circumstances, the Board does not consider it necessary to appoint a committee to carry out
a performance evaluation of its role, as the Board’s performance is evaluated on an ongoing basis by, and is
subject to the constant scrutiny of the Board itself (three (3) directors of which are independent, non-executive
Directors), the Company’s shareholders and all of the rules and regulations to which the Company is subject as
a company with debt securities listed on a regulated market.
Principle 8 - Nomination Committee and Remuneration Committee
The Board considers that the size and operations of the Company do not warrant the setting up of remuneration
and nomination committees. The Company does not believe it is necessary to establish a nomination committee
as appointments to the Board are determined by the shareholders of the Company in accordance with
nomination and appointment process set out in the Company’s Memorandum and Articles of Association. The
Company considers that the members of the Board possess the level of skill, knowledge and experience
expected in terms of the Code.
Principle 10 – Institutional Shareholders
The Company is ultimately privately held and has no institutional shareholders, therefore, Principle 10 does not,
at present, apply to the Company.
PART III - Internal Control and Risk Management in relation to the Financial Reporting Process
The Board, supported by the Audit Committee is ultimately responsible for the Company’s system of internal
control and risk management and for reviewing its effectiveness. Such a system is designed to manage rather
than eliminate the risk of failure to achieve business objectives, and can only provide a reasonable, as opposed
to absolute assurance against material misstatement or loss.
The Company operates through the Board of Directors and senior management with clear reporting lines and
delegation of powers. The Board of Directors has adopted and implemented appropriate policies and procedures
to manage risks and internal control. Senior management plans, executes, controls and monitors business
operations in order to achieve the set objectives.
The Directors, with the assistance of senior management, are responsible for the identification, evaluation and
management of the key risks to which the Company may be exposed. The Company has clear and consistent
procedures in place for monitoring the system of internal financial controls. The Directors also receive periodic
management information giving comprehensive analysis of financial and business performance including
variances against the Company’s set targets.The Audit Committee reviews and assesses the effectiveness of
the internal control systems, including financial reporting, and determines whether significant internal control
recommendations made by external auditors have been implemented. The Committee plays an important role in
initiating discussions with the Board with respect to risk assessment and risk management and reviews
contingent liabilities and risks that may be material to the Company.
13
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF COMPLIANCE WITH THE CODE OF PRINCIPLES OF GOOD CORPORATE
GOVERNANCE
PART IV - General Meetings
General meetings are called and conducted in accordance with the provisions contained in the Company’s
Articles of Association and in accordance with any applicable laws or regulations as may be applicable from time
to time.
The report above is a summary of the views of the Board on the Company’s compliance with the Code.
Generally, the Board is of the opinion that, in the context of the applicability of the various principles of the Code
to the Company and in the context of the Company’s business operations and save as indicated herein in the
section entitled “Non-Compliance” the Company has applied the principles and has complied with the Code
throughout the financial year under review. The Board shall keep these principles under review and shall monitor
any developments in the Company’s business to evaluate the need to introduce new corporate governance
structures or mechanisms as and when the need arises.
Signed on behalf of the Board of Directors on 24 July 2026 by Edward Vella (Executive and Managing
Director) and Robert Ancilleri (Non-Executive, Independent Chairman).
14
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March
Notes
2026
€
2025
€
Revenue 4 2,766,947 2,448,000
Administrative expenses (146,961) (154,084)
Operating profit 2,619,986 2,293,916
Change in fair value of investment property 10 955,695 5,380,003
Reversal of impairment on receivable from related party 12,13 43,384 503,217
Reversal of/(depreciation charge) 10 184,935 (184,935)
Finance income 7 48,948 279,739
Finance costs 8 (1,324,908) (1,310,409)
Profit before tax 5 2,528,040 6,961,531
Taxation 9 (499,274) (2,685,773)
Profit for the
year
2,028,766 4,275,758
Basic earnings per share 19 2.03 4.28
The notes on pages 19 to 41 are an integral part of these financial statements.
15
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF FINANCIAL POSITION
As at
31 March
Notes
2026
€
2025
€
ASSETS
Non-current assets
Investment property 10 96,014,691 94,462,620
Loan receivable 12 1,500,000 -
Total non-current assets 97,514,691 94,462,620
Current assets
Loan receivable 12 211,247 614,644
Trade and other receivable 13 287,859 2,906,510
Cash and cash equivalents 14 2,215,253 562,143
Total current assets 2,714,359 4,083,297
TOTAL ASSETS
100,229,050 98,545,917
EQUITY AND LIABILITIES
Capital and reserves
Share capital 15 2,329,373 2,329,373
Retained earnings 62,916,469 60,887,703
TOTAL EQUITY 65,245,842 63,217,076
LIABILITIES
Non-current liabilities
Borrowings 16 24,552,034 24,499,752
Deferred tax 17 9,601,469 9,446,262
Total non-current liabilities 34,153,503 33,946,014
Current liabilities
Trade and other payables 18 588,150 579,527
Current tax payable 241,555 803,300
Total current liabilities 829,705 1,382,827
TOTAL LIABILITIES 34,983,208 35,328,841
TOTAL EQUITY AND LIABILITIES
100,229,050 98,545,917
The notes on pages
19 to 41
are an integral part of these financial statements.
The financial statements on pages
15 to 41
were approved and authorised for issue by the Board of Directors on
24 July 2026
. The financial statements were signed on behalf of the Board of Directors by Edward Vella
(Executive and Managing Director) and Robert Ancilleri (Non-Executive, Independent Chairman) as per the
Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial
Report.
16
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF CHANGES IN EQUITY
Share
capital
€
Retained
earnings
€
Total
equity
€
Balance at 1 April 2024 2,329,373 56,611,945 58,941,318
Total comprehensive income for the year:
Profit
for the year - 4,275,758 4,275,758
Balance at
31 March 2025
2,329,373 60,887,703 63,217,076
Balance at 1 April 2025 2,329,373 60,887,703 63,217,076
Total comprehensive income for the year:
Profit
for the year - 2,028,766 2,028,766
Balance at
31 March 2026
2,329,373 62,916,469 65,245,842
The notes on pages
19 to 41
are an integral part of these financial statements.
17
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
STATEMENT OF CASH FLOWS
For the year ended
31 March
Notes
2026
€
2025
€
Cash flows from operating activities:
Profit before tax 2,528,040 6,961,531
Adjustment for:
Finance costs 8 1,324,908 1,310,409
Reversal of impairment on receivable from related party 12,13 (43,384) (503,217)
Finance income 7 (48,948) (279,739)
Change in fair value of investment property 10 (955,695) (5,380,003)
(Reversal of)/Depreciation charge of investment property 10 (184,935) 184,935
Amortisation of bond issuance costs 16 52,282 49,512
Amortisation of intangible assets 11 - 590
Cash generated from operating activities before working
capital changes 2,672,268 2,344,018
Decrease/(increase) in trade and other receivables 2,618,651 (1,660,494)
Increase/(decrease) in trade and other payables 8,623 (17,965)
Cash generated from operating activities
5,299,542
665,559
Income taxes paid (905,812) -
Payments of interest classified as operating (12,408) (624)
Net cash generated from operating activities 4,381,322 664,935
Cash flows from investing activities:
Interest received from related company 48,948 279,739
Movement in balances with related company (1,464,660) 780,219
Net cash
(used in)/generated from
investing activities
(1,415,712)
1,059,958
Cash flows from financing activities:
Payment of bond interest (1,312,500) (1,309,785)
Net cash used in financing activities (1,312,500) (1,309,785)
Net cash increase in cash and cash equivalents 1,653,110 415,108
Cash and cash equivalents at beginning of year
562,143 147,035
Cash and cash equivalents at end of year
14 2,215,253 562,143
There were non-cash transactions during the year ended 31 March 2026 excluded in investing activities
amounting to €411,441 (2025: 18,447,105) as disclosed in Note 10.
The notes on pages
19 to 41
are an integral part of these financial statements.
18
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
1.
GENERAL INFORMATION
Qawra Palace p.l.c.
(“the Company”) is a
public limited liability company
incorporated in Malta with
registration number C 27835 and registered address at
Qawra Palace p.l.c.
,
Qawra Palace Hotel
,
St. Paul's
Bay SPB 1902
,
Malta
. The Company's bonds are listed on the main market of the Malta Stock Exchange.
The Company owns the "Qawra Palace Resort & SPA" which is leased to a related party company, which
operates the hotel.
The ownership of the Company's share capital and voting rights related to such holdings is such that no
particular individual or identifiable group of individuals may be deemed to exercise ultimate control over the
Company.
2.
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 presentation
The financial statements of the Company have been prepared in accordance with International Financial
Reporting Standards (IFRS Accounting Standards) as adopted by the European Union (EU) and the
requirements of the Companies Act (Cap. 386), enacted in Malta.
The financial statements have been prepared under the historical cost basis, except for the investment
property which is carried at fair value.
Presentation and functional currency
The financial statements are presented in Euro (€) which is the Company's functional and presentation
currency.
New or amended accounting standards and interpretations adopted
The Company adopted all of the 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 accounting standards and interpretations issued but not yet effective
At the end of the reporting period, certain new standards, interpretations or amendments thereto, were in
issue and endorsed by the EU, but not yet effective for the current financial period. There have been no
instances of early adoption of standards, interpretations or amendments ahead of their effective date. The
directors anticipate that the adoption of the new standards, interpretations or amendments thereto, will not
have a material impact on the financial statements upon initial application, except for the effects of IFRS 18
on the presentation and disclosures of certain items.
19
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
New or amended accounting standards and interpretations issued but not yet effective - continued
IFRS 18 Presentation and Disclosure in Financial Statements (IFRS 18), will become effective for annual
reporting periods beginning on or after 1 January 2027, with early application permitted. This new standard
introduces new requirements aimed at improving consistency, comparability and transparency of financial
statement presentation, particularly in the statement of profit or loss. IFRS 18 will not have any effect on the
recognition and measurement of items in the financial statements, however, it is expected to have an effect
on the presentation and disclosure of certain items. These changes include categorisation and sub-totals in
the statement of profit or loss, aggregation/disaggregation and labelling of information, and disclosure of
management-defined performance measures. The directors are assessing the impact of the adoption of
IFRS 18.
Leases
The Company assesses at contract inception whether a contract is, or contains, a lease, that is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
The company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases. Rental income arising is accounted for on a
straight-line basis over the lease term and is included in revenue in the statement of profit or loss due to its
operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to
the carrying amount of the leased asset and recognised over the lease term on the same basis as rental
income. Contingent rents are recognised as revenue in the period in which they are earned.
Tax
The tax charge/credit in the profit or loss for the year normally comprises current and deferred tax. Tax is
recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the
end of the reporting period, and any adjustments to tax payable in respect to previous years.
Deferred income tax is provided using the liability method, for all temporary differences arising between the
tax bases of assets and liabilities and their carrying values for financial reporting purposes. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, based on tax rates that have been enacted or substantively enacted at the end of
the reporting period, and are expected to apply when the related deferred tax asset is realised or the
deferred tax liability is settled.
Under this method, the Company is required to make provision for deferred income taxes on the revaluation
of certain property assets and provisions on the difference between the carrying value for financial reporting
purposes and their tax base.
20
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Tax - continued
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the assets can be utilised and/or sufficient taxable temporary differences are
available. Deferred tax assets are reduced to the extent that is no longer probable that the related tax
benefit will be realised.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current
tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they
relate to the same taxable authority on either the same taxable entity or different taxable entities which
intend to settle simultaneously.
Investment property
Investment property, principally comprise of freehold land and buildings held for long-term rentals and/or for
capital appreciation that are not occupied by the Company. Investment property, including property under
construction for such purposes, is initially recognised at historical cost, including transaction and borrowing
costs. Borrowing costs which are incurred for the purpose of acquiring or constructing a qualifying
investment property are capitalised as part of its cost. Borrowing costs are capitalised while acquisition or
construction is actively underway. Capitalisation of borrowing costs is ceased once the asset is substantially
complete and is suspended if the development of the asset is suspended.
After initial recognition, investment property is carried at fair value, representing open market value
determined annually. Fair value is based on active market prices, adjusted, if necessary, for any difference
in the nature, location or condition of the specific asset. If the information is not available, the Company uses
alternative valuation methods such as recent prices on less active markets or discounted cash flow
projections. Movements in fair value are recognised directly in profit or loss in the period in which they arise.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future
economic benefits associated with the expenditure will flow to the Company and the cost of the item can be
measured reliably. All other repairs and maintenance costs are charged to profit or loss during the financial
period in which they are incurred. When part of an investment property is replaced, the carrying amount of
the replaced part is derecognised.
The fair value of investment property does not reflect future capital expenditure that will improve or enhance
the property and does not reflect the related future benefits from this future expenditure other than those a
rational market participant would take into account when determining the value of the property.
An investment property is derecognised upon disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are expected from the disposal. Any difference
between the net disposal proceeds and the carrying amount of the asset is included in profit or loss in the
period in which the property is derecognised.
Transfers to and from investment properties to property, plant and equipment are determined by a change
in use of owner-occupation. The fair value on the date of change of use from investment properties to
property, plant and equipment is used as deemed cost for the subsequent accounting. The existing carrying
amount of property, plant and equipment is used for the subsequent accounting cost of investment
properties on the date of change of use.
21
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity. Financial assets and financial liabilities are recognised when the
Company becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and rewards are transferred. Financial liabilities
are derecognised when they are extinguished, discharged, cancelled or expired.
Financial assets
Financial assets are classified at initial recognition in accordance with how they are subsequently measured,
as follows:
financial assets at amortised cost;
financial assets at fair value through other comprehensive income; and
financial assets at fair value through profit or loss.
Financial assets at amortised cost
Financial assets at amortised cost are financial assets that are held within the business model whose
objective is to collect contractual cash flows (“hold to collect”) and the contractual terms give rise to cash
flows that are solely payments of principal and interest.
On initial recognition, financial assets at amortised cost are recognised at fair value plus transaction costs
that are directly attributable to the acquisition of the financial asset. Discounting is omitted where the effect
of discounting is immaterial. Trade receivables without a significant financing component are measured at
the transaction price as a practical expedient.
Financial assets at amortised cost are subsequently carried at amortised cost using the effective interest
method less impairment losses, if any. Gain or losses are recognised in profit or loss when the asset is
derecognised, modified, or impaired.
Financial assets are derecognised when the rights to receive cash flows have expired or have been
transferred and the Company has transferred substantially all the risks and rewards of ownership. When
there is no reasonable expectation of recovering part or all of a financial asset, its carrying value is written
off.
Provisions are recorded where, in the opinion of the directors, there is an impairment in value. Where there
has been an impairment in the value of an investment, it is recognised as an expense in the period in which
the diminution is identified.
The Company’s financial assets under this classification include loan receivable, trade and other receivables
and cash and cash equivalents.
22
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Financial instruments - continued
Impairment of financial assets
The Company recognises an allowance for expected credit losses (ECLs) on financial assets that are
measured at amortised cost.
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. The resulting impairment allowance is insignificant to the company’s financial position
and results.
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).
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified
impairment losses are insignificant.
For receivables from related parties, the Company applies the general approach if the financial asset is
determined to have low credit risk at the reporting date where the credit risk has not increased significantly
since initial recognition. The financial asset is deemed to have low credit risk if there is low risk of default
and the debtor has a strong capacity to meet its contractual obligations in the near term.
The Company’s financial assets are mainly financial assets at amortised cost.
Financial liabilities
Financial liabilities are classified at initial recognition in accordance with how they are subsequently
measured, as follows:
financial liabilities at amortised cost; and
financial liabilities at fair value through profit or loss.
The Company’s financial liabilities are mainly financial liabilities at amortised cost.
Financial liabilities at amortised cost
Financial liabilities at amortised cost are initially recognised at fair value, net of transaction cost and are
subsequently measured at amortised cost using the effective interest method. All interest-related charges
under the interest amortisation process are recognised in profit or loss.
23
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
2.
MATERIAL ACCOUNTING POLICY INFORMATION - continued
Financial instruments - continued
Financial liabilities at amortised cost - continued
On derecognition, the difference between the carrying amount of the financial liability (or part of a financial
liability) extinguished or transferred to another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, are recognised in profit or loss.
Financial liabilities under this classification include borrowings and trade and other payables.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of
Directors. The Board of Directors considers the Company to be made up of one segment, that is, to lease
the investment property.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes, the fair value is based on 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; and assumes that
the transaction will take place either in the principal market, or in the absence of a principal market, in the
most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interests. For non-financial assets, the fair value
measurement is based on its highest and best use. Valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair value, are used, maximising the
use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements. Classifications are reviewed at
each reporting date and transfers between levels are determined based on a reassessment of the lowest
level of input that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are
selected based on market knowledge and reputation. Where there is a significant change in fair value of an
asset or liability from one period to another, an analysis is undertaken, which includes a verification of the
major inputs applied in the latest valuation and a comparison, where applicable, with external sources of
data.
24
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
3.
CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with IFRS Accounting Standards as adopted by the EU
requires management to make judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and expenses. The
directors have
considered the development, selection and disclosure of the Company’s critical accounting policies and
estimates and the application of these policies and estimates. Estimates and judgements are continually
evaluated and based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
In the opinion of the Company’s directors, except for the matter disclosed below, the accounting estimates
and judgements made in the course of preparing these financial statements, are not difficult, subjective or
complex to a degree which would warrant their disclosure in terms of the requirements of IAS 1
Presentation of Financial Statements.
Fair value of investment property
Investment property is revalued to fair value by using either internal valuations or valuations prepared by
external independent valuers. These valuations are based upon assumptions including average rate per
room and other income, anticipated operating costs, occupancy rate and the appropriate earnings multiplier.
These estimates are subjective in nature and involve uncertainties and matters of significant judgements
and therefore, cannot be determined with precision.
4.
REVENUE
2026
€
2025
€
Rental income
2,766,947 2,448,000
Revenue represents lease income from a related company from the lease of the investment property.
25
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
5.
PROFIT BEFORE TAX
The profit before tax is stated after charging:
2026
€
2025
€
Amortisation of bond issuance costs (Note 16)
52,282 49,512
Amortisation of intangible assets (Note 11)
- 590
Statutory audit
9,270 9,000
Employee benefit expense (Note 6)
42,000 42,000
Fees charged by the auditor for services rendered during the financial year are as follows:
2026
€
2025
€
Auditor's remuneration
Statutory audit
9,270 9,000
Other assurance services
4,500 4,000
Non-assurance services
500 500
6.
EMPLOYEE BENEFIT EXPENSE
Employee benefit expenses incurred during the
year
were as follows:
2026
€
2025
€
Directors' remuneration
42,000 42,000
The average number of persons employed by the Company during the year was
3
(
2025
:
3
).
7.
FINANCE INCOME
2026
€
2025
€
Interest from loan receivable
48,948 279,739
26
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
8.
FINANCE COSTS
2026
€
2025
€
Bank charges
723 624
Other interest expense
11,685 -
Interest expense on bonds payable (Note 16)
1,312,500 1,309,785
1,324,908
1,310,409
9.
TAXATION
The tax charged to profit or loss comprised of the following:
2026
€
2025
€
Current tax charge
344,067 321,556
Deferred tax charge
155,207 2,364,217
499,274
2,685,773
The tax on the
Company
's profit before tax differs from the theoretical tax expense that would arise using
the applicable tax rate in Malta of 35% as follows:
2026
€
2025
€
Profit before tax
2,528,040 6,961,531
Theoretical tax expense at 35%
884,814 2,436,536
Tax effect of:
ECL disallowed for tax purposes
(15,184) (176,126)
Difference between 10% deferred tax on investment property
and 35% on gain in fair value
(179,285) 481,216
Disallowed expenses
48,444 50,779
Provisions disallowed
(64,728) 64,728
Maintenance allowance
(174,787) (171,360)
Tax charge
499,274
2,685,773
27
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
10.
INVESTMENT PROPERTY
2026
€
2025
€
Opening balance
94,462,620 70,820,447
Additions
411,441 18,447,105
Change in fair value
955,695 5,380,003
Reversal of/(depreciation charge)
184,935 (184,935)
Carrying amount
96,014,691
94,462,620
The investment property is a hotel which is situated at, Qawra Palace Resort & SPA, Qawra Coast Road, St.
Paul's Bay SPB 1902, Malta, which is being leased out to a related company and is carried at fair value.
Rental income from investment property for the year ended
31 March 2026
amounted to
€2,766,947
(
2025
:
€2,448,000
). The Company has not incurred direct operating expenses arising from its investment property.
During the years ended 31 March 2026 and 31 March 2025, the related party transferred costs incurred by it
relating to the investment property, to the Company, as partial repayment of the outstanding loan payable to
the Company. These costs so transferred represent the full additions during the current and comparative
years. As this transaction did not involve cash, it is considered a non-cash investing activity. Last year these
assets were treated as movable assets and depreciation was calculated thereon. Upon reassessment,
these assets were classified as immoveable assets and therefore, the depreciation thereon was reversed
during the current year.
2026
€
2025
€
Cost
32,901,646 32,490,205
Fair value gains
63,113,045 62,157,350
Depreciation of assets within the investment property
- (184,935)
Carrying amount
96,014,691
94,462,620
The fair value of the investment property as at 31 March 2026 and 31 March 2025 is based on valuations by
an independent architect who has experience in the location and category of the investment property being
valued, as adjusted for the purposes of these financial statements as disclosed below:
2026
€
2025
€
Fair value as per architect's valuation as at end of year
112,861,921
112,861,921
Carrying amount of PPE as at end of year (i)
(16,847,230) (18,399,301)
96,014,691
94,462,620
i. The carrying amount of property, plant and equipment relates to the cost (less accumulated
depreciation) of hotel assets incurred by the lessee (a related company) and recognised in its
accounts. Since this factor is being taken into consideration in determining the future rental charges to
the lessee and since the architect's valuation considered the state of the hotel including all property,
plant and equipment held as at 31 March 2026 and 31 March 2025, respectively, the fair value of the
investment property has been adjusted as explained above.
28
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
10.
INVESTMENT PROPERTY - continued
The carrying amounts that would have been recognised had the land and buildings have been carried under
the cost model were as follows:
2026
€
2025
€
Cost
32,901,646 32,490,205
Accumulated depreciation
(2,831,009) (2,501,992)
30,070,637
29,988,213
The Company's investment property is used as a guarantee for a first ranking special hypothec in favour of
the bank and a second ranking special hypothec in favour of the Security Trustee (for the benefit of
Bondholders).
Minimum lease commitments receivable but not recognised in the financial statements are as follows:
2026
€
2025
€
Within 12 months
2,546,899 2,496,960
After one year but within five years
10,707,267 10,497,320
After five years
20,905,075 23,661,920
34,159,241
36,656,200
The fair value measurement relating to investment property is disclosed in Note
23
.
11.
INTANGIBLE ASSETS
Computer
software
€
Cost
As at 31 March 2025 & 31 March 2026
1,770
Accumulated amortisation
As at 31 March 2025 & 31 March 2026
(1,770)
Carrying amount
At 31 March 2026
-
At 31 March 2025
-
29
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
12.
LOAN RECEIVABLE
2026
€
2025
€
Non-current
Loan receivable (i)
1,500,000 -
Current
Loan receivable (ii)
276,212 722,993
Impairment of loans to related company (iii)
(64,965) (108,349)
211,247
614,644
i. On 1 August 2025, the Company entered into an interest-bearing loan facility agreement with a related
company under common control, with final maturity date of 27 January 2033. Interest of 3% per annum
is to be paid on 1 August of every year during the term of the agreement.
ii. On 15 December 2022, the Company entered into an interest-bearing loan facility agreement with a
related company under common control, with final maturity date of 26 January 2037. Interest of 5.25%
per annum is to be paid on 27 January of every year during the term of the agreement. The movement
for the year includes a set-off amounting to €411,441 (2025: €18,447,105) resulting from the transfer of
assets to the Company as disclosed in Note 10. This balance is reclassified as current as it will be paid
through a further set-off during the next financial year.
iii. The Company recognised a reversal of the impairment provision on the loan receivable from a related
company amounting to
€43,384
during the year ended 31 March 2026 (2025:
€467,753
).
Movements in the allowance for expected credit losses are as follows:
2026
€
2025
€
Opening balance
108,349 576,102
Reversal of provision
(43,384) (467,753)
Closing balance
64,965 108,349
The Company's exposure to credit risk related to loan receivable is disclosed in Note
21
.
30
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
13.
TRADE AND OTHER RECEIVABLES
2026
€
2025
€
Trade receivables - related party (i)
- 2,888,640
Accrued income
269,987 -
Prepayments
17,872 17,870
287,859
2,906,510
i. Trade receivables are stated net of allowance for impairment losses amounting to NIL (
2025
: NIL).
Movements in the allowance for expected credit losses are as follows:
2026
€
2025
€
Opening balance
- 35,464
Reversal of provision
- (35,464)
Ending balance
- -
The Company’s exposure to credit risk and impairment losses relating to trade and other receivables is
disclosed in Note
21
.
14.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of balances with banks. Cash and cash equivalents included in the
statement of cash flows reconcile to the amounts shown in the statement of financial position as follows:
2026
€
2025
€
Bank balances
2,215,253 562,143
The Company’s exposure to credit risk relating to cash and cash equivalents is disclosed in Note
21
.
31
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
15.
SHARE CAPITAL
2026
€
2025
€
Authorised
, issued and fully paid up
1,000,000 Ordinary Shares at €2.329373 each
2,329,373 2,329,373
All ordinary shares carry identical voting rights at general meeting of the Company, are equally entitled to
any distribution of dividends, and all classes of shares rank equally for any residual assets of the Company
after the settlement of all liabilities in the event of the Company's winding up.
16.
BORROWINGS
2026
€
2025
€
Non-current
€25,000,000 bonds, 5.25%, 2023-2033
24,552,034 24,499,752
In 2023, the Company issued an aggregate principal amount of €25,000,000 secured bonds with a nominal
amount value of €100 per bond issued at par and with a maturity date of 27 February 2033. The bonds are
secured by a second ranking special hypothec granting the security trustee a right of preference and priority
for repayment over the hypothecated property. The amount is net of bond issuance cost amounting to
€447,966 with amortisation during the year ended 31 March 2026 amounting to €52,282 (2025: €49,512).
The fair value of the bonds for every €100 bond as at 31 March 2026 was €101 (2025: €102.50)
The Company’s exposure to liquidity risk related to borrowings is disclosed in Note
21
.
32
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
17.
DEFERRED TAX LIABILITY
Deferred taxes are calculated on all temporary differences under the liability method using a principal tax
rate of 35% (2025: 35%), with the exception of deferred taxation on fair value gains attributable to
investment property which is computed utilising a tax rate of 10% (2025: 10%) on the basis applicable to
property disposals.
The balance represents temporary differences attributable to:
Fair value of investment property
2026
€
2025
€
Opening deferred tax
9,446,262 7,082,045
Charged to profit or loss
155,207 2,364,217
Closing deferred tax
9,601,469
9,446,262
The balances at 31 March arose from fair value changes arising on investment property.
Movements in deferred tax attributable to temporary differences arising on changes in fair value of
investment property are recognised in profit or loss.
The recognised deferred tax liabilities are expected to be settled principally after more than twelve months
from the end of the reporting period.
18.
TRADE AND OTHER PAYABLES
2026
€
2025
€
Trade payables
- 1,770
FSS payable
725 -
Accruals
142,136 141,132
VAT payable
445,289 436,625
588,150
579,527
The Company's exposure to liquidity risk related to trade and other payables is disclosed in Note 21.
33
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
19.
EARNINGS PER SHARE
The basic earnings per share at 31 March is calculated by dividing the profit attributable to owners of the
Company by the weighted average number of ordinary shares in issue during the year, as follows:
2026
2025
Profit attributable to the owners
€
2,028,766
€
4,275,758
Weighted average number of ordinary shares
1,000,000 1,000,000
Basic earnings per share
€
2.03
€
4.28
20.
RELATED PARTY TRANSACTIONS
The
Company
has related party relationships with companies under common control and over which the
directors exercise significant influence. Transactions are carried out with related parties on a regular basis
and in the ordinary course of the business. The following are the transactions with related parties during the
year:
2026
€
2025
€
Revenue
Company under common control
2,766,947 2,448,000
Interest income
Company under common control
48,948 279,739
Acquisition of investment property
Company under common control
411,441 18,447,105
Loan receivable
Company under common control
1,464,660 (780,219)
Administrative expenses
Directors' remuneration
42,000 42,000
The outstanding balances arising from the above transactions are disclosed in Notes
12
and
13
to these
financial statements.
34
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT
The Company’s activities exposed it to a variety of financial risks, including market risk (fair value interest
rate risk), credit risk and liquidity risks.
The Company’s directors are responsible for managing the risks faced by the Company. This responsibility
includes identifying, analysing, setting the appropriate risk limits and controls, and monitoring adherence to
such limits and controls. The Company did not make use of derivative financial instruments to hedge certain
risk exposures during the current and preceding financial periods.
At year-end, the Company’s financial assets are comprised of financial assets at amortised cost namely
loan receivable, trade and other receivables and cash and cash equivalents.
At year-end, the Company’s financial liabilities comprised of financial liabilities at amortised cost namely
borrowings and trade and other payables.
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 and the Company’s income or the value of its holdings of financial
instruments. The Company is exposed mainly to changes in interest rates.
Fair value interest rate risk
Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of
changes in market interest rates. The Company is exposed to fair value interest rate risk primarily in relation
to its fixed-rate bonds payable and fixed-rate loans receivable. Changes in market interest rates affect the
fair value of these instruments but do not affect their carrying amounts, which are measured at amortised
cost.
The Company's policy is to maintain an appropriate balance between fixed-rate and variable-rate financial
instruments, taking into consideration expected movements in interest rates, funding requirements and
investment objectives. Management monitors market interest rates on an ongoing basis and periodically
assesses the impact of changes in interest rates on the fair value of the Company's financial assets and
liabilities.
The fixed-rate loans receivable carry interest at rates ranging from 3% to 5.25% (2025: 5.25%) and mature
between 2033 and 2037. The fixed-rate bonds payable bear interest at 5.25% (2025: 5.25%) and mature in
2033.
Because the Company's fixed-rate loans receivable and fixed-rate bonds payable are measured at
amortised cost, changes in market interest rates do not have a direct impact on profit or loss or equity.
Consequently, no sensitivity analysis has been presented for these instruments, as changes in market
interest rates affect only their fair values and not the amounts recognised in the financial statements.
35
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT - continued
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Company.
Credit risk principally arises from cash and cash equivalents comprising deposits with banks and loans and
trade receivables from a related company. The Company’s principal exposures to credit risk as at the end of
the reporting period are analysed as follows:
2026
€
2025
€
Cash at bank
2,215,253 562,143
Trade receivables - related party
- 2,888,640
Loans receivable - related party
1,776,212 722,993
Accrued income - related party
269,987 -
4,261,452
4,173,776
The maximum exposure to credit risk at the end of the reporting period in respect of the financial assets
mentioned above is equivalent to their carrying amount, net of any provisions for impairment of those
assets, as disclosed in the statement of financial position and in the respective notes to the financial
statements.
Cash at bank
The Company’s cash is placed with reputable financial institutions, such that management does not expect
any institution to fail to meet repayments of amounts held in the name of the Company. While cash and
cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss
was insignificant.
Trade and loans receivable
The Company's trade receivable and loans receivable balances are with a related company. The
Company’s risk is managed through assessing the credit quality of its related company by taking into
account the financial position, past experience and other factors and incorporating forward looking
information such as economic conditions where the related party operates and other macroeconomic
factors affecting the ability of the related company to settle the loans receivable.
Impairment of receivables
An impairment analysis is performed at each reporting date for these assets using the general approach to
measure the allowance ECL on trade and loan receivables. The trade and loan receivables are with the
same related company. The Company has adopted a 12-month ECL method to its balances with the related
company. 12-month ECL are the expected credit losses that result from default events that are possible
within 12 months after the reporting date. A loss allowance of
€64,965
(2025:
€108,349
) was provided for
the loan receivable.
36
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT - continued
Credit risk - continued
Generally, receivables are written off when there is no reasonable expectation of recovery. Indicators of this
include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to
make contractual payments for a period greater than 1 year.
Liquidity risk
The Company is exposed to liquidity risk in relation to meeting future obligations associated with its financial
liabilities, which comprise principally of borrowings and trade and other payables (Note
16
and
18
). Prudent
liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure the
availability of an adequate amount of funding to meet the Company’s obligations.
The directors manage liquidity risk by maintaining adequate cash reserves and/or available borrowing
facilities by continuously monitoring actual and forecast cash flows as well as the maturity profiles of
financial liabilities.
The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings
based on the remaining period at the end of the reporting period to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within twelve
months equal their carrying amounts, as the impact of discounting is not significant.
Weighted
average
interest rate
%
Within one year
€
One to five
years
€
Over five
years
€
Remaining
contractual
maturities
€
31 March 2026
Non-interest bearing:
Trade payables
- - - - -
Interest-bearing - fixed:
Bonds payable
5.25% 1,312,500 5,253,596 27,628,596 34,194,692
1,312,500
5,253,596
27,628,596
34,194,692
Weighted
average
interest rate
%
Within one year
€
One to five
years
€
Over five
years
€
Remaining
contractual
maturities
€
31 March 2025
Non-interest bearing:
Trade payables
- 1,770 - - 1,770
Interest bearing - fixed:
Bonds payable
5.25% 1,312,500 5,253,596 28,941,096 35,507,192
1,314,270
5,253,596
28,941,096
35,508,962
37
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
21.
FINANCIAL RISK MANAGEMENT - continued
Fair value of financial instruments
As at year-end, the carrying amounts of the cash and cash equivalents, trade and other receivables and
trade and other payables reflected in the financial statements are reasonable estimates of fair value in view
of the nature of these instruments or the relatively short period of time between the origination of the
instruments and their expected realisation. The fair value of amounts owed by the related company which
are current or repayable on demand is equivalent to their carrying amount. The fair value of the Company’s
non-current floating interest rate bank borrowings at the end of the reporting period is not significantly
different from the carrying amounts.
Timing of cash flows
The presentation of the financial assets and liabilities listed above under the current and non-current
headings within the
statement of financial position
is intended to indicate the timing in which cash flows will
arise.
Capital risk management
The capital structure of the Company consists of debt, which includes the borrowings disclosed in Note 16,
and equity attributable to equity holders, comprising issued share capital and retained earnings as disclosed
in Note
15
to these financial statements and in the statement of changes in equity.
The Company manages its capital to ensure that it will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the debt and equity balance. The
Company's strategy remains unchanged from 2025.
38
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
22.
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Company’s liabilities arising from financing activities, including both
cash and non-cash changes. Liabilities arising from financing activities are those which cash flows were, or
future cash flows will be, classified in the Company's statement of cash flow as cash flow from financing
activities.
Balance at 1
April 2025
€
Net cash
proceeds/
(repayments)
€
Non-cash
changes
Effective
interest
€
Balance at 31
March 2026
€
€25,000,000 bonds, 5.25%, 2023-2033
24,499,752 (1,312,500) 1,364,782 24,552,034
Balance at 1
April 2024
€
Net cash
proceeds/
(repayments)
€
Non-cash
changes
Effective
interest
€
Balance at 31
March 2025
€
€25,000,000 bonds, 5.25%, 2023-2033
24,450,240 (1,309,785) 1,359,297 24,499,752
39
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
23.
FAIR VALUE MEASUREMENT
The Company is required to analyse non-financial assets carried at fair value by level of the fair value
hierarchy.
The following table details the Company's assets and liabilities, measured or disclosed at fair value, using a
three-level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
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 or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Level 1
Level 2
Level 3
31 March 2026
Assets
Investment property
- - 96,014,691
The Company’s policy is to recognise transfers into and out of fair value hierarchy levels as of the beginning
of the reporting period. There were no transfers between levels during the financial year. A reconciliation
from the opening balance to the closing balance of property for recurring fair value measurements
categorised within Level 3 of the value hierarchy, is reflected in Note
10
.
Valuation processes
The Company’s property is valued by the directors, generally taking cognisance of professional advice from
independent professionally qualified valuers who hold a recognised relevant professional qualification and
have the necessary experience in the location and segments of the property being valued.
When external valuations are carried out in accordance with this process, the valuer reports directly to the
Board of Directors and discussions on the valuation technique, the model utilised and its results, including
an evaluation of the inputs to the valuation model, are held at Board level. A new valuation is typically
commissioned to an external valuer, whenever, in the opinion of the Board of Directors, new circumstances
arise which may suggest that a material change in value in the underlying property has occurred.
40
QAWRA PALACE P.L.C.
Annual Financial Report and Financial Statements -
31 March 2026
NOTES TO THE FINANCIAL STATEMENTS
- continued
23.
FAIR VALUE MEASUREMENT - continued
Valuation techniques
The valuation of the investment property is determined on the wealth-generating capacity of the investment
property, taking into consideration assumptions including average rate per room and other income,
anticipated operating costs, occupancy rate and the appropriate earnings multiplier.
Income capitalisation or discounted cash flow (“DCF”) approach: considers the free cash flows arising from
the projected income streams expected to be derived from the operation of the property, discounted to
present value using an estimate of the weighted average cost of capital that would be available to finance
such an operation. The significant unobservable inputs utilised with this technique include:
The level 3 assets unobservable inputs and sensitivity are as follows:
EBITDA
WACC
Growth rate Sensitivity
Qawra Palace Resort & SPA
€6.6m - €7.4m 9.7% 2%
0.5% change on
both rates would
increase/decrease
the fair value by
EUR5.0 million
24.
CONTINGENT LIABILITY
The obligations of the Company to the bondholders under the bonds are secured by means of a special
hypothec. Specifically, the Company shall, pursuant to the deed of hypothec, constitute in favour of the
security trustee (for the benefit of bondholders) the special hypothec over the hypothecated property for the
full amount of principal and interest due by the Company to the bondholders in respect of the bonds. The
Special Hypothec may be enforced by the security trustee upon the bonds becoming immediately due and
payable upon an event of default, following which bondholders shall be paid out of the hypothecated
property in priority to other creditors, save for any prior ranking security or privilege that may arise by
operation of law.
41
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Qawra Palace p.l.c.
Report on the Audit of the Financial Statements
Opinion
We
have audited the accompanying financial statements of
Qawra Palace p.l.c.
("the Company"), set
out on pages
15 to 41
, which comprise the
statement of financial position
as at
31 March 2026
, 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 March 2026
, 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 the 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 Auditor's 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.
42
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on the Audit of the Financial Statements - continued
Basis for Opinion - continued
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 ended 31 March 2026
are disclosed in Note
5
to the financial statements.
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 year. 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 Property
The Company's investment property pertaining to the Qawra Palace Resort & SPA located at Coast
Road, St. Paul's Bay SPB 1902, Malta is carried at its fair value of
€96,014,691
. Valuation of this
property is inherently subjected to, among other factors, the individual nature of the property, its
location, and the expected future revenues to be derived from the property.
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 uncertainties underlying the estimations.
Consequently, specific audit focus and attention was given to this area.
The fair value of the investment property as at 31 March 2026 and 31 March 2025 is based on
valuations by an independent architect who has experience in the location and category of the
investment property being valued, as adjusted for the purposes of these financial statements as
discussed in Note
10
.
Our audit procedures in relation to the valuation of the investment property included, amongst others:
Considering the objectivity, independence, competence and capabilities of the external valuer;
Reviewing the methodology used by the external valuer and by management to estimate the fair
value of the investment property;
Testing the mathematical accuracy of the calculations derived from the forecast model; and
Assessing the key valuation inputs and assumptions used on which the forecasts were made.
43
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
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, and the statement of compliance with the code of principles of good
corporate governance, but does not include the financial statements and our auditor's 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 under 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 auditor's 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 those in 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 and Those Charged with Governance 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.
Those charged with governance are responsible for overseeing the Company's financial reporting
process.
44
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on the Audit of the Financial Statements - continued
Auditor's 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 auditor's 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
auditor's 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 auditor's 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.
45
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on the Audit of the Financial Statements - continued
Auditor's Responsibilities for the Audit of the Financial Statements - continued
We communicate with those charged with governance 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 those charged with governance 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 those charged with governance, 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 auditor's report unless law or regulation
precludes public disclosure about the matter or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on the Statement of Compliance with the Code of Principles of Good Corporate
Governance
The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to
prepare and include in their Annual Report a Statement of Compliance providing an explanation of the
extent to which they have adopted the Code of Principles of Good Corporate Governance and the
effective measures that they have taken to ensure compliance throughout the accounting period with
those Principles. The Capital Markets Rules also require the auditor to include a report on the
Statement of Compliance prepared by the directors.
We read the Statement of Compliance and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the financial statements included in the
Annual 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 9 to 14 has been properly prepared in accordance with the requirements of the Capital
Markets Rules issued by the Malta Financial Services Authority.
46
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Report on Other Legal and Regulatory Requirements - continued
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 Qawra Palace p.l.c. for the year ended 31 March 2026,
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.
Auditor's 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 report for the year ended 31 March 2026 has been prepared, in all material
aspects, in accordance with the requirements of its ESEF RTS.
47
INDEPENDENT AUDITOR'S REPORT
- continued
To the Shareholders of Qawra Palace p.l.c.
Other matters on which we are required to report by exception
Under the Maltese Companies Act (Cap. 386), we are also responsible to report to you if, in our
opinion:
proper accounting records have not been kept, or
proper returns adequate for our audit have not been received from branches not visited by us; 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 purpose of our audit.
We also have responsibilities under the Capital Market 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 statutory auditors of the Company by the shareholders of the
Company on 6 April 2023 for the year ended 31 March 2023, and we were subsequently reappointed
by the shareholders at the Company's general meeting for the financial years thereafter. The period of
uninterrupted engagement as statutory auditor of the Company is four financial years.
This copy of the audit report has been signed by
Conrad Borg (Principal)
for and on behalf of
RSM Malta
Registered Auditors
24 July 2026
48
