213800A1PC5JJQ42YB81 2022-01-01 2022-12-31 213800A1PC5JJQ42YB81 2022-12-31 213800A1PC5JJQ42YB81 2021-01-01 2021-12-31 213800A1PC5JJQ42YB81 2021-12-31 213800A1PC5JJQ42YB81 2020-01-01 2020-12-31 213800A1PC5JJQ42YB81 2020-12-31 213800A1PC5JJQ42YB81 2022-01-01 213800A1PC5JJQ42YB81 2021-01-01 213800A1PC5JJQ42YB81 2021-01-01 2021-12-31 stivala:IncentivesAndBenefitsReserveMember 213800A1PC5JJQ42YB81 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember 213800A1PC5JJQ42YB81 2021-01-01 2021-12-31 stivala:PropertyPlantAndEquipmentAndInvestmentPropertyRevaluationSurplusMember 213800A1PC5JJQ42YB81 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember 213800A1PC5JJQ42YB81 2021-01-01 ifrs-full:IssuedCapitalMember 213800A1PC5JJQ42YB81 2021-01-01 stivala:PropertyPlantAndEquipmentAndInvestmentPropertyRevaluationSurplusMember 213800A1PC5JJQ42YB81 2021-01-01 stivala:IncentivesAndBenefitsReserveMember 213800A1PC5JJQ42YB81 2021-01-01 ifrs-full:RetainedEarningsMember 213800A1PC5JJQ42YB81 2021-12-31 ifrs-full:RetainedEarningsMember 213800A1PC5JJQ42YB81 2021-12-31 ifrs-full:IssuedCapitalMember 213800A1PC5JJQ42YB81 2021-12-31 stivala:PropertyPlantAndEquipmentAndInvestmentPropertyRevaluationSurplusMember 213800A1PC5JJQ42YB81 2021-12-31 stivala:IncentivesAndBenefitsReserveMember 213800A1PC5JJQ42YB81 2022-01-01 2022-12-31 ifrs-full:IssuedCapitalMember 213800A1PC5JJQ42YB81 2022-01-01 2022-12-31 stivala:PropertyPlantAndEquipmentAndInvestmentPropertyRevaluationSurplusMember 213800A1PC5JJQ42YB81 2022-01-01 2022-12-31 stivala:IncentivesAndBenefitsReserveMember 213800A1PC5JJQ42YB81 2022-01-01 2022-12-31 ifrs-full:RetainedEarningsMember 213800A1PC5JJQ42YB81 2022-12-31 ifrs-full:RetainedEarningsMember 213800A1PC5JJQ42YB81 2022-12-31 ifrs-full:IssuedCapitalMember 213800A1PC5JJQ42YB81 2022-12-31 stivala:PropertyPlantAndEquipmentAndInvestmentPropertyRevaluationSurplusMember 213800A1PC5JJQ42YB81 2022-12-31 stivala:IncentivesAndBenefitsReserveMember ISO4217:EUR ISO4217:EUR xbrli:shares
Company Registration No.: C
82218
Stivala Group Financ e p.l.c.
Annual Report and Consolidated Financial Statements
for the year ended
31 December 2022
Contents
Page
Chairman’s Statement
1 - 2
Directors' Report 3 - 10
Corporate Governance - Statement of Compliance 11 - 19
Independent Auditor's Report 20 - 28
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
29 - 30
Consolidated Statement of Financial Position 31 - 32
Consolidated Statement of Changes in Equity 33 - 35
Consolidated Statement of Cash Flows 36 - 37
Notes to the Consolidated Financial Statements
38 - 99
1
Stivala Group Finance p.l.c.
Chairman’s Statement
for the year ended 31 December 2022
Dear Shareholders and Stakeholders,
I am very happy to present our annual report for the fiscal year 2022. Over the past year, we have faced
many challenges, but we have achieved significant progress through hard work and determination. We
are excited to share with you this annual report. De
spite our obstacles, we remained committed to
providing our clients affordable and quality services.
Tourism Outlook
As we are all aware, the COVID-
19 pandemic has severely impacted the tourism industry in Europe.
However, we are optimistic about the future of tourism for the foreseeable future. According to industry
experts, the tourism sector is expected to experience
robust growth, and we anticipate a surge in demand
for tourism-related products and services.
At Stivala Group, we have been closely monitoring the tourism market and have made strategic decisions
to position ourselves for the anticipated upturn. We are confident that our upcoming projects will be well-
received by the market, and we will be able to capitalise on this. The Strategic Plan for Tourism focuses
on
higher-quality tourism markets.
Stivala will respond to this by providing better quality tourism products
to ensure we synchronise with this vision.
New Exciting Projects
After our success with the projects we have completed, we are thrilled to announce several new projects
in
the pipeline. We are finalising the plans for residential projects in Msida and Mosta.
We will also soon
launch the ST Tower, a modern and luxurious commercial property providing state-of-the-
art facilities to
our clients. The tower will offer 15 floors
of offices, a cafeteria and an outstanding rooftop restaurant
overlooking the Marsamxett Harbour.
This tower will be an excellent addition to our property portfolio
and significantly boost our revenue stream.
We are also proud to announce that the constr
uction of Alavits Hotel in Gzira is set to be completed in
June 2023. This hotel is expected to furtherance the hospitality industry, offering exceptional services and
amenities to guests. We are confident that Alavits Hotel will become a leading destinati
on for travellers
seeking affordable quality accommodation.
Furthermore, we are excited to share that we are replacing Blubay Suites Apartments with the
construction of a new Novotel Hotel with over 300 bedrooms, which is expected to be completed in Q2 of
2025. Given the growing demand for affordable, high-
quality hotel accommodations, we anticipate the
market will receive this project well.
The Chalet Pr oject
We are thrilled to have been the sole bidder for The Chalet project, a legacy project which will complement
our portfolio.
The plans that have been submitted not only respect the conditions of the tender but will
also place back on the map the landmark building which was lost.
We will provide a project that respects
the past but, at the same time, will challenge the capabiliti
es of the workmanship. This project will be an
exciting and challenging venture for our company and a luxurious destination for the tourism industry.
We are excited to work with new partners to bring it to fruition.
2
Stivala Group Finance p.l.c.
Chairman’s Statement
for the year ended 31 December 2022
Occupancy Rates
I am pleased to report that Our portfolio of office space has achieved an average occupancy of 95% during
2022, which is a testament to the high-
quality services we provide to our clients. Despite the challenging
economic climate, we have remained committed to delivering exceptional services and will continue to
do
so in the coming years.
In conclusion, I want to thank all our employees, partners, and customers for their continued support. We
remain committed to providing high-quality services and real estate, and we are confident that our
upcoming projects will position us as a leading player in the tourism industry.
Sincerely,
Mr. Ivan Stivala
Chairman, Stivala Group
3
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
The Board of Directors are hereby presenting their annual report together with the audited financial
statements of the Group and the Company for the year ended 31 December 2022.
Principal activities
The principal activity of the Company is to act as a finance and investment company, in particular the
financ ing or r e-fina ncing of the f unding r equir ements of re lated companie s wit hin the S tivala Group.
The principal activities of the Group relate to the property letting, development and hospitality. The
Group owns and leases a number of commercial, r
esidential and office properties. These include
apartments and various hotels namely Bayview Hotel, Blubay Apartments, Blubay Suites, Sliema Hotel
and Azur Hotel, majority of which are situated in Gzira and Sliema.
Review of business
The Company registered a profit before tax of €31,419,896 during the year ended 31 December 2022 (2021:
loss before tax of €21,182,263).
The Group registered a consolidated profit before tax of €27,035,170 during the year ended 31 December
2022 (2021: €4,395,177).
Given the Group’s and Company’s financing structure and the positive net assets position of the Group
and the Company at the end of the financial year, the Directors consider the Group’s and Company’s
state
of affairs as at the close of the financial year to be satisfactory.
Performance
The Company's revenue amounting to €33,946,032 (2021: €41,142,087) is derived from dividends
receivable from its subsidiary. The major cost of the Company is the bond interest payable amounting to
€2,347,500 (2021: €2,347,500). The Company registered a profit after taxation of €31,425,337 (2021: loss
after taxation of €20,380,454) and as at year end, its total equity amounted to net asset of €674,090 (2021:
net liability of €18,751,247).
The Group's revenue for the year amounts to €28,843,005 (2021: €15,065,293). The main revenue streams
of
the group are hospitality and rental income. The rental income is slightly higher compared with prior
year
while a significant 191% increase was noted for the hospitality industry due to lifting of covid-
19
restrictions. After deducting the main expenses being the cost of sales and distribution costs related to
hospitality as well as administrative expense
s, the Group registered an operating profit of €14,212,498
(2021: incurred an operating loss of €1,178,984).
On the other hand, the increase in the Group's total comprehensive income for the year is primarily due to
increasing change in fair value of investment property and property, plant and equipment.
In prior year, the directors assessed the valuation of their properties at year end as part of the annual
reassessment based on the market values of similar properties around the area. In current year, the Group
commissioned RS Design Associates to carry o
ut a valuation exercise of the properties owned by the
Group which are pledged to secure borrowings. This has resulted in the reporting of a change in fair
value
of investment property and property plant and equipment of €8,389,602 and €4,381,777, net of deferred
tax in the statement of profit or loss and other comprehensive income, respectively. The directors
assessed
that the fair values of the remaining properties approximate their carrying amounts.
4
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
The Bond Issue
By virtue of the prospectus dated 25 September 2017 and 18 July 2019, the Company issued 45,000,000 4%
secured bonds with a face value of €100 each, redeemable at par on 18 October 2027 and 15,000,000 3.65%
secured bonds with a face value of €100 each, red
eemable at par on 29 July 2029, respectively. The funds
received were intended for further purchase and development of its properties, in line with the Group's
vision of continuous business expansion.
Principal risks and uncertainties
The Directors are aware of the various risks faced by the Group as a result of its diversified business lines
primarily on hospitality and property development and letting. A number of measures are in place to
ensure that such risks and uncertainties are m
aintained at acceptable levels and are in line with the
Group’s risk strategy of sustainable, long-term growth and profitability.
The key risks faced by the group include credit risk, strategic risk, operational risk, liquidity risk and
legislative risks.
Together with other risks and uncertainties inherent in the business, these require strong
capital management as safeguard against competent authority requirements and unfavourable events.
Given such, the Group regularly reviews operational and capital ta
rgets against actual and forecast
business levels to minimise such risks if necessary, to the most considerable level possible in the interest
of
institutional stakeholders.
The main types of risk types are outlined hereunder:
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss.
The Group is exposed to credit risk from its operating
activities and from its financing activities including deposits with banks.
Customer credit risk is managed by the Group's management subject to the Group's established policy,
procedures and control relating to customer credit risk management.
Credit quality of a customer is
assessed based on each customer's credit limits.
Outstanding customer receivables are regularly
monitored. An impairment analysis is performed on each reporting date in accordance with the
guidelines set in IFRS 9 Financial Instruments Standard. The Group exercises a prudent credi
t control
policy, and accordingly, it is not subject to any significant exposure or concentration of credit risk. The
Group banks only with local financial institutions with high quality standard or rating. The Group's
operations are principally carried ou
t in Malta and most of the Group's revenue originates from clients
based in Malta.
Strategic risk
This risk relates to the value of Group's assets and local property market in general.
The Group has strict guidelines and engages competent professionals on quality and valuation of its
investment properties and property, plant and equipment. The Group's properties are rented out to
various tenants, except for those sites where development
is in progress. The Group currently has lease
agreements with in-substance fixed rental receivables in place after the non-cancellable period, which
will
protect the Group from unforeseen circumstances and inflation. The Group ensures to implement sound
capital management policies and flexible cash flow as disclosed below under liquidity risk, to mitigate
such risk.
5
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
Operational risk
Operational risk maybe defined as the risk of losses arising from defects or failures in its internal
processes, people, systems or external events including risks related to fraud, technological and conduct
risk.
Operational risk is inherent in all processes, systems and activities of the Group. As such, all employees
are responsible for managing and controlling operational risks associated with their own activities and
business processes where they are involved. T
he Group, in terms of operational risk management and
control, continues to identify, evaluate and mitigate such risks, regardless if these actually occurred or
not.
The Group also assesses at each reporting date (unless immediate evaluation is necessary) areas of
concern
for improvement to minimise such operational risks, arising due to the volatile results of each year's
operations.
Liquidity risk
The Group is exposed to liquidity risk in relation to meeting future obligations associated with its financial
liabilities. 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 Group's obligations.
The Group is heavily dependent on the operations of the hotels it owns and the rental market. It regularly
reviews the financial performance of its revenue streams in order to ensure that there is sufficient
liquidity
to sustain its operations. Cost cut practices have also been continuously implemented.
Legislative risks
The Group is governed by a number of laws and regulations. Failure to comply could have financial and
reputational implications and could
materially affect the group's ability to operate. The Group has
embedded operating policies and procedures to ensure compliance with existing legislation.
The Group may also be subject to reputation and litigation risk as a result of its course of actions and
operations. This may pose significant effect on the Group’s and the various stakeholders’ wellbeing, if
ignored. The Board of Directors exercises the h
ighest levels of ethical behaviour possible through a
number of appropriate policies, procedures and controls, implemented on its day to day operations.
The hotel industry globally is marked by strong and increasing consolidation and many of the Group’s
current and potential competitors may thus have bigger name recognition, larger customer bases and
greater financial and other resources than the companies within the Group. In response to this, the Group
and the Company's hotels have undergone renovations that would cater the taste of the majority, still
being offerred at the most affordable cost.
Financial risk management and exposures
Note 31 Financial Risk Management to these financial statements provide details in connection with the
Company’s use of
financial instruments, its financial risk management objectives and policies and the
financial risks to which it is exposed.
6
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
Events after reporting period
All events occuring after the balance sheet date until the date of authorisation for issue of these financial
statements and that are relevant for valuation and measurement as at 31 December 2022 for the Group
and the Company are included in these consolid ated financial statements.
As we progress through 2023, certain events which might have the potential of impacting the results of
the
Company are possible repercussions from the war in Ukraine on the European and, more generally, on
the
world economy as well as rising inflation and stock market uncertainty. Other concerns could arise from
another pandemic flareup although the latter is considered unlikely in the short term as
vaccinations have
been administered on a large scale global
ly. Post the end of the reporting date however, as
aforementioned, the potential risks to the performance of any company is from high inflation witnessed
in
the last few months which has forced many major central banks to increases interest rates as a counter-
measure for inflation.
So far, Malta has been well shielded from increases in fuel and utility prices, though the Government has
hinted that this may not be sustainable in the longer term. Should the government halt its subsidies on
energy and other assistance to industry in general, this could lead to further price increases and possibly
a
reduction in disposable income, and which in-turn would adversely influence the propensity to save.
The Directors are closely monitoring the possible im
pact on its operations and financial performance and
are committed to take all necessary steps to mitigate the impact. This has no impact on the financial
statements of the Company as at date of approval. We are not otherwise aware of any further events that
could possibly have an effect on the operations of the Company.
Future developments
Despite the economic uncertainties caused by high inflation and higher interest rates, the Group started
2022 with an upward trend on its hospitality revenue exceeding its budgets by approximately 100% while
the property letting/development sector continues to operate normally.
The strong upturn in 2022 proved that the customers continue to trust the Group. In the meantime the
Group is committed to continue investing in the tourism, accommodation and residential sector with
various projects. Such projects
include the newly built Alavits Hotel in Gzira which will be opened in mid
2023, ST Tower which will house 15 floors of offices, a cafeteria and a rooftop restaurant. The Group will
be also introducing the first Novotel Hotel in Malta, which will be a 4 star 300 room hotel which is
expected to be opened in Q2 2025. The Group remains to have an optimistic outlook for 2023.
Dividends and Reserves
The results for the year are set in the Consolidated Statement of Comprehensive Income on page 29 and
30.
The Board of Directors paid a dividend of €12,000,000 (2021: Nil), net of taxation. Retained profits carried
forward at the reporting date amounted t
o €11,211,356 (2021: €5,293,934) for the Group and retained
earnings of €419,090 (2021: accumulated losses of €19,006,247) for the Company.
7
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
Directors
The Directors of the Company since the beginning of the year up to the date of this report were:
Mr. Ivan Stivala - Chairman and Executive Director
Mr. Michael Stivala - CEO and Executive Director
Mr. Martin John Stivala - Executive Director
Dr. Ann Marie Agius - Non-Executive Director
Mr. Francis Gouder - Non-Executive Director
Mr. Jean Paul Debono - Non-Executive Director
Company Secretary
Ms. Antoinette Scerri
Remuneration committee and corporate governance
During the period under review, the functions of the Remuneration Committee were carried out by the
Board of Directors in view of the fact that the remuneration of Directors is not performance related.
Statement of Directors’ Responsibilities for the financial statements
The Directors are required by the Maltese Companies Act, 1995 (Cap.386) to prepare financial statements
in accordance with International Financial Reporting Standards as adopted by the EU 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 such financial statements, the Directors are responsible for:
-
ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
-
selecting and applying consistently appropriate accounting policies;
-
making accounting estimates that are reasonable in the circumstances; 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 also responsible for designing, implementing and maintaining internal control as
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, 1995 (Cap. 386). They
are also responsible for safeguarding the assets of the Group and the parent Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The financial statements of Stivala Group Finance p.l.c. for the year ended 31 December 2022 are included
in the Annual Report 2022, which is published in hard-
copy printed form and is available on the
Company’s website.The Directors are responsible for the maintenance and
integrity of the Annual 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
legisla
tion governing the preparation and dissemination of financial statements may differ from
requirements or practice in Malta.
8
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
Additionally, the directors are responsible for:
- the preparation and publication of the Annual Financial Report, including the consolidated financial
statements and the relevant tagging requirements therein, as required by Capital Markets Rule 5.56A, in
accordance with the requirements of ESEF RTS,
-
designing, implementin, and maintaining internal controls relevant to the preparation of the Annual
Financial Report that is free from material non-
compliance with the requirements of the ESEF RTS,
whether due to fraud or error, and consequently, for ensuring the accurate transfer of the information in
the Annual Financial Report into a single electronic reporting format.
Statement of responsibility pursuant to the Capital Market Rules issued by Malta Financial Services
Authority
The Directors confirm that in accordance with the Capital Market Rules, to the best of their knowledge:
- the financial statements give a true and fair view of the financial position of the Group and the Company
as at 31 December 2022, and of the financial performance and the cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the European Union; and
- the Directors' Report includes a fair review of the performance of the business and the financial position
of the issuer and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that the Group and the Company face.
Going concern – Capital Markets Rules 5.62
Having made an appropriate assessment of going concern as discussed in Note 2.1 to these financial
statements, the financial statements of the Group and the Company are prepared on a going concern
basis.
The Directors regard that pursuant to Capital Markets Rule 5.62, this is appropriate, after due
consideration of the Group’s and Company's financial support from the shareholder and ultimate
beneficial owners. Specifical
ly, the Directors have prepared financial and capital plans for the next eleven
years which show that the Group and the Company is in a position to continue operating as a going
concern for the foreseeable future. These plans take into account risks and
uncertainties facing the Group
and the Company, including but not limited to, the effect of the completion of divestment of major
share holder’s inte rest in t he Gr oup and t he Com pany, as a nnounce d last 2 7 Apr il 202 1.
Shareholder register information pursuant to Capital Market Rule 5.64
- Structure of Capital
The Company has an authorised share capital of €500,000 Ordinary Shares of €1 each and issued and fully
paid up share capital of €255,000 with a nominal value of €1 each. Each Ordina
ry Share is 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.
9
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
- Appointment and removal of Directors
Article 55.1A of the Company’s Memorandum and Articles of Association states that a shareholder
holding not less than 25% of the issued share capital of the Company having voting rights or a number of
shareholders who between them hold not less than 25% of the issued share capital of the Company
having
voting rights ("a qualifying shareholder") shall be entitled to appoint (1) director for every such
qualifying
shareholding, by letter addressed to the Company. Any shareholder who does not qualify to appoint
directors in terms of the provisions of paragraph (a) of this sub-
article 55.1, and who has not aggregated
his holdings with those of other shareholders for the purposes of appointing a director(s) pursuant
thereto
shall be entitled to participate and vote in an election of directors to take place once in every year at the
Annual General Meeting of the Company.
The Chairman shall be appointed by the
directors at their first meeting following the annual general
meeting in each year, save for the first chairman who shall retain the post of chairman until such time as
he resigns or is earlier removed in accordance with the provisions of the articles reg
ulating the removal of
directors.
Any director may be removed at any time by the Company in general meeting. The director who is to be
removed shall be given opportunity of making representations to the general meeting at which a
resolution for his removal is to be taken.
- Powers of Directors
Subject to applicable provisions of the Articles, the directors may exercise all the powers of the Company
to borrow money and to hypothecate or charge its undertaking, property and uncalled capital or any part
thereof, and to issue equity securitie
s and debt securities on such terms, in such manner and for such
consideration as they think fit, whether outright or as security for any debt, liability or obligation of the
Company or of any third party. Provided that the members in general meeting may, from time to time,
restrict and limit the aforesaid powers of the directors, in such manner as they may deem appropriate.
- General Meetings
Subject to the provisions of the Act, the Company shall in each year hold an annual general meeting at
such time and place as the directors shall appoint. All general meetings other than the annual general
meetings shall be called extraordinary general mee
tings. The Directors may convene an extraordinary
general meeting whenever they think fit. Extraordinary general meetings may also be convened on such
requisition, or in default, may be convened by such requisitionists, as provided by the Act. If at any ti
me,
there are not in Malta sufficient directors capable of acting to form a quorum, any director, or any two
members of the Company, may convene an extraordinary general meeting in the same manner, as nearly
as possible, as that in which meetings may be convened by the Directors.
A general meeting of the Company shall be deemed not to have been duly convened unless at least 14
(fourteen) days notice has been given in writing, to all those
members entitled to received such notice. The
notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which
it was given, and shall specify the place, the day and the hour of the meeting, and in case of extraord
inary
business or special business, the general nature of the business, and shall be accompanied by a statement
regarding the effect and scope of any proposed resolution in respect of such extraordinary business.
10
Stivala Group Finance p.l.c.
Directors' Report
for the year ended 31 December 2022
- Auditors
Pursuant to the Company’s statutory obligations in terms of Companies Act and Capital Market Rules, the
appointment of the auditors and the authorisation of the Directors to set their remuneration will be
proposed and approved at the Company’s AGM. HLB CA
Falzon have expressed their willingness to
continue in office.
These financial statements were approved for issue by the Board of Directors on 27 April 2023 and
signed on its behalf by Mr. Michael Stivala (CEO) and Mr. Martin John Stivala (Director) as per the
Directors’ Declaration on ESEF Annual Financial Reports submitted in conjunction with the Annual
Financial Report 2022.
Stivala Group Finance p.l.c.
11
Corporate Governance Statement
for the year ended 31 December 2022
Introduction
Pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority (the “Rules“),
Stivala Group Finance p.l.c. (“the Company”) should endeavour to adopt the Code of Principles of Good
Corporate Governance contained in Appendix 5.1 to Ch
apter 5 of the Rules (“the Code”) and accordingly,
in terms of Rule 5.94, the Company is hereby reporting on the extent of its adoption of the Code, with
respect to the financial year under review.
The Company became subject to the principles when its bon
ds were admitted to capital market and
subsequent trading on the Malta Stock Exchange.
Accordingly this report of the Company on this matter
covers the whole year.
The Company acknowledges that although the Code does not dictate or prescribe mandatory rules,
compliance with the principles of good corporate governance recommended in the Code is in the best
interests of the Company, its shareholders and other stakeholders.
The Company has only issued debt securities which have been admitted to trading on the Malta Stock
Exchange, and accordingly, in terms of Rule 5.101, is exempt from reporting on the matters prescribed in
Rules 5.97.1 to 5.97.3, 5.97.6 and 5.97.7 in this corporate governance statement (the "Statement”). It is in
the
light of this exemption afforded to the Company by virtue of Rule 5.101, that the directors of the
Company
are herein reporting on the corporate governance of the Company.
General
Good corporate governance is the responsibility of the Board of Directors of the Company (“the Board”) as
a whole, and has been and remains a priority for the Company. In deciding on the most appropriate
manner in which to implement the Code, the Board took cognisance of the Company’s size, nature and
operations, and formulated the view that the adoption of certain mechanisms and structures which may
be
suitable for companies with extensive operations may not be appropriate for the Company. The
limitations of size and scope of operations inevitably impact on the structures required to implement the
Code, without however diluting the effectiveness thereof.
The Board considers that, to the extent otherwise disclosed herein, the Company has generally been in
compliance with the Principles throughout the year under review.
This Statement shall now set out the structures and processes in place within the Company and how these
effectively achieve the goals set out in the Code for the year under review. For this purpose, this
Statement
will make reference to the pertinent principles of the Code and then set out the manner in which the
Board
considers that these have been adhered to.
For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code
means compliance with the Code’s main principles and the Code provisions.
Compliance with the Code
The Directors believe that for the financial year under review the Company has generally complied with
the requirements for each of these principles. Further information in this respect is provided hereunder.
Stivala Group Finance p.l.c.
12
Corporate Governance Statement
for the year ended 31 December 2022
Principle One - The Board
The Directors report that for the financial year under review, the Directors have provided the necessary
leadership in the overall direction of the Company and have performed their responsibilities for the
efficient and smooth running of the Company with h
onesty, competence and integrity. The Board is
composed of members who are competent and proper to direct the business of the Company with
honesty,
competence and integrity. All the members of the Board are fully aware of, and conversant with, the
statutory and regulatory requirements connected to the business of the Company. The Board is
accountable for its performance and that of its delegates to shareholders and other relevant stakeholders.
The Board has throughout the period under review provided the necessary leadership in the overall
direction of the Company, and has adopted prudent and effective systems which ensure an open dialogue
between the Board and Senior Management.
The Company has a structure that ensures a mix of Executive and Non-Executive Directors and that
enables the Board to have direct information about the Company’s performance and business activities.
Principle Two - Chairman and CEO
The position of the Chairman and that of the CEO are occupied by different individuals. There is a clear
division of responsibilities between the running of the Board and the CEO's responsibility in managing
the
Group's business. This separation of roles of the Chairman and CEO avoids concentration
of authority and
power in one individual and differentiates leadership of the Board from the running of the business.
The role of Chairman exercises independent judgement and is responsible to lead the Board and set its
agenda, whilst also ensuring that the Directors receive precise, timely and objective information so that
they can take sound decisions and effectively mo
nitor the performance of the Company. The Chairman is
also responsible for ensuring effective communication with shareholders and encouraging active
engagement by all members of the Board for discussion of complex or contentious issues. The Board
believes that these functions have been conducted in compliance with the dictates of Code provision 2.2.
The role of CEO is then accountable to the Board for all business operations of the Company.
Principle Three - Composition of the Board
The Board is composed of 6 members, with 3 Executive and 3 Non-Executive Directors. The Board is
responsible for the overall long term strategy and general policies of the Company, of monitoring the
Company’s systems of control and financial reporting and that it communicates effectively with the market
as and when necessary.
The CEO provides the rest of the Directors with access to the information on the Company’s financial
position and systems.
He acts as the main point of communication between the Board and overall
corporate operations as he is responsible for proper impleme
ntation of sustainable business solutions,
effective framework of internal controls over risk in relation to the business and strategic goals devised by
the Board.
The Board of Directors consists of the following:
Mr. Ivan Stivala - Chairman and Executive Director
Mr. Michael Stivala - CEO and Executive Director
Mr. Martin John Stivala - Executive Director
Dr. Ann Marie Agius - Non-Executive Director
Mr. Francis Gouder - Non-Executive Director
Mr. Jean Paul Debono - Non-Executive Director
Stivala Group Finance p.l.c.
13
Corporate Governance Statement
for the year ended 31 December 2022
In accordance with the provisions of the Company’s Articles of Association, the appointment of Directors
to the Board is exclusively reserved to the Company’s shareholders, except in so far as appointment is
made by the Board to fill a casual vacancy, whic
h appointment would be valid until the conclusion of the
next annual general meeting ("AGM") of the Company following such an appointment.
In terms of the
Articles of Association, a director shall hold office for a period of one (1) year from the date of
a
ppointment. Provided that no appointment may be made for a period exceeding three (3) years.
Notwithstanding the period for which a director has been appointed, on the lapse of such period, a
director will be eligible for re-appointment. Dr. Ann Marie Agiu
s, Mr. Francis Gouder and Mr. Jean Paul
Debono are considered by the Board to be independent non-executive members of the Board, in that they
have no involvement or relationship with the Company or with the majority shareholders.
None of the independent Non-Executive Directors:
a)
b)
c)
d)
e)
f)
are or have been employed in any capacity with the Company and/or the Group;
have or had a significant business relationship with the Company and/or the Group;
has received or receives significant additional remuneration from the Company and/or the
Group;
has close family ties with any of the Company’s executive Directors or senior employees;
has served on the board for more than twelve consecutive years; or
is or has been within the last three years an engagement partner or a member of the audit team
of the present or former external auditor of the Company and/or the Group.
Each Non-Executive Director has declared in writing to the Board that he/she undertakes:
a)
b)
c)
to maintain in all circumstances his independence of analysis, decision and action;not to seek or
accept any unreasonable advantages that could be considered as compromising his/her
independence; and
to clearly express his/her opposition in the event that he finds that a decision of the Board may
harm the Company.
Principle Four - The Responsibilities of the Board
The Board acknowledges its statutory mandate to conduct the administration and management of the
Company.
The Board, in fulfilling this mandate and discharging its duty of stewardship of the Company,
assumes responsibility for the Company’s strategy and de
cisions with respect to the issue, servicing and
redemption of its bonds in issue, and for monitoring that its operations are in conformity with its
commitments towards bondholders, shareholders, and all relevant laws and regulations. The Board is
also
res
ponsible for ensuring that the Company establishes and operates effective internal control and
management information systems and that it communicates effectively with the market.
The Executive Officers of the Company may be asked to attend board meetings
or general meetings of the
Company, although they do not have the right to vote thereat until such time as they are also appointed to
the Board. The rest of the Directors may entrust to and confer upon the CEO any of the powers
exercisable
by them upon such terms and conditions and with such restrictions as they may think fit, and either
collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw,
alter or vary all or any of such powers.
Stivala Group Finance p.l.c.
14
Corporate Governance Statement
for the year ended 31 December 2022
In fulfilling its mandate, the Board:
a)
b)
c)
d)
e)
f)
has a clearly-defined Company strategy, policies, management performance criteria and
business policies which can be measured in a precise and tangible manner;
has established a clear internal and external reporting system so that the Board has continuous
access to accurate, relevant and timely information such that the Board can discharge its
duties,
exercise objective judgment on corporate affairs and take pertinent decisions to ensure that an
informed assessment can be made of all issues facing the board;
establishes an Audit Committee in terms of Capital Market Rules 5.117 – 5.134;
continuously assesses and monitors the Company`s present and future operations,
opportunities, threats and risks in the external environment and current and future strengths
and weaknesses;
evaluates management’s implementation of corporate strategy and financial objectives, and
regularly reviews the strategy, processes and policies adopted for implementation using key
performance indicators so that corrective measures can be taken to address any deficiencies
and ensure the future sustainability of the Company; and
ensures that the Company has appropriate policies and procedures in place to assure that the
Company and its employees maintain the highest standards of corporate conduct, including
compliance with applicable laws, regulations, business and ethical standards.
As part of succession planning, the Board ensure that the Company implements appropriate schemes to
recruit, retain and motivate employees and Senior Management. Directors are entitled to seek independent
professional advice at any time on any aspect of their duties and responsibilities, at the Company’s
expense.
The Audit Committee
The Audit Committee’s primary objective is to assist the Board in fulfilling its responsibilities: in dealing
with issues of risk, control and governance; and review the financial reporting processes, financial policies
and internal control structure. During the financial year under review, the Audit Committee met 5 times.
Although the Audit Committee is set up at the level of the Company its main tasks are also related to the
activities of the subsidiary, sub- subsidiaries and operational companies.
The Board has set formal terms of establishment and the terms of reference
of the Audit Committee that
establish its composition, role and function, the parameters of its remit as well as the basis for the
processes
that it is required to comply with. The Audit Committee is a sub-
committee of the Board and is directly
responsibl
e and accountable to the Board. The Board reserves the right to change these terms of reference
from time to time.
Furthermore, the Audit Committee has the role and function of scrutinising and evaluating any proposed
transaction to be entered into by the Company and a related party, to ensure that the execution of any
such
transaction was at arm’s length and on a commercial basis and ultimately in the best interests of the
Company.
The Audit Committee is composed of 3 independent, Non-Executive Directors:
•
Mr. Francis Gouder – Chairman of Audit Committee and Member
•
Dr. Ann Marie Agius – Member
•
Mr. Jean Paul Debono – Member
Stivala Group Finance p.l.c.
15
Corporate Governance Statement
for the year ended 31 December 2022
Principle Five - Board meetings
The Directors meet regularly to dispatch the business of the Company. The Directors are notified of
forthcoming meetings by the Company Secretary with the issue of an agenda and supporting board
papers, which are circulated in advance of the meeting. Minut
es are prepared during Board meetings
recording faithfully attendance, and resolutions taken at the meeting. These minutes are subsequently
circulated to all Directors as soon as practicable after the meeting.
The Chairman ensures that all relevant
issues
are on the agenda supported by all available information, whilst encouraging the presentation of
views pertinent to the subject matter and giving all Directors every opportunity to contribute to relevant
issues on the agenda. The agenda on the Board seeks to achieve a balance between long-term strategic and
short-term performance issues.
The Board meets as often and as frequently required in line with the nature and demands of the business
of the Company. Directors attend meetings on a frequent and regular basis and dedicate the necessary
time
and attention to their duties as Directors of the Company. The Board met 5 times during the financial
year
under review. The following Directors attended meetings as follows:
Mr. Ivan Stivala – Chairman and Executive Director - 5 meetings
Mr. Michael Stivala – CEO and Executive Director - 5 meetings
Mr. Martin John Stivala – Executive Director - 5 meetings
Dr. Ann Marie Agius - Non-Executive Director - 5 meetings
Mr. Francis Gouder - Non-Executive Director - 5 meetings
Ms. Jean Paul Debono - Non-Executive Director (newly appointed on 21 April 2022) - 4
meetings
Mr. Mark Bamber - Non-Executive Director (resigned on 21 April 2022) - 1 meetings
Business at the Company’s AGM will cover the Annual Report and Financial Statements, the declaration of
dividends if any, election of directors and the approval of their remuneration, appointment of the auditors
and the authorisation of the directors to set the auditors’ fees. Shareholders’ meetings are called with
enough notice to enable the use of proxies to attend, vote and abstain. The Company recognises the
importance of maintaining dialogue with its shareholders to ensure its strategies and performance.
Principle Six - Information and Professional Development
The Directors believe that for the financial year under review they conducted sufficient professional
development for its officers. The Company will continue with this commendable practice. As part of
succession planning and employee retention, the Board ensure that the Company implements appro
priate
schemes to recruit, retain and motivate employees and Senior Management and keep a high morale
amongst employees.
Principle Seven - Evaluation of the Board's performance
The current composition of the Board allows for a cross-section of skills and experience and achieves the
appropriate balance required for it to function effectively. During the year, the Directors carried out a self-
evaluation performance analysis, including the Chairman and/or the CEO. The results of this analysis did
not require any material changes in the Company’s corporate governance structure.
Stivala Group Finance p.l.c.
16
Corporate Governance Statement
for the year ended 31 December 2022
Principle Eight - Committees
Principle Eight A of the Code deals with the establishment of a remuneration committee for the Company
aimed at developing policies on remuneration for Directors and Senior Executives and devising
appropriate remuneration packages.
In view of the size and type of operation of the Company, the Board does not consider the Company to
require the setting up of a remuneration committee, and the Board itself carries out the functions of the
remuneration committee specified in, and in accordance with, Principle Eight A of the Code, given that
the
remuneration of Directors is not performance-related.
The Board has established a remuneration policy for Directors and Senior Executives, underpinned by
formal and transparent procedures for the development of such a policy and the establishment of the
remuneration packages of individual Directors.
The Boar
d confirms that there have been no changes in the Company’s remuneration policy during the
year under review and the Company does not intend to effect any changes in its remuneration policy for
the following financial year.
The maximum annual aggregate emoluments that may be paid to the Directors is, pursuant to the
Company’s Memorandum and Articles of Association, approved by the shareholders in general meeting.
The Board is composed exclusively of executive and non-executive Directors. The determination of
remuneration arrangements for board members is a reserved matter for the Board as a whole.
During the financial year under review, Mr. Michael Stivala, Mr. Ivan Stivala and Mr. Martin John Stivala
each held an indefinite full-time contract of service with ST Hotels Ltd.
The remuneration policy for Directors has been consistent since inception; no Director (including the
Chairman) is entitled to profit sharing, share options or pension benefits.
There is no linkage between the
remuneration and the performance of Directors.
A fixed honorarium is payable at each financial year to
the Non-Executive Directors.
For the financial year under review the aggregate remuneration of the Directors of the Company and the
Group (where the Company forms part) were as follows:
Fixed remuneration from Company €25,755
Fixed remuneration from Sub-subsidiary €135,763
Principle Eight B of the Code deals with the formal and transparent procedure for the appointment of
Directors.
In view of the size and type of operation of the Company, the Board does not consider the Company to
require the setting up of a nomination committee. Reference is also made to the information provided
under the subheading ‘Principle Three’ above, which provides for a formal and transparent procedure for
the appointment of new Directors to the Board.
Principle Nine - Relations with shareholders and with the market
Pursuant to the Company’s statutory obligations in terms of the Companies Act (Cap. 386 of the Laws of
Malta) and the Capital Market Rules issued by the Malta Financial Services Authority, the Annual Report
and Financial Statements, the election of Directo
rs and approval of Directors’ fees, the appointment of the
auditors and the authorisation of the Directors to set the auditors’ fees, and other special business, are
proposed and approved at the Company’s AGM.
With respect to the Company’s bondholders and the market in general, during the financial year under
review, there was no need to issue any Company announcements to the market.
Stivala Group Finance p.l.c.
17
Corporate Governance Statement
for the year ended 31 December 2022
The Company’s Articles of Association allow minority shareholders to call special meetings on matters of
importance to the Company, provided that the minimum threshold of ownership established in the
Articles of Association is met.
Principle Ten - Relations with Institutional shareholders
The Directors are of the view that this Principle is not applicable to the Company.
Principle Eleven - Conflicts of Interest
Principle Eleven deals with conflicts of interest and the principle that Directors should always act in the
best interests of the Company
All of the Directors of the Company, except for Dr. Ann Marie Agius, Mr. Francis Gouder and Mr. Jean
Paul Debono are Executive Officers of the Company. The other Executive Directors have a direct
beneficial
interest in the share capital of the Company, and as such are susceptible to conflicts arising between the
potentially diverging interests of the shareholders and the Company. During the financial year under
review, no private interests
or duties unrelated to the Company were disclosed by the Directors which
were or could have been likely to place any of them in conflict with any interests in, or duties towards, the
Company.
The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the best
interests of the Company. Furthermore, in accordance with the provisions of article 145 of the Companies
Act (Cap. 386 of the Laws of Malta), every
Director who is in any way, whether directly or indirectly,
interested in a contract or proposed contract with the Company is under the duty to fully declare his
interest in the relevant transaction to the Board at the first possible opportunity and he wi
ll not be entitled
to vote on matters relating to the proposed transaction and only parties who do not have any conflict in
considering the matter will participate in the consideration of the proposed transaction .
Principle Twelve - Corporate Social Responsibility
Principle Twelve encourages Directors of listed companies to adhere to accepted principles of corporate
social responsibility
The Company seeks to adhere to sound Principles of Corporate Social Responsibility in its management
practices, and is committed to enhance the quality of life of all stakeholders and of the employees of the
Company and the Group.
The Board is strongly co
mmitted to the environment, and to the welfare of the community in which we
operate. All directors are mindful that sustainable development and environmental protection are critical,
both for the success of our tourism and development activities, and for t
he benefit of our community’s
quality of life. To this end, the Group has taken initiatives to minimise its consumption of natural
resources, reduce its generation of waste, and to incorporate sustainability principles and attractive design
in its developments.
In carrying on its business the Group is fully aware and at the forefront to preserving the environment
and
continuously review its policies aimed at respecting the environment and encouraging social
responsibility
and accountability.
Stivala Group Finance p.l.c.
18
Corporate Governance Statement
for the year ended 31 December 2022
Internal Control
The Board is ultimately responsible for the Company’s system of internal controls and for reviewing its
effectiveness. The Directors are aware that internal control systems are designed to manage, rather than
eliminate, the risk of failure to achieve busin
ess objectives, and can only provide reasonable, and not
absolute, assurance against normal business risks.
During the financial year under review the Company operated a system of internal controls which
provided reasonable assurance of effective and effi
cient operations covering all controls, including
financial and operational controls and compliance with laws and regulations. Processes are in place for
identifying, evaluating and managing the significant risks facing the Company.
Other key features of the system of internal control adopted by the Company in respect of its own internal
control as well as the control of its subsidiaries and affiliates are as follows:
Risk identification
The Board, with the assistance of the management team of the Company, is responsible for the
identification and evaluation of key risks applicable to the areas of business in which the Company and its
subsidiaries are involved. These risks are assessed on a continual basis and any potential exposure is
discussed regularly at Board and management level, with a view to mitigation thereof, where possible.
Information and communication
Periodic strategic reviews which include consideration of long-term financial projections and the
evaluation of business alternatives are regularly convened by the Board. Regular budgets are prepared
and
performance against these plans is actively monitored and reported to the Board.
In conclusion, the Board considers that the Company has generally been in compliance with the Principles
throughout the period under review as befits a company of this size and nature.
Stivala Group Finance p.l.c.
19
Corporate Governance Statement
for the year ended 31 December 2022
Non-compliance with the principles and the reasons therefor have been identified below.
Code Provision
Explanation
4.2.7
The Board has not formally developed a succession
policy for the future composition of the Board of
Directors as recommended by Code Provision 4.2.7. In
practice, however, the Board is actively engaged in
succession planning and involved in ensuring that
appropriate
schemes
to
recruit,
retain
and
motivate
employees and Senior Management are in place.
7.1
The Board has not appointed a committee for the
purpose of undertaking an evaluation of the Board’s
performance. The Board believes that the size of the
Company and the Board itself does not warrant the
establishment of a committee specifically
for the purpose
of carrying out a performance evaluation of
its role. The
size of the Board is such that it should enable it to
evaluate its own performance without the requirement
of
setting up an ad-
hoc committee for this purpose. The
Board shall retain this matter under review over the
coming year.
8B
The Board has not appointed a Nominations Committee,
particularly of the appointment process being
specifically
set out in the Articles of Association. The Board,
however, intends to keep under review the utility and
possible advantages of having a Nominations
Committee
and following an evaluation may, if the need arises,
make recommendations to the sha
reholders for a change
to the Articles of Association.
Approved by the Board on 27 April 2023.
20
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Report on the Financial Statements for the year ended 31 December 2022
Opinion
We have audited the individual financial statements of Stivala Group Finance p.l.c. (“the Company”) and the
consolidated financial statements of the Company and its subsidiaries (together, “the Group”), set out on
pages 29 to 99, which comprise the stateme
nt of financial position as at 31 December 2022, statement of
comprehensive income, statement of changes in equity and the statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the
Group and the Company as at 31 December 2022, and of the Group’s and the Company’s financial
performance and cash flows f
or the year then ended in accordance with International Financial Reporting
Standards as adopted by the European Union and have been properly prepared in accordance with the
requirements of the Companies Act, Cap. 386 of the Laws of Malta.
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 Group in accordance with the International
Ethics
Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), together with
the ethical requirements that are relevant to our audit of the financial statements in accordance with the
Accountancy Profession (Code of Ethic
s for Warrant Holders) Directive issued in terms of the Accountancy
Profession Act (Cap.281) in Malta, and we have fulfilled our other ethical responsibilities in accordance with
the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
To the best of our knowledge and belief, we declare that no prohibited non-audit services referred to in
Article 18A(1) of the Accountancy Profession Act, Cap. 281 of the Laws of Malta were provided by us to the
Company and the Group and we remain independ
ent of the Company and the Group. No other services
besides statutory audit services as disclosed in the annunal report in note 7 to the financial statements were
provided by us to the Company and its controlled undertakings.
21
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of most significance in our audit
of the financial statements of the current period. These matters where addressed in the context of our audit
of
the financial statements as a whole and in forming our opinion thereon.
We do not provide a separate opinion on these matters.
1.
Investment property and Property, plant and equipment valuations
Risk description
The Group carries its investment property and buildings under property, plant and equipment at
fair value, with changes in fair value being recognised in the profit or loss and other
comprehensive income, respectively.
The last market valuation performed by independent
architects on these properties was on 12 October 2022.
In the years where a valuation is not obtained, management verifies all major inputs to the
independent valuation report, assesses any property valuation movements when compared to
the
previous valuation report and holds discussions with the independent valuer, as necessary.
As at 31 December 2022, fair value of properties pledged to secure borrowings was based on
market valuation performed by independent professional architects while fair value of
remaining
properties was based on valuation performed by the directors as part of their responsibility for
annual assessment. Investment property and buildings under property, plant and equipment
amounted to €200,373,877 and €153,969,966
as at 31 December 2022, respectively and are deemed
material to the financial statements.
Estimating the fair value is a complex process involving a number of judgements and estimates
regarding various inputs. Consequently, we have determined the valuation of the
aforementioned properties to be a key audit matter.
Relevant references in the annual report and financial statements:
- Accounting policy: notes 2.5, 2.7 and 2.21
- Note on Property, Plant and Equipment: note 13
- Note on Investment Property: note 17
- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3
22
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
1.
2.
Recoverability of deferred tax asset
Risk description
As at 31 December 2022, the Group has recognised a deferred tax asset amounting to €12,692,209
arising primarily from deductible temporary differences in respect of excess of capital allowance
over depreciation, unabsorbed capital allowances, unutilized ta
x losses, provision for estimated
credit losses and investment tax credit that it believes are recoverable.
The recoverability of
recognised deferred tax asset is in part dependent on the Group’s ability to generate future
taxable profits sufficient to uti
lise deductible temporary differences and tax losses. We have
determined this to be a key audit matter, due to the inherent uncertainty in forecasting the
amount and timing of future taxable profits and the reversal of temporary difference.
Relevant references in the annual report and financial statements:
- Accounting policy: notes 2.19
- Note on Deferred Tax: note 25
- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3
Investment property and Property, plant and equipment valuations (continued )
How the scope of our audit responded to the risk
- We obtained an understanding of the Group’s process for determining fair value measurements
and disclosures and the relevant control procedures. We assessed inherent and control risk
related to the fair value measurements and disclosures and evaluated whether the fair value
measurements and disclosures are in accordance with the Group’s financial reporting
framework
and are consistently applied.
-
We evaluated the professional competence and independence of the architects employed by the
Group. We assessed whether the scope of the architects’ work was adequ
ate for the purpose of
our audit. We evaluated the assumptions and the basis of valuation and the completeness of
information used by the architects. We assessed whether the architects’ Report is complete and
reasonable and whether all pertinent informatio
n therein is properly reflected in the financial
statements.
- We performed tests relating to the valuation of the Group’s property, focusing on management
reviews over the property valuations by inspecting management analysis and minutes of
meetings of the board and audit committee where such valuation was discussed;
-
We also assessed the relevance and adequacy of disclosures relating to the Group’s fair
valuation of property, plant and equipment, and investment properties presented in various
notes mentioned above.
Findings
The result of our testing was satisfactory and we concur that the valuations of the investment
property and property, plant and equipment are appropriate.
23
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
2.
Recoverability of deferred tax asset (continued )
How the scope of our audit responded to the risk
We ensured that IAS 12 Income Taxes has been correctly applied in respect of deferred tax,
paying particular attention to the following situations: (a) the revaluation of an asset (b)
unabsorbed capital allowances and unutilized tax losses (c) provision for estimated credit losses
and (d) investment tax credits.
We assessed the accuracy of forecast future taxable profits by evaluating historical forecasting
accuracy and comparing assumptions with our expectations of those assumptions derived from
our knowledge of the industry and our understanding obtained during the audit.
Findings
We are satisfied that the deferred tax asset has been properly recognised and measured in view of
the fact that taxable profits will be available against which the deductible temporary differences
can be utilized.
Other Information
The Directors are responsible for the other information. The other information comprises of the Chairman’s
Statement
, Directors' Report and Corporate Governance Statement of Compliance. Our opinion on the
financial statements does not cover this information. Except for our opinion on the Directors’ Report in
accordance with the Companies Act, Cap. 386 of the Laws of Mal
ta and on the Corporate Governance
Statement of Compliance in accordance with the Capital Market Rules issued by the Malta Financial Services
Authority, our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
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.
With respect to the Directors' Report, we also considered whether the Directors' Report includes the
disclosures required by Article 177 of the Companies Act, Cap. 386 of the Laws of Malta. Based on
the work
we have performed, in our opinion:
-
the information given in the Directors' Report for the year ended 31 December 2022 is consistent with the
financial statements; and
-
the Directors' Report has been prepared in accordance with the Companies Act, Cap. 386 of the Laws of
Malta.
In addition, in light of the knowledge and understanding of the Company and the Group and their
environment, obtained in the course of the audit, we are required to report if we have identified material
misstatements in the Directors' Report and other information that we obtained prior to the date of this
auditor’s report. Based on the work we have performed, we have nothing to report in this regard.
24
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Responsibilities of the Directors and the Audit Committee for the financial statements
The Directors are responsible for the preparation of the financial statements that give a true and fair view in
accordance with the International Financial Reporting Standards as adopted by the European Union, and for
such internal controls 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 Group's abil
ity to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations,
or
have no realistic alternati
ve to do so. 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.
The Directors have delegated the responsibility for overseeing the Company's financial reporting process to
the Audit Committee.
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinion.
Reasonable Assurance is a h
igh 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 agg
regate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
In terms of article 179A(4) of the Companies Act (Cap.386), the scope of our audit does not include assurance
on the future viability of the audited entity or on the efficiency or effectiveness with which the Directors have
conducted or will conduct the af fairs of the entity.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
- Identify and assess the risk of material misstatement of the financial statements, w
hether 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 f
raud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the Directors.
25
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
- Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are
required to draw attention in our 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 Group to cease to continue as a going concern. In particular, it is difficult to evaluate all of the
potential implications that the geopolitical conflict between Russia and Ukraine will have on
the Company’s
and Group's business and the overall economy.
- 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.
-
Obtain sufficient appropriate evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are
responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for our
audit
opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope and timing
of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that
may reasonably be thought to bear our independence, and where applicable related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditors' report unless law or regulation precludes public
disclosure
about the
matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication. There are no such undisclosed matters.
26
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Report on other legal and regulatory requirements
The Annual Report and Consolidated Financial Statements of Stivala Group Finance p.l.c. for the year ended
31 December 2022 contains other areas required by legislation on which we are required to report. The
directors are responsible for these other areas.
Report on the Statement of Compliance with the Principles of Good Corporate Governance
The Capital Market Rules issued by the Malta Financial Service Authority require the directors to prepare and
include in their Annual Report a Corporate Governance Statement 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 with those Principles.
The Capital Market Rules also require the auditor to include a report on the statement of compliance
prepared
by the directors. We are also required to express an opinion as to whether, in the light of the knowledge and
understanding
of the Group and the Company and its environment obtained in the course of the audit, we
have identified material misstatements with respect to the information referred to in Capital Market Rules
5.97.4 and 5.97.5.
We read the statement of compliance and consider the implication for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements included in the annual
report. Our responsibilities do not extend to
considering whether this statement is consistent with the other
information included in the annual report.
We are not required to, and we do not, consider whether the Board's statements on internal control included
in the Corporate Governance Statement co
ver all the risks and controls, or form an opinion on the
effectiveness of the Company's corporate governance procedures or its risks and control procedures.
In our opinion:
- the Corporate Governance Statement set out on pages 11 to 19 has been properly prepared in accordance
with the requirements of the Capital Market Rules 5.94 and 5.97.
-
in the light of the knowledge and understanding of the Company and the Group and its environment
obtained in the course of the audit the information referre
d to in Capital Market Rules 5.97.4 and 5.97.5 are
free from material misstatement.
Under the Capital Market Rules we also have the responsibility to:
- review the statement made by the Directors, set out on pages 3 to 10, 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.
27
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
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) A
ssurance Directive (the “ESEF Directive 6”) on the Annual
Financial Report of Stivala Group Finance p.l.c. for the year ended 31 December 2022, entirely prepared in a
single electronic reporting format.
Responsibilities of the directors
The directors are
responsible for the preparation of the Annual Financial Report, including the consolidated
financial statements and the relevant mark-
up requirements therein, by reference to Capital Markets Rule
5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including
the
consolidated financial statements and the relevant electronic tagging therein, complies in all material
respects
with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance
engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
- Obtaining an understanding of the entity's financial reporting process, including the preparation of the
Annual Financial Report, in accordance with the requirements of the ESEF RTS;
- Obtaining the Annual Financial Report and performing validations to determine whether the Annual
Financial Report has been prepared in accordance with the requirements of the technical specifications of the
ESEF RTS; and
- Examining the information in the Annual Financial Report to determine whether all the required taggings
therein have been applied and whether, in all material respects, they are in accordance with the requirements
of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2022 has been prepared, in all
material respects, in accordance with the requirements of the ESEF RTS.
28
Independent Auditor's Report
to the shareholders of Stivala Group Finance p.l.c.
Other matters on which we are required to report by exception under the Companies Act
We also have responsibilities:
-
under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion:
-
adequate accounting records have not been kept, or that returns adequate for our audit have not
been received from branches not visited by us;
-
the financial statements are not in agreement with the accounting records and returns;
-
we have not received all the information and explanations we require for our audit; and
-
certain disclosures of Directors' remuneration specified by law are not made in the financial
statements, giving the required particulars in our report.
-
under the Capital Markets Rules to review the statement made by the Directors that the business is a going
concern together with supporting assumptions or qualifications as necessary.
We have nothing to report to you in respect of these responsibilities.
Appointment and audit tenure
We were first appointed by those charged with governance to act as statutory auditor by the board of
Directors on 12 October 2020. Our appointment has been renewed annually by shareholder resolution
representing a total uninterrupted engagement of 3 years. The Company became listed in on a regulated
market on 25 September 2017.
Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion on the financial statements expressed herein is consistent with the additional report to the
audit committee in accordance with the provisions of article 11 of the EU Audit Regulation No. 537/2014,
which was issued on the same date as this report.
The partner in charge of the audit resulting in this independent auditor's report is
Jozef Wallace Galea for and on behalf of
HLB CA Falzon
Registered Auditors
27 April 2023
Stivala Group Finance p.l.c.
29
Distribution and selling costs
7
Administrative expenses
7
Other operating charges
7
Other operating income
8
Operating profit/(loss)
22,704,604
(95,270)
11,352,120
(46,382)
-
-
-
-
(9,398,315)
(13,551,147)
(118,636)
(48,125)
-
(2,233)
-
-
1,001,479
1,068,658
-
4,011
14,212,498
(1,178,984)
(118,636)
(44,114)
Change in fair value of investment
properties
17
Share in loss of associates
15
Gain on transfer of properties
22
Loss on major shareholder's divestiture
22
Gain on disposal of subsidiaries
Dividends income
Finance costs
9
Profit/(loss) before tax
9,119,132
29,967,931
-
-
(33,959)
(47,300)
-
-
-
38,741,687
-
-
-
(59,872,736)
-
(59,872,736)
7,301,670
-
-
-
201,896
-
33,946,032
41,142,087
(3,766,067)
(3,215,421)
(2,407,500)
(2,407,500)
27,035,170
4,395,177
31,419,896
(21,182,263)
Income tax credit
11
Profit/(loss) for the year
(728,146)
7,991,525
5,441
801,809
26,307,024
12,386,702
31,425,337
(20,380,454)
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 31 December 2022
The Group The Company
Note
19,489,796 6,698,242 - -
9,353,209 8,367,051 - -
28,843,005 15,065,293 - -
(6,138,401) (3,713,173) - -
The notes on page 38–99 form part of these financial statements.
2022
2021
2022 2021
€
€
€
€
Revenue from contracts with customers
6
Rental income
24
Revenue
Cost of sales and services
7
Gross profit
Stivala Group Finance p.l.c.
30
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 31 December 2022
The Group
The Company
Note
Profit/(loss) for the year
Other comprehensive income
Items that will not be subsequently reclassified
to profit or loss:
Change in fair value of property, plant and
equipment due to revaluation, net of
deferred tax
28
Total comprehensive income/(loss) for the
year
Earnings/(loss) per share (cents)
- Basic profit/(loss) for year attributable to
ordinary equity holders of the parent
27
26,307,024 12,386,702 31,425,337 (20,380,454)
103.16 48.58 123.24 (79.92)
The notes on page 38–99 form part of these financial statements.
2022 2021
2022 2021
€
€
€
€
4,381,777
30,355,009
-
-
30,688,801
42,741,711
31,425,337
(20,380,454)
Stivala Group Finance p.l.c.
31
Current assets
Inventories
19
Property held-for-sale
20
Trade and other receivables
21
Current tax recoverable
11
Other financial assets
16
Cash and cash equivalents
30
Total current assets
Total assets
16,783
11,657
-
-
2,451,601
2,179,099
-
-
11,849,355
9,861,024
1,506,381
-
-
-
22,095
22,095
8,320,289
8,004,289
11,406,839
-
1,588,455
199,234
8,232
4,597
24,226,483
20,255,303
12,943,547
26,692
396,553,348
362,953,882
73,245,270
60,322,974
Consolidated Statement of Financial Position
as at 31 December 2022
Note
ASSETS
Non-current assets
Property, plant & equipment
13
Intangible assets
18
Investment in subsidiaries
14
Investment in associates
15
Investment property
17
Right-of-use assets
24
Deferred taxation
25
Total non-current assets
-
-
,004,872
-
-
-
296,
851
,301,723
The notes on page 38–99 form part of these financial statements.
The Group The Company
2022
2021 2022 2021
€
€ € €
158,599,395 152,490,635
5,400 6,057
- - 60
273,585 307,544
200,373,877 178,713,402
382,399 607,302
12,692,209 10,573,639
372,326,865 342,698,579 60
-
-
60,004,872
-
-
-
291,410
60,296,282
Stivala Group Finance p.l.c.
32
Consolidated Statement of Financial Position
as at 31 December 2022
The Group
The Company
Note
2022
2021
2022
2021
€
€
€
€
EQUITY AND LIABILITIES
Equity
Issued capital
26
255,000
255,000
255,000
255,000
Revaluation reserve
28
237,788,861
225,017,482
-
-
Incentives and benefits reserves
29
-
4,825,440
-
-
Retained earnings
11,211,356
5,293,934
419,090
(19,006,247)
Total equity
249,255,217
235,391,856
674,090
(18,751,247)
,730,000
-
-
,730,000
17,365,456 4,867,999 12,000,000 18,567,863
169,904 232,626 - -
12,807,664 12,808,095 841,180 836,358
2,648,487 3,454,660 - -
32,991,511 21,363,380 12,841,180 19,404,221
The notes on page 38–99 form part of these financial statements.
These financial statements set out on pages 29 to 99 were approved and authorized for issue by the Board of
Directors and signed on its behalf on 27 April 2023 by Mr. Mr. Michael Stivala (CEO) and Mr. Martin John
Stivala (Director) as per the Directors’ Declaration on ESEF Annual Financial Reports submitted in
conjunction with the Annual Financial Report 2022.
147,298,131
127,562,026
72,571,180
79,074,221
396,553,348
362,953,882
73,245,270
60,322,974
Total liabilities
Total equity and liabilities
Non-current liabilities
Interest bearing loans
and borrowings
16
Finance lease liability
16, 24
Deferred taxation
25
Total non-current liabilities
85,479,011 80,290,082 59
225,046 394,949
28,602,563 25,513,615
114,306,620 106,198,646 59
59,670,000
-
-
59,670,000
Current liabilities
Current borrowings
16
Finance lease liability
16, 24
Trade andother payables
23
Current tax due
11
Total current liabilities
Stivala Group Finance p.l.c.
Issued
capital
€
Revaluation
reserve
€
Incentives
and benefits
reserves
€
Retained
earnings
€
Total
Equity
€
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
The Group
Balance as at 1 January 2021
300,000
200,672,324
4,825,440
25,639,068
231,436,832
Reduction due to major shareholder's
divestiture (see note 22)
(75,000)
(33,580,348)
-
(5,161,339)
(38,816,687)
Issuance of share capital (see note 22)
30,000
-
-
-
30,000
Profit for the year
-
-
-
12,386,702
12,386,702
Other comprehensive income (note 28)
-
30,355,009
-
-
30,355,009
Total comprehensive income
for the year
-
30,355,009
-
12,386,702
42,741,711
Transfer of fair value gain on
investment property, net of deferred tax
(note 28)
-
27,570,497
-
(27,570,497)
-
5,293,934 235,391,856
The notes on page 38–99 form part of these financial statements.
33
Balance as at 31 December 2021
255,000 225,017,482 4,825,440
Stivala Group Finance p.l.c.
Issued
capital
€
Revaluation
reserve
€
Incentives
and benefits
reserves
€
Retained
earnings
€
Total
Equity
€
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
The Group
Balance as at 1 January 2022
255,000
225,017,482
4,825,440 5,293,934 235,391,856
Profit for the year
-
-
- 26,307,024 26,307,024
Other comprehensive income (note 28)
-
4,381,777
- - 4,381,777
Total comprehensive income
for the year
-
4,381,777
- 26,307,024 30,688,801
Derecognition due to disposal of subsidiary
(note 29)
-
-
(4,825,440) - (4,825,440)
Transfer of fair value gain on
investment property, net of deferred tax
(note 28)
-
8,389,602
- (8,389,602) -
Dividends distributed (note 12)
-
-
- (12,000,000) (12,000,000)
11,211,356 249,255,217
The notes on page 38–99 form part of these financial statements.
34
Balance as at 31 December 2022
255,000 237,788,861 -
Stivala Group Finance p.l.c.
Balance as at 1 January 2022
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends distributed (note 12)
Balance as at 31 December 2022
255,000
-
-
-
-
255,000
(19,006,247)
31,425,337
-
31,425,337
(12,000,000)
419,090
(18,751,247)
31,425,337
-
31,425,337
(12,000,000)
674,090
Statement of Changes in Equity
for the year ended 31 December 2022
The Company
Retained
earnings
Total
Equity
€ €
1,374,207 1,674,207
- (75,000)
- 30,000
(20,380,454) (20,380,454)
- -
(20,380,454) (20,380,454)
(19,006,247) (
18,751,247)
The notes on page 38–99 form part of these financial statements.
35
Issued capital
€
300,000
(75,000)
30,000
-
-
-
255,000
Balance as at 1 January 2021
Reduction due to major shareholder's
divestiture (see note 22)
Issuance of share capital (see note 22)
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Balance as at 31 December 2021
Stivala Group Finance p.l.c.
36
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
The Group The Company
Note
Cash flows from operating activities
Profit/(loss) before tax
27,035,170
4,395,177
31,419,896
(21,182,263)
Adjustments for:
Change in fair value of investment
properties
17
(9,119,132)
(29,967,931)
-
-
Gain on transfer of properties
22
- (38,741,687) - -
Loss on major shareholder's divestiture 22
- 59,872,736 - -
Gain on disposal of subsidiaries
(7,301,670)
-
-
-
Share in loss of associates
15
33,959
47,300
-
-
Depreciation of right-of-use assets and
property, plant and equipment
7
3,993,684
3,687,024
-
-
Amortisation of intangible assets
18
7,857 20,895 - -
Provision expected losses for credit(ECL)
7, 8,
31
2,917,252
7,920,416
68,446
(4,011)
Dividends income
(201,896)
-
(33,946,032)
(41,142,087)
Finance costs
9
3,766,067 3,215,421 2,407,500 2,407,500
Working capital changes:
Increase in inventories
19
(5,126)
(3,099)
-
-
Decrease / (increase) in property held-for-sale
20
1,883,430
(679,099)
-
-
Increase in receivables
(1,316,287)
(783,042)
-
-
(Decrease) / increase in payables
(2,231,782) 4,129,278 4,822 119,860
Interest received from banks
-
-
-
-
Interest paid on overdraft
(30,978)
(17,978)
-
-
Taxation paid
11
(714,289) (781,519) (840,140) (840,140)
Taxation refunded
11
-
(294,247)
840,140
2,543,814
Net cash generated from / (used in) operating
activities
18,716,259
12,019,645
(45,368)
(58,097,327)
The notes on page 38–99 form part of these financial statements.
2022
2021
2022
2021
€ € € €
Stivala Group Finance p.l.c.
37
Net movement in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
30
1,433,092
49,640
3,635
2,197
(1,340,153)
(1,386,556)
4,597
2,400
90,397
(1,340,153)
8,232
4,597
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
The Group The Company
Note
Cash flows from investing activities
Payments to acquire non-current intangible
assets
18
(7,200)
-
-
-
Payments to acquire property, plant and
equipment
13
(3,136,346)
(5,246,407)
-
-
Payments to acquire investment property
17
(14,697,275)
(3,009,870)
-
-
Receipts from disposal ofnon-current financial
assets
14
-
-
-
23
Dividends received
201,896
-
Advances from directors
(633,369)
(532,845)
-
-
Net cash (used in) / generated investing from
activities
(18,272,294)
(8,789,122)
-
23
Cash flows from financing activities
Issuance of share capital 22 - 30,000 - (45,000)
(Repayments to)/advances from banks loans (1,303,486) 2,179,941 - -
Advances from subsidiary company
- - 3,913,503 60,492,001
Advances from/(to) other related companies 488,418 (4,753) - -
Advances to associates
(581,053) (111,413) - -
Repayment of lease liabilities
24 (252,713) (239,813) - -
Advances to other companies (180,000) - - -
Payments to shareholder
- - (1,517,000) -
Interest paid on bonds
9 (2,347,500) (2,347,500) (2,347,500) (2,347,500)
Interest paid on bank loans
5,165,461 (2,687,345) - -
Net cash (used in) / generated from financing
activities
989,127 (3,180,883) 49,003 58,099,501
(2,542) (3,237) - -
The notes on page 38–99 form part of these financial statements.
2022
2021
2022
2021
€ € € €
Movement of ECL on cash in banks
30
Stivala Group Finance p.l.c.
38
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
1.
Corporate information
The consol idated f inancial statement s of Stivala Group Finance p.l.c. and its subsidiar ies (“the Gr oup”)
for the year ended 31 December 2022 were authorized for issue in accordance with a resolution of the
Direc tors o n 27 Apri l 2023.
Stiva la Group Financ e p.l.c. (“the Company”) with re gistration n o. of C 82 218 is a limited liabilit y
compan y list ed on t he Ma lta S tock Exc hange and i s incorp ora ted in M alta, unde r the Co mpanie s Act,
Cap. 386 of t he Laws of Malta. The Compa ny is a hold ing co mpany of the Ca rmel
o Stivala Group
Limited, which is mainly involved to act as a holding company and to rent out properties to its
subsidiarie s for hosp itality and property development/letting purposes. Its registered office is at 143,
The Strand, Gzira, Malta.
2.
Significant accou nting policies
2.1 Basis of preparation and consolidation
Basis of preparation
These financial statements are prepared under the historical cost convention, as modified by the
measurement of investment properties and buildings under property, plant and equipment in
accordance with the requirements of the International Financial Repor
ting Standards (IFRS) as adopted
by the European Union and in compliance with the Companies Act, Cap. 386 of the Laws of Malta.
The
consolidated financial statements are presented in Euro (€), which is the functional currency of the
Group.
Further information concerning fair value, fair value hierarchy and transfers therein are outlined in
detail in n otes 2.21 to the fina nc ial state ments.
Geopolitical and macroeconomic risks
Following the escalation of the geopolitical tensions in Russia and Ukraine from February 2022, the
Group has gone through a process of assessing any potential exposures, with no material exposure
identified. Whilst, the Group has no direct exposure to the
se jurisdictions, management will continue to
monitor the situation, particularly in terms of the wider macroeconomic implications.
Consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries as at 31 December 2022.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns
through
its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:
-
Power over the investee (i.e., existing rights that give it the current ability to direct the relevan
t
activities of the investee)
-
Exposure, or rights, to variable returns from its involvement with the investee
-
The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an investee,
the Group considers all relevant facts and circum
stances in assessing whether it has power over an
investee, including:
-
The contractual arrangement(s) with the other vote holders of the investee
-
Rights arising from other contractual arrangements
-
The Group’s voting rights and potential voting rights
Stivala Group Finance p.l.c.
39
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when
the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary.
Assets, liabilities, income
and expenses of a subsidiary acquired or disposed of during the year are
included in the consolidated financial statements from the date the Group gains control until the date
the
Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies in line with the Group’s accounting policies. All intra-
group assets and liabilities,
equity, i
ncome, expenses and cash flows relating to transactions between members of the Group are
eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill),
liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is
recognised in pr ofit or loss. Any inves tment retained is recognised at f air value.
2.2 Current versus non-current classification
The Group presents assets and liabilities in the statement of financial position based on current/non-
current classification. An asset is current when it is:
-
Expected to be realised or intended to be sold or consumed in the normal operating cycle;
-
Held primarily for the purpose of trading;
-
Expected to be realised within twelve months after the reporting date; or
-
Cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting date.
All other assets are classified as non-current.
A liability is current when:
-
It is expected to be settled in the normal operating cycle;
-
It is held primarily for the purpose of trading;
-
It is due to be settled within twelve months after the reporting date; or
-
There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting date.
The Group classifies all other liabilities as non-current.
Deferred tax a ssets a nd liabilities are classif ied as non-c urrent assets a nd liabil ities.
2.3 Investment in associate
An associate is an entity over which the group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is also
the power to participate in the financial and operati
ng policy decisions of the investee, but is not control
or joint control over those policies.
The considerations made in determining significant influence are similar to those necessary to
determine
control over subsidiaries. The Group’s investment in its
associate are accounted for using the equity
method.
Under the equity method, the investment in an associate is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the
associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount
of the investment and is not tested for impairment separately.
Stivala Group Finance p.l.c.
40
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
The statement of profit or loss reflects the Group’s share of the results of operations of the associate. In
addition, when there has been a change recognised directly in the equity of the associate, the Group
recognises its share of any changes, when appl
icable, in the statement of changes in equity. Unrealised
gains and losses resulting from transactions between the Group and the associate are eliminated to the
extent of the interest in the associate.
The aggregate of the Group’s share of profit or loss of an associate is shown on the face of the statement
of profit or loss outside operating profit and represents profit or loss after tax and noncontrolling
interests in the subsidiaries of the associate.
The financial statements of the associate are prepared for the same reporting period as the Group. When
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group det
ermines whether it is necessary to recognise an
impairment loss on its investment in its associate. At each reporting date, the Group determines
whether
there is objective evidence that the investment in the associate is impaired. If there is such evidence, the
Group calculates the amount of impairment as the difference between the recoverable amount of the
associate and its carrying value, and then recognises the loss within ‘Share of profit of an associate’ in
the
statement of profit or loss.
Upon loss of significant influence over the associate, the Group measures and recognises any retained
investment at its fair value. Any difference between t
he carrying amount of the associate upon loss of
significant influence or joint control and the fair value of the retained investment and proceeds from
disposal is recognised in profit or loss.
2.4 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instr ume nt of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets measured at amortized cost, fair
value through profit or loss (FVTPL) and fair value through other comprehensive income (FVOCI). All
financial assets are recognized initially at f
air value plus, in the case of financial assets not recorded at
FVTPL, transaction costs that are attributable to the acquisition of the financial asset.
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash
flow characteristics and the Group’s business model for managing them. With the exception of trade
receivables that do not contain a significant financing component or for which the Group has applied
the
practical expedient, the Group init
ially measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not
contain a significant financing component or for which the Group has applied the practical expedient
are
measured at the transaction price determined under IFRS 15. Refer to the accounting policies in section
2.16 (Revenue from contracts with customers).
In order for a financial asset to be classified and measured at amortised cost or FVOCI, it needs to give
rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principal amount
outstanding. This assessment is referred to as
the SPPI test and is performed at an instrument level.
Financial assets with cash flows that are not SPPI are classified and measured at fair value through
profit
or loss, irrespective of the business model.
The Group’s business model for managing financi al assets refers to how it manages its financial assets
in
order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
Stivala Group Finance p.l.c.
41
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Purchases or sales of financial assets that require delivery of assets within a time frame established by
regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e.,
the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets in these financial statements are classified in
four categories:
- financial assets at amortised cost (debt instruments)
- financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments)
- financial assets designated at FVOCI with no recycling of cumulative gains and losses upon
derecognition (equity instruments)
- financial assets at FVTPL
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is
derecognised, modified or impaired.
The Group’s financial assets at amortised cost include cash in banks, trade and other receivables, and
receivables from associates, directors and other related undertakings which are included under current
financial assets.
Financial assets at FVOCI (debt instruments)
For debt instruments at FVOCI, interest income, foreign exchange revaluation and impairment losses or
reversals are recognised in the statement of profit or loss and computed in the same manner as for
financial assets measured at amortised cost. The remain
ing fair value changes are recognised in OCI.
Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.
As at 31 December 2022 and 2021, the Group has no debt instruments at FVOCI.
Financial assets designated at FVOCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
instruments designated at FVOCI when they meet the definition of equity under
IAS 32 Financial
Instruments: Presentation and are not held for trading. The classification is determined on an instrument-
by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as
other income in the statement of profit or loss when the right of payment has been established, except
when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in
which case, such gains are recorded in OCI.
Equity instruments designated at FVOCI are not subject to
impairment assessment.
As at 31 December 2022 and 2021, the Group has no equity instruments at FVOCI.
Financial assets at FVTPL
Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes
in fair value recognised in the statement of profit or loss.
This category includes derivative instruments and listed equity investments which the Group had not
irrevocably elected to classify at FVOCI. Dividends on listed equity investments are recognised as other
income in the statement of profit or loss when the right of payment has been established.
Stivala Group Finance p.l.c.
42
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
A derivative embedded in a hybrid contract, with a financial liability or non-
financial host, is separated
from the host and accounted for as a separate derivative if: the economic characteristics and
risks are not
closely related to the host; a separate instrument with the same terms as the embedded derivative
would
meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit
or loss. Embedded derivatives are measured at fair value with changes in fair value re
cognised in profit
or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly
modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of
the fair value through profit or loss category.
As at 31 December 2022 and 2021, the Group has no financial assets at FVTPL.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s statement of financial position) when:
- the rights to receive cash flows from the asset have expired; or
- the Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-
through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor reta
ined substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the
extent of its continuing involvement. In that case, the Group also recognises an associated li
ability. The
transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at t
he
lower of the original carrying amount of the asset and the maximum amount of consideration that the
Group could b e required to repay.
Impairment
Further disclosures relating to impairment of financial assets are also provided in notes 3 and 31 to the
consolidated financial statements.
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Company expects to receive,
discounted at an approximation of the original effective interest rate.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from
default events that are possible within the ne xt 12-months (a 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, irrespectiv
e of the timing of
the default (a lifetime ECL).
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group
does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at
each reporting date. The Group has established a provision matrix that is based on its historical credit
loss experience,
adjusted
for
forward-looking
factors specific
to the
debtors
and
the economic
environment.
Stivala Group Finance p.l.c.
43
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
For cash in bank, other receivables, receivables from associates, directors and other related undertakings,
the Group applies a general approach in calculating ECLs. Therefore, the Group tracks changes in credit
risk, and recognises a loss allowance based on either 12-month ECLs or lifetime ECLs, depending on
whether there has been a significant increase in credit risk on the financial instrument since initial
recognition. This is being done by considering the change in the risk of default occurring over the
remaining life of the financial instrument. The key elements in the calculation of ECLs are the Probability
of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD).
The following are the key elements in the calculation of ECLs:
a. Probability of Default
(PD)
The PD is an estimate of the likelihood of default over a
given time horizon. A default may only happen at a certain
time over the assessed period, if the financial asset has not
been previously derecognised.
b. Exposure at Default
(EAD)
The EAD is an estimate of the exposure at a future default
date, taking into account expected changes in the exposure
after the reporting date.
c. Loss Given Default
(LGD)
The LGD is an estimate of the loss arising in the case where a
default occurs at a given time. It is based on the difference
between the contractual cash flows due and those that the
lender would expect to receive.
The mechanics of the ECL method are summarised below:
Stage 1:
The 12-month ECL is calculated as the portion of lifetime
ECL that represent the ECL that result from default events on
a financial instrument that are possible within the 12 months
after the reporting date. The Group calculates the 12-month
ECL allowance based on the expectation of a default
occurring in the 12 months following the reporting date.
These expected 12-month default probabilities are applied to
a forecast EAD and multiplied by the expected LGD.
Stage 2:
When a financial asset has shown a significant increase in
credit risk since origination, the Group records an allowance
for the lifetime ECL. The mechanics are similar to those
explained above, but PDs and LGDs are estimated over the
lifetime of the instrument.
Stage 3: For financial asset considered as credit-impaired, the Group
recognises the lifetime ECL. The method is similar to that for
Stage 2 financial assets, with the PD set at 100%.
The Group considers a financial asset in default when contractual payments are 90 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when internal
or
external information indicates that the Group is unlikely to receive the outstanding contractual amounts
in full before taking into account any credit enhancements held by the Group. A financial asset is
written
off when there is no reasonable expectati on of recovering the contractual cash flows.
Financi al liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at FVTPL, loans and
borrowings or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payable s, net of dire ctly attr ibutable tr ansac tion c osts.
Stivala Group Finance p.l.c.
44
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
- financial liabilities at FVTPL
- financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at FVTPL.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing
in the near term. This category also includes derivative financial instruments enter
ed into by the Group
that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated
embedded derivatives are also classified as held for trading unless they are designated as effective
hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of
recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial
liability at FVTPL as at 31 December 2022 and 2021.
Financial liabilities at amortised cost (loans and borrowings)
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are
recognised in profit or loss when the liabilities are d
erecognised as well as through the EIR amortisation
process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or
costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the
statement of profit or loss.
This category generally applies to interest-bearing loans and borrowings. For more information, refer to
notes 16 and 31 to the consolidated financial statements.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on
substantially
different terms, or the terms of an exist
ing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability
and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of
financial position if there is a currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Stivala Group Finance p.l.c.
45
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
2.5 Property, plant and equipment
Commercial and residential properties included in buildings are stated in the statement of financial
position at its revalued amount, being the fair value at the date of revaluation. Revaluations are
performed with sufficient regularity such that the carrying amount does not differ materially from
those
that would be determined using fair values at each reporting date.
A revaluation surplus is recorded in OCI and credited to the revaluation reserve in equity. However, to
the extent that it reverses a reval
uation deficit of the same asset previously recognised in profit or loss,
the increase is recognised in profit and loss. A revaluation deficit is recognised in the statement of profit
or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the
revaluation reserve.
Property, plant and equipment, except for revalued buildings, are stated at cost less accumulated
depreciation. Depreciation is calculated using the straight-
line method to write off the cost of property,
plant and equipment less any residual value over the expected useful lives.
The annual rates used for this purpose, which are consistent with those used in the previous year, are as
follows:
Buildings
2%
Motor vehicles
20%
Kitchen equipment
16.67%
Computer equipment
25%
Plant and machinery
10%
Furniture, fittings and office equipment
10%
Electrical installations
6.67%
Energy saving equipment
16.67%
Depreciation methods, useful life and residual values are reassessed at each reporting date.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is
included in the statement of profit or loss and other comprehensive income when the asset is
derecognised.
2.6 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of
intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are
amortised
over the useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and the amortisation method for an
intangible asset with a finite useful life are reviewe
d at least at each reporting date. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in
the
asset are considered to modify the amortisation period or method, as appropriate, and are treated as
c
hanges in accounting estimates. The amortisation expense on intangible assets with finite lives is
recognised in the profit or loss in the expense category that is consistent with the function of the
intangible assets. These costs are amortised using a straight line method as follows:
Computer software 25%
Gains or losses arising from derecognition of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognised in statement of profit
or loss and other comprehensive income when the asset is derecognised.
Stivala Group Finance p.l.c.
46
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
2.7 Investment property
Property that is held for long-term rental yields or for capital appreciation or both, and is not occupied
by the Group, is classified as investment property. Investment property comprises freehold land and
buildings held under long-term operating leases.
Investment property is measured initially at its historical cost, including related transaction costs and
borrowing costs (if any).
Historical cost includes expenditure that is directly attributable to the
acquisition of the items. 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 cease
d 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 periodically. 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
Group uses alternative valuation methods such as recent prices on less active markets or discounted
cash
flow projections.
These valuations are reviewed annually. Investment property that is being redeveloped for continuing
use as investment property or for which the market has become less active continues to be measured at
fair va lue.
Fair value measurement on property under construction is only applied if the fair value is
considered to be reliably measurable. The fair value of investment property reflects, among other
things,
rental income from current leases and assumptions about rental income from future leases in
the light of
current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could
be expected in respect of the property.
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 Group and the cost of the item can be
measured reliably. All other repairs and maintenance costs are charged to profit or lo
ss 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 its future expenditure other
than those a rational market participant would ta
ke into account when determining the value of the
property.
Changes in fair value are recognised in profit or loss and tranferred to "Revaluation reserve" under
equity. Investment properties are derecognised either when they have been disposed of or when
the
investment property is permanently withdrawn from use and no future economic benefit is expected
from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset
is recognised in profit or loss in the period of derecognition.
If an investment property becomes owner-
occupied, it is reclassified as property, plant and equipment.
Its fair value at the date of the reclassification becomes its cost for subsequent accounting purposes.
When the Group decides to dispose
of an investment property without development, the Group
continues to treat the property as an investment property. Similarly, if the Group begins to redevelop
an
existing investment property for continued future use as investment property, it remains an i
nvestment
property during the redevelopment.
Stivala Group Finance p.l.c.
47
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
If an item of property, plant and equipment and property held-for-sale becomes an investment property
because its use has changed, any difference resulting between the carrying amount and the fair value of
this item at the date of transfer is treated in the same way as revaluation under IAS 16. Any resulting
increase in the carrying amount of the property is recognised in statement of comprehensive income to
the extent that it reverses a previous impairment loss; with any remaining increase recognised in other
comprehensive income, directly to revaluation surplus with equity. Any resulting decrease in the
carrying amount of the property is initially charged to other comprehensive income against any
previously recognised revaluation surplus, with any remaining decrease charged to the profit or loss.
Upon the disposal of such investment property, any surplus previously recorded in equity is transferred
to retained earnings; the transfer is not made through statement of comprehensive income.
2.8 Inventories
Inventories are valued at the lower of cost and net realisable value.
The cost of inventories comprises the invoiced value of goods sold and other direct costs and is
determined by first-in first-out method.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
of comple tion and the e stima ted costs ne cessary t o make the sa le.
2.9 Property held-for-sale
Property held-for-sale is included in the financial statements at the lower of cost and net realisable value.
Cost comprises the purchase price of acquiring the property and other costs incurred to develop the
property.
Net realisable value is the estimated selling price in the ordinary course of business, less
estimated costs of compl eti on a nd the est imated costs n ecessary to make t he sa le.
2.10 Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and in hand,
which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash on hand and
banks as defined above, net of outstanding bank overdrafts as they are considered an integral part of
the
Group's cash manage ment.
2.11 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
are shown in equity as a deduction, net of tax, from the proceeds.
2.12 Dividend distribution
Dividend distribution to the Group's shareholders is recognised as a liability in the Group's financial
statements in the period in which the dividends are approved by the Group's shareholders.
2.13 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is due
within one year or less. If not, they are presen ted as non-current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method.
Stivala Group Finance p.l.c.
48
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
2.14 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate of the amount of the obligation can be made.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-
tax rate that reflects current market assessments of the time value of money and
the r
isks specific to the obligation. The increase in the provision due to the passage of time is recognised
as interest expens e.
2.15 Foreign currencies
Items included in the financial statements of each of the Group's entities are measured using the
currency of the primary economic environment in which the entity operates (the functional currency).
The consolidated financial statements are presented in euro, which is the Company's functional and
presentation currency.
Foreign currency translations are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured. Forei
gn exchange
gains and losses resulting from the settlement of such transactions and from the translation at year-
end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss. All foreign exchange
gains and losses are presented in the income statement within 'Other
operating c harges'.
2.16 Revenue recognition
Revenue from contracts with customers (under IFRS 15)
Revenues include all revenues from the ordinary business activities of the group and are recorded net of
value added tax. They are recognised in accordance with the provision for goods or services provided
that collectability of the consideration is probable.
Revenue mainly represents inco
me earned for accommodation, food and beverage and other services.
The Group also sold property through barter during the year. The Group recognizes revenue when or
as
it satisfies a performance obligation by transferring control of a product or service to a customer.
Sale/barter of property for resale
Revenue from sale/barter of real property is recognised at the point in time when control of asset is
transferred to the customer, generally upon signing of deed of sale where the customer obtains legal
title
to the property. Total fund is paid in full on date of deed.
Revenue from accommodation
Revenue from accommodation is recognised over a period of time. The customers get the benefits (i.e.
control over the promise) with every passing day of each year’s stay at the Group's hotel rooms. The
revenue stream therefore meets the conditions for reve
nue recognition over time (i.e. stage of
completion), and revenue is accordingly recognised on a daily basis of accommodation or equally
amortised over the period of stay of the customer.
The performance obligation is to provide accommodation services as and when customers make use of
the services. The transaction price follows a fee structure which is known at the date of booking or
consumption of service and thus no significant estimates are required in this respect.
Stivala Group Finance p.l.c.
49
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Revenue from food and beverage, and other services
Revenue from services is generally recognized in the accounting period in which the services are
rendered, by reference to completion of the specific transaction assessed on the basis of the actual
service
provided as a proportion of the total services to be provided. Revenue arising from these activities is
recognised when the service is performed and/or when the goods (primarily food and beverage relating
to restaurant and/or bar sales) are supplied upon performance of the service.
Each of the services rendered is assessed to be a distinct performance obligation, and if applicable, the
Group allocates the transaction price to each of the services rendered to the customer on a relative basis,
based on their stand-
alone selling price. Normally, the transaction price follows a fee structure which is
known at the date of consumption of service and thus no significant estimates are required in this
respect.
The Group considers whether there are other promises in the contract that are separate performance
obligations to which a portion of the transaction price needs to be allocated (if there is any).
In determining the transaction price, the Group considers the effects of variable consideration, existence
of significant financing component, non-
cash consideration, and consideration payable to the customer
(if there is any).
i) Variable consideration
If the consideration in a contract includes a variable amount, the Group estimates the amount of
consideration to which it will be entitled in exchange for transferring the goods to the customer.
The variable consideration is estimated at contract inception and constrained until it is highly probable
that a significant revenue reversal in t
he amount of cumulative revenue recognised will not occur when
the associated uncertainty with the variable consideration is subsequently resolved.
As at 31 December 2022 and 2021, variable consideration would be the amount refunded to a customer
if
the customer cancels the booking within the window provided by the hotel. In this case, the Group uses
the 'most likely amount' approach since it has only 2 possible outcome, which is if the customer will
cancel the booking or not. The amount
of variable consideration on refundable amounts to customer is
not that significant as at year end. Should there have been discounts or concessions for goods and
services, these have been already established with customer at the inception of the contract,
thus are not
considered contingent as the amounts agreed are fixed or unavoidable.
Overall, aside from the above mentioned, there are no other known factors or events that could make the
consideration to be variable as at the current financial year end. The validity of this assessment is
reassessed at each reporting date.
ii) Significant financing component
The Company applies the practical expedient for short-term advances received from customers. That is,
the promised amount of consideration is not adjusted for the effects of a significant financing
component
if the period between the transfer of the promised good or service and the payment is one year or less.
As at each year end, the contract liabilities (if there is any) were normally recognised as revenue within
1
year. The validity of this assessment is reassessed at each reporting date.
iii) Non-cash consideration
The Group does not receive non-cash considerations from customers for the sale of goods and services.
iv) Consideration payable to customer
There is no consideration payable to a customer that can be applied against amounts owed to the Group.
As at 31 December 2022 and 2021, upfront fees and pre-production fees are not applicable.
Stivala Group Finance p.l.c.
50
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer. If the company performs by transferring goods or services to a customer before the customer
pays consideration or before payment is due, a contract asset is recognised for the earned consideration
that is conditional.
It is very unlikely for the company to have contract assets since the collection of payment must be
completed immediately after the company performs the service or goods/services and
before the
customer leaves the hotel's premises. This leaves no obligation on the part of the customer to pay
further
consideration.
Trade receivables
A receivable represents the company’s right to an amount of consideration that is unconditional (i.e.,
only the passage of time is required before payment of the consideration is due).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the hotel has
received consideration,
or for which an amount of consideration is due from the customer. It is noted
that in extremely rare situations, customers contracts contain a right to right to terminate for
convenience, where amounts paid by the customer are refundable. In these situati
ons, the customer has
paid for future goods or services, but because of the termination clause an agreement does not exist and
thus the Hotel does not have an obligation to transfer goods or services except as the customer requests
(i.e. doesn’t terminate).
Cost to obtain a contract
The Group applies the optional practical expedient to immediately expense costs to obtain a contract if
the amortisation period of the asset that would have been recognised is one year or less.
As such,
payments of commissions to sales agencies which constitute relatively small amounts are immediately
recognised as an expense in the consolidated statement of profit or loss and comprehensive income.
Other revenue sources (not within the scope of IFRS 15)
The following recognition criteria must also be met before revenue is recognised:
Rental income
This relates to the rental income from the rental of immovable property in the ordinary couse of the
Group's activities. For operating leases, it is recognised at profit or loss on a straight-
line basis over the
term of the lease and is stated net of value added tax.
Dividend income
Revenue from dividend income is recognised on the date the Group's right to receive payment is
established.
Interest income
Interest income is accounted for when it is probable that the economic benefits associated with the
transaction will flow to the Group and these can be measured reliably. Interest income is recognised on
an accrual or time proportion basis.
Other operatin g income
Other operating income are accounted for when it is probable that the economic benefits associated with
the transaction will flow to the Group and these can be measured reliably.
Stivala Group Finance p.l.c.
51
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
2.17 Leases
The Group 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 Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-
term
leases and leases of low-
value assets. The Group recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-
use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for a
ny remeasurement of lease liabilities. The cost of
right-of-
use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Right-of-
use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets, as follows:
Buildings
5 - 11 years
Furnitures and Fittings 5 years
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section 2.22
(Impairment of non-financial assets).
ii) Lease Liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable, variable lease payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably certain to be
exercised by
the Group and payments of penalties for terminating the lease, if the lease term reflects the
Group exercising the option to terminate. Variable lease payments that do not depend on an index or a
rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which
the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable.
After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest
and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured
if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to
future payments resulting from a change in an index or rate used to determine such lease payments) or
a
change in the assessment of an option to purchase the underlying asset.
The Group’s lease liabilities are included in Interest-bearing loans and borrowings (see note 16).
Stivala Group Finance p.l.c.
52
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low-value a
ssets recognition exemption to leases of assets that are
considered to be low value (if there is any). Lease payments on short-term leases and leases of low
value
assets are recognised as expense on a straight-line basis over the lease term.
The Group as a lessor
Leases in which the Group 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 terms and is included
in revenue in the statement of profit or loss and
other comprehensive income 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 ove
r
the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the
period in wh ich they are earned.
2.18 Assets held for distribution to owner
In accordance with IFRS 5, a non-current asset (or disposal group) is classified as held for distribution to
owners when the entity is committed to distribute the asset (or disposal group) to the owners.
For this to be the case, the assets must be available for immediate distribution in their present condition
and the distribution must be highly probable. For the distribution to be highly probable, actions to
complete the distribution must have been initiated and should be expected to be completed within one
year from the date of classification.
Actions required to complete the distribution should indicate that it is unlikely that significant changes
to the distribution will be made or that the distributio
n will be withdrawn. The probability of
shareholders’ approval (if required in the jurisdiction) should be considered as part of the assessment of
whether the distribution is highly probable.
Non-current assets and disposal groups classified as held for distribution to owner are measured at the
lower of their carrying amount and fair value less costs to distribute. Costs to distribute are the
incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance
costs and income tax expense.
There are a number of asset categories that are excluded from measurement requirements of IFRS 5,
although disclosure requirements still need to be complied with. Among these exclusions, the most
relevant to the Company is "Non-current
assets that are accounted for in accordance with the fair value
model (IAS 40 Investment Property)" which will be subsequently measured under the same accounting
policy as before the classification.
In prior year, assets classified as held for distribution to owner are presented separately as current items
in the statement of financial position. Additional disclosures are provided in note 22.
2.19 Taxation
The tax expense for the year comprises current and deferred tax. Tax is recognized in profit or loss,
except when it relates to items recognized in other comprehensive income or directly in equity, in
which
case it is also dealt with in other comprehensive income or in equity, as appropriate.
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to
be recovered or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantially enacted, at the reporting date. Current income tax relating to
items recognised directly in equity is recognised in equity and not in profit or loss.
Stivala Group Finance p.l.c.
53
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Deferred income tax
Deferred tax is provided using the liability method on temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recongised for all temporary differences, except when the deferred tax
liability
arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a
business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or
loss.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax
credits and unused tax los
ses, to the extent probable that taxable profit will be available against which
the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses
can be utilised, except when the deferred tax asset relating to the deductible temporary differences
arises
from the initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are meas
ured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or sub stantively enacted at each reporti ng date.
Value Added Tax
Revenue, expenses and assets are recognised net of Value Added Tax, except:
-
where the Value Added Tax incurred on a purchase of assets or services is not recoverable from the
taxation authority, in which case Value Added Tax is recognised as part of the acquisition of the asset or
as part of the expense item, as applicable;
-
where receivables and payables that are stated with the amount of Value Added Tax included.
The net amount of Value Added Tax recoverable from, or payable to, the taxation authority is included
as part of receivables or payables in the statement of financial position.
2.20 Retirement benefits
The Group contributes towards the state pension fund in accordance with local legislation. The only
obligation of the Group is to make the required contribution and carries no further legal or construction
obligations to make further payments if the fund d
oes not have sufficient assets to pay all of the
employees' entitlements to post-employment benefits. Costs are expensed in the year in which they are
incurred.
2.21 Fair value measurements and valuation processes
The Group measures non-financial assets such as buildings under property, plant and equipment and
investment property at fair value at each reporting date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between the market participants at the measurement date.
The fair value measurement is
based on the presumption that the transaction t o sell the asset or transfer the liability takes place either
(a) in the principal market for the asset or liability or (b) in
the absence of a principal market, in the most
advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
Stivala Group Finance p.l.c.
54
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
The fair value of an asset or liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best
interest.
A fair value measurement of non-
financial asset takes into account a market participant's ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another
market
participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient
data are available to measure at fair value, maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.
Information about the valuation techniques and inputs used in determining the fair value of buildings
and invest ment prop erties a re disclosed in notes 1 3, 17 and 31 respe ctively.
2.22 Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset may be
impaired.
If any indication exists, or when annual impairment testing for an asset is required, the Group estimates
the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s or CGU’s fair
value less costs of disposal and its value in use. The recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from ot
her
assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount,
the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are disc
ounted to their present value using a
pre-
tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken
into
account. If no such transactions can be identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies
or other available fair value indicators.
The Group bases its impairment calculation on most recent budgets and forecast calculations, which are
prepared separately for each of the Group’s CGUs to which the individual assets are allocated. These
budgets and forecast calculations generally cover a period of five years. A long-term growth rate is
calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in the statement of profit or loss in expense
categories consisten
t with the function of the impaired asset, except for properties previously revalued
with the revaluation taken to OCI. For such properties, the impairment is recognised in OCI up to the
amount of any previous revaluation.
For assets excluding goodwill, a
n assessment is made at each reporting date to determine whether there
is an indication that previously recognised impairment losses no longer exist or have decreased. If such
indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously
recognised
impairment loss is reversed only if there has been a change in the assumptions used to determine the
asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying
amount
that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is
carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value
may be impaired.
Stivala Group Finance p.l.c.
55
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of
CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying
amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in
future periods.
Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level, as
appropriate, and when circumstances indicate that the carrying value may be impaired.
2.23 Government grants
Government grants are recognised where there is reasonable assurance that the Group will comply with
the conditions attaching to them and that the grants will be received.
Government grants related to income are recognised in profit or loss on a systemati
c basis over the
periods in which the Company recognises as expenses the related costs for which the grants are
intended
to compensate. Specifically, the government grants related to assets, whose primary condition
is that the
Group should purchase, construct or otherwise acquire noncurrent assets are recognised as deferred
income in the statement of financial position and transferred to profit or loss on a systematic and
rational
basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already incurred or for
the
purpose of giving immediate financial support to the Group with no future related costs are recognised
in profit or loss in the period in which they become rece i vable.
2.24 Borrowing costs
Borrowing costs which are incurred for the purpose of acquiring or constructing qualifying property,
plant and equipment are capitalised as part of its cost. Borrowing costs are capitalised while acquisition
or construction is actively underway, during the
period of time that is required to complete and prepare
the asset for its intended use. Capitalisation of borrowing costs is ceased once the asset is substantially
complete and is suspended if the development of the asset is suspended. All other borrowing
costs are
expensed. Borrowing costs are recognised for all interest-
bearing instruments on any accrual basis using
the effective interest method. Interest costs include the effect of amortising any difference between
initial
net proceeds and redemption value in respect of the Group's int erest-beari ng borr owings.
2.25 Segment reporting
The Group determines and presents operating segments based on the information that internally is
provided to the Board of Directors, which is the Group's chief operating decision-
maker in accordance
with the requirements of IFRS 8 'Operating Segments'.
An operating segment is a component of the Group that engages in business activities from which it
may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any
of the Group's other components, and for which discrete financial information is available. An
operating
segment's operating results are reviewed reg
ularly by the Board of Directors to make decisions about
resources to be allocated to the segment and to assess its performance executing the function of the chief
operating decision-maker.
Stivala Group Finance p.l.c.
56
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
3.
Critical accounting estimates and judgements
In preparing the financial statements, the Directors are required to make judgements, estimates and
assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets
and liabilities. Use of available information and application of judgement are inherent in the formation
of
estimates. Actual results in the future could differ from such estimates and the differences may be
material to the financial statements. These estimates are reviewed on a regular basis and if a ch
ange is
needed, it is accounted in the period the changes become known. The most significant judgement and
estimates are as follows:
Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgements, which have the most significant effect on the amounts recognised in the consolidated
financial statements:
Determining the lease term of contracts with renewal and termination options – Group as lessee
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods
covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group has lease contracts that include extension and termination options. The Group applies
judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew
or terminate the lease. That is, it considers all releva
nt factors that create an economic incentive for it to
exercise either the renewal or termination. After the commencement date, the Group reassesses the lease
term if there is a significant event or change in circumstances that is within its control and af
fects its
ability to exercise or not to exercise the option to renew or to terminate.
The Group does not include the renewal periods as part of the lease term for leases of assets with non-
cancellable periods as these are not reasonably certain to be exercised. The effect of covid-
19 pandemic
also contributes to this uncertainty. Furthermore, the periods covered by termination options are
included as part of the lease term only when they are reasonably certain not to be exercised.
Property lease classification – Group as lessor
The Group has entered into commercial and residential property leases on its investment property and
property, plant and equipment portfolio. The Group has determined, based on an evaluation of the
terms and conditions of the arrangements, such as the lease term not constituting a major part of the
economic life of the properties and the present value of the minimum lease payments not amounting to
substantially all of the fair value of the properties
, that it retains substantially all the risks and rewards
incidental to ownership of these properties and accounts for the contracts as operating leases.
Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability
that future taxable income will be available against which the deductible temporary differences and tax
loss carry-forward can be utilized. In addition, significant judgement is required in assessing the impact
of any legal or economic limits or uncertainties in various tax jurisdictions.
Stivala Group Finance p.l.c.
57
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Estimates and assumptions
Fair value of investment property and property, plant and equipment
The Group carries its investment property at fair value, with changes being recognised in profit or loss,
while it carries its buildings within property, plant and equipment at fair value, with changes being
recognised in other comprehensive income. These
are based on market valuations performed by
independent professional architect at least every three years.
In a year when market valuations are not
performed by the independent professional architect, an internal assessment of the fair value of
investment
property and property, plant and equipment are performed to reflect market conditions at
the year-end date by the management. The Management has assessed the valuation of properties as at
31
December 2022 by reference to value of similar properties in the market as well as the management's
expert knowledge of the industry being in property sector for more than 20 years.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or CGU exceeds its recoverable amount, which is
the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data fro
m binding sales transactions, conducted at arm’s length, for
similar assets or observable market prices less incremental costs of disposing of the asset. The value in
use calculation is based on a discounted cash flow (DCF) model. The cash flows are derive
d from the
budget for the next five years and do not include restructuring activities that the Group is not yet
committed to or significant future investments that will enhance the performance of the assets of the
CGU being tested. The recoverable amount i
s sensitive to the discount rate used for the DCF model as
well as the expected future cash-
inflows and the growth rate used for extrapolation purposes. These
estimates are most relevant to goodwill recognised by the Group.
Provision for ECL on trade receivables
Upon adoption of IFRS 9, provision for ECL is maintained at a level considered adequate to provide for
potentially uncollectible receivables. For trade receivables, the Company applies the Simplified
Approach designed to identify potential charges to the allowance and is performed on a continuous
basis throughout the period. For the year ended 31 December 2022, the decrease in provision for ECL on
trade receivables amounted to €36,039 (2021: increase of €21,810) (note 31).
The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based
on days past due for groupings of various customer segments that have similar loss patterns (i.e., by
geography, product type, customer type and rating).
The provision matrix is initially based on the Group’s historical observed default rates. The Group
calibrates the matrix to adjust the historical credit loss experience with forward-
looking information. For
instance, if forecast economic conditions (i
.e., gross domestic product) are expected to deteriorate over
the next year which can lead to an increased number of defaults in the manufacturing sector, the
historical default rates are adjusted. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
The assessment of the correlation between historical observed default rates, forecast economic conditions
and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of
forecast economic conditions. The Group’s historical credit loss experience and forecast of economic
conditions may also not be representative
of customer’s actual default in the future. The information
about the ECLs on the Company's trade receivables is disclosed in notes 21 and 31.
Stivala Group Finance p.l.c.
58
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Provision for ECL on other financial assets
The measurement of the Group's ECL on cash in banks, receivables from associates and other related
undertakings is a function of the PD, LGD and the EAD. These financial assets are measured under
Stage
1 of the impairment model, and therefore ECLs are calculated on 12-month basis.
Elements of the ECL model which are considered accounting judgments and estimates include:
- The Group's internal credit grading model, which assigns PDs to the individual grades
- The Group’s criteria for assessing if there has been a significant increase in credit risk and so
allowances should be measured on a liftetime ECL basis and the qualitative assessment
- Development of ECL models, including the various formulas and the choice of inputs
- Determination of associations between macroeconomic scenarios and, economic inputs, and the
effect on PDs, EADs and LGDs
- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive
the economic inputs into the ECL models
It is the Group’s policy to regularly review its model in the context of actual loss experience and adjust
when necessary.
Leases - Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its
incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the
Group would have to pay to borrow over a similar term, and with a similar security, the funds
necessary
to obtain an asset of a similar value to the right-of-
use asset in a similar economic environment. The IBR
therefore reflects what the Group ‘would have to pay’, which requires estimation when no observable
rates are available (such as for subsid
iaries that do not enter into financing transactions) or when they
need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in
the subsidiary’s functional currency). The Group estimates the IBR using observable
inputs (such as
market interest rates or rates from bank sanction letters) when available and is required to make certain
entity-specific estimates (such as the subsidiary’s stand-alone credit rating).
In the opinion of the management, except for the above, the accounting estimates, assumptions and
judgements made in the course of preparing these financial statements are not difficult, subjective or
complex to a degree which would warrant their description as significant in terms of the requirements
of
IAS 1 (revised) – ‘Presentation of Financial Statements’.
Stivala Group Finance p.l.c.
59
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
4.
Application of New and Revised IFRS
4.1 New and Revised IFRS effective for current year
The Group applied for the first time certain standards and amendments, which are effective for annual
periods beginning on or after 1 January 2022.
The Group has not early adopted any standards,
interpretations or amendments that have been issued but are not yet effective.
The nature and the impact of each new standard and amendment is described below:
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
An onerous contract is a contract under which the unavoidable of meeting the obligations under the
contract costs (i.e., the costs that the Company cannot avoid because it has the contract) exceed the
economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-
making, an entity
needs to include costs that relate directly to a contract to provide goods or services including both
incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly
related
to contract activities (e.g., depreciation of equipment used to fulfil the contract and costs of contract
management and supervision). General and administrative costs do not relate directly to a contra
ct and
are excluded unless they are explicitly chargeable to the counterparty under the contract.
These amendments had no impact on the financial statements of the Company as it did not have onerous
contracts in scope of IAS 37 as at the reporting date.
Reference to the Conceptual Framework – Amendments to IFRS 3
The amendments replace a reference to a previous version of the IASB’s Conceptual Framework with a
reference to the current version issued in March 2018 without significantly changing its requirements.
The amendments add an exception to the recognition principle of IFRS 3 Business Combinations to
avoid
the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be
within the scope of IAS 37 Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 Levies,
if
incurred separately. The except
ion requires entities to apply the criteria in IAS 37 or IFRIC 21,
respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at
the acquisition date.
The amendments also add a new paragraph to IFRS 3 to clarify th at contingent assets do not qualify for
recognition at the acquisition date.
In accordance with the transitional provisions, the Group applies the amendments prospectively, i.e., to
business combinations occurring after the beginning of the annual reporting period in which it first
applies the amendments (the date of initial application).
These amendments had no impact on the financial statements of the Company as there were no
contingent assets, liabilities or contingent liabilities within the scope of these amendments that arose
during the period.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 Leases
The amendment prohibits entities from deducting from the cost of an item of property, plant and
equipment (PPE), any proceeds of the sale of items produced while bringing that asset to the location
and condition necessary for it to be capable of operating
in the manner intended by management.
Instead, an entity recognises the proceeds from selling such items, and the costs of producing those
items, in profit or loss.
In accordance with the transitional provisions, the Company applies the amendments retrospectively
only to items of PPE made available for use on or after the beginning of the earliest period presented
when the entity first applies the amendment (the date of initial application).
Stivala Group Finance p.l.c.
60
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
These amendments had no impact on the financial statements of the Company as there were no sales of
such items produced by property, plant and equipment made available for use on or after the beginning
of the earliest period presented.
IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time
adopter
The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure
cumulative translation differences using the amounts reported in the parent’s consolidated financial
statements, based on the parent’s date of transition to IFRS,
if no adjustments were made for
consolidation procedures and for the effects of the business combination in which the parent acquired
the subsidiary. This amendment is also applied to an associate or joint venture that elects to apply
paragraph D16(a) of IFRS 1.
These amendments had no impact on the consolidated financial statements of the Group as it is not a
firsttime adopter.
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or
modified financial liability are substantially different from the terms of the original financial liability.
These fees include only those paid or receive
d between the borrower and the lender, including fees paid
or received by either the borrower or lender on the other’s behalf. There is no similar amendment
proposed for IAS 39 Financial Instruments: Recognition and Measurement.
In accordance with the tra
nsitional provisions, the Company applies the amendment to financial
liabilities that are modified or exchanged on or after the beginning of the annual reporting period in
which the entity first applies the amendment (the date of initial application). Thes
e amendments had no
impact on the financial statements of the Company as there were no modifications of the Company’s
financial instruments during the period.
IAS 41 Agriculture – Taxation in fair value measurements
The amendment removes the requirement in paragraph 22 of IAS 41 that entities exclude cash flows for
taxation when measuring the fair value of assets within the scope of IAS 41.
These amendments had no impact on the financial statements of the Company as it did not have assets
in scope of IAS 41 as at the reporting date.
4.2 New and Revised IFRS in issue but not effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date
of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these
standards, if applicable, when they become effective.
Description
Effective for annual periods
beginning on or after
IFRS 17 Insurance Contracts
1 January 2023
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
1 January 2023
Definition of Accounting Estimates - Amendments to IAS 8
1 January 2023
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
1 January 2023
Deferred Tax related to Assets and Liabilities arising from a Single Transaction -
Amendments to IAS 12
1 January 2023
Stivala Group Finance p.l.c.
61
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
5.
Segment information
For management purposes, the Group is organised into business units based on its products and services
and has two reportable segments, as follows:
Holding
This serves as the finance arm of the Group and the principal vehicle for
further
expansion
of
the
Group's
hospitality
business
and
mixed-use
developments.
Property development and
letting
This
segment carries works such as construction, plumbing, electrical and
others to bring various properties in a state that can be leased to third
parties.
In relation to this, the Group leases out various freehold commercial and
residential properties to third parties.
Hospitality and
Entertainment
This segment includes hotel operations such as accommodation, food and
beverage and other related services. The Group owns various hotels and
apartment suites namely Bayview Hotel, Blubay Apartments, Blubay Suites,
Sliema Hotel and Azur Hotel.
Management
monitors the operating results of its business units separately for the purpose of making
decisions about resource allocation and performance assessment.
Segment performance is evaluated
based on profit or loss and is measured consistently with profit or l
oss in the consolidated financial
statements.
Stivala Group Finance p.l.c.
Year ended 31 December 2022
Holding
Property
development and
letting
€
Hospitality and
Entertainment
€
Total segments
€
Eliminations
€
Consolidated
€
Notes to the Financial Statements
for the year ended 31 December 2022
5.
Segment information (continued)
Inter-seg ment tr ansact ions, assets and liabil ites are eliminate d u pon co nsolida tion and reflected in the ‘el iminat ions’ c olum n.
External customers
-
15,580,983
13,262,022
28,843,005
-
28,843,005
Inter-segment
33,946,032
9,468,690
-
43,414,722
(43,414,722)
-
Total revenue
33,946,032
25,049,673
13,262,022
72,257,727
(43,414,722)
28,843,005
Income/(expenses)
Finance and similar income
-
846,003
-
846,003 (846,003)
-
Finance cost
(2,407,500)
(846,237)
(2,818,446)
(6,072,183)
2,306,116
(3,766,067)
Depreciation and amortisation
-
(346)
(4,778,707)
(4,779,053)
777,512
(4,001,541)
Share in loss of associates
-
-
(33,959)
(33,959)
-
(33,959)
Income tax expense
5,441
(3,797,667)
823,522
(2,968,704)
2,240,558
(728,146)
Segment profit before tax 31,419,896 38,439,613 234,930 70,094,439 (43,059,269) 27,035,170
Total assets
73,245,270
382,995,504
68,528,012
524,768,786
(128,215,438)
396,553,348
Total liabilities
72,571,180
68,253,923
72,045,004
212,870,107
(65,571,976)
147,298,131
17,833,6 21 - 17,83 3,621 - 17,833,621
62
Other disclosures
Capital expenditure
-
Stivala Group Finance p.l.c.
Year ended 31 December 2021
Holding
Property
development and
letting
€
Hospitality and
Entertainment
€
Total segments
€
Eliminations
€
Consolidated
€
Notes to the Financial Statements
for the year ended 31 December 2022
5.
Segmen t inform atio n (continu ed)
External customers
-
8,563,835
6,501,458
15,065,293
-
15,065,293
Inter-segment
41,142,087
8,286,226
-
49,428,313
(49,428,313)
-
Total revenue
41,142,087
16,850,061
6,501,458
64,493,606
(49,428,313)
15,065,293
Income/(expenses)
Finance and similar income
-
344,702
-
344,702
(344,702)
-
Finance cost
(2,407,500)
(344,945)
(2,327,128)
(5,079,573)
1,864,152
(3,215,421)
Depreciation and amortisation
-
(346)
(5,916,616)
(5,916,962)
2,209,043
(3,707,919)
Share in loss of associates
-
-
(47,300)
(47,300)
-
(47,300)
Income tax expense
801,809
1,412,454
2,432,065
4,646,328
3,345,197
7,991,525
Segment profit before tax (21,182,263) 105,259,964 (4,347,608) 79,730,093 (75,334,916) 4,395,177
Total assets
60,322,974
369,883,134
65,204,115
495,410,223
(132,456,341)
362,953,882
Total liabilities
79,074,221
50,213,122
72,252,084
201,539,427
(73,977,401)
127,562,026
Other disclosures
Capital expenditure
-
8,256,277 - 8,256,277
-
8,256,277
Capital expen diture consi sts of a dditions to property, plant a nd equipment, and investme nt pro pe rti es.
63
Stivala Group Finance p.l.c.
64
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
6.
Revenue from contracts with customers
The Group's hospitality revenue is derived locally from the operations of the hotels in Malta.
Disaggregated revenue information
Set out below is the disaggregation of the Group's revenue from contracts with customers:
2022
2021
€
€
Type of goods or service
Hospitality and Entertainment (note 5)
Accommodation
11,835,458
5,652,238
Food and beverage
1,157,982
616,423
Other services
268,582
232,797
13,262,022
6,501,458
Property development and letting (note 5)
Sale/barter of property for resale
6,227,774
196,784
19,489,796
6,698,242
Timing of revenue recognition
Services/goods transferred at a point in time
7,654,338
1,046,004
Services transferred over time
11,835,458
5,652,238
19,489,796
6,698,242
Performance obligations
Information about the Group’s performance obligations are summarised below:
Accommodation
The performance obligation is satisfied upon rendering the service over time as the hotel's customers
consume and receive the benefit from these services on each day/throughout their stay until checkout.
The payment (which is equal to the transaction price
established at the time of booking) is generally due
immediately on the day of checkout before the customer leaves the hotel's premises.
Food, beverage and other services
The performance obligation is satisfied at a point in time upon availment of service by the customer. The
payment (which is equal to the transaction price established at the time of availment) is generally due
immediately upon completion of services before the customer leaves the hotel's premises.
The Group assesses that there are no other premises in the contract of sale that are separate performance
obligations to which a a portion of transaction price needs to be allocated. The transaction price, which
is
equal to the cash selling price indicated
in the sales invoices issued, is therefore allocated to only one
performance obligation.
Sale/barter of property for resale
The performance obligation is satisfied at the point in time when control of the asset is transferred to the
customer, generally upon signing of deed of sale where the customer obtains legal title to the property.
The normal credit term is 30 to 90 days from date of deed.
The Group assesses that there are no other promises in the contract of sale/barter of properties held-for-
sale that are separate performance obligations to which a portion of the transaction price needs to be
allocated. The transaction price, which is equal to the selling price indicated in the deed of sale/barter
signed by both parties, is therefore allocated to only one performance obligation. The Group assesses
that there exist no variable considerations and consideration payable to the customer relating to the
sale/barter of properties held-for-sale.
There are no contract liabilities or remaining performance obligations as at 31 December 2022 and 2021.
Stivala Group Finance p.l.c.
65
Administrative expenses
Depreciation (notes 13 and 24)
Amortisation (note 18)
Directors' remuneration (note 10)
Office salaries (note 10)
Social security contributions (note 10)
Auditors' remuneration
Provision for ECL (notes 16, 21 and 31)
Legal and professional fees
Rent (note 24)
Computer maintenance
Bank charges
Insurance
Motor vehicle expenses
Other admi nistrat ive expenses
3,993,684
3,687,024
-
-
7,857
20,895
-
-
161,518
184,359
25,755
26,385
407,986
497,957
12,000
8,511
33,351
30,900
-
-
19,900
20,500
8,500
8,500
2,917,252
7,920,416
68,446
-
872,191
338,947
2,721
3,450
95,894
40,346
-
-
125,913
97,073
-
-
112,228
133,915
343
408
40,150
53,821
-
-
120,653
91,808
-
-
684,964
433,186
871
871
9,398,315
13,551,147 118,636 48,125
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
7.
Expens es
The Group The Company
2022
2021 2022 2021
€
€ € €
95,270 46,382 - -
- 2,233 - -
1,874,733
526,627
-
-
120,929 113,806
-
-
1,536,799
712,850
-
-
393,448 726,058
-
-
905,322
469,478
-
-
16,664
270,593
-
-
1,035,721
755,731
-
-
133,227 26,329
-
-
121,558
111,701
-
-
6,138,401 3,713,173
-
-
Cost of sales
Direct wages (note 10)
Social security contributions (note 10)
Commissions
Repairs and maintenance
Cost of goods sold (note 19)
Licenses and permits
Utilities
Transport
Fuel
Distribution and selling costs
Adver tising a nd promo tions
Other operating charges
Exchange fluctuations
Stivala Group Finance p.l.c.
66
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Auditor's fees
Fees charged by the auditor for services rendered during the financial years ended 31 December 2022
and 2021 relate to the following:
The Group
The Company
2022
2021
2022
2021
€
€
€
€
Annual statutory audit
19,900
20,500
10,030
10,030
8.
Othe r operat ing income
The Maltese government announced a number of measures to financially support businesses whose
operation was financially affected by the Covid-19 pandemic. ST Hotels Ltd. was able to benefit from
MDB covid-19 interest rate subsidy scheme where the Company r eceived €60,173 (2021: €10,048) in the
form of government grant during 2022. These amounts were deducted from the line item 'Interest on
bank loan s' as disclose d abov e.
The Group The Company
2022
2021 2022 2021
€
€ € €
434,585
322,506 - -
374,507
284,897
10,101
210,395 - -
-
- - 4,011
189,244
135,634 - -
-
6,796 - -
-
3,296
(6,958)
105,134 - -
1,001,479
1,068,658 - 4,011
Recharge of utilities to tenants
Condominium fees & other charges
Recharge of expenses to other parties
Decrease in provision for estimated
credit losses (notes 16, 21 and 31)
Management fees
Gain on lease modification
/rent concession
Government grant
Miscellaneous income
9.
Financ e costs
The Group The Company
2022
2021 2022 2021
€
€ € €
30,978
17,978 - -
2,407,500
2,407,500 2,407,500 2,407,500
1,307,501
761,925 - -
20,088
28,018 - -
3,766,067
3,215,421 2,407,500 2,407,500
Interest on bank overdrafts
Interest on bonds and amortisation of
bond issue cost
Interest on bank loans
Interest on lease lia bility (note 24)
Stivala Group Finance p.l.c.
67
Wages and salaries (including
Directors’ remuneration) (note 7)
Social security contributions (note 7)
The Group The Company
2022
2021 2022 2021
€
€ € €
2,444,237
1,208,943 37,755 34,896
154,280
144,706 - -
2,598,517
1,353,649 37,755 34,896
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
10.
Staff costs an d empl oye e information
Staff costs for the ye ar comprised the follow ing:
The Maltese government announced a number of measures to financially support businesses whose
operation was financially affected by the Covid-19 pandemic. The Group was able to benefit from the
covid wage supplement, receiving €800 on a monthly basis per full-time employee commencing on
March 2020. During the current year ended 31 December 2022, the Group had €553,583 (2021:
€1,139,219) in the form of government grants under the covid wage supplement. These amounts were
deducted from the line item 'direct wages and office salaries' as disclosed in note 7.
The average num ber of persons (including Directors) employed by the company during the year was as
follows:
The Group
The Company
2022
2021
2022
2021
No.
No.
No.
No.
Operational 210 121
-
-
Administration
29
15
-
-
239 136
-
-
11.
Income tax
Tax expense on profit on ordinary activities
Provision for income tax has been made at the rate of 35% on the chargeable income for the year except
for investment income which is charged at the rates of 15% and 35% and for proceeds from sale of
property taxable at 5% and 8% final withholding tax.
The Group
The Company
2022
2021
2022
2021
€
€
€
€
Income tax expense:
Final withholding tax at 15%
(1,402,981)
(1,248,657)
-
-
Final withholding tax at 5%
-
(12,750)
-
-
Over/(Under) provision of tax
in prior years
(714,205)
631,785
-
821,728
Total current tax expense
(2,117,186)
(629,622)
-
821,728
Deferred taxation (note 25):
Credit for the year
1,389,040
8,621,147 5,441 (19,919)
Income tax (expense)/credit for the year
(728,146)
7,991,525 5,441 801,809
Stivala Group Finance p.l.c.
68
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
11.
In come tax (continued)
Tax reconciliation
Current taxation
Taxation due/(recoverable) is made up as follo ws:
The Group The Company
2022
2021 2022 2021
€
€ € €
As at 1 January
3,454,660
2,982,619 (22,095) (904,041)
Underprovision of tax in prior years
-
(631,785) - (821,728)
Income tax expense
2,117,186
1,261,407 - -
Tax refund/(excess) tax refund
in prior year
-
(294,247) 840,140 2,543,814
5,571,846
3,317,994 818,045 818,045
Payments:
Provisional tax
(84)
- - -
Settlement tax
-
(768,769) - -
Final withholding tax at 5% and 8%
(714,205)
(12,750) - -
Tax at source
-
- (840,140) (840,140)
(714,289)
(781,519) (840,140) (840,140)
Reclassification to accrual:
Final withholding tax at 15%
(2,209,070)
918,185 - -
As at 31 December 2,648,487
3,454,660 (22,095) (22,095)
The Group The Company
2022
2021 2022 2021
€
€ € €
27,035,170
4,395,177 31,419,896 (21,182,263)
9,462,311
1,538,311 10,996,964 (7,413,792)
83,086
(556,319) - -
1,649,008
24,699,665 884,147 21,814,926
(11,111,319)
(26,936,483) (11,881,111) (14,401,134)
2,117,186
1,261,407 - -
(432,541)
(834,843) - -
(575,000)
(52,860) - -
18,515
(709,828) 18,515 18,515
729,530
(3,006,588) - -
2,703
1,854 - -
(1,021,037)
(2,764,056) (23,956) 1,404
(194,296)
(631,785) - (821,728)
728,146
(7,991,525) (5,441) (801,809)
Profit before tax
Taxation charge thereon
Tax effect of:
- excess of carrying amount of property,
plant and equipment over tax base
- expenses not allowed for tax purposes
- income not allowed for tax purposes
- income taxed at different rates
- unabsorbed capital allowances
- investment tax credit
- unabsorbed tax losses
- change in the fair value of
investment property
- effect of adoption of IFRS 16
- provision for estimated credit losses
- under provision of prior year tax
charge
Income ta x credi t f or the year
Stivala Group Finance p.l.c.
69
Net dividend on ordinary shares
distributed from final tax account
Total net dividends during the year
Amount of net dividend in cents per
share
12,000,000
-
12,000,000
-
12,000,000
-
12,000,000
-
47.06
-
47.06
-
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
12.
Equit y dividends
The Group The Company
2022
2021 2022 2021
€
€ € €
13.
Property, plant and equipment
The Group
Fair value
The fair value of the freehold buildings as at 31 December 2022 is based on a valuation carried out by an
independent architect on 12 October 2022 for properties pledged to secure borrowings, and valuation
assessed by the directors on 31 December 2022 for all remaining properties as at year end, which
includes the consideration of wear and tear. The Group assessed that there are no conditions that would
significantly increase or decrease the fair value of assets determined on 12 October 2022 except for
acquisiton of property and other additions after 12 october 2022, whose costs are being considered by
the
directors as being equivalent to its fair value. The architect is qualified and has experience in valuation
of
properties of similar locations and categor
ies. As at 31 December 2022, management assessed whether
there are any significant changes to the significant inputs of the valuation. The fair value movement
were
credited to other comprehensive income and subsequently transferred to revaluation reserve under
equity.
Owner-occupied property is disclosed in property, plant and equipment as Buildings.
These consist mainly of residential and commercial buildings with a carrying amount of €25,911,228
(2021: €24,825,898), had these assets been carried at cost less accumulated depreciation. As at 31
December 2022 and 2021, these properties have been categor
ised to fall within level 2 of the fair value
hierarchy. The different levels in the fair value hierarchy have been defined in note 32. The Group
policy
is to recognise transfers into and out of fair value hierarchy levels as of date of the event of change
in
circumstances that caused the transfer. There were no transfers between levels during the year. For all
properties, their current use equates to the highest and best use.
For properties categorised under Level 2 of the fair value hierarchy as at 31 December 2022 and 2021, the
followi ng technique s and inputs were use d:
Type of property
Technique
Inputs
Commercial properties
Market approach
Value of the pro pert ies are based on the
selling price of sim ilar types of properties.
Reside ntial properties
Market appr oach
Cost / Valuation
As at 1 January 2021
Additions
Transfer from investment property (note 17)
Revaluation surplus (note 28)
As at 31 December 2021
Additions
Revaluation surplus (note 28)
As at 31 December 2022
227,181,199
463,841
67,043
327,026
544,986
6,873,419
4,909,851
1,038,961
241,406,326
3,377,383 37,713 55,704 5,401 357,488 630,219 739,414 43,085 5,246,407
(112,897,902) - - - - - - - (112,897,902)
30,676,399
- - - - - - -
30,676,399
148,337,079
501,554
122,747
332,427
902,474
7,503,638
5,649,265
1,082,046
164,431,230
1,706,025
45,000
20,650
59,175
131,411
464,311
709,774
-
3,136,346
6,741,195
- - - - - - -
6,741,195
156,784,299
546,554
143,397
391,602
1,033,885
7,967,949
6,359,039
1,082,046
174,308,7 71
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2022
13.
Property, plant and equipment (continued )
The Group
Buildings
Motor
Vehicles
Kitchen
equipment
Computer
equipment
Plant and
machinery
Furniture, fittings
and office
equipment
Electrical
installations
Energy saving
equipment
Total
€
€
€
€
€
€
€
€
€
70
Depreciation
As at 1 January 2021
Charge for the year
Revaluation surplus (note 29)
As at 31 December 2021
Charge for the year
As at 31 December 2022
Net book amount
As at 31 December 2021
As at 31 December 2022
2,318,176
283,929
31,947
158,872
370,124
4,579,360
2,268,804
773,831
10,785,043
-
101,205
21,424
69,528
198,215
1,694,925
1,121,236
267,195
3,473,728
(2,318,176)
-
-
-
-
-
-
-
(2,318,176)
-
385,134
53,371
228,400
568,339
6,274,285
3,390,040
1,041,026
11,940,595
2,814,333
63,537
21,299
111,475
66,374
266,526
415,958
9,279
3,768,781
2,814,333
448,671
74,670
339,875
634,713
6,540,811
3,805,998
1,050,305
15,709,376
148,337,079
116,420
69,376
104,027
334,135
1,229,353
2,259,225
41,020
152,490,635
153,969,966 97,883 68,727 51,727 399,172 1,427,138 2,553,041 31,741 158,599,395
Stivala Group Finance p.l.c.
71
2022
€
2021
€
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
14.
Investment in subsidiaries
The Company
As at 31 December 2022, the Com pany held the f ollo wing equity intere sts:
Undertaking / Registered Office
Number, class and
Percentage of
nominal value
issued shares
of shares held
held
Subsidiary
Carmelo Stivala Group Limited
4,872 Ordinary shares,
100%
143,
60,000,000 Redeemable
Preference Shares,
100%
The Strand,
of €1 each
Gzira, Malta
fully paid up
The subsidiary was engaged in renting out properties to related parties. It is a holding company. The
Company also acts as a guarantor to the bonds issued by Stivala Group Finance p.l.c..
Sub-subsidiaries
ST Hotels Ltd.
500,000 Ordinary shares,
100%
143,
of €1 each
The Strand,
fully paid up
Gzira, Malta
The subsidiary was engaged in operating hotels and hostels. It also rents out properties.
ST Properties Ltd
1,200 Ordinary shares,
100%
143,
of €1 each
The Strand,
fully paid up
Gzira, Malta
The subsidiary is principally engaged in renting out properties.
15.
Invest ment in a ssociates
The Group The Company
2022
2021 2022 2021
€
€ € €
Cost
As at 1 January
307,544
354,844 - -
Share in loss
(33,959)
(47,300) - -
As at 31 December
273,585
307,544 - -
60,004,872 60,004,895
- (23)
60,004,872 60,004,872
Cost
As at 1 January
Reduction due to major shareholder's divestiture (see note 22)
As at 31 December
Stivala Group Finance p.l.c.
72
Undertaking
Civala Limited
Platinum Developments Ltd
Sliema Creek Lido Limited
Aqualuna Lido Ltd
Accounting period
Saturday, December 31, 2022
Saturday, December 31, 2022
Saturday, December 31, 2022
Saturda y, December 31, 202 2
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
As at 31 December 2022, the Company (through its subsidiary) held the following equity interests:
Undertaking / Registered Office
Associates
Civala Limited
600 Ordinary shares,
50%
Vincenti Buildings,
of €1 each
25/25 Strait Street
20% paid up
Valletta VLT 1432, Malta
The associate has been engaged to acquire and hold assets of whatsoever nature, whether movable or
immovable, corporal or incorporal, whether by way of title, real or personal, or on behalf of others.
Platinum Developments Ltd
600 Ordinary shares,
50%
143,
of €1 each
The Strand Gzira
20% paid up
Gzira GZR 1026, Malta
The associate is principally engaged to act as building developers, contractors, designers and ancillary
services to building industry.
Sliema Creek Lido Limited
500 'B' Ordinary shares,
33%
Number 2,
of €1 each
Geraldu Farrugia Street,
fully paid up
Zebbug ZBG 4351, Malta
The associate was engaged in operation of a lido.
Aqualuna Lido Ltd
500 'B' Ordinary shares,
33%
Number 2,
of €1 each
Geraldu Farrugia Street,
fully paid up
Zebbug ZBG 4351, Malta
The associate will be engaged in operation of a lido.
Summarised financial information of the associates, based on their latest audited financial statements,
and reconciliation with the carrying amount of the investments in the consolidated financial statements
are set out below. The amounts presented are ext
racted from the most updated and available financial
statements of the associates as at and for the year ended:
Percentage of
issued shares
held
Number, class and
nominal value
of s hares held
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2022
15. Investme nt in associat es (co nti nued )
The aggregate capital and reserves as at the end of the under mentioned accounting period and the results for the said period of the Company were as follows:
Civala Limited
Platinum Developments
Limited
Sliema Creek Lido Ltd
Aqualuna Lido Ltd
Total
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Percentage ownership interest
50%
50%
50% 50%
33% 33%
33% 33%
Non-current assets
7,804,751
7,860,160
546
590
105,114
65,331
7,910,411
7,926,081
Current asset
401
240
551,739
399,821
219,168
230,276
562,027
518,469
1,333,335
1,148,806
Non-current liabilities
(7,618,643)
(7,060,729)
-
-
-
-
(7,618,643)
(7,060,729)
Current liabilities
(10,161)
(8,696)
(192,914)
(586,403)
(226,520)
(237,717)
(666,522)
(669,167)
(1,096,117)
(1,501,983)
Net Asset (Liability) (100%)
(9,760)
(8,456)
544,933
612,849
(6,806)
(6,851)
619
(85,367)
528,986
512,175
Group's share on net asset (liability)*
(4,880)
(4,228)
272,465
306,424
(2,268)
(2,283)
204
(28,171)
265,521
271,742
Adjustments
4,880
4,228
120
120
2,768
2,783
296
28,671
8,064
35,802
Group's carrying amount of the
investment
-
-
272,585
306,544
500
500
500
500
273,585
307,544
Net Asset (liabilities) include (100%):
Cash and cash equivalent
240
240
57,028
7,558
71,362
16,544
-
-
128,630
24,342
Non-current financial assets
-
-
-
-
-
-
-
-
-
-
Revenue and other income - -
187,327 165,785
154,600 66,431
1,377,875 439,158 1,719,802 671,374
Cost of sale
-
-
-
-
(150,000)
(63,699)
(201,777)
(246,234)
(351,777)
(309,933)
Interest expense
-
-
-
-
-
-
-
-
-
-
Other expense
(1,304)
(1,157)
(255,244)
(260,384)
(4,555)
(11,084)
(377,537)
(279,791)
(638,640)
(552,416)
Change in fair value of investment
property
-
-
-
-
-
-
-
-
-
-
(Loss)/profit before tax
(1,304)
(1,157)
(67,917)
(94,599)
45
(8,352)
798,561
(86,867)
729,385
(190,975)
Income tax expense
-
-
-
-
-
-
(106,886)
-
(106,886)
-
Other comprehensive loss
-
-
-
-
-
-
-
-
-
-
Total comprehensive (loss)/profit (100
(1,304)
(1,157)
(67,917)
(94,599)
45
(8,352)
691,675
(86,867)
622,499
(190,975)
Group’s share of (loss)/
profit for the year
-
-
(33,959)
(47,300)
15
-
228,253
-
194,309
(47,300)
Prior year losses taken up this year
-
-
306,544
353,844
(15)
-
(228,253)
-
78,276
353,844
Group’s share in profit at yearend
-
-
272,585
306,544
-
-
-
-
272,585
306,544
Stivala Group Finance p.l.c.
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
16. Financial ass ets and fin anc ial li abilities
16.1
Financial assets
The Group The Company
2022 2021 2022
2021
€ € €
€
Debt instruments at amortised cost:
Current assets
Trade receivables - net of ECL (note 21)
Other receivables - net of ECL (note 21)
Amounts owed by directors
- net of ECL (note 21)
Total trade and other receivables
Other financial assets
Loans to subsidiary undertakings
- net of ECL
-
-
11,406,839
-
Loans to associates - net of ECL
5,140,836
5,059,446
-
-
Loans to other related undertakings -
net of ECL
2,751,328
2,696,718
-
-
Loans to other parties - net of ECL
428,125
248,125
-
-
Total other financial assets 8,320,289 8,004,289 11,406,839
-
Total debt instuments at amortised cost
16,967,631 16,203,818 14,440,839 -
All of the above debt instruments at amortised cost are interest free, unsecured and repayable on
demand. The Group's exposure to credit risk related to these financial assets is disclosed in note 31. As
at
the reporting date, these financial assets were fully performing and hence do not contain impaired
assets. However, due to the implementation of IFRS 9, the assets are measured at amortised cost and
estimated credit losses have to be calculated.
Allowance for ECL on loans to associates, other related undertakings and other parties amounted to
€571,912, €10,377,717 and €1,875 (2021: €72,125, €7,924,119 and €1,875), respectively. Movement in the
allowance forms part of the total provision for ECL reported in the statement of profit or loss and other
comprehensive income.
74
476,586
479,265
-
-
361,769 538,022
-
-
7,
808,987 7,182,242 1,517,000
-
8,647,342 8,199,529 1,517,000
-
Interest rate
Maturity
Current loans and borrowings
Bank overdrafts (notes 31)
Bank loans (notes 31)
Loans from subsidiary undertakings
Loans from associate (note 31)
Amount due to other related undertakings
Proposed dividend
Finance lea se liability (note 31)
Non-current loans and borrowings
450,000 and 150,000 (€100 face value) secured bonds
Bank loans (notes 31)
Finance lease liability (note 31)
3.65% - 4%
2027 - 2029
2.50% - 4%
2025 - 2035
3.25% - 3.99%
2023 - 2029
59,730,000
59,670,000
59,730,000
59,670,000
25,749,011
20,620,082
-
-
225,046
394,949
-
85,704,057
80,685,031
59,730,000
59,670,000
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2022
16.
Financ ial ass ets and finan cia l liabiliti es (continued )
16.2
Financial liabilities: Loans and borrowin gs
12,807,664 12,808,095 841,180 836,358
75
The Group
2022
2021
€
€
1,498,058
1,539,387
3,346,878
3,328,612
-
-
124
-
520,396
-
12,000,000
-
169,904
232,626
17,535,360
5,100,625
The Company
2022
2021
€
€
-
-
-
-
-
18,567,863
-
-
-
-
12,000,000
-
-
-
12,000,000
18,567,863
4% - 5%
on demand
2.50% - 4%
2025 - 2035
no interest
on demand
no interest
on demand
no interest
on demand
no interest
on demand
3.25% - 3.99%
2023 - 2029
Other Financial Liabilities at amortised cost, other than loans and borrowings
Trade and other p ayables (note 23)
Stivala Group Finance p.l.c.
76
Face value of the secured bonds
Unamortised bond issue cost
Amortised cost
2022
2021
€
€
60,000,000
60,000,000
(270,000) (330,000)
59,730,000
59,670,000
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
16.
Financial assets and financial liabilities (continued )
16.2 Financial liabilities: Loans and borrowings (continued)
The Company
The secured bonds are measured at the amount of the net proceeds adjusted for the amortisation of the
difference between the net proceeds and the redemption value of the bonds, using effective yield
method
as follows:
By virtue of the prospectus dated 25 September 2017 and 18 July 2019, the Company issued 45,000,000
4% secured bonds with a face value of €100 each, redeemable at par on 18 October 2027 and 15,000,000
3.65% secured bonds with a face value of €100 each, redeemable at par on 29 July
2029, respectively. The
amount is made up of the two bond issues of €45 million and €15 million respectively, net of the bond
issue costs which are being amortised over the lifetime of the bonds. These bonds are guaranteed by
Carmelo Stivala Group Limited, which bound itself jointly and severally liable with the issuer. The
bonds are secured by a first-
ranking special hypothec over various guarantor's property, and pledge on
various insurance proceeds (notes 13 and 17), pursuant to and subject to the terms and conditions in the
prospectus.
The bond bear interest rate of 4.00% per annum on the nominal value payable annually in arrears every
18th of October with respect to the €45 million bond issue and 3.65% per annum on the nominal
value
payable annually in arrears every 18th of July with respect to the €15 million bond issue.
The bonds are listed on the Official Companies List of the Malta Stock Exchange. The quoted market
prices as at 31 December 2022 for the secured bonds was €99.98 and €95.00 (2021: €103.50 and €102.90),
respectively, which in the opinion of the Directors fa
irly represents the fair value of these financial
liabilities and which is considered to be a Level 1 valuation within the fair value hierarchy.
The Group
The bank overdraft and bank loans bear interest ranging between 2.50% to 5% per annum (2021: 0.35%
to 5%). These facilities are secured by a general hypothec over the Group’s
assets, special hypothec and
guarantees over some of the Group’s immovable proper
ties, by joint and several personal guarantees
and by pledge over the Group’s insurance policies.
The bank overdrafts are repayable on demand. Information about the contractual terms of the Group's
loans including interest are disclosed in note 31.
The loans from associate are unsecured, interest-free and repayable on demand.
Stivala Group Finance p.l.c.
77
Effective interest rates:
Bank overdrafts
Bank loans
450,000 (€100 face value) secured
bonds 2027
150,000 (€100 face value) secured
bonds 2029
Lease liability
4% - 5%
2.50% - 4%
4.00%
3.65%
3.25% - 3.99%
4% - 5%
2.50% - 4%
4.00%
3.65%
3.25% - 3.99%
-
-
4.00%
3.65%
-
-
-
4.00%
3.65%
-
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
16.
This note provides information about the Company's borrowings. For more information about the
Company's e xposure t o inter est rate a nd liquidity ris k, see note 3 1.
17.
Investment property
The Group The Company
2022
2021 2022 2021
€
€ € €
Valuation
As at 1 January
178,713,402
34,337,699 - -
Additions
14,697,275
3,009,870 - -
Transfer to property held-for-sale
(note 20)
(2,155,932)
(1,500,000) - -
Change in fair value
9,119,132
29,967,931 - -
Transfer from property, plant and
equipment (note 13)
-
112,897,902
As at 31 December
200,373,877
178,713,402 - -
Fair value
Market valuations are performed by independent professional architects every three years or earlier
whenever their fair values differ materially from their carrying amounts. In the year when a market
valuation is not performed, an assessment of the fair va
lue is performed to reflect market conditions at
the year-end date.
Financial assets and financial liabilities (continued )
16.2 Financial liabilities: Loans and borrowings (continued)
The in teres t rate exposures of borrowings are as follows:
The Group The Company
2022
2021
2022
2021
€
€
€
€
Total borrowings:
At fixed rates
90,718,897
85,785,656
59,730,000
59,670,000
Stivala Group Finance p.l.c.
78
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
17.
Investment property (continued )
The fair value of the Group's investment properties as at 31 December 2022 is based on a valuation
carried out by an independent architect on 12 October 2022 for properties pledged to secure
borrowings,
and valuation assessed by the directors for all remai
ning properties as at year end.The Group assessed
that there are no conditions that would significantly increase or decrease the fair value of assets
determined on 12 October 2022 except for acquisiton of property and other additions after 12 october
2022, whose costs are being considered by the directors as being equivalent to its fair value. The
architect
is qualified and has experience in valuation of properties of similar locations and categories. As at 31
December 2022, management also assessed whether
there are any significant changes to the significant
inputs of the valuation. The fair value movement were credited to profit or loss and subsequently
transferred to revaluation reserve under equity.
As at 31 December 2022 and 2021, these properties have been categorised to fall within level 2 of the fair
value hierarchy. The different levels in the fair value hierarchy have been defined in note 31. The Group
policy is to recognise transfers into and out of fair value hierarchy levels as of date of the event of
change
in circumstances that caused the transfer. There were no transfers between levels during the year. For
all
properties, t heir current use equates to th e highest and best use.
Reconciliation of fair value:
Office
properties
Commercial
properties
Residential
properties
Total
€
€
€
€
As at 1 January 2021
7,325,479
15,793,192
11,219,028
34,337,699
Additions
321,895
94,051
2,593,924
3,009,870
Transfer to property held-for-sale
(note 20)
-
-
(1,500,000)
(1,500,000)
Transfer to property, plant and
equipment (note 13)
46,310,296
28,575,159
38,012,447
112,897,902
Fair value change recognised in
profit or loss
3,265,817
14,636,290
12,065,824
29,967,931
As at 31 December 2021
57,223,487
59,098,692
62,391,223
178,713,402
Additions
665,106
11,375,209
2,656,960
14,697,275
Transfer to property held-for-sale
(note 20)
-
(1,566,439)
(589,493)
(2,155,932)
Fair value change recognised in
profit or loss
9,319,132
(700,000)
500,000
9,119,132
As at 31 December 2022
67,207,725
68,207,462
64,958,690
200,373,877
Stivala Group Finance p.l.c.
79
Amortisation
As at 1 January
Charge for the year
As at 31 Dece mber
118,740
97,845
-
-
7,857
20,895
-
-
126,597
118,740
-
-
Net book amount
As at 1 January
As at 31 Dece mber
6,057
26,952
-
-
5,400
6,057
-
-
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
For investment properties categorised under Level 2 of the fair value hierarchy as at 31 December 2022
and 2021, the following techniques and inputs were used:
Type of property
Technique
Inputs
Commercial properties Market approach
Value of the properties are
based on the selling price of
similar types of properties.
Residential properties
Market approach
Office properties
Market approach
As at year end, the Company did not had preliminary agreements for contractual agreements for the
acquisition of investment property (2021: €870,000).
As at year end, the Company had investment property with a carrying amount of €57,800,000 (2021:
€33,715,651) pledged to secure b orro wing s.
18.
In tan gible a ssets
The Group The Company
2022
2021 2022 2021
€
€ € €
19.
Inventories
Goods held for resale
During 2022, €905,322 (2021: €469,478) was recognised as an expense during the year and included in
cost of sales (note 7).
124,797
124,797
-
-
7,200
-
-
-
131,997
124,797
-
-
Cost - Computer Software
As at 1 January
Additions
As at 31 Decem ber
The Group The Company
2022
2021 2022 2021
€
€ € €
16,783
11,657 - -
Stivala Group Finance p.l.c.
80
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
20.
Prope rty he ld-for-sale
In 2021, the Group sold properties for resale costing €58,216 and sale value consideration of €255,000.
The profit from these transactions were shown in the statement of profit or loss and other comprehensive
income under revenue from contracts with customers (note 6).
21.
Trade and other receivables
The Group The Company
2022
2021 2022 2021
€
€ € €
Current
Trade receivables
483,950
522,668 - -
Amounts owed by directors
7,864,035
7,233,978 1,517,000 -
Amounts owed by ultimate beneficial
owners
1,518,353
1,353 - -
Other receivables
364,417
541,534 - -
Other advances
1,544,976
1,505,978 - -
Indirect taxation
112,544
124,356 - -
Prepayments and accrued income
26,140
29,808 - -
11,914,415
9,959,675 1,517,000 -
Allowance for ECL on (note 31):
Trade receivables
(7,364)
(43,403) - -
Amounts owed by directors (55,048)
(51,736) (10,619) -
Other receivables
(2,648)
(3,512) - -
(65,060)
(98,651) (10,619) -
Total trade and other receivables
11,849,355
9,861,024 1,506,381 -
Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.
The amounts owed by related parties are unsecured, interest free and repayable on demand.
Other advan ces inclu de advan ce de posits on purcha se of pr opertie s.
The Group The Company
2022
2021 2022 2021
€
€ € €
2,179,099
- - -
-
737,315 - -
2,155,932
1,500,000 - -
(1,883,430)
(58,216) - -
2,451,601
2,179,099 - -
Cost
As at 1 January
Additions
Transfer from investment property
(note 17)
Disposals
As at 31 Decem ber
Stivala Group Finance p.l.c.
81
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Set out below is the movement in the allowance for ECL on trade and other receivables:
The Group
The Company
2022
2021
2022
2021
€
€
€
€
As at 1 January
98,651
46,874
-
-
Provision for ECL (note 7)
(33,591)
51,777
10,619
-
As at 31 December
65,060 98,651 10,619
-
22.
Assets held for distribution to owner
Principal divestment of major shareholder
Pursuant to the framework agreement and promise of sale agreement made last 20 November 2020, the
relinquishment of ownership of Mr. Carlo Stivala from Stivala group has been formally concluded on
26
April 2021 and was formally announced by Stivala Group Finance p.l.c. ('the Company') the next day,
27
April 2021.
In view of this event, the result were as follows:
(i) the share capital of each of the Company, Carmelo Stivala Group Limited and North Harbour Limited
has been reduced pursuant to the cancellation of all shares held therein by Carlo Stivala and Carmelo
Stivala Trustee Limited as trustee of the Seaside Trust, the beneficiaries of which are Carlo Stivala and
his descendants;
(ii) the final deed of transfer in respect of the properties that were agreed to in terms of a promise of sale
agreement as consideration due to Carlo Stivala and Carmelo Stivala Trustee Limited as trustee of the
Seaside Trust, the beneficiaries of which are Carlo Stivala and
his descendants, for the aforesaid parties
to relinquish all of their rights and interests in the share capital of the companies forming part of the
Stivala group, has been duly executed; and
(iii) Carlo Stivala has resigned from the board of directors of all companies forming part of Stivala group
of which he is a director.
In terms of the clause (i) above, the share capital of the Company has been reduced by €75,000 , made
up
of €75,000 ordinary shares of €1 each, equivalent to 25% of the i ssued share capital of the Company. As
a
result, the indirect shareholding in the Company of each of Martin Stivala, Ivan Stivala and Michael
Stivala and their respective descendants (the "ultimate beneficial owners") has increased from 25% to
33.33% of the Company's issued share capital.
Furthermore, the resultant issued share capital amounting to €225,000 has been increased by €30,000 to
amount to €255,000 in accordance with Listing Rule 3.17. The afore-
stated €30,000 ordinary shares of €1
each have been subscribed to as fully paid-up sha
res by Carmelo Stivala Trustee Limited on behalf of
each of the ultimate beneficial owners.
The issued ordinary share capital of Carmelo Stivala Group Limited (CSGL) and the corresponding
investment of the Company in CSGL have also been reduced by €24, made up of €24 ordinary shares of
€1 each.
In terms of the clause (ii) above, the immovable properties with the value of €59,947,736 as disclosed in
prior year annual financial report as 'assets held for distribution to owner', were transferred from
Carmelo Stivala Group Limited to CAST Holdings Lt
d, a company that is ultimately owned by Trimer
Services Ltd as trustee of CAST Trust, the beneficiaries of which are Carlo Stivala and his descendants.
Such value were ultimately closed to the Company where it represents part of the consideration due to
the Trustee Seaside Trust, and full consideration due to Carlo Stivala, for the said parties relinquishing
all of their interests in the share capital of the companies forming part of Stivala group.
Stivala Group Finance p.l.c.
82
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Such amount of transfer value of the properties amounting to €59,947,736 less Carlo Stivala's share
capital amounting to €75,000 was presented as 'Loss on major shareholder's divestiture' disclosed in the
Consolidated Statement of Profit or Loss and Other
Comprehensive Income. Out of the transfer value of
the properties mentioned previously, the amount of €38,741,687 represents fair value increments on
such
properties over the costs. Due to the divestiture, these were considered realised and presented as 'G
ain
on transfer of properties' in the Statement of Comprehensive Income of Carmelo Stivala Group Limited
and were declared eventually as dividends to the Company for the same amount disclosed as 'Dividends
receivable' in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
In terms of the clause (iii) above for companies within Stivala group, duly filled forms were submitted to
Malta Business Registry to effect his removal from the board of directors of all companies forming part
of Stivala group of which he is a director.
23.
Trade and other payables
The Group The Company
2022
2021
2022
2021
€
€ € €
Current
Amount received in advance
462,257
470,492 - -
Trade payables 5,354,585
4,955,875 - -
Other payables
2,447,017
1,895,243 12,395 6,814
Indirect taxes and Social Security
Contributions
1,761,479
1,708,971 - -
Accruals
1,059,362
1,042,620 828,785 829,544
Deferred rental income
1,722,964
2,734,894 - -
Total trade and other payables
12,807,664
12,808,095 841,180 836,358
Trade payables are non-interest bearing and are normally settled between 30 to 90 days. Other payables
which includes refundable security and other deposits to tenants.
Indirect taxes and social security contributions included due from prior years, which are being paid in
installments in accordance with the agreements entered by the Group with Commission for Revenue.
The Group's expos ure to l iquidity risk related to trade and other payables is disclose d in note 31.
24.
Leases
24.1 The Group as a lessee
The Group has lease contracts for various buildings and furniture and fittings used in its operations.
Leases of building has lease terms of 5 to 11 years, while furniture and fittings have lease terms of 5
years. The Group’s obligations under its leases a
re secured by the lessor’s title to the leased assets.
Generally, the Group is not restricted from subleasing the leased assets (except when otherwise agreed
with the lessor in special terms) and effecting major structural or layout alterations on the leased
The Group has a lease contract which includes in-
substance fixed payments. The Group has no lease
contracts containing variable lease payments that depend on an index or a rate, residual value
guarantees and sales and leaseback transactions.
The Group has leases of garage with lease term of 12 months or less. The Group applies the ‘short-term
lease’ recognition exemption for this lease. There are no other leases qualifying for short term or low
value asset recognition exemptions applicable to the Company.
Stivala Group Finance p.l.c.
83
As at 1 January
Lease modification
Additions
Payments
Accretion of interest (note 9)
As at 31 December
The Group
The Company
2022
2021
2022
2021
€
€ € €
627,575
841,080 - -
-
(82,977) - -
-
81,267 - -
(252,713)
(239,813) - -
20,088
28,018 - -
394,950
627,575 - -
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
24.
Leases (continued )
24.1 The Group as a lessee (continued )
Set out below are the carrying amounts of the Group's right-of-use assets recognised and the movements
during the peri od:
Buildings
Furnitures
and Fittings
Total
€
€
€
As at 1 January 2021
425,596
389,916
815,512
Lease modification
(76,181)
-
(76,181)
Additions 81,267
-
81,267
Depreciation expense (note 7)
(84,110) (129,186)
(213,296)
As at 31 December 2021
346,572
260,730
607,302
Depreciation expense (note 7)
(95,717)
(129,186)
(224,903)
As at 31 December 2022
250,855
131,544
382,399
Set out below are the carrying amounts of lease liabilities included under interest-bearing loans and
borrow ings (note 1 6) a nd the moveme nts d uring the per iod:
Current
169,904
232,626
-
-
Non-current 225,046
394,949
-
-
The ma turity analysis of lea se lia bilities are discl osed in not e 31.
Stivala Group Finance p.l.c.
84
Depreciation expense of right-of-use
assets
Interest expense on lease liabilities
Expense relating to short-term leases
and leases of low-value assets
(included in administrative expenses)
(note 7)
Total amount recognised in profit or
loss
The Group
The Company
2022
2021
2022
2021
€
€
€
€
224,903
213,296
-
-
20,088
28,018
-
-
95,894
40,346
-
-
340,885
281,660
-
-
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
24.
The Group had total cash outflows for leases of €252,713 in 2022 (€239,813 in 2021). In 2022, there is no
non-cash addition to right-of-use assets and lease liabilities (2021: €81,267), respectively.
24.2 The Group as a lessor
The Group has entered into operating leases on its property portfolio consisting of certain commercial
and residential buildings (see notes 13 and 17). These leases have terms of between 1 and 3 years for the
non-cancellable portion, while up to 8 years fo
r the cancellable portion thereafter. All leases include a
clause to enable upward revision (usually 10%) of the rental charge at various intervals on a cumulative
basis (in-substance fixed payments) as a precaution to prevailing market conditions througho
ut the
whole lease term. The Group is not exposed to foreign currency risk as a result of the lease
arrangements, as all leases are denominated in euro. Rental
income recognised by the Group during the
year is €9,353,209 (2021: €8,367,051).
Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as
follows:
The Group
The Company
2022
2021
2022
2021
€
€
€
€
Within one year
2,744,507
2,744,507
-
-
After one year but not more than five
years
2,326,705
2,326,705
-
-
More than five years
457,169
457,169
-
-
5,528,381
5,528,381
-
-
Leases (continued )
24.1 The Group as a lessee (continued)
The following are the amou nts reconi sed in prof it or loss:
Stivala Group Finance p.l.c.
85
As at 1 January
(Charge)/Credit in profit or loss
(note 11)
Charge in other comprehensive
income
As at 31 December
The Group The Company
2022
2021
2022
2021
€
€ € €
(25,513,615)
(25,880,637) - -
(729,530)
3,006,588 - -
(2,359,418)
(2,639,566) - -
(28,602,563)
(25,513,615) - -
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
25. Def erred taxation
Deferre d tax liability
The balance represents:
The Group The Company
2022
2021
2022
2021
€
€ € €
Tax effect of temporary differences relating to:
Asset revaluat ions (28,602,563) (25,513,615) - -
Deferred tax asset
As at 1 January
Credit/(charge) in profit or loss (note 11)
As at 31 December
The balance represents:
The Group The Company
2022
2021
2022
2021
€
€ € €
Tax effect of temporary differences relating to:
Excess of capital allowances over
depreciation
1,647,569
1,730,655
-
-
Unabsorbed capital allowances
2,373,855
1,941,314
-
-
Unrelieved tax losses
2,622,134
2,640,649
272,895
291,410
Allowance for estimated credit losses
3,856,039
2,835,002
23,956
-
Leases
198,058
6,465
-
-
Investment tax credit
1,994,554
1,419,554
-
-
12,692,209
10,573,639
296,851
291,410
The Group The Company
2022
2021
2022
2021
€
€
€
€
10,573,639
4,959,080
291,410
311,329
2,118,570
5,614,559
5,441
(19,919)
12,692,209
10,573,639 296,851 291,410
Stivala Group Finance p.l.c.
86
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Deferred income taxes are calculated on all temporary differences under the liability method and are
measured at the tax rates that are expected to apply to the period when the asset is realized or the
liability is settled based on tax rates (and tax laws) that have been enacted by the end of the reporting
period. The principal tax used is 35% (2021: 35%) with the exception of deferred taxation on the fair
valuation of non-depreciable investment property which is computed on the basis applicable to
disposal s of immovable property that is tax effect of 8% (2021: 8%) of the transfer value.
The Group and the Company did not have unrecognised deferred income tax assets that could be carried
forwar d again st fu ture t axable i ncome as at 31 December 202 2 and 31 Decem ber 2021.
26.
Share c apital
The Group The Company
2022
2021
2022
2021
€
€ € €
Each ordinary share gives the right to one vote, participates equally in profits distributed by the
company and carries equal rights upon distribution of assets by the company in the event of winding up.
See note 22 for more information on the reduction of issued share capital of the Group and the
Compa ny.
27.
Earnings per share
Earnings per share is based on the profit for the year attributable to the owners of the Group divided by
the weighted average number of ordinary shares in issue during the year.
The Group
The Company
2022
2021
2022
2021
€
€
€
€
Profit for the year attributable to
shareholders:
- Basic profit/(loss) for year attributable
to ordinary equity holders of the
parent
26,307,024
12,386,702
31,425,337
(20,380,454)
Weighted average number of
ordinary shares in issue (note 26)
255,000 255,000 255,000 255,000
Earnings/(loss) per share (cents)
- Basic profit/(loss) for year attributable
to ordinary equity holders of the
parent
103.16 48.58 123.24 (79.92)
There is no difference between the basic and diluted earnings per share as the Group and Company has
no potential d ilutive ordina ry shares.
Authorised:
500,000 Ordinary shares of €1 each
Issued and fully paid up:
255,000 Ordinary shares of €1 each
500,000
500,000
500,000
500,000
255,000
255,000
255,000
255,000
Stivala Group Finance p.l.c.
87
As at 1 January
Derecognition due to disposal of
subsidiary
As at 31 December
The Group The Company
2022
2021
2022
2021
€
€
€
€
4,825,440
4,825,440
-
-
(4,825,440)
-
-
-
-
4,825,440
-
-
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
28.
Reval uation reserv e
The revaluation reserve comprises the revaluation of property, plant and equipment and investment
properties, net of deferred taxation due to change in fair market value which are unrealised at the
reporting date. The change in fair value of investment properties are transferred from retained earnings
to this reserve since these gains are not considered by the directors to be available for distribution. Upon
disposal of the respective investment property, realised fair value gains are transferred back to retained
earnings. This reserve is a non-distributable reserve.
29.
Incen tives and benefits reserv es
The incentives and benefits reserve represents profits set aside for re-investment in terms of Section 6(1)
and 36(2) of the Business Promotion Act. Amounts included in this reserve can only be distributed by
way of cap italizatio n of prof its.
The Group The Company
2022
2021
2022
2021
€
€
€
€
225,017,482
200,672,324
-
-
As at 1 January
Reduction due to major shareholder's
divestiture (see note 22)
Revaluation of property, plant and
equipment, net of deferred tax
(note 13 and 25)
Revaluation of investment property,
net of deferred tax
(note 17 and 25)
As at 31 December
-
(33,580,348)
-
-
4,381,777
30,355,009
-
-
8,389,602
27,570,497
-
-
237,788,861 225,017,482
-
-
Stivala Group Finance p.l.c.
88
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
30.
Cash and cash equivalents
The cash and cash equivalents comprise the following statement of financial position amount:
The Group The Company
2022
2021
2022
2021
€
€
€
€
Cash at banks and in hand
1,589,150
202,471
8,232
4,597
Allowance for ECL
(695)
(3,237)
-
-
Bank overdrafts (note 16)
(1,498,058)
(1,539,387)
-
-
As at 31 December
90,397
(1,340,153)
8,232
4,597
Set out below is the movement in the allowance for ECL on cash in banks:
The Group
The Company
2022
2021
2022
2021
€
€
€
€
As at 1 January
3,237
-
-
-
Provision for ECL (note 7)
(2,542)
3,237
-
-
As at 31 December
695 3,237
-
-
31.
Financial risk management objectives and policies
The Group's principal financial assets comprise trade and other receivables, loans receivable and cash
and cash equivalents. Its principal financial liabilities comprise trade and other payables, borrowings
and lease liabilities.
The Group is exposed to market risk, credit risk, liquidity risk, fair value risk and capital risk
management.
The Board of Directors reviews and agrees policies for managing each of these risks which are
summarise d below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices.
Market prices comprise four types of risk: interest rate risk,
currency risk, commodity price risk and other price risk.
Financial instruments affected by market risk
include borrowings. The Group is only exposed to interest rate risk.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market interest rates.
Except as disclosed in note 16, the Group's borrowings are non-interest bearing. Borrowings issued at
fixed rates consist primarily of bank loans, 3.65% and 4% secured bonds which are carried at amortised
cost, and therefore do not expose the Group to cash flow and fair value interest rate risk.
Exposure to cashflow interest rate risk arises in respect of interest payments relating to bank loans
amounting to €5,165,461 (2021: €2,687,345).
The Company's exposure to interest rate risk is limited to the variable interest rates on bank overdraft
and bank loans. Based on observations of current market conditions, the directors consider an upward
or
downward movement in interest of 1% to be reasonable possible. However, the potential
impact of such
movement is considered immaterial. As a result, the Company is not subject to significant amounts of
risk due to fluctuations on the prevailing levels of market interest rates.
Stivala Group Finance p.l.c.
89
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss.
The Group is exposed to credit risk from its operating
activities (primarily trade receivables and contract assets) and from its financing activities including
deposits with banks and loans to related undertakings.
Customer credit risk is managed by the Group's management subject to the Group's established policy,
procedures and control relating to customer credit risk management.
Credit quality of a customer is
assessed based on each individual's credit limits. Outs
tanding customer receivables are regularly
monitored. An impairment analysis is performed at the reporting date on an individual basis.
The
Group exercises a prudent credit control policy, and accordingly, it is not subject to any significant
exposure or concentration of credit risk.
The Group banks only with local financial institutions with high quality standard or rating. The Group's
operations are principally carried out in Malta and most of the Group's revenue originates from clients
based in Malta.
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2022
31.
Financial risk management objectives and policies (continued )
Set out below is the information about the credit risk exposure on the Group and Company's financial assets and contract assets subject to ECL under IFRS 9.
31 December 2022
The Group
Trade receivables
(notes 16 and 21)
Loans to other
related
undertakings
(note 16)
Loans to
associates
(notes 16 and 21)
Loans to other
party
(note 16)
Other receivables
(notes 16 and 21)
Amounts owed
by directors
(notes 16 and 21)
Cash and cash
equivalents
(note 31)
Total
Approach in measuring ECL
Simplified
General
General
General
General
General
General
Probability of default
0% - 32.26%
0.70% - 100%
1.34% - 100%
1%
0.70% - 1.09%
0.70%
0.06%
Loss given default
N/A
100%
100%
75%
100%
0%
45%
Estimated gross carrying
amount at default
245,388
14,646,045
5,712,748
250,000
308,192
7,864,035
2,574,156
Allowance for ECL
7,364
10,377,717
571,912
1,875
2,648
55,048
695
11,017,259
(Decrease) / increase in
provision for ECL (note 7)
(36,039)
2,453,598
499,787
-
(864)
3,312
(2,542)
2,917,252
31 December 2021
The Group
Trade receivables
(notes 16 and 21)
Loans to other
related
undertakings
(note 16)
Loans to
associates
(notes 16 and 21)
Loans to other
party
(note 16)
Other receivables
(notes 16 and 21)
Amounts owed
by directors
(notes 16 and 21)
Cash and cash
equivalents
(note 31)
Total
Approach in measuring ECL
Simplified
General
General
General
General
General
General
Probability of default
1.49% - 42.32%
0.57% - 75%
1.34% - 100%
1%
0.70% - 1%
1%
0.06% - 1.34%
Loss given default
N/A
100%
100%
75%
100%
100%
100%
Estimated gross carrying amount
at default
288,825
10,620,837
5,131,571
250,000
389,229
7,233,978
1,179,965
Allowance for ECL
43,403
7,924,119
72,125
1,875
3,512
51,736
3,237
8,100,007
Increase in provision for ECL
(note 7)
21,810
7,863,607
858
937
2,152
27,815
3,237
7,920,416
90
Stivala Group Finance p.l.c.
Notes to the Financial Statements
for the year ended 31 December 2022
31.
Financial risk management objectives and policies (continued )
31 December 2022
The Company
Loans to subsidiary
(note 16)
Amounts owed by
directors
(notes 16 and 21)
Total
Approach in measuring ECL
General
General
Probability of default
0.57%
0.70%
Loss given default
88.60%
100%
Estimated gross carrying
amount at default
11,464,666
1,517,000
Allowance for ECL
57,827
10,619
68,446
Increase in provision for ECL
(note 7)
57,827
10,619
68,446
31 December 2022
The Company
Loans to subsidiary
(note 16)
Amounts owed by
directors
(notes 16 and 21)
Total
Approach in measuring ECL
General
General
Probability of default
-
-
Loss given default
-
-
Estimated gross carrying
amount at default
-
-
Allowance for ECL
-
-
-
Decrease in provision for ECL
(note 8)
(4,011)
-
(4,011)
91
Stivala Group Finance p.l.c.
92
Bank overdrafts
Bank loans
Finance lease liabilities
4.00% secured bonds and interest
3.65% secured bonds and interest
Trade and other payables
The Group
Less than
1 year
1 to 5
years
> 5 years
Total
€
€
€
€
1,498,058
-
-
1,498,058
3,764,197
13,159,737 13,663,964 30,587,898
181,765
188,534
59,538
429,837
-
-
44,820,000
44,820,000
-
-
14,910,000
14,910,000
12,807,664
-
-
12,807,664
30,772,204
13,348,271
73,453,502
117,053,457
Bank overdrafts
Bank loans
Finance lease liabilities
4.00% secured bonds and interest
3.65% secured bonds and interest
Trade and other payables
The Group
Less than
1 year
1 to 5
years
> 5 years
Total
€
€
€
€
1,539,387
-
-
1,539,387
3,722,539
13,184,304
11,303,042
28,209,885
252,714
330,607
99,230
682,551
-
-
44,775,000
44,775,000
-
-
14,895,000
14,895,000
12,808,095
-
-
12,808,095
18,322,735
13,514,911
71,072,272
102,909,918
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
31.
Financial risk management objectives and policies (continued )
Liquidity risk
The Group is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities.
Prudent liquidity risk management includes maintaining sufficient cash and
committed credit lines to ensure the availability of an a
dequate amount of funding to meet the Group's
obligations.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscoun ted payme nts.
As at 31 Dece mber 2022
As at 31 December 2021
Stivala Group Finance p.l.c.
93
Lease liabilities
Gross payments
Finance charges
Carrying amount
(net present value)
The Group
Less than
1 year
1 to 5
years
> 5 years
Total
181,765
188,534
59,538
429,837
(11,861)
(21,093)
(1,933)
(34,887)
169,904
167,441
57,605
394,950
Bank loans
Gross payments
Finance charges
Carrying amount
(net present value)
The Group
Less than
1 year
1 to 5
years
> 5 years
Total
3,722,539
13,184,304
11,303,042
28,209,885
(726,256)
(2,165,919)
(1,369,016)
(4,261,191)
2,996,283
11,018,385
9,934,026
23,948,694
Lease liabilities
Gross payments
Finance charges
Carrying amount
(net present value)
The Group
Less than
1 year
1 to 5
years
> 5 years
Total
252,714
330,607
99,230
682,551
(20,088)
(29,889)
(4,999)
(54,976)
232,626
300,718
94,231
627,575
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
31.
Financial risk management objectives and policies (continued )
Liquidity risk (continued)
The below table shows gross undiscounted cash flows for lease liabilities and bank loans. The following
shows t he corr espond ing re concil iatio n of th ose am oun ts to the carry ing amou nt (net present value):
As at 31 December 2022
The Group
Bank loans
Less than
1 year
1 to 5
years
> 5 years
Total
Gross payments
3,764,197
13,159,737
13,663,964
30,587,898
Finance charges
(749,648)
(2,021,311)
(1,246,577)
(4,017,536)
Carrying amount (net
present value)
3,014,549
11,138,426
12,417,387
26,570,362
As at 31 December 2021
Stivala Group Finance p.l.c.
94
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
31.
Financial risk management objectives and policies (continued )
Liquidity risk (continued)
As at 31 December 2022
The Company
Less than 1
year
1 to 5 years
> 5 years
Total
€
€
€
€
4.00% secured bonds and interest
-
-
44,820,000
44,820,000
3.65% secured bonds and interest
-
-
14,910,000
14,910,000
Trade and other payables
841,180
-
-
841,180
841,180
-
59,730,000
60,571,180
As at 31 December 2021
The Company
Less than 1
year
1 to 5 years
> 5 years
Total
€
€
€
€
4.00% secured bonds and interest
-
-
44,775,000 44,775,000
3.65% secured bonds and interest
-
-
14,895,000
14,895,000
Trade and other payables
836,358
-
-
836,358
836,358
-
59,670,000
60,506,358
Fair value risk
As at 31 December 2022 and 2021, the carrying amounts of trade and other receivables, other financial
assets (loans and receivables), cash and cash equivalents, trade and other payables and current
borrowings reflected in the financial statements are reaso
nable 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 values of non-current borrowings
are not materially
different from their carrying amounts in the statement of financial position.
The Group used the following hierarchy for determining and disclosing the fair value of investment
property.
Level 1: quoted(unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value
are observable, either directly or indirectly; and
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are
not based on observable market data.
Stivala Group Finance p.l.c.
95
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Fair value measurement hierarchy:
The Group
Level 1
Level 2
Level 3
Total
€
€
€
€
There were no transfers between level classifications of investment property and property, plant and
equipment during 2022.
The Group
Level 1
Level 2
Level 3
Total
€
€
€
€
As at 31 D ecember 2022 and 2021, there are no propert ies o wned by the Compa ny.
Capital Risk management
Capital includes the equity attributable to the ultimate shareholders of the Group.
The primary objective of the Group's capital management is to ensure that it maintains healthy capital
ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to
the sharehol ders, return capital to the shareholders o r issue new shares.
As at 31 December 2022
Investment property
Commercial properties
Residential properties
Offices
-
68,207,462
-
68,207,462
-
64,958,690
-
64,958,690
-
67,207,725
-
67,207,725
-
200,373,877
-
200,373,877
Property, plant and equipment
Commercial properties
Residential properties
-
112,953,467
-
112,953,467
-
43,830,832
-
43,830,832
-
156,784,299
-
156,784,299
As at 31 December 2021
Investment property
Commercial properties
Residential properties
Offices
-
59,098,692
-
59,098,692
-
62,391,223
-
62,391,223
-
57,223,487
-
57,223,487
-
178,713,402
-
178,713,402
Property, plant and equipment
Commercial properties
Residential properties
-
106,000,474
-
106,000,474
-
42,336,605
-
42,336,605
-
148,337,079
-
148,337,07 9
Stivala Group Finance p.l.c.
96
Interest-bearing loans and other
borrowings
Trade and other payables (note 23)
Finance lease liability (note 24)
Less: cash and cash equivalents
Net debt
Equity
Net d ebt to equity ratio
The Group The Company
2022
2021
2022
2021
€
€ € €
102,844,467
85,158,081 71,730,000 78,237,863
12,807,664
12,808,095 841,180 836,358
394,950
627,575 - -
(1,588,455)
(199,234) (8,232) (4,597)
114,458,626
98,394,517 72,562,948 79,069,624
249,255,217
235,391,856 674,090 (18,751,247)
0.46:1
0.42:1 (32.47):1 (4.22):1
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
No changes were made in the objectives, policies or processes for managing capital during the years
ended 31 D ecemb er 2022 a nd 2021.
No changes were made in the objectives, policies or processes for managing capital during the years
ended 31 D ecemb er 2022 a nd 2021.
32.
Events after the reporting date
All events occuring after the balance sheet date until the date of authorisation for issue of these financial
statements and that are relevant for valuation and measurement as at 31 December 2022 for the Group
and the Company are included in these consolid ated financial statements.
As we progress through 2023, certain events which might have the potential of impacting the results of
the Company are possible repercussions from the war in Ukraine on the European and, more generally,
on the world economy as w
ell as rising inflation and stock market uncertainty. Other concerns could
arise from another pandemic flareup although the latter is considered unlikely in the short term as
vaccinations have been administered on a large scale globally. Post the end of th
e reporting date
however, as aforementioned, the potential risks to the performance of any company is from high
inflation witnessed in the last few months which has forced many major central banks to increases
interest rates as a counter-measure for inflation.
So far, Malta has been well shielded from increases in fuel and utility prices, though the Government
has
hinted that this may not be sustainable in the longer term. Should the government halt its subsidies on
energy and other assistance to industry in general, this could lead to further price increases and possibly
a reduction in disposable income, and which in-turn would adversely influence the propensity to save.
The Directors are closely monitoring the possible impact on its operations and financial performance and
are committed to take all necessary steps to mitigate the impact. This has no impact on the financial
statements of the Company as at date of approval. We are not otherwise aware of any further events
that
could po ssib ly have a n eff ect on t he opera tions of the Compan y.
Stivala Group Finance p.l.c.
97
Bank overdrafts
Bank loans
4% and 3.65% secured bonds
Finance lease liability
(notes 16, 24 and 31)
Total liabilities from financing
activities
1 January
2022
Cash flows
Non-cash
changes
31 December
2022
€
€
€
€
1,539,387
(41,329)
-
1,498,058
23,948,694
5,147,195
-
29,095,889
59,670,000
-
60,000
59,730,000
627,575
(252,713) 20,088 394,950
85,785,656
4,853,277
12,600,484
103,239,417
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
33.
Supplemental cash flow information
Changes in liabilities arising from financing activities
The Group
The Group
1 January
2021
Cash flows
Non-cash
changes
31 December
2021
€
€
€
€
Bank overdrafts 1,978,579
(439,192)
-
1,539,387
Bank loans
21,768,753
2,179,941
-
23,948,694
4% and 3.65% secured bonds
59,610,000
-
60,000
59,670,000
Finance lease liability
(notes 16, 24 and 31)
841,080
(239,813)
26,308
627,575
Total liabilities from financing
activities
84,198,412
1,500,936
86,308
85,785,656
Non-cash changes refer to accumulated amortization of bond issue cost, accretion of interest expense on
finance lease liability, and additional lease liability recognised during the year.
The Company
1 January
2022
Cash flows
Non-cash
changes
31 December
2022
€
€
€
€
Proposed dividends
-
-
12,000,000
12,000,000
4% and 3.65% secured bonds
59,670,000
-
60,000
59,730,000
Loans from subsidiary undertakings
18,567,863
14,538,029
(33,105,892)
-
Total liabilities from financing
activities
78,237,863
14,538,029
(21,045,892)
71,730,000
Stivala Group Finance p.l.c.
98
4% and 3.65% secured bonds
Loans from subsidiary undertakings
Total liabilities from financing
activities
1 January
2021
Cash flows
Non-cash
changes
31 December
2021
€
€
€
€
59,610,000
-
60,000
59,670,000
-
-
19,645,765
18,567,863
59,610,000
-
19,705,765
78,237,863
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Non-cash changes refer to accumulated amortization of bond issue cost and loss incurred on owner's
divestiture recognised during the year.
34.
Contingent liabilities
Some of the companies within the group (where the Company forms part as an ultimate parent
company) are engaged in various legal proceedings. As at approval date of these financial statements, it
is difficult to predict exposures of the Group; hence no provision has been made in the consolidated
financial sta tements a ccord ingly.
35.
Related party transactions
The Company
The following table provides the total amount of transactions that have been entered into with related
parties for the relevant financial year.
Expenses
recharge to
(from) related
parties
Dividend
income
Interest
income
Amount
owed by (to)
related
parties
€
€
€
€
Subsidiary of the Company:
Carmelo Stivala Group
Limited
2022
-
33,946,032
-
11,464,666
2021
(59,947,736)
41,142,087
-
-
Sub-subsidiaries of the Company:
ST Hotels Ltd.
2022 (37,755)
-
-
-
2021
(34,896)
-
-
-
Stivala Group Finance p.l.c.
99
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in
arm’s length transactions. Outstanding balances at the year-
end are unsecured and interest free and
settlement occurs in cash. There have been no guarante
es provided or received for any related party
receivables or payables. For the year ended 31 December 2022, the Group recorded impairment of
receivables relating to amounts owed by other related undertakings disclosed in notes 16, 21 and 31, in
compliance
with IFRS 9. This assessment will be undertaken each financial year through examining the
financial position of the related party and the market in which the related party operates together with
other historic al data on recovery of amounts due.
36.
Ultimate controlling parties
Stivala Group Finance p.l.c., the ultimate parent company, is a public limited company incorporated in
Malta.
The Company's registered office is 143, The Strand Gzira GZR 1026, Malta. The Company's share capital
is fully owned by Carmelo Stivala Trustee Limited acting as a trustee, on behalf of the ultimate
beneficial
owners w hic h are Mr. Mi chael Stival a, Mr. Iv an Stivala an d Martin John Stiv ala.