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Malta International Airport p.l.c.
C 12663
Annual Financial Report and Financial Statements
31 December 2023
Malta International Airport p.l.c.
Contents
General Information
2
Directors’ Report
3-14
Statement of Directors’ Responsibilities
15
Corporate Governance – Statement of Compliance
16-28
Remuneration Report
29-31
Income Statements and Statements of Comprehensive Income
32
Statements of Financial Position
33-34
Statements of Changes in Equity
35
Statements of Cash Flows
36-37
Notes to the Financial Statements
38-88
Independent Auditor’s Report
Malta International Airport plc
General Information
Year Ended 31 December 2023
2
Directors:Mr Nikolaus Gretzmacher (Chairman)
Mr Alan Borg (Chief Executive Officer)
Mr Karl Dandler (Chief Financial Officer)
Dr. Cory Greenland
Ms Rita Heiss
Dr. Wolfgang Koeberl
Mr Florian Nowotny
Company secretary:Dr. Louis de Gabriele LL.D.
Registered office:Malta International Airport,
Luqa,
Malta.
Tel. (+356) 2124 9600
Country of incorporation:Malta
Company registration
number:C 12663
Auditor:PricewaterhouseCoopers,
78 Mill Street,
Zone 5,
Central Business District,
Qormi, Malta.
Legal advisors:Camilleri Preziosi Advocates,
Level 2 - Valletta Buildings,
South Street,
Valletta,
Malta.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
3
The directors present their report together with the audited financial statements for the year ended 31 December 2023.
Principal Activities
Malta International Airport p.l.c.’s (“t he Company”) principal activities are the development, operation and management of Malta International Airport, for which the Company has a 65-year concession that came into effect in July 2002.
The Company has three 100% owned operating subsidiaries: Airport Parking Limited, SkyParks Development Limited and SkyParks Business Centre Limited. Airport Parking Limited operates all car parks situated on the land leased to Malta International Airport p.l.c., whilst SkyParks Development Limited and SkyParks Business Centre Limited manage the SkyParks Business Centre building. The Company and these subsidiaries are together referred to as “the Group”.
Malta International Airport p.l.c. also has another 100% owned subsidiary: Kirkop PV Farm Limited, set up with the intention to explore opportunities in the generation of electricity using photovoltaic technologies. Kirkop PV Farm Limited, however, did not trade in 2023.
Review of the Business
Traffic Development
Malta International Airport closed 2023 with a record 7.8 million passenger movements, registering an increase of 33.4% in traffic over 2022. Handling an additional circa half a million passengers over 2019, this result was achieved in parallel with an upturn of 27.3% in aircraft movements and an increase of 29.1% in seat capacity. Strong seat occupancy levels were also registered throughout the year, with seat load factor reaching an all-time high overall average of 85.2%, gaining 2.7 percentage points over 2022. While each month registered varying rates of growth, the strongest upturn in traffic was achieved in the last quarter, reflecting increased travel demand in the winter months.
All markets continued to recover at different rates. The majority of our markets reached or surpassed their respective 2019 and 2022 results, with Italy, United Kingdom, Germany, France and Poland topping Malta International Airport’s market leaderboard. Whilst both the French and Polish markets registered the most significant growth, traffic from the United Kingdom and Germany performed below 2019 levels, despite registering a marked improvement over 2022, due to fewer flight connections. The Italian market also continued to perform well, retaining its spot as Malta International Airport’s top driver of traffic.
Traffic Highlights
2023
2022
+/-
% Change
Passenger Movements
7,803,042
5,851,079
1,951,963
33.4%
Aircraft Movements
51,353
40,355
10,998
27.3%
Seat Capacity
9,155,085
7,093,600
2,061,485
29.1%
Seat Load Factor
85.2%
82.5%
2.7 pp
MTOW (in tonnes)
2,011,402
1,564,392
447,010
28.6%
Cargo and Mail (in tonnes)
20,645
17,552
3,093
17.6%
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
4
(continued)
Q1 2023
Q1 2022
% Change
Q2 2023
Q2 2022
% Change
Passenger M ovements
1,245,525
672,965
85.1%
2,188,945
1,672,329
30.9%
Aircraft Movements
8,825
5,990
47.3%
14,514
11,639
24.7%
Seat Capacity
1,535,759
1,028,045
49.4%
2,586,398
2,048,569
26.3%
Seat Load Factor
81.1%
65.5%
15.6 pp
84.6%
81.6%
3.0 pp
MTOW (in tonnes)
348,466
230,583
51.1%
564,508
446,678
26.4%
Cargo and Mail (in tonnes)
4,948
3,716
33.2%
4,948
4,145
19.4%
Q3 2023
Q3 2022
% Change
Q4 2023
Q4 2022
% Change
Passenger Movements
2,539,355
2,059,920
23.3%
1,829,217
1,445,865
26.5%
Aircraft Movements
15,691
12,939
21.3%
12,323
9,787
25.9%
Seat Capacity
2,824,635
2,304,195
22.6%
2,208,293
1,712,791
28.9%
Seat Load Factor
89.9%
89.4%
0.5 pp
82.8%
84.4%
(1.6 pp)
MTOW (in tonnes)
610,614
501,517
21.8%
487,814
385,614
26.5%
Cargo and Mail (in tonnes)
4,793
4,968
(3.5%)
5,956
4,722
26.1%
Operational Performance Indicators
Airports Council International’s (ACI) Airport Service Quality (ASQ) survey is the world’s leading airport passenger satisfaction program, with close to 400 participating airports in 95 countries. This globally recognized program provides airports with tools and expertise to measure and improve passenger satisfaction, business performance and airport service quality. Malta International Airport has been participating in the program since 2005 and has consistently ranked in the top 5 airports in Europe within its size category, being awarded the ’Best Airport in Europe’ title in the 5 to 15 million passenger category in 2018, 2019, 2020, 2021 and 2022.
At the start of 2022, the ASQ Departures Questionnaire was improved to better reflect airport guests’ satisfaction in relation to service quality and customer experience, which are both crucial factors in the creation of memorable airport experiences. This survey gathers information from passengers just before boarding their flight and delivers an accurate picture of their satisfaction throughout the airport journey, from check-in through to boarding. The analysis of this passenger feedback enables Malta International Airport to continue improving the terminal facilities and airport services in line with changing guest expectations, with the aim of increasing the overall satisfaction of guests with their experience at the airport, improving the service offering within the terminal, and increasing non-aviation revenue.
Key performance indicators (KPIs), including terminal cleanliness, waiting times and staff courtesy and helpfulness, are consistently measured using a five-point scoring system, with five being the highest score. Malta International Airport’s Overall Satisfaction scores for the four quarters of 2023 are tabulated below. The average score obtained for 20 23 was 4.39; a slight drop (-0.02) over the score achieved in 2022. However, given the record passenger traffic being handled by the airport in 2023 and its effect on the limited terminal capacity which is currently being addressed through our expansion project, this score is still a positive one.
Led by a vision of service excellence and enhanced customer experience, t he Company will continue working towards maintaining high overall satisfaction scores, which w ill continue to place Malta International Airport among the top five European performers in ASQ in the coming years.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
5
(continued)
ASQ Scores
2023
2022
+/-
1st Quarter
4.46
4.38
0.08
2nd Quarter
4.35
4.40
(0.05)
3rd Quarter
4.39
4.43
(0.04)
4th Quarter
4.34
4.41
(0.07)
Average for the year
4.39
4.41
(0.02)
To uphold its commitment to service excellence, Malta International Airport continued to roll out initiatives aimed at improving the guest experience throughout the year under review. This led the Company to apply for Level 4 of ACI’s Customer Experience Accreditation Programme in November 2023, after having renewed the Level 3 Accreditation. The ACI Airport Customer Experience Accreditation Programme is the only worldwide customer experience management accreditation designed specifically to recognise the efforts and enhancements airports make to create a better customer experience.
During the coming weeks, the Company shall be notified whether Malta International Airport has attained this prestigious level in ACI Customer Experience Accreditation, which would constitute a significant accomplishment for the airport team, and will be a testimony to the Company’s ongoing efforts to improve the customer experience by collaborating further with its stakeholders and supporting the community it serves.
Infrastructural Investments
The overall capital expenditure during the year under review amounted to EUR 44.3 million.
Within the retail & property section, the relocation of the fuel station was implemented (2023: EUR 0.5 million), with the new service station opening for business in December 2023. The clearance of the area being used by the former fuel station was a condition for site preparation and mobilisation for the SkyParks Business Centre 2 project. W orks on the construction of the new business centre are planned to start during the first half of 2024. Phase 3 of the cargo village project, providing a 900 m 2 warehouse for TNT, was completed and became operational in Q1 2023 (2023: EUR 0.2 million). While the upgrade of the VIP Terminal was set into motion in Q4 2023, works on the project commenced in January 2024.
The development of Apron X also progressed during the year under review (2023: EUR 11.9 million). The first phase of the project is expected to be completed by Q3 2024, resulting in three aircraft parking stands becoming operational. Once completed, Apron X will increase the Company’s aircraft parking capacity by a total of seven stands, allowing the handling of additional narrow and widebody aircraft.
Extensive resurfacing works on the airport’s secondary runway were concluded in Q4 2023. Works on runway 23-05 started in October 2023 and were finalised in December 2023, with the total investment amounting to EUR 14.5 million. Furthermore, aircraft stand rehabilitation works on Apron 9, which commenced in Q4 2022, are proceeding according to plan (2023: EUR 1.4 million).
During the year under review the Group took the first steps to increase its terminal footprint, paving the way for the EUR 11 million westward expansion project of the terminal building as well as the construction of a new Schengen arrivals route (2023: EUR 1.9 million). The expansion of the customs area was concluded in Q3 2023 (EUR 1.0 million). The next stage of this project requires the reconfiguration of the baggage reclaim area, which includes the installation of an additional reclaim belt.
The Group continued to invest in digitalisation in 2023, creating the basis for increased automation as well as for the modernisation of the existing hardware. During the same year, the replacement and upgrade of the IT network and servers was concluded (2023: EUR 1.5 million).
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
6
(continued)
Other upgrades include the installation of a new heating, ventilation and air conditioning system within the terminal (2023: EUR 2.6 million), the conversion of all lighting to LED (2023: 0.6 million), the upgrading of airfield substations and the terminal switch room (2023: EUR 0.2 million), as well as the replacement of the Airfield Ground Lighting (AGL) control room system (2023: EUR 0.9 million).
Principal Risk and Uncertainties
The Board, as a whole, including the Audit Committee members, is responsible for evaluating the nature and extent of the R isk M anagement F ramework, as well as the risk profile that is acceptable to the Board. The Audit Committee periodically reviews the work carried out by the Company’s Risk Management Committee and evaluates the impact that identified risks pose to the Company’s strategic objectives.
The main strategic, corporate and operational risks and uncertainties identified during the year under review are listed below.
Disruption of Critical ICT-Systems
The disruption of an airport's critical ICT system or process, whether through complete or partial disruption, could result in a breakdown of essential communication channels, compromised data integrity, and potential lapses in security protocols. This may lead to operational inefficiencies, hindering the airport's ability to manage flights, process passenger information, and execute security measures effectively. The interconnected nature of modern airport systems amplifies the impact, with failures in hardware, networks, personnel vetting, backups, firewalls, and connectivity potentially causing widespread disruptions, impacting airport operations, safety and security, regulatory compliance as well as the overall passenger experience, potentially leading to reputation damage, substantial recovery costs and financial losses. Mitigating these risks is crucial to maintaining the reliability and functionality of critical ICT systems.
Continuous monitoring and adaptive strategies are essential to sustain this risk posture and uphold the resilience of the Company’s critical ICT systems against unforeseen challenges. Measures for risk mitigation within Malta International Airport include a robust backup strategy, a thorough business impact analysis, software-defined networking redundancy, the implementation of redundant hardware, software and network infrastructure as well as the regular training of key personnel.
Pandemic Outbreak
Malta International Airport has a robust Health and Safety management framework in place. Following the COVID-19 outbreak, tailored emergency response plans as well as protocols enabling effective case management, were implemented in order to ensure that business continuity could be maintained throughout the crisis.
To safeguard its financial stability and preserve its liquidity, the Company also carries out regular analyses of the potential impact on financial results and going concern. Additionally, the Company maintains a close relationship with financial institutions to strengthen it s liquidity position should the need arise.
Long-Term Capacity Constraints
Malta International Airport achieved strong traffic development over the past years, with significant growth rates being attained between 2016 and 2019. As a result, the capacity of the aprons and the terminal had been experiencing phases of saturation at peak times, prompting the Company to take concrete action to mitigate the impact of such peak-driven demand. The impact of COVID-19 on international travel, and consequently operations at Malta International Airport, was significant, having short to medium-term repercussions on passenger demand and aircraft movements. Following the reinstatement of unrestricted operations in June 2022, recovery to pre-Covid levels has been stronger than expected, as 2019 movements were surpassed in 2023.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
7
(continued)
During the year under review, the EU Commission strengthened its resolve to implement stronger Border Control measures by introducing the Entry Exit System (EES). The terminal footprint required to introduce EES infrastructure while increased immigration processing times will have a significant impact on the available terminal capacity. Thus, the Company must retain its focus on maintaining sufficient capacity to meet the short-term passenger handling requirements brought about by re-stabilised travel demand, while also ensuring that the terminal and airside infrastructure can sustain future growth over the longer term.
To this end, it is crucial for the Company to execute its investment program for the next five years, targeting the
terminal and airfield infrastructure, in a timely and cost-effective manner. Infrastructure development is key to meeting the strategic objectives of the Group. Failure to develop infrastructure to the appropriate extent could result in facilities becoming capacity-constrained shortly after their inauguration, or conversely becoming excessive from both a size and cost perspective.
To address these concerns, the Company regularly updates its traffic projections using a proven and reliable forecasting model and conducts extensive capacity studies combined with regular scenario analyses. At the same time, it is ensured that the setting of financial and operational goals is in line with the Company’s strategy and aligned with the required resources.
Employees
The Group employed an average of 417 employees in 2023, which translates to an increase of 17.6% over the previous year. This growth in headcount was a reflection of the busiest year of operation ever recorded at Malta International Airport. The total headcount at year-end stood at 435, which included nine employees working for Airport Parking Limited and four employees working for SkyParks Business Centre. Nine out of ten employees were employed on a full-time basis, whilst the remaining 10% were employed on a part-time basis, bringing the full-time equivalent (FTE) figure for employees at year-end to 402 employees. Compared to year-end 2022, the increase in FTE was of 16.2%. Female employees accounted for 35% of the Group’s workforce, which is slightly below the 37% recorded in the preceding year.
In 2023, the employee turnover rate for the Group stood at 11.9%, which was a marginal improvement when compared to turnover rate of 12.1% registered in 2022, and the lowest rate recorded since 2019. The average employee’s length of service on the other hand dropped from 9.0 to 8.2 years, resulting from the recruitment of 106 employees during the year under review.
Training expenses for the year were just short of EUR 270,000; an increase of 22% over 2022, mainly driven by the increase in the Group's headcount. Total training hours reached a record of 16,047 hours, which does not take into account the 2,626 hours of fire recruitment training and another 6,400 hours of physical training performed by our fire-fighting team. The majority of training provided to our staff during the year was related to fire-fighting and fire awareness, which accounted for 4,704 hours. Training related to aerodrome safety totalled 2,283 hours, whilst induction training for new staff members amounted to 1,971 hours. The rest of the training, which ranged from courses targeting professional skills and service quality to courses focusing on technical skills and health and safety, amounted to 7,089 hours. The average training hours provided per employee throughout 2023 stood at 37 hours, decreasing slightly from the 42 hours of training provided in the previous year.
During the year under review, more than half of the Company’s office workers availed themselves of the opportunity to work from home for up to two days per week, in line with the Company’s Work from Home Policy. The Company Leave Bank, which was set up to assist employees who are going through particularly challenging circumstances and require additional leave, benefitted 5 employees in 2023.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
8
(continued)
The following table shows the HR related indicators:
2023
2022
+/-
% Change
Headcount - 31 December
435
370
65
17.6%
Headcount - Average
417
355
62
17.6%
FTE - 31 December
402
346
56
16.2%
FTE - Average
391
336
56
16.6%
Average age (in years)
38.7
39.1
(0.4)
(1.0%)
Length of service (in years)
8.2
9.0
(0.8)
(8.9%)
Share of women in workforce
35.4%
37.0%
-
(1.6pp)
Employee turnover rate
11.9%
12.1%
-
(0.2pp)
Training expenses (EUR)
269,911
221,166
48,745
22.0%
Reportable accidents
5
7
(2)
(28.6%)
Corporate Responsibility
Sustainability remained at the core of Malta International Airport’s corporate strategy in 2023, as it collaborated with its employees, stakeholders, and neighbouring communities towards operating in a more mutually beneficial environment, while also taking on forward-looking environmental initiatives aimed at setting up the Company for long-term success.
Despite the fact that passenger traffic increased by 33%, ongoing investments in energy management solutions led the Company to reduce its electricity consumption by 3% in 2023. The year under review also saw the Company generate 3.2 million KWh of energy from renewable sources; triple the amount of clean energy produced in 2019. Another significant achievement in this regard was the granting of approval for the procurement of a fifth photovoltaic system on the airport campus. At 3.3 MWp, this photovoltaic system will be the largest to be installed to date and will enable Malta International Airport to generate and consume 40% of its energy through clean sources.
In recognition of these efforts to manage and reduce the airport’s carbon emissions, Airports Council International renewed Malta International Airport’s Level 2 certification of the Airport Carbon Accreditation (ACA) Programme. The Company is now eyeing the next rung of the programme, where during the year under review, it officially kicked off its Stakeholder Engagement exercise, which paves the way for more efforts on engaging stakeholders in its sustainability journey. Over 110 stakeholders, ranging from ground handling companies to cleaning service providers, were approached to contribute to exercises aimed at collecting Scope 3 emission-related data.
Within the organisation, the Environmental Working Group, which was established in 2021, remained a key player in the implementation of internal sustainable policies and practices. In 2023, the Working Group endeavoured to continue fostering a culture of environmental consciousness within the organization. This effort included the development of a Waste Management Plan and Green Procurement guidance, both of which fall within the scope of the Company’s broader Environmental Plan. A workshop was also organised for employees with the aim of raising awareness about the steps the Company is taking in its journey towards becoming net zero, particularly in respect to electricity consumption; the second GREENTalk to be organised since the initiative was launched in 2022.
Through its Corporate Responsibility Committee, the Company continued to seize opportunities for collaboration with neighbouring communities to achieve a genuine social impact that creates value within the region in which it operates. During the year under review, the Company’s philanthropic contributions through the committee totalled over €89,000, which funds supported a number of local non-profits and community organisations.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
9
(continued)
On the other hand, the Malta Airport Foundation continued to build its track record in the field of local heritage preservation. 2023 saw the Foundation support an embellishment project inside the Parish Church of Saint Leonard in the airport’s neighbouring village of Kirkop as well as the conservation and restoration of fourteen paintings dating back to the first half of the eighteenth century which depict the stations of the Via Sagra inside the Church of Ta’ Ġieżu in Valletta. Furthermore, the Foundation entered into a collaboration with Fondazzjoni Patrimonju Malti on the restoration of the Victor Pasmore Gallery which is also located in the capital city, and supported the voluntary organisation Friends of Villa Frere in the rehabilitation of the façade and interiors of Villa Hay in Pietà.
Efforts to showcase Malta’s underwater heritage continued through the ongoing Submerged World mini-documentary project. In 2023, the Foundation shed light on the HMS Maori and Ro żi shipwrecks in 2023, while the remaining three instalments of the series are set to be made public in 2024. For the fourth consecutive year, the Foundation also collaborated with two local dive clubs on the organisation of two underwater clean-ups in the localities of Birgu and St. Paul’s Bay.
Financial Performance
Financial Results
The earnings before interest, taxation, depreciation and amortisation (EBITDA) of the Group incr eased by EUR 20.3 million; from EUR 54.9 million in 2022 to EUR 75.2 million in 2023. The EBITDA margin improved by 0.2 percentage points; from 62.4% to 62.6%.
While the net profit for 2022 before tax credit amounted to EUR 26.9 million and after the tax credit of EUR 12 million to EUR 38.9 million, the Group posted a net profit of EUR 40.3 million in 2023.
The total comprehensive income for 2023 attributable to shareholders of the Company (net of tax) reached EUR 40.3 million. Minimal actuarial losses on defined benefit pension plans (net of deferred taxes) of EUR 0.02 million were posted for the year under review. In previous year other comprehensive income of EUR 0.2 million, driven by actuarial gains, had to be reported.
Revenues
The t otal revenue of the Group amounted to EUR 120.2 million, translating to an increase 36.6% or EUR 32.2 million compared to 2022; up from EUR 88.0 million to EUR 120.2 million. Aviation-related revenues are the most important income stream of the Group, greatly benefitting from the high demand in air traffic. For the year under review, t he a irport segment con tributed a share of 68.5% of total revenues (2022: 66.3%), showing an increase of 41.2% or EUR 24.0 million over 2022. Revenues from the Retail and Property segment totalled EUR 37.6 million (2022: EUR 29.5 million), which represents an increase of 27.7%. The remaining portion of EUR 0.3 million of revenues originated from the other activities and contributed a 0.2% share.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
10
(continued)
Staff Costs
The staff costs of the Group amounted to EUR 14.3 million in 2023, marking an increase of EUR 4.2 million or 42.1% over 2022. The increase is a result of the growth in headcount required to provide adequate resources to meet operational needs and to continue our excellent service delivery to the increased number of passengers. In addition to necessary adjustments in all operational areas of the Group, the increase in the staff costs was also the result of the termination of the Wage Supplement Benefit as from June 2022 and wage increases.
Other Operating Expenses
In line with a 33.4% growth in passenger volumes, the other operating expenses of the Group increased by 33.8%, rising from EUR 22.9 million in 2022 to EUR 30.7 million in 2023.
Passenger-related costs, namely the costs for the provision of customer assistance, passenger screening and cleaning services, were in line with passenger throughput. The increase in costs for VIP and lounge services in 2023 was mainly driven by the 57.1% increase of lounge guests over the previous year.
2023 also saw the Group invest heavily in the maintenance and servicing of the existing airport infrastructure. Expenses for maintenance and repair totalled EUR 4.1 million in 2023, marking a year-on-year increase of EUR 2.0 million. Necessary works included the maintenance of the terminal building, the regular upkeep of all green areas, required maintenance of the existing PV systems as well as obligatory maintenance works on the IT network infrastructure.
Other fixed operating costs registered a below-average increase, highlighting the fact that cost measures launched during the past years continue to positively affect the Group’s unit costs.
Depreciation and Amortisation
Depreciation and amortisation amounted to EUR 12.6 million in the year under review, translating into an increase of EUR 1.2 million compared with the previous year.
Comprehensive Income and Dividends
The financial results of the Group and the Company for the year ended 31 December 2023 are shown in the Statement of Comprehensive Income on page 32. The Group’s t otal comprehensive profit for the year after taxation amounted to EUR 40.3 million (2022: EUR 39.1 million).
Further to the net interim dividend of EUR 0.03 per share (Gross EUR 0.0461) paid in 2023 the Board of Directors is recommending the payment of a final net dividend of EUR 0.12 per share (Gross EUR 0.1846) on all shares settled as at close of business on 15 April 2024, which dividend shall be paid by no later than 31 May 2024.
Financial Position
The profit for the year, together with shareholders’ funds brought forward from the previous year, resulted in shareholders’ funds as at 31 December 2023 of EUR 190.9 million and EUR 188.6 million for the Group and the Company, respectively. These totals were up from EUR 170.9 million and EUR 168.8 million, respectively, at year end 2022.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
11
(continued)
Going Concern
After reviewing the Company’s budget for the next financial year and its long-term plans, the D irectors are of the opinion that, at the time of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the Financial Statements.
Financial Risk Management
The financial risks of the Group and the Company identified during the year and their financial risk management objectives are outlined in detail in Note 38 of the Financial Statements.
Financial Key Performance Indicators
Variance
Financial Indicators (EUR mn)
2023
2022
abs.
in %
Total Revenue
120.2
88.0
32.2
36.6%
thereof Aviation Revenue
82.4
58.3
24.0
41.2%
thereof Non-Aviation Revenue
37.9
29.7
8.2
27.6%
EBITDA
75.2
54.9
20.3
37.0%
EBITDA Margin (in %)
62.6%
62.4%
0.2 pp
EBIT
62.7
43.5
19.2
44.1%
EBIT Margin (in %)
52.1%
49.4%
2.7 pp
Net Profit
40.3
38.9
1.4
3.7%
ROCE (in %) *
23.5%
17.0%
6.5 pp
Cash (incl. term deposits) & T reasury B ills
76.4
68.7
7.7
11.2%
Equity
190.9
170.9
20.0
11.7%
Balance Sheet Total
330.6
285.1
45.5
15.9%
Capital Expenditure
44.3
12.4
31.8
256.2%
Taxes on Income
21.9
2.9
19.1
660.9%
Average Employees (No.)
417
355
62
17.5%
*2022: EUR 12mn tax credit not included in ROCE calculation
Share Capital
The share capital of the Company is EUR 33,825,000 divided into three classes of shares as follows:
•81,179,990 Ordinary ‘A’ Shares representing approximately 60% of the total issued share capital;
•54,120,000 Ordinary ‘B’ Shares representing 40% of the total issued share capital; and
•10 Ordinary ‘C’ Shares.
All shares issued have a nominal value of EUR 0.25 and are fully paid up and allotted.
The Ordinary ‘A’ Shares are admitted to the official list of the Malta Stock Exchange, whilst the Ordinary ‘B’ and Ordinary ‘C’ Shares are not admitted or traded on an exchange.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
12
(continued)
The Ordinary ‘A’ Shares and Ordinary ‘B’ Shares shall entitle their holders to the same rights, benefits and powers in the Company save for the transferability thereof. The Ordinary ‘A’ Shares shall be freely transferable whilst the Ordinary ‘B’ Shares were non-transferable for a period of fifteen (15) years from 26 July 2002, upon which date they automatically became fully and freely transferable without the need of any formality.
The Ordinary ‘C’ Shares are held by and, in terms of the Memorandum of Association, may only be held by the Government of Malta. It does not carry any right to receive dividends or assets on a winding up or other return of capital but entitles the Government of Malta to appoint members on the National Interest Matters Committee pursuant to Article 58.10 of the Articles of Association of the Company.
Save for the above, there are no other restrictions attached to the shares of the Company.
No changes in the share capital of the Company were made nor did the Company acquire ownership of, or any rights over, any portion of its own share capital.
The following shareholders have an interest in more than 5% of the issued share capital of the Company:
•Malta Mediterranean Link Consortium Ltd
•Government of Malta
•VIE (Malta) Ltd
Directors
Appointment and Replacement of Directors
The Board of Directors of the Company is composed of a maximum of eight (8) directors. Five (5) directors are non-executive directors and a maximum of three (3) directors, amongst whom is the CEO, are executive directors.
Any shareholder holding not less than 20% of the issued share capital of the Company having voting rights is entitled to appoint one director for each 20% shareholding by a letter addressed to the Company. In this respect, Malta Mediterranean Link Consortium Limited is entitled to appoint two (2) non-executive directors and the Government of Malta is entitled to appoint one (1) non-executive director. The remaining non-executive directors are appointed by the shareholders in a general meeting pursuant to the Articles of Association.
Unless appointed for a longer term, a director holds office from one Annual General Meeting to the next and is eligible for re-appointment. The maximum period for which a director may be appointed is a term of three (3) years, following the lapse of which such director shall be eligible for re-appointment.
In terms of the Articles of Association, the CEO of the Company shall occupy one of the executive director positions. The other executive directors to be co-opted to the Board are the Chief Financial Officer an d the Chief Commercial Officer.
Powers of Directors
The directors of the Company have all the powers necessary to manage and direct the Company. The Company is empowered to buy back any of its shares, subject to the limitations and restrictions at law and the capital market rules. Subject to the authority of shareholders, to be given at three (3) year intervals, the directors are also empowered to issue further shares in the Company.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
13
(continued)
Directors
The directors who served during the year under review were:
Director
Title
Director since
Mr Nikolaus Gretzmacher
Chairman & Non-Executive Director
2012
Ms Rita Heiss
Non-Executive Director
2015
Dr. Cory Greenland
Non-Executive Director
2015
Dr. Wolfgang Koeberl
Non-Executive Director
2016
Mr Florian Nowotny
Non-Executive Director
2017
Mr Alan Borg
CEO and Executive Director
2012
Mr Karl Dandler
CFO and Executive Director
2014
In accordance with paragraph 56.1 of the Company’s Articles of Association, all the present directors are to retire at the forthcoming Annual General Meeting. The appointment of the new directors will take place in accordance with paragraphs 55 and 56 of the same Articles of Association at the Annual General Meeting.
Directors’ Interests in Material Contracts
The following directors have declared their interests in the share capital of the Group:
•Mr Nikolaus Gretzmacher a non-beneficial interest 1
•Ms Rita Heiss a non-beneficial interest 2
•Dr Cory Greenland a beneficial interest
No other director has a beneficial or non-beneficial interest in the Company’s share capital.
Auditor
A resolution to reappoint PricewaterhouseCoopers as auditor of the Company will be proposed at the forthcoming Annual General Meeting.
Outlook
Traffic Development
The outlook for this year is positive, with a number of airlines planning to continue to deliver growth mainly through an increase in the number of weekly flights on existing routes. Moreover, we also expect to address the gaps in two of the airport’s core markets, the United Kingdom and Germany, with several airlines deploying additional seat capacity to both destinations. As already announced, a new national carrier will also be replacing the current Air Malta carrier with the new KM Malta Airlines. While the new airline will be launching operations in April 2024 with the same number of aircraft, capacity will be deployed predominantly into primary airports in Europe. The industry continues to navigate a challenging landscape characterised by geo-political instability, aircraft shortages, slot constraints and industrial action. As pent-up demand is also expected to level off, the record levels of seat occupancy on flights are unlikely to continue their upward trend.
1 These shares are held by MMLC and VIE Malta Limited, companies of which Mr Gretzmacher is a director.
2 These shares are held by MMLC and VIE Malta Limited, companies of which Ms Heiss is a director.
Malta International Airport plc
Directors’ Report
Year Ended 31 December 2023
14
(continued)
Nevertheless, our outlook for 2024 is still optimistic albeit mindful of the risk involved. Whilst forecasting an increase in seat capacity, we are expecting a dip in seat load factor this year, to achieve an overall 2.5% increase in traffic over 2023. We therefore expect to handle 8 million passengers by the end of 2024.
Financial Performance
Based on the projected passenger numbers for 2024, the total revenue of the Group for the year is expected to reach EUR 126 million. Projected EBITDA and Net Profit are to be at EUR 79 million and EUR 42 million, respectively. The capital expenditure of the Group during the year is expected to reach EUR 45 million.
Signed on behalf of the Company's Board of Directors on 28 February 2024 by Nikolaus Gretzmacher (Chairman), Alan Borg (Chief Executive Officer) and Karl Dandler (Chief Financial Officer) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2023.
Malta International Airport p.l.c.
Statement of Directors’ Responsibilities
15
The directors are required by the Companies Act (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 and the Group at the end of each financial year, and of the profit or loss of the Company and the Group for the year then ended.
In preparing the financial statements, the directors should:
•select suitable accounting policies and apply them consistently;
•make judgments and estimates that are reasonable; and
•prepare the financial statements on a going concern basis, unless it is inappropriate to presume that the Company and the Group will continue in business as a going concern.
The directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Company and the Group and which enable the directors to ensure that the financial statements comply with the Companies Act (Cap. 386). This responsibility includes designing, implementing and maintaining such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The directors are also responsible for safeguarding the assets of the Company and the Group, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Additionally, the directors are responsible for:
•the preparation and publication of the Annual Financial Report, including the consolidated financial statements and the relevant tagging requirements therein, as required by Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS,
•designing, implementing, and maintaining internal controls relevant to the preparation of the Annual Financial Report that is free from material non-compliance with the requirements of the ESEF RTS, whether due to fraud or error, and consequently, for ensuring the accurate transfer of the information in the Annual Financial Report into a single electronic reporting format.
Statement of responsibility pursuant to the Capital Market Rules issued by MFSA
We confirm that to the best of our knowledge:
a)i n accordance with the Capital Market Rules, the financial statements give a true and fair view of the financial position of the Company and the Group as at 31 December 2023 and of their financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the EU; and
b)i n accordance with the Capital Market Rules, 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 they face.
Approved by the Board of directors on 28 February 2024.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
16
Introduction
Pursuant to the Capital Markets Rules issued by the Capital Markets Authority, Malta International Airport p.l.c. (the “Company”) should endeavour to adopt the Code of Principles of Good Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Capital Markets Rules (the “Code”). In terms of Capital Markets Rule 5.94, the Company hereby reports on the extent of its adoption of the principles of the Code for the financial year being reported upon.
The Company acknowledges that the Code does not dictate or prescribe mandatory rules, but recommends principles of good practice. However, the directors strongly believe that such practices are generally in the best interests of the Company and its shareholders and that compliance with the principles of good corporate governance is not only expected by investors but also evidences the directors’ and the Company’s commitment to a high standard of governance.
The Board of Directors (the “Board”) has carried out a review of the Company’s compliance with the Code for the financial year being reported upon, namely the year ended 31 December 2023.
General
The directors believe that good corporate governance is a function of a mix of checks and balances that best suit the Company and its business. Accordingly, whilst there are best practices that can be of general application, the structures that may be required within the context of larger companies are not necessarily and objectively the best structures for companies whose size and/or business dictate otherwise. It is in this context that the directors have adopted a corporate governance framework within the Company that is designed to better suit the Company, its business, scale and complexity whilst still ensuring a robust framework of manual and automated controls.
The Company has a corporate decision-making and supervisory structure that is tailored to suit the Company’s requirements and designed to ensure the existence of a framework of controls within the Company.
In general, the directors believe that the Company has adopted appropriate structures to achieve an adequate level of good corporate governance, together with an adequate system of controls in line with the Company’s requirements.
This corporate governance statement (the “Statement”) will 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 this purpose, this Statement will make reference to the pertinent principles of the Code and then set out the manners in which the directors believe that these have been adhered to. Where the Company has not complied with any of the principles of the Code, this Statement will give an explanation for non-compliance.
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
Principle One: The Board
The directors believe that for the period under review the Company has generally complied with the requirements of this principle and the relative code provisions.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
17
(continued)
The Board is composed of members who are fit 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 too.
The Board is responsible for determining the Company’s strategic direction and organisational requirements, whilst ensuring that the Company has the appropriate mix of financial and human resources to meet its objectives and improve its performance. Throughout the period under review, the Board provided the necessary leadership in the overall direction of the Company and has adopted prudent and effective systems whereby it obtains timely information from the Chief Executive Officer (the “CEO”) as the head of the Executive Committee to ensure an open dialogue between the CEO and directors at regular intervals and not only at meetings of the Board. The Company has a structure that ensures a mix of Executive and Non-Executive Directors that enables the Board, and particularly the Non-Executive Directors to have direct information about the Company’s performance and business activities from the head of executive management that is also a director on the Board.
Principle Two: Chairman and Chief Executive Officer
In line with the requirements of Principle Two, the Company has segregated the functions of the CEO and the Chairman. Whilst the CEO heads the Executive Committee, the Chairman’s main function is to lead the Board and set its agenda. The Chairman is also responsible to ensure that the Board receives accurate, timely and objective information so that the directors can take sound decisions and effectively monitor the performance of the Company. The Chairman exercises independent judgement and ensures that, during Board meetings, there is effective communication with stakeholders as well as active engagement by all directors for the discussion of complex and/or contentious issues.
The CEO is accountable to the Board of the Company for all business operations. He has the power and authority to appoint the persons to fill in the post of each member of the Executive Committee. He also has the discretion to ask any one or more of such members, from time to time, to address the Board on matters relating to the operations of the Company and its Subsidiaries. The Board, of course, is entitled to call in, at its discretion, any one or more of the executives of the Company.
Principle Three: Composition of the Board
The full maximum complement of the Board, in line with Principle Three is of five (5) Non-Executive Directors and three (3) Executive Directors, a balance that is entrenched in the Company’s Memorandum and Articles of Association, which requires that the CEO is an ex ufficio director together with a maximum of two (2) other senior executives of the Company. The presence of top executives on the Board is designed to ensure that all the Non-Executive Directors have direct access to the individuals who have the prime responsibility for the day-to-day operations and executive management of the Company. Furthermore, the presence of top executives allows for the implementation of policies that allow effective discussion and the availability of all the information necessary for the Board to carry out its function in the best possible manner.
The members of the Board for the year under review were:
Director
Title
Director since
Mr Nikolaus Gretzmacher
Chairman & Non-Executive Director
2012
Ms Rita Heiss
Non-Executive Director
2015
Dr Cory Greenland
Non-Executive Director
2015
Mr Wolfgang Koeberl
Non-Executive Director
2016
Mr Florian Nowotny
Non-Executive Director
2017
Mr Alan Borg
CEO and Executive Director
2012
Mr Karl Dandler
CFO and Executive Director
2014
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
18
(continued)
Pursuant to generally accepted practices, as well as the Company's Articles of Association, the appointment of non-executive directors to the Board is reserved exclusively to the Company's shareholders, except in so far as an appointment is made to fill a vacancy on the Board.
The Board normally meets every eight (8) weeks and as a matter of Board policy, a guideline was established whereby at its first meeting, meetings are scheduled for the full year. Board meetings concentrate mainly on strategy, operational performance, and financial performance. The Board also delegates specific responsibilities to the CEO and the Committees, notably the Executive Committee and the Audit Committee which operate under their respective formal terms of reference. Directors may, in the furtherance of their duties, take independent professional advice on any matter at the Company's expense.
For the purposes of Code Provision 3.2, requiring the Board to report on whether it considers each Non-Executive Director as independent in line with the requirements of that Code Provision, the Board considers each of the Non-Executive Directors as independent within the meaning of the Code.
Save for what is stated hereunder, none of the Non-Executive Directors:
(a)are or have been employed in any capacity by the Company;
(b)have or have had a significant direct or indirect relationship with the Company;
(c)receive significant additional remuneration from the Company;
(d)have close family ties with any of the executive members of the Board;
(e)have served on the Board for more than twelve consecutive years;
(f)have been within the last three years an engagement partner or a member of the audit team of the present or past external auditor of the Company or any Company forming part of the same group; and
(g)have a significant business relationship with the Company.
Mr Nikolaus Gretzmacher, and Ms Rita Heiss (Non-Executive Directors) are currently members of the Board of Directors of Malta Mediterranean Link Consortium Limited, a Company holding 40 per cent of the issued and voting capital of the Company, and, together with Mr Wolfgang Koeberl are also employees of Flughafen Wien AG, the company’s ultimate parent company. Notwithstanding the above relationship the Board still considers Mr Gretzmacher, Ms Heiss and Mr Koeberl as having the required skills, experience and integrity to retain their impartiality in acting as directors of the Company.
In terms of Principle 3.4, each Non-Executive Director has declared in writing to the Board that he/she undertakes:
•to maintain in all circumstances his/her independence of analysis, decision and action;
•not to seek or accept any unreasonable advantages that could be considered as compromising his/her independence; and
•to clearly express his/her opposition in the event that he/she finds that a decision of the Board may harm the Company.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
19
(continued)
Principle Four: The Responsibilities of the Board
In line with the requirements of Principle Four, it is the Board’s responsibility to ensure a system of accountability, monitoring, strategy formulation and policy development.
The Board believes that this responsibility includes the appropriate delegation of powers to management and the organization of the executive team in a manner that is designed to provide high levels of comfort to the directors that there is proper monitoring and accountability apart from appropriate implementation of policies. The Board delegates specific responsibilities to committees, which operate under their respective formal Terms of Reference.
Executive Committee
The Board’s link to the Executive Committee is principally the CEO, together with the other Executive Director on the Board, both of whom are members of the Executive Committee.
The Executive Committee comprises the Executive Directors and the heads of each business unit of the Group. The role of the Executive Committee is to implement the Company`s strategy and policies, through the various departments within the organisation. It also makes recommendations to the Board on matters which are beyond its remit. The Chief Executive Officer chairs the Executive Committee.
The members of the Committee for the period under review were:
•Mr Alan Borg (Chief Executive Officer)
•Mr Karl Dandler (Chief Financial Officer)
•Ing Martin Dalmas (Operations & Business Continuity)
•Mr George Mallia (Retail & Property)3
•Mr Gayle Lynn Callus (Retail & Property, Marketing & Communications)4
•Mr Ian Maggi (Innovation & Technology)
•Mr Patrick Murgo (Safety & Security, Fire Services & Procurement)
•Ms Tina Lombardi (People & Strategy)
•Mr Alex Cardona (Traffic Development, Customer Services & Administration)
•Ing Kevin Alamango (Technical Services)
•Mr Robert Mizzi (Aerodrome Safety & Compliance)
•Ms Justine Baldacchino (Sustainability & Business Analytics)5
The Executive Committee has met 35 times during the year under review.
3 Until 31 July 2023
4 As from 1 Aug 2023
5 As from 27 Mar 2023
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
20
(continued)
The Company has also established three cross-functional Committees, the ‘Corporate Responsibility (CR) Committee, the Customer Experience (CE) Committee and the Finance Committee, which meet on a regular basis.
The CR Committee is responsible for the company’s overall CR policy and strategy including the respective formulation and implementation thereof as well as the company’s environmental planning, Airport Carbon Management and supervises the Malta Airport foundation.
The CE Committee systematically deals with how to improve the airport’s Customer Experience with a special focus on customer journeys, touch points, pain points and delighters as well as ASQ benchmarking, customer feedback and ASQ’s Customer Experience Accreditation programme.
The Finance Committee analyses and interprets the company’s financial information on a monthly and quarterly basis with a special focus on current and future income streams, cost drivers and margins to secure a sustainable growth for the Company.
The Chief Executive Officer chairs these cross-functional Committees and all meetings are minuted.
Audit Committee
As part of its corporate governance structures the Company has an Audit Committee in line with the requirements of the Capital Markets Rules. The principal roles of the Audit Committee are in line with the requirements of Capital Markets Rule 5.127 and include the following:
•informing the Board of the Company of the outcome of the statutory audit and explaining how the statutory audit contributed to the integrity of financial reporting and what the role of the audit committee was in that process;
•monitoring the financial reporting process and submitting recommendations or proposals to ensure its integrity;
•monitoring of the effectiveness of the company’s internal quality control and risk management system and, where applicable, its internal audit, regarding the financial reporting of the Issuer, without breaching its independence;
•monitoring of the audit of the annual and consolidated financial statements;
•reviewing additional reports prepared by the statutory auditor/s or audit firm/s;
•reviewing and monitoring the independence of the statutory auditors or the audit firms;
•taking responsibility for the procedure for the selection of statutory auditor/s or audit firm/s; and
•recommending the statutory auditor/s or the audit firm/s to be appointed.
During the year ended 31 December 2023 the Committee consisted of three (3) Non-Executive Directors, namely Mr Florian Nowotny, Ms Rita Heiss, and Dr Cory Greenland. The Committee has the power and authority under its Terms of Reference to summon any person to assist it in the performance of its duties. The directors believe that, during the year under review, Mr Florian Nowotny was independent and competent in accounting and/or auditing in terms of Capital Markets Rule 5.117. Mr Nowotny is considered as competent in accounting and/or auditing in view of his qualifications and experience.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
21
(continued)
When the Audit Committee’s monitoring and review activities reveal cause for concern or scope for improvement, it shall make recommendations to the Board on the action needed to address the issue or make improvements. In the period under review the Audit Committee has held 7 meetings.
Company Executives participate in periodic strategic reviews, which include consideration of long-term projections and the revaluation of the business objectives in the short term. Regular budgets and strategic plans are prepared, which are incorporated into a comprehensive strategic plan for the Company. Performance against these plans is actively monitored and reported to the Board using key risk and performance indicators so that corrective measures can be taken to address any deficiencies and to ensure the future sustainability of the Company. These key risk and performance indicators are benchmarked against industry norms so that the Company’s performance can be effectively evaluated.
In view of the number of members of the Board, the directors believe that its size is manageable to be able to address most issues as a Board rather than create sub-committees of the Board that may be more suitable in the case of companies having larger Boards. Indeed, the Board feels that its size and membership allow directors the opportunity to discuss matters directly and that this is a more effective and efficient manner to conduct its business.
The directors, however, are aware that there may be situations that require the delegation to certain committees of certain tasks or assignments and the Board has on occasion composed ad hoc committees for this purpose.
Notwithstanding that the board has established no formal policy on the matter, as part of succession planning, the Board and CEO ensure that the Company implements appropriate schemes to recruit, retain and motivate employees and senior management.
In ensuring compliance with other statutory requirements and with continuing listing obligations, the Board is advised directly, as appropriate, by its appointed broker, legal advisor and external auditors. The Board also ensures that appropriate policies and procedures are in place to assure that the highest standards of corporate conduct are maintained.
Directors are entitled to seek independent professional advice at any time on any aspect of their duties and responsibilities at the Company’s expense.
Principle Five: Board Meetings
The Board believes that it complies fully with the requirements of this principle and the relative Code Provisions, in that it has systems in place to ensure the reasonable notice of meetings of the Board and the circulation of discussion papers in advance of meetings so as to provide adequate time for directors to prepare themselves for such meetings. Minutes are prepared during Board meetings recording faithfully attendance, discussions and resolutions. These minutes are subsequently circulated to all directors as soon as practicable after the meeting.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
22
(continued)
The Board meets as often and as frequently as required in line with the nature and demands of the business of the Company. During the financial year under review the Board held six (6) meetings:
Director
Attendance Board Meetings 2023
Mr Nikolaus Gretzmacher
6/6
Ms Rita Heiss
5/6
Dr Cory Greenland
6/6
Mr Wolfgang Koeberl
5/6
Mr Florian Nowotny
6/6
Mr Alan Borg
6/6
Mr Karl Dandler
6/6
The Chairman ensures that all relevant issues are on the agenda and 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 strikes a balance between long-term strategic and short-term performance issues.
Directors attend meetings on frequent and regular basis and dedicate the necessary time and attention to their duties as directors of the Company.
Principle Six: Information and Professional Development
The CEO is appointed by the directors and enjoys the full confidence of the Board. The CEO, although responsible for the selection of the Executive Committee and the recruitment of senior executives, regularly updates the directors on the appointment of senior executives. The Board is satisfied that the current schemes for executive compensation and professional development are designed to render the Company an attractive proposition for the retention of top executives within the Company and to motivate the Executive Committee.
The Board intends to organise other professional development sessions for directors and executives designed specifically to enable them to discharge their functions more efficiently and in line with the high standards expected of them.
Directors have access to the advice and services of the Company Secretary who is also the legal counsel to the Board and the Company. As part of succession planning and employee retention, the Board and CEO ensure that the Company implements appropriate schemes to attract, retain and develop the best talent and keep employees engaged and motivated.
Principle Seven: Evaluation of the Board’s Performance
The Board has not appointed a committee for the purpose of undertaking an evaluation of the Board’s performance in accordance with the requirements of Code Provision 7.1 but has conducted an informal review of its own performance over the period under review. Refer to the note under the Section on ‘Non-Compliance with the Code’.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
23
(continued)
Principle Eight: Committees
A.Remuneration Committee
The Company has no performance-related remuneration payable to its Non-Executive Directors and accordingly, as allowed by Code Provision 8.A.2, it has not appointed a Remuneration Committee. Instead, the functions of the Remuneration Committee are vested in the Board, which itself establishes the remuneration policies of the Company. The Non-Executive members of the Board establish the policies and decide on the performance related remuneration of its Executive Directors. Further details on remuneration of the directors are set out in the Remuneration Report for the financial year under review and is in compliance with the requirements of Capital Markets Rule 12.26 and contains the information required by Appendix 12.1 of the Capital Markets Rules.
The Board notes that the organizational set-up of the Company and the size of the Board itself, together with the fact that Non-Executive Directors are not entitled to performance related remuneration, does not, in the opinion of the directors, warrant the establishment of a Remuneration Committee. Remuneration policies have therefore been retained within the remit of the Board itself, and as already stated in the case of the Executive Directors, it is the Non-Executive members of the Board that decide on their performance related remuneration.
The directors believe that certain committees that are suggested in the Code are either not required by the Company, or the functions of a number of committees may efficiently be merged or undertaken by the Board itself. In addition, the Board believes that its size and composition is sufficient for the proper direction and management of the Company and its business and that there would be no value added to the Company and its shareholders to increase the number of Board members simply to be able to have separate committees of the Board – when the same functions can properly be undertaken by the Board itself. The directors will retain the need of such committees under review and as in the past, may appoint ad hoc committees of directors to deal with specific issues as and when these arise.
For the purposes of the provisions of Article 63 of the Company’s Articles of Association, the aggregate emoluments paid to the directors is EUR 666,514 which is within the amount approved by the shareholders of EUR 989,160 for the purpose of that article. The aggregate emoluments paid to the members of the Executive Committee excluding executive directors amount to EUR 775,721.
A.Nomination Committee
The Board believes that the main principle has been duly complied with, in that it is the Articles of Association themselves that establish a formal and transparent procedure for the appointment of directors. The Company has, however, not established a Nominations Committee as suggested by the Code.
Principle Nine: Relations with Shareholders and with the Market and Principle Ten: Institutional Shareholders
The Board serves the legitimate interests of the Company, accounts to shareholders fully and ensures that the Company communicates with the market effectively through a number of Company announcements, informing the market of significant events happening within the Company.
The Company also communicates with its shareholders through the Annual General Meeting (AGM), where the Board communicates directly with shareholders on the performance of the Company over the last financial year and informs shareholders of the challenges that lie ahead.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
24
(continued)
Business at the Company's AGM will cover the approval of the Annual Report and the audited Financial Statements, the declaration of a dividend, if any, the election of directors, the determination of the maximum aggregate emoluments that may be paid to directors, the appointment of auditors and the authorisation of the directors to set the auditors' remuneration. Any other matter that may be placed by the directors before the AGM will be dealt with as “Special Business”.
Apart from the AGM, the Company has continued to communicate with its shareholders and the market by way of the Annual Report and Financial Statements, by publishing its results on a six-monthly basis during the year and through the directors’ statements, which are also published on a six-monthly basis, as well as the publication of results for each of quarter 1 and quarter 3 in a financial year. Generally, the company also communicates with the market through Company announcements to the market in general. Regular meetings are carried out between Malta International Airport plc and Malta Association of Small Shareholders (MASS) to discuss matters of mutual interest.
The Company recognises the importance of maintaining a dialogue with the market to ensure that its strategies and performance are well understood. The Company's website (www.maltairport.com) also contains information about the Company and its business and is a source of further information to the market.
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 Eleven: Conflicts of Interest
The Board has established procedures on how conflicts are to be handled, if and when they arise. A director having a personal conflict on any matter is bound to inform the other members of the Board of such a conflict whether it is an actual, potential or a perceived conflict. It is then the other members of the Board that would decide on whether there exists such a conflict, actual or potential. By virtue of the Memorandum and Articles of Association, in the event that, in the opinion of the Board such a conflict exists, then the conflicted director is invited to leave the meeting when it proceeds to the vote, if any, on the matter concerned. As a matter of practice, discussions of such matters are normally conducted in the absence of the conflicted director. The Board feels that this is a procedure that achieves compliance with both the letter and the rationale of principle eleven.
Commercial relationships between the Company and other companies may be related by way of common directors and shareholders (“Related Party Transactions”). Contracts are entered into in the ordinary course of business with shareholders and other parties in which the directors have a beneficial interest. Terms and conditions of contracts negotiated with related parties are reviewed by the Company’s Audit Committee. Full disclosure of Related Party Transactions entered into during the financial year under review is made in note 33 to the Financial Statements.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
25
(continued)
The following directors have declared their interests in the share capital of the Company:
•Nikolaus Gretzmacher a non-beneficial interest 6
•Rita Heiss a non-beneficial interest 7
•Cory Greenland a beneficial interest
No other director has a beneficial or non-beneficial interest in the Company’s share capital.
Principle Twelve: Corporate Social Responsibility
The directors are committed to high standards of Corporate Responsibility specifically in the social, economic and environmental fields both internally and externally. This is being done for the benefit of its key stakeholders which include its shareholders, employees, customers as well as the local community at large.
6 These shares are held by MMLC and VIE (Malta) Limited, companies of which Mr Gretzmacher is a director.
7 These shares are held by MMLC and VIE (Malta) Limited, companies of which Ms Heiss is a director.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
26
(continued)
Non-Compliance with Code Provisions
The directors set out below the code provisions with which they do not comply and a careful explanation as to the reasons for such non-compliance:
Code Provision
Explanation
2.1
Whilst the Company has segregated the functions of the Chairman and the CEO, in that the two posts are occupied by different persons, the division of responsibilities between them has not been established in writing, although there is significant experience and practice that determines the two roles.
4.2
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 and CEO are actively engaged in succession planning and in ensuring that appropriate schemes to recruit, retain and motivate employees and senior management are in place.
6
Over the course of the year under review and taking into account the annual sessions held in past years with respect to directors’ duties, the board has not formally held any professional development sessions for directors.
7.1
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. Whilst the requirement under Code Provision 7.1 might be useful in the context of larger companies having a more complex set-up and a larger Board, 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.
Having conducted an informal review of its own performance over the period under review it is the Board’s view that all members of the Board, individually and collectively, have contributed in line with the required levels of diligence and skill. In addition, the Board believes that its current composition endows the Board with a cross-section of skills and experience, not only with respect to the specific business of the Company, but also in a wider range of business areas and skills. This process was conducted by the Board itself rather than by a Committee chaired by a Non-Executive Director as required by the Code.
8B
The Board has not appointed a Nominations Committee in line with Code Provision 8B, particularly in the light of the specific manner in which the Articles of Association require that Non-Executive Directors be appointed by a shareholding qualification to the Board. The Executive Directors are, in accordance with the Articles, appointed by the Non-Executive Directors after their appointment, as aforesaid. The Board believes that the current Articles of Association do not allow the Board itself to make any recommendations to the shareholders for appointments of directors and that if this function were to be undertaken by the Board itself or a Nominations Committee, they would only be able to make a non-binding recommendation to the shareholders having the necessary qualification to appoint directors pursuant to the Articles of Association.
The Board 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 shareholders for a change to the Articles of Association.
9.3
The Memorandum and Articles of Association does not provide any mechanism for the resolution of conflicts between shareholders or any process that would trigger arbitration in these instances. This is mitigated by ongoing open dialogue between executive management and Non-Executive Directors of the Company, to ensure that such conflicts do not arise.
9.4
The Company does not have a policy in place to allow minority shareholders to present an issue to the Board.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
27
(continued)
Internal Control
The Board is ultimately responsible for the Company's system of internal controls and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate risk to achieve business objectives, and can provide only reasonable, and not absolute, assurance against normal business risks or loss.
Through the Audit Committee, the Board reviews the effectiveness of the Company's system of internal controls, which are monitored by the Internal Auditors on a regular basis.
The key features of the Company’s system of internal control are as follows:
Organisation
The Company operates through the CEO and Executive Committee with clear reporting lines and delegation of powers.
Control Environment
The Company is committed to standards of business ethics that emulate best practice and seeks to maintain these standards across all of its operations. Company policies and employee procedures are in place for the reporting and resolution of improper activities.
The Company has an appropriate organisational structure for planning, executing, controlling, and monitoring business operations in order to achieve Company objectives.
Risk Identification
Company management is responsible for the identification and evaluation of key risks applicable to their respective areas of business. A Risk Management Committee serves as a primary champion of risk management at a strategic and operational level to ensure that a sound system is in place that identifies, assesses, manages, and monitors risk. In addition, through regular checks the internal auditors test the Company’s internal control systems and processes and make recommendations to management and the audit committee on any deficiency in such systems.
General Meetings
The general meeting is the highest decision-making body of the Company and is regulated by the Company’s Articles of Association. All shareholders registered on the register of members of the Company on a particular record date are entitled to attend and vote at general meetings. A general meeting is called by twenty-one (21) days’ notice.
At an Annual General Meeting what is termed as “ordinary business” is transacted, namely, the declaration of a dividend, the consideration of the accounts, balance sheets and the reports of the directors and the auditors, the election of directors, the appointment of auditors and the fixing of remuneration of directors and auditors. Other business which may be transacted at a general meeting (including at the Annual General Meeting) will be dealt with as “Special Business”.
Malta International Airport p.l.c.
Corporate Governance – Statement of Compliance
Year ended 31 December 2023
28
(continued)
Voting at any general meeting takes place by a show of hands or a poll where this is demanded. Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands each shareholder is entitled to one vote and on a poll each shareholder is entitled to one vote for each share carrying voting rights of which he is a holder. Shareholders who cannot participate in the general meeting may appoint a proxy by written or electronic notification to the Company. Appointed proxy holders enjoy the same rights to participate in the general meeting as those to which the shareholder they represent is entitled.
Every shareholder represented in person or by proxy is entitled to ask questions which are pertinent and related to the items on the agenda of the general meeting and to have such questions answered by the directors or such persons as the directors may delegate for such purpose.
The directors’ statement of responsibilities for preparing the Financial Statements is set out on page 15.
The information required by:
(a)Capital Markets Rule 5.97.5 is found in the Directors’ Report;
(b)Capital Markets Rule 12.26 and Appendix 12.1 are found in the Remuneration Report.
Approved by the Board of Directors on 28 February 202 4.
Malta International Airport p.l.c.
Remuneration Report
Year ended 31 December 2023
29
This Report on the remuneration of Malta International Airport plc’s (the “Company” or “MIA”) Board of Directors, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), has been drawn up in compliance with the requirements of Chapter 12 of the Captital Markets Rules and contains information required by the provisions of Appendix 12.1 of the Capital Markets Rules.
The Company’s remuneration of its Board of Directors and executive management is based on the Remuneration Policy adopted and approved by shareholders at the annual general meeting of 11 November 2020. This policy may be viewed on the Company’s website at https://www.maltairport.com/corporate/investors/publications/.
The Remuneration Policy
The Company’s Remuneration Policy determines the basis for remuneration of all members of the Board of Directors of the Company. It defines the principles and guidelines that apply to both fixed and variable remuneration, including all bonuses and benefits, which can be awarded to directors and, in the case of variable remuneration, indicate the relative proportion between fixed and variable components.
The Company’s Remuneration Policy is intended as a measure to attract and retain suitable candidates to serve as directors and to provide the Company with the appropriate skills, technical knowledge, experience, and expertise both for the determination of policies and strategies of the Company as well as the supervisory role of the Board.
The overall remuneration of the Board distinguishes between the remuneration of the non-executive directors and executive directors. In the case of the non-executive directors, including the Chairman, the only component of remuneration is the fixed honorarium received by the non-executive directors, whilst in the case of the executive directors the remuneration consists of two components:
•The basic salary for the role as executive, and;
•A bonus linked to individual performance and the performance of the Company.
The decision-making process with respect to remuneration
The aggregate emoluments that may be paid to the directors, including the executive directors, is decided upon by the shareholders in general meeting following a recommendation made to shareholders by the Board.
The Board then decides on the remuneration of the Chairman and the other non-executive directors consisting of a fixed honorarium to each director. The Board also establishes and approves the remuneration of the CEO and CFO with respect to their executive roles within the Company.
Key principles of remuneration
The Board of Directors of the Company consists of seven (7) individuals. Five (5) are non-executive directors and two (2) are executive directors, including the CEO.
The aggregate remuneration approved by shareholders for the financial year ended 31 December 2023 was set at EUR 989,160. This includes components of remuneration of both non-executive and executive directors.
In accordance with Capital Markets Rule 12.26 transposing the requirements of the new EU Shareholders’ Rights Directive (2019), the Remuneration Policy was approved by the shareholders at the annual general meeting 11 November 2020.
Accordingly, this is the fourth year that the Company is publishing a Remuneration Statement in line with the Remuneration Policy adopted by shareholders at the AGM 11 November 2020.The comparable figures refer to the financial years 2022, 2021 and 2020 for comparability.
Malta International Airport p.l.c.
Remuneration Report
Year ended 31 December 2023
30
(continued)
The Chairman and the non-executive directors
Fixed Component
The Board believes that, in line with local practice, the fixed honorarium for non-executive directors is the principal component that compensates directors for their contribution as members of the Board. The Chairman’s honorarium reflects the role as the most senior non-executive director on the Board and as the person responsible, amongst others, for chairing Board meetings and co-ordinating Board assignments.
Non-executive directors who are also delegated to sit on a sub-committee of the Board or otherwise chair such a sub-committee, are paid additional fixed honoraria for each such assignment.
None of the directors have service contracts with the Company and each non-executive director serves from one annual general meeting to the next, when the appointment of directors is conducted at the annual general meeting. Accordingly, none of the non-executive directors are entitled to any compensation if they are removed from office. Such removal would require an ordinary resolution of the shareholders at a general meeting.
The directors are entitled to be paid travelling and other reasonable expenses incurred by them in the performance of their duties as directors. The Company does not remunerate the Chairman or the other non-executive directors in any other manner, nor does it provide any loans or other guarantees to them.
Variable Component
The Chairman and non-executive directors of the Company do not receive any variable component of remuneration.
Table 1 shows the overall remuneration of the Chairman and non-executive directors for the financial years ended 31 December 2023, 2022, 2021 and 2020.
Euro
Fixed Honorarium
Remuneration for sitting in subcommittees
Total 2023
Total 2022
Total 2021
Total 2020
Paid 2021
Paid 2020
Mr Nikolaus Gretzmacher
25,006
25,006
23,294
23,294
23,294
22,420
20,964
Ms Rita Heiss
13,956
3,542
17,498
16,300
11,647
11,647
11,210
10,482
Dr Cory Greenland
13,956
3,542
17,498
16,300
11,647
11,647
11,210
10,482
Mr Wolfgang Koeberl
13,956
13,956
13,000
9,318
9,318
8,968
8,386
Mr Florian Nowotny
13,956
3,542
17,498
16,300
11,647
11,647
11,210
10,482
Total
80,830
10,626
91,456
85,194
67,553
67,553
65,018
60,796
Table 1: Remuneration of non-executive directors
Due to the COVID-19 crises and the material adverse impact which this had on the Company the non-executive directors offered to have their remuneration reduced by 30% between April and July 2020 and again by 15% between February and April 2021. These reductions in remuneration are shown in Table 1. Effective 1st January 2022 the remuneration for a Non-Executive Director and a Non-Executive Director and Committee Member was increased from EUR 9,318 to EUR 13,000 and from EUR 11,647 to EUR 16,300 respectively, whereas the remuneration for the Chairman remained unchanged. The last review of the remuneration of Non-Executive Directors took place in 2005. Effective 1st January 2023 the remuneration for a Non-Executive Director and a Non-Executive Director and Committee Member was increased based on the Retail Price Index.
Malta International Airport p.l.c.
Remuneration Report
Year ended 31 December 2023
31
(continued)
Executive Directors
The Company has two executives that are appointed members of the Board. The executive directors are the CEO and the CFO, both of whom have service contracts with the Company of a definite duration, which entitle them to a fixed salary.
Fixed Remuneration – Salary
The CEO was entitled to receive a gross salary for the financial year ended 31 December 2023 of EUR 206,969, (2022: EUR 206,866; 2021: EUR 201,210; 2020: EUR 200,794). During 2020, due to the events occasioned by the COVID-19 crisis and the material adverse impact which this had on the Company, the CEO offered to have his salary reduced by 30% between April and July 2020. During 2021, due to the ongoing COVID-19 crisis the CEO offered again a salary reduction of 15% between February and April 2021, and consequently the remuneration received for the year 2021 was of EUR 193,696 (2020: EUR 180,766). The CEO also receives the following benefits: Insurance (Health-Private Hospital Scheme, Accident & Disability Insurance, and Directors & Officers’ Insurance), a Company car and a fully expensed mobile phone service.
The CFO was entitled to receive a gross salary for the financial year ended 31 December 2023 of EUR 173,179; (2022: EUR 161,357; 2021: EUR 157,054; 2020: EUR 156,963) . During 2020, due to the events caused by the COVID-19 crisis and the material adverse impact which this had on the Company, the CFO offered to have his salary reduced by 30% between April and July 2020. During 2021, due to the then ongoing COVID-19 crisis the CFO again offered a salary reduction of 15% between February and April 2021, and consequently the remuneration received for the year 2021 was of EUR 151,184 (2020: EUR 141,318). The CFO also receives the following additional benefits: Insurance (Health-Private Hospital Scheme, Accident & Disability Insurance, and Directors & Officers’ Insurance), a Company car and a fully expensed mobile phone service.
Variable Remuneration – Bonus
Both the CEO and the CFO are entitled to a bonus scheme which is linked to the performance of the Company and their individual performance over the course of the financial year. The Chairman sets targets at the beginning of the year to be reached by each executive, and then assesses the performance of each executive against the benchmarks set at the beginning of each year and awards the bonus accordingly. The variable component of the executive directors’ remuneration is based on a balance scoring system which includes both financial and non-financial Key Performance Indicators (KPIs) and targets. The Chairman has full discretion in evaluating the performance and attainment of such KPIs and targets.
In the year 2023, the CEO received a bonus of EUR 142,927 (2022: EUR 100,186; 2021: EUR 50,070; 2020: EUR 98,844), whilst the CFO received a bonus of EUR 48,253 (2022: EUR 46,963; 2021: EUR 23,468; 2020: EUR 46,316), both in respect of the year 2022.
In terms of the requirements within Appendix 12.1 of the Capital Market Rules, the annual change of the average remuneration on a full-time equivalent basis of employees other than directors was 15.0% (2023 vs 2022), 1.7% (2022 vs 2021) and 3.8% (2021 vs 2020). In relation to the performance of the Company we refer to page 11 of the Directors’ Report: ‘Financial Key Performance Indicators’.
The foregoing Remuneration Statement is being put forward to an advisory vote of the 2023 AGM in accordance with the requirements of the MFSA Capital Markets Rule 12.26 L.
The contents of the Remuneration Report have been reviewed by the external Auditors to ensure that it conforms with the requirements of Appendix 12.1 to Chapter 12 of the Capital Market Rules.
Approved by the Board of Directors on 28 February 2024.
Malta International Airport p.l.c.
Income Statements and Statements of Comprehensive Income
Year Ended 31 December 2023
32
Income Statements

|  |  |  | The Group |  | The Company
(in EUR) |  | Notes |  | 2023 |  | 20 22 |  | 2023 |  | 2022
Revenue |  | 6 |  | 120,247,948 |  | 88,016,852 |  | 115,378,805 |  | 83,644,230
Staff costs |  | 11 |  | (14,327,716) |  | (10,082,051) |  | (13,997,077) |  | (9,810,124)
Other operating expenses |  | 9 |  | (30,670,557) |  | (22,925,386) |  | (29,757,301) |  | (22,441,167)
Impairment losses on financial assets |  | 21 |  | (26,701) |  | (121,639) |  | (29,256) |  | (89,724)
Depreciation |  | 15/16 |  | (12,567,502) |  | (11,411,003) |  | (10,697,872) |  | (9,605,555)
Release of deferred income arising on the sale of terminal buildings upon privatisation |  | 23 |  | 283,603 |  | 283,603 |  | 283,603 |  | 283,603
Investment income |  | 7 |  | 1,481,698 |  | 70,636 |  | 2,915,167 |  | 824,218
Finance cost |  | 8 |  | (2,172,154) |  | (2,080,491) |  | (2,172,154) |  | (2,080,491)
Profit before tax |  |  |  | 62,248,619 |  | 41,750,521 |  | 61,923,915 |  | 40,724,990
Income tax expense |  | 13 |  | (21,944,766) |  | (2,884,210) |  | (21,820,838) |  | (2,524,543)
Profit for the year attributable to the ordinary equity holders of the Company, net of tax |  |  |  | 40,303,853 |  | 38,866,311 |  | 40,103,077 |  | 38,200,447
Earnings per share attributable to the ordinary equity holders of the Group |  | 30 |  | 0.298 |  | 0.287 |  | - |  | -

Statements of Comprehensive Income
The Group
The Company
(in EUR)
Notes
2023
2022
2023
2022
Profit for the year attributable to the ordinary equity holders of the Company, net of tax
40,303,853
38,866,311
40,103,077
38,200,447
Items that will not be reclassified subsequently to profit or loss:
Actuarial (loss)/gain on defined benefit pension plans
24/25
(36,757)
359,133
(36,757)
359,133
Deferred tax debit/(credit)
19
12,865
(125,697)
12,865
(125,697)
Other comprehensive income for the year attributable to the ordinary equity holders of the Company, net of tax
(23,892)
233,436
(23,892)
233,436
Total comprehensive income for the year attributable to the ordinary equity holders of the Company, net of tax
40,279,961
39,099,747
40,079,185
38,433,883
Malta International Airport p.l.c.
Statements of Financial Position
As at 31 December 2023
33
The Group
The Company

(in EUR) | Notes | 2023 | 2022 | 2023 | 2022
Assets |  |  |  |  |
Property, plant and equipment | 15 | 202,120,085 | 170,078,670 | 187,265,334 | 154,231,504
Investment property | 16 | 15,529,126 | 15,875,216 | 306,615 | 313,584
Investment in subsidiaries | 17 | - | - | 2,004,800 | 2,004,800
Loans receivable | 18 | - | - | 22,742,598 | 26,533,318
Other receivables | 21 | 1,900,124 | 1,992,558 | 1,974,970 | 1,977,871
Deferred tax assets | 19 | 5,546,733 | 5,620,139 | 5,346,063 | 5,395,516
Non-current assets |  | 225,096,068 | 193,566,583 | 219,640,380 | 190,456,593
Inventories | 20 | 1,280,119 | 1,162,402 | 1,280,119 | 1,162,402
Loans receivable | 18 | - | - | 1,937,663 | 1,290,720
Trade and other receivables | 21 | 27,857,390 | 21,706,912 | 29,859,224 | 25,167,482
Short-term Treasury Bills | 27 | 14,699,519 | 24,789,438 | 14,699,519 | 24,789,438
Term deposits | 28 | 37,000,000 | 19,500,000 | 37,000,000 | 19,500,000
Cash and cash equivalents | 29 | 24,674,829 | 24,420,042 | 21,759,733 | 19,421,903
Current assets |  | 105,511,857 | 91,578,794 | 106,536,258 | 91,331,945
Total Assets |  | 330,607,925 | 285,145,377 | 326,176,638 | 281,788,538

Malta International Airport p.l.c.
Statements of Financial Position
As at 31 December 2023
34
(continued)
The financial statements on pages 32 to 88 were approved and authorised for issue by the Board of Directors on 28 February 2024. The financial statements were signed on behalf of the Company’s Board of Directors by Nikolaus Gretzmacher (Chairman), Alan Borg (Chief Executive Officer) and Karl Dandler (Chief Financial Officer) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2023.
The Group
The Company

(in EUR) | Notes | 2023 | 2022 | 2023 | 2022
Equity and Liabilities |  |  |  |  |
Equity attributable to ordinary equity holders of the Company |  |  |  |  |
Share capital | 26 | 33,825,000 | 33,825,000 | 33,825,000 | 33,825,000
Retained earnings |  | 157,026,288 | 137,041,327 | 154,797,850 | 135,013,665
Total Equity |  | 190,851,288 | 170,866,327 | 188,622,850 | 168,838,665
Lease liability | 34 | 54,374,185 | 54,042,492 | 54,374,185 | 54,042,492
Deferred income | 23 | 5,049,058 | 5,372,926 | 5,049,058 | 5,372,926
Other payables | 22 | 1,957,908 | 1,184,025 | 1,770,277 | 996,394
Employee benefit obligations | 24 | 2,890,265 | 2,964,300 | 2,890,265 | 2,964,300
Provision for MIA benefit fund | 25 | 264,827 | 359,188 | 264,827 | 359,188
Non-current liabilities |  | 64,536,243 | 63,922,931 | 64,348,612 | 63,735,300
Trade and other payables | 22 | 55,803,964 | 48,379,099 | 53,712,808 | 47,320,812
Current tax liabilities |  | 19,416,430 | 1,977,020 | 19,492,368 | 1,893,761
Current liabilities |  | 75,220,394 | 50,356,119 | 73,205,176 | 49,214,573
Total Liabilities |  | 139,756,637 | 114,279,050 | 137,553,788 | 112,949,873
Total Equity and Liabilities |  | 330,607,925 | 285,145,377 | 326,176,638 | 281,788,538

Malta International Airport p.l.c.
Statements of Changes in Equity
Year Ended 31 December 2023
35
The Group
Equity attributable to ordinary equity holders of the Company
(in EUR)
Share
Retained
capital
earnings
Total
Balance at 1 January 20 22
33,825,000
97,941,580
131,766,580
Profit for the year
-
38,866,311
38,866,311
Other comprehensive income
-
233,436
233,436
Total comprehensive income for the year
-
39,099,747
39,099,747
Balance at 31 December 20 22
33,825,000
137,041,327
170,866,327

Balance at 1 January 2023 | 33,825,000 | 137,041,327 | 170,866,327
Profit for the year | - | 40,303,853 | 40,303,853
Other comprehensive income | - | (23,892) | (23,892)
Total comprehensive income for the year | - | 40,279,961 | 40,279,961
Transactions with owners of the company: |  |  |
Dividends (Note 14) | - | (20,295,000) | (20,295,000)
Balance at 31 December 2023 | 33,825,000 | 157,026,288 | 190,851,288

The Company
Equity attributable to ordinary equity holders of the Company
(in EUR)
Share
Retained
capital
earnings
Total
Balance at 1 January 20 22
33,825,000
96,579,782
130,404,782
Profit for the year
-
38,200,447
38,200,447
Other comprehensive income
-
233,436
233,436
Total comprehensive income for the year
-
38,433,883
38,433,883
Balance at 31 December 20 22
33,825,000
135,013,665
1 68,838,665
Balance at 1 January 2023
33,825,000
135,013,665
1 68,838,665
Profit for the year
-
40,103,077
40,103,077
Other comprehensive income
-
(23,892)
(23,892)
Total comprehensive income for the year
-
40,079,185
40,079,185
Transactions with owners of the company:
Dividends (Note 14)
-
(20,295,000)
(20,295,000)
Balance at 31 December 2023
33,825,000
154,797,850
188,622,850
Malta International Airport p.l.c.
Statements of Cash Flows
Year Ended 31 December 2023
36
The Group
The Company

(in EUR) | Notes | 2023 | 2022 | 2023 | 2022
Cash flows from operating activities |  |  |  |  |
Profit before tax |  | 62,248,619 | 41,750,521 | 61,923,915 | 40,724,990
Adjustments for: |  |  |  |  |
Depreciation | 15/16 | 12,567,502 | 11,411,003 | 10,697,872 | 9,605,555
Investment income | 7 | (1,481,698) | (70,636) | (2,915,167) | (824,218)
Finance cost | 8 | 2,144,381 | 2,131,404 | 2,144,381 | 2,131,404
Gain on sale of PPE |  | - | (24,650) | - | (24,650)
Release of deferred income arising on the sale of terminal buildings upon |  |  |  |  |
privatisation | 23 | (283,603) | (283,603) | (283,603) | (283,603)
Amortisation of grants | 23 | (40,255) | (40,255) | (40,255) | (40,255)
Provision for employee benefit obligations | 24 | 93,510 | 36,419 | 93,510 | 36,419
Provision for MIA benefit plan | 25 | (93,703) | 46,597 | (93,703) | 46,597
Provision for impairment of trade receivables | 21 | 26,701 | 121,639 | 29,255 | 89,725
|  | 75,181,454 | 55,078,439 | 71,556,205 | 51,461,964
Working capital movements: |  |  |  |  |
Movement in inventories | 20 | (117,717) | (277,338) | (117,717) | (277,338)
Movement in trade and other receivables | 21 | (5,163,190) | (5,968,383) | (3,010,016) | (5,795,416)
Movement in trade and other payables | 22 | 2,200,369 | 5,966,853 | 1,324,544 | 5,305,445
Cash flows from operations |  | 72,100,916 | 54,799,571 | 69,753,016 | 50,694,655
Lease interest paid | 34 | (1,812,688) | (1,732,798) | (1,812,688) | (1,732,798)
Income taxes paid |  | (4,419,086) | (2,933,820) | (4,159,913) | (3,074,325)
(Payments)/Receipts of deposit to/from tenants |  | (293,600) | 332,362 | (293,600) | 300,000
Retirement benefit paid | 24 | (204,960) | (692,005) | (204,960) | (692,005)
Net cash flows from operating activities |  | 65,370,582 | 49,773,310 | 63,281,855 | 45,495,527

Malta International Airport p.l.c.
Statements of Cash Flows
Year Ended 31 December 2023
37
(continued)
The Group
The Company

| Notes | 2023 | 2022 | 2023 | 2022
Cash flows from investing activities |  |  |  |  |
Purchase of PPE | 15 | (37,747,232) | (12,178,991) | (37,589,808) | (11,433,677)
Additions to investment property | 16 | (223,626) | (1,637,454) | - | -
Proceeds from sale of property, plant & equip. | 15 | - | 24,650 | - | 24,650
Investments in short-term treasury bills | 27 | 10,089,919 | (24,789,438) | 10,089,919 | (24,789,438)
Investments in term deposits | 28 | (17,500,000) | (9,000,000) | (17,500,000) | (9,000,000)
Receipts from intracompany loans | 18 | - | - | 3,790,720 | 1,290,720
Interest received | 7 | 560,144 | 12,963 | 560,144 | 327,284
Net cash flows used in investing activities |  | (44,820,795) | (47,568,270) | (40,649,025) | (43,580,461)
Cash flows from financing activities |  |  |  |  |
Dividends paid | 14 | (20,295,000) | - | (20,295,000) | -
Net cash flows used in financing activities |  | (20,295,000) | - | (20,295,000) | -
Net movement in cash and cash equivalents |  | 254,787 | 2,205,040 | 2,337,830 | 1,915,066
Cash and cash equivalents at the beginning of the year |  | 24,420,042 | 22,215,002 | 19,421,903 | 17,506,837
Cash and cash equivalents at the end of the year | 29 | 24,674,829 | 24,420,042 | 21,759,733 | 19,421,903

Net Debt Reconciliation
All the movements in the Group’s and the Company’s net debt (Lease liability net of cash and cash equivalents)
related only to cash flow movements and are disclosed as part of the operating activities in the Statements of Cash Flows above (refer to Note 34).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
38
1.Reporting entity
The Company is a public limited liability company whose shares are publicly listed and traded on the Malta Stock Exchange. The Company’s registration number is C12663, the country of incorporation is Malta and the Company’s registered office is Malta International Airport, Luqa, Malta.
The principal activities of the Company are the development, operation and management of Malta’s airport. On 11 February 2008, the Company set up a wholly owned subsidiary, Sky Parks Limited, to take over the operations of the car park business. The name of this subsidiary was changed to Airport Parking Limited on 27 October 2009. Another subsidiary, Sky Parks Development Limited, was set up by the Company on 29 October 2009. The main activity of Sky Parks Development Limited is to manage real estate projects within the land which is currently under the management of the Group. Another subsidiary Sky Parks Business Centre Limited was set up by the Company on 26 April 2012. The principal activity of the subsidiary is to operate the Business Centre within the limits of the airport. On 20 June 2013, the Company set up another wholly owned subsidiary, Kirkop PV Farm Limited. The main activity of this company is to explore opportunities in the generation of electricity using photovoltaic technologies.
The Company and the subsidiaries are together referred to as ‘the Group’.
2.Basis of preparation
Under the Companies Act, Cap. 386 of the Laws of Malta, the Company is required to present individual and consolidated financial statements. The financial statements of the Group and the Company have been prepared on a historical cost basis except for the subsequent measurement of the employee benefit obligations and the provision for the MIA Benefit fund and are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and comply with the Companies Act, Cap. 386 of the Laws of Malta. The functional currency of the Company is the Euro which is also the presentation currency of the Group.
The consolidated financial statements comprise the financial statements of Malta International Airport p.l.c, and its subsidiaries, as mentioned in Note 1 above. For more details on the scope of consolidation see Note 41.
3.Judgments in applying accounting policies and key sources of estimation uncertainty
Except as discussed below and in the remaining notes to the financial statements, the directors did not make any significant judgments in the process of applying the Company’s and the Group’s accounting policies which can significantly affect the amounts recognised in the consolidated and the individual financial statements and, at the end of the reporting period, there were no key assumptions concerning the future, or any other key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
39
3.Judgments in applying accounting policies and key sources of estimation uncertainty (continued)
3.1.Service Concession Arrangements in terms of IFRIC 12
IFRIC 12 Service Concession Arrangements was endorsed by the EU for financial years beginning after 29 March 2009. The Interpretation, which is limited in scope, clarifies the accounting of service concession arrangements by private sector operators which provide public services on behalf of government or other public sector entities.
The Interpretation of IFRIC 12 provides guidance on the scope of arrangements based on the influence of the guarantor in regulating what services the operator must provide with the infrastructure, to whom it must provide services, and at what price. For arrangements falling within the Interpretation’s scope, the infrastructure assets are not recognised as property, plant and equipment of the operator. Rather, depending on the terms of the arrangement, the operator will recognise:
(i)a financial asset (where the operator has an unconditional right to receive a specified amount of cash or other financial asset over the life of the arrangement); or
(ii)an intangible asset (where the operator’s future cash flows are not specified, for example, where they will vary according to usage of the infrastructure asset); or
both a financial asset and an intangible asset where the operator’s return is provided partially by a financial asset and partially by an intangible asset.
The Group and Company’s business activities and operations are governed under a 65-year concession granted in July 2002. The nature of the Group’s and Company’s operations, including various revenue streams from a number of third-party entities, are not influenced by the grantor of the concession. The setting of prices by the Group and Company’s operational team are based on local and international market forces including seasonality, demand and market rates. The regulator and the Group and the Company collaborate to set rates for regulated revenues with a view of attaining a healthy traffic of travel to the island, rates are discussed and mutually agreed but not imposed. The Company’s and the Group’s proportion of unregulated activities is also not insignificant. Based on the foregoing the directors conclude that accounting under IFRIC 12 rules does not apply to the Group and to the Company.
3.2.Lessee accounting in terms of IFRS 16
Judgments and estimates with regards to IFRS 16 Leases that warrant additional disclosures in terms of IAS 1 comprise (a) the judgment in connection with the inclusion of the aerodrome licence within the scope of IFRS 16 and (b) the estimate in connection with the determination of the incremental borrowing rate upon the implementation of IFRS 16 on 1 January 2019.
The Group concluded that the licence over the aerodrome which includes the Airfield, falls within the scope of IFRS 16 and the contractual payments in this respect have therefore been included within right-of-use assets and lease liabilities, amounting to EUR 10.7 million upon the adoption of IFRS 16 on 1 January 2019. The Group arrived at this conclusion by taking into consideration the following factors - (a) the management of the Airfield is considered to be integral to the use of the land and buildings held as temporary emphyteusis, with the Group having an obligation to manage the Airfield for the same duration of the emphyteusis, (b) the Group considers the licence as being inseparable from the right to use the Airfield (being the tangible component), (c) it is not possible to split the right to operate the Airfield from the right to use the Airfield and (d) the Group considers the use of the Airfield to be the most significant element of the transaction.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
40
3.Judgments in applying accounting policies and key sources of estimation uncertainty (continued)
Upon the implementation of IFRS 16, lease liabilities at 1 January 2019 were measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate as of that date. The incremental borrowing rate reflects 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. To determine this rate, the Group obtained information from its bank for the particular purpose and extrapolated it to reflect the specific characteristics of the lease, in particular the long remaining lease term of the temporary emphyteuses and the related aerodrome licence until 2067. The weighted average incremental borrowing rate that the Group applied to its lease liabilities as at 1 January 2019 was 4.07% per annum.
4.Application of new and revised IFRS
4.1.Standards, interpretations and amendments to published standards effective in 2023
The following amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards.
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
The amendments are intended to help preparers in deciding which accounting policies to disclose in their financial statements. The term ‘significant’ was replaced with ‘material’ in the context of disclosing accounting policy information. In assessing the materiality of the accounting policy information the Group considers the size of transactions, other events or conditions and their nature.
IAS 12 Amendment – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Prior to the amendments, there had been some uncertainty about whether the IAS 12 exemption from recognising deferred tax applied to transactions for which companies recognise both an asset and liability, for example leases. The amendments clarify that the exemption does not apply and that companies are required to recognise deferred tax on such transactions. The Group and the Company now discloses the deferred tax on lease liabilities and right-of-use assets separately arising from the application of IFRS 16 as shown in note Note 19.
4.2.Standards, interpretations and amendments to published standards that are not yet effective
At the date of approval of these financial statements, a number of other International Financial Reporting Standards were either not yet endorsed by the EU or were not yet applicable to the Group. The Board of Directors anticipate that the adoption of these Standards will have no material impact on the financial statements of the Group in the period of initial application.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
41
5.Operating Segments
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.
For management purposes the Group is organised into operating segments based on the nature of its operations and has the reportable segments as shown below.
Management monitors the operating results of its segments separately for the purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on earnings before interest, tax and deferred income arising from the sale of terminal buildings upon privatisation (EBIT). Revenues and certain costs are allocated in full to particular segments. The remaining costs are allocated across the different segments on the basis of square meters or revenues, as applicable. The Group and the Company financing (including finance income and finance costs), deferred income arising from the sale of terminal buildings upon privatisation and income tax are managed on a Group and Company basis and are not allocated to operating segments.
Airport Segment
The Airport Segment comprises of the activities usually carried out by an airport. These services include revenue from airport regulated fees, aviation concessions and PRMs (persons with reduced mobility) and their associated costs. This segment also includes the operations and maintenance of the terminal, runways, taxiways and aircraft parks.
Retail and Property Segment
The Retail and Property Segment includes various services that support the airport operations. These include the operations of the various retail outlets within the airport perimeter, advertising sites and rental of offices, warehouses and income from the running of the VIP lounges. Income and costs from Airport Parking Limited, Sky Parks Business Centre Limited and Sky Parks Development Limited are also allocated within the Retail and Property Segment.
Other Segment
This comprises services that do not fall under the Airport and the Retail and Property Segments, which include miscellaneous income and disbursement fees from third parties as well as any costs associated with this income.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
42
5.Operating Segments (continued)
The results of the operating segments are reported below:
2023
Retail &
(in EUR)
Airport
Property
Other
The Group
Revenue (external)
82,364,410
37,609,762
273,776
120,247,948
Staff costs
(12,297,411)
(2,030,305)
-
(14,327,716)
Other operating costs
(24,892,057)
(5,778,500)
-
(30,670,557)
Impairment losses on financial assets
(21,356)
(5,345)
-
(26,701)
EBITDA
45,153,586
29,795,612
273,776
75,222,974
Depreciation
(7,517,150)
(5,050,352)
-
(12,567,502)
EBIT
37,636,436
24,745,260
273,776
62,655,472
Investment income
1,481,698
Finance cost
(2,172,154)
Release of deferred income arising on the sale of terminal buildings upon privatisation
283,603
Profit before tax
62,248,619
2022
Retail &
(in EUR)
Airport
Property
Other
The Group
Revenue (external)
58,327,579
29,457,009
232,264
88,016,852
Staff costs
(8,545,001)
(1,537,050)
-
(10,082,051)
Other operating costs
(18,473,144)
(4,452,242)
-
(22,925,386)
Impairment losses on financial assets
(65,499)
(56,140)
-
(121,639)
EBITDA
31,243,935
23,411,577
232,264
54,887,776
Depreciation
(6,880,184)
(4,530,819)
-
(11,411,003)
EBIT
24,363,751
18,880,758
232,264
43,476,773
Investment income
70,636
Finance cost
(2,080,491)
Release of deferred income arising on the sale of terminal buildings upon privatisation
283,603
Profit before tax
41,750,521
Airport segment revenues generated from two clients with each generating 10% or more of revenues amounted to EUR 33,806,146 and EUR 20,516,118 (2022: EUR 22,477,640 and EUR 16,056,395).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
43
6.Revenue
In the following table, revenue of the Group is disaggregated by revenue category. The table also includes a reconciliation of the disaggregated revenue with the Group’s operating segments (see Note 5).
The Group
2023
Retail and
(in EUR)
Airport
Property
Other
Total
Revenue from Services provided
Regulated revenue
66,372,926
-
-
66,372,926
Unregulated revenue
15,991,484
9,936,797
273,776
26,202,057
Revenue from Contracts with Customers
82,364,410
9,936,797
273,776
92,574,983
Revenue from leases (note 34)
-
27,672,965
-
27,672,965
Total Revenue
82,364,410
37,609,762
273,776
120,247,948
The Group
2022
Retail and
(in EUR)
Airport
Property
Other
Total
Revenue from Services provided
Regulated revenue
47,529,981
-
-
47,529,981
Unregulated revenue
10,797,598
7,440,984
232,264
18,470,846
Revenue from Contracts with Customers
58,327,579
7,440,984
232,264
66,000,827
Revenue from leases (note 34)
-
22,016,025
-
22,016,025
Total Revenue
58,327,579
29,457,009
232,264
88,016,852
In the following table, revenue of the Company is disaggregated by revenue category:
The Company
(in EUR)
2023
2022
Revenue from Services provided
Regulated revenue
66,372,926
47,529,981
Unregulated revenue
24,584,035
17,232,659
Revenue from Contracts with Customers
90,956,961
64,762,640
Revenue from leases (note 34)
24,421,844
18,881,590
Total Revenue
115,378,805
83,644,230
All the Group’s revenues and its non-current assets other than financial assets are attributable to the Company’s country of domicile.
Revenue generated with entities under government control is disclosed in note 33 and 35.
The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period either relates to contracts that have an original expected duration of one year or less or is in relation to contracts for which the Company and the Group provide a daily service of access that is distinct, with the uncertainty related to the consideration receivable being also resolved on that basis.
Details of the contract assets and contract liabilities are disclosed in Notes 21 and 22 respectively.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
44
7.Investment Income
The Group
The Company
(in EUR)
2023
2022
2023
2022
Interest income on loans receivable
-
-
1,433,469
753,582
Interest income on treasury bills
728,996
19,867
728,996
19,867
Interest income on term deposits
752,702
50,769
752,702
50,769
Investment income
1,481,698
70,636
2,915,167
824,218
8.Finance Cost
The Group
The Company
(in EUR)
2023
2022
2023
2022
Lease interest
2,172,154
2,080,491
2,172,154
2,080,491
Finance cost
2,172,154
2,080,491
2,172,154
2,080,491
9.Other Operating Expenses
The Group
The Company
(in EUR)
Notes
2023
2022
2023
2022
Air traffic services
35
929,611
929,611
929,611
929,611
Bad debts
21
326,277
17,031
305,350
14,701
Cleaning
1,985,251
1,462,374
1,885,735
1,394,416
Ground handling services
35
1,493,832
1,172,302
1,493,832
1,172,302
Insurance
594,963
486,328
580,184
470,538
IT Expenses
2,998,499
2,777,227
2,998,499
2,777,227
Legal and professional fees
1,107,718
951,529
1,083,958
930,139
Lease payments on low-value items
34
12,488
6,766
12,488
6,766
Marketing and communication costs
7,299,577
5,624,496
7,354,375
5,787,753
Miscellaneous operating expenses
2,671,036
1,752,221
2,401,297
1,563,679
Other security services
413,952
144,298
341,062
87,446
Airport security costs
35
4,157,174
3,062,148
4,157,174
3,062,148
Repairs and maintenance
4,117,871
2,083,615
3,661,444
1,799,033
Net exchange differences
23,272
4,601
23,227
4,211
Telecommunications
100,298
108,854
98,375
107,156
Utilities
2,438,738
2,341,985
2,430,690
2,334,041
Other operating expenses
30,670,557
22,925,386
29,757,301
22,441,167
Expenses incurred with entities under government control are disclosed in note 33 and 35.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
45
9.Other Operating Expenses (continued)
Included in the legal and professional fees are amounts that are payable to the parent Company’s auditor:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Audit of the financial statements
121,000
110,000
106,000
96,500
Other assurance
14,150
22,800
14,150
22,800
134,563
132,800
119,563
119,300
Other non-assurance services amounting to EUR 14,000 (2022: EUR -) have been charged to the Company by connected undertakings of the audit firm.
10.Key Management Personnel Compensation
Directors' compensation
The Group
The Company
(in EUR)
2023
2022
2023
2022
Short-term benefits:
Fees
91,456
85,195
91,456
85,195
Management remuneration
575,148
521,552
575,148
521,552
Social security costs
2,683
2,598
2,683
2,598
669,287
609,345
669,287
609,345
In addition, during the year under review, the Company granted other benefits to its directors. The aggregate amount of benefits, which includes monetary and non-monetary benefits, amounted to EUR 53,217 (2022: EUR 28,738). These amounts are included with other operating expenses.
Also, during the year under review, the Company maintained professional indemnity insurance for its directors. The aggregate amount of premiums paid in respect thereof amounted to EUR 20,200 (2022: EUR 13,125). These amounts are included with other operating expenses.
11.Staff Costs and Employee Information
Staff Costs
The Group
The Company
(in EUR)
2023
2022
2023
2022
Wages and salaries
13,090,383
9,182,929
12,782,314
8,929,029
Recharge from parent
223,695
200,000
223,695
200,000
Social security costs
900,655
616,106
878,085
598,079
Retirement benefit costs (note 24 & 25)
112,983
83,016
112,983
83,016
14,327,716
10,082,051
13,997,077
9,810,124
The above amounts include the directors’ compensation disclosed in Note 10.
The average number of persons employed during the year, including Executive Directors, was made up as follows:
Average No. of Employees
The Group
The Company
(Number)
2023
2022
2023
2022
Business development, operations and marketing
244
208
232
198
Finance, IT and IM
29
25
29
25
Firemen
48
47
48
47
Met office
13
13
13
13
Technical and engineering
83
62
83
62
417
355
405
345
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
46
12.Government Assistance
In 2020 the Maltese Government announced the COVID Wage Supplement Scheme which was in effect until May 2022. Malta International Airport was eligible to benefit from the COVID Wage Supplement, receiving EUR 800 on a monthly basis per full-time employee starting from 9 March 2020 until May 2022.
During the preceding period, the Company received EUR 1,138,040 in government grants under the COVID Wage Supplement. These amounts were deducted from the line item ‘Staff Costs’ in the Consolidated Statement of Comprehensive Income.
No government assistance was received during the current reporting period.
13.Income Tax Expense
Income tax recognised in profit or loss is as follows:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Current tax expense
21,858,496
2,309,317
21,758,520
2,450,993
Deferred tax
86,270
574,893
62,318
73,550
Income tax expense for the year
21,944,766
2,884,210
21,820,838
2,524,543
Tax applying the statutory domestic income tax rate and the income tax expense for the year is reconciled as follows:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Profit before Tax
62,248,619
41,750,521
61,923,915
40,724,990
Tax at applicable rate of 35 %
21,787,017
14,612,682
21,673,370
14,253,747
Tax effect of:
Depreciation charges not deductible by way of capital allowances in determining taxable income
378,243
380,200
319,501
321,458
Other net difference between accounting and tax deductible items of expenditure
(82,286)
(54,642)
(31,623)
(5,171)
Tax credit
-
(12,000,000)
-
(12,000,000)
Other differences
(138,208)
(54,030)
(140,410)
(45,491)
Income tax expense for the year
21,944,766
2,884,210
21,820,838
2,524,543
Deferred tax recognised in other comprehensive income is as follows:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Deferred tax debit / (credit) on defined benefit pension plans
12,865
(125,697)
12,865
(125,697)
In the prior year the European Commission and Government of Malta approved a EUR 12 million aid measure to compensate Malta International Airport p.l.c. for part of the losses suffered due to the coronavirus pandemic. This measure was aimed at compensating Malta International Airport p.l.c. for the material losses suffered during the period between 21 March and 30 June 2020 due to the coronavirus pandemic and the travel ban imposed by Malta to limit the spread of the virus, together with the closure of non-essential shops which had an impact on the Group and Company’s retail and property segment. Malta International Airport p.l.c. has received the compensation for the losses directly caused by the pandemic, as stipulated in “Legal Notice 247 of 2022 Tax Credit”.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
47
14.Dividends
The net final dividend for 2022 of EUR 16,236,000 (EUR 12.0 cents per ordinary share) proposed by the directors of the Company for the previous financial year was approved by the shareholders at the Annual General Meeting on 10 May 2023 and was paid during the reporting period on 26 May 2023. No dividends were paid in the comparative period.
On 11 September 2023, a net interim dividend of EUR 4,059,000 (EUR 3.0 cents per share) was paid to ordinary shareholders of the Company. No interim dividend payment was made in the prior year.
The Directors propose that a net final dividend of EUR 12.0 cents per ordinary share will be paid to ordinary shareholders in respect of the year ended 31 December 2023. This dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in the financial statements. The total proposed dividend to be paid is EUR 16,236,000 (2022: 16,236,000).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
48
15.Property, Plant and Equipment
Total
268,118,047
11,024,918
(13,983)
279,128,982
43,775,514
322,904,496
98,477,745
10,586,550
(13,983)
109,050,312
11,734,099
120,784,411
170,078,670
202,120,085
Advance deposits
-
-
-
-
7,007,303
7,007,303
-
-
-
-
-
-
-
7,007,303
Motor vehicles
1,948,104
96,988
(13,983)
2,031,109
40,868
2,071,977
1,414,573
168,687
(13,983)
1,569,277
164,926
1,734,203
461,832
337,774
Furniture,fixtures,plant and equipment
98,293,814
10,916,110
-
109,209,924
36,049,581
145,259,505
48,773,855
7,239,156
-
56,013,011
8,392,666
64,405,677
53,196,913
80,853,828
Buildings
Not subject to operating leases
63,906,516
8,735
-
63,915,251
488,666
64,403,917
25,621,174
1,181,383
-
26,802,557
1,151,022
27,953,579
37,112,694
36,450,338
Subject to operating leases - The Group as lessor
16,669,023
3,085
-
16,672,108
189,096
16,861,204
7,305,991
417,241
-
7,723,232
445,402
8,168,634
8,948,876
8,692,570
Related Aerodrome Licence
10,746,985
-
-
10,746,985
-
10,746,985
664,761
221,587
-
886,348
221,587
1,107,935
9,860,637
9,639,050
Land held on temporary emphyteusis
Not subject to operating leases
58,567,090
-
-
58,567,090
-
58,567,090
11,670,677
1,084,080
-
12,754,757
1,089,514
13,844,271
45,812,333
44,722,819
Subject to operating leases - The Group as lessor
17,986,515
-
-
17,986,515
-
17,986,515
3,026,714
274,416
-
3,301,130
268,982
3,570,112
14,685,385
14,416,403
The Group
(in EUR)
Cost
At 1 January 2022
Additions
Disposals
At 1 January 2023
Additions
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Provision for the year
Disposal Adjustments
At 1 January 2023
Provision for the year
At 31 December 2023
Carrying amount
At 31 December 2022
At 31 December 2023
No depreciation is being charged on assets not yet available for use amounting to EUR 23,502,461 (2022: EUR 13,649,300).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
49
15.Property, Plant and Equipment (continued)
Total
248,913,975
11,271,802
(13,983)
260,171,794
43,724,733
303,896,527
96,355,687
9,598,586
(13,983)
105,940,290
10,690,903
116,631,193
154,231,504
187,265,334
Advance deposits
-
-
-
-
7,007,303
7,007,303
-
-
-
-
-
-
-
7,007,303
Motor vehicles
1,925,749
96,991
(13,983)
2,008,757
40,864
2,049,621
1,392,220
168,688
(13,983)
1,546,925
164,932
1,711,857
461,832
337,764
Furniture,fixtures,plant and equipment
89,016,571
11,162,992
-
100,179,563
36,012,276
136,191,839
46,921,843
6,462,235
-
53,384,078
7,561,420
60,945,498
46,795,485
75,246,341
Buildings
Not subject to operating leases
55,265,295
9,266
-
55,274,561
500,875
55,775,436
25,560,799
1,087,863
-
26,648,662
1,043,893
27,692,555
28,625,899
28,082,881
Subject to operating leases - The Company as lessor
15,405,770
2,553
-
15,408,323
163,415
15,571,738
7,118,672
299,717
-
7,418,389
340,581
7,758,970
7,989,934
7,812,768
Related Aerodrome Licence
10,746,985
-
-
10,746,985
-
10,746,985
664,761
221,587
-
886,348
221,587
1,107,935
9,860,637
9,639,050
Land held on temporary emphyteusis
Not subject to operating leases
50,239,420
-
-
50,239,420
-
50,239,420
9,961,647
892,532
-
10,854,179
897,962
11,752,141
39,385,241
38,487,279
Subject to operating leases - The Company as lessor
26,314,185
-
-
26,314,185
-
26,314,185
4,735,745
465,964
-
5,201,709
460,528
5,662,237
21,112,476
20,651,948
The Company
(in EUR)
Cost
At 1 January 2022
Additions
Disposals
At 1 January 2023
Additions
At 31 December 2023
Accumulated depreciation
At 1 January 2022
Provision for the year
Disposal Adjustments
At 1 January 2023
Provision for the year
At 31 December 2023
Carrying amount
At 31 December 2022
At 31 December 2023
In addition, the cost of fully depreciated plant and equipment amounts to EUR 26,953,507 (2022: EUR 21,015,919) for both the Group and the Company.
Included in the additions for the reporting period is an amount of capitalised lease interest of EUR 12,508 (2022: EUR 50,913).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
50
15.Property, Plant and Equipment (continued)
The Group’s assets under construction as at 31 December 2023 amounted to EUR 23,502,461(2022: EUR 13,649,300) and includes EUR 22,775,550 (2022: EUR 13,484,524) of furniture, fixtures, plant & equipment and EUR 726,911 (2022: EUR 81,132) of buildings. No depreciation is being charged on these assets. The Group has no motor vehicles forming part of the assets under construction (2022: 83,644).
The Company’s assets under construction as at 31 December 2023 amounted to EUR 20,670,655(2022: EUR 12,358,067) and includes EUR 19,943,744 (2022: EUR 12,193,291) of furniture, fixtures, plant & equipment and EUR 726,911 (2022: EUR 81,132) of buildings. No depreciation is being charged on these assets. The Company has no motor vehicles forming part of the assets under construction (2022: 83,644).
Included under advance deposits are amounts in relation to Apron X, HVAC upgrade and new baggage reclaim belts. Details of right-of-use assets presented under property, plant and equipment are provided in note 34.
As at 31 December 2023 management has assessed, and is of the opinion, that no triggering event has occurred in accordance with IAS 36.
16.Investment Property
The investment property relates to the business centre which is located on a portion of the land held on temporary emphyteusis. The carrying amount of the property includes the cost of construction and the cost of items that are an integral part of the building. The carrying amount also includes the portion of the right-of-use asset in relation to the temporary emphyteusis of the leasehold land classified as investment property, as further disclosed in note 34.
(in EUR)
The Group
The Company
Cost
At 1 January 2022
22,716,180
341,460
Additions from subsequent expenditure
1,401,785
-
At 1 January 2023
24,117,965
341,460
Additions from subsequent expenditure
487,313
-
At 31 December 2023
24,605,278
341,460
Accumulated depreciation
At 1 January 2022
7,418,295
20,907
Provision for the year
824,454
6,969
At 1 January 2023
8,242,749
27,876
Provision for the year
833,403
6,969
At 31 December 2023
9,076,152
34,845
Carrying amount
At 31 December 2022
15,875,216
313,584
At 31 December 2023
15,529,126
306,615
The Company’s investment property comprises the portion of the right-of-use asset in relation to the temporary emphyteusis of the leasehold land classified as investment property with a carrying amount of EUR 313,584 at 1 January 2023 (2022: EUR 320,553) less depreciation charge for the year of EUR 6,969 (2022: EUR 6,969) resulting in the carrying amount of EUR 306,615 at 31 December 2023 (2022: EUR 313,584).
During the year, direct operating expenses of EUR 1,351,065 (2022: EUR 951,693) which arose from the investment property, were incurred. Such expenses were incurred in generating rental income during the year.
The operating lease income generated from the investment property is disclosed under note 34.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
51
16.Investment Property (continued)
Fair Value
Based on an internal valuation carried out by the directors of the Company, the fair value of the Group’s investment property was in the region of EUR 32 million at the balance sheet date (2022: EUR 31 million).
The fair value measurement is categorised within Level 3 of the fair value hierarchy. The model is based on the present value of the net cash flows expected to be generated by the property on the basis of market expectations and includes the rates stipulated in the existing contracts with tenants, expected increase in rents after the non-cancellable period, occupancy rates and all other costs attributable to these assets. The expected net cash flows are discounted using a discount factor representing a weighted average cost of capital that is considered appropriate in the circumstances. The net cash flows reflect the amounts in the 2024 budget and long-term corporate planning.
In estimating fair value, the highest and best use of the property is its current use.
17.Investment in Subsidiaries
The Company’s investment in subsidiaries is stated at cost and comprises:
Share Capital
The Company
(in EUR)
2023
2022
Airport Parking Limited
1,200
1,200
Sky Parks Development Limited
2,001,200
2,001,200
Sky Parks Business Centre Limited
1,200
1,200
Kirkop PV Farm Limited
1,200
1,200
Investment in subsidiaries
2,004,800
2,004,800
The Company holds a 100% (2022: 100%) ownership in the ordinary share capital of Airport Parking Limited, a limited liability company incorporated in Malta, whose principal activity is the operation of car parks within the limits of the airport.
The Company holds a 100% (2022: 100%) ownership in the ordinary share capital of Sky Parks Development Limited, a limited company incorporated in Malta, whose principal activity is to manage real estate projects within the land which is currently under the management of the Group.
The Company holds a 100% (2022: 100%) ownership in the ordinary share capital of Sky Parks Business Centre Limited, a limited liability company incorporated in Malta, whose principal activity is to operate the Business Centre within the limits of the airport.
The Company holds a 100% (2022: 100%) ownership in the ordinary share capital of Kirkop PV Farm Limited, a limited liability company incorporated in Malta. The principal activity of this company is to explore opportunities in the generation of electricity using photovoltaic technologies.
The principal place of business of the company’s subsidiaries is Malta. The registered offices for these subsidiaries are as follows:
Airport Parking Ltd
Level 2
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
52
17.Investment in Subsidiaries (continued)
Sky Parks Development Ltd
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
Sky Parks Business Centre Ltd
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
Kirkop PV Farm Limited
Malta International Airport Head Office
Malta International Airport
Luqa LQA 4000
The following table shows financial information for the consolidated subsidiaries:
Airport Parking Ltd
(in EUR)
2023
2022
(Loss)/Profit for the year
(166,444)
27,670
Share Capital
1,200
1,200
Retained earnings
1,448,751
1,615,195
Total Equity
1,449,951
1,616,395
Sky Parks Development Ltd
(in EUR)
2023
2022
Profit for the year
334,692
517,545
Share Capital
2,001,200
2,001,200
Accumulated Losses
(858,860)
(1,193,552)
Total Equity
1,142,340
807,648
Sky Parks Business Centre Ltd.
(in EUR)
2023
2022
Profit for the year
32,524
120,647
Share Capital
1,200
1,200
Retained earnings
1,682,245
1,649,721
Total Equity
1,683,445
1,650,921
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
53
18.Loans Receivable
The Company
Loans to
(in EUR)
subsidiary
Amortised cost
At 31 December 2023
24,680,261
Less: Amount expected to be settled within 12 months (shown under current assets)
(1,937,663)
Amount expected to be settled after 12 months
22,742,598
The Company
Loans to
(in EUR)
subsidiary
Amortised cost
At 31 December 2022
27,824,038
Less: Amount expected to be settled within 12 months (shown under current assets)
(1,290,720)
Amount expected to be settled after 12 months
26,533,318
The Company has granted four unsecured loans to subsidiaries. One of these loans was granted in 2019 and represents a loan commitment of EUR 20 million which was partly drawn down during the prior years (EUR 14.2 million). The interest rates of all loans are at arm’s length and comprise a margin which is over and above the EURIBOR.
Two loans with a total amount outstanding as at the end of the reporting period of EUR 8.4 million (2022: EUR 9.0 million) are being repaid on equal annual instalments until 2029. Payments amounting to EUR 2.5 million were made during the year against the loan of EUR 14.2 million which shall be repaid in full by the year 2044. Repayments of the fourth loan with an amount outstanding of EUR 4.6 million (2022: EUR 4.6 million) will commence in 2030.
The following table shows a reconciliation from the opening to the closing balances for the loans to the subsidiaries:
The Company
Loans to
(in EUR)
subsidiary
Carrying amount
At 31 December 2021
29,114,758
Additions
-
Repayments
(1,290,720)
At 31 December 2022
27,824,038
Repayments
(3,143,777)
At 31 December 2023
24,680,261
Details on the Company’s exposure to credit risk, the risk management policy and the expected credit losses on the loans receivable are provided in note 38.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
54
19.Deferred Taxation
The Group
Movement
Movement
(in EUR)
31.12.2021
for the year
31.12.2022
for the year
31.12.2023
Assets / (Liabilities)
Assets / (Liabilities)
Assets / (Liabilities)
Arising on:
Recognised in Total Comprehensive Income:
Accelerated tax depreciation
(3,174,701)
25,596
(3,149,105)
(239,411)
(3,388,516)
Provision for pension costs
1,312,591
(338,843)
973,748
(58,939)
914,809
Deferred income
1,492,384
(73,068)
1,419,316
(73,068)
1,346,248
Unabsorbed capital allowances
2,343,472
(592,816)
1,750,656
(98,060)
1,652,596
Lease income adjustment
(672,858)
(110,937)
(783,795)
(67,657)
(851,452)
Right-of-Use assets
(14,977,920)
333,462
(14,644,458)
329,134
(14,315,324)
Lease liabilities
18,775,421
139,451
18,914,872
116,093
19,030,965
Future deductions of refinancing costs
636,101
(82,077)
554,024
(82,077)
471,947
Other temporary differences
380,035
(1,358)
378,677
100,579
479,256
Subtotal
6,114,525
(700,590)
5,413,935
(73,406)
5,340,529
Arising on:
Other movements:
Provision for pension costs
206,204
-
206,204
-
206,204
Subtotal
206,204
-
206,204
-
206,204
Total
6,320,729
(700,590)
5,620,139
(73,406)
5,546,733
The Company
Movement
Movement
(in EUR)
31.12.2021
for the year
31.12.2022
for the year
31.12.2023
Assets / (Liabilities)
Assets / (Liabilities)
Assets / (Liabilities)
Arising on:
Recognised in Total Comprehensive Income:
Accelerated tax depreciation
(931,456)
(106,051)
(1,037,507)
(380,235)
(1,417,742)
Provision for pension costs
1,312,591
(338,843)
973,748
(58,939)
914,809
Deferred income
1,492,384
(73,068)
1,419,316
(73,068)
1,346,248
Lease income adjustment
(610,277)
(102,351)
(712,628)
7,323
(705,305)
Right-of-Use assets
(14,973,593)
329,135
(14,644,458)
329,134
(14,315,324)
Lease liabilities
18,775,421
139,451
18,914,872
116,093
19,030,965
Other temporary differences
323,489
(47,520)
275,969
10,239
286,208
Subtotal
5,388,559
(199,247)
5,189,312
(49,453)
5,139,859
Arising on:
Other movements:
Provision for pension costs
206,204
-
206,204
-
206,204
Subtotal
206,204
-
206,204
-
206,204
Total
5,594,763
(199,247)
5,395,516
(49,453)
5,346,063
Included in Total Comprehensive Income is an amount of EUR 12,865 deferred tax debit (2022: EUR 125,697 deferred tax credit) recorded in Other Comprehensive Income during the year for both the Group and the Company in connection with the provision for pension costs.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
55
19. Deferred Taxation (Continued)
Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. The amount of deferred tax assets that can be recognised is based upon the likely timing and level of future taxable profits together with future tax-planning strategies.
20.Inventories
The Group
The Company
(in EUR)
2023
2022
2023
2022
Consumables
1,280,119
1,162,402
1,280,119
1,162,402
The cost of inventories recognised as an expense during the year was of EUR 1,464,791(2022: EUR 748,133).
21.Trade and Other Receivables
The Group
The Company
(in EUR)
2023
2022
2023
2022
Short-term receivables
Trade receivables
13,514,621
10,221,210
11,540,047
9,457,594
Receivables from other related parties
7,608,010
8,656,393
7,210,826
8,318,209
Receivables from subsidiaries
-
-
4,871,962
5,193,271
Other receivables
3,053,338
613,491
2,783,989
325,399
Prepayments
3,681,421
2,215,818
3,452,400
1,873,009
27,857,390
21,706,912
29,859,224
25,167,482
Long-term receivables
Other receivables
1,900,124
1,992,558
1,974,970
1,977,871
Total receivables
29,757,514
23,699,470
31,834,194
27,145,353
The terms and conditions of the receivables from subsidiaries and related parties are disclosed in Note 33. Trade receivables are non-interest bearing and are generally on 30-day terms.
The receivables from other related parties of the Group and the Company of EUR 7,608,010(2022: EUR 8,656,393) and EUR 7,210,826 (2022: EUR 8,318,209) respectively, is made up entirely from balances owed from entities under government control. R eceivables from other related parties are non-interest bearing and are generally on 30-to-90-day terms.
Impairment of Trade Receivables
For details on the accounting policies with respect to trade receivables and impairment of trade receivables refer to Note 41.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
56
21.Trade and Other Receivables (continued)
The movement in the credit loss allowance in respect of trade receivables during the year for the Group and the Company was as follows:
Loss Allowance
The Group
Individual
Collective
(in EUR)
Assessment
Assessment
Total
At 1 January 2022
299,591
592,475
892,066
Credit loss allowances
35,536
86,102
121,638
At 31 December 2022
335,127
678,577
1,013,704
Credit loss allowances
15,808
346,473
362,281
Reversal of impairment loss
(335,580)
-
(335,580)
At 31 December 2023
15,355
1,025,050
1,040,405
The Company
Individual
Collective
(in EUR)
Assessment
Assessment
Total
At 1 January 2022
252,473
445,814
698,287
Credit loss allowances
61,727
27,997
89,724
At 31 December 2022
314,200
473,811
788,011
Credit loss allowances
6,732
337,175
343,907
Reversal of impairment loss
(314,651)
-
(314,651)
At 31 December 2023
6,281
810,986
817,267
The Group
Collective(not credit-impaired)
Collective(credit-impaired, but not POCI)
Individual(credit-impaired, but not POCI)
LT-ECL(in EUR)
Total
Balance as at 1 January 2022
420,736
171,737
299,591
892,064
Addition
60,322
25,782
35,536
121,640
Balance as at 31 December 2022
481,058
197,519
335,127
1,013,704
Addition
229,879
116,594
15,808
362,281
Reversal
-
-
(335,580)
(335,580)
Balance as at 31 December 2023
710,937
314,113
15,355
1,040,405
The Company
Collective(not credit-impaired)
Collective(credit-impaired, but not POCI)
Individual(credit-impaired, but not POCI)
LT-ECL(in EUR)
Total
Balance as at 1 January 2022
317,162
128,650
252,473
698,285
Addition
87,516
(59,517)
61,727
89,726
Balance as at 31 December 2022
404,678
69,133
314,200
788,011
Addition
149,889
187,286
6,732
343,907
Reversal
-
-
(314,651)
(314,651)
Balance as at 31 December 2023
554,567
256,419
6,281
817,267
The Group and the Company do not hold any collateral over the past due but not impaired balances. These trade receivables are substantially companies with good track records with the Group.
Details on the Group’s risk management policies in relation to credit risk are provided in note 38.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
57
22.Trade and Other Payables
The Group
The Company
(in EUR)
2023
2022
2023
2022
Short-term payables
Trade payables
5,825,200
4,133,140
5,610,635
3,932,785
Other payables
521,995
376,517
348,193
275,263
Payables due to other related party
641,641
3,031,086
641,641
3,031,086
Payables due to subsidiaries
-
-
66,375
66,375
Deferred income related to subsidiaries
-
-
81,445
-
Contract liabilities
539,334
367,649
539,334
367,649
Deferred income & related payables
3,233,118
2,726,224
2,017,388
2,211,289
Other Deferred income
323,898
323,888
323,898
323,888
Accruals
44,718,778
37,420,595
44,083,899
37,112,477
55,803,964
48,379,099
53,712,808
47,320,812
Long-term payables
Other payables
1,957,908
1,184,025
1,770,277
996,394
57,761,872
49,563,124
55,483,085
48,317,206
Contract liabilities represent prepayments from contracts with customers in relation to VIP services. The balance as at 31 December 2022 of EUR 367,649 was fully recognised as revenue during the reporting period and the balance as at 31 December 2021 of EUR 165,384 was fully recognised as revenue during the comparative period.
Accruals at the end of the year, amounting to EUR 22.1 million (2022: EUR 16.4 million) are in respect to related parties.
Terms and conditions of the above financial liabilities:
•Trade payables are non-interest bearing and are normally settled on 30-day terms.
•Other payables are non-interest bearing and have an average term of three months.
•The terms and conditions of the payables due to the related party and the subsidiaries are disclosed in Note 33.
•Long-term other payables are non-interest bearing and are expected to be settled in between one and five years.
All the above amounts are unsecured.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
58
23.Other Deferred Income
The Group
Movement for the year
(in EUR)
2022
Amortisation
2023
Deferred income arising on the sale of terminal buildings upon privatisation
5,495,519
(283,603)
5,211,916
European Commission grant
201,295
(40,255)
161,040
Total deferred income as at 31 December
5,696,814
(323,858)
5,372,956
Less amounts included in trade and other payables
(323,888)
(323,898)
Amounts included in non-current liabilities
5,372,926
5,049,058
The Group
Movement for the year
(in EUR)
2021
Amortisation
2022
Deferred income arising on the sale of terminal buildings upon privatisation
5,779,122
(283,603)
5,495,519
European Commission grant
241,550
(40,255)
201,295
Total deferred income as at 31 December
6,020,672
(323,858)
5,696,814
Less amounts included in trade and other payables
(323,878)
(323,888)
Amounts included in non-current liabilities
5,696,794
5,372,926
The Company
Movement for
the year
(in EUR)
2022
Amortisation
2023
Deferred income arising on the sale of terminal buildings upon privatisation
5,495,519
(283,603)
5,211,916
European Commission grant
201,295
(40,255)
161,040
Total deferred income as at 31 December
5,696,814
(323,858)
5,372,956
Less amounts included in trade and other payables
(323,888)
(323,898)
Amounts included in non-current liabilities
5,372,926
5,049,058
The Company
Movement for
the year
(in EUR)
2021
Amortisation
2022
Deferred income arising on the sale of terminal buildings upon privatisation
5,779,122
(283,603)
5,495,519
European Commission grant
241,550
(40,255)
201,295
Total deferred income as at 31 December
6,020,672
(323,858)
5,696,814
Less amounts included in trade and other payables
(323,878)
(323,888)
Amounts included in non-current liabilities
5,696,794
5,372,926
The deferred income arising on the sale of terminal buildings that took place on the date of the privatisation of the Company in 2002 is being taken to income in accordance with the accounting policy stated in Note 41.
The European Commission grant is composed of grants related to assets and which were received in 2006 and 2011 in respect of the upgrading of the taxiways project.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
59
24.Employee Benefit Obligations
The Group
The Company
(in EUR)
2023
2022
2023
2022
Non-current provision
2,890,265
2,964,300
2,890,265
2,964,300
The provision at year end represents the estimated amounts that are to be reimbursed by the Company to the Government of Malta. The provision for retirement benefits is unfunded and represents the Company’s and the Group’s share of the year end provision in accordance with the Pensions Ordinance (Cap 93) for obligations relating to pensions of employees who joined the public service before 15 January 1979 and were transferred to the Company.
The provision has been computed in accordance with the accounting policy stated in Note 41 and represents the Company’s and the Group’s obligation (i) discounted to the net present value at the rate which has been determined by reference to market yields at the end of the reporting period on high quality corporate bonds in Euros (ii) after considering the average life expectancy of such employees based on the latest publicly available mortality tables and (iii) where applicable, expected rates of salary increases based on the inflation and previous increases given to employees and (iv) the Company’s expectations, based on historic data, of the payment options that will be selected by the plan members, being either an annual benefit per employee or a lump sum payment plus a reduced annual benefit per employee until death, capped in accordance with statutory requirements.
The movement in the provision for retirement benefit plan may be analysed as follows:
The Group & The Company
(in EUR)
2023
2022
Present value of the provision for retirement benefits at 1 January
2,964,300
3,954,173
Payments effected
(200,760)
(692,005)
Recognised in Staff costs
Charge for the year
93,510
36,419
thereof Service costs
90,406
35,071
thereof Interest costs
3,104
1,348
Recognised in Other Comprehensive Income
Actuarial gains resulting from changes in financial assumptions, gross of deferred tax
33,215
(334,287)
Present value of the provision for retirement benefits at 31 December
2,890,265
2,964,300
The year-end obligation of EUR 2,890,265 (2022: EUR 2,964,300) is fully in relation to retired employees.
The plan exposes the Group and the Company to such risks as (i) interest risk, since a decrease in market yields will increase the plan liability; (ii) longevity risk, since an increase in the life expectancy of the plan participants will increase the plan liability; and (iii) salary risk, since an increase in the salary of the plan participants will increase the plan liability.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
60
24.Employee Benefit Obligations (continued)
The significant actuarial assumptions used to determine the present value of the retirement benefit plan were as follows:
2023
2022
Discount rate(s)
3.32%
3.70%
Mortality rate(s) in years
- Males
79
79
- Females
83
83
The sensitivity analysis below are in connection with each significant actuarial assumption and are prepared as of the end of the reporting period, showing how the defined benefit obligation would have been affected by hypothetical changes in the relevant actuarial assumption that were reasonably possible at that date, while holding all other assumptions constant.
The sensitivity analysis presented below are for illustrative purposes only and may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. In presenting the sensitivity analysis, the present value of the obligation has been calculated using the projected unit credit method at the end of the reporting period. The amounts generated from the sensitivity analysis represent forward-looking estimates and hence, actual results in the future may differ materially from those projected results.
•If the discount rate is 25 basis points higher (lower) with all other assumptions held constant, the defined benefit obligation decreases by EUR 21,975 (increases by EUR 22,457) (2022: decreases by EUR 24,835 (increases by EUR 25,403)).
•If the life expectancy increases (decreases) by one year for both men and women with all other assumptions held constant, the defined benefit obligation increases by EUR 176,970 (decreases by EUR 179,644) (2022: increases by EUR 150,250 (decreases by EUR 159,732)).
The weighted average duration of the defined benefit obligation at 31 December 2023 is 7 years (2022: 8 years) in relation to retired employees.
25.Provision for MIA Benefit Plan
The Group
The Company
(in EUR)
2023
2022
2023
2022
Non-current provision
264,827
359,188
264,827
359,188
The provision for the MIA benefit plan is unfunded and represents the year-end provision for obligations relating to payments to employees after their retirement as per the Company’s Collective Agreement. The provision has been computed in accordance with the accounting policy stated in Note 41 and represents the Company’s possible obligation discounted to the net present value at the rate which has been determined by reference to market yields at the end of the reporting period on high quality corporate bonds in Euros after considering the probability that employees reach the applicable retirement age when they are still in employment with the Company.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
61
25.Provision for MIA Benefit Plan (continued)
The movement in the provision for retirement pension plan may be analysed as follows:
The Group & The Company
(in EUR)
2023
2022
Present value of the provision for MIA benefit plan at 1 January
359,188
337,437
Payments effected
(4,200)
-
Recognised in Staff costs
Charge for the year
(93,703)
46,597
Recognised in Other Comprehensive Income
Actuarial gains resulting from changes in financial assumptions, gross of deferred tax
3,542
(24,846)
Present value of the provision for MIA benefit plan at 31 December
264,827
359,188
26.Share Capital
The Company
As at 31.12.2023 and 31.12.20 22
Authorised
Issued and called up
(in EUR)
111,809,746 "A" ordinary shares of EUR 0.25 each (81,179,990 of which have been issued, called up and fully paid)
27,952,436
20,294,997
74,539,840 "B" ordinary shares of EUR 0.25 each (54,120,000 of which have been issued, called up and fully paid)
18,634,960
13,530,000
14 "C" ordinary shares of EUR 0.25 each (10 of which have been issued, called up and fully paid)
4
3
46,587,400
33,825,000
The Ordinary ‘A’ and ‘B’ shares have the same rights, benefits, powers in the Company and are freely transferable. Ordinary ‘C’ shares carry no voting rights and do not receive dividends.
Shareholders owning 5% or more of the Company’s equity share capital at 31 December 2023 were:
Shareholder
Share
Type
Malta Mediterranean Link Consortium Ltd. *
40.0%
'B' shares
Government of Malta
20.0%
'A' and 'C' shares
VIE (Malta) Limited
10.1%
'A' shares
* of which VIE (Malta) Limited constitutes 95.85%
The number of shareholders developed as follows:
Number of Shareholders
24.01.2024
15.09.2023
Change
1-500 shares
608
599
9
501-1,000 shares
886
861
25
1,001-5,000 shares
3,547
3,575
(28)
5,001 and over
1,409
1,429
(20)
6,450
6,464
(14)
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
62
27.Short-term Treasury Bills
Treasury bills amounting to EUR 15 million were bought during the reporting period. EUR 5 million will mature after 182 days and the other EUR 10 million will mature after 273 days.
28.Term Deposits
During the reporting period the Company increased its fixed term deposits by EUR 17.5 million. The accounts have a maturity date of between 3 months and one year and carry a fixed interest rate.
29.Cash and Cash Equivalents
Cash and cash equivalents shown in the statements of cash flow comprise the following amounts presented in the Statements of Financial Position:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Cash at bank
24,674,829
24,420,042
21,759,733
19,421,903
30.Earnings per Share
Earnings per ordinary share attributable to the owners of the parent has been calculated by dividing the Group’s net profit for the year after taxation attributable to the ordinary equity holders of the Group by the weighted average number of ordinary shares in issue during the year.
The Group
2023
2022
Profit for the year attributable to ordinary equity holders of the Group (in EUR)
40,303,853
38,866,311
Weighted average number of A and B shares
135,299,990
135,299,990
Earnings per share attributable to ordinary equity holders of the Group (in EUR)
0.298
0.287
There is no difference between the basic and diluted earnings per share as the Company has no potential dilutive ordinary shares.
31.Capital Commitments
The Group
The Company
(in EUR)
2023
2022
2023
2022
Property, plant and equipment:
Contracted but not provided for
44,744,911
34,085,719
44,744,911
34,085,719
Authorised but not contracted for
32,385,635
25,862,131
32,285,635
25,777,131
Investment property:
Contracted but not provided for
85,314,509
-
-
-
Authorised but not contracted for
150,000
8,623,513
-
-
In the current reporting period no PPE was contracted but not provided for (2022: EUR 346,997), whereas the amount of PPE authorised but not contracted for, which will be leased out amounts to EUR 12,474,000 (2022: EUR 9,457,717).
Further to the capital commitments disclosed above, the Group has discussed plans covering a six-year period which amount to a combined spend of around EUR 250 million, starting from the reporting period. The EUR 250 million includes the capital commitments disclosed in the table above and further tranches of commitments will be authorised by the Board in the coming years in a piece-meal manner.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
63
32.Contingent Liabilities
At reporting date, there existed the following contingent liabilities:
(i)claims filed by former employees of the Company for unfair dismissal and wrong application of disciplinary procedures, the amount of which has not been determined;
(ii)A judicial protest first lodged by the Government of Malta in 2008 relating to reimbursement of specified expenses and which were last estimated by the Government to amount to approximately EUR 7.5 million as at 31 December 2022. The amount is expected to be updated by the Government of Malta in line with prior year increases.
In the directors’ opinion, all the above contingent liabilities are unfounded.
33.Related Party Disclosures
During the course of the year, the Group and the Company entered into transactions with related parties as set out below. Transactions between the Company and its subsidiaries have been eliminated on consolidation. The related party transactions in question were:
2023
2022
Related
Related
The Group
party
Total
party
Total
(in EUR)
activity
activity
%
activity
activity
%
Revenue
Related party transaction with:
Entities controlled by Government *
21,159,142
15,502,538
21,159,142
120,247,948
18
15,502,538
88,016,852
18
Other operating costs
Related party transaction with:
Entities controlled by Government *
4,033,744
4,023,668
Key management personnel of the Group
742,704
651,208
Entities that control the Company's parent
345,023
200,846
5,121,471
30,670,557
17
4,875,722
22,925,386
21
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
64
33.Related Party Disclosures (continued)
2023
2022
Related
Related
The Company
party
Total
party
Total
(in EUR)
activity
activity
%
activity
activity
%
Revenue
Related party transaction with:
Entities controlled by Government *
21,015,661
15,334,027
Subsidiaries
3,443,903
2,642,142
Entities that control the Company's parent
-
-
24,459,564
115,378,805
21
17,976,169
83,644,230
21
Other operating costs
Related party transactions with:
Entities controlled by Government *
4,033,744
4,023,668
Key management personnel of the Company
742,704
651,208
Subsidiaries
225,000
225,000
Entities that control the Company's parent
345,023
200,846
5,346,471
29,757,301
18
5,100,722
22,441,167
23
* This balance is exclusive of material contracts shown in Note 35.
The Company has earned interest income amounting to EUR 1,433,469 (2022: EUR 753,582) on the loans granted to subsidiaries (see Note 18).
The amounts due to/from related parties are disclosed in Note 18, 21 and 22. The terms and conditions do not specify the nature of the consideration to be provided in settlement. No guarantees have been given or received. These amounts were unsecured and, except as specified in Note 18, are interest-free.
In addition to the above, the details of the material contracts entered into by the Company in the year ended 31 December 2023 with its substantial shareholders and their related parties are disclosed in Note 35.
Lease liabilities presented in the Statement of Financial Position within non-current liabilities and recognised on 1 January 2019 in terms of IFRS 16 include the Group’s obligation in relation to the right to use the land and the buildings held on temporary emphyteuses. Annual ground rents are payable to Malita Investments plc (previously to the Government of Malta) and the corresponding licence payable to the Government of Malta, as further disclosed in Note 34.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
65
34.Lease Arrangements
The Group and the Company as lessee
The Group and the Company recognised right-of-use assets within Property, Plant and Equipment and Investment Property.
Right-of-use assets are primarily in relation to the temporary emphyteusis of the leasehold land and buildings with ground rents payable by the Group to Malita Investments plc (previously to the Government of Malta) and further payments for the related aerodrome licence fee payable to the Government of Malta. The lease payments on the temporary emphyteusis are adjusted upwards periodically by a specified rate. The payments for the related aerodrome licence fee are subject to revisions in terms of the Airport Economic Regulations and are directly linked to revisions in airport charges. There are no residual value guarantees in this respect. The lessor has a special privilege in relation to the obligations emanating from the temporary emphyteuses and a general hypothec over all the property of the Company, present and future. The Group is entitled to enjoy and make full use of the emphyteutical site as provided in the contractual arrangement, with the terminal building to be used only as an airport passenger terminal, the terminal land to be used for the purposes necessary for, ancillary to and/or related with the operation of an international airport and the aerodrome sites to be used for such commercial, industrial or administrative purposes as the Company may consider appropriate, provided that such activities are related or ancillary to the aviation industry or are designed to provide facilities and services which are complimentary to the operation of the terminal site and all the activities therein carried out.
The lease terms under IFRS 16 for the temporary emphyteuses and the related aerodrome licence do not involve significant judgment as there are no extension, termination or purchase options from the perspective of the Group beyond the non-cancellable and enforceable period, with clauses for remote contingencies that are customary for the type of lease in place. The lease terms range from 58 years to 65 years, which are governed under a concession which was granted by the Government and which commenced in 2002 and ends in 2067 with a smaller lease being granted for the period 2010 to 2067.
For leases of low value assets, which relate to the multi-function printers situated in the administration offices, the Company has applied the optional recognition exemptions to not recognise right-of-use assets as at the date of initial application of the standard. This expense is presented in Note 9.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
66
34.Lease Arrangements (continued)
The movements during the current year and the comparative year in relation to right-of-use assets classified as property, plant and equipment are disclosed below:
Carrying
Depreciation
Carrying
The Group & The Company
amount
charge for
amount
(in EUR)
1 Jan 2023
the year
31 Dec 2023
Land held on temporary emphyteusis
60,503,471
(1,358,496)
59,144,975
Related aerodrome licence
9,860,637
(221,587)
9,639,050
Buildings
20,875,723
(1,074,702)
19,801,021
Total right-of-use assets classified as property, plant and equipment
91,239,831
(2,654,785)
88,585,046
Carrying
Depreciation
Carrying
The Group & The Company
amount
charge for
amount
(in EUR)
1 Jan 2022
the year
31 Dec 2022
Land held on temporary emphyteusis
61,861,967
(1,358,496)
60,503,471
Related aerodrome licence
10,082,224
(221,587)
9,860,637
Buildings
21,950,425
(1,074,702)
20,875,723
Total right-of-use assets classified as property, plant and equipment
93,894,616
(2,654,785)
91,239,831
The movements during the current year and the comparative year in relation to lease liabilities are disclosed below:
Carrying
Lease
Carrying
The Group & The Company
amount
Cash
Interest
amount
(in EUR)
1 Jan 2023
Outflows
Expense
31 Dec 2023
Lease Liability
54,042,492
(1,812,688)
2,144,381
54,374,185
Carrying
Lease
Carrying
The Group & Company
amount
Cash
Interest
amount
(in EUR)
1 Jan 2022
Outflows
Expense
31 Dec 2022
Lease Liability
53,644,066
(1,732,798)
2,131,224
54,042,492
Expenses relating to low value assets for which the recognition exemption is applied are presented in Note 9.
Lease liabilities are classified as non-current in the Statement of Financial Position to the extent that over the next 12 months interest will exceed the contractual cash payments.
The Group classifies all interest payments in relation to the lease liability within its operating cash flows in the Statement of Cash Flows to the extent that interest during the period exceeds the contractual cash payments.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
67
34.Lease Arrangements (continued)
The Group and the Company as lessor
The table below represents the lease income under operating leases recognised as income for the year:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Lease income under operating leases recognised as income for the year
7,006,490
6,884,105
3,457,313
3,471,474
Lease income under operating leases relating to variable lease payments that do not depend on an index or a rate
20,666,475
15,131,920
20,964,531
15,410,116
Total lease income
27,672,965
22,016,025
24,421,844
18,881,590
Below is the ‘Minimum Lease Payment Receivables’ table showing the amounts to be received from next year onwards:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Year 1
16,491,844
15,554,275
12,558,868
12,050,326
Year 2
15,405,328
14,969,255
12,811,036
12,072,116
Year 3
11,242,772
14,238,023
10,437,009
12,328,279
Year 4
2,831,460
10,695,854
2,088,507
10,578,309
Year 5
1,995,761
2,778,301
1,771,307
2,234,046
Year 6 and onwards
16,016,735
17,772,628
17,337,327
19,108,634
63,983,900
76,008,336
57,004,054
68,371,710
Operating lease income receivable by the Group includes income from leases of portions of land held on temporary emphyteuses and classified as property, plant and equipment. The term of the principal non-cancellable lease arrangements ranges between 3 months and 26 years and the lease receivables are adjusted upwards periodically by a specified rate.
Operating lease income receivable by the Group also includes the lease of the investment property built on a portion of land held on temporary emphyteuses. The term of the principal non-cancellable lease arrangements ranges between 9 month and 13 years. The leases include periodic adjustments by a specified rate and variable portions linked to the turnover of the lessees.
Operating lease income receivable by the Group also includes the lease of office and parking spaces inside the multi-storey car park built on a portion of land held on temporary emphyteuses. The term of the principal non-cancellable lease arrangements is of 20 months. The leases include periodic adjustments by a specified rate.
Operating lease income also includes income from the lease to tenants of commercial property within the building held on temporary emphyteusis. The terms of these leases range from 2 months to 26 years. The leases include periodic adjustments by a specified rate and variable portions linked to the turnover of lessees.
Operating lease income receivable by the Company also includes income from the lease to a subsidiary of certain carparks situated on portions of land held on temporary emphyteusis and classified as property, plant and equipment and income from the lease of the land on which the investment property is built, which investment property is also situated on portions of land held on temporary emphyteusis. The leases terminate in 2048 and 2034 respectively. One of the leases includes periodic adjustments by a specified rate and the other comprises fixed annual amounts and variable portions linked to the turnover of the lessee.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
68
34.Lease Arrangements (continued)
Where the lease income is adjusted periodically by a specified rate, the lease income is recognised on a straight-line basis over the lease term.
The income above includes an amount of EUR 3,283,623 (2022: EUR 2,973,228) generated by the Group in relation to the business centre classified as investment property as well as an amount of EUR 75,443 (2022: EUR 75,443) generated by the Company in relation to the corresponding right-of-use assets in relation to the land on which the business centre is located. The Group and the Company generate EUR 24,389,342 and EUR 24,346,401 (2022: EUR 19,042,798 and EUR 18,806,147), respectively, from subleasing right-of-use assets that are classified as property, plant and equipment.
All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expiry of the lease period. The Group manages credit risk from operating lease contracts by implementing contractual terms that ensure that rentals are payable quarterly in advance. All leases include clauses to enable upward revision of the rental charge according to prevailing market conditions or at pre-fixed rates. In addition, the Group obtains security deposits from tenants, in the form of bank guarantees for the term of the lease.
35.Material Contracts
The material contracts entered into by the Company in the year ended 31 December 2023 with its current substantial shareholders and their related parties are the following:
The Government of Malta
(i)The terminal and other land lease agreements with Malita Investments plc for EUR 1,316,531 (2022: EUR 1,236,821);
(ii)Licence Fee payable to the Government of Malta for the airport operation amounting EUR 496,157 (2022: EUR 496,157);
(iii)The contract for contribution to the Malta Tourism Authority for EUR 232,937 (2022: EUR 232,937); the contracts for contributions payable towards the Route Development Fund that is administered by the Malta Tourism Authority for EUR 4,000,000(2022: EUR 5,100,000); the contracts for contributions payable towards the events for EUR 800,000 (2022: EUR 0); the contracts for contributions payable towards Cruise & Fly for EUR 400,000 (2022: EUR 0)
(iv)The contract with the Armed Forces of Malta for the security of the restricted areas at the Airport is no longer effective in the current year (2022: EUR 276,368);
(v)The provision of Air Navigation Services and other services by Malta Air Traffic Services Limited for an expense of EUR 929,611 (2022: EUR 929,611);
(vi)The provision of Meteorological Services and other services to Malta Air Traffic Services Limited for revenue of EUR 743,688 (2022: EUR 743,688);
(vii)The contract with Enemed Co. Ltd for fuel throughput charges generated the amount of EUR 426,194 (2022: EUR 370,938) in revenue;
(viii)The ground handling and concession agreements with Air Malta p.l.c. and its subsidiaries that generated income of EUR 1,029,144 (2022: EUR 1,741,466); and
(ix)The contracts with Indis Malta Ltd. for the lease of land that generated income of EUR 1,105,591 (2022: EUR 1,093,000).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
69
36.Parent Company
For the purposes of IFRS 10 Consolidated Financial Statements, it is considered that Articles 58.2 and 58.7 of the Company's Articles of Association combine so as to give Malta Mediterranean Link Consortium Limited (“MMLC”), which has its registered office at Palazzo Pietro Stiges, 60 St. Christopher Street, Valletta, Malta, control over the Company. MMLC has a 40% equity interest in Malta International Airport p.l.c. (the “Company”).
Effective as at 26 November 2019, MMLC’s majority shareholders VIE (Malta) Limited (which has an equity interest of 57.1% in MMLC) and MMLC Holdings Malta Limited (previously SNC-Lavalin (Malta) Limited) (which has an equity interest of 38.75% in MMLC) merged, leading to VIE (Malta) Limited being MMLC’s majority shareholder with an equity interest of 95.85% in MMLC.
VIE (Malta) Limited also holds an additional 10.1% equity stake in the Company.
VIE (Malta) Limited is controlled by VIE International Beteiligungsmanagement GmbH (“VINT”), which also controlled MMLC Holdings Malta Limited until the merger in November 2019. VINT does not produce consolidated financial statements. The ultimate parent of the Company is Flughafen Wien AG, whose registered office is Postfach 1, A-1300 Wien-Flughafen. Flughafen Wien AG’s consolidated share in the Company amounts to 48.44%.
The financial results and financial position of the Company are included in the consolidated financial statements of Flughafen Wien AG. Copies of these consolidated financial statements may be obtained from Investor Relations department of Flughafen Wien or online.
37.Fair Values of Financial Assets and Financial Liabilities
At 31 December 2023 and 2022, the carrying amounts of financial assets and financial liabilities classified within non-current and current assets / liabilities respectively, comprising trade and other receivables, cash and cash equivalents, term deposits, investments in treasury bills, current loans receivable and trade and other payables approximated their fair values due to the short-term maturities of these assets and liabilities.
The fair values (Level 2) of non-current financial assets that are not measured at fair value and that carry a floating rate of interest, comprising of loans receivable by the Company, are not materially different from their carrying amounts because they carry an arm’s length interest rate that is repriced periodically and the margin continues to be reflective of the credit risk of the borrower at the year-end (see Note 18).
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
70
38.Financial Risk Management
The Group’s and the Company’s principal financial liabilities comprise of trade payables and lease liabilities. The principal recognised financial assets of the Group and the Company are trade receivables, loans receivable, term deposits, investments in treasury bills and cash and cash equivalents.
The carrying amount of principal financial instruments are as follows:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Loans receivable
-
-
24,680,261
27,824,038
Trade receivables
20,907,477
13,832,817
22,575,309
16,951,056
Investments in treasury bills
14,699,519
24,789,438
14,699,519
24,789,438
Term deposit
37,000,000
19,500,000
37,000,000
19,500,000
Cash and cash equivalents
24,674,829
24,420,042
21,759,733
19,421,903
Lease liabilities
(54,374,185)
(54,042,492)
(54,374,185)
(54,042,492)
Trade and other payables
(53,660,874)
(46,140,714)
(52,597,817)
(45,409,732)
Net gains/(losses) arising from these financial instruments are classified as follows:
The Group
The Company
(in EUR)
2023
2022
2023
2022
Recorded in profit or loss:
Loans receivable - interest
-
-
1,433,469
753,582
Trade and other receivables - ECL
(352,978)
(138,670)
(334,605)
(104,426)
Investments in treasury bills - interest
728,996
19,867
728,996
19,867
Term deposit – interest
752,702
50,769
752,702
50,769
Financial liabilities at amortised cost - interest
(2,172,154)
(2,080,491)
(2,172,154)
(2,080,491)
The main risks arising from the Group’s and the Company’s financial instruments are changes in interest rate, liquidity risk and credit risk, which are summarised below.
Interest Rate Risk
The Group and the Company have treasury bills as disclosed in Note 27, term deposits as disclosed in Note 28 and cash at bank balances as disclosed in Note 29. The Company has also granted interest-bearing loans to its subsidiaries as disclosed in Note 18.
The Group and the Company are exposed to cash flow interest rate risk on financial instruments carrying a floating interest rate. Management monitors the movement in interest rates and, where possible, reacts to material movements in such rates by restructuring its investing and financing structure.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group’s and Company’s profit before tax. The Group and Company consider the reasonably possible changes in interest rates to be a change in 25 basis points.
Increase or
Effect on Profit before tax
Decrease
The Group
The Company
(basis points)
(in EUR)
(in EUR)
2023
+ 25
115,742
169,298
- 25
(115,742)
(169,298)
2022
+ 25
84,235
140,452
- 25
(84,235)
(140,452)
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
71
38.Financial Risk Management (continued)
The effect on profit takes into consideration both interest payable and interest receivable based on the financial instruments as disclosed in Notes 18, 27, 28 and 29.
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group or the Company. Financial assets which potentially subject the Group and / or the Company to concentrations of credit risk, consist principally of the following:
•Loans receivable from subsidiary undertakings
•Loan commitments to subsidiary undertakings
•T rade and other receivables
•Treasury bills
•Term deposits
•Cash and cash equivalents
Such financial assets are presented net of a loss allowance, where applicable. The maximum exposure to credit risk for recognised financial assets is the carrying amounts of each class of asset as disclosed in Notes 18, 21, 27, 28 and 29 respectively. The maximum exposure to credit risk for the loan commitment is disclosed in Note 18.
Management considers the quality of its financial assets as being acceptable, as further detailed below.
Allowances for provision for impairment on financial assets measured at amortised cost are made in line with the accounting policies outlined in Note 41.
Trade and other receivables
Credit risk with respect to trade and other receivables is managed and assessed through the adherence to credit control procedures, which include client acceptance procedures, and is also limited through the number of customers comprising the Group’s and Company’s debtor base. Outstanding trade receivables are regularly monitored by management.
For trade receivables the Group and the Company have applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL.
Where the Group has reasonable and supportable information that is available without undue cost or effort to measure LT-ECLs on an individual instrument basis, such an individual assessment is carried out. LT-ECLs on the remaining financial assets are measured on a collective basis, using a provision matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
72
38.Financial Risk Management (continued)
Trade receivables – tested individually:
LT-ECL (credit-impaired but not POCI)
The Group
The Company
(in EUR)
2023
2022
2023
2022
Internal rating grades
Performing
-
-
-
-
In default
15,355
335,127
6,281
314,200
Gross carrying amount at 31 December
15,355
335,127
6,281
314,200
Loss allowance at 31 December
(15,355)
(335,127)
(6,281)
(314,200)
Net carrying amount at 31 December
-
-
-
Trade receivables – tested collectively:
The table below details the risk profile of trade receivables for which a provision matrix is applied:
The Group
Expected Credit Loss Rate
Gross Carrying Amount
LT-ECL
Net Carrying Amount
31 December 2023
(in EUR)
Current (not past due)
1.0%
10,604,958
106,050
10,498,908
30 to 90 Days
1.2%
7,944,726
95,336
7,849,390
91 to 180 Days
10.5%
2,491,161
261,572
2,229,589
181 to 270 Days
34.4%
448,185
154,176
294,009
271 to 360 Days
72.5%
129,385
93,804
35,581
> 360 Days
100.0%
314,112
314,112
-
21,932,527
1,025,050
20,907,477
The Group
Expected Credit Loss Rate
Gross Carrying Amount
LT-ECL
Net Carrying Amount
31 December 2022
(in EUR)
Current (not past due)
1.2%
6,914,762
82,977
6,831,785
30 to 90 Days
1.4%
5,533,155
77,464
5,455,691
91 to 180 Days
12.1%
1,491,747
180,501
1,311,246
181 to 270 Days
29.8%
300,115
89,434
210,681
271 to 360 Days
68.4%
74,096
50,682
23,414
> 360 Days
100.0%
197,519
197,519
-
14,511,394
678,577
13,832,817
The same ECL Rates are applied to the Company’s debtors with a gross carrying amount of EUR 23,386,294 (2022: EUR 17,424,866), resulting in a net carrying amount of EUR 22,575,309 (2022: EUR 16,951,056) and a collective LT-ECL of EUR 810,986 (2022: EUR 473,811) of which an amount of EUR 256,419 (2022: EUR 69,133) is in relation to trade debtors that are more than 360 days past due.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
73
38.Financial Risk Management (continued)
The 2nd-largest single customer of the Group, Air Malta p.l.c., will be shut down on 30 March 2024 and a new airline owned by the government of Malta, named KM Malta Airlines Ltd. will start to operate from 31 March 2024 onwards, reflecting the Maltese government commitment that Malta will continue to have a national airline. The replacement company will act as a separate economic operator and not as a legal successor of Air malta. Air Malta p.l.c. accounts for EUR 6.6 million (2022: EUR 7.8 million) of the Group’s trade and other receivables at year end and 18% (2022: 19%) of the Group’s revenue for the year (recorded in all segments). The Company’s exposure to this customer is not materially different to that of the Group. The maximum exposure in the reporting period to this customer was in the region of EUR 9.3 million (2022: EUR 7.4 million). The Board feels confident that the Group’s and the Company’s exposure to Air Malta p.l.c. will not jeopardize in any way the Group’s ability to continue operations for the foreseeable future and that Air Malta p.l.c. will meet its obligations arising until the termination of its operation.
Cash and cash equivalents
The cash at bank balances held by the Group and the Company are disclosed in Note 29. Currently the Group holds its cash at bank balances with reputable and investment grade rated banking institutions.
12m-ECL
The Group
The Company
(in EUR)
2023
2022
2023
2022
External rating grades
BBB- (stable) (S&P)
19,481,017
21,869,811
16,565,921
16,871,672
BBB+ (stable) (S&P)
3,000
-
3,000
-
A- stable (S&P)
2,105,476
2,050,231
2,105,476
2,050,231
A stable (S&P)
3,085,336
500,000
3,085,336
500,000
Gross/Net Carrying Amount at 31 December
24,674,829
24,420,042
21,759,733
19,421,903
On the basis of the low credit risk exemption, the resulting 12 m-ECL in terms of IFRS 9 are not considered to be material.
Treasury Bills
The Group has invested in treasury bills with the Government of Malta as disclosed in Note 27.
12m-ECL
The Group
The Company
(in EUR)
2023
2022
2023
2022
External rating grades
A- stable (S&P)
14,699,519
24,789,438
14,699,519
24,789,438
Gross/Net Carrying Amount at 31 December
14,699,519
24,789,438
14,699,519
24,789,438
On the basis of the low credit risk exemption, the resulting 12 m-ECL in terms of IFRS 9 are not considered to be material.
Term Deposits
The Group holds its term deposits with the same reputable and investment grade rated banking institutions as its cash and cash equivalents as outlined above.
12m-ECL
The Group
The Company
(in EUR)
2023
2022
2023
2022
External rating grades
BBB+ (stable) (S&P)
15,000,000
-
15,000,000
-
A2 stable (S&P)
15,000,000
10,000,000
15,000,000
10,000,000
A stable (S&P)
7,000,000
9,500,000
7,000,000
9,500,000
Gross/Net Carrying Amount at 31 December
37,000,000
19,500,000
37,000,000
19,500,000
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
74
38.Financial Risk Management (continued)
On the basis of the low credit risk exemption, the resulting 12 m-ECL in terms of IFRS 9 are not considered to be material.
Loans receivable
Loans receivable and undrawn loan commitments of the Company are disclosed in Note 18. The credit risk is contained within the Group.
12m-ECL
The Company
(in EUR)
2023
2022
Internal rating grades
Performing
24,680,261
27,824,038
Gross/Net Carrying Amount at 31 December
24,680,261
27,824,038
The Company determined that the loans and the undrawn loan commitments did not result in a significant increase in credit risk, as compared to the risk of default on initial recognition and accordingly a 12m-ECL applies. On the basis of the expected manner of recovery of the loans and the possible alternative strategies available to the borrower, the Company concluded that full recovery is expected, taking into consideration the financial position of the respective counterparty and, where applicable, forward-looking information that addresses the future prospects of the industries in which the borrower operates and information that relates to the borrower’s core operations. Consequently, the resulting 12m-ECL in terms of IFRS 9 are not considered to be material.
Liquidity Risk
The tables below summarise the maturity profile of the Group’s and Company’s financial liabilities as at 31 December 2023 and 2022 based on contractual undiscounted payments.
The Group
31 December 2023
Carrying Amount
Gross Cash Flows
(in EUR)
< 1 year
1-5 Years
> 5 years
Lease Liability
54,374,185
130,578,350
1,812,688
7,575,263
121,190,399
Other payables
2,479,903
2,479,903
521,995
1,957,908
-
Accruals
44,718,779
44,718,779
44,718,779
-
-
Trade payables
6,466,841
6,466,841
6,466,841
-
-
108,039,708
184,243,873
53,520,303
9,533,171
121,190,399
The Group
31 December 2022
Carrying Amount
Gross Cash Flows
(in EUR)
< 1 year
1-5 Years
> 5 years
Lease Liability
54,042,492
132,391,038
1,812,688
7,377,783
123,200,567
Other payables
1,585,736
1,585,736
401,711
1,184,025
-
Accruals
37,420,595
37,420,595
37,420,595
-
-
Trade payables
7,164,226
7,164,226
7,164,226
-
-
100,213,049
178,561,595
46,799,220
8,561,808
123,200,567
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
75
38.Financial Risk Management (continued)
The Company
31 December 2023
Carrying Amount
Gross Cash Flows
(in EUR)
< 1 year
1-5 Years
> 5 years
Lease liability
54,374,185
130,578,350
1,812,688
7,575,263
121,190,399
Other payables
2,118,470
2,118,470
348,193
1,770,277
-
Accruals
44,083,899
44,083,899
44,083,899
-
-
Trade payables
6,318,651
6,318,651
6,318,651
-
-
106,895,205
183,099,370
52,563,431
9,345,540
121,190,399
The Company
31 December 2022
Carrying Amount
Gross Cash Flows
(in EUR)
< 1 year
1-5 Years
> 5 years
Lease liability
54,042,492
132,391,038
1,812,688
7,377,783
123,200,567
Other payables
1,384,585
1,384,585
388,191
996,394
-
Accruals
37,112,477
37,112,477
37,112,477
-
-
Trade payables
7,030,246
7,030,246
7,030,246
-
-
99,569,800
177,918,346
46,343,602
8,374,177
123,200,567
The Group monitors and manages its risk to a shortage of funds by monitoring forecast and actual cash flows.
Capital Management
One of the objectives of the Group and the Company is to ensure that it maintains a strong credit rating and healthy capital ratios by means of proper management of its capital. The Group and the Company manage their capital structure and adjust it, in light of changes in economic conditions. No changes were made in the objectives and processes during the years ended 31 December 2023 and 31 December 2022.
The Company monitors its capital requirement on a periodic basis considering its current requirements. Capital primarily includes equity attributable to the equity holders. Based on recommendations of the directors, the Group and the Company balance their overall capital structure through the payments of dividends, new share issues as well as the issue of new debt or the redemption of existing debt.
Other than as disclosed in that note, the Group’s and Company’s policy in managing capital has remained unchanged from the prior year.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
76
39.Events after the Reporting Period
All events occurring 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 of 31 December 2023 for the Group and the Company, such as outstanding legal proceedings or claims for damages and other obligations or impending losses that must be recognised or disclosed in accordance with IAS 10 are included in these consolidated financial statements. No relevant events after the reporting period occurred.
40.Comparative information
Comparative figures disclosed in the main components of these financial statements have been reclassified to conform with the current year’s presentation format for the purpose of fair presentation.
41.Material Accounting Policy Information
Scope of Consolidation
The consolidated financial statements include all subsidiaries, with the exception of Kirkop PV Farm Limited, as its economic significance and influence on the financial position, financial performance and cash flows of the Group is immaterial. The net liability position of Kirkop PV Farm Limited is under EUR 3,000 (2022: under EUR 3,000). Kirkop PV Farm Limited did not commence to trade by the balance sheet date.
The 2023 and 2022 consolidated financial statements include Malta International Airport p.l.c as well as three domestic subsidiaries that are controlled by Malta International Airport p.l.c.
Subsidiaries included in the consolidated financial statements 2023 and 2022 are Airport Parking Limited, Sky Parks Development Limited and Sky Parks Business Centre Limited. For financial information on these subsidiaries see Note 17.
The financial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using consistent accounting policies. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions and dividends are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control or from the date of set-up under the control of the Company and continue to be consolidated until the date such control ceases.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
77
41.Material Accounting Policy Information (continued)
Property, Plant and Equipment
The Group’s and the Company’s property, plant and equipment are classified into the following classes – land held as temporary emphyteusis, related aerodrome licence, buildings, furniture, fixtures, plant and equipment, motor vehicles. Advance deposits paid to suppliers of property, plant & equipment are recognised as part of property, plant & equipment.
Upfront payments in relation to the temporary emphyteusis of the leasehold land and buildings are reclassified to right-of-use assets which is included under property, plant and equipment in terms of IFRS 16. The accounting policy for right-of-use assets is included below in the Section entitled ‘Leases’.
Property, plant and equipment also include the right-of-use assets in relation to the related licence over the aerodrome, which includes the Airfield. The management of the Airfield is considered to be integral to the use of the land and buildings held as temporary emphyteusis, with the Group having an obligation to manage the Airfield for the same duration of the emphyteusis. The Group considers the licence as being inseparable from the right to use the Airfield (being the tangible component). It is also not possible to split the right to operate the Airfield from the right to use the Airfield and the Group considers the use of the Airfield to be the most significant element of the transaction.
Property, plant and equipment are initially measured at cost. Such cost includes borrowing costs for long-term construction projects, if the recognition criteria are met. Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated with the item will flow to the Group or the Company and the cost of the item can be measured reliably. Expenditure on repairs and maintenance of property, plant and equipment is recognised as an expense when incurred.
Subsequent to initial recognition, property, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairment losses.
Property, plant and equipment are derecognised on disposal or when no future economic benefits are expected from their use or disposal. Gains or losses arising from derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount. Any gains or losses arising on derecognition are included in profit or loss in the year the asset is derecognised.
Properties in the Course of Construction
Properties in the course of construction for production supply or administrative purposes are classified as property, plant and equipment and are carried at cost less any identified impairment loss. Cost includes professional fees, and for qualifying assets, borrowing costs capitalised in accordance with the Company's accounting policy on borrowing costs. Depreciation of these assets, on the same basis as other property assets, commences when the assets are available for use.
Properties in the course of construction for future use as investment property are classified as investment property. Existing investment property that is being redeveloped for continued future use as investment property continues to be classified as investment property.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
78
41.Material Accounting Policy Information (continued)
Investment Property
Investment property also includes right-of-use assets in terms of IFRS 16. The accounting policy for right-of-use assets is included below in the Section entitled ‘Leases’.
Investment property is property held to earn rentals or for capital appreciation or both. Investment property is recognised as an asset when it is probable that the future economic benefits that are associated with the investment property will flow to the entity and the cost can be measured reliably. Investment property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment property is stated at cost less any accumulated depreciation and any accumulated impairment losses.
Investment property is derecognised on disposal or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses on derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount, and are recognised in profit or loss in the period of derecognition.
Depreciation
Depreciation commences when the depreciable assets are available for use and is charged to profit or loss, so as to write off the cost less any estimated residual value, over their estimated useful lives (unless this exceeds the end of any applicable leases or emphyteusis, in which case the accounting policy in the Section entitled ‘Leases’ applies), using the straight-line method, on the following bases:
Land held on temporary emphyteusis
by equal annual instalments over the remaining term of the emphyteusis
Buildings classified within Property, Plant and Equipment
2% to 5% per annum
Furniture, fixtures, plant and equipment classified within Property, Plant and Equipment
10% to 33 1/3% per annum
Motor vehicles classified within Property, Plant and Equipment
20% per annum
Investment property (other than the land component)
5% to 15% per annum
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset.
The depreciation method applied, the residual value and the useful life are reviewed at each financial year end and adjusted prospectively, as appropriate.
Investments in Subsidiaries
A subsidiary is an entity that is controlled by the Company. The Company controls an investee when the Company 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. Investment in subsidiaries in the separate financial statements of the Company is accounted for on the basis of the direct equity interest and is stated at cost less any provisions for impairment, where in the opinion of the directors, any impairment in value has taken place. Dividends from the investment are recognised in profit or loss.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
79
41.Material Accounting Policy Information (continued)
Financial Instruments
Financial assets and financial liabilities are recognised when the Group entities become a party to the contractual provisions of the instrument. Unless otherwise stated below, financial assets and financial liabilities are initially recognised at their fair value plus directly attributable transaction costs for all financial assets or financial liabilities not classified at fair value through profit or loss.
Financial assets and financial liabilities are offset, and the net amount presented in the Statement of Financial Position when the Group entities have a legally enforceable right to set off the recognised amounts and intend either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or when the entity transfers the financial asset and the transfer qualifies for derecognition. Financial liabilities are derecognised when they are extinguished. This occurs when the obligation specified in the contract is discharged, cancelled or expires.
Financial Assets
This accounting policy is in relation to the following financial assets:
•Trade and other receivables
•Term deposits
•Treasury Bills
•Cash and cash equivalents
•Loans receivable
These assets are held for collection of contractual cash flows whereby these cashflows represent solely payments of principal and interest hence these financial instruments are subsequently carried at amortised cost. Interest income from these financial assets is included in profit or loss under investment income using the effective interest rate method. Any gain or loss on derecognition is also recognised in profit or loss. Trade receivables which do not have a significant financing component are initially measured at their transaction price and are subsequently stated at their nominal value less any loss allowance for expected credit losses.
Impairment of Financial Assets
Credit losses are determined based on the ECL model. The ECL model applies to financial assets measured at amortised cost, debt investments at FVOCI, lease receivables and contract assets, but not to investments in equity instruments. The amount of ECLs is updated at each reporting date to reflect changes in credit risk since the initial recognition.
ECLs are probability-weighted estimates of credit losses with the respective risks of a default occurring as the weights. Credit losses are measured at the present value of all expected cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset. The measurement of ECLs is a function of the probability of default, loss given default (that is, the magnitude of the loss if there is a default) and the exposure at default.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
80
41.Material Accounting Policy Information (continued)
The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information, where applicable. Forward-looking information considered includes economic and industry indicators such as GDP, unemployment rates and/or industry projections as well as factors that are specific to the debtors, unless the effect is considered to be immaterial.
ECLs are determined by means of a three-stage model for impairment (the general approach) based on changes in credit risk since initial recognition.
•Stage 1 includes financial instruments that have not had a significant increase in credit risk since initial recognition or that have low credit risk at the reporting date. For these assets, 12-month ECLs (12-M-ECLs) are recognised. 12-M ECLs are the ECLs that result from default events that are possible within 12 months after the reporting date.
•Stage 2 includes financial instruments that have had a significant increase in credit risk since initial recognition - unless they have low credit risk at the reporting date - but that do not have objective evidence of impairment. For these assets, lifetime ECLs (LT-ECLs) are recognised. LT-ECLs are the ECLs that result from all possible default events over the expected life of a financial asset.
•Stage 3 includes financial assets that have objective evidence of impairment at the reporting date. For these assets, LT-ECLs are recognised. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Impairment gains or losses are recognized in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.
Loss allowances are measured according to the above outlined three-stage model (the general approach) except for trade receivables and contract assets that do not contain a significant financing component or for which the practical expedient for contracts that are one year or less is applied. For these financial assets the simplified approach is applied and LT-ECLs are recognized.
Simplified approach
The Group applies the simplified approach for trade receivables and contract assets that do not contain a significant financing component. The Group’s trade receivables are of a short-term nature as they are based on credit terms of less than one year and, thus, do not include a significant financing component.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
81
41.Material Accounting Policy Information (continued)
Where the Group does not have reasonable and supportable information that is available without undue cost or effort to measure LT-ECLs on an individual instrument basis and in order to ensure that LT-ECLs are recognised before an asset becomes credit-impaired or an actual default occurs, LT-ECLs on the remaining financial assets are measured on a collective basis.
In such instances and where appropriate, the financial instruments are grouped on the basis of shared credit risk characteristics and the LT-ECLs are estimated using a provision matrix based on actual credit loss experience over past years, which is adjusted to reflect current conditions and the Group’s view of economic conditions over the expected lives of the receivables. Such adjustments are based on factors that are specific to the debtors and economic and industry indicators such as GDP, unemployment rates and/or industry projections, where applicable, unless the effect is considered to be immaterial. For the purpose of the provision matrix, loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency over a selected period, taking into consideration the applicable credit terms for such debtors and the past due status. Unless the effect is immaterial, for receivables after 360 days, the loss rate is adjusted to take into consideration the proportion of actual recoveries over the selected period.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.
In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition: an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating, significant deterioration in external market indicators of credit risk for a particular financial instrument, existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the borrower’s ability to meet its debt obligations, an actual or expected significant deterioration in the operating results of the borrower, an actual or expected significant adverse change in the regulatory, economic, or technological environment of the borrower that results in a significant decrease in the borrower’s ability to meet its debt obligations.
Forward-looking information considered includes economic and industry indicators such as GDP, unemployment rates and/or industry projections as well as factors that are specific to the debtors, unless the effect is considered to be immaterial.
Irrespective of the outcome of the above assessment, it is presumed that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless there is reasonable and supportable information, that is available without undue cost or effort, that demonstrates otherwise.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
82
41.Material Accounting Policy Information (continued)
Despite the aforegoing, it is assumed that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if i) the financial instrument has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. A financial asset is considered to have low credit risk when it has an internal or external credit rating of ‘investment grade’ as per globally understood definitions. The Group and the Company have applied the low credit risk assumption for the following classes of financial assets – cash at bank with an external credit rating of Investment grade.
Definition of default
For internal credit risk management purposes, the Group considers it as constituting an event of default when historical experience or information indicates that a financial asset is generally not recoverable as the debtor is unlikely to pay its creditors in full, without taking into account any collateral held by the Group or the Company.
Irrespective of the above analysis, default is considered to have occurred when a financial asset is more than 90 days past due unless reasonable and supportable information is available to demonstrate that a more lagging default criterion is more appropriate. The Group and the Company rebut the 90 days past due presumption for trade receivables since they have reasonable and supportable information to demonstrate that a more lagging default criterion of 360 days past due is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events: significant financial difficulty of the issuer or the borrower, a breach of contract, such as a default or delinquency in interest or principal payments, the probability to enter bankruptcy or other financial reorganisation, the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider, the disappearance of an active market for that financial asset because of financial difficulties.
Write-off policy
The Group and the Company write off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
83
41.Material Accounting Policy Information (continued)
Loan commitments
For loan commitments, the date that the Company becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing the financial instrument for impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a loan commitment, the Company considers changes in the risk of a default occurring on the loan to which a loan commitment relates. For undrawn loan commitments, the ECL is the present value of the difference between the contractual cash flows that are due to the Company if the holder of the loan commitment draws down the loan, and the cash flows that the Company expects to receive if the loan is drawn down. For loan commitments, the loss allowance is recognised as a provision.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method and comprises expenditure incurred in acquiring the inventories and other costs incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion.
Revenue Recognition
The Group and the Company generate income from regulated revenue, unregulated revenue and leases.
•Regulated revenue comprises income from aviation services which arise from income from passenger services charges and aircraft landing and parking fees.
•Unregulated revenue consists of security fees, PRM charges, income from ground handling charges, certain car parking revenue, income from VIP services as well as meteorological services and other income.
Revenue from operating leases reflects all income from renting office, retail, food and beverage, and advertising space including commissions based on sales as well as income from renting certain car parks. The accounting policies for this revenue stream are addressed under “Leases – the Group as a lessor” below.
The remainder of this note addresses regulated and unregulated revenue from contracts with customers.
Revenue from contracts with customers is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group and the Company recognise such revenue when (or as) they satisfy a performance obligation by transferring control of a promised good or service to the customer.
Regulated revenue
Regulated revenue constitutes income based on fees that are subject to the Airport Economic Regulations. These fees are charged to airlines and aircraft operators for the use of the airport infrastructure and include passenger service charges as well as landing and parking fees.
The performance obligation is to make the airport available as and when each airline makes use of it. The transaction price follows a set fee structure and is based on a variety of underlying metrics, such as the number of departing passengers, and the maximum take-off weight, which metrics become known by the time the services are provided and thus no significant estimates are required in this respect.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
84
41.Material Accounting Policy Information (continued)
In determining the transaction price, consideration is taken of variable fee-reducing rebates based on incentive agreements. Incentives are deducted from revenue in full and are included within the line item ‘Trade and other payables’. Any such incentives which are not taken up are recognised as revenue only when it is highly probable that a significant reversal will not occur, that is, when the uncertainty associated with the incentives is subsequently resolved.
The performance obligation in relation to regulated revenue is satisfied at a point in time. A receivable is recognised as the services are provided and included in the line item ‘Trade and other receivables’ until the actual payment is made by the respective customers.
In determining the transaction price, consideration is also made of contributions payable to airlines through a government entity, in an effort to improve the number of passengers departing from the airport, thus resulting in additional revenues to the Company and the Group. Such contributions are payable to an Air Route Development Fund that is administered by the government entity, with a particular focus being made on the timing and destination of strategic routes which result in increased revenues. The allocations that are made by this Fund to the respective airlines are subject to the satisfaction by the airlines of the conditions attaching to eligibility for such contributions and accordingly any revenues disclosed in the respective notes are net of any such contributions. The amounts payable by the Company and the Group to the Fund are non-refundable and vary with the number of passenger departures, subject to a fixed cap. These amounts are treated as a reduction of the transaction price (and therefore, of revenue) since such payments are not considered to be in exchange for a distinct good or service that the customers, or the government entity, transfer to the Company or the Group. These amounts are included within the line item ‘Trade and other payables’ until they are settled. No estimates are required in this regard since the extent of the consideration payable is dependent on the number of passenger departures and thus corresponds to the Company’s and the Group’s efforts to satisfy its performance obligation, with such allocation being consistent with the objective of allocating the transaction price in an amount that depicts the amount of consideration to which the Company and the Group expect to be entitled in exchange for transferring the promised services to the customers.
Unregulated revenue
Unregulated revenue is income based on charges that are not regulated, but subject to fee structures that are negotiated with the Group’s customers. Fees for each service are uniform among all customers.
•Security fees are charged to airlines in order to recover costs relating to the security function of the Group. The performance obligation is to provide a safe and secure environment for all stakeholders of the airport campus. The transaction price is represented by a set fee that is based on the number of departing passengers of an airline or aircraft operator. The performance obligation is satisfied over time.
•PRM fees are charged to airlines in order to recover costs emanating to the Group for the provision of assistance to persons with reduced mobility (PRM) in line with Regulation (EC) 1107/2006. The performance obligation is to arrange the required services for persons with reduced mobility on behalf of the airline or aircraft operator. The transaction price is represented by a set fee that is based on the number of departing passengers of an airline or aircraft operator. The performance obligation is satisfied at a point in time.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
85
41.Material Accounting Policy Information (continued)
•Ground handling concession income is revenue from ground handling and infrastructure providers for the right to provide their services (ground handling, fuelling) within the airport perimeter for the duration of the respective contracts. The performance obligation is to make the maintained airport infrastructure and equipment available so that the ground handling provider is able to provide its services to airlines and aircraft operators. The transaction price follows a fee structure that is based on a variety of underlying metrics, such as the number of departing passengers, aircraft movements, maximum take-off weight, kilograms of freight and mail and litres of fuel. The Group has determined that it provides a daily service of access that is distinct, with the uncertainty related to the consideration receivable being also resolved on that basis and accordingly no further estimates are required in this regard. The performance obligation is satisfied over time. A receivable is recognised as the services are provided and included in the line item “Trade and other receivables” until the actual payment is made by the respective ground handling provider.
•Car parking income primarily represents revenue generated through the provision of car parking spaces at the car parks within the airport perimeter, other than revenue from rental income resulting from the lease of car parks which is addressed by the accounting policy on leases. The performance obligation is to provide and maintain car parking space for the duration of the stay. The transaction price follows a pre-determined fee structure that is based on parking time and that is payable immediately upon use. The performance obligation is satisfied over time. Besides, income from the sale of car park access cards, which allow customers to make use of the car park over a fixed period of time, is recognised over time on straight-line basis for the duration of the contract.
•Income from VIP services primarily represents revenue generated through the provision of services, such as access to airport lounges and ancillary services (e.g. porterage, meet-and-greet). The Group’s performance obligation is to provide the services if and when requested by customers in line with underlying terms and conditions. The transaction price follows a fixed price structure. The performance obligation is satisfied over time. In addition, the Group issues membership cards that enable members to make use of a variety of VIP services and facilities provided by the airport, such as lounges and access to car parks, over a fixed period. Such revenue is recognised over time on a straight-line basis for the duration of the contract with any deferred income being recognised as a contract liability within the line item ‘Trade and other payables’.
•Revenue from meteorological services is generated from the provision of meteorological services to Malta Air Traffic Services (MATS). The Group’s performance obligation is to provide meteorological services in respect of air navigation as well as for public, maritime and agricultural purposes and to maintain the equipment and facilities necessary to do so over the specified contractual period. The transaction price is a contractually agreed amount recognised over the term of the agreement. The performance obligation is satisfied over time.
In addition to the above-mentioned revenue streams, the Group and the Company generate other income that is classified within unregulated revenue, which arises from a variety of services, such as the issuance of security passes, the provision of luggage trolleys, lost and found services and left luggage.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
86
41.Material Accounting Policy Information (continued)
Government Grants
Grants are recognised when there is reasonable assurance that all the conditions attached to them are complied with and the grants will be received. Grants related to income are recognised in the profit or loss over the periods necessary to match them with the related costs which they are intended to compensate on a systematic basis. Such grants are presented as part of profit or loss, by deducting them from the related expense. Grants related to assets are presented in the Statement of Financial Position as deferred income, which is recognised as income on a systematic basis over the useful life of the asset.
Deferred Income
Deferred income arising from the sale of terminal buildings that took place on the date of the privatisation of the Company in 2002 is transferred separately to the income statement in equal annual instalments over the remaining life of the underlying assets.
Leases
The Group as a lessee
For any contract entered into by the Group, it considers whether the contract is, or contains a lease. A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
To apply this definition the Group assesses whether the contract meets three key evaluations which are (1) whether the contract contains an identified asset; (2) whether the Group has the right to obtain substantially all of the economic benefits from use throughout the period of use; and (3) whether the Group has the right to direct the use of the identified asset throughout the period of use.
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the balance sheet.
The Group measures the lease liability at the lease commencement date at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease (if that rate is readily determined) or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed) less any incentives receivable, variable payments based on an index or rate (initially measured using the index or rate at the commencement date), amounts expected to be payable under a residual value guarantee and payments arising from purchase options or termination penalties reasonably certain to be exercised.
Variable lease payments not included in the measurement of the lease liability are recognised in profit or loss (unless the costs are included in the carrying amount of another asset) in the period in which the event or condition that triggers those payments occurs.
The right-of-use asset is initially measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made at or before the lease commencement date.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
87
41.Material Accounting Policy Information (continued)
Right-of-use assets are subsequently measured using the cost model. The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The Group also assesses the right-of-use asset for impairment when such indicators exist in which case the recoverable amount of the asset is estimated.
Subsequent to initial measurement, the liability is reduced for payments made and increased for interest (using the effective interest method). It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.
The Group accounts for short-term leases and leases of low-value assets using the recognition exemptions. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term or another systematic basis that is more representative of the pattern of the lessee’s benefit.
As a practical expedient, a lessee is permitted not to separate non-lease components from lease components, and instead account for any lease and associated non-lease components as a single lease component. The Group has not used this practical expedient. For contracts that contain a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The Group does not present right-of-use assets separately from other assets in the statement of financial position. It includes such assets within the same line item as that within which the corresponding underlying assets would be presented if they were owned. Right-of-use assets are presented within Property, plant and Equipment and Investment Property. The Group presents lease liabilities separately from other liabilities in the Statement of Financial Position.
In the Statement of profit or loss and other comprehensive income, the Group presents interest expense on the lease liability separately from the depreciation charge for the right-of-use asset. The lease payments attributable to low value items and short-term leases for which the recognition exemption is applied, together with variable lease payments not included in the measurement of the lease liability, are presented within ‘other operating expenses.’
In the Statement of Cash Flows, the Group classifies cash payments for the principal portion of the lease liability within financing activities and the cash payments for the interest portion of the lease liability within operating activities.
Malta International Airport p.l.c.
Notes to the Financial Statements
Year Ended 31 December 2023
88
41.Material Accounting Policy Information (continued)
The Group as a lessor
As a lessor the Group classifies its leases as either operating or finance leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset and classified as an operating lease if it does not. Lease classification is made at inception of the lease, which was the earlier of the date of the lease agreement and the date of commitment by the parties to the principal terms and conditions of the lease.
Rentals receivable under operating leases are recognised as income in profit or loss on a straight-line basis over the lease term unless another systematic basis is more representative of the pattern in which use benefit derived from the leased asset is diminished.
When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
Furthermore, for a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract applying IFRS 15. With respect to modifications to an operating lease in which the Group is a lessor, such modifications are accounted for as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.
Employee Benefits
Employee benefits include short-term benefits and post-employment benefits.
Short-term employee benefits
The Group and the Company contribute towards the state pension fund in accordance with local legislation. The only obligation of the Group and the Company is to make the required contribution. Costs are expensed in the year in which they are incurred.
Retirement plans
For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with estimations being carried out at each reporting date. Past service cost is recognised as an expense at the earlier of the following dates (a) when the plan amendment or curtailment occurs and (b) when the entity recognises related restructuring costs or termination benefits. The amount recognised in the Statement of Financial Position represents the present value of the expected future payments required to settle the obligation resulting from employee service in the current and prior periods. The service cost and the net interest on the net defined benefit liability are recognised in profit or loss.
Remeasurements of the net defined benefit liability, comprising actuarial gains and losses are recognised in other comprehensive income and are not reclassified to profit or loss in a subsequent period. Such remeasurements are reflected immediately in retained earnings.
Actuarial gains and losses are changes in the present value of the defined benefit obligation resulting from experience adjustments and the effects of changes in actuarial assumptions. Actuarial assumptions are an entity’s best estimates of the variables that will determine the ultimate cost of providing post-employment benefits.

Independent auditor’s report

To the Shareholders of Malta International Airport p.l.c.

Report on the audit of the financial statements

Our opinion

In our opinion:

● The Group financial statements and the Parent Company financial statements (the “financial statements”) of Malta International Airport p.l.c. give a true and fair view of the Group and the Parent Company’s financial position as at 31 December 2023, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and

● The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).

##### Our opinion is consistent with our additional report to the Audit Committee.

#####

##### What we have audited

Malta International Airport p.l.c.’s financial statements comprise:

● the Consolidated and Parent Company income statements and statements of comprehensive income for the year ended 31 December 2023;

● the Consolidated and Parent Company statements of financial position as at 31 December 2023;

● the Consolidated and Parent Company statements of changes in equity for the year then ended;

● the Consolidated and Parent Company statements of cash flows for the year then ended; and

● the notes to the financial statements, comprising material accounting policy information and other explanatory information.

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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

#####

##### Independence

We are independent of the Group and the Parent Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the parent company and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).

The non-audit services that we have provided to the parent company and its subsidiaries, in the period from 1 January 2023 to 31 December 2023, are disclosed in note 9 to the financial statements.

Our audit approach

#####

##### Overview

| ● Overall group materiality: €3,100,000 which represents 5% of profit before tax.
● The audit carried out by the group engagement team covered the parent company and the three subsidiaries consolidated as part of the group.
● Recognition of revenue

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

##### Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group materiality | €3,100,000
How we determined it | 5% of profit before tax
Rationale for the materiality benchmark applied | We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark by ISAs for profit based entities. We chose 5% which is within the range of quantitative materiality thresholds that we consider acceptable.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €155,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

#### Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter | How our audit addressed the Key audit matter
Recognition of revenue Revenue recognition has been selected as a key audit matter due to the significance of the amount to the consolidated income statement of Malta International Airport p.l.c.’s financial statements. Furthermore, the matter requires significant audit attention due to the various revenue streams and the manner in which each revenue stream is computed. The determination of revenue is complex in nature and treated as a significant risk in the audit. Revenue recognition is governed by IFRS 15 ‘Revenue from contracts with customers’ and IFRS 16 ‘Leases’. For the year ended 31 December 2023 the Group’s revenue amounted to €120,247,948 (2022: €88,016,852). Revenue is a key driver of the profitability before tax of the Group, which for the year ended 31 December 2023 amounted to €62,248,619 (2022: €41,750,521). The Group generates income from regulated revenue, unregulated revenue and leases. Regulated revenue comprises income from aviation services which arise from income from passenger services charges. Regulated revenue also comprises aircraft landing and parking fees which are based on maximum take-off weight and aircraft area. Unregulated revenue consists of security fees, PRM (persons with reduced mobility) charges and income from ground handling services which are also based on passenger numbers, and maximum take-off weight. Unregulated revenue also comprises certain car parking revenue, income from VIP services, recharges for utilities as well as meteorological services, fuel throughput charges, charges for the use of common areas and other income. Revenue from leases reflects all income from renting office, retail, food and beverage, and advertising space including commissions based on sales as well as income from renting certain car parks. The revenue recognition accounting policies are disclosed in note 41 to these financial statements. Further detail covering revenue can be found in note 6 to the financial statements. | We tested the recognition of revenue as follows: - We performed a detailed understanding of the revenue process including an understanding of the design and implementation of the manual and automated controls surrounding revenue recognition. - Our IT audit specialists have directed their efforts at systems and business processes that have a significant impact on financial reporting to ensure an appropriate level of control operates within the IT general control environment with targeted areas including overall IT management and governance, access to programs and data, computer operations, program changes and development. Furthermore, the IT audit specialists ensured that an appropriate level of automated and manual application controls are in place to support the processing of transactions by the key financial systems. - We reconciled revenue streams, including airport regulated and unregulated revenue, income from tenants through leasing and parking revenue, to listings extracted from operating systems. These listings were deemed to be key reports and therefore we performed testing on these listings to obtain comfort on the accuracy and completeness of these key reports. Key variables including passenger numbers, maximum take-off weight (“MTOW”) figures and aircraft parking area have been confirmed to third party supporting documentation and certificates. - We recomputed, based on the key reports tested as per above and through the use of a data science and analytics automation platform, the airport revenue derived from airlines and ground handlers based on passenger numbers, maximum take-off weight (“MTOW”) figures and aircraft parking area. - We tested relevant manual controls, mainly cash reconciliations performed by car park attendants and members of the finance team, relating to parking revenue which includes revenue collected through cash. - We tested a sample of other revenue transactions by agreeing the revenue to supporting documentation including contracts, invoices and cash receipts and ensuring that revenue is recognised appropriately. - We performed testing surrounding revenue recognised in the last few days of 2023 and initial days of 2024 to ensure that revenue is recognised in the correct period. Based on work carried out as detailed in the paragraphs above, we found revenue recognition to be appropriate and in line with the expected treatment of IFRS 15 ‘Revenue from contracts with customers’ and IFRS 16 ‘Leases’.

How we tailored our group audit scope

The Group is composed of four components: Malta International Airport p.l.c. (the parent company) and its three wholly owned subsidiaries. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

The group audit team performed all of this work by applying the overall Group materiality, together with additional procedures performed on the consolidation. This gave us sufficient appropriate audit evidence for our opinion on the Group financial statements as a whole.

Other information

The directors are responsible for the other information. The other information comprises all of the information in the Annual Financial Report (but does not include the financial statements and our auditor’s report thereon).

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

#### Responsibilities of the directors and those charged with governance for the financial statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control.

● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit 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 those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6

We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the Annual Financial Report of Malta International Airport p.l.c. for the year ended 31 December 2023, entirely prepared in a single electronic reporting format.

Responsibilities of the directors

The directors are responsible for the preparation of the Annual Financial Report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.

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.

● 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 2023 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.

Other reporting requirements

The Annual Financial Report and Financial Statements 2023 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.

The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.

Area of the Annual Financial Report and Financial Statements 2023 and the related Directors’ responsibilities | Our responsibilities | Our reporting
Directors’ report The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. | We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements. We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements. In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements. | In our opinion: ● the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ● the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386). We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
Corporate Governance – Statement of Compliance The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles. | We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements. We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97. We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate governance procedures or its risk and control procedures. | In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
Remuneration report The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules. | We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included. | In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
| Other matters on which we are required to report by exception 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 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 which, to the best of our knowledge and belief, we require for our audit. We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. | We have nothing to report to you in respect of these responsibilities.

Other matter – use of this report

Our report, including the opinions, has been prepared for and only for the Parent Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.

Appointment

We were first appointed as auditors of the Company on 11 May 2022. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 2 years.

Stephen Mamo

Principal

For and on behalf of:

PricewaterhouseCoopers

78, Mill Street

Zone 5, Central Business District

Qormi

Malta

28 February 2024