Company Registration Number: C 94829
G3 FINANCE p.l.c.
Annual Report and Financial Statements
31 December 2023
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
Pages
Directors’ report
1 - 4
Corporate governance – Statement of compliance
5 - 9
Statement of financial position
10
Statement of comprehensive income
11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 27
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
1
Directors’ report
The directors present their report and the audited financial statements for the year ended 31 December
2023.
Principal activities
The Company is principally involved to act as a financing company, serving as a vehicle through which the
G3 Group will continue to finance its future projects.
Review of business
During the year under review, finance income on loans from fellow subsidiary, G3 Hospitality Limited,
amounted to €701,800, whilst interest payable on bonds totalled €562,500.
The Company registered a profit after tax of €11,831 (2022: €88,928) after incurring administrative
expenses, mainly relating to listing and compliance costs, directors’ emoluments and professional fees,
amounting to €116,644.
The company’s balance sheet is primarily made up of the bond issue of €12.5 million (classified as non-
current liabilities) and the loan receivable from G3 Hospitality Limited (classified as non-current assets)
amounting to €12,124,472. G3 Finance p.l.c. equity as at year end is stated at €260,219, primarily made up
of the share capital funds.
The company recognises that the key risk and uncertainty of its business is that of the potential non-
fulfilment by the borrower (noted above) of its obligations.
Guarantor’s performance for 2023 and outlook for 2024
On 25 March 2022, G3 Finance p.l.c. (a fellow subsidiary of G3 Hospitality Limited) issued an aggregate of
€12,500,000 in bonds having a face value of €100 per bond, subject to a minimum holding of €2,000 and
in multipliers of €100 thereafter. The bonds have a coupon interest rate of 4.5% per annum and were listed
on the Official List of the Malta Stock Exchange on 6 April 2022.
Proceeds of the bond issue were advanced to one of the subsidiaries of the G3 Group, namely G3
Hospitality Limited, for the purpose of re-financing existing bank facilities within the group and to finance
future growth in operations.
G3 Holdings Limited is the Guarantor of the above-mentioned bonds. For the year ending 31 December
2023, the group registered a profit after tax of €1,477,634 (2022: €1,617,122). At 31 December 2023, the
group’s net asset value was €21,588,214 (2022: €20,110,577) whilst total assets were €44,887,379 (2022:
€42,110,189).
The group also continued to strengthen its operations within the local hospitality sector with the taking over
of management operations of Palm Beach Lido, Armier, as from June 2023 and DOMS Boutique Living and
DOMS Brasserie as from October 2023. These additions continued to strengthen the company’s offerings
in hospitality and food and beverage in the Mellieha area.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
2
Directors’ report
- continued
Review of business
- continued
Guarantor’s performance for 2023 and outlook for 2024 – continued
Given the size of the group and its dependence on the global economy, the group recognises that the main
risk and uncertainty to its business is the potential downturn in the global economy with particular effect on
the tourism and services industries.
The current global geo-political situation is causing disruptions in economic activity and supply chains,
leading to inflation and putting pressure on commodity prices. Management continues to keep a close watch
on any developments and also exercises control on variable expenditure.
Management has prepared granular forecast profit and loss and cash flow projections for the period to 2032
using prudent assumptions.
Management has factored in a number of stress case scenarios into the model
but results for cashflow and profitability remain favourable. Projections continue to forecast that the group
will have adequate levels of liquidity and profitability to be able to operate and meet commitments as and
when they fall due.
Based on the above, the directors look forward with optimism to yet another year of good results despite
the challenges that lie ahead and remain confident that these financial statements can continue being
prepared on a going concern basis.
Moreover, it should be noted that in view of the measures undertaken by the Group, including the projections
outlined above, the directors are of the opinion that the Group will have the necessary funds to finance the
interest falling due in April 2024 and going forward.
Results and dividends
The statement of comprehensive income is set out on page 11.
The directors do not recommend the
payment of a dividend and propose that the balance of accumulated profits amounting to €8,219 (2022:
accumulated losses €3,612) be carried forward to the next financial year.
Financial risk management
The company's activities potentially expose it to a variety of financial risks, including liquidity risk.
The company's overall risk management program focuses on the unpredictability of markets and seeks to
minimise potential adverse effects on the company's financial performance.
Risk management is carried
out within the company where applicable under policies approved by the management of the company. The
company does not use derivative financial instruments to hedge risk exposures.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the
availability of funding through an adequate amount of committed credit facilities and the ability to close out
market positions. Refer to Note 2 to the financial statements.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
3
Directors’ report
- continued
Principal risks and uncertainties faced by the Company
The company’s main objective, as a finance company for the G3 Group, is to raise funds, mainly from the
capital markets, to finance the operations and projects of the group. In this context, the company’s ability to
recover loans issued to its fellow subsidiary is dependent on the performance of G3 Hospitality Limited
which is the operating company within the G3 Group and to which amounts have been advanced by the
company. Further details of the performance of the guarantor are provided in the review of the guarantor’s
performance for FY 2023 and the outlook for FY 2024 set out above.
Within this context, the directors have evaluated the risks faced by the fellow subsidiary to which funds have
been advanced and continue to monitor closely the impact of events as they take place in the local and
global economy, and how these would affect the ability of the fellow subsidiary to honour its financial
commitments. On the basis of this analysis, the directors are of the view that all amounts receivable by the
company are fully recoverable.
A detailed review of the risk management policies employed by the company is included in Note 2 of these
financial statements.
Directors
The directors of the company who held office during the year were:
Alexander Grima
Daniel Grima
John Grima
Jonathan Grima
Albert Grech
Juanita Bencini
Michael Lewis Macelli
Statement of directors’ responsibilities for the financial statements
The directors are required by the Maltese Companies Act (Cap. 386) to prepare financial statements which
give a true and fair view of the state of affairs of the company as at the end of each reporting period and of
the profit or loss for that period.
In preparing the financial statements, the directors are responsible for:

ensuring that the financial statements have been drawn up in accordance with the International
Financial Reporting Standards as adopted by the EU;

selecting and applying appropriate accounting policies;

making accounting estimates that are reasonable in the circumstances;

ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate
to presume that the company will continue in business as a going concern.
The directors are also responsible for designing, implementing and maintaining internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and that comply with the Maltese Companies Act (Cap. 386).
They are also responsible for safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
4
Directors’ report
- continued
Statement of directors’ responsibilities for the financial statements
- continued
The financial statements of G3 Finance p.l.c. for the year ended 31 December 2023 are included in the
Annual Financial Report 2023, which is made available on the G3 Group website.
The directors are responsible for the maintenance and integrity of the Annual Financial Report on the
website in view of their responsibility for the controls over, and the security of, the website. Access to
information published on the group’s website is available in other countries and jurisdictions, where
legislation governing the preparation and dissemination of financial statements may differ from requirements
or practice in Malta.
The directors confirm that, to the best of their knowledge:

the financial statements give a true and fair view of the financial position of the company as at 31
December 2023, and of the financial performance and the cash flows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU; and

the Annual Report includes a fair review of the development and performance of the business and
the position of the company, together with a description of the principal risks and uncertainties that
the company and the guarantor face.
Going concern statement pursuant to Capital Markets rule 5.62
After making enquiries, the directors, at the time of approving the financial statements, have determined
that it is reasonable to assume that the company has adequate resources to continue operating for the
foreseeable future. For this reason, the directors have adopted the going concern basis in preparing the
financial statements.
Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their re-
appointment will be proposed at the Annual General Meeting.
Signed on behalf of the Board of Directors on 23 April 2024 by Daniel Grima (Executive Director) and
Juanita Bencini (Independent, Non-Executive Director) as per the Directors’ Declaration on ESEF Annual
Financial Report submitted in conjunction with the Annual Financial Report.
Registered office:
The Pergola,
Adenau Street
Mellieha
MLH 2014
Malta
Telephone (+356) 21523912
Company secretary
Dr Luca Vella
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
5
Corporate Governance – Statement of Compliance
Introduction
G3 Finance p.l.c. (the “
Company
”) and the G3 group of companies (the “
G3 Group
”) is committed to
observing the principles of transparency and responsible corporate governance. The Board considers
compliance and corporate governance principles to constitute an important means of maintaining the
confidence of present and future shareholders, bondholders, creditors, employees, business partners and
the general public, amongst other stakeholders. Pursuant to the requirements of the Capital Markets Rules
issued by the Malta Financial Services Authority, the Company hereby reports on how it has complied with
the Code of Principles of Good Corporate Governance (the “
Code
’’) contained in Appendix 5.1 of the Capital
Markets Rules for the financial period ended 31 December 2023, which report details the extent to which
the Code has been adopted, as well as the effective measures taken by the Company to ensure compliance
with said Code.
The Board recognises that, in virtue of Capital Markets Rule 5.101, the Company is exempt from the
requirement to disclose the information prescribed by Capital Markets Rules 5.97.1 to 5.97.3, 5.97.6 and
5.97.8.
Compliance with the Code
Principles 1 and 4 - The Board of Directors and its Responsibilities
The Board is responsible for overseeing the Company’s strategic planning process, as well as reviewing
and monitoring management’s execution of the corporate and business plans. The Board delegates certain
powers, authorities and discretions to the Audit Committee, as duly constituted in terms of the Capital
Markets Rules, the role and competence of which committee are regulated in furtherance of Terms of
Reference duly implemented for the purpose and as further described hereunder.
The Board of Directors has a composition that ensures that the Company is led by individuals who have the
necessary skills and diversity of knowledge relative to the Company’s and the G3 Group’s respective
businesses. It considers strategic issues, key projects and regularly monitors performance against delivery
of the key targets of the annual strategic plans and forecasts.
In fulfilling its mandate, the Board assumes responsibility for:
-
reviewing the Company’s strategy on an on-going basis, as well as setting the appropriate business
objectives;
-
reviewing the effectiveness of the Company’s system of internal controls;
-
implementing an appropriate organisational structure for planning, executing, controlling and
monitoring business operations in order to achieve the Company’s objectives;
-
identifying and ensuring that significant risks are managed satisfactorily; and
-
ensuring that Company policies are being rigorously observed.
Principle 2 - Chairman and Managing Director
The roles of Chairman and Managing Director are occupied by separate individuals. Mr Daniel Grima carries
out the role of G3 Group Managing Director, overseeing the overall management of the G3 Group, while Mr
John Grima continued to act as Chairman of the Board during the period under review.
The Chairman is responsible to lead the Board and set its agenda. The Chairman ensures that the Board
is in receipt of precise, timely and objective information, encourages active engagement by all members of
the Board for discussion and ensures effective communication with shareholders.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
6
Corporate Governance – Statement of Compliance
- continued
Principle 3 – Composition of the Board
The Company’s Memorandum of Association provides that the Board of Directors shall consist of not less
than four (4) and not more than eight (8) Directors. Each Director has one (1) vote. All Directors are
appointed by means of an ordinary resolution of the shareholders of the Company in general meeting.
Accordingly, G3 Holdings Limited, the parent company of the G3 Group, is empowered to appoint the
Directors of the Company, thereby putting it in a position to appoint an absolute majority of the Directors
and, accordingly, have control over the management and operations of the Company.
All Directors are to retire from office at least once every three (3) years but shall be eligible for re-election.
During the last Annual General Meeting of the Company held on 16 May 2023 the Company’s shareholders
approved the re-appointment of the then-current Directors up to the next Annual General Meeting in
accordance with the Company’s articles of association.
Accordingly, As at the date of this statement and during the reporting period under review, the Board of the
Company is composed of the seven (7) individuals listed below, who are collectively responsible for the
overall direction and management of the Company. The Board currently consists of three (3) executive
Directors, who are entrusted with the Company’s day-to-day management, and four (4) non-executive
Directors, two (2) of whom are also independent of the Company, whose main functions are to monitor the
operations of the executive Directors and their performance, as well as to review any proposals tabled by
the executive Directors. No Directors have been removed since the Company’s inception.
Executive Directors:
John Grima – Chairman
Daniel Grima
Jonathan Grima
Non-executive Directors:
Alexander Grima
Albert Grech
Independent, non-executive Directors:
Juanita Bencini
Michael Lewis Macelli
Luca Vella acts as company secretary to the Board of Directors, as well as secretary to the Audit Committee.
In compliance with the Capital Markets Rules, the Board considers that the independent, non-executive
Directors are independent of management and free from any significant business, family or other
relationship with the Company, its controlling shareholder or its management that could materially interfere
with the exercise of their independent judgment. In assessing the independence of the independent, non-
executive Directors, due notice has been taken of Capital Markets Rule 5.119. The composition of the Board
has a balance of knowledge and experience, as well as a strong non-executive presence, to allow continued
scrutiny of performance, strategy and governance.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
7
Corporate Governance – Statement of Compliance
- continued
Principle 5 – Board Meetings
Meetings of the Board are held as frequently as considered necessary, with a minimum of four (4) meetings
being held annually – the Board met four (4) times during 2023. The Board members are notified of
forthcoming meetings at least seven (7) days before the said meeting. In addition, the notification includes
the issue of an agenda and any supporting documentation as necessary, in order to ensure that all meetings
are of a highly effective nature and all participants are well informed and able to effectively contribute to
Board decisions. Attendance with regards to Board meetings is recorded in the minutes of the meetings.
Minutes of all Board and Audit Committee meetings are circulated to all members and kept on file by the
Company Secretary.
Board and Audit Committee meetings are attended by the Financial Controller of the G3 Group, Ms Ann
Abela, in order for the Board of the Company to have direct access to the financial operation and results of
the G3 Group. This is also intended to ensure that the policies and strategies adopted by the Board are
effectively implemented by the finance team and senior management.
The Board is headed by the Chairman, Mr John Grima.
All executive Directors have more than 15 years’ work experience at the G3 Group, whereas the non-
executive Directors and the independent, non-executive Directors have relevant experience related to the
business in which the Group operates. The remuneration of the Directors is reviewed periodically by the
shareholders of the Company.
All Directors of the Company, including, therefore, the non-executive Directors and the independent, non-
executive Directors, have access to the G3 Group’s in-house and external financial and legal advisors who
keep said Directors adequately informed of all statutory and regulatory requirements connected to the
business of the Company and the G3 Group generally on an on-going basis. The Directors are also kept
updated with respect to their obligations in terms of the Market Abuse Regulation [Regulation (EU)
No 596/2014] in view of their position as Restricted Persons (PDMRs and Persons having access to Internal
Information) of the Company.
Principle 6 – Information and Professional Development
The Company firmly believes in the professional development of all the members in the G3 Group. The
Managing Director is responsible for establishing and implementing incentives which are aimed to maintain
and recruit employees and management personnel. Furthermore, regular training exercises are held for the
G3 Group’s employees to keep abreast of current technological and hospitality standards and other relevant
subject matter trends and practices. Directors are encouraged to talk directly to any member of
management regarding any questions or concerns the Directors may have. Senior management are invited
to attend Board meetings from time to time when and as appropriate.
Principle 8 – Committees
The Board delegates certain powers, authorities and discretions to the Audit Committee. The Company’s
Board has established an Audit Committee for the purposes of
inter alia
:
a)
monitoring the financial reporting process and submitting recommendations or proposals to ensure
its integrity;
b)
monitoring of the effectiveness of the Company’s internal quality control and risk management
system;
c)
making recommendations to the Board in relation to the appointment of the external auditor and to
approve the remuneration and terms of engagement of the external auditor, following appointment
by the shareholders during the Company’s annual general meeting;
d)
reviewing and monitoring the external auditor’s independence;
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
8
Corporate Governance – Statement of Compliance
- continued
Principle 8 – Committees - continued
e)
evaluating the arm’s length nature of any proposed transactions to be entered into by the Company
and a related party, to ensure that the execution of such transaction is at arm’s length, conducted on
a sound commercial basis and in the best interests of the Company; and
f)
assessing any potential conflicts of interest between the duties of the Directors and their respective
private interests or duties unrelated to the Company, to ensure that any potential abuse is managed,
controlled and resolved in the best interests of the Company and according to law.
As indicated above, the Company adopts measures in line with the Code with a view to ensuring that the
relationship with its major shareholder is retained at arm’s length, including adherence to rules on related
party transactions set out in Chapter 5 of the Capital Markets Rules. Said rules require the vetting and
approval of any related party transaction by the Audit Committee, which is constituted in its entirety by non-
executive Directors, two (2) of whom are independent, and of which one, in the person of Juanita Bencini,
acts as Chair.
The Audit Committee has, pursuant to the relative terms of reference, been granted express powers to be
given access to the financial position of the Company and all other entities comprising the G3 Group on a
quarterly basis.
The Board has formally appointed the following three (3) individuals as the members of the Audit Committee:
Juanita Bencini – Chairperson and independent, non-executive Director
Michael Lewis Macelli – independent, non-executive Director
Alexander Grima – non-executive Director
Audit Committee members are appointed for a one (1) year term of office. Such term is automatically
renewed for further periods of one (1) year each unless otherwise determined by the Board of Directors of
the Company. The Audit Committee meets at least four (4) times a year, with additional meetings to be
called at the discretion of the Chairperson of the Audit Committee, presently Juanita Bencini. The Audit
Committee met five (5) times during 2023. The Chairperson will also call a meeting of the Audit Committee
if required by any Committee member, by senior management or by the external auditors of the Company.
In compliance with the Capital Markets Rules, Juanita Bencini and Michael Lewis Macelli are considered to
be independent and all members are deemed to be competent in accounting and/or auditing matters. The
Company considers that the members of the Audit Committee have the necessary experience,
independence and standing to hold office as members thereof.
Principle 9 - Relations with shareholders and with the Market
The Company is committed to having an open and communicative relationship with its shareholders and
bondholders. The market is kept updated with all relevant information concerning the Company via the
publication of Company Announcements in terms of the Capital Markets Rules and, furthermore, the
Company regularly publishes such information on its website to ensure continuous relations with the market,
including but not limited to, the Interim and Annual Financial Statements.
Principle 11 - Conflicts of Interest
Directors are expected to always act in the best interests of the Company and its shareholders and
investors. In accordance with the provisions of the Articles of Association of the Company, any actual,
potential or perceived conflict of interest must be immediately declared by a Director to the other members
of the Board, who then decide on whether such a conflict exists, also possibly through a referral to the Audit
Committee. In the event that the Board perceives such interest to be conflicting with the relative Director’s
duties, said Director shall not vote at a meeting of Directors in respect of any contract, arrangement or
proposal in which he/she has a material interest, whether direct or indirect.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
9
Corporate Governance – Statement of Compliance
- continued
Principle 12 - Corporate Social Responsibility
The Board is mindful of and seeks to adhere to sound principles of corporate social responsibility in its
management practices. This helps the G3 Group develop strong relationships with its stakeholders and
create long-term value for society and its business. The G3 Group is committed to play an effective role in
society’s sustainable development, whilst tangibly proving itself to be a responsible and caring citizen of the
community in which it operates. The G3 Group continues to support a number of different local initiatives
aimed at improving the quality of life of the local communities it supports.
Remuneration Statement
In terms of the Memorandum and Articles of Association of the Company, the aggregate emoluments of all
Directors in any one financial year, and any increases thereto, shall be such amount as may, from time to
time, be determined by the shareholders in general meeting. The remuneration of Directors is a fixed
amount
per annum
and does not include any variable component relating to profit sharing, share options or
pension benefits. For the financial year ended on 31 December 2023 the Company paid an aggregate of
€43,002 to its Directors.
Non-compliance with the Code
Other than as stated below, the Company has fully implemented the principles set out in the Code.
Principle 7
–
Evaluation of the Board’s Performance
Under the present circumstances, the Board of the Company does not consider it necessary to appoint a
committee to carry out a performance evaluation of its role, as the Board’s performance is evaluated on an
on-going basis by, and is subject to the constant scrutiny of, the Company’s shareholders and the rules by
which the Company is regulated as a listed company.
Principle 8 - Nomination Committee and Remuneration Committee
The Board of Directors considers that the size and operation of the Company does not warrant the setting
up of nomination and remuneration committees. Given that the Company does not have any employees
other than the Directors and the company secretary it is not considered necessary for the Company to
maintain a remuneration committee. Similarly, the Company has not incorporated a nomination committee.
Appointments to the Board of Directors are determined by the shareholders of the Company in accordance
with the Company’s Memorandum and Articles of Association. The Company considers that the members
of the Board possess the level of skill, knowledge and experience expected in terms of the Code.
Principle 10 – Institutional Shareholders
The Company is ultimately privately held and has no institutional shareholders, therefore, Principle 10 does
not, at present, apply to the Company.
Approved by the Board of Directors on 23 April 2024.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
10
Statement of financial position
As at 31 December
202
3
2022
Notes
€
€
ASSETS
Non
-
current assets
Loans receivable
4
12,124,472
12,124,472
Current assets
Trade and other receivables
5
975,031
835,711
Cash and cash equivalents
6
36,766
2,000
Total current assets
1,011,797
837,711
Total assets
13,136,269
12,962,183
EQUITY AND
LIABILITIES
Equity
Share capital
7
252,000
252,000
Accumulated profits/(losses)
8,219
(3,612)
Total equity
260,219
248,388
LIABILITIES
Non
-
current liabilities
Borrowings
8
12,254,243
12,224,967
Current liabilities
Trade and other payables
9
613,877
488,828
Current tax liability
7,930
-
Total current liabilities
621,807
488,828
Total liabilities
12,876,050
12,713,795
Total
equity and liabilities
13,136,269
12,962,183
The accompanying notes are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 23 April 2024.
The financial statements were signed on behalf of the Board of Directors by Daniel Grima (Executive
Director) and Juanita Bencini (Independent, Non-Executive Director) as per the Directors’ Declaration on
ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
11
Statement of comprehensive income
Year ended 31 December
202
3
2022
Note
€
€
Finance income
10
701,800
581,795
Finance costs
11
(562,500)
(413,014)
Net interest income
139,300
168,781
Administrative expenses
12
(116,644)
(79,853)
Profit
before tax
22,656
88,928
Tax expense
14
(10,825)
-
Profit for the year – Total comprehensive
income
11,831
88,928
The accompanying notes are an integral part of these financial statements.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
12
Statement of changes in equity
Share
Accumulated
p
rofits/
capital
(
l
osses
)
Total
Note
€
€
€
Balance at 1 January 2022
2,000
(92,540)
(90,540)
Transactions with owners
Issue of ordinary share capital
7
250,000
-
250,000
Total transactions with owners
250,000
-
250,000
Comprehensive income
Profit for the year
-
88,928
88,928
Balance at
31 December 2022
252,000
(3
,612
)
2
48,388
Comprehensive
income
Profit for the year
-
11,831
11,831
Balance at
31 December 2023
252,000
8,219
260,219
The accompanying notes are an integral part of these financial statements.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
13
Statement of cash flows
Year ended
31 December
Note
202
3
2022
€
€
Cash
flows
from
/(
used in
)
operating activities
Cash
from
/
(
used in
)
operations
15
37
,
66
1
(98,495)
Income tax paid
(2,895)
-
Net cash generated from/(used in) operating activities
34
,
76
6
(98,495)
Cash
flows used in investing activities
Loans to fellow subsidiary
4
-
(12,124,472)
Net cash used in investing activities
-
(12,124,472)
Cash flows from
financing activities
Net proceeds from bond issue
8
-
12,224,967
Net cash from financing activities
-
12,224,967
Net movement in cash and cash equivalents
34,766
2,000
Cash and cash equivalents at beginning of yea
r
2,000
-
Cash and cash equivalents at end of year
36,766
2,000
The accompanying notes are an integral part of these financial statements.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
14
Notes to the financial statements
1.
Material accounting policy information
The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to the years presented, unless otherwise
stated.
1.1 Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU and the requirements of the Maltese Companies Act (Cap.
386). These financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the
use of certain accounting estimates. It also requires the directors to exercise their judgement in the
process of applying the company’s accounting policies (see Note 3 – Critical accounting estimates
and judgements).
Standards, interpretations and amendments to published standards effective in 2023
In 2023, the company has adopted new standards, amendments and interpretations to existing
standards that are mandatory for the company’s accounting period beginning on 1 January 2023.
The adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in
substantial changes to the company’s accounting policies impacting financial performance and
position.
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
The amendments are intended to help preparers in deciding which accounting policies to disclose in
their financial statements. The term ‘significant’ was replaced with ‘material’ in the context of
disclosing accounting policy information. In assessing the materiality of the accounting policy
information, the Company considers the size of transactions, other events or conditions and their
nature.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published
by the date of authorisation for issue of these financial statements but are mandatory for the
Company’s accounting periods beginning after 1 January 2023.
The Company has not early adopted
these revisions to the requirements of IFRSs as adopted by the EU, and the Company’s management
are of the opinion that, there are no requirements that will have a possible significant impact on the
Company’s financial statements in the period of initial application.
1.2 Foreign currency translation
(a) Functional and presentation currency
The company’s financial results and financial position are measured in the functional currency, i.e.
euro (“€”), which is the currency of the primary economic environment in which the company
operates. These financial statements are presented in euro (“€”), i.e. the presentation currency, which
is the currency in which the company’s share capital is denominated.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
15
1.
Material accounting policy information
- continued
1.2 Foreign currency translation
- continued
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured.
Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are
presented in the income statement within ‘finance income or cost’.
All other foreign exchange gains
and losses are presented in the income statement within ‘other income/(expense)’.
1.3 Financial assets
1.3.1 Classification
The company classifies its financial assets as financial assets measured at amortised costs. The
classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows. The company classifies its financial assets as at amortised cost
only if both the following criteria are met:
- The asset is held within a business model whose objective is to collect the contractual cash flows,
and
- The contractual terms give rise to cash flows that are solely payments of principal and interest.
Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on
initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit
risk associated with the principal amount outstanding during a particular period of time and for other
basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the
company considers the contractual terms of the instrument. This includes assessing whether the
financial asset contains a contractual term that could change the timing or amount of contractual cash
flows such that it would not meet this condition.
1.3.2 Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade date, which is the
date on which the company commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been transferred
and the company has transferred substantially all the risks and rewards of ownership.
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
16
1.
Material accounting policy information
– continued
1.3 Financial assets
– continued
1.3.2 Recognition and measurement
– continued
Interest income on debt instruments measured at amortised cost from these financial assets is
included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition of these instruments is recognised directly in profit or loss and presented in other
gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as
a separate line item in the consolidated statement of profit or loss.
1.3.3 Impairment
The company assesses on a forward-looking basis the expected credit losses (ECL) associated with
its debt instruments carried at amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. The company’s financial assets are
subject to the expected credit loss model.
Expected credit loss model
The company measures loss allowances at an amount equal to lifetime ECLs, except for the
following, which are measured at 12-month ECLs:

debt securities that are determined to have low credit risk at the reporting date; and

other debt securities and bank balances for which credit risk has not increased significantly since
initial recognition.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the company considers reasonable and supportable
information that is relevant and available without undue cost or effort.
The company assumes that
the credit risk on a financial asset has increased significantly if it is more than 30 days past due, and
it considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations
to the company in full, without recourse by the company to actions such as realising security (if any
is held); or the financial asset is more than 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a
financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are
possible within the 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months). The maximum period considered when estimating ECLs is the
maximum contractual period over which the company is exposed to credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present
value of all cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset.
At each reporting date, the company assesses whether financial assets carried at amortised cost are
credit-impaired. 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. Evidence that a
financial asset is credit-impaired includes observable data such as significant financial difficulty of the
borrower or issuer, or a breach of contract such as a default or being more than 90 days past due.
Loss allowances for financial assets measured at amortised cost are deducted from the gross
carrying amount of the assets.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
17
1.
Material accounting policy information
– continued
1.3 Financial assets
– continued
1.3.3 Impairment
– continued
Expected credit loss model
– continued
For the loans receivable from related parties and cash and cash equivalents, the expected credit
losses are immaterial.
1.4 Trade and other receivables
Other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less expected credit loss allowances.
Other receivables are recognised initially at the amount of consideration that is unconditional unless
they contain significant financing components, when they are recognised at fair value. The company
holds the other receivables with the objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost using the effective interest method.
1.5 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.
1.6 Financial liabilities
The company recognises a financial liability in its statement of financial position when it becomes a
party to the contractual provisions of the instrument.
The company’s financial liabilities, other than
derivative contracts, are classified as financial liabilities measured at amortised cost, i.e. not at fair
value through profit or loss under IFRS 9.
Financial liabilities not at fair value through profit or loss
are recognised initially at fair value, being the fair value of consideration received, net of transaction
costs that are directly attributable to the acquisition or the issue of the financial liability.
These
liabilities are subsequently measured at amortised cost.
The company derecognises a financial
liability from its statement of financial position when the obligation specified in the contract or
arrangement is discharged, is cancelled or expires.
1.7 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the
period of the borrowings using the effective interest method. Borrowings are classified as current
liabilities unless the company has an unconditional right to defer settlement of the liability for at least
twelve months after the end of the reporting period.
Issue cost incurred in connection with the issue of the bonds include professional fees, printing,
listing, registration, underwriting, selling costs and other miscellaneous costs.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
18
1.
Material accounting policy information
– continued
1.8 Trade and other payables
Trade payables comprise obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating cycle of the business if longer).
If
not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
1.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position when there is a legally enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
1.10 Current and deferred tax
The tax expense for the period comprises current and deferred tax.
Tax is recognised in profit or
loss, except to the extent that it relates to items recognised directly in equity.
In this case, the tax is
also recognised directly in equity.
Deferred tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements.
However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting nor
taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the end of the reporting period and are expected to apply when
the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances on a net basis.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
19
1.
Material accounting policy information
– continued
1.11 Interest income and expense
Interest income and expense are recognised in profit or loss for all interest-bearing financial
instruments using the effective interest method. The effective interest method is a method of
calculating the amortised cost of a financial asset or a financial liability and of allocating the interest
income or interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the company estimates future cash flows considering all contractual terms of
the financial instrument but does not consider future credit losses. The calculation includes all fees
and points paid or received between parties to the contract that are an integral part of the effective
interest rate, transaction costs and all the other premiums or discounts. Accordingly, interest expense
includes the effect of amortising any difference between net proceeds and redemption value in
respect of the company’s interest-bearing borrowings.
2.
Financial risk management
2.1 Financial risk factors
The company constitutes a financing special purpose vehicle whose bonds will be matched by
equivalent amounts due from, and guaranteed by, G3 Holdings Limited (a related party). The
company’s principal risk exposures relate to credit risk and liquidity risk. The company is not exposed
to currency risk and the directors deem interest rate risk exposure to be minimal due to matching of
its interest costs on borrowings with finance income from its loans and receivables referred to above.
(a) Credit risk
Credit risk primarily arises from loans receivable from G3 Hospitality Limited (Note 4), amounts due
from parent company and fellow subsidiary (Note 5) and cash and cash equivalents (Note 6).
The company’s exposure to credit risk is limited to the carrying amount of financial assets recognised
at the reporting date, as summarised below. The company’s exposures to credit risk as at the end of
the reporting periods are analysed as follows:
The maximum exposure to credit risk at the end of the reporting period in respect of the financial
assets mentioned above is equivalent to their carrying amount as disclosed in the respective notes
to the financial statements.
The company does not hold any collateral as security in this respect.
20
2
3
2022
€
€
Financial assets measured at amortised cost
Loans receivable from fellow subsidiary (Note 4)
12,124,472
12,124,472
Trade and other receivables (Note 5)
973,091
833,792
Cash and cash equivalents (Note 6)
36,766
2,000
13,134,329
12,960,264
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
20
2.
Financial risk management
– continued
2.1 Financial risk factors
– continued
(a) Credit risk
- continued
Cash and cash equivalents
The company’s cash and cash equivalents are held with local financial institutions with high quality
standing or rating and are due to be settled on demand. Management considers the probability of
default to be close to zero as the financial institutions have a strong capacity to meet their contractual
obligations in the near term. The identified impairment loss subject to the impairment requirements
of IFRS 9 on cash and cash equivalents is insignificant.
Loans receivable and other amounts owed by group companies
The company’s loans receivable consist of advances to related entities forming part of the G3 Group
(Note 4), which advances have been affected out of the company’s bond issue proceeds. The
company monitors intra-group credit exposures on a regular basis and ensures timely performance
of these assets in the context of overall group liquidity management. The guarantor in relation to the
bond issue (G3 Holdings Limited) is the parent of the group. The company assesses the credit quality
of the G3 Group taking into account financial position, performance and other factors including
profitability and cashflow forecasts that are reviewed and approved at regular intervals by the Board
of directors. The company takes cognisance of the related party relationship with these entities and
management does not expect any losses from non-performance or default.
Loans receivable from related parties are categorised as Stage 1 for IFRS 9 purposes (i.e.
performing) in view of the factors highlighted above. The expected credit loss allowances on such
loans are based on the 12-month probability of default, capturing 12-month expected losses. On 31
December 2023, the company’s directors reviewed the company’s financial assets in particular the
loans advance to fellow subsidiary (Note 4). In view of the respective entity’s history, results to date,
gearing ratios and reserves, as well as forward looking estimates, the directors applied judgement in
determining the appropriate expected credit loss provisions as a result of adopting the expected
future loss framework under IFRS 9.
The company monitors the performance of its receivables on a regular basis to identify incurred
collection losses, which are inherent in the company’s receivables, taking into account historical
experience. Other receivables, representing amounts due from the parent company and from fellow
subsidiaries (Note 5), are subjected to the expected future credit loss framework required under IFRS
9 and the resulting expected credit loss allowance is considered immaterial.
Following the assessment of the directors, all of the company’s financial assets are considered to
have low credit risk and a low risk of default. The loss allowance subject to the impairment
requirements of IFRS 9 is deemed immaterial to be recognised in the balance sheet as at 31
December 2023.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
21
2.
Financial risk management
– continued
2.1 Financial risk factors
– continued
(b) Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall
due. The company is exposed to liquidity risk in relation to meeting future obligations associated with
its financial liabilities, which comprise principally the bonds issued to the general public (Note 8) and
trade and other payables (Note 9). Prudent liquidity risk management includes maintaining sufficient
cash and committed credit lines to ensure the availability of an adequate amount of funding to meet
the company’s obligations.
The company’s liquidity risk is managed actively by ensuring that cash inflows arising from expected
maturities of the company’s advances to the related entity effected out of the bond issue proceeds,
together with any related interest receivable, match the cash outflows in respect of the company’s
bond borrowings, covering principal and interest payments, as referred to in Note 8 and reflected in
the table below.
The following table analyses the company’s financial liabilities into relevant maturity based on the
remaining period as at 31 December 2023 to the contractual maturity date. The amounts disclosed
in the table below are the contractual undiscounted cash flows. Balances due within twelve months
equal their carrying balances, as the impact of discounting is not significant.
Between 1
Carrying
a
mount
Contractual
cash flows
Within
one year
and 2
years
Between 2
and 5 years
Over 5
years
€
€
€
€
€
€
31
Decembe
r
202
3
Trade and other
payables
613
,
877
613,877
613,877
-
-
-
Borrowings
12
,
254,243
17,562,500
562,500
562,500
1,687,
5
00
14,750,
0
00
1
2
,
868
,
120
18,176,377
1,176,377
562,500
1,687,
5
00
14,750,
0
00
31 December
202
2
Trade and other
payables
488,828
488,828
488,828
-
-
-
Borrowings
12,224,967
18,125,000
562,500
562,500
1,687,500
15,312,500
12,713,795
18,613,828
1,051,328
562,500
1,687,500
15,312,500
2.2 Capital risk management
The company’s objectives when managing capital are to safeguard the respective company’s ability
to continue as a going concern in order to provide returns for shareholders and benefits for other
stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, the company may issue new shares or adjust the amount of
dividends paid to shareholders.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
22
2.
Financial risk management
– continued
2.2 Capital risk management
– continued
The company’s equity, as disclosed in the statement of financial position, constitutes its capital. The
company maintains its level of capital by reference to its financial obligations and commitments
arising from operational requirements. Taking cognisance of the nature of the company’s assets,
together with collateral held as security, backing the company’s principal borrowings, the capital level
at the end of the reporting period is deemed adequate by the directors.
2.3 Fair values of financial instruments
At 31 December 2023 and 2022 the carrying amounts of cash at bank, trade and other receivables
and trade and other payables reflected in the financial statements are reasonable estimates of fair
value in view of the nature of these instruments or the relatively short period of time between the
origination of the instruments and their expected realisation.
The fair values of the interest-bearing
loans receivable were not significantly different from their carrying amounts at the end of the reporting
period.
3.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and other
factors including expectations of future events that are believed to be reasonable under the
circumstances. In the opinion of the directors, the accounting estimates and judgements made in the
course of preparing these financial statements are not difficult, subjective or complex to a degree
which would warrant their description as critical in terms of the requirements of IAS 1.
4.
Loans receivable
202
3
2022
€
€
Non
-
current
Loan to fellow subsidiary
12,124,472
12,124,472
The loan receivable represents the proceeds from the bond issue (Note 8) which have been
advanced by the company to G3 Hospitality Limited (the company’s fellow subsidiary). The principal
purposes for these advances were the re-financing of existing banking facilities of the borrower, to
finance future growth in operations and for the general corporate funding purposes of the G3 Group
as the need arises in the ordinary course of business. Credit risk is assessed in Note 2.
This loan is subject to interest at a fixed interest rate of 5.8% (2022: 6.5%). The loan is unsecured
and repayable by not later than 6 April 2032.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
23
5.
Trade and other receivables
202
3
2022
€
€
Current
Amounts due from parent
251,997
251,997
Amounts due from fellow subsidiary
721,09
4
581,795
Prepayments and accrued income
1,940
1,919
975,031
835,711
Amounts due from parent and fellow subsidiary are unsecured, interest-free and repayable on
demand.
The company’s exposure to credit and currency risks and impairment losses relating to trade
receivables are disclosed in Note 2.
6.
Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following:
202
3
2022
€
€
Cash at bank
36,766
2,000
7.
Share capital
2023
2022
€
€
Authorised
252,000 ordinary shares of €1 each
252,000
252,000
Issued
and fully paid up
252,000 ordinary shares of €1 each
252,000
252,000
Increase in share capital
During March 2022, the authorised and issued share capital of the company was increased from
€2,000 to €252,000 following the capitalisation of shareholder loans.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the company. All shares rank equally with regard to
the company’s residual assets.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
24
8.
Borrowings
202
3
2022
€
€
Non
-
current
125,000 4.5% bonds 2032
12,254,243
12,224,967
The bonds are measured at the amount of the net proceeds adjusted for the amortisation of the
difference between the net proceeds and the redemption value of such bonds, using the effective
yield method as follows:
20
23
2022
€
€
Original face value of bonds issued
12,500,000
12,500,000
Gross amount of bond issue costs
(296,827)
(296,827)
Accumulated amortisation
51,070
21,794
Unamortised bond issue costs
(245,757)
(275,033)
Amortised cost and closing carrying
amount of the bonds
12,254,243
12,224,967
By virtue of an offering memorandum dated 25 March 2022, G3 Finance p.l.c. (the Issuer) issued an
aggregate of €12,500,000 in bonds having a face value of €100 per bond, subject to minimum holding
of €2,000 and in multiples of €100 thereafter. The bonds have a coupon interest rate of 4.50% per
annum payable on a yearly basis on 6 April each year. The bonds are guaranteed by G3 Holdings
Limited, which has bound itself jointly and severally liable with the issuer, for the repayment of the
bonds and interest thereon, pursuant to and subject to the terms and conditions in the offering
memorandum. These bonds were eventually admitted for listing on the Malta Stock Exchange on 6
April 2022. The quoted market price as at 31 December 2023 for the bonds was €99.70 (2022:
€100.50), which in the opinion of the directors fairly represents the fair value of these financial
liabilities.
In accordance with the provisions of the prospectus, the proceeds from the bond issue have been
advanced by the issuer to undertakings forming part of the G3 Group for the purpose of re-financing
existing bank facilities within the group and to finance future growth in operations.
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
25
9.
Trade and other payables
202
3
2022
€
€
Current
Amounts due to fellow subsidiary
138,137
59,200
Interest accrued on bonds in issue
447,115
413,014
Accruals
28,625
16,614
613,877
488,828
Amounts due to fellow subsidiary are unsecured, interest-free and repayable on demand.
The company’s exposure to liquidity risks related to trade and other payables is disclosed in Note 2.
10.
Finance income
202
3
2022
€
€
Interest income on loan advanced to fellow subsidiary
701,800
581,795
11.
Finance costs
202
3
2022
€
€
Bond interest expense
562,500
413,014
12.
Expenses by nature
202
3
2022
€
€
Directors’ fees (Note 13)
43,002
34,793
Listing and related compliance costs
38,418
28,052
Legal and professional fees
34,
0
77
16,777
Other expenses
1,
147
231
116,644
79,853
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
26
12.
Expenses by nature
- continued
Auditor’s fees
Fees charged by the auditor for services rendered during the financial periods ended 31 December
2023 and 2022 relate to the following:
202
3
202
2
€
€
Annual statutory audit
10,5
00
10,000
Tax advisory and compliance services
260
250
10,7
60
10,250
Apart from the services disclosed above, there have been no further non-audit services provided by
the auditor.
13.
Directors’ emoluments
202
3
202
2
€
€
Directors’ fees
43,002
34,793
14.
Tax expense
202
3
202
2
€
€
Current tax expense:
on taxable profit subject to tax at 35%
10,825
-
10,825
-
The tax on the company’s results before tax differs from the theoretical amount that would arise using
the basic tax rate as follows:
202
3
202
2
€
€
Profit
before tax
22,6
5
6
88,92
8
Tax on profit at 35%
7,9
30
31,125
Adjustment for current tax of prior periods
2,89
5
-
Tax effect of:
Unrecognised deferred tax movement
-
(31,125)
Tax expense
10,825
-
27
G3 FINANCE p.l.c.
Annual Report and Financial Statements - 31 December 2023
15.
Cash from/(used in) operations
Reconciliation of operating profit to cash used in operations:
202
3
2022
€
€
Profit before tax
22,656
88,928
Adjustments for:
Amortisation of bond issue costs
29,27
6
21,794
Changes in working capital:
Trade and other receivables
(139,32
0
)
(583,711)
Trade and other payables
125,
049
374,494
Cash generated from/(used in) operations
37,661
(98,495)
16.
Related party transactions
G3 Finance p.l.c. forms part of the G3 Group. All companies forming part of the G3 Group are related
parties since these companies all have common ultimate controllers.
Trading transactions between
these companies typically include company interest charges, management fees and other such items
which are normally encountered in a group context.
Key management personnel comprises the directors of the company. Key management personnel
compensation, consisting of remuneration to the company’s directors, has been disclosed in Note
13.
17.
Statutory information
G3 Finance p.l.c. is a limited liability company and is incorporated in Malta. The registered office is
‘The Pergola’, Adenau Street, Mellieha, Malta.
The immediate and ultimate parent company of G3 Finance p.l.c. is G3 Holdings Limited, a company
registered in Malta, with its registered address at ‘The Pergola’, Adenau Street, Mellieha, Malta.
The ultimate beneficial owner of G3 Holdings Limited is Mr. John Grima.

Independent auditor’s report

To the Shareholders of G3 Finance p.l.c.

Report on the audit of the financial statements

Our opinion

In our opinion:

· The financial statements give a true and fair view of the financial position of G3 Finance p.l.c. (the Company) as at 31 December 2023, and of the company’s 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

G3 Finance p.l.c.’s financial statements comprise:

· the statement of financial position as at 31 December 2023;

· the statement of comprehensive income for the year then ended;

· the statement of changes in equity for the year then ended;

· the statement 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 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 company 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 company, in the period from 1 January 2023 to 31 December 2023, are disclosed in Note 12 to the financial statements.

Our audit approach

#####

##### Overview

Materiality | ● Overall materiality: €131,300, which represents 1% of total assets.
Key audit matters | ● Recoverability of loans issued to fellow subsidiary

#####

##### As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the 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.

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 company, the accounting processes and controls, and the industry in which the company operates.

#####

##### 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 financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the 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 materiality | €131,300
How we determined it | 1% of total assets
Rationale for the materiality benchmark applied | We chose total assets as the benchmark because, in our view, it is an appropriate measure for this type of entity. We chose 1%, 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 €13,000 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
Recoverability of loans issued to fellow subsidiary Loans receivable include funds advanced to G3 Hospitality Limited for the re-financing of existing banking facilities of the borrower, to finance future growth in operations and for the general corporate funding purposes of the G3 Group as the need arises in the ordinary course of business. The loan bears interest at 5.8% and is repayable in 2032. Loan balances due to the company from G3 Hospitality Limited as at 31 December 2023 amounted to €12.1m. Management assesses recoverability of the loan by reference to the expected future cash flows of the G3 Group for the period 2024 to 2032. The loans are the principal asset of the company and the recoverability of the loan relies on the profitability of the fellow subsidiary, which is why we have given additional attention to this area. Refer to Note 4 in the financial statements for further details covering the loan recoverable from the fellow subsidiary. | We have agreed the terms surrounding the loan to the supporting loan agreement. We evaluated the cash flow model of the G3 Group to assess the recoverability of the loan by reviewing projected cashflows for the period 2024 to 2032. We checked the calculations used in the model for accuracy and the key inputs in the model were agreed to supporting evidence. In the case of certain assumptions and judgements, we obtained explanations from management and the Board. Management’s cash flow forecasts used in the model were assessed by considering the Group’s current year’s performance against the budget and the reasons for any deviation, also through discussion with management and the Board. We also challenged the revenue growth assumptions, factoring market developments. Based on evidence and explanations obtained, we concur with management’s view with respect to the reasonability of conclusions surrounding recoverability of this balance. The appropriateness of disclosures made in the financial statements in relation to loans and receivables from the fellow subsidiary was also reviewed.

Other information

The directors are responsible for the other information. The other information comprises the Directors’ report and the Corporate Governance – Statement of Compliance (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 company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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

Auditor’s responsibilities for the audit of the financial statements

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

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

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

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

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

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

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

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 G3 Finance 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 financial statements, 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 financial statements, 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 XHTML format.

· Examining whether the Annual Financial Report has been prepared in XHTML format.

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

Opinion

In our opinion, the Annual Financial Report for the year ended 31 December 2023 has been prepared in XHTML format in all material respects.

Other reporting requirements

The Annual 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 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.
| 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.

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Other matter – use of this report

Our report, including the opinions, has been prepared for and only for the 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 28 October 2021 for the period ended 31 December 2020. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 4 years. The company became listed on a regulated market on 6 April 2022.

Stephen Mamo

Principal

For and on behalf of

PricewaterhouseCoopers

78, Mill Street

Zone 5, Central Business District

Qormi

Malta

23 April 2024