GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| Reg. No. C 75875

GAP GROUP P.L.C.
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
31st DECEMBER 2023

| CONTENTS | PAGE |
| Directors' Report | 1 - 6 |
| Corporate Governance - Statement of Compliance | 7 - 9 |
| Income Statement & Statement of Comprehensive Income | 10 |
| Statement of Financial Position | 11 |
| Statement of Changes in Equity | 12 |
| Statement of Cash Flows | 13 |
| Notes to the Financial Statements | 14 - 41 |

GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
DIRECTORS' REPORT
FOR THE YEAR ENDED 31st DECEMBER 2023
The directors present their annual report and the audited parent company financial statements together with the group’s consolidated financial statements (the “financial statements”) of Gap Group p.l.c. for the year ended 31st December 2023.
Principal Activities
The principal activity of Gap Group p.l.c. is to hold investments in subsidiary companies and to raise financial resources from the capital markets to finance its investments and the property development projects of its subsidiaries. The principal activity of the Group is to acquire, develop and dispose of immovable property and to construct, develop and enter into arrangements with contractors and other service providers in connection with its properties. The directors do not envisage any changes to the company’s and group’s principal activities in the foreseeable future.
Review of business
Works on the developments progressed well and within the scheduled time frames. The Group continued to sign new preliminary agreements at a steady pace whilst a promising number of contracts from its various projects were signed during the financial year under review.
Southridge
The Southridge development in Mellieha was fully complete in 2020 and by the end of 2023, all remaining units have been contracted.
Fairwinds
The Fairwinds development in Hal Luqa consists of 21 blocks. By the end of the year, all the blocks were fully complete. At the end of the year, out of the 268 residential units, 267 units have been sold (contracted) and the last remaining unit was subject to a Preliminary Agreement.
This means that 100% of the residential units were committed, out of which 99% have been contracted as at the end of the year.
Waterbank
The Waterbank development in Marsascala development consists of 63 residential units. As at 31 December 2023, the project was fully complete and all remaining units have been contracted.
The Hazel
The Hazel development in Birkirkara consists of 14 residential units. By the end of 2022, the project was fully complete and by the end of 2023 all remaining units have been contracted.
Dumont
The Dumont development in San Pawl tat-Targa consists of 9 residential units. The project was fully complete by end 2022 and the last remaining unit was contracted during 2023.
1
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
DIRECTORS' REPORT – continued
Mulberry Park
Works on the Mulberry Park in Qawra started in December 2020 and progressed at a steady pace. The project consists of 93 residential units and was almost complete by the end of 2022.
At the end of the year, out of the 93 residential units, 88 unit has been sold (contracted) and a further 2 units were subject to a Preliminary Agreement.
This means that 98% of the residential units were committed, out of which 95% have been contracted by the end of the year.
The Pantheon
Works on The Pantheon development in Mosta started in December 2020 and progressed at a steady pace. The project is split in 3 different Zones and consists of 114 residential units.
As at year end, two zone were 100% complete, whereas the third zone was 90 % complete in terms of construction and 35% completed in terms of finishings. The third zone is expected to be fully complete during Q3 2024.
As at 31 December 2023, only 76 units were placed on the market. From these, 49 units have been contracted and a further 18 units were subject to a promise of sale agreement.
This means that 88% of the units placed on the market were committed, out of which 64% have been
contracted.
Seaberry Park
Works on Seaberry Park development in Qawra started in early 2022 and were fully completed by the end of 2023. The project consists of 113 units.
As at 31 December 2023, 4 units have been sold (contracted) and another 87 units were subject to a promise of sale agreement.
This means that 81% of the units have been committed, 4% of which have been contracted.
Marsaskala Project
During the month of January 2023, the company commenced excavation on a new project in Marsaskala which consists of 118 units. Excavation was 100% complete during Q3 2023 and construction works commenced immediately thereafter in September 2023. As at 31 December 2023, construction was 30% complete.
Sunflower Project
During Q2 2023, the company acquired a plot of land in Qawra through one of its subsidiaries and the project consists of 59 units. Works commenced immediately with the demolition and excavation works which were 100% complete in June 2023. Construction works commenced soon after in July 2023 and was 60% complete as at year end.
2
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
DIRECTORS' REPORT – continued
Bonds in issue
At the end of the year, the company had three bonds in issue, namely the GAP Group p.l.c. 3.7% Secured Bonds 2023 – 2025, the GAP Group p.l.c. 3.9% Secured Bonds 2024 – 2026 and the GAP Group p.l.c. 4.75% Secured Bonds 2025 - 2027.
Furthermore, during the year, on 3 October 2023, the company redeemed in full the remaining balance of the GAP Group p.l.c. 4.25% Secured Bonds 2023, amounting to €8,349,900.
In December 2023, the company also redeemed most of the GAP Group p.l.c 3.7% Secured Bonds 2023- 2025. As at 31 December 2023 the outstanding balance of this bond amounted to €5,899,500 (2022: €20,848,853). The company has redeemed the remaining balance of this bond on 11 April 2024.
As at 31 December 2023 the aggregate amount of bonds in issue amounted to €49,475,167 being, €5,899,500 Gap Group p.l.c. 3.7% Secured Bonds 2023 – 2025, €20,860,293 Gap Group p.l.c. 3.9% Secured Bonds 2024 – 2026 and €22,715,374 Gap Group p.l.c. 4.75% Secured Bonds 2025 – 2027.
Reserve Account
Pursuant to the bond prospectus of the 3.7% Secured Bonds 2023 - 2025, the 3.9% Secured Bonds 2024 – 2026 and the 4.75% Secured Bonds 2025 - 2027 a reserve account had been created by the Security Trustee to cover for the redemption of the three bonds. All sales of units forming part of the hypothecated property in favour of the bond issue shall be made on condition that these units are freed from hypothecary rights and privileges against an agreed amount from the sale proceeds being deposited in the said Reserve Accounts.
By 31 December 2023, the Reserve Account of the 3.7% Secured Bonds 2023 - 2025 carried a balance of €3,632,210 (i.e. 62% of the total bond repayment) and the Reserve Account of the 3.9% Secured Bonds 2024 – 2026 carried a balance of €1,030,957 (i.e. 4% of the total bond repayment)
Moreover, the trustee held an amount of €4,067,641 with respect to the 4.75% Secured Bonds 2025 – 2027. This amount was available for immediate withdrawal to finance the M’Skala project.
Principal risks and uncertainties
Although the development works of the afore-mentioned projects and the securing of new sales by way of preliminary agreements are progressing as planned, the company is still subject to several financial risk factors including the market, economic, counter-party, credit and liquidity risks amongst others that may affect the projects and their timely completion. Additionally, the directors are monitoring closely inflationary risks resulting from the conflict in Ukraine and the Middle-East. The directors are confident that the company has robust measures in place to mitigate the likely possible effects of inflationary pressures. Where possible, the board provides principles for the overall risk management as well as policies to mitigate these risks in the most prudent way.
3
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
DIRECTORS' REPORT – continued
Events subsequent to the reporting period
On 11th April 2024, the company redeemed in full the remaining outstanding balance of the 3.7% Secured Bonds 2023 – 2025 amounting to €5,899,500 plus interests thereon. Therefore as at the date of this report, the company has two remaining bonds in issue, namely the 3.9% Secured Bond 2024 – 2026 and the 4.75% Secured Bond 2025 – 2027.
Directors
The directors of the Company who held office during the year were:
George Muscat (Chairperson)- deceased on 22 September 2023
Paul Attard (Executive Director and Company Secretary)
Adrian Muscat (Executive Director)
Francis Gouder (Non-Executive Director)
Mark Castillo (Non-Executive Director)
Dr Chris Cilia (Non-Executive Director)
Justin Cutajar (Non-Executive Director) appointed on 22nd September 2023
The Company’s Articles of Association do not require any directors to retire.
Company Secretary
The Company's Secretary is Mr Paul Attard.
4
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
DIRECTORS' REPORT – continued
The directors are required by the Companies Act (Chap. 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 at the end of each financial year and of the profit or loss of the company for the year then ended. In preparing the financial statements, the directors should:

|  | • | Ensure that the financial statements have been drawn up in accordance with International Financial Reporting Standards as adopted by the European Union;
|  | • | adopt the going concern basis unless it is inappropriate to presume that the company will continue in business;
|  | • | value separately the components of asset and liability items;
|  | • | select suitable accounting policies and apply them consistently;
|  | • | make judgements and estimates that are reasonable and prudent;
|  | • | account for income and charges relating to the accounting period on the accruals basis;
|  | • | report comparative figures corresponding to those of the preceding accounting period.

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 which enable the directors to ensure that the financial statements comply with the Companies Act (Chap. 386). This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. The directors are also responsible for safeguarding the assets of the company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement by the Directors pursuant to Capital Market Rules 5.68
We, the undersigned, declare that to the best of our knowledge, the financial statements prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and its subsidiaries included in the consolidation taken as a whole, and that this report includes a fair review of the performance of the business and the position of the Company and its subsidiaries included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Going Concern statement pursuant to Capital Market Rules 5.62
Based on the outcome of cash flow projections which factor for possible strain on the property market resulting from inflationary pressures resulting from conflicts in East Europe and the Middle East , the Directors consider the going concern assumption in the preparation of the financial statements as appropriate as at the date of authorisation and believe that no material uncertainty that may cast significant doubt about the company’s and the group’s ability to continue as a going concern exists as at that date.
Statement by the Directors pursuant to Capital Market Rules 5.70.1
As at the year end the group had entered into capital commitments with various contractors for the development of various projects and entered into promise of sale agreements in connection with the sales of immovable properties of such projects.
5
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
DIRECTORS' REPORT – continued
Auditor
The auditor of the company, TACS Malta Limited has expressed its willingness to continue in office and a resolution proposing his reappointment will be put before the members at the next annual general meeting.
Signed on behalf of the Board of Directors on 26 April 2024 by Mr. Adrian Muscat (Director) and Mr. Paul Attard (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report
Registered office:
PLAN GROUP HEAD OFFICE,
Triq il-Wirt Naturali,
Bahar ic-Caghaq,
In-Naxxar
Date : 26 April 2024
6
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
CORPORATE GOVERNANCE - STATEMENT OF COMPLIANCE
Corporate governance - Statement of compliance
1.Introduction
Pursuant to the Capital Market Rules issued by the Listing Authority of the Malta Financial Services Authority, GAP Group p.l.c. is hereby reporting on the extent of its adoption of the Code of Principles of Good Corporate Governance contained in Appendix 5.1 of the Capital Market Rules.
GAP Group p.l.c. acts as a finance company to the Group and as such has minimal operations. Its primary function is the lending and monitoring of the proceeds of the public bond to the Group. GAP Group p.l.c. has no employees other than the directors and the company secretary.
2. Compliance with the Code
The Board of Directors of GAP Group p.l.c. (The Company) believe in the adoption of the Code and has endorsed it except where the size and/or circumstances of the company are deemed by the Board not to warrant the implementation of specific recommendations.
Additionally, the Board recognises that, by virtue of Capital Market Rules 5.101, the company is exempt from making available the information required in terms of Capital Market Rules 5.97.1 to 5.97.3, 5.97.6 to 5.97.8.
Moreover, the Board also acknowledges that the requirements emanating from Directive 2014/95/EU as published in Circular 05/16 – Transposition of Directive 2014/95/EU do not apply to the company since it does not classify as a ‘large company’ under the definition of the Directive.
3. The Board of Directors
The board of directors is responsible for the Company’s affairs, for the overall direction of the company and being dynamically involved in supervising the systems of control and financial reporting.
The Board meets at least four times annually and is currently composed of six members, three of whom
are independent from the Company or related parties.
As at date of this statement, the Board of Directors is composed as follows:
Paul Attard (Executive Director and Company Secretary)
Adrian Muscat (Executive Director)
Justin Cutajar (Non-Executive Director)- appointed on 22 nd September 2023
Francis Gouder (Non-Executive Director)
Mark Castillo (Non-Executive Director)
Dr Chris Cilia (Non-Executive Director)
There is no CEO role required in the Company due to the nature of the Company and as such the board carries out the policy decisions regarding the Company.
7
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
CORPORATE GOVERNANCE - STATEMENT OF COMPLIANCE – continued
4. Committees
i. Audit Committee
In accordance with the Capital Market Rules, GAP Group p.l.c. has established an Audit Committee, which terms of reference are based on the principles set out by the said Capital Market Rules. The Audit Committee is entirely composed of independent, non-executive directors. At present, Francis X. Gouder acts as chairperson, whilst Mark Castillo and Dr Chris Cilia LLD act as members. In compliance with the Capital Market Rules, Francis X. Gouder is the independent Non-Executive Director who is competent in accounting and auditing matters having previously served in various senior positions in several financial institutions.
The committee’s primary object is to assist the board in fulfilling its supervisor and monitoring responsibility by reviewing the company’s financial statements and disclosures, monitoring the system of internal control established by management as well as the audit process. The audit committee formally convened four times during the financial period ending 31st December 2023.
ii. Remuneration and Nomination Committees
Under present circumstances, the board does not consider it necessary to appoint a remuneration committee and a nomination committee as decisions on these matters are taken at shareholder level and by the board itself.
iii. Evaluation of the board’s performance
Under present circumstances, the board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role as the board’s performance is constantly under the scrutiny of the shareholders of the company.
5. Remuneration Statement
In terms of Rule 8.A.4 of the Code of Principles of Good Corporate Governance contained in Appendix 5.1 of the Capital Market Rules of the Listing Authority (the “Code”), the Company is to include a remuneration statement in its annual report which should include details of the remuneration policy of the Company in respect of the financial packages of members of the Board of Directors of the Company.
The remuneration payable to directors of the Company consists of fixed remuneration only. No part of the remuneration paid to the directors is performance-based and none of the directors (in their capacity as directors of the Company) are entitled to profit-sharing, share options or pension benefits. The directors do not receive any form of monetary or non-monetary perks or benefits. There were no changes to this policy from the previous year and the Company does not intend to change the policy in the foreseeable future.
Remuneration paid to the Directors by the subsidiaries of the Company for the period from 1st January 2023 to 31st December 2023 amounted to €184,525.
8
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
CORPORATE GOVERNANCE - STATEMENT OF COMPLIANCE – continued
6. Internal Control
While the Board is ultimately responsible for the company’s internal controls as well as their effectiveness, authority to operate the company is delegated to the Executive Directors. The company’s system of internal controls has been drawn up through the Internal Control Manual to manage risks in the most appropriate manner. Procedures are in place for the Company to control, monitor and assess risks and their implications through ongoing cash flow monitoring reports and strategic plans which are presented to the Executive Directors.
7. Relations with the market
The market and bondholders alike are kept up to date with all relevant information, the Annual Report and Financial statements, as well as, via company announcements made through the Malta Stock Exchange.
8. Institutional shareholders
This principle is not applicable since the company has no institutional shareholders.
9. Conflicts of interest
The directors always act in the interest of the Company and its shareholders. If any director has a conflict of interest, he will not be allowed to vote on the matter at hand. Furthermore, the board of directors and management of the company is in compliance with the obligations towards the rules of Insider Dealing.
10. Corporate Social Responsibility
The Group adhered to accepted principles of corporate social responsibility in its day to day practices by acting ethically in the day to day management of the business and strives to improve the quality of life of the workforce as well as of the society at large. The Group also regularly supports charitable causes.
Signed on behalf of the Board of Directors on 26 April 2024 by Mr. Adrian Muscat (Director) and Mr. Paul Attard (Director).
9
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 ST DECEMBER 2023

|  |  |  | Group |  | Company
|  | Notes |  | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  |  |  | € |  | € |  | € |  | €
| Revenue |  | 3 |  | 42,763,849 |  | 29,496,100 |  | - |  | -
| Cost of sales |  |  |  | (27,560,601) |  | (20,705,516) |  | - |  | -
| Gross Profit |  |  |  | 15,203,248 |  | 8,790,584 |  | - |  | -
| Administrative expenses |  |  |  | (2,454,611) |  | (1,853,370) |  | (298,648) |  | (147,393)
| Operating profit / (loss) |  | 4 |  | 12,748,637 |  | 6,937,214 |  | (298,648) |  | (147,393)
| Finance costs |  | 7 |  | (348,848) |  | (837,609) |  | (3,263,913) |  | (2,763,119)
| Finance income |  | 8 |  | 599,107 |  | 628,181 |  | 3,760,730 |  | 9,243,776
| Profit before taxation |  |  |  | 12,998,896 |  | 6,727,786 |  | 198,169 |  | 6,333,264
| Tax expense |  | 9 |  | (3,303,379) |  | (1,657,631) |  | (27,722) |  | (48,020)
| Profit for the year |  |  |  | 9,695,517 |  | 5,070,155 |  | 170,447 |  | 6,285,244

OTHER COMPREHENSIVE INCOME

| Other comprehensive income / (loss) |  |  |  |  |  |  |  |
| Reserve arising on revaluation of investments and amortised cost of interest free long term loan receivable |  | 135,382 |  | (359,250) |  | 36,750 |  | (359,250)
| Other comprehensive income /(loss) for the year |  | 135,382 |  | (359,250) |  | 36,750 |  | (359,250)
| Total Comprehensive income |  | 9,830,899 |  | 4,710,905 |  | 207,197 |  | 5,925,994
| Earning s per share |  | 3.88 |  | 2.03 |  | 0.07 |  | 2.51

The notes on pages 14 to 42 are an integral part of these financial statements.
10
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
STATEMENT OF FINANCIAL POSITION – 31 ST DECEMBER 2023

|  |  |  | Group |  | Company
| Notes |  | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  |  | € |  | € |  | € |  | €
ASSETS |  |  |  |  |  |  |  |  |  |
Non-current assets |  |  |  |  |  |  |  |  |  |
Property, plant and equipment | 11 |  | 27,161 |  | 43,493 |  | 1 |  | 1
Investment in subsidiaries | 12 |  | - |  | - |  | 34,344,774 |  | 34,344,774
Investments | 13 |  | 3,600,300 |  | 8,063,550 |  | 3,600,300 |  | 8,063,550
Other financial assets | 14 |  | 10,286,219 |  | 10,982,645 |  | 7,721,806 |  | 8,516,864
|  |  |  | 13,913,680 |  | 19,089,688 |  | 45,666,881 |  | 50,925,189
Current assets |  |  |  |  |  |  |  |  |  |
Inventory – Development project | 16 |  | 62,197,149 |  | 49,147,357 |  | - |  | -
Trade and other receivables | 17 |  | 11,184,898 |  | 7,227,793 |  | 47,399,568 |  | 39,248,415
Cash and bank equivalents | 18 |  | 11,311,636 |  | 34,514,459 |  | 5,486,724 |  | 29,681,881
Current tax assets |  |  |  | - |  | 14,498 |  | - |  | -
|  |  |  | 84,693,683 |  | 90,904,107 |  | 52,886,292 |  | 68,930,296
Total Assets |  |  |  | 98,607,363 |  | 109,993,795 |  | 98,553,173 |  | 119,855,485
EQUITY AND LIABILITIES |  |  |  |  |  |  |  |  |  |
Capital and Reserves |  |  |  |  |  |  |  |  |  |
Share capital | 19 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000
Subordinated shareholders’ loan – Quasi equity | 21 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000
Revaluation reserve | 22 |  | 286,684 |  | 151,302 |  | (247,678) |  | (284,428)
Retained earnings |  |  | 30,830,042 |  | 21,134,525 |  | 6,684,011 |  | 6,513,564
Total equity |  |  |  | 36,116,726 |  | 26,285,827 |  | 11,436,333 |  | 11,229,136
Non-current liabilities |  |  |  |  |  |  |  |  |  |
Bank loans | 23 |  | 3,726,241 |  | 1,960,366 |  | - |  | 1,960,366
Other financial liabilities | 24 |  | 4,907 |  | 4,907 |  | - |  | -
Debt securities in issue | 23 |  | 22,715,374 |  | 43,387,094 |  | 22,715,374 |  | 43,387,094
Total non-current liabilities |  |  |  | 26,446,522 |  | 45,352,367 |  | 22,715,374 |  | 45,347,460
Current liabilities |  |  |  |  |  |  |  |  |
Bank loans | 23 |  | 1,879,395 |  | 1,750,000 |  | 1,879,395 |  | 1,750,000
Debt securities in issue | 23 |  | 26,759,793 |  | 29,198,753 |  | 26,759,793 |  | 29,198,753
Trade and other payables | 24 |  | 7,296,129 |  | 7,406,848 |  | 241,339 |  | 250,068
Other financial liabilities | 24 |  | - |  | - |  | 35,385,433 |  | 32,067,858
Current tax liability |  |  | 108,798 |  | - |  | 135,506 |  | 12,210
Total Current liabilities |  |  |  | 36,044,115 |  | 38,355,601 |  | 64,401,466 |  | 63,278,889
Total liabilities |  |  |  | 62,490,637 |  | 83,707,968 |  | 87,116,840 |  | 108,626,349
Total equity and liabilities |  |  |  | 98,607,363 |  | 109,993,795 |  | 98,553,173 |  | 119,855,485

The notes on pages 14 to 42 are integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board of Directors on 26 April 202 4. The financial statements were signed on behalf of the Board of Directors by Mr. Adrian Muscat (Director) and Mr. Paul Attard (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.
11
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 ST DECEMBER 2023

| Notes |  | Share Capital |  | Quasi Equity |  | Revaluation Reserve |  | Retained Earnings |  | Total
|  |  | € |  | € |  | € |  | € |  | €
Group |  |  |  |  |  |  |  |  |  |  |
Balance at 1 st January 2022 |  |  | 2,500,000 |  | 2,500,000 |  | 510,552 |  | 16,064,370 |  | 21,574,922
Comprehensive income |  |  |  |  |  |  |  |  |  |  |
Profit for the year |  |  | - |  | - |  | - |  | 4,710,905 |  | 4,710,905
Revaluation reserve | 22 |  | - |  | - |  | (359,250) |  | 359,250 |  | -
Balance at 31 st December 2022 |  |  | 2,500,000 |  | 2,500,000 |  | 151,302 |  | 21,134,525 |  | 26,285,827
Balance at 1 st January 2023 |  |  | 2,500,000 |  | 2,500,000 |  | 151,302 |  | 21,134,525 |  | 26,285,827
Comprehensive income |  |  |  |  |  |  |  |  |  |  |
Profit for the year |  |  | - |  | - |  | - |  | 9,830,899 |  | 9,830,899
Revaluation reserve | 22 |  | - |  | - |  | 135,382 |  | (135,382) |  | -
Balance at 31 st December 2023 |  |  | 2,500,000 |  | 2,500,000 |  | 286,684 |  | 30,830,042 |  | 36,116,726

Company

Balance at 1 st January 2022 |  |  | 2,500,000 |  | 2,500,000 |  | 74,822 |  | 228,320 |  | 5,303,142
Comprehensive income |  |  |  |  |  |  |  |  |  |  |
Profit for the year |  |  | - |  | - |  | - |  | 5,925,994 |  | 5,925,994
Revaluation reserve | 22 |  | - |  | - |  | (359,250) |  | 359,250 |  | -
Balance at 31 st December 2022 |  |  | 2,500,000 |  | 2,500,000 |  | (284,428) |  | 6,513,564 |  | 11,229,136
Balance at 1 st January 2023 |  |  | 2,500,000 |  | 2,500,000 |  | (284,428) |  | 6,513,564 |  | 11,229,136
Comprehensive income |  |  |  |  |  |  |  |  |  |  |
Profit for the year |  |  | - |  | - |  | - |  | 207,197 |  | 207,197
Revaluation reserve | 22 |  | - |  | - |  | 36,750 |  | (36,750) |  | -
Balance at 31 st December 2023 |  |  | 2,500,000 |  | 2,500,000 |  | (247,678) |  | 6,684,011 |  | 11,436,333

The notes on pages 14 to 42 are an integral part of these financial statements.
12
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED 31 ST DECEMBER 2023

|  |  | Group |  | Company
|  |  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | Notes | € |  | € |  | € |  | €
| Cash flows from operating activities |  |  |  |  |  |  |  |
| Net profit before taxation |  | 12,998,896 |  | 6,727,786 |  | 198,169 |  | 6,333,264
| Adjustment s for: |  |  |  |  |  |  |  |
| Depreciation | 11 | 18,821 |  | 17,676 |  | - |  | -
| Finance income | 8 | (599,107) |  | (628,181) |  | (3,760,730) |  | (9,243,776)
| Interest expenses | 7 | 348,848 |  | 837,609 |  | 3,263,913 |  | 2,763,119
| Fair value gain on interest-free long term receivable |  | 135,382 |  | (359,250) |  | 36,750 |  | (359,250)
| Operating profit / (loss) before working capital changes |  | 12,902,840 |  | 6,595,640 |  | (261,898) |  | (506,643)
| Trade and other receivables | 17 | 468,214 |  | 2,051,809 |  | (279,022) |  | 107,957
| Inventory – Development Project | 16 | (13,049,792) |  | (3,326,938) |  | - |  | -
| Trade and other payables | 24 | (110,719) |  | (4,164,109) |  | (8,729) |  | (2,535,9 29)
| Cash generated from / (used in) operations |  | 210,543 |  | 1,156,402 |  | (549,649) |  | (2,934,615)
| Interest payable | 7 | (348,848) |  | (837,609) |  | (3,263,913) |  | (2,763,119)
| Income tax paid |  | (3,180,083) |  | (1,744,427) |  | 95,574 |  | (134,816)
| Net cash (used in) operating activities |  | (3,318,388) |  | (1,425,634) |  | (3,717,988) |  | (5,832,550)
| Cash flows from investing activities |  |  |  |  |  |  |  |
| Purchase of fixed assets | 11 | (2,489) |  | (42,502) |  | - |  | -
| Investments (net) | 13 | 4,463,250 |  | 1,606,450 |  | 4,463,250 |  | 1,605,250
| Finance income | 8 | 599,107 |  | 628,181 |  | 3,760,730 |  | 9,243,776
| Net cash from investing activities |  | 5,059,868 |  | 2,192,129 |  | 8,223,980 |  | 10,849,026
| Cash flows from financing activities |  |  |  |  |  |  |  |
| Parent Company | 17 | (9,803,007) |  | - |  | (6,061,216) |  | -
| Related parties | 25 | 5,377,688 |  | (1,769,729) |  | 1,506,660 |  | (13,107,054)
| Bank loans (net) | 23 | 1,895,270 |  | (4,267,202) |  | (1,830,971) |  | (1,079,966)
| Bonds and debentures | 23 | (23,110,680) |  | 3,583,995 |  | (23,110,680) |  | 3,583,995
| Other financial assets | 14 | 696,426 |  | (306,228) |  | 795,058 |  | (306,228)
| Net cash (used in) financing activities |  | (24,944,303) |  | (2,759,164) |  | (28,701,149) |  | (10,909,253)
| Movement in cash and cash equivalents |  | (23,202,823) |  | (1,992,669) |  | (24,195,157) |  | (5,892,777)
| Cash and cash equivalents at beginning of the year |  | 34,514,459 |  | 36,507,128 |  | 29,681,881 |  | 35,574,658
| Cash and cash equivalents at end of the year | Note 18 | 11,311,636 |  | 34,514,459 |  | 5,486,724 |  | 29,681,881

The notes on pages 14 to 42 are an integral part of these financial statements.
13
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1. | Summary of material accounting policies

The material accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.

1.1 | Basis of preparation

These financial statements have been prepared in accordance with the requirements of International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and with the requirements of the Maltese Companies Act, 1995. The financial statements are prepared under the historical cost convention, except as disclosed in the accounting policies below.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates. It also requires directors to exercise their judgements in the process of applying the Group’s accounting policies. 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.
Standards, interpretations and amendments to published standards effective in 2023
The Group adopted new standards, amendments and interpretations to existing standards that are mandatory for the Group’s accounting period beginning on 1st January 2023.
The Group adopted Disclosures of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement) from 1st January 2023.
The amendments require the disclosure of ‘material’ rather than ‘significant’, accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity specific accounting policy information that users need to understand other information in the financial statements.
Management reviewed the accounting policies and made updates to the information disclosed in Material accounting policies in certain instances in line with the amendments.
Other than the above t he adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in substantial changes to the Group’s accounting policies.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group and the Company.
At the date of authorisation of these financial statements, certain new standards, and amendments to existing standards have been published by the IASB that are not yet effective, and have not been adopted early by the Group.
14
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1. | Summary of material accounting policies – continued

1.1 | Basis of preparation - continued

Management anticipates that all relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. The Group does not expect that new standards, interpretations and amendments will have a material impact on the Group’s financial statements.

1.2 | Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments has been identified as the board of directors, responsible for making strategic decisions. The board of directors considers the Company to be made up of one segment, that is raising financial resources from capital markets to finance the capital projects of the Company. All the Company’s revenue and expenses are generated in Malta and revenue is mainly earned from the development of immovable property.

1.3 | Foreign currency translation

| (a) Functional and presentation currency

Items included in these Financial Statements are measured using the currency of the primary economic environment in which the entity operates (the functional currency). These Financial Statements are presented in Euro, which is the company’s functional currency and presentation currency.

| (b) Transactions and Balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions. 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 the statement of comprehensive income. Translation differences on non-monetary items, such as equities, are reported as part of the fair value gain or loss.

1.4 | Financial assets

1.4.1 | Classification

The Group classifies it's financial assets as measured at amortised cost, as designated at fair value through other comprehensive income (FVOCI) and as designated at fair value through profit or loss (FVTPL). The classification is based on the business model in which a financial asset is managed and its contractual cash flows.
15
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1. | Summary of material accounting policies – continued

1.4 | Financial assets – continued

1.4.2 | Recognition and measurement

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:

| i. | the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
| ii. | the contractual terms of the financial asset give rise on specified dates to cash flows that are Solely Payments of Principle and Interest (“SPPI”).

A debt instrument is measured at FVOCI only if it meets both of the following conditions and is not designated as FVTPL:

| i. | the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
| ii. | the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

On initial recognition of an equity investment that is not held-for-trading, the Group may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
All other financial assets are classified as measured at FVTPL.
In addition, on initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

1.4.3 | Derecognition

Financial assets
The Company derecognises a financial asset when:

|  | The contractual right to the cash flows from the financial asset expire ; or
|  | It transfers the rights to receive the contractual cash flows in a transaction which either:
| - | Substantially all of the risks and rewards of ownership of the financial assets are transferred; or
| - | The Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The company enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.
16
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1 | Summary of material accounting policies – continued

1.4 | Financial assets - continued

1.4.3 | Derecognition

Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expired. The Company also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

1.4.4 | Impairment

The Group 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:

| i. | debt securities that are determined to have low credit risk at the reporting date; and
| ii. | 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 Group considers reasonable and supportable information that is relevant and available without undue cost or effort. The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due date and it considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held) or the financial asset is more than 90 days past due date.
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.
17
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1 | Summary of material accounting policies – continued

1.4 | Financial assets - continued

1.4.4 | Impairment – continued

ECLs are 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 difficult of the borrower or issuer or a breach of contract such as default or being more than 90 days past due date.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
Simplified approach model
For loans and trade and other receivables, the Group applies the simplified approach required by IFRS 9, which required expected lifetime losses to be recognised from initial recognition of the receivables.
The expected loss rates are based on the payment profiles of sales over a period of 12 months before 31 December 2023 or 1 January 2023 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the liability of the customers to settle the receivable. Receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, among others, the probability of insolvency or significant financial difficulties of the debtor. Impaired debts are derecognised when they are assessed as uncollectible.
18
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1 | Summary of material accounting policies – continued

1.5 | Consolidation

Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date of disposal. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. The Group financial statements include the financial statements of the parent Company and all its subsidiaries.
The company acquired the shares in its subsidiaries during the period ended 31st December 2016 and the period ended 31st December 2019. The subsidiaries acquired during the years 2016 and 2019 were acquired at the net asset value of the subsidiaries existing and adjusted with the increase in the value of the immovable property arising from a revaluation of the immovable property at market value. The company incorporated two subsidiaries in the G roup in 2021 and 2022.
In the Company's financial statements investments in subsidiaries are accounted for on the basis of the direct equity interest and are stated at cost less any accumulated impairment losses. Dividends from investments are recognised in the profit or loss.
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is measured at fair value as are the identifiable net assets acquired.
19
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1 | Summary of material accounting policies – continued

1.6 | Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

1.7 | Offsetting financial instruments

Financial assets and liabilities are offset, and the net amount is 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.

1.8 | Provisions

Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is possible that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

1.9 | Revenue and cost recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the company’s activities. Revenue is shown net of value added tax, returns, rebates and discounts. The company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when the specific criteria have been met as described below.
Sales of property are recognised when the significant risks and rewards of ownership of the property being sold effectively transferred to the buyer. This is generally considered to occur at the later of the contract of sale and the date when all the company’s obligations relating to the property are completed and the possession of the property can be transferred in the manner stipulated by the contract of sale. Amounts received in respect of sales that have not yet been recognised in the financial statements, due to the fact that the significant risks and rewards of ownership still rest with the company, are treated as payments received on account and presented within trade and other payable.
Other operating income consisting of the following is recognised on an accruals basis:
Interest
Dividends receivable are accounted for on a cash basis
Costs are recognised when the related goods and services are sold, consumed or allocated, or when their future useful lives cannot be determined.
20
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1 | Summary of material accounting policies – continued

1.10 | Borrowing costs

Borrowing costs directly attributable to the acquisition and construction of property are capitalised as part of the cost of the project and are included in its carrying amount. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare any distinct part of the project for its sale or intended use is completed. Borrowing costs which are incurred for the purpose of acquiring or constructing qualifying property, plant and equipment or investment property are capitalized as part of its cost. Borrowing costs are capitalized which acquisition or construction is actively underway and cease once the asset is substantially complete, or suspended if the development of the asset is suspended. All other borrowing costs are recognized as an expense in the profit and loss account in the period as incurred.

1.11 | Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (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.

1.12 | Other financial liabilities

Other financial liabilities are recognized initially at fair value of proceeds received, net of transaction costs incurred. Other financial liabilities are subsequently measured at amortised cost using the effective interest method unless the effect of discounting is immaterial. Any difference between the proceeds, net of transaction costs, and the settlement or redemption of other borrowings is recognised in profit or loss over the term of the borrowings, unless the interest on such borrowings is capitalised in accordance with the company’s accounting policy on borrowing costs.
Repurchases of Bonds issued by the company - If the company repurchases a part of a financial liability, the company allocates the previous carrying amount of the financial liability between the part that continues to be recognised and the part that is derecognised based on the relative fair values of those parts on the date of the repurchase. The difference between the carrying amount allocated to the part derecognised and the consideration paid, including any non-cash assets transferred or liabilities assumed, for the part derecognised shall be recognised in profit or loss.

1.13 | Property, plant and equipment

All property, plant and equipment are initially recorded at cost and subsequently stated at cost less depreciation.
Cost includes expenditure that is directly attributable to the acquisition of the items. 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 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.
21
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1 | Summary of material accounting policies – continued

1.13 | Property, plant and equipment – continued

Property, plant and equipment are stated at cost or valuation less accumulated depreciation. Depreciation is provided for on the straight-line method in order to write off cost over the expected useful economic lives of the assets as follows:

|  | Years
| Tools | 4
| Computer & Office Equip. | 4
| Motor Vehicles | 5
| Furniture & Fittings | 10

The assets' residual values and useful lives are reviewed and adjusted if appropriate, at each statement of financial position date.
Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with the carrying amount, and are taken into account in determining operating profit.
An asset's carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

1.14 | Inventory - Development project

The main object of the Company is the development of land acquired for development and resale. This development is intended in the main for resale purposes, and is accordingly classified in the financial statements as Inventory. Any elements of a project which are identified for business operation or long-term investment properties are transferred at their carrying amount to Property, plant and equipment or investment properties when such identification is made and the cost thereof can reliably be segregated.
The development is carried at the lower of cost and net realisable value. Cost comprises the purchase cost of acquiring the land together with other costs incurred during its subsequent development, including:

| (i) | The cost incurred on development works, including demolition, site clearance, excavation, construction, etc., together with the costs of ancillary activities such as site security.
| (ii) | The cost of various design and other studies conducted in connection with the project, together with all other expenses incurred in connection therewith.
| (iii) | Any borrowing costs, including imputed interest, attributable to the development phases of the project.

The purchase cost of acquiring the land represents the cash equivalent of the contracted price. This was determined at date of purchase by discounting to present value the future cash outflows comprising the purchase consideration.
22
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

1 | Summary of material accounting policies – continued

1.14 | Inventory - Development project - continued

Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses.
As stated in note 1.5 the Group accounts for business combinations using the acquisition method. Accordingly, at group level, the identifiable net assets acquired, including inventory held by the newly-acquired subsidiary, are measured at fair value as at date of acquisition of subsidiary. Therefore, at consolidated group level, inventory cost represents the fair value of inventory held by the acquired subsidiary as at date of acquisition of subsidiary, together with additional development and borrowing costs incurred following date of acquisition.

1.15 | Cash and cash equivalents

Cash and cash equivalents as shown in the cashflow statement comprise cash in hand and deposits repayable on demand less bank overdrafts. Bank overdrafts are included in the statement of financial position as borrowings under current liabilities.

1.16 | 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 in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 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 tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
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 balance on a net basis.

1.17 | Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders.
23
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

2 | Financial risk management

2.1 | Financial risk factors

The Group’s activities potentially expose it to a variety of risks: market risk, economic risk, counter-party risk, credit risk and liquidity risk. Where possible, the board provides principles for overall risk management, as well as policies to mitigate these risks in the most prudent way.
(i) The Group is subject to market and economic conditions generally
The Group is subject to the general market and economic risks that may have a significant impact on the projects of the subsidiaries, the timely completion of the said projects and budgetary constraints. These include factors such as the state of the local property market, inflation, and fluctuations in interest rates, exchange rates, property prices and other economic and social factors affecting demand for real estate generally. If general economic conditions and property market conditions experience a downturn which is not contemplated in the Group’s planning during the construction and completion of the projects, this shall have an adverse impact on the financial condition of the Group and the ability of the Company to meet its obligations.
(ii) The property market is a very competitive market that can influence the sales of units in the Projects
The real estate market in Malta is very competitive in nature. An increase in supply and/or a reduction in demand in the property segments in which the Group operates and targets to sell the remaining units in stock and the properties being developed, may cause sales of units forming part of the projects to sell at prices which are lower than is being anticipated by the Group or that sales of such units are in fact slower than is being anticipated. If these risks were to materialise, particularly if due to unforeseen circumstances there is a delay in the tempo of sales envisaged by the Group, they could have a material adverse impact on the Group and the Issuer’s ability to meet its obligations.
(iii) The Group depends on third parties in connection with its business, giving rise to counterparty risks
The Group relies upon third-party service providers such as architects, building contractors and suppliers for the construction and completion of each of the projects of its subsidiaries. The Group has engaged the services of third party contractors for the development of the projects including, excavation, construction and finishing of the developments in a timely manner and within agreed cost parameters. This gives rise to counter-party risks in those instances where such third parties do not perform in line with the Group’s expectations and in accordance with their contractual obligations. If these risks were to materialise, the resulting development delays in completion could have an adverse impact on the Group’s businesses, and their respective financial condition, results of operations and prospects, that could have a material adverse impact on the Issuer’s ability to meet its obligations.
24
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

2 | Financial risk management – continued

2.1 | Financial risk factors – continued

(iv) Material risks relating to real estate development may affect the economic performance and value of the Projects
There are several factors that commonly affect the real estate development industry, many of which are beyond the Group’s control, and which could adversely affect the economic performance and value of the Group’s projects. Such factors include:
- changes in European and global economic conditions;
- changes in the general economic conditions in Malta;
- general industry trends, including the cyclical nature of the real estate market;
- changes in local market conditions, such as an oversupply of similar properties;
- a reduction in demand for real estate or change of local preferences and tastes;
- possible structural and environmental problems;
- changes in the prices, supply of raw materials;
- acts of nature that may damage any of the properties or delay development thereof.
(v) The Group may be exposed to environmental liabilities attaching to real estate property
The Group may become liable for the costs of removal, investigation, or remediation of any hazardous or toxic substances that may be located on, or in or which may have migrated from, a property owned or occupied by it, which costs may be substantial. The Group may also be required to remove or remedy any hazardous substances that it causes or knowingly permits at any property that it owns or may in future own. Laws and regulations, which may be amended over time, may also impose liability for the presence of certain materials or substances or the release of certain materials or substances into the air, land or water or the migration of certain materials or substances from a real estate investment, including asbestos, and such presence, release or migration could form the basis for liability to third parties for personal injury or other damages. These environmental liabilities, if realised, could have an adverse effect on the Group’s operations and financial position.
(vi) Property valuations may not reflect actual market values
The valuations of the properties on which the share acquisitions were based were prepared by an independent qualified architect in accordance with the valuation standards published by the Royal Institution of Chartered Surveyors (RICS). In providing a market value of the respective properties, the independent architect has made certain assumptions which ultimately may cause the actual values to be materially different from any future values that may be expressed or implied by such forward-looking statements or anticipated on the basis of historical trends as reality may not match the assumptions. There can be no assurance that such property valuations and property-related assets will reflect actual market values.
25
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

2 | Financial risk management – continued

2.1 | Financial risk factors – continued

(vii) General exposure to funding risks
The funding of each project is partly dependent on the proceeds from the gradual sale of the units in each development. If the projected sale of the units is not attained or is delayed, the Group may well not have sufficient funds to complete all the projects within the projected time-frames or to pay the contractors for works performed.
(viii) The Group may be exposed to cost overruns and delays in completion of the projects
Each of the projects being undertaken by the Group is prone to certain risks inherent in real estate development, most notably the risk of completing each project within its scheduled completion date and within the budgeted cost for that development. If either or both risks were to materialise they could have a significant impact on the financial condition of the respective subsidiary and/or the Group, and the ability of the latter to meet its obligations. The risks of delays and cost overruns, could cause actual sales revenues and costs to differ from those projected and which are affected, amongst others, by factors attributable to counter-parties, general market conditions, and competition which are beyond the Group’s control. Delays in the time scheduled for completion of one or more of the projects may also cause significant delays in the tempo of the sales forecasted by the Group for units within the Project or Projects affected by such delay, which can have a significant adverse impact on the Group’s financial condition and cash flows. Similarly, if any one or more of the projects were to incur significant cost overruns that were not anticipated, the Group may have difficulties in sourcing the funding required for meeting such cost overruns and therefore may risk not completing one or more of the projects, which shall have a material adverse impact on the cash flows generated from sales of units in that Project and a material adverse impact on the financial condition of the specific subsidiary and ultimately the Issuer. The directors are closely monitoring closely inflationary risks resulting from the conflict in Ukraine and the aftermath of the COVID pandemic.
(ix) Foreign Exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities which are denominated in a currency that is not the entity's functional currency. As at reporting date, the Group has no currency risk since all assets and liabilities are denominated in Euro.
(x) Fair value interest rate risk
The Group is exposed to risks associated with the effects of fluctuations in the prevailing levels of the market interest rates on its interest bearing financial instruments.
As at the reporting date, the Company holds available for sale investments which are limited to Corporate bonds and bank deposits. The 4.25% Secured Bonds 2023, and the 3.7% Secured Bonds 2023 – 20 2 5, the 3.9% Secured Bonds 2024 - 2026 and the 4.75% Secured Bonds 2025 – 2027 w hich represent about 90% of the G roup’s third-party borrowings are subject to fixed interest rates, whereas the other 10% of the G roup’s third-party borrowings are subject to interest rate fluctuations. Based on the above, the board considers the potential impact on profit or loss of a defined interest rate shift at the reporting date to be quite contained.
26
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

2 | Financial risk management – continued

2.1 | Financial risk factors – continued

(xi) Liquidity risk
The Group is exposed to liquidity risk in relation to meeting future obligations associated with its financial liabilities, which comprise principally trade and other payables and borrowings. Prudent liquidity risk management includes maintaining sufficient cash to ensure the availability of an adequate amount of funding to meet the C ompany's financial obligations and to safeguard the Group’s ability to continue as a going concern, in particular to complete of the Group’s projects in a timely manner.
In the next 12 months, the G roup requires to raise further funding to finish its ongoing projects. The funding should be available from own Reserves. In the absence of that, the Group will seek bank finance. There is no certainty that the Group will be able to obtain the full capital it requires, and this may effect the ability of the G roup to deliver these two projects on time.
Notwithstanding these challenges, the company has ample experience in the industry and has always managed to obtain the appropriate funding and completed projects within pre-determined time-frames.
Maturity analysis
The Group’s trade and other payables with the exception of specific liabilities (refer to Note 10) are entirely repayable within one year from the end of the reporting period. The following table analyses the Group’s borrowings, lease liabilities and deposits arising under operating leases classified as other payables into relevant maturity groupings based on the remaining period from the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

|  | CARRYING AMOUNT | LESS THAN 1 YEAR | BETWEEN 1 AND 2 YEARS | BETWEEN 2 AND 5 YEARS | TOTAL CONTRACTUAL CASH FLOWS
|  | € | € | € | € | €
| 31st December 2023 |  |  |  |  |
| Bank loans | 5,605,636 | 2,157,490 | 3,810,081 | - | 5,967,571
| Debt securities | 49,475,169 | 28,731,096 | 23,807,876 | - | 52,538,972
| Other payables | 7,296,129 | 7,296,129 | - | - | 7,296,129

|  | CARRYING AMOUNT | LESS THAN 1 YEAR | BETWEEN 1 AND 2 YEARS | BETWEEN 2 AND 5 YEARS | TOTAL CONTRACTUAL CASH FLOWS
|  | € | € | € | € | €
| 31 st December 2022 |  |  |  |  |
| Bank loans | 3,710,366 | 1,846,250 | 2,176,006 | - | 4,022,256
| Debt securities | 72,585,847 | 30,236,314 | 22,336,794 | 26,973,142 | 79,546,250
| Other payables | 7,406,848 | 1,750,000 |  |  | 9,156,848

27
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

2 | Financial risk management – continued

2.1 | Financial risk factors – continued

(xii) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern; to maximise the return to stakeholders through the optimisation of the debt and equity balance and to comply with the requirements of the Prospectus issued in relation to the 4.25% Secured Bonds 2023, 3.7% Secured Bonds 2023-2025, the 3.9% Secured Bonds 2024 – 2026 and the 4.75% Secured Bonds 2025 – 2027.
The capital structure consists of items presented within equity in the statement of financial position. The company monitors the level of debt against total capital on an ongoing basis.
(xiii) Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument leading to a financial loss.
The Group is not significantly exposed to credit risk arising in the course of its principal activity relating to the sale of residential units in view of the way promise of sale agreements are handled through receipt of payments on account at established milestones up to delivery. The Group monitors the performance of the purchases throughout the term of the related agreement in relation to meeting contractual obligations and ensures that contract amounts are fully settled prior to delivery of the residential unit.
Credit risk mainly arises from financial assets held in the Reserve Account, cash and cash equivalents and available for sale investments. Credit risk relating to financial assets is addressed through careful selection of the issuers of securities bought by the Company. All such transactions have been carried out solely by the Company’s stockbroker (and Sponsor/Manager of the 4.25% 2023 Secured Bonds, the 3.7% Secured Bonds 2023-2025 and the 3.9% Secured Bonds 2024 - 2026). During the year under review, the available for sale investments were limited to purchases in reliable Corporate Bonds (€8.1 Million) whilst the cash at Bank was held with local quality financial institutions (€29.7 Million). The Reserve Account is administered by the Security Trustee of the 4.25% 2023 Secured Bonds, the 3.7% Secured Bonds 2023 – 2025, the 3.9% Secured Bonds 2024 – 2026 and the 4.75% Secured Bonds 2025 – 2027. Bonds issues and funds are held in a bank account of high standing.
Furthermore, the Group manages its credit risk exposure in relation to receivables from fellow companies in an active manner, at arm’s length and with accrued interest charges thereon. The Board retains direct responsibility for affecting and monitoring the investments made by the fellow companies. The Board considers these receivables to be fully performing and recoverable.
28
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

3 | Revenue

Revenue represents the sale of property held for development and resale, and is made up as follows:

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Sale of property held for Development and resale | 42,763,849 |  | 29,496,100 |  | - |  | -
|  | 42,763,849 |  | 29,496,100 |  | - |  | -

4 | Operating profit / (loss)

Operating profit / (loss) for the year is stated after charging:

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Directors’ fee s (Note 6) | 184,525 |  | 164,808 |  | 18,000 |  | 18,000
| Employment costs (Note 5) | 824,522 |  | 725,957 |  | 100,000 |  | -
| Depreciation (Note 1 1) | 18,821 |  | 17,676 |  | - |  | -
| Audit fees – Annual statutory audit | 48,911 |  | 41,664 |  | 9,166 |  | 7,236
| Assurance services | 5,664 |  | 5,664 |  | 5,664 |  | 5,664

5 | Employees

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Employment cost s comprise: |  |  |  |  |  |  |
| Wages and salaries - administration | 232,887 |  | 202,299 |  | 93,858 |  | -
| Wages and salaries – allocated to cost of sales | 548,163 |  | 484,295 |  | - |  | -
| Social security costs – administration | 12,516 |  | 11,542 |  | 6,142 |  | -
| Social security costs – allocated to cost of sales | 30,956 |  | 27,821 |  | - |  | -
|  | 824,522 |  | 725,957 |  | 100,000 |  | -

| The average weekly number of persons employed by the G roup during the year was: | 21 |  | 19 |  | - |  | -

29
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS – 31 ST DECEMBER 2023

6 | Directors’ emoluments

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Directors’ salary – allocated to cost of sales | 166,525 |  | 146,808 |  | - |  | -
| Directors’ Remuneration | 18,000 |  | 18,000 |  | 18,000 |  | 18,000
|  | 184,525 |  | 164,808 |  | 18,000 |  | 18,000

7 | Finance costs

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Interest and amortisation costs | 348,848 |  | 837,609 |  | 3,263,913 |  | 2,763,119
|  | 348,848 |  | 837,609 |  | 3,263,913 |  | 2,763,119

| Finance cost s allocated to cost of sales (I nventories – Property development) |  |  |  |  |  |
| At 1 st January | 2,674,066 |  | 2,509,152 |  | - |  | -
| Interest capitalised during the year | 3,436,709 |  | 2,260,383 |  | - |  | -
| At 31 st December | (2,733,260) |  | (2,674,066) |  | - |  | -
| Charge of capitalised interest for the year | 3,377,515 |  | 2,095,469 |  | - |  | -

8 | Finance income

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Interest receivable from related parties | 418,233 |  | 306,227 |  | 3,579,856 |  | 2,921,822
| Interest receivable from investments | 180,874 |  | 293,750 |  | 180,874 |  | 293,750
| Gains on investment | - |  | 28,204 |  | - |  | 28,204
| Dividends receivable from related parties | - |  | - |  | - |  | 6,000,000
|  | 599,107 |  | 628,181 |  | 3,760,730 |  | 9,243,776

30
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

9 | Tax expense

The parent Company and Group’s income tax charge for the year has been arrived at as follows:

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Current income tax |  |  |  |  |  |  |
| Income tax on taxable income at 15% | 21,668 |  | 44,062 |  | 21,668 |  | 44,062
| Income tax subject to final tax of 5% and 8% on sales of immovable property | 3,275,657 |  | 1,609,611 |  | - |  | -
| Income tax subject to 35% | 6,054 |  | 3,958 |  | 6,054 |  | 3,958
| Tax charge | 3,303,379 |  | 1,657,631 |  | 27,722 |  | 48,020

The accounting profits and the tax charge for the year are reconciled as shown hereunder:

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Net profit for the year | 12,998,896 |  | 6,727,786 |  | 198,169 |  | 6,333,264
| Income tax thereon at 35% | 4,549,614 |  | 2,354,725 |  | 69,359 |  | 2,216,642
| Deferred tax not accounted for | (7,278) |  | (12,308) |  | - |  | -
| Difference arising from interest received | (28,891) |  | (58,751) |  | (28,891) |  | (58,751)
| Expenses disallowed for tax purposes | 324,156 |  | 172,261 |  | - |  | -
| Difference arising on income subject to 5-8% withholding tax on sales of immovable property | (1,664,199) |  | (1,665,994) |  | - |  | -
| Difference arising on adjustment to revaluation of inventories | 142,723 |  | 877,566 |  | - |  | -
| Exempt income | (12,746) |  | (9,868) |  | (12,746) |  | (2,109,871)
|  | 3,303,379 |  | 1,657,631 |  | 27,722 |  | 48,020

10 | Fair value adjustment

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Difference arising on amortised cost on |  |  |  |  |  |  |
| interest free loan given to Gap Holdings Limited (Note 14) |  |  |  |  |  |  |
| Amount as at 31 st December | 2,564,413 |  | 2,465,781 |  | - |  | -
| Amount as at 1 st January | (2,465,781) |  | (2,465,781) |  | - |  | -
|  | 98,632 |  | - |  | - |  | -

31
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

11 | Property, plant and equipment

| Group | Tools |  | Computer & Office Equipment |  | Motor Vehicles |  | Furniture & Fittings |  | Total
|  | € |  | € |  | € |  | € |  | €
| Cost |  |  |  |  |  |  |  |  |
| At 1 st January 2023 | 4,098 |  | 46,115 |  | 67,208 |  | 1,720 |  | 119,141
| Additions during the year | - |  | 2,489 |  | - |  | - |  | 2,489
| Disposals | - |  | (10,592) |  | - |  | (437) |  | (11,029)
| At 31 st December 2023 | 4,098 |  | 38,012 |  | 67,208 |  | 1,283 |  | 110,601
| Depreciation |  |  |  |  |  |  |  |  |
| At 1 st January 2023 | 2,020 |  | 19,667 |  | 53,140 |  | 821 |  | 75,648
| Charge for the year | 1,026 |  | 7,474 |  | 10,193 |  | 128 |  | 18,821
| Released – disposal | - |  | (10,592) |  | - |  | (437) |  | (11,029)
| At 31 st December 2023 | 3,046 |  | 16,549 |  | 63,333 |  | 512 |  | 83,440
| Net book value |  |  |  |  |  |  |  |  |
| At 31 st December 2023 | 1,052 |  | 21,463 |  | 3,875 |  | 771 |  | 27,161
| At 31 st December 2022 | 2,078 |  | 26,448 |  | 14,068 |  | 899 |  | 43,493

| Company |  |  |  |  |  |  | Motor Vehicles |  | Total
|  |  |  |  |  |  |  | € |  | €
| Cost |  |  |  |  |  |  |  |  |
| At 1 st January 2023 |  |  |  |  |  |  | 10,000 |  | 10,000
| Additions during the year |  |  |  |  |  |  | - |  | -
| At 31 st December 2023 |  |  |  |  |  |  | 10,000 |  | 10,000
| Depreciation |  |  |  |  |  |  |  |  |
| At 1 st January 2023 |  |  |  |  |  |  | 9,999 |  | 9,999
| Charge for the year |  |  |  |  |  |  | - |  | -
| At 31 st December 2023 |  |  |  |  |  |  | 9,999 |  | 9,999
| Net book value |  |  |  |  |  |  |  |  |
| At 31 st December 2023 |  |  |  |  |  |  | 1 |  | 1
| At 31 st December 2022 |  |  |  |  |  |  | 1 |  | 1

32
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

12 | Investments in subsidiary undertakings

|  |  | Group |  | Company
|  |  | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  | € |  | € |  | € |  | €
| Shares in subsidiary undertakings |  |  |  |  |  |  |  |
| Geom Developments Limited (C50805) - 2,000 ordinary shares of €1 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 10,580,444 |  | 10,580,444
| Geom Holdings Limited (C64409) - 1,997 ordinary shares of €1 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 2,651,130 |  | 2,651,130
| Gap Gharghur Limited (C72015) - 320,000 ordinary shares of €1 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 3,838,626 |  | 3,838,626
| Gap Mellieha (I) Limited (C72013) - 1,200 ordinary shares of €1 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 4,487,174 |  | 4,487,174
| Gap Group Contracting Limited (C75879) - 1,200 ordinary shares of €1 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 1,200 |  | 1,200
| Gap Luqa Limited (C32225) - 600 ordinary shares of €2.33 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 12,775,000 |  | 12,775,000
| Gap QM Limited (C96686) - 5,000 ordinary shares of €1 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 5,000 |  | 5,000
| Gap Qawra Limited(C100513) - 5,000 ordinary shares of €1 each representing 100 % holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 5,000 |  | 5,000
| Gap Zonqor Limited (C103533) – 1,200 ordinary shares of €1 each representing 100% holding (PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar. ) |  | - |  | - |  | 1,200 |  | 1,200
| Total |  | - |  | - |  | 34,344,774 |  | 34,344,774

Geom Developments Limited (C50805) is the parent company of Gap Group Finance Limited (C54352) which is the parent company of Manikata Holdings Limited (C53818) and Gap Properties Limited (C47928). The Group owns all the shares with the exception of a few shares which are owned by third parties. The amount attributable to the minority interest is reflected in note 2 4.
The principal activity of all the subsidiaries, except for Gap Group Contracting Limited, is the acquisition of property for development and resale. The activity of Gap Group Contracting Limited is to provide services to the entities within the Group related to their trading activity.
33
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023
NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

13 | Investments

| Investments - FVOCI | Interest rate |  | Redemption date |  | Group |  | Company
|  |  |  |  |  | 2023
|  |  |  |  |  | € |  | €
| Corporate Bonds | 3.25% |  | 2026 |  | 248,300 |  | 248,300
| Corporate Bonds | 3.85% |  | 2028 |  | 637,000 |  | 637,000
| Corporate Bonds | 3.65-3.80% |  | 2029 |  | 2,715,000 |  | 2,715,000
|  |  |  |  |  | 3,600,300 |  | 3,600,300

| Investments - FVOCI | Interest rate |  | Redemption date |  | Group |  | Company
|  |  |  |  |  | 2022
|  |  |  |  |  | € |  | €
| Corporate Bonds | 5% |  | 2023 |  | 2,500,000 |  | 2,500,000
| Corporate Bonds | 3.25-3.7% |  | 2026 |  | 2,179,750 |  | 2,179,750
| Corporate Bonds | 3.85% |  | 2028 |  | 672,000 |  | 672,000
| Corporate Bonds | 3.65-3.80% |  | 2029 |  | 2,711,800 |  | 2,711,800
|  |  |  |  |  | 8,063,550 |  | 8,063,550

14 | Other financial assets

|  |  | Group |  | Company
|  |  | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  | € |  | € |  | € |  | €
| Amount receivable from Gap Holdings Limited - Maturity date 202 7 |  | 2,564,413 |  | 2,465,781 |  | - |  | -
| Amount receivable from Gap Holdings Limited - Maturity date 202 7 |  | 5,221,806 |  | 8,516,864 |  | 5,221,806 |  | 8,516,864
| Amount receivable from third party |  | 2,500,000 |  | - |  | 2,500,000 |  | -
|  |  | 10,286,219 |  | 10,982,645 |  | 7,721,806 |  | 8,516,864

At 31st December 2023, the amount due by Gap Holdings Limited of €2,564,413 (2022 - €2,465,781) is non-interest bearing and is expected to be repaid by December 2027 (2022 - December 2027). The nominal amount of the loan is €3,000,000.
The amount due by Gap Holdings Limited of €5,221,806 (2022 - €8,516,864) is expected to be repaid by December 2027 and is unsecured. The amount receivable bears interest at 4.0% per annum (2022 – 4.0% per annum).
The amount receivable from third party matures on 31 March 2025 and bears interest at 5% per annum.
34
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

15 | Reserve Account

| The Reserve fund is made up as follows:

|  |  | 2023 |  | 2022
|  |  | € |  | €
| Amount held by the trustee as part of the Investments listed under Investments (See Note 13) held for the redemption of the 2022 and 2023 Bond |  | 3,600,300 |  | 8,063,550
| Amount held by the trustee for redemption of the bonds (See Note 18) |  | 5,130,508 |  | 28,095,044
| Amount advanced to the issuer |  | 2,316,000 |  | -
|  |  | 11,046,808 |  | 36,158,594

16 | Inventory – Development project

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Property cost of land and development costs | 59,463,889 |  | 46,065,511 |  | - |  | -
| Capitalised borrowing costs (See Note 7) | 2,733,260 |  | 2,674,066 |  | - |  | -
| Fair value adjustment on acquisition of subsidiaries | - |  | 23,032,927 |  | - |  | -
| Fair value adjustment reversed on sale of property | - |  | (22,625,147) |  | - |  | -
|  | 62,197,149 |  | 49,147,357 |  | - |  | -

17 | Trade and other receivables

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Amounts receivable | 91,830 |  | 839,066 |  | - |  | -
| Amounts due from Parent Company | 9,803,007 |  |  |  | 6,061,216 |  |
| Amounts due from group companies | - |  | - |  | 40,303,913 |  | 38,159,333
| Amounts due from related parties | 944,312 |  | 6,322,000 |  | 688,690 |  | 1,022,355
| Accrued interest receivable | 345,749 |  | 66,727 |  | 345,749 |  | 66,727
|  | 11,184,898 |  | 7,227,793 |  | 47,399,568 |  | 39,248,415

| The amounts due from parent company, group companies and related parties are interest free and repayable on demand.

35
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

18 | Cash and cash equivalents

| Cash and cash equivalents included in the cash flow statement comprise:

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Cash in hand | 146,910 |  | 47,600 |  | - |  | -
| Bank deposits | 11,164,726 |  | 34,466,859 |  | 5,486,724 |  | 29,681,881
|  | 11,311,636 |  | 34,514,459 |  | 5,486,724 |  | 29,681,881
|  | 11,311,636 |  | 34,514,459 |  | 5,486,724 |  | 29,681,881

19 | Share capital

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Authorised |  |  |  |  |  |  |
| 2,500,000 Ordinary shares of €1 each | 2,500,000 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000
|  | 2,500,000 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000
| Issued and fully paid up |  |  |  |  |  |  |
| 2,500,000 Ordinary shares of €1 each | 2,500,000 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000
|  | 2,500,000 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000

20 | Earnings per share

| Earnings per share is calculated by dividing the result attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year.

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Profit for the year | 9,695,517 |  | 5,070,155 |  | 170,447 |  | 6,285,244
| Weighted average share in issue | 2,500,000 |  | 2,500,000 |  | 2,500,000 |  | 2,500,000
| Earnings per share | 3.88 |  | 2.03 |  | 0.07 |  | 2.51

| The company has not issued any dilutive instruments in the past, and therefore the basic and diluted earnings per share are equal.

36
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

21 | Subordinated shareholders’ loan – Quasi equity

|  | Group & Company
|  | 2023 |  | 2022
|  | € |  | €
| Shareholders’ loan | 2,500,000 |  | 2,500,000
|  | 2,500,000 |  | 2,500,000

| The shareholders’ loan, classified as “Subordinated shareholders’ loan-Quasi equity” was advanced to the company by the shareholders in connection with the raising of funds through the first bond issue (see note 23). The amount is interest free and is only repayable to the shareholders after the settlement of the amount due to the Bond holders.

22 | Revaluation reserve

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Gain on amortisation of long term interest free loan receivable | 534,362 |  | 435,730 |  | - |  | -
| (Loss) on revaluation of investments at year end rates | (247,678) |  | (284,428) |  | (247,678) |  | (284,428)
|  | 286,684 |  | 151,302 |  | (274,678) |  | (284,428)

23 | Borrowings

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Short term – falling due within one year |  |  |  |  |  |  |
| Bank loans | 1,879,395 |  | 1,750,000 |  | 1,879,395 |  | 1,750,000
|  |  |  | - |  |  |  | -
|  |  |  | - |  |  |  | -
| Total short term borrowings | 1,879,395 |  | 1,750,000 |  | 1,879,395 |  | 1,750,000

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Long term – falling due after one year |  |  |  |  |  |  |
| Bank loans | 3,726,241 |  | 1,960,366 |  | - |  | 1,960,366

| The parent company has a bank loan facility of €1,879,395 (2022 - €3,710,366) which bears interest at 5.2%. This is repayable by the year 2024 by monthly instalments.
| Gap Mellieha (I) Limited has a bank loan of €3,726,241 (2022 - €0) which bears interest at 4.5% per annum. The loan is repayable by the year 2026 form sales proceeds of immovable property.
| The facilities were secured by a general and special hypothecs on the immovable properties of the relative subsidiaries.

37
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

23 | Borrowings – continued

| Debt securities in issue
| The bonds are measured at the amount of net proceeds adjusted for the amortisation of the difference between the net proceeds and the redemption value of such bonds, using effective yield method as follows:

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Face value |  |  |  |  |  |  |
| 4.25% Secured Bonds 2023 | - |  | 8,349,900 |  | - |  | 8,349,900
| 3.7% Secured Bonds 2023-2025 | 5,899,500 |  | 21,000,000 |  | 5,899,500 |  | 21,000,000
| 3.9% Secured Bonds 2024-2026 | 21,000,000 |  | 21,000,000 |  | 21,000,000 |  | 21,000,000
| 4.75% Secured Bonds 2025-2027 | 23,000,000 |  | 23,000,000 |  | 23,000,000 |  | 23,000,000
|  | 49,899,500 |  | 73,349,900 |  | 49,899,500 |  | 73,349,900

| Amortised Cost |  |  |  |  |  |  |
| Issue of bond costs | 846,054 |  | 1,206,050 |  | 846,054 |  | 1,206,050
| Issue of bond costs amortised | (421,721) |  | (441,997) |  | (421,721) |  | (441,997)
|  | 424,333 |  | 764,053 |  | 424,333 |  | 764,053

| Amortised cost | 49,475,167 |  | 72,585,847 |  | 49,475,167 |  | 72,585,847

| The effective interest rates at the end of the year were as follows:

| Face value |  |  |
|  | 2023 |  | 2022
|  | € |  | €
| Secured Bonds 2022 Secured Bonds 2023 | - 4.25% |  | 3.65% 4.25%
| Secured Bonds 2023-2025 | 3.70% |  | 3.70%
| Secured Bonds 2024-2026 | 3.90% |  | 3.90%
| Secured Bonds 2025-2027 | 4.75% |  | 4.75%

| During the current year, the 3.7% Secured Bonds 2023-2025 amounting to €5,899,500 and the 3.9% Secured Bonds 2024 – 2026 amounting to €21,000,000 were classified as current. The 4.75% Secured Bonds 2025-2027 amounting to €23,000,000 were classified as non-current.

| On 3 October 2023, 4.25% Secured Bonds 2023 were paid in full upon maturity.

38
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

23 | Borrowings – continued

On 20 November 2020, GAP Group p.l.c. issued up to 21,000,000 3.7% Secured Series I Bonds 2023-2025 of a nominal value of €100 per Series I Bond issued at par. The bond interest is payable annually in arrears on 17 December. The bonds are redeemable at par and are due for redemption at any date falling between 18 December 2023 and 17 December 2025, at the sole option of the Issuer, by giving not less than 30 days’ notice. The bonds are guaranteed by GAP QM Limited, which has bound itself for the payment of the bonds and interest thereon, pursuant to and subject to the terms and conditions in the Prospectus. The bonds have been admitted to the Stock exchange on 17 December 2020. The quoted market price as at 31 December 2023 for the bonds was €95.03. In the opinion of the directors, these market prices fairly represent the fair value of these financial liabilities. On 18th December 2023, the company exercised the option to redeem part of the Bond. The company resolved to redeem 50% of the outstanding amount. Furthermore, the company received the remaining balance of 3.7% Secured Bonds 2023-2025 on 11 April 2024.
On 6 December 2021, GAP Group p.l.c. issued up to 21,000,000 3.9% Secured Bonds 2024-2026 of a nominal value of €100 per Bond issued at par. The bond interest is payable annually in arrears on 29 December. The bonds are redeemable at par and are due for redemption at any date falling between 30 December 2024 and 29 December 2026, at the sole option of the Issuer, by giving not less than 30 days’ notice. The bonds are guaranteed by GAP QM Limited and GAP Qawra Limited, which have bound themselves for the payment of the bonds and interest thereon, pursuant to and subject to the terms and conditions in the Prospectus. The bonds have been admitted to the Stock exchange on 17 January 2023. The quoted market price as at 31 December 2023 for the bonds was €99. In the opinion of the directors, these market prices fairly represent the fair value of these financial liabilities.
On 5 December 2022, GAP Group p.l.c. issued up to 23,000,000 4.75% Secured Bonds 2025-2027 of a nominal value of €100 per Bond issued at par. The bond interest is payable annually in arrears on 21 December. The bonds are redeemable at par and are due for redemption at any date falling between 22 December 2025 and 21 December 2027, at the sole option of the Issuer, by giving not less than 30 days’ notice. The bonds are guaranteed by GAP Zonqor Limited, which has bound itself for the payment of the bonds and interest thereon, pursuant to and subject to the terms and conditions in the Prospectus. The bonds have been admitted to the Stock exchange on 29 December 2023. The quoted market price as at 31 December 2023 for the bonds was €100. In the opinion of the directors, these market prices fairly represent the fair value of these financial liabilities.
39
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

24 | Trade and other payables

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Trade and other payables |  |  |  |  |  |  |
| Trade creditors and accruals | 5,076,227 |  | 5,276,225 |  | 241,339 |  | 250,068
| Advance deposits received on promise of sale agreements | 2,167,213 |  | 2,121,763 |  | - |  | -
| Other taxation | 52,689 |  | 8,860 |  | - |  | -
|  | 7,296,129 |  | 7,406,848 |  | 241,339 |  | 250,068
| Other Financial liabilities |  |  |  |  |  |  |
| Amounts due to shareholders | - |  | - |  | - |  | 1,662,766
| Amounts due to subsidiaries | - |  | - |  | 35,385,433 |  | 30,405,092
|  | - |  | - |  | 35,385,433 |  | 32,067,858
| Non-current liabilities |  |  |  |  |  |  |
| Minority interests | 4,907 |  | 4,907 |  | - |  | -
|  | 4,907 |  | 4,907 |  | - |  | -

| Total trade and other creditors | 7,301,036 |  | 7,411,755 |  | 35,626,772 |  | 32,317,926

| The amounts due to the shareholders and subsidiaries are interest free and repayable on demand.

40
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

25 | Transactions with related parties

| All companies forming part of Gap Group p.l.c. are considered by the directors to be part of the Group. Companies having the same shareholders and directors are considered by the directors to be related parties.
| During the course of the year, the Company and the Group entered into transactions with related undertakings all of which arise in the ordinary course of business. The related party transactions were :

|  | Group |  | Company
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | € |  | € |  | € |  | €
| Other financial assets |  |  |  |  |  |  |
| Amounts receivable from related companies | 7,786,219 |  | 10,982,645 |  | 5,221,806 |  | 8,516,864

| Trade and other receivables |  |  |  |  |  |  |
| Amounts due from group companies | - |  | - |  | 40,303,913 |  | 38,159,333
| Amounts due from related parties | 944,312 |  | 6,322,000 |  | 688,690 |  | 1,022,355
| Finance income |  |  |  |  |  |  |
| Interest receivable from related parties | 418,233 |  | 306,227 |  | 3,579,856 |  | 2,921,822
| Other financial liabilities |  |  |  |  |  |  |
| Amounts due to related parties | - |  | - |  | - |  | 1,662,766
| Amounts due to subsidiaries | - |  | - |  | 35,385,433 |  | 30,405,092

26 | Contingent liabilities

| One of the companies within the Group, Geom Developments Limited is involved in a pending court case which might lead to litigation costs amounting to circa Eur75,000. Consequently, this was disclosed as a contingent liability.

27 | Capital commitments

| As at December 2023, the Group has entered into promise of sale agreements with advance deposits amounting to €2,162,813 (2022 - €2,121,763). These agreements are expected to generate sales amounting to €21,628,130 (2022 - €21,217,630).

| As at 31 December 2023, the Group had bank guarantees amounting to €269,985 in favour of third parties.

28 | Events subsequent to the reporting period

| On 11th April 2024, the company redeemed in full the remaining outstanding balance of the 3.7% Secured Bonds 2023 – 2025 amounting to €5,899,500 plus interests thereon. Therefore as at the date of this report, the company has two remaining bonds in issue, namely the 3.9% Secured Bond 2024 – 2026 and the 4.75% Secured Bond 2025 – 2027.

41
GAP GROUP P.L.C.
Annual Report and Consolidated Financial Statements for the year ended 31 st December 2023

| NOTES TO THE FINANCIAL STATEMENTS - 31st DECEMBER 2023

29 | Statutory information

| Gap Group p.l.c. is a limited liability company and is incorporated in Malta, with its registered address at PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar.
| The parent company of Gap Group p.l.c is Gap Group Investments II Limited, a company registered in Malta, with its registered address at PLAN Group Head Office, Triq il-Wirt Naturali, Bahar ic-Caghaq, Naxxar.
| There is no ultimate controlling party as none of the shareholders hold more than 50% of the voting shares in the company.

42
Independent auditor's report
To the Shareholders of Gap Group p.l.c.
Report on the Annual Report and Consolidated Financial Statements for the year ended 31st December 2023.
Opinion
I have audited the parent company financial statements and the consolidated financial statements (the “financial statements”) of Gap Group plc (the “Company”) and its subsidiaries together (the “Group”), set on pages 10 to 42 which comprise the statement of financial position as at 31st December 2023 and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the consolidated financial statements including a Summary of material accounting policies.
In my opinion, the accompanying financial statements give a true and fair view of the financial position of Gap Group p.l.c. and its Group as at 31st December 2023, and of the Company’s and its Group’s financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and have been properly prepared in accordance with the requirements of the Companies Act (Cap. 386).
Basis for Opinion
I conducted my audit in accordance with International Standards on Auditing (ISAs). My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Independence
I am independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the financial statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap.281) in Malta, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code.
My audit approach
Overview

• | Overall materiality - €427,638 (1% of the consolidated turnover)
• | Key audit matter - Valuation of Inventory

Scope and timing of the Group audit engagement
As part of designing my audit, I determined materiality and assessed the risks of material misstatement in the financial statements. In particular, I 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. I also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represent a risk of material misstatement due to fraud.
I tailored the scope of my audit in order to perform sufficient work to enable me to provide an opinion on the financial statements as a whole, taking into account the structure of the Company and the Group, the accounting processes and controls, and the industry in which the Company and the Group op e rates.
43
Independent auditor's report
To the Shareholders of Gap Group p.l.c.
Levels of materiality and methodology used for the group audit engagement
The scope of my audit was influenced by my 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 reasonable be expected to influence the economic decisions of the users taken on the basis of the financial statements.
Based on my professional judgement, I determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole. These, together with qualitative considerations, helped me to determine the scope of my audit and the nature, timing and extent of my audit procedures and to evaluate the effect of misstatements, both individual and in aggregate of the financial statements as a whole.
The overall Group materiality amounted to €427,638 which represents 1% of the consolidated turnover. I chose total turnover as the accepted point of reference to the users of the financial statements as it is most commonly used. I chose 1% as it is within the range of acceptable quantitative materiality thresholds in auditing standards.
I agreed with the Audit Committee that I would report to them misstatements identified during my audit above €427,638 as well as misstatements below that amount that, in my view, warranted reporting for qualitative reasons.
Key Audit Matter
Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements for the current period. These matters are addressed in the context of my audit of the financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters. The key audit matter identified was :
Valuation of inventory
The Group consists of companies holding immovable property for development and resale. Bonds were issued to the public to enable the Company to acquire shares of property development companies and to provide further finance to the group companies to carry on further development. At 31st December 2023, the carrying amount of immovable property held by the Group as inventory represented 63% of total assets.
At Company level, the carrying amount of inventory represents the cost of the land, development costs and borrowing costs.
At Group level, the acquisition method of accounting is applied to account for business combinations. Identifiable assets and liabilities assumed by the business combination are therefore initially measured at their fair values at the acquisition date. Therefore, at consolidated group level, inventory cost represents the fair value of inventory held by the acquired subsidiary as at date of acquisition of subsidiary, together with additional development and borrowing costs incurred following date of acquisition.
The carrying value of inventories as at 31st December 2023 is explained in note 16 which discloses the composition of the Inventories, including the fair value adjustment on the acquisition of subsidiaries. At year end, the directors assess whether inventory is carried at the lower of cost and net realisable value.
Inventory valuation has been identified as a key audit matter because of the significance of the carrying value of inventories in the Group’s Statement of Financial Position and the judgmental nature of the assumptions used by the directors in the assessment described above.
44
Independent auditor's report
To the Shareholders of Gap Group p.l.c.
Valuation of inventory – continued
My other audit procedures included:

| • | Audit procedures carried out to verify cost included testing over source documentation, including vouching costs incurred to date, a review of labour costs and a re-calculation of borrowing costs.
| • | An assessment was made of the reasonableness of cost of property reversed from inventory upon the sale of property.
| • | Audit procedures carried out in relation to net realisable value included a comparison of estimated selling price to recent market transactions and to similar property on the market and an assessment of the reasonableness of estimated costs to completion.
| • | I also evaluated the appropriateness as audit evidence of the valuation carried out by an independent valuer.
| • | I evaluated the adequacy of related disclosures in the financial statements

Based on my audit work, I concluded that the inventories were fairly stated.
Other information
The directors are responsible for the other information. The other information comprises the Directors’ Report, the Statement of Compliance with the Principles of Good Corporate Governance and the Statement of the Directors’ Responsibilities, but does not include the financial statements and my auditor’s report thereon.
My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.
In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I 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 and fair presentation of the financial statements in accordance with IFRSs as adopted by the EU, 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 and the Group’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 has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.
45
Independent auditor's report
To the Shareholders of Gap Group p.l.c.
Auditor’s Responsibilities for the Audit of the Financial Statements
My 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 my 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, I exercise professional judgment and maintain professional scepticism throughout the audit. I 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 my 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 and the Group’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Company’s and Group’s ability to continue as a going concern and future events or conditions may cause the Company and the Group to cease to continue as a going concern. In particular, it is difficult to evaluate all of the potential implications resulting from the conflict in Ukraine and the Middle East and inflationary risks.
| • | 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. I am responsible for the direction, supervision and performance of the G roup audit. I remain solely responsible for my audit opinion.

I 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 I identify during my audit.
I also provide those charged with governance with a statement that I 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 my independence, and where applicable, related safeguards.
46
Independent auditor's report
To the Shareholders of Gap Group p.l.c.
Auditor’s Responsibilities for the Audit of the Financial Statements – continued
From the matters communicated with those charged with governance, I determined those matters that are of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my 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
I 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 Gap Group 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 the Listing Rules Rule 5.56A, in accordance with the requirements of the ESEF RTS.
My responsibilities
My 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 I have obtained. I conducted my reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
My 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.

I believe that the evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Opinion
In my opinion, the Annual Financial Report for the year ended 31 December 2023 has been prepared in accordance with the ESEF RTS in all material aspects.
47
Independent auditor's report
To the Shareholders of Gap Group p.l.c
Report on Other Legal and Regulatory Requirements – continued
Report on Directors’ R eport
With respect to the Directors’ R eport, I also considered whether the Directors’ Report includes the disclosure requirements of Article 177 of the Companies Act (Cap. 386). Pursuant to listing Rule 5.62 of the Capital Market Rules issued by the Listing Authority in Malta, I am required to review the directors' statement in relation to going concern.
In accordance with the requirements of sub-article 179(3) of the Companies Act (Cap. 386) in relation to the Director’s Report, in my opinion, based on the work undertaken in the course of the audit:

| • | The information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements;
| • | The Directors’ Report has been prepared in accordance with applicable legal requirements; and
| • | I have nothing to report in relation to the statement on going concern.

In the light of the knowledge and understanding of the Company and the Group and their environment obtained in the course of the audit, I have not identified any material misstatements in the Directors’ Report and other information that I obtained prior to the date of the auditor's report. I have nothing to report in this regard.
Report on Corporate Governance – Statement of Compliance
Pursuant to Listing Rule 5.94 issued by the Malta Financial Services Authority, in its capacity as the Listing Authority in Malta, the directors are required to include in the Company’s and the Group’s Annual Financial Report a Corporate Governance Statement explaining the extent to which they have adopted the Code of Principles of Good Corporate Governance set out in Appendix 5.1 to Chapter 5 of the Capital Market Rules, and the effective measures that they have taken to ensure compliance with those principles. The Corporate Governance Statement of Compliance is to contain at least the information set out in Listing Rule 5.97.
My responsibility is laid down by Listing Rule 5.98, which requires the auditor to include a report to shareholders on the Corporate Governance Statement in the Company’s and the Group’s Annual Financial Report.
I read the Statement of Compliance and consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements included in the Annual Report. My responsibilities do not extend to considering whether this Statement is consistent with any other information included in the Annual Report.
I am not required to, and I 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 and the Group’s corporate governance procedures, or its risk and control procedures.
In my opinion, the Statement of Compliance set out on pages 7 to 9 has been properly prepared in accordance with the requirements of Capital Market Rules issued by the Malta Listing Authority.
Consistency of the Audit Report with the Additional Report to the Audit Committee
My opinion on the audit of the financial statements is consistent with the additional report to the audit committee.
48
Independent auditor's report
To the Shareholders of Gap Group p.l.c.
Report on Other Legal and Regulatory Requirements – continued
Declaration on prohibited non-audited services
To the best of my knowledge and belief, I have not provided any non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281) and under Article 5(1) of the EU Audit Regulation No. 537/2014. During the period from 1 January 2023 to 31 December 2023, I provided the services disclosed in Note 4 to the financial statements in addition to the statutory audit.
Report on Other matters which I a m required to report by exception
I am also responsible under the Companies Act (Cap. 386), to report to you if, in my opinion:

| • | Adequate accounting records have not been kept, or that returns adequate for my audit have not been received by b ranches visited by me.
| • | The financial statements are not in agreement with the accounting records and returns.
| • | I have not received all the information and explanations I require for my audit.
| • | The information given in the Report of the Directors is not consistent with the financial statements.

I have nothing to report to you in respect of these responsibilities.
Appointment
I was first appointed as auditor of the Company and the Group on 20 th November 2020 for the financial year ended 31 st December 2020. My appointment was renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 4 years. The Company was listed on a regulated market on 26 th October 2016.
This copy of the audit report has been signed by
Pamela Fenech (Director) for and on behalf of
TACS Malta Limited
Certified Public Accountant
Registered Auditor
1, Tal-Providenza Mansions,
Main Street,
Balzan,
Malta
Date : 26 th April 2024
49
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