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SP FINANCE P.L.C.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 st DECEMBER 2023
Company No. C- 89462
SP FINANCE P.L.C.
CONTENTS
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PAGE
Report of the directors
1 to 5
Statement of compliance with the principles of good corporate governance
6 to 9
Statement of profit or loss and other comprehensive income
10
Statement of financial position
11-12
Statement of changes in equity
13
Statement of cashflows
14
Notes to the financial statements
15 to 58
Independent auditors’ report
59 to 66
SP FINANCE P.L.C.
REPORT OF THE DIRECTORS
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1
Directors:-
Mr. Joseph Casha
Mrs. Josephine Casha
Dr. Alex Perici Calascione – Non-executive director
Dr. Reuben Debono – Non-executive director
Mr. Mark Anthony Grech – Non-executive director
Secretary:-
Dr. Andrea Micallef
Bankers:-
HSBC Bank Malta p.l.c.
Business Bank Centre
Mill Street,
Qormi
Registered Office:-
89,
The Strand,
Sliema, Malta.
The Directors hereby present their annual report together with the audited financial statements of SP Finance p.l.c. (the “Company”) for the year ended on 31 December 2023.
The Directors also present their annual report together with the audited financial statements of the SP Finance p.l.c. Group (the “Group”) which comprises the Company and its fully owned subsidiaries, namely SP Investments Limited (Reg. No. C-89468), Med Asia Branding Ltd. (formerly Pebbles St Julians Limited) (Reg. No. C-89612), Pebbles Resort Limited (Reg. No. C-89613), Sea Pebbles Limited (Reg. No. C-6138) and Med Asia Operations Limited (Reg. No. C-103605) for the year ended on 31 December 2023. The latter company became part of the Group in February 2023 upon the acquisition of all its shares by Sea Pebbles Limited.
Principal Activities
The Company’s principal activity is to act as the parent and investment holding company of the Group.
The Group’s principal activities consist in the ownership and operation of the Pebbles Boutique Aparthotel in Sliema and the operation of the Pebbles Resort hotel in St. Paul’s Bay. Since 1 April 2023 the Group, through its subsidiary Med Asia Operations Limited operates a number of catering and entertainment establishments namely the MedAsia Fusion Lounge in Sliema, the MedAsia Playa in Sliema, The MedAsia Golden Sands in Golden Bay, the Noodle Box in Sliema and all the bar and restaurant establishments located in the Pebbles Resort in St. Paul’s Bay. The Group, through its subsidiary Med Asia Branding Limited, also holds intellectual property rights.
Bond Issue
In terms of the Prospectus dated 8 April 2019 the Company had offered for subscription an amount of €12 million 4% Secured Bonds 2029 of a nominal value of €100 per Bond issued at par. The Bonds were fully subscribed and admitted to the Official List of the Malta Stock Exchange p.l.c. with effect from 3 May 2019. Sea Pebbles Limited acted as guarantor of this bond issue (the “Guarantor”).
In accordance with the Prospectus, the proceeds from the bond issue were utilized by the Group to acquire properties connected with its current hotel operations and planned expansion projects, to refurbish and upgrade the San Pawl Hotel (now Pebbles Resort) and to repay an outstanding bank financing facility.
Review of Business
The Group registered a loss before tax of €426,234 (2022: Loss of €2,622,889 after taking into consideration one-time impairments of €1,500,000 on the carrying value of the right of use asset and property, plant and equipment). The Company registered a profit before tax of €4,728 (2022: Profit of €117,894). The Group’s revenue in 2023 amounted to €10,521,305 (2022: €3,625,530), of which €5,448,205 represents revenue from the catering businesses acquired by the Group on 1 April 2023.
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REPORT OF THE DIRECTORS
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2
Financial position
As at 31 December 2023 the Group’s total asset base stood at €43,257,858 (2022: €36,791,985). The Group’s current assets amounted to €3,242,917 (2022: €959,815) while current liabilities amounted to €6,556,989 (2022: €3,705,836). The Group’s non-current liabilities stood at €18,793,695 (2022: €19,660,166) which mainly consist of bond borrowings amounting to €12,000,000 and lease liabilities of €4,279,307 (2022: €4,418,892).
Business Update
The Pebbles Boutique Aparthotel in Sliema continued to benefit from excellent customer reviews as a value-for-money hotel located in a prime location on the Sliema – Gzira seafront. This ensured a high occupancy rate throughout the year at decent daily rates. Its revenue increased from €1,251,833 in 2022 to €1,454,966 in 2023 (+16%), while its profit before tax, excluding dividends received from its subsidiary acquired in 2023, increased from €104,979 in 2022 to €190,094 in 2023 (+81%).
The Pebbles Resort in St. Paul’s Bay, which during the summer months operates as a music hotel under the ‘Bora Bora Ibiza Malta’ franchise had its best year since it opened in 2019. Its revenue increased from €2,373,697 in 2022 to €3,912,192 in 2023 (+65%) while its loss before tax which in 2022 stood at €2,656,560 decreased to €411,050 in 2023 (-85%). It must be noted that in 2022 the company’s financial results were negatively impacted by one-time impairments of €1,500,000 on the carrying value of the right of use asset and property, plant and equipment. When excluding this one-time impairment, the loss in 2022 amounted to €1,156,560 compared to €411,050 in 2023 (-64%).
As stated above, in early 2023 the Group acquired a number of well-established catering outlets from related companies outside the Group and started operating them as from 1 April 2023. The newly acquired businesses contributed to the Group additional revenue and profit before tax of €5,448,205 and €422,741 respectively and served to diversify the Group’s activities beyond the tourist accommodation sector.
The catering outlets operated by the Group from 1 April 2023 performed slightly below projections mostly due to some weekends of lost business in MedAsia Playa due to bad weather. In addition, profit margins were less than forecast due to continuing inflationary pressures on inputs, mainly wages and food items.
Events after the Reporting Period
In early January 2024 the Group embarked on a project to transform the Pebbles Boutique Aparthotel in Sliema from a 54-room 3-star hotel to a 110 units / 300-bed 3-star hotel and self-catering apartments. The project is expected to be completed in the third quarter of 2025 and will permit the Group to fully exploit the business potential of this prime site on the Sliema – Gzira seafront.
Acquisition of business and intellectual property
On 1 April 2023 the Group, through its subsidiary Med Asia Operations Ltd. acquired various established catering businesses, already referred to in the 'Principal Activities' paragraph above, from commonly controlled companies outside the Group, for a consideration of €3,480,000, including goodwill calculated at €2,317,829. The balance of the consideration as yet unpaid, amounting to €2,830,000 is classified in the Statement of Financial Position as a Capitalisation Reserve and will be satisfied through the allotment of additional shares to the Company’s current shareholders.
On 1 April 2023 the Group, through its subsidiary Med Asia Branding Ltd. acquired various trademarks from commonly controlled companies outside the Group, for a consideration of €1,784,815 which is as yet unpaid. It is classified as a Capitalisation Reserve and will be satisfied through the allotment of additional shares to the Company’s current shareholders.
Key Risks – General
The Group’s business activities consist of the provision of tourist accommodation and the operation of catering establishments. Such hospitality operations are subject to external factors, many of which are common to the hospitality industry, and beyond the Group’s control, including: (i) market and economic conditions generally; (ii) susceptibility to local competition; (iii) impact of geo-political instability due to ongoing armed conflicts in Eastern Europe and the Middle East; (iv) outbreaks of pandemics that may restrict international travel; and (v) increases in operating costs.
SP FINANCE P.L.C.
REPORT OF THE DIRECTORS
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3
While negative trends in any of these areas, if they materialize, would unavoidably impact the Group’s operations and business, it is considered that the Group’s decades’ long presence and experience operating in this sector renders it sufficiently resilient to overcome any challenges it may face.
Key Risks – Specific
As stated above, the Group has embarked on a multi-million-euro project to transform the current Pebbles Boutique Aparthotel in Sliema to a much larger hotel which is expected to be completed in the third quarter of 2025. The new hotel, when operational, is expected to generate significantly higher revenues than those generated by the existing hotel.
The principal risks which have been identified with this project are:
•Cost overruns. The directors consider this to be a low to medium risk in view of the fact that most works contracts are in place and also that construction works will be carried out mostly by related companies outside the Group.
•Delay in completion date. The directors consider that a significant delay in the completion date is a low risk since most construction work will be carried out by related companies outside the Group and therefore within the operational control of the ultimate shareholders.
•Change in market conditions prevalent when the hotel reopens. This is considered as a low risk by the directors in view of the current robustness of the Maltese tourism industry, the prime location in which the hotel is situated and the excellent customer reviews it has always enjoyed.
•Project financing. This project is mostly financed by the Group’s cash generation and by related companies outside the Group. Discussions with a local bank to secure financing for the remaining portion are in a very advanced stage and it is envisaged that a sanction letter will be issued in the coming months. The directors consider the risk that the Group has insufficient financing to complete the project to be low risk.
Statement pursuant to Capital Markets Rule 5.62
Rule 5.62 of the Capital Markets Rules requires the directors to make a statement that the business is a going concern with supporting assumptions or qualifications as necessary.
In preparing this statement the directors considered the following factors:
In general, Malta’s tourism sector in 2023 and the first few months of 2024 has shown signs of robustness and steady growth. Industry experts and government sources predict that tourist arrivals in 2024 will surpass the record numbers achieved in 2023. As a Group that operates in the hospitality industry (tourist accommodation and catering establishments) this augurs well that in the foreseeable future the Group will be operating in a robust and flourishing tourism industry.
More specifically, the Group’s financial position improved significantly in 2023 compared to 2022 and prior years. This was primarily a consequence of the newly acquired catering businesses previously operated by related companies outside the Group. In addition, the music hotel concept under which the Pebbles Resort has operated during the summer months since 2022 is bearing fruit, enabling the company to provide a unique experience that distinguishes it from other hotels, thus securing higher occupancy levels at better rates compared to hotels in the surrounding area.
The directors also considered realistic financial projections presented by management which indicate that the Group is likely to generate sufficient financial resources through its operations as to permit it to continue in operational existence for the foreseeable future.
Therefore, in terms of Capital Markets Rule 5.62, the Directors hereby state that these financial statements have been prepared on the going concern basis.
SP FINANCE P.L.C.
REPORT OF THE DIRECTORS
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4
Loans between subsidiary companies
The proceeds from the bond issue of the 3 May 2019 were invested as €12,000,000 4.1% Cumulative Preference shares in its subsidiary SP Investments Limited. In turn, these proceeds were invested by SP Investments Limited in its subsidiaries, which are the companies operating the Group’s hotels, partly as Ordinary share capital and partly as loans.
As per section B5 of the Summary Note forming part of the Prospectus of the above-mentioned bond issue, the loans invested by SP Investments Limited in its subsidiaries were interest-free.
As from 1 January 2021, it was deemed beneficial to the Group that SP Investments Limited start charging interest on the loans to its subsidiaries at the rate of 8% per annum. Following a share reduction of €2,500,000 by Sea Pebbles Limited which came into effect on the 30 December 2022, and the conversion of the €2,500,000 to a loan from SP Investments Limited to its subsidiary Sea Pebbles Limited, the interest rate charged by SP Investments Limited to Sea Pebbles Limited was reduced to 6.5% per annum starting from 1 January 2023, The Group and the Company results are not negatively impacted by these changes.
Results, Dividends and Reserves
The results for the year are set in the Statement of Profit and Loss and Other Comprehensive Income on page 10.
The Board does not propose the payment of a dividend.
The Group’s retained earnings as at 31 December 2023 amounted to negative €4,913,848 (2022: negative €4,780,225) while the Company’s retained earnings on the same date amounted to €172,992 (2022: €169,919).
Statement of Directors’ Responsibilities for the Financial Statements
The Companies Act (Chapter 386 of the Laws of Malta) requires the directors of SP Finance p.l.c. to prepare annual financial statements for each financial year which give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the profit or loss for the year in accordance with the requirements of International Financial Reporting Standards as adopted by the European Union.
In preparing such financial statements, the Directors are required to:
•Adopt the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business;
•Select suitable accounting policies and apply them consistently from one accounting year to another;
•Make judgements and estimates that are reasonable and prudent; and
•Account for income and charges relating to the accounting year on the accruals basis.
The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time, the financial position of the Group and the Company and enable them to ensure that the financial statements have been properly prepared in accordance with the provisions of the Companies Act. The directors are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud, errors and other irregularities.
The financial statements of SP Finance p.l.c. and the Group for the year ended on 31 December 2023 are included in the Annual Report 2023, which is available on the Company’s website.
SP FINANCE P.L.C.
REPORT OF THE DIRECTORS
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5
Statement of Responsibility pursuant to the Capital Markets Rule 5.68
The directors confirm that, to the best of their knowledge:
•The financial statements give a true and fair view of the financial position of the Company and the Group as at 31 December 2023, and of the financial performance and the cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union; and
•The Annual Report includes a fair review of the development and performance of the business and the position of the Company and the Group, together with a description of the principal risks and uncertainties that the Company and the Group face.
Statement pursuant to Capital Markets Rule 5.70.1
Pebbles Resort Limited rented the bars and restaurants located within the Pebbles Resort to Sea Pebbles Leisure Limited (C91291), a company outside the Group whose directors are Mr. Joseph Casha and Mrs. Josephine Casha.
As from October 2022 the latter company has been contracted to provide the meals and breakfasts consumed by guests of Pebbles Resort, which service was, between May 2021 and September 2022, being provided by a third party. This agreement was terminated on 31 March 2023 since the bars and restaurants located within the Pebbles Resort were operated by Med Asia Operations Limited (a subsidiary within the Group) as from 1 April 2023.
Sea Pebbles Limited rented a restaurant located in Sliema to Med Asia Limited (C-50148), a company outside the Group in which Mr. Joseph Casha and Mrs. Josephine Casha are directors. The rental agreement was entered into in 2011. This agreement was terminated on 31 March 2023 since restaurant was operated by Med Asia Operations Limited (a subsidiary within the Group) as from 1 April 2023.
Auditors
VCA Certified Public Accountants have intimated their willingness to continue in office. A resolution for their reappointment will be proposed at the Annual General Meeting.
Signed on behalf of the Board of Directors on 29 April 2024 by Mr. Joseph Casha (Director) and Mrs. Josephine Casha (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statement
SP FINANCE P.L.C.
STATEMENT OF COMPLIANCE WITH PRINCIPLES OF GOOD CORPORATE GOVERNANCE
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6
Introduction
Pursuant to the Capital Markets Rules as issued by the Malta Financial Services Authority, S.P. Finance p.l.c. (the ‘company’ or the ‘Issuer’) is hereby reporting on the extent of its adoption of the Code of Principles of Good Corporate Governance (the ‘Principles’) contained in Appendix 5.1 of the Capital Markets Rules as well as the measures adopted to ensure compliance with these same Principles.
Since its inception, the Company’s principal activity was to raise funds from the capital market to finance the operations of other group companies forming part of the Sea Pebbles Group (the ‘Group’).
The Board of Directors acknowledges that the Code does not dictate or prescribe mandatory rules but recommends principles of good practice. Nonetheless, the Board strongly believes that the Principles are in the best interest of the shareholders and other stakeholders since they ensure that the Directors and Management of the Company adhere to internationally recognised high standards of Corporate Governance.
The Company currently has a corporate decision-making and supervisory structure that is tailored to suit the Company’s requirements and designed to ensure the existence of adequate checks and balances within the Company, whilst retaining an element of flexibility, particularly in view of the size of the Company and the nature of its business. The Company adheres to the Principles, except for those instances where there exist particular circumstances that warrant non-adherence thereto, or at least postponement for the time being.
Additionally, the Board recognises that, by virtue of Capital Markets Rule 5.101, the Company is exempt from making available the information required in terms of Capital Markets Rules 5.97.1 to 5.97.3; 5.97.6 and 5.97.8.
Roles and Responsibilities
The Board acknowledges its statutory mandate to conduct the administration and management of the Company. The Board, in fulfilling its mandate and discharging its duties assumes responsibility for:
1.the Company’s strategy and decisions with respect to the issue, servicing and redemption of its Bonds;
2.monitoring that its operations are in conformity with its commitments towards bondholders, shareholders and all relevant laws and regulations; and
3.ensuring that the Company installs and operates effective internal control and management systems and that it communicates effectively with the market.
The Board of Directors
The Board of Directors of the Company is responsible for the overall long-term direction of the Company, in particular in being actively involved in overseeing the systems of control and financial reporting and that the Company communicates effectively with the market. The Company has in place systems whereby the directors obtain timely information not only at meetings of the Board but at regular intervals or when the need arises.
Directors are appointed during the Company’s Annual General Meeting for periods of one year, at the end of which term they may stand again for re-election. The Articles of Association of the Company clearly set out the procedures to be followed in the appointment of directors.
Apart from setting the strategy and direction of the Company, the Board retains direct responsibility for approving and monitoring:
-that the proceeds of the Bonds are applied for the purposes for which they were sanctioned as specified in the prospectus of the Bonds issued;
-the proper utilisation of the resources of the Company; and
-the annual report and financial statements, the relevant public announcements and the Company’s compliance with its continuing obligations under the Capital Markets Rules.
SP FINANCE P.L.C.
STATEMENT OF COMPLIANCE WITH PRINCIPLES OF GOOD CORPORATE GOVERNANCE
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Complement of the Board
The Board of Directors meets regularly, with a minimum of four times annually, and is currently composed of five Members, three of which are completely independent from the Company or any other related companies and therefore free of any significant business relationship, family or other relationships with the Issuer, its controlling shareholders or the management, that creates a conflict of interest such as to impair their judgement.
The activities of the Board are exercised in a manner designed to ensure that it can effectively supervise the operations of the Company and protect the interests of bondholders and the shareholders. During the current financial period, meetings of the Board were held as frequently as considered necessary.
The Board members are notified of forthcoming meetings by the Company secretary (Dr. Andrea Micallef) with the issue of an agenda and necessary supporting documentation which are then discussed during the Board meetings.
During the financial year under review, the Board met formally five times and was always attended by more than 75% of the Officers of the Company.
Dr. Alex Perici Calascione, Mr. Mark Anthony Grech and Dr. Reuben Debono are the independent non-executive directors of the Company.
Executive Directors
Mrs. Josephine Casha
Mr. Joseph Casha
Independent, Non-Executive Directors
Dr. Alex Perici Calascione
Dr. Reuben Debono
Mr. Mark Anthony Grech
The remuneration of the Board is reviewed periodically by the shareholders of the Company. The Company ensures that it provides Directors with relevant information to enable them to effectively contribute to Board decisions.
The Directors are fully aware of their duties and obligations and should a conflict of interest in decision making ever to arise, the current internal policy of the Company is such as to ensure that the particular Director refrains from participating in such decisions. The Board member concerned shall not take part in the assessment by the Board as to whether a conflict of interest exists. A Director shall not vote in respect of any contract, arrangement, transaction or proposal in respect of which he has a material interest.
Risk Management and Internal Control
The Company’s system of internal controls is designed to manage all the risks in the most appropriate manner. However, such controls cannot provide an absolute elimination of all business risks or losses. Therefore, the Board, inter alia, reviews the effectiveness of the Company’s system of internal controls in the following manner:
-Reviewing the Company’s strategy on an on-going basis as well as setting the appropriate business objectives in order to enhance value for all stakeholders;
-Implementing an appropriate organisational structure for planning, executing, controlling and monitoring business operations in order to achieve company objectives;
-Identifying and ensuring that significant risks are managed satisfactorily; and
-Company policies are being observed.
SP FINANCE P.L.C.
STATEMENT OF COMPLIANCE WITH PRINCIPLES OF GOOD CORPORATE GOVERNANCE
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Audit Committee
The Board of Directors of the Company has established an Audit Committee in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. The Audit Committee’s primary objective is to assist the Board in fulfilling its responsibilities relating to risk, control, and governance, as well as to review the financial reporting process and the process for monitoring compliance with applicable laws and regulations.
The Audit Committee is a sub-committee of the Board constituted to fulfil an overseeing role in connection with the quality and integrity of the Company’s financial statements. In performing its duties, the Audit Committee maintains effective working relationships with the Board of Directors, management, and the external auditors of the Company. The Committee also has the function of scrutinising and evaluating any proposed transaction to be entered into by the Company and a related party, to ensure that the execution of any such transaction is at arm’s length and on a commercial basis ultimately in the interest of the Company.
The Board has set formal Terms of Reference of the Audit Committee that establish its composition, role, and scope. The Board reserves the right to amend these Terms of Reference from time to time. The Terms of Reference of the Audit Committee are modelled on the principles set out in the Capital Markets Rules 5.117 – 5.134A.
The Audit Committee assists the Board in fulfilling its supervisory and monitoring responsibility by reviewing the company financial statements and disclosures, monitoring the system of internal control established by management as well as the audit processes. The Audit Committee as stated above is a sub-committee of the Board and is directly responsible and accountable to the Board.
In terms of the Maltese Companies Act (Chap. 386) and the Malta Financial Services Authority Capital Markets Rules, the financial statements of SP Finance plc are subject to annual audit by its external auditors. Moreover, the Audit Committee has direct access to the external auditors of the Company, who attend the meeting at which the Company’s financial statements are approved.
The Audit Committee which met four times during the year under review is currently composed of the following individuals:
Mr. Mark Anthony Grech (Chairman)
Dr. Alex Perici Calascione
Dr. Reuben Debono
This current complement addresses the requirement established by the Capital Markets Rules that the Audit Committee is composed of non-executive directors, the majority of which being independent.
The Board considers Mr. Mark Anthony Grech to be competent in accounting and auditing matters in terms of the Capital Markets Rules. Mr Mark Anthony Grech is considered as an independent director since he is free of any significant business, family or other relationship with the Company, its controlling shareholders or the management of either, that could create a conflict of interest such as to impair his judgement. Furthermore, the Board considers that the Audit Committee, as a whole, to have relevant competence in the sector the company is operating.
The Audit Committee was formally set up on the 6 November 2019. Communication with and between the Company Secretary, top level management and the Committee is ongoing and considerations that required the Committee’s attention were acted upon between meetings and decided by the Members (where necessary) through electronic circulation and correspondence.
Relations with the market
The market is kept up to date with all relevant information, and the Company regularly publishes such information on its website to ensure consistent relations with the market.
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STATEMENT OF COMPLIANCE WITH PRINCIPLES OF GOOD CORPORATE GOVERNANCE
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Committees
The directors believe that, due to the Company’s size and operation, the remuneration, evaluation and nominations committees that are suggested by the Code are not required and that the function of these can effectively be undertaken by the Board itself. However, the Board is tasked to review on an annual basis, the remuneration paid to the directors and to carry out an evaluation of their performance and that of the Audit Committee. The shareholders approve the remuneration paid to the directors at the annual general meeting of the Company.
Remuneration Statement
Pursuant to the Company’s Memorandum and Articles of Association, the maximum annual aggregate emoluments that may be paid to the directors is determined by the Company further to a General Meeting during which the proposed aggregate emoluments or an increase in the maximum limit of such aggregate emoluments shall be proposed. Furthermore, the remuneration of directors is a fixed amount per annum and does not include any variable component relating to profit sharing, share options or pension benefits. During the year under review, the directors received emoluments amounting in total to €24,000.
Conclusion
The Board considers that, to the extent otherwise disclosed herein, the Company was generally in compliance with the Principles throughout the period under review as befits a company of its size and nature.
Signed on behalf of the Board of Directors on 29 April 2024 by Mr. Joseph Casha (Director) and Mrs. Josephine Casha (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statements.
SP FINANCE P.L.C.
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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10

|  | Group |  | Group | Company | Company
|  | 2023 |  | 2022 | 2023 | 2022
| Notes | € |  | € | € | €
Revenue | 4 | 10,521,305 |  | 3,625,530 | 492,000 | 575,500
Costs |  |  |  |  |  |
Cost of sales | 7 | (7,625,393) | (2,468,775) |  | (33,938) | (34,313)
Gross profit |  | 2,895,912 |  | 1,156,755 | 458,062 | 541,187
Administrative expenses | 7 | (403,436) | (276,304) |  | (123,334) | (93,293)
Other operating income | 5 | 146,963 |  | 143,759 | 150,000 | 150,000
(Loss)/ Gain on sale of property, plant & equipment | 11 | (618,810) |  | 182,000 | - | -
Earnings before interest, tax and depreciation |  | 2,020,629 |  | 1,206,210 | 484,728 | 597,894
Depreciation |  | (1,486,455) |  | (1,469,990) | - | -
Operating profit/(loss) |  | 534,174 | (263,780) |  | 484,728 | 597,894
Finance costs | 6 | (938,185) |  | (859,109) | (480,000) | (480,000)
Impairment of non-financial instruments | 9 | - |  | (1,500,000) | - | -
Write off of amounts receivable |  | (22,223) |  |  |  |
(Loss)/Profit before taxation |  | (426,234) | (2,622,889) |  | 4,728 | 117,894
Tax credit/(expense) | 10 | 292,611 |  | 69,986 | (1,655) | (6,134)
(Loss)/Profit for the year |  | (133,623) | (2,552,903) |  | 3,073 | 111,760
Total comprehensive (loss)/ profit for the year |  | (133,623) | (2,552,903) |  | 3,073 | 111,760
(Loss)/Profit attributable to: |  |  |  |  |  |
Equity holders of the Company |  | (133,623) | (2,552,903) |  | 3,073 | 111,760

SP FINANCE P.L.C.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
11

|  | Group | Group | Company | Company
|  | 2023 | 2022 | 2023 | 2022
Assets | Notes | € | € | € | €
Non-current assets |  |  |  |  |
Property, Plant and equipment | 11 | 25,640,105 | 25,976,325 | - | -
Intangible assets | 12 | 4,103,104 |  |  |
Right-of-use assets | 13 | 2,699,698 | 2,685,957 | - | -
Investment property | 14 | 6,004,491 | 6,004,491 | - | -
Investment in subsidiary | 15 | - | - | 19,097,783 | 19,097,783
Financial assets at amortised cost | 16 | - | - | 12,000,000 | 12,000,000
Deferred tax asset | 19 | 1,488,093 | 1,165,397 | - | -
Trade and other receivables | 18 | 79,450 | - | - | -
|  | 40,014,941 | 35,832,170 | 31,097,783 | 31,097,783
Current assets |  |  |  |  |
Trade and other receivables | 18 | 2,977,532 | 871,618 | 597,786 | 600,828
Inventories | 17 | 116,884 | - | - | -
Cash at bank and in hand |  | 148,501 | 88,197 | 2,983 | 3,003
|  | 3,242,917 | 959,815 | 600,769 | 603,831
Total Assets |  | 43,257,858 | 36,791,985 | 31,698,552 | 31,701,614

SP FINANCE P.L.C.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
12
Group
Group
Company
Company
2023
2022
2023
2022
Equity and liabilities
Notes
€
€
€
€
Equity
Called up issued share capital
23
250,000
250,000
250,000
250,000
Share premium
23
17,750,000
17,750,000
17,750,000
17,750,000
Revaluation reserve
24
14,799,920
14,799,920
-
-
Fair value gain reserve
25
2,938,013
2,938,013
-
-
Other reserve
26
(12,916,911)
(17,531,725)
1,098,983
1,098,983
Retained earnings
(4,913,848)
(4,780,225)
172,992
169,919
Total equity
17,907,174
13,425,983
19,271,975
19,268,902
Liabilities
Non-current liabilities
Borrowings
22
12,236,892
12,979,734
12,000,000
12,000,000
Lease liability
13
4,279,307
4,418,892
-
-
Deferred tax liability
19
2,277,496
2,261,540
-
-
18,793,695
19,660,166
12,000,000
12,000,000
Current liabilities
Trade and other payables
20
4,006,075
1,772,464
424,922
432,712
Current income tax liability
21
129,723
115,594
1,655
-
Borrowings
22
1,818,989
1,545,627
-
-
Lease liability
13
602,202
272,151
-
-
6,556,989
3,705,836
426,577
432,712
Total liabilities
25,350,684
23,366,002
12,426,577
12,432,712
Total equity and liabilities
43,257,858
36,791,985
31,698,552
31,701,614
The financial statements were approved and authorised for issue by the Board of Directors on 29 April 2024. The financial statements were signed on behalf of the Board of Directors by Mr. Joseph Casha (Director) and Mrs. Josephine Casha (Director) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Financial Statement.
SP FINANCE P.L.C.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
13
Group
Share Capital
€
Share premium
€
Revaluation reserve
€
Fair Value gain reserve
€
Other
reserve
€
Retained earnings
€
Total
€
Balance at 1 January 2022
250,000
17,750,000
14,799,920
2,938,013
(17,531,725)
(2,227,322)
15,978,886
Comprehensive income
Loss for the year
-
-
-
-
-
(2,552,903)
(2,552,903)
Balance at 31 December 2022
250,000
17,750,000
14,799,920
2,938,013
(17,531,725)
(4,780,225)
13,425,983

Capitalisation Reserve (note 26) | - | - | - | - | 4,614,814 | - | 4,614,814
Comprehensive income |  |  |  |  |  |  |
Loss for the year | - | - | - | - | - | (133,623) | (133,623)
Balance at 31 December 2023 | 250,000 | 17,750,000 | 14,799,920 | 2,938,013 | (12,916,911) | (4,913,848) | 17,907,174

Company
Share
Capital
Share
Premium
Other
Reserve
Retained Earnings
Total
€
€
€
€
€
Balance at 31 December 2022
250,000
17,750,000
1,098,983
58,159
19,157,142
Comprehensive income
Profit for the year
-
-
-
111,760
111,760
Balance at 31 December 2022
250,000
17,750,000
1,098,983
169,919
19,268,902
Comprehensive income
Profit for the year
-
-
-
3,073
3,073
Balance at 31 December 2023
250,000
17,750,000
1,098,983
172,992
19,271,975
SP FINANCE P.L.C.
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
14
Group
Group
Company
Company
2023
2022
2023
2022
Cashflow from operating activities
€
€
€
€

(Loss)/Profit before taxation |  | (426,234) | (2,622,889) | 4,728 | 117,894
Adjustments for: |  |  |  |  |
Depreciation and amortisation | 11,13 | 1,486,455 | 1,469,990 | - | -
Finance costs | 6 | 906,603 | 827,527 | 480,000 | 480,000
Impairment loss on PPE & ROU asset | 9 | - | 1,500,000 | - | -
Amortisation of bond issue costs | 6 | 31,582 | 31,582 | - | -
Dividend income | 4 | - | - | (492,000) | (575,500)
Provision for doubtful debts |  | - | 41,309 | - | -
Gain on disposal of PPE | 11 | 618,810 | (182,000) | - | -
Operating profit/(loss) before working capital changes |  | 2,617,216 | 1,065,519 | (7,272) | 22,394
Movement in receivables/related company balances | 18 | (2,185,364) | (116,032) | 3,042 | (524,914)
Movement in inventories | 17 | (9,005) | - | - | -
Movement in payables | 20 | 2,233,151 | 934,685 | (7,790) | 42,854
Cash generated from/(used in) operations |  | 2,655,998 | 1,884,172 | (12,020) | (459,666)
Income tax refund |  | - | 37,243 | - | 89,020
Interest paid |  | (593,404) | (827,527) | (480,000) | (480,000)
Net cashflows generated from/(used in) operating activities |  | 2,062,594 | 1,093,888 | (492,020) | (850,646)
Cashflows from investing activities |  |  |  |  |
Payments to acquire property, plant and equipment | 11 | (179,825) | (169,308) | - | -
Consideration paid on business combination | 26 | (650,000) | - | - | -
Net dividends received |  | - | - | 492,000 | 575,500
Net cashflows (used in)/generated from investing activities |  | (829,825) | (169,308) | 492,000 | 575,500
Cashflow from financing activities |  |  |  |  |
Movement in bank loans | 22 | (621,545) | (494,336) | - | -
Movement in third party borrowings | 22 | (333,332) | (366,665) | - | -
Lease liability payments | 13 | (671,403) | (256,722) | - | -
Net cash used in financing activities |  | (1,626,280) | (1,117,723) | - | -
Net movement in cash and cash equivalents |  | (393,511) | (193,143) | (20) | (275,146)
Cash and cash equivalents at the beginning of the year |  | (335,183) | (142,040) | 3,003 | 278,149
Cash and cash equivalents at the end of the year | 28 | (728,694) | (335,183) | 2,983 | 3,003

SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
15
1.Basis of preparation
Reporting entity
SP Finance p.l.c. (the ‘Company’) is a public limited liability company which was incorporated in Malta on 19 November 2018. The Company’s registration number is C-89462 and the Company’s registered office is 89, the Strand, Sliema, Malta.
SP Finance p.l.c. and its subsidiaries’ (the ‘Group’) principal activities include the ownership, rental, development and operation of hotels. During the current financial year, the Group acquired 100% shares of Med Asia Operations Limited which subsequently om 1 April 2024, the said subsidiary acquired various catering businesses from a related party outside the Group. As at that date the Group also acquired the brand ‘Med Asia’ from related party outside the Group. Details of these acquisition is disclosed further below paragraph “Acquisition of catering and business and intellectual property”.
The consolidated financial statements include the financial statements of the Company and its subsidiaries.
The financial statements of the Company and the consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and in accordance with the requirements of the Companies Act (Cap. 386).
These financial statements have been prepared under the historical cost convention basis as modified by the fair valuation of the land and buildings class of property, plant and equipment and investment property. The functional currency of the Company is the Euro which is also the presentation currency of the Group.
Assessment of the appropriateness of the going concern assumption
The Group’s financial results for the year ended on 31 December 2023 show a very marked improvement over the results obtained in the prior year and over the projections for the year. Gross accommodation revenue reached €5,367,158, which represents a 48% increase over the figure of €3,625,530 achieved in 2022 and a 19% increase over the projected gross accommodation revenue for 2023.
Income from the catering business which the Group took over as from 1 April 2023 reached €5,448,205 which represents an 11% increase over the projected income for the same period.
The positive financial results for 2023 resulted in significant improvements in the Group’s gearing, liquidity and other relevant accounting ratios.
With a view to determining the appropriateness of preparing the financial statements on a going concern basis, the directors requested management to prepare realistic yet prudent financial projections for 2024 and beyond, by considering the following relevant matters, among others:
-The loss of accommodation revenue from the Pebbles Boutique Aparthotel for approximately twenty months while it is being transformed into a much larger hotel that is expected to reopen in the third quarter of 2025.
-The capital expenditure that will be spent in connection with this project.
-The additional income from the catering business arising from the fact that during the whole of 2024 the relevant income will accrue to the Group while in 2023 this business was taken over on 1 April 2023.
-The very encouraging revenue achieved by Pebbles Resort in the first quarter of 2024 and the solid bookings for the rest of the year, which augur well for significantly improved results compared to the already excellent results achieved in 2023.
-The fact that negotiations with a local bank to finance a portion of the Sliema project and refinance other loans are at an advanced stage and though the relevant sanction letter has not yet been issued, this is expected to be in place in the coming months.
-A payment program with certain privileged creditors is currently being finalized and based on informal indications, the terms are not unduly onerous on the Group.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
16
Basis of preparation (continued)
-The timing of repayments by related companies outside the Group depends on the conclusion of promises of sale of properties that are already in place.
The Directors are conscious that any financial projections presented to it include judgements and assumptions which at this stage remain subject to a material degree of underlying uncertainty, both in view of general risks as well as risks that are specific to the Group and the sectors in which it operates, as identified in more detail in the Directors Report.
Following a detailed evaluation of the judgments and assumptions taken into account in the preparation of these financial projections, these were considered to be realistic yet prudent and were thus adopted by the Board.
The directors concluded that the Group is likely to generate sufficient financial resources through its operations and external sources as to permit it to continue in operational existence for the foreseeable future.
Accordingly, based on the outcome of the financial projections in a prudent scenario as referred to above, the Directors consider the going concern assumption in the preparation of the Group’s financial statements as appropriate as at the date of authorisation for issue of the 2023 financial statements.
Acquisition of Catering business and intellectual property
As part of a group restructuring exercise to diversify the Group’s business and strengthen the financial position, the Group have carried out the following acquisitions both of which effective on 1 April 2023:
i.Acquisition of 100% of the share capital of Med Asia Operations Ltd C103605, a Company registered under the laws of Malta. Subsequently, the subsidiary has entered into an agreement with related party outside the group to acquire various catering operations namely; MedAsia Fusion lounge in Sliema, MedAsia Playa in Sliema, MedAsia Golden Sands in Golden Bay, Noodle Box in Sliema and all the bar and restaurant venues located in the Pebbles Resort in St, Paul’s Bay. Refer to note 15 “investment in subsidiaries” to these financial statements
ii.Acquisition of intellectual property relating to the Catering operations in point referred to in paragraph i
The acquisition price for the catering business and the intellectual property was determined by management using an EBITDA Multiplier. Payment will be settled at the discretion of SP Finance P.L.C Group. The Directors have therefore accounted for this transaction as a capitalised reserve within “other reserves” component in equity – refer to note 26 “other reserves”.
Details of the purchase consideration, the net assets acquired, and goodwill are disclosed in note 12 to these financial statements.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
17
Basis of preparation (continued)
Standards, interpretations and amendments to published standards effective in 2023
In 2023, the Group adopted new standards, amendments and interpretations to existing standards that are mandatory for the Group’s accounting period beginning on 1 January 2023. The Group has applied the following standards and amendments for the first time for its annual reporting period commencing from 1 January 2023:
i.Definition of accounting Estimates – amendments to IAS 8
ii.Deferred tax relates to Assets and Liabilities arising from a single transaction – amendments to IAS 12.
iii.Disclosure of accounting policies - Amendments to IAS 1 and IFRS Practice Statement 2
The amendments listed above did not have any impact to the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
Other than changing its accounting policies for certain modifications of leases where the Group is a lessee, the adoption of these revisions to the requirements of IFRSs as adopted by the EU did not result in substantial changes to the Group’s and the Company’s accounting policies.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements but are mandatory for the Group and Company’s accounting periods beginning after 1 st January 2024. The Group and Company have not early adopted these revisions to the requirements of IFRS’s as adopted by the EU and the directors are of the opinion that there are no requirements that will have a possible significant impact on the Group’s and the Company’s financial statements in the period of initial application.
2.Material accounting policies
A summary of the more important accounting policies, which have been applied consistently, is set out below:
Basis of consolidation
Subsidiaries
A subsidiary is an entity that is controlled by the Company. The Company controls an investee when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
The Group financial statements include the financial statements of the parent Company and all its subsidiaries. The results of the subsidiaries acquired or disposed of during the period are included in the Group statement of profit or loss and other comprehensive income from the date of their acquisition or up to date of their disposal.
Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses, cash flows and any unrealised gains relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including any goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
In the Company’s financial statements, investments in subsidiaries are accounted for on the basis of the direct equity interest and are stated at the pre organisation book value less any accumulated impairment losses. Dividends from the investment are recognised in profit or loss.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
18
Material accounting policies (continued)
Intangible assets
Goodwill
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised, but it is tested for impairment annually, or more frequent if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which
the goodwill arose. The units or group of units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments.
Trademark – Intellectual property
An acquired intangible asset is recognised only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. An intangible asset is initially measured at cost, comprising its purchase price and any direct attributable cost of preparing the asset for its intended use.
Intangible assets are subsequently carried at cost less any accumulated amortisation and any accumulated impairment losses. Amortisation is calculated to write down the carrying amount of the intangible asset using the straight-line method over its expected useful life. Amortisation of an asset begins when it is available for use and ceases at the earlier of the date that the asset is classified as held for sale (or included in disposal group that is classified as held for sale) or the date that the asset is derecognised. Intangible assets are tested for impairment annually and amortised accordingly.
Property, plant & equipment
Property, plant and equipment are initially measured at cost and subsequently, land and buildings are stated at market value, based on valuations by external independent valuers, less depreciation. Revaluations are carried out at regular intervals, but at least every five years, unless the directors consider it appropriate to have an earlier revaluation, such that the carrying amount of property does not differ materially from that which would be determined using fair values at the end of the reporting period. Any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Plant and equipment are stated at historical cost less depreciation. Assets in the course of construction for production, supply or administrative purposes are classified as property, plant and equipment under development and are carried at cost, less any identified impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the company's accounting policy on borrowing costs. Depreciation of these assets, on the same basis as other property assets, commences when the assets are available for use.
Costs include 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 Group
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.
Any revaluation increase arising on the revaluation is recognised in other comprehensive income and accumulated in equity under the heading of revaluation surplus unless it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the revaluation surplus relating to a previous revaluation of that asset. When the asset is derecognised, the attributable revaluation remaining in the revaluation surplus is transferred to retained earnings.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
19
Material accounting policies (continued)
Property, plant and equipment are derecognised on disposal or when no future economic benefits are expected from their use or disposal. Gains or losses arising from derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount, and are included in profit or loss in the period of derecognition. On disposal of a revalued asset, amounts in the revaluation reserve relating to that asset are transferred to retained earnings.
Depreciation commences when the depreciable assets are available for use and is charged to profit or loss so as to write off the cost or revalued amount, less any estimated residual value, over their estimated useful lives, using the straight-line method, on the following bases:
Freehold buildings
2%
Electrical installations
10%
Furniture, fixtures and fittings
5%-10%
Equipment
10%
Motor vehicles
20%
Computer equipment
10%
Catering equipment
16.7%
Other fixed assets
10%
Freehold land is not depreciated as it is deemed to have an indefinite life. The depreciation method applied, the residual value and the useful life are reviewed, and adjusted if appropriate, at the end of each reporting period.
Investment property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Group, is classified as investment property. Investment property comprises freehold and leasehold land and buildings, and land and buildings held under long-term operating leases.
Investment property is initially measured at cost, including transaction costs. Subsequent to initial recognition, investment property is stated at fair value at the end of the reporting period. Gains or losses arising from changes in the fair value of
investment properties are recognised in profit or loss in the period in which they arise. Fair value is based on active market prices, adjusted, if necessary, for difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discontinued cash flow projections. These valuations are reviewed periodically by the Group directors.
The fair value of investment property reflects, among other factors, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.
Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to the profit loss account during the financial period in which they are incurred.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair value at the date of reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment property is classified as property, plant and equipment and is stated at cost until construction or development is complete, at which time it is reclassified and subsequently accounted for as investment property.
An item of property, plant and equipment becomes an investment property because its use has changed, any difference resulting between the carrying amount and the fair value of this item at the date of transfer is recognised in equity as a
revaluation of property, plant and equipment under IAS 16. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in the income statement.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
20
Material accounting policies (continued)
Investment property (continued)
Investment property is derecognised on disposal or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses on derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount and are recognised in profit or loss in the period of derecognition.
Financial instruments
Financial assets
Recognition and derecognition
The Group recognises a financial asset initially at fair value in its statement of financial position when it becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Classification and subsequent measurement
-Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. The Group’s and the Company’s debt instruments principally comprise loans and advances to other undertakings and investments.
The Group’s debt instruments are subsequently measured at either amortised cost, at fair value through other comprehensive income, or at fair value through profit or loss.
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
-Financial assets measured at amortised cost
Debt instruments that meet the following conditions are subsequently measured at amortised cost when:
- The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance, measured in accordance with the Group’s accounting policy ‘Impairment of financial assets’ further below.
Changes in the carrying amount of financial assets carried at amortised cost, as a result of foreign exchange gains or losses, impairment gains or losses and interest income are recognised in profit or loss. On derecognition, any difference between the carrying amount and the consideration received is recognised in profit or loss and is presented separately in the line item ‘Gains and losses arising from the derecognition of financial assets measured at amortised cost’.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
21
Material accounting policies (continued)
Impairment of financial assets
In terms of IFRS 9, the Group and the Company applies an expected credit loss (“ECL”) model. The Group and the Company has to assess on a forward-looking basis the expected credit loss associated with its debt instruments carried at amortised cost and fair value through other comprehensive income.
For trade and other receivables, the Group applies the simplified approach and recognises lifetime ECL. The ECLs on these financial assets are estimated using a provision matrix based on the respective Companies’ historical credit loss experience based on the past due status of the debtors, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.
For all other financial instruments, the Group and the Company uses the general approach, which requires an assessment as to whether the counterparty has experienced a significant increase in credit risk since initial recognition. This assessment forms the basis as to whether lifetime ECL should be recognised and is based on significant increases in the likelihood or risk of a default occurring since initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting date or an actual default occurring. As at reporting date, the credit risk on the Group’s and the
Company’s financial instruments has not increased significantly since initial recognition and consequently the Group and the Company measures the loss allowance at an amount equal to 12-month ECL (‘12m ECL’).
Financial liabilities
The Group recognises a financial liability on its statement of financial position when it becomes a party to the contractual provision of the instrument. The Group’s financial liabilities are classified as financial liabilities which are not at fair value through profit or loss. These financial liabilities are recognised initially at fair value, being the fair value of consideration received, net of transactions costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. The Group derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, cancelled or expired.
Modifications to existing financial liabilities are accounted for as an extinguishment of the original liability and the recognition of a new financial liability if the modification represents a substantial modification. The Group considers that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid, is at least 10% different from the discounted present value of the remaining cash flow of the original financial liability.
Where modifications to financial liabilities are not substantial, the Group discounts the present value of the revised cash flows using the original effective interest rate. The difference between the revised present value and the carrying amount of the original financial liability is recognised in profit or loss at the date of the modification.
Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 90 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. Details about the Group’s impairment policies and the calculation of the loss allowance are provided in policy ‘Impairment of financial assets’.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
22
Material accounting policies (continued)
Trade and other payables
Trade payables are classified within current liabilities unless payment is not due within 12 months from the reporting period. They are initially recognised at fair value and are subsequently measured at amortised cost using the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any difference between the proceeds and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method, unless the effect of discounting is immaterial.
Borrowings are classified as current liabilities unless the companies within the Group have an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Subsequent to initial recognition, interest-bearing bank overdrafts are carried at face value in view of their short-term maturities.
Ordinary shares issued by the Company Ordinary shares issued by the Company are classified as equity instruments.
Cash and cash equivalents and bank deposits
Cash and cash equivalents comprise cash in hand, demand deposits and short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of the company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows and are presented in current liabilities on the statement of financial position. Bank deposits that the directors do not consider a component of cash equivalents, are presented separately in the statement of financial position.
Provisions
Provisions are recognised when the Group’s companies have a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the present obligation at the balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Provisions are not recognised for future operating losses.
Impairment of non-financial assets
All non-financial assets are tested for impairment except for investment property measured at fair value through profit or loss. At each balance sheet date, the carrying amount of assets is reviewed to determine whether there is any indication or objective evidence of impairment, as appropriate, and if any such indication or objective evidence exists, the recoverable amount of the asset is estimated. An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount is the higher of fair value (which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date) less costs of disposal and value in use (which is the present value of the future cash flows expected to be derived, discounted using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset). Where the recoverable amount is less than the carrying amount, the carrying amount of the asset is reduced to its recoverable amount, as calculated. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
23
Material accounting policies (continued)
Impairment losses are recognised immediately in the income statement, unless the asset is carried at a revalued amount, in which case, the impairment loss is recognised in other comprehensive income to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that asset.
An impairment loss recognised in a prior year is reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.
Where an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.
Revenue recognition
Revenue includes all revenues from the ordinary business activities of the Group and is recorded net of value added tax. Revenue is measured based on the consideration specified in a contract with customer and excludes amounts collected on behalf of third parties. The Group recognizes revenue when (or as) it satisfies performance obligation by transferring control of a promised good or service to the customer.
Hospitality
Revenue from hospitality includes revenue from accommodation and other ancillary services. The substantial majority of services are provided to customers during their stays in the Group’s hotels, and, depending on the type of booking, some services, would generally be amalgamated into one ‘contract’ (for example, bed and breakfast).
Catering
The Group through its subsidiary, sells food and beverage products directly to customers through its own outlets. Revenue is recognized when control of the good has transferred, being at the point the customer purchases the goods at the outlet of the property. Customers do not have the right of return.
Dividends received
Dividends income from investment is recognised when the shareholders’ right to receive payment has been established.
Management services
The Company provides management services to its subsidiaries. Such services have been assessed to fall within scope of the IFRS 15 series guidance such that they are recognised as one performance obligation over time during the contract term.
Borrowing costs
Borrowing costs include the costs incurred in obtaining external financing. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised from the time that expenditure for these assets and borrowing costs are being incurred and activities that are necessary to prepare these assets for their intended use or sale are in progress. Borrowing costs are capitalised until such time as the assets are substantially ready for their intended use or sale. Borrowing costs are suspended during extended periods in which active development is interrupted. All other borrowing costs are recognised as an expense in profit or loss in the period in which they are incurred.
Leases
Where the Group is a lessee, with the exception of short-term leases and leases of low value assets, the Group recognises a right-of-use asset and a corresponding liability at the date at which a leased asset is available for use by the Group. Further details on the Group’s accounting policy, and a summary of its leasing arrangements as a lessee is described in note 13.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
24
Material accounting policies (continued)
Lease income from operating leases where the Group or the Company is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective assets leased out under operating leases are included in investment property in the balance sheet.
Modifications to operating leases where the Group is the lessor are accounted for as a new lease from the effective date of the modification, considering any prepaid or accrued payments relating to the original lease as part of the lease payments for the new lease.
Taxation
Current and deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly in equity, in which case the current and deferred tax is also dealt with in other comprehensive income or in equity, as appropriate.
Current tax is based on the taxable result for the period. The taxable result for the period differs from the result as reported in profit or loss because it excludes items which are non-assessable or disallowed and it further excludes items that are taxable or deductible in other periods. It is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit. However, deferred tax is not accounted for if it arises from the 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 substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the property will be recovered entirely through sale.
Deferred tax in relation to the revaluation of land and buildings is charged or credited to other comprehensive income (to the extent that the revaluation is recognised in other comprehensive income). For buildings, deferred tax is recognised on the basis that the tax will be recovered through use (i.e., the corporate rate of tax in Malta), whilst land is expected to be recovered through sale. Deferred income tax on the difference between the actual depreciation on the property and the equivalent depreciation based on the historical cost of the property is realised through the income statement.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets, including deferred tax assets for unused tax losses and unused tax credits carried forward, are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences (or the unused tax losses and unused tax credits) can be utilised to the period when the asset is realised or the liability is settled based on the tax rates that have been enacted by the balance sheet date. Deferred tax assets and liabilities are offset when the Group’s companies have a legally enforceable right to settle its current tax assets and liabilities on a net basis.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
25
Material accounting policies (continued)
Foreign currencies
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Euro, which is the Company’s functional and presentation currency. Transactions denominated in currencies other than the functional currency are translated at the exchange rates ruling on the date of transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are re-translated to the functional currency at the exchange rate ruling at year-end. Exchange differences arising on the settlement and on the re-translation of monetary items are recognised in profit or loss. Non-monetary assets and liabilities denominated in currencies other than the functional currency that are measured at fair value are re-translated using the exchange rate ruling on the date the fair value was determined. Non-monetary assets and liabilities denominated in currencies other than the functional currency that are measured in terms of historical cost are not re-translated. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period.
Related parties
Related parties are those persons or bodies of persons having relationships with the Company as defined in International Accounting Standard No. 24.
Government grants
Grants from government are recognised at their fair value when there is a reasonable assurance that the grant will be received, and the Group will comply with all attached conditions.
Government grants related to income are recognised in profit or loss over the periods necessary to match them with the related costs which they are intended to compensate, on a systematic basis. Such grants are presented as part of profit or loss.
Government grants related to assets are presented in the statement of financial position by deducting the grant in arriving at the carrying amount of the asset. The grant is recognised as income over the life of the depreciable asset by way of a reduced depreciation charge.
Reorganisation between group entities
Reorganisations between group entities under common control are accounted for using the reorganisation method of accounting. Under this method, assets and liabilities are incorporated at the predecessor carrying values, which are the carrying amounts of assets and liabilities of the acquired entity as recognised and measured in that entity’s financial statements before reorganisation. No goodwill arises in reorganisation accounting, and any difference between the consideration given and the aggregate book value of the assets and liabilities of the acquired entity, is included in equity. The financial statements incorporate the acquired entity’s full year results, including comparatives, as if the post-reorganisation structure was already in place at the commencement of the comparative period.
3.Critical accounting estimates and judgements
In preparing the financial statements, the Directors are required to make judgements, estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgement are inherent in the formation of estimates. Actual results in the future could differ from such estimates and the differences may be material to the financial statements. These estimates are reviewed on a regular basis and, if a change is needed, it is accounted for in the year the changes become known.
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 Group’s directors, except as follows, 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 IAS1 (revised).
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
26
Critical accounting estimates and judgements (continued)
Judgement
In the process of applying the Group’s accounting policies, the Directors have made the following judgement:
Recoverability of deferred tax assets
Deferred tax assets are recognised for all unused tax losses and capital allowances to the extent that it is probable that taxable profits will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits.
Estimates
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below. Estimates underlying the Group and the Company’s use of the going concern assertion are described in note 1 to these financial statements.
Fair value of land and buildings and investment properties
The Group’s property, plant and equipment and investment property are measured at fair value. In estimating the fair value of these assets, the Group uses the market comparison approach which obtains market-observable data to the extent that it is available. The Group engages third party qualified valuers to perform the valuation.
Information about the valuation techniques and inputs used in determining the fair value of these assets are disclosed in note 11 to these financial statements.
Impairment on right of use assets and property, plant and equipment.
In the prior year the Group carried out a review on the recoverable amount of the carrying value of the right of use asset and property, plant and equipment. This led to the recognition of an impairment loss of €1.5m. In determining the amount of impairment, the Directors took into consideration the projected discounted cashflows emanating from this cash generating unit which reported the carrying amount higher than its recoverable amount. The discounted cashflow valuation is highly dependant on estimates and assumptions including the capitalisation rate, operating results and respective growth rate. The assessment was carried during the current financial year. No impairment was required as at 31 December 2023.
Expected credit loss allowances on loans and advances.
Credit loss allowance represent management’s best estimate of expected credit losses in the financial assets subject to IFRS 9 impairment requirements at the balance sheet date. In this respect, the directors are required to exercise judgement in defining what is considered to be a significant increase in credit risk and in making assumptions and estimates to incorporate relevant information about past events, current conditions and forecasts of economic conditions. The Group and the Company use the PD (Probability of default), LGD (Loss Given Default) and EAD (Exposure at Default) models in assessing loans and receivables and the provision matrix model for trade receivables to support the measurement of ECL. The resultant ECL under both methods were deemed to be immaterial, as disclosed in note 32.
Key assumptions used for value in use calculations
The Group tests whether goodwill has suffered any impairment on an annual basis. For the 2023 reporting period, the recoverable amount of the cash-generating units (CGUs) was determined based on value in use calculations which require the use of assumptions. The calculations use cashflow projections based on financial budgets approved by management covering a two-year period. Cashflows beyond this period are extrapolated using estimated growth rates. Growth rates are consistent with market specific to the industry in each CGU operations.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
27
Critical accounting estimates and judgements (continued)
Lease term
In determining the lease term management considers all facts and circumstances that create an economic incentive to exercise extension option. Extension options are only included in lease term if the lease is reasonably certain to be extended.
4.Segment information and revenue from contracts with customers
4.1.Segment information
This note discloses information regarding the Group’s reportable segments. The Company is not required to and does not present segment information. However, it presents the information on its revenue from contracts with customers in note 4.2.
Segment information and revenue from contracts with customers (continued)
The standard requires a “management approach” under which segment information is presented on the same basis as that used for internal reporting purposes. The Group’s CODM, consisting of the board of directors and the chief executive officers and chief financial officer examine the Group’s performance namely from an industry/product perspective and has identified two reportable segments – hospitality and entertainment and other related operations.
The CODM assesses performance based on the measure of EBITDA (earnings before interest, tax, depreciation and amortisation) and revenue of the operating segments.
The Group is not required to report a measure of total assets and liabilities for each reportable segment since such amounts are not regularly provided to the CODM. Additionally, since all of the Group’s non-current assets are located in Malta, the geographical information that would have otherwise been required by IFRS 8, is not presented in these consolidated financial statements.
2023
Hospitality
Operations
Catering
Operations
Intellectual
Property
Unallocated
Total
€
€
€
€
€
Revenue
5,789,462
5,448,205
287,964
-
11,525,631
Less: inter-segment sales
(422,308)
(326,709)
(255,309)
-
(1,004,326)
5,367,154
5,121,496
32,655
-
10,521,305
Segment profit/ (loss)
1,458,407
1,170,240
26,831
(163,002)
2,492,476
Other operating income
146,963
-
-
-
146,963
Loss on sale of fixed assets
(618,810)
-
-
-
(618,810)
Group EBITDA
986,560
1,170,240
26,831
(163,002)
2,020,629
Depreciation and amortisation
(1,239,470)
(246,985)
-
-
(1,486,455)
Finance costs
(401,475)
(56,710)
-
(480,000)
(938,185)
Modification loss on financial liability
(22,223)
-
-
-
(22,223)
Profit/(Loss) before tax
(676,608)
866,545
26,831
(643,002)
(426,234)
Tax charge
453,920
(148,045)
(3,316)
(9,948)
292,611
Profit/(Loss) for the year
(222,688)
718,500
23,515
(652,950)
(133,623)
Segment assets non-current
34,366,578
3,870,138
1,778,225
-
40,014,941
Segment assets current
1,259,414
1,882,547
95,644
5,312
3,242,917
35,625,992
5,752,685
1,873,869
5,312
43,257,858
Segment liabilities non-current
6,315,122
478,573
-
12,000,000
18,793,695
Segment liabilities current
4,143,077
1,944,974
30,823
438,115
6,556,989
10,458,199
2,423,547
30,823
12,438,115
25,350,684
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
28
Segment information and revenue from contracts with customers (continued)
Segment information
Segment information and revenue from contracts with customers (continued)
4.2 Revenue from contracts with customers
i.Disaggregation of revenue from contracts with customers
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Hospitality segment
5,367,154
3,625,530
-
-
Catering segment
5,121,496
-
-
-
Royalty fees
32,655
-
-
-
Dividends received from subsidiaries
-
-
492,000
575,500
_________
10,521,305
_________
_________
3,625,530
_________
_________
492,000
_________
_________
575,500
_________
2022
Hospitality
Operations
Catering
Operations
Intellectual
Property
Unallocated
Total
€
€
€
€
€
Revenue
3,625,530
-
-
-
3,625,530
Less: inter-segment sales
-
-
-
-
-
3,625,530
-
-
-
3,625,530
Segment profit/ (loss)
1,016,086
-
-
(135,635)
880,451
Other operating income
143,759
-
-
-
143,759
Loss on sale of fixed assets
182,000
-
-
-
182,000
Group EBITDA
1,341,845
-
-
(135,635)
1,206,210
Depreciation and amortisation
(1,469,990)
-
-
-
(1,469,990)
Finance costs
(379,109)
-
-
(480,000)
(859,109)
Impairment charge
(1,500,000)
-
-
(1,500,000)
Profit/(Loss) before tax
(2,007,254)
-
-
(615,635)
(2,622,889)
Tax charge
76,120
-
-
(6,134)
69,986
Profit/(Loss) for the year
(1,931,134)
-
-
(621,769)
(2,552,903)
Segment assets non-current
35,838,760
-
-
(6,590)
35,832,170
Segment assets current
954,835
-
-
4,980
959,815
36,793,595
-
-
(1,610)
36,791,985
Segment liabilities non-current
7,660,166
-
-
12,000,000
19,660,166
Segment liabilities current
3,268,079
-
-
437,757
3,705,836
10,928,245
-
-
12,437,757
23,366,002
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
29
Segment information and revenue from contracts with customers (continued)
ii.Liabilities related to contracts with customers
The Group has recognised the following liabilities relating to contracts with customers:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Contract liabilities
Advance deposits – hospitality (note 20)
112,866
58,090
-
-
Total contract liabilities
_________
112,866
_________
_________
58,090
_________
_________
-
_________
_________
-
_________
No revenue recognised in the current year which relates to carried forward contract liabilities.
5.Other operating income
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Service charge
60,200
8,700
150,000
150,000
Rental income
86,763
135,059
-
-
Rental concessions
-
-
-
-
_________
146,963
_________
_________
143,759
_________
_________
150,000
_________
_________
150,000
_________
6.Finance costs
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Interest on overdraft
33,726
29,496
-
-
Interest on bank borrowings
41,935
27,330
-
-
Other interest
37,742
5,629
-
-
Bond interest
480,000
480,000
480,000
480,000
Interest on lease liability
313,200
285,072
-
-
Bond issue costs
31,582
31,582
-
-
_________
938,185
_________
_________
859,109
_________
_________
480,000
_________
_________
480,000
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
30
7.Expenses by nature
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Direct costs
4,775,610
1,024,449
738
1,113
Wages and salaries
1,571,165
676,498
9,200
9,200
Directors’ remuneration
195,025
204,000
24,000
24,000
Utility expenses
425,534
281,855
-
-
Repairs and maintenance
504,059
270,116
-
-
Other expenses
557,436
288,161
123,334
93,293
_________
8,028,829
_________
_________
2,745,079
_________
_________
157,272
_________
_________
127,606
_________
Profit before tax for the Group is stated after charging the following fees in relation to services provided by the external auditors of the Group.
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Total remuneration payable to the auditors for:
Audit services
25,150
17,550
25,150
17,550
Audit services charged by the component auditor
39,733
14,437
-
-
_________
64,883
_________
_________
31,987
_________
_________
25,150
_________
_________
17,550
_________
8.Staff costs and employee information
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Wages and salaries (including directors)
1,639,111
950,584
33,200
33,200
Social security costs
127,079
61,807
-
-
_________
1,766,190
_________
_________
1,012,391
_________
_________
33,200
_________
_________
33,200
_________
Government grant
-
(131,893)
-
-
_________
1,766,190
_________
_________
880,498
_________
_________
33,200
_________
_________
33,200
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
31
Staff costs and employee information (continued)
Government assistance
The Maltese Government announced a number of measures to financially support businesses where operations were significantly impacted by the COVID-19 pandemic. The Group was eligible to benefit from the COVID Wage supplement under Annex A, receiving €800 on a monthly basis per full-time employee until the measure was terminated by the Government on 31 May 2022.
The average number of persons employed during the year, including directors, was made up as follows:
Group
Group
Company
Company
2023
2022
2023
2022
Number
Number
Number
Number
Operations and administrations
124
50
-
-
Directors
2
2
2
2
_________
126
_________
_________
52
_________
_________
2
_________
_________
2
_________
9.Impairment of non-financial instruments
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
At 1 January
-
-
-
-
Impairment on ROU asset (note 13)
-
847,000
-
-
Impairment on PPE (note 11)
-
653,000
-
At 31 December
_________
-
_________
_________
1,500,000
_________
_________
-
_________
_________
-
_________
10.Tax (credit)/expense
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Deferred tax (credit)/ charge
(306,740)
(77,636)
-
6,134
Current tax charge
14,129
7,650
1,655
-
_________
(292,611)
_________
_________
(69,986)
_________
_________
1,655
_________
_________
6,134
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
32
Tax (credit)/expense (continued)
The tax expense and the tax charge using the statutory income tax rate of 35% are reconciled as follows:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Loss before taxation
(426,239)
__________
(2,622,889)
__________
4,728
__________
117,894
__________
Tax (credit)/ charge at 35%
(149,184)
(918,011)
1,655
41,263
Depreciation charges not deductible by way of capital allowances
(140,074)
10,521
-
-
Expenses disallowed for tax purposes
515
945,183
-
24,697
Additional allowable deductions
-
(3,679)
-
-
Fiscal consolidation adjustments
-
-
-
(59,826)
Income taxed at reduced rates
(3,868)
(45,900)
-
-
Tax effect of non-taxable income
-
(58,100)
-
-
Tax (credit)/expense
_________
(292,611)
_________
_________
(69,986)
_________
_________
1,655
_________
_________
6,134
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
________________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________________________
33
11.Property, Plant & Equipment

Group | Land &Buildings | Motor Vehicles | Equipment | Electrical Installations | Furniture,& Fittings | Computer Equipment | Catering Equipment | Other fixed | Total
| € | € | € | € | € | € | € | € | €

Cost/ Valuation
As at 1 January 2022
24,380,275
46,061
1,844,900
1,187,530
3,179,609
68,946
-
207,223
30,914,544
Additions
112,805
-
28,941
-
20,804
1,998
-
4,760
169,308
Disposals
-
(29,661)
-
-
-
(36,189)
-
-
(65,850)
As at 31 December 2022
24,493,080
16,400
1,873,841
1,187,530
3,200,413
34,755
-
211,983
31,018,002
Acquired on business
combinations
-
-
194,641
-
414,330
-
445,321
-
1,054,292
Additions
27,800
57,585
74,177
1,419
18,378
466
179,825
Disposals
-
-
(506,420)
(233,477)
(1,251,283)
-
-
-
(1,991,180)
As at 31 December 2023
24,520,880
16,400
1,619,647
954,053
2,437,637
36,174
463,699
212,449
30,260,939
Depreciation
As at 1 January 2022
1,122,059
39,561
683,075
383,877
1,175,206
53,419
-
85,788
3,542,985
Charge for the year
322,740
2,600
147,498
115,655
279,885
7,833
-
35,331
911,542
Released on disposal
-
(29,661)
-
-
-
(36,189)
-
-
(65,850)
Impairment loss
483,000
-
-
170,000
-
-
-
-
653,000
As at 31 December 2022
1,927,799
12,500
830,573
669,532
1,455,091
25,063
-
121,119
5,041,677
Charge for the year
251,212
2,600
192,341
89,501
318,847
3,655
57,962
35,409
951,527
Released on disposal
-
-
(443,958)
(187,786)
(740,626)
-
-
-
(1,372,370)
As at 31 December 2023
2,179,011
15,100
578,956
571,247
1,033,312
28,718
57,962
156,528
4,620,834
Net Book Value
As at 31 December 2023
22,341,869
1,300
1,040,691
382,806
1,404,325
7,456
405,737
55,921
25,640,105
As at 31 December 2022
22,565,281
3,900
1,043,268
517,998
1,745,322
9,692
-
90,864
25,976,325
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
34
Property, Plant & Equipment (continued)
Fair value of property
The Group is required to analyse non-financial assets carried at fair value by level of the fair value hierarchy within which, the recurring fair value measurements are categorised in their entirety (Level 1, 2 or 3). The different levels of the fair value hierarchy have been defined as fair value measurements using:
•Quoted prices (unadjusted) in active markets for identical assets (Level 1).
•Inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
•Inputs for the asset that are not based on observable market data (that is, unobservable inputs) (Level 3).
The Group’s land and buildings, within property, plant and equipment consists principally of hotel properties that are owned and managed by the Group’s subsidiaries. The Group’s investment property comprises mainly of two outlets and a guest house property that are held for long term rental yields or for capital appreciation or both and are measured at fair value on annual basis as required by IAS 40 (note 14).
All the recurring property fair value measurements at 31 December 2023 and 2022, as applicable, use significant unobservable inputs and are accordingly categorised within Level 3 of the fair valuation hierarchy.
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the beginning of the reporting period. There were no transfers between different levels of the fair value hierarchy during the current and preceding financial years.
A reconciliation from the opening balance to the closing balance of property for recurring fair value measurement categorised within level 3 of the fair value hierarchy, for the current and preceding financial years, is reflected in the table above and in note 14 for investment property.
Valuation techniques
The Group obtains independent valuations for its freehold land and buildings at least every five years. In addition to the revaluations carried out on hotel properties, the Group’s investment properties, which comprise two restaurant outlets and a guest house are measured by an independent valuer on an annual basis as required by IAS 40.
At the end of each reporting period, the directors update their assessment of the fair value of each property, taking into account the most recent independent valuations. The directors determine a property’s value within a range of reasonable fair value estimates. The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available, the directors consider information from a variety of sources.
In financial year 2022 the Directors carried out an impairment assessment as per IAS 36 – ‘Impairment of assets’ on the works carried out on the property classified within ‘Land and Buildings’ and ‘electrical installation’ in property, plant and equipment, relating to the assets where the Group has the right of use (note 13). The resultant DCF differed materially from the carrying value of the PPE combined with the ROU asset, and therefore the Directors impaired the assets forming part of PPE by €653,000 as shown in the table above and as disclosed in note 11 to these financial statements. The impairment on ROU asset recorded in prior year is further disclosed in note 13 “leases”. As at 31 December 2023, the carrying value of these assets was re-tested for any impairment charges. The resultant DCF did not differ materially from the carrying value and therefore no impairment was required to be recorded in these financial statements.
Valuation processes
In 2023, the directors carried an assessment for those properties measured in accordance with the revaluation model under IAS 16 for property, plant and equipment and IAS 40 for Investment property, to determine whether a material shift in fair value has occurred.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
35
Property, Plant & Equipment (continued)
Where management, through its assessment, concludes that the fair value of hotel properties differs materially from its carrying amount, and at least every 5 years, an independent valuation report prepared by third party qualified valuers, is performed. The report is based on information provided by the Group, publicly available information and the expert
valuer’s knowledge and experience in the field. The information provided to the valuers, together with the assumptions and the valuation models used by the valuer, are reviewed by the directors. This includes a review of the fair value movement over the period. The directors consider whether the valuation report is appropriate in order to revalue the Group’s property.
The Group’s property (land and buildings together with all other integral assets) and investment property were last revalued on 31 December 2018 and reflected in the Group’s financial statements. The valuations were again obtained by the independent professional qualified valuer on 31 December 2023 and 2022. The land and buildings together with all other integral assets were valued by Perit Colin Zammit (a firm of architects and civil engineers). The external valuations of the property as at 31 December 2018 - 2023 as applicable, have been performed using the comparison market approach and Level 3 inputs of the fair valuation hierarchy.
In view of a limited number of properties with similar characteristics, the valuations have been performed using unobservable inputs. The significant inputs to the approach used is a sales price per square metre related to transactions in comparable properties located in proximity to the respective property, with adjustments for differences in the size and condition of the property. As at 31 December 2023, the resultant fair value did not differ materially from the book values of the property.
Information about fair value measurements using significant unobservable inputs (Level 3)
-Group
Fair value at
Valuation
technique
Unobservable inputs
Relationship of unobservable
inputs to fair value
-
31 Dec
31 Dec
-
2023
2022
-Description
€
€
Property, plant, and equipment
Current use as hotel properties
21,221,241
22,000,506
Comparison Approach
Sales price
per square
metre
* €5,500
The higher the sales price per square metre the higher the fair value
Investment properties
Leased buildings
6,004,491
6,004,491
Comparison Approach
Sales price
per square
metre
* €5,800
The higher the sales price per square metre the higher the fair value
*These inputs represent the range of inputs used in the external valuation carried out as at 31 December 2023 and 2022.
Historical cost basis of properties
If the cost model had been used, the carrying amounts of the revalued properties classified as property, plant and equipment would be €8,578,645 (2022: €8,914,865). The revalued amounts include a revaluation surplus of €17,061,460 before tax (2022: €17,061,460), which is not available for distribution to the shareholders of SP Finance P.L.C.
Use as collateral
Land and buildings held by the Group, with a carrying amount of €13.8m (2022: €13.8m) are pledged as security for non-current borrowings.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
36
12.Intangible assets

Goodwill | Intellectual Property | Total
€ | € | €

Group
At 1 January 2023
-
-
-
Goodwill arising from the acquisition of the various Catering businesses
2,317,829
-
2,317,829
Acquisition of ‘Med Asia’ brand
-
1,784,815
1,785,275
Registration of new trademarks
-
460
-
At 31 December 2023
__________
2,317,829
_________
__________
1,785,275
_________
__________
4,103,104
_________
Goodwill arising from the acquisition of the various catering business has been recognised as follows:
2023
€
Total purchase consideration
3,480,000
Fair value of net identifiable assets acquired
(1,162,171)
Goodwill
2,317,829
The following table summarises the recognised amounts of assets transferred at the date of acquisition:
2023
€
Property, plant and equipment
1,054,292
Inventories
107,879
Total identifiable assets transferred
1,162,171
The goodwill is attributable to the Cash Generating Units “CGUs” of the acquired business. It will not be deductible for tax purposes. There were no acquisitions in the prior year.
Fair value measurements and valuation technique of assets acquired
Property, plant and equipment – market comparison technique and cost technique
The valuation model considers market prices for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.
Inventories – market comparison technique and cost technique
The fair value is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.
Measurement period
During the measurement period, the Group obtained additional information about the facts and circumstances that existed at acquisition date which had an effect on the measurement of the amounts recognised as consideration used to measure the goodwill as at acquisition date. The Directors considered all pertinent factors and recognised a decrease in the provision amount for the identifiable assets by means of a decrease in goodwill.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
37
13.Leases
This note provides information for leases where the Group is a lessee. For leases where the Group is a lessor, see note 14 to these financial statements.
i.Amounts recognised in the balance sheet
The balance sheet shows the following amounts relating to leases:
Group
2023
2022
€
€
Right-of-use assets
Land and buildings
1,895,911
2,255,816
Equipment
579,479
165,050
Furniture & fittings
224,308
265,091
2,699,698
2,685,957
Lease liabilities
Current
602,202
272,151
Non-current
4,279,307
4,418,892
4,881,509
4,691,043
Additions to ROU asset during the current year amounts to €548,669 (2022: NIL). €335,305 relating to leased catering oulets, €172,343 relating to leased equipment and €41,021 relating to leased furniture and fittings within the catering establishments.
Impairment Assessment on the Carrying Value
The ROU asset held by the Group was assessed for impairment in combination with an amount of €3.4m net of impairment charge in FY 2023 (2022: €3.8m net of impairment) classified within property, plant and equipment, since these assets relate to the same hotel operated by the Group and therefore have been assessed as one cash generating unit.
The directors assessed the fair value of the Group’s ROU asset in 2023 by using a discounted cash flow (DCF) analysis applying the expected cash flow approach based on their expectations of the achievable outcome.
The resultant DCF valuation carried out by the directors exceeded the carrying value of the plant and equipment as at 31 December 2023 and therefore no impairment was required. In financial year 2022, the carrying value as at year end
did not exceed the carrying value of the ROU asset and the carrying value of the plant and equipment held in the balance sheet as at 31st December 2022, therefore, an impairment of €847,000 in ROU asset and €653,000 (note 13) in PPE was accounted for.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
38
Leases (continued)
ii.Amounts recognised in the statement of profit or loss
The statement of profit or loss shows the following amounts relating to leases:
Group
2023
2022
€
€
Depreciation charge of right-of-use assets
Land and buildings
438,138
493,640
Equipment
50,538
24,025
Furniture & fittings
46,252
40,782
534,928
558,447
Interest expense (included in finance cost – note 6)
313,200
285,072
Impairment on ROU asset (note 9)
-
847,000
The total cash outflow for leases in 2023 was €648,639 (2022: €541,796).
iii.The Group’s leasing activities and how these are accounted for
The Group leases land, buildings, equipment and furniture. The Group’s rental contracts are for fixed periods of 5 to 10 years, but may have extension options as described in (v) below.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
•Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
•Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date;
•Amounts expected to be payable by the Group under residual value guarantees;
•The exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
•Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
39
Leases (continued)
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is the case for leases in the Group except for furniture leases and some equipment leases, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
•Where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received; and
•Makes adjustments specific to the lease, e.g., term and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
•The amount of the initial measurement of lease liability; and
•Any lease payments made at or before the commencement date less any lease incentives received.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. While the Group revalue its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for the right-of-use land and buildings held by the Group.
Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
iv.Variable lease payments
The Group’s leases do not contain variable payment terms.
v.Extension and termination options
Extension and termination options are included in the Group’s property leases. These are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The extension and termination options held are exercisable only by the Group and not by the respective lessor.
The Group has an option to extend the present leases of land and building for an additional 5 years, however, this has not been reflected in the right-of-use asset or in the lease liability since the Group is currently not reasonably certain that the option for this extension will be exercised. When the Group determines that it is reasonably certain that the option will be exercised, the right-of-use asset and corresponding lease liability will be adjusted for in the Group financial statements.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
40
14.Investment property
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
At the beginning of the year
6,004,491
6,004,491
-
-
Additions
-
-
-
-
Revaluation
-
-
-
-
At the end of the year
_________
6,004,491
_________
_________
6,004,491
_________
_________
-
_________
_________
-
_________
Investment property is valued annually on 31 December at fair value comprising open market value approved by the directors on the basis of a professional valuation prepared by an independent architect. Fair value disclosures are included in note 11.
i.Amounts recognised in profit or loss for investment properties.
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Rental income from lease
22,500
52,559
-
-
_________
_________
_________
_________
ii.Lease arrangements
The Group’s investment properties are leased to tenants with rentals payable on a monthly or quarterly basis. Lease payments for some contracts include fixed annual increases, but there are no variable lease payments that depend on an index.
The future minimum operating lease payments under non-cancellable leases are as follows:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Within one year
-
132,058
-
-
Between 1 – 2 years
-
104,500
-
-
Between 2 – 3 years
-
104,500
-
-
Between 3 – 4 years
-
88,750
-
-
Between 4 – 5 years
-
73,000
-
-
Later than 5 years
-
146,000
-
-
_________
-
_________
_________
648,808
_________
_________
-
_________
_________
-
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
41
15.Investment in subsidiary
On 28 November 2018, the Company acquired 100% of the share capital of SP Investments Limited through an exchange of shares for a consideration of 10,000 100% paid up Ordinary shares of €1 each with a premium of €17,750,000.
Company
Shares in subsidiary
Total
€
€
At 1 January 2023
19,097,783
19,097,783
Additions
-
-
At 31 December 2023
_________
19,097,783
_________
_________
19,097,783
_________
The investment in subsidiary is accounted for using the reorganisation method of accounting and therefore reflects the Net Asset Value of the pre-existing assets and liabilities acquired. Refer to accounting policies “Reorganisation between group entities” and note 27.
By virtue of a share purchase agreement signed on 23 February 2023, the Group acquired 100% of the share capital of Med Asia Operations Limited C-103605 for a consideration of €1 per share. The amount of €2,637,829 was recognised as goodwill on acquisition of the subsidiary. The goodwill is allocated between the relevant CGUs. Refer to note 12
All subsidiary undertakings are included in the consolidation and are accounted for on the basis of direct equity interest and are stated at the pre organisation value less any accumulated impairment losses.
The Directors considered the recoverability of the investment in its subsidiary SP Investments taking into consideration the acquisition of operations and branding post year end as disclosed in note 1 and 32 to these financial statements and concluded that the recoverable amount exceeds the carrying value as at 31 December 2023 and therefore no impairment is required.
Shares in subsidiaries represent the following investments:
Company
Registered address
Principal Activity
2023
2022
% Holding
%
Holding
SP Investments Limited
89, The Strand, Sliema
Holding Company
100%
100%
Sea Pebbles Limited
89, The Strand, Sliema
Hospitality operations
100%
100%
Pebbles Resort Limited
89, The Strand, Sliema
Hospitality operations
100%
100%
Med Asia Operations Ltd
89, The Strand, Sliema
Catering operations
100%
-
Med Asia Branding Ltd (previously named Pebbles St. Julians Limited)
89, The Strand, Sliema
Holder of Intellectual Property
100%
100%
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
42
16.Financial assets at amortised costs
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Non-Current
Redeemable preference shares
Note i
-
-
12,000,000
12,000,000
_________
-
_________
_________
-
_________
_________
12,000,000
_________
_________
12,000,000
_________
i.Redeemable preference shares
This investment represents 100% holding of the 4.1% non-voting, cumulative redeemable preference shares. These preference shares are redeemable within a period of up to 30 years of their allotment. The subsidiary has the right to redeem all or part of the said preference shares on any date it chooses within the aforesaid thirty-year period with the mutual consent of the Company. Provided that the directors of each of the issuer and the subsidiary have undertaken that the redemption of any of the preference shares is to occur subject to the proceeds thereof being held by the Company.
17.Inventories
Group
Group
Company
Company
Note
2023
2022
2023
2022
€
€
€
€
Acquired on business combination
12
107,879
-
-
-
Food and beverage
9,005
-
-
-
_________
116,884
_________
_________
-
_________
_________
-
_________
_________
-
_________
18.Trade and other receivables
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Non-Current
Amounts due by commonly controlled entities
Note ii
_________
79,450
_________
_________
-
_________
_________
-
_________
_________
-
_________
Current
Trade receivables
585,097
280,729
-
-
Other receivables
27,400
6,390
-
-
VAT refundable
29,316
36,050
-
-
Amounts owed by subsidiary
Note i
-
-
595,914
598,956
Amounts due by commonly controlled entities
Note ii
2,225,869
520,864
-
-
Prepayments and accrued income
109,850
27,585
1,872
1,872
_________
2,977,532
_________
_________
871,618
_________
_________
597,786
_________
_________
600,828
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
43
Trade and other receivables (continued)
i.Amounts owed by subsidiary
Amounts owed by subsidiary are unsecured, interest free and repayable on demand.
The Group and the Company assess whether any loss allowance is required on its financial assets as set out in the accounting policies and note 32.
ii.Amounts due by commonly controlled entities
Amounts due by commonly controlled entities are unsecured and interest free. The balance is repayable in accordance with the signed repayment agreement in place.
19.Deferred taxation
Deferred taxes are calculated on all temporary differences under the liability method using a principal tax rate of 35% / 10% (2022 – 35% / 10%). The movement in the deferred tax account is as follows:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
At the beginning of the year
(1,096,143)
(1,173,779)
-
-
Recognised in profit or loss:
Movement in unabsorbed tax losses and capital allowances
235,480
(629,878)
-
-
Movement in excess of capital allowances over depreciation
(26,215)
279,951
-
-
Movement in effect of provisions
24,568
14,458
-
-
Movement in effect of bond issue costs amortisation
11,053
11,053
-
-
Movement in effect of leases accounting under IFRS 16
61,854
402,052
-
-
At the end of the year
_________
(789,403)
_________
_________
(1,096,143)
_________
_________
-
_________
_________
-
_________
Effect recognised in:
Deferred tax movements recognised in profit & loss (note 10)
306,740
77,636
-
(6,134)
Transfer of tax losses between group companies
-
-
-
6,134
_________
306,740
_________
_________
77,636
_________
_________
-
_________
_________
-
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
44
Deferred taxation (continued)
The following amounts are shown in the balance sheet:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Deferred tax assets
Unabsorbed tax losses and capital allowances
579,113
529,030
-
-
Effect of leases accounting under IFRS 16
763,634
701,780
-
-
Effect of provisions
39,961
15,393
-
-
_________
1,382,708
_________
_________
1,246,203
_________
_________
-
_________
_________
-
_________
Deferred tax liabilities
Effect of excess of capital allowances over depreciation
148,384
(10,797)
-
-
Effect due to amortisation of bond issue costs
(58,955)
(70,009)
-
-
Effect due to revaluation of Land & Buildings
(1,880,400)
(1,880,400)
-
-
Effect due to revaluation of Investment Property
(381,140)
(381,140)
-
-
_________
(2,172,111)
_________
(2,342,346)
_________
-
_________
-
_________
(789,403)
_________
_________
(1,096,143)
_________
_________
-
_________
_________
-
_________
Presented in the balance sheet as follows:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Deferred tax asset
1,488,093
1,165,397
-
-
Deferred tax liability
(2,277,496)
(2,261,540)
-
-
_________
(789,403)
_________
_________
(1,096,143)
_________
_________
-
_________
_________
-
_________
At 31 December 2023 the Group had a deferred tax asset of € 811,115 (2022: €862,952) emanating from unabsorbed capital allowances. The crystallisation of this asset remains doubtful given the expected pattern of income in the future years and has therefore not been recognised.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
45
20.Trade and other payables
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Trade payables
1,203,624
536,110
24,058
70,741
Indirect taxes
1,584,428
466,670
18,781
15,168
Amounts owed to commonly controlled entities and related entities
Note i
170,464
130,841
-
-
Accruals
934,693
580,753
382,083
346,803
Deferred income and advanced deposits
112,866
58,090
-
-
_________
4,006,075
_________
_________
1,772,464
_________
_________
424,922
_________
_________
432,712
_________
i.Amounts due to commonly controlled entities and related entities
Amounts due to commonly controlled entities and related entities are unsecured, interest free and repayable on demand.
21.Current income tax (liability)/ asset
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Balance as the beginning of the year
(115,594)
(70,701)
-
89,020
Provision for the year
(14,129)
(7,650)
(1,655)
-
FWT paid
-
7,650
-
-
Settlement tax paid
-
44,127
-
-
Tax refund received
-
(89,020)
-
(89,020)
Balance at the end of the year
_________
(129,723)
_________
_________
(115,594)
_________
_________
(1,655)
_________
_________
-
_________
Balance sheet allocation
Liability
_________
(129,723)
_________
_________
(115,594)
_________
_________
(1,655)
_________
_________
-
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
46
22.Borrowings
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Falling due within a year
Bank overdrafts
Note i
877,195
423,380
-
-
Bank borrowings
Note ii
641,790
622,247
-
-
Third party borrowings
Note iii
300,004
500,000
-
-
_________
1,818,989
_________
_________
1,545,627
_________
_________
-
_________
_________
-
_________
Falling due after more than one year
Bank borrowings
Note ii
405,329
1,046,417
-
-
Bonds
Note iv
11,831,563
11,799,983
12,000,000
12,000,000
Third party borrowings
Note iii
-
133,334
-
-
_________
12,236,892
_________
12,979,734
_________
12,000,000
_________
12,000,000
Total borrowings
_________
14,055,881
_________
_________
14,525,361
_________
_________
12,000,000
_________
_________
12,000,000
_________
The debts securities are disclosed at the value of the proceeds less the net book amount of the transaction costs as follows:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Face value of bonds
Bonds
12,000,000
_________
12,000,000
_________
12,000,000
_________
12,000,000
_________
Issue costs
(315,822)
(315,822)
-
-
Accumulated amortisation
147,387
115,805
-
-
Net book amount
_________
(168,435)
_________
(200,017)
_________
-
_________
-
Amortised cost
_________
11,831,565
_________
_________
11,799,983
_________
_________
12,000,000
_________
_________
12,000,000
_________
(i)The Group’s bank overdraft facilities as at 31 st December 2023 amounted to €1,00,000 (2022: €700,000). The Company does not have a facility. The Group’s overdrafts are secured by general hypothecs and special hypothecs over the Group’s assets, guarantees over related party assets and by pledges over various insurance policies.
(ii)The Group’s bank loan facilities are secured by general hypothecs and special hypothecs over the Group’s assets, guarantees over related party assets and by a guarantee provided by Malta Development Bank (MDB).
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
47
Borrowings (continued)
(iii)The third-party loan relates to capital expenditure which is being repaid in quarterly instalments of €100,000. This loan is unsecured and interest-free.
(iv)By virtue of the Prospectus dated 8 April 2019, SP Finance p.l.c. issued for subscription by the general public 120,000 secured bonds having a nominal value of €100 each for an aggregate principal amount of €12,000,000. These bonds have been issued at par.
The bonds are subject to a fixed interest rate of 4% per annum payable on the 3 May of each year up to redemption date. All bonds, unless previously purchased and cancelled, will be redeemed on 3 May 2029.
The bonds are subject to the terms and conditions in the prospectus and are listed on the Malta Stock Exchange. The quoted market price as at 31 st December 2023 for the 4% secured Bonds was €99 (2022: €96). The directors are of the opinion that this price represents the fair value of these liabilities; as at balance sheet date, the fair value of the bonds therefore amounts to €11,880,000 (2022: €11,520,000). The fair value calculation is classified within Level 1 of IFRS 13’s fair value hierarchy.
Group
Group
Company
Company
2023
2022
2023
2022
Interest rate exposure:
€
€
€
€
At floating rates
1,924,314
2,092,044
-
-
At fixed rates
11,831,563
11,799,983
12,000,000
12,000,000
Interest free
300,004
633,334
-
-
Total borrowings
_________
14,055,881
_________
_________
14,525,361
_________
_________
12,000,000
_________
_________
12,000,000
_________
Group
Group
Company
Company
2023
2022
2023
2023
Weighted average effective interest rates
%
%
%
%
At the balance sheet date:
Bank overdrafts
5.85
5.85
-
-
Bank loans
3.10
3.10
-
-
Bond
4.00
4.00
4.00
4.00
Group
Group
Company
Company
2023
2022
2023
2022
Maturity of long-term borrowings:
€
€
€
€
Between 2 and 5 years
242,519
1,179,752
-
-
Over 5 years
11,994,373
11,799,982
12,000,000
12,000,000
_________
12,236,892
_________
_________
12,979,734
_________
_________
12,000,000
_________
_________
12,000,000
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
48
Borrowings (continued)
Collateral granted in favour of the security trustee
Security for the fulfilment of the Company’s obligations in term of the bond issue is to grant in favour of the security trustee for the benefit of the bond holders, a first ranking special hypothec over the security property for the sum of €12,000,000 and interest thereon and charges in connection therewith, to be constituted by the Guarantor in favour of the security trustee for the benefit of the beneficiaries by virtue of the Security Trust Deed dated 24 April 2019.
23.Share capital and share premium
Details of share capital for Company as at 31 December 2023
Issues shares
Share
Premium
€
€
Authorised, issued and fully paid up
250,000 Ordinary shares of €1 each 100% paid up
250,000
-
Shares issues at premium on capital re-organisation (Note 27)
-
17,750,000
_________
250,000
_________
_________
17,750,000
_________
Details of share capital for Company as at 31 December 2022
Issues shares
Share
Premium
€
€
Authorised, issued and fully paid up
250,000 Ordinary shares of €1 each 100% paid up
250,000
-
Shares issues at premium on capital re-organisation (Note 27)
-
17,750,000
_________
250,000
_________
_________
17,750,000
_________
24.Revaluation reserve
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
At the beginning of the year
14,799,920
14,799,920
-
-
At the end of the year
_________
14,799,920
_________
_________
14,799,920
_________
_________
-
_________
_________
-
_________
The revaluation reserve was created on the revaluation of the Group’s property plant and equipment. The revaluation reserve is a non-distributable reserve.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
49
25.Fair value gain reserve
This reserve represents changes in fair value, net of deferred tax, on the investment properties held by the Group for long-term rental yields. Movement in fair values are presented in profit or loss as part of ‘fair value gains on investment property’. Information about the valuation process of the investment property is disclosed in note 11 to these financial statements.
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
At the beginning of the year
2,938,013
2,938,013
-
-
At the end of the year
_________
2,938,013
_________
_________
2,938,013
_________
_________
-
_________
_________
-
_________
This reserve is a non-distributable reserve.
26.Other reserves

Capital Redemption Reserve | Capitalisation Reserve | Total
€ | € | €

Group
At 1 January 2022
17,531,725
-
17,531,725
At 31 December 2022
__________
17,531,725
__________
-
__________
17,531,725
Capitalisation
-
(4,614,814)
(4,614,814)
At 31 December 2023
__________
17,531,725
_________
__________
(4,614,814)
_________
__________
12,916,911
_________

Capital Redemption Reserve | Total
€ | €

Company
At 1 January 2022
1,098,983
1,098,983
At 31 December 2022
__________
1,098,983
__________
1,098,983
At 31 December 2023
__________
1,098,983
_________
__________
1,098,983
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
50
Other reserves (continued)
Capital Redemption Reserve
Reserve created upon reorganisation of Group. Refer to note 27 “Group reorganisation” for details of creation of this reserve.
Capitalisation Reserve
This amount represents contribution by related parties outside the Group.
On 1 April 2023, the Group’s subsidiaries acquired the ‘Med Asia’ brand and the Catering business from a related party outside the Group. By virtue of signed agreement between the subsidiary and the related party outside the group, it was agreed that €4.9m of the amounts payable created upon acquisition of the brand and the various catering businesses will be payable at the discretion of the Group.
27.Group Reorganisation
On 28 November 2018, the Company acquired 100% of the share capital of SP Investments Limited through an exchange of shares for a consideration of 10,000 100% paid up Ordinary shares of €1 each with a premium of €17,750,000. SP Investment Limited’s shareholders prior to this transaction became shareholders of the Company, and this reorganisation has been recognised in accordance with the accounting policy applicable to such transactions.
The following table summarises the consideration paid by the Company and the amounts of assets acquired, and liabilities assumed, that were recognised in the consolidated statement of financial position as at 28 November 2018, being the date of the legal reorganisation:
Group
2023
2022
Consideration
€
€
As at the beginning of the year
17,531,725
17,531,725
__________
__________
Other reserves created upon reorganisation
17,531,725
17,531,725
__________
__________
Company
Consideration
€
Non-cash consideration
17,998,800
Recognised amounts of identifiable assets acquired, and liabilities assumed
Net assets acquired
(19,097,783)
Equity adjustments:
Other reserves created upon reorganisation
(1,098,983)
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
51
28.Cash and cash equivalents
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Cash at bank and in hand
148,501
88,197
2,983
3,003
Overdraft
(877,195)
(423,380)
-
-
At the end of the year
_________
(728,694)
_________
_________
(335,183)
_________
_________
2,983
_________
_________
3,003
_________
The balances of cash and cash equivalents are available for use by the Group and the Company in their entirety.
29.Related party transactions
During the course of the year the Group and the Company entered into transactions with related parties. These transactions have been carried at arm's length. The related party transactions in question were:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Revenue
Subsidiaries
Service charge
-
-
150,000
150,000
Dividends received
-
-
492,000
575,500
Commonly controlled entities
Revenue
117,479
-
-
-
Royalties
32,652
-
-
-
Other operating income
Commonly controlled entities
Rental income
61,500
107,500
-
-
Service fee
94,623
5,500
-
-
Other operating expenses
Commonly controlled entities
Direct costs
117,882
116,023
-
-
Non-current assets
Property, plant and equipment
Sale of property
-
182,000
-
-
Business Combination transactions
Consideration for acquisition of catering business and trade marks
5,264,815
-
-
-
Key management personnel include the board of directors. Key management compensation, consisting of directors’ remuneration, has been disclosed in note 8 to the financial statements.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
52
30.Commitments
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Authorised but not contracted
-
-
-
-
Contracted but nor provided for
180,000
-
-
-
Financing
The contracted commitment is with a related party outside the Group. The value of works carried out by the related party will be set off against the receivable balance owed to the Group as at year end.
31.Contingent liabilities
As at 31 December 2023 the Group provided general and special hypothecs over the Group’s immovable property to the amount of €1,390,000 (2022: €1,390,000) to various related undertakings outside the Group.
The Group is engaged in legal action in respect of a number of claims against it. The Group is restricting those claims and in some instances is issuing counterclaims. No provision has been made in these financial statements in respect of these actions.
32.Financial risk management
The Group’s activities potentially expose it to a variety of financial risks on its financial assets and financial liabilities. The key components of financial risks to the Group are: market risk (namely, cash flow interest rate risk and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.
Market risk
Market risk is the risk that changes in market prices, such as interest rates, and quoted prices, will affect the Group’s income or financial position. The objective of the Group’s market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
Cash flow and fair value interest rate risk
The Group’s interest rate risk arises on its interest-bearing borrowings and deposits held with banks. Borrowings issued at variable rates, comprising bank borrowings, expose the Group to cash flow interest rate risk. The Group’s bank borrowings are subject to an interest rate that varies according to revisions made to the Bank’s Base Rate and three-month Euribor. The directors monitor the level of floating rate borrowings as a measure of cash flow risk taken on.
The Group has adopted a cautious risk policy with regards to interest rate fluctuation through the issue of a €12,000,000 ten-year bond incurring interest of 4%. Debt securities issued at fixed rates and bank deposits expose the Group to fair value interest rate risk.
Bank deposits and borrowings are carried at amortised cost. Accordingly, a shift in interest rates would not have an impact on profit or loss.
A shift in interest rates on borrowings at variable rates will however have an impact on profit or loss. The directors consider the potential impact on the Group’s profit or loss of a defined interest rate shift of 1.5%, that is reasonably possible, at the end of the reporting period keeping all other variables constant, to amount to +/- €28,900 (2022: +/- €31,400).
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
53
Financial risk management (continued)
Credit risk
Credit risk arises from cash and cash equivalents, deposits with banks and credit risk exposures to customers, including outstanding receivables and committed transactions. The carrying amount of the financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Carrying amounts
Financial assets at amortised cost
-
-
12,000,000
12,000,000
Amounts due by commonly controlled entity
2,305,319
520,864
-
-
Trade and other receivables
751,663
350,754
597,786
600,828
Cash at bank and in hand
148,501
88,197
2,983
3,003
_________
3,205,483
_________
_________
959,815
_________
_________
12,600,769
_________
_________
12,603,831
_________
Financial assets at amortised cost comprise of investment in preference shares in subsidiary company as described in note 16. These loans are secured and the failure of the related undertaking could have an impact on the Company’s results.
The Group’s Companies bank only with local financial institutions with high quality standing or rating. The Group has no concentration of credit risk that could materially impact on the sustainability of its operations. However, in common with similar business concerns, the failure of specific large customers could have a material impact on the Group’s results.
The Group assesses the credit quality of its customers taking into account financial position, past experience and other factors. Standard credit terms are in place for individual clients, however, wherever possible, new corporate customers are analysed individually for creditworthiness before the Group’s standard payment and service delivery terms and conditions are offered. The Group’s review includes external credit worthiness databases when available.
Impairment of financial assets
The Group and the Company have three types of financial assets that are subject to the expected credit loss model:
•Trade receivables and accrued income relating to the provision of services;
•Financial assets at amortised cost for Company, comprising investment in preference shares in subsidiary undertaking;
•Other financial assets at amortised costs comprising loans receivable from related parties outside the group; and
•Cash and cash equivalents.
Trade receivables and accrued income
The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables and accrued income.
To measure the expected credit losses, trade receivables and accrued income have been grouped based on shared credit risk characteristics and the days past due. The Group has concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the accrued income since they have substantially the same characteristics.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
54
Financial risk management (continued)
The expected loss rates are based on the payment profiles of sales over a period of 12 months before 31 December 2023 and 31 December 2022 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 ability of the customers to settle the receivables.
Based on the assessment carried out in accordance with the above methodology, the identified expected credit loss allowance on trade receivables and accrued income, was deemed immaterial. The movement in loss allowances as at 31 December 2023 and 2022 is also deemed immaterial by management. On this basis, the information pertaining to loss rates and loss allowances in the Group’s provisions matrix, which would have otherwise been required by IFRS 7, is not presented as at 31 December 2023 and 2022.
Trade receivables and accrued income are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 1 year past due.
Financial assets at amortised costs
As disclosed above, the Company’s main exposures are a loan to the Company’s subsidiary, representing the advance of the bonds raised by the Company invested as redeemable preference shares. The Company’s management monitor intra-group credit exposures on a regular basis and ensure timely performance of these assets in the context of its overall liquidity management. The loss allowances for these financial assets are based on assumptions about risk of default and expected loss rates. The Company’s management uses judgement in making these assumptions, based on the counterparty’s past history, existing market conditions, as well as forward-looking estimates at the end of each reporting period.
The Directors assessed recoverability of these balances by leveraging on cash flow projections prepared by the respective counterparties. The cash flow projections, which stretch over the term of the loan, consider whether the counterparty could meet its obligations under different, forward-looking scenarios.
After taking into account the results of their assessment, together with the fact that the counterparty has met its obligations as and when due, the resultant impairment charge required was deemed immaterial, and accordingly is not recognised in these financial statements.
Other financial assets at amortised cost
The Group’s other financial assets at amortised cost which are subject to IFRS 9’s general impairment model comprise of loan advanced to a related undertaking outside the Group.
The Group monitors intra-group credit exposures at individual entity level on a regular basis and ensure timely performance of these assets in the context of its overall liquidity management. The loss allowances for these financial assets are based on assumptions about risk of default and expected loss rates. The Company’s management uses judgement in making these assumptions, based on the counterparty’s past history, existing market conditions, as well as forward-looking estimates at the end of each reporting period.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
_____________________________________________________________________________________________
______________________________________________________________________________________________________
55
Financial risk management (continued)
Where the counterparties’ financial position suggests that it does not have sufficient liquid assets at balance sheet date to repay the loan if this is demanded, the probability of default is deemed to be 100%. Given that the related party relationships of such balances are between entities under common control, the directors assess the loss given default of the balance by analysing recovery strategies that the Group would allow, taking cognisance of such related party relationship. These recovery strategies typically include a projection of the net cash flows emanating from allowing the counterparty to operate, incorporating multiple forward-looking scenarios that take into account all reasonable and supportable information available to the Group. The assessment also considered the possibility of refinancing and the value of properties owned by the Group with specific emphasis on the properties held by virtue of the Security Trust Deed dated 24 April 2019. In making this analysis, the Group also takes into account any support of shareholders in place.
After making this analysis, the directors concluded that the resulting loss-given-default rates are low, such that when applied to the PD x LGD x EAD methodology to calculate the IFRS 9 ECL allowance, the resulting impairment charge required was deemed to be immaterial.
Cash at bank
The Group’s cash is placed with reputable financial institutions, such that management does not expect any institution to fail to meet repayments of amounts held in the name of the companies within the Group. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identified impairment loss was insignificant.
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 interest-bearing borrowings disclosed in note 22. Prudent liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure the availability of an adequate amount of funding to meeting the Group’s obligations.
The directors monitor liquidity risk by means of cash flow forecasts on the basis of expected cash flows over a twelve-month period, in order to ensure that adequate funding is in place in order for the Group to be in a position to meet its commitments as and when they will fall due. In response to the possible future liquidity constraints, the Directors and the Group’s senior management undertook a number of measures. The impact of these measures on the consolidated financial statements include:
-Negotiations with a local bank to finance a portion of the Sliema project and refinance other loans are at an advanced stage and though the relevant sanction letter has not yet been issued, this is expected to be in place in the coming months.
-A payment program with certain privileged creditors is currently being finalized and based on informal indications, the terms are not unduly onerous on the Group.
-Repayments by related companies outside the Group depends on the conclusion of promises of sale of properties that are already in place.
Accordingly, based on the outcome of the cash flow projections in a prudent scenario as referred to, the Directors consider the going concern assumption in the preparation of the Group’s financial; statements as appropriate as at the date of authorisation for issue of the 2023 financial statements.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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56
Financial risk management (continued)
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Group
Group
Company
Company
2023
2022
2023
2022
€
€
€
€
Within one year
Trade and other payables
4,006,075
1,772,464
424,922
432,712
Bank overdraft
877,195
423,380
-
-
Bank borrowings
665,184
1,088,564
-
-
Third party borrowings
300,000
500,000
-
-
Bonds
480,000
480,000
480,000
480,000
Lease liability
732,807
541,796
-
-
_________
7,061,261
_________
_________
4,806,204
_________
_________
904,922
_________
_________
912,712
_________
Between 2 – 5 years
Bank borrowings
409,775
1,074,213
-
-
Third party borrowings
-
133,334
-
-
Bonds
1,920,000
1,920,000
1,920,000
1,920,000
Lease liabilities
3,804,110
3,914,760
-
-
_________
6,133,885
_________
_________
7,042,307
_________
_________
1,920,000
________
_________
1,920,000
________
Over 5 years
Bonds
12,480,000
12,960,000
12,480,000
12,960,000
Lease liabilities
344,580
1,380,133
-
-
________
12,824,580
________
________
14,340,133
________
_________
12,480,000
_________
_________
12,960,000
_________
Total
26,019,726
_________
26,188,644
_________
15,304,922
_________
15,792,712
_________
The amount of trade and other payables, for both the Group and the Company, classified as repayable within one year in the table above, are contractually repayable on demand.
Financial instruments not measured at fair value
At 31 December 2023 and 31 December 2022, the carrying amounts of payables, receivables and short-term borrowings approximated their fair values due to the short-term maturities of these assets and liabilities. The fair values of long-term borrowings, together with the related fair value disclosures, are presented in note 22.
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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57
33.Capital management
The Group’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may issue new shares or adjust the amount of dividends paid to shareholders.
The capital structure of the Group consists of net debt (borrowings as presented in note 22 after deducting cash and bank balances, presented in note 28) and equity of the Group (comprising issued capital, reserves and retained earnings as presented in the Statement of Changes in Equity).
The Group monitors the capital structure on a monthly basis by monitoring the balances of assets and liabilities.
34.Cash flow information
Reconciliation of liabilities arising from financing activities
The table below details changes in the Company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Statement of Cash Flows as cash flows from financing activities.

Group | As at December 2022 | Cashflows | Other Liability Related Changes | As at 31 December 2023
| € | € | € | €

Bank borrowings
1,668,664
(621,545)
-
1,047,119
Third party loans
633,334
(333,330)
-
300,004
Bonds
11,799,981
-
31,582
11,831,563
Lease liability
4,691,043
(671,403)
861,869
4,881,509
_________
18,793,022
_________
_________
(1,626,278)
_________
_________
893,451
_________
_________
18,060,195
_________

Group | As at December 2021 | Cashflows | Other Liability Related Changes | As at 31 December 2022
| € | € | € | €

Bank borrowings
2,163,000
(494,336)
-
1,668,664
Third party loans
1,000,000
(366,666)
-
633,334
Bonds
11,768,399
-
31,582
11,799,981
Lease liability
4,947,766
(256,723)
-
4,691,043
_________
19,879,165
_________
_________
(1,117,725)
_________
_________
31,582
_________
_________
18,793,022
_________
SP FINANCE P.L.C.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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58
Cash flow information (continued)
35.Statutory information
SP Finance P.L.C. is a limited liability Company and is incorporated in Malta.
Company
As at 31
December
2022
Cashflows
Other
Liability
Related
changes
As at 31
December
2023
€
€
€
€
Bonds
12,000,000
-
-
12,000,000
_________
12,000,000
_________
_________
-
_________
_________
-
_________
_________
12,000,000
_________
Company
As at 31
Cashflows
Other
As at 31
December
Liability
December
2021
Related
2022
changes
€
€
€
€
Bonds
12,000,000
-
-
12,000,000
_________
12,000,000
_________
_________
-
_________
_________
-
_________
_________
12,000,000
_________
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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59
Report on the Audit of the Financial Statements
Opinion
We have audited the consolidated and stand-alone parent company financial statements of SP Finance p.l.c. set out on pages 10 to 58 which comprise the consolidated and parent company statement of financial position as at 31 December 2023, and the consolidated and parent company statement of profit and loss and comprehensive income, changes in equity and cashflow for the year then ended including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and the Company as at 31 December 2023, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU and have been prepared in accordance with the requirements of the Companies Act (Cap. 386), enacted in Malta.
Our opinion is consistent with our additional report to the audit committee.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw attention to Note 1 to these financial statements, which describes the Directors’ assessment of the Group’s projected financial results, cash flows and financial position. The assessment includes events and conditions which indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Independence
We are independent of the Group and the Parent Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) in Malta, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Group and the Company are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the Group and the Company are disclosed in note 7 to the financial statements.
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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Our Audit Approach
Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedure and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Materiality
€263,000
How we determined it
2.5% of turnover
Rationale for the materiality benchmark applied
We selected turnover as the materiality benchmark and saw the effect on the Group’s results. In our view, the turnover of the Group is considered the most appropriate measure of the success of the Group in generating enough profits to service its annual obligations towards the bond holders. We chose 2.5%, which is within the range of acceptable quantitative materiality thresholds in auditing standards.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €13,150 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty relating to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.
Fair valuation of property, plant and equipment, investment property and right-of-use asset
Risk Description
The Group’s land and buildings classified as property, plant and equipment, investment property and right-of-use asset which are being further described in Notes 11,13 and 14 to the accompanying financial statements, account for 79% of total assets as at 31 December 2023. Land and buildings and right-of-use asset are measured at fair value at the date of revaluation, less any subsequent accumulated depreciation and impairment losses. Investment properties are stated at fair value, which reflects market conditions at the reporting date.
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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Risk Description
Due to the significance of the balances and the estimation uncertainty involved in the fair valuation of properties, we have considered the fair valuation of land and buildings classified as property, plant and equipment, investment properties and right-of-use asset as a key audit matter.
Valuation and impairment of property, plant and equipment, investment property and right-of-use asset
How the scope of our audit responded to the risk
The Group’s property comprises 2 hotels; one owned and one leased and investment property which comprises mainly of two outlets and a guest house property that are held for long term rental yields or for capital appreciation. The valuation of the Group’s property portfolio is inherently subjective due to, among other factors, the individual nature of each property, its location and the expected future returns.
Management have carried out a re-assessment, using a professional valuer, for its owned properties classified as investment property amounting to €6m and classified within property, plant and equipment amounting to €21.2m, to determine whether a material shift in fair value would have occurred during 2023. The valuation reports by the third-party valuer as at 31 December 2022 and 2023 are computed using the comparison market approach and Level 3 inputs of the fair valuation hierarchy.
The second hotel operated by the Group is held under an operating lease and therefore classified as Right-of-use asset (ROU). The ROU asset amounting to €2.7m and its improvements and movables amounting to an additional €3.4m classified within property, plant and equipment were assessed for impairment using discounted cashflows (DCF). The valuation of property at fair value is highly dependent on estimates and assumptions including, the capitalisation rate, operating results and respective growth rate under this income capitalisation approach.
-Considered the objectivity, independence, competence and capabilities of the external valuer.
-Reviewed the methodologies used by the external valuer and by the directors to estimate the fair value.
-Considered the appropriateness of the fair values estimated by the external valuers based on our knowledge of the industry.
-Assessed the key inputs in the calculations of the DCF presented such as revenue growth and discount rate, by reference to management’s forecasts, data external to the Group and our own expertise.
-Testing the mathematical accuracy of the calculations derived from each model.
Significant Financing Transactions
Risk Description
The principal activity of the Company, SP Finance p.l.c. is to raise financial resources from the capital market to finance the capital projects of the companies forming part of SP Group. These debt securities are guaranteed by the subsidiary, Sea Pebbles Limited, and further secured by a grant in favour of the security trustee for the benefit of the bond holders, a first
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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Risk Description
ranking special hypothec over the security property for the sum of €12,000,000. The funds received from the debt securities in issue have been invested in €12m cumulative redeemable preference shares in SP Investments Limited. The recoverability of the financial asset at amortised cost and the debt servicing thereon is dependent on the generation of profits from the operating subsidiaries of SP Investments Limited.
Recoverability of Parent Company bond proceeds invested in its Subsidiary Company SP Investments Ltd
How the scope of our audit responded to the risk
Financial assets at amortised costs includes proceeds from the bond issue which were invested through cumulative redeemable preference shares in the subsidiary SP investments Limited. Investment in preference shares as at 31 December 2023 amounted to €12 million.
The eventual redemption of this investment of €12m will be used to repay the principal amount of the bond, which is why we have given additional attention to this area. On an annual basis the Company is principally dependent on the receipt of dividend payments from this financial asset to maintain its debt financing.
The Group’s subsidiaries operate in Hospitality and Catering business. The directors have assessed the recoverability of the Company’s investment in its subsidiary companies.
The assessment was based on the estimated operating results of the subsidiaries, including the operations acquired by the group in 2023. The assessment also considered the possibility of refinancing and the value of properties owned by the Group.
The financial asset at amortised cost is subject to impairment testing in accordance with the expected credit loss model in terms of IFRS9.
We have agreed the terms of its financial asset to supporting documentation.
We have assessed the financial situation of Sea Pebbles Ltd “the Guarantor” and the Group subsidiaries. In doing this, we made reference to the latest audited financial statements, cash flow projections, forecasts and other prospective information made available to us. We performed additional audit work on the assumptions, conditions and relevant risk assessments used by the directors. We reviewed the forecasted financial position of the Group for the possibility of refinancing in the longer term. We assessed the fair value of the properties owned by the Group with specific emphasis on the properties held by virtue of the Security Trust Deed dated 24 April 2019.
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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Other Information
The directors are responsible for the other information. The other information comprises the directors’ report and the Statement of Compliance with the Principles of Good Corporate Governance. Except for our opinions on the directors’ report in accordance with the Companies Act (Cap.386) and on the Corporate Governance Statement of Compliance in accordance with the Capital Markets Rules issued by the Maltese Financial Services Authority, our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
With respect to the Directors’ Report, we also considered whether the Directors’ Report includes the disclosures required by Article 177 of the Maltese Companies Act (Cap. 386). Based on the work we have performed, in our opinion:
-the information given in the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-the directors’ report has been prepared in accordance with the Maltese Companies Act (Cap.386).
In addition, in light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the directors’ report. We have nothing to report in this regard.
Responsibilities of the Directors and those charged with governance for the financial statements
The directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards 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 Group’s and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and the Company or to cease operations, or has no realistic alternative but to do so.
The directors have delegated the responsibility for overseeing the Group’s and the Company’s financial reporting process to the Audit Committee.
Auditor’s Responsibilities for the Audit Committee
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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64
-Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
-Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
-Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and the Company’s ability to continue as a going concern.
-Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Market Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (“the ESEF Directive 6”) on the Annual Financial Report of SP Finance p.l.c. for the year ended 31 December 2023, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the annual financial report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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65
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the annual financial report including the consolidated financial statements and the relevant electronic tagging therein comply in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
-Obtaining an understanding of the entity’s financial reporting process, including the preparation of the annual financial report, in 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 tagging therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the annual financial report for the year ended 31 December 2023 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
Report on Corporate Governance Statement of Compliance
The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in their Annual Report a Statement of Compliance providing an explanation of the extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures that they have taken to ensure compliance throughout the accounting period with those Principles.
The Capital Markets Rules also require the auditor to include a report on the Statement of Compliance prepared by the directors.
We read the Statement of Compliance and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements included in the Annual Report. Our responsibilities do not extend to considering whether this statement is consistent with any other information included in the Annual Report.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate governance procedures or its risk and control procedures.
In our opinion, the Statement of Compliance set out on pages 6 to 9 has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
SP FINANCE P.L.C.
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66
We also have responsibilities:
•Under the Maltese Companies Act (Cap. 386) we are required to report to you if, in our opinion:
-We have not received all the information and explanations we require for our audit.
-Adequate accounting records have not been kept, or that returns adequate for our audit have not been received from branches not visited by us.
-The financial statements are not in agreement with the accounting records and returns.
•Under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary.
We have nothing to report to you in respect of these responsibilities.
Other matter – use of this report
Our report, including the opinions, has been prepared for and only for the Parent Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the Group and the Company for the financial period ended 31 December 2019. Our appointment has been renewed by shareholders resolution representing a total period of uninterrupted appointment of 5 years.
This copy of the audit report has been signed by:
MICHAEL CURMI
for and on behalf of
VCA CERTIFIED PUBLIC ACCOUNTANTS
29 April 2024