Plaza Centres p.l.c. - 635400UWIKAY1KU8RP17

Outlook for 2023

The Covid-19 pandemic, whilst still being labelled as an emergency, has gradually reduced its grasp on the world's economic environment and allowed a positive sentiment in business recovery. The inflow of tourists, a key factor influencing aggregate economic demand, is once again rising. However, the economic environment for 2023 is still challenging. The armed conflict in the Ukraine is reinforcing constraints in the supply chain of crucial resources in several key economic sectors thereby pushing up prices worldwide in product, labour and financial markets.

In 2023, the Group will continue to renovate and upgrade its retail and commercial space offering to ensure it remains competitive and attractive in line with the new markets' standards and demands. In line with the Company's strategic direction, Plaza continues to explore the feasibility and attractiveness of a number of growth opportunities which make economic sense to the business.

Financial risk management

During 2022, there has been no changes in the Group's financial risk management. Information relating to the Group's financial risk management is disclosed in Note 2 to the financial statements.

Results, dividends and reserves

The consolidated financial results are set out in the income statement. The Directors are recommending the payment of a final net dividend of €350,000, equivalent to €0.0137 per share, this payment is over and above the interim dividend of €250,000, equivalent to €0.0098 per share, paid to shareholders in August 2022. The total net dividend being paid for the year under review amounts to €600,000 (2021: €600,000). Retained earnings carried forward at the end of the financial reporting period amounted to €3,968,823 (2021: €4,035,376) for the Group and €3,996,282 (2021: €4,005,036) for the Parent Company.

Directors

The Directors of the Parent Company who held office during the year were:

Charles J. Farrugia (Chairman)

Emanuel P. Delia

Brian R. Mizzi

Alfredo Munoz Perez

Etienne Sciberras

Gerald J. Zammit

The Directors are required in terms of the Parent Company's Articles of Association to retire at the forthcoming Annual General Meeting and may offer themselves for re-appointment or re-election.

A shareholder holding not less than 14 per cent of voting rights of the issued share capital or a number of shareholders who between them hold not less than 14 per cent, shall appoint one director for every such 14 per cent holding by letter addressed to the Parent Company. All shares not utilised to make appointments in terms of the above shall be entitled to vote at the Annual General Meeting to elect the remaining directors. The Memorandum and Articles of the Parent Company provide for a Board of Directors of not less than five and not more than seven members.

Share capital of the Parent Company

The Parent Company has an authorised share capital of 75,000,000 ordinary shares of €0.20 each, and issued and fully paid share capital of 25,492,000 ordinary shares with a nominal value of €0.20 each.

The Parent Company is authorised pursuant to its Memorandum and Articles of Association to purchase its own shares, provided that appropriate authority has been given to the Directors for that purpose. In this respect, during the Annual General Meeting held on 14 October 2020, the shareholders authorised the Company Directors to re-purchase up to 10% of the total issued share capital of the Company. The resolution remained in place for a period of 18 months and shares so re-purchased were eventually cancelled in accordance with the provisions of the Companies Act (Cap. 386). A total of 2,750,000 ordinary shares had been re-purchased and such shares have been cancelled officially during the financial year ending 31 December 2021. Further information relating to the Parent Company's purchase of own shares is disclosed in Note 11 to the financial statements.

The Parent Company's share capital consists of only one class of shares, and all shares in that class are admitted to trade on the Malta Stock Exchange (''MSE''). All shares in the Parent Company are freely transferable. There are no shareholders having special control rights in the Parent Company, nor are there any restrictions on voting rights in the Parent Company.

The Parent Company does not operate any employee share option schemes.

The Parent Company is not aware of any agreements between shareholders with respect to the transfer of shares or the exercise of voting rights.

No disclosures are being made pursuant to Capital Market Rules 5.64.10 and 5.64.11 as these are not applicable to the Parent Company.

The following are the shareholders holding more than 5 per cent of the voting issued share capital of the Parent Company:


	% holding
	At 31.12.22

MAPFRE MSV Life p.l.c.	31.42%
Rizzo Farrugia & Co (Stockbrokers) Ltd - Nominee Account	15.93%
Lombard Bank Malta Plc.	5.61%

Statement of Directors' responsibilities for the financial statements

The Directors are required by the Maltese Companies Act (Cap. 386) to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Parent Company as at the end of each reporting period and of the profit or loss for that period.

In preparing the financial statements, the Directors are responsible for:

ensuring that the financial statements have been drawn up in accordance with International Financial Reporting Standards as adopted by the EU;
selecting and applying appropriate accounting policies;
making accounting estimates that are reasonable in the circumstances;
ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business as a going concern.

The Directors are also responsible for designing, implementing and maintaining internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and that comply with the Maltese Companies Act (Cap. 386). They are also responsible for safeguarding the assets of the Group and the Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements of Plaza Centres p.l.c. for the year ended 31 December 2022 are included in the Annual Financial Report 2022, which is made available on the Parent Company's website. The Directors are responsible for the maintenance and integrity of the Annual Financial Report on the website in view of their responsibility for the controls over, and the security of the website. Access to information published on the Parent Company's website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of financial statements may differ from requirements or practice in Malta.

The Directors further confirm that, to the best of their knowledge:

the financial statements give a true and fair view of the financial position of the Group and the Parent Company as at 31 December 2022, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU; and
the Annual Report includes a fair review of the development and performance of the business and the position of the Group and the Parent Company, together with a description of the principal risks and uncertainties that it faces.

Going concern basis

After making due enquiries, the Directors have a reasonable expectation, at the time of approving the financial statements, that the Group and the Parent Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements.

Auditors

PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their re-appointment will be proposed at the Annual General Meeting.

The Directors' Report was signed on behalf of the Board of Directors on 26 April 2023 by Charles J Farrugia (Chairman) and Etienne Sciberras (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.

Registered office: Company secretary:

The Plaza Commercial Centre Louis de Gabriele

Level 3, Bisazza Street

Sliema SLM 1640 Telephone Number:

Malta +356 21343832

Corporate Governance - Statement of compliance

1. Introduction

Pursuant to the Capital Markets Rules issued by the Listing Authority, Plaza Centres p.l.c. ("Plaza") should endeavour to adopt the Code of Principles of Good Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Capital Markets Rules (the "Code"). In terms of Capital Markets Rule 5.94, Plaza hereby reports on the extent of its adoption of the principles of the Code for the financial year being reported upon.

Plaza acknowledges that the Code does not dictate or prescribe mandatory rules, but recommends principles of good practice. However, the Directors strongly believe that such practices are generally in the best interests of Plaza and its shareholders and that compliance with the principles of good corporate governance is not only expected by investors but also evidences the Directors' and Plaza's commitment to a high standard of good governance.

The Board of Directors of Plaza (the "Board") has carried out a review of Plaza's compliance with the Code for the financial year being reported upon.

2. General

Plaza's governance principally lies with its Board which is responsible for the overall determination of Plaza's policies and business strategies. Plaza's principal activity is to lease, manage and market its Shopping and Commercial Centres.

Plaza has adopted a corporate decision-making and supervisory structure that is tailored to suit its requirements and designed to ensure the existence of adequate controls and procedures within Plaza, whilst retaining an element of flexibility essential to allow Plaza to react promptly and efficiently to the dictates of its business, its size and the economic conditions in which it operates. The Directors are of the view that it has employed structures which are most suitable for the size, nature and operations of Plaza. Accordingly in general, the Directors believe that Plaza has adopted appropriate structures to achieve an adequate level of good corporate governance, together with an adequate system of control in line with Plaza's requirements.

This corporate governance statement (the "Statement") will now set out the structures and processes in place within Plaza and how these effectively achieve the goals set out in the Code. For this purpose, this Statement will make reference to the pertinent principles of the Code and then set out the manners in which the Directors believe that these have been adhered to. Where Plaza has not complied with any of the principles of the Code, this Statement will give an explanation for non-compliance.

For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code means compliance with the Code's main principles and the Code provisions.

3. Compliance with the Code

Principles One to Five

Principles One to Five of the Code deal fundamentally with the role of the Board and of the Directors.

The Directors believe that for the period under review Plaza has generally complied with the requirements for each of these principles.

Principle One: The Board

The Board is composed of members who are fit and proper to direct the business of Plaza with honesty, competence, and integrity. All the members of the Board are fully aware of, and conversant with, the statutory and regulatory requirements connected to the business of Plaza. The Board is accountable for its performance and that of its delegates to shareholders and other relevant stakeholders.

The Board is responsible for determining Plaza's strategic aims and organisational structure, whilst ensuring that Plaza has the appropriate mix of financial and human resources to meet its objectives and improve its performance.

The Board has throughout the period under review provided the necessary leadership in the overall direction of Plaza and has adopted prudent and effective systems whereby it obtains timely information from the Chief Executive Officer (the "CEO"). This ensures an open dialogue between the CEO and Directors at regular intervals, and not only at meetings of the Board. The Directors believe that the attendance of the CEO at Directors' meetings as well as regular reporting and ongoing communication through the Executive Committee has improved the communication between the Board and the CEO and ensures continued prosperity of Plaza as regular liaison between the Board and the CEO enhances the probability of risks being effectively assessed and managed.

Plaza has a structure that ensures a mix of executive and non-executive Directors that enables the Board, and particularly the non-executive Directors to have direct information about Plaza's performance and business activities.

Principle Two: Chairman and Chief Executive

In line with the requirements of Code principle Two, Plaza has segregated the functions of the CEO and the Chairman. Whilst the CEO heads the Executive Committee and management, the Chairman's main function is to lead the Board and set its agenda, a function which the Board believes has been conducted in compliance with the dictates of Code Provision 2.2. The Chairman is also responsible to ensure that the Board receives precise, timely and objective information so that the Directors can take sound decisions and effectively monitor the performance of Plaza. The Chairman exercises independent judgement and ensures that, during Board meetings, there is effective communication with stakeholders as well as active engagement by all Directors for the discussion of complex and/or contentious issues.

The CEO is accountable to the Board of Plaza for all business operations. He has the power and authority to appoint the persons to fill in the post of each member of the Executive Committee. He also has the discretion to ask any one or more of such members, from time to time, to address the Board on matters relating to the operations of Plaza.

All in all, the Board believes that each of the CEO and the Chairman maintain significant experience and practice that determines the two roles.

Principle Three: Composition of the Board

The composition of the Board, in line with the requirements of Code principle Three, is composed of executive and non-executive Directors, including independent non-executives. During 2022, the Board was composed of two directors having an executive role as part of the Executive Committee and four other Directors acting in a non-executive capacity. The members of the Board for the year under review were Mr. Charles J. Farrugia (Chairman), Prof. Emanuel P. Delia, Mr. Brian R. Mizzi, Mr. Etienne Sciberras, Mr Alfredo Munoz Perez and Mr. Gerald J. Zammit. Pursuant to generally accepted practices, as well as article 55.1 of Plaza's Articles of Association, the appointment of Directors to the Board is reserved exclusively to Plaza's shareholders, except in so far as an appointment is made to fill a vacancy on the Board.

The Board meets on a regular basis. Board meetings usually focus on strategy, operational performance and financial performance. The Board also delegates specific responsibilities to the CEO and ad-hoc Committees as may be required from time to time.

For the purposes of Code provision 3.2, the Board considers each of the non-executive Directors as independent within the meaning of the Code, notwithstanding the relationships disclosed hereunder. The independent, non-executive Directors who held office as at 31 December 2022 were the following:

Prof. Emanuel P. Delia - the Chairman of Amalgamated Investments SICAV p.l.c., which company is a shareholder of Plaza;
Brian R. Mizzi - a director of Mizzi Organisation Limited, which company is a shareholder of Plaza;
Alfredo Munoz Perez - a senior officer of Mapfre Inmuebles, which company forms part of the Mapfre Group;
Etienne Sciberras - a Chief Executive Officer of MAPFRE MSV Life p.l.c., which company is a shareholder of Plaza.

The only relationship that could impact the independence of the non-executive Directors refers to their status as directors or senior officers of other entities that are shareholders of Plaza.

None of the non-executive Directors:

are or have been employed in any capacity by Plaza;
receive significant additional remuneration from Plaza;
have close family ties with any of the executive members of the Board;
have been within the last three years an engagement partner or a member of the audit team of the present or past external auditor of Plaza; and
have a significant business relationship with Plaza.

In terms of Code provision 3.4, each non-executive director has declared in writing to the Board that he/she undertakes:

to maintain in all circumstances his/her independence of analysis, decision and action;
not to seek or accept any unreasonable advantages that could be considered as compromising his/her independence; and
to clearly express his/her opposition in the event that he/she finds that a decision of the Board may harm Plaza.

Each non-executive director has complied with such an undertaking for the period under review.

Principle Four: The Responsibilities of the Board

In terms of Code principle Four, it is the Board's responsibility to ensure a system of accountability, monitoring, strategy formulation and policy development. Accordingly, the Board is entrusted with the overall direction, administration and management of the Group (i.e. the Company, Tigne Place Ltd (C 76364) and Esports Avenue Limited (C 102562) and in fulfilling this mandate, assumes responsibility for the following:

to review, evaluate and approve the business plan and budgets that are submitted by management and work with management towards their successful implementation;

to identify the principal business risks for the Group and overseeing the implementation and monitoring of appropriate risk management systems;

to ensuring that effective internal control systems are in place and reviewing their effectiveness;

to review the assignment of management responsibilities, the performance of senior management and to monitor the establishment of appropriate systems of succession planning;

to reviewing, evaluate and approve the compensation strategy for senior management and to ensure that the Group has in place a policy to enable it to communicate effectively with shareholders, other stakeholders and the public generally;

to review and approve various management reports as well as annual financial plans, including capital budgets, together with the regular review of the strategies, processes and policies adopted for implementation; and

to participate in training and refresher courses, and to keep abreast with applicable regulatory issues, at least annually.

The Executive Committee

Whilst these are matters which are reserved for the Board to determine, the Board believes that this responsibility includes the appropriate delegation of authority and accountability for Plaza's day to day business to the Executive Committee, in a manner that is designed to provide high levels of comfort to the Directors, that there is proper monitoring and accountability apart from the appropriate implementation of corporate policy. Nonetheless, the Executive Committee operates under its formal Terms of Reference and matters relating to administration, finance and strategy are discussed at Board level.

During 2022, the Executive Committee was composed of the following members:

Mr. Charles J. Farrugia - the Chairman of the Board;

Mr. Steve Abela - the CEO; and

Mr. Gerald J. Zammit - Director.

The Executive Committee met 13 times during the year under review (2021: 9).

The Audit Committee

Plaza has established an Audit Committee in line with the requirements of the Capital Markets Rules whose principal role is the monitoring of internal systems and control. Unlike the provisions of the Code, which are not mandatory in nature, the Directors acknowledge that the requirement of having an Audit Committee in place is an obligation under the Capital Markets Rules. The members of the Audit Committee for the year under review were Mr. Etienne Sciberras (Chairman of the Audit Committee), Prof. Emanuel P. Delia and Mr. Brian R. Mizzi. The Directors believe that Mr. Etienne Sciberras is independent and competent in accounting and/or auditing in terms of Capital Markets Rule 5.117. The Directors believe that Mr. Etienne Sciberras satisfies the independence criteria as he is independent within the meaning of the Code as explained above in this Statement. Furthermore, Mr. Sciberras is also competent in accounting/auditing given his extensive experience in the financial services sector and has the necessary skills to undertake the responsibilities required of him.

The terms of reference of the Audit Committee, approved by the Board, are modelled on the recommendations of the Capital Markets Rules.

They include, inter alia, the responsibility of reviewing the financial reporting process and policies, the system of internal control and management of financial risk, the audit process, any transactions with related parties and Plaza's process for monitoring compliance with laws and regulations. The external auditors are invited to attend specific meetings of the Audit Committee and are entitled to convene a meeting if they consider that it is necessary.

When the Audit Committee's monitoring and review activities reveal cause for concern or scope for improvement, it shall make recommendations to the Board on the action needed to address the issue or make improvements.

In the period under review, the Audit Committee met 4 times (2021: 4).

Board of Directors

The role of the Board is exercised in a manner designed to ensure that it can function independently of management and effectively supervises the operations of Plaza. Each Board meeting is presented with a report by the CEO. Such report regularly includes: (i) Plaza's management accounts circulated monthly to each Director; (ii) a management commentary on the results and on relevant events and decisions; and (iii) background information on any matter requiring the approval of the Board.

In fulfilling its mandate, the Board assumes responsibility to:

Establish appropriate corporate governance standards;
Review, evaluate and approve, on a regular basis, long-term plans for Plaza;
Review, evaluate and approve Plaza's budgets and forecasts;
Review, evaluate and approve major resource allocations and capital investments;
Review the financial and operating results of Plaza;
Ensure appropriate policies and procedures are in place to manage risks and internal control;
Review, evaluate and approve the overall corporate organisation structure, the assignment of management responsibilities and plans for senior management development including succession;
Review, evaluate and approve compensation to senior management; and
Review periodically Plaza's objectives and policies relating to social, health and safety and environmental responsibilities.

The Board does not consider it necessary to constitute separate committees to deal, inter alia, with item (h) above, as might be appropriate in a larger company. In ensuring compliance with other statutory requirements and with continuing listing obligations, the Board is advised directly, as appropriate, by its appointed broker, legal advisor and other advisors.

In accordance with the above, the Board engages in periodic strategic reviews, which include consideration of long-term projections and the revaluation of the business objectives in the short term. Regular budgets and strategic plans are prepared and performance against these plans is monitored and reported to the Board using key risk and performance indicators annually, so that corrective measures can be taken to address any deficiencies and to ensure the future sustainability of the Company. These key risk and performance indicators are benchmarked against industry norms so that the Company's performance can be effectively evaluated.

As part of succession planning, the Board and CEO ensure that Plaza implements appropriate schemes to recruit, retain and motivate employees and senior management.

Directors are entitled to seek independent professional advice at any time on any aspect of their duties and responsibilities, at Plaza's expense.

During the financial year under review, the Board held 8 meetings (2021: 8).

Principle Five: Board Meetings

The Board believes that it complies fully with the requirements of this principle and the relative Code provisions, in that it has systems in place to ensure the reasonable notice of meetings of the Board and the circulation of discussion papers in advance of meetings so as to provide adequate time to Directors to prepare themselves for such meetings. To this effect, advance notice of ad hoc meetings of the Board is also given, so as to allow Directors sufficient time to re-arrange their commitments in order to be able to participate. Minutes are prepared during all Board meetings recording faithfully attendance, discussions and resolutions. These minutes are subsequently circulated to all Directors as soon as practicable after the meeting.

The Board meets as often and as frequently required in line with the nature and demands of the business of Plaza. Directors attend meetings on a frequent and regular basis and dedicate the necessary time and attention to their duties as directors of Plaza.

The following is the attendance at board meetings of each of the Directors during 2022:

Mr. Charles J. Farrugia - Chairman 8

Prof. Emanuel P. Delia 8

Mr. Brian R. Mizzi 6

Mr. Etienne Sciberras 6

Mr. Alfredo Munoz Perez 8

Mr. Gerald J. Zammit 8

The Chairman ensures that all relevant issues are on the agenda supported by all available information, whilst encouraging the presentation of views pertinent to the subject matter and giving all Directors every opportunity to contribute to relevant issues on the agenda. The agenda on the Board strikes a balance between long-term strategic and short-term performance issues.

Principle Six: Information and Professional Development

The Board believes that this principle has been duly complied with for the period under review. The CEO is appointed by the Directors and enjoys the full confidence of the Board. The CEO actively participates in the appointment of senior management and ensures that there is adequate training in Plaza for directors, management and employees. The CEO adopts an open door policy with all staff and conducts various informal meetings with each employee to assess and monitor performance as well as staff morale. Staff duties are listed by role in order to make it easier for succession planning. Additionally, all new employees, staff, executives and Directors, undergo an induction programme upon joining, which covers, to the extent necessary, the Company's organization and activities and his/her responsibilities.

Principle Seven: Evaluation of the Board's performance

Over the period under review it is the Board's opinion that all members of the Board, individually and collectively, have contributed in line with the required levels of diligence and skill. In addition, the Board believes that its current composition endows the Board with a cross-section of skills and experience and achieves the appropriate balance required for it to function effectively. During the year, the Directors carried out a self-evaluation performance analysis, including the Chairman. The results of this analysis did not require any material changes in Plaza's corporate governance structure.

Principle Eight: Committees

Code principle Eight A deals with the establishment of a Remuneration Committee for Plaza aimed at developing policies on remuneration for Directors and senior executives and devising appropriate remuneration packages.

The Board has established a remuneration policy for Directors and senior executives, underpinned by formal and transparent procedures for the development of such a policy and the establishment of the remuneration packages of individual Directors.

The Board notes that the organisational set-up of Plaza consisted of 13 employees, of whom 1 is considered to be a senior officer. The size of its human resource does not, in the opinion of the Directors, warrant the establishment of an ad-hoc Remuneration Committee. Remuneration policies have therefore been retained within the remit of the Board itself. The Directors of Plaza are entitled to a variable bonus which is dependant on the performance of the Group (i.e. the Company, Tigne Place Ltd (C 76364) and Esports Avenue Limited (C 102562)) and which is calculated through an objective and automatic formula, being: (5 x Outperformance) x base remuneration of the directors, where the term 'Outperformance' refers to the percentage by which the profits before tax of Plaza registered for a particular financial year exceed 105% of the profits before tax registered by Plaza for the relative previous year, in both cases, in accordance with the audited financial statements of Plaza for the respective years. In no case shall the total bonuses payable exceed €44,000. Further, the senior officer is entitled to a cash performance bonus, which varies in line with improvements in Plaza's profitability and which is subject to the review of the Board.

The aggregate amount of fixed remuneration paid to all Directors of Plaza was € 85,680 during 2022 and each Director received an annual remuneration of €10,000, apart from the Chairman who received €13,600. The aggregate amount of remuneration paid to all Directors also includes the amount of € 4,320, received by each of the two directors who sit on the Audit Committee, apart from the Chairman of the Audit Committee who received €4,800, amounting in total to €13,440 as an annual Audit Committee remuneration. The aggregate amount of remuneration paid to all Directors also includes the amount of €4,320 received by each of the two directors who sit on the Executive Committee, amounting in total to €8,640 as an annual Executive Committee remuneration. The total emoluments received by the senior officer during the current financial year amounted to € 91,329. The Directors are entitled for a variable bonus with respect to the group's performance during the current financial year. An aggregate payment of €44,000 will be paid to the directors during 2023, with respect to the performance bonus for the preceding financial year.

Code principle Eight B of the Code deals with the requirement of a formal and transparent procedure for the appointment of Directors.

The Board believes that the main principle has been duly complied with, in that it is the Articles of Association of Plaza themselves that establish a formal and transparent procedure for the appointment of Directors. The Company has however not established a Nominations Committee as suggested by the Code.

Principles Nine and Ten: Relations with Shareholders and with the Market, and Institutional Shareholders

The Board serves the legitimate interests of Plaza, accounts to shareholders and bondholders fully and ensures that Plaza communicates with the market effectively through a number of company announcements that it publishes, informing the market of significant events relevant to Plaza and its business, and of developments relevant to investors. Thus, Plaza recognises the importance of maintaining a dialogue with the market to ensure that its strategies and performance are well understood and disclosed in a timely manner. In this respect, the Board notes that the reaction of market participants to Plaza's communication strategy of important events has been positive.

Plaza will be holding its 23^rd Annual General Meeting where the Board intends to communicate directly with shareholders on the performance of Plaza over the last financial year and to inform shareholders of the challenges that lie ahead.

Business at Plaza's Annual General Meeting covers the approval of the Annual Report and Audited Financial Statements, the declaration of a dividend, if any, the election of Directors, the determination of the maximum aggregate emoluments that may be paid to Directors, the appointment of auditors and the authorisation of the Directors to set the auditors' remuneration.

Apart from the Annual General Meeting, Plaza intends to continue with its active communication strategy with the market, and shall accordingly continue to communicate with its shareholders and bondholders and the market by way of the Annual Report and Audited Financial Statements, by publishing its results on a six-monthly basis during the year, and by way of company announcements to the market in general. Plaza recognises the importance of maintaining a dialogue with the market to ensure that its strategies and performance are well understood and disclosed to the market in a timely manner. Plaza's website (www.plaza-shopping.com) also contains information about Plaza and its business, which is a source of further information to the market.

Plaza's Articles of Association allow minority shareholders to call special meetings on matters of importance to Plaza, provided that the minimum threshold of ownership established in the Articles of Association is met. Additionally, in practice, there exists the possibility for an open channel of communication between Plaza and minority shareholders via the Company Secretary, to the effect that any issue that may merit bringing to the attention of the Board may be transmitted via the Company Secretary, who is in attendance at all meetings of the Board of Directors.

Principle Eleven: Conflicts of Interest

It is the practice of the Board that when a potential conflict of interest arises in connection with any transaction or other matter, the potential conflict of interest is declared in line with internal policies so that steps may be taken to ensure that such items are appropriately addressed. The steps taken will depend on the circumstances of the particular case, and may include the setting up of ad-hoc committees of independent Directors that would assist and monitor management as appropriate in the execution of specific transactions. By virtue of the Memorandum and Articles of Association, the Directors are obliged to keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with that of Plaza. The Board member concerned shall not take part in the assessment by the Board in determining whether a conflict of interest exists. A director shall not participate in a discussion concerning matters in which he has a conflict of interest (unless the Board finds no objection), nor shall he vote in respect of any contract, arrangement, transaction or proposal in which he has material interest in accordance with the Memorandum and Articles of Association. The Board believes that this is a procedure that achieves compliance with both the letter and rationale of Code principle eleven.

There were no changes in the Directors' interest in the shareholding of the Company between year-end and 26 April 2023. Commercial relationships between Plaza and other companies with common Directors and shareholders may include the purchase of supplies and services, and the letting of outlets. Such contracts are entered into in the ordinary course of business and terms and conditions of new contracts negotiated are reviewed by Plaza's Audit Committee. During the financial .year under review, these contracts include income from lettings and premia of €16,931 (2021: €84,742): and during the preceding financial year also included supplies and services of €11,689. Other related party transactions as defined by IAS 24 are disclosed in Note 29 to the financial statements.

As at the date of this Statement, the interests of the Directors in the shares of Plaza, including indirect shareholdings through other companies, were as follows:

Brian R. Mizzi has an indirect interest in the share capital of Plaza by virtue of his ultimate effective holding of 8.33% (2021: 8.33%) shares in Mizzi Organisation Limited that holds 4.76% (2021: 5.18%) shareholding in Plaza Centres p.l.c.

Charles J. Farrugia has a direct interest in the share capital of Plaza by virtue of his holding of 0.09% (2021: 0.09%) shares in Plaza Centres p.l.c.

Gerald J. Zammit has a direct interest in the share capital of Plaza by virtue of his holding of 0.01% (2021: 0.01%) shares in Plaza Centres p.l.c.

Principle Twelve: Corporate Social Responsibility

The Directors are committed to high standards of ethical conduct and to contribute to the development of the well-being of employees and their families as well as the local community and society at large. Plaza recognises the importance of its role in the corporate social responsibility arena and seeks to ensure that in its operations the environment is respected. The Directors are also aware of the importance of having good relations with stakeholders and strive to work together with them in order to invest in human capital and safety issues and to adopt environmentally friendly responsible practices.

4. Non-Compliance with the Code

The Directors set out below the Code Provisions with which they do not comply and an explanation as to the reasons for such non-compliance:


Code Provision		Explanation


2.3		With respect to Code Provision 2.3, the Board notes that the Chairman is also a member of the Executive Committee. However, the Board is of the view that this function of the Chairman does not impinge on his ability to bring to bear independent judgement to the Board.


4.2		The Board has not formally developed a succession policy for the future composition of the Board of Directors as recommended by Code Provision 4.2.7.
7.1		The Board has not appointed a committee for the purpose of undertaking an evaluation of the Board's performance in accordance with the requirements of Code Provision 7.1. The Board believes that the size of Plaza and the Board itself does not warrant the establishment of a committee specifically for the purpose of carrying out a performance evaluation of its role. Whilst the requirement under Code Provision 7.1 might be useful in the context of larger companies having a more complex set-up and a larger Board, the size of Plaza's Board is such that it should enable it to evaluate its own performance without the requirement of setting up an ad-hoc committee for this purpose. The Board does in fact conduct a self-evaluation performance exercise on an annual basis and takes the necessary actions to address any points raised by directors.

8A		The Board has not appointed a Remuneration Committee in line with Code provision 8A, particularly in light of the objectivity with which variable remuneration is computed. Variable remuneration payable to Directors is subject to a cap and is computed on the basis of a simple, automatic formula, which, in the Board's view, does not necessistate the establishment of a separate Remuneration Committee. Variable remuneration for Directors was introduced in 2017. The Board intends to keep under review the utility and possible benefits of having a Remuneration Committee in due course.
8B		The Board has not appointed a Nominations Committee in line with Code provision 8B, particularly in the light of the specific manner in which the Articles of Association require that Directors be appointed by a shareholding qualification to the Board. The Board believes that the current Articles of Association do not allow the Board itself to make any recommendations to the shareholders for appointments of Directors and that if this function were to be undertaken by the Board itself or a Nominations Committee, they would only be able to make a non-binding recommendation to the shareholders having the necessary qualification to appoint Directors pursuant to the Articles of Association. The Board, however, intends to keep under review the utility and possible advantages of having a Nominations Committee and following an evaluation may, if the need arises, make recommendations to the shareholders for a change to the Articles of Association.

9.3

There are no procedures in place within Plaza for the resolution of conflicts between minority and controlling shareholders, nor does the Memorandum and Articles of Association contemplate any mechanism for arbitration in these instances. This is mitigated by ongoing open dialogue between executive management and non-executive Directors of Plaza, to ensure that such conflicts do not arise and if they do are effectively managed.

5. Internal control

The Board is ultimately responsible for Plaza's system of internal controls and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate risk to achieve business objectives, and can provide only reasonable, and not absolute, assurance against normal business risks or loss.

Through the Audit Committee, the Board reviews the effectiveness of Plazaʼs system of internal controls.

The key features of Plaza's system of internal control are as follows:

Organisation

Plaza operates through the CEO and Executive Committee with clear reporting lines and delegation of powers.

Control Environment

Plaza is committed to the highest standards of business conduct and seeks to maintain these standards across all its operations. Company policies and employee procedures are in place for the reporting and resolution of improper activities.

Plaza has an appropriate organisational structure for planning, executing, controlling and monitoring business operations in order to achieve its objectives

During the year Management introduced a Whistleblowing Policy following guidelines set in the Protection of the Whistleblowing (Amendment) Act 2021.

Risk Identification

Management is responsible for the identification and evaluation of key risks applicable to their respective areas of business.

6. General meetings

The general meeting is the highest decision making body of Plaza and is regulated by Plaza's Articles of Association. All shareholders registered on the register of members of Plaza on a particular record date are entitled to attend and vote at general meetings. A general meeting is called by twenty-one (21) days' notice.

At an Annual General Meeting what is termed as "ordinary business" is transacted, namely, the declaration of a dividend, the consideration of the financial statements and the reports of the Directors and the auditors, the election of Directors, the appointment of auditors and the fixing of remuneration of Directors and auditors. Other business which may be transacted at a general meeting (including at the Annual General Meeting) will be dealt with as "Special Business".

Voting at any general meeting takes place by a show of hands, or a poll where this is demanded, or otherwise directed by the chair. Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands each shareholder is entitled to one vote and on a poll each shareholder is entitled to one vote for each share carrying voting rights of which he is a holder. In the case of equality of votes, whether on a show of hands or on a poll, the chair of the meeting shall have a second or casting vote. Shareholders who cannot participate in the general meeting may appoint a proxy by written or electronic notification to Plaza. Appointed proxy holders enjoy the same rights to participate in the general meeting as those to which the shareholder they represent is entitled. Every shareholder represented in person or by proxy is entitled to ask questions which are pertinent and related to the items on the agenda of the general meeting and to have such questions answered by the Directors or such persons as the Directors may delegate for such person.

The Directors' statement of responsibilities for preparing the financial statements is set out in the Directors' report.

The information required by Capital Markets Rule 5.97.5, where applicable for Plaza, is found in the Directors' Report.

Approved by the Board of Directors on 26 April 2023.

Remuneration report

This statement on the remuneration of the board of directors and Chief Executive Officer of Plaza Centres plc (the "Company") has been drawn up in compliance with the requirements of Chapter 12 of the Capital Markets Rules and contains the information required by the provisions of Appendix 12.1 of the Capital Markets Rules.

The Company's remuneration of its board of directors and executive management is based on the remuneration policy adopted and approved by the shareholders at the annual general meeting of 22 June 2022. That policy is available for inspection on the Company's website at https://plaza-shopping.com.

The Remuneration Policy

The Company's remuneration policy determines the basis for remuneration of all members of the board of directors, and the Chief Executive Officer ("CEO") of the Company. It defines the principles and guidelines that apply to both fixed and variable remuneration, including all bonuses and benefits, which can be awarded to directors, and in the case of variable remuneration, indicate the relative proportion between fixed and variable components.

The Company's remuneration policy is intended as a measure to attract and retain suitable candidates for the position of directors and CEO, calculated to provide the Company with the appropriate skills, technical knowledge experience, and expertise both for the determination of policies and strategies of the Company as well as the supervisory role of the board.

The overall remuneration of the board and the CEO consists of three components:

The basic remuneration, consisting of fixed honoraria as sitting members of the board, or in the case of the CEO a fixed Salary;
Additional remuneration where a member of the board is assigned additional duties to sit on or chair a board committee; and
A Bonus scheme linked to the performance of the Company.

The Decision-making process with respect to remuneration

The aggregate emoluments that may be paid to the directors excluding the CEO (who is not a member of the board) is decided upon by the shareholders in the annual general meeting following a recommendation made to shareholders by the board.

The board then decides on the remuneration of the Chairman and the other directors consisting of a fixed honorarium to each director. The board also establishes and fixes the remuneration of the CEO with respect to his executive roles within the Company.

Key principles of remuneration

The board of directors of the Company consists of 6 individuals. During 2022, the Board was composed of two directors having an executive role as part of the Executive Committee and four other Directors acting in a non-executive capacity. The members of the Board for the year under review were Mr. Charles J. Farrugia (Chairman), Prof. Emanuel P. Delia, Mr. Brian R. Mizzi, Mr. Alfredo Munoz Perez, Mr. Etienne Sciberras and Mr. Gerald J. Zammit.

The Board considers each of the following Directors as independent within the meaning of the Code. The non-executive Directors who held office at 31 December 2022 were the following:

Prof. Emanuel P. Delia
Brian R. Mizzi;
Alfredo Munoz Perez and
Etienne Sciberras

In view of their role in the executive committee of the Company, Charles J. Farrugia (Chairman) and Gerald J. Zammit are not considered as independent directors.

The aggregate remuneration approved by the shareholders for the financial year ended 31 December 2022 was set at €140,000, with €96,000 reserved for the fixed component and a maximum of €44,000 for the variable component. This includes the three components of remuneration. The total remuneration due to the directors during the financial year ended 31 December 2022 amounted to €124,491, which includes both the fixed and variable components.

The Chairman and the other directors

Fixed Component

The board believes that in line with local practice, the fixed honorarium for directors is the principal component that compensates directors for their contribution as members of the board. The Chairman of the board receives a higher honorarium in view of the role of acting as the most senior director on the board and as the person responsible for chairing board meetings, and co-ordinating board assignments.

Directors who are also delegated to sit on a sub-committee of the board or otherwise chair such sub-committee are paid additional fixed honoraria for each such assignment.

None of the directors have service contracts with the Company and each director serves from one annual general meeting to the next, when the appointment of directors is conducted at the annual general meeting. Accordingly, none of the directors have any entitlement to any compensation if they are removed from office. Such removal would require an ordinary resolution of the shareholders at a general meeting.

The Directors are entitled to be paid travelling and other reasonable expenses incurred by them in the performance of their duties as directors.

Variable Component

In addition to the fixed honorarium the chairman and the other directors of the Company are also entitled to a variable component of remuneration linked to the performance of the Company in that financial year.

In line with the Remuneration Policy approved by shareholders, the chairman and the other directors are entitled to a bonus payment based on the following basic criteria and subject to a cap of €44,000. The bonus works on the basis of the following formula:

(5xOutperformance) x base remuneration of the Director

Where the term Outperformance refers to the percentage by which the profits before tax of the Group registered for a particular year exceed 105% of the profits before tax registered by the Group for the previous year, in both cases, in accordance with the audited financial statements of the Group for the respective years.

The table below shows the overall remuneration of Directors paid during the financial years ended 31 December 2022 and 2021:

Fixed Component


	Relating to the year ended 31 December 2022		Relating to the year ended 31 December 2021
	Fixed honorarium €	Additional remuneration for sitting on subcommittees €	Fixed honorarium €	Additional remuneration for sitting on subcommittees €
Charles J. Farrugia	13,600	4,320	10,000	3,900
David G. Curmi	-	-	3,470	-
Emanuel P. Delia	10,000	4,320	7,200	3,900
Alan Mizzi	-	-	3,470	-
Brian R. Mizzi	10,000	4,320	7,200	3,900
Alfredo Munoz Perez	10,000	-	3,730	-
Etienne Sciberras	10,000	4,800	7,200	3,900
Gerald J. Zammit	10,000	4,320	7,200	4,220

Variable Component


	Relating to the year ended 31 December 2022 €	Relating to the year ended 31 December 2021 €
Charles J. Farrugia	9,410	8,693
Emanuel P. Delia	6,918	6,257
Brian R. Mizzi	6.918	6,257
Alfredo Munoz Perez	6,918	6,257
Etienne Sciberras	6,918	6,257
Gerald J. Zammit	6,918	6,257

The Company does not remunerate the Chairman or the other directors in any other manner, nor does it provide any loans or other guarantees to them.

Other information on remuneration in terms of Appendix 12.1 of the Capital Markets Rules

In terms of the requirements within Appendix 12.1 of the Capital Market Rules, the following table presents the annual change of remuneration, of the company's performance, and of average remuneration on a full-time equivalent basis of the company's employees (other than directors) over the two most recent financial years. The Company's Directors and CEO have been excluded from the table below:-


	2022/2021	2021/2020
	€	€
Annual aggregate employee remuneration (excluding CEO)	37.03%	(0.16)%
The Group performance attributable to the Company - Profit before tax	32.92%	13.7%
Average employee remuneration - full-time equivalent	2.78%	24.8%

The CEO

The CEO of the company is not a member of the board, although he attends and participates at board meetings. The CEO has a service contract with the Company of a definite duration that entitles him to a fixed salary.

Fixed Remuneration - Salary

For the year under review the CEO received a gross salary of €67,012 (2021: €63,861) per annum. He is also covered by health insurance, life insurance, paid mobile phone and subscription, company car and fuel allowance in aggregate amounting to €11,545 (2021: €11,860).

Variable Remuneration - Bonus

The CEO is entitled to a discretionary bonus which is linked to the performance of the Company and the individual performance of the CEO over the course of the financial year. The board sets targets at the beginning of the year to be reached by the CEO and then assess the performance against the benchmarks set at the beginning of each year and awards the bonus accordingly.

In the year 2022 the CEO received a bonus of €12,772 (2021: €6,000).

The Company does not remunerate its CEO in any other manner, nor does it provide any loans or other guarantees to him. The CEO receives no remuneration from any other company in which the Company has a controlling interest.

The contents of the Remuneration report have been reviewed by the external auditor to ensure that the information required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules has been included.

Approved by the Board of Directors on 26 April 2023.

Statements of financial position


		As at 31 December


		Group			Company
		2022	2021	2022		2021
	Notes	€	€	€		€
ASSETS
Non-current assets
Property, plant and equipment	4	32,310,228	32,319,171	32,151,017		32,319,171
Intangible assets	5	3,105	8,633	-		8,633
Investments in subsidiary	6	-	-	51,000		100,000
Financial assets at FVOCI	7.1	2,102,485	2,943,444	2,102,485		2,943,444
Loans Receivable	8.1	44,100	-	292,610		-


Total non-current assets		34,459,918	35,271,248	34,597,112		35,371,248


Current assets
Trade and other receivables	8.2	353,566	372,768	307,634		372,598
Financial assets at FVPL	7.2	437,894	345,072	437,894		345,072
Cash and cash equivalents	9	1,552,060	2,630,864	1,483,291		2,630,864


Total current assets		2,343,520	3,348,704	2,228,819		3,348,534



Total assets		36,803,438	38,619,952	36,825,931		38,719,782


EQUITY AND LIABILITIES

Capital and reserves
Share capital	10	5,098,400	5,098,400	5,098,400		5,098,400
Share premium	11	3,094,868	3,094,868	3,094,868		3,094,868
Revaluation reserves	12	14,459,923	14,601,360	14,459,923		14,601,360
Retained earnings		3,968,823	4,035,376	3,996,282		4,005,036


Total capital and equity attributable		26,622,014	26,830,004	26,649,473		26,799,664
to owners of the Company
Non-controlling interests	6.1	(3,893)	-	-		-


Total equity		26,618,121	26,830,004	26,649,473		26,799,664


Non-current liabilities
Trade and other payables	13	71,224	83,234	71,224		83,234
Lease liabilities	4	615	6,993	615		6,993
Borrowings	14	5,630,987	7,264,135	5,630,987		7,264,135
Deferred tax liabilities	15	3,185,338	3,208,373	3,185,338		3,208,373


Total non-current liabilities		8,888,164	10,562,735	8,888,164		10,562,735


Current liabilities
Trade and other payables	13	864,552	863,742	855,693		993,700
Lease liabilities	4	6,878	6,695	6,878		6,695
Current tax liabilities		425,723	356,776	425,723		356,988


Total current liabilities		1,297,153	1,227,213	1,288,294		1,357,383


Total liabilities		10,185,317	11,789,948	10,176,458		11,920,118


Total equity and liabilities		36,803,438	38,619,952	36,825,931		38,719,782

The accompanying notes are an integral part of these financial statements.

The financial statements were approved and authorised for issue by the Board of Directors on 26 April 2023. The financial statements were signed on behalf of the Board of Directors by Charles J Farrugia (Chairman) and Etienne Sciberras (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.

Income statements


		Year ended 31 December


		Group		Company
		2022	2021	2022	2021
	Notes	€	€	€	€

Revenue	16	2,869,850	2,533,514	2,846,697	2,533,514
Marketing and maintenance costs	17	(208,604)	(229,661)	(192,829)	(229,661)
Administrative expenses	17	(723,187)	(671,785)	(664,749)	(664,617)


Operating profit before depreciation		1,938,059	1,632,068	1,989,119	1,639,236
Depreciation and amortisation	17	(510,324)	(518,665)	(490,664)	(518,665)


Operating profit		1,427,735	1,113,403	1,498,455	1,120,571
Investment and other related (expense)/ income	19	(25,165)	41,394	7,873	3,531,234
Finance income	20	79,736	61,415	86,269	61,415
Finance costs	21	(327,901)	(347,712)	(327,500)	(347,736)


Profit before tax		1,154,405	868,500	1,265,097	4,365,484
Tax expense	22	(435,099)	(347,564)	(435,099)	(487,404)


Profit for the year		719,306	520,936	829,998	3,878,080

Profit/(loss) attributable to:
Owners of the parent		772,199	520,936	-	-
Non-controlling interests	6.1	(52,893)	-	-	-

		719,306	520,936	829,998	3,878,080

Earnings per share (cents)	24	2c82	2c04

The accompanying notes are an integral part of these financial statements.

Statements of comprehensive income


		Year ended 31 December


		Group		Company
		2022	2021	2022	2021
	Notes	€	€	€	€

Profit for the year		719,306	520,936	829,998	3,878,080



Other comprehensive income:
Items that will not be reclassified to
profit or loss
Movements in deferred tax
liability on revalued land and
buildings determined on the
basis applicable to
property disposals	12, 15	3,881	3,881	3,881	3,881

Items that may be reclassified to profit or loss
(Losses)/ gains from changes in fair value of debt instruments at FVOCI		(157,888)	27,205	(157,888)	27,205
Reclassification adjustments for net losses included in profit or loss upon disposal of debt instruments at FVOCI	12	23,818	-	23,818	-

Total other comprehensive income		(130,189)	31,086	(130,189)	31,086


Total comprehensive income
for the year		589,117	552,022	699,809	3,909,166



Total comprehensive income attributable to:
Owners of the parent		642,010	552,022	699,809	3,909,166
Non-controlling interests	6.1	(52,893)	-	-	-

		589,117	552,022	699,809	3,909,166

The accompanying notes are an integral part of these financial statements.

Statements of changes in equity


		Attributable to the owners of the Company
Group			Treasury			To
		Share	Shares	Share	Revaluation	Retained	Total	Non-controlling	Total
		Capital	Reserve	Premium	Reserves	Earnings	Equity	interests
	Notes	€	€	€	€	€	€	€	€


Balance at 1 January 2021		5,648,400	(550,000)	3,094,868	14,581,522	3,903,192	26,677,982	-	26,677,982

Comprehensive income
Profit for the year		-	-	-	-	520,936	520,936	-	520,936

Other comprehensive income:
Movements in deferred tax
liability determined on the basis
applicable to property disposals	12, 15	-	-	-	3,881	-	3,881	-	3,881
Depreciation transfer through
asset use, net of deferred tax	12, 15	-	-	-	(11,248)	11,248	-	-	-
Gains from changes in fair value of financial assets at FVOCI	12	-	-	-	27,205	-	27,205	-	27,205


Total other comprehensive income		-	-	-	19,838	11,248	31,086	-	31,086


Total comprehensive income		-	-	-	19,838	532,184	552,022	-	552,022

Transactions with owners
Dividends for 2020	25	-	-	-	-	(400,000)	(400,000)	-	(400,000)
Cancellation of re-purchased shares	10	(550,000)	550,000	-	-	-	-	-	-

Total Transactions with Owners		(550,000)	550,000	-	-	(400,000)	(400,000)	-	(400,000)


Balance at 31 December 2021		5,098,400	-	3,094,868	14,601,360	4,035,376	26,830,004	-	26,830,004


Comprehensive income
Profit for the year		-	-	-	-	772,199	772,199	(52,893)	719,306

Other comprehensive income:
Movements in deferred tax
liability determined on the basis
applicable to property disposals	12, 15	-	-	-	3,881	-	3,881	-	3,881
Depreciation transfer through
asset use, net of deferred tax	12, 15	-	-	-	(11,248)	11,248	-	-	-
Losses from changes in fair value of financial assets at FVOCI	12	-	-	-	(157,888)	-	(157,888)	-	(157,888)
Reclassification adjustments for net losses in profit or loss upon disposal of debt instruments at FVOCI		-	-	-	23,818	-	23,818	-	23,818

Total other comprehensive income		-	-	-	(141,437)	11,248	(130,189)	-	(130,189)


Total comprehensive income		-	-	-	(141,437)	783,447	642,010	(52,893)	589,117

Transactions with owners
Dividends for 2021	25	-	-	-	-	(600,000)	(600,000)	-	(600,000)
Dividends for 2022	25	-	-	-	-	(250,000)	(250,000)	-	(250,000)
Share capital		-	-	-	-	-	-	49,000	49,000

Total Transactions with owners		-	-	-	-	(850,000)	(850,000)	49,000	(801,000)


Balance at 31 December 2022		5,098,400	-	3,094,868	14,459,923	3,968,823	26,622,014	(3,893)	26,618,121


Company			Treasury
		Share	shares	Share	Revaluation	Retained	Total
		capital	reserve	Premium	Reserves	Earnings	Equity
	Notes	€	€	€	€	€	€

Balance at 1 January 2021		5,648,400	(550,000)	3,094,868	14,581,522	515,708	23,290,498

Comprehensive income
Profit for the year		-	-	-	-	3,878,080	3,878,080


Other comprehensive income:
Movements in deferred tax
liability determined on the basis
applicable to property disposals	12, 15	-	-	-	3,881	-	3,881
Depreciation transfer through
asset use, net of deferred tax	12, 15	-	-	-	(11,248)	11,248	-
Gains from changes in fair value of financial assets at FVOCI	12	-	-	-	27,205	-	27,205

Total other comprehensive income		-	-	-	19,838	11,248	31,086

Total comprehensive income		-	-	-	19,838	3,889,328	3,909,166


Transactions with owners
Dividends for 2020	25	-	-	-	-	(400,000)	(400,000)
Cancellation of re-purchased shares	10	(550,000)	550,000	-	-	-	-

Total transactions with owners		(550,000)	550,000	-	-	(400,000)	(400,000)


Balance at 31 December 2021		5,098,400	-	3,094,868	14,601,360	4,005,036	26,799,664

Comprehensive income
Profit for the year		-	-	-	-	829,998	829,998


Other comprehensive income:
Movements in deferred tax
liability determined on the basis
applicable to property disposals	12, 15	-	-	-	3,881	-	3,881
Depreciation transfer through
asset use, net of deferred tax	12, 15				(11,248)	11,248
Gains from changes in fair value of financial assets at FVOCI	12	-	-	-	(157,888)		(157,888)
Reclassification adjustment for net losses included in profit or loss upon disposal of debt instruments at FVOCI		-	-	-	23,818	-	23,818

Total other comprehensive income		-	-	-	(141,437)	11,248	(130,189)

Total comprehensive income		-	-	-	(141,437)	841,246	699,809

Transactions with owners
Dividends for 2021	25	-	-	-	-	(600,000)	(600,000)
Dividends for 2022	25	-	-	-	-	(250,000)	(250,000)
Total transactions with owners		-	-	-	-	(850,000)	(850,000)


Balance at 31 December 2022		5,098,400	-	3,094,868	14,459,923	3,996.282	26,649,473

The accompanying notes are an integral part of these financial statements.

Statements of cash flows


		Year ended 31 December


		Group		Company
		2022	2021	2022	2021
	Notes	€	€	€	€
Cash flows from operating activities
Cash generated from operations	26	1,959,646	1,642,191	2,078,281	1,650,905
Interest received		1,431	-	1,431	-
Interest paid		(233,262)	(337,593)	(232,907)	(337,593)
Net income tax paid		(385,306)	(325,400)	(385,518)	(325,400)


Net cash generated from operating
Activities		1,342,509	979,198	1,461,287	987,912


Cash flows from investing activities
Payments for property, plant and
equipment and intangible assets	4, 5	(504,538)	(435,709)	(322,562)	(435,709)
Payments for purchase of debt
Investments	7.1	(717,129)	(1,666,739)	(717,129)	(1,666,739)
Disposal of debt investments		1,400,200	-	1,400,200	-
Payments for purchase of equity investments		(117,436)	-	(117,436)	-
Investment in subsidiary		-	-	(51,000)	-
Advances to subsidiary		-	-	(276,102)	-
Other advances		(49,000)	-	(49,000)	-
Loans repaid by subsidiary	29	-	-	-	133,038
Dividends received from equity
Investments	19	23,267	41,394	23,267	3,376,432
Interest received from debt investments	19	78,259	61,415	84,838	61,415


Net cash generated from/ (used in)
investing activities		113,623	(1,999,639)	(24,924)	1,468,437


Cash flows from financing activities
Consideration paid for bonds
redeemed, including related costs	14	(1,726,556)	(491,898)	(1,726,556)	(491,898)
Principal elements of lease payments	4	(7,380)	(7,380)	(7,380)	(7,380)
Transactions with non-controlling interests		49,000	-	-	-
Dividends paid	25	(850,000)	(400,000)	(850,000)	(400,000)


Net cash used in financing activities		(2,534,936)	(899,278)	(2,583,936)	(899,278)


Net movement in cash and cash
Equivalents		(1,078,804)	(1,919,719)	(1,147,573)	1,557,071

Cash and cash equivalents at
beginning of year		2,630,864	4,550,583	2,630,864	1,073,793


Cash and cash equivalents at end of year	9	1,552,060	2,630,864	1,483,291	2,630,864

The accompanying notes are an integral part of these financial statements.

Notes to the financial statements

1. Summary of significant accounting policies

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

1.1 Basis of preparation

The consolidated financial statements include the financial statements of Plaza Centres p.l.c. and its subsidiary. These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386). They have been prepared under the historical cost convention, as modified by the fair valuation of the land and buildings class of property, plant and equipment, and measured at fair value.

The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates. It also requires Directors to exercise their judgement in the process of applying the Group's accounting policies (see Note 3 - Critical accounting estimates and judgements).

The Group is adequately capitalised and sufficiently liquid to meet its financial obligations, including the necessary funds to finance the payment of bond interest falling due in September 2023 and going forward. The cash reserve for 31 December 2023 is being forecasted at circa €2 million. Accordingly, the Board remains confident that with the Group's strong financial fundamentals together with its prudent and timely measures, it can continue to withstand unprecedented challenges and be in a position to continue creating value for its stakeholders.

On the basis of the matters disclosed above, the board continues to adopt the going concern basis in preparing the Group's and the company's financial statements and considers that there are no material uncertainties which may cast doubt about the ability of the Group and the company to continue operating as a going concern.

Standards, interpretations and amendments to published standards effective in 2022

In 2022, the Group adopted new standards, amendments and interpretations to existing standards that are mandatory for the Group accounting period beginning on 1 January 2022. 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 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 not mandatory for the Group's current financial period ended 31 December 2022. The Group has not early adopted these revisions to the requirements of IFRSs as adopted by the EU and the parent company's Directors are of the opinion that, there are no requirements that will have a possible significant impact on the Group's financial statements in the period of initial application.

1.2 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments has been identified as the Parent Company's Board of Directors that makes strategic decisions. The Board of Directors considers the Group to be made up of one segment, that is to lease, manage and market commercial property.

1.3 Consolidation

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group.

In the Company's separate financial statements, investments in subsidiaries are accounted for by the cost method of accounting i.e. at cost less impairment. Provisions are recorded where, in the opinion of the Directors, there is an impairment in value. Where there has been an impairment in the value of an investment, it is recognised as an expense in the period in which the diminution is identified. The results of subsidiaries are reflected in the Company's separate financial statements only to the extent of dividends receivable. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to profit or loss.

1.4 Foreign currency translation

(a) Functional and presentation currency

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 currency and the Group's presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

1.5 Property, plant and equipment

The Group owns and operates commercial property that is fully serviced and which activity extends beyond the mere leasing out of retail space. The extent of the services provided by the Group is deemed to be significant to the arrangement with the tenants as a whole. Accordingly, the commercial property owned and managed by the Group is treated as property, plant and equipment under the requirements of IAS 16 rather than investment property under IAS 40.

Property, plant and equipment, comprising land and buildings, electrical installations, plant, machinery and equipment, and furniture and fittings are initially recorded at cost. Land and buildings are subsequently shown at market value, based on periodic, but at least triennial valuations by external independent valuers, less subsequent depreciation for buildings. Valuations are carried out on a regular basis 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 revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs which are incurred for the purpose of acquiring or constructing a qualifying asset are capitalised as part of its cost (Note 1.20).

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset as appropriate, 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 are charged to profit or loss during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as a revaluation reserve in shareholders' equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against the revaluation reserve directly in equity; all other decreases are charged to profit or loss. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to profit or loss and depreciation based on the asset's original cost, net of any related deferred income taxes, is transferred from the revaluation reserve to retained earnings.

Land is not depreciated as it is deemed to have an indefinite life. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amount to their residual values over their estimated useful lives, as follows:



		%
Buildings		1 - 5
Electrical installations		6.67
Plant, machinery and equipment		6.67-10
Furniture and fittings		5 - 20

Assets in the course of construction are not depreciated.

The assets' residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount (Note 1.8).

Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

1.6 Intangible assets - computer software

Acquired computer software applications are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives four (4) years. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Amortisation is included within 'administrative expenses' in profit or loss.

1.7 Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to depreciation and are tested annually for impairment. Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

1.8 Financial assets

(a) Classification

The Group classifies its financial assets in the following measurement categories:

those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss), and
those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

(b) Recognition and derecognition

The Group recognises a financial asset in its statement of financial position when it becomes a party to the contractual provisions of the instrument.

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

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. There are three measurement categories into which the Group may classify its debt instruments:

Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss. Impairment losses are presented in the statement of profit or loss.

- FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets' cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss. Interest income from these financial assets is included in finance income using the effective interest rate method. Impairment losses are presented in the statement of profit or loss.

FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss in the period in which it arises.

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group's management has elected to present fair value gains and losses on equity investment in OCI, there's no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group's right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(d) Impairment

The Group assess on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade and other receivables, the Group applied the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. For debt investments at FVOCI any credit loss allowances are recognised in profit or loss and reduces the fair value loss otherwise recognised in OCI.

1.9 Loans receivable

All loans receivable are recognised when cash is advanced to the borrowers. Loans receivable are initially recognised at the fair value of cash consideration given or proceeds advanced, plus transaction costs. These financial assets are subsequently carried at amortised cost using the effective interest method, less expected credit loss allowances.

1.10 Trade and other receivables

Trade receivables comprise amounts due from tenants for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less expected credit loss allowances.

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.

1.11 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at face value. In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and bank overdrafts, if any. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

1.12 Share capital

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

1.13 Financial liabilities

The Group recognises a financial liability in its statement of financial position when it becomes a party to the contractual provisions of the instrument. The Group's financial liabilities, are classified as financial liabilities measured at amortised cost, i.e. not at fair value through profit or loss other than derivative contracts, under IFRS 9. Financial liabilities not at fair value through profit or loss, are recognised initially at fair value, being the fair value of consideration received, net of transaction costs that are directly attributable to the acquisition or the issue of the financial liability. These liabilities are subsequently measured at amortised cost. The Group derecognises a financial liability from its statement of financial position when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.

1.14 Trade and other payables

Trade payables comprise obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Deferred income comprises advance payments for rent receivable relating to subsequent periods and rental premia that are credited to profit or loss on a straight-line basis over the lease term.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.15 Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.

1.16 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

1.17 Current and deferred tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Deferred tax is recognised using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Under this method, the Group is required to make a provision for deferred taxes on the revaluation of property, plant and equipment. Such deferred tax is charged or credited directly to the revaluation reserve. Deferred 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 profit or loss.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

1.18 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Group's activities. Revenue is recognised upon performance of services, and is stated net of sales tax, returns, rebates and discounts.

The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group's activities as described below:

(a) Rental income

Rents receivable and premia charged to clients are included in the financial statements as revenue. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments received under operating leases are credited to profit or loss on a straight-line basis over the period of the lease.

Finance income

Interest income is recognised in profit or loss as it accrues, unless collectability is in doubt.

1.19 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or a series of payment, the right to use an asset for an agreed period of time.

A group undertaking is the lessee

At inception of a contract, an entity shall assess whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

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.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, 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 lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received;
- uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, where there is no third party financing; and
- makes adjustments specific to the lease, e.g. term, country, currency 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;
- any lease payments made at or before the commencement date less any lease incentives received; and
- any initial direct costs.

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.

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. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.

A group undertaking is the lessor

Assets leased out under operating leases are included in property, plant and equipment in the statement of financial position and are accounted for in accordance with accounting policy 1.5. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income from operating leases is recognised in profit or loss on a straight-line basis over the lease term.

1.20 Borrowing costs

Borrowing costs which are incurred for the purpose of acquiring or constructing qualifying property, plant and equipment, are capitalised as part of its cost. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Borrowing costs are capitalised while acquisition or construction is actively underway, during the period of time that is required to complete and prepare the asset for its intended use. Capitalisation of borrowing costs is ceased once the asset is substantially ready for its intended use or sale and is suspended if the development of the asset is suspended. All other borrowing costs are expensed. Borrowing costs are recognised for all interest-bearing instruments on an accrual basis using the effective interest method. Interest costs include the effect of amortising any difference between initial net proceeds and redemption value in respect of interest-bearing borrowings.

1.21 Deferred Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants related to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs they are intended to compensate.

Government grants related to assets, i.e. in respect of the purchase of property, plant and equipment, are included in liabilities as deferred government grants, and are credited to profit or loss on a straight-line basis over the expected lives of the related assets, presented within 'Other operating income'.

Grants related to income are presented as a deduction in reporting the related expense.

1.22 Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the financial statements in the period in which the dividends are approved by the shareholders.

2. Financial risk management

2.1 Financial risk factors

The Group's activities potentially expose it to a variety of financial risks: market risk (including price risk, cash flow 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. The Group did not make use of derivative financial instruments to hedge risk exposures during the current and preceding financial years. The Board provides principles for overall risk management, as well as policies covering risks referred to above.

(a) Market risk

(i) Foreign exchange risk

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities which are denominated in a currency that is not the entity's functional currency. The Group's transactions and recognised assets and liabilities are all denominated in euro and hence the Group is not exposed to foreign exchange risk.

(ii) Cash flow and fair value interest rate risk

The Group's significant interest-bearing assets and liabilities, and related interest rate and maturity information, are disclosed in Notes 7 and 14.

The Group's instruments which are subject to fixed interest rates comprise the bonds issued to the general public (Note 14) and the debt investments disclosed in Note 7.1. In this respect, the Group and the Company are potentially exposed to fair value interest rate risk in view of the fixed interest nature of these instruments, which are however measured at amortised cost.

The Group's cash flow interest rate risk principally arises from bank borrowings issued at variable rates (Note 14), which exposes the Group to cash flow interest rate risk. Management monitors the impact of changes in market interest rates on amounts reported in profit or loss in respect of these instruments. The Group's operating cash flows are substantially independent of changes in market interest rates. Based on the above, management considers the potential impact on profit or loss of a defined interest rate shift that is reasonably possible at the end of the reporting period to be immaterial.

(iii) Price risk

The Group is exposed to price risk in view of listed investments held by the Parent Company which have been classified in the statement of financial position as financial assets at FVOCI and financial assets at FVPL (refer to Notes 7.1 and 7.2 respectively). To manage its price risk the Group diversifies its portfolio in terms of listing status and business sectors of investees. These investments are quoted on the Malta Stock Exchange and Irish Stock Exchange and are accordingly incorporated in the MSE equity index and Ireland Stock Exchange Overall Index. In the context of the Group's and Company's figures reported in the statement of financial position, the impact of a reasonable possible shift in the MSE equity index and ISEQ on the Group's income statement and revaluation reserve is not deemed significant.

(b) Credit risk

Financial assets that potentially subject the Group to credit risk consist principally of cash and cash equivalents, contractual cash flows of debt investments at FVOCI and credit exposure to customers, including outstanding receivables and committed transactions.

The Group's and the Company's exposures to credit risk as at the end of each reporting period are analysed as follows:


	Group		Company
	2022	2021	2022	2021
	€	€	€	€

Debt instruments measured at FVOCI (Note 7.1)	2,102,485	2,943,444	2,102,485	2,943,444

Financial assets measured at amortised cost:
Loans receivable (Note 8.1)	44,100	-	292,610	-
Trade and other receivables (Note 8.2)	252,901	322,969	257,443	322,969
Cash and cash equivalents (Note 9)	1,552,060	2,630,864	1,483,291	2,630,864


	3,951,546	5,897,277	4,135,829	5,897,277

The maximum exposure to credit risk at the end of the reporting period in respect of the financial assets mentioned above is equivalent to their carrying amount. The Group does not hold any collateral as security in this respect.

Cash and cash equivalents

The Group's cash and cash equivalents are held with local financial institutions with high quality standing or rating. While cash and cash equivalents are subject to the impairment requirements of IFRS 9, the identified impairment loss is insignificant.

Debt instruments

The Group's debt investments at FVOCI are considered to have low credit risk and the issuers, have a strong capacity to meet the contractual cash obligations. While debt investments are also subject to impairment requirements, any identified impairment loss was deemed insignificant.

Trade receivables

The Group's trade receivables, including accrued income, do not contain significant financing components, and accordingly the Group applies the IFRS 9 simplified approach to provide for lifetime expected credit loss for all trade receivables, irrespective of whether these have demonstrated a significant increase in credit risk. The Group assesses the credit quality of its tenants, the majority of which are unrated, taking into account financial position, past experience and other factors. The Group manages credit limits and exposures actively in a practicable manner such that there are no material past due amounts receivable from tenants as at the end of the reporting period. The Group monitors the performance of its trade receivables on a regular basis to identify incurred collection losses, which are inherent in the Group's debtors, taking into account historical experience in collection of accounts receivable. Concentration of credit risk with respect to trade receivables is limited due to the number of customers comprising the Group's debtor base.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of time before the reporting date and the corresponding credit losses experienced within the current and preceding financial periods. The identified loss rates were adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the tenants to settle the receivables. Credit loss allowances also include specific provisions against credit impaired individual exposures with the amount of the provisions being equivalent to the balances attributable to credit impaired receivables. On that basis, the loss allowance for the Group was determined as follows:


	Up to 30	31 to 60	60 to 90	91 to 120	121 to 150	150	180
	days	Days	days	Days	days	days	Days	Total
	past due	past due	past due	past due	past due	past due	past due
31 December 2022
Expected loss rate	6%	10%	28%	58%	75%	90%	90%
Gross carrying amount (€)	62,556	60,565	20,340	21,563	10,935	10,276	85,415	271,650
Loss allowance (€)	3,810	5,957	5,620	12,454	8,188	9,249	77,803	123,081



	Up to 30	31 to 60	60 to 90	91 to 120	121 to 150	150	180
	days	Days	days	Days	days	days	Days	Total
	past due	past due	past due	past due	past due	past due	past due


31 December 2021
Expected loss rate	8%	12%	24%	61%	78%	94%	100%
Gross carrying amount (€)	53,409	73,376	25,668	18,363	11,862	6,059	78,072	266,809
Loss allowance (€)	4,021	8,662	6,171	11,162	9,269	5,724	78,072	123,081