Company Registration Number: C 29506
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements
31 December 2023
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
Pages
Directors’ report 1 - 4
Corporate Governance - Statement of Compliance 5 - 14
Statement of financial position 15
Statement of comprehensive income 16
Statement of changes in equity 17
Statement of cash flows 18
Notes to the financial statements 19 - 33
Independent auditor’s report
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
1
Directors’ report
The directors present their report and the audited financial statements for the financial year ended 31
December 2023.
Principal activity
The company’s principal activity, which is unchanged since last year, is to carry on the business of a finance
and investment company in connection with the ownership, development, operation and financing of the
business activities of the companies forming part of the Mizzi Organisation.
Review of the business
By virtue of the Prospectus dated 24 September 2021, the company issued for subscription to the general
public 450,000 bonds with a nominal value of €100 per bond issued at par, for a total amount of
€45,000,000. The bonds are subject to a fixed interest rate of 3.65% per annum, payable annually in
arrears on 15 October of each year. The proceeds from the bond issue amounting to €44,100,000 (net of
bond issue costs) were advanced to the parent company, Mizzi Organisation Limited. This loan is subject
to a fixed interest rate of 4.3% per annum paid annually and the principle amount repayable by not later
than 15 days before the redemption date of the bonds. The resulting finance income for the year amounted
to €1,913,304 (2022: € 1,909,267).
Consequently after accounting for interest costs, during the year under review the company earned a net
interest income of €199,912 (2022: €198,214). After deducting administration costs and taxation, net profit
for the year amounted to €43,205 (2022: €38,133).
Financial risk management
The company’s activities expose it to a variety of financial risks, mainly credit risk and liquidity risk. Refer
to Note 2 to these financial statements.
Performance of the Mizzi Organisation for 2023 and outlook for 2024
Consolidated Holdings Limited, GSD Marketing Limited, Mizzi Organisation Limited and The General Soft
Drinks Company Limited are the guarantors for the bond, which together with their subsidiary undertakings
and Mizzi EV Limited constitute the Mizzi Organisation.
Performance during financial year 2023
The guarantors for the bond recorded an improved result versus 2022, with revenues increasing by 24% to
€222 million (2022: €179 million), yielding a gross profit of €60.8 million (2022: €50.6 million) translating to
an operating profit of €14 million in 2023 (2022: €9.8 million), before considering gains from changes in fair
value of property and impairment charges. In 2023, the Group also recognised gains from changes in the
fair value of investment property amounting to €341k (2022: €6 million). Impairment charge on property,
plant and equipment of a particular operation of the Mizzi Organisation in 2023 amounted to €2 million
(2022: Nil).
Net finance costs increased at €5.9 million (2022: €4.3 million), similarly to investment income and share
of profits of associates, which in aggregate amounted to €1.8 million (2022: €918k).
This resulted in a profit before tax of €8.2 million against a profit of €12.4 million in 2022.
The Group incurred a tax charge including deferred taxation of €2.4 million (2022: €1.1 million) giving a
combined profit for the year for the issuer and its guarantors of €5.8 million versus a profit of €11.3 million
in 2022.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
2
Directors’ report - continued
Outlook for financial year ending 2024
Financial performance in 2024
In 2024, Mizzi Organisation is expecting to consolidate further the results obtained by the automotive
division in 2023. In 2024, the automotive sector will continue working on the site known as the ’Hofra’ in
Blata l-Bajda. This is a long-term project that will be partly financed by the proceeds from the bond issue.
Following the refurbishment projects carried out on the Arkadia Commercial Centre and the Portomaso
food store in 2022 and 2023 respectively, as well as the opening of a new food store in Naxxar in 2023,
results in the retail and fashion sectors are expected to improve in 2024.
The engineering division aligns itself to the real estate projects on the island which seem to be at a stable
position. Management is satisfied with the order book which can only grow gradually due to the shortage
of skilled labour this sector is facing.
The Group’s real estate sector kept its positive trends. Following the uptake of two further floors at the new
office block in St Julian’s in 2023, an additional floor was leased out early in 2024, while it is envisaged that
at least a further floor will be rented out during the rest of the year. Management is expected to finalise the
sale of the site of the former GSD factory in Qormi by the end of 2024, following an extension to the promise
of sale signed in 2022, due to delays in the relevant permits being issued.
The projections of the beverage division for 2024 are that business will continue growing further in line with
positive economic indicators and the continued recovery of inbound tourism.
Likewise, business on the books of the hospitality division also indicates that there is a healthy level of
appetite for tourists to visit Malta, which augurs well for the year.
Management teams across the Mizzi Organisation remain cautious vis-à-vis the inflation experienced over
the past 24 month and its affect on the people’s spending power. Interest rates are at their highest levels
in a number of years and are expected to remain at similar levels in 2024.
The Boards of Directors of Mizzi Organisation Finance p.l.c. and its guarantors are very comfortable with
the state and performance of each company forming part of the Group. The refinancing exercises made in
prior years have given the Group a fixed exposure when it comes to borrowing costs. This has created a
hedge which will last for the next five years, thus overcoming the threats of a rising interest rate scenario,
which is currently being experienced both locally and overseas. Mizzi Organisation has over the years
adopted highest levels of corporate governance and financial discipline which adds a layer of comfort on
the Group’s servicing obligations. Over the years, Mizzi Organisation Limited (a related party) has taken a
treasury role within the Group which helps control and monitor the Group’s overall loan exposure. During
the pandemic, the directors adopted an approach of carrying out only essential capital expenditure and
even though the pandemic is over, the Board kept on exercising these cautious principles. The directors
consider the Organisation and all Mizzi Organisation companies to be a going concern. Hence the going
concern assumption in the preparation of these financial statements is considered appropriate and there
are no material uncertainties which may cast significant doubt about the ability of the Organisation and its
companies to continue operating as a going concern.
Results and dividends
The financial results of the company are set out in the statement of comprehensive income. The directors
do not recommend the payment of dividend. The directors propose that the balance of retained earnings
amounting to €61,892 (2022: €18,687) to be carried forward to the next financial year.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
3
Directors’ report - continued
Directors
The directors of the company who held office during the year were:
Mr Carmel J. Farrugia
Mr Joseph M. Galea
Mr Brian R. Mizzi
Mr Kenneth C. Mizzi
Mr Maurice F. Mizzi
Prof. Andrew Muscat (appointed on 30 June 2023)
Mr Kevin J. Rapinett
The company’s Articles of Association do not require any directors to retire. The directors will be eligible
for re-appointment on the lapse of the period for which they were appointed in accordance with the
company’s Articles of Association.
Statement of directors’ responsibilities for the financial statements
The directors are required by the Maltese Companies Act (Cap. 386), to prepare financial statements which
give a true and fair view of the state of affairs of the company as at the end of each reporting period and of
the profit or loss for that period.
In preparing the financial statements, the directors are responsible for:
● ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
● selecting and applying appropriate accounting policies;
● making accounting estimates that are reasonable in the circumstances;
● ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate
to presume that the company will continue in business as a going concern.
The directors are also responsible for designing, implementing and maintaining internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error, and that comply with the Maltese Companies Act (Cap. 386).
They are also responsible for safeguarding the assets of the company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The financial statements of Mizzi Organisation Finance p.l.c. for the year ended 31 December 2023 are
included in the Annual Financial Report 2023, which is made available on the Mizzi Organisation’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 Organisation’s website is available in other countries and jurisdictions, where
legislation governing the preparation and dissemination of financial statements may differ from
requirements or practice in Malta.
The directors confirm that, to the best of their knowledge:
● the financial statements give a true and fair view of the financial position of the company as at 31
December 2023, and of 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 Directors’ Report includes a fair review of the development and performance of the business and
the position of the company, together with a description of the principal risks and uncertainties that the
company faces.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
4
Directors’ report - continued
Going concern basis
After making due enquiries, the directors have a reasonable expectation, at the time of approving the
financial statements, that the company has 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.
The Directors’ report has been signed on behalf of the Board of Directors on 29 April 2024 by Mr Brian R.
Mizzi (Director) and Mr Kenneth C. Mizzi (Director) as per the Directors' Declaration on ESEF Annual
Financial Report submitted in conjunction with the Annual Financial Report.
Registered office:
Mizzi Organisation Corporate Office
Testaferrata Street
Ta’ Xbiex
Malta
Telephone number:
+356 2596 9000
Company secretary:
Dr Malcolm Falzon
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
5
Corporate Governance - Statement of Compliance
1. Introduction
Pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority (the “Rules”), Mizzi
Organisation Finance p.l.c. (the “Company”) should endeavour to adopt the Code of Principles of Good
Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Rules (the “Code”). In terms of Rule
5.94, the Company is hereby reporting on the extent of its adoption of the Code and on the effective
measures it has taken to ensure compliance throughout the accounting period with the requirements of the
principles set out in the Code which were applicable during the financial year ended 31 December 2023.
The Company acknowledges that the Code does not dictate or prescribe mandatory rules, but recommends
principles of good practice. However, the directors strongly believe that such practices are in the best
interests of the Company, its shareholders, and other stakeholders, primarily because compliance with
principles of good corporate governance is expected by investors of the Company’s securities admitted to
the Official List of the Malta Stock Exchange and also because it evidences the directors' and the
Company's commitment to a high standard of corporate governance.
The directors report that since the Company has only issued debt securities and has not issued equity
securities which are traded in a multilateral trading facility, it is exempt from disclosing the information
prescribed in Rules 5.97.1, 5.97.2, 5.97.3, 5.97.6 and 5.97.8 in this corporate governance statement (the
“Statement”) but may do so on a best efforts basis. The Statement is to be construed accordingly.
2. General
The primary responsibility for good corporate governance lies with the Company’s board of directors (the
“Board”), which is responsible for the overall determination of the Company’s policies and business
strategies. The Company’s principal activity is to act as a finance company of the Mizzi Organisation
conglomerate of companies (the “Mizzi Organisation”). It does not carry out any trading activities of its
own and its sole purpose is that of raising funds in the capital markets for the purposes of on-lending to
companies forming part of the Mizzi Organisation. The core business activities of the Mizzi Organisation
comprise the following sectors: (i) automotive; (ii) beverage; (iii) food and fashion retail; (iv) hospitality,
tourism, and leisure; (v) real estate; and (vi) mechanical and engineering contracting.
The company 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 the
Company, whilst retaining an element of flexibility essential to allow the Company to react promptly and
efficiently to circumstances arising in respect of its business, taking into account 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 and complementary for the size, nature and operations of the Company. Accordingly, in general
the directors believe that the company has adopted appropriate structures to achieve an adequate level of
good corporate governance, together with an adequate system of control in line with the company’s
requirements.
The Board shall keep the principles of the Code under review and shall monitor any developments in the
Company’s business to evaluate the need to introduce new corporate governance structures or
mechanisms, as and when the need arises.
This Statement will now set out the structures and processes in place within the Company and how these
effectively achieve the goals set out in the Code for the financial period under review. 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 such principles have been adhered to. Where the Company has not complied with
any of the principles of the Code, this Statement will provide an explanation for the non-compliance.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
6
Corporate Governance - Statement of Compliance - continued
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 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 current financial year the Company 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 the Company with
honesty, integrity, and competence. The Board consists of a mix of executive and non-executive directors
that enables the Board, and particularly the non-executive directors, to have direct information about the
Company's performance and business activities.
Throughout the period under review, the Directors have provided the necessary leadership in the overall
direction of the Company and are fully aware of, and conversant with, the statutory and regulatory
requirements connected to the business of the Company. The Directors hereby report that they have
consistently attended meetings of the Board, have kept themselves updated with statutory and regulatory
requirements and the business of the Company and have performed the responsibilities delegated to them
to ensure the smooth running and better management of the Company.
Principle Two: Chairman and Chief Executive Officer
As at the end of the period under review, the Board has not appointed a Chief Executive Officer (CEO).
Accordingly, the Directors report that Code provision 2.1 is not applicable to the Company.
Andrew Manduca resigned as Chairman of the Board on the 30 of June 2023, whilst Prof. Andrew Muscat
was appointed as Chairman on the same day. The function of the Chairman is to lead the Board and to set
its agenda The Chairman is also responsible to: (i) ensure that the Board receives precise, timely and
objective information in order for the directors to take sound decisions and effectively monitor the
performance of the Company; (ii) ensure that there is effective communication with stakeholders and, (iii)
encourage active engagement by all directors for the discussion of complex and, or contentious issues.
The Board considers the present Chairman to be fit and proper to occupy the role.
The directors believe that the function of the Chairman has been performed in compliance with Code
provision 2.2.
Principle Three: Composition of the Board
The composition of the Board is in line with the requirements of Principle Three of the Code. The Board is
composed of executive and independent non-executive directors. During the period under review, the Board
was chaired by Andrew Manduca and Prof. Andrew Muscat. Both representatives satisfy the independence
criteria required by the Code.
The Board is composed of six directors, three of whom are independent directors in accordance with the
Capital Markets Rules.
The members of the Board for the year under review were Mr Maurice F. Mizzi, Mr Kenneth C. Mizzi, Mr
Brian R. Mizzi (executive directors), and Mr Carmel J. Farrugia, Mr Joseph M. Galea and Mr Kevin Rapinett
(independent non-executive directors).
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
7
Corporate Governance - Statement of Compliance - continued
In this respect, the Directors consider that the Company is headed by an effective Board and its members
provide a proficient mix able to add value to the Company. Apart from being conducive to good corporate
governance, this structure provides the added benefits of direct control and management of the Company’s
affairs, together with an effective centralisation of the decision-making process.
Independence of Non-Executive Directors
In line with principle 3 (iii) of the Code, at least one third of the Board consists of non-executive directors.
The non-executive directors play an important role in overseeing executive directors and management,
ensuring a system of checks and balances and contributing to the strategic direction of the Company in an
objective manner. For the purposes of Code Provision 3.2, with respect to three independent non-executive
directors, Mr Carmel J. Farrugia, Mr Joseph M. Galea and Mr Kevin Rapinett, it is hereby reported that
none of them:
a) are or have been employed in any capacity by the Company;
b) have or have had, over the past three years, a significant business relationship with the Company;
c) have received or receives significant additional remuneration from the Company in addition to their
director’s fee;
d) have close family ties with any of the Company’s executive directors or senior employees;
e) have served on the Board for more than twelve consecutive years;
f) have been within the last three years an engagement partner or a member of the audit team or past
external auditor of the Company; and
In compliance with Code Provision 3.4, each of the Directors hereby declares that he undertakes to:
a) maintain in all circumstances his independence of analysis, decision, and action;
b) not to seek or accept any unreasonable advantages that could be considered as compromising his
independence; and
c) clearly express his opposition in the event that he finds that a decision of the Board may harm the
Company.
Principle Four: The Responsibilities of the Board
In terms of Principle Four, it is the Board’s responsibility to ensure a system of accountability, monitoring,
strategy formulation and policy development.
The Board of the Company is entrusted with the overall direction, administration and management of the
Company and meets on a regular basis to discuss and take decisions on matters concerning the strategy,
operational performance, and financial performance of the Company.
Role and Responsibilities of the Board
In fulfilling its mandate, the Board assumes responsibility to:
(a) establish appropriate corporate governance standards;
(b) review, evaluate and approve, on a regular basis, long-term plans for the Company;
(c) review, evaluate and approve the Company’s budgets and forecasts;
(d) review, evaluate and approve major resource allocations and capital investments;
(e) review the financial and operating results of the Company;
(f) ensure appropriate policies and procedures are in place to manage risks and internal control;
(g) review, evaluate and approve the overall corporate organisation structure, the assignment of
management responsibilities and plans for senior management;
(h) review, evaluate and approve compensation to senior management; and
(i) review periodically the Company’s objectives and policies relating to social, health and safety and
environmental responsibilities.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
8
Corporate Governance - Statement of Compliance - continued
In fulfilling its responsibilities, the Board continuously assesses and monitors the Company’s present and
future operations, opportunities, threats and risks in the external environment, and its current and future
strengths and weaknesses. The Board evaluates and reviews the implementation of the business and
financial strategy of the Company.
In ensuring compliance with other statutory requirements and with continuing listing obligations, the Board
is advised directly, as appropriate, by its appointed legal and other advisors. Directors are entitled to seek
independent professional advice at any time on any aspect of their duties and responsibilities, at the
Company’s expense.
The Board reports that since the Company does not carry out any trading activities of its own, the Company
does not have any new business plans or strategies and its main function remains that of a finance company
for the Mizzi Organisation and the monitoring of its loan receivables. In this context, the Board believes that
through its regular meetings it is in a position to properly monitor the financial position and business of the
Company. The Company does not have any written succession policy to Board membership.
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. The Board believes that the size of the Company and
the Board itself does not warrant the setting up of an ad hoc committee to establish the remuneration
packages of individual directors and relies on the constant scrutiny of the Board itself, the Company’s
shareholders, the market, and the rules by which the Company is regulated as a listed company. The Board
shall retain this matter under review over the coming year.
The Audit Committee
In line with the requirements of the Rules, the Company has established an audit committee (the “Audit
Committee”).
Composition of the Audit Committee
The Audit Committee is appointed by the Board and is composed of three non-executive directors. The
Audit Committee is chaired by Carmel J Farrugia who is an independent non-executive director of the
Company, appointed by the Board. The other two members are Kevin Rapinett and Joseph M Galea who
are also independent non-executive Directors of the Company. All Members are appointed for a one-year
term of office, automatically renewed for further periods of one-year each unless otherwise determined by
the Board.
In terms of Rule 5.117, the Board considers all three members of the Audit Committee to be independent
within the meaning of the Code. Joseph M. Galea is the member of the Audit Committee considered by the
Board to be competent in accounting and auditing matters.
Role and Responsibilities
The Audit Committee is a sub-committee of the Board constituted to fulfil an oversight role in connection
with, inter alia, the quality and integrity of the Company’s financial statements. In performing its duties, the
Audit Committee is to maintain effective working relationships with the Board, management, and the
external auditors of the Company.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
9
Corporate Governance - Statement of Compliance - continued
The Audit Committee’s primary objective is to assist the Board in fulfilling its oversight responsibilities over
the financial reporting processes, financial policies, and internal control structure. The Audit Committee
reports directly to the Board. Briefly, the Audit Committee is expected to deal with and advise the Board on:
(a) its monitoring responsibility over the financial reporting processes, financial policies, and internal
control structures;
(b) maintaining communications on such matters between the Board, management, and the external
auditors; and
(c) preserving the Company’s assets by assessing the Company’s risk environment and determining
how to deal with those risks.
In the discharge of this role, but without prejudice to the generality of the foregoing, the Audit Committee,
inter alia, has the responsibility of:
(a) ensuring that the Company adopts, maintains and, at all times, applies appropriate accounting
and financial reporting processes and procedures;
(b) monitoring of the audit of the Company’s management and annual accounts;
(c) facilitating the independence of the external audit process and addressing issues arising from the
audit process and ensuring good communication between internal and external audit activities, as
applicable;
(d) reviewing of the systems and procedures of internal control implemented by management and of
the financial statements, disclosures and adequacy of financial reporting;
(e) making of recommendations to the Board in relation to the appointment of the external auditors
and the approval of the remuneration and terms of engagement of the external auditors, following
the relative appointment by the shareholders in the annual general meeting;
(f) monitoring and reviewing of the external auditors’ independence and, in particular, the provision
of additional services to the Company;
(g) ensuring that the Company, at all times, maintains effective financial risk management and
internal financial and auditing control systems, including compliance functions;
(h) to make proposals for the development and implementation of a policy on the engagement of the
external auditors to provide non-audit services to the Company; and
(i) to review the capacity of the parent company and related parties to repay the loans advanced by
the Company when these become due.
Related Party Transactions
In addition, the Audit Committee also has the role and function to scrutinize and evaluate any proposed
transaction to be entered into by the Company and a “Related Party” (which term shall have the same
meaning as in the International accounting standards adopted in accordance with Regulation (EC) No.
1606/2002 of the European Parliament and of the Council) to ensure that the execution of any such
transaction is at arm’s length, on a commercial basis and ultimately in the best interests of the Company.
Any proposed transaction which the Company wishes to enter into, and which satisfies either of the
following conditions is referred to the Audit Committee for its consideration and approval:
(a) transactions which clearly fall within the ambit of the Capital Markets Rules as “Related Party
Transactions” and which are not the subject of an exemption therefrom;
(b) transactions which management is not certain as to whether they fall within the ambits of the Rules as
“Related Party Transactions” or where there is uncertainty as to whether any one or more exemptions
should apply to the proposed transactions.
At the meeting convened for this purpose, the Audit Committee considers the proposed transaction and
first determines whether it is a transaction that falls within the ambit of the applicable Rules and, if it so
determines, then considers the merits of the proposed transaction.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
10
Corporate Governance - Statement of Compliance - continued
In determining whether a transaction falls to be classified as a “Related Party Transaction”, the Audit
Committee adopts a substance over form approach and assesses the transaction according to the specific
circumstances and characteristics. In its evaluation of the proposed transaction, the Audit Committee is at
all times guided by the best interests of the Company and its general body of shareholders taken as a
whole. The Audit Committee reports to the Board on its findings and make its recommendations to the
Board as to whether the transaction should be entered into in the first place and to make such further
recommendations as to any matters that, in the opinion of the Audit Committee need to be reviewed or
improved in the proposed transaction or any of its terms to ensure that the best interests of the Company
are properly safeguarded.
Conflicts of interest
Furthermore, the Audit Committee is vested with the task of ensuring that any potential conflicts of interest
between the duties of the directors and their respective private interests or duties unrelated to the Company
are resolved in the best interests of the Company.
Terms of reference
The terms of reference of the Audit Committee, approved by the Board, are modelled on the
recommendations of the Rules.
Audit Committee Meetings
The Audit Committee shall meet a minimum of four times a year, with additional meetings to be called at
the discretion of the chairperson of the Audit Committee. The chairperson will call a meeting of the Audit
Committee if so, requested by any Audit Committee member or by the external auditors of the Company.
The Audit Committee met 11 times during the year 2023 and the number of meetings attended by each
Audit Committee member were as follows:
Name
Capacity
Meetings attended while in office
Mr Carmel J. Farrugia
Audit Committee Chairman
9
Mr Joseph M. Galea
Audit Committee Member
11
Mr Kevin Rapinett
Audit Committee Member
11
The Audit Committee is scheduled to meet at least four times in 2024.
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. Minutes of Board meetings record attendance, discussions, and
resolutions. These minutes are circulated to all directors as soon as practicable after the meeting, for
approval.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
11
Corporate Governance - Statement of Compliance - continued
The Board convenes as and when necessary, and allows proper and equal opportunity to all the directors
to voice and express their views on matters relating to the Company and its business. During the period
under review, the Board met six times and the number of meetings attended by each director were as
follows:
Name
Capacity
Meetings attended while in office
Mr Maurice F. Mizzi
Executive Director
3
Mr Kenneth C. Mizzi
Executive Director
4
Mr Brian R. Mizzi
Executive Director
4
Mr Carmel J. Farrugia
Independent Non-Executive Director
3
Mr Joseph M. Galea
Independent Non-Executive Director
5
Mr Kevin Rapinett
Independent Non-Executive Director
5
Prof. Andrew Muscat
Independent Non-Executive Director
2
The Chairman ensures that all issues relevant to long-term strategic and short-term performance of the
Company are placed on the agenda of Board meetings and, for the purpose of discussion thereon, are
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 the discussion.
Principle Six: Information and Professional Development
The Board believes that this principle has been duly complied with for the period under review but reports
that provisions 6.4 and 6.5 of the Code are not applicable to the Company because a CEO has not been
appointed. In addition, the Company has not appointed senior management. The Company is committed
to provide adequate and detailed induction training to directors who are newly appointed to the Board.
The Company pledged to make available to the directors all training and advice on a requirements basis,
including regular attendance at courses on matters which are important to the execution of the role of
directors. On a regular basis, the Directors also receive periodic information on the Company’s financial
performance and position. The company secretary advises the Board on governance matters. Directors
may, in the course of their duties, seek independent professional advice on any matter at the Company’s
expense. In addition, the Board and its committees are given adequate and suitable resources to duly
discharge their functions in a proper and effective manner.
Principle Seven: Evaluation of the Board’s Performance
The Board does not consider it necessary to appoint a committee to carry out a performance evaluation of
its role, as the Board’s performance is evaluated on an ongoing basis by, and is subject to the constant
scrutiny of the Board itself (half of which is composed by independent non-executive Directors), the
Company’s shareholders, the market and all of the rules and regulations to which the Company is subject
as a company with its securities listed on a regulated market.
The Board is of the opinion that the directors of the Company hold the necessary skills and expertise to
perform their duties and have always carried out their functions in accordance with the required levels of
skill and diligence. 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. The Board has not undertaken a specific review of its own performance for the financial year
under review.
Principle Eight A: Remuneration Committee
The size and structure of the Company and its management are such that, in the opinion of the directors,
the establishment of an ad hoc remuneration committee is not warranted. Remuneration policies have
therefore been retained within the remit of the Board itself.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
12
Corporate Governance - Statement of Compliance – continued
The Board discusses, reviews and approves the remuneration arrangements of the independent non-
executive directors at least on an annual basis taking cognisance of the contribution of the individual director
and effectiveness achieved. Save for the remuneration of the independent non-executive directors, the
Company does not pay any remuneration to any of its directors. The aggregate amount of remuneration
received by the independent non-executive directors for the financial year under review was €45,000 (2022:
€45,000).
The Board takes on the role of periodically assessing the skills, knowledge and experience of individual
directors necessary for the board to have the appropriate level of skill, competence and experience that
would endow the board with the requisite collective knowledge and skill necessary for the proper functioning
of the Company and its oversight by the Board.
Principle Nine: Relations with shareholders and with the market
The Company is highly committed to having an open and communicative relationship with its investors. The
publication of interim and annual financial statements and ongoing company announcements keep
bondholders informed on developments relevant to their investment. Specifically with respect to the latter,
the Board serves the legitimate interests of the Company, and ensures that the Company communicates
with the market effectively and in a timely manner through a number of company announcements that it
publishes, informing the market of significant events relevant to the Company and its business.
The Company 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. The
Company’s website (www.mizziorganisation.com) is also a means through which the market may be
informed about the Company and its business.
During the annual general meeting, the Board communicates directly with shareholders on the performance
of the Company over the last financial year and informs shareholders of the challenges that lie ahead.
Business at the Company’s annual general meeting covers the approval of the Annual Report and Audited
Financial Statements, the declaration of dividends, if any, the election of Directors, the approval of the
reports of the directors and the auditor, the appointment of the auditor and the fixing of the remuneration of
directors and of the auditor.
Currently there is no established mechanism disclosed in the Memorandum and Articles of Association of
the Company to trigger arbitration in the case of conflict between the minority shareholders and the
controlling shareholders. In any such cases should a conflict arise, the matter is dealt with in the Board
meetings and through the open channel of communication between the Company and the minority
shareholders via the office of the company secretary.
Principle Ten: Institutional Shareholders
The directors hereby report that the requirements of this principle do not apply to the circumstances of the
Company.
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 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 of the Company, the Directors are obliged to keep the Board
advised, on an ongoing basis, of any interest that could potentially conflict with that of the Company. The
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
13
Corporate Governance - Statement of Compliance - continued
Board member concerned shall not take part in the assessment by the Board as to whether a conflict of
interest exists. A director shall not vote in respect of any contract, arrangement, transaction, or proposal in
which he has material interest in accordance with the Memorandum and Articles of Association of the
Company. The Board believes that this is a procedure that achieves compliance with both the letter and
rationale of principle eleven. No such conflicts have occurred during the year under review.
Principle Twelve: Corporate Social Responsibility
The directors are committed to high standards of ethical conduct and to contribute to the development of
the local community and society at large. The Company 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
Code Provision
Explanation
7.1
The Board does not consider it necessary to appoint a committee to carry out a
performance evaluation of its role, as the Board’s performance is evaluated on an
ongoing basis by, and is subject to the constant scrutiny of the Board itself (half of
which is composed by independent non-executive directors), the Company’s
shareholders, the market and all of the rules and regulations to which the
Company is subject as a company with its securities listed on a regulated market.
Whilst the requirement under Code provision 7.1 might be useful in the context of
larger companies having a more complex set-up and a larger Board, the size of
the Company’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 shall retain this matter under review over the coming year.
8A
The Board considers that the size and operations of the Company as well as the
Board itself, do not warrant the setting up of a remuneration committee to establish
the remuneration packages of individual directors. Rather, the Board relies on the
constant scrutiny of the Board itself, the Company’s shareholders, the market, and
the rules by which the company is regulated as a listing company Furthermore,
save for the remuneration of the independent non-executive directors, the
Company does not pay any remuneration to any of its directors.
8B
The Board considers that the size and operations of the Company do not warrant
the setting up of a nomination committee as appointments to the Board are
determined by the shareholders of the Company in accordance with the
appointment process set out in the Company’s Memorandum and Articles of
Association. The Company considers that the members of the Board possess the
level of skill, knowledge and experience expected in terms of the Code.
Notwithstanding this, the Board intends to keep under review the matter relating
to the setting up of a nomination committee.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
14
Corporate Governance - Statement of Compliance – continued
5. Internal Control
The Board is ultimately responsible for the Company’s system of internal controls and for reviewing its
effectiveness. Such a system is designed to manage rather than eliminate risk to achieve business
objectives, and can provide only reasonable, and not absolute, assurance against normal business risks or
loss.
Through the Audit Committee, the Board reviews the effectiveness of the Companyʼs system of internal
controls. The key features of the Company’s system of internal control are as follows:
Organisation
The Company operates through the Board with clear reporting lines and delegation of powers.
Control Environment
The Company is committed to the highest standards of business conduct and seeks to maintain these
standards across all its operations. Company policies and procedures are in place for the reporting and
resolution of improper activities.
The Company has an appropriate organisational structure for planning, executing, controlling, and
monitoring business operations in order to achieve its objectives.
6. General Meetings
The general meeting is the highest decision making body of the Company and is regulated by its Articles
of Association. All shareholders registered on the register of members of the Company on a particular
record date are entitled to attend and vote at general meetings. A general meeting is called by fourteen
days’ notice, which notice must specify the place, day and hour of the meeting, and in case of extraordinary
business, the general nature of that business, and shall be accompanied by a statement regarding the
effect and scope of such extraordinary business.
The quorum of shareholders required is not less than fifty-one per cent (51%) of the nominal value of the
share capital in respect of which holders thereof are entitled to attend and vote at the meeting. Voting at
any general meeting takes place by a show of hands or a poll where this is demanded. Subject to any rights
or restrictions for the time being attached to any class or classes of shares, on a show of hands each
shareholder is entitled to one vote and on a poll each shareholder is entitled to one vote for each share
carrying voting rights of which he is a holder. Shareholders who cannot participate in the general meeting
may appoint a proxy by written notification to the Company in accordance with the Articles of Association
of the Company. The instrument of proxy shall be in such form as to allow the shareholder appointing a
proxy to indicate how he / she would like his proxy to vote in relation to each resolution. The instrument
appointing the proxy shall be deemed to confer authority to demand or join in demanding a poll insofar as
the appointed proxy attends the meeting or any adjournment thereof.
The directors’ statement of responsibilities for preparing the financial statements is set out in the Directors’
report.
Approved by the Board on 29 April 2024.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
15
Statement of financial position
As at 31 December
Notes
2023
2022
€
€
ASSETS
Non-current assets
Property, plant and equipment
4
-
4,944
Loans and advances
5
44,100,000
44,100,000
Total non-current assets
44,100,000
44,104,944
Current assets
Loans and advances
5
500,000
500,000
Receivables
6
637,328
387,836
Cash and cash equivalents
7
35,613
150,291
Total current assets
1,172,941
1,038,127
Total assets
45,272,941
45,143,071
EQUITY AND LIABILITIES
Capital and reserves
Share capital
8
302,818
302,818
Retained earnings
61,892
18,687
Total equity
364,710
321,505
Non-current liabilities
Borrowings
9
44,349,897
44,279,484
Current liabilities
Payables
10
558,334
542,082
Total liabilities
44,908,231
44,821,566
Total equity and liabilities
45,272,941
45,143,071
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 29 April
2024. The financial statements were signed on behalf of the Board of Directors by Mr. Brian R. Mizzi
(Director) and Mr. Maurice F. Mizzi (Director) as per the Directors' Declaration on ESEF Annual Financial
Report submitted in conjunction with the Annual Financial Report.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
16
Statement of comprehensive income
Year ended 31 December
Notes
2023
2022
€
€
Finance income
11
1,913,304
1,909,267
Finance costs
12
(1,713,392)
(1,711,053)
Net interest income
199,912
198,214
Administrative expenses
13
(132,777)
(140,880)
Profit before tax
67,135
57,334
Tax expense
14
(23,930)
(19,201)
Profit for the year - total comprehensive income
43,205
38,133
The accompanying notes are an integral part of these financial statements.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
17
Statement of changes in equity
Share
capital
Retained
earnings/
(accumulated
losses)
Total
€
€
€
Balance at 1 January 2022
302,818
(19,446)
283,372
Comprehensive income
Profit for the year - total comprehensive income
-
38,133
38,133
Balance at 31 December 2022
302,818
18,687
321,505
Comprehensive income
Profit for the year - total comprehensive income
-
43,205
43,205
Balance at 31 December 2023
302,818
61,892
364,710
The accompanying notes are an integral part of these financial statements.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
18
Statement of cash flows
Year ended 31 December
2023
2022
Notes
€
€
Cash flows from operating activities
Interest received
1,653,469
1,985,813
Bond interest paid
(1,642,500)
(1,642,500)
Tax (paid)/refunded
(19,201)
1,371
Cash paid to service providers
(106,446)
(189,263)
Net cash (used in)/generated from operating activities
(114,678)
155,421
Cash flows from investing activities
Advances to parent company
5
-
(130,000)
Net cash used in investing activities
-
(130,000)
Cash flows from financing activities
Payments for bond issue costs
-
(273,667)
-
Net cash used in financing activities
-
(273,667)
Net movement in cash and cash equivalents
(114,678)
(248,246)
Cash and cash equivalents at beginning of year
150,291
398,537
Cash and cash equivalents at end of year
7
35,613
150,291
The accompanying notes are an integral part of these financial statements.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
19
Notes to the financial statements
1. Summary of material accounting policies
The material 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
These financial statements have been prepared in accordance with the requirements of International
Financial Reporting Standards (IFRSs) as adopted by the EU and with the requirements of the
Maltese Companies Act (Cap. 386). The financial statements have been prepared under the
historical cost convention.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the
use of certain accounting estimates. It also requires directors to exercise their judgment in the
process of applying the Company’s accounting policies (see Note 3 – Critical accounting estimates
and judgments).
Appropriateness of the going concern assumption in the preparation of the financial statements
The Board of Directors of Mizzi Organisation Finance p.l.c. and its guarantors are comfortable with
the financial position and performance of each company forming part of the Mizzi Organisation. The
refinancing exercises effected in prior years have given the Group a fixed exposure when it comes
to a significant portion of borrowing costs. This has created a hedge which will last for the next five
years, thus overcoming the threats of a rising interest rate scenario, which is currently being
experienced both locally and overseas. Mizzi Organisation has over the years adopted highest levels
of financial discipline which adds a layer of comfort on the Group’s servicing obligations. Over the
years, Mizzi Organisation Limited (the company’s parent) has taken a treasury role within the Group
which helps control and monitor the Group’s overall loan exposure. During the pandemic, the
directors adopted an approach of carrying out only essential capital expenditure and even though
the pandemic is over, the Board kept on exercising these cautious principles. The directors consider
the Organisation and all Mizzi Organisation companies to be a going concern. Hence the going
concern assumption in the preparation of these financial statements is considered appropriate and
there are no material uncertainties which may cast significant doubt about the ability of the
Organisation and its companies to continue operating as a going concern.
Standards, interpretations and amendments to published standards effective in the current financial
year
In 2023, the company adopted new standards, amendments and interpretations to existing standards
that are mandatory for the company’s accounting period beginning on 1 January 2023. The adoption
of these revisions to the requirements of IFRSs as adopted by the EU did not result in substantial
changes to the company’s accounting policies impacting the company’s financial performance and
position.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published
by the date of authorisation for issue of these financial statements but are mandatory for the
company’s accounting periods beginning after 1 January 2023. The company has not early adopted
these revisions to the requirements of IFRSs as adopted by the EU and the company’s directors are
of the opinion that there are no requirements that will have a possible significant impact on the
company’s financial statements in the period of initial application.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
20
1. Summary of material accounting policies - continued
1.2 Functional and presentation currency
Items included in these financial statements are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The financial
statements are presented in euro, which is the company’s functional and presentation currency.
1.3 Property, plant and equipment
All property, plant and equipment is initially recorded at historical cost and is subsequently stated at
historical cost less depreciation and impairment losses. 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. Borrowing costs are
capitalised while acquisition or construction is actively underway. Capitalisation of borrowing costs
is ceased once the asset is substantially complete and is suspended if the development of the asset
is suspended.
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 Organisation 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.
Depreciation is calculated using the straight-line method to allocate the cost of the assets to their
residual values over their estimated useful lives, as follows:
%
Furniture, fittings and office equipment
33⅓
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
Property, plant and equipment is reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. 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. 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). Property, plant and equipment that
suffered an impairment is reviewed for possible reversal of the impairment at the end of each
reporting period.
Gains and losses on disposals of property, plant and equipment are determined by comparing
proceeds with carrying amount and are recognised in profit or loss. When revalued assets are
disposed of, the amounts included in the revaluation reserve relating to the assets are transferred to
retained earnings.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
21
1. Summary of material accounting policies - continued
1.4 Financial assets
Classification
The company classifies its financial assets as financial assets 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. The company classifies its financial assets at amortised cost
only if both the following criteria are met:
- The asset is held within a business model whose objective is to collect the contractual cash flows,
and
- The contractual terms give rise to cash flows that are solely payments of principal and interest.
Assessment of whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on
initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit
risk associated with the principal amount outstanding during a particular period of time and for other
basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the
company considers the contractual terms of the instrument. This includes assessing whether the
financial asset contains a contractual term that could change the timing or amount of contractual
cash flows such that it would not meet this condition.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on the trade date, which is the
date on which the company commits to purchase or sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the financial assets have expired or have been transferred
and the company has transferred substantially all the risks and rewards of ownership.
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset.
Interest income on debt instruments measured at amortised cost is included in finance income using
the effective interest rate method. Any gain or loss arising on derecognition of these instruments is
recognised directly in profit or loss. Impairment losses are presented profit or loss.
Impairment
The company assesses on a forward-looking basis the expected credit losses (ECL) associated with
its debt instruments carried at amortised cost. The impairment methodology applied depends on
whether there has been a significant increase in credit risk. The company’s financial assets are
subject to the expected credit loss model.
Expected credit loss model
The company measures loss allowances at an amount equal to lifetime ECLs, except for the
following, which are measured at 12-month ECLs:
• debt securities that are determined to have low credit risk at the reporting date; and
• other debt securities and bank balances for which credit risk has not increased significantly since
initial recognition.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
22
1. Summary of material accounting policies - continued
1.4 Financial assets - continued
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the company considers reasonable and supportable
information that is relevant and available without undue cost or effort. The company assumes that
the credit risk on a financial asset has increased significantly if it is more than 30 days past due, and
it considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations
to the company in full, without recourse by the company to actions such as realising security (if any
is held); or the financial asset is more than 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a
financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are
possible within the 12 months after the reporting date (or a shorter period if the expected life of the
instrument is less than 12 months). The maximum period considered when estimating ECLs is the
maximum contractual period over which the company is exposed to credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present
value of all cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset.
At each reporting date, the company assesses whether financial assets carried at amortised cost are
credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence
that a financial asset is credit-impaired includes observable data such as significant financial difficulty
of the borrower or issuer, or a breach of contract such as a default or being more than 90 days past
due.
Loss allowances for financial assets measured at amortised cost are deducted from the gross
carrying amount of the assets.
1.4.1 Cash and cash equivalents
Cash and cash equivalents are carried in the statement of the financial position at face value less
expected credit loss allowances. In the statement of cash flows, cash and cash equivalents include
cash in hand and deposits held at call with banks.
1.5 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
1.6 Financial liabilities
The company recognises a financial liability in its statement of financial position when it becomes a
party to the contractual provisions of the instrument. The company’s financial liabilities are classified
as financial liabilities measured at amortised costs i.e. not at fair value through profit or loss under
IFRS 9. Financial liabilities not at fair value through profit or loss are recognised initially at fair value,
being the fair value of consideration received, net of transaction costs that are directly attributable to
the acquisition or the issue of the financial liability. These liabilities are subsequently measured at
amortised cost. The company derecognises a financial liability from its statement of financial position
when the obligation specified in the contract or arrangement is discharged, is cancelled or expires.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
23
1. Summary of material accounting policies - continued
1.6 Financial liabilities - continued
1.6.1 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any difference between the
proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the
period of the borrowings using the effective interest method. Borrowings are classified as current
liabilities unless the company has an unconditional right to defer settlement of the liability for at least
twelve months after the end of the reporting period.
Issue costs incurred in connection with the issue of the bonds include professional fees, listing,
registration, underwriting, management fees, selling costs and other miscellaneous costs.
1.6.2 Payables
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. If not, they are presented as non-current liabilities.
Payables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method.
1.7 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.
1.8 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 the latter case, the tax is also recognised in other comprehensive income or directly in
equity respectively.
Deferred tax is recognised in full, 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, the 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 substantially enacted by the end of the reporting period and are expected to apply
when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised 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.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
24
1. Summary of material accounting policies - continued
1.9 Interest income and expense
Interest income and expense are recognised in profit or loss for all interest-bearing financial
instruments using the effective interest method. The effective interest method is a method of
calculating the amortised cost of a financial asset or a financial liability and of allocating the interest
income or interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the company estimates cash flows considering all contractual terms of the
financial instrument but does not consider future credit losses. The calculation includes all fees and
points paid or received between parties to the contract that are an integral part of the effective interest
rate, transaction costs and all other premiums or discounts. Accordingly, interest expense includes
the effect of amortising any difference between net proceeds and redemption value in respect of the
company’s interest-bearing borrowings.
1.10 Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the company’s
financial statements in the period in which the dividends are approved by the company’s
shareholders.
1.11 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board
of directors that makes strategic decisions. The Board considers the company to constitute one
reportable segment in view of its activities.
2. Financial risk management
2.1 Financial risk factors
The company’s activities potentially expose it to a variety of financial risks: market risk (including fair
value interest rate risk), credit risk and liquidity risk. The company’s overall risk management focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
company’s financial performance. The company did not make use of derivative financial instruments
to hedge certain 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 and specific areas such as investment of excess liquidity.
(a) Market risk
(i) Foreign exchange risk
The company is not exposed to foreign exchange risk because its principal assets and liabilities are
denominated in euro. The company’s interest income, interest expense and other operating
expenses are also denominated in euro. Accordingly, a sensitivity analysis for foreign exchange risk
disclosing how profit or loss and equity would have been affected by changes in foreign exchange
rates that were reasonably possible at the end of the reporting period is not deemed necessary.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
25
2. Financial risk management - continued
(ii) Fair value interest rate risk
In view of the nature of its operations, the company’s transactions mainly consist of earning interest
income on advances effected from the proceeds of the bond issue and of servicing its borrowings.
The company’s significant interest-bearing instruments, comprising advances to the parent company
and bonds issued to the general public, are subject to fixed interest rates. The company has secured
a spread between the return on its investments and its cost of borrowings. Accordingly, the company
is not exposed to cash flow interest rate risk but is potentially exposed to fair value interest rate risk
in view of the fixed interest nature of its instruments, which are however measured at amortised cost.
The company’s operating income and cash flows are substantially independent of changes in market
interest rates and on this basis, the directors consider 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
insignificant.
(b) Credit risk
Credit risk primarily arises from loans receivable from the parent company, other receivables and
cash and cash equivalents.
The maximum credit exposure to credit risk at the end of the reporting period in respect of the
company’s financial assets is equivalent to their carrying amount, which is analysed as follows:
2023
2022
€
€
Financial assets measured at amortised cost:
Loans receivable from parent company (Note 5)
44,600,000
44,600,000
Other receivables (Note 6)
578,352
318,517
Cash and cash equivalents (Note 7)
35,613
150,291
45,213,965
45,068,808
The maximum exposure to credit risk at the end of the reporting period in respect of these financial
assets is equivalent to their carrying amount. The company does not hold any collateral in this
respect.
Cash and cash equivalents
The company’s cash and cash equivalents are held with local financial institutions with high quality
standing or rating and are due to be settled on demand. Management considers the probability of
default to be very low as the financial institutions have a strong capacity to meet their contractual
obligations in the near term. As a result, while cash and cash equivalents are subject to the
impairment requirements of IFRS 9, the identified impairment loss is insignificant.
Loans and related interest receivable from parent company
The company’s receivables mainly include loans and advances to the company’s parent together
with the related interest thereon. The company monitors intra-group credit exposures at individual
entity level on a regular basis and ensures timely performance of these assets in the context of overall
Group liquidity management. The company assesses the credit quality of related parties taking into
account financial position, performance and other factors. The company takes cognisance of the
related party relationship and the directors not expect any significant losses from non-performance
or default.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
26
2. Financial risk management - continued
Loans receivable from parent company are categorised as Stage 1 for IFRS 9 purposes (i.e.
performing) in view of the factors highlighted above. The expected credit loss allowances on such
loans are based on the 12-month probability of default, capturing 12-month expected losses and
hence are considered insignificant.
The company’s other receivables mainly include interest receivable in respect of the advances
referred to previously. Expected credit losses are based on the assumption that repayment of this
interest is demanded at the reporting date. Accordingly, the expected credit loss allowance
attributable to such balances is insignificant.
(c) Liquidity risk
The company is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities, which comprise principally the bonds issued to the general public and other
payables (refer to Notes 9 and 10 respectively). Prudent liquidity risk management includes
maintaining sufficient cash and liquid assets to ensure the availability of an adequate amount of
funding to meet the company’s obligations.
The company’s liquidity risk is managed actively by ensuring that cash inflows arising from expected
maturities of the company’s advances to the parent company effected out of the bond issue proceeds,
together with any related interest receivable, match the cash outflows in respect of the company’s bond
borrowings, covering principal and interest payments, as referred to in Note 9 and reflected in the table
below.
The following table analyses the company’s financial liabilities into relevant maturity groupings based
on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed
in the tables below are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances, as the impact of discounting is not significant.
Within
Between 1
Between 2
Over
1 year
and 2 years
and 5 years
5 years
Total
€
€
€
€
€
31 December 2023
Borrowings
1,642,500
1,642,500
4,927,500
49,927,500
58,140,000
Payables
207,334
-
-
-
207,334
1,849,834
1,642,500
4,927,500
49,927,500
58,347,334
31 December 2022
Borrowings
1,642,500
1,642,500
4,927,500
51,570,000
59,782,500
Payables
191,082
-
-
-
191,082
1,833,582
1,642,500
4,927,500
51,570,000
59,973,582
2.2 Capital risk management
The Mizzi Organisation’s objectives when managing capital at subsidiary level are to safeguard the
respective company’s ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to
reduce the cost of capital. In order to maintain or adjust the capital structure, the company may
issue new shares or adjust the amount of dividends paid to shareholders.
The company’s equity, as disclosed in the statement of financial position, constitutes its capital. The
company maintains its level of capital by reference to its financial obligations and commitments
arising from operational requirements. Taking cognisance of the nature of the company’s assets,
together with collateral held as security, backing the company’s principal borrowings, the capital level
at the end of the reporting period is deemed adequate by the directors.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
27
2. Financial risk management - continued
2.3 Fair values of financial instruments
At 31 December 2023 and 2022, the carrying amounts of cash at bank, current loans receivable, other
receivables, payables and accrued expenses approximated their fair values due to the nature or short-
term maturity of these instruments. The fair values of the non-current interest bearing loans receivable
were not significantly different from their carrying amounts at the end of the reporting period based on
discounted cash flows using market interest rates prevailing at the end of the respective financial period.
The current market interest rates utilised for discounting purposes, which were almost equivalent to the
respective instruments’ contractual interest rates, are deemed observable and accordingly these fair
value estimates have been categorised as Level 2 within the fair value measurement hierarchy required
by IFRS 7, ‘Financial instruments: Disclosures’. Information on the fair value of the company’s bonds
issued to the general public is disclosed in Note 9 to the financial statements. The fair value estimate
in this respect is deemed Level 1 as it constitutes a quoted price in an active market.
3. Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and based on historical experience and other
factors including expectations of future events that are believed to be reasonable under the
circumstances. In the opinion of the directors, the accounting estimates and judgments made in the
course of preparing these financial statements are not difficult, subjective or complex to a degree
which would warrant their description as critical in terms of the requirements of IAS 1.
4. Property, plant and equipment
Furniture,
fittings
and office
equipment
At 1 January 2022
€
Cost
14,830
Accumulated depreciation
(4,943)
Net book amount
9,887
Year ended 31 December 2022
Opening net book amount
9,887
Depreciation charge
(4,943)
Closing net book amount
4,944
At 31 December 2022
Cost
14,830
Accumulated depreciation
(9,886)
Net book amount
4,944
Year ended 31 December 2023
Opening net book amount
4,944
Depreciation charge
(4,944)
Closing net book amount
-
At 31 December 2023
Cost
14,830
Accumulated depreciation
(14,830)
Net book amount
-
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
28
5. Loans and advances
2023
2022
€
€
Non-current
Loans to parent company
44,100,000
44,100,000
Current
Loans to parent company
500,000
500,000
Under the terms and conditions of the 2021 Prospectus, the net proceeds of the bond issue (Note 9)
for an amount of €44,100,000 have been advanced by the company to Mizzi Organisation Limited,
its parent, for the purposes of, and subject to the terms and conditions in, the offering memorandum
dated 24 September 2021. These funds are being utilised by entities forming part of the Mizzi
Organisation (see Note 17) for various projects and financing needs as specified in the Prospectus.
Consolidated Holdings Limited, GSD Marketing Limited, Mizzi Organisation Limited and The General
Soft Drinks Company Limited, the guarantors in respect of the company’s bond issue, have jointly and
severally between themselves and with the respective borrower irrevocably undertaken to repay all
interest and principal amounts that will become due and payable by the borrower to Mizzi Organisation
Finance p.l.c. pursuant to the loans. Whilst Mizzi Organisation Limited is the company’s parent,
Consolidated Holdings Limited, GSD Marketing Limited and The General Soft Drinks Limited are
related parties forming part of the Mizzi Organisation.
As at 31 December 2023, the non-current loans out of the bond issue proceeds amounting to
€44,100,000 (2022: €44,100,000) are subject to interest at a rate of 4.3% per annum (2022: 4.3%)
and repayable by not later than 15 days before the redemption date of the bonds, as referred to in
Note 9.
As at 31 December 2023 other current loans for an amount of €500,000 (2022: €500,000) are
unsecured, repayable on demand and subject to interest at a rate of 3.4% per annum (2022: 3.4%).
6. Receivables
2023
2022
€
€
Current
Interest receivable from parent company
578,352
318,517
Prepayments
58,976
69,319
637,328
387,836
The terms and conditions of interest receivable from parent company are disclosed in Note 5.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
29
7. Cash and cash equivalents
For the purposes of the statement of cash flows, the year-end cash and cash equivalents comprise
the following:
2023
2022
€
€
Cash at bank
35,613
150,291
8. Share capital
2023
2022
€
€
Authorised
5,000 (2022: 5,000) ordinary shares of €232.937339 each
1,164,687
1,164,687
Issued and fully paid
1,300 (2022:1,300) ordinary shares of €232.937339 each
302,818
302,818
The company’s share capital consists of only one class of shares and there are no shareholders
having special control rights in the company, nor are there any restrictions on voting rights in the
company.
9. Borrowings
2023
2022
€
€
Non-current
450,000 3.65% bonds 2028 - 2031 issued in 2021
44,349,897
44,279,484
By virtue of the Prospectus dated 24 September 2021, the company issued for subscription by the
general public 450,000 bonds for an amount of €45,000,000. The bonds have a nominal value of
€100 per bond and have been issued at par. The bonds are subject to a fixed interest rate of 3.65%
per annum payable annually in arrears on 15 October of each year.
The bonds are redeemable at par (€100 for each bond) and at the latest are due for redemption on
20 October 2031, unless they are redeemed earlier in whole or in part at the company’s sole
discretion on any date falling between and including 15 October 2028 and 14 October 2031 (Early
Redemption Dates).
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
30
9. Borrowings - continued
Mizzi Organisation Limited, Consolidated Holdings Limited, The General Soft Drinks Company
Limited and GSD Marketing Limited, the guarantors, are jointly and severally with the company and
between themselves, guaranteeing the repayment of the nominal value of the bonds on the
redemption date and of the interest amounts of the bonds on each interest payment date. The
guarantors irrevocably and unconditionally guarantee the due and punctual performance of all the
obligations undertaken by the company under the bonds.
Under the terms and conditions of the 2021 Prospectus, the bond proceeds have been advanced to
Mizzi Organisation Limited as outlined in Note 5 to the financial statements, pursuant to, and subject
to, the terms and conditions in the offering memorandum.
The bonds have been admitted to the Official List of the Malta Stock Exchange on 25 October 2021.
The quoted market price of the bonds at 31 December 2023 was €94.00 (2022: €94.00), which in the
opinion of the directors fairly represented the fair value of these financial liabilities.
At the end of the reporting period, bonds having a face value of €505,000 (€2022: €505,000) were
held by company directors and persons closely associated with them, whilst bonds with a face value
of €1,000,000 (2022: €1,030,000) were held by directors of the guarantors and persons closely
associated with them. Additionally, bonds with a face value of €30,000 (2022: €80,000) were held by
other officers of companies forming part of the Mizzi Organisation and persons closely associated
with these individuals.
The bonds are measured at the amount of net proceeds adjusted for the amortisation of the
difference between net proceeds and the redemption value of the bonds using the effective interest
method as follows:
2023
2022
€
€
3.65% bonds 2028 – 2031
Original face value of bonds issued
45,000,000
45,000,000
Bond issue costs
Gross amount of bond issue costs
(802,675)
(802,675)
Amortisation of gross amount of bond issue costs:
Accumulated amortisation at beginning of the year
82,159
14,368
Amortisation charge for the current year
70,413
67,791
Accumulated amortisation at end of year
152,572
82,159
Unamortised bond issue costs
(650,103)
(720,516)
Amortised cost and closing carrying amount of the bonds
44,349,897
44,279,484
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
31
10. Payables
2023
2022
€
€
Current
Amounts owed to parent company
10,176
19,201
Amounts owed to fellow subsidiaries
23,930
-
Other payables
159,644
157,442
Accrued interest on bonds
351,000
351,000
Other accruals
13,584
14,439
558,334
542,082
Other payables include an amount of €155,169 (2022: €155,169) representing the face value of the
bonds, and related interest thereon, that have been issued and redeemed by the company in prior
years and have not been claimed by the respective bondholders upon redemption.
The terms and conditions of amounts owed to parent company and fellow subsidiaries are disclosed
in Note 17.
11. Finance income
2023
2022
€
€
Interest income on loans advanced to parent company
1,913,304
1,909,267
12. Finance costs
2023
2022
€
€
Bond interest expense
1,712,913
1,710,291
Bank interest and charges
479
762
1,713,392
1,711,053
13. Administrative expenses
The company’s administrative expenses mainly comprise director’s fees (see Note 15), recharged
salaries from parent company amounting to €17,856 (2022: €17,004) and such other expense items
incurred in relation to listing and related compliance, and the administration of the company’s
activities.
Fees charged by the auditor for services rendered during the financial periods ended 31 December
2023 and 2022 relate to the following:
2023
2022
€
€
Annual statutory audit
10,000
10,000
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
32
13. Administrative expenses – continued
During the current year fees in relation to non-assurance services amounting to €270 (2022:
€270) have been charged by connected undertakings of the company’s auditor, in respect of tax
advisory and compliance services.
14. Tax expense
2023
2022
€
€
Current taxation:
Group relief
23,930
19,201
23,930
19,201
The tax on the company’s profit before tax differs from the theoretical amount that would arise using
the basic tax rate applicable as follows:
2023
2022
€
€
Profit before tax
67,135
57,334
Tax on profit at 35%
23,497
20,067
Tax effect of:
Movement in temporary differences arising on
property, plant and equipment
433
432
Utilisation of unabsorbed capital allowances
brought forward from previous years
-
(1,298)
Tax charge in the accounts
23,930
19,201
At 31 December 2023 and 2022, the company had the following unrecognised temporary differences:
Unrecognised
2023
2022
€
€
Deductible temporary differences arising on
depreciation of property, plant and
equipment
3,708
2,471
The unrecognised deferred tax assets at the end of the reporting periods have not been reflected in
these financial statements due to the uncertainty of the realisation of the tax benefits.
MIZZI ORGANISATION FINANCE p.l.c.
Annual Financial Report and Financial Statements - 31 December 2023
33
15. Directors’ emoluments
2023
2022
€
€
Fees
45,000
45,000
16. Contingencies
The company, together with certain other group undertakings and related parties forming part of Mizzi
Organisation, is jointly and severally liable in respect of guarantees given to secure the banking
facilities of various group undertakings and related parties forming part of Mizzi Organisation up to a
limit of €25,958,000 (2022: €25,958,000) together with interest and charges thereon.
17. Related party transactions
Mizzi Organisation Finance p.l.c. forms part of the Mizzi Organisation. The Mizzi Organisation is not
a legal entity and does not constitute a group of companies within the meaning of the Maltese
Companies Act (Cap. 386). The Organisation is a conglomerate of companies principally comprising
Consolidated Holdings Limited and Mizzi Organisation Limited, together with all their respective
subsidiaries, Mizzi EV Limited, The General Soft Drinks Company Limited and GSD Marketing
Limited. Mizzi Organisation Limited is the company’s immediate and ultimate parent (see Note 18).
The entities constituting the Mizzi Organisation are ultimately fully owned by Daragon Limited,
Demoncada Holdings Limited, Demoncada Limited, Investors One Limited and Maurice Mizzi.
Members of the Mizzi family in turn ultimately own and control the above mentioned companies.
Accordingly, the members of the Mizzi family, the shareholder companies mentioned above, all
entities owned or controlled by the members of the Mizzi family and the shareholder companies, the
associates of entities comprising the Organisation and the Organisation entities’ key management
personnel are the principal related parties of the entities forming part of the Mizzi Organisation. Three
of the company’s directors are members of the Mizzi family.
Transactions with companies forming part of Mizzi Organisation principally include the advances
effected by the company, as disclosed in Note 5 to the financial statements. Interest income earned
from these transactions is disclosed in Note 11 and year-end balances in this respect are disclosed
in Note 6 to the financial statements. Other balances with related parties at the end of the reporting
period are disclosed in Note 10. Such balances are unsecured, interest free and repayable on
demand, unless otherwise stated in these financial statements.
Key management personnel comprises the directors of the company. Key management personnel
compensation, consisting of remuneration to the company’s directors, has been disclosed in Note
15.
18. Statutory information
Mizzi Organisation Finance p.l.c. is a public limited liability company and is incorporated in Malta.
The immediate and ultimate parent company of Mizzi Organisation Finance p.l.c. is Mizzi
Organisation Limited, a company registered in Malta, with its registered address at Mizzi
Organisation Corporate Office, Testaferrata Street, Ta’ Xbiex.
Independent auditor’s report
To the Shareholders of Mizzi Organisation Finance p.l.c.
Report on the audit of the financial statements
Our opinion
In our opinion:
· The financial statements give a true and fair view of the financial position of Mizzi Organisation Finance p.l.c. (the “Company”) as at 31 December 2023, and of the company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and
· The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).
Our opinion is consistent with our additional report to the Audit Committee.
What we have audited
Mizzi Organisation Finance p.l.c.’s financial statements comprise:
· the statement of financial position as at 31 December 2023;
· the statement of comprehensive income for the year then ended;
· the statement of changes in equity for the year then ended;
· the statement of cash flows for the year then ended; and
· the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the company are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the company, in the period from 1 January 2023 to 31 December 2023, are disclosed in note 13 to the financial statements.
Our audit approach
Overview
|
Materiality |
· Overall materiality: €450,000, which represents 1% of total assets. |
|
Key audit matters |
· Recoverability of loans issued to parent company |
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the company, the accounting processes and controls, and the industry in which the company operates.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
|
Overall materiality |
€450,000 |
|
How we determined it |
1% of total assets |
|
Rationale for the materiality benchmark applied |
We chose total assets as the benchmark because, in our view, it is an appropriate measure for this entity. We chose 1%, which is within the range of quantitative materiality thresholds that we consider acceptable. |
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €45,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
|
Key audit matter |
How our audit addressed the Key audit matter |
|
Recoverability of loans issued to parent company (Notes 2.1b and 5)
Loans receivable represent funds advanced to Mizzi Organisation Limited (the company’s parent). Loan balances with the parent company as at 31 December 2023 amounted to €44,600,000.
As explained in accounting policy Note 1.4, the recoverability of the loans is assessed at the end of each financial year.
The loans are the principal asset of the company, which is why we have given additional attention to this area.
|
We have agreed the terms of the loans issued to the parent to supporting loan agreements.
We have assessed the financial soundness of the parent company by making reference to the latest audited financial statements, management accounts, forecasts and other prospective information made available to us.
Mizzi Organisation Limited, Consolidated Holdings Limited, GSD Marketing Limited and The General Soft Drinks Company Limited are guarantors to the bonds issued to the general publid. In this respect, we have also assessed the projected financial performance and cash flows of the guarantors.
Based on evidence and explanations obtained, we concur with management’s view with respect to the recoverability of these loans. |
Other information
The directors are responsible for the other information. The other information comprises the Directors’ report and the Corporate Governance – Statement of Compliance (but does not include the financial statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors and those charged with governance for the financial statements
The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the company’s financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obt ain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.
· Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
· Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (“the ESEF Directive 6”) on the Annual Financial Report of Mizzi Organisation Finance p.l.c. for the year ended 31 December 2023, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the financial statements, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the financial statements, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
· Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report in XHTML format.
· Examining whether the Annual Financial Report has been prepared in XHTML format.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2023 has been prepared in XHTML format in all material respects.
Other reporting requirements
The Annual Financial Report and Financial Statements 2023 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.
The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.
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Area of the Annual Financial Report and Financial Statements 2023 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
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Directors’ report The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. |
We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.
In addition, we are required to state whether, in the light of the knowledge and understanding of the company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements. |
In our opinion: · the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and · the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
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Corporate Governance - Statement of Compliance The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the company has complied with the provisions of the Code, presenting the extent to which the company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.
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We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.
We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the company’s corporate governance procedures or its risk and control procedures. |
In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
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Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion: · adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us. · the financial statements are not in agreement with the accounting records and returns. · we have not received all the information and explanations which, to the best of our knowledge and belief, we require for our audit.
We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. |
We have nothing to report to you in respect of these responsibilities. |
Our report, including the opinions, has been prepared for and only for the company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the company for the financial year ended 31 December 2002. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 22 years. The company became listed on a regulated market on 25 October 2021.
Stephen Mamo
Principal
For and on behalf of
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
29 April 2024
