Company Registration Number: C 35139
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements
31 December 2021
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
Pages
Directors’ report
1-6
Corporate Governance – Statement of compliance
7 - 16
RemNom Committee Report
17 - 21
Statement of financial position
22
Income statement
23
Statement of comprehensive income
23
Statement of changes in equity
24
Statement of cash flows
25
Notes to the financial statements
26 - 55
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
1
Directors’ report
The Directors present their report and the audited financial statements for the year ended 31
December 2021.
Principal activities
The Company’s principal activity is the ownership and management of 'The Point Shopping Mall' (the
Mall) and its car park.
Review of the business
Similar to the previous year, 2021 was also characterised by disruptions that the Covid-19 pandemic
brought to the market. In retail specifically, retailers not only needed to cope with weaker demand, but
they also had to operate under the severe constraints brought about by the challenging logistical
issues that the pandemic brought about all along their supply chain. Franchisors were very often,
unable to meet in full the orders put in by local retailers and this situation only started to improve
towards the second half of the year.
Retailers have had to work for substantial periods with
insufficient, if not inadequate stocks. Managing human resources was another challenge faced by the
industry during the period under review. At times, retailers had so many employees who were unwell
or caught up in quarantine at the same time, that their trading capabilities were severely compromised.
A further impact on retail business during the period under review was brought about by the
mandatory closure of non-essential retail by the National Health Authorities between the 11 March and
25 April 2021.
During this period, only the food store and the pharmacy continued to trade.
On the
upside, business results were highly encouraging, even in instances exceeding pre-COVID levels.
Indeed, when retail trade recommenced towards the end of April, business picked up almost
immediately and turnover registered by tenants during this period very often exceeded that of 2019.
Our marketing strategy had to be adapted to these new realities and the seeking of alternatives to the
traditional organisation of on-site promotions and events which could not be held during 2021.
Our
focus was directed on reaching out to customers through the media, both the traditional platforms and
increasingly via the social media. This shift in strategy worked well and footfall recovered significantly
during 2021, as did tenant sales. All in all, despite the prevailing adversity, the Mall traded at a robust
level of activity and the shops performed well.
During this second year of the pandemic, further initiatives were taken to support our tenants.
The
Board has always considered the agreements with the tenants as underpinned by long-term
relationships and, in this spirit, the Company reached out to its tenants with continued support and
easing of terms. That said, given the increased economic activities in the Mall, the Company managed
to scale down the extent of support when compared to 2020 and consequently, the Company’s
revenues in 2021 increased by 23% to
€
6,695,355 (2020:
€
5,443,722).
As announced on 3 June 2021, the tenancy of a major store was terminated and concurrently
concluded an agreement with a new tenant in their stead, practically ensuring full occupancy
throughout the entire year under review. We look forward to the launch of this store in 2022.
The Company’s senior management team has compiled financial projections for the year ending 31
December 2022.
These comprise historical financial information up to the date of authorisation for
issue of these financial statements and forecast financial information for the rest of 2022. These cash
flow projections show that the Company is expected to continue having sufficient liquidity and financial
resources to meet its obligations and expected cash outflows.
Based on the outcome of the cash flow projections as referred to above, the Directors and senior
management consider the going concern assumption in the preparation of the Company’s financial
statements as appropriate as at the date of authorisation for issue of the 2021 financial statements.
They also believe that no material uncertainty that may cast significant doubt about the Company’s
ability to continue as a going concern exists as at that date.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
2
Directors’ report
– continued
Review of the business
- continued
As at 31 December 2021, the Company’s current liabilities exceeded its current assets by
€
0.5 million
(2020:
€
1.5 million). The Company has managed to address this position during the course of the year
through a programme of active liquidity management.
Vision
The Company’s vision is to be the best shopping mall destination in Malta offering an optimal
customers’ experience to the visitors and sustainable returns to its shareholders. It therefore continues
to embrace a business strategy based on providing a compelling retail destination, developing and
maintaining strong relationships with tenants, housing an iconic mix of brands, delivering long-term,
sustainable growth in net rental income and generating returns for shareholders.
Trading performance
During 2021, the Company’s revenues amounted to
€
6.7 million, an increase of 23% over the previous
year and operating profits increased to
€
4.2 million (2020:
€
2.9 million). Earnings before interest, tax
and depreciation increased to
€
6.1 million (2020:
€
4.8 million). Finance costs decreased to
€
0.6million
(2020:
€
0.7million); of which
€
0.1 million relates to the interest charged to profit or loss on the lease
liability, which represents the present value of the remaining lease payments over the emphyteutical
term, in line with the terms of IFRS 16. In line with previous years, the Company opted to be taxed at
a final withholding tax rate of 15% on its rental income. It consequently incurred an effective tax
expense of
€
1 million (2020:
€
0.8million), ending the year with profits after tax of
€
2.8 million.
During the year under review the Company generated
€
5.2 million by way of cash flow from operating
activities. This was mainly directed towards the repayment of bank borrowings, payment of an interim
dividend, ongoing capital expenditure and the servicing of working capital requirements.
The Financial Risk Management note in the Financial Statements (Note 2) explains the process of
how the Board identifies and manages its financial risks. The main categories of risk described in this
Note are market risk, credit risk and liquidity risk. The same note includes extensive detail of the
processes undertaken by the Company to manage these risks.
The Statement of Compliance with the Principle of Good Corporate Governance and RemNom
Committee Report in this Annual Financial Report, describes other non-financial key performance
indicators relevant to the Company, including information relating to employee matters.
Results and dividends
The financial results are set out on page 23. During the year a distribution of
€
378,929 was made to
the shareholders (2020: Nil). Subsequent to the end of the reporting period, the Directors recommend
the payment of a final net dividend of
€
750,000 in relation to the 2021 financial results.
Directors
The Directors of the Company who held office during the financial year ended 31 December 2021
were:
Joseph Zammit Tabona (Chairman)
David Demarco
Marzena Formosa
Caroline Buhagiar Klass
Joseph M. Zrinzo – (resigned on 15
th
June 2021)
Albert Frendo – (appointed on 15
th
June 2021)
In accordance with the Company’s articles of association, the directors retire from office at the Annual
General Meeting and are eligible for re-election or re-appointment.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
3
Directors’ report
- continued
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
relevant to the preparation and the fair presentation of the 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 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.
The
financial statements of Tigné Mall p.l.c. for the year ended 31 December 2021 are included in the
Annual Financial Report 2021, which is available for viewing or download on the Company’s website.
Access to information published on the Company’s website is available in other countries and
jurisdictions, where legislation governing the preparation and dissemination of financial statements
may differ from requirements or practice in Malta.
The Directors 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 2021, 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 European
Union on the basis explained in note 1 to the financial statements; and
the Annual Financial Report includes a fair review of the development of the business and the
position of the Company, together with a description of the principal risks and uncertainties
that the Company face.
Information pursuant to Capital Markets Rule 5.64
Structure of Capital
The Company has an authorised share capital of 60,000,000 ordinary shares of
€
0.50 each and
issued and fully paid-up share capital of 56,400,000 ordinary shares with a nominal value of
€
0.50
each. The Ordinary Shares rank
pari passu
amongst each other for all purposes. Each Ordinary Share
is entitled to one vote. There are currently no different classes of Ordinary Shares in the Company and
accordingly all Ordinary Shares have the same rights, voting rights and entitlements in connection with
any distribution whether of dividends or capital (on a winding up or otherwise). All the shares are freely
transferable and have been admitted to trading on the Malta Stock Exchange.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
4
Directors’ report
- continued
Information pursuant to Capital Markets Rule 5.64
- continued
Appointment and removal of Directors
Article 95 of the Company’s Memorandum and Articles of Association states that at each Annual
General Meeting of the Company all the Directors shall retire from office. A Director retiring from office
shall retain office until the dissolution of such Meeting and a retiring Director shall be eligible for re-
election
or
re-appointment. The
Directors
shall be elected
as
provided
in Article
99
of
the
Memorandum and Articles of Association that is a maximum of 5 Directors shall be elected at each
Annual General Meeting (or at an Extraordinary General Meeting convened for the purpose of electing
Directors). Voting shall take place on the basis that every Member shall have 1 vote in respect of each
ordinary share held by him. A Member may use all his votes in favour of one candidate or may split his
votes in any manner he chooses amongst any two or more candidates. The Chairman of the Meeting
shall declare elected those candidates who obtain the greater number of votes on that basis. The
Company’s Articles of Association contain a provision whereby the Directors are entitled to appoint
additional directors to the Board where this would be to the benefit of the Company in view of their
commercial knowledge and experience.
Powers of Directors
The Directors are empowered to act on behalf of the Company and in this respect have the authority
to enter into contracts, sue and be sued in representation of the Company. In terms of the
Memorandum and Articles of Association they may transact all business of whatever nature not
expressly reserved by the Memorandum and Articles of Association to the shareholders in general
meeting or by any provision contained in any law for the time being in force.
General Meetings
The Company shall in each year hold a General Meeting as its Annual General Meeting in addition to
any other meetings in that year and not more than 15 months shall elapse between the date of one
Annual General Meeting of the Company and that of the next. All general meetings other than Annual
General Meetings shall be called Extraordinary General Meetings. The Directors may, whenever they
think fit, convene an Extraordinary General Meeting and Extraordinary General Meetings shall also be
convened on such requisition, or, in default, may be convened by such requisitionists as provided by
the Companies Act. Any two Members of the Company may convene an Extraordinary General
Meeting in the same manner as nearly as possible as that in which meetings may be convened by the
Directors.
A General Meeting of the Company shall be called by not less than 21 days’ notice in writing. The
notice shall be exclusive of the day on which it is served or deemed to be served and of the day for
which it is given and shall specify the place, the day and the hour of meeting, the proposed agenda for
the Meeting and in case of special business, the general nature of the business to be considered as
well as other information. A notice calling an Annual General Meeting shall specify the meeting as
such and a notice convening a meeting to pass an Extraordinary Resolution as the case may be, shall
specify the intention to propose the resolution as such and the principal purpose thereof. A notice of
General Meeting called to consider extraordinary business shall be accompanied by a statement
regarding the effect and scope of any proposed resolution in respect of such extraordinary business.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
5
Directors’ report
- continued
Information pursuant to Capital Markets Rule 5.64
- continued
Any Member or Members holding not less than 5% in nominal value of all the shares entitled to vote at
the meeting may:
(a) request the Company to include items on the agenda of the General Meeting, provided that
each item is accompanied by a justification or a draft resolution to be adopted at the Annual
General Meeting; and
(b) table draft resolutions for items included in the agenda of a General Meeting. The request to put
items on the agenda of the General Meeting or the tabling of draft resolutions to be adopted at the
General Meeting shall be submitted to the Company (in hard copy or in electronic form to an email
address provided by the Company for the purpose) at least 46 days before the date set for the
General Meeting to which it relates and shall be authenticated by the person or persons making it.
An “Ordinary Resolution” means a resolution taken at a General Meeting of the Company passed by a
Member or Members having the right to attend and vote at such meeting holding in the aggregate
more than 50% in nominal value of the shares represented and entitled to vote at the meeting. An
“Extraordinary Resolution” means a resolution taken at a General Meeting of the Company of which
notice specifying the intention to propose the text of the resolution as an extraordinary resolution and
the principal purpose thereof has been duly given and passed by a number of Members having the
right to attend and vote at such meeting holding in the aggregate not less than 75% in nominal value
of the shares represented and entitled to vote at the meeting and at least 51% in nominal value of all
the shares entitled to vote at the meeting.
Directors’ interests in the Company’s share capital
The Company’s Directors do not have any direct or indirect interests in the share capital of the
Company.
Registered Shareholders with 5% or more of the Company’s share capital
As at 31 December 2021
As at 14 April 2022
Ordinary
Shares
%
Holding
Ordinary
Shares
%
Holding
Mapfre MSV Life p.l.c.
20,000,000
35.46%
20,000,000
35.46%
Bank of Valletta p.l.c.
9,426,767
16.71%
9,426,767
16.71%
HSBC Bank Malta p.l.c. as
Custodian for HSBC Life
Assurance (Malta) Ltd.
7,227,000
12.81%
7,227,000
12.81%
Other matters
The Company has nothing to report in relation to the requirements of Capital Markets Rules 5.64.4,
5.64.5, 5.64.6, 5.64.7 and 5.64.10 since they do not apply to the Company. Information relating to the
requirements of Capital Markets Rule 5.64.11 is reflected in the RemNom Committee Report on page
17.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
6
Directors’ report
- continued
Information pursuant to Capital Markets Rule 5.70.1
In terms of Capital Markets Rule 5.70.1, the Company did not enter into any new material contracts.
Information pursuant to Capital Markets Rule 6.39
Remuneration Report
The Remuneration and Nominations Committee of the Board of Directors of the Company will be
submitting to the Shareholders at the next Annual General Meeting the Remuneration Report for the
financial year ending 31 December 2021 (the ‘Reporting Period’). The Report is drawn up in accordance
with, and in fulfilment of the provisions of Chapter 12 of the Capital Markets Rules issued by the Malta
Financial Services Authority (‘Capital Markets Rules’) relating to the Remuneration Report and Section 8A
of the Code of Principles of Good Corporate Governance (Appendix 5.1 of the Capital Markets Rules)
regarding the Remuneration Statement.
The Report provides a comprehensive overview of the nature and quantum of remuneration paid to the
individual Directors and the Chief Executive Officer during the reporting period and details how this
complies with the Company’s Remuneration Policy. The Report is intended to provide increased corporate
transparency, increased accountability and a better shareholder oversight over the remuneration paid to
Directors and the Chief Executive Officer. The contents of this Remuneration Report have been reviewed
by the Company’s Auditors to ensure that the information required in terms of Appendix 12.1 of the Capital
Markets Rules has been included.
Going Concern
The Directors, as required by Capital Markets Rule 5.62 have considered the Company’s operational
performance, the statement of financial position as at year-end as well as the business plans for the
coming year, and they have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. For this reason, in preparing the financial
statements, they continue to adopt the going concern basis in preparing the financial statements.
Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their
re-appointment will be proposed at the Annual General Meeting.
Signed on behalf of the Board of Directors on 14 April 2022 by Joseph Zammit Tabona (Chairman)
and David Demarco (Director) as per the Directors' Declaration on ESEF Annual Financial Report
submitted in conjunction with the Annual Financial Report.
Registered office:
The Point Shopping Mall
Management Suite
Tigné Point
Sliema TP01
Malta
14 April 2022
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
7
Corporate Governance – Statement of Compliance
A.
INTRODUCTION
Tigné Mall p.l.c. (the “Company”) is required to include a statement of compliance with the Code of
Principles of Good Corporate Governance (the “Code”) contained in Appendix 5.1 of the Capital
Markets Rules issued by the Malta Financial Services Authority. This statement is made in terms of
Capital Markets Rules 5.94 and 5.97.
The Board of Directors (“the Board”) believes that the adoption of these principles is in the best
interest of the Company, its shareholders and other stakeholders, since compliance with the Code is
expected by investors on the Malta Stock Exchange and further evidences the Directors' and the
Company's commitment to a high standard of corporate governance.
Good corporate governance is the responsibility of the Board, and in this regard, the Board has carried
out a review of the Company’s compliance with the Code. It has taken measures for the Company to
comply with the requirements of the Code to the extent that this is considered appropriate and
complementary to the size, nature and operations of the Company. Notwithstanding the fact that the
Principles of Good Corporate Governance are not mandatory, the Board has endorsed them and
ensured their adoption, save as indicated within the section entitled Non-Compliance with Code where
the Board indicates and explains the instances where it has departed from or where it has not applied
the Code.
B.
COMPLIANCE WITH THE CODE
Principle 1: The Board
The Directors believe that for the period under review the Company has complied with the
requirements of this principle.
The overall management and policy setting of the Company is vested in the Board consisting of a
Chairman and four (4) Directors. The Board has provided the necessary leadership in the overall
direction of the Company and at the same time has adopted systems whereby it obtains timely
information from the Chief Executive Officer (the “CEO”) to ensure an open dialogue between the CEO
and Directors on an ongoing basis and not only at meetings of the Board.
All the Directors, individually and collectively, are of the appropriate calibre and have the necessary
skills and experience to contribute effectively to the decision-making process. The Board delegates
specific responsibilities to three committees, namely the Supervisory Committee, the Audit Committee
and the RemNom Committee, each of which operates under formal terms of reference approved by
the Board.
Principle 2: Chairman and Chief Executive
In line with the requirements of Principle 2, the Company has segregated the functions of the
Chairman and the CEO. The Chairman is responsible to lead the Board and to set its agenda,
ensuring that the Board’s discussions on any issue put before it go into adequate depth, encouraging
the involvement of all Directors, and ensuring that all the Board’s decisions are supported by precise,
timely and objective information. The Chairman, together with the Supervisory Committee, ensures
that the CEO implements the strategy that is agreed to by the Board.
These positions have been defined with specific roles rendering them completely separate from one
another and are occupied by Mr. Joseph Zammit Tabona and Mr. Edwin Borg respectively.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
8
Corporate Governance – Statement of Compliance -
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 2: Chairman and Chief Executive
- continued
The Board has delegated specific authority to the CEO to manage activities within the Company which
include, amongst others:
Implementation of policies as set by the Board;
Working towards objectives established by the Board;
Putting into effect plans to organise, direct and manage the human resources available to
attain
the
highest
possible
profitability
and
results
in
the
interest
of
the
Company’s
shareholders and all other stakeholders.
The role of the CEO is to plan, co-ordinate and control the daily operations of the Company through
the leadership and direction of the Company’s human resources. The CEO reports regularly to the
Supervisory Committee and the Board on the performance and affairs of the Company.
Together with the Chairman of the Board, the CEO represents the Company with third parties.
Principle 3: Composition of the Board
The size of the Board, whilst not being large as to be unwieldy, is appropriate for the requirements of
the Company’s business and conducive to good corporate governance. The combined and varied
knowledge, experience and skills of the Board members provides a robust framework for efficient
decision-making, supports the effective control and management of the Company’s affairs and
contributes to the functioning of the Board and its direction to the Company. The Board is composed
entirely of non-executive Directors, comprising independent non-executives, each of whom is able to
add value and to bring independent judgement to bear on the decision-making process.
The CEO attends all Board meetings, albeit without a vote, providing direct input into the Board’s
deliberations and gaining in-depth understanding of the Board’s policy and strategy in the process.
The following Directors served on the Board during the period under review:
Non-Executive Chairman
Mr. Joseph Zammit Tabona
Non-Executive Directors
David Demarco
Marzena Formosa
Caroline Buhagiar Klass
Joseph M. Zrinzo – (resigned on 15
th
June 2021)
Albert Frendo – (appointed on 15
th
June 2021)
Pursuant to generally accepted practice, as well as the Company’s Articles of Association, the
appointment of Directors to the Board is reserved to the Company’s shareholders, except in so far as
an appointment is made to fill a vacancy on the Board, or the Board is of the opinion that it would be of
benefit to the Company if additional Directors are appointed in view of their commercial knowledge
and experience. Unless appointed for a shorter period, a Director shall hold office from the end of one
Annual General Meeting to the end of the next and a retiring Director shall be eligible for re-election or
re-appointment.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
9
Corporate Governance – Statement of Compliance -
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 3: Composition of the Board
- continued
Every shareholder owning twenty per cent (20%) of the ordinary share capital is entitled to appoint one
director for each twenty per cent (20%) shareholding. Furthermore, any excess fractional shareholding
not so utilised may participate in the voting for the election of other directors. Shareholders who own
less than twenty per cent (20%) of the ordinary share capital participate in the election of the Directors
on the basis that each shareholder shall have one vote in respect of each ordinary share held. The
Chairman is elected by a simple majority from amongst the Directors of the Company.
Principle 4: The Responsibilities of the Board
In fulfilling its mandate within the terms of the Company’s Memorandum and Articles of Association,
the Board of Directors assumes responsibility to:
a) establish corporate governance standards;
b) review, evaluate and approve the business plan and targets submitted by management and
work with management towards their successful implementation;
c)
identify the principal business risks for the Company and oversee the implementation and
monitoring of appropriate risk management systems;
d) ensure that effective internal control systems are in place and review their effectiveness;
e) review, evaluate and approve the overall corporate organisation structure, the assignment of
management responsibilities, the performance of senior management and plans for senior
management development including succession planning;
f)
review, evaluate and approve compensation strategy for senior management;
g) review periodically the Company’s objectives and policies relating to social, health and safety
and environmental responsibilities; and
h) ensure that the Company has in place a policy that enables it to communicate effectively with
shareholders, stakeholders and the public in general.
The Board supervises compliance with the Capital Markets Rules, including those pertaining to the
preparation and publication of the Annual Financial Report and Financial Statements. It approves the
Financial Statements for submission to the General Meeting of the shareholders and accordingly
retains direct responsibility for approving and monitoring:
(i)
the Business Plan for the Company;
(ii)
the Annual Financial Plans including capital budgets;
(iii)
the Annual Financial Statements;
(iv)
proposals to increase the issued capital and to materially increase or decrease the
Company’s funding; and
(v)
other resolutions which the Board may determine to be subjected to its approval from time
to time.
Any meeting that a Director wishes to initiate may be arranged through the Company Secretary. A
Director of the Company has access to the advice from internal and external sources which are
deemed necessary for carrying out the respective roles and responsibilities and the Company will bear
the related expenses.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
10
Corporate Governance – Statement of Compliance -
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 5: Board Meetings
The Board of Directors meets at least every quarter and on any other occasion as may be necessary.
Further to attending formal Board meetings, individual Directors participate in other
ad hoc
meetings
during the year as may be required. They are also active in Board sub-committees, either to assure
good corporate governance or to contribute to the Company’s decision-making process. Board
meetings are presided over by the Chairman and all Directors are allowed equal opportunity to voice
and express their views on matters relating to the Company and its business.
Nine meetings of the Board of Directors were held during 2021 and attendance was as follows:
Board member
Attended
Joseph Zammit Tabona
8 (out of 9)
David Demarco
9 (out of 9)
Marzena Formosa
9 (out of 9)
Caroline Buhagiar Klass
7 (out of 9)
Joseph M. Zrinzo – (resigned on 15
th
June 2021)
4 (out of 4)
Albert Frendo – (appointed on 15
th
June 2021)
5 (out of 5)
Principle 6: Information and Professional Development
The CEO is appointed by the Board and enjoys its full support and confidence. The recruitment and
selection of senior management is the responsibility of the CEO in consultation with the Board.
Likewise, the CEO consults with the Board on matters relating to succession planning for senior
management within the Company. The Board considers and discusses succession planning measures
at all senior management levels taking into account the size and depth of the management team of the
Company, with reliance on a limited number of officers.
Newly appointed Directors are provided with briefings by the CEO, the Company Secretary and also
by other members of management in respect to the operations of the Company. A comprehensive
information pack is handed over to a new Director following his appointment and this usually
incorporates the Memorandum and Articles of the Company, relevant legislation as well as rules and
regulations. The Directors have access to the advice and services of the Company Secretary who is
responsible for ensuring that Board procedures are adhered to. Additionally, Directors may seek
independent professional advice on any matter at the Company’s expense.
The Company ensures the personal development of Directors, management and employees by
recommending attendance to seminars, conferences as well as training programmes that are
designed to help improve the potential of its staff members whilst furthering the Company’s
competitiveness.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
11
Corporate Governance – Statement of Compliance
-
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 8: Committees
The Board has appointed the following Committees:
Audit Committee
For the year under review, the Audit Committee was composed of three non-executive Directors and
had the following members:
David Demarco (Chairman of the Committee)
Caroline Buhagiar Klass
Joseph M. Zrinzo – (resigned on 15
th
June 2021)
Albert Frendo – (appointed on 15
th
June 2021)
In terms of Capital Markets Rule 5.118, Mr David Demarco is the Director whom the Board considers
as competent in accounting and auditing. Mr David Demarco is an independent non-executive Director
and is considered independent because he is free from any significant business, family or other
relationship with the Company or its management that may create a conflict of interest such as to
impair his judgement. Mr Demarco is also competent in accounting in terms of the Capital Markets
Rules having previously occupied and currently occupying senior positions with banking and other
financial institutions.
For the purpose of Code Provision 3.2, the Board considers each of the other non-executive Directors
as independent within the meaning of the Code, notwithstanding their positions of senior executive
officers within other entities that are shareholders of the Company.
The Audit Committee is a committee appointed by the Board and is directly responsible and
accountable to the Board. The Audit Committee’s primary purpose is to:
(a) protect the interests of the Company’s shareholders; and
(b) assist the Directors in conducting their role effectively so that the Company’s decision-making
capability and the accuracy of its reporting and financial results are maintained at a high level at
all times.
The Board has set formal terms of reference for the Audit Committee that establish its composition,
role and function. The Board may change these terms of reference from time to time.
The main role and responsibilities of the Audit Committee are:
(a) to inform the Board of Directors of the outcome of the statutory audit and to explain how the
statutory audit contributed to the integrity of the Financial Statements and what the role of the
audit committee was in this process;
(b) to monitor the financial reporting process and to submit recommendations of proposals to ensure
its integrity;
(c) to establish internal procedures and to monitor these on a regular basis;
(d) to monitor the effectiveness of the Company’s internal quality control and risk management
systems and, where applicable, its internal audit regarding the financial reporting without
breaching its independence;
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
12
Corporate Governance – Statement of Compliance -
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 8: Committees
- continued
(e) to monitor the audit of the annual and consolidated financial statements, in particular, its
performance, taking into account any findings and conclusions by the competent authority
pursuant to Article 26 (6) of the Statutory Audit Regulation;
(f)
to review the additional report prepared by the statutory auditors or audit firm submitted to the
Audit Committee in terms of Article 11 of the Statutory Audit Regulation. The Audit Committee
may disclose the additional report to third parties in order to execute its functions in line with the
terms of reference;
(g) to review and monitor the independence of the statutory auditors or audit firms in accordance with
Articles 22, 22a, 22b, 24a and 24b of the Directive 2006/43/EC on statutory audits of annual
accounts and consolidated accounts, amending Council Directive 78/660/EEC and 83/349/EEC
and repealing Council Directive 84/253/EEC and Article 6 of the Statutory Audit Regulation and in
particular the appropriateness of the provision of non-audit services to the audited entity in
accordance with Article 5 of the Statutory Audit regulation;
(h) the responsibility for the procedure for the selection of statutory auditors or audit firms;
(i)
to recommend the statutory auditors or the audit firm to be appointed in accordance with Article 16
of the Statutory Audit Regulation;
(j)
to review the Company’s internal financial control system and, unless addressed by a separate
risk committee or the Board itself, risk management systems; and
(k) reviewing the organisation of the internal audit function of the Company, including its plans,
activities, staffing and organisational structure.
The role of the Audit Committee with respect to related party transactions.
The Audit Committee shall be responsible for vetting and approving related party transactions.
The Audit Committee shall ensure that any such transactions are entered into at arm’s length and on a
normal commercial basis and shall give due consideration to:
-
the materiality of the transaction;
-
whether the transaction is in the ordinary course of the Company’s business;
-
whether the transaction gives rise to preferential treatment to the Related Party.
Should the Audit Committee deem that the related party transaction will have a material effect on the
Company’s business, the Company shall make a Company announcement which shall contain:
-
the nature and details of the transaction;
-
the name of the Related Party concerned; and
-
details of the nature and extent of the interest of the Related Party in the transaction.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
13
Corporate Governance – Statement of Compliance -
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 8: Committees
- continued
Where the proposed related party transaction is not approved by the Audit Committee but the
Company still wants to proceed with the transaction, the Company shall:
-
make a Company Announcement with the details set out above;
-
send a circular to its shareholders; and
-
obtain the approval of its shareholders either prior to the transaction being entered into and
where applicable ensure that the Related Party itself abstains from voting on the relevant
resolution.
During the general meeting convened for this purpose, the Board of directors of
the Company shall disclose the fact that the audit committee did not approve the related party
transaction.
The Audit Committee met four times. The CEO, the Financial Controller and the External Auditors
were invited to attend relevant parts of such meetings. Attendance at the meetings was as follows:
Board member
Attended
David Demarco
4 (out of 4)
Caroline Buhagiar Klass
3 (out of 4)
Joseph M. Zrinzo – (resigned on 15
th
June 2021)
1 (out of 1)
Albert Frendo – (appointed on 15
th
June 2021)
3 (out of 3)
Supervisory Committee
The Board delegates specified authority and accountability for the Company to the Supervisory
Committee, which is composed of Ms. Marzena Formosa (Chairperson of the Committee), Mr. David
Demarco and Mr. Edwin Borg. The Supervisory Committee supervises the management of the
Company, to ensure the attainment of its strategy and objectives.
The Supervisory Committee typically meets every month and the terms of reference of the Committee
envisage the execution of policy matters delegated by the Board to ensure the attainment of the
Company’s objectives.
RemNom Committee
A separate “RemNom Committee Report” features elsewhere in the Annual Financial Report in
compliance with the relevant Code provisions of the Principles of Good Corporate Governance.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
14
Corporate Governance – Statement of Compliance
-
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 9 & 10: Relations with Shareholders and with the Market, and Institutional Investors
The Company recognises the importance of maintaining a dialogue with its shareholders and of
keeping the market informed to ensure that its strategies and performance are well understood. In the
Board’s view, the Company communicates effectively with shareholders by issuing two bi-annual
Shareholders’ newsletters, publishing its results on a six-monthly basis during the year, by way of half
yearly and annual financial reports and financial statements, through Interim Directors’ Statements,
through periodical Company Announcements and through press releases in the local media to the
market
in
general.
The
financial
results
are
available
on
the
Company’s
website
www.thepointmalta.com, in the Investors Relations Section. Within seven months of the end of the
financial year, the annual general meeting of the Shareholders is convened to consider the annual
financial statements, the Directors’ and Auditors’ reports for the year, to decide on any dividends
recommended by the Board, to elect Directors, appoint
auditors and to set their respective
remuneration. A presentation is given by the CEO of the Company showing how the Company
operated in the light of prevailing economic and market conditions, and an assessment on future
prospects is given. More information on Annual General Meetings is disclosed in the Directors’ Report.
The Chairman arranges for all Directors to attend the Annual General Meeting. As outlined below, the
Board has adopted rules whereby directors having conflicts of interest on any matters being discussed
at Board level disclose the conflict in a timely manner to the Board and the Director so conflicted will
not be allowed to vote on such matters.
Principle 11: Conflicts of Interest
The Directors are fully aware of their responsibility to act in the interest of the Company and its
shareholders at all times and of their obligation to avoid conflicts of interest. Such conflicts of interest
affecting Board members may, and do, arise on specific matters from time to time. In these instances,
by virtue of the Memorandum and Articles of Association:
a director is obliged to make full disclosure with respect to any matter where there is a
potential or a real conflict of interest, whether such conflict arises from personal interests or
the interests of the companies in which such person is a director or an officer;
the said director is excused from the meeting and consequently not involved in the Board’s
discussion on the matter; and
the said director does not vote on such matter.
The Memorandum and Articles of Association state that if any question arises at any meeting as to the
materiality of a Director’s interest or as to the entitlement of any Director to vote and such question is
not resolved by his voluntarily agreeing to abstain from voting, then such question shall be referred to
the Audit Committee and their ruling shall be final and conclusive.
Potential conflicts of interest may principally arise in relation to the leasing out of retail space and the
procurement of certain services.
In the event of a prospective lease the Chief Executive Officer negotiates with the prospective tenant
to ensure that a superior standard and type of tenant is taken on at the best possible terms and
conditions.
The Supervisory Committee is responsible for the supervision of such process. In particular, it is
responsible for approving prospective tenants in principle, assisting and directing the CEO in
negotiations with tenants. Accordingly, leases for retail space within ‘The Point Shopping Mall’ are
approved by the Board on the advice of the Supervisory Committee.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
15
Corporate Governance – Statement of Compliance
-
continued
B.
COMPLIANCE WITH THE CODE
- continued
Principle 11: Conflicts of Interest
- continued
All contracts for goods and services and any other purchases are based upon the principle of
competitive bidding. The CEO negotiates with suppliers in order to ensure that the best quality goods
and services are procured by the Company at the best possible price. The Supervisory Committee is
responsible to supervise such procurement processes by assisting and directing the CEO in
negotiations with contractors, suppliers and service providers.
The Company has also implemented a clear and detailed policy in respect of dealings of Directors in
the Company’s shares, which policy is based on timely and comprehensive disclosures and notices,
where and if applicable in terms of the Capital Markets Rules.
The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the
best interest of the Company.
Principle 12: Corporate Social Responsibility
The Company recognises the importance of its role in the corporate social responsibility (CSR) arena
and works to meet the expectations of the community in this respect. Amongst the initiatives taken
during the year under review, the Company has endeavoured to meet its CSR obligations, in particular
through:
its support for fundraising events for charitable institutions;
participation in recognised student-exchange programmes for the benefit of both local and
foreign students;
waste recycling initiatives; and
energy conservation initiatives.
C.
NON-COMPLIANCE WITH THE CODE
Principle 3: Composition of the Board
The Board is composed entirely of non-executive Directors, including independent non-executives.
However, the Board holds the opinion that it is of an adequate size and that the balance of skills and
experience is appropriate for the requirements of the Company. The attendance of the CEO at Board
meetings is deemed a sufficiently effective measure to ensure a balance of executive and non-
executive participation.
Principle 4: Succession policy for the future composition of the Board (Code Provision 4.2.7)
The Board notes that pursuant to the Company’s Memorandum and Articles of Association, the
appointment of Directors to serve on the Board of Directors is a matter which is entirely reserved to the
shareholders of the Company. As indicated in the statement of compliance, all newly appointed
Directors are given an adequate induction course in the operations, activities and procedures of the
Company to be able to carry out the function of a Director in an effective manner. The Board also
notes the emphasis in this Code provision on the executive component of the Board and points out
that the Company’s Board is composed entirely of non-executive members.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
16
Corporate Governance – Statement of Compliance
-
continued
C.
NON-COMPLIANCE WITH THE CODE
- continued
Principle 7: Evaluation of Board’s Performance
During the current financial year, the Board initiated an evaluation of its own performance together
with that of the Committees, the Chairman, the individual Directors and the CEO. Under the direction
of the Chairperson of the RemNom Committee, the evaluation process for the Board is being
conducted through a comprehensive board effectiveness questionnaire, the results of which will be
discussed by the Chairperson of the RemNom Committee and the Chairman of the Audit Committee.
The Board intends to finalise this evaluation and review in detail the outcome of such evaluation during
2022.
Principle 9: Relations with Shareholders and with the Market (Code Provision 9.3)
There are no procedures disclosed in the Company’s Memorandum or Articles as recommended in
Code Provision 9.3, to resolve conflicts between minority shareholders and controlling shareholders.
No such conflicts have arisen during the year under review.
D.
INTERNAL CONTROL AND RISK MANAGEMENT IN RELATION TO THE FINANCIAL
REPORTING PROCESS
The Board is ultimately responsible for the Company’s system of internal control and risk management
and for reviewing its effectiveness. Such a system is designed to manage, rather than eliminate, the
risk of failure to achieve business objectives, and can only provide a reasonable, as opposed to
absolute, assurance against material misstatement or loss.
The Company operates through the Board of Directors and the Supervisory Committee with clear
reporting lines and delegation of powers. The Board of Directors has adopted and implemented
appropriate policies and procedures to manage risks and internal control. The Supervisory Committee
plans, executes, controls and monitors business operations in order to achieve the set objectives.
The Directors, with the assistance of Management, are responsible for the identification, evaluation
and management of the key risks to which the Company may be exposed. The Company has clear
and consistent procedures in place for monitoring the system of internal financial controls. The
Directors also receive periodic management information giving comprehensive analysis of financial
and business performance including variances against the Company’s set targets. This process is
applicable specifically in relation to the Company’s financial reporting framework.
The Audit Committee reviews and assesses the effectiveness of the internal control systems, including
financial reporting, and determines whether significant internal control recommendations made by the
Auditors have been implemented. The Committee plays an important role in initiating discussions with
the Board with respect to risk assessment and risk management, reviews contingent liabilities and
risks that may be material to the Company.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
17
RemNom Committee Report
The Tigne Mall p.l.c. (the ‘Company’) Remuneration and Nominations Committee (the ‘Committee’) hereby
submits its Remuneration Report (‘Report’) for the financial year ending 31 December 2021 to the
Company’s shareholders. The Report is drawn up in accordance with, and in fulfilment of the provisions of
Chapter 12 of the Capital Markets Rules issued by the Malta Financial Services Authority (‘Capital Markets
Rules’) relating to the Remuneration Report and Section 8A of the Code of Principles of Good Corporate
Governance (Appendix 5.1 of the Capital Markets Rules) regarding the Remuneration Statement.
Terms of Reference
The Committee, in its function as Remuneration Committee is tasked with the oversight of the Company’s
remuneration policy for its Directors and senior executives, being those persons reporting directly to the
Board of Directors. The Committee is responsible for making proposals to the Board on the individual
remuneration packages of its Directors and senior executives in line with the Company’s Remuneration
Policy. It also monitors remuneration levels and structures with a view to ensure their continued alignment
with the Company’s business strategies, values and long-term interests. In addition, the Committee
evaluates, recommends and reports on proposals made by the Company’s Chief Executive Officer relating
to remuneration packages for senior executives.
During the financial year under review, the Committee
was charged with reviewing and updating the Company’s remuneration policy to reflect the requirements
set out in Chapter 12 of the Capital Markets Rules.
Committee Membership and Meetings
The Committee is composed of three (3) non-executive Directors, Ms. Marzena Formosa (Chairperson until
15
th
June 2021 and then continued as committee member), Ms. Caroline Buhagiar Klass (appointed
Chairperson from 15
th
June 2021) and Mr. Joseph M. Zrinzo (resigned on 15
th
June 2021). Mr Joseph M.
Zrinzo was replaced by Mr. David Demarco, who was appointed on the same day.
The Committee held four meetings during the year under review, on 24
th
September 2021, 20
th
October
2021, 12
th
November 2021 and 24
th
November 2021, which were attended as follows:
Member
Attended
Ms. Marzena Formosa
(Chairperson till 15
th
June 2021 and continued as member)
4 out of 4
Ms. Caroline Buhagiar Klass
(appointed Chairperson on 15
th
June 2021)
4 out of 4
Mr. David Demarco
(appointed on 15
th
June 2021)
4 out of 4
Remuneration Policy
The Company’s latest Remuneration Policy for its Directors and Chief Executive Officer (the ‘Remuneration
Policy’) was approved by the shareholders at the Annual General Meeting held on 9
th
September 2020.
The resolution relating to the Remuneration Policy was passed with 46,924,788 votes in favour with no
votes against and no abstentions.
As the resolution was approved by the required majority, the
Remuneration Policy was implemented in 2020. The policy is applicable for a maximum period of four
years.
The Company’s Remuneration Policy is designed such that the Company can attract, motivate and retain
the right individuals as would assist in the implementation of its business strategies for its long-term benefit
and sustainability. In line with the Company’s objectives of good governance, the Policy aims to deliver fair
and transparent remuneration to those persons charged with its management and administration.
The
Policy is based on a number of core principles, namely the creation of long-term value for the Company’s
shareholders, the motivation and retention of the Company’s management and the alignment of the
interests of the Company’s management with the interests of its shareholders.
The Company’s
Remuneration Policy is in line with the policy for the remuneration paid to Directors and senior executives
in the preceding financial period. The remuneration paid to the Directors and Chief Executive Officer during
the year under review is in conformity with the Company’s Remuneration Policy.
During 2021 the
Remuneration Policy was reviewed and minor cosmetic changes were made which do not deem to be
material.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
18
RemNom Committee Report
- continued
Remuneration Policy
– continued
The Remuneration Policy may be accessed in full on the Company’s website.
No changes to the Remuneration Policy are being proposed for the approval of the shareholders at the
Company’s next Annual General Meeting.
The Company has complied with the procedure for the implementation of the Remuneration Policy as set
out in Chapter 12 of the Capital Markets Rules issued by the Malta Financial Services Authority.
Directors’ Remuneration
The Company’s Board of Directors is composed entirely of non-executive Directors, including a non-
executive Chairman. None of the directors have a service contract with the Company.
In terms of the Company’s Articles of Association, the maximum annual aggregate emoluments payable to
the Board of Directors in any one financial year shall be determined by the Shareholders in General
Meeting.
In accordance with the Remuneration Policy, the Board, on the recommendation of the Committee, will
then allocate from such amount, a fixed fee to each member in recognition of the individual’s time
commitment, contribution and ongoing responsibilities towards the Company. Remuneration payable to
directors in their capacity as such, is not linked to the Company’s share price or performance and is
comparable to remuneration paid by companies of a similar size operating in a comparable business
environment. None of the Directors are entitled to profit sharing, share options, pension benefits,
termination payments or other similar remuneration.
The Company’s approach to the payment of such remuneration is that of motivating and retaining high
performing Directors by recognising and rewarding their contribution, which is critical to the implementation
of the Company’s long-term strategy.
For the year under review, it is noted that despite the General meeting having approved a threshold of
€
90,000 as aggregate emoluments for Directors, the aggregate amount of fees proposed by the Committee
and approved by the Board to be paid as emoluments in accordance with the Remuneration Policy
amounted to
€
65,305.
This was deemed to be consistent with market practice and conducive to the
achievement of the Company’s strategic objectives. The Board of Directors has agreed to keep the current
remuneration payable under review to ensure its consistency with comparable market trends and
commensurate with the duties and responsibilities of the Directors.
Total emoluments received by Directors during the financial year 2021 for the purposes of Code Provision
8.A.5 are as follows:
-
Fixed remuneration
€
65,305 (2020:
€
68,725)
-
Variable remuneration
None (2020: None)
-
Share Options
None (2020: None)
-
Others
None (2020: None)
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
19
RemNom Committee Report
- continued
Directors’ Remuneration
- continued
In terms of the requirements within Appendix 12.1 of the Capital Markets Rules, the following table
presents the annual change of remuneration of the directors and the Chief Executive Officer, of the
Company’s performance, and of average remuneration on a full-time equivalent basis of the Company’s
employees (other than directors and Chief Executive Officer) over the two most recent financial years.
Aggregate
remuneration
awarded during
2021
€
Percentage annual
change of
remuneration
(2020 - 2021)
%
Percentage annual
change of the
Company’s
performance
(2020 - 2021)
%
Percentage
annual
change of the
average
remuneration
of the
Company’s
employees on
full-time
equivalent
basis
(2020-2021)
%
Edwin Borg
108,088
0.4%
68%*
3%
*The percentage annual change of the Company’s performance included in the above table is based on the
Company’s profit before tax, as this has been deemed by management to be the most appropriate basis for
measuring performance. The percentage annual change of the Company’s performance appears to be
elevated in view of the substantial impact of the pandemic on the Company’s financial results for the year
ended 31 December 2020, with subdued profits reported driven primarily by lease incentives granted to
tenants.
For the purposes of Appendix 12.1 of Chapter 12 of the Capital Markets Rules issued by the Malta
Financial Services Authority, the following emoluments were paid to Directors during the financial year
2021:
Board Member
Position
Emoluments received
2021
2020
Joseph Zammit Tabona
Chairman
€
14,266
€
15,026
Marzena Formosa
Non-executive director
€
13,538
€
15,962
David Demarco
Non-executive director
€
12,643
€
14,032
Caroline Buhagiar Klass
Non-executive director
€
12,643
€
8,700
Alicia Agius Gatt
(resigned 9
th
September 2020)
Non-executive director
-
€
8,030
Muriel Rutland
(resigned 1
st
April 2020)
Non-executive director
-
€
2,900
Joseph M. Zrinzo
(resigned 15
th
June 2021)
Non-executive director
€
5,803
€
3,625
Albert Frendo
(appointed 15
th
June 2021)
Non-executive director
€
6,412
-
Apart from a one-time adjustment in 2020, remuneration levels are in line with prior year and hence, the
changes reflected above have not been included in the previous table, with the other changes being
attributable to changes in the committees’ composition.
No non-cash benefits were offered to Directors during the year under review. Other than as set out above,
no compensation was paid to Joseph M. Zrinzo as compensation in connection with the cessation of his
directorship.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
20
RemNom Committee Report
- continued
Chief Executive Officer’s Remuneration
The Company’s day to day administration and operations are managed by the Chief Executive Officer
(‘CEO’). The Company’s Remuneration Policy with respect to the CEO is designed to attract and motivate
a qualified and experienced professional engaged by the Company to execute its business plans in a
highly competitive market.
In accordance with the Remuneration Policy, the CEO’s remuneration is made up of a fixed component
and a variable element.
The fixed component constitutes a basic remuneration awarded for the
performance of the CEO’s executive function, reflecting his experience and knowledge, together with the
responsibilities and assigned functions of this role.
This fixed component is not linked to variable
parameters or to the results achieved by the Company. The fixed element is also benchmarked to market
parameters taking into account remuneration for CEOs of entities with a similar size operating in a
comparable sector.
The variable element is structured as a performance bonus aimed at rewarding the CEO’s performance
with respect to the achievement of a set of financial and non-financial targets which contribute to the long-
term interests and sustainability of the Company.
These typically include EBIDTA-based targets, liquidity
levels, project realization and similar criteria.
These targets are established on an annual basis and may
vary from year to year depending on the circumstances of the Company’s operations at any given time.
Achievement of financial objectives is measured by a comparison of the targets set and the outcomes
realised.
Assessment of non-financial objectives is made by the Committee through a subjective
assessment of the CEO’s performance exercised in a reasonable manner. The variable element is
structured to provide an appropriate balance between the fixed and variable elements of the CEO’s
remuneration, such that the variable element represents a minor part of total remuneration as compared to
the fixed element. The Company does not have an option to reclaim back variable remuneration paid to the
CEO.
By way of non-cash benefits, the CEO is entitled to health insurance, professional indemnity insurance
cover and a fully expensed Company car.
The CEO is entitled to the equivalent of a full year’s pay, as severance payment, should within three years
following a change in control of the Company, his employment be terminated for reasons other than for any
of the specific causes set out in the contract of employment or by the executive himself in the cases set out
in the contract. The CEO’s contract of employment is indefinite.
Other than as stated above, the CEO is not entitled to profit sharing, share options, pension benefits or
other similar remuneration.
The Company’s approach with respect to the CEO’s remuneration is that in line with the Remuneration
Policy, it seeks to motivate and retain a qualified and experienced professional to execute the Company’s
short and longer term business plans in a competitive market and thereby grant such remuneration as is
commensurate with the functions assigned and the responsibilities attached to the role. During September
2021, a benchmarking analysis was conducted by an external consultant to review the competitiveness of
the CEO’s salary.
For the purposes of Appendix 12.1 of Chapter 12 of the Capital Markets Rules, the total emoluments
received by the CEO, for the financial year under review in accordance with the Company’s Remuneration
Policy consisted of a fixed remuneration of
€
95,138 (2020:
€
94,440) and a variable remuneration of
€
12,950 (2020:
€
13,165). It is noted that the award of variable remuneration was predominantly based on
the achievement of financial and non-financial targets, including revenue and expenditure, footfall, retail
experience and adherence to Company policies.
Non-cash benefits for the year which amounted to
€
13,471.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
21
RemNom Committee Report
- continued
Senior Executives’ Remuneration
For the purposes of this Remuneration Report, reference to Senior Executives shall mean the Chief
Executive Officer and the Financial Controller.
The Committee is tasked with recommending to the Board of Directors the appropriate remuneration
packages for Senior Executives.
In doing so, the Committee is mindful of the need to attract, retain and
motivate the right professionals. Base salaries are determined in accordance with the Company’s salary
structure for its senior management, paying due regard to market conditions and remuneration rates
offered by comparable organisations for comparable roles. The Company’s policy is such that none of the
Company’s senior management are entitled to any share options, profit sharing arrangements or pension
benefits.
It is the Company’s policy to engage its senior management on the basis of indefinite contracts of
employment after a period of probation, rather than on fixed term contracts. Accordingly, the applicable
notice periods, after probation, are those provided for in the relevant legislation. The terms and conditions
of employment of senior management are specified in their respective indefinite contracts of employment.
The individual contracts of employment of Senior Executives, other than the CEO, do not contain
provisions for termination payments and/or other payments linked to early termination other than as may be
applicable in accordance with legal requirements.
Senior Executives are entitled to health and life insurance, reimbursement of telephone expenses and use
of a Company car.
Remuneration payable to senior management during the financial year ended 31 December 2021, which
comprises mainly fixed remuneration as per contractual arrangements, is not being disclosed as the
information is deemed to be of a commercially sensitive nature taking into account the fact that the senior
management team is composed of two individuals.
This Directors’ Remuneration Report, drawn up in accordance with the Capital Markets Rules, is being put
forward for the advisory vote of the Annual General Meeting of the Company to be held in 2022.
The contents of this Remuneration Report have been reviewed by the external auditor to ensure that the
information required in terms of Appendix 12.1 of the Capital Markets Rules has been included.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
22
Statement of financial position
As
at 31 December
Notes
2
0
2
1
2020
€
€
ASSETS
Non
-
current assets
Property, plant and equipment
4
81,400,000
74,774,774
Right-of-use assets
5
3,94
0
,8
7
2
3,991,623
Total non-current assets
85,340,872
78,766,397
Current assets
Trade and other receivables
6
2
,98
1,236
2,212,427
Cash and cash equivalents
7
2,826,649
2,599,032
Total current assets
5,807,885
4,811,459
Total assets
91,148
,757
83,577,856
EQUITY AND
LIABILITIES
Capital and reserves
Share capital
8
2
7,
766,888
27,766,888
Revaluation reserve
9
19,
275,233
14,108,925
Retained earnings
9,
712,571
7,096,745
Total e
quity
5
6,
754,692
48,972,558
Non
-
current li
a
bilities
Trade and other payables
10
6
95,642
758,678
Borrowings
11
10,011,
0
94
12,929,677
Lease liabilities
12
4,167,270
4,111,408
Deferred tax liabilities
13
1
3,
216,202
10,475,506
Total non-current liabilities
28,090,208
28,275,269
Current liabi
lities
Trade and other payables
10
3,531,832
3,542,212
Borrowings
11
1,787,234
2,004,817
Lease liabilities
12
88,803
88,803
Current tax liabilities
895,
988
694,197
Total current liabilities
6
,
303,857
6,330,029
Total liabilities
34,
394,065
34,605,298
Total equity and liabilities
91,148,757
83,577,856
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 14 April
2022. The financial statements were signed on behalf of the Board of Directors by Joseph Zammit Tabona
(Chairman) and David Demarco (Director) as per the Directors' Declaration on ESEF Annual Financial
Report submitted in conjunction with the Annual Financial Report.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
23
Income statement
Year ended 3
1 December
Notes
20
2
1
2020
€
€
Revenue
14
6,695,355
5,443,722
Cost of sales
15
(2,1
25
,
2
1
6
)
(2,087,875)
Gross profit
4,570,139
3,355,847
Administrative and other expenses
15
(
470,482
)
(452,382)
Other operating income
17
122,000
-
Oper
ating profit
4
,221,657
2,903,465
Finance income
18
572
3,164
Finance costs
19
(
586,570
)
(748,485)
Profit before tax
3,635,659
2,158,144
Tax expense
20
(
821,470
)
(834,064)
Pr
ofit for the
year
2,814,189
1,324,080
Earnings per share (
e
uro cen
t
s)
22
4.99
2.35
Statement of Comprehensive Income
Year ended
31 December
Notes
2021
2020
€
€
Profit for the year
2,814,189
1,324,080
Other comprehensive income:
Revaluation surplus on land and buildings
arising during the year, net of deferred tax
9
5,346,874
-
Other
comprehensive i
ncome for
the year,
net
of t
ax
5,346,874
-
Total com
prehensive income for the year, net of
tax
8,
161,063
1,324,080
The accompanying notes are an integral part of these financial statements.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
24
Statement of changes in equity
Share
Revaluation
Re
taine
d
Notes
capital
reserv
e
earnings
Tota
l
€
€
€
€
Balance at 1 January 2020
27,766,888
14,289,491
5,592,099
47,648,478
Comprehensive income
Profit for the year
-
-
1,324,080
1,324,080
Total comprehensive incom
e
-
-
1,
324
,080
1,
324,080
Other mo
vements
Reclassification from revaluation
reserve to retained earnings
9
-
(180,566)
180,566
-
-
(180,566)
180,566
-
Bala
nce as at 31 December
2020
27,766,888
14,108,925
7
,
096,745
4
8,972,55
8
Balance at 1 January 2021
27,766,888
14,108,925
7,096,745
48,972,558
Comprehensive income
Profit for the year
-
-
2,814,189
2,814,189
Other comprehensive
income
Revaluation surplus on land and
buildings arising during the year,
net of deferred tax
9
-
5,346,874
-
5,346,874
Total other
comprehensive inc
o
me
-
5,3
4
6
,874
-
5,3
46
,874
Total comprehensive income
-
5,3
46
,874
2,814,189
8,1
61
,063
Transacti
on
s
with
owners
Dividends paid to shareholders
26
-
-
(378,929)
(378,929)
Total transac
tion
s
with o
wners
-
-
(378,9
29)
(378,929)
Other move
ments
Reclassification from revaluation
reserve to retained earnings
9
-
(180,566)
180,566
-
-
(180,566)
180,566
-
Balance as
at 31 December
2021
27,766
,888
1
9,275,233
9,
712,571
5
6,
7
54,
692
The accompanying notes are an integral part of these financial statements.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
25
Statement of cash flows
Year ended 31 Dece
mber
Notes
202
1
2020
€
€
Cash flows from operating activities
Cash generated from operations
23
5,248,545
4,994,211
Interest paid
(441,905)
(605,322)
Interest received
572
3,164
Tax paid
(758,069)
(1,051,470)
Net cash generated from operations
4,049,143
3,340,583
Cash flows from investing activities
Purchase of property, plant and equipment
4
(217,628)
(309,404)
Net cash used in investing activities
(217,6
28
)
(309,404)
Cash flows from financing
activities
Dividends paid
26
(378,929)
-
Proceeds from bank borrowings
11
175,500
824,500
Repayment of bank borrowings
11
(3,311,6
66)
(2,895,134)
Principal element of lease payments
12
(88,803)
(88,803)
Net cash used in financing activities
(3,603,898)
(2,159,437)
Net mov
ement in cash and cash equivalents
227
,
617
871,742
Cas
h and cash equiva
len
ts at
be
ginning
of year
2,599,032
1,727,290
Cash and cash equivalen
ts at end o
f year
7
2,826,649
2,599,032
The accompanying notes are an integral part of these financial statements.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
26
Notes to the financial statements
1.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
1.1 Basis of preparation
Tigné Mall p.l.c. is a public limited liability Company with its principal activity being to own and
manage 'The Point Shopping Mall'.
The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the EU and with the requirements of the Maltese Companies Act
(Cap. 386). They have been prepared under the historical cost convention, as modified by the fair
valuation of the land and buildings class of property, plant and equipment.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the
use of certain accounting estimates. It also requires Directors to exercise their judgement in the
process of applying the Company’s accounting policies (see Note 3 - Critical accounting estimates
and judgements).
Appropriateness of the application of the going concern assumption in the preparation of the
financial statements
As at 31 December 2021, the Company’s current liabilities exceeded its current assets by
€
0.5
million (2020:
€
1.5 million). The Company has continued to manage this position during the course
of the current financial year through a programme of active liquidity management.
On 11 March 2021, the Company announced that in view of the new directives issued by the
National Health Authorities for non-essential retail operations in respect of the COVID-19 pandemic,
The Point Shopping Mall was closed for business and its operations were suspended with effect
from that date. The operations of ‘The Point Shopping Mall’ resumed on 25 April 2021 when the
above directives were lifted.
The Company’s senior management team has compiled financial projections for the year ending 31
December 2022 following an assessment of any estimated potential direct and indirect impacts of
the COVID-19 pandemic and the conflict in Ukraine which commenced after the end of the reporting
period, which factors were deemed to have insignificant effects. The projections comprise historical
financial information up to the date of authorisation for issue of these financial statements and
forecast financial information for the residual period. Based on the outcome of the cash flow
projections as referred to above, the Directors and senior management consider the going concern
assumption in the preparation of the Company’s financial statements as appropriate as at the date of
authorisation for issue of the 2021 financial statements. They also believe that no material
uncertainty that may cast significant doubt about the Company’s ability to continue as a going
concern exists as at that date.
Standards, interpretations and amendments to published standards effective in 2021
In 2021, the Company adopted amendments to existing standards that are mandatory for the
Company’s accounting period beginning on 1 January 2021. 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.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
27
1.
Summary of significant accounting policies
- continued
1.1 Basis of preparation
- continued
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 2021. The Company has not early adopted
these revisions to the requirements of IFRSs as adopted by the EU and the Directors are of the
opinion that there are no requirements that will have a possible significant impact on the Company’s
financial statements in the period of initial application.
1.2
Foreign currency translation
(a) Functional and presentation currency
Items included in these financial statements are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The financial
statements are presented in euro, which is the Company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
1.3 Property, plant and equipment
All property, plant and equipment is initially recorded at historical cost. Land and buildings,
comprising mainly ‘The Point Shopping Mall’, are shown at fair value less subsequent depreciation.
The fair value of ‘The Point Shopping Mall’ is based on the discounted cash flow valuation model.
Valuations are carried out on a regular basis such that the carrying amount of property does not
differ materially from that which would be determined using fair values at the end of the reporting
period. Any accumulated depreciation at the date of revaluation is eliminated against the gross
carrying amount of the asset, and the net amount is restated to the revalued amount of the asset.
All other property, plant and equipment is stated at historical cost less depreciation 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 Company and the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during
the financial period in which they are incurred.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
28
1.
Summary of significant accounting policies
- continued
1.3 Property, plant and equipment
- continued
Increases in the carrying amount arising on revaluation of land and buildings are credited to other
comprehensive income and shown as a revaluation reserve in shareholders’ equity. Decreases that
offset previous increases of the same asset are charged to other comprehensive income and debited
against the revaluation reserve directly in equity; all other decreases are charged to profit or loss.
Each year the difference between depreciation based on the revalued carrying amount of the asset
charged to profit or loss and depreciation based on the asset’s original cost is transferred from the
revaluation reserve to retained earnings.
Land and buildings are depreciated over the remaining term of the emphyteusis. Depreciation on
other assets is calculated using the straight-line method to allocate their cost or revalued amounts to
their residual values over their estimated useful lives, as follows:
%
Land and buildings
1
Electrical and plumbing installation
3-8
Plant, machinery and operational equipment
3 - 15
Fixtures and fittings
10 - 20
Office and computer equipment
20 - 33.33
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period. An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 1.4).
Gains and losses on disposals of property, plant and equipment are determined by comparing the
proceeds with carrying amount and are recognised in profit or loss. When the revalued assets are
sold, the amounts included in the revaluation reserve relating to the assets are transferred to
retained earnings.
1.4 Impairment of non-financial assets
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill
that suffered an impairment are reviewed for possible reversal of the impairment at the end of each
reporting period.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
29
1.
Summary of significant accounting policies
- continued
1.5 Financial assets
1.5.1 Classification
The Company classifies its financial assets as measured at amortised cost only if both of 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.
The Company’s financial assets comprise of trade and other receivables and cash and cash
equivalents in the statement of financial position (Note 1.6 and 1.7 respectively).
These financial
assets are held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows (‘Hold to Collect’) and the contractual terms of the financial assets give rise to
cash flows that are SPPI, and accordingly subsequent to initial recognition are measures at
amortised cost.
These assets are included in current assets, except for maturities greater than
twelve months after the end of the reporting period which are classified as non-current assets.
1.5.2 Recognition and measurement
The Company recognises a financial asset in its statement of financial position when it becomes a
party to the contractual provisions of the instrument. Regular way purchases and sales of financial
assets are recognised on trade date, the date on which the 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 or has not retained control of the asset.
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. Subsequent to initial recognition, financial assets
are measured at amortised cost if the financial asset is held within a business model whose objective
is to hold financial assets in order to collect contractual cash flows (‘Hold to Collect’) and the
contractual terms of the financial asset give rise to cash flows that are SPPI. The amortised cost is
the amount at which the financial asset is measured at initial recognition minus the principal
repayments, plus or minus the cumulative amortisation using the effective interest method of any
difference between the initial amount and the maturity amount, and adjusted for any credit loss
allowance.
1.5.3 Impairment
The Company has two types of financial assets that are subject to the expected credit loss model:
- trade receivables in respect of lease income; and
- cash and cash equivalents.
IFRS 9 requires the measurement of credit loss allowances on financial instruments using the
expected credit loss (“ECL”) impairment model utilising a forward-looking approach that emphasises
shifts in the credit risk attached to a financial instrument, and consequently the probability of future
credit losses, even if no loss events have yet occurred.
IFRS 9 outlines a ‘three-stage’ model for
impairment based on changes in credit quality since initial recognition. The key driver of the
measurement of ECLs therefore relates to the level of credit risk for each exposure and, as a result,
an assessment of the change in credit risk over the expected life of an asset is a core element in
determining the staging criteria under IFRS 9. The three stages under IFRS 9 are as follows:
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
30
1.
Summary of significant accounting policies
- continued
1.5 Financial assets
- continued
1.5.3 Impairment
- continued
Stage 1 - Financial instruments that have not had a significant increase in credit risk (SICR) since
initial recognition, or that have “low credit risk” at the reporting date are classified in Stage 1. 12-
month ECLs are recorded to measure the expected losses that result from default events that are
possible within 12 months after the reporting date;
Stage 2 - Financial instruments that have experienced a SICR since initial recognition are classified
in Stage 2. Lifetime ECLs are recorded to measure the expected losses that result from all possible
default events over the expected life of the financial instrument; and
Stage 3 - Financial instruments that demonstrate objective evidence of impairment, and which are
considered to be in default or credit-impaired, are classified in Stage 3, also requiring the
measurement of lifetime ECLs.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses for trade
receivables which uses a lifetime expected loss allowance for all receivables. To measure the
expected credit losses, trade receivables are grouped based on shared credit risk characteristics and
the days past due. The expected loss rates are based on the payment profiles and historical credit
losses of the Company.
The historical loss rates are adjusted to reflect current and forward looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to
engage in a repayment plan with the Company, and a failure to make contractual payments.
Impairment losses on trade receivables are presented as net impairment losses within operating
profit. Subsequent recoveries of amounts previously written off are credited against the same line
item.
1.6 Trade and other receivables
Trade receivables are amounts due from customers for services performed in the ordinary course of
business. They are generally due for settlement within 30 days and therefore are all classified as
current.
Trade
receivables
are
recognised
initially
at
the
amount
of
consideration
that
is
unconditional, unless they contain significant financing components when they are recognised at fair
value.
The Company holds the trade receivables with the objective to collect the contractual cash flows and
therefore measures them subsequently at amortised cost using the effective interest method.
Details about the Company’s impairment policies and the calculation of the loss allowance are
provided in note 1.5.3.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
31
1.
Summary of significant accounting policies
- continued
1.7 Cash and cash equivalents
In the statement of cash flows, cash and cash equivalents includes cash in hand and deposits held
at call with banks.
1.8 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.
1.9 Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method. 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.
1.10 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between the proceeds (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 reporting period.
1.11 Deferred Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance
that the grant will be received and the Company will comply with all attached conditions. Government
grants related to costs are deferred and recognised in profit or loss over the period necessary to
match them with the costs they are intended to compensate.
Government grants related to assets, i.e. in respect of the purchase of property, plant and
equipment, are included in liabilities as deferred government grants, and are credited to profit or loss
on a straight line basis over the expected lives of the related assets, presented within ‘Other
operating income’.
Grants related to income are presented as a deduction in reporting the related expense.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
32
1.
Summary of significant accounting policies
- continued
1.12 Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or
loss, except to the extent that it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity respectively.
Deferred tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. However,
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 only to the extent that it is probable that future taxable profit will
be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances on a net basis.
1.13 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the Company’s activities. Revenue is shown net of sales
taxes, rebates and discounts.
The Company recognises revenue when the amount of revenue can be reliably measured, it is
probable that future economic benefits will flow to the entity and when specific criteria have been met
as set out below.
Revenue from services is generally recognised in the period during which the services are provided,
based on the services performed to date as a percentage of the total services to be performed.
Accordingly, revenue is recognised by reference to the stage of completion of the transaction under
the percentage of completion method.
Rental income is recognised in profit or loss on a straight-line basis over the term of the lease.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
33
1.
Summary of significant accounting policies
- continued
1.14 Leases
1.14.1 Company is the lessee
IFRS 16 requires an entity to assess whether a contract is, or contains, a lease at the inception date.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified
asset for a period of time in exchange for a consideration. Leases are recognised as a right-of-use
asset and a corresponding liability at the commencement date, being the date at which the leased
asset is available for use by the Company.
Assets and liabilities arising from a lease are initially measured on a present value basis.
Lease
liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate, initially measured using the index or
rate as at the commencement date;
amounts expected to be payable by the Company using residual value guarantees;
the exercise price of a purchase option if the Company is reasonably certain to exercise that
option; and
payment of penalties for terminating the lease, if the lease term reflects the Company exercising
that option.
Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for lessees, the lessee’s incremental borrowing rate
is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value to the right-of-use asset in a similar economic environment with
similar terms, security and conditions.
To determine the incremental borrowing rate, the Company:
where possible, uses recent third-party financing received by the lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received; and
makes adjustments specific to the lease, term, country, currency and security.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to
profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are initially measured at ‘cost’ which, where applicable, comprises the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives
received;
any initial direct costs; and
restoration costs.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
34
1.
Summary of significant accounting policies
- continued
1.14 Leases
- continued
1.14.1 Company is the lessee
- continued
Right-of-use assets linked to owner occupied property are subsequently measured at cost, less
accumulated depreciation and any accumulated impairment losses.
Right-of-use assets are
generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line
basis.
Payments associated with short-term leases and leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less.
1.14.2 Company is the lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a
straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are
added to the carrying amount of the underlying asset and recognised as an expense over the lease
term on the same basis as lease income. The respective leased assets are included in the balance
sheet based on their nature.
1.15 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.
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
currency risk, fair value interest rate risk and cash flow 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’s board of Directors provides principles for overall risk management, as well as policies
covering risks referred to above and specific areas such as investment of excess liquidity. The
Company did not make use of derivative financial instruments to hedge certain risk exposures during
the current and preceding financial years.
The COVID-19 pandemic had a considerable impact on the Company’s operations and business.
The closure of The Point Shopping Mall for a period of time during both the current and preceding
financial year and the subdued economic conditions experienced by the tenants, led management to
take a number of actions which included rent relief granted to tenants and a focused credit
management policy.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
35
2.
Financial risk management
- continued
2.1 Financial risk factors
- continued
(a)
Market risk
(i)
Foreign exchange risk
The Company’s revenues and operating expenditure together with its financial assets and liabilities,
including financing, are predominantly denominated in euro. Accordingly, the Company is not
significantly exposed to foreign exchange risk. 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.
(ii)
Cash flow and fair value interest rate risk
The Company’s significant instruments which are subject to fixed interest rates comprise the
principal bank borrowings and deposits effected under operating lease arrangements. In this respect,
the Company is potentially exposed to fair value interest rate risk in view of the fixed interest nature
of these instruments, which are however measured at amortised cost and therefore any changes in
interest rates will not have an effect on profit or loss and equity. The Company’s cash flow interest
rate risk principally arises from specific bank borrowings issued at variable rates (Note 11).
Management monitors the impact of changes in market interest rates on amounts reported in the
profit or loss in respect of these latter instruments. Based on this analysis, management considers
the potential impact on profit or loss of a defined interest rate shift that is reasonably possible at the
end of the reporting period to be immaterial. The Company’s operating cash flows are substantially
independent of changes in market interest rates and accordingly the level of interest rate risk is
contained.
(b)
Credit risk
Credit risk arises from cash and cash equivalents (Note 7) and trade receivables (Note 6), which
constitute the Company’s financial assets that are subject to the expected credit loss model.
The
Company’s exposures to credit risk are analysed in the respective notes to the financial statements.
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. Except for the security deposits effected by tenants, the
Company does not hold any collateral as security in this respect.
The Company banks only with local financial institutions with high quality standard or rating. The
Company invoices its customers quarterly in advance and assesses the credit quality of its
customers taking into account financial position, past experience and other factors. It has policies in
place to ensure that sales of services are effected to customers with an appropriate credit history.
The Company monitors the performance of its receivables on a regular basis to identify expected
and incurred collection losses, which are inherent in the Company’s receivables, taking into account
historical experience in collection of accounts receivable. Management does not expect any material
losses from non-performance by its debtors except as outlined below.
The expected credit loss rates are based on the payment profiles of sales over the historical period
available to the Company. Management also considers any adjustment to the historical loss rates to
reflect current and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021
36
2.
Financial risk management
- continued
2.1 Financial risk factors
- continued
On 11 March 2021, the Company announced that in the light of the COVID-19 pandemic, The Point
Shopping Mall was closed for business with effect from that date in line with the directions given by
the National Health Authorities and its operations were principally suspended.
This situation gave
rise to a heightened level of business disruption which had an impact on the operations of the
tenants. Following subsequent direction given by the same National Health Authorities ‘The Point
Shopping Mall’ re-opened for business on 26 April 2021.
With a view to alleviating the business
disruption experienced by the tenants, the Company decided that, without modifying the lease
agreements in place, it accords rent relief to tenants within structured programmes. To this effect, the
Company established eligibility criteria for rent relief and granted abatement selectively to qualifying
tenants to the extent of
€
0.9m (2020:
€
1.6m).
As of 31 December 2021, the amount of billed rental and service charges due from tenants in
respect of the previous twelve months was insignificant and accordingly no trade receivables were
deemed to be long outstanding or credit impaired. The balance due as at the end of year principally
represented billing in advance in respect of 2022 which was recovered by the time of issuance of
these financial statements.
Accordingly, the credit loss allowances in respect of trade receivables
are insignificant.
As at the end of the reporting period, the Company had past due, but not credit impaired, receivables
amounting to
€
105,293 (2020:
€
91,859). The Company manages credit exposures actively in a
practicable manner such that past due amounts receivable from customers are within controlled
parameters. The Company’s trade receivables, which are not credit impaired financial assets, are
principally debts in respect of transactions with customers for whom there is no recent history of
default.
Management
does
not
expect
any
material losses
from non-performance by
these
customers.
As outlined previously, the Company holds security deposits (Note 10) effected under operating
lease arrangements by a number of tenants, which contain the potential expected credit losses on
billing in advance.
In view of the nature of the Company’s activities, which constitutes the operation of a shopping mall,
a limited number of customers constitute a major portion of the entity’s trade receivables (refer to
Note 14). However, this does not give rise to heightened concentration risk in management’s view.
The Company’s receivables include amounts owed by related parties. Management monitors related
party credit exposures at individual entity level and ensures timely performance in the context of
overall liquidity management. The Company takes cognisance of the related party relationship with
these debtors and management does not expect any losses from non-performance or default.
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the
identified expected credit loss was insignificant.
TIGNÉ MALL p.l.c.
Annual Financial Report and Financial Statements - 31 December 2021