31 December Company Registration Number: C564

Transcription

1 Annual Report and Financial Statements 31 December Company Registration Number: C564

2 Rpot Report PLAZA CENTRES p.l.c. Contents Pages Chairman s Statement 4 Share Register Information 5 Board of Directors 6-7 Directors Report 8-10 Corporate Governance - Statement of compliance Independent auditor s report Statement of fi nancial position 17 Statement of comprehensive income 18 Statement of changes in equity 19 Statement of cash fl ows 20 Notes to the fi nancial statements

3 PLAZA CENTRES p.l.c. nu Mission Statement To retain our position as Malta s leader in quality retailing and to use our strength to stimulate further growth 2

4 Rpot Report PLAZA CENTRES p.l.c. 3

5 PLAZA CENTRES p.l.c. nu Chairman s Statement It gives me great pleasure to report the Company s positive results for the fi nancial year ended 31 December. Plaza Centres p.l.c. has maintained a consistent level of growth, both in terms of occupancy and profi tability, and the results are materially in line with the Directors expectations. During, the Company s revenue increased by 3.1%. On similar lines to previous years, the Company s occupancy stood at 96.1% during. Similar occupancy levels are anticipated for 2011, despite a larger rentable area, following the launch of the new extension in March Revenue for the year was 2,061,794 (: 1,999,827), whilst profi t before tax amounted to 1,309,815 (: 1,315,411). Profi t after tax amounted to 832,700 (: 836,783). The Company s cost to income ratio was satisfactory at 32.8% (: 30.8%). The Company s extension project progressed as planned during the year. 85% of the additional area has been leased with income streams commencing during the fi rst quarter of In line with its growth plans, the Company will continue to look for new opportunities for expansion. The economic environment during proved to be challenging, both for the Company and its tenants. Market indications for 2011 appear to be equally challenging in view of the changing dynamics for local and international markets. The Directors continue to assume a cautious outlook during Based on the favourable results for, the Board of Directors recommends the payment of a fi nal net dividend of 707,795 or per share (: 790,776, net per share) for approval at the Annual General Meeting to be held on 24 May The fi nal net dividend will be paid to all shareholders on the Company s share register at close of trading on the Malta Stock Exchange on 31 March Once again, I would like to conclude by extending my appreciation towards our Board of Directors, Management, Shareholders, Tenants and Staff for their valued contribution towards the Company s continued success. Albert Mizzi i Chairman 3 March

6 Rpot Report PLAZA CENTRES p.l.c. Share Register Information Share register information pursuant to the Malta Stock Exchange Bye-laws Directors interest in the share capital of the Company (shares held) Beneficial interests at Beneficial interests at Albert Mizzi 754, ,280 Brian R. Mizzi 755, ,095 Gerald J. Zammit 125, ,100 Adrian Strickland 111, ,031 Shareholders holding 5% or more of the equity share capital Shareholding details As at 31 December, Plaza Centres p.l.c. s issued share capital was held by 430 shareholders, and as at 3 March 2011 by 436 shareholders. The issued share capital consists of one class of ordinary shares with equal voting rights. Distribution of shareholders analysed by range: % holding at % holding at MSV Life p.l.c HSBC Bank p.l.c. as Custodian for Ammt Sicavs Malta Mizzi Associated Enterprises Ltd Cenmed Ltd HSBC Bank p.l.c. as Custodian for HSBC Life Assurance Lombard Bank Malta p.l.c Range of shareholding No of shareholders at No of shareholders at Shares at Shares at shares ,481 27, shares ,350 77, shares , , & over ,946,062 8,947,862 Company Secretary and Registered Office Lionel A. Lapira MBA (Henley), AMD, CMD, The Plaza Commercial Centre Level 8 Bisazza Street Sliema SLM 1640 Malta 3 March

7 PLAZA CENTRES p.l.c. nu Board of Directors Albert Mizzi - Chairman Mr. Mizzi was appointed Chairman of the Company in He has had an active career within the business community in Malta having led a number of major private sector initiatives and is currently Chairman of various companies including HSBC Bank Malta p.l.c., MIDI p.l.c., Consolidated Biscuit Co. Ltd., Supermarkets (1960) Ltd., Mizzi Associated Enterprises Ltd., Mellieha Bay Hotel Ltd. and Kemmuna Ltd. Mr. Mizzi is a Director and shareholder in the Alf Mizzi & Sons Group. He has also served for many years as Executive Chairman on various state-owned companies, including Air Malta p.l.c. (19 years), Middle Sea Insurance, Sea Malta and Malta Shipbuilding. He has also served as Chairman of the Malta Council for Economic Development. David G. Curmi ACII, Chartered Insurer Chief Executive Officer MSV Life p.l.c. Formerly: Managing Director of Citadel Insurance Services Ltd. and Citadel Insurance p.l.c., Director of Medpoint Insurance Brokers Ltd., Director of Mediterranean Survey Bureau Ltd., Director of International Insurance Management Services Ltd., Director of EuroMed Risk Solutions Ltd., President of the Malta Insurance Association, Honorary Secretary of the Malta Chamber of Commerce, Vice President of the Malta Chamber of Commerce, Governor of Finance Malta. At Present: Chief Executive Officer of MSV Life p.l.c., Malta s leading life insurance company. Chief Executive Offi cer and Director of Growth Investments Ltd., Director of Plaza Centres p.l.c., Director of Midi p.l.c., Director of Premium Realty Ltd., Council Member of the Malta Insurance Association, Director of the Protection and Compensation Fund, Chairman of L.B. Factors Ltd. Mr. Curmi started his career in the insurance industry over thirty years ago during which time he held various senior executive positions with a number of insurance operators in the Maltese market. Mr. Curmi is an Associate of the Chartered Insurance Institute of the United Kingdom and a Chartered Insurer. Mr. Curmi is a regular lecturer on various insurance topics at the University of Malta and at the Malta Insurance Training Centre. Marzena Formosa Chief Investment Officer MSV Life p.l.c. Joined Middlesea Group in 1996 and occupied various positions within the Group Investments unit. At present: Chief Investment Officer of MSV Life p.l.c., Assistant General Manager of Growth Investments Ltd., Director of Euro Globe Holdings Ltd. Holds a Masters degree in Economics and a Masters degree in Financial Services. Charles J. Farrugia Charles J. Farrugia is a non-executive Director of Plaza p.l.c. He worked in the banking sector for 35 years and sat on a number of boards and committees within the HSBC Malta Group. Before retirement, in December, he held the post of Head Global Banking & Markets and was a senior executive director of HSBC Malta p.l.c. Charles Farrugia still holds a non-executive directorship with HSBC Bank Malta p.l.c. as well as non-executive directorships in other Maltese companies. 6

8 Rpot Report PLAZA CENTRES p.l.c. Brian R. Mizzi Mr. Brian Mizzi sits on the Board of Directors of Mizzi Organisation and has over forty years of active service working within the organisation. He serves as Managing Director for The General Soft Drinks Co. Ltd., bottlers and distributors of Coca-Cola products in Malta, and has been actively involved since it was acquired by Mizzi Organisation. Mr. Mizzi is also Managing Director for Arkadia Marketing Ltd., one of Malta s leading shopping centres and a retail company. Mr. Mizzi is also heavily involved in the tourism industry; he is the Managing Director for The Waterfront Hotel as well as being a Director, representing Mizzi Organisation s interests, on the board for Mellieha Bay Hotel and Kemmuna Ltd., owner of the Comino Hotel. Also in Brian Mizzi s directorship portfolio is The Institute of English Language Studies Ltd. of which Mizzi Organisation is a substantial shareholder. Gerald J. Zammit A member of the Plaza Executive Management Committee, Plaza s Marketing Committee, Sliema s Business Community and a Plaza Board member since Mr. Zammit is also actively involved in marketing, communications and new technologies. Adrian Strickland KM Mr. Strickland was formerly Chairman of CAM Group and has been Senior Vice President of the Malta Chamber of Commerce. Presently, he is Chairman of Strickland Ltd. Executive Management Lionel A. Lapira - Chief Executive Officer Mr. Lapira joined the Company on 1 July 1994 and has since occupied a number of posts within the Company including Commercial Manager, Company Secretary, Compliance Officer and member of the Company s Executive Management Committee. He has been a member of the ICSC (International Council of Shopping Centres) since 1995 and in 1999 was awarded AMD (Accredited Marketing Director), CMD (Certifi ed Marketing Director) status by the ICSC. In January 2000, the Company appointed him General Manager with responsibilities for operations, human resources, leasing, marketing and property management. With qualifi cations and experience in management, fi nance, marketing and diplomatic studies, Mr. Lapira obtained his MBA at Henley-Brunel University in Prior to joining Plaza Centres p.l.c., he occupied senior management positions in the local hospitality, entertainment and leisure industry. Mr. Lapira was appointed Chief Executive Officer on 1 January 2005 and has since served as Chairperson of Plaza s Marketing Committee and as a Committee member of the Sliema Business Community. 7

9 PLAZA CENTRES p.l.c. nu Directors Report The Directors present their report and the audited fi nancial statements for the year ended 31 December. Principal activities The Company s principal activity, which is unchanged since last year, is to lease and manage the Plaza Shopping and Commercial Centre. Review of the business Plaza Centres p.l.c. s revenue for the year ended 31 December was 2,061,794 (: 1,999,827) whilst profi t before tax amounted to 1,309,815 (: 1,315,411). Profi t after tax amounted to 832,700 (: 836,783) whilst the Company s cost to income ratio increased marginally to 32.8% (: 30.8%). In, occupancy was 96.1% (: 94.2%) and similar occupancy levels are anticipated during During, the Company s extension project progressed according to plan with 85% of the areas leased. The new leases are expected to come on stream during the fi rst quarter of Results and dividends The fi nancial results are set out on page 18. The Directors recommend the payment of a fi nal dividend of 707,795 (: 790,776). Directors The Directors of the Company who held offi ce during the year were: Albert Mizzi - Chairman David G. Curmi - appointed 29 April Charles J. Farrugia Brian R. Mizzi Adrian Strickland Marzena Formosa - appointed 29 April Gerald J. Zammit Peter Borg - resigned 29 April Anne Marie Tabone - resigned 29 April The Directors are required in terms of the Company s Articles of Association to retire at the forthcoming Annual General Meeting and may offer themselves for re-appointment or re-election. A shareholder holding not less than 14 per cent of voting rights of the issued share capital or a number of shareholders who between them hold not less than 14 per cent, shall appoint one Director for every such 14 per cent holding by letter addressed to the Company. All shares not utilised to make appointments in terms of the above shall be entitled to vote at the Annual General Meeting to elect the remaining Directors. The Memorandum and Articles of the Company provides for a Board of Directors of not less than fi ve and not more than seven members. 8

10 Rpot Report PLAZA CENTRES p.l.c. Directors Report (continued) Directors statement of responsibilities in relation to the financial statements The Directors are required by the Companies Act, 1995 to prepare fi nancial 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 profi t or loss for that period. In preparing the fi nancial statements, the Directors are responsible for: ensuring that the fi nancial 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 fi nancial statements are prepared on the going concern basis unless it is inappropriate to presume that the Company will continue in business as a going concern. The Directors are also responsible for designing, implementing and maintaining internal control as the Directors determine is necessary to enable the preparation of the fi nancial statements that are free from material missatetement, whether due to fraud or error, and that comply with the Companies Act, 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 fi nancial statements of Plaza Centres p.l.c. for the year ended 31 December are included in the Annual Report, which is published in hard-copy printed form and made available on the Company s website. The Directors are responsible for the maintenance and integrity of the Annual Report on the website in view of their responsibility for the controls over, and the security of, the website. Access to information published on the Company s website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of fi nancial statements may differ from requirements or practice in Malta. The Directors further confi rm that, to the best of their knowledge: the fi nancial statements give a true and fair view of the fi nancial position of the Company as at 31 December, and of its fi nancial performance and its cash fl ows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU; and the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. Going concern basis After making due enquiries, the Directors have a reasonable expectation, at the time of approving the fi nancial statements, that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the fi nancial statements. 9

11 PLAZA CENTRES p.l.c. nu Directors Report (continued) Auditors PricewaterhouseCoopers have indicated their willingness to continue in offi ce and a resolution for their re-appointment will be proposed at the Annual General Meeting. On behalf of the board Albert Mizzi Chairman Charles J. Farrugia Director Registered offi ce: The Plaza Commercial Centre Level 8 Bisazza Street Sliema SLM 1640 Malta 3 March

12 Rpot Report PLAZA CENTRES p.l.c. Corporate Governance - Statement of compliance Introduction Pursuant to Listing Rule 8.36 of the Listing Rules issued by the Listing Authority, Plaza Centres p.l.c. ( the Company ) should endeavour to adopt the principles of good corporate governance contained in Appendix 8.1 of the Listing Rules 1. In terms of Listing Rules 8.37 and 8.38 the Company hereby reports on the extent of its adoption of the principles (also referred to as the Code ) for the fi nancial year being reported upon. The Company acknowledges that the Code does not dictate or prescribe mandatory rules, but recommends principles of good practice. The Directors believe that such practices are generally in the best interests of the Company and its shareholders, and they have adopted such measures as they consider to be the most suitable for the size, nature and operations of the Company. Roles and responsibilities The Company s governance principally lies in its Board of Directors, which is responsible for the overall setting of the Company s policies and business strategies. The Company s principal activity is to lease and manage the Plaza Shopping and Commercial Centre. In fulfi lling its mandate, the Board of Directors assumes responsibility to: a) Establish appropriate corporate governance standards; b) Review, evaluate and approve, on a regular basis, long-term plans for the Company; c) Review, evaluate and approve the Company s budgets and forecasts; d) Review, evaluate and approve major resource allocations and capital investments; e) Review the fi nancial and operating results of the Company; f) Ensure appropriate policies and procedures are in place to manage risks and internal control; g) Review, evaluate and approve the overall corporate organisation structure, the assignment of management responsibilities and plans for senior management development including succession; h) Review, evaluate and approve compensation to senior management; i) Review periodically the Company s objectives and policies relating to social, health and safety and environmental responsibilities. The Board delegates authority to, and accountability, for the Company s day to day business to a team, which during was composed of the Chairman, Mr. Albert Mizzi, the Chief Executive Offi cer, Mr. Lionel Lapira and Mr. Gerald J. Zammit. Matters relating to administration, fi nance and strategy are discussed at Board level. The Company has adopted a corporate decision-making and supervisory structure that is tailored to suit its requirements and designed to ensure the existence of adequate controls and procedures within the Company, whilst retaining an element of fl exibility essential to allow the Company to react promptly and effi ciently to the dictates of its business, its size and the economic conditions in which it operates. In general, the Directors believe that the Company has adopted appropriate structures to achieve an adequate level of good corporate governance, together with an adequate system of control in line with the Company s requirements. 1 The Listing Rules have been amended and re-numbered. The Code of Principles of Good Corporate Governance has also been amended and is currently set out as Appendix 5.1 to Chapter 5 of the Listing Rules (as amended). The Code as amended shall only come into force with respect to the Company as from the fi nancial year ending 31 December Accordingly this Statement of compliance is based on the Code s provisions and requirements that applied to the fi nancial year ended 31 December. 11

13 PLAZA CENTRES p.l.c. nu Corporate Governance - Statement of compliance (continued) Composition of the Board The Board of Directors has throughout the period under review provided the necessary leadership in the overall direction of the Company, and has adopted systems whereby it obtains timely information from the CEO. This ensures an open dialogue between the CEO and Directors at regular intervals, and not only at meetings of the Board. The Company has segregated the functions of the CEO and the Chairman, with the CEO heading the Executive team whilst the Chairman s main function is to lead the Board. During the Board was composed of Mr. Albert Mizzi, Chairman, Mr. David G.Curmi, Mr. Brian R. Mizzi, Mr. Adrian Strickland, Ms. Marzena Formosa, Mr. Charles J. Farrugia and Mr. Gerald J. Zammit. All Directors not on the Executive team serve in a non-executive capacity. The Directors believe that the attendance of the CEO at Directors meetings as well as regular reporting and ongoing communication through the Committee described above serves the purposes of the Company adequately, given its size and nature of operations. Pursuant to generally accepted practices, as well as the Company s Articles of Association, the appointment of Directors to the Board is reserved exclusively to the Company s shareholders, except in so far as an appointment is made to fi ll a vacancy on the Board. It is the practice of the Board that when a potential confl ict of interest arises in connection with any transaction or other matter, the potential confl ict of interest is declared so that steps may be taken to ensure that such items are appropriately dealt with. The steps taken will depend on circumstances, and may include the setting up of ad-hoc committees of independent Directors that would assist and monitor management as appropriate in the execution of specifi c transactions. Commercial relationships between the Company and other companies are related by way of common Directors and shareholders. Related party transactions may include the purchase of supplies and services, and the letting of outlets. Contracts are entered into in the ordinary course of business with shareholders and other parties in which the Directors have a benefi cial interest. Terms and conditions of new contracts negotiated with related parties are reviewed by the Company s Audit Committee. During the fi nancial year, these contracts included: supplies and services of 29,889 (: 222,846) and income from lettings and premia of 200,749 (: 331,977). By virtue of the Memorandum and Articles of Association, the Directors are obliged to keep the Board advised, on an ongoing basis, of any interest that could potentially confl ict with that of the Company. The Board member concerned shall not take part in the assessment by the Board as to whether a confl ict of interest exists. A Director shall not vote in respect of any contract, arrangement, transaction or proposal in which he has material interest in accordance with the Memorandum and Articles of Association. As at the date of this Statement, the interests of the Directors in the shares of the Company were as follows (shares held): Benefi cial interests Brian R. Mizzi 755,095 Albert Mizzi 754,280 Gerald J. Zammit 125,100 Adrian Strickland 111,031 The aggregate amount of remuneration paid to all Directors of the Company was 22,400 during and each Director received an annual remuneration of 3,200. Board meetings concentrate mainly on strategy, operational performance and fi nancial performance. The Board also delegates specifi c responsibilities to the CEO and ad-hoc Committees as may be required from time to time. 12

14 Rpot Report PLAZA CENTRES p.l.c. Corporate Governance - Statement of compliance (continued) Exercise of the role of the Board The activities of the Board are exercised in a manner designed to ensure that it can function independently of management and effectively supervise the operations of the Company. Each Board meeting is presented with a report by the CEO, which regularly includes the Company s management accounts circulated monthly to each Director; a management commentary on the results and on relevant events and decisions; and sets out background information on any matter requiring the approval of the Board. Apart from setting the strategy and direction of the Company, the Board retains direct responsibility for approving and monitoring: (a) annual plans and budgets; (b) the remuneration of the Chief Executive Officer, which is determined on an arm s length basis by reference to the responsibility entailed in this post and to the Board s assessment of the performance of the offi cial; (c) policies regulating relationships with tenants and prospective tenants, including the procedures to be followed from time to time to ensure the timely receipt of all amounts due to the Company; (d) tenancies which may require a variation from planned terms; (e) proposals for potential new investments, including any transactions which may entail the acquisition or disposal of property; and (f) the approval of interim and annual fi nancial statements and reports, and of relevant public announcements made by the Company; the Company s compliance with its continuing listing obligations; and the systems of internal control established by management. The Board does not consider it necessary to constitute separate committees to deal, inter alia, with item (b) above, as might be appropriate in a larger company. In ensuring compliance with other statutory requirements and with continuing listing obligations, the Board is advised directly, as appropriate, by its appointed broker, legal advisor and external auditors. Directors are entitled to seek independent professional advice at any time on any aspect of their duties and responsibilities, at the Company s expense. During the fi nancial year under review, the Board held 9 meetings (: 11). Over the period under review it is the Board s view that all members of the Board, individually and collectively, have contributed in line with the required levels of diligence and skill. In addition, the Board believes that its current composition endows the Board with a cross-section of skills and experience and achieves the appropriate balance required for it to function effectively. 13

15 PLAZA CENTRES p.l.c. nu Corporate Governance - Statement of compliance (continued) Audit Committee As part of its corporate governance structures, the Company has established an Audit Committee in line with the requirements of the Listing Rules. Through the Audit Committee, the Board reviews the effectiveness of the Company s system of internal controls. This Committee is made up of Mr. Charles J. Farrugia, Mr. Adrian Strickland and Ms. Marzena Formosa. The terms of reference, approved by the Board of Directors, are modelled on the recommendations of the Listing Rules. They include, inter alia, the responsibility of reviewing the fi nancial reporting process and policies, the system of internal control and management of fi nancial risk, the audit process, any transactions with related parties and the Company s process for monitoring compliance with laws and regulations. The external auditors are invited to attend specifi c meetings of the Audit Committee and are entitled to convene a meeting if they consider that it is necessary. When the Audit Committee s monitoring and review activities reveal cause for concern or scope for improvement, it shall make recommendations to the Board on the action needed to address the issue or make improvements. In accordance with the Listing Rules the Audit Committee met 5 times during (: 5). Each Director received a remuneration of 2,000 pro-rated during. Communication with Shareholders and the Market The Board is of the view that over the period under review the Company has communicated effectively with the market through a number of Company announcements that it published informing the market of signifi cant events happening within the Company. Business at the Company s Annual General Meeting (AGM) covers the approval of the Annual Report and Audited Financial Statements, the declaration of a dividend, if any, the election of Directors, the determination of the maximum aggregate emoluments that may be paid to Directors, the appointment of auditors and the authorisation of the Directors to set the auditors remuneration. Apart from the AGM, the Company intends to continue with its active communication strategy in the market, and shall accordingly continue to communicate with its shareholders and the market by way of the Annual Report and Financial Statements, by publishing its results on a six-monthly basis during the year, and by way of Company announcements to the market in general. The Company recognises the importance of maintaining a dialogue with the market to ensure that its strategies and performance are well understood and disclosed to the market in a timely manner. The Company s website ( also contains information about the Company and its business, which is a source of further information to the market. The Directors are committed to high standards of ethical conduct and to contribute to the development of the well-being of employees and their families as well as the local community and society at large. The Directors statement of responsibilities for preparing the fi nancial statements is set out on page 9. 14

16 Rpot Report PLAZA CENTRES p.l.c. Independent auditor s report To the Shareholders of Plaza Centres p.l.c. Report on the Financial Statements We have audited the fi nancial statements of Plaza Centres p.l.c. on pages 17 to 36 which comprise the statement of fi nancial position as at 31 December, and the statements of comprehensive income, changes in equity and cash fl ows for the year then ended and a summary of signifi cant accounting policies and other explanatory information. Directors Responsibility for the Financial Statements As explained more comprehensively in the Directors statement of responsibilities in relation to the fi nancial statements on page 9, the Directors are responsible for the preparation of fi nancial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of the Maltese Companies Act, 1995 and for such internal control as the Directors determine is necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. Opinion In our opinion the fi nancial statements give a true and fair view of the fi nancial position of the Company as at 31 December, and of the Company s fi nancial performance and its cash fl ows for the year then ended in accordance with IFRSs as adopted by the EU; and have been properly prepared in accordance with the requirements of the Maltese Companies Act,

17 PLAZA CENTRES p.l.c. nu Independent auditor s report (continued) Report on Other Legal and Regulatory Requirements The Listing Rules issued by the Malta Listing Authority require the Directors to prepare and include in their Annual Report a Statement of compliance providing an explanation of the extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures that they have taken to ensure compliance throughout the accounting period with those Principles. The Listing Rules also require the auditor to include a report on the Statement of compliance prepared by the Directors. We read the Statement of compliance and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the fi nancial statements included in the Annual Report. Our responsibilities do not extend to considering whether this statement is consistent with any other information included in the Annual Report. We are not required to, and we do not, consider whether the Board s statements on internal control included in the Statement of compliance cover all risks and controls, or form an opinion on the effectiveness of the Company s corporate governance procedures or its risk and control procedures. In our opinion, the Statement of compliance set out on pages 11 to 14 has been properly prepared in accordance with the requirements of the Listing Rules issued by the Malta Listing Authority. We also read other information contained in the Annual Report and consider whether it is consistent with the audited fi nancial statements. The other information comprises only the chairman s statement, shareholder information and the Directors report. Our responsibilities do not extend to any other information. We also have responsibilities: Under the Maltese Companies Act, 1995 to report to you if, in our opinion: The information given in the Directors report is not consistent with the fi nancial statements. Adequate accounting records have not been kept, or that returns adequate for our audit have not been received from branches not visited by us. The fi nancial statements are not in agreement with the accounting records and returns. We have not received all the information and explanations we require for our audit. Certain disclosures of Directors remuneration specifi ed by law are not made in the fi nancial statements, giving the required particulars in our report. Under the Listing Rules to review the statement made by the Directors, set out on page 9, that the business is a going concern together with supporting assumptions or qualifi cations as necessary. We have nothing to report to you in respect of these responsibilities. 167 Merchants Street Valletta Malta Romina Soler Partner 3 March

18 Rpot Report PLAZA CENTRES p.l.c. Statement of financial position As at 31 December Notes ASSETS Non-current assets Property, plant and equipment 4 28,022,993 26,847,076 Current assets Trade and other receivables 5 343, ,756 Current tax asset - 16,956 Cash and cash equivalents 6 12,225 20,954 Total current assets 356, ,666 Total assets 28,379,062 27,185,742 EQUITY AND LIABILITIES Capital and reserves attributable to owners of the Company Share capital 7 4,385,738 4,385,738 Share premium 8 3,094,868 3,094,868 Revaluation reserve 9 10,498,075 10,509,323 Retained earnings 2,257,440 2,204,268 Total equity 20,236,121 20,194,197 Non-current liabilities Borrowings 10 2,549,567 1,505,852 Deferred tax liabilities 11 2,896,462 2,879,432 Trade and other payables , ,442 Total non-current liabilities 6,079,438 5,160,726 Current liabilities Borrowings 10 1,315,221 1,168,272 Trade and other payables , ,547 Current tax liabilities 16,832 - Total current liabilities 2,063,503 1,830,819 Total liabilities 8,142,941 6,991,545 Total equity and liabilities 28,379,062 27,185,742 The notes on pages 21 to 36 are an integral part of these fi nancial statements. The fi nancial statements on pages 17 to 36 were authorised for issue by the Board on 3 March 2011 and were signed on its behalf by: Albert Mizzi Chairman Charles J. Farrugia Director 17

19 PLAZA CENTRES p.l.c. nu Statement of comprehensive income Notes Year ended 31 December Revenue 2,061,794 1,999,827 Marketing costs 13 (62,423) (42,689) Maintenance costs 13 (16,393) (14,758) Administrative expenses 13 (264,353) (233,239) Operating profit before depreciation 1,718,625 1,709,141 Depreciation 13 (333,925) (325,332) Operating profit 1,384,700 1,383,809 Finance income 15 16,277 16,325 Finance costs 16 (91,162) (84,723) Profit before tax 1,309,815 1,315,411 Tax expense 17 (477,115) (478,628) Profit for the year - total comprehensive income 832, ,783 Earnings per share (cents) 19 8c85 8c89 The notes on pages 21 to 36 are an integral part of these fi nancial statements. 18

20 Rpot Report PLAZA CENTRES p.l.c. Statement of changes in equity Notes Share capital Share premium Revaluation reserve Retained earnings Total equity Balance at 1 January 4,385,738 3,094,868 10,520,571 2,100,884 20,102,061 Comprehensive income Profi t for the year , ,783 Other comprehensive income: Depreciation transfer through asset use, net of deferred tax (11,248) 11,248 - Total comprehensive income - - (11,248) 848, ,783 Transactions with owners Dividends relating to (744,647) (744,647) Balance at 1 January 4,385,738 3,094,868 10,509,323 2,204,268 20,194,197 Comprehensive income Profi t for the year , ,700 Other comprehensive income: Depreciation transfer through asset use, net of deferred tax (11,248) 11,248 - Total comprehensive income - - (11,248) 843, ,700 Transactions with owners Dividends relating to (790,776) (790,776) Balance at 31 December 4,385,738 3,094,868 10,498,075 2,257,440 20,236,121 The notes on pages 21 to 36 are an integral part of these fi nancial statements. 19

21 PLAZA CENTRES p.l.c. nu Statement of cash flows Notes Year ended 31 December Cash flows from operating activities Cash generated from operations 21 1,289,848 1,527,163 Interest received 15 16,277 16,325 Interest paid (71,403) (60,925) Income tax paid (426,297) (529,744) Net cash from operating activities 808, ,819 Cash flows from investing activities Purchase of property, plant and equipment (1,217,042) (1,571,636) Net cash used in investing activities (1,217,042) (1,571,636) Cash flows from financing activities Increase in borrowings 10 1,043, ,423 Dividends paid 20 (790,776) (744,647) Net cash from/(used in) fi nancing activities 252,939 (52,224) Net movement in cash and cash equivalents (155,678) (671,041) Cash and cash equivalents at beginning of year (924,478) (253,437) Cash and cash equivalents at end of year 6 (1,080,156) (924,478) The notes on pages 21 to 36 are an integral part of these fi nancial statements. 20

22 Rpot Report PLAZA CENTRES p.l.c. Notes to the financial statements 1. Summary of significant accounting policies The principal accounting policies applied in the preparation of these fi nancial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 1.1 Basis of preparation These fi nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of the Companies Act, They have been prepared under the historical cost convention, except as modifi ed by the fair valuation of the land and buildings class of property, plant and equipment. The preparation of fi nancial 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). Standards, interpretations and amendments to published standards effective in In, the Company adopted new standards, amendments and interpretations to existing standards that are mandatory for the Company s accounting period beginning on 1 January. 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. 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 fi nancial statements but are mandatory for the Company s accounting periods beginning after 1 January. The Company has not early adopted these revisions to the requirements of IFRSs as adopted by the EU and the Company s directors are of the opinion that there are no requirements that will have a possible signifi cant impact on the Company s fi nancial statements in the period of initial application. 1.2 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments has been identifi ed as the Board of Directors that makes strategic decisions. The Board of Directors considers the Company to be made up of one segment, that is to lease and manage the Plaza Shopping and Commercial Centre. 1.3 Foreign currency translation (a) Functional and presentation currency Items included in the fi nancial statements are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The fi nancial 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 remeasured. 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 profi t or loss. 21

23 PLAZA CENTRES p.l.c. nu 1. Summary of significant accounting policies - continued 1.4 Property, plant and equipment Property, plant and equipment, comprising land and buildings, electrical installations, plant, machinery and equipment, and furniture and fi ttings are initially recorded at cost. Land and buildings are subsequently shown at market value, based on periodic, but at least triennial valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. 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 benefi ts associated with the item will fl ow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profi t or loss during the fi nancial period in which they are incurred. Increases in the carrying amount arising on revaluation of land and buildings are credited to the revaluation reserve in shareholders equity. Decreases that offset previous increases of the same asset are charged against the revaluation reserve directly in equity; all other decreases are charged to profi t or loss. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to profi t or loss and depreciation based on the asset s original cost, net of any related deferred income taxes, is transferred from the revaluation reserve to retained earnings. Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amount to their residual values over their estimated useful lives, as follows: % Buildings 1 Electrical installations 4 Plant, machinery and equipment 5-20 Furniture and fi ttings Assets in the course of construction are not depreciated. The assets residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount (Note 1.5). Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised within operating profi t. On disposal of a revalued asset, the amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. 22

24 Rpot Report PLAZA CENTRES p.l.c. 1. Summary of significant accounting policies - continued 1.5 Impairment of non-financial assets Assets that have an indefi nite useful life are not subject to amortisation and are tested annually for impairment. 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 identifi able cash fl ows (cash-generating units). Non-fi nancial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period. 1.6 Financial assets Classification The Company classifi es its fi nancial assets in the loans and receivables category. The classifi cation depends on the purpose for which the fi nancial assets were acquired. Management determines the classifi cation of its fi nancial assets at initial recognition. Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading the asset. They are included in current assets, except for maturities greater than twelve months after the reporting period. These are classifi ed as non-current assets. The Company s loans and receivables comprise trade and other receivables and cash and cash equivalents in the statement of fi nancial position (Notes 1.7 and 1.8) Recognition and measurement The Company recognises a fi nancial instrument in its statement of fi nancial position when it becomes a party to the contractual provisions of the instrument. Loans and receivables are initially recognised at fair value plus transaction costs. All regular way transactions in assets classifi ed in the loans and receivables category are accounted for using settlement date accounting, that is, on the date an asset is delivered to or by the entity. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Amortised cost is the initial measurement amount adjusted for the amortisation of any difference between the initial and maturity amounts using the effective interest method. Financial assets are derecognised when the rights to receive cash fl ows from the fi nancial assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership or has not retained control of the fi nancial asset. The Company assesses at the end of each reporting period whether there is objective evidence that a fi nancial asset or a group of fi nancial assets is impaired. If there is objective evidence that an impairment loss on loans and receivables has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset s original effective interest rate. Impairment testing of trade receivables is described in Note

25 PLAZA CENTRES p.l.c. nu 1. Summary of significant accounting policies - continued 1.7 Trade and other receivables Trade receivables are amounts due from customers for services rendered in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classifi ed as current assets. If not, they are presented as non-current assets. Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. Signifi cant fi nancial diffi culties of the debtor, probability that the debtor will enter bankruptcy or fi nancial reorganisation, and default or delinquency in payments are considered indications that the receivable is impaired. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash fl ows, discounted at the effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profi t or loss. When a receivable is uncollectible, it is written off against trade and other receivables. Subsequent recoveries of amounts previously written off are credited to profi t or loss. 1.8 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of fi nancial position. 1.9 Share capital Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of new shares are shown as a deduction in equity from the proceeds Trade and other payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classifi ed as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profi t or loss over the period of the borrowings using the effective interest method. Borrowings are classifi ed 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. Borrowing costs are capitalised within property, plant and equipment in so far as they relate to the specifi c external fi nancing of assets under development. Such borrowing costs are capitalised up to the time that the assets are brought into use. Other borrowing costs are recognised as an expense in the year to which they relate. 24