Company Registration No.: C
82218
Contents Page
Chairman’s Statement 1 - 2
Directors' Report 3 - 10
Corporate Governance - Statement of Compliance 11 - 19
Independent Auditor's Report 20 - 28
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
29 - 30
Consolidated Statement of Financial Position 31 - 32
Consolidated Statement of Changes in Equity 33 - 35
Consolidated Statement of Cash Flows 36 - 37
Notes to the Consolidated Financial Statements 38 - 98
1
1
1
1
1
0
0
0
0
1
for the year ended
31 December 2021
Stivala Group Finance p.l.c.
Annual Report and Consolidated Financial Statements
Chairman’s Statement
for the year ended 31 December 2021
Development Projects
Stivala Group Finance p.l.c.
On26April2021,oneofthemajorshareholders,CarloStivala,relinquishedhis25%ownership interest in
theStivalaGroupandinconsideration,€60.0millionofimmovablepropertyowned bytheGroupwas
transferredtoacompanyultimatelyownedbyCarloStivalaandhisdescendants.Thedivestment process
was concluded smoothly and as planned. We wish Carlo all the very best in his future endeavours.
Principal Divestment of Major Shareholder
Whilethepandemichasadverselyimpactedourhospitalitybusiness,Iamencouragedbytheimmediate
increaseintravel demandexperiencedduring2021 followingtheeasingoftravelrestrictionsbysource
countries.Therearesignsallaroundusthatpeopleareadaptingtoa“newnormal”–andcertainlythe
returnoftravelisoneofthebestindicators.In2021,ourhospitalityoperationsgenerated€8.6millionin
revenue, a 57% surgeover 2020, whilegrossprofitincreased by169%to€5.3 million,thoughstill36%
below pre-pandemic levels.
ThepropertylettingdivisionoftheGroupremainedstrongthroughout2021atalmostfulloccupancy.In
thisregard,revenuegeneratedbythisdivisionamountedto€6.2million,beingmarginallyhigher ona
comparablebasis(2020:€6.1million).Iampleasedtoreportthatthenewly developed STBalluta Business
Centre in Sliema, comprising 8 floors of office space, has been fully leased.
Performance
The Group has continued to position itself for growth by investing in its properties. During 2021, the
Group was involved in the following development projects:
Development works are currently underway for the construction of a 15-floor commercial building in
TestaferrataStreet,Ta’Xbiex.Oncompletion,thepropertywillcomprise14floorsofrentableofficespace
andatopfloorearmarkedforcateringpurposes.TheGroupexpectstocompletetheprojectbytheendof
2024 at an estimated cost of €14.5 million.
ST Tower, Ta’ Xbiex
Ponsomby Hotel and School, Gzira
TheGroupispresently developingahotelandschooloverasiteareameasuringcirca400m2.Thisproject
isscheduledto becompletedbyQ12023atanestimatedcostofcirca€7.9million. Theproposedproperty
willcompriseaschoolastotheinitial4floorsandan82-roomhotelfromthe5thfloortothe10thfloor.
Therooflevelwillincludeapoolanddeckingarea.Theafore-mentionedschoolissettoformpartofan
Italian-based higher education institution specialising in osteopathy and physiotherapy.
Consequently, the consolidated statement of profit or loss and other comprehensive income for 2021
reflects anetloss on major shareholder’s divestiture of€21.1million which hasbeenmitigated by anuplift
infairvalueofinvestmentpropertiesof€30.0million andbuildings underproperty,plantandequipment
of €30.3 million (net of deferred tax), respectively.
TheGroup’sbusinessmodelremainsstrongwithapropertyportfoliovaluedat€331million(2020:€325
million).Netborrowingsasat31December2021amountedto€85.2millioncomparedto€83.4milliona
year earlier.
1
Chairman’s Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Corporate Social Responsibility
7
Looking Forward
The Chairman's Statement has been signed by Mr. Michael Stivala ('the Chairman') on 28 April 2022 as per
submitted ESEF Annual Financial Report.
Movenpick hotel (redevelopment of the Sliema Hotel)
TheGroupisplanningtodemolishthe70-roomSliemaHotelanddevelopa165-room5-starhotelatan
estimatedcostof€10.5million.Furthermore,theGrouphasenteredintoafranchiseagreementtooperate
thesaidhotelunderthe“Movenpick”brandname.ClosureoftheSliemaHotelwilltakeplaceafterthe
new Novotel Hotel is completed and fully operational.
Residential units for resale
The Group is developing a property in Sqaq Dun Andrea, Msida which is presently inshell form. On
completion, the project will consist of 54 residential units spread over 4 adjacent blocks.
TheGrouphasbuildingpermitsinhandfortheredevelopmentofthe54-roomBlubayBlock locatedin
PonsombyStreet,Gzira. Worksarescheduled tocommenceinQ42022andwillextendforaperiodof
circa30monthsatacostofapproximately€15million.Theplanistodevelopan11-floorpropertyhaving
292 rooms, along with undergroundparkingandancillary facilitiessuch as an indoorpool and fitness
area,aswellasapoolanddeckareaatrooflevel.Furthermore,theGrouphasenteredintoafranchise
agreement for the purposes of operating the proposed 4-star hotel under the “Novotel” brand name.
Novotel Hotel (redevelopment of the Blubay Suites & Apartments)
Aswelookoutoverthenextseveralyears,webelieve ourproperty portfoliois poisedtocapitaliseon
majortrendsweseeimpactingtheGroup’sbusinessactivities. Focusingonhospitality,webelievefirmly
intheresilienceoftravelwhichleadustobeoptimisticaboutthefutureofourGroupandthetourism
industry in Malta.
I would like to take this opportunity to thank all our employees, business partners, shareholders, our
Board of Directors and other stakeholders for their continued support.
Refer to page 17 for the Group's commitment to corporate social responsibility.
2
Directors' Report
for the year ended 31 December 2021
Principal activities
Review of business
Performance
The Bond Issue
On the other hand, the increase in the Group's total comprehensive income for the year is primarily due to
increasing change in fair value of investment property and property, plant and equipment.
Inprioryear,theGroupcommissionedFalzonandCutajar-ArchitectsandCivilEngineerstocarryouta
thoroughvaluationexerciseofthepropertiesownedbytheGroup.Incurrentyear,thedirectorsassessed
the valuationof theirproperties at yearend as part ofthe annualreassessment basedon the market values
of similar properties around the area. This has resulted in the reporting of a change in fair value of
investment propertyand property plant andequipment of €27,570,497and €30,355,009, net ofdeferredtax
in the statement of profit or loss and other comprehensive income, respectively.
Stivala Group Finance p.l.c.
The Board of Directors are hereby presenting their annual report together with the audited financial
statements of the Group and the Company for the year ended 31 December 2021.
By virtueoftheprospectus dated25September2017and18July2019,theCompany issued45,000,0004%
securedbondswithafacevalueof€100each,redeemable atparon18October2027and15,000,0003.65%
securedbondswithafacevalueof€100each,redeemableatparon29July2029,respectively.Thefunds
receivedwereintendedforfurtherpurchaseanddevelopmentofitsproperties,inlinewiththeGroup's
vision of continuous business expansion.
TheprincipalactivityoftheCompanyistoactasafinance andinvestmentcompany,inparticularthe
financing or re-financing of the funding requirements of related companies within the Stivala Group.
The
principal
activities
of
the
Group
relate
to
the
property
letting,
development
and
hospitality.
The
Group owns and leases a number of commercial, residential and office properties. These include
apartmentsandvarioushotelsnamely BayviewHotel,BlubayApartments,BlubaySuites, SliemaHotel
and Azur Hotel, majority of which are situated in Gzira and Sliema.
TheCompanyregisteredalossbeforetaxof€21,182,263duringtheyearended31December2021(2020:
profit before tax of €1,020,427).
GiventheGroup’sandCompany’sfinancingstructureandthepositivenetassetspositionoftheGroup
and theCompany at the end of thefinancialyear,theDirectorsconsider theGroup’s andCompany’s state
of affairs as at the close of the financial year to be satisfactory.
TheGroupregisteredaconsolidatedprofitbeforetaxof€4,395,177duringtheyearended31December
2021 (2020: €27,472,088).
The Group's revenue forthe year amounts to€15,065,293 (2020:€11,748,502).The mainrevenue streams of
the groupare hospitalityand rental income. The rental income isslightly higher compared withprior year
whileasignificant100%increasewasnotedforthehospitalityindustryduetogradualeasingofcovid-19
restrictions.After deductingthe mainexpensesbeing the costof sales and distribution costsrelated to
hospitalityaswellasadministrativeexpenses,theGroupincurredanoperatinglossof€1,178,984(2020:
registered an operating profit of €1,257,424).
TheCompany'srevenueamounting to€41,142,087(2020:€3,458,801)isderivedfromdividendsreceivable
fromitssubsidiary.ThemajorcostoftheCompanyisthebondinterestpayableamountingto€2,347,500
(2020:€2,347,500).TheCompanyregisteredalossaftertaxationof€20,380,454(2020:profitaftertaxation
of€200,000)andasatyearend,itstotalequity amountedtonetliabilityof€18,751,247(2020:netassetsof
€1,674,207).
3
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Principal risks and uncertainties
The key risks faced by the group include credit risk, strategic risk, operational risk, liquidity risk and
legislativerisks.Togetherwithotherrisksanduncertaintiesinherentinthebusiness,theserequirestrong
capital management as safeguard against competent authority requirements and unfavourable events.
Given such, the Group regularly reviews operational and capital targets against actual and forecast
business levelsto minimise such risksif necessary, tothe most considerable levelpossible in theinterest of
institutional stakeholders.
TheDirectorsareawareofthevariousrisksfacedbytheGroupasaresult ofitsdiversifiedbusinesslines
primarily on hospitalityand property development and letting. A number of measures are in place to
ensure that such risks and uncertainties are maintained at acceptable levels and are in line with the
Group’s risk strategy of sustainable, long-term growth and profitability.
The main types of risk types are outlined hereunder:
Credit risk
Strategic risk
This risk relates to the value of Group's assets and local property market in general.
The Group has strict guidelines and engages competent professionals on quality and valuation of its
investment properties and property, plant and equipment. The Group's properties are rented out to
varioustenants,exceptforthosesiteswheredevelopmentisinprogress.TheGroupcurrentlyhaslease
agreementswithin-substancefixedrentalreceivablesinplaceafterthenon-cancellableperiod,which will
protecttheGroupfromunforeseen circumstancesandinflation.AlthoughCOVID-19hadanimpacton
deferral of rental collections from some of its tenants, the Group ensures to implement sound capital
management policies and flexible cash flow as disclosed below under liquidity risk, to mitigate such risk.
Credit risk is the risk that a counterparty willnot meet its obligations under a financial instrumentor
customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating
activities and from its financing activities including deposits with banks.
CustomercreditriskismanagedbytheGroup'smanagementsubjecttotheGroup'sestablishedpolicy,
procedures and control relating to customer credit risk management. Credit quality of a customer is
assessed based on each customer's credit limits. Outstanding customer receivables are regularly
monitored. An impairment analysis is performed on each reporting date in accordance with the
guidelines set in IFRS 9 Financial Instruments Standard. The Group exercises a prudent credit control
policy,andaccordingly,itisnotsubjecttoanysignificantexposureorconcentrationofcreditrisk.The
Group banks only with local financial institutions with high quality standard or rating. The Group's
operationsareprincipallycarriedoutinMaltaandmostoftheGroup'srevenueoriginatesfromclients
based in Malta.
Operational risk
Operational risk maybe defined as the risk of losses arising from defects or failures in its internal
processes,people,systemsorexternaleventsincludingrisksrelatedtofraud,technologicalandconduct
risk.
Operationalriskisinherentinallprocesses,systemsandactivitiesoftheGroup.Assuch,allemployees
are responsiblefor managingand controllingoperationalrisksassociated with theirown activitiesand
business processes where they are involved. The Group, in termsof operationalrisk management and
control, continues toidentify, evaluate andmitigate suchrisks, regardless ifthese actually occurredor not.
The Group also assesses at each reporting date(unless immediate evaluation is necessary) areasof concern
for improvement to minimise such operational risks, arising due to the volatile results of each year's
operations.
4
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Financial risk management and exposures
Events after reporting period
Thehotelindustrygloballyismarkedbystrongandincreasingconsolidationand manyoftheGroup’s
current and potential competitors may thus have bigger name recognition, larger customer bases and
greaterfinancialandotherresourcesthanthecompanieswithintheGroup.Inresponsetothis,theGroup
and the Company's hotels have undergone renovations that would cater the taste of the majority, still
being offerred at the most affordable cost.
Theoutbreakofnationorworld-widepandemicssuchasCovid-19mayhinderoccupationalhealthand
safetyoftheemployeesandheavilydisruptnormalbusinessoperations.Suchrisksareadditionaltothe
potentialeconomicimpactoncustomersandtheextentofrecoveryfollowingapossibleoutbreak.Taking
advantageofthelessonslearntfromCovid-19duringthispasttwoyears,byquicklyreactingtohealth
authorities advice and constantly implementing additional measures, the Group managed to maintain
operations. The Group's constant proactive approach to such adversity, will ensure that such risk is
mitigated.
Pandemics
Note32FinancialRiskManagementtothesefinancialstatementsprovidedetailsinconnectionwiththe
Company’s use of financial instruments, its financial risk management objectives and policies and the
financial risks to which it is exposed.
Legislative risks
Liquidity risk
The
Group
is
exposed
to
liquidity
risk
in
relation
to
meeting
future
obligations
associated
with
its
financial
liabilities. Prudentliquidityriskmanagementincludesmaintainingsufficientcashandcommittedcredit
lines to ensure the availability of an adequate amount of funding to meet the Group's obligations.
Alleventsoccuringafterthebalancesheetdateuntilthedateofauthorisationforissueofthesefinancial
statementsandthatarerelevantforvaluationandmeasurementasat31December2021fortheGroup
and the Company are included in these consolidated financial statements.
TheGroupisgovernedbyanumberoflawsandregulations.Failuretocomplycouldhavefinancialand
reputational implications and could materially affect the group's ability to operate. The Group has
embedded operating policies and procedures to ensure compliance with existing legislation.
TheGroup mayalsobe subjectto reputation and litigation riskas a resultof itscourseof actionsand
operations. This may pose significant effect on the Group’s and the variousstakeholders’ wellbeing, if
ignored. The Board of Directors exercises the highest levels of ethical behaviour possible through a
number of appropriate policies, procedures and controls, implemented on its day to day operations.
TheGroup isheavilydependentontheoperationsofthehotels itownsandtherental market.Itregularly
reviews thefinancialperformanceof its revenue streamsin orderto ensurethat thereis sufficient liquidity
to sustain itsoperations. Giventhe evolving nature ofCOVID-19,the Group’s immediatecash flowwill be
stretched. Througharrangementswithbankers, the Groupis seekingtosmoothenthe impact overthis
difficult period. Cost cut practices have also been continuously implemented.
5
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Future developments
Dividends and Reserves
Directors
Company Secretary
TheDirectorsarecloselymonitoringthepossibleimpactonitsoperationsandfinancialperformanceand
are committed to take all necessary steps to mitigate the impact. This has no impact on the financial
statements of the Group and the Company as at date of approval.
Mr. Joseph Brincat - Non-Executive Director (resigned on 30 April 2021)
Mr. Francis Gouder - Non-Executive Director
Mr. Ivan Stivala - Executive Director
Mr. Michael Stivala - Chairman/CEO and Executive Director
Mr. Martin John Stivala - Executive Director
Mr. Jean Paul Debono - Non-Executive Director (appointed on 21 April 2022)
On another note, the geopolitical situation in Eastern Europe intensified on February 24, 2022, with
Russia’sinvasionofUkraine.Thewarbetweenthetwocountriescontinuestoevolveasmilitaryactivity
proceedsandadditionalsanctions areimposed.Inadditiontothehumantollandimpactoftheeventson
entitiesthathaveoperationsinRussia,Ukraine,orneighboringcountries(e.g.,Belarus)orthatconduct
business withtheircounterparties,thewarisincreasingly affectingeconomicandglobalfinancialmarkets
andexacerbatingongoing economic challenges,includingissues suchas rising inflationand global
supply-
chain disruption.
Mr. Mark Bamber - Non-Executive Director (appointed on 1 March 2021 and resigned on 21 April 2022)
The strongupturn in 2022 provedthat the customers continue to trust the Group. Whilemajor renovations
took place in 2021 for ST BayviewHotel, the Group has other projects to refurbishand rebrand other
properties within the Group. These include development projects for ST Tower, Ponsonby Hotel and
School,DunAndrea,MovenpickHotelandNovotelHotel.AllofthesearepartoftheGroup'sultimate
objectivetofocusoncreating,acquiringandenhancingits operationstocreateshareholdervalueoverthe
mediumtermtoensuretheclientsgetthebestpossibleserviceandvalue.TheGroupremainstohavean
optimistic outlook for 2022.
Itisveryuncertaintoanticipate the political,economicandhealthhappeningworldwideincludingthe
Russia-Ukraine war and covid-19 pandemic as it continues to evolve. Despite these uncertainties, the
Group started 2022 with an upward trend on its hospitality revenue exceeding its budgets by
approximately 100% while the property letting/development sector continues to operate normally.
Dr. Ann Marie Agius - Non-Executive Director
The Directors of the Company since the beginning of the year up to the date of this report were:
TheresultsfortheyeararesetintheConsolidatedStatementofComprehensiveIncomeonpage29and
30.
The Board of Directors does not propose the payment of dividend in order to further strengthen the
financial position of the Group. Retained profits carried forward at the reporting date amounted to
€5,293,934(2020:€25,639,068)fortheGroupandaccumulatedlossesof €19,006,247(2020:retainedprofits
of €1,374,207) for the Company.
Ms. Antoinette Scerri
6
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Remuneration committee and corporate governance
Statement of Directors’ Responsibilities for the financial statements
Statement of responsibility pursuant to the Capital Market Rules issued by Malta Financial Services
Authority
The Directors are also responsible for designing, implementing and maintaining internal control as
necessary to enable the preparation of financial statements that are free from material misstatement,
whetherduetofraudorerror,andthatcomplywiththeMalteseCompaniesAct,1995(Cap.386).They
are also responsible for safeguarding the assets of the Group and the parent Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
TheDirectorsarerequiredbytheMalteseCompaniesAct,1995(Cap.386)topreparefinancialstatements
inaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEUwhichgiveatrue
and fair viewof thestateofaffairsofthe Companyasat theendof eachreporting periodandofthe profit
or loss for that period.
In preparing such 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 consistently appropriate accounting policies;
- making accounting estimates that are reasonable in the circumstances; and
- 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.
- designing, implementin, and maintaining internal controls relevant to the preparation of the Annual
Financial Report that is free from material non-compliance with the requirements of the ESEF RTS,
whetherduetofraudorerror,andconsequently,forensuringtheaccuratetransferoftheinformationin
the Annual Financial Report into a single electronic reporting format.
- the preparation and publication of the Annual Financial Report, including the consolidated financial
statementsandtherelevanttaggingrequirementstherein,asrequiredbyCapitalMarketsRule5.56A,in
accordance with the requirements of ESEF RTS,
The Directors confirm that in accordance with the Capital Market Rules, to the best of their knowledge:
Additionally, the directors are responsible for:
Thefinancialstatements ofStivalaGroupFinance p.l.c.fortheyearended31December2021areincluded
in the Annual Report 2021, which is published in hard-copy printed form and is available on the
Company’swebsite.TheDirectorsareresponsibleforthemaintenanceandintegrityoftheAnnualReport
onthewebsiteinviewof theirresponsibility forthecontrolsover,andthesecurityof,thewebsite.Access
to information published on the Company’s website is available in othercountries and jurisdictions, where
legislation governing the preparation and dissemination of financial statements may differ from
requirements or practice in Malta.
Duringtheperiodunderreview,thefunctionsoftheRemunerationCommitteewerecarriedoutbythe
Board of Directors in view of the fact that the remuneration of Directors is not performance related.
-theDirectors'Reportincludesafairreviewoftheperformanceofthebusinessandthefinancialposition
of the issuer and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that the Group and the Company face.
- thefinancial statements givea trueandfair viewof thefinancial positionof the Groupandthe Company
asat31December2021,andofthefinancialperformanceandthecashflowsfortheyearthenendedin
accordance with International Financial Reporting Standards as adopted by the European Union; and
7
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Going concern – Capital Markets Rules 5.62
Shareholder register information pursuant to Capital Market Rule 5.64
The Companyhas anauthorised sharecapital of€500,000OrdinarySharesof€1eachandissuedand fully
paidupsharecapitalof€255,000withanominalvalueof€1each. EachOrdinaryShareisentitledtoone
vote. The Ordinary Shares in the Company shall rank pari passu for all intents and purposes at law.
TherearecurrentlynodifferentclassesofOrdinarySharesintheCompanyandaccordinglyallOrdinary
Shares have thesame rights, voting rights andentitlements in connection with anydistribution whetherof
dividends or capital.
- Appointment and removal of Directors
Furthermore,theresultantissuedsharecapitalamountingto€225,000hasbeenincreasedby€30,000to
amountto €255,000inaccordancewith CapitalMarketRule3.17.Theafore-stated€30,000ordinary shares
of €1 each have been subscribedto as fully paid-up shares by Carmelo Stivala Trustee Limited on behalf of
each of the ultimate beneficial owners. Information on other financial impact of the shareholder's
divestiture is disclosed further in note 22.
Having made an appropriate assessment of going concern as discussed in Note 2.1 to these financial
statements, the financialstatements of the Groupand theCompany are prepared on agoing concern basis.
The Directors regard that pursuant to Capital Markets Rule 5.62, this is appropriate, after due
consideration of the Group’s and Company's financial support from the shareholder and ultimate
beneficialowners.Specifically,theDirectorshavepreparedfinancialandcapitalplansforthenexteleven
years which show that the Group and the Company is in a position to continue operating as a going
concernfortheforeseeablefuture.Theseplanstakeintoaccountrisksand uncertaintiesfacingtheGroup
and the Company, including but not limited to, the effect of the completion of divestment of major
shareholder’s interest in the Group and the Company, as announced last 27 April 2021.
- Structure of Capital
- Principal divestment of major shareholder
Pursuant to the Company announcement issued by Stivala Group Finance p.l.c ('the Company') on 27
April2021,one ofthemajorshareholdersMr.CarloStivala,hasresigned from theboardof directorsof all
companies forming part of the Stivala Group of which he was adirector. The share capital of the Company
hasbeenreducedby€75,000,madeupof€75,000ordinarysharesof€1each,equivalentto25%ofthe
issuedshare capitalof theCompany. Asa result,the indirectshareholding intheCompanyof eachof
MartinStivala,IvanStivalaandMichaelStivalaandtheirrespectivedescendants(the"ultimatebeneficial
owners") has increased from 25% to 33.33% of the Company's issued share capital.
Article 55.1A of the Company’s Memorandum and Articles of Association states that a shareholder
holdingnotlessthan25%oftheissuedsharecapitaloftheCompanyhavingvotingrightsoranumberof
shareholders whobetween themhold not lessthan 25%of theissued sharecapital ofthe Company having
voting rights("aqualifyingshareholder")shallbeentitledto appoint(1)directorfor everysuchqualifying
shareholding, by letter addressed to the Company. Any shareholder who does not qualify to appoint
directorsintermsoftheprovisionsofparagraph(a)ofthissub-article55.1,andwhohasnotaggregated
his holdings with thoseof othershareholders forthepurposes ofappointing adirector(s) pursuant thereto
shallbeentitledtoparticipateandvoteinanelectionofdirectorstotakeplaceonceineveryyearatthe
Annual General Meeting of the Company.
8
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
AgeneralmeetingoftheCompanyshallbedeemednottohavebeendulyconvenedunlessatleast14
(fourteen)days noticehas beengiven in writing,to allthose membersentitledto receivedsuchnotice. The
noticeshallbeexclusiveofthedayonwhichitisservedordeemedtobeservedandofthedayforwhich
it wasgiven, andshall specify theplace,the dayand thehour ofthemeeting, andincaseof extraordinary
businessorspecialbusiness,thegeneralnatureofthebusiness,andshallbeaccompaniedbyastatement
regarding the effect and scope of any proposed resolution in respect of such extraordinary business.
SubjecttotheprovisionsoftheAct,theCompanyshallineachyearholdanannualgeneralmeetingat
such time and place as the directors shallappoint. Allgeneral meetingsother thanthe annualgeneral
meetings shall be called extraordinary general meetings. The Directors may convene an extraordinary
generalmeetingwhenevertheythinkfit.Extraordinarygeneralmeetingsmayalsobeconvenedonsuch
requisition,orindefault,maybeconvenedbysuchrequisitionists,asprovidedbytheAct.Ifatanytime,
therearenotinMaltasufficientdirectorscapableofactingtoformaquorum,anydirector,oranytwo
membersoftheCompany,mayconveneanextraordinarygeneralmeetinginthesamemanner,asnearly
as possible, as that in which meetings may be convened by the Directors.
- Powers of Directors
SubjecttoapplicableprovisionsoftheArticles,thedirectorsmayexerciseallthepowersoftheCompany
toborrowmoneyandtohypothecateorchargeitsundertaking,propertyanduncalledcapitaloranypart
thereof, and to issue equity securities and debt securities onsuchterms, insuch manner and for such
considerationastheythinkfit,whetheroutrightorassecurityforanydebt,liabilityorobligationofthe
Companyorofanythirdparty.Providedthatthemembersingeneralmeetingmay,fromtimetotime,
restrict and limit the aforesaid powers of the directors, in such manner as they may deem appropriate.
The Chairman shall be appointed by the directors at their first meeting following the annual general
meetingineachyear,saveforthefirstchairmanwhoshallretainthepostofchairmanuntilsuchtimeas
heresigns orisearlierremovedinaccordancewith theprovisions ofthearticlesregulating theremovalof
directors.
AnydirectormayberemovedatanytimebytheCompanyingeneralmeeting.Thedirectorwhoistobe
removed shall be given opportunity of making representations to the general meeting at which a
resolution for his removal is to be taken.
- General Meetings
9
Directors' Report
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
- Auditors
Registered Office
TheDirectors’reporthasbeensignedonbehalfoftheBoardofDirectorson28April2022byMr.Michael
Stivala (Director) and Mr. Ivan Stivala (Director) as per the Directors' Declaration on ESEF Annual
Financial Report submitted in conjunction with the Annual Financial Report.
Pursuant tothe Company’s statutory obligations in terms of CompaniesAct andCapital MarketRules, the
appointment of the auditors and the authorisation of the Directors to set their remuneration will be
proposed and approved at the Company’sAGM. HLB CA Falzon have expressed their willingness to
continue in office.
Gzira GZR 1026
143,
The Strand,
10
Corporate Governance Statement
for the year ended 31 December 2021
The Board considers that, to the extent otherwise disclosed herein, the Company has generallybeenin
compliance with the Principles throughout the year under review.
ThisStatementshallnow setoutthestructuresandprocessesinplacewithin theCompanyandhowthese
effectively achieve the goals set out inthe Code for the year underreview. For this purpose,this Statement
will makereferenceto thepertinent principlesofthe Codeandthenset outthe mannerin whichthe Board
considers that these have been adhered to.
For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code
means compliance with the Code’s main principles and the Code provisions.
TheDirectorsbelievethatforthefinancialyearunderreviewtheCompanyhasgenerallycompliedwith
the requirements for each of these principles. Further information in this respect is provided hereunder.
Compliance with the Code
Stivala Group Finance p.l.c.
Pursuantto theCapital MarketRulesasissued bythe MaltaFinancial ServicesAuthority(the "Rules"),
StivalaGroupFinancep.l.c.(“theCompany”)isherebyreportingontheextentofitsownadoptionofthe
Code of Principles of Good Corporate Governance (”the Code”) contained with the Capital Market Rules.
TheCompanyhasonly issueddebtsecurities whichhave been admitted totradingon the Malta Stock
Exchangeaccordinglyitis exemptfrom reporting onthemattersprescribedinCapitalMarketRules5.97.1
to 5.97.3,5.97.6and5.97.7 inthis corporategovernance statement (“the Statement”). It is inthe light of this
exemption afforded tothe Company that theDirectors are hereinreporting on thecorporategovernance of
the Company.
Good corporategovernance isthe responsibility ofthe BoardofDirectorsof theCompany (“theBoard”)as
a whole, and has been and remains a priority for the Company. In deciding on the most appropriate
mannerinwhichtoimplementtheCode,theBoardtookcognisanceoftheCompany’ssize,natureand
operations, andformulatedthe viewthat theadoption ofcertain mechanisms and structures which may be
suitable for companies with extensive operations may not be appropriate for the Company. The
limitationsofsizeandscopeofoperationsinevitablyimpactonthestructuresrequiredtoimplementthe
Code, without however diluting the effectiveness thereof.
Introduction
The Company acknowledges that although the Code does not dictate or prescribe mandatory rules,
compliance with the principles of good corporate governance recommended in the Code is in the best
interests of the Company, its shareholders and other stakeholders.
Pursuant to the Capital Market Rules issued by the Malta Financial Services Authority, Stivala Group
Finance p.l.c. (“the Company”) is hereby reporting on the extentof its adoption of theCode ofPrinciples of
Good Corporate Governance (“the Principles”) with respect to the financial year under review.
The Company became subject to the principles when its bonds were admitted to capital market and
subsequenttradingontheMaltaStockExchange. AccordinglythisreportoftheCompanyonthismatter
covers the whole year.
General
11
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Principle One - The Board
Principle Two - Chairman and CEO
Principle Three - Composition of the Board
The Board has throughout the period under review provided the necessary leadership in the overall
directionoftheCompany,andhasadoptedprudentandeffectivesystemswhichensureanopendialogue
between the Board and Senior Management.
The Company has a structure that ensures a mix of Executive and Non-Executive Directors and that
enables the Board to have direct information about the Company’s performance and business activities.
TheroleofChairmanexercisesindependent judgementandisresponsibletolead theBoard and setits
agenda, whilstalso ensuringthatthe Directorsreceive precise, timelyandobjective informationsothat
theycantakesounddecisionsandeffectivelymonitortheperformanceoftheCompany.TheChairmanis
also responsible for ensuring effective communication with shareholders and encouraging active
engagementbyallmembersoftheBoardfordiscussionofcomplexorcontentiousissues.TheroleofCEO
is then accountable to the Board for all business operations of the Company.
The Board is composed of 6 members, with 3 Executive and 3 Non-Executive Directors. The Board is
responsible for the overall long term strategy and general policies of the Company, of monitoring the
Company’s systems of control andfinancial reportingand that it communicateseffectively withthe market
as and when necessary.
TheDirectorsreportthatforthefinancialyearunderreview,theDirectorshaveprovidedthenecessary
leadership in the overall direction of the Company and have performed their responsibilities for the
efficient and smooth running of the Company with honesty, competence and integrity. The Board is
composed ofmembers who are competent andproper todirectthe business oftheCompany withhonesty,
competence and integrity. All the members of the Board are fully aware of, and conversant with, the
statutory and regulatory requirements connected to the business of the Company. The Board is
accountable for its performance and that of its delegates to shareholders and other relevant stakeholders.
The CEO provides the rest of the Directors with access to the information on the Company’s financial
position and systems. He acts as the main point of communication between the Board and overall
corporate operations as he is responsible for proper implementation of sustainable business solutions,
effectiveframework ofinternalcontrolsoverrisk inrelation to thebusinessandstrategic goalsdevised by
the Board.
Thepositionof the Chairmanandthat ofthe CEOareoccupied bysame individual. Exceptionally,the
BoarddecidedthattheChiefExecutiveshouldbecomeChairman.Suchdecisionwasconsultedtomajor
shareholdersinadvance.ThisstructurewassuccessfulasitconcentratedtheleadershipoftheBoardand
ofexecutivemanagementbyasingleperson.TheBoardhasnowdiscussedtheroleoftheChairmanat
somelength,andagreedthattheroleoftheChairmanoftheBoardshould be heldbyathirdpartywhois
not the CEO of the Company/Group. However, in the light of thecurrent significantimpact of the COVID-
19 pandemic onthe tourismindustry,the Board feltthat a disruptionofleadershipatthe currenttime
would not be in the Company/Group’s best interest.
12
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Mr. Michael Stivala - Chairman/CEO and Executive Director
Mr. Ivan Stivala - Executive Director
Mr. Martin John Stivala - Executive Director
a)
b)
c)
d)
e)
f)
a)
b)
c)
Principle Four - The Responsibilities of the Board
None of the independent Non-Executive Directors:
Each Non-Executive Director has declared in writing to the Board that he/she undertakes:
are or have been employed in any capacity with the Company and/or the Group;
have or had a significant business relationship with the Company and/or the Group;
has received or receives significant additional remuneration from the Company and/or the
Group;
has close family ties with any of the Company’s executive Directors or senior employees;
has served on the board for more than twelve consecutive years; or
is or has been within the last three years an engagement partner or a member of the audit team
of the present or former external auditor of the Company and/or the Group.
to maintain in all circumstances his independence of analysis, decision and action;not to seek or
accept any unreasonable advantages that could be considered as compromising his/her
independence; and
to clearly express his/her opposition in the event that he finds that a decision of the Board may
harm the Company.
InaccordancewiththeprovisionsoftheCompany’sArticlesofAssociation,theappointmentofDirectors
to the Board is exclusively reserved tothe Company’s shareholders, except in so far as appointmentis
madebytheBoardtofillacasualvacancy,whichappointmentwouldbevaliduntiltheconclusionofthe
next AGM of the Company following such an appointment. In terms of the Articles of Association, a
director shall hold office for a period of one (1) year from the date of appointment. Provided that no
appointmentmaybemadeforaperiodexceedingthree(3)years.Notwithstandingtheperiodforwhicha
directorhasbeenappointed,onthelapseofsuchperiod,a directorwillbeeligibleforre-appointment. Dr.
Ann Marie Agius, Mr. Francis Gouder and Mr. Jean Paul Debono are considered by the Board to be
independentnon-executivemembersoftheBoard,inthattheyhavenoinvolvementorrelationshipwith
the Company or with the majority shareholders.
The Board acknowledges its statutory mandate to conduct the administration and management of the
Company. TheBoard,infulfillingthismandateanddischargingitsdutyofstewardshipoftheCompany,
assumesresponsibilityfortheCompany’sstrategyanddecisionswithrespecttotheissue,servicingand
redemption of its bonds in issue, and for monitoring that its operations are in conformity with its
commitments towardsbondholders, shareholders,andall relevantlawsand regulations. The Boardis also
responsible for ensuring that the Company establishes and operates effective internal control and
management information systems and that it communicates effectively with the market.
Mr. Mark Bamber - Non-Executive Director (appointed on 1 March 2021 and resigned on 21 April 2022)
Mr. Francis Gouder - Non-Executive Director
Dr. Ann Marie Agius - Non-Executive Director
Mr. Joseph Brincat - Non-Executive Director (resigned on 30 April 2021)
The Board of Directors consists of the following:
Mr. Jean Paul Debono - Non-Executive Director (appointed on 21 April 2022)
13
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
a)
b)
c)
d)
e)
f)
Principle Five - Board meetings
The Directors meet regularly to dispatch the business of the Board. The Directors are notified of
forthcoming meetings by the Company Secretary with the issue of an agenda and supporting board
papers, which are circulated in advance of the meeting. Minutes are prepared during Board meetings
recording faithfully attendance, and resolutions taken at the meeting. These minutes are subsequently
circulatedtoallDirectorsassoonaspracticableafterthemeeting. TheChairmanensuresthatallrelevant
issuesareontheagendasupportedby allavailableinformation,whilstencouragingthe presentationof
viewspertinenttothesubjectmatterandgivingallDirectorseveryopportunitytocontributetorelevant
issues ontheagenda.Theagendaon theBoardseekstoachieveabalancebetweenlong-termstrategic and
short-term performance issues.
TheExecutiveOfficersoftheCompanymaybeaskedtoattendboardmeetingsorgeneralmeetingsofthe
Company,although theydonot havetheright tovotethereatuntilsuch timeastheyarealsoappointedto
the Board. The restof the Directors mayentrust toand confer uponthe CEO anyof the powers exercisable
by them upon such terms and conditions and with such restrictions as they may think fit, and either
collaterallywithortotheexclusionoftheirownpowers,andmayfromtimetotimerevoke,withdraw,
alter or vary all or any of such powers.
In fulfilling its mandate, the Board:
has a clearly-defined Company strategy, policies, management performance criteria and
business policies which can be measured in a precise and tangible manner;
hasestablishedaclearinternalandexternalreportingsystemsothattheBoardhascontinuous
accessto accurate, relevant andtimely information suchthat the Board candischarge its duties,
exerciseobjectivejudgmentoncorporateaffairsandtakepertinentdecisionstoensurethatan
informed assessment can be made of all issues facing the board;
establishes an Audit Committee in terms of Capital Market Rules 5.117 – 5.134;
continuously assesses and monitors the Company`s present and future operations,
opportunities,threatsandrisksintheexternalenvironmentandcurrentandfuturestrengths
and weaknesses;
evaluates management’s implementation of corporate strategy and financial objectives, and
regularlyreviewsthestrategy,processesand policiesadoptedforimplementationusingkey
performance indicators so that corrective measures can be taken toaddress any deficiencies
and ensure the future sustainability of the Company; and
ensuresthattheCompanyhasappropriatepoliciesandproceduresinplacetoassurethatthe
Companyand itsemployeesmaintain the higheststandards ofcorporateconduct,including
compliance with applicable laws, regulations, business and ethical standards.
Aspartofsuccessionplanning,theBoardensurethattheCompanyimplementsappropriateschemesto
recruit,retain andmotivate employeesandSenior Management. Directorsare entitledtoseek independent
professional advice at any time on any aspect of their duties and responsibilities, at the Company’s
expense.
14
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
Principle Six - Information and Professional Development
The Board has established a remuneration policy for Directors and Senior Executives, underpinned by
formal and transparent procedures for the development of such a policy and the establishment of the
remuneration packages of individual Directors.
ThecurrentcompositionoftheBoardallowsforacross-sectionofskillsandexperienceandachievesthe
appropriatebalancerequiredforittofunctioneffectively.Duringthe year,theDirectorscarriedoutaself-
evaluationperformanceanalysis,includingtheChairmanand/ortheCEO.Theresults ofthisanalysisdid
not require any material changes in the Company’s corporate governance structure.
Principle Eight A of the Code deals with the establishment of a remuneration committee for the Company
aimed at developing policies on remuneration for Directors and Senior Executives and devising
appropriate remuneration packages.
InviewofthesizeandtypeofoperationoftheCompany,theBoarddoesnotconsidertheCompanyto
requirethesettingupofaremunerationcommittee,andtheBoarditselfcarriesoutthefunctionsofthe
remuneration committeespecifiedin, and inaccordance with,Principle EightAof theCode,giventhat the
remuneration of Directors is not performance-related.
The Directors believe that for the financial year under review they conducted sufficient professional
development for its officers. The Company will continue with this commendable practice. As part of
successionplanningandemployeeretention,theBoardensurethattheCompanyimplementsappropriate
schemes to recruit, retain and motivate employees and Senior Management and keep a high morale
amongst employees.
TheBoardmeetsasoftenandasfrequentlyrequiredinlinewiththenatureanddemandsofthebusiness
of the Company. Directors attend meetings on a frequent and regular basis and dedicate the necessary time
andattention totheir duties as Directorsof theCompany. The Board met5timesduring thefinancialyear
under review. The following Directors attended meetings as follows:
Mr. Michael Stivala – Chairman, CEO, Executive Director - 5 meetings
Mr. Ivan Stivala – Executive Director - 5 meetings
Mr. Martin John Stivala – Executive Director - 5 meetings
Dr. Ann Marie Agius - Non-Executive Director - 5 meetings
Mr. Francis Gouder - Non-Executive Director - 5 meetings
Mr. Mark Bamber - Non-Executive Director (newly appointed on 1 March 2021) - 3 meetings
Mr. Joseph Brincat - Non-Executive Director (resigned on 30 April 2021) - 1 meeting
Principle Seven - Evaluation of the Board's performance
Principle Eight - Committees
TheBoardconfirmsthattherehave been nochangesintheCompany’sremunerationpolicyduring the
yearunderreviewandtheCompanydoesnotintendtoeffectanychangesinitsremunerationpolicyfor
the following financial year.
The maximum annual aggregate emoluments that may be paid to the Directors is, pursuant to the
Company’s Memorandum and Articles of Association, approved by the shareholders in general meeting.
The Board is composed exclusively of executive and non-executive Directors. The determination of
remuneration arrangements for board members is a reserved matter for the Board as a whole.
Duringthefinancialyearunderreview,Mr.MichaelStivala,Mr.IvanStivalaandMr.MartinJohnStivala
each held an indefinite full-time contract of service with ST Hotels Ltd.
15
Corporate Governance Statement
for the year ended 31 December 2021
Stivala Group Finance p.l.c.
TheCompany’sArticlesofAssociationallowminorityshareholderstocallspecialmeetingsonmattersof
importance to the Company, provided that the minimum threshold of ownership established in the
Articles of Association is met.
Fixed remuneration from Sub-subsidiary €157,974
Fixed remuneration from Company €26,385
The remuneration policy for Directors has been consistent since inception; no Director (including the
Chairman)isentitledtoprofitsharing,shareoptionsorpensionbenefits. Thereisnolinkagebetweenthe
remunerationandtheperformanceofDirectors. Afixedhonorariumispayableateachfinancialyearto
the Non-Executive Directors.
ForthefinancialyearunderreviewtheaggregateremunerationoftheDirectorsoftheCompanyandthe
Group (where the Company forms part) were as follows:
The Directors are of the view that this Principle is not applicable to the Company.
Principle Eleven deals with conflicts of interest and the principle that Directors should always act in the
best interests of the Company
Principle Eight B of the Code deals with the formal and transparent procedure for the appointment of
Directors.
InviewofthesizeandtypeofoperationoftheCompany,theBoarddoesnotconsidertheCompanyto
require the setting up of a nominationcommittee. Reference is also made to the information provided
underthesubheading‘PrincipleThree’above,whichprovidesforaformalandtransparentprocedurefor
the appointment of new Directors to the Board.
WithrespecttotheCompany’sbondholdersandthemarketingeneral,duringthefinancialyearunder
review, a Company announcement has been issued to the market on 27 April 2021 in relation to the
completion of Mr.CarloStivala's divestiture from Stivalagroup.Furtherinformation regarding this matter
was disclosed in note 22 of the financial statements.
PursuanttotheCompany’sstatutoryobligationsintermsoftheCompaniesAct(Cap.386oftheLawsof
Malta)andtheCapitalMarketRulesissuedbytheMaltaFinancialServicesAuthority,theAnnualReport
and