STIVALA GROUP FINANCE PLC - FS 31.12.2021 (3)

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

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

andFinancialStatements,theelectionofDirectorsandapprovalofDirectors’fees,theappointmentofthe

auditors and the authorisation of the Directors to set the auditors’ fees, and other special business,are

proposed and approved at the Company’s AGM.

Principle Nine - Relations with shareholders and with the market

Principle Ten - Relations with Institutional shareholders

Principle Eleven - Conflicts of Interest

AlloftheDirectorsoftheCompany,exceptforDr.AnnMarieAgius,Mr.FrancisGouderandMr.Jean

Paul DebonoareExecutiveOfficersofthe Company.The otherExecutive Directorshaveadirectbeneficial

interestinthesharecapitaloftheCompany,andassucharesusceptibletoconflictsarisingbetweenthe

potentially diverging interests of the shareholders and the Company. During the financial year under

review, noprivate interests orduties unrelated tothe Company weredisclosedby the Directorswhich

wereorcouldhavebeenlikely toplaceanyoftheminconflictwith anyinterestsin,ordutiestowards,the

Company.

16

Corporate Governance Statement

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Principle Twelve encourages Directors of listed companies to adhere to accepted principles of corporate

social responsibility

In carrying on itsbusiness the Group isfully awareandat theforefront topreserving theenvironment and

continuously review itspolicies aimedatrespectingthe environmentand encouraging socialresponsibility

and accountability.

TheBoardisstronglycommittedtotheenvironment,andtothewelfareofthecommunityinwhichwe

operate.Alldirectorsaremindfulthatsustainabledevelopmentandenvironmentalprotectionarecritical,

bothfor thesuccess of ourtourism anddevelopmentactivities,and forthe benefitof ourcommunity’s

quality of life. To this end, the Group has taken initiatives to minimise its consumption of natural

resources,reduceitsgenerationofwaste,andtoincorporatesustainabilityprinciplesandattractivedesign

in its developments.

TheCompanyseekstoadheretosoundPrinciplesofCorporateSocialResponsibilityinitsmanagement

practices,andiscommittedtoenhancethequalityoflifeofallstakeholdersandoftheemployeesofthe

Company and the Group.

Principle Twelve - Corporate Social Responsibility

Furthermore,theAuditCommitteehastheroleandfunctionofscrutinisingandevaluatinganyproposed

transaction tobe enteredinto bythe Companyand a related party,to ensurethat the execution ofany such

transaction was at arm’s length and on a commercial basis and ultimately in the best interests of the

Company.

The Audit Committee

TheAuditCommittee’sprimaryobjectiveistoassisttheBoardinfulfillingitsresponsibilities:indealing

withissuesofrisk,controlandgovernance;andreviewthefinancialreportingprocesses,financialpolicies

and internal control structure. During the financial year under review, the Audit Committee met 5 times.

AlthoughtheAuditCommitteeissetupattheleveloftheCompanyitsmaintasksarealsorelatedtothe

activities of the subsidiary, sub- subsidiaries and operational companies.

TheBoardhassetformaltermsofestablishmentandthetermsofreferenceoftheAuditCommitteethat

establish its composition, role and function, the parametersof its remitas well asthe basis forthe processes

thatitisrequiredtocomplywith.TheAuditCommitteeisasub-committeeoftheBoardandisdirectly

responsibleandaccountabletotheBoard.TheBoardreservestherighttochangethesetermsofreference

from time to time.

TheAuditCommitteehasthetasktoensurethatanypotentialconflictsofinterestareresolvedinthebest

interestsoftheCompany.Furthermore,inaccordancewiththeprovisionsofarticle145oftheCompanies

Act (Cap. 386 of theLaws of Malta), every Director who isin any way, whether directly or indirectly,

interested in a contract or proposed contract with the Company is under the duty to fully declare his

interestintherelevanttransactiontotheBoardatthefirstpossibleopportunityandhewillnotbeentitled

tovoteonmattersrelatingtotheproposedtransactionandonlypartieswhodonothaveanyconflictin

considering the matter will participate in the consideration of the proposed transaction .

17

Corporate Governance Statement

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Risk identification

TheBoardofDirectors,withtheassistanceoftheManagementteam,isresponsiblefortheidentification

andevaluationofkeyrisksapplicabletotheareasofbusinessinwhichtheCompanyanditssubsidiaries

are involved. These risks are assessed on a continual basis.

Inconclusion,theBoardconsidersthattheCompanyhasgenerallybeenincompliancewiththePrinciples

throughout the period under review as befits a company of this size and nature.

Information and communication

Periodic strategic reviews which include consideration of long-term financial projections and the

evaluation of business alternatives are regularly convened by the Board. Regularbudgets are prepared and

performance against these plans is actively monitored and reported to the Board.

• Mr. Mark Bamber – appointed on 1 March 2021 and resigned on 21 April 2022

• Mr. Joseph Brincat – resigned on 30 April 2021

Otherkey featuresofthesystemofinternalcontroladoptedbytheCompanyinrespectofitsowninternal

control as well as the control of its subsidiaries and affiliates are as follows:

During the financial year under review the Company operated a system of internal controls which

provided reasonable assurance of effective and efficient operations covering all controls, including

financial and operationalcontrolsandcompliancewith lawsand regulations.Processes arein placefor

identifying, evaluating and managing the significant risks facing the Company.

Mr.JeanPaulDebonoisaNon-ExecutiveDirectorandaqualifiedaccountant,afounderandmanaging

partnerina firm,whotheBoardconsiders asindependentandcompetentinaccountingas requiredin

termsoftheCapitalMarketRules.Heisspecialisedinaccounts,taxationandfinancialreportingandhas

extensive experience in servicing local and international clients across a wide range of industry sectors.

Internal Control

TheBoardisultimatelyresponsiblefortheCompany’ssystemofinternalcontrolsandforreviewingits

effectiveness.TheDirectorsareawarethatinternalcontrolsystemsaredesignedtomanage,ratherthan

eliminate, the risk of failure to achieve business objectives, and can only provide reasonable, and not

absolute, assurance against normal business risks.

The Audit Committee is composed of 3 independent, Non-Executive Directors:

• Mr. Jean Paul Debono – appointed on 21 April 2022

• Mr. Francis Gouder – Chairman of Audit Committee and Member

• Dr. Ann Marie Agius – Member

18

Corporate Governance Statement

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

TheCorporateGovernance-StatementofCompliancehasbeenapprovedandsignedonbehalf oftheBoard

ofDirectorson28April2022byMr.Michael Stivala(Director)andMr.IvanStivala (Director)asperthe

Directors'DeclarationonESEFAnnualFinancialReportsubmittedinconjunctionwith theAnnualFinancial

Report.

Non-compliance with the principles and the reasons therefor have been identified below.

8B TheBoardhasnotappointedaNominationsCommittee,

particularlyof the appointment process being specifically

set out in the Articles of Association. The Board,

however, intends to keep under review the utility and

possible advantagesofhaving aNominations Committee

and following an evaluation may, if the need arises,

makerecommendationstotheshareholdersforachange

to the Articles of Association.

7.1 The Board has not appointed a committee for the

purpose of undertaking an evaluation of the Board’s

performance. The Board believes that the size of the

Company and the Board itself does not warrant the

establishmentofacommitteespecificallyforthepurpose

ofcarryingoutaperformanceevaluationofitsrole.The

size of the Board is such that it should enable it to

evaluateits own performance without therequirement of

setting up an ad-hoc committee for this purpose. The

Board shall retain this matter under review over the

coming year.

4.2 The Board has not formally developed a succession

policy for the future composition of the Board of

Directors as recommended by Code Provision 4.2.7. In

practice, however, the Board is actively engaged in

succession planning and involved in ensuring that

appropriate schemes to recruit, retain and motivate

employees and Senior Management are in place.

Code Provision Explanation

19

Independent Auditor's Report

1.

Going concern

Opinion

WehaveauditedtheindividualfinancialstatementsofStivalaGroupFinancep.l.c.(“theCompany”)andthe

consolidated financial statements of the Company and its subsidiaries (together, “the Group”), set out on

pages 29 to 98, which comprise the statement of financial position as at 31 December 2021, statement of

comprehensive income, statement of changes in equity and the statement of cash flows for the year then

ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements give atrue and fairview of the financial position of the

Group and the Company as at 31 December 2021, and of the Group’s and the Company’s financial

performance and cash flows for the year then ended in accordance withInternational Financial Reporting

Standards as adopted by the European Union and have been properly prepared in accordance with the

requirements of the Companies Act, Cap. 386 of the Laws of Malta.

Basis for Opinion

WeconductedourauditinaccordancewithInternationalStandardsonAuditing(ISAs).Ourresponsibilities

underthosestandardsarefurtherdescribedintheAuditor'sResponsibilitiesfortheAuditoftheFinancial

Statements section of our report.We areindependent ofthe Group in accordance with the International Ethics

StandardsBoardforAccountants'CodeofEthicsforProfessionalAccountants(IESBACode),togetherwith

the ethical requirements that are relevant to our audit of the financial statements in accordance with the

AccountancyProfession(CodeofEthicsforWarrantHolders)DirectiveissuedintermsoftheAccountancy

ProfessionAct(Cap.281)inMalta,andwehavefulfilledourotherethicalresponsibilitiesinaccordancewith

the IESBAcode.Webelievethat theaudit evidencewe haveobtainedis sufficientand appropriatetoprovide

a basis for our opinion.

Key Audit Matters

to the shareholders of Stivala Group Finance p.l.c.

Report on the Financial Statements for the year ended 31 December 2021

Keyauditmattersarethose mattersthatinour professionaljudgementwereofmostsignificanceinouraudit

ofthe financial statements ofthecurrent period.Thesematters whereaddressedinthecontext ofouraudit of

the financial statements as a whole and in forming our opinion thereon.

We do not provide a separate opinion on these matters.

Risk description

AsrequiredbyInternationalFinancialReportingStandardsandasdisclosedintheStatementof

Directors’ Responsibilities, the Directors are required to adopt the going concern basis in the

preparationofthefinancialstatements,unlessitisinappropriatetopresumethattheGroupand

the Company will continue in business in the foreseeable future.

One of the significant events that happened during2021 wasthe completion of Mr.Carlo Stivala's

divestment from Stivala group. In 2021, this event brought the Company to a net loss of

€20,380,454 and a net liabilityof €18,751,247.On a grouplevel, itmade amassivedecreaseof

€20,345,134onretainedprofitscomparedwithprioryear.Thefinancialimpactofthedivestiture

hascreatedanuncertainenvironmentwhich mayimpactsignificantassumptions thatareused in

the Group’s and Company's assessment of its ability to continue as a going concern.

20

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

Relevant references in the annual report and financial statements:

2.

TheGroup’sliquidityforecastunderlyingthegoingconcernassessmentissubjecttosignificant

estimation and therefore represents a key audit matter.

- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3

- Note on Assets held for distribution to owner: note 22

How the scope of our audit responded to the risk

Our

audit

procedures

included

evaluating

the

Directors’

going

concern

assessment

in

order

to

assess whether there areevents and conditions that exist that creatematerial uncertainty that may

cast significant doubt of the Group’sability to continue as agoing concern. Inobtaining sufficient,

appropriate audit evidence we:

Findings

Theresult of ourtesting wassatisfactoryand we concurthat thegoingconcernassumptionis

appropriate.

Investment property and Property, plant and equipment valuations

Risk description

TheGroup carriesits investmentpropertyandbuildingsunderproperty,plant andequipment at

fair value, with changes in fair value being recognised in the profit or loss and other

comprehensive income, respectively. The last market valuation performed by independent

architects on these properties was on 31 May 2020.

- Obtained theGroup’s cash flowforecastfor theperiod subsequent tothe reporting dateup until

Dec2032 and discussed these with management,focusing on updatesmade torespondto the

continued impacts and uncertainties around COVID-19 ongoing developments and expected

recovery period. We also tested the arithmetical accuracy of the forecast.

- Evaluated the Directors’ ability to accurately forecast by comparing actual to historical

information. As part of our procedures on events after the reporting period, obtained an

understanding of the precision of management’s forecast and to identify any potential

management bias included in such projections.

- Assessed forreasonablenessof the main inputs andassumptions usedin the projections, such as

operationalcashflows,inflowsfromsalesofproperty,capitalexpenditures,debtfinancingand

otherfundingavailability againstourunderstandingofthebusinessandindustrydevelopments,

historical data and any other available information.

-PerformedananalysisofthecapitalexpenditureforecastedbytheGrouptobeincurredonits

majordevelopmentprojectsandtheavailabilityoffundingtofinancesuchexpenditurefromthe

StivalaGroupfinanceplcplanof debtissueonthelastquarterofthisyearandotherplanned

bank financing for these projects. We have assessed for reasonableness the net cashflows

forecasted on these major development projects.

Wealsoassessedtherelevanceandadequacyofdisclosuresrelatingtogoingconcernpresented

in Note 2.1 to the accompanying financial statements.

21

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

2.

Investment property and Property, plant and equipment valuations (

continued

)

- Note on Investment Property: note 17

- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3

How the scope of our audit responded to the risk

-WeobtainedanunderstandingoftheGroup’sprocessfordetermining fairvaluemeasurements

and disclosures and the relevant control procedures. We assessed inherent and control risk

related to the fair value measurements and disclosures and evaluated whether the fair value

measurementsanddisclosuresarein accordancewiththeGroup’sfinancialreportingframework

and are consistently applied.

-WeperformedtestsrelatingtothevaluationoftheGroup’sproperty,focusingonmanagement

reviews over the property valuations by inspecting management analysis and minutes of

meetings of the board and audit committee where such valuation was discussed;

In the years where a valuation is not obtained, management verifies all major inputs to the

independent valuation report, assesses any propertyvaluation movements when compared to the

previous valuation report and holds discussions with the independent valuer, as necessary.

Asat31December2021,fairvaluewasbasedonvaluationperformedbythedirectorsaspartof

their responsibility for annual assessment. Investment property and property, plant and

equipmentamountedto€178,713,402and€148,337,079asat31December2021,respectivelyand

are deemed material to the financial statements.

Estimatingthefairvalueisacomplexprocessinvolvinganumberofjudgementsandestimates

regarding various inputs. Consequently, we have determined the valuation of the

aforementioned properties to be a key audit matter.

Relevant references in the annual report and financial statements:

- Accounting policy: notes 2.5, 2.7 and 2.21

- Note on Property, Plant and Equipment: note 13

-Performingproceduresovertheaccuracyandcompletenessoftheinputsorrationaleusedin

the valuations in the light of our understanding of the business and industry developments,

historical data and other available information focusing on updates made to respond to the

continued impact and uncertainties around COVID-19 ongoing developments and expected

recovery period.

- We also assessed the relevance and adequacy of disclosures relating to the Group’s fair

valuation of property, plant and equipment, and investment properties presented in various

notes mentioned above.

Findings

Theresult of ourtesting wassatisfactoryand we concurthat the valuationsof the investment

property and property, plant and equipment are appropriate.

22

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

3.

- Accounting policy: notes 2.19

Risk description

Asat31December2021,theGrouphasrecognised adeferredtaxassetamountingto€10,573,639

arisingprimarilyfromdeductibletemporarydifferencesinrespectofexcessofcapitalallowance

overdepreciation,unabsorbedcapitalallowancesand unutilizedtax lossesand investmenttax

credit thatitbelievesare recoverable. Therecoverabilityof recogniseddeferredtaxassetisin

part dependent on the Group’s ability to generate future taxable profits sufficient to utilise

deductible temporary differences and tax losses. We have determined this to be a key audit

matter,due totheinherentuncertaintyin forecastingthe amountand timingoffuturetaxable

profits and the reversal of temporary difference.

Relevant references in the annual report and financial statements:

- Note on Deferred Tax: note 26

- Judgements in applying accounting policies and key sources of estimation uncertainty: Note 3

Recoverability of deferred tax asset

We are satisfiedthat the deferred tax asset has been properly recognised andmeasured inview of

thefactthattaxableprofitswillbeavailableagainstwhichthedeductibletemporarydifferences

can be utilized.

How the scope of our audit responded to the risk

We ensured that IAS 12 Income Taxes has been correctly applied in respect of deferred tax,

paying particular attention to the following situations: (a) the revaluation of an asset (b)

unabsorbed capital allowances and unutilized tax losses and (c) investment tax credits.

We assessed the accuracy of forecastfuture taxable profitsbyevaluatinghistorical forecasting

accuracyandcomparingassumptionswithourexpectationsofthoseassumptionsderivedfrom

our knowledge of the industry and our understanding obtained during the audit.

Findings

Other Information

TheDirectorsareresponsiblefortheotherinformation.TheotherinformationcomprisesoftheChairman’s

Statement, Directors' Report and Corporate Governance Statement of Compliance. Our opinion on the

financial statements does not cover this information. Except for our opinion on the Directors’ Report in

accordance with the Companies Act, Cap. 386 of the Laws of Malta and on the Corporate Governance

StatementofComplianceinaccordancewiththeCapitalMarketRulesissuedbytheMaltaFinancialServices

Authority, our opinion on the financial statements does not cover the other information and we do not

express any form of assurance conclusion thereon.

Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformation

and, in doing so, consider whether the other information is materially inconsistent with the financial

statementsorourknowledgeobtainedintheaudit,orotherwiseappearstobemateriallymisstated.Ifbased

onourworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,

we are required to report that fact. We have nothing to report in this regard.

23

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

With respect to the Directors' Report, we also considered whether the Directors' Report includes the

disclosuresrequiredbyArticle177oftheCompaniesAct,Cap.386oftheLawsofMalta.Basedonthework

we have performed, in our opinion:

-theinformationgivenintheDirectors'Reportfortheyearended31December2021isconsistentwiththe

financial statements; and

-theDirectors'Reporthasbeenprepared inaccordancewiththeCompaniesAct,Cap.386 ofthe Lawsof

Malta.

Auditors' Responsibilities for the Audit of the Financial Statements

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefree

frommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor'sreportthatincludesour

opinion.

Reasonable Assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance withISAswillalwaysdetectamaterialmisstatementwhenitexists.Misstatements can arisefrom

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these.

Intermsofarticle179A(4)oftheCompaniesAct(Cap.386),thescopeofourauditdoesnot includeassurance

on thefutureviability oftheauditedentityoron theefficiencyoreffectiveness withwhichtheDirectorshave

conducted or will conduct the affairs of the entity.

In addition, in light of the knowledge and understanding of the Company and the Group and their

environment,obtained inthe courseof the audit, wearerequiredto report if we have identified material

misstatements in the Directors' Report and other information that we obtained prior to the date of this

auditor’s report. We have nothing to report in this regard.

Responsibilities of the Directors and the Audit Committee for the financial statements

TheDirectorsareresponsibleforthepreparationofthefinancialstatementsthatgiveatrueandfairviewin

accordancewiththeInternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion,andfor

such internalcontrols asthe Directorsdetermine isnecessary toenablethepreparation offinancial statements

that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group's ability to

continueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoing

concern basis ofaccountingunless theDirectors eitherintend toliquidatethe Grouporto ceaseoperations, or

haveno realistic alternativetodoso. Misstatements can arisefrom fraudorerrorandareconsideredmaterial

if,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsof

users taken on the basis of these financial statements.

TheDirectorshavedelegatedtheresponsibilityforoverseeingtheCompany'sfinancialreportingprocessto

the Audit Committee.

24

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

Aspartof anauditinaccordancewithISAs,weexerciseprofessionaljudgmentandmaintainprofessional

skepticism throughout the audit. We also:

-Identifyandassesstheriskofmaterialmisstatementofthefinancialstatements,whetherduetofraudor

error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide abasis for our opinion. The riskof not detecting a materialmisstatement

resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations or the override of internal control.

We also provide the Audit Committee with a statement that we have complied with relevant ethical

requirements regarding independence,and to communicate with them all relationships and othermatters that

may reasonably be thought to bear our independence, and where applicable related safeguards.

FromthematterscommunicatedwiththeAuditCommittee,wedeterminethosemattersthatwereofmost

significance in the audit of the financial statements of the current period and are therefore the key audit

matters. We describe these matters in our auditors' report unless law or regulation precludes publicdisclosure

about the matter or when, in extremely rare circumstances, we determine that a matter should not be

communicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedto

outweigh the public interest benefits of such communication.

- Obtain an understanding of internal control relevant to the auditin order to designaudit procedures that are

appropriateinthecircumstances,butnotforthepurposeofexpressing anopinionontheeffectivenessofthe

Group's internal control.

-Evaluate theappropriatenessof accountingpolicies used and the reasonablenessof accountingestimates

and related disclosures made by the Directors.

-Concludeon theappropriatenessofthe Directors'useof thegoing concernbasis ofaccounting andbasedon

theauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmay

castsignificantdoubtontheGroup'sabilitytocontinueasagoingconcern.Ifweconcludethatamaterial

uncertaintyexists,wearerequiredtodrawattentioninourauditor'sreporttotherelateddisclosuresinthe

financialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebased

ontheauditevidenceobtaineduptothedateofourauditor'sreport.However,futureeventsorconditions

maycausetheGrouptoceasetocontinueasagoingconcern.Inparticular,itisdifficulttoevaluateallofthe

potential implications that COVID-19 will have on the Company’s and Group's business and the overall

economy.

- Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

- Obtain sufficient appropriate evidence regarding the financial information of the entities or business

activitieswithin theGroupto expressan opinionon theconsolidated financialstatements. Weareresponsible

for thedirection, supervision andperformance oftheGroup audit.We remainsolely responsible forour audit

opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that we

identify during our audit.

25

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

Report on other legal and regulatory requirements

TheAnnualReportandConsolidatedFinancialStatementsofStivalaGroupFinancep.l.c.fortheyearended

31 December 2021 contains other areas required by legislation on which we are required to report. The

directors are responsible for these other areas.

Matters on which we are required to report by the Capital Market Rules

The Capital Market Rulesissued by theMalta FinancialService Authority require the directors to prepare and

includeintheirAnnualReportaCorporateGovernanceStatementprovidinganexplanationoftheextentto

whichtheyhaveadoptedtheCodeofPrinciplesofGoodCorporateGovernanceandtheeffectivemeasures

that they have taken to ensure compliance with those Principles.

Under the Capital Market Rules we also have the responsibility to:

-reviewthestatementmadebytheDirectors,setoutonpages3-10,thatthebusinessisagoingconcern,

together with supporting assumptions or qualifications as necessary.

We have nothing to report to you in respect of these responsibilities.

Matters on which we are required to report on compliance with the European Single Electronic Format

Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6

WehaveundertakenareasonableassuranceengagementinaccordancewiththerequirementsofDirective6

issuedbytheAccountancyBoardintermsoftheAccountancyProfessionAct(Cap.281)-theAccountancy

Profession(EuropeanSingleElectronicFormat)AssuranceDirective(the“ESEFDirective6”)ontheAnnual

FinancialReportofStivalaGroupFinancep.l.c.fortheyearended31December2021,entirelypreparedina

single electronic reporting format.

The Capital Market Rules also require the auditor to include a reporton the statement ofcompliance prepared

bythedirectors.Wearealsorequiredtoexpressanopinionastowhether,inthelightoftheknowledgeand

understandingoftheGroupandtheCompanyanditsenvironmentobtainedinthecourseoftheaudit,we

haveidentified materialmisstatementswithrespect to theinformation referred to inCapital Market Rules

5.97.4 and 5.97.5.

Wereadthestatementofcomplianceandconsidertheimplicationforourreportifwebecomeawareofany

apparent misstatements or material inconsistencies with the financial statements included in the annual

report.Ourresponsibilitiesdonotextendtoconsideringwhetherthisstatementisconsistentwiththeother

information included in the annual report.

Wearenotrequiredto,andwedonot,considerwhethertheBoard'sstatementsoninternalcontrolincluded

in the Corporate Governance Statement cover all the risks and controls, or form an opinion on the

effectiveness of the Company's corporate governance procedures or its risks and control procedures.

In our opinion:

- the Corporate Governance Statement setout on pages 11-19 has been properly prepared inaccordancewith

the requirements of the Capital Market Rules 5.94 and 5.97.

- in the light of the knowledge and understanding of the Company and the Group and its environment

obtainedinthecourseoftheaudittheinformationreferredtoinCapitalMarketRules5.97.4and5.97.5are

free from material misstatement.

26

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

ThedirectorsareresponsibleforthepreparationoftheAnnualFinancialReport,includingtheconsolidated

financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule

5.56A, in accordance with the requirements of the ESEF RTS.

Inouropinion,theAnnualFinancialReportfortheyearended31December2021hasbeenprepared,inall

material respects, in accordance with the requirements of the ESEF RTS.

Matters on which we are required to report by exception under the Companies Act

Pursuant to articles 179(10) and 179(11) of the Maltese Companies Act (Cap. 386) Act, we also have

responsibilities under the Companies Act to report if in our opinion:

- proper accounting records have not been kept;

- the financial statements are not in agreement with the accounting records;

Our responsibility isto obtain reasonable assuranceabout whetherthe Annual Financial Report,including the

consolidatedfinancialstatementsandtherelevantelectronictaggingtherein,compliesinallmaterialrespects

with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance

engagement in accordance with the requirements of ESEF Directive 6.

Our procedures included:

- Obtaining an understanding of the entity's financial reporting process, including the preparation of the

Annual Financial Report, in accordance with the requirements of the ESEF RTS.

- Obtaining the Annual Financial Report and performing validations to determine whether the Annual

FinancialReporthasbeenpreparedinaccordancewiththerequirementsofthetechnicalspecificationsofthe

ESEF RTS.

-ExaminingtheinformationintheAnnualFinancialReporttodeterminewhetheralltherequiredtaggings

thereinhavebeenappliedandwhether,inallmaterialrespects,theyareinaccordancewiththerequirements

of the ESEF RTS.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our

opinion.

Ourauditopiniononthefinancialstatementsexpressedhereinisconsistentwiththeadditionalreporttothe

audit committee of the Company, which was issued on the same date as this report.

- we have not received all the information and explanations we require for our audit.

We have nothing to report to you in respect of these responsibilities.

Appointment and audit tenure

We were first appointed by those charged with governance to act as statutory auditor by the board of

Directors on 12 October 2020 for the financial year ended 31 December 2020. Our appointment has been

renewedannuallybyshareholderresolutionrepresentingatotaluninterruptedengagementof2years.The

Company became listed in on the Malta Stock Exchange on 25 September 2017.

Consistency of the audit report with the additional report to the Audit Committee

27

Independent Auditor's Report

to the shareholders of Stivala Group Finance p.l.c.

HLB CA Falzon

Registered Auditors

28 April 2022

Non-audit services

Noprohibitednon-auditservicesreferredtoinArticle18A(1)oftheAccountancyProfessionAct,Cap.281of

theLawsofMaltawereprovidedbyustotheCompanyandtheGroupandweremainindependentofthe

CompanyandtheGroup.Nootherservicesbesidesstatutoryauditservicesasdisclosedintheannualreport

in note 7 to the financial statements, were provided by us to the Company and its controlled undertakings.

The partner in charge of the audit resulting in this independent auditor's report is

Jozef Wallace Galea for and on behalf of

28

for the year ended 31 December 2021

2021

2020

2021

2020

Note

€ € € €

Revenue from contracts with customers 6 6,698,242 3,472,276 - -

Rental income 25 8,367,051 8,276,226 - -

Revenue 15,065,293 11,748,502 - -

Cost of sales and services

7

(3,713,173) (3,918,098) - -

Gross profit 11,352,120 7,830,404 - -

Distribution and selling costs 7 (46,382) (31,410) - -

Administrative expenses 7 (13,551,147) (7,763,267) (48,125) (30,874)

Other operating charges 7 (2,233) (3,909) - -

Other operating income

8

1,068,658 1,225,606 4,011 -

Operating (loss)/profit (1,178,984) 1,257,424 (44,114) (30,874)

Change in fair value of investment

properties

17 29,967,931 29,020,926 - -

Share in (loss)/profit of associates 15 (47,300) 353,844 - -

Gain on transfer of properties 22 38,741,687 - - -

Loss on major shareholder's divestiture 22 (59,872,736) - (59,872,736) -

Dividends income - - 41,142,087 3,458,801

Finance and similar income 9 - 1 - -

Finance costs

10

(3,215,421) (3,160,107) (2,407,500) (2,407,500)

Profit before tax

4,395,177 27,472,088 (21,182,263) 1,020,427

Income tax credit/(expense) 12

7,991,525 (479,723) 801,809 (820,427)

Profit for the year

12,386,702 26,992,365 (20,380,454) 200,000

Stivala Group Finance p.l.c.

The notes on page 38–98 form part of these financial statements.

The Group The Company

Consolidated Statement of Profit or Loss and Other Comprehensive

Income

29

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Consolidated Statement of Profit or Loss and Other Comprehensive

Income

2021

2020

2021

2020

Note

€ € € €

Profit for the year

12,386,702 26,992,365 (20,380,454) 200,000

Other comprehensive income

Items that will not be subsequently reclassified

to profit or loss:

Change in fair value of property, plant and

equipment due to revaluation, net of

deferred tax

30,355,009 81,337,654 - -

Total comprehensive income for the year

42,741,711 108,330,019 (20,380,454) 200,000

Earnings per share (cents)

- Basic profit for year attributable to

ordinary equity holders of the parent

28 48.58 89.97 (79.92) 0.67

The notes on page 38–98 form part of these financial statements.

The Group The Company

30

Note

2021

2020

2021

2020

€ € € €

ASSETS

Non-current assets

Property, plant & equipment

13

152,490,635

230,621,283

-

Intangible asset

18

6,057

26,952

-

Investment in subsidiaries

14

-

60,004,872

60,004,895

Investment in associates

15

307,544

354,844

-

Investment property

17

178,713,402

34,337,699

-

Right-of-use assets

25

607,302

815,512

-

Deferred taxation

26

10,573,639

4,959,080

291,410

311,329

Total non-current assets 342,698,579 271,115,370 60,296,282 60,316,224

Current assets

Inventories

19

11,657

8,558

-

Property held-for-sale

20

2,179,099

-

Assets held for distribution to

owner

22 - 59,947,736 - -

Trade and other receivables

21

9,861,024

6,652,026

-

Current tax recoverable

12

-

22,095

904,041

Other financial assets

16

8,004,289

15,753,525

-

778,040

Cash and cash equivalents

31

199,234

592,023

4,597

2,400

Total current assets 20,255,303 82,953,868 26,692 1,684,481

Total assets 362,953,882 354,069,238 60,322,974 62,000,705

Stivala Group Finance p.l.c.

Consolidated Statement of Financial Position

as at 31 December 2021

The notes on page 38–98 form part of these financial statements.

The Group The Company

31

Note

2021

2020

2021

2020

€ € € €

Stivala Group Finance p.l.c.

Consolidated Statement of Financial Position

as at 31 December 2021

The Group The Company

EQUITY AND LIABILITIES

Equity

Issued capital

27

255,000

300,000

255,000

300,000

Revaluation reserve

29

225,017,482

200,672,324

-

Incentives and benefits reserves

30

4,825,440

-

Retained earnings

5,293,934

25,639,068

(19,006,247)

1,374,207

Total equity 235,391,856 231,436,832 (18,751,247) 1,674,207

Non-current liabilities

Interest bearing loans

and borrowings

16, 23 80,290,082 79,613,708 59,670,000 59,610,000

Finance lease liability

16, 25

394,949

646,088

-

Deferred taxation

26

25,513,615

25,880,637

-

Total non-current liabilities 106,198,646 106,140,433 59,670,000 59,610,000

Current liabilities

Current borrowings

16, 23

4,867,999

3,743,624

18,567,863

-

Finance lease liability

16, 25

232,626

194,992

-

Trade and other payables

24

12,808,095

9,570,738

836,358

716,498

Current tax due

12

3,454,660

2,982,619

-

Total current liabilities 21,363,380 16,491,973 19,404,221 716,498

Total liabilities 127,562,026 122,632,406 79,074,221 60,326,498

Total equity and liabilities 362,953,882 354,069,238 60,322,974 62,000,705

The notes on page 38–98 form part of these financial statements.

ThefinancialstatementswereapprovedandauthorisedforissuebytheBoardofDirectorson28April2022.

The financial statements weresigned on behalf of the Board of Directors byMr. Michael Stivala(Director) and

Mr.IvanStivala(Director)aspertheDirectors'DeclarationonESEFAnnualFinancialReportsubmittedin

conjunction with the Annual Financial Report.

32

Stivala Group Finance p.l.c.

Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

The Group

Issued

capital

Revaluation

reserve

Incentives

and benefits

reserves

Retained

earnings

Total

Equity

€

€ € €

Balance as at 1 January 2020

300,000

89,123,934

-

33,682,879

123,106,813

Reclassification within equity (in relation to

prior years) - 3,511,484 4,825,440 (8,336,924)

-

Profit for the year - - -

26,992,365

Other comprehensive income - 81,337,654 -

-

81,337,654

Total comprehensive income

for the year

- 81,337,654 - 26,992,365

108,330,019

Transfer of fair value gain on

investment property, net of deferred tax - 26,699,252 - (26,699,252)

-

Balance as at 31 December 2020

300,000

200,672,324

4,825,440

25,639,068

231,436,832

The notes on page 38–98 form part of these financial statements.

33

Stivala Group Finance p.l.c.

Consolidated Statement of Changes in Equity

for the year ended 31 December 2021

The Group

Issued

capital

Revaluation

reserve

Incentives

and benefits

reserves

Retained

earnings

Total

Equity

€

€ € €

Balance as at 1 January 2021 300,000 200,672,324 4,825,440 25,639,068 231,436,832

Reduction due to major shareholder's

divestiture (see note 22)

(75,000) (33,580,348) - (5,161,339) (38,816,687)

Issuance of share capital

30,000 - - - 30,000

Profit for the year

- - - 12,386,702 12,386,702

Other comprehensive income/loss

(note 29)

- 30,355,009 - - 30,355,009

Total comprehensive income

for the year

- 30,355,009 - 12,386,702 42,741,711

Transfer of fair value gain on

investment property, net of deferred tax

- 27,570,497 - (27,570,497) -

Balance as at 31 December 2021 255,000 225,017,482 4,825,440 5,293,934 235,391,856

The notes on page 38–98 form part of these financial statements.

34

Stivala Group Finance p.l.c.

Statement of Changes in Equity

for the year ended 31 December 2021

The Company

Issued capital

Retained

earnings

Total

Equity

€ € €

Balance as at 1 January 2020 300,000 1,174,207 1,474,207

Profit for the year

- 200,000 200,000

Other comprehensive income

-

Total comprehensive income for the year

- 200,000 200,000

Balance as at 31 December 2020 300,000 1,374,207 1,674,207

Balance as at 1 January 2021 300,000 1,374,207 1,674,207

Reduction due to major shareholder's

divestiture (see note 22)

(75,000) - (75,000)

Issuance of share capital 30,000 - 30,000

Loss for the year

- (20,380,454) (20,380,454)

Other comprehensive income

- - -

Total comprehensive loss for the year

- (20,380,454) (20,380,454)

Balance as at 31 December 2021 255,000 (19,006,247) (18,751,247)

The notes on page 38–98 form part of these financial statements.

35

Note 2021

2020

2021

2020

€ € € €

Cash flows from operating activities

4,395,177 27,472,088 (21,182,263) 1,020,427

Adjustments for:

Change in fair value of investment

properties 17

(29,967,931) (29,020,926) - -

Gain on transfer of properties 22

(38,741,687) - - -

Loss on major shareholder's divestiture 22

59,872,736 - - -

Share in (loss)/profit of associates

15

47,300 (353,844) - -

Depreciation of right-of-use assets and property,

plant and equipment 7

3,687,024 5,953,883 - -

Amortisation

18

20,895 41,339 60,000 60,000

Provision for expected credit losses (ECL)

7, 32

7,920,416 (16,026) (4,011) 207

Dividends income

- - (41,142,087) (3,458,801)

Finance and similar income

9

- (1) - -

Finance costs

10

3,215,421 3,160,107 2,347,500 2,347,500

Working capital changes:

(Increase)/decrease in inventories

19

(3,099) 9,130 - -

(Increase)/decrease in property held-for-sale 20

(679,099) 27,721 - -

Decrease / (increase) in receivables

(783,042) 425,432 - -

(Decrease) / increase in payables

4,129,278 584,363 119,860 2,513

- 1 - -

Interest paid on overdraft (17,978) (5,590) - -

Taxation paid 12 (781,519) (18,800) (840,140) (821,728)

12

(294,247) 294,247 1,703,674 294,247

12,019,645 8,553,124 (58,937,467) (555,635)

Interest received from banks

Stivala Group Finance p.l.c.

Consolidated Statement of Cash Flows

for the year ended 31 December 2021

The notes on page 38–98 form part of these financial statements.

The Company The Group

Taxation refunded

Net cash generated from operating activities

Profit before tax

36

Note 2021

2020

2021

2020

€ € € €

Stivala Group Finance p.l.c.

Consolidated Statement of Cash Flows

for the year ended 31 December 2021

The Company The Group

13

(5,246,407) (7,895,155) - -

17

(3,009,870) (3,628,977) - -

- (500) - -

18

- - 23 -

- (250,000) - -

Advances from directors (532,845) (528,951) - -

(8,789,122) (12,303,583) 23 -

Cash flows from financing activities

Issuance of share capital 27 30,000 - (45,000) -

2,179,941 4,993,623 - -

- 61,332,141 2,899,495

(4,753) 314 - -

(111,413) (45,269)

16, 25

(239,813) (191,913) - -

Interest paid on other undertakings - (13,795) - -

10

(2,347,500) (2,347,500) (2,347,500) (2,347,500)

(2,687,345) (441,157) - -

(3,180,883) 1,954,303 58,939,641 551,995

(3,237) 3,093 - -

49,640 (1,796,156) 2,197 (3,640)

(1,386,556) 406,507 2,400 6,040

31

(1,340,153) (1,386,556) 4,597 2,400

Advances to associates

Advances from subsidiary company

Movement of ECL on cash in banks

Interest paid on bonds

Receipts from disposal of non-current financial

assets

Advances to other parties

Repayment of lease liabilities

The notes on page 38–98 form part of these financial statements.

Cash and cash equivalents at end of year

Advances from banks loans

Interest paid on bank loans

Net cash (used in)/from financing activities

Advances from/(to) other related companies

Net movement in cash and cash equivalents

Cash and cash equivalents at beginning of year

Payments to acquire property, plant and

equipment

Payments to acquire investment property

Net cash used in investing

activities

Payments to acquire investment in associate

Cash flows from investing activities

37

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

1.

0

2.

12.1 Basis of preparation and consolidation

Basis of preparation

0

Assessment of the Appropriateness of the Going Concern Assumption

Aftertheprincipaldivestitureofthemajor shareholder 'Mr.Carlo Stivala' as laidoutin detail innote 22,

the financial impact on the Group and the Company were summarized as per below.

Asat31December2021,theGroup’scurrentliabilitiesexceededitscurrentassetsby€1,108,077(2020:

currentassetsexceededitscurrentliabilitiesby€66,461,895)whereastheGroup’stotalassetsexceeded

itstotalliabilitiesby€235,391,856(2020:€231,436,832).Thecurrentliabilitiespositionasat31December

2021includeabalanceof€2,734,894(2020:€1,184,961)thatrepresentsdeferredincomewhichdoesnot

have an impact on the Group’s liquidity.

As at 31 December 2021, the Company’s current liabilities exceeded its current assets by €19,377,529

(2020:currentassetsexceedingcurrentliabilitiesof€967,983).GiventhenatureoftheCompanyandits

functionwithintheGroupofwhichitistheultimateparentcompany(“theCompany”or“theultimate

parent”),theCompanyisdependentontheGroupforfinancialsupport.Seesucceedingparagraphsfor

information regarding cash flow forecasts.

Management has concluded that as a result of the strength of the Group's financial position and the

measuresbeingtakenbymanagementtoaddressandmitigatetheimpactofthecovid-19pandemic,the

Groupwillbeabletosustainitsoperationsover theforeseaable future ina mannerthatis cashflow

positive. Accordingly, basedon information availableatthe timeofapproving thesefinancialstatements

managementhasreasonableexpectationthattheGroupwillmeetallitsobligationsasandwhenthey

fall due over the foreseaable future and therefore, that the going concern basis adopted for the

preparation of these financial statements is appropriate.

Stivala Group Finance p.l.c.

TheconsolidatedfinancialstatementsofStivalaGroupFinancep.l.c.anditssubsidiaries(“theGroup”)

fortheyearended31December2021wereauthorizedforissueinaccordancewitharesolutionofthe

Directors on 28 April 2022.

Stivala Group Finance p.l.c. (“the Company”) with registration no. of C 82218 is a limited liability

companylistedontheMaltaStockExchangeandisincorporatedinMalta,undertheCompaniesAct,

Cap. 386 of the Laws of Malta. The Company is a holding company of the Carmelo Stivala Group

Limited, which is mainly involved to act as a holding company and to rent out properties to its

subsidiariesforhospitalityandproperty development/letting purposes.Its registered officeis at143,

The Strand, Gzira, Malta.

Further information concerning fair value, fair value hierarchy and transfers therein are outlined in

detail in notes 2.21 and 32 to the financial statements.

Corporate information

Significant accounting policies

These financial statements are prepared under the historical cost convention, as modified by the

measurement of investment properties and buildings under property, plant and equipment in

accordancewiththerequirementsoftheInternationalFinancialReportingStandards(IFRS)asadopted

bytheEuropeanUnionandincompliancewiththeCompaniesAct,Cap.386oftheLawsofMalta. The

consolidated financial statements are presented in Euro (€), which is the functional currency of the

Group.

38

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

ir

Business update

2021 was a challenging journey for Stivala Group, traversing still the uncertainty of the covid-19

pandemic.Oneofthegroup'smainrevenuestream,thehospitalitysector,hascontinuedtobeunevenly

affectedbythecovid-19.Intheearlypartof2021,operations ofthehospitality sectorhavecurtaileddue

torules imposedbythe governmentsuchastemporaryclosureofrestaurantsand non-essentialshop.In

thesecondandthird quarterof 2021 especially thesummermonths,however, therewas anoticeable

increaseinhospitalityrevenueduetogradualeasingofrestrictionsfollowingthesuccessresultingfrom

therolloutofvaccinesinMaltaandacrosstheworld.Thistrackcontinuednotuntilthenewomicron

variantofcovid-19cameintopictureapproaching theendof2021,which tosomedegree,contributedto

thedeclineofhospitalitysectorattheendoftheyear.Nevertheless,ultimately,thetotalofhospitality

revenue in 2021 increased by 100% from 2020.

MajorrefurbishmentofBayviewHotel(oneofthemajoroperatinghotel)oftheGroupwascompleted

during 2021 with improved amenities just in time to welcome customers as restrictions on travel

graduallyeased.WhiletheGroupcontinuestodiversifyitsbusinessportfolio,theothermainrevenue

stream'propertydevelopmentandletting' continues operate inanormal operating cycleastherewas no

significantfluctuationnotedcomparedwithprioryear.TheGrouphaslotsofotherprojectstorefurbish

andrebrandotherpropertieswithin theGroup.AllofthesearepartoftheGroup'sultimateobjectiveto

focusoncreating,acquiringandenhancingitsoperationstocreateshareholdervalueoverthemedium

term to ensure the clients get the best possible service and value.

Liquidity

Cash flow forecast

During theyearunderreview,theGroupsecured€2.3million loanto manageits workingcapitalneeds.

TheGroupownsmorethan60propertiesinitsportfoliowhichhavecountlessopportunitiestogenerate

future economic benefit tothe Group.In 2021and2020,the Group has availed itselfof various bank loan

repaymentmoratoriumswithits’bankers.InordertofinancevariousprojectsoftheGroup,theGroup

areconsideringahybridofbankfinancingandbondissuancewhichareexpectedtohappenin2022or

2023.

Management hasprepared aforecast forthe Groupcovering 11 years from thebalance sheet datein

ordertoassesstheimpactofthecurrentsituationonthebusiness.Theassumptionsarebased onthe

estimatedpotentialimpactofcovid-19restrictionsandregulations,followingasuccessfullvaccineand

boosterroll-outandgradualeasingof restrictionsby thegovernment. Thebasecasescenario considered

the benefits of measures taken by management to reduce the negative impact of covid-19 on its

operationsespeciallythehospitalitysector,cashinflowsfromdisposalofanimmovablepropertyand

cashnetinflowstobe generated fromrevenue uponcompletionofvariousprojectsmentioned inthe

directors'report.Inadditiontotheseprojectswhich willbefinancedthroughahybridofbankfinancing

and bond issuance, the Group plans to continue with the developmentof other projects that are key to its

long-termstrategy. Managementisalsoinadvanced discussionswith an interested third-party buyer

and expects the asset to be realized through sale within the forecast period.

Managementhascautiouslyplannedtheyearwhentostartandtargetcompletionsofaforementioned

projects in order to facilitate its liquidity. Based on the 11 year forecast of the Group, the Group is

expectedto continue as a goingconcern, having sufficient liquidity with anapproximate €64 million cash

and cashequivalents (net of bank overdrafts)at the endof the forecast period, relative tothe hybrid

funding the Group intends to take.

Management has also identified a contingency plan should there be an unpredictable economic

downturn. Certain capital investments that were not deemed critical will be postponed to future dates.

39

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Consolidation

22.2 Current versus non-current classification

The Group re-assesses whether or not it controls an investee iffacts andcircumstances indicatethat there

arechangestooneormoreofthethreeelementsofcontrol.Consolidationofasubsidiarybeginswhen

the Group obtains control overthe subsidiaryandceases when the Group losescontrol of the subsidiary.

Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are

included in the consolidated financial statements from the datethe Group gains control until the datethe

Group ceases to control the subsidiary.

Generally, there is a presumption that a majority of voting rights results in control. To support this

presumptionandwhentheGrouphaslessthanamajorityofthevotingorsimilarrightsofaninvestee,

the Group considers all relevant facts and circumstances in assessing whether it has power over an

investee, including:

- The contractual arrangement(s) with the other vote holders of the investee

- Rights arising from other contractual arrangements

- The Group’s voting rights and potential voting rights

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in the normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting date; or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after

the reporting date.

The Group classifies all other liabilities as non-current.

The

consolidated

financial

statements

comprise

the

financial

statements

of

the

Company

and

its

subsidiariesasat31December2021. ControlisachievedwhentheGroupisexposed,orhasrights,to

variable returns from its involvement with the investee and has the ability to affect thosereturns through

its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant

activities of the investee)

- Exposure, or rights, to variable returns from its involvement with the investee

- The ability to use its power over the investee to affect its returns

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill),

liabilities,non-controllinginterestandothercomponentsofequity,while anyresultantgainorlossis

recognised in profit or loss. Any investment retained is recognised at fair value.

TheGroup presents assetsandliabilitiesin thestatementoffinancialpositionbased oncurrent/non-

current classification. An asset is current when it is:

- Expected to be realised or intended to be sold or consumed in the normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting date; or

- Cash and cash equivalents unless restricted from being exchanged or used to settle a liability for at

least twelve months after the reporting date.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their

accounting policiesin line withthe Group’saccountingpolicies. All intra-group assets and liabilities,

equity, income, expenses and cash flows relating to transactions between members of the Group are

eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, withouta loss of control, is accounted for as an

equity transaction.

40

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

32.3 Investment in associate

42.4 Financial instruments

Financial assets

Initial recognition and measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial

liability or equity instrument of another entity.

Financialassetsareclassified,atinitialrecognition,asfinancialassetsmeasuredatamortizedcost,fair

valuethroughprofitorloss(FVTPL)andfairvaluethroughothercomprehensiveincome(FVOCI).All

financialassetsarerecognizedinitiallyatfairvalueplus,inthecaseoffinancialassetsnotrecordedat

FVTPL, transaction costs that are attributable to the acquisition of the financial asset.

Theconsiderations madein determining significant influence aresimilarto thosenecessaryto determine

control over subsidiaries. The Group’s investment in its associate are accounted for using the equity

method.

Under the equity method, the investment in an associate is initially recognised at cost. The carrying

amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the

associatesincetheacquisition date.Goodwillrelatingto theassociate isincludedinthecarryingamount

of the investment and is not tested for impairment separately.

ThestatementofprofitorlossreflectstheGroup’sshareoftheresultsofoperationsoftheassociate.In

addition, when there has been a change recognised directly in the equityof the associate, theGroup

recognisesitsshareofanychanges,whenapplicable,inthestatementofchangesinequity.Unrealised

gainsandlossesresultingfromtransactionsbetweentheGroupandtheassociateareeliminatedtothe

extent of the interest in the associate.

TheaggregateoftheGroup’sshareofprofitorlossofanassociateisshownonthefaceofthestatement

of profit or loss outside operating profit and represents profit or loss after tax and noncontrolling

interests in the subsidiaries of the associate.

Thefinancialstatements oftheassociate arepreparedfor thesamereportingperiodastheGroup. When

necessary, adjustments are made to bring the accounting policies in line with those of the Group.

Afterapplicationoftheequitymethod,theGroupdetermineswhether itisnecessary torecognisean

impairment losson itsinvestment inits associate.Ateachreportingdate,the Groupdetermineswhether

thereisobjectiveevidencethattheinvestmentintheassociateisimpaired.Ifthereissuchevidence,the

Group calculates the amount of impairmentas the difference between the recoverable amount ofthe

associate and itscarrying value, and thenrecognises the loss within ‘Shareof profit ofan associate’in the

statement of profit or loss.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Uponlossofsignificantinfluenceovertheassociate,theGroupmeasuresandrecognisesanyretained

investmentatitsfairvalue.Anydifferencebetweenthecarryingamountoftheassociateuponlossof

significantinfluence or joint controland thefair valueof the retained investmentand proceedsfrom

disposal is recognised in profit or loss.

An associate is an entity over which the group has significant influence but not control, generally

accompanyingashareholdingofbetween20%and50%ofthevotingrights.Significantinfluenceisalso

thepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvestee,butisnot control

or joint control over those policies.

41

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

FordebtinstrumentsatFVOCI,interestincome,foreignexchangerevaluationandimpairmentlossesor

reversals are recognised in the statement of profit or loss and computed in the same manner as for

financial assetsmeasured at amortised cost. Theremainingfair value changesare recognisedinOCI.

Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.

Financial assets designated at FVOCI (equity instruments)

Financialassetsatamortisedcostaresubsequentlymeasuredusingtheeffectiveinterest(EIR)method

and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is

derecognised, modified or impaired.

The

Group’s

financial

assets

at

amortised

cost

include

cash

in

banks,

trade

and

other

receivables,

and

receivablesfromassociates,directorsandotherrelatedundertakingswhichareincludedundercurrent

financial assets.

Financial assets at FVOCI (debt instruments)

- financial assets designated at FVOCI with no recycling of cumulative gains and losses upon

derecognition (equity instruments)

- financial assets at FVTPL

As at 31 December 2021 and 2020, the Group has no debt instruments at FVOCI.

Financial assets at amortised cost (debt instruments)

- financial assets at FVOCI with recycling of cumulative gains and losses (debt instruments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity

instruments designated at FVOCI when they meet the definition of equity under IAS 32 Financial

Instruments:Presentation andarenotheldfortrading.Theclassificationisdeterminedonaninstrument-

by-instrument basis.

The classification of financial assets at initial recognition depends on thefinancial asset’scontractual cash

flow characteristics and the Group’s businessmodel for managingthem. With the exception of trade

receivablesthat donot contain asignificant financing component or for which theGroup hasappliedthe

practicalexpedient,theGroupinitiallymeasuresafinancialassetatitsfairvalueplus,inthecaseofa

financialassetnotatfairvaluethroughprofitorloss,transactioncosts.Tradereceivablesthatdonot

contain asignificant financing component or forwhich the Grouphas appliedthe practicalexpedient are

measuredatthetransactionpricedeterminedunderIFRS15.Refertotheaccountingpoliciesinsection

2.16 (Revenue from contracts with customers).

Purchasesorsalesoffinancialassetsthatrequiredeliveryofassetswithinatimeframeestablishedby

regulationorconventioninthemarketplace(regularwaytrades)arerecognisedonthetradedate,i.e.,

the date that the Group commits to purchase or sell the asset.

Subsequent measurement

Forpurposesofsubsequentmeasurement,financialassetsinthesefinancialstatementsareclassified in

four categories:

- financial assets at amortised cost (debt instruments)

In

order

for

a

financial

asset

to

be

classified

and

measured

at

amortised

cost

or

FVOCI,

it

needs

to

give

rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the principalamount

outstanding. This assessment is referred to as the SPPI test and is performed at an instrumentlevel.

Financial assetswith cashflows that are not SPPI are classified andmeasured atfair valuethrough profit

or loss, irrespective of the business model.

TheGroup’s business modelformanagingfinancialassets refersto howit managesits financialassets in

order to generate cash flows. The business model determines whether cash flows will result from

collecting contractual cash flows, selling the financial assets, or both.

42

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

WhentheGrouphastransferreditsrightstoreceivecashflows froman assetorhasenteredintoapass-

through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of

ownership.Whenithasneithertransferrednorretainedsubstantiallyalloftherisksandrewardsofthe

asset,nortransferredcontroloftheasset,theGroupcontinuestorecognisethetransferredassettothe

extentofitscontinuinginvolvement.Inthatcase,theGroupalsorecognisesanassociatedliability.The

transferred asset and the associated liability are measured on a basis that reflects the rights and

obligations that the Group has retained.

Continuinginvolvementthattakestheformofaguaranteeoverthetransferredassetismeasuredatthe

loweroftheoriginalcarryingamountoftheassetandthemaximumamountofconsiderationthatthe

Group could be required to repay.

Impairment

Further

disclosures

relating

to

impairment

of

financial

assets

are

also

provided

in

notes

3

and

31

to

the

consolidated financial statements.

Gains

and

losses

on

these

financial

assets

are

never

recycled

to

profit

or

loss.

Dividends

are

recognised

as

otherincomeinthestatementofprofitorlosswhentherightofpaymenthasbeenestablished,except

when theCompanybenefitsfromsuchproceedsasarecoveryofpartofthecostof thefinancial asset,in

whichcase,suchgainsarerecordedinOCI.EquityinstrumentsdesignatedatFVOCIarenotsubjectto

impairment assessment.

As at 31 December 2021 and 2020, the Group has no equity instruments at FVOCI.

Financial assets at FVTPL

FinancialassetsatFVTPLare carriedinthestatement offinancialposition at fairvaluewithnetchanges

in fair value recognised in the statement of profit or loss.

ThiscategoryincludesderivativeinstrumentsandlistedequityinvestmentswhichtheGrouphadnot

irrevocablyelectedtoclassifyatFVOCI.Dividendsonlistedequityinvestmentsarerecognisedasother

income in the statement of profit or loss when the right of payment has been established.

A

derivative

embedded

in

a

hybrid

contract,

with

a

financial

liability

or

non-financial

host,

is

separated

from thehost and accounted for asaseparatederivativeif:theeconomic characteristicsand risksarenot

closely related tothe host; aseparateinstrument withthe sametermsasthe embeddedderivativewould

meetthedefinitionofaderivative;andthehybridcontractisnotmeasuredatfairvaluethroughprofit

orloss.Embeddedderivativesaremeasuredatfairvaluewith changesinfairvaluerecognisedin profit

orloss.Reassessmentonlyoccursifthereiseitherachangeintheterms ofthe contractthatsignificantly

modifiesthecashflowsthatwouldotherwiseberequiredorareclassificationofafinancialassetoutof

the fair value through profit or loss category.

As at 31 December 2021 and 2020, the Group has no debt instruments at FVTPL.

Derecognition

A

financial

asset

(or,

where

applicable,

a

part

of

a

financial

asset

or

part

of

a

Group

of

similar

financial

assets) is primarily derecognised (i.e., removed from the Group’s statement of financial position) when:

- the rights to receive cash flows from the asset have expired; or

- the Group has transferred its rights to receive cash flows from the asset or has assumed an

obligation to pay the received cash flows in full without material delay to a third party under a

‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks

and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the

risks and rewards of the asset, but has transferred control of the asset.

TheGroup recognises anallowanceforexpectedcreditlosses(ECLs)forall debtinstruments notheldat

fairvaluethroughprofitorloss.ECLsarebasedonthedifferencebetweenthecontractualcashflows

due in accordance with the contract and all the cash flows that the Company expects to receive,

discounted at an approximation of the original effective interest rate.

43

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

The Group considers a financial asset in default when contractual payments are 90 days past due.

However, incertain cases, theGroup mayalso consider afinancial assetto be in default when internal or

externalinformationindicatesthattheGroupisunlikelytoreceivetheoutstandingcontractualamounts

in full before taking into accountany creditenhancements heldby theGroup. Afinancialasset iswritten

off when there is no reasonable expectation of recovering the contractual cash flows.

For trade receivables, theGroup appliesasimplified approach in calculating ECLs.Therefore,the Group

doesnottrackchangesincreditrisk,butinsteadrecognisesalossallowancebasedonlifetimeECLsat

eachreportingdate.TheGrouphasestablishedaprovisionmatrixthatisbasedonitshistoricalcredit

loss experience, adjusted for forward-looking factors specific to the debtors and the economic

environment.

For purposes of subsequent measurement, financial liabilities are classified in two categories:

Subsequent measurement

Financialliabilitiesareclassifiedasheldfortradingiftheyareincurredforthepurposeofrepurchasing

inthenearterm.ThiscategoryalsoincludesderivativefinancialinstrumentsenteredintobytheGroup

thatarenotdesignatedashedginginstrumentsinhedgerelationshipsasdefinedbyIFRS9.Separated

embedded derivatives are also classified as held for trading unless they are designated as effective

hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.

For cashin bank,other receivables, receivables from associates, directorsand other related undertakings,

theGroupappliesageneralapproachin calculatingECLs.Therefore,the Grouptrackschangesincredit

risk,and recognises aloss allowance based oneither 12-month ECLsor lifetimeECLs,dependingon

whether there has been a significant increase in credit risk on the financial instrument since initial

recognition. This is being done by considering the change in the risk of default occurring over the

remaining lifeof thefinancial instrument. Thekey elements in the calculation of ECLs arethe Probability

of Default (PD), Exposure at Default (EAD) and Loss Given Default (LGD).

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities

designated upon initial recognition as at FVTPL.

Allfinancialliabilitiesarerecognisedinitiallyatfairvalueand,inthecaseofloansandborrowingsand

payables, net of directly attributable transaction costs.

- financial liabilities at FVTPL

- financial liabilities at amortised cost (loans and borrowings)

TheGroup’sfinancialliabilitiesincludetradeandotherpayables,loansandborrowingsincludingbank

overdrafts.

Initial recognition and measurement

Financial

liabilities

are

classified,

at

initial

recognition,

as

financial

liabilities

at

FVTPL,

loans

and

borrowings or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

Financial liabilities at FVTPL

ECLs are recognised in two stages. For credit exposures for which there has not been a significant

increase in credit risk since initial recognition, ECLs are provided for credit losses that result from

defaulteventsthatarepossiblewithinthenext12-months (a12-monthECL).Forthosecreditexposures

forwhichtherehasbeenasignificantincreaseincreditrisksinceinitialrecognition,alossallowanceis

requiredforcreditlossesexpectedovertheremaininglifeoftheexposure,irrespectiveofthetimingof

the default (a lifetime ECL).

Financial liabilities

44

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

52.5 Property, plant and equipment

20%

Property, plant and equipment, except for revalued buildings, are stated at cost less accumulated

depreciation.Depreciationiscalculatedusingthestraight-linemethodtowriteoffthecostofproperty,

plant and equipment less any residual value over the expected useful lives.

Financial liabilities at amortised cost (loans and borrowings)

20%

Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of

recognition,andonlyifthecriteriainIFRS9aresatisfied.TheGrouphasnotdesignatedanyfinancial

liability at FVTPL as at 31 December 2021 and 2020.

Motor vehicles

1%

Theannualratesusedforthispurpose,whichareconsistentwiththose usedinthepreviousyear,areas

follows:

Buildings

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and

borrowingsaresubsequentlymeasured atamortisedcostusingtheEIR method. Gainsand lossesare

recognisedinprofitorlosswhentheliabilitiesarederecognisedaswellasthroughtheEIRamortisation

process.

Amortisedcostiscalculatedbytakingintoaccountanydiscountorpremiumonacquisitionandfeesor

costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the

statement of profit or loss.

Thiscategorygenerallyappliestointerest-bearingloansandborrowings.Formoreinformation,referto

note 32 to the consolidated financial statements.

ArevaluationsurplusisrecordedinOCIandcreditedtotherevaluationreserveinequity.However,to

theextentthatitreversesarevaluationdeficitofthesameassetpreviouslyrecognisedinprofitorloss,

theincreaseisrecognisedinprofitandloss.Arevaluationdeficitisrecognisedinthestatementofprofit

or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the

revaluation reserve.

Derecognition

Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelledor

expires.Whenan existing financialliability isreplacedbyanotherfrom thesamelenderonsubstantially

different terms, or the terms of an existing liability are substantially modified, such an exchange or

modificationis treatedasthe derecognition ofthe originalliability andthe recognition ofanew liability.

The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Computer equipment

Energy saving equipment

Financial assets and financial liabilities are offset and the net amount is reported in the statementof

financial position ifthereis acurrently enforceable legalright to offset therecognised amountsand there

is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

20%

Offsetting of financial instruments

20%

Kitchen equipment

Electrical installations

Plant and machinery

Commercial and residential properties included in buildings are stated in the statement of financial

position at its revalued amount, being the fair value at the date of revaluation. Revaluations are

performedwithsufficientregularitysuchthatthecarrying amountdoes notdiffermateriallyfromthose

that would be determined using fair values at each reporting date.

Furniture, fittings and office equipment

45

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

62.6 Intangible assets

Computer software 25%

72.7 Investment property

An

item

of

property,

plant

and

equipment

is

derecognised

upon

disposal

or

when

no

future

economic

benefitsareexpected fromits useor disposal. Anygain orloss arisingon derecognitionoftheasset

(calculatedasthedifferencebetweenthenetdisposalproceedsandthecarryingamountoftheasset)is

included in the statement of profit or loss and other comprehensive income when the asset is

derecognised.

Gainsorlossesarisingfromderecognitionofanintangibleassetaremeasuredasthedifferencebetween

thenetdisposalproceedsandthecarryingamountoftheassetandarerecognisedinstatementofprofit

or loss and other comprehensive income when the asset is derecognised.

Investmentproperty ismeasured initiallyat itshistoricalcost,including relatedtransactioncostsand

borrowing costs (if any). Historical cost includes expenditure that is directly attributable to the

acquisition of the items. Borrowing costs which are incurred forthe purpose of acquiring or constructing

a qualifying investment propertyare capitalisedas partof itscost. Borrowingcosts arecapitalisedwhile

acquisitionorconstructionisactivelyunderway. Capitalisationofborrowingcostsisceased oncethe

asset is substantially complete and is suspended if the development of the asset is suspended. After

initial recognition, investment property is carried at fair value representing open market value

determined periodically. Fair value is based on active market prices, adjusted, if necessary, for any

differenceinthenature,locationor conditionofthespecificasset. Ifthe informationis notavailable,the

Group uses alternative valuation methods such as recentprices on less active marketsor discounted cash

flow projections.

Thesevaluationsarereviewedannually.Investmentpropertythatisbeingredevelopedforcontinuing

useasinvestmentpropertyorforwhichthemarkethasbecomelessactivecontinuestobemeasuredat

fairvalue. Fairvaluemeasurementonpropertyunderconstructionisonlyappliedifthefairvalueis

considered to be reliably measurable. The fair valueof investment property reflects, among other things,

rentalincome from currentleases andassumptions about rental incomefromfutureleasesinthelightof

currentmarketconditions. Thefairvaluealsoreflects,onasimilarbasis,anycashoutflowsthatcould

be expected in respect of the property.

Propertythatisheldforlong-termrentalyieldsorforcapitalappreciationorboth,andisnotoccupied

by the Group, is classified as investment property. Investmentproperty comprises freehold land and

buildings.

Depreciation methods, useful life and residual values are reassessed at each reporting date.

Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of

intangible assets are assessed as either finite or indefinite. Intangible assets with finite livesare amortised

over the useful economic life and assessed for impairment whenever there is an indication that the

intangible asset may be impaired. The amortisation period and the amortisation method for an

intangible asset with a finite useful life are reviewed at least at each reporting date. Changes in the

expectedusefullifeortheexpectedpatternofconsumption offutureeconomicbenefitsembodiedinthe

asset areconsideredto modifythe amortisation periodor method,asappropriate, and are treatedas

changes in accounting estimates. The amortisation expense on intangible assets with finite lives is

recognised in the profit or loss in the expense category that is consistent with the function of the

intangible assets. These costs are amortised using a straight line method as follows:

46

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

82.8 Inventories

0

92.9 Property held-for-sale

112.10 Cash and cash equivalents

Ifaninvestmentpropertybecomesowner-occupied,itisreclassifiedasproperty,plantandequipment.

Its fair value at the date of the reclassification becomes its cost for subsequent accounting purposes.

When the Group decides to dispose of an investment property without development, the Group

continues to treat the property asan investmentproperty. Similarly, if theGroup beginsto redevelopan

existinginvestmentpropertyforcontinuedfutureuseasinvestmentproperty,itremainsaninvestment

property during the redevelopment.

Ifanitem ofproperty,plantandequipmentandpropertyheld-for-salebecomesaninvestmentproperty

becauseitsusehaschanged,anydifferenceresultingbetweenthecarryingamountandthefairvalueof

thisitematthedateoftransferistreatedinthesamewayasrevaluationunderIAS16. Anyresulting

increaseinthecarryingamountofthepropertyisrecognisedinstatementofcomprehensiveincometo

theextentthatitreversesapreviousimpairmentloss;withanyremainingincreaserecognisedinother

comprehensive income, directly to revaluation surplus with equity. Any resulting decrease in the

carrying amount of the property is initially charged to other comprehensive income against any

previouslyrecognisedrevaluation surplus,withanyremainingdecrease chargedto theprofit orloss.

Uponthedisposal ofsuchinvestmentproperty,anysurpluspreviouslyrecordedinequityistransferred

to retained earnings; the transfer is not made through statement of comprehensive income.

Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lessestimatedcosts

of completion and the estimated costs necessary to make the sale.

The cost of inventories comprises the invoiced value of goods sold and other direct costs and is

determined by first-in first-out method.

Cashandcashequivalentsinthestatementoffinancial positioncomprisecashatbanksandinhand,

which are subject to an insignificant risk of changes in value.

Subsequentexpenditureiscapitalisedtothe asset's carrying amount onlywhen itisprobablethatfuture

economic benefits associatedwith theexpenditure willflowtothe Groupandthecost oftheitemcanbe

measured reliably. All other repairs and maintenance costs are charged to profit or loss during the

financial period in which they are incurred. When part of an investment property is replaced, the

carrying amount of the replaced part is derecognised.

Thefairvalueofinvestmentpropertydoesnotreflectfuturecapitalexpenditurethatwillimproveor

enhancethepropertyanddoesnotreflecttherelatedfuturebenefitsfromitsfutureexpenditureother

than those a rational market participant would take into account whendetermining the value of the

property.

Changes in fair value are recognised in profit or loss and tranferred to "Revaluation reserve" under

equity. Investmentproperties are derecognisedeither when theyhave been disposedof or whenthe

investmentproperty ispermanentlywithdrawn fromuseand no future economic benefit is expected

fromits disposal.The differencebetweenthenet disposal proceedsandthecarryingamount oftheasset

is recognised in profit or loss in the period of derecognition.

Inventories are valued at the lower of cost and net realisable value.

Property held-for-sale isincluded inthe financialstatements atthe lowerof cost and netrealisable value.

Cost comprises the purchase price of acquiring the property and other costs incurred to develop the

property. Net realisable value is the estimated selling price in the ordinary course of business, less

estimated costs of completion and the estimated costs necessary to make the sale.

47

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

0

122.11 Share capital

132.12 Dividend distribution

142.13 Trade payables

152.14 Provisions

162.15 Foreign currency translation

172.16 Revenue recognition

Revenuemainlyrepresentsincomeearnedforaccommodation,foodand beverageandotherservices.

TheGroup also soldpropertythrough barterduring theyear.The Group recognizesrevenuewhen oras

it satisfies a performance obligation by transferring control of a product or service to a customer.

Revenuesincludeall revenuesfrom theordinarybusinessactivitiesofthegroup andarerecordednetof

valueaddedtax.Theyarerecognisedinaccordancewiththeprovisionforgoodsorservicesprovided

that collectability of the consideration is probable.

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary

courseof business from suppliers.Accounts payableareclassifiedascurrentliabilitiesifpaymentisdue

within one year or less. If not, they are presented as non-current liabilities.

Tradeandotherpayablesarerecognisedinitiallyatfairvalueandsubsequentlymeasuredatamortised

cost using the effective interest method.

ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultof

pastevents,itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredto

settle the obligation and a reliable estimate of the amount of the obligation can be made.

Provisionsaremeasuredatthepresentvalueoftheexpendituresexpectedtoberequiredtosettlethe

obligationusingapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyand

therisksspecifictotheobligation.Theincreaseintheprovisionduetothepassageoftimeis recognised

as interest expense.

Revenue from contracts with customers (under IFRS 15)

Forthepurposeofthestatementofcashflows,cashandcashequivalentsconsistofcashonhandand

banks asdefinedabove,net ofoutstanding bankoverdrafts astheyareconsideredanintegral partofthe

Group's cash management.

Foreign currency translations are translated into the functional currency using the exchange rates

prevailingatthedatesofthetransactionsorvaluationwhereitemsarere-measured.Foreignexchange

gainsandlossesresultingfromthesettlementofsuchtransactionsandfromthetranslationatyear-end

exchange rates of monetary assetsand liabilitiesdenominated in foreign currencies are recognised in

profitorloss.Allforeignexchangegains andlossesarepresentedintheincomestatementwithin'Other

income' or 'Other expenses'.

Items included in the financial statements of each of the Group's entities are measured using the

currencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(thefunctionalcurrency).

The consolidated financial statements are presented in euro, which is the Company's functional and

presentation currency.

Dividend distribution to the Group's shareholders is recognisedas a liabilityin the Group'sfinancial

statements in the period in which the dividends are approved by the Group's shareholders.

Ordinarysharesareclassifiedas equity.Incrementalcostsdirectly attributableto theissue ofnew shares

are shown in equity as a deduction, net of tax, from the proceeds.

48

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

0

Revenue from food and beverage, and other services

Revenue from accommodation

As at 31December2021and2020,variableconsideration would be the amount refunded to acustomer if

thecustomercancelsthebookingwithinthewindowprovidedbythehotel.Inthiscase,theGroupuses

the'mostlikely amount'approachsince ithas only2 possibleoutcome, whichis ifthe customerwill

cancelthebookingornot.Theamountofvariableconsiderationonrefundableamountstocustomeris

not that significant as at year end. Should there have been discounts or concessions for goods and

services,thesehavebeenalreadyestablishedwithcustomerattheinceptionofthecontract,thus arenot

considered contingent as the amounts agreed are fixed or unavoidable.

i) Variable consideration

If

the

consideration

in

a

contract

includes

a

variable

amount,

the

Group

estimates

the

amount

of

consideration to which it will be entitled in exchange for transferring the goods to the customer.

Theperformanceobligationistoprovideaccommodationservicesasandwhencustomersmakeuseof

the services. The transaction price follows a fee structure which is known at the date of booking or

consumption of service and thus no significant estimates are required in this respect.

Eachoftheservicesrenderedisassessedtobeadistinctperformanceobligation,andifapplicable,the

Groupallocatesthetransactionpricetoeachoftheservicesrenderedtothecustomeronarelativebasis,

basedontheirstand-alonesellingprice.Normally,thetransactionpricefollowsafeestructurewhichis

known at the date of consumption of service and thus no significant estimates are required in this

respect.

Revenue

from

services

is

generally

recognized

in

the

accounting

period

in

which

the

services

are

rendered,by reference tocompletion ofthe specifictransaction assessed on the basis of theactual service

providedasaproportionofthetotalservicestobeprovided. Revenuearisingfrom these activitiesis

recognisedwhen theserviceisperformedand/or when thegoods (primarily food andbeverage relating

to restaurant and/or bar sales) are supplied upon performance of the service.

The Group considers whether there are other promises in the contract that are separate performance

obligations to which a portion of the transaction price needs to be allocated (if there is any).

Revenuefromaccommodationisrecognisedoveraperiodoftime.Thecustomersgetthebenefits(i.e.

controloverthepromise)witheverypassingdayofeachyear’sstay attheGroup'shotelrooms.The

revenue stream therefore meets the conditions for revenue recognition over time (i.e. stage of

completion), and revenue is accordingly recognised on a daily basis of accommodation or equally

amortised over the period of stay of the customer.

Indetermining thetransactionprice,theGroup considers theeffectsofvariableconsideration,existence

ofsignificantfinancingcomponent,non-cashconsideration,andconsiderationpayabletothecustomer

(if there is any).

Overall, aside from the above mentioned, there are no other known factors or events that could make the

consideration to be variable as at the current financial year end. The validity of this assessment is

reassessed at each reporting date.

Sale/barter of property for resale

Revenuefromsale/barterof real property is recognised at the pointin time whencontrol of asset is

transferredto thecustomer, generallyuponsigning of deedof salewherethecustomer obtainslegal title

to the property. Total fund is paid in full on date of deed.

Thevariableconsiderationisestimatedatcontractinceptionandconstraineduntilitishighlyprobable

thatasignificantrevenuereversalintheamountofcumulativerevenuerecognisedwillnotoccurwhen

the associated uncertainty with the variable consideration is subsequently resolved.

49

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Rental income

iv) Consideration payable to customer

Acontractliabilityistheobligationtotransfergoodsorservicestoacustomerforwhichthehotelhas

receivedconsideration,orforwhichanamountofconsiderationisduefromthecustomer.Itisnoted

that in extremely rare situations, customers contracts contain a right to right to terminate for

convenience,whereamountspaidbythecustomerarerefundable.Inthesesituations,thecustomerhas

paidforfuturegoodsorservices,butbecauseoftheterminationclauseanagreementdoesnotexistand

thustheHoteldoesnothaveanobligationtotransfergoodsorservicesexceptasthecustomerrequests

(i.e. doesn’t terminate).

Other revenue sources (not within the scope of IFRS 15)

The following recognition criteria must also be met before revenue is recognised:

This relates to the rental income from the rental of immovableproperty in the ordinary couse of the

Group'sactivities.Foroperatingleases,itisrecognisedatprofitorlossonastraight-linebasisoverthe

term of the lease and is stated net of value added tax.

Contract liabilities

iii) Non-cash consideration

The Group does not receive non-cash considerations from customers for the sale of goods and services.

TheCompanyappliesthepracticalexpedientforshort-termadvancesreceivedfromcustomers.Thatis,

the promisedamount of consideration isnot adjusted for theeffects ofa significant financingcomponent

iftheperiodbetweenthetransferofthepromisedgoodorserviceandthepaymentisoneyearorless.

As at eachyear end, thecontract liabilities(ifthere isany) werenormally recognised as revenue within 1

year. The validity of this assessment is reassessed at each reporting date.

As at 31 December 2021 and 2020, upfront fees and pre-production fees are not applicable.

A

receivable

represents

the

company’s

right

to

an

amount

of

consideration

that

is

unconditional

(i.e.,

only the passage of time is required before payment of the consideration is due).

Contract assets

Trade receivables

A

contract

asset

is

the

right

to

consideration

in

exchange

for

goods

or

services

transferred

to

the

customer.Ifthecompanyperformsbytransferringgoodsorservicestoacustomerbeforethecustomer

paysconsiderationorbeforepaymentisdue,acontractassetisrecognisedfortheearnedconsideration

that is conditional.

There is no consideration payable to a customer that can be applied against amounts owed to the Group.

Cost to obtain a contract

The

Group

applies

the

optional

practical

expedient

to

immediately

expense

costs

to

obtain

a

contract

if

the amortisation period of the asset that would have been recognised is one year or less. As such,

paymentsofcommissionstosalesagencieswhichconstituterelativelysmallamountsareimmediately

recognised as an expense in the consolidated statement of profit or loss and comprehensive income.

It is very unlikely for the company to have contract assets since the collection of payment must be

completed immediately after the company performs the service or goods/services and before the

customer leavesthe hotel'spremises.Thisleavesno obligationon thepartof thecustomerto payfurther

consideration.

Contract balances

ii) Significant financing component

50

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

182.17 Leases

5 - 11 years

5 years

Buildings

Furnitures and Fittings

Ifownership oftheleasedassettransfers totheGroupattheendofthe lease termorthecost reflectsthe

exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

Theright-of-useassets are alsosubject to impairment. Refer to the accountingpoliciesinsection2.22

(Impairment of non-financial assets).

The

Group

recognises

right-of-use

assets

at

the

commencement

date

of

the

lease

(i.e.,

the

date

the

underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated

depreciationandimpairmentlosses,andadjustedforanyremeasurementofleaseliabilities.Thecostof

right-of-useassetsincludes the amountofleaseliabilitiesrecognised,initialdirectcosts incurred,and

leasepaymentsmadeatorbeforethecommencementdatelessanyleaseincentivesreceived.Right-of-

useassetsaredepreciatedonastraight-linebasisovertheshorteroftheleasetermandtheestimated

useful lives of the assets, as follows:

TheGroupappliesasinglerecognitionandmeasurementapproachforallleases,exceptforshort-term

leasesandleasesoflow-valueassets.TheGrouprecognisesleaseliabilitiestomakeleasepaymentsand

right-of-use assets representing the right to use the underlying assets.

Interest income

Interest

income

is

accounted

for

when

it

is

probable

that

the

economic

benefits

associated

with

the

transactionwillflowtotheGroupandthesecanbemeasuredreliably.Interestincomeisrecognisedon

an accrual or time proportion basis.

Other operating income

The Group as a lessee

The Groupassesses atcontractinception whether acontractis, orcontains, a lease. That is, ifthe contract

conveys the right to control the use of an identified asset for a period of time in exchange for

consideration.

Dividend income

Revenue

from

dividend

income

is

recognised

on

the

date

the

Group's

right

to

receive

payment

is

established.

Otheroperatingincome areaccounted forwhen itisprobablethattheeconomic benefitsassociatedwith

the transaction will flow to the Group and these can be measured reliably.

ii) Lease Liabilities

Atthecommencementdateofthelease,theGrouprecognisesleaseliabilitiesmeasuredatthepresent

value ofleasepayments tobe made overthe leaseterm. Theleasepaymentsinclude fixed payments

(including in-substance fixed payments) less any lease incentives receivable, variable lease payments

thatdependonanindexorarate,andamountsexpectedtobepaidunderresidualvalueguarantees.

The lease payments also include the exercise price of a purchase option reasonably certain to be

exercisedbytheGroupandpaymentsofpenaltiesforterminatingthelease,iftheleasetermreflectsthe

Groupexercisingtheoptiontoterminate.Variableleasepaymentsthatdonotdependonanindexora

ratearerecognisedasexpenses(unlesstheyareincurredtoproduceinventories)intheperiodinwhich

the event or condition that triggers the payment occurs.

i) Right-of-use assets

51

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

192.18 Assets held for distribution to owner

0Forthistobethecase,theassetsmustbeavailableforimmediatedistributionintheirpresentcondition

and the distribution must be highly probable. For the distribution to be highly probable, actions to

completethedistributionmusthavebeeninitiatedandshouldbeexpectedtobecompletedwithinone

year from the date of classification.

There are a number of asset categories that are excluded from measurement requirements of IFRS 5,

although disclosure requirements still need to be complied with. Among these exclusions, the most

relevanttotheCompanyis"Non-currentassetsthatareaccountedforinaccordancewiththefairvalue

model(IAS40InvestmentProperty)"whichwillbesubsequentlymeasuredunderthesameaccounting

policy as before the classification.

Actionsrequiredtocompletethedistributionshouldindicatethatitisunlikelythatsignificantchanges

to the distribution will be made or that the distribution will be withdrawn. The probability of

shareholders’approval(ifrequiredinthejurisdiction)shouldbeconsideredaspartoftheassessmentof

whether the distribution is highly probable.

TheGroupappliestheshort-termleaserecognitionexemptiontoitsshort-termleases(i.e.,thoseleases

thathavealeasetermof12monthsorlessfromthecommencementdateanddonotcontainapurchase

option).Italsoapplies the leaseoflow-value assetsrecognitionexemptiontoleasesofassets thatare

consideredtobelow value(ifthereisany).Lease paymentson short-termleases andleasesof lowvalue

assets are recognised as expense on a straight-line basis over the lease term.

The Group’s lease liabilities are included in Interest-bearing loans and borrowings (see note 16).

iii) Short-term leases and leases of low-value assets

InaccordancewithIFRS5,anon-currentasset(or disposalgroup)isclassifiedasheldfordistribution to

owners when the entity is committed to distribute the asset (or disposal group) to the owners.

The Group as a lessor

Incalculatingthepresentvalueofleasepayments,theGroupusesitsincrementalborrowingrateatthe

lease commencement datebecausethe interestrate implicitin the lease is not readilydeterminable. After

the commencement date, theamount oflease liabilities is increased toreflectthe accretionof interest and

reducedfortheleasepaymentsmade.Inaddition,thecarryingamountofleaseliabilitiesisremeasured

ifthereisamodification,achangeintheleaseterm,achangeintheleasepayments(e.g., changesto

future payments resulting fromachange in anindexor rateused to determine such lease payments) or a

change in the assessment of an option to purchase the underlying asset.

Non-currentassetsanddisposalgroupsclassifiedasheldfordistributiontoowneraremeasuredatthe

lower of their carrying amount and fair value less costs to distribute. Costs to distribute are the

incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance

costs and income tax expense.

Inprioryear,assets classifiedasheldfordistribution toownerarepresentedseparately ascurrentitems

in the statement of financial position. Additional disclosures are provided in note 22.

Leases in which the Group does not transfer substantially all the risks and rewards incidental to

ownership of an asset are classified as operating leases. Rental income arising is accounted for on a

straight-linebasisovertheleasetermsandisincludedinrevenueinthestatementofprofitorlossand

othercomprehensiveincomeduetoitsoperatingnature.Initialdirectcostsincurredinnegotiatingand

arranginganoperatingleaseareaddedtothecarryingamountoftheleasedassetandrecognisedover

thelease term onthe same basisas rental income.Contingentrentsare recognised as revenue in the

period in which they are earned.

52

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

202.19 Taxation

0

1

212.20 Retirement benefits

0

Deferred tax is provided using the liability method on temporary differences at the reporting date

between the tax bases of assets and liabilities and their carrying amounts for financial reporting

purposes.

Deferred income tax

Deferred

tax

assets

are

recognised

for

all

deductible

temporary

differences,

carry

forward

of

unused

tax

creditsandunusedtaxlosses,totheextentprobablethattaxableprofitwillbeavailableagainstwhich

the deductibletemporarydifferences,andthecarryforwardofunusedtaxcreditsandunusedtaxlosses

can be utilised,except whenthe deferred tax assetrelating to thedeductible temporarydifferences arises

fromthe initialrecognitionofan asset orliabilityinatransactionthatis notabusinesscombinationand,

at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Unrecogniseddeferredtaxassetsarereassessedateachreportingdateandarerecognisedtotheextent

that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax liabilities are recongised for all temporary differences,except when the deferredtax liability

arises from the initialrecognition of goodwill oran asset orliability inatransaction thatis notabusiness

combinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofit or

loss.

Currentincometaxassetsandliabilitiesforthecurrentperiodaremeasuredattheamountexpectedto

berecoveredorpaidtothetaxationauthorities.Thetaxratesandtaxlawsusedtocomputetheamount

arethosethatareenactedorsubstantiallyenacted,atthereportingdate.Currentincometaxrelatingto

items recognised directly in equity is recognised in equity and not in profit or loss.

The Group contributes towards the state pension fund in accordance with local legislation. The only

obligationoftheGroupistomaketherequiredcontributionandcarriesnofurtherlegalorconstruction

obligations to make further payments if the fund does not have sufficient assets to pay all of the

employees'entitlementstopost-employmentbenefits.Costsareexpensedintheyearinwhichtheyare

incurred.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplyin theyear

whenthe asset is realised or the liability is settled, based on tax rates (and tax laws) that have been

enacted or substantively enacted at each reporting date.

Revenue, expenses and assets are recognised net of Value Added Tax, except:

-wheretheValueAddedTaxincurredonapurchaseofassetsorservicesisnotrecoverablefromthe

taxationauthority, inwhichcaseValueAddedTaxisrecognisedaspartoftheacquisitionof theassetor

as part of the expense item, as applicable;

- where receivables and payables that are stated with the amount of Value Added Tax included.

Thetax expensefor theyear comprises current anddeferred tax. Tax is recognized in profit orloss,

exceptwhenitrelatestoitemsrecognizedinothercomprehensiveincomeordirectlyinequity,inwhich

case it is also dealt with in other comprehensive income or in equity, as appropriate.

ThenetamountofValueAddedTaxrecoverablefrom,orpayableto,thetaxationauthorityisincluded

as part of receivables or payables in the statement of financial position.

Value Added Tax

Current income tax

53

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

222.21 Fair value measurements and valuation processes

0

A fair value measurement of non-financial asset takes into account a market participant's ability to

generate economic benefits by using the asset in its highest and best use or by selling it to another market

participant that would use the asset in its highest and best use.

Information

about

the

valuation

techniques

and

inputs

used

in

determining

the

fair

value

of

buildings

and investment properties are disclosed in notes 13, 16, 17 and 32 respectively.

Thefairvalueofanassetorliabilityismeasuredusingtheassumptionsthatmarketparticipantswould

use when pricing the asset or liability, assuming that market participants act in their economic best

interest.

TheGroupbasesitsimpairmentcalculationonmostrecentbudgetsandforecastcalculations,whichare

preparedseparatelyforeachoftheGroup’sCGUstowhichtheindividual assetsareallocated.These

budgets and forecast calculations generally cover a period of five years. A long-term growth rate is

calculated and applied to project future cash flows after the fifth year.

2.22 Impairment of non-financial assets

The Groupassesses, ateachreporting date, whether thereisan indicationthat an asset may be impaired.

Ifanyindicationexists,orwhenannualimpairmenttestingforanassetisrequired,theGroupestimates

theasset’srecoverableamount.Anasset’srecoverableamountisthehigherofanasset’sorCGU’sfair

valuelesscosts ofdisposalanditsvalueinuse.Therecoverableamountisdeterminedforanindividual

asset,unlesstheassetdoesnotgeneratecashinflowsthatarelargelyindependentofthosefromother

assets or groups of assets. Whenthe carryingamount of an assetor CGUexceeds itsrecoverable amount,

the asset is considered impaired and is written down to its recoverable amount.

Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusinga

pre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisks

specifictotheasset.Indetermining fairvaluelesscosts ofdisposal,recentmarkettransactions aretaken

intoaccount.Ifnosuchtransactionscanbeidentified,anappropriate valuationmodelisused.These

calculationsarecorroboratedbyvaluationmultiples,quotedsharepricesforpubliclytradedcompanies

or other available fair value indicators.

TheGroupusesvaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficient

data are available to measure at fair value, maximising the use of relevant observable inputs and

minimising the use of unobservable inputs.

Impairmentlossesofcontinuingoperationsarerecognisedinthestatementofprofitorlossinexpense

categoriesconsistentwiththefunctionoftheimpairedasset,exceptforpropertiespreviouslyrevalued

withtherevaluationtakentoOCI.Forsuchproperties,theimpairmentisrecognisedinOCIuptothe

amount of any previous revaluation.

Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderly

transactionbetweenthemarket participantsatthe measurementdate. Thefairvaluemeasurementis

basedonthepresumptionthatthetransactiontoselltheassetortransfertheliabilitytakesplaceeither

(a)intheprincipal market fortheassetor liabilityor (b)in theabsence ofaprincipalmarket,in themost

advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group.

TheGroupmeasuresnon-financialassetssuchasbuildingsunderproperty,plantandequipmentand

investment property at fair value at each reporting date.

54

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

0

Government grants related to income are recognised in profit or loss on a systematic basis over the

periods in which theCompany recognises asexpenses the related costs for which the grantsare intended

tocompensate.Specifically,thegovernmentgrantsrelatedtoassets,whose primarycondition isthatthe

Group should purchase, construct or otherwise acquire noncurrent assets are recognised as deferred

income in thestatement of financial position and transferred toprofit or loss ona systematic and rational

basis over the useful lives of the related assets.

Government grants that arereceivable as compensation for expenses orlosses alreadyincurred or for the

purposeofgivingimmediatefinancialsupporttotheGroupwithnofuturerelatedcostsarerecognised

in profit or loss in the period in which they become receivable.

Intangible assets with indefiniteuseful lives are tested for impairment annually at the CGU level, as

appropriate, and when circumstances indicate that the carrying value may be impaired.

2.25 Segment reporting

The Group determines and presents operating segments based on the information that internally is

providedtotheBoardofDirectors,whichistheGroup'schiefoperatingdecision-makerinaccordance

with the requirements of IFRS 8 'Operating Segments'.

ImpairmentisdeterminedforgoodwillbyassessingtherecoverableamountofeachCGU(orgroupof

CGUs)towhichthegoodwillrelates.WhentherecoverableamountoftheCGUislessthanitscarrying

amount,animpairmentlossisrecognised.Impairmentlossesrelatingtogoodwillcannotbereversedin

future periods.

Goodwillis tested for impairment annually and when circumstances indicate that the carryingvalue

may be impaired.

2.23 Government grants

GovernmentgrantsarerecognisedwherethereisreasonableassurancethattheGroupwill comply with

the conditions attaching to them and that the grants will be received.

Forassetsexcludinggoodwill, anassessmentismadeateachreportingdatetodeterminewhetherthere

isanindicationthatpreviouslyrecognisedimpairmentlossesnolongerexistorhavedecreased.Ifsuch

indication exists,the Groupestimatestheasset’sorCGU’srecoverableamount.Apreviouslyrecognised

impairmentlossisreversedonlyiftherehasbeenachangeintheassumptionsusedtodeterminethe

asset’srecoverableamountsincethelastimpairmentlosswasrecognised.Thereversalislimitedsothat

the carrying amount of the asset does not exceed its recoverableamount, nor exceed thecarrying amount

thatwouldhavebeendetermined,netofdepreciation,hadnoimpairmentlossbeenrecognisedforthe

asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is

carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

2.24 Borrowing costs

Borrowingcosts whichare incurred for thepurpose ofacquiringorconstructingqualifyingproperty,

plantandequipmentarecapitalisedaspartofitscost.Borrowingcostsarecapitalisedwhileacquisition

orconstructionisactivelyunderway,duringtheperiodoftimethatisrequiredto completeandprepare

theassetforitsintendeduse.Capitalisationofborrowingcostsisceasedoncetheassetissubstantially

completeandissuspendedifthedevelopmentoftheassetissuspended.Allotherborrowingcostsare

expensed.Borrowingcostsarerecognisedforallinterest-bearinginstrumentsonanyaccrualbasisusing

the effective interestmethod. Interest costsincludethe effect ofamortising any differencebetween initial

net proceeds and redemption value in respect of the Group's interest-bearing borrowings.

55

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

3.

In preparing the financial statements, the Directors are required to make judgements, estimates and

assumptionsthataffectreportedincome,expenses,assets,liabilitiesanddisclosureofcontingentassets

and liabilities. Use ofavailable information and application of judgement are inherent in theformation of

estimates. Actual results in the future could differ from such estimates and the differences may be

materialtothefinancialstatements.Theseestimatesarereviewedonaregularbasisandifachangeis

needed,itisaccountedintheperiodthechangesbecomeknown.Themostsignificantjudgementand

estimates are as follows:

An operatingsegment is acomponent ofthe Groupthat engagesin business activities from which it may

earnrevenuesandincurexpenses,includingrevenuesandexpensesthatrelatetotransactionswithany

ofthe Group's othercomponents,and forwhich discretefinancialinformationisavailable.Anoperating

segment'soperatingresultsarereviewedregularlybytheBoard ofDirectorstomakedecisionsabout

resourcesto beallocatedtothesegment andtoassessits performanceexecuting thefunction ofthe chief

operating decision-maker.

Critical accounting estimates and judgements

Judgments

In the process of applying the Group’s accounting policies, management has made the following

judgements, which have the most significant effect on the amounts recognised in the consolidated

financial statements:

Determining the lease term of contracts with renewal and termination options – Group as lessee

The

extent

to

which

deferred

tax

assets

can

be

recognized

is

based

on

an

assessment

of

the

probability

thatfuturetaxableincomewillbeavailableagainstwhichthedeductibletemporarydifferencesandtax

losscarry-forwardcanbeutilized.Inaddition,significantjudgementisrequiredinassessingtheimpact

of any legal or economic limits or uncertainties in various tax jurisdictions.

TheGroupdeterminestheleasetermasthenon-cancellabletermofthelease,togetherwithanyperiods

coveredby anoption to extend the lease if itis reasonablycertain to be exercised,or any periods covered

by an option to terminate the lease, if it is reasonably certain not to be exercised.

Recognition of deferred tax assets

Property lease classification – Group as lessor

The

Group

has

entered

into

commercial

and

residential

property

leases

on

its

investment

property

and

property, plant and equipment portfolio. The Group has determined, based on an evaluation of the

termsandconditionsofthearrangements,suchasthelease termnotconstitutingamajorpart ofthe

economiclifeofthepropertiesandthepresentvalueoftheminimumleasepaymentsnotamountingto

substantiallyallofthefairvalueoftheproperties,thatitretainssubstantiallyalltherisksandrewards

incidental to ownership of these properties and accounts for the contracts as operating leases.

TheGroupdoesnotincludetherenewalperiodsaspartoftheleasetermforleasesofassetswithnon-

cancellableperiodsasthesearenotreasonablycertaintobeexercised.Theeffectofcovid-19pandemic

also contributes to this uncertainty. Furthermore, the periods covered by termination options are

included as part of the lease term only when they are reasonably certain not to be exercised.

The Group has lease contracts that include extension and termination options. The Group applies

judgementinevaluatingwhetheritisreasonablycertainwhetherornottoexercisetheoptiontorenew

orterminatethelease.Thatis,itconsidersallrelevantfactorsthatcreateaneconomicincentiveforitto

exerciseeithertherenewalortermination. Afterthe commencementdate,theGroupreassessesthe lease

termifthereisa significantevent orchange incircumstancesthat is withinitscontroland affectsits

ability to exercise or not to exercise the option to renew or to terminate.

56

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Assets held for distribution to owner

- The selected assets are available for immediate distribution in their present condition.

TheGroup usesaprovisionmatrixtocalculateECLsfor tradereceivables.Theprovisionratesarebased

ondayspastdue forgroupingsof variouscustomer segmentsthathavesimilarlosspatterns (i.e.,by

geography, product type, customer type and rating).

Estimates and assumptions

Impairment of non-financial assets

ImpairmentexistswhenthecarryingvalueofanassetorCGUexceedsitsrecoverableamount,whichis

thehigherofitsfairvaluelesscostsofdisposalanditsvalueinuse.Thefairvaluelesscostsofdisposal

calculation is based on available data frombindingsales transactions,conducted at arm’s length, for

similarassetsorobservablemarketpriceslessincrementalcostsofdisposingoftheasset.Thevaluein

usecalculationisbasedonadiscountedcashflow(DCF)model.Thecashflowsarederivedfromthe

budget for the next five years and do not include restructuring activities that the Group is not yet

committedto orsignificant future investmentsthat willenhance the performance of the assets ofthe

CGUbeingtested.TherecoverableamountissensitivetothediscountrateusedfortheDCFmodelas

well as the expected future cash-inflowsand the growth rate used for extrapolation purposes. These

estimates are most relevant to goodwill recognised by the Group.

UponadoptionofIFRS9,provisionforECLismaintainedatalevelconsideredadequatetoprovidefor

potentially uncollectible receivables. For trade receivables, the Company applies the Simplified

Approach designed to identify potential charges to the allowance and is performed on a continuous

basisthroughouttheperiod.Fortheyearended31December2021,theincreaseinprovisionforECLon

trade receivables amounted to €21,810 (2020: decrease of €32,483) (note 21).

- The actions to complete the distribution were initiated such as the Public announcement, Board

resolutions, Framework agreement and Promise of sale agreement. This is expected to be completed

within 3 months from the date of initial classification.

On 25 November 2020, the Board of Directors publicly announced that Mr. Carlo Stivala, one of the

ultimate beneficial owners, will relinquish all of its ownership interest from the group. The Board

consideredthenoncurrentassetsthatwillbetransferredtotheownerareclassifiedas'Assetsheldfor

distribution to owner' as such assets met the criteria for the following reasons:

For more details on the assets held for distribution to owner, refer to note 22.

Provision for ECL on trade receivables

Fair value of investment property and property, plant and equipment

TheGroupcarriesitsinvestmentpropertyatfairvalue,withchangesbeingrecognisedinprofitorloss,

while it carries its buildings within property, plant and equipment at fair value, with changes being

recognised in other comprehensive income. These are based on market valuations performed by

independentprofessionalarchitectatleasteverythreeyears. Inayearwhenmarketvaluationsarenot

performed by the independent professional architect, an internal assessment of the fair value of

investmentpropertyandproperty,plantandequipmentareperformedtoreflectmarketconditionsat

the year-end date bythe management. TheManagement has assessed thevaluation ofproperties asat 31

December2021byreferencetovalueofsimilarpropertiesinthemarketaswellasthemanagement's

expert knowledge of the industry being in property sector for more than 20 years.

57

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its

incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the

Group would have topay toborrow overa similarterm, andwith asimilar security, the funds necessary

toobtainanassetofasimilarvaluetotheright-of-useassetinasimilareconomicenvironment.TheIBR

thereforereflectswhattheGroup‘wouldhavetopay’,whichrequiresestimationwhennoobservable

ratesareavailable(suchasforsubsidiariesthatdonotenterintofinancingtransactions)orwhenthey

needtobeadjustedtoreflectthetermsandconditionsofthelease(forexample,whenleasesarenotin

the subsidiary’s functional currency). The Group estimates the IBR using observable inputs (such as

marketinterestratesorratesfrombanksanctionletters)whenavailableandisrequiredtomakecertain

entity-specific estimates (such as the subsidiary’s stand-alone credit rating).

- The Group’s criteria for assessing if there has been a significant increase in credit risk and so

allowances should be measured on a liftetime ECL basis and the qualitative assessment

- The Group's internal credit grading model, which assigns PDs to the individual grades

Elements of the ECL model which are considered accounting judgments and estimates include:

The assessment of thecorrelation betweenhistorical observeddefaultrates, forecast economic conditions

andECLsisasignificantestimate.TheamountofECLsissensitivetochangesincircumstancesandof

forecast economic conditions. The Group’s historical credit loss experience and forecast of economic

conditionsmay alsonot be representative of customer’s actual defaultin the future. The information

about the ECLs on the Company's trade receivables is disclosed in notes 21 and 32.

The

provision

matrix

is

initially

based

on

the

Group’s

historical

observed

default

rates.

The

Group

calibratesthematrixtoadjustthehistorical creditloss experiencewithforward-lookinginformation.For

instance,ifforecasteconomicconditions(i.e.,grossdomesticproduct)areexpectedtodeteriorateover

the next year which can lead to an increased number of defaults in the manufacturing sector, the

historicaldefaultratesare adjusted. At every reporting date, thehistorical observed default ratesare

updated and changes in the forward-looking estimates are analysed.

- Development of ECL models, including the various formulas and the choice of inputs

Leases - Estimating the incremental borrowing rate

Provision for ECL on other financial assets

In the opinion of the management, except for the above, the accounting estimates, assumptions and

judgementsmade in the course ofpreparing these financial statementsare not difficult, subjective or

complex toa degree which wouldwarranttheir descriptionas significantin terms ofthe requirements of

IAS 1 (revised) – ‘Presentation of Financial Statements’.

- Selection of forward-looking macroeconomic scenarios and their probability weightings, to derive

the economic inputs into the ECL models

ThemeasurementoftheGroup'sECL oncashinbanks,receivablesfromassociatesandotherrelated

undertakings is a function of the PD, LGD and the EAD. These financialassets aremeasured under Stage

1 of the impairment model, and therefore ECLs are calculated on 12-month basis.

- Determination of associations between macroeconomic scenarios and, economic inputs, and the

effect on PDs, EADs and LGDs

ItistheGroup’spolicytoregularlyreviewitsmodelinthecontextofactuallossexperienceandadjust

when necessary.

58

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

4.

14.1 New and Revised IFRS effective for current year

On28May2020,theIASBissuedCovid-19-RelatedRentConcessions-amendmenttoIFRS16Leases.

The amendments provide relief to lessees from applying IFRS 16 guidance on lease modification

accountingforrentconcessionsarisingasadirectconsequenceoftheCovid-19pandemic.Asapractical

expedient,alesseemayelectnottoassesswhetheraCovid-19relatedrentconcessionfromalessorisa

leasemodification.Alesseethatmakes thiselection accounts foranychangeinleasepaymentsresulting

fromtheCovid-19relatedrentconcessionthesamewayitwouldaccountforthechangeunderIFRS16,

if the change were not a lease modification.

Covid-19-Related Rent Concessions beyond 30 June 2021 Amendments to IFRS 16

Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

- Apractical expedient to requirecontractualchanges, orchangesto cash flowsthat aredirectly required

bythereform,tobetreatedaschangestoafloatinginterestrate,equivalenttoamovementinamarket

rate of interest

Application of New and Revised IFRS

TheGroupappliedforthefirsttimecertainstandardsandamendments,whichareeffectiveforannual

periodsbeginningonorafter1January2021. Severalotheramendmentsandinterpretationsapplyfor

the first timein2021,butdo nothaveanimpactonthefinancialstatements ofthegroup.TheGroup has

notearlyadoptedanystandards,interpretationsoramendmentsthathavebeenissuedbutarenotyet

effective.

The nature and the impact of each new standard and amendment is described below:

The

amendment

was

intended

to

apply

until

30

June

2021,

but

as

the

impact

of

the

Covid-19

pandemic

is

continuing,on31March2021,theIASBextendedtheperiodofapplicationofthepracticalexpedientto

30June2022.Theamendmentappliestoannualreportingperiodsbeginningonorafter1April2021.

TheseamendmentshadnoimpactonthefinancialstatementsoftheCompany,butmayimpactfuture

periods should the Company enter into any leases.

-

Permit

changes

required

by

IBOR

reform

to

be

made

to

hedge

designations

and

hedge

documentation

without the hedging relationship being discontinued

Theseamendments hadno impact onthefinancialstatementsoftheCompany. TheCompanyintends to

use the practical expedients in future periods if they become applicable.

-Providetemporaryrelieftoentitiesfromhavingtomeettheseparatelyidentifiablerequirementwhen

an RFR instrument is designated as a hedge of a risk component

The amendments provide temporary reliefs which address the financial reporting effects when an

interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The

amendments include the following practical expedients:

59

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

2

IAS 41 Agriculture – Taxation in fair value measurements

IFRS 17 Insurance Contracts

5. Segment information

Holding

Property development and

letting

Hospitality and

Entertainment

For managementpurposes, theGroup is organised into businessunits based onits products and services

and has two reportable segments, as follows:

1 January 2022

IFRS 1 First-time Adoption of International Financial Reporting Standards –

Subsidiary as a first-time adopter

IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition

of financial liabilities

Managementmonitorstheoperatingresultsofitsbusinessunitsseparatelyforthepurposeofmaking

decisions about resource allocation and performance assessment. Segment performance is evaluated

based on profit or loss and is measured consistently with profit or loss in the consolidated financial

statements.

The newandamendedstandards andinterpretationsthatare issued,butnot yeteffective,uptothe date

ofissuanceoftheGroup’sfinancialstatementsaredisclosedbelow.TheGroupintendstoadoptthese

standards, if applicable, when they become effective.

Description

1 January 2022

1 January 2023

Amendments to IAS 1: Classification of Liabilities as Current or Non-current

This serves as the finance arm of the Group and the principal vehicle for

further expansion of the Group's hospitality business and mixed-use

developments.

Property, Plant and Equipment: Proceeds before Intended Use

– Amendments to IAS 16

1 January 2022

Reference to the Conceptual Framework – Amendments to IFRS 3

Effective for annual periods

beginning on or after

This segment carries works such as construction, plumbing, electrical and

others tobring various properties in astatethat canbe leased tothird parties.

In relation to this, the Group leases out various freehold commercial and

residential properties to third parties.

This segment includes hotel operations such as accommodation, food and

beverage and other related services. The Group owns various hotels and

apartmentsuitesnamelyBayviewHotel,BlubayApartments,BlubaySuites,

Sliema Hotel and Azur Hotel.

1 January 2022

Onerous Contracts – Costs of Fulfilling a Contract – Amendments to

IAS 37

4.2 New and Revised IFRS in issue but not effective

1 January 2023

1 January 2022

Definition of Accounting Estimates - Amendments to IAS 8

Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice

Statement 2

1 January 2023

60

Notes to the Financial Statements

for the year ended 31 December 2021

5. Segment information (continued)

Year ended 31 December 2021 Holding

Property

development and

letting

Hospitality and

Entertainment Total segments Eliminations Consolidated

€ € € € €

External customers

-

8,563,835

6,501,458

15,065,293

-

15,065,293

Inter-segment

41,142,087

8,286,226

-

49,428,313

(49,428,313)

-

Total revenue

41,142,087 16,850,061 6,501,458 64,493,606 (49,428,313) 15,065,293

Income/(expenses)

Finance and similar income

-

344,702

-

344,702

(344,702)

-

Finance cost

(2,407,500)

(344,945)

(2,327,128)

(5,079,573)

1,864,152

(3,215,421)

Depreciation and amortisation

-

(346)

(5,916,616)

(5,916,962)

2,209,043

(3,707,919)

Share in loss of associates

-

(47,300)

-

(47,300)

Income tax expense

801,809

1,412,454

2,432,065

4,646,328

3,345,197

7,991,525

Segment profit/(loss) before tax (21,182,263) 105,259,964 (4,347,608) 79,730,093 (75,334,916) 4,395,177

Total assets 60,322,974 369,883,134 65,204,115 495,410,223 (132,456,341) 362,953,882

Total liabilities 79,074,221 50,213,122 72,252,084 201,539,427 (73,977,401) 127,562,026

Other disclosures

Capital expenditure

-

8,256,277

-

8,256,277

-

8,256,277

61

Inter-segment transactions, assets and liabilites are eliminated upon consolidation and reflected in the ‘eliminations’ column.

Stivala Group Finance p.l.c.

Notes to the Financial Statements

for the year ended 31 December 2021

5. Segment information (continued)

Stivala Group Finance p.l.c.

Year ended 31 December 2020 Holding

Property

development and

letting

Hospitality and

Entertainment Total segments Eliminations Consolidated

€ € € € €

External customers

-

8,395,831

3,352,671

11,748,502

-

11,748,502

Inter-segment

3,458,801

7,975,098

-

11,433,899

(11,433,899)

-

Total revenue

3,458,801 16,370,929 3,352,671 23,182,401 (11,433,899) 11,748,502

Income/(expenses)

Finance and similar income

347,922

1

347,923

(347,922)

1

Finance cost

(2,407,500)

(348,425)

(2,216,529)

(4,972,454)

1,812,347

(3,160,107)

Depreciation and amortisation

-

(346)

(5,724,279)

(5,724,625)

(270,597)

(5,995,222)

Share in profit of associates

-

353,844

-

353,844

-

353,844

Income tax expense

(820,427)

(10,182,681)

3,720,750

(7,282,358)

6,802,635

(479,723)

Segment profit before tax 1,020,427 131,550,006 (6,883,928) 125,686,505 (98,214,417) 27,472,088

Total assets 62,000,705 343,589,531 62,114,376 467,704,612 (113,635,374) 354,069,238

Total liabilities 60,326,498 46,262,553 67,246,802 173,835,853 (51,203,447) 122,632,406

Other disclosures

Capital expenditure

-

11,524,132

-

11,524,132

Capital expenditure consists of additions to property, plant and equipment, and investment properties.

62

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

6.

Revenue from contracts with customers

The Group's hospitality revenue is derived locally from the operations of the hotels in Malta.

2021

2020

€

Type of goods or service

Hospitality and Entertainment (note 5)

5,652,238

2,867,939

616,423 347,321

232,797 137,411

6,501,458 3,352,671

Property development and letting (note 5)

Sale/barter of property for resale (note 20)

196,784 119,605

6,698,242 3,472,276

Timing of revenue recognition

Services/goods transferred at a point in time

1,046,004 604,337

Services transferred over time

5,652,238 2,867,939

6,698,242 3,472,276

Sale/barter of property for resale

Food, beverage and other services

Information about the Group’s performance obligations are summarised below:

Other services

Food and beverage

Accommodation

The

performance

obligation

is

satisfied

at

a

point

in

time

upon

availment

of

service

by

the

customer.

The

payment(whichisequaltothetransactionpriceestablishedatthetimeofavailment)isgenerallydue

immediately upon completion of services before the customer leaves the hotel's premises.

TheGroup assesses thatthereareno otherpremisesinthecontract ofsalethatareseparateperformance

obligations to which aaportion of transaction priceneeds tobe allocated.The transaction price,which is

equaltothecashsellingpriceindicatedinthesalesinvoicesissued,isthereforeallocatedto onlyone

performance obligation.

Set out below is the disaggregation of the Group's revenue from contracts with customers:

Disaggregated revenue information

Performance obligations

Accommodation

The

performance

obligation

is

satisfied

upon

rendering

the

service

over

time

as

the

hotel's

customers

consumeandreceivethebenefitfromtheseservicesoneachday/throughouttheirstayuntilcheckout.

Thepayment(whichisequaltothetransactionpriceestablishedatthetimeofbooking)isgenerallydue

immediately on the day of checkout before the customer leaves the hotel's premises.

The

performance

obligation

is

satisfied

at

the

point

in

time

when

control

of

the

asset

is

transferred

to

the

customer,generallyuponsigningofdeedofsalewherethecustomerobtainslegaltitletotheproperty.

The normal credit term is 30 to 90 days from date of deed.

There are no contract liabilities or remaining performance obligations as at 31 December 2021 and 2020.

The

Group

assesses

that

there

are

no

other

promises

in

the

contract

of

sale/barter

of

properties

held-for-

salethatare separate performanceobligationstowhichaportionofthetransaction priceneeds tobe

allocated.Thetransactionprice,whichisequaltothesellingpriceindicatedinthedeedofsale/barter

signedby bothparties,is thereforeallocatedtoonly oneperformanceobligation.TheGroupassesses

that there exist no variable considerations and consideration payable to the customer relating to the

sale/barter of properties held-for-sale.

63

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

7.

Expenses by nature

2021

2020

2021

2020

€

Cost of sales

Direct wages (note 11) 526,627 670,174 - -

Social security contributions (note 11) 113,806 112,752 - -

Commissions 712,850 519,590 - -

Repairs and maintenance 726,058 911,255 - -

Cost of goods sold (note 19) 469,478 467,083 - -

Licenses and permits 270,593 319,078 - -

Utilities 755,731 747,371 - -

Transport 26,329 76,558 - -

Fuel 111,701 88,155 - -

Other direct costs - 6,082 - -

3,713,173 3,918,098 - -

Distribution and selling costs

Advertising and promotions 46,382 31,410 - -

Administrative expenses

Depreciation (notes 13 and 24) 3,687,024 5,953,883 - -

Amortisation 20,895 41,339 - -

Directors' remuneration (note 11) 184,359 199,477 26,385 18,000

Office salaries (note 11) 497,957 236,162 8,511 -

Social security contributions (note 11) 30,900 22,564 - -

Auditors' remuneration 20,500 20,500 8,500 8,500

Provision for ECL (notes 16, 21 and 32) 7,920,416 - - 207

Legal and professional fees 338,947 615,033 3,450 2,995

Rent (note 25) 40,346 2,200 - -

Computer maintenance 97,073 45,098 - -

133,915 67,288 408 313

Insurance 53,821 103,827 - -

Motor vehicle expenses 91,808 65,249 - -

Other administrative expenses 433,186 390,647 871 859

13,551,147 7,763,267 48,125 30,874

Other operating charges

Exchange fluctuations 2,233 3,909 - -

The Group

Bank charges

The Company

64

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

2021

2020

2021

2020

€

Annual statutory audit 20,500 20,500 10,030 10,030

8.

Other operating income

2021

2020

2021

2020

€ € € €

322,506 368,519 - -

Charges to tenants for damages - 2,349

Condominium fees & other charges 284,897 196,641

Recharge of expenses to other parties 210,395 226,989 - -

- 16,026 4,011 -

Litigation settlement

- 62,500 - -

135,634 100,118 - -

6,796 9,000 - -

Government grant

3,296

105,134 188,057 - -

-

55,407

-

1,068,658 1,225,606 4,011 -

9.

Finance and similar income

2021

2020

2021

2020

€

- 1 - -

10.

Finance costs

2021

2020

2021

2020

€

17,978 5,590 - -

2,407,500 2,407,500 2,407,500 2,407,500

761,925 700,550 - -

28,018

32,672

-

- 13,795 - -

3,215,421 3,160,107 2,407,500 2,407,500

Decrease in provision for estimated

credit losses (notes 16, 21 and 32)

The Company

Interest from banks

The Group

Recharge of utilities to tenants

The Company

Interest on lease liability (note 25)

The Company

Auditor's fees

Interest on bank overdrafts

Interest on bank loans

The Group

Management fees

Gain on lease modification

/rent concession

Interest on bonds and amortisation of

bond issue cost

Miscellaneous income

Reversal of payable

The Group

Feeschargedbytheauditorforservicesrenderedduringthefinancialyearsended31December2021

and 2020 relate to the following:

The Group

The Company

Other interest

65

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

11.

Staff costs and employee information

Staff costs for the year comprised the following:

2021

2020

2021

2020

€

1,208,943 1,105,813 34,896 18,000

144,706 135,316 - -

1,353,649 1,241,129 34,896 18,000

2021

2020

2021

2020

No.

Operational 121 120 - -

Administration 15 15 - -

136 135 - -

Theaveragenumberofpersons(includingDirectors)employedbythecompanyduringtheyearwasas

follows:

The Maltese government announced a number of measures to financially support businesses whose

operationwasfinanciallyaffectedbytheCovid-19pandemic.STHotelsLtd.wasabletobenefitfrom

MDB covid-19 interest rate subsidy scheme where the Company received €101,048 in the form of

governmentgrant during2021.Theseamountswere deductedfrom thelineitem 'Intereston bankloans'

as disclosed above.

The Company

The

Maltese

government

announced

a

number

of

measures

to

financially

support

businesses

whose

operationwasfinanciallyaffectedbytheCovid-19pandemic.TheGroupwasabletobenefitfromthe

covid wage supplement, receiving €800 on a monthly basis per full-time employee commencing on

March 2020. During the current year ended 31 December 2021, the Group had €1,139,219 (2020:

€813,428) in the form of government grants under the covid wage supplement. These amounts were

deducted from the line item 'direct wages and office salaries' as disclosed in note 7.

The Group

The Company

Social security contributions (note 7)

Wages and salaries (including

Directors’ remuneration) (note 7)

The Group

66

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

12.

Income tax

2021

2020

2021

2020

€ € € €

Income tax expense:

- - - (821,728)

- (803,299) - -

(1,248,657) (918,185) - -

- (18,800) - -

(12,750) - - -

631,785 (731) 821,728 -

(629,622) (1,741,015) 821,728 (821,728)

8,621,147 1,261,292 (19,919) 1,301

7,991,525 (479,723) 801,809 (820,427)

12.

Income tax (continued)

2

2021

2020

2021

2020

€ € € €

4,395,177 27,472,088 (21,182,263) 1,020,427

1,538,311 9,615,230 (7,413,792) 357,149

Tax effect of:

(556,319) (529,744) - -

24,699,665 2,671,942 21,814,926 853,431

(26,936,483) (12,294,924) (14,401,134) (1,210,580)

1,261,407 1,740,284 - 821,728

(834,843) (742,749) - -

(52,860) (1,330,676) - -

(709,828) (923,689) 18,515 103

(3,006,588) 2,321,674 - -

1,854 (5,492) - -

- provision for estimated credit losses (2,764,056) (42,864) 1,404 (1,404)

(631,785) 731 (821,728) -

(7,991,525) 479,723 (801,809) 820,427

- income not allowed for tax purposes

Provisionforincometaxhasbeenmadeattherateof35%onthechargeableincomefortheyearexcept

for investment income which is charged at the rates of 15% and 35% and for proceeds from sale of

property taxable at 8% final withholding tax.

- investment tax credit

Total current tax expense

The Company

Final withholding tax at 5%

- under provision of prior year tax

charge

The Company

Tax reconciliation

- excess of carrying amount of property,

plant and equipment over tax base

Credit for the year

Current tax charge

Tax at source

Final withholding tax at 8%

Tax expense on profit on ordinary activities

Profit before tax

- income taxed at different rates

- unabsorbed capital allowances

Deferred taxation (note 26):

Income tax credit/(expense) for the year

The Group

- unabsorbed tax losses

- effect of adoption of IFRS 16

Taxation charge thereon

- change in the fair value of

investment property

Income tax (credit)/expense for the year

Final withholding tax at 15%

Over/(Under) provision of tax

in prior years

The Group

- expenses not allowed for tax purposes

67

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

3

Current taxation

0

Taxation due/recoverable is made up as follows:

2021

2020

2021

2020

€ € € €

2,982,619 2,158,705 (904,041) (1,198,288)

(631,785) 731 (821,728) -

1,261,407 1,740,284 - 821,728

(294,247) 294,247 2,543,814 294,247

3,317,994 4,193,967 818,045 (82,313)

(768,769) - - -

(12,750) (18,800) - -

- - (840,140) (821,728)

(781,519) (18,800) (840,140) (821,728)

918,185 (1,192,548) - -

3,454,660 2,982,619 (22,095) (904,041)

13.

Property, plant and equipment

Fair value hierarchy disclosures for these buildings are in note 32.

Type of property

Technique

Inputs

Commercial properties

Market approach

Residential properties

Market approach

Underprovision of tax in prior years

Fair value

Income tax expense

The fair valueof thefreehold buildings is based on avaluationassessedby the directors on31 December

2021for all existing properties asat year end,which includes the consideration ofwear andtear. The last

independent architect's valuation of the Company’s properties was performed on 31 May 2020, by

independent external valuers having experience in the location and type of property. The costs of

additions after 31May 2020arebeing considered bythe directors asbeing equivalent to its fair value. As

at31December2021,managementassessedwhetherthereareanysignificantchangestothesignificant

inputs of the valuation. The fair value movement were credited to other comprehensive income and

subsequently transferred to revaluation reserve under equity.

The Company

Value of the properties are based on the

selling price of similar types of properties.

Reclassification to accrual:

Final withholding tax at 15%

For

properties

categorised

under

Level

2

of

the

fair

value

hierarchy

as

at

31

December

2021

and

2020,

the

following techniques and inputs were used:

The Group

These

consist

mainly

of

residential

and

commercial

buildings

with

a

carrying

amount

of

€24,825,898

(2020: €61,988,419), had these assets been carried at cost less accumulated depreciation. As at 31

December2021and2020,thesepropertieshavebeencategorisedtofallwithinlevel2ofthefairvalue

hierarchy.The differentlevelsin the fair valuehierarchy havebeen definedin note 32. The Grouppolicy

istorecognisetransfersintoandoutoffairvaluehierarchylevelsasofdateoftheeventofchangein

circumstancesthatcausedthetransfer.Therewerenotransfersbetweenlevelsduringtheyear.Forall

properties, their current use equates to the highest and best use.

The Group

As at 1 January

Payments:

Owner-occupied property is disclosed in property, plant and equipment as Buildings.

Tax at source

Settlement tax

Final withholding tax at 5% and 8%

As at 31 December

Tax refund/(excess) tax refund

in prior year

68

Notes to the Financial Statements

for the year ended 31 December 2021

13.

Property, plant and equipment (continued)

Buildings

Motor

Vehicles

Kitchen

equipment

Computer

equipment

Plant and

machinery

Furniture, fittings

and office

equipment

Electrical

installations

Energy saving

equipment Total

€

Cost / Valuation

As at 1 January 2020

78,592,613 424,226 67,043 308,446 526,427 6,137,756 3,915,405 1,031,359 91,003,275

Additions

6,080,690 39,615 - 18,580 18,559 735,663 994,446 7,602 7,895,155

Transfer from investment property (note 17)

55,561,976 - - - - - - - 55,561,976

Revaluation surplus (note 29)

86,945,920

- - - - - - -

86,945,920

As at 31 December 2020

227,181,199 463,841 67,043 327,026 544,986 6,873,419 4,909,851 1,038,961 241,406,326

Additions

3,377,383 37,713 55,704 5,401 357,488 630,219 739,414 43,085 5,246,407

Transfer to investment property (note 17)

(112,897,902) (112,897,902)

Revaluation surplus (note 29)

30,676,399 30,676,399

As at 31 December 2021

148,337,079 501,554 122,747 332,427 902,474 7,503,638 5,649,265 1,082,046 164,431,230

Depreciation

As at 1 January 2020

1,464,574 182,825 18,531 81,346 243,404 2,885,940 1,243,935 344,647 6,465,202

Charge for the year

2,318,176 101,104 13,416 77,526 126,720 1,693,420 1,024,869 429,184 5,784,415

Revaluation surplus (note 29)

(1,464,574) - - - - - - - (1,464,574)

As at 31 December 2020

2,318,176 283,929 31,947 158,872 370,124 4,579,360 2,268,804 773,831 10,785,043

Charge for the year

- 101,205 21,424 69,528 198,215 1,694,925 1,121,236 267,195 3,473,728

Revaluation surplus (note 29)

(2,318,176) - - - - - - - (2,318,176)

As at 31 December 2021

- 385,134 53,371 228,400 568,339 6,274,285 3,390,040 1,041,026 11,940,595

Net book amount

As at 31 December 2020

224,863,023 179,912 35,096 168,154 174,862 2,294,059 2,641,047 265,130 230,621,283

As at 31 December 2021

148,337,079 116,420 69,376 104,027 334,135 1,229,353 2,259,225 41,020 152,490,635

69

The Group

Stivala Group Finance p.l.c.

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

14.

Investment in subsidiaries

2021

2020

€

Cost

60,004,895 60,004,895

(23)

As at 31 December 60,004,872 60,004,895

0

Undertaking / Registered Office Percentage of

issued shares

held

Subsidiary

100%

143, 100%

The Strand,

Sub-subsidiaries

100%

of

€1 each

of

€1 each

Number, class and

The subsidiary used to be engaged in operating hotels and hostels.

The Strand,

ST Properties Ltd

500,000 Ordinary shares,

1,200 Ordinary shares,

143,

The subsidiary is principally engaged in renting out properties.

Stivala Properties Ltd

143,

of

€2.329373 each

143,

nominal value

Reduction due to major shareholder's divestiture (see note 22)

The Company

60,000,000 Redeemable

Preference Shares,

Gzira

fully paid up

The Strand,

of

€1 each

4,872 Ordinary shares,

The subsidiary used to be engaged in renting residential and commercial properties to third parties.

fully paid up

of shares held

Thesubsidiarywasengagedinrentingoutpropertiestorelatedparties.Itisaholdingcompany.The

Company also acts as a guarantor to the bonds issued by Stivala Group Finance p.l.c..

Carmelo Stivala Group Limited

fully paid up

Gzira GZR1026

Gzira

1,200 Ordinary shares,

fully paid up

Gzira

fully paid up

The Strand,

As at 31 December 2021, the Company held the following equity interests:

Stivala Operators Limited

Gzira

of

€1 each

996 Ordinary shares,

ST Hotels Ltd.

The Strand,

As at 1 January

143,

The subsidiary was engaged in operating hotels and hostels. It also rents out properties.

70

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

15.

2021

2020

2021

2020

€ € € €

Cost

354,844 500 - -

Additions - 500 - -

(47,300)

353,844

-

307,544 354,844 - -

Undertaking / Registered Office

Percentage of

issued shares

held

Associates

50%

143,

33%

Vincenti Buildings,

Number, class and

20% paid up

of

€1 each

No. 2,

of

€1 each

The Company

of

€1 each

of shares held

Geraldu Farrugia Street,

The Group

As at 31 December 2021, the Company (through its subsidiary) held the following equity interests:

Zebbug ZBG 4351

Investment in associates

600 Ordinary shares,

fully paid up

The associate will be engaged in operation of a lido.

fully paid up

nominal value

The associate was engaged in operation of a lido.

Sliema Creek Lido Limited

The Strand,

As at 31 December

Platinum Developments Ltd

600 Ordinary shares,

500 'B' Ordinary shares,

Valletta VLT 1432

25/25 Strait Street

Aqualuna Lido Ltd

The

associate

is

principally

engaged

to

act

as

building

developers,

contractors,

designers

and

ancillary

services to building industry.

Gzira GZR 1026

The

associate

has

been

engaged

to

acquire

and

hold

assets

of

whatsoever

nature,

whether

movable

or

immovable, corporal or incorporal, whether by way of title, real or personal, or on behalf of others.

Share in (loss)/profit

Zebbug ZBG 4351

Number 2,

of

€1 each

Geraldu Farrugia Street,

As at 1 January

500 'B' Ordinary shares,

Civala Limited

71

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Undertaking

Aqualuna Lido Ltd

Sliema Creek Lido Limited

Platinum Developments Ltd

Summarisedfinancial informationoftheassociates, basedontheirlatestauditedfinancialstatements,

andreconciliationwiththecarryingamountoftheinvestmentsintheconsolidatedfinancialstatements

aresetoutbelow.Theamountspresentedareextractedfromthemostupdatedandavailablefinancial

statements of the associates as at and for the year ended:

31 December 2021

Accounting period

31 December 2021

Civala Limited

72

15.

Investment in associates (continued)

#

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

Percentage ownership interest 50% 50% 50% 50% 50% 50% 33% 33% 33% 33%

Non-current assets 7,860,160 6,036,569 - - 590 - 65,331 - 7,926,081 6,036,569

Current asset

240

399,821 444,222 - - 230,276 156,524 518,469 3,095 1,148,806 604,081

Non-current liabilities (7,060,729) (5,616,107) - - - - - - (7,060,729) (5,616,107)

Current liabilities (8,696) (7,125) (586,403) (157,236) - (850) (237,717) (155,023) (669,167) (1,595) (1,501,983) (321,829)

Net Asset (Liability) (100%) (8,456) (6,885) 612,849 707,448 - (850) (6,851) 1,501 (85,367) 1,500 512,175 702,714

Group's share on net asset (liability)* (4,228) (3,443) 306,424 353,724 - (425) (2,283) 500 (28,171) 500 271,742 350,856

Adjustments 4,228 3,443 120 120 425 2,783 28,671 - 35,802 3,988

Group's carrying amount of the

investment

- - 306,544 353,844 - - 500 500 500 500 307,544 354,844

Net Asset (liabilities) include (100%):

Cash and cash equivalent 240 240 7,558 79,033 - - 16,544 48,698 - - 24,342 127,971

Non-current financial assets - - - - - - - - - -

Revenue and other income - - 165,785 140,044 - - 66,431 61,756 439,158 1,595 671,374 203,395

Cost of sale - - - - - - (63,699) (50,137) (246,234) - (309,933) (50,137)

Interest expense - - - (150) - - - - - - - (150)

Other expense (1,157) (1,161) (260,384) (180,317) - (636) (11,084) (9,108) (279,791) (1,595) (552,416) (192,817)

Change in fair value of investment

property

- 1,707,297

Loss before tax (1,157) (1,161) (94,599) 1,666,874 - (636) (8,352) 2,511 (86,867) - (190,975) (39,709)

Income tax expense - - - (621,007) - - - - - - - (621,007)

Other comprehensive loss - - - - - - - - - - - -

Total comprehensive loss (100%) (1,157) (1,161) (94,599) 1,045,867 - (636) (8,352) 2,511 (86,867) - (190,975) (660,716)

Group’s share of (loss)/

profit for the year

- - (47,300) 522,934 - - - 837 - - (47,300) 523,771

Prior year losses taken up this year - - 353,844 (169,090) - - - (837) - - 353,844 (169,927)

Group’s share in profit at yearend - - 306,544 353,844 - - - - - - 306,544 353,844

73

Sliema Creek Lido Ltd Aqualuna Lido Ltd Total

The aggregate capital and reserves as at the end of the under mentioned accounting period and the results for the said period of the Company were as follows:

Stivala Group Finance p.l.c.

Notes to the Financial Statements

for the year ended 31 December 2021

Platinum Developments

Limited Quisisana Boutique Co. LtdCivala Limited

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

16.

Financial assets and financial liabilities

16.1 Financial assets

2021

2020

2021

2020

€

Current assets

479,265

281,315

-

538,022 384,641 - -

7,182,242 4,784,060 - -

Total trade and other receivables 8,199,529 5,450,016 - -

Other financial assets

- - - 778,040

5,059,446

4,948,891

-

2,696,718 10,555,572 - -

248,125 249,062 - -

Total other financial assets 8,004,289 15,753,525 - 778,040

16,203,818 21,203,541 - 778,040

Loans to other related undertakings -

net of ECL

Loans to associates - net of ECL

The Group The Company

All of the above debt instruments at amortised cost are interest free, unsecured and repayable on

demand.The Group'sexposure to credit risk related to these financial assets isdisclosed in note 32. Asat

the reporting date, these financial assets were fully performing and hence do not contain impaired

assets.However, duetotheimplementationofIFRS9,theassetsaremeasured atamortisedcostand

estimated credit losses have to be calculated.

Loans to subsidiary undertakings

- net of ECL

Loans to other party - net of ECL

Debt instruments at amortised cost:

Other receivables - net of ECL (note 21)

Total debt instuments at amortised cost

Amounts owed by related parties

- net of ECL (note 21)

Trade receivables - net of ECL (note 21)

Allowance for ECL on loans to associates, other related undertakings and other parties amounted to

€72,125, €7,924,119 and €1,875 (2020: €71,267, €60,512 and €938), respectively. Movement in the

allowanceformspartofthetotalprovisionforECLreportedinthestatementofprofitorlossandother

comprehensive income.

74

16.

Financial assets and financial liabilities (continued)

16.2 Financial liabilities: Loans and borrowings

Maturity

2021

2020

2021

2020

Current loans and borrowings € € € €

Bank overdrafts (notes 23 and 32)

4% - 5%

on demand

1,539,387

1,978,579

-

Bank loans (notes 23 and 32)

2.50% - 4%

2025 - 2035

3,328,612

1,765,045

-

Loans from subsidiary undertakings

no interest

on demand

-

18,567,863

-

Finance lease liability (note 25 and 32)

4%

2022 - 2029 232,626 194,992 - -

5,100,625

3,938,616

18,567,863

-

Non-current loans and borrowings

3.65% - 4% 2027 - 2029 59,670,000 59,610,000 59,670,000 59,610,000

Bank loans (notes 23 and 32)

2.50% - 4%

2025 - 2035

20,620,082

20,003,708

-

Finance lease liability (note 25 and 32)

4%

2023 - 2029

394,949

646,088

-

80,685,031

80,259,796

59,670,000

59,610,000

Other Financial Liabilities at amortised cost, other than loans and borrowings

Trade and other payables (note 24)

12,808,095

9,570,738

836,358

716,498

75

The Company

450,000 and 150,000 (€100 face value) secured bonds

Interest rate

Stivala Group Finance p.l.c.

Notes to the Financial Statements

for the year ended 31 December 2021

The Group

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

16.

Financial assets and financial liabilities (

continued

)

16.2 Financial liabilities: Loans and borrowings (continued)

2021

2020

€ €

Face value of the secured bonds 60,000,000 60,000,000

Unamortised bond issue cost (330,000) (390,000)

Amortised cost

59,670,000 59,610,000

Byvirtueoftheprospectusdated25September2017and18July2019,theCompanyissued45,000,000

4%securedbondswithafacevalueof€100each,redeemableatparon18October2027and15,000,000

3.65%secured bondswith afacevalue of€100each, redeemableatparon 29July2029,respectively. The

amountismadeupofthetwobondissuesof€45millionand€15millionrespectively,netofthebond

issuecostswhicharebeingamortisedoverthelifetimeofthebonds.Thebondsaresecuredbyafirst-

rankingspecialhypothecovervariousguarantor'sproperty,andpledgeonvariousinsuranceproceeds

(notes 13 and 17), pursuant to and subject to the terms and conditions in the prospectus.

Thebankoverdraftsarerepayableondemand.InformationaboutthecontractualtermsoftheGroup's

loans including interest are disclosed in note 32.

The loans from associate are unsecured, interest-free and repayable on demand.

Thebondbearinterestrateof4.00%perannum onthenominalvaluepayableannuallyinarrearsevery

18thofOctoberwithrespecttothe€45millionbondissueand3.65%perannumonthenominalvalue

payable annually in arrears every 18th of July with respect to the €15 million bond issue.

Thesecuredbondsaremeasuredattheamountofthenetproceedsadjustedfortheamortisationofthe

difference between the net proceeds and the redemption value of the bonds, using effective yield method

as follows:

The secured bonds are listed on the Official Companies List of the Malta Stock Exchange and are

guaranteedby Carmelo StivalaGroup Limited, which hasbound itself with theissuer, for the repayment

ofthebondsandinterestthereon,pursuanttoandsubjecttothetermsandconditionsintheoffering

memorandum.

The Group

Thebankoverdraftandbankloansbearinterestrangingbetween2.50%to5%perannum(2020:0.35%

to5%).ThesefacilitiesaresecuredbyageneralhypothecovertheGroup’s assets,specialhypothecand

guarantees oversome of theGroup’simmovableproperties, byjointandseveralpersonalguarantees

and by pledge over the Group’s insurance policies.

The Company

76

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

16.

Financial assets and financial liabilities (

continued

)

16.2 Financial liabilities: Loans and borrowings (continued)

2021

2020

2021

2020

€ € € €

Total borrowings:

At fixed rates 60,297,575 60,451,080 59,670,000 59,610,000

-

4.00% 4.00% 4.00% 4.00%

3.65% 3.65% 3.65% 3.65%

3.25% - 3.99% 3.25% - 3.99%

- -

0

17. Investment property

2021

2020

2021

2020

€

Valuation

34,337,699 116,469,022 - -

3,009,870 3,628,977 - -

(1,500,000) - - -

29,967,931 29,020,926 - -

- (59,219,250) - -

112,897,902 (55,561,976)

As at 31 December

178,713,402 34,337,699 - -

0

Transfer to assets held for distribution

to owner (note 22)

Transfer to property held-for-sale

(note 20)

Change in fair value

150,000 (€100 face value) secured

bonds 2029

Fair value

450,000 (€100 face value) secured

bonds 2027

The interest rate exposures of borrowings are as follows:

Market valuations are performed by independent professional architects every three years or earlier

whenever their fair values differ materially from their carrying amounts. In the year when a market

valuationisnotperformed,anassessmentofthefairvalueisperformedtoreflectmarketconditionsat

the year-end date.

The Group

Effective interest rates:

Lease liability

As at 1 January

Additions

The Group

Transfer from/(to) property, plant and

equipment (note 13)

The Company

This note provides information about the Company's borrowings. For more information about the

Company's exposure to interest rate and liquidity risk, see note 32.

The Company

77

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

17.

Investment property (continued)

Office

properties

Commercial

properties

Residential

properties Total

€ € € €

As at 1 January 2020 32,317,557 27,616,691 56,534,774 116,469,022

Additions 196,629 2,617,414 814,934 3,628,977

(27,422,719) (14,078,990) (14,060,267) (55,561,976)

3,834,012 2,838,077 22,348,837 29,020,926

(1,600,000) (3,200,000) (54,419,250) (59,219,250)

As at 31 December 2020 7,325,479 15,793,192 11,219,028 34,337,699

Additions

321,895 94,051 2,593,924

3,009,870

- - (1,500,000) (1,500,000)

46,310,296 28,575,159 38,012,447 112,897,902

3,265,817 14,636,290 12,065,824 29,967,931

As at 31 December 2021 57,223,487 59,098,692 62,391,223 178,713,402

ir

Type of property Technique Inputs

Commercial properties Market approach

Residential properties Market approach

Office properties Market approach

Transfer to property held-for-sale

(note 20)

Value of the properties are

based on the selling price of

similar types of properties.

For investment properties categorised under Level 2 of the fair value hierarchy as at 31 December 2021

and 2020, the following techniques and inputs were used:

Fair value change recognised in

profit or loss

The fair value of the Group's investment properties as at 31 December 2021 is based on a valuation

assessed by the directors at year end. The last independent architect's valuation of the Company's

investment properties was performed on 31 May 2020, by an independent external valuers having

experience in the location and type of property. the costs of additions after 31 May 2020 are being

consideredbythedirectorsasbeingequivalenttoitsfairvalue.Asat31December2021,management

also assessed whether thereareany significantchanges tothe significant inputsof the valuation. Thefair

value movement were credited to profit or loss and subsequently transferred to revaluation reserve

under equity.

Reconciliation of fair value:

Transfer to assets held for distribution

to owner (note 17)

Transfer from property, plant and

equipment (note 13)

Asatyearend,theCompanyhadpreliminaryagreementsforcontractualagreementsfortheacquisition

of investment property amounting to €870,000 (2020: €17,503,268).

Asat31December2021and2020,thesepropertieshave beencategorisedtofallwithin level2ofthefair

valuehierarchy.Thedifferentlevelsinthefairvaluehierarchyhavebeendefinedin note32.TheGroup

policy is torecognise transfersinto and out offair valuehierarchy levelsas of date of theevent of change

in circumstances thatcausedthetransfer.Therewere notransfersbetweenlevelsduring theyear.For all

properties, their current use equates to the highest and best use.

Fair value change recognised in

profit or loss

Transfer to property, plant and

equipment (note )

78

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

18. Intangible assets

2021

2020

2021

2020

€

Cost - Computer Software

As at 1 January and 31 December

124,797 124,797 - -

Amortisation

As at 1 January

97,845 56,506 - -

Charge for the year

20,895 41,339 - -

As at 31 December

118,740 97,845 - -

Net book amount

As at 1 January 26,952 68,291 - -

As at 31 December 6,057 26,952 - -

19.

Inventories

2021

2020

2021

2020

€

Goods held for resale 11,657 8,558 - -

20.

Property held-for-sale

2021

2020

2021

2020

Cost

€

- 756,207 - -

737,315 87,674 - -

1,500,000 - - -

(58,216) (115,395) - -

- (728,486) - -

2,179,099 - - -

The Group

The Company

In2021,theGroupsoldpropertiesforresalecosting€58,216andsalevalueconsiderationof€255,000.In

2020, the Group exchanged (through barter) a property for resale costing €115,395 with a new

investmentproperty,atanexchangevalueconsiderationof€235,000.Theprofitfromthesetransactions

were shown in the statement of profit or loss and other comprehensive income under revenue from

contracts with customers (note 6).

Disposals

The Group

The Company

Transfer from investment property

(note 17)

Transfer to assets held for distribution to

owner (note 22)

As at 1 January

The Group

During2021,€469,478(2020:€467,083)wasrecognisedasanexpenseduringtheyearandincludedin

cost of sales (note 7).

Additions

The Company

As at year end, the Company had investment property with a carrying amount of €33,715,651

(2020: €25,880,826) pledged to secure borrowings.

As at 31 December

79

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

21.

Trade and other receivables

2021 2020 2021 2020

€

Current

522,668 302,908 - -

7,233,978 4,784,060 - -

1,353 -

541,534 386,001 - -

1,505,978 969,241 - -

124,356 216,658 - -

29,808 40,032 - -

9,959,675

6,698,900

-

(43,403) (21,593) - -

(51,736) (23,921) - -

(3,512) (1,360) - -

(98,651) (46,874) - -

9,861,024 6,652,026 - -

2021

2020

2021

2020

€

As at 1 January

46,874

54,076

-

Provision for ECL (note 7)

51,777

(7,202)

-

As at 31 December

98,651 46,874 - -

22.

Assets held for distribution to owner

2021

2020

2021

2020

€ € € €

- 59,219,250 - -

Property for resale - 728,486 - -

- 59,947,736 - -

Other advances include advance deposits on purchase of properties.

Amounts owed by directors

Allowance for ECL on (note 35):

Set out below is the movement in the allowance for ECL on trade and other receivables:

The Company

The Group

Total trade and other receivables

The Group The Company

Investment property under fair value

model

Total assets held for distribution to

owner

Trade receivables

Other receivables

Amounts owed by directors

Indirect taxation

Prepayments and accrued income

The Group

Trade receivables

Amounts owed by ultimate beneficial

owners

Other receivables

The Company

Other advances

The amounts owed by related parties are unsecured, interest free and repayable on demand.

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

80

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Pursuanttotheframeworkagreementandpromiseofsaleagreementmadelast20November2020,the

relinquishment ofownership ofMr.CarloStivalafromStivalagrouphas beenformallyconcludedon26

April2021andwasformallyannounced byStivalaGroupFinance p.l.c.('theCompany')the nextday,27

April 2021.

Principal divestment of major shareholder

(i) the sharecapital ofeach of the Company, Carmelo StivalaGroup Limited andNorth Harbour Limited

hasbeenreducedpursuanttothecancellationofallsharesheldthereinbyCarloStivalaandCarmelo

StivalaTrusteeLimitedastrusteeoftheSeasideTrust,thebeneficiariesofwhichareCarloStivalaand

his descendants;

Intermsoftheclause(ii)above,theimmovablepropertieswiththevalueof€59,947,736asdisclosedin

prior year annual financial report as 'assets held for distribution to owner', were transferred from

CarmeloStivalaGroupLimitedtoCASTHoldingsLtd,acompanythatisultimatelyownedbyTrimer

ServicesLtdastrusteeofCASTTrust,thebeneficiariesofwhichareCarloStivalaandhisdescendants.

SuchvaluewereultimatelyclosedtotheCompanywhereitrepresentspartoftheconsiderationdueto

theTrusteeSeasideTrust,andfullconsiderationduetoCarloStivala,forthesaidpartiesrelinquishing

all of their interests in the share capital of the companies forming part of Stivala group.

In view of this event, the result were as follows:

(ii)

the

final

deed

of

transfer

in

respect

of

the

properties

that

were

agreed

to

in

terms

of

a

promise

of

sale

agreementasconsiderationduetoCarloStivalaandCarmeloStivalaTrusteeLimitedastrusteeofthe

SeasideTrust,thebeneficiariesofwhichareCarloStivalaandhisdescendants,fortheaforesaidparties

torelinquishalloftheirrightsandinterestsinthesharecapitalofthecompaniesformingpartofthe

Stivala group, has been duly executed; and

(iii) CarloStivalahasresigned fromthe boardof directors ofallcompanies formingpartof Stivala group

of which he is a director.

In terms oftheclause (i)above,the sharecapitalof theCompany hasbeen reduced by€75,000 ,made up

of €75,000ordinaryshares of€1each, equivalent to 25% ofthe issuedsharecapitalofthe Company.As a

result, the indirect shareholding in the Company of each of Martin Stivala, Ivan Stivala and Michael

Stivala and theirrespectivedescendants(the "ultimate beneficial owners") has increased from 25% to

33.33% of the Company's issued share capital.

Furthermore,theresultantissuedsharecapitalamountingto€225,000hasbeenincreasedby€30,000to

amountto€255,000inaccordancewithListingRule3.17.Theafore-stated€30,000ordinarysharesof€1

eachhavebeensubscribedtoasfullypaid-upsharesbyCarmeloStivalaTrusteeLimitedonbehalfof

each of the ultimate beneficial owners.

The issued ordinary share capital of Carmelo Stivala Group Limited (CSGL) and the corresponding

investmentoftheCompanyinCSGLhavealso beenreducedby€24,madeupof€24ordinarysharesof

€1 each.

Such

amount

of

transfer

value

of

the

properties

amounting

to

€59,947,736

less

Carlo

Stivala's

share

capitalamountingto€75,000waspresentedas'Lossonmajorshareholder'sdivestiture'disclosedinthe

ConsolidatedStatementofProfitorLossandOtherComprehensiveIncome.Outofthetransfervalueof

the propertiesmentioned previously, the amount of€38,741,687represents fairvalueincrementson such

propertiesoverthecosts.Duetothedivestiture,thesewereconsideredrealisedandpresentedas'Gain

ontransferofproperties'intheStatementofComprehensiveIncomeofCarmeloStivalaGroupLimited

and were declared eventually as dividends to the Company for the sameamount disclosedas 'Dividends

receivable' in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

In terms oftheclause (iii)abovefor companieswithin Stivalagroup, dulyfilledforms weresubmittedto

MaltaBusinessRegistrytoeffecthisremovalfromtheboardofdirectorsofallcompaniesformingpart

of Stivala group of which he is a director.

81

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

23.

Borrowings

2021

2020

2021

2020

€ € € €

Current

1,539,387 1,978,579 - -

3,328,612 1,765,045 - -

- - 18,567,863 -

4,867,999 3,743,624 18,567,863 -

Non-current

44,775,000 44,730,000 44,775,000 44,730,000

3.65 % secured bonds 14,895,000 14,880,000 14,895,000 14,880,000

20,620,082 20,003,708 - -

80,290,082 79,613,708 59,670,000 59,610,000

85,158,081 83,357,332 78,237,863 59,610,000

Loans from associate is unsecured, non-interest bearing and repayable on demand.

24.

Trade and other payables

2021

2020

2021

2020

€

Current

470,492 392,729 - -

4,955,875 3,711,913 - 1,770

1,895,243 689,031 6,814 5,273

1,708,971 1,201,119 - -

1,042,620 2,390,985 829,544 709,455

2,734,894 1,184,961 - -

12,808,095 9,570,738 836,358 716,498

0

Indirect

taxes

and

social

security

contributions

included

due

from

prior

years,

which

are

being

paid

in

installments in accordance with the agreements entered by the Group with Commission for Revenue.

Tradepayablesarenon-interestbearingandarenormallysettledbetween30to90days.Otherpayables

which includes refundable security and other deposits to tenants.

4% secured bonds

Total non-current borrowings

The Company

The Group

Deferred rental income

Bank overdrafts (note 31)

Bank loans

The Group's exposure to liquidity risk related to trade and other payables is disclosed in note 32.

Other payables

Total borrowings

Trade payables

The Company

Total current borrowings

Indirect taxes and Social Security

Contributions

Accruals

Total trade and other payables

Bank loans

FurtherinformationontheeffectonothercompaniesoutsideStivalaGroupnamelyNorthHarbourLtd

and Carmelo Stivala Trustee Limited, are found on the individual financial statements of the

aforementioned companies.

The Group

Loans from subsidiary undertakings

Amount received in advance

82

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

25.

Leases

Buildings

Furnitures

and Fittings Total

€

- 516,745 516,745

Additions

468,235

-

468,235

(42,639)

(126,829)

(169,468)

As at 31 December 2020

425,596

389,916

815,512

Lease modification

(76,181)

-

(76,181)

Additions 81,267 - 81,267

Depreciation expense

(84,110)

(129,186)

(213,296)

As at 31 December 2021

346,572 260,730 607,302

2021

2020

2021

2020

€

As at 1 January

841,080

524,823

-

Lease modification

(82,977)

-

Additions

81,267

475,498

-

Payments

(239,813)

(191,913)

-

28,018

32,672

-

As at 31 December

627,575 841,080 - -

Current 232,626 194,992 - -

Non-current 394,949 646,088 - -

TheGrouphasleasesofgaragewithleasetermof12monthsorless.TheGroupappliesthe‘short-term

lease’recognitionexemption for thislease. Therearenoother leases qualifyingfor shorttermor low

value asset recognition exemptions applicable to the Company.

Depreciation expense (note 7)

The Company

As at 1 January 2020

TheGroup hasa lease contract whichincludes in-substance fixed payments. TheGroup has no lease

contracts containing variable lease payments that depend on an index or a rate, residual value

guarantees and sales and leaseback transactions.

Set outbelow are thecarryingamounts ofthe Group'sright-of-useassetsrecognised andthe movements

during the period:

25.1 The Group as a lessee

Accretion of interest (note 10)

TheGroup hasleasecontractsfor various buildingsand furnitureandfittings used inits operations.

Leasesof building hasleaseterms of5 -11years,while furniture and fittingshave leaseterms of5 years.

TheGroup’sobligationsunderitsleasesaresecuredbythelessor’stitletotheleasedassets.Generally,

theGroupisnotrestricted from subleasingtheleasedassets(exceptwhenotherwiseagreed withthe

lessor in special terms) and effecting major structural or layout alterations on the leased premises.

Set out below are the carrying amounts of lease liabilities included under interest-bearing loans and

borrowings (note 16) and the movements during the period:

The Group

83

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

25.

Leases (continued)

2021

2020

2021

2020

€

213,296 169,468 - -

28,018

32,672

-

40,346 2,200 - -

281,660 204,340 - -

2021

2020

2021

2020

€

Within one year 2,744,507 1,452,506 - -

2,326,705 276,479 - -

More than five years 457,169 - - -

5,528,381 1,728,985 - -

The Group

Interest expense on lease liabilities

Depreciation expense of right-of-use

assets

The maturity analysis of lease liabilities are disclosed in note 32.

25.2 The Group as a lessor

TheGrouphasenteredintooperatingleasesonitspropertyportfolioconsistingofcertaincommercial

andresidentialbuildings(seenotes13and17).Theseleaseshavetermsofbetween1and3yearsforthe

non-cancellableportion,whileupto8yearsforthecancellableportionthereafter.Allleasesincludea

clausetoenableupwardrevision (usually10%)oftherentalchargeatvariousintervalsonacumulative

basis (in-substance fixed payments) as a precaution to prevailing market conditions throughout the

whole lease term. The Group is not exposed to foreign currency risk as a result of the lease

arrangements,asallleasesaredenominatedineuro. Rental incomerecognised bytheGroupduring the

year is €8,367,051 (2020: €8,276,226).

After one year but not more than five

years

Expense relating to short-term leases

and leases of low-value assets

(included in administrative expenses)

(note 7)

Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as

follows:

The following are the amounts reconised in profit or loss:

The Company

Total amount recognised in profit or

loss

The Group

The Company

TheGrouphadtotalcashoutflowsforleasesof€239,813in2021(€191,913in2020).In2021,theGroup

also had non-cash additions to right-of-use assets and lease liabilities of €81,267 (2020: €468,235 and

€475,498), respectively.

25.1 The Group as a lessee (continued)

84

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

26.

Deferred taxation

Deferred tax liability

2021

2020

2021

2020

€

(25,880,637) (15,110,009) - -

- (1,376,114) - -

3,006,588 (2,321,674) - -

(2,639,566) (7,072,840) - -

As at 31 December

(25,513,615) (25,880,637) - -

The balance represents:

2021

2020

2021

2020

€

Tax effect of temporary differences relating to:

Asset revaluations (25,513,615) (25,880,637) - -

Deferred tax asset

2021

2020

2021

2020

€

As at 1 January

4,959,080 - 311,329 310,028

- 1,376,114 - -

5,614,559 3,582,966 (19,919) 1,301

As at 31 December

10,573,639 4,959,080 291,410 311,329

2021

2020

2021

2020

€

Tax effect of temporary differences relating to:

1,730,655 1,174,336 - -

Unabsorbed capital allowances 1,941,314 1,106,471 - -

Unrelieved tax losses 2,640,649 1,233,717 291,410 310,028

Allowance for estimated credit losses 2,835,002 69,543 - 1,301

6,465 8,319 - -

Investment tax credit 1,419,554 1,366,694 - -

10,573,639 4,959,080 291,410 311,329

The Company

Leases

Reclass to deferred tax asset

Credit in profit or loss (note 12)

(Charge)/Credit in profit or loss

(note 12)

The balance represents:

As at 1 January

The Group

The Company

(Charge) in other comprehensive

income

The Company

Excess of capital allowances over

depreciation

The Group

The Company

The Group

Reclass from deferred tax liability

85

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

26.

Deferred taxation (continued)

Deferred tax asset (continued)

27.

Share capital

2021

2020

2021

2020

€

Authorised:

500,000 Ordinary shares of €1 each 500,000 500,000 500,000 500,000

Issued and fully paid up:

300,000 Ordinary shares of €1 each 255,000 300,000 255,000 300,000

28.

Earnings per share

2021

2020

2021

2020

€

12,386,702 26,992,365 (20,380,454) 200,000

255,000 300,000 255,000 300,000

Earnings per share (cents)

48.58 89.97 (79.92) 0.67

Deferred incometaxesare calculated onall temporarydifferencesundertheliabilitymethodandare

measured at the tax rates that are expected to apply to the period when the asset is realized or the

liabilityissettledbasedontaxrates(andtaxlaws)thathavebeenenactedbytheendofthereporting

period. Theprincipaltax used is 35% (2020: 35%) withthe exception ofdeferred taxationon the fair

valuation of non-depreciable investment property which is computed on the basis applicable to

disposals of immovable property that is tax effect of 8% (2020: 8%) of the transfer value.

- Basic profit for year attributable to

ordinary equity holders of the parent

ThereisnodifferencebetweenthebasicanddilutedearningspershareastheGroupandCompanyhas

no potential dilutive ordinary shares.

Each ordinary share gives the right to one vote, participates equally in profits distributed by the

company andcarries equal rights upon distribution ofassets by the companyin the event ofwinding up.

See note 22 for more information on the reduction of issued share capital of the Group and the

Company.

Profit for the year attributable to

shareholders:

- Basic profit for year attributable to

ordinary equity holders of the parent

The Company

The Group

The Company

Weighted average number of

ordinary shares in issue (note 27)

EarningspershareisbasedontheprofitfortheyearattributabletotheownersoftheGroupdividedby

the weighted average number of ordinary shares in issue during the year.

The Group and the Company didnot have unrecognised deferred income tax assets that could be carried

forward against future taxable income as at 31 December 2021 and 31 December 2020.

86

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

29.

Revaluation reserve

2021

2020

2021

2020

€ € € €

As at 1 January 200,672,324 89,123,934 - -

- 3,511,484 - -

(33,580,348) - - -

30,355,009 81,337,654 - -

27,570,497 26,699,252 - -

As at 31 December

225,017,482 200,672,324 - -

30.

Incentives and benefits reserves

2021

2020

2021

2020

€

As at 1 January

4,825,440

-

Reclassification from retained earnings

-

4,825,440

-

As at 31 December 4,825,440 4,825,440 - -

31.

Cash and cash equivalents

The cash and cash equivalents comprise the following statement of financial position amount:

2021

2020

2021

2020

€

Cash at banks and in hand 202,471 592,023 4,597 2,400

Allowance for ECL (3,237) - - -

Bank overdrafts (note 16, 23) (1,539,387) (1,978,579) - -

As at 31 December

(1,340,153) (1,386,556) 4,597 2,400

Revaluation of investment property,

net of deferred tax

(note 17 and 26)

Reduction due to major shareholder's

divestiture (see note 22)

The Group

The Company

The revaluation reserve comprises the revaluation of property, plant and equipment and investment

properties, net of deferred taxation due to change in fair market value which are unrealised at the

reportingdate.Thechangeinfairvalueofinvestmentpropertiesaretransferredfromretainedearnings

tothis reservesincethesegainsarenotconsideredbythe directorsto beavailablefordistribution. Upon

disposaloftherespectiveinvestmentproperty,realisedfairvaluegainsaretransferredbacktoretained

earnings. This reserve is a non-distributable reserve.

The Group The Company

Revaluation of property, plant and

equipment, net of deferred tax

(note 13 and 26)

The Company

Theincentivesandbenefitsreserverepresentsprofitssetasideforre-investmentintermsofSection6(1)

and36(2)oftheBusinessPromotionAct. Amountsincludedinthisreservecanonlybedistributedby

way of capitalization of profits.

Reclassification of revaluation in prior

years related to investment property,

net of deferred tax

The Group

87

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

2021

2020

2021

2020

€

As at 1 January

-

3,093

-

Provision for ECL (note 7)

3,237

(3,093)

-

As at 31 December

3,237 - - -

32.

Financial risk management objectives and policies

Set out below is the movement in the allowance for ECL on cash in banks:

The Company

CustomercreditriskismanagedbytheGroup'smanagementsubjecttotheGroup'sestablishedpolicy,

procedures and controlrelatingto customer creditrisk management. Credit quality ofa customer is

assessed based on each individual's credit limits. Outstanding customer receivables are regularly

monitored. An impairment analysis is performed at the reporting date on an individual basis. The

Group exercises a prudent credit control policy, and accordingly, it is not subject to any significant

exposure or concentration of credit risk.

The Group

The Group is exposed to market risk, credit risk, liquidity risk, fair value risk and capital risk

management.

The Board of Directors reviews and agrees policies for managing each of these risks which are

summarised below.

Market risk

Market riskis the risk that thefair value offuture cashflowsofa financialinstrumentwillfluctuate

because of changes in market prices. Market prices comprise four types of risk: interest rate risk,

currencyrisk,commoditypriceriskandotherpricerisk. Financialinstrumentsaffectedbymarketrisk

include borrowings. The Group is only exposed to interest rate risk.

Interest rate risk

Interestrateriskis theriskthatthefairvalueoffuturecashflowsof afinancialinstrument will fluctuate

because of changes in market interest rates.

Exceptas disclosedin note16,23, theGroup's borrowings arenon-interest bearing. Borrowings issuedat

fixedratesconsistprimarilyofbankloans,4%and3.65%securedbondswhicharecarriedatamortised

cost, and therefore do not expose the Group to cash flow and fair value interest rate risk.

Exposure to cashflow interest rate risk arises in respect of interest payments relating to bank loans

amounting to €2,687,345 (2020: €441,157).

Credit risk

Creditriskistheriskthatacounterpartywillnotmeetitsobligationsunder afinancialinstrumentor

customercontract,leading toa financial loss. TheGroup is exposed to credit risk from itsoperating

activities (primarily trade receivables and contract assets) and from its financing activities including

deposits with banks and loans to related undertakings.

TheGroup'sprincipalfinancialassetscomprisetradeandotherreceivables,loansreceivableandcash

and cash equivalents. Its principal financial liabilitiescomprise trade and other payables, borrowings

and lease liabilities.

TheCompany'sexposuretointerestrateriskislimitedtothevariableinterestratesonbankoverdraft

and bankloans. Basedon observations of current market conditions, the directors consider an upwardor

downwardmovementininterestof1%tobereasonablepossible.However,thepotentialimpactofsuch

movementisconsideredimmaterial.Asaresult,theCompanyisnotsubjecttosignificantamountsof

risk due to fluctuations on the prevailing levels of market interest rates.

88

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Followingtheoutbreakofcovid-19,theGrouphasmonitoredinformationavailableonmacroeconomic

factors,affectingrepaymentability,aswellastheactualandprojectedimpactofthepandemiconthe

businessmodelofthecustomersservicedbytheGroup.PaymentpatternsattributabletotheGroup's

customerspostCOVID-19outbreakwasthoroughlyandregularlyassessedtodeterminewhetherany

deteriorationincollectionrateswasbeingexperienced.TheGroupdeterminedthattheexpectedcredit

losses havenot materiallychanged takingcognisance ofthe projectedimpactonthe repaymentability of

the Group's customers, the repayment pattern actually experienced, and the estimated life of the

receivables.

TheGroupbanksonlywithlocalfinancialinstitutionswith highqualitystandardorrating.The Group's

operationsareprincipallycarriedoutinMaltaandmostoftheGroup'srevenueoriginatesfromclients

based in Malta.

89

Notes to the Financial Statements

for the year ended 31 December 2021

32.

Financial risk management objectives and policies (continued)

31 December 2021

Trade receivables

(notes 16 and 21)

Loans to other

(notes 16 and 21)

Loans to

associates

(notes 16 and 21)

Loans to other

party

(notes 16 and 21)

Other receivables

(notes 16 and 21)

Amounts owed

by directors

(notes 16 and 21)

Cash and cash

equivalents

(note 31) Total

Approach in measuring ECL

Simplified

General

Probability of default

1.49% - 42.32%

0.57% - 75% 1.34% - 100% 1.00% 0.70% - 1.00% 1.00% 0.06% - 1.34%

Loss given default

N/A

100%

75%

100%

Estimated gross carrying

amount at default 288,825 10,620,837 5,131,571 250,000 389,229 7,233,978 1,179,965

Allowance for ECL

43,403

7,924,119

72,125

1,875

3,512

51,736

3,237

8,100,007

Increase / (decrease) in

provision for ECL (note 8) 21,810 7,863,607 858 937 2,152 27,815 3,237 7,920,416

31 December 2020

Trade receivables

(notes 16 and 21)

Loans to other

(notes 16 and 21)

Loans to

associates

(notes 16 and 21)

Loans to other

party

(notes 16 and 21)

Other receivables

(notes 16 and 21)

Amounts owed

by directors

(notes 16 and 21)

Cash and cash

equivalents

(note 31) Total

Approach in measuring ECL

Simplified

General

Probability of default 10.13% - 14.56% 0.57% 1.34% - 100% 0.50% 0.50% - 1.09% 0.50% 0.00%

Loss given default

N/A

100%

75%

75% - 100%

100%

0%

Estimated gross carrying amount

at default 188,768 10,616,084 5,020,158 250,000 208,076 4,784,060 -

Allowance for ECL

21,593

60,512

71,267

938

1,360

23,921

-

179,591

90

Increase / (decrease) in

provision for ECL (note 7) (32,483) (13,803) 7,134 938 1,360 23,921 (3,093) (16,026)

Stivala Group Finance p.l.c.

The Group

Set out below is the information about the credit risk exposure on the Group and Company's financial assets and contract assets subject to ECL under IFRS 9.

Notes to the Financial Statements

for the year ended 31 December 2021

32.

Financial risk management objectives and policies (continued)

31 December 2021

The Company 31 December 2020 The Company

Loans to

subsidiary

(notes 16 and 21)

Loans to

subsidiary

(notes 16 and 21)

Approach in measuring ECL

General

Approach in measuring ECL General

Probability of default

-

Probability of default

0.0057

Loss given default

-

Loss given default

90%

Estimated gross carrying

amount at default -

782,051

Allowance for ECL

-

Allowance for ECL

4,011

Increase / (decrease) in

provision for ECL (note 7) (4,011)

207

91

Increase / (decrease) in

provision for ECL (note 7)

Stivala Group Finance p.l.c.

Estimated gross carrying

amount at default

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

32.

Financial risk management objectives and policies (

continued

)

As at 31 December 2021

Less than

1 year

1 to 5

years > 5 years Total

€ € € €

1,539,387 - - 1,539,387

Bank loans

3,722,539 13,184,304 11,303,042 28,209,885

Finance lease liabilities

252,714 330,607 99,230 682,551

- - 44,775,000 44,775,000

- - 14,895,000 14,895,000

12,808,095 - - 12,808,095

18,322,735 13,514,911 71,072,272 102,909,918

As at 31 December 2020

Less than

1 year

1 to 5

years > 5 years Total

€ € € €

1,978,579 - - 1,978,579

Bank loans

2,337,506 11,382,392 12,297,275 26,017,173

Finance lease liabilities

223,814 565,629 138,922 928,365

4.00% secured bonds and interest - - 44,730,000 44,730,000

- - 14,880,000 14,880,000

9,570,738 - - 9,570,738

14,110,637 11,948,021 72,046,197 98,104,855

As at 31 December 2021

Bank loans

Less than

1 year

1 to 5

years > 5 years Total

Gross payments

3,722,539 13,184,304 11,303,042 28,209,885

Finance charges

(726,256) (2,165,919) (1,369,016) (4,261,191)

Carrying amount (net

present value)

2,996,283 11,018,385 9,934,026 23,948,694

Bank overdrafts

ThetablebelowsummarisesthematurityprofileoftheGroup’sfinancialliabilities basedoncontractual

undiscounted payments.

The Group

Thebelowtableshowsgrossundiscountedcashflowsforleaseliabilitiesandbankloans.Thefollowing

shows the corresponding reconciliation of those amounts to the carrying amount (net present value):

Liquidity risk

4.00% secured bonds and interest

The Group is exposed to liquidity risk in relation to meeting future obligations associated with its

financial liabilities. Prudent liquidity risk management includes maintaining sufficient cash and

committedcreditlinestoensuretheavailabilityofanadequateamountoffundingtomeettheGroup's

obligations.

3.65% secured bonds and interest

Trade and other payables

3.65% secured bonds and interest

Bank overdrafts

Trade and other payables

92

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

Lease liabilities

Less than

1 year

1 to 5

years > 5 years Total

Gross payments

252,714 330,607 99,230 682,551

Finance charges

(20,088) (29,889) (4,999) (54,976)

Carrying amount

(net present value)

232,626 300,718 94,231 627,575

As at 31 December 2020

Bank loans

Less than

1 year

1 to 5

years > 5 years Total

Gross payments

2,337,506 11,382,392 12,297,275 26,017,173

Finance charges

(572,461) (2,085,799) (1,590,160) (4,248,420)

Carrying amount

(net present value)

1,765,045 9,296,593 10,707,115 21,768,753

Lease liabilities

Less than

1 year

1 to 5

years > 5 years Total

Gross payments

223,814 565,629 138,922 928,365

Finance charges

(28,822) (49,038) (9,425) (87,285)

Carrying amount

(net present value)

194,992 516,591 129,497 841,080

Less than 1

year 1 to 5 years > 5 years Total

€

-

44,775,000

-

14,895,000

1

836,358 - -

836,358

836,358 - 59,670,000

60,506,358

The Group

3.65% secured bonds and interest

4.00% secured bonds and interest

Trade and other payables

The Group

The Company

The Group

As at 31 December 2021

93

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

32.

Financial risk management objectives and policies (

continued

)

Less than 1

year 1 to 5 years > 5 years Total

€ € € €

1

- - 44,730,000

44,730,000

1

- - 14,880,000

14,880,000

1

716,498 - -

716,498

0

716,498 - 59,610,000

60,326,498

0

Fair value measurement hierarchy:

Level 2

Level 3

Additions

Total

€

As at 31 December 2021

Commercial properties 59,004,641 - 94,051 59,098,692

Residential properties 59,797,299 - 2,593,924 62,391,223

Offices 56,901,592 - 321,895 57,223,487

175,703,532 - 3,009,870 178,713,402

Property, plant and equipment

Commercial properties 105,317,714 - 682,760 106,000,474

Residential properties 39,641,983 - 2,694,622 42,336,605

144,959,697 - 3,377,382 148,337,079

There were no transfers between level classificationsof investmentproperty andproperty, plant and

equipment during 2021.

Asat31December2021and2020,thecarryingamountsoftradeandotherreceivables,otherfinancial

assets (loans and receivables), cash and cash equivalents, trade and other payables and current

borrowings reflected in the financial statements are reasonable estimates of fair value in view of the

nature of these instruments or the relatively short period of time between the origination of the

instrumentsandtheirexpectedrealisation. Thefairvaluesofnon-currentborrowingsarenotmaterially

different from their carrying amounts in the statement of financial position.

The Group used the followinghierarchy for determining and disclosing the fair value of investment

property.

The Company

As at 31 December 2020

3.65% secured bonds and interest

4.00% secured bonds and interest

The Group

Liquidity risk (continued)

Trade and other payables

Level3:techniqueswhichuseinputswhichhaveasignificanteffectontherecordedfairvaluethatare

not based on observable market data.

Fair value risk

Level 1: quoted(unadjusted) prices in active markets for identical assets or liabilities;

Investment property

Level2:othertechniquesforwhichallinputswhichhaveasignificanteffectontherecordedfairvalue

are observable, either directly or indirectly; and

94

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

As at 31 December 2020

Commercial properties 14,067,273 - 1,725,919 15,793,192

Residential properties 9,808,990 - 1,410,038 11,219,028

Offices 7,325,479 - - 7,325,479

31,201,742 - 3,135,957 34,337,699

Property, plant and equipment

Commercial properties 163,530,485 - 2,738,500 166,268,985

Residential properties 60,912,214 - - 60,912,214

224,442,699 - 2,738,500 227,181,199

As at 31 December 2021 and 2020, there are no properties owned by the Company.

2021

2020

2021

2020

€ € € €

85,158,081 83,357,332 78,237,863 59,610,000

12,808,095 9,570,738 836,358 716,498

Finance lease liability (notes 23 and 25)

627,575 841,080 - -

(199,234) (592,023) (4,597) (2,400)

Net debt

98,394,517

93,177,127

79,069,624

60,324,098

Equity

235,391,856

231,436,832

(18,751,247)

1,674,207

Net debt to equity ratio

0.4:1 0.4:1 -4.22:1 36.03:1

Investment property

No changeswere made in the objectives, policies or processes formanaging capitalduring the years

ended 31 December 2021 and 2020.

Capital Risk management

Interest-bearing loans and other

borrowings

The Group

The Company

Trade and other payables (note 23)

Capital includes the equity attributable to the ultimate shareholders of the Group.

TheGroupmanagesitscapitalstructureandmakesadjustmentstoitinlightof changes ineconomic

conditions.Tomaintainoradjustthecapitalstructure,theGroupmayadjustthedividendpaymentto

the shareholders, return capital to the shareholders or issue new shares.

TheprimaryobjectiveoftheGroup'scapitalmanagementistoensurethatitmaintainshealthycapital

ratios in order to support its business and maximise shareholder value.

Less: cash and cash equivalents

No changeswere made in the objectives, policies or processes formanaging capitalduring the years

ended 31 December 2021 and 2020.

95

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

33.

34.

The Group

1 January

2021

Cash flows

Non-cash

changes

31 December

2021

€

Bank overdrafts 1,978,579 (439,192) - 1,539,387

Bank loans

21,768,753

2,179,941

-

23,948,694

4% and 3.65% secured bonds

59,610,000

-

60,000

59,670,000

Finance lease liability

(notes 16, 25 and 32)

841,080 (239,813) 26,308 627,575

84,198,412 1,500,936 86,308 85,785,656

The Group

1 January

2020

Cash flows

Non-cash

changes

31 December

2020

€

Bank overdrafts 475,236 1,503,343 - 1,978,579

Bank loans 16,775,130 4,993,623 - 21,768,753

4% and 3.65% secured bonds 59,550,000 - 60,000 59,610,000

Loans from associate 41,218 (41,218) - -

Finance lease liability

(notes 16, 25 and 32)

524,823 (191,913) 508,170 841,080

77,366,407 6,263,835 568,170 84,198,412

Supplemental cash flow information

On another note, the geopolitical situation in Eastern Europe intensified on February 24, 2022, with

Russia’sinvasionofUkraine.Thewarbetweenthetwocountriescontinuestoevolveasmilitaryactivity

proceedsandadditionalsanctionsareimposed.Inadditiontothehumantollandimpactoftheevents

on entities that have operations in Russia, Ukraine, or neighboring countries (e.g., Belarus) or that

conduct business with their counterparties, the war is increasingly affecting economic and global

financial markets and exacerbating ongoing economic challenges, including issues such as rising

inflation and global supply-chain disruption.

The Directorsareclosely monitoring the possible impacton its operations and financial performance and

are committed to take all necessary steps to mitigate the impact. This hasno impact on thefinancial

statements of the Group and the Company as at date of approval.

All

events

occuring

after

the

balance

sheet

date

until

the

date

of

authorisation

for

issue

of

these

financial

statementsandthatarerelevantforvaluationandmeasurementasat31December2021fortheGroup

and the Company are included in these consolidated financial statements.

Total liabilities from financing

activities

Events after the reporting date

Total liabilities from financing

activities

Changes in liabilities arising from financing activities

Non-cashchangesrefertoaccumulatedamortizationofbondissuecost,accretionofinterestexpenseon

finance lease liability, and additional lease liability recognised during the year.

96

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

The Company

1 January

2021 Cash flows

Non-cash

changes

31 December

2021

€

Bank overdraft

-

4% and 3.65% secured bonds

59,610,000

-

60,000

59,670,000

Loans from subsidiary undertakings

-

(1,077,902)

19,645,765

18,567,863

59,610,000 (1,077,902) 19,705,765 78,237,863

1 January

2020 Cash flows

Non-cash

changes

31 December

2020

€

4% and 3.65% secured bonds 59,550,000 - 60,000 59,610,000

59,550,000 - 60,000 59,610,000

35. Contingent liabilities

36.

Related party transactions

The Company

Expenses

recharge to

(from) related

parties

Dividend

income

Interest

income

Amount

owed by (to)

€ € € €

Subsidiary of the Company:

2021 (59,947,736) 41,142,087 - -

2020 - 3,458,801 - -

Sub-subsidiaries of the Company:

ST Hotels Ltd.

2021 (34,896) - - -

2020 (18,000) - - -

Some of the companies within the group (where the Company forms part as an ultimate parent

company)areengagedinvariouslegalproceedings.Asatapprovaldateofthesefinancialstatements,it

is difficult to predict exposures of the Group; hence noprovisionhasbeen madein the consolidated

financial statements accordingly.

Total liabilities from financing

activities

Total liabilities from financing

activities

Thefollowingtableprovidesthetotalamountoftransactionsthathavebeenenteredintowithrelated

parties for the relevant financial year.

Carmelo Stivala Group

Limited

Non-cashchanges refer toaccumulated amortizationofbondissue costand lossincurred onowner's

divestiture recognised during the year.

97

Notes to the Consolidated Financial Statements

for the year ended 31 December 2021

Stivala Group Finance p.l.c.

37.

Ultimate controlling parties

Terms and conditions of transactions with related parties

The

sales

to

and

purchases

from

are

made

on

terms

equivalent

to

those

that

prevail

in

arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and

settlementoccurs in cash. There have beenno guarantees provided or received for any related party

receivables or payables. For the year ended 31 December 2021, the Group recorded impairment of

receivablesrelatingtoamountsowedbyotherrelatedundertakingsdisclosedinnotes16,21and32,in

compliancewithIFRS9.Thisassessmentwillbeundertakeneachfinancialyearthroughexaminingthe

financialpositionoftherelatedpartyandthemarketinwhichtherelatedpartyoperatestogetherwith

other historical data on recovery of amounts due.

Stivala

Group

Finance

p.l.c.,

the

ultimate

parent

company,

is

a

public

limited

company

incorporated

in

Malta.

TheCompany's registeredofficeis 143,TheStrandGziraGZR1026,Malta.TheCompany'ssharecapital

is fullyowned byCarmelo StivalaTrusteeLimited acting as a trustee, on behalfof theultimate beneficial

owners which are Mr. Michael Stivala, Mr. Ivan Stivala and Martin John Stivala.

98