DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements
31 December 2008
Company Registration Number: C31688
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Pages
Directors’ report
1-3
Corporate governance - Statement of compliance
4-7
Independent auditors’ report
8-9
Statements of financial position
Income statements
Statements of changes in equity
Statements of cash flows
Notes to the financial statements
10 - 11
12
13 - 14
15
16 - 45
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Directors’ report
The directors present their report and the audited consolidated financial statements for the year ended
31 December 2008.
Principal activity
The Group’s principal activity is the operation of the Dolmen Resort Hotel in Bugibba, Malta, and the
renting out of parts of the said property to a subsidiary and to third parties.
Review of the business
Turnover for the Dolmen Properties Group reached €11.22 million during 2008 an increase of 5.6% or
€599,609 over that of 2007. This is by far the best performance recorded by this Group which operates the
Dolmen Resort hotel and its amenities. Gross profit reached €3.84 million an increase of €671,679 or
21.19% over the same period last year. This result followed from a higher average room revenue base
when compared to 2007. Direct costs as a percentage of turnover were marginally lower in line with a
slight decrease in occupancy levels during the year under review, leading to a gross profit equivalent to
34.25% of revenue.
Administrative costs declined during the year under review totally due to lower management charges which
were levied by the Group upon the hotel during 2007 and were not due again during 2008. Had this been
the case the total indirect costs would have exceeded those of 2007 mainly due to precautionary
impairment provisions which were raised this year.
Operating profit amounted to €2.90 million an advance of €940,137 over the previous year. Over seventy
percent of this improvement flowed directly from a superior gross profit.
The upbeat performance in 2008 owes its origin to a better room rate which was in evidence during
practically the whole year. The same cannot be said for the occupancy level, which although it is still
robust overall, it did not match that of the previous year, totally due to lower accommodation levels during
the last quarter of the year. This of course is all relative as compared to the performance of other hotels
within the same category the Dolmen Resort faired better both on occupancy and room rate measures.
Once again, the overall performance is also marginally above that the Group had itself projected, hence
the steady build-up of funds which would eventually go to secure the Bond Redemption Fund as set out in
the 2003 Bond Issue projections. In line with shareholders’ strategy and in order to retain the hotel’s
standing a further refurbishment programme of approximately €3.5 million was taken in hand later during
2008 and is projected to be completed before summer 2009 sets in. The directors decided that the timing
of the hotel’s upgrading programme was appropriate in spite of a recessionary environment.
The Group’s equity base reached an all-time high of €25.54 million and working capital of €6.20 million
demonstrating a consistent positive performance. Borrowings as a percentage of total assets improved to
23.88%, versus 24.66% is at the end of 2007. Interest cash cover over stood at 7.14 as opposed to 4.53 in
2007.
1
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Directors’ report - continued
Outlook for the financial year ending 31 December 2009
The expectations for 2009 are somewhat subdued and sober when compared to previous year’s budget
and actual performance. This reflects the last quarter of 2008 and the expectations which may follow as a
result of the current general economic turmoil. Tourism forecasts both locally and abroad are lower on
previous years as economies at large brace themselves for tough times. It is particularly now that the hotel
industry needs to re-assess its standing and re-position itself to become leaner and more competitive
ensuring that it upgrades its product to meet higher expectations once the economic cycle regains
momentum. This is what the Dolmen Resort Hotel is set to do, as the Group departs from a position of
strength following years of successful operations.
Results and dividends
The income statements are set out on page 12. The directors do not recommend the payment of a
dividend.
Directors
The directors of the Company who held office during the year were:
George Fenech - Chairman
Lino Spiteri
Raymond Fenech
Raymond Sladden
Michael Grech
The Company’s Articles of Association do not require any director to retire.
Directors’ statement of responsibilities in relation to the financial statements
The directors are required by the Maltese Companies Act, 1995 to prepare financial statements which give
a true and fair view of the state of affairs of the group and the company as at the end of each reporting
period and of the profit or loss for that period.
In preparing the financial statements, the directors are responsible for:




ensuring that the financial statements have been drawn up in accordance with International Financial
Reporting Standards as adopted by the EU;
selecting and applying appropriate accounting policies;
making accounting estimates that are reasonable in the circumstances;
ensuring that the financial statements are prepared on the going concern basis unless it is
inappropriate to presume that the group and company will continue in business as a going concern.
The directors are also responsible for designing, implementing and maintaining internal control relevant to
the preparation and the fair presentation of the financial statements that are free from material
misstatement, whether due to fraud or error, and that comply with the Maltese Companies Act, 1995. They
are also responsible for safeguarding the assets of the group and the company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
2
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Directors’ report - continued
Directors’ statement of responsibilities in relation to the financial statements - continued
The financial statements of Dolmen Properties p.l.c. for the year ended 31 December 2008 are included in
the Annual Report 2008, which is made available on the group’s website. The directors are responsible for
the maintenance and integrity of the Annual Report on the website in view of their responsibility for the
controls over, and the security of, the website. Access to information published on the group’s website is
available in other countries and jurisdictions, where legislation governing the preparation and dissemination
of financial statements may differ from requirements or practice in Malta.
The directors confirm that, to the best of their knowledge:
•
•
the financial statements give a true and fair view of the financial position of the group and company
as at 31 December 2008, and of the financial performance and the cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the EU; and
the Annual Report includes a fair review of the development and performance of the business and
the position of the group and the company, together with a description of the principal risks and
uncertainties that the group and company face.
Going concern basis
After making enquiries, the directors, at the time of approving the financial statements, have determined
that there is reasonable expectation that the group and the company have adequate resources to continue
operating for the foreseeable future. For this reason, the directors have adopted the going concern basis
in preparing the financial statements.
Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their reappointment will be proposed at the Annual General Meeting.
On behalf of the Board
George Fenech
Chairman
Lino Spiteri
Director
Registered office:
Tumas Group Corporate Office
Level 3
Portomaso Business Tower
Portomaso
St. Julians
Malta
Telephone (+356) 2137 2347
Ray Sladden
Company secretary
30 April 2009
3
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Corporate governance – Statement of compliance
Introduction
This statement is being made by Dolmen Properties p.l.c. (a fully owned subsidiary of Tumas Group
Company Limited – “the Group”) pursuant to Listing Rules 8.37 and 8.38 issued by the Malta Financial
Services Authority and affirms the extent to which the Company has adopted the Code of Principles of
Good Corporate Governance (the “Principles”) referred to in the said Rules as well as the measures taken
to ensure compliance therewith.
The Company holds title to the land and buildings that constitute the Dolmen Resort Hotel and its
amenities and surrounding grounds in Bugibba, Malta. The Company is also the principal shareholder of
Dolmen Complex Limited (“DCL”), the operator of the hotel. DCL’s principal activity is the operation of the
Dolmen Resort Hotel, and the renting out of parts of the said property to a fellow subsidiary and third
parties. The Company therefore exercises full control over and is the beneficial owner of all the profit and
net cash flow streams arising from the operation of the hotel, in part by way of rental payments and in part
through dividends and other transfers.
In deciding on the most appropriate manner in which to implement the Principles, the Board of Dolmen
Properties p.l.c. (the “Board”) has taken cognisance of its size, which inevitably impacts on the structures
required to implement the Principles without diluting the effectiveness thereof. The Company does not
have any employees.
Roles and responsibilities
The Board acknowledges its statutory mandate to conduct the administration and management of the
Company. The Board, in fulfilling this mandate and discharging its duty of stewardship of the Company,
assumes responsibility for:

the Company’s strategy and decisions with respect to the proper administration of its investments,
and the servicing and redemption of its bonds;

reviewing and approving of the hotel management operation business plan and targets and
implementation of such plans presented to it by DCL;

identifying the principal business risks of the Company and of DCL and overseeing the
implementation and monitoring of appropriate risk management systems;
4
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Corporate governance – Statement of compliance - continued
Roles and responsibilities - continued

ensuring that the operations of DCL are in conformity with the Company’s commitments towards
bondholders, shareholders and all relevant laws and regulations;

ensuring that the DCL installs and operates effective internal control and management information
systems;

assessing the performance of the DCL’s senior officers, including monitoring the establishment of
appropriate systems of succession planning and for approving the compensation levels of such
officers;

ensuring that DCL has a policy in place to enable it to communicate effectively with the market.
The Board delegates authority and vests accountability for DCL’s day to day operational business to DCL
which has its own management structure and accounting systems and internal controls, and is governed
by its own board, whose members are Mr George Fenech, Mr Raymond Fenech and Mr Emanuel Fenech.
The hotel management team is led by the hotel general manager, Mr Alex Pace and is supported by
Group officers designated to the different functional roles within the hotel operations. Matters related to the
bond issue and the market are delegated to Mr Raymond Sladden who is supported by a separate team of
Group officers.
Board of Directors
The Company has five directors who are appointed by its ultimate principal shareholder, Tumas Group
Company Limited. Each director receives an annual remuneration of €1,396.
Three of the directors, Mr George Fenech, Mr Raymond Fenech and Mr Raymond Sladden, occupy senior
executive positions within the Tumas Group of Companies. The two other directors, Mr Lino Spiteri and Dr
Michael Grech, serve on the Board of the Company and of another fellow subsidiary, in a non-executive
capacity.
The exercise of the role of the Board
The activities of the Board are exercised in a manner designed to ensure that it can function independently
of management and effectively supervise the operations of DCL and protect the interests of bondholders
and shareholders.
5
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Corporate governance – Statement of compliance - continued
The exercise of the role of the Board - continued
Meetings of the Board, chaired by Mr George Fenech, are held as frequently as considered necessary.
Individual directors, apart from attendance at formal Board meetings, participate in other informal meetings
during the year as may be required, either to assure good corporate governance, or to contribute more
effectively to the decision making process. The Board members are notified of forthcoming meetings by
the Company Secretary with the issue of an agenda and supporting documents as necessary which were
then discussed during the board meetings held during 2008.
Apart from setting the strategy and direction of the Company and DCL, the Board retains direct
responsibility for approving and monitoring:

direct supervision, supported by expert professional advice as appropriate, on the issue and listing
of bonds;

that the proceeds of the bonds are applied for the purposes for which they were sanctioned as
specified in the offering memorandum dated 28 October 2003;

proper utilisation of the resources of the Company and DCL, and financing opportunities, through
budgets and annual plans for the hotel operations and property rentals;

approval of the annual report and financial statements and of relevant public announcements and
for the Company’s compliance with its continuing listing obligations.
During the year, regular operational review board meetings have been held whereby management
presented the Board with performance reviews on hotel and rental operations. This ensured sufficient
delegation of powers to achieve effective management, as well as an organisational structure ensuring
that proper control and reporting systems are in place and maintained.
The Board does not consider it necessary to institute separate committees in the Company such as the
remuneration and director nomination committees, as would be appropriate in a larger corporate set-up.
Pursuant to the Company’s Listing Agreement with the Listing Authority, prior to being appointed or elected
directors, nominees undergo a screening process by the Authority.
During 2008, the Audit Committee, which was established in the latter part of 2007, held 3 meetings. Audit
Committee meetings are held mainly to discuss formal reports remitted by the group internal auditor but
also to consider the the six-monthly financial results and the annual financial statements.
The Audit Committee is composed of the two non-executive directors and one executive director. In 2007,
Mr Lino Spiteri was appointed Chairman, with Dr. Michael Grech and Mr. Raymond Fenech as committee
members. During 2008, the board established the terms of reference of the audit committee modelled on
the recommendations of the Listing Rules. Mr. Lino Spiteri, an economist by profession, in his capacity as
the Chairman of the audit committee, held meetings to review the accounts and operations with the
executive directors.
As required by the Maltese Companies Act, 1995 and the Malta Financial Services Authority Listing Rules,
the financial statements of Dolmen Properties p.l.c. are subject to annual audit by its external auditors.
Moreover, the Board has direct access to the external auditors of DCL, who attend at Board meetings at
which the Company’s and DCL’s financial statements are approved. Moreover, in ensuring compliance
with other statutory requirements and with continuing listing obligations, the Board is advised directly, as
appropriate, by its appointed broker, legal advisor and the external auditors. Directors are entitled to seek
independent professional advice at any time on any aspect of their duties and responsibilities, at the
Company’s expense.
6
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Corporate governance – Statement of compliance - continued
The exercise of the role of the Board - continued
The Company has formal mechanisms to monitor dealings by directors and senior officials in the bonds of
the Company and has also put in place the appropriate mechanisms for the advance notification of such
dealings.
Relations with bondholders and the market
Pursuant to the Company’s statutory obligations in terms of the Maltese Companies Act, 1995 and the
Malta Financial Services Authority Listing Rules, the Annual Report and Financial Statements, the election
of directors and approval of directors’ fees, the appointment of the auditors and the authorisation of the
directors to set the auditors’ fees, and other special business, are proposed and approved at the
Company’s Annual General Meeting.
The Company communicates with its bondholders by publishing its results on a six monthly basis during
the year and by way of the Annual Report. The Board feels that it is providing the market with adequate
information about its activities through these channels.
The Board considers that the Company has been in compliance with the Principles throughout the year as
befits a Company of this size and nature.
Approved by the Board on 30 April 2009 and signed on its behalf by:
George Fenech
Chairman
Lino Spiteri
Director
7
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Independent auditors’ report
To the shareholders of Dolmen Properties p.l.c.
We have audited the financial statements of Dolmen Properties p.l.c. on pages 10 to 45 which comprise
the group’s and the company’s statements of financial position as at 31 December 2008 and the income
statements, statements of changes in equity and statements of cash flows for the year then ended and a
summary of significant accounting policies and other explanatory notes.
Directors’ Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in
accordance with the requirements of the Maltese Companies Act, 1995 and International Financial
Reporting Standards (IFRSs) as adopted by the EU as applied in accordance with the provisions of the
said Act. As described in the statement of directors’ responsibilities on page 2, this responsibility includes
designing, implementing and maintaining internal control relevant to the preparation and fair presentation
of financial statements that are free of material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in the
circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with International Standards on Auditing. Those Standards require that
we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion the financial statements:

give a true and fair view of the financial position of the group and company as at 31 January 2009,
and of the financial performance and the cash flows for the year then ended in accordance with
IFRSs as adopted by the EU; and

have been properly prepared in accordance with the requirements of the Maltese Companies Act,
1995.
Report on Other Legal and Regulatory Requirements
The Listing Rules issued by the Malta Listing Authority require the directors to prepare and include in their
Annual Report a Statement of Compliance providing an explanation of the extent to which they have
adopted the Code of Principles of Good Corporate Governance and the effective measures that they have
taken to ensure compliance throughout the accounting period with those Principles.
8
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Independent auditors’ report - continued
Report on Other Legal and Regulatory Requirements - continued
The Listing Rules also require the auditor to include a report on the Statement of Compliance prepared by
the directors.
We read the Statement of Compliance and consider the implications for our report if we become aware of
any apparent misstatements or material inconsistencies with the financial statements included in the
Annual Report. Our responsibilities do not extend to considering whether this statement is consistent with
any other information included in the Annual Report.
We are not required to, and we do not, consider whether the Board’s statements on internal control
included in the Statement of Compliance cover all risks and controls, or form an opinion on the
effectiveness of the company’s corporate governance procedures or its risk and control procedures.
In our opinion, the Statement of Compliance set out on pages 4 to 7 has been properly prepared in
accordance with the requirements of the Listing Rules issued by the Malta Listing Authority.
We also read other information contained in the Annual Report and consider whether it is consistent with
the audited financial statements. The other information comprises only the Directors’ Report. Our
responsibilities do not extend to any other information.
We also have responsibilities:

Under the Maltese Companies Act, 1995 to report to you if, in our opinion:






The information given in the directors’ report is not consistent with the financial statements.
Adequate accounting records have not been kept, or that returns adequate for our audit have not
been received from branches not visited by us.
The financial statements are not in agreement with the accounting records and returns.
We have not received all the information and explanations we require for our audit.
Certain disclosures of directors’ remuneration specified by law are not made in the financial
statements, giving the required particulars in our report.
Under the Listing Rules to review the statement made by the directors, set out on page 2, that the
business is a going concern together with supporting assumptions or qualifications as necessary.
We have nothing to report to you in respect of these responsibilities.
167 Merchants Street
Valletta
Malta
John Zarb
Partner
30 April 2009
9
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Statements of financial position
As at 31 December
Notes
Group
2008
€
2007
€
Company
2007
2008
€
€
ASSETS
Non-current assets
Property, plant and equipment
Investment property
Investments in subsidiary
Trade and other receivables
36,526,748
887,689
36,703,662
887,689
33,646,270
5,766,883
-
33,854,085
5,766,883
-
37,414,437
37,591,351
39,413,153
39,620,968
230,217
5,276,233
5,290,066
189,865
3,823,368
102,565
3,985,775
226,524
6,368
5,229,158
127,484
65,795
3,899,385
Total current assets
10,796,516
8,101,573
5,462,050
4,092,664
Total assets
48,210,953
45,692,924
44,875,203
43,713,632
3
4
5
6
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
7
6
8
10
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Statements of financial position - continued
As at 31 December
2007
€
Company
2007
2008
€
€
16,305,611
1,109,823
172,718
7,954,689
16,305,611
1,109,823
172,718
6,310,075
16,305,611 16,305,611
5,715,516 5,715,516
2,195,125 1,450,832
25,542,841
23,898,227
24,216,252 23,471,959
6,663,490
313,284
11,098,206
6,666,995
302,774
10,794,817
6,354,438 6,411,356
10,649,962 10,794,817
18,074,980
17,764,586
17,004,400 17,206,173
3,498,492
417,099
677,541
3,554,979
475,132
-
3,654,551
-
3,035,500
-
Current liabilities
4,593,132
4,030,111
3,654,551
3,035,500
Total liabilities
22,668,112
21,794,697
20,658,951 20,241,673
Total equity and liabilities
48,210,953
45,692,924
44,875,203 43,713,632
Notes
Group
2008
€
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Revaluation reserve
Other reserve
Incentives and benefits reserve
Retained earnings
9
10
11
12
Total equity
Non-current liabilities
Deferred taxation
Provisions for other liabilities and charges
Borrowings
13
14
15
Total non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Current tax liabilities
16
15
The notes on pages 16 to 45 are an integral part of these financial statements.
The financial statements on pages 10 to 45 were authorised for issue by the board of directors on 30 April
2009 and were signed on its behalf by:
George Fenech
Chairman
Lino Spiteri
Director
11
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Income statements
Year ended 31 December
Notes
Group
2008
€
2007
€
Company
2008
2007
€
€
Revenue
Cost of sales
17
18
11,216,965
(7,375,496)
10,617,356
(7,447,566)
1,733,084
(462,058)
1,734,491
(468,169)
Gross profit
Administrative expenses
Other income
18
17
3,841,469
(994,374)
37,989
3,169,790
(1,242,048)
17,205
1,271,026
(52,835)
-
1,266,322
(56,526)
-
Operating profit
Finance income
Finance costs
20
21
2,885,084
182,503
(733,801)
1,944,947
93,270
(734,277)
1,218,191
192,322
(714,497)
1,209,796
111,987
(705,468)
Profit before tax
Tax (expense)/income
22
2,333,786
(689,172)
1,303,940
(364,253)
696,016
48,277
616,315
42,355
1,644,614
939,687
744,293
658,670
Profit for the year
Earnings per share (cents)
24
23c5
13c4
The notes on pages 16 to 45 are an integral part of these financial statements.
12
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Statements of changes in equity
Group
Balance at 1 January 2007
Incentives
and
Share Revaluation
benefits
capital
reserve
reserve
€
€
€
Retained
earnings
€
Total
€
16,305,611
1,109,823
172,718
5,370,388
22,958,540
-
-
-
939,687
939,687
Balance at 31 December 2007
16,305,611
1,109,823
172,718
6,310,075
23,898,227
Balance at 1 January 2008
16,305,611
1,109,823
172,718
6,310,075
23,898,227
-
-
-
1,644,614
1,644,614
16,305,611
1,109,823
172,718
7,954,689
25,542,841
Profit for the financial year
- total recognised income for 2007
Profit for the financial year
- total recognised income for 2008
Balance at 31 December 2008
The notes on pages 16 to 45 are an integral part of these financial statements.
13
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Statements of changes in equity - continued
Share
capital
€
Other
reserve
€
Retained
earnings
€
Total
€
16,305,611
5,715,516
792,162
22,813,289
-
-
658,670
658,670
Balance at 31 December 2007
16,305,611
5,715,516
1,450,832
23,471,959
Balance at 1 January 2008
16,305,611
5,715,516
1,450,832
23,471,959
-
-
744,293
744,293
16,305,611
5,715,516
2,195,125
24,216,252
Company
Balance at 1 January 2007
Profit for the financial year
- total recognised income for 2007
Profit for the financial year
- total recognised income for 2008
Balance at 31 December 2008
The notes on pages 16 to 45 are an integral part of these financial statements.
14
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Statements of cash flows
Year ended 31 December
Notes
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax (paid)/recovered
25
20
21
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment property
Proceeds from disposal of property,
plant and equipment
2,250,298
192,322
(714,497)
50,782
2,001,721
111,987
(705,468)
(11,551)
1,803,133
1,797,784
1,778,905
1,396,689
3
34,340
(694,164)
Net cash used in financing activities
Company
2007
2008
€
€
2,461,682
93,270
(723,774)
(33,394)
(728,504)
-
15
15
15
8
2007
€
2,256,497
182,503
(723,288)
87,421
3
4
Net cash used in investing activities
Cash flows from financing activities
Repayments of bank borrowings
Increase in bank borrowings
Purchase of own bonds
Contribution to bond redemption fund
Group
2008
€
448,244
(194,889)
(1,045,185)
(791,830)
(231,561)
(231,561)
(254,243)
(254,243)
(36,438)
(36,438)
(2,265)
(194,889)
(1,032,213) (1,045,185) (1,032,213)
(1,034,478)
(1,240,074) (1,032,213)
Movement in cash and cash equivalents
317,139
531,745
284,588
328,038
Cash and cash equivalents at beginning
of year
1,114,037
582,292
1,502,779
1,174,741
1,431,176
1,114,037
1,787,367
1,502,779
Cash and cash equivalents at end
of year
8
The notes on pages 16 to 45 are an integral part of these financial statements.
15
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
Notes to the financial statements
1.
Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
1.1.
Basis of preparation
These consolidated financial statements include the financial statements of Dolmen Properties p.l.c.
and its subsidiary undertaking. The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and with
the requirements of the Maltese Companies Act, 1995. The financial statements are prepared
under the historical cost convention as modified by the revaluation of property, plant and equipment.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the
use of certain accounting estimates. It also requires the directors to exercise their judgement in the
process of applying the group’s accounting policies (see Note 2 - Critical accounting estimates and
judgements).
Standards, interpretations and amendments to published standards effective in 2008
In 2008, the group adopted new standards, amendments and interpretations to existing standards
that are mandatory for the group’s accounting period beginning on 1 January 2008. The adoption of
these revisions to the requirements of IFRSs as adopted by the EU did not result in substantial
changes to the group’s accounting policies.
Standards, interpretations and amendments to published standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published
by the date of authorisation for issue of these financial statements but are mandatory for the group’s
accounting periods beginning after 1 January 2008. The group has not early adopted these
revisions to the requirements of IFRSs as adopted by the EU and the company’s directors are of the
opinion that there are no requirements that will have a possible significant impact on the group’s
financial statements in the period of initial application.
1.2.
Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of the voting rights.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They
are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the
group. The cost of an acquisition is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest.
16
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
1.
Summary of significant accounting policies - continued
1.2
Consolidation - continued
(a) Subsidiaries - continued
The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net
assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the
net assets of the subsidiary acquired, the difference is recognised directly in the income statement
(note 1.6).
Inter-company transactions, balances and unrealised gains on transactions between group
companies are eliminated. Unrealised losses are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the group.
Dolmen Properties p.l.c acquired a 99.9% shareholding in Dolmen Complex Limited on 24
September 2003, in exchange for the issue of shares to the previous shareholder of this subsidiary.
The substance of this transaction was that of a Group restructuring and accordingly the provisions in
respect of business combinations set out in IFRS 3 were not applicable. In accordance with
generally accepted accounting principles, the predecessor basis of accounting has been adopted
and this transaction has been recorded as if it had occurred at the beginning of the earliest period
recorded.
1.3.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the
currency of the primary economic environment in which the entity operates (‘the functional
currency’). The consolidated financial statements are presented in euro, which is the company’s
functional and the group’s presentation currency.
Following Malta’s adoption of the euro as its national currency on 1 January 2008, the entity’s
functional currency was changed from Maltese lira to euro. The effects of the change in functional
currency have been accounted for prospectively and all items have been translated into the new
functional currency using the exchange rate at the date of the change.
In view of the redenomination of the group’s share capital from Maltese lira to euro, the group’s
presentation currency also changed to euro. Accordingly, the results and financial position relating
to the comparative financial period were translated and presented in these financial statements at
the Irrevocably Fixed Conversion Rate of €1:Lm0.429300 as at 1 January 2008.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are
presented in the income statement within ‘finance income or cost’. All other foreign exchange gains
and losses are presented in the income statement within other income/(expense).
17
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
1.
Summary of significant accounting policies - continued
1.4.
Property, plant and equipment
All property, plant and equipment, is stated at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of items.
Subsequent costs are included in the asset’s carrying amount, or recognised as a separate asset,
as appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Group, and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to the income statement during the financial period in which they are
incurred.
Land and buildings are subsequently shown at market value, based on valuations by external
independent valuers, less subsequent depreciation. Valuations are carried out periodically when the
directors consider it appropriate to do so such that the carrying amount of land and buildings does
not differ materially from that which would be determined using fair values at the end of the reporting
period. All other plant and equipment is stated at historical cost less depreciation.
Increases in the carrying amount arising on revaluation are credited to the revaluation reserve in
shareholders’ equity. Decreases that offset previous increases of the same asset are charged
against the revaluation reserve; all other decreases are charged to the income statement. Each
year the difference between depreciation based on the revalued carrying amount of the asset (the
depreciation charged to the income statement) and depreciation based on the asset’s original cost,
net of any related deferred income taxes, is transferred from the revaluation reserve to retained
earnings.
Depreciation is calculated using the straight-line method to allocate the cost of the assets to their
residual values over their estimated useful lives as follows:
Freehold and long-term leasehold land
Buildings and improvements
Plant and equipment and fixtures, fittings and furniture
Motor vehicles
%
Nil
1-5
6.7 - 30
20
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount (note 1.6).
Gains and losses on disposals of property, plant and equipment are determined by comparing the
proceeds with carrying amount, and are recognised within ‘Other income/(expenses)’ in the income
statement. On disposal of a revalued asset, amounts in the revaluation reserve relating to that asset
are transferred to retained earnings.
18
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
1.
Summary of significant accounting policies – continued
1.5.
Investment property
The Company owns investment property, principally comprising the Dolmen Complex land and
buildings and integral plant, which is held for long-term rental yields and is not occupied by the
Company but rented out to its subsidiary undertaking in its entirety. Consequently this property is
classified and measured as property, plant and equipment in the Group’s financial statements in
accordance with the requirements of IAS 16.
The Company’s investment property is stated in the statement of financial position at cost less
accumulated depreciation and impairment losses. Maintenance expenses and repairs are
recognised as an expense. Subsequent expenditure that increases the value of property is
capitalised if it extends the useful life. The capitalised costs of buildings are amortised over one
hundred years at most, in accordance with their useful lives.
An asset’s carrying amount is written down immediately to its recoverable amount if its carrying
amount is greater than its estimated recoverable amount (see note 1.6).
Property that is being constructed or developed for future use as investment property is classified as
property, plant and equipment and stated at cost until construction or development is complete, at
which time it is reclassified and subsequently accounted for as investment property at the carrying
amount.
If an investment property becomes owner-occupied, it is reclassified as property, plant and
equipment and its carrying amount at the date of reclassification becomes its cost for accounting
purposes or subsequent recording. If an item of property, plant and equipment becomes an
investment property because its use has changed, the carrying amount at the date of
reclassification becomes its cost for accounting purposes or subsequent recording.
1.6.
Impairment of assets
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and
are tested annually for impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period.
Impairment of financial assets
The Group assesses at each end of the reporting period whether there is objective evidence that a
financial asset is impaired. A financial asset is impaired and impairment losses are incurred only if
there is objective evidence of impairment as a result of one or more events that have occurred after
the initial recognition of the asset and that has an impact on the estimated future cash flows of the
financial asset that can be reliably estimated. Objective evidence that a financial asset is impaired
includes observable data about certain events which can include (but are not restricted to)
indications that there is a measurable decrease in the estimated future cash flow from the financial
asset since the initial recognition.
19
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
1.
Summary of significant accounting policies – continued
1.6.
Impairment of assets - continued
If there is objective evidence that an impairment loss has been incurred on loans and receivables
carried at amortised cost, the amount of the loss is recognised in the income statement and
measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows discounted at the financial asset’s original effective interest rate.
The Group assesses at each end of the reporting period whether there is objective evidence that a
financial asset or a group of financial assets is impaired. Impairment losses recognised in the
income statement on equity instruments are not reversed through the income statement.
1.7.
Investment in subsidiary
In the Company’s financial statements, investments in group and associates are accounted for by
the cost method of accounting. The dividend income from such investments is included in the
income statement in the accounting year in which the Company’s rights to receive payment of any
dividend is established. The Company gathers objective evidence that an investment is impaired
using the same process disclosed in note 1.6. On disposal of an investment, the difference
between the net disposal proceeds and the carrying amount is charged or credited to the income
statement.
1.8.
Inventories
Inventories are stated at the lower of cost and net realisable value, and include transport and
handling costs, determined on a weighted average basis.
1.9.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less provision for impairment. A provision for
impairment of trade and other receivables is established when there is objective evidence that the
group will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the receivable, probability that the receivable will enter bankruptcy
or financial reorganisation, and default or delinquency in payments are considered indicators that the
receivable is impaired. The amount of the provision is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective
interest rate. The carrying amount of the asset is reduced through the use of an allowance account,
and the amount of the loss is recognised in the income statement within ‘selling and distribution
costs’. When a receivable is uncollectible, it is written off against the allowance account for trade
and other receivables. Subsequent recoveries of amounts previously written off are credited against
‘selling and distribution costs’ in the income statement.
1.10. Other financial instruments
The Group’s other financial assets, which have not been referred to in the accounting policies
disclosed above, are classified as loans and receivables in accordance with the requirements of IAS
39 and are measured at cost, that is, the face value of these assets. All regular way transactions in
assets classified in this category are accounted for using settlement date accounting.
A credit risk provision for financial asset impairment is established if there is objective evidence that
the Group will not be able to collect all amounts due. The amount of the provision is the difference
between the carrying amount and the recoverable amount, being the present value of the expected
cash flows, including amounts recoverable from collateral, discounted based on the interest rate at
inception.
20
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
1.
Summary of significant accounting policies – continued
1.10. Other financial instruments - continued
The Group’s financial liabilities, other than those referred to in the accounting policies above, are
classified as liabilities which are not held for trading (“other liabilities”) under IAS 39, and are
measured at cost, that is, the face value of such instruments.
1.11. Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities in the statement of financial position.
1.12. Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
1.13. Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
1.14. Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the income statement over the period of the
borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer
settlement of the liability for at least 12 months from the end of the reporting period.
1.15. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial
position when there is a legally enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
1.16. Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income
statement, except to the extent that it relates to items recognised directly in equity. In this case, the
tax is also recognised in equity.
Deferred tax is recognised, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, the deferred tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the end of the reporting period and are
expected to apply when the related deferred tax asset is realised or the deferred tax liability is
settled.
21
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
1.
Summary of significant accounting policies – continued
1.16. Current and deferred tax- continued
Under this method the Group is required to make provision for deferred income taxes on the
revaluation of certain fixed assets. Such deferred tax is charged or credited directly to the
revaluation reserve. Deferred income tax on the difference between the actual depreciation on the
property and the equivalent depreciation based on the historical cost of the property is realised
through the profit and loss account.
Deferred tax assets are recognised only to the extent that future taxable profit will be available such
that realisation of the related tax benefit is probable.
1.17. Provisions
Provisions for legal claims are recognised when the group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to
settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for
future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle
the obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to passage of time
is recognised as interest expense.
1.18. Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and services in the ordinary course of the Group’s activities. Revenue is shown net of value-added
tax or other sales taxes, returns, rebates and discounts and after eliminating sales within the Group.
The group recognises revenue when the amount of revenue can be reliably measured, it is probable
that future economic benefits will flow to the entity and when specific criteria have been met as
described below.
Revenue is recognised as follows:
(a) Sales of services in the hospitality activity
Sales of services are recognised in the accounting period in which the services are rendered, by
reference to completion of the specific transaction assessed on the basis of the actual service
provided as a proportion of the total services to be provided. Sales arising on hospitality activities
are recognised when the service is performed and goods are supplied. Revenue is usually in cash,
credit card or on credit. The recorded revenue, includes credit card fees payable for the transaction.
(b) Sales of goods – retail
Sales of goods are recognised when a subsidiary sells a product to the customer. Retail sales are
usually in cash or by credit card. The recorded revenue, includes credit card fees payable for the
transaction. Such fees are included in finance costs. Restaurant and bar sales are recognised upon
performance of the service.
(c) Property related income
Rentals receivable, short-term lets receivable and premia charged to tenants of immovable property
are recognised in the period when the property is occupied. Premia are taken to the income
statement over the period of the leases to which they relate.
22
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
1.
Summary of significant accounting policies – continued
1.18. Revenue recognition - continued
(d) Sales of services
Sales of services are recognised in the accounting period in which the services are rendered, by
reference to completion of the specific transaction assessed on the basis of the actual service
provided as a proportion of the total services to be provided.
(e) Interest income
Interest income is recognised on a time-proportion basis using the effective interest method. When
a receivable is impaired, the subsidiary reduces the carrying amount to its recoverable amount,
being the estimated future cash flows discounted at the original effective interest rate of the
instrument, and continues unwinding the discount as interest income. Interest income on impaired
loans is recognised using the original effective interest rate.
(f) Dividend income
Dividend income is recognised when the right to receive payment is established.
1.19. Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments made under operating leases (net of any incentives
received from the lessor) are charged to the income statement on a straight-line basis over the
period of the lease.
1.20. Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the group’s
financial statements in the period in which the dividends are approved by the company’s
shareholders.
1.21. Finance income and costs
Finance income and costs are recognised in the income statement for all interest-bearing
instruments on an accrual basis using the effective yield method. Finance costs includes the effect
of amortising any difference between net proceeds and redemption value in respect of the Group’s
borrowings. Other income is recognised as it accrues, unless collectibility is in doubt. Finance costs
are charged against income without restriction. No borrowing costs have been capitalised.
2.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and based on historical experience and other
factors including expectations of future events that are believed to be reasonable under the
circumstances.
In the opinion of the Group directors (except as disclosed in note 3), the accounting estimates and
judgements made in the course of preparing these financial statements are not difficult, subjective
or complex to a degree which would warrant their description as critical in terms of the requirements
of IAS 1.
23
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
3.
Property, plant and equipment
Assets in
Land and
course of
buildings construction
€
€
Plant and
equipment,
and fixtures,
fittings and
furniture
€
Motor
vehicles
€
Total
€
Group
At 1 January 2007
Cost or valuation
Accumulated depreciation
32,907,382
(797,298)
-
13,199,436
(7,932,215)
19,259
(11,679)
46,126,077
(8,741,192)
Net book amount
32,110,084
-
5,267,221
7,580
37,384,885
Year ended 31 December 2007
Opening net book amount
Additions
Disposals
Depreciation charge
Depreciation released on disposals
32,110,084
29,192
(246,900)
-
-
5,267,221
202,369
(5,823)
(663,988)
5,823
7,580
(1,896)
-
37,384,885
231,561
(5,823)
(912,784)
5,823
Closing net book amount
31,892,376
-
4,805,602
5,684
36,703,662
At 31 December 2007
Cost or valuation
Accumulated depreciation
32,936,574
(1,044,198)
-
13,395,982
(8,590,380)
19,259
(13,575)
46,351,815
(9,648,153)
Net book amount
31,892,376
-
4,805,602
5,684
36,703,662
Year ended 31 December 2008
Opening net book amount
Additions
Disposals
Depreciation charge
Depreciation released on disposals
31,892,376
71,352
(247,610)
-
433,119
-
4,805,602
219,841
(286,963)
(655,075)
286,963
5,684
4,192
(9,783)
(2,733)
9,783
36,703,662
728,504
(296,746)
(905,418)
296,746
Closing net book amount
31,716,118
433,119
4,370,368
7,143
36,526,748
At 31 December 2008
Cost or valuation
Accumulated depreciation
33,007,926
(1,291,808)
433,119
-
13,328,860
(8,958,492)
13,668
(6,525)
46,783,573
(10,256,825)
Net book amount
31,716,118
433,119
4,370,368
7,143
36,526,748
The Group’s land and buildings were last revalued on 31 December 1998. Valuations were made on
the basis of open market value, after considering the returns being attained by the hotel and the
intrinsic value of the property. The book values of the land and buildings were adjusted to the
revalued amounts and the resultant surplus net of deferred income taxes was credited to the
revaluation reserve.
24
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
3.
Property, plant and equipment - continued
This valuation has been confirmed by an independent architects’ valuation dated 28 October 2003.
Although five years have lapsed, since the approval of this valuation assessment, the Company
directors have confirmed that the carrying amount of land and buildings as at 31 December 2008
does not differ materially from that which would be determined using fair values. The directors take
cognisance of certain economic factors that have negatively impacted the Group net cash inflows
including increases in utility prices and changes in interest rates which they believe have been
counterbalanced by higher operating revenues and by appreciation in property values.
Assets in course of construction relate to amounts acquired in 2008 not yet commissioned in
respect of the refurbishment of the Dolmen Hotel commenced during 2008.
The carrying amount of land and buildings would have been €9,368,664 (2007: €9,544,922) had the
assets been included in the financial statements at cost less depreciation.
Fully depreciated assets which were still in use at 31 December 2008 amounted to €7,388,826
(2007: €6,827,999).
The Group’s depreciation charge is included in the income statement as follows: €890,183 (2007:
€897,820) in cost of sales and €15,235 (2007: €14,964) in administrative expenses.
Bank borrowings are secured by the Group’s property, plant and equipment (Note 15).
25
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
4.
Investment property
Land and
buildings
€
Assets in
course of
construction
€
Plant and
equipment
€
Total
€
Company
At 1 January 2007
Cost
Accumulated depreciation
32,907,382
(797,298)
-
3,021,062
(845,330)
35,928,444
(1,642,628)
Net book amount
32,110,084
-
2,175,732
34,285,816
Year ended 31 December
2007
Opening net book amount
Additions
Depreciation charge
32,110,084
29,192
(246,900)
-
2,175,732
7,246
(221,269)
34,285,816
36,438
(468,169)
Closing net book amount
31,892,376
-
1,961,709
33,854,085
At 31 December 2007
Cost
Accumulated depreciation
32,936,574
(1,044,198)
-
3,028,308
(1,066,599)
35,964,882
(2,110,797)
Net book amount
31,892,376
-
1,961,709
33,854,085
Year ended 31 December
2008
Opening net book amount
Additions
Depreciation charge
31,892,376
71,352
(247,610)
164,664
-
1,961,709
18,227
(214,448)
33,854,085
254,243
(462,058)
Closing net book amount
31,716,118
164,664
1,765,488
33,646,270
At 31 December 2008
Cost
Accumulated depreciation
33,007,926
(1,291,808)
164,664
-
3,046,535
(1,281,047)
36,219,125
(2,572,855)
Net book amount
31,716,118
164,664
1,765,488
33,646,270
The above property is leased out by the Company under an operating lease to its subsidiary
undertaking in accordance with the operating lease agreement dated 19 September 2003.
Consequently, as disclosed in Note 3, this property is classified and measured in the Group financial
statements as property, plant and equipment in accordance with the requirements of IAS 16. The
related property rental income is disclosed in note 17.
Assets in course of construction relate to amounts acquired by the company related to the
refurbishment of the Dolmen Hotel.
26
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
4.
Investment property - continued
The fair open market value of investment property as at 31 December 2008 is estimated by the
directors not to be materially different from its carrying amount on the basis of an open market
value, after considering the returns being obtained by the hotel and rented property and the intrinsic
value of the property as evaluated by professional architects (Note 3).
Fully depreciated assets which were still in use at 31 December 2008 amounted to €1,390,492
(2007: €1,198,842).
The Company’s depreciation charge is included in cost of sales in the income statement.
Bank borrowings are secured by the Company’s investment property (Note 15).
5.
Investment in subsidiary
Company
2007
2008
€
€
Year ended 31 December
Opening and closing net book amount
5,766,883
5,766,883
During 2003, the Company acquired a 99.9% shareholding in Dolmen Complex Limited, its only
subsidiary undertaking, for a consideration representing the nominal share capital acquired of
€1,187,980. Under the requirements of the predecessor basis of accounting, the difference
between the net asset value of this subsidiary undertaking as at the date of acquisition and the
consideration paid, amounted to €20,170,920 and was disclosed as an adjustment to equity (Note
11). Subsequently, the Company received a dividend of €15,592,017. This dividend has been
distributed upon the realisation of the revaluation surplus arising on the transfer of land and
buildings to the Company.
The principal subsidiary at 31 December is shown below:
Dolmen Complex Limited
Registered
office
Class of
shares held
Tumas Group Corporate Office
Level 3
Portomaso Business Tower
Portomaso, St. Julians
Ordinary
shares
Percentage of
shares held
2008
2007
99.9%
99.9%
27
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
6.
Trade and other receivables
Group
2008
€
Non-Current
Amounts owed by parent company (Note 29)
Current
Trade receivables
Amounts owed by fellow subsidiaries (Note 29)
Advance payments and other receivables
Indirect taxation
Prepayments and accrued income
Total trade and other receivables
2007
€
Company
2008
2007
€
€
887,689
887,689
-
-
1,570,196
2,790,793
791,143
124,101
1,833,729
1,768,835
121,878
98,926
108,110
21,139
97,275
74,621
494
52,369
5,276,233
3,823,368
226,524
127,484
6,163,922
4,711,057
226,524
127,484
Non-current amounts owed by parent undertaking are unsecured, interest free and repayable
between 2010 and 2013. Current amounts owed by fellow subsidiaries are unsecured, interest free
and repayable on demand.
Receivables are stated net of provision for impairment as follows:
Group
2008
€
Trade receivables
331,893
2007
€
186,478
Company
2008
2007
€
€
-
-
The provision for impairment of receivables is disclosed in Note 18 and is included in administrative
expenses in the income statements.
The Group’s and Company’s exposure to credit risk and impairment losses relating to trade
receivables are disclosed in note 26. The other classes within receivables do not contain impaired
assets.
7.
Inventories
Group
2008
2007
€
€
Food and beverage
Consumables
151,907
78,310
118,570
71,295
230,217
189,865
28
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
8.
Cash and cash equivalents
For the purposes of the statement of cash flows, the year end cash and cash equivalents comprise
the following:
Group
2008
€
Cash and cash equivalents
Bank overdraft
5,290,066
(417,099)
2007
€
3,985,775
(475,132)
Bond redemption fund
4,872,967 3,510,643
(3,441,791) (2,396,606)
Cash and cash equivalents
1,431,176
1,114,037
Company
2008
2007
€
€
5,229,158
-
3,899,385
-
5,229,158
(3,441,791)
3,899,385
(2,396,606)
1,787,367
1,502,779
As disclosed above cash and cash equivalents exclude the contribution to the bond redemption fund
held in bank accounts, which use is restricted pursuit to the terms and conditions stated in the
Offering Memorandum of the Secured Bonds.
Cash at bank for the Group and the Company includes an amount of €2,800,000 (2007: €1,171,912)
which is held at call and earns interest at floating rates. The effective interest rate at 31 December
2008 was 4.65% (2007: 3.5%). During the year the Group purchased treasury bills amounting to
€741,069 (2007:€Nil) with a maturity between three to nine months.
9.
Share capital
Group and Company
2007
2008
€
€
Authorised, issued and fully paid
7,000,000 Ordinary shares of €2.329373 each
16,305,611
16,305,611
As a result of Malta’s adoption of the euro, with effect from 1 January 2008 the company’s share
capital has been redenominated to euro at the Irrevocably Fixed Conversion Rate of
€1:Lm0.429300. Accordingly, the company’s share capital of Lm7,000,000, consisting of 7,000,000
ordinary shares with a nominal value of Lm1 per share, has been converted to €16,305,611
representing 7,000,000 shares with a converted nominal value of €2.329373 per share.
10.
Revaluation reserve
Group
2008
€
At beginning and end of year 31 December
1,109,823
2007
€
1,109,823
The revaluation reserve is a non-distributable reserve.
29
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
11.
Other reserve
Company
2007
2008
€
€
At beginning and end of year 31 December
5,715,516
5,715,516
The net adjustment against equity created during 2003 and amounting to €4,605,693, represents
the excess between the fair value of the investment in the subsidiary undertaking at the date of
acquisition, and the respective carrying amount of this investment, net of releases and movements.
The movements to deferred tax attributable to changes in the basis applicable to tax rules relate to
releases in the deferred taxation balance following the tax reform announced by Government in
respect of transfers of immovable property in line with the requirements of IAS 12 (revised). This
release was transferred to the net adjustment against equity reserve.
12.
Incentives and benefits reserve
Group
2008
€
At beginning and end of year 31 December
2007
€
172,718
172,718
In accordance with Sections 24B and 36 of the Business Promotion Act, a transfer has been made
to an incentives and benefits reserve representing the net amount of profits subject to income tax at
a reduced rate of tax. Such profits are set aside for the exclusive purpose of financing the
upgrading projects within the Company as approved by Malta Enterprise Corporation in accordance
with Article 6 of the Business Promotion Act.
The incentives and benefits reserve is not distributable. The incentives and benefits reserve will be
retained for a period of eight years after which it can be distributed by means of a bonus issue.
13.
Deferred taxation
Group
2008
€
At beginning of year
Transfer of depreciation through asset
use (Note 22)
Deferred tax on temporary differences arising on
provisions (Note 22)
Deferred tax on temporary differences arising on
depreciation of property, plant and equipment
(Note 22)
Deferred tax on temporary differences arising on
unabsorbed capital allowances (Note 22)
At 31 December
2007
€
Company
2007
2008
€
€
6,666,995 6,317,305 6,411,356 6,468,274
(56,918)
(56,918)
(56,918)
(56,918)
335
-
-
103,343
91,749
-
-
965
314,524
-
-
6,663,490
6,666,995
(50,895)
6,354,438 6,411,356
30
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
13.
Deferred taxation – continued
Deferred income taxes are calculated on all temporary differences under the liability method using a
principal tax rate of 35% (2007: 35%) except for temporary differences on immovable property that
are calculated under the liability method using a principal tax rate of 12% on the carrying amounts
(2007: 12% on the carrying amounts).
The balance at 31 December represents temporary differences attributable to:
Group
2007
2008
€
€
Revaluation of property, plant and equipment
Investment property
Unabsorbed capital allowances
Provisions
Depreciation of property, plant and equipment
Company
2007
2008
€
€
6,354,438 6,411,355
- 6,354,438
(724)
(65,267)
(116,163)
321,631
425,215
-
6,411,356
-
6,663,490 6,666,995
6,411,356
6,354,438
Deferred taxation is principally composed of deferred tax assets and liabilities which are to be
mainly recovered and settled after more than 12 months.
At 31 December 2008 and 2007, the Group had the following unutilised tax credits and temporary
differences, all of which were recognised in these financial statements.
Group
Unutilised tax credits arising from unabsorbed capital allowances
Deductible temporary differences arising on provisions
Taxable temporary differences arising on property, plant and
equipment
14.
2008
€
2007
€
331,893
2,068
186,478
1,214,890
(918,947)
Provisions for other liabilities and charges
Group
2008
€
2007
€
At beginning of year
Charged to the income statement
302,774
10,510
292,271
10,503
At 31 December
313,284
302,774
The amounts shown comprise gross provisions in respect of legal claims brought against the
Group. In the opinion of the directors, after taking appropriate legal advice, the outcome of the legal
claims will not give rise to any significant loss beyond the amounts provided at 31 December 2008.
31
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
15.
Borrowings
Group
2008
€
Non-current
107,530 6% secured bonds 2010 – 2013
Bank loan
Company
2007
2008
€
€
10,649,962
448,244
10,794,817
-
10,649,962
-
10,794,817
-
11,098,206
10,794,817
10,649,962
10,794,817
417,099
475,132
-
-
417,099
475,132
-
-
11,515,305
11,269,949
10,649,962
10,794,817
Current
Bank overdraft
Total borrowings
2007
€
The bank loans and overdraft are secured by:
(a)
(b)
(c)
a general and special hypothec over the Group’s assets;
pledges on the Group’s insurance policies;
letters of undertaking.
The Group’s banking facilities as at 31 December 2008 amounted to €931,750 (2007: €931,750).
The secured bonds are measured at the amount of the net proceeds adjusted for the amortisation
of the difference between the net proceeds and the redemption value of such bonds, using the
effective yield method as follows:
Group
2008
€
Face value of the secured bonds
10,753,166
2007
€
10,948,055
Company
2007
2008
€
€
10,753,166
10,948,055
Issue costs
Accumulated amortisation
328,884
(225,680)
328,884
(175,646)
328,884
(225,680)
328,884
(175,646)
Closing net book amount
103,204
153,238
103,204
153,238
10,649,962
10,794,817
10,649,962
10,794,817
Amortised cost at 31 December
32
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
15.
Borrowings - continued
By virtue of an offering memorandum dated 28 October 2003, the Company issued 47,000 secured
bonds with a face value of Lm100 each. The secured bonds’ interest is payable annually in arrears
on 20 November. The bonds are redeemable at par and are due for redemption on 20 November
2013 but are redeemable in whole or in part, at the option of the Company on each of 20 November
2010, 20 November 2011 and 20 November 2012 (the optional redemption dates). Pursuant to and
subject to the terms and conditions contained in the said offering memorandum, the bonds are
secured by a first special hypothec over the Company’s property, namely the Dolmen Complex,
except for the block of 47 timeshare apartments.
The secured bonds have been admitted on the Official List of the Malta Inventory Exchange on
17 November 2003. The quoted market price as at 31 December 2008 for the bonds was 100 (2007:
100), which in the opinion of the directors fairly represents the fair value of these financial liabilities.
During 2008, the company acquired own bonds for the amount of €194,889. These bonds have
been netted-off within the face value above.
The interest rate exposure of borrowings was as follows:
Group
2008
€
Total borrowings:
At fixed rates
At floating rates
2007
€
Company
2007
2008
€
€
11,098,206 10,794,817 10,649,962 10,794,817
475,132
417,099
11,515,305 11,269,949 10,649,962 10,794,817
Weighted average effective interest rates at end of the reporting period:
Bank loan
Bank overdraft
Secured bonds 2010 – 2013
Group
2008
2007
Company
2007
2008
4.7%
4.7%
6.0%
5.8%
6.0%
6.0%
6.0%
This note provides information about the contractual terms of the Company’s and the Group’s
interest-bearing borrowings. For more information about the Company’s and the Group’s exposure
to interest rate, and liquidity risk, see note 26.
33
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
16.
Trade and other payables
Group
2008
€
Current
Trade payables
Amounts owed to fellow subsidiaries (Note 29)
Capital and other payables
Indirect taxes and social security
Accruals and deferred income
2007
€
Company
2007
2008
€
€
1,999,070
487,897
64,142
102,598
844,785
2,218,369
236,511 3,515,551 2,832,331
72,788
26,491
22,389
260,508
766,803 116,611
176,678
3,498,492
3,554,979 3,654,551 3,035,500
Amounts owed to fellow subsidiaries are unsecured, interest free and are repayable on demand.
The Group’s and Company’s exposure to currency and liquidity risks related to trade and other
payables is disclosed in note 26.
17.
Revenue and other income
Group
2008
€
By class of business
Hospitality
Property rentals
Management fees
Dividends receivable
2007
€
Company
2007
2008
€
€
10,813,612
403,353
-
10,238,339
379,017
-
815,281
32,641
885,162
815,281
34,048
885,162
11,216,965
10,617,356
1,733,084
1,734,491
The Group’s other income consists of gain on disposal of property, plant and equipment amounting
€34,340 (2007:€nil) and exchange differences amounting to €3,649 (2007: €17,205).
34
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
18.
Expenses by nature
Group
2008
€
Employee benefit expense (Note 19)
Depreciation on non current assets:
- Property, plant and equipment (Note 3)
- Investment property (Note 4)
Operating supplies and related expenses
Utilities
Movement in provision for impairment
of receivables (Note 6)
Impairment for receivables (Note 6)
Property rentals payable
Other expenses
Total cost of sales and administrative
Expenses
Company
2008
2007
€
€
2007
€
3,704,040
3,575,639
-
-
905,418
1,730,713
442,032
912,784
1,724,773
570,005
462,058
-
468,169
-
145,415
78,612
3,148
1,360,492
(957)
3,231
3,252
1,900,887
52,835
56,526
8,369,870
8,689,614
514,893
524,695
Auditor’s fees
The company’s auditors’ remuneration amounted to €3,500 (2007: €3,500).
Fees charged by the auditor to the Group, for services rendered during the financial periods ended
31 December 2008 and 2007 relate to the following:
Group
2008
€
Annual statutory audit
Other assurance services
Tax advisory and compliance services
Other non-audit services
19.
2007
€
15,145
3,725
1,280
5,820
15,500
6,000
1,280
-
25,970
22,780
Employee benefit expense
Group
2008
€
Wages and salaries
Social security costs
2007
€
3,407,836
296,204
3,285,630
290,009
3,704,040
3,575,639
35
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
19.
Employee benefit expense - continued
Average number of persons employed by the Group during the year:
Group
2008
Direct
Administration
20.
Finance income from fellow subsidiaries
Bank interest
210
69
279
279
2007
€
Company
2007
2008
€
€
70,940
111,563
36,527
56,743
80,759
111,563
55,244
56,743
182,503
93,270
192,322
111,987
Finance costs
Group
2008
€
Bank loans and overdraft
Coupon interest payable on secured bonds
Amortisation of secured bonds issue
costs (Note 15)
Other interest payable
Bank and other financial charges
22.
210
69
Finance income
Group
2008
€
21.
2007
2007
€
Company
2007
2008
€
€
3,681
656,764
13,925
656,883
656,764
656,883
50,034
11,360
11,962
46,958
9,567
6,944
50,034
7,699
46,958
1,627
733,801
734,277
714,497
705,468
Tax expense/(income)
Group
2008
2007
€
€
Company
2008
2007
€
€
Current tax expense:
on profit subject to tax at 15%
on profit subject to tax at 35%
over provision in prior year
Deferred tax expense/(income) (Note 13)
16,734
690,506
(14,563)
(3,505)
7,025
5,800
1,738
349,690
16,734
6,470
(14,563)
(56,918)
7,025
5,800
1,738
(56,918)
Tax expense/(income)
689,172
364,253
(48,277)
(42,355)
36
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
22.
Tax expense/(income) - continued
The tax on the Group’s and the Company’s profit before tax differs from the theoretical amount that
would arise using the basic tax rate as follows:
Group
2008
2007
€
€
Profit before tax
Tax on profit at 35%
Tax effect of:
Temporary differences attributable to
property, plant and equipment
Over/under provision of current tax
in prior years
Maintenance allowance on rental income
attributable to immovable property
Movement in deferred tax arising
from depreciation through asset use
Income subject to tax at 15%
Expenses not allowable for tax purposes
Dividends not subject to tax
Over provision in deferred tax asset
in prior years
Tax expense/(income)
23.
Company
2008
2007
€
€
2,333,786
1,303,940
696,016
616,315
816,825
456,379
243,606
215,710
(146,010)
(143,920)
-
-
(14,563)
1,738
(14,563)
1,738
(57,070)
(57,070)
(57,070)
(57,070)
(56,918)
(22,313)
168,788
-
(56,918)
(9,366)
173,357
-
(56,918)
(22,313)
168,788
(309,807)
(56,918)
(9,366)
173,358
(309,807)
433
53
689,172
364,253
(48,277)
(42,355)
Directors’ emoluments
Directors’ fees
Group
2008
2007
€
€
Company
2008
2007
€
€
6,988
6,988
4,659
4,659
37
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
24.
Earnings per share
Earnings per share is based on the profit for the year attributable to the owners of the Group divided
by the weighted average number of ordinary shares in issue during the year and ranking for dividend.
Group
2008
Net profit attributable to equityholders
Weighted average number of ordinary shares in issue (Note 9)
Earnings per share
25.
2007
€1,644,614
€939,687
7,000,000
7,000,000
23c5
13c4
Cash generated from operations
Reconciliation of operating profit to cash generated from operations:
Group
2008
€
Operating profit
Adjustments for:
Depreciation on:
- Property, plant and equipment (Note 3)
- Investment property (Note 4)
Profit on disposal of property, plant and
equipment
Amortisation of secured bonds issue
costs (Note 15)
Movement in provision for impairment of
receivables (Note 6)
2007
€
Company
2008
2007
€
€
2,885,084
1,944,947
1,218,191
1,209,796
905,418
912,784
-
462,058
468,169
-
-
-
46,958
50,034
46,958
-
-
(34,340)
50,034
145,415
(957)
Changes in working capital:
Inventories
Trade and other receivables
Amounts owed by/to fellow subsidiaries
Trade and other payables
Cash generated from operations
(40,352)
(576,321)
(770,571)
(307,870)
2,256,497
27,643
136,455
(675,892)
69,744
2,461,682
(65,550)
(33,489)
619,054
2,250,298
(11,686)
278,500
9,984
2,001,721
38
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
26.
Financial risk management
26.1. Financial risk factors
The Group’s activities potentially expose it to a variety of financial risks: market risk (including
currency risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity
risk. The Group’s overall risk management focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Group’s financial performance. The Group did
not make use of derivative financial instruments to hedge certain risk exposures during the current
and preceding financial years.
The Board provides principles for overall risk management, as well as policies covering risks
referred to above and specific areas such as investment of excess liquidity.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and
liabilities which are denominated in a currency that is not the respective Group entity’s functional
currency. The Group is not exposed to foreign exchange risk arising from the Group’s purchases or
sales. Management does not consider foreign exchange risk attributable to recognised liabilities
arising from purchase transactions to be significant since balances are settled within very short
periods in accordance with the negotiated credit terms. Also foreign exchange risk attributable to
future transactions is not deemed to be material since group companies manage the risk by
reflecting, as far as is practicable, the impact of exchange rate movements registered with respect
to purchases in the respective sales prices.
Accordingly, a sensitivity analysis for foreign exchange risk disclosing how profit or loss and equity
would have been affected by changes in foreign exchange rates that were reasonably possible at
the end of the reporting period is not deemed necessary.
(ii) Cash flow and fair value interest rate risk
Although the Group has significant interest-bearing assets, its income and operating cash flows are
substantially independent of changes in market interest rates. The Group’s interest rate risk arises
from long-term borrowings. Borrowings issued at variable rates, comprising bank borrowings (refer
to Note 15), expose the Group to cash flow interest rate risk. The Group’s borrowings are subject to
an interest rate that varies according to revisions made to the Bank’s Base Rate. Management
monitors the level of floating rate borrowings as a measure of cash flow risk taken on. Interest rates
on these financial instruments are linked with the Central Intervention Rate issued by the European
Central Bank. Borrowings issued at fixed rates, consisting primarily of secured bonds which are
carried at amortised cost (refer to Note 15), potentially expose the Group to fair value interest rate
risk.
39
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
26.
Financial risk management - continued
26.1. Financial risk factors - continued
(b) Credit risk
Credit risk arises from cash and cash equivalents, deposits with banks, intercompany receivables,
as well as credit exposures to customers, including outstanding receivables and committed
transactions. The carrying amount of financial assets represents the maximum credit exposure. The
maximum exposure to credit risk at the end of the reporting period was:
Group
2008
€
2007
€
Company
2008
2007
€
€
Loans and receivables category
Trade and other receivables
Cash and cash equivalents (Note 8)
6,163,922
1,431,176
4,711,057
1,114,037
226,524
1,787,367
127,484
1,502,779
7,595,098
5,825,094
2,013,891
1,630,263
Group companies bank only with local financial institutions with high quality standing or rating. The
Group’s operations are carried out in Malta. The Group has no concentration of credit risk that could
materially impact on the sustainability of its operations.
The Group assesses the credit quality of its customers taking into account past experience and
other factors. It has policies in place to ensure that sales of products and services are effected to
customers with an appropriate credit history. The Group monitors the performance of these
financial assets on a regular basis to identify incurred collection losses which are inherent in the
Group’s receivables taking into account historical experience in collection of accounts receivable.
The Group’s receivables, which are not impaired financial assets, are principally in respect of
transactions with customers for whom there is no recent history of default. Management does not
expect any material losses from non-performance by these customers.
As at year end, impairment provisions of €331,893 (2007: €186,478) were made at the year end in
respect of receivables that were overdue and that were not expected to be recovered. Other
overdue debts that were not impaired were in large part settled since the year end.
The movement in the allowance for impairment in respect of trade and other receivables during the
year was as follows:
2008
€
At 1 January
Receivables written off during the year
Receivables recovered during the year
Receivables provided for during the year
2007
€
186,478
(78,612)
(34,447)
258,474
187,436
(3,231)
(2,402)
4,675
331,893
186,478
40
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
26.
Financial risk management - continued
26.1. Financial risk factors - continued
(b) Credit risk - continued
The allowance accounts in respect of trade receivables are used to record impairment losses
unless the Group is satisfied that no recovery of the amount owing is possible; at the point the
amounts considered irrecoverable are written off against trade receivables directly.
The Group’s receivables also include advances to subsidiaries on which no credit risk is considered
to arise.
(c) Liquidity risk
The Group is exposed to liquidity risk in relation to meeting future obligations associated with its
financial liabilities, which comprise principally trade and other payables and borrowings (refer to
Notes 15 and 16). Prudent liquidity risk management includes maintaining sufficient cash and
committed credit lines to ensure the availability of an adequate amount of funding to meet the
Group’s obligations.
Management monitors liquidity risk by means of cash flow forecasts on the basis of expected cash
flows over a twelve month period and ensures that no additional financing facilities are expected to
be required over the coming year.
The liquidity risk arising from the above was extensively tested when the bonds were issued, to
ensure that the commitments entered into by the Company could be covered by the cash flow
generated from the operations of the hotel. A sinking fund arrangement was instituted at that stage
for this purpose (see also note 8) and was designed to accumulate, over the life of the bonds, the
liquidity needed to ensure the repayment of the bonds.
A proportion of profit is invested annually in a Bond redemption fund in accordance with the terms of
issue of the bonds. In addition, management regularly monitors the accumulation of the fund
against the company’s original projections, and the hotel’s current and expected future
performance. Where necessary, liquid assets are retained for an amount higher than the Bond
redemption fund. At 31 December 2008, liquid funds amounting to €1,431,176 (2007: €1,114,037)
were retained in excess of the bond redemption fund.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on
the remaining period at the statement of financial position to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12
months equal their carrying balances, as the impact of discounting is not significant.
41
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
26.
Financial risk management - continued
26.1. Financial risk factors - continued
(c) Liquidity risk – continued
Carrying
Amount
€
Contractual
cash flows
€
Within
one year
€
One to
five years
€
Over
five years
€
11,515,305
3,498,492
12,940,175
3,498,492
1,100,109
3,498,492
11,661,153
-
178,913
-
15,013,797
16,438,667
4,598,601
11,661,153
178,913
11,269,949
3,554,979
13,393,836
3,554,979
1,132,015
3,554,979
12,261,821
-
-
14,824,928
16,948,815
4,686,994
12,261,821
-
10,649,962
3,654,551
11,963,729
3,654,551
656,884
3,654,551
11,306,845
-
-
14,304,513
15,618,280
4,311,435
11,306,845
-
10,794,817
3,035,500
12,918,705
3,035,500
656,884
3,035,500
12,261,821
-
-
13,830,317
15,954,205
3,692,384
12,261,821
-
Group
31 December 2008
Borrowings
Trade and other payables
31 December 2007
Borrowings
Trade and other payables
Company
31 December 2008
Borrowings
Trade and other payables
31 December 2007
Borrowings
Trade and other payables
26.2. Capital risk management
The capital of the Group is managed with a view of maintaining a controlled relationship between
capital and structural borrowings in order to maintain an optimal capital structure which reduces the
cost of capital. To maintain or adjust its capital structure, the group may adjust the amount of
dividends paid to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as structural
borrowings divided by total capital.
Total capital is measured by reference to the amounts reflected in the financial statements, where
the hotel property is stated at revalued amounts that are regularly updated. Structural borrowings
include all interest bearing borrowings, less funds attributable to the Bond Redemption Fund (see
note 8).
42
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
26.
Financial risk management – continued
26.2. Capital risk management - continued
The resultant gearing was as follows:
Group
2008
€
Total borrowings (Note 15)
Less: Bond redemption fund
2007
€
Company
2008
€
2007
€
11,515,305
(3,441,791)
11,269,949
(2,396,606)
10,649,962
(3,441,791)
10,794,817
(2,396,606)
8,073,514
8,873,343
7,208,171
8,398,211
Total equity
25,542,841
23,898,227
24,216,252
23,471,959
Total capital
33,616,355
32,771,570
31,424,423
31,870,170
24.0%
27.1%
22.9%
26.4%
Net borrowings
Gearing
26.3. Fair values of financial instruments
At 31 December 2008 and 2007 the carrying amounts of cash at bank, receivables, payables,
accrued expenses and short-term 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 instruments and their expected realisation.
27.
Commitments
At the year end, the group had the following capital commitments in respect of the refurbishment
costs on property, plant and equipment:
Group
2008
€
Authorised but not contracted
Contracted but not yet incurred
2007
€
Company
2007
2008
€
€
3,500,000
2,252,313
-
1,051,000
802,419
-
5,752,313
-
1,853,419
-
43
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
27.
Commitments - continued
Operating lease commitments - where the group or the company is the lessor
The future minimum lease payments receivable under non-cancellable operating leases are as
follows:
Group
2008
€
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
2007
€
Company
2007
2008
€
€
392,800
1,306,610
-
-
1,867,978
8,032,307
-
1,863,499
7,826,695
2,049,849
1,699,410
-
-
9,900,285 11,740,043
The Company’s future minimum lease payments receivable under non-cancellable operating leases
relate to a property lease agreement entered into with the subsidiary undertaking following the transfer
of the Dolmen Complex land and buildings as per lease agreement dated 19 September 2003. This
lease agreement expires in 2013.
28.
Contingencies
At 31 December 2008, the Group had the following contingent liabilities:
(a)
A special hypothec for €7,127,883 (2007: €7,127,883) on 47 apartments, forming part of the
Dolmen Resort Hotel, registered against it in favour of Club Dolmen (Title) Limited.
(b)
Guarantees of €5,590,496 (2007: €5,590,496) issued by the Group, jointly with other
subsidiaries, on behalf of another subsidiary’s banking facilities. The guarantees are
supported by a general and special hypothec over the Group’s assets.
At 31 December 2008, the Company had guarantees of €2,105,826 (2007: €2,105,826) issued by
the Company, jointly with other subsidiaries on behalf of another subsidiary’s banking facilities. The
guarantees are supported by a general hypotec over the Company’s assets.
29.
Related party transactions
The Group forms part of the Tumas Group of Companies. All companies forming part of the Tumas
Group are related parties since these companies are all ultimately owned by Tumas Group
Company Limited which is considered by the directors to be the ultimate controlling party. Trading
transactions between these companies include items which are normally encountered in a Group
context. The Group is ultimately fully owned by members of the Fenech family, who are therefore
considered to be related parties.
44
DOLMEN PROPERTIES p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2008
29.
Related party transactions - continued
The following are the principal transactions that were carried out with related parties:
Group
2008
€
2007
€
Company
2007
2008
€
€
Income from goods and services
Accommodation revenue from fellow group
subsidiaries
Management fees receivable from
fellow group subsidiaries
Rent receivable from fellow group subsidiaries
Interest receivable from fellow group
subsidiaries
85,051
139,748
-
-
329,261
293,433
32,641
815,281
34,048
815,281
70,940
29,813
80,759
55,243
-
465,875
-
-
9,614
5,952
-
-
Expenditure for goods and services
Management fees payable to fellow group
subsidiaries
Other expenses payable to fellow group
subsidiaries
Key management personnel compensation, consisting of directors’ remuneration, has been
disclosed in Note 23 to the financial statements.
Year end balances arising from related party transactions are disclosed in Notes 6 and 16.
30.
Statutory information
Dolmen Properties p.l.c. is a limited liability company and is incorporated in Malta.
The immediate parent Company of Dolmen Properties p.l.c. is Spinola Investments Limited, a
Company registered in Malta, with its registered address at Tumas Group Corporate Office, Level 3,
Portomaso Business Tower, Portomaso, St. Julians, Malta. Spinola Investments Limited is exempt
from the preparation of consolidated financial statements by virtue of section 174(1)(a) of the
Maltese Companies Act, 1995.
The ultimate parent Company of Dolmen Properties p.l.c. is Tumas Group Company Limited, a
Company registered in Malta, with its registered address at Tumas Group Corporate Office, Level 3,
Portomaso Business Tower, Portomaso, St. Julians, Malta.
31.
Comparative information
All comparative financial information has been converted into euro using the Irrevocably Fixed
Conversion Rate of €1: Lm0.429300. This change in comparative presentation has been made for
information purposes only. Comparative figures disclosed in the main components of these
financial statements have been reclassified to conform with the current year’s disclosure format for
the purpose of fairer presentation.
45