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C 91228Annual Report andConsolidated Financial Statements 31 December 2021
Tum Finance plc
Tum Finance plc
Contents
Pages
General information
1
Directors' report
2-3
Statement of compliance with the principles of good corporate governance
4-14
Statements of profit or loss and other comprehensive income
15
Statements of financial position
16 – 17
Statement of changes of equity - Group
18
Statement of changes in equity - Company
19
Statements of cash flows
20
Notes to the financial statements
21 – 54
Independent auditor's report
55 – 63
Tum Finance plc
1
General information
Registration
Tum Finance plc (‘the Company’) is registered in Malta as a public limited liability company under the Companies Act (Cap. 386, Laws of Malta). The Company was registered on 26 March 2019 and its registration number is C 91228.
Board of Directors
Mr. Anthony Fenech
Mr. Matthew Fenech
Mr. Silvan Fenech
Mr. Stanley Portelli
Mr. Mario Vella
Mr. William Wait
Company Secretary
Dr. Malcolm Falzon
Registered Office
Tum Invest Head Office
Zentrum Business Centre
Mdina Road
Qormi, QRM9010
Malta
Bankers
Lombard Bank Malta plc 
67, Republic Street
Valletta VLT1117
Malta
Bank of Valletta plc
45, Republic Street
Valletta VLT1113
Malta
Auditor
Ernst & Young Malta Limited
Fourth Floor
Regional Business Centre
Achille Ferris Street
Msida MSD1751
Malta
Tum Finance plc
2
Directors’ report
The Board of Directors of Tum Finance p.l.c. (the “Company”) submit their annual report and the annual financial statements of the Company (on a separate and consolidated basis) for the year ended 31 December 2021.
Principal activity
The Company and its subsidiaries (the “Group”) are involved in real estate development, investment and leasing in Malta. The Company holds investments in subsidiaries for capital growth and income generation. It also provides financing to companies forming part of the Group and to other related companies.
Performance review
The statement of comprehensive income is set out on page 15. During the year, the Group generated a profit before tax of EUR1,978,097 (2020: EUR6,396,121). The results for the prior year were influenced by the fair value gain registered on investment property held by the Group which amounted to EUR4,855,047. The Company generated a profit before tax of EUR72,940 (2020: EUR20,292).
Dividends
During the year ended 31 December 2021, the Company did not declare any dividends.
Financial risk management
The Company's activities expose it to a variety of financial risks, including credit risk and liquidity risk. Please refer to Note 26 in these financial statements.
Events after the end of reporting year
Events after the reporting period are disclosed in Note 27 to the financial statements.
Future developments
The Directors are confident that the worst effect on the business of the Covid pandemic has passed and failing unforeseeable events, look to 2022 with optimism.
A wholly owned subsidiary of the Company, Tum Operations Limited (C-91301) (“TOL”), and Center Parc Holdings Limited (C-72342) (“CPHL”), in which TOL holds 75% of the issued share capital, together with the other shareholder of CPHL, has entered negotiations with third parties unrelated to the Company, in connection with a possible joint venture whose principal activity will be the development and operation of properties already owned by each of the joint venture parties as well as investment in further properties for the development and, or operation thereof. The Board has already issued a company announcement (TMF16) informing the market of this potential transaction and will be keeping the market informed of developments through the issuance of further announcements as and when appropriate.
Directors
The names of the Directors of the Company who held office during the year to date are set out on page 1. In accordance with the Company’s Memorandum and Articles of Association, the present Directors shall remain in office for a period of three (3) years from their date of appointment.
Auditor
Ernst & Young Malta have expressed their willingness to continue in office and a resolution for their re-appointment will be proposed at the Annual General Meeting.
Tum Finance plc
3
Directors’ report - continued
Statement of directors’ responsibilities pursuant to Capital Markets Rule 5.68
The Directors are required by the Companies Act (Cap. 386) of the laws of Malta (the “Companies Act”) to prepare financial statements in accordance with generally accepted accounting principles and practice which give a true and fair view of the state of affairs of the Company at the end of each financial period and of the profit or loss of the Company for the period then ended.
In preparing the financial statements, the Directors should:
Select suitable accounting policies and apply them consistently;
make judgements and estimates that are reasonable; and
prepare the financial statements on a going concern basis, unless it is inappropriate to presume that the Company will continue in business as a going concern.
account for income and charges relating to the accounting period on the accrual basis;
value separately the components of asset and liability items;
report comparative figures corresponding to those of the preceding accounting period.
The Directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Company and which enable the Directors to ensure that the financial statements comply with the Companies Act and the International Financial Reporting Standards as adopted by the EU. This responsibility includes designing, implementing and maintaining such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Directors are also responsible for safeguarding the assets of the Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Going Concern Statement Pursuant to Capital Markets Rule 5.62
The Directors have assessed the appropriateness of the going concern on the basis of cash forecasts prepared by management. These projections indicate that the Group will have sufficient resources to meet its obligations as they fall due. The shareholders have furthermore confirmed their commitment to support the Group financially or otherwise should this be required.
At the time of approving these financial statements, the Directors have determined that there is a reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future and continue adopting the going concern basis in preparing the financial statements.
Signed on behalf of the Company’s Board of Directors on 22 April 2022 by Silvan Fenech and Anthony Fenech as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2021.
Tum Finance plc
4
Statement of compliance with the principles of Good Corporate Governance
1.Introduction
The Capital Markets Rules issued by the Malta Financial Services Authority (MFSA) require companies listed on the Official List of the Malta Stock Exchange to endeavour to adopt and observe The Code of Principles of Good Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Capital Markets Rules (the “Code”).
Although the Code sets out (non-mandatory) recommended principles of good practice, the Board of Directors of the Company (the “Board” or the “Directors”) consider that such practices are generally in the best interests of the Company, its shareholders, its bondholders, and other stakeholders, and that compliance with the Code evidences the Company’s and the Directors’ commitment to high standards of good corporate governance.
This Corporate Governance Statement (the “Statement”) sets out the organisational structures, controls practices and processes in place within the Company and explains how these effectively achieve the goals set out in the Code. For this purpose, the Statement will make reference to the pertinent provisions and principles of the Code and set out the manner in which the Directors believe these have been adhered to. Where the Company has not complied with any of the principles of the Code, this Statement provides an explanation for such non-compliance. Reference in this Statement to compliance with the principles of the Code means compliance with the Code’s main principles and provisions.
The Board has carried out a review of the Company’s compliance with the Code during the period under review and is hereby reporting on the extent of its adoption of the provisions and principles of the Code for the financial year being reported, as required in terms of Capital Markets Rule 5.97.
2.Compliance
The Company has adopted a corporate decision-making and supervisory structure that is tailored to suit its requirements and designed to ensure the existence of adequate controls and procedures within the Company, whilst retaining an element of flexibility essential to allow the Company to react promptly and efficiently to circumstances arising in respect of its business, taking into account its size and the economic conditions in which it operates.
The Directors are of the view that the Company has employed structures which are most suitable and complementary for the size, nature, operations and level of complexity of the Company. Accordingly, in general the Directors believe that the Company has adopted appropriate structures to achieve an adequate level of good corporate governance, together with an adequate system of control in line with the Company’s requirements.
In particular, it is pertinent to note that the Company has no employees of its own and its principal purpose is to act as a financing and holding vehicle for the Tum Finance Group (as defined hereunder), consisting of the Company and its direct subsidiary Tum Operations Limited (C91301) and indirect subsidiaries Center Parc Holdings Limited (C72342) and Easysell Limited (C9778) (hereinafter the Guarantor”) (collectively referred to as the “Tum Finance Group”), in view of which, the Directors deem some of the principles and provisions of the Code to be disproportionate or inapplicable to the Company, as explained further below.
Tum Finance plc
5
Statement of compliance with the principles of Good Corporate Governance – continued
Principle 1: The Board
The Directors believe that for the period under review, the Company has generally complied with the requirements of this principle and the relative Code provisions.
The Board is composed of members who are fit and proper to direct and manage the business of the Company with honesty, competence and integrity. All the members of the Board are aware of, and conversant with, the statutory and regulatory requirements connected to the business of the Company and its status as a listed company and the Board is cognisant of its accountability for its own performance and that of its delegates. The Board of Directors is primarily responsible for:
devising the corporate and business strategy of the Company;
setting and reviewing internal policies, procedures and controls of the Company;
the overall management and supervision of the Company;
reviewing and evaluating internal control procedures, financial performance and business risks and opportunities facing the Company.
Throughout the period under review, the Board has maintained systems designed to ensure that the Directors obtain timely information at regular intervals or when the need arises.
The Board has delegated specific responsibilities to the Audit Committee, under formal terms of reference approved by the Board. Further detail in relation to the Audit Committee may be found in the sections headed ‘Principles 4 and 5’ of this Statement hereunder.
Principle 2: Chairman and Chief Executive Officer
Given that the Company acts as the holding and financing arm of the Tum Finance Group and does not carry out other operations of its own, the Company has not appointed a Chief Executive Officer. Nevertheless, it has appointed a Chairperson, whose role is to lead the Board. During the period under review, Mr Anthony Fenech (an executive director of the Company) occupied the post of Chairperson.
Principle 3: Composition of the Board
In terms of the Articles of Association of the Company, the Board of Directors of the Company shall consist of a minimum of three (3) directors and a maximum of six (6) directors.
In terms of the Articles of Association of the Company, the Directors of the Company (save for the managing director, if any) shall retire from office every three (3) years. Retiring Directors shall, however, be eligible for re-appointment. The Company shall give its shareholders, having voting rights, at least fourteen (14) days written notice to submit candidates for the election to Directors, and the appointment (and removal) of Directors shall be made by an ordinary resolution.
The Board of Directors of the Company is comprised of six (6) directors, three (3) of whom are executive directors, and three (3) of whom are independent non-executive directors. All of the present Directors of the Company were originally appointed with effect from the date of registration of the Company, and their tenure was extended for a further period of three years by virtue of a shareholders’ resolution passed on 24 March 2022.
Director
Capacity
Date of Appointment
Mr. Anthony Fenech
Executive Director (Chairperson)
26th March 2019
Mr. Matthew Fenech
Executive Director
26th March 2019
Mr. Silvan Fenech
Executive Director
26th March 2019
Dr. Stanley Portelli
Independent and Non-Executive Director
26th March 2019
Mr. Mario Vella
Independent and Non-Executive Director
26th March 2019
Mr. William Wait
Independent and Non-Executive Director
26th March 2019
Tum Finance plc
6
Statement of compliance with the principles of Good Corporate Governance - continued
Principle 3: Composition of the Board (continued)
For the purpose of Code Provision 3.2, three (3) of the Directors are considered by the Board to be independent within the meaning of the Capital Markets Rules, such independent Directors being Dr. Stanley Portelli, Mr. Mario Vella, and Mr. William Wait.
The non-executive Directors contribute to the strategic development of the Company and the creation of long-term growth of the Company and are responsible for:
constructively challenging and developing strategy;
monitoring reporting of performance;
scrutinising performance of management; and
ensuring the integrity of financial information, financial controls and risk management systems.
Save as disclosed above, none of the non-executive Directors of the Company:
a)are or have been employed in any capacity by the Company;
b)receive significant additional remuneration from the Company;
c)have close family ties with any of the executive members of the Board;
d)have been within the last three (3) years an engagement partner or a member of the audit team of the present or past external auditor of the Company; and
e)have a significant business relationship with the Company.
In terms of Code Provision 3.4, each non-executive Director has declared in writing to the Board that he undertakes:
to maintain in all circumstances his/her independence of analysis, decision and action;
not to seek or accept any unreasonable advantages that could be considered as compromising his independence; and
to clearly express his opposition in the event that he finds that a decision of the Board may harm the Company.
Each non-executive Director has complied with the aforementioned undertaking for the period under review.
Principle 4 and 5: The Responsibilities of the Board and Board Meetings
The Board of Directors is entrusted with the overall direction, administration and management of the Company and meets on a regular basis to discuss and take decisions on matters concerning the strategy, operational performance and financial performance of the Company.
In fulfilling its mandate, the Board assumes responsibility to:
a)establish appropriate corporate governance standards;
b)review, evaluate and approve, on a regular basis, long-term plans for the Company;
c)review, evaluate and approve the Company’s budgets, forecasts and financial statements;
d)review, evaluate and approve major resource allocations and capital investments;
e)review the financial and operating results of the Company;
f)ensure appropriate policies and procedures are in place to manage risks and internal control;
g)review, evaluate and approve the overall corporate organisation structure;
h)review, evaluate and approve compensation to Directors;
i)ensure effective communication with shareholders, bondholders, other stakeholders and the market.
Tum Finance plc
7
Statement of compliance with the principles of Good Corporate Governance - continued
Principle 4 and 5: The Responsibilities of the Board and Board Meetings (continued)
In fulfilling its responsibilities, the Board continuously assesses and monitors the Company’s present and future operations, opportunities, threats, and risks in the external environment, and its current and future strengths and weaknesses in its internal environment.
Audit Committee
The Board delegates certain specific responsibilities to the Audit Committee. The Board of Directors of the Company has established an Audit Committee and has formally set out Terms of Reference governing the scope of its composition, role, functions, powers, duties and responsibilities, as well as the procedures and processes to be complied with in its activities.
The Audit Committee is a sub-committee of the Board and fulfils an oversight role in connection with the quality and integrity of the Company’s financial statements. Towards this end, the over-arching objective of the Audit Committee is that of assisting the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal controls, the audit process and the process for monitoring compliance with applicable laws and regulations.
The Audit Committee is expected to deal with and advise the Board on issues of financial risk, control and compliance, and associated assurance of the Company, including:
i.ensuring that the Company adopts, maintains and, at all times, applies appropriate accounting and financial reporting processes and procedures;
ii.monitoring of the audit of the Company’s management and annual accounts;
iii.facilitating the independence of the external audit process and addressing issues arising from the audit process and ensuring good communication between internal and external audit activities, as applicable;
iv.reviewing of the systems and procedures of internal control implemented by management and of the financial statements, disclosures and adequacy of financial reporting;
v.making of recommendations to the Board in relation to the appointment of the external auditors and the approval of the remuneration and terms of engagement of the external auditors, following the relative appointment by the shareholders in the annual general meeting;
vi.monitoring and reviewing of the external auditors’ independence and, in particular, the provision of additional services to the Company;
vii.ensuring that the Company, at all times, maintains effective financial risk management and internal financial and auditing control systems, including compliance functions; and
viii.assessing any potential conflicts of interests between the duties of Directors and their respective private interests, or their duties and interests unrelated to the Company.
In addition, the Audit Committee has the role and function of evaluating any proposed transaction to be entered into by the Company and a related party (which term shall have the same meaning as in the International accounting standards adopted in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council) to ensure that the execution of any such transaction is at arm’s length, on a commercial basis and ultimately in the best interests of the company.
Any proposed transaction which the Company wishes to enter into and which satisfies either of the following conditions shall be referred to the Audit Committee for its consideration and approval:
(i)transactions which clearly fall within the ambit of the Capital Markets Rules as related party transactions and which are not the subject of an exemption therefrom;
(ii)transactions in respect of which management is not certain as to whether they fall within the ambits of the Capital Markets Rules as related party transactions or in respect of which there is uncertainty as to whether any one or more exemptions should apply to the proposed transactions.
Tum Finance plc
8
Statement of compliance with the principles of Good Corporate Governance – continued
Principle 4 and 5: The Responsibilities of the Board and Board Meetings (continued)
At the meeting convened for this purpose, the Audit Committee shall consider the proposed transaction and first determine whether it is a transaction that falls within the ambit of the applicable Capital Markets Rules and, if it so determines, shall then consider the merits of the proposed transaction.
The Audit Committee is made up entirely of non-executive Directors, all of whom are independent of the Company. Audit Committee members are appointed for as long as they remain independent non-executive Directors, unless terminated earlier by the Board. During the period under review, the Audit Committee was composed of:
Mr. Mario Vella
Chairperson of the Audit Committee
Dr. Stanley Portelli
Member of the Audit Committee
Mr. William Wait
Member of the Audit Committee
The Chairperson of the Audit Committee, appointed by the Board, is entrusted with reporting to the Board on the workings and findings of the Audit Committee. Mr Mario Vella occupied the post of Chairperson of the Audit Committee during the period under review.
Mr. Mario Vella and Mr. William Wait  are considered by the Board to be competent in accounting and/or auditing in terms of the Capital Markets Rules, based on their respective extensive experience occupying financial management and auditing roles within various private and public entities, as well as their respective skills and competencies in financial reporting, financial management, financial auditing and general financial advisory.
In performing its duties, the Audit Committee is to maintain effective working relationships with the Board of Directors, management and the external auditors of the Company.
The Audit Committee has also met on ten (10) occasions during the financial period ended 31 December 2021, which meetings were attended by all its members. The Audit Committee is scheduled to meet at least five (5) times in 2022.
The Board believes that it has systems in place to fully comply with Principle 5 and the relative Code Provisions, in that it has systems in place to ensure reasonable notice of meetings of the Board and ensuring that the Directors receive discussion papers in advance of meetings, to the extent possible.
The Directors are assisted by the company secretary, who is consulted to ensure compliance with statutory requirements and with continuing listing obligations. The company secretary keeps minutes of all meetings of the Board and of its committees, which minutes are subsequently circulated to the Board as soon as practicable after the meeting.
The Company also maintains detailed records of all dealings by Directors of the Company and its subsidiaries, as well as senior executives thereof in the Company’s bonds, and assists the Board and senior management in being duly informed of and conversant with their obligations emanating from the Market Abuse Regulation (EU Regulation 596/2014) (“MAR”) and ensuring compliance therewith, to ensure the prevention and detection of insider dealing, unlawful disclosure of inside information and, or market abuse. In particular, cognisant of the material consequences of non-compliance with MAR and the effects thereof on investor confidence and market integrity, the Board has in place written policies and procedures relating to the keeping of insiders’ lists, dealing in bonds of the Company, and procedures for persons in possession of inside information.
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Statement of compliance with the principles of Good Corporate Governance - continued
Principle 4 and 5: The Responsibilities of the Board and Board Meetings (continued)
The Directors have access to independent professional advice on any aspect of their duties and responsibilities, or the business and activities of the Company, at the Company’s expense should they so require.
The Board of Directors of the Company met formally eleven times