Company Registration No.:      C 5067

Hal Mann Vella Group p.l.c.

Annual Report and Consolidated Financial Statements

for the year ended

31 December 2024

Chairman’s Statement

for the year ended 31 December 2024

As we close another year, it is with appreciation and satisfaction that I present the Chairman’s Statement for Halmann Vella Group plc for the financial year ended 31 December 2024. This year has been particularly significant for our Group—not only due to notable financial and operational achievements but also because we proudly celebrated our 70th anniversary.

Reaching this milestone is a testament to the resilience, dedication, and passion that have defined Halmann Vella over the decades. From our humble beginnings to becoming a leading name in the industry, our journey has been one of continuous evolution and excellence. We take this opportunity to thank our employees, clients, and partners who have been instrumental in shaping the Group’s success. Despite a dynamic economic landscape, Halmann Vella Group remained steadfast in its commitment to growth, innovation, and sustainability. Our strategic investments and ongoing projects have further strengthened our position in the industry, reinforcing our legacy as a leader in natural stone products.

Our performance

The Group delivered a strong financial performance in 2024, achieving a turnover exceeding €27 million and a profit before tax of more than €4 million. This success was underpinned by sustained growth in our Balance Sheet, with total assets reaching €138 million and equity standing at €54 million, reinforcing our financial stability and resilience.

However, rising operational costs presented challenges, particularly as wage-induced inflation continued to climb. Employers across industries, including our own, have been compelled to increase salaries to attract and retain talent, yet high employee turnover and skills mismatches have impacted overall productivity. The tight labour market in Malta has further strained operations, making it increasingly difficult for businesses to secure the necessary workforce. Despite these challenges, our strategic investments and prudent financial management have enabled the Group to maintain steady growth while navigating the evolving economic landscape.

In our Manufacturing segment, we have made significant strides with key investments in advanced plant and machinery, which are nearing completion and will soon enable us to expand our production capabilities and introduce new products to the market. In 2024, we embarked on several landmark customer projects and contracts, some of which are continuing into 2025, further showcasing our ability to deliver high-quality solutions and strengthening our relationships with key clients.

Our Property Development segment saw limited activity in 2024; however, several projects remain in progress. Our property letting segment delivered a stable performance, and completed the sale of the Mavina property at the end of the year.

A key highlight of the year was the successful redemption of our maturing bond in November 2024. This was an important milestone that underscored the Group’s financial strength and prudent management. At the same time, we successfully issued a new bond, which was met with strong interest from the investing public. We are deeply grateful for the trust and confidence that investors continue to place in Halmann Vella Group. This unwavering support enables us to pursue our vision and drive further value for our stakeholders.

Corporate Social Sustainability

At Halmann Vella Group, we understand the importance of operating in a socially and environmentally responsible way. While there’s always more to be done, we’re taking meaningful steps toward sustainability. From integrating renewable energy through solar panels and operating water recycling systems across our factories to introducing electric vehicles in our fleet, we are actively working to reduce our environmental impact while exploring new ways to innovate in sustainable product development.

We remain committed to nurturing a diverse and inclusive workplace, recognizing that this is a continuous journey. The well-being and safety of our employees, subcontractors, and stakeholders remain a top priority, and we strive to support them through ongoing training programs and a range of well-being initiatives. Our goal is to create an environment where everyone has the opportunity to grow and succeed, while always seeking ways to improve and evolve.

Looking Forward

Looking ahead, we remain committed to our strategic objectives within our Manufacturing and Contracting segment, focusing on innovation, efficiency, and sustainable growth. As we continue to work on several major projects that extend into 2025, we will also explore new opportunities to further enhance our operational capabilities and strengthen our market position. Additionally, we have commenced a new project within our property letting segment, further expanding our portfolio and reinforcing our long-term commitment to this sector.

I sincerely thank my colleagues on the Board of Directors, the Management team, and all our employees for their dedication and remarkable achievements. Their hard work and commitment have been instrumental in driving our success. I also extend my gratitude to our valued customers, whose continued trust in the Halmann Vella brand inspires us to strive for excellence. Lastly, on behalf of the Board of Directors, I express my appreciation to our bondholders for their support as we continue to strengthen the Group and build a sustainable future.

_______________________________

Mr. Martin Vella

Chairman

Directors' Report

for the year ended 31 December 2024

The Board of Directors are hereby presenting their annual report together with the audited financial statements of the Group and the Company for the year ended 31 December 2024.

Principal activities

The principal activity of the Company is to hold assets for the Group and also acts as the financing arm of the Group.

The principal activities of the Group relate to the manufacture and business of stone, marble and granite as well as the manufacture of terrazzo and pre-cast elements. The Group owns and leases a number of commercial properties and is also involved in property development and resale.

Review of business

The Group generated a turnover of €27,047,918, as compared to the previous year's €25,083,049, and achieved an operating profit of €5,102,737 up from €4,373,925 in 2023, after recording a profit on sale of investment property of €1,144,296. Additionally, the Group registered a consolidated profit before tax of €4,052,194, compared to €3,458,528 in the previous year.

The Company registered a profit before tax of €1,169,507 during the year ended 31 December 2024                                                                                                                                                                                      (2023: €2,068,137).

Given the Group’s and Company’s financing structure and positive net assets position, we are pleased to report that the Directors consider the state of affairs for both entities at the close of the financial year to be satisfactory.

Performance

In 2024, Group total revenue increased from €25.08m to €27.05m, driven by increased activity in the Manufacturing and Contracting Segment. Rental income was marginally higher year-on-year, whereas the Property Development segment’s contribution was lower when compared to 2023.  In 2024 the financial performance was positively impacted by a one-off profit on sale of investment property of €1.1m. Overall segment contribution was stable year-on-year.

The increase in administrative expenses in 2024 was primarily driven by wage inflation and a growing workforce, as we continued to invest in our operations. Additionally, a higher year-on-year provisioning charge, demonstrating our prudent financial approach, contributed to the overall rise in costs. Increased depreciation expenses also reflected our ongoing investments in manufacturing and technological advancements. Despite these inflationary pressures, the Group remained focused on cost management and operational efficiency, underscoring our commitment to sustainable growth.

The Bond Issue

In November 2014, the Company issued €30 million 5% secured bonds of a nominal value of €100 per bond, issued at par (ISIN: MT0000811209) in terms of a prospectus dated 6 October 2014. The 2014 bonds were fully redeemed on 6 November 2024.

In terms of a prospectus dated 28 June 2024 the Company issued €23 million 5.35% secured bonds of a nominal value of €100 per bond, issued at par (ISIN: MT0000811217).  The 5.35% bonds shall be redeemed on 26 July 2034 provided that the Company reserves the right to redeem on an earlier redemption date.

Principal risks and uncertainties

The Directors are aware of the various risks faced by the Group as a result of its well diversified business lines primarily on manufacturing and property development. A number of measures are in place to ensure that such risks and uncertainties are maintained at acceptable levels and are in line with the Group’s risk strategy of sustainable, long-term growth and profitability. Our principal risks have not changed this year.

The key risks faced by the Group include credit risk, strategic risk, operational risk, liquidity risk, and reputational risk. Together with other risks and uncertainties inherent in the business, these require strong capital management as safeguard against competent authority requirements and unfavourable events. Given such, the Group regularly reviews operational and capital targets against actual and forecast business levels to minimise such risks if necessary, to the most considerable level possible in the interest of institutional stakeholders.

The main types of risk types are outlined hereunder:

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.  The Group is exposed to credit risk from its operating activities and from its financing activities including deposits with banks.

Customer credit risk is managed by the Group's management subject to the Group's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on each customer's credit limits. Outstanding customer receivables are regularly monitored. An impairment analysis is performed on each reporting date in accordance with the guidelines set in IFRS 9 Financial Instruments Standard. The Group maintains a prudent credit control policy, ensuring minimal exposure to significant credit risk or concentration. Banking relationships are exclusively with reputable local financial institutions that meet high-quality standards or ratings. Given that the Group primarily operates in Malta, the majority of its revenue is generated from clients within the local market.

Strategic risk

This risk relates to the value of Group's assets and local property market in general. The Group has strict guidelines and engages competent professionals on quality and valuation of its investment properties. The Group's properties are rented out to various tenants, except for those sites where development is in progress. The Group currently has long term lease agreements with in-substance fixed rental receivables in place, which will protect the Group from unforeseen circumstances and inflation. The Group ensures to implement sound capital management policies and flexible cash flow as disclosed below under liquidity risk, to mitigate its risks.

Operational risk

Operational risk maybe defined as the risk of losses arising from defects or failures in its internal processes, people, systems or external events including risks related to fraud, technological and conduct risk.

Operational risk is inherent in all processes, systems and activities of the Group. As such, all employees are responsible for managing and controlling operational risks associated with their own activities and business processes where they are involved. Project management is carried out by competent professionals and surveyors in the field for each site with ongoing projects. The Group, in terms of operational risk management and control, continues to identify, evaluate and mitigate such risks, regardless, if these actually occurred or not. The Group also assesses at each reporting date (unless immediate evaluation is necessary) areas of concern for improvement to minimise such operational risks, arising due to the volatile results of each year's operations.

Liquidity risk

The Group is exposed to liquidity risk in relation to meeting future obligations associated with its financial liabilities.  Prudent liquidity risk management includes maintaining sufficient cash and committed credit lines to ensure the availability of an adequate amount of funding to meet the Group's obligations.

Financial risk management and exposures

Note 34 Financial Risk Management to these financial statements provide details in connection with the Company’s use of financial instruments, its financial risk management objectives and policies and the financial risks to which it is exposed.

Future Developments

The Group enters 2025 with a good order book in its manufacturing segment, providing a strong foundation for the year ahead. However, we remain cautious about margin pressures as we continue to navigate sector-wide challenges, including skills imbalances and wage-induced inflation. To mitigate these risks, we are intensifying our efforts to enhance productivity and operational efficiency. Additionally, we are cautiously optimistic that our recent investment in new plant and machinery will begin contributing positively to revenue streams.

Our letting portfolio remains stable with minimal exposure to risk, while our involvement in property development remains limited, with two projects expected to be completed within the year.

Supported by a strong balance sheet, the Group remains well-positioned to adapt to market conditions and capitalize on growth opportunities while maintaining a balanced and diversified business model.

Dividends and Reserves

The results for the year are set in the Consolidated Statement of Comprehensive Income on pages 27 and 28.

The Board of Directors does not propose the payment of a dividend in order to further strengthen the financial position of the Group. Retained profits carried forward at the reporting date amounted to €19,524,980 (2023: €13,304,994) for the Group and €4,751,736 (2023: €4,629,159) for the Company.

Directors

The Directors of the Company since the beginning of the year up to the date of this report were:

Remuneration committee and corporate governance

During the period under review, the functions of the Remuneration Committee were carried out by the Board of Directors in view of the fact that the remuneration of Directors is not performance related.

Statement of Directors’ Responsibilities for the financial statements

The Directors are required by the Maltese Companies Act, 1995 (Cap.386) to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the EU 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 such financial statements, the Directors are responsible for:

The Directors are also responsible for designing, implementing and maintaining internal control as necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and that comply with the Maltese Companies Act, 1995 (Cap. 386). They are also responsible for safeguarding the assets of the Group and the parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements of Hal Mann Vella Group p.l.c. for the year ended 31 December 2024 are included in the Annual Report 2024, which is published in hard-copy printed form and is available on the Company’s website. The Directors are responsible for the maintenance and integrity of the Annual Report on the website in view of their responsibility for the controls over, and the security of, the website. Access to information published on the Company’s website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of financial statements may differ from requirements or practice in Malta.

Statement of responsibility pursuant to the Capital Markets Rules of the Malta Financial Services Authority

The Directors confirm that, to the best of their knowledge:

Going Concern

The Directors, as required by the Capital Markets Rule 5.62, have considered the Company’s operating performance, the balance sheet at year-end, as well as the business and financial plan for the coming year, and they have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, in preparing the financial statements, they continue to adopt the going concern basis in preparing the financial statements.

Shareholder register information pursuant with Capital Markets Rule 5.64

The Company has an authorised share capital of €5,000,000 Ordinary Shares of €1 each and issued and fully paid up share capital of €4,999,820 with a nominal value of €1 each.  Each Ordinary Share is entitled to one vote.  The Ordinary Shares in the Company shall rank pari passu for all intents and purposes at law.  There are currently no different classes of Ordinary Shares in the Company and accordingly all Ordinary Shares have the same rights, voting rights and entitlements in connection with any distribution whether of dividends or capital.

Article 55.1 of the Company’s Memorandum and Articles of Association states that the Directors of the Company shall be appointed by the Members in the annual general meeting (AGM) of the Company.  An election of the Directors shall take place every year.  All Directors, except a managing director (if any), shall retire from office every 3 years, but shall be eligible for re-election.  The Directors shall be elected as provided in Article 55.1.1 & 55.1.2 of the Memorandum and Articles of Association, that any Member or number of Members who in the aggregate hold not less than 200,000 shares having voting rights in the Company shall be entitled to nominate a fit and proper person for appointment as director of the Company.  In addition to the nominations that may be made by Members pursuant to the provisions of Article 55.1.1, the Directors themselves or a committee appointed for the purpose by the Directors, may make recommendation and nominations to the Members for the appointment of Directors at the next following AGM.

The powers and duties of Directors are outlined in the Company’s Articles of Association.

The Company shall in each year hold a General Meeting as its AGM in addition to any other meetings in that year.  All general meetings other than annual general meetings shall be called extraordinary general meetings.  The Directors may convene an extraordinary general meeting whenever they think fit.  If at any time there are not sufficient Directors capable of acting to form a quorum for a meeting of the Directors, any Director, or any two Members of the Company holding at least 10% of the Equity Securities conferring a right to attend and vote at general meetings of the Company, may convene an extraordinary general meeting in the same manner, as nearly as possible, as that in which meetings may be convened by the Directors and shall give notice thereof.

A General Meeting of the Company shall be called by not less than 14 days notice in writing.  The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it was given and shall specify the place, the day and the hour of the meeting, and in case of special business, the general nature of that business, and shall be accompanied by a statement regarding the effect and scope of any proposed resolution in respect of such special business.

Pursuant to the Company’s statutory obligations in terms of Companies Act and Capital Markets Rules, the appointment of the auditors and the authorisation of the Directors to set their remuneration will be proposed and approved at the Company’s AGM. HLB CA Falzon have expressed their willingness to continue in office.

These financial statements were approved and authorized for issue by the Board of Directors and signed on its behalf on 16 April 2025 by Mr. Martin Vella (Chairman) and Mr. Mark Vella (Director) as per the Directors' Declaration on ESEF Annual Financial Reports submitted in conjunction with the Annual Financial Report 2024

Corporate Governance Statement

for the year ended 31 December 2024

Introduction

Pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority (the “Rules”), Hal Mann Vella Group p.l.c. (“the Company”) should endeavour to adopt the Code of Principles of Good Corporate Governance contained in Appendix 5.1 to Chapter 5 of the Rules (“the Code”). In terms of Rule 5.94, the Company is hereby reporting on the extent of its adoption of the Code, with respect to the financial year under review. This report covers the period commencing 1 January 2024 and ending 31 December 2024.

The Company became subject to the Rules when its bonds were admitted to listing and subsequent trading on the Official List of the Malta Stock Exchange.

The Company acknowledges that although the Code does not dictate or prescribe mandatory rules, compliance with the principles of good corporate governance recommended in the Code is in the best interests of the Company, its shareholders, bondholders and other stakeholders, and that compliance with the Code, is not only expected by investors but also evidences the directors' and the Company's commitment to maintaining a high standard of good governance.

The Company has only issued debt securities and has not issued equity securities.  Accordingly, in terms of Rule 5.101, the Company is exempt from reporting on the matters prescribed in Rules 5.97.1 to 5.97.3, 5.97.6 and 5.97.8 in this corporate governance statement (the "Statement”) but may do so on a best-effort basis. This Statement is to be construed accordingly.

General

Good corporate governance is the responsibility of the Board of Directors of the Company (“the Board”) as a whole and has been and remains a priority for the Company. In deciding on the most appropriate manner in which to implement the Code, the Board took cognisance of the Company’s size, nature and operations, and formulated the view that the adoption of certain mechanisms and structures which may be suitable for companies with extensive operations may not be appropriate for the Company. 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 group of companies of which it forms part; the Hal Mann Vella Group (the “Group”). The Board is of the view that it has employed structures which are most suitable and complementary for the size, nature and operations of the Company

The Board considers that, to the extent otherwise disclosed herein, the Company has generally been in compliance with the principles set out in the Code throughout the year under review.

This Statement shall now set out the structures and processes in place within the Company and how these effectively achieve the principles set out in the Code for the year under review.  For this purpose, this Statement will make reference to the pertinent principles of the Code and then set out the manner in which the Board considers that these have been adhered to. Where the Company has not complied, this Statement will provide an explanation for non-compliance.

For the avoidance of doubt, reference in this Statement to compliance with the principles of the Code means compliance with the Code’s main principles and the Code provisions.

Compliance with the Code

Principle One - The Board

The Board reports that for the financial year under review, the directors of the Company have provided the necessary leadership in the overall direction of the Company and have performed their responsibilities for the efficient and smooth running of the Company with honesty, competence and integrity. The Board has adopted prudent and effective systems which ensure an open dialogue between the Board and senior management. The Board is composed of fit and proper members who are competent and proper to direct the business of the Company with honesty, competence and integrity. All the members of the Board are fully aware of, and conversant with, the statutory and regulatory requirements connected to the business of the Company. The Board is accountable for its performance and that of its delegates to shareholders and other relevant stakeholders.

The Board has a structure that ensures a mix of Executive and Non-Executive Directors and that enables the Board to have direct information about the Company’s performance and business activities.

Principle Two - Chairman and Chief Executive Officer (CEO)

The position of the Chairman and that of the CEO are occupied by different individuals. There is a clear division of responsibilities between the running of the Board and the CEO's responsibility in managing the Company's business. This separation of roles of the Chairman and CEO avoids concentration of authority and power in one individual, and differentiates the leadership of the Board, from the running of the business.

The Chairman exercises independent judgement and is responsible to lead the Board and set its agenda, whilst also ensuring that the Directors receive precise, timely and objective information so that they can take sound decisions and effectively monitor the performance of the Company. The Chairman is also responsible for ensuring effective communication with shareholders and other stakeholders and encouraging active engagement by all members of the Board for discussion of complex or contentious issues. The Board believes that these functions have been conducted in compliance with the dictates of Code provision 2.2. The CEO is then accountable to the Board for all business operations of the Company.

Principle Three - Composition of the Board

The Board is composed, in line with the requirements of Code provision 3, of a mix of executive and non-executive directors, including independent non-executives. During 2024, the Board was composed of six members, with three executive and three non-executive directors,  two of whom are independent from the Company.  It is responsible for the overall long-term strategy and general policies of the Company, of monitoring the Company’s systems of internal control, managing the Company's exposure to financial risk, financial reporting, and ensuring effective communication with the market, as and when necessary.

The CEO provides the rest of the directors with access to the information on the Company’s financial position and systems.  He acts as the main point of communication between the Board and overall corporate operations as he is responsible for proper implementation of sustainable business solutions, effective framework of internal controls over risk in relation to the business and strategic  goals devised by the Board.

The Board consists of the following:

In accordance with the provisions of the Company’s Articles of Association, the appointment of directors to the Board is exclusively reserved to the Company’s shareholders, except in so far as appointment is made by the Board to fill a casual vacancy, which appointment would be valid until the conclusion of the next annual general meeting ("AGM") of the Company, following such an appointment.  In terms of the Company's Articles of Association a director shall hold office for a period of three years from the date of his appointment.  Dr. Arthur Galea Salomone and Mr. Mario Galea are considered by the Board to be independent non-executive members of the Board. Ms. Miriam Schembri on the other hand, is also a non-executive member of the Board, however, is not independent.

None of the independent non-executive directors:

In terms of Code provision 3.4, each non-executive director of the Board has declared in writing to the Board that he/she undertakes:

Principle Four - The Responsibilities of the Board

In terms of Principle Four, it is the Board’s responsibility to ensure a system of accountability, monitoring, strategy formulation and policy development.

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, meets on a regular basis, with such meetings usually focusing on business strategy, operational and financial performance, and assumes responsibility for the Company’s strategy and decisions with respect to the issue, servicing and redemption of its bonds in issue, and for monitoring that its operations are in conformity with its commitments towards bondholders, shareholders, and all relevant laws and regulations.  The Board is also responsible for ensuring that the Company establishes and operates effective internal control and management information systems and that it communicates effectively with the market.

The executive officers of the Company may be asked to attend board meetings or general meetings of the Company, although they do not have the right to vote thereat until such time as they are also appointed to the Board.  The rest of the directors may entrust to and confer upon the CEO any of the powers exercisable by them upon such terms and conditions and with such restrictions as they may think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers.

In fulfilling its mandate, the Board:

As part of succession planning, the Board ensures that the Company implements appropriate schemes to recruit, retain and motivate employees and senior management.

In ensuring compliance with other statutory requirements and with continuing listing obligations, the Board is advised directly, as appropriate, by its appointed legal and other advisors. The directors are entitled to seek independent professional advice at any time on any aspect of their duties and responsibilities, at the Company’s expense.

The Audit Committee

The Company has established an audit committee (the "Audit Committee") in line with the requirements of the Rules. The Audit Committee’s primary objective is to assist the Board in fulfilling its responsibilities: in dealing with issues of risk, control and governance; and to monitor and review the financial reporting processes, financial policies and internal control structure of the Company.

Related Party Transactions

In addition, the Audit Committee also has the role and function to scrutinize and evaluate 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. Although the Audit Committee is set up at the level of the Company its main tasks are also related to the activities of the subsidiaries and operational companies.

Any proposed transaction which the Company wishes to enter into, and which satisfies either of the following conditions is referred to the Audit Committee for its consideration and approval:

At the meeting convened for this purpose, the Audit Committee considers the proposed transaction and first determines whether it is a transaction that falls within the ambit of the applicable Rules and, if it so determines, then considers the merits of the proposed transaction.

In determining whether a transaction falls to be classified as a “Related Party Transaction”, the Audit Committee adopts a substance over form approach and assesses the transaction according to the specific circumstances and characteristics. In its evaluation of the proposed transaction, the Audit Committee is at all times guided by the best interests of the Company and its general body of shareholders taken as a whole. The Audit Committee reports to the Board on its findings and make its recommendations to the Board as to whether the transaction should be entered into in the first place and to make such further recommendations as to any matters that, in the opinion of the Audit Committee need to be reviewed or improved in the proposed transaction or any of its terms to ensure that the best interests of the Company are properly safeguarded.

Conflicts of interest

Furthermore, the Audit Committee is vested with the task of ensuring that any potential conflicts of interest between the duties of the directors and their respective private interests or duties unrelated to the Company are resolved in the best interests of the Company.

Audit Committee Meetings

During the financial year under review, the Audit Committee met eight times.

Terms of reference

The Board has set formal terms of establishment and reference of the Audit Committee that establish its composition, role and function, the parameters of its remit as well as the basis for the processes that it is required to comply with. The Audit Committee is a sub-committee of the Board and is directly responsible and accountable to the Board. The Board reserves the right to change these terms of reference from time to time.

Composition

The Audit Committee is composed of three non-executive directors, two of whom are also independent:

Mr. Mario Galea is a non-executive director and a qualified accountant, who the Board considers as independent and competent in accounting as required in terms of the Rules.

Principle Five - Board meetings

The directors meet regularly to dispatch the business of the Company.  The directors are notified in advance of forthcoming meetings so as to provide adequate time to directors to prepare themselves for such meetings. Notification thereof, together with the issue of an agenda and supporting board papers, which are circulated in advance of the meeting, is carried out by the company secretary of the Company. Minutes are prepared during Board meetings recording faithfully attendance, and resolutions taken at the meeting. These minutes are subsequently circulated to all directors as soon as practicable after the meeting.  The Chairman ensures that all relevant issues are on the agenda supported by all available information, whilst encouraging the presentation of views pertinent to the subject matter and giving all directors every opportunity to contribute to relevant issues on the agenda. The agenda on the Board seeks to achieve a balance between long-term strategic and short-term performance issues.

The Board meets as often and as frequently required in line with the nature and demands of the business of the Company. Directors attend meetings on a frequent and regular basis and dedicate the necessary time and attention to their duties as directors of the Company.  The Board met eight times during the financial year under review. The following directors attended meetings as follows:

Shareholders’ influence is exercised at the AGM of the Company, which is the highest decision-making body. All shareholders have the right to participate and to vote in the meeting. Shareholders who cannot participate in the meeting can be represented by a proxy.

Business at the Company’s AGM will cover the annual report and financial statements, the declaration of dividends if any, election of directors and the approval of their remuneration, appointment of the auditors and the authorisation of the directors to set the auditors’ fees. Shareholders’ meetings are called with enough notice to enable the use of proxies to attend, vote and abstain. The Company recognises the importance of maintaining dialogue with its shareholders to ensure its strategies and performance.

The Board believes that it fully complies with the requirements of this Principle Five and the relative Code provisions.

Principle Six - Information and Professional Development

The Board  routinely assesses the need for further training of its members with a view to ensuring that the directors possess the necessary knowledge and skill to fulfil their function. During the year under review, no specific training was deemed necessary and thus provided to the Board. Whilst no specific training was provided to the Board over the course of the year under review, the Board continuously evaluates whether any further training is required for its members and, or a specific member or committee, from time to time, and expects to schedule training on regulatory developments and ongoing obligations in the near future.

The CEO is responsible for the recruitment and appointment of senior management, and, in the performance of his role as CEO, ensures that the following systems are in place:

Principle Seven - Evaluation of the Board's performance

The current composition of the Board allows for a cross-section of skills and experience and achieves the appropriate balance required for it to function effectively. During the year, the directors carried out a self-evaluation performance analysis, including the Chairman and the CEO. The results of this analysis did not require any material changes in the Company’s corporate governance structure.

Principle Eight - Committees

Principle Eight A of the Code deals with the establishment of a remuneration committee for the Company aimed at developing policies on remuneration for directors and senior executives and devising appropriate remuneration packages.

In view of the size and type of operation of the Company, the Board does not consider the Company to require the setting up of a remuneration committee, and, in accordance with Code Principle 8.A.2, the Board itself carries out the functions of the remuneration committee specified in, and in accordance with, Principle Eight A of the Code, given that the remuneration of directors is not performance-related.

The Board has established a remuneration policy for directors and senior executives of the Company, underpinned by formal and transparent procedures for the development of such a policy and the establishment of the remuneration packages of individual directors.

The Board confirms that there have been no changes in the Company’s remuneration policy during the year under review and the Company does not intend to effect any changes in its remuneration policy for the following financial year.

The maximum annual aggregate emoluments that may be paid to the directors of the Company is, pursuant to the Company’s memorandum and articles of association, approved by the shareholders in general meeting. The Board is composed exclusively of executive and non-executive directors. The determination of remuneration arrangements for board members is a reserved matter for the Board as a whole.

During the financial year under review, Mr. Martin Vella, Mr. Mark Vella and Mr. Joseph Vella each held an indefinite full-time contract of service with Sudvel Limited and Hal Mann Vella Limited.

The remuneration policy for directors has been consistent since inception; no director (including the Chairman) is entitled to profit sharing, share options or pension benefits.  There is no linkage between the remuneration and the performance of directors.  A fixed honorarium is payable at each financial year to the non-executive directors of the Company.

For the financial year under review the aggregate remuneration of the directors of the Company was as follows:

Principle Eight B of the Code deals with the formal and transparent procedure for the appointment of directors.

In view of the size and type of operation of the Company, the Board does not consider the Company to require the setting up of a nomination committee. Reference is also made to the information provided under the subheading ‘Principle Three’ above, which provides for a formal and transparent procedure for the appointment of new directors to the Board.

Principle Nine - Relations with shareholders and with the market

Pursuant to the Company’s statutory obligations in terms of the Companies Act (Cap. 386 of the laws of Malta) and the 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 AGM. 

With respect to the Company’s bondholders and the market in general, Company announcements are issued as and when required. During the year under review, eight company announcements were issued.

The Company’s articles of association allow minority shareholders to call special meetings on matters of importance to the Company, provided that the minimum threshold of ownership established in the Company's articles of association is met.

Principle Ten - Relations with Institutional shareholders

The directors are of the view that this Principle is not applicable to the Company.

Principle Eleven - Conflicts of Interest

Principle Eleven of the Code deals with conflicts of interest and the principle that directors should always act in the best interests of the Company

All of the directors of the Company, except for Ms. Miriam Schembri, Dr. Arthur Galea Salomone and Mr. Mario Galea are executive officers of the Company. The executive directors have a direct beneficial interest in the share capital of the Company, and as such are susceptible to conflicts arising between the potentially diverging interests of the shareholders and the Company.  During the financial year under review, no private interests or duties unrelated to the Company were disclosed by the directors which were or could have been likely to place any of them in conflict with any interests in, or duties towards, the Company.

The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the best interests of the Company. Furthermore, in accordance with the provisions of article 145 of the Companies Act (Cap. 386 of the laws of Malta), every director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company is under the duty to fully declare his interest in the relevant transaction to the Board at the first possible opportunity and he will not be entitled to vote on matters relating to the proposed transaction and only parties who do not have any conflict in considering the matter will participate in the consideration of the proposed transaction.

Principle Twelve - Corporate Social Responsibility

Principle Twelve of the Code encourages directors of listed companies to adhere to accepted principles of corporate social responsibility

The Company seeks to adhere to sound principles of corporate social responsibility in its management practices and is committed to high standards of ethical conduct and to contribute to the development of the well-being of employees and their families as well as the local community and society at large.

The Board is mindful of the environment and its responsibility within the community in which it operates. To this end the Company, and other Group companies have taken initiatives such as; investment in renewable energy; implementation of water management systems within its operations and manufacturing companies to curtail waste and better manage the use of water.

Furthermore, the Group also seeks to minimise waste by seeking to deploy what are by products of its manufacturing, in its terrazzo line ensuring a cheaper product complimentary to its social policy of reducing waste.

In carrying on its business, the Group is fully aware and at the forefront to preserving the environment and continuously review its policies aimed at respecting the environment and encouraging social responsibility and accountability.

Internal Control

The Board is ultimately responsible for the Company’s system of internal controls and for reviewing its effectiveness. The directors of the Company are aware that internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives of the Company, and can only provide reasonable, and not absolute, assurance against normal business risks.

During the financial year under review, the Company operated a system of internal controls which provided reasonable assurance of effective and efficient operations covering all controls, including financial and operational controls and compliance with laws and regulations. Processes are in place for identifying, evaluating and managing the significant risks faced by the Company.

Other key features of the system of internal control adopted by the Company in respect of its own internal control as well as the control of its subsidiaries and affiliates are as follows:

Risk identification

The Board, with the assistance of the management team of the Company, is responsible for the identification and evaluation of key risks applicable to the areas of business in which the Company and its subsidiaries are involved.  These risks are assessed on a continual basis and any potential exposure is discussed regularly at Board and management level, with a view to the mitigation thereof, where possible.

Information and communication

Periodic strategic reviews which include consideration of long-term financial projections, and the evaluation of business alternatives are regularly convened by the Board. Regular budgets are prepared and performance against these plans is actively monitored and reported to the Board.

In conclusion, the Board considers that the Company has generally been in compliance with the principles of the Code throughout the period under review as befits a company of its size and nature. 

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

These financial statements were approved and authorized for issue by the Board of Directors and signed on its behalf on 16 April 2025 by Mr. Martin Vella (Chairman) and Mr. Mark Vella (Director) as per the Directors' Declaration on ESEF Annual Financial Reports submitted in conjunction with the Annual Financial Report 2024

Independent Auditors' Report

to the shareholders of Hal Mann Vella Group p.l.c.

Report on the Financial Statements for the year ended 31 December 2024

Opinion

We have audited the individual financial statements of Hal Mann Vella Group p.l.c. (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (together, “the Group”), set out on pages 27 to 108, which comprise the statement of financial position as at 31 December 2024, statement of profit and loss and comprehensive income, statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and the Company as at 31 December 2024, and of the Group’s and the Company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and have been properly prepared in accordance with the requirements of the Companies Act, Cap. 386 of the Laws of Malta.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), together with the ethical requirements that are relevant to our audit of the financial statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap.281) in Malta, and we have fulfilled our other ethical responsibilities in accordance with the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the company are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).

The non-audit services that we have provided to the company, in the period from 1 January 2023 to 31 December 2024, are disclosed in Note 7 to the financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgement were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our audit opinion thereon.

We do not provide a separate opinion on these matters.

Other Information

The Directors are responsible for the other information. The other information comprises of the Chairman’s Statement, Directors' Report and Corporate Governance Statement of Compliance. Our opinion on the financial statements does not cover this information. Except for our opinion on the Directors’ Report in accordance with the Companies Act, Cap. 386 of the Laws of Malta and on the Corporate Governance Statement of Compliance in accordance with the Capital Markets Rules issued by the Malta Financial Services Authority, our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

With respect to the Directors' Report, we also considered whether the Directors' Report includes the disclosures required by Article 177 of the Companies Act, Cap. 386 of the Laws of Malta. Based on the work we have performed, in our opinion:

In addition, in light of the knowledge and understanding of the Group and its environment, obtained in the course of the audit, we are required to report if we have identified material misstatements in the Directors' Report.

Based on the work we have performed, we have nothing to report in this regard.

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

The Directors are responsible for the preparation of the financial statements that give a true and fair view in accordance with the International Financial Reporting Standards as adopted by the European Union, and for such internal controls 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.

In preparing the financial statements, the Directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative to do so. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The Directors have delegated the responsibility for overseeing the Company's financial reporting process to the Audit Committee.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion.

Reasonable Assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

In terms of article 179A(4) of the Companies Act (Cap.386), the scope of our audit does not include assurance on the future viability of the audited entity or on the efficiency or effectiveness with which the Directors have conducted or will conduct the affairs of the entity.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear our independence, and where applicable related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. There were no such undisclosed matters.

Report on other legal and regulatory requirements

The Annual Report and Financial Statements of Hal Mann Vella Group p.l.c. for the year ended 31 December 2024 contains other areas required by legislation on which we are required to report. The Directors are responsible fir these other areas.

Report on the Statement of Compliance with the Principles of Good Corporate Governance

The Capital Markets Rules issued by the Malta Financial Services Authority require the Directors to prepare and include in their annual report a Corporate Governance Statement providing an explanation of the extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures that have taken to ensure compliance with those Principles.

The Capital Markets Rules also require the auditor to include a report on the Corporate Governance Statement prepared by the Directors. We read the Corporate Governance Statement 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 Corporate Governance Statement 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 Corporate Governance Statement set out on pages 10 to 18 has been properly prepared in accordance with the requirements of the Capital Markets Rules 5.94 and 5.97.

Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the "ESEF RTS"), by reference to Capital Markets Rule 5.55.6

We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the 'ESEF Directive 6') on the Annual Report and Financial Statements of Hal Mann Vella Group p.l.c. for the year ended 31 December 2024, entirely prepared in a single electronic reporting format.

Responsibilities of the directors

The directors are responsible for the preparation of the Annual Report, including the consolidated Financial Statements, and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.

Our responsibilities

Our responsibility is to obtain reasonable assurance about whether the Annual Report, including the consolidated Financial Statements and the relevant electronic tagging therein, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.

Our procedures included:

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

Opinion

In our opinion, the Annual Report for the year ended 31 December 2024 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.

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

We also have responsibilities:

-         under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion:

-         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; and

-         certain disclosures of Directors' remuneration specified by law are not made in the financial

-         statements, giving the required particulars in our report.

-         under the Capital Markets Rules to review the statement made by the Directors 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.

Audit Tenure

We were first appointed as auditors of the Group on 18 April 2017. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 8 years. The Company became listed on a regulated market on 11 November 2014.

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

Our audit opinion is consistent with the additional report to the Audit Committee in accordance with the provisions of article 11 of the EU Audit Regulation No. 537/2014.

This copy of the audit report has been signed by:

The partner in charge of the audit resulting in this independent auditors' report is Fiona Buttigieg for and on behalf of

HLB CA Falzon

Registered Auditors

16 April 2025

These financial statements were approved and authorized for issue by the Board of Directors and signed on its behalf on 16 April 2025 by Mr. Martin Vella (Chairman) and Mr. Mark Vella (Director) as per the Directors' Declaration on ESEF Annual Financial Reports submitted in conjunction with the Annual Financial Report 2024

Notes to the Consolidated Financial Statements

for the year ended 31 December 2024