Directors’ report

The directors present their report together with the audited financial statements of 1923 Investments p.l.c. (the Company) and the consolidated financial statements of the Group of which it is the parent, for the year ended 31 December 2022.

Principal activities

The Company acts as an investment company and service provider to its subsidiary undertakings.

The group is engaged in (i) the sale and distribution of Apple Products and third party electronic products as an Apple Premium Reseller, (ii) the sale, maintenance and servicing of information technology solutions, security systems and provides electronic payment solutions, (iii) providing road, sea and air logistics services including the provision of ship-to-ship transfer services and LNG terminal management.

Through the incorporation of E-Lifecycle Holdings GmbH during the current year, operating under the iRiparo and UZED brands, the Group offers high quality mobile device repair and the sale of refurbished phones and of accessories in Germany but the service will be extended to a number of other European countries in the near future.

Performance review – The Group

During the year under review, the consolidated revenue increased by 35.2% to € 232,714,394 (2021: € 172,154,948). The increase in revenue was driven by (i) organic revenue growth of 44.5%, amounting to € 55,847,490 primarily due to strong performance at iSpot, (ii) an increase of 13.4% in revenue amounting to € 4,155,687 in the Logistics sector, (iii) slight increase in revenue at Harvest Technology p.l.c. (‘Harvest’) from €15,747,511 registered in 2021 to  €16,275,659 generated in 2022.

In 2022, the Group registered an operating profit of € 12,061,076 (2021: € 10,483,284) on revenue of € 232,714,394 (2021: € 172,154,948), resulting in an increase in the operating profit margin from 6.1% in 2021 to 5.2% during 2022. The Group registered a profit before tax of € 9,430,624 (2021: € 8,316,511).

The Group’s net assets at the end of 2022 amounted to € 59,536,589 (2021: € 52,831,260). In 2022, the increase in Net Asset Value is mainly attributable to the increase in profitability, amounting to € 6,705,329 (2021: € 7,257,204). It is pertinent to note that as a result of a weaker Polish Zloty (PLN) against the Euro closing at PLN 4.6808 at 31 December 2022 (2021: PLN 4.5969) and a stronger US Dollar (USD) against the Euro of USD 1.0666 at 31 December 2022 (2021: USD 1.1326), the translation reserve had a positive impact of € 666,338 (2021: € 1,641,334). While this movement arises since the reporting currency is different from the functional currency, all efforts are made by management to mitigate against adverse foreign currency variances arising from exposure to different currencies. Non-controlling interest increased from € 4,964,072 to € 5,039,034 being the share of profitability of Harvest not owned by the Company.

The Group measures the achievement of its objectives through the use of the following other key performance indicators.

Financial

The Group’s current ratio (“current assets divided by current liabilities) currently stands at 1.02 (2021: 1.04). The Group uses this indicator as a measure of liquidity.

The Group measures its performance based on EBITDA. EBITDA is defined as the Group’s profit before depreciation, amortisation, net finance expense and taxes. During the year under review, EBITDA increased by € 1,969,666 to € 19,736,539 from € 17,766,873 in 2021. 

The Group’s EBITDA margin decreased to 8.5% (2021: 10.3%).

The return on average capital employed represents the profit on ordinary activities before finance costs and exceptional items but including share of results of joint ventures, divided by the average of opening and closing tangible net worth. The Company ensures that this capital is used as effectively as possible. The return on average capital employed increased from 11.2% to 11.6% during the year under review due to an increase in profitability.

The Group’s gearing ratio has increased slightly to 42% (2021: 40%). Interest cover remained stable at 5.1 times compared to 5.1 times in 2021.

Performance review – The Company as a stand-alone entity

The Company earned revenue and investment income of € 1,110,000 and € 6,368,299 respectively (2021: revenue of € 1,010,000 and investment income of € 5,427,126). The Company registered a profit before tax of € 2,729,784 (2021: € 1,714,710). The net assets of the Company at the end of 2022 amounted to € 53,172,550 (2021: € 51,437,979).

Group performance review – non-financial

iSpot

iSpot reported a strong year, both financially but also through improved customer engagement. During 2022, iSpot reported a 4 5% (2021: 19%) increase in organic revenue and € 2,313,990 (2021: € 2,774,313) increase in pre-tax profit. Footfall traffic within the stores increased by 28 % over 202 1 due to the removal of Covid-19 restrictions, increased in-store marketing campaigns and more outlets being opened during the year.  Furthermore, iSpot experienced (i) increased e-commerce sales; and (ii) high conversion rate and significantly higher basket spend. The conversion rate, which measures the percentage of actual purchases compared to customers entering the store, amounted to 12.2 % and the average basket spend increased by 9.1 % to € 299 compared to €274 in 2021. Revenue from e-commerce increased by 30 % compared to 2021.

Increased traffic and number of completed orders did not affect the quality-of-service delivery resulting in a high Net Promoter Score of 85% vs 81 % achieved in 2021. Observing the performance of brick-and-mortar stores in Poland, iSpot management decided to continue growing this channel with the opening of four additional stores, in Zielona Góra, in Gorzów, in Tarnów and Janki (Warsaw) . Furthermore, iSpot opened one additional service point in the South of Poland - Katowice .

On 31 March 2023, iSpot Poland acquired 100% of the shares in Cortland Sp. z o.o, (“Cortland”). Cortland is the second largest Apple Premium Retailer in Poland and operated 16 outlets across Poland which are in locations  that are complementary to those currently operated by iSpot. Through this new acquisition, iSpot also acquired a strong B2B franchise and plans to grow the combined business further through synergies and a tailored focus on its corporate and individual customers.

Harvest Technology plc

During the year under review, Harvest Technology registered an operating profit of € 2,089,978 (2021: € 4,007,506) on revenue of € 16,275,659 (2021: € 15,747,511). After accounting for net finance costs and taxation, the Group registered a profit for the year of € 1,341,370 (2021: € 2,693,519).

During 2022, Apco Systems Limited reported a decrease in the transaction value processed through its gateway. The decrease was primarily due to the increased regulatory scrutiny and additional licensing requirements mandated on online gaming operators which impacted our large clients and the commissions receivable from partnering banks. Furthermore, the payment gateway is undergoing significant investment to upgrade the system to a cloud-based gateway. The development of the new gateway is highly demanding as it requires the company to operate and maintain two payment gateways in parallel. The new gateway is expected to be operational in the second half of 2023.

At Apco, the key development is in new products and services primarily in Electrical Vehicle (EV) charging and Unmanned Aerial Vehicle (UAV) where Apco Limited has already been awarded new contracts. These two new products present an opportunity to further develop its internationalisation strategy.

IT Services provider, PTL Limited, recorded higher revenue than the previous year due to the recognition of hardware and software licenses revenue related to the two main projects carried out successfully by the team for the Maltese public sector. Going forward, the key focus will be on expanding the service offering both locally and internationally. During 2022, the management team has been developing new relationships with prospective partners, in various countries, where PTL’s expertise in Health, Border Security and Financial Services is attracting interest from various stakeholders.

Hili Logistics

In the Logistics industry, following the Russia and Ukraine war, the market continues to be challenging and highly competitive.

Despite the challenges posed during 2022 as a result of the sanctions and restrictions imposed by certain countries, agency business volumes at Carmelo Caruana Company Limited were in line with those performed in 2021. The Free-Trade Zone warehouse business continued to perform well in 2022. CMA-CGM Malta Agency Ltd experienced better performance in 2022, recording revenue growth of 6% which reached € 8,148,073 (2021: € 7,694,580). Profit after tax amounted to € 1,636,145 (2021: € 1,390,686).

The demand for the STS services is predominately driven by the volume of oil traded amongst oil majors, independent traders, and also by production where local port infrastructure is unable to accommodate large tankers. In 2022, STS Marine Solutions reported revenue which increased by 14.4% to € 18,313,119 compared to € 16,008,764 in 2021. The management team remains focussed on submitting competitive tenders, concluding long term contracts and securing new STS operations in the Oil and LNG space in the US, Asia, North Africa and Europe. 

ALLcom, a freight forwarding company and provider of warehousing in Poland, saw better performance due to higher freight rates in 2022 compared to 2021. The profit before tax increased by 88% to reach € 612,764 in 2022 (2021: €325,226). During the year, part of the warehouse in Bolszewo was refurbished.

E-Lifecycle Holdings GmbH

Following the incorporation of the company in Germany on 28 June 2022, the company is investing to develop the business supported by a team of core management specialising in finance, HR, operations, marketing, warehousing, and most importantly building a pipeline of outlets to be opened in 2023. By the end of 2022, 2 outlets were opened, whilst by the end of the first quarter of 2023, a total of 7 outlets were operating in Germany. During 2022, the company incurred a loss amounting to €732,467.  

Principal risks and uncertainties

The Board as a whole, including the Audit Committee members, consider the nature and extent of the risk management framework and risk profile that is acceptable to the Board. The Audit Committee regularly reviews the work carried out by Internal Audit, and ensure any weaknesses identified are remedied so as not to pose a risk to the Group.

1923 Investments has established strategic relationships with its key suppliers. These relationships support 1923 Investments’ product and service offerings, and sales activities generally. There is no guarantee that 1923 Investments will be able to maintain these alliances, enter into further alliances or that existing suppliers will not enter into relationships with 1923 Investments’ competitors. The loss of any of these relationships, in particular, the agreement with Apple that authorises iSpot Poland Sp z.o.o to engage in the sale and distribution of Apple products as an Apple Premium Reseller in Poland, could have a material adverse effect on 1923 Investments’ business, results of operations and financial condition. Additionally, the Group has alliances with shipping companies which will expire in 2023. The expiry of these alliances and agreements, if not renegotiated, may have a significant impact on the results of the logistics and transport business.

Financial risk management

Note 41 to the financial statements provides details in connection with the Group’s use of financial instruments, its financial risk management objectives and policies and the financial risks to which it is exposed.

Non-financial statement

In line with the Directive 2014/95/EU and pursuant to Article 177 of the Companies Act (CAP. 386), and in terms of the Sixth Schedule of the Act, the Directors of 1923 Investments plc. are hereby reporting the impact of its activities on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters.

1.       Our Business Model

The Group operates four main business activities, which are (i) the sale of retail and IT solutions in Poland predominately as an Apple Premium Reseller, (ii) the sale of payment processing services, the provision of IT solutions and security systems, (iii) the provision of road, sea and air logistics services; and (iv) provision of Ship-to-Ship transfers of oil and LNG, terminal Management and consultancy services. These activities are undertaken by separate subsidiaries, as explained in the annual financial statements.

The Group’s iSpot Poland Sp z.o.o retail business in Poland offers an extensive range of Apple products dedicated accessories, technical services and other software in Poland.

Under a Master Franchise Agreement with iRiparo, E-Lifecycle Holdings GmbH operaring under the iRiparo and Uzed brands is opening stores dedicated to high quality mobile device repair and the sale of refurbished phones and of accessories in 31 European countries, starting from Germany. E-Lifecycle Holdings GmbH operates in adherence to the principles of the circular economy – the circulation of products and materials, the elimination of waste and the regeneration of materials.

Harvest Technology plc’s (Harvest) business line in Malta is a multi-brand information technology solutions provider to businesses and the public sector. In addition, Harvest, through APCO Systems Limited operates a payments solutions provider offering e-commerce processing services for retailers and internet-based merchants together with the provision of a wide range of automation and security solutions catering to the banking, retail, fuel and other sectors. Harvest is currently seeking further internationalization of its services in Europe and other continents where it already has a connection. Through its wide range of services and experience in technology, the Group is positioned to continue to develop and offer a wide range of solutions to its customers and to assure a high quality of services to its customers.

Hili Logistics Limited is the logistics division continues to provide its transport and logistics services through its long-standing experience in the sector and its continued support and excellent relationship with its business partners. Hili Logistics is the shareholder of Carmelo Caruana Co. Ltd (CCCL), ALLcom and STS Marine Solutions Limited (STSMS).

2.       Environmental Matters

As a Group we are committed to environmental responsibility, and all subsidiaries within the Group have a role to play in living up to that commitment. We are aware that our operations have both a direct and indirect impact on our surrounding environment and therefore we place great importance in taking actions to mitigate such impacts.

Efforts are being made on areas where the Group can have significant impact on critical environmental issues, including climate change, natural resource conservation and waste management. The Group invests in innovations that can improve our environmental footprint, besides collaborating with other organizations to raise environmental awareness and work with key suppliers to promote environmentally responsible practices in their operations.

2.1 Carbon emissions and other pollutants

1923 Investments management understand that environmental responsibility transcends our direct operations; thereby, as a Group we make sure to partner with suppliers who place great focus on minimising their carbon footprint and consequentially their environmental impact.

In 2021, iSpot commenced to partially source its energy requirement from utility companies which generate electricity from renewable energy (not fossil fuel). In 2022, 19% of the electricity demand of 5 stores was covered by renewable electricity and a similar share is envisaged for 2023. During 2022, iSpot has also introduced a cycle-to-work benefit, incentivizing employees to use bikes over cars on their daily commute to work.

Carmelo Caruana Co. Ltd (CCCL) plans to replace present vehicles with greener ones upon contract expiry. From an operational point of view, the company seeks to engage contractors with the most modern and safest equipment on the market. In the meantime, the employees also try to consolidate trips via land or sea avoiding unnecessary emissions and promote shortest transit trips.

CCCL abides with local port notices and makes sure to inform all of its clients before any of their vessels call Malta. This includes consumption of fuel and switching to lower-sulphur content fuel as early as possible.

STSMS maintains an Environmental Aspect and Impact Register through which data relating to environmental impact is measured and  analyzed for objectives and targets to be set. The Reduction of impact targets and objectives are in respect of the following areas: surface water, ground water, soil, air, natural resources, waste, legal and other requirements, public/customer relations and accidental release of product spills. Operational, terminal and office activities were assessed and the areas impacted are; air, natural resources, waste and accidental release. The Register has assessed the Aspects and implemented controls to reduce the scores accordingly. All data is recorded on the HSE Document SharePoint with trends and information shared throughout STSMS via different means i.e., booklets, presentations, graphs etc.

Guardian LLC vessel is periodically maintained to ensure Health and Safety standards. The routes are planned in a way to be fuel efficient and pollute less.

Harvest Technology are evaluating changing their car fleet (leased) to hybrid and/or electric vehicles to further reduce carbon emissions. They are also offering increased opportunity for remote working – further reducing the carbon footprint of operations.

All companies also encourage employees to car pool whenever possible. This will help decrease air pollution and associated health costs. Having less cars on the road means reduced emissions and enhanced air quality. In particular, we have a “Corporate and Social Responsibility Policy” to enforce our commitment to protect the environment.

2.2 Natural resource conservation

iSpot has continued its tree-seeding actions for employees, the “przygarnij złomka” initiative (refurbishment of computers for schools), and trade-in in stores to reduce circulating machines (both iphones, ipads and macs). In 2021 iSpot planted 1400 m2 of trees as part of the “forest forever” project. In 2022, 1522 contracts were signed remotely, which will translate into planting 1522 m2 of trees in the same project.

2.3 Resource use and circular economy 

STSMS has recently reviewed their “Rubber Hose Age Policy” to support prolonging the hose life. This allows for a reduction in natural resource utilization, as well as the reduction in disposal and overall environmental impact.

Most of the STS equipment such as rubber hoses and fenders has a shelf life as recommended by the manufacturers. Over the last couple of years, STSMS and CCCL have embarked on surveying exercises to extend the life of the assets whenever possible rather than immediate disposal. On other occasions, when the life of such assets could not be extended the company has sold at reduced costs or donated such equipment to entities that had use for such equipment without jeopardising the environment. Most recently the company has also opted to invest in equipment (hoses) with longer operational life. The company also makes sure to make the necessary maintenance and certification to all the equipment.

STSMS operates a KPI relating to recycling and repurposing the fenders used in the STS operations to support environmental objectives.

CCCL sold expired fenders and hoses which have exceeded their life span for operational purposes. Such assets were still in good condition and could be utilised by other parties as opposed to disposing of them. CCCL has replaced equipment with a longer life span, thus prolonging the life of the asset and reducing the disposal frequency required upon expired equipment.

iSpot has also embarked into an exercise of redesigning the packaging of its B-brand to eliminate foil and reduce plastic of its packaging. iSpot is planning to recycle used marketing materials into gadgets, bags for Employees.

During 2022, iSpot introduced an electronic exchange of documents between shops and the warehouse, which significantly reduced paper folding. In addition, a cardboard cutter was purchased for the warehouse, this creating a new process through which the utilities of the cartons are reduced and can be used as the filler to secure the goods sent from the warehouse.

At iSpot, in 2021 we saw the introduction of a totally paper-free Leasing Process (with no paper documentation as well as an agreement with supplier to plant 1m ² of forest for each agreement signed by the customer).

iSpot introduced reusable cartons for their online store, enabling customers to return their goods (if and when necessary) in the same packaging as that acquired.

The back-office of 1923 Investments and its subsidiaries put particular focus on saving paper and minimizing printed material.

2.4 Waste management

We feel that it is our duty to operate as part of the local community in order to keep the countries where we operate tidy. Subsidiaries within the Group are enrolled in local programmes for waste collection, separation and recycling of waste.

iSpot introduced re-cycling measures in the head office (previously unavailable) and is now separating organic material, paper, plastic, metal and glass.

At the level of CCCL,  informing all clients before any of their vessels call Malta helps improve water ballast practices, deployment of oil booms and encourage clients to dispose segregated waste to authorized waste companies.   

CCCL also encourages its employees to separate waste by providing segregated bins for recyclable materials and waste. Furthermore, the company engages the services of a recycling company to recycle paper.

In addition to what is stated above, STSMS disposes old IT equipment that has been replaced or decommissioned and that will not be used in the future in compliance with the WEEE regulations, and an appropriate waste transfer note is obtained. STSMS ensures that sensitive or confidential information contained on any IT devices is protected or removed as appropriate. STS Transfer hoses are disposed of, via local entities for recycling and a waste transfer note is obtained.

In line with the STSMS ISO14001 certification, the STSMS “Environmental Management Plan” details the aspects and impacts, commitment to legislation, auditing and recording and evaluating of environmental performance. This is audited on a yearly basis and is awarded for the recognition that the Companies Environmental Management section of its Integrated Management System conforms with the Standard by identifying, managing, monitoring and controlling environmental processes.

ALLcom who have implemented full waste segregation at their offices, are registered in BDO database (database for products, packages and waste management), and have an agreement with third-party organizations for utilization of paper and plastic foil. Plastic and paper waste is being collected separately on monthly basis.

2.5 Energy efficiency

In terms of energy efficiency, the Group implements modern technology throughout its business divisions, with the installation of energy management systems, automatic light switches and movement detectors together with the use of energy efficient equipment and LED lighting in its buildings.

Harvest Technology are reporting consumption of energy usage with a commitment to improve this metric going forward.

In an effort to increase the employees’ climate awareness and consciousness, 1923 Investments plc and its subsidiaries adopt temperature regulation while employees are advised to switch off air-condition systems when not needed as well as switching off unnecessary lighting. In most common parts, our offices have installed motion sensor lighting to allow for an overall reduction in energy usage.

3.       Social and Employee Rights

3.1 Employee wellbeing

We strongly believe that our employees deserve to be treated with fairness, respect and dignity, providing equal opportunity for employees and applicants. All of the Group’s employees have the right to work in a place that is free from harassment, intimidation or abuse, sexual or otherwise, or acts or threats of physical violence.

We also encourage our employees to have a healthy work-life balance, which will not only make them happier and more productive but would also help in leading healthier and more fulfilling lives.

At 1923 Investments and its subsidiaries, employees make use of state-of-the-art recreational areas and are promoting working on hybrid basis (working from office versus working from home).

iSpot is currently offering psychological emergency support (regardless of cause) and allocates funds for social or medical emergencies. iSpot is planning to extend the benefit of psychological support to psychotherapeutic support throughout Poland and subsidise psychiatric consultations. 

Furthermore, iSpot welcomes all maternity, paternity and parental leaves and supports its employees during those important moments (gifts for mothers/fathers).

STSMS Equality Policies ensure that all employees are entitled to work in a violence and harassment free environment. This is subsequently supported by the Company’s “Bullying and Harassment Policy”. STSMS “Corporate and Social Responsibility Policy” covers their commitment to looking after employees and human rights. Mental health wellbeing has been a focal point for STSMS post COVID, STSMS have operated on knowledge sharing during STSMS safety meetings, and sharing bulletins highlight not only the free support services, but the Company Support Mental Health Program.

STSMS displays this information through the office for ease of access to this information.

ALLcom management cherish the work-life balance principle of its employees. Furthermore, at 1923 Investments and all subsidiaries, employees have been equipped to work from home where possible. This approach started during COVID and was continued in 2022. Flexible working hours are offered when necessary.

3.2 Health and Safety of our Employees

We are committed to providing a safe and healthy working environment for our employees, requiring all employees to abide by safety rules and practices and to take the necessary precautions to protect themselves and their fellow employees. We continue to integrate Health and Safety in our policies and premises, ensuring that our employees and our clients health is safeguarded. Moreover for everyone’s safety, employees must immediately report accidents and unsafe practices or conditions to their immediate supervisors.

We do our utmost to work in a safe environment free of workplace hazards, violence, threats of violence, intimidation and personnel under the influence of alcohol or illegal drugs.  We strictly prohibit any verbal abuse, threatening behavior, or conduct that may endanger persons or property, including possession of any unauthorized firearm or other weapon on our property.  Our policies on Health and Safety and Alcohol and Drug Abuse provide more information and guidance.

STSMS has a digital reporting platform for audit, accident, and best practice information, this is accessible to partners and contractors to ensure all inputs to the overall Company success are operating as one. STSMS operates a stringent investigation procedure, with a database of qualified investigators noted to carry out investigations. The results of all health and safety investigations are discussed during monthly safety meetings.

KPI’s and targets are set by the Senior Management Team for proactive safety reporting to ensure that the statistical data can be analyzed, and measures can be put in place to protect the employees.

Health and Safety Audits are carried out annually on procedures and in each remote location to assess compliance with STSMS safety standards and appropriate health and safety legislation. Mental health wellbeing has also been a focal point for STSMS post COVID, STSMS have operated on knowledge sharing during STSMS safety meetings, and sharing bulletins highlight not only the free support services, but the Company Support Mental Health Program. STSMS displays this information through the office for ease of access to this information.

From a Health and Safety perspective, iSpot is auditing all stores, warehouses, service centre and head office all year round to ensure 100% compliance with government regulations. At iSpot  employees are provided regular courses on first aid in life-threatening emergencies.

ALLcom uses an external company that is responsible for identification of health and safety hazards, implementation of adequate procedures, remediate actions, staff training and application of monitoring controls. All employees are trained on health and safety procedures. The staff is also included in the long term first aid training curriculum. Fire drills are performed regularly by the administrators of the offices.

3.3 Employee long-term development

The Group provides various opportunities, nurtures talent, provides support to develop leaders and rewards achievement. Performance evaluation systems are employed across the Group by applying career progression mechanisms and by rewarding achievements.

All subsidiaries within 1923 Investments promote continuous development programmes through sponsorship, conduct talent assessments following the performance review process to ensure succession planning and career growth. For example, ALLcom provides specific tax, customs, accounting and HR trainings for the employees. Regular English lessons are offered to most of the staff. Annual Performance Review is being performed along with constructive feedback. Remuneration levels and promotions are based on individual performance, skills and responsibilities and are in no way linked to other personal factors.

Whether at iSpot, STSMS, CCCL, ALLcom or Harvest Technologies management believe that on-the-job training is an important aspect of total training and management ensures that work is allocated to expose individuals to a range of tasks that will assist in their personal development. Every possible assistance is given to employees to share information and experiences and to learn from each other.

Furthermore, training and succession planning were primary focus of iSpot in 2022. The company offered multiple workshops and training related to advancing careers (for example iSpot Heroes, iLeader+ (for Retail staff) and iSpot Managers Masterclass (for HQ, Service and Warehouse). iSpot introduced comprehensive and clear succession planning in Service department as well as in Retail outlets. iSpot is planning to introduce an internal mentoring and coaching programme to share knowledge, experience and expertise for employees within the organisation.

3.4 Equality, diversity and inclusion at the workplace

The Group believes that a team of individuals with diverse backgrounds and experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to its continuing business success. We are committed to diversity and equal opportunities for everyone, respecting the unique attributes and perspectives of every employee, and we rely on these diverse perspectives to help the Group build and improve the relationships with customers and business partners. The Group embraces the diversity of its employees, customers and business partners, and we work hard to make sure everyone within the Group feels welcome. The Group provides equal treatment and equal employment opportunity without regard to race, colour, religion, sex, age, national origin, disability, sexual orientation, gender identity or any other basis protected by law.

As per our policy on Equal Opportunities and Sexual Harassment, employees respect the rights of fellow colleagues to fair treatment and equal opportunity, free from discrimination and unlawful harassment or retaliation. We avoid any comments or behaviour toward others that may reasonably be regarded as harassment, or as reflecting bias on the basis of any protected category including, but not limited to, race, religion, national origin, age, sex, sexual orientation or disability. 

STSMS employs Mooring Masters of different nationalities for carrying out work in various locations around the world, and have a mixed gender head office with 66% male and 34% female.

As of the end of December 2022, at ALLcom out of a total of 39 employees, 23 are women (59%) with 4 women having a managerial position (36%), including the managing director.

3.5 Support to the Community

The Group takes its corporate social responsibility very seriously and engages with its social partners and the community in general to give back through community involvement and the protection of the environment through the creation and realisation of advanced technology systems. The Group’s history has shown a proven contribution towards society by enhancing the quality of life of its customers and the general public alike.

In 2021, iSpot supported “Wielka Orkiestra Świątecznej pomocy” charity as well as “iSpot heros” through donations made for initiatives brought up by its employees.

Each employee at CCCL can opt to donate a small amount from each salary payment to the Ronald McDonald House Charity (RMHC). This encourages employees to give back to the community and contribute to the wellbeing of the recipients of the charity. At iSpot, in 2022 a volunteer programme was conducted in which all employees had to opportunity to help people at 3 foundations in Poland.

STSMS encourage employees to use an annual allowance per employee of 2 days per year to use for supporting agreed community events / fund raising events with worthwhile local causes and/or charities (some restrictions include that eligible organisation must be registered charities, supporting local communities and demonstrating financial responsibility).

During 2022, ALLcom continued its commitment to support charity actions for local community, through donations and employees activities (e.g. organization of a food collection for the poor and homeless, collection of clothes for orphanages, etc.). Our employees are also collecting plastic bottle tops for charitable purposes.

4.       Respect for Human Rights

The Group conducts its activities in a manner that respects human rights, taking the responsibility seriously to act with due diligence to avoid infringing on the human rights of others and addressing any impact on human rights if they occur. The Group’s commitment to respect human rights is defined in the code of business conduct, which applies to all employees of the Group. Group employees are trained annually on the standard of business conduct.

Employees conduct all aspects of our business in an ethical manner that reflects our dedication to integrity, honesty and fairness.  At all times, they are to obey the laws of the jurisdictions where we conduct business. Our Code of Business Conduct and ethics provide more information and guidance and is available in English and Polish so that it is communicated and understood by everyone in different countries.

5.       Anti-corruption and bribery matters

The Group’s employees must comply with the Group Code of Conduct and Whistle-blower Policy to ensure that all employees are discouraged from any corrupt practices or bribery as well as are incentivized to report any such activities in a direct line with the responsible Group supervisor, without fearing reprisals. Every employee is introduced to these policies upon employment and are mandatory to be adhered to it.

The Group prohibits all forms of bribery or kickbacks as detailed in the Code of Conduct. All employees, representatives and business partners must fully comply with anti-bribery legislation. To comply with the Group policy and anti-bribery laws, no employee should ever offer, directly or indirectly, any form of gift, entertainment or anything of value to any government official or his or her representatives.

The Group is committed to complying with the applicable laws in all countries where it does business. It adopts an anti-corruption policy which sets forth its commitment to ensuring that it carries out business in an ethical manner and abides by all applicable anti-bribery and anti-corruption laws in the countries in which it operates by, among other things, prohibiting the giving or receiving of improper payments in the conduct of its business, and by discouraging such behaviour by its business partners.

All employees must also comply with the Anti-Corruption Policy to ensure that corrupt practices are deterred, allowing the company and its people to operate with integrity. Employees and Directors should also not accept gifts or other things of value from suppliers or others that we do business with that are unlawful, improper or outside the bounds of company guidelines

6.       EU Taxonomy Disclosure

The EU Taxonomy establishes an EU classification system for ecologically sustainable economic activities (EU Taxonomy). It is the European Union’s core tool to channel capital flows towards sustainable investments and to create market transparency. It encourages an increased flow of investments to where they are most needed for sustainable development.

In accordance with Article 8 of the European Regulation 2020/852 (EU Taxonomy Regulation) and Article 10(2) of the Disclosures Delegated Act ( Commission Delegated Regulation (EU) 2021/2178), 1923 Investments plc (or “the Group”) is subject to the obligation to disclose the part of its 2022 revenue, its capital expenditures, and operating expenses which is considered “eligible” as well as “aligned” under the EU Taxonomy of sustainable activities. Furthermore, the Group will disclose qualitative information (according to Section 1.2 of Annex I of the Disclosures Delegated Ac t as of January 2022) .

A Taxonomy-eligible economic activity means an economic activity that is included in the delegated acts supplementing the Taxonomy Regulation . Taxonomy-aligned activities, are eligible activities, which in addition meet the technical screening criteria (significant contribution), do not significant harm and comply with minimum social standards. At this point, the EU regulation is in force for objectives related to climate mitigation and climate adaptation , with further delegated acts detailing requirements on other four environmental objectives (water, biodiversity, circular economy and pollution prevention) to be published at a later stage.

Identifying eligible activities

In order to identify business activities that may be in scope of the European Taxonomy Regulation, the Group relied on the EU Taxonomy Climate Delegated Act ( Commission Delegated Regulation (EU) 2021/2139) supplementing Regulation (EU) 2020/852, in particular Annex 1 & 2 and the EU Taxonomy Compass.

In a first step, the eligible and non-eligible activities were identified based on the officially-assigned NACE codes of the Group’s subsidiaries in a top-down approach. [1] In case the NACE code was reflected in the EU Taxonomy on sustainable activities, the activity descriptions were assessed against the actual activities carried out by the entities to further verify and confirm eligibility. EU taxonomy activities, which have not been assigned a NACE code in the EU Taxonomy Compass/delegated acts (e.g. Storage of Hydrogen or restoration of wetlands) were assessed based on the activity description only.

Identified relevant activities within the EU Taxonomy, based on NACE code basis, are the following:

After reviewing the actual activities carried out by the respective entities, and assessing them in line with the more detailed EU Taxonomy descriptions, it was decided that the activities under NACE 62, 61 as well as 65.1 should not be considered eligible . This assessment has also been based on the Commission Notice on the interpretation of certain legal provisions of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation on the reporting of eligible economic activities and assets (2022/C 385/01), in particular Question 5 on eligibility of climate adaptation-related economic activities.

Thus, the final list of eligible activities is shown below:

However, in addition to the core economic activities, also certain OpEx and CapEx that is channeled into Taxonomy-eligible or aligned activities, can be included in the calculations, as referenced in Annex I of the Disclosures Delegated Act ( Commission Delegated Regulation (EU) 2021/2178) .

With regard to the above, potentially eligible spend related to sales and installation of electric vehicle charging equipment (Installation, maintenance and repair of charging stations for electric vehicles in buildings and parking spaces attached to buildings, climate change mitigation & adaptation).

C alculation of eligibility KPIs

In a second step, the three eligibility KPIs (turnover, Opex, Capex) were calculated based on the EU Taxonomy regulation and Disclosures Delegated Act (Section 1.1 of Annex I  – KPIs of non-financial undertakings) and its definition of the denominator and numerator of the required KPIs.

This step consisted of:

(a)     Extracting the denominators for the 3 KPIs for the Group from the financial reporting system

(b)     Calculating the numerators for all identified eligible sub-activities within the Group and its subsidiaries based on Turnover, Capex and Opex .

These non-financial statement disclosures are based on the same consolidation principles that have been applied in the Group’s financial reporting under the applicable accounting principles, in order to ensure comparability of this reporting with the Group's financial information.

The following definitions were applied:

Note: In 2022 additional CAPEX or OPEX spent apart from the ones deriving from core eligible economic activities was identified . Relevant spent in qualifying areas related to sales and installation of EV charging infrastructure.

Based on the above criteria the following KPIs were derived:

Table 1:

C alculation of alignment KPIs

In a next step alignment for the identified eligible activities related to NACE 52.2.2 as well as the two identified expenditures in qualifying areas was assessed.

T he eligible project spend and eligible activities under NACE 52.2.2 were not considered aligned due to the absence of a robust climate risk and vulnerability assessment which contributed to the failure to fully satisfy the Technical Screening Criteria (TSC) and/or the Do No Significant Harm (DNSH) criteria. Hence, it was concluded that none of the eligible activities or expenditures is to be considered aligned.  

Based on the above conclusions the following alignment KPIs were derived:

Table 2:

The presented KPIs can also be found in Annex 1, where Turnover, CapEx and OpEx KPIs for 1923 Investments plc are presented in the templates provided in Annex II of regulation EU 2021/2178.

Additional Qualitative Disclosures

According to Art. 10.2 of EU 2021/2178 companies shall be disclosing the qualitive information referred to in Section 1.2 of Annex I in addition to the quantitative information above (KPIs of non-financial undertakings). No changes to the accounting policy (1.2.1) have taken place compared to the previous reporting year double counting has been avoided as for example eligible spend was only counted towards one environmental dimension (in case several were applicable). With regard to the required contextual information (1.2.3) no major changes of eligibility and alignment KPIs during the reporting period have taken place despite the incorporation of a new legal entity (E-Lifecycle Holding GmbH) in October 2022. As the activities of this entity were neither eligible nor aligned, this change did not impact the overall KPIs.

Summary and Outlook

For the 2022 reporting year, the complete reporting requirements of the EU Taxonomy w ere applicable for the first time. Thus, in 2022, we did not only report on the Taxonomy eligible activities but also, where applicable, assess ed their alignment with the Taxonomy principles such as the substantial contribution criteria (Technical Screening Criteria), the Do es No t Significant Harm Criteria and respect for minimum social standards. As expected, b ased a substantial contribution or Does Not Significant Harm criteria less activities were aligned versus eligible which is mostly due to the requirement to perform a robust climate risk and vulnerability assessment.

In the future the Commission is expec ted to adopt the d elegated acts related to the remaining four environmental objectives; thus going forward we will also assess and report on those activities.

Irrespective of the above Taxonomy disclosures with regard to the Group’s direct economic activity, the Group remains committed to its priority sustainability issues.

7.       Concluding remarks

Moving forward the Directors are of the firm belief that having good social, environmental and governance structures support the Group’s strategy and its reputation and enables the good quality of services and products offered. Therefore, the company will continue putting such matters high on our agenda, making sure that such measures bring a tangible positive change to the environment, employees and society as a whole. The Group is also looking into the upcoming commitments related to the newly-enacted Corporate Sustainability Reporting Directive (CSRD).

In view of the fact that the Company will be required to report in line with CSRD during financial year 2024, the Company will be launching and implementing initiatives during 2023 which include:

Annex 1

Proportion of turnover from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2022.

Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities - dsclosure covering year 2022.

Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities - disclosure covering year 2022.

Significant judgements and estimates

Note 4 to the financial statements provides details in connection with the inherent uncertainties that surround the preparation of the financial statements which require significant estimates and judgements.

Results and dividends

The results for the year ended 31 December 2022 are shown in the statements of profit or loss and other comprehensive income. The Group’s profit after tax was € 7,246,014 (2021: € 5,838,440), whilst the Company’s profit after tax was € 2,519,578 (2021 € 1,719,387). During 2022, a management fee amounting to € 600,000 was charged by the parent company (2021: € 600,000).

In December 2022, a dividend of €785,007 was declared and paid to the parent company (2021: Nil).

Likely future business developments

The directors of 1923 Investments p.l.c. are of the view that there are a number of investment opportunities in the retail sector, technology sector and logistics sector.

iSpot has also embarked into an annual target of increasing 2 new outlets in Poland to speed up its organic growth initiatives. Through a larger network following the acquisition of Cortland Sp. Z.o.o., management is envisaging to operate 47 outlets in Poland and strengthen the B2B business sector. Through the sale of B-brand and third party products to all outlets operated by iSpot and Cortland, it is expected that the service and product offering will be more complete and customer driven. 

1923 Investments plc is also planning to further expand its retail sector in Europe. Through its subsidiary E-Lifecycle Holdings GmbH, a company registered in Germany in June 2022, 1923 Investments plc endevours to be a leading European retailer supplying refurbished phones, highquality mobile device repair and accessories. Under the terms of the agreement, the Company has the right to launch the brand across 31 countries in Europe. iRiparo is already present in European markets, with 380 stores across Italy, France, and Spain.

The Company has launched its iRiparo operation in Germany and has opened 2 outlets by end of 2022. E-Lifecycle Holdings GmbH plans to open more outlets in Germany and launch the business in Romania by end of 2023. 

Each investment opportunity that will arise during the course of the year will be thoroughly explored and evaluated with a view to continue to grow its business portfolio in line with the Company’s strategy.

Whilst the situation remains fluid and future events may have an adverse effect on the Group’s future profitability, liquidity and financial position, the medium-term outlook remains cautiously optimistic.

The directors consider that the year-end financial position of the Group was satisfactory however future performance might be negatively affected due to the geopolitical situation in Europe, especially if this spreads beyond Ukraine.

Post balance sheet events

By way of a company announcement issued on 31 March 2023, 1923 Investments plc through iSpot Poland Sp. z o.o entered into a share purchase agreement to purchase 100% of the shares issued in the capital of Cortland Sp. z o.o, (“Cortland”).

The consideration paid upon execution of the SPA amounts to PLN 198,600,000 equivalent to €42,800,000 and is subject to a subsequent adjustment calculated in a manner specified in the SPA. The overall terms of the SPA are considered customary for a transaction of this size and nature.

The total gross assets and the profits before tax of Cortland as at the 31 December 2022, as per its audited financial statements drawn up in accordance with Polish GAAP, are reported as PLN69,480,000 and PLN 35,263,000, respectively, equivalent to €14,840,000 and €7,530,000, respectively.

There were no other adjusting or significant non-adjusting events that have occurred between the end of the reporting period and the date of authorisation by the board.

Directors

The following have served as directors of the Company during the period under review:

                        Mr Charles Borg – Chairman

                        Mr Carmelo sive Melo Hili

                        Mr Dorian Desira

                        Mr Karl Fritz

                        Dr Annabel Hili (appointed on 20 September 2022)

                        Dr Ann Fenech

In accordance with the Company’s Articles of Association, the present directors remain in office.

Going concern

After making due enquiry and using the best judgment available at the time of approving these financial statements, an impact assessment has been carried out by the Board, including a review of different service level and cash flow scenarios. Based on this review and the measures taken as indicated above, the Board expects that the Group will be able to sustain its operations over the next twelve months, and to meet its obligations as and when they fall due.

Accordingly, for these reasons the Board is of the opinion that it remains appropriate to adopt the going concern basis in the preparation of these financial statements.

Disclosure of information to the auditor

At the date of making this report the directors confirm the following:            

Statement of directors’ responsibilities

The Companies Act, Cap 386 requires the directors to prepare financial statements for each financial period which give a true and fair view of their state of affairs of the Group and the Company as at the end of the reporting period and of the profit or loss of their operations for that period.  In preparing those financial statements, the directors are required to:

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company, and to enable them to ensure that the financial statements have been properly prepared in accordance with the Companies Act, Cap 386.  This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. They are also responsible for safeguarding the assets of the Group, and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Auditor

Grant Thornton have intimated their willingness to continue in office.

A resolution to reappoint Grant Thornton as auditor of the Company will be proposed at the forthcoming annual general meeting.

Signed on behalf of the Board of Directors on 20 April 2023 by Mr. Charles Borg (Chairman and Director) and Mr. Dorian Desira (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report.

Registered address:

Nineteen Twenty-Three

Valletta Road

Marsa MRS 3000

Malta

20 April 2023

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

We confirm that to the best of our knowledge:

Signed on behalf of the Board of Directors on 20 April 2023 by Mr. Charles Borg (Chairman and Director) and Mr. Dorian Desira (Director).

Corporate governance – Statement of compliance

Introduction

Pursuant to the Capital Markets Rules as issued by the Malta Financial Services Authority, 1923 Investments p.l.c. (the ‘company’) is hereby reporting on the extent of its adoption of the Code of Principles of Good Corporate Governance (the ‘Principles’) contained in Appendix 5.1 of the Capital Markets Rules.

The Board acknowledges that the Code does not dictate or prescribe mandatory rules but recommends principles of good practice. Nonetheless, the Board strongly believes that the Principles are in the best interest of the shareholders and other stakeholders since they ensure that the Directors, Management and employees of the Group adhere to internationally recognised high standards of Corporate Governance.

The Group currently has a corporate decision-making and supervisory structure that is tailored to suit the Group’s requirements and designed to ensure the existence of adequate checks and balances within the Group, whilst retaining an element of flexibility, particularly in view of the size of the Group and the nature of its business. The Group adheres to the Principles, except for those instances where there exist particular circumstances that warrant non-adherence thereto, or at least postponement for the time being.

Additionally, the Board recognises that, by virtue of Capital Markets Rule 5.101, the Company is exempt from making available the information required in terms of Capital Markets Rules 5.97.1 to 5.97.3; 5.97.6 and 5.97.8.

The Board of Directors

The Board of Directors of the Company is responsible for the overall long-term direction of the Group, in particular in being actively involved in overseeing the systems of control and financial reporting and that the Group communicates effectively with the market.

The Board of Directors meets regularly, with a minimum of four times annually, and is currently composed of six Members, three of which are completely independent from the Company or any other related companies.

For the purpose of the Capital Markets rules, Mr Charles Borg, Dr Ann Fenech and Mr Karl Fritz are independent non-executive directors of the Company. Furthermore, Dr Annabel Hili was appointed Director on 20 September 2022.

Non-Executive Directors

Mr Carmelo sive Melo Hili

Mr Dorian Desira

Dr Annabel Hili (appointed on 20 September 2022)

Independent Non-Executive Directors      

Mr Charles Borg (Chairman)

Dr Ann Fenech

Mr Karl Fritz

The Board Meetings are attended by the Chief Executive Officer of the group in order for the Board to understand the operations of the group. The Chief Executive Officer is joined by the Chief Financial Officer of the Group in order for the Board to have direct access to the financial operation of the Group. This is intended to, inter alia, ensure that the policies and strategies adopted by the Board are effectively implemented.

The remuneration of the board is reviewed periodically by the shareholders of the Company.

The Company ensures that it provides directors with relevant information to enable them to effectively contribute to board decisions.

The directors are fully aware of their duties and obligations, and whenever a conflict of interest in decision making arises, they refrain from participating in such decisions.

Audit Committee

The Terms of Reference of the Audit Committee are modelled on the principles set out in the Capital Markets Rules. The Audit Committee assists the Board in fulfilling its supervisory and monitoring responsibility by reviewing the Group financial statements and disclosures, monitoring the system of internal control established by management as well as the audit processes.

The Board of Directors established the Audit Committee, which meets regularly, with a minimum of four times annually, and is currently composed of the following individuals:

Mr Karl Fritz (Chairman)

Dr Ann Fenech

Mr Dorian Desira

To satisfy the requirement established by the Capital Markets Rules, the Audit Committee is composed of non-executive directors, the majority of which being independent. Mr Dorian Desira is a non-executive director and holds the position of Chief Financial Officer of the parent company.

The Board considers Mr Karl Fritz to be competent in accounting and/or auditing in terms of the Capital Markets Rules. Furthermore, the Board considers that the Audit Committee, as a whole, to have relevant competence in the sector the Company is operating.

The Audit Committee met four times during 2021 and seven times during 2022. Communication with and between the Secretary, top level management and the Committee is ongoing and considerations that required the Committee’s attention were acted upon between meetings and decided by the Members (where necessary) through electronic circulation and correspondence.

Internal Control

While the Board is ultimately responsible for the Group’s internal controls as well as their effectiveness, authority to operate the Group is delegated to the Chief Executive Officer.

The Group’s system of internal controls is designed to manage all the risks in the most appropriate manner. However, such controls cannot provide an absolute elimination of all business risks or losses. Therefore, the Board, inter alia, reviews the effectiveness of the Group’s system of internal controls in the following manner:

Corporate Social Responsibility

The Board is mindful of and seeks to adhere to sound principles of Corporate Social Responsibility in their daily management practices, which is also extended throughout the Company’s subsidiary companies. There is continuing commitment to operate the business ethically at all times, at the same time as contributing to economic development whilst improving the quality of life of its employees and their families together with the local community and society at large.

In carrying on its business, the Group is fully aware of its obligation to preserving the environment and has, in fact, put in place a number of policies aimed at respecting the environment and reducing waste.

Relations with the market

The market is kept up to date with all relevant information, and the Company regularly publishes such information on its website to ensure consistent relations with the market.

Non-compliance with the code

Principle 7: Evaluation of the board’s performance

Under the present circumstances, the Board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role as the Board’s performance is always under scrutiny of the shareholders of the Company.

Principle 8: Committees

Under the present circumstances the Board does not consider it necessary to appoint a remuneration committee and a nomination committee as decisions on these matters are taken at shareholder level.

Principle 10: Institutional shareholders

This principle is not applicable since the Company has no institutional shareholders.

Signed on behalf of the Board of Directors on 20 April 2023 by Mr. Charles Borg (Chairman and Director) and Mr. Dorian Desira (Director).

Other disclosures in terms of Capital Markets Rules

Statement by the directors pursuant to Capital Markets Rule 5.70.1

Contracts of significance

Loan agreements with subsidiaries and related parties

The Company has loans payable and receivable to/from subsidiaries and related parties, which are disclosed in the financial statements.

Rental agreements with related parties

The subsidiaries of 1923 Investments p.l.c. have entered into rental agreements with a related party. The agreed rates have been set on an arms’ length basis.

Pursuant to Capital Markets Rule 5.70.2

Company secretary and registered office

Adrian Mercieca (appointed on 1 July 2022)

Nineteen Twenty-Three

Valletta Road

Marsa MRS 3000

Malta

Signed on behalf of the Board of Directors on 20 April 2023 by Mr. Charles Borg (Chairman and Director) and Mr. Dorian Desira (Director).

The consolidated financial statements have been prepared from the financial statements of the companies comprising the group as detailed in notes to the consolidated financial statements.