OFFERING MEMORANDUM DATED 2 May 2002 MIZZIrizzofarrugia.com/wp-content/uploads/Mizzi-Organisation...1 MIZZI ORGANISATION FINANCE plc OFFERING MEMORANDUM DATED 2 May 2002 MIZZI ORGANISATION

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MIZZIORGANISATIONFINANCE p l c

OFFERING MEMORANDUM DATED 2 May 2002

MIZZI ORGANISATION FINANCE PLC(a limited liability company registered in Malta)

issue of Lm5 million 6.7% Bonds 2009-2012

(subject to an Over-allotment Option described below)

GUARANTEED BY

CONSOLIDATED HOLDINGS KASTELL MIZZI HOLDINGS THE GENERAL SOFT DRINKSLIMITED LIMITED LIMITED CO. LIMITED

(all limited liability companies registered in Malta)members of the

MIZZI ORGANISATION

Mizzi Organisation Finance plc (the ‘Company’) is hereby offering to the public in Malta Lm5 million 6.7 per cent. Bonds due for

redemption on 31 May 2012 but redeemable in whole or in part at the option of the Company on each of 31 May 2009, 31 May 2010 and

31 May 2011 (each an optional Redemption Date) each Bond having a nominal value of Lm100 and issued at par (the ‘Bond’). The Bonds

are jointly and severally guaranteed by each of Consolidated Holdings Limited, Kastell Limited, Mizzi Holdings Limited and The General

Soft Drinks Co. Limited (jointly the “Guarantors”). The Bond will, unless previously purchased and cancelled, be finally redeemed by

the Company on 31 May 2012 (See “Terms and Conditions of the Bonds”). Interest on the Bonds will become due and payable semi-

annually in arrears on 31 May and on 30 November in each year at the rate of 6.7 per cent. per annum. The first interest payment shall

become due and payable on 30 November 2002. In the event that during the Offer Period the Company receives applications for Bonds

in excess of the Original Bond Issue (as defined below) the Company may increase the Bonds in issue by an aggregate of Lm5 million

(the “Over-allotment Option”) (See “Subscriptions” below). The proceeds from the Bonds will be used principally for the purpose of re-

financing part of the Mizzi Organisation’s banking facilities and also for its general corporate funding purposes (See “Purpose of the

Issue” below). The Bonds are fully underwritten by Bank of Valletta plc (the “Underwriter”) so that any amount of the Original Bond

Issue not taken up by investors will be purchased by the Underwriter.

The Bonds constitute the general, direct, unconditional, unsecured and unsubordinated obligations of the Company and theGuarantors and will rank pari passu without any priority or preference with all other present and future unsecured andunsubordinated obligations of the Company and each of the Guarantors.

Application has been made to the Malta Stock Exchange (the "Malta Stock Exchange" or "MSE") for the Bonds to be admitted to itsOfficial List (the "MSE Official List") and for dealings to commence in the Bonds.

Manager, Registrar & Underwriter Sponsoring Stockbroker

Bank of Valletta plc Vincent J. Rizzo Rizzo, Farrugia & Co. (Stockbrokers) Ltd.


THIS DOCUMENT CONSTITUTES A PROSPECTUS ANDCONTAINS INFORMATION ON AN ISSUE BY MIZZIORGANISATION FINANCE PLC (THE "COMPANY") OF LM 5MILLION 6.7 PER CENT BONDS 2009 - 2012 OF A NOMINALVALUE OF LM100 ISSUED AT PAR AND JOINTLY ANDSEVERALLY GUARANTEED BY EACH OF CONSOLIDATEDHOLDINGS LIMITED, KASTELL LIMITED, MIZZIHOLDINGS LIMITED AND THE GENERAL SOFT DRINKSCO. LIMITED (JOINTLY THE "GUARANTORS"). THISDOCUMENT ALSO CONTAINS INFORMATION ABOUT THECOMPANY AND THE GUARANTORS IN COMPLIANCEWITH THE REQUIREMENTS OF THE MALTA STOCKEXCHANGE.

THE DIRECTORS OF THE COMPANY, WHOSE NAMESAPPEAR UNDER THE HEADING "DIRECTORS" (THE"DIRECTORS"), ARE THE PERSONS RESPONSIBLE FOR THEINFORMATION CONTAINED IN THIS PROSPECTUS, SAVEFOR THE INFORMATION SPECIFICALLY RELATING TO THEGUARANTORS, FOR WHICH THE DIRECTORS OF THEGUARANTORS ARE RESPONSIBLE. SUBJECT TO THEABOVE, TO THE BEST OF THE KNOWLEDGE AND BELIEFOF THE DIRECTORS OF THE COMPANY AND THEGUARANTORS (WHO HAVE ALL TAKEN REASONABLECARE TO ENSURE THAT SUCH IS THE CASE), THEINFORMATION CONTAINED IN THIS PROSPECTUS IS INACCORDANCE WITH THE FACTS AND DOES NOT OMITANYTHING LIKELY TO AFFECT THE IMPORT OF SUCHINFORMATION. THE DIRECTORS ACCEPTRESPONSIBILITY ACCORDINGLY.

NO BROKER, DEALER, SALESMAN OR OTHER PERSONHAS BEEN AUTHORISED BY THE COMPANY, THEGUARANTORS OR THEIR RESPECTIVE DIRECTORS, TOISSUE ANY ADVERTISEMENT OR TO GIVE ANYINFORMATION OR TO MAKE ANY REPRESENTATIONS INCONNECTION WITH THE SALE OF THE BONDS (ASDEFINED HEREIN) OTHER THAN THOSE CONTAINED INTHIS PROSPECTUS AND IN THE DOCUMENTS REFERREDTO HEREIN, IN CONNECTION WITH THE ISSUE HEREBYMADE, AND IF GIVEN OR MADE, SUCH INFORMATION ORREPRESENTATIONS MUST NOT BE RELIED UPON ASHAVING BEEN AUTHORISED BY THE COMPANY, THEGUARANTORS OR THEIR RESPECTIVE DIRECTORS.

THE MALTA STOCK EXCHANGE ACCEPTS NORESPONSIBILITY FOR THE CONTENTS OF THISPROSPECTUS, MAKES NO REPRESENTATIONS AS TOITS ACCURACY OR COMPLETENESS AND EXPRESSLYDISCLAIMS ANY LIABILITY WHATSOEVER FOR ANYLOSS HOWEVER ARISING, FROM OR IN RELIANCEUPON THE WHOLE OR ANY PART OF THE CONTENTSOF THIS PROSPECTUS.

THIS PROSPECTUS DOES NOT CONSTITUTE, AND MAYNOT BE USED FOR PURPOSES OF AN OFFER ORINVITATION TO SUBSCRIBE FOR BONDS BY ANY PERSONIN ANY JURISDICTION (I) IN WHICH SUCH OFFER ORINVITATION IS NOT AUTHORISED OR (II) IN WHICH THEPERSON MAKING SUCH OFFER OR INVITATION IS NOT

QUALIFIED TO DO SO OR (III) TO ANY PERSON TO WHOMIT IS UNLAWFUL TO MAKE SUCH OFFER OR INVITATION.IT IS THE RESPONSIBILITY OF ANY PERSON INPOSSESSION OF THIS PROSPECTUS AND ANY PERSONWISHING TO APPLY FOR BONDS TO INFORM HIMSELF OF,AND TO OBSERVE AND COMPLY WITH, ALL APPLICABLELAWS AND REGULATIONS OF ANY RELEVANTJURISDICTION. PROSPECTIVE APPLICANTS FOR BONDSSHOULD INFORM THEMSELVES AS TO THE LEGALREQUIREMENTS OF SO APPLYING AND ANY APPLICABLEEXCHANGE CONTROL REQUIREMENTS AND TAXES INTHE COUNTRIES OF THEIR NATIONALITY, RESIDENCE ORDOMICILE.

THE BONDS HAVE NOT BEEN NOR WILL THEY BEREGISTERED UNDER THE UNITED STATES SECURITIESACT OF 1933, AS AMENDED (THE "1933 ACT") OR UNDERANY STATE SECURITIES LAW AND, EXCEPT WITH THESPECIFIC CONSENT OF THE DIRECTORS, MAY NOT BEOFFERED OR SOLD DIRECTLY OR INDIRECTLY, IN THEUNITED STATES OF AMERICA, ITS TERRITORIES ORPOSSESSIONS OR ANY AREA SUBJECT TO ITSJURISDICTION (THE "UNITED STATES") OR TO ANYUNITED STATES PERSON (AS DEFINED IN REGULATION SOF SUCH ACT, AS AMENDED FROM TIME TO TIME). INADDITION THE COMPANY WILL NOT BE REGISTEREDUNDER THE UNITED STATES INVESTMENT COMPANYACTOF 1940), AS AMENDED (THE "1940 ACT") AND INVESTORSWILL NOT BE ENTITLED TO THE BENEFITS OF THE 1940ACT. BASED ON INTERPRETATIONS OF THE 1940 ACT BYTHE STAFF OF THE UNITED STATES SECURITIES ANDEXCHANGE COMMISSION RELATING TO FOREIGNINVESTMENT COMPANIES, IF THE COMPANY HAS MORETHAN 100 BENEFICIAL OWNERS OF ITS SECURITIES WHOARE UNITED STATES PERSONS, IT MAY BECOME SUBJECTTO THE 1940 ACT. THE DIRECTORS WILL NOTKNOWINGLY PERMIT THE NUMBER OF HOLDERS WHOARE UNITED STATES PERSONS TO EXCEED 70.

A COPY OF THIS PROSPECTUS HAS BEEN REGISTEREDWITH THE REGISTRAR OF COMPANIES, IN ACCORDANCEWITH THE ACT AND SUBMITTED TO THE MALTA STOCKEXCHANGE IN SATISFACTION OF THE LISTINGPARTICULARS FOR THE BONDS.

STATEMENTS MADE IN THIS PROSPECTUS ARE, EXCEPTWHERE OTHERWISE STATED, BASED ON THE LAW ANDPRACTICE CURRENTLY IN FORCE IN MALTA AND ARESUBJECT TO CHANGES THEREIN.

AN APPLICATION FORM IS PROVIDED WITH THISDOCUMENT, TOGETHER WITH A GUIDE ON HOW TOCOMPLETE IT. THE PROCEDURE FOR, AND THE TERMSAND CONDITIONS OF THE ISSUE OF BONDS ARE SET OUTIN ANNEX A OF THIS DOCUMENT.

THE COMPANY HAS APPLIED TO THE MALTA STOCKEXCHANGE FOR THE BONDS BEING ISSUED PURSUANTTO THIS PROSPECTUS TO BE QUOTED ON THE OFFICIALLIST OF THE MALTA STOCK EXCHANGE.

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I M P O RTA N T I N F O R M AT I O N

THE BOND ISSUE HAS BEEN UNDERWRITTEN BY BANKOF VALLETTA PLC.

THE VALUE OF INVESTMENTS CAN GO UP OR DOWNAND PAST PERFORMANCE IS NOT NECESSARILYINDICATIVE OF FUTURE PERFORMANCE. THENOMINAL VALUE OF THE BONDS ON OFFER WILL BEREPAYABLE IN FULL UPON REDEMPTION. IF YOUNEED ADVICE YOU SHOULD CONSULT A LICENSEDSTOCKBROKER OR AN INVESTMENT ADVISERLICENSED UNDER THE INVESTMENT SERVICES ACT,CAP. 370 OF THE LAWS OF MALTA.

PERMISSION FROM THE MALTA FINANCIAL SERVICESCENTRE FOR THE ISSUE OF THIS PROSPECTUS IN TERMSOF SECTION 11 OF THE INVESTMENT SERVICES ACT,CAP.370 OF THE LAWS OF MALTA IS NOT REQUIRED BYVIRTUE OF THE EXEMPTIONS CONTAINED IN LEGALNOTICES 6 AND 95 OF 1995.

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FORWARD-LOOKING STATEMENTS

This Offering Memorandum contains forward-looking statements that include, among others, statements concerning the Company's andthe Guarantors’ strategies and plans relating to the attainment of those objectives, its capital requirements and other statements ofexpectation, belief, future plans and strategies, anticipated developments and other matters that are not historical facts and which mayinvolve predictions of future circumstances. Investors can generally identify forward-looking statements by the use of terminology suchas ‘may,’ ‘will,’ ‘expect,’ ‘intend,’ ‘plan,’ ‘estimate,’ ‘anticipate,’ ‘believe,’ or similar phrases. These forward-looking statements areinherently subject to a number of risks, uncertainties, and assumptions. Important factors that could cause actual results to differmaterially from the expectations of the Company’s or the Guarantors’ directors include those risks identified under the heading “RISKFACTORS” and “TRADING PROSPECTS”, and elsewhere in this Offering Memorandum. The Company and the Guarantors caution thereader that these forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ fromthose expressed or implied by the statements and no assurance is given that the future results or expectations will be achieved.

TA B L E O F C O N T E N T S

Important information 2Forward-looking statements 3Table of contents 4Definitions 5Key Features 6Directors and Advisers of the Company 6Risk Factors 7PART I – THE BOND ISSUE 8

Details of the Bond Issue 8Purpose of the Issue 8Placing Arrangements 9Allocation Policy 9Employee Offering 9Offer Expenses 9Directors 9Authorisations 9Underwriting 9Taxation 10Tax on Interest 10Tax on Capital Gains 10

PART II – THE COMPANY 11Business 11Board of Directors 12Directors’ Service Contracts 12Aggregate Emoluments of Directors 12Loans to Directors 12

PART III - THE GUARANTORS 13Corporate Data 13Other Investments 15The Business 16The Corporate Philosophy 16The Automotive Sector 16The Beverage Sector 17Tourism and Leisure Sector 17Retailing and Contracting Sector 18Real Estate Sector 19Other Activities 19Trading Prospects 19Management 20Working Capital 21

PART IV- THE GUARANTEE 22PART V - GENERAL INFORMATION 23

Incorporation 23Share Capital 23Appointment of Directors 23Powers of Directors 23Commissions 23Directors' Interests 24Litigation 24Accountants' Report 24Material Contracts 24Loan Capital & Borrowings 24Documents for inspection 24

Annex A – Part I Terms and Conditions of the Bond A1 - A4Annex A – Part II Terms and Conditions of Application for Bonds A5 - A6Annex B – Financial Information about Mizzi Organisation and the Guarantors B1 - B48Annex C – List of Authorised Distributors C1Annex D - List of Companies constituting the Mizzi Organisation D1

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D E F I N I T I O N S

In this document the following words and expressions shall bear the following meanings except where the context otherwise requires:

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

Applicant person or persons whose name or names (in the case of joint applicants) appear in the registration details of an Application Form;

Application the application to purchase made by an Applicant by completing an Application Form and posting it ordelivering it to the Registrar or an Authorised Distributor;

Application Form the form of application for subscription of Bonds issued by the Company;

Authorised Distributors all the licensed stockbrokers and financial intermediaries listed in Annex C of this Offering Memorandum;

Bonds the Lm5 million 6.7 per cent Bonds 2009-2012 or, in the case of exercise of the Over-allotment Option,up to an aggregate amount of Lm10 million 6.7 per cent Bonds 2009-2012 issued pursuant to this Offering Memorandum;

Bond Offer Price the price of Lm100 for each Bond;

Company or Issuer Mizzi Organisation Finance plc;

Directors or Board the directors of the Company whose names and addresses are set out under the heading “DIRECTORS AND ADVISERS”;

Employee Offering the offering to directors and employees of companies within the Mizzi Organisation as at the 30 April 2002 and to members of the Mizzi Family, of an aggregate of 12,000 Bonds at a discounted price of Lm97.50 per Bond;

Guarantors Consolidated Holdings Limited, Kastell Limited, Mizzi Holdings Limited and The General Soft Drinks Co. Limited;

Interest Payment Dates means 31 May and 30 November of each year between and including each of the year 2002 and the year 2012 with the exception of 31 May 2002 and 30 November 2012;

Maltese Liri the lawful currency from time to time of the Republic of Malta;

Malta Stock Exchange the Malta Stock Exchange established by the Malta Stock Exchange Act, Cap. 345 of the Laws of Malta;

Mizzi Family the individuals who are either directors or shareholders in any one of Demoncada Ltd, Demoncada Holdings Ltd, Daragon Ltd and Devilhena Ltd;

Mizzi Organisation or the Guarantors and each of the companies set out in Annex D of this Offering Memorandum; Organisation

Offer Period the period between 23 May 2002 and 31 May 2002 (or such earlier date as may be determined by the Issuer) during which the Bonds are available for subscription;

Optional Redemption Dates the dates falling on 31 May 2009, 31 May 2010 and 31 May 2011 when the Company may, at its option, redeem part or whole of the Bonds then outstanding by giving at least sixty (60) days advance written notice to all bond holders;

Original Bond Issue the Lm5 million 6.7 per cent. Bond 2009-2012 issued at the Bond Offer Price or at the discounted price under the employer Bond Offering;

Over-allotment Option the option of the Issuer to increase the Original Bond Issue by an aggregate maximum of an additional Lm5 million in Bonds at the Bond Offer Price, in the event of over-subscription of the Original Bond Issue;

Offering Memorandum this document in its entirety;

Redemption Date 31 May 2012 or any of the Optional Redemption Dates;

Redemption Value Lm100 for each Bond;

Manager, Registrar Bank of Valletta plc.or Underwriter

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K E Y F E AT U R E S

1. Share Capital- Authorised: Lm500,000Issued: Lm100,000Nominal Value: Lm100 per share

2. Expected Time-Table

Application forms available 20 May 2002Opening of Subscription lists 23 May 2002Closing of Subscription lists 31 May 2002Announcement of basis of acceptance and commencement of interest 11 June 2002Expected dispatch of allocation advice & Refunds of unallocated monies 18 June 2002

The Issuer reserves the right to close subscription lists before 31 May 2002 in the event of over-subscription, in which case, the remaining events on the expected time-table shall be anticipated in the same chronological order

in such a way as to retain the same number of working days between the respective events.

D I R E C T O R S A N D A D V I S E R S O F T H E C O M PA N YDirectorsName: Louis Camilleri PreziosiAddress: 82, Bakery Street, Lija BZN 10Nationality: Maltese

Name: John C. GrechAddress: “Wakatipu” Trejqa Albert M. Cassola, Swieqi STJ 04Nationality: Maltese

Name: Brian R. MizziAddress: “Villa Jada”, Triq Busewdien, Wardija SPB 07Nationality: Maltese

Name: Kenneth C. MizziAddress: 11, Museum Esplanade, Rabat RBT 05Nationality: Maltese

Name: Maurice F. MizziAddress: “Ras Rihana”, Bidnija MST 11Nationality: Maltese

Company SecretaryName: Hugh MerciecaAddress: 65, "Tricia", Triq it-Tiben, Swieqi STJ 04Nationality: Maltese

Managers, Registrars & Underwriters Name: Bank of Valletta plcAddress: BOV Centre, High Street, Sliema SLM 16

Legal Counsel Name: Camilleri Preziosi Address: Level 2, Valletta Buildings, South Street, Valletta VLT 11

Auditors & Reporting AccountantsName: PricewaterhouseCoopersAddress: 167, Merchants Street, Valletta VLT 03

Sponsoring StockbrokerName: Vincent J. Rizzo

Rizzo, Farrugia & Co. (Stockbrokers) Ltd.Address: Airways House, Third Floor, High Street, Sliema SLM 15

Company BankersBank of Valletta plc High Street, Sliema SLM 16HSBC Bank Malta plc Republic Street, Valletta VLT 03

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R I S K FA C T O R SBefore investing in the Bond prospective investors should consider all the information contained in this Offering Memorandum, includingthe risk factors set forth below. See also Trading Prospects below.

Risks associated with the business of the Company

The Company is a finance company of the Mizzi Organisation and was only recently established; accordingly it has no trading record.The Company itself does not have any substantial assets and is merely a special purpose vehicle set up for the issue of the Bonds. TheBonds however are being guaranteed by companies within the Mizzi Organisation and the information in this Offering Memorandum isdesigned to provide the prospective investor with sufficient information about the Guarantors and the other companies comprising theMizzi Organisation to enable an investor to make an informed judgment as to the reliance on the guarantee.

Risks associated with the business of the Mizzi Organisation

General

The Mizzi Organisation has a diversified business portfolio with activities ranging from the importation and sale of automobiles to thelocal market, the bottling and sale for the local market of internationally renowned beverages, tourism and leisure, and retail andcontracting. The diversification of the Organisation’s business interests provides a natural hedge against downtrends in any one particularsector of its business activities on the one hand whilst it exposes the Organisation to risks which are not particular to any one industrysector.

The Mizzi Organisation’s business activities are all concentrated in and aimed at the Maltese market, accordingly the Organisation ishighly susceptible to economic trends in Malta. The business of the Organisation is predominantly targeted to the retail and consumermarket and is therefore vulnerable to the macro-economic state of the Maltese economy. Negative economic factors and trends in Malta,particularly those having an effect on consumer demand, would have a negative impact on the business of the Organisation.

The following are highlights of particular risks of certain areas of the Organisation’s business.

Automotive business

The automotive business is a highly competitive one in Malta. The Organisation represents a very wide range of internationally recognisedbrands in Malta that enables it to meet consumer demand in all market segments. This sector is a major driver of the Organisation’srevenue and any material negative effect on this part of the Organisation’s business would have a material negative impact on theOrganisation’s revenue generation.

In this sector each car company within the Organisation is highly dependent on its relationship with the car manufacturers represented inMalta by the Organisation. This dependence could adversely affect the Organisation’s operating results and growth strategy if it is unableto maintain the existing relationships or replace them with alternative relationships on equally favourable terms. The Organisation hasover the last thirty years managed to maintain the relationships with car manufacturers and expects, save for unforeseen circumstancesand matters which are completely beyond the control of the Organisation, to be able to do so in the future.

The Beverage sector

The Mizzi Organisation through The General Soft Drinks Co. Limited (‘GSD’) is the local bottler for internationally known brands ofbeverages such as Coca-Cola™, Diet Coke™, Sprite™, Diet Sprite™, Krest™, Diet Krest™, Fanta™ and Diet Fanta™ under licence ofthe trade-mark proprietor as well as new products such as Finley™ mixers - (tonic water, soda water, and ginger ale), and its own brandof fine table water Kristal™. The beverage sector is, of its nature cyclical, and normally experiences fluctuations in demand dependingon seasonality with peaks in the summer months and troughs in the winter months. GSD has today reached a stage of maturity and isrecognised as a major player in the Maltese market. The higher demand for beverages in the summer months is also attributable to touristarrivals in Malta and any material decline in tourist arrivals could well have an adverse impact on the company’s revenues during thatperiod.

Tourism and leisure

The tourism and leisure business of the Organisation is also seasonal in nature and closely linked to the trends in the Maltese market andincoming tourism to Malta. A decline in the number of tourist arrivals to Malta will have an adverse effect on the revenues of the Organisation.

THE VALUE OF INVESTMENTS CAN GO UP OR DOWN AND PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTUREPERFORMANCE. THE NOMINAL VALUE OF THE BONDS ON OFFER WILL BE REPAYABLE IN FULL UPON REDEMPTION. IF YOUNEED ADVICE YOU SHOULD CONSULT A LICENSED STOCKBROKER OR AN INVESTMENT ADVISER LICENSED UNDER THEINVESTMENT SERVICES ACT, CAP. 370 OF THE LAWS OF MALTA.

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1 The brands Coca-Cola, Diet Coke, Fanta, Diet Fanta, Sprite, Diet Sprite, Krest, Diet Krest and Finley are all registered trade marks of The Coca Cola Company of Atlanta USA.

PA RT I – T H E B O N D I S S U E

Details of the Bond Issue

The Company is making an offering of bonds for subscription to the general public of 50,000 Bonds of a face value of Lm100 each Bondissued at par and redeemable on the Redemption Date at Lm100 each Bond. Prior to the offering of Bonds to the general public theCompany shall be making the Employee Offering that shall be limited to an aggregate of 12,000 Bonds and which shall be made availablefor subscription and purchase to directors and employees of the Mizzi Organisation including members of the Mizzi Family, as betterdescribed under the heading ‘Employee Offering’ in this Part of the Offering Memorandum. Any Bonds made available under theEmployee Offering which are not subscribed and purchased under that offering shall be allocated to the offering to the general public andmade available for subscription and purchase by the general public at the Bond Offer Price.

In the event of an over-subscription, the Company may, at its option, issue further Bonds up to an aggregate maximum of another 50,000Bonds pursuant to the Over-allotment Option to meet applications for subscriptions. The Bonds are being issued with the joint and severalguarantee of the Guarantors (See ‘Guarantee’). The following is a description of the Bond Issue.

The Offering: The offering by the Company consists of (i) the Employee Offering limited to 12,000 Bonds of a nominalvalue of Lm100 each offered at Lm97.50 per Bond; and (ii) a general offering of 38,000 Bonds and any Bonds not subscribed in the Employee Offering of a nominal value of Lm100 each being offered at the Bond Offer Price.

Interest: 6.7 per cent, per annum payable six monthly in arrears on 31 May and 30 November in each year, thefirst interest payment to be effected on 30 November 2002.

Maturity & Redemption: Any Bonds outstanding will mature on 31 May 2012. The Bonds or any part thereof may be redeemed atthe option of the Company on any one of the Optional Redemption Dates. In any case the Bonds will be redeemed at their Redemption Value. The Company reserves the right at any time to purchase Bonds on theopen market before the Redemption Date at the then current market prices. Any Bonds so purchased shallbe cancelled.

Guarantee: The Guarantors are, jointly and severally with the Company and between themselves, guaranteeing thepayment of the nominal value of the Bonds on the Redemption Date and of the interest on the Bonds on each Interest Payment Date.

Over-allotment Option: The Company, with the consent and under the guarantee of the Guarantors, reserves the right to issue furtherBonds to meet applications for subscription up to, and not exceeding, the aggregate amount of an additionalLm5 million.

Purpose of the Issue

The Company is a fully owned subsidiary of Mizzi Holdings Limited, one of the Guarantors, and has been set up as a finance companyfor the Mizzi Organisation. The proceeds of the Bond will be advanced by the Company to the Guarantors and shall be applied by eachGuarantor principally to re-finance existing banking facilities of that Guarantor or an operating subsidiary of that Guarantor and for thegeneral corporate funding purposes of the Guarantors or operating subsidiaries of a Guarantor aimed at strengthening and furtherconsolidating the Mizzi Organisation’s position in a number of business units.

In the event that the Issuer restricts the issue to the Original Bond Issue it is expected that the proceeds will be applied as follows:

• Lm1,000,000 will be advanced to Kastell Limited in reduction of the banking facilities currently available to that company and/or to operating subsidiaries thereof, a list of which is set out under the heading ‘Corporate Data’ on pages 13-14.

• Lm1,750,000 will be advanced to Consolidated Holdings Limited in reduction of banking facilities currently available to that company and/or to operating subsidiaries thereof, a list of which is set out under the heading ‘Corporate Data’ on page 15.

• Lm2,250,000 will be advanced to Mizzi Holdings Limited principally in reduction of banking facilities currently available to that company and/or to operating subsidiaries thereof, a list of which is set out under the heading ‘Corporate Data’ on page 14, and also for general corporate funding purposes.

The net effect of the use of proceeds from the Bond Issue will be to further diversify the source of debt financing of the Organisationwhilst retaining the debt exposure of the Organisation to its current levels, improving its cash-flows and enabling the Organisation to havea more efficient management of its cash resources.

In the event that the Issuer exercises the Over-allotment Option the additional funds raised shall be advanced by the Company as to anadditional Lm4,900,000 (or such lesser amount for which the Over-allotment Option is exercised) to Mizzi Holdings Limited to re-financeits existing banking facilities or those of its operating subsidiaries and an additional Lm100,000 to Kastell Limited.

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Placing Arrangements

The Company has entered into conditional subscription agreements with certain institutional and professional investors pursuant to whichthose investors have bound themselves to subscribe and purchase upon closing of subscription lists, and the Company has bound itself toallot to such investors, an aggregate not exceeding 50 per cent. of the Bond Issue. Subscriptions under these arrangements are subject tothe same terms and conditions of the Bonds contained in the Offering Memorandum.

Allocation Policy

Upon closing of subscription lists and within six working days of such closing, the Company or the Registrar on behalf of the Companyshall determine and announce the basis of acceptance of Applications for Bonds and the allocation policy to be adopted.

Employee Offering

The Employee Offering consists of an offer by the Company to directors and employees of the Mizzi Organisation as at 30 April 2002and members of the Mizzi Family (collectively the ‘Employees’) of a number of Bonds not exceeding 12,000 at a price of Lm97.50 perBond (the ‘Employee Bond Price’). Any Bonds not subscribed in the Employee Offering shall be allocated in the offering to the generalpublic at the Bond Offer Price.

Subscriptions in the Employee Offering must be made for a minimum of Lm300 in nominal value of Bonds. Upon application, eachEmployee shall be given a preference allocation up to the first Lm1,500 in nominal value of Bonds applied for and for which an ApplicationForm has been submitted by such Employeee (the ‘Preference Allocation’). In the event that the total number of Bonds applied for underthe Employee Offering exceeds 12,000 Bonds, each Employee’s Preference Allocatrion shall first be satisfied and then each Applicationsubmitted by an Employee for a number of Bonds in excess of the Preference Allocation shall be satisfied until the relevant Application hasbeen fully satisfied or the total number of Bonds available under the Employee Offering has been fully allocated.

An Application under the Employee Offering that has not been fully satisfied under that offering shall, for the purposes of any Bondsapplied for but not allocated under the Employee Offering, be treated as an Application for Bonds at the Bond Offer Price and will, subjectto the terms and conditions of the offering to the general public, be allocated at the Bond Offer Price.

Employees are to apply for bonds under the Employee Offering as follows:

(a) For the first 15 Bonds at the Employee Bond Price, i.e., Lm97.50 per Bond; and(b) For any Bonds over and above the first 15 Bonds at the Bond Offer Price of Lm100 per Bond.

In the event that more than the first 15 Bonds are allocated under the Employee Offering to an Applicant, the Issuer shall refund thedifference of Lm2.50 per Bond allocated in excess of the first 15 Bonds at the Employee Bond Price.

Any Bonds which are made available under the Employee Offering and which remain unallocated under that offering shall be availablefor purchase and subscription in the offer to the general public at the Bond Offer Price.

Offer Expenses

Selling commission is payable to Authorised Distributors. Each Authorised Distributor shall be entitled to a selling commission on thevalue of Bonds allocated to Applicants applying through such Authorised Distributor at the following rates :

• 0.5 per cent. on the first 5,000 Bonds; and• 0.6 per cent. on any Bonds in excess of the first 5,000 Bonds.

Professional fees, management fees, underwriting fees, publicity, advertising, printing, listing, registration and other miscellaneous costs,excluding selling commissions, are estimated not to exceed Lm160,000. All expenses of the Bond issue shall be borne by each of theGuarantors in proportion to the share of the proceeds of the Bond issue to be advanced to each of them.

Directors

The Directors currently in office are expected to remain in office, at least until the next annual general meeting.

Authorisations

The issue of the Bonds has been duly authorised by the Malta Stock Exchange. Permission from the Malta Financial Services Centre forthe issue of this Offering Memorandum in terms of Section 11 of the Investment Services Act (Cap.370 of the Laws of Malta) is notrequired by virtue of the exemptions contained in Legal Notices 6 and 95 of 1995.

Underwriting

By an agreement dated 2 May 2002, between the Issuer, the Guarantors and the Underwriter, it was agreed that in the event that any Bondsin the original Bond issue remain outstanding after the end of the Offer Period, the Underwriter shall purchase all such outstanding Bondsat par value.

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Taxation

Tax on Interest

Unless the Issuer is otherwise advised by a Bond holder resident in Malta, interest shall be paid by the Issuer to such Bond holder net ofa deduction for tax at source at the rate of 15 per cent. pursuant to section 33 of the Income Tax Act (Cap. 123 of the Laws of Malta).This withholding tax is considered as a final tax and Bond holders who are physical persons need not declare the interest so received onhis/her income tax return.

In the case of a valid election by a Bond holder resident in Malta to receive the interest due without the deduction of withholding tax, theninterest will be paid gross by the Issuer and such Bond holder will be under an obligation to declare interest so received on his/her incometax return.

Any such election by a Bond holder at the time of application may be changed by the Bond holder by giving written notice to the Issueror the MSE, as the case may be.

Non-resident Bond holders are not taxable in Malta on the interest received and will receive interest gross.

Special rules apply to interest payable to a collective investment scheme.

Tax on Capital Gains

Capital gains arising on disposal of the Bonds are not chargeable to Maltese income tax.

The information above does not constitute legal or tax advice, and is based on tax law and practice applicable at the date of this Prospectus.Investors are reminded that tax law and practice may change from time to time.

INVESTORS AND PROSPECTIVE INVESTORS ARE URGED TO SEEK PROFESSIONAL ADVICE AS REGARDS BOTHMALTESE AND ANY FOREIGN TAX LEGISLATION APPLICABLE TO THE ACQUISITION, HOLDING AND DISPOSAL OFBONDS AS WELL AS INTEREST PAYMENTS MADE BY THE COMPANY. THE ABOVE IS A SUMMARY OF THEANTICIPATED TAX TREATMENT APPLICABLE TO THE BONDS AND TO BOND HOLDERS. THIS INFORMATION, WHICHDOES NOT CONSTITUTE LEGAL OR TAX ADVICE, REFERS ONLY TO BOND HOLDERS WHO DO NOT DEAL INSECURITIES IN THE COURSE OF THEIR NORMAL TRADING ACTIVITY.

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PA RT I I – T H E C O M PA N Y

The Company is a public limited liability company, registered on 28 March 2002 with number C29506 in terms of the Act, and has itsregistered office at Mizzi House, National Road, Blata l-Bajda. The Company has an authorised share capital of Lm500,000 and an issuedand fully paid up share capital of Lm 100,000 divided into 1,000 ordinary shares of a nominal value of Lm100 each share. The Companyis a fully owned subsidiary of Mizzi Holdings Limited.

Business

The Company was set up and established on 28 March 2002 to act as a finance company for the Mizzi Organisation and is a fully ownedsubsidiary of Mizzi Holdings Limited. Save for what is stated hereunder, the Company has not traded nor has it conducted any businessand no financial statements have been prepared since the date of its inception.

The Company has entered into loan agreements dated 30 April 2002 (the ‘Loan Agreements’) with Kastell Limited, ConsolidatedHoldings Limited and Mizzi Holdings Limited (‘in this section referred to as the ‘Borrowers’) pursuant to which the Company willadvance to each of the Borrowers a portion of the proceeds from the Bond Issue under the terms and conditions set out therein. In termsof the Loan Agreements there will be an advance not exceeding the following amounts for each Borrower:

Company Original Bond Issue Over-allotment Option

Consolidated Holdings Limited Lm1,750,000 NIL

Kastell Limited Lm1,000,000 Lm100,000

Mizzi Holdings Limited Lm2,250,000 Lm4,900,000

Total Lm5,000,000 Lm5,000,000

In any event the aggregate of advances under the Loan Agreements shall be equal to the proceeds of the Bond ( the ‘Loans’). The Loansshall be drawn down by the each of the Borrowers in the same currency of denomination of the Bond and shall bear interest at the rate of7.2 per cent. per annum with interest payable six monthly in arrears on 30 April and 31 October of each year. The first interest paymenton the Loan shall be paid on 31 October 2002. In terms of the Loan Agreements each of the Borrowers bound itself to repay its respectiveLoan by not later than 30 April 2012. The security for the loans is the guarantee of each of the Guarantors that has bound itself ‘in solidum’with the Borrower under each Loan Agreement to repay all interest and principal that will become due and payable by the Borrowerpursuant to the Loans. All expenses incurred in the preparation and implementation of the Bond Issue shall be at the charge of theGuarantors proportionately to the share of the proceeds of the Bond Issue being advanced to each of them.

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Board of Directors

The Company is managed by a board of directors consisting of five (5) directors whose names and addresses are set out under the heading‘Directors and Advisers’above. The following are brief curriculum vitae of each of the directors of the Company in alphabetical order:

Louis Camilleri Preziosi

Louis, is a lawyer by profession. He read law at the University of Malta and the University of London. He has been very active in privatepractice since 1965 and is the founder of the law firm Camilleri Preziosi, from which he retired as a partner in December 2000 retaininga position of consultant. He has specialised in the practice of commercial law and has established himself as an eminent commerciallawyer in Malta. He has advised both local and foreign clients on several areas of the law.

John C. Grech

John C. Grech is a leading business and management consultant both locally and internationally. He served as chairman of the Bank ofValletta Group, chairman of Middle Sea Valletta Life Assurance Co.Limited and President of the Mediterranean Bank Network. John iscurrently chairman of the Mizzi Organisation Board together and managing director of EMCS Limited and chairman of Unipol InsuranceAgency Limited. He is also currently chairman of the Malta Tourism Authority, chairman of the International Advisory Board of FirstInternational Merchant Bank plc and a director with Middle Sea Insurance plc. He is also a visiting lecturer at the University of Malta.

Brian R. Mizzi

Brian was born in 1946 and educated at St. Edwards College. He worked with Turquand Youngs in the UK before becoming a director ofseveral companies within the Mizzi Organisation in 1971 and was appointed as managing director of a number of companies includingFesta Ltd and The General Soft Drinks Co Ltd. In the late nineties he was responsible for the development of the Arkadia CommercialComplex in Victoria, Gozo and of the Waterfront Hotel situated at the Strand in Gzira. He is managing director of the companies operatingboth projects.

Kenneth C. Mizzi

Born in 1948, Kenneth qualified as a Chartered Accountant in1969. After working with Touche Ross in London, he returned to Malta andjoined the family business in 1971. He is director of a number of Mizzi Organisation companies and is managing director of Muscat’sMotors Limited and United Acceptances Finance Limited. He is also managing director of SAK Limited, the franchisee and retailer ofThe Body Shop products in Malta. Over the years he served as a director on the Board of the Malta Development Corporation (1978-1980) and a number of other parastatal companies. He also served as director on the Board of Mid-Med Bank Limited between 1992 and1995 and is currently director of HSBC Fund Management (Malta) Limited.

Maurice F. Mizzi

Maurice was born in 1936. He was educated at St. Aloysius College and read law at the University of Malta where he obtained a Diplomaof Legal Procurator. He joined the family business in 1957 and was appointed director of a number of Mizzi Organisation companies. Heis currently managing director of Continental Cars Limited, Mizzi Limited and Titan International Limited. Maurice, held a number ofchairmanships over the years including Mediterranean Film Studios (1984-1990) and the Malta Development Corporation (1997-1998).He has been the Honorary Consul of Iceland since 1978. He is currently also director of inter alia Plaza Centres plc., Allcom Limited,Technical and Management Services Limited, Datatrak Holdings plc, Datatrak Systems Limited, Datastream Limited, MIDI plc, and ischairman of Volksbank Malta Limited.

Directors Service Contracts

None of the directors of the Company have a service contract with the Company. All directors may be removed by the shareholderappointing them or by an ordinary resolution of the shareholders in general meeting.

Aggregate Emoluments of Directors

For the current financial year ending on 31 December 2002 the Company proposes to pay an aggregate of Lm3,000 to its directors.

Loans to Directors

There are no loans outstanding by the Company to any of its directors nor any guarantees issued for their benefit by the Company.

PA RT I I I - T H E G U A R A N T O R S

The Mizzi Organisation is a conglomerate of business units spanning a broad portfolio of business interests and industry sectors rangingfrom the automotive to tourism and leisure, manufacture, services, real estate and mechanical and engineering contracting, employingover 700 people. The Organisation consists of three main groups of companies which control several operational subsidiaries in a diverserange of economic activities and two other operational companies. The following diagram sets out the corporate structure of theOrganisation:

The guarantee being made for the repayment of all interest and principal on the Bonds is being made available by each of Kastell Limited,Mizzi Holdings Limited, Consolidated Holdings Limited and The General Soft Drinks Co. Limited jointly and severally between themand with the Company. This provides prospective investors, directly and indirectly, with the full support of the main Companies formingpart of the Mizzi Organisation.

Corporate Data

Kastell Limited ('Kastell') is a private limited liability company registered in Malta on 18 August 1972 with company registration numberC2596 and has its registered office at Mizzi House, National Road, Blata l-Bajda. The authorised share capital is Lm1,998 and the issuedshare capital is Lm1,998. The issued share capital of Kastell is fully paid up and subscribed as follows:

Daragon Limited (C2562) 666 shares of Lm1 each

Demoncada Limited (C2577) 666 shares of Lm1 each

Devilhena Limited (C2588) 666 shares of Lm1 each

Kastell is the 100 per cent. holding company in each of the following companies (except for Lada Motors Limited (36%) and throughContinental Cars Limited 33.3% of Mizzi Automotive Services Limited) and all shares are held directly by Kastell Limited, except forthe holdings in Malta Farmhouses Limited and Festa Limited, which are held Festa Limited and Festa Holdings Limited respectively.

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Mizzi Family Companies

Kastell Ltd.

OperatingSubsidiaries

ConsolidatedHoldings Ltd.


Mizzi Holdings Ltd


The General SoftDrinks Co Ltd.

Falcon Wines& Spirits Ltd.

Name Company Date of Authorised Issued ShareRegistration Registration Share Capital Capital

Number Lm Lm

Arkadia Marketing Ltd. C1113 15/11/1989 100,000 75,000Continental Cars Ltd. C2840 01/04/1974 10,000 2,000Duemila Ltd. C18533 25/05/1995 5,000 5,000Festa Holdings Ltd. C735 11/01/1967 20,000 20,000Festa Ltd. C799 27/03/1967 500 500Hubbalit Developments Ltd. C440 11/06/1966 5,000 5,000Lada Motors Ltd. C6628 19/12/1983 52,100 52,100Malta Farmhouses Ltd. C15689 20/12/1993 5,000 5,000Mega Imports Ltd. C21636 09/07/1997 500 500M.I.S. Ltd.1 C7201 21/12/1984 1.000 500Mizzi Automotive Services Ltd. C23949 12/01/1999 6,000 6,000Mizzi Insurance Agency Ltd. C15111 04/06/1993 30,000 30,000Mizzi Ltd. C1041 09/03/1986 5,000 600Mizzinvest Ltd. C15075 25/05/1993 5,000 5,000Nissan Motor Sales Ltd. C2387 23/03/1971 10,000 1,000Russian Motors Ltd. C10557 21/04/1989 500 500St. Paul’s Court Ltd. C1441 14/02/1969 500 500Titan International Ltd. C1115 21/05/1968 5,000 3,000Voyagair Ltd. C6512 23/09/1983 1,000 500

1 This Company was placed in voluntary liquidation on 25 June 1996, but has not as yet been struck off the register of companies.

Mizzi Holdings Limited (‘MHL’) is a private limited liability company registered in Malta on 7 April 1967 with company registrationnumber C813 and has its registered office at Mizzi House, National Road, Blata l-Bajda. The authorised share capital is Lm1 million andthe issued share capital is Lm685,600. The issued share capital of MHL is fully paid up and subscribed as follows:

Daragon Limited (C2562) 228,533 shares of Lm1 each;

Demoncada Limited (C2577) 228,534 shares of Lm1 each;

Maurice F. Mizzi 228,533 shares of Lm1 each.

MHL is the 100 per cent. holding company in each of the following subsidiaries (except for Mizzi Automotive Services Limited in whichit holds 33.3% of its issued share capital through Muscat Motors Limited).


Number Lm Lm

Mizzi Automotive Services Ltd. C23949 12/01/1999 6,000 6,000Mizzi Brothers Ltd. C416 07/06/1966 500 500Mizzi Estates Ltd. C990 02/01/1968 5,000 600Mizzi Organisation Finance plc. C29506 28/03/2002 500,000 100,000Muscats Motors Ltd. C420 07/06/1966 2,500 2,500

In addition, MHL is also the vehicle used to provide the rest of the Organisation with centralised corporate and support services in variousareas as well as acting as the catalyst for the strategic planning and direction of the Organisation. The services offered by MHL to therest of the Organisation are discussed later in this document.

Consolidated Holdings Limited (‘CHL’) is a private limited liability company registered in Malta on 26 July 1968 with companyregistration number C1192 and has its registered office at Mizzi House, National Road, Blata l-Bajda. The authorised share capital isLm500,000 and the issued share capital is Lm320,600. The issued share capital of CHL is fully paid up and subscribed to as follows:


Demoncada Limited (C2577) 106,866 shares of Lm1 each;

Maurice F. Mizzi 106,868 shares of Lm1 each.

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CHL is the 100 per cent. holding company in each of the following subsidiaries, except Mizzi Associated Enterprises Ltd. in which it hasa 51 per cent. shareholding and Mizzi Automotive Services Ltd in which, through Industrial Motors Ltd, it holds 33.3%.


Number Lm Lm

Industrial Motors Ltd. C417 07/06/1966 2,500 2,500United Acceptances Finance Ltd. C360 25/05/1966 450,000 400,000The Waterfront Hotel Ltd. C22209 01/12/1997 10,000 10,000Mizzi Associated Enterprises Ltd. C1372 16/01/1969 50,000 50,000Mizzi Automotive Services Ltd. C23949 12/01/1999 6,000 6,000

The General Soft Drinks Co. Limited (‘GSD’) is a private limited liability company registered in Malta on 6 May 1969 with companyregistration number C1591 and has its registered office at Mdina Road, Qormi. The authorised and issued share capital is Lm50,000. Theissued share capital of GSD is fully paid up and subscribed as follows:


Demoncada Holdings Limited (C3858) 1,666 shares of Lm1 each;

Devilhena Limited (C2588) 1,666 shares of Lm1 each;

Mizzi Holdings Limited (C813) 2 shares of Lm1 each.

GSD is the authorised bottler of Coca–Cola and allied brands for Malta.

Falcon Wines & Spirits Limited (‘FWS’) is a private limited liability company registered in Malta on 5 September 1977 with companyregistration number C3774 and has its registered office at Mdina Road, Qormi. The authorised and issued share capital is Lm50,000. Theissued share capital of FWS is fully paid up and subscribed as follows:


Demoncada Holdings Limited (C3858) 1,666 shares of Lm1 each;

Devilhena Limited (C2588) 1,666 shares of Lm1 each;

Mizzi Holdings Limited (C813) 2 shares of Lm1 each.

FWS conducts the business of importation of beer, ice tea and operates a beverage and snacks vending operation.

Other Investments

1. Through CHL the Mizzi Organisation has a 51 per cent. shareholding in Mizzi Associated Enterprises Limited (‘MAE’), a private limited liability company registered in Malta on 16 January 1969 with company registration number C1372 and whose registered office is at Leisure House, 30, Archbishop Street, Valletta. The issued share capital of MAE is Lm50,000 divided into 50,000 shares of a nominal value of Lm1 each and is fully paid and subscribed as to Lm25,500 by CHL and Lm24,500 by Alf. Mizzi and Sons Limited. The latter company is not a member of the Mizzi Organisation. The business of MAE is principally the administration and financing of investments, including hotel operations and property rentals and development.

2. Through Festa Limited, Kastell Limited holds 50 per cent. of the issued share capital of Institute of English Language Studies Limited (‘IELS’), a private limited liability company registered in Malta on 23 January 1985 with registration number C7235 and whose registered office is at Mizzi House, National Road, Blata l-Bajda. The issued share capital of IELS is Lm 60,000 divided into 30,000 ordinary shares of Lm1 each and 30,000 redeemable preference shares of Lm1 each, subscribed to as to 15,000 ordianry and 15,000 redeemable preference shares by Festa Limted and the remaining shares by Frosch Touristik (Malta) Limited. The principal business activity of IELS is the teaching of English to foreign students.

3. Mizzi Holdings Limited has a 40 per cent. shareholding in Globe Insurance Brokers Limited, a limited liability company registered in Malta on 9 February 1998 with company registration number C22502 and whose registered address is at 120, The Strand Gzira. The issued share capital of the company is Lm56,250 divided into 22.500 ordinary ‘A’ shares of Lm1 each; 11,250 ordinary ‘B’shares of Lm1 each; and 22,500 ordinary ‘C’ shares of Lm1 each. MHL holds the 22,500 ordinary ‘C’ shares. Sake Management Limited, Globe Financial Investments Limited and Mican Investments Limited are the other shareholders in the company. The main activity of the company is insurance broking.

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4. Through Festa Limited, Kastell Limited is a shareholder in Kemmuna Limited and holds 25 per cent. of the issued share capital of thatcompany. Kemmuna Limited was registered in Malta on 18 August 1993 with company registration number C15344 and whose registered address is Leisure House, 30, Archbishop Street, Valletta. The total issued share capital is Lm1,250,000 and is held by Festa Limited, Alf. Mizzi and Sons Limited, Plateau Limited and Ropes Services Limited as to 25 per cent. each.

The Business

The Corporate Philosophy

The Mizzi Organisation’s vision is to pursue its role as a multi-disciplined Organisation with a wide range of business activities allowingit to benefit from the advantages of diversification. Its philosophy has three fundamental goals:

• To seek to maintain and improve its leading position in its core business activities;• To identify new investment opportunities in new areas of business both locally and overseas

thus further expanding its portfolio of business activities and fulfilling its role of a diversified Organisation; and• To provide its shareholders with an attractive return on their investment.

The Mizzi Organisation’s core strategy in achieving these goals is to allow a high level of autonomy to its operational business units whilstensuring that each operational unit follows the same key strategic direction. The legal structure of the Organisation explained above isimportant to ensure the segregation of certain potentially competing businesses within the Organisation, particularly in the automotivesector, where absolute autonomy of the operational subsidiaries is key to the effective management of potential conflicts between differentautomotive franchises represented in Malta by the Mizzi Organisation.

The Organisation’s philosophy, however, is that the management and strategic planning processes within the Organisation should begeared to follow the main economic drivers of the Organisation’s core business lines. In this context, the Organisation through MHL actsas the bridge between the different groups composing the Organisation. It provides centralised corporate and support services to the othermembers of the Organisation, including strategic planning on an Organisation-wide basis, legal services, financial services, treasury,internal audit and control, human resources management, quality management, public relations and information technology.

The Organisation believes that with its wide range of business interests the provision of these services through MHL is key for theOrganisation and its shareholders to benefit from economies of scale and to ensure an adequate level of monitoring of its operationalbusiness units and their performance.

At the operational level each main subsidiary is endowed with a high level of autonomy and flexibility. Together with the supportprovided centrally through MHL this is designed to ensure that business decisions are made and subsequently implemented within the fasttime-frames required in the competitive environment and markets in which they operate.

The core business activities of the Mizzi Organisation can, briefly, be identified in the following sectors:

• automotive;• beverage;• tourism and leisure; • retail and contracting; and• real estate.

A brief description of these business sectors follows:

The Automotive Sector

This sector is the highest contributor to the Organisation’s revenues. For the financial year ending 31 December 2001 this sectorcontributed almost 70 per cent. of the Organisation’s turnover. The Organisation owes its very origins to Mr. Spiro Mizzi’s enterprise inthe automotive sector and the experience accumulated over the years by the Organisation is expected to retain it in a leading position inthis sector.

Five companies within the Organisation are responsible for the importation, marketing, distribution and sales of automobiles andaftermarket operations.

Continental Cars Ltd. (‘CCL’) is the sole distributor in Malta of the world renowned marques Volkswagen, Audi and Porsche. CCL had aturnover of around Lm11.6 million in the financial year ending 31 December 2001. CCL operates from property owned by the MizziOrganisation, in Testaferrata Street, Gzira, and Princess Margaret Street, Gzira which property is currently being partly rebuilt and refurbished.

Industrial Motors Ltd. (‘IML’) is the sole distributor in Malta of the international brands Mitsubishi, Seat and Suzuki. During 2001,

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IML’s turnover reached Lm6 million. In addition to services associated with the sale and servicing of automobiles, IML also operates aservice station in National Road, Blata l-Bajda, a location that enables it to capture the commuting traffic into Valletta. IML operates fromproperty owned by the Organisation in National Road, Blata l–Bajda which consists of showrooms, stores, garages and offices.

Muscats Motors Ltd (‘MML’) is the sole distributor of the prestigious international brands BMW, Rover, Land Rover, Citroen, andDaihatsu. In the year 2000 following negotiations with Citroen, an agreement was reached to transfer the sales of Citroen cars from CCLto MML. This company had a turnover of Lm9.4 million in the financial year ending 31 December 2001.

Nissan Motor Sales Ltd (‘NMS’) is the sole distributor of Nissan vehicles and Kawaski Motorcycles in Malta. The company operates ashowroom and servicing facilities from Organisation owned premises in Antonio Bosio Street, Msida

Mizzi Automotive Services Ltd (‘MAS’) is a company owned by CCL, MML and IML as to 33.3 per cent. each. The Company wasestablished on 12 January 1999, has an authorised and issued share capital of Lm6,000. MAS provides panel beating, spray painting,valeting and rust proofing (Ziebart) services. The company operates a high quality vehicle repair centre in rented premises at Tal-Handaq,Qormi and is an approved repairer by the Malta Insurance Agents Association. In addition, the company manages an after marketwholesale and retail car parts operation from premises owned by the Mizzi Organisation in Paola. Representation includes Lucas, AGIPOils, Champion Spark Plugs and Bosch.

The automotive industry in Malta has become highly competitive but the Organisation believes that with the experience and expertise thatit has accumulated over the years and with the brands that it represents, it should be able to maintain its position as the Maltese leader inthis sector. In 2001, Organisation member companies had a market share of around 32 per cent. Although in line with internationalindustry practice the distribution agreements with foreign principals have expiry dates, these agreements have always been renewed bythe foreign principals. With the level of sales achieved and high quality service provided to their customers, the member companies areconfident of continued renewals.

The Organisation has adopted an arm’s length approach to the management and financing of the various car companies comprised in theautomotive sector.This is important to ensure that each company is allowed to perform at the highest level of its potential within its targetmarket. At the operational level each car company is headed by a managing director and general manager who are given the necessaryautonomy and flexibility to ensure that the appropriate decisions are made at company level. This guarantees the confidentiality ofinformation and allows each brand to benefit from the enterprise, research and market analysis of that company’s management andmarketing team.

The Beverage Sector

The beverage sector is another significant contributor to the turnover of the Mizzi Organisation with a contribution of around 16 per cent.for the financial year 2001.

The main driver in this sector is The General Soft Drinks Co. Limited (‘GSD’) that for the past thirty one years has been the authorisedbottler of internationally known brands1. These include Coca-Cola™, Diet Coke™, Sprite™, Diet Sprite™, Krest™, Diet Krest™,Fanta™ and Diet Fanta™ under licence of the trade-mark proprietor as well as new products such as Finley™ mixers (tonic water, sodawater, and ginger ale), and its own brand of fine table water Kristal™.

With the range of internationally recognised brands in its portfolio, GSD has established itself as a leader in the beverage sector in Malta,a position which the Directors seek to maintain and consolidate. The beverage sector in Malta is also a highly competitive sector but thedirectors believe that with GSD’s experience and expertise in this area coupled with the quality and range of the brands it represents it iswell placed to compete in the local market. Through the years GSD has been focusing on the marketing and sales of its products and thedevelopment of an efficient distribution network for its products to sustain its marketing efforts and improve its sales.

For the financial year 2001, GSD sales amounted to Lm6.5 million representing an increase of 8.5% over the previous year. GSD’sbusiness is also seasonal in nature and normally experiences significantly higher sales in the summer months. This is due to theconvergence of two factors: (i) the natural increase in consumption of its products in the Maltese summer months; and (ii) the incidenceof tourist arrivals in Malta.

Falcon Wines & Spirits Limited (‘FWS’) imports Nestea™ products, the world renowned beer Stella Artois™ and operates a fullvending operation of soft drinks.

Tourism and Leisure Sector

The Mizzi Organisation, as a leading Maltese enterprise also operates in the tourism sector, one of the mainstays of the Maltese economy.The tourism industry in Malta is predominantly a seasonal industry reaching a peak in the summer months. The performance of theOrganisation’s tourism sector is also intimately dependant on and follows the trends of the Maltese tourism industry.

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1 The brands Coca-Cola, Diet Coke, Fanta, Diet Fanta, Sprite, Diet Sprite, Krest, Diet Krest and Finley are all registered trade marks of The Coca Cola Company of Atlanta USA.

In May 2000, the Organisation opened the Waterfront Hotel along Sliema’s sea-front promenade. The Waterfront is a 116 room four-star hotel comprising a restaurant, a wine bar, a roof-top pool, conference and banqueting facilities, private parking and other facilities.The hotel enjoys spectacular views of Marsamxetto Harbour and the historic fortifications of Valletta. During its first full year ofoperations ending 31 December 2001 the hotel achieved an average occupancy of 82 per cent. which is well above the industry average.Also, in 2001 the Hotel received two prestigious Thomson Gold Awards for best hotel in Summer Sun and Winter Sun categories.

Also situated in the Waterfront Hotel is the Pizza Express restaurant, a renowned international catering franchise with a chain exceeding280 restaurants all over the world. This franchise opened for business in June 2000 and is operated by Festa Limited.

The Mizzi Organisation has equity interests in two other hotels, the Mellieha Bay Hotel and the Comino Hotel.

The Mellieha Bay Hotel is wholly owned by Mizzi Associated Enterprises Limited and is located in Malta’s prime sandy beach. It islicenced in the four-star category and its facilities include indoor and outdoor pools together with its own private beach, tennis courts anddiving school.

The Comino Hotel, including its bungalows is the only tourist development on the island of Comino. It is a four-star resort hotel thatfeatures 95 rooms and 45 bungalows, one indoor and one open air restaurant, lobby bar with snack facilities, sun deck, two outdoorswimming pools and a children’s swimming pool, dive centre with water sports facilities, two small sandy beaches, extensive grounds,eight tennis courts and several water sports facilities. The hotel enjoys beautiful views of Gozo and Santa Maria Bay in Comino.

The Mizzi Organisation has also taken advantage of Malta’s niche market in the teaching of English as a foreign language. TheOrganisation was one of the pioneers in this field and one of the first to realise the potential of this market. In the early nineties, togetherwith Frosch Touristik it set up the Institute of English Language Studies Limited (IELS). The Organisation’s experience in the tourismsector, the natural attraction of Malta as a holiday resort, the availability of the right resources to teach the English language and the joint-venture with Frosch, made this an attractive investment to the Organisation through the combination of study-holidays for those wishingto learn English as a foreign language. IELS manages around 10,000 foreign students every year.

The directors believe that the experience that IELS has accumulated over the years, its presence as a leader in this market and its continuedefforts to improve quality should enable it to maintain its position in the market and to enhance its operational performance.

Retail and Contracting Sector

The Mizzi Organisation has been in the retail sector selling white goods and home appliances for almost fifty years. The Organisation hasin more recent years expanded its involvement in the retail sector through its equity interest in Plaza Centres plc and later in 1998 thedevelopment and launch of the Arkadia Commercial Centre in Gozo.

Mizzi Limited is the company within the Organisation that is entrusted with the continued involvement in the white goods and homeappliances sector. This company represents globally known brands such as Hoover™, Kenwood™, Zanussi™, Ocean™, and Tricity™amongst many others. The company has five retail outlets through which it conducts its business apart from maintaining a wholesaleoperation to other retail outlets in Malta. Mizzi Limited has been a leader in this sector for virtually the last fifty years and is currentlyseeking to further diversify its product and brand range to meet the ever increasing demands of the Maltese consumer. The company hada turnover of Lm1.1 million in 2001.

In 1998 the Organisation launched its own retail complex in Victoria, Gozo, known as Arkadia Commercial Centre. Arkadia MarketingLimited, a 100 per cent. subsidiary of Kastell, owns and operates the complex that comprises 3,500 square metres of shopping spacedistributed over four floors. Arkadia was the first to adopt the department store concept in Malta and Gozo and apart from affording theOrganisation with a superb showcase of its own brands of products in Gozo, the Arkadia Complex also provides consumers with theavailability of leading retail brands such as Body Shop™, Miss Selfridge™, Vodafone™ and Nike™, as well as a Mc Donalds™ outletand a food store, all in one complex. This makes the Arkadia Complex the undisputed leader in retail business in Gozo.

The Mizzi Organisation, through its shareholding in Mizzi Associated Enterprises Ltd. (‘MAE’) is also a significant equity holder in PlazaCentres plc (‘Plaza’), a company whose shares are listed on the Malta Stock Exchange. MAE owns 20 per cent. of the issued share capitalof Plaza. Plaza operates one of the largest and best equipped retail malls in Malta in the heart of Malta’s popular shopping district, Sliema.In the contracting sector the Organisation’s involvement for the last 28 years has been conducted through Titan International Limited(‘Titan’), a fully owned subsidiary of Kastell. Titan’s main area of activity is as mechanical and electrical engineering contractors,particularly in the installation of industrial and domestic air-conditioning systems and lifts. A core of qualified and experienced technicalpersonnel and engineers allow the company to leverage its know-how and compete for major infrastructure projects in Malta. Otheractivities of the company also include the wholesale and retail of electrical components, air extractors and power tools. Titan is therepresentative in Malta of brands, such as Carrier™, Otis Lifts and Escalators™, Crabtree™, Vortice™, Hitachi™ Haier™ and Scame™.

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Real Estate Sector

Property owning is undoubtedly the single most important non-operational asset of the Mizzi Organisation. The Organisation’s philosophyhas always been one of owning prime sites from where it conducts its various business activities. Consequently, all the major operationssuch as Industrial Motors Limited, Muscats Motors Limited, Continental Cars Limited, Nissan Motors Sales Limited, Arkadia MarketingLimited, Waterfront Hotel Limited, Delta Homecentres (with the exception of the Valletta outlet), the bottling plant of The General SoftDrinks Co. Limited and the corporate headquarters at Mizzi House are all fully owned by the Mizzi Organisation. It also owns other largeprime sites in Blata l-Bajda, Mellieha and Gzira which are earmarked for development in the future.

Furthermore, the Organisation, through Mizzi Estates Ltd., Mizzi Brothers Ltd., and United Acceptances Finance Ltd. holds a portfolioin excess of 120 residential and commercial properties across Malta that are leased out directly to tenants generating a constant flow ofincome to the Organisation.

The Mizzi Organisation conducts revaluation of its immovable property portfolios at regular intervals as follows:(i) with respect to investment property, on an annual basis (see paragraph 7 under the heading ‘Accounting Policies’ in Annex B); and(ii) with respect to other immovable property, on a regular basis such that the carrying amount of each property would not differ materiallyfrom that which would be determined using fair values at each financial year end (see paragraph 9 under the heading ‘Accounting Policies’in Annex B).

In line with the above revaluation policies, valuations were carried out in the year 2001 by an expert valuer and the results thereof arereflected in the audited financial statements of each of the Guarantors as well as in the pro forma consolidated financial informationcontained in Annex B.

Other Activities

There are other operations in which the Organisation is actively involved but which do not fall within the strict ambits of any of thebusiness lines set out above.

The most significant activity is that performed by United Acceptances Finance Ltd (‘UAFL’). This company finances hire-purchasesales by the Organisation’s car companies as well as sales by Titan International Ltd of both industrial and domestic air-conditioningequipment as well as elevators and allied equipment. Some sales of ‘white goods’ are also financed through UAFL. The obviousadvantages to customers is the ‘one stop shop’ concept where the client’s financial needs are serviced in one convenient location. Inaddition, the operations of UAFL ensure a healthy cash-flow to the Organisation’s automotive sector and more efficient centralisedmonitoring of customer accounts. UAFL adopts stringent credit rating criteria and controls that have resulted in limiting bad debts to anabsolute minimum. UAFL also conducts a treasury and cash management function for the Organisation.

Trading Prospects

The directors of the Guarantors expect that the Mizzi Organisation will, in the absence of unforeseen circumstances, at least maintain thefinancial and trading results, which it has achieved in the past three financial years. In other parts of this document certain trade factorsand risks which may have an impact on the trading and financial prospects of the Mizzi Organisation have already been set out (See ‘RiskFactors’). The Mizzi Organisation has made a gross operating profit in 2001 of Lm2.4 million; as against Lm2 million in 2000 and Lm1.5 million in 1999.

The Mizzi Organisation’s business is diversified in different areas of operation. The directors believe that this diversification provides theOrganisation with the resilience to withstand the pressures in those areas of its business which may be more vulnerable to national andinternational economic trends than others. The Organisation’s single most important business sector is the automotive sector that hascontributed more than 70 per cent. of the Organisation’s turnover in the financial year ending 31 December 2001. In this context, thedirectors are of the view that the range of automotive franchises represented by the Organisation’s car companies and the target marketsat which they are aimed provide in themselves a wide diversification within the different market segments that should act as protectionagainst downturns in demand in any one or more market segments for automobiles.

The Organisation also expects to maintain its position in the beverage sector and continue to seek strategies to improve its return fromthis sector by leveraging the internationally renowned brands which it represents. This sector of the Organisation’s business is alsoinfluenced by other economic and political factors that have an impact on the tourism and leisure sector which has historically increasedthe demand for beverages, particularly due to incoming tourism in the summer months.

In the tourism and leisure sector, the 11 September 2001 incidents have rendered an assessment of the future trading prospects of theOrganisation’s business in this sector more difficult, particularly in view of the fact that this sector is perceived as being vulnerable to alack of international political stability and the uncertainty it brings about.

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The exact extent of decline in business following the 11 September incidents is still uncertain, but there has been no impact on the tourismand leisure business of the Mizzi Organisation in the first months of the current financial year. In the medium to longer term, it is expectedthat the situation stabilises further and that any uncertainty surrounding the travel industry should subside. It is still too early, however,to determine with any reasonable level of certainty how international political events will evolve. Moreover, if uncertainty were to resume,the travel and hospitality sectors in which the Mizzi Organisation operates will come under severe pressure, and could have an adverseeffect on its revenues and profitability. The directors, however, believe that in the context of the 11 September events, the MizziOrganisation’s diversification in other business activities should enable the Organisation to withstand these pressures. In addition theyexpect that Malta, as the location where the Organisation’s business is carried out, is of a lower political risk profile than jurisdictions thatare more actively involved in the aftermath of those events. They believe that, save for the general uncertainty surrounding the travelindustry generally, there are no jurisdiction-specific factors that should have an adverse effect on the Organisation’s operations.

For the full year ended 31 December 2001, the Organisation will have profits cover for bond interest on the Original Bond Issue of 5.8times and for interest on its aggregated debt of 2.5 times. In the event that the Over-allotment Option is exercised, profit cover for bondinterest will be 3.4 times and 2.5 times for interest on the Organisation’s aggregated debt.

Immediately after the Bond issue, the Mizzi Organisation will have net tangible assets cover: (i) for the Original Bond Issue of 5.7 timeswhich will be reduced to 2.9 times in the event of the exercise of the Over-allotment Option; and (ii) 1.3 times for aggregated debt in thecase of both the Original Bond and the exercise of the Over-allotment Option, as the Bond proceeds will replace existing bankingfacilities.

There has been no significant change in the financial or trading position of Mizzi Organisation which has occured since the last financialyear for which financial information has been published in part B of this document.

Management

A board of directors manages each of the Guarantors. The boards of directors are responsible for the overall management of theOrganisation and the companies comprising it and establishing policy guidelines for the management of each company, includingresponsibility for the appointment of all executive officers and other key members of management. The Chairman of the boards is anindependent person who is appointed by consensus from outside the family companies. Dr. John C. Grech is the person currently appointedto the office of Chairman.1

The following list sets out the current directors and the company secretary:

Brian R. Mizzi Director CHL, GSD, Kastell, MHL.Gordon A. Mizzi Director CHL, GSD, Kastell.Jeffrey J. Mizzi Director CHL, Kastell.Kenneth C. Mizzi Director Kastell, MHL.Maurice F. Mizzi Director CHL, GSD, Kastell, MHL.Ian Mizzi Director GSD.Austin Walker Company Secretary CHL, GSD, Kastell, MHL.

(1) Appointed by consensus of the other directors from outside the Mizzi Family.

The following are brief curriculum vitae of each of the directors who are not also directors of the Company:

Gordon A. Mizzi

Gordon is 54 years old. He holds an Economics Degree from the University of Leicester, UK and a Masters Degree in BusinessAdministration from the Graduate Business School of the University of Southern California. He joined the Mizzi Organisation in 1971.He was managing Director of Mizzi Insurance Agency until the year 2000. Gordon Mizzi was also a director of the British Merchant BankSinger and Friedlander (Malta) between 1973 and 1982 and is currently chairman and director of Galileo Limited.

Ian Mizzi

Ian Mizzi, is a graduate in Business Administration from Luther College in the United States. He joined The General Soft Drinks Co.Limitedas sales manager and was subsequently appointed to the post of executive director. In 1998 he moved to Mizzi Organisation Head Office incharge of special projects. He is currently responsible for Mizzi Automotive Services Limited and other projects. He occupies the post ofVice-president of the Federation of Industry and was recently appointed as President of the Malta Trade Fairs Corporation.

Jeffrey J. Mizzi

Jeffrey was born on 17 August 1953. He received his education at St. Edwards College in Malta, Monte Rosa Institute in Switzerlandand Luther College in USA. He is managing director of Industrial Motors Limited. Jeffrey Mizzi is currently president of the Associationof Car Importers in Malta.

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Directors’ Service Contracts

Each of the following directors, Brian R. Mizzi, Jeffrey J. Mizzi, Kenneth C. Mizzi and Maurice F. Mizzi have a management role in theMizzi Organisation and is employed in his executive capacity on the basis of an indefinite contract of employment. None of the directorshave definite service contracts. Their appointment as directors is made directly by the shareholders.

Removal of Directors

A director may, unless he resigns, be removed by the shareholder appointing him or by an ordinary resolution of the shareholders asprovided in section 139 of the Act.

Powers of Directors

The directors are by virtue of the articles of association of each of the companies within the Organisation empowered to transact allbusiness that is not by the articles expressly reserved for the shareholders in general meeting.

Key Executives

Some of the directors mentioned above have executive roles within the Organisation. They are supported in their roles by a core executiveteam at MHL consisting of the following:

Austin Walker - Chief Executive Officer and Company Secretary

Austin is a Fellow of the Association of Chartered Certified Accountants after having graduated in 1977. He is also a Fellow of the MaltaInstitute of Accountants and holds a warrant as a Certified Public Accountant and Auditor. He joined the Mizzi Organisation in 1978 as GroupChief Accountant and was appointed as Chief Executive Officer in March 1997. He was previously employed with Panta Lesco Limited.Austin was chairman of the Co-Operatives Board between 1990 and 1993 and is currently chairman of the Agricultural Export MarketingBoard and director of Globe Insurance Brokers Limited.

Hugh Mercieca - Group Financial Controller

Hugh joined the then Barclays Bank D.C.O. in Malta in 1961 and was admitted as an Associate of the Association of Chartered Instituteof Bankers in 1967. He left Mid-Med Bank Ltd. (today HSBC Bank (Malta) plc), the successor of Barclays Bank D.C.O., in 1978 to jointhe Mizzi Organisation as credit controller. He is today the Board Secretary of the Company and Group Financial Controller with addedresponsibility for United Acceptances Finance Ltd. He is also a director of Globe Insurance Brokers Ltd. appointed on that company bythe Mizzi Organisation.

Luke Coppini - Group Chief Accountant

Luke is 38 years of age and was educated at De La Salle College. He was admitted as Associate of the Association of Chartered CertifiedAccountants in 1991 and as Fellow in 1997. He is also a Fellow of the Malta Institute of Accountants and holds a warrant as a CertifiedPublic Accountant since 1992. He joined the Mizzi Organisation in 1990 as Assistant to the Group Chief Accountant and was promotedto Chief Accountant in 1997. His previous experience includes management positions held in the local manufacturing sector.

Working CapitalThe directors of the Company and of the Guarantors are of the opinion that working capital available to the Company and each of the Guarantorsrespectively is sufficient for the attainment of its objects and the carrying on of their respective business for the next 12 months of operations.

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PA RT I V - T H E G U A R A N T E E

To All Bond holders:

We make reference to the issue of:

Lm 5 million 6.7 per cent. Bonds 2009-2012 by Mizzi Organisation Finance plc (the ‘Issuer’) pursuant to and subject to the terms andconditions contained in the Offering Memorandum dated 2 May 2002 (the ‘Bonds’).

Now therefore by virtue hereof each of Consolidated Holdings Limited, Kastell Limited, Mizzi Holdings Limited and The General SoftDrinks Co. Limited, hereby stand surety jointly and severally with the Issuer and irrevocably and unconditionally guarantee the due andpunctual performance of all the obligations undertaken by the Issuer under the Bonds and, without prejudice to the generality of theforegoing, undertake to pay all amounts of principal and interest which may become due and payable by the Issuer to Bondholders underthe Bonds.

We understand that the aggregate principal amount of Bonds issued by the Issuer may be increased by a maximum aggregate amount ofLm5 million in the event that the Issuer exercises its Over-allotment Option, this guarantee shall extend to such increased amount whichshall in no event exceed the aggregate amount of Lm10 million.

All terms used in this guarantee shall, unless the context otherwise requires, have the same meaning assigned to them in the OfferingMemorandum.

This guarantee shall be governed by the laws of Malta.

Signed and executed on this the 2 day of May 2002, after approval of the Board of Directors of each of Consolidated Holdings Limited,Kastell Limited, Mizzi Holdings Limited and The General Soft Drinks Co. Limited at a meeting of the 23 April 2002.

Brian R. Mizzi Kenneth C. Mizzi Maurice F. Mizzi

This guarantee has been executed by Brian R. Mizzi, Kenneth C. Mizzi and Maurice F. Mizzi on behalf of each of theGuarantors.

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PA RT V - G E N E R A L I N F O R M AT I O N

Incorporation

The Company was incorporated on 28 March 2002 as a public company with limited liability in terms of the Act, with company numberC29506.

Share Capital

[1] (i) The authorised share capital of the Company is Lm500,000.(ii) The issued share capital of the Company is Lm100,000 fully paid up, divided into 1000 ordinary shares of a

nominal value of Lm100 each share.

[2] There is more than 10 per cent. of the Company's authorised capital that is unissued. However in terms of the Company's memorandum and articles of association none of such capital shall be issued in such a way as would effectively alter the control of the Company or nature of the business, without the prior approval of the Company in general meeting.

[3] The shares of the Company are not listed on the MSE. Application has not been filed for the shares of the Company to be quoted on the official list of the MSE.

[4] There is no capital of the Company which has been issued to the public, during the two years immediately preceding the publication of this Offering Memorandum nor is it expected that the Company issues during the next financial year any shares,whether fully or partly paid up, in consideration for cash or otherwise.

[5] There is no capital of the Company which is currently under option, nor is there any agreement by virtue of which any part of the capital of the Company is to be put under option.

Appointment of Directors

The Directors are appointed in terms of the Company’s articles of association.

Powers of Directors

(i) The Directors are vested with the management of the Company and their powers of management and administration emanate directly from the memorandum and articles of association and the law. The Directors are empowered to act on behalf of the Company and in this respect have the authority to enter into contracts, sue and be sued in representation of the Company. In terms of the memorandum and articles of association they may do all such things as are not by the memorandum and articles of association reserved for the Company in general meeting.

(ii) Directors may not vote on any proposal, issue, arrangement or contract in which they have a personal material interest.

(iii) The maximum limit of aggregate emoluments of the Directors is in terms of the memorandum and articles of association, to be established by the shareholders in general meeting. Within that limit the Directors shall have the power to vote remunerationto themselves or any number of their body. Any increases in the maximum limit of Directors' aggregate emoluments have to be approved by the general meeting. The Directors may also vote pensions, gratuities or allowances on retirement to any director who has held any other salaried office with the Company or to his widow or dependents, however any such proposal shall have to be approved by the shareholders in general meeting.

(iv) In terms of the memorandum and articles of association, the Board of Directors may exercise all the powers of the Company toborrow money and give security therefor, subject to the limit established in the articles of association and the over-riding authority of the shareholders in general meeting to change, amend, restrict and or otherwise modify such limit and the Directors’ borrowing powers.

(v) There are no provisions in the memorandum and articles of association regulating the retirement or non-retirement of Directors over an age limit.

Commissions

There were no commissions, discounts, brokerages or other special terms granted during the two years immediately preceding thepublication of this document in connection with the issue or sale of any capital of the Company or any of its subsidiaries.

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Directors' Interests

Brian R. Mizzi, Kenneth C. Mizzi and Maurice F. Mizzi, directors of the Company have declared that they have an indirect interest of 8.3per cent., 6.6 per cent. and 33.3 per cent. respectively in the share capital of the Company as at the date of this Offering Memorandumthrough their ultimate beneficial interest in shares in the companies that own Mizzi Holdings Limited. There are no assets which have beenleased or otherwise transferred by or to the Company in which any of the Directors have any interest direct or indirect, nor are any suchleases or transfers being proposed. In addition, there is no contract or arrangment subsisting at the date of this document in which a Directorof the Company is materially interested.

Litigation

The Company has no litigation or claims of material importance pending or threatened against it.

Several companies within the Mizzi Organisation, including the Guarantors and subsidiaries of the Guarantors, in the normal course oftheir business have claims pending or threatened against them and in some instances are also involved in judicial proceedings. Differenceshave lately arisen with one of the directors in certain companies within the Mizzi Organisation, but no specific claims have been madeagainst any one or more of the companies within the Organisation.

In the opinion of the board of directors of each of the Guarantors none of the claims pending or threatened against any of the companieswithin the Mizzi Organisation is of such materiality as to affect the ability of the Company and the Guarantors to repay the principal andinterest on the Bond as and when they fall due.

Accountants' Report

The Accountants' report in the form of pro forma consolidated financial statements is being included in this Offering Memorandum withthe consent of the Accountants preparing it, in the form and content in which it is included, which consent has not been withdrawn.

Material Contracts

The Company has not entered into any contracts of a material nature, which were not in the ordinary course of its business, save asotherwise disclosed in this Offering Memorandum.

Loan Capital & Borrowings

The Company has no loan capital and borrowings as at the date of this Offering Memorandum. Full details of the loan capital andborrowings of the Guarantors are found in note 20 of Annex B to this document.

From an estimate made by the Guarantors as at 31 March 2002, the unencumbered assets of the Mizzi Organisation before the issue ofthe Bonds amounted to circa Lm36 million. The term unencumbered assets is defined in the terms and conditions of the Bond in AnnexA Part I as assets which are not subject to a Security Interest.

Documents for inspection

The following documents or certified copies thereof will be made available for inspection at Mizzi House, National Road, Blata l-Bajdaduring the Offer Period:

(i) The memorandum and articles of association of the Company;

(ii) a certified copy of Accountants' report;

(iii) the written consent of Accountants to reproduce their report in the Offering Memorandum;

(iv) the pro forma consolidated financial information for the three years to 31 December 2001;

(v) the original letter of guarantee by the Guarantors;

(vi) the underwriting agreement between Bank of Valletta plc, the Issuer and the Guarantors; and

(vii) the loan agreements between the Issuer and each of the Guarantors.

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A N N E X APart I: TERMS AND CONDITIONS OF THE BOND

1. General

Each Bond forms part of a duly authorised issue of 6.7 per cent Bonds issued by the Issuer at par, limited to the aggregate principalamount of five million Maltese Liri (Lm 5,000,000) (except as otherwise provided under Clause 9 "Further Issues" below) and due forredemption on the 31 May 2012 but redeemable in whole or in part at the option of the Company on each of the 31 May 2009, 31 May2010 and the 31 May 2011(each an Optional Redemption Date), subject to the exercise by the Company of the Over-allotment Option inthe event of over-subscription in which case the Company may increase the Bonds in issue up to an aggregate of ten million Maltese Liri(Lm10,000,000).

2. Form, Denomination and Title

The Bonds will be issued in fully registered form, without coupons, in denominations of any integral multiple of one hundred MalteseLiri (Lm100) provided that on subscription the Bonds will be issued for a minimum of Lm500 (except in the case of the EmployeesOffering). The Bonds, and transfer thereof, shall be registered as provided under Clause 8 "Registration, Replacement, Transfer andExchange" below. A person in whose name a Bond shall be registered may (to the fullest extent permitted by law) be treated at all timesand for all purposes as the absolute owner of such Bond regardless of any notice of ownership or trust.

3. Interest

(a) The Bonds shall bear interest from and including 11 June 2002 at the rate of 6.7 per cent (6.7%) per annum, payable semi-annually in arrears on 31 May and 30 November of each year and commencing on 30 November 2002 (each such day, an “Interest Payment Date”). Each Bond will cease to bear interest from and including its due date of redemption unless, upon due presentation, payment of the principal in respect of the Bond is improperly withheld or refused or unless the Issuer defaults, in which event interest shall continue to accrue at the rate specified above or at the rate of 2 per cent (2 %) per annum above the Central Bank of Malta minimum discount rate whichever is the greater.

(b) When interest is required to be calculated in respect of a period of less than a full year, it shall be calculated on the basis of a three hundred and sixty (360) day year consisting of twelve (12) months of thirty (30) days each, and, in the case of an incomplete month, the number of days elapsed.

4. Status and Negative Pledge

(a) The Bonds constitute general, direct, unconditional, unsecured and unsubordinated obligations of the Issuer and willrank pari passu, without any priority or preference, with all other present and future unsecured and unsubordinated obligations of the Issuer.

(b) The Issuer undertakes, for as long as any principal or interest under the Bonds or any of the Bonds remains outstanding, not to create or permit to subsist any Security Interest (as defined below), other than a Permitted Security Interest (as defined below), upon the whole or any part of their respective present or future assets or revenues to secure any Financial Indebtedness (as defined below) of the Issuer unless at the same time or prior thereto the Issuer’s indebtedness under the Bonds shares in and is secured equally and rateably therewith and the instrument creating such Security Interest so provides.

For the purposes of this Clause and of Clause 7 "Events of Default" below:

"Financial Indebtedness" means any indebtedness in respect of (A) monies borrowed; (B) any debenture, bond, note, loan stock or othersecurity; (C) any acceptance credit; (D) the acquisition cost of any asset to the extent payable before or after the time of acquisition orpossession by the party liable where the advance or deferred payment is arranged primarily as a method of raising finance or financingthe acquisition of that asset; (E) leases entered into primarily as a method of raising finance or financing the acquisition of the asset leased;(F) amounts raised under any other transaction having the commercial effect of borrowing or raising of money; (G) any guarantee,indemnity or similar assurance against financial loss of any person;

"Security Interest" means any privilege, hypothec, pledge, lien, charge or other encumbrance which grants rights of preference to acreditor over the assets of the debtor;

"Permitted Security Interest" means (A) any Security Interest arising by operation of law; (B) any Security Interest securing temporary bank loansor overdrafts in the ordinary course of business; (C) any other Security Interest (in addition to (A) and (B) above) securing Financial Indebtednessof the Issuer, or an entity in which the Issuer has a controlling interest, in an aggregate outstanding amount not exceeding 80 per cent of thedifference between the value of unencumbered assets of the Issuer and the aggregate principal amount of Bonds outstanding at the time.

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Provided that the aggregate Security Interests referred to in (B) and (C) above do not result in the unencumbered assets of the Issuer beingless than 106.7 per cent of the aggregate principal amount of the Bonds still outstanding;

"unencumbered assets" means assets which are not subject to a Security Interest.

5. Payments

(a) Payment of the principal amount of a Bond will be made in the currency of denomination of the Bond to the person in whose name such Bond is registered, with interest accrued to the date fixed for redemption, against surrender of such Bond at the registered office of the Issuer or at such other place in Malta as may be notified by the Issuer by a cheque in the currency of denomination of the Bond drawn on a bank in Malta.

(b) Payment of any instalment of interest on a Bond will be made in the currency of denomination of the Bond to the person in whose name such Bond is registered at the close of business 15 days prior to the Interest Payment Date by mailing a cheque drawn on a bank in Malta to the Bondholder at such Bondholder’s registered address within 7 days of the Interest Payment Date or by means of a direct credit into an account of the Bondholder or of any person as the Bondholder may designate. The Bondholder shall be required to make such election in the Application Form. The Issuer shall not be responsible for any loss or delay in transmission. The payment of the cheque, if purporting to be duly endorsed, shall be a good discharge to the Issuer.

(c) All payments are subject in all cases to any pledge (duly constituted) of the Bonds and to any applicable fiscal or other laws and regulations. In particular, but without limitation, all payments by the Issuer in respect of the Bonds shall be made net of any amount which the Issuer is compelled by law to deduct or withhold for or on account of any present or future taxes, duties, assessments or other government charges of whatsoever nature imposed or levied by or on behalf of the Government of Malta or authority thereof or therein having power to tax.

(d) No commissions or expenses shall be charged to the Bondholders in respect of such payments.

6. Redemption and Purchase

(a) Unless previously purchased and cancelled the Bonds will be redeemed at their principal amount (together withinterest accrued to the date fixed for redemption) on 31 May 2012

(b) The Issuer may at any time purchase Bonds in the open market or otherwise at any price. Any purchase by tender shall be made available to all Bondholders alike. All Bonds so purchased will be cancelled forthwith and may not be re-issued or resold.

(c) The Issuer may by giving at least sixty days prior notice to bondholders redeem part or all of the Bonds then outstanding on the 31 May 2009, 31 May 2010 and the 31 May 2011. The procedure for the redemption of the Bonds on Optional Redemption Dates shall be determined and announced in the notice to be sent to all Bond holders.

7. Events of Default

The Bonds shall become immediately due and repayable at their principal amount, together with accrued interest, if any of the followingevents ("Events of Default") shall occur:-

(i) the Issuer shall fail to pay any interest on any Bond when due and such failure shall continue for thirty (30) days after written notice thereof shall have been given to the Issuer by any Bondholder; or

(ii) the Issuer shall fail duly to perform any other material obligation contained in the terms and conditions of the Bonds and such failure shall continue for sixty (60) days after written notice thereof shall have been given to the Issuer by any Bondholder; or

(iii) an order is made or resolution passed or other action taken for the dissolution, termination of existence, liquidation, winding-up or bankruptcy of the Issuer; or

(iv) the Issuer stops or suspends payments (whether of principal or interest) with respect to all or any class of its debts or announces an intention to do so or ceases or threatens to cease to carry on its business or a substantial part of its business; or

(v) the Issuer is unable, or admits in writing its inability, to pay its debts as they fall due or otherwise becomes insolvent; or

(vi) there shall have been entered against the issuer a final judgment by a court of competent jurisdiction from which no appeal may be or is taken for the payment of money in excess of five hundred thousand Maltese Liri (Lm500,000) or its equivalent and ninety (90) days shall have passed since the date of entry of such judgment without its having been satisfied or stayed; or

(vii) any default occurs and continues for ninety (90) days under any contract or document relating to any Financial Indebtedness (as defined above) of the Issuer in excess of five hundred thousand Maltese Liri (Lm500,000) or its equivalent at any time.

8. Registration, Replacement, Transfer and Exchange

(a) If and for as long as the Bonds are admitted to listing on the Malta Stock Exchange a register of the Bonds will be kept by the Issuer at the Central Securities Depository of the Malta Stock Exchange, wherein there will be entered the names and addresses of the Bondholders and particulars of the Bonds held by them respectively and a copy of such register will, at all reasonable times during business hours, be open to the inspection of the Bondholders at the registered office of the Company.

(b) If any Bond certificate is lost, stolen, mutilated, defaced or destroyed, it shall be replaced by the Issuer, on application by the Bondholder, subject to all applicable laws, and on such terms as to evidence, security, indemnity and otherwise as the Issuer may require (provided that the requirement is reasonable in the light of prevailing market practice). Mutilated or defaced Bond certificates must be surrendered before replacements will be issued. In addition, prior to issuing any replacement, the Issuer may require the payment of a sum sufficient to cover any tax, duty or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.

(c) A Bond may be transferred in whole (in multiples of one hundred Maltese Liri (Lm100)) by the Bondholder surrendering the Bond for registration of transfer at the registered office of the Issuer or such other place as may be notified by the Issuer, accompanied by a written instrument in form satisfactory to the Issuer or the Registrar duly executed by the Bondholder and the transferee. The Issuer or Registrar (as agent of the Issuer) shall have the right to retain such written instrument of transfer.

(d) Any person becoming entitled to a Bond in consequence of the death or bankruptcy of a Bondholder may, upon such evidence being produced as may from time to time properly be required by the Issuer, elect either to be registered himself as holder of the Bond or to have some person nominated by him registered as the transferee thereof. If the person so becoming entitled shall elect to be registered himself, he shall deliver or send to the Issuer a notice in writing signed by him stating that he so elects. If he shall elect to have another person registered he shall testify his election by executing to that person a transfer of the Bond. Provided that if a Bond is transmitted or transferred in part, a person will not be registered as a Bondholder unless such transmission or transfer is made in multiples of one hundred Maltese Liri (Lm100).

(e) All transfers and transmissions are subject in all cases to any pledge (duly constituted) of the Bonds and to any applicable laws and regulations.

(f) A Bond certificate may be exchanged for Bond certificates of equal aggregate principal amount in denominations of one hundred Maltese Liri (Lm100) or any integral multiple thereof by the Bondholder surrendering the Bond certificate for exchange at the registered office of the Issuer accompanied by a written request signed by the Bondholder in form satisfactory to the Issuer.

(g) The cost and expenses of effecting any exchange or registration of transfer or transmission except for the expenses of delivery by other than regular mail (if any) and except, if the Issuer shall so require, the payment of a sum sufficient to cover any tax, duty or other governmental charge or insurance charges that may be imposed in relation thereto, will be borne by the Issuer.

(h) The Issuer will not register the transfer or transmission of Bonds for a period of fifteen (15) days preceding the due date for any payment of interest on the Bonds.

9. Further Issues

The Issuer is at liberty, from time to time, without the consent of the Bondholders, to create and issue further bonds, notes or debenturesranking pari passu in all respects with the Bonds (or in all respects save for the first payment of interest thereon). The Issuer shall notissue any other debt instrument for a period of twelve months following the date of this Offering Memorandum.

10. Bonds held Jointly

In respect of a Bond held jointly by several persons (including husband and wife), the joint holders shall nominate one of their numberas their representative and his/her name will be entered in the register with such designation. The person whose name shall be inserted inthe field entitled "Applicant" on the Application Form shall for all intents and purposes be deemed to be such nominated person by allthose joint holders whose names appear in the field entitled "Additional Applicants" in the Application Form. Such person shall, for allintents and purposes, be deemed to be the registered holder of the Bond so held.

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11. Bonds held Subject to Usufruct

In respect of a Bond held subject to usufruct, the name of the bare owner and the usufructuary shall be entered in the register. Theusufructuary shall, for all intents and purposes, be deemed vis a vis the Issuer to be the holder of the Bond so held and shall have the rightto receive interests on the Bond but shall not, during the continuance of the Bond, have the right to dispose of the Bond so held withoutthe consent of the bare owner

12. Governing Law and Jurisdiction

(a) The Bonds are governed by and shall be construed in accordance with Maltese law.

(b) Any suit, action or proceeding against the Issuer or the Guarantors with respect to a Bond or the Offering Memorandum shall exclusively be brought against it in the Maltese Courts.

13. Notices

Notices will be mailed to Bondholders at their registered addresses and shall be deemed to have been served at the expiration of twenty-four (24) hours after the letter containing the notice is posted, and in proving such service it shall be sufficient to prove that a prepaidletter containing such notice was properly addressed to such Bondholder at his registered address and posted.

14. Listing

In the event that the Bonds are admitted to listing on the Malta Stock Exchange (the "Exchange"), all the Terms and Conditions, inparticular, but not limited to, Clause 8 "Registration, Replacement, Transfer and Exchange" shall be subject to, and shall apply only sofar as they are not inconsistent with, all the laws, bye-laws, regulations and requirements relating to the Exchange.

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A N N E X APART II: TERMS AND CONDITIONS OF APPLICATION FOR BONDS

1. The contract created by the acceptance of an Application shall be subject to the terms and conditions set out herein. If anyApplication is not accepted, or if any Application is accepted for fewer Bonds than those applied for, the Application monies or the balanceof the amount paid on Application will be returned without interest by mail at the risk of the Applicant.

2. Subject to all other terms and conditions set out in the Offering Memorandum, the Company reserves the right to reject in wholeor in part, or to scale down any Application, including multiple or suspected multiple Applications and to present any cheques and or draftsfor payment upon receipt. The right is also reserved to refuse any Application which, in the opinion of the Issuer is not properly completedin all respects in accordance with the instructions or is not accompanied by the required documents. Only original Application forms willbe accepted and photocopies/facsimile copies will not be accepted.

3. Any person, whether natural or legal, shall be eligible to submit an Application, and any one person, whether directly orindirectly should not submit more than one Application Form for Bonds. In the case of corporate Applicants or Applicants having legalpersonality, the Application Form must be signed by a person or persons authorised to sign and bind such Applicant. It shall not be incumbenton the Issuer or Registrar to verify whether the person or persons purporting to bind such an Applicant is or are in fact so authorised.

Applications in the name and for the benefit of minors shall be allowed provided that they are signed by both parents or the legal guardianand accompanied by a Public Registry birth certificate of the minor in whose name and for whose benefit the Application Form issubmitted. Any Bonds allocated pursuant to such an Application shall be registered in the name of the minor as Bondholder, with interestpayable to the parents/legal guardian signing the Application Form until such time as the minor attains the age of eighteen (18) years, afterwhich all dividends and/or interests shall be payable directly to the registered holder, provided that the Company has been duly notifiedin writing of the fact that the minor has attained the age of eighteen years.

In the case of joint Applications, reference to the Applicant in these Terms and Conditions is a reference to each Applicant, and liabilitytherefor is joint and several. Furthermore, as joint applicants, each warrants that he/she has only submitted one Application in his/her name.

4. All Applications for the subscription of Bonds must be submitted on Application Forms within the time limits established above.The minimum subscription of Bonds is Lm500 in value for Bonds and Applications in excess of Lm500 must be in multiples of Lm100.The completed Application Forms are to be lodged with any of the Authorised Selling Agents mentioned in this Offering Memorandum.Unless other arrangements are concluded with the Registrar or the Issuer, all Application Forms must be accompanied by the full price ofthe Bonds applied for. Payment may be made either in cash or by cheque payable, to "The Registrar - Mizzi Organisation Bond Issue".In the event that cheques accompanying Application Forms are not honoured, the Issuer and the Registrar reserve the right to invalidatethe relative Application. Multiple Applications are not allowed.

5. By completing and delivering an Application Form you (as the Applicant (s)):

(a) irrevocably offer to purchase the number of Bonds specified in your Application Form (or any smaller number for which the Application is accepted) at the Bond Offer Price, subject to the Offering Memorandum, these Terms and Conditions and the Memorandum and Articles of Association of the Company;

(b) authorise the Registrar and the Directors to include your name or in the case of joint Applications, the first named applicant, in the register of Members and/or Debentures of the Company in respect of the Bonds allocated to you;

A refund of unallocated Application monies will be sent to you by cheque, without interest, and mailed to your address (or that of the firstnamed Applicant) as set out in your Application Form, at your own risk;

(c) warrant that your remittance will be honoured on first presentation and agree that, if such remittance is not so honoured, you will not be entitled to receive a registration advice, or to be registered in the register of Debentures or to enjoy or receive any rights in respect of such Bonds unless and until you make payment in cleared funds for such Bonds and such payment is accepted by the Company (which acceptance shall be made in its absolute discretion and may be on the basis that you indemnify it against all costs, damages, losses, expenses and liabilities arising out of or in connection with the failure of your remittance to be honoured on first presentation) and that, at any time prior to unconditional acceptance by the Company of such late payment in respect of such Bonds, the Company may (without prejudice to other rights) treat the agreement to allocate such Bonds as void and may allocate such Bonds to some other person, in which case you will not be entitled to any refund or payment in respect of such Bonds (other than return of such late payment);

(d) agree that the registration advice and other documents and any monies returnable to you may be retained pending clearance of your remittance and any verification of identity as required by the Prevention of Money Laundering Act 1994 (and regulations made thereunder) and that such monies will not bear interest;

(e) agree that all Applications, acceptances of Applications and contracts resulting therefrom will be governed by, and construed in accordance with Maltese law and that you submit to the jurisdiction of the Maltese Courts and agree that nothing shall limit the right of the Company to bring any action, suit or proceeding arising out of or in connection with any such Applications, acceptances of Applications and contracts in any other manner permitted by law in any court of competent jurisdiction;

A5


(f) warrant that, if you sign the Application Form on behalf of another party or on behalf of a corporation or corporate entity or association of persons, you have due authority to do so and such person, corporation, corporate entity, or association of persons will also be bound accordingly and will be deemed also to have given the confirmations, warranties and undertakings contained in these Terms and Conditions and undertake to submit your power of attorney or a copy thereof duly certified by a lawyer or notary public if so required by the Registrar;

(g) agree that all documents in connection with the Issue of the Bonds and any returned monies will be sent at your risk and may be sent by post at the address set out in the Application Form;

(h) agree that, having had the opportunity to read the Offering Memorandum you shall be deemed to have had notice of all information and representations concerning the Company and the Issue of the Bonds contained therein;

(i) confirm that in making such Application you are not relying on any information or representation in relation to the Company or the Issue of the Bonds other than those contained in the Offering Memorandum and you accordingly agree that no person responsible solely or jointly for the Offering Memorandum or any part thereof will have any liability for any such other information or representation;

(j) confirm that you have reviewed and you will comply with the restriction contained in paragraph 6 and the warning in paragraph 7 below;

(k) warrant that you are not under the age of 18 years or if you are lodging an Application in the name and for the benefit of a minor,warrant that you are the parents or legal guardian/s of the minor;

(l) agree that such Application Form is addressed to the Issuer and that in respect of those Bonds for which your Application has been accepted, you shall receive a registration advice confirming such acceptance;

(m) confirm that in the case of a joint Application the first named Applicant shall be deemed the holder of the Bonds.

(n) agree to provide the Registrar and/or Company as the case may be, with any information which it may request in connection with your Application(s);

(o) agree that Rizzo, Farrugia & Co. (Stockbrokers) Ltd. will not, in their capacity of Sponsoring Stockbrokers, treat you as their customer by virtue of your making an application for Bonds or by virtue of your Application to subscribe for Bonds being accepted and that Rizzo Farrugia & Co. (Stockbrokers) Ltd. will owe you no duties or responsibilities concerning the price of the Bonds or their suitability for you;

(p) warrant that, in connection with your Application, you have observed all applicable laws, obtained any requisite governmental or other consents, complied with all requisite formalities and paid any issue, transfer or other taxes due in connection with your Application in any territory and that you have not taken any action which will or may result in the Company or the Registrar acting in breach of the regulatory or legal requirements of any territory in connection with the Issue or your Application;

(q) warrant that if you are a non-resident any funds accompanying your Application emanate from a foreign source or foreign currency account held in Malta; and

(r) represent that you are not a U.S. person (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act") and that you are not accepting the invitation comprised in the Offer from within the United States of America, its territories or its possessions, any State of the United States of America or the District of Columbia (the "United States") or on behalf or for the account of anyone within the United States or anyone who is a U.S. person, unless you indicate otherwise with your Application Form.

6. The Bonds have not been and will not be registered under the Securities Act and accordingly may not be offered or sold withinthe United States or to or for the account or benefit of a U.S. person.

7. No person receiving a copy of the Offering Memorandum or an Application Form in any territory other than Malta may treat the sameas constituting an invitation or offer to him nor should he in any event use such Application Form, unless, in the relevant territory, such an invitationor offer could lawfully be made to him or such Application Form could lawfully be used without contravention of any registration or other legalrequirements. It is the responsibility of any person outside Malta wishing to make any Application to satisfy himself as to full observance of thelaws of any relevant territory in connection therewith, including obtaining any requisite governmental or other consents, observing any otherformalities required to be observed in such territory and paying any issues, transfer or other taxes required to be paid in such territory.

8. Within six working days of the closing of the subscription lists, the Company either directly or through the Registrar shalldetermine and announce the basis of acceptance of applications and allocation policy to be adopted.

9. Save where the context requires otherwise, terms defined in the Offering Memorandum bear the same meaning when used in theseTerms and Conditions of Application, in the Application Form and in any other document issued pursuant to the Offering Memorandum.

10. Applications by Employees under the Employee Offering shall be dealt with and allocated by the Company and the Registrar inaccordance with the terms described under the heading ‘Employee Offering’ in Part I of the Offering Memorandum and the submission of anApplication under the Employee Offering shall constitute the Applicant’s consent for the Application to be dealt with and allocated under thoseterms.

11. The Subscription lists for the Bonds will open at 08.30 hours on 23 May 2002 and will close as soon thereafter as may bedetermined by the Company, as the case may be, but not later than 15.00 hours 31 May 2002.

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B1


A N N E X BFINANCIAL INFORMATION ABOUT MIZZI ORGANISATION AND THE GUARANTORS

Mizzi Organisation Pro Forma Consolidated Financial Information for the three years to 31 December 2001

CONTENTS PAGE

Accountants’ report B2 - B4

Pro forma consolidated profit and loss accounts B5

Pro forma consolidated statements of total recognised gains and losses B6

Pro forma consolidated balance sheets B7 - B8

Pro forma consolidated statements of changes in equity B9 - B11

Pro forma consolidated cash flow statements B12

Accounting policies B13 - B20

Notes to the pro forma consolidated financial statements B21 - B48

The DirectorsMizzi Organisation Finance plcMizzi HouseNational RoadBlata l-Bajda HMR 02Malta

The DirectorsRizzo, Farrugia & Co. (Stockbrokers) LimitedThird FloorAirways HouseHigh StreetSliema SLM 15Malta

2 May 2002

Dear Sirs

Pro Forma Consolidated Financial Information for the three years to 31 December 2001

We report on the pro forma consolidated financial information set out on pages B5 to B48 of the Offering Memorandum of MizziOrganisation Finance plc dated 2 May 2002.

The pro forma consolidated financial information has been prepared, for illustrative purposes only, to provide financial information aboutMizzi Organisation (the pro forma company), if such a company were incorporated: the main assumption being that Mizzi Organisationis assumed to own all of the issued share capital of Kastell Limited, Mizzi Holdings Limited, Consolidated Holdings Limited and TheGeneral Soft Drinks Company Limited (the Guarantors), and of Falcon Wines & Spirits Limited, another Group company. This pro formafinancial information has been prepared for inclusion in the Offering Memorandum of Mizzi Organisation Finance plc dated 2 May 2002.

The firm is registered as a partnership of Certified Public Accountants and Auditors in terms of the Accountancy Profession Act. Partners and directors: John Bonello, Joseph Camilleri, Lino Casapinta, Antoine Fiott, Simon Flynn, Neville Gatt, Godfrey Leone Ganado, Frederick Mifsud Bonnici, George Sammut, David Valenzia, Kevin Valenzia, John Zarb.

B2

PricewaterhouseCoopers

PO Box 61 CMR 01

167 Merchants Street

Valletta VLT 03 Malta

Telephone +356 21 247 000

Facsimile +356 21 244 768

Basis of preparation

The pro forma financial information set out on pages B5 to B48 is based on the audited consolidated financial statements of each of theGuarantors, as well as the audited financial statements of Falcon Wines & Spirits Limited, and each of their subsidiary undertakings, forthe three years ended 31 December 2001, on which we have expressed an unqualified opinion on each of the individual companies andthe Groups, for each of the years, and has been prepared on the basis set out in Note 1 on pages B13 to B15.

The pro forma financial information set out in this report comprises:

• Pro forma consolidated profit and loss accounts and pro forma consolidated statements of total recognised gains and losses for eachof the three years ended 31 December 1999, 2000 and 2001.

• Pro forma consolidated balance sheets as at 31 December 1999, 2000 and 2001.

• Pro forma consolidated statements of changes in equity for each of the three years ended 31 December 1999, 2000 and 2001.

• Pro forma consolidated cash flow statements for each of the three years ended 31 December 1999, 2000, and 2001.

• The principal accounting policies applied to the pro forma financial statements for each of the three years ended 31 December 1999, 2000 and 2001.

• Notes to the pro forma consolidated financial statements for each of the three years ended 31 December 1999, 2000 and 2001.

No audited financial statements have been prepared for any Group company in respect of any period subsequent to 31 December 2001.

Responsibilities

Such pro forma financial information is the responsibility of the directors of the Guarantors and of the directors of Falcon Wines & SpiritsLimited, who approved their issue. The directors of Mizzi Organisation Finance plc are responsible for the contents of the OfferingMemorandum dated 2 May 2002, in which this report is included.

It is our responsibility to form an opinion on the pro forma financial information and to report our opinion to you. We do not accept anyresponsibility for any reports previously given by us on any financial information used in the compilation of the pro forma financialinformation beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

B3

B4



Basis of opinion

We conducted our work in accordance with the Statements of Investment Circular Reporting Standards and Bulletin 1998/8 ‘Reportingon pro forma financial information pursuant to the Listing Rules’ issued by the Auditing Practices Board in the UK. Our work, whichinvolved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjustedfinancial information with the source documents, considering the evidence supporting the adjustments and discussing the pro formaconsolidated financial information with the directors of the Guarantors and the directors of Falcon Wines & Spirits Limited.

Opinion

In our opinion:

• The pro forma consolidated financial information has been properly compiled on the basis stated;

• Such basis is consistent with the accounting policies of the Guarantors and with the accounting policies of Falcon Wines & SpiritsLimited; and

• The adjustments are appropriate for the purposes of the pro forma consolidated financial information.

Yours faithfully

This report has been signed byJoseph A. Camilleri (Partner) for and on behalf of PricewaterhouseCoopers

B5



Pro forma consolidated profit and loss accounts

Notes 2001 2000 1999Lm Lm Lm

Turnover 1 43,222,260 40,416,929 33,673,940Cost of sales (34,038,643) (32,192,217) (26,706,955)

Gross profit 9,183,617 8,224,712 6,966,985Direct expenses (899,533) (919,201) (920,220)Distribution and selling costs (2,118,537) (1,982,811) (1,511,288)Administrative expenses (4,341,520) (4,034,893) (3,792,195)Changes in fair value of investment property 14 364,992 387,365 384,281Other operating income 210,162 371,921 411,968

Operating profit 3 2,399,181 2,047,093 1,539,531Share of result before tax of associated undertakings 15 246,122 310,280 243,298Income from financial fixed assets 5 4,348 2,525 11,114Interest receivable and similar income 6 42,717 23,708 46,081Interest payable and similar charges 7 (1,104,435) (847,259) (730,032)

Profit on ordinary activities before tax 1,587,933 1,536,347 1,109,992Tax on profit on ordinary activities 8 (303,183) (458,220) (317,653)

Profit for the financial year 1,284,750 1,078,127 792,339

Earnings per share 10 1.21 1.02 0.75

Pro forma consolidated statements of total recognised gains and losses

Notes 2001 2000 1999Lm Lm Lm

Revaluation surplus on land and buildings arising during the year, net of deferred taxation 25 3,733,955 - -

Share of revaluation surplus on land and buildings of associated undertakings arising during the year 25 11,915 - 398,538

Impairment charges, net of deferred taxation 25 (220,162) - (566,004)Movement in revaluation surplus on land and buildings arising

on determination of deferred tax liability on the basis applicable to capital gains 25 (35,303) (53,817) (25,469)

Share of movement in revaluation surplus of associated undertakings arising on determination of deferred tax liability on the basis applicable to capital gains 25 (4,951) (5,387) 14,734

(Losses)/gains from changes in fair value of available-for-sale financial assets 25 (44,941) (17) 43,780

Transfer of fair value gains on available-for-sale financial assets upon disposal 25 - (7,957) (2,253)

Movement in associated undertaking’s capital reserve on redemption of capitalised ground rents 26 (111) (769) (10,554)

Net gains/(losses) not recognised in profit and loss account 3,440,402 (67,947) (147,228)

Profit for the financial year 1,284,750 1,078,127 792,339

Total recognised gains 4,725,152 1,010,180 645,111

B6



Pro forma consolidated balance sheets

Notes 2001 2000 1999Lm Lm Lm

ASSETSFixed assetsIntangible assets 12 30,687 37,928 45,169

Tangible assetsProperty, plant and equipment 13 23,991,691 19,532,931 17,402,774Investment property 14 4,536,737 4,315,660 3,923,909

Financial assetsInvestments in associated undertakings 15 4,875,510 4,709,088 4,621,228Available-for-sale investments 16 218,690 242,034 131,590

33,653,315 28,837,641 26,124,670

Current assetsStocks and assets held for sale 17 7,371,253 7,947,537 6,890,394Debtors 18 16,750,839 17,707,765 14,728,556Current taxation 320,909 325,599 316,967Cash at bank and in hand 28 1,132,676 942,482 477,854

25,575,677 26,923,383 22,413,771

Total assets 59,228,992 55,761,024 48,538,441

B7



Pro forma consolidated balance sheets - continued

Notes 2001 2000 1999Lm Lm Lm

EQUITY AND LIABILITIESCapital and reservesShare capital 24 1,059,200 1,059,200 1,059,200Revaluation reserves 25 12,580,053 9,270,851 9,465,021Other reserves 26 2,894,543 2,724,931 2,441,381Profit and loss account 11,949,906 11,003,568 10,322,768

Total shareholders’ funds 28,483,702 24,058,550 23,288,370

Provisions for liabilities and chargesDeferred taxation 22 2,726,253 1,669,710 1,546,710Other provisions 23 48,900 49,300 -

2,775,153 1,719,010 1,546,710

Creditors: amounts falling due after more than one yearBorrowings 20 11,360,838 11,224,757 8,732,433Trade and other creditors 21 11,566 11,566 74,215

11,372,404 11,236,323 8,806,648

Creditors: amounts falling due within one yearBorrowings 20 11,049,342 11,589,656 9,337,771Trade and other creditors 21 5,250,774 6,884,149 5,369,971Current taxation 297,617 273,336 188,971

16,597,733 18,747,141 14,896,713

Total creditors 27,970,137 29,983,464 23,703,361

Total equity and liabilities 59,228,992 55,761,024 48,538,441

B8



Pro forma consolidated statements of changes in equity

Share Revaluation Other Profit andNotes capital reserves reserves loss account Total

Lm Lm Lm Lm Lm

Balance at 1 January 1999 1,059,200 9,712,573 2,204,765 9,866,721 22,843,259

Share of revaluation surplus on land and buildings of associated undertakings arising during the year 25 - 398,538 - - 398,538

Impairment charges, net of deferred taxation 25 - (566,004) - - (566,004)Movement in deferred tax liability on revalued land and

buildings determined on the basis applicable to capital gains 25 - (25,469) - - (25,469)Share of movement in deferred tax liability on revalued

land and buildings of associated undertakings determinedon the basis applicable to capital gains 25 - 14,734 - - 14,734

Transfer upon realisation through disposal of land and buildings, net of deferred taxation 25 - (26,524) - 26,524 -

Depreciation transfer 25 - (84,354) - 84,354 -Transfer of fair value gains on investment property

arising during the year, net of deferred tax movements 26 - - 275,370 (275,370) -Gains from changes in fair value of available-for-sale

financial assets 25 - 43,780 - - 43,780Transfer of fair value gains on available-for-sale financial

assets upon disposal 25 - (2,253) - - (2,253)Transfer arising upon merger into associated undertaking 26 - - (28,200) 28,200 -Movement in associated undertaking’s capital reserve on

redemption of capitalised ground rents 26 - - (10,554) - (10,554)

Net (losses)/gains not recognised in profit and loss account - (247,552) 236,616 (136,292) (147,228)

Dividends for 1999 11 - - - (200,000) (200,000)Profit for the financial year - - - 792,339 792,339

Balance at 31 December 1999 1,059,200 9,465,021 2,441,381 10,322,768 23,288,370

B9



B10



Pro forma consolidated statements of changes in equity - continued


Lm Lm Lm Lm Lm


Movement in deferred tax liability on revalued land and buildings determined on the basis applicable to capital gains 25 - (53,817) - - (53,817)

Share of movement in deferred tax liability on revalued land and buildings of associated undertakings determined on the basis applicable to capital gains 25 - (5,387) - - (5,387)

Transfer upon realisation through disposal of land and buildings, net of deferred taxation 25 - (41,881) - 41,881 -


arising during the year, net of deferred tax movements 26 - - 284,319 (284,319) -Losses from changes in fair value of available-for-sale

financial assets 25 - (17) - - (17)Transfer of fair value gains on available-for-sale

financial assets upon disposal 25 - (7,957) - - (7,957)Movement in associated undertaking’s capital reserve

on redemption of capitalised ground rents 26 - - (769) - (769)

Net (losses)/gains not recognised in profit and loss account - (194,170) 283,550 (157,327) (67,947)

Dividends for 2000 11 - - - (240,000) (240,000)Profit for the financial year - - - 1,078,127 1,078,127


B11



Pro forma consolidated statements of changes in equity – continued


Lm Lm Lm Lm Lm


Revaluation surplus on land and buildings arising during the year, net of deferred taxation 25 - 3,733,955 - - 3,733,955

Share of revaluation surplus on land and buildings of associated undertakings arising during the year 25 - 11,915 - - 11,915

Impairment charges, net of deferred taxation 25 - (220,162) - - (220,162)Movement in deferred tax liability on revalued land and

buildings determined on the basis applicable to capital gains 25 - (35,303) - - (35,303)Share of movement in deferred tax liability on revalued

land and buildings of associated undertakings determinedon the basis applicable to capital gains 25 - (4,951) - - (4,951)

Transfer upon realisation through disposal of land and buildings, net of deferred taxation - (49,404) - 49,404 -


arising during the year, net of deferred tax movements 26 - - 292,856 (292,856) -Transfer upon realisation through disposal of

investment property, net of deferred taxation 26 - - (123,133) 123,133 -Losses from changes in fair value of available-for-

sale financial assets 25 - (44,941) - - (44,941)Movement in associated undertaking’s capital reserve

on redemption of capitalised ground rents 26 - - (111) - (111)

Net gains/(losses) not recognised in profit and loss account - 3,309,202 169,612 (38,412) 3,440,402

Dividends for 2001 11 - - - (300,000) (300,000)Profit for the financial year - - - 1,284,750 1,284,750


Pro forma consolidated cash flow statements

Notes 2001 2000 1999Lm Lm Lm

Operating activitiesCash generated from operations 27 3,333,978 787,683 1,366,112Dividends received 4,348 2,525 11,114Dividends received from associated undertakings 15 115,950 129,180 90,121Interest received 42,717 23,708 46,081Interest paid (1,104,435) (847,259) (730,032)Tax paid (356,438) (222,270) (223,306)

Net cash from/(used in) operating activities 2,036,120 (126,433) 560,090

Investing activitiesPurchase of tangible assets (1,756,462) (4,058,506) (3,355,477)Acquisition of investments in associated undertakings 15 (125,000) (3,950) -Purchase of available-for-sale financial assets 16 (27,884) (131,241) (45,696)Proceeds from disposal of tangible assets 761,366 259,769 467,189Proceeds from disposal of available-for-sale financial assets 16 6,287 20,780 5,002

Net cash used in investing activities (1,141,693) (3,913,148) (2,928,982)

Financing activitiesIncrease in/(payments of) short term borrowings 519,996 (86,746) (130,198)Increase in long term borrowings 136,081 2,492,324 1,489,028Dividends paid 11 (300,000) (240,000) (200,000)

Net cash from financing activities 356,077 2,165,578 1,158,830

Movement in cash and cash equivalents 1,250,504 (1,874,003) (1,210,062)

Cash and cash equivalents at beginning of year (10,314,957) (8,440,954) (7,230,892)

Cash and cash equivalents at end of year 28 (9,064,453) (10,314,957) (8,440,954)

B12



Accounting policies

The principal accounting policies adopted in the preparation of these pro forma consolidated financial statements are set out below.

1. Basis of preparation

These pro forma consolidated financial statements have been prepared, for illustrative purposes only, to provide financial information about Mizzi Organisation (the pro forma company), if such a company were incorporated. This pro forma financial information has been prepared for inclusion in the Offering Memorandum of Mizzi Organisation Finance plc dated 2 May 2002 (the "Offering Memorandum").

The Bonds that are being offered for sale in the above-mentioned Offering Memorandum are being guaranteed by Kastell Limited, Mizzi Holdings Limited, Consolidated Holdings Limited and The General Soft Drinks Company Limited (the "Guarantors"). Ultimately, common individuals and/or common individual companies equally own the Guarantors, and accordingly the results andfinancial position of the Guarantors are not consolidated into any Group company on a statutorily required basis. Accordingly, as there is no legal entity at the level of which a consolidation takes place, the common directors of each of the Guarantors have prepared these pro forma consolidated financial statements (assuming a holding company owns each of the Guarantors) to provide more meaningful information to potential investors. For the purposes of these pro forma consolidated financial statements, the assumed holding company has been named Mizzi Organisation.

The basis of preparation of these pro forma consolidated financial statements (including the various assumptions used) are noted hereunder as well as in the accounting policies below:

a) It is assumed that a holding company, for this purpose named Mizzi Organisation, owns all of the issued share capital of each of the Guarantors, as well as all of the issued share capital of Falcon Wines & Spirits Limited, another Group company.

b) The pro forma consolidated financial statements include the audited consolidated financial statements of each of the Guarantors, as well as the audited financial statements of Falcon Wines & Spirits Limited, and each of their subsidiary undertakings [see (e) below], for the three years ended 31 December 2001, on which the auditors have expressed an unqualified opinion on each of the individual companies and the Groups, for each of the years.

c) The pro forma consolidated financial statements have been prepared in accordance with International Accounting Standards (except as disclosed in the accounting policies below in respect of the adoption of IAS 39 and IAS 40 with effect from 1 January 1999) and in accordance with the requirements of the Companies Act, 1995. They have been prepared under the historical cost convention, as modified by the fair valuation of the land and buildings category of property, plant and equipment, available-for-sale investments and investment property.

d) The total authorised, issued and fully paid up share capital of the pro forma holding company (Mizzi Organisation) has been assumed to be the aggregate of all of the authorised, issued and fully paid up share capital of each of the Guarantors and of the authorised, issued and fully paid up share capital of Falcon Wines & Spirits Limited.

e) The principal Group undertakings whose results and financial position affected the figures of these pro forma consolidated financial statements are shown below, whereas the Group’s investments in associated undertakings are set out in Note 15 to these proforma consolidated financial statements:

B13



1. Basis of preparation - continued

(i) Kastell Limited

Name Principal activity

Arkadia Marketing Limited Owner and operator of a shopping and commercial centre in GozoContinental Cars Limited Importation and sale of motor vehiclesDuemila Limited Land and property development (non-trading)Festa Limited Holiday services and operator of ‘Pizza Express’ franchiseFesta Holdings Limited Holding of investment in Festa LimitedHubbalit Developments Limited Owner of site for developmentMalta Farmhouses Limited Land and property developmentMega Imports Limited Importation and sale of CDs (non-trading)M.I.S. Limited In liquidationMizzinvest Limited Operation of music stores (non-trading)Mizzi Insurance Agency Limited Insurance agent (non-trading)Mizzi Limited Importation and sale of domestic appliancesNissan Motor Sales Limited Importation and sale of motor vehiclesRussian Motors Limited Importation and sale of motor vehiclesSt. Paul’s Court Limited Owner of property (non-trading)Titan International Limited Importation, sale and servicing of airconditioning units and liftsVoyagair Limited Sales agent for international airlines

All the shareholdings are held directly by Kastell Limited, except for the holdings in Malta Farmhouses Limited and Festa Limited, which are held by Festa Limited and Festa Holdings Limited, respectively.

All subsidiaries have been incorporated in Malta and are wholly owned unless otherwise stated. All holdings are in the ordinary share capital of the undertaking concerned and have remained unchanged throughout the three year period to 31 December 2001.

(ii) Consolidated Holdings Limited


Industrial Motors Limited Importation and sale of motor vehiclesM.E.C. Limited (50%) In liquidationThe Waterfront Hotel Limited Owner and operator of ‘The Waterfront Hotel’United Acceptances Finance Limited Finance company (granting and administering hire purchase agreements)

All shareholdings are held directly by Consolidated Holdings Limited.

All subsidiaries have been incorporated in Malta and are wholly owned unless otherwise stated. All holdings are in the ordinary share capital of the undertaking concerned and have remained unchanged throughout the three year period to 31 December 2001.

B14



1. Basis of preparation - continued

(iii)Mizzi Holdings Limited


Mizzi Brothers Limited Importation and sale of outboard enginesMizzi Estates Limited Renting of propertyMuscats Motors Limited Importation and sale of motor vehicles

All shareholdings are held directly by Mizzi Holdings Limited. Mizzi Estates Limited was acquired from Consolidated HoldingsLimited on 18 December 2001.

All subsidiaries have been incorporated in Malta and are wholly owned unless otherwise stated. All holdings are in the ordinaryshare capital of the undertaking concerned and have remained unchanged throughout the three year period to 31 December 2001,except as noted above.

The Group also holds the entire share capital of Mizzi Automotive Services Limited, whose principal activity is the provision of panel beating, spray painting and other services in the automotive industry. The shareholding in this company is held equally by Continental Cars Limited, Muscats Motors Limited and Industrial Motors Limited.

(iv) The General Soft Drinks Company Limited

The company’s principal activity is the bottling of soft drinks and mineral water.

(v) Falcon Wines and Spirits Limited

The company’s principal activity is the importation and sale of beer and non-alcoholic beverages.

2. Consolidation

a) Subsidiary undertakings

Subsidiary undertakings, which are those entities in which the Group (Mizzi Organisation), directly or indirectly has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations, are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. All intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered.

b) Associated undertakings

Investments in associated undertakings are accounted for by the equity method of accounting. These are undertakings over which the Group generally has between 20% and 50% of the voting rights, or over which the Group exercises significant influence, but which it does not control. Provisions are recorded for long-term impairment in value.

Equity accounting involves recognising in the profit and loss account the Group’s share of the associates’ profit or loss for the year. The Group’s interest in the associate is carried in the balance sheet at an amount that reflects its share of the net assets of the associate and includes goodwill or negative goodwill (net of accumulated amortisation) on the acquisition.

Unrealised gains on transactions between the Group and its associated undertakings are eliminated to the extent of the Group’s interest in the associated undertakings; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

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3. Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary or associated undertaking at the date of acquisition. Goodwill on acquisitions of subsidiary undertakings occurring on or after 1 January 1995 would be included in ‘Intangible assets’. Goodwill on acquisitions of associated undertakings occurring on or after 1 January 1995 is included in ‘Investments in associated undertakings’. Goodwill is amortised using the straight-line method over a maximum period of five years. Goodwill on acquisitions that occurred prior to 1 January 1995 has been charged in full to retained earnings in shareholders’ equity; such goodwill has not been retroactively capitalised and amortised.

Negative goodwill represents the excess of the fair value of the Group’s share of the net assets acquired over the cost of acquisition. Negative goodwill is presented in the same balance sheet classifications as goodwill. To the extent that negative goodwill relates to expectations of future losses and expenses that are identified in the Group’s plan for the acquisition and can be measured reliably, but which do not represent identifiable liabilities, that portion of negative goodwill is recognised in the profit and loss account when the future losses and expenses are recognised. Any remaining negative goodwill, not exceeding the fair value of the non-monetary assets acquired, is recognised in the profit and loss account over the remaining weighted average useful life of those assets; negative goodwill in excess of the fair values of those assets is recognised in the profit and loss account immediately.

4. Revenue recognition

Sales are recognised upon delivery of products or performance of services, net of sales taxes and discounts, and are included in these pro forma consolidated financial statements as turnover. Sales relating to long-term contracts - vide accounting policy for ‘Long-term contracts’ .

Other revenues earned by the Group are recognised on the following bases:

Interest income - as it accrues, unless collectibility is in doubt;Dividend income - when the Group’s right to receive payment is established;Operating lease rental income - vide accounting policy for ‘Operating leases’.

5. Foreign currencies

Transactions in foreign currencies have been converted into Maltese Liri at the rates of exchange ruling on the date of the transaction.Assets and liabilities denominated in foreign currencies have been translated into Maltese Liri at the rates of exchange ruling at the balance sheet date. All resulting differences are taken to the profit and loss account.

6. Available-for-sale financial assets

For the purposes of the preparation of these pro forma consolidated financial statements, the Group adopted IAS 39 Financial Instruments: Recognition and Measurement as from 1 January 1999. IAS 39 became effective for financial statements covering financial years beginning on or after 1 January 2001. However, in order to present these pro forma consolidated financial statements on a consistent basis, the results and financial position in each of the years have been adjusted retrospectively.

The Group classifies its investments (other than investments in associated undertakings) as available-for-sale financial assets, under the requirements of IAS 39. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices are classified as available-for-sale assets. Such investments are included in fixed assets unless management has the express intention of holding the assets for less than 12 months from the balance sheet date. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis.

All available-for-sale assets are initially recognised at cost (which includes transaction costs). These financial assets are subsequently remeasured at fair value based on quoted market prices. Unquoted equity instruments are measured atdirectors’ valuations, in most cases by reference to the net asset backing of the investee. Unrealised gains and losses arising from changes in the fair value of assets classified as available-for-sale are recognised in equity. When the assets are disposed of or impaired, the related accumulated fair value adjustments are transferred to the profit and loss account.

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6. Available-for-sale financial assets - continued

A financial asset is impaired if its carrying amount is greater than its estimated recoverable amount. The amount of the impairment loss for assets carried at fair value is calculated as the difference between the asset’s carrying amount and the present value of expected future cash flows discounted at the current market rate of interest for similar financial assets.

All regular way purchases and sales of all available-for-sale assets are recognised at settlement date, which is the date on which an asset is delivered to or by the Group. Any change in fair value for the asset to be received is recognised between the trade date and settlement date.

7. Investment property

For the purposes of the preparation of these pro forma consolidated financial statements, the Group also adopted IAS 40 Investment Property as from 1 January 1999. IAS 40 became effective for financial statements covering periods beginning on or after 1 January 2001. However, in order to present these pro forma consolidated financial statements on a consistent basis, the results and financial position in each of the years have been adjusted retrospectively.

Property held for long-term rental yields which is not occupied by the Group is classified as investment property. Investment propertyprincipally comprises land and buildings. Investment property is treated as a long-term investment and is carried at fair value, representing open market value determined annually by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or conditon of the specific asset. Under IAS 40, changes in fair values are recorded in the profit and loss account.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of the reclassification becomes its cost for accounting purposes. Property that is being constructed or developed for future use as investment property is classified as property, plant and equipment and stated at cost until construction or development is complete, at which time it is reclassified and subsequently accounted for as investment property.

If an item of property, plant and equipment becomes an investment property because its use has changed, any difference resulting between the carrying amount and the fair value of this item at the date of transfer is recognised in equity as a revaluation of property, plant and equipment under IAS 16. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in the profit and loss account. Upon the disposal of such investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through the profit and loss account.

8. Intangible assets

Expenditure on acquired franchises is capitalised and amortised using the straight-line method over their useful life, generally over a period of five to ten years. Intangible assets are not revalued. The carrying amount of each intangible asset is reviewed annually and adjusted for permanent impairment where it is considered necessary.

9. Property, plant and equipment

All property, plant and equipment are initially recorded at cost. Land and buildings are subsequently shown at market value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Valuations are carried out on a regular basis such that the carrying amount of property does not differ materially from that which would be determined using fair values at the balance sheet date. All other tangible assets are stated at historical cost less depreciation.

Increases in the carrying amount arising on revaluation are credited to the revaluation reserve in shareholders' equity. Decreases that offset previous increases of the same asset are charged against the revaluation reserve; all other decreases are charged to the profit and loss account. Each year the difference between depreciation based on the revalued carrying amount of the asset (the depreciation charged to the profit and loss account) and depreciation based on the asset's original cost, net of any related deferred income taxes, is transferred from the revaluation reserve to retained earnings.

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9. Property, plant and equipment - continued

Depreciation is calculated on the straight-line method to write off the cost, or revalued amount, of the assets to their residual values over their estimated useful life as follows:

%Long-term leasehold property NilFreehold buildings 1 – 10Plant, machinery and equipment 5 – 33 1/3

Furniture, fixtures and fittings 10 – 33 1/3

Motor vehicles 25

Freehold land is not depreciated as it is deemed to have an indefinite life. Assets in the course of construction are not depreciated.

Long-term leases are defined as those having a remaining term of more than 50 years. In view of the Group’s policy of continuous refurbishment of long-term leasehold property, the long estimated useful life of such property and its high residual value, the depreciation charge on such property would, in any event, be immaterial. Other leasehold property is amortised over the period of the lease.

Gains and losses on disposal of tangible assets are determined by reference to their carrying amount and are taken into account in determining operating profit. On disposal of a revalued asset, amounts in the revaluation reserve relating to that asset are transferred to retained earnings.

10. Recoverability of tangible and intangible assets

The Group evaluates the carrying value of all tangible and intangible assets whenever events or circumstances indicate the carrying value of assets may exceed their recoverable amounts. An impairment loss is recognised when the estimated future cash flows expected to result from the use of an asset are less than the carrying amount of the asset. Measurement of an impairment loss is based on fair value of the asset computed using discounted cash flows if the asset is expectedto be held and used. Measurement of an impairment loss for an asset held for sale would be based on market value less estimated costs to sell.

11. Operating leases

(a) A Group company is the lessee

Leases of assets where a significant portion of the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.

(b) A Group company is the lessor

Assets leased out under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income is recognised on a straight-line basis over the lease term.

12. Stocks

Stocks, with the exception of containers, which are being written down from cost to deposit value, are stated at the lower of cost and net realisable value. In general, cost of raw materials and assets purchased for resale includes transport and handling costs. Cost of work in progress and finished goods comprises raw materials, direct labour, other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. The basis of stock valuation is as follows:

• stocks of motor vehicles are valued by specifically identifying their individual costs;• stocks of spare parts are valued using the weighted average cost method; and• stocks of other goods for resale are valued using the first-in first-out method.

13. Assets held for sale

Assets which are no longer required for the purpose for which they were originally acquired and which will, hence, be disposed of, are transferred to assets held for sale within current assets and are carried at the lower of their carrying amounts and estimated recoverable amounts.

On disposal, the difference between the net disposal proceeds and the carrying amount is charged or credited to the profit and loss account.

14. Trade debtors

Trade debtors are carried at the original invoice amount less an estimate made for doubtful debtors based on a review of all outstanding amounts at the year-end. Bad debts are written off during the year in which they are identified.

15. Amounts receivable from hire purchase debtors

Amounts receivable from hire purchase debtors, covered by bills of exchange, are recognised as trade receivables at the face value of the debts financed with the interest element of the bills of exchange being accounted for as interest accrues with the passage of time. Receivables covered by bills of exchange factored out to bankers with an option to repurchase them at face value as they falldue are not derecognised from the Group’s balance sheet. The Group does not lose control of the contractual rights that are embeddedwithin the hire purchase receivables which it factors out to bankers. The transferee does not have the ability to obtain the benefits ofthe receivables and accordingly the transferor retains substantially all the risks of the assets. Control would not have been surrendered since the transferor has the right to reacquire the receivables, the assets are not readily obtainable in the market and the re-acquisition price is not specified as the fair value of the assets at the time of re-acquisition. Essentially this factoring facility is accounted for as collateralised borrowings for an amount of the face value of the bills of exchange subject to interest charges.

Bills of exchange factored out to bankers without an option to repurchase them as they fall due are derecognised by the Group since the transferor would have lost control over the receivables. The transferor has the ability to obtain the benefits of the underlying receivables i.e. the right to receive a stream of cash flows in the form of principal and interest amounts. The banker’s right of recourse under this facility is limited to 15% of the value of the bills factored in the preceding six months. This right of recourse is accounted for as a separate financial liability assumed by the Group upon factoring bills of exchange. It is recognised at fair value based on the probability that an outflow of resources will be required to settle the obligation implied in the financial instrument assumed i.e. based on the present value of expected credit losses covered by the right of recourse.

16. Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at face value. For the purposes of the pro forma consolidated cash flow statements, cash and cash equivalents comprise cash in hand and deposits held at call with banks, net of bank overdrafts and bills of exchange factored out to bank. In the pro forma consolidated balance sheets, the bank overdrafts and the short-term portion of bills of exchange factored out to bank are included in borrowings in current liabilities.

17. Long-term contracts

When the outcome of a contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable; and contract costs are recognised when incurred.

When the outcome of a contract can be estimated reliably, contract revenue and contract costs are recognised over the period of the contract, respectively, as revenue and expenses. The Group uses the percentage of completion method to determine the appropriate amount of revenue and costs to recognise in a given period; the stage of completion is measured by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total costs for the contract. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

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17. Long-term contracts - continued

In determining costs incurred up to the year-end, any costs relating to future activity on a contract are excluded and shown as contract work in progress. The aggregate of the costs incurred and the profit or loss recognised on each contract is compared against theprogress billings up to the year-end.

Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the balance is shown as due from customers for contract work, under debtors. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as due to customers for contract work, under trade and other creditors.

18. Borrowings

Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss account over the period of the borrowings.

19. Other financial instruments

The Group’s other financial assets, which have not been referred to in the accounting policies disclosed above, are classified as loans and receivables originated by the Group in accordance with the requirements of IAS 39 and are measured at cost, i.e. the face value of these assets. All regular way transactions in assets classified in this category are accounted for using settlement date accounting.

A credit risk provision for financial asset impairment is established if there is objective evidence that the Group will not be able to collect all amounts due. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of the expected cash flows, including amounts recoverable from collateral, discounted based on the interest rate at inception.

The Group’s financial liabilities, other than those referred to in the accounting policies above, are classified as liabilities which are not held for trading (“other liabilities”) under IAS 39, and are measured at cost i.e. the face value of such instruments.

20. Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

21. Dividends payable

Dividends on ordinary shares are recognised in equity in the period in which they are declared.

22. Deferred taxation

Deferred income tax is provided using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes.

The principal temporary differences arise from the fair valuation of land and buildings and investment property, depreciation on property, plant and equipment, provisions for doubtful debtors and unabsorbed capital allowances carried forward. Deferred tax on the fair valuation of property, plant and equipment is charged or credited directly to the revaluation reserve. Deferred income tax on the difference between the actual depreciation on the asset and the equivalent depreciation based on the historical cost of the asset is realised through the profit and loss account.

Deferred tax assets are recognised only to the extent that future taxable profit will be available such that realisation of the related tax benefit is probable.

23. Provisions

Provisions are recognised when the company has a legal or constructive obligation as a result of past events, it is probable that anoutflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

24. Borrowing costs

Interest costs incurred on funds borrowed specifically to finance the construction of property, plant and equipment are capitalised,during the period of time that is required to complete and prepare the asset for its intended use, as part of the cost of the asset. All other borrowing costs are expensed.

Notes to the pro forma consolidated financial statements

1. Segment information

Leisure & Retail & RealAutomotive Beverage tourism contracting estate Other Group

Lm Lm Lm Lm Lm Lm LmYear ended 31 December 2001Total revenue 30,142,656 7,312,261 1,114,078 4,955,529 14,288 - 43,538,812Less: inter-divisional sales - - (17,415) (291,637) (7,500) - (316,552)

Turnover 30,142,656 7,312,261 1,096,663 4,663,892 6,788 - 43,222,260

Segment result 1,905,747 1,116,187 (121,572) (291,467) 292,868 (16,048) 2,885,715Eliminations on consolidation (36,806)Unallocated costs (449,728)

Operating profit 2,399,181Income from financial assets 4,348Interest receivable 42,717Interest payable (1,104,435)Share of results of associates 16,080 - 217,855 - - 12,187 246,122

Profit before tax 1,587,933Tax (303,183)

Net profit 1,284,750

Segment assets 39,593,650 7,737,837 6,620,971 7,836,339 4,433,505 216,894 66,439,196Elimination of Group balances (22,320,146)Associates 75,012 - 4,776,538 - - 23,960 4,875,510Unallocated assets 10,234,432

Total assets 59,228,992

Segment liabilities 6,914,717 2,042,118 3,107,425 4,355,134 8,618,708 158,687 25,196,789Elimination of Group balances (22,320,146)Unallocated liabilities 27,868,647

Total liabilities 30,745,290

Capital expenditure 782,206 492,869 179,973 279,012 - 22,402 1,756,462Depreciation and amortisation 611,420 543,385 235,105 287,803 793 - 1,678,506Impairment charges recognised

in equity (Notes 13 and 17) 178,127 - - 12,827 87,692 - 278,646Impairment charges recognised

in profit and loss account (Note 17) - - - 62,324 - - 62,324Other non-cash expenses/(income) 10,574 229,436 (3,860) 18,109 - 1,175 255,434

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1. Segment information - continued

Leisure & Retail & RealAutomotive Beverage tourism contracting estate Other Group

Lm Lm Lm Lm Lm Lm LmYear ended 31 December 2000Total revenue 28,467,625 7,065,042 740,333 4,604,453 15,421 348 40,893,222Less: inter-divisional sales - - (17,250) (451,543) (7,500) - (476,293)

Turnover 28,467,625 7,065,042 723,083 4,152,910 7,921 348 40,416,929

Segment result 1,885,014 883,620 (304,556) (142,577) 422,813 (46,497) 2,697,817Eliminations on consolidation (47,575)Unallocated costs (603,149)

Operating profit 2,047,093Income from financial assets 2,525Interest receivable 23,708Interest payable (847,259)Share of results of associates 43,920 - 253,102 - - 13,258 310,280


Net profit 1,078,127

Segment assets 29,293,774 7,953,572 6,255,670 6,363,913 5,326,151 286,407 55,479,487Elimination of Group balances (14,368,871)Associates 84,646 - 4,608,989 - 15,453 - 4,709,088Unallocated assets 9,941,320


Segment liabilities 6,980,876 2,840,441 2,879,188 4,327,995 961,502 218,678 18,208,680Elimination of Group balances (14,368,871)Unallocated liabilities 27,862,665


Capital expenditure 1,986,293 264,613 1,637,544 163,645 1,725 4,686 4,058,506Depreciation and amortisation 540,686 538,139 180,892 303,645 2,200 - 1,565,562Impairment charges recognised

in profit and loss account (Note 13) - - - 28,000 - - 28,000Other non-cash expenses 38,026 201,352 13,599 8,941 - 16,079 277,997

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1. Segment information - continuedLeisure & Retail & Real

Automotive Beverage tourism contracting estate Other GroupLm Lm Lm Lm Lm Lm Lm

Year ended 31 December 1999Total revenue 24,111,931 6,089,299 407,165 3,496,216 15,813 110,159 34,230,583Less: inter-divisional sales - - (75,204) (475,139) (6,300) - (556,643)

Turnover 24,111,931 6,089,299 331,961 3,021,077 9,513 110,159 33,673,940

Segment result 1,527,766 707,978 (108,172) (312,511) 457,628 44,105 2,316,794Eliminations on consolidation (64,856)Unallocated costs (712,407)

Operating profit 1,539,531Income from financial assets 11,114Interest receivable 46,081Interest payable (730,032)Share of results of associates (8,351) - 251,649 - - - 243,298


Net profit 792,339

Segment assets 25,569,884 6,916,999 5,339,363 6,774,409 2,551,841 515,239 47,667,735Elimination of Group balances (11,453,960)Associates 90,048 - 4,531,180 - - - 4,621,228Unallocated assets 7,703,438


Segment liabilities 4,647,291 2,616,812 2,245,058 3,401,638 1,089,072 253,167 14,253,038Elimination of Group balances (11,453,960)Unallocated liabilities 22,450,993


Capital expenditure 701,215 887,616 1,221,506 536,021 433 8,686 3,355,477Depreciation and amortisation 328,731 667,797 193,235 305,908 2,578 4,997 1,503,246Impairment charges recognised

in equity (Notes 13 and 17) - 21,510 616,470 - - - 637,980Other non-cash expenses/(income) 30,826 80,743 (2,239) 1,011 - (1,391) 108,950

The Group is organised into five main business segments which operate in Malta:

Automotive - sale of motor vehicles, spare parts and provision of other ancillary services;Beverage - bottling and sale of soft drinks and table water, importation and sale of other beverages;Leisure & tourism - operation of hotels and provision of holiday related services;Retail & contracting - operation of a shopping complex in Gozo; importation and sale of domestic appliances;

importation, sale and contracting of airconditioning units; and Real estate - holding of investment property.

1. Segment information - continued

Segment revenue and segment result include transfers between business segments. Such transfers, which are eliminated on consolidation, are priced on, and accordingly accounted for at, commercial terms.

Unallocated costs mainly comprise corporate expenses. Segment assets include all operating assets used by a segment and consist principally of property, plant and equipment, stocks, debtors and operating cash, and exclude current tax assets. Segment liabilities include all operating liabilities and consist principally of trade creditors and accrued liabilities, and exclude items such as borrowings, current tax and deferred tax liabilities. Capital expenditure comprises mainly additions to property, plant and equipment.

2001 2000 1999Lm Lm Lm

Analysis of sales by categorySale of goods 39,368,187 37,258,417 31,548,504Revenue from services 2,309,053 1,748,628 1,170,423Contract revenue 1,193,248 995,225 569,230Operating lease rental income 351,772 414,659 385,783

43,222,260 40,416,929 33,673,940

2. Discontinuing operations

During the year ended 31 December 2000, the directors resolved to cease the car hire operation of a Group undertaking with effect from 1 April 2000 and to discontinue the insurance agency activities of another company. On 19 January 2000, a Group company hasgiven notice of termination of its insurance agency agreement, but it has continued to run-off contracts of insurance effected before that date. Furthermore, during the financial year ended 31 December 2001, the directors resolved to discontinue the activities of two Group undertakings involved in the operation of music stores with effect from 1 July 2001. Whereas the operation of music stores and the car hire activity have been reported in the ‘Retail & contracting’ and ‘Leisure & tourism’ business segments respectively (vide Note 1), the insurance agency operation is not reported within any of the five main business segments disclosed above and is included in ‘Other’ business segments.

The sales and results of the discontinuing activities in each of the financial periods reported upon, were as follows:

2001 2000 1999Lm Lm Lm

Operation of music storesSales 120,056 428,752 356,456Operating costs (165,806) (612,512) (462,331)Impairment of tangible assets (Notes 13 and 17) (58,808) (28,000) -

Operating result (104,558) (211,760) (105,875)

Insurance agency operationCommissions receivable - - 110,159Operating costs (10,351) (55,907) (64,387)

Operating result (10,351) (55,907) 45,772

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2. Discontinuing operations - continued

2001 2000 1999Lm Lm Lm

Car hire operationSales 1,155 33,361 167,937Operating costs (18,822) (63,099) (175,394)

Operating result (17,667) (29,738) (7,457)

The net cash flows attributable to the activities of the discontinuing operations in each of the financial periods, were as follows:

2001 2000 1999Lm Lm Lm

Operation of music storesOperating cash flows (8,428) (36,902) (131,522)Investing cash flows 8,011 37,727 (30,097)

Total cash flows (417) 825 (161,619)

Insurance agency operationOperating cash flows 65,286 (294,442) 109,332Investing cash flows 9,224 115 (2,126)Financing cash flows - - (25,000)

Total cash flows 74,510 (294,327) 82,206

Car hire operationOperating cash flows (1,759) (40,668) 23,105Investing cash flows 76,244 24,150 2,950

Total cash flows 74,485 (16,518) 26,055

The net assets that are directly attributable to the discontinuing activities at the balance sheet dates, were as follows:

At 31 At 31 At 31December December December

2001 2000 1999Lm Lm Lm

Operation of music storesTangible assets 44,700 117,346 198,351Current assets 9,788 168,749 309,781

Total assets 54,488 286,095 508,132Total liabilities (20,376) (93,704) (135,988)

Net assets 34,112 192,391 372,144

2. Discontinuing operations - continuedAt 31 At 31 At 31

December December December2001 2000 1999

Lm Lm Lm

Insurance agency operationTangible assets - 9,581 13,761Current assets 66,916 210,231 107,452

Total assets 66,916 219,812 121,213Total liabilities (3,744) (67,860) (186,195)

Net assets/(liabilities) 63,172 151,952 (64,982)

Car hire operationTangible assets - 92,152 141,703

The Group’s operating current assets and operating liabilities attributable to the discontinuing operations are being settled in the ordinary course of business until the discontinuance is expected to be completed. The tangible assets were to be disposed of becausethey were no longer required for the purpose for which they were originally acquired. Details with respect to tangible assets directlyattributable to discontinuing operations which have been disposed of, as a result of the decision to discontinue the activities, during the financial years reported upon, were as follows:

2001 2000 1999Lm Lm Lm

Operation of music storesProceeds from disposal 11,294 46,241 -Carrying amount (17,121) (35,816) -

(Loss)/profit on disposal (5,827) 10,425 -

Insurance agency operationProceeds from disposal 9,224 - -Carrying amount (9,581) - -

Loss on disposal (357) - -

Car hire operationProceeds from disposal 76,244 24,150 -Carrying amount (92,152) - -

(Loss)/profit on disposal (15,908) 24,150 -

The gains and losses recognised on disposal of tangible assets were not deemed material for the purposes of disclosure on the face of the profit and loss account. The tangible assets attributable to the discontinuing activities, which had not yet been disposed of have been transferred to assets held for sale within current assets as at 31 December 2000 (Note 17).

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B27

MIZZIORGANISATIONFINANCE p l cMizzi Organisation Pro Forma Consolidated Financial Information

for the three years to 31 December 2001

3. Operating profit

Operating profit is stated after charging/(crediting):

2001 2000 1999Lm Lm Lm

Staff costs (Note 4) 4,938,229 3,846,697 3,431,673Depreciation of tangible assets: (Note 13)- owned assets 1,500,715 1,370,561 1,354,355- owned assets (motor vehicles) leased out under operating leases 170,550 187,760 141,650Amortisation of intangible assets (included in ‘Cost of sales’, Note 12) 7,241 7,241 7,241Auditors’ remuneration 27,000 27,000 27,000Property operating lease rentals payable 250,462 240,109 180,271Loss/(profit) on disposal of tangible assets 16,647 (5,911) (155,271)Exchange differences 67,355 7,658 455Increase in provisions for bad and doubtful debts 255,434 277,997 108,950Bad debts written off 169,213 49,189 10,223Impairment of tangible assets: (included in ‘Administrative expenses’)- continuing operations (Note 17) 3,516 - -- discontinuing operations (Notes 13 and 17) 58,808 28,000 -

4. Staff costs2001 2000 1999

Lm Lm Lm

Wages and salaries 4,622,778 3,580,507 3,192,213Social security costs 315,451 266,190 239,460

4,938,229 3,846,697 3,431,673

Average number of persons employed by the Group during the year:2001 2000 1999

Direct 510 451 354Managerial and administrative 209 186 186

719 637 540

5. Income from financial fixed assets2001 2000 1999

Lm Lm Lm

Gross dividends receivable 4,348 2,525 11,114

6. Interest receivable and similar income2001 2000 1999

Lm Lm Lm

Interest receivable 34,032 1,154 23,687Other income 8,685 22,554 22,394

42,717 23,708 46,081

7. Interest payable and similar charges2001 2000 1999

Lm Lm Lm

Bank interest and charges 1,062,775 838,167 706,586Other finance charges 41,660 9,092 23,446

1,104,435 847,259 730,032

8. Tax on profit on ordinary activities2001 2000 1999

Lm Lm Lm

Current tax expense 385,409 298,003 142,744Deferred tax (Note 22) (177,829) 69,183 77,564Share of tax of associated undertakings (Note 15) 95,603 91,034 97,345

303,183 458,220 317,653

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows:

2001 2000 1999Lm Lm Lm

Profit on ordinary activities before tax 1,587,933 1,536,347 1,109,992

Tax on ordinary profit at 35% 555,777 537,722 388,497Tax effect of:Movement in temporary differences arising on tangible assets, provisions

for doubtful debtors, provisions on financial assets and other provisions 260,459 (75,265) 119,758Tax incentives available under tax legislation (112,214) (63,837) (132,752)Utilisation of unabsorbed capital allowances brought forward from previous years (607,464) (596,945) (600,399)Unabsorbed capital allowances claimed during the year 256,524 703,235 613,033Determination of deferred tax on fair value gains of investment property on the

basis applicable to capital gains (55,611) (32,532) (25,587)Expenses not deductible for tax purposes 35,064 39,029 14,084Application of time apportionment basis to profit on disposal of property 10,948 (26,824) (69,231)Income not subject to tax (15,371) (16,805) (3,966)Others (24,929) (9,558) 14,216

Tax charge in the accounts 303,183 458,220 317,653

B28

MIZZIORGANISATIONFINANCE p l c Mizzi Organisation Pro Forma Consolidated Financial Information


9. Directors’ emoluments

2001 2000 1999Lm Lm Lm

Salaries and other emoluments 213,361 207,061 132,830

10. Earnings per share

Earnings per share is based on the net results for the year divided by the weighted average number of ordinary shares (see Note 24) during the year.

2001 2000 1999

Net profit attributable to ordinary shareholders Lm1,284,750 Lm1,078,127 Lm792,339 Weighted average number of ordinary shares 1,059,200 1,059,200 1,059,200Earnings per share Lm1.21 Lm1.02 Lm0.75

11. Dividends

2001 2000 1999Lm Lm Lm

Final dividends paid on ordinary shares:Gross 386,924 304,616 254,135Tax at source (86,924) (64,616) (54,135)

Net 300,000 240,000 200,000

Dividends per share 0.28 0.23 0.19

12. Intangible assets2001 2000 1999

Lm Lm LmFranchise rightsOpening net book amount 37,928 45,169 52,410Amortisation charge (7,241) (7,241) (7,241)

Closing net book amount 30,687 37,928 45,169

Cost 52,410 52,410 52,410Accumulated amortisation (21,723) (14,482) (7,241)

Net book amount 30,687 37,928 45,169

B29



13. Property, plant and equipmentPlant,

machinery Furniture, Assets inLand and and fixtures and Motor course ofbuildings equipment fittings vehicles construction Total

Lm Lm Lm Lm Lm Lm

Year ended 31 December 2001Opening net book amount 14,155,386 2,014,469 2,232,750 1,098,834 31,492 19,532,931Revaluation surplus arising during the year (Note 25)- effect on cost or valuation 4,764,534 - - - - 4,764,534- effect on accumulated depreciation 226,974 - - - - 226,974Additions 215,602 390,041 484,814 424,608 218,995 1,734,060Reclassifications 21,520 353,710 (53,819) (70,924) (250,487) -Impairment charges (Note 25) (180,092) - - - - (180,092)Disposals - (174,959) (27,423) (786,253) - (988,635)Depreciation charge (243,600) (586,156) (488,399) (353,110) - (1,671,265)Depreciation released on disposals - 171,962 11,707 389,515 - 573,184Transfer of accumulated depreciation

upon reclassifications - (117,611) 46,687 70,924 - -

Closing net book amount 18,960,324 2,051,456 2,206,317 773,594 - 23,991,691

At 31 December 2001Cost or valuation 20,199,391 7,593,589 4,968,728 2,380,013 - 35,141,721Accumulated depreciation (1,239,067) (5,542,133) (2,762,411) (1,606,419) - (11,150,030)

Net book amount 18,960,324 2,051,456 2,206,317 773,594 - 23,991,691

Year ended 31 December 2000Opening net book amount 10,804,598 2,121,229 1,522,231 778,921 2,175,795 17,402,774Additions 188,194 291,506 1,053,198 836,111 1,684,811 4,053,820Reclassifications 3,476,681 137,583 214,850 - (3,829,114) -Impairment charges (vide Note below) - - (28,000) - - (28,000)Cost of assets held for sale

transferred to current assets (Note 17) (53,869) - (206,568) (255,419) - (515,856)Disposals (44,560) (103,614) (36,210) (313,669) - (498,053)Depreciation charge (231,776) (533,770) (428,707) (364,068) - (1,558,321)Depreciation released on disposals 4,125 101,535 19,689 254,441 - 379,790Depreciation released on transfers

to assets held for sale (Note 17) 11,993 - 122,267 162,517 - 296,777

Closing net book amount 14,155,386 2,014,469 2,232,750 1,098,834 31,492 19,532,931

At 31 December 2000Cost or valuation 15,377,827 7,024,797 4,565,156 2,812,582 31,492 29,811,854Accumulated depreciation (1,222,441) (5,010,328) (2,332,406) (1,713,748) - (10,278,923)

Net book amount 14,155,386 2,014,469 2,232,750 1,098,834 31,492 19,532,931

B30



13. Property, plant and equipment - continuedPlant,

machinery Furniture, Assets inLand and and fixtures and Motor course ofbuildings equipment fittings vehicles construction Total

Lm Lm Lm Lm Lm Lm

Year ended 31 December 1999Opening net book amount 11,447,766 1,842,006 1,387,935 802,046 944,066 16,423,819Additions 314,373 908,647 561,748 333,920 1,231,729 3,350,417Reclassifications (17,971) - 17,971 - - -Impairment charges (Note 25) (616,470) - - - - (616,470)Cost of assets held for sale

transferred to current assets (Note 17) (57,226) - - - - (57,226)Disposals (150,156) (410,948) (19,255) (177,375) - (757,734)Depreciation charge (138,773) (615,318) (434,715) (307,199) - (1,496,005)Depreciation released on disposals 15,256 396,842 8,547 127,529 - 548,174Depreciation released on transfers

to assets held for sale (Note 17) 7,799 - - - - 7,799

Closing net book amount 10,804,598 2,121,229 1,522,231 778,921 2,175,795 17,402,774

At 31 December 1999Cost or valuation 11,811,381 6,699,322 3,539,886 2,545,559 2,175,795 26,771,943Accumulated depreciation (1,006,783) (4,578,093) (2,017,655) (1,766,638) - (9,369,169)

Net book amount 10,804,598 2,121,229 1,522,231 778,921 2,175,795 17,402,774

Reclassifications comprise mainly transfers from assets in the course of construction to the appropriate categories but also include transfers effected between different categories during the years ended 31 December 2001 and 1999 for the sake of fairer presentation of the Group’s tangible assets. The effect of such reclassifications on the current and future years’ depreciation charges was not deemed material for disclosure purposes.

The impairment charges recognised in the years ended 31 December 2001 and 1999 are attributable to reductions in the revalued amounts of property so as to reflect the recoverable amount of these assets. The impairment charges recognised in the year ended 31 December 2000 arose as a consequence of the cessation of the activities of Group undertakings involved in the operation of music stores (Note 2). The tangible assets have been written down to their estimated recoverable amounts. The recoverable amount (the higher of the value in use and net selling price) was determined at the individual asset level and represents the net selling price, determined by reference to market prices for equivalent assets.

The tangible assets attributable to the Group undertakings involved in the operation of music stores, the car hire activity and the insurance agency operation (vide Note 2), were to be disposed of as they were no longer required for the purpose for which they were originally acquired. Accordingly the carrying amounts have been transferred to assets held for sale during the financial year ended 31 December 2000 (Note 17).

B31



13. Property, plant and equipment - continued

During 1998 and 1999 the directors had resolved to dispose of certain property belonging to the Group and, accordingly, this property had been reclassified as property held for sale within current assets (Note 17).

Leased assets included above, where Group undertakings are lessors, comprise motor vehicles leased out under operating leases:

2001 2000 1999Lm Lm Lm

Cost 730,943 1,078,808 978,765Accumulated depreciation (369,906) (335,922) (505,843)

Net book amount 361,037 742,886 472,922

The movement in the net book amount of leased assets is analysed as follows:2001 2000 1999

Lm Lm Lm

Opening net book amount 742,886 472,922 433,058Additions 133,418 575,045 195,468Cost of assets transferred to other categories or to assets held for sale (7,501) (253,919) (9,553)Disposals (473,782) (221,083) (23,001)Depreciation charge (170,550) (187,760) (141,650)Depreciation released on disposals 133,374 195,914 13,227Depreciation released on transfers 3,192 161,767 5,373


The Group’s land and buildings were revalued during 2001 by an independent professionally qualified valuer. Valuations were madeon the basis of open market value. The book values of the properties were adjusted to the revaluations and the resultant surplus net ofdeferred income taxes was credited to the revaluation reserve in shareholders’ equity (Note 25).

If the land and buildings were stated on the historical cost basis, the amounts would be as follows:

2001 2000 1999Lm Lm Lm

Cost 9,165,947 8,928,825 5,310,152Accumulated depreciation (1,046,567) (865,228) (716,759)

Net book amount 8,119,380 8,063,597 4,593,393

Bank borrowings are secured on the Group’s land and buildings (Note 20).

During the financial year ended 31 December 2000, borrowing costs of Lm108,122 (1999: Lm93,982), arising on financing specifically entered into for the construction of property, plant and equipment were capitalised during the year and are included in ‘Additions’ in the tables above. A capitalisation rate of 7.25% was used, representing the borrowing cost of the loans used to finance the projects.

B32



14. Investment property 2001 2000 1999

Lm Lm Lm

Opening net book amount 4,315,660 3,923,909 3,542,628Fair value gains (Note 26) 364,992 387,365 384,281Additions 13,392 4,686 -Disposals (157,307) (300) (3,000)

Closing net book amount 4,536,737 4,315,660 3,923,909

Cost 1,258,162 1,267,834 1,263,448Fair value gains 3,278,575 3,047,826 2,660,461

Net book amount 4,536,737 4,315,660 3,923,909

The investment properties are valued annually on 31 December at fair value comprising open market value by an independent professionally qualified valuer.

If the investment property was stated on the historical cost basis, the amounts would be as follows:

2001 2000 1999Lm Lm Lm

Cost 1,258,162 1,267,834 1,263,448Accumulated depreciation (19,579) (12,320) (6,171)

Net book amount 1,238,583 1,255,514 1,257,277

Bank borrowings are secured on the Group’s investment property (Note 20).

15. Investments in associated undertakings2001 2000 1999

Lm Lm Lm

Opening net book amount 4,709,088 4,621,228 4,162,678Additions at cost 125,000 3,950 -Share of result before tax 246,122 310,280 243,298Share of tax (Note 8) (95,603) (91,034) (97,345)Share of surplus arising on revaluation of land and buildings (Note 25) 11,915 - 398,538Share of movement in revaluation surplus arising on

determination of deferred tax liability (Note 25) (4,951) (5,387) 14,734Share of movement in capital reserve upon redemption of

capitalised ground rents (Note 26) (111) (769) (10,554)Dividends received (115,950) (129,180) (90,121)

Closing net book amount 4,875,510 4,709,088 4,621,228

Cost 390,706 265,706 261,756Share of undertakings’ profits and reserves 4,484,804 4,443,382 4,359,472

Net book amount 4,875,510 4,709,088 4,621,228

B33



15. Investments in associated undertakings - continued

The share of result before tax includes Lm2,245 (2000: Lm2,245, 1999: nil) representing the amortisation of negative goodwill inrespect of the acquisition of an associated undertaking.

Negative goodwill is being amortised over a period of five years, which represents the remaining weighted average useful life of the non-monetary assets acquired. Accordingly, investments in associated undertakings at 31 December 2001 include negative goodwill of Lm6,734 (2000: Lm8,979, 1999: nil), net of accumulated amortisation of Lm4,490 (2000: Lm2,245, 1999: nil).

The principal associated undertakings at 31 December 2001, 2000 and 1999 whose results and financial position affected the figuresof the Group are shown below:

(i) Kastell Limited

Name Principal activity Percentage of shares held

Institute of English Language Studies Limited Language school 50%Kemmuna Limited Owner and operator of ‘Comino Hotel’ 25%Lada Motors Limited Importation and sale of motor vehicles 36%

The above shareholdings are held by Festa Limited (a subsidiary of Kastell Limited) except for the investment in Lada Motors Limited, which is held directly by Kastell Limited. All companies have been incorporated in Malta and all holdings are in the ordinary share capital of the undertaking concerned.

(ii) Consolidated Holdings Limited


Mizzi Associated Enterprises Limited Trading in, administering and financing 51%investments, including hotel operations,and of property development and rentals

The shareholding in Mizzi Associated Enterprises Limited is held by Consolidated Holdings Limited (51%) and Alf. Mizzi & Sons Limited (49%). Neither of these shareholders is in a position to exercise a dominant influence on the company as they are only entitled, under the company’s memorandum and articles of association, to elect two directors each while the fifth, independent director, is appointed unanimously.

(iii) Mizzi Holdings Limited


Globe Insurance Brokers Limited Insurance brokers 40%Heritage Motor Company Limited Non-trading 25%

There where no changes in the interests held in the associated undertakings throughout the three year period to 31 December 2001except for the investments in Heritage Motor Company Limited and Globe Insurance Brokers Limited which were acquired during 2000. All companies are incorporated in Malta.

B34



16. Available-for-sale investments

2001 2000 1999Lm Lm Lm

Opening net book amount 242,034 131,590 47,315

Additions 27,884 131,241 45,696(Losses)/gains from changes in fair value (Note 25) (44,941) (17) 43,780Disposals (6,287) (20,780) (5,002)Increase in provisions for impairment - - (199)


Cost 275,963 254,366 135,948Provisions for impairment (53,356) (53,356) (53,356)Fair value (losses)/gains (3,917) 41,024 48,998

Net book amount 218,690 242,034 131,590

Investments quoted on the Malta Stock Exchange 197,214 114,271 97,541Other investments 21,476 127,763 34,049

218,690 242,034 131,590

Available-for-sale investments, consisting primarily of equity investments, are fair valued annually at the close of business on 31 December. For investments traded on the Malta Stock Exchange, fair value is determined by reference to the Malta Stock Exchange quoted prices. For other investments, fair value is mainly estimated by reference to the net asset backing of the investee.

B35



17. Stocks and assets held for sale

2001 2000 1999Lm Lm Lm

StocksMotor vehicles, spare parts and related supplies 4,298,265 4,512,305 3,801,373Other goods purchased for resale 1,333,389 1,381,902 1,017,793Raw materials and finished goods 382,754 311,592 403,029Containers 1,054,680 1,082,450 1,092,695

Total stocks 7,069,088 7,288,249 6,314,890

Assets held for saleProperty Opening net book amount 440,209 575,504 641,885Transfer from tangible assets (Note 13) - - 49,427Additions 5,727 - 5,060Disposals (86,401) (135,295) (99,358)Impairment charges recognised in equity (Note 25) (98,554) - (21,510)Impairment charges recognised in profit and loss account (Note 3) (3,516) - -


Motor vehicles and other assets (including leasehold property improvements)Opening net book amount 219,079 - -Transfer from tangible assets (Note 13) - 219,079 -Additions 3,283 - -Disposals (118,854) - -Impairment charges recognised in profit and loss account (Note 3) (58,808) - -

Closing net book amount 44,700 219,079 -

Total assets held for sale 302,165 659,288 575,504

Total stocks and assets held for sale 7,371,253 7,947,537 6,890,394

Property held for sale has been written down to its estimated recoverable amount during the financial years ended 31 December 1999 and 2001. The recoverable amount represents the estimated net selling price determined by reference to market prices for equivalent assets. The impairment charges on the other assets recognised during 2001 arose on the assets attributable to the operation of music stores, which had been transferred from property, plant and equipment (Note 13) following the decision to discontinue the activity.

B36



18. Debtors

2001 2000 1999Lm Lm Lm

Amounts falling due within one yearTrade debtors 4,358,340 5,437,120 3,697,576Amounts receivable from hire purchase debtors (Note 19) 10,094,961 9,193,802 8,154,572Gross amounts due from customers for contract work 155,555 85,383 27,580Amounts owed by related parties 130,082 106,623 228,977Amounts owed by associated undertakings 554,978 619,398 566,061Other debtors 786,405 1,038,542 825,798Indirect taxes 201,109 559,096 706,569Prepayments and accrued income 469,409 667,801 521,423

16,750,839 17,707,765 14,728,556

Amounts included above which are due after more than one yearAmounts receivable from hire purchase debtors (Note 19) 6,481,680 5,989,085 5,121,772Other debtors 141,129 216,158 78,292

All debtors falling due after more than one year are receivable within five years from the balance sheet date.

Debtors above are disclosed net of provisions for bad and doubtful debts as follows:

2001 2000 1999Lm Lm Lm

Trade debtors 562,228 533,414 351,038Other debtors (amounts falling due within one year) 439,382 233,704 145,124Other debtors (amounts falling due after more than one year) 33,947 13,005 5,964

Total 1,035,557 780,123 502,126

Provisions for bad and doubtful debts on amounts receivable from hire purchase debtors are disclosed separately in Note 19 to thefinancial statements.

The aggregate amount of costs incurred and recognised profits (less recognised losses) for contracts in progress as at 31 December2001, 2000 and 1999 amounts to Lm294,110, Lm111,273 and Lm48,513, respectively. Gross amounts due from and to customers inrespect of these contracts are shown in the table above and in Note 21 respectively.

B37



19. Amounts receivable from hire purchase debtors

2001 2000 1999Lm Lm Lm

Amounts falling due within one yearDebtors on whom bills of exchange were drawn 4,050,309 3,480,771 3,371,686Provisions for bad and doubtful debts (437,028) (276,054) (338,886)

3,613,281 3,204,717 3,032,800

Amounts falling due after more than one yearDebtors on whom bills of exchange were drawn 6,516,699 6,019,758 5,159,426Provisions for bad and doubtful debts (35,019) (30,673) (37,654)

6,481,680 5,989,085 5,121,772

Total amounts receivable from hire purchase debtors 10,094,961 9,193,802 8,154,572

Amounts receivable from hire purchase debtors are subject to an effective interest rate of 8.5% (2000 and 1999: 8.5%).

Receivables covered by bills of exchange factored out to the bank with an option to repurchase them as they fall due are not derecognised from the Group’s balance sheet. The amounts advanced under this facility are treated as collateralised borrowings amounting to the face value of the bills factored out (Note 20). Receivables covered by bills of exchange factored out to bankers without an option to repurchase them as they fall due are derecognised by the Group. The Group has derecognised from the balancesheet receivables amounting to Lm234,397, Lm520,475 and Lm1,328,615 in the financial years ended 31 December 2001, 2000 and1999 respectively. The Group retains a portion of the credit risk in these receivables through the bank’s right of recourse. This right of recourse is recognised as a financial liability measured at its fair value which is deemed to be insignificant at the balance sheet dates [vide Note 31(c)].

20. Borrowings

2001 2000 1999Lm Lm Lm

Short-term – falling due within one yearBank overdrafts 7,246,900 8,625,079 6,399,052Bank overdraft - trade bills facility 19,579 - -Bills of exchange factored out to bank (Note 19) 2,930,650 2,632,360 2,519,756Bank loans 852,213 332,217 418,963

Short-term borrowings 11,049,342 11,589,656 9,337,771

Long-termBank overdraft - trade bills facility 27,021 - -Bills of exchange factored out to bank (Note 19) 4,707,851 4,587,544 4,156,360Bonds issued to bankers 850,000 850,000 850,000Bank loans 5,775,966 5,787,213 3,726,073

Long-term borrowings 11,360,838 11,224,757 8,732,433

Total borrowings 22,410,180 22,814,413 18,070,204

B38



20. Borrowings - continued

The interest rate exposure of the borrowings of the Group was as follows:

2001 2000 1999Lm Lm Lm

Total borrowings:At fixed rates 850,000 850,000 850,000At floating rates (fluctuating with the bank’s base rate) 21,560,180 21,964,413 17,220,204

22,410,180 22,814,413 18,070,204

Weighted average effective interest rates:2001 2000 1999

% % %

Bank overdrafts 6.4 6.3 7.5Bank loans 6.6 6.8 6.2Bills of exchange factored out to bank 6.7 6.8 7.6Bonds issued to bankers 8.0 8.0 8.0

Maturity of long-term borrowings:2001 2000 1999

Lm Lm Lm

Between 1 and 2 years 2,839,325 2,633,172 2,606,437Between 2 and 5 years 5,769,370 5,070,295 4,251,176Over 5 years 2,752,143 3,521,290 1,874,820

11,360,838 11,224,757 8,732,433

The Group’s banking facilities as at 31 December 2001, 2000 and 1999 amounted to Lm29,417,746, Lm28,050,729 and Lm25,731,120 respectively.

The banking facilities are secured by:

a) joint and several guarantees by various Group undertakings, supported by general and special hypothecary guarantees over properties held;

b) general and special hypothecs on the Group’s assets together with a special privilege on the property of a Group undertaking;c) hire purchase trade bills to cover the amount of the overdraft trade bills facility; d) a pledge on insurance policies covering the hypothecated property, and e) various letters of undertaking.

B39



20. Borrowings - continued

The Group had the following bank loans outstanding at the balance sheet dates:

2001 2000 1999Lm Lm Lm

Arkadia Marketing Limited:Loan 1 840,308 938,060 932,285Loan 2 244,786 308,610 303,984

Festa Limited 85,400 29,102 -

Mizzi Limited 140,000 - -

Muscats Motors Limited:Loan 1 1,298,766 862,332 -Loan 2 176,000 - -

The General Soft Drinks Company Limited 743,763 900,144 1,047,306

The Waterfront Hotel Limited 3,099,156 3,081,182 1,861,461

The Group’s bank loans are subject to the following repayment terms:

Arkadia Marketing Limited:Loan 1 Monthly repayments of Lm12,700, inclusive of interest, which commenced in February 2001.

Loan 2 Monthly repayments of Lm6,810 inclusive of interest over a period of six years - repayments commenced in September 2000.

Festa Limited Monthly repayments of Lm1,607, inclusive of interest, which commenced in February 2001 - loan to be repaid in full by August 2007.

Mizzi Limited Monthly repayments of Lm1,919, inclusive of interest, commencing in July 2003 - loan to be repaid in full by July 2010.

Muscats Motors Limited:Loan 1 Quarterly repayments of Lm53,764, inclusive of interest, commencing in May 2002 - loan

repayable in full by May 2010.

Loan 2 Loan repayable in full by the end of 2002.

The General Soft Monthly repayments of Lm18,050 inclusive of interest - loan to be repaid in full Drinks Company by the end of 2005.Limited

The Waterfront Annual repayments of Lm280,000, exclusive of interest, commencing in November 2002 with Hotel Limited repayments in 2002 only amounting to Lm140,000 - loan to be repaid in full by July 2013.

The bonds, which are redeemable at par not earlier than 2003 but not later than 2006 and which are subject to a coupon rate of 8%, are secured by a first general hypothec for Lm850,000 over the Group undertaking’s assets supported by a first special hypothec and special privilege for the same amount over the undertaking’s property.

The banking facilities include an amount of Lm1,350,000 (2000 and 1999: Lm1,200,000) in respect of the recourse element of 15% of the face value of bills of exchange factored out to the bank with an option to repurchase them up to a limit of Lm9,000,000 (2000 and 1999: Lm8,000,000). At 31 December 2001, 2000 and 1999, the total value of outstanding bills, which had been factoredout under this facility, amounted to Lm7,638,501, Lm7,219,904 and Lm6,676,116 respectively as disclosed above.

The banking facilities also include an amount of Lm225,000 at each of the three period ends in respect of the recourse element of 15% of the value of bills factored out without an option to repurchase them as they fall due up to a limit of Lm1,500,000.

B40



21. Trade and other creditors2001 2000 1999

Lm Lm LmAmounts falling due within one yearTrade creditors 2,807,151 4,314,328 2,893,762Advances from customers for contract work 27,139 - 1,914Amounts owed to related parties 192,525 239,473 150,313Other creditors 394,566 495,690 379,682Indirect taxes and social security 302,912 188,848 169,817Accruals and deferred income 1,526,481 1,645,810 1,774,483

5,250,774 6,884,149 5,369,971

Amounts falling due after more than one yearTrade creditors, falling due between one and two years - - 65,649Other creditors, falling due after more than five years 11,566 11,566 8,566

11,566 11,566 74,215

Included in trade creditors at 31 December 2000 and 1999 are amounts of Lm70,901 and Lm65,649 (disclosed asamounts falling due after more than one year) respectively, which were secured by a general hypothec over a Group company’s assets and were subject to interest at 8% per annum.

22. Deferred taxation

Deferred income taxes are calculated on temporary differences under the liability method using a principal tax rate of 35%. The movement on the deferred tax account is as follows:

2001 2000 1999Lm Lm Lm

At beginning of year 1,669,710 1,546,710 1,515,653Deferred income taxes on revaluation surplus arising during

the year (Note 25) 1,257,553 - -Movement in deferred tax liability determined on the basis

applicable to capital gains:- property, plant and equipment (Note 25) 35,303 53,817 25,469- investment property (Note 8) 5,969 6,654 9,203

Realisation through impairment charges (Note 25) (58,484) - (71,976)Transfer upon realisation through asset disposal:

- property, plant and equipment (Note 8) (6,630) (10,346) (7,682)- investment property (Note 8) (11,111) - -

Deferred income taxes on fair value gains on investment property arising during the year (Note 8) 66,167 96,392 99,708

Deferred income taxes on realisation through asset use (Note 8) (21,792) (23,517) (23,665)Deferred income taxes on temporary differences arising on

provisions for doubtful debtors (Note 8) (83,075) - -Deferred income taxes on unabsorbed capital allowances (Note 8) 257,171 (196,183) (189,622)Deferred income taxes on depreciation of tangible assets (Note 8) (381,561) 196,183 189,622Other profit and loss account credit (Note 8) (2,967) - -

At end of year 2,726,253 1,669,710 1,546,710

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22. Deferred taxation - continued

The balance at 31 December represents:2001 2000 1999

Lm Lm Lm

Temporary differences arising on fair valuation of property 2,936,685 1,669,710 1,546,710Temporary differences arising on provisions for doubtful debtors (83,075) - -Temporary differences arising on depreciation of tangible assets 540,028 921,589 725,406Deferred taxation attributable to unabsorbed capital allowances (664,418) (921,589) (725,406)Others (2,967) - -

2,726,253 1,669,710 1,546,710

At 31 December 2001, 2000 and 1999, Group undertakings had the following unutilised tax credits and temporary differences:

Unrecognised Recognised2001 2000 1999 2001 2000 1999

Lm Lm Lm Lm Lm LmUnutilised tax credits arising from:

Unabsorbed tax losses 142,090 149,108 162,156 - - -Unabsorbed capital losses 71,570 75,576 62,006 - - -Unabsorbed capital allowances 1,098,911 1,139,161 1,393,146 1,898,336 2,633,110 2,072,589

Deductible temporary differences arising on tangible assets 476,887 340,218 303,802 - - -

Temporary differences arising on provisions for doubtful debtors 959,494 876,651 623,406 237,357 - -

Temporary differences arising on provisions on financial assets and other provisions 113,856 127,656 78,356 - - -

Taxable temporary differences arising on tangible assets - - - (1,542,936) (2,633,110) (2,072,589)

The unrecognised deferred tax assets of Lm1,001,983 at 31 December 2001 have not been reflected in these financial statements due to the uncertainty of the realisation of the tax benefits. Whereas tax losses and capital losses have no expiry date, unabsorbed capital allowances are forfeited upon cessation of the trade.

23. Other provisions

2001 2000 1999Lm Lm Lm

At beginning of year 49,300 - -Charged to the profit and loss account 11,400 49,300 -Utilised during the year (11,800) - -

At end of year 48,900 49,300 -

The amounts shown comprise gross provisions in respect of legal claims brought against the Group. In the opinion of the directors, after taking appropriate legal advice, the outcome of these legal claims will not give rise to any significant loss beyond the amounts provided at 31 December 2001.

24. Share capital

2001 2000 1999Lm Lm Lm

Authorised1,561,998 ordinary shares of Lm1 each 1,561,998 1,561,998 1,561,998

Issued and fully paid1,059,200 ordinary shares of Lm1 each 1,059,200 1,059,200 1,059,200

For the purposes of these pro forma consolidated financial statements, the share capital above represents the aggregate of each of the authorised, issued and fully paid up share capital of Kastell Limited, Mizzi Holdings Limited, Consolidated Holdings Limited, The General Soft Drinks Company Limited and Falcon Wines & Spirits Limited.

25. Revaluation reserves

2001 2000 1999Lm Lm Lm

Surplus arising on fair valuation of:Land and buildings of Group undertakings 9,438,904 6,050,287 6,189,657Land and buildings of associated undertakings 3,145,066 3,179,540 3,226,366Available-for-sale financial assets (3,917) 41,024 48,998

12,580,053 9,270,851 9,465,021

Land and buildings of Group undertakingsAt beginning of year 6,050,287 6,189,657 6,850,569Revaluation surplus arising during the year (Note 13) 4,991,508 - -Impairment charges (Notes 13 and 17) (278,646) - (637,980)Transfer upon realisation through asset disposal (56,034) (52,227) (34,206)Transfer upon realisation through asset use (62,261) (67,189) (66,580)Movement in deferred tax liability determined on the basis

applicable to capital gains (Note 22) (35,303) (53,817) (25,469)Deferred income taxes on revaluation surplus

arising during the year (Note 22) (1,257,553) - -Deferred income taxes on realisation through impairment charges (Note 22) 58,484 - 71,976Deferred income taxes on realisation through asset disposal (Note 22) 6,630 10,346 7,682Deferred income taxes on realisation through asset use (Note 22) 21,792 23,517 23,665

At end of year 9,438,904 6,050,287 6,189,657

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25. Revaluation reserves - continued2001 2000 1999

Lm Lm LmLand and buildings of associated undertakingsAt beginning of year 3,179,540 3,226,366 2,854,533Share of revaluation surplus arising during the year (Note 15) 11,915 - 398,538Movement in deferred tax liability determined on the basis

applicable to capital gains (Note 15) (4,951) (5,387) 14,734Transfer upon realisation through asset use (41,438) (41,439) (41,439)

At end of year 3,145,066 3,179,540 3,226,366

Available-for-sale financial assetsAt beginning of year 41,024 48,998 7,471(Losses)/gains from changes in fair value (Note 16) (44,941) (17) 43,780Fair value gains transferred to net profit upon disposal - (7,957) (2,253)

At end of year (3,917) 41,024 48,998

Gains and losses arising from changes in fair value of available-for-sale financial assets are recognised directly in equity through therevaluation reserve in accordance with the Group’s accounting policy. When the assets are disposed of, the related accumulated fairvalue adjustments are transferred to the profit and loss account as gains and losses from available-for-sale assets.

The revaluation reserves are non-distributable.

26. Other reserves2001 2000 1999

Lm Lm LmUnrealised gains reserve arising on fair value gains of investment propertyAt beginning of year 2,490,946 2,206,627 1,931,257Fair value gains on investment property arising during the year (Note 14) 364,992 387,365 384,281Transfer upon realisation through disposal of investment property (134,244) - -Deferred income taxes on fair value gains on investment

property arising during the year (Note 22) (66,167)) (96,392) (99,708)Movement in deferred tax liability determined on the basis

applicable to capital gains (Note 22) (5,969) (6,654) (9,203)Deferred income taxes on realisation through

disposal of investment property (Note 22) 11,111 - -

At end of year 2,660,669 2,490,946 2,206,627

Share of associated undertaking’s capital reserveAt beginning of year 95,701 96,470 135,224Redemption of capitalised ground rents (Note 15) (111) (769) (10,554)Transfer to retained earnings arising upon merger

into associated undertaking (vide Note below) - - (28,200)

At end of year 95,590 95,701 96,470

Capital reservesAt beginning and end of year 138,284 138,284 138,284

Total other reserves 2,894,543 2,724,931 2,441,381

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26. Other reserves - continued

Gains from changes in fair value of investment property, net of deferred taxation, which are recognised in the Group’s profit and lossaccount in accordance with the Group’s accounting policy for investment property, are transferred from retained earnings to the unrealised gains reserve for the purposes of the requirements of the Third Schedule to the Companies Act, 1995. According to paragraph 14(c)(i) of the Third Schedule, only profits realised at the balance sheet date may be included in the profit and loss account.

A fully owned subsidiary undertaking of an associated undertaking was merged into the latter during the year ended 31 December1999. The difference arising between net assets acquired and the related investment cost has been released to retained earnings.

These reserves are not considered by the directors to be available for distribution.

27. Cash generated from operations

Reconciliation of operating profit to cash generated from operations:

2001 2000 1999Lm Lm Lm

Operating profit 2,399,181 2,047,093 1,539,531

Adjustments for:Depreciation of tangible assets (Note 13) 1,671,265 1,558,321 1,496,005Amortisation of intangible assets (Note 12) 7,241 7,241 7,241Impairment of tangible assets (Note 3) 62,324 28,000 -Changes in fair value of investment property (Note 14) (364,992) (387,365) (384,281)Loss/(profit) on disposal of tangible assets 16,647 (5,911) (155,271)Profit on disposal of financial assets - (7,957) (2,253)Increase in provisions on financial assets - - 199Increase in provisions for bad and doubtful debts 255,434 277,997 108,950Increase in other provisions (Note 23) 11,400 49,300 -Other provisions utilised during the year (Note 23) (11,800) - -

Changes in working capital:Stocks 219,161 (973,359) (319,524)Debtors 701,492 (3,257,206) (1,582,713)Creditors (1,633,375) 1,451,529 658,228

Cash generated from operations 3,333,978 787,683 1,366,112

28. Cash and cash equivalents

For the purposes of the cash flow statement, the year-end cash and cash equivalents comprise the following:

2001 2000 1999Lm Lm Lm

Cash at bank and in hand 1,132,676 942,482 477,854Bank overdrafts (Note 20) (7,246,900) (8,625,079) (6,399,052)Bills of exchange factored out to bank (Note 20) (2,950,229) (2,632,360) (2,519,756)

(9,064,453) (10,314,957) (8,440,954)

Bills of exchange factored out to the bank are treated as cash equivalents as this facility forms an integral part of the Group’s cash management.

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29. Financial instruments

The nature of the Group’s operations implies that financial instruments are extensively used in the course of its activities. The Group did not make use of derivative financial instruments during the years ended 31 December 2001, 2000 and 1999. The Group is potentially exposed to a range of risks that are managed as outlined below.

Foreign exchange and interest rate risks

The Group is exposed to foreign exchange risk arising from various currency exposures with respect to the Group’s purchases, a significant part of which are denominated in foreign currencies. The Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s significant interest-bearing instruments comprise mainly amounts receivable from hire purchase debtors, subject to fixed interest rates, and bank borrowings, which are predominantly floating rate instruments. Interest rate and related information is disclosed in the respective notes to the pro forma consolidated financial statements. Up to 31 December 2001 the Group did not have any hedging policy with respect to foreign exchange and interest rate risks as exposure to such risks was not considered to be significant by the directors.

Credit risk

Financial assets which potentially subject the Group to concentrations of credit risk consist principally of cash at bank, debtors and investments. The Group's cash is placed with quality financial institutions. Debtors are presented net of an allowance for doubtful debts. Credit risk with respect to debts is limited due to the large number of customers comprising the Group's debtor base and consequently the Group has no significant concentration of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. The Group’s historical experience in collection ofaccounts receivable falls within the recorded allowances. Accordingly, management believes that no additional credit risk beyondamounts provided for collection losses is inherent in the Group’s trade debtors. The Group’s investments consist mainly of equityinstruments quoted on the Malta Stock Exchange and hence, credit risk is limited.

Liquidity risk

The Group’s liquidity risk is considered to be relatively insignificant by the directors in view of the nature of its main assets andliabilities. The Group maintains committed credit lines to ensure the availablity of an adequate amount of funding to meet its obligations. The Group’s assets and liabilities are analysed into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date in the respective notes to the financial statements.

Fair values

At 31 December 2001, 2000 and 1999 the carrying amounts of cash at bank, debtors, creditors and accrued expenses and short-term borrowings approximated their fair values due to the nature or short-term maturity of the instruments. The fair values of long-term borrowings, based on discounted cash flows in the case of fixed interest-bearing borrowings, were not materially different from their carrying amounts.

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30. CommitmentsCapital commitments

Commitments for capital expenditure not provided for in these pro forma consolidated financial statements are as follows:2001 2000 1999

Lm Lm Lm

Contracted but not provided for - 100,000 2,613,300Authorised but not contracted 750,000 750,000 698,940

750,000 850,000 3,312,240

Operating lease commitments – where a Group undertaking is the lessee

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:2001 2000 1999

Lm Lm Lm

Not later than one year - 24,370 57,370Later than one year and not later than five years - - 24,370

- 24,370 81,740

Operating lease commitments – where a Group undertaking is the lessor

The future minimum lease payments receivable under non-cancellable property operating leases are as follows:

Not later than one year 284,839 59,350 50,900Later than one year and not later than five years 762,198 245,973 232,418Later than five years 782,030 845,779 837,280

1,829,067 1,151,102 1,120,598

The future minimum lease payments receivable under non-cancellable motor vehicle operating leases are as follows:

Not later than one year 177,466 193,101 120,084Later than one year and not later than five years 397,650 502,860 238,093Later than five years 7,433 51,895 10,031

582,549 747,856 368,208

B47



31. Contingencies

(a) At 31 December 2001, 2000 and 1999, there existed contingent liabilities amounting to Lm1,480,042, Lm1,512,752 and Lm1,446,100 in respect of guarantees issued by the bank on behalf of Group undertakings in favour of the Comptroller of Customs and other third parties in the ordinary course of business.

(b) Group undertakings are in dispute with the Commissioner of Inland Revenue over assessments raised relating to basis years 1971 to 1997 amounting to Lm120,140, Lm146,579 and Lm155,077 at 31 December 2001, 2000 and 1999 respectively, in respect of which no provision has been made in these pro forma consolidated financial statements.

Also, no provision has been made in these financial statements for disputed income tax amounting to Lm172,756 at 31 December 2001, 2000 and 1999, arising from assessments raised in terms of Section 44 of the Income Tax Act, Cap. 123. Objections have been filed on the said assessments. The directors are confident that no material future liability will arise beyond the amounts which are acknowledged as properly due, which amounts have been fully provided for.

(c) At the balance sheet dates the Group had a contingent liability in respect of bills of exchange factored out to the bank without an option to repurchase them as they fall due. In this instance, the bank’s right of recourse is limited to 15% of the value of bills factored out in the preceding six months. At 31 December 2001, 2000 and 1999 the Group’s contingent liability amounted to Lm14,601, Lm21,403 and Lm86,563 respectively.

32. Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Group is ultimately fully owned by Daragon Limited, Demoncada Limited, Demoncada Holdings Limited, Devilhena Limited and Chev. Maurice Mizzi. Members of the Mizzi family in turn ultimately own the above-mentioned companies.

During the three years to 31 December 2001, transactions between the Group and related parties were not deemed material in relation to the Group’s overall results and financial position.

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C1


A N N E X CAUTHORISED DISTRIBUTORS

LICENSED STOCKBROKERS

Atlas Stockbroking Limited Tel 21 322590 Fax 21 322584

Azzopardi Stockbrokers Limited Tel 21 313100 Fax 21 318897

BOV Stockbrokers Limited Tel 21 227370 Fax 21 227375

Calamatta Stockbrokers Limited Tel 21 237858 Fax 21 220509

Charts Investment Management Service Limited Tel 21 224106 Fax 21 241101

Curmi & Partners Limited Tel 21 347331 Fax 21 347333

Epic Stockbroking Limited Tel 21 345859 Fax 21 345853

Financial Planning Stockbrokers Limited Tel 21 344255 Fax 21 341202

Globe Financial (Stockbrokers) Limited Tel 21 388595 Fax 21 388593

Hogg Capital Stockbroking Limited Tel 21 322872 Fax 21 342760

HSBC Stockbrokers (Malta) Limited Tel 21 245284 Fax 21 252504

Ivan Burridge Stockbroking Limited Tel 21 231492 Fax 21 239279

Lombard Stockbrokers Limited Tel 21 220002 Fax 21 243280

Rizzo, Farrugia & Co (Stockbrokers) Limited Tel 21 333125 Fax 21 310671

FINANCIAL INTERMEDIARIES

APS Bank Limited Tel 21 226644 Fax 21 226202

Bank of Valletta plc Tel 21 346140 Fax 21 346171

Elmo Investments Limited Tel 21 347147 Fax 21 347149

Finco Treasury Management Limited Tel 21 233041 Fax 21 243280

Globe Financial Management plc Tel 21 310088 Fax 21 310093

Growth Investments Limited Tel 21 226414 Fax 21 249811

HSBC Bank Malta plc Tel 21 245281 Fax 21 485857

Island Financial Services Limited Tel 21 223355 Fax 21 243801

Joseph Scicluna Investment Services Limited Tel 21 565707 Fax 21 565706

Lombard Bank (Malta) plc Tel 21 248411 Fax 21 246600

MZ Investment Services Limited Tel 21 453739 Fax 21 453407

Michael Grech Financial Investment Services Limited Tel 21 554492 Fax 21 559199

D1



A N N E X DLIST OF COMPANIES CONSTITUTING THE MIZZI ORGANISATION

Consolidated Holdings Ltd.

Kastell Ltd.

Mizzi Holdings Ltd.

The General Soft Drinks Co. Ltd.

Falcon Wines & Spirits Ltd.

Arkadia Marketing Ltd.

Continental Cars Ltd.

Duemila Ltd.

Festa Holdings Ltd.

Hubbalit Developments Ltd.

Industrial Motors Ltd.

Malta Farmhouses Ltd.

Mega Imports Ltd.

Mizzi Brothers Ltd.

Mizzi Estates Ltd.

Mizzi Insurance Agency Ltd.

Mizzi Ltd.

Mizzinvest Ltd.

Nissan Motor Sales Ltd.

Russian Motors Ltd.

Mizzi Organisation Finance plc

Muscats Motors Ltd.

St. Paul’s Court Ltd.

The Waterfront Hotel Ltd.

Titan International Ltd.

United Acceptances Finance Ltd.

Voyagair Ltd.

Festa Ltd.

Mizzi Automotive Services Ltd.

M.I.S. Ltd.