Financial Statements and Auditors' Report

IT-TNAX-IL LEĠIŻLATURA

P.L. 8696

Dokument imqiegħed fuq il-Mejda tal-Kamra tad-Deputati fis-Seduta Numru 501 tat-3 ta’ April 2017 mill-Ministru għall-Ġustizzja, Kultura u Gvern Lokali.

______Raymond Scicluna Skrivan tal-Kamra

Heritage Malta Annual Report & Consolidated Financial Statements 31 December 2016

Heritage Malta 1 Annual report and consolidated financial statements Year ended 31 December 2016

Contents

Contents 1

Directors’ report 2

Income and expenditure accounts 20

Statement of financial position 21

Statement of changes in accumulated fund - consolidated 23

Statement of changes in accumulated fund – Agency 24

Statements of cash flows 25

Notes to the consolidated financial statements 26

Independent auditor’s report 45

Heritage Malta 2 Annual report and consolidated financial statements Year ended 31 December 2016

Directors’ report

The directors present their report and the audited financial statements for the year ended 31 December 2016.

Principal activity Heritage Malta (“the Agency”) is the national agency of the Government of Malta. It was set up in 2002 under the provisions of the Cultural Heritage Act, 2002 and entrusted with the management of national museums and Heritage sites and their collections in Malta and Gozo – including seven UNESCO World Heritage sites. The Agency is responsible for ensuring that those elements of cultural heritage entrusted to it are protected and made accessible to the public as well as conserving and restoring cultural property within its portfolio. It also provides training in conservation, education, research and consultation. It strives to create public awareness through displays, exhibition, thematic events, public relations and other initiatives.

Financial allocation The Agency finances its operations through revenues, mainly from admission fees to museums and sites, and also from a Government subvention. The net revenue generated from admission fees by the Agency in 2016 reached € 5,827,213 (2015: € 5,968,398).

A government subvention of € 4,600,010 (2015: € 3,729,984) was received during the year to meet the Agency’s administrative expenditure for the financial year ended 31 December 2016.

Furthermore, an amount of € 283,487 (2015: € 238,206) is paid to Government as rent on various sites and premises occupied by Heritage Malta.

Further amounts were also allocated to Heritage Malta under Capital Vote XIV in the Government's financial estimates of 2016 covering the period from 1 January 2016 to 31 December 2016. These include € 681,694 (2015: € 881,000) relating to improvements at museums and historical sites and restoration works under item 7033. Other funds amounting to € 41,508 (2015: € 118,406) were applied under Vote 7270 - Restoration of Fort St. Angelo. Vote 5795 received € 233,459 (2015: € 118,406) for the new museum of art, while Vote 5557 - fund for acquisition of contemporary Maltese articles received € 54,688 (2015: € 118,406), while € 190,204 (2015: € Nil) were allocated to Vote 7376 - National Monuments.

The Agency’s subsidiary, Heritage Malta Services Limited, serves as its commercial arm for activities. Its main activities include the hiring out of venues for corporate entertainment, promoting a patrons programme and monitoring the museum shop activities besides other day-to-day revenue generating operations. The net revenue generated through Heritage Malta Services Limited amounted to € 201,226 (2015: € 166,309).

Heritage Malta 3 Annual report and consolidated financial statements Year ended 31 December 2016

Results The Agency and the Group registered a deficit for the year of € 380,072 (2015: € 505,671) and € 304,602 (2015: € 539,709), respectively.

Review of operations During the year under review Heritage Malta sustained the upbeat momentum and to some extent surpassed the noteworthy achievements of 2015.

Besides the inauguration of three major infrastructural projects, two of which co-funded by the EU, and a major exhibition to commemorate the 450th anniversary of the foundation of Valletta, Heritage Malta also managed to register a record in the number of visitors and in the generation of revenue for the fourth year in a row.

The Agency’s output comprised also the biggest-ever number of cultural activities, website hits and social media statistics, and an impressive outreach programme including thematic sessions for school children and publications.

Capital works During the year under review works at the Malta Maritime Museum continued with the restoration of the lateral façade and apertures, the structural consolidation of the turrets, and the refurbishment of the St Angelo Hall and kitchen. Catering equipment was also bought to upgrade the kitchen operational capabilities. The office and library upgrades also continued, including a new board room and two sealed reserve collection areas. Further investment was also made in the functions spaces at Fort St Angelo in order to meet clients’ needs and expectations. Restoration and infrastructural works also continued at a steady pace in the vaults of the upper courtyard and the arcaded façade of the lower courtyard of the National Museum of Natural History (Vilhena Palace) in Mdina. Refurbishment works are also underway in the Victorian display hall and main reception, including the museum shop area, at Għar Dalam. An application was submitted to the Environment and Resources Authority to replace all the exotic and alien plant species with indigenous ones, and another application was submitted to the Planning Authority to modify the pedestrian access to the museum, with the cooperation of Enemed Co Ltd.

An internal working group composed of representatives of various departments has been set up to design a project for the creation of the Għar Dalam National Heritage Park Project. A management plan was drafted and action is being taken to implement the initial recommendations regarding HM’s sites. It is planned that this park would create of a physical link between Għar Dalam, Ta' Kaċċatura and Borġ in- Nadur, with Għar Dalam being the starting point and hub of the park. In fact, in order to improve the present conditions of the site, which presently lies in a derelict state and in danger of being lost forever, and to be able to preserve it better for future generations, HM has officially requested the Lands Department for the transfer of title of the Roman Villa of Ta’ Kaċċatura under its responsibility.

The intensive restoration programme at the Inquisitor’s Palace continued, with resources focused on the courtyard, especially the lateral garden elevation wall which incorporates one of the former external façades of the Magna Curia Castellania building. Apertures within the secondary staircase connecting the two levels of the Ruffo Apartments, overlooking the garden, were reinstated back to their original appearance as constructed by Inquisitor Giorgio Spinola (1703-06), while work in a punitive cell in the prison yard included the reinstatement of the original flooring. The spaces earmarked for the relocation of the costume reserve collection and exhibition halls were refurbished, including the required infrastructural installations.

Heritage Malta 4 Annual report and consolidated financial statements Year ended 31 December 2016

All remaining carpentry works on the restoration and reconstruction of the Ta’ Kola Windmill mechanism were completed, including the installation of the external blades. Pointing works were carried out on the stone fabric of the milling tower, and the project was officially inaugurated on 21 October. A project book was published in conjunction with the project.

Technical studies regarding the best way forward for the conservation of the Xagħra Stone Circle continued. Works at the National Museum of Archaeology included the first phase of the restoration of the façade of the courtyard (Cart Street side), completed in December. Works are also underway for the replacement of the asbestos roofing over the Grand Salon with insulated composite panels, which is also the first intervention in the eventual restoration of the wall paintings and soffit of the Salon itself, which also started by a thorough laser scanning documentation exercise. The lobby area was also refurbished: the previous marble reception desk was dismantled and a new one placed nearer the main door to maximise on the use of space for events and for the museum shop.

In cooperation with the Rural Development Department and the Department of Classics and Archaeology of the University of Malta, HM has also officially requested the transfer of title of the indigenous Bidnija Olive Grove datable to the Roman period, including an adjacent extensive unexcavated Roman structure, which presently lie in a derelict state and in danger of being lost, in order to preserve its unique natural and cultural heritage for future generations. In the meantime two memoranda of understanding are being drafted with the mentioned departments to delineate the administrative responsibilities of all three parties within the project.

The most significant work at the Domvs Romana was the redesign of the entrance area, with a new museum shop display, while the installation of a new electrical system at St Augustine's Catacombs is nearing completion. Since very little conservation works can be carried out at Tas-Silġ before the final reports of the excavations by the Missione Archeologica Italiana are published, HM has sought the help of the Restoration Directorate to restore the dilapidated farmhouse and construct new basic visitor amenities, including the replacement of the wall along the northern side of the public road with a lightweight fence and walkway. Preliminary designs for this work have been finalised and a Planning Application has been submitted. Seven trial trenches were also excavated in the various areas of the site affected by the new project. These were carried out in conjunction with the Superintendence of Cultural Heritage and with the help of volunteers from the Environmental Resources Authority. These excavations produced data required by the project architects to design the new structures but also provided archaeologists with important information on the extent of past excavations and limits of untouched strata.

At the Għajn Tuffieħa Roman Baths, HM started working on draft plans for a smaller project than previously envisaged. In view of this, a large portion of land to the northeast of the site consisting of garigue and a number of fields has been returned to the Lands Department. The so-called British rooms and adjacent caterpillar shelter were retained as part of HM's site. Lease agreements for the official handover from the Lands Department to HM of Borġ in-Nadur, St Augustine’s Catacombs and Ta’ Bistra Catacombs were finally concluded. A number of internal works were carried out within the chapel of San Pawl Milqi, and plans are in hand for the conservation of the chapel and sacristy, which shall include the reassembly of the original altar of the chapel, and the replacement of the wooden floor with a more permanent solution which includes glass panels, to avoid the need for visitors to go under the current floor.

At St Paul's Catacombs, various pending works were concluded. Conservation works within the catacombs were mostly finished by the start of the year. Other works included the construction of 10 structural pillars to mitigate the serious structural problems within catacomb 5. A number of meetings were held with HM's conservators and scientists to discuss a conservation plan for the Late Roman frescoes found within catacombs 17 and other paintings discovered during cleaning works within other parts of the site. All

Heritage Malta 5 Annual report and consolidated financial statements Year ended 31 December 2016

infrastructural works within each of the catacombs opened to the public were finished and visitor flow is now controlled through a fibreglass walkway and a new lighting system. Visitors can now visit 19 out of the 24 catacombs the site holds.

Catacomb 8 remains closed to the public. The excavations carried out within this catacomb in 2013 have uncovered a large amount of human skeletons which were earmarked for Isotope analysis. Samples have been extracted jointly by the Superintendence of Cultural Heritage and HM, and will be exported for the required tests. In the meantime, the archaeological layers in this catacomb are being backfilled so the required conservation works on the catacomb can be carried out before the walkway is installed and this catacomb is also made accessible to the public.

Environmental monitoring in the various areas of the site was carried out throughout the year. This was the focus of a project by Masters students from the Department of Sustainable Heritage within the University College London. Preliminary results were presented in December and the final report on the findings shall be submitted in April 2017.

Works are also underway in the Ħaġar Qim and Mnajdra Temples visitor centre, namely the refurbishment of the foyer, including the construction of a site office, a new ticketing desk and museum shop within the existing building. Improvements have also started in the hall which was originally the cafeteria, which is being turned into a multi-purpose hall to accommodate lectures, conferences, workshops and receptions. The maintenance of pathways around the park continued. Following the conclusion of a court case in 2015 which confirmed government ownership of the room between the two temples, the property has been cleaned and restored. The room will have furniture and interpretation so that it can also serve as a starting point for the two walks that guide visitors around the park’s landscape, as well as a resting stop.

The refurbishment of the Tarxien Temples visitor centre was concluded with the introduction of information panels, new furniture for the museum shop, and an upgrade of the restroom facilities. The on- site recreational area was also completed and is proving invaluable for school trips and other activities. The outer modern megalithic façade wall was thoroughly cleaned and conserved by the Restoration Directorate. In order to improve accessibility and security at Ta’ Ħaġrat a collapse in the boundary wall was restored, and steps leading from the entrance to the forecourt of the temple were also improved.

As part of ongoing landscaping works in the Ġgantija Temples grounds, extensive rubble wall restoration works were carried out. The irrigation system in the Ġgantija landscaped grounds was reinstalled. A number of fields were topped up with new soil and shrubs were planted along the final length of the pathway before approaching the temples. Following the major infrastructural improvements undertaken, the site was able to host a number of private functions. A process for the transfer of title of a field that provides access to Triq l- Imqades was initiated through the Lands Department in July. The retaining wall of the Ġgantija terrace suffered a collapse in May due to the dry winter experienced at the beginning of this year. The collapse was cleared and the area investigated. Following the submission of a method statement, documentation, survey and the authorisation from the Superintendence of Cultural Heritage, the wall was reconstructed with supporting concrete blocks being integrated in it. The UNESCO Intergovernmental Body Allocation Contract for funds to aid in the Studies for Stabilising the Facade of Ġgantija Temples: Phase 1 – Movement Sensors (US$24,864), was renewed in September and is to be completed by end 2017. In carrying out this exercise for the purchase of movement sensors and the detailed study of the state of conservation of the façade of Ġgantija, HM has engaged the services of Architect Alex Torpiano.

Heritage Malta 6 Annual report and consolidated financial statements Year ended 31 December 2016

National Monuments

In collaboration with the Office of the Prime Minster and the Valletta 2018 Foundation, and as commissioned by the Alfred Mizzi Foundation, the monument in honour of Francesco Laparelli and Girolamo Cassar, located near the new Parliament, was inaugurated on 22 December by the Hon. Prime Minister, as part of the celebrations for the 450th anniversary of the founding of Valletta. Works on the Artistic Statement to the Maltese Republic are currently on hold in view of the proposal for the development of Lower Fort St Elmo, since the proposed project impacts directly the earmarked location of the said monument. Works on the Monument for the Maltese People, to be located off Castille Square and inaugurated in 2017, are nearing completion, while work on the monument to Prime Minister Dom Mintoff, to be located in Castille Square, are proceeding steadily. HM and the Grand Harbour Regeneration Corporation, on behalf of the OPM, have also launched a public request for proposals for Artistic expression/s at City Gate, Valletta - http://www.heritagemalta.org/monuments/. HM also provided the required information for the interpretation panels of the following monuments: Sir Paul Boffa, Dr George Borg Olivier, Manuel Dimech, Sette Giugno, Jean de Valette, and Valletta Summit & Malta’s Foreign Policy. The Agency also provided the necessary assistance for the installation of the Sette Giugno monument to its original location in St George’s Square.

EU CO Funder Projects

The EAFRD M323/12 (REBACA – Rehabilitation of the Roman Baths and Christian Catacombs, c. €2m), focused on the conservation of the Għajn Tuffieħa Roman Baths and the necessary infrastructural works required to render the Ta’ Bistra Catacombs (Mosta) accessible to the general public. Works were finalised, and the new walkways and protective shelter were officially inaugurated on 24 June.

Following the completion of the four major ERDF co-funded projects in 2015, namely St Paul’s Catacombs, Tarxien Temples, Fort St Angelo and Fort St Elmo, in October HM received the official green light that three other major projects were also awarded ERDF funding, namely:

ERDF 05.019: MUŻA – The National Community Art Museum: Since MUŻA is also the flagship project for the Valletta 2018 capital city of culture, the main works tender was issued and awarded. Mobilisation works have commenced in December and are expected to be completed by early 2017, following the official green light by the Planning Authority in December. On the other hand, the restoration works on the main façade of the Auberge d’Italie overlooking Merchants Street were completed in June with the symbolic relocation of the bust of Grandmaster Gregorio Carafa on the main facade of the building. Nonetheless, the Agency is also currently in discussions with the relevant authorities to increase the ERDF fund for this project from €5 to 10 million.

Works proposed for specific areas within the footprint of the building were also extensively discussed and reviewed. The Renzo Piano Studio was roped in to provide feedback regarding the intervention on the original façade overlooking Pjazza de Valette. The proposed intervention on corridors surrounding the main courtyard was extensively discussed with the Superintendence of Cultural Heritage, but had to be dropped due to stringent deadlines. Plans for the museum shop and back office spaces were also extensively discussed. In the meantime, select areas within the building were scraped from layers of paint in order to determine the extent of required interventions prior to tender issue. The Malta Tourism Authority should be out of the building by February 2017.

Heritage Malta 7 Annual report and consolidated financial statements Year ended 31 December 2016

Branding and brand book were concluded and are currently being tested. This exercise was undertaken by a multidisciplinary team with the support of the Department for Digital Arts, University of Malta. A call for a strategic partner for MUŻACafe was drafted and published. Pitching sessions were subsequently held in October and two proposals were shortlisted out of a total of six submitted. Results have been published and a way forward is currently being discussed. A call for the development of products inspired by the MUŻA brand and vision has also been issued. Pitching sessions were held and results published. The projects submitted did not meet expectations and a way forward is being discussed. A blog webpage featuring the latest news about the project purposely was also launched.

In the meantime the National Museum of Fine Arts closed its doors for the last time on 2 October, the day after Notte Bianca. A final public event was also held the following week. A virtual rendition of the museum, sponsored by Dhalia Real Estate, has been created, and the entire collection relocated to various temporary storage facilities. The edifice will be handed over to the office of the Attorney General in January 2017.

ERDF.05.022 – The Establishment of a Regional Museum for Gozo: The design competition for the new Gozo Museum at the former Ninu Cremona Lyceum in Victoria, Gozo, was launched on 4 March. Three design submissions were received. A Design Jury made up of various experts, including a foreign expert, convened on 4 May. Following the jury process, the administrative and financial evaluation ensued. The recommendation for award of contract was communicated on 19 July. Nonetheless, the process was halted since an objection was filed by one of the bidders. The appeal is still pending a court decision, expected in January 2017. The report on the proposed museum by Masters’ students from the Department of Sustainable Heritage within the University College London was presented in April. In the meantime, the process is ongoing to finalise the ERDF application leading to the formalization of the grant agreement. This project is being managed in collaboration with the MGOZ.

ERDF 05.016 – The Grand Master’s Palace Regeneration Project: The grant agreement for the project at the Grand Master’s Palace is also being concluded. This project is being led by the Restoration Directorate in close collaboration with HM, and a €10 million budget is also being considered by the authorities in this case. Even though the works can only commence post-September 2017, due to the hosting of the EU Presidency in the first half of 2017, the main service tender was published and is under evaluation. The works envisage the creation of a visitor centre and the re-location of the Knight’s Armoury collection from the Palace stables, where it has been exhibited since 1974, to the hall on the Piano Nobile where it had been established by Grandmaster Wignacourt in 1604 (previously the Parliament Chamber). However, with an increased budget, the restoration of extensive areas of the Piano Nobile corridors and halls can also be addressed. Furthermore, in preparation for the EU Presidency, in collaboration with the GHRC, extensive restoration works were undertaken with respect to most of the marble flooring of the main corridors, the redecoration of the corridor walls in the Piano Nobile, and conservation and redecoration of the wall paintings on the doorway of the Palace Chapel. These works were carried out by private contractors (with supervision and direct assistance of HM conservators) following the publication of three separate requests for quotations. The wrought iron wall sconces which decorated the Palace corridors were replaced with period ones which fit with the corridor’s decor, and the adjoining halls refurbished into meeting rooms required during the Presidency. The latter work included the restoration of the three antique crystal chandeliers, restoration and provision of pelmets, advice for the choice of textile for the installation of new curtains and upholstery of historic armchairs. A wrought iron chandelier in one of the former PM’s office anteroom was restored, while an antique 19th century crystal gas lit chandelier was bought anew for hanging inside the same office. A series of 27 armorial shields formerly in the Palace Armoury sporting various Malta British Governors’ coat of arms were also conserved and fixed to embellish said room.

Heritage Malta 8 Annual report and consolidated financial statements Year ended 31 December 2016

Folklore Museum/Gran Castello Historic House: Work was mainly focused on the conversion of part of the Folklore Museum into domestic quarters dating to the 18th century. A new lighting system was installed throughout the museum complex, replacing the old system dating to the 1980s. The museum was officially renamed the ‘Gran Castello Historic House’ and launched when the Ċittadella Restoration project was inaugurated on 30 June. Two levels of the southernmost house forming part of the museum complex were respectively devoted to (a) the serving personnel quarters at ground level, and (b) the family’s dwelling quarters at first floor level. The domestic quarters now comprise a reconstructed set-up typical of the 18th century, employing period furniture and related accessories. To complement artefacts already available from the previous display or from the reserve collection, a number of acquisitions were made. As part of the improved visitor experience, twelve infopods with audio-visual content were set up throughout the museum complex. These were funded through ERDF as part of the Ċittadella project. The audio-visual content varies from different aspects of daily life to the urban and rural context in Gozo during the period under consideration. A 3D-model of the Ċittadella as it stood in the late medieval period was separately set up on another screen and was similarly funded through the ERDF. On the other hand, works with respect to the EEA (Norwegian Funds) Financial Mechanism 2009-14: New Environmental Management System project for the Ħal Saflieni Hypogeum (c. €900,000) proceeded as planned. The condition assessment and biological survey reports were concluded, while the geological survey and the rate of deterioration are ongoing. Following its third issue, the tender for works on site was concluded through a Negotiated Procedure. The site was closed to the public on 7 June and works commenced with the installation of a protective platform over the Upper Level to ensure protection of the original surfaces and to keep the environment of the site relatively stable while the overlying polyurethane sandwich roof is replaced. Work carried out so far includes the removal of old equipment, furniture and services from the site, and commencement of electrical and plumbing works. The steel structure supporting the site’s glass enclosure was also stripped from old paint and rust and repainted with intumescent paint. Another tender was issued to replace two wrought iron drain pipes at a third party property in order to eliminate leakages in this area of the hypogeum. The work will involve the displacement of the tenant living in the related property. Works are still ongoing and scheduled to be completed by mid 2017. In the meantime HM and the Paola Local Council are co-ordinating the pedestrianization of the road leading to the site's entrance. These discussions will also involve Transport Malta and other entities. Until works on the project are ongoing, site PCs were temporarily removed and environmental data is being collected manually on a monthly basis. In addition, air quality within the site is continuously monitored.

In October HM also submitted the following applications for EU-funded projects from the Interreg V Italia-Malta programme:

SPLEAION is a project being proposed by the Phoenician, Roman and Medieval Sites Department and the Natural History Department in collaboration with the Centro Universitario per la tutela e la gestione degli ambienti naturali e degli agro-ecosistemi. This project, with an estimated budget of €2.15M will entail the documentation and studying of seven underground sites (four in Malta and three in Sicily) which are mostly inaccessible to the general public. In Malta, these include the Salini Catacombs, Abbatija tad-Dejr, Għar Mirdum and Għar il-Friefet. The project's main aim is to conduct a number of documentation studies such as 3D modelling and remote sensing with the aim of making these available to the general public through a number of research stations in HM museums. These stations may be used by researchers, scholars and the general public to gather information on these less-known sites, while the studies created will provide the basis for monitoring of these sites by local authorities.

Heritage Malta 9 Annual report and consolidated financial statements Year ended 31 December 2016

ITINERA aims at developing an ‘innovative’ and ‘inclusive’ model in the management of the cultural assets, both the tangible and the intangible. This project, estimated at €1.83M, mainly involves the creation of a virtual museum, via the documentation of a number of sites (and related objects) in Malta and Sicily, with the aim of generating a digital platform for the management and accessibility of these sites, as well as two immersive experiences, one at the National Museum of Archaeology and another at the Parco Archeologico di Agrigento. The immersive experiences will narrate the story of two sister islands, comparing their convergence and divergence, form Prehistory to the Middle Ages.

Moreover, in November HM also submitted three applications for the EEA/Norwegian Financial Mechanisms 2014-21, as follows: 1. Reconstruction of dilapidated parts of the Malta Maritime Museum and enhancement of visitor infrastructure (c. €500,000) 2. Purchase of technical equipment for the setting up of a conservation science laboratory (c. €500,000) 3. Digitization and management of the national collection (c. €1m)

HM is also currently participating in the following EU projects:

MEDIDWARFS PROJECT 2012-2017 – The National Museum of Natural History has for the past four years collaborated with the Natural History Museum of London on a research project to study the fossil mammals from Għar Dalam as part of a broader project on endemic Pleistocene mammals of Mediterranean islands. The research has been funded by the Natural Environment Research Council (UK) and the Leverhulme Trust. Work this year has focussed on elephants and deer, and has revealed the presence of several species of each.

FRAGSUS – HM’s participation in the project FRAGSUS, Fragility and Sustainability in restricted island environments: Adaptation, cultural change and collapse in prehistory, continued during this year. Fieldwork was conducted in Skorba, where part of the Għar Dalam phase wall originally excavated by David Trump was uncovered again. Samples for scientific testing were taken from the sections of the trench and the trench was then backfilled. A GNSS setup was acquired which was partly funded by FRAGSUS. This will aid in the identification of remote archaeological site as part of the project. Attempts are currently being made to link the equipment to the national grid reference in order to be able to use the equipment without the need of extensive post processing of the data, thus making the process less time consuming. In February, SCH collected ‘Gozo survey’ crates with ceramic material from the Ġgantija Finds Hut for study. Backfilling works were carried out on the Ġgantija terrace wall trench in March. The following month, the lower level trench below the temple plaza was reopened. Soil samples were taken for study. Work on the Taċ-Ċawla pottery assemblage commenced, and has so far focussed on desk research on past work on ceramics and a preliminary visual study of some of the material, in order to familiarize with the Taċ-Ċawla assemblage. The Prehistoric Sites Department has also participated in the project’s annual meeting and seminars in Cambridge in January of this year, and participated in an introductory course to petrography in Belfast in February.

Heritage Malta 10 Annual report and consolidated financial statements Year ended 31 December 2016

EDUCATION AND OUTREACH

HM was also very active on the education front through the production of specific education programmes and work sheets, and by the organisation of a series of activities including hands-on sessions, drama representations and treasure hunts for school children, and others attending Skolasajf. This year saw a continuation of the thematic cross curricular programme of activities which started being delivered in a number of sites and museums at the start of the scholastic year 2015/16. The focus of these activities is one based on the Outcomes and Outputs of the National Curriculum Framework. The aim is to change the perception that a visit to a museum is a mere day out of school. Each thematic activity is focused on a particular event or period in history which students are taught about in class, so that the visit to the museum becomes a directly relevant and important part in the learning experience. As much as possible the activities are programmed in such a way so as to coincide with the particular time when that specific aspect of history is being taught. For students to garner maximum benefit a pre- and post-museum visit preparation is being encouraged. Through the museum visit students were also allowed to interact more fully with the primary sources referred to in their textbooks. Since most activities are cross curricular in nature, the fluidity and interconnection between different subject matters is evidenced.

As an integral part and follow-up of last year’s education programmes focusing on the 450th anniversary of the Great Siege, on 10 June took place the official launch of the publications L-Assedju l-Kbir Farka Farka and its English translation A Bird’s Eye View of the Great Siege. Both publications were produced by HM and published in collaboration with the Department of Curriculum Management within the Ministry of Education. Copies of these publications will be distributed to all Year 6 students next year.

Activities were open to all schools, and over the scholastic year the Agency has offered activities that could be followed by every level, from kindergarten to post secondary. Thematic programmes were specifically developed for students that fall within the Core Curriculum Programme. However, keeping firmly in mind that everyone has different learning abilities and skills, HM started diversifying the activities with the aim of reaching out to students who have different abilities and challenging backgrounds. The success of such programmes has encouraged the Education Unit to re-offer the programme in the coming year and to open it up to more schools whose students face similar challenges.

We also cooperated with the Ministry of Education in other initiatives such as the organisation of in-service courses for history teachers. Career orientation programmes and participation in career counselling events are being given the appropriate attention with a more diverse and targeted programme aiming to fulfil the scope of such internships being developed. An average of two classes per month were offered career orientation visits at the Conservation Laboratories, while job exposure week-long placements at Head Office and various sites were offered to Kirkop Boys Secondary and Ħandaq Girls Secondary in November and December.

Another particular event, which to all intents and purposes was a ‘first’ for the Agency, was the workshop organised on 14-21 October to celebrate World Sight Day in collaboration with the Parliamentary Secretariat for the Rights of People with Disabilities at the Għajnsielem Learning Hub, Gozo, where models of prehistoric temples and other replicas were offered for a special tactile experience to people with visual difficulties.

A total of 48,877 students and accompanying adults visited HM museums and sites as part of their curricular needs or during extra-curricular activities.

Heritage Malta 11 Annual report and consolidated financial statements Year ended 31 December 2016

During the year under review the Publications Department awarded particular attention to the consolidation of its efforts on the publishing front in a bid to valorize and democratize in a more effective way the cultural resources in the Agency’s care. Besides producing two more volumes in the Project Book Series, two issues of its biannual journal (Tesserae), and a lavish catalogue in connection with the exhibition commemorating the 450th anniversary of the foundation of Valletta, three new series of publications have been launched.

The first consists of the Monograph Series (in-depth studies on particular aspects of Maltese heritage). The first title in this series is entitles In the name of the Prince: Maltese Corsairs 1760-1798, and focuses on the vast depositary of information found within HM collections and archives. The first edition, launched in February at the Malta Maritime Museum, sold out within the first few months and another print run was ordered in October. The second is the Proceedings/Collected Papers Series, which was started with the publication of the proceedings of the conference organised by HM at the Aula Magna of the University of Malta in 2013. It is entitled Caring for Our Heritage: Conference Proceedings. The third is the Espresso Series (high end brochures relating to more intimate and focused exhibitions).

Special mention must also be made of the collaboration with other prestigious stakeholders including the University of Malta, the National Library of Malta and the Akkademja tal-Malti in the publication of the earliest known and monumental dictionary of Maltese: Damma tal-Kliem Kartaginis mscerred fel Fom tal Maltin u Ghaucin, which was also a major hit with the general public. All publications were presented with great success in the annual national Bookfest in November, during which HM was represented for the fourth year running. Meanwhile, a significant amount of preparatory work has been carried out in connection with the production of several titles and the development of new series due in 2017.

EXHIBITIONS AND EVENTS

HM’s major event during the year under review was undoubtedly the exhibition to commemorate the 450th anniversary of the founding of Valletta, entitled Valletta 1566: Melita Renascens. The exhibition is split up between two different locations, the Vendome Bastion (former National War Museum, Fort St Elmo) and the National Library (Valletta), and will run until July 2017. The two venues complement each other by illustrating thematically various aspects of the life of the city. While the display at the National Library focuses on the ‘body’ of Valletta (the fortifications, the physical layout and the most prominent buildings), the section at Fort St Elmo concentrates on the city’s ‘soul’: the way of life, important personalities, amenities, recreation, art and crime. The exhibition was also accompanied by the production of a lavishly illustrated catalogue. Other publications on the same theme, including two volumes of collected papers and a children’s workbook are in programme for next year. Apart from the above, during the year under review HM organised, participated in or hosted more than 240 cultural events, including lectures, heritage trails, seminars, temporary exhibitions, re-enactments, and others (Refer to Appendix I – Calendar of Events). Worthy of special mention is the start of the Espresso Exhibition Series – small exhibitions focusing on particularly intriguing artefacts from the National Collection. Four such exhibitions were organised, namely ‘1. Siege Maps – Keeping Memory Safe’, ‘2. Mattia Preti: Self-Image’, ‘3. Edward Lear in Gozo – 150 Years Later’, and ‘4. Reborn: A Renaissance Painting in Focus’. 1, 2 and 4 were held at the National Museum of Archaeology, the other being held at the Gozo Area Office.

Heritage Malta 12 Annual report and consolidated financial statements Year ended 31 December 2016

Of particular importance are also the participations in the exhibition ‘Valentin de Boulogne: Beyond Caravaggio’ held at the Metropolitan Museum of Art of New York, the exhibition ‘Mattia Preti: Con lo sguardo verso Caravaggio’ organised by the Soprintendenza per i Beni Culturali e Ambientali Regione Siciliana at Syracuse, and the exhibition ‘Siege Maps: Keeping Memory Safe’ in collaboration with the Charles University of Prague and held at the said university. HM also provided its technical assistance and lent artefacts to various local councils and other local associations for the organisation of exhibitions and other cultural activities.

All the museums and sites managed by HM were open free of charge to the public during two open days on 31 January and 8 December. Likewise, admission was reduced to a nominal fee on several occasions in various museums and sites, in particular during the respective cultural events organised by Local Councils such as Birgufest, or free on national events such as the Notte Bianca. Worthy of special mention are the extremely successful 'Mortem' held on 21 February at St Paul’s Catacombs, including live re-enactments of a Roman funeral and food inspired by Roman recipes, the open day of Fort St Angelo on 8 September, and the open day of the Conservation Laboratories on 2 November. Ten events were specifically organised for HM members. A number of underprivileged groups were granted free access, while an increasing number of local groups (local councils, parish groups, retired teacher groups, scouts, etc) took advantage of the €1.00 scheme throughout the year.

Ta’ Bistra Catacombs and Fort St Angelo officially opened their doors to the general public on 1 October and 1 November respectively, while in March the prehistoric temples of Kordin III became a HM site after its transfer from Fondazzjoni Wirt Artna, and is now open by appointment.

Other progress was registered regarding permanent displays. At the National Museum of Natural History, the Mammals display on the ground floor was dismantled, making way for a new display on Islands and Eco-Systems, covering also endemic and indigenous species. The Molluscs display has been dismantled, refurbished and relocated. Work on new displays on Mammals, Maltese Flora, and Insects is in progress. Additional on-site information panels were added at the Tarxien Temples, where the mobile app launched in January is proving popular with visitors since it enhances the visitor experience by making the site more accessible thanks to its text and audio guide being available in multiple languages. New audio-guides were also launched at the National Museum of Archaeology.

At the Inquisitor’s Palace preliminary preparations commenced to implement the interpretive vision whereby a historic house approach will unfold at ground floor, first floor and the prison complex, while ethnographic displays illustrating national religious identity in part resulting from the presence of the Inquisition in Malta will be relocated in the upper floor.

The Malta Maritime Museum started a pilot project of historic dinners based on historically accurate menus following research on artefacts and documents within the museum collection and archives. The menus are intended to give the visitors a different museum experience, an opportunity to taste history. Such menus are prepared on site by qualified chefs. Two pilot dinners were organized in October and November, and both events were very successful.

The communities of Kalkara, Marsa and Gżira participated in the Naqsam il-MUŻA project. Visuals of chosen artworks were displayed in public spaces and videos featuring participants commenting their choice of artwork are being aired on social media. This is a joint project with Valletta2018. The HM Showcase exhibition space in Melita Street was kept functional until June, when the MTA’s Tourist Information Office was located there. Exhibitions held during the first half of the year included two curated projects introducing two up-and-coming artists, and three solo shows.

Heritage Malta 13 Annual report and consolidated financial statements Year ended 31 December 2016

Work is also currently underway for a number of forthcoming initiatives, including exhibitions to be held in Brussels and Rome in 2017 on the occasion of Malta’s presidency of the EU, and an exhibition on the Schranz Family of Artists http://schranz.heritagemalta.org/ in 2018 for Valletta Capital City of Culture.

CORPORATE

HM has started reaping the benefits of the investment in ICT systems to meet the demands of the ever changing external operational environment especially regarding an integrated software for financial management, coupled with turnstiles, CCTVs, new Point of Sale systems integration, and the introduction of electronic payment to suppliers. Furthermore, the stores function was separated completely from the procurement section, resulting in two separate procurement arms: one replenishes items used on a day-to-day basis and the gift shop store that replenish museum shops, while the other issues purchase orders and vets requests being made have the necessary approvals and quotations. A new procurement policy for the entire agency was also drafted and will be implemented in 2017, also in view of the new government procurement legislation. The proposed changes will not only improve the entire purchasing process, but also ensure that there is more accountability and transparency.

Procedures covering museum shops stock and procurement from stores were consolidated, audit systems within museums were reviewed, staff was trained on a new point-of-sale system, the rosters of Malta and Gozo were combined to maximise resources, and a simpler price structure introduced. All activities were very actively publicised on all media: 35 press releases were issued, 39 appearances on television programmes, 38 interviews on radio programmes, 52 articles on magazines, 198 online articles, and 10 press conferences, while 86 requests for filming and 145 requests for photography by the Malta Tourism Authority were processed. The number of page views of the official HM website continued to increase and exceeded the 1,800,000 mark (1,489,663 in 2015). Likewise, the official HM Facebook page (16,211 Likes) and Group (5,599 members) have also registered very encouraging results and are proving to be very effective to reach out to our audiences. HM has also investigated the use of Google Ad Words and Facebook advertising and so far the results are extremely encouraging. In one particular case, the Valletta 1566 video advert generated over 35,000 views on YouTube in one week. HM intends to continue exploring this advertising medium.

HM also developed a new website promoting the hire of HM venues in various museums and sites http://www.heritagemalta.org/venues/. The Membership Scheme was revamped with revised rates and increased benefits to all members, and officially launched on 2 November. Previously on 23 September HM also launched a new HM student scheme, granting free access to HM museums and sites to all primary school children, and a 50% discount to any two accompanying adults. This scheme was devised with the cooperation of the MJCL and MEDE. The response so far has been extremely encouraging, with over seven thousand applying for this card.

Throughout the year HM concluded a number of agreements with stakeholders on various fronts, thus enabling it to reach out better to all its audiences, diversify and improve its various services. The following are worthy of particular mention. On 16 March HM and the University of Malta signed a memorandum of understanding focusing on mutual cooperation regarding equipment and technical assistance, staff training, student academic support, and research. Intensive discussions were held with MCAST regarding the setting up and launching of a course focusing on cultural heritage skills. On 8 September HM also signed a management agreement with the Sovereign Military Order of Malta for making the upper part of Fort St Angelo (managed by the Order) accessible to the general public through the provision of daily guided tours at an extra charge. Such tours were started on 5 December. Another agreement was reached with Google Street View & Google Cultural Institute to digitize archaeological sites, the buildings hosting museums

Heritage Malta 14 Annual report and consolidated financial statements Year ended 31 December 2016

and their contents and providing an online platform to upload cultural assets for display on the Internet. A sponsorship agreement was also signed with Dhalia Real Estate Services to digitize museums and sites and present a 360 degree navigable model of the spaces on the internet (http://heritagemalta.org/museums- sites/the-inquisitors-palace/).

We have capitalized on sponsorships and monetary donations, which have been used for further capital works and other projects such as the Malta Maritime Museum bell project, 3D documentation of the Grand Salon of the National Museum of Archaeology, the MUŻA furniture restoration project, and the Għar Dalam regeneration project.

HM also introduced an electric car service between Ħaġar Qim and Mnajdra Temples through a third party operator. This has proved to be very effective and led to an increase of 15% visitors to Mnajdra compared to the previous year.

HM also launched, through its Business Development Unit, the commission agents system whereby tour guides and other operators have been granted special prices and commissions on sale of tickets to specific sites. This system shall be improved and fine-tuned during the coming year in order to generate more admissions in HM sites.

Nine HM sites have received the renowned Certificate of Excellence for 2016, while two of the sites also received The Travellers’ Choice Award by TripAdvisor, the world’s largest travel site. HM has in fact received such certificates for some of its sites for the last four consecutive years. The National War Museum, the Ħal Saflieni Hypogeum, the National Museum of Archaeology, Mnajdra Temples, Ħaġar Qim Temples, Ġgantija Temples, the Malta Maritime Museum, St Paul’s Catacombs, and Fort St Elmo have received the Tripadvisor Certificate of Excellence, which is awarded only to establishments that consistently achieve outstanding traveller reviews on TripAdvisor. The Ħal Saflieni Hypogeum and Ħaġar Qim Temples also received The Travellers’ Choice Award.

The museum shops performance was once again encouraging. For the first time HM introduced a number of agency branded merchandise and food and beverage items. These new additions to the product mix and to the publications proved that museum shops are indeed an important source of revenue to the Agency, while providing an expected service and improving the overall visitor experience. HM, through its Business Development Unit, has developed a number of merchandise which is on sale exclusively from its museum shops. These include a number of food products from Għar Dalam, stationery, coaster sets, branded mugs, colouring booklets for children, figurines featuring soldiers of the Order of St John, and others. The Agency has also introduced a Museum Shop Development task force in charge of reviewing present experience and with the remit of proposing improvements to the display, products, signage etc. Collaboration with third party retailers improved and HM is selling its merchandise and publications in various locations. Encouraging results have also been achieved through the online shop on http://www.heritagemalta.org/shop - another way for HM to increase accessibility to its publications and museum merchandise.

Besides the technical training for the Diagnostic Science Laboratories mentioned above, during the year under review HM staff also benefited from training and professional development. A self-motivation training session for all management staff was held in January, customer care and team building sessions were held in March and April, and first aid sessions were held in July and August. Three workshops on business planning, entrepreneurship and stakeholder modelling were organised in collaboration with St Martin's Institute of Higher Education in August and September.

Heritage Malta 15 Annual report and consolidated financial statements Year ended 31 December 2016

Many other members of staff attended conferences and specific courses relevant to their respective responsibilities, while others still benefited from various forms of assistance to further their studies. HM also provided much appreciated museum-related experience to 74 interns from all over Europe, and hosted students from the Institute of Tourism Studies and from the Department of Tourism Studies of the University of Malta as part of their course studies.

Heritage Malta 16 Annual report and consolidated financial statements Year ended 31 December 2016

Table 1: Education visits statistics

Museum /Site Number of (By Region) Participants

National Museum of Archaeology 3,531 National Museum of Fine Arts 1,043 National War Museum 7,492 Palace Armoury & State Rooms 1,393 Bighi 91 Inquisitor’s Palace 2,741 Malta Maritime Museum 1,663

Fort St Angelo 3,884 Tarxien Temples 735 Hal Saflieni Hypogeum 0 Għar Dalam 1,421 Ħagar Qim Temples 5,008 Mnajdra Temples 3,397 National Museum of Natural History 2,248 Domus Romana 1,274 St Paul’s Catacombs 2,175 Ta’ Ħagrat Temple 0 Skorba Temple 0

Ta Bistra Catacombs 284 Gozo Museum of Archaeology 896 Folklore Museum 1,003 Gozo Nature Museum 1,410 The Old Prison 1,919 Ġgantija 4,240 Ta’ Kola Windmill 1,029

Total 48,877

Heritage Malta 17 Annual report and consolidated financial statements Year ended 31 December 2016

Table 2: Admission statistics

Museum/Site (By Region) Visitors National Museum of Archaeology 52,394 National Museum of Fine Arts* 12,665 National War Museum (Fort St Elmo)* 87,629 Palace Armoury 110,570 Palace State Rooms** 119,084 Inquisitor’s Palace 32,579 Malta Maritime Museum 20,281 Fort St Angelo*** 14,973

Tarxien Temples** 65,512 Hal Saflieni Hypogeum**** 12,012 Ghar Dalam Cave & Museum 39,467 Hagar Qim Temples 143,650 Mnajdra Temples 99,069 National Museum of Natural History 15,109 Domvs Romana 29,039 St Paul’s Catacombs 61,868 Ta’ Hagrat Temple 1,953 Skorba Temple 1,182 Gozo Museum of Archaeology*** 10,994 Folklore Museum 8,034 Gozo Nature Museum 6,083 The Old Prison 20,939 Ggantija Temples 183,579 Ta’ Kola Windmill 22,154 Other sites 1,066

Sub total 1,171,885 Free admissions (including school visits) 115,700

GRAND TOTAL 1,287,585

* Closed from 3 October onwards; ** Closed from mid-October onwards; *** Open from 1 November onwards; **** Closed from 7 June onwards

Heritage Malta 18 Annual report and consolidated financial statements Year ended 31 December 2016

Directors The following have served as directors of the Agency during the year under review: Dr Joseph M. Buttigieg - Chairman Mr Anthony Scicluna – Vice-Chairman Prof JoAnn Cassar Mr Anthony Degiovanni Mr Peter Muscat Dr Gerald Montanaro Gauci Prof Anthony Zammit Mr Anthony Preca

In accordance with the Cultural Heritage Act, 2002, the directors are appointed for such term and under such terms and conditions as the responsible minister may deem proper, and they are eligible for reappointment.

Disclosure of information to the auditor At the date of making this report the directors confirm the following: - As far as each director is aware, there is no relevant information needed by the independent auditor in connection with preparing the audit report of which the independent auditor is unaware, and - Each director has taken all steps that he ought to have taken as a director in order to make himself aware of any relevant information needed by the independent auditor in connection with preparing the audit report and to establish that the independent auditor is aware of that information.

Statement of directors’ responsibilities The Cultural Heritage Act, 2002 requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and the Agency as at the end of the financial year and of the profit or loss for that year. In preparing these financial statements, the directors are required to: - adopt the going concern basis unless it is inappropriate to presume that the Group and the Agency will continue in business; - select suitable accounting policies and then apply them consistently; - make judgements and estimates that are reasonable and prudent; - account for income and charges relating to the accounting period on the accruals basis; - value separately the components of asset and liability items; and - report comparative figures corresponding to those of the preceding accounting period.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Agency and to enable them to ensure that the financial statements have been properly prepared in accordance with the Cultural Heritage Act, 2002. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. They are also responsible for safeguarding the assets of the Agency and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements of Heritage Malta for the year ended 31 December 2016 are included in the Annual Report 2016, which is published in hard-copy printed from and may be made available on the Heritage Malta’s website. The directors are responsible for the maintenance and integrity of the Annual Report on the website in view of their responsibility for the controls over, and the security of, the website. Access to information published on the Agency’s website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of financial statements may differ from requirements or practice in Malta.

Heritage Malta 19 Annual report and consolidated financial statements Year ended 31 December 2016

Auditor The auditor Grant Thornton has intimated its willingness to continue in office, and a resolution proposing its reappointment will be proposed at the Annual General Meeting.

Joseph M. Buttigieg Anthony Scicluna Chairman Director

Registered address: Heritage Malta Head Office Ex Royal Naval Hospital Marina Street Kalkara KKR 1524 Malta

[DATE]

Heritage Malta 20 Annual report and consolidated financial statements Year ended 31 December 2016

Income and expenditure accounts

Consolidated Agency Notes 2016 2015 2016 2015 € € € €

Subvention from consolidated fund for recurrent expenditure 6 4,799,576 4,028,283 4,799,576 4,028,283 Income from operations 7 7,086,541 7,024,158 6,885,315 6,857,849 Funds available for recurrent expenditure 11,886,117 11,052,441 11,684,891 10,886,132 Staff costs 8 (6,681,437) (6,148,523) (6,616,142) (6,121,331) Other recurrent operational expenditure (5,219,463) (4,928,236) (5,219,461) (4,955,428) Recurrent administrative expenditure (237,949) (473,253) (200,542) (272,651) Deficit on recurrent expenditure before interest (252,732) (497,571) (351,254) (463,278) Finance income 9 83 299 50 152 Finance costs 9 (28,818) (42,393) (28,868) (42,425) Deficit before income tax 10 (281,467) (539,665) (380,072) (505,671) Tax expense 11 (23,135) (44) - - Deficit for the financial year (304,602) (539,709) (380,072) (505,671)

Heritage Malta 21 Annual report and consolidated financial statements Year ended 31 December 2016

Statements of financial position

Consolidated Agency Notes 2016 2015 2016 2015 € € € € Non-current Property, plant and equipment 12 6,503,371 5,453,805 6,492,685 5,441,725 Investment in subsidiary 13 - - 4,959 4,959 6,503,371 5,453,805 6,497,644 5,446,684

Current Inventories 14 456,252 522,120 431,182 491,338 Trade and other receivables 15 499,243 316,057 610,995 529,460 Cash and cash equivalents 16 1,661,168 2,000,247 1,384,964 1,766,206 Current tax assets - 3,917 - - 2,616,663 2,842,341 2,427,141 2,787,004

Total assets 9,120,034 8,296,146 8,924,785 8,233,688

Heritage Malta 22 Annual report and consolidated financial statements Year ended 31 December 2016

Statements of financial position – continued

Consolidated Agency Notes 2016 2015 2016 2015 € € € € Reserves Accumulated fund Capital vote 6,127,431 5,330,700 6,127,431 5,330,700 Recurrent vote and operating activities 356,174 255,954 241,657 216,907 Total reserves 6,483,605 5,586,654 6,369,088 5,547,607

Liabilities Non-current Specific endowment funds 18 573,685 623,289 573,685 623,289

Current Specific endowment funds 18 129,862 (4,584) 129,862 (4,584) Trade and other payables 19 1,911,254 2,090,787 1,852,150 2,067,376 Current tax liabilities 21,628 - - - 2,062,744 2,086,203 1,982,012 2,062,792

Total liabilities 2,636,429 2,709,492 2,555,697 2,686,081

Total reserves and liabilities 9,120,034 8,296,146 8,924,785 8,233,688

The financial statements on pages 20 to 44 were approved and authorised for issue by the board on [DATE and were signed on its behalf by:

Joseph M. Buttigieg Anthony Scicluna Chairman Director

Heritage Malta 23 Annual report and consolidated financial statements Year ended 31 December 2016

Statement of changes in accumulated fund - consolidated

Notes Recurrent vote and operating Accumulated activities Capital vote fund € € €

At 1 January 2015 398,055 4,471,663 4,869,718 Deficit for the year (539,709) - (539,709) Capital subvention for the year 17 - 1,256,645 1,256,645 Transfer of depreciation from capital vote 397,608 (397,608) - At 31 December 2015 255,954 5,330,700 5,586,654

At 1 January 2016 255,954 5,330,700 5,586,654 Deficit for the year (304,602) - (304,602) Capital subvention for the year 17 - 1,201,553 1,201,553 Transfer of depreciation from capital vote 404,822 (404,822) - At 31 December 2016 356,174 6,127,431 6,483,605

Heritage Malta 24 Annual report and consolidated financial statements Year ended 31 December 2016

Statement of changes in accumulated fund – Agency

Recurrent vote and operating Accumulated

Notes activities Capital vote fund € € €

At 1 January 2015 324,970 4,471,663 4,796,633 Deficit for the year (505,671) - (505,671) Capital subvention for the year 17 - 1,256,645 1,256,645 Transfer of depreciation from capital vote 397,608 (397,608) - At 31 December 2015 216,907 5,330,700 5,547,607

At 1 January 2016 216,907 5,330,700 5,547,607 Deficit for the year (380,072) - (380,072) Capital subvention for the year 17 - 1,201,553 1,201,553 Transfer of depreciation from capital vote 404,822 (404,822) - At 31 December 2016 241,657 6,127,431 6,369,088

Heritage Malta 25 Annual report and consolidated financial statements Year ended 31 December 2016

Statements of cash flows

Consolidated Agency Notes 2016 2015 2016 2015 € € € € Operating activities Deficit before tax (281,467) (539,665) (380,072) (505,671) Adjustments 20 400,488 570,747 395,096 527,107 Net changes in working capital 20 (145,774) 160,862 (81,498) 254,814 Interest received 83 299 50 152 Interest paid - (42,393) - - Net tax refunded 2,409 8,573 - - Net cash generated from/(used in) (24,261) 158,423 (66,424) 276,402 operating activities

Investing activities Acquisition of property, plant and equipment (1,601,213) (853,267) (1,601,213) (853,267) (1,601,213) (853,267) (1,601,213) (853,267) Net cash used in investing activities

Financing activities Capital subvention from government 17 1,201,553 1,256,645 1,201,553 1,256,645 Specific endowment funds 18 84,842 (483,390) 84,842 (483,390) Net cash generated from financing 1,286,395 773,255 1,286,395 773,255 activities

Net change in cash and cash equivalents (339,079) 78,411 (381,242) 196,390 Cash and cash equivalents, beginning of year 2,000,247 1,921,836 1,766,206 1,569,816 Cash and cash equivalents, end of year 16 1,661,168 2,000,247 1,384,964 1,766,206

Heritage Malta 26 Annual report and consolidated financial statements Year ended 31 December 2016

Notes to the consolidated financial statements

1 Nature of operations Heritage Malta (“the Agency”) is the national agency of the Government of Malta. It was set up in 2002 under the provisions of the Cultural Heritage Act, 2002 and entrusted with the management of national museums and heritage sites and their collections in Malta and Gozo – including seven UNESCO World Heritage sites. The Agency is responsible for ensuring that those elements of cultural heritage entrusted to it are protected and made accessible to the public as well as conserving and restoring cultural property within its portfolio. It also provides training in conservation, education, research and consultation. It strives to create public awareness through displays, exhibitions, thematic events, public relations and other initiatives.

2 General information and statement of compliance with IFRS The address of the Agency’s registered office, which is also its principal place of business, is Heritage Malta Head Office, Ex Royal Naval Hospital, Marina Street, Kalkara, KKR 1524 Malta.

The financial statements of the Agency and the consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, and in accordance with the Cultural Heritage Act, 2002.

3 Going concern The Agency finances its operations through a subvention voted by Government in its annual financial estimates for the Ministry for Education, Culture, Youth and Sport. In 2016, € 4,600,010 (2015: € 3,729,984) was received by Heritage Malta to meet its administrative expenditure for the calendar year from 1 January 2016 to 31 December 2016 under recurrent vote 38, item 6031.

As administrator of historical sites on behalf of Government, Heritage Malta is solely responsible for the management of the museums and sites entrusted to it (refer to Appendix 1). Although Heritage Malta acts as project manager for the restoration of historical sites that fall under ERDF projects, funds allocated to, and expenses incurred in, such projects are handled directly by Government and do not form part of the financial statements of Heritage Malta. The related funding is deposited directly to the Treasury and is not available to Heritage Malta to meet its recurrent expenditure.

Heritage Malta 27 Annual report and consolidated financial statements Year ended 31 December 2016

During the year, the Agency incurred a deficit of € 380,072 (2015: € 505,671) and at 31 December 2016 its Accumulated Fund for recurrent expenditure had a balance of € 241,657 (2015: € 216,907). Although its current assets exceeded its current liabilities by € 445,129 (2015: € 724,212), an amount of € 506,578 (2015: € 484,332) included with cash at bank and in hand relates to specific endowment funds, which use is restricted to the purpose for which they were received by the Agency.

After excluding these funds, current liabilities exceeded current assets by € 61,449 (2015: excess of current assets over current liabilities of € 239,880). These financial statements have been prepared on a going concern basis that assumes that the Agency will contine in operational existence in the foreseeable future due to its ability to generate additional income or failing this, to obtain Government support. The directors are confident that the Government will support the Agency by making up for an eventual shortfall in cash generated, through its annual subvention.

4 Changes in accounting policies

4.1 New and revised standards that are effective for annual periods beginning on or after 1 January 2016 The agency has not adopted any new standards or amendments that have a significant impact on the agency’s results or financial position.

4.2 Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Agency At the date of authorisation of these financial statements, certain new standards, and amendments to existing standards have been published by the IASB that are not yet effective, and have not been adopted early by the company. Information on those expected to be relevant to the agency’s financial statements is provided below.

Management anticipates that all relevant pronouncements will be adopted in the agency's accounting policies for the first period beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either adopted or listed below are not expected to have a material impact on the agency’s financial statements.

IFRS 9 ‘Financial Instruments’ 2014 The new standard for financial instruments (IFRS 9) introduces extensive changes to IAS 39’s guidance on the classification and measurement of financial assets and introduces a new ‘expected credit loss’ model for the impairment of financial assets. IFRS 9 also provides new guidance on the application of hedge accounting.

Management has started to assess the impact of IFRS 9 but is not yet in a position to provide quantified information. At this stage the main areas of expected impact are as follows:

 the classification and measurement of the company’s financial assets will need to be reviewed based on the new criteria that considers the assets’ contractual cash flows and the business model in which they are managed;

 an expected credit loss-based impairment will need to be recognised on the company’s trade receivables and investments in debt-type assets currently classified as AFS and HTM, unless classified as at fair value through profit or loss in accordance with the new criteria;

 it will no longer be possible to measure equity investments at cost less impairment and all such investments will instead be measured at fair value. Changes in fair value will be presented in profit or loss unless the company makes an irrevocable designation to present them in other comprehensive income.

Heritage Malta 28 Annual report and consolidated financial statements Year ended 31 December 2016

 if the company continues to elect the fair value option for certain financial liabilities, fair value movements will be presented in other comprehensive income to the extent those changes relate to the company’s own credit risk.

IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018.

IFRS 15 ‘Revenue from Contracts with Customers IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts’, and several revenue-related Interpretations. The new standard establishes a control based revenue recognition model and provides additional guidance in many areas not covered in detail under existing IFRSs, including how to account for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase options, and other common complexities.

IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018. Management has started to assess the impact of IFRS 15 but is not yet in a position to provide quantified information.

IFRS16 ‘Leases’ IFRS 16 will replace IAS 17 and three related Interpretations. It completes the IASB’s long-running project to overhaul lease accounting. Leases will be recorded on the statement of financial position in the form of a right-of-use asset and a lease liability.

IFRS 16 is effective from periods beginning on or after 1 January 2019. Management is yet to fully assess the impact of the Standard and therefore is unable to provide quantified information. However, in order to determine the impact, the Agency is in the process of performing a full review of all agreements to assess whether any additional contracts will now become a lease under IFRS 16’s new definition.

5 Summary of accounting policies

5.1 Overall considerations The consolidated financial statements have been prepared using the significant accounting policies and measurement bases summarised below.

5.2 Basis of consolidation Subsidiaries are all entities over which Heritage Malta, directly or indirectly, has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the Agency. They are de-consolidated from the date that control ceases.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non- controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Heritage Malta 29 Annual report and consolidated financial statements Year ended 31 December 2016

Accounting policies of the subsidiary have been changed where necessary to ensure consistency with the policies adopted by the Group.

In the Agency’s separate financial statements, investments in subsidiaries are accounted for by the cost method of accounting, i.e. at cost less impairment. Provisions are recorded where, in the opinion of the directors, there is an impairment in value. Where there has been an impairment in the value of an investment, it is recognised as an expense in the period in which the diminution is identified. The results of subsidiaries are reflected in the Agency’s separate financial statements only to the extent of dividends receivable. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to profit or loss.

5.3 Revenue recognition Revenue is measured by reference to the fair value of consideration received or receivable, excluding sales taxes, rebates, and trade discounts.

Revenue is recognised when the amount of revenue can be measured reliably, collection is probable, the costs incurred or to be incurred can be measured reliably, and when the criteria for each of the Group's different activities have been met.

Funds available for recurrent expenditure Income is recognised upon performance of services rendered.

The income derived from the subvention from Government referred to in note 6 is recognised on accrual basis.

Sale of goods Sale of goods comprises the sale of publications and merchandise, and is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods supplied. Significant risks and rewards are generally considered to be transferred to the buyer when the customer has taken undisputed delivery of the goods.

Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable.

5.4 Operating expenses Operating expenses are recognised in the statement of comprehensive income upon utilisation of the service or at the date of their origin.

5.5 Foreign currency translation Functional and presentation currency The consolidated financial statements are presented in euro (€), which is also the functional currency of the parent company.

Foreign currency transactions and balances Foreign currency transactions are translated into the functional currency of the respective entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in the income and expenditure accounts.

Heritage Malta 30 Annual report and consolidated financial statements Year ended 31 December 2016

5.6 Property, plant and equipment Items of property, plant and equipment are initially recognised at acquisition cost including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the management. These are subsequently measured using the cost model, cost less subsequent depreciation and impairment losses.

Depreciation is calculated using the straight line method to write down the cost or valuation of the assets over their estimated useful lives on the following bases: % - Infrastructural improvement 5 - Plant and equipment 10-33.3 - Computer hardware and office equipment 12.5 - 25 - Furniture, fixtures and fittings 10-12.5 - Ticketing system 15 - Motor vehicle 25

‘Heritage Assets’ are not depreciated. They are stated at cost less provisions for impairment. Provisions for impairment are made when it is estimated that the residual value of these assets has fallen below their original cost.

No depreciation is provided on assets that are not yet brought into use.

Gains and losses on disposals of property, plant and equipment are determined as the difference between disposal proceeds and the carrying amount of the assets and are recognised in statement of comprehensive income.

5.7 Impairment testing of property, plant and equipment For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount is the greater of its fair value less costs to sell and its value in use. To determine the value in use, the Group’s management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profiles as assessed by management.

Impairment losses are recognised immediately in profit or loss. Impairment losses for cash-generating units are charged pro rata to the assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. An impairment charge that has been recognised is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

5.8 Operating leases Operating leases are those leases where a significant portion of the risk and rewards of ownership are effectively retained by the lessor. Payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

Heritage Malta 31 Annual report and consolidated financial statements Year ended 31 December 2016

5.9 Financial instruments

Recognition, initial measurement and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and subsequent measurement of financial assets For the purpose of subsequent measurement, financial assets of the Agency are classified into loans and receivables upon initial recognition.

All financial assets are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired.

All income and expenses relating to loans and receivables are presented within ‘finance income’ or ‘finance costs’, except for impairment of trade receivables which is presented within ‘administrative expenses’.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Trade and other receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other available features of shared credit risk characteristics. The percentage of the write down is then based on recent historical counterparty default rates for each identified group.

Classification and subsequent measurement of financial liabilities The Group’s financial liabilities include specific endowment funds and trade and other payables. These are stated at their nominal amount which is a reasonable approximation of fair value.

All interest-related charges are included within ‘finance costs’.

5.10 Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method. Cost includes all expenses directly attributable to acquiring the inventories and to bringing them to their existing location and condition. Financing costs are not taken into consideration. In the case of work-in-progress cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.

Heritage Malta 32 Annual report and consolidated financial statements Year ended 31 December 2016

5.11 Income taxes Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period.

Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income. Deferred tax liabilities are always provided for in full.

Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.

5.12 Cash and cash equivalents In the statements of financial position and cash flows, cash and cash equivalents comprise cash in hand and demand deposits with banks.

5.13 Provisions Provisions are recognised when the group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain.

Costs related to the ongoing activities of the Group are not provided in advance. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

5.14 Significant management judgement in applying accounting policies and estimation uncertainty

When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Heritage Malta 33 Annual report and consolidated financial statements Year ended 31 December 2016

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Impairment

In assessing impairment, management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain plant and equipment.

Inventories

Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

6 Subvention from consolidated fund for recurrent expenditure Amounts advanced by Government for recurrent expenditure are made in the form of subventions from the consolidated fund in accordance with Section 20 of the Cultural Heritage Act, 2002. In accordance with the selected accounting policy, these amounts are accounted for upon on accrual basis. Amounts attributable to the reporting period were:

Consolidated & Agency Amount Amount attributable to attributable to reporting reporting Total vote period Total vote period 2016 2016 2015 2015

Subvention received from consolidated fund for Heritage Malta 4,600,010 4,600,010 3,729,984 3,729,984

Additional amount received in kind, by way of payment by Government, of expenses on behalf of the Agency - 199,566 - 298,299 4,600,010 4,799,576 3,729,984 4,028,283

7 Income from operations The income from operations was generated locally from entrance fees and other ancillary services, and is stated net of discounts allowed.

Heritage Malta 34 Annual report and consolidated financial statements Year ended 31 December 2016

8 Staff costs Consolidated Agency 2016 2015 2016 2015 € € € €

Wages and salaries paid by Government on behalf of the Agency (note 6) 199,566 298,299 199,566 298,299 Wages and salaries paid directly (including directors emoluments) 6,046,875 5,432,096 6,046,875 5,432,096 Social security costs 434,996 418,128 434,996 418,128 6,681,437 6,148,523 6,681,437 6,148,523

Wages and salaries recharged to subsidiary undertaking - - (65,295) (27,192) 6,681,437 6,148,523 6,616,142 6,121,331

The average number of persons employed by Heritage Malta during the year was: Consolidated and Agency 2016 2015 No. No.

Operations 200 191 Administration 65 62 265 253

9 Finance income and finance costs The following amounts have been included in the income and expenditure accounts line for the years presented: Consolidated Agency 2016 2015 2016 2015 € € € €

Finance income Bank interest receivable 83 299 50 152

Finance costs Bank interest and charges 28,818 42,393 28,868 42,545

10 Deficit before income tax The deficit before tax is stated after charging:

Consolidated Agency 2016 2015 2016 2015 € € € €

Depreciation on property, plant and equipment 551,647 528,653 550,253 527,259 Directors’ remuneration 40,936 40,613 40,936 40,613 Auditor’s remuneration 7,885 6,600 6,785 5,500

11 Tax expense Heritage Malta is exempt from any liability for the payment of income tax as per Section 13 of the Cultural Heritage Act, 2002. Income tax is chargeable on taxable income of the subsidiary, Heritage Malta Services Limited, at the normal tax rates applicable under the Income Tax Act, Cap 123.

Heritage Malta 35 Annual report and consolidated financial statements Year ended 31 December 2016

12 Property, plant and equipment Details of the Group’s and the Agency’s property, plant and equipment and their carrying amounts are as follows: Computer hardware Furniture Infrastructural Heritage Plant and and office fixtures and Ticketing Consolidated improvements assets equipment equipment fittings system Total € € € € € € €

Gross carrying amount Balance at 1 January 2015 4,424,406 1,105,539 2,768,260 756,505 2,812,809 477,525 12,345,044 Additions 319,268 295,400 53,870 65,363 119,366 - 853,267 Balance at 31 December 2015 4,743,674 1,400,939 2,822,130 821,868 2,932,175 477,525 13,198,311

Depreciation Balance at 1 January 2015 1,752,631 - 2,324,262 646,694 2,014,741 477,525 7,215,853 Depreciation for the year 201,856 - 108,327 54,809 163,661 - 528,653 Balance at 31 December 2015 1,954,487 - 2,432,589 701,503 2,178,402 477,525 7,744,506 Carrying amount at 31 December 2015 2,789,187 1,400,939 389,541 120,365 753,773 - 5,453,805

Gross carrying amount Balance at 1 January 2016 4,743,674 1,400,939 2,822,130 821,868 2,932,175 477,525 13,198,311 Additions 621,701 472,887 214,131 35,516 256,978 - 1,601,213 Balance at 31 December 2016 5,365,375 1,873,826 3,036,261 857,384 3,189,153 477,525 14,799,524

Depreciation Balance at 1 January 2016 1,954,487 - 2,432,589 701,503 2,178,402 477,525 7,744,506 Depreciation for the year 223,155 - 101,982 54,441 172,069 - 551,647 Balance at 31 December 2016 2,177,642 - 2,534,571 755,944 2,350,471 477,525 8,296,153 Carrying amount at 31 December 2016 3,187,733 1,873,826 501,690 101,440 838,682 - 6,503,371

Heritage Malta 36 Annual report and consolidated financial statements Year ended 31 December 2016

12 Property, plant and equipment (continued) Computer hardware Furniture Infrastructural Heritage Plant and and office fixtures and Ticketing Agency improvements assets equipment equipment fittings system Total € € € € € € €

Gross carrying amount Balance at 1 January 2015 4,424,406 1,105,539 2,754,321 756,505 2,812,809 477,525 12,331,105 Additions 319,268 295,400 53,870 65,363 119,366 - 853,267 Balance at 31 December 2015 4,743,674 1,400,939 2,808,191 821,868 2,932,175 477,525 13,184,372

Depreciation Balance at 1 January 2015 1,752,631 - 2,323,797 646,694 2,014,741 477,525 7,215,388 Depreciation for the year 201,856 - 106,933 54,809 163,661 - 527,259 Balance at 31 December 2015 1,954,487 - 2,430,730 701,503 2,178,402 477,525 7,742,647 Carrying amount at 31 December 2015 2,789,187 1,400,939 377,461 120,365 753,773 - 5,441,725

Gross carrying amount Balance at 1 January 2016 4,743,674 1,400,939 2,808,191 821,868 2,932,175 477,525 13,184,372 Additions 621,701 472,887 214,131 35,516 256,978 - 1,601,213 Balance at 31 December 2016 5,365,375 1,873,826 3,022,322 857,384 3,189,153 477,525 14,785,585

Depreciation Balance at 1 January 2016 1,954,487 - 2,430,730 701,503 2,178,402 477,525 7,742,647 Depreciation for the year 223,155 - 100,588 54,441 172,069 - 550,253 Balance at 31 December 2016 2,177,642 - 2,531,318 755,944 2,350,471 477,525 8,292,900 Carrying amount at 31 December 2016 3,187,733 1,873,826 491,004 101,440 838,682 - 6,492,685

Capital votes are presented as increases in equity, and the acquired heritage assets are presented as assets in the statement of financial position.

Heritage Malta 37 Annual report and consolidated financial statements Year ended 31 December 2016

13 Investment in subsidiary The amount stated in the statement of finance position is analysed as follows: 2016 2015 € €

Balance at 31 December 4,959 4,959

The Agency has an unquoted investment in: Registered Class of shares Percentage of Name Office held shares held

Heritage Malta Services Limited Heritage Malta Ordinary shares 100% Head Office Ex Royal Naval Hospital Marina Street Kalkara, KKR 1524 Malta

14 Inventories Inventories of the Group and the Agency consist of the following: Consolidated Agency

2016 2015 2016 2015 € € € €

Merchandise and publications held for sale 456,252 522,120 431,182 491,338

15 Trade and other receivables Consolidated Agency 2016 2015 2016 2015 € € € €

Trade receivables – gross 266,160 338,686 170,315 300,411 Allowance for doubtful debts (58,917) (232,158) (54,887) (232,158) Trade and receivables - net 207,243 106,528 115,428 68,253 Amounts owed by subsidiary - - 203,754 266,056 Other receivables 106,051 97,582 105,864 97,852 Loans and receivables 313,294 204,110 425,046 432,161 Prepayments 78,391 21,219 78,391 21,219 Other receivables 26,558 90,728 26,558 76,080 Deferred expenses 81,000 - 81,000 - Trade and other receivables 499,243 316,057 610,995 529,460

The carrying value of short-term loans and receivables is considered a reasonable approximation of fair value.

The amounts owed by subsidiary are unsecured, interest free and repayable on demand.

Other receivables include a claim for refund of exhibition costs estimated at € 100,000 (2015: € 92,000). As at the date of signing of these financial statements the refund due to the Agency was still not finalised due to the fact that Heritage Malta did not receive all the information required from third parties.

Heritage Malta 38 Annual report and consolidated financial statements Year ended 31 December 2016

Certain trade receivables were found to be impaired and a provision has been recorded accordingly in the income and expenditure accounts. The movement in allowance for doubtful debts is as follows:

Consolidated Agency 2016 2015 2016 2015 € € € €

Balance at 1 January 232,158 232,158 232,158 232,158 Decrease in allowance (173,241) - (177,271) - Balance at 31 December 58,917 232,158 54,887 232,158

16 Cash and cash equivalents Cash and cash equivalents in the statements of financial position and statements of cash flows include the following components: Consolidated Agency 2016 2015 2016 2015 € € € €

Cash at bank and in hand 1,661,168 2,000,247 1,384,964 1,766,206

Included with cash at bank and in hand is an amount of € 506,578 (2015: € 484,332) in respect of the specific endowment funds disclosed in note 18.

17 Subvention from consolidated fund for capital expenditure Amounts advanced by Government towards capital expenditure are made in the form of subventions from the consolidated fund in accordance with Section 22 of the Cultural Heritage Act, 2002. In accordance with the selected accounting policy, these amounts are accounted for upon receipt. Amounts advanced during the period were: Consolidated and Agency 2016 2015 € €

Subvention received from consolidated fund in respect of improvements at Museums and historical sites, and restoration work 1,201,553 1,256,645

18 Specific endowment funds Consolidated and Agency 2016 2015 € €

EU Restricted funds – Fragsus 17,375 17,375 17,375 17,375

Heritage Malta 39 Annual report and consolidated financial statements Year ended 31 December 2016

18 Specific endowment funds (continued)

Consolidated and Agency 2016 2015 € € Non - EU Restricted funds – Rural Development - (11,127) Restricted funds – BOV Tarxien Temples 243,890 249,340 Restricted funds – Vodafone Malta Limited 109,474 118,210 Restricted funds – Palace Armoury – Gasan Mamo Insurance 49,778 52,191 Restricted funds – HSBC SPC Radisson 33,330 33,330 Restricted funds – HSBC Hypogeum Hilton 23,571 24,287 Restricted funds – Mediterranean Bank 36,512 38,400 Restricted funds – Research fund 10,835 10,835 Restricted funds – HSBC Hagar Qim Intercontinential 4,523 5,410 Restricted funds – HSBC VIlhena Xara Palace 17,750 15,646 Restricted funds – HSBC SPC Golden Sands 1,203 3,883 Restricted funds – Abattija tad-Dejr – Din l-Art Helwa 2,418 2,555 Restricted funds – HSBC Mnajdra San Gorg 162 427 Restricted funds – Farsons Foundation - 2,500 Restricted funds – HSBC Maritime Seabank 1,163 1,163 Restricted funds – HSBC SPC Coastline 270 270 Restricted funds – HSBC Ta’ Kola Windmill 94 94 Restricted funds – Tour Operators 94,231 (7,837) Restricted funds – Sports & Social Committee 3,164 3,252 Restricted funds – Inquisitor Alf Mizzi 1,469 1,817 Restricted funds – Pilot Launch operation - 3,000 Restricted funds – Remasi 2,701 19,652 Restricted funds – HSBC Fine Arts – Library 22,193 34,032 Restricted funds –V18 Projects 10,000 - Restricted funds – Unesco Ggantija facade 17,441 - 686,172 601,330

703,547 618,705

Specific endowment funds are disclosed as follows within the statement of financial position: Consolidated and Agency 2016 2015 € €

Current 129,862 (4,584) Non-current 573,685 623,289 Total specific endowment funds 703,547 618,705

Endowment funds are derived from gifts and donations to Heritage Malta and can only be used for specific purpose. Depreciation on property, plant and equipment funded by these funds amounting to € 32,467 (2015: € 31,548) has been transferred from the recurrent vote and charged to the respective fund.

Heritage Malta 40 Annual report and consolidated financial statements Year ended 31 December 2016

19 Trade and other payables Consolidated Agency 2016 2015 2016 2015 € € € €

Trade payables 1,050,931 576,232 1,048,659 569,507 Accrued expenses 512,270 1,232,114 510,720 1,230,816 Financial liabilities 1,563,201 1,808,346 1,559,379 1,800,323 Indirect taxation and social security 306,719 257,719 283,840 258,331 Deferred income 34,810 20,602 - - Other payables 6,524 4,120 4,329 4,120 Amounts due to subsidiary - - 4,602 4,602 Trade and other payables 1,911,254 2,090,787 1,852,150 2,067,376

20 Statement of cash flows The following non-cash flow adjustments have been made to the result for the year to arrive at operating cash flow: Consolidated Agency 2016 2015 2016 2015 € € € € Adjustments: Depreciation 551,647 528,653 550,253 527,259 Movement in provision for doubtful debts (173,241) - (177,271) - Stocks written off 22,165 - 22,164 - Interest receivable (83) (299) (50) (152) Interest payable - 42,393 - - 400,488 570,747 395,096 527,107

Net changes in working capital: Change in inventories 43,704 (21,171) 37,990 (21,171) Change in trade and other receivables (9,945) (46,410) 95,738 53,375 Change in trade and other payables (179,533) 228,443 (215,226) 222,610 (145,774) 160,862 (81,498) 254,814

21 Contingent liabilities and assets At 31 December 2015 Heritage Malta was in dispute with a third party in respect of a claim it filed against the third party amounting to € 120,000. This case was put on hold pending a counter-claim made by the third party in Court and also because of pending arbitration proceedings instituted by the third party. The case was decided by the Court in favour of the Agency but was still under appeal.

During 2016, Heritage Malta was successful in the proceedings relating to the counter-claim since it won the Court appeal as well as the arbitration proceedings instituted by the third party. As a result at 31 December 2016, the Agency is still pursuing its own claim against the third party for € 120,000.

Heritage Malta has three other cases pending in the Courts against it by other third parties. The first relates to a claim made by a building contractor for works done on one of the sites managed by the Agency. Heritage Malta is disputing liability and consequently, no provision has been made in these financial statements.

The second relates to a claim being made by an employee for damages relating to his employment with the Agency. The Agency has not provided for any amount in respect of this case.

Heritage Malta 41 Annual report and consolidated financial statements Year ended 31 December 2016

Another claim has been lodged against the Agency by a restaurant claiming damages to its premises as a result of certain works undertaken in one of the sites. To date, no amount has yet been quantified in respect of damages incurred by the restaurant.

22 Commitments Heritage Malta has committed itself to execute infrastructural works to Heritage sites as funded by third parties. The relative funds so committed are disclosed as specific endowment funds in note 18.

23 Related party transactions Heritage Malta Services Limited, a subsidiary of Heritage Malta is considered by the directors to be a related party since this company is ultimately owned by Heritage Malta. Trading transactions between these companies would typically include service charges and other such items which are normally encountered in a Group context. Recharges of staff costs to Heritage Malta Services Limited is disclosed in note 8.

IAS 24 ‘Related Party Disclosure’, paragraph 8 states that knowledge of related party transactions, outstanding balances and relationships may affect assessments of an entity’s operations by users of financial statements, including assessments of the risks and opportunities facing the entity.

The Agency is owned and controlled by the Government of Malta. In the ordinary course of its operations, the Agency carried out business with the Government of Malta, government departments, public sector corporations and other entities owned or controlled by the Government. Therefore, Government, all entities that are Government controlled and those which fall within the Government administration structure are considered by the board members to be related parties.

The directors consider that the following significant transactions with Government should be disclosed: 2016 2015 € €

Revenue Government subventions 4,600,010 3,729,984 Improvements of museums and sites 1,201,553 1,256,645 Additional amount received in kind of expenses on behalf of the Agency 199,566 298,299 6,001,129 5,284,928

Expenditure Direct operational costs Security services 14,017 40,124 Rent payable 283,487 238,206 Water and electricity 798,404 213,700 Repairs and maintenance - 355

Administrative expenses IT services 16,266 9,145 Sundry expenses 4,307 2,064 1,116,481 503,594

Year end balances owed by or to related parties, arising principally from the above transactions are disclosed in notes 15 and 19 to these financial statements.

Key management personnel compensations, consisting of board members’ fees, have been disclosed in note 8 and 10.

Heritage Malta 42 Annual report and consolidated financial statements Year ended 31 December 2016

24 Risk management objectives and policies The group is exposed to credit risk, liquidity risk and market risk through its use of financial instruments which result from both its operating and investing activities. The Group’s risk management is coordinated by the directors and focuses on actively securing the Group’s and the Agency’s short to medium term cash flows by minimising the exposure to financial risks.

The most significant financial risks to which the Group and the Agency is exposed to are described below. See also note 24.4 for a summary of the Group’s financial assets and liabilities by category.

24.1 Credit risk The Group’s and the Agency’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below: Consolidated Agency Notes 2016 2015 2016 2015 € € € € Classes of financial assets – carrying amounts Trade and other receivables 15 313,294 204,110 425,046 432,161 Cash and cash equivalents 16 1,661,168 2,000,247 1,384,964 1,766,206 1,974,462 2,204,357 1,810,010 2,198,367

The directors considers that financial assets that are not impaired for each of the reporting dates under review are of good credit quality, including those that are past due.

The credit risk for liquid funds is considered negligible since the counterparties are reputable banks with high quality external credit ratings.

24.2 Liquidity risk The Group’s and the Agency’s exposure to liquidity risk arises from its obligations to meet its financial liabilities, which comprise trade and other payables (see note 19). Prudent liquidity risk management includes maintaining sufficient cash and committed credit facilities to ensure the availability of an adequate amount of funding to meet the Group’s and the Agency’s obligations when they become due.

At 31 December 2016 the Group’s and Agency’s financial liabilities have contractual maturities which are summarised below:

Group 31 December 2016 Non- Current current within 2 to 5 1 year years € €

Trade and other payables 1,563,201 - 1,563,201 -

Heritage Malta 43 Annual report and consolidated financial statements Year ended 31 December 2016

This compares to the maturity of the Group’s and Agency’s financial liabilities in the previous reporting period as follows: Non- 31 December 2015 Current current within 2 to 5 1 year years € €

Trade and other payables 1,808,346 - 1,808,346 -

Agency Non- 31 December 2016 Current current within 2 to 5 1 year years € €

Trade and other payables 1,559,379 - 1,559,379 -

This compares to the maturity of the Agency’s financial liabilities in the previous reporting period as follows: Non- 31 December 2015 Current current within 2 to 5 1 year years € €

Trade and other payables 1,800,323 - 1,800,323 -

The above amounts reflect the contractual undiscounted cash flows which may differ from the carrying amounts of the liabilities at the reporting date.

24.3 Market risk analysis

Foreign currency risk The Group transacts business mainly in euro and had no material foreign currency denominated financial assets and liabilities at the end of the financial reporting date under review. Accordingly, the Group’s exposure to foreign exchange risk is not significant.

Interest rate risk The Group is not exposed to interest rate risk as the group has no significant interest bearing financial assets and liabilities.

Heritage Malta 44 Annual report and consolidated financial statements Year ended 31 December 2016

24.4 Summary of financial assets and liabilities by category The carrying amounts of the Group’s and Agency’s financial assets and liabilities as recognised at the reporting date of the reporting periods under review may also be categorised as follows. Consolidated Agency Notes 2016 2015 2016 2015 € € € €

Current assets Trade and other receivables 15 313,294 204,110 425,046 432,161 Cash and cash equivalents 16 1,661,168 2,000,247 1,384,964 1,766,206 1,974,462 2,204,357 1,810,010 2,198,367

Current liabilities Trade and other payables 19 1,563,201 1,808,346 1,559,379 1,800,323 1,563,201 1,808,346 1,559,379 1,800,323

25 Statutory Information Heritage Malta is a body corporate set up by the enactment of the Cultural Heritage Act, 2002.

26 Events after the reporting date No other adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.

Heritage Malta 45 Report and financial statements Year ended 31 December 2016

Independent auditor’s report

To the directors of Heritage Malta

Opinion We have audited the financial statements of Heritage Malta and the consolidated financial statements of the group set out on pages 20 to 44, which comprise the statements of financial position as at 31 December 2016, and their income and expenditure accounts, statements of changes in accumulated fund and statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Agency and the group as at 31 December 2016, and of their financial performance and their cash flows for the year the ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU), and have been properly prepared in accordance with the requirements of the Cultural Heritage Act, 2002.

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Agency in accordance with the ethical requirements that are relevant to our audit of the financial statements in Malta, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In addition, Section 27 the Cultural Heritage Act, 2002, states that the Agency shall cause to be kept proper books of account and other records in respect of its operations and shall cause to be prepared a statement of accounts in respect of each financial year.

In preparing the financial statements, management is responsible for assessing the Agency’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management or the Government of Malta either intend to liquidate the Agency or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Agency’s financial reporting process

Heritage Malta 46 Report and financial statements Year ended 31 December 2016

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. - Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Agency’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause the Agency to cease to continue as a going concern.

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

Mark Bugeja (Partner) for and on behalf of

GRANT THORNTON Certified Public Accountants

Tower Business Centre Tower Street, Suite 3 Swatar BKR 4013 Malta

[DATE]

Heritage Malta 47 Year ended 31 December 2016

Income and expenditure accounts

Agency 2016 2015 € €

Subvention from consolidated fund for recurrent expenditure 4,799,576 4,028,283 Income from operations (page 48) 6,885,315 6,857,849 11,684,891 10,886,132 Funds available for recurrent expenditure Staff costs (page 49) (6,616,142) (6,121,331) Other recurrent operational expenditure (page 49) (5,219,461) (4,955,428) Recurrent administrative expenditure (page 49) (200,542) (272,651)

Deficit on recurrent expenditure before interest (351,254) (463,278) Finance income 50 152 Finance costs (28,868) (42,425) Deficit for the year (380,072) (505,671)

Heritage Malta 48 Year ended 31 December 2016

Income analysis

Agency 2016 2015 € €

Income Entrance fees – sites 5,827,213 5,968,398 Conservation fees 10,000 13,438 Refund from EU projects 23,036 58,693 Amounts released from specific endowment funds 40,935 50,486 Publications 518,036 486,107 Membership fees 16,527 23,103 Events 5,531 27,894 Other income 444,037 229,730 - to page 47 6,885,315 6,857,849

Heritage Malta 49 Year ended 31 December 2016

Expenditure analysis

Agency 2016 2015 € € Direct operational costs Security services 2,199,975 1,875,982 Depreciation 550,253 527,259 Rent 403,989 317,589 Water and electricity (24,880) 359,090 Repairs and maintenance 378,215 421,150 Exhibitions and events 177,262 233,810 Commissions re ticketing system 97,657 119,590 Cleaning 364,119 290,387 EU projects – costs 3,383 1,183 Cost of audio guides usage 73,498 89,540 Restorations : Materials 34,247 32,635 Repairs and maintenance 63,971 42,478 Telecommunication 10,270 13,909 General staff costs 54,943 59,482 Staff training 23,173 18,843 Hospitality and accommodation 18,755 17,781 Publications 428,904 281,689 Marketing costs 37,307 39,374 Libraries 2,506 1,614 Insurance premium paid 2,196 2,741 Outsourced services 76,263 19,959 Others 243,455 189,343 - to page 47 5,219,461 4,955,428

Staff costs Salaries and wages 6,575,206 6,080,718 Directors’ fees 40,936 40,613 - to page 47 6,616,142 6,121,331

Administrative expenses IT services 68,684 68,777 Transport and expenses 110,330 135,102 Printing, postages and stationery 32,256 30,451 Professional fees 9,566 16,100 Sundry expenses (32,024) 12,179 Audit fees 6,785 5,500 Subscriptions and membership fees 3,530 4,542 Auctioneer fees 2,683 - Bad debts (1,268) - - to page 47 200,542 272,651

Heritage Malta 50 Year ended 31 December 2016

Appendix 1: Museums and sites

Domus Romana – Rabat-Malta Folklore museum-Citadella-Gozo Ggantija Temples-Xaghra-Gozo Għar Dalam and Museum-Birzebbuga-Malta Gozo Museum of Archaeology-Cittadella-Gozo Gozo Nature Museum-Cittadella-Gozo Ħagar Qim Temples-Qrendi-Malta Hypogeum-Paola-Malta Inquisitor’s Palace-Vitoriosa-Malta Malta Maritime Museum-Vittoriosa-Malta Mnajdra Temples-Qrendi-Malta National Museum of Archaeology-Valleta-Malta National Museum of Fine Arts-Valletta-Malta National Museum of Natural History-Rabat-Malta National War Museum-Valleta-Malta Old Prison-Cittadella-Malta Palace Armoury-Valletta-Malta Palace State Rooms-Valletta-Malta Skorba Temples-Mgarr-Malta St Paul’s Catacombs-Rabat-Malta Ta’ Bistra Catacombs-Rabat-Malta Ta’ Ħagrat Temples-Mgarr-Malta Ta’ Kola Windmill-Xaghra-Malta Ta’ Mintna Catacombs-Qrendi-Malta Tarxien Temples-Tarxien-Malta Borġ in-Nadur-Birzebbuga-Malta Fort St. Angelo-Birgu-Malta Għar ta’ Għejzu-Xagħra-Gozo Ħaġra ta’ Sansuna-Xagħra-Gozo San Pawl Milqi-Burmarrad-Malta Tal-Pilar Chapel-Valletta-Malta Tas-Silġ-Marsaxlokk-Malta Xagħra Stone Circle-Xaghra-Gozo Abbatija tad-Dejr-Rabat-Malta Birgu Armoury-Birgu-Malta Fort Delimara-Marsaxlokk-Malta Forugasse-Marsalforn-Gozo Għajn Tuffieħa Roman Baths-Malta Salina Catacombs-Naxxar-Malta Bighi Ex Naval Hospital-Kalkara - Malta Kordin Temples - Paola - Malta