MFSA concerned over news report with misleading information on Von der Heyden group financials

Von der Heyden Group says EBITDA is not some camouflage term but a standard industry benchmark for reporting a company’s performance

The Von der Heyden Group is a major investor in the Cugo Gran Macina Hotel
The Von der Heyden Group is a major investor in the Cugo Gran Macina Hotel

A press report on the financial statements presented by the Von der Heyden Group provided misleading information that did not truly reflect the company’s statements.

The Malta Financial Services Authority had raised its concerns with the company on the information contained in the press report, a spokesperson for the Group has confirmed.

She denied the Group was issued any warning whatsoever by the MFSA. A previous version of this report erroneously reported that the MFSA issued the company with a warning.

“A concern was expressed by the Authority on the manner in which our results were reported by a particular newspaper on its online portal that reproduced incorrectly certain parts of our press statement in the published article. The Group immediately communicated with the said paper and formally requested it to change the information in their article to be in line with our press statement. The newspaper in question complied immediately, upon receipt of our request,” the company spokesperson said.

The report in question was an unsigned article published in Times of Malta late last month and BusinessToday had sought a comment from MFSA CEO Kenneth Farrugia on the report.

Farrugia said that certain financial information being referred to in the article “appears to be incorrect and not reflective of the financial statements published by the company”.

Farrugia added that the information referred to in the original newspaper article “does not appear to pertain directly to the Listed Company itself, but rather its Group and Guarantor.”

The spokesperson for the Von der Heyden Group said the CEO’s comments were directed towards the newspaper report, which has since been corrected.

“It was not the financial information published by the Von der Heyden Group that was in any way misleading but the publication referred to by the Authority’s CEO,” the spokesperson said.

Malta’s financial services watchdog is increasingly scrutinising the type of information relayed by companies to their customers. Some companies have been accused of inflating their financial achievements and misleading customers with half-baked results.

Farrugia would not comment on what type of engagement the authority had with the Von der Heyden Group, insisting supervisory engagement is confidential.

“The information published in terms of the applicable requirements to Listed Companies is made through the Officially Appointed Mechanism, including Company Announcements and Annual Financial Reports. The MFSA monitors the adequacy of transparency of Listed Companies in terms of the Capital Market Rules and Market Abuse legislation. The MFSA also carries out supervisory engagement with entities, which engagement is confidential.”

Former PN minister heads Von der Heyden Group

The Von der Heyden Group which has properties in Eastern Europe, a yacht charter business and a restaurant chain said it had increased its turnover, specifically pushing the narrative of higher turnover but not referring to any loss in profit.

But in a statement to BusinessToday, Von der Heyden categorically denied it sought to camouflage its results by referring to EBITDA in its financials.

“The Group being in nature predominantly a real estate development company consistently reports performance in terms adjusted EBITDA capturing not only profits or losses from operating activities but also fair value gains and losses on the assets the Group holds or are under development. EBITDA is not some camouflage term but a standard industry benchmark for reporting a company’s performance,” the spokesperson said.

The company’s executive director is former finance minister Tonio Fenech. In 2017, Fenech was officially reprimanded by the MFSA as a non-executive director of a pension fund that lost millions in Swedish pensioners’ savings.

Last year, Fenech spearheaded a second bond issue for five years for Von der Heyden Group, which some industry players said was intended to borrow Maltese money to spend abroad.

Since the issue of the first bond in 2017, Timan Investments Holdings Ltd within the group recorded losses as of June 2022, of €3.8 million.

When contacted by BusinessToday in 2022, Fenech acknowledged that the parent company had recorded a loss in the past three years, but put it down to the effects of COVID-19 on the property and hospitality industries, in which the company is heavily invested.

Fenech had acknowledged that plans for Malta had not been fully realised. “The group had an agreement in place to operate a boutique hotel in Valletta but those plans fell through when all construction and heavy work in Valletta was prohibited in the run-up to and during the Valletta 2018 celebrations as EU culture capital,” he had said.

Fenech had said that the Group now had a promise of sale agreement in place for the Cugo Gran Macina Hotel in Isla.

“We have also solidified a 50% shareholding in the five Hammett’s restaurants in Malta, and are also finalising a warehousing project in the south of Malta,” he had said.

This article has been updated to reflect that the MFSA did not issue a warning to the Von der Heyden Group but only commented on an erroneous press report that misrepresented the company’s financial statements