ISSUER
AX
G
ROUP P
.
L
.
C
.
(C 12271)
Prepared by:
F
INANCIAL
A
NALYSIS
S
UMMARY
19 April 2024
M.Z. Investment Services Limited
63, MZ House, St Rita Street, Rabat RBT 1523, Malta
E [email protected] W mzinvestments.com
M.Z. Investment Services Limited is a private limited liability company licensed to conduct investment services business by the Malta
Financial Services Authority under the Investment Services Act. Member of the Malta Stock Exchange. Enrolled Tied Insurance
Intermediary under the Insurance Intermediaries Act, 2006 for MAPFRE MSV Life p.l.c.
Company Registration Number: C 23936 | VAT Number: MT 1529 8424
The Directors
AX Group p.l.c.
AX Business Centre
Triq id-Difiża Ċivili
Mosta MST 1741
Malta
19 April 2024
Dear Board Members,
Financial Analysis Summary
In accordance with your instructions, and in line with the requirements of the MFSA Listing Policies,
we have compiled the Financial Analysis Summary (the “Analysis”) set out on the following pages and
which is being forwarded to you together with this letter.
The purpose of this Analysis is that of summarising key financial data appertaining to AX Group p.l.c.
(the “Issuer”, “Group”, or “AX Group”). The data is derived from various sources or is based on our
own computations as follows:
(a) Historic information for the most recent three financial years ended 31 October 2021, 31
October 2022, and 31 October 2023 has been extracted from the respective audited
consolidated annual financial statements.
(b) The forecast financial information for the year ending 31 October 2024 has been provided by
the Group.
(c) Our commentary on the financial performance, cash flows, and financial position of AX Group
is based on explanations provided by the Issuer.
(d) The ratios quoted in this Analysis have been computed by us applying the definitions set out
in Part 4 – Explanatory Definitions of this report.
(e) Relevant financial data in respect of the companies included in Part 3 – Comparative Analysis
of this Analysis has been extracted from public sources such as websites of the companies
concerned, financial statements filed with the Registrar of Companies, as well as other sources
providing financial data.
M.Z. Investment Services Limited
63, MZ House, St Rita Street, Rabat RBT 1523, Malta
E [email protected] W mzinvestments.com
M.Z. Investment Services Limited is a private limited liability company licensed to conduct investment services business by the Malta
Financial Services Authority under the Investment Services Act. Member of the Malta Stock Exchange. Enrolled Tied Insurance
Intermediary under the Insurance Intermediaries Act, 2006 for MAPFRE MSV Life p.l.c.
Company Registration Number: C 23936 | VAT Number: MT 1529 8424
This Analysis is meant to assist existing and potential investors in the Issuer’s securities by summarising
the more important financial data of the Group. This Analysis does not contain all data that is relevant
to investors. This Analysis does not constitute an endorsement by our firm of any securities of the
Issuer and should not be interpreted as a recommendation to invest or not invest in any of the Issuer’s
securities. We will not accept any liability for any loss or damage arising out of the use of this Analysis.
As with all investments, potential investors are encouraged to seek professional advice before
investing in the Issuer’s securities.
Yours faithfully,
Evan Mohnani
Head Corporate Broking
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 1
TABLE OF CONTENTS
PART 1 – INFORMATION ABOUT THE GROUP ................................................................................. 2
1. ABOUT AX GROUP ...................................................................................................... 2
2. DIRECTORS AND EXECUTIVE MANAGEMENT ....................................................................... 4
3. ORGANISATIONAL STRUCTURE ........................................................................................ 5
4. PRINCIPAL PROPERTY ASSETS ......................................................................................... 6
5. SEGMENT INFORMATION ............................................................................................. 12
6. MAJOR COMMITTED PROJECTS ..................................................................................... 18
7. SECURITIES IN ISSUE ................................................................................................... 19
8. MARKET OVERVIEW ................................................................................................... 20
PART 2 – PERFORMANCE REVIEW ............................................................................................... 27
9. FINANCIAL INFORMATION ............................................................................................ 27
10. VARIANCE ANALYSIS .................................................................................................. 36
PART 3 – COMPARATIVE ANALYSIS.............................................................................................. 40
PART 4 – EXPLANATORY DEFINITIONS ......................................................................................... 42
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 2
PART 1 – INFORMATION ABOUT THE GROUP
1. ABOUT AX GROUP
AX Group is engaged in the provision of hospitality services, leisure, and entertainment (“AX Hotels”);
retirement residences and elderly care (“AX Care”); property development (“AX Development”);
construction and building materials (“AX Construction”); as well as the ownership of real estate mainly
through AX Real Estate p.l.c. (“AXRE”). In addition, the Group has a 50% shareholding in a joint venture
that owns properties in an industrial park (Hardrocks Estates Limited) and has substantial shareholding
in two associates that are involved in renewable energy projects (through Imselliet Solar Limited) and
the management of the Valletta Cruise Port (through Valletta Cruise Port p.l.c. – “VCP”).
The Group commenced its business in the 1970s, first as a property construction and development
company before diversifying into the hotel industry in the 1980s through the launch of AX Sunny Coast
Resort & Spa (“AX Sunny Coast”) and AX ODYCY (formerly Seashells Resort at Suncrest), both located
in Qawra. Thereafter, AX Group continued to grow its hospitality division with the development of AX
The Victoria Hotel and AX The Palace in 1996 and 2007 respectively, both located in Sliema. These
were followed by the acquisition and restoration of two upmarket boutique properties located in
Valletta – AX The Saint John (2015) and Rosselli AX Privilege (2016) – which welcomed their first guests
in August 2017 and May 2019 respectively.
Over the years, the AX Hotels brand has carved a unique status in the local hospitality market as a
hotel operator that caters for a wide range of diverse tastes. Across its hotel properties, as well as its
various highly distinguished food and beverage outlets, the Group’s hospitality division is the largest
operating segment of the Group.
AX Construction and AX Development are also very important operating arms of the Group having
been entrusted with a number of major projects including the VCP, the Group’s own hotels, the
Verdala Mansions, Capua Hospital, is-Suq tal-Belt, the Hilltop Complex (which comprises the Hilltop
Gardens Retirement Village and the Simblija Care Home), and the Parliament Building amongst others.
Furthermore, AX Construction gained specialisation in the restoration of various buildings which are
also deemed to be among Malta’s most valuable from a cultural and historical point of view.
In FY2014 and FY2015, the Group developed the Hilltop Complex which is operated under the AX Care
brand. The complex offers independent living with access to a range of facilities and amenities, as well
as a 24-hour care and nursing home for dependent elderly residents who require intensive health
support.
In FY2016, AX Group increased its shareholding in VCP to 36.4% from 24% for a total consideration of
€3.9 million. The value of this investment, together with the Group’s shareholding interests in Imselliet
Solar Limited (33.3%) and Hardrocks Estates Limited (50%) stood at €7.89 million as at 31 October
2023.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 3
In December 2019, AX Group successfully issued €25 million in unsecured bonds (the €15 million 3.25%
2026 and the €10 million 3.75% 2029), the net proceeds of which were used for: (i) the acquisition and
development of Palazzo Lucia, Valletta (€9 million); (ii) the acquisition of a site located in Marsa (€7
million); the refinancing of existing debt (€4.5 million); as well as (iv) general corporate funding
requirements (€4 million). The acquisitions of Palazzo Lucia and the site in Marsa were completed in
May 2020. Furthermore, following extensive restoration and upgrading, Palazzo Lucia was completed
in March 2024 as a prestigious office having 1,248sqm of rentable area complemented by a suite of
high-quality amenities and facilities.
During FY2020, the Group was involved in the development of the Tarġa Gap Complex. The building
houses the Group’s head office and includes residential units, office space leased to independent third
parties, as well as four levels of underground parking. All the 14 residential units that were placed on
the market have been sold whilst the Group leases the remaining seven units to independent third
parties. Similarly, during FY2022 and H1 2023, AX Group concluded the sale of all the remaining units
within Falcon House, Sliema, and leased the available office space to independent third parties. Falcon
House is located adjacent to the Falcon House Complex and comprises two levels of office space, eight
luxury apartments, and a penthouse.
In FY2021, the Group commenced civil works on the site previously occupied by the 160-room five-
star Grand Hotel Verdala. The site is located in a Special Designated Area in Tal-Virtù, Rabat, and was
acquired by the Group in March 1997. It is currently being redeveloped into: (i) a 46-room five-star all-
suite Verdala Wellness Hotel that will also include 23 additional serviced/self-catering units; and (ii)
two residential blocks comprising a total of 87 units for resale. Furthermore, the project entails the
refurbishment of 19 existing apartments (known as Virtù Heights) that will be annexed to the Verdala
Wellness Hotel.
In February 2022, AX Group listed AXRE on the Main Market of the Malta Stock Exchange, with just
over 25% of the company’s ordinary ‘A’ shares being taken up by the general public. Through this
transaction, €13.65 million in new equity was raised. In conjunction, AXRE also issued €40 million
unsecured bonds redeemable in 2032. The general public subscribed for €18.35 million of the bonds
whilst the remaining €21.65 million was allocated to AX Group through the part conversion of an
existing intra-group loan with AXRE. The balance of AXRE bonds held by the Issuer has been reduced
to €16.19 million (nominal) as at 15 April 2024. It is the Issuer’s intention to further dispose of such
bonds held by it at the opportune time to ascertain sufficient liquidity for future large-scale projects.
Also in 2022, AX Group acquired the La Ferla Building which is situated in Tower Road corner with Tigné
Street, Sliema, for a total consideration of €2.3 million. The transaction was financed from the Group’s
own accumulated reserves. In this respect, the Issuer started the process to obtain the necessary
permits for the eventual redevelopment of the building.
In 2023, AX Group completed a multi-million project related to the extension and refurbishment of AX
ODYCY. Furthermore, in Q4 2023, the Group issued new €40 million 5.85% unsecured bonds maturing
in November 2033 which replaced the €40 million 6.00% AX Investments p.l.c. 2024 unsecured bonds.
The new bonds were listed on the Official List of the Malta Stock Exchange on 7 November 2023.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 4
2. DIRECTORS AND EXECUTIVE MANAGEMENT
2.1 BOARD OF DIRECTORS
The Board of Directors of AX Group consists of seven individuals who are entrusted with the overall
direction, strategy, and management of the Group:
Angelo Xuereb Executive Chairman
Michael Warrington Executive Director and Chief Executive Officer
Denise Xuereb Executive Director (AX Construction and AX Development)
1
Claire Zammit Xuereb Executive Director (AX Hospitality and AX Care)
John Soler Independent Non-Executive Director
Josef Formosa Gauci Independent Non-Executive Director
Christopher Paris Non-Executive Director
2.2 EXECUTIVE MANAGEMENT
In addition to the Executive Directors mentioned above, the Executive Management team of AX Group
is also composed of the following individuals:
Albert Bonello Managing Director, Finance and Administration
David Wain Chief Legal Officer
Nicky Camilleri Chief Operations Officer
Marthese Vella Chief Technical Officer
Caroline Schembri Head of Administration
Josephine Grima Head of Human Resources
Kevin Callus General Manager, Sliema and Valletta properties
Joseph Vella General Manager, Qawra properties
Andreas Aquilina General Manager, AX Construction
Jocelyn Cuomo Head of Marketing and Public Relations
The average number of persons employed by the Group during FY2023 stood at 922 (FY2022: 684). Of
these, 206 persons performed management and administration functions (FY2022: 173), whilst the
remaining 716 persons were within the Group’s operations and distribution network (FY2022: 511).
1
Denise Xuereb is also the Chief Executive Officer of AXRE.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 5
3. ORGANISATIONAL STRUCTURE
The diagram below illustrates the organisational structure of AX Group. The Group is ultimately owned
by Angelo Xuereb (55%), Richard Xuereb (15%), Claire Zammit Xuereb (15%)
2
, and Denise Xuereb
(15%).
3
During FY2021, the Issuer went through a reorganisation exercise with the aim of consolidating its
main property letting activities under a single entity – i.e., AXRE. A description of the operational
activities of AXRE, together with an analysis of the company’s performance and forecasts, is included
in the most recent Analysis which is available at: https://axinvestor-relations.mt/ax-real-estate/.
2
Through The Lotus Co Ltd.
3
Through DX Holdings Limited.
1
50% ownership
2
75% ownership
3
91.13% ownership
4
On 5 October 2023, St John’s Boutique Hotel Limited merged into Palazzo Merkanti Leisure Limited.
5
36% ownership
6
33.3% ownership
AX Hotel
Operations p.l.c.
(C 40905)
AX Construction
Limited
(C 17438)
Simblija
Developments
Limited
(C 39400)
AX Investments
p.l.c.
(C 27586)
Heritage
Developments
Limited
(C 14217)
Hilltop Gardens
Retirement
Village Limited
(C 65735)
AX Finance
Limited
(C 6867)
Central Leisure
Developments
Limited
(C 25774)
Hardrocks
Estates Limited
1
(C 41571)
Hilltop
Management
Services Limited
(C 72480)
AX Business Park
Limited
(C 13019)
Prime Buildings
Limited
2
(C 18860)
Verdala
Mansions
Limited
(C 7793)
Skyline
Developments
Ltd
(C 34281)
AX Real Estate
p.l.c.
3
(C 92104)
Harbour
Connections
Limited
(C 72480)
AX Group
p.l.c.
(C 12271)
Construction
Development
Hospitality &
Entertainment
Retirement
Residences &
Nursing Home
Finance &
Investment
Engage People
Limited
(C 90119)
AX Port Holding
Company Limited
(C 26331)
AX Port
Investment
Company Limited
(C 26330)
Valletta Cruise
Port p.l.c.
5
(C 26469)
Imselliet Solar
Limited
6
(C 84337)
Renewables
Limited
(C 84113)
Suncrest Hotels
p.l.c.
(C 8643)
Palazzo Lucia
Limited
(C 39402)
Palazzo Merkanti
Leisure Limited
4
(C 76080)
Real Estate
Royal Hotels
Limited
(C 16994)
Verdala Terraces
Limited
(C 100344)
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 6
4. PRINCIPAL PROPERTY ASSETS
The table below provides a list of the principal properties of the Group and their respective asset values
as at the end of each of FY2021, FY2022, and FY2023. The year-on-year movement in the carrying value
of each property mainly reflects additions, disposals, depreciation and, or fair value adjustments. The
table also shows the net movement in the revaluation of each property during the financial years under
review.
4.1 QAWRA HOTELS
AX ODYCY is a four-star hotel located on the Qawra seafront featuring 599 rooms designed in a
contemporary style. The hotel suspended its operations in Q4 2021 for the purpose of pursuing a major
investment comprising the addition of four floors which increased the total number of rooms by a
further 147 rooms. Furthermore, the extensive renovation included a substantial upgrade and
extension of the hotel’s public areas, as well as the creation of new pools (including a small family
waterpark), restaurants, bars, and other facilities at the hotel.
AX ODYCY had a soft opening in late May 2023 (in time to host participants and delegates for the 2023
Games of the Small States of Europe), thus only contributing circa five months to the Group’s financial
results in FY2023. During the summer, the hotel operated at a reduced capacity as work on certain
areas of the hotel and lido were still in progress. Despite these challenges, AX ODYCY managed to
AX Group p.l.c. Revaluation
Principal Property Assets FY2021 - FY2023
As at 31 October €’000 €’000 €’000 €’000
Qawra Hotels 1 93,469 111,150 147,000 (1,260)
Sliema Hotels 2 79,870 75,864 75,050 6,526
Verdala Wellness Hotel and Verdala Terraces, Rabat 31,825 44,728 63,327 (1,951)
Hilltop Complex, Naxxar 3 47,485 48,585 47,891 7,295
Valletta Hotels 4 22,698 20,849 21,200 3,571
Tad-Dwiemes, Marsa 5 18,758 19,000 19,000 242
Tarġa Gap Complex, Mosta 6 12,615 10,715 12,255 3,526
Palazzo Capua, Sliema 8,940 9,300 9,300 428
Hardrocks Business Park, Burmarrad 7 6,950 7,600 7,678 800
Palazzo Lucia, Valletta 5,828 6,507 7,340 23
Villa Vistana, Mosta 5,250 5,250 5,279 1,533
Falcon House offices, Sliema 4,320 5,050 5,160 4,177
La Ferla Building, Sliema 8 - 2,417 2,417 -
Other 8,481 10,644 9,721 (1,538)
346,489 377,659 432,618 23,372
Notes:
1. AX ODYCY, AX Sunny Coast, and Luzzu Complex.
2. AX The Palace and AX The Victoria Hotel.
3. Hilltop Gardens Retirement Village and Simblija Care Home.
4. AX The Saint John and Rosselli AX Privilege.
6. Property principally serves as the Group's head office. Some office
space and residential units are leased to third parties.
5. Plot of land which is currenty not in use.
7. Nine warehouses and an office block in an industrial complex.
8. Property earmarked for future redevelopment.
2022 2021
Note
2023
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 7
exceed the budgeted rooms revenue in September and October 2023. Furthermore, in terms of
customer reviews, the hotel received outstanding feedback on several industry-leading booking sites.
The hotel’s amenities comprise various food and beverage outlets, from exquisite dining and laid-back
seaside restaurants to family-friendly options and a convenient grab-and-go concept. AX ODYCY also
has a panoramic lido and entertainment area overlying extensive car park facilities spanning the entire
length of the property.
The overall cost for the redevelopment and refurbishment of AX ODYCY exceeded the initial budget by
circa €20 million. The material variance resulted due to elaborative changes to the hotel’s designs and
specifications, as well as inflationary pressures. As a result, the total cost of the project amounted to
approximately €70 million.
The AX Sunny Coast Resort & Spa (“AX Sunny Coast”) is a 92-room four-star aparthotel that offers
self-catering apartments with resort facilities on the Qawra coast. It occupies a gross floor area
measuring approximately 6,000 sqm and operated in the vacation ownership market between 1983
and 2021. AX Sunny Coast features a restaurant, indoor and outdoor pools, spa and leisure facilities,
and a fitness centre. Furthermore, the adjacent lido consists of a number of restaurants leased out to
independent third parties, an indoor swimming pool, a spa, an outdoor pool, and other sports facilities
which are leased to independent third parties.
The Luzzu Complex occupies a gross floor area of circa 2,250 sqm and comprises a seaside restaurant
(Luzzu Restaurant), a beach club (Luzzu Lido), and a conference centre which accommodates up to 300
delegates in theatre style and 450 guests in standing receptions.
THE QAWRA PROJECT
It is the Group’s intention to continue investing in its Qawra Hotels in the years ahead. In this regard,
AX Real Estate has a master plan in place for the execution in stages of new projects over a number of
years, with a view of making the best use of its properties whilst minimising any potential disruptions
to the newly refurbished and extended AX ODYCY.
These plans envision two additional phases, one which will see the redevelopment of the lido areas of
the Luzzu Complex and AX Sunny Coast, and another phase which will focus on the demolition and
rebuilding of AX Sunny Coast. AX Real Estate already has the necessary full development permit to
pursue the latter project. On the other hand, the Group has so far only obtained an outline
development permit for the redevelopment of the lido areas of the Luzzu Complex and AX Sunny Coast
and is currently in the process of also obtaining a full development permit.
The AX Sunny Coast project will comprise the demolition of the existing building and the construction
of a 161-unit aparthotel with new food, beverage, and leisure facilities. Moreover, it is envisaged that
the hotel’s underground car park, the lidos at AX Sunny Coast and Luzzu Complex, as well as the
surrounding commercial outlets will eventually be linked to the properties that form part of AX ODYCY.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 8
There are presently no firm timelines for the commencement of the next phases of the Qawra Project,
although it is expected that works will commence in the foreseeable future subject to the Group
obtaining the necessary funding and having the required resources to pursue works.
LEGAL AND ARBITRATION PROCEEDINGS
The Commissioner of Lands had instituted claims against the Group for damages for the alleged illegal
occupation of land forming part of the lidos of AX ODYCY and AX Sunny Coast, which claims were
contested by the Group.
Parliament endorsed the declassification of the foreshore last year. Additionally, a concession
agreement, granting the Group legal ownership of the land for 65 years, along with a settlement
agreement for prior land usage, has recently gained approval. These agreements are anticipated to be
signed soon.
4.2 SLIEMA HOTELS
AX The Palace is a luxurious 144-room five-star city hotel located in a prime location in Sliema that has
a strong appeal to business travellers owing to its extensive conference and events facilities. The hotel,
which opened its doors for business in 2007, marked AX Group’s first investment in the five-star hotel
segment. The Palace offers a wide range of facilities to its guests, including five restaurants, an outdoor
infinity pool on the rooftop terrace, a generous sized freshwater indoor pool, a steam and sauna room,
as well as spa, health and fitness centre. The hotel has an underground car park common with AX The
Victoria Hotel.
AX The Victoria Hotel is a 142-room Victorian-style hotel located in the heart of Sliema next to AX The
Palace. The hotel, which is marketed as a classical five-star experience in a four-star accommodation,
opened for business in 1997 and was last refurbished in 2018. It features elegant rooms, outdoor and
indoor pools, a steam and sauna room, spa facilities, a health and fitness centre, as well as multi-
purpose conference halls. AX The Victoria Hotel operates part of the adjacent AX Palazzo Capua which
is also owned by AX Group
4
and houses the Copperfield’s Restaurant and the Penny Black Pub. The
hotel has an underground car park accessible from the entrance to the AX The Palace car park and can
accommodate up to 108 cars.
The proximity between AX The Palace and AX The Victoria Hotel allows both hotels to centralise their
management function and share many of the fixed cost elements to maximise efficiencies and returns.
Indeed, to address cost pressures, AX Group has made a strategic decision to consolidate the kitchen
operations at both hotels into a single production kitchen. This approach has allowed AX Group to
synergise between the two hotels, leveraging economies of scale to counter rising costs while
4
AX Palazzo Capua houses five luxurious guest suites, four of which are spread over two floors, and offers outstanding facilities for exclusive
meetings, receptions, and banquets, targeting both business and social functions. The remaining part of the 200-year-old neoclassic building
(i.e., the top floor, penthouse, and basement areas) has been leased to independent third parties during the 2024 financial year.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 9
maintaining the distinctiveness of AX Group’s end products for clients, ensuring both value for money
and quality across its 4-star and 5-star offerings.
4.3 VALLETTA HOTELS
AX The Saint John is a 19-room boutique hotel located in Merchants Street, Valletta. Once a former
merchant’s residence and shop, AX The Saint John was refashioned into a modern hospitable setting
while preserving the building’s rich historical fabric. Each of the 19 rooms exude an urban industrial
feel with exposed brick and natural materials, combining on-trend style with luxury and modern in-
room technology. The boutique hotel features two private meeting rooms accommodating 16 persons
in-theatre style, or eight individuals in a board room set up, which are ideal for the frequent business
traveller who needs to make use of desk space in an office-like setting. AX The Saint John is also home
to the catering establishment Cheeky Monkey Gastropub.
AX Group holds the Rosselli AX Privilege under the title of temporary emphyteusis. The 25-room five-
star boutique hotel opened for business in May 2019 and is one of the most prestigious old palazzos
in Valletta. The Rosselli AX Privilege is housed in a luxurious property displaying a fusion of traditional
and contemporary design complemented by an advanced suite of technology services for guests. Apart
from a three-level restaurant with varied cuisine genres – namely Under Grain, Grain, and Over Grain
which offer patrons refined culinary experiences – the boutique hotel has a rooftop terrace and a
swimming pool. Additionally, hotel butler service is available at providing a tailor-made experience for
guests staying at the hotel.
4.4 VERDALA WELLNESS HOTEL & VERDALA TERRACES
In 2021, AX Group started works on the transformation of the area previously occupied by the former
Grand Hotel Verdala. The Verdala Project comprises the development of:
(i) A 46-room five-star all-suite Verdala Wellness Hotel which will also include the 19 luxury
apartments known as Virtù Heights which are currently being reconfigured and luxuriously
renovated, as well as an additional 23 serviced/self-catering units. An important aspect of the
Verdala Wellness Hotel will be its 1,800 sqm state-of-the-art spa that will offer tailor-made
packages, wellness programmes, and retreats that drive long-term positive change. The hotel
is expected to be inaugurated in early 2025 and will target a new niche market in luxury
wellness hospitality in Malta apart from continue diversifying the Group’s hotel products to
cater towards new and untapped segments.
(ii) An exclusive residential component made up of a total of 87 units earmarked for resale spread
over two blocks (Royal Mansions and Grand Mansions) (the “Verdala Terraces).
The 38 residential units within Royal Mansions will overlook 2,350 sqm of landscaped gardens and
public piazzas that encircle the residential complexes, whilst the 49 units making up the Grand
Mansions block will offer panoramic views of Mdina. New unparalleled vistas will be enjoyed by the
public from Triq San Bastjan and Triq ir-Rgħajja, whilst a multi-level pyramidal atrium will include all
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 10
the communal facilities with a view of creating a physical and visual corridor from Triq ir-Rgħajja to the
ridge views overlooking Malta. Furthermore, by reducing the overall height from the demolished
building by almost two storeys, the Verdala Project is being developed in such a way as to blend more
harmoniously with the promontory. A system of terraces and voids on the ridge side of the building
will mimic the natural forms of the rock strata, whilst the back elevations will have greater solidity to
tie into the traditional façade typology found in the surrounding streets.
Following completion of all civil works related to the development of the Verdala Terraces, in June
2023 the Group set up a dedicated sales office and presented a show apartment with a view of visibly
showcasing prospective customers the luxury and high level of detail of the Verdala Terraces. The
residential units were officially launched on the market at the end of June 2023 and since then, a
number of promise of sale agreements have been signed.
Primarily as a result of high inflation, the increase in professional fees and development costs, as well
as the high-end product and service offering of both the Verdala Wellness Hotel (targeting discerning
wellness travellers) and the Verdala Terraces (targeting high net worth individuals), the total
expenditure for the Verdala Project is now expected to be around €85 million compared to the earlier
projection of €66 million.
4.5 HILLTOP COMPLEX
Hilltop Gardens Retirement Village is the first luxury retirement village developed in Malta, consisting
of private residences in the form of one or two-bedroom self-catering apartments and penthouses,
finished to high standards, surrounded by landscaped gardens. The complex also includes a spa, hair
salon, swimming pool, restaurant, crafts centre, indoor and outdoor kids play areas, library, common
room and hall, chapel, and underground parking. A reception desk and 24-hour security personnel
complement the residences. Residents may also request certain additional services which are provided
at an extra cost, including cleaning, repairs and maintenance of apartments, as well as the preparation
and delivery of meals.
The setup of the residences allows residents to live independently within a secure community knowing
that care is at hand should the need arise. The Hilltop Gardens Retirement Village welcomed its first
residents in January 2016 and by August 2018, all 133 apartments in the village had been occupied on
leases for definite periods ranging from one month to 50 years by individuals who at the time of taking
up residence must be over 55 years of age.
In view of the continued strong demand, AX Real Estate is aiming to vertically extend the Hilltop
Gardens Retirement Village by an additional two floors (comprising 50 residential units) across the
entire building. The Group has to date obtained the necessary development permit to add one floor.
The Simblija Care Home is a 155-bed care home providing nursing care to the more dependent elderly
residents. It also operates the Revive Physiotherapy Centre which has its own fully equipped state-of-
the-art hydrotherapy pool, dedicated services and amenities for short term respite care,
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 11
convalescence and post-operative recovery, as well as a specialised dementia ward offering specialist
support and assistive technology specifically selected and installed for residents with dementia.
4.6 OTHER OPERATING PROPERTIES
The Targa Gap Complex, which is situated in Mosta, includes a mix of residential units spread across
two blocks (Clover and Springfield), office space, and garages. Most of the residential units forming
part of Clover block were sold whilst two units were retained by the Group for lease to independent
third parties. On the other hand, the residential units forming Springfield block were all retained by
the Group and are currently leased to independent third parties.
Targa Gap Complex also includes the AX Business Centre which houses the head office of AX Group, as
well as two separate offices at ground floor level which are currently leased to independent third
parties. The complex has a photovoltaic plant installed on its roof and has four floors of parking in the
underground. A number of garages were sold to the owners of the residential units.
Separately, the Group owns nine warehouses and an office block at the Hardrocks Business Park
located in Burmarrad. Six of the warehouses are leased to independent third parties for a period
between four to fifteen years whilst three warehouses and the office block, together with the
underlying basement areas, are primarily utilised as the operating base of the Group’s construction
arm. An independent third party leases the roofs of the warehouses.
Meanwhile, the office space at Falcon House in Sliema consists of an area of circa 1,180 sqm spread
over two levels which is entirely leased to independent third parties. The development of office space
was completed in October 2021. Elsewhere, the Group owns the Blackstead Garage in Naxxar which
consists of a stand-alone industrial garage and is complimented by a loading bay. The total site area is
circa 257 sqm and is leased to an independent third party.
0
50
100
150
200
250
300
350
400
450
2021 2022 2023
Asset Value (€ million)
Qawra Hotels Sliema Hotels Hilltop Complex
Valletta Hotels Land in Marsa Verdala Wellness Hotel
Tarġa Gap Complex Other
AX Group p.l.c.
Principal Property Assets
FY2021(A) to FY2023(A)
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 12
5. SEGMENT INFORMATION
The Group has four principal reportable segments: (i) hospitality; (ii) construction; (iii) healthcare; and
(iv) real estate and property rentals.
5.1 HOSPITALITY
Revenues generated from the hospitality segment include income from accommodation, food and
beverage services, as well as other ancillary services.
An important aspect of the Group’s strategy for its hotel properties is to be present in strategic
locations and in proximity to one other. AX Group believes that this manner of operating hotels in
clusters yields various value-adding advantages such as the allocation of single management teams
per location, as well as the creation of internal efficiencies through the reduction of overlap in areas
such as marketing, maintenance, accounting, and procurement.
The performance of the Group’s hospitality division in FY2021 was adversely impacted by the COVID-
19 pandemic. Revenue generated during this period stood at circa 40% of the income reported prior
to the pandemic, while gross operating profit (“GOP”) was lower by an average of 73%.
The first signs of the recovery started to emerge in FY2022 as total turnover generated by the Group’s
hotels rebounded by 58.48% to €22.79 million (FY2021: €14.38 million) despite the closure of AX
AX Group p.l.c.
Segment Information
For the financial year 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
Revenue (€’000) 35,806 38,443 50,293 92,399
Hospitality 14,382 22,793 36,529 54,471
Construction 6,466 7,025 4,148 12,693
Healthcare 5,676 6,143 6,865 7,263
Real estate and property rentals 8,894 2,309 1,680 17,199
Other 388 173 1,071 773
Gross operating profit (€’000) 11,525 10,556 12,746 27,521
Hospitality 4,885 7,961 10,292 18,640
Construction 572 630 212 810
Healthcare* 1,494 1,471 1,037 1,588
Real estate and property rentals 4,574 494 1,205 6,483
Gross operating profit margin (%) 32.19 27.46 25.34 29.78
Hospitality 33.97 34.93 28.17 34.22
Construction 8.85 8.97 5.11 6.38
Healthcare* 26.32 23.95 15.11 21.86
Real estate and property rentals 51.43 21.39 71.73 37.69
* GOP for the healthcare segment is equivalent to EBITDA.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 13
ODYCY in Q4 FY2021. Revenues generated by the hotels located in Sliema and Valletta doubled to
€14.24 million (FY2021: €7.09 million) and €3.23 million (FY2021: €1.50 million) respectively, reflecting
sharp increases in RevPAR and GOPAR as shown in the table below. In contrast, the income generated
from the Qawra properties eased by 8.07% to €5.32 million compared to €5.79 million in FY2021 due
to the temporary closure of AX ODYCY.
The uplift in business translated into a marked improvement in GOP which surged by 62.97% to €7.96
million (FY2021: €4.89 million). The main contributors were the Sliema Hotels which generated a GOP
of €5.66 million (FY2021: €2.52 million). The Valletta Hotels also recorded significant growth in GOP to
€0.62 million (FY2021: €0.36 million) despite their minimal contribution to the overall profitability of
the Group’s hospitality division. On the other hand, the Qawra Hotels registered a 16.50% decline in
GOP to €1.68 million (FY2021: €2.01 million) as despite the considerable growth in RevPAR and GOPAR,
the number of available rooms dropped drastically reflecting the temporary close of AX ODYCY.
AX Group p.l.c.
Segment Information – Hospitality
For the financial year 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
Revenue (€’000) 14,382 22,793 36,529 54,471
Qawra Hotels 5,786 5,319 14,854 32,009
Sliema Hotels 7,093 14,242 17,245 17,553
Valletta Hotels 1,503 3,232 4,430 4,909
Gross operating profit (€’000) 4,885 7,961 10,292 18,830
Qawra Hotels 2,006 1,675 3,841 12,115
Sliema Hotels 2,516 5,663 5,743 5,830
Valletta Hotels 363 623 708 885
Gross operating profit margin (%) 33.97 34.93 28.17 34.57
Qawra Hotels 34.67 31.49 25.86 37.85
Sliema Hotels 35.47 39.76 33.30 33.21
Valletta Hotels 24.15 19.28 15.98 18.03
Revenue per available room (RevPAR)* (€)
Qawra Hotels 40 157 138 127
Sliema Hotels 68 136 165 168
Valletta Hotels 94 201 276 306
Gross operating profit per available room (GOPAR)** (€)
Qawra Hotels 14 49 36 48
Sliema Hotels 24 54 55 56
Valletta Hotels 23 39 44 55
* Calculated by dividing a hotel's total revenue by the total number of available rooms.
** Calculated by dividing a hotel's gross operating profit by the total number of available rooms.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 14
FY2023 was marked by the further year-on-year recovery in business to a level almost at par with the
activity prior to the COVID-19 pandemic. Indeed, total revenues amounted to €36.53 million compared
to the all-time high of €38.94 million recorded in FY2018. The Sliema Hotels were again the main
contributors in terms of revenue (€17.25 million) and GOP (€5.74 million), followed by the Qawra
Hotels which in aggregate generated revenues of €14.85 million and a GOP of €3.84 million. The AX
ODYCY reopened in late May 2023, but operated at a reduced capacity as works on certain areas of
the hotel and lido were still in progress. Despite these challenges, AX ODYCY managed to exceed the
budgeted rooms revenue in September and October. Meanwhile, the Valletta Hotels also contributed
positively to the performance of the Group’s hospitality division and the two boutique properties
generated €4.43 million in revenues and a GOP of €0.71 million.
For FY2024, AX Group is now expecting to generate €54.47 million from its hospitality division,
representing a year-on-year increase of 49.12% and an uplift of 10.21% over the previously projected
figure of €49.42 million as estimated at the time of the bond issue in the second half of 2023. The main
upward revision in the projected income derives from the Qawra Hotels on the back of the expected
higher performance of AX ODYCY. In tandem, the two Qawra Hotels are now estimated to generate
€32.01 million in revenue compared to the prior estimate of €27.67 million. Elsewhere, the revised
revenue forecasts for the Sliema and Valletta Hotels are in line with the previous projections as these
properties are now expected to generate €17.55 million and €4.91 million in income respectively,
representing an aggregate 41.24% of the Group’s total revenue from its hospitality division in 2024.
Despite the upward revision in revenues, the Group is expecting its hotel properties to register virtually
the same level of GOP (€18.83 million compared to €10.29 million in FY2023) as previously estimated
at the time of the 2023 bond issue. On the one hand, AX Group is now forecasting a comparatively
superior GOP of €12.12 million from its Qawra Hotels (compared to the previous projection of €11.21
million) that would translate into a margin of 37.85% (FY2023: 25.86%). Similarly, the Valletta Hotels
are also being expected to contribute a marginally higher GOP of €0.89 million compared to the prior
projection of €0.87 million. Conversely, the forecast GOP for the Sliema Hotels has been lowered by
13% from €6.70 million to €5.83 million which, in turn, would translate into a margin of 33.21%
(FY2023: 33.30%).
5.2 CONSTRUCTION
The activities related to construction, building materials, and property management have historically
been the second largest business segment of the Group in terms of revenue generation. This division
also comprise civil engineering, turnkey assignments, project management, as well as the restoration
of buildings. Any related party revenue is eliminated upon consolidation and is not included in the
consolidated information provided in the financial statements.
Total turnover generated by the construction division increased each year in FY2021 and FY2022 to
€6.47 million (+7.05%) and €7.03 million (+8.65%) respectively. Growth in FY2021 was driven by the
restoration unit (+€0.64 million to €1.32 million) which offset the 3.96% decline (or -€0.21 million to
€5.15 million) in construction activity. Conversely, both the construction and restoration units
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 15
registered increase in business in FY2022, particularly the restoration unit (+35.36% to €1.78 million)
which was particularly focused on the works related to the Senglea bastions and the Maritime Museum
in Vittoriosa.
In FY2023, the construction division continued works on the two main internal developments of the
Group (i.e., the Verdala Project and the extension and refurbishment of AX ODYCY) apart from the
redevelopment of Palazzo Lucia. Year-on-year, revenues from external sources dropped markedly to
€4.15 million. Most of this income amounting to €3.26 million (FY2022: €5.24 million) was generated
by construction activity including works on the new visitors’ centre at the St John’s Co-Cathedral in
Valletta, whilst the remaining portion of the income amounting to €0.89 million emanated from
restoration activity. The latter included works to the Oratories at the Jesuits’ Church in Valletta, the
restoration of Villa Luginsland in Rabat, as well as the restoration of the façade of the VCP.
Overall, the construction division registered a GOP of €0.21 million in FY2023 compared to €0.57
million in FY2021 and €0.63 million in FY2022. Furthermore, the GOP margin contracted sharply to
5.11% compared to close to 9% in the previous two financial years.
The revised forecasts for FY2024 show that the Group is now expecting its construction division to
generate €12.69 million in income compared to the previous projection of €7.18 million, which would
filter into a GOP of €0.81 million and a relative margin of 6.38%. Both the construction (+84.8% over
the previous projected income of €5.74 million to €10.58 million) and the restoration segments
(+46.94% to €2.11 million) are anticipating higher levels of activity including works on the new arrivals
lounge at the Malta International Airport, as well as the continuation of the restoration of the Oratories
at the Jesuits’ Church and Villa Luginsland.
5.3 HEALTHCARE
The Hilltop Gardens Retirement Village and the Simblija Care Home offer tailor-made packages
covering different levels of long and short-term care. Revenue from Hilltop Gardens Retirement Village
derive from the self-catering apartments and penthouses that are occupied by tenants for definite
periods. On the other hand, income from Simblija Care Home consist of revenue from stays for short
AX Group p.l.c.
Segment Information – Construction
For the financial year 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
€'000 €'000 €'000 €'000
Construction 5,148 5,241 3,257 10,583
Restoration 1,318 1,784 891 2,110
Total Revenue 6,466 7,025 4,148 12,693
Gross operating profit 572 630 212 810
Gross operating profit margin (%) 8.85 8.97 5.11 6.38
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 16
term respite care, convalescence, and post-operative recovery, as well as intensive nursing care to the
more dependent elderly residents. This is recognised over time on a systematic basis, reflecting the
period consumed as a proportion of the total contractual period.
The independent units at Hilltop Gardens Retirement Village were virtually fully occupied throughout
the historic period under review. Income surged by 16.50% in FY2022 to just under €2.80 million
compared to €2.40 million in FY2021. Furthermore, revenue grew by a further 23.21% in FY2023 to
€3.45 million on the back of a particularly strong demand for the Revive physiotherapy centre whilst
the food and beverage facilities within the village also experienced an improvement over the previous
year.
The operational performance of Simblija Care Home in FY2020 and FY2021 was adversely impacted
by the various restrictions and measures imposed by the health authorities to contain the spread of
the COVID-19 pandemic. In addition, the nursing home experienced challenges in achieving budgeted
occupancy levels.
Although the effects of the COVID-19 pandemic continued to be felt during FY2022, overall occupancy
moved closer to pre-pandemic level and in fact revenues increased by 2.17% to €3.35 million (FY2021:
€3.28 million). In FY2023, the care home registered a marginal improvement in income to €3.42 million
on the back of a steady increase in occupancy to 88%.
In aggregate, revenues generated by the Group’s healthcare division amounted to €6.87 million in
FY2023 compared to €5.68 million in FY2021 and €6.14 million in FY2022. However, despite the year-
on-year growth in income registered in FY2022 (+8.23%) and FY2023 (+11.75%), EBITDA trended lower
in both years to €1.47 million (translating into an EBITDA margin of 23.95%) and €1.04 million (margin
of 15.11%) respectively, from €1.49 million in FY2021, due to an increase in overheads. Particularly in
FY2023, the Group introduced an employee retention scheme with a view of rewarding loyalty within
the division’s staff compliment. Excluding this new incentive, the year-on-year drop in EBITDA would
have been less than 2%.
AX Group p.l.c.
Segment Information – Healthcare
For the financial year 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
€'000 €'000 €'000 €'000
Residences & other income 2,400 2,796 3,445 3,694
Nursing home 3,276 3,347 3,420 3,569
Total Revenue 5,676 6,143 6,865 7,263
Direct costs (2,765) (3,414) (3,940) (4,342)
Other costs (1,417) (1,258) (1,888) (1,333)
EBITDA 1,494 1,471 1,037 1,588
EBITDA margin (%) 26.32 23.95 15.11 21.86
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 17
For FY2024, the Group marginally revised upwards the income and EBITDA forecasts to €7.26 million
and €1.59 million respectively, whilst the revised EBITDA margin of 21.86% is in line with the previous
target of 22.16%. Revenue from both the retirement village and the care home are expected to
increase year-on-year, with the sharpest uplift anticipated to emanate from the former to €3.69 million
(+7.23%) which is also considerably higher than the previous projected figure of €2.96 million.
5.4 REAL ESTATE AND RENTAL INCOME
By FY2022, AX Group completed the Tarġa Gap Complex and the Falcon House projects at a total cost
of circa €11.5 million, and either leased or sold all the residential units and commercial/office space
that were placed on the market. As a result, income from the sale of property surged to €8 million in
FY2021 before dropping to €1.29 million in FY2022. Furthermore, rental income rose by 33.23% to
€0.89 million in FY2021 and increased by a further 13.76% to €1.02 million in FY2022.
Overall, the real estate and property rentals division generated aggregate revenues of €11.20 million
in FY2021 and FY2022 which filtered into a GOP of €5.07 million.
In FY2023, the real estate unit generated revenues of €0.65 million whilst rental income increased by
a marginal 1.18% to €1.03 million. GOP amounted to €1.21 million, thus representing a notable uplift
compared to the prior year (€0.49 million) and a marked improvement in the relative margin to 71.73%
compared to 21.39% in FY2022.
FY2024 will be mostly characterised by the recognition of the sales of the first units forming part of
Verdala Terraces, whilst new rental income is expected to be generated from the lease of Palazzo Lucia
as from Q2 2024. In view of the delays in the targeted completion date of Verdala Terraces and Palazzo
Lucia, AX Group is now expecting revenues from its real estate and rental divisions to amount to €15.91
million and €1.29 million respectively (to a total of €17.20 million) compared to the previous estimates
of €37.05 million and €1.74 million. As a result, GOP has been revised lower to €6.48 million compared
to the prior projected figure of €12.86 million which, in turn, would translate into a margin of 37.69%.
AX Group p.l.c.
Segment Information – Real Estate and Property Rentals
For the financial year 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
€'000 €'000 €'000 €'000
Real estate 8,000 1,292 651 15,912
Rental income 894 1,017 1,029 1,287
Turnover 8,894 2,309 1,680 17,199
Gross operating profit 4,574 494 1,205 6,483
Gross operating profit margin (%) 51.43 21.39 71.73 37.69
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 18
6. MAJOR COMMITTED PROJECTS
The following is a list of the Group’s planned major investments for the coming years, excluding the
Verdala Project which is being completed in stages culminating in the inauguration of the Verdala
Wellness Hotel in early 2025 (i.e., in the first half of the Group’s 2025 financial year):
Expected Year of
Commencement
and Completion
Development Planning Process Status
Approximate
Investment
Hilltop Gardens Retirement Village
2025 – 2026
Addition of further units for lease. After obtaining the
development permit to
add one floor, the
Group is in the process
of submitting another
application for the
construction of the
second additional floor.
€8 million
Qawra Project – Phases 2 and 3
As yet to be
determined,
subject to the
Group having the
necessary
funding and
resources.
Phase 2: Redevelopment of the lidos
appertaining to Luzzu Complex and AX
Sunny Coast. These will be linked to the
lido of AX ODYCY.
Phase 3: Demolition of AX Sunny Coast
which will be rebuilt into a 161-unit
aparthotel with new food, beverage, and
leisure facilities.
Full development
permit obtained
(PA/05952/21).
Outline development
permit obtained
(PA/05952/21).
The Group has
submitted the relevant
application for a full
development permit.
€70 million
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 19
7. SECURITIES IN ISSUE
7.1 INFORMATION RELATING TO THE ISSUER’S BONDS
AX Group has three bonds which are listed on the Regulated Main Market (Official List) of the Malta
Stock Exchange. The key information relating to these bonds is provided in the table below:
7.2 INFORMATION RELATING TO AXRE’S SECURITIES
The authorised share capital of AX Real Estate p.l.c. is €500 million divided into 2 billion ordinary ‘A’
shares and 2 billion ordinary ‘B’ shares of a nominal value of €0.125 each. The issued share capital is
€34.29 million divided into 97,193,600 ordinary ‘A’ shares (representing 35.43% of the issued share
capital) which are listed on the Malta Stock Exchange, and 177,143,100 ordinary ‘B’ shares
(representing 64.57% of the issued share capital) which are not listed on an exchange and are entirely
owned by AX Group. Of the ordinary ‘A’ shares, 72,856,900 shares are owned by AX Group whilst the
remaining 24,336,700 shares (or 25.04% of the total number of ordinary ‘A’ shares) are considered as
free float. Further information about AXRE’s shares is included in the most recent Analysis issued by
AXRE which is available at https://axinvestor-relations.mt/ax-real-estate/.
Meanwhile, AXRE also has €40 million 3.50% unsecured bonds 2032 which are listed on the Regulated
Main Market (Official List) of the Malta Stock Exchange. The key information relating to these bonds is
provided in the table below:
Security ISIN Security Symbol Code Amount Outstanding Market Price*
MT0002361203 3.25% AX Group p.l.c. unsecured bonds 2026 Series I AX26A € 15,000,000 99.00%
MT0002361211 3.75% AX Group p.l.c. unsecured bonds 2029 Series II AX29A € 10,000,000 100.00%
MT0002361229 5.85% AX Group p.l.c. unsecured bonds 2033 AX33A € 40,000,000 104.02%
€ 65,000,000
* As at 15 April 2024.
Security ISIN Security Symbol Code Amount Outstanding Market Price*
MT0002571215 3.50% AX Real Estate p.l.c. unsecured bonds 2032 AX32A € 40,000,000 90.00%
* As at 15 April 2024.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 20
8. MARKET OVERVIEW
8.1 ECONOMIC UPDATE
5
Following the strong rebound in economic activity in 2021 and 2022 that resulted in Malta’s gross
domestic product (“GDP”) to expand by 12.6% (euro area [EA]: 5.9%) and 8.2% (EA: 3.4%) respectively
in real terms, the European Commission (“EC”), in its most recent update issued in February 2024,
upgraded the estimated growth of the Maltese economy in 2023 to 6.1% (EA: 0.5%) from the previous
forecast of 4.0% (EA: 0.6%). Furthermore, the EC raised the projected growth for 2024 and 2025 to
4.6% (EA: 0.8%) and 4.3% (EA: 1.5%) respectively from the prior estimates of an increase in GDP of
4.0% in 2024 (EA: 1.2%) and 4.2% in 2025 (EA: 1.6%).
In this regard, the EC noted that its more favourable view of the Maltese economy is due to the robust
underlying dynamics of private consumption and net exports, and the continued robust performance
of the tourism sector. Furthermore, following a weaker construction activity in 2023, investment
growth is expected to pick-up in 2024 and 2025.
Despite the more positive assessment of the rate of growth of the Maltese economy, the EC lowered
the inflation estimate for 2023 to 5.6% (EA: 5.4%) from the previous forecast of 5.7% (EA: 5.6%). In
2022, Malta’s inflation rate stood at 6.1% (EA: 8.4%) compared to 0.8% in 2020 (EA: 0.3%) and 0.70%
in 2021 (EA: 2.6%). Similarly, the EC is now expecting inflation in Malta to converge earlier to the
European Central Bank target of 2.0% as it reduced the forecast and projected inflation for 2024 and
2025 to 2.9% (EA: 2.7%) and 2.7% (EA: 2.2%) respectively from the previous estimates of 3.3% in 2024
(EA: 3.2%) and 3.1% in 2025 (EA: 2.2%).
Meanwhile, in its more detailed update issued in November 2023, the EC had explained that Malta’s
labour market remained robust as employment increased by 6.2% in 2022 and continued to grow very
strongly in 2023. The positive trend in the demand for labour across all sectors of the economy,
particularly in the tourism sector and administrative services, led the unemployment rate to fall to
2.9% in 2022 (EA: 6.8%) from 4.4% in 2020 (EA: 8.0%) and 3.4% in 2021 (EA: 7.7%). Moreover, the EC
expects Malta’s unemployment rate to trend marginally lower and stabilise at 2.7% which is much
lower that the corresponding rate of 6.4% in 2025 for the euro area.
Regarding Malta’s fiscal position, after climbing to 9.6% of GDP in 2020 (EA: 7.1%), Malta’s government
deficit eased to 7.5% (EA: 5.2%) and 5.7% (EA: 3.6%) in 2021 and 2022 respectively. In 2023, the
government’s deficit is estimated to have fallen further to 5.1% of GDP (EA: 3.2%) amid a reduction of
the cost of the measures aimed at mitigating the impact of high energy prices (accounting for 1.6% of
GDP compared to 2.3% in 2022) and a slower growth in the compensation of employees and social
benefits than the rate of growth in nominal GDP.
5
Sources: European Commission, European Economic Forecast Autumn 2023, 15 November 2023.
European Commission, European Economic Forecast Winter 2024 (Interim), 15 February 2024.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 21
Despite the higher debt servicing costs, in 2024 the government’s deficit is expected to drop to 4.6%
(EA: 2.8%) amid the phasing out of the costs supporting the operations of Air Malta. Furthermore,
social benefits and intermediate consumption expenditures are anticipated to grow at a slower pace
than nominal GDP. On the other hand, the net budgetary cost of energy-related measures is projected
to increase to 2.0% of GDP. In 2025, the reduction of the government deficit to 4.1% of GDP (EA: 2.7%)
is projected to be driven by the decline in the cost of energy related measures as percentage of GDP
(1.0%), intermediate consumption expenditure, as well as slower growth in the costs associated with
social benefits. Overall, however, the government debt-to-GDP ratio is anticipated to reach 57.2% in
2025 (EA: 89.5%) which would be 5 percentage points higher than the level of 52.2% in 2020 (EA:
99.1%).
2020 2021 2022 2023 2024 2025
Actual Actual Actual Forecast Forecast Projection
Malta
Real GDP growth
(%, year-on-year)
2
(8.10) 12.60 8.20 6.10 4.60 4.30
Real GDP growth per capita
(%, year-on-year)
1
(10.10) 11.70 4.50 1.30 1.80 1.90
Inflation
(%, year-on-year)
2 3
0.80 0.70 6.10 5.70 3.30 3.10
Unemployment (%)
1
4.40 3.40 2.90 2.70 2.70 2.70
Primary balance
(% of GDP)
1
(8.30) (6.40) (4.80) (4.00) (3.30) (2.70)
General balance
(% of GDP)
1
(9.60) (7.50) (5.70) (5.10) (4.60) (4.10)
Gross public debt
(% of GDP)
1
52.20 54.00 52.30 53.30 55.80 57.20
Current account balance
(% of GDP)
1
2.50 5.70 0.60 4.20 5.70 5.90
Euro area (20)
Real GDP growth
(%, year-on-year)
2
(6.10) 5.90 3.40 0.50 0.80 1.50
Real GDP growth per capita
(%, year-on-year)
1
(6.20) 5.90 3.00 0.10 0.90 1.30
Inflation
(%, year-on-year)
2 3
0.30 2.60 8.40 5.60 3.20 2.20
Unemployment (%)
1
8.00 7.70 6.80 6.60 6.60 6.40
Primary balance
(% of GDP)
1
(5.50) (3.80) (1.90) (1.50) (1.00) (0.70)
General balance
(% of GDP)
1
(7.10) (5.20) (3.60) (3.20) (2.80) (2.70)
Gross public debt
(% of GDP)
1
99.10 96.50 92.50 90.40 89.70 89.50
Current account balance
(% of GDP)
1
2.30 3.60 1.00 2.50 2.60 2.70
EU
Real GDP growth
(%, year-on-year)
2
(5.60) 6.00 3.40 0.50 0.90 1.70
Real GDP growth per capita
(%, year-on-year)
1
(5.70) 6.10 3.30 - 1.10 1.60
Inflation
(%, year-on-year)
2 3
0.70 2.90 9.20 6.50 3.50 2.40
Unemployment (%)
1
7.20 7.10 6.20 6.00 6.00 5.90
Primary balance
(% of GDP)
1
(5.30) (3.40) (1.70) (1.50) (1.00) (0.70)
General balance
(% of GDP)
1
(6.70) (4.70) (3.30) (3.20) (2.80) (2.70)
Gross public debt
(% of GDP)
1
91.70 88.90 84.80 83.10 82.70 82.50
Current account balance
(% of GDP)
1
2.40 3.30 0.90 2.50 2.50 2.50
1
Source:
European Commission, ‘European Economic Forecast Autumn 2023, 15 November 2023.
2
Source:
European Commission, ‘European Economic Forecast Winter 2024 (Interim)’, 15 February 2024.
3
Harmonised Indices of Consumer Prices ("HICP")
Key Economic Indicators
1 2
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 22
8.2 HOSPITALITY
6
Total inbound tourists to Malta amounted to just over 3 million in 2023 (2022: 2.33 million)
7
, thus
exceeding the previous high of 2.77 million recorded in 2019 by 8.33%. Overall, inbound tourists spent
a total of 20.24 million nights (2019: 19.34 million), or 6.80 nights per inbound tourist (2019: 7.02
nights per inbound tourist), the majority of which (17.12 million) were spent in rented accommodation
which comprises collective accommodation (10.57 million nights)
8
and other rented accommodation
(6.55 million nights).
9
On the other hand, inbound tourists only spent 3.12 million nights at non-rented
accommodation.
10
Accordingly, inbound tourists spent a total of 10.57 million nights at collective
accommodation (or 52.20% of the total nights spent) whilst the remaining portion (9.68 million nights
– or 47.80%) were spent at private accommodation.
The total expenditure by inbound tourists in 2023 amounted to €2.67 billion which was 20.30% higher
than the previous all-time high of €2.22 billion recorded in 2019. This also translated into an spend of
€132 per inbound tourist per night which was 14.78% higher than the expenditure of €115 per inbound
tourist per night registered in 2019. When adjusted for inflation, the expenditure per inbound tourist
per night in 2023 stood at €125 compared to €113 in 2019.
6
Source: National Statistics Office, available at: https://nso.gov.mt/tourism/.
7
Including overnight cruise passenger which in 2023 amounted to 27,153 visitors (2022: 43,723 visitors).
8
Collective accommodation comprises hotels, guesthouses, hostels, tourist villages, holiday complexes, bed & breakfast, and campsites.
9
Other rented accommodation comprises holiday furnished premises (farmhouses, flats, and villas), host families, marinas, convents, rented
yachts, and student dormitories.
10
Non-rented accommodation typically comprises private residences (owned dwellings, caravans, and, or yachts), stays with friends or
relatives, and other private accommodation such as timeshare.
0
4
8
12
16
20
24
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Nights (million)
Inbound Tourists (million)
Collective Accomodation Private Accomodation Total Nights
Malta Tourism Sector
Inbound Tourists & Total Nights
2014 to 2023
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 23
Almost 68% (or 2.02 million) of inbound tourists in 2023 came from EU countries, of which 80.58%
represented markets within the euro area, the largest of which were Italy (0.55 million inbound tourists
who spent circa €107 per capita per night), followed by France (0.29 million inbound tourists / €127
per capita per night), and Germany (0.22 million inbound tourists / €133 per capita per night). Outside
of the euro area, the largest markets were the United Kingdom (0.54 million inbound tourists / €148
per capita per night), followed by Poland (0.17 million inbound tourists / €120 per capita per night),
and Sweden (0.11 million inbound tourists / €120 per capita per night).
The bulk of inbound tourists visiting Malta in 2023 were for leisure purposes (2.71 million) who opted
not to take a packaged holiday (2.23 million). Similarly, the large majority (2.31 million – or 77.47%)
where first-time tourists whilst the number and percentage of repeat tourists trended lower when
compared to 2019. In fact, 0.67 million were repeat tourists in 2023, representing 22.53% of the
inbound tourists, compared to a total of 0.70 million in 2019 who represented 25.32% of the inbound
tourists who visited Malta that year.
In terms of the demographic profile of inbound tourists in 2023, 0.66 million (or 22.14%) were below
25 years, 1.16 million (or 38.97%) were aged between 25 years and 44 years, 0.89 million (or 29.79%)
were aged between 45 years and 64 years, whilst the remaining portion amounting to 0.27 million (or
9.10%) were over 64 years. All age brackets contracted slightly as a proportion of inbound tourists in
2023 when compared to 2019, except for the youngest tourists aged below 25 years as this section
gained 2.36 percentage points relative to 2019.
0
20
40
60
80
100
120
140
160
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Expenditure per Night (€)
Total Expenditure (billion)
Total Expenditure Expenditure per Capita per Night
Malta Tourism Sector
Total Expenditure per Night
2014 to 2023
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 24
8.3 PROPERTY MARKET
11
DEVELOPMENT PERMITS FOR DWELLINGS
Data provided by the Central Bank of Malta (“CBM”) and the National Statistics Office (“NSO”) shows
that in 2023, the total number of permits for the construction of new dwellings increased by 24.78%
to 1,586 permits (2022: 1,271 permits). However, the total number of approved new residential units
declined by 15.49% year-on-year to 8,112 units, mostly comprising apartments which totalled 7,026
units (2022: 8,280 apartments) representing 86.61% of the total number of approved new units in
2023. The sharpest year-on-year percentage decline in the number of approved residential units was
for the construction of new maisonettes (-21.76% to 712 units), followed by apartments (-15.14%),
and terraced houses (-12.31% to 292 units). On the other hand, other type of dwellings including villas,
bungalows, and farmhouses increased by 7.89% to 82 units.
The highest ever number of approved new residential units in a single year took place in 2018 as 2,363
permits were issued for the construction of a total of 12,885 residential units. Between 2019 and 2021,
the total number of approved new residential units trended lower each year, reaching a five-year low
of 7,578 units in 2021 before rebounding strongly by 26.67% to 9,599 new units in 2022.
PROPERTY PRICES & TRANSACTIONS
In nominal terms, the CBM Property Prices Index – which is based on the advertised sale prices of
apartments, maisonettes, terraced houses, and other types of dwellings – reached an all-time high of
11
Sources: Central Bank of Bank and National Statistics Office online portals at https://www.centralbankmalta.org/real-economy-indicators
and https://nso.gov.mt/property respectively.
3,947
7,508
9,006
12,885
12,485
7,831
7,578
9,599
8,112
0
20
40
60
80
100
120
140
160
180
200
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2015 2016 2017 2018 2019 2020 2021 2022 2023
CBM Property Prices Index (points)
Number of Residential Units
Residential Property Market
Development Permits & CBM Property Prices Index
2013 to 2023
Apartments Maisonettes Terraced Houses
Others PPI Inflation-Adjusted PPI
Source: Central Bank of Malta
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 25
172.01 points in 2023, representing a significant increase of 8.28% over the prior year (158.86 points).
The sharpest year-on-year percentage increase took place in the prices of ‘other property’ comprising
town houses, houses of character and villas, which saw their advertised prices increase by an aggregate
10.57% in 2023. The advertised prices of apartments and maisonettes also increased markedly in 2023
by 9.80% and 9.20% respectively, whilst the advertised prices of terraced houses contracted by a
minimal 0.17%. In real terms, the CBM Property Prices Index increased by 8.86% in 2023 (the strongest
uplift since 2018), thus erasing to prior year’s decline of 2.45% to reach an inflation-adjusted record
reading of 162.95 points.
The NSO Property Price Index – which is based on actual transactions involving apartments,
maisonettes, and terraced houses – reached an all-time high of 151.08 points as at the end of Q2 2023
– representing a year-on-year increase of 4.46% in nominal terms. During 2023, a total of 12,178 final
deeds of sale were registered compared to 14,368 deeds in 2021 and 14,331 deeds in 2022. However,
the total value of final deeds of sale dropped by only 2.35% in 2023 to €3.22 billion (or €3.05 billion in
real terms) compared to the record of just under €3.30 billion (or €3.11 billion in real terms) registered
in 2022. Furthermore, the average value per deed of sale reached an all-time high of €0.26 million (or
€0.25 million in real terms) compared to €0.22 million in 2021 and €0.23 million in 2022.
0
25
50
75
100
125
150
175
200
225
250
275
300
0
100
200
300
400
500
600
700
800
900
1,000
Average Value per Deed of Sale (€'000)
Value of Final Deeds of Sale (€ million)
Residential Property Market
Final Deeds of Sale
Q1 2018 to Q4 2023
Value of Final Deeds of Sale Average Value per Deed of Sale
Source: National Statistics Office
2019
2018
2020
2021
2022
2023
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 26
8.4 LONG-TERM CARE
Estimates provided by the National Statistics Office
12
show that the total population of Malta as at the
end of 2022 stood at 542,051 persons, representing an increase of 4.21% when compared to 2021.
13
Of these, 404,675 persons (or 74.66%) were Maltese whilst 137,376 persons (or 25.34%) were foreign
nationals. Furthermore, persons whose age was between 30 years and 69 years represented 55.64%
of Malta’s population, while persons under the age of 29 years, and persons whose age was 70 years
and over represented 31.15% and 13.22% of Malta’s population respectively.
Projections prepared by the United Nations Population Division
14
show that Malta’s population is
expected to continue changing dramatically in the years and decades ahead, with life expectancy to
exceed 87 years by 2050 from the current level of circa 84 years, before increasing further and reach
93 years by 2100. Moreover, the median age of Malta’s population is projected to increase from the
current level of just over 39 years to well over 50 years by 2050 and beyond amid an evident ageing of
Malta’s population. In fact, almost one-third of Malta’s population is expected to be 70 years and older
by 2100, whilst persons whose age will be between 30 years and 69 years, and those below 30 years,
will represent circa 44% and 24% of the total population.
Against this background, it is expected that both the quantity and the quality of demand for long-term
care will continue to intensify, particularly for the services provided by community care centres and
other state-run institutions, as well as facilities operated by the Church and the private sector.
12
Source: https://nso.gov.mt/population/.
13
The population increase of 21,877 persons in 2022 was driven by total net migration of 21,798 persons, of whom just over 83% originated
from non-EU countries.
14
Source: Population Division – Department of Economic and Social Affairs, United Nations Secretariat, World Population Prospects 2022,
available at: https://population.un.org/wpp/.
12% 10% 8% 6% 4% 2% 0% 2% 4% 6% 8% 10% 12%
0 - 9
10 - 19
20 - 29
30 - 39
40 - 49
50 - 59
60 - 69
70 - 79
80 - 89
90+
% of Total Population
Age Group
Malta Population Pyramid
2022 Estimate vs. 2100 Projection
■ / ■ 2022
Male
Female
/ 2100
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 27
PART 2 – PERFORMANCE REVIEW
9. FINANCIAL INFORMATION
The historic information is extracted from the audited consolidated annual financial statements of AX
Group for the financial years ended 31 October 2021, 31 October 2022, and 31 October 2023.
The forecast information is based on future events and assumptions which AX Group believes to be
reasonable. Accordingly, the actual outcome may be adversely affected by unforeseen situations
and the variation between forecasts and actual results may be material.
The estimates presented in this Analysis assume that the carrying values of the Group’s hotels and
investment properties will not be revalued upwards or impaired, and therefore no adjustment has
been made as to possible uplifts or impairments in value of assets which can materially affect the
values in the consolidated Income Statement and the consolidated Statement of Financial Position.
AX Group p.l.c.
Income Statement
for the financial year 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
€’000 €’000 €’000 €’000
Revenue 35,806 38,443 50,293 92,399
Net operating expenses (29,026) (31,223) (42,847) (72,160)
EBITDA 6,780 7,220 7,446 20,239
Depreciation (6,815) (6,916) (9,338) (9,858)
Adjusted operating profit / (loss) (35) 304 (1,892) 10,381
Investment property revaluation 4,965 1,669 103 -
Operating profit / (loss) 4,930 1,973 (1,789) 10,381
Share of results of associates and joint venture 541 849 976 941
Net finance costs (4,016) (4,125) (6,004) (7,457)
Profit / (loss) before tax 1,455 (1,303) (6,817) 3,865
Taxation 473 1,054 2,996 (1,981)
Profit / (loss) after tax 1,928 (249) (3,821) 1,884
Other comprehensive income
Gain / (loss) on property revaluation 16,589 (3,587) 3,633 -
Taxation 1,581 2,055 (2,785) -
Total comprehensive income / (expense) 20,098 (1,781) (2,973) 1,884
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 28
INCOME STATEMENT
In FY2021, total revenues rebounded by 23.23% (or +€6.75 million) to €35.81 million primarily on the
back of the income generated from the sale of the residential units at Tarġa Gap Complex and Falcon
House.
Malta’s rapid vaccination programme launched in May 2021 led to the gradual easing of a number of
COVID-19 related restrictions which benefitted the operations of the Group’s hospitality division. As a
result, this segment experienced a steady improvement in performance particularly during the
summer months. Nonetheless, revenue generated from hospitality for the full year decreased by just
under €1.0 million to €14.38 million.
Group EBITDA improved considerably and amounted to €6.78 million which translated into a margin
of 18.94%. Furthermore, although net finance costs increased by 16.68% to €4.02 million, in view of
the upsurge in EBITDA, the interest cover improved to 1.69 times. Meanwhile, as the Group recorded
an uplift of €4.97 million in the fair value of its investment property. Coupled with the contribution of
€0.54 million from associates and joint venture, the Issuer reported a pre-tax profit of €1.46 million
and a net profit €1.93 million. The latter translated into a margin of 5.38% and a return on equity and
on assets of 0.85% and 0.53% respectively.
The total comprehensive income for the year amounted to €20.10 million and was boosted by gains of
€16.59 million on property revaluations.
In FY2022, total revenues increased by 7.36% to €38.44 million largely reflecting the encouraging
rebound in tourism throughout the year despite the sharp rise in the number of cases related to the
Omicron variant which peaked in late 2021 and early 2022. Indeed, revenues from the hospitality
AX Group p.l.c. FY2021 FY2022 FY2023 FY2024
Key Financial Ratios Actual Actual Actual Forecast
EBITDA margin (%)
(EBITDA / revenue)
Operating profit margin (%)
(Adjusted operating profit / revenue)
Net profit margin (%)
(Profit after tax / revenue)
Return on equity (%)
(Profit after tax / average equity)
Return on assets (%)
(Profit after tax / average assets)
Return on invested capital (%)
(Adjusted operating profit / average equity and net debt)
Interest cover (times)
(EBITDA / net finance costs)
18.94
(0.85)
(0.50)
1.24
(0.06) 0.53
(0.01) 0.09
1.75 1.69
21.90
11.23
2.04
0.77
0.39
2.51
2.71
14.81
(3.76)
(7.60)
(1.55)
(0.10) 0.79
(0.65) 5.38
0.85 (0.10)
18.78
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 29
division surged by 58.48% to €22.79 million. Furthermore, the Group recorded higher revenues from
its healthcare and construction divisions to €6.14 million (FY2021: €5.68 million) and €7.03 million
(FY2021: €6.47 million) respectively. In contrast, the real estate and property rentals division recorded
a considerable drop in revenues to €2.31 million (FY2021: €8.89 million) in view of the material one-
time property sales accounted for in the 2021 financial year.
The EBITDA of €7.22 million translated into a margin of 18.78% whilst the interest cover improved to
1.75 times despite the slight increase in net finance costs to €4.13 million. Nonetheless, the Group still
recorded a pre-tax loss of €1.30 million as the increase in EBITDA and the higher contribution from
associates and joint venture which amounted to €0.85 million were dented by the marginal increase
in depreciation charges to €6.92 million (FY2021: €6.82 million) and the lower amount of fair value
gains of €1.67 million when compared to the prior year. Overall, AX Group posted a net loss of €0.25
million and a total comprehensive expense of €1.78 million.
Revenues surged by 30.80% in FY2023 to just above €50 million, mainly driven by the contribution of
the hospitality division which generated revenues of €36.53 million and representing 72.63% of total
income. The healthcare division also registered growth year-on-year (+11.75% to €6.87 million), whilst
the construction, and the real estate and property rentals divisions recorded drops in income to €4.15
million and €1.68 million respectively.
Despite the strong double-digit growth in revenues, EBITDA only edged up by 3.13% to €7.45 million
which translated into a margin of 14.81%. The notable increase in operating costs took place amid the
expansion of the Group’s operations. Furthermore, staff costs experienced a substantial year-on-year
increase of 59% to €25.89 million (FY2022: €16.28 million) as during FY2022 the Group benefitted from
the COVID-19 related wage supplement scheme (€1.48 million), whilst during FY2023 AX Group hired
numerous staff members months ahead of the opening of AX ODYCY. This early recruitment strategy
allowed sufficient time for comprehensive training of the new staff to meet the AX Hotels standards.
Meanwhile, the Group also introduced a retention bonus scheme applicable to all staff members which
aims to reward loyal and committed employees for their performance and extended tenure with the
Group.
In view of the sharper increase in net finance costs to €6 million than the growth in EBITDA, the interest
cover retracted to 1.24 times. Elsewhere, the Group’s financial performance was also dented by a
substantial increase of 35.02% in depreciation charges to €9.34 million primarily driven by the multi-
million investments in the extension and refurbishment of AX ODYCY. On the other hand, the share of
results of associates and joint venture increased to €0.98 million, largely reflecting the contribution
from the Group’s investment in VCP which, during 2023, hosted almost 0.9 million passengers from a
total of 312 cruise ship calls.
Overall, AX Group registered a net loss of €3.82 million whilst the total comprehensive expense
amounted to €2.97 million as the net loss for the year and a deferred tax charge of €2.79 million were
offset by a €3.63 million gain on property revaluations.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 30
For FY2024, AX Group is now anticipating total revenues to increase by 83.72% to €92.40 million which
is lower than the previously projected figure of €102.93 million. The major year-on-year boost in
income is expected to come from the hospitality division which is estimated to generate €54.47 million
in income (compared to the prior projection of €49.42 million) representing 58.96% of the Group’s
total revenues. Likewise, the Group upgraded its revenue forecasts for the construction and healthcare
divisions to €12.69 million (previous projection: €7.18 million) and €7.26 million (previous projection:
€7.08 million) respectively. Conversely, the expected revenues to be generated from the real estate
and property rentals division have been lowered to €17.20 million compared to the previous estimate
of €38.80 million amid delays in the completion of Verdala Terraces. As a result, some of the sales of
the residential units forming part of Verdala Terraces which were previously anticipated to be
concluded in FY2024 will now be accounted for in FY2025.
In view of the downward revision in revenues, EBITDA is now anticipated to amount to €20.24 million
compared to the previous estimate of €29.64 million. The updated EBITDA target translates into a
margin of 21.90% and leads to an interest cover of 2.71 times on net finance costs of €7.46 million.
Meanwhile, net operating expenses and depreciation charges are expected to increase substantially
throughout the year to €72.16 million (FY2023: €42.85 million) and €9.86 million respectively reflecting
the overall growth in the business, the adverse impact of high inflation, as well as the Group’s multi-
million investments in property, plant, equipment, and human resources. Furthermore, during FY2023,
AX Group made significant digital advancements with enhanced and revamped customised solutions
and management systems across all its operating segments that might lead to the installation of a new
Enterprise Resource Planning system in FY2024.
After accounting for share of results of associates and joint venture of €0.94 million and tax charges of
€1.98 million, the Issuer is expecting to register a net profit of €1.88 million. This would translate into
a margin of 2.04%, and a return on equity and on assets of 0.77% and 0.39% respectively.
0
3
6
9
12
15
18
21
24
0
10
20
30
40
50
60
70
80
90
100
2021(A) 2022(A) 2023(A) 2024(F)
EBITDA (€ million)
Revenue (€ million)
Hospitality Construction Healthcare
Real Estate Other EBITDA
AX Group p.l.c.
Revenue & EBITDA
FY2021(A) to FY2024(F)
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 31
STATEMENT OF CASH FLOWS
In FY2021, net cash from operating activities amounted to €2.96 million compared to a negative €0.59
million in the prior year, on account of an increase in operational activities particularly from the real
estate and property rentals division. Furthermore, the Group’s cash flows benefitted from lower
outflows related to investing activities (amounting to €6.73 million) albeit AX Group raised a lower
amount of cash, amounting to €7.64 million, in relation to its financing activities. Overall, the Group’s
cash position improved to a positive balance of €3.71 million as at 31 October 2021 compared to the
negative position of €0.17 million as at the start of the financial year.
In FY2022, the Group used €4.49 million in cash flows for its operating activities largely reflecting the
material negative movement in inventories which offset the favourable movement in trade and other
payables. However, as AX Group raised €42.72 million from its financing activities which outweighed
the outflows of €32.36 million in relation to its investing activities, the Group ended the 2022 financial
year with a higher cash balance of €9.58 million.
Net movement in cash and cash equivalents amounted to €0.75 million in FY2023 compared to €5.87
million in FY2022 as during the year the Group raised €50.49 million in cash from financing activities
(mostly through bank borrowings) which marginally offset the amounts of cash used in operating
(€12.33 million) and investing activities (€37.41 million).
Of significance, cash flows before changes in working capital amounted to €10.53 million compared to
€7.84 million in FY2022, but the Group’s operating cash flows were negatively impacted by
unfavourable movements in working capital (€16.01 million) as well as the payment of interest (€5.74
million) and tax (€1.11 million). Meanwhile, AX Group also intensified its capital investments as these
amounted to €38.75 million in FY2023 compared to €31.33 million in the prior year.
AX Group p.l.c.
Statement of Cash Flows
for the financial year 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
€’000 €’000 €’000 €’000
Net cash from / (used in) operating activities 2,959 (4,489) (12,334) 3,977
Net cash used in investing activities (6,725) (32,363) (37,409) (23,498)
Net cash from financing activities 7,644 42,719 50,494 13,935
Net movement in cash and cash equivalents 3,878 5,867 751 (5,586)
Cash and cash equivalents at beginning of year (166) 3,712 9,579 10,330
Cash and cash equivalents at end of year 3,712 9,579 10,330 4,744
Capital expenditure:
Purchase of PPE 4,910 31,327 36,069 20,948
Acquisition of investment property 1,815 1,036 2,677 2,550
Inventory - Verdala Terraces - - - -
Free cash flow (3,766) (36,852) (51,080) (19,521)
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 32
For FY2024, the Group is now forecasting an aggregate negative movement in cash and cash
equivalents of €5.59 million as the substantial amount of cash to be used in investing activities (€23.50
million) largely relating to the Verdala Project is expected to outweigh the inflows from operating
(€3.98 million) and financing activities (€13.94 million). As a result, the Group expects to end the 2024
financial year with a cash balance of €4.74 million compared to €10.33 million as at 31 October 2023.
-16
-12
-8
-4
0
4
8
12
16
-60
-40
-20
0
20
40
60
2021(A) 2022(A) 2023(A) 2024(F)
Cash Balance (€ million)
Cash Flows (€ million)
Operating Cash flows Net Cash used in Investing Activities
Net Cash from Financing Activities Cash Balance
AX Group p.l.c.
Cash Flows
FY2021(A) to FY2024(F)
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0
20
40
60
80
100
120
140
160
180
200
2021(A) 2022(A) 2023(A) 2024(F)
Debt-to-Assets (times)
Total Debt (€ million)
Bank Borrowings Bonds
Lease Liabilities Debt-to-Assets
AX Group p.l.c.
Total Debt
FY2021(A) to FY2024(F)
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 33
AX Group p.l.c.
Statement of Financial Position
as at 31 October 2021 2022 2023 2024
Actual Actual Actual Forecast
€’000 €’000 €’000 €’000
ASSETS
Non-current assets
Property, plant & equipment 268,546 281,437 324,000 337,105
Investment property 48,446 57,887 61,703 59,003
Inventories 23,195 37,023 - -
Investments in associates, joint venture, & other non-current assets 9,132 10,014 10,064 11,005
Right-of-use assets - - 394 365
349,319 386,361 396,161 407,478
Current assets
Inventories 3,510 3,506 49,102 64,471
Trade & other current assets 11,072 19,011 18,108 20,165
Investment property held for sale 4,286 - - -
Cash at bank and in hand 5,912 13,881 10,657 4,744
24,780 36,398 77,867 89,380
Total assets 374,099 422,759 474,028 496,858
EQUITY
Share capital 1,165 1,165 1,165 1,165
Reserves 210,041 209,429 210,401 211,165
Retained earnings 25,224 24,317 19,236 19,764
Non-controlling interest 713 13,312 12,739 12,671
237,143 248,223 243,541 244,765
LIABILITIES
Non-current liabilities
Debt securities 63,955 82,424 45,629 85,086
Bank borrowings 14,939 27,126 68,988 72,411
Trade & other payables 13,300 13,039 11,517 10,350
Deferred tax liabilities 22,286 19,745 20,360 20,425
Lease liabilities - - 372 354
114,480 142,334 146,866 188,626
Current liabilities
Debt securities 2,317 2,798 42,693 3,649
Bank borrowings 6,474 7,976 11,431 22,814
Trade & other payables 13,685 21,428 29,475 36,981
Lease Liabilities - - 22 23
22,476 32,202 83,621 63,467
Total liabilities 136,956 174,536 230,487 252,093
Total equity and liabilities 374,099 422,759 474,028 496,858
Total debt 87,685 120,324 169,135 184,337
Net debt 81,773 106,443 158,478 179,593
Invested capital (total equity plus net debt) 318,916 354,666 402,019 424,358
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 34
STATEMENT OF FINANCIAL POSITION
Total assets stood at €374.10 million as at the end of FY2021 of which €346.49 million comprised
property assets as described in Section 4 – Principal Property Assets – of this Analysis. During the year,
the net carrying value of properties increased by €21.55 million mainly reflecting the uplifts in the fair
value of the Sliema Hotels (+€8.95 million), the Hilltop Complex (+€4.06 million), the Valletta Hotels
(+€3.89 million), and the Falcon House offices (+€3.52 million). In the meantime, the portion of the
Verdala site that is currently being redeveloped into the Verdala Terraces was reclassified from
investment property to non-current inventories.
Trade and other current assets increased to €11.07 million due to an increase in operating activities
within the hospitality division as well as an increase in accrued income emanating from the
construction division. Investment property held for sale amounted to €4.29 million and related to the
previous head office of the Group situated in Lija (AX House).
Total liabilities increased by €5.75 million to €136.96 million. During the year, bank borrowings
increased by €8.85 million to €21.41 million while deferred tax liabilities decreased by €2.41 million to
€22.29 million due to an increase in deferred tax assets on unutilised capital allowances and tax losses
which were partly offset by an increase in deferred tax liabilities on revaluation of properties.
All the principal debt ratios remained virtually unchanged year-on-year, except for the net debt-to-
EBITDA multiple which dropped to 12.06 times reflecting the partial rebound from the material
negative impact of the COVID-19 pandemic on the Group’s profitability in FY2021. Furthermore, the
current ratio improved to 1.10 times on account of an increase in trade receivables and cash balances.
Total equity increased by almost €20 million to €237.14 million, principally due to the material gain on
property revaluation which positively impacted the total comprehensive income of the Group.
AX Group p.l.c. FY2021 FY2022 FY2023 FY2024
Key Financial Ratios Actual Actual Actual Forecast
Net debt-to-EBITDA (times)
(Net debt / EBITDA)
Net debt-to-equity (times)
(Net debt / total equity)
Net gearing (%)
(Net debt / net debt and total equity)
Debt-to-assets (times)
(Total debt / total assets)
Leverage (times)
(Total assets / total equity)
Current ratio (times)
(Current assets / current liabilities)
1.13 1.10
0.28 0.23
1.58 1.70
12.06 14.74 21.28
0.43 0.34
25.64 30.01
0.65
39.42
8.87
0.73
42.32
1.41
0.36
1.95
0.93
0.37
2.03
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 35
During FY2022, total assets increased by 13.01% to €422.76 million largely reflecting higher levels of
property, plant, and equipment (“PPE”) (+4.80% to €281.44 million); investment property (+19.49% to
€57.89 million); inventories (+59.62% to €37.02 million); and trade and other current assets (+71.70%
to €19.01 million). During the year, the Group continued with the execution of the projects in Qawra
and Rabat and pursued the renovation of Palazzo Lucia apart from concluding the acquisition of the La
Ferla Building in Sliema.
Total liabilities also increased markedly to €174.54 million mainly on the back of the higher level of
debt which grew by 37.22% (or +€32.64 million) to €120.32 million (31 October 2021: €87.69 million).
Despite the further expansion in the Group’s equity base to €248.22 million (+4.67%), the net gearing
ratio climbed to just over 30% (31 October 2021: 25.64%) whilst the net debt-to-equity and debt-to-
asset ratios increased to 0.43 times and 0.28 times respectively from 0.34 times and 0.23 times as at
the end of FY2021. Furthermore, the net debt-to-EBITDA multiple rose to 14.74 times despite the
6.51% increase in EBITDA generated during the year.
The Group’s asset base expanded further in FY2023 to €474.03 million (+€51.27 million) reflecting the
increase in property (+€54.96 million to €432.62 million) which offset the lower balance of trade and
other current assets (-€0.90 million to €18.11 million) and cash balances (-€3.22 million to €10.66
million). The impact of property revaluation during the year only amounted to €3.74 million whilst the
sharpest year-on-year movement in the value of property related to the Qawra Hotels (+€35.85 million
to €147 million) and the Verdala Project (+€18.60 million to €63.33 million).
Total liabilities increased in line with the growth in assets and amounted to €230.49 million as at 31
October 2023. Of significance, total debt approached the €170 million level largely due to the higher
level of bank borrowings which increased by €45.32 million to €80.42 million compared to €35.10
million as at the end of FY2022. In this regard, in January 2023, the Group obtained bank funding
amounting to €48.50 million for the completion of the project related to the extension and
refurbishment of AX ODYCY. Furthermore, in February 2023, the Group also obtained a €36 million
bank loan to finance the development of the Verdala Terraces.
The Group’s equity base contracted by 1.89% in FY2023 to €243.54 million. Coupled with the increase
in debt, all principal credit metrics deteriorated during the year in line with previous forecasts as the
net gearing ratio moved to 39.42% whilst the net debt-to-equity ratio reached 0.65 times. Likewise,
the debt-to-asset ratio and the leverage ratio trended higher to 0.36 times and 1.95 times respectively.
Furthermore, despite the higher level of EBITDA generated during the year, the net debt-to-EBITDA
multiple increased considerably to 21.28 times. In this regard, the Group considers the deterioration
in its credit metrics to be temporary, as they are projected to revert to historical norms post FY2024
upon the completion of the Verdala Project and the recognition of the sales of the Verdala Terraces.
Total assets are expected to increase by 4.82% (or +€22.83 million) in FY2024 to €496.86 million largely
driven by the forecasted year-on-year increase in the value of PPE (+€13.11 million to €337.11 million)
and inventories (+€15.37 million) which will outweigh the drop in cash and investment property. The
latter is due to the reclassification of Villa Vistana as inventory as the Group expects to sell this property
in the short term.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 36
Total liabilities are estimated to increase by 9.37% (or +€21.61 million) to €252.09 million, mostly due
to the forecasted rise in trade and other payables (+€7.51 million to €36.98 million) and bank
borrowings (+€14.81 million to €95.23 million) taken on for the purpose of financing the Group’s multi-
million investments. Although the Group’s equity base is anticipated to expand by 0.50% to €244.77
million, given the sharper increase in indebtedness, most of the Issuer’s credit metrics are expected to
deteriorate including the net debt-to-equity ratio and the net gearing ratio which are forecasted to
trend higher to 0.73 times and 42.32% respectively. Likewise, the debt-to-assets ratio and the leverage
ratio are estimated to climb to 0.37 times and 2.03 times respectively. Nonetheless, the sharpest year-
on-year change is projected to be in the net debt-to-EBITDA multiple whereby this is expected to fall
considerably to 8.87 times on the back of the boost in profitability mainly resulting from the full year
contribution from AX ODYCY and the profits to be made on the sale of some of the units forming part
of the Verdala Terraces.
10. VARIANCE ANALYSIS
The following is an analysis of the major variances between the forecast financial information for the
year ended 31 October 2023 included in the Analysis dated 26 September 2023, and the audited
consolidated annual financial statements for the year ended 31 October 2023.
Although the Group’s revenue figure of €50.29 million was in line with the target of €50.70 million, the
Issuer reported an operating loss of €1.79 million compared to the forecasted operating profit of €2.39
million. The main reasons for this variance were:
AX Group p.l.c.
Income Statement
for the financial year 31 October 2023 2023
Actual Forecast
€’000 €’000
Revenue 50,293 50,696
Net operating expenses (42,847) (40,959)
EBITDA 7,446 9,737
Depreciation (9,338) (7,352)
Adjusted operating profit / (loss) (1,892) 2,385
Investment property revaluation 103 -
Operating profit / (loss) (1,789) 2,385
Share of results of associates and joint venture 976 (127)
Net finance costs (6,004) (5,246)
Loss before tax (6,817) (2,988)
Taxation 2,996 (341)
Loss after tax (3,821) (3,329)
Other comprehensive income
Gain / (loss) on property revaluation 3,633 -
Taxation (2,785) -
848 -
Total comprehensive expense (2,973) (3,329)
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 37
(i) higher than expected operating expenses, mostly due to the introduction of a new employee
retention scheme as well as the early recruitment strategy that the Group adopted prior to the
reopening of AX ODYCY which allowed sufficient time for comprehensive training of the new
staff to meet the AX Hotels standards; and
(ii) higher than estimated depreciation charges mainly related to the Group’s new projects.
Meanwhile, the Group’s share of results of associates and joint venture stood at €0.98 million
compared to the estimated share of loss of €0.13 million. The positive variance was principally related
to the better-than-expected performance of VCP which was linked to the strong recovery of the cruise
line industry following the end of the COVID-19 pandemic.
During FY2023, the Group incurred higher net finance costs of €6 million compared to the forecasted
figure of €5.25 million namely in view of higher bank fees and a lower amount of capitalised interest
costs. On the other hand, the income tax credit of just under €3 million was largely the result of the
reported pre-tax loss of €6.82 million.
AX Group ended the 2023 financial year with a much higher cash balance of €10.33 million compared
to the forecasted figure of €2.45 million. Purchase of PPE and acquisition of investment property were
€13.63 million less than estimated, whilst the inventory related to the Verdala Terraces (development
work done) was accounted for within operating cash flows rather than part of cash used in investing
activities as previously included in the forecasts.
Meanwhile, the material variances between the actual and forecast Statement of Financial Position as
at 31 October 2023 were as follows:
AX Group p.l.c.
Statement of Cash Flows
for the financial year 31 October 2023 2023
Actual Forecast
€’000 €’000
Net cash from / (used in) operating activities (12,334) 6,166
Net cash used in investing activities (37,409) (65,770)
Net cash from financing activities 50,494 52,475
Net movement in cash and cash equivalents 751 (7,129)
Cash and cash equivalents at beginning of year 9,579 9,579
Cash and cash equivalents at end of year 10,330 2,450
Capital expenditure:
Purchase of PPE 36,069 46,264
Acquisition of investment property 2,677 6,114
Inventory - Verdala Terraces - 13,391
Free cash flow (51,080) (59,603)
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 38
(1) Within total assets, inventory related to the Verdala Terraces was classified as part of current
assets in view of the availability of the property placed on the market. Furthermore, besides
the higher cash balances, the Group also ended the 2023 financial year with circa €18 million
in trade and other assets compared to the estimated figure of €12.34 million.
(2) Total liabilities amounted to €230.49 million as at 31 October 2023 compared to the forecasted
figure of €223.06 million. Although the Group’s total indebtedness amounting to €169.14
million was in line with the estimated figure of €169.65 million, trade and other payables
exceeded forecasts by a net amount of €7.33 million.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 39
AX Group p.l.c.
Statement of Financial Position
as at 31 October 2023 2023
Actual Forecast
€’000 €’000
ASSETS
Non-current assets
Property, plant & equipment 324,000 327,157
Investment property 61,703 61,625
Inventories - 48,617
Investments in associates, joint venture, & other non-current assets 10,064 10,382
Right-of-use assets 394 -
396,161 447,781 (1)
Current assets
Inventories 49,102 3,674
Trade & other current assets 18,108 12,335
Cash at bank and in hand 10,657 2,450
77,867 18,459 (1)
Total assets 474,028 466,240
EQUITY
Share capital 1,165 1,165
Reserves 210,401 209,429
Retained earnings 19,236 19,548
Non-controlling interest 12,739 13,040
243,541 243,182
LIABILITIES
Non-current liabilities
Debt securities 45,629 84,615
Bank borrowings 68,988 77,523
Trade & other payables 11,517 12,384
Deferred tax liabilities 20,360 19,745
Lease liabilities 372 -
146,866 194,267
Current liabilities
Debt securities 42,693 1,303
Bank borrowings 11,431 6,208
Trade & other payables 29,475 21,280
Lease Liabilities 22 -
83,621 28,791
Total liabilities 230,487 223,058 (2)
Total equity and liabilities 474,028 466,240
Total debt 169,135 169,649
Net debt 158,478 167,199
Invested capital (total equity plus net debt) 402,019 410,381
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 40
PART 3 – COMPARATIVE ANALYSIS
The table below provides a comparison between the Group and its bonds with other debt issuers listed
on the Malta Stock Exchange and their respective debt securities. Although there are significant
variances between the activities of the Group and other issuers (including different industries, principal
markets, competition, capital requirements etc.), and material differences between the risks
associated with the Group’s business and that of other issuers, the comparative analysis serves as an
indication of the financial strength and creditworthiness of the Group.
Comparative Analysis*
Amount
Issued
Yield-to-
Maturity /
Worst
Interest
Cover
Net Debt-to-
EBITDA
Net Gearing
Debt-to-
Assets
(€’000) (%) (times) (times) (%) (times)
5.00% Hal Mann Vella Group p.l.c. Secured 2024 30,000 3.09 2.21 9.47 51.49 0.43
5.10% 1923 Investments p.l.c. Unsecured 2024 36,000 6.59 4.81 2.94 47.79 0.40
4.25% Best Deal Properties Holding p.l.c. Secured & Guaranteed 2024 6,106 2.65 13.29 4.71 63.61 0.65
5.75% International Hotel Investments p.l.c. Unsecured 2025 45,000 5.74 1.87 11.42 41.92 0.40
5.10% 6PM Holdings p.l.c. Unsecured 2025** 13,000 6.74 16.04 0.65 17.79 0.20
4.50% Hili Properties p.l.c. Unsecured & Guaranteed 2025 37,000 4.48 1.80 12.53 45.87 0.46
4.35% Hudson Malta p.l.c. Unsecured & Guaranteed 2026 12,000 4.67 6.11 4.89 71.67 0.57
4.25% CPHCL Finance p.l.c. Unsecured & Guaranteed 2026 40,000 4.17 1.66 12.42 42.45 0.40
4.00% International Hotel Investments p.l.c. Secured 2026 55,000 4.46 1.87 11.42 41.92 0.40
5.00% Dizz Finance p.l.c. Unsecured & Guaranteed 2026 8,000 4.99 1.91 10.70 79.93 0.59
3.75% Premier Capital p.l.c. Unsecured 2026 65,000 4.16 11.25 2.09 61.67 0.56
4.00% International Hotel Investments p.l.c. Unsecured 2026 60,000 4.40 1.87 11.42 41.92 0.40
3.25% AX Group p.l.c. Unsecured 2026 15,000 3.64 1.24 21.28 39.42 0.36
3.90% Gap Group p.l.c. Secured & Guaranteed 2024-2026 20,700 3.89 33.21 4.85 56.20 0.69
4.00% Hili Finance Company p.l.c. Unsecured & Guaranteed 2027 50,000 4.02 4.64 4.84 69.79 0.63
4.35% SD Finance p.l.c. Unsecured & Guaranteed 2027 65,000 3.99 4.68 1.74 22.08 0.26
4.00% Eden Finance p.l.c. Unsecured & Guaranteed 2027 40,000 4.54 4.24 5.37 25.33 0.23
5.25% Mediterranean Investments Holding p.l.c. Unsecured & Guaranteed 2027 30,000 4.59 3.79 3.30 22.75 0.21
4.00% Stivala Group Finance p.l.c. Secured & Guaranteed 2027 45,000 3.99 5.61 4.81 28.97 0.26
4.75% Best Deal Properties Holding p.l.c. Secured & Guaranteed 2025-2027 15,000 4.74 13.29 4.71 63.61 0.65
4.75% Gap Group p.l.c. Secured & Guaranteed 2025-2027 23,000 4.74 33.21 4.85 56.20 0.69
3.85% Hili Finance Company p.l.c. Unsecured & Guaranteed 2028 40,000 3.85 4.64 4.84 69.79 0.63
5.85% Mediterranean Investments Holding p.l.c. Unsecured & Guaranteed 2028 20,000 5.18 3.79 3.30 22.75 0.21
5.75% PLAN Group p.l.c. Secured & Guaranteed 2028 12,000 4.54 6.50 12.28 56.64 0.55
3.65% Stivala Group Finance p.l.c. Secured & Guaranteed 2029 15,000 3.77 5.61 4.81 28.97 0.26
3.80% Hili Finance Company p.l.c. Unsecured & Guaranteed 2029 80,000 4.66 4.64 4.84 69.79 0.63
3.75% AX Group p.l.c. Unsecured 2029 10,000 3.75 1.24 21.28 39.42 0.36
6.25% GPH Malta Finance p.l.c. Unsecured & Guaranteed 2030 18,144 5.54 1.73 7.63 93.89 0.75
3.65% International Hotel Investments p.l.c. Unsecured 2031 80,000 4.93 1.87 11.42 41.92 0.40
3.50% AX Real Estate p.l.c. Unsecured 2032 40,000 5.08 2.04 12.44 49.30 0.45
5.00% Mariner Finance p.l.c. Unsecured 2032 36,930 4.57 4.72 5.95 49.91 0.49
5.85% AX Group p.l.c. Unsecured 2033 40,000 5.30 1.24 21.28 39.42 0.36
6.00% International Hotel Investments p.l.c. Unsecured 2033 60,000 5.32 1.87 11.42 41.92 0.40
4.50% The Ona p.l.c. Secured & Guaranteed 2028-2034 16,000 4.57 44.17 9.76 64.11 0.59
5.50% Juel Group p.l.c. Secured & Guaranteed 2035 32,000 5.14 3.35 11.26 55.24 0.51
*As at 15 April 2024
** The financial ratios pertain to Idox p.l.c..
Most recent audited annual financial statements except for PLAN Group p.l.c. (FY2023 - forecast) and Juel Group p.l.c. (FY2024 – forecast).
M.Z. Investment Services Limited
Sources: Malta Stock Exchange
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 41
The closing market price as at 15 April 2024 for the 3.25% AX Group p.l.c. unsecured bonds 2026
(AX26A) was 99.00%. This translated into a yield-to-maturity (“YTM”) of 3.64% which was 121 basis
points below the average YTM of 4.86% of other local corporate bonds maturing in the same year. The
premium over the corresponding average Malta Government Stock yield of equivalent maturity stood
at 52 basis points.
The closing market price as at 15 April 2024 for the 3.75% AX Group plc unsecured bonds 2029 (AX29A)
was 100.00%. This translated into a yield-to-maturity (“YTM”) of 3.75% which was 72 basis points
below the average YTM of 4.47% of other local corporate bonds maturing in the same year. The
premium over the corresponding average Malta Government Stock yield of equivalent maturity stood
at 55 basis points.
The closing market price as at 15 April 2024 for the 5.85% AX Group plc unsecured bonds 2033 (AX33A)
was 104.02%. This translated into a yield-to-maturity (“YTM”) of 5.30% which was 19 basis points
above the average YTM of 5.10% of other local corporate bonds maturing in the same year. The
premium over the corresponding average Malta Government Stock yield of equivalent maturity stood
at 194 basis points.
3.64%
3.75%
5.30%
2023.5 2024.5 2025.5 2026.5 2027.5 2028.5 2029.5 2030.5 2031.5 2032.5 2033.5 2034.5 2035.5
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Yield (%)
Yield (%)
Average MGS Yield Average Corporate Bond Yield AX Group plc
Yield Curves
Malta Government Stocks & Corporate Bonds
AX26A
AX29A
AX33A
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 42
PART 4 – EXPLANATORY DEFINITIONS
Income Statement
Revenue Total income generated from business activities.
EBITDA
Earnings before interest, tax, depreciation, and amortisation. It is a metric used for
gauging operating performance excluding the impact of capital structure. EBITDA is
usually interpreted as a loose proxy for operating cash flows.
Adjusted operating profit / (loss) Profit (or loss) from core operations, excluding movements in the fair value of
investment property, share of results of associates and joint ventures, net finance
costs, and taxation.
Operating profit / (loss) Profit (or loss) from operating activities, including movements in the fair value of
investment property but excluding the share of results of associates and joint
ventures, net finance costs, and taxation.
Share of results of associates and
joint ventures
Share of profit (or loss) from entities in which the company does not have a majority
shareholding.
Profit / (loss) after tax Net profit (or loss) registered from all business activities.
Profitability Ratios
EBITDA margin EBITDA as a percentage of revenue.
Operating profit margin Operating profit (or loss) as a percentage of total revenue.
Net profit margin Profit (or loss) after tax as a percentage of total revenue.
Return on equity Measures the rate of return on net assets and is computed by dividing the net profit
(or loss) for the year by average equity.
Return on assets
Measures the rate of return on assets and is computed by dividing the net profit (or
loss) for the year by average assets.
Return on invested capital
Measures the rate of return from operations and is computed by dividing operating
profit (or loss) for the year by the average amount of equity and net debt.
Statement of Cash Flows
Net cash from / (used in)
operating activities
The amount of cash generated (or consumed) from the normal conduct of business.
Net cash from / (used in)
investing activities
The amount of cash generated (or consumed) from activities related to the
acquisition, disposal, and/or development of long-term assets and other investments.
Net cash from / (used in)
financing activities
The amount of cash generated (or consumed) that have an impact on the capital
structure, and thus result in changes to share capital and borrowings.
Free cash flow Represents the amount of cash generated (or consumed) from operating activities
after considering any amounts of capital expenditure.
AX GROUP P.L.C. – FINANCIAL ANALYSIS SUMMARY | 43
Statement of Financial Position
Non-current assets These represent long-term investments which full value will not be realised within the
next twelve months. Such assets, which typically include property, plant, equipment,
and investment property, are capitalised rather than expensed, meaning that the
amortisation of the cost of the asset takes place over the number of years for which
the asset will be in use. This is done instead of allocating the entire cost to the
accounting year in which the asset was acquired.
Current assets All assets which could be realisable within a twelve-month period from the date of
the Statement of Financial Position. Such amounts may include development stock,
accounts receivable, cash and bank balances.
Non-current liabilities These represent long-term financial obligations which are not due within the next
twelve months, and typically include long-term borrowings and debt securities.
Current liabilities Liabilities which fall due within the next twelve months from the date of the
Statement of Financial Position, and typically include accounts payable and short-
term debt.
Total equity
Represents the residual value of the business (assets minus liabilities) and typically
includes the share capital, reserves, as well as retained earnings.
Financial Strength / Credit Ratios
Interest cover Measures the extent of how many times a company can sustain its net finance costs
from EBITDA.
Net debt-to-EBITDA
Measures how many years it will take a company to pay off its net interest-bearing
liabilities (including lease liabilities) from EBITDA, assuming that net debt and EBITDA
are held constant.
Net debt-to-equity Shows the proportion of net debt (including lease liabilities) to the amount of equity.
Net gearing
Shows the proportion of equity and net debt used to finance a company’s business
and is calculated by dividing net debt by the level of invested capital.
Debt-to-assets Shows the degree to which a company’s assets are funded by debt and is calculated
by dividing all interest-bearing liabilities (including lease liabilities) by total assets.
Leverage Shows how many times a company is using its equity to finance its assets.
Current ratio
Measures the extent of how much a company can sustain its short-term liabilities
from its short-term assets.
