AX REAL ESTATE P.L.C.(formerly AX REAL ESTATE LIMITED)
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2022
The Directors present their annual report and the audited financial statements of AX Real Estate p.l.c. (formerly AX REAL ESTATE LIMITED) (“the Company”) and its subsidiaries (collectively, “the Group” or “the Estates Group”) for the year-ended 31 October 2022.
Principal activities
The Company acts as the holding company of the Estates Group within the AX Group p.l.c. group of companies (“the AX Group”). The Estates Group is involved in the letting of a diverse portfolio of real estate to subsidiary companies of AX Group p.l.c. and third parties.
Performance review
Company
During 2021, the AX Group went through a reorganisation exercise, with the ultimate aim of consolidating the main property letting activities of the AX Group into one newly formed division under AX Real Estate p.l.c. (formerly AX REAL ESTATE LIMITED) and thus forming the Estates Group.
The Board resolved to approve the change in status of the Company from a Private Limited Liability Company to a Public Limited Liability Company also during 2021. As a result, the Company’s name was changed from AX Real Estate Limited to AX Real Estate p.l.c. with effect from 23 November 2021.
On 23 November 2021, the issued share capital of AX Real Estate p.l.c. was increased by EUR12,450,000 though a bonus issue of 99,600,000 ordinary ‘A’ shares of a nominal value of EUR0.125 each in favour of the-then Existing Shareholders, by virtue of the capitalisation of retained earnings. On 30 November 2021, the Company issued 150,000,000 ordinary ‘B’ shares of a nominal value of EUR0.125 each and EUR0.2084 per share in share premium in favour of AX Group p.l.c. by virtue of the capitalisation of a loan due to AX Group p.l.c. amounting to EUR50,000,000.
In January 2022, the Company obtained a sanction letter from a local credit institution for a Loan Facility amounting to EUR15,000,000 which has been provided to enable the Group to further support its initial costs related to the extension of the Suncrest Hotel in Qawra and for the redevelopment of the Verdala Hotel site in Rabat. The Loan Facility is repayable in full within 2 years from the date of the first drawdown.
In February 2022, the Company was listed on the Malta Stock Exchange, with 25% of the ordinary ‘A’ shares being taken up by the general public. Through this transaction, the Company raised EUR13,648,644. In conjunction with the share issue, the Company also issued EUR40,000,000 unsecured bonds redeemable in 2032. The general public subscribed to EUR18,354,600 bonds whilst the remaining EUR21,645,400 bonds were allocated to AX Group p.l.c. through the part conversion of the existing intra-group loan with the Company. These bonds are unsecured and subject to the terms and conditions in the prospectus dated 6 December 2021.
The Company received dividends of EUR10.8 million (2021: EUR17 million) from its subsidiaries and recognised an increase in the fair value of its investment property, the warehouses at Hardrocks Business Park and the Falcon House offices, of EUR1,033,961 (2021: EUR3,824,451). The Company’s profit before tax amounted to EUR10,411,386 (2021: EUR20,974,082).
Group
The Group was formed in October 2021 following the reorganisation mentioned above. As a result, the performance of the Group in 2021 represented the results of the Company for the year and that of the subsidiaries as from the acquisition dates of when the Company acquired control of the subsidiaries (Note 4). On completion of the reorganisation, the Group entered into long-term lease agreements of 20 years with the respective operating companies of the AX Group responsible for the operation of the relevant properties.
The financial year ended 31 October 2022 represents the first full year results of the Group since it was formed. The Group generated EUR8,909,902 in revenue which consists of EUR8,155,774 in rental income from the lease of the Group’s investment properties and EUR754,128 in sales of property, representing the sale of the remaining apartments at Targa Gap Complex in Mosta. The new office development at Falcon House in Sliema as well as the remaining offices at AX Business Centre in Mosta were fully taken up by third parties during the year.