AX REAL ESTATE P.L.C.Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2023
Directors’ Report – continued
Performance review – continued
Upon the opening of the AX ODYCY hotel and lido, the Group commenced receiving rental income from the AX Group in accordance with the lease agreement. This explains the significant increase in rental income over the prior year.
During 2023, the Group was focused on finishing the AX ODYCY hotel extension and its lido redevelopment as well as the development of the Verdala project in Rabat. Construction of the Verdala hotel is progressing steadily and it is expected that the hotel will open by end of 2024.
In January 2023, Suncrest Hotels p.l.c., a subsidiary of the Company, obtained a sanction letter from a local financial institution for a loan facility amounting to EUR30,500,000 which has been provided to enable the Group to further support its costs related to the extension of the AX ODYCY hotel. This loan facility is repayable over 15 years from the date of the first drawdown, inclusive of a 12-month moratorium period.
Other operating costs for the year amounted to EUR994,070 (2022: EUR1,191,066). The prior year balance included a sum of EUR472,659 representing the cost of property sold. Staff costs, inclusive of directors’ remuneration, stood at EUR286,131 (2022: EUR286,239).
The Group recognised a decrease in the fair value of its investment properties of EUR1,817,549 (2022: increase in the fair value of EUR2,787,449).
During 2023, the Group registered an operating profit of EUR8,779,199 (2022: EUR10,335,715).
Finance costs totalled EUR5,219,009 (2022: EUR3,288,902), encompassing interest on debt securities in issue, bank borrowings, and interest payable on loans from related parties. The escalation in finance costs is attributed to the inclusion of the first full year of interest on the issued bond and interest on the new bank loan mentioned above.
Profit before tax in 2023 amounted to EUR4,578,298 (2022: EUR7,061,725).
As at year-end, the Group’s net assets stood at EUR135,585,611 (2022: EUR142,032,510). The Group’s balance sheet remains sound with a gearing ratio of 50.6% (2022: 43.6%).
As at date of reporting, all properties owned by the Group are fully taken up and leased for periods between 6 months to 20 years. In addition, the positive recovery experienced in the tourism industry augurs well for the Group in achieving the budgeted rental income from its hotels in the forthcoming year. Despite the positive trajectory projected, Directors and management are cautiously monitoring the situation to ensure a sustainable growth as well as a healthy performance.
Financial key performance Indicators
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*The Group measures Adjusted Earnings before Interest, Tax, Depreciation and Amortisation (“Adjusted EBITDA”) and reconciles to the operating profit after adjusting for gain/(loss) on revaluation of investment properties. This key performance indicator is not defined by International Financial Reporting Standards but can be directly calculated with reference to the Statement of Profit or Loss.
