AX Group Chairman Angelo Xuereb has hailed “another successful year” for the company, as it released its financial results for 2021 on Wednesday.
The group, which operates across a number of sectors, but whose main business is its hotels division, continued to be hit by the pandemic, focused its energies on its development sector.
Highlights of the year included its receipt of a full development permit to demolish and redevelop the Verdala Hotel site in Rabat, and separately another permit to extend its Suncrest hotel by adding four floors to the existing building.
Another highlight for the group was the submitting of plans for the redevelopment of the hotel lido, and for the redevelopment of the Sunny Coast hotel, with an outline development permit for the latter having already been approved.
In his comments accompanying the report, Mr Xuereb explained that the group decided to embark on its Suncrest extension, despite the economic difficulties imposed on the hospitality industry due to COVID, as it believes that once people begin to adapt to COVID and the new way of life it brings, they will resume travelling.
He also pointed to the prediction by the World Health Organisation (WHO), that travel would return to pre-pandemic levels by 2023.
“It was for these reasons that we decided to build the hotel extension now, when demand is weak and our plan is to complete the project by early 2023, just in time for the peak season. The works are moving along at a fast pace in line with the program of works that will ensure completion by this deadline,” he explained.
In order to meet the demands of its new projects, the workforce in AX Group’s development and construction divisions has “almost doubled,” and is expected to continue to increase as is required to manage the projects.
In AX Group’s healthcare division, the safety and wellbeing of residents “remained the prime focus,” according to the CEO.
In construction, it started work on two restoration projects, the Jesuits Church in Valletta and the annexe to St John’s Co-cathedral.
It is also working on the restoration of our new property in Merchants Street, Palazzo Castelletti which it is converting into a high-end office.
On the corporate side, the group carried out a “fundamental restructuring,” which saw it create an intermediate holding company AX Real Estate plc, under which it moved many key property-owning subsidiaries.
Mr Xuereb thanked the group’s management team, who worked “so hard” to achieve the challenging results it did, including his daughters Claire and Denise, who “continue to lead and take on increasing responsibilities and who are so active in furthering the growth that AX Group is experiencing."
“I look forward to the next years which will undoubtedly be very busy for AX Group. I am confident and optimistic that we are heading in the right direction,” he concluded.
CEO comments
Similarly, in his comments accompanying the report, CEO Michael Warrington praised the executive management team at the group, which has proved, “time and again,” that it has the “means, know-how, resources, energy, and understanding to drive a diversified corporation onward even in the most challenging of circumstances.”
The past year, Mr Warrington reflected, has also seen AX Group make good on its commitment to investing in its green footprint. This included the installation of a PV system on the roof of its Business Centre and on all the roofs at Hilltop Gardens.
“These initiatives have led the group to explore other exciting and highly innovative investments in renewable energy,” he added.
His comprehensive comments also addressed the performance of AX Hotels, which was impacted by travel restrictions imposed locally and internationally, but which, from June, improved markedly, with revenues between July and October reportedly “comparable,” to those achieved before the pandemic hit in 2019.
When the pandemic peaked again in mid-December 2021, AX hotels again experienced a slowdown in demand but by mid-January 2022 as optimism returned, Mr Warrington said it saw business start to pick up again.
On the staffing shortage plaguing the hospitality industry, Mr Warrington explained that AX Hotels has been forced to call on staff from all levels of the group to on occasion “lend a hand” in certain areas, in order to maintain a satisfactory guest experience for clients.
Providing his outlook on the sector for 2022, he predicted the year to show considerable growth compared to 2021 and predicted that by 2023, travel to Malta will have returned to 2019 levels.
“With the completion of the Suncrest hotel in Q2 of 2023, the Group is looking to maximise on that year’s tourist high season, he said, adding: “Even in terms of employment, the Group will continue to grow significantly, surpassing 1,000 employees in the next year and reaching around 1,400 by 2023.”
Financial performance
AX Group's Verdala Hotel and Terraces Project
In terms of financial performance during the quarter, AX Group reported a combined revenue and operating income of €35,805,634, leading to an operating profit of €4,830,093.
This revenue was an increase of €6,702,193 over the previous year, which was mainly attributable to the sale of units at the Targa Gap complex and Falcon House, as well as an increase in rental income.
After tax, this led to a profit of €1,928,278, which is a dramatic improvement from the €7,889,730 loss recorded during 2020.
As aforementioned, the group’s construction division was not materially affected by the pandemic and continued to operate with little disruption.
However, during the first quarter of the financial year, a number of third-party construction projects were delayed and commenced later than originally planned.
AX Group’s investment in Valletta Cruise Port plc remained heavily impacted by the pandemic. Following the restrictions imposed on 5th March 2021, the retail outlets, bars and restaurants at the Valletta Waterfront were closed in accordance with the restrictions imposed by the Health Authorities.
However, following the gradual easing of restrictions, business picked up in the summer months and operating profitability more than doubled in 2021 compared to 2020.
The company also emphasised the strength of its diversified business model, saying that it means that if a particular market suffers a setback, the other business divisions may help compensate for that loss.
Main Image:
