AX Group Chairman dubs 2023 ‘one of the most challenging, yet rewarding’ years of his career

AX Group Chairman Angelo Xuereb has described 2023 as one of the “most challenging, yet profoundly rewarding” years of his career, characterised by major development projects such as AX ODYCY in Qawra and Verdala Terraces in Rabat.

His comments came in AX Group’s Annual Report for the financial year ended 31st October 2023 (FY 2023), where the group recorded a pre-tax loss of €6.8 million, a downturn in performance when compared to the €1.3 million pre-tax loss in the corresponding period in 2022.

This came despite a significant rise in revenue during FY 2023, going up by 30.3 per cent from the previous year to €49.9 million. This was driven by the hospitality division, which saw revenues increase by €13.7 million, fuelled by improved momentum in tourism over recent months. Additionally, AX ODYCY hotel spent most of the year closed, having had a soft opening in May 2023.

The healthcare division also had a 10.9 per cent rise in revenue, with independent apartments at Hilltop Gardens, a retirement village in Naxxar, being fully occupied throughout the year. The construction division made significant progress on AX ODYCY and Verdala Terraces, and also managed to generate €4.1 million in revenue from third-party works.

Operating costs for the year experienced a 13.5 per cent rise when compared to FY 2022, going up to €17 million. Staff costs also surged upwards, going up by a staggering 59 per cent in FY 2023, partly attributable to the hiring of numerous staff members months ahead of the opening of the AX ODYCY.

As at the end of FY 2023, AX Group’s total assets stood at €474 million, an expansion of 12.1 per cent from the previous year. The Board of Directors did not recommend the payment of a final dividend.

“2023 was one of the most challenging yet profoundly rewarding years of my career,” Mr Xuereb said while commenting on the performance, stating that AX ODYCY and Verdala Terraces stand out as the most important achievements.

“The momentum that started in 2022 with two major group projects underway picked up in the early part of 2023 as we were determined to meet our goal of opening the AX ODYCY hotel in time for the Small Nations Games, for which the hotel was contracted to accommodate the athletes, organisers, and dignitaries,” he said.

He remarked that the construction and development teams, along with many contractors and their employees, “worked tirelessly to achieve this goal.” Mr Xuereb commended his daughter Denise Xuereb, AX Group Director of Construction and Development, for leading this “challenging task,” noting that it gives him “great confidence to see the commitment, energy, and dedication she invested into managing this project from start to finish.”

Mr Xuereb was also full of praise for AX ODYCY’s management team, led by his other daughter AX Group Director of Hospitality and Care Claire Zammit Xuereb and Qawra properties General Manager Joseph Vella, who had to recruit close to 400 new employees. He said that he is proud of Ms Zammit Xuereb for also managing all of the other AX Hotels as well as Hilltop Gardens and Simblija Care Home during this time.

“The new ODYCY hotel has, as we envision, set high standards in the local hospitality market. The years of detailed planning, building on four decades of hospitality experience and know-how, are evident in the final product. It is no wonder that the hotel has achieved such high occupancy during the year, with significant rate growth and ratings on key online channels being among the best on the islands,” he affirmed.

Mr Xuereb said that AX Group is confident that in FY 2024, it will be in a “much improved financial position” with the AX ODYCY hotel being fully operational and the sale of a number of residential units in the Verdala Terraces set to be signed during the year. “There is no doubt in my mind that next year will be another busy and eventful year for the group,” he continued.

He stated that the group now employs almost 1,200 people, with this set to increase in the coming months as it prepares for the launch of the Verdala Hotel in 2024. Mr Xuereb also expressed confidence in AX Group’s executive management, led by CEO Michael Warrington.

Concluding, Mr Xuereb thanked AX Group’s shareholders and bondholders who continued to support the group in its mission. “We will continue to strive to deliver superior returns to our shareholders in the long term and for AX Group to be one of the leading businesses in the Maltese Islands,” he affirmed.

On his part, Mr Warrington said that FY 2023 commenced with AX Group being “fully aware” that the opening of AX ODYCY was a key priority as it is the “single main revenue generator of the group.” He added that the opening of a hotel, especially on the scale of this one, “requires detailed planning and coordination,” and he is pleased that it opened according to the planned timeline.

Mr Warrington also noted that the Verdala Terraces and Verdala Hotel projects were also progressing steadily.

“As one can expect in a period of high investment such as FY 2023, the group registered a loss before taxation of €6.8 million,” he affirmed. Despite the loss, he said that AX Group’s finances “remain strong,” especially since investment has been sustained through successful equity and bond issues, as well as additional bank financing.

Mr Warrington said that the appointments of Nicky Camilleri as Chief Operating Officer (COO) and Marthese Vella as Chief Technology Officer (CTO) have strengthened the executive management team at a time when AX Group felt it “needed to enhance oversight” on its operations and also “drive change through technology.”

Mr Warrington concluded by expressing gratitude to AX Group’s management and employees for 2023’s achievements, adding that their loyalty and commitment is “truly rewarding.” “Needless to say, I thank the Xuereb family; their inspiration and hands-on management are integral to he success of the group,” he continued. He also thanked the Board of Directors of the whole group, as well as the investors for their support.