Issue link: https://maltatoday.uberflip.com/i/1324024
6 maltatoday | SUNDAY • 3 JANUARY 2021 NEWS NICOLE MEILAK NO explanation may be re- quired as to why the hospitality industry suffered in the COV- ID-19 pandemic. But a glimpse into the latest annual figures of SD Finance, which comprises the DB Group hotels as well as its other arms, shows how the coronavirus pandemic did not mean signal business losses all around. The hotels group's Sea- bank and San Antonio hotels in 2020 registered a turnover of just 20% the previous year's fig- ures for the April-to-Septem- ber period, with gross operat- ing profits standing at 10% and 8% of previous years respec- tively. This was expected given the drop in tourists following the COVID-19 lockdown in March. However, SD Finance's lei- sure operations took a soft- er blow. The group's Star- bucks outlets remained open throughout the year, and their turnover actually increased by 25% during the first six months of 2020, compared to last year. It appears that with bars and restaurants shuttered by the first wave's lockdown, walk-in coffee shops provided a well-needed pick-me-up for those drudging through lock- down at home or work. On top of this, a fourth Star- bucks outlet was opened in Bugibba, and the phenome- nal rise in food delivery servic- es during the pandemic meant anyone could get a Starbucks drink delivered straight to their home. SD Finance's healthcare arm was crucial in providing a financial lifeline. Tasked with providing care worker services at Mater Dei Hospital and St Vincent de Paul Residence, the pandemic naturally caused an upswing in demand for these services. The opening of a 504- bed wing at St Vincent de Paul Residence – which the compa- ny part-financed together with James Caterers – will likely continue to cushion the detri- mental impact of the virus on the group's other finances. Between decreased hotel de- mand, increased healthcare provisions, and fairly buoy- ant leisure operations, the full impact of COVID-19 on the group was somewhat mitigat- ed. Yet this wasn't enough to generate an overall profit – SD Finance projected an after-tax loss of €7.9 million in their in- terim financial statements, a far cry from their €12.2 million after-tax profit in the previous year. SD Finance isn't the only ho- tel company suffering profit woes. International Hotel In- vestments plc, with Corinthia hotels all over Europe in their portfolio, registered a loss of €30.1 million, despite salary cuts and a scaling down in op- erations. The same goes for the hotel and ancillary operations of Tu- mas Group, whose projected earnings before interest and tax (EBITDA) stand at €65,000 for their hotel and ancillary op- erations alone. Entertainment and retail were not fully spared by the pan- demic. Despite over a month- long shutdown between March 23 and May 3, Tigné Mall closed off the first six months of the year with a profit af- ter tax of €197,712, but this is still an 83% decrease from last year. And despite an ar- ray of hotel and entertainment projects in their portfolio, Eden Leisure Group have been projecting a €4,396 loss by end of year. While the arrival of the COV- ID-19 vaccine sparks renewed hope in the Maltese economy, 2021 will be all about survival. A second round of vouchers will give an added consump- tion boost, but another sum- mer of low tourist arrivals could spell disaster for the lei- sure industry – most especially for those companies that rely primarily on the leisure indus- try for turnover. Lockdown shifted profits to healthcare and leisure MATTHEW VELLA AN Italian subsidiary of the Melite retail group has entered into voluntary admin- istration in a bid to restructure debts in- curred after the COVID-19 lockdown in Italy hit hard its 26 retail fashion stores. Melite Italia is the sub-lessee of 21 out of 26 stores owned by Melite Properties Srl. Melite Properties is now seeking new tenants for its stores, a process that is dampened by the imposition of a second lockdown in Italy. "Management's expectation is that, until such time as the outcome of the Christmas period and the rate of distri- bution of approved COVID-19 vaccines become clear, it is unlikely that Melite Properties will be successful in sub-leas- ing further stores at the frequency that had been previously anticipated by man- agement." A spike in COVID-19 cases across Italy forced the Italian government to intro- duce a series of restrictive measures as from early November. "Retail activity was intermittent across most regions of Italy, particularly in the regions in which Melite Properties' tenants operate," the group's finance vehicle Melite Finance reported. The Melite group reported €3.5 mil- lion in losses in the first six months of 2020, as its Accessorize, Monsoon and CKU retail outlets were forced shut by the COVID-19 pandemic in Italy. Even more worrying, its capital and reserves have dwindled from €6 million to a mere €2.2 million. The company secured €449,000 from the Malta Development Bank's Covid Guarantee Scheme to meet its interest payments for its €9.25 million bonds. The Melite shareholders will extend a €1.1 million loan to the company, but it had yet to achieve bondholders' ap- proval to accept lower returns on their investment. The shareholders – arguably among Malta's most powerful businesses groups with Alf. Mizzi, Marina Milling, and the Ganado family – have not pro- posed increasing their share capital. In 2019, the group issued a €9.25 mil- lion bond to finance a restructuring of the group, whose principal activity is the acquisition and sub-leasing of prop- erty rights for Italian retail outlets. The group wants bondholders to reduce the bond interest rate from 4.85% to 3.5% as from November 2021. Besides the forced closure of stores, the Italian government-imposed cur- fews at night and restricted movement during the day and across towns and regions. Within areas designated as red zones, individuals were and still are only permitted to leave the confines of their homes in very limited circumstances, such as for essentials, health or emer- gency reasons, with catering establish- ments and non-essential shops, includ- ing retail outlets, being forced shut. Malta franchisers place Italy company in voluntary administration SD Finance's leisure operations took a softer blow than its hotels: the group's Starbucks outlets remained open throughout the year, and their turnover actually increased by 25% during the first six months of 2020 Melite Italia is the sub-lessee of 21 out of 26 stores owned by Melite Properties Srl. Melite Properties is now seeking new tenants for its stores, a process that is dampened by the imposition of a second lockdown in Italy