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3 NEWS 21.9.2023 db Group registers after-tax profit of €12.4 million in FY2023 FROM PAGE 1 e Group also operates several out- lets via franchise agreements with Hard Rock Café and Starbucks. In FY2023, the Group rolled out six new Starbucks outlets, bringing the total to 14 outlets. e average number of persons em- ployed by the Group during FY2023 stood at 931 (FY2022: 660). e full head count including subsidiaries and asso- ciated companies amounted to 5,782 employees as at the end of March 2023. is includes the operations of MHC which had a staff complement of 3,482 employees within its healthcare division as at the end of March 2023 (31 March 2022: 3,143 employees), comprising 455 professional nurses, 394 staff members providing domiciliary care for the elder- ly, and 2,633 care assistants. Since the end of FY2023 to date, the Group opened Espiral Restaurant in Mellieha, which features a variety of traditional Spanish dishes; Tora, a con- temporary oriental style restaurant in Sliema; and Manta, a lido situated in Tigne, Sliema. e Group also com- menced operations of a catering outlet – Verani – situated in the Departures Hall of the Malta International Airport. Revenues increased in FY2023 to €70.80 million (+75.42%) reflecting the strong underlying dynamics of the post- COVID-19 pandemic recovery. Hotel occupancy increased to 85% (FY2022: 54%) which was higher than the pre COVID-19 level of 81% recorded in FY2020. Moreover, the Group's food and beverage division recorded robust growth partly on the back of the open- ing of two new restaurants (LOA and Sonora) in St. Paul's Bay and six addi- tional Starbucks outlets to a total of 14 across Malta. EBITDA grew at a slower pace than revenues and reached €24.75 million. As a result, the EBITDA margin contracted to 34.96% in view of the negative impact of high inflation, an increase in payroll costs and other operational and admin- istrative expenses in anticipation of the planned growth in the Group's opera- tional activities both locally and abroad, and a lower amount of COVID-19 Wage Supplement when compared to the pri- or year (FY2023: €0.95 million, FY2022: €4.74 million). Net finance costs increased by 21.82% to €5.29 million, but the interest cover still improved, albeit marginally, to 4.68 times. Meanwhile, the higher level of depreciation and amortisation charges (+6.17% to €9.56 million) was offset by the superior performance of the Group's associates which in FY2023 contributed €5.65 million to the Group's profitability. Overall, SD Holdings reported a net profit of €12.37 million (+17.13%) which resulted into improved returns on equi- ty (8.41% compared to 7.72% in FY2022) and assets (3.41% compared to 3.11% in FY2022). e return on invested capi- tal also increased year-on-year to 7.78% despite the contraction in the operating profit margin to 21.46%. For the current financial year ending 31 March 2024, the Group is forecasting a 13.27% increase in revenues to €80.19 million. e estimated growth is driven by the ongoing recovery in tourism, the continued expansion of catering estab- lishments referred to section 3 of this report and 4 additional Starbucks out- lets in Malta. Meanwhile, SD Holdings is also looking at establishing a presence in London through the opening of a new restaurant. FY2024 Total assets in FY2024 are projected to increase by 10.88% (or +€40.93 million) to €417.03 million mainly reflecting the higher levels of PPE (+€21.20 million to €205.55 million), right-of-use assets (+€9.00 million to €24.37 million), in- vestments in associates (+€5.65 million to €24.70 million), and current assets (+€6.49 million to €77.98 million). e notable forecasted increase in PPE is on account of civil works appertaining to the City Centre project and to a less- er extent, fitout works in relation to the Group's new catering and Starbucks out- lets. Total liabilities are estimated to in- crease by 13.54% to €254.25 million mainly on account of an increase in total debt of €29.56 million to €127.11 mil- lion. Long-term bank borrowings are projected to increase by €22.09 million and shall be applied for the purposes of the City Centre project. Lease liabilities are expected to increase by €8.24 million to €24.37 million, reflecting the terms of lease obligations of the Group as lessee. Despite the further strengthening of the Group's equity base to €162.77 mil- lion (+6.97% to €162.77 million), the net debt-to-equity and net gearing ratios are projected to moved higher to 0.43 times and 29.84% respectively. Like- wise, the net debt-to-EBITDA multiple and the debt-to-asset ratio are antici- pated to trend higher to 2.73 times and 0.30 times respectively. From a revenue perspective, the Group exceeded forecasts by 14.23% reflecting the better-than-expected recovery in tourism and leisure activi- ties. On the other hand, net operating costs came in higher than anticipated on account of the increased volume of business as well as the negative impact of high inflation. As a result, EBITDA only exceeded projections by 1.15%. Depreciation and amortisation charg- es were lower than estimated by 9.26% amid a lower level of capital expend- iture pursued throughout the year. Equally positive was the share of results of associates which exceeded forecasts by 25.83% largely in view of the stronger performance of MHC as well as the ef- fect of the Group's increased sharehold- ing in Kore Air Services Limited and Kore Inflight Services Ltd to 40% from 30% as at the end of 31 March 2023. On the other hand, net finance costs exceeded projections by 15.06% on ac- count of the higher level of interest in- curred on floating rate loans in line with movements across international finan- cial markets. Overall, the net profit of €12.37 mil- lion registered by the Group during FY2023 was only 0.10% lower than the forecasted figure of €12.39 million. Principal investment in associate MHC is a joint venture between SD Holdings and James Caterers Limit- ed and is engaged in the provision of healthcare catering services, together with the provision of nursing, medi- cal, and clinical services, through three main subsidiaries: Healthmark Care Services Ltd, Health Services Group Limited, and Support Services Limited. e major sources of income in rela- tion to healthcare services derive from the following key agreements: (i) the provision of nursing and care services under the Active Ageing and Commu- nity Care Directorate; (ii) the provision of care worker services at Mater Dei Hospital and other entities within the Health Department; (iii) the provision of care worker services at St Vincent de Paul Residence ("SVPR") and Homes for the Elderly Community Care; and (iv) the provision of home help servic- es. With respect to catering and ancil- lary operations, MHC serves over 6,000 cook-chill meals a day to in-patients and staff at Gozo General Hospital (since 2013) and SVPR (since 2014). In the historical financial years under review, MHC reported an increase in revenue from €78.75 million in FY2021 to €90.43 million and €103.94 million in FY2022 and FY2023 respectively, most- ly driven by growth recorded by the healthcare division which, in FY2023 represented circa 70% of MHC's total income. Likewise, net profit increased each year and exceeded the €10 million mark in FY2023 (FY2022: €8.73 million), while maintaining a profit margin of almost 10% (FY2023: 9.77%, FY2022: 9.65%). e performance achieved by MHC in FY2023 was better than pre- viously anticipated, with revenues ex- ceeding forecasts by 6.80% and the ac- tual net profit figure at 13.10% above expectations. For FY2024, MHC is expecting a fur- ther increase of 11.33% in revenues to €115.72 million, as it anticipates a high- er level of business across all three oper- ational segments. Net profit is project- ed to amount to €11.21 million which would translate into a margin of 9.69%.

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