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Registration number C 12271
AX GROUP P.L.C.
Annual Report and Consolidated and Separate
Financial Statements
For the year-ended 31 October 2024
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
Contents
Page
Directors, Officers and Other Information
1
Directors’ Report
2 – 24
Statement of Directors’ Responsibilities
25
Corporate Governance – Statement of Compliance
26 – 28
Statements of Profit or Loss and Other Comprehensive Income
29
Statements of Financial Position
30 – 31
Statements of Changes in Equity
32 – 33
Statements of Cash Flows
34
Notes to the Financial Statements
35 – 87
Independent Auditor’s Report
88 – 95
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
1
Directors, Officers and Other Information
Registration:
AX Group p.l.c. was registered in Malta as a public Limited Liability Company under the Companies Act, Cap. 386 of the Laws of Malta on 18 January 1991, with the registration number C 12271.
Directors:
Mr Angelo Xuereb
Ms Denise Xuereb
Ms Claire Zammit Xuereb
Mr Josef Formosa Gauci
Mr Christopher Paris
Mr John Soler
Mr Michael Warrington
Secretary:
Dr Edmond Zammit Laferla
Registered office:
AX Group
AX Business Centre
Triq id-Difiza Civili
Mosta, MST 1741
Malta
Country of incorporation:
Malta
Company registration number:
C 12271
Auditors:
Ernst & Young Malta Limited
Regional Business Centre
Achille Ferris Street
Msida, MSD 1751
Malta
Principal bankers:
Bank of Valletta p.l.c.
Labour Avenue
Naxxar
Malta
Legal adviser:
Dr David Wain
AX Group
AX Business Centre
Triq id-Difiza Civili
Mosta, MST 1741
Malta
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
2
Directors’ Report
The Directors present their annual report and the audited consolidated and separate financial statements (“the financial statements”) of AX Group p.l.c. (“the Company”) and its subsidiaries (collectively “the Group” or “AX Group”) for the year-ended 31 October 2024.
Principal activities
The AX Group is primarily engaged in four main business sectors namely; Care, Construction, Hospitality, Real Estate and Development and is also involved in renewable energy.
Performance review
Company
The Company generated revenues of EUR13,523,836 (2023: EUR31,270,094). This included management fees of EUR2,217,237 (2023: EUR1,646,994), dividends received from subsidiaries of EUR11,171,486 (2023: EUR29,498,155) and rental income of EUR135,113 (2023 EUR124,945). Staff costs incurred amounted to EUR3,870,169 (2023: EUR3,825,546) and operating costs amounted to EUR1,574,254 (2023: EUR2,148,174).
In November 2023, the Company issued a EUR40 million bond with a 5.85% interest rate, to redeem the EUR40 million AX Investments p.l.c. bond which matured on 6 March 2024. The new bond attracted high demand, leading to an early closure of the offer period. The new bonds were admitted to listing on the Official List of the Malta Stock Exchange on 7 November 2023.
Moreover, during 2024, the Company disposed of EUR6,169,000 (2023: EUR3,037,000) of its holding of AX Real Estate p.l.c. debt instruments, incurring a realised loss of EUR595,563 (2023: EUR595,700). The remaining debt instruments held were remeasured at fair value at year end, resulting in an increase in fair value of EUR435,447 (2023: decrease in fair value of EUR637,955).
The Company also sold its shares in AX Investments p.l.c. to another subsidiary during the year, generating a gain on disposal of EUR2,204,063. This share transfer was carried out to facilitate the merger of AX Investments p.l.c. with the other subsidiary.
Operating profit of the Company amounted to EUR9,406,580 (2023: EUR23,124,711).
During the current year, finance costs remained stable at EUR3,716,351 (2023: EUR3,678,631). However, this stability was due to an increase in interest on debt securities following the new bond issued during the year, which offset a decrease in interest on amounts payable to subsidiaries following the redemption of some intra-group loans. Meanwhile, finance income saw an increase of EUR373,036 largely attributable to increases in interest rates on intra-group loans.
The profit for the year amounted to EUR9,642,214 (2023: EUR19,868,672).
Group
During the current year, the Group registered total revenue of EUR83,343,606 (2023: EUR49,865,256). The primary growth was driven by the Hospitality division, with revenues rising by EUR24.8 million when compared to last year. This increase is largely due to the AX ODYCY hotel and lido in Qawra, which re-opened in May 2023. After extensive development and a complete refurbishment, the hotel expanded significantly by adding four storeys, increasing the total number of guest rooms to 599. The project also included the demolition of the old Suncrest lido, excavation down to almost sea level, and the construction of three levels. These levels comprise an underground car park accommodating 80 cars, pools, sundeck areas and restaurant outlets one floor below street level, with additional outlets at street
level. This year marks the first full year of operation for the rebranded hotel. Additionally, the Group's other hotels have also exceeded expectations, outperforming their projected revenue and operating profits.
The Healthcare division registered an increase in revenue of 5.3% compared to the prior year. The independent apartments at Hilltop Gardens were fully occupied throughout the year while occupancy at the Care Home exhibited a steady increase. In addition, revenues from the Revive physiotherapy centre and the food and beverage facilities experienced an improvement when compared to last year.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
3
Directors’ Report – continued
Performance review - continued
Group – continued
The Construction division has more than doubled its revenue from third-party work compared to last year, reaching EUR11.6 million in the current year (2023: EUR4.1 million). The division has successfully secured numerous contracts for the current year and beyond. In contrast, last year, the division was primarily focused on internal projects, mainly the extension of the AX ODYCY hotel and the redevelopment of the lido in Qawra. The Construction division was also heavily involved in the Verdala project during both the current and prior year. The main third-party projects during the current year included construction works at the Malta International Airport, the St John Co-Cathedral Annex, Villa Lugisland in Rabat and restoration works on the St Paul’s Pro-Cathedral in Valletta.
Work on the Verdala project in Rabat is making steady progress. The finishing works on the residential blocks are at an advanced stage, while those on the hotel are progressing steadily. The goal is to have the hotel operational by May 2025. This 5-star wellness hotel is set to establish a new standard in luxury hospitality in Malta.
The Verdala Terraces were officially launched on the market at the end of June 2023, and since then, the number of promise of sale agreements signed has steadily increased, demonstrating continued confidence in the destination and concept. The first deed of sale was signed in November 2024.
In addition to these major projects, the Group completed the redevelopment of Palazzo Lucia in Valletta, converting it into a premium office space. A tenant was also secured during the year.
The Group also resolved a long-standing dispute with the Commissioner of Lands concerning claims of alleged illegal occupation of land encompassing parts of the AX ODYCY and AX Sunny Coast lidos. Following a period of negotiations, a resolution was reached in May 2024 through a lease agreement. This agreement grants the Group temporary emphyteusis on the land for a 65-year term, coupled with a settlement arrangement for prior usage.
The Group reported a share of results from associates and joint ventures of EUR2,104,953 (2023: EUR975,602). The increase can be attributed largely to the improved operations of Hardrocks Estates Limited and Valletta Cruise Port p.l.c., entities in which the Group has a non-controlling interest. The improvement in performance at Valletta Cruise Ports p.l.c. is attributed to the growth in tourism and the recovery in the cruise industry.
Operating costs increased by EUR10,404,798 compared to 2023, reflecting the expanded operations of the Group. Simultaneously, staff costs experienced a substantial increase of 24% compared to prior year. The rise in operating and staff costs aligns with the improved performance of the Hospitality and Construction divisions.
The depreciation of property, plant, and equipment experienced a EUR740,171 increase over last year, primarily driven by substantial investments in the development of the AX ODYCY hotel and lido in Qawra.
Consequently, the operating results for the year shifted from a loss of EUR 1,789,249 in the previous year to a profit of EUR11,477,584 in the current year.
Finance costs increased by EUR1,888,039 over the previous year reflecting the further drawdown from the bank loan obtained during the prior year to finance the Qawra project as well as an increase in interest on debt securities following the new bond issued during the year.
The Group’s profit before taxation for the year amounted to EUR5,812,014 (2023: loss before taxation of EUR6,817,166). As at year-end, the AX Group’s equity stood at EUR248,829,558 (2023: EUR243,540,298).
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
4
Directors’ Report – continued
Performance review - continued
Financial Key Performance Indicators
*The Group measures Adjusted Earnings before Interest, Tax, Depreciation and Amortisation (“Adjusted EBITDA”) as operating profit/(loss) after adjusting for (loss)/gain on revaluation of investment properties, movement in fair value of financial asset, gain/(loss) on disposal of financial asset and depreciation. This key performance indictor is not defined by International Financial Reporting Standards but can be directly calculated with reference to the Statement of Profit or Loss.
Going concern
Having made an appropriate assessment of going concern as discussed in Note 2.1 to these financial statements, the Directors, at the time of approving these financial statements, have determined that there is reasonable expectation that the Group and the Company have adequate resources to continue operating for the foreseeable future. For this reason, these financial statements have been prepared on a going concern basis which assumes that the Group and the Company will continue in operational existence for the foreseeable future and will meet their financial obligations as and when they fall due.
Principal risks and uncertainties
The Company is exposed to risks inherent to its operation, with the main risks summarized as follows:
1.Strategy risk
Risk management falls under the responsibility of the Board of Directors (“the Board”). The Board is continuously analysing its risk management strategy to ensure that risk is adequately identified and managed. The Audit Committee regularly reviews the risk profile adopted by the Board.
2.Operational risks
The Company’s revenue is mainly derived from dividend income, interest charges and rental income charged to related parties and hence the Company is heavily dependent on the performance of the AX Group. The Company regularly reviews the financial performance of the AX Group of companies to ensure that there is sufficient liquidity to sustain its operations.
3.Legislative risks
The Company is governed by a number of laws and regulations. Failure to comply could have financial and reputational implications and could materially affect the Company’s ability to operate. The Company has embedded operating policies and procedures to ensure compliance with existing legislation.
Financial risk management and exposures
Note 35 to the financial statements provides a detailed analysis of the financial risk to which the Group and the Company are exposed.
Group
Company
2024
2023
2024
2023
EUR
EUR
EUR
EUR
Revenue and other operating income
83,550,472
50,292,529
13,576,106
31,284,316
Adjusted EBITDA*
24,033,119
7,445,341
8,131,683
25,310,596
Operating profit/(loss)
11,477,584
(1,789,249)
9,406,580
23,124,711
Net finance costs
(7,770,523)
(6,003,519)
(745,317)
(1,080,633)
Profit/(loss) after tax
5,067,350
(3,821,584)
9,642,214
19,868,672
Earnings per share
3.82
(3.31)
-
-
Total equity and liabilities
513,112,469
474,028,233
196,602,536
176,312,899
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
5
Directors’ Report – continued
Dividends and reserves
In September 2024, the Company issued an interim dividend of EUR4.29 per ordinary share, amounting to EUR5,000,000. The Directors do not recommend the payment of a final dividend.
During the year, AX Real Estate p.l.c., a subsidiary of the Company, declared interim dividends amounting to EUR531,976 due to non-controlling interest. The Directors intend to distribute a further gross dividend amounting to EUR205,012, equivalent to EUR0.008424 per ordinary share due to non-controlling interest. Following this payment, the total gross distribution to non-controlling interest for the year will amount to EUR736,988, equivalent to EUR0.030283 per share.
Events after the reporting period
The Group and the Company have evaluated subsequent events and transactions for potential recognition or disclosure in these financial statements. Apart from the further dividend as noted above, the Group and the Company have not identified any subsequent events that would require adjustment to or disclosure in these financial statements.
Directors
In accordance with the Company’s Articles of Association, the present Directors remain in office.
Auditors
Ernst & Young Malta Limited have expressed their willingness to continue in office and a resolution for their re-appointment will be proposed at the Annual General Meeting.
STATEMENT ON NON-FINANCIAL INFORMATION
In line with the Directive 2014/95/EU and pursuant to Article 177 of the Companies Act, Cap. 386 of the Laws of Malta and in terms of the Sixth Schedule to the Act, the Directors hereby report the impact of the Group’s activities on environmental, social and employee matters, respect for human rights, anti-corruption and bribery matters. The Group’s reporting scope corresponds to that used in the financial statements.
Our Business Model
The AX Group is primarily engaged in four main business sectors namely, Care, Construction, Hospitality, Real Estate and Development and is also involved in renewable energy. We strive to leverage our entrepreneurial skills to deliver high-quality innovative developments. This is achieved by inspiring our people to learn from our past, and to embrace the future with courage and optimism. Our values of creativity, determination and integrity underpin and support everything we do.
Founded by chairman Angelo Xuereb in 1975, AX Group began its existence as a civil engineering firm. In the ensuing decades, the Group took steps towards diversification by expanding its business portfolio to include restoration works, hotels, restaurants, care homes and many other high-quality projects. In 2018, the Group consolidated its various businesses under the AX brand.
Creating effective Environmental, Social, and Governance (“ESG”) policies is a top priority for the Group. We recognise the important role that businesses play in shaping a sustainable future and are committed to aligning our practices with responsible principles.
ESG Committee
The Group’s ESG committee is composed of dedicated cross-functional leaders from all divisions and departments. The committee is tasked with researching industry best practices, engaging with stakeholders, and developing a comprehensive set of ESG policies that will guide our operations and decision-making. In addition to the focus on value creation, the ESG committee aims to enhance data collection and data management processes to facilitate reporting on sustainable initiatives. The ESG committee holds regular meetings to assess the progress of ongoing initiatives, explore new initiatives and actively promote collaboration within the Group. Furthermore, the ESG committee provides regular updates on the progress achieved to the Group’s executive management team.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Directors’ Report – continued
STATEMENT ON NON-FINANCIAL INFORMATION - continued
Compliance with the Corporate Sustainability Reporting Directive
The Corporate Sustainability Reporting Directive (“CSRD”) officially came into effect on 5 January 2023. The CSRD mandates large EU entities to issue a sustainability report in accordance with European Sustainability Reporting Standards (“ESRS”). Such entities will be required to disclose information on what they see as the risks and opportunities arising from social and environmental issues, and on the impact of their activities on people and the environment. This helps investors, consumers and other stakeholders to evaluate the sustainability performance of companies. Qualifying entities are required to release their first sustainability report for financial years commencing on or after 1 January 2024.
In response to these regulatory changes, the Group has enlisted the expertise of external consultants to assist us in preparing for the new CSRD requirements and ensuring compliance with ESRS. This ongoing process involves several key steps, starting with a thorough risk assessment, the execution of a double materiality assessment, the identification of environmental, social, and governance impacts, risk and opportunities.
The initial evaluation of our impacts, risks, and opportunities is now well-progressed and moving into the crucial phase of data collection. To support this, we are developing methodologies and tailored data collection templates to ensure accuracy and compliance. Recognizing the complexity of this task, we are addressing challenges such as integrating data from multiple platforms, including those managed by third parties, and harmonizing diverse data formats. Despite these intricacies, we remain committed to refining our scoring approach and methodologies throughout the process, ensuring that our reporting aligns with the requirements set out in the said standards.
Environmental Consciousness
The AX Group has maintained its unwavering commitment to ecological responsibility over the past year. We continue to integrate environmental considerations into our business decisions and harmonizing financial success with environmental stewardship. Our mission remains to minimise adverse environmental impacts, both within our property developments and through our internal operations.
Policies and Risks
At AX Group, we recognise the importance of environmental sustainability and the impact our operations can have on the environment. During the year, the Group has issued several environmental policies, as outlined below. Meanwhile, we are actively developing additional policies to further guide our operations toward more sustainable practices. The foundations to develop this framework is the double materiality assessment referred to above which will help us identify material impacts to be addressed. While the progress on the sustainability statement mandated by the CSRD continues, our network of ESG stewards across the divisions remain vigilant to seek environmentally sustainable opportunities, particularly in energy efficiency and waste management.
We believe that taking a proactive approach to environmental sustainability is crucial for the long-term success of our business, and for the health of the planet. Our strategy in the coming years aims to focus on establishing transition plans which will involve a phasing in approach to shift our business model, operations and asset base towards increased sustainability.
Our objective is to establish ESG policies that are robust, measurable and consistently enhanced to generate a positive impact on our stakeholders and the communities we engage with.
The Group is exposed to environmental risks by way of its supply chain, be it construction materials or hospitality consumables. A shortage in supply of these key materials will pose a risk for the Group and in this regard, management has established a close relationship with both local and foreign key suppliers to ensure that this risk is mitigated.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Directors’ Report – continued
STATEMENT ON NON-FINANCIAL INFORMATION - continued
Environmental Consciousness - continued
Policies and Risks - continued
The Group has updated its Procurement Policy to incorporate environmental considerations. This revised policy establishes a framework for integrating sustainability into procurement processes, fostering environmentally responsible practices throughout the organization’s supply chain. When procuring OPEX or CAPEX items, we are now more sensitive and inquisitive about the ESG credentials of the suppliers and the products we are acquiring.
Environment and Real Estate
Environmental sustainability is an intrinsically valued objective of the Group and at the centre of our activities, reflected especially in the way we have been designing our buildings over the years. Our Development and Construction teams prioritise meticulous design to create buildings that incorporate energy efficiency features. These include consideration of solar orientation to minimise dependence on electrical lighting as well as heating and cooling systems. We integrate various features such as thermal and acoustic insulation, natural ventilation systems, roof and wall insulation and double-glazed UV protection windows, amongst other sustainable technologies.
As the Verdala project approaches completion, we are proud to report that the sustainability initiatives outlined in last year’s report have been successfully implemented. This project stands as a testament to our commitment to innovation and environmental stewardship. Beyond its historical significance and prime location, the Verdala building is envisioned to become a landmark in sustainability, embodying forward-thinking design and practices that harmonize luxury with ecological responsibility.
Carbon Matters
As a Group, we aim to be at the forefront of the business community in championing actionable carbon neutral policies and protocols in our business activities. We continue to promote awareness of the carbon footprint implications of our operations at all levels of the Group. In preparation for the upcoming regulatory obligations emanating from the CSRD, the Group has already taken steps to commence measuring carbon emissions from the main areas of the business. Scope 1 and Scope 2 emissions, as categorized under the Greenhouse Gas Protocol (GHG Protocol), are now consistently monitored and reported to the executive team on a monthly basis, ensuring accountability and progress in our sustainability efforts.
Following the guidance of our external consultants, our objective is to create a centralized platform dedicated to consolidating carbon-related data. Currently dispersed across different operational systems, including accounting systems, building management systems, and third-party platforms, this data requires integration for a comprehensive overview. The initial step involved defining the boundaries for Scope 1, 2, and 3 emissions. However, the more pivotal and challenging phase lies ahead, aggregating this diverse data into a cohesive dashboard. Accomplishing this objective demands significant investment in cutting edge IT tools and a workforce equipped with data driven skills and expertise.
This process is envisaged to span several months, aimed at delivering the first sustainability report in February 2026.
While the above process is ongoing, we have taken several immediate steps to mitigate and lessen the Group’s carbon footprint. Wherever feasible, we prioritise the use of energy efficient equipment.
To achieve this, we engaged an independent consultant to carry out comprehensive energy audits across our main operating properties. These detailed assessments have highlighted opportunities for energy savings, ranging from optimising our heating and cooling systems to improving lighting efficiency and adopting more sustainable operational practices. Management is currently studying the recommendations put forward to ensure that such initiatives align with the Group’s strategy.
To reduce water consumption and promote sustainable water use, management has installed over 650 aerators throughout our Qawra properties, including in all guest rooms and public areas. These aerators help minimise water usage by limiting the flow rate while maintaining water pressure, creating a softer, more aerated stream that also reduces energy consumption.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Directors’ Report – continued
STATEMENT ON NON-FINANCIAL INFORMATION - continued
Environmental Consciousness - continued
Carbon Matters – continued
The Group is also enhancing its infrastructure by introducing electric vehicle charging stations in all of its car parks. These facilities will encourage our hotel guests, customers and employees to make use of electric vehicles, thereby reducing carbon emissions. Additionally, the Group is actively transitioning to electric vehicles wherever possible.
During 2024, the Group generated 3 million KWH (2023: 2.8 million KWH) from the solar panels installed at the Imselliet solar farm in Mgarr, Hilltop Gardens Retirement Village in Naxxar and AX Business Centre in Mosta. The Group’s strategy is to increase its investment in renewable energy and continues to explore new opportunities to install additional solar panels.
Waste
Conscious about the substantial waste generated from the various Group divisions, we have been measuring waste generated from selected divisions to better understand the type and source of waste. It is clear that the waste generated by the Group varies depending on the nature of the business and the volume of business conducted. Our strategy in the coming years aims to reduce waste generation considerably by revisiting internal processes and ensuring that the waste generated by the Group is separated and recycled in line with the Environmental Protection Act amendment of February 2023. In this regard, our agreements with our waste collection contractors include the collection of various types of waste to ensure our waste is adequately separated, recycled and properly disposed of.
The Group has incorporated recycle bins throughout its properties to promote and encourage guests and staff to separate waste at source rather than disposing of all their waste into the mixed waste bin. Waste separation on-the-job training sessions are continually being held for all employees.
Following the ongoing data gathering exercise referred to above, the Group is building internal knowledge on its waste footprint and management which will lead to informed decisions when introducing improved sustainable practices. For example, in 2024 our Sliema hotels installed hand dryers in public areas and back-of-house bathrooms to reduce and eventually eliminate single-use paper towels.
Additionally, the Group has implemented several internal policies, including a Food Waste Reduction Policy across its hotel properties, designed to minimize food waste, optimize the use of food resources and support environmental conservation efforts. This year, the Group also introduced a Waste Management Policy across its hotel properties to formalize waste handling and disposal practices, prevent improper waste disposal, reduce overall waste, assign clear responsibilities for waste management within operations and ensure compliance with legislation and international best practices.
Within the Group, we are proudly aligned with the Beverage Container Refund System (“BCRS”) in Malta, an initiative that prioritizes environmental sustainability and responsible waste management. We have implemented a comprehensive program for the collection and return of single-use beverage containers, ensuring that these items are diverted from landfills and appropriately recycled. Where possible, our dedicated teams have set up designated collection points throughout our properties, making it convenient for both guests and staff to separate and deposit these containers for recycling. While actively participating in the BCRS system, we remain committed to our ongoing efforts to reduce the use of single-use beverage containers, embracing alternative eco-friendly solutions to further minimise our environmental footprint.
Over the past year, the Group has taken proactive measures to enhance sustainability across all its hotels. One key initiative was replacing double-packaged room amenities with single packaging made from recycled paper. Other initiatives included, switching to purchasing locally produced yogurt in 10-liter buckets instead of individually packed small cups, replacing packaged juices with concentrate juices dispensed from kegged machines and arranged for cakes to be delivered in returnable plastic crates instead of disposable cardboard boxes. These efforts reflect our commitment to reducing plastic waste and promoting eco-friendly practices.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Directors’ Report – continued
STATEMENT ON NON-FINANCIAL INFORMATION - continued
Environmental Consciousness - continued
Waste – continued
In the Construction division, all clean concrete waste is now sent to a recycling facility, where it is repurposed into concrete by-products. Additionally, we have established an agreement with a local contractor to recycle steel waste generated on-site. The division has also intensified its waste separation efforts by launching an initiative to equip construction sites with separation containers. Moreover, as from the end of 2023, a waste management plan is being developed for each new construction site, outlining the specific waste management strategies for that specific location.
EU Taxonomy Disclosure
The EU Commission’s “Action Plan on Financing Sustainable Growth” aims to provide the economic and financial system in the EU with a more sustainable strategy to achieve climate neutrality by 2050. As part of its action plan, the EU’s Taxonomy Regulation 2020/852 (“EU Taxonomy” or “the Regulation”) establishes a standardised classification system for sustainable economic activities and provides guidance on those activities which qualify as contributing to the Taxonomy’s environmental objectives.
The Regulation defines the following six environmental objectives:
In accordance with Article 8 of the EU Taxonomy Regulation and Article 10(2) of the Disclosures Delegated Act (Commission Delegated Regulation (EU) 2021/2178), AX Group is required to disclose information about how and to what extent the Group’s activities qualify as environmentally sustainable. Furthermore, the regulation requires the disclosure of Key Performance Indicators (KPIs), namely, the proportion of revenue (“Turnover”), capital expenditures (“CapEx”) and operating expenditure (“OpEx”) which are considered as eligible and/or aligned in terms of the EU Taxonomy. Furthermore, the Group also discloses qualitative information (according to Section 1.2 of Annex I of the Disclosures Delegated Act).
The EU Taxonomy is supplemented by delegated acts which establish ‘technical screening criteria’. These criteria define the specific requirements and thresholds for an activity to be considered as “significantly contributing” to a sustainability objective and “does not significantly harm” the other objectives.
Taxonomy-Eligible and Taxonomy-Aligned Economic Activities
An economic activity is “Taxonomy-Eligible” if it is listed in the EU Taxonomy’s delegated acts. Once all Taxonomy-Eligible activities have been determined, an assessment shall be made to establish which of the eligible activities are also “Taxonomy-Aligned”.
In accordance with the EU Taxonomy, economic activities of undertakings are considered as “Taxonomy-Aligned” if they:
-make a substantial contribution to at least one environmental objective, by meeting certain ‘technical screening criteria’;
-do no significant harm (DNSH) to the achievement of the five other environmental objectives; and
-comply with minimum social safeguards.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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STATEMENT ON NON-FINANCIAL INFORMATION - continued
EU Taxonomy Disclosure – continued
Identifying Eligible Activities
In order to identify business activities that may be in scope of the Regulation, the Group relied on the EU Taxonomy package including the:
-Disclosures Delegated Act (Commission Delegated Regulation (EU) 2021/2178),
-Climate Delegated Act (Commission Delegated Regulation (EU) 2021/2139),
-Complementary Climate Delegated Act (Commission Delegated Regulation (EU) 2022/1214),
-Amended Climate Delegated Act (Commission Delegated Regulation 2023/2485),
-Environmental Delegated Act (Commission Delegated Regulation (EU) 2023/2486), and
-EU Taxonomy Compass.
The eligibility assessment was conducted using a combination of granular data on the Group’s activities, assets and financial information, alongside a top-down analysis of officially assigned NACE codes, the EU’s nomenclature used to categorise economic activities for statistical purposes, for its subsidiaries. Initially, economic activities were classified as eligible or non-eligible based on their alignment with NACE codes reflected in the EU Taxonomy Compass and delegated acts. For activities assigned a relevant NACE code, their descriptions were compared to the actual operations of the Group’s entities to verify and confirm eligibility. For activities not directly associated with a NACE code in the EU Taxonomy, assessments were based solely on the activity descriptions provided in the framework.
Key assumptions applied during the assessment included the adequacy and relevance of the NACE classification system in capturing all pertinent economic activities, as well as its alignment with current business practices. Using cross-references from the Taxonomy Compass, the Group ensured that eligibility was determined against relevant environmental objectives, as outlined in the EU Taxonomy framework.
Following this thorough review, the following taxonomy-eligible economic activities were identified for the financial year ending 31 October 2024:
NACE
Economic Activity
Climate Delegated Act Reference
Environmental Delegated Act Reference
Environmental Objective/s
F41
Construction
Activity 7.1
Activity 3.1
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Transition to a Circular Economy (CE)
L68
Real Estate & Development
Activity 7.7
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Q87
Residential Care Activities
Activity 12.1
Climate Change Adaptation (CCA)
I55
Hotels and Similar Accommodation
Activity 2.1
Restoration of Biodiversity and Ecosystems (BIO)
The Group determined that none of its eligible economic activities qualify as ‘enabling’ or ‘transitional’ under the EU Taxonomy. Furthermore, in compliance with Article 8 of the Disclosures Delegated Act (as amended), disclosures were prepared regarding taxonomy-aligned, eligible and non-eligible economic activities, excluding those referenced in Sections 4.26–4.31 of Annexes I and II to the Climate Delegated Act, as these did not apply to the Group’s operations.
Additionally, while the EU Taxonomy allows the inclusion of certain OpEx and CapEx related to eligible or aligned activities in KPI calculations, no such expenditures were recorded as of 31 October 2024. Financial data was utilized to calculate relevant KPIs, as outlined in the Key Performance Indicators.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Accounting Policy for Taxonomy Disclosures
The evaluation of the eligibility of the Group’s economic activities has been conducted on the basis of the Regulation and its definition of the denominator and numerator of the three required KPIs (Turnover, CapEx and OpEx). It was performed through a methodological approach consisting of:
I.Extracting a total denominator for the three KPIs from the financial reporting system, and
II.Calculating the numerators for all identified eligible sub-activities within the Group and its subsidiaries based on Turnover, CapEx and OpEx.
These non-financial statement disclosures are based on the same consolidation principles that have been applied in the Group’s financial reporting under the applicable accounting principles, in order to ensure comparability of this reporting with the Group’s financial information.
KPIs are provided at the level of the Group based on consolidated financial statements. The following definitions were applied:
Turnover
Capex
Opex
Numerator
Revenues derived from products and/or services associated with EU taxonomy- eligible activities.
Capital expenditures that:
•relates to assets or processes associated with the EU taxonomy eligible activities;
•are part of a plan to expand taxonomy-eligible economic activities, or;
•enable taxonomy-eligible activities to become taxonomy-aligned.
Operating expenses that are related to assets or processes associated with the EU taxonomy-eligible activities.
Denominator
Total consolidated revenues accounted for in the Consolidated Statement of Profit or Loss and Other Comprehensive Income under IFRS.
Total Capex consisting of additions to tangible and intangible assets accounted for in the Consolidated Statement of Financial Position under IFRS during the financial year, considered before depreciation, amortisation and any re-measurements, excluding Goodwill.
Direct non-capitalised costs recorded in the Consolidated Statement of Profit or Loss and Other Comprehensive Income under IFRS that relate to research and development, building renovation measures, short-term lease, maintenance and repair (excluding expenses reported as raw materials and consumables used) and any other direct expenditures relating to the day-to-day servicing of assets or Property, Plant and Equipment (PPE).
The Group is also required to report on the alignment of its eligible business activities. The assessment to establish Taxonomy alignment involves:
I.Determining if the eligible economic activities meet the ‘Technical Screening Criteria’ (TSC) defined by the delegated acts,
II.Determining if the eligible economic activities meet the ‘Do No Significant Harm’ (DNSH) criteria defined by the delegated acts,
III.Assessing whether the Minimum Social Safeguards are met in terms of the Final Report on Minimum Safeguards issued by the Platform on Sustainable Finance, and
IV.Determining the KPIs based on the proportion of aligned (if all criteria in (I)-(III) are met) and non-aligned (should any one criterion not be met) eligible economic activities.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Accounting Policy for Taxonomy Disclosures - continued
The process of determining alignment is cumulative, meaning that, if one or more of the Technical Screening Criteria or Do No Significant Harm criteria or Minimum Social Safeguards, are not met, the economic activity automatically qualifies as eligible but is not aligned. It is also noted that the same activity may align with only one or more environmental objectives for which it is eligible.
The Group is aware that the disclosures required by the Disclosure Delegated Act are not subject to the materiality assessment, therefore all economic activities have been considered. Where an economic activity contributes substantially to more than one environmental objective, the higher percentage is taken to avoid any double counting. Furthermore, the aggregation of eligible and non-eligible activities should always amount to 100%.
Key Performance Indicators
Based on the above considerations and methodology, the tables below show the actual KPIs related to the EU Taxonomy, including comparatives.
KPIs – FY2024
TURNOVER
CAPEX
OPEX
Taxonomy Eligible – Aligned
0%
0%
0%
Taxonomy Eligible – Not Aligned
99.0%
99.5%
90.6%
Non-Eligible
1.0%
0.5%
9.4%
TOTAL
100%
100%
100%
KPIs – FY2023
TURNOVER
CAPEX
OPEX
Taxonomy Eligible – Aligned
0%
0%
0%
Taxonomy Eligible – Not Aligned
98.6%
98.7%
85.4%
Non-Eligible
1.4%
1.3%
14.6%
TOTAL
100%
100%
100%
The KPIs are based on the following figures:
FY2024
TURNOVER
EUR
CAPEX
EUR
OPEX
EUR
Taxonomy Eligible – Aligned
-
-
-
Taxonomy Eligible – Not Aligned
82,471,971
41,893,320
53,935,273
Non-Eligible
871,635
222,760
5,582,080
TOTAL
83,343,606
42,116,080
59,517,353
FY2023
TURNOVER
EUR
CAPEX
EUR
OPEX
EUR
Taxonomy Eligible – Aligned
-
-
-
Taxonomy Eligible – Not Aligned
49,189,112
60,201,261
36,608,853
Non-Eligible
676,144
779,841
6,238,335
TOTAL
49,865,256
60,981,102
42,847,188
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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EU Taxonomy Disclosure - continued
Key Performance Indicators – continued
The KPIs indicate that for the financial year ended 31 October 2024, the Group's taxonomy-eligible activities increased compared to the previous year. Revenue from economic activities deemed taxonomy-eligible saw a slight increase from 98.6% to 99.0%. CapEx experienced an increase from 98.7% in the prior year to 99.5% during the current year. Taxonomy-eligible OpEx also experienced an increase from 85.4% to 90.6% during the year.
-Reconciliation
The Group’s consolidated net turnover captured in the denominator of the KPI of EUR83,343,606 (2023: EUR49,865,256) reconciles with the amount disclosed in the ‘Revenue’ financial statement line item included in the ‘Statements of Profit or Loss and Other Comprehensive Income’ in the consolidated financial statements included in this annual report.
The Group’s total CapEx captured in the denominator of the KPI can be reconciled to the consolidated financial statements of the Group included in this annual report, by reference to the respective disclosures capturing the additions for property, plant and equipment, investment property and inventories.
Capex Reconciliation
2024
2023
Note
EUR
EUR
CapEx per KPI denominator
42,116,079
60,981,102
Additions as per consolidated financial statements relating to:
Property, plant and equipment
16
22,757,034
41,810,840
Investment properties
17
2,101,426
3,289,228
Inventories relating to Verdala terraces*
17,257,619
15,881,034
42,116,079
60,981,102
* The figure presented pertains to the additions made to the Verdala Terraces project during the reporting period. This amount is included within Inventories (Note 22) in the consolidated financial statements. Furthermore, in the prior year, it also includes the transfer from inventory to property, plant and equipment and the transfer from inventory to investment properties, as illustrated in both the Property, Plant, and Equipment (Note 16) and Investment Properties (Note 17) sections of the consolidated financial statements.
The Group’s consolidated OpEx captured in the denominator of the KPI of EUR59,517,353 (2023: EUR42,847,188) reconciles with the summation of the amounts disclosed in the ‘Operating costs’ and ‘Staff costs’ financial statement line items included in the ‘Statements of Profit or Loss and Other Comprehensive Income’ in the consolidated financial statements included in this annual report.
-Determination of Alignment
To determine Taxonomy alignment, the Group conducted a ‘Substantial Contribution’ assessment for each of its eligible economic activities, including Construction, Real Estate & Development, Residential Care Activities, and Hotels & Accommodation. This process involved a detailed analysis of the Technical Screening Criteria of the relevant delegated acts.
The ‘Substantial Contribution’ screening required an in-depth evaluation of the technical screening criteria to determine whether each economic activity made a meaningful contribution to the relevant environmental objectives. During this assessment, judgements were made for each activity and it was determined that none of the Group’s eligible economic activities met the specific technical screening criteria for substantial contribution.
Under the Taxonomy framework, if even one criterion is not satisfied, the economic activity cannot be considered as substantially contributing to an environmental objective and, therefore, cannot be classified as aligned. As a result, for the financial year, Taxonomy-aligned activities accounted for 0% of the Group's revenues, with related CapEx and OpEx also amounting to 0%.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Key Performance Indicators – continued
-Determination of Alignment – continued
The significant gap between eligible and aligned activities reflects the more rigorous requirements for alignment compared to eligibility. The Group is committed to identifying these gaps and implementing procedures to gather the necessary data as stipulated in the Climate Delegated Act and Environmental Delegated Act.
The information regarding eligibility and alignment is presented in the format required by the Disclosures Delegated Act, as amended by Annex II of the Environmental Delegated Act. Since the Group’s economic activities do not align with any environmental objective for which they are eligible, the disclosures provided focus exclusively on Taxonomy eligibility. Activities have been classified as follows:
-EL: Taxonomy-eligible activity for the relevant objective; or
-N/EL: Taxonomy-non-eligible activity for the relevant objective.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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In terms of the Disclosures Delegated Act, the above information shall be presented in the following format:
(1)Turnover KPIs
Substantial Contribution Criteria
DNSH Criteria
Economic Activities
Code
Absolute Turnover
Proportion of Turnover
2024
Climate Change Mitigation
Climate Change Adaptation
Water and mineral resources
Circular Economy
Pollution
Biodiversity and Ecosystems
Climate Change Mitigation
Climate Change Adaptation
Water and mineral resources
Circular Economy
Pollution
Biodiversity and Ecosystems
Minimum Safeguards
Proportion of Taxonomy Aligned /Eligible Turnover 2023
Category
Enabling / Transitional Activity
(E/T)
EUR
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1. Taxonomy-aligned
Turnover of A.1
0%
0%
0%
0%
0%
0%
0%
A.2 Taxonomy-Eligible but not Taxonomy-Aligned
Construction
CCM7.1
CCA7.1 CE3.1
11,573,486
13.9%
EL
EL
N/EL
EL
N/EL
N/EL
8.3%
Real Estate and Development
CCM7.7
CCA7.7
2,399,998
2.9%
EL
EL
N/EL
N/EL
N/EL
N/EL
4.6%
Other Residential Care Activities
CCA12.1
7,189,896
8.6%
N/EL
EL
N/EL
N/EL
N/EL
N/EL
12.5%
Hotels and Similar Accommodation
BIO2.1
61,308,591
73.6%
N/EL
N/EL
N/EL
N/EL
N/EL
EL
73.3%
Turnover of A.2
82,471,972
99.0%
98.6%
Total (A) = (A.1 + A.2)
82,471,972
99.0%
98.6%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy Non-Eligible Activities
871,635
1.0%
1.4%
TOTAL TURNOVER (A+B)
83,343,606
100.0%
100%
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Key Performance Indicators – continued
(2)CapEx KPIs
Substantial Contribution Criteria
DNSH Criteria
Economic Activities
Code
Absolute CAPEX
Proportion of CAPEX
2024
Climate Change Mitigation
Climate Change Adaptation
Water and mineral resources
Circular Economy
Pollution
Biodiversity and Ecosystems
Climate Change Mitigation
Climate Change Adaptation
Water and mineral resources
Circular Economy
Pollution
Biodiversity and Ecosystems
Minimum Safeguards
Proportion of Taxonomy Aligned /Eligible CAPEX 2023
Category
Enabling / Transitional Activity
(E/T)
EUR
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1. Taxonomy-aligned
CAPEX of A.1
-
0%
0%
0%
0%
0%
0%
0%
0%
A.2 Taxonomy-Eligible but not Taxonomy-Aligned
Construction
CCM7.1
CCA7.1 CE3.1
235,281
0.6%
EL
EL
N/EL
EL
N/EL
N/EL
0.4%
Real Estate and Development
CCM7.7
CCA7.7
37,700,848
89.5%
EL
EL
N/EL
N/EL
N/EL
N/EL
80.7%
Other Residential Care Activities
CCA12.1
156,026
0.4%
N/EL
EL
N/EL
N/EL
N/EL
N/EL
0.0%
Hotels and Similar Accommodation
BIO2.1
3,801,165
9.0%
N/EL
N/EL
N/EL
N/EL
N/EL
EL
17.6%
CAPEX of A.2
41,893,320
99.5%
98.7%
Total (A) = (A.1 + A.2)
41,893,320
99.5%
98.7%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy Non-Eligible Activities
222,760
0.5%
1.3%
TOTAL CAPEX (A+B)
42,116,079
100.0%
100%
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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EU Taxonomy Disclosure – continued
Key Performance Indicators – continued
(3)OpEx KPIs
Substantial Contribution Criteria
DNSH Criteria
Economic Activities
Code
Absolute CAPEX
Proportion of CAPEX
2024
Climate Change Mitigation
Climate Change Adaptation
Water and mineral resources
Circular Economy
Pollution
Biodiversity and Ecosystems
Climate Change Mitigation
Climate Change Adaptation
Water and mineral resources
Circular Economy
Pollution
Biodiversity and Ecosystems
Minimum Safeguards
Proportion of Taxonomy Aligned /Eligible OPEX 2023
Category
Enabling / Transitional Activity
(E/T)
EUR
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
A. TAXONOMY ELIGIBLE ACTIVITIES
A.1. Taxonomy-aligned
OPEX of A.1
-
0%
0%
0%
0%
0%
0%
0%
0%
A.2 Taxonomy-Eligible but not Taxonomy-Aligned
Construction
CCM7.1
CCA7.1 CE3.1
9,484,226
15.9%
EL
EL
N/EL
EL
N/EL
N/EL
7.9%
Real Estate and Development
CCM7.7
CCA7.7
1,646,745
2.8%
EL
EL
N/EL
N/EL
N/EL
N/EL
2.4%
Other Residential Care Activities
CCA12.1
5,653,150
9.5%
N/EL
EL
N/EL
N/EL
N/EL
N/EL
12.4%
Hotels and Similar Accommodation
BIO2.1
37,151,152
62.5%
N/EL
N/EL
N/EL
N/EL
N/EL
EL
62.7%
OPEX of A.2
53,935,273
90.6%
85.4%
Total (A) = (A.1 + A.2)
53,935,273
90.6%
85.4%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
B. OpEx of Taxonomy Non-Eligible Activities
5,582,080
9.4%
14.6%
TOTAL OPEX (A+B)
59,517,353
100.0%
100.0%
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Social Matters
AX Group strives to enhance the quality of life of its employees, its consumers, the community and society as a whole. Through varying initiatives, the Group tries to ensure the well-being of both its employees as well as other members of society.
Ensuring Staff Well-Being
The Group employs over 1,200 employees (including both directly employed as disclosed in Note 9 and subcontracted employees), from around 63 different countries and with a spectrum of skill sets. We believe that the Group is only as strong as our people, and therefore, their happiness and well-being remain of utmost importance.
The Group continues to provide all employees with free health insurance coverage, along with significantly subsidised rates for their family members. Additionally, we continue to support all employees by providing access to professional and confidential mental health support through complimentary therapy sessions.
The Group is deeply committed to fostering a positive and inclusive work environment through a variety of initiatives that bring employees together and enhance their well-being. Team-building events are organized across the Group to strengthen relationships, enhance teamwork and boost morale among staff members. To further support our employees' health, the Group provides free gym access at the Sunny Coast Hotel and also partly subsidises employees opting to have their own gym membership subscription. During 2024, a gym was also set up at the AX Business Centre in Mosta for employee use. These initiatives reflect the Group’s dedication to creating a supportive, engaged and health-conscious workplace where every team member feels valued and motivated.
This year, employees across the Group came together to support a meaningful cause through a weekly dress-down initiative held between October and November 2024. The initiative not only fostered camaraderie but also raised an impressive donation exceeding €4,100. The collected funds were proudly contributed to Hospice Malta, enabling them to continue their invaluable work in providing palliative care for individuals battling cancer and other serious illnesses. This collective effort reflects our team’s shared commitment to making a positive impact in the community.
Long-Term Development of Personnel
Our Group is committed to being recognized as an "employer of choice." This commitment serves as the foundation for all our efforts on the Human Resources (HR) front. Through initiatives that prioritise employee engagement, well-being, development and inclusivity, we strive to create a workplace where talent thrives. We do so by focusing our employment strategy on these key principles:
-Positive workplace culture
-Attracting the best fit talent
-Recognising and rewarding employees
-Employee training and career development
During 2024, the Group carried out 28,064 hours (2023: 19,504 hours) of training equating to an average of 28 hours per employee. Through the AX Careers online portal and the Knowledge Centre, the Group aims at stepping up its recruitment – providing applicants with an understanding of the values of the Group, whilst also training and developing the employees in their jobs to ensure longer retainment of personnel.
Performance of staff is evaluated through a periodic evaluation based on objective setting and feedback on job performance. The assigned reviewers set yearly objectives and targets with the appraisee which are then monitored and reviewed throughout the year.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Social Matters – continued
Long-term Development of Personnel - continued
We have also shown our appreciation and gratitude towards employees who have given their unwavering service to the Group over the years, during the AX Group’s Annual Employee Awards Night which was held in June 2024. Over 60 employees from all divisions of the Group were recognised for their commitment and long service with the Group ranging between 5 and 35 years. A much-valued employee at AX Construction, who passed away during the year, received a special mention and standing ovation by all attendees. An award was presented to his family, for his commitment and the positive impact he had on his colleagues and the company’s success during his tenure. The AX Awards ceremony also featured CSR and ESG awards, which were given to Dorianne D’Anastasi and Simon Peter Camilleri respectively, for their invaluable contributions in the respective areas.
Furthermore, as a gesture of appreciation for our dedicated AX Group employees and to acknowledge their steadfast commitment, we have implemented a retention bonus program. Under this initiative, our valued staff members who have shown an excellent track record, are eligible to receive bonuses as they reach their 3-year and 5-year anniversaries within the Group. This not only serves as a way to express our gratitude for their loyalty but also aims to provide additional motivation and recognition for their excellent work and dedication. We believe that such incentives contribute to fostering a positive and supportive work environment while fostering long-term relationships with our exceptional team.
Workplace Diversity and Inclusions
AX Group believes in the benefits of having a diversified workplace environment and it is committed to promote inclusion and respect for human rights at all levels of the Group. The Group has long been embracing multiculturalism, and currently circa 76% of the staff compliment are foreign nationals. These foreign nationals come from over 63 countries and a considerable number of these foreign nationals are from outside the EU. We understand that this multicultural pool of staff brings new opportunities, more talent and a wider perspective to the entire Group. The respective Human Resources departments are continually working to ensure that these foreign nationals are welcome and that they integrate with the workplace culture of the AX Group.
Additionally, we have made thoughtful adjustments to the staff meals provided to our employees working in hotels and care facilities. Recognizing the diverse cultural backgrounds of our workforce, including many from India and Nepal, we have introduced options such as rice-based dishes to better accommodate their tastes and preferences.
Moreover, the Group is also aiming at creating greater inclusion and equal representation at management level, having the Executive team being composed of 5 women and 7 men, whilst the Board still being composed of 2 females and 5 males.
Respect for Human Rights
The Group is committed to respecting human rights of its employees whether directly employed or otherwise as well as any workers in the supply chain. Management is vigilant to uphold such rights in all areas of operations. It is every employee’s responsibility to maintain a work environment that promotes human rights and is free from all discrimination and harassment. All levels of management throughout the Group have an open-door policy to encourage open communication with staff and where any workplace concerns are addressed efficiently.
The organisation believes that preventing discrimination and/or harassment is an integral part of good management. The Group has a discrimination and harassment policy detailing the procedures employees should follow in any case of discrimination or harassment.
Supply Chain
The Group has introduced and distributed a Suppliers Code of Ethics to the primary suppliers of AX Hotels. This document, which has been signed by the suppliers, outlines the ESG standards they must adhere to when conducting business with AX Hotels. The suppliers have also agreed to audits by AX Group to ensure compliance with these standards.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Supply Chain – continued
Additionally, through its recruitment agency, AX Careers, the Group conducts thorough compliance checks on subcontractor agencies to ensure full adherence to legal requirements. These measures highlight our unwavering commitment to ethical, lawful and sustainable business practices across all aspects of our operations.
Entrepreneurship
Our mission statement clearly outlines our passion for entrepreneurship. As a Group we aim to not only develop our personnel to reach their potential professionally, but we also aim to embrace and push the entrepreneurial community in Malta. Throughout the year, various members of the Group have generously dedicated their time to contribute to educational talks and public speaking engagements. These sessions have covered a wide range of topics, including IT, Cybersecurity, ESG, leadership and entrepreneurship. By sharing their expertise and experiences, our team members have actively supported knowledge-sharing and inspired others in the community.
Health and Safety
Due to the nature of certain operations within the Group, health and safety measures are of utmost priority within our workplace. For this reason, we are constantly reviewing and improving our health and safety measures in all of our processes, to ensure that both our employees’, as well as our customers’ health and safety are safeguarded.
To ensure adherence to key health and safety practices, we have implemented a Health and Safety Barometer. This comprehensive tool, prepared by an independent third-party consultant, provides robust monitoring and evaluation of our performance in this critical area. Executive management closely reviews the barometer's findings, reinforcing our commitment to maintaining a safe and compliant working environment across all operations.
In relation to our employees, we continue to provide safety equipment where necessary and ensure that health and safety measures and processes are made known to all staff. In addition to the mandatory health and safety officers on all construction sites, the Group has appointed an independent third party to prepare a high-level dashboard in order to keep executive management and Directors abreast of the health and safety status of all construction sites managed by the Group. The Group is pleased to report that no significant workplace injuries were recorded during the year.
The Construction Division has also introduced fines for any violations of Health and Safety regulations, including failure to wear the minimum personal protective equipment provided by the Group.
AX Care
Another key business activity is the provision of Care for the elderly. We believe that through the Hilltop Gardens Retirement Village concept we are providing our elderly premium care within a safe, secure and comfortable environment, hence promoting active ageing and improving quality of life for our independent community of elders.
Through our “village within a village” concept in Naxxar, we provide our elderly a self-contained village environment enabling them to continue their day-to-day lives as normally as possible, through features such as pools, a chapel, a restaurant and other day-to-day amenities.
Moreover, through our Simblija Home we offer tailor-made packages depending on the needs of our elderly, including respite, convalescence, and palliative treatments. Our facilities also include Revive, which is our physiotherapy and aquatic center.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
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Social Matters – continued
AX Foundation and Other Community Initiatives
Outside of the Group, we also take great pride in our community investment initiatives and charitable initiatives. Since its inception, the AX Foundation has proactively identified gaps in the support services to affect change on a national level and help young people living with disabilities acquire functional skill sets to live as independently as possible throughout their adult lives. We have taken steps to contribute to national policymaking, driving social change, to create a more inclusive future for all.
In June 2024, the AX Foundation Board of Administrators approved to fully finance and support San Andrea School in building a Nurture Room, Therapy Rooms and Support Rooms. The project was fully executed by December 2024 and was officially inaugurated in January 2025. The idea of this pilot project is to create safe and secure spaces, that will allow educators and specialists to further develop the children’s individual needs.
Also during the month of June 2024, the AX Foundation hosted a Dining and Giving Fundraiser at Minoa at AX ODYCY hotel during which the annual AX Ability Award was awarded to Dr Alistair Degaetano. The AX Ability Award recognizes the journey made by people with invisible challenges towards achieving success in their lives. It puts the focus on them, so that other people with similar challenges can see them, emulate them, and be encouraged to move forward, despite the difficulties that life throws at them. The AX Ability Award also recognizes people who have worked relentlessly in the field of invisible disabilities and who have striven to improve the rights of people with disabilities within their lifetime. The event was a resounding success, welcoming over 100 guests, and raising over EUR33,450 in support of AX Foundation’s initiatives for individuals living with invisible disabilities.
In October 2024, AX Foundation collaborated with Inspire and extended its support to organize a very well attended conference on Accessibility organized at AX The Palace. A welcome address was given by the Minister for Inclusion and The Voluntary Sector, and by the Shadow Minister. Another welcome address was given by the Commissioner for the Rights of Persons with Disability. The conference was addressed by a broad range of local and foreign experts in the field of disabilities. It delved into a number of areas related to accessibility in its broadest sense.
AX Foundation, for the second year running, this year, continued to extend its support to the Children in Need Foundation and Fondazzjoni Sebh, by sponsoring children in residential homes, providing weekly therapy sessions, by health professionals, to address their mental wellbeing, and social, emotional and educational needs. This is a 3-year pilot project.
During 2024, the AX Foundation has also worked on another pilot project to effectively match the unique skills and talents of neurodivergent persons, for roles and careers that suit their skills and talents. This is a project that we continue to work on, in conjunction with the Autism Council and the Ministry for Inclusion, Agenzija Sapport, two foreign organisations specialized in the field of coupling neurodivergent jobseekers with employment opportunities and another local NGO. The project is expected to be launched next year around May 2025.
AX Foundation also administers the AX Staff Solidarity Fund for the AX Group. This is a fund aimed at directly helping employees who come across health and financial challenges in their lives. We recognise that our employees may at some time in their lives find themselves faced with a personal crisis and may need financial assistance to help them through such difficult moments. For this reason, the AX Staff Solidarity Fund was set up, which contributes financial assistance to all direct and subcontracted employees, without distinction, or their dependents requiring financial support to help them cope with unfortunate medical or health problems.
Other Community Initiatives
The Group partners with various educational institutions to offer internship opportunities and has also hosted students for business tours, showcasing its commitment to supporting education and investing in the local community. Through active engagement with schools, we strengthen our ties with the community and foster mutually beneficial partnerships.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
22
Directors’ Report – continued
STATEMENT ON NON-FINANCIAL INFORMATION – continued
Social Matters – continued
Other Community Initiatives – continued
A beach cleanup event was organised in May 2024 by the Sliema operations to actively support biodiversity conservation efforts. Volunteers gathered to restore the natural beauty of the coastline and protect marine ecosystems.
The Group also collaborated with Coast is Clear on a reforestation initiative, planting approximately 50 indigenous trees in the Kennedy Grove area in Qawra in December 2024. This project highlights our dedication to enhancing local biodiversity and contributing positively to our natural surroundings.
AX Group is supporting YMCA Malta by contributing to the vital initiatives of their 365 Campaign, which includes aiding homelessness, mental health, domestic violence and poverty alleviation efforts. The funds collected are directed towards YMCA’s prevention, outreach, community, residential and aftercare services, making a positive and tangible difference in the lives of those they support.
In celebration of National Pet Day, employees from AX Group visited the Association for Abandoned Animals, (AAA Malta) in Birzebbugia. Throughout April, our team came together and rallied behind the NGO with a generous donation of food, toys, bedding and monetary contributions to support the vital work of the association.
Throughout the year, the Group has undertaken several other impactful initiatives, such as partnering with Nature Trust Malta at the AX ODYCY hotel, sponsoring the ALIVE Charity Foundation's ALIVE2024 Cycling Challenge for Cancer Research and conducting food drives to support families in crisis through the Foodbank Lifeline Foundation.
Our Group is proud to support key initiatives such as L-Istrina. Additionally, we provide numerous donations to a variety of social causes throughout the year, reflecting our dedication to fostering positive change and supporting those in need. These efforts exemplify our role as a socially responsible organization and underline our commitment to making a difference.
Maltese Heritage
As a Group we value our local heritage and over the years we have taken up several renovation works across Malta, mainly on the bastions and in national museums. This is also outlined in the mission statement of AX Construction – “Building our future, restoring our heritage”. In 2024, we completed works on the restoration of Villa Luginsland in Rabat and St Paul’s Pro-Cathedral in Valletta. Works on the extension of the St John Co Cathedral are still ongoing. In 2020, the Group had acquired a dilapidated palazzo in Merchant Street Valletta with the aim of restoring it and convert the property to an office building. During 2024, the extensive restoration works was completed and this property has been re-branded as ‘Palazzo Lucia’.
The Valletta hotels also promote a number of cultural and gastronomic tours for tourists, providing them with an experience of the local tastes and lifestyle. Rosselli hotel guests are offered complimentary tickets to the fine arts museum, war museum or national archaeology museum to enhance their stay and foster a deeper engagement with Malta’s rich cultural heritage.
All of our hotels offer guests detailed information about the natural and cultural heritage of the surrounding area, ensuring they have the opportunity to fully appreciate the local environment and history. Additionally, our staff members are thoroughly educated about these aspects and are readily available to provide insights and recommendations, enhancing the overall guest experience by connecting them with the rich heritage of the region.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
23
Directors’ Report – continued
STATEMENT ON NON-FINANCIAL INFORMATION - continued
Uphold Good Governance
As a large, listed company, AX Group has the necessary corporate governance structures in place. The Group’s internal auditor, who reports regularly to the Audit Committee, also ensures that all our internal controls are adhered to at all times.
Upholding Ethical Standards
A cornerstone of our governance framework is the Employee Code of Conduct, which outlines the principles for effective, ethical and positive behavior across the Group. This code ensures that all employees uphold the highest standards of integrity and professionalism, reinforcing our commitment to responsible and ethical business practices.
Anti-Bribery and Corruption
Being one of the Group’s core values, AX Group is committed to comply with local legislation and has zero tolerance towards bribery and corruption.
We stand by a code of ethics reflecting the ethical ethos of the Group. This is applicable to all employees and board members. The code of ethics sets out the principles and necessary controls to mitigate against bribery and corruption. All Group policies and procedures are built to ensure that this is achieved and that high ethical standards are maintained at all times. We constantly remind our employees about the risks and obligations associated with bribery and corruption. Cognizant of the potential reputational damage, the Group has also set out procedures to ensure that its principal suppliers operate and comply with local legislation. AX Group is committed to uphold and enhance its policy against bribery and corruption. No instances of bribery or corruption were identified in the past year.
The Governance of ESG and the Alliance
The Directors believe that for a business to thrive in the coming decades, it must work in harmony with its surrounding environment. This harmony and the consequential positive financial performance and longevity can only be achieved by considering ESG aspects in the Group’s decision making.
AX Group understands that senior oversight and accountability for ESG initiatives is crucial to achieve a progressive ESG culture across the Group. Therefore, an ESG Committee has been established and is composed of individuals representing all areas of the business. The ESG Committee is responsible to establish an ESG framework, to identify, measure, analyse, monitor and document ESG elements across the Group.
In 2022, AX Group took a significant step forward in ESG matters by collaborating with 12 esteemed business leaders in Malta to establish the Malta ESG Alliance (MESGA). MESGA is fully dedicated to addressing local environmental, social and governance priorities. Through active engagement in monthly meetings, members collectively contribute to ongoing initiatives. The Alliance's primary focus is to raise awareness among other companies, policymakers, and the broader community on environmental, social and governance issues. MESGA actively collaborates with policymakers to contribute to enhancing the local regulatory landscape on ESG matters.
AX Group is dedicated to adapting our own operations and catalyzing positive change on a larger scale. Recognizing the profound connection between business success and societal well-being, we, through MESGA, actively pursue a sustainable future for Malta. MESGA is now on a journey to increase the number of corporate members joining us in this transformative journey, building a future where responsible corporate practices shape a thriving and sustainable community.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
24
Directors’ Report – continued
STATEMENT ON NON-FINANCIAL INFORMATION - continued
Concluding Remarks
Moving forward, our Group remains adamant to be a catalyst in safeguarding the environment, whilst giving back to society and withholding the highest good governance processes. We acknowledge the ever-increasing importance of sustainability in businesses as well as the greater requests for Environment, Social and Governance data moving forward, from regulators, clients and investors alike.
We thereby commit to continue working on integrating ESG aspects within the overall strategy of the Group, including the necessary structures and skills to lead this transition. Moreover, we will ensure that the right level of ESG data is collected and verified periodically so that future measures and investments are well placed and conducive to improving our non-financial position along with our financial position. This will ensure that AX Group is not only a financially sound Group, but also one which adds value to the community, whilst respecting the environment in which it operates in, in a just manner.
Signed on behalf of the Board of Directors on 24 February 2025 by Mr Angelo Xuereb and Mr Michael Warrington as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2024.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
25
Statement of Directors’ Responsibilities
The Directors are required by the Companies Act, Cap. 386 of the Laws of Malta to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the EU which give a true and fair view of the state of affairs of the Group and the Company at the end of each financial year and of the profit or loss of the Group and the Company for the year then ended. In preparing the financial statements, the Directors should:
-adopt the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business;
-select suitable accounting policies and apply them consistently;
-make judgements and estimates that are reasonable and prudent;
-account for income and charges relating to the accounting period on the accruals basis;
-value separately the components of asset and liability items; and
-report comparative figures corresponding to those of the preceding accounting period.
The Directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Company and which enable the Directors to ensure that the financial statements comply with the Companies Act, Cap. 386 of the Laws of Malta. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. The Directors are also responsible for safeguarding the assets of the Group and the Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
26
Corporate Governance – Statement of Compliance
Pursuant to Capital Market Rule 5.97 issued by the Malta Financial Services Authority, the Company is hereby reporting on the extent of its adoption of “the Code of Principles of Good Corporate Governance” (the Code) previously established by the Malta Stock Exchange. The Board has reviewed its Corporate Governance practices and an explanation of how the Principles of Good Governance have been applied is contained in this report.
The Company acts as the ultimate holding company to the AX Group of companies and does not itself carry on any trading activities other than for the purpose of funding the Group as and when the demands of its business so requires, and accordingly is economically dependent on the subsidiaries.
Compliance
Although the adoption of the Code is not mandatory, the Board has considered the principles embodied in the Code and has noted the Code’s recommended practices aimed towards the fulfilment of these same principles. The Board has also taken into account the nature of the Company’s structure, business activities and operations and in the light of such considerations it has formulated the view that the Company was generally in compliance with the Code throughout the period.
The Board
The Board of Directors of AX Group p.l.c. (the Board) is currently made up of seven Directors, three of whom are independent from the Company or any related Group Company. Pursuant to generally accepted practices, as well as the Company’s Articles of Association, the appointment of Directors to the Board is reserved exclusively to the Company’s shareholders.
The present Directors are Mr Angelo Xuereb, Ms Denise Xuereb, Ms Claire Zammit Xuereb, Mr Josef Formosa Gauci, Mr Christopher Paris, Mr John Soler and Mr Michael Warrington. Messrs Formosa Gauci, Paris and Soler are independent non-executive directors.
In the opinion of the Board, the independent non-executive directors are free from significant business, family or other relationship with the Group, its shareholders or its management that would create a conflict of interest such as to impair their judgement.
Mr Angelo Xuereb has been appointed as Chairman of the Board and Mr Michael Warrington as the Chief Executive Officer and Deputy Chairman of the Company. Mr Kenneth Abela has been appointed as Chief Executive Officer Designate in November 2024.
The Board acknowledges its statutory mandate to conduct the administration and management of the Company. The Board’s functions are governed by Chapter 5 of the Capital Market Rules and the Code of Corporate Governance for Listed Entities.
The Board is also responsible for ensuring that the Company installs and operates effective internal control and management information systems and that it communicates effectively with the market.
The Board met six times during the year under review. The Board has a formal schedule of matters reserved to it for decision. Directors receive board and committee papers 10 days in advance of meetings and have access to the advice and services of the Company Secretary. Directors may, in the furtherance of their duties, take independent professional advice on any matter at the Company’s expense.
The Company, due to its continuous oversight and communication with its shareholders, has not established a performance evaluation committee chaired by a non-executive Director in order to carry out a performance evaluation of its role.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
27
Corporate Governance – Statement of Compliance – continued
Audit Committee
The Committee is chaired by Mr John Soler, and its other members are Mr Josef Formosa Gauci and Mr Christopher Paris. Mr Josef Formosa Gauci is considered by the Board to be competent in accounting and auditing in terms of the Capital Market Rules. As described above, all three directors are independent non-executive directors.
The Company Secretary acts as secretary to the committee which also receives the assistance of the Group Chief Executive Officer, Mr Michael Warrington, the Group Managing Director of Finance and Administration, Mr Albert Bonello and the Group Internal Auditor, Ms Isabelle Spiteri.
The Audit Committee met five times during the year under review.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee (the “RemNom Committee”) is composed of Mr Josef Formosa Gauci (Chairperson), Mr Christopher Paris and Mr John Soler, all of which are independent non-executive Directors.
In its function as remuneration committee, the RemNom Committee is charged with the oversight of the remuneration policies implemented by the Group with respect to its senior management.
In its function as nominations committee, the RemNom Committee is charged with enhancing the quality of nominees to the Board and ensuring the integrity of the nominating process and with proposing the remuneration package of Directors and senior executives of the Group.
The RemNom Committee was scheduled to meet during the year, however, the meeting was convened to 7 November 2024 due to business demands that arose close to year-end.
Dealings by Directors and Senior Officers
Conscious of its responsibility for monitoring dealings by Directors and senior officers in the Company’s securities, the Board approved a Code of Conduct for Securities Transactions by Directors, Executives and Employees in compliance with Capital Market Rules 5.102 to 5.116. The code provides guidance to the Company’s officers and serves as a minimum standard of good practice when dealing in the Company’s securities.
During the year under review, there were no transactions in the Company’s securities involving Directors or any of the Company’s employees in possession of unpublished price-sensitive information.
Internal Control
The Board is ultimately responsible for the Company’s system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve objectives, and can provide only reasonable, and not absolute, assurance against material misstatement or loss.
A policy is in place, laying down the minimum required reports that should be made available to the Board in order to keep it informed in a structured and systematic manner on the operational and financial performance of the Company.
Institutional Shareholders
The Company is privately held and has no institutional shareholders.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
28
Corporate Governance – Statement of Compliance – continued
Risk Identification
Management is responsible for the identification and evaluation of key risks applicable to their areas of business. Risks may be associated with a variety of internal or external sources including control breakdowns, disruption in information systems, competition, natural catastrophe and regulatory requirements.
The Board is responsible to review its risk management policies and strategies and oversee their implementation to ensure that identified operational risks are properly assessed and managed.
Directors’ Remuneration
The Board determines the remuneration of the Directors. The Directors’ and senior executives’ annual remuneration for the financial year under review, as approved by the Board, amounted to EUR1,276,761. This is a fixed remuneration and there are no variable elements or share options included. For the purposes of clarity, although several Directors sit on various committees of the Company, such Directors did not receive extra remuneration for occupying such roles during the year under review.
Commitment to Maintain an Informed Market
The Company recognises the importance of maintaining a dialogue with its stakeholders to ensure that its strategies and performance are understood. The Company communicates with stakeholders by way of the Annual Report and Financial Statements and by publishing its results on a six-monthly basis during the year, and through company announcements to the market in general.
The Board has also implemented an Investor Relations Program, which aims at giving Bondholders rewards to be used within the Group to foster loyalty. This program, which is managed by AX Group p.l.c. executives, includes the issue of the AX Investors Loyalty Card and the periodic dissemination of the AX Group Newsletter.
Corporate Social Responsibility
The Company is conscious of its responsibility towards the society in which it operates. It promotes environmentally friendly measures such as the reduction in the Company’s carbon footprint as well as encourages its employees to lead a healthy and active lifestyle. More information on environmental, social and governance matters is found in the Statement of Non-Financial Information in the Directors’ Report.
Signed on behalf of the Board of Directors on 24 February 2025 by Mr Angelo Xuereb and Mr Michael Warrington as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Financial Report 2024.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
29
Statements of Profit or Loss and Other Comprehensive Income
The notes on pages 35 to 87 form an integral part of these financial statements

|  | Group | Company
| Notes | 2024 | 2023 | 2024 | 2023
|  | EUR | EUR | EUR | EUR
Revenue | 8 | 83,343,606 | 49,865,256 | 13,523,836 | 31,270,094
Other operating income |  | 206,866 | 427,273 | 52,270 | 14,222
Operating costs | 12 | (27,362,043) | (16,957,245) | (1,574,254) | (2,148,174)
Staff costs | 9 | (32,155,310) | (25,889,943) | (3,870,169) | (3,825,546)
Depreciation | 16,18 | (10,077,922) | (9,337,751) | (569,050) | (589,297)
(Loss)/gain on revaluation of investment properties | 17 | (2,477,613) | 103,161 | (200,000) | (362,933)
Movement in fair value of financial asset | 21 | - | - | 435,447 | (637,955)
Gain/(loss) on disposal of financial assets |  | - | - | 1,608,500 | (595,700)
Operating profit/(loss) |  | 11,477,584 | (1,789,249) | 9,406,580 | 23,124,711
Share of results of associates and joint ventures | 20 | 2,104,953 | 975,602 | - | -
Finance income | 10 | 231,417 | 110,382 | 2,971,034 | 2,597,998
Finance costs | 11 | (8,001,940) | (6,113,901) | (3,716,351) | (3,678,631)
Profit/(loss) before taxation |  | 5,812,014 | (6,817,166) | 8,661,263 | 22,044,078
Taxation | 14 | (744,664) | 2,995,582 | 980,951 | (2,175,406)
Profit/(loss) for the year |  | 5,067,350 | (3,821,584) | 9,642,214 | 19,868,672
Attributable to: |  |  |  |  |
Owners of the parent |  | 4,449,620 | (3,856,785) | - | -
Non-controlling interest |  | 617,730 | 35,201 | - | -
|  | 5,067,350 | (3,821,584) | - | -
Basic earnings/(loss) per share | 15 | 3.82 | (3.31) | - | -
Other comprehensive income |  |  |  |  |
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods |  |  |  |  |
Gain on property revaluations | 16 | 7,072,651 | 3,632,933 | - | -
Taxation | 14 | (1,318,765) | (2,785,280) | - | -
Other comprehensive income net of tax |  | 5,753,886 | 847,653 | - | -
Total comprehensive income/(loss) |  | 10,821,236 | (2,973,931) | 9,642,214 | 19,868,672
Attributable to: |  |  |  |  |
Owners of the parent |  | 10,203,506 | (3,009,132) | - | -
Non-controlling interest |  | 617,730 | 35,201 | - | -
Total comprehensive income/(loss) |  | 10,821,236 | (2,973,931) | 9,642,214 | 19,868,672

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
30
Statements of Financial Position

|  | Group | Company
|  | 2024 | 2023 | 2024 | 2023
| Notes | EUR | EUR | EUR | EUR
ASSETS |  |  |  |  |
Non-current assets |  |  |  |  |
Property, plant and equipment | 16 | 343,800,766 | 324,000,066 | 935,592 | 1,029,965
Investment properties | 17 | 61,443,002 | 61,703,333 | 9,592,854 | 9,792,134
Right-of-use assets | 18 | 3,706,899 | 393,679 | 4,944,268 | 5,284,855
Net investment in the lease | 18 | - | - | 1,063,394 | 1,303,744
Investment in subsidiaries | 19 | - | - | 87,866,933 | 82,472,590
Investments in associates and joint ventures | 20 | 8,645,937 | 7,889,009 | - | -
Loans receivable | 21 | 388,892 | 2,175,155 | 62,485,306 | 42,779,811
Financial assets | 21 | - | - | 11,080,392 | 16,813,945
|  | 417,985,496 | 396,161,242 | 177,968,739 | 159,477,044
Current assets |  |  |  |  |
Inventories | 22 | 66,234,134 | 49,101,502 | 3,179,131 | 3,179,131
Trade and other receivables | 23 | 17,707,222 | 15,142,002 | 12,542,163 | 9,849,491
Net investment in the lease | 18 | - | - | 240,350 | 230,941
Current tax asset |  | 616,471 | 2,966,585 | 2,488,557 | 3,536,449
Cash at bank and in hand | 24 | 10,569,146 | 10,656,902 | 183,596 | 39,843
|  | 95,126,973 | 77,866,991 | 18,633,797 | 16,835,855
Total assets |  | 513,112,469 | 474,028,233 | 196,602,536 | 176,312,899

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
31
Statements of Financial Position – continued

|  | Group | Company
|  | 2024 | 2023 | 2024 | 2023
| Notes | EUR | EUR | EUR | EUR
EQUITY AND LIABILITIES |  |  |  |  |
Capital and reserves |  |  |  |  |
Share capital | 26 | 1,164,688 | 1,164,688 | 1,164,688 | 1,164,688
Revaluation reserve | 26 | 214,005,845 | 209,785,089 | 3,886,290 | 4,066,290
Other reserves |  | 616,095 | 616,095 | 285,342 | 285,342
Retained earnings | 26 | 20,929,232 | 19,235,716 | 98,276,514 | 93,454,300
|  | 236,715,860 | 230,801,588 | 103,612,834 | 98,970,620
Non-controlling interest |  | 12,113,698 | 12,738,710 | - | -
Total equity |  | 248,829,558 | 243,540,298 | 103,612,834 | 98,970,620
Non-current liabilities |  |  |  |  |
Trade and other payables | 27 | 12,517,872 | 11,517,083 | 1,399,991 | -
Bank borrowings | 28 | 63,621,749 | 68,988,396 | - | -
Other financial liabilities | 29 | - | - | 3,912,273 | 2,700,848
Debt securities in issue | 30 | 90,671,876 | 45,629,109 | 64,186,996 | 24,773,154
Non-current lease liabilities | 18 | 3,622,187 | 372,104 | 5,705,411 | 6,079,868
Deferred tax liabilities | 31 | 20,549,360 | 20,359,867 | 333,633 | 522,562
|  | 190,983,044 | 146,866,559 | 75,538,304 | 34,076,432
Current liabilities |  |  |  |  |
Trade and other payables | 27 | 39,522,736 | 29,469,209 | 1,704,479 | 3,843,671
Bank borrowings | 28 | 29,903,372 | 11,431,154 | - | -
Other financial liabilities | 29 | 8,449 | 5,973 | 12,282,994 | 38,319,182
Debt securities in issue | 30 | 3,810,761 | 42,692,823 | 3,089,469 | 746,712
Current lease liabilities | 18 | 54,549 | 22,217 | 374,456 | 356,282
|  | 73,299,867 | 83,621,376 | 17,451,398 | 43,265,847
Total liabilities |  | 264,282,911 | 230,487,935 | 92,989,702 | 77,342,279
Total equity and liabilities |  | 513,112,469 | 474,028,233 | 196,602,536 | 176,312,899

The notes on pages 35 to 87 form an integral part of these financial statements.
The financial statements on pages 29 to 87 have been authorized for issue by the Board of Directors on 24 February 2025 and were signed on its behalf by Mr Angelo Xuereb and Mr Michael Warrington as per Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report 2024.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
32
Statements of Changes in Equity
GROUP
Attributable to
equity
Non-
Share
Revaluation
Other
Retained
holders of
controlling
capital
reserve
reserves
earnings
the parent
interest
Total
EUR
EUR
EUR
EUR
EUR
EUR
EUR
At 31 October 2022
1,164,688
208,812,536
616,095
24,317,401
234,910,720
13,311,927
248,222,647
(Loss)/profit for the year
-
-
-
(3,856,785)
(3,856,785)
35,201
(3,821,584)
Other comprehensive income for the year, net of tax
-
847,653
-
-
847,653
-
847,653
Total comprehensive income/(loss) for the year
-
847,653
-
(3,856,785)
(3,009,132)
35,201
(2,973,931)
Dividends (Note 26)
-
-
-
(1,100,000)
(1,100,000)
(608,418)
(1,708,418)
Fair value movement of investment properties, net of tax
-
124,900
-
(124,900)
-
-
-
At 31 October 2023
1,164,688
209,785,089
616,095
19,235,716
230,801,588
12,738,710
243,540,298

Profit for the year | - | - | - | 4,449,620 | 4,449,620 | 617,730 | 5,067,350
Other comprehensive income for the year, net of tax | - | 5,753,886 | - | - | 5,753,886 | - | 5,753,886
Total comprehensive income for the year | - | 5,753,886 | - | 4,449,620 | 10,203,506 | 617,730 | 10,821,236
Dividends (Note 26) | - | - | - | (5,000,000) | (5,000,000) | (531,976) | (5,531,976)
Derecognition of non-controlling interest (Note 4) | - | - | - | 710,766 | 710,766 | (710,766) | -
Fair value movement of investment properties, net of tax | - | (1,533,130) | - | 1,533,130 | - | - | -
At 31 October 2024 | 1,164,688 | 214,005,845 | 616,095 | 20,929,232 | 236,715,860 | 12,113,698 | 248,829,558

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
33
Statements of Changes in Equity – continued
The notes on pages 35 to 87 form an integral part of these financial statements.
COMPANY
Share
Revaluation
Other
Retained
capital
reserve
reserve
earnings
Total
EUR
EUR
EUR
EUR
EUR
At 31 October 2022
1,164,688
4,392,929
285,342
73,402,872
79,245,831
Profit for the year
-
-
-
19,868,672
19,868,672
Total comprehensive income for the year
-
-
-
19,868,672
19,868,672
Effect of merger (Note 3)
-
-
-
956,117
956,117
Dividends (Note 26)
-
-
-
(1,100,000)
(1,100,000)
Fair value movement of investment properties, net of tax
-
(326,639)
-
326,639
-
At 31 October 2023
1,164,688
4,066,290
285,342
93,454,300
98,970,620
Profit for the year
-
-
-
9,642,214
9,642,214
Total comprehensive income for the year
-
-
-
9,642,214
9,642,214
Dividends (Note 26)
-
-
-
(5,000,000)
(5,000,000)
Fair value movement of investment properties, net of tax
-
(180,000)
-
180,000
-
At 31 October 2024
1,164,688
3,886,290
285,342
98,276,514
103,612,834
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
34
Statements of Cashflows

|  | Group | Company
|  | 2024 | 2023 | 2024 | 2023
| Notes | EUR | EUR | EUR | EUR
Cash flows from operating activities |  |  |  |  |
Profit/(Loss) before taxation |  | 5,812,014 | (6,817,166) | 8,661,263 | 22,044,078
Adjustments for: |  |  |  |  |
Depreciation | 16,18 | 10,077,922 | 9,337,751 | 569,050 | 589,297
Dividend receivable | 8 | - | - | (11,171,486) | (29,498,155)
Share of results of associates and joint ventures | 20 | (2,104,953) | (975,602) | - | -
Movement in fair value of investment properties | 17 | 2,477,613 | (103,161) | 200,000 | 362,933
Movement in fair value of financial asset | 21 | - | - | (435,447) | 637,955
(Gain)/ loss on disposal of financial asset |  | - | - | (1,608,500) | 595,700
Movement in expected credit loss | 12 | (81,134) | (237,241) | 44,358 | 13,632
Movement in provision for litigation | 12 | (46,666) | 247,887 | - | -
Movement in provision for obsolete stock |  | (15,669) | - | - | -
Other short-term employee benefits | 9 | 1,453,447 | 3,073,642 | 137,153 | 613,526
Issue cost amortization | 11 | 179,102 | 154,797 | 102,838 | 36,980
Interest expense | 11 | 7,527,230 | 5,959,104 | 3,613,513 | 3,641,651
Interest income | 10 | (231,417) | (110,382) | (2,971,034) | (2,597,998)
Operating profit/(loss) before working capital changes |  | 25,047,489 | 10,529,629 | (2,858,292) | (3,560,401)
Movement in inventories | 16,17,22 | (17,116,963) | (15,423,923) | - | -
Movement in trade and other receivables |  | (5,976,238) | (1,347,157) | (651,284) | (766,631)
Movement in trade and other payables |  | 10,036,753 | 761,585 | (22,837,600) | 5,652,277
Cash flows from/(used in) operating activities |  | 11,991,041 | (5,479,866) | (26,347,176) | 1,325,245
Interest paid |  | (6,176,939) | (5,743,539) | (862,500) | (864,863)
Interest received | 10 | 231,417 | - | 68,737 | 65,456
Taxation credit received/(paid) |  | 475,553 | (1,110,865) | 1,707,812 | -
Net cash flows from/(used in) operating activities |  | 6,521,072 | (12,334,270) | (25,433,127) | 525,838
Cash flows from investing activities |  |  |  |  |
Purchase of property, plant and equipment |  | (23,188,224) | (36,069,495) | (134,089) | (152,129)
Payments to acquire investment properties |  | (2,217,282) | (2,677,229) | - | -
Dividends received | 20 | 1,348,025 | 1,337,248 | - | -
Disposal of financial assets |  | - | - | 7,776,780 | 2,441,300
Movement in loan to subsidiary |  | - | - | 7,352,705 | (1,688,689)
Net cash flows (used in)/from investing activities |  | (24,057,481) | (37,409,476) | 14,995,396 | 600,482
Cash flows from financing activities |  |  |  |  |
Bank loan drawdowns |  | 19,973,917 | 53,029,045 | - | -
Bank loan repayments |  | (7,765,529) | (3,736,347) | - | -
Movement on other loans |  | - | (412,144) | - | -
Proceeds from debt securities in issue |  | 5,050,011 | 2,864,045 | 10,924,704 | -
Payment of lease liabilities | 18 | (174,953) | (36,500) | (343,220) | (628,408)
Dividends paid |  | - | (605,000) | - | (605,000)
Dividends to non-controlling interest |  | (531,976) | (608,418) | - | -
Net cash flows from/(used in) financing activities |  | 16,551,470 | 50,494,681 | 10,581,484 | (1,233,408)
Net movement in cash and cash equivalents |  | (984,939) | 750,935 | 143,753 | (107,088)
Cash and cash equivalents at beginning of year | 10,329,685 | 9,578,750 | 39,843 | 146,931
Cash and cash equivalents at end of year | 24 | 9,344,746 | 10,329,685 | 183,596 | 39,843

The notes on pages 35 to 87 form an integral part of these financial statements
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
35
Notes to the Financial Statements
1.GENERAL INFORMATION
AX Group p.l.c. (C 12271) is a public limited liability company incorporated in Malta. The Company is the parent company of the Group, which is mainly involved in the provision of hospitality and entertainment services, healthcare services, construction and property development. The Company’s registered office is at AX Group, AX Business Centre, Triq id-Difiza Civili, Mosta, MST 1741, Malta.
2.BASIS OF PREPARATION
The financial statements have been prepared in accordance with the requirements of the International Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of the Companies Act, Cap. 386 of the Laws of Malta.
The financial statements have been prepared on a historical cost basis, except for investment properties (Note 17), land and buildings (Note 16) and investment in debt securities (Note 21) which are stated at fair value. The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates. It also requires the Directors to exercise their judgement in the process of applying the Group and the Company’s accounting policies. Material accounting policies are disclosed in Note 5 and significant accounting judgments, estimates and assumptions are disclosed in Note 6 to these financial statements.
These financial statements are presented in Euro (EUR) which is the Group and the Company’s functional currency. The accounting policies set out below have been applied consistently to all periods presented in these financial statements.
2.1 Going concern
Profitability
The Group registered total revenue of EUR83.3 million, representing an increase of EUR33.5 million over last year and has reported an Adjusted EBITDA of EUR24,033,119 (2023:EUR7,445,341) which reconciles to the Group’s operating profit/(loss) after adjusting for gain/(loss) on revaluation of investment properties, movement in fair value of financial asset, gain/(loss) on disposal of financial asset and depreciation on the Statement of Profit or Loss.
Financial Position
As at 31 October 2024, the Company’s current assets exceeded its current liabilities by EUR1,182,399 (2023: current liabilities exceeded its current assets by EUR26,429,992). Given the nature of the Company and its function within the Group, of which it is the ultimate parent company, the Company is dependent on the Group for financial support.
As at 31 October 2024, the Group’s current assets exceeded its current liabilities by EUR21,827,106 (2023: current liabilities exceeded its current assets by EUR5,754,385) whereas the Group’s total assets exceeded its total liabilities by EUR248,829,558 (2023: EUR243,540,298). The working capital position at 31 October 2024 includes a balance of EUR2,067,464 (2023: EUR2,020,019) that represents deferred income which does not have an impact on the Group’s liquidity.
As described below, management has prepared a cashflow forecast for the AX Group, considering events and transactions that have occurred shortly after year-end or are expected to occur in the forthcoming eighteen month period, and has concluded that as a result of the strength of the Group’s financial position and performance and availability of financing, the AX Group will be able to sustain its operations over the foreseeable future in a manner that is cash flow positive.
Accordingly, based on information available at the time of approving these financial statements, the Directors have reasonable expectation that the Group and the Company will be able to meet all their obligations as and when they fall due over the foreseeable future and therefore, that the going concern basis adopted for the preparation of these consolidated and separate financial statements is appropriate.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
36
Notes to the Financial Statements – continued
2.BASIS OF PREPARATION - continued
2.1 Going concern - continued
Liquidity and Capital Funding
During the year, management took various steps to retain a high level of liquidity in line with the Group’s policy. As at reporting date, the Group had aggregate sanctioned banking facilities of EUR113,497,761 (2023: EUR120,763,291) of which EUR19,977,729 (2023: EUR40,344,706) were undrawn banking facilities.
As at 31 October 2024, the Group’s gearing ratio stood at 49.6% (2023: 46.4%). This ratio is anticipated to decrease following the closure of Verdala Terraces sales, as a portion of the proceeds from each sale will be allocated to repaying the bank loan. It should be noted that the Group is not required to maintain a sinking fund in relation to its borrowings.
Cashflow Forecast
Management has prepared a cashflow forecast covering 18 months from reporting date, considering significant events and transactions that have occurred or are expected to occur subsequent to period end. The base case scenario contemplates the Group FY2025 budget prepared by the various divisions of the Group.
Revenue from the hospitality division is projected to grow further, building on the successful first full year of operations of the AX ODYCY hotel and lido following its refurbishment and extension. In the construction division, multiple third-party contracts have been secured for the coming year, expected to drive a notable increase in revenue. The healthcare sector is forecasted to maintain the same level of activity achieved in 2024. Additionally, during 2025, the Group anticipates closing several contracts of sale from the Verdala residential development, with the first ones signed in November 2024.
The cash flow forecast also prudently factors in the potential impact of inflationary pressures on the Group’s operating costs. It includes planned capital expenditure associated with the completion of the Verdala project, alongside its financing arrangements, as well as the development of a select number of projects considered critical to the Group’s long-term strategy. Management also considered the servicing of current and projected debt, including debt at variable rates and contractual loan covenants which will come into effect as from FY2025.
Management has simulated a stress-tested scenario to assess the Group’s resilience and ability to handle unforeseen challenges. Under all scenarios tested, the Group is expected to continue to have sufficient liquidity relative to the funding available to it.
The Group has also identified a contingency plan aimed to generate further liquidity should the events that are expected to occur do not materialize and, with the contingency plan in place, management is confident that the Group will continue to have sufficient liquidity to operate in the foreseeable future. The contingency plan includes the possibility of obtaining additional bank financing, guaranteed by unencumbered assets owned by the Group. Additionally, the Group has earmarked some non-core immovable property that can be disposed of.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
37
Notes to the Financial Statements – continued
3.LEGAL MERGER IN 2023
On 5 September 2022, the board of Directors of Capua Palace Investments Limited, a company registered in Malta and the board of Directors of AX Group p.l.c. (“the Company”), approved a Draft Terms of Merger, whereby Capua Palace Investments Limited (“the company being acquired”) was amalgamated into the Company. The merger became effective on the 30 March 2023, on which date Capua Palace Investments Limited was struck off from the Malta Business Registry. The Draft Terms of Merger stipulated that the transactions of the company being acquired are accounted for in the annual accounts of the Company as from 1 November 2022.
Prior to the merger, the Company owned 100% of the ordinary shares in issue of Capua Palace Investments Limited. As a result of the legal merger, Capua Palace Investments Limited transferred all its activities to the Company and ceased to operate.
No cash payment was made; the legal merger is in substance the redemption by the Company of shares in Capua Palace Investments Limited, in exchange for the net assets of Capua Palace Investments Limited. The assets acquired and liabilities assumed are recognised at the carrying amounts in the consolidated financial statements as of the date of the legal merger with any difference recognised in equity as disclosed below:

| Capua Palace Investments Limited 31 October 2022
| EUR
ASSETS |
Non-current assets |
Right-of-use asset | 495,527
Other receivables | 1,534,685
Total non-current assets | 2,030,212
Current assets |
Trade and other receivables | 2,863,507
Total current assets | 2,863,507
TOTAL ASSETS | 4,893,719
LIABILITIES |
Current liabilities |
Trade and other payables | 2,364,639
Current tax payable | 25,207
Total current liabilities | 2,389,846
Non-current liabilities |
Deferred tax liabilities | 278,141
Other payables | 1,269,615
Total non-current liabilities | 1,547,756
TOTAL LIABILITIES | 3,937,602
EQUITY |
Retained earnings | 956,117
TOTAL EQUITY | 956,117
TOTAL EQUITY AND LIABILITIES | 4,893,719

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
38
Notes to the Financial Statements – continued
4.BASIS OF CONSOLIDATION
Subsidiaries are those companies in which the Group, directly or indirectly, has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.
The consolidated financial statements comprise the financial statements of AX Group p.l.c. (“the Company”) and its subsidiaries (“the Group”) as at 31 October 2024. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the Group has:
-Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
-Exposure, or rights, to variable returns from its involvement with the investee
-The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
-The contractual arrangement(s) with the other vote holders of the investee
-Rights arising from other contractual arrangements
-The Group’s voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
39
Notes to the Financial Statements – continued
4.BASIS OF CONSOLIDATION – continued
These consolidated financial statements comprise the Company and its subsidiaries, namely:

| Group % of equity and voting rights held
| 2024 | 2023
AX Construction Limited | 100 | 100
AX Finance Limited | 100 | 100
AX Hotel Operations p.l.c. | 100 | 100
AX Investments p.l.c. | 100 | 100
AX Port Holding Company Limited | 100 | 100
AX Port Investments Company Limited | 100 | 100
Capua Palace Investments Limited (merged into the Company per Note 3) | - | -
Central Leisure Developments Limited * | 100 | 100
Harbour Connections Limited (merged into Verdala Mansions Limited) | - | 100
Heritage Developments Limited * | 100 | 100
Hilltop Gardens Retirement Village Limited | 100 | 100
Hilltop Management Services Limited | 100 | 100
AX Business Park Limited | 100 | 100
Palazzo Merkanti Leisure Limited * | 100 | 100
Prime Buildings Limited ** | - | 75
Renewables Limited | 100 | 100
Royal Hotels Limited * | 100 | 100
Simblija Developments Limited * | 100 | 100
Skyline Developments Limited * | 100 | 100
Suncrest Hotels p.l.c.* | 100 | 100
Palazzo Lucia Limited | 100 | 100
Verdala Mansions Limited | 100 | 100
AX Real Estate p.l.c. | 91.13 | 91.13
Engage People Limited | 100 | 100
Verdala Terraces Limited | 100 | 100

* AX Group p.l.c. being the ultimate parent company of these entities through direct ownership of their immediate parent, AX Real Estates p.l.c.
**Prime Buildings Limited was dissolved and consequently voluntarily wound up during the year. Upon liquidation, the minority interest waived their right for the share capital and dividend distribution in favour of the Company (Note 19).
The registered address of all subsidiaries is AX Group, AX Business Centre, Triq id-Difiza Civili, Mosta MST 1741, Malta.
The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
40
Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied in the financial statements presented, unless otherwise stated.
5.1 Standards, interpretations and amendments to published standards endorsed by the European Union effective in the current year
The accounting policies adopted are consistent with those of the previous financial year, except for the following amendments to IFRS effective during the year:
-Amendments to IAS 12 Income Taxes: International Tax Reform – Pillar Two Model Rules (issued on 23 May 2023) (effective for financial year beginning on or after 1 January 2023)
-Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information (issued on 9 December 2021) (effective for financial year beginning on or after 1 January 2023)
-Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (issued on 7 May 2021) (effective for financial year beginning on or after 1 January 2023)
-Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies (issued on 12 February 2021) (effective for financial year beginning on or after 1 January 2023)
-Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021) (effective for financial year beginning on or after 1 January 2023)
-IFRS 17 Insurance Contracts (issued on 18 May 2017); including Amendments to IFRS 17 (issued on 25 June 2020) (effective for financial year beginning on or after 1 January 2023)
Apart from the below, the changes resulting from the above standards, interpretations and amendments are not expected to have a material effect on the financial statements of the Group.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies
The amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements provide guidance and examples to help entities apply materiality judgements to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting disclosures. The amendments impacted the Group’s disclosures of accounting policies, but not the measurement, recognition or presentation of any items in the Group’s financial statements.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
41
Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES
5.2 Standards, interpretations and amendments to published standards as adopted by the EU which are not yet effective
Up to date of approval of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but which are not yet effective for the current reporting year and which the Group has not early adopted but plans to adopt upon their effective date. The new and amended standards follow:
-Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (issued on 25 May 2023) (effective for financial year beginning on or after 1 January 2024)
-Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022) (effective for financial year beginning on or after 1 January 2024)
-Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15 August 2023) (effective for financial year beginning on or after 1 January 2025)
-Amendments to IAS 1 Presentation of Financial Statements:
i.Classification of Liabilities as Current or Non-Current (issued on 23 January 2020 (effective for financial year beginning on or after 1 January 2024));
ii.Classification of Liabilities as Current or Non-Current – Deferral of Effective Date (issued on 15 July 2020) (effective for financial year beginning on or after 1 January 2024); and
iii.Non-Current Liabilities with Covenants (issued on 31 October 2022) (effective for financial year beginning on or after 1 January 2024)
The changes resulting from these standards, interpretations and amendments are not expected to have a material effect on the financial statements of the Group.
5.3 Standards, interpretations and amendments that are not yet endorsed by the European Union
These are as follows:
-IFRS 19 Subsidiaries without Public Accountability: Disclosures (issued on 9 May 2024) (effective for financial year beginning on or after 1 January 2027)
-IFRS 18 Presentation and Disclosure in Financial Statements (issued on 9 April 2024) (effective for financial year beginning on or after 1 January 2027)
-Contracts Referencing Nature-dependent Electricity – Amendments to IFRS 9 and IFRS 7 (issued on 18 December 2024) (effective for financial year beginning on or after 1 January 2026)
-Annual Improvements Volume 11 (issued on 18 July 2024) (effective for financial year beginning on or after 1 January 2026)
-Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 (issued on 30 May 2024) (effective for financial year beginning on or after 1 January 2026)
The Group is still assessing the impact that these new standards will have on the financial statements.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
42
Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.4 Revenue from contracts with customers
Revenue includes all revenues from the ordinary business activities of the Group and is recorded net of value added tax. Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when (or as) it satisfies a performance obligation by transferring control of a promised good or service to the customer. The Group has generally concluded that it is the principal in its revenue arrangements.
The Group recognises revenue from the following major sources:
i.Sale of goods
ii.Provision of hospitality services primarily accommodation in hotels and boutique properties and catering services offered by the Group outlets and provision of accommodation services within a retirement home, independent living facilities and other ancillary services
iii.Construction, turnkey and restoration works of residential, commercial and industrial properties
iv.Sale of inventory property – completed property and property under development
i.Sale of goods
The Group, through its subsidiaries, sells food and beverage products and healthcare items directly to customers through its own outlets. Revenue is recognised when control of the goods has transferred, being at the point the customer purchases the goods at the outlet or property. Customers do not have the right of return and no warranties are given on the items sold.
ii.Provision of services - Hospitality and Healthcare
The Group, through various subsidiaries, provides hospitality and healthcare services.
Revenue from hospitality includes revenue from accommodation, foods and beverage services and other ancillary services. Each of the services rendered is recognised at a point in time when transferring control of the contracted service to the customer.
Revenue from health care services includes revenue recognised over time on a systematic basis based on the period consumed as a proportion of the total contractual period for: (i) revenue from Hilltop Gardens Retirement Village consisting of revenue from self-catering apartments and penthouses that are occupied by tenants for definite periods and (ii) revenue from Simblija Care Home consisting of revenue from stays for short term respite care, convalescence and post-operative recovery and intensive nursing care to the more dependent elderly residents; and revenue recognised at a point in time when transferring control of the contracted service to the customer – related to ancillary services provided at Simblija Care Home and other amenities.
iii.Provision of services – Construction
The Group provides construction related works to its customers. Revenue from construction works is recognised over time, based on the proportion of works performed to date. The Directors consider that this input method is an appropriate measure of the progress towards complete satisfaction of these performance obligations under IFRS15. The Group becomes entitled to invoice customers for construction works, when a third-party assessor signs off a certificate confirming the achievement of a milestone.
iv.Sale of inventory property – Completed property and property under development
The sale of completed property constitutes a single performance obligation and the Group has determined that this is satisfied at the point in time when control transfers. For unconditional exchange of contracts, this generally occurs when legal title transfers to the customer. For conditional exchanges, this generally occurs when all significant conditions are satisfied. Payments are received when legal title transfers.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
43
Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.5 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised from the time that expenditure for these assets and borrowing costs are being incurred and activities that are necessary to prepare these assets for their intended use or sale are in progress. Borrowing costs are capitalised until such time as the assets are substantially ready for their intended use or sale. Other borrowing costs are recognised as an expense in the profit and loss in the period in which they are incurred.
5.6 Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company and Group as a lessee
A single recognition and measurement approach for all leases is applied, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of use assets representing the right to use the underlying assets.
i.Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use, initial direct costs incurred, and lease payments made at or before the commencement date less assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
Group
Hospitality-15 to 111 years
Company
Offices-20 years
Warehouse-20 years
Hospitality -15 to 20 years
If ownership of the leased asset is transferred to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
44
Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.6 Leases - continued
Company and Group as a lessee – continued
ii.Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Group’s lease liabilities are detailed in Note 19.
Group as lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss and other comprehensive income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.
5.7 Taxation
i.Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted at the reporting date in the country where the Group operates and generates taxable income.
Current income tax is charged or credited to profit or loss. Current income tax relating to items realized directly in equity is realized in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
The charge for current tax is based on the taxable result for the period. The taxable result for the period differs from the result as reported in profit or loss because it excludes items which are non-assessable or disallowed and it further excludes items that are taxable or deductible in other periods.
AX GROUP P.L.C.
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Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.7 Taxation - continued
ii.Deferred income tax
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax liabilities are realized for all taxable temporary differences and deferred tax assets are realized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be realized.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to settle its current tax assets and liabilities on a net basis.
5.8 Fair value measurement
The Group and the Company measure non-financial assets such as investment properties, land and buildings and financial assets such as investment in debt securities in issue at fair value at each balance sheet date.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
-Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities
-Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
-Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
AX GROUP P.L.C.
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Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.9 Investment in subsidiaries
Subsidiaries are all entities over which the investor has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Company
Investments in subsidiaries are initially recognized at cost, being the fair value of the consideration given, including acquisition charges associated with the investment. Subsequent to initial recognition, the investments are measured at cost less any accumulated impairment losses.
5.10 Investment in associates and joint ventures
The Group holds an interest in a joint venture, Hardrocks Estates Limited, and an interest in associates, Valletta Cruise Port p.l.c. and Imselliet Solar Limited.
The financial statements of Hardrocks Estates Limited are prepared for the same reporting period as the Group whilst those of Valletta Cruise Port p.l.c. and Imselliet Solar Limited have different reporting periods. The accounting policies of all companies are aligned with those of the Group. Therefore, no adjustments are made when measuring and recognising the Group’s share of the profit or loss of the investees after the date of acquisition.
Group
The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group’s investment in its associate and joint venture are accounted for using the equity method.
Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately. The statement of profit or loss reflects the Group’s share of the results of operations of the associate or joint venture after adjustments to align the accounting policies of the Group, from the date that significant influence commences until the year-ended 31 October 2024.
Company
Investments in associates and joint ventures are initially recognized at cost. The Company subsequently measures the investments in associates and joint ventures at cost less any accumulated impairment losses.
AX GROUP P.L.C.
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Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.11 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i.Financial assets
Initial recognition and measurement
The Group classifies its financial assets, at initial recognition, as subsequently measured at amortised cost, and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
Subsequent measurement
For purposes of subsequent measurement, the Group classifies its financial assets in the following categories:
-Financial assets at amortised cost (debt instruments)
-Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost (debt instruments) are the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:
-The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
-The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s debt instruments at amortised cost includes loans and receivables, trade and other receivables and cash and cash equivalents.
AX GROUP P.L.C.
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5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.11 Financial instruments – continued
i.Financial assets – continued
Subsequent measurement – continued
Financial assets at fair value through profit or loss
Financial assets that do not meet the criteria for being measured at amortised cost are measured at fair value through profit or loss (FVTPL), specifically, debt instruments that do not meet the amortised cost criteria are classified as at FVTPL.
Financial assets measured at FVTPL are subsequently measured at fair value at the end of each reporting period, with any fair value gains or losses including foreign exchange gains and losses, recognised in profit or loss.
Interest income is disclosed within the line item ‘Finance income’. Fair value gains and losses are recognised within the line items ‘Movement in fair value of financial asset’. The Company holds investment in debt securities which falls in this category.
ii.Financial liabilities
Initial recognition and measurement
The Group’s financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Group’s financial liabilities include loans and borrowings and trade and other payables.
Subsequent measurement
For purposes of subsequent measurement, the Group’s financial liabilities are classified at amortised cost (loans and borrowings).
Financial liabilities at amortised cost (loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
AX GROUP P.L.C.
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Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.11 Financial instruments – continued
iii.Impairment of financial assets
The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, there is objective evidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets.
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
iv.Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
5.12 Impairment of non-financial assets
All other assets are tested for impairment in terms of this accounting policy except for inventory and investment properties measured at fair value.
At the end of each reporting period, the carrying amount of assets, including cash-generating units, is reviewed to determine whether there is any indication or objective evidence of impairment, as appropriate, and if any such indication or objective evidence exists, the recoverable amount of the asset is estimated. An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.
Impairment losses are recognised immediately in profit or loss, unless the asset is carried at a revalued amount, in which case, the impairment loss is recognised in other comprehensive income to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that asset.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.
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Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.13 Property, plant, and equipment
Property, plant, and equipment other than land and buildings are initially recorded at cost. These are subsequently stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes purchase price and any directly attributable cost of preparing the asset for its intended use.
Property, plant, and equipment are derecognised on disposal or when no future economic benefits are expected from their use or disposal. Gains or losses arising from derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount, and are included in profit or loss in the period of derecognition.
Depreciation is provided on the below items, at rates intended to write down the cost less residual value of the assets over their expected useful lives. The annual rates used, which are consistent with those applied in the previous year, are as follows:

Improvements | 10% per annum
Furniture, fixtures and fittings | 5% - 33% per annum
Computer equipment | 16% - 20% per annum
Plant and machinery | 5% - 20% per annum

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into consideration in determining the operating profit. The residual useful lives of the assets are reviewed and adjusted as appropriate, at each financial reporting date. The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount of the asset is greater than its estimated recoverable amount.
Subsequent costs are included in the carrying amount of the asset or recognized as separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group during the financial period in which they are incurred.
5.14 Revaluation of land and buildings
Land and buildings are held for use in the production or supply of goods or services or for administrative purposes. Subsequent to initial recognition, land and buildings are stated at revalued amount at the date of the revaluation less any subsequent accumulated depreciation and subsequent impairment losses. Revaluations are made for the entire class of land and buildings and with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using revaluations at the date of the statement of financial position. Any accumulated depreciation at the date of the revaluation is eliminated against the gross carrying amount of the asset.
Any revaluation increase arising on the revaluation is credited to the revaluation reserve unless it reverses a revaluation decrease for the same asset previously recognised in the profit and loss, in which case, the increase is credited to profit and loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation is recognised in profit and loss to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset.
An annual transfer from the asset revaluation surplus to retained earnings is made for the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset’s original cost. Additionally, accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation surplus relating to the particular asset being sold is transferred to retained earnings.
Depreciation commences when the depreciable assets are available for use and is charged to profit or loss so as to write off the cost /revalued amount, less any estimated residual value, over their estimated useful lives, using the straight-line method, on the following bases:

Buildings | 2% per annum

AX GROUP P.L.C.
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Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.15 Investment properties
Investment properties are properties held to earn rentals or for capital appreciation or both. Investment properties are recognized as an asset when it is probable that the future economic benefits that are associated with the investment properties will flow to the entity and the cost can be measured reliably.
Investment properties are initially measured at cost, including transaction costs, less impairment losses. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in fair values of investment properties are included in profit and loss in the period in which they arise, including the corresponding tax effect. Fair values are determined by a professionally qualified architect/surveyor on the basis of market values.
Investment properties are derecognized either when they have been disposed of (i.e. at the date the recipient obtains control) or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit and loss in the period of derecognition. The amount of consideration to be included in the gain or loss arising from the derecognition of investment properties is determined in accordance with the requirements for determining the transaction price in IFRS 15.
Transfers are made to (or from) investment properties only when there is a change in use. For transfer from investment properties to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.
5.16 Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined on a weighted average cost basis. Net realisable value is the price at which stocks can be sold in the course of business less anticipated costs of selling. Provision is made where necessary for obsolete, slow moving and defective stock.
Property held for development and re-sale is stated at the lower of cost and net realisable value. The cost includes the purchase price of the property and development costs incurred to date. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing and selling.
The cost of development and common costs are apportioned on the basis of the costs absorbed during the stage of development and the cost of land is apportioned on the basis of the floor area.
Cost incurred in bringing each property to its present location and condition includes:
-Freehold and leasehold rights for land
-Amounts paid to contractors for development
-Planning and design costs, costs of site preparation, professional fees for legal services, property transfer taxes, development overheads and other related costs
When an inventory property is sold, the carrying amount of the property is recognised as an expense in the period in which the related revenue is recognised. The carrying amount of inventory property recognised in profit or loss is determined with reference to the directly attributable costs incurred on the property sold and an allocation of any other related costs based on the relative size of the property sold.
5.17 Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits and short term, highly liquid investments readily convertible to known amounts of cash and subject to significant risk of changes in value. For the purpose of the statement of cashflows, cash and cash equivalents consist of cash in hand and deposits at banks, net of outstanding overdrafts.
AX GROUP P.L.C.
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Notes to the Financial Statements – continued
5.SUMMARY OF MATERIAL ACCOUNTING POLICIES – continued
5.18 Legal merger
The merger is accounted using the book value method of accounting, whereby the acquiring company recognises the assets acquired and liabilities assumed at the carrying amounts in the consolidated financial statements as of the date of the legal merger, on the effective date of as stipulated in the Draft Terms of Merger.
5.19 Ordinary shares and dividends
Ordinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary shares are recognized as a deduction from equity.
Dividends to holders of equity instruments are recognised as liabilities in the period in which they are declared. Dividends to holders of equity instruments are debited directly in equity.
5.20 Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities. Related party accounts are carried at cost, net of any impairment charge.
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Notes to the Financial Statements – continued
6.SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In preparing the financial statements, the Directors are required to make judgements, estimates and assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and application of judgment are inherent in the formation of estimates. Actual results in the future could differ from such estimates and the differences may be material to the financial statements. These estimates are reviewed on a regular basis and, if a change is needed, it is accounted for in the year the changes become known.
Except for the below, in the opinion of the Directors, the accounting estimates, assumptions and judgements made in the course of preparing these financial statements are not difficult, subjective or complex to a degree which would warrant their description as significant in terms of the requirements of IAS 1 (revised) - ‘Presentation of financial statements’.
Judgements
In the process of applying the Group’s accounting policies, the Directors have made the following judgements:
Recoverability of deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits together with future tax planning strategies (Note 31).
Deferred tax on revalued land and buildings
The Group’s own-use land and buildings within property, plant and equipment are measured at revalued amounts under IAS16. In the financial statements of the property-owning subsidiaries, these land and buildings were classified as investment property at fair value, and the resulting deferred tax liability was measured on the basis that the value of these assets will be recovered through sale (rather than through use) under the rebuttable presumption in IAS12. In Malta, the income tax rate applicable to benefits generated through operating the asset (recovery through use) is 35%, while that applicable on sale of property is 8% or 10% on the sales proceeds.
Judgement is required in preparing these financial statements to determine whether the Group will recover the value of the land and buildings through use or through sale, or partially through use and sale. During 2021, management of the property-owning subsidiaries entered into contracts with other group subsidiaries for a period of twenty years for the management and operation of the assets. This is part of a restructuring exercise in line with the updated strategy of the Group. As a result, the Group has reassessed the expected manner of recovery of these property, plant and equipment. In making this assessment, management made an estimation of the amount relating to non-depreciable assets, being land carried at fair value, where the deferred tax on revaluation assumes recovery through sale. For the depreciable portion, an estimation of the period over which management expects to recover the property, plant and equipment through use was made at the remaining number of years from the duration of the contract. The remaining balance beyond the period of use was assumed to be recovered through sale.
AX GROUP P.L.C.
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Notes to the Financial Statements – continued
6.SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS – continued
Estimates
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year, are described below. Estimates underlying the Group and the Company’s use of the going concern assertion are described in Note 2.1 to these financial statements.
Fair value of land and buildings and investment properties
The Group and the Company uses the services of professional valuers to revalue the land and buildings and investment properties. The professional valuers take into account market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group and the Company’s land and buildings and investment properties are revalued by independent professional qualified valuers on a rotation basis. In the years in which an independent valuation is not obtained, management reperforms fair valuations of the properties by verifying and updating all major inputs to the last independent valuation report prepared by an external independent valuer. Internal methods are therefore aligned with those used by external valuers. On a yearly basis, management assesses each property’s change in value to determine whether the change is reasonable and holds discussions with the independent valuer, as necessary.
The highest and best use of a non-financial asset takes into account the use of the asset that is physically possible, legally permissible and financially feasible, as follows:
-A use that is physically possible, takes into account the physical characteristics of the asset that market participants would take into account when pricing the asset (e.g. the location or size of a property).
-A use that is legally permissible takes into account any legal restrictions on the use of the asset that market participants would take into account when pricing the asset (e.g. the zoning regulations applicable to a property).
-A use that is financially feasible takes into account whether a use of the asset that is physically possible and legally permissible generates adequate income or cash flows (taking into account the costs of converting the asset to that use) to produce an investment return that market participants would require from an investment in that asset put to that use.
The Group and the Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimising the use of unobservable inputs. As described in Note 17, the Group and the Company uses valuation techniques that include inputs that are not always based on observable market data in order to estimate the fair value of land and building and investment properties. Note 17 provides detailed information regarding these valuation methods and the key assumptions used in performing such valuations.
Provision for expected credit losses of trade receivables
The entity applies the simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers.
AX GROUP P.L.C.
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Notes to the Financial Statements – continued
7.SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on its products and services and has five reportable segments, as follows:
-Hospitality
The hospitality segment operates a portfolio of hotel properties located in Valletta, Sliema and Qawra. Revenue generated by the hospitality operating segment includes revenue from accommodation, foods and beverage services and other ancillary services. Revenue from food and beverage is recognised at the point of sale, whereas accommodation revenue is recognised progressively over the duration of the guests’ stay.
-Construction
This operating segment undertakes construction projects with an emphasis on civil engineering works, turnkey assignments and restoration works, rendering services to both third party customers as well as companies forming part of the Group. Revenue from construction works is recognised over time, based on the proportion of works performed to date. The Directors consider that this input method is an appropriate measure of the progress towards complete satisfaction of these performance obligations under IFRS15. The Group becomes entitled to invoice customers for construction works, when a third-party assessor signs off a certificate confirming the achievement of a milestone.
-Healthcare
The healthcare operating segment encompasses Hilltop Gardens Retirement Village and Simblija Care Home, which offer tailor-made packages covering different levels of long- and short-term care. Revenue generated from health care services includes (a) revenue recognised over time on a systematic basis based on the period consumed as a proportion of the total contractual period for: (i) revenue from Hilltop Gardens Retirement Village consisting of revenue from self-catering apartments and penthouses that are occupied by tenants for definite periods and (ii) revenue from Simblija Care Home consisting of revenue from stays for short term respite care, convalescence and post-operative recovery and intensive nursing care to the more dependent elderly residents; and (b) revenue recognised at a point in time when transferring control of the contracted service to the customer – related to ancillary services provided at Simblija Care Home and other amenities.
-Real Estate and Development
The Group earns revenue from acting as a lessor in operating leases which do not transfer substantially all of the risks and rewards incidental to ownership of investment properties. Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease term and is included in revenue in the statement of profit or loss due to its operating nature, except for contingent rental income which is recognised when it arises. Initial direct costs incurred in negotiating and arranging an operating lease are recognised as an expense over the lease term on the same basis as the lease income.
The sale of completed property constitutes a single performance obligation and the Group has determined that this is satisfied at the point in time when control transfers. For unconditional exchange of contracts, this generally occurs when legal title transfers to the customer. For conditional exchanges, this generally occurs when all significant conditions are satisfied. Payments are received when legal title is transferred.
-Administration, Finance and Investment
The administration, finance and investment segment comprise of a number of entities whose principal activity is that of either holding investments in associate undertakings or acting as a financing arm for the Group.
No operating segments have been aggregated to form the above reportable operating segments.
The Chief Operating Decision Maker (CODM) of the Group is deemed to be the Board of Directors, who monitors the operating results of the business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the consolidated financial statements. The Group’s financing (including finance costs, finance income and other income) and income taxes are managed on a group basis and are not allocated to operating segments.
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7.SEGMENT INFORMATION – continued
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. Intra-segment revenues are eliminated upon consolidation and reflected below.
Segments for the year-ended 31 October 2024

| Hospitality | Construction | Healthcare | Real estate and property rentals | Admin,finance and investment | Adjustments and eliminations | Consolidated
| EUR | EUR | EUR | EUR | EUR | EUR | EUR
External customers | 61,300,161 | 11,573,486 | 7,203,940 | 2,424,579 | 841,440 | - | 83,343,606
Inter-segment | - | 6,443,338 | - | 31,299,755 | 15,554,685 | (53,297,778) | -
Revenue | 61,300,161 | 18,016,824 | 7,203,940 | 33,724,334 | 16,396,125 | (53,297,778) | 83,343,606
Other operating Income | - | 23,392 | 35,346 | 95,858 | 52,270 | - | 206,866
Other operating costs | (25,083,042) | (10,788,747) | (1,712,377) | (1,309,291) | (1,589,826) | 13,121,240 | (27,362,043)
Staff costs | (19,946,846) | (5,948,306) | (3,939,352 | (329,095) | (3,991,023) | 1,999,312 | (32,155,310)
Adjusted EBITDA | 16,270,273 | 1,303,163 | 1,587,557 | 32,181,806 | 10,867,546 | (38,177,226) | 24,033,119
Depreciation | (2,951,725) | (289,446) | (34,098) | (532) | (240,479) | (6,561,642) | (10,077,922)
Loss on revaluation | - | - | - | (2,277,613) | (200,000) | - | (2,477,613)
Operating profit |  |  |  |  |  |  | 11,477,584
Share of results of associates and joint ventures |  |  |  |  |  |  | 2,104,953
Net finance costs |  |  |  |  |  |  | (7,770,523)
Profit before tax |  |  |  |  |  |  | 5,812,014
Taxation |  |  |  |  |  |  | (744,664)
Profit for the year |  |  |  |  |  |  | 5,067,350
Segment assets | 171,172,506 | 18,094,792 | 53,447,203 | 515,103,207 | 235,165,341 | (479,870,580) | 513,112,469
Segment liabilities | (165,582,402) | (16,077,945) | (63,910,305) | (242,296,299) | (106,284,199) | 329,868,239 | (264,282,911)

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
57
Notes to the Financial Statements – continued
7.SEGMENT INFORMATION – continued
Segments for the year-ended 31 October 2023

| Hospitality | Construction | Healthcare | Real estate and property rentals | Admin,finance and investment | Adjustments and eliminations | Consolidated
| EUR | EUR | EUR | EUR | EUR | EUR | EUR
External customers | 36,528,735 | 4,138,979 | 6,841,329 | 1,680,464 | 675,749 | - | 49,865,256
Inter-segment | - | 17,167,039 | - | 19,205,997 | 32,840,491 | (69,213,527) | -
Revenue | 36,528,735 | 21,306,018 | 6,841,329 | 20,886,461 | 33,516,240 | (69,213,527) | 49,865,256
Other operating Income | - | 9,405 | 24,073 | 379,573 | 14,222 | - | 427,273
Other operating costs | (13,861,053) | (12,735,941) | (1,986,115) | (285,416) | (2,249,602) | 14,160,882 | (16,957,245)
Staff costs | (15,529,459) | (7,539,282) | (3,842,714) | (294,385) | (3,977,920) | 5,293,817 | (25,889,943)
Adjusted EBITDA | 7,138,223 | 1,040,200 | 1,036,573 | 20,686,233 | 27,302,940 | (49,758,828) | 7,445,341
Depreciation | (2,797,501) | (302,400) | (35,207) | (747) | (253,144) | (5,948,752) | (9,337,751)
Gain/(loss) on revaluation | - | - | - | 468,827 | (365,666) | - | 103,161
Operating loss |  |  |  |  |  |  | (1,789,249)
Share of results of associates and joint ventures |  |  |  |  |  |  | 975,602
Net finance costs |  |  |  |  |  |  | (6,003,519)
Loss before tax |  |  |  |  |  |  | (6,817,166)
Taxation |  |  |  |  |  |  | 2,995,582
Loss for the year |  |  |  |  |  |  | (3,821,584)
Segment assets | 170,944,801 | 12,392,471 | 56,113,153 | 556,596,240 | 243,716,678 | (565,735,110) | 474,028,233
Segment liabilities | (166,735,645) | (10,806,676) | (66,103,751) | (283,536,118) | (128,124,492) | 424,818,747 | (230,487,935)

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
58
Notes to the Financial Statements – continued
8.REVENUE
Revenue by category of activity:

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Construction works and building materials | 11,573,486 | 4,138,978 | - | -
Hospitality and entertainment | 60,986,343 | 36,237,054 | - | -
Healthcare | 6,976,408 | 6,623,179 | - | -
Sale of property and real estate | 1,119,628 | 651,000 | - | -
Rental income | 1,951,219 | 1,663,845 | 135,113 | 124,945
Management services | 736,522 | 551,200 | 2,217,237 | 1,646,994
Dividend receivable | - | - | 11,171,486 | 29,498,155
| 83,343,606 | 49,865,256 | 13,523,836 | 31,270,094

Construction works and building materials, hospitality and entertainment, healthcare, sale of property
and real estate and management services fall under IFRS15 and are recognized as follows:
Timing of revenue recognition
Group

| 2024 | 2023
| EUR | EUR
At a point in time |  |
Sale of property and real estate | 1,119,628 | 651,000
Hospitality and entertainment | 23,007,414 | 13,183,397
Healthcare | 2,228,547 | 2,138,604
| 26,355,589 | 15,973,001
Over time |  |
Construction works and building materials | 11,573,486 | 4,138,978
Hospitality and entertainment | 37,978,929 | 23,053,657
Healthcare | 4,747,861 | 4,484,575
Management services | 736,522 | 551,200
| 55,036,798 | 32,228,410

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
59
Notes to the Financial Statements – continued
9.STAFF COSTS

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Personnel costs |  |  |  |
Wages and salaries | 27,424,666 | 22,785,483 | 3,839,119 | 3,419,137
Social security costs | 1,783,587 | 1,462,663 | 130,543 | 123,234
| 29,208,253 | 24,248,146 | 3,969,662 | 3,542,371
Subcontracted labour | 3,492,922 | 3,861,972 | - | -
Salaries capitalised (i) | (1,999,312) | (5,293,817) | - | -
Salaries recharged to subsidiaries | - | - | (236,646) | (330,351)
Other short-term employee benefits (ii) | 1,453,447 | 3,073,642 | 137,153 | 613,526
| 32,155,310 | 25,889,943 | 3,870,169 | 3,825,546

(i)Capitalised salaries mostly relate to work performed on the two main internal developments, the extension and refurbishment of the AX ODYCY Hotel and the redevelopment of the Verdala Site.
(ii)Other short-term employee benefits relate to a provision for a retention bonus programme which is applicable to all staff members subject to achieving certain criteria. This incentive aims to reward loyal and committed employees for their extended tenure with the Group.
The average number of employees (including the Directors) during the year were:

| Group | Company
| 2024 | 2023 | 2024 | 2023
Management and administration | 184 | 206 | 32 | 43
Operations and distribution | 819 | 716 | - | 2
| 1,003 | 922 | 32 | 45

10.FINANCE INCOME

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Interest income on loans and receivables | 231,417 | 110,382 | 68,737 | 65,456
Interest income on loans to subsidiary | - | - | 2,314,511 | 1,826,742
Interest on net investment in the lease | - | - | 57,184 | 66,225
Interest income on investments | - | - | 530,602 | 639,575
| 231,417 | 110,382 | 2,971,034 | 2,597,998

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
60
Notes to the Financial Statements – continued
11.FINANCE COSTS

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Interest on bank loans and overdrafts | 3,068,590 | 1,928,723 | - | -
Interest on debt securities in issue | 4,363,429 | 3,684,967 | 3,205,257 | 864,863
Interest on lease liabilities | 95,211 | 19,785 | 275,062 | 289,470
Interest on amounts payable to subsidiary | - | - | 133,194 | 2,487,318
Amortisation of bond issue costs | 179,102 | 154,797 | 102,838 | 36,980
Bank loan fees | 295,608 | 325,629 | - | -
| 8,001,940 | 6,113,901 | 3,716,351 | 3,678,631

12.OPERATING COSTS

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Auditors’ remuneration |  |  |  |
For audit services – statutory audit | 220,000 | 190,000 | 55,200 | 43,000
For audit services – other assurance | - | 27,000 | - | 27,000
For non-audit services | 8,800 | 10,000 | 400 | 400
Stock consumed | 7,773,936 | 4,939,470 | - | -
Cost of constructing property sold | 208,617 | 152,482 | - | -
Construction costs | 5,182,861 | 640,276 | - | -
Movement in allowance for expected credit losses | (81,134) | (237,241) | 44,358 | 13,632
Provision for litigation | - | 247,887 | - | -
Water and electricity | 2,570,218 | 1,872,746 | 9,375 | 11,280
Repairs and maintenance | 797,601 | 1,145,314 | 83,361 | 270,290
Professional fees | 980,549 | 871,059 | 468,343 | 299,723
Commissions | 3,200,307 | 2,405,973 | 11,290 | 24,097
Cleaning | 851,080 | 551,935 | 5,577 | 1,890
Advertising and marketing | 583,310 | 427,247 | 184,951 | 95,984
Insurance | 568,031 | 433,977 | 73,265 | 59,352
Bank charges | 117,312 | 156,510 | 12,685 | 5,465
Licences and permits | 228,339 | 403,987 | - | 74,887
Printing and stationery | 229,937 | 121,157 | 66,845 | 20,387
Entertainment | 358,786 | 176,651 | 12,180 | 4,515
Recruitment and other staff related expenses | 591,784 | 206,248 | 10,714 | -
Waiver of amount due from subsidiary | - | - | - | 1,000,000
Other administrative costs | 2,971,709 | 2,214,567 | 535,710 | 196,272
| 27,362,043 | 16,957,245 | 1,574,254 | 2,148,174

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
61
Notes to the Financial Statements – continued
13.KEY MANAGEMENT PERSONNEL COMPENSATION

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Directors’ compensation |  |  |  |
Short-term benefits | 1,319,761 | 990,153 | 1,276,761 | 947,153
Other key management personnel compensation |  |  |  |
Salaries and social security contributions | 1,203,053 | 856,789 | 699,287 | 512,469

14.TAXATION

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Current income tax |  |  |  |
-for the year | 1,870,237 | (825,389) | - | 2,174,360
-losses surrendered to subsidiaries | - | - | (792,022) | -
Deferred tax through profit or loss | (1,125,573) | (2,170,193) | (188,929) | 1,046
Income tax charge/(credit) | 744,664 | (2,995,582) | (980,951) | 2,175,406
Deferred tax through other comprehensive income | 1,318,765 | 2,785,280 | - | -

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Profit/(loss) before taxation | 5,812,014 | (6,817,166) | 8,661,263 | 22,044,078
-Tax thereon at 35% | 2,034,205 | (2,386,008) | 3,031,442 | 7,715,427
Tax effect of: |  |  |  |
Income not subject to tax | (736,734) | (341,461) | (3,271,948) | (5,220,135)
Lower rate of tax on immoveable property fair value | (309,186) | (57,903) | - | -
Lower rate of tax on rental and other income | (1,784,491) | (1,138,009) | 60,542 | 118,281
Disallowed expenses | 1,540,870 | 927,799 | - | -
Other permanent differences | - | - | (800,987) | (438,167)
Income tax charge/(credit) for the year | 744,664 | (2,995,582) | (980,951) | 2,175,406

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
62
Notes to the Financial Statements – continued
15.EARNINGS PER SHARE
The earnings per share has been calculated on the Group’s profit for the year attributable to the owners of the parent of EUR4,449,620 (2023: loss for the year of EUR3,856,785) divided by the weighted average number of ordinary shares in issue during the year.
Group

| 2024 | 2023
| EUR | EUR
Weighted average number of shares in issue (Note 26) | 1,164,688 | 1,164,688
| EUR | EUR
Basic earnings/(loss) per share | 3.82 | (3.31)

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
63
Notes to the Financial Statements – continued
16.PROPERTY, PLANT AND EQUIPMENT

Group | Land and buildings | Improvements | Plant and machinery | Motor vehicles | Furniture, fixtures and equipment | Total
| EUR | EUR | EUR | EUR | EUR | EUR
Fair value/Cost |  |  |  |  |  |
At 01.11.2022 | 252,872,240 | 29,333 | 25,687,722 | 839,127 | 51,560,501 | 330,988,923
Additions | 22,418,750 | - | 8,044,222 | 51,141 | 11,296,727 | 41,810,840
Revaluation | 3,632,933 | - | - | - | - | 3,632,933
Transfer from Inventory (i) | 6,428,078 | - | - | - | - | 6,428,078
Other transfer (ii) | (3,147,122) | - | - | - | - | (3,147,122)
At 31.10.2023 | 282,204,879 | 29,333 | 33,731,944 | 890,268 | 62,857,228 | 379,713,652
Additions | 11,695,029 | - | 5,445,852 | 53,723 | 5,562,430 | 22,757,034
Revaluation | 7,072,651 | - | - | - | - | 7,072,651
Other transfer (ii) | (3,509,948) | - | - | - | - | (3,509,948)
At 31.10.2024 | 297,462,611 | 29,333 | 39,177,796 | 943,991 | 68,419,658 | 406,033,389
Depreciation |  |  |  |  |  |
At 01.11.2022 | - | 29,333 | 15,248,933 | 656,716 | 33,616,693 | 49,551,675
Provision for the year | 3,221,263 | - | 2,188,916 | 77,185 | 3,821,669 | 9,309,033
Transfer (ii) | (3,147,122) | - | - | - | - | (3,147,122)
At 31.10.2023 | 74,141 | 29,333 | 17,437,849 | 733,901 | 37,438,362 | 55,713,586
Provision for the year | 3,435,807 | - | 2,202,667 | 25,313 | 4,365,198 | 10,028,985
Transfer (ii) | (3,509,948) | - | - | - | - | (3,509,948)
At 31.10.2024 | - | 29,333 | 19,640,516 | 759,214 | 41,803,560 | 62,232,623
Net book value |  |  |  |  |  |
At 31.10.2024 | 297,462,611 | - | 19,537,280 | 184,777 | 26,616,098 | 343,800,766
Net book value |  |  |  |  |  |
At 31.10.2023 | 282,130,738 | - | 16,294,095 | 156,367 | 25,418,866 | 324,000,066
Net book value |  |  |  |  |  |
At 31.10.2022 | 252,872,240 | - | 10,438,789 | 182,411 | 17,943,808 | 281,437,248

(i)Details of the transfer from inventory
The transfer from inventory relates to the transfer of property resulting from a change in use, following management’s assessment of whether the property meets, or ceases to meet, the definition of property, plant and equipment.

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Transfer from inventory with a view to be occupied by the Group | - | 6,428,078 | - | -

(ii)This transfer relates to accumulated depreciation at the date of revaluation, eliminated against the gross carrying amount for the asset.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
64
Notes to the Financial Statements – continued
16.PROPERTY, PLANT AND EQUIPMENT – continued
Group – continued
Valuation of land and buildings
The Group’s land and buildings are revalued by independent professional qualified valuers on a rotation basis. In the years in which an independent valuation is not obtained, management reperforms fair valuations of the properties by verifying and updating all major inputs to the last independent valuation report prepared by an external independent valuer. Internal methods are therefore aligned with those used by external valuers. On a yearly basis, management assesses each property’s change in value to determine whether the change is reasonable and holds discussions with the independent valuer, as necessary.
The surplus on revaluation was transferred to the revaluation reserve. Note 17 provides detailed information regarding the key assumptions used in performing such revaluation.
The carrying amount of land and buildings, had they been measured at cost, would have amounted to EUR111,210,782 (2023: EUR101,518,322).
Capitalised borrowing costs
The Group completed works on the extension of the AX ODYCY hotel and redevelopment of the lido in Qawra during 2023. This project was financed partly through bank borrowings and partly through debt securities issued by AX Real Estates p.l.c., a subsidiary of the Company. The amount of borrowing costs capitalised during the year ended 31 October 2023 was EUR717,673. The rates used to determine the amount of borrowing costs eligible for capitalisation were 2.85% plus 3-month Euribor, 3.5% and 4.25% respectively per annum, which were the EIR of the specific borrowings.
Furthermore in 2024, the Group capitalized borrowing costs amounting to EUR1,445,247 into inventory in relation to the Verdala residential project.
Company
Furniture, fittings, and equipment
Motor vehicles
Total
EUR
EUR
EUR
Cost
At 01.11.2022
2,496,889
432,055
2,928,944
Additions
95,773
56,356
152,129
At 31.10.2023
2,592,662
488,411
3,081,073
Additions
145,090
-
145,090
Disposals
-
(11,000)
(11,000)
At 31.10.2024
2,737,752
477,411
3,215,163
Depreciation
At 01.11.2022
1,394,152
408,247
1,802,399
Provision for the year
198,328
50,381
248,709
At 31.10.2023
1,592,480
458,628
2,051,108
Provision for the year
219,391
9,072
228,463
At 31.10.2024
1,811,871
467,700
2,279,571
Net book value
At 31.10.2024
925,881
9,711
935,592
Net book value
At 31.10.2023
1,000,182
29,783
1,029,965
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
65
Notes to the Financial Statements – continued
17.INVESTMENT PROPERTIES

| Group | Company
| EUR | EUR
Fair value |  |
At 31 October 2022 | 57,887,382 | 9,552,294
Additions | 3,289,228 | 602,773
Fair value gain/(loss) | 103,161 | (362,933)
Transfers from inventory (i) | 423,562 | -
At 31 October 2023 | 61,703,333 | 9,792,134
Additions | 2,101,426 | 720
Fair value loss | (2,477,613) | (200,000)
Transfers from inventory (i) | 115,856 | -
At 31 October 2024 | 61,443,002 | 9,592,854

The transfers (to) / from property, plant and equipment, inventory and investment property held for sale relate to the transfer of properties resulting from a change in use, following management’s assessment of whether the property meets, or ceases to meet, the definition of investment property.
(i)Details of the transfers from inventory

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Transfer from inventory with a view to earn rentals or for capital appreciation | 115,856 | 979,367 | - | -
Transfer to inventory with a view to sell | - | (555,805) | - | -
| 115,856 | 423,562 | - | -

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
66
Notes to the Financial Statements – continued
17.INVESTMENT PROPERTIES – continued
Valuation process
The Group’s land and buildings are classified as either property, plant and equipment or investment property depending on their intended use. Land and buildings are revalued by independent professionally qualified architects or surveyors on a rotation basis. The architects are qualified and has experience in the category of investment properties being valued. The valuation models applied are in accordance with that recommended by the International Valuation Standards Committee and are consistent with the principles in IFRS13.
In the years in which an independent valuation is not obtained, management reperforms fair valuations of the properties by verifying and updating all major inputs to the last independent valuation report prepared by an external independent valuer. Internal methods are therefore aligned with those used by external valuers. On a yearly basis, management assesses each property’s change in value to determine whether the change is reasonable and holds discussions with the independent valuer, as necessary.
Climate-related considerations
For investment properties measured at fair value and land and buildings at revalued amount, the Group considers the effect of physical and transition climate-related risks and whether these could impact the value of the Group’s properties.
Management has evaluated potential climate-related risks that could impact the value of the Group’s land and buildings and investment properties, and these considerations have been included within the valuation process. These include possible physical risks from climate-change such as potential damage from extreme weather events, or transitional risks such as changes in property attractiveness due to shifting climate conditions and increasing requirement for energy efficiency of buildings.
Management has concluded that, based on the information currently available as factored in the cashflow forecasts, these potential climate-related risks are not expected to have a material impact on the value of the Group’s land and buildings and investment properties.
The Group remains vigilant and committed to continuously monitoring these climate-related considerations and will adjust the land and buildings and investment property valuations as necessary to reflect any significant changes in these risks or in their potential impact on the Group.
Changes in valuation techniques
The valuation technique used to determine the fair value of the Sliema and Valletta hotels was changed from the average of income capitalisation approach and replacement cost approach in the prior year to the income capitalisation approach in the current year. This was deemed to be the most appropriate approach by the independent valuer and it aligns with the valuation methodology of the other hotel properties owned by the Group.
The change in valuation methods are applied prospectively since they present a change in estimate.
The Group applied the same valuation techniques used in the previous year for the rest of the properties.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
67
Notes to the Financial Statements – continued
17.INVESTMENT PROPERTIES – continued
Highest and best use
The current use of the Group and the Company’s investment properties measured at fair value is considered to be the highest and best use except for part of the Verdala site which management intends to function as part of the hotel, and Palazzo Capua which management intends to refurbish and lease as office space. The Group has no restrictions on the realisability of its investment properties and no contractual obligations to purchase, construct or develop investment properties or for repairs, maintenance and enhancements.
Fair value hierarchy
The Group and Company’s property is classified as Level 3 in the fair value hierarchy. The different levels in the fair value are defined in Note 5.8.
The Group and Company’s policy is to recognize transfers into and out of fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. There were no transfers between levels during the year.
All gains and losses for recurring fair value measurements categorised within Level 3 of the fair value hierarchy, recorded in the Group’s Statement of Profit or Loss and Other Comprehensive Income, amount to a net gain of EUR2,477,613 (2023: net loss of EUR103,161). The Company recorded a loss on fair value measurements amounting to EUR200,000 (2023: EUR362,933). These are attributable to changes in unrealized gains or losses relating to investment property held at the end of the reporting period.
Group
Details of the investment properties and land and buildings and information about their fair value hierarchy as at the end of the year:
(i)Investment Properties

Type of Property | Level 3 | Total | Date of Valuation
| EUR | EUR
Land | 19,008,995 | 19,008,995 | 31/10/2022
Commercial property | 3,700,000 | 3,700,000 | 31/10/2021
| 22,320,603 | 22,320,603 | 31/10/2024
Residential | 5,319,379 | 5,319,379 | 31/10/2024
| 612,000 | 612,000 | 31/10/2021
| 10,482,025 | 10,482,025 | 31/10/2023
Total | 61,443,002 | 61,443,002 |

(ii)Land and Buildings

Type of Property | Level 3 | Total | Date of Valuation
| EUR | EUR
Commercial property | 297,462,611 | 297,462,611 | 31/10/2024
Total | 297,462,611 | 297,462,611 |

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
68
Notes to the Financial Statements – continued
17.INVESTMENT PROPERTIES – continued
Group – continued
Valuation techniques used to derive Level 3 fair value
For investment properties categorized under Level 3 of the fair value hierarchy, the valuation was determined by a combination of the market approach, the replacement cost approach and the income capitalization approach as applicable.
(i)Investment Properties

Type of Property | Valuation Technique | Inputs | Sensitivity
Residential property amounting to EUR4,498,025 (2023: EUR3,769,000) | Income capitalisation approach | Income capitalization approach: total projected stabilised EBITDA of EUR617,251 (2023: EUR746,476) using an average growth of 3% (2023: 2%) and discount rate of future income of 10.5% (2023: 12.83%). | The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.
Commercial property amounting to EUR2,210,000 (2023: EUR2,712,963) | Income capitalisation approach | The valuation relies on estimated commercial rental rates and yearly return of the various components of the existing building capitalized at a rate of 7% (2023: 7%). Annual rental rate of EUR350 per sqm (2023: EUR425) is assumed and EUR276,000 (2023: EUR320,000) for the ancillary property. | The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.
Commercial property amounting to EUR13,187,881 *(2023: EUR13,340,619) | Income capitalisation approach | The inputs used to calculate the total value of the property is an annual return in the range of EUR40 and EUR268 per square meter (2023: in the range of EUR40 and EUR268) at a capitalisation rate of 6% (2023: 6%). | The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.
Land amounting to EUR19,008,995(2023: EUR19,000,000) | Income capitalisation approach | The inputs used to calculate the total value of the property on completion is an annual return of EUR145 per square meter (2023: EUR 145) at a capitalisation rate of 7% (2023: 7%) less costs to implement. | The higher the capitalisation rate, the lower the fair value. The higher the annual return per square meter the higher the fair value.
Commercial property amounting to EUR6,922,722(2023: EUR7,340,014) | Income capitalisation approach | The inputs used to calculate the total value of the property is an annual return of EUR205 (2023: EUR550) per square meter at a capitalisation rate of 6.5% (2023: 6.25%) less costs to implement. | The higher the capitalisation rate, the lower the fair value. The higher the annual return per square meter the higher the fair value.
Residential property amounting to EUR612,000 (2023: EUR612,000) | Market approach | Market transaction. | The higher the market rates, the higher the fair value
Residential property amounting to EUR5,319,379 (2023: EUR5,308,737) | Replacement cost approach | This method takes into account the actual physical building fabric constituting the facility, together with an estimated land value. The valuation relies on estimated going rates of the various components of the existing building. | The higher the rates for construction, finishings, services and fittings the higher the fair value.
Residential property amounting to EUR5,984,000 (2023 EUR5,720,000) | Market approach | The valuation of investment property was based on market rates for comparable advertised properties taking into account the size, fit out of the subject units, location of the property and current situation of the residential and commercial property market. | The higher the market rates, the higher the fair value.
Commercial property amounting to EUR3,700,000 (2023: EUR3,900,000) | Income capitalisation approach | The inputs used to calculate the total value of the property is an annual return of EUR100-EUR300 per square meter (2023: EUR100-EUR300) at a capitalisation rate of 5.5% (2023: 5.5%). | The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.

* Includes a property amounting to EUR979,367 which was transferred from inventory to investment property during the prior year as disclosed in Details of the transfers (to) / from property, plant and equipment in Note 17.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
69
Notes to the Financial Statements – continued
17.INVESTMENT PROPERTIES – continued
Group – continued
Valuation techniques used to derive Level 3 fair value – continued
(ii)Land and Buildings

Type of Property | Valuation Technique | Inputs | Sensitivity
Commercial property amounting to EUR8,231,321 (2023: EUR8,124,822) | Income capitalisation approach | The inputs used to calculate the total value of the property is an annual return in the range of EUR40 and EUR270 per square meter (2023: EUR40 and EUR270 per square meter) at a capitalisation rate in the range of 5.75% to 6% (2023: 5.75% to 6%). | The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.
Commercial property amounting to EUR42,918,024(2023: EUR42,009,911) | Average of profits method; income capitalisation approach and replacement cost approach | Profits method: stabilised EBIDTA of EUR1,601,381 (2023: EUR2,136,690), capitalisation yield of 5.5% (2023: 5.5%), land appreciation of 4.5% per annum (2023: 4.5%), discount rate for commercial property sale at termination 5% (2023: 5%) and EBITDA multipliers ranging between 11.5X to 16X (2023: 11.6X to 16.4X).Income capitalization approach: stabilised EBIDTA of EUR1,601,381 (2023: EUR2,136,690), capitalisation yield of 5.5% (2023: 5.5%), land appreciation of 4.5% per annum (2023: 4.5%), discount rate for commercial property sale at termination 5% (2023: 5%) and discount rate for future income ranging 7.5%-11.83% (2023: 7.5%-11.83%).Replacement cost approach: This method takes into account the actual physical building fabric constituting the facility, together with an estimated land value. The valuation relies on estimated going rates of the various components of the existing building. | Profits method: The higher the EBITDA and capitalisation yield, the higher the fair value.Income capitalization approach: The higher the EBITDA and capitalisation yield, the higher the fair value. Replacement cost approach: The higher the rates for construction, finishings, services and fittings, the higher the fair value.
Commercial property amounting to EUR6,622,583 (2023: EUR6,420,000) | Income capitalisation approach | Income capitalization approach: total projected stabilised EBITDA of EUR2,049,732 (2023: EUR1,952,779) using an average growth of 3% (2023: 2%) and discount rate of future income of 11.83% (2023: 12.83%). | The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.
Commercial property amounting to EUR219,753,362* (2023: EUR210,558,733) | Income capitalisation approach | Income capitalization approach: total projected stabilised EBITDA of EUR24,695,000 using an average growth of 3% (2023: 3%), discount rate of 9.48%-11% (2023: 10%-11.83%). | The higher the EBITDA and capitalisation yield, the higher the fair value.
Commercial property amounting to EUR12,947,321 (2023: EUR8,504,376)** | Residual Method | The valuation of the property was based on market rates for comparable advertised properties using the residual method, taking into account the size, fit out of the subject units, location of the property and current situation of the residential and commercial property market. The gross development value is deducting all projected development costs as well as a developer’s profit. | The higher the market rates, the higher the fair value.

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
70
Notes to the Financial Statements – continued
17.INVESTMENT PROPERTIES – continued
Group – continued
Valuation techniques used to derive Level 3 fair value – continued
(ii)Land and Buildings – continued

Type of Property | Valuation Technique | Inputs | Sensitivity
Commercial property amounting to EUR6,990,000 (2023: EUR6,587,037) | Income capitalisation approach*** | The valuation relies on estimated commercial rental rates and yearly return of the various components of the existing building capitalized at a rate of 7% (2023: 7%). Annual rental rate of EUR350 per sqm (2023: EUR425) is assumed and EUR276,000 (2023: EUR320,000) for the ancillary property. | The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.

*During the year, the valuation technique used to determine the revalued amount of part of this commercial property was changed as disclosed in Changes in valuation techniques in Note 17.
**During the prior year, the property was transferred at cost from inventory to owner-occupied property as disclosed in Details of the transfers (to)/from inventory in Note 17.
***During the prior year, part of the property was transferred from owner-occupied property to investment property as disclosed in Details of the transfers (to)/from property, plant and equipment in Note 17.
Company
Details of the investment properties and information about their fair value hierarchy as at the end of the year:
Type of Property
Level 3
Total
Date of
EUR
EUR
Valuation
Commercial property
3,700,000
3,700,000
31/10/2021
Residential
5,280,854
5,280,854
31/10/2022
Residential
612,000
612,000
31/10/2023
Total
9,592,854
9,592,854
Valuation techniques used to derive Level 3 fair value
For investment properties categorized under Level 3 of the fair value hierarchy, the valuation was determined by a combination of the market approach and the income capitalization approach as applicable.
Type of Property
Valuation Technique
Inputs
Sensitivity
Commercial property amounting to EUR3,700,000 (2023: EUR3,900,000)
Income capitalisation approach
The inputs used to calculate the total value of the property is an annual return of EUR100-EUR300 per square meter (2023: EUR100-EUR300) at a capitalisation rate of 5.5% (2023: 5.5%).
The higher the capitalisation rate, the lower the fair value. The higher the rental income and growth rate the higher the fair value.
Residential property amounting to EUR5,280,854 (2023: EUR5,280,134)
Replacement cost approach
This method takes into account the actual physical building fabric constituting the facility, together with an estimated land value. The valuation relies on estimated going rates of the various components of the existing building.
The higher the rates for construction, finishings, services and fittings the higher the fair value.
Type of Property
Valuation Technique
Inputs
Sensitivity
Residential property amounting to EUR612,000 (2023: EUR612,000)
Market approach
Market transaction
The higher the rates, the higher the fair value.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
71
Notes to the Financial Statements – continued
18.LEASES
Group as a lessor
The operating leases relating to investment properties owned by the Group have terms between 1 and 20 years. The lessee does not have the option to purchase the property at the expiry of the lease period. The income earned under the operating lease amounted to EUR1,951,219 (2023: EUR1,663,845).
At the end of the reporting period, the lessee had outstanding commitments under non-cancellable operating leases, which fall due as follows:

| 2024 | 2023
| EUR | EUR
Within one year | 1,713,726 | 1,252,010
Between two and five years | 4,143,948 | 1,844,112
Over five years | 839,450 | 951,783
| 6,697,124 | 4,047,905

Group and Company as a lessee
The Company has lease contracts with its subsidiaries for its Head Office, a warehouse and a sublease contract for Palazzo Capua following the merger of Capua Palace Investments Limited into the Company (Note 3). The lease contracts have terms between ten to twenty years.
On 22 October 2024, Palazzo Merkanti Limited, a subsidiary of the Group, was formally recognized by the Lands Authority as the new emphyteuta of land in Valletta, which includes the Roselli Hotel, for the remaining term of the 150-year temporary emphyteusis which commenced on 24 May 1985.
Moreover, during the year, the Group entered into a new lease agreement that grants the Group temporary emphyteusis on the land where the Qawra Lido, operated by the Group’s hospitality division, is located, for a term of sixty-five years.
The carrying amounts of right-of-use assets recognized and the movements during the year are as follows:

| Group | Company
| EUR | EUR
Opening balance at 1 November 2022 | - | 5,129,916
Effect of merger (Note 3) | - | 495,527
Recognition of a new lease | 422,397 | -
Depreciation on right-of-use assets | (28,718) | (340,588)
Closing balance at 31 October 2023 | 393,679 | 5,284,855
Recognition of a new lease | 3,362,158 | -
Depreciation on right-of-use assets | (48,938) | (340,587)
Closing balance at 31 October 2024 | 3,706,899 | 4,944,268

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
72
Notes to the Financial Statements – continued
18.LEASES - continued
Group and Company as a lessee – continued
The carrying amounts of lease liabilities and the movements during the year are as follows:

| Group | Company
| EUR | EUR
Opening balance at 1 November 2022 | - | 5,321,900
Effect of merger (Note 3) | - | 1,453,188
Recognition of new lease | 411,036 | -
Accretion of interest | 19,785 | 289,470
Amounts set-off in respect of payments | (36,500) | (628,408)
Closing balance at 31 October 2023 | 394,321 | 6,436,150
Current | 22,217 | 356,282
Non-current | 372,104 | 6,079,868
| 394,321 | 6,436,150
Recognition of new lease | 3,362,157 | -
Accretion of interest | 95,211 | 275,062
Amounts set-off in respect of payments | (174,953) | (631,345)
Closing balance as at 31 October 2024 | 3,676,736 | 6,079,867
Current | 54,549 | 374,456
Non-current | 3,622,187 | 5,705,411
| 3,676,736 | 6,079,867

The Company subleases the Palazzo Capua to a subsidiary. As a result, the Company has a net investment in the lease of EUR1,303,744 (2023: EUR1,534,685), out of which EUR240,350 (2023: EUR230,941) is a current balance.
19.INVESTMENT IN SUBSIDIARIES
Company
Cost
EUR
At 1 November 2022
82,054,477
Disposal
(1,162)
Increase in capital contributions (Note i)
419,275
At 31 October 2023
82,472,590
Disposal (Note ii)
(3,605,657)
Increase in capital contributions (Note i)
9,000,000
At 31 October 2024
87,866,933
These financial statements comprise the results and position of the Group and the Company at 31 October 2024, which is a common year-end of all subsidiaries forming part of the Group. The list of consolidated subsidiaries is disclosed in Note 4.
(i)During the year, the Company made capital contributions of EUR9,000,000 (2023: EUR419,275) in subsidiaries (Note 34).
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
73
Notes to the Financial Statements – continued
19.INVESTMENT IN SUBSIDIARIES – continued
Company
(ii)During the year, the Company sold two of its subsidiaries, AX Investments p.l.c. and Harbour Connections Limited, to AX Finance Limited and Verdala Mansions Limited, two other subsidiaries, respectively. The Company sold the shares held in AX Investments p.l.c. for a consideration of EUR4,999,996. The cost as at the date of disposal amounted to EUR2,795,933, resulting in a gain on disposal of investment in subsidiary amounting to EUR2,204,063. The Company sold the shares held in Harbour Connections Limited at cost, for an amount of EUR768,474. Moreover, Prime Buildings Limited, another subsidiary of the Company, was dissolved and consequently voluntarily wound up. The cost of the Company’s investment in Prime Buildings Limited as at the date of liquidation amounted to EUR41,250. Upon liquidation, the minority interest waived their right for the share capital and dividend distribution in favour of the Company (Note 4).
20.INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Group

| EUR
At 31 October 2022 | 8,250,655
Share of results | 975,602
Dividends | (1,337,248)
At 31 October 2023 | 7,889,009
Share of results | 2,104,953
Dividends | (1,348,025)
At 31 October 2024 | 8,645,937

The Group has a 36% interest and voting rights in Valletta Cruise Port p.l.c. (2023: 36%), 33% interest and voting rights in Imselliet Solar Limited (2023: 33%) and 50% interest and voting rights in Hardrocks Estates Limited (2023: 50%). The entities are privately owned entities registered and operating in Malta and are not listed on any public exchange. The Group’s interest in Valletta Cruise Port p.l.c., Imselliet Solar Limited and Hardrocks Estates Limited is accounted for using the equity method in the consolidated financial statements.
The Group’s carrying amount of the investments includes goodwill amounting to EUR1,449,613 (2023: EUR1,449,613) resulting upon acquisition of an interest at an amount higher than its book value.
The following table illustrates the summarised financial information of the Group’s investment in these entities:

| 2024 | 2023
| EUR | EUR
Current assets | 7,253,566 | 6,606,838
Non-current assets | 52,100,417 | 52,019,501
Current liabilities | 8,274,608 | 6,018,027
Non-current liabilities | 31,482,206 | 35,049,467
Revenue | 19,659,547 | 14,421,411
Profit for the year | 5,577,772 | 2,418,435

The associates had no contingent liabilities or capital commitments at 31 October 2024 and 31 October 2023.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
74
Notes to the Financial Statements – continued
21.LOANS RECEIVABLE AND OTHER FINANCIAL ASSETS
Group

| Loans receivable from shareholders | Loans receivable from other related party | Total
| EUR | EUR | EUR
At 31 October 2022 | 863,011 | 900,000 | 1,763,011
New loan origination | 412,144 | - | 412,144
At 31 October 2023 | 1,275,155 | 900,000 | 2,175,155
Repayment of loan | (886,263) | (900,000) | (1,786,263)
At 31 October 2024 | 388,892 | - | 388,892

Loans to shareholders are unsecured, bear an interest rate of 5% and are repayable by 31 December 2025. The entity determines the expected credit loss allowance on these loans based on a probability of default of 0.16% and a loss given default of 100%.
Company
Loans Receivable
Investment in debt securities
EUR
EUR
Cost
Fair Value
At 1 November 2022
38,839,539
20,488,900
New loan origination
2,044,166
-
Repayment of loan
(767,783)
-
Interest on loans transferred from current
2,720,160
-
Disposal of debt securities
-
(3,037,000)
Fair value movement
-
(637,955)
At 31 October 2023
42,836,082
16,813,945
New loan origination
19,082,269
-
Repayment of loan
(886,263)
-
Interest on loan
1,551,389
-
Disposal of debt securities
-
(6,169,000)
Fair value movement
-
435,447
At 31 October 2024
62,583,477
11,080,392
Expected credit loss
At 1 November 2022
38,463
-
Movement for the year
17,808
-
At 31 October 2023
56,271
-
Movement for the year
41,900
-
At 31 October 2024
98,171
-
Net book value
At 31 October 2024
62,485,306
11,080,392
Net book value
At 31 October 2023
42,779,811
16,813,945
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
75
Notes to the Financial Statements – continued
21.LOANS RECEIVABLE AND OTHER FINANCIAL ASSETS - continued
Company – continued
Loans receivable
Loans receivable include loans to shareholders amounting to EUR388,892 (2023: EUR1,275,155) which are unsecured, bear an interest rate of 5% and are repayable by 31 December 2025. The remaining balance relates to subsidiary undertaking loans, which are unsecured, carry interest at of 4.82% to 6.25% (2023: 4.85% to 4.98%) and are repayable between 31 October 2029 to 31 October 2033. The entity determines the expected credit loss allowance on the Group undertakings loans based on a probability of default of 0.16% and a loss given default of 100%.
Investment in debt securities
These relate to the allocation of EUR21,645,400 of bonds issued by AX Real Estate p.l.c. to the Company through the part conversion of the existing intra-group loan in 2022. Fair values of these debt instruments are determined by reference to published price quotations in an active market. The carrying amount of the debt securities held at 31 October 2024 amounted to EUR11,914,400.
22.INVENTORIES

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Property held for development and re-sale | 64,304,393 | 47,070,934 | 3,179,131 | 3,179,131
Raw materials and consumables | 1,929,741 | 2,030,568 | - | -
| 66,234,134 | 49,101,502 | 3,179,131 | 3,179,131
Current (i) | 66,234,134 | 49,101,502 | 3,179,131 | 3,179,131
Non-current | - | - | - | -
| 66,234,134 | 49,101,502 | 3,179,131 | 3,179,131

(i)The construction of the residential units at the Verdala site was completed during 2023. Accordingly, the units were ready to be sold in the ordinary course of business and such inventory property was transferred from non-current assets to current assets as at 31 October 2023.
During the current year, EUR8 million (2023: EUR5.1 million) was recognized as an expense for inventories carried at cost. This is recognized as part of operating expenses (Note 12).
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
76
Notes to the Financial Statements – continued
23.TRADE AND OTHER RECEIVABLES

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Trade receivables (i) | 6,599,302 | 6,464,973 | 72,171 | 212,799
Provision for doubtful debts (i) | (215,266) | (386,856) | - | -
Allowance for ECL on trade receivables (i) | (234,554) | (195,485) | - | -
| 6,149,482 | 5,882,632 | 72,171 | 212,799
Amounts owed by associates (ii) | 115,102 | 678,425 | - | -
Amounts owed by other related parties (ii) | 41,587 | 215,363 | 38,549 | 21,761
Amounts owed by subsidiaries (ii) | - | - | 7,484,382 | 5,862,448
Shareholders’ current account (ii) | 2,240,833 | 3,111,344 | 2,236,623 | 2,942,227
Allowance for ECL on balances owed by related parties | - | - | (11,340) | (8,882)
Advanced payments to suppliers (iii) | 1,415,992 | 1,695,032 | - | 3,466
Indirect taxation | 486,040 | 712,577 | - | -
Other receivables | 3,270,480 | 1,033,143 | 2,371,000 | 319,250
Prepayments and accrued income | 3,987,706 | 1,813,486 | 350,779 | 496,422
| 17,707,222 | 15,142,002 | 12,542,163 | 9,849,491

(i)Trade and other receivables are non-interest bearing and repayable on 60 day terms.
Impairment of financial assets – trade receivables
The entity applies the simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component. In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers. The expected credit losses for trade receivables as at 31 October 2024 was determined as follows:
2024

|  | Current | >30 days | >60 days | >90 days | >180 days | >365 days | Total
Expected credit loss rate | % | 0.02-1.25 | 0.04-1.95 | 0.07-94.66 | 0.11-100 | 0.39-100 | 100 |
Gross carrying amount | EUR | 2,813,220 | 1,489,271 | 734,497 | 565,076 | 465,071 | 532,167 | 6,599,302
Lifetime expected credit loss | EUR | 56,933 | 24,133 | 20,470 | 53,879 | 49,381 | 29,758 | 234,554
Provision for doubtful debts | EUR | - | - | - | - | 215,266 | - | 215,266

2023

|  | Current | >30 days | >60 days | >90 days | >180 days | >365 days | Total
Expected credit loss rate | % | 0.20-1.72 | 0.04-3.99 | 0.07-52.53 | 0.11-89.61 | 0.39-89.61 | 100 |
Gross carrying amount | EUR | 3,894,019 | 715,842 | 820,053 | 586,449 | 364,507 | 84,103 | 6,464,973
Lifetime expected credit loss | EUR | 34,947 | 14,163 | 23,984 | 85,811 | 12,425 | 24,155 | 195,485
Provision for doubtful debts | EUR | - | - | - | - | 386,856 | - | 386,856

(ii)Amounts owed by associates, other related parties, subsidiaries and shareholders are unsecured, interest-free and have no fixed date of repayment. Amounts owed by associates represent dividends receivable.
(iii)Advanced payments to suppliers relate to preliminary payments executed by the Group to suppliers in respect of its ongoing projects as per contract terms. The Group has already settled these payments, and it is expected that the counterparties will fulfil their contractual obligations as a compensation for these advances.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
77
Notes to the Financial Statements – continued
24.CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the cash flow statement comprise the following:

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Cash at bank and in hand | 10,569,146 | 10,656,902 | 183,596 | 39,843
Bank overdrafts (Note 28) | (1,224,400) | (327,217) | - | -
| 9,344,746 | 10,329,685 | 183,596 | 39,843

The Group and the Company engaged in the following significant non-cash operating, investing and financing activities during the year:

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Non-cash operating activities |  |  |  |
Property sold to shareholder (Note 34) | 1,000,000 | 600,000 | - | -
Waiver of amount owed by subsidiary (Note 12 and Note 34) | - | - | - | 1,000,000
Non-cash investing activities |  |  |  |
Assets taken over upon merger (Note 3) | - | - | - | 4,893,719
Non-cash financing activities |  |  |  |
Dividend declared by Company | 5,000,000 | 495,000 | 5,000,000 | 495,000
Dividend declared by subsidiary (Note 8) | - | - | 11,171,486 | 29,498,155
Increase in capital contribution (Note 19) | - | - | 9,000,000 | 419,275

25.CONSTRUCTION CONTRACTS
As at year-end, retentions held by customers for contract works amounted to EUR2,453,027 (2023: EUR2,551,759).
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
78
Notes to the Financial Statements – continued
26.CALLED UP ISSUED SHARE CAPITAL
Company and Group

| 2024 | 2023
| EUR | EUR
Authorised |  |
300,000,000 ordinary shares of EUR1 each | 300,000,000 | 300,000,000
Called up issued and fully paid up |  |
1,164,688 (2023: 1,164,688) ordinary shares of EUR1 each | 1,164,688 | 1,164,688

Each ordinary share gives the right to one vote, participates equally in profits distributed by the Company and carries equal rights upon the distribution of assets by the Company in the event of a winding up.
Revaluation reserve
The Company’s revaluation reserve arises on the revaluation of investment properties and land and buildings net of deferred tax. When the revalued property is sold, the portion of the property revaluation reserve that relates to that asset, and is effectively realised, is transferred directly to retained earnings.
Retained earnings
The reserve represents accumulated retained profits that are available for distribution to the Company’s shareholders.
Dividend paid
During the year, AX Real Estate p.l.c., a subsidiary of the Company, declared interim dividends amounting to EUR531,976 (2023: EUR608,418) due to non-controlling interest.
In September 2024, the Company paid an interim dividend of EUR4.29 per ordinary share, amounting to EUR5,000,000 (2023: EUR1,100,000).
27.TRADE AND OTHER PAYABLES

| Group |  | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Trade payables (i) | 11,271,918 | 10,172,884 | 103,190 | 327,306
Other payables | 6,879,162 | 5,525,007 | 2,417,397 | 2,656,836
Indirect taxation and social security | - | - | 220,187 | 195,077
Accruals and deferred income (ii) | 33,889,528 | 25,288,401 | 363,696 | 664,452
| 52,040,608 | 40,986,292 | 3,104,470 | 3,843,671
Current | 39,522,736 | 29,469,209 | 1,704,479 | 3,843,671
Non-current | 12,517,872 | 11,517,083 | 1,399,991 | -
| 52,040,608 | 40,986,292 | 3,104,470 | 3,843,671

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
79
Notes to the Financial Statements – continued
27.TRADE AND OTHER PAYABLES - continued
(i)Trade payables are non-interest bearing and repayable within a 60-day term.
(ii)Accruals and deferred income mainly relate to upfront receipts from retirement home residents which will be recognised as revenue when the performance obligation is satisfied, along with deposits received on properties sold under a promise of sale.
28.BANK BORROWINGS

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Bank loans | 92,300,721 | 80,092,333 | - | -
Bank overdrafts (Note 24) | 1,224,400 | 327,217 | - | -
| 93,525,121 | 80,419,550 | - | -

Bank loans and overdrafts are repayable as follows:

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
On demand or within one year | 29,903,372 | 11,431,154 | - | -
Between two and five years | 24,321,821 | 21,608,479 | - | -
After five years | 39,299,928 | 47,379,917 | - | -
| 93,525,121 | 80,419,550 | - | -
Current | 29,903,372 | 11,431,154 | - | -
Non-current | 63,621,749 | 68,988,396 | - | -
| 93,525,121 | 80,419,550 | - | -

The Group has aggregate bank facilities of EUR113,497,761 (2023: EUR120,763,291) of which EUR19,977,729 (2023: EUR40,344,706) were undrawn as at the reporting date. These facilities are secured by general hypothecs over the group assets, by special hypothecs over various immovable properties, by pledges over various insurance policies and by personal guarantees of the ultimate controlling party. They bear interest of 3.9% to 6% per annum (2023: 3.9% to 6.8%).
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
80
Notes to the Financial Statements – continued
29.OTHER FINANCIAL LIABILITIES

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Amounts owed to subsidiaries (i) | - | - | 16,048,941 | 41,020,030
Amounts owed to shareholders (ii) | - | - | 146,326 | -
Amounts owed to other related parties (iii) | 8,449 | 5,973 | - | -
Total other financial liabilities | 8,449 | 5,973 | 16,195,267 | 41,020,030
Current | 8,449 | 5,973 | 12,282,994 | 38,319,182
Non-current | - | - | 3,912,273 | 2,700,848
Total other financial liabilities | 8,449 | 5,973 | 16,195,267 | 41,020,030

(i)Amounts owed to subsidiaries are unsecured, interest free and have no fixed date of repayment.
(ii)Amounts owed to shareholders are unsecured, interest free and have no fixed date of repayment.
(iii)Amounts owed to other related parties are unsecured, interest-free and have no fixed date of repayment.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
81
Notes to the Financial Statements – continued
30.DEBT SECURITIES IN ISSUE
Group and Company
In November 2023, AX Group p.l.c. issued an aggregate principal amount of EUR40,000,000 bonds (2023-2033), having a nominal value of EUR100 each, bearing interest at the rate of 5.85% per annum, to redeem the EUR40 million AX Investments p.l.c. bond which matured on 6 March 2024. These bonds are unsecured and subject to the terms and conditions in the prospectus dated 26 September 2023. The bonds are listed on the Official Companies List of the Malta Stock Exchange. The quoted market price as at 31 October 2024 for the 5.85% bonds (2023 – 2033) was EUR106. The fair value of the bond as at 31 October 2024 amounted to EUR42,400,000. The carrying value of the bond as at 31 October 2024 amounted to EUR39,376,862. Interest on the bonds is due and payable annually in arrears on 7 November of each year at the above-mentioned rate.
During 2022, AX Real Estate p.l.c., a subsidiary of the Company, issued an aggregate principal amount of EUR40,000,000 (2022 – 2032), having a nominal value of EUR100 each, bearing interest at the rate of 3.5% per annum. EUR21,645,400 were assigned to the Company as part conversion of the loan receivable from AX Real Estate p.l.c.. These bonds are unsecured and subject to the terms and conditions in the prospectus dated 6 December 2021. The bonds are listed on the Official Companies List of the Malta Stock Exchange. The quoted market price as at 31 October 2024 for the 3.5% bonds (2022 – 2032) was EUR93 (2023: EUR92.98). The fair value of the bonds as at 31 October 2024 amounted to EUR37,200,000 (2023: EUR37,192,000). The carrying value of the bond as at 31 October 2024 amounted to EUR39,611,543 (2023: EUR39,556,055). The amount is made up of the bond issue of EUR18,354,600 net of the bond issue costs which are being amortised over the lifetime of the bonds and of EUR21,645,400 which were assigned to AX Group p.l.c. as described above. Interest on the bonds is due and payable annually in arrears on 7 February of each year at the above-mentioned rate.
During 2020, AX Group p.l.c. issued an aggregate principal amount of EUR25,000,000 bonds, split in two tranches of EUR15,000,000 (2020 – 2026) and EUR10,000,000 (2020 – 2029), having a nominal value of EUR100 each, bearing interest at the rate of 3.25% and 3.75% respectively per annum. These bonds are unsecured and subject to the terms and conditions in the prospectus dated 22 November 2019. The bonds are listed on the Official Companies List of the Malta Stock Exchange. The quoted market price as at 31 October 2024 for the 3.25% bonds (2020 – 2026) was EUR97.99 (2023: EUR98.5) and for the 3.75% bonds (2020 – 2029) was EUR95 (2023: EUR95.01). The fair value of the bonds as at 31 October 2024 amounted to EUR14,698,500 (2023: EUR14,775,000) and EUR9,500,000 (2023: EUR9,501,000 respectively, which amounts to an aggregated fair value of EUR24,198,500 (2023: EUR24,276,000). The carrying value of the bonds as at 31 October 2024 amounted to EUR24,810,134 (2023: EUR24,773,154). The amount is made up of the bond issue of EUR25,000,000 net of the bond issue costs which are being amortised over the lifetime of the bonds.
As at year-end, the Group had a balance of EUR90,671,876 (2023: EUR85,442,763) from the bond issues. The amount is made up of the bond issues of EUR91,873,337 net of bond issue costs which are being amortised over the life of the bonds.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
82
Notes to the Financial Statements – continued
30.DEBT SECURITIES IN ISSUE – continued
Group

| 2024 | 2023
| EUR | EUR
At beginning of year | 85,442,763 | 82,423,921
Bonds issued during the year (Note i) | 45,739,007 | 2,863,916
Bond matured during the year | (40,000,000) | -
Bond issue costs | (688,996) | -
Bond issue costs amortization for the year | 179,102 | 154,926
| 90,671,876 | 85,442,763
Accrued interest | 3,810,761 | 2,879,169
At end of year | 94,482,637 | 88,321,932
Current | 3,810,761 | 42,692,823
Non-current | 90,671,876 | 45,629,109
| 94,482,637 | 88,321,932

(i)Bonds issued during the year relate to new bond issue of EUR40 million issued by AX Group p.l.c. and sale of EUR5.7 million of AX Real Estate p.l.c. debt instruments by AX Group p.l.c. in the secondary market.
Company
2024
2023
EUR
EUR
At beginning of year
24,773,154
24,736,174
Bonds issued during the year
40,000,000
-
Bond issue costs
(688,996)
-
64,084,158
24,736,174
Bond issue costs amortised for the year
102,838
36,980
64,186,996
24,773,154
Accrued interest
3,089,469
746,712
At end of year
67,276,465
25,519,866
Current
3,089,469
746,712
Non-current
64,186,996
24,773,154
67,276,465
25,519,866
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
83
Notes to the Financial Statements – continued
31.DEFERRED TAX LIABILITIES
As at year-end, unabsorbed tax losses and other temporary differences for which no asset is recognised in the Group amounted to EUR8,586,157 (2023: EUR8,373,920).

| Group | Company
| 2024 | 2023 | 2024 | 2023
| EUR | EUR | EUR | EUR
Arising on: |  |  |  |
Excess of capital allowances over depreciation | (62,679) | (161,515) | (282,730) | (320,820)
Provision for doubtful debts | (251,958) | (240,893) | (38,329) | (22,804)
Provision for obsolete stock | (9,842) | (15,326) | - | -
Provision for litigation | - | (86,760) | - | -
Unabsorbed tax losses and capital allowances | (9,747,018) | (8,017,142) | (120,159) | -
Revaluation of investment properties | 30,567,489 | 28,881,503 | 716,000 | 732,000
Net lease position | 53,368 | - | 58,851 | 134,186
| 20,549,360 | 20,359,867 | 333,633 | 522,562

32.CONTINGENT LIABILITIES
At 31 October 2024, various guarantees were given in favour of third parties amounting to EUR1,251,742 (2023: EUR2,699,525) for which no provision has been made in these financial statements:
33.CAPITAL COMMITMENTS
Commitments for capital expenditure with respect to the development and completion of a number of projects stood as follows:

| 2024 | 2023
| EUR | EUR
Authorised and contracted | 18,088,909 | 22,125,869
Authorised but not contracted | 14,113,587 | 35,407,849

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
84
Notes to the Financial Statements – continued
34.RELATED PARTIES
The ultimate controlling party of the Group is Mr Angelo Xuereb, who holds 55% of the voting rights of the Company.
Group
All entities in which Mr Xuereb has control, has significant influence or is a member of the key management personnel are considered to be “related parties” in these financial statements. Related parties also comprise of key management who have the ability to control or exercise a significant influence in financial and operating decisions.
Transactions with related parties
The Group entered into transactions with related parties as follows:

| 2024 | 2023
| EUR | EUR
Management services (Note 8) | 736,522 | 551,200
Dividend issued to shareholders (Note 26) | 5,000,000 | 1,100,000
Property sold to shareholder (Note 24) | 1,000,000 | 600,000

Balances with related parties
Balances with related parties are disclosed in Note 21, Note 23 and Note 29.
Company
All subsidiaries of AX Group p.l.c. are deemed to be related parties in these financial statements.
Transactions with related parties
The Company entered into transactions with related parties as follows:
2024
2023
EUR
EUR
Management services (Note 8)
2,217,237
1,646,994
Dividend received from subsidiaries (Note 8)
11,171,486
29,498,155
Dividend issued to shareholders (Note 26)
5,000,000
1,100,000
Interest receivable from subsidiaries (Note 10)
2,314,511
1,826,742
Interest payable to subsidiaries (Note 11)
133,194
2,487,318
Waiver of amount owed by subsidiary (Note 12) (i)
-
1,000,000
Recharge of salaries (Note 9)
236,646
330,351
Increase in capital contribution (Note 19)
9,000,000
419,275
i)The waiver of amount owned by subsidiary relates to a loan advanced to a fully owned subsidiary for the acquisition of property.
Balances with related parties
Balances with related parties are disclosed in Note 19, Note 21, Note 23 and Note 29.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
85
Notes to the Financial Statements – continued
35.RISK MANAGEMENT OBJECTIVES AND POLICIES
The most significant financial risks to which the Group and the Company are exposed to are described below.
The Group and the Company are exposed to credit risk, liquidity risk and market risk through its use of financial instruments which result from its operating, investing and financing activities. The Group and the Company’s risk management is coordinated by the Directors and focuses on actively securing the Group and the Company’s short term to medium term cash flows by minimising the exposure to financial risks.
Credit risk
The Group and the Company’s credit risk is limited to the carrying amount of financial assets recognised at the date of the statement of financial position, which are disclosed in Notes 21 and 23.
The Group and the Company continuously monitor defaults of customers and other counterparts and incorporate this information into their credit risk controls. The Group and the Company’s policy is to deal with creditworthy counterparties.
None of the Group and the Company’s financial assets are secured by collateral or other credit enhancements.
The credit risk for liquid funds is considered to be negligible, since the counterparties are reputable institutions with high quality external credit ratings.
Quoted investments are acquired after assessing the quality of the relevant investments. Cash is placed with reliable financial institutions.
Liquidity risk
The Group and the Company’s exposure to liquidity risk arises from its obligations to meet financial liabilities, which comprise debt securities, trade and other payables and other financial liabilities. Prudent liquidity risk management includes maintaining sufficient cash and committed credit facilities to ensure the availability of an adequate amount of funding to meet the Group and the Company’s obligations when they become due.
At 31 October 2024 and 31 October 2023, the contractual maturities on the financial liabilities of the Company and the Group were as summarized below. Contractual maturities reflect gross cash flows, which may differ from the carrying values of financial liabilities at the date of the statement of financial position.
Group

2024 | Less than 6 months | From 6 to 12 months | From 1 to 5 years | More than 5 years | Total
| EUR | EUR | EUR | EUR | EUR
Bank borrowings | 20,047,400 | 12,286,362 | 33,979,729 | 44,382,844 | 110,696,335
Debt securities in issue | 1,973,556 | 1,973,556 | 29,813,444 | 86,328,044 | 120,088,600
Lease liabilities | 156,703 | 33,016 | 778,994 | 17,984,528 | 18,953,241
Other payables | 18,151,078 | - | - | - | 18,151,078
Total | 40,328,737 | 14,292,934 | 64,572,167 | 148,695,416 | 267,889,254

2023 | Less than 6 months | From 6 to 12 months | From 1 to 5 years | More than 5 years | Total
| EUR | EUR | EUR | EUR | EUR
Bank borrowings | 4,900,487 | 10,052,093 | 33,100,075 | 54,805,146 | 102,857,801
Debt securities in issue | 42,643,607 | 803,556 | 20,940,944 | 35,003,044 | 99,391,151
Lease liabilities | 18,250 | 18,250 | 149,535 | 356,407 | 542,442
Other payables | 15,697,891 | - | - | - | 15,697,891
Total | 63,260,235 | 10,873,899 | 54,190,554 | 90,164,597 | 218,489,285

AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
86
Notes to the Financial Statements – continued
35.RISK MANAGEMENT OBJECTIVES AND POLICIES – continued
Financial Guarantee
For each financial guarantee contract issued, the Group has to determine the amount of expected credit loss in accordance with IFRS9. The Company provided a financial guarantee to secure the banking facilities of subsidiaries for an amount of EUR10,000,218. Management has carried out an assessment on the loans receivable provided by the Issuer to other related parties which has been quantified as not material. Accordingly, the financial guarantee in the Company is deemed not to be material.
Foreign currency risk
Foreign currency transactions arise when the Group and the Company enter into transactions denominated in a foreign currency. Foreign currency transactions mainly comprise transactions in US Dollars and GB Pounds.
The risk arising from foreign currency transactions is managed by regular monitoring of the relevant exchange rates. The Directors consider foreign exchange risk exposure not to be material and accordingly a sensitivity analysis disclosing how profit or loss and other comprehensive income would change as a result of a reasonable possible shift in foreign exchange rates, is not considered necessary.
Interest rate risk
The Group and the Company’s exposure to interest rate risk is limited to the variable interest rates on borrowings. This applies to all of the Group’s bank borrowings as per Note 28 whose applicable interest rates are linked to either the 3-month Euribor or the bank’s base rate. Based on observations of current market conditions, the directors consider an upward or downward movement in interest of between 1% to 2% to be reasonably possible. However, the potential impact of such a variance is considered immaterial.
36.CAPITAL MANAGEMENT
For the purpose of the Group and the Company’s capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group’s and the Company’s capital maximise the shareholder value.
The Group and the Company manage their capital structure and make adjustments in light of changes in economic conditions. To maintain and adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders or issue new debt. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group includes within net debt Interest bearing loans and borrowings, trade and other payables and other financial liabilities less cash and cash equivalents.

Group |  |
| 2024 | 2023
| EUR | EUR
Interest bearing loans and borrowings (Note 18, 28, 30) | 191,684,494 | 169,135,803
Other financial liabilities (Note 29) | 8,449 | 5,973
Trade and other payables (Note 27) | 52,040,608 | 40,986,292
Less: cash and cash equivalents (Note 24) | (10,569,146) | (10,656,902)
Net Debt | 233,164,405 | 199,471,166
Equity (Note 26) | 1,164,688 | 1,164,688
Other reserves | 235,551,172 | 229,636,900
Total capital | 236,715,860 | 230,801,588
Capital and net debt | 469,880,265 | 430,272,754
Gearing ratio | 49.6% | 46.4%

No changes were made in the objectives, policies and processes for managing capital during the years ended 31 October 2024 and 2023.
AX GROUP P.L.C.
Annual Report and Consolidated and Separate Financial Statements for the year-ended 31 October 2024
87
Notes to the Financial Statements – continued
37.SUBSEQUENT EVENTS
The Directors intend to distribute a further gross dividend amounting to EUR205,012, equivalent to EUR0.008424 per ordinary share due to non-controlling interest. Following this payment, the total gross distribution to non-controlling interest for the year will amount to EUR736,988, equivalent to EUR0.030283 per share.
Ernst & Young Malta Limited
Regional Business Centre
Achille Ferris Street
Msida MSD 1751, Malta
Tel: +356 2134 2134
Fax: +356 2133 0280
ey.malta@mt.ey.com
ey.com
88
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on the audit of the financial statements
Opinion
We have audited the consolidated and separate financial statements of AX Group p.l.c. (the “Company”) and its subsidiaries (the “Group”), set on pages 29 to 87, which comprise the consolidated and separate statement s of financial position as at 31 October 2024, and the consolidated and separate statements of profit or loss and comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended, and notes to the consolidated and separate financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated and separate financial statements give a true and fair view of the financial position of the Group and the Company as at 31 October 2024, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”) and the Companies Act, Cap. 386 of the Laws of Malta (the “Companies Act”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the Companies Act. Our responsibilities under those standards and under the Companies Act are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company and the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) as issued by the International Ethics Standards Board of Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in accordance with the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act, Cap. 281 of the Laws of Malta, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
89
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on the audit of the financial statements
Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial statements.
Fair valuation of land and buildings classified as property, plant and equipment, and investment properties
The Group’s land and buildings classified as property, plant and equipment, which are being further described in Notes 5.13, 5.14, 6 and 16 to the accompanying financial statements, account for 60% of total assets as at 31 October 2024. Land and buildings are measured at fair value at the date of revaluation, less any subsequent accumulated depreciation and impairment losses.
The Group also holds investment properties, which are being further described in Notes 5.15, 6 and 17 to the accompanying financial statements, accounting for 12% of total assets of the Group as at 31 October 2024. Investment properties are stated at fair value, which reflects market conditions at the reporting date.
The Group uses the services of professional qualified and independent valuers to revalue the land and buildings classified as property, plant and equipment, and the investment properties, on the basis of assessments of the fair value of the property in accordance with international valuation standards and best practice. The valuations are arrived at by a combination of the income capitalization approach, the replacement cost approach and the market approach as applicable.
In the years in which an independent valuation is not obtained, management reperforms fair valuations of the properties by verifying and updating all major inputs to the last independent valuation report prepared by an external independent valuer. Internal methods are therefore aligned with those used by external valuers. On a yearly basis, management assesses each property’s change in value to determine whether the change is reasonable and holds discussions with the independent valuer, as necessary.
The valuation of property at fair value is highly dependent on estimates and assumptions such as:
•the capitalisation rate, rental income and respective growth rate under the income capitalisation approach;
•the estimated land value and going rates for construction, finishing, services and fittings under the replacement cost approach; and
•the market prices for comparable advertised properties under the market approach.
90
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on the audit of the financial statements
Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of material misstatements due to fraud – continued
Fair valuation of land and buildings classified as property, plant and equipment, and investment properties – continued
Therefore, due to the significance of the balances and the estimation uncertainty involved in the fair valuation of properties, we have considered the fair valuation of land and buildings classified as property, plant and equipment, and investment properties as a key audit matter.
Our audit procedures over the fair valuation of land and buildings classified as property, plant and equipment, and investment properties included amongst others:
•evaluating the design and implementation of key controls over the Group’s property valuation process by inquiring with the valuation process owners;
•performing tests relating to the valuation of the Group’s property, focusing on management reviews over the property valuations by inspecting management analysis and minutes of meetings of the board and audit committee where such valuation was discussed;
•obtaining an understanding of the scope of work of the professional valuers by reviewing the available valuation reports and considered the independence and expertise thereof;
•obtaining an understanding of the process followed by management in the years where an independent valuation is not obtained and an update is performed internally.
•including a valuation specialist on our team to assist us in assessing the appropriateness of the valuation approaches applied, as well as evaluating the reasonability and validity of key assumptions and estimates used in the valuations by comparing to independent sources and relevant market data and conditions; and
•performing procedures over the accuracy and completeness of the inputs used in the valuations in the light of our understanding of the business and industry developments, historical data and other available information.
We also assessed the relevance and adequacy of disclosures relating to the Group’s fair valuation of land and buildings classified as property, plant and equipment, and investment properties presented in Notes 5.13, 5.14, 5.15, 6, 16 and 17 to the accompanying financial statements.
91
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on the audit of the financial statements
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon other than our reporting on other legal and regulatory requirements.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors and those charged with governance for the financial statements
The directors are responsible for the preparation and fair presentation of the financial statements in accordance with IFRS and the requirements of the Companies Act and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and the Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s and the Company’s financial reporting process.
92
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on the audit of the financial statements
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
•identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
•obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control;
•evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors;
•conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and the Company to cease to continue as a going concern;
•evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
•obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
93
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on the audit of the financial statements
Auditor’s responsibilities for the audit of the financial statements - continued
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Matters on which we are required to report by the Companies Act
Directors’ report
We are required to express an opinion as to whether the directors’ report has been prepared in accordance with the applicable legal requirements. In our opinion the directors’ report has been prepared in accordance with the Companies Act.
In addition, in the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Directors’ report. We have nothing to report in this regard.
Other requirements
We also have responsibilities under the Companies Act to report if in our opinion:
•proper accounting records have not been kept;
•proper returns adequate for our audit have not been received from branches not visited by us;
•the financial statements are not in agreement with the accounting records;
•we have not received all the information and explanations we require for our audit.
We have nothing to report to you in respect of these responsibilities.
Appointment
We were appointed as the statutory auditor by the General Meeting of Shareholders of the Company on 28 October 2020. The total uninterrupted engagement period as statutory auditor, including previous renewals and reappointments amounts to 5 years.
Consistency with the additional report to the audit committee
Our audit opinion on the financial statements expressed herein is consistent with the additional report to the audit committee of the Company, which was issued on the same date as this report.
Non-audit services
No prohibited non-audit services referred to in Article 18A(1) of the Accountancy Profession Act, Cap. 281 of the Laws of Malta were provided by us to the Group and the Company and we remain independent of the Group and the Company as described in the Basis for opinion section of our report.
No other services besides statutory audit services and services disclosed in the annual report and in the financial statements, were provided by us to the Group and the Company and its controlled undertakings.
94
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on other legal and regulatory requirements
Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the annual financial report of AX Group p.l.c. for the year ended 31 October 2024, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the annual financial report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the annual financial report, including the consolidated financial statements and the relevant electronic tagging therein comply in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.
Our procedures included:
•Obtaining an understanding of the entity's financial reporting process, including the preparation of the annual financial report, in accordance with the requirements of the ESEF RTS.
•Obtaining the annual financial report and performing validations to determine whether the annual financial report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS.
•Examining the information in the annual financial report to determine whether all the required taggings therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the annual financial report for the year ended 31 October 2024 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
95
A member firm of Ernst & Young Global Limited.
Registered in Malta No: C30252
INDEPENDENT AUDITOR’S REPORT
to the Shareholders of AX Group p.l.c.
Report on other legal and regulatory requirements
Matters on which we are required to report by the Capital Markets Rules
Corporate governance statement
The Capital Markets Rules issued by the Malta Financial Services Authority (“MFSA”) require the directors to prepare and include in their annual report a statement of compliance providing an explanation of the extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures that they have taken to ensure compliance throughout the accounting period with those Principles.
The Capital Markets Rules also require the auditor to include a report on the statement of compliance prepared by the directors. We are also required to express an opinion as to whether, in the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have identified material misstatements with respect to the information referred to in Capital Market Rules 5.97.4 and 5.97.5.
We read the statement of compliance and consider the implication for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements included in the annual report. Our responsibilities do not extend to considering whether this statement is consistent with the other information included in the annual report.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the statement of compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s governance procedures or its risk and control procedures.
In our opinion:
•the corporate governance statement set out on pages 26 to 28 has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the MFSA
•in the light of the knowledge and understanding of the Company and the Group and its environment obtained in the course of the audit the information referred to in Capital Market Rules 5.97.4 and 5.97.5 are free from material misstatement
Other requirements
Under the Capital Markets Rules we also have the responsibility to review the statement made by the Directors, set out on page 4, that the business is a going concern, together with supporting assumptions or qualifications as necessary.
We have nothing to report to you in respect of these responsibilities.
The partner in charge of the audit resulting in this independent auditor’s report is
Christopher Balzan for and on behalf of
Ernst & Young Malta Limited
Certified Public Accountants
24 February 2025