VBL Group ends 2022 with €6.6 million profit, net asset value per share up 11%

The VBL Group - the Valletta focused property owner and investor - ended 2022 with an actual profit for the year of €6.6m and an increase at EBITDA level of 48% over 2021 numbers.

Net Asset Value per share increased by 11% to €0.256 (2021: €0.231), which is reflecting the results from the Group's acquisitions and the scheduled delivered development projects.

Even though the hospitality market in Malta was severely affected in the first four months of year 2022, VBL Group’s performance quickly recovered, leading to and surpassing established KPIs by year end, reflecting the strong recovery of the market.

Currently the VBL Group is operating with a mere 25% of its €80m strong property portfolio, which has been re-developed into market conscious high-quality products, while much of the remaining 75% of VBL’s owned assets are being regenerated and shall become operational in the mid to long term.

This explains, why much emphasis and focus goes into the Group’s currently ongoing development cycle and the preparation of the future property regeneration cycles. Stephen Clough, the Group’s Head of Development, details further “with the completion of the current developments, VBL shall add significant growth in revenues, EBITDA and FCF, expected to rump-up to its full commercial potential in 2026”.

The focused and clear strategy, which has remained constant since VBL’s founding and subsequent IPO, is believed to be behind its success. The Group’s objective is to continue increasing both revenue and profitability for its shareholders via the ongoing conversion of its undeveloped properties into revenue generating assets.

While VBL remains mainly a growth equity, it continues to pay increasing dividends, a trend which has started in 2015. And the directors have once again, proposed the distribution of dividends.

For the upcoming AGM, it is proposed to the shareholders to approve a dividend distribution of 12.5% higher than the previous year.

Consistent with previous projections, major increases in potential dividend distribution shall be possible, after the completion of VBL’s current development cycle, when it is projected that significant free cashflow shall be generated.

VBL Group is also well known for its presence on the Valletta commercial rental market, where VBL has also seen a ramp up in its commercial rental revenues, recording a growth of 74% on the previous year.

VBL Plc CFO Julian Tzvetkov explains “This was mainly driven by phasing out discounts provided to Tenants in the pandemic period, and renegotiation of existing rental contracts within the Group’s rental property clusters. At the same time, several existing Tenants have expanded their rental operations within VBL owned commercial space by signing new rental agreements, a true testament of the Group’s vision and product quality. Further growth in this revenue segment shall be realised on completion of the redevelopment of The Coliseum Shopping Arcade, another Valletta landmark property, earmarked for the next development cycle”.

VBL Management expects a strong growth in the hospitality segment throughout 2023. This forecast is confirmed by the year-to-date KPIs, which have already proven that the market has not only returned but exceeded the levels of 2019, the last full ‘normal’ operational year.

Increase in hospitality daily rates are outperforming inflation, and VBL forecasts for year 2023 suggests that average daily rates shall be at least 20% higher than in the last normal year of operation, with occupancy also growing significantly with 11% over the previous period.

In the first quarter of the year, the average daily rates recorded were ca. €83 per unit, for the Group’s portfolio ranging from economy dormitory beds to high-end palazzos. Current forecasts also suggest that commercial operators renting shops from VBL, shall be able to stabilise their businesses in 2023 and have the ability to improve quality and consistency of service.

Regarding the Group’s ambitious development projects, VBL is firmly focusing its attention on its core product – high-quality refurbished historic assets in Valletta - and is currently developing an additional 51 hospitality units.

Construction industry capacity issues, cost and supply of materials have normalised during the past year, eliminating some major risk factors.

The company is confident that based on current assumptions, the key redevelopment projects shall remain on track when considering delivery of the major milestones, with interim delays being absorbed by the end of the development cycle.

During 2022, VBL’s development team has delivered on its original projections in terms of completed projects and realised new acquisitions, with long term development plans and overall project CAPEX remaining at previously planned levels. The Group’s steadfast strategy of converting its currently owned, non-operational property into revenue generating assets seems very much on track for all major projects.