Hili Properties Plc

Management Reports • Jun 23, 2023

The Directors Hili Properties p.l.c. Nineteen Twenty Three, Valletta Road, Marsa, MRS3000, Malta

Re: Financial Analysis Summary 2023

Dear Sirs,

Analysis

In accordance with your instructions, and in line with the requirements of the MFSA Listing Policies, we have compiled the Financial The purpose of the financial analysis is that of summarising key financial data appertaining to Hili Properties p.l.c. Issuer as well as Harbour (APM) Investments Limited and Hili Estates Ltd Guarantors as explained in part 1 of the Analysis. The data is derived from various sources, or is based on our own computations as follows: a) Historical financial data for the three years ending 31 December 2020, 2021 and 2022 have been extracted from the b) The forecast data for the financial year ending 31 December 2023 has been provided by management. d) The ratios quoted in the Analysis have been computed by us applying the definitions set out in Part 4 of the Analysis. e) The principal relevant market players listed in Part 3 of the document have been identified by management. Relevant

- audited financial statements of the Issuer and the Guarantors.

- c) cial position is based on the explanations provided by management.

• financial data in respect of competitors has been extracted from public sources such as the web sites of the companies concerned or financial statements filed with the Registrar of Companies.

The Analysis financial data of the Group. The Analysis does not contain all data that is relevant to investors or potential investors. The Analysis does not constitute an endorsement by our firm of any securities of the Issuer and should not be interpreted as a recommendation of the Analysis. As with all investments, potential investors are encouraged to seek professional advice before investing in the Issue securities.

Yours sincerely,

______________

Patrick Mangion Head of Capital Markets

FINANCIAL ANALYSIS SUMMARY 2023

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Prepared by Calamatta Cuschieri Investment Services Limited

Glossary and Definitions30

Information about the Group

1.1 Issuer and Group Key Activities and Structure

incorporated on 23 October 2012 as a holding company and forms part of the Hili Ventures Group. The Issuer has an authorised share capital 120,000,000 divided into newly issued shares floated on the Malta Stock Exchange ( MSE ) during 2021, the issued share capital is of are held equally by APM Holdings Ltd and La Toc Ltd, a subsidiary of Hili Ventures Limited, and is the parent

company of the property division of the Hili Ventures Group. The principal objective of the Issuer is to purchase or otherwise acquire, under any title whatsoever, to hold and manage, by any title, movable and immovable property or other assets, both locally and overseas.

HIL incorporated on 4 December 2012 as a private limited liability company. The main objective of HIL is to purchase or otherwise acquire, under any title whatsoever, to hold and manage, by any title, movable and immovable property or

other assets, both locally and overseas. On 6 April 2022, the Issuer announced the acquisition of HIL from APM Holdings Ltd, thereby effectively adding to its property portfolio circa 92,000m2 of land wholly owned subsidiary of the Issuer.

HEL 1996 as a private limited liability company and forms part of the Hili Properties Group. HEL is principally involved in holding movable and immovable property and currently owns and manages one property; Nineteen Twenty Three building situated in Marsa, Malta. The property measures around 5,686m2 of office space and warehousing facilities. Management confirmed that, as at May 2023, this property is currently fully leased to companies forming part of the Hili Ventures Group and other related parties.

Guarantors currently listed on the Official List of the Malta Stock is explained further in section 1.7 of the Analysis.

The latest structure chart developments mainly relate to the inclusion of a 75% ownership of Baneasa Real Estate SRL, which was acquired by the Issuer on 4 August 2022. Furthermore, on 23 December 2022, the Group entered into another share purchase agreement for the acquisition of the remaining 25% shares in Baneasa Real Estate SRL, which is expected to be finalised in August 2024. The principal activity of Baneasa Real Estate SRL is to hold and rent immovable property. Board of Directors - Issuer Mr. Pier Luca Demajo Chairman and Independent Non-Mr. Georgios Kakouras Executive Director

1.2 Directors and Key Employees

	inclusion of a 75% ownership of Baneasa Real Estate SRL, which was acquired by the Issuer on 4 August 2022. Furthermore, on 23 December 2022, the Group entered into	employees.
property.	expected to be finalised in August 2024. The principal activity of Baneasa Real Estate SRL is to hold and rent immovable
1.2 Directors and	Key Employees
	As at the date of this Analysis, the following persons
constitute the board of directors of the Issuer:
Name	Designation
Mr. Pier Luca Demajo	Chairman and Independent Non Executive Director	November 2022.
Mr. Georgios Kakouras	Executive Director
Mr. Peter Hili	Non-Executive Director
Mr. Eddy Vermeir	Non-Executive Director
Mr. David Aquilina	Independent Non-Executive Director
Dr. Laragh Cassar	Independent Non-Executive Director
	The senior management team of the Group consists of:
Name	Designation
Mr. Georgios Kakouras	Managing Director
Ms. Daniela Pavia	Chief Financial Officer
Page 5

The senior management team of the Group consists of:

Name	Designation

The business address of all the directors is the registered office of the Issuer. Mr. Adrian Mercieca is the company secretary of the Issuer, taking over from Dr. Laragh Cassar on 25 July 2022.

The board is composed of Mr. Pier Luca Demajo acting as chairman, Mr. Georgios Kakouras acting as executive director, and four non-executive directors; Mr. Peter Hili, Mr. Eddy Vermeir, Mr. David Aquilina and Dr. Laragh Cassar. The board is responsible for the overall long-term direction of the Group, and is actively involved in overseeing the systems of control and financial reporting and that the Group communicates effectively with the market. Analysis, Mr. Pier Luca Demajo, Mr. David Aquilina, and Dr. Board of Directors - Guarantors

The board meets regularly, with a minimum of four times annually, and is currently composed of six members, three of whom are independent of the Issuer. As at the date of this Laragh Cassar are independent non-executive directors of the Issuer. Mr. Georgios Kakouras Director Mr. Julian Caruana Director On 29 April 2022, Mr. Carmelo Hili resigned from the board

As at the date of this Analysis, the Issuer has a total of 4 employees and, in aggregate, the Group currently has 11 employees.

As at the date of this Analysis, the following persons constitute the board of directors of the Guarantors:

Harbour (APM) Investments Limited

Name	Designation

of HIL and was replaced by Mr. Georgios Kakouras. Mr. Julian Caruana was also appointed onto the board of HIL on 4 November 2022. Mr. Georgios Kakouras Director Mr. Julian Caruana Director On 4 November 2022, Dr. Annabel Hili resigned from the board of HEL and was replaced by Mr. Julian Caruana.

Hili Estates Limited

Name	Designation

1.3 Major Assets owned by the Group

Real Estate Portfolio

December 2022, with a total value of circa 210.3m. Since these properties are held by the Group for long-term rental yields or for capital appreciation (or both), these are classified as investment property in the Gro , which

comprise the following: The Group owned 23 income-generating properties as of comprises an aggregate rentable space of 118,298m2 generates an annualised rental income of circa 12.2m. The group also owns a parcel of land under Harbour APM of around 25.7M, bringing the total value of investment property held by the group to 232.3m. The contracted gross rental yield is estimated at 5.6%. level, as at this date of this Analysis, is 99% with a weighted average unexpired lease term (WALT) of 9.6 years as at 31 December 2022. As noted through the graphical charts diversified across a number of asset types and geographical regions. As at the date of this Analysis, there have not been any acquisitions or disposals of property in 2023.

Name of Property	Location	Description	Main Tenant	Rentable Area (m2)	Valuation as at 31.12.2022	Occupancy rate (%) as at 31.12.22	WALT (in years)	Ownership
Imanta Restaurant	Riga, Latvia	Restaurant (with drive thru)	Quick Service Restaurant	2,709	2,300	100	8.8	Freehold
Vienibas Restaurant	Riga, Latvia	Restaurant (with drive thru)	Quick Service Restaurant	3,497	2,215	100	9.3	Freehold
Ulmana Restaurant	Riga, Latvia	Restaurant (with drive thru)	Quick Service Restaurant	2,000	1,875	100	12.4	Freehold
Dainava Restaurant	Kaunas, Lithuania	Restaurant (with drive thru)	Quick Service Restaurant	3,021	2,280	100	8.1	Freehold
Svajone Restaurant	Vilnius, Lithuania	Restaurant (in a building complex)	Quick Service Restaurant	580	2,610	100	8.4	Land is leased, building is freehold
Parnu Restaurant	Parnu, Estonia	Restaurant (with drive thru)	Quick Service Restaurant	1,803	1,510	100	7.4	Freehold
Rehau Industrial Building	Pramones str.35A, Klaipeda	Retail	Rehau	18,980	20,100	100	19.0	Land is leased, building is freehold
Supermarket and Retail Centre	Nicgales Street 2, Riga, Latvia	Retail	Rimi Latvia	2,863	7,780	99	1.6	Freehold

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023

Vienibas Avenue, which is situated outside the centre of Riga.				v.	The Svajone property is constructed on a stateowned land plot and is located at 15, Gedimino Avenue, a favourable and	Svajone Restaurant, Vilnius, Latvia
Prospekts 3, Imanta. ii. The Vienibas property consists of a plot of land and a building constructed thereon. The site is located at 115A	Vienibas Restaurant, Riga, Latvia				The Dainava property consists of a plot of land, a building structure constructed thereon, and an ancillary building that operates as a car park. The site is in Kaunas.			Pramones Ave. 8B,
The Imanta property consists of a plot of land and a building constructed thereon. The site is located in Kurzemes				iv.	Street, which is situated outside the centre of Riga.	Dainava Restaurant, Kaunas, Lithuania		constructed thereon. The site is located at 88, Karla Ulmana
i.	Imanta Restaurant, Riga, Latvia							The Ulmana property consists of a plot of land and a building
*This An overview of each property is set out below:			table also takes into account two portions of land adjacent to the relative buildings owned by the Group.	iii.		Ulmana Restaurant, Riga, Latvia
	Romania	Total	Romania	118,298	210,288	99%	9.6
Centre 7 Miro offices	Romania Bucharest,	Office space Office space	Care and Delta Health Trade KPMG	23,773 24,245	30,100 60,400	100 100	11.7 6.7	Freehold Freehold
Coresi Brasov Restaurant Art Business	Bucharest, Romania Bucharest,	(with drive thru) Hospital and	Quick Service Restaurant Delta Health	2,070	1,979	100	18.3	Freehold
Santu Mare	Bucharest, Romania	Restaurant (with drive thru) Restaurant	Quick Service Restaurant	1,346	1,239	100	16.8	Freehold
Alba Iulia	Bucharest, Romania	Restaurant (with drive thru)	Quick Service Restaurant	1,184	1,201	100	16.8	Freehold
Bragadiru Restaurant	Bucharest, Romania	Restaurant (with drive thru)	Quick Service Restaurant	2,700	2,198	100	15.9	Freehold
Selgros Restaurant	Bucharest, Romania	Restaurant (with drive thru)	Quick Service Restaurant	1,499	2,441	100	15.8	Freehold
Restaurant and overlying office, Sliema, Malta	Sliema, Malta	Restaurant and office space	Quick Service Restaurant	1,055	8,300	100	7.2	Freehold
Villa Marika	Madliena, Malta	Private residence	n/a	n/a	3,740	n/a	n/a	Freehold
building Transport House	Floriana, Malta	facilities Office space	Group Ministry of Energy	910	2,525	100.0	3.3	Freehold
357 Nineteen Twenty Three	Luqa, Malta	Office space/ Warehousing	Hili Ventures	5,302	17,100	100	6.2	Freehold
357 Maskavas Street	Riga, Latvia	Land	&ALB n/a	n/a	150	n/a	n/a	and building is freehold Freehold
Maskavas Street	Latvia Riga, Latvia	Retail	Rimi Latvia	8,246	11,280	97.0	3.2	Land - 734m2 is leased, other land
Shopping Centre	Riga, Latvia Stirnu Street 26, Riga,	Retail	Rimi Latvia	7,068	20,140	90	9.7	Freehold
Shopping Centre	Dzelzavas Street 78,	Retail	Rimi Latvia	3,447	6,825	100	6.6	Freehold

square.

vi. Parnu Restaurant, Estonia The Parnu property consists of a plot of land and a building constructed thereon. The property is located at 74, Tallinna Maante, Parnu. vii. Rehau Industrial Building, Lithuania The property is constructed on a 50,000m2 plot and is located in a Free . viii.Wholesale & retail trade building, Nicgales Street,

Riga, Latvia

The property is constructed on a 16,785m2 plot. The property is currently used as a retail and shopping centre.

ix. Shopping Centre, Dzelzavas Street, Riga, Latvia The footprint of the property measures 8,062m2 located in Purvciems, in the west of Riga on the east bank of the Daugava River. During FY2018, the property was demolished and re-developed to a modern shopping centre.

x. SIA SC Stirnu During Q1 2022, the Group secured the acquisition of a shopping areas. The shopping centre has been operational for fifteen years and has the benefit of an anchor tenant as well as other successful retail operators. More information on this property can be found in section 1.4.4.1. xi. Dole, Retail Centre, Maskavas Street 357, Riga, Latvia xii. Nineteen Twenty Three, Valletta Road, Luqa, Malta

The property is a four-storey building having 8,000m2 of gross intended leasable area and is occupied by more than 60 tenants.

The property, built on a plot area of 2,585m2 , is developed mainly as an office block with part of the premises at ground and intermediate levels used as a warehouse/storage area. The property is 100% leased out, mainly to a number of subsidiary companies forming part of the Hili Ventures Group. xiii. Transport House, Triq San Frangisk, Floriana, Malta

The property is located in a central area in Floriana and comprises of a three-storey building, a receded penthouse, and two interconnected apartments on the first and second floors, all for use as office space.

xiv. Villa Marika, High Ridge, Madliena The property consists of a fully-detached bungalow located in a prime location in High Ridge, Madliena with a superficial area of circa 1,250m2

. The property has been earmarked as held for sale at the end of December 2022, and is expected to be sold by the end of 2023.

and is xv. Restaurant and overlying office, Sliema, Malta The property in Sliema is leased as a restaurant at ground and mezzanine levels, and the first floor is completed as office space and rented out to a third party. The premises form part of a development block overlooking two streets, namely The Strand, Sliema at the waterfront and Sqaq il-Fawwara, Sliema at the back of the property. xvi. Selgros Restaurant, Bucharest, Romania xvii. Bragadiru, Bucharest, Romania xviii. Alba lulia Restaurant, Alba, Romania

The Berceni Selgros restaurant commenced operations on 21 November 2018. It is a drive-thru restaurant located in a busy area in the 4th district of Bucharest.

The Bragadiru restaurant is a drive-thru restaurant located on a busy road in a town called Bragadiru, which is 10km from Bucharest.

The Alba lulia restaurant is a drive-thru restaurant located near the city centre of Alba lulia, in the premises of Kaufland parking area, in the central part of the country, in Alba County. xix. Satu Mare Restaurant, Satu Mare, Romania near the city centre of Satu Mare in the northern part of the xx. Coresi Brasov Restaurant xxi. ART Business Centre, Bucharest, Romania

The Satu Mare restaurant is a drive-thru restaurant located country, in Satu Mare County.

The Coresi Brasov Restaurant is a drive-thru restaurant located in the north-eastern part of Brasov, in the Tractorul neighbourhood.

The property is located in the affluent Nordului neighbourhood in northern Bucharest. The nine-storey

property has a footprint of 3,400m2 24,000m2 of gross leasable area, of which circa 5,000m2 storage space. The three underground floors accommodate 407 parking spaces. The property is fully leased out and its anchor tenant is Ponderas Academic Hospital which was taken over by the Regina Maria Private Healthcare Network, xxii. MIRO offices In August 2022, the Group acquired a newly built Class A property is found in section 1.4.4.3 of this Analysis.

mixed-use property developed in the Baneasa area, with approx. 23,000m2 of leasable area spread out over 5 levels and with a 1,700m2 outdoor plaza. More information on this

Harbour (APM) Investments Limited

Apart from the above mentioned properties and as further explained in section 1.1 of this Analysis, the Group also owns circa 92,000m2 of land in , Malta. This property Road to the Northwest, by the new LPG depot & Fort Beng sites are reserved for industrial use. PA10665/17 and have been operational since 7 April 2020.

Within the land, two sites have been developed into a 2.4 MwP solar farm as per Planning Authority permit The solar farm covers a larger area of land partly owned by two other third parties. This land is being leased to a third party up until 31 March 2045 to develop and operate a solar farm.

Marsaxlokk Bay Local Plan. The strategy for this zone is outlined in the respective local plan issued in 1995. Apart from the more recent solar farm permit noted above, an LPG terminal has already been developed within the said PA 867/09. strategic objective is the acquisition, management, and disposal of diversified low-risk real-estate

1.4 Operational Developments

1.4.1 Strategy

The principal objective of the Issuer is to act as the property holding vehicle of the Hili Ventures Group. In this respect, assets, to provide stable returns to shareholders through long-term contracted cash flows and asset appreciation.

and comprises circa is in key cities in Europe. Focus is to provide exceptional property management and customer service, to its tenants operating from its properties. This way the issuer builds and enhances its reputation as a trustworthy and reliable commercial real estate owner in the industry. is enhancing its ESG efforts, implementing new green technologies and initiatives in its properties such as electric vehicle charging stations, recycling stations, solar panel The Issuer believes that its Board of Directors, in addition to

Aiming to contribute to a more sustainable future the Issuer installations and granting facilities to non-profit organisation for supporting good causes.

the support of external advisors, property experts and Hili Ventures group resources, has sufficient and appropriate knowledge and competence to capitalise on the opportunities presented by both the current and forwardlooking market conditions.

Based on its long-standing experience within the industry, the intention of the Issuer is to source its investment and divestment extensive network of relationships, which includes the corporate and private landlords, brokers, domestic banks and others. The Board of Directors expects to create both sustainable income and strong capital returns for the Group. Directors in relation to investment property acquisitions are based on a number of property characteristics, which are

The investment decisions carried out by the Board of deemed to be aligned to the aforementioned strategic goals of the Group.

It is crucial to point out that, in carrying out investment decisions, the Board of Directors concentrate on assets priced at equal or at a discount to fair value or assets with active asset management opportunities. Strategies in use include asset repositioning, rental extension or rental optimisation. buildings when and where considered appropriate;

Where appropriate, the intention of the Board of Directors portfolio through proactive asset management techniques which include:

• Renegotiating or surrendering leases;
• Improving lease terms duration and tenant profile;
• Carrying out structural improvements to the
• Improving layouts and space efficiency of specific assets;

• Ensuring an appropriate mix and well-structured tenant mix within certain properties;
• requirements;
• Taking advantage of planning opportunities where appropriate; and

Upon implementing the aforementioned business strategies, the Issuer utilises prudent levels of leverage in order to enhance equity returns over the long-term. Nevertheless, the Group may possibly modify the leverage policy from time to time in light of then current economic conditions, the relative costs of debt and equity capital, the assets, growth and acquisition opportunities or other factors it deems appropriate. occupancy rate of 99% of property for rent, the Board of rates for future investment properties. The average nalysis, three properties were sold by the Group. These properties consisted of three

for rent which presently reflects an overall average Directors aims to maintain the same high level of occupancy occupancy rate excludes the property under Harbour APM Investments and Villa Marika.

1.4.2 Properties sold

supermarket and retail sectors in Riga, namely the one in Vienibas Street, the one in Augusta Dombrovska Street and the one in Kreimenu Street. 1.4.4.1 SIA SC Stirnu

1.4.3 Properties held for sale

As at 31 December 2022, property held for sale amounted to circa m and included Villa Marika, Malta.

1.4.4 Acquisitions

This relates to a 7,863m2 shopping centre in Riga, Latvia, built on 21,580m2 of land. The property is situated in one of -brand RIMI hypermarket as well as other successful retail operators operate from the shopping centre. In April, the Issuer acquired 100% of the 92,000m2 parcel of Malta Freeport. More information on this property can be

1.4.4.2

land comprising a number of sites at Benghajsa next to the found in section 1.3 .

Maintaining dialogue with tenants to assess their Repositioning the portfolio through sales of assets. 1.4.4.3 MIRO offices In August, the Issuer purchased 75% of their biggest asset to date situated in Bucharest, Romania. The property is located at 89A, Bucuresti-Ploiesti Road, in northern Baneasa area, on the exit road towards Henri Coanda International Airport. MIRO hosts extensive list of reputable companies, such as KPMG Romania, Rovere, COS, Cegeka, Eaton, Neoclinique, Speedwell, Stradale/Mitzu, Jura and Hisky.

1.5 Macroeconomic environment

1.5.1 War in Ukraine

1.5.2 Macroeconomic changes

1.5.3 Assumptions undertaken in the projections utilised for the purpose of this document

agreements that the Group currently has in place with its tenants, specifically in relation to the properties discussed throughout the Analysis. Management explained that these and understanding of the potential implications brought about by the aforementioned conflict which might possibly arise in the remaining months of the current financial year. In this respect, such projections also cater for the current and persistent inflationary pressures which the Group is the

facing, namely in terms of higher utility expenses and higher interest rates

1.6 Related Party Securities

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023
1.5 Macroeconomic environment	interest rates
1.5.1 War in Ukraine
The invasion of Ukraine by the Russian Federation just over a year ago has undermined the stability of Europe whilst adversely impacting food and energy security throughout the world. These stresses come just as economies are navigating their way out of the fiscal and demographic issues endemic to the COVID-19 pandemic. Although based on available insights to date, the Company and the Group are not expected to be directly negatively impacted by the	1.6 Related Party Hili Properties p.l.c. is a member of the Hili Ventures Group. Within the same group, 1923 Investments p.l.c., Premier Capital p.l.c., Hili Finance Company p.l.c. and Harvest Technology p.l.c. have the following listed securities. The below table also includ securities.	Securities	listed
ongoing invasion, the global inflation and interest rate risks	Security	ISIN	Amount
associated with the conflict are liable to negatively impact	4.5% Hili Properties plc 2025	MT0000941204
finance.	Hili Properties p.l.c.	MT0000940107	400,892,700 Shares
The fact that all assets reside in NATO countries provides extra safeguards, however, management together with the	5.1% 1923 Investments	MT0000841206
directors, continue to actively monitor all developments	3.75% Premier Capital	MT0000511213
taking place internationally in order to take any action that might be necessary in the eventuality that developments in	3.85% Hili Finance Company plc 2028	MT0001891200
business activity.	3.8% Hili Finance Company plc 2029	MT0001891218
1.5.2 Macroeconomic changes	3.8% Hili Finance Company plc 2029	MT0001891226
Commercial real estate currently faces challenges with rising interest rates that result in increased financing costs and	Harvest Technology	MT0002370105	22,780,636 Shares
affect value of the investment properties held by the group.
1.5.3 Assumptions undertaken in the projections utilised for the purpose of this document	1.7 Bond Guarantee
	As per bond prospectus dated 18 September 2015, the
The 2023 projections were based on the contractual rental
agreements that the Group currently has in place with its	guaranteed by HIL and HEL. The Guarantors undertook that
tenants, specifically in relation to the properties discussed	as long as the bond remains outstanding, the Guarantors
throughout the Analysis. Management explained that these	shall collectively ensure that their aggregate net asset value
projections were based on the actual 2022 financial			ing
	date. As at 31 December 2022, the aggregate net assets of
and understanding of the potential implications brought about by the aforementioned conflict which might possibly arise in the remaining months of the current financial year. In this respect, such projections also cater for the current	both Guarantors togeth m) and therefore covers the bonds in issue.		1:

1.7 Bond Guarantee

Historical Performance and Forecasts

The said projected financial information relates to events in the future and are based on assumptions which the Group believes to be reasonable. Consequently, the actual outcome may be adversely affected by unforeseen situations and the variation between forecast and actual results may be material.

Issue Income Statement

FINANCIAL ANALYSIS SUMMARY 2023
Historical Performance and Forecasts
The financial information below (section 2.1 to 2.3) is extracted from the audited consolidated financial statements of Hili
Properties p.l.c. for the financial years ended 31 December 2020, 2021 and 2022. The projected financial information for the year
ending 31 December 2023
to be reasonable. Consequently, the actual outcome may be adversely affected by unforeseen situations and the variation
between forecast and actual results may be material.
Issue Income Statement
Statement of Comprehensive Income for the year ended 31 December	2020A	2021A	2022A	2023F
Revenue	8,112	8,451	12,526	14,507
Net operating expenses	(2,973)	(3,546)	(4,079)	(3,826)
EBITDA	5,139	4,905	8,447	10,681
Depreciation and amortisation	(158)	(47)	(48)	(74)
EBIT	4,981	4,858	8,399	10,607
Net investment income	3,575	2,124	3,042	755
Net finance costs	(3,344)	(3,223)	(4,643)	(5,333)
Profit before tax	5,212	3,759	6,798	6,028
Income tax	(1,116)	(590)	(826)	(1,014)
Profit after tax	4,096	3,169	5,972	5,104
Other comprehensive income
Exchange differences - foreign operations	(5)	(26)	16	-
Total comprehensive income	4,091	3,143	5,988	5,104
EBITDA Derivation	2020A	2021A	2022A	2023F
EBITDA has been calculated as follows:
Operating profit (EBIT)	4,981	4,858	8,399	10,607
Adjustments:
Depreciation and amortisation	158	47	48	74
EBITDA	5,139	4,905	8,447	10,681
Ratio Analysis	2020A	2021A	2022A	2023F
Profitability
Growth in Revenue (YoY Revenue Growth)	-11.4%	4.2%	48.2%	15.8%
EBITDA Margin (EBITDA / Revenue)	63.4%	58.0%	67.4%	73.6%
Operating (EBIT) Margin (EBIT / Revenue) Net Margin (Profit for the year / Revenue)	61.4% 50.5%	57.5% 37.5%	67.1% 47.7%	73.1% 34.6%
Return on Common Equity (Net Income / Average Equity)	6.8%	3.7%	5.1%	4.0%
Return on Assets (Net Income / Average Assets)	2.7%	1.8%	2.6%	2.1%

EBITDA Derivation	2020A	2021A	2022A	2023F
EBITDA has been calculated as follows:
Operating profit (EBIT)	4,981	4,858	8,399	10,607
Adjustments:
Depreciation and amortisation	158	47	48	74

Profit after tax	4,096	3,169	5,972	5,104
Other comprehensive income
EBITDA Derivation	2020A	2021A	2022A	2023F
EBITDA has been calculated as follows:
Operating profit (EBIT)	4,981	4,858	8,399	10,607
Adjustments:
Depreciation and amortisation	158	47	48	74
Ratio Analysis	2020A	2021A	2022A	2023F
Profitability
Growth in Revenue (YoY Revenue Growth)	-11.4%	4.2%	48.2%	15.8%
EBITDA Margin (EBITDA / Revenue)	63.4%	58.0%	67.4%	73.6%
Operating (EBIT) Margin (EBIT / Revenue)	61.4%	57.5%	67.1%	73.1%
Net Margin (Profit for the year / Revenue)	50.5%	37.5%	47.7%	34.6%
Return on Common Equity (Net Income / Average Equity)	6.8%	3.7%	5.1%	4.0%
	2.7%	1.8%	2.6%	2.1%
Return on Assets (Net Income / Average Assets)

of 48 over the revenues of the previous year.

acquisition of new assets which led to an increase in revenue the full year operations of the

an increase of around 15.8% over FY22 actual results. nditure during FY22 amounted to circa revenue generated over the year. Moving forward, management is forecasting net operating expenses to stabilise at around . Acquisitions made in FY22 consist mainly of triple net assets, thereby passing on most of the expenses incurred to the tenants.

The (FY21: during FY23. Management noted that this projected improvement in EBITDA is mainly due to the full year operation of the Strinu asset, which was acquired in March 2022, and the Miro asset which was acquired in August 2022. Specifically, in view of the projected FY23 revenue expected to amount higher to 73.6% and 73.1% respectively.

Net and mainly relates to net increases in fair value gains on the properties located in Malta, Romania and the Baltic

in November 2021. The Group focused on the Management is forecasting FY23 revenues to be in the acquisitions made in the previous year, which will result in 8m during FY23 mainly because of further uplifts in fair value of properties held by the group. The Group incurred a higher level of finance costs during FY22, m. These are expected to amount higher at , mainly due to additional loans taken up during the previous year for acquisitions made, together with the higher interest rate environment.

Tax i m. The Group is antici FY23, which is in line with the higher profitability planned during the year.

m), with this projected to improve to around The Group reported a profit after tax of around m). In 2022, the Group benefited from a slight movement in exchange differences from foreign operations of 16k as a result of a stronger Romanian currency (RON) against the Euro which closed at RON 4.9474 at 31 December 2022 (2021: RON 4.9481). The US Dollar also benefited against the Euro and reached USD 1.0702 on 31 December 2022 (2021: USD 1.1323). EBITDA, profit after tax has bee 5.1m during

Countries. Investment income is expected to be around Notwithstanding the aforementioned improvement in FY23. This drop is mainly attributable to lower net investment income expected in FY23, since in the current global economic environment, rising interest rates, result in increased financing costs and affect the uplift of the value of the properties. is expected to taper down to 34.6% during FY23, from 47.7% in the prior year.

2.1.1 Variance Analysis

Statement of Comprehensive Income for	the year ended 31 December	Dec-22	Dec-22	Variance
		Forecast	Audited
Revenue		12,019	12,526	507
Net operating expenses		(4,289)	(4,079)	210
EBITDA		7,731	8,447	716
Depreciation and amortisation		(55)	(48)	7
EBIT		7,676	8,399	723
Net investment income		703	3,042	2,339
Net finance costs		(4,204)	(4,643)	(439)
Profit before tax		4,175	6,798	2,623
Income tax		(1,588)	(826)	762
Profit after tax		2,587	5,972	3,385
Other comprehensive income
Exchange differences - foreign operations		-	16	16
Total comprehensive income		2,587	5,988	3,401

Issue

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023 Issue
Statement of Financial Position as at 31 December	2020A	2021A	2022A	2023F
Assets
Non-current assets
Goodwill and other intangibles	16	16	16	16
Property, plant and equipment	80	75	110	190
Investment properties	105,199	124,626	232,298	205,890
Property held for sale Other financial assets	7,735 24,500	11,970 24,500	3,700 -	- -
Loans and receivables	5,231	1,225	547	547
Other non-current assets	2,151	2,341	5,712	1,261
Total non-current assets	144,912	164,753	242,383	207,904
Current assets
Loans and other receivables	53	3,089	28	175
Other assets	1,616	3,661	2,976	5,246
Cash and cash equivalents	3,058	37,193	10,983	14,307
Total current assets	4,727	43,943	13,987	19,728
Total assets	149,639	208,696	256,370	227,632
Equity
Called up share capital	41,592	80,179	80,179	80,179
Other reserves	633	7,090	7,125	7,125
Retained earnings	20,055	23,612	28,935	29,020
Non-controlling interests	395	-	8,691	9,294
Total equity	62,675	110,881	124,930	125,618
Liabilities
Non-current liabilities
Borrowings and bonds	72,188	84,413	103,634	90,405
Other financial liabilities	2,235	573	2,227	2,028
Deferred tax & other non-current liabilities	3,271	3,497	5,904	5,052
Total non-current liabilities	77,694	88,483	111,765	97,485
Current liabilities
Bank loans	5,285	4,796	14,834	1,920
Other financial liabilities	11	722	37	50
Other current liabilities	3,974	3,814	4,804	2,559
Total current liabilities	9,270	9,332	19,675	4,529
Total liabilities	86,964	97,815	131,440	102,014
Total equity and liabilities	149,639	208,696	256,370	227,632

investment properties, which on aggregate amounted to circa 90.6% of total assets. This sharp increase in investment FY22. The Group is planning the disposal of an investment and relate to the Villa Marika property. The group also has

-current assets are also composed of property held for sale, which m -current assets, which relate to deferred tax assets, trade and other receivables, right of use assets and restricted cash. -current assets are expected to , mainly property. throughout the year resulting in a lower cash position.

other assets and cash and cash equivalents, decreased to is due to the investments carried out by the Group

because of the aforementioned decrease in investment Other than equity, the Group is financed through bank loans and bonds, which 118.4m (FY21: hypothecs, pledges and guarantees provided by Group companies. The bonds constitute unsecured obligations of the Company, and rank equally without priority or preference with all other present and future unsecured and unsubordinated obligations of the Issuer. Moving into FY23, noncurrent assets are expected to decrease to circa 0.4m. Total liabilities during FY23 are projected to decrease to m. The aforementioned decrease in total borrowings is also reflected in the financial strength ratios, with all gearing ratios expected to amount lower during FY23. In view of the

m). Notably, this decrease improved financial performance discussed above, both interest coverage ratios are expected to solidify further.

2.2.1 Variance Analysis

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023
2.2.1 Variance Analysis
Statement of Financial Position as at 31 December	Dec-22	Dec-22	Variance
	Forecast	Audited
Assets
Non-current assets
Goodwill and other intangibles	41	16	(25)
Property, plant and equipment	111	110	(1)
Investment properties	221,915	232,298	10,383
Property held for sale	-	3,700	3,700
Loans and receivables	2,474	547	(1,927)
Other non-current assets	975	5,712	4,737
Total non-current assets	225,516	242,383	16,867
Current assets Loans and other receivables	1,337	28	- (1,309)
Other assets	224	2,976	2,752
Cash and cash equivalents	12,995	10,983	(2,012)
Total current assets	14,556	13,987	(569)
			-
Total assets	240,072	256,370	16,298
Equity
Called up share capital	80,179	80,179	-
Other reserves	6,810	7,125	315
Retained earnings	24,003	28,935	4,932
Non-controlling interests Total equity	- 110,991	8,691 124,930	8,691 13,939
Liabilities
Non-current liabilities
Borrowings and bonds	115,262	103,634	(11,628)
Other financial liabilities	1,089	2,227	1,138
Deferred tax & other non-current liabilities	5,188	5,904	716
Total non-current liabilities	121,539	111,765	(9,774)
Current liabilities
Bank loans	3,872	14,834	10,962
Other financial liabilities	397	37	(360)
Other current liabilities Total current liabilities	3,273 7,541	4,804 19,675	1,531 12,134
Total liabilities	129,081	131,440	2,359
Total equity and liabilities	240,072	256,370	16,298
s non-current	prepayments and accrued income as evidenced by the
assets during FY22 relate to higher acquisitions made which	positive variance	in other current assets. The variance
led to a positive variance of	Groups total equity during FY22	relates	to higher profits
The Villa Marika property, which was earmarked for sale in	registered in FY22, along with the addition of the minority
	interest following the acquisition of the MIRO property.
on the Issuers books. A portion of non-current loans and	When it comes to borrowings and bonds the Group reclassed
receivables were also reclassed as current assets whilst the
acquisitions of properties led to higher than expected	section of the balance sheets to the current section, which

was not forecasted. These mentioned loans are in the process of being refinanced and will be classified back to long-term liabilities by the end of FY23.

Issue Statement of Cash Flows

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023
process of being refinanced and will be classified back to
Issue Statement of Cash Flows
Cash Flows Statement for the year ended 31 December	2020A	2021A	2022A	2023F
Cash flows from operating activities	4,529	5,457	13,147	10,588
Interest paid	(3,686)	(3,316)	(4,300)	(5,021)
Income tax paid	(520)	(965)	(404)	(551)
Net cash flows generated from / (used in) operating activities	323	1,176	8,443	5,016
Net cash flows generated from / (used in) investing activities	4,588	(20,080)	(27,003)	13,575
	(8,988)	53,064	(7,666)	(15,283)
Net cash flows generated from / (used in) financing activities		34,160	(26,226)	3,308
Movement in cash and cash equivalents	(4,077)
Cash and cash equivalents at start of year	7,141	3,059	37,193	10,983
Foreign exchange adjustment Cash and cash equivalents at end of year	(5) 3,059	(26) 37,193	16 10,983	16 14,307
Ratio Analysis	2020A	2021A	2022A	2023F
Cash Flow Free Cash Flow (Net cash from operations + Interest - Capex)	4	3,689	243	9,499

Ratio Analysis	2020A	2021A	2022A	2023F
Cash Flow

Following the positive performance registered in FY22 along with the favourable movements working capital activities, the Group reported an improved net cash generated from generated from operating activities is projected to decrease slightly to around

With respect to investing activities, net cash outflow in FY22 amounted to circa m and mainly relates to an investment in in FY22. Moving forward, net cash from investing activities is expected to turn positive and amount to circa as a result of investment property being disposed of around 30m over the year. attributable to the repayment of bank loans, which

Net cash used in financing activities amounted to around m duri m). This is mainly . It is pertinent to note that the large inflow in FY21 was due to the IPO. Cash flows used in

cash Moving into free cash flow, apart from net cash from operations and interest payments which are presented capital expenditure.

2.3.1 Variance Analysis

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023 2.3.1 Variance Analysis
p.l.c. Statement of Cash Flows for the year ended 31 December		Dec-22	Dec-22
Hili Properties		Forecast	Audited	Variance
Cash flows from operating activities		8,088	13,147	5,059
Interest paid		(3,925)	(4,300)	(375)
Income tax paid		(1,445)	(404)	1,041
Net cash flows generated from / (used in) operating activities		2,718	8,443	5,725
Net cash flows generated from / (used in) investing activities		(50,766)	(27,003)	23,763
Net cash flows generated from / (used in) financing activities		24,447	(7,666)	(32,113)
Movement in cash and cash equivalents		(23,601)	(26,226)	(2,625)
Cash and cash equivalents at start of year Foreign exchange adjustment		37,193 -	37,193 16	- 16

Harbour (APM) Investments Ltd

The following financial information is extracted from the audited financial statements of HIL for the financial years ended 31 December 2020 to 2022. The projected financial information for the year ending 31 December 2023 has been provided by Group management. The projected financial information detailed below relates to events in the future and are based on assumptions which the Group believes to be reasonable. Consequently, the actual outcome may be adversely affected by unforeseen situations and the variation between forecast and actual results may be material.

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023
Harbour (APM) Investments Ltd
The following financial information is extracted from the audited financial statements of for the financial years ended 31 December 2020 to 2022. The projected financial information 2023 has been provided by Group management. The projected financial information detailed below relates to events in the future and are based on assumptions which the Group believes to be reasonable. Consequently, the actual affected by unforeseen situations and the variation between forecast and actual results may be material.			for the year ending 31 December outcome may be adversely	HIL
HIL Statement of Comprehensive Income for the year ended 31 December	2020A	2021A	2022A	2023F
Rental Income	-	25	35	35
Administrative expenses	(18)	(21)	(67)	(23)
Finance and other income	86	61	36	-
Finance costs	(29)	(2)	-	-
Investment income / (loss)	-	-	(7)	-
Profit before tax	39	63	(3)	12
Taxation	(20)	(28)	(22)	(10)
Profit after tax	19	35	(25)	2
HIL Statement of Financial Position as at 31 December	2020A	2021A	2022A	2023F
Assets
Non-current assets
Investment property Loans and other receivables	25,507 1,722	25,757 -	25,750 1,283	25,750

Administrative expenses	(18)	(21)	(67)	(23)
Finance costs	(29)	(2)	-	-
Profit before tax	39	63	(3)	12
Profit after tax	19	35	(25)	2
HIL Statement of Financial Position as at 31 December	2020A	2021A	2022A	2023F
Assets
Non-current assets
Investment property	25,507	25,757	25,750	25,750
Loans and other receivables	1,722	-	1,283
Total non-current assets	27,229	25,757	27,033	25,750
Current assets
Loans and other receivables	491	1,274	26	99
Other receivables	6	4	1	0
Cash and cash equivalents	1	198	204	65
Total current assets	498	1,476	231	164
Total assets	27,727	27,233	27,264	25,914
Equity
Equity and reserves	23,504	24,447	24,422	23,778
Total equity	23,504	24,447	24,422	23,778
Liabilities
Non-current liabilities
Bank borrowings and other financial liabilities	289	288	690	-
Deferred tax liabilities	2,040	2,060	2,060	2,060
Total non-current liabilities	2,329	2,348	2,750	2,060
Current liabilities
Other payables	1,659	437	93	76
Bank loans	235	-	-	-
Total current liabilities	1,894	437	93	76
Total liabilities	4,223	2,785	2,843	2,136
Total equity and liabilities	27,727	27,232	27,265	25,914

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023
HIL Cash Flows Statement for the year ended 31 December		2020A	2021A	2022A	2023F
Net cash flows generated from / (used in) operating activities		(69)	55	5	(10)
Net cash flows generated from / (used in) investing activities		-	939	-	(130)
Net cash flows generated from / (used in) financing activities		68	(796)	1	1
Movement in cash and cash equivalents		(1)	198	6	(139)
Cash and cash equivalents at start of year		2	1	198	204
Cash and cash equivalents at end of year		1	199	204	65
Ratio Analysis		2020A	2021A	2022A	2022F
Financial Strength
Gearing 1 (Net Debt / Net Debt and Total Equity)		2.2%	0.4%	2.0%	-0.3%
Gearing 2 (Total Liabilities / Total Assets)		15.2%	10.2%	10.4%	8.2%
ta which, as at 31 December	the FY22			results incorporate minimal rental income
2022 Analysis, in FY22, the Group finalised the acquisition of the	concerning a portion of the land which is currently being leased out to a third party. No other significant				activities
shares of HIL, thereby effectively adding to its portfolio circa	occurred during FY22			and no material movements are
h previous projections,	forecasted for FY23.

Ratio Analysis	2020A	2021A	2022A	2022F
Financial Strength
Gearing 2 (Total Liabilities / Total Assets)	15.2%	10.2%	10.4%	8.2%

Hili Estates Limited

The following financial information is extracted from the audited financial statements of HEL for the financial years ended 31 December 2020 to 2022. The projected financial information for the year ending 31 December 2023 has been provided by Group management. The projected financial information detailed below relates to events in the future and are based on assumptions which the Group believes to be reasonable. Consequently, the actual outcome may be adversely affected by unforeseen situations and the variation between forecast and actual results may be material.

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023
Hili Estates Limited
The following financial information is extracted from the audited financial statements of financial years ended 31 December 2020 to 2022. The projected financial information for the year ending 31 December 2023 been provided by Group management. The projected financial information detailed below relates to events in the future and are based on assumptions which the Group believes to be reasonable. Consequently, the actual outcome may be adversely affected by unforeseen situations and the variation between forecast and actual results may be material.			HEL	for the has
HEL Statement of Comprehensive Income for the year ended 31 December	2020A	2021A	2022A	2023F
Revenue	1,001	1,031	1,151	1,114
Net operating expenses	(75)	(79)	(130)	(91)
EBITDA	926	952	1,021	1,023
Depreciation and amortisation	(95)	(1)	-
		951	1,021	1,023
EBIT	831
Net investment income	1,066	-	115	-
Net finance costs	91	175	20	(83)
Profit before tax	1,988	1,126	1,156	940
Income tax	(413)	(355)	(382)	(311)
Profit after tax	1,575	771	774	629
HEL Statement of Financial Position as at 31 December	2020A	2021A	2022A	2023F
Assets
Non-current assets
Investment properties	16,900	16,900	17,100	17,271
Property, plant and equipment	-	-	-
Right of use of assets	1	-	-
Loans and other receivables	3,070	8,800	10,052	10,052
Total non-current assets	19,971	25,700	27,152	27,323

Profit before tax	1,988	1,126	1,156	940
Profit after tax	1,575	771	774	629
Assets
Non-current assets
Investment properties	16,900	16,900	17,100	17,271
Property, plant and equipment	-	-	-
Right of use of assets	1	-	-
Loans and other receivables	3,070	8,800	10,052	10,052
Total non-current assets	19,971	25,700	27,152	27,323
Current assets
Loans and other receivables	4,245	5,215	5,845	5,845
Cash and cash equivalents	119	1,476	204	461
Total current assets	4,364	6,691	6,049	6,306
Total assets	24,335	32,391	33,201	33,629
Equity
Equity and reserves	16,650	14,909	15,683	15,488
Total equity	16,650	14,909	15,683	15,488
Liabilities
Non-current liabilities
Bank Borrowings and loans	3,373	6,846	6,067	2,042
Deferred tax & other non-current liabilities	1,352	6,159	10,003	15,814
Total non-current liabilities	4,725	13,005	16,070	17,856
Current liabilities
Bank overdraft and loans	462	247	307	177
Other financial liabilities	1,838	3,625	-
Other payables	660	605	1,141	108
Total current liabilities	2,960	4,477	1,448	285
Total liabilities	7,685	17,482	17,518	18,141
Total equity and liabilities	24,335	32,391	33,201	33,629
Page 22

Hili Properties p.l.c.
FINANCIAL ANALYSIS SUMMARY 2023
HEL Cash Flows Statement for the year ended 31 December	2020A	2021A	2022A	2023F
Cash flows from operating activities	466	889	1,303	1,089
Interest paid	(167)	(230)	(293)	(318)
Income tax paid	(323)	(477)	(236)	(544)
Net cash flows generated from / (used) operating activities	(24)	181	774	227
Net cash flows generated from / (used in) investing activities	520	(3,515)	303	87
Net cash flows generated from / (used in) financing activities	(617)	4,690	(2,349)	(57)
Movement in cash and cash equivalents	(121)	1,357	(1,272)	257
Cash and cash equivalents at start of year	240	119	1,476	204
Cash and cash equivalents at end of year	119	1,476	204	461
Ratio Analysis	2020A	2021A	2022A	2023F
Financial Strength
Gearing 1 (Net Debt / Net Debt and Total Equity)	18.2%	27.4%	28.2%	10.2%
Gearing 2 (Total Liabilities / Total Assets)	31.6%	54.0%	52.8%	53.9%
During the year under review, HEL was principally engaged
in the management of the Nineteen-twenty-three building in			ncrease by another
Marsa, Malta. Rental income generated in FY22 amounted		bank borrowings and loans during FY22
% when compared to the prior	amounte	m. Total borrowings are expected to
year. Notwithstanding the fact that HEL incurred higher		m, predominantly due to bank loan
operating expenditure during FY22, the Company reported	repayments expected to take place during FY23. Meanwhile,
profit	other financial
after tax in FY23. During	are expected to be negligible in FY23.

Ratio Analysis	2020A	2021A	2022A	2023F
Financial Strength
Gearing 2 (Total Liabilities / Total Assets)	31.6%	54.0%	52.8%	53.9%

Key Market and Competitor Data

3.1 European Economic Forecast ¹

The better-than-expected start to the year lifts the growth outlook for the EU economy to 1.0% in 2023 and 1.7% in 2024. Upward revisions for the euro area are of a similar magnitude, with GDP growth now expected at 1.1% and 1.6% in 2023 and 2024 respectively. On the back of persisting core price pressures, inflation has also been revised upwards, to 5.8% in 2023 and 2.8% in 2024 in the euro area.

As inflation remains high, financing conditions are set to are expected to be nearing the end of the interest rate hiking cycle, the recent turbulence in the financial sector is likely to add pressure to the cost and ease of accessing credit, slowing down investment growth and hitting in particular residential investment.

After peaking in 2022, headline inflation continued to decline in the first quarter of 2023 amid a sharp deceleration of energy prices. Core inflation is, however, proving more persistent. In March it reached a historic high of 7.6%, whilst in April, the flash harmonised index of consumer prices estimate for the euro area, showed a marginal decline in the rate of core inflation. On an annual basis, core inflation in the euro area in 2023 is set to average 6.1%, before falling to 3.2% in 2024, remaining above headline inflation in both forecast years.

The EU labour market is expected to react only mildly to the slower pace of economic expansion. Employment growth is forecast at 0.5% this year, before edging down to 0.4% in 2024. The unemployment rate is projected to remain just above 6%. Wage growth has picked up since early 2022 but has so far remained well below inflation. More sustained wage increases are expected on the back of persistent tightness of labour markets, strong increases in minimum wages in several countries and, more generally, pressure from workers to recoup lost purchasing power.

Despite the introduction of support measures to mitigate the impact of high energy prices, strong nominal growth and the unwinding of residual pandemic-related measures led the EU aggregate government deficit in 2022 to fall further to 3.4% of GDP. In 2023 and more markedly in 2024, falling energy prices should allow governments to phase out energy

support measures, driving further deficit reductions, to 3.1% and 2.4% of GDP respectively. The EU aggregate debt-to-GDP ratio is projected to decline steadily to below 83% in 2024 (90% in the euro area), which is still above the prepandemic levels.

3.2 Malta Economic Outlook ²

tighten further. Though the ECB and other EU central banks domestic product (GDP) growth is projected to moderate significantly from 6.8% in 2022 to 3.7% in 2023, and to ease slightly further to 3.6% and 3.5% in 2024 and 2025, respectively. When compared to the previous projections, the Ban unchanged, as upward revisions in private investment and exports were offset by an upward revision in imports.

In 2023, domestic demand is expected to be the main driver of growth as investment begins to reco contraction, while consumption is expected to remain relatively robust. The net export contribution is expected to be marginal in 2023, as exports should grow at a significantly slower rate following the strong rebound seen in 2022. Although the contribution of net exports is set to edge up slightly in 2024 and 2025, domestic demand is then expected to remain the main driver of growth in those years. stand at 3.0% in 2023, and to remain at a relatively low level

Employment growth is set to moderate too, from 5.4% in 2022 to 3.3% in 2023, which partly reflects the envisaged slowdown in economic activity towards its potential. Over the rest of the projection horizon, employment growth is set to stand at 2.0%. The unemployment rate is expected to of 3.2% in 2024 and 2025. Consumer Prices is projected to remain high in 2023, but

In view of the increase in inflation in 2023, together with tight labour market conditions, wage growth is projected to be relatively strong. Nevertheless, nominal wage growth is forecast to remain below consumer price inflation in 2023 due to lags in the transmission from prices to wages. In later years wage growth is expected to remain robust and outpace consumer price inflation. stand at 4.5% in 2023, down from 6.1% in 2022. The fall in

Annual inflation based on the Harmonised Index of significantly lower than in 2022. Indeed, it is envisaged to

² Central Bank of Malta -2025

¹ European Economic Forecast Spring 2023

inflation reflects a broad-based decrease across all subcomponents of HICP, except for energy inflation. Services is envisaged to be the main contributor to HICP inflation, but non-energy industrial goods (NEIG) and processed food are also projected to contribute strongly to annual HICP inflation in 2023. Inflation is set to ease further in 2024 and 2025 to 2.3% and 2.1%, respectively.

The general government deficit-to-GDP ratio is estimated to have declined to 5.2% of GDP in 2022, from 7.5% in 2021. It is then projected to narrow further to 4.9% of GDP in 2023, and to continue declining over the rest of the forecast horizon, reaching 2.9% of GDP by 2025. This improvement is driven by a declining share of expenditure in GDP, especially following the unwinding of COVID-19 support measures in 2022 and the declining profile of inflation-mitigation measures. The general government debt ratio is estimated to have decreased in 2022 and then increase progressively over the rest of the forecast horizon, stabilising at around 58.0% by 2025.

On balance, risks to economic activity are slightly tilted to the downside in 2023 and more balanced thereafter. The main downside risks relate to the possibility of stronger than envisaged weakness in the international economic environment, which could lead to lower exports. Foreign demand may also be weaker than expected, especially if monetary policy in advanced economies tightens more forcibly than assumed in this projection round. Some of these risks could be mitigated by stronger than expected wage growth, which could offer additional support to household consumption.

Risks to inflation are considered as balanced for the entire projection horizon. Indeed, while the effect of upward price pressures to salaries in Malta and an incomplete lagged passthrough of past increases in energy costs in the euro area could increase commodity prices further, the re-opening of China could be seen as a partial reversal of the previous supply shocks. Also, a stronger pass-through of the recent appreciation of the euro, monetary tightening as well as lower international energy and transport costs should result in downward pressures on inflation.

On the fiscal side, risks are on the downside (deficitincreasing) from 2023 onwards. These mainly reflect the likelihood of State Aid to the national airline, though possible weaker economic growth would also have an impact. These

risks may be partly offset by the profile of outlays on price mitigation measures, which could be less than projected if oil and gas prices stabilise at lower levels.

3.3 Baltic Real Estate Retail Market ³

Despite war outbreak in February 2022 in Ukraine along with and a number of projects being put on hold due to uncertainty and construction cost increase, the total volume of commercial real estate investment in the Baltics exceeded the EUR 1 billion mark in 2022 and reached 1.27b).

The investment market recorded several large and mediumsize single and portfolio deals, while the retail segment emerging asset classes such as the residential rental segment and senior housing continued to gain momentum. Although Baltic investors continued to dominate the market, 2022 saw increased activity from Nordic investors. During 2022 uncertainty remained strong around the cost of debt. Higher interest rates started to exert upward pressure on yields and suppress investment activity by year-end. services companies. There were also some alarming events

Despite all recent challenges, the office market has continued to demonstrate consistent activity, resulting in strong development activity. The largest contribution in office take-up in the region came from ITC and professional such as some tenants postponing their expansion in the region and a leap in energy prices in early autumn forcing developers to review their energy sustainability and ways of fixing this type of expenditure in leasing contracts. The market has rather shifted to tenant oriented as competition for both existing and potential tenants has picked up pace. expected, 2022 was a quiet year in terms of new professional

Following consequences caused by the pandemic and restrictions during 2020 purchasing power and rising energy costs remained as the (new) key concerns for retail tenants throughout 2022. As retail object development, although active development continued in the grocery segment and several shopping centres started and/or continued partial redevelopment / refurbishment. In 2022, discount retailers remained the most notable demand generators in the segment.

³https://www.colliers.com/en-lv/research/colliers-2023-balticreal-estate-market-overview

Although high uncertainty among tenants and developers initiated temporary delays in development and leasing processes, the industrial segment remained also overall active throughout the year.

3.4 Romanian Real Estate Retail Market ⁴

2022 marks the second consecutive year of positive growth experienced in 2020. The much-needed jumpstart recorded during the previous year, resulting in a V-shaped trend line ated the momentum for a second year of economic growth. With an estimated 4.3% annual increase overall in to keep an upward trend despite arising challenges. Projections indicate a steady course of evolution with yearly growths of 2.0% in 2023 and 3.0% in 2024. than 25% ( 1.25b). This amount is 36% higher than the

2022 will be remembered as an exceptional year for the Romanian investment market, as the total investment pandemic year. Bucharest proved again to be the most liquid real estate market for Romania generating 69% of last total investment volume. Throughout the year, twenty-one deals were closed for properties located in the capital, having an average ticket size of 41.1m, a value which tertiary cities such as Cluj-Napoca, Oradea, Arad, Pitesti and Ploiesti contributed at the investment volume with fifteen transactions with and average deal size of 25.7. throughout the year. Throughout 2023 another 265,000 sqm when taking into account the under -construction and

Modern retail stock in Romania at the end of 2022 reached circa 4.1m sqm, as eleven new retail parks were inaugurated planned projects with an estimated delivery date by the end of the year. More than three quarters of the future new supply is developed as a retail park format, out of which the overwhelming majority of 93% will be welcomed in secondary and tertiary cities.

The continuous addition of modern products to the coun -known Romanian

spending habit encouraged new companies from various industries to expand or enter the local market. Seventeen newcomers opened stores in 2022, and most of them chose Bucharest as the first location in the country.

3.5 Malta Real Estate Retail Market

volume exceeded the historical milestone of 1.0b by more volume registered in 2021 and 25% higher than the last pre-The strong economic growth sustained by the Maltese economy in recent years has contributed to a rise in the employment rate and the influx of foreign workers within the Maltese workforce. This has contributed to an increase in the demand for rental of office and commercial space in Malta. To address such growing demand, the supply of office and commercial space in Malta has considerably increased over the last couple of years. Of note, there are several traditional business areas in Malta. For instance, Sliema attracts many international brands and companies. Likewise, for law firms and many long-established family businesses.

Other traditional commercial areas include the likes of St. -view offices, and Floriana, which attracts businesses that want to be located in the vicinity of Valletta. In furtherance, there are also topquality commercial developments within in the proximity of the airport and in other residential areas such as Naxxar, Mosta, Mellieha and in parts of the south of Malta. The variety of commercial and office space in Malta cater for every type of business, from start-ups to established global organisations. In this regard, numerous business centres have recently been developed, with new centres in the pipeline.

Data specifically related to commercial property in Malta is limited, thus making it more challenging to identify the exact state of this sector. Nevertheless, it is evident that Malta has, over recent years, completely evolved and has attracted a numerous amount of foreign companies related to sectors within the financial services, gaming and IT. It is therefore apparent that the demand for good commercial property has been dominated by a situation of demand seemingly excessing supply. The latter has resulted into the majority of high-quality commercial developments being fully let.

⁴https://www.cbre.ro/en/research-and-reports/Romania-Real-Estate-Market-Outlook-2023

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023

In line with latest statistical data issued by Eurostat5 , the index reflecting office building permits within the European Union, indicated business levels similar to 2021 throughout 2022, which were still well above the depressed levels experienced in 2020. In Q1 2022 the index increased slightly to 135.7 from 134.9 in the previous quarter. The index then increased further to 138.8 in Q2 before dropping to 126.4 and 124.9 levels in Q3 and Q4 respectively.

3.6 Comparative Analysis

The purpose of the table below compares the debt issuance of the Issuer to other debt instruments. Additionally, we believe there is no direct comparable company related to the Issuer and, as such, we included a variety of securities with different maturities. More importantly, we have included different securities with similar maturity as the debt securities of the Issuer. One must note that, given the material differences in profiles and industries, the risks issuers is therefore different

Hili Properties p.l.c. FINANCIAL ANALYSIS SUMMARY 2023
							Net Debt
			Interest coverage			Total Liabilities	/ Net Debt	Net Debt /		Return on		Revenue Growth
Security	Nom Value	Yield to Maturity		Total Assets	Total Equity				Current Ratio		Net Margin
			(EBITDA)			/ Total Assets	and Total	EBITDA		Common Equity		(YoY)
							Equity
		(%)	(times)			(%)	(%)	(times)	(times)	(%)	(%)	(%)
	8,350	4.13%	14.6x	110.0	26.3	76.1%	61.4%	3.4x	2.4x	21.2%	17.2%	-41.1%
	8,500	9.35%	0.3x	18.4	7.9	56.9%	-8.7%	(4.7)x	1.1x	1.7%	15.4%	2.6%
5.8% International Hotel Investments plc 2023	10,000	2.58%	0.7x	1,662.0	817.9	50.8%	36.2%	10.7x	0.8x	-0.3%	-1.0%	84.3%
	40,000	5.91%	2.6x	422.8	248.2	41.3%	30.0%	12.0x	1.1x	-0.1%	-0.7%	8.1%
	35,000	4.02%	0.7x	1,662.0	817.9	50.8%	36.2%	10.7x	0.8x	-0.3%	-1.0%	84.3%
5% Hal Mann Vella Group plc	30,000	4.98%	2.9x	124.6	50.3	59.6%	51.8%	9.5x	1.2x	3.4%	7.0%	-5.6%
	6,465	2.55%	12.3x	34.5	9.2	73.4%	69.7%	6.2x	9.8x	31.6%	18.1%	-29.9%
5.75% International Hotel Investments plc	45,000	5.46%	0.7x	1,662.0	817.9	50.8%	36.2%	10.7x	0.8x	-0.3%	-1.0%	84.3%
	37,000	4.95%	2.0x	256.4	124.9	51.3%	46.3%	12.5x	0.7x	5.1%	48.8%	48.6%
S2T1	2,985	5.25%	1.3x	58.2	23.8	59.1%	55.3%	18.6x	0.7x	0.8%	10.0%	19.9%
	40,000 50,000	4.63% 4.34%	1.6x (.4)x	1,807.8 231.9	875.4 101.3	51.6% 56.3%	41.2% 41.9%	13.8x (67.7)x	0.8x 3.0x	-0.4% -2.2%	-1.3% -66.6%	85.6% -63.7%
	55,000	4.34%	0.7x	1,662.0	817.9	50.8%	36.2%	10.7x	0.8x	-0.3%	-1.0%	84.3%
	5,680	4.06%	6.1x	36.8	26.6	27.7%	13.3%	2.1x	1.8x	2.7%	25.1%	12.4%
	60,000	4.15%	0.7x	1,662.0	817.9	50.8%	36.2%	10.7x	0.8x	-0.3%	-1.0%	84.3%
3.25% AX Group plc Unsec Bds 2026 Series I	15,000	3.55%	2.6x	422.8	248.2	41.3%	30.0%	12.0x	1.1x	-0.1%	-0.7%	8.1%
	11,500	5.22%	2.6x	179.4	37.2	79.3%	37.5%	3.5x	3.0x	24.1%	22.9%	666.2%
	40,000	4.42%	4.8x	217.9	135.4	37.9%	25.3%	4.8x	0.8x	1.0%	3.5%	47.3%
4.4% Central Business	6,000	4.95%	1.3x	58.2	23.8	59.1%	55.3%	18.6x	0.7x	0.8%	10.0%	19.9%
	45,000	4.00%	7.7x	396.6	249.3	37.1%	29.0%	5.6x	0.7x	10.8%	93.7%	91.5%
	*Average	4.63%
Source: Latest available audited financial statements
Last closing price as at 21/06/2023
*Average figures do not capture the financial analysis of the Issuer

The above graph illustrates the average yearly yield of all local issuers as well as the corresponding yield of MGSs (Yaxis) vs the maturity of both Issuers and MGSs (X-axis), in their respective maturity bucket, to which the spread premiums can be noted. The graph also illustrates on a stand-alone basis, the yield of Hili Properties plc bond. As at 21 June 2023, the average spread over the Malta

Government Stock (MGS) for corporates with maturity range Hili Properties bond is trading at a YTM of 5.19%, translating MGS. This means that this bond is trading at a premium of

Glossary and Definitions

Income Statement
Revenue	Total revenue generated by the Group/Company from its principal business activities during the financial year.
Costs	Costs are expenses incurred by the Group/Company in the production of its revenue.
EBITDA	EBITDA is an abbreviation for earnings before interest, tax, depreciation and amortisation. It reflects the
EBIT (Operating Profit)	EBIT is an abbreviation for earnings before interest and tax.
Depreciation and Amortisation	An accounting charge to compensate for the decrease in the monetary value of an asset over time and the eventual cost to replace the asset once fully depreciated.
Net Finance Costs	The interest accrued on debt obligations less any interest earned on cash bank balances and from intra-group companies on any loan advances.
Profit After Taxation	The profit made by the Group/Company during the financial year net of any income taxes incurred.
Profitability Ratios
Growth in Revenue (YoY)	This represents the growth in revenue when compared with previous financial year.
Gross Profit Margin	Gross profit as a percentage of total revenue.
EBITDA Margin	EBITDA as a percentage of total revenue.
Operating (EBIT) Margin	Operating margin is the EBIT as a percentage of total revenue.
Net Margin	Net income expressed as a percentage of total revenue.
Return on Common Equity	the owners of issued share capital, computed by dividing the net income by the average common equity (average equity of two years financial performance).
Return on Assets	Return on assets (ROA) is computed by dividing net income by average total assets (average assets of two years financial performance).
Cash Flow Statement
Cash Flow from Operating Activities (CFO)	Cash generated from the principal revenue producing activities of the Group/Company less any interest incurred on debt.
Cash Flow from Investing Activities	Cash generated from the activities dealing with the acquisition and disposal of long-term assets and other investments of the Group/Company.
Cash Flow from Financing Activities	Cash generated from the activities that result in change in share capital and borrowings of the Group/Company.
Capex	Represents the capital expenditure incurred by the Group/Company in a financial year.
Free Cash Flows (FCF)	The amount of cash the Group/Company has after it has met its financial obligations. It is calculated by taking Cash Flow from Operating Activities less the Capex of the same financial year.
Balance Sheet
Total Assets	What the Group/Company owns which can de further classified into Non-Current Assets and Current Assets.
Non-Current Assets	Assets, full value of which will not be realised within the forthcoming accounting year
Current Assets	Assets which are realisable within one year from the statement of financial position date.
Inventory	Inventory is the term for the goods available for sale and raw materials used to produce goods available for sale.

Cash and Cash Equivalents	Cash and cash equivalents are Group/Company assets that are either cash or can be converted into cash immediately.
Total Equity	Total Equity is calculated as total assets less liabilities, representing the capital owned by the shareholders, retained earnings, and any reserves.
Total Liabilities	What the Group/Company owes which can de further classified into Non-Current Liabilities and Current Liabilities.
Non-Current Liabilities	Obligations which are due after more than one financial year.
Current Liabilities	Obligations which are due within one financial year.
Total Debt	All interest-bearing debt obligations inclusive of long and short-term debt.
Net Debt	Total debt of a Group/Company less any cash and cash equivalents.
Financial Strength Ratios
Current Ratio	The Current ratio (also known as the Liquidity Ratio) is a financial ratio that measures whether or not a company has enough resources to pay its debts over the next 12 months. It compares current assets to current liabilities.
Quick Ratio (Acid Test Ratio)	The quick ratio measu -term obligations with its most liquid assets. It compares current assets (less inventory) to current liabilities.
Interest Coverage Ratio	The interest coverage ratio is calculated by dividing EBITDA of one period by cash interest paid of the same period.
Gearing Ratio	finance total assets.
Gearing Ratio Level 1	Is calculated by dividing Net Debt by Net Debt and Total Equity.
Gearing Ratio Level 2	Is calculated by dividing Total Liabilities by Total Assets.
Gearing Ratio Level 3	Is calculated by dividing Net Debt by Total Equity.
Net Debt / EBITDA	The Net Debt / EBITDA ratio measures the ability of the Group/Company to refinance its debt by looking at the EBITDA.
Other Definitions	YTM is the rate of return expected on a bond which is held till maturity. It is essentially the
Yield to Maturity (YTM)	internal rate of return on a bond and it equates the present value of bond future cash flows to its current market price.

Hili Properties p.l.c.

FINANCIAL ANALYSIS SUMMARY 2023

Calamatta Cuschieri Investment Services Limited

Page 32 Ewropa Business Centre, Triq Dun Karm, Birkirkara, BKR 9034, Malta www.cc.com.mt Calamatta Cuschieri Investment Services Limited is a founding member of the Malta Stock Exchange and is licenced to conduct investment services by the Malta Financial Services Authority