Dizz Group has registered a loss of €3.3 million for the year 2020, financial documents have revealed, with auditors raising doubts whether the group will be able to survive the pandemic.
The group’s auditors of Dizz Group noted that the COVID-19 pandemic and government restrictions had had a big effect on the group’s operations, leading to it posting recorded losses. Because of this, they said that “an uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern”.
The accounts for 2020 noted that the increased loss for the year was attributed to a reduction in revenue of 8% from €14,027,847 in 2019 to €12,912,280 in 2020. Dizz Group also recorded a loss of €2.3 million in 2019
Taking into account property revaluations and deferred tax, the total comprehensive loss for the year was €3,326,553. Without them, the end of year loss would have totalled €5.3 million.
The loss is far greater than the group’s projections for 2020. On 14th July 2020, the group had projected a loss of €203,000 by the end of the year.
DIZZ Group is the operator of leading fashion franchises Terranova, Liu Jo, Calliope, Brooks Brothers, Golden Point, MAX&Co., PINKO, Paul & Shark, Guess, Trussardi, Harmont & Blaine, Elisabetta Franchi, and Michael Kors among others. The Group also operates the Caffe Pascucci franchise in Malta.
The company’s assets are currently valued at €61 million, with its current liabilities growing to €54 million. Its non-current liabilities have doubled in recent years, climbing up from €15.6 million in 2018 to €35.1 million in 2019 and €41 million in 2020. Its cash flow is also in the red, with accounts showing that its cash was a negative €780,615 by the end of 2020.
The Group was reluctant to answer several questions put forward by Lovin Malta to further explain the financial figures, citing commercial sensitivity, claiming “malicious inference” in the questions asked and threatening legal action. The group even sent a legal letter calling to cease and desist from publishing this article. Their full official reply can be found at the bottom of the article.
Dizz Group, which is a publicly listed company, has issued several bonds over the last few years. On 20 September 2016, Dizz Finance plc published a prospectus in connection with the issuance of €8.0 million 5.0% unsecured bonds maturing in 2026. This bond is being guaranteed by Dizz Group of Companies Limited. In 2017, it used 7.5 million Unsecured Bonds maturing in 2028 with an annual 5.35% coupon guaranteed by D Shopping Malls Limited. In 2020, also issued a €10 million convertible notes programme to acquire shares in the group’s food subsidiaries, D Foods Finance PLC.
The group refused to answer questions about whether a sinking fund had been put in place to ensure the company would be able to pay back the bond interest.
Despite the lack of reply, a look at the accounts showed that Dizz Group’s staff costs increased over the period from €1,451,114 to €2,751,630. The group, which benefitted from the COVID-19 wage supplement, actually increased the number of people employed in 2020, jumping up from 118 to 196., which is commendable during the pandemic.
An increase in administrative costs has been attributed to an increase in legal and professional fees, fines, loss on termination of lease and a higher rental cost than projected.
During the year under review, Dizz Group underwent a corporate restructuring exercise aimed at streamlining operations of the subsidiaries into four key pillars: retail, food and beverage, property and financing.
As part of this exercise, the Group incorporated D Foods Finance PLC as the holding company of the food and beverage arm of the Group, and raised “€3,000,000 Notes through bank finance as the First Tranche of its base programme”.
In a bid to further consolidate its food and beverage side of the business, Dizz Group also acquired DK Pascucci Limited, DCaffe Holding Limited, D Kitchen Lab Limited and Xilema Limited.
In 2020, the Group also finished works at D Mall in Tigne Point, Sliema and by the end of the year, eight outlets were leased out to related or third parties, with one outlet and office space remaining vacant at the end of the year.
Speaking to Lovin Malta, Dizz Group CFO Kenneth Abela said:
“It was a surprise to read some of the questions you have put forward. One must surely appreciate and understand that certain matters are commercially sensitive and disclosing same would be highly prejudicial to the interests of our companies, employees, bondholders and shareholders.”
“The malicious inference in the questions put forward is unacceptable. Throughout these challenging times we have taken important decisions and implemented measures aimed at protecting the interests of our employees and bondholders. We are proud to confirm that notwithstanding these unprecedented challenges, we have not reduced our staff complement and all our employees were assured their position within the Group. DIZZ has always honoured, and continues to honour, its commitments with third parties, including with our bondholders. We have also always acted in full compliance of our obligations at law and complied with all admission and listing requirements imposed by the relative regulatory body. Our Group now looks ahead with a positive outlook for the coming months and is confident in a positive recovery from this global pandemic.”
“As we have sought to protect the interests of our employees and bondholders throughout all these years, we will not hesitate to take whatever legal and judicial action we consider necessary against any person and entity that attempts to prejudice such interests. You are therefore requested to cease and desist from making any false, misleading or incorrect statements or inferences about our Group. In default, we shall hold you personally and Lovin Malta Limited, responsible for any and all damage, including monetary damage, that our Group may sustain and will take all action to protect our rights at law.”
What do you think of the group’s financial situation?