Arkati Interview with Vassallo Group Finance Director, Stephen Borg – “Laying the Groundwork for Sustainable Growth”

In an ever-changing financial landscape, adaptability and foresight are paramount. For Vassallo Group – one of Malta’s leading conglomerates with a diverse portfolio spanning real estate, education, and sports – the past year has presented significant financial challenges. From managing long-term investments to navigating rising interest rates, Group Finance Director Stephen Borg says the Group had to remain agile in its strategies to ensure continued growth and success. The Group has made considerable investments over the last few years, particularly in the Campus Hub, Vassallo Business Park and Mediterranean College of Sport projects.

“These are all major long-term investments where capital outflow comes long before the generation of Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA), hence cash from the project. Consequently, matching the Group’s debt servicing with its cash generation has been the main financial challenge over the past year,” Stephen explains. To mitigate this, diversification has been a critical component of the Group’s strategy. This approach has allowed the company to maintain stability, while awaiting returns on its long-term investments. One of the most significant changes in the financial environment over the past few years has been the rise in interest rates.

“All businesses had got used to a stable interest rate platform, which was completely overturned post-Covid. This has continued to prevail and coupled with increased inflation is likely to be a key factor in the next five years,” he says. “Indeed, this was a major change in the business environment and the impact on the Group was obviously a rise in operating costs, which had to be managed within the parameters of each business operating sector.” However, despite the challenges posed by rising interest rates, the Group’s financial strategy has remained resilient, allowing it to navigate these changes without the need for major overhauls in its short-term financial planning.

“The Groups’ financial strategy is not likely to suffer any major change in the short-term, but the changing goals set for each business area are requiring some strategic changes to the manner in which projects are financed. “In addition, the Group is ensuring it solidifies its financial foundations to emerge even more resilient to the dynamic environment,” Stephen adds. As the financial landscape continues to evolve, Vassallo Group is taking proactive steps to ensure it remains well-positioned for the future. By focusing on building resilience, the Group is positioning itself to not only meet its budgeted goals, but to thrive in a dynamic financial environment.

In addition to its financial strategy, Vassallo Group has also made sustainability a core focus of its long-term vision. “Sustainability has been on the Group’s radar since 2022 and initial reviews have taken place over the last two years with an aim to report in 2025. “The reports have shown that the Group is already well placed to face sustainable growth moving forward. Nevertheless, the Group has chosen to embrace Environmental, Social, and Governance (ESG) measures within its business considerations rather than solely a reporting obligation.” One of the factors allowing Vassallo Group to maintain its strength during challenging times is the close collaboration between the finance team and the CEOs of its various sectors.

As Director of Finance and Company Secretary for all Group companies, Stephen is present at board meetings across the organisation’s diverse portfolio, ensuring that financial decisions are aligned with the specific goals of each sector. “This enables me to be part of the discussion and decision-making process together with the various CEOs. “On a personal level, we are a very youngish team and we are constantly in contact to bounce off ideas and issues together. The Group CEO also organises a quarterly forum, which gives all CEOs and myself the opportunity to share experiences and problems from the different sectors where the Group operates in.”

As Vassallo Group looks to 2025 and beyond, the focus will be on allowing its recent investments to reach full fruition. “As I have already said, the Group has made some considerable investments in the last three to five years, which it would like to allow to reach fruition. In the meantime, a number of key changes are taking place to ensure that after the restart button is pushed, the Groups’ future investments will reap the desired benefits.”