“Following sustained losses in prior years, the Group’s performance in FY19 improved, with 1923 registering a profit after tax. Despite the pandemic, 1923 still expects an improvement in its financial performance for FY20. The Group is forecasting an improvement of 86 basis points in its EBITDA margin on a comparative basis, with revenues expected to grow by 18.2%. Such improvement is also attributable to the newly acquired STS business, which mainly was financed through new debt.

The contribution of the newly acquired STS operations, coupled with the organic growth of both the IT and retail segments, is expected to offset the above mentioned increase in leverage, with both the interest coverage and gearing forecasted to remain constant to FY19. Nonetheless, the extent of the impact from the pandemic both on the logistics and STS operations are not yet fully known, therefore we believe that a Neutral credit opinion on 1923 is justified.

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