MIDI p l c : Annual Report for 2022

MIDI P.L.C.

ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2022

CONTENTS

CHAIRMAN'S MESSAGE	4
CEO'S REVIEW OF OPERATIONS	6
DIRECTORS' REPORT	10
STATEMENT OF COMPLIANCE WITH THE PRINCIPLES OF GOOD CORPORATE GOVERNANCE	24
REMUNERATION REPORT AND STATEMENT	39
STATEMENTS OF FINANCIAL POSITION	46
INCOME STATEMENTS	50
STATEMENTS OF COMPREHENSIVE INCOME	51
STATEMENTS OF CHANGES IN EQUITY	52
STATEMENTS OF CASH FLOWS	56
NOTES TO THE FINANCIAL STATEMENTS	58
FIVE YEAR RECORD	114
INDEPENDENT AUDITOR'S REPORT	116

Readers are reminded that the official statutory Annual Financial Report 2022, authorised for issue by the Board of Directors, is in European Single Electronic Format (ESEF) and is published on www.midimalta.com. A copy of the Independent auditor's report issued on the official statutory Annual Financial Report 2022, is included within this printed document and comprises the auditor's report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the ESEF RTS), by reference to Capital Markets Rule 5.55.6.

CHAIRMAN'S MESSAGE

"The Manoel Island project remains at the forefront of the Company's objectives.

A significant amount of planning work is taking place behind the scenes to get this long-awaited project finally off the ground.

"

I would like to welcome you to the thirteenth Annual General Meeting of MIDI p.l.c.. Over the past year, the Group's focus has been on the development of the last phase of Tigné Point and the planning stage of the Manoel Island project.

For the financial year ended 31 December 2022, the Group has registered a loss of €2.28 million compared to a profit after tax of €558k registered during the financial year of 2021. This financial performance reflects the cyclical nature of the Company's property development business. Prior to 2022, the Company had successfully delivered all the apartments

making up the Q2 residential development. Consequently, during the financial year under review, the Company had no other inventory of residential apartments for sale. Given that the Group's financial results are very dependent on the contribution generated from the sale of property, the lack of revenues generated during 2022 (€229k versus €6.61 million in 2021) impacted negatively on the overall financial performance of the Group.

The Group's property rental and management segment has recorded an increase in revenues during 2022, (2022: €3.19 million versus 2021: €2.81 million) as all rent concessions related to the COVID-19 pandemic have been terminated. However, this increase in revenue is not reflected in the profitability of the segment, principally due to a decision taken by the Board of Directors to adjust downwards the carrying value of the Group's investment property portfolio by €1.05 million. This has resulted in an operating loss for this segment which amounts to €0.28 million (2021: operating profit amounting to €1.18 million).

As in previous years, Mid Knight Holdings Limited ("MKH"), the joint venture owning 'The Centre' office block situated at the heart of the Tigné Point development, continues to generate a positive contribution in the Group's results. The Group's 50% share of MKH's profits for 2022 amounted to €1.98 million which is marginally less than that recorded for 2021 (€2.03 million).

Having previously referred to the cyclical nature of the Company's operations, the Company has now embarked on its last residential development at Tigné Point, Q3 - Fortress Gardens. This development consists of 63 luxury seafront apartments with underground parking and landscaping of the historic Garden Battery and adjoining areas. This development will reinforce the Group's commitment towards the integration of the rich historical heritage of Tigné Point with the contemporary design and cosmopolitan culture of this latest development. The restored 19th century Garden

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MIDI P.L.C. ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2022

Battery will be sensitively landscaped to create a new public realm for the enjoyment of residents and the neighbouring community.

The Fortress Gardens project was launched to the market in January 2023, and I am very pleased to report that more than 60% of these apartments are subject to a reservation agreement or a promise of sale agreement. The market's response has been very encouraging with interest coming equally from both local and international buyers. Development works commenced during 2022 and the shell structure is earmarked for completion by the end of the first half of 2023. The finishes and façade works will commence soon, and the project is expected to be completed towards the middle of 2025. Given the market's response, I am confident that this development will have a very positive effect on the overall financial performance of the Group, once these apartments are delivered to their owners.

The Manoel Island project remains at the forefront of the Company's objectives. A significant amount of planning work is taking place behind the scenes to get this long-awaited project finally off the ground.

Discussions with Government are ongoing with regards to specific remedies available in the Deed of Emphyteusis, which will mitigate in part the impact on the overall profitability of the project, following the reduction of development volumes as a consequence of the discovery of archaeological finds on the Manoel Island site. This discovery had necessitated a revision to the Manoel Island Masterplan which resulted in a reduction of development volumes from 127,000 sqm to 95,000 sqm.

Following the signing of a non-binding memorandum of understanding with AC Enterprises Limited in December 2021 to explore the possibility of establishing a joint venture for the development of Manoel Island, the Group has continued with intensive negotiations and discussions throughout 2022.

From a planning process point of view, the detailed design process has advanced well and the full development application for the Manoel Island development was submitted to the Planning Authority in December 2022. In January 2023, the Environment and Planning Review Tribunal ("EPRT") rejected the appeal submitted by a third party in relation to the Environmental Impact Assessment ("EIA"), which had been previously approved by the Environmental and Resources Authority. The appellant appealed the EPRT decision at the Court of Appeal and on the 10th May 2023, the Court of Appeal rejected this appeal and therefore both the EIA and the Outline Development Permit have now been confirmed.

Notwithstanding the challenges faced, obstacles created by third parties and subsequent delays experienced, I am confident that a world class Manoel Island project will ultimately be successfully delivered and that it will meet the different and contrasting expectations of the project's stakeholders, be it the Group's shareholders, the Gzira community, future residents, and the wider community.

The Group will continue to take a prudent approach to its overall financial management. It is cognisant of the fact that the returns of its main projects, i.e. that of the Q3 - Fortress Gardens residential development and the Manoel Island development, are not expected to accrue in the short term. Given the status of its projects, the Board of Directors has decided to continue adopting a cautious approach and is therefore not proposing the declaration of a dividend for 2022.

Together with my fellow directors, I would like to express our appreciation to our CEO, Mark Portelli, and the management team, as well as to all staff for their commitment and loyalty during the past year. I would also like to take this opportunity to thank my fellow board members for their continued support and valuable contributions. We remain focused on our principal target which is to create shareholder value from the Q3 residential development and the Manoel Island project.

Finally, I would like to thank all MIDI's shareholders, bondholders, clients and other stakeholders for their continued support and confidence in the MIDI Group of Companies.

ALEC A. MIZZI

CHAIRMAN, MIDI P.L.C.

MIDI P.L.C. ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2022

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