MIDI p l c : Financial Statements for 2020

MIDI p.l.c.

Annual Report and Consolidated

Financial Statements

31 December 2020

Company Registration Number: C 15836

MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2020

	Pages
Directors' report	1	- 11
Statement of compliance with the Principles of Good Corporate Governance	12	- 26
Remuneration Report and Statement	27	- 33
Independent auditor's report	34	- 46
Statements of financial position	47	- 48
Income statements		49
Statements of comprehensive income		50
Statements of changes in equity	51	- 54
Statements of cash flows		55
Notes to the Financial Statements	56 - 110

MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2020

Directors' report

The Directors present their annual report and the audited Financial Statements for the year ended 31 December 2020.

Principal Activity

The MIDI Group (the "Group") comprises MIDI p.l.c ("MIDI" or the "Company") and three subsidiaries, Tigné Contracting Limited, T14 Investments Limited and Solutions & Infrastructure Services Limited. A fourth subsidiary Tigné Point Marketing Limited has been merged into Tigné Contracting Limited as at 1 January 2020. The Company also holds a 50% share in Mid Knight Holdings Limited.

The principal activity of the Group and the Company is the development of the Manoel Island and the Tigné Point Project.

Review of the business

The Group has registered a loss after tax of €2.1 million for the financial year ended 31 December 2020 compared to a profit after tax of €8.2 million registered during the financial year ended 31 December 2019. These financial results had been anticipated given the fact that the Company had a very limited number of properties available for sale during 2020 following the successful delivery of the Q2 apartments spanning over the previous two financial years. As at the beginning of 2020, the Company only had three Q2 apartments in stock and in part due to the subdued economic activity resulting from the COVID-19 pandemic none of these were sold during 2020. In fact, revenues from the development and property sale segment amounted to €213k when compared to revenues generated from the same segment in 2019 which amounted to €24.3 million. Contribution from this segment in 2019 amounted to €10 million whereas in 2020 this amounted to a loss of €2.5 million.

The property rental and management segment has also seen a reduction in revenues and consequently in contribution during 2020. This segment includes the Group's rental operations of its Pjazza retail outlets and foreshore restaurants, car parking operations, operator concession fees earned from the Manoel Island Yacht Marina and all the operating activities undertaken by Solutions & Infrastructure Services Limited ("SIS"). Revenues from this segment amount to €2.6 million (2019: €3.4 million) with the resultant contribution amounting to €1.3 million (2019: €2.0 million). This reduction in revenues and contribution is principally due to the Company granting rent concessions to the tenants of its commercial properties and to its car park operator by way of support during the COVID-19 pandemic.

Total assets have decreased from €234.6 million as at 31 December 2019 to €227.6 million while Net Asset Value has decreased from €104.0 million to €101.8 million as at 31 December 2020. Hence the Net Asset Value per share as at end of 2020 stood at €0.476 compared to €0.485 as at 31 December 2019.

The Group's financial results are positively impacted by the financial results of Mid Knight Holdings Limited ("MKH"), a jointly controlled entity accounted for on the basis of the equity method of accounting. The Group's 50% share of MKH profits for 2020 amounts to €1.9 million compared to €1.6 million recorded in the 2019 financial statements. The profits are wholly generated from the rental operations of 'The Centre', an office block situated at Tigné Point which was developed and is being operated by MKH.

The Company has continued to focus on the Manoel Island project during 2020. The Company had announced on the 18 June 2020 that the Environment & Planning Review Tribunal ("EPRT") had concluded that there was a breach in the Environment Impact Assessment ("EIA") in respect of the revised Outline Development Permit for Manoel Island (PA9407/17) which had been approved by the Planning Authority ("PA") on the 20 March 2019. The EPRT determined that a fresh EIA was to be submitted by the Company to the Environmental and Resources Authority ("ERA"), in order for the PA to reconsider the application.

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MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2020

Directors' report - continued

Review of the business - continued

Over the past twenty-four months, additional site investigations have been carried out by the Company under the supervision of an independent archaeologist approved by the Superintendence of Cultural Heritage. These site investigations revealed that a part of the site, previously earmarked for development, is of archaeological importance. Consequently, this necessitated a revised Masterplan which took into consideration these findings. As announced by the Company on the 18 February 2021 the revised Masterplan was submitted to the PA for its consideration and a fresh EIA was submitted to ERA. The revised Masterplan envisages a reduction in development volumes from the previously approved 127,000sqm to 95,000sqm and an increase in the open spaces which will total 192,000sqm of which 175,000sqm will be public open space.

Although the loss of the development volumes impacts the profitability of the project, this impact is mitigated to some extent by provisions of the Deed of Emphyteusis entered into with the Government of Malta on 15 June 2000 which provide for specific remedies in the event that the development is impacted by archaeological finds.

All works on Manoel Island relating to the Full Development Permit PA7781/18 (for the clearing of the Manoel Island site including the uprooting of trees, demolishing of existing buildings whilst retaining St. George's Chapel and Customs House) have been suspended in terms of a PA decision dated 11 February 2021 and will remain so until a final decision is taken by the PA with respect to the revised Masterplan. Similarly, the Full Development Permits relating to the development of the sports facilities and the upgrade of the yacht marina shall remain non-executable until the determination of the revised Masteplan application.

In addition to the Manoel Island project, the Company has also been working on its final development at Tigné Point known as the Q3 Residential Block. The residential block will consist of 63 apartments and underground car parking. A full development permit was granted by the PA on the 16 April 2020 which also includes the landscaping, paving and embellishment of the Garden Battery and adjoining areas. This permit is now subject to an appeal which was lodged by the Fort Cambridge Residents Association. Notwithstanding this, the Company is continuing with both the design and procurement processes of the development, in order to be in a position to commence works immediately, should the appeal be decided in the Company's favour.

The ongoing COVID-19 pandemic has continued to have a significant negative impact on the Maltese economy. The measures taken from time to time by the health authorities to contain the pandemic have impacted negatively on the Company's 2020 financial results. The more pronounced impact arises on the property rental and management operations as the Company continued to support the tenants of its commercial properties and its car park operator in the form of rent concessions from the onset of the pandemic and throughout the whole of 2020. This has resulted in a decrease of revenue and profitability from this segment. During some time in 2020, the pandemic appeared to be impacting the demand for the Company's properties available for sale, albeit these properties were limited in number. Nonetheless, the Company has now entered into a promise of sale agreement for two of the three remaining Q2 apartments, at the budgeted prices, the delivery of which are earmarked for the first half of 2021.

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MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2020

Directors' report - continued

Review of the business - continued

During the course of the pandemic, the Company has acted prudently and continues to do so by taking all the necessary measures to preserve its cash resources. Throughout 2020, the Company took a number of cost cutting measures to ensure that it retained the necessary financial resources to continue weathering this challenging period and meet all its obligations as they fall due. In the circumstances, the Board of Directors are not recommending to pay a dividend during 2021 in respect of the 2020 financial year. On 11 March 2021, hence subsequent to the reporting period, in view of the new directives issued by the National Health Authorities for non-essential retail operations to contain the spread of the COVID-19 pandemic, retail units were again closed for business. Management anticipates that business will be resuming, in line with the recent announcements on the 26 of April.

The Group's senior management team has compiled financial projections for the year ending 31 December 2021. These comprise historical financial information up to the date of authorisation for issue of these financial statements and forecast financial information for the residual period, incorporating the ongoing impact of the pandemic on the projected financial results, cash flows and financial position of the Group. Under these cash flow projections, which consider the rent concessions being planned for 2021, and the financing arrangements the Company has recently secured, the Group is expected to continue having sufficient liquidity and financial resources to meet its obligations and expected cash outflows.

Information pursuant to Listing Rule 5.64

Structure of Capital

The Company has an authorised share capital of ninety million euro (€90,000,000) divided into four hundred and fifty million (450,000,000) Ordinary shares having a nominal value of €0.20 each.

The Company's issued share capital is forty-two million eight hundred and thirty-one thousand nine hundred eight four euro (€42,831,984) divided into two hundred and fourteen million one hundred fifty-nine thousand nine hundred and twenty-two (214,159,922) Ordinary shares of €0.20 each fully paid up and forming part of one class of Ordinary Shares.

Any increase in the issued share capital of the Company shall be decided upon by an Ordinary Resolution of the Company: provided that, notwithstanding the foregoing, the Company may by Ordinary Resolution authorise the Directors to issue shares up to the amount specified as the authorised share capital of the Company, which authorisation shall be for a maximum period of five years and is renewable for further periods of five years each.

Since there are currently no different classes of ordinary shares in the Company, all Ordinary Shares have the same rights, voting rights and entitlements in connection with any distribution whether of dividends or capital (on a winding up or otherwise). There are no shares in issue that have any preferred or deferred rights.

Every Ordinary Share carries the right to participate in any distribution of dividend declared by the Company pari passu with all other Ordinary Shares. Each Ordinary Share shall be entitled to one vote at meetings of Shareholders. Every Ordinary Share carries the right for the holders thereof to participate in any distribution of capital made whether on a winding up or otherwise, pari passu with all other Ordinary Shares. The Ordinary Shares are freely transferable and pursuant to admission to the Official List of the Malta Stock Exchange, the shares are transferable in accordance with the rules and regulations of the Malta Stock Exchange as applicable from time to time.

Subject to the provisions of the Companies Act (Chapter 386 of the Laws of Malta) (the "Companies Act"), the Company may purchase its own shares.

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