MIDI p l c : Financial Statements for 2022

MIDI p.l.c.

Annual Report and Consolidated

Financial Statements

31 December 2022

Company Registration Number: C 15836

MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2022

	Pages
Directors' report	1	- 11
Statement of compliance with the Principles of Good Corporate Governance	12	- 26
Remuneration Report and Statement	27	- 33
Statements of financial position	34	- 35
Income statements	36
Statements of comprehensive income	37
Statements of changes in equity	38	- 41
Statements of cash flows	42
Notes to the Financial Statements	43	- 97

MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2022

Directors' report

The Directors present their annual report and the audited Financial Statements for the year ended 31 December 2022.

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. The Company also holds a 50% share in Mid Knight Holdings Limited through its subsidiary T14 Investments 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 of €2.28 million for the financial year ended 31 December 2022. This contrasts with the profit after tax of €0.6 million that was posted by the Group for the financial year ended 31 December 2021.

The reasons for this decline in financial performance are two-fold. Firstly, and primarily, MIDI had no inventory of residential apartments for sale during 2022, reflecting the cyclical nature of the Company's property development business. Although MIDI has recently launched the apartments from its final residential development at Tigné Point (known as Q3 - Fortress Gardens), in terms of the Company's accounting policies the sale of these residential units will only be recognised once the final deeds of sale are entered into with the respective buyers. Given that the Group's financial results are very dependant on the contribution generated from the sale of property, the lack of revenues generated from this sector invariably impacts negatively on the Group's overall financial performance. As a consequence, revenues generated from the sale of property during 2022 amounted to €229k (2021: €6.61 million) resulting in an operating loss of €1.13 million (2021: operating profit: €686k) for this segment which in turn impacted negatively on the overall financial performance of the Group.

Secondly, the Group has carried out its yearly review of its book values of its investment property portfolio. Having taken into consideration current economic circumstances and other developments that have taken place over the past twelve months, the Board of Directors has concluded that it would be prudent to reduce the overall book value of its investment property portfolio by €1.05 million. The Board of Directors believes that the reduced valuation of the Group's investment property portfolio as shown on the Group's Statement of financial position is now in line with the perceived market fair value of the assets making up this portfolio. This fair value loss of the book value of investment portfolio has also impacted negatively the overall financial performance of the Group.

Revenues of the property rental and management segment have increased during 2022 (2022: €3.19 million

versus 2021: €2.81 million) as the Company has terminated all rent concessions related to the COVID-19 pandemic. The increased revenue for 2022 is not reflected in the segment's operating (loss)/profit since the aforementioned fair value loss impacted the overall profitability of this segment (2022: operating loss: €0.28 million versus 2021: operating profit: €1.18 million). 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 the operating activities undertaken by Solutions and Infrastructure Services Limited ("SIS").

With regards to SIS, the Company had announced in December 2022, that as part of a corporate restructuring exercise, this subsidiary will be amalgamated with the Company during the financial year of 2023, by virtue of a merger by acquisition procedure to be carried out in accordance with the provision of Title II, Chapter III, Part VIII of the Companies Act, 1995. Upon this amalgamation taking effect, the Company shall succeed to all the assets, rights, liabilities and obligations of SIS, which in turn will cease to exist.

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MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2022

Directors' report - continued

Review of the business - continued

Total assets have increased from €225.70 million as at 31 December 2021 to €231.85 million as at 31 December 2022 while the Net Asset Value has decreased from €102.39 million as at 31 December 2021 to €101.27 million as at 31 December 2022, as a consequence of the loss being registered in the financial year ending 31 December 2022. The Net Asset Value per share as at year end amounts to €0.473 compared to €0.478 as at 31 December 2021.

The Group's financial results also include its 50% share of 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 share of MKH's profits for 2022 amounted to €1.98 million which is marginally less than the €2.03 million registered in 2021. MKH's profits are wholly generated from the rental operations of 'The Centre', an office block situated at Tigné Point.

The development of Manoel Island continues to play a prominent part in the Group's activities. Discussions with Government are ongoing with regards to the specific remedies available in the Deed of Emphyteusis entered into on 15 June 2000 which will help to mitigate in part the impact of the reduction of development volumes resulting from the discovery of archaeological finds on the Manoel Island site. The discovery of these finds had necessitated a revision to its Manoel Island masterplan which resulted in a reduction of development volumes from 127,000sqm to 95,000sqm.

As previously announced, the Planning Authority ("PA") has approved the Outline Permit for the revised Manoel Island Masterplan on 16 September 2021. This had followed the approval of the Environmental Impact Assessment ("EIA") by the Environmental and Resources Authority ("ERA"). Although the Outline Permit is not itself subject to appeal, the decision by ERA to approve the EIA has been appealed by third parties. On the 10 January 2023, the Environment and Planning Review Tribunal ("EPRT") rejected the appeal. The third party appealed the decision of the EPRT at the Court of Appeal following which all avenues of appeal would have been exhausted. Submissions to the Court of Appeal have now been made by all parties and a judgement is expected in May 2023.

Following the signing of a non-binding memorandum of understanding with AC Enterprises Limited (C49755) in December 2021 to explore the possibility of establishing a joint venture with regards to the Manoel Island development, the Company has continued with intensive negotiations and discussions with the party in question but as yet no transaction has been concluded.

In parallel to the ongoing separate discussions with Government and AC Enterprises Limited, the detailed design process has continued in earnest and the full development application for the Manoel Island development (PA/01053/23) was submitted to the PA in December 2022.

During the course of 2022, the Company commenced works on the aforementioned Q3 - Fortress Gardens residential development, which will be the final development at Tigné Point. This development consists of 63 apartments and underground parking as well as the landscaping, paving and embellishment of the Garden Battery and adjoining areas. Civil works have progressed swiftly and are ahead of the expected timelines. The Company has recently awarded contracts for the finishing works (including mechanical, electrical and plumbing ("MEP")) as well as the façade works for this residential building.

In January 2023, the Company launched the Q3 - Fortress Gardens apartments to the market. The market's response has been very positive and more than 60% of the launched apartments are currently either subject to a reservation agreement or to a promise of sale agreement. This augurs well for the future financial performance of the Group when, upon the delivery of these apartments, the Group will be in a position to register the profits made from these sales.

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MIDI p.l.c.

Annual Report and Consolidated Financial Statements - 31 December 2022

Directors' report - continued

Review of the business - continued

The Company 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. In view of this, the Group continues to adopt a prudent approach in its projected cashflow assessments. Based on these assessments, the Group has sufficient liquidity and financial resources to meet all its obligations and expected outflows after considering arrangements with its bankers in respect of sanctioned bank facilities. Given the status of its projects as per above, the Board of Directors has decided to continue adopting a cautious approach and is not recommending to pay a dividend during 2023 in respect of the 2022 financial year.

Capital Markets 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.

Appointment and Removal of Directors

Article 98 of the Company's Memorandum and Articles of Association states that at each Annual General Meeting of the Company all the Directors shall retire from office. A Director retiring from office shall retain office until the dissolution of such Meeting and a retiring director shall be eligible for re-election or re- appointment.

The Directors of the Company shall be elected as provided in Article 102 of the Company's Memorandum and Articles of Association that is a maximum of eight (8) directors shall be elected at each Annual General Meeting (or at an Extraordinary General Meeting convened for the purpose of electing directors). Voting shall take place on the basis that every member shall have one (1) vote in respect of each ordinary share held by him. A member may use all his votes in favour of one candidate or may split his votes in any manner he chooses amongst any two or more candidates. The Chairman of the Meeting shall declare elected those candidates who obtain the greater number of votes on that basis.

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