MIDI plc - Full-Year Results

Wednesday, April 30th, 2014

On 29 April, MIDI plc published its financial statements for the year ended 31 December 2013. The Group’s shareholding in Tigné Mall plc was disposed of on 2 May 2013 and as such, this entity was accounted for as a discontinued operation for the first four months of 2013 and similarly reclassified in the comparable figures of 2012.

Performance Overview

During 2013, MIDI registered a 15.7% decline in total revenue to €7.8 million largely reflecting the 21% drop in turnover from the sale of apartments to €6.4 million given the very limited number of apartments available for sale during the year. This offset the 21.7% increase in revenue from property rental and management activities to €1.4 million. As explained above, the revenue figure excludes the €1.5 million in turnover registered by Tigne Mall plc during the first four months of the year as it was subsequently disposed.

Similarly, cost of sales dropped by 16.3% to €6.7 million reflecting the lower incidence of apartment sales. Nonetheless, given the larger absolute drop in revenue, the gross profit for 2013 dropped by 11.4% to €10.9 million but the gross profit margin improved slightly to 14% from 13.3%.

Administrative expenses were relatively unchanged at €1.78 million whilst MIDI’s financials were boosted by a €1.79 million fair value uplift on its investment property (including car park and commercial leases) leading to an operating profit of €1.2 million in contrast to the operating loss of €0.47 million incurred in 2012.

The Group’s net finance costs were reduced by 6.2% to €2.75 million following the €47 million reduction in the Group’s consolidated borrowings (connected with the disposal of Tigne Mall plc as explained below).

Meanwhile, the Group’s investment in its joint-venture, SIS Limited, had a neutral impact on the financials for the period under review as its value has been completely written off. In previous reports, MIDI had explained that the business plan of the joint-venture is being reviewed with an aim of returning it to a profitable position. The 2013 financial statements provide no further guidance in this respect.

Overall, MIDI plc reported a pre-tax loss of €1.57 million for 2013 compared to €3.57 million in 2012. After accounting for a tax credit of €0.14 million (2012: €1.27 million) and the loss attributable to the discontinued operation, namely the shopping mall, for the four month period up to 2 May 2013 of €0.04 million (2012: profit of €0.42 million), the Group registered a net loss of €1.42 million which translates into a negative earnings per share of €0.007.

The Statement of Financial Position shows a 22.9% drop in total assets to €178.9 million mainly due to the disposal of the shareholding in Tigne Mall plc. Similarly, total liabilities dropped by 30.7% to €116.5 million due to the €47 million reduction in the Group’s borrowings with €36.5 million being assumed by the Tigne Mall plc and the balance repaid from the proceeds generated upon the disposal of the shares in Tigne Mall plc. Meanwhile, shareholders’ funds only dropped by 2.6% to €62.39 million (net asset value per share of €0.291) reflecting the loss for the period as well as the €1.1 million reduction in the property revaluation reserve following the disposal of the shopping mall. It is noteworthy to highlight that the Group’s gearing ratio has significantly improved to 45.1% from 60.5% in 2012.

Outlook

Tigne Point

During 2013, MIDI commenced the development works on the Q1 residential block (comprising 39 apartments). Construction works are on schedule and expected to be completed by June 2014 with finishing works set commence imminently and expected to be completed by the first half of 2015. To date, a total of 33 apartments from the 39 available are subject to a promise of sale agreement. The profit from the sales of such apartments is expected to be recognised in the 2015 financial year in line with the conclusion of the sales contract and delivery of the apartments to the buyers.

MIDI is also planning the development of the Q2 residential block consisting of 60 apartments and a commercial offering at ground level. The Company is planning to commence this development during the third quarter of 2014 and is targeting to launch these apartments for sale in 2015.

The MIDI Group has also been evaluating its options with regards to the development of the T14 Office Block (circa 14,000 square metres) with the objective of commencing the development during the 2014 financial year.

Manoel Island

The Group is also currently reviewing its development plans of Manoel Island with particular emphasis on revamping the design intent of this significant part of the overall MIDI project. In this regard, the Board of Directors is considering a number of options including the possibility of setting up partnerships with strategic investors in order to move forward with the development of Manoel Island.

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MIDI plc – Annual Report and Consolidated Financial Statements 31 December 2013

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