MIDI plc - Full-Year Results

Friday, April 21st, 2017

On 20 April, MIDI plc published its financial statements for the year ended 31 December 2016.

Performance Overview

During the year under review, MIDI reported a significant drop in revenue to €8.67 million compared to €41.04 million in 2015. The drop is largely due to the fact that MIDI had very few apartments which it could deliver to their respective owners. In fact, revenue from the ‘development and sale of property’ only amounted to €5.6 million in 2016 compared to €38.78 million in 2015. The income in 2015 reflects the delivery of most of the apartments forming the Q1 residential block. On the other hand, revenue from ‘property rental and management’ increased by 36.2% million reflecting the consolidation of the Group’s wholly owned subsidiary, Solutions & Infrastructure Services Limited (SIS) for a full year.

Given the lower level of apartment sales, cost of sales also dropped by 87.5% to €3.89 million leading to a gross profit of €4.79 million compared to €9.92 million in 2015.

Nonetheless, given the full-year consolidation of SIS, administrative expenses increased by 42.4% to €2.64 million (2015: €1.85 million). The 2016 results were also impacted by other operating expenses amounting to €0.52 million in contrast to the net other income of €0.2 million registered in 2015. Furthermore, the €4.85 million gain from changes in the fair value of investment property accounted for in 2015 was not repeated in 2016.

As a result, the Group’s operating profit amounted to €1.63 million compared to €13.12 million in 2015. Excluding the fair value movements as well as the depreciation charges, the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to €2.20 million compared to €8.47 million in 2015.

Net finance costs increased by 16.3% to €3.73 million largely reflecting costs and accounting entries related to the issue of the 2026 bond and the redemption of the maturing bond.

The Group also reported a marginal share of loss from its joint-venture, namely the 50% shareholding in Mid Knight Holdings Limited which in turn is involved in the development, management and administration of the business centre and Tigne Point.

Following the acquisition of the 50% shareholding in SIS back in September 2015, the Group had incurred an impairment charge on goodwill of €0.45 million in the financial statements for the year ended 31 December 2015. This charge was not repeated in the 2016 results.

Overall, MIDI plc reported a pre-tax loss of €2.1 million in contrast to the pre-tax profit of €9.46 million reported in the previous year. Similarly, after accounting for a tax charge of €0.4 million, the net loss for 2016 amounted to €2.52 million compared to a net profit of €9.92 million in 2015. This translates into a negative earnings per share of €0.0117 compared to a positive figure of €0.0463 in 2015.

The Statement of Financial Position as at 31 December 2016 shows an 8.7% increase in total assets to €203.78 million largely reflecting the 10.4% increase in the value of ‘Inventories – development project’ to €127.08 million as MIDI is carrying out the development of the Q2 residential block as well as the €7.4 million increase in cash balances to €14.17 million on the back of the €15.1 million inflows from the promise of sale agreements signed on the Q2 apartments that were launched on the market during the year (representing practically half of the entire block).

Total liabilities also increased by 17.4% to €136.42 million largely representing the 20.7% increase in total borrowings to €60.45 million as well as the 41.8% increase in long-term trade payables to €33.43 million reflecting the advance payments made by prospective buyers of the aforementioned Q2 apartments. Overall, shareholders’ funds decreased by 5.5% to €67.36 million reflecting both the loss incurred during the period under review as well as the dividend paid out in respect of the previous financial. This translates into a net asset value per share of €0.315 compared to €0.333 as at the end of the 2015 financial year.

Dividend

The Directors recommended an unchanged final net dividend of €0.007 per share to all shareholders as at the close of trading on Wednesday 17 May. Subject to shareholder approval at the upcoming Annual General Meeting scheduled to be held on Tuesday 20 June, the dividend will be paid by not later than 6 July 2017.

Outlook

Going forward, the Directors noted that the launch of the remaining Q2 apartments will be staggered over 2017 and 2018. Finishing works on this residential block are now well underway and expected to be completed by the first half of 2018. Therefore, the Directors anticipate that profits from the sale of Q2 apartments will be registered in the 2018 financial year in line with accounting standards.

Furthermore, development works on the business centre at Tigne Point, in which MIDI owns a 50% shareholding, are also progressing well and are projected to be completed during the first half of 2017 with the aim of commencing operations during the latter part of 2017. The Directors also noted that advanced discussions are currently being held with a number of parties for the rental of office space within the business centre and reiterated that it has also concluded the sale of one of the floors.

In the meantime, with the support of its advisors, MIDI is seeking a suitable partner to support the development of Manoel Island.

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MIDI plc – Financial Statements for the year ended 31 December 2016.

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