Mediterranean Investments Holding plc - Full-Year Results

On 1 March, Mediterranean Investments Holding plc (MIH) published its financial results for the year ended 31 December 2010. The Company reported a net loss of €0.79 million which is €19.4 million lower than the projected results published in the June 2010 bond prospectus. This was mainly due to the fact that the €19.1 million property uplift of Palm City did not materialise as the 99-year lease on the land of Palm City was not transferred from Corinthia Palace Hotel Company Ltd to Palm City Limited by year end. Therefore the valuation of Palm City was based on the shorter-tenure of the existing 65-year build-operate-transfer agreement and a higher discount rate which in turn led to the lower than forecasted value for Palm City.

Nevertheless MIH generated total revenue of €9.1 million representing a significant increase over the previous year but a €4.3 million shortfall compared to the earlier forecasts. This was due to the fact that although leases have been signed, some tenants had not yet moved in and therefore income from these tenancies could not have been accounted for. The financial statements for 2010 also do not include the €4.3 million in costs related to the IPO of Palm City as the offer did not take place. Meanwhile the Company provided for an unrealised loss on exchange amounting to €0.43 million in respect of the Libyan Dinar portion of the loan which could not have been anticipated in the forecasts.

MIH reported total assets of €288.1 million as at 31 December 2010 which are mainly made up of the Palm City Residences valued at €246 million and a cash balance of €28.3 million. On the other hand MIH has total liabilities of €182.1 million most of which is made up of debt amounting to €129.3 million.

Operationally, by the end of 2010, the Palm City Residences complex was completed with 276 out of the total 413 units leased out. Furthermore, another 109 units were awaiting confirmation from clients. Companies that have signed up lease agreements emanate from varied industries including hydrocarbon, construction and infrastructure, financial services, tourism and airlines.

During 2010, MIH invested in the 40-storey Medina Tower project through a 25% shareholding in the Medina Tower Joint Stock Company for Real Estate Investments and Development (MTJSC). The other shareholders are International Hotel Investments plc (25%) and the Economic Development Real Estate Company (EDREICO) with the balance of 50%. During the year under review, MTJSC acquired the title to the land and secured full development approvals for the project. MTJSC is currently in negotiation with contractors. Once completed, the Medina Tower will comprise a combination of luxury apartments, retail space, office space and conference and health and leisure facilities complemented by a 900-bay underground car park.

Meanwhile, in a company announcement published on 25 February, the Directors of MIH made reference to the current political unrest in Libya. The Directors explained that despite the current turmoil, Palm City Residences is still operational despite with a reduced number of personnel due to the temporary relocation of some tenants. Nonetheless, no contracts have been terminated with the 282 signed agreements still in full effect and most of which have their rent paid for 12 months in advance. In the 2010 Annual Report, the Directors noted that they cannot make an estimate of the financial effect that the recent events may have on MIH although these may adversely affect the company’s future performance and financial position. Nonetheless, the Directors noted that due to the nature of the leases in force and the fact its clientele have significant vested interests in Libya, the Directors consider the company is still a going concern.

Download a copy of the Mediterranean Investments Holding plc – 2010 Annual Report.

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