MIDI plc - Full-Year Results

On 25 April 2019, MIDI plc published the 2018 Annual Report and financial statements.

Performance Overview

During 2018, MIDI recorded €52.5 million in revenues largely reflecting the sale and transfer of the large part of the apartments within the Q2 residential block. In fact, revenues from development and sale of property amounted to €48.6 million, representing almost 93% of total revenues, whilst revenues from rental and management of property amounted to €3.89 million. In the Directors’ Report, MIDI noted that the Q2 development has proved to be one of the most successful projects that the company has ever undertaken both in terms of the quality of the buildings achieved as well as from a financial point of view.

MIDI also reported improved profitability in the property rental and management segment. Although revenues from this segment dropped by almost 13% to €3.89 million (2017: €4.45 million), profit margins improved considerably reflecting the non-recurrence of certain loss-making operations performed by MIDI’s wholly-owned subsidiary Solutions & Infrastructure Services Ltd. Overall, the property rental and management segment posted an operating profit of €1.14 million in 2018 compared to just €0.34 million in the previous comparable period.

On the expenditure side, total costs amounted to €34 million. Accordingly, MIDI reported an operating profit of €18.5 million compared to an operating loss of €2.79 million in 2017. This is however 24.4% lower than the €24.4 million figure as projected in the Financial Analysis Summary (“FAS”) dated 20 June 2018, possibly reflecting delays in the delivery of some of the Q2 apartments to their respective owners. In fact, the Statement of Financial Position as at 31 December 2018 shows that MIDI ended the year which a much higher stock of inventories amounting to €123.6 million compared to the forecasted figure of almost €115 million.

The financial performance of MIDI in 2018 was also favourably impacted by a near 14% reduction in net finance costs. This was the result of both higher interest income on the back of increased income generated from amounts owed from its 50%-owned joint venture company Mid Knight Holdings Ltd (which, in turn, is the owner of “The Centre” business block) as well as slightly lower finance costs.

Conversely, MIDI reported a much lower overall contribution from Mid Knight Holdings Ltd as the financial performance in 2017 was exceptionally impacted by the significant positive revaluation of the “The Centre” which had resulted in a fair value gain of €59.6 million. As such, the 50% share of profits of €1.35 million reflecting in the 2018 Income Statement of MIDI was derived exclusively from the rental operations of Mid Knight Holdings Ltd.

Overall, MIDI reported a pre-tax profit of €17.9 million which, after accounting for a tax charge of €6.22 million, led to a net profit of €11.6 million.

The Statement of Financial Position as at 31 December 2018 shows that total assets contracted by 6.2% to €220.6 million largely reflecting the stock of Q2 apartments that were delivered to their respective owners. Similarly, total liabilities decreased by 18.8% to €51.6 million reflecting lower amounts of trade and other payables (-€22 million) and borrowings (-€6.83 million). On the other hand, total shareholders’ funds surged by 12.5% to €97.4 million which, in turn, translates into a net asset value per share of €0.455 compared to €0.405 as at the end of the 2017 financial year and €0.475 per share as forecasted in the FAS dated 20 June 2018.

Dividend

The Directors are recommending a 14.3% increase in the net dividend to €0.008 per share (FY2017: €0.007 per share), payable to shareholders as at close of trading on 8 May 2019 subject to shareholders’ approval during the upcoming Annual General Meeting scheduled to be held on 11 June 2019.

Outlook

In their review of the business, the Directors of MIDI explained that during 2018, the company continued to work on updating the masterplan of the Manoel Island project. In fact, on 7 March 2019 MIDI announced that the Planning Authority approved the revised Masterplan and the revised Outline Permit for the restoration and redevelopment of Manoel Island. This approval, which is currently the subject of an appeal, relates to amendments to the Outline Development Permit originally issued in 1999 and provides for a gross developable area of 127,178 square metres. Meanwhile, MIDI also progressed on the detailed design for what has been earmarked as “Phase 1” of the project and is now planning to commence preparatory works by the third quarter of 2019 with development works commencing early in 2020. The Directors also reiterated that discussions with Tumas Group Company Limited with respect to the development of Manoel Island are still ongoing, however to date no transaction has been concluded.

The Directors’ Report also explained that during 2018, MIDI submitted a development application to the Planning Authority for the final development phase of Tigné Point. This phase will consist of a residential block comprising of 63 apartments and 4 levels of car parking, a 2,453 square metre commercial block and the landscaping, paving and embellishment of the “Garden Battery” and adjoining areas. Subject to the issue of the required development permits, MIDI is envisaging that development works on this phase will commence in early 2020.

Download

MIDI plc – Annual Report & Financial Statements for the year ended 31 December 2018.