Malta International Airport plc - Interim Results

On 25 July 2019, Malta International Airport plc (“MIA”) published its interim financial statements covering the six-month period ended 30 June 2019. It is important to note that a number of line items in the financial statements, such as operating costs, depreciation charges, finance costs, total assets and total liabilities are not comparable to the corresponding period last year following the introduction of accounting rule IFRS 16 – ‘Leases’ which came into effect on 1 January 2019. Further information about this new accounting standard, and its impact on the reporting of financial results, is available here.

Performance Overview

During the first half of 2019, MIA registered a 9.1% increase in revenues to a record (at interim stage) of €44.6 million (H1 2018: €40.9 million) on the back of growth in both the ‘Airport’ segment as well as the ‘Retail and Property’ segment. Turnover from the ‘Airport’ segment increased by 7.1% to just over €31 million (H1 2018: €29 million) reflecting the 5.9% increase in passenger movements during the first six months of 2019 to 3.25 million (H1 2018: 3.07 million). The growth in passenger numbers resulted from a 5.8% increase in seat capacity as well as a 5.9% increase in aircraft movements. Moreover, despite the substantial increase in seat capacity and aircraft movements, the seat load factor remained in line with the previous year and stood at 79.8%. Meanwhile, revenues from the ‘Retail & Property’ segment increased by 13.2% to €13.3 million (H1 2018: €11.8 million). Overall, the ‘Airport’ segment contributed nearly 70% of total revenues while the non-aviation segment accounted for the remaining 30%.

In view of the increased level of business, staff and other operating costs grew by 3.95% to €17.6 million. However, this increase does not take into account the lease expenses of MIA as following the implementation of IFRS 16 – ‘Leases’, these are now partly included under the ‘Depreciation’ line item and partly under the ‘Finance Cost’ line item. In fact, the airport operator explained that on a like-with-like basis, operating expenses would have increased by a further €1.1 million in H1 2019 when compared to the corresponding period last year. Nonetheless, given the stronger increase in revenues, adjusted EBITDA still exceeded last year’s figure by 8.1% and stood at just under €26 million (H1 2018: €23.9 million).

The charges related to depreciation and financing were also impacted by the introduction of the new accounting rule IFRS 16. In fact, the depreciation charge surged by nearly 20% to €4.35 million (H1 2018: €3.63 million) whilst net finance costs increased to €1.02 million compared to just €0.18 million in H1 2018 notwithstanding the fact that MIA remained entirely debt free (except for lease liabilities which are now recognised on balance sheet against a ‘right-of-use’ asset). On a like-with-like basis, the depreciation charge would have only increased by 6% to €3.85 million in H1 2019, whilst net finance costs would have been much lower and amounting to only €0.02 million.

Overall, MIA’s pre-tax profits increased by 7.3% to €21.7 million. After taking into account a tax charge of €7.75 million, the net profit for the period under review amounted to €14 million, representing an increase of nearly €1 million over the previous figure for the first half of 2018.

The condensed ‘Statement of Financial Position’ as at 30 June 2019 shows a 1.6% increase in net assets to €114.4 million when compared to €112.6 million as at 31 December 2018. Following the introduction of IFRS 16 – ‘Leases’, MIA is now recognising on its balance sheet the value of its lease liabilities and the ‘right-of-use’ of the temporary emphyteuses in relation to the leasehold land and buildings, as well as other assets namely motor vehicles. Meanwhile, despite its various investments amounting to €7 million within the terminal and on car parking infrastructure and the airfield, MIA remained entirely free from any bank borrowings. Moreover, the airport operator ended the period under review with a cash balance of €25.8 million which, in turn, is 27.6% higher than the balance of €20.3 million as at the end of 2018.

Dividend  

The Directors of MIA declared an unchanged gross interim dividend of €0.0462 per share (net: €0.03 per share). Shareholders as at the close of trading on Monday 19 August 2019 will be entitled to receive the dividend which is expected to be paid by not later than Friday 13 September 2019.

2019 Forecasts  

MIA reiterated its confidence in achieving its 2019 forecasts of a projected 5.8% increase in passenger movements to 7.2 million. On 17 January 2019 MIA had also outlined the following financial targets for the 2019 financial year:

  • Revenues of €96 million
  • Unadjusted EBITDA of €59 million
  • Net profit of €31 million
  • Capital investments of over €20 million
  • Annual taxes & dividend contributions to Government in the region of €21 million
  • Capital investments of €20 million.

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Malta International Airport plc – Interim Financial Statements for the six-month period ended 30 June 2019.