Malta Properties Company plc - Interim Results
On 12 August 2019, Malta Properties Company plc (“MPC”) published its interim financial statements covering the six-month period ended 30 June 2019.
Performance Overview
During the first half of 2019, revenues increased by 5.7% to €1.74 million reflecting the completion of new developments as well as upward inflationary adjustments on lease terms. Furthermore, the financial performance of MPC was boosted by a significant reduction in administrative costs as these contracted by 25.3% to €0.4 million (H1 2018: €0.53 million) reflecting the implementation of cost rationalisation initiatives. Likewise, net finance costs contracted by almost 22% to €0.24 million (H1 2018: €0.31 million) largely due to the capitalisation of interest on loan drawdowns related to the Zejtun project.
Overall, MPC reported a 36.4% rise in pre-tax profits to €1.11 million. After taking into account tax charges of €0.35 million, the net profit for the period under review amounted to €0.76 million, representing a growth of over 50% over the comparable period last year.
The condensed Statement of Financial Position as at 30 June 2019, when compared to the corresponding figures as at 31 December 2018, shows that net assets dropped by a minimal 0.5% to €51.4 million. This translates into a net asset value per share of €0.5071 compared to €0.5094 as at 31 December 2018. The main movements in the company’s assets were related to the value of investment property which increased by 1.2% (or €0.9 million) to €73.4 million and cash balances which contracted by 23% (or €1.12 million) to €3.75 million. On the liabilities side, the amount of borrowings increased by 4.8% (or €0.91 million) to just under €20 million whilst trade and other payables dropped by 31% (or €1.13 million) to €2.52 million. The company’s gearing ratio (calculated as total debt divided by total debt plus equity) edged up to 28% from 27% as at the end of 2018.
Dividend
The Board of Directors resolved to determine the extent of a dividend distribution for 2019 on the basis of the full-year results. Accordingly, no interim dividend was declared.
Outlook
In their commentary, the Directors of MPC explained that the performance of the company during the first half of 2019 continues to show the dynamics of its strategy towards delivering value to shareholders through revenue growth, cost optimisation and increased profitability. Early in 2019, MPC completed the new Birkirkara Exchange which was handed over to its tenant – namely GO plc. Furthermore, in June 2019, GO plc exited the St George’s Exchange and this site was released in favour of MPC for the company’s future sale plans. Meanwhile, works on the Zejtun development progressed further and the project is now expected to be completed during the current year. In addition, the development of the property known as the ‘Naxxar Radio Link’ is planned for 2021 whilst the Spencer Hill property located in Marsa is planned to be developed into approximately 9,000 sqm of leasable space, including ample parking space, and is now expected to be completed by 2024.
With respect to the discussions related to the potential acquisition of most of the shareholding in SmartCity (Malta) Ltd, MPC noted that negotiations are still ongoing. In this respect, MPC also explained that this potential transaction could be a game changing opportunity for the company which it can tap in view of its sound financial position.