Malita Investments plc - Interim Results
On 21 August 2020, Malita Investments plc published its condensed interim financial statements covering the six-month period ended 30 June 2020.
Performance Overview
During the first half of 2020, Malita registered a 1.2% increase in revenues to €4.2 million. Income from the company’s operating sites (namely the Open Air Theatre and the Parliament Building in Valletta, as well as the airport and the Valletta Cruise Port) increased by 4% to €4.11 million (H1 2019: €3.95 million) largely reflecting contractual upward revisions in lease rates in line with inflation. On the other hand, the net amount of recognised project management fees related to the ‘Affordable Housing’ project dropped to just €0.09 million compared to €0.21 million in H1 2019 reflecting the accounting treatment of revenues and costs related to the corresponding concession arrangements.
On the expenditure side, administrative costs increased sharply to €0.42 million compared to €0.24 million in H1 2019. As a result, Malita registered a 3.3% drop in operating profit before fair value adjustments to €3.78 million compared to €3.91 million in the first half of 2019.
The financial performance of Malita was significantly dented by a €25.2 million charge related to the fair value of its operating sites. In this respect, the company explained that the considerable negative fair value movement was due to an upward trend in secondary market yields which, in turn, is derived with reference to the yield-to-maturity on the longest term available Malta Government Stock in issue plus a premium reflecting the risk inherent in the underlying future cash flows.
Meanwhile, net finance costs increased by 3.4% to €0.63 million as total bank borrowings increased by 5.4% to €47.2 million compared to €44.8 million as at 30 June 2019.
Overall, Malita reported a pre-tax loss of €22 million compared to a pre-tax profit of €30.8 million recorded in H1 2019 which also included a record upward movement in the fair value of investment property of €27.4 million. After accounting for a tax income of €1.2 million, the net loss for the period under review amounted to €20.8 million.
The condensed Statement of Financial Position as at 30 June 2020 compared to the corresponding figures as at 31 December 2019 shows that net assets contracted by 14.8% to €135.4 million which, in turn, translates into a net asset value per share of €0.9142 (31 December 2019: €1.0734 per share). Total borrowings increased by 2.1% to €50.5 million when including lease liabilities amounting to €3.38 million. In contrast, net debt dropped by 3.1% to €47.3 million (31 December 2019: €48.7 million) as the company’s cash balances increased sharply to €3.27 million compared to €0.72 million as at 31 December 2019.
Dividend
The Directors of Malita declared an unchanged net interim dividend of €0.0086 per share. This is payable on Wednesday 23 September 2020 to all shareholders as at close of trading on Wednesday 2 September 2020.
Outlook
In their commentary, the Directors of Malita explained that the company was not impacted by the ‘COVID-19’ pandemic, except for some delays in receiving the payment of ground rents in respect of properties on which it owns the dominium directum – namely the airport and the Valletta Cruise Port sites.
On the ‘Affordable Housing’ project, Malita noted that this is progressing well and the ‘COVID-19’ pandemic in this respect has been minimal. Excavation of all the sixteen property sites is substantially complete while the company issued, and will continue to issue, further invitations for the construction, mechanical and electrical works, as well as finishes and the installation of lifts. Indeed, construction works have been awarded for fourteen sites; mechanical and electrical works have been awarded for ten sites; while finishing works have been awarded for four sites.
With respect to the other potential project which Malita was considering pursuing, the Board of Directors decided to reverse the related capitalised costs amounting to €184,413 given the lack of progress achieved. Nonetheless, Malita reiterated its intention of continuing analysing and assessing other possible investment opportunities.