Malta Properties Company plc - Interim Results

On 10 August 2020, Malta Properties Company plc published its interim financial statements covering the six-month period ended 30 June 2020.

Performance Overview

During the first half of 2020, revenues dropped by 7.4% to €1.61 million (H1 2019: €1.74 million) as the lost income from the properties which have been vacated and have either been sold or are subject to a promise of sale agreement offset the upward inflationary adjustments on lease terms.

On the expenditure side, total costs surged by 16.3% to €0.46 million due to an increase in the company’s operations as well as higher level of business development activity including due diligence exercises on possible acquisitions. As a result, operating profit dropped by 14.4% to €1.15 million compared to €1.35 million in the previous comparable period. Meanwhile, net finance costs eased by 1.3% to €0.24 million despite a 5.3% increase in total borrowings to €21.1 million compared to €20 million as at the end of June 2019.

Overall, MPC reported a 17.3% drop in pre-tax profits to €0.91 million (H1 2019: €1.11 million). After taking into account tax charges of €0.21 million, the net profit for the period under review amounted to €0.7 million, representing a drop of almost 8% over the comparable period last year.

The condensed Statement of Financial Position as at 30 June 2020, when compared to the corresponding figures as at 31 December 2019, shows that net assets dropped by a minimal 0.6% to €53 million. This translates into a net asset value per share of €0.523 compared to €0.526 as at 31 December 2019. The main movements in the company’s assets were related to the value of trade and other receivables which increased sharply by €1.25 million to €1.49 million whilst cash balances contracted by 32.1% (or -€2.16 million) to €4.57 million. On the other hand, total liabilities remained virtually unchanged at €30.9 million as the increase in total borrowings was offset by the drop in trade and other payables.

Outlook

In their commentary, the Directors of MPC explained that COVID-19 has not resulted in any impact on the company’s operations and financial performance. The lease agreements that MPC has in place with its tenants represent a secure revenue stream for the foreseeable future. Moreover, revenues are expected to increase once the redevelopment of the former Zejtun Exchange is completed in 2021, as well as once the acquisition of the HSBC Contact Centre located in Swatar is also concluded. Bank financing for the latter investment is already in place. This property comprises over 3,000 sqm of office space and 84 car spaces with a lease agreement in favour of HSBC Global Services (UK) Limited.

MPC noted that the half yearly results continue to show its strong financial position as the company aims at delivering additional shareholder value through the maximisation of its current property portfolio as well as pursue extrinsic growth. In fact, the company continued to evaluate various projects during the first half of 2020 with the intention of acquiring the right investments at an adequate return whilst minimising risk. Furthermore, MPC embarked on a strategy aimed at diversifying its client base and property portfolio.

In conclusion, the Directors warned that despite the company’s resilient business model, there is a risk for MPC that COVID-19 will lead to negative movements across the real estate market in general. Although this could lead to a negative impact on the value of MPC’s portfolio going forward, the Directors noted that the company will continue to monitor closely how the market evolves and will adapt its strategy accordingly.

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Malta Properties Company plc – Condensed Interim Financial Statements for the six-month period ended 30 June 2020.