Malta Properties Company plc - Interim Results
On 5 August 2021, Malta Properties Company plc published its interim financial statements covering the six-month period ended 30 June 2021.
Performance Overview
During the first half of 2021, revenues rose by just under 14% to €1.82 million (H1 2020: €1.6 million). The increase in rental income mostly emanated from the contribution of the HSBC Contact Centre located in Swatar which was acquired by MPC in September 2020. Furthermore, MPC explained that the long-term lease agreements that it currently has in place will continue to secure stable revenues for the foreseeable future. Moreover, revenues are expected to increase further once the Zejtun development is completed later in 2021.
Administrative expenses increased to €0.57 million from €0.46 million in H1 2020 as a result of additional professional fees and operating costs including personnel. Nonetheless, given the sharper growth in revenues, operating profit still improved by 11.6% to €1.29 million compared to €1.15 million in the previous comparable period.
Meanwhile, net finance costs increased to €0.31 million from €0.24 million in H1 2020, largely due to the new borrowings taken on for the acquisition of the Swatar property. On the other hand, the financial performance of the company was boosted by a gain on the fair value of investment property which amounted to €1.93 million.
Overall, MPC reported a pre-tax profit of €2.9 million compared to €0.91 million in H1 2020. After accounting for a tax charge of €0.6 million (H1 2020: €0.21 million), the net profit for the period under review amounted to €2.3 million compared to just under €0.7 million in the previous comparable period.
The condensed Statement of Financial Position as at 30 June 2021, when compared to the corresponding figures as at 31 December 2020, shows that net assets rose by 4.2% to €57.6 million. This translates into a net asset value per share of €0.568 compared to €0.546 as at 31 December 2020. The main movements in the company’s assets were mainly related to a €1.34 million increase in investment property to €76.9 million and a €1.4 million increase to €14 million in assets classified as held for sale, which outweighed the €0.71 million decrease to €3.35 million in cash and cash equivalents. These increases primarily arose from the continued development in Zejtun and fair value increases for the properties in Swatar and St. George’s. On the other hand, total liabilities marginally declined by €0.2 million to €38.6 million.
Outlook
In their commentary, the Directors of MPC explained that the Group expects to make significant progress on its development projects this year. The Zejtun development is expected to be completed toward the end of 2021. MPC has also advanced in the planning application process for its Spencer Hill site in Marsa and the permit is expected to be issued by the end of 2021.
Furthermore, during the first six-months of the year, the Directors noted that the Group has continued to explore various opportunities and is currently evaluating a number of acquisition projects. Meanwhile, MPC has €16 million in short-term bank borrowings which are repayable by the end of 2021 and the Group is currently at an advanced stage of renegotiating the facility to address the liquidity needs for the next twelve months.
In its conclusion, the Directors positively noted that the coronavirus pandemic has not resulted in any financial impact on the company and that MPC’s income is secured for the medium-term by lease agreements already in place. However, the Directors warned that despite the company’s resilient business model, there is a risk that the pandemic could 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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