Malita Investments plc - Full-Year Results
On 16 March 2023, Malita Investments plc published its Annual Report and Financial Statements for the year ended 31 December 2022.
Revenue increased by 2.7% to €8.81 million reflecting a marginal uplift in lease and ground rent income from investment property as well as higher net revenue recognised in relation to the service concession arrangements for affordable housing purposes.
On the expenditure side, administrative expenses surged by 30.8% to €0.62 million largely reflecting the higher amounts of professional fees and other expenses. However, as the improvement in revenues in absolute terms outweighed the higher costs, operating profit climbed 1% higher to a record of €8.19 million.
The financial performance was also boosted by the fair value gain of investment property of €2.85 million compared to the fair value loss of €27.8 million in 2021. The uplift was brought by the increase of €17 million (2021: loss of €10 million) in the present value of the Parliament Building and the Open-Air Theatre sites as the higher levels on inflation and lower risk premium outweighed the impact of a higher risk-free rate based on the longest dated Malta Government Stock. Meanwhile, the Malta International Airport and Valletta Cruise Port sites experienced a fair value loss of €14.1 million (2021: fair value loss of €17.8 million) as the rental income growth rate for these sites was not impacted by changes to inflation.
Net finance costs dropped by more than half to €0.39 million on the back of higher levels of finance income.
Overall, Malita registered a pre-tax profit of €10.7 million. After accounting for tax expense of €1.88 million, the net profit for the year amounted to €8.78 million compared to a net loss of €20 million in 2021.
The Statement of Financial Position as at 31 December 2022 shows that total assets increased by 11.8% to €272.3 million mainly reflecting the higher value attributed to the housing project asset (+€17.7 million to €49.5 million) and cash (+€6.4 million to €17.3 million). Total liabilities rose by 23.2% to €126.5 million largely reflecting the increase of €18.5 million in total debt to €95.3 million when including lease liabilities amounting to €3.39 million. As a result, total equity increased by 3.6% to €145.7 million which translates into a net asset value per share of €0.984 (31 December 2021: €0.950).
The Directors are recommending the payment of an unchanged final net dividend of €0.0142 per share to all shareholders as at the close of trading on Friday 24 March 2023. The dividend will be paid on Thursday 11 May 2023 subject to shareholders’ approval at the upcoming Annual General Meeting scheduled to be held on Thursday 27 April 2023. Coupled with the interim net dividend of €0.0112 per share, the total net dividend for the 2022 financial year amounts to €0.0254 per share, unchanged from the prior year.
Update on the Affordable Housing Project
In their commentary, the Directors explained that the Affordable Housing Project continued to register significant progress. The Birkirkara site was completed in August 2022 and 73 units were made available. In the first quarter of 2023, units in Kirkop and Zebbug as well as lock-up garages at Birkirkara were also completed and leased. Three other sites are close to completion and will be leased in the coming weeks. Construction works for all sites except the Luqa site are competed, while a decision was taken to discontinue the development on one of the sites originally planned. As such, Affordable Housing Project will consist of a total 748 units at 15 sites.
The Board has successfully negotiated an increase in revenue streams to ensure that the project remains profitable due to variations to the initial plans which also included additional number of units, resulting in higher costs than originally estimated. The company also incurred higher rates for services and the project is also impacted by higher costs currently present in the construction industry. The Board and management are currently addressing the financing gap of around €60 million and are confident that the necessary financing will be secured in the coming months to finalise the construction and finishing phases of all sites.
Meanwhile, the Directors stated that the company will not be proceeding with the scheme announced in January 2022 to purchase band club properties.