MIDI’s Annual General Meeting 2021 was held on Thursday, 17th June 2021. The AGM was held remotely due to the ongoing health risks and concerns associated with the COVID-19 pandemic. The AGM was livestreamed on the Company’s website so that shareholders could follow the proceedings from the comfort of their home or office.
In his address Company Chairman, Dr Alec Mizzi said that 2020 was an extraordinary year, principally due to the challenging trading conditions caused by the ongoing COVID-19 pandemic. The Group has registered a loss after tax of €2.1 million for the financial year ending 31st December 2020. These financial results reflect the fact that no residential properties were sold by the Company. This is partly attributable to the limited stock available and partly attributable to the impact of the COVID-19 pandemic. In addition, MIDI’s rental operations have also experienced a reduction in revenues during 2020. This reduction in revenues is a result of the Company taking decisive action to support the tenants of its commercial properties and to its car park operator by granting rent concessions. This was done to mitigate the tenants’ cashflows challenges created by the measures taken by the Authorities to limit the spread of the COVID-19 virus.
Dr Mizzi added that, MIDI’s primary focus has continued to be on the Manoel Island project. On 18th February 2021, the Company submitted a revised Masterplan to the Planning Authority together with a fresh Environmental Impact Assessment (“EIA”) to the Environmental Resources Authority (“ERA”). The 2021 Masterplan makes a series of key improvements on the previous Masterplans. MIDI feels that the 2021 Masterplan should meet the different and contrasting expectations of the various stakeholders, that is, the Company’s shareholders, the Gzira community, future residents and tenants at Manoel Island and the wider community in general.
On the Tigné Point development Dr Mizzi said that on 16th April 2020, the Planning Authority granted the development permit for the final phase. This development will comprise of a residential block, to be known as Q3, consisting of 63 apartments and 4 levels of car parking. This permit is now subject to an appeal. Nonetheless, the Company has commenced site preparatory works and construction is scheduled to commence towards the end of 2021.
Dr Mizzi added that in response to the COVID-19 pandemic, the Company has taken a prudent approach to financial management and implemented a number of measures. Given the current market conditions, the Board has taken the decision not to declare a dividend for 2020. However, when one considers the current activity within the Company with regards to Manoel Island and the Q3 development, MIDI is confident that the Company’s future prospects are indeed promising.
In his address, MIDI’s CEO Mark Portelli said that the revenue for the year at €2.8 million was significantly less than the revenue of €27.7 million recorded in the previous year. This sharp decrease reflected the fact that no residential property was sold throughout 2020 due to the limited number of properties available for sale as well as to the subdued economic activity resulting from the COVID-19 pandemic. In fact, for the year the Company only had 3 residential units available for sale, two of which were sold in the latter part of 2020. Additionally, property rental revenues have been in part impacted by the rent concessions given by the Company to provide support to the tenants of its commercial properties during the COVID-19 pandemic. The gross profit for the year of €1.1 million reflected the flow through the limited revenue generated in 2021.
Mr Portelli added that administration expenses at €2.3 million compared favourably to the €3.0 million incurred in the previous year. The difference was in part due to cost cutting measures put in place in light of the ongoing pandemic. Consequently, the Company recorded an operating loss for the year of €1.2 million compared to the operating profit of €11.6 million recorded in the prior year. The finance costs of €2.3 million primarily related to the €50 million bond which matures in 2026 and the increase compared to the prior year reflects a reduction in finance income generated from a loan to Mid Knight Holdings Limited which has since been repaid. The share of the joint venture results related to the group’s 50% share of the profit generated by Mid Knight Holdings Limited, the company which owns and operates The Centre at Tigné Point. Overall, the company incurred a loss after tax of €2.1 million for the year ending 2020. Capital employed as at year end totalled €161 million, which was marginally lower than the prior year in view of the loss incurred. Gearing was up from 26% to 32% reflecting the reduction in cash balances. The cash in hand has reduced by €10 million which was partly applied to continued development costs and partly applied to settle creditors (principally the premia of €5.8 million payable to Government). As at year end the NAV per share totals €0.48 which is marginally lower than the prior year.
Tigné Point
Mr Portelli stated that the Company has now commenced the final stage of the development of Tigné Point. This includes the development of the Q3 residential block and the landscaping of the Garden Battery which will create a new open space for the enjoyment of the general public. Although the permit for Q3 is currently under appeal the Company is confident that works will commence during the last quarter of 2021 and MIDI is in the final stages of appointing a contractor to undertake this development. The Company has secured funding for the project through a ring-fenced banking facility being provided by a local bank. In the meantime, the Company is projecting to sell the remaining 3 apartments in the Q2 residential block during 2021 generating revenues of circa €6 million. To-date two apartments have already been sold leaving one remaining apartment to be sold.
Manoel Island
On Manoel Island, Mr Portelli stated that the Outline Development Permit for Manoel Island issued during the first quarter of 2019 was the subject of an appeal filed by the Flimkien Ghall-Ambjent Ahjar (“FAA”). The appeal was partially upheld by the Environment and Planning Review Tribunal (“EPRT”) this time last year and the decision required the Environmental Impact Assessment (“EIA”) to be re submitted to Environment and Resources Authority (“ERA”) (with a fresh Cultural Heritage report). The Company is glad to report that at the ERA public hearing meeting held two weeks ago the revised EIA was approved. The next step is for the Outline Planning Application to be reconsidered by the Planning Authority.
Mr Portelli noted that throughout 2019 extensive site investigations were undertaken by MIDI under the supervision of an independent Archaeologist and the Superintendence of Cultural Heritage (the “SCH”). The investigations focused on a number of high-risk sites which were thought to be cleared during the 1970’s. The investigations have concluded that a large part of the site, measuring 22,000sqm, is compromised as the area is deemed to be of archaeological importance. After consultation with the SCH, it was determined that this part of the site cannot be developed. In view of the requirement to revise the Masterplan as a result of the archaeological finds MIDI took the opportunity, in consultation with Government, to address a number of concerns raised by NGOs and local residents. These concerns included the density of the development, the lack of significant open spaces and the impact of the proposed reclamation. Like the 2017 Masterplan, the revised Masterplan puts the heritage buildings at the centre of the development. During the first quarter of 2021 MIDI developed a reduced Masterplan which aims to protect the archaeological sites and ensures that the heritage buildings remain accessible.
Mr Portelli said that the revised Masterplan which has now been submitted to the Planning Authority, provides for a significant reduction in the footprint of the site to be developed, a reduction in the new building and the elimination of the reclamation works. This has provided an opportunity to include a significant open space measuring 35,000sqm at the heart of the development. This new open space complements the Fort Manoel Glacis Public Park measuring 80,000sqm. When comparing the revised Masterplan with the Deed the reduction in the development is immediately evident. New buildings will now occupy circa 10% of the site compared to 26% originally contemplated and open spaces will now total 192,000sqm accounting for circa 70% of the site compared to 58% contemplated in the Deed. Significantly the built-up area of the new buildings will total 55,000 sqm compared to 95,000 sqm in the original Masterplan.
Mr Portelli concluded that although the reduction in the development negatively impacts the projected earnings associated with the project, this impact is partially mitigated by the transfer of 8,000sqm to Tigné Point for the development of Q3, the specific remedies provided in the Deed in respect of volumes surrendered due to archaeological finds and the savings associated with a reduction in the infrastructure obligations. In the meantime, the Company is confident that the revised Masterplan will be considered by the Planning Authority during the 3rd quarter of this year and the efforts to secure a strategic investor to undertake the project in partnership with MIDI are progressing.
Election of Directors
The Chairman informed the Meeting that at the Annual General Meeting, all the directors of the Company retired from office in terms of the Articles of Association of the Company. In line with the Articles, the Company issued adverts calling for the nomination of persons to be appointed directors. The Company received eight valid nominations. Accordingly, in terms of the Articles, since there were as many nominations as vacancies, namely eight nominations for eight vacancies, no election took place, and the eight nominees automatically took office as directors; and no resolution was required at this Meeting as the directors were duly appointed pursuant to the Articles.
The Board of Directors is therefore composed of 8 directors as follows:
- Joseph Bonello
- David Demarco
- Joseph A. Gasan
- Alan Mizzi
- Alec A. Mizzi
- Alfredo Muñoz Perez
- Gordon Polidano
- Joseph Said