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Company Registration Number: C 15836
MIDI p.l.c.
Annual Report and Consolidated
Financial Statements
31 December 2021
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
Pages
Directors’ report 1 - 11
Statement of compliance with the Principles of Good Corporate Governance12 - 27
Remuneration Report and Statement28 - 35
Statements of financial position36 - 37
Income statements38
Statements of comprehensive income39
Statements of changes in equity40 - 43
Statements of cash flows44
Notes to the Financial Statements45 - 98
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
1
Directors’ report
The Directors present their annual report and the audited Financial Statements for the year ended 31 December 2021.
Principal Activity
The MIDI Group (the “Group”) comprises MIDI p.l.c. (“MIDI” or the “Company”) and three subsidiaries, Tigné Contracting Limited, T14 Investments Limited and Solutions & Infrastructure Services Limited. The Company also holds a 50% share in Mid Knight Holdings Limited through its subsidiary T14 Investments Limited.
The principal activity of the Group and the Company is the development of the Manoel Island and the Tigné Point Project.
 
Review of the business
The Group has registered a profit after tax of €0.6 million for the financial year ended 31 December 2021 compared to a loss after tax of €2.1 million registered during the financial year ended 31 December 2020.
Notwithstanding the profit before tax and the overall improvement in performance, the 2021 results continued to be impacted by the COVID-19 pandemic as the Company continued supporting the tenants of its commercial properties and its car park operator by way of concessions, albeit not to the same extent as in 2020.
The improvement in results is mainly driven by the sale of the remaining three apartments in the Q2 residential development which were still in inventory as at 1 January 2021. In fact, revenues from the development and sale of property segment amounted to €6.6 million (2020: €0.2 million) resulting in an operating profit of €0.7 million compared to an operating loss in 2020 amounting to €2.2 million, thus indicating the positive contribution generated from the delivery of these apartments.
Although revenues from the property rental and management segment have increased from €2.6 million in 2020 to €2.8 million in 2021 these remain impacted by the pandemic and have yet not returned to pre-pandemic levels. This uptick in revenues has resulted in an improved operating profit for this segment increasing from €1.0 million in 2020 to €1.2 million in 2021. This segment includes the Group’s rental operations of its Pjazza retail outlets and foreshore restaurants, car parking operations, operator concession fees earned from the Manoel Island Yacht Marina and the operating activities undertaken by Solutions & Infrastructure Services Limited (“SIS”).
Total assets have decreased from €227.6 million as at 31 December 2020 to €225.7 million as at 31 December 2021, while the Net Asset Value has marginally increased from €101.8 million to €102.4 million as at 31 December 2021. Hence the Net Asset Value per share as at year end amounts to €0.478 compared to €0.476 as at 31 December 2020.
The Group’s financial results are positively impacted by the financial results of Mid Knight Holdings Limited (“MKH”), a jointly controlled entity accounted for on the basis of the equity method of accounting. The Group’s 50% share of MKH profits for 2021 amounts to €2.0 million compared to €1.9 million recorded in the 2020 financial statements. The profits are wholly generated from the rental operations of ‘The Centre’, an office block situated at Tigné Point.
Directors’ report – continued
Review of the business - continued
The Company’s focus continues to be on the development of Manoel Island. As announced on 18 February 2021 via company announcement MDI157, MIDI submitted a revised Masterplan for the Restoration and Redevelopment of Manoel Island to the Planning Authority and a fresh Environmental Impact Assessment (“EIA”) to the Environmental and Resources Authority (“ERA”). This was necessitated following additional site investigations, carried out by the Company under the supervision of an independent archaeologist approved by the Superintendence of Cultural Heritage, which uncovered archaeological findings on part of the site which was previously earmarked for development. Consequently, the revised Masterplan envisages a reduction in development volumes from the previously approved volumes of 127,000sqm to 95,000sqm.
Although the reduction of development volumes impacts the overall profitability of the project, this impact is mitigated by provisions in the Deed of Emphyteusis entered with Government on 15 June 2000 which provides for specific remedies in the event that the development is impacted by archaeological findings. The Group is currently pursuing the matter with Government.
As announced via company announcement MDI166, the Planning Authority approved the Outline Permit for the revised Masterplan for the development of Manoel Island on 16 September 2021. This followed the approval of the updated EIA for the revised Masterplan by ERA on 4 June 2021. Although the Outline Permit is not subject to appeal the decision by ERA to approve the EIA has been appealed by third parties.
On 20 December 2021, MIDI further announced via company announcement MDI167, that it had entered into a non-binding memorandum of understanding with AC Enterprises Limited (C49755) to explore the possibility of establishing a joint venture with respect to the development of Manoel Island. Discussions are progressing, however, to date no transaction has been concluded.
The detailed design process for Manoel Island has commenced in earnest and it is expected that the full development permit for Manoel Island will be submitted to the Planning Authority towards the latter part of 2022.
In addition to the Manoel Island project, the Company has also been working on the final development at Tigné Point known as the Q3 Residential Block. This residential block will consist of 63 apartments and underground car parking. A full development permit was granted by the Planning Authority on 16 April 2020 which also includes the landscaping, paving and embellishment of the Garden Battery and adjoining areas. This permit was subject to an appeal which was lodged by third parties, which appeal has not been upheld by the Environmental and Planning Review Tribunal in a decision published on 5 April 2022. Notwithstanding the appeal, the Company had continued with both the design and procurement processes of the development and is now in a position to commence the civil works.
As the Maltese economy returns to a greater state of normality following the impact of the COVID-19 pandemic, the Group continues to monitor its cash flow projections to assess the pandemic’s lingering effect on its operations. In addition, the Company is cognizant of the fact that the delivery of its next development, i.e. the afore-mentioned Q3 residential block, is still sometime away and hence resultant cashflows are projected for in the medium term as opposed to the short term.  Furthermore, the current geopolitical tensions have resulted in price hikes of a number of commodities including building material which will need to be procured by the Company to continue with its development works, which in turn is expected to impact the profitability margins on the development and sale of property. Nonetheless, the Group expects to have sufficient liquidity and financial resources to meet its obligations and expected cash outflows after also taking into account arrangements with its bankers in respect of sanctioned bank facilities. Given the circumstances, the Board of Directors has decided to continue adopting a cautious approach and is not recommending to pay a dividend during 2022 in respect of the 2021 financial year.
Directors’ report - continued
Information pursuant to Listing Rule 5.64
Structure of Capital
The Company has an authorised share capital of ninety million euro (€90,000,000) divided into four hundred and fifty million (450,000,000) Ordinary shares having a nominal value of €0.20 each.
The Company’s issued share capital is forty-two million eight hundred and thirty-one thousand nine hundred eight four euro (€42,831,984) divided into two hundred and fourteen million one hundred fifty-nine thousand nine hundred and twenty-two (214,159,922) Ordinary shares of €0.20 each fully paid up and forming part of one class of Ordinary Shares.
Any increase in the issued share capital of the Company shall be decided upon by an Ordinary Resolution of the Company:  provided that, notwithstanding the foregoing, the Company may by Ordinary Resolution authorise the Directors to issue shares up to the amount specified as the authorised share capital of the Company, which authorisation shall be for a maximum period of five years and is renewable for further periods of five years each.
Since there are currently no different classes of ordinary shares in the Company, all Ordinary Shares have the same rights, voting rights and entitlements in connection with any distribution whether of dividends or capital (on a winding up or otherwise). There are no shares in issue that have any preferred or deferred rights.
Every Ordinary Share carries the right to participate in any distribution of dividend declared by the Company pari passu with all other Ordinary Shares. Each Ordinary Share shall be entitled to one vote at meetings of Shareholders. Every Ordinary Share carries the right for the holders thereof to participate in any distribution of capital made whether on a winding up or otherwise, pari passu with all other Ordinary Shares. The Ordinary Shares are freely transferable and pursuant to admission to the Official List of the Malta Stock Exchange, the shares are transferable in accordance with the rules and regulations of the Malta Stock Exchange as applicable from time to time.
Subject to the provisions of the Companies Act (Chapter 386 of the Laws of Malta) (the “Companies Act”), the Company may purchase its own shares.
Appointment and Removal of Directors
Article 98 of the Company’s Memorandum and Articles of Association states that at each Annual General Meeting of the Company all the Directors shall retire from office.  A Director retiring from office shall retain office until the dissolution of such Meeting and a retiring director shall be eligible for re-election or re-appointment.
The Directors of the Company shall be elected as provided in Article 102 of the Company’s Memorandum and Articles of Association that is a maximum of eight (8) directors shall be elected at each Annual General Meeting (or at an Extraordinary General Meeting convened for the purpose of electing directors). Voting shall take place on the basis that every member shall have one (1) vote in respect of each ordinary share held by him. A member may use all his votes in favour of one candidate or may split his votes in any manner he chooses amongst any two or more candidates. The Chairman of the Meeting shall declare elected those candidates who obtain the greater number of votes on that basis.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
4
Directors’ report - continued
Information pursuant to Listing Rule 5.64 - continued
Appointment and Removal of Directors - continued
The Directors of the Company may appoint two (2) additional directors to the Board of the Company without the requirement that the appointment of such director or directors be ratified by a members’ resolution taken at a General Meeting of the Company. A director so appointed by the Board of the Company shall hold office until the end of the Annual General Meeting following his appointment.  The director so appointed may be withdrawn or replaced by the Board at any time.
Powers of Directors
The Directors are empowered to act on behalf of the Company and in this respect have the authority to enter into contracts, sue and be sued in representation of the Company. The business of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not, by the Companies Act or by the Articles of Association, required to be exercised by the Company in General Meeting, subject, nevertheless, to the provisions of the Articles of Association and of the Companies Act and to such directions, being not inconsistent with any provisions of the Articles of Association and of the Companies Act, as may be given by the Company in General Meeting: provided that no direction given by the Company in General Meeting shall invalidate any prior act of the Directors which would have been valid if such direction had not been given. The general powers conferred upon the Directors by Article 87 of the Articles of Association shall not be deemed to be abridged or restricted by any specific power conferred upon the Directors by any other Article.
Subject to the provisions of the Articles of Association, the Board of Directors may exercise all the powers of the Company to borrow money and to hypothecate or charge its undertaking, property and uncalled capital or any part thereof, and to issue debentures and other securities, whether outright or as security for any debt, liability or obligation of the Company or of any third party.
Voting Rights in respect of Ordinary Shares
As outlined previously, each ordinary share shall be entitled to one vote. Subject to any rights or restrictions for the time being attached to any class or classes of shares, on a show of hands every member present in person shall have one (1) vote, and on a poll every member present in person or by proxy shall have one (1) vote for each share of which he is the holder.
On a poll votes may be given personally or by proxy and a member entitled to more than one vote need not, if he votes, use all his votes or cast all the votes he uses in the same way.
No member shall be entitled, in respect of any share in the capital of the Company held by him, to be present or to vote on any question, either in person or by proxy, at any General Meeting, or upon any poll, or to be reckoned in a quorum, or to exercise any other right or privilege conferred by membership in relation to meetings of the Company if any call or other sum presently payable by him to the Company in respect of such share remains unpaid.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
5
Directors’ report - continued
Information pursuant to Listing Rule 5.64 - continued
Restrictions on Ordinary Shares
During such time as any part of the call or installment together with interests and expenses remains unpaid, the entitlement of the person from whom the sum is due to the rights and advantages conferred by membership of the Company including the right to receive dividends and the right to attend and vote at meetings of the Company, shall be suspended. A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall, upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share, be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to Meetings of the Company.
Provided always that the Directors may at any time give notice requiring any such person to elect either be registered himself or to transfer the share, and if the notice is not complied with within ninety (90) days, the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the share until the requirements of the notice have been complied with.
Transfer of Ordinary Shares
Subject to the provisions of law and of the Company’s Articles of Association, the shares of the Company are freely transferable provided that in no case may a part of a share constitute the object of a transfer.
All transfers of shares in the Company, which are listed on the Malta Stock Exchange, shall be regulated by law and accordingly Articles 34 to 36 of the Company’s Articles of Association shall be applicable to such transfers only in so far as the said Articles are not inconsistent therewith.
General Meetings
The Company shall in each year hold a General Meeting as its Annual General Meeting in addition to any other meetings in that year, and not more than fifteen (15) months shall elapse between the date of one Annual General Meeting of the Company and that of the next. Furthermore, Article 182(1) of the Companies Act, sets out a period of seven (7) months from the end of the accounting period, within which period, a public Company is to call a general meeting for the approval of the annual accounts for the applicable accounting period. 
All General Meetings other than Annual General Meetings shall be called Extraordinary General Meetings. The Directors may, whenever they think fit, convene an Extraordinary General Meeting, and Extraordinary General Meetings shall also be convened on such requisition, or, in default, may be convened by such requisitionists as provided by the Act.  If at any time there are not in Malta sufficient directors capable of acting to form a quorum, the Directors in Malta capable of acting, or if there are no directors capable and willing so to act, any two (2) members of the Company, may convene an Extraordinary General Meeting in the same manner as nearly as possible as that in which meetings may be convened by the Directors.
A General Meeting of the Company shall be called by not less than twenty-one (21) days' notice in writing. The notice shall be exclusive of the day on which it is served or deemed to be served and of the day for which it is given, and shall specify the place, the day and the hour of meeting, the proposed agenda for the Meeting and, in case of special business, the general nature of the business to be considered as well as other information which is specified in Article 56(2) of the Company’s Articles of Association.
Subject to such restrictions for the time being, affecting the right to receive notice to the holders of any class of shares, notice of every General Meeting shall be given in any manner hereinbefore authorised to: - (a) every member except those members who have not supplied to the Company an address for the giving of notices to them; and (b) the Auditor for the time being of the Company; and (c) the Directors for the time being of the Company. No other person shall be entitled to receive notices of General Meetings.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
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Directors’ report - continued
Information pursuant to Capital Markets Rule 5.64 - continued
General Meetings - continued
A notice calling an Annual General Meeting shall specify the meeting as such and a notice convening a meeting to pass an Extraordinary Resolution shall specify the intention to propose the resolution as such and the principal purpose thereof. A notice of a General Meeting called to consider extraordinary business shall be accompanied by a statement regarding the effect and scope of any proposed resolution in respect of such extraordinary business.
In every notice calling a meeting, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint one or more proxies to attend and vote instead of him and that a proxy need not also be a member and such statement shall comply with the provisions of the Act as to informing members of their right to appoint proxies.
Any member or members holding not less than five per cent (5%) in nominal value of all the shares entitled to vote at the meeting may: (a) request the Company to include items on the agenda of the General Meeting, provided that each item is accompanied by a justification or a draft resolution to be adopted at the Annual General Meeting; and (b) table draft resolutions for items included in the agenda of a general meeting.
The request to put items on the agenda of the General Meeting or the tabling of draft resolutions to be adopted at the General Meeting shall be submitted to the Company (in hard copy or in electronic form to an email address provided by the Company for the purpose) at least forty-six (46) days before the date set for the General Meeting to which it relates and shall be authenticated by the person or persons making it. Furthermore,  where the right to request items to be put on the agenda of the General Meeting or to table draft resolutions to be adopted at the General Meeting requires a modification of the agenda for the General Meeting that has already been communicated to Shareholders, there shall be made available a revised agenda in the same manner as the previous agenda in advance of the applicable record date or, if no such record date applies, sufficiently in advance of the date of the General Meeting so as to enable other Shareholders to appoint a proxy, or where applicable, to vote by correspondence.
The accidental omission to give notice of a meeting or (in cases where instruments of proxy are sent out with the notice) the accidental omission to send such instrument of proxy to, or the non-receipt of notice of a meeting or such instrument of proxy by, any person entitled to receive notice shall not invalidate the proceedings at that meeting.
An “Ordinary Resolution” means a resolution taken at a General Meeting of the Company passed by a member or members having the right to attend and vote at such meeting holding in the aggregate more than fifty per cent (50%) in nominal value of the shares represented and entitled to vote at the meeting. An “Extraordinary Resolution” means a resolution taken at a General Meeting of the Company of which notice specifying the intention to propose the text of the resolution as an extraordinary resolution and the principal purpose thereof has been duly given and passed by a number of members having the right to attend and vote at such meeting holding in the aggregate not less than seventy-five per cent (75%) in nominal value of the shares represented and entitled to vote at the meeting and at least fifty-one per cent (51%) in nominal value of all the shares entitled to vote at the meeting. Provided that, if one of the aforesaid majorities is obtained, but not both, another meeting shall be convened within thirty (30) days in accordance with the provisions for the calling of meetings to take a fresh vote on the proposed resolution. At the second meeting the resolution may be passed by a member or members having the right to attend and vote at the meeting holding in the aggregate not less than seventy-five per cent (75%) in nominal value of the shares represented and entitled to vote at the meeting. However, if more than half in nominal value of all the shares having the right to vote at the meeting is represented at that meeting, a simple majority in nominal value of such shares so represented shall suffice.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
7
Directors’ report - continued
Information pursuant to Capital Markets Rule 5.64 - continued
Changes to the Company’s Memorandum and Articles of Association
The Company may by extraordinary resolution approved by the shareholders in general meeting alter or add to its Memorandum and Articles of Association.
Other matters
The Company has nothing to report in relation to the requirements of Capital Markets Rules 5.64.4, 5.64.5, 5.64.6, 5.64.7 and 5.64.10, since these do not apply to the Company. Information relating to the requirements of Capital Markets Rule 5.64.11 is reflected in the Remuneration Report and Statement on pages 28 to 35.
Information pursuant to Capital Markets Rule 5.70.1
Directors’ report - continued
Results and dividends
The consolidated income statement is set out on page 49. The Board of Directors continues to adopt a cautious approach in not recommending a dividend payment in respect of the year ended 31 December 2021. This decision has been taken in light of the perceived current uncertainties in order to preserve the Group’s cash resources enabling it to manage liquidity demands over the coming months. 
Directors
The Directors of the Company who held office during the year were:
Alec A. Mizzi - Chairman
Joseph Bonello
David Demarco
Joseph A. Gasan
Alan Mizzi
Mark Portelli
Joseph Said
Alfredo Muñoz Perez(appointed on the 17 June 2021)
Gordon Polidano(appointed on the 17 June 2021)
John Mary sive Jimmy Gatt (resigned on the 17 June 2021)
David G. Curmi (resigned on the 17 June 2021)
All the Directors shall retire from office at the Annual General Meeting of the Company in accordance with articles 98 and 99 of the Company’s Articles of Association and those eligible can be re-elected or re-appointed.
Senior Management, Company Secretary and Internal Audit
As at 31 December 2021, the senior management of the Group was composed as follows:
Mark Portelli Chief Executive Officer
Jesmond MicallefChief Financial Officer
Ivan PiccininoSenior Project Manager
Catherine Formosa Company Secretary
The Company’s Board of Directors engaged the services of EY Malta to provide internal audit related services to the Company.
Directors’ statement of responsibilities in relation to the Financial Statements
The Directors are required by the Maltese Companies Act (Cap. 386) to prepare financial statements which give a true and fair view of the state of affairs of the Group and the Parent Company as at the end of each reporting period and of the profit or loss for that period.
Directors’ report – continued
Directors’ statement of responsibilities in relation to the Financial Statements - Continued
In preparing the financial statements, the Directors are responsible for:
•ensuring that the financial statements have been drawn up in accordance with International Financial Reporting Standards as adopted by the EU;
•selecting and applying appropriate accounting policies;
•making accounting estimates that are reasonable in the circumstances;
•ensuring that the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business as a going concern.
The Directors are also responsible for designing, implementing and maintaining internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and that comply with the Maltese Companies Act (Cap. 386).  They are also responsible for safeguarding the assets of the Group and the Parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Financial Statements of MIDI p.l.c. for the year ended 31 December 2021 are included in the Annual Report 2021, which is published in hard-copy printed form and made available on the Company’s website. The Directors are responsible for the maintenance and integrity of the Annual Report on the website in view of their responsibility for the controls over, and the security of, the website.  Access to information published on the Company’s website is available in other countries and jurisdictions, where legislation governing the preparation and dissemination of Financial Statements may differ from requirements or practice in Malta.
Statement by Directors in terms of Capital Markets Rule 5.68
The Directors confirm that, to the best of their knowledge:
• the financial statements give a true and fair view of the financial position of the Group and the Parent Company as at 31 December 2021, and of the Group’s and the Parent Company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU; and
• the Annual Report includes a fair review of the development and performance of the business and the position of the Company and the subsidiaries included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Going concern basis – Capital Markets Rule 5.62
Taking cognisance of the short-term funding arrangements together with the Group’s long-term liquidity and capital management programmes, the Directors have a reasonable expectation, at the time of approving the Financial Statements, that the Group and the Parent Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the Financial Statements.
Financial key performance indicators
The Directors consistently monitor the Group’s financial performance by assessing a range of financial indicators which illustrate the financial strength and performance of the Group.
Directors’ report - continued
Financial key performance indicators - Continued
The Directors consistently monitor the Group’s financial performance by assessing a range of financial indicators which illustrate the financial strength and performance of the Group.
The main financial key performance indicators which are monitored by the Board include the following:
2021
2020
Working capital ratio
2.79
2.93
Debt to asset ratio
0.26
0.26
Debt to equity ratio
1.20
1.24
Non-Financial Key Performance Indicators
Human Resources
The Group seeks to employ high quality people in order to have talented and multi-skilled human resources to take forward the development project. It seeks to ensure that it provides the necessary environment in which its employees can develop their capabilities and contribute towards the achievements of the Group’s ambitious goals. Further disclosures are made in the Statement of Compliance with the Principles of Good Corporate Governance and in the Remuneration Report and Statement.
Corporate Social Responsibility
The Group has always recognised the importance of its corporate social responsibility, most notably during the restoration works undertaken on Fort Manoel and Fort Tigné and other historical assets at Manoel Island and Tigné Point.
The restoration of these important heritage sites is an on-going process and to-date more than €20 million has been invested by MIDI for their restoration, including the majestic Fort Manoel. MIDI’s sustainability values are the guiding principles for the development of Manoel Island and Tigné Point development projects. From the initial concept, right through the design, construction, and operational procedures, the Company is deploying green and eco-friendly strategies aimed at creating a sustainable environment.
Furthermore, in its drive to ensure that the guidelines of the Guardianship Deed with the Manoel Island Foundation are respected, the Company regularly meets with the members of the Foundation to discuss issues related to the Manoel Island project. On the initiative of the Foundation earlier this year the Company embarked on an embellishment programme of the Manoel Island foreshore for the benefit of the general public frequenting Manoel Island. The works included the installation of railings along the pathways leading down to the foreshore and site clearing works in various areas of the coastline. Additionally, a winding staircase leading down to the beach under the Couvre Porte was discovered and exposed following extensive clearance works enabling it to be used. In the summer months, MIDI also provides a free shuttle service for bathers on Manoel Island over the weekends and public holidays.
The Company has also reached out to the neighbouring communities of Gzira and Sliema by supporting various initiatives organized at community level. Since 2019, the Company has supported Gzira United Football Club in the organization of sporting events for the benefit of the children of this community.
In collaboration with the Sliema Local Council, MIDI has also embarked on a project to refurbish the playground located within the George Bonello Du Puis gardens at Qui-Si-Sana. The first phase of the refurbishment project commenced in September 2020 and was completed in November of the same year. The second phase consisting of the installation of an infants’ swings area and fencing was completed in November 2021. The third and final stage of this project is expected to be completed by the end of 2022. 
Directors’ report - continued
Non-Financial Key Performance Indicators - continued
Human Resources - continued
In line with its community reach out programme, during 2021, MIDI also supported part of the internal restoration works of the Gzira parish church which is dedicated to our Lady of Mount Carmel. The renovation project consisted of cleaning of the paintings and sculptures in the church followed by an extensive painting job of the two side aisles, the church nave and the area around the altar.
MIDI also continues to offer various premises which form part of the Group’s assets free of charge to non-profit organisations and other third parties to carry out activities and events which benefit philanthropic and community causes.
As part of an ongoing sponsorship to Zibel, an NGO focusing on environmental clean-ups and a healthier
livelihood, MIDI has once again sponsored the berthing costs of the NGO’s boat, as well as the supply of
all services for the operation of a Seabin at the Manoel Island Yacht Marina. This Seabin is contributing to keep a cleaner water environment in the Marina, as this device collects floating plastics and debris from the
sea surface. Last year MIDI together with Zibel also organized a marine clean-up in the Marina, where a total of 9,200 kgs of material were collected from the sea-bed. These consisted of plastic, ropes and fishing gear, glass, metal, mixed waste and vehicle tyres.
Further reference to the Group’s Corporate Social Responsibility is made in the Statement of Compliance with the Principles of Good Corporate Governance.
Financial risk management
The Financial risk management note in the Financial Statements (Note 2) describes the process of how the Group identifies, measures and manages its financial risks. The main categories of risk described in this section are market, credit and liquidity risks.
Auditors
PricewaterhouseCoopers have indicated their willingness to continue in office and a resolution for their re-appointment will be proposed at the Annual General Meeting.
Signed on behalf of the entity’s Board of Directors on 26 April 2022 by Alec A. Mizzi (Chairman) and Joseph A. Gasan (Director) as per the Directors’ Declaration on the ESEF Annual Financial Report submitted in conjunction with the 2021 Annual Report and Consolidated Financial Statements.
 
Company secretary: Catherine Formosa
Registered office:
North Shore
Manoel Island
Gzira
Malta
Telephone number: (+356) 2065 5500
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
12
Statement of compliance with the Principles of Good Corporate Governance
A.INTRODUCTION
Pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority, MIDI p.l.c. (the “Company”) is hereby reporting on the extent of its adoption of the Code of Principles of Good Corporate Governance (the “Code”) as well as on the measures adopted to ensure compliance with this same Code. For this reporting period, the Company is adhering to the Code as set out in Appendix 5.1 of Chapter 5 – Continuing Obligations of the said Capital Markets Rules. The Directors are committed to the values of transparency, honesty, and integrity in all their actions and strongly believe that such practices are in the best interests of the Company, its Shareholders and other stakeholders. The Directors believe that the Company benefits from having in place more transparent governance structures and from improved relations with the market which enhance market integrity and confidence.
Good corporate governance is the responsibility of the Board of Directors of the Company (the “Board”), and in this regard the Board has carried out a review of the Company’s compliance with the Code during the period under review.  Notwithstanding that the Principles of Good Corporate Governance are not mandatory, the Board has ensured their adoption, save as indicated herein within the section entitled Non-Compliance with Code. In the latter section the Board indicates and explains the instances where it has departed from or where it has not applied the Code, as allowed by the Code.
The Board takes such measures as are necessary in order for the Company to comply with the requirements of the Code to the extent that this is considered appropriate and complementary to the size, nature and operations of the Company.
B.COMPLIANCE WITH THE CODE
Principle 1: The Board
The overall management and policy setting of the Company is vested in a Board of Directors consisting of a Chairman and eight (8) Directors.
While the Board provides the necessary leadership in the overall direction of the Company, its key role with respect to the Company’s principal activities is to establish the Company’s strategy and to appoint all members of Senior Management and other key members of management.
All the Directors, individually and collectively, are of the appropriate calibre, and have the necessary skills and experience to contribute effectively to the decision-making process. The Board delegates specific responsibilities to a number of committees, notably the Supervisory Board, the Audit Committee and the Remuneration and Nomination Committee, each of which operates under formal terms of reference approved by the Board. The Project Management Advisory Committee reports to the Supervisory Board.
Principle 2: Chairman and Chief Executive
The positions of the Chairman of the Board and that of the Chief Executive Officer (the “CEO”) are vested in separate individuals. The positions have been defined with specific roles rendering these positions completely separate from one another.
Dr. Alec A. Mizzi serves as Chairman of the Board. The Chairman, who continues to meet the independence criteria (see principle 3 below), is responsible to lead the Board and to set its agenda.  The Chairman ensures that the Board’s discussions on any issue put before it goes into adequate depth, encourages the involvement of all Directors, and ensures that all the Board’s decisions are supported by adequate and timely information.  The Chairman, together with the Supervisory Board, ensures that the CEO develops a strategy that is agreed to by the Board.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
13
Statement of compliance with the Principles of Good Corporate Governance - continued
B.COMPLIANCE WITH THE CODE - continued
Principle 2: Chairman and Chief Executive - continued
The role of CEO is vested in Mr. Mark Portelli. The Board has delegated specific authority to the CEO to manage specific activities within the Company which include, amongst others:
•Implementation of policies as set by the Board;
•Working towards objectives established by the Board;
•Representing the Company with third parties;
•Putting into effect plans to organise, direct and manage the human resources available to attain the highest possible profitability or results in the interest of the Company’s shareholders and all other stakeholders.
The role of the CEO is to plan, co-ordinate and control the daily operations of the Company through the leadership and direction of MIDI’s management team.  For this purpose, the CEO communicates on a continuous basis with Senior Managers to direct business activities against plans, to decide on emerging matters, to allocate responsibilities of work and to monitor performance.
On the 17 June 2021, the CEO Mr. Mark Portelli was re-appointed by the Board of Directors as a Director in terms of Article 102(3) of the Articles of Association of the Company which permits the Board to appoint up to a maximum of two additional directors without the requirement that the appointment be ratified by a members’ resolution taken at a General Meeting of the Company. In terms of Article 117(3) of the Articles of Association of the Company, if the person appointed to the office of CEO is a director of the Company the said person shall be designated as Managing Director*.
Principle 3: Composition of the Board
The Board is composed of 8 independent non-executive Directors (including the Chairman) and 1 executive Director.
The following Directors served on the Board during the period under review:
Chairman
Alec A. Mizzi
Independent non-executive Directors
Joseph Bonello
David Demarco
Joseph A. Gasan
Alan Mizzi
Joseph Said
Alfredo Muñoz Perez(appointed on the 17 June 2021)
Gordon Polidano(appointed on the 17 June 2021)
John Mary sive Jimmy Gatt (resigned on the 17 June 2021)
David G. Curmi(resigned on the 17 June 2021)
Executive Director (Managing Director)*
Mark Portelli      
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
14
Statement of compliance with the Principles of Good Corporate Governance - continued
B.COMPLIANCE WITH THE CODE - continued
Principle 3: Composition of the Board - continued
The Board determines whether a director is independent by considering primarily the following principles relating to independence contained in the Code:
i.Whether the director has been an executive officer or employee of the Company or a subsidiary of the Company as the case may be within the last three years;
ii.Whether the director has or has had within the last three years, a significant business relationship with the Company either directly, or as a partner, shareholder, director or senior employee of a body that has a such a relationship with the Company;
iii.Whether the director has received or receives significant additional remuneration from the Company or any member of the group of which the Company forms part in addition to a director’s fee;
iv.Whether the director has close family ties with any of the Company’s executive Directors or senior employees;
v.Whether the director has served on the Board for more than twelve consecutive years; or
vi.Whether the director is or has been within the last three years an engagement partner or a member of the audit team of the present or former external auditor of the Company or any member of the group of which the Company forms part.
Following an assessment of the criteria above and after having considered whether other situations exist which may possibly impinge on the independence of the current non-executive Directors, the Board considers all current non-executive Directors to be independent. It is the Board’s view that despite the fact that Dr. Alec A. Mizzi, Mr. Joseph A. Gasan and Mr. Joseph Said have served on the Board for more than twelve consecutive years, the Directors in question continue to provide valuable contribution and insight to the Board as well as a deep understanding of the Company’s operations and market in which it operates and in the carrying out of their role, their ability to exercise objective and unbiased judgement has not been impaired by length of service.  Furthermore, Mr. Joseph Said is also the CEO and Executive Director of Lombard Bank Malta p.l.c. (“Lombard”) which provides credit facilities to the Company. It is the Board’s view that the fact that Mr. Joseph Said is a director of a company that has a significant relationship with the Group does not impinge on Mr. Said’s independence and his ability to take objective and unbiased judgements. In any case, the relationship between Lombard and the Company is conducted on a commercial and arms’ length basis and Mr. Joseph Said has informed the Board of Directors that he is not involved in any decisions taken by Lombard in relation to the Company. Likewise, as a director of the Company, Mr. Joseph Said is not involved in any decisions concerning or which have a bearing on the Lombard relationship.
In terms of Principle 3.4, each non-executive Director has confirmed in writing to the Board that the Director undertook:
• to maintain in all circumstances his independence of analysis, decision and action;
• not to seek or accept any unreasonable advantages that could be considered as compromising his independence; and
• to clearly express his opposition in the event that he finds that a decision of the Board may harm the Company.
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Principle 3: Composition of the Board - continued
The composition of the Board is determined by the Articles of Association of the Company. The appointment of directors to the Board is reserved exclusively to the Company’s shareholders, except in so far as (i) the situation contemplated in Article 102(3) of the Articles of Association where the Directors may appoint two additional directors to the Board without the requirement that the appointment be ratified by a members’ resolution taken at a General Meeting of the Company; and (ii) an appointment which may be made by the Board to fill a casual vacancy on the Board in terms of Article 103(3).
The Board is composed of a minimum of five (5) and a maximum of ten (10) directors. A maximum of eight (8) directors are elected at each Annual General Meeting (or at an Extraordinary General Meeting convened for the purpose of electing directors) while the Board of Directors may appoint two (2) additional directors to the Board without the requirement that the appointments be ratified by a members’ resolution taken at a General Meeting of the Company in terms of Article 102(3). On the 17 June 2021, Mr. Mark Portelli was re-appointed as a director by the Board of Directors in terms of the provisions of Article 102(3).
No election will take place where there are as many nominations for the Board of Directors as there are vacancies, in which case the candidates so nominated will be automatically appointed directors.
Unless appointed for a shorter period, a director shall hold office from the end of one Annual General Meeting to the end of the next. A retiring director shall be eligible for re-election or re-appointment. The Director appointed by the Board in terms of Article 102(3) shall likewise hold office until the end of the Annual General Meeting following his appointment.
Shareholders are entitled to participate in the election of the directors on the basis that each shareholder shall have one (1) vote in respect of each ordinary share held. A shareholder may use all his votes in favour of one candidate or may split his votes in any manner he chooses amounts two or more candidates.  The candidates elected are those candidates who obtain the greater number of votes on that basis.
The Chairman shall be elected by a simple majority from amongst the Directors of the Company.
The Board considers that the size of the Board, whilst not being large as to be unwieldy, is appropriate for the requirements of the Company’s business. Apart from being clearly equally conducive to good corporate governance, the composition of the Board provides, in the Board’s view, the added benefits of control and management of the Company’s affairs and an efficient decision-making process. The Board considers that the balance of skills and experience is appropriate for the requirements of the business and that changes to the Board’s composition can be managed without undue disruption. The Board is also of the view that it is composed of members who, as a whole, have the required diversity of knowledge, judgment and experience to properly complete their tasks. As from the 5 October 2020, in addition to the eight independent non-executive Directors, the Board’s composition also includes one executive Director.
Principle 4: The Responsibilities of the Board
The Board of Directors is charged with the supervision of Board Committees and of management and the general course of affairs of the Company and the business connected with it (including its financial policies and corporate structure). The Board of Directors periodically evaluates the main organisational structure and the operation of the internal risk-management and control systems established as well as agree on any necessary changes or corrective actions regarding such systems.
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Principle 4: The Responsibilities of the Board - continued
In fulfilling its mandate, the Board of Directors assumes responsibility to:
a)establish corporate governance standards;
b)review, evaluate and approve, on a regular basis, long-term plans for the Company;
c)review, evaluate and approve the Company’s budgets and forecasts;
d)review, evaluate and approve major resource allocations and capital investments;
e)review the financial and operating results of the Company;
f)ensure appropriate policies and procedures are in place to manage risks and internal control;
g)review, evaluate and approve the overall corporate organisation structure, the assignment of management responsibilities and plans for senior management development including succession;
h)review, evaluate and approve compensation strategy for senior management; and
i)review periodically the Company’s objectives and policies relating to social, health and safety and environmental responsibilities.
The Board supervises compliance with the Capital Markets Rules, including those pertaining to the preparation and publication of the Annual Report and Financial Statements, and approves the Financial Statements for submission to the General Meeting of the Shareholders. The Board retains direct responsibility for approving and monitoring:
(i)the Business Plan for the Group;
(ii)the Annual Budget;
(iii)the Annual Financial Statements;
(iv)termination of the employment or engagement of a substantial number of employees of the Company simultaneously or within a short period of time;
(v)termination of employment or engagement of the Chief Executive Officer and other positions of strategic importance at Senior Management level;
(vi)proposals to increase the issued capital and to materially increase or decrease the Company’s funding; and
(vii)other resolutions which the Board of Directors may determine to be subject to its approval.
Any meeting that a director wishes to initiate may be arranged through the Company Secretary. A director of the Company has access to advice from internal and external sources, which are deemed necessary for carrying out the respective roles and responsibilities and the Company will bear the related expenses. A newly appointed director is given a thorough induction course in the operations, activities and procedures of the Company to be able to carry out the function of a director in an effective manner.
Principle 5: Board Meetings
The Board endeavours to meet on a monthly basis, with additional meetings held as necessary. Board meetings are presided over by the Chairman and all Directors are allowed equal opportunity to voice and express their views on matters relating to the Company and its business.
After each Board meeting, minutes that faithfully record attendance, matters discussed and decisions taken, are prepared, and circulated to all Directors as soon as practicable after the meeting.
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Principle 5: Board Meetings - continued
A total of thirteen (13) Board of Directors meetings were held during 2021 and attendance was as follows:
Board member Attended
Alec A. Mizzi 13
Joseph Bonello 13
David Demarco 13
Joseph A. Gasan 12
Alan Mizzi 12
Mark Portelli 13
Joseph Said 13
Alfredo Muñoz Perez (appointed on the 17 June 2021) 7 (out of 7)      
Gordon Polidano (appointed on the 17 June 2021) 7 (out of 7)
David G. Curmi (resigned on the 17 June 2021) 5 (out of 6)
John Mary sive Jimmy Gatt (resigned on the 17 June 2021) 6 (out of 6)
Principle 6: Information and Professional Development
The Chief Executive Officer is appointed by the Board of Directors in accordance with the Articles of Association.
The recruitment and selection of Senior Management is the responsibility of the Remuneration and Nomination Committee (as described under Principle 8 below) in consultation with the CEO.
Newly appointed directors are provided with briefings by the Chief Executive Officer and also by other members of Senior Management in respect to the operations of the Group.  An information pack is handed to a new director following his appointment which incorporates Memoranda and Articles of Group companies, terms of reference of any relevant committees, any Company policies as well as relevant legislation and rules. The Directors have access to the advice and services of the Company Secretary who is responsible for ensuring that Board procedures are adhered to. Additionally, Directors may seek independent professional advice on any matter at the Company’s expense.
The Company ensures the personal development of Directors, management, and employees by recommending attendance to seminars, conferences as well as training programmes that are designed to help improve the potential of its staff members whilst boosting the Company’s competitiveness.  The Company provides the necessary training to the individual Directors on a requirements basis by formally identifying and addressing any such requirements.
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Principle 7: Evaluation of Board’s Performance
During March 2022, the Board carried out an evaluation of its own performance together with that of the Committees and the Chairman.  The Board delegated the carrying out of the evaluation exercise to the Remuneration and Nomination Committee.  The exercise was conducted through a comprehensive Board Effectiveness Questionnaire, the results of which were analysed by the Remuneration and Nomination Committee and then discussed by the Board. The review has not resulted in any material changes in the Company’s internal organisation or in its governance structures. However, some best practice recommendations which emerged from the analysis of the results will be implemented by the Board.
Principle 8: Committees
The Board has appointed the following Committees:
Audit Committee
The Audit Committee is a committee appointed by the Board and is directly responsible and accountable to the Board. The Audit Committee’s primary purpose is to:
(a)protect the interests of the Company’s shareholders; and
(b)assist the Directors in conducting their role effectively so that the Company’s decision-making capability and the accuracy of its reporting and financial results are maintained at a high level at all times.
The Board has set formal terms of reference of the Audit Committee that establish its composition, role and function and responsibilities.
The main role and responsibilities of the Audit Committee include:
(a)to inform the Board of Directors of the outcome of the statutory audit and to explain how the statutory audit contributed to the integrity of the Financial Statements and what the role of the Audit Committee was in this process;
(b)to monitor the financial reporting process and to submit recommendations of proposals to ensure its integrity;
(c)to monitor the effectiveness of the Company’s internal quality control and risk managements system and, where applicable, its internal audit regarding the financial reporting without breaching its independence;
(d)to monitor the audit of the annual and consolidated financial statements, in particular, its performance, taking into account any findings and conclusions by the competent authority pursuant to Article 26 (6) of the Statutory Audit Regulation;
(e)to review the additional report prepared by the statutory auditors or audit firm submitted to the Audit Committee in terms of Article 11 of the Statutory Audit Regulation.
(f)to review and monitor the independence of the statutory auditors or audit firms in accordance with Articles 22, 22a, 22b, 24a and 24b of the Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, amending Council Directive 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC and Article 6 of the Statutory Audit Regulation and in particular the appropriateness of the provision of non-audit services to the audited entity in accordance with Article 5 of the Statutory Audit regulation;
(g)the responsibility for the procedure for the selection of statutory auditors or audit firms in accordance with Articles 16 and 17 of the Statutory Audit Regulation, and also the consideration of the appointment of the external auditors and the making of recommendations to the Board of Directors and additionally the consideration of any questions of auditor resignation or dismissal.
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Other responsibilities of the Audit Committee are set out in its Terms of Reference and these include, amongst others, the review, appointment or replacement of the internal auditor and the making of recommendations accordingly to the Board, the development and implementation of a policy on the engagement of the external auditor to supply non‐audit services, if and where applicable, the consideration of the respective scope of work and audit plans of the internal auditor, if any, and the external auditors, the coordination of the audit, the review of the adequacy of the Company's internal controls, including computerised information system controls and security, management letters and any related significant findings and recommendations of the external auditors and internal audit together with Management’s responses thereto, to enquire with  Management about significant risks or exposures and assess the steps Management has taken to minimise such risks to the Company, to consider and review with Management significant internal audit findings during the year and management’s responses thereto, to review legal and regulatory matters that may have a material impact on the financial statements, related compliance policies, and any reports arising from examinations or inspections performed by the regulators and review and evaluate any proposed transaction that the Company intends to carry out with a Related Party in accordance with the Capital Markets Rules.
For the year under review, the Audit Committee was composed of three independent non-executive Directors. Mr Joseph Bonello was appointed Chairman of the Audit Committee on the 18 June 2021. The other two members of the Audit Committee are Mr. Alan Mizzi and Mr. Alfredo Muñoz Perez (who was appointed on the 18 June 2021). Mr Joseph Said and Mr David Demarco held the roles of Chairman and member of the Audit Committee respectively until the 18 June 2021.
In terms of Capital Markets Rules 5.117 and 5.118, Mr Alan Mizzi, ACA and Mr Alfredo Muñoz Perez are the Directors who the Board considers as competent in accounting and/or auditing. The two members, as also the Chairman Mr Joseph Bonello, are considered independent because they are free from any business, family or other relationship with the Company or its management that may create a conflict of interest such as to impair their judgement.
The Audit Committee is required by the Capital Markets Rules to meet a minimum of four (4) times a year. During the year under review the Audit Committee met four (4) times.
When the Audit Committee’s monitoring and review activities reveal cause for concern or identify the need for improvement, it shall make recommendations to the Board on the action needed to address the issue or make such improvements.
The Audit Committee oversees the Internal Audit process. This independent appraisal function was established within the Group to carry out business process risk-based audits aimed at ensuring adequate controls and efficient business processes. Such a process is undertaken by EY Malta, with representatives of the firm attending the meetings of the Audit Committee and thereby reporting directly to the Audit Committee.
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Supervisory Board
The Board delegates some of its responsibilities to the Supervisory Board, which is composed of Dr. Alec A. Mizzi (Chairman of the Committee), Mr David Demarco (Director) (appointed as member on the 18 June 2021), Mr. Joseph A. Gasan (Director), Mr. Mark Portelli (CEO of the Company and Managing Director), Mr. Jesmond Micallef (CFO of the Company), and Perit Ivan Piccinino (Senior Project Manager of the Company). Mr David G. Curmi (Director) held the role of member of the Supervisory Board until his resignation from the Board on the 17 June 2021.
The Supervisory Board, which reports to the Board, is charged with oversight of Management in the attainment of MIDI’s objectives and strategies. 
Some of the more important functions carried out by the Supervisory Board include:
(a)to oversee strategic, business and similar plans in a manner which ensures that appropriate risks and rewards are identified and properly evaluated
(b)to oversee status, progress, developments of any ongoing projects or commercial operations of the Company and its subsidiaries;
to oversee the annual budgeting process for the Company and ensure that the Company’s plans are based on adequate and realistic funding budgets ;
(c)the supervision of the Project Management Advisory Committee on all development related matters, including the making of recommendations to the Board of Directors with regards to the awarding of contract of works; and
(d)the consideration of all new business opportunities, including partnering with third parties on existing or new projects
Project Management Advisory Committee
In view of the inherent operations of the Company as a property developer, the Supervisory Board set-up a sub-committee in the form of an advisory committee to assist it with project management related matters pertaining to the Tigné Point and the Manoel Island developments.
In furtherance of such an advisory role, the Project Management Advisory Committee’s (“PMAC”) involvement extends to the three main stages of project management: (i) the preparatory stages of the development including the procurement phase; (ii) the performance stage when works are undertaken on site; and (iii) the handover stage when following completion, the end product is either transferred to a third party purchaser or alternatively is prepared for the Company to itself operate as part of its overall operations.
Some of the more specific functions undertaken by the PMAC include the following:
(a)to make recommendations on the appropriate procurement procedure to be adopted in particular phases of a planned or ongoing project;
(b)to act as an interface between the Company and the project management consultants, advisors, contractors, suppliers or service providers engaged by the Company;
(c)subject to the supervision of the Supervisory Board, to carry out the tendering process including the preparation of tender documents, to approach potential bidders and/or to publish tenders, to receive offers and to prepare and/or to oversee the preparation of reports on the short-listed bidders and to make recommendations on the selection of a preferred bidder to the Supervisory Board;
(d)to oversee the negotiation and the execution of any contracts of works, services or supplies being entered into by the Company;
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(e)to provide regular updates to the Supervisory Board on the status and progress of planned or ongoing projects, both from a timing and cost point of view; and
(f)to advise the Supervisory Board on any action that may be required on project management matters.
The PMAC is composed of Mr. David Demarco (Director) who chairs the Committee, Mr. Joseph Bonello (Director) and members of Senior Management. Mr. John Mary sive Jimmy Gatt (Director) held the role of member of the Committee until his resignation from the Board on the 17 June 2021. A number of consultants may also be invited to attend the meetings of the PMAC as may be necessary from time to time.
Remuneration and Nomination Committee
As Nomination Committee, the Committee periodically or as may be necessary is to review the structure, size and composition of the Board with a view to making any recommendations to the Board with regard to its composition and any skills, knowledge, diversity and experience suited to the Board. The Committee is responsible for identifying, nominating and proposing to the Board, for its approval, candidates for the position of Director to be appointed by the Board without the requirement that the appointment of such director or directors be ratified by a members’ resolution taken at a General Meeting of the Company in terms of Article 102(3) of the Articles of Association of the Company: provided that for the sake of clarity, the decision whether to appoint an additional or additional directors to the Board in terms of the said Article shall always remain with the Board. The Committee is to keep under review the leadership needs of the Company and it is to consider succession planning issues in relation to and the policy for the selection of CEO and other Senior Executives, making any necessary recommendations to the Board. The Committee shall also be responsible for selecting, nominating and proposing to the Board, for its approval, candidates for the position of CEO and other Senior Executives.
The Committee is responsible for the process relating to the annual evaluation of the performance of the Board and that of its committees, including that of the Committee itself, as recommended to be carried out by the Code of Corporate Governance. The Committee shall then report to the Board on the results of the performance evaluation process in order to ascertain the strengths and to address the weaknesses of the Board.
Information regarding the Remuneration and Nomination Committee in relation to its remuneration function is found as part of the section in the Annual Report entitled “Remuneration Report and Statement”.
Principle 9 & 10: Relations with Shareholders and with the Market, and Institutional Investors
Pursuant to the Company’s statutory obligations in terms of the Maltese Companies Act (Cap. 386) and the Capital Markets Rules, the Annual Report and Financial Statements, declaration of dividends, election of directors, and appointment of auditors and authorisation of the directors to set the auditors’ fees are proposed and approved at the Company’s Annual General Meeting.
The Company recognises the importance of maintaining a dialogue with its shareholders and of keeping the market informed to ensure that its strategies and performance are well understood.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
22
Statement of compliance with the Principles of Good Corporate Governance – continued
B.COMPLIANCE WITH THE CODE - continued
Principle 9 & 10: Relations with Shareholders and with the Market, and Institutional Investors - continued
The Board is of the view that during the period under review, the Company communicated effectively with shareholders through periodical Company Announcements and through press releases and other material addressed to the market in general using both the traditional media as well as social media.
The Company also communicates with its shareholders through the Company’s Annual General Meeting (“AGM”). Apart from the AGM, the Company communicates with its shareholders by way of the Annual Report and Financial Statements. The Company’s website also contains information about the Company and its business, including an Investor Relations Section.
The Directors consider that the Board properly serves the legitimate interests of all Shareholders and is accountable to all Shareholders.
The Chairman arranges for all Directors to attend the AGM. Information on the Company’s General Meetings is found in the Directors’ Report.
Individual shareholders can raise matters relating to their shareholding and the business of the Group at any time throughout the year and are given the opportunity to submit written questions in advance to be answered at the AGM or to ask questions in person at the AGM (subject to the AGM being held physically). In terms of Article 129 of the Companies Act, the Board may call an extraordinary general meeting on the request of shareholders holding not less than one-tenth of the paid-up share capital of the Company.
The Company holds meetings with stockbrokers and financial intermediaries at least once a year, which meeting usually coincides with the publication of the annual financial statements.
Principle 11: Conflicts of Interest
By way of internal practice, some of the Company’s Directors also act as Directors on fully owned subsidiaries within the Group, namely: Tigné Contracting Limited, Solutions & Infrastructure Services Limited and T14 Investments Limited. Mr. Joseph A. Gasan is also a director on Mid Knight Holdings Limited, a joint venture Company and its subsidiary Mid Knight Operations Limited.
During the period under review the CEO acted as a director of Tigné Contracting Limited, Mid Knight Holdings Limited and its subsidiary Mid Knight Operations Limited.
The Directors are strongly aware of their responsibility to act at all times in the interest of the Company and its shareholders as a whole and of their obligation to avoid conflicts of interest.
The Directors and the CEO, acting as directors of other companies of the Group and other third companies, may be subject to conflicts between the potentially divergent interests of the Company, the Group or such other third companies.  The Company is not aware of any private interest or duties unrelated to the Group which may or are likely to place the Directors or the CEO in conflict with any interest in, or duties towards the Company.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
23
Statement of compliance with the Principles of Good Corporate Governance - continued
B.COMPLIANCE WITH THE CODE - continued
Principle 11: Conflicts of Interest - continued
Given the current shareholding of MIDI p.l.c., and in line with expectations upon the commencement of the Company, conflicts of interest affecting Board members may arise from time to time with regards to:
1.contracts for goods and services, including the provision of construction services, civil and mechanical and engineering works which have been/may be entered into between MIDI p.l.c., Tigné Contracting Limited, Solutions & Infrastructure Services Limited, Mid Knight Holdings Limited and companies related to Board members;
2.financing and insurance related services which have been/may be provided to MIDI p.l.c. by companies related to Board members;
3.activities, including retail projects carried on by MIDI p.l.c. which may compete with similar activities carried on, in the close proximity of the MIDI’s retail projects by companies related to Board members;
4.purchases of apartments by Directors or by companies related to Board members;
5.rental agreements by Directors or by companies related to Board members in relation to any of MIDI’s commercial premises.
All contracts for goods and services, including the provision of construction services, civil and mechanical and engineering works, and any other purchases are based upon the principle of competitive bidding. The CEO negotiates with suppliers in order to ensure that the best quality goods and services are procured by MIDI at the least possible price. With regard to construction services, the Supervisory Board is responsible, with assistance from the Project Management Advisory Committee, to supervise the tendering process. In particular, the Supervisory Board is responsible for assisting and directing the CEO in negotiations with contractors, suppliers and service providers and is responsible for the award of tenders not exceeding the value of €2 million. Any tenders exceeding such a value are awarded by the Board.
In terms of Article 90 of the Articles of Association of the Company, a director who is in any way, whether directly or indirectly, interested (even if such direct or indirect interest relates to the Member or Members who appointed him to office) in any contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at a meeting of the Directors. In the case of a proposed contract or arrangement, the declaration of interest to be made by such director shall be made at the meeting of the directors at which the question of entering into the contract or arrangement is first taken into consideration, or if such director was not at the date of that meeting interested in the proposed contract or arrangement, at the next meeting of the Directors held after he became so interested; and in a case where such Director becomes interested in a contract or arrangement after it is made, the said declaration shall be made at the first meeting of the Directors held after such director becomes so interested.
In line with Code Provision 11.1, a director does not participate in a discussion concerning matters in which he has a conflict of interest unless the Board finds no objection to the presence of such director. In addition, in accordance with the said Article 90, a director shall not vote in respect of any contract, arrangement, transaction or proposal in which he has material interest in accordance with the Memorandum and Articles of Association, whether direct or indirect, otherwise than by virtue of his interests in shares or debentures or other securities of or otherwise in or through the Company. A director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
24
Statement of compliance with the Principles of Good Corporate Governance - continued
B.COMPLIANCE WITH THE CODE - continued
Principle 11: Conflicts of Interest - continued
Article 91 of the Articles of Association also states that if any question arises at any meeting as to the materiality of a director's interest or as to the entitlement of any director to vote and such question is not resolved by his voluntarily agreeing to abstain from voting, then such question shall be referred to the auditors and their ruling shall be final and conclusive except in a case where the nature or extent of the interests of the Director concerned have not been fairly disclosed.
Dealing in Company Securities
On joining the Board and regularly thereafter, the Directors are informed of their obligations on dealing in securities of the Company within the parameters of the law, including the Capital Markets Rules and the Market Abuse Regulations (MAR), as well as within the Company’s policy in respect of dealings by directors
in the Company’s securities, which policy is based on timely and comprehensive disclosures and notifications, as applicable in terms of the law.
Directors’ interests in the share capital of the Company are contained in the Directors’ report.
Principle 12: Corporate Social Responsibility
Statement of compliance with the Principles of Good Corporate Governance - continued
B.COMPLIANCE WITH THE CODE - continued
Principle 12: Corporate Social Responsibility - continued
The second phase consisting of the installation of an infants’ swings area and fencing was completed in November 2021. The third and final stage of the project is expected to be completed towards the end of 2022.
In line with its community reach out programme, during 2021, MIDI also supported part of the internal restoration works of the Gzira parish church which is dedicated to our Lady of Mount Carmel. The renovation project consisted of cleaning of the paintings and sculptures in the church followed by an extensive painting job of the two side aisles, the church nave and the area around the altar.
MIDI also continues to offer various premises which form part of the Group’s assets free of charge to non-profit organisations and other third parties to carry out activities and events which benefit philanthropic and community causes.
Remuneration Report and Statement
Remuneration Report and Statement was drawn up by the Remuneration and Nomination Committee and approved by the Board on the 26 April 2022. It is drawn up in terms of Code Provisions 8.A.3 to 8.A.6 of the Code of Principles of Good Corporate Governance (Appendix 5.1 of the Capital Markets Rules) and in accordance with the Capital Markets 12.26K and the requirements of Appendix 12.1 of the Capital Markets Rules.
Membership and activities of the Remuneration and Nomination Committee
The Remuneration and Nomination Committee is composed of Joseph Said (Chairman), Alan Mizzi and Alfredo Muñoz Perez as members, all of whom are independent non-executive directors.
Alan Mizzi and Alfredo Muñoz Perez were appointed members on the 18 June 2021.  Joseph Bonello was a member of the Remuneration and Nomination Committee until the 18 June 2021 and David G. Curmi served as a member up to his resignation the from the Board of the Company on the 17 June 2021.
In its function the Remuneration and Nomination Committee is charged with oversight of the remuneration policies implemented by the Company with respect to its Directors, Senior Management and employees. It assists the Board in meeting its responsibilities regarding the determination, implementation and oversight of Directors, CEO and Senior Executive remuneration arrangements to enable the recruitment, motivation and retention of individuals with right skills and qualities. Its functions as a Nomination Committee are described in the Corporate Governance Statement under Principle 8.
Decisions of the Remuneration and Nomination Committee during the financial year under review were taken by virtue of resolutions approved by all the members.
Directors’ Remuneration Policy approved by the Annual General Meeting
A Directors’ Remuneration Policy was approved by the shareholders at the Annual General Meeting of the Company held on 1 October 2020.
The Directors’ Remuneration Policy is available in full on https://www.midimalta.com/en/corporate-governance. The Directors’ Remuneration Policy applies to “directors” as such term is defined in Chapter 12 of the Capital Markets Rules and therefore in the case of the Company it applies to any member of the Board of Directors of the Company and to the Chief Executive Officer (“CEO”).  The Board is currently composed of 8 non-executive Directors and 1 executive Director who is also the CEO of the Company and whose remuneration is also addressed in the Directors’ Remuneration Policy in the part entitled “Remuneration of the CEO”.
Any material amendments to the Policy shall be submitted to a vote by the General Meeting before their adoption and in any case at least every four years. No changes to the Policy are being proposed for approval at the next General Meeting
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
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Remuneration Report and Statement - continued
Remuneration Policy – Non-Executive Directors
In proposing the overall remuneration for non-executive Directors and any reviews to remuneration, the Company takes into account the Company’s need to attract, and motivate directors who possess the necessary experience, qualities and attributes to enable them to discharge their duties with integrity and highest professional standards, market realities, trends or standards for similar positions, the time commitment required to be devoted to the Company, group financial performance, salary increases for all employees, as well as the overall interests of shareholders and the overall costs to shareholders.
In terms of Article 84(1) of the Articles of Association of the Company, the maximum aggregate remuneration of all directors in any one financial year and any increases to such aggregate amount are approved by the Company in General Meeting.  Since 2017, the maximum annual aggregate remuneration for the Directors of the Company had been capped at seventy-five thousand euro (€75,000). Following a recommendation by the Remuneration & Nomination Committee, the Board has resolved to propose for the approval by the shareholders at the forthcoming Annual General Meeting of the Company that the said maximum annual aggregate remuneration for the Directors of the Company is increased from seventy-five thousand euro (€75,000) to one hundred twenty-five thousand euro (€125,000).
There are no service contracts between the non-executive Directors and the Company or its subsidiaries. The remuneration of non-executive Directors consists of a fixed fee for their duties as directors.  These fixed fees have been determined in line with information available from the current market. Each of the non-executive directors receive the same amount in terms of fixed fees for his or her respective duties as directors other than in the case of the Chairman of the Company who receives a different fixed fee commensurate with the added responsibilities of the role of chairman and in the case of directors who have an additional responsibility by way of chairmanship or membership of a Board committee or where the non-executive director is appointed by the Board to sit on the Board of Directors of a subsidiary company, a joint venture company or another company forming part of the same Group as the Company.
The remuneration of non-executive Directors does not include any variable component, such as bonuses, incentives or other benefits in whatever form, nor does the Company award share-based remuneration or any share options.  Non-executive Directors do not participate in any long-term incentive plans, neither do they receive any retirement or pension benefits or any payment related to their resignation or removal from office.
Any reasonable travel and business expenses incurred by non-executive Directors in connection with the business of the Company are met by the Company.
A non-executive director is appointed and holds office for a term of one year from the end of one Annual General Meeting to the end of the next. In terms of Article 98 of the Articles of Association, all directors therefore retire from office at each Annual General Meeting.  Directors appointed by the Board in terms of Article 102(3) of the Articles, that is, directors who are appointed without the requirement that the appointment be ratified by a members’ resolution taken at a General Meeting of the Company are likewise appointed until the Annual General Meeting following their appointment and also retire at such Annual General Meeting, unless he or she are appointed for a shorter term.  As stated earlier, there are no provisions for the payment of any benefits linked to termination of their office of directors.
 
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
30
Remuneration Report and Statement - continued
Remuneration Policy – Non-Executive Directors - continued
The current Directors’ fees as applicable and as approved by the Board are as follows:
Directors’ Fees
Chairman€6,000 per annum (2020: €6,000)
Other Directors (per Director)€3,000 per annum (2020: €3,000)
Audit Committee Fees
Chairman€2,000 per annum (2020: €2,000)
Member (per member)€1,500 per annum (2020: €1,500)
Remuneration Committee Fees
Chairman €1,500 per annum (2020: €1,500)
Member (per member)€1,000 per annum (2020: €1,000)
Supervisory Board Fees
Chairman€5,000 per annum (2020: €5,000)
Member (per member)€4,000 per annum (2020: €4,000)
Project Management Advisory Committee Fees
Chairman€4,000 per annum (2020: €4,000)
Member (per member)€3,000 per annum (2020: €3,000)
Subsidiary/Group Company Fees (as may be applicable)
Chairman of Joint Venture Company €4,000 per annum (2020: €4,000)
Member of Joint Venture Company
(per member)€3,000 per annum (2020: €3,000)
Chairman of Subsidiary €4,000 per annum (2020: €4,000)
Member of Subsidiary (per member)€3,000 per annum (2020: €3,000)
In accordance with Code Provision 8.A.5, total Directors’ remuneration for the financial year ended 31 December 2021 in respect of their office as Directors is as detailed below:
Fixed Remuneration
Variable Remuneration
Share Options
Others
€66,500
None
None
None
The amount disclosed above reflects the total Directors’ emoluments paid during the period under review (2020: €69,577).
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
31
Remuneration Report and Statement - continued
Remuneration Policy – Non-Executive Directors - continued
-Code Provision 12.26K and Appendix 12.1 of the Capital Markets Rules
In addition to the information provided above and with reference to Appendix 12.1 of the Capital Markets Rules, it is noted that the amount paid to each non-executive Director by the Company for attendance at meetings of the Board, meetings of Board Committees and directorships on the Company’s subsidiaries and joint venture company (where applicable) during the period under review is indicated below. The table hereunder also represents the annual change of remuneration of the non-executive Directors, of the Company’s performance, and of average remuneration on a full-time equivalent basis of the Company’s employees over the two most recent financial years:
Remuneration Report and Statement - continued
Remuneration Policy – Non-Executive Directors - continued
-Code Provision 12.26K and Appendix 12.1 of the Capital Markets Rules - continued
As stated above, there are no service contracts between the non-executive Directors and the Company or its subsidiaries. The remuneration of non-executive Directors does not include any variable component, such as bonuses, incentives or other benefits in whatever form, nor does the Company award share-based remuneration or any share options.  Non-executive directors do not participate in any long-term incentive plans, neither do they receive any retirement or pension benefits or any payment related to their resignation or removal from office.
No other fees were payable or paid to any of the non-executive Directors during the financial year under review.
Remuneration Policy – CEO
In proposing the overall remuneration for the CEO and any reviews thereto, the Company takes into account the Company’s need to attract, retain and motivate an individual who possesses the necessary experience, qualities and attributes for this key executive role within the Company by offering a base salary and other employment terms that are competitive within the market.  The Company also considers the size and scope of the role, the experience of the individual, market realities, trends or standards for similar positions, group financial performance, salary levels, increases and general conditions applicable to the Company’s employees, as well as the overall interests of shareholders and the overall costs to shareholders.
It is the Company’s policy to engage the CEO on an indefinite contract of employment after a period of probation, rather than on a fixed term contract. Accordingly, the applicable notice periods, after probation, are those provided for in the relevant legislation.   The CEO’s terms of employment do not contain provision for any form of payment on resignation or termination of employment and therefore the only payments on termination are those which may be applicable in accordance with legal requirements.  No retirement or pension benefits in whatever form are payable to the CEO.
The CEO is entitled to a base or fixed salary as well as to an annual performance bonus which is established by reference to the attainment of pre-established annual financial and non-financial targets and/or performance criteria or key performance indicators.  The annual performance bonus is the only variable component of the CEO’s remuneration. These targets or performance criteria are set annually by the Remuneration and Nomination Committee in consultation with the Chairman of the Company.  These targets or performance criteria are selected to incentivise the delivery of the Company’s business plans, goals and financial objectives.  These targets or performance criteria include a mix of company corporate objectives to be met and an assessment of the individuals’ performance and attainment of personal objectives.   Neither the reviews of the base or fixed salary nor the performance bonus is linked directly or indirectly to the performance of the share price of the Company.
The Remuneration and Nomination Committee, in consultation with the Chairman of the Company, will decide on the payment of or otherwise of the annual performance bonus after assessing the attainment of the relative targets and/or performance criteria.  It may also decide to defer the payment of the annual performance bonus or part thereof for a definite period. No such deferment has taken place in relation to the performance bonus paid for the financial year ending 31 December 2021.  The link between the fixed salary and the performance annual bonus shall be appropriate and reasonable.  The performance bonus of the CEO shall never exceed 40% of the fixed salary. The Company does not have the possibility to reclaim any variable remuneration
Remuneration Report and Statement - continued
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
33
Remuneration Policy – CEO - continued
The CEO is not otherwise awarded any other incentives or benefits in whatever form, nor does the Company award share-based remuneration or share options.  The CEO does not participate in any profit-sharing arrangement.
Any reasonable travel and business expenses incurred by the CEO in connection with the business of the Company is met by the Company. The CEO is also entitled to a mobile telephone allowance.
On the 17 June 2021, the CEO Mark Portelli was re-appointed by the Board of Directors as an (executive) Director in terms of Article 102(3) of the Articles of Association of the Company which permits the Board to appoint up to a maximum of two additional directors without the requirement that the appointment be ratified by a members’ resolution taken at a General Meeting of the Company. In terms of Article 117(3) of the Articles of Association of the Company, if the person appointed to the office of CEO is a director of the Company the said person shall be designated as Managing Director.
No additional remuneration is paid by the Company to the CEO in respect of his role as an executive director of the Company and member of the Supervisory Board and the Project Management Advisory Committee. Neither does the CEO receive any remuneration in respect of his directorship on the subsidiary companies Tigné Contracting Limited and Solutions and Infrastructures Services Limited and on the joint venture company Mid Knight Holdings Limited and its subsidiary Mid Knight Operations Limited.
-Code Provision 12.26K and Appendix 12.1 of the Capital Markets Rules
In addition to the information provided above and with reference to Appendix 12.1 of the Capital Markets Rules, it is noted that the total remuneration paid to the CEO, Mark Portelli, for the period under review was as indicated below. The table hereunder also represents the annual change of the Company’s performance, and of average remuneration on a full-time equivalent basis of the Company’s employees over the two most recent financial years:
Fixed Remuneration FY 2021
€
Variable Remuneration FY 2021
€
Total Remuneration FY 2021
€
Total Remuneration FY 2020
€
% Annual Change of Remuneration (2020-2021)
% Annual Change of the Company’s consolidated Performance (2020 – 2021)
Based on Net Profit After Tax
% Annual Change of the Average Remuneration of the Company’s employees on a full-time basis (2020 – 2021)
135,731
50,000
185,731
175,144
+6.0%
+126.0%
+2.40%
The variable remuneration was arrived at after an assessment of the level of attainment of targets set as explained earlier on in this report. No other fees were payable or paid to the CEO during the financial year under review.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
34
Remuneration Report and Statement - continued
Remuneration Policy - Senior Management
The term ‘Senior Management’ shall refer to the list of officers as set out within the Directors’ report and except where otherwise expressly stated includes the CEO.
In proposing the overall remuneration for Senior Management and any reviews thereto, the Company takes into account the Company’s need to attract, retain and motivate individuals who possesses the necessary experience, qualities and attributes for this key executive role within the Company by offering a base salary and other employment terms that are competitive within the market. The Company generally engages its Senior Management on the basis of indefinite contracts of employment after a period of probation, rather than on fixed term contracts. Accordingly, the applicable notice periods, after probation, are those provided for in the relevant legislation.
The terms and conditions of employment of Senior Management are specified in their respective indefinite contracts of employment.  Senior Management are entitled to a base or fixed salary as well as to an annual performance bonus which is established by reference to the attainment of pre-established annual financial and non-financial targets and/or performance criteria or key performance indicators. Neither the reviews of the base or fixed salary nor the performance bonus is linked directly or indirectly to the performance of the share price of the Company.
The annual performance bonus is the only variable component of the remuneration of Senior Management. The link between the fixed salary and the performance annual bonus shall be appropriate and reasonable. The annual performance bonus of Senior Management (to the exclusion of the CEO) is approved by the Remuneration and Nomination Committee in consultation with the CEO.
None of the Company’s Senior Management, through their employment with the Company, is entitled to any share options and/or profit-sharing arrangements or pension benefits.
The individual contracts of employment of all Senior Management, excluding the contract of employment of the CEO, contain provisions for severance payments in certain defined circumstances. These payments would be in addition to payments that may be applicable in accordance with legal requirements.
All employees of the Company are entitled to health and life insurance, whilst Senior Management and some other executives of the Company are entitled to reimbursement of telephone expenses. Any reasonable travel and business expenses incurred by Senior Management in connection with the business of the Company is met by the Company.
Total emoluments received by Senior Management during the period under review are as detailed below, in terms of Code Provision 8.A.5 of the Capital Markets Rules.
Fixed Remuneration
Variable Remuneration
Share Options
Others
Non-cash
€342,301
€130,000
None
benefits
referred to above
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
35
Remuneration Report and Statement - continued
Remuneration Policy - Senior Management - continued
This Directors’ Remuneration Report in terms of Chapter 12 of the Capital Markets Rules is being put forward to an advisory vote of the 2022 Annual General Meeting in accordance with the requirements of the Capital Markets Rule 12.26 L.
In accordance with the requirements emanating from Appendix 12.1 of the Capital Markets Rules, the contents of the Directors’ Remuneration Report within this Remuneration Report have been reviewed by the external auditor to ensure compliance with such requirements.
 
Statements of cash flows
Year ended 31 December
Group
Company
Notes
2021
2020
2021
2020
€
€
€
€
Cash flows from operating activities
Cash generated from/(used in) operations
33
99,186
(9,419,664)
1,826,007
(6,938,193)
Net interest paid
(2,254,359)
(2,121,591)
(2,252,716)
(2,119,741)
Net income tax paid
(548,661)
(10,262)
(548,661)
(14,503)
Net cash used in operating activities
(2,703,834)
(11,551,517)
(975,370)
(9,072,437)
Cash flows from investing activities
Purchase of property, plant and equipment
5
(32,122)
(71,835)
-
-
Dividends received
9
1,425,000
1,883,500
50,000
50,000
-
Net cash generated from investing activities
1,392,878
1,811,665
50,000
50,000
Cash flows from financing activities
Principal elements of lease payments
6
(467,559)
(632,631)
(467,559)
(632,631)
Net cash used in financing activities
(467,559)
(632,631)
(417,559)
(682,631)
Net movement in cash and cash
equivalents
(1,778,515)
(10,372,483)
(1,392,929)
(9,655,068)
Cash and cash equivalents at
beginning of year
11,528,748
21,901,231
10,526,664
20,181,732
Cash and cash equivalents at
end of year
13
9,750,233
11,528,748
9,133,735
10,526,664
The notes on pages 45 to 98 are an integral part of these financial statements.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
45
Notes to the Financial Statements
1.Summary of significant accounting policies
The principal accounting policies applied in the preparation of these Financial Statements are set out below.  These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1Basis of preparation
These consolidated Financial Statements include the Financial Statements of MIDI p.l.c. and its subsidiaries.  These Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and with the requirements of the Maltese Companies Act (Cap. 386).  They have been prepared under the historical cost convention as modified by the fair valuations of the land and buildings class of property, plant and equipment, investment property and specific financial assets.  The preparation of Financial Statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates.  It also requires the Directors to exercise their judgement in the process of applying the Group’s accounting policies (see Note 3 – Critical accounting estimates and judgements).
1.1.1Assessment of going concern assumption
MIDI p.l.c. has registered a consolidated profit before tax amounting to €1,499,327 during the financial year ended 31 December 2021 (2020: loss of €1,590,832).  The Group’s total assets exceeded its total liabilities by €102,387,532 as at 31 December 2021 (2020: €101,842,250). The Group has reviewed its financing arrangements to ensure that it is in a position to meet its operational and cash flow commitments in business as usual circumstances throughout the twelve-month period subsequent to 31 December 2021. In this regard it has secured new banking facilities with local banks which will be utilised (i) to finance in part ongoing operational expenditure and (ii) to finance the development of the Q3 residential block.
Notwithstanding the profit before tax and the overall improvement  in financial performance, the 2021 results have been in part impacted by the COVID-19 pandemic as MIDI continued supporting the tenants of its commercial properties and its car park operator by way of concessions albeit not to the same extent as in 2020.
The improvement in results is mainly driven by the sale of the remaining three apartments in the Q2 residential development which were still in inventory as at 1 January 2021. In fact, revenues from the development and sale of property segment amounted to €6.6 million (2020: €0.2 million) resulting in an operating profit of €0.7 million compared to an operating loss in 2020 amounting to €2.2 million, thus indicating the positive contribution generated from the delivery of these final apartments.
Although revenues from the property rental and management segment have increased from €2.6 million in 2020 to €2.8 million in 2021, these remain impacted by the COVID-19 pandemic and have yet not returned to pre-COVID levels. This uptick in revenues has resulted in improved operating profit for this segment increasing from €1.0 million in 2020 to €1.2 million in 2021.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
46
1.Summary of significant accounting policies - continued
1.1Basis of preparation - continued
1.1.1Assessment of going concern assumption - continued
The Company’s focus continues to be on the development of Manoel Island. As announced on 18 February 2021 via company announcement MDI157, MIDI submitted a revised Masterplan for the Restoration and Redevelopment to the Planning Authority and a fresh Environmental Impact Assessment (“EIA”) to the Environmental and Resources Authority (“ERA”). This was necessitated following additional site investigations, carried out by the Company under the supervision of an independent archaeologist approved by the Superintendence of Cultural Heritage, which uncovered archaeological findings on part of the site which was previously earmarked for development. Consequently, the revised Masterplan envisages a reduction in development volumes from the previously approved volumes of 127,000sqm to 95,000sqm.
Although the reduction of development volumes impacts the overall profitability of the project, this impact is mitigated by provisions in the Deed of Emphyteusis entered with Government on 15 June 2000 which provides for specific remedies in the event that the development is impacted by archaeological findings. The Company is actively seeking confirmation from Government in connection with the application of the specific clauses in the deed, which cater for such eventuality.
As announced via company announcement MDI166, the Planning Authority approved the Outline Permit for the revised Masterplan for the development of Manoel Island on 16 September 2021. This followed the approval of the updated EIA for the revised Masterplan by ERA on 4 June 2021. Although the Outline Permit is not subject to appeal the decision by ERA to approve the EIA has been appealed by third parties.
On 20 December 2021, MIDI further announced via company announcement MDI167, that it had entered into a non-binding memorandum of understanding with AC Enterprises Limited company registered in Malta with registration number (C49755) to explore the possibility of establishing a joint venture with respect to the development of Manoel Island. Discussions are progressing, however, to date no transaction has been concluded.
The detailed design process for Manoel Island has commenced in earnest and it is expected that the full development permit for Manoel Island will be submitted to the Planning Authority towards the latter part of 2022.
In addition to the Manoel Island project, the Company has also been working on the final development at Tigné Point known as the Q3 Residential Block. This residential block will consist of 63 apartments and underground car parking. A full development permit was granted by the Planning Authority on 16 April 2020 which also includes the landscaping, paving and embellishment of the Garden Battery and adjoining areas. This permit was subject to an appeal which was lodged by third parties, which appeal has not been upheld by the Environmental and Planning Review Tribunal in a decision published on 5 April 2022. Notwithstanding the appeal, the Company had continued with both the design and procurement processes of the development and is now in a position to commence the civil works.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
47
1.Summary of significant accounting policies - continued
1.1Basis of preparation - continued
1.1.1Assessment of going concern assumption - continued
As the Maltese economy returns to a greater state of normality following the impact of the COVID-19 pandemic, the Group continues to monitor its cash flow projections to assess the pandemic’s lingering effect on its operations. In addition, the Company is cognisant of the fact that the delivery of its next development, i.e. the afore-mentioned Q3 residential block, is still sometime away and hence resultant cashflows are projected for in the medium term as opposed to the short term.  Furthermore, the current COVID-19 circumstances have resulted in price hikes of a number of commodities including building material, which will need to be procured by the Company to continue with its development works.  This factor might in turn be expected to impact the profitability margins on the development and sale of property going forward. This might be further exacerbated by the geopolitical tensions experienced subsequent to the end of the reporting period in view of the conflict in Ukraine, although it is quite premature to estimate any potential impacts in this respect. The resultant uncertainty requires the Group to continue adopting a prudent approach in its projected cash flow assessments. Nonetheless, the Group expects to have sufficient liquidity and financial resources to meet its obligations and expected cash outflows after also taking into account arrangements with its bankers in respect of sanctioned bank facilities.
In view of the above developments with regards to the Q3 residential block (the final phase to be developed on Tigné Point) and the potential transaction vis a vis the Manoel Island project, MIDI continues to assess its liquidity and capital management programmes by: i) monitoring the feasibility of the different project phases based on net cash inflows and income streams; ii) reviewing the sustainability of the carrying amount of assets allocated to the respective phases; and iii) assessing the appropriate funding mix to be applied to each phase.  The outcome of the review of the Group’s funding programmes in the longer-term could potentially result in changes to the existing or projected use of the asset base pertaining to the different phases of the Tigné Point and Manoel Island project to leverage the underlying cash flow streams.
The review highlighted above has not given rise to potential indications of impairment of the carrying amount of inventories attributable to the remaining Tigné Point phase and to the Manoel Island project. No heightened risk factors have been identified in respect of the latter notwithstanding the judgemental nature of the review process.
The Group’s projected equity levels are also being assessed in the context of the future project phases, focusing on the relationship between the amount of borrowings and shareholders’ equity.
Based on the outcome of the cash flow projections as referred to above, the Directors and senior management consider the going concern assumption in the preparation of the Company’s consolidated financial statements as appropriate as at the date of authorisation for issue of the 2021 financial statements. In the opinion of the Directors, taking cognisance of the short-term funding arrangements together with the Group’s long-term liquidity and capital management programmes, there is no material uncertainty which may cast significant doubt on the Group’s ability to continue operating as a going concern
Auditor’s fees
Fees charged by the auditor for services rendered during the financial periods ended 31 December 2021 and 2020 relate to the following:
Group
Company
2021
2020
2021
2020
€
€
€
€
Annual statutory audit
63,800
62,100
42,800
41,600
Tax advisory and compliance services
8,560
7,675
6,990
6,690
Other assurance services
6,753
-
1,747
-
79,113
69,775
51,537
48,290
During the current year fees amounting to €18,230 (2020: €15,500) have been charged to the Group by connected undertakings of the Group’s auditor, in respect of tax advisory services and other advisory services. 
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
91
24.Employee benefit expense
Group
Company
2021
2020
2021
2020
€
€
€
€
Wages and salaries
1,774,491
1,733,610
1,626,100
1,590,559
Social security costs
82,115
84,467
70,506
72,763
1,856,606
1,818,077
1,696,606
1,663,322
Amounts reflected in Inventories -
Development project
487,885
507,845
487,885
507,845
Amounts recharged to subsidiaries
-
-
64,629
101,050
Amounts expensed in profit or loss
1,306,001
1,245,152
1,081,372
989,347
Amounts incurred on behalf of third parties
33,381
35,846
33,381
35,846
Amounts recharged to joint venture
29,339
29,234
29,339
29,234
1,856,606
1,818,077
1,696,606
1,663,322
Average number of persons employed by the Group and Company during the year:
Group
Company
2021
2020
2021
2020
€
€
Technical and administration
35
36
30
31
During the financial year ending 31 December 2020, group wages and salaries within the table above are presented net of grants received from the Government of Malta under the COVID-19 wage supplement scheme amounting to €4,483. No grants were received in 2021.  Grants related to income are presented as a deduction in reporting the related expense which the grant is intended to compensate for.
25.Directors’ emoluments
Group and Company
2021
2020
€
€
Directors’ fees
66,500
69,577
26.Finance income
Group and Company
2021
2020
€
€
Interest income from:
- bank deposits
20,714
14,552
- investment in debt securities
11,011
10,978
31,725
25,530
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
92
27.Finance costs
Group
Company
2021
2020
2021
2020
€
€
€
€
Interest and related expense recognised
in profit or loss on:
- Bank loans and overdrafts
188,450
123,836
188,450
123,836
- Bonds issued to the general public
- coupon interest payable
2,000,000
2,001,822
2,000,000
2,001,822
- amortisation of difference between
net proceeds and redemption value
91,947
91,947
91,947
91,947
- Interest on lease liabilities
100,035
97,290
100,035
97,290
- Bank and other charges
97,634
21,463
95,991
19,613
2,478,066
2,336,358
2,476,423
2,334,508
Finance costs capitalised are disclosed in Note 11 to these Financial Statements.
28.Other operating income
Group
Company
2021
2020
2021
2020
€
€
€
€
Rental and other income
43,899
58,012
44,599
54,638
Management fees receivable
2,483
1,997
2,483
1,997
46,382
60,009
47,082
56,635
29.Other income
Other income represents a dividend of €50,000 (2020: €50,000) received from Manoel Island Yacht Yard Limited.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
93
30.Tax expense
Group
Company
2021
2020
2021
2020
€
€
€
€
Current taxation:
Current tax expense
908,097
10,262
908,097
14,503
Deferred taxation (Note 21):
Current year charge
87,072
514,631
87,072
514,631
Over provision in prior years
(53,462)
-
(53,462)
-
Tax expense
941,707
524,893
941,707
529,134
The tax on the profit/(loss) of the Group and the Company differs from the theoretical amount that would arise using the basic tax rate as follows:
Group
Company
2021
2020
2021
2020
€
€
€
€
Profit/(loss) before taxation
1,499,327
(1,590,832)
(392,567)
(3,325,682)
Tax at 35%
524,764
(556,791)
(137,398)
(1,163,989)
Tax effect of:
- expenses and cost of property not
deductible for tax purposes
3,101,048
1,868,122
3,052,256
1,812,724
- application of tax rates
to property disposals
(1,915,091)
(69,140)
(1,915,091)
(69,140)
- other differences
(4,598)
(54,703)
(4,598)
(50,461)
- Over provision in prior years
(53,462)
-
(53,462)
-
- share of profit of joint venture
(710,954)
(662,595)
-
-
Tax expense in accounts
941,707
524,893
941,707
529,134
31.Earnings per share
Earnings per share is calculated by dividing the results attributable to equity holders of the Company by the weighted average number of ordinary shares of MIDI p.l.c. in issue during the year.
Group
2021
2020
Profit/(loss) attributable to equity holders of the Company
€ 557,620
(€ 2,115,725)
Weighted average number of ordinary shares in issue
214,159,922
214,159,922
Earnings per share
€0.003
(€0.010)
The Company has no instruments or arrangements which give rise to dilutive potential ordinary shares, and accordingly diluted earnings per share is equivalent to basic earnings per share.
MIDI p.l.c.
Annual Report and Consolidated Financial Statements - 31 December 2021
94
32.Dividends

PwC_fl_4cp.eps

Independent auditor’s report

To the Shareholders of MIDI p.l.c.

 

Report on the audit of the financial statements

Our opinion

 

In our opinion:

 

●    The Group financial statements and Parent Company financial statements (the “financial statements”) give a true and fair view of the Group and the Parent Company’s financial position of MIDI p.l.c. as at 31 December 2021, and of the Group’s and the Parent Company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and

●      The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).

 

Our opinion is consistent with our additional report to the Audit Committee.

 

What we have audited

 

MIDI p.l.c.’s financial statements comprise:

 

●        the Consolidated and Parent Company statements of financial position as at 31 December 2021;

●        the Consolidated and Parent Company income statements and statements of comprehensive income for the year then ended;

●        the Consolidated and Parent Company statements of changes in equity for the year then ended;

●        the Consolidated and Parent Company statements of cash flows for the year then ended; and

●        the notes to the financial statements, which include significant accounting policies and other explanatory information.

 

Basis for opinion

 

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

 

We are independent of the Group and the Parent Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code)  together with the ethical requirements of the Accountancy Profession (Code of Ethics for Warrant Holders) Directive issued in terms of the Accountancy Profession Act (Cap. 281) that are relevant to our audit of the financial statements in Malta. We have fulfilled our other ethical responsibilities in accordance with these Codes.

 

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the parent company and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).

 

The non-audit services that we have provided to the parent company and its subsidiaries, in the period from 1 January 2021 to 31 December 2021, are disclosed in note 23 to the financial statements.

 

Our audit approach

 
Overview

 

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●     Overall group materiality: €760,000, which represents approximately 0.75% of consolidated net assets.

●      The audit carried out by the group engagement team covered all companies within the group as at and for the year ended 31 December 2o21, comprising MIDI p.l.c. (the Parent Company) and its subsidiaries: Tigné Contracting Limited, T14 Investments Limited and Solutions & Infrastructure Services Limited, as well as the investment in joint venture Mid Knight Holdings Limited and its subsidiary Mid Knight Operations Limited.

 

●      Fair valuation of investment property relating to the Group and the Parent Company

●      Inventory valuation relating to the Group and the Parent Company

 

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

 

Materiality

 

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

 

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

 

Overall group materiality

€760,000

How we determined it

Approximately 0.75% of consolidated net assets

Rationale for the materiality benchmark applied

We chose net assets as the benchmark because, in our view, it is the benchmark against which the underlying value of the Group is most commonly measured by users and is a generally accepted benchmark. We chose 0.75%, which is within the range of quantitative materiality thresholds that we consider acceptable.

 

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €38,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

 

Key audit matter

How our audit addressed the Key audit matter

Fair valuation of investment property, relating to the Group and the Parent Company

 

The Group's and Parent Company's assets comprise properties held for long-term rental yields or for capital appreciation, which are classified as investment property and are measured at fair value.

 

The main asset of Mid Knight Holdings Limited, the Group's jointly controlled entity, comprises an office block known as 'The Centre' which is rented out to third parties. The asset is accounted for as investment property in the joint venture's financial statements and is measured at fair value. 

 

During 2021 the Board of Mid Knight Holdings Limited commissioned an independent property valuation on the basis of an assessment of the open market value of the property performed by a professional valuer, which confirmed that the carrying amount of the property is not significantly different from the carrying amount. Such process considered the current and projected economic scenario and also the developments at the property tenant level.

 

With respect to the components of the Group’s investment property, at the end of every reporting period, when an external valuation is not carried out, the Directors assess whether any significant changes in actual circumstances and developments have been experienced since the last external valuation. On an annual basis, management updates internally developed valuation models which are based on the discounted cash flow and comparable sales value approaches, for the purpose of ascertaining whether the carrying amount of the key components within the Group’s property portfolio are significantly different from estimated fair values.  An adjustment to the carrying amount of the property is only reflected if it has been determined that there has been significant change.

 

In the process of reviewing the valuation assumptions as at 31 December 2021 in respect of specific elements within the Group's investment property, management considered developments at the tenant level and the rent concessions granted in view of the disruption brought about by the COVID-19 pandemic.  Following the assessments carried out as at 31 December 2021, no adjustments to the overall carrying amount of the Group's investment property portfolio and to the carrying amount of the jointly controlled entity's investment property were deemed necessary as at that date.

 

We focused on this area because of the significance of the carrying value of the Group's and joint venture's property in the respective Statements of Financial Position, together with the judgemental nature of the assumptions used in the valuation models, such as the sales price per car space or per square metre, projected rental income streams and the discount rates applied.  The outbreak of the COVID-19 pandemic has given rise to a heightened level of estimation uncertainty with respect to key assumptions underlying the valuation of investment property.

 

Further disclosure is included in Note 7 (Investment Property) and Note 9 (Investments in joint venture).

 

 

We reviewed management’s internally developed valuation models refreshed as at the end of the current reporting period, which were utilised by management to assess the carrying amount by determining fair values of the different components of the Group’s investment property. We reviewed the  independent valuation report in respect of investment property owned by Mid Knight Holdings Limited, the joint venture, which was commissioned during 2021. We confirmed that the valuation approach for each property and the valuation models utilised in determining the fair value of property were in accordance with professional valuation standards.

 

We engaged our in-house valuation experts to critique and challenge the principal assumptions used in the valuation report for the office block of Mid Knight Holdings Limited and management’s internal valuation models referred to above which have been updated by management as at the end of the current financial year for each component of the Group's  property to support the carrying amounts. Our valuation experts have reviewed the valuation report and the valuation models updated by management in detail within the ambit of their assessments. The principal assumptions include the projected cashflows, estimated sale market rates or prices, and the discount rate applied for certain properties. Third party evidence and other data was obtained to corroborate the assumptions.  We tested the mathematical accuracy of the calculations.

 

We have also considered the potential impacts of the economic distress caused by the COVID-19 pandemic, and recent economic developments and developments at tenant level, on the carrying amount of the assets as at the end of the reporting period. Our experts have taken cognisance of the prevailing economic and market conditions as a result of the uncertainty.  Based on management's assessments, the estimated impact on the fair valuation of specific elements of investment property is not considered material taking cognisance of discounted projected cash flows for the entire term of the emphyteutical grant.  Also, the estimated sales values of other elements of investment property have not been materially impacted as a result of the pandemic.

 

We discussed the outcome of management's assessments with the Audit Committee. 

 

Management's valuation models and the independent valuation report confirmed that there are no significant differences between carrying amounts and estimated fair values as at 31 December 2021 as we concluded, based on our audit work, that the outcome of the management and external assessments in respect of the overall carrying amounts of the investment property portfolio as at 31 December 2021 was within a reasonable range of values.

 

Inventory Valuation, relating to the Group and the Parent Company

 

 

The carrying amount of inventory at Group and Parent Company level represents the value of land, development and borrowing costs attributable to the various phases of the Manoel Island and Tigné Point project which are either held for sale or under development as at 31 December 2021, analysed by project phase.

 

For each project phase, management assesses whether inventory is carried at the lower of cost and net realisable value, on the basis of projected financial information pertaining to the respective phases.

 

We focused on this area because of the significance of the carrying value of inventories, which includes costs attributable to the Manoel Island project, in the Group’s Statement of Financial Position and the judgemental nature of the assumptions used by management in the assessments referred to above.

 

Taking cognisance of developments relating to the COVID-19 pandemic and the current economic scenario, management’s assessments indicate that no impairment indicators have been registered as at 31 December 2021 in respect of the key inventory elements, also as these are principally expected to generate sales revenues in a few years’ time.

Further disclosure is included in Note 11 (Inventories - Development project).

 

 

 

 

 

We understood and evaluated the assessment performed by management to ascertain whether inventory is carried at the lower of cost and net realisable value, for all inventory elements including the Manoel Island project.

 

Our audit procedures included a review, also with the assistance of our valuation experts, of the projected financial information for the different project phases prepared by management with the objective of estimating recoverable amounts.  We have also considered the implications of the COVID-19 pandemic  and recent economic developments on the carrying amount of the assets.  In particular, our valuation experts have reviewed the manner in which the estimated impacts of these developments have been reflected within the principal assumptions underlying management’s assessments. Our experts have taken cognisance of the prevailing economic and market conditions as a result of the uncertainty brought about by the pandemic.

 

In relation to the Manoel Island project, we are  aware that during the current financial year, the Outline Permit in respect of the revised Masterplan for the restoration and redevelopment of Manoel Island, which also contemplates a decrease in development volumes, has been approved by the Planning Authority.

 

We take cognisance of the fact that during 2021 the Group announced that it had entered into a non-binding memorandum of understanding with AC Enterprises Limited to explore the possibility of establishing a joint venture with respect to the development of Manoel Island.

 

We have discussed with management and the Audit Committee the principal assumptions underlying the inventory assessments performed for the different inventory elements and also considered the key elements emanating from the memorandum of understanding entered into with the third party referred to above.

 

Based on the evidence we have sighted during our procedures and the consideration of management’s assessments, nothing leads us to believe that that any impairment indicators exist in respect of the Group’s inventory elements. We concluded, based on our audit work, that the outcome of the assessments in respect of carrying amounts of inventories as at 31 December 2021 is not unreasonable.

 

How we tailored our group audit scope

 

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

 

The Group is composed of MIDI p.l.c. (the Parent Company) and its subsidiaries: Tigné Contracting Limited, T14 Investments Limited and Solutions & Infrastructure Services Limited. It also holds an investment in joint venture Mid Knight Holdings Limited and its subsidiary Mid Knight Operations Limited.

 

Full scope audit procedures were performed by PwC Malta on all the components. This, together with the additional procedures performed on the consolidation at the Group level, were sufficient to allow us to conclude on our opinion on the Group financial statements as a whole.

 

 

Other information

 

The directors are responsible for the other information. The other information comprises the Directors’ report, the Statement of compliance with the Principles of Good Corporate Governance and the Remuneration Report and Statement (but does not include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the Chairman’s Message, the Chief Executive Officer’s Review of Operations, and the Five Year Record, which is expected to be made available to us after that date.

 

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements. 

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

 

When we read the Chairman’s Message, the Chief Executive Officer’s Review of Operations, and the Five Year Record, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance in accordance with International Standards on Auditing.

 

 

Responsibilities of the directors and those charged with governance for the financial statements

 

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

 

 

Auditor’s responsibilities for the audit of the financial statements

 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

 

●    Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

●   Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control.

●     Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

●     Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Parent Company’s  ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s or the Parent company’s ability to continue as a going concern. In particular, it is difficult to evaluate all of the potential implications that COVID-19 will have on the Group’s and the Parent company’s trade, customers and suppliers, and the disruption to their business and the overall economy.

●      Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

●      Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

Report on other legal and regulatory requirements

Report on compliance with the requirements of the European Single Electronic Format Regulatory Technical Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6

 

We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued by the Accountancy Board in terms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession (European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the Annual Financial Report of MIDI p.l.c. for the year ended 31 December 2021, entirely prepared in a single electronic reporting format.

 

Responsibilities of the directors

 

The directors are responsible for the preparation of the Annual Financial Report, including the consolidated financial statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in accordance with the requirements of the ESEF RTS.

 

Our responsibilities

 

Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the consolidated financial statements and the relevant electronic tagging therein, complies in all material respects with the ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with the requirements of ESEF Directive 6.

 

Our procedures included:

 

●    Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report, in accordance with the requirements of the ESEF RTS.

●    Obtaining the Annual Financial Report and performing validations to determine whether the Annual Financial Report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS.

●      Examining the information in the Annual Financial Report to determine whether all the required taggings therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS.

 

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Opinion

 

In our opinion, the Annual Report for the year ended 31 December 2021 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.

 

 

Other reporting requirements

 

The Annual Report and Consolidated Financial Statements 2021 contains other areas required by legislation or regulation on which we are required to report.  The Directors are responsible for these other areas.

 

The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.

 

Area of the Annual Report and Consolidated Financial Statements 2021 and the related Directors’ responsibilities

Our responsibilities

Our reporting

Directors’ report

The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act.

We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.    

 

We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.

 

In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements.

 

In our opinion:

●       the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

●       the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).

 

We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.

 

Statement of Compliance with the Principles of Good Corporate Governance

The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules.  The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97.  The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.

 

We are required to report on the Statement of Compliance by expressing an opinion as to whether,   in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.

 

We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.

 

We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance cover all risks and controls, or form an opinion on the effectiveness of the Company’s corporate governance procedures or its risk and control procedures.

In our opinion, the Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.

 

We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.

Remuneration report and Statement

The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules.

We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included.

In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.

 

Other matters on which we are required to report by exception

We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion:

●       adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us.

●       the financial statements are not in agreement with the accounting records and returns.

●       we have not received all the information and explanations  which, to the best of our knowledge and belief, we require for our audit.

 

We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary.

We have nothing to report to you in respect of these responsibilities.

 

Other matter – use of this report

 

Our report, including the opinions, has been prepared for and only for the Parent Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.

 

 

Appointment

 

We were first appointed as auditors of the Company for the financial year ended 31 December 1998.  Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 24 years. The parent company became listed on a regulated market on 23 January 2009.  

 

 

 

PricewaterhouseCoopers

78, Mill Street

Zone 5, Central Business District

Qormi

Malta

 

 

 

Fabio Axisa

Partner

 

26 April 2022