Malita Investments Plc

Earnings Release • Aug 21, 2020

COMPANY ANNOUNCEMENT

MALITA INVESTMENTS P.L.C (THE "COMPANY")

Board Meeting held for the approval of the Interim Financial Statements

Date of Announcement	21 August 2020
Reference	82/2020
In Terms of Chapter 5 of the Listing Rules

The following is a Company Announcement issued by the Company pursuant to the Listing Rules of the Malta Financial Services Authority

QUOTE

During the meeting of the Board of Directors of Malita Investments p.l.c. held on Friday 21 August 2020, the Company's condensed interim financial statements for the six months ended 30 June 2020 were approved.

The interim financial statements are attached herewith and are also available for viewing at the Company's registered office or electronically on http://www.malitainvestments.com/financialstatements/financial-statements-2020

The Directors of the Company have also approved the payment of a gross interim dividend €1,955,026 or €0.0132 per share equating to an interim net dividend of €1,270,767 or €0.0086 per share. The interim dividend will be paid on 23 September 2020 to the Shareholders on the Company's share register at close of business at the Malta Stock Exchange on 4 September 2020.

UNQUOTE

By Order of the Board

Signed

Donald Vella Company Secretary

MALITA INVESTMENTS P.L.C.

Condensed Interim Financial Statements (unaudited) 30 June 2020

	Pages
Interim Directors' report	1 - 3
Report on review of interim financial information	র্ব
Condensed statement of financial position	5 - 6
Condensed statement of comprehensive income	7
Condensed statement of changes in equity	8
Condensed statement of cash flows	9
Notes to the condensed interim financial statements	10 - 29

Interim Directors' report

The Directors present their report together with the condensed interim financial statements for the period ended 30 June 2020.

Principal activities

The Company's principal activities include the financing, acquisition, development, management and operation of immovable property, in particular, projects of national and/or strategic importance, and the investment in local stocks and shares.

Review of the business

The Company received lease income in respect of the Open Air Theatre and Parliament Building in City Gate, Valletta. Lease payments from Open Air Theatre and Parliament Building have both contractually increased by the index of inflation.

The Company registered a loss for the period from January to June 2020 of €20,841,623 (June 2019: profil €27,826,486). The operating profit excluding any fair value movements for the period amounts to €3,781,754 (June 2019: €3,909,300).

As further explained in Note 4, the negative movement in fair value of the MIA and VCP properties as well as the Parliament Building and Open Air Theatre amounts to €18,024,000 and €7,173,135 respectively. This negative fair value movement came about due to the upward movement of interest rates. This has been transferred to a non-distributable fair value reserve (net of deferred tax). The Company has always registered positive fair value movements due to the continuous downward movement of interest rates in prior years. It was expected that when interest rates start increasing, as happened in the current period, the Company will register negative fair value movements which will partly offset the positive fair value movements that were registered so far.

The Company was not impacted due to the Covid-19 pandemic except for some delay in receiving the payment of ground rents in respect of properties on which Malita owns the dominium directum. The Company is taking the necessary measures to collect the amounts due.

In 2017 the Company entered into two credit facility agreements for a 25-year term amounting to €53,700,000 with the European Investment Bank and the Council of Europe Development Bank for the purpose of financing the construction of a number of affordable housing units in Malta. Furthermore, the Company had also entered into an emphyteutical deed with the Housing Authority to acquire sixteen property sites in a number of locations across Malta for the purpose of developing affordable housing units in Malta. Lastly in 2018, the Company entered into sixteen (16) availability agreements with Government whereby the Company will make available sixteen (16) property sites consisting of around 768 units in a number of locations across Malta for a period of 25 years once complete.

The Affordable Housing project is progressing well, and the Covid-19 pandemic impact has been minimal until now as there were no restrictions imposed on the construction activity. Excavation of all the property sites is substantially complete. In 2020 the Company issued further invitations to tender for the construction, mechanical and electrical works, finishes and lifts of these units. Construction works have been awarded for fourteen sites, mechanical and electrical works have been awarded for ten sites and finishing works have been awarded for four sites. Invitations to tender will continue to be issued in respect of the construction, mechanical and electrical works, finishes and lifts of the remaining sites. The capitalised cost to date on this development amounts to €13,358,050 and is reflected in these financial statements.

Interim Directors' report - continued

Review of the business - continued

The Company had a project which as at 31 December 2019 was being classified under Other assets. During the current period, the Board of Directors have decided to reverse this capitalisation given the lack of progress that was registered on this project. Nonetheless, the Board of Directors are constantly analysing and assessing other possible investment opportunities.

Result and dividends

The condensed statement of comprehensive income is set out on page 7. On 21 August 2020, the Directors declared the payment of an interim gross dividend of €1,955,026 or €0.0132 per share (June 2019: €1,955,026 or €0.0132 per share) equating to an interim net dividend of €1,270,767 or €0.0086 per share (June 2019: €1,270,767 or €0.0086 per share) payable on 23 September 2020.

Directors

The Directors of the Company who held office during the period were: Kenneth Farrugia Ray Sladden Paul Mercieca Robert Suban Eric Schembri

The Company's Articles of Association require Directors to retire after three years in office, but they are eligible for re-appointment.

Statement of Directors' responsibilities for 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 Company as at the end of each reporting period and of the profit or loss for that period.

In preparing the financial statements, the Directors are responsible for the following matters:

• 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 Company will continue in business as a going concern.

The Directors are also responsible for designing, implementing internal controls as the The Birocers are are not researcy to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error, and that comply with the Maltese Companies Act material misstations in the safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements of Malita Investments p.l.c. for the period ended 30 June 2020 are included in the Condensed Interim Financial Statements – 30 June 2020, which is published in printed form and will be o onlable on the Company's website. The Directors are responsible for the maintenance and integrity rf the Company's 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.

Interim Directors' report - continued

On behalf of the board

Kenneth Farrugia Chairman

Paul Mercieca Director

Registered office: Clock Tower Level 1 Tigne` Point Sliema Malta

21 August 2020

1

Report on review of interim financial information

To the Directors of Malita Investments p.l.c.

Introduction

We have reviewed the accompanying condensed interim statement of financial position of Malita Investments p.l.c. as of 30 June 2020 and the related condensed statements of comprehensive income, changes in equity and cash flows for the six-month period then ended and notes, comprising a summary of significant accounting policies and other explanatory notes. The Directors are responsible for the preparation and presentation of this condensed interim financial information in accordance with International Accounting Standard 34 'Interim Financial Reporting'. Our responsibility is to express a conclusion on this condensed interim financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of interim financial information performed by the independent auditor of the entity'. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in acooming matters) and appyl in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34 'Interim Financial Reporting'.

PricewaterhouseCoopers

78 Mill Street Oormi Malta Steve Mamo Partner

21 August 2020

	Notes	As at 30 June 2020 ਵ	As at 31 December 2019 €
ASSETS		(unaudited)	(audited)
Non-current assets
Property, plant and equipment		22,197	18,933
Investment property	4	198,188,493	223,385,628
Contract asset	රි	13,358,050	9,818,225
		211,568,740	233,222,786
Current assets
Trade and other receivables		378,265	253,913
Cash and cash equivalents		3,270,936	717,826
Other assets			184,413
		3,649,201	1,156,152
Total assets		215,217,941	234,378,938
EQUITY AND LIABILITIES Capital and reserves
Share capital	7	73,295,143	73,295,143
Retained earnings	రి	7,608,444	8,177,094
Non-distributable reserve - fair value movements	9	51,324,668	74,549,282
Non-distributable reserve - other	10	3,166,227	2,959,028
Total equity		135,394,482	158,980,547
Non-current liabilities
Borrowings	11	37,104,676	38,143,573
Lease liability	5	3,208,300	3.197.559
Provision on restoration	5	4,992,002	4,891,177
Deferred tax liabilities	16	15,436,724	17,409,245
		60,741,702	63,641,554
Current liabilities
Borrowings	11 5	10,063,583 168,131	8,030,150 110,250
Lease liability Capital creditor for acquisition of property	12	1,972,774	1,678,173
Trade and other payables		6,262,779	1,559,402
Current tax liabilities		614,490	378,862
		19,081,757	11,756,837
Total liabilities		79,823,459	75,398,391
Total equity and liabilities		215,217,941	234,378,938

Condensed statement of financial position

Condensed statement of financial position - continued

The notes on pages 10 to 29 are an integral part of these condensed interim financial statements.

The condensed interim financial statements on pages 5 to 29 were authorised for issue by the board on 21 August 2020 and were signed on its behalf by:

Kenneth Farrygia

Chairman

Paul Mercieca Director

Condensed statement of comprehensive income

		Period from 1 January to 30 June 2020	Period from 1 January to 30 June 2019
	Notes	€	€
		(unaudited)	(unaudited)
Revenue	13	4,106,633	3,947,959
Revenue from service concession arrangements	ട	3,253,786	7,059,803
Costs related to service concession arrangements	6	(3,159,015)	(6,854,178)
Administrative expenses		(419,650)	(244,284)
Operating profit		3,781,754	3,909,300
Change in fair value of investment property	ব	(25,197,135)	27,449,000
Finance income		216,243	233,547
Finance costs		(842,301)	(838,746)
(Loss)/Profit before tax		(22,041,439)	30,753,101
Tax credit/(expense)	15	1,199,816	(2,926,615)
(Loss)/Profit for the period - total comprehensive
(loss)/income		(20,841,623)	27,826,486
(Loss)/Earnings per share in cents	17	(14.07)	18.79

The notes on pages 10 to 29 are an integral part of these condensed interim financial statements.

Condensed Statement of Changes in equity			Non-distributable reserves
		Share capital	Retained earnings	Fair value movements	Other	Total
	Notes	€	€	€	€	€
Balance at 1 January 2019 Change in accounting policy due to the		73,295,143	6,817,895	45,784,355	2,510,545	128,407,938
application of IFRS 16		ﮯ	(2,483,551)			(2,483,551)
Comprehensive income
Profit for the period			27,826,486			27,826,486
Transactions with owners
Transfer within owners' equity	9		(22,769,124)	22,769,124
Transfer within owners' equity	10		(230,459)		230,459
Dividends to equity shareholders	18		(2,098,691)		-	(2,098,691)
Balance at 30 June 2019 (unaudited)		73,295,143	7,062,556	68,553,479	2,741,004	151,652,182
		73,295,143	7,062,556	68,553,479	2,741,004	151,652,182
Balance at 1 July 2019
Change in accounting policy due to the application of IFRS 16			(717,587)			(717,587)
Comprehensive income
Profit for the period			9,316,719			9,316,719
Transactions with owners
Transfer within owners' equity	9	-	(5,995,803)	5,995,803
Transfer within owners' equity	10		(218,024)		218,024
Dividends to equity shareholders			(1,270,767)			(1,270,767)
Balance as at 31 December 2019 (audited)		73,295,143	8,177,094	74,549,282	2,959,028	158,980,547
Balance at 1 January 2020		73,295,143	8,177,094		74,549,282 2,959,028	158,980,547
Comprehensive income
Loss for the period			(20,841,623)			(20,841,623)
Transactions with owners
Transfer within owners' equity	9		23,224,614	(23,224,614)
Transfer within owners' equity	10		(207,199)		207,199
Dividends to equity shareholders	18		(2,744,442)			(2,744,442)
Balance at 30 June 2020 (unaudited)		73,295,143	7,608,444	51,324,668	3,166,227	135,394,482

densed statement of changes in equity

(unaudited)
The notes on pages 10 to 29 are an integral part of these condensed interim financial statements.

		Period from 1 January to	Period from 1 January to
		30 June	30 June
		2020	2019
	Notes	ਵ	€
		(unaudited)	(unaudited)
Cash flows from operating activities
Cash generated from operations Interest received	19	6,272,035 25	4,166,496
Interest paid and similar charges		(32,207)	(910)
Income taxes paid		(537,082)	(510,097)
Payments on lease liability		(1,514)
Net cash generated from operating activities		5,701,257	3,655,489
Cash flows from investing activities
Purchase for property, plant and equipment		(7,169)	(3,311)
Payments to acquire investment property		(2,815,258)	(1,595,160)
Net cash used in investing activities		(2,822,427)	(1,598,471)
Cash flows from financing activities
Repayment of borrowings		(1,006,751)	(975,466)
Interest paid on borrowings		(774,006)	(692,704)
Dividends paid to equity holders	18	(544,963)	(2,098,691)
Proceeds from borrowings		2,000,000
Net cash used in financing activities		(325,720)	(3,766,861)
Net movement in cash and cash equivalents		2,553,110	(1,709,843)
Cash and cash equivalents at beginning of period		717,826	(884.198)
Cash and cash equivalents at end of period		3,270,936	(2,594,041)

Condensed statement of cash flows

The notes on pages 10 to 29 are an integral part of these condensed interim financial statements.

Notes to the condensed interim financial statements

1. Summary of significant accounting policies

The Board has adopted the following principal accounting policies which it believes cover most of the type of activities it will undertake in the foreseeable future. Accordingly, not all the accounting policies set out below would necessarily apply as at the date of this report.

1.1 Basis of preparation

These condensed interim financial statements for the six months ended 30 June 2020 have been prepared in accordance with IAS 34, 'Interim financial reporting'. They have been prepared under the historical cost convention as modified by fair valuation of investment property.

The condensed interim financial statements should be read in conjunction with the annual financial r in condonou interim manedal cibenember 2019, which have been prepared in accordance with IFRS.

The condensed interim financial statements have been reviewed, not audited.

The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain accounting estimates. It also requires Directors to exercise their judgement in the accounting the Company's accounting policies (see note 2 – Critical accounting estimates and judgements).

The financial statements have been prepared on a going concern basis that assumes that the The financial exational existence for the foreseeable future. This basis of preparation has been made after considering the effects which the Covid-19 outbreak is having on the Company. nus been made atter other of experiencing instances where receiving the payment of ground At this been delayed and this delay is not expected to result in default. Management has also rent has been doldyou and this action is no action in the value of pact on the value of properties on assessed and oonlined that each ectum. Given that the investment properties are being accounted while with the domin the adminitiates embedded in the model, the effect of market driven movements for at all value with aloount rated of the properties. The Directors are confident that is being relieved in the routers as a going concern and that liabilities will continue to be honoured as and when they fall due.

The statement of financial position reflects a net current liability position of €15,432,556. Current I lie statement of manolar position renesables of €1,972,774 in relation to the Affordable Housing hiamiles as at of ourie are nicial stages of obtaining the required drawdowns. Moreover, project for miller in the mile to seenditure from own funds during the period under the oompany paid and the Company's liquidity from the capital expenditure on the Affordable review. In order to anovate the ochipany financing locally of €2,000,000. As riousing project, the "Ochpany "Satures the Company has entered into two credit facility agreements amounting to €53,700,000 in order to finance this project, however no disbursements have been announting to eso, roo, oo many and eventually be drawn down from this bank loan and the Company's position will improve.

Standards, interpretations and amendments to published standards effective in 2020

The Company adopted new standards, amendments and interpretations to existing standards that The Oumpany adoptour now claimance, arounting period beginning on ↑ January 2020. The adoption of are manufact for the requirements of IFRSs as adopted by the EU did not result in substantial changes to the Company's accounting policies.

1.1 Basis of preparation - continued

Standards, interpretations and amendments to published standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published by the date of authorisation for issue of these financial statements but are mandatory for the Company's accounting periods beginning after 1 January 2020. The Company has not early adopted these revisions to the requirements of IFRSs as adopted by the EU.

1.2 Investment property

Investment property is held for long-term rental yields or for capital appreciation or both, and is not occupied by the Company. Investment property also includes property that is being constructed or developed for future use as investment property, when such identification is made.

Investment property is measured initially at its historical cost, including related transaction costs and borrowing costs. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Borrowing costs which are incurred for the purpose of acquiring or constructing a qualifying investment property are capitalised as part of its cost, in accordance with Note 1.12. After initial recognition, investment property is carried at fair value. Given that there is no active market for the investment property held by the Company establishes fair value by using valuation techniques, particularly discounted cash flow analysis.

Investment property that is being redeveloped for continuing use as investment property continues to be measured at fair value measurement on property under construction is only applied if the fair value is considered to be reliably measurable. The fair value of investment property reflects. among other things, rental income from current leases and assumptions about rental income from future leases in the light of current market conditions. The fair value also reflects, on a similar basis, any cash outflows that could be expected in respect of the property.

Subsequent expenditure is capitalised to the asset's carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are charged to profit or loss during the financial period in which they are incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

Changes in fair values are recognised in the income statement properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

1.3 Contract asset

The Company is recognising a contract asset in its statement of financial position to account for the Affordable housing project during its construction period. The carrying amount of the contract asset is equal to the total costs incurred on this project, profit on the completed construction and financing revenue

1.

1.4 Financial assets

1 4.1 Classification

The classification of financial assets depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The acquired: manageinen as a manage of receivables. Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Company provides money, goods or services directly to a debtor with no intention of trading the asset. Ochhouny pro hassets, except for maturities greater than twelve months after the end of the reporting period. The latter are classified as non-current assets. The Company's receivables comprise trade and other receivables and cash and cash equivalents in the statement of financial oomphoo trade and cash equivalents includes cash in hand, deposits held with banks with original maturities of six months or less.

1.4.2 Recognition and measurement

The Company recognises a financial asset in its statement of financial position when it becomes a rine oompany 1900g value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows value plac transaction occess have been transferred and the Company has transferred from the imandial kees and rewards of ownership or has not retained control of the asset.

IFRS 9, 'Financial Instruments' relates to the recognition, classification and measurement of financial il To v, I manolal metrantent of financial instruments, impairment of financial assets assets and individual labilities, accounting of IFRS 9 did not result in changes in accounting policies or adjustments to the amounts recognised in the financial statements.

1.5 Service Concession Arrangements

Under the terms of IFRIC 12, 'Service Concession Arrangements', a concession operator has a twofold activity:

• a construction activity in respect of its obligations to design, build and finance a new asset that it a conotion activity in verple is recognized over time in accordance with IFRS 15;
• delivere to the gramon Prespect of concession assets: revenue is recognised in accordance with IFRS 15.

In return for its activities as operator, the Company will receive remuneration from the grantor and therefore IFRIC 12's financial asset model applies. Under this model, the operator has an therefore in NO first to receive payments from the concession grantor, irrespective of the amount of use made of the infrastructure.

The operator recognises a financial asset, attracting interest, in its Statement of financial position, in consideration for the services it provides (design, construction, etc.). Such financial assets are Consideration Tor the Statement of financial position as a contract asset, in an amount corresponding to The fair value of the infrastructure on first recognition and subsequently at amornsed cost. The the fall value of the infrastration on mot recogerator's right to retain all rental payments to be receivable will in oubstances letion, such payments will be received partly from users enceced by doers apon completed on the basis of the basis of the effective interest method is recognised under finance income in the Statement of comprehensive income.

1.5 Service Concession Arrangements - continued

The part of the investment that is covered by an unconditional contractual right to receive payments from the grantor (in the form of rental) is recognised as a contract asset up to the amount guaranteed.

1.6 Trade and other receivables

Trade receivables comprise amounts due from customers for ground rents and lease of property. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. In the opinion of the Directors, the recorded book value in the company's books of trade and other receivables and their value measured at amortised cost using the effective interest method, less provision for impairment are not materially different.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement. When a receivable is uncollectible, it is written off against the allowance account for trade and other receivables. Subsequent recoveries of amounts previously written off are credited against profit or loss.

1.7 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at face value. In the statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and when applicable bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

1.8 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares are shown in equity as a deduction, net of tax, from the proceeds.

1.9 Trade and other payables

Trade payables comprise obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.10 Current and deferred tax

The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is also recognised in other comprehensive income or in equity.

1.10 Current and deferred tax - continued

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, tax baooo of accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither transaction 'other than ' a bachese' ochinined using tax rates (and laws) that have acounting, nortalism in the end of the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right title are also tax assets against current tax liabilities and when the deferred tax assets and liablities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

1.11 Revenue recognition

Revenue comprises the fair value for ground rents receivable as per contracts entered into, leases of the Parliament Building on the initial and additional investment and the lease of the into, loads of the Panancer, the Company is recognising revenue in relation to the Service concession arrangement (Note 6) as performance obligations are satisfied.

The Company recognises revenue when the amount of reliably reliably heasured, it is he The Oompany Tooghlood To one for each of the Company's activities as described below.

(a) Interest income

Interest income is recognised for all interest-bearing instruments using the effective interest method. merest moone is recognious for all interest between of a financial asset and of allocating the interest income over the relevant period.

(b) Rental income from investment property

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease.

1.12 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production Ocherard openits betwenning sects that necessarily take a substantial period of time to get ready of qualifying aboute, which are added to the cost of those assets, until such time as the assets are for their intended as or sale, are added to r sale. All other borrowing costs are expensed. Borrowing the effective Substantially for their intonation about of since in an accrual basis using the effective costs are recognious for an interset beather of amortising any difference between initial net proceeds and redemption value in respect of interest-bearing borrowings.

1.13 Dividend distributions

Dividend distributions to the Company's shareholders are recognised as a liability in the Company's financial statements in the period in which the dividends are approved by the Company's Directors.

2. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Valuation of investment properties

The Company's investment property comprises the MIA and VCP properties as well as the Parliament Building and Open Air Theatre. The fair value of the Company's investment property has been determined based on projected future cash flows, appropriately discounted by a risk adjusted discount rate. As explained in Note 4 - Investment Property, the valuation was determined using discounted cash flow projections considering, inter alia, the projected future cash flows to be generated from the transfer of the dominium directum in respect of the MIA and VCP properties, the Parliament Building and Open Air Theatre, ongoing maintenance needs, and other relevant market factors.

A key variable used in the determination of the fair value of the Investment Property is the discount rate. The discount rate used for fair valuing the Investment Property is primarily based on the yield to maturity on the longest term available Malta Government Stock (MGS), plus a risk premium. Due to the continuous low interest rate environment in the prior years, the fair value of the investment properties was increasing at each period, and fair value gains were being recognised as a result. When interest rates start increasing, as happened in the current period, the discount rate increases. fair value of the investment properties decreases, and fair value losses may result (see Note 4). Movements resulting from the said revaluation process are treated as non-distributable fair value movements (see Note 9).

The Audit Committee and the Board have been holding continuous discussions around the estimates and judgements applied to the fair value mechanism and related inputs mainly due to the unprecedented and unexpected low level of interest rates feeding into the fair value model. The Board continues to be confident that the mechanism is the most appropriate method to derive fair valuation of the respective investment properties in the Statement of Financial Position. As explained in note 4, the Board had elected to consider a conditional premium to counter the volatility in interest rates that is having a significant impact on the fair value movements.

(b) Service concession arrangements

The analysis on whether the IFRIC 12, Service Concession Arrangements, applies to certain contracts and activities involves various complex factors and it is significantly affected by legal interpretation of certain contractual agreements or other terms and conditions with public sector entities.

2. Critical accounting estimates and judgements - continued

(b) Service concession arrangements - continued

The application of IFRIC 12 requires extensive judgment in relation with, amongst other factors, (i) The application of IT NO TZ requires oxtoner of Januaries in the scope of IFRIC 12, 12, 12, 12, 12, 12, 12, 12, 12, 12, the loentification of centain infrastration (and more of the classification of the revonus (ii) the understanding of the hature of the payments in the recognition of the revenue from construction and concessionary activity.

Changes in one or more of the factors described above may significantly affect the conclusions as to Changes in one of the lactire documbula above may bighter of operations or our financial position (Note 6).

Segment reporting నా

The Directors have reviewed the disclosure requirements of IFRS 8, 'Operating Segments' and The Directors have reviewed the disolosure requirement, taking cognisance of the determined that the 'Gempany' offectively of assessing performance.

4. Investment property

	ਵ	30 June 2020 31 December 2019 E
MIA and VCP properties Parliament Building and Open Air Theatre	86.097.000 112.091.493	104.121.000 119,264,628
Carrying amount	198,188,493	223,385,628

i. MIA and VCP

ਵ	30 June 2020 31 December 2019 を
104.121.000 (18,024,000)	80.447.000 23,674,000
86,097,000	104,121,000

4. Investment property - continued

ii. Parliament Building and Open Air Theatre

	30 June 2020 ਵ	31 December 2019 €
At 1 January Adjustment upon adoption of IFRS 16	119,264,628	103.451.507 4,820,047
Amortisation of borrowing costs Fair value movement	119,264,628 (7,173,135)	108,271,554 3.374 10,989,700
Carrying amount	112,091,493	119.264.628

Fair values of investment property

The movement in the fair value of investment property comprises the movement in the fair value of the dominium directum of the MIA and VCP properties, as well as the Parliament Building and Open Air Theatre.

The fair value of investment property is calculated with reference to the cash flows receivable by the Company in terms of its contractual agreements, discounted to present value as at 30 June 2020.

Accordingly, the fair value of the investment property is subject to variation owing to, amongst other things, movements in market interest rates, expected inflation rates and changes in the contractual cash flows owing to the passage of time.

The Company is required to disclose fair value measurements of the following fair value measurement hierarchy for non-financial assets carried at fair value by level:

• Quoted prices (unadjusted) in active markets for identical assets (level 1).
• Inputs other than quoted prices included within level 1 that are observable for the asset either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
• Inputs for the asset that are not based on observable market data for similar properties (that is, unobservable inputs) (level 3).

The Company's recurring fair value measurements are categorised as level 3 as they are based on significant unobservable inputs.

Valuation process

MIA and VCP a)

The valuation of the MIA and VCP properties is based on the present value of ground rents up to the expiry of the temporary emphyteutical grants and the estimated freehold value thereafter discounted to present value. The fair value of investment property is calculated with reference to the cash flows receivable by the Company in terms of its contractual agreements, discounted to present value as at 30 June 2020. The discount rate is based on the vield to maturity on the longest term available MGS (Malta Government Stock) in issue as at year end plus a premium reflecting the risk inherent in the underlying cash flows. Given the unexpected and unprecedented low interest rate environment in the prior years, an additional risk premium was factored in the discount rate as explained further below.

4. Investment property - continued

Valuation process - continued

a) MIA and VCP - continued

For the period ended 30 June 2020 the MGS benchmark referred to above increased and as a result r er the pensa enare a 19,024,000 (June 2019 fair value gain: €19,598,000) has been recognised in these financial statements. The YTM on the longest term available MGS has been continuously decreasing but due to its increase in the current period, the Company is recognising a fair value loss.

In accordance with the fair value measurement hierarchy explained above, the significant unobservable inputs applied in the valuation of the Company's assets are the following:

• Ground rent, as contractually agreed which for the coming year is estimated at €2.0 million (June 2019: €2.0 million);
• Growth rate, as contractually agreed at an average of 2.53% p.a. (June 2019: 2.50% p.a.) represents the estimated average growth of the Company's rentals;
• Discount rate of 4.75% (June 2019: 4.16%) based on:
  • the risk-free rate of return being the YTM on the longest term available MGS at period end 1.68% (June 2019: 1.34%);
  • how promise and location of property, competition, country risks and resource risks 2.32% (June 2019: 2.32%); and
  • noke 2.02% (June 2019: 0.50%). When the YTM reverts to 2.00% or higher, conditional promium would decrease to 0.50%. Although the YTM increased for the period the conditional promises in thence the conditional premium was retained at 0.75%.

If the discount rate used in the discounted future cash flows for the MIA and VCP properties had been n the disount rate dood in the fair value of the fair value of the MA and VCP properties would 0.50 % highonowor, all other things being 2019: €13.9 million (June 2019: €17.0 million) respectively.

b) Parliament Building and Open Air Theatre

The valuation of the Parliament Building and Open Air Theatre is based on the present value of the The Valuation of the Traniance Ballang and 'Open Fair and Ciscounted to present value. The ground rems up to the oxpiry of the temporated with reference to the cash flows receivable by the fair value of investment property lo calements over the period to 2077, discounted to present value Oompany in terms of the discount rate is based on the yield to maturity on the longest term available as at 50 June 2020. The disocant fats is battler with reflecting the risk interest rete environment Malla Overnment Given the unexpected and unprecedented low interest rate environment, the underlying cash nowe. On on the discount rate as explined further below. On 1 an additional nok promised on FRS 16 Leases and recognised a Right-use asset (see Note 5). The fair value of this asset is being included with the Investment property. Hence, the fair value of 3). The fair value of this access is a more of Building and Open Air Theatre includes the fair value of the Right-of-use asset for such properties.

For the period ended 30 June 2020 the MGS benchmark referred to above increased and as a results r of the pend Chaca of e7,173,135 (2019: €7,851,000) has been recognised in these financial statements.
a fair value loss of €7,173,135 (2019: €7,851,000) has been recognised a lall value loss of Cr , Fro, 100 (2016) the Right-of-use asset. The YTM on the preset This fair Value 1055 inolades the valities and the reasing but due to its decrease in the current period, the Company is recognising a fair value loss.

4. Investment property - continued

Valuation process - continued

b) Parliament Building and Open Air Theatre - continued

In accordance with the fair value measurement hierarchy explained above the significant unobservable inputs applied in the valuation of the Company's assets are the following:

• Rents, as contractually agreed which for the coming year is estimated at €6.26 million (2019: €6.0 million);
• Growth rate, at an average of 2.80% (June 2019: 2.80%), represents the estimated average growth of the Company's rentals;
• Discount rate of 6.25% (June 2019: 5.66%) based on:
  • o the risk-free rate of return being the YTM on the longest term available MGS at year end 1.68% (June 2019: 1.34%);
  • o risk premium taking into account factors such as, property illiquidity, management limitations, type, size and location of propetition, country risk, counter-party risks and resource risks 3.82% (June 2019: 3.82%); and
  • the conditional premium would decrease to 0.50%. Although the YTM increased for the period ended June 2020, it is still below 2.00% and hence the conditional premium was retained at 0.75%.

If the discount rate used in the discounted future cash flows for the Parliament Building and Open Air Theatre properties had been 0.50% higher/lower, all other things being equal, the fair value of the Parliament Building and Open Air Theatre properties would decrease/increase by €8.0 million (June 2019: €8.7 million) and €9.2 million (June 2019: €10.1 million) respectively.

5. Right-of-use asset, Lease liability and Provision on restoration

The Company adopted IFRS 16 Leases from 1 January 2019 using a modified retrospective approach, under which the Company had restated comparatives for the 2018 reporting period, as permitted under the specific transition provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules were therefore recognised in the opening Statement of financial position on 1 January 2019 within the statement of changes in equity.

On adoption of IFRS 16, the Company recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. Disclosures included in the financial statements for the year ended 31 December 2018 indicate an estimated right-of-use asset of €107,907,980 and a lease liability of €4,456,473. In 2019 the Company had recomputed the model required for adoption of IFRS 16, using a more appropriate Incremental borrowing rate as opposed to the Internal rate of return. The transitional adjustment impacting lease liabilities had therefore been measured at the present value of the remaining lease payments, discounted using the Company's incremental borrowing rate as of 1 January 2019. This resulted in a right-of-use asset as at 1 January 2019 amounting to €111,472,692, a lease liability amounting to €8,021,185 and a net investment in the lease amounting to €103,451,507.

5. Right-of-use asset, Lease liability and Provision on restoration - continued

In deriving the Incremental borrowing rate as at the application date two separate approaches were m defining the first approach included the establishment of a reference rate which was based on the adopted. The first approach more the secusioned with the weighted bease term. The weighted yead-to-maturity on make Overnment terms, years remaining to the lease term, cash flows term was defired by ocholdering the payment. A financing spread was then of fease payments and an imation for as a por and leads to an Incremental borrowing rate of 4.4%.
added to the reference rate. This build-up approach leads to and hy real, es The second approach was based on the yield-to-maturity on bonds issued by real estate focused The Second approach was based on the your in the year the bonds term and lease local companies as at the upplied.or actor intentional borrowing rate of 4.2%. Finally, an average of the two approaches was taken at 4.3%.

The Company recognised the right-of-use asset and the lease liability at the date of initial application. The Company recognised the light of acount of are that date. The right-of-use assets Therefore, the neasurement principles of il No 10 is in its amount of any prepaid of was measured at the amount of easilities and provision on restoration costs amounting to 6,021,185 accrued lease payments. Leade liablished ant pf financial position as at 1 January 2019. The outflows were separately recogniou in the classmon of the value of the Company's investment property.

The Company fair values the investment property associated with the right-of-use asset. Hence, as a The Company fair values the invosmolity of experience in the value of the right-of-use asset at 1 January 2016 the Gompany retained earnings in the statement of changes at cost and at fair value as an adjustment to opening retained earnings in the statement of changes in equity. At 30 June 2015 the adjustment to opening really aconsequently recognised
in equity amounted to €2,483,551. Moreover, the amount of €717,587 was consequently recog in equity amounted to C2,400,001: Morover, the tinfounce asset from 1 January 2019 to 30 June in 2019 to renover the recognised in the Statement of comprehensive income.

a) Measurement of lease liabilities

	30 June 2020	31 December 2019
	117	ਵ
Undiscounted operating lease liability commitments as at 31 December 2018 Impact of discounting using the lessee's incremental borrowing rate at the date of initial application		10.687.016
		(7,355,358)
Lease liability recognised as at 1 January	3.307.809	3.331.658
Interest on lease liability for the period Ground rents payable for the period	70.136	139,709
	(1,514)	(163,558)
Lease liability carrying amount	3.376.431	3,307,809

5. Right-of-use asset, Lease liability and Provision on restoration - continued

a) Measurement of lease liabilities - continued

	30 June 2020	31 December 2019
	€	€
Of which are:
Current lease liabilities Non-current lease liabilities	168,131 3,208,300	110,250 3.197.559
Carrying amount	3,376,431	3,307,809
	30 June 2020	31 December 2019
	€	ਵ
Maturity analysis - contractual undiscounted cash flows
Less than one year	170,885	113,006
One to five years	474.624	471,732
More than five years	9,876,132	9,936,903
Total undiscounted lease liabilities	10,521,641	10,521,641
	30 June 2020	30 June 2019
	€	€
Amounts recognised in profit or loss from 1 January
Interest on lease liabilities	70,136	69,126
Interest on provision on restoration	100,825	100,825
	170,961	169.951

b) Measurement of right-of-use assets

The associated right-of-use assets for property leases were measured at 1 January 2019 at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position as at 31 December 2018. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application. The recognised right-of-use assets relate to investment properties and are being measured at fair value in line with the underlying investment properties.

5. Right-of-use asset, Lease liability and Provision on restoration - continued

b) Measurement of right-of-use assets - continued

		30 June 2020 31 December 2019
	ਵ	ട്
Balance as at 1 January Fair value (loss)/gain	5.762.745 (541,135)	4.820.047 942.698
Carrying amount	5,221,610	5,762,745

6. Contract asset and Service concession arrangements

On 29 December 2017, Malita entered into a contractual arrangement with the Hosing Authority "Housing" to make available sixteen residential blocks, totalling around six hundred and eighty-four Tribusing to make a railable of carages that will be used for affordable housing purposes.
units, a number of car spaces and lock-up garages that will areas as managed units, a number of our opdood and look ap garage of any and in the last few weeks of 2018 and to date construction works are underway. The construction and in the last lew weeks of 2018 and to date thereafter the operating phase will finishing phase to bkpoted to be sears once the construction and finishing phase is complete.

In line with the agreed terms, the Company has entitlement to cash flows from rental of the respective in ine with the agreed torms, the company and will be paid by agreed and will be paid by the tenant, unlis, car spaces and fook up garagoer Ratos and sing. The Company's total cashflows will equate to the contractually agreed rates.

Upon termination of the emphyteutical grant, the Company is required to hand-over responsibility and Opon termination of the emplytedatour gran, the sixteen construction sites to Housing. During the term of the ownership of all assets relating to the elikes relating to residential units, car spaces and lock-up agreement, Malita 13 Chittled to Sam live reading to cash-flows is making is making galages even if these are vacant - the only containent was not however dispose, or change the use of, the properties during the period of the concession.

Pursuant to IFRIC 12, when the operator has an unconditional right to receive cash or other financial annilies Pursualit to if NO TZ, when the operator has an ession services, the financial asset model apples. lassels from the grantor in romaneration for contracts cannot be recorded in assets of the In this context, the infrastructure managed ander throos conceduas financial assets. During the construction phase, the financial asset is recorded as a contract asset.

During the construction phase, a financial receivable is recognised in the Statement of Financial During the construction phase, a misticant. The stage of completion of works was tetermined Postion and revente in the moonly statentify the reporting period relative to the total estimated cost (cost-to-cost method).

Income amounting to €3,253,786 from the construction activity was recognized during the period Income announting to C5,200, Torn the comulatively recognized in the Statement of Financial ended 50 June 2020 and C13,000,000 la canalation of system one, no cash flows were Position as a contract asset: "Onloo the operation problem process (159,015 have been recognised in received to date. Gosts in relation to other and cost from the construction project during the income of the substance, project management fees.

6. Contract asset and Service concession arrangements - continued

Financial receivables are initially measured at the lower of fair value and the sum of discounted future cash flows and subsequently recognized at amortized cost using the effective interest method. The implied interest rate on the financial receivable is based on the implicit in the discounted cash flow model encompassing related terms and conditions within the Housing contract.

The following table sets out the movement in the contract asset:

	30 June 2020	31 December 2019
	ਵ	を
Balance as at 1 January	9,818,225	5.566.308
Additions, including finance income	3.539.825	4.251.917
Carrying amount at end of reporting period	13,358,050	9,818,225

7. Share capital

	30 June 2020	31 December 2019
	€	€
Authorised
150,000,000 Ordinary A shares of €0.50 each	75,000,000	75,000,000
50,000,000 Ordinary B shares of €0.50 each	25,000,000	25,000,000
	100,000,000	100,000,000
Issued and fully paid
118,108,064 Ordinary A shares of €0.50 each	59,054,032	59,054,032
30,000,000 Ordinary B shares of €0.50 each	15,000,000	15,000,000
	74,054,032	74.054.032
Issue costs	(758,889)	(758,889)
	73,295,143	73,295.143

Retained earnings 8.

The retained earnings include non-distributable earnings as a result of the Revenue from service r is recamed cannings ments recognised on the Affordable Housing project as per IFRS 15. These earnings will become distributable once the Company starts earning lease income.

	ਵ	30 June 2020 31 December 2019 ಲ್ಲು
Distributable Non- distributable	6,605,183 1,003,261	7.484.838 692.256
	7,608,444	8,177,094

Non-distributable reserve - fair value movements 9.

The reserve represents the cumulative fair value gains, net of applicable deferred tax libilities on the The reserve ropresents in earning These fair value movements are intitly recognised in the Company 3 investment propertion - 11:00 Tax - Friday - 11:50
statement of comprehensive income and because of their nature, were subsequently transferred to a non-distributable reserve.

10. Non-distributable reserve - other

As per article 82 of the Company's Articles of Association, the Directors have set aside €207,199 As per anticle of the equals 10% of the net profit for the period excluding fair value (June 2015. C230,400) which oquale 1990.
movements net of deferred tax of the Company and allocated them to of the husiness of the movements her or defenred tax of the occipany in the furtherance of the business of the Company as the Directors may from time to time think fit.

Borrowings 11.

On 1 October 2012, the Company withdrew a €40,000,000 loan facility with the European Investment On 1 October 2012, the Ochpany mintion of the Parliament Building and the Open Air This This Ballk in part Satisfaction of the acquilition of the Paris nears of interest.
facility is split up into €25,000,000 for 20 years and €15,000,000 for 25 years and The facility is Spit up into E20,000,000 is inclusive of a three-year capital moratorium period. The first capital repayment of the long-term loan was paid in January 2016.

On 28 September 2016, the Company secured a €7,000,000 revolving loan facility in to he filly ropoid On 20 September 2016, the Sompany of the Parliament Building. The facility is to be fully repaid valletta in Satisfaction of the mprovements of interest. The first capital and interest repayments within 15 years from first arantal materials is pledged against the additional rent receivable by the Company for the use of the Parliament Building.

On 28 November 2018, the Company obtained a €1,000,000 short term funding facility from Bank of Off 26 November 2010, the Oompany obtainou a 84,000, in respect of the Affordable Housing project.

On 22 October 2019, the Company obtained additional short term funding of €5,000,000 from Bank On 22 October 20 the continued construction of the Affordable Housing project.

11. Borrowings - continued

On 21 May 2020, the Company obtained an additional short term loan of €2,000,000 from Bank of Valletta to enable the continued construction of the Affordable Housing project since EIB and CEB funds were not disbursed yet.

The total of €8,000,000 total short term funding facilities will be repaid in full within the coming year when the drawdowns from two credit facility agreements with the European Investment Bank and the Council of Europe Development Bank take place. These will be classified as non-current borrowings.

	30 June 2020 31 December 2019
	€	೯
Borrowings
Non-current	37.104.676	38,143,573
Current	10,063,583	8,030,150
	47,168,259	46,173,723

12. Capital creditor for the acquisition of property

The outstanding balance of €1,972,774 is related to the Affordable Housing project and is due within the coming year. Hence, it is classified as a current liability.

	ਵ	30 June 2020 31 December 2019 E
Capital creditor for acquisition of property	1,972,774	1.678.173

13. Revenue

Revenue comprises the consideration payable by MIA and VCP by way of an annual ground rent in respect of the temporary emphyteusis granted. The Company also receives lease income in relation to the Open Air Theatre. Also included in the revenue figure is lease income for the Parliament Building which commenced on February 2019 as the Parliament Building's certificate of completion was issued in January 2019. Prior to the certificate of completion being issued the Company received a penalty payable by Government pursuant to a public deed entered into with the Company which stipulated that, in the event of a delay in completion, the Government was liable to pay the Company a daily penalty broadly in line with the rental income due, had the project been completed on time.

On 20 April 2017, a lease agreement was entered into between the Government of Malta and the Company to reflect an additional investment in the Parliament Building and as from 1 June 2017 additional rent is payable semi-annually to the Company.

Lease payments from Open Air Theatre and Parliament Building have both contractually increased by the index of inflation in the current period.

14. Directors' emoluments

	Period from 1 January to 30 June 2020 €	Period from 1 January to 30 June 2019 ਵ
Kenneth Farrugia (Chairman) Paul Mercieca (Director) Ray Sladden (Director) Robert Suban (Director) Eric Schembri (Director)	12.500 7.500 5,000 7,500 5.000 37.500	12,500 7.500 5.000 7.500 5.000 37.500

15. Tax credit/expense

The tax credit/expense for the period is made up as follows:

	Period from 1 January to 30 June 2020 ਵ	Period from 1 January to 30 June 2019 ਵ
Current tax expense Deferred tax (credit)/expense (note 16)	772.705 (1,972,521)	730.290 2.196.325
Tax (credit)/expense	(1,199,816)	2,926,615

The tax on the Company's loss/profit before tax differs from the theoretical amount that would arise using the basic tax rate as follows:

	Period from 1 January to 30 June 2020 ਵ	Period from 1 January to 30 June 2019 (11)
(Loss)/Profit before tax	(22,041,439)	30,753,101
Tax (credit)/expense on (loss)/profit at 35%	(7,714,503)	10,763,585
Tax effect of: Income subject to 15% final withholding tax Income deductible for tax purposes Expenses not deductible for tax purposes Tax rules applicable to investment property Maintenance allowance	(195,157) (108,852) 376,918 6,657,079 (215,301)	(187,726) (153,710) 121,105 (7,410,825) (205,814)
Tax (credit)/expense in the accounts	(1,199,816)	2,926,615

Deferred tax 16

Deferred tax is provided for using the liability method for temporary differences arising on movements in the fair value of immovable investment property of MIA and VCP and the Parliament Building and Open Air Theatre. The calculation of the deferred tax provision for the period ended 30 June 2020 is calculated on the taxation rules on capital gains upon a transfer of immovable property implemented through Act XIII of 2015, with effect from 1 January 2015, the rate of capital gains tax applicable is a final withholding tax of 8% on the value of the property.

The deferred tax balance as at 30 June 2020 represents:

		30 June 2020 31 December 2019
	ਵ	ﻟﻠﻠ
Temporary differences on:
Fair value movements	15,436,724	17,409,245

The movement for the period comprising the recognition of the above deferred tax liability has been credited to the statement of comprehensive income.

17. Earnings per share

Earnings per share is calculated by dividing the profit attributable to owners of the Company by the total number of ordinary shares in issue during the period.

	Period from 1 January to 30 June 2020	Period from 1 January to 30 June 2019
(Loss)/Profit for the period (€) Total average number of ordinary shares in issue	(20,841,623) 148,108,064	27,826,486 148,108,064
(Loss)/Earnings per share in cents	(14.07)	18.79

As explained in the Review of the Business, the Company registered a loss for the period ended 30 June 2020 solely due to the negative fair value movement of €25,197,135 which emanates from the valuation of the Company's investment properties. If this fair value movement is excluded together with its tax implication, the results would show a profit of €2,382,991 equating to earnings per share of €16.09 cents.

18. Dividends

	2019 Final Dividend ਵ	2018 Final dividend ਵ
Dividends paid on ordinary shares Gross Tax at source	3,228,756 (484,314)	3,228,756 (1,130,065)
	2,744,442	2,098,691
Dividends per share in cents	1.85	1.42

On 21 August 2020, the Board of Directors declare an interim gross dividend in respect of the period Off 21, August 2020 of €1,955,026 or €0.0132 per share equating to an interim et dividend of ended on can e care e and e . The financial statements do not reflect this dividend.

19. Cash generated from operations

Reconciliation of operating profit to cash generated from operations:

	Period from 1 January to 30 June 2020 €	Period from 1 January to 30 June 2019 €
Operating profit	3,781,754	3.909.300
Adjustments for: Net contract asset revenue Depreciation of property, plant and equipment Amortisation on restoration provision	(94,770) 3.906	(205,625) 2,713 40.139
Changes in working capital: Trade and other receivables Trade and other payables	60.044 2,521,101	445.385 (25,416)
Cash generated from operations	6.272.035	4.166.496

20. Related party transactions

The only major shareholder of the Gompany is the Government of Malta through its 79.75% (2019: 79.75%) shareholding. The remaining 20.25% (2019: 20.25%) of the shares are held by the public.

Other related entities are the following, since they are all Government owned and managed:

• Malta Investment Management Company Limited
• Projects Plus Limited -
• Housing Authority -
• Social Projects Management Limited ı

All because they are Government owned and managed.

The following transactions have been carried out with the above related parties during the period.

	Period from 1 January to 30 June 2020 ਵ	Period from 1 January to 30 June 2019 ਵ
Government of Malta
Payment of City Gate ground rent to Government Receipt of Parliament lease income from Government Receipt of Open Air Theatre lease income from Government	(55,125) 3,804,683 1,675,166	(55,125) 1,843,333 790.993
Receipt of Parliament Building additional rent from Government	843,643	375,000
Malta Investment Management Company Limited Office Lease payable to Malta Investment Management Company Limited	(4,425)	(4,425)
Projects Plus Limited Payments to Projects Plus Limited for professional services		(186,778)
Housing Authority Payments to Housing Authority for ground rent	(69,802)	(69,802)
Social Projects Management Limited Payments to SPM Limited for project management services	(410,407)	(957,878)

21. Statutory information

Malita Investments p.l.c. is a public limited liability Company and is incorporated in Malta.