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 the Parent Company financial statements (the “financial statements”) of MIDI p.l.c. give a true and fair view of the Group and the Parent Company’s financial position as at 31 December 2025, and of their 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 2025;
· 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, comprising material accounting policy information 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 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 audits of financial statements of an EU Public Interest Entity in Malta and the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) as applicable to audits of financial statements of public interest entities. We have also 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 2025 to 31 December 2025 are disclosed in Note 23 to the financial statements.
Emphasis of Matter
We draw attention to Note 1.1.1 to the financial statements which describes the Directors’ assessment of the impacts of the developments that occurred during the year ended 31 December 2025 and until the date of this audit report.
This matter is considered to be of fundamental importance to the understanding of the financial statements due to its nature and significance. Our opinion is not modified in respect of this matter.
Our audit approach
Overview
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As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the 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 financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the 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.
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Overall group materiality |
€500,000 |
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How we determined it |
Approximately 1% of consolidated net assets |
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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 the users, and is a generally accepted benchmark. We chose 1% 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 €50,000 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.
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Key audit matter |
How our audit addressed the key audit matter |
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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. As publicly disclosed by the Group, during June and September of 2025, the Government of Malta and the Transport Authority filed two Judicial Letters against the Group alleging breach of the Emphyteutical Concession. In order to counter the financial pressures created by the threatened rescission, the Group commenced a process to seek to dispose of other assets in order to generate funds to meet its liabilities. The Group hence sounded the market in connection with the potential sale of a number of investment properties. As explained further and in detail below - under the section ‘Inventory valuation relating to the Group and the Parent Company’, Fort Tigné, which is reflected within the Group’s Investment Property portfolio, will revert to Government upon entering into the deed of partial rescission. The arrangement includes reimbursement which in the case of Fort Tigné approximates the respective carrying amount.
In view of the developments referred to, the carrying amount of the Group’s investment property which was earmarked for disposal and/or rescission as at 31 December 2025, was adjusted to reflect the offers received or amounts reflected within promise of sale agreements for those properties that the Group had placed on the market. The main asset of Mid Knight Holdings Limited, the Group's jointly controlled entity, comprises an office block and business centre 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 the year, the Board of Mid Knight Holdings Limited commissioned an independent property valuation based on an assessment of open market value performed by a professional valuer, which confirmed that the carrying amount of the property was not significantly different from the estimated fair value. This process has considered current and projected economic scenarios and also developments at property tenant level. With respect to other components of the Group’s investment property which have not been designated as held for sale, management updated the internally developed valuation models which are based on discounted cash flows, for the purpose of ascertaining whether the carrying amounts are significantly different from estimated fair values. Management considers developments at tenant and specific property level, and also the estimated impacts of the prevailing economic conditions. An adjustment to the carrying amount of a component of property, which the Group intends to retain, was deemed necessary as at end of the reporting period. We focused on this area because of the developments which occurred during the year, 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 including the projected rental income streams and the discount rates applied. The current macro-economic conditions and geopolitical uncertainties have given rise to a certain degree of estimation uncertainty with respect to key assumptions underlying the valuation of investment property. Relevant references in the Annual report and Consolidated Financial Statements: · Summary of material accounting policies: Notes 1.1.1, 1.1.2 and 1.6 · Investment property: Note 7 · Investment in joint venture: Note 9
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We have reviewed the promise of sale agreements entered into by the Group and the offers received for the properties placed on the market with a view to immediate sale, on the basis of which the carrying amounts of the specific investment properties as at 31 December 2025 were adjusted, and corresponding fair value changes were recognised within profit or loss. In respect of the property components which were not placed on the market with a view to immediate sale, 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 and adjust the carrying amounts of specific Group investment properties. We reviewed the independent valuation report in respect of investment property owned by Mid Knight Holdings Limited, the joint venture, which has been commissioned during the current year. 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 review the valuation report for the office block and business centre 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, and to critique and challenge the principal assumptions used therein. The principal assumptions within the external valuation report and internal valuation models include the projected cashflows and the discount rate applied. Third party evidence and other data was obtained to corroborate the assumptions. We tested the mathematical accuracy of the calculations. We have also assessed the developments at tenant level and in the plans specific to the respective investment property component, and the impact which these have on the carrying amount of the assets as at the end of the reporting period. Our valuation experts have considered the prevailing macro-economic and market conditions giving rise to a certain degree of economic uncertainty. We discussed the external valuation report and the outcome of management's assessments with the Audit Committee. After considering management’s adjustments to the carrying amounts of investment property arising from the promise of sale agreements entered into and the offers received, together with management’s refreshed internal valuation models and the independent valuation report, we concluded, based on our audit work, that there were no significant differences between the adjusted carrying amounts and estimated fair values as at 31 December 2025. The outcomes of the internal and external assessments were within a reasonable range of values. |
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Inventory valuation relating to the Group and the Parent Company The carrying amount of inventory at Group and Parent Company level includes the land, development and borrowing costs attributable to Manoel Island. In view of the developments which occurred during the current financial year, subsequent to the approval of Parliament on 24 March 2026 and of the MIDI p.l.c.’s shareholders through the Extraordinary General Meeting on 28 April 2026, Manoel Island will revert to Government upon rescission of the emphyteutical grant on signing of the Settlement Deed. The Group’s inventory also includes a number of other areas within the Tigné Point project which, are either held for sale or under development as at 31 December 2025. The Group has disclosed that in June 2025, Government withdrew its support for the Manoel Island project and publicly declared its intention to convert the island into a national park. The Board concluded that a development of this scale and complexity would not succeed without the active support of Government. Prior to change in the stance of Government, the total carrying amount of Manoel Island, net of the amount payable to the Government of Malta, and including the effects of the related right-of-use assets and corresponding lease liabilities, amounted to €70.1 million. The reimbursement offered by Government in respect of Manoel Island is lower than the carrying amount referred to above and amounted to €42.7m. Consequently, the difference between the carrying amount of the inventories subject to rescission and reversion to Government, and the reimbursement amount, equivalent to €27.4m, has been reflected as a loss in the Group’s profit or loss, to adjust the carrying amount of inventories to realisable values. A standstill agreement between the Government and the Group has been entered into on 19 March 2026, which suspends all time periods set out in the notice of rescission included in the Judicial Letters and prevents either party from taking further legal action hence enabling both parties to enter into the final settlement deed which will give effect to the irrevocable transfer of both Manoel Island and Fort Tigne to Government and the settlement of the reimbursement amount of €42.7m due to the Group. For the project phases, other than Manoel Island, 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. Taking cognisance of the developments referred to on projected market conditions, management’s assessments indicate that no other impairment indicators have been registered as at 31 December 2025 in respect of other inventory elements. We focused on this area due to the developments that occurred during 2025 and the significance of the carrying value of inventories recognised in the Group’s and Parent Company’s statements of financial position, particularly those relating to costs attributable to the Manoel Island project. Relevant references in the Annual report and Consolidated Financial Statements: · Summary of material accounting policies: Notes 1.1.1, 1.1.2 and 1.10 · Inventories – Development project: Note 11 |
We understood and evaluated the assessments 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.
In relation to the developments connected to Manoel Island project, we have taken cognisance of the announced agreement between the Government and the Group, in respect of the partial rescission of the emphyteutical grant, the reversion of Manoel Island and Fort Tigne back to the Government and the receipt by the Group of the reimbursement amount of €42.7m from Government.
We have reviewed evidence available to substantiate correspondence reflecting the final offer of €42.7m made to the Group by the Government on 13 March 2026, the standstill agreement entered into between both parties on 19 March 2026, the approvals of Parliament and MIDI p.l.c.’s shareholders through Extraordinary General Meeting of the partial rescission of the emphyteutical grant and settlement deed on 24 March 2026 and 28 April 2026 respectively, and the correspondence confirming that both parties will appear to enter into the final settlement deed.
With respect to phases of property held within inventory, other than Manoel Island, our procedures included a review 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 effects of the recent developments on the carrying amount of the assets.
We have discussed with management and the Audit Committee the principal events, circumstances and assumptions underlying the adjustments accounted for within inventories. Based on the adjustments to the carrying amount of inventories reflected within the 2025 financial statements and evidence we have obtained throughout our procedures including the consideration of management’s assessments, nothing leads us to believe that any further impairment indicators exist in respect of the Group’s inventory elements as at 31 December 2025, other than those identified and already reflected by management. We concluded, based on our audit procedures, that the outcome of the assessments in respect of carrying amounts of inventories as at 31 December 2025 is not unreasonable and that the disclosures in the financial statements are appropriate. |
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: Tigne Contracting Limited, T14 Investments Limited and Manoel Island Investments Limited. It also holds an investment in a joint venture, Mid Knight Holdings Limited.
Full scope audit procedures were performed by PwC Malta on all significant components. This, together with the additional procedures performed on the consolidation at the Group level, was 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 CEO’s Review of Operations, and the Five Year Record, which are 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 Chairman’s Message, the CEO’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, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.
· 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.
· Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes 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 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 2025, 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 Financial Report for the year ended 31 December 2025 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 2025 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.
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Area of the Annual Report and Consolidated Financial Statements 2025 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
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Directors’ report |
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.
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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. |
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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. |
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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 on 31 December 1998. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 28 years. The Company became listed on a regulated market on 23 January 2009.
Michael Formosa
Principal
For and on behalf of
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
29 April 2026