Maltacom's last accounts as a parastatal

The Exchange, like the weather, went through an overcast week. Long gaps in trading punctuated all the sessions with activity taking place in sporadic bursts. Equity turnover by value for this full trading week was the year's record low at Lm393,342. This is a full 22% drop on the previous weekly low of Lm502,196 for the week starting July 3.

Prices see-sawed unconvincingly with most equities ending the week flat or in negative territory. The two exceptions were Simonds Farsons Cisk plc (SFC) and Lombard Bank plc (LOM). The former was finally out of the doldrums and the week's star performer, up 5.7% to 74c from its year's low of 70c. LOM finally traded after a full two weeks' inactivity, recouping 16c to end the week up 3.5% at Lm4.68. The MSE index at 5120.61 was down 0.675% on the week.

Bank of Valletta plc (BOV) was stable at Lm3.65 throughout all of Monday's soulless session when only 3,924 shares changed hands for a value of Lm14,323. By mid-session on Tuesday, BOV had advanced to Lm3.67 but a sale order for 1,031 shares one minute from the close pulled the price back to Lm3.65. All of Wednesday's trade took place with only eight minutes of trading time left, and one sale order for 6,962 shares cleaned up all existing buy orders between Lm3.70 to Lm3.651, to again leave BOV practically unchanged at the close. Thursday's trade was a monotonous ping-pong at Lm3.65 and Lm3.651, with most of Friday's trade carried out at Lm3.65, unchanged from the previous weekend. At the close of trade best bids totalled 1,500 shares at Lm3.628, while supply for 1,400 shares started at Lm3.65

HSBC Bank Malta plc (HSB) traded consistently at Lm2.149 during all of Monday and for the opening of Tuesday's session, staging an imperceptible gain to Lm2.15 for the rest of that day. On Wednesday HSB opened at Lm2.15, then saw the one mil gain reversed at the very end of trade. It suffered a knock on Thursday as the equity had 1.4% shaved off its price, falling from a Lm2.149 open to a Lm2.12 close; it continued south on Friday, slipping to a low of Lm2.10, recovering a cent in the final minutes of trade to close at Lm2.11, 1.8% down on the week. At the end of trading the best bid was 246 shares at Lm2.10, while the best offer for 4,150 shares stood at Lm2.12.

Maltacom plc (MLC) started the week on a stable footing at Lm1.781, dipping to Lm1.78 but rising 2c to Lm1.80. Tuesday's first deal was struck nearly 90 minutes after the opening bell at Lm1.82; the price then climbed to Lm1.85 for the rest of the session. After another slow start on Wednesday, the first two deals were effected at Lm1.86 and Lm1.87. However, supply of 10,000 shares 10 minutes before the close dragged the price back to Lm1.82, slipping another cent to Lm1.81 on Thursday. Friday saw the slide continue as MLC traded at successively lower prices from a Lm1.80 open to a Lm1.76 close. This closing price marks a new low for 2006. At the end of the session, the best bids were for 176 shares at Lm1.70 and the best offers started at 900 shares at Lm1.80.

Ninety minutes after the close of trade on Friday, we received MLC's results for the six-month period ending June 30. The company recorded a profit before tax of Lm6.3 million - 18% less when compared to the Lm7.7 million over the same period last year. Earnings per share also declined an identical 18% from 5c to 4c1. The board approved the payment of an ordinary interim dividend of 1c5 per share net of tax (2005 net interim dividend: 2c per share). This will be paid on October 27 to shareholders on the register next Friday.

While revenue declined a negligible Lm128,000 (0.5%) Lm26.6 million, the cost of sales increased by 8.34% to just over Lm14 million. The annualised return on average shareholders' funds is down to 13.9% from 18.2% on the same period last year. The percentage return on the average total assets employed also declined from 13.4% to 10.9%. Net operating costs increased by 6.8% to Lm20.5 million, Lm1.3 million higher than the comparative six months to June 2005. The net operating costs are mainly made up of interconnection charges with other operators, labour charges and depreciation.

It is worth noting that these accounts reflect a transitional period during which the sale of Government's majority shareholding must have generated uncertainty and likely management inertia. The Tecom takeover effect should filter through in the second half of the year.

Malta International Airport plc (MIA) only traded on Tuesday and Friday. On Tuesday, it advanced from a Lm1.33 open to Lm1.35 mid-session. Lack of buyers at this price, however, saw an unsold balance of a tiny lot of 47 shares take the price down to Lm1.335. On Friday, it bounced back to Lm1.35 in the day's only two deals which were effected at the opening bell. At the close of trading best bids for 3,080 shares started at Lm1.335, while offers for 2,000 shares started at Lm1.35.

In small cap stocks: SFC was the week's best performer, up 5.7% on the week, albeit on turnover of only 2,091 shares. It first traded on Tuesday, progressing 4c to 74c and maintained this price when it traded again on Thursday.

LOM was the second best performer gaining 3.5% on the week with only one trade on Thursday for 2,101 shares at Lm4.68. Middlesea Insurance plc (MSI) was marginally ahead on a mere 487 shares trading at Lm2.495 and Lm2.494. It closed at the latter price for a 0.6% rise on the week. On Wednesday, MSI announced that the board will meet next Friday to approve the half-yearly results to June 30.

International Hotel Investments (IHI) was out of favour in the early part of the week, dropping €0.01 to €0.94. It recouped its loss during Friday's comparatively busy session to end the week unchanged. A company announcement released on Tuesday confirmed that as per the AGM's proposal to raise new equity, 2,500,000 IHI shares of €1 each will be issued and allotted to HSBC No-Load Funds SICAV plc.

GlobalCapital plc (GCL) was the week's wooden spooner, down 9c or 4.3% to Lm2.01, with all the week's dealings taking place at this price. On Monday GCL published its interim financial statements for the six months ended June 30, which were approved by the board on September 8. A gross interim dividend of 2c per share has been declared. This will be paid on September 29 to shareholders on the register last Friday. GCL registered a profit before tax of Lm1.07 million - an increase of 59.3% over the same six months last year. Operating profits increased by 51% to Lm658,316 with gains on investment property registering the largest proportion of the gain from Lm30,000 to Lm772,740. Earnings per share increased 40% from 4c to 5c6.

Fimbank plc closed 0.5% lower at US$1.839. The week's volume was a slim 3,800 shares. Datatrak plc ended the week flat at 26c on a turnover of a miniscule 760 shares.

The Government bond market was significantly busier this week with 68 deals for a turnover by value of Lm2,262,344. Friday was the busiest session with a nominal turnover of Lm931,100. In the corporate bond market, turnover by value reached Lm43,313 spread over 20 deals.

Financial Planning Services Limited is licensed by the MFSA to provide investment services, including stockbroking. The company is involved in acting as sponsoring stockbroker and corporate stockbroker. The directors or related parties, including the company, and their clients, are likely to have an interest in securities mentioned.

Financial Planning Services Ltd., tel: 2134-4244, fax 2134-1202, e-mail matthew@bonellofinancial.com, elaine@bonellofinancial.com