Financial analysis
FIMBank posts 10.7% rise in half-year profitsRights issue to shareholders planned by end of yearOn August 24, FIMBank plc published its financial statements for the six months ended June 30, 2007. Similar to last year, no interim dividend was...
FIMBank posts 10.7% rise in half-year profits
Rights issue to shareholders planned by end of year
On August 24, FIMBank plc published its financial statements for the six months ended June 30, 2007. Similar to last year, no interim dividend was declared.
During the first half of this year the FIMBank Group generated total operating income of $12.7 million, an increase of 15.1 per cent over the first six months of 2006. Net interest income grew by 22.3 per cent to $5 million with non-interest income amounting to $7.7 million (+10.9 per cent). Net fee and commission income increased by 24.2 per cent to $6.1 million on improvement performances at the bank and its fully-owned subsidiary London Forfaiting Company. Net trading income was identical to last year at $1.4 million whereas in the first half of 2006 the group benefited from a one-time dividend income of $0.5 million from the sale of its equity in Eastern Prospect BV.
Non-interest expenses, comprising administrative expenses and depreciation, climbed 23 per cent to $9.3 million. The directors attribute the bulk of this increase to start up costs of new joint-venture associates, recruitment of further staff and increases in performance-based compensation. The share of profits from the factoring associate companies (38.5 per cent shareholding in Global Trade Finance Ltd in India and 40 per cent equity of the recent start-up EgyptFactors) amounted to $1.4 million, representing a 25 per cent growth from the contribution within the first half of 2006. The directors noted in the half-year review that the share of profits from Global Trade Finance in India of $1.6 million (+46 per cent) was partly offset by the share of expenses in the first few months of operation at EgyptFactors.
The group's cost-to-income ratio after taking into account the share of profits from the factoring associate companies at 66.4 per cent compares negatively to the improvements registered in 2006 of 61.5 per cent.
On the other hand, net impairment losses during the first half of 2007 decreased to $0.4 million from $1 million in the comparative period last year. The impairment provisions taken during the period under review mainly relate to an increase in collective impairment allowances. On the other hand, in the first half of 2006, the group had taken a specific impairment charge on an impaired forfaiting asset within LFC's portfolio. Meanwhile, in the first six months of the year LFC recognised a further deferred tax asset amounting to $0.5 million (June 2006: $0.1 million) which helped reduce the carrying amount of goodwill at LFC to $0.65 million from $1.1 million in December 2006. Once the goodwill is depleted, the group would begin to start benefiting from the unutilised tax credits at LFC, which are expected to positively impact the income statement in future reporting periods.
Group pre-tax profits during the first half of the year amounted to $3.8 million, 10.5 per cent higher than the profitability in the same period of 2006. After accounting for taxation of $0.3 million, the profit for the period amounted to $3.5 million (June 2006: $3.1 million).
Group total assets as at June 30, 2007 amounted to $473.7 million. Since the start of the year, loans and advances to banks and customers decreased while financial assets at fair value through profit or loss relating to LFC's forfaiting portfolio increased to $200 million. On the liabilities side, deposits from both banks and customers increased during the first six months of the year with LFC continuing to develop its own funding resources through the issue of promissory notes. Shareholders' funds increased by 4 per cent since the start of the year to $65.2 million resulting in a net asset value per share of $0.76. Commitments outstanding for the group as at June 30, 2007, mainly in the form of documentary credits and confirmed letters of credit, amounted to $176 million.
The group's pre-tax return on equity (profit before tax divided by average shareholders' funds) decreased from 12.8 per cent in June 2006 to 12.4 per cent. Likewise group return on assets (pre-tax profit divided by average assets) of 1.4 per cent compares to 1.7 per cent in June 2006.
The directors reported that a major challenge of the FIMBank Group during the second half of 2007 "is to enlarge its equity base with a view to support its international expansion plans as well as to strengthen its risk-based solvency, particularly in view of Basle II considerations". In this respect the directors noted the group's continued efforts to secure the interest of reputable and strategic institutional investors after it had declined the offer made by Burgan Bank of Kuwait in April 2007 to acquire a majority equity stake. Moreover, the directors stated that, as previously announced, FIMBank will be undertaking a rights issue to shareholders by the end of this year.
In line with FIMBank Group's strategy of establishing a network of global joint-venture factoring companies, the board of directors confirmed in the half-year report that together with the National Bank of Dubai, a joint-venture factoring company in Dubai (MENAFACTORS) was established on May 10, 2007 in the Dubai International Financial Centre and is currently awaiting authorisation by the Dubai Financial Services Authority. After the interim balance sheet date on June 30, 2007 FIMBank injected its first $5 million in this new joint-venture. Moreover, the directors announced that it approved an investment of up to $8 million in a new factoring joint-venture company in the Maghreb region (Tunisia, Algeria and Morocco). Also, it was recently reported that FIMBank signed a Memorandum of Understanding with Bladex (Banco Latinoamericano de Exportaciones SA) to establish another joint venture company which would offer full factoring services to institutions in Latin America. Bladex is a supranational bank originally established by the Central Banks of Latin American and Caribbean countries to promote trade finance in the region.
Profits at GlobalCapital decline sharply
Investment property revaluations keep group in the black
GlobalCapital plc published its financial statements for the six months ended June 30, 2007 following a board of directors' meeting held on August 24. No interim dividend was declared by the directors whereas in the first half of 2006 the group distributed a gross dividend of 2c per share.
During the first six months of 2007 GlobalCapital's income from commission and fees receivable mainly arising from investment and advisory services, and agency and brokerage services remained unchanged at Lm1.04 million. While revenue from investment and advisory services dropped by 15 per cent to Lm0.6 million, income from agency and brokerage services increased by 12.8 per cent to Lm0.3 million. The balance on the insurance technical account before tax showed a loss of Lm0.4 million despite a strong growth in premium income from Lm1.7 million to Lm3.4 million. On the other hand, gains on investment property more than doubled from Lm0.8 million in the first half of 2006 to Lm1.7 million during the period under review. This fair value gain was determined on the basis of a professional valuation carried out by a leading independent residential and commercial property consultancy firm.
Administrative expenses incurred by the group in the first half of this year increased by 18.6 per cent to Lm1.1 million with commissions payable and direct marketing costs remaining unchanged at Lm0.3 million. After accounting for goodwill impairment of Lm0.1 million, the group's operating profit during the first half of the year increased by 21.9 per cent to Lm0.8 million. However, while in the first six months of 2006 the group received net investment income of Lm0.4 million, during the period under review GlobalCapital incurred a net investment expense of Lm0.7 million.
The directors reported that during the first half of the year, the group incurred significant fair value losses on investments attributable to negative market conditions, mainly due to the sharp decline in Malta Government Stock prices and also as a result of the 14 per cent drop in the share price of Lombard Bank Malta, in which the GlobalCapital has a sizeable shareholding.
The net investment expense forced the group's pre-tax profits to drop to only Lm0.1 million in the first half of the year, significantly lower than the Lm1.1 million generated in the same period of 2006. GlobalCapital provided for a tax credit of Lm0.2 million while in the comparative period a tax charge of Lm0.3 million was recognised. This tax credit helped the group's profit for the period increase to Lm0.4 million. Despite this, profits after tax declined by 47 per cent in the first half of 2007 with earnings per share of 2c9 compared to 5c6 in June 2006.
Total assets as at June 30, 2007 amounted to Lm43.8 million, an increase of 5.7 per cent since the start of the year mainly as a result of an increase in the value of investment property as well as other financial investments. Shareholders' funds dropped 1 per cent to Lm12.6 million resulting in a net asset value per share of Lm0.95.
The group's post-tax return on equity (profit after tax divided by average shareholders' funds) decreased from 13.5 per cent in June 2006 to 6.5 per cent. Similarly, group return on assets (pre-tax profit divided by average assets) dropped to 1.9 per cent in June 2007 from 4.6 per cent a year earlier.
The GlobalCapital Group operates across three main areas of activity: investment and advisory services; insurance and brokerage; and property services. The first two categories are inherently linked to the performance of financial markets, mainly the local equity and bond market.
The unfavourable performance of the local bond market led to a situation in which these two areas of activity incurred operating losses for the group during the first half of the year. The group's positive bottom line, although sharply lower than the comparative period last year, is therefore solely attributable to the revaluation of a number of properties held by the group for investment purposes.
The second half of 2007 is also likely to be very challenging for the group with the directors warning that the recent international stock market volatility and global economic uncertainty may continue to affect the group's trading and investment performance. However, the directors stated in the half-yearly report that they expect trading activity to be sustained during the second half of the year.
• Rizzo, Farrugia & Co. (Stockbrokers) Ltd. are members of the Malta Stock Exchange and licensed to conduct investment services business by the Malta Financial Services Authority. This report contains public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily indicative of future results. Neither Rizzo, Farrugia & Co., nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this report.
© 2007 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.
• Mr Rizzo is a director at Rizzo, Farrugia & Co (Stockbrokers) Ltd.
http://www.rfstockbrokers.com
Rights issue to shareholders planned by end of year
On August 24, FIMBank plc published its financial statements for the six months ended June 30, 2007. Similar to last year, no interim dividend was declared.
During the first half of this year the FIMBank Group generated total operating income of $12.7 million, an increase of 15.1 per cent over the first six months of 2006. Net interest income grew by 22.3 per cent to $5 million with non-interest income amounting to $7.7 million (+10.9 per cent). Net fee and commission income increased by 24.2 per cent to $6.1 million on improvement performances at the bank and its fully-owned subsidiary London Forfaiting Company. Net trading income was identical to last year at $1.4 million whereas in the first half of 2006 the group benefited from a one-time dividend income of $0.5 million from the sale of its equity in Eastern Prospect BV.
Non-interest expenses, comprising administrative expenses and depreciation, climbed 23 per cent to $9.3 million. The directors attribute the bulk of this increase to start up costs of new joint-venture associates, recruitment of further staff and increases in performance-based compensation. The share of profits from the factoring associate companies (38.5 per cent shareholding in Global Trade Finance Ltd in India and 40 per cent equity of the recent start-up EgyptFactors) amounted to $1.4 million, representing a 25 per cent growth from the contribution within the first half of 2006. The directors noted in the half-year review that the share of profits from Global Trade Finance in India of $1.6 million (+46 per cent) was partly offset by the share of expenses in the first few months of operation at EgyptFactors.
The group's cost-to-income ratio after taking into account the share of profits from the factoring associate companies at 66.4 per cent compares negatively to the improvements registered in 2006 of 61.5 per cent.
On the other hand, net impairment losses during the first half of 2007 decreased to $0.4 million from $1 million in the comparative period last year. The impairment provisions taken during the period under review mainly relate to an increase in collective impairment allowances. On the other hand, in the first half of 2006, the group had taken a specific impairment charge on an impaired forfaiting asset within LFC's portfolio. Meanwhile, in the first six months of the year LFC recognised a further deferred tax asset amounting to $0.5 million (June 2006: $0.1 million) which helped reduce the carrying amount of goodwill at LFC to $0.65 million from $1.1 million in December 2006. Once the goodwill is depleted, the group would begin to start benefiting from the unutilised tax credits at LFC, which are expected to positively impact the income statement in future reporting periods.
Group pre-tax profits during the first half of the year amounted to $3.8 million, 10.5 per cent higher than the profitability in the same period of 2006. After accounting for taxation of $0.3 million, the profit for the period amounted to $3.5 million (June 2006: $3.1 million).
Group total assets as at June 30, 2007 amounted to $473.7 million. Since the start of the year, loans and advances to banks and customers decreased while financial assets at fair value through profit or loss relating to LFC's forfaiting portfolio increased to $200 million. On the liabilities side, deposits from both banks and customers increased during the first six months of the year with LFC continuing to develop its own funding resources through the issue of promissory notes. Shareholders' funds increased by 4 per cent since the start of the year to $65.2 million resulting in a net asset value per share of $0.76. Commitments outstanding for the group as at June 30, 2007, mainly in the form of documentary credits and confirmed letters of credit, amounted to $176 million.
The group's pre-tax return on equity (profit before tax divided by average shareholders' funds) decreased from 12.8 per cent in June 2006 to 12.4 per cent. Likewise group return on assets (pre-tax profit divided by average assets) of 1.4 per cent compares to 1.7 per cent in June 2006.
The directors reported that a major challenge of the FIMBank Group during the second half of 2007 "is to enlarge its equity base with a view to support its international expansion plans as well as to strengthen its risk-based solvency, particularly in view of Basle II considerations". In this respect the directors noted the group's continued efforts to secure the interest of reputable and strategic institutional investors after it had declined the offer made by Burgan Bank of Kuwait in April 2007 to acquire a majority equity stake. Moreover, the directors stated that, as previously announced, FIMBank will be undertaking a rights issue to shareholders by the end of this year.
In line with FIMBank Group's strategy of establishing a network of global joint-venture factoring companies, the board of directors confirmed in the half-year report that together with the National Bank of Dubai, a joint-venture factoring company in Dubai (MENAFACTORS) was established on May 10, 2007 in the Dubai International Financial Centre and is currently awaiting authorisation by the Dubai Financial Services Authority. After the interim balance sheet date on June 30, 2007 FIMBank injected its first $5 million in this new joint-venture. Moreover, the directors announced that it approved an investment of up to $8 million in a new factoring joint-venture company in the Maghreb region (Tunisia, Algeria and Morocco). Also, it was recently reported that FIMBank signed a Memorandum of Understanding with Bladex (Banco Latinoamericano de Exportaciones SA) to establish another joint venture company which would offer full factoring services to institutions in Latin America. Bladex is a supranational bank originally established by the Central Banks of Latin American and Caribbean countries to promote trade finance in the region.
Profits at GlobalCapital decline sharply
Investment property revaluations keep group in the black
GlobalCapital plc published its financial statements for the six months ended June 30, 2007 following a board of directors' meeting held on August 24. No interim dividend was declared by the directors whereas in the first half of 2006 the group distributed a gross dividend of 2c per share.
During the first six months of 2007 GlobalCapital's income from commission and fees receivable mainly arising from investment and advisory services, and agency and brokerage services remained unchanged at Lm1.04 million. While revenue from investment and advisory services dropped by 15 per cent to Lm0.6 million, income from agency and brokerage services increased by 12.8 per cent to Lm0.3 million. The balance on the insurance technical account before tax showed a loss of Lm0.4 million despite a strong growth in premium income from Lm1.7 million to Lm3.4 million. On the other hand, gains on investment property more than doubled from Lm0.8 million in the first half of 2006 to Lm1.7 million during the period under review. This fair value gain was determined on the basis of a professional valuation carried out by a leading independent residential and commercial property consultancy firm.
Administrative expenses incurred by the group in the first half of this year increased by 18.6 per cent to Lm1.1 million with commissions payable and direct marketing costs remaining unchanged at Lm0.3 million. After accounting for goodwill impairment of Lm0.1 million, the group's operating profit during the first half of the year increased by 21.9 per cent to Lm0.8 million. However, while in the first six months of 2006 the group received net investment income of Lm0.4 million, during the period under review GlobalCapital incurred a net investment expense of Lm0.7 million.
The directors reported that during the first half of the year, the group incurred significant fair value losses on investments attributable to negative market conditions, mainly due to the sharp decline in Malta Government Stock prices and also as a result of the 14 per cent drop in the share price of Lombard Bank Malta, in which the GlobalCapital has a sizeable shareholding.
The net investment expense forced the group's pre-tax profits to drop to only Lm0.1 million in the first half of the year, significantly lower than the Lm1.1 million generated in the same period of 2006. GlobalCapital provided for a tax credit of Lm0.2 million while in the comparative period a tax charge of Lm0.3 million was recognised. This tax credit helped the group's profit for the period increase to Lm0.4 million. Despite this, profits after tax declined by 47 per cent in the first half of 2007 with earnings per share of 2c9 compared to 5c6 in June 2006.
Total assets as at June 30, 2007 amounted to Lm43.8 million, an increase of 5.7 per cent since the start of the year mainly as a result of an increase in the value of investment property as well as other financial investments. Shareholders' funds dropped 1 per cent to Lm12.6 million resulting in a net asset value per share of Lm0.95.
The group's post-tax return on equity (profit after tax divided by average shareholders' funds) decreased from 13.5 per cent in June 2006 to 6.5 per cent. Similarly, group return on assets (pre-tax profit divided by average assets) dropped to 1.9 per cent in June 2007 from 4.6 per cent a year earlier.
The GlobalCapital Group operates across three main areas of activity: investment and advisory services; insurance and brokerage; and property services. The first two categories are inherently linked to the performance of financial markets, mainly the local equity and bond market.
The unfavourable performance of the local bond market led to a situation in which these two areas of activity incurred operating losses for the group during the first half of the year. The group's positive bottom line, although sharply lower than the comparative period last year, is therefore solely attributable to the revaluation of a number of properties held by the group for investment purposes.
The second half of 2007 is also likely to be very challenging for the group with the directors warning that the recent international stock market volatility and global economic uncertainty may continue to affect the group's trading and investment performance. However, the directors stated in the half-yearly report that they expect trading activity to be sustained during the second half of the year.
• Rizzo, Farrugia & Co. (Stockbrokers) Ltd. are members of the Malta Stock Exchange and licensed to conduct investment services business by the Malta Financial Services Authority. This report contains public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily indicative of future results. Neither Rizzo, Farrugia & Co., nor any of its directors or employees accepts any liability for any loss or damage arising out of the use of all or any part of this report.
© 2007 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.
• Mr Rizzo is a director at Rizzo, Farrugia & Co (Stockbrokers) Ltd.
http://www.rfstockbrokers.com