Financial review
GlobalCapital profits decline sharply Share price follows On April 3, GlobalCapital plc published its preliminary statement of results for the year ended December 31, 2007. The board of directors failed to recommend the payment of a dividend. Last...
GlobalCapital profits decline sharply
Share price follows
On April 3, GlobalCapital plc published its preliminary statement of results for the year ended December 31, 2007. The board of directors failed to recommend the payment of a dividend. Last year, the company distributed a total gross dividend of €0.186 per share inclusive of a special dividend of €0.116 per share.
During 2007, the GlobalCapital Group generated total income of €9.3 million, 32 per cent lower than the previous year. The directors attributed this decline to the downturn in the capital markets with performance fees receivable shrinking to just €134,656 compared to €5.8 million in 2006. Stock market declines also negatively impacted the return from the insurance business. In fact, the balance on the insurance technical account dropped from a profit of €151,314 in 2006 to a loss of €467,356 during the period under review despite a 30 per cent growth in premiums to €12.6 million.
The directors also noted that the turmoil in financial markets affected investor sentiment negatively resulting in lower sales of investment products. Commissions and fees receivable declined by 13 per cent to €4.7 million despite a strong increase registered by the insurance agency and insurance brokers' division. On the other hand, total income was positively affected by unrealised gains on investment property of €4.7 million together with the realisation of a slight profit on the disposal of property held for development. Administrative expenses rose by 12.8 per cent during the year to €6.4 million while other expenses relating to commissions payable and other direct marketing costs dropped to €0.46 million in 2007 from €0.7 million the previous year. This decrease is directly related to the drop in sales of investment products.
Net investment income declined to a loss of €1.6 million compared to a profit of €1 million in 2006 mainly composed of unrealised losses on the group's investment portfolio arising from the adverse stock market conditions. This item also includes the payment of the 5.6 per cent coupon on the company's bond which was issued in May 2006.
The group's profit for the year amounted to €0.58 million, 88 per cent lower than the profit of €4.75 million in 2006. As a result, earnings per share dropped to €0.044 from €0.36 in 2006.
The balance sheet shows total assets of €105.1 million as at December 31, 2007, 8.8 per cent higher than the previous year principally as a result of an uplift in the value of investment property. Cash and cash equivalents at the end of the year amounted to €3.2 million with shareholders' funds decreasing by 2 per cent to €28.9 million. In the preliminary profit statement, the directors noted that despite the prevailing environment, the group is well positioned to take advantage of an upturn in due course and confirmed that it is actively pursuing opportunities for acquisitions.
On March 14, GlobalCapital plc announced that it was notified by The Provident Real Estate Fund that as at January 31, the fund held 750,534 GlobalCapital plc shares, equivalent to 5.68 per cent of the total issued share capital. The Provident Real Estate Fund had a net asset value of MUR220 million as at November 2007, equivalent to circa €5.2 million. The fund is managed by Bramer Asset Management Ltd of Mauritius, a member of the British American Investment Group. British American is the largest shareholder in GlobalCapital plc, holding a 48 per cent equity.
The key highlights are:
• Commission and fees receivable drops 57 per cent to €4.8 million;
• Performance fees receivable substantially lower at €0.13 million (2006: €5.8 million);
• Gains on investment property of €4.7 million (2006: €1.8 million);
• Profit after tax of €0.58 million;
• Shareholders' funds of €28.9 million
IHI reports a pre-tax profit of €14 million
Directors declare bonus share issue of three new shares for every 100
On April 9, International Hotel Investments plc (IHI) published its preliminary profits statement for the year ended December 31, 2007. The directors are recommending a bonus issue of three new shares for every 100 held. Shareholders as at close of trading last Tuesday were eligible to this bonus share issue, which will be put forward for shareholders' approval during the annual general meeting scheduled to take place on May 15.
Total revenue generated by the IHI Group during the year ended December 31, 2007 amounted to €104.2 million compared to €60.4 million in the previous year. The directors attributed this increased turnover to three factors, namely: (i) the improved performance of the hotels in Budapest, Lisbon, St Petersburg and Malta; (ii) the full-year contribution of the management company CHI Ltd; and (iii) the seven-month contribution from the newly-acquired hotels in Prague and Tripoli. Direct costs increased to €65.7 million, resulting in a gross profit of €38.5 million (2006: €21.3 million) with other operating costs rising by 23 per cent during the period under review to €22.3 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) surged to €33.8 million from €13 million in 2006 with the EBITDA margin improving to 32.4 per cent (2006: 21.6 per cent).
While in 2006 IHI recognised an impairment loss of €7.2 million on the Corinthia Lisboa Hotel in Lisbon, no further impairment was taken in 2007. Meanwhile, in line with the group's policy of revaluing the carrying amounts of its properties to fair value, two uplifts in the value of investment properties totalling €7.7 million were recognised in the income statement. The directors explained in the preliminary profit statement that a €5.7 million increase in value was recognised on one of the plots of land adjacent to the Corinthia Nevskij Palace Hotel in St Petersburg, with the other €2 million in relation to the Commercial Centre in Tripoli.
Net financing costs increased to €9.8 million following the rise in interest rates as well as the additional debt assumed on the acquisition of the two hotels in Libya and Czech Republic.
The IHI Group registered a pre-tax profit of €14 million during the year under review compared to a loss of €10.7 million in 2006. After accounting for taxation and the profit attributable to minority interests, the group's profit for the year amounted to €9.6 million.
Total assets of the IHI Group as at December 31, 2007 amounted to €989.2 million, significantly above the level in 2006 following the acquisition of the hotels in Libya and Czech Republic. Shareholders' funds likewise increased to €585.6 million reflecting the issue of 192 million shares to Corinthia Palace Hotel Co. Ltd as part consideration for the acquisition of the new hotels and the issue of 178 million shares to Istithmar Hotels of Dubai. IHI's net asset value per share increased to €1.09.
Following the cash injection by Istithmar of €178 million, IHI had stated that this new capital would be used to purchase additional properties to increase the group's hotel portfolio. In recent weeks IHI issued two important announcements related to its acquisition programme. On February 6, IHI announced that its bid for the acquisition of the Metropole Hotel and adjoining 10 Whitehall Place in London was successful. IHI along with its principal shareholders Istithmar and Libyan Foreign Investment Company (LFICO) acquired the property for £130 million (€174.4 million) from The Crown Estate of the UK. IHI and its partners are committed to develop this building into a 283-room, five-star deluxe hotel and 12 luxury apartments. This hotel is scheduled to open in 2011 and CHI - the group's hotel management arm - will be responsible for its operation under the Corinthia brand.
Moreover on February 22 IHI announced that it had entered into a Memorandum of Understanding with LFICO for a joint-venture agreement to develop a five-star deluxe hotel on the waterfront in central Benghazi, Libya. IHI and LFICO plan to develop the 7,000 square metre site into a 360-room hotel with offices and retail outlets earmarked for rental to third parties. Construction is expected to commence in 2008 and on completion the hotel and other facilities will also be operated by CHI Ltd.
The key highlights are:
• Turnover rises to €104 million;
• EBITDA climbs to €33.8 million;
• Revaluation of investment property of €7.7 million;
• Pre-tax profit of €14 million;
• Shareholders' funds of €585.6 million (NAV per share of €1.09);
• Bonus share issue of three new shares for every 100 held
• Mr Rizzo is a director with Rizzo, Farrugia and Co.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It 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. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies therein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees, accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
ww.rfstockbrokers.com
Share price follows
On April 3, GlobalCapital plc published its preliminary statement of results for the year ended December 31, 2007. The board of directors failed to recommend the payment of a dividend. Last year, the company distributed a total gross dividend of €0.186 per share inclusive of a special dividend of €0.116 per share.
During 2007, the GlobalCapital Group generated total income of €9.3 million, 32 per cent lower than the previous year. The directors attributed this decline to the downturn in the capital markets with performance fees receivable shrinking to just €134,656 compared to €5.8 million in 2006. Stock market declines also negatively impacted the return from the insurance business. In fact, the balance on the insurance technical account dropped from a profit of €151,314 in 2006 to a loss of €467,356 during the period under review despite a 30 per cent growth in premiums to €12.6 million.
The directors also noted that the turmoil in financial markets affected investor sentiment negatively resulting in lower sales of investment products. Commissions and fees receivable declined by 13 per cent to €4.7 million despite a strong increase registered by the insurance agency and insurance brokers' division. On the other hand, total income was positively affected by unrealised gains on investment property of €4.7 million together with the realisation of a slight profit on the disposal of property held for development. Administrative expenses rose by 12.8 per cent during the year to €6.4 million while other expenses relating to commissions payable and other direct marketing costs dropped to €0.46 million in 2007 from €0.7 million the previous year. This decrease is directly related to the drop in sales of investment products.
Net investment income declined to a loss of €1.6 million compared to a profit of €1 million in 2006 mainly composed of unrealised losses on the group's investment portfolio arising from the adverse stock market conditions. This item also includes the payment of the 5.6 per cent coupon on the company's bond which was issued in May 2006.
The group's profit for the year amounted to €0.58 million, 88 per cent lower than the profit of €4.75 million in 2006. As a result, earnings per share dropped to €0.044 from €0.36 in 2006.
The balance sheet shows total assets of €105.1 million as at December 31, 2007, 8.8 per cent higher than the previous year principally as a result of an uplift in the value of investment property. Cash and cash equivalents at the end of the year amounted to €3.2 million with shareholders' funds decreasing by 2 per cent to €28.9 million. In the preliminary profit statement, the directors noted that despite the prevailing environment, the group is well positioned to take advantage of an upturn in due course and confirmed that it is actively pursuing opportunities for acquisitions.
On March 14, GlobalCapital plc announced that it was notified by The Provident Real Estate Fund that as at January 31, the fund held 750,534 GlobalCapital plc shares, equivalent to 5.68 per cent of the total issued share capital. The Provident Real Estate Fund had a net asset value of MUR220 million as at November 2007, equivalent to circa €5.2 million. The fund is managed by Bramer Asset Management Ltd of Mauritius, a member of the British American Investment Group. British American is the largest shareholder in GlobalCapital plc, holding a 48 per cent equity.
The key highlights are:
• Commission and fees receivable drops 57 per cent to €4.8 million;
• Performance fees receivable substantially lower at €0.13 million (2006: €5.8 million);
• Gains on investment property of €4.7 million (2006: €1.8 million);
• Profit after tax of €0.58 million;
• Shareholders' funds of €28.9 million
IHI reports a pre-tax profit of €14 million
Directors declare bonus share issue of three new shares for every 100
On April 9, International Hotel Investments plc (IHI) published its preliminary profits statement for the year ended December 31, 2007. The directors are recommending a bonus issue of three new shares for every 100 held. Shareholders as at close of trading last Tuesday were eligible to this bonus share issue, which will be put forward for shareholders' approval during the annual general meeting scheduled to take place on May 15.
Total revenue generated by the IHI Group during the year ended December 31, 2007 amounted to €104.2 million compared to €60.4 million in the previous year. The directors attributed this increased turnover to three factors, namely: (i) the improved performance of the hotels in Budapest, Lisbon, St Petersburg and Malta; (ii) the full-year contribution of the management company CHI Ltd; and (iii) the seven-month contribution from the newly-acquired hotels in Prague and Tripoli. Direct costs increased to €65.7 million, resulting in a gross profit of €38.5 million (2006: €21.3 million) with other operating costs rising by 23 per cent during the period under review to €22.3 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) surged to €33.8 million from €13 million in 2006 with the EBITDA margin improving to 32.4 per cent (2006: 21.6 per cent).
While in 2006 IHI recognised an impairment loss of €7.2 million on the Corinthia Lisboa Hotel in Lisbon, no further impairment was taken in 2007. Meanwhile, in line with the group's policy of revaluing the carrying amounts of its properties to fair value, two uplifts in the value of investment properties totalling €7.7 million were recognised in the income statement. The directors explained in the preliminary profit statement that a €5.7 million increase in value was recognised on one of the plots of land adjacent to the Corinthia Nevskij Palace Hotel in St Petersburg, with the other €2 million in relation to the Commercial Centre in Tripoli.
Net financing costs increased to €9.8 million following the rise in interest rates as well as the additional debt assumed on the acquisition of the two hotels in Libya and Czech Republic.
The IHI Group registered a pre-tax profit of €14 million during the year under review compared to a loss of €10.7 million in 2006. After accounting for taxation and the profit attributable to minority interests, the group's profit for the year amounted to €9.6 million.
Total assets of the IHI Group as at December 31, 2007 amounted to €989.2 million, significantly above the level in 2006 following the acquisition of the hotels in Libya and Czech Republic. Shareholders' funds likewise increased to €585.6 million reflecting the issue of 192 million shares to Corinthia Palace Hotel Co. Ltd as part consideration for the acquisition of the new hotels and the issue of 178 million shares to Istithmar Hotels of Dubai. IHI's net asset value per share increased to €1.09.
Following the cash injection by Istithmar of €178 million, IHI had stated that this new capital would be used to purchase additional properties to increase the group's hotel portfolio. In recent weeks IHI issued two important announcements related to its acquisition programme. On February 6, IHI announced that its bid for the acquisition of the Metropole Hotel and adjoining 10 Whitehall Place in London was successful. IHI along with its principal shareholders Istithmar and Libyan Foreign Investment Company (LFICO) acquired the property for £130 million (€174.4 million) from The Crown Estate of the UK. IHI and its partners are committed to develop this building into a 283-room, five-star deluxe hotel and 12 luxury apartments. This hotel is scheduled to open in 2011 and CHI - the group's hotel management arm - will be responsible for its operation under the Corinthia brand.
Moreover on February 22 IHI announced that it had entered into a Memorandum of Understanding with LFICO for a joint-venture agreement to develop a five-star deluxe hotel on the waterfront in central Benghazi, Libya. IHI and LFICO plan to develop the 7,000 square metre site into a 360-room hotel with offices and retail outlets earmarked for rental to third parties. Construction is expected to commence in 2008 and on completion the hotel and other facilities will also be operated by CHI Ltd.
The key highlights are:
• Turnover rises to €104 million;
• EBITDA climbs to €33.8 million;
• Revaluation of investment property of €7.7 million;
• Pre-tax profit of €14 million;
• Shareholders' funds of €585.6 million (NAV per share of €1.09);
• Bonus share issue of three new shares for every 100 held
• Mr Rizzo is a director with Rizzo, Farrugia and Co.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It 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. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC may have or have had a relationship with or may provide or has provided other services of a corporate nature to companies therein mentioned. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees, accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
ww.rfstockbrokers.com