Global Capital well-positioned for positive year after 2010 loss – CEO

Global Capital plc, the financial services provider, is well-positioned for a positive performance this year after dealing with a number of goodwill impairments and scaling back its property division in 2010, newly appointed chief executive officer Bashar Khatib told The Sunday Times.

The group registered a loss after tax to December 31 last year of €8.2 million, a considerable drop from the post-tax loss of €760,744 for 2009.

Significantly, the 2009 loss was 90 per cent lower than that of 2008, and Global Capital had said at the time it had emerged from 2009 “a stronger company, well-positioned for further growth”.

In its financial statements for 2010, Global Capital indicated that the results were negatively impacted by non-cash and non-recurrent items totalling €5.8m, including write-offs of goodwill, computer software, and tangible assets as well as negative fair value movements on investment property.

Within the investment property impairment charge was a write-down of €1.5m specific to a group property, a baronial castle outside Rome. Global Capital considered independent valuations obtained under the group’s accounting policy, and the carrying value of the property as at December 31 was reduced by €1.5m to €8.1m.

Mr Khatib explained the operational position between 2009 and 2010 was largely unchanged, but the group had taken the important step to strengthen its balance sheet.

“From an operational point of view, Global Capital’s activity is practically the same between 2009 and 2010,” the chief executive said.

“The difference is that the company moved to clear up issues concerning paper losses and redeeming its shareholding in the Metropolis Plaza development. The board felt there were a number of goodwill impairments which needed to be taken out.

“Some of the values of the real estate in our property portfolio were not easy to ascertain and it was better to be conservative than hawkish.

We were aware in 2008, when the crisis happened, that the financial and real estate markets were badly affected. The board decided to have a look at investments in property, especially on an international level, to make sure we did not get hit by surprise with large losses. That was very logical.”

Global Capital has dedicated the first months of this year to focusing on the “fundamentals” – the group’s core business in insurance and investments – and the entire team was in positive mood.

Mr Khatib added that Global Capital was already ahead of its revenue and ratio targets for the year, and hoped that the trend would continue in the coming months.

“The outlook is good and we have a much stronger balance sheet. We have much more confidence and productivity is rising,” he pointed out.

Global Capital is currently focused on improving its human capital management in its bid to grow organisational performance and achieve competitive advantage.

Mr Khatib said teams’ engagement was being heightened with staff being given a thorough understanding of the group’s strategy. Career paths were being carved out for team members as support and training was provided across the group’s business.

Internally, Global Capital has revamped its selection processes and induction programmes by focusing them on team members’ primary role to help clients identify their financial goals and work with them to achieve targets.

“People have to trust us and have to have confidence in us,” Mr Khatib replied when asked how the group intended to win more clients.

“If we are going to help people achieve their financial goals, we have to be transparent. It is important that their expectations are clear from the outset. We have to understand whether they are conservative or aggressive, and make sure they understand the risk involved.”

The group was also building the necessary infrastructure to be able to provide high standard products and services and to maintain long-term relationships with clients.

Global Capital was currently designing a new suite of insurance and investment products and services to meet clients’ evolving requirements. The investment offerings portfolio would be diversified with third party products that had a positive track record.

Global Capital Health Insurance Agency, the group’s company entrusted with the provision of Bupa health insurance, similarly had plans for further growth by capitalising on its history in the local market. Mr Khatib said the agency was currently in talks with Bupa to provide new products that met client needs better, and to improve service levels with the implementation of the latest technological platforms.

Meanwhile, Global Capital was also looking to manage resources and costs better through updated IT, Mr Khatib pointed out.

Short-term plans at Global Capital also include a diversification of distribution channels as the group seeks to target other sectors and niches.

Global Capital is keen to examine the potential of intermediary distribution by building relationships with banks, brokers and other professionals to expand its network and increase market share.

One of the most important events in Global Capital’s financial year was the group’s sale, last August, of its 41 per cent stake in Metropolis Plaza.

The stake in the €60m Gżira mixed-use lifestyle development project, which was held by a subsidiary, was sold for €3.8m to Dutch company Raykan BV.

Metropolis Plaza, earmarked for the block just across the road from Global Capital’s new headquarters in Testaferrata Street, had been extensively marketed by the group, and construction work was planned to begin in the third quarter of last year. The site on which three high-rise buildings of 13, 27 and 33 floors were to sit has been excavated and sealed off.

Mr Khatib pointed out that Global Capital’s decision to divest its shareholding in the project was taken before his appointment, but he explained that the local and international property market had not taken the direction the project had originally foreseen.

“When the company saw it was not moving in the right direction, it was decided that redeeming the shareholding was the right thing to do at that point,” he added. “The new board has offered buyers a repurchase and all obligations were honoured. There was also a subordinated loan to private investors that was fully paid.”

Mr Khatib emphasised that Global Capital’s commitment to regenerate Gżira was underlined by the location of its new building: it was a sign of confidence in the neighbourhood, the company, and the community, he said.

Global Capital still owns some property in the area that it is still looking to develop into commercial property, in keeping with the drive to transform the neighbourhood into a business district.

Jerusalem-born Bashar Khatib was appointed Global Capital’s chief executive officer last November.

Raised in Jordan and educated in the UK and the US, Mr Bashar has been actively involved in the financial services sector for more than 20 years and has held senior roles with multi-nationals in the US, Europe, the Far East and the Middle East.

Now based in Malta, he joined Global Capital from a Shariah-compliant life and health insurance company which he established and managed in the United Arab Emirates.