The Global Capital Group has reported a post-tax loss of €6.8 million, compared with a net profit of €579,935 for 2007.
Last November, the group had warned that the disruption caused by the international financial turmoil was adversely affecting the fair valuations of its portfolio of financial investments and demand for its products.
"The global financial crisis resulted in a sharp downturn in the bond, equity and property markets which have significantly impacted on the various areas of the group's business," Global Capital said last Friday.
Almost two-thirds of the loss was registered during the first half of the year. Last August, Global Capital had reported that it had already made a net loss of €4.3 million for the six months ending June 30, compared with a profit of €906,000 for the same period in 2007.
It was the worst performing company listed on the Malta Stock Exchange last year, with its share price dropping from €5.602 to €1.991, the same price at which its shares were trading last Friday. In view of the 2008 results, the group's directors are not recommending the payment of a dividend to shareholders.
Global Capital is a diversified financial services group currently operating in three main areas of business - investments, insurance and property, with total assets valued at just over €99 million. Set up 21 years ago, the Gzira-based group describes itself as "a one-stop service point for individual and corporate financial service requirements, with a special focus on financial management, fund advisory, life insurance, private medical insurance, insurance broking and property". It is the exclusive agent in Malta for Bupa, the UK's leading medical insurance providers.
Analysing the reasons for the group's annual results, the group said its equity and bond investment portfolio had suffered a severe reduction in value, with the largest portion of the group's 2008 losses attributable to unrealised fair value loss thereon totalling €6,513,318, compared with equivalent write-downs of €1,140,908 in 2007.
"Another non-cash item - impairment of goodwill totalling €1,228,715 (compared to €465,875 in 2007) - represents a further significant component of the year's losses. The remaining losses are attributable to operating deficits for the year, primarily sustained in the investment division, which suffered as a result of a reduction in the sale of investment products due to reduced investor confidence in the capital markets."
Last July, there had been a shake-up of senior positions in the group. Nicholas Ashford-Hodges had been appointed group chairman, taking over from Christopher Pace, who, however, remained on the board as non-executive director. Meanwhile, Adrian Galea was appointed chief operations officer with responsibility for most of the group's centralised services units including IT, human resources, fund administration, investment operations, administration, call centre and customer services.
At the time, Mr Ashford-Hodges had said: "I am taking over as chairman of a company which has experienced significant growth and diversification over the years and has exciting plans for future growth."
Mr Pace had said: "After taking Global Capital to uncharted heights, I feel this is the most suitable time to step down as chairman. I intend to focus on local and international property investments."
The group said its property activities as well as its agency and brokerage services had registered positive results last year. Property registered a total pre-tax profit of €303,099 (compared with €3,013,518 in 2007) primarily from a combination of profit on disposal of property held for development, and fair value gains on investment property, while the group's agency and brokerage services registered a profit before tax of €622,810 compared to €714,307 in 2007.
Chief executive officer Nicholas Portelli said the the group had taken "strategic measures to dispose of its assets in Dubai at a time when property was still much sought after and selling at peak prices".
Last November, Ian Zammit, head of the group's insurance and property division, also announced that demolition works had started on the site of the former Dun car showroom in the lower part of Testaferrata Street in Gzira. This was done in pre-paration for the development of over 2,000 square metres of office and retail space. The demolition works were expected to last around six weeks, followed by site excavations.
"The development of the site marks the first visible milestone of our regeneration project for the Testaferrata and Gzira area. New office and retail space will be completed before the Metropolis high-rise development, which will be mostly residential," Mr Zammit had said. The Malta Environment Planning Authority recently approved the consitruction of the €80 million three-tower, 7,000-square metre project in which the group has over 43 per cent shareholding.
At the time he had said Global Capital's property portfolio included a 5,000 square metre site in Croatia, which was earmarked for the development of 63 seafront units. The group also owns properties in Sofia and Varna in Bulgaria, as well as in Rome and Barcelona and was in the process of being handed over a number of highly luxurious apartments in the heart of Buenos Aires, Argentina.
The group said that throughout 2008 it had taken constant measures to contain its direct and indirect costs and this would continue to be a key area of focus this year.
In addition, the board said that during late 2008 it had started a comprehensive review of its business to identify and implement further process efficiencies and business realignment.
In November, the group had announced that while it had not proceeded with the acquisition of Mediterranean Bank plc as it had originally planned, it remained committed to adding banking to its existing business lines at the opportune time and under the right market conditions.
Earlier in 2008, Global Capital had proposed acquiring 85.5 per cent of the issued share capital of Medifin Holding Ltd, which holds 99.9 per cent of the issued share capital of Mediterranean Bank plc, which is licensed by the Malta Financial Services Authority to operate as a bank and provide investment services.