The GlobalCapital Group has reported a loss after tax of €6,886,162 for 2008 compared to a profit after tax of €579,935 for year ended 31 December 2007.
“The sustained global financial crisis resulted in a sharp downturn in the bond, equity and property markets which, during the year under review, have significantly impacted on the various areas of the group’s business,” GlobalCapital said.
“The group’s equity and bond investment portfolio has suffered a severe reduction in value with the largest portion of the group’s 2008 losses relating to unrealised fair value loss thereon totalling €6,513,318 compared to 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, whilst the remaining losses are attributable to operating deficits for the year, primarily sustained in the Investment Division. This division suffered as a result of a reduction in the sale of investment products due to reduced investor confidence in the capital markets.”
The group said its property activities as well as the Agency and Brokerage services registered positive results. Property registered a total pre-tax profit of €303,099 (compared to €3,013,518 in 2007) primarily arising from a combination of profit on disposal of property held for development and fair value gains on investment property, whilst the group’s Agency and Brokerage services registered a profit before tax of €622,810 compared to €714,307 in 2007.
Throughout 2008 the group took constant measures to contain its direct and indirect costs. This continues to be a key area of focus in 2009, and in addition the Board has during late 2008 and early 2009 initiated a comprehensive review of its business in order to identify and implement further process efficiencies and business re-alignment, the group said.
The directors have not recommended the declaration of a dividend.
Nicholas Ashford-Hodges, Chairman of GlobalCapital p.l.c. in a statement said: “the unprecedented and extended disruption in the global financial markets has inevitably impacted negatively on GlobalCapital’s 2008 results. Our portfolio of assets registered an overall 7% drop in value. Whilst significant, this outcome has occurred during a period when the Malta Stock Exchange registered a fall of 35% and the FTSE dropped by 31%.”
"The Group’s business of insurance was adversely impacted by the negative performance of the capital markets as well as a decline in premiums resulting in a negative balance on the long term business account of €3,767,833 compared to an equivalent deficit of €467,356 in 2007. The increment in the value of in-force-business totalled €1,271,282 in 2008, compared to €58,234 in 2007 - this item reflects the projection of future shareholder profits expected from insurance policies in force at the year-end appropriately discounted and adjusted for the effect of taxation."
He added that notwithstanding the current turmoil in financial markets, there existed attractive market opportunities which could yield positive results in the medium to long-term. Despite the current turmoil in the market GlobalCapital still remained well positioned to enter into new initiatives as and when opportunities arise.