GlobalCapital pre-tax earnings down 50% over 2015 to €2.8 million

GlobalCapital shareholder funds more than doubled through increase in share capital, with debt-to-equity now standing at 64% down from 188%

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Matthew Vella
6 April 2017, 5:38pm
GlobalCapital p.l.c. has registered pre-tax earnings for the year 2016 of €2.8 million compared to €5.6 million in 2015.

The results include a significant reduction in fair value gains on the group’s financial and property investment portfolios amounting to €1.4 million for the year compared to €7.3 million as at the end of the previous reporting period.

Assets increased by 11.9% from €101 million to €113.1 million as at 31 December 2016, whereas shareholder funds more than doubled through a combination of the increase in share capital and other reserves. Net asset value stood at €15.1 million (2015: €7.3 million).

The company said it had strengthened its financial base through capitalisation, debt restructuring, the repayment of the maturing bond and strengthening the financial operating results of its subsidiaries, leading to a significant improvement in the group’s debt-to-equity ratio, down to 64% from 188%.

Following the listing of 16,792,452 new shares at €0.29 each in March 2016, the company announced the closure of the rights issue in April 2016, with Investar Plc becoming the single largest shareholder within the group holding 15,781,465 shares, representing 52.6% of total shares. Following the rights issue, the company’s issued share capital increased by 127% to 30,000,000 shares.

In May 2016, the company issued €10,000,000 5% bonds, maturing in 2021, on the Malta Stock Exchange which issue was over-subscribed, and commenced trading on 15 June 2016.

The proceeds generated from the equity and debt issues were used to settle both principal and interest of the 5.6% bond that matured on 2 June 2016, the principal amount of which amounted to €13.8 million.

In July 2016, the company increased its share capital from 30 million to 85 million ordinary shares at €0.29 each. The directors intend to increase the share capital of the company to meet the general financing requirements and to repay the company’s unsecured bonds maturing in 2021.

The life insurance company registered significant growth in all lines of business, with pre-tax profit at €3.5 million, net assets up by 18.6% to €24.6 million. The health insurance agency registered a profit before tax of €1.1 million compared to a prior period profit of €740,000. The increase was driven by a sharp increase in revenue from €1.65m €1.99m as at 2016, and a notable reduction in operating costs.

The financial year was challenging for GlobalCapital Financial Management Limited (GCFM). GCFM experienced a significant drop in revenue during the current reporting period, primarily driven by a reduction in trailer fees. GCFM’s costs also increased marginally, following the decision to retain this line of business. Results were dampened by the provision charge which adversely affected the results for the year. GCFM’s net assets as at the end of the current reporting period amounted to €772,000 (2015: €1.39m).

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Matthew Vella is executive editor at MaltaToday.