FIMBank plc - Full Year Results and Dividend

Tuesday, February 21st, 2006

At a Board of Directors meeting held in Kuwait on 19 February 2006, the Audited Financial Statements of FIMBank were discussed and approved for release. The Preliminary Statement of Results was published on 20 February.

During the twelve months ended 31 December 2005, the Bank’s net interest income increased by 46.4% to US$4.18 million reflecting an increase in the Bank’s activity base through more availability of Bank lines of credit, customer deposits, the IFC subordinated convertible loan and the Bank’s debut on the Euroloan market. Meanwhile, net fee and commission income rose by 20.5% to US$7.0 million with other income (mainly composed of net trading income and dividend income) growing by 60.2% to US$0.74 million. The Bank’s total income in 2005 amounted to US$11.96 million, representing a rise of 30.6% from the previous year. Net impairment losses amounted to US$0.37 million (2004: US$0.8 million) resulting in net operating income of US$11.6 million, compared to US$8.3 million in 2004, representing a rise of 39%. Due to the Bank’s continued business growth and organisational expansion, operating expenses (administrative expenses and depreciation) increased by 20.5% to US$8.34 million, resulting in a pre-tax profit of US$3.25 million, a 128.4% rise over the previous year. The cost to income ratio dropped from 75.6% in 2004 to 69.7%. After accounting for taxation, the Bank’s profit for the year amounted to US$3 million.

At the Group level, which includes the consolidated operations of London Forfaiting Company, net interest income dropped by 16.8% to US$1.5 million reflecting the Group’s dependence on the Bank for funding of its forfaiting portfolio as consolidation eliminates the intra-group interest flows between the parent company and the subsidiary. Meanwhile net fee and commission income rose by 20% to US$7.98 million with other income (mainly composed of net trading income from LFC’s trading on forfaiting assets) growing by 32.5% to US$6.5 million. In total, Group operating income increased by 19.6% to US$15.99 million in 2005. Following the acquisition in late 2004 of a 38.5% shareholding in Global Trade Finance Ltd. in India, 2005 is the first year in which GTF made a contribution to the consolidated results. The preliminary statement of results shows share of profits from associates amounting to US$0.89 million, thus increasing the Group’s net operating income to US$16.89 million. As a result of increased business volumes, the Group’s operating expenses continued to rise during the year despite the reorganisation of the global network of offices of LFC. In 2005, Group expenditure increased by 13.5% to US$13.03 million.

Notwithstanding this rise, the Group cost to income ratio improved to 77.1% compared to 85.9% in 2004. Similarly to last year, in 2005, LFC recognised a deferred tax asset of US$0.68 million (2004: US$1.9 million), which was adjusted against the carrying amount of goodwill. The reduction in the carrying amount of goodwill was recognised in the income statement and diluted this year’s earnings accordingly. This resulted in a pre-tax profit for the Group of US$2.94 million and after deducting taxation of US$0.24 million (compared to a positive tax figure of US$1.87 million in 2004), the Group’s profit attributable to shareholders increased by 75% to US$2.7 million. Group diluted earnings per share increased from US$0.0234 in 2004 to US$0.0406.

Group total assets during the year increased by 37% to US$295 million with shareholders’ funds of US$54.79 million as at 31 December 2005. The increase in shareholders’ funds during the year is partly as a result of the conversion of the subordinated loan into equity by the International Finance Corporation. The conversion by the World Bank Group subsidiary took place on 30 November 2005. The Group return on equity (profit after tax divided by average shareholders’ funds) increased to 5.24% from 3.2% in 2004 with return on assets (pre-tax profit divided by average assets) similarly rising to 1.15%.

The Board of Directors have proposed for approval at the Annual General Meeting due on 6 April, the payment of a net dividend of US$0.014 per share. Shareholders have the option of receiving the dividend either in cash or in new shares at a discounted price of US$1.50 per share. Moreover, the Board of Directors will be recommending a 1 for 5 bonus share issue by the capitalisation of the share premium reserve. The cut-off date in respect of the dividend and the bonus shares is on Tuesday 28 February 2006.

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