FIMBank plc - Interim Directors’ Statement

On 16 May, FIMBank plc published its Interim Directors’ Statement updating the market on its performance since the start of 2014.

A number of important developments occurred during 2014 including the increase in the shareholding of the new institutional shareholders (United Gulf Bank B.S.C. and Burgan Bank S.A.K.) to just over 80% following a voluntary bid. During the period under review, the FIMBank Group, under the guidance of the new majority shareholders, sought new business ideas and secured better funding opportunities.

Furthermore, in line with the plan to obtain shareholder control in key ventures, the Group increased its shareholding to 79% in India Factoring and Finance Solutions Private Limited and to 80% in CIS Factors Holding B.V. (which in turn owns the entire share capital of the Russian factoring associate, FactorRus). Meanwhile, the Group is in the process of opening a branch in Athens, Greece, to offer factoring services to corporate clients. Additionally, Dubai is being looked at as a test ground for initiating the offering of leasing services later in the year whilst discussions on the potential acquisition of a 40% stake in the Slovenian-based PRVI Faktor are still on-going following the shareholders’ agreement signed last year.

The Directors also noted that maintaining strong capital ratios and enhancing its credit rating shall be critical to the development of the FIMBank Group. In this respect, a first rights issue of USD50 million has been announced for next month and another issue of a similar size shall follow in due course, potentially as early as 2015. Furthermore, the Directors revealed that the Listing Authority granted its approval for FIMBank shares to remain listed on the Malta Stock Exchange notwithstanding that less than 25% of the total issued share capital is in public hands.

From a financial perspective, the period under review is demonstrating good operating results in the wholly-owned entities whilst mixed signals are being observed from the associated factoring ventures. The Directors explained that revenue levels, both in terms of interest spread and fee income, have improved when compared to the same period in 2013. However, following the significant impairment events in 2013 across the main component entities of FIMBank and London Forfaiting Company Limited (LFC), impairments continue to impact the performance in Russia whilst the outlook for Egypt remains cautious. Additionally, impairment levels at LFC are also being observed in view of the economic tensions in certain markets where the entity is active. The Directors also noted that despite the recovery efforts with regard to the 2013 impairments, no recoveries have yet materialised.