LifeStar Holding plc - Full-Year Results

On 2 May, GlobalCapital plc published its Annual Report and Financial Statements for the year ended 31 December 2015.

Performance Overview

During 2015, GlobalCapital registered pre-tax profits of €5.61 million compared to €0.81 million in 2014. The Group’s results include net fair value gains on its financial and property investment portfolios amounting to €7.2 million which were partially compensated by an increase in technical reserves. After accounting for a tax charge of €1.48 million (2014: €0.59 million), the Group’s net profit for the year amounted to €4.12 million (2014: €0.22 million) which translates into an earnings per share of €0.312 (2014: €0.017).

The turnaround in the Group’s operational performance was the result of the execution of the aggressive transformation strategy that started to take material effect in early June 2014 and which yielded the full results in the financial year ended 31 December 2015. This included the generation of a sustainable level of revenue growth together with a reduction in overall operational costs to ensure long-term financial stability and profitability. This transformation resulted in a better performance of all the regulated businesses forming part of the Group.

The Statement of Financial Position shows a 12.9% increase in total assets to €101.0 million (2014: €89.5 million) while total liabilities advanced by 8.5% to €93.7 million. The Group’s equity base more than doubled from €3.16 million in 2014 to €7.36 million in 2015, largely reflecting the profit generated during the period under review. This translates into a net asset value per share of €0.557 on the number of shares as at the year ended December 2015, and of €0.245 per share reflecting the new shares issued following the rights issue concluded in March 2016.

Going Concern

The Directors’ Report make reference to the maturing 5.6% €13.8 million bond which is due for repayment on 2 June 2016. As at the date of approval of the 2015 financial statements, GlobalCapital has only secured part of the funding required for the repayment of the bond, which also includes accrued interests of €0.8 million. In fact, in March 2016, the Group generated €4.7 million through a rights issue offer following which Investar plc became the majority shareholder of the Company with a 52.6% shareholding. These funds have been placed in a sinking fund for the repayment of the bond.

GlobalCapital intends to come out with a €10 million five-year bond (the “New Bond”) at a coupon of 5.0% in order to fund the remaining €9.9 million of the existing bond. The Company is actively working on an application for regulatory approval of the admissibility to listing of the New Bond and anticipates that all actions necessary to obtain regulatory approval for the New Bond to be issued prior to 2 June 2016 will be completed in a timely manner. Once the New Bond is issued and subscribed, the proceeds from the issue will be available for the Company to meet its existing bond obligation on maturity. The success of the New Bond is however subject to a number of conditions, the most significant being the obtaining of all new regulatory approvals within the limited time frame available and the take-up in full of the New Bonds.

To this effect, GlobalCapital has received a commitment from Investar plc to subscribe up to €5 million in the New Bonds in the event that there is a shortfall of such an amount or more in the overall take-up of the New Bonds. The Company has also received commitments from other shareholders/professional investors, through its sponsor, to subscribe up to an additional €5 million in aggregate in the New Bonds in the event of a shortfall in the overall take-up of the New Bonds after the fulfilment by Investar plc of its above commitment. Such commitments amount in aggregate to €10 million which is equivalent to the full amount of the New Bond.

Furthermore, the Directors have resolved that a further rights issue for an amount of €5 million will be made following the issue of the New Bond and this within the next twelve months to strengthen the Company’s capital base. In the event of such rights issue, the Company will also be required to seek prior shareholder approvals in general meeting by means of an extraordinary resolution in order to increase its authorized share capital for the Company to be able to increase its issued share capital.

While the Directors are confident of the successful outcome of the Company’s refinancing plans and the subsequent repayment of the bond on maturity, they are also aware of the significant uncertainties that exist, some of which are not within their control. Such material uncertainty may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, that GlobalCapital may be unable to realise its assets and discharge its liabilities in the normal course of business.

Auditor’s Report

In their report, the Auditors of the Company stated that they were unable to obtain sufficient appropriate audit evidence about the appropriateness of the Directors’ use of the going concern assumption and that thus they are unable to provide an audit opinion on whether the Financial Statements being presented give a true and fair view of the financial position of GlobalCapital plc as at 31 December 2015 and of the Group’s financial performance and cash flows for the period under review.

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GlobalCapital plc – 2015 Annual Report and Financial Statements.