During the first six months of the year turnover from commissions and fees receivable amounted to Lm1,043,961, 21% lower than last year. The balance on the long-term business of insurance technical account dropped by 7.4% to Lm178,903. On the other hand, the Group’s plans in the diversification strategy proved to be fruitful with a substantial gain of Lm772,740 being registered from investment property (June 2005: Lm30,000). Administrative expenses rose by 11% to Lm941,363 (2005: Lm850,762) and commission payable and direct marketing costs increased by 13.3% to Lm295,925. Despite the increase in costs and goodwill impairment of Lm100,000, the Group’s overall operating profits surged by 51% to Lm658,316 (2005: Lm435,661).
The half-yearly report also included a breakdown of the turnover and operating profit derived from the Group’s different areas of activity. This reveals that if it were not for the property division, the Group would have incurred an operating loss. In fact, the operating profit from insurance activities dropped by 4.5% to Lm128,905 whilst a loss of Lm135,556 was registered in the investment and advisory services compared to a profit of Lm283,545 in the previous year.
During the first six months of the year, GlobalCapital plc generated investment income of Lm416,351 (2005: Lm238,927) which helped boost the Group’s profit before tax to Lm1,074,667, 59% higher than the Lm674,588 during the comparative year. After accounting for taxation, profits stand 39% higher than the previous interim period at Lm735,180 (2005: Lm528,470) resulting in earnings per share of 5c6 (2005: 4c).
The Group’s balance sheet as at 30 June 2006 shows total assets improved by 38% during the past six months to Lm39.5 million mainly due to significant rises in other investments and investment properties. On the other hand, total equity increased marginally to Lm11.5 million. This translates into a net asset value per share of Lm0.87 cents. The Group achieved an annualised return on equity (profit after tax divided by shareholders’ funds) of 12.7% (June 2005: 10.3%) with annualised return on assets also rising to 4.4% (June 2005: 3.7%).