On 3 April 2008, GlobalCapital plc published its Preliminary Statement of results for the year ended 31 December 2007. The Board of Directors failed to recommend the payment of a dividend. Last year, the Company distributed a total gross dividend of €0.186 per share inclusive of a special dividend of €0.116 per share.
The key highlights are:
• Commission and fees receivable drop 57 per cent to €4.8 million;
• Performance fees receivable substantially lower at €0.13 million (2006: €5.8 million);
• Gains on investment property of €4.7 million (2006: €1.8 million);
• Profit after tax of €0.58 million;
• Shareholders’ funds of €28.9 million.
During 2007, the GlobalCapital Group generated total income of €9.3 million, 32 per cent lower than the previous year. The Directors attributed this decline to the downturn in the capital markets with performance fees receivable shrinking to just €134,656 compared to €5.8 million in 2006. Stock market declines also negatively impacted the return from the insurance business. In fact, the balance on the insurance technical account dropped from a profit of €151,314 in 2006 to a loss of €467,356 during the period under review despite a 30 per cent growth in premiums to €12.6 million. The Directors also noted that the turmoil in financial markets affected investor sentiment negatively resulting in lower sales of investment products. Commissions and fees receivable declined by 13 per cent to €4.7 million despite a strong increase registered by the insurance agency and insurance brokers division. On the other hand, total income was positively affected by unrealized gains on investment property of €4.7 million together with the realisation of a slight profit on the disposal of property held for development.
Administrative expenses rose by 12.8 per cent during the year to €6.4 million while other expenses relating to commissions payable and other direct marketing costs dropped to €0.46 million in 2007 from €0.7 million the previous year. This decrease is directly related to the drop in sales of investment products.
Net investment income declined to a loss of €1.6 million compared to a profit of €1 million in 2006 mainly composed of unrealised losses on the Group’s investment portfolio arising from the adverse stock market conditions. This item also includes the payment of the 5.6 per cent coupon on the Company’s bond which was issued in May 2006.
The Group’s profit for the year amounted to €0.58 million, 88 per cent lower than the profit of €4.75 million in 2006. As a result, earnings per share dropped to €0.044 from €0.36 in 2006.
The balance sheet shows total assets of €105.1 million as at 31 December 2007, 8.8 per cent higher than the previous year principally as a result of an uplift in the value of investment property. Cash and cash equivalents at the end of the year amounted to €3.2 million with shareholders’ funds decreasing by 2 per cent to €28.9 million.
In the Preliminary Profit Statement, the Directors noted that despite the prevailing environment, the Group is well-positioned to take advantage of an upturn in due course and confirmed that it is actively pursuing opportunities for acquisitions.
On 14 March 2008, GlobalCapital plc announced that it was notified by The Provident Real Estate Fund that as at 31 January 2008, the Fund held 750,534 GlobalCapital plc shares, equivalent to 5.68% of the total issued share capital. The Provident Real Estate Fund had a net asset value of MUR220 million as at November 2007, equivalent to circa €5.2 million. The fund is managed by Bramer Asset Management Ltd of Mauritius, a member of the British American Investment Group. British American is the largest shareholder in GlobalCapital plc holding a 48 per cent equity stake.