August dominated by companies’ interim results
Monthly Round up Report for August 2017
In August, the Malta Stock Exchange launched its new
MSE Equity Total Return Index,
which includes the dividend payments distributed by listed companies. The index fell by 1.272 per cent, closing at 8,925.135 points. Turnover amounted to €9.2m spread across 22 equities of which 11 fell, nine gained ground and two closed unchanged.
Simonds Farsons Cisk plc
shares registered an increase for the fifth consecutive month having advanced by €0.24 or 3.1 per cent as a mere 915 shares changed ownership across five deals. The food and beverage equity closed at a record high of €8.
Bank of Valletta plc (BOV)
shares oscillated between a monthly high of €2.15 and a low of €1.99, to ultimately close 2.5 per cent lower at €2.097. The equity witnessed 355 trades of 892,108 shares. The board of directors of BOV decided to voluntarily provide early disclosure of summarised financial information for the interim six-month period ended June 30, 2017.
The group registered a profit before tax of €68m, equating to a Return on Equity (ROE) of 18 per cent – €5m, or 8 per cent higher when compared to the same period last year after adjusting for the one-off gain of €22m, arising on the disposal of the bank’s interest in Visa Europe. This was mainly due to the even lower interest rate environment experienced in 2017. Analysing into further depth the group’s different segments, the increase in profit arose predominantly as a result of improved profitability within the Personal Banking & Wealth Management division (up by 26 per cent) and Corporate Banking division (up by 11.1 per cent).
The bank is planning to strengthen its capital base by issuing €150m in a fresh issue of share capital, in order to strengthen its capital buffers, and to enable the bank to undertake new investments, sustain lending activity and distribute appropriate dividends to its shareholders.
HSBC Bank Malta plc shares stumbled by €0.15 or 7.3 per cent as 81 transactions of 337,811 shares were struck, closing at €1.90. The bank registered a profit before tax of €25.9m for the six months ended June 30, 2017, compared to a profit of €41.3m registered in the comparable period of 2016. On an adjusted basis, after excluding the €10.8m investment gain on the sale of Visa Europe last year, profit was down by 15 per cent. Net interest income for the period under review amounted to €60.3m – down by 5.6 per cent from 2016. However, all three main business lines, Retail Banking and Wealth Management, Commercial Banking and Global Markets, continued to be profitable during the six month period under review. Earnings per share (EPS) decreased from €0.075 to €0.047. The bank announced that a net interim dividend of €0.03 net of tax per share will be paid on September 11, 2017 to shareholders on the bank’s register as at August 10, 2017 – in-line with the current dividend pay-out ratio of 65 per cent.
Lombard Bank Malta plc
shares fully erased July’s gain having edged 1.3 per cent over three deals of 3,330 shares, closing €0.03 lower at €2.36. During the month the company reported that profit before tax for Lombard Bank group – consisting of Lombard Bank Malta plc and Redbox Limited plc (the company holding the bank’s shares in MaltaPost plc) increased by 7.6 per cent to €4.7m for the first six months of 2017, compared to €4.4m in the same period last year. Net interest income at bank level for the first half of 2017 rose by 1.9 per cent from €7m to €7.1m.
The unfavourable interest rate environment persisted, putting further downward pressure on the interest margin. The bank managed these rates, which were absorbed and not passed on to its customers. This cost was mitigated by additional interest earned from a volume increase of 13.5 per cent in Customer Loans and Advances, thus resulting in a positive net interest margin. EPS increased from €0.057 to €0.06. No interim dividend payment is being recommended.
FIMBank plc shares were the only positive performers in the banking industry, having gained seven per cent across 13 trades of 502,141 shares, to close $0.05 higher at $0.76. In August the Group announced that it had registered a profit before tax of $4.2m for the six months ended June 30, 2017 compared to $2.2m registered during the same period in 2016. Operating income for the period under review amounted to $25.7m, an increase of 17.4 per cent from 2016. Meanwhile, EPS increased to $1.32 from the $0.38 registered in 2016. The directors do not recommend the payment of an interim dividend.
GlobalCapital plc shares registered the best performance for the month having soared by 10 per cent over two trades of 1,540 shares, closing €0.03 higher at €0.33. The company reported that Christopher J. Pace, the founder shareholder who held 5.04 per cent of the voting rights in the company had disposed of all his shares in the company.
Global Capital reported that it registered a profit before taxation on a consolidated basis for the six months ended June 30, 2017 totalling €2.4m compared to the prior period equivalent to €1.9m.
GlobalCapital Life Insurance Limited’s contribution towards the consolidated profit before taxation amounted to €1.3m, compared to a profit of €696,352 for the same period in 2016. The continued efforts to registering sustained levels of new business resulted in an increase in the value of in-force business for the period under review of €1.2m.
The GlobalCapital Financial Management Limited also registered an improved level of activity and likewise an increase in operational costs. This, together with enhancements to the company’s provisioning policy, led to a profit before taxation to €131,607 compared to €7,169 for the period ended June 2016. The directors did not recommend the payment of an interim dividend.
Mapfre Middlesea plc shares increased by €0.039 or 2.1 per cent as 5,902 shares changed ownership across eight transactions, closing at €1.939.
Plaza Centres plc shares headed the list of fallers having sagged by 9.5 per cent, to close €0.109 lower at €1.04. The equity was active on 15 deals of 102,900 shares.
Tigne Mall plc shares fell by €0.07 or 7.2 per cent over the highest turnover for the month of 17 trades of 3.2m shares, closing at €0.90. The Group reported that it registered a profit before tax of €1.6m for the six-months ended June 30, 2017 compared to €1.4m registered during the same period in 2016. Revenue for the period under review amounted to €2.9m, an increase of 3.5 per cent from 2016. Meanwhile, EPS increased to €0.019 from the €0.014 registered in 2016.
The directors have declared an interim net dividend payment of €726,150 (2016: €705,000) equivalent to €0.0128. The interim dividend was paid on August 31, 2017 to shareholders on the company’s register at close of business on August 17, 2017.
Malita Investments plc
shares slipped by two per cent as 262,000 shares changed hands over 11 transactions, to close at €0.75. The company reported that it registered a profit before tax of €9.7m for the six months ended June 30, 2017, compared to €4.9m registered during the same period in 2016. Revenue for the period amounted to €3.5m, an increase of 1.8 per cent from 2016. Meanwhile, EPS decreased to €1.13 from the €2.66 registered in 2016.
The directors of the company approved the payment of a gross interim dividend of €0.0132 per share equating to an interim net dividend of €0.00858 per share. The interim dividend will be paid on September 7, 2017 to the shareholders on the company’s share register at close of business at the MSE on August 18, 2017.
MIDI plc shares rose by 1.6 per cent across seven deals of 70,000 shares, to close at €0.31.During the month the company reported that it has registered a loss before tax amounting to €1.5m for the six months ended June 30, 2017 compared to the €1.1m registered in the same period under review last year.
The results are in line with the company’s projections and are a consequence of having practically no apartments which it could handover to their respective owners. Q2 apartments are expected to be delivered during 2018 and hence profits registered from these sales will be accounted for in the company’s 2018 financial statements. The company is projecting an overall loss for 2017 financial year.
As a result, revenue during the period under review decreased by 52.3 per cent from €3.9m. EPS decreased from negative €0.004 in the first six months of 2016 to negative €0.0078 in the same period last year. No interim dividend has been recommended.
Malta Properties Company plc shares closed August
unchanged at €0.51 as 57 transactions of 371,743 shares were struck. The group registered a profit before tax of €727,774 for the six-month period ended June 30, 2017 compared to €928,358 registered during the same period in 2016. Revenue from leasing of property for the period amounted to €1.5m, a decrease of 7.5 per cent from 2016.
PG plc (PG) shares have registered an increase on every consecutive month since their listing in May. The equity advanced by 4.5 per cent in August as 39 trades of 135,127 shares were executed, to close €0.06 higher at €1.40.
PG announced that it has registered an annual profit before tax of €10.8m for the period ended April 30, 2017 compared to €6.7m registered in the same period in 2016. This surge in annual profit before tax can be explained further by a number of material changes in the composition of the group. The group increased its shareholding in PAVI Supermarket from 50 per cent to 100 per cent on August 31, 2015. Moreover, PAMA Shopping Village opened for business in late October 2015, and the financial year ended April 30, 2016 accordingly only includes six months operation of the supermarket and its related retail outlets; whereas a full year’s trading results of this business are reflected in the financial year ended April 30, 2017. The retail mall within the PAMA Shopping Village, including the Zara Home outlet situated therein, commenced operations in November 2016.
Revenue for the period under review amounted to €91.7m, a rise of 65.8 per cent from 2016. EPS increased to €0.35 from €0.25. In line with the company’s policy as declared in the company’s prospectus dated March 27, 2017 the first dividends payable will be for the current financial year ending April 30, 2018.
GO plc shares increased 0.6 per cent across 65 transactions of 217,798 shares, closing at €3.57. The board of directors of the company approved the group interim unaudited financial statements for the six month period ended June 30, 2017. The GO Group reports improved results, with growth in revenue and profitability as well as continued robust cash generation from operations. During the period under review, revenues increased by €4.3m to €81m (2016: €76.7m). This led to an improvement of €2.7m (9 per cent) in earnings before interest, tax, depreciation and amortisation EBITDA), which amounted to €32.6m (2016: €29.9m) and an operating profit of €14.6m (2016: €12.3m). No dividends were declared.
Malta International Airport plc shares edged 0.7 per cent over 55 deals of 180,714 shares, to close €0.03 lower at €4.17. The number of passengers passing through the terminal in July increased by more than 90,000, signifying an upturn of 15.5 per cent over the same month last year. July’s 675,111 passenger movements exceeded the airport’s previous passenger traffic record, of August 2016, by 12 per cent.
International Hotel Investments plc shares slipped by 1.5 per cent as 15 trades of 49,592 shares were executed, closing at €0.61. The company reported that during the first six months of 2017, the IHI group registered an increase in revenue of €44.5m over the corresponding period last year. The group registered a loss before tax of €2.3m, compared to a €1.9m profit registered in the same period last year.
A factor behind the increase in revenue and finance costs across the board from all International Hotel Investments plc’s (IHI) fully owned subsidiary hotels, is the consolidation of the London Hotel operation as from the beginning of this year. In the past, as neither of the two equal shareholders in the holding company of this operation could effectively exercise control, in terms of IFRS rules and regulations, IHI could not consolidate these results but only report the ultimate bottom line item of net profit or loss after tax under ‘investments accounted through the equity method’. With a change in the control provisions, approved at the end of last year, the Company is now able to consolidate the London Hotel results and then account for the 50% share of equity not belonging to IHI through minority interests. In consequence of this very significant development, it is now possible to report revenues, direct costs, EBITDA, interest costs and depreciation for the London operation jointly with all the other wholly owned subsidiaries of IHI. In summary, this means that it is not possible to conduct a like for like comparison in the individual line items on the income statement between 2017 and 2016.
Another factor which had a material impact on the Company’s results for the six month period running between January 1, 2017 and June 30, 2017, was the difference on exchange. While in 2016 IHI reported a favourable differ- ence of around €5.3 million, in 2017 the Company is reporting an adverse variance of €2.9 million – a shift of over €8 million in exchange differences from one reporting period to the other. This is, in the main, all attributable to the rate of exchange prevailing between the Euro and the Rouble in converting the Company’s Euro loan at the prevailing rate of exchange at balance sheet date. In 2016, there was an appreciation of the Rouble versus the Euro rate between January 1, 2016 and June 30, 2016, while in 2017 the opposite occurred. The fall in sterling also had a negative impact on the results. EPS decreased from €0.003 to a negative €0.001. No interim dividends have been announced.
RS2 Software plc
shares fell by €0.065 or 3.5 per cent over 57 deals of 342,140 shares, to close at €1.78. The group reported that it had generated total revenues of €10.6m for the first half of 2017, compared to €9.7m reported in the comparable period of 2016. Net increase in revenue from services and managed services has partly offset a decline in licence fees.
Profit before tax amounted to €2.5m, an increase of 38 per cent when compared to the same period last year. In addition to the net increases in revenue when matched to expenses, this positive result emanated from the fact that the group was impacted by exchange losses which were lower by 52 per cent compared to the previous year, and by managing to double the amount of development costs which was capitalised over the same period last year. EPS during the period increased from €0.008 in 2016 to €0.009 in 2017.
Due to further substantial investment in infrastructure and business development, the Board is not declaring an interim dividend.
Loqus Holdings plc shares traded flat at €0.175 over two deals of 1,100 shares.
Grand Harbour Marina plc (GHM) shares appreciated by
nine per cent as 700 shares changed ownership over a sole transaction, closing €0.074 higher at €0.894. GHM approved the half-yearly report of the company for the six months ended June 30, 2017. The combined revenues of GHM and IC Cesme fell slightly from €3.1m in the first six months of 2016 to €2.9m in the corresponding period this year.
Group profit before tax for the period ended June 30, 2017 which includes the 45 per cent share of the profits of IC Cesme, amounted to €0.2m, compared to the €0.4m reported in the same period last year. There was no dividend payment during the six months ended June 30, 2017.
Medserv MaltaPost plc
shares fully recouped July’s loss having advanced by €0.085 or 6.8 per cent as 33 trades of 257,134 shares were struck, to close at €1.335. The company reported that turnover for the six month period ended June 30, 2017 amounted to €13.6m compared to the €17.3m registered in the comparative period. This was a result of a slowdown in performance across the group’s operations, Integrated Logistics Support Services (ILSS) and Oil Country Tubular Goods (OCTG). However operations are expected to pick up in both ILSS and OCTG towards the end of this year.
The group registered a loss before tax of €2.9m, compared to the profit before tax of €275,851 registered in the same period in 2016. EPS decreased to a negative €0.061. No interim dividends are being recommended.
shares decreased by two per cent across 11 trades of 14,024 shares, closing at €1.98.
Santumas Shareholdings plc
shares edged 0.4 per cent over 18 transactions of 37,856 shares, to close at €2.141. The board of directors of the company approved the audited financial statements of annual results for the financial year ended April 30, 2017. The company reported that the registered a profit before tax of €1.83m, compared to €2.37m registered in 2016. Total revenue for the period under review amounted to €1.96m, a decrease of 21.2 per cent from 2016. However, the results for the year have been materially affected by the redemption of one particular ground rent which resulted in a net income of €900,541. Despite the material realised gain from this transaction, the results for 2017 are not materially different from the profits shown for the financial year ended April 30, 2016 in view of the unrealised profits booked following the increase in fair value of investment properties in financial year ended April 30, 2016 – part of which has been realised in the financial year ended April 30, 2017.
Meanwhile, earnings per share decreased to €0.36 from the €0.48 registered in 2016. The Board further resolved to recommend that the Annual General Meeting approves the payment of a bonus share issue of one share for every two shares held which will be allotted to shareholders on the company’s share register as at close of business on December 1, 2017. The bonus issue will be funded by a capitalisation of reserves amounting to €609,508. The management further highlighted that the previous two years have both yielded extremely positive results, primarily as a result of one-off events which are not expected to be repeated in the short-term. No dividend payment is being proposed.
In the corporate bond market 43 issues were active of which 14 fell, 23 advanced and six closed unchanged as turnover amounted to €5.5m.
In August, Simonds Farsons Cisk plc (SFC) announced that it will be issuing €20m 3.5% SFC Unsecured Bonds 2027 while redeeming the €15m 6% SFC Bonds 2017-2020. Preference was given to the existing SFC bond holders.
Grand Harbour Marina plc (GHM)
announced the basis of acceptance for the €15,000,000
GHM p.l.c. 4.50% Unsecured Bonds 2027. Applications for an
aggregate value of €8,869,200 were received for the €11,000,000 bonds reserved for the redemption bondholders. The balance of the bonds not subscribed to by the redemption bondholders equal to €2,130,800 was reserved for subscription by selected authorised financial intermediaries through an intermediaries’ offer. Meanwhile, €2,832,300 were received for the €2,000,000 bonds reserved for the existing shareholders - the first €20,000 were allotted in full, as well as an additional 21.78 per cent on the remaining balance, rounded to the nearest €100. Trading in this bond commenced on August 23, 2017.
In the sovereign debt market turnover totalled to €42.6m spread over 28 issues of which 20 gained ground and eight slipped.
The Government issued the 62+ Malta Government Savings Bond at €100 per bond offering a coupon of 3% per annum maturing on September 13, 2022. The applications for the issue were heavily subscribed for as pensioners jumped at the opportunity. This article, which was compiled by Jesmond Mizzi, Managing Director of Jesmond Mizzi Financial Advisors Limited, does not intend to give investment advice and the contents therein should not be construed as such. The Company is licensed to conduct investment services by the MFSA and is a Member Firm of the Malta Stock Exchange and a member of the Atlas Group. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information, contact Jesmond Mizzi Financial Advisors at 67 Level 3, South Street, Valletta, or on Tel: 21224410, or email firstname.lastname@example.org