BOV rights issue approved as bank reports strong results

The MSE Equity Total Return Index partially erased September’s positive performance of a 1.016% increase having declined by 0.89% in October, to close at 8,935.647 points. Activity was spread across 21 equities of which 12 advanced and seven fell. Turnover totalled to €11,677,186.

In the last week of October, the board of directors of Bank of Valletta plc (BOV) announced the submission of an application for authorisation for admissibility to listing, to the Listing Authority requesting the approval of a prospectus in relation to the Rights Issue. Yesterday, the Bank issued the formal notice following the approval by the relevant authority. The Rights Issue will be offered to existing shareholders appearing on the issuers’ register of members as at close of business on October 26, 2017. Shareholders will be entitled to one ordinary share for every four ordinary shares held. The offer price was set at €1.43 per new ordinary share, consisting of a discount of 27.47% to the theoretical ex-rights price (“TERP”). In calculating the TERP, the issuer has taken into account the trade weighted average price of the issuer’s ordinary shares over a three-month period from July 18, 2017 to October 17, 2017.

The Rights Issue, if fully taken up, will result in the issued share capital of the issuer increasing by 25%. Existing shareholders who accept their proportionate entitlement of rights in full, will suffer no dilution to their interests in the issuer. However, those shareholders who do not take up any of their rights to subscribe for the new shares will, if the Rights Issue is fully taken up, suffer an immediate dilution of 20% in their interests in the bank.

BOV also published the group interim results for the twelve-month period ended September 30, 2017, reporting a pre-tax profit of €143.9 million. This compares to a pre-tax profit of €145.9 million for the corresponding period last year. The latter result included a one-time windfall gain of €27.5 million, resulting in an adjusted comparable profit last year of €118.4 million. Earnings per share (EPS) increased to €0.233 from €0.226 in 2016.

Core profit (profit stated before fair value movements and the contribution of associated companies) amounted to €124 million, an increase of almost 23% over the €101.2 million registered for the corresponding period in 2016. Pre-tax return on equity is 19% (2016 as adjusted: 16.9%), while return on assets stands at 1.3% (2016 as adjusted: 1.1%).

Two significant items which have also strongly contributed to the group’s overall profitability were the reversal of impairment charges against non-performing loans (2017: +€7.5 million, 2016: -€23.1 million), and a strong recovery from its associated companies in the life and non-life insurnace businesses (2017: +€14.5 million, 2016: +€3.7 million).

Group total income rose marginally over last year, to reach €256.4 million. Net interest margin, which yielded €147 million (2016: €149 million) accounted for 57% of this total income, compared to 59% last year. On the other hand, the growth in fee and commission income made up for the reduction in interest margin, as the group availed itself of the opportunities offered by the strong growth momentum of the Maltese economy.

The bank reported that during the period under review, deposits rose by €897 million, and have now exceeded €10 billion. Concurrently, the demand for loans, although showing a noticeable increase over recent years, fell far short of the growth in deposits. Lending increased by €190 million, with growth being registered in both business finance and personal finance sectors. The surplus of incoming deposits was channelled into short term funds, which, in the current environment, are yielding low-to-negative returns. This combination of solid deposit inflow and a more subdued growth in credit has resulted in a historically low loans-todeposits ratio of 43%.

During the month, BOV shares fell by €0.07 or 3.4% as 365 deals of 2,451,780 shares were struck, to close at €2.00. On October 25, 2017, the equity traded ex-rights and thus investors who opted to purchase shares of the bank will now not be entitled to participate in the imminent rights issue which is awaiting approval from the competent authority.

HSBC Bank Malta plc shares fully erased September’s 1.8% gain having declined by 3.9% as 222,249 shares changed ownership on 58 trades, closing €0.075 lower at €1.86. FIMBank plc shares added on September’s 6.6% decrease, having edged by 1.4% on 4 transactions of 36,622 shares, to close at $0.70.

Lombard Bank Malta plc shares were the only positive performers in the banking sector having advanced by a minimal 0.05%, after falling by 6.8% in September, closing at €2.201. The equity was active on 30 trades of 99,547 shares.

The insurance and investments provider Mapfre Middlesea plc registered a 1% decline in its share price as 7 deals of 16,710 shares were executed, to close at €1.92. In the same sector, GlobalCapital plc shares advanced by 8.2% across 6 trades of 42,000 shares, closing at €0.357.

Malta (MIA) International Airport plc

shares rallied by €0.29 or 6.5% as 662,256 shares changed hands across 119 trades, to close at €4.75 - registering a 17.3% increase as at year-to-date. The local airport operator announced that in September the airport registered an increase of more than 89,000 passenger movements over the same month last year, with a total of 626,488 guests welcomed at MIA – translating into an increase of 16.7% over 2016. The United Kingdom continued to lead MIA‘ s list of top markets, contributing 146,160 passenger movements to September’s total traffic, and growing by 4.7% over last year mainly due to an increase in capacity as a result of the Cruise & Fly operation.

Simonds Farsons Cisk plc shares have recorded an increase for seven months, having advanced by €0.15 or 1.6% in October and 37.9% as at year-to-date, to close at €9.65. The shares of the food and beverage suppliers were active on 14 transactions of 7,593 shares.

GO plc shares have registered an increase for four months, having risen by 0.2% over 39 deals of 65,645 shares, closing at €3.596. The telecommunications provider announced that it will be investing in excess of €100 million in the coming five years to ensure that its infrastructure and systems reflect technological developments and con- tinue to serve the growing demands of its market. This investment is additional to circa €240 million which was invested over the past decade. The company also announced that it is evaluating the feasibility of creating a new link with an existing submarine cable which currently links Tunis with Marseille.

Grand Harbour Marina plc shares headed the list of fallers having stumbled by €0.168 or 18.8%, to close at €0.726. The equity was negotiated over a single trade of 2,800 shares.

International Hotel Investments plc (IHI) shares increased by a marginal 0.8% across 41 deals of 994,275 shares, closing at €0.61.

In the property management sector, Plaza Centres plc shares advanced by €0.059 or 5.6% over 11 transactions of 124,345 shares, to close at €1.109. MIDI plc shares rose by 3.2% as 19 deals of 957,800 shares were executed, closing at €0.32.

Malita Investments plc shares recouped September’s 1.2% loss having advanced by 1.4% across 8 deals of 54,000 shares, to close at €0.751. Malta Properties Company plc shares fully erased September’s 1.8% gain, having declined by 2.3% as 179,141 shares were struck over 24 transactions, closing at €0.507.

Tigne Mall plc shares closed unchanged at €0.96 across 8 trades of 85,000 shares.

The other non-movers for the month were PG plc shares having closed unchanged at €1.50. The supermarkets and retail owner’s shares witnessed 31 deals of 198,172 shares.

Santumas Shareholdings plc shares appreciated by €0.06 or 2.7% over 5 transactions of 21,806 shares, to close at €2.25. The company announced that the 44th Annual General Meeting (AGM) held on October 27, 2017 approved all resolutions on the agenda.

Medserv plc shares recouped by 5% after having registered a 10.1% fall in September. The oil and logistics services company’s shares were active on 41 trades of 302,673 shares, closing €0.06 higher at €1.26 - recording a 21.2% loss as at year-to-date.

RS2 Software plc shares registered a decline for the third month having decreased by €0.095 or 5.5% across 40 deals of 292,646 shares, closing at €1.64.

MaltaPost plc shares appreciated by €0.099 or 5% as 49,066 shares changed hands over 19 trades, to close at €2.079.

The Board of Loqus Holdings plc approved the financial statements for the financial year ended June 30, 2017 and resolved that they be submitted for the approval of the shareholders at the forthcoming AGM. The company registered a revenue of €3.5 million, compared to €3.9 million registered in 2016. Profit for the year amounted to €484,014, compared to €268,549 last year. The equity was not active in October.

In the corporate bond market turnover amounted to €8.1m spread across 49 issues of which 29 gained ground and 17 fell. The 5.75% IHI Unsecured € 2025 headed the list of gainers having advanced by 3.1%, to close at €109, while the 5.3% United

Finance Plc Unsecured € Bonds 2023

was the worst performer having declined by 2.8%, closing at €105.01.

The board of Mediterranean Bank plc approved a capital contribution from the bank’s majority shareholder, MeDirect Group Limited, amounting to €8.2 million, by means of a Board Resolution dated September 29, 2017.

During the month, bank also announced the basis of acceptance for the issue of Euro equivalent of €20,000,000 5% Mediterranean Bank Subordinated Unsecured Bonds 2027. Interest on the bonds commenced on October 13, 2017 and trading commenced on October 27, 2017.

The board of 6pm Holdings plc, which has a bond listed on the Malta Stock Exchange, approved the company’s audited financial statements for the year ended December 31, 2016. The group reported a loss after tax of £12.66m compared to the restated loss of £4.76m reported in 2015. The net liabilities as at 2016 stood at £13.8million.

The board has determined that the results in respect of the financial years ended December 31, 2014 and December 31, 2015 were materially misstated, resulting principally from a failure of internal controls and management in the group operations.

The restated financial statements show that during the financial years of 2014 and 2015, revenue as well as profit/ (loss) before tax have significantly declined. The restated profit/ (loss) before tax during both reporting periods stood at negative £0.1m and negative £3.2m, from the previous profit before tax of £0.9m and £1.6m respectively. The restated net assets/liabilities during the financial year ending December 31, 2015 show a net liabilities of £0.5m, from the previous reported net assets of £15.8m.

Furthermore, the company stated that after due consideration of the group’s and the company’s profitability, statement of financial position, capital adequacy, solvency and guarantee of support from Idox Group, the directors are satisfied that at the time of approval of the financial statements, the group and company have adequate access to resources to continue to operate as a going concern for the foreseeable future.

In the sovereign debt market turnover amounted to €32,159,320 spread across 27 issues of which 20 gained ground and seven slipped. The most liquid issue was the 2.1% MGS 2039 having increased by 1.52%, closing at €101.01.

€64.3million - €31.2 million from new applicants while €33.1 million from the previous issue applicants. The offer to eligible applicants was for a total of €30