BOV rights is­sue ap­proved as bank re­ports strong re­sults

The Malta Business Weekly - - FRONT PAGE -

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

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