03 May 2006

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Business Today

Mixed results for listed companies

By a special correspondent

The Malta Stock Exchange was inundated with the publication of the financial results of four quoted companies, each with a different level of success for the financial year ended 2005.
IHI Plc, which operates in the tourism sector in different countries, registered an improved performance in 2005 and reported a profit before tax against a loss in the previous year.
This entity is the only one that reports its results and trades in Euros.
The revenue improvement reached 17% to exceed EUR54.5 million. Moreover, the condensed income statement includes two transactions which positively affected the results. One was a partial reversal of an impairment charge of EUR5.47 million which was recognised in previous years. This contrasts with a EUR2.2 million impairment in 2004.
Another positive figure was the EUR2.4 million revaluation to the fair value of an investment property on the Group’s land adjacent to the Corinthia Nevskij Palace Hotel.
The profit before tax exceeded three quarters of a million Euros in 2005 against a loss of EUR11.3 million. In the previous year, the Group could utilise a tax credit whilst this year’s reversal of the impairment charge on the hotel property and the revaluation of the fair value of an investment property triggered a tax charge.
IHI has a strong balance sheet with total assets of the group at EUR347 million adequately covering all the liabilities at EUR219 million. Overall, IHI plc registered a loss for the year of EUR737,000 against the EUR8.1 million sustained in 2004. This is reflected in the loss per share being one euro cent in 2005 and the Board not recommending any dividend.

Another Group that issued its financial results was Simonds Farsons Cisk p.l.c. The results show that the turnover decreased slightly by 1.8% to reach Lm26.7 million but the operating profit on the amount was only Lm319,000 being a drastic decrease from the Lm1.4 million of 2004. The company that registered gains from fair values of investment property and the overall profit from continuing operations as a result of an income tax credit, nearly reached that registered in 2004.
The group took a loss of Lm542,000 for discontinued operations to bring the profit for the year at Lm210,000 being 35% less than that of the previous year.
Looking at the Balance Sheet, the shareholders’ funds represent 44% of the current assets and are adequate to cover the current liabilities.
The shareholders have been faced with disappointing results with earnings per share being 1c4 against 2c5 registered in 2005.
The financial year for Farsons ended in January 2006, and the Board of Directors are recommending an interim dividend for the approval of the Annual General Meetings. The dividend of 1c1 per share is 48% than that earned in the previous year.
Farsons in 2005, encountered a difficult economic climate as a result of less tourists visiting the island, and the affect of higher utility costs on the Maltese consumer.
Yet, the Group will continue with its investment programme and in November it will redeem the Lm2,000,000 bonds (6.25%). In future years Farsons plan to make more use of its surplus property.

The Third Company to issue its full year results was MiddleSea Insurance plc, which registered a profit before tax of Lm6.5 million against Lm3.6 million for 2004. This is a 79% increase and after deducting the tax, the profit stood at Lm4.9 million bringing the Earnings per share to 38c5. All revenue streams related to insurance registered an increase as did investment income. One would have to see if income from investments can be sustained in the future.
A review of Middlesea’s Balance sheet reveals that the Total Assets stand at Lm108.4 million of which Lm31 million are in capital and reserves and Lm60.3 million are allocated for technical provision. The Group increased its borrowings from Lm2.9 million in 2004 to Lm6.4 million.
On the basis of these favourable results, Middlesea declared a final dividend of 7c per share and a special dividend of 3c on the occasion of the 25 Anniversary of their operations. The Annual General meeting will also have to approve a recommendation by the Board of Directors for a share split.

Bank of Valletta
Bank of Valletta plc was the fourth company, last week to publish results. The interim results show the BOV’s profit increased by 92.2% so that the net profit before tax stood at Lm9.8 million. The Bank registered a strong performance in financial markets, investments, growth in its loan book, sale of investments and other products as well as increased contribution from the Group’s insurance business. BOV also succeeded in reducing its cost to income ratio to reach 44.3%.
This year the net impairment loss stood at Lm3.9 million compared to Lm6.6 million in the previous year and includes one specific impairment charge of Lm2.9 million. This impairment is questioned as it came following a more prudent view of a collateral held against certain impaired accounts leading to a downward revaluation of the realisable value.
Following this transaction the profit after tax was Lm13.1 million against Lm6.7 million in 2004 thus registering an earnings per share of 11c7. The Bank’s balance sheet got stronger with total assets reaching Lm2.2 billion and net advances of Lm826.7 million.

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