Globalcapital p.l.c. (the Group) has registered €1,878,526 in pre-tax earnings for the first six months of this financial year ending on the 30th June 2016. In an interim Directors’ Report published today on the Malta Stock Exchange, the Group reported a healthy and improved performance during the reporting period, especially when compared to the profit before tax of €1,176,197 reported in the corresponding period last year.
Operational profitability during the first six months of 2016 increased to €1,786,920 from €977,795 during the corresponding period in 2015
GlobalCapital Life Insurance
The Directors reported a continuation of stable growth in its levels of new business resulting in an increase in the value of in-force business for the period under review of €1,244,615 compared to €535,385 in June 2015. Operational efficiencies introduced earlier this year have also contributed towards achieving this positive performance. Notwithstanding a swing in market forces which had a marginal impact on the investment portfolio of the life company, GlobalCapital Life Insurance still registered a profit before tax of €696,352 compared to a profit of €1,000,961 for the same period in 2015.
Agency and Investment business
The Investment Division registered a sizeable drop in its revenue when compared to the first six months of 2015. This was driven by both a reduction in new business and the adverse volatility in international markets. The containment of operational costs helped results remain in positive territory.
Revenues from GlobalCapital Health Insurance Agency, representatives of Bupa in Malta, improved over the same period in 2015. This revenue growth together with a reduction in operating expenditure ended the first six months of 2016 with a profit before taxation of €640,696 compared to €477,777 as of June 2015.
Achieving long term financial stability
The Directors’ report reviewed the Group’s efforts to continue strengthening its financial stability.
During the first half of 2016, the Group pursued a Rights’ Issue increasing its share capital by 127% and returning a total net capital injection of €4.7m. As a result, Investar Plc (formerly EIP plc) increased its shareholding from 8.93% to 52.60%.
Subsequently, the Company had issued a €10 million 5% unsecured bond maturing in 2021 and these proceeds together with those from the Rights’ Issue were used to complete the repayment of the maturing bond amounting to €13,823,200.
The repayment of the maturing bond resolved the uncertainty disclosed in the basis of preparation of the financial statements dated 31 December 2015, which was the subject matter of the basis of Disclaimer of Opinion issued by the auditor on the same financial statements.
The increase in share capital, the debt restructuring and the improved performance reported over the last four consecutive reporting periods led to a significant improvement in the Group's debt to equity ratio reducing it from 188% as at end December 2015 to 77% as at end of the current reporting period.
Moreover, through the motions of the Extraordinary General Meeting held on the 22 July 2016, the company increased its authorised share capital from 30 million to 85 million ordinary shares of €0.291172 each. It is the Directors intention to increase the issued share capital of the Company, subject to any necessary regulatory approvals, in order to increase the capital base by raising additional equity to meet the general financing requirements and to repay the Company’s unsecured bonds maturing in 2021.
The Directors have therefore considered that on the basis of the above, there no longer are material uncertainties that may cast significant doubt about the company's ability to continue as a going concern. Consequently the interim financial statements have been prepared on a going concern basis.