The Global Capital group owns a 12th-century castle in Collalto Sabino, 50km outside of Rome, currently on sale for €8-9 milllion.The intended purchase of shareholding by EIP may have saved Global Capital from the brink – with its auditors warning in its 2014 results that, without funding, there was “a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern”.
EIP is a Malta-registered entity owned by two Italians with a background in the investment management sector. Last July, EIP agreed to purchase 6.4 million shares (48.45 per cent) from BAI Co. (Mtius) Ltd, which was put into the hands of a conservator in Mauritius last April after a scandal emerged about its banking operation. The sale is subject to various processes, and the indicative purchase price has not been made public.
The auditors’ warning has really tarnished the group’s big moment: it has been undergoing a painful restructuring since Reuben Zammit took over as CEO last summer – and has just announced its first profit in seven years.
Global Capital is planning a rights issue by the end of the year and EIP has already indicated its willingness to subscribe to €14.54 million of the new ordinary shares. The issue must raise a minimum of €14 million and a maximum of €30 million.
Next June, Global Capital has to repay €14 million outstanding from its €17 million unsecured bond issued in 2006, which has a coupon rate of 5.6 per cent. It currently has an authorised share capital of just €8.7 million (paid up: €3.8m), and according to its shareholder circular, wants to increase this almost fivefold (466 per cent) to €40.8 million.
The Global Capital group reported a profit after taxation of €222,671 for the year ended December 31, 2014, compared to a prior year loss after taxation of €3,661,194. Between 2010 and 2013, the group lost €18.6 million.
The profit was made despite the adverse impact of one-off restructuring and redundancy costs in 2014. The headcount was reduced from 74 to 67 between 2013 and 2014.
Another important indicator in the results was the news that the group decided to retain the investment and advisory function, as the new shareholder intends to expand the investment operation both locally and in other European territories.
An aggressive transformation strategy launched in early June 2014 helped improve the results of all the regulated businesses forming part of the group. The aim was to ensure the long-term sustainability and profitability of the group, primarily by reducing overall operational costs while increasing revenues from the group’s core business activity – life and health insurance.
The group also tried to reduce its €20 million property portfolio. This registered substantially smaller impairments in 2014 of €323,090, compared to €3,174,376 in 2013.
“The group remains actively engaged in disposing immoveable assets that are in excess to requirements. Substantial progress has already been registered in this area and a number of promise-of-sale agreements on certain properties have been signed,” it said.
The group said it was currently “in advanced negotiations with potential buyers to dispose of other excess property” and the aim is to sell all of them by the end of 2016. The property portfolio – somewhat bizarrely – includes a baronial 12th century castle in Collalto Sabino, 50km outside of Rome, currently valued on the books at around €5.5 million – six per cent of the group’s total assets, and a quarter of the investment property portfolio.
Although the group has been open to offers for the castle for some time, it tried to auction it earlier this year for the first time. In spite of considerable interest, no offers were made. The 15-bedroom castle, spread over 2.5 acres, is currently being advertised on various sites for €8 to 9 million.
2014 results at a glance
Profit after tax: €222,671 (2013: €3.7 million loss)
Profit before tax: €811,151 (2013: €4.2m loss)
Accumulated losses 2010-2013: €18.6m
Revenue: €16m (2013: €13.7m)
Gross premiums written: €8.2m (2013: €6.8m)
Turnover (commission and fees receivable): €2.7m (2013: €2.9m)
Expenses: €14m (2013: €17m)
Life insurance profit: €3.1m (2013: €505,614 loss)
Health insurance profit: €574,328 (2013: €930,974)
Property impairments: €323,090 (2013: €3.2m)
Investment company loss: €464,224 (2013: €1.1m loss)