Stock Market Review - MaltaPost registers record profit of €2.9 million
A week ago, MaltaPost plc published its financial results for the year ended September 30, 2008. The postal operator registered a record pre-tax profit of €2.9 million, 74 per cent higher than 2007 and, more importantly, 28 per cent higher than the...
A week ago, MaltaPost plc published its financial results for the year ended September 30, 2008. The postal operator registered a record pre-tax profit of €2.9 million, 74 per cent higher than 2007 and, more importantly, 28 per cent higher than the forecasts published at the time of the company's initial public offering (IPO) in January 2008.
In line with the dividend policy published in the IPO prospectus, the company also recommended the payment of a dividend, the first dividend to the general public investors who subscribed to the company's shares 12 months ago.
The directors are recommending the payment of a net dividend of €0.04 per share, representing a net yield of 4.9 per cent (after tax) on the current market price of €0.82 and a net yield of eight per cent on last year's €0.50 share price offering at the IPO.
Shareholders have the option of receiving the dividend either in cash or by the issue of new shares at a price of €0.77 per share. The dividend will be paid on March 4 following approval at the annual general meeting scheduled for February 17.
The key highlights of MaltaPost's full-year results are:
• turnover up 10 per cent to €20.5 million;
• EBITDA (earnings before interest, taxes, depreciation and amortisation) of €3.4 million (+47 per cent);
• pre-tax profits up 74 per cent to €2.9 million;
• cash of €7.95 million and shareholders' funds of €9 million;
• no debt.
During the year, MaltaPost's total revenue grew by 10 per cent to €20.5 million, and this improved turnover (principally in the first half of the financial year) was attributed to an overall increase in the company's activity mainly as a result of increased volumes of mail before the general elections in March 2008 as well as sales of philatelic/numismatic issues commemorating the introduction of the euro on January 1, 2008.
MaltaPost and Lombard Bank issued a 30,000 limited edition set of Malta euro coins and miniature stamp sheets carrying a selection of the new coins. During the year, MaltaPost also began encashing government social welfare cheques to start diversifying its services away from traditional mail activities.
The preliminary profit announcement does not reveal the extent of the financial services contribution to overall revenue. In the previous financial year to September 30, 2007, revenue from financial services accounted for only one per cent of total income compared to around 14 per cent for the international industry average.
One of MaltaPost's main objectives following the acquisition of a majority shareholding by Lombard Bank Malta plc in the company was to use the bank's expertise and its own vast branch network to provide low-cost financial services. Should this materialise in the years ahead, it will help the postal operator to counteract the continued decline in traditional mail volumes.
This is also being mitigated by the healthy increases registered to date in parcels and express mail services as a result of more frequent on-line shopping. During the year, MaltaPost reportedly saw a 22 per cent increase in parcel and courier volumes. Moreover, a media report recently stated that there was a 52 per cent increase in parcel volumes over the Christmas period. This should show up in the financial results for the current financial year to September 30, 2009.
Revenue could also be enhanced through the sale of MaltaPost stationery and other items such as telecommunications products, and this should also help it to diversify its income stream further.
On November 30, 2008, the chief operations officer of Melita plc, Stephen Wright, reported that Melita had signed an agreement with MaltaPost to sell its products and services through the post-office branch network. This new source of revenue is also likely to start during the current financial year.
MaltaPost's total costs, incorporating staff costs, other operating costs and depreciation amounted to €17.9 million (September 2007: €17.1 million). Staff costs were marginally lower at €10.1 million and the charge for depreciation declined to €0.87 million from €0.93 million. Meanwhile, other expenses increased to €7 million (September 2007: €6 million). These mainly incorporate costs incurred for international outgoing mail.
EBITDA increased by almost 50 per cent during the year under review to €3.4 million with the EBITDA margin improving to 16.7 per cent from 12.6 per cent the previous year.
Interest receivable on the company's portfolio of financial assets increased to €0.35 million from €0.29 million in the previous year. The postal operator recorded a pre-tax profit of €2.9 million and after deducting tax expenses of €1 million, the profit for the year amounts to €1.9 million, a growth of 72 per cent.
The balance sheet as at September 30 clearly reflects the financial strength and robust fundamentals of the company, with zero borrowings and cash of €7.95 million apart from other financial assets of €3.8 million. Shareholders funds' amounted to €9 million, translating into a net asset value per share of €0.32. The pre-tax return on equity is a very healthy 33 per cent with an equally attractive return on assets of nine per cent.
The September 2008 full-year results, together with the announcement of a healthy dividend, is positive news not only for MaltaPost shareholders, but also for shareholders in Lombard Bank as a result of the latter's 63.8 per cent shareholding in the postal company.
Lombard's full-year results to December 31, 2008, should reflect a strong contribution from MaltaPost when these are published on March 12, 2009. Lombard increased its equity stake beyond the 60 per cent level in recent months through purchases of more MaltaPost shares on the Malta Stock Exchange at around current price levels.
Lombard's additional investment in MaltaPost is a further strong signal of support for the postal operator. The challenge for MaltaPost will be to sustain such profitability levels in the near term as it seeks to counteract the effect of e-substitution.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, RFC, are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.
• Rizzo, Farrugia & Co. acted as sponsoring stockbrokers to MaltaPost plc during the initial public offering.
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Ltd.
In line with the dividend policy published in the IPO prospectus, the company also recommended the payment of a dividend, the first dividend to the general public investors who subscribed to the company's shares 12 months ago.
The directors are recommending the payment of a net dividend of €0.04 per share, representing a net yield of 4.9 per cent (after tax) on the current market price of €0.82 and a net yield of eight per cent on last year's €0.50 share price offering at the IPO.
Shareholders have the option of receiving the dividend either in cash or by the issue of new shares at a price of €0.77 per share. The dividend will be paid on March 4 following approval at the annual general meeting scheduled for February 17.
The key highlights of MaltaPost's full-year results are:
• turnover up 10 per cent to €20.5 million;
• EBITDA (earnings before interest, taxes, depreciation and amortisation) of €3.4 million (+47 per cent);
• pre-tax profits up 74 per cent to €2.9 million;
• cash of €7.95 million and shareholders' funds of €9 million;
• no debt.
During the year, MaltaPost's total revenue grew by 10 per cent to €20.5 million, and this improved turnover (principally in the first half of the financial year) was attributed to an overall increase in the company's activity mainly as a result of increased volumes of mail before the general elections in March 2008 as well as sales of philatelic/numismatic issues commemorating the introduction of the euro on January 1, 2008.
MaltaPost and Lombard Bank issued a 30,000 limited edition set of Malta euro coins and miniature stamp sheets carrying a selection of the new coins. During the year, MaltaPost also began encashing government social welfare cheques to start diversifying its services away from traditional mail activities.
The preliminary profit announcement does not reveal the extent of the financial services contribution to overall revenue. In the previous financial year to September 30, 2007, revenue from financial services accounted for only one per cent of total income compared to around 14 per cent for the international industry average.
One of MaltaPost's main objectives following the acquisition of a majority shareholding by Lombard Bank Malta plc in the company was to use the bank's expertise and its own vast branch network to provide low-cost financial services. Should this materialise in the years ahead, it will help the postal operator to counteract the continued decline in traditional mail volumes.
This is also being mitigated by the healthy increases registered to date in parcels and express mail services as a result of more frequent on-line shopping. During the year, MaltaPost reportedly saw a 22 per cent increase in parcel and courier volumes. Moreover, a media report recently stated that there was a 52 per cent increase in parcel volumes over the Christmas period. This should show up in the financial results for the current financial year to September 30, 2009.
Revenue could also be enhanced through the sale of MaltaPost stationery and other items such as telecommunications products, and this should also help it to diversify its income stream further.
On November 30, 2008, the chief operations officer of Melita plc, Stephen Wright, reported that Melita had signed an agreement with MaltaPost to sell its products and services through the post-office branch network. This new source of revenue is also likely to start during the current financial year.
MaltaPost's total costs, incorporating staff costs, other operating costs and depreciation amounted to €17.9 million (September 2007: €17.1 million). Staff costs were marginally lower at €10.1 million and the charge for depreciation declined to €0.87 million from €0.93 million. Meanwhile, other expenses increased to €7 million (September 2007: €6 million). These mainly incorporate costs incurred for international outgoing mail.
EBITDA increased by almost 50 per cent during the year under review to €3.4 million with the EBITDA margin improving to 16.7 per cent from 12.6 per cent the previous year.
Interest receivable on the company's portfolio of financial assets increased to €0.35 million from €0.29 million in the previous year. The postal operator recorded a pre-tax profit of €2.9 million and after deducting tax expenses of €1 million, the profit for the year amounts to €1.9 million, a growth of 72 per cent.
The balance sheet as at September 30 clearly reflects the financial strength and robust fundamentals of the company, with zero borrowings and cash of €7.95 million apart from other financial assets of €3.8 million. Shareholders funds' amounted to €9 million, translating into a net asset value per share of €0.32. The pre-tax return on equity is a very healthy 33 per cent with an equally attractive return on assets of nine per cent.
The September 2008 full-year results, together with the announcement of a healthy dividend, is positive news not only for MaltaPost shareholders, but also for shareholders in Lombard Bank as a result of the latter's 63.8 per cent shareholding in the postal company.
Lombard's full-year results to December 31, 2008, should reflect a strong contribution from MaltaPost when these are published on March 12, 2009. Lombard increased its equity stake beyond the 60 per cent level in recent months through purchases of more MaltaPost shares on the Malta Stock Exchange at around current price levels.
Lombard's additional investment in MaltaPost is a further strong signal of support for the postal operator. The challenge for MaltaPost will be to sustain such profitability levels in the near term as it seeks to counteract the effect of e-substitution.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, RFC, are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.
• Rizzo, Farrugia & Co. acted as sponsoring stockbrokers to MaltaPost plc during the initial public offering.
• Mr Rizzo is director of Rizzo, Farrugia & Co. (Stockbrokers) Ltd.