SFS Group Public Company Ltd (SFS) is forecasting that 2008 profit will increase to EUR 31 mln from EUR 30.3 mln reported for 2007 with significant improvements recorded in most areas of activity.
During 2008, the Group is deploying significant resources in its fund raising effort of EUR400m during 2008 in which it will participate with significant minority stakes.
The Group’s main strategic direction during 2008 will be in the following activities:
Financial services (Cyprus, Greece, Dubai). Venture capital (USA, Europe, Middle East).
Real estate investments (Cyprus, South Eastern Europe, Russia). Shipping investments (Worldwide).
It has also reaffirmed the Quantitative (Financial) Strategic Targets of the Group for 2008-2010: Maintain revenue growth rates of over 20% per annum in continuing operations. Contain fixed cash overheads at below inflation rate plus 3%. Sustain annual return on shareholders equity (RoE) at over 20%. Significant reduction in bank debt by end of 2008 (mainly through profitability and sale of investments). Maintain shareholders equity around EUR110m. Minimum dividend payout ratio of 30% of annual net profits.
1Q08 results
Net profits attributable to shareholders of the SFS Group recorded a 180% increase for the first quarter of 2008 compared to 2007 and reached EUR6.6m from EUR2.4m in 1Q 2007. This corresponds to an annualized RoE of 22.8% in 1Q 2008 compared to 14.4% in 1Q 2007 and 34.1% for the full year 2007. Contributing factors to this were the disposal of five ship owning companies and the significant increase of the financial services revenue.
The Group’s total revenues increased by 23% compared to the first quarter of 2007. The General Price Index of the CSE lost 40% of its value during the first quarter of 2008 and as a result the Group’s proprietary trading portfolio lost only 18%, showing a loss of EUR2.4m for the quarter.
As a result of the above, and taking into account also the realised profit from the disposal of property of EUR1.1m that was recognised in the first quarter of year 2007, the total contribution from operations for the first quarter of 2008 reached to EUR7.6m compared to EUR9.9m for 2007.
Selling and distribution costs remained at the same levels whereas the administration expenses recorded an increase of 17% (from EUR3.1m in 2007 to EUR3.6m in 2008), that resulted mainly from the increased activity in the shipping and financial segments of the Group. The decrease in depreciation and amortisation of assets is due to the disposal of the five paper carriers during the first quarter of year 2008, and due to the devaluation of the US dollar.
Profit from operations of the Group during the first quarter of 2008 reached EUR0.5m compared to EUR2.3m in 1Q 2007.
In line with the Group’s new declared strategy, which involves the setting up of new Funds in its core areas of competency, and investing together with its clients and investors, the Group proceeded with the disposal of five ship owning companies. This disposal gave rise to a realised profit of EUR12.0m, unlocking in this way the shareholder value that was created from this investment.
Total assets reached EUR312m at 31 March 2008 compared to EUR319m at 31 December 2007. It is worth mentioning that the Group decreased its total net debt in the first quarter of 2008 by EUR20m (from EUR79m to EUR59m). The total equity of the Group as well as the total equity attributable to equity holders increased to EUR157.0m and EUR118.7m respectively, from EUR145.6m and EUR113.7m respectively at 31 December 2007.
During 2008, the Group started the implementation of its new strategy and on 11 April 2008, agreed to sell its 51% stake in the share capital of its subsidiary company Waverland Investments, for a total consideration of $29.750.000 (EUR18.798.000) in cash. The profit that arose from the sale of Waverland Investments, whose net assets were $10.285.000 (EUR6.499.000) was $14.872.000 (EUR9.397.000). Due to exchange differences that had arisen to that date, the Group had already written off EUR2.516.000 losses through reserves. Due to the sale of the subsidiary, these losses were transferred to the profit and loss account, and therefore the profit arising from this sale will be reduced to EUR6.880.000. The profit attributable to the shareholders of SFS amounts to EUR5.895.000. The profit from this disposal is not recorded in the results of the first quarter of year 2008.
