SFS maintains strong profitability growth

SFS Group Pcl (SFS.CY) issued its first half financial results, posting a net profit figure of EUR 14.6 mln, down moderately by 8.3% year-on-year from the EUR 15.9 mln profit booked in 1H07. EPS was recorded at EUR 0.2353.
Despite the very difficult environment, SFS managed to maintain its profits at satisfactory level on the back of the disposal of nine ships during 2008 and due to
the fact that no property was delivered during 1H 2008 (profit on disposal and revaluation of investment property stood at EUR8.6 mln in 1H 2007).
Management stated that it expects total net profit for the year at EUR 31 mln, in line with its earlier forecast.
Revenue was up by 14% yoy to EUR 55.7 mln mainly driven by the Group’s shipping operations, up 55% to EUR 27 mln as well as the financial services division lifting its contribution by 22% to EUR 8.4 mln.
On the other hand, other revenue was down to EUR0.2mln compared to EUR 5.8mln for the corresponding period in 2007, as a result of the contribution of negative goodwill write-off in 2007, emerged by the acquisition of White Knight Holdings.
In addition, the Company’s portfolio decreased in value, resulting in losses of EUR 2.4mln compared to a profit of EUR 0.6mln in 1H of 2007.
On the cost side, Group’s selling and distribution costs were up 11% while administrative expenses increased by 16%, as a result of the revenue growth from financial and shipping operations. Depreciation expenses decreased by 46% to EUR 1.4mln, attributed to the disposal of the Group’s nine ships during first half of 2008. Finance costs were also
reduced by 44%, on lower loans and the disposal of the Group’s ships.
The Group’s share from associated companies showed a loss of EUR 0.2m (1H07: profit EUR 1.3mln) , due to the loss related to SFS’s associated company, TFI Plc which operates in emerging markets and was affected by U.S subprime crisis. Within the scope of the Group’s strategy, SFS proceeded with the disposal of all of its ship owning companies, realizing a profit of EUR 20.0mln, unlocking in this way shareholder value.
The Group’s financial condition was maintained at a satisfactory level, compared to the corresponding period in 2007, due to the decrease in financial leverage (1H08: 1.9 vs 1H07: 2.5) through repayment of debt using the proceeds of the property sales and the sale of shipping subsidiaries.