Company shows improvement over last quarter and year-over-year
TORONTO, Sept. 22 /CNW/ - Kingsway International Holdings Limited (TSX: KIH), an Asian based financial services firm, today announced its financial results for the fourth quarter and the 2009 fiscal year ended June 30, 2009, and a restatement of balances for the first three quarters of the fiscal year ended June 30, 2009. All figures are in U.S. dollars unless otherwise specified.
The financial performance for Kingsway International Holdings Limited ("Kingsway" or the "Company") and its subsidiaries (collectively the "Group") for the fiscal year ended June 30, 2009 was negatively impacted by the global financial crisis and the volatility of the international financial markets. In the fourth quarter of the current fiscal year, the performance of the Group has significantly improved when compared to the first three quarters of the fiscal year 2009, as a result of the continued growth of the PRC and the correction of the Hong Kong market.
Financial highlights for the fiscal year include:
- Net loss was $6.7 million, or $0.0839 per share, compared with a net
loss of $15.3 million, or $0.1906 per share, for the same period last
- Revenue from services and other income decreased to $11.4 million,
compared with $23.8 million for the same period last year;
- Trading loss from financial assets held for trading was $1.3 million,
compared with a net loss of $15.6 million for the same period last
Financial Results for the Fourth Quarter
The Group reported strong growth in revenue and net income for the fourth quarter compared to the corresponding quarter last year. Total revenue for the fourth quarter of $17.2 million compared with negative revenue of $7.2 million for the corresponding quarter last year. Revenue from services and other income decreased to $3.2 million from $3.7 million for the fourth quarter of last year. Trading income from financial assets held for trading was $14.0 million compared with a trading loss of $10.8 million for the corresponding quarter last year, attributable to the correction of the financial market in Hong Kong during the last quarter of FY2009.
Net income for the quarter was $8.6 million, or $0.1070 per share, compared with a net loss of $9.1 million, or $0.1133 loss per share for the same period last year.
Financial Results for the Fiscal Year
Total revenue for FY2009 increased to $10.1 million from $8.2 million in FY2008. Revenue from services and other income decreased to $11.4 million from $23.8 million in last year. Trading loss from financial assets held for trading was $1.3 million for FY2009 compared to $15.6 million for FY2008. The improved performance of the Group was mainly attributable to the correction of the Hong Kong financial market.
Selling and administrative expenses decreased 32% to $17.1 million for FY2009 from $25.0 million for FY2008. The decrease was mainly due to the decrease in commissions and variable staff costs, including bonuses, which was in line with the decrease in operating revenue.
The Group recorded a $0.8 million fair value gain on financial derivative liabilities in the current year, which arose from the fair value change of the conversion option derivative component of the convertible debentures issued during the year. A $1.6 million gain on the sale of subsidiaries was recognized in FY2008.
Share of loss on investments that were "equity accounted" increased to $1.8 million in FY2009, compared with $0.6 million in last year. The significant increase in the shared loss resulted mainly from the recognition of realized and unrealized losses in the investment portfolio of the investee companies.
Overall, the Group recorded a loss before income taxes and non-controlling interests of $10.0 million in FY2009, compared with $18.5 million in FY2008 and the net loss for the year was $6.7 million, compared with $15.3 million in last year.
Segmented Results of Operations for the fiscal year
Corporate Investment in
Finance & Securities Corporate
Capital Asset & Structured and Other
Brokerage Markets Management Investment Activities
$'000 $'000 $'000 $'000 $'000
Commission & fee
income 5,991 2,133 130 64 877
Interest and other
income 500 206 50 1,404 44
income (44) (617) (794) 126 2
6,447 1,722 (614) 1,594 923
Inter-segment revenue 92 - 48 - 2,661
expenses (8,893) (3,174) (278) (1,931) (5,603)
Share of loss on
influence (83) - (37) (1,699) -
Other expenses (140) (37) (2) (457) (535)
Loss before income
taxes and non-
interests (2,577) (1,489) (883) (2,493) (2,554)
Revenue for FY2009 decreased to $6.4 million, compared with $13.8
million for last year. The decrease in commission and fee income by
43% to $6.0 million in current year was mainly attributable to the
depressed market conditions. As a result of the shrinkage in the
Group's margin loan portfolio, reduction of interest rates and
reduction in the number of initial public offerings ("IPO"), interest
and other income decreased to $0.5 million for FY2009, compared with
$3.4 million for FY2008.
The division recorded an overall loss of $2.6 million in current
year, compared with income of $1.5 million for last year.
- Corporate Finance & Capital Markets
Total revenue decreased to $1.7 million for FY2009, compared with
$7.7 million for FY2008. The significant decrease was mainly due to
the significant reduction of IPO activities in the market, leading to
the drop in fee income from underwriting and placements transactions.
The division recorded an overall loss of $1.5 million for the year,
compared with an income of $1.6 million in last year.
- Asset Management
Trading loss of $0.8 million was recognised for FY2009, compared with
trading income of $1.2 million for FY2008, attributable to the loss
on disposal of an investment received as management fees in prior
The division recorded an overall loss of $0.9 million in FY2009,
compared with an income of $0.7 million in FY2008.
- Investment In Securities and Structured Investment
Total revenue of $1.6 million was recognised in the division in
FY2009, compared to negative revenue of $16.2 million in FY2008. The
improved performance was due to the correction of the Hong Kong
market. In addition, the Group's portfolio outperformed the Hang Seng
Index for the same period, attributable to our successful strategy on
focusing in companies connected with the PRC.
The division recorded an overall loss of $2.5 million for FY2009,
compared with a loss of $21.0 million for last year.
- Corporate and Other Activities
The corporate and other activities of the Group incurred an overall
loss of $2.6 million for FY2009, compared with a loss of $1.2 million
for FY2008. The increase in the loss was mainly attributable to the
slight decrease in the revenue sourced from the Group's technology
division and to an increase in expenses associated with the
implementation of the Company's new business plan.
The Company proposed a final dividend for fiscal year 2009 in the amount of CDN$0.02 per share that will be paid on or about December 8, 2009 from contributed surplus.
Restatement of Balances for the First Three Quarters of FY2009
During the preparation of the annual consolidated financial statements for the fiscal year ended June 30, 2009, it was determined that the conversion option of the convertible debentures issued during the year should be included as a liability component instead of an equity component as the conversion will not result in the issuance of a fixed number of common shares of the Company in settlement of the fixed amount of the liability. In addition, the effective interest rate of the liability component is considered to be higher given the non-tradable nature of the debentures. The impact on the consolidated balance sheet and consolidated statement of operations is summarized in the management's discussion and analysis for the year ended June 30, 2009, which is available on SEDAR at www.sedar.com. The adjustment had no cash impact on the financial statements of the Company.
Over the previous financial year the Group operated in an extremely volatile and difficult environment for financial services firms. During this difficult fiscal year we established our Strategic Investing Group within the Company focused on natural resources, and infrastructure. Our largest asset continues to be our investment in SW Kingsway Capital Holdings Limited which operates our Hong Kong based financial services business. The Company anticipates that the market volatility experienced over the previous fiscal year will continue to impact the growth and profitability of these Hong Kong operations. While some sectors have shown signs of recovery, the Company anticipates continuing weaknesses in the United States and European financial services sectors. However, the Company believes that the Chinese economy will continue to grow, albeit at a somewhat reduced rate; however China's influence as a global economic force will continue to increase, particularly in those sectors where we have focused, being natural resources - mining and energy - and infrastructure. We believe the changes we are instituting will be beneficial for our shareholders and will position the Company to be a financial services provider and investor in those sectors which we believe will continue to prosper from China's increasing needs for natural resources.
About Kingsway International Holdings Limited
The Company is listed on the main board of the Toronto Stock Exchange (TSX) under the symbol KIH. The Group is a middle tier financial services provider, linking the global investment community with PRC's high growth economy. In addition to engaging in proprietary investment activities, the Group offers a variety of complementary, client focused services through its capital markets and asset management divisions.
Founded in 1990, the Group operates from offices in Hong Kong, Beijing, Shanghai, Shenzhen and Toronto.
Forward-Looking (Safe harbour) Statements
This press release contains forward-looking statements that are based on the beliefs of Management and reflect the Group's current expectations. In certain cases, forward-looking information can be identified by the use of words such as "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may", "should", "will", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on forward-looking information. Forward-looking information is provided as of the date of this press release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.
SOURCE KINGSWAY INTERNATIONAL HOLDINGS LIMITED
For further information: For further information: Gary Quedado, Kingsway Group, (416) 861-3099 Ext. 238, email@example.com