Kingsway International Reports Financial Results for Fiscal Year Ended June
30, 2010
TORONTO, Sept. 21 /CNW/ - Kingsway International Holdings Limited (TSX: KIH), ("Kingsway" or the "Company"), an Asian based financial services firm, announced its financial results for the fourth quarter and the 2010 fiscal year ended June 30, 2010. All figures are in U.S. dollars unless otherwise specified.
The financial performance for Kingsway International Holdings Limited and its subsidiaries (collectively the "Group") for the fiscal year ended June 30, 2010 showed a significant year-over-year improvement. Following the recovery of the Hong Kong market from the global financial crisis from calendar year 2009, Kingsway has enjoyed a better performance in current year. The Chinese economy continues to be a growth driver in the global economy but there are still uncertainties in the North American and European economies.
Financial highlights for the fiscal year include:
- Net income was $4.1 million, or $0.0500 basic earnings per share,
compared with a net loss of $6.7 million, or $0.0839 loss per share,
for the same period last year;
- Revenue from services and other income increased to $12.4 million,
compared with $10.6 million for the same period last year;
- Trading income from financial assets held for trading was $7.3
million, compared with a trading loss of $1.3 million for the same
period last year;
- A one-off gain on disposal of shares of jointly controlled entities
classified as discontinued operations of $5.7 million, after
deducting the attributable non-controlling interests of $2.0 million
for current year.
Financial Results for the Fiscal Year
Total revenue from continuing operations for FY2010 increased to $19.7 million from $9.3 million in FY2009, attributable to the recovery of the fund raising markets and the increase in market activities in the Hong Kong market. Revenue from services and other income from continuing operations increased to $12.4 million from $10.6 million in last year. Trading income from financial assets held for trading was $7.3 million for FY2010 compared to trading loss of $1.3 million for FY2009.
Selling and administrative expenses increased 12.6% to $18.3 million for FY2010 from $16.3 million for FY2009. The increase was mainly attributable to the increase in commission expenses, the increase in staff costs in relation to the investment and advisory group established in FY2009, and the exchange differences arose from the translation of the Company's convertible debentures.
Fair value loss on financial derivative liabilities, arose from the change in fair value of the conversion option derivative component of the convertible debentures, of $0.2 million was recorded in FY2010, as compared to a gain of $0.8 million for FY2009.
The Group recorded a loss before income taxes, non-controlling interests and discontinued operations of $0.7 million in FY2010, compared with a loss of $9.3 million in FY2009.
During the year, the Group disposed of its interests in jointly controlled entities, which held interest in the investment properties in the PRC. The related results of the jointly controlled entities were separately disclosed in the Group's consolidated financial statements as discontinued operations. A one-off gain of $5.7 million, after deducting the attributable non-controlling interests of $2.0 million was recorded in FY2010. No comparable gain was recognized in FY2009.
Overall, net income for the year was $4.1 million, or $0.0500 basic earnings per share and $0.0495 diluted earnings per share, compared to a net loss of $6.7 million, or $0.0839 loss per share in last year.
Segmented Results of Continuing Operations for the fiscal year
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Corporate
Finance & Asset Invest-
Capital Manage- ment in
Brokerage Markets ment Securities
$'000 $'000 $'000 $'000
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Commission & fee income 8,120 2,372 3 -
Interest and other income 429 35 - 441
Trading (loss)/income (24) 83 - 6,423
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8,525 2,490 3 6,864
Inter-segment revenue 101 - - -
Selling and administrative
expenses (10,286) (2,734) (179) (882)
Share of profit/(loss) on
investments subject to
significant influence 15 - (20) -
Other expenses (190) (463) (1) (6)
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Loss/(income) before income
taxes and non-controlling
interests (1,835) (707) (197) 5,976
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Corporate
Structured and Other
Investment Activities Total
$'000 $'000 $'000
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Commission & fee income 6 768 11,269
Interest and other income - 176 1,081
Trading (loss)/income 824 - 7,306
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830 944 19,656
Inter-segment revenue - 2,625 2,726
Selling and administrative
expenses (1,115) (5,843) (21,039)
Share of profit/(loss) on
investments subject to
significant influence (17) - (22)
Other expenses (1,162) (216) (2,038)
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Loss/(income) before income
taxes and non-controlling
interests (1,464) (2,490) (717)
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- Brokerage
Kingsway was ranked the Best Local Brokerage in Hong Kong as
determined by the Asiamoney Brokers Poll in October 2009, a category
in which it has been a top-three contender for the last five
consecutive years.
The division organized several road shows for fund managers and
seminars for current and prospective retail clients, designed to
strengthen our client relationships. Further strengthening the
division's prospects, a new internet trading platform was implemented
in April 2010, which is expected to improve our service delivery
standard and expand our customer base.
Revenue increased to $8.5 million for FY2010, compared with $6.4
million for FY2009. The commission and fee income increased to $8.1
million in current year from $6.0 million in last year as a result of
the recovery in the fund raising markets and the resultant increase
in market activities in the Hong Kong market. Interest and other
income decreased to $0.4 million for FY2010 from $0.5 million for
FY2009, mainly due to the reduction of bank interest rates on bank
deposits.
The division recorded a net loss of $1.8 million in current year,
compared to $2.6 million for last year.
- Corporate Finance & Capital Markets
Total revenue increased to $2.5 million for FY2010, compared with
$1.7 million for FY2009. The increase was mainly attributable to the
disposal of the division's unlisted derivatives and the related
securities after exercising the derivatives during the year.
The division recorded an overall loss of $0.7 million for the current
year, compared to $1.5 million for last year.
The division participated in several underwriting and placing
activities in current year, and is also taking part in several
projects including IPO sponsorships.
- Asset Management
An overall loss of $0.2 million was recorded in the division in
FY2010, compared to $0.9 million in last year. The loss recorded in
FY2009 was mainly due to the loss on disposal of an investment
received as management fees in prior years.
The division is now looking for suitable investment opportunities to
set up a new private equity fund.
- Investment In Securities
Total revenue of $6.9 million was recorded in FY2010, as compared to
$0.2 million in FY2009. The better performance was mainly due to the
recovery of the Hong Kong stock market. The division invested in
several natural resources and electronics distributor and
manufacturer stocks through their fund raising activities to
diversify the portfolio.
Overall, the division recorded a gain of $6.0 million in the current
year, compared to a loss of $0.4 million in last year.
- Structured Investment
Total revenue of $0.8 million from continuing operations was
recognised in the division in FY2010, compared to $0.6 million in
FY2009. The division invested in several natural resources securities
and an investment vehicle engaged in investments of high-end
automotive dealerships throughout southern China to diversify the
portfolio.
Selling and administrative expenses increased to $1.1 million in
current year from $0.6 million in FY2009, mainly attributable to the
increase in variable staff costs including the provision of staff
bonuses and the increase in general administrative expenses in
relation to the investment and advisory group set-up in FY2009.
An overall loss of $1.5 million was recorded for continuing
operations for FY2010, compared with $1.4 million for FY2009.
- Corporate and Other Activities
The corporate and other activities of the Group remained stable with
an overall loss of $2.5 million recognized for FY2010, compared to
$2.6 million for FY2009.
Financial Results for the Fourth Quarter
The Group reported negative revenue for the fourth quarter of $3.8 million compared with a total revenue of $17.2 million for the same quarter of FY2009. This decline in revenue was primarily the result of unrealized portfolio losses arising from market condition. Revenue from services and other income for the fourth quarter of FY2010 increased to $3.4 million from $3.2 million for the corresponding quarter last year. Trading loss of $7.2 million was recorded in the current quarter, compared to a trading income of $14.0 million for the corresponding quarter last year.
Net loss for the quarter was $7.6 million, or $0.0963 loss per share, compared with an income of $8.6 million, or $0.1070 earnings per share for the same period last year.
Dividends
The Company proposed a final dividend for fiscal year 2010 of Canadian Dollar 0.020 per share to shareholders of record as at October 4, 2010. The dividend will be paid out on or about December 2, 2010.
Outlook
The Company continues to believe in the strength and the growth of the Chinese economy. As China develops, it is creating its own substantial consumer market. This consumer market continues to be driven by the increase in urbanization of its population and the growth of its middle class. As a result, China is decreasing its dependence on foreign exports as a key driver of its economy. Exports while continuing in importance are gradually being replaced by domestic demand as a growth driver of the Chinese economy.
The investment and advisory group established in FY2009 continues to focus on the natural resource sector, in particular mining and energy as the Company believes these sectors while important today, will be even more strategic in the future.
Internally, Sun Wah Group, a prominent Hong Kong conglomerate controlled by Dr. Jonathan Choi, Chairman of the Company, has now entered into arrangements to increase its holdings to approximately 70% of the current outstanding equity of the Group through acquisition of shares from existing shareholder. Sun Wah Group's support, through several placements, has been crucial in the implementation of the Company's current business plan.
It is believed that the changes which have instituted in the Company, and the changes which are now initiating throughout the Group, will have a major positive impact on the growth of the Company and creation of value for the Shareholders.
It is believed that as an asset-based financial services provider, the Group is well positioned to benefit from the continuing strengths of the Chinese economy.
About Kingsway International Holdings Limited
Kingsway International is a strategically positioned, asset based financial services firm focused on linking China's high growth economy with the global investment community. Through the Kingsway Group's worldwide operations (encompassing Kingsway International and its subsidiaries), the Company conducts operations through two main arms: Capital Markets and Asset Management. The Group operates from six offices located in Hong Kong (2), Beijing, Shanghai, Shenzhen and Toronto.
China is widely recognized as an increasingly important player on the world's financial stage. As the country continues to grow, its greatest needs will lie in energy and resources. Following a recent restructuring, Kingsway is positioned as a middle tier provider of financial services in these sectors and an opportunistic investor in these and related sectors. The Group's strategy is to use investment activities strategically to generate advisory services revenue while creating value for its shareholders through asset accumulation.
Leveraging a 20-year track record and significant relationships throughout Asia, Kingsway continues to operate as a China focused multi-discipline asset based financial services firm, with a focus on natural resources, infrastructure and real estate.
Founded in 1990, Kingsway International is listed on the main board of the Toronto Stock Exchange under the symbol KIH.
For more information on Kingsway International's core business and new strategic direction, please visit the Company's website at www.kingwaygroup.ca.
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.
For further information: Gary Quedado, Kingsway Group, (416) 861-3099 Ext. 238, [email protected]
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