TORONTO, Feb. 11 /CNW/ - Asian based financial services firm, Kingsway International Holdings Limited (TSX: KIH), ("Kingsway" or the "Company"), today announced its financial results for the second quarter ended December 31, 2009, reporting net income of US$3.7 million. All figures quoted are in U.S. dollars unless otherwise specified.
The financial performance for Kingsway International Holdings Limited and its subsidiaries (collectively the "Group") for the second quarter of its fiscal 2010 year showed significant improvement compared to that of the corresponding quarter last year. The Company credits this solid progress to ample liquidity in the Hong Kong market as well as continued strong economic conditions in China, where Kingsway's business model is focused.
Financial highlights for the second quarter include:
- Net income was $3.7 million, or $0.0465 basic earnings per share,
compared with a net loss of $6.0 million, or $0.0752 loss per share,
for the same quarter last year;
- Revenue from services and other income increased to $3.3 million,
compared with $2.5 million for the same quarter last year;
- Trading income from financial assets held for trading was
$6.3 million, compared with a loss of $7.0 million for the same
period last year.
"Overall, we are satisfied with our financial performance this period," said Douglas Betts, President and CEO of Kingsway International. "We continue to make solid financial and operational progress, which we attribute in large part to ongoing strong economic growth in China, where our primary investment assets and growth strategy lie, underscoring the strength and potential of our new strategic direction."
Financial Results for the Second Quarter
Revenue from services and other income increased 34% to $3.3 million in the current quarter from $2.5 million in the same quarter last year, attributable to the increase in market activities. Trading income, both realized and unrealized, of $6.3 million was recorded for the second quarter compared to a trading loss of $7.0 million for the same quarter last year. The Group recorded total revenue of $9.6 million in the second quarter as compared to negative revenue of $4.5 million in the corresponding quarter last year as a result of abundant liquidity in the Hong Kong market.
Selling and administrative expenses decreased to $4.0 million in the second quarter from $4.8 million for the same quarter last year. The decrease was mainly due to the reduction of staff costs in the primary operating subsidiaries in Hong Kong, in addition to the decrease in specific provision for outstanding client receivables. The decrease was partially offset by the increase in expenses associated with the investment and advisory group established during fiscal year 2009, and the exchange loss arising from the translation of the convertible debentures.
The Group recorded a $0.1 million fair value loss on financial derivative liabilities in the current quarter, compared with a gain of US$0.7 million for the same quarter last year, which arose from the change in the fair value of the conversion option derivative component of the Group's convertible debentures.
Share of profit of equity accounted investments was $0.4 million in the current quarter, compared with a share of loss of $0.6 million for the same quarter last year. The improved results were mainly due to the unrealized gains recognized in the investment portfolio in these investee companies.
Income before income taxes and non-controlling interests of $5.3 million was recorded in the current quarter, compared with a loss of $9.6 million for the same quarter last year. The Group recorded a net income of $3.7 million in the second quarter, or $0.0465 basic earnings per share, compared with a net loss of $6.0 million, or $0.0752 loss per share, for the same quarter last year.
Segmented Results of Operations for the Second Quarter
Corporate Investment in
Finance & Securities Corporate
Capital Asset & Structured and Other
Brokerage Markets Management Investment Activities Total
$'000 $'000 $'000 $'000 $'000 $'000
income 2,006 660 (8) - 137 2,795
income - - - 48 - 48
other income 121 10 - 273 50 454
income (2) (382) - 6,660 - 6,276
2,125 288 (8) 6,981 187 9,573
revenue 46 - - - 506 552
expenses (2,338) (271) (51) (585) (1,340) (4,585)
influence 3 - (8) 364 - 359
Other expenses (47) (4) - (518) (23) (592)
interests (211) 13 (67) 6,242 (670) 5,307
Kingsway was ranked the Best Local Brokerage in Hong Kong 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 is in the process of implementing a new internet trading
platform in 2010 in order to expand its customer base and improve its
services delivery standard.
Revenue for the second quarter increased 43% to $2.1 million,
compared with $1.5 million for the corresponding quarter last year,
as a result of active market conditions and a recovery in the
company's fund raising activities.
The division recorded an overall loss of $0.2 million in the current
quarter, compared with $0.8 million in the same quarter last year.
- Corporate Finance & Capital Markets
Total revenue of $0.3 million was recognized in the current quarter,
compared with $1.0 million in the same quarter last year. The
decrease in revenue in the current quarter was mainly due to a
trading loss of $0.4 million recognised from the unrealised loss on
its investment portfolio in Canada during the quarter.
Overall, the division generated an income of $0.01 million in the
current quarter, compared with a loss of $0.4 million in the same
quarter last year.
- Asset Management
The division recorded negative revenue of $0.01 million in the
current quarter, compared with $0.4 million in the corresponding
quarter of last year. The loss recorded in the second quarter last
year was mainly due to the loss on disposal of an investment received
as management fees in prior years.
The division recorded an overall loss of $0.07 million in the current
quarter, compared with $0.4 million in the same quarter last year.
- Investment In Securities and Structured Investment
This division's results have improved significantly with trading
income of $6.7 million recorded in the current quarter, which
compares with a trading loss of $7.1 million in last year's
corresponding quarter. The improved results were due to the recovery
of the Hong Kong stock market over the last two quarters.
The division recorded overall income of $6.2 million in the current
quarter, compared with a loss of $7.4 million in the same period last
The Group entered into a share purchase agreement to dispose of its
jointly controlled entities which holds investment properties in the
PRC. Proceeds from the disposal will be used as working capital for
the Group's primary operating subsidiary based in Hong Kong.
- Corporate and Other Activities
The corporate and other activities of the Group incurred an overall
loss of $0.7 million in both the current quarter and the same quarter
of last year.
The FY2009 final dividend of C$0.020 (equivalent to US$0.019) per common share was paid on December 8, 2009 from contributed surplus. The dividend was reflected as an appropriation of contributed surplus during the period ended December 31, 2009.
While the Company anticipates continued uncertainties in the international financial services market, particularly in North America and Europe, Kingsway remains generally positive on the equity markets worldwide and most commodities on a long term basis. The Company is, however, concerned that the recovery from last years' economic crisis may not be sustainable in the short term. As a result, we continue to position ourselves to withstand future fluctuations in economic conditions through our refocused business model.
The Group operates primarily from its base in Hong Kong. While we expect continued volatility in this market, we also see that this volatility may bring substantial opportunity for both the Group and for the Company. We believe in the sustainable growth of the Chinese economy and that 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 successful financial services provider and investor in those sectors which we believe will continue to prosper from China's increasing needs for natural resources.
We also believe opportunities are developing in the North American financial services sector, real estate and in some natural resource producers in North America. As we continue to grow we will also focus on these opportunities that may add value to our core businesses.
About Kingsway International Holdings Limited (TSX: KIH)
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, 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 with its strategic focus on China, working with China based groups with a particular focus in financial services and in natural resources - particularly mining and energy - and infrastructure.
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 new 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.
SOURCE KINGSWAY INTERNATIONAL HOLDINGS LIMITED
For further information: For further information: Gary Quedado, Kingsway Group, (416) 861-3099 Ext. 238, firstname.lastname@example.org