Global Reports A Loss In First Half But Continuing Profitability In Its Core Fee-Based Businesses Of Asset Management And Brokerage (Press Release)

Key points of the results:

Results comprise net operating income from fee-based businesses (asset management, investment banking and brokerage) impacted by losses on investments and losses from share of results of associates resulting in an overall loss


Global reported a profit of KD8.1 million from asset management and brokerage lines of business and an overall net loss for the first half of KD98.6million (KD0.080 loss per share); Q2 2009 overall net loss reduced by 58% to KD29.0 million compared to Q1 2009 net loss. The loss is mainly attributable to:


· Realised and unrealised losses and impairment from principal investments and real estate of KD44.0 million


· Losses from share of results of associates of KD29.4 million; losses from share of results of associates for Q2 2009 reduced to KD1.5million compared to Q1 2009 losses of KD27.9 million.


Fee, interest and dividend income contributed KD18.2 million to the operating income during first half of 2009 (H1 2009).


Despite the reported net loss in H1 2009 Global's total assets amounted to KD1,011.3 million and net assets of KD213.0 million.


Total AUM as at 30 June 2009 amounted to KD2,074.7 million. Our asset management business remained resilient with several of the funds outperforming their respective performance benchmarks. Global MENA Ijarah Real Estate Fund decided to reward its unit holders with a 6.5% cash dividend for the second quarter of 2009. This was the Fund's third distribution since its final closing in September 2008. Global Buyout Fund distributed 3% cash dividend whereas Global Opportunistic Fund II distributed US$15.3 million to the unit holders after realizing gains from an investment. All these funds are managed by Global's Alternative Investment Management group.


Cost cutting measures


· Global continues to work towards reducing its operating cost base. H1 2009 personnel expenses of KD4.6 million were 53% lower than the first half of 2008. Other operating costs of KD9.6million were however higher than H1 2008 on account of one-off costs associated with the restructuring process and increases in costs arising from acquisitions made in H2 2008. Staff costs declined by 14.6% during the second quarter and other operating costs declined by 11.2% as compared to Q1 2009 as a result of continued cost rationalization efforts.


Debt default and progress on restructuring process


· Global has continued to meet all its debt service payments as they fall due and remains confident that by working cooperatively with its stakeholders, a sustainable, long-term financing solution for the Company is likely to be achieved in the near future.


Commenting on the results, Maha Al-Ghunaim, Chairperson and Managing Director of Global, said: "Our first half results continued to be impacted by market turbulence and decline. Reassuringly the pace of decline slowed during the second quarter, which gives us confidence going forwards. Strengthening fee generating lines of business, namely asset management, investment banking and brokerage is integral to our future profitability.


Although we have not yet concluded the restructuring of our debt obligations, I am convinced that we are up to the challenge and will emerge from this period of market dislocation as a stronger Company, able to serve our clients even more effectively and deliver value for our shareholders."- Ends -