Government’s debt swap forced Barita Investments to take a $240 million hit in February as they wrote off investment gains that were on their books, prior to the swap. The swap meant that investments had a value that was higher than the face value at which government acquired them at, resulting in the loss. The write-off severely impacted the company’s results for both the quarter and for the six months period. Accordingly, Barita recorded a loss in both periods.
The company stated in a release to shareholders, that without the impact of the National Debt Exchange, the financial performance would have surpassed the prior year to date profit of $143 million.
Barita posted losses of $98 million for the second quarter of the financial year and had year to date losses of $20 million. The company was able to grow its income with the main drivers being dividend income, increasing by $13 million, foreign exchange trading and translation gains, which increased by $78 million and unit trust operations. Operating expenses at the end of the second quarter were $240 million compared to $226 million for the same period of 2012. The company reported that cost savings in the curtailment of expenses contributed positively to the bottom line.
Management stated that they continue the diversification of the revenue streams by increasing product offerings and growing non-interest income. Funds under management for the Money Market and Capital Growth funds, maintained a level of nearly $3 billion. Barita Unit Trusts Management Company recorded significant improvements in our top and bottom line performances where revenues grew by 15 percent and profits increased by 20 percent for the quarter the company stated.
Balance Sheet | The asset base showed a $1.5 billion or 10 percent decrease over prior year, from $14.2 billion to $12.7 billion, while liabilities also decreased by $1.1 billion or 9 percent. As at the end of March 2013, shareholders equity stood at $1.38 billion.
Stock Outlook | The company, with the loss to date, faces a difficult task this year as all indications points to lower profits for the year ending in September than for 2012. The stock, at best, is a hold at this stage.
Talk Back | If you have a response to our stock outlook, please leave a comment below.
[…] $255 million in 2012. The investment loss, which is before corporate taxation, arose from the swapping of government bonds for new lower yielding ones. When this is factored in, earnings would have been around $230 million […]