Bahrain's BCFC posts consolidated net profit of $6.64mln

The company has reported earnings per share for first six months of the year at 13 fils (2019: 54 fils)

  

MANAMA: Bahrain Commercial Facilities Company (BCFC) has reported a consolidated net profit of BD2.5 million for the six months ended June 30, 2020, 77 per cent lower than BD10.8m earned in the same period last year.

The company has reported earnings per share for first six months of the year at 13 fils (2019: 54 fils).

Chairman Abdulrahman Fakhro expressed his satisfaction with the financial results achieved in the current circumstances.

He said, “The coronavirus pandemic has put forth unprecedented challenges impacting economic activities negatively. Thanks to the country’s leadership and novel initiatives to support local people and businesses, the business environment is fast expected to improve in coming months. The company with its core competencies and strong financials is in good position to recover as and when the economic activities shall normalise.”

In the first half of 2020, the company has achieved total operating income of BD19m, 17pc lower than the same period last year (2019: BD23m).

For the first six months of the year, the company’s total comprehensive income stood at net loss of BD1.2m (2019: Net profit of BD8m).

The equity as of June 30, 2020 was BD132m, 13pc lower than BD152m as of June 30, 2019.

Total assets as of June 30, 2020 stand at BD384m, 6pc lower than BD410m as of June 30, 2019.

The company continues to maintain a strong and healthy liquidity position.

It is operating at a low leverage of 1.9 multiples which would help it to sustain the economic uncertainties.

The Covid-19 outbreak has had multiple implications on the company, from stressed market conditions, significant reduction in sales of its product and services and disruption of its normal operations due to social distancing norms.

In March 2020, the CBB announced a six-month loan deferral to all qualifying Bahraini individuals and companies.

Subsequently, the CBB directed all the licensees to take the present value of the shortfall in interest income (termed the ‘modification loss’ under IFRS) arising from this deferral directly to equity, net of any government grants received.

The initial modification loss recorded amounted to BD16.1m. The company received BD1.4m grants in the form of salary subsidy and electricity and water bill reductions.

The consumer finance business, Bahrain Credit, remained stable. It has reported a net profit of BD2.9m, 68pc lower than BD9.1m achieved in same period last year.

Net interest income was BD12.6m, 7pc lower than same period last year (2019: BD13.5m).

During the six months, Bahrain Credit has taken a conservative approach in relation to not increasing its credit exposures. New loans are sanctioned only to customers belonging to relatively low risk market segments.

The company has adequate impairment provisions as a precaution toward future and currently unidentified expected risks that the company may face.

National Motor Company has reported net loss of BD0.34m (2019: net profit BD1.1m).

While the company was ahead of plan during the first two months of the year, the outbreak of the pandemic in March this year severely impacted the performance during the last 4 months.

Additionally, the closure of showrooms for new and used car sales further negatively impacted the performance.

The company has taken multiple pro-active steps to counter the negative effects of this global pandemic. Expenses have been slashed within every level to ensure that the company is very lean and effective.

Contracts have been re-negotiated with all manufacturers, local vendors, suppliers as well as multiple other entities.

Receivables are an area of focus as the team works diligently in collecting outstanding funds. Managing cash flow continues to be an integral part of daily operations.

The company has also introduced multiple initiatives to provide customers clean and safe environment and continue its superior customer services.

Tasheelat Automotive Company has posted a net loss of BD342,000 (2019: net profit BD141,000). The reduction in profitability is due to sharp decline in automotive sales.

Also, the company launched two new brands during fourth quarter of last year which typically would take two years to break even.

More and more customers are expected to shift towards value buying due to the general downward fall in the economy as a result of the pandemic and reduction in customers disposable income.

It brings a unique opportunity to the company, with full range of vehicles from GAC and Haval Motor, to target more customer segments looking for lower priced, fuel-efficient cars.

Tasheelat Car Leasing Company has reported net loss of BD13,000. The pandemic has affected the demand for vehicle leasing services due to travel restrictions and significant reduction in the visitors arrival in Bahrain.

The utilisation levels on the rental fleet have significantly dropped rendering the units idle resulting in overall decline in short-term revenue earnings.

Despite all challenges and adversities, the company was pro-active in shifting gears and identifying key profit areas such as income from additional contractual revenue and reducing costs wherever possible.

The company’s real estate division, Tasheelat Real Estate Services Company has reported net profit of BD132,000 compared to BD116,000 in the same period last year.

The current lockdown of non-essential business activities has significantly reduced real estate activities. However, the company continued its focus to liquidate available land and apartment inventory.

The rental property portfolio continued to enjoy healthy occupancy rates.

The company has added new buildings to the portfolio which is generating steady and reliable annuity style returns.

Tasheelat Insurance Services Company has achieved a net profit of BD123,000 for the six months ended June 30, 2020 (2019: BD369,000). The company’s performance was mainly affected due to reduction in overall economic activities, more particularly motor insurance business.

The reduction is a combination of contraction in the new vehicle sales with customers opting for lower value cars resulting in lower commission income. The company continued to be a leader in this segment with a high renewal rate for its existing insurance policies.

BCFC Group chief executive Dr Adel Hubail said, “The results in the context of challenging economic conditions are remarkable and welcome. The financial position remains strong. The company would continue to take initiatives to reduce cost and increase shareholders value.”

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