?Net Asset Value (NAV) reported at euro 1.33 per share at 30.09.08 opposite euro 1.36 at 30.06.08, showing a decrease of 2.2%
?Parent Company's profitability increased, with EBITDA and EAT rising by 22.6% and 39.1% respectively
?Group reported losses, as results affected negatively from the performance of Fund of Hedge Funds activity due to the current market circumstances
The current adverse conditions, which dominated capital markets during the last months, affected negatively the returns of Fund of Hedge Funds activity and especially the activity of Sciens CFO I during Q3 2008. As a result, Sciens International Investments & Holdings S.A. reported losses in a consolidated basis, despite the positive performance of the parent company. At 30.09.2008 Fund of Hedge Funds activity consisted of 6.3% of Group's total equity. Nevertheless, Group's strategy is that exposure to the Fund of Hedge Funds sector will be further reduced from the current levels of investment and that it will be reexamined when the market stabilizes.
In particular, in a consolidated basis, Group reported losses after taxes and minority interest for the 9month period of 2008 of euro 13.953 mln opposite profits of euro 1.700 mln for the same period of 2007. Accordingly, Sciens International Investments & Holdings S.A. reported euro 5.301 mln losses on Group's earnings before interest, taxes, depreciation and amortization (EBITDA) for the 9month of 2008 versus profits of euro 10.619 mln for the same period of 2007. Additionally, Group's Total Operating Revenues decreased to euro 1.070 mln versus euro 14.068 mln for the 9month period of 2007, affected from the negative returns of Sciens CFO I during Q3 2008.
In the 9month period of 2008, the Parent Company reported at EBITDA level, earnings of euro 7.461 mln opposite to earnings of euro 6.088 mln for the same period of 2007, 22.6% higher. Parent company's earnings after taxes reached euro 5.450 mln versus earnings of euro 3.918 mln for the same period of 2007, showing an increase of 39.1% in annual basis. Additionally, Parent Company's Total Operating Revenues increased by 25.5%, reaching euro 8.500 mln versus euro 6.771 mln for the 9month period of 2007.
At 30.09.2008, total equity figures reached euro 215.140 mln for the Group opposite euro 221.330 mln at 30.06.2008 and euro 232.625 mln for the Parent Company versus euro 233.802 mln at 30.06.2008. Therefore, based on the reported equity figures, Net Asset Value (NAV) has been calculated to euro 1.33 per share at 30.09.08., in a consolidated basis, decreased by 2.2% from the 30.06.2008 levels of euro 1.36 per share.
Despite the Group's negative bottom line results, Net Asset Value per share experienced a rather marginal decrease mainly due to the significant appreciation of US dollar against Euro during the Q3 2008. The euro/USD exchange rate is influenced by the current situation in the US economy, and during Q3 2008 had a positive effect on the returns and equity of the Group's investments operating in USD currency. On 30.9.2008, the Group held investments in USD totalling $ 225.940 mln with an average exchange rate at euro/USD 1.4642 and reporting exchange rate on 30.9.2008 at euro/USD 1.4303 opposite a reporting exchange rate on 30.6.2008 at euro/USD 1.5764. Apparently, given the current euro/USD exchange rate, the ongoing strengthen of US dollar against Euro looks to affect positively Net Asset Value for Q4 2008, since c. 35% of Group's investments are held in USD.
Group's financial results for the 9month period of 2008 comprise of the following characteristics.
a) The increased dividend income from Club Hotel Loutraki S.A. by euro0.9 mln or 42% compared to the respective period of the previous year, as well as a euro1.7 mln profit from valuation of the parent company's investment in Club Hotel Loutraki S.A.
b) The significant profitability from the aviation operation of Apollo Aviation Holdings, which in its first year of operations, contributed euro 1.32 mln to Group's profitability during the 9month period of 2008.
c) The positive returns of the private equity fund Sciens Special Situation Master Fund. Sciens Special Situation Master Fund contributed euro 4.4 mln to Group's profitability during first half 2008 results opposite euro 1.75 mln during the same period of 2007.
d) The significant increase in interest income proceeds due to Group's high levels of liquidity maintained during the 9month period of 2008.
e) The fund of funds negative performance during Q3 2008 resulted to losses of euro 0.75 mln for Oceanus Reinsurance despite the company's significant organic growth. Minority shareholders of Oceanus reported net profits of euro 3.9 mln due to the substantial increase on sales of reinsurance products.
f) The significant increase of losses to Group shareholders reported in the H1 of 2008 from the fund of funds activity, and especially the activity of Sciens CFO I, due to the negative trends dominated international capital markets. The negative returns of Hedge Funds industry extended during Q3 2008, after the sudden and unilateral SEC and other regulators' restriction on short sales of a wide range of financial stocks which took away downside protection of hedged portfolios. As a result of that decision, HFRX Global HF Index reported a 10-year negative record return of -10.6% during Q3 2008 which was much better than the return of other comparable traditional major stock market indices, but still negative.
As of 30.9.2008, both the Group and the Parent Company, maintain very satisfactory leverage ratios. Specifically, the Debt/Equity ratio was calculated at 0.11 and 0.95 for the Company's and the Group's shareholders, compared to 0.21 and 1.05 on 31.12.2007, respectively, primarily due to a euro 25 mln reduction of the parent company's long-term debt, and also the repayment of a short-term debt of euro 6 mln made by the subsidiary Sciens International Structured Finance Holdings Ltd during H1 2008. The Group's debt figures also include the long-term debt of subsidiary Sciens CFO I which, however, has been raised against security provided solely on assets of Sciens CFO I, with no further guarantees and security by the parent company. Excluding the long-term debt of Sciens CFO I, the Debt/Equity ratio for the Group's shareholders drops significantly to 0.12. Note that the Company as of 30.09.2008 did not hold any short-term debt.
Low leverage ratios in conjunction with current liquidity levels, provide the ability to the Group to take advantage of potential opportunities in the private equity area, after the huge correction of valuations, recently took place in international markets. Nevertheless, in any case, to take advantage of opportunities may arise, a continuous reallocation of investments on our portfolio will be necessary.
During the 9month period of 2008 Sciens International Investments & Holdings S.A. made investments of euro 79.6 mln. The investments of Q3 2008 amounted euro 14.4 mln of which euro 6.2 mln derived from the proceeds of the recent capital rise of euro128 mln.