(MENAFNEditorial) Capital Intelligence (CI), the international credit rating agency, announced today that while it had affirmed Bahrain-based Esterad Investment Company (Esterad)'s Long- and Short-term Ratings of 'BBB-' and 'A3' respectively, these ratings were at the same time being withdrawn at the entity's request.
Esterad remained loss-making in H1 2011 reflecting the ongoing challenging conditions in regional and international markets. Despite good cost control, the Company incurred a net loss of BHD4.3mn in H1 as total income slipped into negative territory due to an unrealised loss on investments. Sources of income remained constrained reflecting limited investment activity in the face of difficult markets and ongoing high investment risk across most asset classes. While impairment losses were limited, the still challenging operating environment in Esterad's key markets suggests that future impairment losses may have to be taken and that profitability in consequence will remain under pressure.
Esterad's asset base remains reasonably diversified by asset class, although there was some concentration in that exposure was mainly to investments in Gulf Cooperation Council (GCC) markets. This geographic emphasis however reflects the Company's chosen investment strategy. While total shareholders' equity contracted further due to sustained losses, Esterad's balance sheet remains supported by a sound, although small, capital base. The latter funded a substantial 91% of total assets at end-June 2011.
Leverage remained noticeably low and in fact improved slightly to just 0.1x in H1 2011 as a result of repayment of short-term bank debt. Remaining short-term bank borrowings stood at just BHD1.8mn (USD4.9mn) while the cash balance was a healthy BHD6.1mn. The liquidity position was comfortable reflecting this and the sizeable pool of unencumbered marketable securities.
Esterad in 2003/04 moved to being an investment company from what had previously been largely a trading company. The current principal activity is investing in direct investments and in all types of securities and financial instruments in the local and to a lesser extent international financial markets. The Company's two largest shareholders are Bahrain's state pension fund (18.6%) and the National Bank of Bahrain (11.2%). The remainder is widely held by approximately 4,500 shareholders. At end-June 2011, total assets were BHD54mn (USD143mn) and total equity BHD49mn (USD130mn).
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