Blackwell Global Holdings Ltd announces Preliminary Results

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Blackwell Global Holdings Limited (NZX: BGI)

Half year preliminary unaudited announcement for the 6 months ended 30 September 2018

Commentary
AUCKLAND, New Zealand, 29 November 2018 – The Board of Blackwell Global Holdings Limited (NZX:
BGI) is pleased to announce the preliminary unaudited half year results of the business for the six
months ended 30 September 2018.

Results for Announcement to the Market

Reporting Period 6 months to 30 September 2018
Previous reporting period 6 months to 30 September 2017

Amount (000s) Percentage change
Revenue from ordinary activities $NZ602 Nil revenue in
comparative period
Loss from ordinary activities after tax
attributable to security holder
$NZ(309) (12.2)%
Net profit attributable to
shareholders
$NZ(309) (12.2)%

Interim/Final Dividend Amount per share Imputed amount per
share
The company does not propose to pay
a dividend at this time.
Not applicable Not applicable

Record Date Not applicable
Dividend Payment Date Not applicable

Comments: See below

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Blackwell Global Holdings Limited (NZX: BGI)

Half year preliminary unaudited announcement for the 6 months ended 30 September 2018


Results

During the course of the first 6 months of the financial year the Group’s focus has been on:
• continuing to develop its internal operational infrastructure to provide a platform for growing its
finance company operations;
• deploying its funds towards good quality, moderate margin loan receivables. To this end, the
Group has to date:
- funded ten separate loan facilities;
- deployed total funds to date of $7,375,770 with loans structured across a mix of capitalised
interest arrangements, and interest only loans. The loans have all been secured by first
ranking mortgage securities over quality real estate assets. There have been no defaults of
any description in terms of the loans deployed;
• developing a bespoke investment/funding structure whereby the Group can facilitate investment
by third party investors into loan facilities procured and managed by the Group;
• continued investment in the progression of the development of a derivatives trading operation.
The Group has been able to offset much of the costs associated with the development of the
derivatives trading operation via the contribution towards those costs by the Group’s major
shareholder.

The Group’s revenue comprises interest and fee income from mortgage lending activities.

Special purpose vehicle and new subsidiary
During the last 6 months a new funding mechanism has been established by creating a Special Purpose
Vehicle (SPV). In April 2018 Blackwell Global Funds Limited was incorporated as a wholly owned
subsidiary to act as a custodian for an SPV loan origination and lending service. The subsidiary has
raised $2.9 million of borrowings through the SPV arrangement and holds the Group’s interest in $2.9
million of loan receivables. Blackwell Global Finance Limited manages all aspects of the loan. The
Group derives interest and fee income from this arrangement with a corresponding interest expense.

The SPV is a risk sharing mechanism which mitigates almost all of the Group’s credit risk on the related
loan receivables that were funded through the SPV arrangement.

The group is seeking additional SPV/Investor relationships as this method of funding has significant
advantages for BGI and will allow expansion of lending activities into the non-bank sector, which is
seen as a growth area given the main trading bank restrictive lending policies.

While the SPV arrangement is profitable for the Group, the net profit of the new subsidiary, Blackwell
Global Funds Limited, is not material to the Group’s results for the period.

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New funding
In addition to the SPV funding arrangement noted above, and to assist the Group with funding its
ongoing working capital requirements and loan receivables, the Group has drawn down a further
$500,000 of secured bonds issued to the Group’s major shareholder.

The ongoing challenge for the Group in respect of growing its finance company operation is the ability
to continue to raise debt finance from third party investors which can then be deployed towards
funding loan receivables, and generating a profit margin for the Group. The Group is continuing to
explore innovative new initiatives to secure more funding with a view to aggressively growing the
finance company operation in the future.

Loan book
The loan book as at 30 September 2018 was $5.7 million. All loans were secured by first mortgages
over residential properties. The average lending to value ratio (LVR) was very low at an average of
58%. All loans are current with no past-due assets.


Other matters
Employee expenses include wages for two employees in the derivative trading subsidiary, Blackwell
Global Investments (NZ) Limited. There is an agreement with the 56.6% shareholding company,
Blackwell Global Group Limited, to reimburse these expenses.

BGINZ is currently assessing the opportunity to apply for a full derivates trading licence from the
Financial Markets Authority although at the date of this announcement, no formal application has
been submitted.

The group has adequate cash reserves to meet ongoing needs for the foreseeable future, but lending
growth is required to increase revenue, and this requires additional funding from the major
shareholder and attracting new investors in the new SPV model.


Earnings per Share and Net Tangible Asset per security
The earnings per share are shown below the Consolidated Statement of Profit & Loss and Other
Comprehensive Income below. The net tangible asset backing per security is shown below the
Consolidated Statement of Position below.


Audit
The consolidated financial statements shown below have not been audited nor reviewed by the
Group’s auditor.

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Future Events

Event Date
Interim report due 31 December 2018


ENDS

Authority for this announcement
Mark Thornton
Chief Executive Officer
Ph: 021 723766
mark.thornton@nzf.co.nz
Date of release: 29 November 2018

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Consolidated Statement of Comprehensive Income
Blackwell Global Holdings Limited
For the six months ended 30 September 2018



6 mths ended6 mths ended12 mths ended
30 Sep 201830 Sep 201731 Mar 2018
(unaudited)(unaudited)(audited)
Notes$$$
Revenue
Interest and fee income4424,1699,05576,462
Other income5177,915-82,352
Total Income602,0849,055158,814
Expenses
Directors' fees11(146,625)(129,044)(284,481)
Employee expenses(299,516)(30,000)(135,000)
Interest expense(222,153)(11,781)(99,200)
Other operating expenses6(242,594)(113,536)(392,293)
Total expenses(910,888)(284,361)(910,974)
Loss before income tax(308,804)(275,306)(752,160)
Income tax benefit/(expense)---
Total comprehensive loss for the period(308,804)(275,306)(752,160)
Attributable to:
Owners of the parent company(308,804)(275,306)(752,160)
Earnings/(loss) per share
Basic (loss) per share (cents per share):7(0.07)(0.10)(0.21)
Diluted (loss) per share (cents per share):(0.07)(0.10)(0.21)

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Statement of Changes in Equity
Blackwell Global Holdings Limited
For the six months ended 30 September 2018




NotesShare ConvertibleContributedAccumulatedTotal
CapitalNoteCapitalLossesEquity
Reserve
$$$$$
Balance at 1 April 2017 (audited)9,650,250--(10,041,222)(390,972)
Loss for the period---(275,306)(275,306)
Other comprehensive income
Total comprehensive loss for the year---(275,306)(275,306)
Issue of ordinary shares, net of transaction costs2,460,496---2,460,496
Equity component recognised in convertible note
reserve-----
Contributed capital on the bond-----
Balance at 30 September 2017 (unaudited)12,110,746--(10,316,528)1,794,218
Balance at 1 April 2017 (audited)9,650,250--(10,041,222)(390,972)
Loss for the period---(752,160)(752,160)
Other comprehensive income-----
Total comprehensive loss for the year---(752,160)(752,160)
Issue of ordinary shares, net of transaction costs2,460,496---2,460,496
Equity component recognised in convertible note
reserve-114,716--114,716
Contributed capital on the bond--102,013-102,013
Balance at 31 March 2018 (audited)12,110,746114,716102,013(10,793,382)1,534,093
Balance at 1 April 2018 (audited)12,110,746114,716102,013(10,793,382)1,534,093
Loss for the period---(308,804)(308,804)
Other comprehensive income-----
Total comprehensive loss for the year---(308,804)(308,804)
Contributed capital on the bond--25,503-25,503
Balance at 30 September 2018 (unaudited)12,110,746114,716127,516(11,102,186)1,250,792

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Consolidated Statement of Financial Position
Blackwell Global Holdings Limited
As at 30 September 2018




30 Sep 201830 Sep 201731 Mar 2018
(unaudited)(unaudited)(audited)
Notes$$$
Current assets
Cash and cash equivalents1,535,8972,364,057801,387
Prepayments and other receivables5,693-9,648
Loan receivables5,721,940105,0203,315,377
Total current assets7,263,5302,469,0774,126,412
Non-current assets
Prepayments and other receivables75,000-75,000
Property and equipment 1,251-1,668
Total non-current assets76,251-76,668
Total assets7,339,7812,469,0774,203,080
Current liabilities
Trade payables and other liabiliities234,017174,859270,892
Deferred revenue81,187-56,417
Borrowings82,900,000--
Total current liabilities3,215,204174,859327,309
Non-current liabilites
Borrowings82,873,785500,0002,341,678
Total non-current liabilities2,873,785500,0002,341,678
Total liabilities6,088,989674,8592,668,987
Net assets
1,250,7921,794,2181,534,093
Equity
Share capital912,110,74612,110,74612,110,746
Convertible note reserve114,716-114,716
Contributed capital127,516-102,013
Accumulated losses(11,102,186)(10,316,528)(10,793,382)
Total equity
1,250,7921,794,2181,534,093
Net tangible assets per share (cents per share):0.28 0.66 0.43

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Consolidated Statement of Cash Flows
Blackwell Global Holdings Limited
For the six months ended 30 September 2018

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Reporting of Segments
Operating segments are reported in the manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision maker is identified as the Board of
Directors. The Group internally reported as a single operating segment to the chief decision-maker.