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Bahrain’s Gulf Finance House swings to small profit in 2011
Bahrain's Gulf Finance House swung to a full-year profit in 2011 as the troubled sharia-compliant investment firm said its restructuring plan, which included significant cost-cutting, helped reverse its fortunes.
March 1, 2012 1:48 by p.deleon
The company made a $0.38 million net profit last year, compared with a net loss of $349.4 million in 2010, it said in a statement on Thursday.
Operating costs were reduced by 37 percent during 2011, the firm said, while liabilities dropped by 33 percent by the end of the year as part of its restructuring plan.
GFH also posted improved fourth-quarter numbers, although it remained in the red for the final three months of the year due to an $8 million impairment.
It made a net loss of $4 million in the three-month period to Dec. 31, versus a $187 million net loss in the corresponding period in 2010.
GFH was forced into restructuring obligations in 2010 as the firm struggled with its debt burden in the aftermath of the global financial crisis.
It approved a highly-dilutive recapitalisation plan in November 2010, which included a 75 percent capital cut to absorb accrued losses and a $500 million offering of a murabaha instrument to new investors to raise funds.
GFH said it was continuing to target new investors with the murabaha – a cost-plus-profit arrangement which complies with Islamic law – although it gave no figures as to how much new capital had been raised. (Reporting by David French; Editing by Praveen Menon)