Profit jumped 43 percent before tax at Limners and Bard, with revenues surging 41 percent for the third quarter to July this year. The robust third quarter profit did not hold for the final quarter despite a 55 percent jump in fourth quarter revenues to $226 million from $146 million in 2019, with profit inching just a two percent higher for the final quarter from $18.9 million in 2019 to $19.24 million this year.
Full year profit rose 18 percent from before tax in 2019 from $108 million to $127 million and just 41 percent from $90 million after profit tax. There was no tax payable for 2020, following the tax relief benefit now enjoyed from listing on the Junior Market of the Jamaica Stock Exchange.
Revenues increased 44 percent, moving from $632 million in 2019 to $912 in 2020. Cost in generating revenues grew much faster than income, with an increase of 51 percent for the year to $613 million and 68 percent for the final quarter to $154 million.
Administration expenses and other costs rose 55 percent to $241 million for the year and by 54 percent for the October quarter to $54 million as salary related cost jumped 43 percent for the year and directors’ remuneration more than doubled with a rise of 110 percent to $24.6 million. The company’s CEO and the Chairman indicated the sharp increase was due to one executive director serving as a director for a part of the previous year, resulting in the numbers looking distorted. In the July quarterly report accompanying the results, the Chairman, Steven Gooden and Kimala Bennett, Chief Executive Officer commented on increased cost, stated, “these included a systemization initiative and training to assist in efficiencies linked to our growth drivers and a pay-out of 50 percent of our 2019 employee profit share.
Kimala Bennett, Chief Executive Officer of The Lab.
The audited financial statements did not include the comparative 2019 segment results, as is the norm, to allow investors to compare the current year’s figures with those of 2019. In an interview with the Chairman and the CEO, they pointed out that salaries were cut during the uncertainty to business earlier this year. At the same time, the profit share payment was suspended. As the year unfolded, with results looking positive, the board decided to reinstate the full salaries and pay out the profit share for 2019 that was approved earlier in the year, the full cost of which is included in the second half of the fiscal year, the directors indicated. The services of five new employees were engaged in the final quarter, to meet increasing demand in the future, adding to the increase in cost. The directors stated that no decision has yet been made about profit share for 2020 and no provisions are included in the 2020 audited accounts.
The company separates the business in three segments. Revenues for the Media Segment moved from 46 percent of total revenues in 2019 to 53.96 percent in 2020, Production Segment revenues fell as a percentage of overall revenues from 35.77 percent in 2019 to 25.67 percent, while the Agency segment rose from a contribution of 18 percent to 20.4 percent.
Revenue for the Production segment for the year was $234 million just up from $226 million in 2019, with Gross segment profit rising marginally from $100 million to $102 million for a Gross profit margin of 43.6 percent. The Media segment pulled in 68 percent more revenues than in 2019, to reach $492 million, resulting in an increase in Gross profit of 77 percent to $71.5 million and a Gross profit margin of just 14.5 percent. 
The Agency segment climbed a robust 65 percent to $186 million from $113 million in 2019 and enjoyed a 45 percent rise in Gross profit to $124.7 million from $86 million, with a Gross profit margin of 67.2 percent. Up to the third quarter, the media segment delivered a 60.5 percent growth in revenue amounting to $136 million putting revenue in this area at $362 million and resulting in revenues of $130 million in the fourth quarter.
The Company generated cash flows from operations of $140 million up from $121 million in 2019. After increased working capital needs, repayment of loans, payment of $19 million in dividends and net inflows from movements in fixed assets, the company held on to $89 million of the funds generated and ended with cash and equivalent at $380 million at the end of the year.
Current assets jumped sharply to $560 million from $387 million in 2019, receivables leaped from $84 million to $158 million. The level of receivables amounts to the total revenues generated in the final quarter and that was the case in 2019. Current liabilities amounted to $149 million, up from $83 million in 2019. Borrowings stood at just $65 million. Shareholders’ equity climbed to $464 million from $356 million in 2019.
The strong growth in revenues is positive for the company, however, the production segment, with a high profit margin, was flat during the year, while Media placements, a low contributor to profits grew strongly, with much higher risk associated with it, due to the high level of liabilities it incurs. Strong growth in the Agency segment is excellent as it contributes the most to gross profit and is an area to watch for continued robust growth.
The financial reports indicate some weakness in management, particularly the financing area, but the company is addressing this with the planned employment of appropriate personnel. As indicated above, there is no comparison for the segment accounts and no information on segment assets and liabilities, which is the standard requirement. Past quarterly reports do not contain segment results, which is the norm. These are all areas that point to weakness in critical areas.
The final quarter numbers are of major concern with increased cost wiping out the benefit of a big surge in revenues. The directors’ commentary for the third quarter results speaks to cost rising, but there is no commentary explaining what happened in the final quarter.
The company has been reporting big increases in staff cost for some time, the level of increase suggests that some of these costs relate to direct operating expenses rather than administration and therefore distorts the contents of the data presented to shareholders and withholds pertinent information for better understanding of the contents of the profit out turn.
With nearly two months of the current quarter having elapsed, the directors revealed that the company is on target to meet their forecast so far. After the year end, the company declared a regular dividend of 3.4 cents per share and a special dividend of 4 cents payable on January 22.
In going public, one objective for the use of the proceeds was in funding acquisitions. The directors indicate that they reviewed some potential candidates, but so far, none have met their objectives.
The company reported earnings of just 2 cents per share in the October quarter and 13 cents for the year. IC Insider.com projects 22 cents earnings per share for fiscal 2021, with the stock last trading at $3.05 on the Junior Market of the Jamaica Stock Exchange on Thursday for a PE ratio of 14 and based on 2021 projected earnings.
It was a brutal year for the fledgling companies as only seven recording gains during the year as the vast majority of prices tumbled.
Lasco Manufacturing advanced 15 cents to $3.85 with 10,310 stock units traded, Limners and Bards lost 10 cents to close at $3.05 with a transfer of 197,501 shares, Lumber Depot slipped 2 cents to $1.56 with 224,630 stocks passing through the market. Mailpac Group exchanged 2,639,122 units and declined by 1 cent to end at $2.87, Main Event dropped 19 cents to $3.20 with investors switching ownership of 49,287 stock units, Medical Disposables rose 5 cents to $4.25 with 131,782 units changing hands. SSL Venture gained 2 cents to close at 57 cents with 11,566 stocks traded and Stationery and Office Supplies advanced 24 cents to $4.54 with 2,000 shares crossing the exchange.
The local market has recovered some 16 percent of the losses suffered up to March 25, but the gains so far are some way off the start of the year. At the close, the All Jamaican Composite Index rose 2,252.56 points to close at 433,521.09, the Main Index gained 2,013.69 points to close at 395,614.93 and the JSE Financial Index lost 0.16 points to end at 102.09.
Wisynco Group ended with 6.4 percent market shares from 2.53 million units, JMMB Group 6.2 percent with 2.5 million units, Barita Investments 4 percent with 1.59 million units and Wigton Windfarm 3.9 percent market share with 1.54 million units.
MPC Caribbean Clean Energy dropped $5 to close at $153 in switching ownership of 12 units, NCB Financial declined by $3 to $142 in exchanging 6,748 stocks, PanJam Investment shed $2.13 in closing at $66.02 and trading 10,010,704 shares. Pulse Investments increased 36 cents to $4.50 in switching ownership of 6,616,355 stock units, Sagicor Group lost $1 in closing at $50 and finished trading 19,340 stocks, Salada Foods rose $2.75 to $30, trading 130,001 stock units. Scotia Group lost 70 cents to end at $44.25 after 17,576 units crossed the exchange, Sygnus Credit Investments climbed $1.07 in closing at $16.47 with investors swapping 75,710 shares, Wisynco Group increased by $1 to $17.50 in trading 2,527,199 stock units.
The market closed for a second consecutive day with six securities changing hands at the close and ending with prices of five declining and one remaining unchanged.
At the close, First Rock Capital Investment declined by 1.18 cents in closing at 7.81 US cents after exchanging 33,000 shares, Productive Business Solutions fell 6 cents in closing at 75 US cents after trading 1,000 units, Proven Investments declined by 0.8 of a cent to 25.9 US cents 153,408 stock units crossing the market. Sterling Investments declined 0.38 of a cent to 2 US cents after an exchange of 62,700 shares, Sygnus Credit Investments remained at 16 US cents in trading 18,490 stocks and Transjamaican Highway declined by 0.07 of a cent to 0.83 of a US cent with 258,716 units.
The market closed with 13 securities trading, up from 11 on Wednesday, and ended with prices of four rising, two declining and seven remaining unchanged. Trading resulted in 63 percent fewer securities changing hands than on Wednesday, with just 126,516 shares trading at $2,514,364, down from 340,242 shares for $7,205,775 on Wednesday.
Stocks declining│ Massy Holdings fell $4.01 to close at $60.99 trading 43 units and NCB Financial Group traded 51,024 shares and lost 2 cents in closing at $8.13.
At the close, 46 percent more shares were traded than on Tuesday, with 5,982,419 units changing hands for $14,795,087 compared to 4,103,575 units at $9,392,768 on Tuesday. The PE Ratio averages 14 based on ICInsider.com’s forecast of 2020-21 earnings.
Investor’s Choice bid-offer indicator shows four stocks ended with bids higher than their last selling prices and three with lower offers.
Lasco Distributors rose by 8 cents to $3.16 trading 15,763 shares, Lasco Financial climbed 6 cents to $2.76 with 2,568 stocks changing hands, Lasco Manufacturing dropped 18 cents to $3.70 with investors switching ownership of 41,293 units. Limners and Bards rose 1 cent to $3.15 with 130,979 stock units traded, Lumber Depot gained 2 cents to end at $1.58 with a transfer of 272,500 shares, Mailpac Group exchanged 2,848,891 units and increased 9 cents to $2.88. Paramount Trading closed 1 cent higher at $1.45 with 15,085 stocks changing hands and Tropical Battery gained 8 cents to finish at $1.20 with 1,149,078 shares trading.
Trading for the day averaged 614,217 units at $11,886,046 for each security, compared to an average of 651,934 shares at $6,663,580 on Tuesday. Trading month to date averages 435,836 units at $7,056,56, in contrast to 426,447 units at $6,802,380 on Wednesday. November ended with an average of 623,120 units at $6,686,047.
Margaritaville dived $13.23 to $43 in an exchange of 855 units, Mayberry Investments lost 31 cents to close at $5.77 trading 132,619 stock units, MPC Caribbean Clean Energy climbed $22.99 to $158 in an exchange of 729 units. NCB Financial gained $3 to close at $145 with an exchange of 34,603 stock units, Radio Jamaica climbed 33 cents to $1.68 in exchanging 766,452 shares, Sagicor Group climbed 60 cents to $51 while trading 1,086,033 stock units. Scotia Group increased $1.44 in closing at $44.95 with 6,540 shares changing hands, Seprod declined by $1.50 to $65 after exchanging 38,172 units and Stanley Motta climbed 60 cents to $5.50 in transferring ownership of 275,734 stocks.
Trading ended with six securities changing hands at the close, compared to seven on Tuesday and ended with the prices of two stocks rising, three declining and one remaining unchanged.
At the close of the market, MPC Caribbean Clean Energy slipped 1 cent to US$1.14 after exchanging 341 shares, Productive Business Solutions advanced 15 cents to end at 81 US cents in exchanging 11,458 stock units, Proven Investments dropped 0.27 of a cent to settle at 26.7 US cents after exchanging 53,640 shares. Sterling Investments closed at 2.38 US cents with investors swapping 809 units, Sygnus Credit Investments climbed 2 US cents to 16 US cents trading 5,000 stock units and Transjamaican Highway shed 0.05 of a cent to settle at 0.9 US cents with an exchange of 12,850 stock units.
Guardian Holdings slipped 10 cents to $20.90 with 213,870 units crossing the exchange, Grace Kennedy dipped 10 cents to $3.80 in trading 6,696 units and Unilever lost 5 cents trading 101,000 stock units at $16.65.
The All Jamaican Composite Index lost 528.44 points to close at 429,331.77, the JSE Main Index shed 550.89 points to end at 391,753.12 and the JSE Financial Index shed 0.11 points to settle at 102.35.
The day’s trading averaged 651,934 units at $6,663,580 for each security, versus 1,075,147 shares at $6,244,835 on Monday. Trading month to date averaged 426,447 units at $6,802,380 for each security, compared to 414,481 units at $6,809,746 on the prior trading day. November ended with an average of 623,120 units at $6,686,047.
Salada Foods gained $4.10 in closing at $27.25 after trading 100 shares, Scotia Group lost $1.44 to settle at $43.51, with 37,260 stocks crossing the exchange and Sygnus Credit Investments fell 50 cents to close at $15.50 in trading 142,589 shares.
