Bright profit spots but cloudy elsewhere

A number of listed companies recently posted results for the second quarter of 2021, with some recording a strong rise in revenues and outstanding profits or lower losses than in 2020 and a few with lower profits.
Fontana had a good year to June and for the June quarter. The Junior Market listed company reported profit that surged 85 percent for the year to June of $512 million, with earnings per share of 41 cents, up from a profit of $277 million in 2020, with revenues rising 14 percent to $5.15 billion from $4.5 billion in 2020.
Blue Power suffered a reversal in fortunes, with a suspension of exports of soaps to Caricom, following a decision of the Jamaica Government to stop issuing Certificates of Origin for soaps manufactured in Jamaica, using imported soap noodles.
For the quarter to July, total revenues fell 23 percent from $150 million generated in 2020 to $116 million, leading to profits from operations dropping 62 percent to $8 million, from $21 million in the previous year, but gains on sales of investments of $26 million and other income, resulted in after tax profit of $46 million.
Jamaica Broilers posted revenues that surged 32 percent to $17.6 billion from $12.5 billion in 2020 for the first quarter to July 2021 but profit of $275 million dropped 28 percent from $383 million in 2020, as the Jamaican and Haitian segments posted lower profits for the quarter as the USA segment enjoyed a 84 percent jump.
Revenues at KLE Group recovered from just $7.8 million in the June quarter in 2020 to $38 million this year, with the half year returning revenues of $73 million versus $80.5 million in 2020, with losses showing slight improvement to $18 million for the quarter from $24.6 million in 2020 and from a loss of $43.7 million in 2020 half year to $40 million in 2021.

Scotia Group

Revenues at Lumber Depot increased 16 percent to $420 million in the  July quarter, this year, from $361 million in 2020, helping to drive profits 140 percent higher to $71.8 million, from $29.9 million in 2020. The strong increase resulted from a surge in gross profit margin from 18.7 percent in 2020 to 24.6 percent in the 2021 July quarter and contributed $26 million to the $42 million of increased profit.
Scotia Group reported a profit of $2.8 billion, an increase of 81 percent over the depressed 2020 third quarter and slightly more than the $2.7 billion generated in the April quarter. Profit for the nine months jumped 31 percent from $5.6 billion to $7.3 billion as expected credit loss provision fell sharply from $5.3 billion in 2020 to $1.99 billion for the nine months to July, thus negating a fall in interest income and increased operating expenses and taxation.

Is Fesco’s pricing rational?

Investors who bought shares in Future Energy Source in the IPO in April or a few months after are laughing all the way to the bank, with the price providing a gain of 311 percent up to Friday. The recent rally in the stock has moved it from an IPO price of 80 cents to $3.29 at the close on Friday, making it the highest valued Junior Market stock at a PE of 25 times current year’s earnings, with the next closest being, Honey Bun at 18.3.
With just 15 service stations within its network and the planned opening of the Beechwood Avenue station, there is much scope for the company to expand and grow profits in the future, but it seems a bit overdone for Fesco to be priced at a 38 percent premium to the next highest priced stock on the Junior Market.
The company’s latest financial report shows profit surging 55.5 percent to $40 million before taxes for the 2021 June quarter versus $25.7 million in the first quarter of 2020. Profit after taxes rose 66 percent from $24 million. There is no tax charge for the latest quarter, resulting from listing on the Junior Market of the Jamaica Stock Exchange. The tax incentive provides a 10 years tax concession, with no taxes payable for 5 years and at 50 percent of the normal rate for the second 5 years.
A 29.5 percent spike in the volume of fuel sold added 2.9 million litres to volume sales, helping to push revenues for the quarter up 58 percent to $1.9 billion from $1.2 billion in 2020 and much greater than the $1.5 billion generated in March 2021 quarter. Most of the June increase over the March quarter would be due to the increased price of imported fuel, emanating from the upward movement in world oil prices during the period. Sales for the June 2020 quarter, was negatively affected by disruption to business following the outbreak of covid-19 last year.

Beechwood Avenue service station, under construction.

The first quarter performance is ahead of the opening of the new Fesco Ferry service station on July 15, which is dealer owned and operated.
The Company recorded a gross profit of $55 million, an increase of 63.4 percent over the June 2020 quarter of $34 million.
Operating and administrative expenses for the 2021 first quarter popped 139 percent from $8.6 million to $20.5 million, due mainly to spending in new areas during the quarter, with no cost in 2020. Advertising consumed $2.9 million, directors fees $1.4 million, amortization of right of use assets $867,000, while legal and professional fees rose from $310,000 to $2 million and audit and accounting fees added $1 million, with virtually none in 2020.
Finance Income increased from $1.7 million to $6.4 million, with foreign exchange gains accounting for $4.4 million in the 2021 quarter. Interest cost was minimal at under $1 million in the 2020 and 2021 periods.
Current assets amount to $547 million and current liabilities $210 million, with net current assets of $336 million versus $145 million in 2020. Cash funds amount to $282 million and receivables and amounts due from related parties amount to $250 million.
Shareholders Equity stands at $582 million, up from $231 million at the end of June 2020, reflecting the net proceeds from the IPO earlier this year and an increase in retained earnings. The company outlaid $238 million in work in progress in building out the service station on Beechwood Avenue in Kingston, with $114 million incurred in the June quarter.

Barita APO to be priced at $80

Barita Investments‘ directors have approved the issue of 125 million ordinary shares at $80 each, with an option to upsize the amount issued by 62.5 million shares to raise $15 billion in an additional public issue (APO).
The New Ordinary Shares will be reserved for the benefit of certain specified investors in amounts determined at the discretion of the Company. The APO should open on September 3, or such other date as determined by the Group Chief Executive Officer and is to close on September 21, or such other date as determined by the Group Chief Executive Officers.
The original notice to the Jamaica Stock Exchange stipulated the issue of up to 160 million units that could have been upsized 80 million shares. Since the first notice to the Jamaica Stock Exchange, on August 5, the stock price moved up from the low $83.90 to $92.77, with the proposed price being a discount of nearly 14 percent.
The company reported nine months results to June, with profit after tax for the June quarter coming in at $1.6 billion, up a strong 62 percent from $990 million reported in 2020 June quarter and ended the quarter, with earnings per share of $1.48 versus $1.21 in 2020. Earnings for the nine months ended at $3.38 per share from after tax profit of $3.67 billion, up 82 percent from $2 billion in 2020.

Is Barita really worth as much as JMMB?

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Barita Investments headquarters

JMMB Group reported profit at $1.7 billion, for the quarter ending June this year, with comprehensive income, a better measure of assessing management performance, of $3 billion. Barita Investments reported profit and comprehensive income of $1.6 billion, almost 50 percent less than JMMB’s comprehensive income and yet Barita’s shares are selling 2.6 times that of JMMB and the market value is 32 percent greater.
Barita has 1.085 billion shares issued to investors, with total assets of $84.5 billion and shareholders’ equity of only $30 billion. JMMB Group has 1.9 billion shares issued almost twice that of Barita and assets of $545 billion and shareholders’ equity of $63 billion, more than twice that of Barita, but the market has placed a higher value on the much smaller company.
At the close of trading on the Jamaica Stock Exchange on Wednesday, the market value for Barita is $99 billion and JMMB $75 billion, nearly 25 percent less than Barita. Why is the market pricing Barita at a steep premium to JMMB? Barita has only a small percentage of its stock in the public’s hands and therefore is enjoying a scarcity premium, while JMMB is far more liquid with more shares in the public’s hands.
ICInsider.com TOP10 selection revealed over the years is that most investors appear to chase momentum and popular stocks of the day than invest in stocks that are likely to be big winners down the road.
Seeking relevant and credible information for proper investment decisions is not an area of focus for many. Radio Jamaica is a case in point. The stock has been in the upper level of the Top 10 for the better part of a year and a half, with investors being fed with lots of information to inform them of the big run that was and is still ahead of them. They would not buy into it until the company released full year results in July and even then, only a few bought into what is now unfolding and reflected in the huge rise in the first quarter results. There is a huge demand for the stock that is not easy to find at current pricing levels.

Scotia Group.

The message from the market is that out of favour, stocks are the last to get a following, but the ones that are likely to deliver huge gains. There is the case of Salada Foods, where investors are buying the stock at 40 times earnings when the market is nowhere near that level, while they ignore JMMB Group, for example with PE less than 10.
Investors were treating Barita Investments in the same manner as JMMB is now when Barita was on IC TOP 10 until sometime after the switch in majority ownership to Cornerstone, but few would buy into what was a terrible undervalued stock with much promise.
JMMB enjoyed a big bounce in its June quarter earnings that saw profit 123 percent from $769 million in 2020, but those results were down 31 percent from the $1.1 billion generated in 2019 that makes the 2021 first quarter results so outstanding, as it is up 54 percent over the 2019 results.
Profit for Barita is up 62 percent from $990 million earned in the June quarter of 2020 and up 76 percent over the June 2019 quarter earnings of $910 million.
Interestingly, Scotia Group is worth just 24 percent more than Barita. If Barita gets investors to subscribe to the 240 million shares in the upcoming IPO and the stock price holds at the current level after the issue closes, Barita market value would surpass that of Scotia.

Q3 profit bolts 62% at Barita

Fresh from recommending the issue of new shares to their shareholders, the directors of Investment bankers, Barita Investments, approved the payment of an interim dividend of $3.029 per stock unit to be done on October 7, to shareholders as of September 23, 2021, to cost $3.29 billion.
The company also reported nine months results to June, with profit after tax for the June quarter coming in at $1.6 billion, up a strong 62 percent from $990 million reported in 2020 June quarter and ended the quarter, with earnings per share of $1.48 versus $1.21 in 2020. Earnings for the nine months ended at $3.38 per share from after tax profit of $3.67 billion, up 82 percent from $2 billion in 2020.

Barita eyeing acquisition.

Revenues net of interest expenses rose an impressive 75 percent in the quarter, to $2.64 billion from $1.5 billion and spiked 77 percent from $3.78 billion to $6.69 billion. Fees and commission income generated half of the revenues for the quarter in contributing $1.34 billion and $2.7 billion in the year to date period accounting for 41 percent of net revenues. Foreign exchange gains brought in $647 million in the quarter versus $321 million in 2020 and $1.78 billion year to date versus just $428 million in 2020. The above two areas are the fastest growing for the current fiscal year. Gain on investment activities is down in the quarter, from $257 million to $214 million and down from $1.1 billion in the nine months last year to $1 billion in 2021.
Expenses for the quarter surged 178 percent from $345 million in 2020 to $959 million and jumped 87 from $1.3 billion for the nine months to $2.43 billion. The latest results suggest that earnings per share for the full year could come close to $4.50, of course, with investment banking institutions, they could pick up or drop revenues in many different areas.
Shareholders approved the directors to issue 160 million shares to the public, its fourth capital raising foray since the majority shares in the company was acquired by Cornerstone United Holdings, but the issue may be upsized to as much as 240 million shares.
The shares to be issued may be upsized to a maximum of 80 million additional units if the invitation is oversubscribed. If all 240 million shares are taken up, the company could raise as much as $18 billion in fresh capital, ICInsider.com estimates on the basis that there will not be a steep discount to the price the stock has been mostly traded at up to last week.

Shareholders at Barita Investments AGM.

The pricing and date of the issue are to be determined by the directors, but the offer document seems to be with the Financial Services Commission awaiting signing off of the issue. The last APO was done in August of 2020, the offer document was dated July 30, at which time the JSE closing price was $57.93, with the last traded price of $54, the offer was set at $52 for the general public and existing shareholders. With the stock trading around $82 recently, the price for the new APO could be around $75 to $80. The company could offer existing shareholders a much steeper discount as they did back in 2019, in which case the total take would be less.
Barita Investments is listed on the Jamaica Stock Exchange and has total assets of $84 billion, up from $49 billion a year ago, with Shareholders’ equity of $30.3 billion in June 2021. The company has $2 billion invested in Derrimon Trading, shown as Investment in Associated Company on Barita’s balance sheet. Derrimon contributed $42 million to profit in the quarter.
On Monday, the shares closed trading at $90.24 after jumping $7.24 and boast a PE of 20 times this year’s earnings.

Big recovery for Medical Disposables profit

The financial performance saw a marked about turn for Medical Disposables & Supplies in the June quarter this year from a loss after tax of $7 million in 2020, into the black, with profit after taxation hitting $25.5 million, after with taxation amounting to $3.6 million, from an increase of 33.8 percent in sales revenue to $683 million, from $511 million in 2020.

The 2021 revenue performance not only beat that of 2020 but also the $557 million as well as the $16 million in profit in the June 2019 quarters and appears to be fully back on track from the dislocation experienced last year with the advent of Covid-19. The operations of the new subsidiary have not commenced a note to the financials states. Kurt Boothe Managing Director explained that MDS acquired the assets of the former company and at the time of the quarter end had not yet started trading as they were in the process of focussing on various systems to ensure a smooth and efficient running of the operations once they get started, which should be during the course of the second quarter ending September.“This increase in sales is the result of increased consumer demand for pharmaceutical and medical disposable items,” Kurt Boothe, General Manager stated in his commentary on the financials.
Gross profit was up 56.4 percent to $177 million from $113 million over the previous year “mostly attributable to the increase in sales of pharmaceutical and medical disposable products,” Boothe stated. Growth in gross profit also was the impact of better margins which moved up to 25.9 percent from just 22.1 percent in 2020.
Total operating expenses increased by 13.2 percent from $113.4 million in 2020 to $128.4 million in 2021. Administrative expenses rose 24.5 percent to $63 million in the quarter from $50 million. Although sales shot up sharply selling and promotional expenses increased by a mere 4.5 percent to $58.6 million, the cost is this area is mostly for distribution and delivery of goods Botyhe indicated as such increased volume sales do not necessarily mean increased cost as vehicles may be able to transport more goods per trip than before as such they benefit from economies of scale.  Finance cost jumped to $17 million from $12 million in 2020, partially due to the funding of the acquisition of the subsidiary.

Kurk Boothe – Medical Disposables Managing Director

The company operations generated a gross cash flow of $36 million but growth in receivables, inventories offset by increased payables saw inflows just balancing out. Net borrowings and investment in its new subsidiary resulted in a $37 million cash surplus for the period.
At the end of the quarter, Current assets ended at $1.63 billion including, inventories $910 million, trade and other receivables of $424 million, cash and bank balances of $111 million. Current liabilities ended the period at $1.09 billion. Net current assets ended the period at $540 million. Shareholders’ equity stood at $1.04 billion with long term borrowings at $324 million and short term at $402 million. Boothe indicated that he is optimistic that the trend seen so far will continue for the rest of the financial year.
Earnings per share came out at 10 cents for the quarter, with a loss of 3 cents for the 2020 period. IC Insider.com forecast is 80 cents per share for the fiscal year.  The stock traded at $4.98 on the Junior Market of the Jamaica Stock Exchange on Friday, with a PE of 6 times the current year’s earnings and compares favourably, with the market average of 12.7. Net asset value is $3.96 with the stock selling at a 26 percent premium to the book value, well below the average for the rest of the market.

Sweet profits for Honey Bun

Net profit at Honey Bun surged 221 percent above the 2020 June quarter to $65 million from just $20 million in 2020, with net profit for the nine months hitting $177 million for a 56 percent increase over $113 million earned in 2020.
Revenues rolled in for the quarter, with a 54 percent increase to $566 million, from $367 million last year and the nine months pulling in a 25 percent growth at $1.555 billion from $1.24 billion in the prior year. Export sales were up by 21 percent over the prior year,, the company revealed.
Gross profit for the quarter came in at $279 million, 61 percent over 2020, whilst the gross profit ratio closed at 48.3 percent, similar to the outturn in the prior year. Gross profit for the nine months came in at $751 million, 25 percent more than in the prior year, with $600 million with the gross profit ratio remaining consistent at 48.3 percent, as was the case in the prior year.
“The improvement was attributable to a number of factors, including the introduction of new products such as Cinnamon raisin loaf and the Hot dog roll,” Chief Executive Officer Michelle Chong and Herbert Chong, Chairman, advised shareholders in their management discussion and analysis report.
Administrative expenses increased 27.5 percent to $118.6 million $93 million in the June 2020 quarter, and for the nine months to June, the company incurred $335 million, up 21 percent from $277 million in 2020. Selling and distribution costs climbed 31 percent from $61 million in the June quarter in 2020 to $80 million and rose 9 percent to $208 million from $190 million in 2020. Taxation ended at $16.7 million from $2.6 million in the June 2020 quarter and jumped to $32.88 million for the nine months in 2021 from $17.75 million in 2020.
Gross cash flow brought in $230 million and ended with $259 million after working capital financing but ended with $78 million after addition to fixed assets of $84 million, $32 million for the acquisition of investments, loan payment of $4 and the payment of $59 million in dividends. The $84 million in capital expenditure was mainly used to upgrade the vehicle fleet to service new routes and acquire additional manufacturing equipment.
At the end of the quarter, Current assets ended with $574 million, including cash of $375 million and receivables of $82 million. Payables amount to $229 million and Net current assets ended the period $1.03 billion. Investments amount to $96 million at the end of the period, while Shareholders’ equity stands at $987 million, with borrowings at just $23 million.
Earnings per share came out at 14 cents for the quarter and 37 cents for the nine months. ICInsider.com forecasts earnings of 50 cents per share for the current year and 80 cents per share for 2022. The stock traded at $7.50 on the Junior Market of the Jamaica Stock Exchange on Friday with a PE ratio of 15 times, current earnings and is above the Junior Market average of 12.7 but lower than the average of 17 the market was valued at in March this year.
The company’s tax holiday for listing on the Junior Market expired May 2021; as such, all earnings from June 2021 will be fully taxed at 25 percent less any tax credits. The company is well managed and is poised for further growth; the stock can be scarce and may not be easy to get at the current price.

RJR Q1 profit hits the roof

We boldly predicted that profit at Jamaica’s leading media house – Radio Jamaica, would exceed the full 2021 fiscal years’ earnings of $171 million and stun the market with the full year’s profit on the way to just under $1 billion. We messed up but we were darn close, with the first quarter numbers, but now expect full year’s results to beat the original forecast and end up over $1 billion. 
We projected revenues of $1.465 billion and they delivered $1.449 billion in the quarter. Our forecast for TV revenues was $626.344 million, they reported $639.377. Radio revenues came in at $199.605, somewhat higher than ICInsider.com’s projection of $184.05 and the print division delivered $610,217 million versus ICI’s forecast of $635,697. Other income amounts to $29 million versus IC forecast of $19 million.
RJR added approximately $70 million in provision for bad debt that to drive up administrative expenses above the recent trend thus producing a profit to $110 million in the quarter, a level never before done by them in the quarter. In achieving this performance, operating revenues surged 34 percent to $1.42 billion from $1.06 billion in 2020 and beating 2019 June quarter, with revenues of $1.36 billion.
Profit margin in the quarter rose to 65 percent from 64 percent in the 2020 quarter as direct input cost climbed 28 percent to $494 compared to $385 million in 2020 for the year’s quarter. The effect, operating profit rose 37 percent to $926 million from $675 million.
Sales expenses climbed by 6.5 percent to $243 million from $228 million in 2020. Administrative expenses rose 25 percent to $362 million from $290 million. Other operating expenses rose 14.5 percent and ended at $190 million from $166 million in 2020. Finance cost increased to $12 million from $11 million in 2020. Corporation taxes amount to $37 million and just $284,000 in 20.20

TVJ one of RJR’s subsidaries

The chief Executive officer Gary Allen and Chairman Joseph Matalon, in their report, accompanying the quarterly attribute the improved results to “cost cutting and improved income generation with “increased advertising revenues across all divisions, the continued collaboration with the Ministry of Education and the staging of ISSA/GraceKennedy boys and girls championship”.
Gross cash flow brought in $227 million but growth in receivables, inventories and increased payables resulted in an additional increase of funding of $120 million, addition to fixed assets and loan payment used up funds and created an overall net outflow of $119 million thus reducing the opening cash balance of $725 million to reflect the cash on hand at the end of the quarter. At the end of the quarter, Current assets ended at $2.34 billion including cash of $606 million and receivables of $137 billion, Payables amount to $1.29 billion and net current assets at $1.05 billion. Shareholders’ equity stands at $2.6 billion with borrowings at just $399 million.
Earnings per share came out at 4.5 cents. ICInsider.com forecasts earnings of 45 cents per share for the current year and 80 cents per share for 2023. The stock traded at $2.15 on the Main Market of the Jamaica Stock Exchange on Thursday with a PE ratio of 5 times, current earnings well below the average of 16.3 currently for the Main Market. The stock remains ICInsider.com BUY RATED.

Profit jumps 225% at overvalued Salada

It was difficult to understand the factors driving a pile of investors into Salada Foods shares after the stock split at prices as high as $10, even after the second quarter results were posted, showing strong increases for revenues and profits in that quarter.
Alert investors would have found that the big jump in the second quarter’s performance was due to the underperformance in the first quarter. Unfortunately, the company directors did not help investors to understand what was going on. Many investors will learn that when companies’ products are sold through distributors, sales can be jerky for the producers while the distributors can be showing a totally different picture. That seems to be what happened at Salada, where the second quarter sales fill the void left in the December quarter when sales were low.
The latest quarterly report has leveled the playing field and many investors are going to weep for not heeding the suggestion that the stock was highly overvalued.
Sales in the third quarter popped 17 percent to $311 million, from $257 million in 2020. For the nine months to June, sales rose just 9 percent to $890 million from $920 million in 2020.
Profit after tax climbed 53 percent to $51 million for the current year’s June quarter compared to $24 million in 2020 and for the nine months this year, it rose an impressive 225 percent to $115 million from a mere $36 million in 2020.
Gross profit margin rose in the June quarter to 32.97 percent, with the year to date ending at 30.4 percent as gross profit rose 29 percent in the quarter to $102 million from $79 million 17 percent for the year to date, to $271 million from $231 million in 2020.

Coffee plant

Administrative expenses varied marginally than in the prior year, ending at $31.2 million in the quarter from $30.3 million in 2020 and slipping in the nine months to $96.7 million from $897.5 million in 2020. Marketing and sales expenses were effectively flat at $13 5 million versus $13.4 million in the 2020 June quarter and down sharply in the nine months to $36 million from $46.7 million last year. Net finance income saw a positive contribution in the June 2021 quarter of $8.6 million compared to a loss of $3.6 million in 2020 and $15 million in the nine months to June of $15 million from a loss of $12.5 million in 2020. Taxation rose to $16 million in the June 2021 quarter from $6 million last year and $38.5 million in the nine months to June this year from $12.5 million in 2020.
Gross cash flow brought in $174 million, but increased investments and additions to fixed assets and the paying of $108 million in dividends resulted in net outflows of $4 million. At the end of June, Current assets amounted to $964 million, with inventories of $487 million, receivables of $159 million, cash and bank balances of $167 million and investments of $151 million.
Current liabilities ended the period at $256 million. Net current assets closed the period at $707 million while shareholders’ equity stood at $964 million with no long borrowed funds used to finance the operations. In addition to investments in current assets, is $105 million classified under non-current assets.
Earnings per share came out at 5 cents for the quarter and 11 cents for the year to date. IC Insider.com is forecasting 17 cents per share for the fiscal year with a PE of 46 times, current year’s earnings.
The stock traded at $7.79 on the Main Market of the Jamaica Stock Exchange. Net asset value is 93 cents, with the stock selling at 8.6 times book value.

Rebound for Stationery & Office Supplies

Stationery & Office Supplies is enjoying a strong rebound from the COVID-19 afflicted 2020 financial year, with profit swinging from a loss of $22 million in the June 2020 quarter to a small profit of $3 million in the 2021 second quarter and well off from a profit of $34 million in the 2019 June Quarter.

Stationery & Office Supplies Montego Bay

Profit rose over 168 percent year on year for the first 6 months of 2021, from $21.8 million in 2020 to $58.4 million.
Sales surged 76 percent in the June quarter to $238 million from the 2020 covid-19 battered quarter and 17 percent for the half year to $551 versus $472 million in the 2020 period. While making a good recovery, this year’s revenues trail that of 2019 by some degree. Revenues in June 2019 quarter were 24 percent higher at $295 million and for the half year, 15 percent greater than the $633 million generated in 2019.
The cost of goods sold rose 61 percent in the quarter to $117 million and 7 percent for the half year to $261 million. Gross profit margin rose to 51 percent in the quarter, with gross profit of $120 million up from 46 percent in 2020, with gross profit of $63 million. For the half year, gross profit margin rose to 53 percent from gross profit of $290 million up from 46 percent in 2020, with gross profit of $228 million.
Administrative and general expenses rose 54 percent to $82 million from $55 million in 2020 during the June quarters and climbed a milder 16 percent to $163 million from $141 million for the six months period. Selling and promotional costs rose from $14.6 million in the June 2020 quarter to $22 million and moved from $38 million for the six months in 2020 to $43 million in 2021.
Depreciation, amortisation and impairment charges were slightly down in the quarter at $8.2 million versus $8.7 million in 2020 and $16.5 million compared to $17.8 million for the half year. Finance and foreign exchange cost accounted for $5.2 million in the quarter versus $6.4 million in 2020 and $10 million in the six months period this year, from $12 million in 2020.
“History has shown that SOS’s second quarter is normally the slowest period during the year, but even though we continue to suffer through the Covid-19 virus and all of the issues that come along with it, SOS was able to post a profit, with significant improvements compared to the second quarter of 2020. These are good indicators that Jamaica’s economy is continuing to rebound and as we progress through the summer months, we will see the return of children to school which will also help improve the sales of SEEK back to school products in the market,” stated David McDaniel, Managing Director and Marjorie McDaniel, Chief Administrative officer in their joint commentary of the results.
Earnings per share for the second quarter for 2021 amount to one cent and 23 cents for the half year. ICInsider.com projects full year earnings at 85 cents per share and $1.50 for 2022. The stock traded at $7.50, with a PE of 9, based on 2021 earnings and that compares favourably with the market average PE of 12.4.
The company remains in a healthy financial position at the end of half year period. At the end of June, shareholders’ equity stood at $668 million, with long term borrowings at $114 million and short term borrowings at $39 million. Gross cash flow amounts to $89 million but, with growth in working capital and repayment of loans, the company ended the half year with net negative flows of $6 million. Current assets stood at $509 million, including inventories of $276 million, trade and other receivables of $102 million, and cash and bank balances of $91 million. Current liabilities ended at $126 million, with net current assets ending at $382 million.