Profits for the nine months to September 2014 attributable to equity shareholders of Guardian Holdings grew 45 percent to TT$286 million or $88 million or over the comparable period last year. The 2014 results to date translate Earnings per share (EPS) of $1.23 compared to $0.85 for the same period last year.
For the September quarter, profit for Guardian shareholders was TT$103 million, an increase of 11.2 percent, from $91.38 million in 2013. The profit position flowed from a 29 percent increase in insurance underwriting activities, in the quarter and 15 percent year to date, but lower investment income for the latest quarter, pulled the grow of profit down.
The 2013 result was negatively impacted by an extra-ordinary loss of $31 million, resulting from the Government of Jamaica restructuring their debt. The 2013 results, when this loss is excluded, would end up with an increase of profits year-on-year of $58 million, or 25 percent.
”Investment opportunities continue to be a challenge and as a result, our investment income fell from $666 million to $602 million, a decline of $63 million. This decline was offset by a favourable movement in Fair Value gains of $100 million inclusive of the Jamaican NDX,” Management stated in their release accompanying the results.
Operating Expenses increased by $34 million or 5 percent, of which $19 million is related to the Pointe Simon project. In 2013, Pointe Simon expenses were capitalised as the project was in the construction stage. The Pointe Simon project consists of an office tower building, condominiums and a hotel. From 2014, in keeping with accounting regulation the expenses relating to the project is booked through the income statement since the project has entered the commercialisation phase. Without this change in treatment, our operating expenses would have increased 3 percent year on year.
Management stated that they “expect to conclude transactions for the disposal of the majority of our condominiums by year end. Demand continues to be good for retail space at Pointe Simon and we have begun the process of signing leases for this space. The sale of the hotel will be concluded by year-end and we look forward to its opening in the latter half of next year. We continue to close a number of small leases in our office tower and are in the process of negotiating two large leases.” The sales of this real estate project will inject funds into the group and provide income and increased profits in the last quarter of 2014 and beyond.
Guardian is listed on the Trinidad & Tobago Stock Exchange and is primarily involved in life underwriting, general insurance and investments management.
Guardian Holdings stocks remains IC Insider BUY RATED.
Guardian Holdings profit up
Tax cut help boost D&G profit 30%
Desnoes & Geddes, brewers of the world famous Red Stripe beer, racked up a 30 percent increase in after tax profit, for the quarter to September this year, thanks partly to a reduction in tax, a 3 percent revenue increase and static to reducing cost. Profit before tax increased 14.5 percent to $640 million from $559 million in 2013. Revenues grew just 3 percent to $3.4 billion in the quarter but taxes fell from $192 million in the 2013 to $164 million as the tax rate for companies dropped to 25 percent form 30 percent for 2013.
Gross profit margin improved to 71.76 percent, in the latest quarter, from 69.25 percent last year. The improvement in the margin flowed in part from what management says are “efficiency gains from the investment in the brewery modernization such as the new combined heat and power plant.”
Gross profit improved by 14.7 percent to reach $1.156, as local sales grew 4.8 percent year over year, to reach $2.95 billion. Exports sales fell to $414 million from $465 million in 2013 leading to a fall in gross profit in the export segment to $226 from $291 million. Management stated that the reduction in exports is due to shift in the timing of a Shipment from the September quarter to the December quarter.
The company benefited from lower general, selling and administrative cost which fell to $261 million in the quarter, compared to $288 million in the 2013 quarter.
Cash funds at the end of the quarter, stood at $1.79 billion. The company declared a dividend of 27 cents per share, payable in December to cost $760 million and will be adequately funded by the earnings, for the December quarter. With the planned dividend, the company will pay 52 cents per share, in dividend for the 2014, providing a yield of just over 10 percent, based on the price of $5.10 at the end of 2013.
IC Insider is projecting earnings of 85 cents per share, for the year ending June 2015 and $1.05, for the following year. The stock which last sold at $4.95 remains an IC insider BUY RATED stock.
Sales up margin down at Lasco Distributors
Peter Chin – Lasco Distributors’ Managing Director
Operating cost jumped 15 percent in the quarter, to $377 million and just over 17 percent for the six months to $738 million, pushing profit down 19 percent to $112.5 million for the quarter, from $138.7 million in 2013 and down a much larger, 33 percent, to $203 million for the half year, versus $303 million in the 2013 period.
As disappointing as the second quarter numbers are, they represent a major improvement over the first quarter with a revenue increase of 4 percent, and a fall in profits of 45 percent compared to the 2013 June quarter.
Finances|The company has quite a bit of funds tied up in inventories $1.3 billion and receivables $1.7 billion, that are in excess of normal trading levels, cash funds on the other hand is up to $850 million and will be handy in helping to finance the 110,000 square foot warehousing facility, that they will be embarking on shortly, to meet what management says, is increasing demand flowing from new products to be distributed by the company.
The expected payment from their successful law suit against Pfizer is not yet booked and the amount not yet made public but should exceed $1 billion.
Lasco Manufacturing new “I Cool” drinks
Impressive sales growth at Medical Disposables
Kurk Boothe – Medical Disposables Managing Director
In 2013 after taxation of $4.4 million, $13 million was left as net profit. For the six months, profit after tax of rose 60.6 percent to $38.7 million from $24 million, after accounting for $8.4 million in taxes.
For the quarter, gross profit grew 29 percent to $70.4 million compared to $54.5 million and for the six months an increase of 28 percent to$136 million. “This improvement was due to the increased sales in all categories and consistent review of our pricing structure to maintain gross margin efficiency,” Kurk Boothe, Managing Director said in his report to shareholders. The increase in gross profit was helped by an improvement in gross profit margins, increasing during the latest quarter to 33.14 percent from 32.12 last year and to 33.65 percent for the six months versus 32.90 percent in the same period of 2013.
Sales revenue climbed 26.2 percent to $283 million in the September quarter over the $224 million in 2013. For the half year, sales grew 26 percent to $540 million from $429 million in 2013. “This result was in keeping with the company’s strategic forecast of growing market share and widening the customer base in all categories of its business operations,” Boothe stated.
IC Insider understands that sales have moved to more than $100 million per month since the latter part of the last quarter. If this is maintained then it should lift profit going forward and could push earnings to around 40 cents per share for the current financial year.
Expenses| Total operational expenses increased 49.8 percent for the quarter and the half year to September to $47.6 million compared to $31.8 million in 2013 and to $93.8 million for the six months period.
“This increase was driven mainly by staff related expenses, utilities, professional fees and information technology services. Staff related expenses, in particular, were driven by the strategic decision to realign the staff complement and compensation to sustain the current growth, development and expansion of the business, Boothe said.
Finances| Trade receivables have climbed to more than two months of sales at $240 million and inventories have moved up as well to just under three months’ supply at $182 million. Cash funds are at $86 million but borrowed funds have climbed to $106 million.
The stock is one to watch with the price of the stock on the junior market of the Jamaica Stock Exchange at $1.92 at a PE less than 5 times the 2015 profit. The company declared a 4 cents per share dividend, payable in November 19.
Flat sales higher cost hit Lasco Manufacturing
Lasco Manufacturing new “I Cool” drinks
Earnings per share fell to 3 cents for the quarter and 7 cents for the six months. Year to date revenue was $2.08 billion compared to $1.88 billion for the same period last year, an increase of 11 percent. “This growth was driven mainly by increased volume in our export markets. Our International Division reported a growth of 40 percent during the quarter” management stated in their release with the financials.
Gross profit for the six months rose 14 percent to $602 million from $526 million and in the September quarter it grew to $287 million from $276, bettering gross profit margin moderately. Net profit for the six months declined 15 percent to $268 million against the comparative period last year. “The net profit performance was in line with the expectations of management and the board, this was due to temporary increase in manufacturing cost resulting from the effect of changes in staff complement, overhead costs associated with the new manufacturing plant, and increased finance cost,” the company’s management stated.
Operating expenses climbed 54 percent to $151 million in the latest quarter, and 41 percent, for the six months period. While there is no breakdown for the operating cost, other than the increased staff cost mentioned above, increased depreciation charge on the liquid factory would also be one of the factors pushing cost. With the other factory to be opened after the quarter’s end, the depreciation charge will rise again. Finance cost jumped to $25 million in the quarter from just $2 million in the 2013 quarter and for the half year to $57 million from $2.3 million. Prior to the completion of the factory, the finance cost associated with building and equipping the factories was capitalised as part of the factory cost. With the completion of the facilities, the cost will be a direct charge against income.
Heating of raw material to make bottles for Lasco’s new drinks
“The company is on target with its long-term plan to invest in innovation across all facets of the business – from new product development to powering a pipeline of new products, drive financial performance and fuel continued consumer passion for the LASCO brand,” management stated.
Finances| At the end September, borrowed funds was at $1.49 billion with $187 million to be paid within the next twelve months, while cash funds were at $153 million. $2.1 billion is in work in progress to be transferred to fixed assets and will push total fixed assets to $3 billion when effected. The company is also in the process of constructing a new warehouse of 30,000 square foot. Up to the end of the September the company was operating from two factories one at the White Mall facilities as well as at Red Hills Road, thus resulting in duplicated cost. The liquid plant is to be up graded further by $3 million to reduce raw material cost and expanded for other products, including production for some foreign partner.
Lasco Financial rolls out profit gains
Lasco Financial Managing Director Jacinth Hall-Tracey
For the six months to September, profit is up by 25 percent to $112 million or 9 cents per share and revenue climbed 14 percent to $366 million from $303 million in 2013. All things being equal, the full year earnings to March next year should exceed 20 cents per share.
Cost rose 19 percent in the six months as increased marketing cost helped push cost up, but the increase for the September quarter was only 14 percent. The company is embarking on some new initiatives to expand the business. One will be the utilization of 14 locations island-wide for the provision of loans. They indicated earlier this month that they have already signed an agreement to facilitate this. New software that that has been installed will allow for Money Grams’ data to reside locally and thus speed up the processing in the money transfer transactions, thus creating a better experience for their customers. The focus in this area, is a partial recognition that that the traditional business of cambio and to a lesser degree remittance services are fairly matured and growth has to be explored elsewhere.
Lasco Financial should generate in excess of 40 percent return on equity for the current fiscal year. As of September, equity stood at $726 million, loans and other receivables on the books is at $325 and cash funds $448 million.
A look at Access with return on equity of more than 50 percent, contrast with Lasco Financial more than 40 percent. For one, it indicates that high risk lending is very profitable area if done right as well as the benefit that leveraging can deliver, with Access borrowing funds to relend versus Lasco using its own capital alone.
Revenues up strongly at Access
Access Financial Services’ profit increased 13 percent in the June quarter and is up by 17 percent in the September quarter, to reach $93.57 million that is still down from the robust 30 percent increased profit, in the March quarter.
The third quarter profit grew much more slowly than revenues that grew 31 percent to $272 million and slightly more than in the second quarter’s $267 million and $254 million in the March 2014 quarter.
For the nine months to September, profit is up by 20 percent to $239 million or 87 cents per share. The company becomes taxable in the December quarter, but earnings should surpass $1.20 per share for the full year. In the nine months to September, revenues climbed 37 percent to $793 million from $579 million in 2013, continuing its strong growth trajectory since the shares were listed. The December quarter is traditionally the biggest quarter in income and profit generation. All things being equal, the earnings of 34 cents in the September quarter, should be well surpassed and putting full year earnings around $1.40 per share.
Increase in the provision for bad loans climbed much faster than revenues in 2014 so far, with $54.6 million provided in the latest quarter, bringing the nine months to $169 million compared with $52 million in 2013. The nine months provision amounts to 23.4 percent of the loan income, this is a major increase from 12.6 percent for full twelve months of last year.
Access should generate in excess of 50 percent return on equity for the current year. As of September, equity stood at $744 million, loans on the books is at $1.1 billion, a 26 percent jump from $889 million at September last year. Total borrowed funds used in the financing of the business, amount to $582 million compared to $422 million in September last year, cash funds stand at $146 million.
The company paid a dividend of 36.5 cents per share payable to shareholders on September 1st this year.
Dividend likely for Eppley
The Board of Eppley Limited will meet on Thursday, November 13, to consider the payment of an interim dividend.
For the current year, Eppley paid an ordinary dividend of $9 per share on September 2. An ordinary interim dividend of $9 per share was paid on May 29 and $9 per share was also paid on February 28, this year.
Profit before tax, was up 67 percent for the six months to June this year, but only 21.5 percent in the June quarter, and after tax it was up 112 percent for the quarter, and 119 percent year to date, for a net profit of $29.6 million. There is no tax payable of the profit for the current year, as the company enjoys tax free status for 5 years, under the junior market listing incentive.
Profit climbs 21% at Margaritaville
Revenue jumps 30.7 percent to US$1.7 million, in the first quarter, ending August and pushed up gross profit by 33.24 percent to hit US$1.267 million, as margin improved over the similar quarter in 2013, at Margaritaville Turks Ltd. It was not all good sailing for the second US dollar listed stock on the Jamaica Stock Exchange, as administrative cost climbed faster that revenues at 37.76 percent, and kept growth in profit to US$245,000, for a 21.18 percent increase.
Full year profit| For the current year, based on the growth in revenues so far, profits should climb to US$1.6 million, up from US$732,000 in twelve months to May this year and result in earnings per share of 2.4 US cents and put the PE of the stock at 4.6 making it an attractive buy currently. The standalone business depending on ships docking is not without added risk, a factor that investors should be cognizant of. The shares are not in great supply but there are offers ranging from 11 US cents to 18 cents but there has been no buying interest for weeks.
Construction of a new restaurant, is to commence in the second quarter of the financial year and end in the third quarter, to expand their offerings to customers.
Concerns| The company has little debt, but has a big jump in the amounts owing to creditors, growing from $716,000 to $973,000 while amounts owing by related companies to it, jumped sharply, from $424,000 to $987,000. This is not a good sign and there is not even an ounce of comment by management about this unusual buildup of these amounts. While all of this is happening, cash is down to only $4,000 from $58,000 a year ago.
Margaritaville is new to listing on the stock exchange, but they need to get a few things right. The prospectus stated that the shares would be listed on the stock exchange main market, the audited statement for 2014 says the same, and the current report repeats it as well. These are all incorrect as the shares are listed on the US dollar denominated market, which differs from the main market. The actual financial statement does not provide readers with the number of shares issued, this should be a part of the financial statement. The listing of the number of shares issued in the top 10 shareholders is not a part of the financials and investors should not have to look there for it.
Profit up in Q3 at Carib Cement
Caribbean Cement reported profit of $78 million for the September 2014 quarter, losses of $89 million in the second quarter, helped pull the results down to just $25 million, for the nine months to September this year.
A profit of $32 million was reported in the nine months to September last year. The 2013 profit performance includes exceptional income of $591 million arising from the reversal of charges previously accrued from the debt restructuring with the parent company, Trinidad Cement, but the results for that year also had some exceptional charges, that have not recurred in 2014, including foreign currency losses amounting to $689 million.
Sales Volume| Both domestic and export cement sales volume grew over the nine month period, 2 percent in the local market and 7 percent for exports, while clinker sales grew from 6,700 tonnes to 80,400 tonnes to satisfy the contract to supply clinker to Venezuela. Overall, the plant sold a total of 650,000 tonnes of cement and 80,000 tonnes of clinker, well below the rated capacity of the plant. Sales revenue amounted to $3.5 billion in the September quarter and $10.75 for the year to September, up from $3.2 billion for the September 2013 quarter, and $8.9 billion for the nine months. While the volume of local sales rose, export of cement fell but clinker is up in the quarter.
Outlook| “The recent trend in the domestic market is expected to continue as well as improvement in the export earnings. In addition, we have entered into a new agreement to supply 240,000 tonnes of clinker to Venezuela, starting shipments in October 2014. We therefore remain cautiously optimistic that these favourable results can be sustained.” New chairman Christopher Dehring stated.
The 2015 year, could well experience further growth in domestic sales, as the local economy slowly improve as interest rates should continue to recede, thus lending some life to the construction industry.
But the company continues to be saddled with high debt and the cost of servicing it, which for the nine months is $250 million. With profit after depreciation, but before interest being $270 million, the risk of falling into a loss is great, unless volumes increase at a faster pace that is has so far this year.
The company has accumulated a pile of losses and will require several years of profitable trading to wipe it off and commence the payment of dividends, until then investors will have to look to growth in profits and movement in the stock price for compensation.
