Profit up 92% for Eppley

Recently listed Eppley Limited released results for the quarter ending September with profit almost doubling from $12 million to $23 million for the nine months and with profit of $9.8 million in the 2013 September quarter compared to $6.3 million in 2012. These figures contrast with the full year’s earnings for 2012 of $15 million.

The improvement in the latest quarter came primarily from tax reduction due to the tax free status junior market companies enjoy for 5 years. It was also helped by a $3 million increase in other income which had grown to $5.9 million. Interest income declined in the quarter from $20.5 million in the 2012 quarter to $14.9 million in the latest quarter but a reduction in interest expense to $1.3 million versus $7.2 million took effect as a result of conversion of some debt to equity and some that was paid off resulted in a slight improvement in net interest income. Income from interest in the nine months amounted to $45 million which is down from $59 million in the similar period of 2012.

Loans due from customers shrunk from $509 million last year September to $308 million in 2013. Post September, loans would have increased as the company reported having $33 million in uncommitted cash on hand compared with $121 million in actual cash on the books at September. Loans payable amounted to $109 million at the end of September and is down from $361 million at the end of September last year.

Earnings per share for the September quarter is $13.43 and for the nine months period $48.19. The company reports that yield on the total assets is 14 percent per annum, if this is maintained then the company which has 796,000 issued shares should end up in a full year with approximately $40 per share in profits. But then the company is seeking to raise added capital from a preference share issue, which if successful, will provide increased profits as the funds will allow them to provide loans at higher rates than the capital cost of the funds to be raised.

The company will hold an extraordinary general meeting this coming Thursday to seek approval of a resolution to create and offer up to 100 million preference shares to raise added capital.

The IPO prospectus stated that the board expects to distribute not less than 50% of its after-tax earnings to shareholders in the form of cash dividends, with the projected earnings that would translate to about 5 percent return.