Limners & Bards LAB Q2 profit jumps 54%

Profit rose 26 percent before tax in the second quarter for Limners and Bards (the LAB) 20 percent for the six months to year-over-year to April this year. With no corporation taxes payable since listing in 2019, profit after tax increased 52 percent for the six months to April and 54 percent for the second quarter.
Net profit soared from $25 million in 2019 to $38 million for the quarter and the six-month net profit was up 52 percent, at $87 million from $57 million. The Lab incurred Corporation taxes of $15 million for the half-year for 2019 and $5.4 million for the 2019 April quarter. Profit for the half-year was 81 percent of pretax profit for all of 2019 when the company reported $107 million in profit before taxation, while revenues are 75 percent of the 2019 outturn. The principal activities of the company are production, media and advertising services.
Growth in profit in 2020 to date is disappointing considering the blistering pace that revenue grew by, with an increase of 44 percent for the quarter, to hit $208 million from $145 million in 2019 and 41 percent for the six months, to $471 million from $334 million in 2019. Growth over the six months for revenues “was driven by growth in media by 72.5 percent increase and agency, up 78 percent,” Steven Gooden, Chairman and Kimala Bennett, CEO, reported to shareholders in their joint commentary accompanying the quarterly. The sharp rise in revenues follows a 31 percent increase in the 2019 fiscal year over 2018.
Direct costs increased at a faster pace than revenues at 51 percent for the quarter, to $133 million and 46 percent for the six-months with expenses of $306 million. The result is a slight decline in the gross profit margin down three percentage points at 36 percent for the quarter from 39 percent in 2019 and down two percentage points, at 35 percent for the six months.
Gross profit increased by 32 percent for the quarter and 33 percent for the month at $75 million and $166 million, respectively.
Administrative and selling costs increased 44 percent to $37 million for the quarter and 55 percent year-over-year for the six-months to $79 million.
Gross cash inflows pulled in $92 million for the half-year, but after payment of dividend, loans and working capital increase $61 million remained, when added to funds on hand before cash funds ended at $352 million. Net current assets ended the period at $490 million inclusive of receivables of $119 million, down from$133 million at the end of April 2019 but up from the year-end of $84 million and cash and bank balances of $352 million. Current liabilities stand at $111 million for a healthy current ratio of 4.4. At the end of April, shareholders’ equity stood at $424 million with long-term loans and lease payable amounted to $64 million.
Earnings per share came out at 4 cents for the quarter and 9 cents for the six months. IC Insider.com is forecasting 18 cents per share for PE of 14.5 times 2020 earnings and 25 cents for 2021.
The stock traded at $2.46 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 14 times 2020 earnings.

Limners & Bards revise EPS

Kimala Bennett, Chief Executive Officer of The Lab.

Following IC Insider.com’s report that the earnings per share (EPS) for Limners & Bards were incorrect, the audited accounts of the company are now revised to reflect the EPS the article suggested they should be.
The revised audited reports now state that the calculation of earnings per stock unit is based on the profit after taxation and the weighted average number of stock units in issue during the year. Net profit attributable to shareholders of $94,746,238 in 2019, $62,313,858 in 2018. The weighted average number of ordinary stock units is 803,836,715 in 2019 and 756,552,202 in 2018, resulting in Basic and diluted earnings per stock unit of12 cents in 2019 and 8 cents in 2018.
The original audited financial statements showed the basic and diluted earnings per stock unit at 10 cents for the 2019 fiscal year and 7 cents for 2018 based on the weighted average of ordinary stock units 945,690,252 in each year.
IC Insider’s report on Tuesday stated that “Limners and Bards released full-year results with profit after taxation of $95 million, up by an impressive 52 percent from the $62 million earned in 2018 from healthy gains in revenues, with earnings per share (EPS) works out at 12 cents for 2019 and 8 cents for 2018.”
The company’s operating revenues grew 31 percent to $632 million from $483 million in 2018, with the last quarter growing a stunning 58 percent to $146 million, generating income just below the $152 million generated in the July quarter and profit before tax of $18 million versus $16.5 million in the July quarter. While revenues for the year rose 31 percent, direct cost rose at a slower pace, resulting in the gross profit climbing 39.4 percent over 2018 as gross profit margin rose to 36 percent compared to 33.7 percent in 2018. Administrative cost rose well ahead of revenue growth with a 41 percent increase over 2018, but the full-year increase is below a 70 percent surge in the July quarter while the fourth quarter saw a rise of 39 percent over 2018, is in line with the full-year increase.
In a statement accompanying the nine months results, Chairman, Steven Gooden and Kimala Bennett, Chief Executive Officer stated, “Administration expenses increased by $23.737 million, or 42 percent, which represent 16.63 percent of revenue for the nine months compared to 14.60 percent to the corresponding period ended July 31, 2018. These increases are primarily attributable to staff costs (due to increase work volume), subcontractors (on retainer contracts), depreciation charges and security costs”.
The company reports on three segments comprising Production, Media and Agency. For 2019 Production generated earnings of $226 million and profit of $100 million while Media raked in $292 million but ended with just $40 million in profit and agency the most profitable brought in $114 million and delivered $85 million in net income.
The company ended the year with cash and equivalent of $292 million with shareholders’ equity of $356 million, up from $123 million in 2018. Borrowings stood at $50 million with payables of $83 million and current assets of $387 million.
IC Insider.com forecast earnings per share of 20 cents for 2020 that puts the PE ratio at 15 with the stock closing trading at $3 on Tuesday on the Junior Market of the Jamaica Stock Exchange and is a stock to be watched into 2020.

Auditors spoil good Lab results

Limners and Bards released full-year results with profit after taxation of $95 million, up by an impressive 52 percent from the $62 million earned in 2018 from healthy gains in revenues.
Earnings per share (EPS) works out at 12 cents for 2019 and 8 cents for 2018. Operating revenues rose 31 percent to $632 million from $483 million in 2018, the last quarter grew at a stunning 58 percent to $146 million, just below the $152 million generated in the July quarter and profit before tax of $18 million versus $16.5 million in the July quarter.
Auditors are required to check records of companies and ensure that they accord with various regulations and the financial statements which they audit and certify are free form errors and misstatements.

Kimala Bennett, Managing Director of The Lab.

The Limners and Bards financials is the latest report to indicate that there is a problem with the industry and that a number of the players are eroding the confidence investors have it the financial reports they certify. To be fair to the company auditors, they are not solely to blame. Management, including the directors, is also responsible for preventing financial with errors going out to the public, as they also have to sign off on the financials.
The computation of earnings per share is an area of problem for some of the smaller audit firms. In the past, there are instances where the calculation is wrong when there are stock splits and new share issues.
According to the Limners and Bards financial statements, the basic and diluted earnings per stock unit is 10 cents for the 2019 fiscal year and 7 cents for 2018 based on the weighted average of ordinary stock units 945,690,252 in each year. That is entirely wrong.  What are the facts? The company had 756.55 million shares in issue before the sale of 189,138,050 shares to the public in July this year with the company listing on the stock exchange on July 26. The EPS computation for 2018 is to be based on 756.6 million shares and for 2019, just over 800 million units. The company’s stock closed trading on Monday at $2.78 for a PE of 21 times 2019 earnings before tax and 14 times 2020 earnings of 20 cents per share.

The Lab almost doubles Q3 profit

Add your HTML code here...

Profit at newly listed Junior market Limners and Bards climbed 94 percent in the July 2019 quarter, to $12.7 million after taxation of $4 million from $6.5 million in the 2018 quarter.
The company that is primarily involved in the production of television and multimedia commercials, video productions feature films and advertising agency saw, profit rising just 17 percent to $70 million from $60 million in 2018 for the nine months to July.
Operating revenues rose 16 percent for the quarter, to $152 million from $131 billion and grew 24.4 percent for the year to date, to $486 million from $391 million in 2018.
In contrast to the third quarter, revenues for the April quarter brought in $145 million and delivered pretax profit of $30 million against revenues of $136 million and pretax profit of $24.5 million for the similar period in the prior year.
Gross profit margin in the nine months to July rose to 31.5 percent from 23.5 percent in 2018, as gross profit rose much faster than revenues to be up 56 percent to $48 million from $31 million in 2018. Gross profit margin climbed 36 percent for the nine months from 33 percent in 2018 with gross profit climbing 32 percent over the prior year’s third quarter to $173 million from $131 million.

Kimala Bennett, Managing Director of The Lab.

Administrative expenses rose 70 percent to $30 million in the quarter and increased 42 percent in the nine months period to $81 million from $57 million. Finance cost was flat in the quarter at $1.3 million but rose from $1.2 million to $3.7 million for the nine months.
Earnings per share came out at one cent for the quarter and 9 cents for the nine months and should end the fiscal year ending around 12 to 13 cents.
Gross cash flow from operations brought in $99 million but growth in receivables, offset by an increase in payables, reduced net flows to $52 million. The company ended the period with $237 million in the bank after receiving $179 million from the sale of shares to the public and paying a dividend of $40 million.
At the end of June, shareholders’ equity stood at $332 million with borrowings at just $42 million. Net current assets ended the period at $281 million inclusive of trade and other receivables that jumped sharply from $65 million at the end of October last year to $181 million.
The stock traded at $3 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 23 times 2019 earnings of 13 cents per share.

Market watch spotlight on Junior Market

The focus this week is the entire Junior Market that remains severely undervalued, notwithstanding that it made up much-lost grounds in the past week. The Lab is the first stock to watch from this sector.
NCB Financial third-quarter results were far from inspiring with operating profit being lower in the quarter than for the prior year’s results, at the close on Friday there was good selling on offer that seems likely to keep a lid on the price for a while.  NCB reported Operating profit of $6.46 billion in the June 2019 quarter, down from $8.14 billion in 2018. A $700 million net gain in associated company results eased the difference somewhat.
Barita Investments is back at the record high of $83 it closed at the close on Friday, up from $72 at the end of the previous week. Importantly, supply has mostly dried up except for a block of 1 million units offered by Barita at $98 per share. Shareholders passed the resolution at last week’s extraordinary general meeting for a rights issue that will see 106 million shares or around one for every 15 shares of shares owned offered to shareholders, at an expected price in the $40 region.

Barita eyeing acquisition.

Results for Caribbean Cement are out by but reports indicate that the company reported increased sales for the June quarter but lower profit than in 2018, due mainly to $485 million incurred as foreign currency losses. The company reported 43 cents per share versus 79 cents in the similar quarter in 2018. For the half-year, Carib Cement reported earnings of $1,79 compared to $1.18 in 2018. The company looks like earning $5 per share for the full year with increased second-half sales. Do not look for the price of the stock to move up any time soon, with these results
Jamaica Broilers and Jamaica Producers may not break out just now but there is very limited selling and good news could push them higher at any time. Investors who thought that the sky was the limit for Wigton Windfarm may be having second thoughts with the company posting their full-year results, with earnings excluding foreign exchange gains or losses working out at 5 cents per share going forward. The stock seems poised to remain under $1 for a long time. More selling came for Radio Jamaica in the past week but with first-quarter results due mid-August, the stage could be set for a break beyond the $1.40 price level.
Sygnus Credit Investments is coming into its own with a limited supply of the stock for sale, the price closed at a record high at the close of the past week and may and could move higher this week. investors should continue to watch it. Wisynco Group traded close to $30 in the past week pushing the PE up considerably. It could settle just below the $30 range for a while.

Drax Hall branch of Elite.

The Junior Market finally found its footing in moving solidly higher during the past week to within less than 100 points from the previous record high in 2018. With the entire market severely undervalued, just about all stocks are to be watched. Some are more attractive than others and should enjoy a greater focus.
Blue Power closed on Friday with strong buying interest that suggests higher price ahead arising from a proposed split-up of the company into two separate ones. Caribbean Flavours has a limited supply of stocks for sale and is worth watching. Fontana pulled out of the fall to $7.41, in the previous week as demand pushed the price over $8. The branch in Kingston could influence investors to add the stock to their portfolio. Elite Diagnostic with rising demand and slowing supplies could bounce, having traded at $5. The company’s new Drax Hall branch in St Ann is set to open in August and will add to revenues and profit at a later stage. Elite has more than 387,000 units on offer at $5 and that could constrain upward price movement for some time. Jamaican Teas reported nine months results of 32 cents per share compared with 20 cents last year. Investors reacted positively to the results pushing the stock up to $5, but supply on sale is limited and could encourage more price movement this week. Lasco Financial price bounces around $4.50. The stock is undervalued and should see increased buying interest, with release of June quarter results, due out shortly. In 2018, first-quarter results were released on the 17 of July. Lasco Manufacturing released first-quarter numbers on the 31 of July last year and Lasco Distributors released theirs on the 19. The results could move the price of the stocks higher. Limners and Bards climbed 30 cents to settle at a record high of $1.30 with just 100 shares changing hands on the first day of trading, the stock closed with the bid at $1.65 and looks poised to hit $2, the stock was on offer at $2.95 at the close on Friday. Medical Disposables looks poised to move higher and first-quarter numbers will play an important role in further gains and Stationery and Office Supplies hit a record of $12 during the past week and should move higher with little supply offered for sale.

Pretax profit up 18% at the Lab

Limners and Bards (the Lab) reports pretax profit of $72 million half year to April, up 18 percent versus $61 million last year on revenues of $334.5 million compared to $261 million in 2018.
After-tax profit for the six months ends at $57 million, up 9 percent against $53 million in 2018. For the quarter to April revenues brought in $145 million and delivered pretax profit of $30 million against revenues of $136 million and pretax profit of $24.5 million.
The data suggest seasonality in earnings with full-year’s income of $483 million for the year to October last year and profit before tax of $76.5 million. The 2018 half year’s revenues amounted to 54 percent of income. Of significance is a sharp fall in operating expenses from $100 million in the second quarter of 2018 to $88 million in the 2019 period even as revenues rose resulting in gross profit rising from $36 million to $57 million. For the six-month period, gross profit moved from $100 million to $125 million. Partially offsetting the gross profit improvement is a $15 million in the second quarter is a rise in administrative expenses to $26 million in the quarter but was only up by $11 million for the half-year to $51 million.
The stock was listed on the Junior Market of the Jamaica Stock Exchange today at traded a small amount at $1.30 but closed with bids to buy at $1.65.

Over 21,500 apply for Sagicor Select

Investors plunked down $6 billion in more than twenty-one thousand five applications, to buy the 5 billion shares recently offered by Sagicor Select Funds in an initial Public Offer, information reaching IC Insider.com confirmed.
The heavy subscription by retail investors strained the resources of Sagicor Investments in coming with the allocation within six business days specified by the Jamaica Stock Exchange.
In a release on the delay in the allocation, the broker for the issue advised that Sagicor Financial Select Fund are unable to submit the details and basis of allotment pursuant to its IPO that closed its subscription list on Tuesday, July 16th within the prescribed time. “The reason for the abovementioned delay is the unexpectedly high volume of applications received in the IPO which we estimate, as at the date of this letter, to be approximately twenty thousand.”
The broker advised that they continue to process applications and expects to be in a position to submit the details and basis of allotment by July 30, with refunds to applicants to be done by August 2.
At the same time investors in Limners and Bards share issue that closed on the same day of opening, last week had their account at the JCSD credited on Thursday, with the shares allocated to them.

The Lab IPO opens July 17

The Limners and Bards (The Lab) will be offering 189,138,050 ordinary shares at the subscription price of $1 each to the public and preferred applicants with only 50 million units of the amount earmarked for the general public.
The stock comes to the market with a PE of 10 times 2018 earnings on a pretax basis and about 8.3 times 2019 estimated earnings, if it is assumed that the increased profit in the first quarter of 2019, continues for the rest of the year. These PE are below the average of the market and is suggesting a bounce when listed.
Profit of $76.5 million was made in the year to October 2018 from revenues of $483 million reflecting a major improvement over a small loss in 2017 of $2 million from revenues of $291 million.
Unfortunately, the company has only reported interim figures, to January. With more than 6 months having elapsed since, there are no guidance on what has happened since and can be expected going forward. There are no forecasted earnings, even with fresh capital injection expected. Investors should not have to do wild guesses as to what the future may hold when management is in a far better position to guide them.
For the first quarter this year, revenues climbed 52 percent to $189 million from $124 million in 2018 while profit before tax grew just 16 percent to $42 million for earnings per share of 5.5 cents. Without any historical quarterly information or guidance of likely earnings, it is impossible to say what the out turn will be for the rest of the year. The 2018 fiscal year numbers, suggest that there are seasonality in its operations as the profit for the full 2018 year is just a little over twice the amount earned in the 2018 first quarter, even as revenues for the full year were 4 times that earned in the 2018 first quarter.
The offer opens July 17 and is scheduled close on July 31. Funds raised will be used for expansion and to finance a targeted acquisition. IC Insider.com will post a fuller report at a later date.

5 hot summer IPOs

Initial public offers have been extremely popular amongst investors who have made good money from the vast majority of them. Come this summer investors will get five more opportunities to invest in IPOS.
The last issue, Wigton Windfarm made several thousands investors happy, with the price rising as high as 90 percent over the IPO price of 50 cents. Even now that it is trading lower than the peak, investors are still more than 40 percent up on the initial price. Investors in the year’s first IPO, iCreate are not that lucky as the $1.01 they paid for the stock fell as low as 70 cents since and remains well below the IPO price.
Coming this summer are, The Lab that styles itself as a fully integrated 100 percent Jamaican born and bred advertising agency with global reach and an island swagger.

Kimala Bennett, Managing Director of The Lab.

Kimala Bennett is the company’s Managing Director. NCB Capital Markets are the brokers for The Lab, that could be looking at regional expansion. Clients include National Commercial Bank, JPS. Wendy’s Dominos, Supreme Ventures, Wray and Nephew, Grace Kennedy, Caribbean Broilers, Digicel. Persons in the know say this is one of those IPOs to plan for, as it is unique and profitable. NCB Capital Markets is also taking Eppley Property Fund, a company that owns property across the Caribbean, to market this summer as well as QWI Investments, a new company that invests in listed shares.
NCB Capital Markets is also brokers to Tropical Battery Company. The company expects to come to market in July, to raise around $200 million in an IPO our sources state. The company was founded in 1950 and later purchased by John Melville and remains in the  family, since. The company’s core business is the sale of automotive batteries, complemented by the distribution of several local and world renowned automotive consumer brands. Tropical Battery’s headquarters is located in Kingston, with distribution centres in Kingston and Montego Bay.
Another that will be coming to market is Sagicor Select Funds Limited an Exchange Traded Fund that is going to market in June to raise $5 billion. The fund according to Sagicor Investment CEO, Kevin Donaldson, will track the JSE Financial Index and will be rebalanced if needed, monthly. Donaldson indicates that the fund currently has assets of $1.2 billion already. Sagicor Investments could have 2 to 3 additional listings before the year ends.
When completed, the new listings on the Jamaica Stock Exchange will raise the listed ordinary shares to more than 80 and total listings to more than 100 securities.

The Lab, coming to a broker near you

NCB Capital Markets is readying a number of new public share issues to come to market by the summer this year.
Numbered amongst them are, The Lab that styles itself as a fully integrated 100 percent Jamaican born and bred advertising agency with global reach and an island swagger. “We are a strategic, creative, passionate solutions oriented and no nonsense group with a heavy emphasis on getting stuff done.” Kimala Bennett is the company’s Managing Director. Clients include National Commercial Bank, JPS, Wendy’s, Dominos, Supreme Ventures, Wray and Nephew, Grace Kennedy, Caribbean Broiler and Digicel. Persons in the know say this is one of those IPOs to plan for, it unique and profitable. QWI Investments is another that NCB Capital Markets is readying to take to the Jamaica Stock Exchange main market by early summer.

Kimala Bennett, Managing Director of The Lab.

Another that will be coming to market is Sagicor Select Funds Limited an Exchange Traded Fund. According to a note in the Sagicor Group audited financial statements, “It is the intention of the company to apply to the Board of the Jamaica Stock Exchange for admission of the shares to trading on the main market if subscriptions of at least $5 billion are raised.”
The above will come on top of the current public offer of Wigton Windfarm that opens next week to raise $5.5 billion, earmarked to be paid over to the government after expenses associated with the offer.