Home' Trinidad and Tobago Guardian : February 1st 2015 Contents One 2014 highlight for the
former Neal & Massy
Holdings Ltd was its
rebranding as Massy Hold-
ings Ltd. Some other fea-
tures of the past year
include the refinancing of
part of its huge debt and its increased acquisition
activity, both locally and in the wider region.
Let us see how this conglomerate performed
in the year to September 2014.
Even after eliminating hotel assets held for
sale of $578 million, total assets advanced to
$9.85 billion from the previous year s level of
$8.87 billion, reflecting a movement of 11 per
All major asset categories exhibited higher
values. Long-term assets in the form of property,
plant and equipment rose to $1.98 billion from
2013 s $1.78 billion, reflecting an increase of 11
Investment properties moved from $306 mil-
lion to $390 million as at September 2014; the
major factor that contributed to this increase
was a transfer from plant, property and equip-
ment to this account.
The value of goodwill rose by 42 per cent to
$206.5 million from $145.4 million as at the end
of 2013. This increase reflected the goodwill
arising from the purchase of three companies.
The major acquisition of 70 per cent of Massy
De Lima Grupo Automotriz in Columbia for
$41.96 million generated goodwill of $34.9 mil-
The investments in associates and joint ven-
tures moved to $460.5 million from $430.4 mil-
lion. There were two major changes in this line
item. First, following the full acquisition of Gable-
woods Supermarkets, a value of $38.8 million
was removed. Next, the acquisition of a 20 per
cent stake in a Costa Rican IT services company
for $64.5 million increased the value of this asset
The value of instalment credit and other loans
rose by 30.3 per cent to $255.2 million; the 2013
figure was $195.8 million. In the main, this
reflected the increase in loans granted by Massy
In line with higher trading volumes, both
inventories and trade and other receivables rose.
In the case of the former, year-end balances
moved from $1.33 billion to $1.54 billion while,
in the latter s case, the increase was from $1.74
billion to $2.06 billion.
Cash and cash equivalents climbed by 46.2
per cent to $1.63 billion from 2013 s $1.11 bil-
Movements in debt and gearing
The most significant movement in liabilities
was the increase in non-current borrowings,
which rose to $1.94 billion from $717.9 million
as at September 2013.
At the same time, current borrowings declined
to $522.5 million from $592.1 million previous-
ly. The debt profile now shows that 64.6 per
cent of debt ($1.59 billion) matures beyond five
In addition, the interest on this debt is sig-
This change was directly attributable to the
company issuing $1.2 billion of new bonds last
July. Each bond had a value of $600 million.
One bond had an interest rate of four per cent
and it matures in ten years, while the other bond,
which matures in 15 years, has an interest rate
of 5.25 per cent.
These changes resulted in the company s net
debt (debt less cash) increasing to $841.3 million
from less than $200 million as at September
2013. This debt hike resulted in its gearing increas-
ing to 16.6 per cent from 4.7 per cent as at year-
end 2013. This still leaves much room for Massy
to access additional debt, when it is needed.
Total shareholders equity increased by a mod-
est $138.1 million. The issue of new shares boosted
share capital from $717.8 million to $741.4 mil-
Retained earnings was mostly boosted by
profit of $555 million and reduced by dividends
of $171.5 million.
Other reserves contracted to negative $194.9
million from a positive $86.3 million as at Sep-
tember 2013. Currency translation differences
consumed $40 million while the purchase of
non-controlling interests utilised another $239.5
These changes resulted in year-end equity
moving to $3.99 billion from 2013 s figure of
$3.85 billion. With 97.741 million shares out-
standing, each share had a book value of $40.81;
this is slightly higher than the 2013 figure of
Income and profits
Total revenues advanced by 13.97 per cent to
reach $10.7 billion from the previous year s $9.4
billion. However, the cost of sales increased by
14.7 per cent, moving from $6.73 billion to last
year s $7.72 billion. Consequently, gross profit
improved by only 12.1 per cent to $2.98 billion
from 2013 s $2.66 billion.
General, selling and administrative cost rose
by 12.5 per cent to $2.27 billion from the previous
level of $2.02 billion. This figure includes $881.6
million in staff costs, which reflects an increase
of 12.7 per cent over the $782.2 million incurred
A small improvement in other income to
$170.2 million (2013: $168 million) helped Massy
deliver an operating profit, before finance and
rebranding costs, of $880.8 million. This result
reflects an improvement of 8.8 per cent over the
restated 2013 figure of $809.7 million.
Despite the refinancing effort, net interest
costs increased marginally to $33.9 million from
the previous year s $32.1 million. (Meaningful
reductions in this item would only become evi-
dent in the current (2015) fiscal period.)
The share of profit from associates and joint
ventures fell to $43.4 million from $47.7 million
in the 2013 period. This decline was influenced
both by marginally lower profit levels and changes
in the composition of this line item.
The total rebranding costs came in at $57.9
After allowing for all these movements, pre-
tax profit registered at $832.5 million, which
reflects an increase of $7.2 million or 0.9 per
cent over 2013 s result of $825.3 million.
The after-tax result came in at $600 million.
This was a minute $2.6 million greater than the
2013 profit of $597.4 million. Of this total, $555
million was attributable to shareholders; this
translated into an EPS of $5.69 compared with
$5.59 for 2013.
Despite the mild improvement in EPS, div-
idends increased by 8.6 per cent to $1.90 from
the previous level of $1.75. This suggests con-
fidence in the company s ability to deliver better
results in the current period.
Segment & territory performance
The flagship segment, integrated retail, deliv-
ered the largest revenues and generated the great-
est net profit. After the head office, this segment
absorbed the bulk of the rebranding cost amount-
ing to $18.4 million.
The head office portion of the rebranding
costs was $22.5 million.
Although integrated retail s pre-tax profit was
marginally lower than in the previous year, its
effective tax burden increased by $4.6 million.
This pulled down its net profit to $248.8 million
from 2013 s $254.8 million.
The automotive and industrial equipment
segment delivered both higher revenues and
larger profits. This segment reported losing some
market share, due, in part, to delays in receiving
shipments. This suggests that sales of higher
priced vehicles (and equipment) were more evi-
dent. In addition, the revenues line would have
been helped by the new acquisitions in Colum-
bia.This division also incurred a one-off cost of
$13 million related to the closure of its battery
making plant. The rebranding cost for this seg-
ment was $7.6 million.
All other operating segments produced both
higher revenues and improved profits.
In terms of geographical contributions, Trinidad
& Tobago continued to generate the largest rev-
enues ($5.72 billion) and deliver the greatest pre-
tax profits (before rebranding and income taxes)
of $640.5 million.
Although Jamaica s revenues increased by 12.8
per cent, its pre-tax profit improved by 37 per
cent to $50.7 million. Also, the new acquisitions
in Columbia saw this territory contribute $123.3
million in revenues and deliver $2.5 million in
Share price and dividend yield
Massy s share price started 2014 at $60.01,
rising steadily up until July 9, 2014, when it
flirted with the $70.00 price, but closed at $69.62.
It was around that time that the rebranding
exercise was launched, but costs were not yet
available. From that peak, the price slowly
descended and closed on December 31, 2014 at
This price slippage continued into January. At
the recent price of $67.97 and an annual dividend
of $1.90, this share gives investors a yield of 2.8
In my article published on January 3, 2013,
I suggested that Massy s share price could reach
$100 in about 18 to 24 months. Obviously, that
has not happened. However, the projected div-
idend of $2.00, made in the same article, is close
to being realised. If the share price eventually
reaches $100, would investors expect or demand
a dividend closer to the $3.00 mark?
The larger Massy becomes the more attention
it needs to pay to creeping costs. Having got rid
of its hotel businesses, fully written off its rebrand-
ing costs, restructured a large part of its debt
and resumed its selective expansion drive,
investors now await the release of its first quarter
Perhaps, those results might provide a basis
for gauging if the $100 share price is still attainable
later in 2015?
Alternatively, does the prospect of making
"structural adjustments" in its predominant
Trinidad operations after the general elections
make the previous questions irrelevant?
FEBRUARY 1 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
Massy Group's results for 2014
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