Home' Trinidad and Tobago Guardian : April 12th 2015 Contents Guardian Holdings Ltd (GHL)
profits and EPS rose by
from the modest 2013 base.
This strong improvement
was largely based on the
commercialisation of its
investment in Pointe Salines in Martinique.
There are three aspects to this investment.
The sale of 45 condominium units is one part
of the development. A tax-favoured block trans-
action for 25 units allowed GHL to conclude
the sale of 35 units during 2014; the remaining
10 units are expected to be sold during 2015.
Leases for the office tower have been signed
and full occupancy is expected by year-end
2015. A 76 per cent stake in the hotel was sold
to a Martinique registered company for €21.16
million, yielding a profit of €1.1 million. The
group provided financing for the purchase, which
saw a capital repayment in 2014 of €3.5 million
and will see further repayment of €3.8 million
Let us now turn to other aspects of GHL s
results for its fiscal year ended December 31,
Changes in financial position
Total assets moved up modestly to $22.58
billion from 2013 s $22.06 billion.
The largest component, financial assets, closed
2014 at $12.85 billion, up by 3.3 per cent from
$12.44 billion as at December 2013. Increases
were noted in the value of equity securities,
which advanced to $1.78 billion from the previous
level of $1.52 billion. On the other hand, debt
securities fell to $3.86 billion from 2013 s $4.10
Loans and receivables balances increased by
7.3 per cent, moving to $1.8 billion from the
2013 level of $1.68 billion. The other loans and
receivables component increased to $694.6 mil-
lion from $565.1 million previously. Also, mort-
gages increased from $393.4 million in 2013 to
The value of inforce life insurance increased
by $121.6 million to $1.05 billion; this was 13.1
per cent greater than the December 2013 figure
of $924.7 million.
Also showing strong growth was cash bal-
ances; these increased from $2.03 billion to last
year s $2.23 billion.
Insurance contract liabilities of $13.5 billion
comprised 68.9 per cent of total liabilities of
$19.6 billion. Within this category, long-term
contracts increased to $11.72 billion from $11.11
billion. On the other hand, short-term contracts
declined to $1.79 billion from the 2013 level of
Financial liabilities rose from $1.92 billion to
last year s $2.16 billion. More importantly, the
current portion of debt declined to $376.7 million
from $566.5 million. Consequently, the non-
current portion increased from $1.3 billion to
$1.74 billion as at December 2014.
Investment contract liabilities rose to $1.62
billion from 2013 s $1.58 billion. Two main factors
contributed to this change. The exchange rate
adjustments declined to $64.5 million from $92.1
million in 2013. Also, surrenders and other ter-
minations fell from $217.5 million to last year s
$176.9 million. Interestingly, premiums received
fell from $229 million to $226 million in 2014.
Despite net improvements in retained earnings,
shareholders equity declined to $2.93 billion
from 2013 s balance of $3.1 billion.
Retained earnings were boosted by compre-
hensive income of $437.6 million and lowered
by dividends to shareholders of $125.2 million.
In addition, the purchase of the remaining shares
in Laevulose resulted in a charge of $241.3 million.
This figure comprised of the cash outflow of
$34.2 million together with $207.1 million, which
represented the carrying value of GHL s additional
interest in the company.
Reserves increased from a negative $396.5
million to a negative $582.1 million. This mostly
reflected the effect of higher translation losses.
With 231,899,986 shares outstanding, the book
value of each share fell by $0.70 to $12.65 from
$13.35 as at year-end 2013.
Revenues and profits
Net insurance revenues rose marginally to
$3.69 billion from $3.66 billion in 2013. Long-
term contracts increased from a net of $1.90
billion in 2013 to $1.92 billion while net short-
term contracts were at $1.57 billion for both
periods. Helping this result was the improvement
in reinsurance commission income, which rose
to $195.7 million from the previous level of $187.1
The net result from insurance operations
declined to $546 million from 2013 s $580.6
million. This performance was driven by higher
net claims and benefits and larger policy acqui-
sition expenses. The former increased to $2.67
billion from $2.55 billion. The net benefits com-
ponent rose to $1.79 billion (2013: $1.67 billion)
while the net claims portion was marginally
higher at $885 million (2013: $884.4 million).
Total income from investing activities
increased to $923.3 million from the 2013 level
of $857.9 million. Helping this result was the
fair value gain on financial instruments; this
component moved from a loss of $26.6 million
in 2013 to a profit of $63.3 million last year.
Another notable component, fee income, rose
from $82.2 million to $98.6 million in 2014.
Higher surrender charges and other income
boosted this component.
The major component, investment income,
registered a 4.6 per cent decline, closing 2014
at $770.3 million from $807.4 million in the
prior year. Three out of five components reg-
istered year-on-year declines.
These changes resulted in total income
improving to $1.47 billion from $1.44 billion in
Operating expenses fell by $12.7 million to
$905.1 million. Conversely, finance charges rose
by $3 million to $130.4 million. This resulted
in a 2014 operating profit of $433.8 million
(2013: $393.2 million.
Both associated companies, RoyalStar Assur-
ance and RGM Ltd, registered lower profits in
2014. These changes resulted in the share of
profit from associates falling to $21.7 million
from $28.6 million in 2014. Notably, RGM Ltd
paid dividends of $47 million that almost equalled
its current year s profit of $50.3 million.
In 2013, the fair value adjustment on Pointe
Simon was $457.1 million; this resulted in GHL
recording a pre-tax loss of $35.3 million for that
year. This compares favourably with a pre-tax
profit of $455.5 million for last year.
After allocations to taxes ($90.8 million), par-
ticipating policyholders ($2.1 million) and adding
gains on discontinued operations of $25.7 million,
the profit for 2014 came in at $388.2 million
(2013: $129.8 million loss). Of this total, the
profit attributable to equity holders came in at
$400.5 million (2013: $45.6 million), leaving
non-controlling interests with a loss of $12.3
million (2013: $175.3 million loss).
This result translated in an EPS of $1.73 (2013:
Operating profit presented in the table shows
the results before the adjustment on the Pointe
Simon property. We note the following:
1. A decline in underwriting profit, predom-
inately concentrated under the LHP segment.
Adverse health claims combined with the actu-
arial strengthening of reserves contributed to
this lower result.
2. Elimination of the loss on the Jamaican
3. A positive swing of $90 million in gains
on the sale of financial instruments.
4. A $55 million reduction in income from
other investing activities. This reduction was
explained by lower investment and foreign
exchange income. The net effect of these changes
saw GHL deliver a 10.4 per cent operating profit
Total external revenues improved from $4.68
billion to last year s $4.84 billion, or by 3.4 per
cent. The T&T market accounted for 41.3 per
cent of the total; for 2014, this figure was $1.99
billion (2013: $1.82 billion).
Share price and dividends
GHL s share price started 2014 at $14.00, and
then moved as high as $14.75 on June 6, 2014
before closing on December 31, 2014 at $13.25.
The release of its 2014 results on March 13,
2015, helped move GHL s share price from $13.06
to $13.55, eventually spurting to $15.50 on March
18, 2015. The price was quoted last Wednesday
At that price, the annual dividend of $0.57
gives investors a yield of 3.93 per cent. That
price, when related to an EPS of $1.73 gives a
P/E multiple of 8.38.
Since the start of 2015, GHL has initiated two
The first involves De Jong Assurantien BV for
an amount that could reach as high as €800,000.
In addition, the acquisition of Boogaard Group
is expected to close by the middle of 2015 for
an estimated sum of (Dutch Guilders) ANG 22
million (About US$12.3 million).
We note that Arthur Lock Jack has ceded
significant responsibility at his family company,
Associated Brands Ltd, to his son, Nicholas.
Last year, Arthur Lock Jack also demitted the
chairmanship of Massy Holdings Ltd. Perhaps,
he may have also decided that now is an oppor-
tune time for him to exit GHL?
If that assumption is correct, then it is possible
that GHL may be up for sale. Perhaps, he may
only wish to sell his direct and indirect stake
(almost 22 per cent) to an agreeable buyer. Oth-
erwise, there may two possible suitors lurking
in the wings; these potential acquirers are Repub-
lic Bank Ltd and its Jamaican counterpart,
National Commercial Bank Jamaica Ltd.
With the Pointe Salines investment in Mar-
tinique on a more profitable footing, the decks
now seem clear for RBL or NCBJ to initiate the
bidding process for Guardian Holdings Ltd. A
cash offer seems to be the most likely option.
APRIL 12 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
With adjustments on Pointe Salines behind it...
GHL turns in an
improved 2014 result
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