Home' Trinidad and Tobago Guardian : May 11th 2017 Contents MAY 11 • 2017 guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
GHL awaits NCBJFG's next move
Following the cementing of its
formal association with NCBJ
Financial Group last year, in-
vestment returns at Guardian
Holdings Ltd (GHL) exhibited
Let us now review GHL's results to December
Total assets improved from $22.18 billion to
$24.25 billion or by 9.3 per cent.
Financial assets, inclusive of that relating
to mutual fund unit holders, grew by 10.6
per cent to $16.37 billion from $14.8 billion.
The portion that was classified at fair value
via income statement closed at $7.59 billion
from $6.66 billion. Here, the largest increase
of 26.9 per cent was shown under its exposure
to equities, which climbed to $2.42 billion from
Investments shown as held to maturity
increased to $8.78 billion from $8.14 billion.
This change reflected a 13.1 per cent greater
exposure to government debt, which closed at
$6.46 billion from $5.71 billion. In contrast,
deposits with financial institutions declined
to $1.5 billion from $1.8 billion.
Loans and receivables rose to $2.05 billion
from $1.82 billion or by 12.3 per cent. The pre-
miums and reinsurance component accounted
for $728.2 million (2015: $601.3 million) while
other loans and receivables was $658.7 million
(2015: $593.3 million).
Both policy loans and mortgages were little
changed; the former closed at $394.2 million
from $390 million while the latter fell to $54.3
million from $55.8 million. Debt securities
edged up to $195.3 million from $160.8 million.
Investment properties advanced by 32.3 per
cent to $1.26 billion from $949.9 million. The
Pointe Simon portion increased from $321.8
million to $356.6 million.
Other investment properties climbed to
$900.3 million from $628.1 million; this im-
provement was driven by additions of $234
million and fair value adjustments of $44.2
Plant, property and equipment improved
to $593.4 million from $563.9 million. This
uplift was mainly attributed to a combined
revaluation surplus of $30.7 million at six of
its operating companies.
Cash and cash equivalents fell to $1.74 billion
from $1.85 billion. Cash at hand and in bank
rose to $1.44 billion (2015: $1.37 billion) while
short-term deposits fell to $306.6 million from
Total liabilities expanded to $21.2 billion
from $19.4 billion or by 9.1 per cent.
Insurance contracts increased to $14.7 billion
from $13.2 billion or by 10.8 per cent. Long-
term contracts with fixed and guaranteed
terms, but without discretionary participation
features (DPF), rose by 14 per cent to $7.97
billion from $6.99 billion while long-term
contracts without fixed terms advanced to
$4.32 billion from $3.95 billion.
Short-term insurance contracts increased
by only 4.6 per cent to $1.79 billion from $1.71
billion. The most notable change was under
claims reported and loss adjustment expenses,
which rose to $890 million from $794 million.
Total debt edged up to $2.17 billion from
$2.15 billion. The current portion, which in-
cluded interest of $33.8 million, declined to
$531.2 million from $727.3 million while the
non-current element rose to $1.64 billion from
The current portion included a one-year fa-
cility of $400 million at 4.23 per cent interest,
which is due in December 2017.
Investment contract liabilities advanced by
6.7 per cent to $1.8 billion from $1.7 billion.
Premiums received declined to $238.4 million
from $249.8 million while interest credited fell
to $64.1 million (2015: $68.4 million). Com-
pensating for these cutbacks, surrenders and
terminations decreased to $183.4 million from
$210.3 million while fees dropped to $10 million
from $15.1 million.
Other liabilities rose to $978.6 million from
$853.4 million. These include sundry payables,
which closed at $571.6 million from $530.7
million while sums due to reinsurers jumped
to $317 million from $220.2 million. Finally,
deposits and premiums received in advance
fell to $90.4 million from $102.5 million.
Total equity rallied to $3.06 billion from $2.75
billion. Excluding non-controlling interests of
$22.5 million, shareholders' equity closed at
$3.04 billion from $2.73 billion.
Retained earnings swelled to $1.56 billion
from $1.29 billion. The opening balance ben-
efitted from comprehensive income of $405.8
million and a further $6 million relating to
the value of lapsed stock options. Dividends
to shareholders of $146.1 million lowered the
Reserves improved from negative $597.8 mil-
lion to negative $547.2 million. Comprehensive
income of $64.8 million improved the opening
figure while the translation gain of $13.7 million
on the disposal of Ocho Rios Beach Resorts Ltd
reduced the ending balance.
Share capital declined marginally from
$2.038 billion to $2.032 billion, which reflect-
ed the value of the lapsed stock options. The
number of issued shares remained stable at
231,899,986 for both periods; consequently,
the book value of each share improved to $13.11
from December 2015's $11.77.
Income and profit
Total income from all activities advanced by
15.2 per cent to $1.77 billion from $1.53 billion.
Its investing income overwhelmed its core in-
surance and brokerage activities.
Net underwriting revenues rose by 12.5 per
cent to $4.29 billion from $3.82 billion. This
reflected a combination of higher premiums
(particularly for long-term contracts) and
lower sums ceded to reinsurers.
Policy acquisition expenses increased mar-
ginally to $643.1 million from $642.6 million.
In contrast, net insurance benefits and claims
climbed by 21 per cent to $3.04 billion from
$2.51 billion; this was influenced by Hurricane
Matthew ($38 million).
These movements pulled down the net result
from insurance activities to $612.7 million from
Net income from all investing activities
climbed by 30.4 per cent to $1.03 billion from
$788.3 million. Investment income rose by 6.3
per cent to $820.3 million from $771.5 million;
despite a decline in interest income from cash
equivalents, all other categories recorded im-
Net realised gains, particularly from equi-
ties, climbed to $55.7 million from $13 million
while fair value gains moved from a loss of $7.2
million to a profit of $57 million. Fee income
advanced to $53.7 million from $48.5 million
while foreign exchange gains of $56 million
helped push up other income to $105.4 million
from $31.4 million.
Fee and commission income from its bro-
kerage activities rose by 51.9 per cent to $127
million from $83.6 million.
Operating expenses increased by 16.5 per
cent to $1.12 billion from $961.7 million. Staff
costs rose to $594.5 million from $514.2 million
or by 15.6 per cent. Depreciation and amorti-
sation climbed by 28.8 per cent to $79.1 mil-
lion from $61.4 million while other expenses
advanced by 16.4 per cent to $425.9 million
from $366 million.
Finance charges declined to $129.6 million
from $141.1 million. These changes resulted in
operating profit of $517.3 million (2015: $431.3
The share of profit from its associated com-
panies declined to $3.3 million from $17.4 mil-
lion. This result was influenced by severely
lower profits at both RGM Ltd and RoyalStar
Holdings (Bahamas). These movements result-
ed in pre-tax profit of $520.6 million versus
The effective tax rate increased to 25 per cent
from 22.7 per cent; consequently, the actual
tax charge rose from $101.9 million to $130.2
million. The after-tax result from continuing
operations improved to $390.4 million from
The gain from discontinued operations
contributed a further $22.8 million (2015: $2.5
million), which brought the net profit up to
After allocating $15.6 million to participating
policyholders and $1.9 million to non-con-
trolling interests, the profit attributable to
shareholders registered at $395.8 million; this
represents an improvement of 18.2 per cent
over 2015's $334.8 million.
This result translated to basic EPS of $1.71
compared with $1.44 for 2015.
Although experiencing a weaker underwrit-
ing result, the LHP segment benefitted from a
stronger investing performance. The former
was impacted by the non-repeat of 2015's re-
lease of reserves in Jamaica. Meanwhile, the
latter benefitted from FATUM ($92 million)
and GLOC ($89 million). Also, the acquisition
of the Courtyard Marriott property in Port-
The P&C segment's lower underwriting
result was impacted by the adverse effects of
Hurricane Matthew on the Bahamas. Even so,
investment income exhibited a robust 34 per
The strong investment performance pow-
ered the asset management division's results.
Share price and
GHL's share price closed at $13.25 on Decem-
ber 31, 2015 and ended 2016 at $12.65, reflecting
a one- year decline of 4.53 per cent. In 2017,
the share price shot up to $16.57 on February
21, but was recently quoted at $15.50.
Dividend disbursements improved from
$0.61 for 2015 to $0.66 for 2016. Relating
2016's dividend of $0.66 to the recent price
of $15.50, the yield is 4.26 per cent. That price
also reflects a modest P/E multiple of 9.06 and
price to book value of 1.18.
Powered by continuing strong investing re-
sults, its EPS for Q1 2017 improved to $0.39
from 2016's $0.27.
Readers following the progress of GHL over
the last 18 months or so anticipate that NCBJFG
will make a formal take-over bid for GHL in
the not-too-distant future. That expectation
is confirmed at page 28 in the Chairman's and
CEO's section of the annual report.
Similar to Cemex's offer for TCL, it is likely
that the end result would see NCBJFG securing
around 70 or 75 per cent stake in the company.
That ownership level would ensure NCBJFG's
sufficient control while still allowing GHL to
remain a listed company on the TTSE.
What about the offer price for the GHL
shares? If the bidder uses a 30 per cent pre-
mium over the recent average price of around
$15.50, that would equate to $20.15. Will that
price be acceptable to shareholders, or would
NCBJFG need to move to a higher price to se-
cure its desired level of ownership?
Let us see what happens in the weeks and
In next week's article, we will review Trinidad
Cement Ltd.'s 2016 results.
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