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BUSINESS GUARDIAN guardian.co.tt JULY 27 • 2017
Kingston Wharves gears up for growth
Kingston Wharves Ltd (KW)
is 42 per cent owned by Ja-
maica Producers Group Ltd
while SBD LLC (Solutions by
Design) owns 21.02 per cent
and Shipping Association of
Jamaica Property Ltd holds a 10.62 per cent
stake in the company.
Its entire operations are located at Newport
West, Kingston, Jamaica. Let us now review
KW's results to December 31, 2016.
Changes in financial
Total assets expanded by almost 10 per cent
to J$23.54 billion from J$21.41 billion.
The major increase was shown under prop-
erty, plant and equipment, which rose to J$18.1
billion from J$16.6 billion. The net book value
of machinery and equipment climbed to J$2.4
billion from J$1.7 billion while work in progress
advanced to J$1.4 billion from J$776 million.
The former reflected the commissioning
of a new Liebherr LHM 600 mobile harbour
crane, which has a 104-tonne capacity and the
addition of two Taylor XRS 9927 45-tonne ca-
pacity reach stackers while the latter signified
start-up work on the new total logistics facility.
Intangible assets closed at J$257 million from
The computer software component in-
creased to J$26 million from J$13.7 million
while the rights to customer contracts declined
to J$231 million from J$309.1 million.
The retirement benefits asset soared to
J$936.2 million from J$619.1 million. The fair
value of the plan's assets improved by 19.5 per
cent to J$2.59 billion from J$2.17 billion while
the present value of the funded obligations in-
creased by only 6.8 per cent to J$1.65 billion
from J$1.55 billion.
Higher exposure to equities and repurchase
agreements were largely responsible for the
improvement in the pension plan's assets. In-
ventories, which largely comprised of operating
supplies and fuel, increased to J$304 million
from J$203 million.
Trade and other receivables expanded from
J$404.4 million to J$617.4 million. The trade
receivable component grew from J$365 mil-
lion to J$510 million; of this sum, J$370 million
was due from related parties. Prepayments of
J$18.1 million and "other" of J$89.3 million
comprised the remainder.
Cash and short-term investments were little
changed, closing at slightly greater than J$3
billion for both year-ends. The cash and bank
balances component increased to J$360.8 mil-
lion from J$332.1 million.
The interest rates on the short-term funds
ranges from 1.48 per cent per annum for US
dollar funds to 5.17 per cent per annum for
Jamaican dollar denominated funds.
Total liabilities increased to J$4.9 billion
from J$3.8 billion.
Total borrowings swelled by J$800 million
to J$2.34 billion from J$1.54 billion. The cur-
rent portion rose to J$547.5 million from J$447
million while the long-term element climbed
to J$1.8 billion from J$1.1 billion.
The largest new loan was J$1.8 billion from
Bank of Nova Scotia for the construction of
the total logistics facility; during 2016, J$615
million of this loan was drawn down. This
facility is for seven years and interest ranges
from 8.5 to 9.5 per cent.
Also funding its capital expenditure pro-
gramme was another loan of J$550 million
from CIBC FirstCaribbean, of which J$491
million was utilised. This debt carries an in-
terest rate tied to six-month Government of
Jamaica weighted average treasury bill yield
(WATBY) plus 2.5 per cent. It is subject to a
cap of 10.25 per cent and is scheduled to be
repaid in March 2023.
The long-term liability fell to J$78.1 million
from J$126.6 million. This item refers to ac-
quired stevedoring contracts of an operator
of Port Bustamante.
These sums are interest free and due when
stipulated conditions are met.
Retirement benefits obligation increased to
J$276.8 million from J$245.4 million; this item
relates to the premiums of the group health
and life insurance plans for retirees.
Trade and other payables climbed to J$1.0
billion from J$735 million. The largest increase
was shown under other payables and accruals,
which advanced from J$414.3 million to J$561.1
million; of this sum, J$52.8 million was due to
Dividends to stockholders, which was pay-
able in January, rose to J$292.5 million from
Total equity improved to J$18.6 billion from
J$17.6 billion. Excluding minority interests,
shareholders' equity closed at J$18.5 billion
from J$17.5 billion.
Retained earnings advanced to J$5.5 billion
from $4.4 billion. The opening balance was
enhanced by the current period's profit of
J$1.53 billion while dividends to shareholders
of J$486.3 million lowered the closing figure.
There were small transfers to reserve accounts.
Other reserves increased marginally from
J$10.76 billion to J$10.77 billion. The sole
movements were a credit of J$12.6 million re-
duced by a comprehensive loss of J$5.2 million.
Share capital was unchanged at J$2.08 bil-
lion. The weighted average number of shares
outstanding was stable at 1,430,200,000;
consequently, the book value of each share
improved to J$12.96 from December 2015's
Income and profit
Total revenue increased by 15.8 per cent to
J$5.41 billion from J$4.67 billion. However,
direct costs grew at a slower pace, advancing
by 14.7 per cent to J$2.9 billion from J$2.5 bil-
lion. Consequently, gross profit improved by
17 per cent to J$2.51 billion from J$2.15 billion.
Other operating income declined to J$196.6
million from J$249 million. Foreign exchange
gains jumped from J$70 million to J$113 million
and interest income increased to J$86.2 million
from J$69.6 million.
Negating these gains, dividend income con-
tracted to J$1.6 million from J$84.3 million.
Administration expenses increased by 25.4
per cent to J$1.03 billion from J$824 million.
Among the most notable components included
under the combined direct and administration
costs, were staff costs, repairs and maintenance
Staff cost rose to J$1.58 billion from J$1.37
billion. Head count was slightly lower at 663
individuals (2015: 717 people) and core sala-
ries were little changed at J$1.1 billion for both
periods. However, termination and other costs
totalling J$236.9 million, helped push up the
Repairs and maintenance increased to
J$468.3 million from J$283.1 million. Con-
sistent with its larger asset base, depreciation
expenses expanded to J$468.5 million from
These movements saw operating profit reg-
ister at J$1.49 billion from 2015's J$1.41 billion.
Finance costs rose to J$186.4 million from
J$162.7 million. In harmony with its larger debt,
the interest expenses component widened to
J$134.9 million from J$122.5 million. In ad-
dition, foreign exchange losses increased to
J$51.6 million from J$40.3 million.
These shifts saw pre-tax profit register at
J$1.49 billion; this was 5.6 per cent greater than
the J$1.41 billion recorded for 2015.
Income tax expense increased to J$176 mil-
lion from $141.9 million; this reflected an ef-
fective tax rate of 11.83 per cent versus 10.07
per cent for 2015. Under the free zone act, its
export activities are taxed at zero while all other
commercial activities are taxed at 25 per cent.
The net profit registered at J$1.31 billion
versus J$1.27 billion; after removing profit of
J$19.3 million due to non-controlling interests,
the profit attributable to shareholders reached
J$1.29 billion compared with J$1.27 billion for
2015. This result translated to EPS of J$0.90
compared with the previous year's J$0.88.
Revenues at its terminal operations ad-
vanced by 16.1 per cent while net operating
profit climbed by 32.7 per cent. This division
operates public wharves and stevedoring of
Profits were enhanced by greater activity
at both container and motor vehicle handling
units, which improved by 4 per cent and 10 per
In a similar vein, revenues at the logistics
and ancillary services segment rose by 14.8 per
cent and net operating profit increased by 22.6
per cent. This segment's activities included
facilities and property rentals, security and
the operating of warehousing and logistics
This division benefitted from rate adjust-
ments for providing security services, along
with higher demand for reefer services, inte-
grated logistics services and facilities. Reefer
services is the transportation of tempera-
Q1 2017 results
For the first quarter ended March 31, 2017,
KW recorded a 15.8 per cent growth in reve-
nues to J$1.39 billion from J$1.2 billion in the
comparable 2016 period. Profit attributable
to shareholders expanded by 20.2 per cent to
J$332.5 million from J$276.5 million. That re-
sult translated to EPS of J$0.23 versus J$0.19.
Underpinning these results was the continuing
improvement in the Jamaican economy.
The terminal operations division produced
14 per cent higher revenue and delivered 21
per cent greater core profit (before deducting
interest). Driving that result was the container
At the logistics and handling services seg-
ment, revenue growth was 18 per cent while
profit contribution expanded by 33 per cent,
also before interest expenses. Later in 2017, the
new total logistics facility will be completed
and this will further drive profit improvements.
KW's share price closed at J$11.36 on Decem-
ber 31, 2015. In early 2016, it dipped to J$10.47
on February 5, but recovered to J$13 on May 5.
From that base, it continued to break through
new price barriers, closing on June 29 at J$16.
By December 21, its price was J$20.55 before
closing 2016 at J$20.01. That closing price re-
flected a one-year appreciation of 76 per cent.
In 2017, the share continued its upward trend,
first closing at J$23.46 on January 11 and then
spiking to J$33.99 on January 27. It recently
closed at a more subdued J$30.40.
Total dividends increased from J$0.25 for
2015 to J$0.34 for 2016. Relating the total
2016 dividend of J$0.34 to the recent price of
J$30.40, the yield is 1.12 per cent. That price
also reflects a P/E multiple of 33.8 and price
to book value of 2.35.
These metrics suggest that investors antici-
pate strong profit growth in the near to medium
term, which should be accompanied by higher
In the next article, we will review the 2017
results of JMMB Group Ltd
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