Home' Trinidad and Tobago Guardian : August 31st 2017 Contents BG14 | STOCKS
BUSINESS GUARDIAN guardian.co.tt AUGUST 31 • 2017
Brexit starts to impact Cave Shepherd's results
Barbados-based Cave Shepherd
& Company (CSC) is involved in
duty-free retail services, finan-
cial and other services.
Let us now review Cave Shep-
pard's results to December 2016.
Changes in financial position
Total assets advanced by 5.5 per cent to
B$141.79 million (about TT$479 million) from
B$134.42 million. Current assets comprised
Investments in associates increased to
B$67.33 million from B$63.5 million. During
2016, it sold its shares in The Perfect Time Ltd
for B$56 million. Its three largest holdings all
Its 40 per cent stake in Duty Free Caribbean
Holdings Ltd, which is a travel retail business,
rose to B$35.3 million from B$34.8 million.
CSGK Finance Holdings Ltd trades as Signa
Financial Inc.; both CSC and GraceKennedy
Ltd each own 40 per cent. The value of this
investment closed at B$12.8 million from
Although owning only 16 per cent of CS&C
Joint Venture, CSC exercise significant influ-
ence via board representation; this invest-
ment's value rose to B$13 million from B$11.2
Trade, other receivables and prepayments
rose to B$28.4 million from B$24.8 million.
Primarily, represented by net credit card re-
ceivables of B$25.4 million (2015: B$21.8 mil-
lion), the other major component was other
receivables of B$1.6 million (2015: B$2.1 mil-
lion) and a Visa security deposit of B$1,000.00,
which was repaid in early 2017.
Financial assets held for trading closed at
B$17.2 million from B$16.5 million. This reflects
its investment in the Fortress Mutual Funds,
which a subsidiary manages.
The loan due by an associate was unchanged
at B$5.8 million. This represents a loan dis-
bursement to the Duty Free Caribbean Group
for the purchase of the operations and to assist
with the working capital of Columbian Emer-
alds' distribution and logistics facility in Fort
Lauderdale, Florida, USA.
The total debt is B$7.56 million of which
B$1.76 million is classified as current and forms
part of current assets. The loan is due in 2022
and bears interest at rates ranging from 4.14
to 5.96 per cent.
Property, plant and equipment increased to
B$2.65 million from B$2.37 million. The bulk
of the increase is recorded under furniture and
equipment. The pension plan surplus declined
marginally to B$1.0 million from B$1.2 million.
Cash and cash equivalents rose to B$13.2
million from B$12.9 million.
Total liabilities increased by 11.3 per cent to
B$36.18 million from B$32.5 million. Current
liabilities registered at B$10.23 million.
Total debt closed at B$26.84 million from
B$22.24 million. The redeemable preference
shares component was stable at B$1.1 million
while the current overdraft balance declined
to B$0.9 million from B$1.4 million.
The main increase was shown under un-
secured fixed income notes payable, which
climbed to B$9.0million from B$4.0 million.
The B$5.0 million of new notes mature in two
years and bear interest at 3.75 per cent, which
is the same rate as the previously issued in-
Fixed income certificates payable closed at
B$15.84 million from B$15.73 million. They car-
ry interest ranging from 3.50 to 3.75 per cent;
they will mature on June 30, 2018, but may be
renewed for a further two years.
Trade and other payables rose to B$3.49
million from B$3.12 million. Included in this
figure was B$309,000 which relates to 489,284
non-voting redeemable shares in Fortress
Staff Share Scheme issued to employees of
Both sums due to associates and affiliates
declined; the former contracted to B$1.96
million from B$3.56 million while the latter
fell to B$152,000 from B$191,000. These sums
are interest free, unsecured and have no fixed
terms of repayment.
Dividends payable increased to B$1.88 mil-
lion from B$1.64 million.
Total equity increased to B$105.6 million
from B$101.9 million. Excluding minority
interests, shareholders' equity improved from
B$99.8 million to B$103.8 million.
Retained earnings advanced to B$65.0 mil-
lion from B$61.0 million. Comprehensive
income of B$6.1 million and expired share
options of B$79,000 enhanced the brought
forward balance. Meanwhile, dividends of
B$2.2 million and B$9,000 for the repurchase
of shares lowered the closing figure.
The share option reserve increased to
B$301,000 from B$282,000; this reflected
the exercise of employee options of B$98,000
reduced by B$79,000 in expired share options.
Reflecting the net of B$31,000 in new shares
issued versus B$14,000 for the cost of repur-
chased shares, the issued share capital rose
marginally to B$38.48 million from B$38.46
The weighted average number of shares
edged down to 18,252,401 from 18,305,471;
consequently, the book value of each share
improved to B$5.69 from December 2015's
Income and profit
Revenue from operations climbed by 28.8 per
cent to B$18.34 million from B$14.24 million.
The largest contributor was management fees,
which rose to B$10.45 million from B$6.96 mil-
lion; this reflected the stronger performance of
the Fortress Funds from which most of these
fees are derived.
Finance income also rose, moving from
B$4.52 million to B$5.58 million. The other
major contributor was commissions, which
slipped to B$1.93 million from B$2.07 million.
Other gains fell to B$35,000 from B$83,000.
This item reflected the gains on disposal of
property, plant and equipment. Consequently,
total revenue and other gains closed at B$18.38
million from B$14.32 million.
Total expenses increased to B$14.99 mil-
lion from B$11.04 million. The largest com-
ponent, payroll costs, rose to B$6.85 million
from B$4.57 million. Within this grouping, core
salaries expanded by 52.5 per cent to B$5.99
million from B$3.93 million.
The other major component was other op-
erating expenses, which increased to B$6.03
million from B$4.28 million. The amortisation
of intangible assets was level at B$844,000
for both periods. On the other hand, redeem-
able preference share dividends to non-con-
trolling interests declined to B$751,000 from
These changes resulted in an operating profit
of B$3.38 million versus B$3.28 million from
Consistent with its greater debt, finance
costs rose slightly to B$1.08 million from
The share of results from associates ad-
vanced to B$4.69 million from B$3.03 mil-
lion. Among the most significant contributors
were its 40 per cent owned CS&C joint venture,
which profit expanded to B$1.84 million from
B$1.01 million. At Duty Free Caribbean Hold-
ings (DFCH), attributable profit climbed from
B$116,000 to B$449,000. The profit contri-
bution from CSGK Finance improved to B$1.42
million from B$1.399 million.
Movements on financial assets recovered
from a loss of B$462,000 in 2015 to a profit
of B$540,000 last year. In 2016, the unrealised
gain on financial assets held for trading and
at fair value through profit or loss contributed
B$1.17 million; this was reduced by B$630,000,
which represented the loss on disposal of fi-
nancial assets at fair value through profit or
These movements resulted in pre-tax profit
improving to B$7.54 million from 2015's B$4.83
The effective tax rate declined to 10.59 from
16.02 per cent; however, the tax amount in-
creased to B$798,000 from B$774,000.
The after-tax profit improved to B$6.74
million from B$4.06 million. After allowing
for non-controlling interests, the profit attrib-
utable to shareholders closed at B$6.35 million
(2015: B$3.77 million). This result translated
to basic EPS of B$0.35 compared with the pre-
vious year's B$0.21.
The services division generated 36 per cent
greater revenues while it produced 56 per cent
higher profit. Fortress Fund Managers Ltd
saw its profit expand to B$2.4 million from
In addition, on September 26, 2016, Cave
Shepherd's entire cardholding base was trans-
ferred to Visa cardholders. It is now known as
Cave Shepherd Visa Credit Card and is touted
as a "first" for the Caribbean.
Additional debt was used to fund this tran-
sition and expansion. DGM Financial Group,
which is an offshore financial services group
in which it holds a 72.7 per cent interest, also
delivered an improved result.
Also under the services division, the share
of results from associates expanded by 57 per
cent. Major contributions were made by the
CS&C joint venture and Signia Financial (CSGK
The retail segment consists only of associ-
ated companies, which contribution advanced
by 47 per cent.
This reflected an improved result from
DFCH, where attributable profit rose strongly,
as stated earlier.
In addition, the souvenir, apparel and gift
retailer GCS Ltd (trading as, Ganzee) expe-
rienced a lower profit of B$470,000 from
B$509,000 in 2015.
Half-year results to June 2017
For the six months to June 2017, CSC's rev-
enues rose by 12.7 per cent to B$9.34 million
from B$8.29 million. Even so, expenses climbed
by 18.4 per cent to B$8.69 million. This result-
ed in an operating profit of B$652,000 versus
B$947,000 for the comparative 2016 period.
The share of results from associates con-
tracted to B$835,000 from B$1.76 million. For-
tunately, gains on financial assets improved
to B$1.36 million from a loss of B$47,000 in
the 2016 session.
Profit attributable to shareholders declined
to B$1.85 million (EPS of B$0.10) from 2016's
B$2.07 million, which was equivalent to EPS
Two major reasons were given for the weak-
er performance. Following last year's Brexit
referendum, the reduced value of the pound
sterling contributed to lower spending by Brit-
ish visitors; this has negatively impacted on
the sales at Duty Free Caribbean (Holdings)
Ltd, which includes Columbian Emeralds
and Pages bookstore. Also, Barbados' ongo-
ing economic troubles continue to affect the
On a positive note, the results from Fortress,
Signia and Cave Shepherd Visa Credit Card
operations were reasonable.
Share price and dividends
CSC's share price closed at B$3.01 on De-
cember 31, 2015 and ended at B$3.50 as at
Total dividends were stable at B$0.12 for both
2015 and 2016. An interim dividend of B$0.06
was paid on August 25, 2017.
At the early August ex-dividend price of
B$4.00, the yield is 3.00 per cent. That price
also reflects a discount of nearly 31 per cent
from its book value of B$5.79.
I extend Happy Independence Day Greetings
to all my readers!
In next week's article, we will review Clico
(Trinidad) Ltd.'s results for 2016.
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