Home' Trinidad and Tobago Guardian : March 8th 2018 Contents stocks BG13
Thursday, March 8, 2018
Associates and JV’s help Massy’s results
lthough the Na-
its 20.26 per cent
stake (19.8 million
shares) in Massy
Holdings Ltd (Massy), there were
several significant shifts among
the other large shareholders.
The Barbados NIB’s stake
climbed from 1.27 million to 2.80
million shares and Sagicor Equity
Fund (Barbados) moved from 1.35
million to 2.03 million.
Locally, Guardian Life of the
Caribbean Ltd’s ownership in-
creased from 2.12 million to 3.18
million while Republic Bank Ltd’s
stake fell to 7.82 million from 8.55
These swings suggest that many
institutional investors repose
confidence in the company and
its leadership and consider these
shares to be attractively priced.
Let us now review Massy’s results
to September 30, 2017.
Total assets grew to $13.28 billion
from $11.04 billion.
Of particular note was the large
increase in trade and other receiv-
ables to $4.05 billion from $2.13
billion. The major contributor
to this uplift was the inclusion of
$1.91 billion in reinsurance recov-
erable on the $1.98 billion claims
outstanding resulting from recent
Goodwill rose to $238.5 million
from $197.1 million. Of this sum,
$79.4 million reflected the good-
will arising from the purchase
of Columbian-based automotive
dealer, Automontaña Group, for
An impairment charge of $39
million reduced the closing bal-
ance; of this sum, $26.7 million
related to the sale of Massy Com-
Total financial assets expanded
to $1.64 billion from $884.9 mil-
lion. The long-term portion closed
at $860 million from $738 million
while the current element grew to
$781 million from $147 million.
The held to maturity and loans
and receivables component ex-
panded to $1.26 billion from $525
Included in the current balance
was $1.8 million in exchange ad-
justments; this was down from
$25.1 million in 2016, reflecting the
greater stability of the local dollar.
Instalment credit and other
loans, mainly due to Massy Fi-
nance GFC, increased from $451.5
million to $487.2 million.
The long-term component
closed at $309.4 million from
$294.8 million while the current
portion ended at $177.8 million
from $156.7 million.
These figures are net of loss pro-
visions, which, mainly due to a $7
million adjustment to the open-
ing balance, rose to $20.8 million
from $8.9 million.
Excluding overdrafts, cash
and cash equivalents declined to
$1.57 billion from $2.03 billion.
Although the sale of Massy Com-
munications brought in $196.33
million and proceeds from the
sale of other investments contrib-
uted $154 million, Massy allocated
more than $573 million to other in-
vestments to help improve yields.
Similar to its assets, gross liabili-
ties rose to $8.11 billion from $5.99
Consistent with the increase in
reinsurance assets, liabilities on
insurance contracts swelled to
$2.75 billion from $0.76 billion.
Of this sum, $2.36 billion repre-
sented outstanding claims while
$0.39 billion reflected unearned
Total borrowings rose minimally
to $2.26 billion from $2.22 billion.
The largest increase was recorded
under unsecured advances, which
closed at $1.81 billion from $1.78
Current debt increased to $356.4
million from $347.2 million while
the long-term element closed at
$1.91 billion from $1.87 billion. Al-
most 73 per cent ($1.64 billion) of
the total debt was payable in TT
dollars while 20 per cent ($453
million) was payable in Barbados
dollars. Less than $1 million was
due in US dollars.
Trade and other payables ad-
vanced to $1.92 billion from $1.8
billion. Trade creditors closed at
$931.7 million from $864.2 mil-
lion and may have been partly
influenced by the difficulty of ac-
quiring sufficient foreign currency
on a timely basis. Other payables
increased to $985.9 million from
Total equity moved from $5.05 bil-
lion to $5.16 billion. Excluding mi-
nority interests of $240.9 million,
shareholders’ equity advanced
to $4.92 billion from $4.79 bil-
lion. Share capital increased from
$753.3 million to $760.6 million.
This reflected the value of services
provided under the employee
share grant arrangement.
Other reserves declined from
negative $134.1 million to nega-
tive $150.6 million; this mainly
reflected the purchase of non-con-
trolling interests ($14.7 million)
and currency translation differ-
ences of $9.5 million.
Retained earnings advanced
from $4.17 billion to $4.31 billion.
This component benefitted from
the current year’s profit of $376.2
million. That figure was then re-
duced by dividends of $206.2
million and the remeasurement
of defined benefit pension obliga-
tions of $28.4 million.
The weighted average number
of shares was stable at 97,742,793;
consequently, the book value
of each stock unit improved to
$50.36 from $49.00.
Total revenue increased margin-
ally to $11.76 billion from the re-
stated $11.51 billion for 2016. The
cost of sales rose to $8.63 billion
from $8.34 billion; consequently,
gross profit registered at $3.14 bil-
lion from $3.18 billion.
Selling, general and admin-
istrative expenses advanced to
$2.57 billion from $2.43 billion.
Although year-end headcount was
140 persons lower (mostly, part
time), higher pension costs helped
push up total staff costs to $1.42
billion from $1.40 billion.
Depreciation rose to $168 mil-
lion from $157 million while the
impairment of goodwill swelled to
$37 million from $1.4 million. Also,
operating lease rentals rose to
$99.2 million from $90.9 million.
Other income edged up to
$168.9 million from $167 million.
Consequently, operating profit
closed at $740.9 million from $909
Net finance costs expanded to
$55.6 million from $53.1 million.
Interest expense increased to $109
million from $90 million while in-
terest income advanced to $53.5
million from $36.6 million; the lat-
ter reflected improved returns on
the deployment of fresh cash.
The share of results from asso-
ciates and joint ventures climbed
to $69 million from $29.3 million.
Almost the entire sum reflected
the profit of the Massy Wood
Group. Both GS4 security compa-
nies delivered lower profits. These
changes saw pre-tax profit register
at $754.3 million from $885.1 mil-
The effective tax rate climbed
from 30.8 to 36.4 per cent. Al-
though the starting point was
lower, the tax contribution rose to
$274.5 million from $272.3 million.
This increase was largely in-
fluenced by the higher local tax
rate and greater allocations to the
green fund and business levy.
Therefore, the net profit from
continuing operations closed at
$479.8 million from $612.9 million.
Next, the loss on the discontin-
ued operations of Massy Commu-
nications clawed back $68 million,
which resulted in a profit for the
year of $411.8 million.
Of this sum, $376.2 million re-
lated to the owners of the parent;
that net result translated to EPS of
$3.85 versus $5.10 for 2016.
Local revenues slipped from $5.57
billion to $5.26 billion and now
represent 45 per cent of the total.
Before head office and other
adjustments, the pre-tax profit
contribution fell to $493.7 million
from $509.6 million. This result
was influenced by tighter margins
and weaker consumer demand in
Revenues from Barbados and
the Eastern Caribbean were stable
at $3.9 billion and now account for
33 per cent of the group’s total.
However, profit contracted to
$199.7 million from $287.2 million;
largely contributing to this fall was
the $86 million in losses from two
hurricanes along with the closure
of Sunset Crest store for refurbish-
Guyanese revenues grew by al-
most 9 per cent to $895.5 million
(7.6 per cent of the Group’s total).
In addition, pre-tax profits ex-
panded by 10 per cent to $130.3
This profit was even more
commendable when we factor in
the 23 per cent profit reduction,
which resulted from an unusual
cyber fraud loss, at the automobile
and industrial business unit.
At its Jamaican operations, rev-
enues slipped from $686.3 million
to $667.7 million and now repre-
sent 5.7 per cent of the total. Even
so, profit improved to $74 million
from $63.7 million. That result was
influenced by greater shipments
of LPG and improved support ser-
vices. That government’s commit-
ment to use larger amounts of LNG
to generate electricity will also
help its future operations.
The group’s additional invest-
ments in the Columbian auto-
mobile sector resulted in that
country’s revenues expanding
from $524.6 million to $980 mil-
lion. That figure now represents
8.3 per cent of the group’s total.
However, results contracted to a
loss of $7.3 million from a profit of
The loss of a major contract in
the energy sector saw profit con-
tribution move from a profit of $12
million to a loss of $14 million.
Over its fiscal year, Massy’s share
price declined by $5.11, moving
from $54.10 on September 30,
2016 down to $48.99 last Sep-
tember; since then, it has mostly
traded within a very narrow range.
Following the release of disap-
pointing Q1 2018 results, the price
dipped to $47.00 on February 16,
2018 but subsequently recovered
to close at $47.50 last Wednesday.
The dividend for both fiscal peri-
ods was stable at $2.10.
The $47.50 price reflects a P/E
multiple of 12.3 and provides a div-
idend yield of 4.42 per cent. It also
exhibits a discount of 5.7 per cent
to its book value of $50.36.
These metrics suggest uncer-
tainty and caution by retail inves-
Even so, the gradual implemen-
tation of several initiatives out-
lined in the annual and Q1 reports
should see the profit picture im-
prove as the year evolves.
In the next article, we will review the
2017 results of GraceKennedy Ltd.
at $309.4 million from
$294.8 million while
the current portion
ended at $177.8
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