Home' Trinidad and Tobago Guardian : October 10th 2013 Contents OCTOBER 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG19
For the six months ended June
2013, GraceKennedy Ltd deliv-
ered a 7 per cent improvement
in revenues and a 21 per cent
increase in profit attributable to
shareholders. Revenues came in
at J$32.7 billion for the current period in com-
parison with J$30.57 billion for the 2012 peri-
od.Operating profit advanced modestly to J$1.42
billion from the J$1.41 billion recorded for the
first half of 2012. However, other income more
than doubled to reach J$883 million from the
2012 base of J$419 million. Also exhibiting
strong growth was the share of results from
associated companies; this line item improved
from J$115.3 million in the 2012 half-year to
J$152.4 million in the current period, or by 32.2
Almost entirely on the basis of these two
items, profit attributable to shareholders
advanced from J$1.15 billion in 2012 to J$1.39
billion in the 2013 period. This result translated
into an EPS figure of J$4.17 in 2013 versus
J$3.47 for the 2012 period.
Total assets advanced by almost 3 per cent
to J$107.2 billion from the restated December
2012 value of J$104.1 billion. Shareholders
equity, excluding non-controlling interests,
moved from J$30.7 billion as at December 2012
to J$31.3 billion as at June 2013, or by 2.1 per
cent. Cash and deposit balances stood at J$8.96
billion as at June 2013; this was down from
the J$10.99 billion held at December 2012.
In large measure, these half-year results were
driven by strong performances in three of its
business segments: money services, food trading
and retail and trading.
External revenue at the money services seg-
ment advanced by 7.8 per cent to almost J$2.6
billion from last period s J$2.41 billion. Pre-
tax profits for this segment improved by 10.65
per cent to J$856 million from J$773.8 million
in the 2012 comparative period.
The food trading segment saw revenues
reach J$21.9 billion; this represented an
improvement of 8.3 per cent over the J$20.2
billion recorded for the 2012 half-year. Pre-
tax profits for this segment rose strongly by
48.5 per cent to J$740.7 million from last year s
base of J$498.8 million.
Revenues at the retail and trading segment
improved by 5.7 per cent to close at J$3.29 bil-
lion from last half-year s J$3.11 billion. The
improvement in pre-tax profit was more
encouraging as this measure advanced from a
low base of J$18.6 million to a more acceptable
J$135.3 million; this represents a positive change
of 627.5 per cent. Both the insurance and bank-
ing and investments divisions delivered lower
External revenues at the banking and invest-
ments divisions were almost identical at J$2.6
billion for both 2012 and 2013 half-year sessions.
On the other hand, pre-tax profits contracted
from J$332 million in 2012 to J$308 million in
the current period. Despite an improvement
in its loan portfolio, the National and Private
Debt Exchange programmes restrained profit
The biggest reversal was observed under the
insurance segment. Revenues rose by 3.9 per
cent or from J$2.2 billion in 2012 to J$2.3 billion
in 2013. Despite this, pre-tax profit contracted
to a modest J$64 million; this was J$94 million
or almost 60 per cent less than the J$158.2 million
earned for the first half of 2012. As part of an
on-going review, it was thought prudent that
motor claims reserves be increased. This measure
largely contributed to the lower profit.
The GKC group continues to expand its
market reach to selected countries and regions
in North America, United Kingdom and, more
recently, Ghana. The latter is expected to serve
as its incubator and launching pad to other
selected African countries.
The share price
On the Jamaican Stock Exchange the share
price has been as low as J$47.02 on February
12, 2013 and as high as J$60.97 on May 30,
2013. On October 1, 2013, it closed at J$55.79.
A similar pattern was exhibited on the local
exchange. On March 22, 2013 the price reached
a low point of TT$3.11 and, on June 18, 2013,
it closed at TT$4.05. From that point, the share
price drifted downward.
More recently, the share price has shown
some resurgence in both markets. On October
4, 2013, it closed at T$3.51 on the local exchange
and at J$56.50 in its home market.
A major reason for this recent upswing is
the announcement of GKC s decision to buy
back up to a maximum of 2½ per cent of its
outstanding shares on the open market. This
intention was first signalled back in April 2013
and is only now being implemented, starting
in October 2013.
The Jamaican Ministry of Finance has now
granted the company a tax waiver with respect
to this transaction.
Quite logically, the company has decided
that one of its best investments, in a difficult
investment market, would be to buy its own
shares. This has the effect of reducing the num-
ber of shares outstanding and increasing earnings
per share for the remaining shareholders.
This share buy-back programme is being
financed out of the company s cash resources.
It is expected to continue as long as GKC trades
at prices that do not reflect its intrinsic value
and will end when the limit of 2½ per cent
(approximately 8.38 million shares) of the total
shares outstanding has been reached.
ANSA McAL Ltd
For the first half of 2013, third party revenues
at ANSA McAL Ltd increased by 7.2 per cent
to reach $2.89 billion from 2012 s figure of
$2.69 billion. However, operating profit fell to
$401 million from the $414 million reported
for the first half of 2012. This decline was more
than offset by the reduction in finance costs,
which contracted by $47.6 million to a modest
This reduction was the prime driver that
allowed the profit attributable to shareholders
to advance by 10.3 per cent; this measure moved
from $242 million in 2012 to $267 million in
the current half-year. In line with this result,
EPS rose to $1.55 from $1.40 in the earlier peri-
od.Total assets advanced from the restated
December 2012 figure of $11.2 billion to $11.5
billion, or by 2.7 per cent. Cash and equivalents
improved from $1.37 billion as at December
2012 to $1.9 billion as at June 2013. Total equity
rose from $4.63 billion as at December 2012
to $4.73 billion as at June 2013.
The manufacturing, packing and brewing
segment reported third party sales of $988
million for the first half of 2013. This result
represented an improvement of 7.6 per cent
over the $918 million sold during the first half
of 2012. Pre-tax profits advanced by 8.1 per
cent to $179 million from $165.6 million in the
2012 comparative period. Carib Brewery is the
flagship company within this reporting seg-
Also, starting in the third quarter, output
from the new clay plant should begin to pos-
itively impact sales.
Third party sales from the automotive, trad-
ing and distribution segment rose by 11.4 per
cent to $1.27 billion from $1.14 billion in the
earlier period. Profit generated by this segment
rose by a strong 46 per cent to close at $90.7
million from $62.1 million earned in the first
half of 2012. Much of this gain can be attrib-
utable to a stronger market for vehicle sales.
This suggests that economic activity, however
modest, could be gaining traction.
The insurance and financial services sector
experienced a decline in revenues of almost
$21 million to $347.5 million from $368.5 million
in the comparative half-year period. Despite
this revenue reduction, pre-tax profit improved
by 8.5 per cent to reach $99.6 million from
$91.8 million in the 2012 period.
Revenues at the media, services and parent
segment increased to $290.5 million; this was
$17.2 million more or 6.3 per cent greater than
the $273.3 million delivered for the 2012 half-
year. On the other hand, profit contracted by
$15.2 million or almost 30 per cent to $36.1
million from the earlier period s $51.4 million.
Over the past year AMCL s share has traded
in a narrow range of $65.00 to $67.00. The
highest price at which trades were executed
was $67.19 on July 5, 2013. On October 4, 2013,
the price closed at $66.30.
Based on the most recent 12-month EPS of
$3.82 (Jan to June 2013 = $1.55 + July to Dec
2012 = $2.27), this reflects a price to earnings
multiple of 17.36 times. Using the same price,
together with a historical dividend of $1.10,
the dividend yield is a modest 1.66 per cent.
These calculations suggest that the share is
currently trading at the high end of an accept-
AMCL has a large hoard of cash totalling
$1.9 billion on its balance sheet. Consequently,
there appears to be ample room to increase
the final dividend payment. If this were to be
done, then the share price could break out
from its current range.
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GraceKennedy Ltd • ANSA McAL Ltd
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