Home' Trinidad and Tobago Guardian : March 27th 2014 Contents Despite the challenges of a
debt exchange programme
and changes to the Jamaican
tax regime GraceKennedy
Ltd delivered a strong per-
formance in 2013.
Assets growth and profile
Total assets rose from the restated 2012 fig-
ure of J$104.1 billion to J$108.6 billion as at
December 2013. Among the most prominent
increases were investment securities and
pledged assets, receivables, inventories and
The total of investment securities and
pledged assets increased from J$45.7 billion
in 2012 to J$48 billion as at year-end 2013.
The mix of these securities showed that the
component represented by Bank of Jamaica
and government of Jamaica securities declined
to J$38.8 billion from J$39.36 billion in 2012.
Conversely, there was an increase in the sums
represented by foreign government securities,
corporate bonds and other debt securities;
this sub-total increased from J$6.2 billion in
2012 to J$9 billion last year. In aggregate, the
portion that was represented by pledged assets
declined to J$27.1 billion from J$29.4 billion
Receivables are made up mostly of trade
and insurance components. The trade element
increased by 15.6 per cent to J$5.4 billion from
J$4.67 billion in 2012, mostly reflecting a
higher level of trading activity. The insurance
component declined to J$2.29 billion in 2013
from J$2.44 billion in the prior year.
Year-end inventories moved from J$6.57
billion in 2012 to J$8.35 billion last year. All
components, such as merchandise, goods in
transit and finished goods, were at higher val-
ues than the prior year, which is consistent
with higher levels of trading.
Loans receivable represents loans made by
its banking subsidiary, First Global Bank Ltd.
Increased lending activity at this subsidiary
was the primary reason that the balance
improved to J$16.2 billion from J$13.9 billion
in 2012; this represents a 17 per cent increase.
At Dairy Industries (Jamaica) Ltd, in which
GKC has a 50 per cent stake, profits increased
by almost 61 per cent last year. The net change
in the value of this investment, after allowing
for the payment of a higher dividend, saw its
worth increase to J$1.03 billion from the 2012
level of J$0.9 billion.
Total liabilities increased by almost 3 per
cent to J$74.4 billion from J$72.25 billion in
Deposit balances increased to J$17.7 billion
from J$15.77 billion in 2012, or by 12.7 per
cent. Given that loan balances increased by
17 per cent, as noted above, suggests that
First Global Bank Ltd adopted a more aggres-
sive lending strategy last year.
Payables increased to J$15.2 billion from
the 2012 level of J$13.5 billion. The trade com-
ponent increased by 9 per cent or from J$5.88
billion in 2012 to J$6.4 billion last year. This
rate of increase is significantly lower than the
15.6 per cent recorded for its receivables. This
suggests that the company is being more
lenient in collecting from its customers while
being relatively prompt with its payments to
Bank and other loans increased to J$11.57
billion from J$10.34 billion as at year-end
2012. The bulk of this change was in the bank
overdraft component, which rose from the
2012 balance of J$1.4 billion to J$2.5 billion
Signalling an improvement in the company s
credit rating, the value of unsecured debt
increased to J$9.6 billion from J$7.8 billion
The 2013 unsecured debt represented 83
per cent of total debt as at December 2013;
this percentage is up from the 75.6 per cent
recorded for 2012.
Shareholders equity improved from J$30.7
billion in 2012 to J$32.76 billion as at December
2013. The principal increase was recorded in
the retained earnings line, which advanced
by J$1.83 billion. On the other hand, significant
reductions were noted in the value of the
share capital line.
As part of a deliberate policy, the company
achieved a reduction in its share capital using
two mechanisms. First, it repurchased 1.66
million of its own shares on the open market,
thus reducing the number of issued shares
to 333,659,000 from 335,319,000. In the sec-
ond phase, the company acquired 1.22 million
treasury shares. The net effect of these actions
saw the number of issued and outstanding
shares decline to 331,921,000 from the 2012
level of 334,801,000. The net effect of these
changes reduced the nominal value of share
capital from J$808 million in 2012 to J$643
million last year-end.
The non-controlling interests increased to
J$1.467 billion from 2012 s J$1.166 billion.
These balances primarily represent the values
of Hardware & Lumber Ltd (J$491 million)
and GraceKennedy Money Services Caribbean
SRL (J$977 million).
Income and profit
Total revenues rose by 9.60 per cent to
J$67.26 billion from the 2012 figure of J$61.34
billion. The largest source of revenues was
represented by the sale of products, which
grew by 10.6 per cent or from J$46.billion in
2012 to J$51.42 billion last year. This category
accounted for 76 per cent of total revenues.
Total expenses increased by 9.9 per cent
to J$63.91 billion from the 2012 level of J$58.18
billion. The 2013 figure included a one-off
expense of J$293 million that related to the
National and Private Debt Exchange pro-
Because expenses rose at a faster rate than
revenues, the gross margin increased by only
5.78 per cent, moving from J$3.16 billion in
2012 to J$3.34 billion last year.
Helping to improve the current year s per-
formance was the 65 per cent jump in other
income. This item increased from just over
J$1 billion in 2012 to J$1.71 billion last year.
The most significant change occurred in the
profit from net foreign exchange gains, which
increased by almost J$520 million. In addition,
gains on disposal of investments were J$91
million greater than the prior year s J$41.7
Also making a significant contribution was
income from fees and commissions; here, the
2013 figure of J$208.3 million was J$68.7 mil-
lion greater than the J$139.6 million registered
Net interest expenses declined from J$268.8
million in 2012 to J$240.1 million last year.
Also helping to improve the picture were high-
er profit levels from its associated companies;
their contribution improved to J$260.2 million
from the prior period s J$174 million.
The changes saw pre-tax profit increase to
J$5.1 billion from the 2012 figure of J$4.1 bil-
lion, representing an improvement of 23.7 per
Changes in the tax regime saw income tax
expense increase to J$1.28 billion from J$316
million in the 2012 period.
The lower tax charge in 2012 was helped
by a J$498.5 million credit, which related to
a change in the tax rate of unregulated
Jamaican companies. In addition, previously
unrecognised tax losses of J$142.6 million
were utilised. The effective tax rate of 25.2
per cent in 2013 is closer to the new standard
tax rate of 25 per cent, which is effective in
After-tax profit for 2013 came in at J$3.79
billion (2012: J$3.79 billion). However, the
profit attributable to GKC shareholders
declined to J$3.22 from J$3.48 billion in 2012.
This translated into EPS of J$9.65 versus
J$10.41 for 2012.
GKC structures its business along five major
segments, food trading, retail and trading,
banking and investments, insurance and
Money Services and Food Trading were the
two segments that contributed the bulk of
pre-tax profits for both 2012 and 2013.
MARCH 2014 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
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GraceKennedy's 2013 results
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