Home' Trinidad and Tobago Guardian : June 1st 2014 Contents JUNE 1 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG15
Under less than ideal condi-
tions, the locally based sub-
sidiary of Unilever continues
to deliver reasonable profits.
It also provides many pro-
gressive examples that the
local business community could emulate.
Let us see what their 2013 results reveal.
Total assets increased from $313 million in
2012 to $356.5 million last year or by 13.9 per
Significant changes were recorded in the
retirement benefit asset, which increased to
$53.5 million from the revised 2012 figure of
$37.1 million. This change was heavily influ-
enced by the adoption of new standards under
IAS 19 (employee benefits).
On the one hand, the company enjoyed a
surplus of $55.5 million on its pension plan
for monthly paid staff. This surplus was
reduced by $2 million, which comprised the
deficit on the plan for hourly paid staff.
The company s only residual intangible asset
is shown at $437,000. This sum relates to the
balance to be amortised from a $2.1 million
project which was aimed at helping to improve
the effectiveness of its human resources.
The value of trade and other receivables
increased to $99.7 million from $88 million a
year earlier. The major component of this
figure was trade receivables, which rose to
$87.9 million from $78.2 million.
This growth was primarily due to a huge
increase in the short term (less than two
months) component, which related to new
customers. On the other hand, the amounts
recoverable that relates to value added taxes
increased from $8 million in 2012 to $9.75 mil-
lion as at year-end 2013.
UCL s year-end cash balance increased from
$46.6 million in 2012 to last year s $60.3 mil-
lion. This increase was hugely helped by the
reduction in dividends paid during the year
from $73.2 million in 2012 to $40.7 million
last year. In December 2012, a special dividend
of $1.25 per share cost $32.8 million.
There was virtually no change in total lia-
bilities, which was held at $152 million at the
end of both periods, however, the composition
of specific items did change.
Deferred income tax liabilities moved from
the previous level of $18.1 million to $22.7 mil-
lion. The increase of $4.6 million related to
part of a deferred retirement benefit liability
that was charged to the statement of com-
Trade and other payables advanced to $79.7
million from $67.8 million as at year-end 2012.
The trade payables component increased by
$6.6 million while the "other payables and
accruals" element rose by $5.3 million.
Provisions for other liabilities fell to $6.7
million from $15 million a year earlier. This
item relates to employee benefits, of which
$11 million was used during the year.
Shareholders equity increased by $43.7 mil-
lion to $204.2 million from $160.4 million as
at year-end 2012.
The retained earnings component increased
to $142.7 million from $98.9 million a year
earlier. This $43.8 million improvement rep-
resented the profit for the year of $70.5 million
and other comprehensive income of $14 million
from which dividend payments of $40.7 million
The result of those changes resulted in the
book value of each share increasing to $7.78
from $6.11 as at December 2012.
Income and profit
Helped by a strong 19 per cent increase in
turnover in its personal care division, total
sales rose by a modest 2.2 per cent to $579.4
million; in 2012, this figure registered at $567.1
The cost of sales declined to $345.7 million
from the $347.6 million reported for 2012.
This reduced cost was mainly due to the lower
cost of raw materials and packaging. This
component fell to $134.6 million from the pre-
vious year s $143.3 million.
As a consequence, gross profit improved to
$233.7 million from 2012 s $219.5 million. This
represents a profit margin of 40.3 per cent;
in 2012, this figure was 38.7 per cent.
After deducting selling and distribution
costs of $113 million and administrative expens-
es of $35.4 million, operating profit came in
at $85.3 million. This result was 9.4 per cent
greater than the $78 million reported for 2012.
UCL recorded $8 million in other income;
this represented the proceeds from the sale
of some brands, such as "Wishbone" and
"Skippy" owned by the parent company. The
"Skippy" brand accounted for $1.53 million of
When finance income of $25k is added, the
total pre-tax profit for 2013 came in at $93.36
million; this figure is 19.6 per cent higher than
the $78 million recorded for 2012. After allow-
ing for $22.9 million in taxes, the net profit
came in at $70.5 million. This figure represents
EPS of $2.69 (2012: $2.22).
UCL organises its sales along three major
headings: home care, personal care and foods.
The table gives turnover and pre-tax profit
figures for these divisions for both 2012 and
In addition to generating the sole increase
in turnover (19 per cent), the personal care
division registered the largest increase in pre-
tax profit; this figure moved from $14.78 mil-
lion in 2012 to $30.93 million last year. This
represents an improvement of 109 per cent.
The foods division comprises two segments,
refreshment and foods. The former consists
of products such as tea and ice cream. The
latter includes items such as margarine and
The foods segment saw its 2013 sales decline
by 2.5 per cent to $169 million. In contrast,
the refreshments segment delivered 3.8 per
cent greater sales, which reached $49 million
last year. Profitability for the combined foods
division declined marginally to $41.36 million
from $41.75 million in 2012.
In 2013, 61.1 per cent of total sales were
made locally. This was up from 59.8 per cent
EPS and share price
UCL has traditionally paid a high divided.
An interim dividend of $0.32 was paid last
August and the final dividend of $1.63 will
be paid on June 23, 2014.
With a total dividend of $1.95 and a recent
share price of $60.00, shareholders enjoy a
yield of 3.25 per cent.
The company cautions that, because it
operates with mature product categories and
in markets that have limited growth potential,
top line growth would be minimal. In addition,
parallel trade provides both threats and oppor-
tunities for the company. Parallel trade refers
to the importation of branded goods outside
of the authorised distribution channels.
UCL has recommitted itself to upgrading
and modernising its manufacturing and dis-
tribution facilities at Champs Fleurs. The cost
of these measures will be financed from
In the short term, this expenditure com-
mitment might limit the company s ability
to significantly increase it dividends from the
First quarter 2014 results
Despite a difficult trading environment,
sales for the first quarter of 2014 increased
by $1.57 million or 1.5 per cent. Consequently,
revenues registered at $135.15 million versus
the $133.57 million recorded for the first quarter
Operational efficiencies and higher sales
from more profitable items contributed to an
improved gross profit margin. In addition,
selling and administration costs were $1.35
million lower than for the comparative 2013
These changes helped UCL report a higher
after-tax profit of $13.8 million (2013 Q1: $13
million), which translated into a current period
EPS of $0.53 (2013 Q1: $0.50).
Total assets advanced from $356.5 million
as at year-end 2013 to $366.3 million as at
Changing of auditors
Following the adoption of new rules con-
cerning corporate governance in Europe, the
Unilever group decided to conform to these
regulations. One aspect of this decision con-
cerns the restriction on the duration of an
auditors term of engagement to ten years.
Accordingly, effective for the 2014 financial
year, Unilever Caribbean s former auditors,
PricewaterhouseCoopers, will be replaced by
KPMG. This was one of the agenda items
carded for the AGM, which was held on May
Sometimes, auditors and company officials
may become too familiar with each other;
this situation can sometimes lead to com-
placency and the blurring of lines between
As the old saying goes: "familiarity breeds
contempt" or worse...
Major local companies would do well to
consider adopting this measure on a phased
Unilever Caribbean Ltd 2013 results:
Sticking with the basics
UCL's year-end cash balance increased from $46.6 million in 2012 to last year's $60.3
million. This increase was hugely helped by the reduction in dividends paid during the year
from $73.2 million in 2012 to $40.7 million last year. In December 2012, a special dividend
of $1.25 per share cost $32.8 million.
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