Despite the distraction of the unsuccessful attempt to acquire Barbados brewer Banks Holdings Ltd in the later part of the year, ANSA McAL Ltd (AMCL) produced improved results for 2015.
Let us now review AMCL's performance for the year ended December 2015.
Changes in financial position
Total assets rose to $13.26 billion from $13.12 billion; the long-term portion rose, while current assets declined.
Long-term assets advanced to $6.6 billion from $6.36 billion. Plant, property and equipment increased from $1.65 billion to $1.79 billion. Additions more than doubled to $388.8 million from the previous year's $184.3 million. This increase more than offset the charges for depreciation, write downs and other movements.
A large part of the higher capital expenditure was focussed on a new furnace at Carib Glassworks Ltd, blow moulding equipment at ANSA Polymer and a new automotive centre at Chaguanas. The first two items are expected to boost exports.
The long-term portion of investment securities grew from $1.76 billion to $1.98 billion, while the current portion declined to $1.44 billion from $1.77 billion. Most of these assets are primarily lodged within the insurance and financial segment (ANSA Merchant Bank, TATIL and Consolidated Finance Company).
Similarly, loans advances and other assets also form part of that segment's portfolio. The long-term portion fell marginally to $1.4 billion from $1.44 billion, while the current portion increased to $1.1 billion from $0.8 billion.
Current assets fell to $6.66 billion from $6.76 billion. Inventories increased marginally to $1.28 billion from $1.25 billion. At $906 million, the largest component was finished goods and returnable containers; the latter portion relates to its beer and beverage subsidiary, Carib Brewery.
Trade and other receivables advanced to $1.08 billion from $810 million. The biggest change was recorded under other receivables, which climbed to $335.2 million from $68.3 million. Here, the largest component was $237.6 million, which was receivable from SLU Beverages Ltd. This comprised the estimated value of the group's approximately 11 million shares in Banks Holdings Ltd at BDS$7.10 (or US$3.55), which was the final price of the winning bid.
Cash and short-term deposits fell to $1.76 billion from $2.15 billion. In addition to higher capital expenditure, another reason for this decline was its multiple purchases of shares in Banks Holdings Ltd, which eventually created the large receivable from SLU Beverages Ltd.
Total liabilities declined to $6.28 billion from $6.66 billion.
Customers' deposits and other funding instruments declined to $2.36 billion from $2.83 billion. The current portion fell to $2.07 billion from $2.22 billion while the long-term portion increased to $288 million from $276 million.
Medium and long-term notes rose to $911.4 million from $759 million. In line with what we saw at AMBL, the current portion fell to $64.2 million from $350 million, while the long-term portion rose to $847.2 million from $409 million. On the other hand, short-term borrowings fell to $66 million from 2014's $231 million.
Insurance contract liabilities rose from $1.21 billion to $1.32 billion. Both the current and long-term portions increased; the former expanding to $389.2 million from $310 million, while the latter moved to $935 million from $898 million.
Trade and other payables, at $971.4 million, was marginally higher than the 2014 figure of $963.5 million. Accrued expenses rose by $20.7 million while other payables also increased by $10 million; the trade component fell by almost $30 million.
Equity improvements
Total equity rose from $6.45 billion to $6.98 billion, of which $738 million related to minority interests. Stockholders' equity advanced to $6.24 billion from $5.77 billion.
Other reserves declined to $316 million from $425 million; this mainly reflected exchange differences with respect to its foreign subsidiaries. Retained earnings improved to $5.77 billion from $5.18 billion. Here, the current year's profit of $767 million and the net of transfers and comprehensive loss, totalling $50 million, enhanced the brought forward balance while dividends of $224 million reduced the closing figure.
Net of treasury stock, 172,268,000 shares were outstanding; therefore, each share had a book value of $36.24 (December 2014: $33.46).
Income and profits
Total revenues advanced by 1.8 per cent to $6.21 billion from $6.11 billion. The sale of goods contributed $5.24 billion (2014: $5.20 billion) while the rendering of services accounted for $976 million (2014: $904 million).
At $3.79 billion, the cost of sales was unchanged for both periods; consequently, gross profit improved by 4.7 per cent to $2.42 billion from $2.32 billion.
Other income rose to $274 million from $258 million. Helping this result was a $32 million improvement in net exchange gains and interest and investment income of $116.5 million versus $109.8 million.
Staff cost increased by less than one per cent to $584.8 million from $580.5 million. These changes, along with higher impairment and other costs, saw operating profit come in at $1.18 billion; this was one per cent greater than the $1.08 billion earned for 2014.
Finance costs consumed $43.6 million compared with 2014's $40.6 million, reflecting its higher year-end debt load. Its associated companies, including the 40 per cent stake in Trinidad Lands Ltd, reported lower sales and generated reduced profits; consequently, their contribution to the group's results declined to $22.6 million from $26.1 million.
Higher exempt income and allowances helped lower the effective tax rate to 23.3 per cent from 24.7 per cent; consequently, after-tax profit improved to $891.4 million from $802 million, or by 11.1 per cent.
After allocating $124.8 million to non-controlling interests, the profit attributable to shareholders came in at $766.6 million; this represents a 12 per cent improvement over the 2014 result of $684.9 million.
After excluding almost 4 million in treasury shares, these results translated into 2015 diluted EPS of $4.45 compared with $3.97 for 2014.
Segment performance
Geographically, almost 77 per cent of the group's revenues ($4.76 billion) were generated locally, while those sourced from Barbados accounted for 15.5 per cent ($965 million). Other territories made up the remainder of $488 million (or about 8.0 per cent).
Although not the largest segment in terms of revenue, the manufacturing, packaging and brewing division generated the greatest profit; this pre-tax result was almost 13 per cent higher than the previous year. Many of the companies in this segment are re-tooling with a view to initiating or expanding their export potential.
Pre-tax profits at the automotive, trading and distribution segment were 9.0 per cent above the previous years' results. Even in the face of higher taxes, demand for the high-end products should remain strong.
Shared showrooms at a new location in Chaguanas and continued emphasis on service should enable the automotive segment to maintain and even grow its profit levels. As more CNG stations are deployed throughout the country, the attractiveness of its CNG motor cars should become stronger.
Despite a loss at Consolidated Finance, the insurance and financial services segment managed to post higher pre-tax profits.
At the media, services and parent company pre-tax income rose by 7.8 per cent. Helping this result was the improvement in pre-tax profit at Guardian Media Ltd, which advanced to $36 million from $33.9 million, or by 6.5 per cent. In addition, MBM, via its representations of Dell, Oracle and, more recently, Cable & Wireless recorded an improved performance. Brydens in Barbados and Standard Distributors in Trinidad and Barbados also achieved commendable results.
Dividends and share price
The total dividend for fiscal 2015 was $1.40; this was a 7.7 per cent improvement over the $1.30 paid for 2014.
After peaking at $67.50 on June 25, 2015, AMCL's share price declined very slowly before closing 2015 at $66.63. As the realities of the local economic slowdown continued to filter through to the wider economy, this downward trend continued into the New Year. Last Friday, the price closed at $62.49 with outstanding bids to buy registering at $62.00.
At that closing price, the yield is 2.24 per cent and the P/E multiple is 14.04.
Q1 results
For the first quarter ended March 2016, AMCL achieved revenues of $1.411 billion versus $1.404 billion for the comparative 2015 period. While its net profit was marginally lower, EPS was unchanged at $0.80.
The automotive, trading and distribution segment produced strong results, which led to pre-tax profits of $40 million (2015: $34 million). Next, despite lower profits at GML, its overseas operations made a significant contribution to the results of the media, services and parent segment; these profits advanced from $27 million to $44 million.
The insurance and financial services segment suffered from unrealised investment portfolio losses; here, pre-tax profits declined to $50 million from $58 million. Also showing lower profits was the manufacturing, packaging and brewing segment; this division's contribution fell from $90 million to $70 million.
Subsequent events
On April 22, 2016, Barbados Today reported that ANSA McAL had put up for sale its three supermarkets, which operate under the Trimart brand. The stores may be sold either as one unit or individually. AMCL further explained that this type of business is not within its suite of core competencies. Perhaps, Massy Holdings Ltd, which has a strong retail presence in Barbados and Trinidad, might have an interest in these outlets?
Following the departure of Gerry Brooks from its board in April 2015, the former finance minister, Larry Howai and former banker, David Dulal-Whiteway are being proposed as new directors at the forthcoming AGM on June 2. The expertise of these individuals should be a valuable asset, both to the parent board and, eventually, to the wider group.
Next week, we look at Angostura Holdings Ltd's 2015 performance.