Massy Holdings Ltd has registered a $167 million in profit after tax for the first quarter (Q1) of the 2020 financial year.
In the company’s financial statement, Massy chairman Robert Bermudez said, “Lower effective tax rate (arising from Barbados tax reforms in 2019) produced an even higher increase in profit after tax (PAT) of 13 per cent to $167 million.”
The company also posted third- party revenue of $3.27 billion, two per cent above the prior year’s Q1 third-party revenue.
The group’s profit before tax (PBT) of $250 million was also eight per cent higher than PBT in Q1 prior year. The organisation’s earnings per share (EPS) saw an increase from $1.37 per share in the prior year to $1.57 per share in Q1 of FY 2020, which represents a 15 per cent increase.
Bermudez said, “The group has started to see the benefits of the new portfolio structure announced in its 2019 annual report and annual general meeting. The significant growth in most of the group’s portfolios and lines of business (LoBs) is not a coincidence.”
In the company’s 2019 Annual Report, CEO Gervase Warner explained: “Chairmen and LoB chairmen will focus on priorities for their businesses and will no longer participate in an executive committee reviewing operations and making group-wide decisions for all units.
“Chairmen and their executives in portfolios will focus attention on the strategy, risks and operations of their respective portfolios to drive stronger engagement with employees and customers to produce exceptional financial results.”
The structural changes, according to Warner, will “help our businesses survive and thrive by being better able to change before a crisis forces us to.”
Warner added the changes will also result in improved cash flow for shareholders and more transparent reporting on the industry portfolios which will provide a closer insight for investors on the performance of the businesses.
“We believe that more transparent reporting beyond what is required by accounting standards will allow our shareholders to make better decisions on their investment in the Massy share,” said Warner.
Bermudez added, “The portfolio structure of the group is providing more autonomy and participation for executives and professionals in the portfolios to drive the success of their businesses as they unleash their creativity and ambition.
“Executives are operating with greater focus and have intensified the time spent with their leadership teams and staff, focusing on strategy, operations and people.”
In Q1 of 2020, the company’s PBT growth from the integrated retail, motors and machines and gas products portfolios were 10 per cent, 15 per cent and 27 per cent respectively.
However, Bermudez noted that the adoption of IFRS 15 (revenue recognition) and IFRS 16 (leases) had a negative impact on revenue and expenses for the retail business and reduced the PBT improvement for integrated retail to four per cent.
He said that the financial services and the ITC LoBs also reported excellent PBT growth of 38 per cent and 37 per cent respectively. Massy’s portfolios and operating LoBs added $37.6 million of PBT above Q1 2019.
However, the business lines for strategic and other investments saw a decline of $26.1 million owing to loss of income from divested interests in security companies and a reduction in profit from Massy Wood (as client activity declined versus the same period in FY 2019).
Motors and machines and integrated retail portfolios generated strong improvements of 10 per cent and five per cent respectively.
The revenue growth from distribution companies of 10 per cent outperformed the two per cent revenue improvement from the retail companies.
Bermudez noted that Massy Stores Trinidad was without two stores in Q1 2020, which were operating in Q1 2019, and this resulted in a loss of approximately five per cent of its revenue in Q1 2020.
“All Massy Stores Revenue lines were negatively affected IFRS 15, which requires loyalty points to be deducted from revenue (loyalty points were previously booked to cost of sales).”