Energy and gas doing well, IT not so good

The Neal & Massy Group holds interests in a total of 57 companies.  Of this total only 16 companies represent joint holdings or substantial share ownership by the group, the other 41 companies are wholly owned subsidiaries of the Group.

The table below identifies the companies’ interests by location and area of business. The table is ranked by area of contribution to the annual profits for the year ending September 2002 with the best contributor being presented in the first row ie Retail Distribution and Logistics. The table allows the reader an assessment of the company’s involvement in Trinidad and Tobago and elsewhere in the region. Chairman Nazir Ahamad and CEO Bernard Dulal Whiteway agree that the year under review (October  2001 to September 2002) was difficult for the Group.

The Neal and Massy Group has emerged from the financial year October 2001 to September 2002 with a growth in profit of 3% from TT$159M to TT$164M.  This was correlated to an increase of revenue by TT$100M from TT$2.5 billion (previous year) to TT$2.6 billion. Shareholders benefited from these increases as well as the fact that Guardian Holdings Limited exchanged 15,896,844 shares in return for the sale of Neal and Massy’s insurance operations.  The resulting reduction in the share quantity combined with increased profit to result in earnings per share growing by 23% from $1.51 to $1.85 in 2002.

The Retail, Distribution and Logistics category has remained the best contributor to profit, followed by the Energy and Industrial Gases, then the Automotive Industrial Equipment and Support Services.  The Information Technology and Communications areas have not performed well and made negative contributions to the Group profit. An analysis of the CEO’s report reveals the challenges and the successes that the Group encountered during the period under review.  The salient points are presented by category for review.

Retail Distribution and Logistics.

The Hi Lo chain of stores continues to perform well.  The new (2001) Hi Lo store at West Mall has doubled revenue performance of the old West Mall outlet without affecting sales at other branches in the North West peninsula.  The stores in other regions East-West Corridor, Central and South have all increased their revenues over the last period. The company will continue to upgrade the Hi Lo stores throughout the country and will identify and pursue new areas for expansion.

In March 2002, the Marketing and Distribution made distribution arrangements with General Mills whose brands include Betty Crocker cake mixes and granola bars. The Group has acquired HD Hopwood & Co Ltd, a Jamaican company with over 67 years of experience.  This important acquisition has strengthened the Group’s position throughout the English-speaking Caribbean.  HD Hopwood has secured new agencies including Seven Seas and Kimberley Clark to the extent that they have to expand warehouse capacity during the coming year. The shipping companies have suffered the aftermath of September 11th 2001 and remain challenged to resume their previous levels of revenue. 

Energy

During the period, the Gas Group exported carbon dioxide, acetylene and argon to new markets:  Guadeloupe, Martinique and French Guiana.  Large volumes of nitrogen were provided for plant turnarounds and maintenance at the Point Lisas Industrial Estate. The 50/50 joint venture between Caribbean Gases Unlimited and Air Products and Chemicals Inc of the USA is contracted to Atas Methanol to install a 2810 tonnes per day air separation plant to supply oxygen, nitrogen and instrument air for the production of methanol.  The plant is under construction with a projected completion date of 1st Quarter 2004.

Future plans:

a) Expansion into other Caribbean countries and Central America
b) Introduction of new applications for existing products eg food freezing, oxygen enrichment water treatment and supply of specialty gases to a wide range of customers.

Automotive and Industrial Equipment

Neal & Massy Automotive Ltd. — Nissan, Nissan Diesel, Hyundai, Suzuki and Subaru — its leadership position in the new vehicle market.  Nissan remained the best selling brand with the Almera being the best selling model in the country. The Volkswagen brand is offered under a joint venture with Best Auto Limited and in December 2002, Neal and Massy became a 100% shareholder of City Motors, the distributor for Peugeot. After-sales service is considered a growth area and one that could be provided with a higher level of quality. Other than the dealerships, the company offers these services through the MasterServ chain. Vehicle rental and leasing operations have grown and Auto Rentals now boasts a fleet of over 800 vehicles.

Financial and Other Services

Changes were made to the Executive team of General Finance Corporation’s in response to the number of delinquent loans that were part of the company’s annual portfolio. Construction of the Rainbow Hill Development, which started three years ago, is now complete,  and most of the units were sold. The Group seems to have endorsed a policy that will see companies functioning only in the areas of their core competencies.  This is reflected in the decision that buildings owned by Group companies that are rented to third parties will be transferred to Nealco Properties for management.

Information Technology and Communications

Retrenchment at Illuminat Trinidad reflected the delay or dilution of previously approved or endorsed projects in both the private and public sector. The company launched a broad band Wireless Data Services in T&T with additional repeater sites to provide extended coverage in the islands. The investment has paid off as they are now the provider of wireless data network for one of the largest retail banks in T&T.

In February 2002, the Group acquired 100% ownership of a Barbados-based Call up center.  As a result, the company entered into a 50/50 arrangement with an international Call Center operator who brings international market access as well as operational and technical expertise to the joint venture.  This is expected to be a profitable arrangement.

Guyana

The Group has restructured its distribution company Associated Industries Limited, to accommodate the realities of Guyana’s situation - an economy with little growth or new investment, a depressed rice industry and uncertainty from political and social developments. The Communications division of CCS Guyana Ltd suffered as Guyana joins the rest of the world replacing pagers with cellular phones. The Group remains committed to enhancing its position in Guyana and seems to be focussing on the provisions of services as the way forward.

Jamaica

The Retail and Information Technology divisions have performed well in Jamaica.  Securicor (Jamaica ) has attained Dirk Services Ltd which resulted in a doubling of revenue and profit for the year. Tyre Sales Ltd, a subsidiary that provides outsource services to Goodyear is an area of concern for the Group.  The company has had a disappointing year as Goodyear tyres have been losing market share.

Barbados and the OECS

Arrow Developers Ltd are poised for growth as the company has recommenced its land development program and has a number of lots to sell in the new year.  The Call center joint venture is growing and Securicor (B’dos) has made inroads into the aviation security screening business which will auger well for its future growth. In keeping with the policy of core competencies, Geddes Grant Barbados has sold its travel agency and transferred its shipping business to the Group’s partner Barbados Shipping and Trade. The companies in the OECS have not performed well during the year.  CCS Dominica was sold during the year as well as 60% of Trimarg in the French West Indies.