Going up: RBTT Earnings Per Share

RBTT Financial Holdings Ltd
Results for the year ended 31 March 2005.

RBTT Financial Holdings (RBTT) increased its earnings per share (EPS) from $ 2.35 as at March 2004 to $2.68 as at March 2005. This represents a gain of 14.05 percent over the period. Two factors negatively impacted RBTT’s performance:

•An unrealised before tax mark to market loss of $87 million related to the downgrading of the sovereign credit rating of Grenada as a result of Hurricane Ivan during the 2004 calendar year.
•A post retirement medical benefit expense for employees in accordance with IAS 19 of $111 million before tax.

Under IAS 19 (Accounting for Employee Benefits) an independent actuarial valuation is conducted to determine the present value of any potential future liability arising from benefits to employees. The accounting standard requires recognition of the liabilities in the period in which the benefit is earned by the employee rather than when it is payable.  As a result this provision should not impact on cash flow as at March 31, 2004. RBTT also benefited from the sale of 9 million shares of Guardian Holdings Limited (GHL) during the financial year, resulting in a realised gain of $229 million. The sale of GHL shares necessitated in a change in the accounting treatment for this investment.

Prior to the sale RBTT held a 20 percent stake in GHL and therefore accounted for GHL as an associate company. RBTT now records the residual shares as an investment resulting in a mark to market adjustment. The mark to market gain has resulted in a boost to Shareholders’ Equity of $564 million. RBTT will no longer be entitled to a share of GHL’s profit but will instead be impacted by the movement in GHL’s share price. This should be taken into account in assessing the future prospects of the company. The Group’s operations performed creditably during the year. Overall, net interest income grew by 10.49 percent to $1.62 billion, while other income increased by 10.71 percent to reach $1.17 billion, resulting in total net income of $2.79 billion, up 10.58 percent.

Non interest expense of $1.74 billion represented an increase of 9.26 percent over that of 2004. Operating profit for the year was up 12.83 percent to $1.05 billion. Share of profit from associate companies and Joint Ventures increased by 51.45 percent to $67.61 million. Profit before tax for 2005 was $1.12 billion, up 14.60 percent from $974.2 million in 2004. Profit after tax reached $931 million, up 14.69 percent, while profit attributable to shareholders increased by 14.78 percent to $921.88 million. Profit attributable to shareholders has more than doubled over the last five years, from $409.49 million in 2001 to $921.88 million in 2005. This growth is represented by the following graph.

A final dividend of 77 cents per share was declared, which will be paid on June 10, 2005. Total dividends for the year amounted to $1.18 per share, up 18 percent from $1 in 2004. At the current price of $44 per share, RBTT offers investors a dividend yield of 2.27 percent the highest in the Banking Sector and an earnings multiple of 16.15 times, the lowest in its peer group. We expect that there may be some short-term price volatility associated with this share but the long-term prospects remain relatively strong.

West Indies Stockbrokers Limited
Member of the Trinidad and Tobago Stock Exchange Ltd. WISE is a subsidiary of RBTT Financial Holdings Limited