RBTT results impressive, TCL posts strong revenues, GHL books ING Fatum

RBTT Financial continued to produce impressive results in the quarter ended June 30, 2003.  Profit attributable to shareholders for the three months ended June 30, 2003 was $146.811 million, an increase of 43.95% over the corresponding figure in 2002 of $101.991 million. Net interest income increased by 24.02% moving from $282.037 million in 2002 to $349.794 million in 2003.  Other income increased by a more impressive 31.77% moving from $151.589 million in 2002 to $199.752 million in 2003. Overall total income for the three months ended June 30, 2003 was $549.546 million, an increase of 26.73% over the corresponding 2002 figure of $433.626 million.  The percentage increase in non-interest expenses was marginally lower at 23.06% moving from $311.933 million in 2002 to $383.864 million in 2003.  This led to an even more impressive increase in operating profit of 36.15% which moved from $121.693 million in 2002 to $165.682 million in 2003.  Share in associated companies nearly trippled to $9.801 million in 2003 from $2.800 million in 2002.

Profit before taxes increased by 40.96% moving from $124.493 million in 2002 to $175.483 million in 2003.  The effective tax rate declined from 16.37% in 2002 to 15.30% in 2003.  The earnings per share for the three months ended June 30, 2003 was 43 cents as compared to 30 cents for the same period in 2002, an increase of 43.33%. The Chairman has stated that the improved performance was as a result of improvements in banking operations outside of Trinidad and Tobago.  In fact while revenue in Trinidad and Tobago remained flat moving from $341.790 million in 2002 to $342.414 million in 2003, revenue in the Other Caribbean Territories increased from $381.022 million in 2002 to $459.772 million in 2003, an increase of 20.67%.  In terms of operating profit there was an 11.57% decrease in Trinidad and Tobago from $78.303 million in 2002 to $69.243 million in 2003.  However in the other Caribbean territories operating profit increased by an impressive 122.26% moving from $43.390 million to $96.439 million.

The Chairman has also stated that they are optimistic that the Group will continue to achieve strong earnings growth in the remaining quarters of the financial year.  We concur with this assessment and now forecast a full year earnings per share of $2.10 which at the current price of $23.75 gives a PE of 11.31 which leaves considerable room for capital appreciation.
Trinidad Cement Limited. Results for the Six Months Ended June 30, 2003 Trinidad Cement Limited (TCL) posted a strong second quarter performance to bring the first half of 2003 in line with that of 2002.  Earnings per share was just 8 cents at the end of the first quarter in 2003, however the second quarter produced 17 cents per share, for a total of 25 cents per share, equal to that of 2002. Revenue for the first half of 2003 totalled $583.3 million compared to $554.5 million in 2002.  Operating profit increased marginally by 1.9% to $135.9 million in 2003 from the 2002 amount of $133.4 million.  Finance costs increased 8.6% to $48.8 million from $44.9 million incurred in 2002.   This was a direct result of the depreciation of the Jamaican dollar and its effect on Carib Cement.  Finance costs for Caribbean Cement Company rose more than 100% for the six months ended June 30, 2003. Pre-tax profit reached $87.1 million in 2003, 1.5% below the 2002 figure of $88.4 million.  The net profit of $60.0 million for the first half of 2003 was 0.5% less than the $60.3 million posted in the corresponding period in 2002.  However, 67.3% of this net profit was made in the quarter. The Chairman has described the sales environment as buoyant in Trinidad and Tobago.  Plant output was high in Barbados and Jamaica as well. 
The mitigating factors in the first half were:
* higher fuel costs in Barbados due to an interruption of supplies from Venezuela,* downtime due to planned Kiln upgrades and,
* losses due the depreciation of the Jamaican dollar. 

Going forward, the Group expects continued buoyancy in the local and regional markets.  Benefits are also expected from efficient plant operations due to upgrades completed in the first quarter in Jamaica and Barbados.  Stability in the exchange rate of the Jamaican dollar coupled with increased economic and construction activity is also forecast to impact positively on performance. We expect the third quarter to match or even better the second quarter performance.  Given that the last quarter has traditionally been TCL’s slowest quarter, we estimate a full-year EPS of 55 cents per share, together with a total dividend payout of 20 cents per share.  At the current price level of $5.71, the PE ratio of 10.4 would suggest some room for capital appreciation.  The corollary here is continued exchange rate stability in Jamaica, and a resolution to the efforts for implementation of fair trading measures. 

Guardian Holdings Limited
Results for the Six Months Ended June 30, 2003

Guardian Holdings results for the six months ended June 30, 2003 gives a fuller picture of the effect of the ING Fatum acquisition.  Revenue increased by 59.70% moving from $715.683 million in 2002 to $1.143 billion in 2003.  However operating profit increased by a much smaller figure of 10.80% moving from $119.468 million in 2002 to $132.372 million in 2003.
This reflects the higher cost associated with the new acquisitions, namely ING Fatum.  Share in profits from associates increased by 29.71% moving from $59.814 million in 2002 to $77.586 million in 2003.  Finance charges increased by 56.22% moving from $37.883 million in 2002 to $59.179 million in 2003.  The amortisation of goodwill is a credit of $30.235 million which resulted from the negative goodwill of $45.651 million from the ING Fatum acquisition and the debiting of normal amortisation of goodwill of $15.416 million.
Overall profit before taxes increased by 43.68% moving from $125.981 million in 2002 to $181.014 million in 2003.  The effective tax rate increased from 10.85% in 2002 to 20.95% in 2003 which occurred mainly on account of the new acquisition.  As such income available to shareholders increased by a much smaller figure of 25.63% moving from $95.814 million in 2002 to $120.368 million in 2002.
 
The fully diluted earnings per share for six months ended June 30, 2003 was $0.74, an increase of 23.33% over the corresponding figure in 2002 of $0.60. The Chairman has stated that despite the uncertainty in the global economy and weakness in some Caribbean territories the Group looks forward to a very good performance in the second half.  At this time we maintain our earnings forecast of $1.65 per share which at the current price of $20.80 gives a PE of 12.61. The Directors have decided to pay an interim dividend of 12 cents per share, and have fixed August 21, 2003 as the record date.  Dividend cheques will be mailed out on August 28, 2003.

ANSA Finance and Merchant Bank Limited.
Results for the Six Months
Ended June 30, 2003
ANSA Finance and Merchant Bank (AFMB) managed to increase profit by literally “cutting expenses.”  In the six months ended June 30, 2003, income declined 1.6 per cent to $46.9 million from the corresponding figure of $47.7 million in 2002.  Expenditure was curtailed by 8.9 per cent in 2003 to $32.6 million, down from the $35.7 million incurred in 2002.  This was due in the main to “careful management of interest cost exposure.” Profit before tax rose 20.2 per cent to $14.4 million in 2003 from the 2002 amount of $11.9 million.  Net income was 21.5 per cent higher at $12.2 million in 2003 when compared with the 2002 amount of $10.1 million. As a result of increasing its portfolio of investments regionally, loans, receivables and investments grew 10.9 per cent.   In 2003 the value was $714.6 million from the $644.0 million on the balance sheet at the end of the same period in 2002.  Deposits and fund raising instruments were just 4.8 per cent higher at $719.3 million in 2003, while the corresponding figure in 2002 was $686.2 million. Earnings per share reached 39 cents per share in the first half of 2003 compared with the 32 cents earned in the similar period in 2002.  An interim dividend of 10 cents per share is to be paid to shareholders on August 29, 2003 to registered members as at August 22, 2003. 

Based on these results, we forecast total EPS for 2003 to reach 80 cents per share, with a total dividend payout of 40 cents per share.  At the closing price this week of $8.60, the PE ratio of 10.7 suggests an increase in price in the short-term.
National Flour Mills Limited
Results for the six months
ended June 30, 2003
National Flour Mills continued to show sequential growth in both its top and bottom line.  Turnover for the six months ended June 30, 2003 was $277.736 million as compared to the corresponding period in 2002 of $237.176 million, an increase of 17.10%. The Company was also able to curtail expenses as net income before tax grew by an even more impressive 30.46% moving from $15.816 million in 2002 to $20.634 million in 2003.  Taxation increased by 14.08% moving from $5.425 million in 2002 to $6.189 million in 2003.  As a consequence of the lower increase in taxation net income after tax increased by a much higher figure of 39.01% moving from $10.391 million in 2002 to $14.445 million in 2003.  The earnings per share for the six months ended June 30, 2003 was 12 cents as compared to 9 cents per share in 2002, an increase of 33.33%.

The Chairman stated that he expects the performance in the second half of the year to be better than the first.  We concur with this assessment and now revised our earnings estimate to 28 cents per share.  At the current price of $3.21 this gives a PE ratio of 11.46 which leaves some room for capital appreciation. The Directors have declared an interim dividend of 7 cents per share which is 1 cent per share more than the 6 cents paid in 2002.  The dividend would be paid on September 19, 2003 to shareholders on the Register as at September 2, 2003.
Analysis by West Indies Stockbrokers Limited, 23a Chacon Street, Port of Spain, Trinidad (868) 623-4861.Member of the Trinidad and Tobago Stock Exchange Ltd.