May 2008 Financial News

GHL Releases First Quarter Results

May 13, 2008

Guardian Holdings Limited
Results for the First Quarter Ended March 31, 2008

Earnings Per Share
For the First Quarter Ended March 31, 2008, Guardian Holdings Limited (GHL) reported a diluted Earnings Per Share (EPS) of $0.24 compared to a diluted Loss Per Share (LPS) of $0.99 in the comparable quarter of fiscal 2007. The Chairman stated that all of the Group’s operating divisions in the various geographic regions produced positive returns for the period under review.

Financial Highlights:
• Net Insurance Premium Revenue, up 2.9 per cent or $30.1 million to $1.1 billion
• Fee and Commission Income, up 24.6 per cent or $7.6 million from $30.7 million to $38.3 million
• Total Revenue, up 3.9 per cent or $50.5 million to $1.4 billion
• Net Insurance Benefits and Claims, up a minimal 0.7 per cent or $5.4 million to $811.1 million
• Operating Profit (before fair value losses), up an outstanding 66.5 per cent or $48.9 million from $73.5 million to $122.4 million.
• Fair Value Loss of $15.7 million compared to a Loss of $251.1 million in Q107
• Operating Profit of $106.7 million compared to an Operating Loss of $177.6 million in Q107
• Share of Results of Associated Companies, up a substantial 98.2 per cent or $7.3 million to $14.8 million
• Profit After Taxation of $52.8 million compared to a Loss After Taxation of $225.7 million in Q107

Chairman’s Comments
According to the Chairman, the Group’s investment portfolio saw modest increases in the values of the Trinidad and Tobago and Jamaica equity portfolios, however, these gains were adversely impacted by decreases in the fair market value of international equities and Jamaican Government Bonds. As such, a Net Fair Value Loss of $15.7 million was incurred in Q108.

Disposal of Group’s Investments
RBTT Financial Holdings Limited
The acquisition by the Royal Bank of Canada (RBC) of all of the issued ordinary stock of RBTT Financial Holdings Limited (RBTT) is expected to be completed by June 30, 2008. It is anticipated that the Group will derive a Net Profit of approximately $150 million from this transaction and a net cash inflow of $1.5 billion.

Grupo Mundial of Panama
GHL expects to realize a profit of $300 million and a net cash inflow of $520 million from the sale of the Group’s investment of Grupo Mundial.

Gains from the disposal of these two investments would accrue a one-time gain of approximately $2.23.

Outlook and Recommendation
The long-awaited turnaround in GHL’s performance and continued focus on operational efficiency will serve the Group well in 2008. The shares of GHL last closed at a price of $30.75. We are maintaining our forecasted EPS of $3.10 at this time, which at the current price translates to a price to earnings multiple of 9.9 times. Additionally using a multiple of 11 times and the forecasted EPS, GHL has an expected return of approximately 11 per cent or a Target Price of $34.10. The Group continues to have a strong Balance Sheet with a Net Asset Value per share of $18.92 which translates into a market to book ratio of 1.63 times at the current price. We continue to recommend a BUY on this share.


Nancy Chen
WISE Equity Research Team