Jun 2008 Financial News

NML Releases Half Year Results

Jun 04, 2008

Neal & Massy Holdings Limited
Results for the Half Year Ended March 31, 2008

Earnings Per Share
Neal & Massy Holdings Limited (NML) has had another successful quarter for FY08. For the Half Year Ended March 31, 2008, NML reported Earnings Per Share of $2.33, up 29.4 per cent or 53 cents on the corresponding period’s EPS of $1.80 in fiscal 2007. Q208 on Q207, this figure was up 24.2 per cent from $0.95 to $1.18.

The Group’s earnings were calculated using a weighted average number of shares of 90.7 million as at March 31, 2008 compared with 88.9 million at March 31, 2007.

Financial Highlights (HY08 on HY07)
• Group Third Party Revenue, up a considerable 21.8 per cent or $538.8 million to $3.0 billion
• Operating Profit, up a significant 27.6 per cent or $56.7 million to $262.3 million
• Share of Results of Associated Companies, up 71.6 per cent or $22.7 million to $54.4 million
• Profit After Taxation, up an outstanding 32.3 per cent or $55.6 million from $172.2 million (HY07) to $227.7 million (HY08)

Financial Highlights (Q208 on Q207)
• Group Third Party Revenue, up 28.8 per cent or $357.7 million to $1.6 billion
• Operating Profit, up 28.0 per cent or $29.1 million to $133.1 million
• Share of Results of Associated Companies, up 44.5 per cent or $9.6 million to $31.1 million
• Profit After Taxation, up 28.4 per cent or $25.9 million from $91.4 million (Q207) to $117.4 million (Q208)

BS&T Acquisition
During the second quarter, the Group completed the purchase of an additional 69 per cent of the shares of Barbados Shipping & Trading (BS&T) thereby increasing the Group’s total shareholding to 97 per cent. The acquisition date of the additional 69 per cent shareholding has been established as March 1, 2008, which indicates that only one month (March 2008) of BS&T’s earnings arising out of the increased shareholding was included in the Half Year results.

In addition, with the acquisition of the additional BS&T shares the Group expended:
• Cash paid US$135 million / TT$856 million and issued 10.265 million NML shares
• Acquisition debt of US$102 million / TT$646 million

Also, with respect to the acquisition of the additional shares of BS&T, NML’s Total Assets increased by $3.1 billion to $7.1 billion while Total Debt rose by $1.3 billion ($618 million BS&T Debt; $648 million Acquisition Debt). The Chairman stated that initiatives are in place to restructure part of the Group’s short-term borrowings into medium and long-term debt.

Dividends
The Directors declared to pay an Interim Dividend of 40 cents per share (2007: 36 cents) to be paid on June 16, 2008 to shareholders on the Register of Members at June 4, 2008.

Outlook
With the takeover of BS&T completed, NML will without a doubt, reap the benefits of increased earnings due to its wider geographic spread and entry into new business divisions, such as the hotel industry and investment properties.

Recommendation
NML last closed at a price of $64.17. At the current price and our forecasted EPS of $5.15 for FY08, this share is trading at a price to earnings multiple of 12.5 times. At this time we recommend a HOLD on this share.


Nancy Chen
WISE Equity Research Team