Mar 2007 Financial News

GHL Releases Year End Results

Mar 23, 2007

Results for the Year Ended December 31, 2006

Guardian Holdings Limited (GHL) ended the financial year 2006 with a Loss Per Share (LPS) of $1.14. When compared to Earnings Per Share (EPS) of $1.80 in the comparable period (FY2005), the Company was down by 163.33 per cent. The Chairman has attributed the poor results to the costs associated with the restructuring of the Company’s UK business in addition to the Fair Value Losses sustained in the local stock markets. He also stated that the restructuring programme in the UK was substantially completed by the end of the third quarter of 2006 and this entity delivered strong operating results in the last quarter.

Although Q4 2006 produced positive earnings which resulted in an EPS of approximately $2.28, this was mainly the result of mark to market gains. For the quarter under review, both indices on the local market ended in positive territory: the Composite Index was up 10.59 per cent and the All T&T Index was up 11.56 per cent. GHL’s equity portfolio would have benefited greatly from this, especially the Company’s holdings in RBTT Financial Holdings Limited (RBTT). RBTT’s share price jumped up 34 per cent on the quarter from $28.00 to $37.50. We believe that the gains from this would have added significantly to company’s Q4 2006 EPS.

Net Insurance Premium Revenue for the 12 month period stood at $3.69 billion and was up by 13.98 per cent or $453.23 million. For the quarter, this figure was up by a significant 41.94 per cent to $1.17 billion. This was mainly due to the fact that the Company reduced its Insurance Premium ceded to Reinsurers by 45.46 percent on the quarter and 23.99 per cent on the year end, when compared to 2005. Also contributing to the increased Net Premium Revenue was increased Insurance Premium Revenue, while this was up by a minimal 3.84 per cent or $169.86 million on the year end it was up by 23.82 per cent on the quarter- moving from $1.04 billion (Q4 2005) to $1.29 billion (Q4 2006).

Other Revenue, which includes mark to market gains/losses, amounted to $907.61 million for FY2006 and was down by 22.87 per cent or $269.06 million on the corresponding period in FY2005. Q4 2006 on Q4 2005, this figure was up by 158.58 per cent moving from $311.64 million to $805.83 million. Thus Total Revenue for FY2006 stood at $4.60 billion up by a minimal 4.17 percent on FY2005, while this figure for the quarter amounted to $1.98 billion and was up by a considerable 73.91 per cent.

Net Insurance Benefits and Claims rose by 20.82 per cent for the year under review, from $2.27 billion to $2.74 billion. For the quarter, this figure amounted to $763.78 million up by a significant 53.29 per cent on the corresponding quarter in FY2005. Expenses rose by a lesser margin of 15.66 per cent to $1.89 billion on the year end and 19.68 per cent to $620.35 million on the quarter. Thus, GHL reported an Operating Loss of $34.31 million for FY2006 compared to an Operating Profit of $510.58 in FY2005. While Q4 2006 reported an Operating Profit of $593.26 million up by 392.72 percent on Q4 2005’s Operating Profit of $120.41 million.

Share of Profits from Associated Companies totaled $24.09 million for the year 2006 compared to $69.30 million in 2005. Finance Charges for the period was $148.24 million and was up by 21.17 per cent on the corresponding period in FY2005. As a result, the year ended in a Loss Before Taxation of $158.46 million compared to a Profit Before Taxation of $457.54 million in the previous financial year. Taxation of $77.38 million for the year under review resulted in a Loss After Taxation of $235.84 million. In 2005, the Effective Tax Rate was 17.44 per cent which resulted in a Profit After Taxation figure of $377.74 million.

In light of the results for the financial year 2006, the Board of Directors has decided to forego the payment of a final dividend.

The Annual General Meeting of the Company will take place on May 14, 2007 at 4 o’clock in the afternoon at the Guardian Corporate Centre, 1 Guardian Drive, Westmoorings.

The shares of GHL are currently trading at a price of $19.97. The Company continues to have a strong Balance Sheet with a Net Asset Value of approximately $17.77 and at the current price of $19.97, the market to book ratio is an attractive 1.12 times. WISE will be sending out a Company Update on these results soon, however at this time we believe that GHL is trading at a relatively low price and would be a good buying opportunity for the longer term.

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Gia Singh
WISE Research Team