May 2007 Financial News

NML Releases Half Year Results

May 10, 2007

Results for the Half Year Ended March 31, 2007

Neal & Massy Holdings Limited (NML) continues to report impressive results, as the Group closed the Half Year Ended March 31, 2007 with Earnings Per Share (EPS) of $1.80. This figure was up by an outstanding 32.35 per cent or $0.44 on the corresponding Half Year period for FY06. Also, for the first time, the Group reported quarterly earnings of which the EPS for Q207 stood at $0.95 compared to $0.72 for Q206- also a substantial increase of 31.94 per cent. When compared to the first quarter of FY07, the EPS for Q207 was up by 11.76 per cent or $0.10.

Group Third Party Revenue for the Half Year stood at $2.47 billion compared to $1.96 billion for the same period in FY06, an increase of 26.35 per cent or $515.61 million. Q207 on Q206, this figure was up by 25.85 per cent or $255.11 million from $986.72 million to $1.24 billion. NML’s new acquisitions accounted for $195 million (36 per cent) of the incremental revenue while other subsidiaries contributed the remaining 64 per cent. The Retail business unit was the largest contributor to Revenue and grew by 16 per cent over the corresponding period, while the Energy Business Unit and Finance and Other contributed the least to Revenue. However, while Finance and Other was a small contributor, it showed enormous growth on the comparable period of FY06, up by 180 per cent. The Automotive Business Unit continues to be the second largest revenue driver, up by a considerable 22 per cent on HY06.

HY07 on HY06, Operating Profit was up by 25.56 per cent from $163.70 million to $205.55 million; while Q207 on Q206 this figure saw an increase of 17.18 per cent moving from $88.78 million to $104.04 million.

NML’s associate companies showed significant growth over the previous year, as Share of Results of Associated Companies amounted to $31.72 million for HY07 compared to $16.19 million for HY06- an increase of 95.92 per cent or $15.53 million. Additionally, for Q207, this figure was $21.49 million, up by an outstanding 218.75 per cent or $14.75 million on the same period for FY06. Barbados Shipping & Trading Company (BS&T) was the largest contributor to the Share of Results from Associated Companies adding $20.11 million to the bottom line, an increase of 62 per cent on the corresponding period. While, NM Wood Group Limited showed the largest growth moving from a contribution of $0.58 million to $2.34 million- a 307 per cent increase.

Profit Before Taxation ended the Half Year under review at $237.26 million, an increase of 31.89 per cent or $57.38 million on the same figure for the Half Year Ended March 31, 2006. The Effective Tax Rate for HY07 was 27.43 per cent compared to a Tax Rate of 28.50 per cent for HY06. Thus, Profit After Taxation amounted to $172.19 million, an increase of 33.87 per cent or $43.57 million on the corresponding half year period in FY06.

The Board of Directors has approved the payment of an Interim Dividend of 36 cents (31 cents-2006). This dividend will be paid on June 04, 2007 to shareholders on the Register of Members at the close of business on May 22, 2007.

While the Company expects to see growth in the second half of FY07 over the second half of FY06, they do not expect that the growth will be as exceptional as the growth experienced in the first half of the year (HY07 on HY06). Thus, we are maintaining our forecasted EPS of $4.00 for FY07, which at the current price of $45.50, translates into an attractive price to earnings multiple for this share of 11.38 times. Additionally, using a multiple of 14 times and based on the forecasted EPS of $4.00, we have estimated a target price of $56.00 or a return of approximately 23 per cent at the current share price. We therefore continue to recommend a BUY on this share.

Gia Singh
WISE Equity Research Team