May 2007 Financial News

BS&T Releases Half Year Results

May 16, 2007

Results for the Half Year Ended March 31, 2007

All figures quoted in Barbados Dollars unless otherwise stated

For the Half Year Ended March 31, 2007, The Barbados Shipping & Trading Company Limited (BS&T) reported Earnings Per Share (EPS) of 32.6 cents. This was up on the corresponding Half Year period by a significant 22.56 per cent or 6 cents. However, the EPS for Q207 was down by 18.89 per cent or 3.4 cents on the previous quarter-Q107.

Revenue for the Half Year period was $398.09 million, up 5.99 per cent or $22.52 million on the comparable Half Year in fiscal 2006. Operating Profit before Interest Expense was up by a higher margin of 18.11 per cent or $4.82 million from $26.59 million (HY06) to $31.41 million (HY07).

HY07 on HY06, Interest Expense saw a significant increase of 22.67 per cent or $1.36 million, moving from $5.98 million to $7.34 million. Thus Profit Before Taxation ended the period at $24.07 million, up by a considerable 16.78 per cent or $3.46 million.

Share of Income after tax from Associated Companies saw substantial growth- up by 70.75 per cent or $2.70 million to end the six month period at $6.52 million. The Directors made special mention of this improvement stating that the Associate Companies performed much better during the second quarter. It was also mentioned that the hotel associates benefited from the winter season with Morgan Bay St. Lucia moving into a profitable position while Banks Holdings reported increased earnings on bringing its new Belize associate into account.

The Effective Tax Rate for the period under review was 12.23 per cent compared to a Tax Rate of 8.77 per cent for the corresponding period in fiscal 2006. Thus, Profit After Taxation ended the six month period at $26.85 million, up by 20.46 per cent or $4.56 million on HY06.

Profit After Taxation Attributable to Minority Interest stood at $2.36 million up by 3.41 per cent from $2.29 million in HY06. As a result, Profit Attributable to Shareholders was $24.49 million, an increase of 22.41 per cent or $4.48 million on the same period in fiscal 2006.

The Directors expect that the results will continue to show reasonable growth in the second half of the year over the comparable period last year. They have also resolved to pay an interim dividend of 9 cents, payable on May 31, 2007 to shareholders on record as of May 23, 2007.

BS&T last closed at a price of TT$17.00 on the local exchange. In light of the current results we are revising our Forecasted EPS to TT$1.70 (BBD$0.53). Thus, at this revised forecast and the current price, this share is trading at a multiple of 10.00 times. This multiple is attractive for this share which usually trades in the band of 12 to 14 times. Based on these fundamentals we recommend a BUY on this share.

However, it should be noted that there was an announcement made by the Board of Directors of both BS&T and Neal and Massy Holdings Limited (NML) on May 15, 2007, of a plan to merge the respective enterprises. This decision is subject to regulatory approval as well as approval by the shareholders of both companies. Full details including the benefits of the transaction, supporting financial data and exchange ratio of the shares between the two corporations will be sent to shareholders of both companies as soon as the requisite regulatory approvals have been received. Thus, our recommendation to buy this share remains until further information is available.

Gia Singh
WISE Equity Research Team