May 2007 Financial News

DBG Releases Year End Results

May 23, 2007

Results for the Year Ended March 31, 2007
All figures quoted in Jamaica Dollars unless otherwise stated

For the Year Ended March 31, 2007, Dehring Bunting & Golding Limited (DBG) reported Earnings Per Share (EPS) of $2.27, down 20.07 per cent or $0.57 on the corresponding period in fiscal 2006.

Net Interest Revenue for the period under review was $854.915 million, up $81.071 million or 10.48 per cent on the previous financial year. This was as a result of strong portfolio volume growth primarily in the Company’s managed fund and loan portfolios. DBG’s loan portfolio, driven by the excellent performance of its Merchant Bank, increased 38.5 per cent to $3.700 million when compared to the same period last year. In addition, the Company’s recently launched consumer finance initiative – EASY OWN – has met all of the Company’s expectations and it is expected that this will continue in the future.

Year on year, Other Operating Revenue fell a significant 28.38 per cent or $295.640 million from $1.042 billion to $745.959 million. This was mainly as a result of the decrease in Gains on Securities Trading which was down a considerable 48.73 per cent or $332.564 million to $349.922 million. Fees and Other Income also fell 13.83 per cent or $32.189 million to $200.554 million. However, Foreign Exchange Gains was up a substantial $69.113 million or 54.69 per cent to $195.483 million. Other major profit centers showing credible performances included the brokerage and unit trust units which showed fee income of $201 million for the year.

Ultimately, Net Revenue amounted to $1.601 billion for FY2007 compared to $1.815 billion reported last year. This figure was down 11.82 per cent or $214.569 million from last fiscal. Operating Expenses for the twelve month period stood at $900.772 million, down a minimal 3.04 per cent or $28.242 million from the prior year.

Profit Before Taxation for FY2007 was $700.102 million, down 21.02 per cent or $186.327 million from FY2006. For the period under review, DBG benefited from a Tax Credit of $2.853 million while Taxation for the same period in the last fiscal amounted to $4.110 million. As such, Net Profit After Taxation fell an outstanding 20.33 per cent or $179.364 million to $702.955 million. Additionally, Q407 on Q406, this figure was down a substantial 52.24 per cent or $175.371 million from $335.707 million in Q406. As stated by the CEO, Mr. Peter Bunting, the results should be taken in the context of some extraordinary gains which were recognized in 2006 and which did not reoccur in 2007. These gains amounted to approximately $221.1 million and if excluded from the results of last year would have resulted in the Company showing year over year profit growth of 6 per cent.

For the financial year, DBG demonstrated its commitment to tight cost management as its productivity ratio (non-interest expenses as a percentage of total revenue) was 56.3 per cent which was significantly better than the international benchmark of 60 per cent. Also, as the newest member of the Scotiabank Group, the Company expects that the year ahead will provide exceptional opportunities for all stakeholders and remains committed to maintaining the highest levels of integrity and service quality to its customers.

DBG last closed at a price of TT$2.10 on the local stock market. We are forecasting an EPS of TT$0.24 for fiscal 2008. At this forecast and the current price, these shares are trading at a price/earnings multiple of 8.75 times. As DBG typically trades between 6 to 9 times we recommend a SELL on this share.

Nancy Chen
WISE Equity Research Team