Jun 2007 Financial News

L.J. Williams Releases Year End Results

Jun 18, 2007

Results for the Year Ended December 31, 2006

For the Year Ended December 31, 2006, L.J. Williams Limited (LJWB) reported Earnings Per Share of $0.15, up an outstanding 87.50 per cent or 7 cents on the corresponding EPS for FY05.

Revenue for the period stood at $131.40 million compared to $114.80 million for the same period last financial year- an increase of 14.46 per cent. Cost of Sales also saw an increase, moving from $92.34 million (FY05) to $103.00 million (FY06). Thus, Gross Profit for the period was up 26.43 per cent to close the year at $28.39 million.

The Company was able to control its expenses as Distribution Costs increased by a small 3.83 per cent from $2.22 million to $2.30 million; while Administrative Expenses rose by a smaller margin of 1.10 per cent to end the year at $22.34 million. Other Income fell by a significant 84.21 per cent from $6.05 million (FY05) to $0.96 million (FY06). Consequently, Operating Profit from Ordinary Activities amounted to $4.71 million, up by 12.14 per cent on the comparable period in 2005.

Net Finance Costs were down 90.20 per cent from $1.29 million to $0.74 million. Thus, Profit Before Income Tax stood at $3.98 million, up by a significant 36.40 per cent on the same figure for FY05. The Effective Tax Rate for the period under review was 6.29 per cent compared to a rate of 29.50 per cent for FY05. Therefore, Profit for the year was $3.73 million an increase of 81.31 per cent on the same figure for the last financial year.

It was noted in the Chairman’s Review that Movalite Limited, a subsidiary of LJWB, had reported a Net Profit of $1.78 million which was a marked improvement over 2005’s loss of $2.10 million. Movalite is expected to have a strong performance in 2007. On the other hand, Naco Caribbean Limited, another subsidiary of LJWB, did not perform well and reported a loss of $1.4 million. This company was challenged by the cement crisis in Jamaica, the continued rise in raw material costs and an inflexible pricing market. The Board is reviewing its options for Naco and will make a final determination on its future by the end of July 2007.

The Board has recommended a dividend of 35 cents on preference shares, 7 cents on ‘B’ shares and 0.7 cents on ‘A’ shares.

The shares of LJWB last closed at a price of $1.29 on the local exchange. In light of the favorable results we are forecasting an EPS of $0.20 for FY07. At this forecast and the current price these shares are trading at an attractive multiple of 6.5 times. Additionally, we have estimated a dividend of 9 cents for FY07 which at the current price translates into an estimated dividend yield of 6.98 per cent. Based on these fundamentals we would recommend a BUY on this share. However we do caution investors that this share may prove difficult to acquire as approximately 57 per cent of the issued share capital is held by substantial interests.


Gia Singh
WISE Equity Research Team