CAC 2000 reports 26% decrease in year end net profit

Date: December 31, 2018

CAC 2000 (CAC) revenues for the year ended October 31, 2018, remained relatively unchanged at $1.21 billion. Revenues for the fourth quarter decreased by 27% to $302.18 million compared to $411.75 million for the same period the prior financial year.

Management stated that, “the Three Miles road construction activities severely disrupted normal business activities, as a result, sales in the last quarter (historically the peak period), fell. This business disruption continues, and CAC expects that accessibility to their office will be significantly improves by February 2019, as contingency plans have been implemented to try and minimize the impact until the project is completed.”

Cost of Sales also decreased by 4% for the period to $757.80 million (2017: $786.50 million). Consequently, Gross Profit for the period improved 7% to $453.19 million (2017: $424.44 million). CAC highlighted that, “this was due to improvements in operational efficiencies and job mix changes, but this gain was offset by budgeted expenses to cover increases in salaries, professional fees, costs related to additional preference share issue, training, travel expenses and bad debt provision. The majority of these expenses had already been committed when the Three Miles construction was announced.” For the quarter, Gross Profit fell 32% to close at $100.39 million (2017: $147.96 million).

The Company reported a 24% increase in total expenses to $384.16 million (2017: $308.90 million). This was as a result of a 28% increase in General Administration to $347.14 million (2017: $271.48 million) and a 1% downward movement in Selling & Distribution Expenses to $37.02 million (2017: $37.42 million).

Other Income of $19.03 million was recorded for the period up from $2.12 million reported for the same period the prior year. The Company noted that, “the initial invoice for a design and build project in Barbuda was recognized in the last quarter.”

Profit before Taxation and Finance Cost fell by 25% to $88.07 million (2017: $117.65 million).

Net Finance Costs decreased by 22% for the period in review to $13.3 million (2017: $17.14 million). Interest expense for the year end amounted to $22.67 million relative to $15.95 million twelve months earlier. Interest income and other gains amounted to $3.33 million (2017: $1.09 million) and $6.05 million (2017: Other loss of $2.28 million) respectively.

Profit Before Taxation declined by 26% for the year-end to close at $74.77 million (2017: $100.51 million). No taxes were recorded for the period. Net Profit for the year-end amounted to $74.77 million (2017: $100.29 million).  Net Profit for the quarter was reported at $2.28 million compared to $50.28 million for the corresponding quarter of 2017.

Earnings-per-share (EPS) for the year end amounted to $0.58 compared to $0.78 in 2017, while for the quarter the EPS amounted to $0.02 versus an EPS of $0.39 in 2017. The number of shares used in our calculations is 129,032,258 units. Notably, CAC’s stock price closed the trading period on December 28, 2018 at a price of $16.90.

Management noted that, “CAC was awarded a design contract for the first houses of a development project for high net worth individuals on the island of Barbuda. The project has the potential to generate additional revenues as the development proceeds to make this a significant contributor to CAC’s future expansion in the Caribbean region.”

In addition, “The CAC Foundation continues with the technical training program which to date has started 42 trainees. Unfortunately, this program was also disrupted by the road construction, but rented another facility and will continue to press to achieve the goal of training 100 persons by March 31, 2019.”

Balance Sheet Highlights:  

As at October 31, 2018, the Company reported total assets of $1.04 billion, a 6% increase when compared to $985.21 million a year ago. This was as a result ‘Inventories’ which increased 76% to $367 million (2017: $208.39 million) and ‘Property, Plant and Equipment’ which rose 14% to $51.85 million (2017: $45.55 million).

Total Shareholders’ Equity as at October 31, 2018 was $487.54 million compared to $423.09 million a year ago. This resulted in a book value per share of $3.78 compared to $3.28 in 2017.


Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer(s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this research report.

Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.