November 15, 2022

Derrimon Trading Co. Ltd (DTL)

Financial Statements for the nine months ended September 30, 2022:

Derrimon Trading Limited (DTL), for nine months ended September 30, 2022, reported trading income of $13.8 billion compared to the $12.20 billion booked for the prior year’s comparable period. The company reported revenues of $4.94 billion for the quarter (2021: $4.14 billion). DTL indicated, “The improved performance being reported is the result of our growth strategy being achieved throughout our companies and business segments. Caribbean Flavours and Fragrances Limited (CFF) achieved one of its highest ever quarterly revenue performance to date while Woodcats International Limited has surpassed its budget and the 2021 financial year performance. Arosa and Spicy Hill contributed moderately to the quarterly outrun with both Marnock businesses in New York improving in the third quarter after a slow start to the first half of the year.”

Cost of sales increased by 10% to $10.79 billion for the period (2021: $9.84 billion). Despite the uptick, Gross profit amounted rose to $3.02 billion relative to $2.36 billion for the prior comparable period, an increase of 28% year over year. Gross profit for quarter, rose 28% year over year to $1.23 billion (2021: $819.96 million).

Other income for the period under review fell 9% to $70.82 million relative to $77.47 million booked in the prior comparable period.

Total operating expenses totaled $2.30 billion for the period under review, representing a growth of 21% on the $1.89 billion recorded in the prior year’s corresponding period. Of this, administrative expenses amounted to $1.90 billion, 20% higher when compared to the $1.58 billion in 2021. Selling and distribution expenses recorded a 27% increase for the period, totaling $398.04 million (2021: $312.43 million). Total expenses for the quarter posted a 29% increase to $872.73 million in 2022 from $677.54 million for the three months ended September 30, 2021. The company noted, “The increased expenses reflect the inflationary environment and rising cost of expenses such as staff costs , other business operating costs such as marketing and brand development and higher utility costs. This period also reflect the full consolidation of our latest acquisitions which were not accounted for in the prior period.”

For the nine month period, finance cost closed at $266.92 million versus the $80.52 million posted in the 2021, a 231% increase year over year. According to DTL this was as a result of, “the Group borrowed additional capital to fund the $932 million acquisition of Arosa, complete the new flagship Select Grocers Store, and to extend the Delect Brand. Additionally, the recognition of IFRS 16 on a quarterly basis is factored. There was further increased capital expenditure in relation to Spicy Hill and Arosa which required additional funding to align them with the group structure and expand their business lines.”

Consequently, profit before taxation grew to $525.23 million compared to $464.946 million in 2021. After incurring tax charges of $43.05 million (2021: $45.16 million), net profit amounted to $482.19 million, a 15% increase when compared to $419.79 million reported for the first nine months of 2021. Net profit attributable to shareholders amounted to $461.75 million compared to $398.32 million recorded in 2021. Net profit attributable to shareholders for the quarter closed at $191.01 million relative to the $128.83 million documented for the third quarter of 2021.

Earnings per share (EPS) for the quarter closed the period at $0.042 (2021: $0.028), while EPS year to date amounted to $0.106 (2021: $0.093). The twelve months trailing earnings per share amounted to $0.102. The total number of shares used in the computation amounted to 4,533,360,670 units. Notably, DTL closed the trading period on November 14, 2022 at a price of $2.07 with a corresponding P/E of 20.25 times.

Balance Sheet Highlights:

As at September 30, 2022, the Company’s assets totaled $13.99 billion (2021: $10.3 billion), 36% more than its value as at September 30, 2021. This was due largely to increases in ‘Fixed Assets’ and ‘Intangible Assets’ which closed at $3.40 billion (2021: $880.78 million) and $1.65 billion (2021: $438.64 million), respectively.

Total Shareholders’ Equity totaled $6.24 billion (2021: $5.76 billion), which translated to a book value of $1.38 (2021: $1.27)

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