February 14, 2020

Fontana Limited (FTNA), for the six months ended December 31, 2019 recorded a 21% increase in revenues to total $2.32 billion compared to $1.92 billion for the same period in 2018. Revenue for the 2nd quarter went up by 31% to $1.40 billion (2018: $1.07 billion).

Cost of Sales for the period increased 21%, closing at $1.42 billion, up from $1.17 billion reported the prior year, while for the second quarter there was a 31% increase closing at $814.26 million (2018: $619.30 million).

As such, gross profit for the six months amounted to $900.33 million, a 20% uptick when compared to $747.39 million recorded last year. However, gross profit for the second quarter rose by 29% from $451.67 million to $583.92 million for the corresponding period in 2018.

Administrative expenses climbed by 25% for the period, to total $619.14 million versus $496.40 million in 2018, while selling and promotion closed the six months at $57.08 million (2018: $35.56 million). FTNA stated, the increase in operating expenses was “due primarily to the addition of the Waterloo Square location. The grand opening, media launch, lease expenses, staff expenses and other associated costs account for the bulk of the increase. Expenses were also impacted by the adoption of the new accounting standard on leases, IFRS 16, in July 2019.”

As such operating profit saw a 4% increase to $224.11 million relative to $215.44 million booked a year ago. Operating profit for the second quarter ended December 31, 2019 rose 19% to $203.93 million (2018: $170.99 million).

Finance Cost for the six months totalled $38.66 million, a 123% increase when compared to the $17.31 million recorded for the same period last year, while other income amounted to $27.59 million relative to $16.58 million the prior year.

This resulted in profit before taxation of $213.04 million compared to $214.71 million recorded last year, a 1% decline year over year. For the second quarter profit before taxation moved from $161.98 million in 2018 to $194.67 million in 2019.

There was no taxation charge for the six months period ended December 31, 2019, however, Income taxes for the corresponding six months period in 2018 was $39.81 million. Consequently, Net Profit increased by 22% to end the period at $213.04 million relative to $174.90 million recorded the prior financial year. Net profit for the quarter amounted to $194.67 million, a 48% increase compared to $131.86 million booked for the prior quarter of 2018.

Earnings per share (EPS) for the period totalled $0.17 (2018: $0.14). EPS for the second quarter amounted to $0.16 (2018: $0.11). The twelve months trailing earnings per share amounted to $0.28. The number of shares used in our calculations amounted to 1,249,374,825 units. FTNA’s stock price closed the trading period on February 14, 2020, at $ 6.50.

Balance Sheet at a glance:

As at December 31, 2019, total assets amounted to $3.32 billion, up $1.37 billion from $1.96 billion as at the previous year. The increase in total assets was as a result of the increase in ‘Property, plant and equipment’ and ‘Right of use asset’ which closed the period at $789.41 million (2018: $212.26 million) and $887.88 million (2018: nil) respectively. The company mentioned that, “this was due primarily to the increase in fixed assets for the new Waterloo store, as well as the impact of IFRS 16 where the value and liability associated with right of use leased properties are now recognized on the balance sheet.”

Shareholders’ Equity of $1.43 billion was reported (2018: $1.13 billion) which resulted in a book value per share of $1.14 (2018: $0.91).

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