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Investor Overview >>> FINANCIAL YEAR 2009/2010 OVERVIEW

The performance of the GEL Group during the year continued to be adversely affected by the global financial crisis and the resultant negative impact on all regional economies. This has led to declining output, with a contraction in tourism, exports and financial and business services, as well as a deterioration in government finances. There are some signs of a modest revival in economic activity in the Caribbean region, but global growth is moving along a weaker than expected performance pace, thereby dampening regional growth prospects in the longer term. The United States of America and other developed economies have returned to a small degree of expansion mode, assisted by unprecedented monetary and fiscal stimuli introduced in 2009 and some rebound in consumer spending and production activity. However, unemployment still remains high and the housing and financial sectors continue to struggle. Governments in some advanced economies have been forced to improve their finances by increasing taxes and implementing other austere measures. Taking the above into consideration, it may well be that global and regional recovery will be very gradual over the coming years.

During the year under review, revenue declined by 1.3% from the prior year. This reflects an 8.0% decline from levels achieved in 2008 before the full effects of the global economic crisis were felt by the Group. Our gross profit percentage increased from 31.5% to 33.4% of sales but this was offset by an increase in selling, marketing and administrative expenses from 26.4% of sales to 28.8%. If, however, for comparative purposes, we eliminate from this year's total those expenses relating to companies which were acquired during the year, the expense level is similar to that of last year. Other gains/(losses) – net increased by $4.3 million due primarily to a one-time gain on a wind-up of a pension plan in Jamaica. Taking the above factors into account, profit from operations (after other gains/(losses) – net) declined by 2.9% to $53.9 million. Finance costs declined from $13.8 million in 2009 to $12.4 million in 2010, caused by a marginal fall in interest rates and a net repayment of long term loans during the year. Our share of income from associated companies increased from $2.2 million to $10.3 million this year mainly due to an improved result in our insurance company, which was attributed to the inclusion of a large realised gain on sale of equity securities.

Income before taxation increased by 17.9% to $51.7 million. Our taxation expense as a percentage of income before taxation decreased from 25.1% to 23.8% and net income for the year increased by 19.9% to $39.4 million. After allocating $11.9 million (2009 – $10.2 million) of net income for the year to non-controlling interests, net earnings attributable to the equity shareholders of the Company increased by 21.5% to $27.5 million. This results in a basic earnings per share of 46.1 cents compared to 38 cents per share in 2009, a 21.3% increase. With a closing share price on the Barbados Stock Exchange of $5.89 (2009 – $6.04) this equates to a price-to-earnings ratio of 12.8 compared to the previous year's ratio of 15.9.

With regard to the Group consolidated balance sheet, our working capital ratio at 1.54 is on par with prior year, reflecting on-going management control over the number of days in our inventories and trade receivables. The total assets of the business are being financed by 35.7% from debt and this is well within prudent financial guidelines, which is approximately at the same level as in 2009. It reflects our decision to finance expansion during 2010 primarily from funds generated internally, as opposed to increasing group borrowings.

Our net asset value per share has reached $7.77 per share, up 33 cents per share from 2009. With our share price trading at $5.89 at the year-end, this differential represents good value for potential investors and hopefully will be reflected in increased trading of our shares on the Barbados Stock Exchange in the coming months. We should also note that our rating has been maintained at Cari AA- by the rating agency CariCRIS, despite these challenging and uncertain economic times.

Dividend Declaration

The Directors have declared a dividend of 18 cents per common share on the issued and outstanding shares of the Company for the year ended September 30, 2010 which compares to a dividend of 16 cents per common share paid to shareholders for the year ended September 30, 2009. An interim dividend of 6 cents per share having been paid on August 31, 2010, the Board declared a final dividend of 12 cents per share on the issued and outstanding shares of the Company on December 30, 2010. The final dividend will be paid on February 28, 2011. A dividend cover of 2.6 times and basic earnings per share of 46.1 cents were achieved for the year ended September 30, 2010 when compared to a cover of 2.4 times and basic earnings per share of 38 cents for the 2009 financial year.

Appreciation

We take this opportunity to express gratitude to our customers for their patronage, our suppliers for their support and to you, our shareholders, for your continued confidence in the Board’s management of the business and affairs of the Company, even in these trying times. We also wish to thank our Group’s management and staff for their service and commitment during the 2010 financial year.