The Board of Directors of Goddard Enterprises Limited (“GEL”) is pleased to present the Group’s financial review for the year ended September 30, 2014.
Consolidated Group Revenue and Profit from Operations for the year ended September 30, 2014 amounted to
$954.1 million and $64.7 million respectively, compared with $962.6 million and $46.4 million in the previous year. Earnings per share was 62.1 cents compared with 35.3 cents in 2013.
These results were achieved in spite of the flat economies that we faced across the Caribbean for the better part of the year. Despite some signs of improvement, the Caribbean economies continue to be plagued with high unemployment rates, high debt burdens and challenging fiscal adjustment programmes. In some of the tourism-dependent economies there has been some marginal recovery in stay-over arrivals. According to the Caribbean Tourism Organization, increases have been seen in Grenada (18.6%), Cayman Islands (9.4%), Saint Lucia (6.0%) and Jamaica (1.6%), with Barbados, Saint Vincent and the Grenadines and Saint Kitts and Nevis all showing declines. The Caribbean region overall has experienced slight growth which should help provide some relief to these economies. However, the Caribbean debt crisis and minimal growth in foreign exchange inflows continue to constrict the overall regional economic performance. The Economic Commission of Latin America and the Caribbean has had to revise its 2014 growth rate estimate for the region downward from 2.7% to 2.2%.
Closer to home, the Barbados economy continues to struggle. The Government has implemented fiscal adjustment pro- grammes while unemployment climbed to an estimated 11.7%. Barbados' economic fundamentals continue to be weak. Competitive and other structural shortcomings, and recently announced tax reforms, continue to paint a bleak outlook for the country. Gross public sector debt increased to 109.2% up from 105.2% one year ago. Based on this, no real growth in Gross Domestic Product is expected in 2015.
For the financial year ended September 30, 2014, Group revenue declined by 0.9% over the prior year to $954.1 million, generating a Gross Profit of $356.0 million, down from the prior year by 0.4%. Gross Profit expressed as a percentage of Sales was 37.3%, compared to 37.1% for the prior year. Selling, marketing and administrative expenses totaled $310.0 million, compared to $312.7 million in 2013 representing a decrease of 0.9%. Profit from operations before other gains/(losses) – net increased over prior year by 3.0% to $50.1 million.
Other gains/(losses) – net increased to $14.6 million compared to the prior year loss of $2.2 million representing a 753.2% increase. Income from our Associated Companies decreased by 33.0% to $6.6 million from $9.8 million in the prior year. This decline was as a result of poor performance by Sagicor General Insurance Inc. (“Sagicor”) as well as losses incurred on a recently discovered fraud perpetrated on Globe Finance Inc. (“Globe”).
Turning to the Group Consolidated Balance Sheet, our Working Capital Ratio increased to 1.59 from 1.47 in the prior year mainly due to a reduction in our current borrowings enabled by our improved results. Our Net Asset Value per share stood at $7.92 compared to $7.54 in 2013 representing an increase of 38 cents per share and our closing share price was $6.31 on the Barbados Stock Exchange at September 30, 2014.
Message from the Managing Director
2014 was a transformational year for the Group and the journey has just begun. We have conducted 360 degree behavioural analyses on all of our Executives to gain insight into our management style and culture. This programme is being rolled out to the General Management level across the entire organisation.
We implemented the first tier one Enterprise Resource Planning (“ERP”) System called SAP at Hanschell Inniss Limited (“HIL”). This has been a substantial investment in technology that we hope will lead the way to unifying the distribution business across all companies. This System is expected to improve oversight of our processes and our access to information which will engender better decision making and improved operational efficiencies. We are committed to achieving these benefits as we roll-out this technology across the Group.
We have embarked on a new strategic plan for each of the Catering and Distribution Divisions with clear objectives for growth and return. We have disposed of a number of non-strategic assets in order to strengthen our overall position so that we are poised for growth when opportunities arise. Management has embraced the Economic Profit (“EP”) System employed in the financial year 2014 and is continually looking for ways to increase earnings and streamline their respective balance sheets in order to meet their targets.
As we move forward in what continues to be difficult times for the world economy, we believe our focus on our customers has, and will continue to, guide us through, and will provide the foundation which will fuel the growth and expansion that we hope will follow.
In terms of our Customer Focus therefore, it is the intention of the Group to harness opportunities not only to capture Customer Satisfaction indicators but to use current information systems to enable each Division’s management team to have greater insight into customer needs and purchase patterns. Sales monitoring and measurement have become less overarch- ing and more granular within the companies as we seek to understand the matching of customers and customer groups with product ranges, brand affinity and frequency of purchase. This ability to more accurately analyse sales information will help to build understanding of the motivation for purchase amongst our customer base across the Group.
During these times of economic uncertainty, we need to maintain vigilance on efficiency, productivity and cost containment to continue the improved performance we have begun. Thus, programmes on energy management and investments in alter- native energy systems will be of critical importance as we seek more creative ways to reduce our overall costs to preserve our market competitiveness.
Last but perhaps more importantly, we need to change the mindset and culture of our Group to acting with URGENCY and striving for EXCELLENCE with the end objective of creating shareholder value. We have a number of advantages in our peo- ple, our geographic footprint and our partners, and looking towards 2015, we will continue to build on these core strengths. To these, we will add new competencies in innovation, technology and information systems that enable growth and excellence in execution. We will continue to build an organization focussed on value creation, and a culture where we not
only talk about, but deliver on stakeholder improvement.
The Board of Directors adheres to the belief that good corporate governance is essential to the efficient and prudent operation of the Group’s business. Accordingly, the Board has developed strong corporate governance policies and procedures which are continuously reviewed and strengthened to ensure their soundness in keeping with best practice.
The maximum number of directors permitted by the Company’s Articles of Continuance is fifteen and the minimum is five. The Board of Directors presently consists of nine Members, all of whom, with the exception of the Managing Director, are Non-Executive Directors.
The Board’s mandate extends to the review of management decisions, the approval, implementation and monitoring of the Group’s strategic plan and budget, the consideration and approval of recommendations issuing from its Committees and receipt of progress reports on the implementation of such recommendations, the consideration of managerial reports on the performance of the Group’s operations, the consideration, approval and monitoring of investment opportunities and major capital expenditure, the review and approval of financial statements and their disclosure, the approval of dividends and the review and monitoring of internal controls, risk management and legal and regulatory compliance.
To assist with carrying out its mandate, the Board has established three Standing Committees namely: the Audit Committee, the Corporate Governance Committee and the Compensation and Human Resources Committee. The Charters for each of these Committees can be viewed on the Company’s website: www.goddardenterprisesltd.com. The Members of each Committee are as listed in the Annual Report at page 4 and have also been listed on the Company’s website.
The Directors have declared a dividend of twenty cents per common share on the issued and outstanding shares of the Company for the year ended September 30, 2014, which compares to a dividend of fourteen cents per common share paid to shareholders for the year ended September 30, 2013. An interim dividend of six cents having been paid on August 29, 2014, the Board declared a final dividend of fourteen cents per share on the issued and outstanding shares of the Company at its meeting held on December 9, 2014. The final dividend will be paid on February 27, 2015.
In closing, we take this opportunity to thank our shareholders, customers, suppliers, management and staff for your support and loyalty during the just concluded financial year. As we move forward in a world that has been frought with uncertainty given the prolonged economic recession, we shall continue to count on your support and patronage.