By Al Edwards, Business Co-ordinator
Gleaner Company chairman and managing director Oliver Clarke (centre) is flanked by company secretary Collin Bourne (right) , and director Emeritus Richard Ashenheim, and Professor Gerald Lalor (left). - Norman Grindley /Staff Photographer
FOR THE first three months of this year, the Gleaner Company Limited posted a pre-tax profit of $62 million, compared with $34 million during the same period the previous year.
This is according to the newspaper's financial director, Christopher Roberts, who spoke at the company's Annual General Meeting last week Thursday.
"We are very mindful that this year we will face substantial costs as a result of the Budget and will now have to charge GCT (General Consumption Tax) on the sale of our newspapers," Mr. Roberts told shareholders. "It will now cost the public an additional $75 million per annum just for our newspapers. We will also have to put upfront four per cent on raw materials coming in, and while that is largely a cash flow item, that will cost about $14 million per annum."
He added that "the cash we were getting before when we offered bonus shares has to be considered. We are having a last shot at it, which usually brings in about $20 million. With the devaluation of the Jamaican dollar the remaining nine months will no doubt be a tough year."
Mr. Roberts pointed out that the local currency had depreciated by about 17 per cent this year "but, fortunately, The Gleaner had bought a lot of its newsprint early in the year." Nevertheless, he said, the company was "bracing itself for higher costs later in the year. If you can think that newsprint and ink costs the company $250 million a year, then you can gauge the impact that the devaluation will have on our costs".
FINANCIAL RESULTS
Financial results for the year ended 31 December 2002, show profits after taxation came in at $192.3 million, compared with the previous year's figure of $170 million, a 13 per cent improvement. Of this sum, the parent company contributed $162 million or 84 per cent, with subsidiaries chipping in with $31 million.
The improvement in the parent company's contribution from $133 million to $162 million is quite significant at 28 per cent. In the previous year, the subsidiaries performed better, posting a profit of $38 million, compared to last year's $31 million. The company attributed this to additional costs from the launch of its "" Extra" newspapers in the UK, US and Canadian markets, which are yet to turn a profit, as well as the expansion of its Sangster's Book Store operations resulted in additional cost.
CASH RESOURCES
The Gleaner's cash resources stood at $612 million as at March 31, compared with $635 million at the end of December 2002. This was due in part to the company paying dividends of $35 million and making additional investments costing approximately $24 million. Revenue for the first three months of the year has gone up from the previous year's $470 million to $512 million, an increase of nine per cent. The Gleaner was conservative with its net book value, placing it at $1.38 billion. However, the market was a little more generous with a figure of $1.86 billion. The way that market value is arrived at is by multiplying the stock price at the end of the year by the number of units issued.
Mr. Roberts said the company was not entirely happy with its return on shareholders' funds. The Group's average net worth in 2002 was $1.31 billion, up on the 2001 figure of $1.19 billion. Percentage return after taxation on net worth was 15 per cent last year, minimally up on the 2001 figure of 14 per cent. In order to improve this performance, the Group is currently working on a five-year strategic plan.
Dividend payments for the year came to $60 million, compared with a profit after tax of $192 million, making a 31 per cent dividend payout. The Group spent $87 million in capital expenditure, a significant increase on the previous year's figure of $46 million. This year, the Group has budgeted to spend $75 million.
