THE HOYOS FILE – Have cash, will carry on investing

ONE?OF?BARBADOS’ OLDEST trading firms, Cave Shepherd & Co. Ltd, posted another difficult year, although not as gruelling as the previous one, according to its most recent annual report.
But the company is sitting on a cash pile of BDS$40 million, leaving it ready to aggressively undertake new ventures it is currently evaluating as soon as the time is deemed to be right. 
Chairman Geoffrey Cave and CEO John Williams noted in their directors’ report that things did not improve in the international economy as quickly as they had been hoping, and the group recorded a net loss attributable to shareholders of $2.57 million, resulting in a loss of 14 cents per share. 
However, the outturn was an improvement on the previous year’s losses of $4.24 million. But the results would have been better had the group not chosen to write down inter-company loans and goodwill totalling $6 million, the directors said.
“We do not foresee any write-offs of this magnitude in 2011 and so the coming year’s results should not only be better than 2010 but should be a fairer reflection of the group’s core operating results,” reported Cave and Williams.
And while the trading subsidiaries and associates had shown some improvement despite a continuing difficult economic environment, “our businesses in financial services, Signia Financial Group and Fortress Fund Managers, maintained their strong performance whilst DGM Bank & Trust produced a much improved result compared to prior year”.
Moreover, the group’s cash position improved from $31.1 million to $41.5 million “as we continued our efforts to preserve cash during the recession to enable us to take advantage of opportunities that may become available,” they said. 
Interim and final dividends were maintained at ten cents per share.
In retail, Duty Free Caribbean Holdings (DCFH), in which Cave Shepherd and Co. Ltd owns a 40 per cent stake (the other 60 per cent owned by Dufry International AG), had another loss-making year, close to $2 million of which was reflected in Cave Shepherd’s accounts on its portion of revenue of nearly $93 million.
But the directors say they “remain confident about the future” of Colombian Emeralds International (CEI) as there is an aggressive growth plan” in place for the chain of upmarket jewellery stores.
CEI continued to be a “vital component of the Cave Shepherd Group’s business,” they said, with CEI revenues totalling over $230 million from 50 stores in nine countries.
In financial services, with investor confidence on the rise again, Fortress Fund Managers Ltd enjoyed a better outturn than prior year, the directors reported. 
Assets under management passed the half billion dollar mark for the first time.
Signia Financial Group, in which Cave Shepherd is a 40 per cent shareholder along with Grace Kennedy and United Insurance, had “another excellent year, delivering improved profits even as interest margins shrank,” with customer loans increasing by 21 per cent. Signia contributed $1.3 million in profits to the group last year.
DGM Bank & Trust, the group’s associate company in the offshore sector (40 per cent stake), also had a better year, sending just over $600 000 to Cave Shepherd’s bottom line.
 
Profit
Among Cave Shepherd’s other associates earning a profit last year were Bridgetown Cruise Terminals (20 per cent stake), which contributed nearly a quarter of a million dollars to the bottom line, unfortunately well under the $463 000 earned in the previous year, and whose current lease at the Bridgetown Port expires in 2013; and the CS&C Joint Venture (16 per cent), owners of the Cave Shepherd building in Bridgetown and the Carter building at Wildey, which contributed just over $7 00 000 to company coffers.
Management fees also brought in $6 million in revenue.
The directors conclude on an optimistic note to the effect that the company is not sitting idly by as the winds of recession rage or abate. 
“We are actively looking for new business and investment opportunities, including non-traditional areas, in pursuing our strategic objectives, said the directors, and when they materialized, the board would be “deploying some of the company’s excess cash resources into higher earning investments which will generate ongoing and sustainable earnings in the years ahead,” they said.
 
Pat Hoyos is a long-standing journalist and publisher of the ?Broad Street Journal.