Guardian ( Trinidad and Tobago )
12 October 2023 ( Page 15 )
PBS grows its Caribbean footprint
By Felix Pereira
Following the September 2021 acquisition of PBS
Technologies, Productive Business Solutions Ltd
(PBS) saw its 2022 revenue grow by 39.3 per cent
while its net profit to shareholders expanded by
42.4 per cent. Also, PBS’s presence in Trinidad,
Barbados and Guyana experienced strong
improvements.
PBS is part of the Musson/ Facey Group and sells
printing equipment, ATM machines, and allied
equipment. It also provides data analytics, cloud
solutions and develops software and other
technology solutions. Let us now review PBS’s
results for the year ended December 2022. All
currency references in this article are to US
dollars.
Assets increase
Total assets expanded by 12.5 per cent from $337
million to $379.1 million (TT$2.56 billion).
Intangible assets slipped from $104.8 million to
$101.8 million.
In 2021, that asset was boosted by $87 million
owing to the acquisition of PBS Technology. In
2022, the reduction mainly reflected
amortisation and impairment charges.
Similarly, after experiencing a significant boost
from both acquisitions and additions in 2021, the
2022 figure for property, plant and equipment
slipped from $31.6 million to $29.5 million.
After deducting unearned income, lease
receivables increased from $3.5 million to $8.5
million.
Here, the current amount settled at $1.8 million
from $1.7 million while the non-current element
advanced from $1.8 million to $6.7 million.
Long-term receivables jumped from $0.55
million to $4.44 million. The largest current
component was $4.06 million from Banco
Nacional de Costa Rica, which represents various
guarantee deposits, which earn 2.1 per cent
interest and will mature between January 2024
and December 2025. Notably, 2021 staff loans of
$0.41 million were cancelled in 2022.
Contract assets rose from $15 million to $16.3
million with the current portion advancing from
$8.65 million to $9.43 million while the longterm element closed at $6.85 million from $6.39
million.
The Panamanian pension plan asset increased
from $114,000 to $528,000. Inventories grew
from $39.7 million to $49.5 million.
Gross finished goods climbed from $42.9 million
to $50.3 million while gross goods-in-transit
advanced from $6.6 million to $9.7 million.
Meanwhile, provision for obsolescence registered
at $10.5 million from $9.8 million.
Trade and other receivables expanded from $83.5
million to $99.2 million. Net trade receivables
swelled from $69.4 million to $86.6 million while
prepayments rose from $2.2 million to $2.4
million, however, “other” fell from $11.95
million to $10.15 million.
Included in the latter was $3.56 million in
advances to vendors and $0.503 million
representing short-term deposit as guarantee of
rental contracts.
Cash and cash equivalents expanded from $21.7
million to $31.2 million. Of the latter, $11.7
million was denominated in US dollars and $5.5
million was held in TT dollars.
Liabilities increase
Total liabilities advanced by 8.1 per cent from
$252.76 million to $273.26 million.
Borrowings fell from $145.6 million to $137.1
million with the current portion declining from
$32.8 million to $28.7 million while the noncurrent element closed at $108.4 million from
$112.8 million.
Debt in US dollars fell from $85.1 million to $82.6
million while TT$ debt declined from $40.8
million to $34.7 million, however, Jamaican
currency obligations increased from $19.2 million
to $19.7 million.
Included in the total debt were redeemable
preference shares valued at $15.425 million,
which will mature on July 31, 2024. In September
2022, PBS issued two million perpetual
cumulative redeemable preference shares in both
Jamaican and US dollar denominations, which
represented a net value of $17.234 million; those
liabilities are shown under equity (below).
Trade and other payables expanded from $47.4
million to $65.7 million. Accruals declined from
$11 million to $10.5 million while “other”
retreated from $10.7 million to $8.3 million.
Conversely, under Surepay contracts closed at
$8.8 million from zero while trade payables
climbed from $24.2 million to $36.6 million.
Contract liabilities are advances received from
customers with a promise to deliver equipment
or supply services; those obligations surged from
$13.8 million to $25.6 million.
Retirement benefit obligations rose from
$599,000 to $991,000.
Here, the Panamanian plan increased from zero
to $348,000 while the El Salvador scheme
advanced from $501,000 to $538,000 and the
Nicaraguan fund closed at $105,000 from
$98,000.
Contingent consideration payable declined from
$1.8 million to $0.9 million. This represents the
present value of future earn-outs related to the
acquisition of High- Tech in El Salvador.
Other long-term liabilities fell from $1.5 million
to $1 million; of the latter, $895,000 is an accrual
for any possible loss from lawsuits.
Equity improves
Total equity climbed from $84.2 million to $105.9
million. After excluding non-controlling
interests in its Honduran subsidiary, that figure
grew from $83.3 million to $104.9 million. When
we exclude the new preference shares (above),
adjusted shareholders’ equity increased from
$83.279 million to $85.638 million.
Retained earnings expanded from negative $2.63
million to positive $233,000. Here, the net profit
of $8.39 million boosted the brought forward
balance while dividends of $5.525 million lowered
the ending figure.
Other reserves improved from negative $19.9
million to negative $18.4 million. That upgrade
benefited from $1.43 million in currency
translation differences and $63,000 from
actuarial gains on termination benefits.
Equity share capital remained at $105.782 million
while the number of shares outstanding was
stable at 186,213,000; consequently, the adjusted
book value per share improved from $0.45 to
$0.46.
Revenues and profit
Total revenue increased by 39.3 per cent from
$224 million to $312 million. However, direct
expenses climbed by 47.5 per cent to reach $214.2
million from $145.2 million. Consequently, the
gross profit increased by only 24.2 per cent from
$78.8 million to $97.8 million.
Those relationships reveal that the gross profit
margin fell from 35.2 to 31.4 per cent. Driving
that reduction was the increase in the sale of
goods, which rose from $156 million to $234
million; those products carry a lower margin than
either services or leases.
Also, applicable staff costs increased from $9.4
million to $13.7 million.
Helped by greater interest income, other income
grew from $0.74 million to $2.6 million. Selling,
general and administrative expenses advanced
from $61.5 million to $70.6 million. Here,
influenced by the late 2021 acquisition, staff costs
increased from $27.5 million to $34.6 million
while commission rose from $4.08 million to
$5.63 million.
However, depreciation fell from $13.2 million to
$8.3 million but amortisation of intangible assets
climbed from $1.75 million to $3.15 million.
Finally, “other” expenses increased from $5.1
million to $7.5 million.
Impairment losses on financial instruments fell
from $0.73 million to $0.39 million. These
movements saw the operating profit expand from
$17.3 million to $29.5 million.
Finance costs surged from $10.2 million to $17.7
million. The foreign exchange result reversed
from a gain of $0.4 million to a loss of $1.6
million while core interest expenses surged from
$10.6 million to $16.1 million. Consequently, the
pre-tax profit improved from $7.1 million to
$11.8 million.
Barbados-registered, PBS now operates under the
Companies Act Cap. 308; consequently, the
standard tax rate remained at 5.5 per cent while
the effective tax rate increased from 21.3 to 28.1
per cent and the tax contribution rose from $1.52
million to $3.31 million. Therefore, the current
year’s net profit advanced from $5.6 million to
$8.5 million.
After removing the profit owed to noncontrolling interests and allocation to preference
shareholders, the profit attributable to equity
shareholders registered at $7.9 million versus
$5.5 million.
Those results reveal current basic EPS of 4.22
cents versus 3.83 cents for 2021.
Geographic contributions
External revenues generated by Central American
subsidiaries grew by 24 per cent, while the
adjusted EBITDA contribution improved by 19 per
cent. Revenues from El Salvador increased from
$44.4 million to $59 million while Guatemala’s
contribution surged from $26.4 million to $45.8
million and Panama’s revenues climbed from
$13.4 million to $18.7 million. Conversely, Costa
Rica’s revenues fell from $28.7 million to $24.1
million.
The Caribbean region delivered revenue growth
of 73 per cent while EBITDA jumped by 88 per
cent.
Here, Guyana’s revenues surged from $11.2
million to $33.2 million, while Trinidad’s sales
expanded from $19.9 million to $28.1 million.
Further, Barbados’ sales climbed from $8 million
to $12.2 million and Jamaica’s revenues improved
from $8.3 million to $9.5 million.
Half-year results
During the second quarter of 2023 PBS completed
the acquisition of Infotrans Group Holdings BV,
which operates in the Dutch Caribbean, Guyana
and Columbia.
For the six months ended June 2023, PBS
recorded revenues of $160.7 million versus $157.6
million and delivered gross profit of $48.9
million versus $46.9 million.
The improved profit margin was attributed to a
shift to higher margin sales.
Assisted by lower finance costs and taxes, the
profit attributable to shareholders surged from
$2.32 million to $4.32 million. Those results
revealed current EPS of 2.32 cents versus 1.25
cents.
Total assets grew to $378.9 million while adjusted
shareholders’ equity expanded to $93.694
million.
Consequently, the book value per share improved
to $0.50.
Investors’ returns
Over its fiscal year on the USA segment of the
JSE, PBS’s share price increased by 65 per cent
from $1.06 to $1.75 as of December 30, 2022. This
year, the price closed at $1.95 on October 4.
Annual dividends increased from 1.09 cents to
2.69 cents.
At the recent price of $1.95, the dividend yield is
1.38 per cent.
That price also displays a strong premium of
$1.45 or 190 per cent greater than its June 2023
book value of $0.50 and, using trailing EPS of 5.29
cents, exhibits a robust P/E multiple of 36.9.
In the next article, we will look at the 2022
results of Seprod Ltd