GraceKennedy Limited reported mixed results in its interim report to stockholders for the quarter ended June 30, 2006. The Group's revenues were $17,193.5 million an increase of $818.5 million over the corresponding period of 2005. However, the Net Profit Attributable to Equityholders moved from $967.3 million to $898.6 million a decrease of $68.7 million or 7,1% over the same period in 2005.

The Food Trading Division reported reduced profits for the period compared with the similar period in 2005. The can be attributed to a softening in consumer demand. However the situation showed some improvement in the last two months

The Division is concentrating its efforts on cost reduction and revenue growth. One such effort designed to increase revenue flows is the introduction of a range of new products in both the Canadian and Jamaican markets. Among these are Grace Jus Soy soya milk in four flavours, Grace Fritters Mix, Johnny Cake Mix and Cornmeal Pudding Mix. Initial responses to these products have been good.

The roll-out of the new SAP software in all the companies within the Division was completed and this is expected to result in increased productivity.

As was expected, the downturn in the construction industry caused by the shortage of cement had a negative impact on the performance of Hardware & Lumber Limited. The situation should improve with the return of adequate cement supplies to the industry.

Hi-Lo experienced improved sales performance when compared to the prior year. It achieved a reduction in expenses as a result of its cost containment efforts. It has continued to expand and upgrade its network with the official launch of its Port Maria branch and the upgrading of Hi-Lo Mandeville.

An agreement to sell Medi-Grace Limited was signed in July 2006. Other entities in the Division - Fidelity Motors, Versair In-Flite Services and Industrial Catering Services all reported satisfactory results.

The Financial Services Division experienced a challenging half-year as profits were below expectations. First Global Bank Limited and First Global Financial Services Limited are meeting the challenges in a number of ways, including the introduction of new products and services in 2006-2007 to meet their client's needs. Jamaica International Insurance Company Limited and Allied Insurance Brokers Limited performed reasonably well during the period under review. Both companies are actively introducing innovation in technology, which should assist in maintaining a leading edge.

During the quarter an agreement was reached with Guardian Life Limited to purchase GraceKennedy's interest in MedeCus Health Insurance Agency and MedeCus Health Insurance Company Limited. The sale was concluded on June 19, 2006. The sale price was $74 million fro GraceKennedy's 50% shareholding.

Satisfactory results were reported by the Information Services Division. This can be attributed to effective cost containment measures. GraceKennedy Money Services has recently started operations in several islands representing Western Union in Antigua, St. Kitts, Anguilla and Monserrat. On June 22, 2006, Western Union introduced its Direct to Bank service in Jamaica. Initial response met the Division's expectations and there is every reason to believe that this new service will be well received.

At GraceKennedy's Extraordinary General Meeting the Company approved amendments of the articles of association of the Company to facilitate the buy back of its shares by the Company. At the same time, the shareholders authorized the Directors of the Company to take decisions from time to time to buy back up to 2.5% of the shares in issue over a period of three years.

On July 24, 2006, Mr. Erwin Burton was appointed the new Chief Operating Officer for the Retail & Trading Division, in addition to his current responsibilities as Chief Operating Officer for the Food Trading Division. Mr. Burton succeeds Mr. John Mahfood who will be concentrating on the turnaround of Hi-Lo Food Stores (Jamaica) Limited in which he currently holds the position of Chief Executive Officer. Mr. Mahfood will continue as a Director of GraceKennedy Limited.

Mr. Joe Taffe has been appointed as the new Chief Operating Officer for the Information Services Division in addition to his current responsibilities as Chief Operating Officer for the Financial Services Division. Mr. Taffe succeeds Mr. Brian Goldson who has resigned from the company and the Board of GraceKennedy Limited to pursue his personal interests external to the GraceKennedy group. Ms. Joan-Marie Powell has been appointed Managing Director of GraceKennedy Remittance Services Limited.

The Birthright Programme introduced three years ago continued this year when six young adults of Jamaican parentage were chosen from the United Kingdom, Canada and the United States of America to participate in activities designed to familiarize them with Jamaican society. It is a fully paid cultural and professional internship geared towards highlighting aspects of Jamaican culture while furthering the career path of the participants. GraceKennedy has been gratified and encouraged by the enthusiastic positive response of all the participants to date.

Posted: August 2006