GraceKennedy

The GraceKennedy Group has reported a 54% increase in profits over 2008 despite a challenging year in which revenues were below expectations, and the company suffered a loss from trading irregularities reported at its subsidiary, First Global Bank.

For the period ending December 31, 2009, the Group achieved revenues of $57.4 billion (2008: $53.5 billion), an increase of $3.9 billion or 7%. The Net Profit Attributable to Shareholders increased by $900 million over the corresponding period of 2008, moving from $1.67 billion to $2.57 billion, an increase of 54%. This represents earnings per stock unit of $7.82 (2008: $5.10) an increase of 53%. In US dollars, earnings per stock unit was 8.83 US cents (2008: 6.97 US cents) an increase of 27%. 

The $1,768 million loss at First Global Bank came to light during the third quarter of the year. The losses arose from unauthorized and undisclosed trading activities in US Government Treasury Bonds by a senior employee of the subsidiary, First Global Bank Limited, who was subsequently dismissed. Of that amount, $926 million related to financial year 2008, and $842 million to year 2009, and, in accordance with International Financial Reporting Standards requirements, the 2008 financial statements were restated, and the losses were reported in the respective years. The bank has taken action to ensure that risks surrounding possible similar losses have been eliminated and has implemented additional measures necessary to ensure that there is no recurrence. 

GK Foods and GK Financial Group had mixed results during the fourth quarter with both divisions experiencing reduced demand for products and services as a result of the global recession. However, GraceKennedy’s Chairman & CEO Douglas Orane noted that Group has responded by launching a wide range of new products to give consumers a greater choice, while focussing on reducing internal costs. 

Mr. Orane also reported that the company has retained the services of an international advisory firm to carry out a review of the Group’s internal controls, risk management and governance processes. This major project to strengthen control systems within the Group, will continue through 2010. 

The Chairman also provided an update on GraceKennedy’s new Distribution Centre in Spanish Town which was completed in December 2009, noting, “At the time of this report we have started to move inventory into the building. Deliveries for the export markets will commence mid February 2010, with complete service to the domestic market as of April 2010.”

GraceKennedy Limited made a second dividend payment on December 18, 2009, of 65 cents per stock unit, or a total of $214.3 million to shareholders on record as at November 27, 2009. The total dividend payment for 2009 was, therefore, $378.8 million compared to $378.3 million for 2008. 

Related Documents

• Twelve Month Interim Report (PDF)