Company Overview

Berger Paints Jamaica Limited Stated Mission as committed to provid[ing] the best quality
protective coatings and excellent customer service via superior technology and well trained,
highly motivated human resource-thereby creating an environment where we continue to be the
preferred business partner, leader in the market-place, preferred employer, and outstanding
corporate citizen, thus constantly satisfying the needs of all our stakeholders.
Berger International Limited was founded by Lewis Berger, German colour chemist, in London
in 1760. However, the company only started manufacturing in the Caribbean in 1953, in Jamaica,
Barbados and Trinidad and Tobago. Berger Paints Jamaica is a subsidiary of Berger International
Limited, itself a subsidiary of the Asian Paints Group, a conglomerate which ranks among the
top four decorative coating companies in the world.
Despite being in Jamaica since the early 1950s, Berger Paints Jamaica Limited became a
publicly listed company on the Jamaica Stock Exchange in 1992 and has approximately 6,000
local shareholders. The manufacturing company therefore is a seasoned company in the paint
industry. It offers protective coatings, architectural and wood finishes and marine paints. It also
provides primers, stains and varnishes, furniture finishes, wood preservatives, road marking
paints, enamels, light and heavy duty industrial finishes. Since its existence in the Caribbean,
more specifically, in Jamaica, Berger has experienced innumerable success. Its success has been
attributed to the development and manufacture of paint products which are technologically
correct [and] environmentally friendly for the harsh tropical conditions.
Despite experiencing tremendous success in the past its growth has become stagnant due to The
current economic situation in the country [which] has put a lot of pressure on [the] supply chain
in terms of increased prices of raw material, because of the depreciation of the Jamaican dollar
and tightening in the supply of foreign exchange" (Turra). The economic situation has also
resulted in a shift in demand as a result of decreasing disposable income. The economic
downturn has had an adverse impact on sectors, such as the automotive and construction, critical
to the paint industry. With many of these sectors still struggling today, in a stagnant market,

Berger has aggressively sought out foreign markets, enjoying tremendous success. Berger's
strongest export market is Belize, due to the similarities with the Jamaican market, where it
claims more than 30 per cent market share.
Berger Paints remains the largest paint-manufacturing company in the English-speaking
Caribbean and produces more than 95 per cent of its over 200 products locally. These products
are all non-toxic and environmentally friendly. The company established the first resin plant in
the English-speaking Caribbean - West Indies Resin Products - to manufacture alkyd resin, a key
ingredient in making oil-based gloss paints. A laboratory was built to conduct paint research and
development according to tropical specifications. It is out of that laboratory, that leading paints
such as Berger 303 Flat Emulsion, 404 Gloss Oil, Everglow Low Sheen Emulsion and Magicote
Flat Emulsion emerged. The company also launched the first locally manufactured automotive
paint, Viton.
One of Bergers strategic commitments is to maintain the quality of its products on a consistent
basis. The attainment in the late 1990s of the international benchmark of quality issued by the
International Standards Organization by achieving ISO 9002 certification is additional assurance
of quality of product and service. The delivery of innovative, cutting-edge products and services
have been the hallmarks of success for Berger Paints, ensuring the company's continued
dominance in the local market.
Berger Paint Jamaica also focuses on protecting Jamaicas natural environment by reducing the
environmental impact resulting from the production and use of its products. Consequently, they
were the recipient of the 2014 Best Environmental Management programme, which was awarded
by the Jamaica Manufacturers Association for the second successive year.

Quality and Environmental Policy Statement

The Berger team is committed to:

The provision of products and services of the highest quality with customer satisfaction
our primary goal

The continuous improvement of the effectiveness of our quality and Environmental

Management Systems

The establishment of quantifiable objectives and targets for measuring our processes

The reduction of negative impacts on our environment, compliant with applicable

regulations and legislations

The protection and preservation of our environment and to satisfy all our stakeholders.

Directors and Manager of Berger Jamaica Paint

Board of Directors
Mr. Jalaj Dani
- Chairman

Management Team
Arnold Bloomfield - Operations & Personnel

Mr. Mustafa Turra

Manager

- General

Manager/Director
Mr. Tom Thomas

Mr. Newton Abrahams Sales Manager

- Director/Regional

Ms. Gladys Miller Regional Technical Manager

Head

Mr. Huron Gordon Financial Controller /

Hon. Michael Fennell - Independent Director

Company Secretary

Mr. Warren McDonald - Independent Director

Mr. Trevor Lloyd Marketing Manager

Mr. Milton Samuda

- Independent Director

Mr Pokar Chandiram

- Independent

Director
REGISTERED OFFICE:
Berger Limited Jamaica, 256 Spanish Town Road, Kingston 11, Jamaica, W.I.
Tel: (876) 923-6226
Fax: +1-876-923-5129
Website: www.bergeronline.com/corporate/jamaica.aspx
Email: bergerja@infochan.com

Corporate Social Responsibility

As the leading paint manufacturer in Jamaica, Berger Paint Jamaica Ltd has a duty to maintain
good corporate and social responsibility practices for the benefit of their colleagues, customers,
suppliers and the society in general. Berger continues to support national development at the
highest levels through outreach initiatives in education, sports, environmental upgrade and social
initiatives. Some of the programmes that they are involved with are as follows:
School feeding programme
Berger has contributed to infrastructural development and nutrition programmes at the Riverton
Meadows and Callaloo Mews Early Childhood Development centres - institutions situated in the
communities adjoining its manufacturing plant. This, they have achieved by partnering with
GraceKennedy limited.
Education
Berger Paints Jamaica Ltd has rewarded exceptional performers in education by sponsoring the
Annual Roll of Honour Award, since 1993, by the Jamaica Teachers' Association (JTA) to
outstanding educators. To recognize Berger Paints significant contribution to education, the JTA
awarded the company the JTAs Partners in Education Award.
Additionally, the company finances a Master of Architecture scholarship, tenable at the
Caribbean School of Architecture at the University of Technology, Jamaica.
Sports
Berger has made major sports contributions through its long-standing sponsorship of the Jamaica
Netball Association and the Gibson Relays. The company has also been sponsoring the Jamaica
Basketball League for 30 years.
Beautification Projects
The company is active in various beautification projects across the island. For example, Berger
paints in collaboration with the Ministry of Local Government, were instrumental in upgrading
the Portmore Fire Brigade Station.

Corporate Governance
Corporate Governance is an essential element of the operations of Berger Paints Jamaica. The
responsibility of ensuring the continuance of good governance is a charge of the Board of
Directors and the management team. The corporate governance framework is institutionalised so
as to ensure greater transparency, protect shareholders interest as well as to enhance the
financial performance of the company. The directors are directly responsible for overseeing
investments, operations and internal controls, financial reporting and compliance.
In carrying out its functions, the board ensures that the Company is compliant with the laws of
the land, the rules of the Jamaica Stock Exchange, Junior Market and the policies and procedures
of the company.
The Audit Committee was established to assist the board in the above-mentioned functions. The
Board and the Audit Committee meets frequently (6 times for the financial year 2013-2014). The
Audit Committee, chaired by Mr. Michael Fennell, is guided by the companys established terms
of reference to assist the Directors in the companys performance relating to:

The Companys performance

Overseeing the relationship between the Company and its external Auditors

The review of the effectiveness and adequacy of the Companys internal and financial
controls

The review of the external audit plans and subsequent findings

The review of the effectiveness of the services provided by the external Auditors and
other related matters

Litigation reviews

The review of compliance reports

Competitive Analysis
Swot Analysis for Berger Paint Jamaica
Berger Paints Jamaica Limited delivers quality paint at affordable cost to suit the needs of the
Jamaican market. The company imports the raw materials, add flavours and packages them for
distribution as well as for export.
Strengths

Market leader

Differentiation of new products Berger boasts a wide variety of products.

Capacity expansion

Manufacture of high quality paint by utilizing international best practices

Reduced labour cost
Customer oriented Berger has formulated products that are environmentally friendly
High growth rate
Innovative product research
Large use of technology

Excellent brand of products

Weaknesses

Overdependence on decorative segments

Pricing power limit in industrial quoting
Cost
Future profitability
Scarcity of raw material The paint industry is raw material intensive, consequently, if
raw materials are scarce it will affect the viability of the company

Opportunities

Increase in tourist arrival

Increase in remittances
Marine life
Increase in real estate or projects

Growing demand
New market

Threats

Foreign exchange rates are volatile and can lead to incredible losses
Increase in raw material cost this can also be directly related to the foreign exchange

rates. As the Jamaican dollar loses its value, then the company is faced a decline in profits
Stiff competition
Increasing rates of interest
Liquidity risk
Tax changes
Lowering profitability
Decline in disposable income due to increased unemployment
Porters Five Forces of Competitive Analysis

Berger is currently facing competition from the following companies: BH Paint,

Sherwin Williams, Omega Paint, Edgechem, Diamond Paint and Other companies that import
various brands of paint. Porters five forces of competitive analysis are used to analyze
competition within an industry and the steps that can be employed to create a competitive
advantage.
Threat of new entrants
As it relates to the painting industry, the barrier to entry is relatively high thus making the entry
of new competitors relatively low. Some of the reasons for this includes: government policies as
well as customer loyalty to brand Berger; which has been in Jamaica for over 60 years. With the
current economic condition of Jamaica being poor, any new competitor would have to be a large
manufacturing paint company that can take on the risk of investing in such an unstable economic
climate.
Brand image is also of importance when considering the barrier to new entrants. Consequently,
Berger Jamaica has continuously been rebranding and recreating its image, in order to increase
the barrier.

Threat of substitute products or services

Where awareness about paint is low, for example in rural areas, then the threat of substitute of
products will be higher. The use of glass structures in malls and offices also represent a substitute
which would reduce the need for paint. Additionally, white cement and whitewash represents
some of the substitutes that Berger has to contend with. Subsequent to the threat of various
substitutes, Berger Jamaica has diversified its product, creating paint for various types of
materials and surfaces, thus reducing the threat of substitute products.
Bargaining power of customers
Most consumers do not have sufficient knowledge of the quality, properties and benefits of a
particular paint. Consequently, there would be a high reliance on the opinion of contractors/
painters; thereby becoming strong influencers. In this scenario, the bargaining power of the
customer is relatively low. However, in the industrial sector, the customers have more buying
power, as there are fewer customers with greater demands; losing a customer to a competitor
would be devastating in this scenario. This can be overcome by offering deals as well as
specialized services.
Bargaining power of suppliers
This factor is said to be high as the paint industry is raw material intensive. Berger however, gets
its raw material from the parent company; consequently, they are able to benefit from significant
savings from group deals. As such the bargaining power for suppliers won't be a major factor.

Intensity of competitive rivalry

Berger Paint faces competition from the various paint manufacturers that operate within the
island. To stay ahead of the competition, Berger Paint focuses on product differentiation;
consequently, rivalry among competitors is seen as low.

Ratio Analysis
Limitations to the Ratio Analysis
In conducting our ratio analysis we were faced with the following limitations:

We compared Berger Paints to other companies in the manufacturing industry such as

Seprod Limited, Salada Foods Jamaica Limited and Jamaica Broilers Group. These
companies are not ideal industry comparisons due to their core activities are dissimilar.

Financial accounting information is affected by estimates and assumptions and

companies use different accounting practices. For example, companies may use different
inventory valuation methods (LIFO vs FIFO). These practices may impair comparability.

Ratio analysis explains relationships between past information while users are more
concerned about current and future information.

The ratios may be affected by seasonal factors that are experienced by the different
companies, for example, Berger Paints high sales period may be different from that of
Saladas.

The companies have different reporting periods and profits may have been affected by
inflation.

A company may have some good or bad ratios in a particular period making it difficult to
tell whether the companys performance is strong or weak in comparison to other
companies.

Evaluation of Short-term Liquidity using Current and Quick Ratios

Liquidity ratio is a class of financial metrics that is used to determine a companys ability to
repay its short-term debt obligations (Investopedia, 2014). This is done by using the companys
current assets to cover their current liabilities. The two ratios that were used in this analysis are
Current and Quick ratios. Generally, the higher the value of these ratios, the larger the margin of
safety that the company possess to cover short-term debts.
Quick Ratio

In analysing Berger Paints liquidity over a 5 year period, the general trends for both current and
quick ratios tend to increase. In 2014, the current ratio has increased to 2.31:1, while the quick
ratio 1.07:1. This means that Berger Paints is a very solvent company and over the 5 years shows
consistency in their ability to cover their current liabilities. In analyzing the quick ratio, which
removes inventory, its calculation shows that aged receivables, cash and other current assets are
available to cover current liabilities.
When their current ratio values were compared with those of the industry, Bergers current ratio
value was 0.28 times higher than the market in 2014. This highlights that Berger Paint is capable
of taking care of their current liabilities.
In addition, when Bergers quick ratio values were compared with those of the market, only 2014
figure was in line with the market value of 1.09. However, previous years quick ratio values for
Berger were approximately half the market ratio value.

Efficiency Ratio
To analyze the efficiency of Berger Paint, the following ratios were used: debtors turnover, days
sales outstanding, creditors turnover, payment period, inventory turnover and inventory holding
period. With the exception of the inventory rate turnover, the efficiency ratios indicate that the
company has been improving its efficiency for the review period 2010-2014. This also means
that the company has been improving its efficiency despite the poor economic conditions. When
the efficiency ratios of Berger are compared to the industrial average it reveals that Berger is not
operating as efficiently as others within the industry.
Table X Berger Paint Jamaica Ltd Debtors Turnover
Debtors Turnover is used to show how effective a company is at collecting debt. Higher ratios
suggest frequent collection of its receivables. Berger Paints Debtors turnover ratio showed that
they can convert its receivables (payments due to them) into cash between 6.01 - 7.38 times for
the period 2010-2014. Berger Paints debtors turnover increased from 6.85 in 2010 to 7.15 in
2014; it therefore shows that Berger Paint has been improving the efficiency of its debt
collection. Even though Berger has been improving its debt collection, it was performing below
the industry average of 9.88. Berger Paint has been on a continuous path of improvement, in

ollecting its debts; this would also have a positive effect on the cash flow of the company. In
comparison to the Industry Average, further improvement can be realized in how frequent Berger
collects its debts.
Table X Berger Paint Jamaica Ltd Days sales Outstanding
Days Sales Outstanding assesses the amount of days the company takes to convert sales to cash.
It is in the companys best interest to collect cash from its credit sales as soon as possible so as to
increase their cash flow and liquidity. Throughout the review period, Berger Paints collection
days fluctuated. The shortest collection time was experienced in 2013 with collection period
being, 49 days while 2011 had the longest time of 61 days. With the exception of 2011, Berger
Paints has been collecting within their terms to pay, i.e. between 30 and 60 days. The Industry
Average ratio for collecting days sales outstanding for the 2010-2014 period was 49.92 days.
When compared to the industrial average, it shows that the Berger Paint has been converting its
sales at a fairly efficient level, however, improvements can still be achieved in order to realize
more efficient rates.
Table X Berger Paint Jamaica Ltd Credit Turnover
Creditors Turnover measures the rate at which a company pays its suppliers. This ratio is used
to assess the companys short term liquidity. Higher values, for this ratio is preferred as it shows
that the company is able to pay its current liabilities. This would influence suppliers interest in
doing business. For the five years under review, the rate for Berger Paint experienced a steady
increase, moving from a rate of 2.74 in 2010 to 4.05 in 2014. The figure for 2010 suggest that the
company was experiencing cash flow problems hence its relatively low payment times. However
by 2014, Berger paint, has increased two-fold its payment times to its suppliers, suggesting that
its cash flow has also improved during the period. Despite improvements in the amount of times
Berger pays its suppliers, there are still significant improvements to be done as the industrial
average shows a payment of 8.6 times.
Table X Berger Paint Jamaica Ltd Payment period
Payment Period measures short term liquidity by assessing how quickly suppliers are repaid.
The payment period over the years 2010-2014, was reduced from 133 days in 2010 to 90 days in
2014. The payment period ratio is similar to that of credit turnover ratio, in that it tells how credit

worthy the company is. In essence both ratios would be important determining factors for
suppliers as well as creditors. The average payment period for the 2010-2014 period was 103.4
days. When compared to the industrial average of 58.28 days, it revealed that the company was
not paying suppliers as quickly as others in the industry. This could mean that Berger was having
problems with its cashflow which could have negative implications for its suppliers relationship.
Table X Berger Paint Jamaica Ltd Stock/Inventory turnover
Inventory Turnover measures the number of times a company sells its inventory and replaces it
with new inventory during a given accounting period. A high value of inventory turnover
indicates a better performance. Since Berger paints is a manufacturing company, it is critical that
they have a quick inventory turnover, as this will boost sales and profit. Contrary to the previous
efficiency ratios, the inventory turnover has been reducing steadily between 2010 and 2014.
Their highest turnover for the period was in 2010 with a rate of 3.27. The least inventory
turnover was experienced in 2014 with its ratio being 2.69; this could mean that the company
had fewer inventory in 2014 as it was more focused on reinventing its brand image or simply that
sales had been reduced. The inventory turnover industrial average for 2014 was 4.97. This means
that Berger was operating at a rate two times below the industrial average for 2014.
Table X Berger Paint Jamaica Ltd Inventory holding period/days stock on hand
The inventory holding period is directly related to the rate of Inventory turnover; the holding
period would be dependent on the rate of inventory turnover. A slow turnaround on sales may
indicate internal problems such as brand image or an external problem such as a shrinking
economy. The inventory holding period saw a steady increase from 2010 to 2014. The company
held inventory for 112 days in 2010 and 136 days in 2014. These results coincide with the
inventory turnover ratio results, because the inventory period was also increasing. This directly
reduced the inventory turnover rate for the period. On average, the company took 119.2 days to
get rid of its inventory this is below the industry average rate of 107.94 days. However, this
comparison might not be representative of Berger as its inventory days would be longer as they
are nonperishable items; consequently their inventory days would be shorter.

Evaluating Profitability of the Company

Net Profit Ratio
Net Profit Ratio or Profit Margin ratio is a profitability ratio that shows relationship between net
profit after tax and net sales. It is computed by dividing the net profit (after tax) by net sales. This
ratio reveals the remaining profit after all costs of production, administration and financing have
been deducted from sales and income taxes recognized. It is one of the best measures of the
overall results of a firm and is mainly used to judge performance over a period of time. A high
ratio indicates the efficient management of the affairs of business.

The Net profit ratio has been fluctuating for the five year period with 2011being the highest of
4.53%, followed by 2010 with 4.05%. There was a sharp decline in 2012 by 52.32% to 2.16 %.
The ratio recovered in 2014, increasing by 20.15% to a figure of 3.16%, this meant Berger has a
net income of $0.32 for each dollar of sales. In other words 3.16% of sales are left over after all
the expenses were paid by Berger. See Figure 5.
Sales in 2010 were the highest, followed by 2011; the lowest period was 2012, which meant the
company was not very efficient. Even though 2011 recorded the lowest sales figure for the
comparative period, they also recorded the second highest net profits, thus producing an overall
greater Net Profit Margin. See Table 9. There were several factors why 2012 had a low net profit
margin, the operating expenses went up by 6% when compared to 2011 and other income fell by
331%. Even though taxation decreased in 2012, the income was not enough to offset the cost as
such that resulted in a low overall figure for net profit margin. The financial year 2014 reported
an increase in expenses and also an increase in profit when compared to 2013. Taxation and other
expenses also increased, but the income grew enough to offset the increase and led to a
recovering net profit margin.
When compared with the industry, Bergers average of 9.88%, Bergers average was below by
approximately 200%. See Figure 6.
Gross Profit Margin
Gross margin ratio is a profitability ratio that compares the gross margin of a business to the net
sales. Gross Profit margin ratio or Gross Margin is the ratio of gross profit of a business to its
revenue. It is a profitability ratio measuring what proportion of revenue is converted into gross
profit, which is sales less cost of goods sold. The gross profit ratio is calculated by dividing
Gross Profit by Sales then multiplying by 100.See Table 10. Higher values indicate that more
cents are earned per dollar of revenue which is favorable because more profit will be available to
cover non-production costs.
The gross profit margin for Berger Paints Ltd has been consistent for all five years with an
average of 51.32%, with the exception of 2011, which reported an approximate 3% increase to
54.08%. For the 2011 period, Sales were the lowest of all five years but the cost of goods sold

was also the lowest which maybe the reason for the increase of approximately 3% from 2010.
See Figure 7.
An average percentage of 51.7 % indicates the company can make a reasonable profit once it
keeps its overheads in control, but it also indicates that the company has not been doing anything
different to increase its profitability since 2012. The financial year 2014 ended with an average
of 51.3%, this means that for every sale Berger makes, it gets to keep 51.3 % of every dollar to
go towards non production expenses.
Bergers net profit margin is significantly higher than its Gross profit margin ratio, which would
indicate that its non production expenses are very high. Some of these are Directors emoluments,
which were relatively high figures when compared to the remainder of expenses, Net foreign
exchange loss as well as in 2011, their they had the highest allowance for doubtful debts. See
Figure 8.
Bergers Gross Profit Margin ratio was above the industrys average of 29.79% by approximately
74 % which would confirm that even though its sales figure is high, the average is brought down
by the high operating expenses.

Return on Capital Employed

Return on capital employed or ROCE measures how efficiently a company can generate profits
from its capital employed by comparing net operating profit to capital employed. A higher ROCE
indicates more efficient use of capital. ROCE should be higher than the companys capital cost;
otherwise it indicates that the company is not employing its capital effectively and is not
generating shareholder value. It is calculated by dividing Capital Employed by Net Profit before
tax. Capital Employed is the sum of shareholders' equity and debt liabilities; it can be simplified
as Total Assets less Current Liabilities. See Table 11.
Bergers ROCE ratio has been fluctuating for the past five years, this is as a direct result of the
fluctuation of the net profit before interest and tax totals as capital employed remained relatively
constant for all five years. In 2010 and 2011, ROCE was at its highest, with an average of
17.73%, however, in 2012 it fell by 8.94%. This can be attributed to the significant decrease in

the Net profit before tax and interest of approximately 50%. The ratio increased in 2014 by
4.39% to 13.6 %. Net profit before interest and tax also increased by 30.11 %. See Figure 9
Further analysis into the net profit figures, which is derived from subtracting other income from
expenses, showed that the expense increased from 2011 to 2014, leveling at 1, 662,397. The
highest expense figure was in 2010, which also had the highest ROCE. For the periods, 2013 and
2014, the years with the lowest ROCE, those had the lowest income figure reported. The income
figure increased by approximately 220% in 2014, the highest income figure was reported in
2011.
There is a positive relationship between the net profit margin and the ROCE as the higher the net
profit margin, the higher the ROCE. See Figure 10. Net Sales were the highest in 2010, so
therefore the profit obtained from investment was high as well, in addition to 2014. What
attributed to high ROCE in 2011 were due to low costs. In 2012 and 2013, the net profit margin
was at the lowest likewise ROCE.
When compared to the Industrys average of 19.89 %, Berger has been below.

Return on Shareholders Fund (ROSF)

Return on Shareholders Funds or Return on Net Worth is one of the ratios of overall profitability
group, which indicates the profitability of a firm in relation to the funds supplied by the
shareholders or owners. This ratio is very important from the owners point of view as it helps
the firm to know whether the firm has earned enough returns to repay its shareholders or not. The
formula is as follows: Profit after tax (net income)/Total Shareholder's Equity]*100. Total
Shareholders Equity is Share capital + reserves. See Table 12.
Berger reported the highest ROSFs in 2010 and 2011, with 16.8% and 14.6% respectively. The
ratio fell by more than 100 % in 2012. Since that period, there has been a steady increase, in
2014 there was an increase of approximately 50%, ending at 12.81%, and this means that Berger
generated $0.1281 of profit for every $1 of shareholders equity in 2014. In real terms, for the
period 2014, Berger generated 70,331,609 (0.1281*54,906,000). In 2010, they generated the
highest profit of $11,987,402, whilst in 2013 they generated the least. The rising ROSF in 2014

indicates that Berger is increasing its ability to generate profit without needing as much capital.
See Figure 11.
Interesting to note, even though the ROSF in 2014 was the third largest for the period, it had the
lowest Total Shareholders equity for the period. The fluctuation in the figures for shareholders
equity is purely due to the change in the Total Reserves as Share Capital remains constant for the
five year period. The reason for the rise in ROSF could be attributed in the fact that in 2012,
Berger retained a total of Total reserves for 2014 was the lowest, this could be due to the fact that
Berger retained 300,658 as revenue reserves that were not issued to shareholders that wouldve
been used to invest in the business. Of the five years that was the largest figure recorded.

Evaluating Cash Flow Adequacy

The cash flow adequacy ratios namely the cash flow yield, cash flow to sales, cash flow to assets
and free cash flow will indicate Bergers ability to meet its capital expenses, debt repayment and
dividends from cash flow derived from operating activities.
Cash Flow Yield
The cash flow yields measures how the Berger generates cash from its existing operations.
Bergers cash flow yield decreased between 2010 and 2011 by 27.22% from 1.8 to 1.31. In 2012
there was a more significant drop of 54.2% to 0.6 indicating a potential slowdown in sales
This indicates that the company is taking longer to convert its net current assets and current
liabilities into cash. The increasing trend indicates that the company has challenges in generating
cash to meet its operational expense. This was further highlighted by the negative cash flow yield
in 2014.
Cash Flow to Sales
Cash flow to sales measures the company ability to convert sales into cash. The companys cash
flow to sales ratio continuously declined from 7.3% to 1.3% between 2010 and 2012 indicating
the company had a continuous challenge in generating sufficient cash from its sales to meet its
future operating requirements. The company cash generating ability rebounded in 2013 when the
ratio increased to 6.7% but dropped to negative 3.7% in 2014. This indicates that the company
was unable to generate sufficient cash from its sales to meets its future operating requirements.
The declining trend and negative ratio indicates that there is a decrease in the companys
creditworthiness and productivity, and is an indication that the company could be in a decline.
Cash flow to Assets
Cash flow to assets ratio measures the efficiency in which a company uses its assets to generate
cash. The companys cash flow to assets ratio continuously declined from 14.9% to 2.4%
between 2010 and 2012 indicating the company increasing inefficiencies in generating assets

utilization. The company operating efficiency improved in 2013 before dropping to negative
7.3% in 2014.
Free Cash Flows
Free cash flows show the amount of cash available for distribution to shareholders or
bondholders. The companys free cash flow decreased continuously from 2010 to 2012. There
was a temporary recovery in free cash flow in 2013 before decreasing again in 2014. The
company free cash flow was negative in 2012 and 2014 indicating that the company was not able
to generate sufficient cash flows for future dividends payment or possible interest payments. The
deteriorating trend and negative free cash flow indicated that the companys will have difficulties
growing the business and paying dividends to its shareholders.

Evaluating the Market Strength

Earnings Per Share
Earnings per share (EPS) ratio measures how many dollars of net income have been earned by
each share of common stock. It is computed by dividing net income (profit after tax) less
preferred dividend by the number of shares of common stock outstanding during the period. See
Table 17. It is a popular measure of overall profitability of the company and is usually expressed
in dollars. Earnings per share are generally considered to be the single most important variable in
determining a share's price.
Earnings per share have been fluctuating over the comparative period. It fell by more than 100%
from 2010 2012, after which it slowly recovered ending at $0.26 in 2014. See Figure 16. This
means that for every share that is invested in Berger, it is generating $0.26 dollars of net income.
In theory consistent improvement in the EPS figure year after year is the indication of continuous
improvement in the earnings. We would have to wait until I see.
When compared with the industry, Bergers earning per share is way below the industrys
average by more than 332%. See Figure 17.
Price Earnings Ratios (P/E ratio)
This measures how many times the earnings per share (EPS) has been covered by current market
price of an ordinary share. It is computed by dividing the current market price of an ordinary
share by earnings per share. See Table 18. Price earnings ratio is a very useful tool for financial
forecasting. It gives information about the amount that the investors are willing to invest in the
company to earn $1.
The highest figure was 2012 and what it means is that Investors are willing to pay $19.30 for
every dollar of earnings that Berger generates. For 2014, Berger is below the industrys average
of approximately 50%. Performance wise 2010 and 2011 were two very good years for Berger so
its no price surprise the market price and simultaneously falling price earnings ratio. Investors
are still confident and I guess hopeful in Berger turning around its profitability. See Figure 18.

Dividend Yield
Dividend yield ratio shows what percentage of the market price of a share a company annually
pays to its stockholders in the form of dividends. It is calculated by dividing the annual dividend
per share by market value per share. See Table 19. The ratio is generally expressed in percentage
form and is sometimes called dividend yield percentage. Since dividend yield ratio is used to
measure the relationship between the annual amount of dividend per share and the current market
price of a share, it is mostly used by investors looking for dividend income on continuous basis.
The ratio is important for those investors who purchase shares to earn dividend income. Also the
shares that earn higher dividend income can be sold in the market at higher prices that usually
results in higher profits for the investor.
The financial year 2011 had the highest dividend yield of 9.5%, in 2012 it fell, but since then it
has been gradually increasing, closing at 8.13%. In 2014 investors would earn 8.13% on their
investments (in the form of dividends) if he buys the common stock at current market price. See
Figure 19.
When compared to the industrys average of 3.99%, For 2014 Bergers figure is approximately
100%.

Dividend Cover
This measures of the company's ability to pay off its required preferred dividend payments. A
healthy company will have a high coverage ratio, indicating that it has little difficulty in paying
off its preferred dividend requirements. Not only does this ratio give investors an idea of a
company's ability to pay off its preferred dividend requirements, but it also gives common
shareholders an idea of how likely they are to be paid dividends. If the company has a hard time
covering its preferred dividend requirements, common shareholders are less likely to receive a
dividend payment on their holdings. See Table 19
In 2010, profit after tax could service dividend payments approximately 4 times; this was the
highest for the comparative period. Since the massive decrease of more than 100%, there has
been a steady increase, the ratio closed off at 1.97 for 2014, Profit after tax could service 2 times

in 2014. When 2014 was compared with the industry, the industry average was 2.89, which is
approximately 27 greater than Bergers average. See Figure 20

Trend Analysis
Berger Paints Jamaica limited increased its sales by 13% for years 2011 to 2014. The company
was not able to increase its sales volume by a greater percentage due to harsh economic
conditions and competition from other suppliers.
There was a 50% decline in operating profit for the year 2012, however the company managed to
increase its operating profit by 6% in 2013 and 24% in 2014.
Net profits grew by 12% in 2013 and 17% in 2014. The company was able to achieve this growth
due to an increase in sales and effective cost management.
Figure X Trend in Profits for period 2010 to 2014

A trend analysis of the companys statement of financial position revealed that total non-current
assets remained constant for the period 2011-2013, however there was a growth of 9% in 2014
due to an increase in the value of property, plant and equipment and acquisition of assets.
There was a 6% increase in total current assets in 2014 when compared to 2013. This increase
was due mainly to a decline in inventory turnover.
Total shareholders equity grew by 5% for years 2011 to 2013, however there was a decline of
12% in 2014.
Total non-current liabilities increased by 38% in 2014 when compared to 2013. This was due
mainly to an increase in post employments benefits which increased by $39,328 million.
There was a 3% increase in total current liabilities in 2014 when compared to 2013. This increase
was a result of the increase in the amount due to immediate parent company.

Vertical Analysis
The vertical analysis of the income statement revealed that there was a 1% increase in net profit
as a percentage of sales in 2011 when compared to 2010, however there was a 2% decline in
2014 when compared to 2011. The analysis also showed that for every $1 earned in sales for the
year 2014, $0.03 was accounted for in net profit.
Figure X- Net Profit as a Percentage of Sales
The vertical analysis of the statement of financial Position showed that non-current assets as a
percentage of total assets declined by 11% in 2014 when compared to 2010. On the other hand,
current assets grew by 11% in 2014 when compared to 2010. This shows that the company
increased its current asset base in 2014.
Total shareholders equity as a percentage of total assets declined by 9% in 2014 when compared
to 2010 and non-current liabilities grew by 6%.
Current liabilities as a percentage of total assets, increased by 4% in 2011 and then declined by
7% in 2012. There was an overall increase of 6% in 2014 when compared to 2012.

Horizontal Analysis of Quarter ended September 30, 2014

Berger Paints Jamaica Limited experienced a 47% decline in net profit for quarter ended
September 30, 2014 when compared to the similar period of 2013. However, the company
recovered from a loss of $0.372 million for quarter ended June 30, 2014 to gain a net profit of
8.570 million for quarter ended September 30, 2014. This was due mainly to an increase in sales
volume and a reduction in cost of sales. Growth in the construction sector, particularly new
housing developments, and renovations have resulted in large amounts of paints being sold.
There was a significant improvement in earnings per stock unit for quarter ended September 30,
2014 which moved from $0.00 for quarter ended June 30, 2014 to $0.04.
Berger Paints remain optimistic for the 2014 financial year and will continue its focus on
increasing sales, improving operational efficiency and managing costs.

Should you invest in Berger Paints?

We dont recommend that you invest in Berger Paints Jamaica Limited at this time as the
companys performance relies heavily on growth in the wider economy and based on our current
economic conditions, Jamaica continues to experience low growth.
Berger Paints net profit margin is below the manufacturing industrys average and the market
price per share for the company has been declining since 2012.
The company experienced a loss in the June 2014 quarter, and there was a 47% decline in net
profit for quarter ended September 2014 when compared to the same period in 2013.
In concluding, we note that the company remains optimistic for the future as they anticipate
growth in the construction sector which may result in increase in paint sales.

Reference
Investopedia, L. (2014). Investopedia. Retrieved from www.investopedia.com:
http://www.investopedia.com/terms/l/liquidityratios.asp
IT, A. (2011-2014). Ready Ratios. Retrieved from www.readyratios.com:
http://www.readyratios.com/reference/liquidity/current_ratio.html

http://accountingexplained.com/financial/ratios/advantages-limitations
Retrieved Dec 10, 2011
http://www.investopedia.com/exam-guide/cfa-level-1/financial-ratios/useslimitations-ratios.asp
Retrieved Dec 10, 2011

Our Accounts textbook used as reference

BERGER PAINTS JAMAICA

LIMITED
STATEMENT OF FINANCIAL POSITION AS AT YEARS 2010-2014
Restated
Restated
BERGER PAINTS JAMAICA
2014
2013
2012
2011
2010
LIMITED
$'000
$'000
$'000
$'000
$'000
INCOME STATEMENT FOR YEARS
ASSETS
ENDED 2010-2014
Non-current assets
Property, plant and equipment
140,331
126,993
130,762 131,380 148,348
2014
Restated
2012
2011 159
15
Long-term receivables
2013
months
Post employment benefits
42,466
119,874
121,670 120,402
130864
ended
Deferred tax assets
27,186
2,612
Total non-current assets
209,983
249,479
252,432 251,782 279,371 March
31,2010
$'000
$'000
$'000
$'000
$'000
Current assets
Inventories
Due
from
fellow
subsidiaries and
Sales
(net
of discounts
Trade
and other receivables
rebates)
Investment security
Cash
and bank
balancesFINANCE
PROFIT
BEFORE
Total
current
assets
COSTS AND TAXATION

363,510
190
1,737,9
269,23295
541
40,781
80,844
674,254

Finance Costs
Total assets
PROFIT BEFORE TAXATION

(136)
(27) (1,574)
(41)
(5852)
884,237
895,654
816,724 874,786 807,173
80,708
56,478
49,402
101,09
95,416
1
(25,802
(14,238) (16,085 (33,285
(21,317)
)
)
)
141,793
141,793
141,793
141,793 74,099
54,906 141,793
42,240
33,317
67,806
44,695
44545
42,666
42,466
42,266

EQUITY
TaxationAND LIABILITIES
Shareholders' Equity
Share
NET capital
PROFIT FOR THE YEAR
Revaluation reserves
Revenue reserve
Earnings
per stock unit
Income statement
Total shareholder's equity

265,319
249,235 217,979 209,952
3,558
2,416
1,608,216
1,540,8 4,911
1,498,22,0741,829,255
216,507
219,132 69
277,692 41
220,699
30,270
130,521
122,422
56,50593,509
50,976
101,1395077 101,268
646,175
564,292 623,004 527,802
2

$0.26
242,243
428,731

$0.20296,796
$0.16
$0.32
300,658
280,273
273,977
486,996
481,255 464,532 458,036

165,904

126,576

165,904

Current liabilities
Due to immediate parent company
Due to fellow subsidiaries
Dividends payable
Provisions
Trade and other payables
Income tax payable
Total current liabilities
Total equity and liabilities

Non-current liabilities
Post employment benefits
Deferred tax liability
Total non-current liabilities

126,576

111,117
4,242
115,359

107,682
6,229
113,911

87,309
17,944
105,253

17,370
4,230
14,575
13,306
230,621
9,500
289,602

9,513
4,987
13,719
14,859
235,431
3,573
282,082

8,845
608
13,154
12,873
175,793
8,837
220,110

9,586

8,230

15,830
14,474
220,549
35,904
296,343

12,021
18,894
187,174
17,565
243,884

884,237

895,654

816,724

874,786

807,173

$0.35

BERGER PAINTS JAMAICA LIMITED

STATEMENT OF CHANGES IN
EQUITY
YEAR ENDED MARCH 31,
2014

Balance April 1, 2012 as previously

reported
Adjustments on application of revised
IAS 19
Balance as April 1, 2012 as
restated

Share
Capital
$'000

Revaluat
ion
Reserve
s
$'000

Revenue
Reserve Income
Statement
$'000

Total
$'000

141,793

42,666

287,871

472,3
30

8,925
141,793

Net Profit for the year as restated

Other comprehensive income for the
year as restated
Total comprehensive income for the
year as restated
Dividends paid
Balance as at March 31, 2013 as
restated

42,666

42,240
1,879

(10,516)

1,879

31,724
(27,862)

141,793

44,545

Net Profit for the year

Dividends paid
Balance as at March
31,2014

300,658

54,906

Other comprehensive loss for the year

Total comprehensive loss for the year

296,796

150

(85,459)

150

(30,553)
(27,862)

141,793

44,695

242,243

8,925
481,2
55
42,24
0
(8,637
)
33,60
3
(27,86
2)
486,9
96
54,90
6
(85,30
9)
(30,40
3)
(27,86
2)
428,7
31

BERGER PAINTS JAMAICA LIMITED

STATEMENT OF CHANGES IN EQUITY
YEAR ENDED MARCH 31,
2012

Balance as at April 1, 2010

Share
Capital
$'000

Revalua
tion
Reserve
s
$'000

Revenue
Reserve Income
Statement
$'000

Total
$'000

141,79
3

42,266

273,977

458,0
36

Net Profit for the year

Other comprehensive income for the year
Total comprehensive income for the year

67,806
200
200

Dividends paid
Balance as at March 31, 2011
Net Profit for the year
Other comprehensive loss for the year
Total comprehensive loss for the year

(61,510)
141,79
3

42,466

280,273
33,317

200
200

Dividends paid
Balance as at March 31,2012

67,806

33,317
(25,719)

141,79
3

42,666

287,871

67,806
200
68,006
(61,51
0)
464,5
32
33,317
200
33,517
(25,71
9)
472,3
30

BERGER PAINTS JAMAICA LIMITED

STATEMENT OF CHANGES IN EQUITY
YEAR ENDED MARCH 31, 2011
Share
Capital
$'000

Revaluati
on
Reserves
$'000

Revenue
Reserve Income
Statement
$'000

4
Balance as at April 1, 2009

141,793

Net Profit for the fifteen months period

Other comprehensive income for the fifteen
months period
Total comprehensive income for the period
Dividends paid
Balance as at March 31, 2010
Net Profit for the year
Other comprehensive loss for the year
Total comprehensive loss for the year
Dividends paid
Balance as at March 31, 2011

42,066

200
200

141,793

42,266

200
200

141,793

42,466

220,239
74,099

74,099
(20,361)

7
(20
4

273,977
67,806

67,806
(61,510)

6
(61
4

280,273

BERGER PAINTS JAMAICA LIMITED

STATEMENT OF CASH FLOWS
YEARS ENDED 2010-2014
2014
$'000

2013
$'000

2012
$'000

2011
$'000

15 months
ended March 31,
2010
$'000

54,906

42,240

33,317

67,806

74,099

20,034

18,215

22,290

(1,647)
18,602
25,802
(272)
136
(3,850)
17,928
4,341
1,863
(1,504)

(1,221)
18,584
14,238
(270)
27

(316)
30,017
16,085
(855)
1,574

27,526
(3,225)
(866)
43,984
33,285
(943)
41

38,968
(2,263)
(2,785)
12,013
21,317
(728)
5,852

17,509
15,476
(8,163)

3,684
8,281
546
(3,621)

3,877
15,422
1,039
(2,628)

12,751
15,463
660
(4,860)
(12,194)

Operating cash flows before movements in working capital:

136,339

116,635

111,002

185,318

158,293

Increase in trade and other receivables

Increase in inventories
Increase in due to fellow subsidiary companies
Provisions utilised
(Decrease) Increase in trade and other payables
Increase due to immediate parent company
Post employment benefits constributions

(57,425)
(98,191)
2,611
(19,481)
(4,810)
7,857
(15,810)

(4,688)
(16,084)
3,237
(15,523)
59,638
668
(15,350)

53,354
(31,256)
3,103
(5,285)
(44,756)
(741)
(14,462)

(72,112)
(8,027)
(2,837)
(8,297)
33,194
1,356
(13,149)

91,410
127,060
3,965
(19,173)
(185,543)
(16,856)
(15,635)

Cash (used in) generated from operations

Income tax paid
Interest paid

(48,910)
(15,814)
(136)

128,533
(20,972)
(27)

70,959
(49,402)
(1,574)

115,446
(26,461)
(41)

143,521
(4,358)
(5,852)

Net cash (used in) provided by operating activities

(64,860
)

107,534

19,983

88,944

855

943

CASH FLOWS FROM OPERATING ACTIVITIES

Net profit for the year
Adjustments for:
Depreciation
Profit on sale of property, plant and equipment
Unrealised foreign exchange gains (net)
Post retirement benefit charge
Income tax expense
Interest income
Interest expense
Gain on sale of property, plant and equipment
Provision charge
Impairment loss recognised on trade receivables
Impairment loss recognised on other receivables
Reversal of impairment loss on trade receivables
Write-off of trade receivables

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received

272

270

133,311
728

Long term receivables

Proceeds from sale of property, plant and equipment
Acquisition of property, plant and equipment
Investment security (net)
Net cash provided by (used in) investing activities

(21,672)

(44,446
)

(20,817
)

(4,945)

(1,269)

(27,006)

(27,297)

(28,395)

(57,701)

(19,238)

(27,006
)

(27,297
)

(28,395
)

(57,701
)

(19,238)

(91,387)

35,791

(29,229)

26,298

112,804

130,521
1,647

93,509
1,221

122,422
316

95,077
1,047

(20,200)
2,473

2011
93,509

2010
122,422

95,077

16%
15%
0%
0%
15%
14%
0%
0%
2010-2014
31%
29%

18%
0%
16%
0%
35%

479

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid

BERGER PAINTS JAMAICA

Net cash used
in financing activities
LIMITED
COMMON SIZE FINANCIAL POSITION
FOR THE
YEARS
2010-2014
NET (DECREASE)
INCREASE
IN CASH
AND CASH
EQUIVALENTS
OPENING CASH AND CASH EQUIVALENTS
Effect of foreign exchange rate changes
CLOSING CASH AND CASH EQUIVALENTS

(14,446)
(30,270)

1,445
5,815
(13,148)

3,850
(33,372)
29,729

2014
%

2013
40,781
%

2012
130,521
%

ASSETS
Non-current assets
Property, plant and equipment
16%
14%
Long Term Receivables
0%
0%
BERGER
PAINTSbenefits
JAMAICA
Post
employment
5%
13%
LIMITED:
Deferred
tax assets
3%
0%
STATEMENT
OF FINANCIAL
POSITION
YEARS
Total
non-current
assets
24% AS AT
28%
Current assets
Inventories
Due from fellow subsidiaries
Trade and other receivables
ASSETS security
Investment
Non-current
Cash
and bank assets
balances
Property,
plantassets
and equipment
Total
current
Long term Benefits
Post employment
benefits
Total
assets
Deferred tax assets
Total non-current
assets
EQUITY
AND LIABILITIES
Shareholders' Equity
Current
assets
Share
capital
Inventories reserves
Revaluation
Due from
fellow subsidiaries
Revenue
reserve
Trade
and other
receivables
Income
statement
Investment
security equity
Total
shareholder's
Cash and bank balances
Total current
assets
Non-current
liabilities
Post employment benefits
Total assets
Deferred
tax liability
Total non-current liabilities
EQUITY AND LIABILITIES
Current
liabilities
Shareholders'
Equity
Due
to immediate
parent
Share
capital
company
Revaluation reserves
Due
to fellow
subsidiaries
Revenue
reserve
Dividends
payable
Income
statement
Provisions
Total shareholder's equity
Trade and other payables
Income tax payable
Total current liabilities
Total equity and liabilities

2014
41%
0% %
30%
0%
5%
95%
76%
0%
32%
100%
0%
75%

Restate
d30%
2013
0% %
24%
3%
15%
86%
72%
0%
92%
100%
0%
89%

16%
173%
5%
9%
122%
27%
0%
48%
43%
128%
19%
110%
0%
19%

16%
126%
5%
172%
98%
34%
0%
54%
137%
122%
14%
111%
0%
14%

17%
119%
5%
116%
99%
36%
59%0%
98%
107%
14%
101%
1%
14%

100%
2%
106%
0%
2%
88%
2%
94%
26%
1%
33%

100%
1%
105%
1%
2%
110%
2%
106%
26%
0%
31%

100%
1%
101%
0%
2%
108%
2%
105%
22%
1%
27%

100%

100%

Restate
d31%
2012 25%
0% %
1%
27%
32%
0%
0%
11%
14%
88% 71%
69%
0%
93% 100%
100%
0%
90%

100%

16%
5%

2011
26%
0% %
27%
0%
12%
65%89%
0%
100%92%
0%
90%

12%
1%
13%

18%
5%104%
237%
126%
34%
57% 0%
129%
118%
11%
2%108%
13%

1%
0%
2%
2%
25%
4%
34%

100%
1%100%
0%
1%102%
2%101%
23%
2%
30%

32%
53%

100%

100%

3,587
5,323
(10,907)

Non-current liabilities
Post employment benefits
Deferred tax liability
Total non-current liabilities

190%
0%
158%

145%
0%
120%

127%
24%
110%

123%
35%
108%

Current liabilities
Due to immediate parent
company
Due to fellow subsidiaries
Dividends payable
Provisions
Trade and other payables
Income tax payable
Total current liabilities

211%
0%
121%
70%
123%
54%
119%

116%
0%
114%
79%
126%
20%
116%

107%
0%
109%
68%
94%
50%
90%

116%
0%
132%
77%
118%
204%
122%

Total equity and liabilities

110%

111%

101%

108%

BERGER PAINTS JAMAICA LIMITED

COMPARATIVE INCOME STATEMENT FOR YEARS ENDED 20102014

2014

2013

2012

2011

201
0

Sales (net of discounts and rebates)

95%

88%

84%

82%

100
%

PROFIT BEFORE FINANCE COSTS

AND TAXATION

80%

56%

50%

100%

2%

0%

27%

1%

85%

59%

52%

106%

121%

67%

75%

156%

74%

57%

45%

92%

Finance Costs
PROFIT BEFORE TAXATION
Taxation
NET PROFIT FOR THE YEAR

100
%
100
%
100
%
100
%
100
%

BERGER PAINTS JAMAICA

LIMITED
STATEMENT OF FINANCIAL POSITION AS
SEPTEMBER 30,2014
September
30, 2014
$'000

September
30, 2014
$'000

ASSETS
Non-current assets
Property, plant and equipment
Deferred tax assets
Investment Security
Post employment benefits
Total non-current assets

133,669
27,186
541
46,814
208,210

140,918
0
0
128,628
269,546

Current assets

720,499

670,300

928,709

939,846

141,793

141,793

Total assets
EQUITY AND LIABILITIES
Shareholders' Equity
Share capital

Revaluation reserves
Revenue reserve
Income statement
Total shareholder's equity

44,695

44545

233,295
419,783

285,877
472,215

Non-current liabilities
Post employment benefits
Deferred tax liability
Total non-current liabilities

182,172
0
182,172

146,512
312
146,824

326754

320807

928,709

939,846

Current liabilities
Total equity and liabilities

BERGER PAINTS JAMAICA

LIMITED
INCOME STATEMENT FOR SIX MONTHS ENDED
SEPTEMBER 30, 2014
Quarter
ended
Septembe
r 30, 2014
$'000
Sales (net of discounts and
rebates)
(Loss)/Profit from operations
Income from investments
Finance Costs
PROFIT/(LOSS) BEFORE
TAXATION
Taxation
NET PROFIT FOR THE YEAR
Earnings per stock unit

Quarter
ended
September
30, 2013 Change
$'000

430,207

435,249

-5,042

-1%

11,448
15
0

23,301
48
72

-11,853
-33
(72)

-51%
-69%
-100%

11,463
2,893
8,570
$0.04

23,277
6,961
16,316
$0.08

-11,814
(4,068)
-7,746

-51%
-58%
-47%

BERGER PAINTS JAMAICA

LIMITED
INCOME STATEMENT FOR SIX MONTHS ENDED SEPTEMBER 30, 2014
Quarter
ended June
30,2014
$'000
Sales (net of discounts and
rebates)
(Loss)/Profit from operations
Income from investments
Finance Costs
PROFIT/(LOSS) BEFORE
TAXATION
Taxation
NET PROFIT FOR THE YEAR
Earnings per stock unit

Quarter
ended June
30,2013 Change
$'000

387,248

352,112

35,136

10%

(510)
0
22

-4,728
210
0

4,218
-210
22

-89%
-100%
0%

-532
160
-372
$0.00

-4,518
1,355
-3,163
$0.00

3,986
(1,195)
2,791

-88%
-88%
-88%

BERGER PAINTS JAMAICA

LIMITED
INCOME STATEMENT FOR SIX MONTHS ENDED SEPTEMBER
30, 2014
Six
Months
ended
Septemb
er
30,2014
$'000
Sales (net of discounts and
rebates)

(Loss)/Profit from operations

Income from investments

817,455

10938
15

Six
Months
ended
Septem
ber Chan
30,2013 ge
$'000

787,361

30,09
4

18501
258

7,563
-243

4%
41
%
94

Finance Costs
PROFIT/(LOSS) BEFORE
TAXATION
Taxation
NET PROFIT FOR THE YEAR
Earnings per stock unit

22
10,931
2,733
8,198
$0.04

Quarter
ended
September
30, 2014
$'000
Sales (net of discounts and
rebates)
(Loss)/Profit from operations
Income from investments
Finance Costs
PROFIT/(LOSS) BEFORE
TAXATION
Taxati
on
NET PROFIT FOR THE
YEAR
Earnings per stock unit

72

(50)

18,687

7,756

5,606

(2,87
3)

13,081
$0.06

4,883

%
69
%
42
%
51
%
37
%

Quarter
ended June
30, 2014 Change
$'000

430,207

387,248

42,959

11%

11,448
15
0

-510
0
22

11,958
15
(22)

-2345%
0%
-100%

11,463

-532

11,995

-2255%

2,893

160

2,733

1708%

8,570
$0.04

-372
$0.00

8,942

BERGER PAINTS JAMAICA

LIMITED
INCOME STATEMENT FOR SIX MONTHS ENDED
SEPTEMBER 30, 2014
Quarter
ended
Quarter
September ended June
30, 2014
30, 2014 Change
$'000
$'000

-2404%

Sales (net of discounts and

rebates)
(Loss)/Profit from operations
Income from investments
Finance Costs
PROFIT/(LOSS) BEFORE
TAXATION
Taxation
NET PROFIT FOR THE
YEAR
Earnings per stock unit

430,207

387,248

42,959

11%

11,448
15
0

-510
0
22

11,958
15
(22)

-2345%
0%
-100%

11,463
2,893

-532
160

11,995
2,733

-2255%
1708%

8,570
$0.04

-372
$0.00

8,942

-2404%

LIQUIDITY RATIOS
Current Ratio
Quick Ratio
ASSET MANAGEMENT/EFFICIENCY RATIOS
Debtor Turnover
Days Sales Outstanding/Collection Period (days)/Receivable
days

DEFINITION
Current assets/Current liabilities
Current assets-Inventories/Current liabilities

Credit sales/Average trade receivables

Days in year (365)/Debtor turnover

Creditor Turnover
Payment Period (days)/Payable days

Cost of Sales+/- Change in stocks/Average

creditors
Days in year (365)/Creditor turnover

Stock/Inventory Turnover
Days Stock on Hand (days)/Inventory days

Costs of sales/Average stock

Days in the year (365)/tock turnover

PROFITABILITY RATIOS
Net Profit Ratio/Profit Margin
Gross Profit Margin
Return on Capital Employed (ROCE)
Return on Shareholder's Funds (ROSF)

[Profit after tax (net income)/sales]*100

[Gross Profit/sales]*100
Profit before interest and tax/(Total assetsCurrent liabilities)*100
[Profit after tax (net income)/Share capital +
reserves]*100

LONG TERM SOLVENCY RATIOS

Gearing

Long-term debt + Preference shares/Ordinary

share capital + reserves

Income before interest expense and tax

(EBIT)/Interest expense

Interest Coverage Ratio

CASH FLOW ADEQUACY RATIOS

Net cash flow from operating activities/Profit

after tax (Net income)
Net cash flow from operating ativities/Net
sales
Net cash flow from operating ativities/Average
total assets
Net cash flow from operating activitiesdividends-Net Capital Expenditure

Cash Flow Yield

Cash Flow to Sales
Cash Flow to Assets
Free Cash Flow
MARKET STRENGTH/INVESTMENT RATIOS

Profit after tax - Preference Dividends/#

Ordinary shares outstanding
Market price per share/Earnings per share
Dividend per share/Market price per share
Profit after tax - Preference Dividends/Ordinary
Dividend

Earnings per share

Price Earnings (PE) Ratio
Dividend Yield
Dividend Cover

Liquidity Ratios
Year
Current Assets
Current Liabilities

2014
674,254
289602

2013
646,175
282082

2012
564,292
220110

2011
623,004
296343

2010
527,802
243884

Current Ratio

2.328209

2.290735

2014
674,254
363,510
289602

2013
646,175
265,319
282082

2.56368
2

2.102307

2.164152

2012
2011
564,292 623,004
249,235 217,979
220110
296343
1.43136
2 1.366744

2010
527,802
209,952
243884

Table 1
Year
Current Assets
Inventories
Current Liabilities
Quick Ratio

1.073004 1.350161

Table 2
3
2.5
2
1.5
Current Ratio

Quick Ratio

0.5
0
2014

Figure 1

2013

2012

2011

2010

1.303284

Berger's Current Ratio vs Industry's Average

4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00

2014

Figure 2

2013

2012

2011

2010

Berger's Quick ratio vs Industry Average

2.5
2
1.5
1
0.5
0
2014

2013

2012

2011

2010

Figure 3

Asset Management/Efficiency Ratios

Year
Credit Sales

2014
1737995

2013
1608216

2012
1540869

2011
1498241

2010
1829255

Average Trade Receivables

242869.5

217819.5

248412

Debtor Turnover

7.156086

7.383251

6.202877

2014
365

2013
365

2012
365

7.156086
51

7.383251
49

6.202877
59

249195.
5
266887
6.01231
2 6.854043

Table 3
Year
Day in Years
Debtor Turnover
Days Sales Outstanding
Table 4
Year
Cost of Sales+/- Change in
stocks

2014

2013

2012

344637

800212

776243

Average creditors

233026

205612

198171

4.053784

3.891855

3.917036

2014
365

2013
365

2012
365

4.053784

3.891855

90

Creditor Turnover
Table 5
Year
Days in year
Creditor Turnover
Payment Period
(days)/Payable days
Table 6
Year
Cost of Sales
Average Stock
Stock\Inventory Turnover
Table 7
Year
Days in Year
Stock\Inventory
Days Stock on

2014
365
2.6921341
135.58

2011
2010
365
365
6.01231
2 6.854043
61
53

2011

2010

695998
768002
203861.
5 280101.5
3.41407
3 2.74187

3.917036

2011
365
3.41407
3

2.74187

94

93

107

133

2014
846446

2013
784128

2013
744987

314414.5

257277

233607

2.692134

3.047797

3.189061

2013
365
3.047796733
119.76

2012
365
3.189061115
114.45

2010
365

2011
2010
687971
895062
213965.
5
273482
3.21533
6 3.272837

2011
365
3.215336117
113.52

2010
365
3.272836969
111.52

Hand\Inventory
Days

Table 8

8
7
6
5
4
3
2
1
0

Figure 4

2010

2011

2012

2013

2014

Profitability Ratios
Year
Profit after Tax (Net Income)
Sales
Net Profit Ratio\Profit
Margin
Table 9

2014
54906
1737995
3.16

2013
42240

2012
33317

2011
67806

1608216 1540869

1498241

2010
74099
182925
5

4.53

4.05

2.63

2.16

Berger's Net Profit Margin

2010

4.05%

2011
Financial Year

4.53%

2012

2.16%

2013

2.63%

2014
0%

3.16%
1%

1%

2%

2%

3%

Percentage

Figure 5

3%

4%

4%

5%

5%

Comparison of Berger and the Industry Net Profit Margin

16%
14%
12%
10%
8%
6%
4%
2%
0%

Avg

2014

2013

2012

2011

2010

Figure 6

Gross Profit Margin

Year
Gross Profit
Sales
Gross Profit Margin
Table 10

2014
891549
1737995
51.30

2013
824088
1608216
51.24

2012
795882
1540869
51.65

2011
810270
1498241
54.08

2010
934193
1829255
51.07

Berger's Gross Profit Margin

2010

51.07%

2011

54.08%

2012

51.65%

2013

51.24%

2014
50%

51.30%
50%

51%

51%

52%

52%

Percentage

Figure 7

53%

53%

54%

54%

55%

Berger's Net Sales vs Gross Profit

2,000,000
1,800,000
1,600,000
1,400,000

Net Sales

1,200,000

Gross Profit

1,000,000
800,000
600,000
400,000
200,000
0

2014

2013

2012

2011

2010

Figure 8
Year
Profit before Interest and Tax
Total Assets
Current Liabilities
Return on Capital Employed
(ROCE)

Table 11

2014

2013

2012

2011

2010

80844
884237
289602

56505
895654
282082

50976
816724
220110

101132
874786
296343

101268
807173
243884

13.60

9.21

8.54

17.48

17.98

Berger's ROCE
2010

17.98%

2011
Financial Years

17.48%

2012

8.54%

2013

9.21%

2014
0.00%

13.60%
5.00%

10.00%

15.00%

20.00%

Percentage

Figure 9

Berger's ROCE vs Net Profit Margin

25%
20%

Net Profit Margin

15%

ROCE

10%
5%
0%
2014

2013

2012

2011

2010

Figure 10

Return on Shareholders Fund (ROSF)

Year
Profit after Tax (Net Income)
Total Shareholders' Equity
Return on Shareholder's Funds
(ROSF)

Table 12

2014
54906
428731

2013
42240
486996

2012
33317
481225

2011
67806
464532

2010
74099
458036

12.81

8.67

6.92

14.60

16.18

Berger's Return on Shareholder's Fund

2010

16.18%

2011

14.60%

2012

6.92%

2013

8.67%

2014
0%

12.81%
2%

4%

6%

8%

10%

12%

14%

16%

18%

Figure11

Cash Flow Adequacy Ratios

Year
Net cash Flow from
Operating Activities
Profit After Tax
(Net Income)
Cash Flow Yield

2014

2013

2012

2011

2010

(64,860)

107534

19983

88944

133311

54906
-1.181292

42240
33317
67806
74099
2.545785985 0.599783894 1.311742324 1.799093105

Table 13
Cash Flow Yield Ratio
3
2.5
2
1.5
1
0.5
0
2014
-0.5

2013

2012

2011

2010

-1
-1.5

Figure 12

Year
Net cash Flow from
Operating Activities
Net sales
Cash Flow to Sales
Table 14

2014

2013

2012

(64,860)
1737995

107,534
1608216

-0.037319

0.066865396

19,983
1540869
0.01296865
6

2011

2010

88,944
133,311
1498241
1829255
0.05936561
6 0.07287721

Cash Flow Sales

0.08
0.06
0.04
0.02
0
2014
-0.02

2013

2012

2011

2010

-0.04
-0.06

Figure13
Year
Net cash Flow from
Operating Activities
Average Total Assets
Cash Flow to Assets

2014

2013

2012

2011

2010

-64860
889945.5
-0.072881

107534
856189
0.125596101

19983
845755
0.02362741

88944
840979.5
0.105762388

133311
893752.5
0.149158744

Table 15

Cash Flow to Assets

0.2
0.15
0.1
0.05
0
2014
-0.05
-0.1

Figure 14

2013

2012

2011

2010

Year
Net cash Flow from Operating
Activities
Dividends
Net Capital Expenditure
Free Cash Flow

2014

2013

2012

2011

2010

-64860
27006
29522
-121388

107534
27297
14446
65791

19983
28395
21672
-30084

88944
57701
7333
23910

133311
19238
5584
108489

Table 16

Free Cash Flow

150000
100000
50000
0
2014
-50000
-100000
-150000

Figure 15

2013

2012

2011

2010

Market Strength
Year
Profit after Tax - Preference
Dividends
Number of Ordinary Shares
Outstanding
Earnings Per Share

2014

2013

2012

2011

2010

54906000

42240000

33317000

67806000

74099000

214322393
0.26

214322393
0.20

214322393
0.16

214322393
0.32

214322393
0.35

Table 17

Earnings per share

$0.35
$0.30
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00

Figure 16

2014

2013

2012

2011

2010

Earnings Per Share compared to The Industry

$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$-

Avg

2014

2013

2012

2011

2010

Figure 17

Year
Market price per share
Earnings per share
Price Earnings (PE)
Ratio

201
4
1.6
0.26

2013
1.8
0.2

2012
3
0.16

2011
3
0.32

2010
2.68
0.35

6.25

9.13

19.30

9.48

7.75

Table 18

Price Earning (PE) Ratio

25
20
15
10
5
0

2014

Figure 18

2013

2012

2011

2010

Year
Dividend Per Share
Market Price Per Share
Dividend Yield

2014
0.13
1.6
0.08

2013
0.13
1.8
0.07

2012
0.12
3
0.04

2011
0.29
3
0.10

2010
0.1
2.68
0.04

Table 19

Dividend Yield
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%

2014

2013

2012

2011

2010

Figure 19
Year
Profit after tax - Preference
Dividends
Ordinary Dividend
Dividend Cover

Table 20

2014

2013

2012

2011

2010

54906
27862
1.97

42240
27862
1.52

33317
25719
1.30

67806
61510
1.10

74099
20361
3.64

Dividend Cover
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00

Figure 20

2014

2013

2012

2011

2010

Trend in Profits
120%
100%
80%
60%

Net Profit

Operating Profit

40%
20%
0%
2010

2011

2012

2013

2014

Net Profit in relation to Sales

120%
100%
80%
60%
40%
20%
0%

2010
Figure 21

Figure 22

2011

2012

2013

2014