Fontana Limited is pleased to present our unaudited financial statements for the second quarter ended December 31, 2021, which were prepared in accordance with International Financial Reporting Standards (IFRS).

Despite the continuing impact of the Covid-19 pandemic, our revenues for the quarter increased to $1.85 billion, representing an increase of 20.2% over the $1.54 billion of the corresponding quarter of the previous year.

Our newest store, Waterloo continued to show very positive year over year growth. In a period of major disruptions in Jamaica and across the globe, our focus on early ordering and careful management of shipping logistics enabled Fontana to remain fully stocked before and during the busy holiday season.

As all stores have been open for over 2 years, this 20.2% increase can be considered organic growth, not reflecting any temporary boosts. It also compares favourably to the 9.6% reported by PIOJ for the island-wide ‘Wholesale & Retail, Repairs; Installation of Machinery & Equipment’ sector for October to December 2021 compared to October to December 2020.
(https://www.pioj.gov.jm/product/review-of-economic-performance october-december-2021/).

Our cost of sales grew by 24%, impacted primarily by an unprecedented 500% plus increase in global container freight charges over the past 18 months caused by world-wide supply chain challenges. (https://www.cato.org/blog/why-shipping-prices-have-recently-increased)

Recognizing the challenges faced by consumers in a Covid-19 affected economy, Fontana chose to absorb a percentage of these unexpected and unavoidable cost increases in order to minimize the impact on our customers. As a result, gross profit margin fell from 40.3% last year to 38.7% this year. Gross profits, however, increased by 15% from $622 million to $717 million mainly attributable to volume growth.

Our operating expenses increased by 14% to $392 million, up from $344 million over prior year. Staff costs were the main driver here, as we increased man-hours worked in line with the increased operating hours due to the relaxation of Covid-19 protocols. Despite this, our operating profit increased by 17% to $325 million this quarter.

Finance costs were impacted primarily by the foreign exchange losses recorded in relation to the revaluation of the lease liability (IFRS 16), which resulted in an additional cost of $36.8 million when compared to the same period last year.

Net profit for the quarter was $248.8 million, compared with $248.6 million recorded in the prior year. This represented $0.20 earnings per share for both periods. This flat result was primarily due to unavoidable external factors: large increases in freight charges added to exchange rate losses due to the lease assessment under the IFRS16 accounting principle. The health of core operations is demonstrated through the increase in cash on hand during the quarter (excluding bond issue) by 59%, from $223.5 million to $364 million.

Total assets at the end of the quarter stood at $4.8 billion, up from $3.4 billion in the previous comparative period, reflecting an increase of 41%. Cash on hand (including bond issue) more than doubled from $823 million to $1.72 billion, an increase of 109%, putting us in a solid position to build inventories and finance the upcoming Portmore expansion and warehouse in Kingston. Shareholder’s Equity grew to $1.99 billion, up from $1.69 billion or 18% over the prior year.

Despite the Covid-19 restrictions Fontana continues to focus on community and nationally related sponsorships.
Among our successful partnerships were:
• The National Tourism Debate Competition
• Yaad Hunt Competition
• “The Psychology Of…” TV Show
• Zoo Lights Sponsorship
• WPYC Health and Wellness Fair
• IrieFM Christmas Treat
• Mello Fm 12 Days of Christmas
• Suncity 12 Days of Christmas

For the 6th straight year, we staged our annual Christmas “Wishing Tree”. Each of our six branches selected a children’s home and customers were given the opportunity to purchase Christmas gifts for their wards. Over 200 gifts were given in this initiative. We also donated gift certificates to Doctor’s Cave Bathing Club for their Gifts Nursing Fraternity of Cornwall Regional Hospital initiative.

CEO, Anne Chang said ‘we are encouraged by the level of growth in revenues and the expansion of our customer base this quarter. Fontana is increasingly being chosen as the preferred pharmacy and retail provider by Jamaican consumers. We continue to focus on expanding our product offerings and improving our customers’ shopping experience. We are looking forward to bringing Fontana to the Portmore community, providing the same level of retail excellence as our existing locations. We also are pleased to have played a role in helping to protect our fellow Jamaicans from Covid-19 by partnering with the Ministry of Health & Wellness and to make vaccinations available in our stores. We would like to thank our superb team and other stakeholders for their role in bringing another successful quarter to a close’
Anne Chang
Chief Executive Officer (CEO) Fontana Limited