Cecil Foster Managing Director for FosRich Company has released the following Management Discussion & Analysis And Summary Unaudited Consolidated Financial Statements Six Months Ended 30 June 2023.

Financial Highlights –

Year-to-date
• Revenues – $2,025 million, up $226 million or 13% from $1,799 million in the prior period.
• Gross Profit – $817 million, up $29 million or 4% from $788 million in the prior period.
• Operating Profit – $186 million, compared to $298 million in the prior period.
• Earnings per stock unit – $0.03, compared to $0.06 in the prior period.

Quarter 2
• Revenues – $941 million, up $42 million or 5% from $899 million in the prior period.
• Gross Profit – $372 million, compared to $401 the prior period.
• Operating Profit – $47 million compared to $139 million in the prior period.
• Earnings per stock unit – $0.01, compared to $0.03 in the prior period.

Business Overview
FosRich is primarily a distributor of lighting, electrical and solar energy products, and aims to differentiate itself from its competitors in the Jamaican marketplace by providing a quality and cost-effective service, and by collaborating with clients on technical solutions.

FosRich partners with large global brands seeking local distribution such as Huawei, Philips Lighting, Victron Energy, Siemens, NEXANS and General Electric.

FosRich has a staff complement of over one hundred and seventy (170) persons across nine (9) locations in Kingston, Clarendon, Mandeville, and Montego Bay. FosRich also has a team of energy and electrical engineers who offer technical advice and install solar energy systems, solar water heaters and electrical panel boards.

Income Statement

Income
Year-to-date income was $2,025 million, compared to $1,799 million for the prior reporting period. An increase of $226 million.

Gross Profit for the year-to-date is $817 million compared to $788 million for the prior reporting period. This represents an increase of $29 million. These increases were attributed primarily to increased sales in eight (8) of our twelve (12) Product Groups.

During the second quarter the company generated income of $941 million compared to $899 million for the prior reporting period, representing an increase of $42 million.

Gross profit for the quarter was $372 million compared to $401 million for the prior reporting period.

Administration Expenses
Administration expenses for the year-to-date was $527 million, reflecting an increase of $122 million on the prior reporting period amount of $405 million. The changes were driven primarily by increased staff related costs for salary adjustments, increased sales commission due to improved sales performance and improvements in staff benefits; increased travelling and motor vehicle expenses; increased insurance costs due to increases in policy renewal rates and increased depreciation due to increases in the carrying values of property plant and equipment.

Finance Cost
Finance cost for the year-to-date was $108 million compared to $91 million for the prior reporting period, an increase of $17 million. This increase is being driven primarily by increases in Bond renewal rates and increases in bank financing.

Operating Profit
Operating Profit generated for the period was $186 million, compared to the $298 million reported for the prior reporting period.

Earnings Per Stock Unit
Earnings per stock unit was 3 cents, compared to the 6 cents reported for the prior reporting period.

Balance Sheet

Inventories
The company continues to proactively manage inventory balances and the supply-chain, with a view to ensuring that inventory balances being carried are optimised, relative to the pace of sales, the time between the orders being made and when goods become available for sale, to avoid both overstocking and stockouts. Monitoring is both at the individual product level and by product categories. Inventories have remained stable over both periods. Shipping delays experienced in the prior period did not have a significant impact on the results for the current year.

Receivables
We continue to actively manage trade receivables with an emphasis being placed on balances over 180 days. We have implemented strategies to collect these funds as well as to ensure that the other buckets are managed. Sixty percent (60%) of receivables are within the current to 60-day category, down from the sixty-four percent (64%) for the prior reporting period. Receivables also include advance payments made to foreign suppliers for the increasing levels of inventories required to support increasing sales.

Trade Payables
Our trade payables are categorised by foreign purchases, local purchases and other goods and services.

We have concentrated primarily on the foreign payables as the bulk of our inventories are sourced from overseas. We continue to manage payables, for the most part, within the terms given by our suppliers.

Non-current Liabilities
Non-current liabilities reflect a net increase of $585 million. This increase is caused primarily by the secured and unsecured bonds, which were current at year end, but have now been refinanced.

Liquidity
At balance sheet date the excess of current assets over current liabilities amounted to $1,778 million (31 December 2022 – $1,235 million), with an improvement in the ratio to 2.69:1, up from 1.69:1 at 31 December 2022. It is expected that FosRich will continue to be able to generate sufficient cash to meet obligations when they fall due. Liquidity is provided primarily from sales revenues and loan financing.

Shareholders’ Equity
Shareholders’ equity now stands at $1,943 million, up by $158 million from $1,785 million on 31 December 2022. The net increase of $158 million arose primarily as a result of retained profits for the year amounting to $162 million.

We now have 5,474 shareholders, an increase of 388 or 8% on the 5,086 on 31 December 2022.

New Activities
Construction of our new FosRich Superstore & Corporate Offices at 76 Molynes Road has commenced. The completion date is projected to be Q2, 2024.

We are cognizant that despite the challenges ahead within this operating space, that we have the right talents and leadership to deliver on our plans for the ensuing period. We will continue to execute on our plans to ensure that we remain competitive and deliver value solutions to our customers.

As we report on the performance of our Company, we thank our shareholders, employees, customers, and other stakeholders for their support as we continue to expand our business and bring greater value to our various stakeholders.

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