AML preparing to face upcoming challenges
AML Foods Limited is working to guard against a bottom-line impact threatened by the recent increase in value-added tax (VAT), the high cost of doing business, increasing competition and the country’s planned accession to the World Trade Organization (WTO) the company states in its 2017 annual report.
AML President and CEO Gavin Watchorn said in the report that the 2017 results fell below expectations as a result of one-time expenses that included “the closing costs for Carl’s Jr., pre-opening and initial losses at our new Yamacraw store and the write-off of goodwill wind-up on one of our operating units”.
Watchorn said there is also an air of uncertainty in the wider retail environment due to the aforementioned concerns.
However, he said: “We do not intend to sit by and wait to react to these matters, we will embrace these challenges and shape our strategy to ensure that these, and indeed any matter, do not become a detriment to our long-term success.”
The company’s Chairman Franklyn Butler II said while the closure of Carl’s Jr. last December was “difficult and painful”, no jobs were lost in the closing.
According to the annual report, the company’s cash and bank balances increased in 2017 by $0.7 million from a net cash position of $4.5 million at April 30, 2017 to $5.0 million at April 30, 2018. Last year, however, the company spent $7.2 million on capital expenditures, which included $4.6 million to complete Solomon’s Yamacraw and outfit it with a $1.2 million enterprise resource planning (ERP) system.
“During the year, the company made a principal payment of $1.8 million to its Class C and Class D preference shareholders,” the report states.
“Additionally, ordinary shareholders received dividends of $1.2 million and preference shareholders received $0.9 million for a total dividends payment of $2.0 million.” The report explains that AML also drew down the remaining $4 million of its $7 million demand loan at Royal Bank of Canada in order to purchase property. It adds that the total principal outstanding on its bank loans was $11.2 million.
As part of its growth strategy, the chairman said in the report that by the end of 2019, Cost Rite will be relocated from its Town Centre Mall location.
“While we pursue real estate options for expansion, we will strive to fully understand the impact of the recent value-added tax increases to consumer spending, and the impact the expected admission of The Bahamas into the World Trade Organization will have on our stores,” said Butler.
“A long-standing promise to our shareholders is to begin to increase our dividend distributions to a level where they represent 50 percent of our earnings. In July, we paid an extraordinary dividend of $0.02 for our 2017-2018 fiscal year, marking the first step in fulfilling this promise.”
The company plans to open a new training center in New Providence by March 2019.
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