Grace undertakes huge investments

INDEPENDENT SENATOR Douglas Orane, chairman and chief executive officer of Grace, Kennedy and Company, Ltd., has attributed an increase of more than 100 per cent in the company's long-term liability, to a massive increase in investments which he said the company had to undertake during the financial year ended December 1999.

It was the first time in five years that Grace had undertaken such huge investments, according to the 1999 annual report presented yesterday to shareholders at its annual general meeting at its Harbour Street offices, Kingston.

According to the report, Grace's long-term liability increased to some $629.7 million at the end of 1999 from $280.1 million over the same period in 1998, and from just under $80 million in 1995.

Asked by a shareholder to explain the rationale behind the huge increase, Senator Orane said the company was becoming more capital intensive and therefore had to invest more in its food manufacturing, maritime industry, international growth of its food brands as well as human resources, "which require higher levels of capital than before."

In an analysis of the financial results while addressing the meeting earlier, Senator Orane said the company had recorded significant progress towards their objective of becoming compliant with U.S. Generally Accepted Accounting Principles (GAAP), a move precipitated by the local company's decision to list on a United States stock exchange.

However, he said that based on a recent visit by Grace's Finance Director Don Wehby and himself to the New York financial markets, "the timing of a future U.S. listing would need to be considered carefully." He said that "at this point in time, the U.S. markets are engrossed in finding technology, telecommunications and media stocks," but "based on the cyclical nature of these markets, these interests will eventually change."

In the meantime, he said, Grace would concentrate on "our current programme to become more streamlined and focus even more on our core businesses, an approach preferred by U.S. financial markets."

Noting that they expected growth in all divisions of the company despite losses in some sectors over the past year, Senator Orane said that based on the current assessment, they were forecasting that profits after tax attributable to shareholders for the first six months this year would be about 20 per cent higher than the comparable period in 1999.

Also, he announced that Kingston Wharves and P&O Ports of Australia have signed an agreement to collaborate in evaluating the potential of participating in the proposed privatisation of the Kingston Container Terminal (KTO).

Kingston Wharves, a Grace entity, has been contracted by the Government to manage the operations at KTO, but that contract is due to expire on July 1, 2001, when new options for its management are expected to be effected.

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