In the second year of the pandemic, when state-mandated COVID-19 containment shutdowns exceeded those in 2020, our Group was able to deliver improved revenue and profitability in 2021.
Results in fiscal year 2021 were off to a strong Q1 but were then adversely impacted by additional state-mandated COVID-19 containment shutdowns, particularly in our two largest operating jurisdictions: Trinidad & Tobago and Barbados. The most significant impacts were observed by the end of Q2 by which time Trinidad & Tobago and Barbados were both under states of emergency which lasted into Q4. During this period, many of our plants were either closed or operated at significantly reduced throughput. We were also affected by diminished social and economic activities because of government-imposed restrictions on travel, restaurants and bars. Our Group benefitted from a strong Q4 during which many but not all the COVID-19 containment and public health protocols of the jurisdictions in which we operate were lifted, delivering earnings at pre-pandemic levels, buoyed by improved gains on our investment portfolios.
In fiscal year 2021 our Group built on some of the cost containment lessons in 2020. We worked assiduously to mitigate the substantial increases to raw material costs and shipping costs. With our Q4 recovery as jurisdictions began to lighten restrictions, we were able to deliver improved operating margins which contributed to our 40% increase in diluted earnings per share.
Revenue for the period ended 31 December 2021 was $5.970 billion which is up $50 million or 1% from $5.919 billion in 2020. Manufacturing Packaging, Brewing and Construction Segment led the largest increase up $67 million (+3%); Automotive Trading and Distribution Segment was down $44 million (-2%); Insurance & Financial Services was up $22 million (+2%), while Media, Retail, Services and Parent Company was up $5 million (+2%).
Revenue increased across almost all geo- markets except Barbados, St. Kitts & Nevis and home territory Trinidad & Tobago which was only marginally down.
Capitalizing on cost containment lessons learned in 2020, our Group continued to right-size our overhead costs, reduce distribution and administration expenses, while maintaining our commitment to staff.
Operating Profit (before share of associated company profits and finance charges) increased 30% to $977 million ($752 million – 2020). The operating profit margin increased by 3.5 percentage points to 16.4% with improved profitability in our Banking and Insurance segment due to net gains on investment securities. We also saw broader improvement in profitability across most operating sectors within each reporting segment including Manufacturing, Packaging, Construction, Distribution, Automotive and Retail.
Finance costs increased to $47 million from $42 million (2020). Profit Before Taxation was $935 million up $212 million or 29% ($723 million – 2020). This resulted in an after-tax diluted Earnings Per Share (EPS) of $3.45 up 40% ($2.46 – 2020).
Our Group delivered $1.436 billion in net cash flow from operations ($917 million – 2020) through proactive inventory and receivables management. With improved credit discipline and strengthened controls we mitigated in some measure, the challenges posed by the constrained macroeconomic environment. These deliberate steps ensured a further strengthened financial condition. The gearing ratio, as measured by the total interest-bearing debt to shareholders’ equity, is an outstanding 9.1% improving 0.7 percentage points compared to the prior year.
We have therefore affirmatively positioned ourselves to readily fund attractive growth opportunities and are pleased to declare a final dividend for 2021 of $1.50 per share. Our Group is now well poised to exploit new growth opportunities as we look ahead.
We are an iconic Corporate Group comprising 73 companies of which 48 are operational, domiciled in over nine (9) territories, offering our renowned brands, products, and services in over 30 markets across the world. We employ a population of close to 6,000 people. We operate in nine (9) sectors which are aggregated into four (4) reportable segments.
This segment comprises the manufacture of plastics, glass containers, safety matches, bleach, paint, construction materials and supplies, and brewed and non-brewed beverages. Total assets invested were $3.334 billion across a range of geo-markets including Trinidad & Tobago, Barbados, Eastern Caribbean, Jamaica, and Florida. The segment generated revenue growth of 3% to $2.482 billion ($2.415 billion - 2020) and Reportable Segment PBT decreased (-5%) to $346 million ($365 million – 2020). The blended profit margin was 14%; down 1.1 percentage points from the prior year.
Our chemicals and packaging businesses were among the few selected manufacturing operations deemed ‘essential’ and therefore allowed to remain operating throughout the pandemic. We doubled exports in our packaging business as a result of the firm rebound in demand from customers who had curtailed orders in the prior year.
In our chemicals business, overall caustic soda volumes increased on prior year as several customers’ plants, which were shut down for turnarounds, returned to being fully operational in 2021. Packaged bleach volumes in both local and export markets maintained levels significantly above pre-pandemic volumes, consistent with that of prior year. Chlorine export sales also grew as our chlorine transfill hub in Jamaica had its first full year of operations. Concurrently, we are expanding our water treatment offerings in Guyana and Barbados; soon to be followed by entry into the Dominican Republic and the USA.
Much of our construction businesses’ efforts this year were to recover from the shut downs due to COVID-19 containment measures in both Barbados and Trinidad & Tobago. Barbados was further impacted by disruptions due to La Soufrière's ashfall and Hurricane Elsa.
Our clay block manufacturing business maintained consistent revenue and profit before tax over prior year while our concrete block observed slight declines in volumes sold. Despite the drop in volumes our block manufacturing business had slightly higher margins with increased plant efficiencies. We look forward to expanding our regional footprint as we deepen our dealer partnership network in Guyana.
In the coatings business we launched our "Boldly Berger" regional campaign which is the initial phase of the re-energizing of all our branding and packaging. Our new colour system innovation brings a more environmentally friendly formulation with improved quality and reduced fading. We now offer over 2,000 standard colours versus 900 previously, and with our newly deployed mixing units, and our TrueTint technology, we can match any colour you can possibly imagine. We observed double digit growth in revenue in each of our jurisdictions, however this was matched by 10% - 40% input cost price increases in our core raw materials and shipping services which negatively impacted weighted average profitability.
This year our beverage volumes were even more impacted by state-imposed COVID-19 containment measures as curfews plus restrictions on the sale of “on-premise” alcohol at bars and restaurants continued. These precipitated changes to consumer purchasing patterns. In the United States and Grenada where restrictions were lifted, we observed increased volumes compared to prior year; while volumes were down in home territory Trinidad & Tobago and in St Kitts & Nevis. Our brewing business creditably used the time to complete the planned global re-brand of our flagship Carib beer and we look forward to our future rebound. Capital investment in plant and equipment throughout our beverage businesses will further improve efficiencies to offset the negative impacts of higher input costs and still recovering consumption.
This segment includes the automotive and distribution businesses in Trinidad & Tobago, Barbados, and Guyana. Total assets invested were $1.502 billion ($1.454 billion – 2020) with revenues generated down 2%; to $2.055 billion ($2.106 billion – 2020) and reportable segment PBT up 28%; to $161 million ($126 million - 2020). Reportable Segment PBT margin was at 8%; up 1.9 percentage points from the prior year.
In Automotive, the economic circumstances experienced in 2021 almost mirrored that in 2020. The one fundamental difference was that of the global semi-conductor shortages in 2021 which adversely impacted new vehicle deliveries. This had different impacts in each of the markets in which we operate as dealers with the highest inventories were the least affected. The Barbados market declined approximately 20%, while Trinidad & Tobago was down 8% and in Guyana we observed 15% growth. In such an environment containment of operational expenses trumped other initiatives. Against this backdrop our automotive business delivered improved profitability. We have repositioned our focus as a mobility company. Our “Max Terms” financing products will better drive our used vehicle sales. Our Guyana portfolio is expanding and ready to experience the huge opportunities unfolding in that market.
Our Trading & Distribution businesses had very strong results vs prior year, surpassing both revenue and profitability due to a combination of continued pandemic driven demand, less restrictive market conditions in Guyana, as well as better overall operating efficiency. Of note were the very successful initiatives across all the markets to better manage pricing and costs leading to the strong bottom line delivered.
We are encouraged that the transformational work to reorganise our commercial operational models to provide a more consistent level of experienced leadership teams across our entire trading and distribution operations has borne fruit.
This segment includes merchant banking, commercial banking, and life, property & casualty insurance. The segment experienced a revenue increase up 10% to $1.070 billion ($970 million - 2020) and a reportable segment PBT up 78% to $371 million ($209 million – 2020) surpassing even pre-pandemic levels of 2019.
In our Banking business, our improved performance was a result of the successful execution of innovative transactions by our Investment Banking division, as well as a 15% increase in net interest income from our core lending business. Our Treasury and Foreign Exchange trading business performed quite well and continued to be agile in finding ways to compete in a smaller and more competitive market. Our Investment Services and Wealth Management divisions continue to be affected by the pandemic but performed admirably, growing volumes and revenue, demonstrating the resilience of these lines of business.
ANSA Merchant Bank became the first 100% fully cloud-based Bank in the Caribbean in 2019 with its investment in and installation of a new core banking software system. This foundation allowed us to immediately commence the integration of ANSA Bank Limited, (acquired and rebranded in 2021) into the ANSA Merchant Bank Group. We are focused on our strategic long-term objective of transitioning the bank into a technologically driven digital-first commercial bank.
In Barbados, ANSA Merchant Bank (Barbados) Limited performed exceedingly well, more than quintupling profits as the centralized elements of the back-office into its parent, ANSA Merchant Bank Limited, was successfully executed, along with its corporate rebranding campaign (from Consolidated Finance Corporation Inc.), which was widely publicized in the Barbados market. In view of the strong diversification of our banking businesses and agility to be able to modify our business models, especially during the pandemic, much faster than our larger counterparts, our overall banking business was able to grow market share and achieve a market-leading return on assets of 3.26%.
Our insurance business had a record-breaking 2021, having posted its best results and delivering PBT of $238 million; up from $74 million in 2020. This performance was due to the combination of solid performance in our core insurance business, and from mark to market gains arising from our investment portfolios which benefited from buoyant international and regional markets.
During the year we appointed very experienced and qualified general managers to lead each of our insurance companies. These appointments support our succession planning needs, and allow each of our businesses to focus on key expansion and growth strategies as we begin a journey of transformation initiatives.
We began the merging of our Barbados Insurance operations (Trident into Brydens Insurance) in our TATIL branch which we have branded “Trident Insurance”. The merging of the businesses is being done on a “run off” basis and this 12-month process will be concluded during 2022. We expect to see the full effect of synergies and benefits of this acquisition in 2022. Upon completion, we will account for an estimated 10% share of the Barbados property & casualty insurance market.
In November 2021, TATIL entered into a “Lock up Agreement” with CL Financial Limited (in liquidation), for the purchase of CL Financial’s 94.24% shareholding in COLFIRE. Once concluded, we estimate that we will attain a market share of approximately 25% of the property and casualty insurance market in Trinidad and Tobago. This transaction is currently at the regulatory approval stage, and we hope to obtain the necessary approvals to complete the transaction in 2022.
This segment, which includes our majority stake in multimedia company Guardian Media Limited, furniture retail, purchasing, logistics, shipping and real estate reported a revenue decline of 15% to $362 million ($427 million – 2020) with reportable segment PBT up $33 million or 135% to $58 million ($25 million – 2020) which includes a $47 million one-time gain on sale of associates during FY2021.
Our media business observed shrinking marketing budgets and further shifts in spending commitments from traditional channels to social and e-commerce (digital) advertising channels over the course of the pandemic. All combined, this culminated in yet another challenging year as advertising spend did not recover to pre-COVID levels. In our home territory Trinidad & Tobago, the state of emergency was only discontinued in mid-Q4 at the start of the holiday season. This brought about a welcome rebound in business activity through which our media business returned to profitability. The pandemic has accelerated the transition to digital consumption of content and our media business must meet this demand through the creation of compelling content, while improving organizational agility and efficiencies to protect margins based on leaner digital revenue streams.
Standard Distributors had improved bottom-line results versus prior year. Retail businesses were closed for a period of three and a half months during this financial year due to COVID-19 restrictions as mandated by the Government of Trinidad & Tobago while our Barbados branches were mainly affected as a result of the four-week National Pause in Q1. The retail business did have the predicted positive sales growth after reopening due to ‘pent-up demand’, however the industry’s margins continued to face headwinds from significantly increased product and shipping costs. Notwithstanding these challenges, our business strategy remains centred on the customer experience journey, ensuring the lifestyle range of products they want and need are readily available, together with the delivery of a seamless in-store and online experience for all.
Our procurement, shipping and logistics businesses ANSA McAL (US) Inc. and Alstons Shipping Limited provide procurement and logistics support to both Group and third-party customers. These businesses observed double digit increases in revenue as customers increased purchases to buffer stocks to mitigate suppliers’ stock outs, lengthened lead times for shipments, and to lessen inland trucking issues and port congestion. We are encouraged by the outsized growth in our Guyana business. We have supplemented resources to ensure the development of this revenue line.
Activity rebounded in most of our geo-markets but was flat and down in our largest territories, Trinidad & Tobago and Barbados respectively.
Barbados had an unusually challenging year with disruptions both man-made and natural. There was a four-week “National Pause” with extended mandated COVID-19 restrictions, volcanic ashfall and Hurricane Elsa. Revenues decreased 5% to $835 million. Barbados’ vehicle market remained challenged with new vehicle sales markedly declined. This was partially offset by increased vehicle parts sales and service revenue. Our distribution business showed slight improvement in revenue as we expanded its retail operation with a Specialty Gourmet store: Cavi & Vino, a pharmacy on our compound as well as an expansion of our walk-in retail facility.
Revenues were up 20% to $345 million mainly due to distribution reaping the benefits of our new go-to-market strategy. ANSA Motors Guyana, our nascent addition to the automotive business, has shown over 40% growth in new vehicle sales. With such encouraging signs, we have increased manpower and management, increased rental space and promoted the launch of our construction equipment business, Burmac. To improve market focus and agility we have restructured our beer distribution business under the direct management of Carib Brewery. Our distribution business re-focused to complete its new warehouse which doubles its storage capacity to support its growth expectations.
Revenues increased 5% to $256 million. This relates primarily to our two breweries located in St. Kitts & Nevis and Grenada and our paint manufacturing operation in Grenada. Here we observed mixed results. In Grenada we observed higher sales volumes in both brewing and coatings with the Grenada government’s focus on construction and its commitment to no total shutdowns. In St. Kitts & Nevis we observed a low single-digit percentage decline in sales as a very difficult year improved in late 2021 as COVID-19 protocols were relaxed. Notwithstanding, the businesses delivered a commendable performance as breweries in both territories committed to additional promotions with our global Carib rebrand. In the E.C. territory we continue to advance the development of our fifth brewery having signed a Memorandum of Understanding with the Government of Antigua and Barbuda.
Reported revenues were $143 million, up 23% driven by Berger Paints Jamaica Limited which weathered the changing operating environment and was boosted by the Jamaica government’s commitment to its domestic construction industry. Our chemicals business marked its first full year of operations for our chlorine transfill hub which positions us to better compete in the CARICOM region’s second largest chlorine market. Our water treatment business in Jamaica will focus on offering superior service and cost-effective solutions to the Industrial and Commercial sectors.
Operating businesses include our procurement/ logistics hub as well as brewing through Indian River Brewing Company (trading as Carib Brewery USA). Revenue reported was $49 million, up 22% on prior year as a result of brewery volumes up 33% with our entry into the USVI market and the reopening of Universal Studios in 2021.
In our home territory, reported revenues of $4.341 billion were almost flat year on year. Most of our businesses were ordered closed for over three months due to re-instituted COVID-19 restrictions beginning in Q2 and lifted for the most part in mid-Q4 2021. Our building block and coatings manufacturing businesses still managed growth in spite of government-imposed shutdowns.
In our automotive business, sales declined because of showrooms being closed for almost a third of the year, along with the shortage in new vehicle arrivals as a result of the global automotive industry experiencing a semi- conductor supply shortage. Brewery volumes declined compared to prior year with the continued restriction on the sale of alcoholic beverages at restaurants, bars, and other entertainment and recreation establishments. Our packaging plants rebounded well as export volumes showed a marked increase. Our profit uplift in this market was due primarily to gains on our investment portfolio within our Banking and Insurance segment.
In August 2021, the Group commenced the implementation of a formal Group-wide Enterprise Risk Management (“ERM”) program to integrate risk management into all aspects of the business. The Group-wide ERM framework and policy, which aligns with both the International Standard on Risk Management ISO 31000:2018 (ISO 31000) and the Committee of the Sponsoring Organisation of the Treadway Commission (COSO) framework, will seek to:
We define “Risk” as the possibility of an event or activity preventing the Group from achieving our objectives. It may be positive, negative or both, and may address, create, or result in opportunities and threats. Ultimately, the Group seeks to manage risks such that we identify threats and reduce the negative impact of these risks upon achievement of our objectives and increase positive exposure to ensure that potential opportunities are maximised. The major risks are described below.
The operating environment of the Group was dominated by the social and economic impacts of the COVID-19 pandemic. The threat posed by COVID-19 required us to respond with new operational measures such as social distancing, staff rotation, remote working, and additional sanitisation protocols. The effectiveness of our comprehensive business continuity plans and our ability to respond to unexpected risks and communicate with key stakeholders were tested.
The impact of COVID-19 and more recently the Russia/Ukraine conflict have significantly impacted global supply chains and have resulted in material cost increases, production capacity impacts, demand volatility, logistics route constraints and increased transportation and freight costs. The Group mitigates this risk by ensuring robust contracts and clauses are in place and closely monitoring inventory levels and reserves.
This is concentrated in the Financial Sector and is actively managed by Investment and Credit Risk Committees. Each month, the various committees meet to review the recoverability of investment and appropriate provisions taken in accordance with policy and regulatory requirements. Throughout 2021, the pandemic precipitated changes in consumer and business behaviours and restrictions on economic activity, which have negatively impacted the global economy and could continue to negatively impact our consumer and commercial credit portfolios. Accordingly, we maintained a heightened allowance for credit losses as a result of the expected macroeconomic impact of COVID-19, which has adversely affected our results of operations. As at 31st December 2021, all necessary provisions and impairments have been reflected in the consolidated financial statements.
Strategic risk is the uncertainty and untapped opportunities created and affected by internal and external events that may inhibit the achievement of the Group’s strategic intent and strategic objectives. During the year, we mitigated strategic risk by adopting best practice strategy development methodology consistently across the Group and implemented strategy with clear actions, performance targets and metrics.
Our businesses and revenues derived from non-Trinidad & Tobago jurisdictions are subject to risk of loss from financial, social or judicial instability, changes in governmental policies or policies of central banks, expropriation, nationalization and/or confiscation of assets, price controls, high inflation due to currency fluctuations, natural disasters, the emergence of widespread health emergencies or pandemics, capital controls, currency redenomination risk, exchange controls, unfavourable political and diplomatic developments, oil price fluctuations and changes in legislation. We continue to work collaboratively and support all governments and the countries in which we operate and will increase our monitoring of the economic climate. As a Group, we take seriously our compliance with the respective laws of every territory with which we conduct trade and factor in the growing country risk into our future investment planning.
Certain jurisdictions in which we do business have been or may be negatively impacted by slowing growth or recessionary conditions, market volatility and/or political or civil unrest. The pandemic has had a severe negative impact on global GDP, and the global economic environment remains challenging even as output has begun to improve. Economic weakness may prove persistent, and this risk is heightened in the CARICOM region particularly Trinidad & Tobago and Barbados which are experiencing contractions in government and consumer spending as well as less than timely receipt of payment for government receivables. Each subsidiary has a process around the granting of credit and there is Board oversight of the process. In cases where provisions are taken, debts are still pursued and where necessary, legal action taken to enforce recoverability.
With increased prevalence of digital platforms and inter-connectedness, our risk and exposure to cyber-attacks remain heightened because of, among other things, the evolving nature and pervasiveness of cyber threats, our prominent size and scale, our geographic footprint and international presence, our companies’ exposure to and reliance on networked systems and the internet, and our role in the financial services industry and the broader economy. The Group mitigates cyber risk by maintaining protective measures including training, backup systems and other safeguards to support our operations and bolster our operational resilience, including periodic third- party evaluation of our Group’s cybersecurity risk program. Although to date we have not experienced any material losses or other material consequences relating to technology failure, cyber-attacks or other information or security breaches, there can be no assurance that our controls and procedures in place to monitor and mitigate the risks of cyber threats will be sufficient and that we will not suffer material losses or consequences in the future.
This remained one of the biggest risks impacting the Group’s ability to grow and to manage increased input costs. The Group has positive, long-standing relationships with its principals and has negotiated favourable credit terms and this has assisted in managing the current situation. In Trinidad & Tobago and Barbados, we experience significant constraints in securing US currency. We have the currency (in Trinidad & Tobago dollars) to consummate almost any transaction or acquisition, however the challenges to purchase foreign exchange has forced us to borrow and has increased the cost of doing business. Also, though our leverage is low, the repayment of hard currency loans is also impacted by unavailability of hard currency.
Illegal imports and parallel trade impact local content and employment. We have had to actively engage stakeholders to help contain illegal imports, dumping and contravention with local labelling standards. Such imports do not just impact the growth of the Group but also the activity evades the taxation net and is a source of revenue leakage for the host government. We are working with regional Governments to introduce greater enforcement and/or regulatory change as