I am very pleased to report that our Group has again performed well in 2008. We delivered a strong underlying profit performance exceeding the record results achieved in 2007, and we continued to generate significant cash from our operations allowing us to retire a portion of our external debt and acquire one of our competitors Sissons. Our turnover increased by 7% over 2007 and for the first time in our history exceeded $5 billion dollars.
In our manufacturing, packaging and brewing sector we increased turnover and profit before tax by 10% and 13% respectively, despite significant inflationary pressure on the cost of raw materials, labour and utility costs. Our auto trading and distribution sector produced results marginally below those we achieved in 2007. The media, services and parent company sector increased its turnover by 21% and profit before tax by 23%.
Our operating profit of $987 million was 5% lower than we achieved in 2007. However the results for 2008 have been impacted by the recognition of impairment losses of $130 million arising in our financial services sector. Despite increasing our turnover in this sector, the impact of the impairment losses results in our profit before tax from this sector being 45% lower than we achieved in 2007.
It is important to recognize that these losses are not cash losses, and do not represent an additional liability of the group. Over a period of time I am confident that the losses will reverse. We have recognized these losses in 2008 in order to comply fully with International Accounting Standards, and had these losses not arisen our operating profit for 2008 would have exceeded the level we attained in 2007.
I am pleased to report that your Board of Directors has recommended a final dividend of 70 cents per share. This, together with the interim dividend paid of 30 cents will bring the total dividend payable to shareholders for the year to $1.00 (2007:$0.90). The final dividend will be paid to shareholders on 5th June 2009. The level of dividend that we have recommended reflects your Board’s confidence in the underlying performance and strength of the Group.
Investment in ANSA McAL People
Despite the downturn in world economic activity we continue to extend and invest in training our team. At the centre of our V10 philosophy we will continue to recruit only the brightest people, train them with the best resources available, and nurture them so that they perform exceptionally as individuals and team members within the Group.
During 2008 more executives graduated from the Executive Development Programme run in conjunction with the University of the West Indies, and many of our subsidiaries have also invested significant amounts in the year on additional training. Further training programs will be introduced in 2009 as we continue to seek to equip our team with the tools necessary to excel.
Investment in our Community
The Group continues, as in prior years, to make a significant contribution and social investment into the communities that we live and work in. In 2008 we invested over fourteen million dollars in individual and nation building projects locally and regionally within the Caribbean basin. These projects have had a positive effect contributing to the upliftment of our people, our environment, our communities, and our national heritage.
The social investment we have made at a group and subsidiary level has played a vital role in linking our growth as a group to the growth of our regional human potential as a nation. We take very seriously the relationship between our group and the positive impact we can have on the development of our local communities. We will continue to invest time, effort and resources in building this relationship.
The ANSA McAL Foundation
The ANSA McAL Foundation was developed to publicly recognize, reward, and encourage excellence in human Caribbean Community. The foundation continued to focus on its principal project, the Anthony N. Sabga Caribbean Awards for Excellence. These awards are made on a biannual basis. In 2008 four awards were made. Professor David Dabydeen was awarded in the category of Arts & Letters, Ms. Annette Arjoon and Mrs. Claudette Richardson-Pious were joint awardees in the category of Public & Civic Contributions, and Mr. James Husbands was awarded in the category of Science & Technology.
The ANSA McAL Family
As in all years I wish to acknowledge the support and contribution of all of the Directors who sit on the parent and subsidiary boards in the Group. I also wish to thank the group’s executive team for providing excellent advice, guidance and support during the year, and our total staff complement of over 6,000 people for working hard to achieve the results set in these accounts.
Despite the challenges we have experienced in 2008, I am convinced that we have the right team of highly motivated and dedicated people, who understand
and are focused on achieving the objectives we have set in our V10 mission. I remain confident in the ANSA McAL family. The impact our group has locally and internationally continues to leave an indelible and proud footprint in the social and economic landscape of Trinidad and Tobago and the Caribbean region as a whole.
2009 will clearly be a very difficult year for the world economy, but I strongly believe that our group is particularly well placed to respond to these challenges and to take advantage of the opportunities that will undoubtedly arise. The events of 2008 highlight the strength of the conglomerate business model, the ANSA McAL Group of companies, and the wisdom of the strategic initiatives that underpin the V10 vision your Board has set for the group. However the group does enter this testing period with a number of significant advantages. Under our V10 mission, we have pursued a consistent strategy which has created a business that is well diversified in terms of products, services, customers, currency and geography. We also have a strong balance sheet with very low gearing.
As part of our V10 mission, and in recognition of the serious impact inflation has on our manufacturing companies, early action was taken to ensure that our manufacturing companies are equipped with modern low production cost facilities, and we continue to take steps to reduce operation costs to ensure that all our businesses remain on a sustainable footing. As a group, I am confident that we are better prepared to deal with the uncertainties that lie ahead.
A. Norman Sabga
Chairman and Chief Executive