The LAB grew cash fourfold in the year
Published:Friday | December 27, 2019 | 12:21 AM
Limners and Bards Limited, which trades as The LAB, beat market expectations which pushed the stock higher, but the company itself amassed a pile of cash which grew fourfold in the year.
The market pushed the stock 6.5 per cent higher in the week since the release of its results. It now trades firmly above the psychological $3 barrier. It closed at $3.08 last week Thursday.
The company attributed its growth to maintaining its core services while growing new business. The company operates an advertising agency, with its shares listed on the junior arm of the Jamaica Stock Exchange (JSE) earlier this year. It earned $107 million in pretax profit for the year, up from $76 million a year earlier. That equated to 12 cents per share, up from 8.0 cents a year earlier.
The LAB creates advertising campaigns for large companies, including Digicel, GraceKennedy, National Commercial Bank, Jamaica Public Service, Wendy’s, Domino’s and others.
The company offers three main business streams covering agency, media and production services. Its agency division creates brand strategy, copyrighting, and concept development.
The company’s profit showed improvement by double-digit amounts year-on-year, but its cash flow grew by 370 per cent to $291.5 million from $62 million a year earlier. Specifically, its cash flow from operations are up by one-third to $121 million, while the cash it used for investing purposes decreased by three-quarters to $20 million. These improvements arose even before factoring in the $179 million net raise in its initial public offering (IPO) from issued shares.
The company, in its prospectus, had indicated that the funds raised from the IPO would allow it to buy more equipment, finance organic and inorganic growth, and also raise its profile to garner more local and regional clients. Its plans also include the build-out of a public relations department and a digital department. The company wants to earn 25 per cent of its revenue outside Jamaica in three years. In July, the company disclosed that it already identified a target for acquisition as a means of fulfilling its growth strategy.
The LAB, which is principally owned by CEO Kimala Bennett at 77 per cent, is valued at $2.9 billion by market capitalisation. The LAB’s total assets minus liabilities stand at $356 million, representing about 8.0 per cent of the market cap.
Over five years, the company achieved higher revenue and profit in each year except 2017. For its full year ending October 2019, The LAB made $632 million in revenue compared to $483 million a year earlier.
The LAB had its beginnings in 2009 as The Production Lab and was renamed The Limners and Bards Limited in 2014. Prior to its incorporation, The Production Lab was registered as a partnership in 2007 between Bennett and Melissa Llewelyn.