Air conditioning company, CAC has made a remarkable turnaround from the losses incurred in 2019 to post a substantial increase in operating profit and revenue out-turn for 2020.

Operating profit for 2020 jumped to $60.19 million coming from $2.3 million in 2019, while net profit registered a substantial turnaround from a loss of $33.4 million in 2019 to a profit of $32.5 million at the end of the financial year on October 31, 2020    This amounted to a substantial turn around with net profit increasing by $65.9 million.

Revenues are up 12% to post $1.25 billion coming from $1.12 billion in 2019 while gross profit improved by 23% to $423.85 million coming from $344.62 million in 2019. Gross margins were up 9% over last year due to improvements in purchasing and cost controls.

Expenses kept in check

Expenses were kept lower than the previous year, as the company took rapid action to respond to COVID-19 pandemic by reducing operating costs whilst not making any of the positions of staff member redundant. Net finance and other costs were also reduced, resulting in total expenses falling by 7% compared to the prior year.

Inventory continued its downward trend despite a build-up of equipment and parts (slower movement) while work in progress and goods in transit were reduced. Trade receivables increased by 28% for a number of reasons.

CAC Chairman and CEO, Steven Marston explains that the slowdown of work in the second and third quarter due to the pandemic resulted in the hike in trade receivables. Marston added that the situation was compounded by job execution and customers maintaining their cash reserves and delaying payments along with an increase in fourth quarter billing also impacted on trade receivables going up.

Another factor cited by the CAC Chairman and CEO was an increase in contract assets, which means work done but not yet billable to customers as per International Financial Reporting System (IFRS) 15. The amount was by $136 million and CAC managed to reduce its expected credit loss as per IFRS 9.

Full payment now made to X-ray Diagnostics stemming from lawsuit 

Trade payables were reduced due to the settlement of the X-ray Diagnostics lawsuit case in which CAC was ordered to settle. The amount of US$400,000 plus J$1,159,000 was paid in the just ended financial year. The final payment of US$45,000 was paid this month.

Borrowings reduced slightly as CAC was able to contain its use of the short-term loan facilities but cash and equivalents were down primarily due to the fourth quarter payments to settle the X-ray Diagnostics case.

Marston pointed out that CAC, ”has once again demonstrated our agility by identifying and offering indoor environ mental quality solutions such as fresh air injection systems, higher efficiency filtration, sterilization and improved maintenance services which gained us additional revenues.“ He disclosed that the company is investing in new enterprise software, which is being implemented with expected completion in early 2021.

In concluding Marston said, “We have started the new financial year with a healthy job portfolio and are working on some exciting changes, including handing over to a new CEO, and other initiatives that will put us on a path of profitable growth as we continue to ‘Improve People’s Lives’.”