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Minimal increase in EPS

National Enterprises Limited

For the nine months ended December 31st 2012, National Enterprises Limited (NEL) delivered Earnings per share (EPS) of $0.68 relative to the $0.66 reported in the comparative period the prior year.

For the period, NEL's Revenue remained relatively flat at $322.7M. Gross profit surged 65 per cent to $61.7M resulting in a Gross profit margin of 19 per cent versus the 12 per cent reported in 2011. The Group generated Operating profit of $20.9M up from a loss of $3.5M conveyed for the prior year. This was mainly as a result of the 9 per cent decline in Cost of goods sold.

NEL's Share of Profit of Equity Accounted Investees (SOP) marginally fell to $394.7M. The largest contributor to performance was Tringen, which accounted for approximately 60 per cent of SOP (Exhibit 1). The second largest contributor to SOP was NGC NGL with $115.1M, although this represented a 29 per cent year on year decline. NGC LNG continued on the path of recovery, contributing $30.2M or 8 per cent to SOP. TSTT's $13.6M contribution to SOP was a 32 per cent fall over the comparative period for 2012 and made it the weakest performing Investee Company, accounting for only 3 per cent. The combined performance of NEL's Investee Companies and Subsidiary resulted in a 4.9 per cent growth in Profit after tax, to $411.1M.

NEL's profitability is greatly impacted by the performance of Tringen and NGC NGL. The profitability of these companies resulted from the upward trend of energy prices since 2008. In October 2012 ammonia prices reached a four-year high averaging $670 per metric tonne. Ammonia prices should remain elevated due to continued high demand for commodities and this should bode well for the profitability of Tringen. Henry Hub natural gas prices averaged over US$3 per million British thermal unit (mmbtu) for the first time. It is anticipated that Henry Hub prices will continue to marginally increase in 2013. The US Energy Information Administration (EIA) forecasts that the Henry Hub natural gas price will average US$3.53 per mmbtu in 2013 (compared with US$2.75 per mmbtu in 2012). However, there is some apprehension that the new developments in the production of shale gas could impact the selling price of natural gas which may in turn affect NGC NGL's contribution to SOP. Overall, NEL's satisfactory performance for the period has positioned the Group on a course to achieve positive results for the last quarter.

At a price of $14.71, NEL is trading at a trailing P/E of 14.4 times, close to its 3 year average of 14 times. The Company's dividend yield is currently 4.76 per cent.

Agostini's Limited

Agostini's Limited (AGL) reported diluted Earnings per share (EPS) of $0.38 for its first quarter ended December 31st 2012 (Q1 2013), unchanged when compared to the corresponding period of the previous financial year.

The Group reported Revenue of $359.4M versus $363.4M from last year. This 1.1 per cent decline was largely attributable to the reconfiguration of distribution arrangements in Hand Arnold Trinidad Limited. Operating profit grew 1.8 per cent to $33.8M with the Operating profit margin increasing slightly from 9.1 per cent to 9.4 per cent. According to the Chairman's remarks, the refinancing of lower cost short-term debt by the $50M bond issue in January 2012 resulted in a 14.5 per cent increase in Finance costs to $2.7M. AGL's Profit after tax rose 1.6 per cent to $22.7M.

In terms of the Balance Sheet, Assets and Equity increased by 2.7 per cent and 10.4 per cent to $858.9M and $470.5M respectively, whereas Liabilities decreased by 5.4 per cent to $388.4M. The debt to equity ratio continues to improve, and stood at 20:80 in Q1 2013 versus 20:60 in Q1 2012.

Segmental analysis of Revenue and Operating profit showed the Pharmaceutical & Personal Care Distribution division remains the largest contributor to both, accounting for approximately 62 per cent and 65 per cent. The Pharmaceutical & Personal Care Distribution division experienced a 3.1 per cent and a 9.3 per cent rise in Revenue and Operating profits respectively (Exhibit 2). On the other hand, the Food, Construction Related & Other Trading division suffered a 7.3 per cent and 9.8 per cent decline. The unsatisfactory performance of this sector is due to the lower sale volumes generated by Hand Arnold Trinidad Limited, which was hampered by changes in distribution arrangements and by the closure of the unprofitable Wine & Spirits Division.

On the Retail side, AGL has expanded its SuperPharm chain of Pharmacies. The Group's 7th SuperPharm outlet at Marabella opened on February 1st 2013. The initial customer response was positive and once this continues it may contribute favourably to the Group's performance. The company expects to reap the rewards of the restructuring done in Hand Arnold Trinidad Limited and the investment in Company owned brands. The macroeconomic environment remains stagnant, however it is anticipated that the Government's proposed stimulus programmes would positively contribute to economic growth in 2013. This, coupled with AGL's internal initiatives might yield positive results for the Group.

At a price of $16.60 the dividend yield stands at 2.65 per cent. AGL is trading at a trailing P/E multiple of 15.09 times, a premium to its 3 year average of 13.1 times.

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