Tag: Demerara Distillers Limited

Posted on

Half-yearly reports show increased turnover

Introduction
Caribbean Containers Inc, a public company in the paper recycling business has reported turnover for the first half of 2011 increasing by 9.3% over the same period last year. This follows a 10.3% reported turnover increase by the DDL Group of Companies and a 13.8% increase in the Banks DIH Group, the only one of the three with a September 30 year-end while CCI and DDL have a December 31 year end. The increases in turnover are of course considerably higher than the rates of inflation in the economy. Banks DIH in explaining its improved performance cited higher dollar sales, a term usually used in contradistinction from volume sales.

Caribbean Containers Inc.

CCI reported a gross profit increase over 2010 of 14.3% but its losses before tax increased from $21.8 million to $23.8 million. The report shows Earnings before depreciation as having declined in the first half of the year by 31.3% and that margins were severely affected by the rapid escalation in global fuel prices which resulted in the company’s fuel bill going up by some 40%.

The company’s performance in the third quarter ended September 30, 2011 improved strongly with an 18.3% growth in Earnings before depreciation compared with third quarter 2010. The result was a modest profit before tax of $2.7 million compared with a loss of $10.2 million for the third quarter of 2010. The overall result was a sharp decline in loss before tax for the nine months from $32 million in 2010 to $21million in 2011. The report explained that over the last four years, sales in the second half of the year averaged 13% more than in the first half.

CCI has had its fair share of financial problems over the years with a number of ownership changes and substantial debt restructuring. As at June 30, the company had liabilities of $365 million including trade and other payables of $116 million and loans repayable within a year amounting to $69 million. Cash resources amounted to $37 million but this had gone down to $25 million three months later.

In what can be described as Guyana’s principal LCDS private sector company, survival is still the challenge as the company’s aging technology has high running and maintenance cost, placing cash management at the centre of management focus.

Yet the company deserved commendation for being the only private sector company other than Republic Bank (Guyana) Limited to publish quarterly financial reports. The Bank of Guyana had published and recently withdrew Guideline # 10 requiring all banks to publish quarterly statements.

Banks DIH Limited

The half-yearly report is a consolidated report of the food and beverage giant and its subsidiary Citizens Bank Guyana Inc. Given the disparate nature of the operations and business of the two entities such a consolidated report does not allow any easy informed analysis of the two businesses.

The company had unaudited profit after tax in the half-year of $689.5 million compared to $594.1 million in 2010, an increase of $95.4 million or 16%. Chairman and Chief Executive of the group explained in the report that the improved results came mainly from increased dollar sales, efficiencies derived from Plant and Machinery upgrades and the benefits obtained from the installation of Capital Equipment.

The subsidiary Citizens Bank achieved an unaudited profit after taxation of $364.6 million compared to $261.0 million in 2010.

Total group profit after taxation for the half year was $1,025 million compared with $836 million, an increase of some 22% and a resulting increase in Earnings per Share from $0.71 per share to $0.85 per share.

A meaningful cash flow commentary is not possible as the cash and bank resources of the company cannot be distinguished from those of the banking subsidiary. Inventories, the bulk of which would be for the company stood at $4,367 million, increasing from $4,069 million one year earlier. For the type and nature of the operations this seems reasonable, particularly when compared with DDL to which we now turn attention.

Demerara Distillers Limited

This group comprises several local and overseas companies in the region, North America and Europe as well as a joint venture in India and associated companies in Guyana and Jamaica. In his Chairman’s Statement Dr. Yesu Persaud reported that the group’s pre-tax profit for the half-year of $769 million had increased by 6.4% over 2011, attributed to the performances of the European subsidiary, Demerara Shipping Company Limited and Distribution Services Limited.

When account is taken of increases in the fair value of investments and exchange differences on consolidation, the total comprehensive income for the year – a measure of the sum total of all operating and financial events that have changed the value of an owner’s interest in a business – is $627 million compared with $437 million in 2010. The group may have a challenge however in exceeding the full year reported profits for 2010 of $1,139 million. The profits for that year were augmented by a $151 million “share of profit of associated company.” In the first six months of 2011 this profit was only $8.4 million compared with $3.4 million in 2010 half-year, suggesting some major development in the second half of that year.

Earnings per share (EPS) have increased from $0.65 in half-year 2010 to $0.69 in 2011.

The balance sheet continues to be fair with current assets exceeding current liabilities by a ratio of nearly 2:1. The problem lies however in the composition of the two balance sheet components. Trade payables have climbed to $4 billion, bank overdraft is $2.8 billion and loans repayable in the next twelve months is close to half a billion dollars.

Share prices
None of the reports bother to speak of one of the most important issues for shareholders and that is the performance of the companies’ shares on the Stock Exchange. A comparison of recent prices is shown below:

Posted on

Annual General Meetings generate interest

Introduction
As the season for general meetings moves into high gear, members, or as some companies call them shareholders, have been showing some interest in these meetings, although not always for what might be considered the right reasons. One complainant in a letter appearing in the press this week went so far as to make the charge of meanness against the directors and management of one of those companies. For good measure the writer reported that there was a “deep groundswell of resentment against the directors and management.” One individual who takes a healthy interest in such meetings and is one of the younger breed of investors wrote me on a number of issues all of which he suggested indicate that the directors and management are generally insensitive to the convenience of their members, including the calling of meetings when most persons would be at work, the meetings of more than one company being held on the same day, and no facilities for the aged and infirm. The shareholder was so incensed that he suggested that despite the expense of putting out glossy annual reports, company management really do not want shareholders to attend, speculating that there must be “something to hide”.

That speculation seems both harsh and unjustified. Experience suggests that our shareholding public is not sufficiently informed to detect any “hidden truths” and questions at an AGM almost without exception come from a handful of persons and are less than pointed. Some people it seems go to meetings as a social event, for many the only time they are invited to a hotel. Others go for that peculiarly Guyanese phenomenon at which gifts are distributed to those in attendance. While the motive for this may be good, this is an unfortunate practice to which members have become so accustomed that I do not think any company would wish to discontinue.

Serious business
A shareholders’ meeting is a serious event at which searching questions should be asked of the directors particularly given the weakness of our financial press and the fact that none of the companies meets the press and gives them the opportunity to ask questions. Such meetings are not really the forum for long-service awards but for directors to allow questions about their stewardship.

The practice of gifts apparently developed as a goodwill gesture and is now used to encourage attendance at meetings. It is important to note shareholders’ entitlement is to dividends – not gifts – and that all holders of the same class of shares are to be treated equally. In other words if one shareholder gets a gift or a dividend, then all shareholders of the same class are equally entitled. It would be interesting to see how any of the companies would respond to a challenge to a charge of discrimination against shareholders who do not attend and are therefore told that they are not entitled to a gift.

On this note it is useful to note that the Institute of Chartered Secretaries of India – a country that has lots of experience with improper influences – says categorically that “No gifts, gift coupons, or cash in lieu of gifts should be distributed to Members at or in connection with the Meeting”.

Clash of meetings
In terms of timing of meetings, part of the problem is that several of our public companies have a calendar year-end and have four months within which to hold their annual general meetings. But to do so they need to have the company’s financial statements finalised and audited for inclusion in their annual reports which must be circulated three weeks before the annual general meeting. It is hardly any surprise then that most meetings are held in the fourth month following the year end. While the Securities Council cannot dictate the date and time when companies which they regulate can hold their AGMs, it may wish to consider discussing with them a schedule so that there is no clash and persons who hold shares in more than one company are thereby free to attend each of these meetings.

This coming weekend there are three meetings of public entities – the Demerara Distillers Limited and Sterling Products Limited (April 29) and the New Building Society Limited (April 28). All the reports offer useful opportunities for serious questions on policies, performance, shareholder relations, etc. which could be raised by some shareholder group with collective knowledge and some institutional memory. Before making some specific points about the companies here are some general questions which shareholders can raise.

Board of Directors
With each of the three companies having only one woman director, the questions should be asked about the steps the company is taking to attract qualified women and minority shareholders for board membership. They may also wish to enquire about any mandatory retirement age for directors; whether there is an ethics committee; the perquisites paid to executives, the basis on which these are valued, whether executives reimburse the company for the fair value of personal benefits received and whether executive perquisites are checked by internal auditors and reported to the audit committee.

Audit and controls
The number of internal auditors the company has; whether they report to a sufficiently high level of management and have ready access to the audit committee; the regularity with which they visit each operating location, including foreign operations; the standards and performance of the internal audit department and whether these have been evaluated by an external review; whether internal auditors have full, unrestricted access to all company functions, records, property and personnel; and the actions taken on any material weakness in internal control reported by the independent accountants.

In the case of a company with several subsidiaries, if the annual report does not provide the information, shareholders should enquire whether all of the subsidiary companies are independently audited and the names of the audit firms. Too many auditors are not necessarily a good sign, while no auditor for any of the subsidiaries casts doubts on the financial integrity of their financial statements.

Political and Economic Environment and Taxes
Shareholders should be asking whether the company has maintained its competitiveness in terms of sales and earnings in the markets in which it operates; the cost to the company of compliance with governmental directives and regulations and the risks of operating in some markets and industries; the conditions for investment and expansion; taxation and efforts to lobby government on various issues.

In an election year, shareholders may wish to enquire whether the company plans to make any contributions, loans or other support to any political candidate or organisation including lobbies and if so to ask for details.

Financial and Liquidity and Capital resources
Against the background of their own personal liquidity and to formulate their savings and investments, shareholders would need to hear from their company of its plans to pay cash dividends and issue cash or bonus stock. With financial statements and annual reports growing in size and complexity, the shareholder should be enquiring why financial statements and footnotes in the annual reports are not more intelligibly written so that the average shareholder can understand them.

This list is by no means exhaustive and would have to be tailored to the specific circumstances of the particular company. Serious shareholders should keep a file containing past annual reports and the questions asked since even directors sometimes need to be reminded of earlier commitments.

Let us now turn to some specific issues which could be raised at this weekend’s AGMs.

DDL
This company operates in several countries, the economies of all of which did not perform as well as Guyana’s. Yet of the group companies, those in Guyana performed less well than those abroad. Indeed the parent company (DDL) reported a 12% decline in after tax profit, while the other local subsidiaries including its trading company Distribution Services Limited, TOPCO, Demerara Shipping and Demerara Contractors all came in with disappointing results. The company’s financing strategy has been questioned in these columns before and one wonders at the logic of financing costs over the past five years nearly double the returns to shareholders. If it has not already done so the company needs to consider why with all the investment TOPCO is still making losses. The company’s investment in India continues to cost the company significant sums while St. Kitts and North America remain marginal after several years of efforts and expenditure. On the other hand the investment in National Rums of Jamaica Limited is producing good returns.

Overall the return on assets and shareholders’ funds, has dipped slightly.

Sterling Products Limited
While turnover has increased, profit after tax has declined and therefore so have measures such as return on assets and return on shareholders’ funds. Chairman Dr Leslie Chin attributed this to higher deferred tax which was not completely compensated for by a decline in the corporation tax charge. In order to maintain the same level of dividends paid in 2009 the company will be paying out 53% of its after-tax profits.

New Building Society
The notice convening the meeting excludes from the right to attend the meeting, mortgage account holders, who under rule 21 of the Society’s Rules are described as advance members. While a similar exclusionary note was included in the 2009 annual report, such persons have always been allowed into the meetings and the basis of the decision to exclude them is questionable.

The other three major issues of note are: 1. the Society has been finally brought under the Financial Institutions Act although it has a four-year transitional window; 2. it is still in breach of section 7 of the Act, an issue I have pointed out before; and 3. the Society actually lent one billion dollars less in 2010 than in 2009.

Indeed, despite the housing programme in which it should be playing a major role, the number of loans at the end of 2010 was a mere seventeen more than in 2009, a clear indication that the Society lost significant market share during the year.

While the report acknowledges the mutual nature of the Society’s ownership it not only repeats the word “profit” ad nauseam but the directors appear not to understand the meaning of the concept. No wonder then that they have ignored rule 23 relating to rebates, an issue which the directors agreed at the last meeting to review following a question from the floor.

For those attending the meetings, enjoy your gifts.

Posted on

Weaknesses in the self-regulation of the accounting industry have been demonstrated

The acceptance by Mr Chandradat Chintamani, FCCA of a place on the board of Demerara Distillers Limited on the last day of 2008 has highlighted the role of individual accountants and the regulator in ensuring that ethical standards in the accounting profession are maintained.

Mr Chintamani is a member of the Council of the Institute of Chartered Accountants of Guyana (ICAG) and the Secretary and point man of its Investigations Committee. That committee took close to five years (April 22, 2004 to December 30, 2008) to adjudicate on a professional complaint against two senior directors of DDL and the company’s auditors over a loan-buy back from troubled Hamilton Bank. The evidence is that the company gained from the transaction US$1.1M or more than G$200M at the then exchange rate of the US to the Guyana dollar. The gist of the complaint was that DDL had failed to account for the gain in its financial statements on which the auditors gave a clean opinion.

As the complainant I provided Mr Chintamani directly with particulars of the buy-back which were not reflected in the company’s financial statements.

What increased the concern over the transaction were the conflicting statements made by two senior officials of the company and their inconsistency with the information provided to Mr Chintamani.

In a letter dated December 1, 2003 the company’s Chairman had stated that “the loan was treated as a creditor and included in current liabilities since it is a line of credit.” For good measure the Chairman added that the net effect of the settlement resulted in no gain or loss to the company.

Two weeks later on December 14, 2003 a different story emerged from an article in the Stabroek News in which then Finance Controller and now General Manager of the company Mr Loris Nathoo reported that “since the transaction happened within the financial year and the loans were short-term the company did not see it necessary to report the matter in its statement” (sic). He was also reported as saying that the 25% discount of US$1.1M reflected “interest and other charges.”

After some considerable silence on the part of the Investigations Committee I received a letter dated December 30, 2008 advising me that “based on documentation examined, the Council [of the ICAG] is convinced that the settlement of the loan with Hamilton Bank Limited was properly accounted for in the financial statements of DDL for the year ended December 31, 2002.” I was therefore confronted with a number of questions:

If according to the company’s Chairman the loan was treated as a creditor (as opposed to loans payable or separate treatment as it is an interest bearing liability) how could the Investigations Committee find that it was properly accounted for?

If the later statement by the Finance Controller is correct and there was no need to report the matter in its financial statements were the Finance Controller and the ICAG referring to two different sets of statements?

Assuming that the ICAG is correct, why did interest payable only increase by $72M from 2002 to 2003 if in fact a gain was set against interest payable in 2002?

Should there not have been a disclosure of a loan transaction involving US$4.673M including the credit being specifically disclosed in note 4 to the financial statements?

Since under the ICAG’s bye-laws the Institute can initiate an investigation without a complaint, what is the burden and standard of proof applied by the Investigations Committee and its own obligations to pursue evidence in relation to any enquiry it carries out?

To resolve these questions I wrote the Secretary of the ICAG on January 19, 2009 asking for a copy of the report done by the Investigations Committee. I have not had a response to my request but learnt unofficially that the report may have been oral which raises some serious questions indeed.

The role of the ICAG as regulator is not only to advance the interest of its members generally but also to ensure the maintenance of high standards of practice and professional conduct by all its members. Vernon Soare, ICAEW Executive Director of Professional Standards on the occasion of the decision of that body to open up its tribunals to the press and the public in 2007 put it this way: “A modern professional body must demonstrate that its processes are objective and in the public interest.”

The conduct of the Investigations Committee and the ICAG in the matter of the complaint against DDL and its auditors clearly did not meet that test but rather demonstrated the serious weaknesses in self-regulation and the failure of the accounting profession in its duty to the public. The reputation of the country is no less determined by the conduct of its politicians than by the integrity of the accounting profession.

From the sequence of events Mr Chintamani must have been engaged in discussions about a seat on DDL’s board even while he bore a duty to participate in an independent investigation into a complaint against leading members of that Board. At a minimum, Mr Chintamani should have disclosed to the Council of the ICAG his impending appointment and the Board of DDL ought to have considered the ethical issue involved in offering a place to Mr Chintamani. The approach to him was improper and distasteful and does a disservice to the entire Board of DDL but in the final analysis it was Mr Chintamani’s duty to refuse. His failure to do so, undermined the investigation and discredits the profession.

Mr Chintamani needs to reconsider his decision and lapse of judgment and do what is necessary to restore some measure of confidence in the profession. The Council of the ICAG must also consider whether in the light of these developments the findings of the Investigations Committee can and should stand. A profession that many see, perhaps unfairly, as part of the tax evasion industry cannot afford to feed any negative perceptions about its leading members and itself.

Posted on

On the Line: Demerara Distillers Limited Annual Report 2008

Introduction
In what Dr Yesu Persaud, Chairman of the beverage giant described as one of its most difficult and challenging years the group has experienced in recent times, the Demerara Distillers Limited (DDL) group reports a decline in pre-tax profit of 8.8% over 2007. For the parent company itself, the decline in pre-tax profit was 8.98% and is a measure of how significant its alcohol and soft drinks operations are to the group. In addition to the parent, the group comprises a mix of operating companies in Guyana, the Caribbean, Europe and India. It also has a 30% stake in BEV Enterprises Limited, 33.33% in National Rums of Jamaica Limited and 19.5% in Diamond Fire and General Insurance Company Limited. The parent company accounted for 73% of the group sales but 87% of profit after tax. Correspondingly, the subsidiaries accounted for 27% of revenue and together with the applicable share of profits of associated companies accounted for 13% of after tax profits.

The Chairman attributed the performance of the company and group to the problems facing the global economy and the impact on consumers “burdened by the Value-Added Tax introduced in 2007.” The directors of the company are however confident about the future and in June last year announced a $4.5Bn expansion programme extending into the first quarter of 2010, which has already caused a significant increase in the long-term debt of the company. In fact with the total debt for the company increasing during the year from $4.2Bn to $7.3Bn, its debt to equity ratio, a measure of a company’s ability to borrow and repay money, has jumped from 0.48:1 to 0.82:1. Capital expenditure in 2008 was $1.8Bn and much of the increased borrowings by the company went into financing a 17% build-up in inventory and a 75% increase in receivables. Such borrowings have come at a cost, and finance cost increased during the year from $490Mn to $561Mn. This equates to one out of every three dollars earned before interest and tax being used to pay interest. A further $56Mn of interest paid was not charged to the income statement but was capitalised as a cost of the related asset.

Falling returns
The further expansion in plant and machinery will of course lead to additional interest cost which has increased since 2002 when the Chairman announced a financial restructuring including a share issue to minimise financing cost. That has not materialized, and financing cost has continued to rise. In fact interest cover which measures the number of times interest is covered by profit before interest and tax is now 3, when at the time of the announced financial restructuring it was 5.6 times.

While the gross assets employed by the group have more than trebled in the past ten years, the return on those assets has fallen from 29.1% in 1999 to 9.4% in 2008 – the lowest it has ever been. Despite the decline in after-tax profits by 10.9% the directors are proposing to maintain a dividend of $0.40 per share, jarringly referred to as cents per share, which of course went out of existence in 1998. The total dividend payout for the year is approximately 39%.

‘What if’ reporting
An interesting and innovative inclusion in the Chairman’s report was what may be described as a ‘what if’ statement, in which the company suggested that had it not been for some global factors affecting fuel, net exchange loss movement and increase in provision for impairments the company’s profits would have been $903Mn higher, and that profit before tax would have been an implausible $2,585Mn, an increase of 14% on decreased sales of 10.38%. These are however real costs, and reflect the challenges which directors are expected to confront and mitigate.

The composition of the net exchange loss reflected in note 6 to the financial statements is itself interesting, as it is made up of Exchange losses of $488Mn and Exchange gain of $296Mn. This emphasises the inevitable risk of dealing in international currencies such as the euro and the pound sterling, which often move one way and then the other, the negative impact of which may be avoided by what is referred to as hedging.

Liquidity strains
The company and the group have also seen a substantial reduction in cash with the company’s cash resources reduced to $79Mn from $235Mn at the beginning of the year, and for the group from $298Mn to $107Mn. Current liabilities on the other hand, skyrocketed from $3.7Bn in 2007 to $6.7Bn in 2008, partly due to two major short-term loans taken as bridging finance for the capital expenditure in 2008. The position will abate in 2009 with the conversion of those loans into long-term facilities, but will continue to remain high with trade payables and bank overdraft exceeding $6Bn. Included also in Trade and other payables for the company is a huge amount of $2.242Bn, bringing total interest bearing borrowings to $8.354Bn. If this trend continues without compensating returns on investments, they will become a real drag on the company’s development.

One continuing concern about this company is the high level of its inventory and receivables. The company’s sales for the year declined by 11%, but its level of inventory which includes finished goods, raw materials and spares increased by 17%. And for the group the position was only slightly better. Revenue increased by 2.3%, but its inventory increased by 20%. Expressed another way, the company and the group have in stock at their written down value the equivalent of sales value of 14 months and 20 months respectively! Intuitively one would expect the company to have had a high level of inventory because of the aging of alcohol, but these numbers lead one to wonder seriously about the quality of the inventory held by the subsidiaries.

Sales too have come with hidden financing cost. While sales for the company show a decline of 10.4%, trade receivables went up by 46%, and for the subsidiaries the increase in sales of 67% was accompanied by an increase in their trade receivables by 34%. This latter position appears better than it really is because a major subsidiary – Distribution Services Limited – operates on a cash and carry basis.

Subsidiaries
The performance of the subsidiaries and associates was mixed, with Tropical Orchards Products Company Limited reporting after tax losses increasing from $6Mn to $50Mn. When the group announced a $500Mn investment in TOPCO in 2004 Business Page pointed out that based on a standard measure of investment appraisal such a level could not be justified. Regrettably that fear is being more than vindicated and since then TOPCO has returned a net loss to the group.

Another concern is the investment in India which continues to show losses, and it takes a certain level of faith to persist with this investment in the face of annual losses having to be carried by the rest of the group. China and South America with which the company flirted for a couple of years appear to have gone off the radar and already the company is learning what a difficult environment Jamaica is with its share of pre-tax profits in the Jamaican company declining from $56Mn in 2007 to less than $4Mn in 2008. On the other hand, bright spots are Demerara Shipping and Distribution Services locally, and the European, St Kitts and US operations.

Belatedly, the directors appear to have accepted that the purchase by the company of the controlling shares in Solutions 2000 was not a good investment after all. The company has lost its entire investment in annual losses and given the performance and outlook for Solutions, the company must consider itself lucky that it did not suffer a bigger capital loss. Interestingly it is only in the year of disposal that the company discloses that the controlling interest in the company was acquired from DDL directors Messrs Komal Samaroo and David Spence in 2000. The identity of the purchaser has not been disclosed.

Governance
One difficulty I have with some of the numbers presented for the subsidiaries is that all the subsidiaries are private companies subject to minimal statutory and governance obligations. In fact some of them operate in jurisdictions which do not require an audit and even locally the subsidiaries do not comply with the law requiring them to file annual returns and financial statements. It is unlawful and unacceptable that the local subsidiaries have not been filing their annual returns and financial statements, and the only financial statements seen in any of the files at the Deeds Registry are the annual reports of the group.

In preparing for the column I sent a note to fellow accountant Mr Loris Nathoo, General Manager, asking for the turnover and the names of the auditors of the subsidiaries. Since it relates to the subsidiaries of a public company this information should not be a matter of secrecy. However, the reply took the form of a letter from the company’s in-house attorney that did not respond to my request, but boasted of the “Company’s 2008 Report [being] incomparable to any other published accounts in Guyana and, indeed, in the region.” One has to wonder whether the writer is familiar with the annual reports of Neal and Massy or RBTT of Trinidad and Tobago or Grace Kennedy of Jamaica.

One might have expected awareness on the part of the directors that their note 22 on Segment reporting is not in compliance with paragraph 69 (a) of IAS 14, which requires that where a company chooses business segments as its primary reporting format it must disclose revenue by geographical location of the customers. That is where the risk lies and that is what segment reporting is designed to highlight.

One change in the financial statements is the inclusion of the insurance arm Diamond Fire and General Insurance Inc as an associated company in the results of the company. Dr Persaud claims that this change was based on the advice of the auditors and the Institute of Chartered Accountants of Guyana. Of course that does not reflect the fact that it was a ruling resulting from a formal complaint lodged by this columnist.

New Director
A related issue is that on the last day of 2008 the board appointed Mr Chandradat Chintamani, Chartered Accountant, as a director of the company. This appointment is considered coincidentally unfortunate since a committee of the ICAG headed by Mr Chintamani had very shortly before exonerated certain directors and the company’s auditors from my formal complaint that they had failed to account for a US$1.1Mn discount on a loan buyback from Hamilton Bank, which had gone into liquidation.

Conclusion
Apart from the announcement about the new investment the Chairman’s report is largely retrospective, and nothing is said about the outlook for the company and the group for the current year and beyond. Like with all the companies whose shares are traded on the local stock exchange, the company’s share price has remained steady, and with the recession in the developed economies appearing to have slowed, the group must be hopeful that it will return to growth in 2009.