Business

CAC 2000 explores new revenue stream

Wednesday, January 10, 2018

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Air conditioning and engineering company CAC 2000 Limited is exploring a new revenue stream which involves the company completing jobs financed by a third party.

The company is now in discussion with at least three clients who hope to pay a monthly fee to the financier of the project for use of the air conditioning system.

The financing partnership got underway after CAC took on a job for the Port Authority of Jamaica valued at $110 million. On completion, the financing company would pay CAC the full amount for the job and collect rental for equipment from the Port Authority.

Chairman and CEO Steven Marston said in an adjoining statement to the company's 12 months' report ended October 31, that this is the first of this type of rental done for commercial air conditioning systems in Jamaica.

For the 12 months ended October 2017, CAC posted net profit of $100.5 million, led by an increase of $193.3 million in revenue year over year to end 2017 with total revenue of $1.21 billion. The prior year's profits, which totalled $11.3 million, were adversely impacted by a one-off 2016 court award for damages.

CAC's balance sheet showed a $7.4-million decrease in non-current assets, but a $179.7-million spike in trade and other receivables increased the company's current assets.

According to Marston, this is temporary as it reflects the increased billing in the last quarter, and a substantial part of this increase was due to the new type of financed job.

The fourth quarter benefitted from increased contract business which positively impacted profit.

CAC's selling and distribution expenses increased by 7.5 per cent to $308.8 from $287.3, due largely to increases in commissions and warranties as well as the expansion of capacity (employees, technology and systems) to handle the increased work volume in the review period and in the anticipated 2017/18, CAC said.

While the company's inventory reduced by $67 million, cash increased by $33.8 million to total $191 million at the end of October 2017.

The air conditioning company, which was incorporated on July 24, 2000, has its head office at 231 Marcus Garvey Drive in Kingston.

The company describes itself as a leading provider of commercial air-conditioning systems and refrigeration and energy solutions in Jamaica, also “maintaining a respectable share of the residential market”. CAC designs, installs and services systems predominantly for commercial clients.

Over 50 per cent of the company's present business comes from system replacements, new commercial air conditioning projects, follow-up service contracts, and client system upgrades.

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