Hardware and Lumber Divisions

The year ended December 31, 2014 was a challenging but successful one for Hardware & Lumber Limited, operator of the Rapid True Value and H&L Agro network of stores. While the company recorded sales growth, the H&L Agro segment which provides solutions to the agricultural sector, was hard hit by one of the worst droughts in Jamaica's recent history. Despite this, the company delivered net profit attributable to shareholders of $217.3 million translating to earnings per stock unit of $2.69. Dividend of 32.0 cents per stock unit was paid. We intend to build on these results in the years ahead in support of our commitment to grow shareholders' value.

In 2014 the Jamaican construction industry grew by 1.6% while the country's GDP declined by 1.4%. In an industry where many of the construction inputs are imported, the 7.8% devaluation of the Jamaican dollar resulted in generally higher costs, while the 6.4% inflation rate further reduced purchasing power of our customers. Through the Rapid True Value division, we continued to offer the most comprehensive and cost effective solutions to our builders, contractors, homeowners and "Do-It-Yourselfers". We were also very proud to be the supplier of choice to a wide-cross section of resellers and developers who depend on us to carry quality inventory to fulfill the needs of their customers. We are pleased to report that the performance of the Rapid True Value segment registered increased sales during the year.

The H&L Agro division continued to support the agricultural sector through its expert sourcing and provision of quality seeds, herbicides, pesticides and other agricultural requirements. The upsurge in farming which was evident in the previous year was curtailed by severe drought conditions which resulted in a decline of over 20% in the country's agricultural sector. This unfortunate weather occurrence slowed the sales of all agricultural inputs during the period under review. Notwithstanding that setback, the segment also recorded increased sales over the previous year as planting and crop care activities picked up towards the end of the period.

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