Prestige bogged down in DR, BWIA slumps

Prestige Holdings recorded a 5.77% increase in profit attributable to shareholders for the six months ended May 31, 2003.  This is a reversal of the 6% decline for the three months ended February 28, 2003 over the comparable period in 2002. The actual profit attributable to shareholders for the six months ended May 31, 2003 was $7.402 million as compared to $6.998 million in 2002. The Chairman attributed the reversal of fortunes to the improvement in same store sales from all three brands operating in Trinidad and Tobago in the second quarter.  However the Dominican Republic continues to be a challenge for the KFC brand.  Total sales for the six months ended May 31, 2003 was $197.300 million, an increase of 6.81% over the corresponding period in 2002 of $184.723 million. The increase in cost of sales was 7.90% which was higher than the increase in sales.  Hence the increase in gross profit was only 4.51% moving from $59.605 million in 2002 to $62.296 million in 2003.  The increase in operating expenses was also higher than sales.  As a result operating profit actually declined by 6.42% for the six month period.  Finance cost declined by 3.94% moving from $10.835 million in 2002 to $9.979 million in 2003.  The effective tax rate declined from 48.82% in 2002 to 38.66% in 2003. 

This was the major contributor to the 5.77% increase in profit attributable to shareholders.  The earnings per share for the six months ended May 31, 2003 was 12 cents which is 5.77% better than the 11.7 cents for the comparable period in 2002. The three brands in Trinidad and Tobago continue to deliver improved sales which are expected to be maintained in the second half.  However the DR’s KFC restaurants continue to be a drag on the consolidated profit with a loss of $1.5 million for the six-month period.  The Company has stated that it is committed to the DR in the long term and intends to work through the very difficult economic situation at present.  We have revised our forecast for 2003 to 28 cents per share which at the current price of $4.00 translates to a PE of 14.29.  Thus we recommend a hold on this share.

BWIA West Indies Airways
Results for the Year Ended December 31, 2002.

BWIA experienced a delay in releasing financial results for the fiscal year ended December 31, 2002.  There was no surprise that the results were down when compared with fiscal 2001. 
The airline’s operating loss increased to $116.2 million in 2002, as opposed to a loss of $16.4 million incurred in 2001.  Significantly, extraordinary items, which provided a $62.1 million income cushion in 2001 in the form of a US$9.9 million government grant did not recur in 2002.  Rather, BWIA was faced with having to provide for restructuring, costing of $51.7 million.  This relates to the retrenchment of employees. The Group loss after taxation totalled $216.7 million in 2002.  The comparable loss in 2001 was $4.3 million.  The loss per share for fiscal 2002 was $4.65.  The auditors have qualified their report and pointed to the airline’s accumulated losses of $420.9 million, together with a working capital deficit of $313.8 million as at December 31, 2002. The airline has recently entered into an agreement with LIAT, another regional carrier.  The Government of Trinidad and Tobago also has stepped in and averted the threat of seizure of aircraft by a creditor. We maintain that any recovery in the airline is contingent upon obtaining of additional financing, worldwide improvement in the industry, and most importantly, better performance from BWIA itself.  This would include greater cost controls, and greater efficiency in operations. 

Sagicor Financial Corporation
Results for the quarter ended March 31, 2003
(all amts in Bds$) 

Sagicor Financial Corporation (SFC) reported financial results for the three-month period ended March 31, 2003.  These results are not directly comparable with fiscal 2002, as the company has undergone a radical transformation from a mutual company and has also added significant new investments. 
Revenue reached Bds$176.6 million, 23.7 per cent of the total projected volume for 2003.  Total disposition of revenue was Bds$160.9 million or 23.5 per cent of the total forecast for fiscal 2003.   Net profit for the first quarter amounted to Bds$8.6 million.  We believe the net profit forecast of Bds$49.3 million is attainable.  However the forecast EPS of Bds 21 cents would provide a challenge. 

Analysis by:
West Indies Stockbrokers Limited, a
member of the Trinidad and Tobago Stock Exchange Ltd.