Angostura results ‘flat’, TPC after tax profit doubles

Angostura Holdings (AHL) produced some flat results in the six months ended June 30, 2003 when compared with the similar period in 2002.  Net turnover declined by 5.6 percent to $617.5 million in 2003 compared with the $654.1 million achieved in 2002.  Gross profit was 3.0 percent lower in 2003 at $228.2 million from the $235.2 million made in 2002. Operating profit declined by 49.2 percent in the first half of 2003 due to a 21.6 percent rise in operating expenses.  The likely cause being the “challenges of operating in the highly competitive worldwide market.” Finance costs rose to $47.3 million in 2003, an increase of 37.5 percent over the 2002 figure in the similar period of $34.4 million.  Investment income was 24.8 million in 2003 compared to the 2002 amount of $5.7 million.  There was also a $10.1 million gain on sale of investments in 2003, while in 2002 this figure was just $0.007 million. AHL’s profit before taxes dropped 50.7 percent to $21.7 million in the first half of 2003 when compared to the $44.0 million posted in 2002.  Profit attributable to shareholders though was 4.3 percent higher in 2003 at $20.9 million from the 2002 corresponding period amount of $20.1 million. 

The acquisition of Burn Stewart Distillers plc which was completed in the first quarter of 2003 was funded by debt raised by Angostura Limited, a wholly owned subsidiary of Angostura Holdings.  Burn Stewart has since been transferred out, and now falls under the umbrella of CL World Brands.  The operating results of Burn Stewart as a subsidiary were therefore not consolidated in the first half results of AHL in 2003. CL World Brands also holds a controlling interest in Angostura Holdings, with the latter operating as a “stand alone” company.  It is our understanding that CL World Brands meets interest payments on the debt incurred to finance the purchase of Burn Stewart. Looking at the numbers, AHL continues to struggle to become a global player as the decline in the operating margin in 2003 to 6.7 percent from the 2002 level of 12.5 percent attests.  The chairman has stated that AHL has incurred “substantial costs in the reorganisation of the group’s international marketing platforms.” 

In explaining the decline in net sales and profit before tax, the chairman stated that the loss of a large bottling contract by Todhunter International was the reason. An interim dividend of five cents per share has been declared, to be paid on September 26, 2003. 
Trinidad Publishing Com-pany Limited
Results for the Six Months ended June 30, 2003

Trinidad Publishing Company (TPC) posted some good results for the first half of 2003.  In 2003 turnover reached $42.5 million, up 3.5 percent when compared with the $41.1 million posted in the similar period in 2002.  Income before taxation and goodwill in 2003 was $7.6 million, up 46.0 percent in comparison with the $5.2 million made in 2002. Income after taxation rose 65.9 percent to $5.1 million in 2003, while the similar period in 2002 yielded $3.1 million. After tax profit more than doubled in 2003 to $2.2 million from the 2002 figure of $1.0 million.  The chairman attributed the success largely to the new “G-size” Guardian.  In fact, the new Guardian saw an increase in readership from September 2002 to May 2003.  The increase was mainly in the middle to middle-high income groups. In radio, TPC maintained its market share, holding on to its number two position in all segments. 

The Chairman has pointed to “several new strategic initiatives” under evaluation and a new radio station may be one option.  The attractiveness of this option is that most if not all the infrastructure is already in place.  So this would be the strategy requiring the least capital outlay.  Also on the cards, are the options of commercial printing and acquiring a television station. 

These options would require some capital outlay.  On the side of the commercial printing, TPC has identified it as a $436 million per year industry.  Currently, TPC performs pre-press work for commercial printing jobs, and a foray into this field would seem a logical extension of its current product offering. Earnings per share for the first half of 2003 reached 13 cents, an improvement of 62.5 per cent over the eight cents achieved in the same period in 2002.  An interim dividend of seven cents per share to ordinary shareholders has been declared.  The second half is TPC’s better half by far, and a full-year EPS of 40 cents may not be beyond the company. Accordingly, we cite this as our forecast, together with a dividend payout of 25 cents per share. At the current level of $4.60 and the forward PE of 11.5, we would recommend this share as a buy for medium to long-term investors. Analysis by West Indies Stockbrokers Limited. Member of the Trinidad and Tobago Stock Exchange Ltd.