Home' Trinidad and Tobago Guardian : January 24th 2015 Contents Agostini s Ltd had an eventful
year in fiscal 2015. The year
started with the completion
of its debt refinancing exercise
in early October 2014. After
forming Caribbean Distribu-
tion Partners Ltd (CDP), that entity then bought
40 per cent of a Guyanese company, Desinco
Ltd in January 2015. In February 2015, CDP
bought Barbados-based Facey Trading Ltd.
On July 1, 2015, CDP Ltd acquired Hanschell
Inniss Ltd (Barbados), Independent Agencies
Ltd (Grenada), Coreas Distribution Ltd (St Vin-
cent) and Peter and Company Ltd (St Lucia).
In addition, Agostini s Ltd transferred 100 per
cent of Hand Arnold Trinidad Ltd to CDP.
Then, Goddard Enterprises Ltd received a 50
per cent stake in CDP and US$11.6 million
Facey Trading was absorbed into Hanschell
Inniss. Under accounting rules, Hand Arnold
is deemed to be controlled by Agostini s Ltd
and thus the CDP operations are included in
AGL s results. The rationale for the formation
of CDP was predicated on the need to improve
operational efficiencies and to provide a focussed
platform for future growth and expansion
throughout the region.
Let us now look in some greater detail as to
its performance for the year ended September
Changes in financial position
Helped by acquisitions, total assets rose to
$1.51 billion from $955.4 million as at September
2014. With few exceptions, all major line items
exhibited increases. Long-term assets grew
from $423.4 million to $615.9 million. Here,
property, plant and equipment increased to
$379 million from $248 million. The major
change was recorded under land, buildings and
improvements, which advanced to $325.9 million
from $209.3 million.
Intangible assets climbed to $125.1 million
from $78 million. The major increase was gen-
erated by the transfer into Caribbean Distribution
Partners Ltd of Hanschell Inniss Ltd, Inde-
pendent Agencies Ltd, Coreas Distribution Ltd
and Peter and Company Ltd; all these companies
were formerly part of Goddard Enterprises Ltd.
Current assets rose from $531.9 million to
$897.7 million. Inventories expanded to $414.4
million from $279.1 million. Due to the nature
of most of its businesses, the bulk of this ($361.6
million) represented finished goods.
In a similar vein, trade and other receivables
expanded to $341.4 million from $218.1 million.
Cash at hand and in bank rose strongly to $137.3
million from $31.5 million as at September 2014.
However, after allowing for overdrafts ($43.4
million) and bankers acceptances ($38.4 million),
the net cash position closed at $55.5 million;
this was a huge improvement over the negative
$1.4 million as at year-end 2014.
Total liabilities rose to $766.3 million from
$400 million. Total borrowings climbed by
more than 100 per cent to $365.4 million from
$180.3 million. The long-term portion advanced
to $221.5 million from $129.1 million while the
current portion rose to $143.9 million from
In the case of the long-term borrowings, the
portion that matures over 5 years stood at $107.4
million up from $60.3 million as at September
2014; this is a sign of confidence in the company.
The company obtained new financing of $275
million at more favourable rates and flexible
terms of which $184 million was used to settle
existing loans and the remainder used to finance
its expansion activities.
In line with its larger operating base, the
other major increase saw trade and other
payables increase to $372.5 million from $200.1
million. The higher figure includes $101.9 million
(or B$31.9 million) due to Goddard Enterprises
Total equity rose to $747.4 million from 2014 s
$555.3 million. The major change was recorded
under non-controlling interests, which climbed
to $160.3 million from $1.2 million. This was
a direct result of the formation of CDP.
Stockholders equity advanced to $587 million
from $554 million. The most notable change
was recorded under retained earnings.
This component improved to $368.6 million
from $335.6 million. The current year s profit
of $80.6 million was reduced by dividends of
$32.3 million, comprehensive loss of $5.6 million
and changes in the composition of the group
totalling $9.7 million. With 58,704,219 shares
outstanding, each share had a book value of
$10.00 (September 2014: $9.44).
Income and profits
Total revenues advanced by 25.5 per cent to
reach $1.7 billion from the comparative 2014
outturn of $1.36 billion.
The cost of sales climbed disproportionally
by 26.9 per cent, moving from $1.04 billion to
$1.31 billion. This restrained the gross profit
growth to 21.2 per cent, as it registered at $392.6
million from 2014 s $323.8 million.
Other operating income increased to $31.9
million from $28.1 million, thus boosting total
net income to $424.5 million. This was 20.6
per cent greater than the $351.9 million recorded
The largest component, handling fees, relates
to the recovery of expenses incurred by foreign
pharmaceutical representatives. Rental income
rose to $6.2 million from the previous level of
$5 million. (Unfortunately, these items are not
adequately grouped in the financial report.)
Total expenses rose to $300.2 million from
$228.2 million, or by 31.5 per cent. The increases
were concentrated under the other segment,
which climbed by $43.9 million or 33.1 per cent
to reach $176.4 million from the previous year s
Administration expenses reached $89.4 mil-
lion from 2014 s $61.7 million; this represented
a climb of 47.3 per cent. However, marketing
and distribution costs declined to $34.4 million
from $35.1 million. Helping this reduction was
lower advertising costs, which fell to $9.8 million
from $16.7 million.
These changes resulted in an operating profit
of $124.3 million; this was marginally higher
than the $123.7 million recorded for the previous
year. Notably, in line with expectations, finance
costs fell by $4 million to $12.58 million from
$16.58 million. In addition, the share of profit
from its new associate, Desinco, contributed
$2.14 million; that is a good return on the pur-
chase price of $11.66 million.
These changes boosted pre-tax profit to $113.8
million from last year s $107.1 million.
A higher effective tax rate of 27.8 per cent
(2014: 24.8 per cent) pulled down profits to
$82.18 million from 2014 s $80.55 million.
Of this sum, $1.6 million related to non-
controlling interests, leaving shareholders with
$80.58 million (2014: $79.9 million).
These net results translated into 2015 diluted
EPS of $1.37 compared with $1.36 for 2014.
2015 s relatively disappointing results were
constrained by a number of one-off events and
transactions, most of which will not be repeated
in the current period.
Penalties paid on the debt restructuring exer-
cise, legal and other expenses related to the
new regional investment, legal and arbitration
costs concerning the outstanding matter with
the Housing Development Corporation ($9.3
million). In addition, higher taxes regionally
and now locally will continue to be a feature
of business life.
The strongest performer was pharmaceutical
and personal care, which includes Smith Robert-
son distributors and SuperPharm retail outlets.
Both these business units are expected to con-
tinue to do well. Both revenues and after-tax
profit exhibited growth.
Resulting from the formation of CDP, sales
in the fast moving consumer goods category
expanded robustly. Operating profit growth
was not as strong, especially at Hand Arnold,
but was helped by the contribution from its
associate, Desinco, while taxes were less severe.
The other five CDP operating subsidiaries expe-
rienced start-up and one-off challenges, all of
which are being systematically addressed.
The industrial, construction and holdings
segment experienced strong sales, which were
driven by Agostini Marketing s interior contracts
and the higher sales of building materials. At
the other extreme, Rosco Petroavance s per-
formance directly suffered from lower energy
prices. The start of distribution of a range of
lubricants from ExxonMobil should help improve
the latter s performance in 2016.
Dividends and share price
For its 2015 fiscal year, AGL paid dividends
totalling $0.56 compared with $0.55 for 2014.
In 2015, the share price reached as high as
$18.20 on September 21, 2015. Following the
release of these mixed results, the price declined
and was recently traded at $16.95.
At that price, the dividend yield is 3.30 per
The new joint venture, CDP, only started life
in July 2015, which comprised three months of
last year s results. The synergies and benefits
of this initiative should become more apparent
as changes are implemented incrementally over
the course of the current year.
Property rationalisation will continue to fea-
ture as it moves to increase tenancy at its Nelson
Street property; this property is still up for sale.
At Chootoo Road, it purchased the Kimberly
Clark property. During 2016, SuperPharm s
office and warehouse will move to that location,
while surplus space will be rented.
These changes would bring in additional
funds, which can be used to further expand its
core businesses. Even in the face of slower eco-
nomic growth and higher costs on a variety of
fronts, AGL s prospects for this year seem rea-
sonably good. Its first quarter results, which
are due in February, should give us our first
indication about its 2016 trajectory.
Next week, we will look at the other CDP
partner, Barbados-based, Goddard Enter-
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt JANUARY 24 • 2016
SuperPharm, Smith Robertson help
Agostini's report improved earnings
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