Home' Trinidad and Tobago Guardian : May 26th 2016 Contents As one of our oldest listed
companies and a premier
exporter, Angostura Holdings
Ltd (AHL) is in the enviable
position of being a substan-
tial net earner of foreign
exchange. This gives it the ability to invest
any surplus foreign currency in safe short-
term instruments to earn additional revenue.
In the years following the 2009 CLF debacle,
AHL has concentrated on collecting receivables,
selling assets and eliminating debt. Perhaps,
it would soon be poised to fulfil its latent
Let us now review AHL s results for its fiscal
period ended December 2015.
Changes in financial position
Total assets rose to $1.08 billion from $1.05
billion, reflecting a modest three per cent
Property, plant and equipment advanced to
$359.6 million from $347.3 million. Although
lower than in 2014, additions, especially in
the area of plant, machinery and equipment,
stood at $30 million. This increase comfortably
exceeded depreciation charges of $15.4 million.
Included in the additions was the cost of a
dedicated effluent treatment plant.
The value of its retirement benefit asset fell
to $60.6 million from $64.7 million. Both
components recorded increases; the fair value
of the plan assets grew to $355.2 million from
$340 million, while the deferred benefit obli-
gation advanced to $294.6 million from $275.3
The plan s assets are largely invested in a
managed fund contract, which is administered
by Clico. Approximately $41.2 million (11.7 per
cent) of that fund s assets represent the value
of AHL s shares held by the fund. This equates
to about 3.05 million AHL shares at the year-
end price of $13.50.
Inventories closed at $227 million from $220
million; this increase was largely concentrated
in the value of finished goods, which ended
at $41.8 million from last year-end s $31.5 mil-
Trade and other receivables rose from $241.6
million to $274.4 million. A large part of this
increase related to changes in its export trading
arrangements to EMEAA (Europe, Middle East,
Asia and Africa) countries. Formerly, these
exports were handled by a master distributor.
Now, this is replaced by having sixty individual
distributors. This increased risk is being handled
by using standby letters of credit and, where
prudent, requiring advance payments for prod-
The company used part of its cash to make
a short-term investment valued at $29.3 mil-
This initiative contributed to a reduction in
its cash balance to $125.3 million from $173.4
million. In addition, the company repaid $114.6
million in borrowings, but incurred new short-
term debt of $50.6 million.
Total liabilities contracted to $199.1 million
from $273.3 million.
As noted earlier, current debt contracted to
$50.6 million from $114.8 million. In 2014,
there was a small residual debt of $136,000.00,
which exceeded one year s maturity. The cur-
rent debt matures in less than six months
Trade and other payables also declined,
moving from $106.6 million to $87.2 million.
Provisions for legal costs increased to $31.3
million from $28.5 million. Meanwhile, all
other components declined, in particular, other
payables, which contracted to $3.7 million
from $15.4 million.
Only its deferred tax liability increased,
moving to $61.3 million from $51.9 million.
Total shareholders equity rose by $105.7
million to $880.7 million from $775 million.
The major contributor to this improvement
was retained earnings, which advanced to
$662.3 million from $556.6 million. The current
year s profit of $163.7 million boosted the
brought forward balance while dividends of
$53.6 million and other comprehensive loss
of $4.3 million restrained the closing balance.
Net of treasury stock, 205,820,000 shares
were outstanding; consequently, each share
had a book value of $4.28 (December 2014:
If we were to include the infamous receivable
of $984.6 million from CL Financial, then the
book value of the company more than doubles
to $9.06. (CLF, via Rumpro and Clico, owns
more than 77 per cent of AHL.)
Income and profits
Total revenues fell by $22.8 million or 3.4
per cent to $649.4 million from the compar-
ative 2014 figure of $672.2 million. Sales of
branded items were off by 7.1 per cent, while
revenues from commodity products rose by
13.4 per cent.
The gross profit margin declined to 59.04
per cent from 59.6 per cent. Influencing this
result were lower depreciation charges (2015:
$15.4 million; 2014: $20 million) and repairs
and maintenance (2015: $12.5 million; 2014:
$14.5 million). Consequently, gross profit
declined to $383.4 million from $401 million
or by 4.4 per cent.
Both selling and marketing expenses and
administrative expenses exhibited declines.
The former closed at $116.5 million (2014:
$117.8 million) while the latter ended at $54.2
million from $63 million. These changes were
helped by lower employee benefits (2015: $98
million; 2014: $102 million) and operating lease
payments of $3 million in 2015 versus $3.5
million in 2014. Interestingly, the company
spent very little on research and development
(2015: $414,000; 2014: $708,000).
Reflecting lower debt, finance charges
declined by more than half to $1.4 million
from $3 million. Also, mirroring larger invest-
ments, finance income improved to $154,000
These changes resulted in the results from
continuing operations registering at $211.5 mil-
lion; this was $5.8 million (2.7 per cent) lower
than the $217.3 million earned for 2014. How-
ever, non-core income improved from a loss
of $10.3 million in 2014 to a profit of $6.5 mil-
lion last year.
In 2014, the largest contributors were a loss
on revaluation of land and buildings of $10.9
million, loss on disposal of property, plant and
equipment of $3.3 million and foreign exchange
losses of $1.2 million. In 2015, AHL benefitted
from a gain on the disposal of an investment
in a subsidiary of Burns Stewart Distillers of
$1.5 million, foreign exchange gains of $0.6
million and a $2.75 million fair value gain on
These movements allowed pre-tax profit to
come in at $218 million versus $207 million
in 2014. With a one per cent reduction in the
effective tax rate to 24.9 per cent, the after-
tax profit registered at $163.7 million; this was
$10.2 million or 6.7 per cent greater than the
$153.4 million reported for 2014.
These results translated into 2015 diluted
EPS of $0.80 compared with $0.75 for 2014.
Lower sales in the branded segment were
largely attributed to turbulence in international
markets, ranging from lower oil prices,
upheavals in exchange rates and political and
Even so, the gross margins on branded items
improved to 38.9 per cent from 2014 s 38.4
per cent. Similarly, the margins on commodity
products advanced from seven per cent to
almost 10 per cent, even as the top line grew
by 13.4 per cent.
Unfortunately, the company does not vol-
unteer what percentages of its sales were
derived from exports. One would think that,
as a significant exporter and in the current
environment, this number should be enthu-
The closest indicator that we have is that
receivables denominated in US dollars and
valued at $108 million represented about 39
per cent of total gross trade receivables of
about $274 million, after excluding $4 million
from related parties.
A reasonable guess could put exports at
between $140 million and $180 million. Back
in 2007, exports were given as $123 million,
while in 2010, it was $44.7 million. Figures
for more recent years have not been disclosed.
Dividends and share price
The total dividend for fiscal 2015 was $0.30;
this is an improvement over the $0.26 paid
for 2014. Perhaps soon, its dividends would
approach 40 to 50 per cent of its net prof-
its?In late January 2015, the price peaked at
$16.00 as some investors, anticipating pro-
longed inaction in an election year, decided
to bail out and take their profits. Similarly,
one day after the general elections, back in
September 8, 2015, one million AHL shares
traded at $14.50.
Perhaps, those investors correctly anticipated
that a change of government would mean that
many aspects of the CL Financial resolution
process, which also involves Angostura and
other companies, would be substantially re-
started under a new administration?
To some extent, they have been proved right,
as AHL s share price closed on December 31,
2015 at $13.50. This year, the price has con-
tinued to slide slowly, closing last Friday at
$12.90. At that price, the yield is a modest
2.33 per cent.
Minority shareholders are equally expectant
that the full settlement of CL Financials debt
to AHL should bring them some added benefit.
Perhaps, this might take the form of a special
dividend, which would represent some rec-
ompense for the seven-plus years of waiting.
(The pillage of AHL s treasury by its parent
company needs to be holistically addressed.)
For the three months to March 2016, AHL
recorded revenues of $101.5 million versus
$122.2 million for the comparative 2015 period.
Timing issues was given as one factor for the
Commodity trade fell to $18.5 million from
$34.9 million, while branded products regis-
tered at $83 million versus $87.3 million for
the 2015 period.
These results were positively influenced by
foreign exchange gains of $4.1 million, but
negatively impacted by a higher effective tax
rate (2016: 27.7 per cent; 2015: 16.5 per cent).
Overall, EPS came in at $0.08 versus $0.10
Changes in directors
Over the past year, AHL has experienced
several changes in the composition of its board,
at least some of which were influenced by the
change in government.
On March 31, 2016, Joseph Teixeira resigned,
while former chairman, Maurice Suite, after
a brief stint, resigned on April 11, 2016. These
vacancies were filled on May 12, 2016 by the
appointment of Kirby A Hosang and Rolph
NS Balgobin, who was also installed as chair-
At its upcoming AGM on June 17, 2016,
Albert Tom Yew is up for re-election. In addi-
tion, the company has received a shareholder
proposal from Clico to have Ulric Miller
appointed to the board.
Next week, we look at Unilever Caribbean
Ltd's 2015 results.
BUSINESS GUARDIAN www.guardian.co.tt MAY 26 • 2016
Is AHL our largest non-oil listed exporter?
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