Home' Trinidad and Tobago Guardian : February 2nd 2017 Contents FEBRUARY 2 • 2017 guardian.co.tt BUSINESS GUARDIAN
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fuel Agostini's growth
As Agostini's Ltd (AGL) con-
tinues with its acquisition
and diversification drive, let
us review its results for the
year ended September 2016.
Changes in financial position
Driven by the further integration of the
Caribbean Distribution Partners Ltd (CDPL)
companies, total assets increased to $1.62 bil-
lion from $1.52 billion.
Long-term assets rose to $650.7 million
from $623.9 million. Within this category,
property, plant and equipment advanced to
$408.7 million from $379 million. Additions,
especially under land, buildings and improve-
ments of $26.1 million, mostly accounted for
Intangible assets declined marginally to
$132.5 million from $133.2 million as current
charges exceeded additions. The bulk of this
figure, $116.1 million, comprises goodwill
arising on various acquisitions; Hand Arnold
(Trinidad) Ltd represented $40.6 million while
SuperPharm Ltd comprised $20.9 million.
Current assets advanced to $966.8 million
from $897.7 million. Cash on hand climbed to
$172.8 million from $137.3 million. Temporarily
reduced investment activities and the absence
of new loans contributed to this increase.
At about $414 million for both periods,
inventories were little changed. Meanwhile,
trade and other receivables closed at $373.5
million from $341.4 million. Here, the two main
changes occurred under net trade receivables
and receivables from Goddard Enterprises Ltd
(GEL); the former rose to $308.5 million from
$273.1 million while the latter climbed to $11.8
million from $1.6 million.
Total liabilities increased to $810 million
from $785.2 million.
Total borrowings fell to $353.2 million
from $365.4 million. The long-term portion
advanced to $244.3 million from $221.5 mil-
lion while the short-term fraction declined to
$108.9 million from $143.9 million. The largest
debt is a loan of $140.25 million at 4.25 per cent;
this has a bullet payment of $51 million due in
early 2018, which is likely to be refinanced at
that time. Most other loans have interest rates
of between 4.5 and 5.75 per cent.
Trade and other payables rose to $404.8
million from $387.5 million. The largest in-
crease was payables to GEL, which advanced to
$134.9 million from $116.8 million. The trade
payables component moved to $212.5 million
from $205.1 million.
Total equity moved from $736.5 million to
$807.5 million. Excluding minority interest of
$165.3 million, shareholders' equity closed at
$642.2 million (2015: $581.3 million).
Retained earnings increased from $362.8
million to $424.1 million. The profit for the
year of $89 million together with other com-
prehensive income of $5.2 million enhanced
the brought forward balance while dividends
to shareholders of $32.9 million lowered the
Having 57,704,219 shares outstanding, each
share had a book value of $10.94 (2015: $9.90).
Revenues and profit
In 2015, the five external companies under
the CDP umbrella contributed three months'
revenues to the group's total. In 2016, those
companies contributed the full twelve months
to the year's revenues. On that basis, turnover
increased to $2.45 billion from $1.71 billion or
by 43.8 per cent.
Similarly, cost of sales increased by 44.2 per
cent to $1.90 billion from $1.32 billion.
Consequently, gross profit expanded to
$549.9 million from $386.4 million, reflect-
ing a 42.3 per cent improvement.
Other operating income almost doubled to
$60.3 million from $31.9 million. Included in
the current figure is a gain of $11.7 million,
which represents the settlement of sums due
from the Housing Development Corporation.
Also, foreign exchange gains amounted to $8.6
million (2015: $10.6 million).
In line with the new companies added, total
expenses rose to $446.4 million from $300.5
million. Other operating expenses closed
at $222.4 million from $176.4 million while
administration expenses registered at $154.3
million from $89.7 million. Finally, market-
ing and distribution costs moved from $34.4
million to $69.7 million.
These changes resulted in an operating profit
of $163.8 million; this is 39.1 per cent greater
than the $117.8 million recorded for 2015.
Despite lower overall debt, net finance costs
climbed to $22.1 million from $12.6 million.
This increase probably reflected the greater
use of higher cost bank overdraft facilities.
The group's share of profit in its associate,
Guyana-based Desinco Ltd, fell marginally to
$1.99 million from $2.14 million.
These changes resulted in a pre-tax profit of
$143.6 million, which was 33.8 per cent greater
than the $107.4 million recorded in 2015.
The effective tax rate increased to 32.6 per
cent from 29.7 per cent. Consequently, taxes
rose to $46.9 million from $31.9 million. This
resulted in an after-tax profit of $96.8 million
(2015: $75.4 million).
After allowing for profit attributable to
minority interests, the net profit allocated
to shareholders registered at $89.03 million
versus $77.2 million for 2015.
This result translated into EPS of $1.52 com-
pared with $1.32 for 2015.
Although the PPC division recorded a 3.5
per cent decline in sales its profit reduction
was only 2.2 per cent. This division includes
Smith Robertson and SuperPharm. Despite
lower purchases by the Ministry of Health,
Smith Robertson managed to deliver a profit
that was only marginally lower than 2015's.
In contrast, SuperPharm produced improved
results. Current construction progress suggests
that the new Couva branch could be open be-
fore that of the long-delayed Mausica branch.
A Presto store is expected to open in Arima
in the near future; in addition to items from
Linda's Bakery, this store will offer conveni-
The fast-moving consumer goods/CDPL di-
vision benefitted from a full year's sales from
its new subsidiaries. Sales grew by a strong 132
per cent while pre-tax profit expanded by 244
per cent. Hand Arnold Trinidad Ltd enjoyed
a strong year. Although impressive, some of
the companies within this segment still have
huge potential for improved results.
These include Hanschell Inniss Ltd of Bar-
bados, where a new distribution facility will
be built, starting in Q2 2017. In St Lucia, the
Brydens operations are on track to become fully
integrated with the Peter and Company Ltd
subsidiary. At its Grenadian operations, Inde-
pendent Agencies Ltd will double the size of its
warehouse facility in anticipation of increased
activity. Similarly, Coreas Distribution in St
Vincent will start expansion of its distribution
facility in Q2 2017.
The decline in sales at the ICH division
was attributed to lower sales at both Agostini
Building Solutions and Rosco Petroavance. In
the case of the former, both sales and profits
were lower; however, in the challenging local
construction environment, this result was con-
sidered acceptable. In the case of the latter, the
depressed oil and gas environment inhibited
traditional results; however, the distribution
of a new line of lubricants helped shore up
This division's higher profit figure reflected
the HDC settlement of $11.7 million.
Interestingly, Trinidad-based revenues now
account for only 57 per cent or $1.4 billion of
the group's total. Revenues from Barbados
comprise 17 per cent ($410 million) while other
regional economies make up 26 per cent or
$641 million. This more diversified revenue
stream should improve the group's access to
Share price and dividends
About 94 per cent (54.25 million) of AGL's
shares are owned by its ten largest sharehold-
ers. This leaves the secondary market with a
small float of about 3.45 million shares. When
the float is larger, price discovery will improve.
Perhaps, in the interest of capital market devel-
opment, one or more large shareholders might
soon help to correct this shortage?
AGL's year-end share price declined to $17.30
from $18.00 as at September 2015. More re-
cently, and following its recent acquisitions
(see below), interest in and demand for this
share has improved. The last trade was record-
ed on November 24, 2016 and the share price
closed at $17.50 last Friday.
Considering that a one-off profit helped its
2016 results and in the current challenging
economic environment, the annual dividend
was maintained at $0.56. The final dividend
of $0.34 was paid on January 30, 2017.
These figures reflect a yield of 3.2 per cent
and a P/E multiple of 11.51.
On October 1, 2016, the group acquired Ve-
mco Ltd from Victor E Mouttet Ltd (VEML) for
$177.3 million. The purchase price was settled
by AGL issuing 10,399,530 new shares in AGL
to VEML, which increased the latter's owner-
ship in AGL to 57.78 per cent.
Its CDPL partner, Goddard Enterprises Ltd,
then paid $88.66 million (a large portion in US
currency) to AGL to settle its 50 per cent share
of the transaction. Vemco's final valuation, as
at September 2016, now requires both GEL and
AGL to each pay an additional $3.5 million for
Vemco Ltd has two manufacturing plants
and its expected higher output will be chan-
nelled via the CDPL companies to new regional
On November 1, 2016, via the same CDPL
partnership, AGL bought Pepsi-Cola Trinidad
Bottling Company Ltd (PCT) for US$13 million
(AGL's share was US$6.5 million). This acqui-
sition gives the new owners ten-year exclu-
sive distribution rights in both Trinidad and
Barbados to the Pepsi range of products, some
of which are owned by Pepsi while others are
licensed to them.
Some products are imported while local
manufacturing of several products is done
on a contract basis by Blue Waters and Samba
Bottling. There is also some export potential.
AGL's first quarter results to December 2016,
which are due in mid-February 2017, will begin
to reflect these new acquisitions.
In the next article, we will review First Citizens
Bank Ltd 2016 results.
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