Home' Trinidad and Tobago Guardian : February 1st 2018 Contents stocks BG15
Thursday, February 1, 2018
Agostini’s Ltd continues to grow
he acquisitions of
Vemco and Pepsi
Trinidad at the start
of its 2017 fiscal pe-
riod resulted in sig-
nificant changes to
both the financial and operational
structure of Agostini’s Ltd (AGL).
The Vemco purchase resulted
in Victor E Mouttet Ltd (VEML)
increasing its stake in AGL from
50.3 to 57.8 per cent. That owner-
ship is split among three entities
with Mouttet Capital Ltd owning
33,525,538 shares, GNM Proper-
ties having 4,800,000 shares and
JMM Properties holding 1,600,000
Let us now review AGL’s results to
September 30, 2017.
Fuelled by acquisitions, total
assets grew by 34.5 per cent to
$2.18 billion from $1.62 billion.
Property, plant and equipment
expanded to $602.5 million from
The net additions to existing busi-
nesses added $83.7 million while
acquisitions contributed $103
million; of the latter, Vemco ac-
counted for $101 million.
Intangible assets rose to $200.3
million from $132.5 million. These
increases reflected $36.1 million
for Vemco while Pepsi-Cola Trini-
dad comprised $32.9 million. Both
companies were bought at a price
greater than book value.
The investment in its associate,
Desinco Ltd, improved to almost
$15 million from $13.7 million.
Inventories increased to $550
million from $414.6 million. The
finished goods and goods for re-
sale component closed at $435
million from $352.9 million while
goods in transit advanced to $101.4
million from $69.3 million.
Trade and other receivables
swelled to $492.5 million from
$373.5 million. The net trade re-
ceivables component expanded to
$415.2 million from $308.5 million.
Cash at bank and in hand rose to
$254.5 million from $172.8 million.
The two largest balances were
$182 million in TT dollars and
$41.8 million in US dollars; even
so, the company’s liabilities in US
dollars exceeded its assets in that
currency by $193.6 million. These
greater bank resources give AGL
the flexibility to execute planned
Total liabilities rose to $1.03 bil-
lion from $810 million.
Gross borrowings expanded
from $353.2 million to $472.5 mil-
lion. The current portion rose to
$138 million from $108.9 million
while the long-term portion closed
at $334.4 million from $244.4 mil-
Of the total, $336.2 million is
denominated in TT dollars while
$61.2 million is denominated in
Trade and other payables in-
creased to $486 million from
$404.8 million. Trade payables
rose from $212.5 million to $326
million while accrued expenses
advanced to $75.8 million from
Its net trade receivables (above)
of $415.2 million comfortably ex-
ceeds its trade payables of $326
Total equity expanded from
$807.5 million to $1.14 billion.
Excluding minority interests of
$253.5 million, shareholders’ eq-
uity improved to $888.1 million
from $642.2 million.
Stated capital increased from
$187.4 million to $364.7 million.
This change reflected the issuance
of 10,399,530 new shares at $17.05
for a total value of $177.3 million to
settle the purchase of Vemco Ltd
from Victor E Mouttet Ltd.
Almost immediately, since
Vemco is held under CDPL, God-
dard Enterprises Ltd (GEL) paid
$88.7 million to AGL for its share
of the purchase price.
Retained earnings improved
from $418.9 million to $484.7 mil-
lion. This movement reflected
comprehensive income of $104.3
million, reduced by dividends of
The weighted average number
of shares rose from 58,704,000
to 69,103,000; consistent with its
greater asset base, the book value
of each stock unit advanced from
$10.94 to $12.85.
Total revenue increased by 25.2
per cent to $3.07 billion from $2.45
billion. The bulk of this improve-
ment was attributable to the inclu-
sion of Vemco and Pepsi.
However, the cost of sales grew
by only 23 per cent to $2.34 billion
from $1.90 billion; consequently,
the gross profit improved by 32.8
per cent to $730.5 million from
$549.9 million while the gross
profit margin rallied to 23.8 per
cent from 22.4 per cent.
Other operating income fell to
$27.4 million from $60.3 million.
The miscellaneous income com-
ponent contracted to $3.9 million
from $27.2 million; in 2016, this
item included $11.2 million net
profit from an arbitration settle-
ment from HDC.
In addition, foreign exchange
gains declined to $4.3 million from
$8.6 million while rental income
weakened to $5.9 million from
Total expenses increased to
$557.2 million from $450.2 million.
The other operating expenses el-
ement fell to $151.3 million from
$222.4 million, however, admin-
istration expenses rose to $277.4
million from $158.1 million.
Finally, marketing and distribu-
tion expenses swelled to $128.5
million from $69.7 million. These
changes were consistent with the
Formerly shown under taxes,
the green fund levy is now in-
cluded under administrative ex-
penses. This item increased to $6.7
million from $3.8 million, which
reflects a bigger percentage take.
These movements saw operat-
ing profit expand to $200.7 million
from $160 million.
Consistent with its greater debt,
finance costs increased to $26.1
million from $22.1 million. Mean-
while, the share of net profit from
its associate, Desinco Ltd, slipped
to $0.8 million from $1.2 million.
Although Desinco sales im-
proved by 13 per cent, its admin-
istrative expenses rose by almost
48 per cent.
These changes resulted in a pre-
tax profit of $175.4 million versus
$139 million for 2016.
Helped by a deferred tax asset
credit adjustment, the effective tax
rate fell to 28.8 from 30.4 per cent;
however, with an enlarged base,
taxes increased to $50.5 million
from $42.3 million. This resulted
in an after-tax profit of $124.9 mil-
lion compared with $96.8 million.
After removing the profit due to
minority interests, the profit at-
tributable to shareholders ended
at $100.2 million from $89 million.
Consistent with the greater num-
ber of shares outstanding, EPS fell
to $1.45 from $1.52.
The CDP and food manufacturing
segment accounts for 55 per cent
($1.2 billion) of the group’s total
assets and contributed almost
66 per cent ($2.02 billion) to the
group’s revenues. In terms of pre-
tax profit contribution, the 2017
outturn represented about 38 per
cent of the total.
Both Hanschell Inniss (Barba-
dos) and Hand Arnold (Trinidad)
delivered strong performances.
The same may be said for Coreas
Distribution (St Vincent) and St
Lucia’s Peter & Company while
Independent Agencies in Grenada
delivered a slightly better profit.
Meanwhile, Vemco benefit-
ted from exports to Venezuela
while its total exports grew by
20 per cent. Pepsi Trinidad, now
renamed Vembev, experienced
post-acquisition hand-over issues.
The PPC division remains the
most profitable segment, record-
ing higher sales and profit. The
SuperPharm component, since
June 2017, includes a Presto con-
venience store. Despite multiple
challenges, Smith Robertson de-
livered a commendable result.
In June 2017, it acquired 58 per
cent of Mia-Trin Medical, now re-
named Curis Technologies; Curis
is a distributor for GE Medical Sys-
tems and other allied products.
The ICH segment mainly groups
Agostini Building Solutions, Rosco
Petroavance, property and hold-
ing company activities; although
sales fell, profit increased. Rosco
Petroavance added a new line of
lubricants from Mobil. Despite
economic challenges, both oper-
ating companies remained profit-
Influenced by last year’s acqui-
sitions, local revenues now com-
prise 64 per cent ($1.97 billion)
of the total while Barbados-based
revenues account for 14 per cent
($420 million) and other territo-
ries represent 22 per cent ($683
Over its fiscal year, AGL’s share
price improved by 18.7 per cent,
moving from $17.30 in September
2016 to $20.53 last September;
its most recent closing price was
$20.75. Based on the most recent
annual dividend of $0.56, that
price gives investors a yield of 2.7
That price also represents a P/E
multiple of 14.3 and a premium of
61.5 per cent over its book value
AGL started the 2018 fiscal year
by acquiring the exclusive rights
to four international brands, in-
cluding Peardrax and Cydrax.
The lesser known brands are
Peardrella and Cydrella. These ac-
quisitions, which have significant
export potential, along with Pepsi,
will be housed under the Vembev
Consistent with its original
agreement, AGL is now finalising
plans to increase its stake, via CDP
Ltd, in Guyana’s Desinco Ltd from
40 to 51 per cent; this acquisition
will allow it to expand its partici-
pation in the economic growth
of that emerging energy power-
Under the agreement for the
acquisition of Vemco Ltd, an as-
sessment of the synergies gained
from the purchase and integration
into CDPL is due to be conducted
and verified 18 months later, ie as
at March 2018. The original value
of the synergies to be gained was
estimated at $15 million; of this
sum, 50 per cent would be paid as
additional compensation to Victor
E Mouttet Ltd (VEML).
AGL’s portion of the figure was
estimated at $3.75 million.
In the next article, we will review the
2017 results of First Citizens Bank Ltd.
Total revenue increased by 25.2 per cent to
$3.07 billion from $2.45 billion.
The bulk of this improvement was attributable
to the inclusion of Vemco and Pepsi.
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