Home' Trinidad and Tobago Guardian : May 30th 2013 Contents MAY 2013 • WEEK FIVE www.guardian.co.tt BUSINESS GUARDIAN
STOCKS | BG15
Today, we turn the spotlight on the results
of a media company and a cement manufac-
Guardian Media Ltd
First quarter 2013
For the first three months of 2013, GML
reported strong improvements at the revenue,
operating income and net income levels. In
part, these results were helped by the Tobago
House of Assembly elections, which were held
at the end of January 2013.
Third-party turnover increased from $42.2
million in the first quarter of 2012 to $46.1
million in the current period, or by 9.3 per
cent. Operating income advanced by 30.8 per
cent to reach $10.1 million from the compar-
ative 2012 figure of $7.7 million.
Finance costs fell by $163k to register $664k
in the current quarter; this compares favourably
with $827k paid out in the first quarter of
2012. Taxation costs spiked to $2.2 million
from last period s $1.7 million. These changes
helped GML produce net income for the first
quarter of 2013 of $7.3 million. This result was
almost 41 per cent more than the $5.2 million
showed for the first quarter of 2012. Conse-
quently, earnings per share improved from
2012 s result of $0.13 to $0.18 in the current
Despite a continuing challenging media
environment, GML is confident of its ability
to increase its market share without unduly
sacrificing profitability. One way it expects to
do so is to explore new opportunities for acqui-
Adoption of IAS 19 Employee Benefits
The application of the IAS Standard 19 for
employee benefits now restricts a company s
ability to present actuarial gains and losses in
their long-term employee benefits pension
plans. Consequently, companies now have to
reflect these changes as they happen and the
amounts are to be reflected via the compre-
hensive income statement.
Previously, they were able to do this using
the corridor approach. Under that arrangement,
gains and losses within a corridor range
remained unrecognised, while those outside
the corridor were amortised through the
income statement over multiple years.
In GML s case, the retroactive application
of the standard for 2012 resulted in the reduc-
tion of after-tax profit from $35.9 million as
originally stated down to $35.2 million. Con-
sequently, 2012 EPS declined to $0.88 from
the original figure of $0.90. Many other com-
panies have similar challenges.
Results for 2012
For its fiscal period ended last December,
Guardian Media Ltd (GML) recorded an
improvement in third party turnover of $1.3
million to reach $186.5 million. Even so, oper-
ating income declined by 4.5 per cent to $50.7
million from the 2011 result of $53 million.
However, GML s net income for 2012 came
in at $35.9 million and represented a decline
of $1 million from the prior period s result of
$36.9 million. This result was helped by lower
allocations to finance costs. This item fell by
$0.9 million to $3.2 million from last year s
$4.1 million. Also helping the final result were
lower taxes; in 2011, this figure was $12 million
while for 2012, it declined to $11.6 million.
The tax picture was helped by a lower level
of permanent difference and a slightly higher
amount of tax exempt income.
The final result translated to earnings per
share figure of $0.90 versus the $0.92 reported
for 2011 with the company deciding to increase
its dividend per share to $0.55 from $0.50 paid
These results were driven by an increased
focus on infrastructure improvements,
enhancement to content and building its
human capital. These initiatives have an inher-
ent element of one-off costs, which the com-
pany expects will be recovered in the form of
improved revenues and profit in the short and
The decision to increase the dividend reflects
the company s confidence in its current
prospects and outlook for its future perform-
ance. Another possible reason for the dividend
increase might simply be to return some of
its surplus cash to shareholders.
As at year-end 2012, GML had $127.4 million
in cash and short-term deposits; this figure
was $16.5 million greater than the $110.8 million
the company held as at year-end 2011. Most
of this increase was due to its placing of $35.4
million in the ANSA Income Fund, which
earned 2.7 per cent last year.
On the other hand, GML reduced its hold-
ings of UTC s TT$ Income Fund by more than
$10.3 million; this fund earned 1.3 per cent as
at year-end 2012. Cash on hand and at bank
also fell to $26.1 million from the 2011 figure
of $434.6 million.
These changes will produce a better return
on its cash resources.
With total assets of $368.9 million as at
December 2012, the cash component com-
prised 34.5 per cent of this total. Given that
returns on cash balances are currently less
than optimal, it is perhaps reasonable to return
some of the excess to shareholders.
The multimedia segment (MMS) comprises
six radio stations and one television station.
This segment produced $76.3 million in
turnover during 2012, which represented a 4.6
per cent improvement over the $73 million
recorded for 2011. Despite this modest increase
in a challenging market, the MMS saw its pre-
tax income improve by 12.6 per cent to $28.2
million from last period s $25.1 million.
The print division includes newspaper cir-
culation and printing services for other pub-
lishers. Although larger than the MMS, the
print division reported turnover of $110.2 mil-
lion, compared with the 2011 figure of $112.2
million and pre-tax income of $19.3 million
for 2012, compared with $23.9 million for 2011.
TCL keeps its lenders happy
The last time that TCL reported a profit
was for its financial year ended December
2009. The subsequent three years, 2010
through to 2012, saw the company report huge
losses. The reasons for those losses included
very difficult market conditions, huge debts,
which have since been restructured and pro-
longed industrial action at the Trinidad plant.
In some welcome good news, TCL reported
a strong increase in sales accompanied by
small profit for its first quarter ending March
2013. This result was achieved despite losses
at both Caribbean Cement Company Ltd and
Readymix (West Indies) Ltd.
Revenues rose from the restated figure of
$365.1 million in 2012 s first quarter to $482.1
million in the current period, representing an
increase of 32.1 per cent. Higher selling prices
for cement in most markets helped this result.
In T&T, TCL reported a 52 per cent increase
in volumes of cement sales. Its export markets
saw a 29 per cent increase while Jamaica only
produced a 7 per cent improvement in cement
sales. In addition, concrete volumes recorded
a 10 per cent improvement over the compar-
ative 2012 period.
These higher sales combined with more
efficient plant operations allowed TCL to pro-
duce EBITDA of $114.2 million; this compares
robustly with the $11.2 million reported for
the first quarter of 2012. After allowing for
depreciation expenses of $32.4 million, oper-
ating profit registered at $81.8 million.
While restructuring costs were no longer
applicable, finance costs rose from $51.3 million
last year to $65.2 million in the current period.
This increase of $13.9 million was largely attrib-
utable to foreign exchange loss of $11.3 million
due to the depreciation in the value of the
Jamaican dollar by 6.2 per cent.
Consequently, pre-tax profit improved by
almost $102 million or, from a loss of $85.4
million in 2012 s first quarter to a profit of
After allowing for taxation of $2.4 million
the net profit closed at $14.2 million. Of this
figure, $17.1 million was attributable to share-
holders, while non-controlling interests
incurred a loss of $2.9 million. With
249,765,136 shares outstanding, this result
translates into earnings per share figure of 6.8
cents. This compares favourably with a loss
of $0.25 for the first quarter of 2012.
The company reports its results along three
major lines, cement, concrete and packaging.
It is noteworthy that, even in the full 2012
period, the packaging segment reported a small
pre-tax profit of $5.5 million.
In the first quarter of 2013, the cement busi-
ness accounted for almost 92 per cent of the
company s revenues and contributed 70 per
cent to its pre-tax profit. Although TCL con-
sumes almost 90 per cent of the packaging
produced by its subsidiary, the small amount
of third party sales contributes a useful and
disproportionately high amount to its pre-tax
profit. In the first quarter, third party sales
from this unit ($2.8 million) accounted for less
than 1 per cent of group revenues, but the
division s profit of almost $4 million repre-
sented almost 24 per cent of its pre-tax prof-
it. As recently as January 30, 2013, TCL s share
price was $1.40. Since the release of these
results in early May, trading activity in TCL s
shares has increased. Bid prices have changed
from $0.95 to $0.97 while an increasing num-
ber of shares are being offered for sale at $1.09.
The group reports that, as at March 2013,
it met three financial ratio covenants contained
in the loan restructuring agreement. This state-
ment is incomplete; for example, was the com-
pany only required to meet three financial
ratios? If so, what were they? Or, perhaps, did
it meet the three easiest ones and was unable
to comply with others?
The shareholders primary interest is when
they can expect to see a resumption of dividend
payments. Currently, TCL is effectively under
the control of its lenders, who want to ensure
that the company honours its debts (remember
the saying, "the borrower is servant to the
lender"). Has the company decided to com-
municate to its shareholders the time table
for meeting its lender-imposed financial tar-
gets? And, on that basis, indicated when it
expects to resume dividend payments?
Guardian Media's net income jumps 41%
Results for GML and TCL
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