Home' Trinidad and Tobago Guardian : August 8th 2013 Contents AUGUST 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
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Prestige Holdings Ltd
For the six months ended May
2013, Prestige Holdings Ltd
delivered earnings per share of
$0.30. This result reflected an
improvement of $0.05 over the
comparative 2012 EPS of $0.25.
In dollar terms, profit attributable to share-
holders moved from $15.3 million in the six
months to May 2012 to $18.4 million for the
Despite a modest 3 per cent improvement
is sales revenue to $438.4 million from the
earlier period s $424.8 million, the gross profit
margin improved from $149.5 million to $157
million or by 5 per cent. In addition, finance
costs were $1.2 million lower, moving from
$6.7 million last year to $5.5 million in the
On the down side, other operating restau-
rants expenses increased to $94.4 million from
2012 s $90 million, or by 5.1 per cent. There
was also a minimal increase in administrative
expenses, which rose from last period s $30.7
million to $30.8 million in the current peri-
od.These changes were sufficient to allow PHL
to deliver a pre-tax profit from continuing
operations of $26.3 million; this represents a
17.8 per cent improvement over the $22.3 mil-
lion reported for the 2012 half-year. With a
slightly higher effective tax take, the post-tax
result of $18.2 million represented an improve-
ment of 17.2 per cent from the 2012 half-year
of $15.6 million.
In 2012, the after-tax result was further
reduced by the loss of $365k, which was attrib-
utable to the four branches of TCBY. After
allowing for the losses relating to minority
interests, the profit attributable to the owners
of the parent company improved to $18.4 mil-
lion from last year s $15.3 million.
Using a historical dividend of $0.24 and a
recent price of $9.35, this stock gives investors
a yield of 2.56 per cent.
As at the end of November 2012, PHL had
third party debts of $86.8 million, related party
(Victor E Mouttet Ltd) borrowings of $10 mil-
lion and $45 million due to Mainstream Foods
Ltd, which is the balance due for the purchase
of Subway restaurants.
In June 2013, these debts were amalgamated
and converted to a new $140 million ten-year
bond with a fixed coupon rate of 6.25 per cent.
The interest savings would be reflected in sub-
sequent periods, starting in the third quarter
of its current fiscal year.
One Caribbean Media Ltd
OCM generated revenues for the first six
months of 2013 of $255.2 million; this repre-
sents an improvement of $38.9 million or 18
per cent over the $216.3 million reported for
the 2012 half-year.
Only $15.3 million of this revenue improve-
ment was attributable to the second quarter,
which was a quieter period than the first quar-
ter. We recall that, in the first quarter, the
Tobago House of Assembly elections cam-
paigning activities boosted revenues for that
period. In a similar vein, the current (third)
quarter s revenues should be enhanced by sim-
ilar activities related to the Chaguanas West
Gross profit for the half-year rose by almost
32 per cent to $93.2 million from the com-
parative 2012 figure of $70.6 million. This
improvement was restrained by a huge increase
in both administrative and marketing expenses.
In the case of administrative expenses, these
rose by almost 34 per cent to $38.3 million
from the earlier figure of $28.6 million. Starting
from a small base of $1.5 million, marketing
expenses rose to $4.8 million; this represents
an increase of 224 per cent.
Despite these changes, operating profit closed
at $50.1 million or 23.6 per cent more than
the $40.6 million recorded for the 2012 period.
After including net interest and dividend
income of $1.8 million, the pre-tax profit came
in at $52 million; this was 22.6 per cent above
the $42.4 million earned for 2012. At the after-
tax level, profit advanced from $31.2 million
in 2012 to $38.4 million in 2013, or by 23.2
This result translates into an EPS figure of
$0.57, up from $0.47 in the 2012 half-year.
The company increased its interim dividend
from $0.25 to $0.27 per share. This dividend
will be paid on September 30, 2013. At a recent
price of $18.00 and a projected full-year div-
idend of $0.75 (2012:$0.70), the stock would
give investors a yield 4.2 per cent.
At the beginning of January 2013, this stock
was quoted at $15.83. So far, it has appreciated
by $2.17 or 13.7 per cent. Further appreciation
during the remainder of the year, which would
depress it dividend yield somewhat, remains
a distinct possibility.
As at June 2013, OCM had net assets of
$623.4 million. This compares with net assets
of $624.8 million as at December 2012. The
cash component at $137.4 million represents
22 per cent of its assets. Similarly, equity of
$609.4 million is 97.75 per cent of total lia-
With the Clico matter now drawing to a
close, it is possible that the 15,289,917 shares,
currently owned by Colonial Life Insurance
Company (Trinidad) Ltd, may soon be chang-
ing hands. At 23 per cent of OCM s total issued
capital, this percentage is large enough for
OCM to be classified as an associated company
of Colonial Life.
Is it desirable that an insurance company
be allowed to appoint a director and contribute
to influencing the affairs of a media house?
Are not the investments of insurance com-
panies normally restricted to very minor sums,
which gives them the flexibility to sell and
buy according to their core priorities of insur-
ance claims settlements, cash flow needs and
investment returns management?
West Indian Tobacco Company Ltd
As it continues to feed on the real cravings
and perceived needs of its highly addictive
customer base, Witco delivered strong earnings
for its tax partners and shareholders. For the
six months ending June 2013, consumers paid
$115.55 million in excise taxes for the privilege
of buying $556.3 million in products at the
At the corporate or shareholders level, taxes
of $66.2 million were paid by the owners. Thus,
a total of $181.8 million in taxes were collected
on the basis of $556.3 million in gross turnover;
this works out at 32.7 per cent of gross turnover.
Revenue (net of excise taxes) for the six-
month period increased by 4.3 per cent to
$440.8 million from last year s $422.5 million.
Interestingly, the cost of sales closed at $115.8
million from last period s $119.7 million; this
represented a decline of $3.9 million.
Consequently, gross profit improved to $325
million. This was $22.17 million or 7.3 per cent
greater than the $302.8 million delivered in
the first six months of 2012.
Distribution costs for the period rose by $1.8
million to $9.9 million. Meanwhile, other
income, which represents sales of services to
related parties, fell from $1.5 million in 2012
to $412k in the current period. Administrative
expenses were only $78k greater than the $47.6
million incurred for the comparative period in
On the other hand, other operating expenses
declined by $5.8 million to $14 million from
$19.8 million in the previous period. The net
effect of these changes saw operating profit
rise to $253.8 million; this was $25 million or
10.95 per cent more than the $228.7 million
earned for the 2012 period.
Helped by a marginally lower tax rate, after-
tax income came in at $187.5 million, being
$19.5 million or 11.6 per cent greater than the
$168 million earned for the 2012 half-year.
This figure translates into an EPS of $2.23
(2012:$1.99). On that basis, a second interim
dividend of $1.04 will be paid on August 13,
2013. This payment brings the total dividend
for the year up to $1.86. The total dividend
for the full year should be at least $4.00 per
share. At a recent share price of $118.00, this
would give a dividend yield of 3.39 per cent.
While most of the company s sales are to
the domestic market, fewer than 14 per cent
or $61.1 million in the half-year to June 2013
represents exports to other BAT companies in
the Caricom region.
Interestingly, the gross profit margin on
domestic sales of $379.7 million is 85 per cent;
in contrast, the gross profit margin on its Cari-
com sales is a minute 2.7 per cent. This rep-
resents a gross profit of $1.65 million.
The future value of an obscenely profitable
company like Witco is that it might conceivably
be used to help in the "war" against illicit
drugs. With some states in the USA and, more
recently, the South American country of
Uruguay legalising marijuana, for both recre-
ational and "medicinal" purposes, local leg-
islators might be able to copy either model
and enlist Witco and similar companies in
their efforts to curb the scourge of illicit drug
In the "war" on illicit drugs, too much
money is wasted on expensive weapons, patrol
boats and similar paraphernalia. The prospects
of higher excise taxes, controlled production,
and management and distribution systems
should make this an exciting new business
The attractions of higher excise taxes (for
the Government) and the profit motive (for
business) can be combined in a positive way
to lessen the impact of the drug trade!
Half-year results for PHL, OCM, Witco
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