Fe­lix Pereira

This week, we look at the re­sults of three com­pa­nies whose fi­nan­cial year end­ed in De­cem­ber 2012.

Point Lisas Port De­vel­op­ment Com­pa­ny

In 2012, rev­enues at Plipde­co rose by 7.3 per cent to reach $242 mil­lion from $225.6 mil­lion in 2011. This in­crease was at­trib­uted to the com­bi­na­tion of rate in­creas­es for some es­tate ten­ants and in­creas­es in the through­put of con­tainer­ised car­go. In the case of the lat­ter, this was due to in­creased vol­umes of car­go, re­flect­ing a some­what more buoy­ant lev­el of eco­nom­ic ac­tiv­i­ty.

Di­rect costs rose by ten per cent or from $68.4 mil­lion in 2011 to $75.2 mil­lion last year. This de­vel­op­ment re­strained the growth in gross prof­it to 6.1 per cent, as it in­creased to $166.8 mil­lion from 2011's $157.2 mil­lion. The com­pa­ny al­so ex­pe­ri­enced a de­cline in the un­re­alised fair val­ue gains on its in­vest­ment prop­er­ties; this item fell to $27.5 mil­lion from the pre­vi­ous pe­ri­od's $47.6 mil­lion.

The con­clu­sion of labour union ne­go­ti­a­tions saw retroac­tive pay­ments and new salaries be­ing im­ple­ment­ed, start­ing in the sec­ond quar­ter of 2012. This de­vel­op­ment con­tributed to the rise in ad­min­is­tra­tive ex­pens­es to $80 mil­lion; this was a nine per cent in­crease over the $73.4 mil­lion paid in 2011. Mean­while, oth­er op­er­at­ing ex­pens­es grew by 3.8 per cent to $65.4 mil­lion from the 2011 fig­ure of $63 mil­lion.

The net ef­fect of these changes crys­tallised in­to an op­er­at­ing prof­it of $49 mil­lion; this was $19.4 mil­lion or 28.5 per cent low­er than the $68.4 mil­lion record­ed for 2011. It should be not­ed that $20 mil­lion of this de­cline is trace­able to the con­trac­tion in the val­ue of un­re­alised fair val­ue gains on in­vest­ment prop­er­ties.

Plipde­co al­so record­ed low­er in­vest­ment in­come of $5.3 mil­lion for 2012, which was $2.9 mil­lion less than the $8.2 mil­lion earned for 2011. On a pos­i­tive note, fi­nance costs de­clined by $2.6 mil­lion or from $11.3 mil­lion in 2011 to $8.7 mil­lion last year. The net ef­fect of these changes saw the net prof­it for the year fall to $40 mil­lion from the 2011 re­sult of $59.2 mil­lion.

Af­ter ex­clud­ing fair val­ue gains, earn­ings per share, at $0.31, were high­er than the $0.29 re­port­ed for 2011. On that ba­sis, a div­i­dend of $$0.11 was de­clared. At the re­cent price of $3.65, this re­flects a yield of three per cent.

Trinidad Ce­ment Ltd

The 92-day labour strike in Trinidad re­strained TCL to a mod­est 3.5 per cent in­crease in sales for 2012. The Ja­maican and Bar­ba­dos fa­cil­i­ties al­so ex­pe­ri­enced pro­duc­tion dif­fi­cul­ties.

To­tal rev­enue for 2012 reg­is­tered at $1.62 bil­lion from 2011's $1.56 bil­lion. Even so, TCL man­aged to pro­duce pri­ma­ry earn­ings of $160 mil­lion for 2012; this fig­ure was 82.4 per cent high­er than the 2011 re­sult of $87.7 mil­lion. Bet­ter pric­ing con­tributed to this re­sult. How­ev­er, af­ter al­low­ing for de­duc­tions due to de­pre­ci­a­tion, im­pair­ment and write-off charges as well as loss on dis­pos­al of plant, prop­er­ty and equip­ment, the com­pa­ny record­ed an op­er­at­ing loss of $84.9 mil­lion. This was a strong im­prove­ment from the 2011 loss of $166 mil­lion. If the non-cash $88.6 mil­lion im­pair­ment cost for kiln 4 were ex­clud­ed, the com­pa­ny would have re­port­ed a small prof­it.

Re­struc­tur­ing ex­pens­es came in at $49.1 mil­lion from last pe­ri­od's $103.2 mil­lion. Fi­nance costs rose to $244.7 mil­lion from $188 mil­lion record­ed for 2011. The $56.7 mil­lion in­crease was at­trib­ut­able to two main fac­tors. First, there was $33.7 mil­lion re­lat­ing to for­eign ex­change loss­es at their Ja­maican sub­sidiaries due to the de­val­u­a­tion of the Ja­maican cur­ren­cy. The re­main­ing $23 mil­lion was at­trib­uted to high­er in­ter­est costs as­so­ci­at­ed with the debt re­struc­tur­ing ex­er­cise. Specif­i­cal­ly, this was due to high­er prin­ci­pal bal­ances that re­sult­ed from the cap­i­tal­i­sa­tion of in­ter­est at the end of the sec­ond and third quar­ters of 2012.

These changes saw TCL record a pre-tax loss of $378.7 mil­lion; this was an im­prove­ment of $78.6 mil­lion over the 2011 loss of $457.3 mil­lion. Where­as, in 2011, the com­pa­ny had a tax cred­it of $72.8 mil­lion, in 2012, it in­curred a tax charge of $5 mil­lion. The rea­son for this was large­ly due to the write back of $51.7 mil­lion in de­ferred tax as­sets. The net ef­fect is that the com­pa­ny re­port­ed an al­most un­changed net loss of $384 mil­lion for both 2011 and 2012.

The di­rec­tors' state­ment ex­press­es con­fi­dence in the T&T, Guyana and Suri­name mar­kets. TCL is more re­served about the prospects for growth and prof­it in the Bar­ba­dos and Ja­maican mar­kets.

TCL's share price has de­clined from its De­cem­ber 2012 close of $1.49 and was re­cent­ly quot­ed at $1.00. No doubt, in­vestors are aware that much of the costs in­curred in 2012 would no longer be rel­e­vant in the cur­rent re­port­ing pe­ri­od. Thus, they are await­ing the re­lease of the com­pa­ny's first quar­ter's re­sults to de­cide if the cur­rent price rep­re­sents an at­trac­tive buy­ing op­por­tu­ni­ty.

An­gos­tu­ra Hold­ings Ltd

In 2012, An­gos­tu­ra Hold­ings Ltd (AHL) reg­is­tered im­proved sales of just un­der $4 mil­lion to reach $648.3 mil­lion; this rep­re­sent­ed an in­crease of less than 1 per cent over the $644.3 mil­lion record­ed for 2011.

This re­sult re­flect­ed the strong im­prove­ment in the non-al­co­hol di­vi­sion, which saw sales ad­vance by 18.4 per cent to $94.2 mil­lion from $79.5 mil­lion in 2011. This seg­ment is dom­i­nat­ed by An­gos­tu­ra� bit­ters and LLB bev­er­ages. Dur­ing the year a spe­cial edi­tion of An­gos­tu­ra� bit­ters was launched to mark Queen Eliz­a­beth 11's di­a­mond ju­bilee.

On the oth­er hand, sales of al­co­hol prod­ucts de­clined by $10.7 mil­lion to $554 mil­lion from $564.8 mil­lion in 2011. Part of this drop could be ex­plained by the re­moval of Suri­name Al­co­holic Bev­er­ages, which was sold in April 2012, from the cur­rent fig­ures.

De­spite the anaemic rise in sales, gross prof­it dis­played a health­i­er im­prove­ment. This mea­sure rose by al­most four per cent to reach $378.8 mil­lion from the $364.7 mil­lion reg­is­tered for 2011.

Sell­ing and mar­ket­ing ex­pens­es in­creased by nine per cent to $113.7 mil­lion (2011:$104.1 mil­lion) while ad­min­is­tra­tive ex­pens­es rose by 11 per cent to $62.3 mil­lion (2011:$57 mil­lion).

These changes re­sult­ed in a small de­cline in op­er­at­ing prof­it from the 2011 fig­ure of $204.5 mil­lion to $202.8 mil­lion last year. Of this to­tal, al­co­hol prod­ucts ac­count­ed for $162.7 mil­lion (2011:$173.6 mil­lion) while non-al­co­hol prod­ucts earned $40.1 mil­lion (2011:$30.9 mil­lion).

Per­haps, the big­ger sto­ry at AHL over the past 15 months or so has in­volved debt and in­ter­est rate re­duc­tions and con­sol­i­da­tion, com­bined with the sales of se­lect­ed as­sets. For ex­am­ple, in­ter­est on its eu­ro debt de­clined from 5.1 per cent to 3.1 per cent. This and oth­er sim­i­lar re­duc­tions helped AHL achieve sav­ings of $27.7 mil­lion in fi­nance costs.

In April 2012, AHL dis­posed of its 70 per cent in­ter­est in Suri­name Al­co­hol Bev­er­ages (SAB), and then in De­cem­ber 2012, it sold its three per cent in­ter­est in Las­celles de Mer­ca­do. These two trans­ac­tions re­sult­ed in a prof­it of $43.9 mil­lion.

In April 2012, the com­pa­ny set­tled �13.6 mil­lion debt, at which time it record­ed a for­eign ex­change gain of $10.7 mil­lion. With �26.1 mil­lion still on its books as at year-end 2012, the de­pre­ci­a­tion of the TT$ to eu­ro rate com­pressed this gain down to $4.5 mil­lion.

On April 17, 2013, AHL an­nounced that it sold its 28.91 per cent stake in Burns Stew­art Dis­tillers Ltd to South African Dis­til­leries and Wines (SA) Ltd on April 12, 2013. The im­me­di­ate cash pro­ceeds of about $331 mil­lion will see AHL record a prof­it of at least $80 mil­lion in the sec­ond quar­ter.

The press re­lease al­so states that a fur­ther US$4.4 mil­lion can be earned from a "con­tin­gent earn out". This prompt and pre­cise press re­lease con­trasts with the less than forth­com­ing in­for­ma­tion on the pre­vi­ous sales of both SAB and LdM. Hope­ful­ly, this means that com­mu­ni­ca­tion to share­hold­ers will con­tin­ue to im­prove.

Part of the pro­ceeds from this sale is like­ly to be used to re­pay debt, with the eu­ro-de­nom­i­nat­ed por­tion be­ing high on the list of pri­or­i­ties.

At De­cem­ber 2012, the com­pa­ny had eu­ro-de­nom­i­nat­ed debt of $227.9 mil­lion.

With the sale of many of its sur­plus as­sets now com­plete and its debt bur­den more man­age­able, AHL is now in a bet­ter po­si­tion to con­cen­trate on grow­ing its core busi­ness in a mean­ing­ful and sus­tain­able man­ner. The ma­jor re­main­ing one-off item is the re­ceiv­able of $984.6 mil­lion from CL Fi­nan­cial, which could be set­tled in some way lat­er this year.

For 2012, AHL de­liv­ered di­lut­ed earn­ings per share of $0.99, which was 27 cents greater than the $0.72 cents earned for 2011. On that ba­sis, the com­pa­ny in­creased its div­i­dend from $0.12 in 2011 to $0.15 for 2012.

Fol­low­ing the mid-April an­nounce­ment of the sale of Burns Stew­art, AHL's share price has re­gained its pos­i­tive mo­men­tum. Last Fri­day, the share price closed at $8.50. Per­haps, the price of $10 paid by some in­vestors, who bought be­tween May 11 and May 17, 2010, might be clos­er in sight?

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