Feb 2007 Financial News

OCM Releases Year End Results

Feb 12, 2007

Results for the Year Ended December 31, 2006

One Caribbean Media (OCM) reported an increase in after tax profits of 72.05 per cent. Earnings Per Share (EPS) (inclusive of ESOP) stood at $1.31 which was 20.18 per cent higher than 2005’s EPS of $1.09. The results reflect the performance of the Company in the first year of the merger of the Caribbean Communications Network (CCN) Group and the Nation Group.

According to the Chairman, Sir Fred Gallop, the CCN Group experienced outstanding results with a 20 per cent increase in Profit Before Tax. The Express achieved significant growth in both revenue and profitability with circulation of the Daily and Sunday Express continuing to climb and maintaining market dominance both in copy sales and readership. TV6 also achieved significant growth in revenue and profitability and continues to maintain market dominance both in viewership and revenue. In Barbados, The Nation Group also recorded outstanding results with a 29 per cent growth in Profit Before Tax. In addition, Nation Publishing exceeded its revenue and profitability targets and maintained its market dominance. Starcom Network also performed creditably exceeding its targets and maintaining market dominance. Its Grenadian operations, Grenada Broadcasting Network also exceeded its revenue and profitability targets.

Despite a 79.77 per cent increase in Cost of Sales to $269.290 million, the Group’s Gross Profit grew 163.32 per cent to $178.572 million driven by an even larger increase in Sales of 105.80 per cent to $447.862 million.

Administrative and Marketing Expenses rose 380.08 per cent and 67.49 per cent to $61.642 million and $3.921 million respectively. This resulted in an increase in Operating Profit to $113.009 million (114.70 per cent). Less significant were increases in Dividend Income to $0.065 million (80.56) per cent and Interest Income to $2.969 million (74.34 per cent). Finance Costs increased 120.54 per cent to $1.051 million while Share of Profit in Associate Companies fell 89.88 per cent to $0.645 million.

Ultimately, Profit Before Tax rose 75.57 per cent to $115.637 million. The Effective Tax Rate rose from 22.77 per cent to 24.88 per cent and Profit After Tax was up 70.79 per cent to $86.865 million.

The Directors have agreed to pay a final dividend per share of 47 cents on April 30, 2007. This brings total dividends paid per share for the year to 72 cents which represents an increase of 20.00 per cent from FY 2005’s total dividends per share of 60 cents.

WISE expects OCM to continue to show growth in 2007 as the Company is expected to benefit from advertising revenues driven by the Cricket World Cup together with that of General Elections and recent rate increases. We are currently forecasting EPS of $1.60 which means that at the current price of $20.53, OCM is trading at a price/earnings ratio of 12.83 times earnings. This multiple is low for this share and as such we continue to recommend a BUY.

Sreshtha Tewari
WISE Research Team