Apr 2007 Financial News

OCM Releases First Quarter Results

Apr 30, 2007

Results for the First Quarter Ended March 31, 2007

For the First Quarter Ended March 31, 2007, One Caribbean Media (OCM) reported Earnings Per Share (EPS) (inclusive of ESOP) of 19 cents, an increase of 18.75 per cent or 3 cents on the comparable quarter of 2006. The Group showed a strong first quarter with Profit Attributable to Shareholders increasing by 19.97 per cent or $2.083 million to $12.514 million.

According to the Chairman, Sir Fred Gollop, the Group’s performance for the first quarter showed a significant improvement over the comparable period in 2006 notwithstanding the fact that this quarter traditionally represents the slowest period of growth. Sales increased by 13.66 per cent to $103.523 million and Cost of Sales also rose by 16.03 per cent or $9.823 million over the same period last year to $71.118 million. This ultimately resulted in Gross Profit growing by $2.615 million or 8.78 per cent to $32.405 million.

For the period under review, there was a minimal increase in Administrative Expenses of $0.499 million or 3.30 per cent to $15.613 million. However, Marketing Expenses declined marginally by 4.30 per cent or $0.047 million from $1.093 million in Q1 2006 to $1.046 million in Q1 2007. As a result, Operating Profit amounted to $15.746 million and was up $2.163 million or 15.92 per cent.

The Group saw considerable increases in Interest Income and Finance Costs for the quarter. Interest Income for Q1 2007 was $1.190 million, up by a significant 155.36 per cent or $0.724 million from the previous quarter, while Finance Costs rose by 83.06 per cent or $0.103 million to $0.227 million. Ultimately, Profit Before Taxation increased by 19.99 per cent or $2.784 million to $16.709 million for Q1 2007.

The Effective Tax Rate was 24.62 per cent for the quarter compared to 24.50 per cent for Q1 2006. Thus, Profit After Taxation was $12.595 million, up by 19.80 per cent or $2.082 million on the equivalent quarter in 2006.

On April 23, 2007 OCM entered into an agreement to acquire the radio assets of Cumulus Caribbean, owner of radio stations in Trinidad and Tobago, St. Lucia, St Kitts & Nevis, Antigua and Montserrat. Upon completion of the acquisition, OCM would have created the first pan-Caribbean radio network. As stated by the Chairman, this acquisition is consistent with the Group’s regional broadcasting strategy.

With the upcoming acquisition and the positive results thus far for fiscal 2007, we continue to maintain our forecasted EPS of $1.60 for the financial year 2007. At the current price of $21.21 and this forecasted EPS, OCM is trading at an attractive price to earnings multiple of 13.26 times. Additionally, using a multiple of 15 times and at the forecasted EPS of $1.60, this share has an expected return of approximately 13 per cent on the current price or a target price of $24.00. As such we continue to recommend a BUY on this share.

Nancy Chen
WISE Equity Research Team