Aug 2007 Financial News

AHL Releases Half Year Results

Aug 21, 2007

Results for the Half Year Ended June 30, 2007

For the Half Year Ended June 30, 2007, Angostura Holdings Limited (AHL) reported Earnings Per Share (EPS) of less than 1 cent or $0.004, compared to an EPS of $0.09 for the same period in FY06.

Sales for the Half Year period amounted to $374.56 million down 2.49 per cent or $9.57 million on the corresponding period in the last financial year. The Chairman has stated that the core rum business reflected increased sales of $25.2 million or 8.75 per cent, however this was offset by the effect of increased tolling arrangements within the Ethanol based subsidiary resulting in the overall drop of 2.49 per cent in recorded Sales. Excise Taxes for HY07 stood at $52.51 million, up 12.22 per cent or $5.72 million on HY06. Thus, Net Sales ended the period at $322.05 million, down 4.53 per cent or $15.29 million on the same figure in FY06.

Cost of Goods Sold fell by 20.09 per cent or $47.49 million from HY06 to $188.89 million for HY07. Thus, Gross Profit ended the period at $133.16 million, up 31.89 per cent or $32.20 million on the comparable period in the last financial year.

Selling and Marketing Costs totaled $73.39 million for HY07 compared to $61.12 million for HY06- an increase of 20.08 per cent or $12.27 million. Also, Administrative Expenses increased by a similar margin of 20.14 per cent from $31.99 million for HY06 to $38.43 million for the Half Year under review. Other Income for the period was $139.84 million, a notable increase of 298.91 per cent or $104.79 million on the same period in fiscal 2006. Fair Value Gains for the period under review was $8.19 million. There were no Fair Value Gains or Losses for HY06. Consequently, Operating Profit ended at $152.99 million for HY07 compared to $42.91 million for HY06- a considerable increase of 256.56 per cent or $110.08 million. The Operating Profit figure for HY07 includes a substantial one time gain of $139.8 million from the sale of the Company’s Belvedere Investment in addition to sale of other assets Intra group.

As noted in the Chairman’s Statement, following June 30, 2007, the majority of AHL’s Investment holding in Belvedere SA was disposed of following a serious shareholder dispute between the group and the founding shareholders of Belvedere SA. The Company expects to account for losses on the disposal of $202 million in the third quarter of 2007; however the loss will be offset by previous mark to market gains recorded in 2006 and 2007 to date of $204 million. Thus, the overall financial impact of the Belvedere Transaction was neutral. Also, the proceeds arising from the sale will be utilized for debt reduction in addition to the Company’s quest for valuable international acquisitions related to the core business that will add to AHL’s Global Growth Strategy.

Finance Costs for HY07 was $169.54 million, up a considerable 200.13 per cent or $113.05 million on HY06; while Finance Income was down 23.74 per cent or $6.98 million from $29.41 million for HY06 to $22.43 million for HY07.

Share of Results of Associates fell a significant 187.37 per cent from $2.75 million to $2.40 million. Thus, Profit Before Taxation ended at $3.48 million, down 81.27 per cent or $15.10 million on the corresponding period in fiscal 2006.

The Effective Tax Rate for the Half Year period under review was 74.62 per cent compared to a Tax Rate of 4.00 per cent for HY06. As a result, Profit for the period was $0.88 million, a fall of 95.05 per cent or $16.95 million on the comparable period in FY06.

The Board has declared an Interim Dividend of 5 cents per share to be paid on October 9, 2007.

AHL last closed at a price of $5.00 on the local exchange. Based on the current results and WISE’s outlook for this Company for the rest of FY07, we continue to recommend a SELL on this share.

Gia Singh
WISE Equity Research Team