Oct 2007 Financial News

OCM Releases Nine Month Results

Oct 30, 2007

Results for the Nine Months Ended September 30, 2007

For the Nine Months (NM) Ended September 30, 2007, One Caribbean Media Limited (OCM) reported Earnings Per Share (EPS) (inclusive of ESOP) of 80 cents, up 5.26 per cent or 4 cents on the 76 cents reported on the corresponding Nine Month period in FY06. Group Profit Attributable to Shareholders increased from $50.04 million (NM06) to $52.68 million (NM07), an increase of 5.29 per cent or $2.65 million. According to the Chairman, this result was achieved despite the absorption of a significant loss by one subsidiary on Cricket World Cup.

Sales saw an increase of 5.27 per cent or $16.88 million to end the Nine Month period at $337.44 million, while Cost of Sales rose 6.30 per cent or $12.99 million to $219.07 million. As such, Gross Profit stood at $118.37 million, up 3.40 per cent or $3.89 million on the same period in the last financial year.

For the period under review, Administrative Expenses was up 3.38 per cent or $1.57 million to $47.88 million while Marketing Expenses fell 4.02 per cent or $0.13 million to $3.18 million. Thus, Operating Profit amounted to $67.32 million, an increase of 3.80 per cent of $2.46 million on the same figure in the last fiscal.

NM07 on NM06, Dividend Income increased an outstanding 186.15 per cent or $0.12 million to $0.19 million. Interest Income grew a significant 64.97 per cent or $1.48 million to $3.77 million. Finance Costs for the Nine Months was $0.88 million, up a considerable 89.48 per cent or $0.42 million. Ultimately, Profit Before Taxation totalled $70.39 million compared to $66.74 million for the corresponding period in FY06, an increase of 5.47 per cent or $3.65 million.

The Effective Tax Rate for the period under review was 24.81 per cent compared to a Tax Rate of 24.48 per cent for the same period in fiscal 2006. As a result, Profit After Taxation was $52.93 million, up 5.01 per cent or $2.53 million on NM06.

The Chairman also stated that the Group projects an enhanced performance during the last quarter, which includes the traditional holiday period. Additionally, the Group expects, in the near future, to take operational control of five radio stations in the Eastern and Southern Caribbean as a result of a purchase agreement with Cumulus Media Inc. in April 2007.

The shares of OCM last closed at a price of $17.50. At this price and our forecasted EPS of $1.40 for FY07, this share is trading at a price to earnings multiple of 12.50 times. Additionally using a multiple of 14 times and the forecasted EPS of $1.40, this share has an expected return of approximately 12 per cent on the current price or a target price of $19.60. Thus at this time we recommend a BUY on this share.

Nancy Chen
WISE Equity Research Team