A quick look at the One Caribbean Media Company

5 June 2015


Who are One Caribbean Media Company?

One Caribbean Media (OCM) is a group of companies engaged primarily in the field of media services, wholesale distribution, and the sale of other goods throughout the Caribbean region. The group operates out of locations in Trinidad and Tobago, Barbados and other territories in the Eastern Caribbean.

OCM is involved in the operation of television stations, radio stations and the provision of newspapers throughout the English speaking Caribbean. Its primary markets are in Trinidad and Tobago and Barbados.
OCM is registered in Trinidad and Tobago, and its shares are traded on both the Trinidad and Tobago and Barbados stock exchanges.All figures in this blog entry are derived from the financial statements of OCM. As such all the figures are (unless otherwise stated) presented in thousands of dollars.

The income and expenditure account

In the year ended 31st December 2014 the OCM Group delivered a solid performance.
The group reported a profit of TT$84.7m. This was slightly ahead of the prior year by TT$400k.
However revenue was marginally lower than that recorded in the year ended 31st December 2013 (down approximately TT$4m representing a fall of less than 1% year on year). It should be noted that in 2013 the OCM group would have benefited from significant election activity boosting advertising revenue in both Barbados and Trinidad and Tobago (see comment below in respect of election activity in Trinidad and Tobago in 2015).
The OCM group delivered a gross profit margin of 38.11% in 2014, consistent with that recorded in 2013 (39.33%). Looking further down the income and expenditure account the net profit margin of 15.47% improved slightly over that recorded in 2013.
With average annual costs per employee of TT$206k OCM was able to generate an average annual sales per employee of TT$671k. This reflects the fact that the OCM Group operates in a hi-tech environment, and is efficient at generating income from its workforce.
Key profitability ratio year on year are as follows:
The presentation of financial results in this blog entry

 

The Balance Sheet
The OCM Group has a strong balance sheet with net working capital of $227k in 2014 (2013: $263k), and a current ratio of 3.03 (2013: 3.40).
The group works its fixed assets efficiently managing to turn them over on average two times per year for both 2014 and 2013.

A word on gearing – there isn’t any

OCM has no long-term debt although it does utilise bank overdrafts from time to time. Consequently total assets are funded entirely from equity with the total assets to equity employed ratio in 2014 amounting to 118.25%.
Taxation
OCM has historically paid corporation tax at an effective rate close to the statutory rate of 25% applicable in Trinidad and Tobago.
In 2014 OCM’s effective tax rate fell from 26.67% recorded in 2013 to 18.59%. This was caused by a combination of the effect of recognising tax losses that had not previously been recognised in the financial statements, and adjustments for the effect of different tax rates applicable in the different regions the group operates.

Growth by acquisition

During the year ended 31st December 2014 OCM continued to vigorously pursue its strategic growth initiatives by making acquisitions to deepen and selectively diversify the group. Consequently OCM acquired a 60% interest in Novo Media Limited, a software development company, and 100% in two investment property companies, Basic Space Limited and Donald Dunne Holdings Limited.
These investments follow on from OCM’s investment two years ago in Innogen Technology Inc, a Barbados based company, who produce a photovoltaic product aimed at replacing high fuel costs with lower cost forms of energy.

A mighty performer on the stock exchange

OCM has over the last two years returned a stellar performance on the stock exchange. In the year to 31st December 2014 the share price climbed 35.14%, following on from impressive growth of 16.87% in 2013.

Events subsequent to the year end

In support of the Group’s strategic growth initiative on the 13th April 2015 OCM announced that it had acquired a 40% interest in an innovative technical company. Further details on this acquisition are likely to be revealed in the financial statements for the year ended 31st December 2015.

Other factors to consider

  • 2015 is an election year in Trinidad and Tobago. This will result in increased demand for advertising encompassing all of OCM business segments – television, radio, and newsprint
  • On the 16th October 2014, Richard Young resigned as a director of OCM because of a potential conflict of interest as another company on whose board he serves is entering the market and will, at some point in the future, be in direct competition with a subsidiary of the OCM Group
  • OCM continues to be challenged by the economic climate in Barbados. In 2014 the Barbados market reported a 23% decline in profitability and as a result in the latter part of 2014 management executed a number of strategies aimed at stabilising performance. These strategies included closing non-performing business units, cutting staff and implementation of cost efficiency improvements.
  • OCM made significant investments to upgrade and automate systems resulting in improved operational efficiencies. More investments are expected to be made in this area in 2015.
  • In Trinidad and Tobago OCM are the market leaders in print, television, and radio. The Express Newspaper has 49% of the weekday market and 51% of the Sunday market (nearest rival is the Newsday with 33% and 30% of the weekday and Sunday market respectively)
  • In Trinidad and Tobago the OCM radio network secured the top three positions for both the morning and evening drive time slots
  • In Trinidad and Tobago TV6 news is the most watched programme currently airing on television
  • In Barbados the Nation Newspaper controls 88% of the weekday market and 83% of the Sunday market
  • In Barbados the Starcom Radio Group (controlled by OCM) has a 55% market share
  • OCM are the leading television broadcaster in Grenada
  • OCM have a significant radio presence in the English speaking Caribbean serving, Trinidad and Tobago, Barbados, Grenada, St. Lucia, St. Kitts and Nevis, Anguilla, Antigua, Montserrat, and the British Virgin Islands
  • During the year OCM launched two new radio stations. Taj in Trinidad and Tobago, and wVent in St. Lucia

There’s lots more in our blog
Please feel free to surf our blog. We cover all types of topics and we love to receive feedback from our readers.
Our blog can be found online at http://firstlinesecurities.com/blog/
Supporting analysis
In appendix one to this blog entry we have included some of the key supporting ratios we have calculated in preparing this blog entry.

Next week

Next week we take a look at the Trinidad Publishing Group.

Closing thoughts – ready to make some investments?
Firstline Securities Limited offers comprehensive coverage of local and international markets with a bias for the energy sector. Firstline offers a number of unique opportunities to put surplus cash to work either as your asset manager or investment advisor. Please contact us for more details at info@firstlinesecurities.com or at 868.628.1175, we can discuss your investment needs in detail and craft a portfolio that makes sense for you. We look forward to hearing from you.

Comments are closed.