DIX­IE-ANN DICK­SON

There will be no more min­gling of funds be­tween the T&T-based rum and bit­ters pro­duc­er, An­gos­tu­ra Hold­ings Ltd, and its par­ent com­pa­ny, CL Fi­nan­cial. This was the de­c­la­ra­tion made by Wayne Yip Choy, the new­ly ap­point­ed CEO of An­gos­tu­ra, in an in­ter­view on Mon­day. Since CL Fi­nan­cial sought a bailout from the Gov­ern­ment in Jan­u­ary 2009, An­gos­tu­ra came un­der heavy scruti­ny.?Ques­tions were raised con­cern­ing heavy in­vest­ments, in­clud­ing US$676 mil­lion spent on the ac­qui­si­tion of the Ja­maican con­glom­er­ate, Las­celles de Mer­ca­do. Oth­er con­cerns were raised, in­clud­ing a debt of $1.2 bil­lion in­curred by An­gos­tu­ra and its in­abil­i­ty to pro­duce its 2009 fi­nan­cial state­ment. Ad­mit­ting that the CL Fi­nan­cial is­sue had ini­tial­ly af­fect­ed the com­pa­ny, Yip Choy said, "Mon­ey was mov­ing out of here as there was min­gling of in­ter-com­pa­ny ac­counts."

Things have changed.

"There would be no more min­gling of in­ter-com­pa­ny ac­counts."

That prac­tice stopped a year ago, said Yip Choy, just af­ter he was ap­point­ed as CEO in No­vem­ber, 2009. Yip Choy says that An­gos­tu­ra in­her­it­ed debt not as­so­ci­at­ed with the com­pa­ny. He ex­plained that CL Fi­nan­cial owes An­gos­tu­ra $1.2 bil­lion and, at the same time, it had a debt of about $900 mil­lion.

Do­ing busi­ness dif­fer­ent­ly

A con­fi­dent Yip Choy said: "I have in­creased the prof­itabil­i­ty and the cash flow of the com­pa­ny." He de­scribed An­gos­tu­ra's cash­flow as "healthy." Dur­ing the 13 months he's been at the helm of An­gos­tu­ra, Yip Choy said he had man­aged to re­duce the com­pa­ny's debt by about $100 mil­lion. Ac­cord­ing to An­gos­tu­ra's half-year re­port for the pe­ri­od end­ed on Au­gust 31, 2010, in the sec­ond half of the 2009, the com­pa­ny con­sid­ered ob­tain­ing ad­di­tion­al fi­nanc­ing of be­tween $90 mil­lion and $100 mil­lion to make its prin­ci­pal pay­ment on cer­tain loans as well as to clear over­due in­ter­est and sup­port work­ing cap­i­tal re­quire­ments. Yip Choy said de­spite the ex­pen­di­ture as out­lined above, An­gos­tu­ra has suf­fi­cient cash to meet its debt ser­vice com­mit­ment of $29.1 mil­lion and there­after re­tain ad­e­quate cash re­serves.

What's more, the com­pa­ny record­ed a net prof­it of $91.6 mil­lion for the pe­ri­od Jan­u­ary to Sep­tem­ber 2010 com­pared to a loss of $9 mil­lion for the same pe­ri­od in 2009 and has pub­lished three unau­dit­ed re­ports in the last four months. Not bad for a com­pa­ny that was sus­pend­ed from trad­ing on the T&T Stock Ex­change in Ju­ly 2009 for fail­ing to sub­mit its au­dit­ed fi­nan­cials for the year end­ed De­cem­ber, 2008. When that re­port was even­tu­al­ly pub­lished in Au­gust this year, it re­vealed a loss of $1.2 bil­lion–the largest in the his­to­ry of pub­lic com­pa­nies in T&T. While An­gos­tu­ra has a re­cent lega­cy of debt and fi­nan­cial loss­es, Yip Choy said that he has be­gun the turn­around of the rum and bit­ters pro­duc­er by chang­ing the way it does busi­ness. His­tor­i­cal­ly, Yip Chop said, An­gos­tu­ra, like oth­er al­co­hol com­pa­nies, chased vol­ume.

"But I chase prof­it through con­sump­tion and I do not force feed sales on­to the mar­ket. I am more in­ter­est­ed in con­sump­tion, which re­al­ly means de­ple­tion of your stocks," he ex­plained. "An­gos­tu­ra was not in­ter­est­ed in de­ple­tion of stocks. They were more in­ter­est­ed in how much sales they got and, as a re­sult, year-end, they would push their year-end sales and have a very poor be­gin­ning of the fol­low­ing year. "So I changed the way we do busi­ness be­cause I want­ed to even out how things were done to give me a bet­ter read­ing of what con­sumers were ac­tu­al­ly con­sum­ing, of which this com­pa­ny nev­er had an idea," Yip Choy said. He said the com­pa­ny need­ed to be re­aligned based on con­sump­tion, not on forced sales. He said it would be dif­fi­cult to see the ef­fects of this long-term move un­til the end of the year in­to Jan­u­ary/Feb­ru­ary of 2011.

A facelift for An­gos­tu­ra

An­gos­tu­ra has em­barked on a num­ber of ad­ver­tise­ments and cam­paigns pro­mot­ing its new prod­uct, Sin­gle Bar­rel Rum. Yip Choy said this cam­paign is a part of An­gos­tu­ra's re­brand­ing ini­tia­tive. He said, in ad­di­tion to the cam­paign, the com­pa­ny has al­so re­designed the look of its rum bot­tles, from cap to la­bels. The la­bels are more mod­ern, the bot­tles ap­pear more sleek and are slight­ly heav­ier. "The bot­tles I in­her­it­ed and the de­sign were about 50 years old. The com­pa­ny need­ed a facelift; the im­agery of the com­pa­ny needs a facelift. It needs to be more rel­e­vant for to­day's mar­ket."

Yip Choy, who de­scribed Sin­gle Bar­rel as a sip­ping rum, said its recipe was one of the best kept se­crets af­ter the for­mu­la for the world-fa­mous An­gos­tu­ra Bit­ters. "It's a fan­tas­tic prod­uct that we had here for a few years which has nev­er been pro­mot­ed," he said. "We have been get­ting a lot of rave re­views. The mar­ket has been re­spond­ing great to­wards it," said an ex­cit­ed Yip Choy. He said that sales for White Oak have tak­en off for this year, hav­ing been brand­ed as the most pop­u­lar al­co­holic bev­er­age. Among the com­pa­ny's oth­er big sell­ers are 1824, 1919, An­gos­tu­ra Or­ange Bit­ters, Roy­al Oak, Black La­bel and For­res Park.

An­gos­tu­ra prod­ucts on dis­play at the com­pa­ny's Laven­tille head of­fice. Pho­tos: Shirley Ba­hadur

An­gos­tu­ra's re­cov­ery

Even though things may ap­pear to be down a bit for the Christ­mas sea­son, Yip Choy said for the greater part of the year, the com­pa­ny fared well. "We have man­aged to beat our best year, which was 2003, by two-and-a-half times," he said, adding that the com­pa­ny made $86 mil­lion, but sur­passed that by mid-2010, and is ex­pect­ed to hit $200 mil­lion by year's end. "We have been go­ing great for the most part of the year, but no­tice that the Christ­mas sea­son is not as buoy­ant as it should be. We are now see­ing what peo­ple were com­plain­ing about," Yip Choy said.

He said peo­ple were spend­ing less as a con­se­quence of the slow­down of the econ­o­my, adding that the re­tail trade is al­so suf­fer­ing. De­spite this set­back, Yip Choy said the com­pa­ny has man­aged to make a turn­around. Mak­ing ref­er­ence to the fig­ures above, he said the turn­around tes­ti­fies to the suc­cess of the new strate­gic di­rec­tion adopt­ed by An­gos­tu­ra's man­age­ment team. Ac­cord­ing to its half-year re­port, earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (EBIT­DA), from its core lo­cal op­er­a­tions, is $112.7 mil­lion ($129.3 mil­lion for the to­tal group), which sur­pass­es the high­est ever full-year EBIT­DA of $85.9 mil­lion by $26.8 mil­lion or 31 per cent. "So we have enough funds to keep the com­pa­ny go­ing, but it was touch and go in 2009. An­gos­tu­ra ac­tu­al­ly came close to run­ning out of mon­ey."

Mar­kets

Giselle Laronde-West, man­ag­er, cor­po­rate com­mu­ni­ca­tions, said the com­pa­ny is seek­ing to ex­pand its in­ter­na­tion­al mar­kets. Nei­ther the eco­nom­ic slow­down nor the CL Fi­nan­cial is­sue has af­fect­ed its mar­kets. As a mat­ter of fact, she said the al­co­hol in­dus­try is grow­ing in­ter­na­tion­al­ly. In ad­di­tion to en­ter­ing the Eu­ro­pean mar­ket–in­clud­ing Rus­sia, Italy, Spain, France and Ger­many–Laronde-West said An­gos­tu­ra is?al­ready mov­ing in­to parts of Asia and Africa. Yip Choy said the com­pa­ny is now build­ing back its North Amer­i­can pres­ence.

"Pre­vi­ous­ly, be­fore I came along, we lost a lot of mon­ey on ex­port, but we have stopped that haem­or­rhag­ing." Again, he at­trib­uted this to the com­pa­ny's his­to­ry of chas­ing vol­ume, not prof­it. "My phi­los­o­phy is that you are in the busi­ness to make mon­ey and we hap­pen to make rum to do that. "In ex­port, though the bit­ters by far is do­ing much bet­ter than the rum, we are us­ing bit­ters to pro­pel the rum prod­ucts and open doors for us." Laronde-West said the com­pa­ny would al­so be launch­ing its three-year-old, five-year-old and sev­en-year-old rum in the Unit­ed States by Feb­ru­ary 2011 as part of its re­build­ing, re­brand­ing cam­paign.

About Wayne Yip Choy

Yip Choy, who's a very suc­cess­ful busi­ness­man, was in­stru­men­tal in build­ing the Kiss Bak­ing Com­pa­ny. "I built Kiss Bak­ing Com­pa­ny. Kiss bought out Hol­i­day Foods and I brought that to the mar­ket suc­cess­ful­ly. I spent 28 years build­ing Kiss. I built Kiss from scratch and Hol­i­day Foods was re­vi­talised be­cause of me. Then I re­tired. "I tried re­tir­ing six years ago, but I couldn't. With­in six months, I was at BWIA for three months as CEO des­ig­nate.

"In 2005, I ten­dered my res­ig­na­tion. In 2007/2008, I was man­ag­ing di­rec­tor at Carib. In No­vem­ber last year, I was man­ag­ing di­rec­tor of An­gos­tu­ra."

Due to the op­er­a­tional im­prove­ments made late last year and in­to 2010, the com­pa­ny's in­ter­nal­ly gen­er­at­ed cash­flows sup­port­ed pay­ments of ap­prox­i­mate­ly $152.3 mil­lion as fol­lows:

In­ter­est paid $37.6 mil­lion

Yen swap cost (com­plete) $7.4 mil­lion

Prin­ci­pal on loans paid $62.9 mil­lion

In­jec­tion of work­ing cap­i­tal to

sup­port high­er sales $33.6 mil­lion

Cap­i­tal ex­pen­di­ture $10.8 mil­lion