Home' Trinidad and Tobago Guardian : June 1st 2017 Contents JUNE 1 • 2017 guardian.co.tt BUSINESS GUARDIAN
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Fair value gains boost Plipdeco's 2016 profit
The reduced contribution from
its port and related activities
operations at Point Lisas In-
dustrial Port Development
Corporation Ltd (Plipdeco)
reflected the weaker trading
activity and economic fortunes of the local
Let us now review Plipdeco's results to De-
cember 31, 2016.
Changes in financial
Total assets advanced from $2.35 billion to
$2.81 billion or by 19.5 per cent.
Property, plant and equipment grew to $767.7
million from $608.6 million. The bulk of this
increase reflected a revaluation adjustment of
$141.5 million while additions, net of depre-
ciation, contributed $11.6 million.
Investment properties climbed to $1.83 bil-
lion from $1.57 billion. The largest improve-
ment was attributed to unrealised fair value
gains of $261.6 million, all of which was in-
cluded in gross profit. In addition, there was a
contribution of $58.8 million, which reflected
leases which are 96 years and longer.
Trade and other receivables increased to
$34.6 million from $29.7 million. The net
trade receivables component swelled to $22.1
million from $12.8 million. In contrast, other
receivables and prepayments declined to $8
million from $10.2 million.
In addition, VAT receivable fell to $4.4 mil-
lion from $6.6 million.
Inventory, which comprises maintenance
spares, rose to $16.4 million from $14.7 million.
Held to maturity assets declined to zero from
$40.2 million; this reflected the maturity of
certificates of investment in T&T Government
Cash and cash equivalents rose from $67.4
million to $144.7 million. This improvement
was aided by the receipt close to the end of
the fiscal year of fresh long and medium-term
The current balance was represented by
short-term bank deposits of $128.2 million
and $16.5 million of bank and cash balances.
Total liabilities increased by 17.3 per cent to
$441.3 million from $376.2 million.
Total debt rose to $176.7 million from $128.1
million. The floating rate bonds of $55.2 million
were fully repaid. New borrowing balances re-
flected a long-term portion of $161.9 million
and a current liability of $14.8 million. Of the
total loan balance, about 37 per cent or $65.1
million is denominated in US dollars.
The deferred lease rental income liability
fell marginally from $65.48 million to $64.59
million. The current portion was $4.39 mil-
lion while the long-term element was $60.2
Trade and other payables were little changed,
moving from $43.6 million to $42.9 million.
Both components exhibited little movement;
the trade payables element held at $10.6 mil-
lion for both periods while other payables and
accruals fell from $33 million to $32.4 million.
Retirement obligations under the defined
benefit plan for permanent employees declined
to $31.7 million from $39.2 million; this reflect-
ed the net effect of the improvement in the fair
value of the pension plan's assets to $160.4
million (2015: $149.1 million) while the present
value of its future obligations rose marginally
to $192.1 million from $188.3 million.
A significant contributor to the latter's mod-
est increase was the change in the discount
rate from 5.00 to 5.50 per cent, which is one
of the key actuarial assumptions.
In contrast, the retirement benefit for casual
employees is based on a collective agreement;
it is managed in-house and funded by the com-
pany. This liability increased from $21.6 million
to $22.5 million.
The higher tax rate helped increase deferred
tax liabilities to $101.3 million from $75.6 mil-
Total equity advanced to $2.37 billion from
Retained earnings improved to $1.97 bil-
lion from $1.71 billion. The opening figure
was boosted by the current period's profit of
$264.4 million and a re-measurement of both
pension and casual employee obligations of $7.1
million. The major outflow was dividends to
shareholders of $3.96 million while changes in
the tax rate and other reserve movements, to-
talling $4.8 million, reduced the closing figure.
Revaluation reserves increased from $121.6
million to $252.3 million; this component
mostly benefitted from the net revaluation gain
on land, buildings and own site improvements
of $127.9 million and $2.8 million transferred
from retained earnings.
The stated capital was unchanged at $139.97
million. After excluding treasury shares, the
weighted average number of shares outstanding
was 39,619,607 for both periods; consequently,
the book value of each share improved to $59.73
from December 2015's $49.80.
Income and profit
Total revenue fell by 7.2 per cent to $268.8
million from $289.6 million. The cost of pro-
viding services also declined to $91.4 million
from $94.7 million. Consequently, gross profit
registered at $177.4 million from $194.9 mil-
The unrealised fair value gains on investment
(tenanted) properties climbed to $261.1 million
from $71.3 million. When added to the previ-
ous result, the total gross profit improved to
$439.05 million from $266.12 million.
Both administrative and other operating ex-
penses exhibited declines; the former closed
at $95.4 million from $100.97 million while
the latter ended at $67.95 million from $76.7
Among the most significant falls were staff
costs, repairs and maintenance, office expens-
es and insurance. Total staff costs declined to
$162.2 million from $171.3 million. Within this
category, core wages and salaries fell to $144.5
million from $155 million while pension costs
for both permanent and casual workers rose
to $17.7 million from $16.3 million.
Repairs and maintenance for spares utilised
fell to $13.8 million from $14.6 million. In ad-
dition, repairs and maintenance on property,
plant and equipment contracted to $5.8 million
from $12.5 million.
Office expenses declined to $7.1 million from
$8.7 million while insurance costs settled at
$3.8 million from $5.3 million.
Among the costs that rose were legal and
professional fees and marketing; the former
closed at $2.2 million from $1.7 million while
the latter increased to $1.9 million from $1.6
These changes resulted in an operating profit
of $275.7 million compared with 2015's $88.5
Investment income improved to $6.0 million
from $5.3 million. The bulk of this represented
tax-free interest income of $5.1 million while
other income contributed $0.9 million.
In line with its higher debt incurred towards
the end of its financial year, finance costs rose
to $6.8 million from last year's $6.5 million.
These movements saw pre-tax profit close at
$274.9 million from $87.2 million. The changes
in the tax rate helped push taxes up to $10.4
million from $3.8 million.
Consequently, the after-tax profit registered
at $264.4 million from $83.4 million. This re-
sult translated to EPS of $6.67 compared with
the previous year's $2.11.
When we excluded the non-cash unrealised
fair value gains on investment properties, the
net profit fell to $2.8 million from $12.1 mil-
lion; that result equates to EPS of $0.07 versus
$0.31 for 2015.
The port and related activities segment
produced lower revenues, which translated
to weaker profits. Both containerised cargo
and general cargo declined, the former by 24
per cent while the latter fell by 3.0 per cent.
For containerised cargo, both imports and
exports fell by 14 per cent, while transship-
ments contracted by 57 per cent.
In the case of general cargo, exports rose by
113 per cent; this suggests a glimmer of hope
for exporters. However, imports fell by 4.0 per
cent while transshipments shrunk by 85 per
cent. Helping to stem the fall in imports was
higher imports of steel to replace lost produc-
tion from ArcelorMittal's mothballed facility.
The estate operations exhibited higher reve-
nues, almost entirely due to rent increases from
most of its tenants. During the year, nine lease
renewals and 14 rent reviews were completed.
Notably, the liquidators of ArcelorMittal con-
tinue to honour their rent commitment while
they seek a suitable buyer.
Plipdeco filed a case against ArcelorMittal
for the excessive emissions of dust in the load-
ing and/or offloading of iron ore. The compa-
ny won its case in July 2016 and was awarded
costs and limited damages; in December 2016,
it received a $1.9 million settlement (inclusive
of interest) for costs. This one-off sum also
contributed to the higher estate revenues.
In addition, this division benefitted from the
large increase in unrealised property gains of
more than $190 million. This huge adjustment
was primarily driven by the enhanced current
and potential rental values.
Q1 2017 results
For the first quarter ended March 31, 2017,
Plipdeco recorded a two per cent increase in
revenues to $63.5 million from $62.3 million
while direct costs fell by almost 5 per cent to
$20.1 million from $21.1 million. These move-
ments helped gross profit improve to $43.4
million from $41.2 million.
However, lower unrealised gains on invest-
ment properties and higher operating expenses
resulted in a reduced after-tax profit of $21.2
million compared with Q1 2016's $31 million.
That result translated to EPS of $0.53 versus
$0.78. After removing the unrealised gains on
investment properties of $21.2 million (2016:
$30.4 million), EPS closed at negative 0.13
cents versus 2016's positive 1.6 cents.
Share price and
Back in August 2014, Plipdeco's share price
traded at $4.20. As at year-end 2015, the price
was $3.92. During 2016, the share reached as
high as $4.05 on March 29, and dipped to $3.51
on September 16 before ending at $3.70 on De-
cember 30, 2016. That change reflects a one
year decline of 5.6 per cent.
In line with reduced core profits, the total
dividend fell from $0.10 for 2015 to $0.06 for
2016. This dividend was paid on May 26, 2017.
Relating the total 2016 dividend of $0.06 to
the recent price of $4.00, the yield is 1.50 per
cent. That price also reflects a huge P/E mul-
tiple of 57.1 and a discount to its book value of
93.3 per cent.
In next week's article, we will review National
Flour Mills Ltd's 2016 results.
Total revenue fell by 7.2 per
cent to $268.8 million from
$289.6 million. The cost
of providing services also
declined to $91.4 million from
Consequently, gross profit
registered at $177.4 million
from $194.9 million.
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