Home' Trinidad and Tobago Guardian : May 18th 2014 Contents TCL reported some encouraging
changes in both its top-line and
bottom-line numbers for 2013.
A huge variable continues to
be its high level of debt, about
which it has recently
announced a new initiative to address. Let us
first look at the 2013 results.
Total net assets expanded by 11.1 per cent to
$750.4 million from the restated 2012 figure of
$675.1 million. However, the current ratio
declined dramatically in 2013. In 2012, current
assets exceeded current liabilities by 26.4 per
cent or $178.9 million. Now, in 2013, the excess
percentage narrowed to 19.8 per cent or $138
million. This figure is often used as a key meas-
ure of a company s liquidity.
Non-current assets fell from $2.81 billion as
at year-end 2012 to $2.78 billion last Decem-
ber.The largest decline was shown under the
plant, property and equipment segment, which
moved from $2.09 billion at December 2012 to
$1.98 billion last year-end. Despite new additions
and transfers of $74 million, exchange rate
adjustments consumed $47 million while depre-
ciation of $128 million further reduced the bal-
Pension plan assets increased by $41 million,
moving from $93 million in the previous year
to $134 million last year-end. Higher equity
valuations would have accounted for much of
Deferred tax assets closed 2013 at $437 million,
up by $32 million from 2012 s $405 million.
Total current assets declined from $856.3
million in 2012 to $836.7 million last year-end.
Inventories contracted to $599 million from
the previous year s $614 million. The finished
goods and raw materials and work in progress
components were lower than the previous year,
which is consistent with rising sales.
The current portion of receivables and pre-
payments declined to $179.8 million from $198.8
million a year earlier. The trade receivables
component was almost constant at $121 million.
Reductions were noted in sundry receivables
and prepayments ($10.8 million), deferred
expenditure ($6.1 million) and taxation recov-
erable ($3 million).
Meanwhile, TCL s stock of cash and equiv-
alents rose to $57.8 million from the 2012 level
of $43 million.
Total liabilities contracted by $128.9 million
to $2.863 billion from the 2012 level of $2.991
The non-current portion fell from $2.31 bil-
lion in December 2012 to $2.16 billion last
year-end. The largest contributor to this change
was the reduction in the long-term portion
of borrowings, which closed 2013 at $1.77
billion from $1.95 billion a year earlier.
On the other hand, current liabilities
increased by $21.27 million to $698.7 million
from $677.5 million as at year-end 2012. Here,
short-term advances and payables and accruals
declined by a total of $57.5 million. On the
other hand, this improvement was negated
and exceeded by the increase in the current
portion of borrowings, which advanced by
$78.7 million to $179.3 million.
Total year-end debt declined from $2.046
billion as at December 2012 to $1.952 billion
last December, or by $94 million.
Shareholders equity improved by almost
$75.8 million to end 2013 at $775.6 million
from the previous year s $699.8 million. Non-
controlling interests reduced this figure by $25
million for both periods. Consequently, total
equity advanced from $675 million in 2012 to
$750 million as at December 2013.
The main driver of this change was the 2013
profit of $58 million helped by $17.6 million
from other comprehensive income.
Based on those changes, the book value of
each share improved to $3.10 from $2.80 as
at December 2012.
Revenues and profit
Third party revenues increased by 20 per
cent to reach $1.94 billion; in 2012, this figure
was $1.62 billion.
Overall expenses increased by 3.9 per cent
from $1.46 billion in 2012 to $1.52 billion last
year. In 2012, there was a credit of $79 million
relating to changes in the values of finished
goods and work in progress; in 2013 this line
item had a positive figure of $18 million.
The major declining item in 2013 was oper-
ating expenses, which fell to $208 million from
$251 million in 2012. The two largest cost items
were personnel costs and fuel and electricity.
The former increased from $441 million in
2012 to $444 million last year. In the latter s
case, the rise was from $390 million to $399
After allocating these expenses, EBITDA
came in at $423.4 million; this figure was $269
million greater than the $154.5 million reported
Depreciation charges declined to $127.9 mil-
lion from $149.5 million a year earlier. In addi-
tion, the impairment charge was only $2.4
million (2012: $88.6 million). After deducting
a $2.5 million loss on disposal expense, oper-
ating profit came in at $290.6 million.
The finance cost of $237.8 million saw TCL
report a pre-tax profit of $52.9 million. A pos-
itive tax position of $14.4 million allowed it
to report a profit of $67.3 million. Of this
amount, non-controlling interests accounted
for $9.1 million, leaving shareholders with
This translated into EPS of $0.237 and com-
pares favourably with the loss of $1.31 for 2012.
Relating the $179.3 million value of the cur-
rent portion of debt to the modest $57.8 million
of cash that TCL had at year-end, we can
easily appreciate its cash flow challenges.
TCL groups its business activities under
three headings: cement; concrete; and pack-
aging. The table above highlights data for these
segments for both 2012 and 2013.
The only consistent profit maker is the
packaging activity. Most of this output is used
internally to bag the company s main product,
cement, with some sales to outside customers.
Cement sales rose by 19.5 per cent in 2013.
At the same time losses declined by $228 mil-
lion, moving from a loss of $614 million in
2012 to a loss of $386 million last year.
Concrete sales improved by 28.6 per cent
while losses almost disappeared in 2013.
First quarter 2014 results
Higher sales in both Trinidad and Jamaica
helped drive a 6.5 per cent increase in revenues
for the first quarter of 2014.
Planned and unplanned maintenance stops
in both Barbados and Trinidad contributed to
a lower EBITDA; this figure fell to $99.9 million
from $118.9 million in the first quarter of 2013.
A lower finance cost in 2014 of $50.8 million
(2013: $65.2 million) was insufficient to salvage
the quarterly result. Consequently, the pre-
tax result came in at $17.1 million from $21.3
million in the prior comparative period.
Taxation fell to $4 million from $7 million
in 2013. As a result, the net profit came in at
$13 million from $14.2 million in 2013. Of this
sum, $11.3 million related to equity holders.
This translated into EPS of 4.6 cents (2013:
New debt refinancing proposal
On the same day that its first quarter results
were released, TCL published a notice of
intent to issue US$325 million in "senior
secured first lien notes". This deal is being
done through GMP Securities LP, Byron Cap-
ital Markets td and Jamaica Money Market
Some US$295 million from this issue is
intended to repay all of the company s existing
debt. The remaining US$30 million is intended
to be used "for working capital improvement
and to pay all fees and expenses associated
with the Offering." There is no mention of
new capital expenditure, which also seems
to be needed.
For both 2012 and 2013 TCL had a weighted
average effective interest rate on its existing
debt of 9.9 per cent.
As reported in the Trinidad Guardian of
May 8, 2014, both rating agencies, Standard
& Poor s and Fitch have rated these proposed
instruments as "junk bonds".
These ratings will influence the coupon or
interest rate on these notes. It is expected
that interest will be paid semi-annually and
the principal will be repaid as a lump-sum
in seven years time 2021.
Significantly, the current ratio declined
further. As at March 2014, current assets
exceeded current liabilities by 18.6 per cent
or $127.3 million. As noted earlier, this ratio
contracted markedly in 2013.
If successful, this new debt instrument
will allow TCL to operate with much greater
flexibility. Will the company choose to build
its cash reserves to make the final bullet pay-
ment on schedule, increase the efficiency of
its operations or resume dividend payments?
Perhaps, all these options can be pursued in
a suitable combination to achieve the best
outcome for its shareholders?
Interestingly, TCL is attempting to raise
these funds when it has not yet convened an
AGM for either 2012 or 2013.
In addition, it is stoutly resisting the pos-
sible appointment of new directors by a group
of minority shareholders to the point of drag-
ging the matter to court. It is the outcome
of this matter that is largely responsible for
the company s reluctance to convene an AGM.
These developments may also influence
the pricing of the notes.
Perhaps, one viable option for the new
lenders is simply to price the bonds higher
than what would normally be indicated by
the combination of financial ratios, operational
performance and market factors.
MAY 18 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG15
Trinidad Cement Ltd 2013 results:
REACHING FOR A LIFELINE
Cement sales rose by 19.5 per cent in 2013. At the same time losses declined by $228 million, moving from
a loss of $614 million in 2012 to a loss of $386 million last year.
Concrete sales improved by 28.6 per cent while losses almost disappeared in 2013.
Links Archive May 17th 2014 May 19th 2014 Navigation Previous Page Next Page