Home' Trinidad and Tobago Guardian : July 31st 2014 Contents Despite a 62 per cent decrease in
the earnings per share in its
consolidated financial state-
ments for the period ending
March 31 2014, National Enter-
prises Limited (NEL) is poised for growth, said
chairman Kenny Lue Chee Lip.
Asked to elaborate on how much growth is
anticipated, he said: "There are three or four
investment opportunities we are looking at of
varying magnitude. From $700 million to over
$1 billion in possible investment. But it depends
on which ones actually pan out. We have no
fixed percentage growth. We may just be buy-
ing equities in the stock exchange."
He is not ruling out investment outside of
T&T, but he could not confirm.
Lue Chee Lip said the decrease in the invest-
ment holding company s earnings per share
for the financial year ending March 31, 2014
was due to Telecommunication Services of
T&T (TSTT) provision for VSEP and lower
dividend receipts from Tringen and NGC LNG.
In its publication of summary results last
week, the company reported EPS collapsed
from $0.85 to $0.32.
"The majority reason for that (the declined
performance) is the hit we took from TSTT s
financials, a 500 plus-million-dollar hit from
their loss. Their loss stemmed primarily from
the cost of Voluntary Separation (Of Employ-
ment) Package in the last financial year. Their
loss was over $500 million, so we had to take
that into account in our financials. that is a
major part of the reason why we dropped so
Lue Chee Lip said it was a prudent decision
to take all the losses in one year rather than
spread the losses over more than one year. He
added: "What TSTT was approaching was
their operating cost was exceeding 50 per cent
of their income, so they had to do something
drastic to get their operating cost in line. One
of the major things driving operating costs
were salaries. When TSTT benchmarked its
operation against other providers, the number
of employess they had was significantly higher
than other players in the market."
Being unionised worked against TSTT.
"Because of the unionised environment that
they operate in, they couldn t have the most
efficient organisation. They do have a pretty
militatnt trade union. The trade union was
opposing the organisational changes."
Asked whether the declined EPS was the
worst ever in NEL s history, he declined to
comment, saying that he has been chairman
for four years and could not speak to prior his
For the future, TSTT should be back in the
"black" and resume paying dividends to NEL
in the future. In the year ended March 31,
2014, NEL spent $250 million purchasing
shares in First Citizens, Clico Investment Fund
Explaining why NEL purchased shares in
Clico Investment Fund, Lue Chee Lip said the
company did not pay attention to the stigma
that Clico Investment Fund has in the market,
rather it paid attention to the strategic direction
which experts guided them to.
Commenting on the announcement by act-
ing chief executive George Hill, that TSTT
was taking out $1.5 billion loan to transform
itself into a more streamlined, technologically
advanced mobile and Internet services provider,
Lue Chee Lip said: "TSTT had presented its
five-year strategic plan to the board of NEL
and explained their strategy. One of the plans
is to generate money because their internal
cash flow can only generate so much. When
you look at it, they did not come back to the
shareholders for an equity injection. They
didn t come back for any guarantees for this
loan they are asking for. It was granted based
on the strength of its balance sheet."
He added that the fact that TSTT produced
a plan that was "bankable" speaks "well" of
the management of the company.
New General Manager
On April 21, 2014 Krishnadath Ramlogan,
brother of Attorney General Anand Ramlogan
was appointed to the post of general manager.
Commenting on the need for a general man-
ager, Lue Chee Lip said in order for NEL to
be on a growth path, there was need to appoint
an experienced individual to steer the company
in the right direction. He added that Ramlo-
gan s appointment had nothing to do with his
relation to the Attorney General.
"We looked for the person with the requisite
skills in management, accounting, investment
banking. We think we found the person with
the requistie skills and experience."
There are differing dynamics within the
companies that NEL oversees, which also pro-
vided a reason for the appointment of a general
manager. Ramlogan is a graduate of the ACCA
program and the UWI Institute of Business,
Excerpts from the Chairman's report
Investee companies performance
"TSTT recorded a net loss of $505.9 million
for the year ended March 31, 2014. NEL s share
of TSTT s loss for the year amounted to $226.1
million. These results included a provision for
reorganisation cost of $694.6 million which
is expected to be a non-recurring provision.
TSTT has embarked on an aggressive five-
year strategic plan of which 2014 was the first
year and included a significant Voluntary Sep-
aration of Employee plan."
Regarding Tringen: "the second significant
factor affecting our performance was lower
dividend receipts from Tringen, NEL s dividend
receipts from Tringen for the financial year
ending March 31, 2014 was $115.1 million com-
pared to 213.4 million in 2013."
"National Flour Mills performed better than
2013 but their overall contribution to NEL div-
idend receipts continues to be very small."
"NGC LNG performed marginally better
with a dividend of $54.3 millioncompared to
$52 million in 2013."
"Our dividends from NGC NGL was $123
million compared to $201.5 million in 2013.
In 2013, NEL benefitted from a higher than
usual dividendpayout from NGC NGL due to
a payment from retained earnings."
Govt owes NEL for NFM's Christmas dis-
The Government still owes National Flour
Mills $3.6 million for the Government-man-
dated discount that the majority state-owned
company offered to customers in December
The $3.6 million receivable is reported in
NEL s audited consolidated financial results
for the year ended march 31, 2014. Those
results are dated July 18, 2014. The information
on the receivable can be found on page 35 of
the accounts which are on the T&T Stock
Exchange Website. The note for the receivable
states: "Included in accounts receivable and
prepayments is $3.6 million due from the Gov-
ernment of the Republic of T&T. This amount
is as a result of the company offering discounts
to customers to pass on to the public on specific
products in December 2013 at the request of
the Government of the Republic of T&T."
On July 24 at the post-Cabinet news con-
ference, Prime Minister Kamla Persad-Bissessar
announced a 20 per cent discount on certain
brands of flour, oil and rice sold by NFM from
July 26 to August 1. This was a repeat of a 20
per cent discount offered on December 23 and
24, 2013 of the same items.
Even though the 2013 losses have not been
accounted for, the Prime Minister last week
promised to repay the current losses that NFM
will incur as a result of the Government-man-
On July 24, she said: "National Flour Mills
Ltd would facilitate this initiative on behalf of
the Government. Our government wishes to
emphasise that this initiative will in no way
prejudice the financial performance of NFM.
This government would reimburse the com-
pany in respect of all expenses directly incurred
in the process of effecting this initiative. This
initiative forms part of the temporary stop
cap measure to allow for the ease of living
while government actively pursues measures
to ensure our food security."
NEL owns 51 per cent of NFM, which is a
subsidiary of NEL because NEL in theory con-
trols the milling company. Although it owns
51 per cent of TSTT and Tringen, the ammonia
company, NEL does not control those com-
panies because of pre-existing shareholders
agreement with Cable & Wireless and Yara
(formerly Norsk Hydro) respectively.
The Corporation Sole owns 66 per cent of
NEL s 600,000,641 Issued Share Capital.
BG6 | NEWS
BUSINESS GUARDIAN www.guardian.co.tt JULY 2014 • WEEK FIVE
NEL chair promises
better future earnings
Kenny Lue Chee Lip,
chairman of National
Enterprises Limited (NEL)
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