Former Trinidad Cement Ltd (TCL) chairman Andy Bhajan and former TCL chief executive officer Rollin Bertrand left the cement maker with a $32 million half-year profit, according to the latest consolidated interim financial report released Monday.
The report, approved and signed by Bhajan and Bertrand on August 11 was for the six months ended June 30 (H1). It showed an after-tax profit of $31.96 million for H1 2014, which was lower than the $70.4 million after tax profit for H1 2013, though the latter was helped by a one-off item. For the second quarter (Q2) of 2014, TCL posted an $18.991 million after-tax profit versus Q2 2013's after-tax profit of $56.22 million. The Q2 and H1 2013 figures were boosted by a $32.78 million tax credit in Q2 2013.
"For Q2 2014, the TCL Group recorded growth in earnings before interest, taxes, depreciation and non-recurring charges of $18.6 million or 16 per cent to $132.2 million, compared with Q2 2013. Revenue increased by nine per cent or $48 million to $560 million as demand remained strong in key markets," Bertrand and Bhajan said in their jointly signed directors' statement on the H1 2014 results.
"Non-recurring charges" are for the addition of a $9.9 million provision for retroactive pay increases (2009�2011) arising from the Industrial Court ruling and a charge of $16 million for mainly legal expenses incurred on the debt refinancing exercise initiated in Q2, the directors' statement said."Notwithstanding these charges, profit before taxes for Q2 was higher by $3.1 million compared with Q2 2013, as net finance cost was lower by $11 million in Q2 2014 due to lower foreign exchange losses from the Jamaican subsidiaries."
The statement said for Q2 2014, profit after taxes (PAT) of $19 million was lower than Q2 2013, which included a one-time tax credit of $37.7 million that, if excluded, will result in a PAT of $18.5 million for Q2 2013, which means profit would have gone up and not down.The statement said that for H1 2014, revenue increased by $79.5 million or eight per cent whilst earnings before interest, taxes, depreciation and non-recurring charges remained flat at $232.2 million compared with the first half year of 2013.
"The H1 2014 earnings before income tax, depreciation, and amortisation (Ebitda) was negatively impacted by both the Jamaica and Trinidad plants undertaking planned annual maintenance stops, with the Trinidad stop being longer than normal due to major equipment refurbishment."The plant in Barbados had frequent unplanned stoppages during the period and its planned maintenance stop is scheduled for August 2014."
Signed eight days before they pre-empted their removal from the board by resigning, Bhajan and Bertrand's statement said the withholding tax credit in 2013 H1 of $37.7 million is equal to 15.6 cents. If excluded from the report, earnings per share (EPS) of 25.7 cents will leave comparison of 10.1 cents for H1 2013 compared with 12.2 cents for H1 2014, which itself includes 9.1 cents for the non-recurring charges."Accordingly, core EPS for H1 2014 would be 21.3 cents compared to 10.1 cents for H1 2013," they said.
For H1 2014, the TCL Group made all debt service payments by their due dates and was fully compliant with all ratio covenants and other loan terms, the then directors' said.
Bhajan and Bertrand said the Industrial Court "issued its ruling in the labour dispute involving workers in Trinidad, which has resulted in an obligation of $100 million for retroactive pay for TCL and TPL to be paid by August 8. Whilst the full provision has been made in the financials at June 30, the two affected companies appealed the entire ruling and a stay of execution has been granted until October 13, 2014, when the substantive matter will be heard."
Giving their outlook, the former chairman and CEO said: "Key markets of Trinidad, Guyana, and Suriname remain buoyant whilst the others have stabilised and, accordingly, the group expects better second half results from operations as the annual plant stops at the two largest plants have already taken place in H1.
"The high finance cost remains a major drag on net profits and the group will continue its efforts to secure a reduction in the high rate of interest which, in turn, will result in lower debt service payments and enhanced financial performance."
Not knowing at the time that their injunction would not save them, Bhajan and Bertrand had said: "A shareholder group is seeking to hold a compulsory meeting of shareholders which the TCL Group intends to challenge as our attorneys have advised that the calling of this meeting is in contempt of court, as an Appeal Court injunction is currently in place."
The shareholders met on August 19, voted in the new directors and the new board suspended Bertrand as CEO. Alejandro Ramirez, who sits on the TCL board representing the company's single largest shareholder, Cemex of Mexico, is the new acting CEO, and Wilfred Espinet is the new chairman.