Trinidad Cement Limited
Annual Report 2012
34
The Year in Review
Group CEO’s Report and Management Discussion 2012 (continued)
Impairment Charge
In accordancewith IAS 36, therewas a further non-cash charge of $88.6million (2011
- $79.4 million) for impairment and write-off of CCCL’s Kiln 4 and related assets, due
to the prevailing depressed market conditions. This charge was necessary to write
down the asset to its recoverable value as it is not currently being utilised. These
assets are expected to be used when market conditions improve, at which time the
fair value will then be recorded on the balance sheet.
Debt Restructuring
In2010,theTCLGroupcommencednegotiationswith itsLendersfortherestructuring
of its debt portfolio, and on 14 January, 2011, TCL declared a moratorium on debt
service payments for all entities in the Group. On 10 May, 2012, the Override and
Intercreditor Agreements, which gave effect to the debt restructuring, were executed
by the Group and its Lenders. Under the terms of the Override Agreement (“the
Agreement”), interest payments on the outstanding debt amounting to $51 million
were paid on 30 December, 2012. The scheduled second payment of $70.7 million in
March 2013 has also been honoured. Additionally, the three financial ratio covenants
required by the Agreement were also met at the 31 March, 2013 review date.
While the Group ended 2012 in full compliance with the Agreement, the Board and
Management have continued to express concerns to the Lenders about several
aspects of the debt restructuring that will be burdensome to the Group going
forward. These mainly concern the extent of interest costs, excessive legal fees, on-
going costs of financial and technical monitoring, costly overseas directors, and the
requirement for an additional expensive foreign executive.
Taxation
There was an overall taxation charge of $5.0 million compared to a credit of
$72.8 million for the previous year, mainly due to the non-recognition of
$70.2 million (2011 - $46.3 million) of deferred tax credits arising at CCCL on the
grounds of prudence, given the continuing difficult business conditions in Jamaica.
Net Profit attributable to Group Shareholders
The Group recorded an overall loss of $383.7 million compared to a loss of
$375.0 million for 2011. The loss attributable to Group shareholders amounted to
$319.9 million compared to $325.3 million in 2011. As a consequence, Loss per
Share in 2012 was 130 cents (2011 – 132 cents).
Liquidity and Financial Position
The Group generated $166.5 million cash from operations, compared to
$160.4 million for 2011, after working capital utilisation of $6.8 million. However,
interest payments were $59.5 million compared to $10.3 million in 2011 and debt
restructuring expenses were $49.1 million compared to $33.1 million in 2011, utilising
much of this inflow. Investment in new property, plant and equipment amounted
to $77.9 million (2011 - $40.7 million). The Group also repaid $8.5 million in
long-term debt.
In Jamaica, the
economy slipped
into stagnation
once again with
a 5% contraction
in the domestic
cement market,
where competition
remained robust with
imports from the
Dominican Republic
and Florida, USA.
However, CCCL was
still able to increase
its market share by
pursuing several
initiatives.
