Trinidad Cement Limited
Annual Report 2012
52
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December, 2012
(Expressed in Thousands of Trinidad and Tobago Dollars, except where otherwise stated)
2. Significant accounting policies
(continued)
(ii) Going concern
(continued)
TheTCLGroup’s strategies to achieve sustainability
include aggressively pursuing new markets and
additional market share in existing markets.
Approximately 10% growth in cement sales
volume is projected in the budget for Trinidad with
modest volume growth in Barbados for 2013. In
Jamaica, Caribbean Cement Company Limited
(CCCL) is projecting additional market share
by attracting current importers of cement to be
supplied by CCCL. To counter rising input costs,
the Group has increased its selling prices in most
of its markets during 2012, further increases were
made in January 2013 and the Group continues to
implement cost reduction initiatives.
The Group’s cash generation and performance are
especially sensitive to the level of economic activity
(GDP: Gross Domestic Product) and government
spending in the Caribbean countries which are
the Group’s key markets. Particularly important,
are the markets of Trinidad and Tobago, Jamaica,
Barbados and Guyana where declining or low
levels of GDP growth, high unemployment and
unsustainable government debt, if prevailing, will
pose a major risk to the results of the Group.
The ability of the Group to generate the sustained
incremental cash flows to meet its significant debt
service obligations is sensitive to the successful
implementation of the strategies and the key
assumptions around market size growth, new
markets, cost reductions and price adjustments.
Should these assumptions not materialise such
that the Group is unable to service its debt
obligations when due, this will pose a going concern
risk to the TCL Group.
Based on current plans and strategies being
pursued and implemented, including the successful
completion of the debt restructure exercise in May
2012, the directors have a reasonable expectation
that the TCL Group will generate adequate cash
flows and profitability which would allow the
Group to continue in operational existence for the
foreseeable future.
On this basis, the Directors have maintained the
going concern assumption in the preparation
of these financial statements. This basis of
preparation presumes that the Group will be able to
realise its assets and discharge its liabilities in the
ordinary course of business. The factors described
above indicates the existence of a material
uncertainty related to events or conditions that
may cast significant doubt on the Group’s ability to
continue as a going concern and therefore, that it
may be unable to realise its assets and discharge its
liabilities in the normal course of business.
(iii) Basis of consolidation
These consolidated financial statements comprise
the financial statements of TrinidadCement Limited
(the Parent) and its subsidiaries (collectively
‘the Group’). The financial statements of the
subsidiaries are prepared for the same reporting
period as the Parent, using consistent accounting
policies. Subsidiary undertakings, being those
companies in which the Group, directly or indirectly,
has an interest of more than one half of the voting
rights, are fully consolidated from the date of
acquisition, being the date on which the Group
obtained control. All intercompany transactions,
balances, and unrealised surpluses and deficits
on transactions between Group companies are
eliminated.
Non-controlling interests represent the portion of
profit or loss and net assets not held by the Group
and are presented separately in the consolidated
statements of income and comprehensive
income as well as within equity in the consolidated
statement of financial position.
(iv) Significant accounting judgments, estimates
and assumptions
The preparation of the consolidated financial
statements requires management to make
judgements, estimates and assumptions that
affect the reported amounts of revenues,
expenses, assets and liabilities and the disclosure
of contingent liabilities, at the reporting date.
However, uncertainty about these assumptions
and estimates could result in outcomes that require
a material adjustment to the carrying amount
of the asset or liability affected in future periods.
The key judgments, estimates and assumptions
concerning the future and other key sources of
estimation uncertainty at the statement of financial
position date, that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year
are discussed below:
