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TCL financial report for first quarter

Published by
World Cement,

The first quarter of 2015 has been a milestone in the history of the TCL Group. The board has advised that the rights issue was successfully concluded on 31 March with 124.9 million shares being issued and US$361.5 million additional capital raised. In addition, restructured debt agreements with lenders came into effect as at 30 March 2015, the main elements of which include: Interest rate has reverted to December 2010 levels (2% reduction); forgiveness of the default moratorium interest from 30 September 2014 and a discount offered by the financiers if the loan is repaid in 90 days.

For Q1 2015, group revenue of US$514.9 million showed a small increase (US$1.3 million or 0.3%) compared to Q1 2014, due mainly to cement price increases implemented during 2014 and 11.1 thousand t increased clinker sales volume, while cement sales volume declined by 4%. However, earnings before interest, taxes, depreciation, impairment, loss on disposal of property, plant and equipment and debt restructuring credit from continuing operations increased by US$37.8 million (38%) due mainly to higher sales and production volumes and price increases implemented in 2014 at TCL and lower fuel and electricity cost at CCCL. These improvements were partially reduced by the under performance of ACCL arising from production challenges.

The terms of the restructured debt resulted in a gain on extinguishment of US$2.8 million. Net profit for the quarter was US$46.6 million, an increase of US$33.6 million from Q1 2014.

The event of default disclosed in the fourth quarter 2014 statement has been remedied with the execution of the restructured debt agreements as at 30 March 2015. As a consequence, the loans have now been re-classified from short term to long term, thus improving the working capital from a deficit of US$1.5 billion at 31 December 2014, to a surplus of US$0.6 billion at 31 March 2015. Rights issue proceeds of US$361.5 million were received while debt service payments for the quarter amounted to US$37.0 million and expenditure on property, plant and equipment was US$12.2 million resulting in net cash balance at the end of Q1 of US$548.3 million.

The proceeds of the rights issue will be utilised for investment in capital expenditure, replenishment of working capital, debt service and restructuring/transaction expenses. In addition, the company is exploring the possibility of refinancing its debt, to take advantage of the prepayment discounts negotiated with the lenders. The group is in a much improved position and poised to deliver excellent results and generate sustainable rewards for all our stakeholders.

Adapted from press release by Joseph Green

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