Aug 2015 Financial News

NEL chairman: Good results from prudent portfolio management

Aug 24, 2015

Chairman of National Enterprises Ltd (NEL) Kenny Lue Chee Lip said prudent management of the companies portfolio was responsible for its good performance is in a period of low oil and gas prices.

In his report to shareholders at the company’s annual general meeting, Lue Chee Lip said three years ago the NEL board embarked on a strategic plan that included diversification of its investment portfolio into other sectors including power and utilities, financial services and downstream energy; strengthening of management; monitoring performance of investee companies and contributing to strategic direction; investment and management of cash resources to generate better returns; and increasing overall shareholder value and long term stability of earnings.

“NEL’s results for 2015 are a reflection of the management’s execution of that strategic plan over the last three years, resulting in significantly better earnings in a period where oil and gas prices have seen a significant reduction,” he said.

“In November 2014, we closed an investment in Pan West, LLC, the owner of ten per cent of Phoenix Park Gas Processors Ltd. This was a joint bid by three institutions—the National Insurance Board, The Unit Trust Corporation and National Enterprises Ltd—with each owning one third of Pan West.

“This investment of US$56 million will generate good returns and, along with our 2014 investment of US$33 million in a ten per cent shareholding in PowerGen, increases our portfolio of investee companies and thus our dividend income stream.” He said NEL’s major subsidiary and a significant contributor to its earnings, Tringen, undertook a major capital project, Energy Efficiency Improvement Project (EEIP), in the last quarter of 2014. This resulted in significant downtime and lower earnings.

The project was funded entirely from internal cash and is expected to improve production and energy efficiency on Tringen’s I plant, contributing to better earnings from 2015 onwards. Lue Chee Lip said Tringen’s plant utilisation and production continue to be affected by gas curtailment issues on the Point Lisas Industrial Estate.

He also reported that in 2014 Cable and Wireless (CWC) announced a proposed merger with Columbus Communications. The Telecommunications Authority of T&T made approval conditional on CWC agreeing, with NEL, to divest its 49 per cent shareholding in TSTT.

He said: “A divestment and suspension agreement was subsequently signed between CWC and NEL, and this project is now underway to look for a new strategic partner for TSTT. Operationally, 2015 marked a very good year for TSTT as it started the implementation of its VSEP plan and delivered a very good return as it returned to profitability.”

Lue Chee Lip told shareholders that NEL recorded a profit of $490.5 million for the year ended March 31, 2015, compared to $200.5 million the previous year. This was an increase of 144.7 per cent. Earnings per share was $0.80 compared to $0.32 for the prior year. “TSTT returned to profitability in 2015 contributing $108.6 million to NEL compared to a loss of $226 million in 2014. This was driven by improved operational performance after making VSEP provisions in 2014,” he said.

“NGC NGL also performed marginally better in 2015”. NEL received its first full year earnings from investment in a ten per cent shareholding in PowerGen yielding $11.5 million in dividends, as well as dividends from investments in First Citizens Bank and Clico Investment Fund share shares. The company’s investment in November, 2014, in Pan West, LLC as a member of a consortium with the NIB and UTC, produced dividends of $9.8 million for a four-month period.

“These positive increases were offset by lower profitability from Tringen due to plant downtime from its shutdown for works associated with the Energy Efficiency Improvement Project. This project was funded entirely from internal funds, and therefore Tringen’s final dividends for the year ended December 31, 2014 will be paid to NEL after our year end of March 31, 2015.

“TSTT also did not pay any interim dividends, and will therefore pay a final dividend in respect of the year ended March 31, 2015 in NEL’s financial year 2016. NGC NGL also produced higher results than 2014 and NFM has also reported improved earnings. “Total dividend income was therefore $318,028 compared to $305,014 in 2014, an increase of 4.2 per cent,” Lue Chee Lip said.

Source:
Trinidad Guardian
Monday August 24, 2015

http://www.guardian.co.tt/business/2015-08-24/nel-chairman-good-results-prudent-portfolio-management