ANNUAL REPORT BUILDING A STRONGER REGION

Transcription

1 ANNUAL REPORT 2016 BUILDING A STRONGER REGION

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3 OUR STRATEGIC FRAMEWORK Vision Building a Brighter Future Mission Create sustainable value by providing industry-leading construction products and solutions to satisfy the needs of our customers in the Caribbean Strategic Priorities Health, Safety & Environment Customer Centricity Operational Efficiencies One TCL Sustainable Returns Business Model We leverage on our group s expertise and footprint to establish best practices and common processes, in order to operate with agility and effectiveness to ultimately create value to all of our stakeholders Values Safety Customers Excellence Leadership Integrity CONTENTS Corporate Information 2 Corporate Social Responsibility 5 10-year Consolidated Financial Review 6 Share & Performance Highlights 8 Board of Directors 11 Corporate Governance 16 Group Chairman s Review 19 Group Executive Committee 23 Managing Director s Report & Management Discussion Directors Report 39 TCL Group Business Units - Principal Officers 41 Independent Auditor s Report 51 Consolidated Statement of Financial Position 59 Consolidated Statement of Income 60 Consolidated Statement of Comprehensive Income 61 Consolidated Statement of Changes In Equity 62 Consolidated Statement of Cash Flows 63 Notes to the Consolidated Financial Statements 64 Design and Layout: Paria Publishing Co. Ltd. Main Photographers: Michael Bonaparte, Peter Lim Choy. Printing: Scrip J 1

4 CORPORATE INFORMATION Board of Directors of Trinidad Cement Limited Mr. Wilfred Espinet (Chairman) Mr. Francisco Aguilera Mendoza (Deputy Chairman) Mr. José Luis Seijo González (Managing Director) Mr. Alejandro Alberto Ramirez Cantu Mr. Arun K. Goyal Mr. Ruben McSween Mr. Bryan Ramsumair Mr. Jean Michel Allard Mr. Nigel Edwards Ms. Alison Lewis Company Secretary Ms. Kathryna Baptiste Managing Director - TCL Group Mr. José Luis Seijo González Registered Office Southern Main Road Claxton Bay Trinidad & Tobago, W.I. Phone: (868) Fax: (868) Website: Bankers (Local) Republic Bank Limited High Street, San Fernando Trinidad & Tobago, W.I. First Citizens Bank 38 Southern Main Road Marabella Trinidad & Tobago, W.I. Bankers (Foreign) CITIBANK N.A. 111 Wall Street New York, NY U.S.A. Auditors Ernst & Young 5/7 Sweet Briar Road St. Clair Trinidad & Tobago, W.I. Registrar & Transfer Agent Trinidad and Tobago Central Depository Limited 10th Floor, Nicholas Tower Independence Square Port of Spain Trinidad and Tobago, W.I. Stock Exchange on which the Company is listed: Trinidad & Tobago Stock Exchange 10th Floor, Nicholas Tower Independence Square Port of Spain Trinidad & Tobago, W.I. Attorneys-At-Law Girwar & Deonarine Harris Court, Court Street San Fernando Trinidad, W.I. M.G. Daly & Partners 115A Abercromby Street Port of Spain Trinidad, W.I. 2

5 Johnson, Camacho & Singh First Floor, Briar Place 10 Sweet Briar Road St. Clair Port of Spain Trinidad, W.I. M. Hamel Smith & Co. Eleven Albion Corner Dere & Albion Streets Port of Spain Trinidad, W.I. Pollonais, Blanc, De La Bastide & Jacelon Pembroke Street Port of Spain Trinidad, W.I. Ravi Hefffes-Doon Upper Floor, Abercromby Court 84 Abercromby Street Port of Spain Trinidad, W.I. Alvin Fitzpatrick, S.C. 84 Abercromby Street Port of Spain Trinidad, W.I. Jason K. Mootoo 77 Abercromby Street Port of Spain Trinidad, W.I. Gitanjali Gopeesingh Chancery Chambers 108 Duke Street Port of Spain Trinidad, W.I. Derek Ali 36 Gordon Street, Port-of-Spain Trinidad, W.I. Hylton Powell 11A Oxford Road Kingston 5, Jamaica, W.I. Clarke, Gittens, Farmer Parker House, Wildey Business Park Wildey Road St. Michael Barbados, W.I. Hughes, Fields & Stoby 62 Hadfield & Cross Streets Werk-en-rust Georgetown Guyana, South America Patterson Mair Hamilton Knutsford Boulevard Kingston 5 Jamaica, W.I. Caribbean Juris Chambers Hannah Waverhouse P.O. Box 801 The Valley Anguilla Kelsick, Wilkin & Ferdinand P.O. Box 174 Fred Kelsick Building Independence Square South Basseterre St. Kitts, W.I. 3

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7 CORPORATE SOCIAL RESPONSIBILITY Our strong commitment to social responsibility under the core pillars of youth and education, shelter and the environment creates sustainable support for organisations that make the Caribbean region a better place to live. From all our locations in the region, we strive to get involved in the communities where we operate, to Build a Stronger Region! We respond to requests from community organisations, such as this contribution of equipment to a children s ward. Volunteers from our companies assist needy people in the community with manpower to create a better living environment. We partner with NGOs and schools to undertake youth programmes and activities with children in our communities. We support youth development. 5

8 10-YEAR CONSOLIDATED FINANCIAL REVIEW UOM Group Third Party Revenue TT$m 1, , , , , , , , , , Operating Profit TT$m (1.20) (0.76) Group Profit before Taxation TT$m (149.60) (162.05) (351.74) (102.47) Group Profit attributable to Shareholders TT$m (48.50) (167.17) (292.91) (214.39) Foreign Exchange Earnings TT $m EPS TT$ (0.20) (0.68) (1.19) 0.24 (0.87) Ordinary Dividend per Share TT$ Issued Share Capital Ordinary TT $m Shareholders Equity TT$m 1, , , , , Group Equity TT$m 1, , , , , Total Assets TT $m 3, , , , , , , , , , Net Assets per Share TT$ Return on Shareholders Equity % (3.40) (21.38) (60.30) (77.40) Share Price (Dec 31) TT$ No. of Shares Outstanding (Dec 31) , , , , , , , , , ,647.7 Market Capitalisation (Dec 31) TT$m 1, , , Total Long Term Debt TT$m 1, , , , , , , , , Total Long Term Debt/Equity Ratio %

9 Group Third Party Revenue 1,616 1,941 2,105 2,115 1,887 (TT$m) Group Total Assets 3,453 3,399 3,010 3,033 2,922 (TT$m) Group Earnings per Share 1.19 (1.19) 0.24 (0.87) 0.10 (TT$) Group Profit Attributable to Shareholders (TT$m) (292.91) (214.39)

10 SHARE & PERFORMANCE HIGHLIGHTS January-June 2016 TTSE - Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Volume - TCL 000 8, , ,990 10,777, ,329 62,646 Volume - RML BSE - Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Volume - TCL - 1, ,222 - JSE - Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Volume - TCL Volume - CCCL 7,139,030 1,804,510 1,650,635 9,905,211 1,775,161 1,139,868 July-December 2016 TTSE - Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 TOTAL Volume - TCL , , , ,824 25, ,973 14,961,144 Volume - RML ,999 8,719 BSE - Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 TOTAL Volume - TCL 1,100 1, ,002 38, ,285 JSE - Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 TOTAL Volume - TCL ,066 1,306 20,372 Volume - CCCL 1,814,272 4,052,797 2,358, , , ,123 33,449,262 8

11 Trinidad & Tobago Stock Exchange RML Share Price (TT$) Index/ TCL Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Barbados Stock Exchange Share Price (Bds$) Index/ TCL Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jamaica Stock Exchange Share Price (Ja$) Index/1000 CCCL TCL Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 9

12 SHARE & PERFORMANCE HIGHLIGHTS (C TD.) Distribution of Shareholding Category % Distribution Sierra Trading 39.50% Individuals 20.10% NIB 11.92% Banks / Pension Funds 10.02% Baleno Holdings 8.21% Insurance Companies 4.98% Unit Trust 2.49% Other Foreign Investors 2.78% Group Performance Highlights % Change Income Statement Group Third Party Revenue $m 1, , % Group Profit/(Loss) attributable to Shareholders $m % Foreign exchange earnings $m % Balance Sheet Total Assets $m 2, , % Shareholders Equity $m 1, % Net Assets per Share $ % Total Long Term Debt $m % Total Long Term Debt to Equity Ratio % % Operational Highlights TCL Clinker production 000 tonnes % CCCL Clinker production 000 tonnes % ACCL Clinker production 000 tonnes % TPL Paper sack production millions % TPM Sling/Bag production thousands % 10

13 BOARD OF DIRECTORS Wilfred Espinet (Chairman), José Luis Seijo González (Managing Director) Arun K. Goyal, Alison Lewis, Bryan Ramsumair Ruben McSween, Nigel Edwards Alejandro Alberto Ramirez Cantu, Jean Michel Allard, Francisco Aguilera Mendoza 11

14 ABOUT OUR BOARD OF DIRECTORS About Our Board of Directors The Board of Directors is responsible for setting the strategic aims of the organisation, by reviewing and approving corporate strategy, major plans of action, annual budgets and business plans. It has the statutory authority and obligation to act honestly and in good faith, with a view to the best interest of all shareholders as well as the interests of the Company s employees. Full details of the Board s responsibilities and duties can be downloaded from this website: The Board is comprised of the following directors: Wilfred Espinet Non-Executive Director and Chairman of the Board Wilfred Espinet was appointed to the Board in August He is a businessman with considerable international experience in Manufacturing, Shipping and Retail industries in several countries. He is a former Director of Associated Brands Industries Limited; Managing Director of Consolidated Biscuits Ltd. and Chocolate Products Ltd. in Malta and President Director General of Cheval Blanc S.A. in France. He is a Past President of the Trinidad and Tobago Manufacturers Association. Mr. Espinet is also the Chairman of Aeromarine International Logistics Company, which has operations in North America, Central America and the Caribbean, and Mayfair, a Cosmetic Retailer with outlets throughout the Caribbean. Francisco Aguilera Mendoza Non-Executive Director Francisco Aguilera Mendoza was appointed to the Board in August He is the Vice President of CEMEX South, Central America and the Caribbean Region; and Colombia. Mr. Aguilera Mendoza was appointed to this position in October 2016 and prior to this, was responsible for the trading of cement and clinker for CEMEX in the Americas, including the Caribbean Region. Mr. Aguilera Mendoza joined CEMEX in June 1996, and has held positions in various areas throughout CEMEX s US operations including: Logistics Manager, Sales Administration Director, Aggregate Operations VP, and VP & General Manager for the Concrete Pipe Division, and VP of Trading for Europe, Middle East, Africa and Asia, based in Madrid, Spain. He has extensive experience in the building materials industry, especially in fields such as general management, logistics operations, international commerce and post-merger integrations. Mr. Aguilera Mendoza holds an MBA with a Major in Operations from the Kellogg Graduate School of Management of Northwestern University, and a B.Sc. in Mechanical and Industrial Engineering from the Monterrey Institute of Technology, Mexico. José Luis Seijo González Managing Director José Luis Seijo González was appointed Managing Director of the TCL Group effective May 20, Prior to this, he held the position of Chief Executive Officer of the TCL Group from May 4, He has had many years of experience in the cement industry, having worked in several key cross postings at CEMEX. The most recent posting, before taking up his 12

15 appointment at TCL, was that of Head - Strategic and Financial Planning for Spain and the Mediterranean region. Mr. Seijo González joined CEMEX in 1999, initially in the area of production before moving to strategic planning at the company s operations in Spain. His vast experience incorporates assignments in Mexico in corporate strategic planning, in Israel as Chief Financial Officer, in Bangladesh as Chief Executive Officer and in Latvia, also as Chief Executive Officer. He holds a B.Sc. in Mechanical Engineering with a Master s Degree in Finance from the University of Bath, United Kingdom. Alejandro Ramirez Cantu Non-Executive Director Alejandro Ramirez Cantu was appointed to the Board in October He is the Country Director of CEMEX, Costa Rica. Mr. Ramirez Cantu joined CEMEX in July 2000 and has held positions in various areas including Strategic Planning Director and Projects Director at CEMEX Central, Planning Vice President of the Philippines and Asia, Country Manager (Thailand), Vice President of Planning (Venezuela), Vice President of Strategic Projects (South America and the Caribbean), Director of Corporate Affairs (Americas) and Country Director of CEMEX Puerto Rico. In August 2014, he was appointed Acting CEO of the TCL Group, a position he held until April Mr. Ramirez Cantu has extensive experience in the management of business units as well as development and implementation of operating and corporate strategies. He holds an MBA with a Major in Finance from the Wharton School of the University of Pennsylvania and a B.Sc. in Industrial and Systems Engineering from the Monterrey Institute of Technology, Mexico. Jean Michel Allard Non-Executive Director Jean Michel Allard was appointed to the Board in March He is an Independent Expert in the cement industry and a Senior Advisor to the IFC (World Bank). Mr. Allard gained extensive experience during his 42-year tenure with the Vicat Group, an international cement organization. He served as the Deputy Chief Executive Officer for 22 years and as a member of the Board during the period 1983 to Prior to these appointments, he has held several managerial positions within the company. Mr. Allard s other ancillary assignments included membership on the Board of Directors of Syndicat Français de l Industrie Cimentière and Chairman of the National Commission on Safety for the French Cement Profession. In January 2012, Mr. Allard was nominated Officer of the Legion of Honneur by the President of the French Republic. Mr. Allard is a member of the Board of Directors of National Cement Cie Limited DEVKI Group Kenya. Nigel Edwards Non-Executive Director Nigel Edwards was appointed to the Board in August He is the Vice President Finance at the Trinidad and Tobago Unit Trust Corporation. Mr. Edwards began his career at the Ministry of Finance in 1993 where he worked on several areas of government policy in relation to financial services. In his early career, he worked on originating global equity transactions from emerging markets for an international merchant bank in London. He later spent over fifteen years working in various areas of the financial services sector of the ANSA McAL 13

16 ABOUT OUR BOARD OF DIRECTORS (C TD.) Group of Companies and has worked in the areas of investment banking, corporate finance, structured lending, investment management as well as accounting and finance before moving on to be the Chief Executive of the ANSA McAL Group s life insurance subsidiary. He has been involved in several advisory mandates for mergers and acquisitions, corporate restructuring and equity issuance. Mr. Edwards graduated from the University of the West Indies, St. Augustine, with a B.Sc. degree in Management Studies and subsequently attained an M.Sc. in Finance from the London Business School. Alison Lewis Non-Executive Director Alison Lewis was appointed to the Board in August She is a former Public Servant who served for over twenty-nine years in the Ministry of Finance and rose to the position of Permanent Secretary of that Ministry, a position that she held for eleven years. She has served as a member of a number of Boards of Directors including the Boards of the Central Bank of Trinidad and Tobago, the Trinidad and Tobago Securities and Exchange Commission, the Trinidad and Tobago Unit Trust Corporation and the Heritage and Stabilization Fund. Ms. Lewis is on the Board of Republic Bank Limited and is a member of the Economic Development Advisory Board. During the period 2001 to 2003, Ms. Lewis served as advisor to the Executive Director at the World Bank in Washington, D.C. returning home in 2003 shortly before being appointed Permanent Secretary. Ms. Lewis holds a Bachelor of Arts in Economics and Management from the University of the West Indies (UWI), St. Augustine and became a distinguished awardee on the occasion of the UWI Alumni s 25th anniversary. In addition, Ms. Lewis is the holder of the Public Service Medal of Merit (Gold) for outstanding and meritorious service to Trinidad & Tobago. Ruben McSween Non-Executive Director Ruben McSween was appointed to the Board in July He has been serving as Founder/ President of Eve Financial Services Limited since February Effective February 1, 2016 Mr. Mc Sween was elected as the Deputy Chairman of the National Insurance Board of Trinidad and Tobago. Mr. McSween has over thirty-four years experience in the local and international financial services sector having held senior positions in areas such as investments, operations and business development including the position of Vice President, Customer Service at the Trinidad and Tobago Unit Trust Corporation ( UTC ). He is currently a Director and Executive Committee Member of the Employers Consultative Association ( ECA ); Director - Caribbean Employers Confederation; Director UTC; and Alternative Member - Registration and Recognition Board. Mr. McSween has been a past Chairman of the ECA; President - Rotary Club of Central POS, President - United Nations of Trinidad and Tobago and Chairman - Beetham Gardens Organising Committee. 14

17 Ruben McSween holds a B.Sc. in Finance (1st Class Honours), B.Sc. in Accounting (2nd Class Honours) from Southeastern University and an MBA from Howard University in Washington, D.C. In 1984, he was one of thirty outstanding students throughout the USA who was granted a one-year scholarship to understudy the American System of Government and Politics. Bryan Ramsumair Non-Executive Director Bryan Ramsumair was appointed to the Board in July, He began his career with RBTT Merchant Bank and was involved in the origination, structuring and transaction execution for over US$2 billion transactions, involving sovereign debt issues, real estate and energy project financing, corporate bond issues, and equity capital market transactions. Mr. Ramsumair subsequently formed a corporate finance boutique, which was later sold to a large regional Caribbean conglomerate after consummating US$150 million in transactions in its first two years of operation. Mr. Ramsumair was Chief Financial Officer of Trinity Exploration and Production between 2011 and 2015 and was part of a team which took the company public in 2013 on the Alternative Investment Market of the London Stock Exchange, where it was nominated for AIM Deal of the Year In that time, he also assisted Trinity in raising US$58 million in debt financing and was involved in M&A deals valued over US$110 million. Mr. Ramsumair is currently the Chief Financial Officer of DeNovo Energy Limited, an independent upstream oil and gas company located in Trinidad and Tobago, pursuing opportunities related to the exploitation of stranded oil and gas reserves. Mr. Ramsumair holds an honours degree in Business Administration and an MBA from the Richard Ivey School of Business, Western University. Arun K. Goyal Non-Executive Director Arun K. Goyal was appointed to the Board of Trinidad Cement Limited in December, A long-standing member of the TCL Group, Mr. Goyal has held several instrumental roles including that of General Manager of Trinidad Cement Limited & Caribbean Cement Company Ltd, Group Manufacturing Development Manager and Director on the Board of Readymix (W.I.) Limited. Prior to his appointment as General Manager in 1995, Mr. Goyal, a Chemical Engineer, also served in the capacity of Operations Manager, Senior Process Engineer and Assistant Operations Manager at TCL; Process Engineer at Guyana Mining Enterprise Ltd, Guyana and Industrial Gases Ltd, Trinidad. Mr. Goyal has been past member of the Board of Directors of APCAC Association of Cement Manufacturers of Central America, Caribbean and Latin America, FICEM (Federación Interamericana del Cemento), South Trinidad Chamber of Industry & Commerce and Rotary Club of Pointe-a-Pierre. Mr. Goyal is a Fellow of the Association of Professional Engineers of Trinidad and Tobago and recipient of its Career of Excellence Award in

18 CORPORATE GOVERNANCE The TCL Group recognises that a robust corporate governance system redounds to the overall benefit of the organisation by fostering better performance and by facilitating a lower risk of malfeasance as well as a lower cost of capital. Based on the guiding principles of fairness, transparency and accountability, the Company strives to maintain a high standard of corporate governance through the establishment of a comprehensive and efficient framework of policies, procedures and systems and the promotion of a responsible corporate culture throughout the Group. The TCL Group is committed to adhering to the principles and practices of good corporate governance and the Governance Committee, a sub-committee of the Board, establishes the foundations for compliance. GOVERNANCE COMMITTEE The responsibilities of the Governance Committee include, but are not limited to the following: 1. Recommending all remuneration for directors and the Chairperson; 2. Recommending and monitoring the level and structure of remuneration for Senior Management; 3. Establishing the policy for determining remuneration; 4. Reviewing and evaluating the appropriateness of remuneration plans on an annual basis; 5. Ensuring that the total remuneration and other benefits paid to directors are properly disclosed. Members: Ms. Alison Lewis (Chair) Mr. Francisco Aguilera Mendoza (Member) Mr. Nigel Edwards (Member) Mr. José Luis Seijo González (Managing Director) Ms. Kathryna Baptiste (Recording Secretary) The role of the Corporate Governance Committee is reflected on the Company s Website AUDIT COMMITTEE The Audit Committee is a Sub-committee of the Board charged with the responsibility for: 1. Appointment and ongoing assessment of the External Auditors; 2. Reviewing and advising the Board on the integrity of financial statements; 3. Oversight of the establishment, implementation and assessment of the Risk Management Function; 4. Ensuring that an effective system of internal controls is established and maintained; 5. Assessing compliance with applicable laws and regulations; and 6. Monitoring and assessing the internal audit function. 16

19 Members: Mr. Nigel Edwards (Chairman) Mr. Jean Michel Allard (Member) Ms. Alison Lewis (Member) Mr. Gewan Armoogam (Recording Secretary) FINANCE COMMITTEE The objectives of the Board Finance Committee are two-fold: 1. To enhance the financial strength and shareholder value of the TCL Group by providing guidance and recommendations on issues which have a major financial impact on the TCL Group; and 2. To enhance communication and understanding between TCL Group s management and the Board on financial matters. A summary of the unofficial terms of reference of the Finance Committee follows: 1. Review all significant issues of a financial nature before they are presented for consideration to the Board; 2. Review the adequacy and sourcing of working capital for the TCL Group; 3. Evaluate and recommend proposals for the ongoing long-term financing of the TCL Group; 4. Examine and/or develop proposals for reducing the tax obligation of the TCL Group and the efficient management of its tax affairs; 5. Review annual budgets and five-year plans for the TCL Group before submission for approval to the Board; 6. Examine and/or develop solutions for problems of a financial nature arising from changes in accounting standards, tax regulations and governmental legislation; 7. Develop a set of financial objectives for the TCL Group; and 8. Determine the appropriate capital structure for the TCL Group. Members: Mr. Alejandro Ramirez Cantu (Chairman) Mr. Nigel Edwards (Member) Mr. Luis Gilberto Ali Moya (Group Finance Manager) Mr. Osben Cuffie (Recording Secretary) 17

20 CORPORATE GOVERNANCE (C TD.) HUMAN RESOURCE COMMITTEE The members of the Human Resource Committee were appointed at a Board meeting which was held on January 22, In order to ensure excellence in TCL Group s human capital and cultural initiatives, the Human Resource Committee s strategic direction and vision are aligned to the Company s strategic plan. The following categories of policies are administered by the Human Resource Committee: Talent acquisition Organisation capacity building Performance management Executive development Organisational structure and design Employee wellness A summary of the Terms of Reference of the Human Resource Committee follows: 1. To formulate policies for the TCL Group s Human Resource Management function and to make recommendations to the Board for approval and adoption; 2. To review, approve and ensure compliance with existing administrative policies and recommend to the Board the adoption of proposals for all senior managers and executives across the TCL Group; 3. To ensure that the TCL Group Human Resource function provides efficient services to all Business Units, utilising equitable, transparent and contemporary performance management measures and systems; and 4. To act autonomously and approve on its own account, specific human capital initiatives and recommendations that fall within the overall ambit of pre-existing Board approved policies and systems. Members: Ms. Alison Lewis (Chair) Mr. Nigel Edwards (Member) Mr. José Luis Seijo González (Managing Director) Ms. Bonnie Alexis (Human Resource Manager/Group Coordinator) 18

21 GROUP CHAIRMAN S REVIEW CAPITALISING THE OPPORTUNITIES BUILDING STRENGTH Wilfred Espinet Chairman 2016 was for us another year of key achievements in spite of harsh economic realities. Some of the significant factors that characterise the year in review were successful restructuring, capital investments in our people and plants, healthy cash flows, dividends for shareholders after seven years and a takeover offer by CEMEX. Announcement of the latter in December of 2016 and its eventual realisation in the ensuing month was, however, by far the most significant and timely opening a broad range of opportunities for the Group s competitiveness, financial strength and sustainability. CEMEX TAKEOVER CEMEX now owns *69.83% of TCL. On December 5, 2016, Sierra Trading, a wholly owned direct subsidiary of CEMEX Espana, S.A., which in turn is a 99.88% owned indirect subsidiary of CEMEX, S.A.B. de C.V., issued a takeover bid to acquire up to 132,616,942 ordinary shares in Trinidad Cement Limited at a price of TT$4.50 per ordinary share. Later, on December 23, shareholders were advised by the TCL Board to reject the offer based on a Fairness Opinion by Ernst & Young, which stated that the offer was not fair, from a financial point of view, to the shareholders of TCL. On January 9, 2017, CEMEX revised its offer price to TT$5.07 per share with the option for shareholders to be paid in US dollars at US$0.76 per share. Despite another recommendation to reject the offer by a special committee of the TCL Board, again based on an Ernst & Young Fairness Opinion, the revised offer received overwhelming response, taking the CEMEX shareholding in TCL from 39.5% to *69.83%, just short of its initial target of 74.9%. *Subject to final confirmation by the TTSE. 19

22 GROUP CHAIRMAN S REVIEW (C TD.) Already, TCL s acquisition by its largest and enduring shareholder has begun to deliver wideranging improvements in its operations, largely facilitated and advanced by the groundwork achieved through the Technical and Managerial Services Agreement entered into with CEMEX back in Note: In March of 2017, TCL issued an offer to acquire all of the outstanding minority shares (28.9%) in Readymix (West Indies) Limited at TT$11.00/US$1.62 per share. The offer will close on May 1, CORPORATE RESTRUCTURING Over the last two years, we have been reorganising our operations across the Caribbean for optimisation, by flattening the corporate structure and simplifying the way that business is conducted. Some of these initiatives so far, include: Delisting of shares from the stock exchanges. In January of 2016, TCL delisted from the Guyana Stock Exchange. In March of the same year, from the Eastern Caribbean Stock Exchange and more recently, in March of 2017, the Stock Exchanges of Barbados and Jamaica. Minimal volumes and frequency of trades in those jurisdictions also accounted for the move. Liquidation of TCL Service Limited and de-registration of TCL Service and TCL Leasing as reporting issuers with the Trinidad and Tobago Stock Exchange. Shifting TCL Trading from Anguilla to Barbados by incorporation of TTLI Trading Limited in Barbados. Amalgamation of Premix & Precast Concrete Inc. and Arawak Cement Company Limited in Barbados in progress. Amalgamation of Caribbean Cement Company Limited with Jamaica Gypsum and Quarries and CGC in progress. FINANCIAL PERFORMANCE Overall, the Group generated TT$1.9 billion of revenue during 2016, an 11% decrease compared to 2015 a direct consequence of a contracted construction sector exacerbated by the severe economic conditions. The last quarter results were significantly impacted by these factors in the Trinidad and Tobago market, however, increased cement sales in Jamaica provided some buoyancy. Our adjusted EBITDA for 2016 was TT$464.2 million. During the year, the Group absorbed a number of one-time charges amounting to TT$140 million, the outcome of which was an after tax profit of TT$52.4 million, representing TT$0.10 earnings per share. We are encouraged that the Group generated very healthy cash flows of TT$530.8 million from operations during This allowed (1) scheduled loan payments totalling TT$193 million and a prepayment of TT$67.3 million, reducing the loan balance to TT$968.5 million and resulting in a 27% reduction in net interest expense from TT$151.8 million to TT$110.9 million and (2) capital expenditure investments of TT$200.5 million across our plants in Trinidad and Tobago, Jamaica and Barbados. 20

23 STRATEGIC PRIORITIES AND OUTLOOK Construction activity in the region is expected to remain slow throughout 2017 and to be further compounded by increasing competition. We see these as well as all of today s challenges as tremendous opportunities and are confronting them with immense confidence and a sound strategic approach. The Board remains confident of the Group s future viability and believes that the restructuring initiatives completed so far position the Group on the right path for the creation of longterm value for all stakeholders. To help ensure this, we have expanded and strengthened collaboration within and throughout the company and raised our corporate culture, maintaining our identity as TCL with the strategic priorities of Health, Safety and Environment, customer centricity, the pursuit and growth of new and existing markets, continuous employee development, financial stability, a relentless focus on operational and restructuring programs and sustainable business. All of this will ideally position us to continue shaping the future of the Group and the region s construction sector against a changing cement/concrete landscape. BOARD CHANGES José Luis Seijo González was appointed to the Board of Directors in May of 2016, replacing Emilio Saenz Arroniz. José Bavaro Vallone and Christopher Dehring also resigned from the Board in 2016 and Wayne Yip Choy in February of I wish to thank our former Board members for their invaluable contributions and service to the Group. ACKNOWLEDGEMENTS Thanks to my fellow Directors who continue to add value and uphold good corporate governance. I also wish to acknowledge the efforts of the management team ably led by Managing Director, José Luis Seijo González, who continues to embody the Company s vision with passion and his strong leadership skills. I would also like to acknowledge and congratulate our employee body and representative trade unions for their enthusiasm and commitment. My special gratitude to all loyal distributors, customers and end users, even more so now that you have choices, yet continue to place your confidence in our brands. I am also appreciative of our communities with whom we share good relations. I wish to recognise the wider CEMEX Group and all our shareholders who have invested in this company. You are helping us to create even greater value, and for this, I would like to express my sincerest thanks. As stakeholders in the TCL Group, you have all placed your confidence in the company. We are driven by your support and truly gratified by your individual contributions. Together, we are building a stronger company for many generations to come. i Wilfred Espinet Group Chairman 21

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25 GROUP EXECUTIVE COMMITTEE Kathryna Baptiste - Group Manager Legal/ Company Secretary; Andres Peña - General Manager, Readymix (West Indies) Limited; Jinda Maharaj - General Manager, Trinidad Cement Limited; José Luis Seijo González - Managing Director, TCL Group Ricardo García Viani - Group Strategic Planning Manager; Luis Gilberto Ali Moya - Group Finance Manager; Miguel Roberto Estrada - Group Operations Manager; Egwin Daniel - General Manager, International Business & Marketing Juan Carlos Mendoza - Group Procurement Manager; Bonnie Alexis - Human Resource Manager and Group Coordinator, Trinidad Cement Limited; Roger Ramdwar - General Manager, TCL Packaging Limited and TCL Ponsa Manufacturing Limited Peter Donkersloot Ponce - General Manager, Caribbean Cement Company Limited; Manuel Toro - General Manager, Arawak Cement Company Limited 23

26 ABOUT OUR GROUP EXECUTIVE COMMITTEE José Luis Seijo González Managing Director, TCL Group José Luis Seijo González, was appointed Managing Director of the TCL Group effective May 20, Prior to this, he held the position of Chief Executive Officer of the TCL Group, from May 4, He has had many years of experience in the cement industry, having worked in several key cross postings at CEMEX. The most recent posting, before taking up his appointment at TCL, was that of Head - Strategic and Financial Planning for Spain and the Mediterranean region. Mr. Seijo González joined CEMEX in 1999, initially in the area of production before moving to strategic planning at the company s operations in Spain. His vast experience incorporates assignments in Mexico in corporate strategic planning, in Israel as Chief Financial Officer, in Bangladesh as Chief Executive Officer and in Latvia, also as Chief Executive Officer. He holds a B.Sc. in Mechanical Engineering with a Master s Degree in Finance from the University of Bath, United Kingdom. Jinda Maharaj - General Manager, Trinidad Cement Limited Jinda Maharaj is the General Manager at Trinidad Cement Limited. He possesses a wealth of knowledge and experience, having been with the TCL Group for over twenty five years. He has held various positions throughout the Group, including Engineering Services Manager, Materials Manager, Production Manager, Operations Manager (all at Trinidad Cement Limited) as well as General Manager and Operations Manager at Arawak Cement Company Limited, Operations Manager at Caribbean Cement Company Limited, Group Energy Optimization Manager and Group Manufacturing and Development Manager. Mr. Maharaj holds a B.Sc. in Mechanical Engineering and an M.Sc. in Production Engineering and Management, both from The University of the West Indies, St. Augustine. Peter Donkersloot Ponce - General Manager, Caribbean Cement Company Limited Peter Donkersloot Ponce was appointed General Manager of Caribbean Cement Company Limited effective November 7, Mr. Donkersloot Ponce has over eleven years working experience in the Cement Industry, holding key positions in five different countries (Jamaica, Panama, Peru, El Salvador and Guatemala). His experience ranges in Commercial Operations, Logistics, Risk Assessment, Management Strategic Planning and General Management. Mr. Donkersloot Ponce holds a Global Masters of Business Administration (MBA) from the Thunderbird School of Global Management along with professional qualifications in Industrial Engineering from the Monterrey Institute of Technology (ITESM), Mexico. He is fluent in both Spanish and English. Manuel Toro - General Manager, Arawak Cement Company Limited Prior to joining the TCL Group as General Manager of Arawak Cement Company Limited on January 1, 2016, Manuel Toro held several key positions in CEMEX, including Procurement Director - Central America, South America and the Caribbean; Innovation and Business Development Director and Strategic Planning Director. 24

27 Mr. Toro is a Mechanical Engineer with significant experience in the fields of strategy, leadership, sustainability, innovation and negotiation. His academic achievements include a Master of Business Administration (MBA) degree, in which he specialised in finance, innovation and technology. He also holds certification in executive training from Stanford University, INSEAD and Babson College. Roger Ramdwar - General Manager, TCL Packaging Limited and TCL Ponsa Manufacturing Limited Roger Ramdwar joined the TCL Group in April 2006 in the capacity of Group Internal Auditor. In February 2016, he assumed the position of General Manager of TCL Packaging Limited and TCL Ponsa Manufacturing Limited. Mr. Ramdwar has over twenty years of combined finance, internal and external audit experience, of which eleven years have been at the TCL Group. In January 2013, he graduated with distinction from the Arthur Lok Jack Graduate School of Business with an Executive MBA. He is an FCCA, a Member of the Institute of Internal Auditors and a member of ICATT. Mr. Ramdwar is also a Certified Fraud Examiner. Andres Peña - General Manager, Readymix (West Indies) Limited Andres Peña assumed the position of General Manager at Readymix (West Indies) Limited (RML) on May 4, Prior to that, he was the Group Strategy Implementation Manager of the TCL Group. Before joining the TCL Group, he served as Regional and Export Manager at Corpacero, a leading steel company in Colombia. Mr. Peña has over eighteen years experience in sales and business development, twelve of which were spent in the cement industry. During his career, he has developed a passion for capturing new markets and possesses a deep understanding of the Latin American construction industry, attributes which are undoubtedly beneficial to the Group. Mr. Peña holds a Business Administration Degree from the University of Texas at Arlington and a Marketing Graduate Degree from the Universidad del Norte in Barranquilla, Colombia. Egwin Daniel - General Manager, International Business and Marketing Egwin Daniel joined the Company in October, He has extensive International Marketing and Financial experience having worked in these fields in Canada, USA and throughout the Caribbean for twenty-one years, seven of which were spent abroad in the French and Spanish Caribbean, working in the private sector providing Senior Management expertise in the International Money Markets and Distribution. Mr. Daniel holds an MBA from the University of Concordia, Canada and a B.Sc. from Mc Gill University, Canada. Kathryna Baptiste - Group Manager Legal/ Company Secretary Kathryna Baptiste joined the Company in September, She is an Attorney-at-Law with over twenty years experience in various facets, including corporate, commercial and 25

28 ABOUT OUR GROUP EXECUTIVE COMMITTEE (C TD.) employment Law. Prior to joining the Company, Ms. Baptiste was the Manager Legal/ Company Secretary at Trinidad and Tobago National Petroleum Marketing Company Limited from October 2005 to April 2010 and conducted private practice in the areas of corporate and commercial law from June 2010 to August Ms. Baptiste obtained a Bachelor of Laws (LL.B) (Honours) Degree from the University of the West Indies and a Legal Education Certificate (LEC) from the Hugh Wooding Law School, St. Augustine, Trinidad. She also holds an Executive Masters of Business Administration (Distinction) Degree from the Arthur Lok Jack Graduate School of Business, Trinidad (EMBA Class Valedictorian, 2011). Ms. Baptiste is a member of the Law Association of Trinidad and Tobago, the Association of Caribbean Corporate Counsel and the Caribbean Corporate Governance Institute. Bonnie Alexis - Human Resource Manager and Group Coordinator, Trinidad Cement Limited Bonnie Alexis joined TCL in January 2014 as the HR Business Partner and was promoted to Industrial Relations Manager in In August 2016, she was elevated to the position of Human Resource Manager/Group Coordinator. While Ms. Alexis human resource background is rooted in industrial relations, she has developed a broad knowledge base that has allowed her to successfully practice as a generalist, accredited to her twenty-five years of professional life. Before joining TCL, she served as an executive member of a prominent trade union in Trinidad and Tobago and has held the position of Industrial Relations Officer/Manager in state and private enterprises. Ms. Alexis is a member of the Human Resource Management Association of Trinidad and Tobago (HRMATT) and graduated from Cipriani College of Labour and Co-operative Studies (Trinidad and Tobago) and the National Labour College (USA). She also holds an advanced Diploma in Labour Laws and obtained a post graduate certification in Change Management (PROSCI). Additionally, Ms. Alexis is professionally trained using different methodologies to conduct job evaluation exercises. Luis Gilberto Ali Moya - Group Finance Manager Luis Gilberto Ali Moya was appointed as the Group Finance Manager, effective January 1, Prior to joining the TCL Group, Mr. Ali Moya served in the positions of: Financial and Cost Analyst (CEMEX, Venezuela); Business Process Coordinator (D.H.L, Costa Rica); and most recently, as Business Service Organization Manager (CEMEX, Costa Rica). Mr. Ali Moya earned his Bachelor of Accounting degree from the Universidad Católica Andres Bello in Caracas, Venezuela (1997). He then went on to attain a Master of Business Administration degree from the Universidad Latinoamericana de Ciencia y Tecnología in San Jose, Costa Rica (2009). 26

29 Miguel Roberto Estrada - Group Operations Manager Miguel Roberto Estrada was appointed as the Group Operations Manager on May 4, He has spent his entire professional life of twenty-eight years in the cement industry, specifically in the area of plant operations. Before joining the TCL Group, Mr. Estrada was based in Colombia and held the position of Optimisation Director at CEMEX South America providing technical assistance to CEMEX s plants in the region. Previously, he was Vice President of Operations at CEMEX Philippines, responsible for the two cement plants in the country as well as technical direction for CEMEX Bangladesh and CEMEX Thailand. Mr. Estrada also worked at CEMEX Egypt as Vice President of Operations at the Assiut Cement Plant, the largest production unit of CEMEX worldwide. His career started at CEMEX Colombia. Mr. Estrada graduated from the Universidad Tecnológica de Pereira, Colombia in 1986 as a Mechanical Engineer. Ricardo García Viani - Group Strategic Planning Manager Ricardo García Viani was appointed TCL Group Strategic Planning Manager with effect from May 4, He has over twelve years of practical experience in Corporate Strategy, Business Development, Financial Planning and Marketing Strategy. Among his past positions are Corporate Strategic Planning Manager at CEMEX s corporate offices in Madrid, covering all CEMEX geographies, and Strategic Marketing Manager at CEMEX Venezuela for South and Central America and the Caribbean. Mr. García Viani graduated -Cumlaude- in Industrial Engineering from the Universidad Católica Andrés Bello (Caracas, Venezuela). He was also winner of the Juris Vitol s Award 2001 for best curriculum among all University Class. Mr. García Viani holds an MBA from Columbia University (New York, USA) and a Luxury Management Diploma from the IE Business School (Madrid, Spain). Juan Carlos Mendoza - Group Procurement Manager Juan Carlos Mendoza was appointed as the TCL Group Procurement Manager on May 4, He has thirty-four years experience in the mining and cement industry, with particular focus on procurement, negotiations and inventories management. His most recent position, prior taking up an appointment at TCL, was as Procurement Manager (CEMEX) in Miami, Florida. Mr. Mendoza joined CEMEX on July 22, During his tenure, he was involved in Post- Merger Integration (PMI) in Australia and the USA, as well as Due Diligence (DD) in India, Gabon among other countries. He has held several positions at CEMEX including, Supply Planning Manager, Mexam Trade (Texas); Procurement Manager (Texas) and Manager: Purchases and Materials/Stock (Venezuela). Mr. Mendoza s key areas of expertise include: Customs Law, Shipping Insurance, Material Coding and Classification as well as International Business. 27

30 MANAGING DIRECTOR S REPORT & MANAGEMENT DISCUSSION 2016 INTRODUCTION José Luis Seijo González Managing Director In 2016, we made significant strides towards Building a Brighter Future for all our stakeholders, as our employees remained focused on the task at hand in advancing our strategic priorities. Health, Safety and Environment remained paramount, as we pursued increased operational efficiencies and effectiveness through continued investment in our employee training programmes and plant upgrades at all our manufacturing locations. In addition, we continued to improve and standardise our operational systems and procedures came with many challenges in particular, a heightened competitive environment in the region, with several of our traditional markets remaining either flat or experiencing negative growth. However, our employees continued to rise to the occasion, keeping our customers needs and expectations at the forefront. Notwithstanding the headwinds faced, we were able to maintain a profitable financial position in 2016 and significantly strengthened our balance sheet as at the end of the year. 28

31 1.0 HEALTH, SAFETY AND ENVIRONMENT (HSE) Occupational Safety and Health In 2016, the Group recorded a 37.5% reduction in the total number of Lost Time Injuries (LTIs) when compared with the level for TCL Packaging Limited (TPL), TCL Ponsa Manufacturing Limited (TPM) and TCL Guyana Inc. (TGI) achieved another consecutive year without an LTI among all categories of workers, with TPM setting a group record of nine consecutive years without an LTI, TGI at approximately nine consecutive years and TPL at eight consecutive years. The Group s thrust in 2016 was on ensuring safe systems and places of work. Projects included: internal and external refurbishment of buildings and plant structures, clear demarcation of pedestrian versus vehicular or equipment routes, improvement of enclosed working environments through installation of large industrial fans and effective lighting. Proper housekeeping was emphasised and reported on weekly, to maintain orderly placement and storage of items and materials and a clean and clear working environment. Lock-out Tag-out (LOTO) and other safe systems of work were reviewed and improved. Other improvements were implemented based on a visit to the TCL Group by the CEMEX H&S Advisor. To foster a positive safety culture, all companies held safety talks, and provided OSH training for all workers onsite. In addition, safety training was extended beyond our companies, as a session on Working Safely with Cement and Concrete was held in Grenada for a wide cross-section of users and traders of cement and concrete, inclusive of masons and operators of ready-mix concrete plants. Environmental Management The ISO 14001:2004 EMS-certified companies Trinidad Cement Limited (TCL), Caribbean Cement Company Limited (CCCL), Arawak Cement Company Limited (ACCL) and TGI successfully completed their respective system audits and were all recommended for continued certification. Companies successfully completed various environmental improvement projects; e.g. ACCL completed the upgrade of one chamber of its Electrostatic Precipitator and it is expected that this will result in significant improvements in stack emissions; TGI completed the installation of a cement return system which will result in reduced fugitive dust. Companies are preparing to revise their systems to comply with the 2015 version of ISO FINANCIAL REVIEW AND ANALYSIS Review of 2016 The Group continued to roll out its restructuring and efficiency initiatives in We also invested $200.5 million in capital expenditure in our plants across the region during the year. In Q we completed a comprehensive review of inventory and wrote down $72 million of overstocked items. In Q3 2016, we undertook extensive work on our plants in Jamaica and Trinidad and Tobago, which resulted in scheduled plant maintenance shutdowns of eight weeks in Jamaica and seven weeks in Trinidad. During 2016, the Group repaid $262.1 million of debt including a prepayment of $67 million. The overall reduction in borrowings during 2015 and 2016 has resulted in a 23% reduction in interest payments to $88.8 million in 2016 (2015: $115.7 million). 29

32 MANAGING DIRECTOR S REPORT & MANAGEMENT DISCUSSION 2016 (C TD.) The Group s total revenue of $1.9 billion represents an 11% reduction when compared to This reduction was mainly due to the economic slowdown in Trinidad and Tobago and the reduction in clinker exports. Revenue Our third party revenue of $1.9 billion was negatively impacted by a 24% reduction in revenue in Trinidad and Tobago due to the continued slowdown in construction activity which was partially offset by a 14% increase in revenue in Jamaica. In Barbados, there was also a 58% decrease in revenue which represented the full year effect of the competitive environment which had commenced in November of Additionally, revenue from clinker exports decreased due to the expiration of the clinker sale agreement between Venezuela and Jamaica under the PetroCaribe Agreement. However, the Group s cement exports remained stable compared with 2015, despite increased competition in the region. There was a 35% decrease in third party revenue in the ready-mix and aggregates business due to the continued slow-down in construction activity in Trinidad and Tobago. Operating Results The Operating Profits of the year of $224.4 million was $221.9 million less than the prior year. One-off expenses contributed $140 million to this reduction. The major one-off expenses were: $44.5 million from manpower restructuring exercises; $72 million in respect of overstocked spares which exceed the foreseeable operating requirements of the Group; $7 million in relation to obsolete inventory items; and $16.7 million based on a revision of the estimated life of installed refractory material. Operating results including only recurrent expenditure reduced by $124.1 million and depreciation increased by $12.4 million. Net Finance Costs Net finance cost reduced by 18%, a $29.2 million reduction when compared to This reduction was largely due to a 27% reduction in net interest and related costs to $110.9 million (2015: $151.8 million). The reduced interest cost reflects the annualised effect of the reduction of total borrowings achieved in the financial restructuring of 2015 and subsequent debt repayments. Interest savings were offset by an 86.6% increase in foreign currency exchange losses due to unrealised losses on translation of US Dollar denominated debt. Liquidity & Financial Position We generated $530.8 million in cash from Operations in 2016 (2015: $633 million). In 2016, we continued to invest in capital expenditure to a level of $200.5 million, a 70% increase over our 2015 level. We also made prepayments of $67.3 million in addition to scheduled repayments of $193.8 million on borrowings. As at December 31, 2016, total Group borrowings 30

33 were reduced to $968.5 million ($1.2 billion as at December 31, 2015). We have therefore reduced total borrowings to almost half (53%) of the $1.8 billion balance as at December 31, The continuation of our rigorous working capital management programme further enhanced working capital at the end of year by $23.9 million. SUMMARY FINANCIAL PERFORMANCE The Group achieved profits of $52.4 million in 2016 (2015: $428.8 million) and an EPS of $0.10 despite heightened challenging market and economic conditions. We have continued to critically analyze our operations and implement appropriate actions to secure the strength and prosperity of all stakeholders of the Group. Some of those decisions necessitated additional one-off expenses of $140 million in 2016 which will serve to make us more competitive in 2017 and beyond. It should also be noted that non-recurrent refinancing gains of $205.8 million in 2015 were recognised in the reported profit for that year. Group revenues for 2016 of $1.9 billion (2015: $2.1 billion) were achieved despite the adverse effects of the slowdown in Trinidad and Tobago, the increased competition across the region and the expiration of our clinker agreement in early 2016 with Venezuela. The Group generated a net cash flow of $366.2 million (2015: $469.3 million) from operating activities after payment of interest, tax and pension and post retirement expenses. The Group paid a dividend ($0.04 per share) for the first time since GROUP MARKETING Our 2016 total cement sales volume experienced a decrease of 3% when compared to In Jamaica, CCCL increased its domestic sales volume by 17% over its 2015 level due to growing market demand. Domestic demand was fueled by continued government spending in infrastructural projects, private developments and retail consumption. Whilst total cement sales increased by 10%, cement export sales were curtailed to 79% of its 2015 export volume as the company had to satisfy the surge of the local demand. Additionally, the Clinker Supply Contract with Venezuela came to an end in early Trinidad and Tobago saw its third consecutive year of negative growth in Domestic cement demand decreased by a significant 20% as a consequence of the contraction of the economy and significantly curtailed government spending and increased competition. TCL s export volume increased by a modest 4% over the 2015 level. However, total cement sales fell by 15%. Group 2016 Cement Sales Volume % by Territory 22% 35% 2% 41% Jamaica 41% Trinidad and Tobago 35% Other Countries 22% Barbados 2% 31

34 MANAGING DIRECTOR S REPORT & MANAGEMENT DISCUSSION 2016 (C TD.) In Barbados, ACCL s domestic volume sales fell by 41% from its 2015 level, largely due to the significant inroads made by the foreign competition and a subdued cement market in However, ACCL s export volume increased by 18% as its prime export market in Guyana remained reasonably buoyant and it further satisfied markets in 2016 which were previously supplied from CCCL. In the premixed concrete sector in Trinidad and Tobago, concrete sales volumes by Readymix (West Indies) Limited (RML) decreased by 36% from 2015 level as declining activity in the construction sector persisted in Nonetheless, we were able to maintain our leadership position in this sector as RML remained focused on providing its customers with affordable high quality concrete solutions and technology together with its reputable level of service. Third party aggregate and pitrun sales remained significant in 2016 despite a 37% decrease from the 2015 volume sold. 4.0 GROUP OPERATIONS Clinker / Cement Operations In 2016, the main operational focus was the continuation of the improvement measures to bring our cement plants to world class competitive standards. These measures included the following: Equipment Overhauls At CCCL, a major kiln overhaul was undertaken for a duration of 2 months. The cooler was upgraded and a new rotor for the baghouse purchased, as part of the plan to increase the kiln output from 3,000MT/day to 3,500MT/day. The major issue on that plant was blockages in the tower which was also resolved with the installation of over 30 new air blasters and a new high pressure wash system. Civil works for the foundation of the new coal mill have also been completed and mechanical works are in progress to improve the reliability of that circuit. At ACCL, the kiln was also overhauled and the #1 chamber of the precipitator and the cooler were refurbished to improve the kiln performance. Significant work was done to improve the structural integrity of the preheater tower and on the cement mill a new gear box was installed to improve the reliability of that piece of equipment. Kiln 3 was the major focus at TCL. A major shell change was completed, the kiln re-aligned, the cooler upgraded, the mulita-cyclones refurbished, new instrumentation installed and a new opacity meter installed thereby allowing this kiln to reliably operate at its name-plate. An overhaul of raw mill 2 in Mayo was also done, to improve slurry production. Significant works were also done at the ports of both ACCL and TCL and are expected to continue on a phased basis. At ACCL, the port structure is at serious risk of failure and remedial works have begun. At TCL, infrastructure works were executed and dredging to the original draft (which had not been done in the last 30 years) has commenced. At right: Kiln 3 Shell Change at TCL in August

35 Housekeeping A clean plant not only works better, but also raises the morale of the people who work in it. The major overhauls executed in 2016 addressed many of the long standing issues in our cement plants that had resulted in poor housekeeping. Those changes, as well as visits to CEMEX plants (which allowed staff to see what the possibilities were) and continued focus, have all brought about steady improvements in housekeeping throughout the Group s plants. Quarry Management Steps for increasing the limestone and gypsum reserves in Jamaica are on stream. Submissions have been made with the legal authorities and all approvals are expected to be achieved by May Datamine was re-introduced to the TCL Group in 2015 and as part of the implementation all TCL Group mining staff were retrained in the new version of the software. The main objectives of the implementation are to improve the usage of the software and create more efficient mine planning systems as well as improving the consistency and reliability of the quality of material from the quarry. This in turn will also lead to improved consistency of cement quality. TCL and CCCL have completed the geological mapping of the Limestone Quarry which will be used to create a geological model aimed at increasing the accuracy of the existing block models. All TCL Group mining staff are currently in the process of completing training using Datamine to carry out short term and medium term Mine Planning and preparation of blends. Materials Management Consistent with best practices world-wide, our cement plants have identified the optimal quantity of clinker to be stored on site, thereby avoiding the ageing issues encountered in the past, environmental concerns due to outside storage and consequently reducing the cost for multiple handling of materials. Material balances have also been introduced at the different process stages and tighter process control and instrument calibration implemented. Across the Group, aged clinker inventory was reduced by 20% for Cost Management Cost control has been tightened at all our plants and new reports have been developed and implemented to focus the operational teams on cost from a monthly to a daily basis. Improved planning of maintenance jobs with daily reports as to fuel, electricity, contracts, consumables and human resources usages are now utilised to effectively manage operational costs. Quality Assurance Laboratory Proficiency testing with CEMEX has been implemented and will provide additional assurance of the quality of test methods and test results across the Group. The previously implemented MAC tool has been embedded throughout the Group with measurement results being utilised to manage quality performance. Laboratories continue to maintain international certification with TCL and CCCL maintaining ISO certification whilst ACCL acquired CE Certification in June Working conditions have been improved through renovated infrastructure, specifically at TCL where the laboratory has undergone a major upgrade of the 33

36 MANAGING DIRECTOR S REPORT & MANAGEMENT DISCUSSION 2016 (C TD.) working facilities. At CCCL, improvements to assure blend design before mass stockpiling have been achieved through the placement of an online analyzer on the raw material belt to the storage house. Mind Set Change There has been continued focus on the people aspect at the cement plants across the Group with the objective of improving employee commitment, loyalty and teamwork. For the past year, visits to plants in other countries have been conducted mostly down to the engineer staff level. In the future, this initiative will be extended to lower worker levels so that these new philosophies and best practices can become well embedded in our cement plants as various staff levels would have witnessed first-hand the operational protocol of world class plants. Concrete Operations In 2016 we achieved some positive results operationally, including trouble free raw material inputs based on our improved systems of mining, testing and storage. However, during the first half of the year there were challenges with the transverse conveyor at the Guanapo Plant 1, water availability at the Guanapo 2 plant, an adequate dispensing system for BASF admixtures and the loading ramp at Guanapo 2. Those challenges were adequately addressed and rectified during the second part of the year. The further manpower restructuring during the latter part of 2016 required us to face the challenges of working differently and innovatively towards increasing efficiency and effectiveness throughout the operations. At our quarry, we commenced the engineering and acquisition of equipment for the expansion of Plant #1, with an expected completion date by mid Packaging Operations TPL & TPM delivered another year of stellar safety performance, achieving in excess of nine years without a lost time accident. TPL further reduced its selling prices in 2016 to maintain competitiveness in the international markets. By the end of 2016, the cement plants at CCCL, TCL and ACCL were fully converted to 2ply sacks for the respective local markets, whilst testing is ongoing at TGI for conversion in Q Overall improvements were seen in the operational efficiencies of the key pieces of equipment, along with ongoing housekeeping initiatives. TPM saw an increase in sales volumes for both its Jumbo Bags and Slings during TPM has successfully secured the supply of all CCCL Jumbo Bag requirements and standardsized one bag type for all cement companies in the group. Slings were successfully tested at CEMEX DR, with an order to be supplied in A number of productivity initiatives were implemented during the year, resulting in a reduction of the overall cost of production. TPL & TPM are aggressively pursuing supply options in the wider CEMEX Group. 34

37 5.0 GROUP DEVELOPMENTAL ACTIVITIES The Group continues to explore and analyze strategic business development opportunities throughout the region to further consolidate and strengthen our value chain propositions and activities: cement, aggregates, ready-mix concrete, precast and retail modes. Sustainable Road Solutions 2016 was a pivotal year for the Group s concrete road development programme. Significant emphasis has been placed on offering sustainable concrete solutions for road construction/rehabilitation to all major stakeholders in the region. The first pilot project was completed successfully in Guyana and served as the launching pad for this new building solution line of business. In Guyana, the first concrete pavement using short slab technology was constructed in the second quarter of 2016 by a local contractor who had received the relevant technical training from CEMEX Panama. Shortly after, the first external project was also completed and the business has gained traction amongst key stakeholders in the road paving construction in Guyana. The next stage is in progress: the strategic and technical support for the government and contractors in building more durable roads using these sustainable solutions. In Trinidad, a similar strategy was implemented in the last quarter of 2016 using TCL s internal plant roads as the launching pad with a local contactor for establishing concrete roads. TCL has been working closely with the Ministry of Works and Transport - PURE - to introduce the concrete solutions into its road rehabilitation projects. Officials in the Ministry have been avid observers of the process. Continued partnering and support for alternative designs for roads will be the next step with the Ministry. The aim is to convince the Ministry to include this building solution technology in some portion of its road construction/rehabilitation programme by empirically demonstrating the benefits and durability of these pilot projects. In Barbados, consultation with both the relevant government agency and local entities was the main focal point in The launching of a pilot concrete road project will follow in Housing Housing continues to be a major socio-economic issue for the Caribbean. Most countries have indicated that affordable housing continues to be a challenge, especially to people in the lower income tier. In Trinidad, discussions with the Ministry of Housing have been ongoing with the objective of supporting and filling the gaps in low-cost housing for the country. The TCL Group has been working co-operatively within its business units to provide support in bundled packages for building solutions. The development of RML s Guanapo housing initiative is at the stage where a proposal is under review. In Guyana, the Minister of Housing has also requested low cost affordable solutions for the lower income families. Discussions have been ongoing primarily with housing contractors who are looking for building solutions and support. 35