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Financial News

Jun 2014 Financial News

NEL – Disclosure to Shareholders – Event with Material Impact on Financial Statements for the year ended March 31, 2014

Jun 09, 2014

National Enterprises Limited – Disclosure to Shareholders – Event with Material Impact on Financial Statements for the year ended March 31st, 2014.

TSTT VSEP/VEERP Programme

National Enterprises Limited (NEL) has been advised by way of correspondence received on May 22nd, 2014 and May 23rd, 2014, from one of our investee companies, Telecommunication Services of Trinidad and Tobago Limited (TSTT), in which we are a 51% shareholder, of the status of a VOLUNTARY SEPARATION PROGRAMME (VSEP/VEERP) open to participation by all employees of TSTT. This offer closed on April 30th, 2014 and 608 employees have applied under these plans. In accordance with International Accounting Standards, and as previously shared with NEL at a presentation of TSTT’s 5 Year Strategic Plan 2013 – 2018, TSTT has made provision for the cost of this VSEP programme in its financial statements for the year ended March 31st, 2014.

The draft, unaudited financial statements of TSTT for the year ended March 31st, 2014 indicates that the financial impact of the VSEP programme is a provision of approximately $650M Trinidad and Tobago (TT) dollars. Based on our 51% shareholding, NEL’s share of this provision will be $331.5M Trinidad and Tobago (TT) dollars for the year ended March 31st, 2014. NEL accounts for its investment in TSTT on an equity accounting basis and therefore records 51% of the net profit or loss after tax – final audited financial statements for TSTT for the year ended March 31st, 2014 are not yet available, therefore the full impact on NEL’s reported profits is currently unknown.

We do note however, that this provision will have a material impact on NEL’s financial statements for the year ended March 31st, 2014 and shareholders are thus hereby advised accordingly. This, however, will not affect NEL’s dividend payout to our shareholders other than to the extent that no dividends will be received from TSTT for the year ended March 31st, 2014.

TSTT’s management is confident that this significant reduction in its workforce will result in a reduction in future operating costs, and that the VSEP programme is part of an overall strategic plan that is expected to enhance profitability and shareholder value in the future.

NEL has received significant dividends from TSTT over the past thirteen years, and is cautiously optimistic that these strategies will be successful in improving profitability and dividend flow to NEL in the near future.

Kenny Lue Chee Lip
Chairman


Source:
The Trinidad and Tobago Stock Exchange Limited
Monday June 9, 2014