For the fiscal year ended March 31, 2020, National Enterpises Ltd (NEL) recorded a loss of $327.5 million compared to a profit of $12.5 million in the comparable period last year.
In the company’s financial statements, Chairman Ingrid Lashley said the loss was largely due to the decline in the value of NEL’s investment in Telecommunication Services of T&T Ltd (TSTT) of $127.5 million and NGC NGL $175.3 million.”
According to Lashley, fiscal 2020 marks the second year of NEL accounting for investments at their fair market value. She said: “In essence, as an investment holding company, NEL will allow our shareholders the opportunity to assess the performance of its underlying investments on the basis of actual value of the investment as opposed to the share of the accounting value of the company as was done previously.”
Lashley indicated that this relatively new approach more accurately reflects the company’s mandate to give shareholders the opportunity to benefit from direct ownership of state-owned enterprises and a diversified portfolio of investments.
The fair market value methodology, Lashley said, also recognises gains and losses arising from any change in the market value of the investment. Therefore, as the financial circumstances of the investment or the investee company changes, the impact on the value of the investment, if any, is immediately revealed.
This is what occurred in NEL’s results for the fiscal year ended March 31.
In the case of TSTT, Lashley highlighted that the Group’s restructuring exercise of November 2018 has resulted in improved profitability. However, she expressed that the improvement in financial performance expected for fiscal 2020 was not at the level anticipated owing to “delays in the implementation of the plan”.
Over time, Lashley explained that the company’s financial results will continue to improve as the burden of its operating expenses eases. Nonetheless, she added that this is conditional on the full impact of restrictions and limitations arising from the COVID-19 pandemic.
She also noted that TSTT has been working closely with the T&T Government to assist improving connectivity and ensuring that its customers are served consistently during this period of restricted movement and closed borders.
Regarding the value of the NGC NGL, Lashley asserted that the investment is aligned to the financial standing and performance of Phoenix Park Gas Processors Limited (PPGPL) and T&T NGL Ltd (TTNGL), the latter, a publicly listed company.
She posited: “Owing to the fall in NGL prices of approximately 25 per cent across all products since fiscal 2018, the companies continue to experience decline in revenues and profitability. Improvement is expected in fiscal 2021.”
Lashley asserted that NEL’s payment of dividends to shareholders is based on dividend income during the fiscal year of $23.8 million – this represented a 75.8 per cent decrease when compared to the previous year’s dividend income of $98.4 million.
She added that NEL continues to pursue its strategic objectives in respect of diversification of its investment portfolio researching opportunities within the state sector.
“Notwithstanding the anticipated impact of the COVID-19 pandemic on economic activity overall and the energy sector in particular, we anticipate some recovery in fiscal 2021,” said Lashley.