Many shareholders of Trinidad Cement Ltd (TCL) got news yesterday that they have been waiting for seven years to hear—the directors of the Claxton Bay-headquartered cement producer announced that it would recommend a final dividend of $0.08 to the shareholders of the company.
In a notice on the website of the Trinidad and Tobago Stock Exchange (TTSE), TCL said, “On May 22, 2024, the board of directors of TCL resolved that a final dividend of TT$0.08 per ordinary share be recommended to the shareholders of the company, at the annual meeting, for declaration pursuant to the dividend policy.”
The company’s annual meeting is scheduled to be held on July 5, 2024 at the Hilton Trinidad and Conference Centre. In the notice, TCL said subject to the declaration of the recommended dividend by the company’s shareholders, “the payment shall be made on September 9, 2024 to shareholders listed on the register of members, as at a record date of August 13, 2024 and the ex-dividend date of August 12, 2024.”
With issued share capital of 374,647,704 shares, all shareholders of the company will receive a total of $29.97 million. The Mexican building materials company, Cemex, is TCL’s largest shareholder with 69.83 per cent of the company or 261,623,911 shares. It is estimated that Cemex will receive $20.92 million (US$3.08 million) as a result of the $0.08 per share dividend.
In its 2023 financial year, TCL generated $2.22 billion in revenue and earned $170.19 million in after-tax profit. The company’s profit for 2023 was 194.4 per cent more than the $57.80 million it earned in 2022. For the first three months of its 2024 financial year, TCL declared $78.31 million in after-tax profit compared to a loss of $1.68 million for the same period in 2023.
While many TCL shareholders are happy about the declaration of the dividend, some institutional and individual shareholders complained yesterday about the royalty that the cement company’s board introduced in 2022.
In its 2023 annual report, TCL outlined two service contracts that exist between Cemex and TCL. They are:
• “A master management and business support services and licence agreement dated January 21, 2022, under which TCL and various subsidiaries of Cemex have established a general framework for the corporate services provided by Cemex to TCL and certain subsidiaries, as well as the payment of royalties for the use of intellectual property owned by and licensed by Cemex to TCL and certain subsidiaries.”
• A technical and managerial services agreement, through which Cemex provides support to TCL by making available suitable, qualified and experienced executives to fill key positions, and to provide training as well as technical assistance to support the group’s training and shipping departments.
In its 2023 annual report, TCL disclosed that it had entered into related-party transactions with Cemex, as a result of which TCL paid its Mexican parent $36.5 million in “royalties and management fee expenses.”
In 2022, the total fees paid to Cemex by TCL was $36.4 million.
In a notice posted on the website of the TTSE on February 2, 2022, TCL announced the execution of the services and intellectual property agreements on January 21, 2022, “according to the terms and conditions approved at the company’s annual meeting of shareholders on September 23, 2021.”
Under the agreements, TCL agreed to pay Cemex a fee not exceeding four per cent of the local company’s consolidated net sales. That fee is for corporate services provided by Cemex to TCL, “as well as the payment of royalties for the use of intellectual property owned by Cemex and licensed by TCL.”
For its 2022 financial year, the annual fee applicable to the agreements “shall be equal to two per cent of the consolidated net sales of TCL.”
