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CHAIRMAN’S REVIEW - 2010 RML Group sales and profit performance continued its decline in 2010, a trend which started in 2008 when evidence of the global economic recession took hold, affecting the markets of the Region, particularly Trinidad & Tobago, Barbados, and St Maarten/St Martin, where RML operations were located. Those respective territories were further affected by political uncertainty during the year. In the second quarter of 2010, a general election was announced and held in Trinidad & Tobago. In Barbados, Prime Minister David Thompson became terminally ill and subsequently passed away during his term of office, while in St Maarten, the island took a further step towards self-government from the Netherlands, and with it, the announcement of further fiscal measures including the increase of Turnover Tax from 2% to 5%. These critical events created additional uncertainty in construction activity in the respective territories. In Trinidad & Tobago, where government-initiated projects and large commercial ventures generally account for more than 60% of all concrete sales, there was a continued decline in activity with the shutdown of several projects and the shelving of others previously earmarked for start-up. In Barbados, the economy remained weak, characterized by high fiscal deficit, slowing revenues and high expenditure on government’s current account. Investor confidence was generally soft and many construction projects in the tourism sector previously approved did not commence. In St Maarten/St Martin, new resident and resort developments which were at various stages of progress were halted, without news of a potential date for resumption. Given the depressed state of the market, the RML Board took a decision to cease operations in St Maarten/ St Martin and to put up for sale the shares of the company (ICNV / IC SARL). At year-end, there were no firm buyers identified for the company. 6 BUILD TO LAST FOR GENERATIONS
The Company improved its safety performance throughout the workplace, which coincided with workers displaying a heightened sense of safety awareness and ownership of the “Safety First” motto. In particular, there was a 77% decline in the number of vehicular accidents compared with the prior year. This improvement is directly attributed to a number of initiatives started in 2009, including programs in Defensive Driving and Vehicle Inspections, and a Management decision controlling the use of Company vehicles outside of employees’ work duties. For the financial year 2010, the Group recorded an overall net loss of $7.7M; this represented a significant shortfall compared with the profit of $9.7M of the prior year. During the year, RML remained the overall market leader, with 17 active participants in the pre-mix concrete market. Of these, 75% of the operators were involved in a more diversified offering, including the supply of concrete blocks, general construction, and asphalt paving services. As a result of the supply/demand relationship for concrete, average price fell during the year by 25%, in comparison with the prior year. In the Trinidad & Tobago market, RML sold 106,278m3 in 2010, representing a 28% decline from 147,818m3 of the prior year. RML considered plans for diversifying outside of its core business, and entered into discussions which would involve joint venture arrangements and mutual sales agreements with reputable complementary-type business in the industry. The Company also increased the sale of quarry products, including pitrun and aggregates, to third-party purchasers, with overall revenue of $20.9M, an increase of 100% over the prior year. Other internal cost-cutting and efficiency-improvement initiatives were implemented, such as reduction in the areas of Wages, External Plant Hire, and Repairs and Maintenance, which yielded positive results in terms of cost; however, they could not reverse the overall loss which was realized. At the RML quarry, a comprehensive study was initiated to determine the location and extent of mineable pitrun reserves, and to develop a new mining and rehabilitation plan for the quarry lands. This project, due for completion in 2011, will assist in streamlining pitrun production for purposes such as for supply to the building of highways and agricultural access roads, in addition to the production of high quality aggregates. The Company is also reviewing the feasibility of establishing a modern wash plant at the quarry to replace the existing aggregates wash plant, which is over 25 years old, and which is characterized by issues such as frequent breakdowns, high maintenance cost, and lack of spares by suppliers. During the year, the Company continued the process of bilateral negotiations with the Union for a new Collective Agreement for employees. This matter started in 2009, and remained outstanding at year-end 2010, as there was a substantial difference in the positions between the respective parties. The matter was referred to the Ministry of Labour for conciliation, but has since been sent to the Industrial Court. The Company also pursued its thrust to diversify its operations into other territories, on the basis of a confirmed project. Particular focus was placed on Haiti, where parent Company TCL was involved in discussions for entering the market. A firm opportunity has not yet been identified, but the company will continue to explore potential projects in the New Year. For the year in review, PPCI sold 13,636m3 of concrete, a 19% fall below the budgeted sales volume of 16,800m3 and 1.9% below that of 2009.The depressed sales reflect the challenges during the year, as prospective home-builders remained cautious in the face of the prevailing economic difficulties and private investors further delayed construction of their approved projects until a clearer picture of economic recovery could be envisaged. During the year there was a decrease in the Group’s cash and cash equivalents of $19.5M. Challenges were experienced in the collection of receivables owed from contractors who worked on government-related projects. The Company used its lobby with business groups such as the Trinidad and Tobago Manufacturers Association and the Contractors Association to assist in eliciting payments on behalf of its clients. However, payments trickled, and at year-end almost 60% of the Company’s receivables represented amounts due from government-related projects. Despite the challenging market and economic conditions of 2010, RML maintained a strong financial position, and met and exceeded all of its financial covenants. In the midst of the challenges, the Company has positioned itself to improve its position as market leader, and to take advantage of opportunities which are anticipated in the various sectors in the economy. For the year ended, the stock price traded firm, with no change, at $31.35 per share for the entire year. The Board has agreed that no dividend will be paid to shareholders for the financial year 2010. Ms. Eutrice Carrington Chairman 7 BUILD TO LAST FOR GENERATIONS
Page 2 and 3: One of the most famous sites in the
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Page 10 and 11: DIRECTORS’ & SUBSTANTIAL INTEREST
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