by Shawn Cumberbatch
And it is blaming the $29 million profit slump largely on increased competition, bad debts and a Bajan public with less money to spend.
A Barbados TODAY examination of latest financial statements has also revealed, however, that the company which trades here as LIME has paid out $18.7 million in “employee termination benefits” to people departing the company mainly through redundancy over the past year.
Not only has LIME suffered declines in all of its business lines except broadband, but today parent company C&W Communications voiced concern about the “difficult” market conditions confronting the Barbados operation.
This time last year LIME’s management was counting $37.9 million in profits after the tax man was paid his due, but by the time the company’s financial year ended on March 31 this year profits after tax had shrunk to $8.9 million.
A “management discussion and analysis” authored by Chief Financial Officer/Commercial Director Patrick Hinkson and former Country Manager Alex McDonald prior to his recent separation from the firm detailed LIME’s financial challenges, which included $14.8 million increase in restructuring costs.
With the company scheduled to hold its annual general meeting next Tuesday at the Lloyd Erskine Sandiford Centre, company officials reported:
“We saw declines across all our lines of business with the exception of Broadband which was up 12 per cent over the prior year. Mobile revenue fell by nine per cent, while Enterprise, Data and Other was down 10 per cent from the prior year and there were marginal declines in the Domestic and International voice businesses.
It was also pointed out by Chairman Sir Allan Fields that overall the LIME’s revenues declined by four per cent ($13 million), profit before taxation drop by 77 per cent ($39.6 million), total operating expenses increased by nine per cent ($15 million), and the financial results were also “stifled by an increase in bad debts”.
But beyond its own operational costs, it appears the company was also hit hard by additional competitors in the Barbados telecommunications market, with Sir Allan saying “our revenues have been eroded by the use of Voice Over Internet Protocol technology and a general reduction in consumer spend”.
And then there is its restructuring costs, dominated by a $14.8 million increase in redundancy costs.
In a note accompanying its financial statements, LIME explained: “Estimated restructuring costs mainly include employee termination benefits and are based on a detailed plan agreed between management and employee representatives.”
Today, LIME’s ultimate parent company CWC said in an Interim Management Statement that “market conditions in the rest of the Caribbean remain difficult, particularly in the Eastern Caribbean and Barbados”.
“The major cost reduction plan we announced at the full year is proceeding as anticipated. Furthermore, we are already seeing the benefits of the restructuring performed last year, with operating expenses in the Caribbean down five per cent against quarter one in the prior year,” CWC stated.