Thread by @JCKNIGHT2

#FinanceTwitterJa Since I was at the Carib Cement AGM (CCC) and can provide a further explanation, here is a thread on $CCC.ja.

jamaica-gleaner.com/article/letter…

Firstly, Carib Cement is a part of the Cemex Group (Mexican Company) since the direct owners (Trinidad Cement Limited) own 65% of CCC and they in turn are owned by the Cemex Group. So, CCC->TCL->Cemex. So, even though he's saying Jamaican investors have received no dividends,

the owners (TCL) haven't either. Why is this?! Dividends can only be paid of profits that the company generates. Also, a dividend doesn't have to be declared by a company. The last time CCC paid a dividend was in 2005. Based on the CCC 2016 annual report which gave a 10 year

retrospective, CCC started to experience declining profits from 2007-2008 and then recorded losses from 2009-2012 which totalled $7.7 Billion JMD. Under shareholder's equity, the company had a massive accumulated deficit. During this period from 2007-2012, the company's total

debt kept growing from $2.3Billion in 2007 to a peak of $8.7B in 2012. In 2010, CCC issued 15 million preference shares to TCL which had restrictions on payment of dividends. One such restriction was that dividends must be paid to preference shareholders before ordinary

shareholders. The pref share dividends would also have to be paid in USD as well. So, with this background knowledge, let's look at the present. $CCC.ja once again has an accumlated profit/earnings on its balance sheet as of this year due to growing profits, equipment

buyback and strict management policies implemented through the CEMEX controlled board and General Manager (CEO). The GM (Peter Donkersloot) explained at the AGM that the company wants to start paying dividends again to shareholders (ordinary), but there are still major financial

constraints restricting them such as the preference shares, current total debt and Capital Expenditure needed to ensure the firm can be viable and continue into the growing future. He said that if all goes well based on the presentation he showed attendees, the company can start

paying dividends possibly after 2023. In the interim, the company is also considering the possibility of a share buyback to enhance shareholder value. A share buyback reduces the number of outstanding shares and increases the relative ownership of the remaining shares.

So, for the person in this article saying that it is a disgrace the company hasn't paid dividends, they need to look back at the financials or speak with an accountant who can explain how dividends are paid out from a company. CCC couldn't pay dividends since it would further

erode their working capital and put the company in a very difficult spot in terms of paying bills or operating on a daily basis. Shareholders must always remember that a company never has to pay a dividend. Berkshire Hathaway hasn't paid a cash dividend for more than 50 years and

investors still buy the stock. Instead of getting direct cash (dividends) from the company, shareholders have been rewarded with magnificent returns in the form of capital appreciation. Carib Cement stock price 14 years ago (2005) was $10.15. It's now at $76.87 which is 657%

return on capital appreciation. So, in lieu of dividends, capital appreciation has returned a lot to shareholders. Many $CCC.ja shareholders who held it from decades ago are now millionaires. When you buy a stock, you can be compensated by share buybacks (increasing relative

ownership), dividends (profit) or capital appreciation (increase in stock price). None of these are guaranteed and purchasing any stock is a risk since you can lose value for your money if none of these things are realized.

Enjoy your day everyone.