Marc Melville Chairman Tropical Battery Company Limited has released the following Report and Statement of Financial Position – (Unaudited) for the period ending June 30, 2022.

We had another solid quarter; revenues were up double digits and net profit after tax was up triple digits. More importantly, for the first nine months of this fiscal year, earnings per share went from $0.05 a year ago to $0.11 per share this year.

Tropical Battery Company continues to push our diversification strategy (selling more than just conventional lead acid batteries, i.e. selling lithium ion batteries, renewable energy products, solar panels, et cetera) and this is having a positive impact on our overall business.

Financial Highlights

Income Statement
Our revenues for the quarter were up 27.0%, moving from $521 million in Q3 of 2021 to $662 million in Q3 of 2022. This was an increase of $141 million over the previous quarter. This has proved to be our best Q3 in history and is driving and energizing the entire team the to surpass targets by bringing in new customers from different markets.

Gross profit came in at $207.5 million or approximately 26.0% above the same period last year. The gross profit percentage was 31.4% of total revenue, which is slightly lower than same quarter of the previous year which was 31.6%.

Tropical completed its Q3 with a net profit after taxation of $53.8 million, which is a 117.9% increase over last year’s profit of $24.7 million for the same quarter.

Operating expenses came in at $132 million or 16% above last year is $113 million. We are always encouraged to see expenses at a lesser growth rate than revenue. We are pleased with our new inventory management system and how it effectively manages the increasing variety of stock efficiently. Also, our order fulfilment cycle has significantly improved, and we believe these are some of the efficiencies that are being realized through the warehouse team and the system.

Earnings before interest, taxes, depreciation, and amortization came in at $79.0 million for the quarter that’s 53.5 % above the previous year’s Q3 EBIDTA of $51.4 million. That accounts for almost $27.5 million dollars increase in the company’s EBITDA Quarter over Quarter.

Financial Position
Total assets grew from $1.6 billion last year to $1.9 billion this year, or 18.6%. While total liabilities moved from $832 million to $970 million or 16.6%. Our net current assets moved up to $1.15 billion from $834 million in the prior year or 38.3% increase. These positive increases continue to show a strong financial position. The equity moved from $781 million last year to $944 million this year or 20.8%. A positive sign, and setting us up nicely for an increased dividend payment, as we move closer to the end of our fiscal year.

Outlook
Our team continues to be healthy, motivated, and trained. We continue to see strong demands for our product lines, especially the new renewable energy lithium ion phosphate batteries and solar panels. We are getting closer with our efforts to acquire profitable companies. We are far advanced in the due diligence process with one now, and hope to have this one closed before the end of this calendar year.

We are also in the market raising a $250 million bond, which will allow us to continue our growth plans. This bond should close before the end of our fiscal year September 30, 2022.

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The import duty on electric vehicles has been reduced from 30 per cent to 10 per cent, and purchasers of those vehicles will not have to pay licence fees over the next five years.

The House of Representatives on Tuesday (July 19) approved the Customs Tariff (Revision) (Amendment) (No. 2), Resolution, 2022, and the Road Traffic (Licence Duties) Order, 2022, and

Resolution on Tuesday (July 19) to give effect to the measures. Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, advised that the lower duty rates and the elimination of the licence fee requirement apply to electric vehicles that are three years old or less at the time of importation.

Government is serious about ensuring a clean energy future.

He said that the measures, which took effect on July 14, are supporting the country’s transition from a high dependence on petroleum for motor vehicles by making it more affordable for Jamaicans to acquire electric vehicles.

He said that that Government is serious about ensuring a clean energy future.

“The electric vehicle technologies are undergoing rapid change, and so the public interest is best served by ensuring that the latest technologies are preferred over older technologies. Having 10-year-old electric vehicles in the country doesn’t help anybody; we need the latest electric vehicles at any point in time,” Dr. Clark contended.

The Minister told the House that the implementation of the measures came out of discussions with the Ministry of Science, Energy and Technology, the Inter-American Development Bank (IDB) and other stakeholders, to see how best to encourage persons to purchase electric vehicles.

He said it was determined that the reduction in duty and removal of licence fees would be the best way to incentivise the transition.

The Finance Minister noted that duties on motor vehicles are a major source of government revenue, with earnings of about $30 billion to $40 billion, and so “the way we treat with the reduction of duties for electric vehicles has to be considered very carefully, because we couldn’t afford to completely cannibalise all of that revenue. However, at the same time, we must make a start in the transition”.

“We recognise that these are not panaceas, but they represent a significant concession to facilitate Jamaicans in the acquisition of battery electric vehicles,” he added.

The House of Representatives on Tuesday (June 21) approved the General Consumption Tax (Amendment of Schedule) Order, 2022, Resolution, providing for the exemption of lithium-ion batteries from General Consumption Tax (GCT).

Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, first announced the removal of GCT on the importation of lithium-ion batteries during his closing budget presentation in March.

Dr. Clarke said as the Government seeks to achieve accelerated and aggressive increases in renewable energy penetration, lithium-ion batteries will play a pivotal role in that energy transition, adding that they are also aligned with the policy of promotion of electric vehicles.

The Minister informed that its popularity has been growing as an energy storage technology.

Dr. Clarke explained that the Ministry of Science, Energy and Technology over the years has been in constant dialogue with his Ministry about the category of items that constitute and represent appropriate technology, for which the Government’s long-standing policy of promoting renewables would mean that they would be subject to a differential tax regime.

He said lithium-ion batteries were not among that list of about 14 items, “but technology has changed, and lithium-ion batteries are no longer only used in portable electronics, but now are increasingly being used in renewable technologies”.

“The Ministry of Science, Energy and Technology wrote to the Ministry of Finance outlining that the use of lithium-ion batteries is an appropriate technology to mitigate intermittence that some renewable energy solutions introduced to the grid and, further, that this technology is likely to remain the solution of choice,” the Minister noted.

Dr. Clarke said the Ministry of Finance, therefore, provided a ‘no objection’ letter for the common external tariff (CET) suspension, on 100,000 units of lithium-ion batteries, adding that this was approved by the CARICOM Council for Trade and Economic Development (COTED) for two years, which ended on April 3, 2021.

The Minister said at that time, no GCT exemption was provided on the batteries, noting that as the popularity of these batteries grew and continues to grow, there were no provisions in place for GCT relief on lithium-ion batteries for solar application, but only on photovoltaic batteries.

“Today the category is not just photovoltaic batteries that are used for renewables but also lithium-ion batteries. In order to rectify this, coupled with the recognition of the positive impact of using energy-efficient technologies to reduce the cost associated with the generation of electricity, the Ministry of Finance set out to exempt these batteries from GCT,” Dr. Clarke stated.

Additionally, the Ministry provided another no-objection letter to seek approval for a further suspension of the CET on 240,000 units of lithium-ion batteries from COTED for two years to end on December 31, 2023.

The revenue implications for granting the GCT exemption on lithium-ion batteries, based on 2019 data, reveal that GCT paid was in order of $193 million in that year.

PHOTO: MICHAEL SLOLEY
Minister of Science, Energy and Technology, Hon. Daryl Vaz (right), is in conversation with Jeremy  Barnes Chief Executive Officer of Future Energy Source Company (FESCO), at the launch of Road Safety Month at the FESCO Service Station on Beechwood Avenue, St. Andrew, on Wednesday (June 8).

The Electric Mobility Policy will come into effect by the end of June paving the way for persons to import vehicles into the island.

Minister of Science, Energy and Technology, Hon. Daryl Vaz, said that Cabinet recently signed off on the policy.

He said that requisite infrastructure to accommodate the vehicles is in place, as the private sector has established charging stations in several sections of the island.

“What was important, was to give incentives for persons to purchase electric vehicles, which are much more expensive than regular vehicles, and we will have a concession rate of 10 per cent,” the Minister informed.

He said that vehicles no older that three years old will be allowed into the island, to prevent Jamaica from becoming a dumping ground for older vehicles.

Minister Vaz was delivering the keynote address at the launch of Road Safety Month at the Future Energy Source Company (FESCO) Service Station on Beechwood Avenue, St. Andrew, on Wednesday (June 8).

The event was organised by the Jamaica Gasolene Retailers Association (JGRA) under the theme ‘Safe Roads Together with Safe Vehicles Help to Keep Our Children Safe’.

Minister Vaz said that indiscipline on the roads must be treated as a national emergency, noting that “no society can prosper” with drivers operating without due regard for the traffic rules and the lives of others.

“The Government is doing what it can, legislatively, to facilitate safer use of our roads,” the Minister said, adding that the necessary equipment and technologies will be procured as part of measures to address the problem.

IDB Launches 2021 Sustainability Report Focused on Integrated Climate Action

Last year, the Inter-American Development Bank (IDB) financed a record $4.5 billion in activities related to climate change, according to its 2021 Sustainability Report. These resources, which account for 30% of the Bank’s total annual approvals, are benefiting the region through loans, grants, technical cooperation, guarantees, and equity investments.

The report highlights IDB’s unique integrated approach to sustainability in its governance, strategy, policies, and project cycle, leading climate action devoted to jobs generation and socioeconomic benefits, disaster-risk management and resilience, biodiversity, and innovative financing tools under a gender and diversity-inclusion focus.

“In today’s IDB, we believe in the urgent need to move past climate change diagnosis and significantly ramp up our efforts to tackle it. If we and our member countries do so, Latin America and the Caribbean is poised to become the world leader in addressing an issue that knows no borders,” IDB President Mauricio Claver-Carone said.

The report showcases projects and publications on sustainable development in the region financed and coproduced by IDB. It highlights the consistent decrease in the greenhouse gas (GHG) footprint of the Bank’s lending portfolio, among other metrics, its projects’ disaster and climate change risks, and the application of its environmental and social policies.

In 2021, the IDB achieved important milestones under its sustainability framework. At COP26 (United Nations Climate Change Conference) in Glasgow, the Bank announced its commitment to align all operations with the Paris Agreement starting in 2023, and to provide $24 billion in climate and green financing during the 2022–2025 timeframe. Additionally, multilateral development banks (MDBs) led by IDB at COP26 released a Joint Statement on Nature, People, and Planet. The document commits to mainstream nature into policies, analysis, and investments.

Likewise, IDB’s new Environmental and Social Policy Framework (ESPF) took effect on November 1, 2021, setting ambitious new standards to help clients tackle environmental and social issues. IDB is leading the development of a regional platform on climate change for finance ministries, a network to promote a shared understanding of their role in the climate agenda.

The Bank’s Board of Directors also approved the Amazon Initiative, devoted to mobilizing public and private resources to forge and implement sustainable development models based on human capital, natural wealth, and the cultural heritage of the Amazon region.

The report includes a Global Reporting Initiative (GRI) annex that sets global standards for sustainability reporting, relying on best practices for reporting on a range of economic, environmental, and social impacts.

Climate change action is one of the priority areas of Vision 2025: Reinvest in the Americas, IDB’s blueprint for Latin America and the Caribbean’s post-pandemic recovery and sustainable and inclusive growth.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance, and training to public and private sector clients throughout the region.