KLE Group raised $94.6 million from the IPO share issue when 27 million shares were sold at $3.70 per each, but the company has melted through these funds in a relatively quickly having turned a $9 million surplus at the end of 2011 into an accumulated loss of $81 million, as of June this year, leaving equity of only $42 million.
KLE operates Usain Bolts’ Tracks and Records and Friction Lounge night club in Kingston and Nightclub, in Portmore starting in the middle of 2013.
In 2013 the group lost $56 million and for 2014 to June, $21 million of losses were added to reduce the level of equity further. But things may well be looking up for them if information for the second quarter holds. Although there was a loss of $8 million in the quarter, this was a bit better than the $13 million in the first quarter, this year, even as revenues were less than in the first quarter as well as against the 2013 quarter. The first task at the company has at hand, is the curtailment of cash, this could be just around the corner. In fact there was a positive $6 million cash flow inflow from operations in the June quarter, a big improvement to the half a million in the first quarter.
Revenues| fell sharply in the June quarter from that in 2013 with $59 million in 2014 versus $89 million in 2013. The June income is also down on that of the first quarter at $68 million. For the six months to June, revenues fell to $127 million compared with $152 million in 2013, all the reduction occurred in the second quarter.
Administrative and other expenses fell to $40 million in the latest quarter, from $71 million in 2013 and $87 million in the six months versus $120 million last year. The cut in administrative cost in the quarter, helped to produce a small loss of $2 million, before depreciation and finance expenses and an overall loss of $8 million for the quarter, versus $19 million in 2013. “The company has further reduced operating cost including overheads eliminated as a result of corporate office consolidation at the beginning of May.” Gary Matalon CEO of the company stated in his report to shareholders. He went on to indicate, that the cost rationalisation has brought expenses much more in line with revenues. Expenses included a charge against fixed asset, amounting to $8 million in the June quarter. Unfortunately for the company, a 193 percent gross profit margin enjoyed in the 2013 second quarter, melted down to a still respectable 160 percent.
Making allowances for the one off charge against fixed assets and the cost reduction which only applied for two months out of the June quarter, KLE could be looking at a profit in the next quarter, assuming that revenues and margins are kept up.
Matalon spoke to the franchising arrangements reaching a matured stage where selling can commence, if successful it would bring in added revenues. But that is a promise, although reference is made about two potential candidates being courted.
Finances| As can be expected, with the burning through of capital, the group’s finances have deteriorated. Borrowing stands a $52 million, current assets stands at only $50 million including cash of $7 million and current liabilities of $143 million.
KLE stock last traded at $1 and now has a bid to buy 100,000 units at $1 and an offer at $1.90, the stock traded as low as 90 cents.
Archives for August 2014
Is KLE Group about to turn a profit?
J$ stable with US gains vs Pound & Canadian
In Friday’s forex trading, authorized dealers bought the equivalent of US$33,380,231 versus US$28,845,903 on Thursday, and sold the equivalent of US$34,212,576 compared to US$28,790,439 on Thursday.
In US dollar trading, dealers bought US$27,436,923 compared to US$24,514,855 on Thursday. The buying rate for the US dollar fell 3 cents to $112.35, US$29,448,084 was sold versus US$25,391,984 on Thursday, the selling rate was unchanged at $112.79.
The Canadian dollar buying rate gained 25 cents to $101.99 with dealers buying C$2,229,148, and selling C$1,605,903, the selling rate fell 19 cents to $102.76. The rate for thePound declined by 17 cents to $185.21, for the purchase of £1,452,616, while £1,254,137 was sold, as the rate fell 9 cents to $187.01. Other currencies bought, amounted to the equivalent of US$1,524,963 while selling was the equivalent of US$1,222,079.
Highs & Lows| The highest buying rate for the US dollar fell 90 cents to $113.10, the lowest buying rate and the highest selling rate remained unchanged $91.85 and $117.70 respectively, and the lowest selling rate fell 73 cents to end at $93.30. The highest buying rate for the Canadian dollar, lost 50 cents to $103.50 and the lowest buying rate was unchanged at $81.59. The highest selling rate fell 38 cents to $105.18 and the lowest selling rate was unchanged at $98.30. The highest buying rate for the British Pound was down 90 cents to $187, the lowest buying rate decreased 50 cents to $149.73. The highest selling rate fell $3.01 to $190.66 and lowest selling rate declined 80 cents to $180.20.
Prices of 12 stocks rose on JSE & 3 fell
Trading picked up somewhat on Friday on the Jamaica Stock Exchange, as the number of securities changing hands climbed to 31 with the prices of 12 stocks rising and 3 declining. There was a total of 8,433,459 stock units trading, valued at $ 52,156,868.
Main Market| The JSE Market Index gained 528.73 points to 71,665.41 and the JSE All Jamaican Composite index moved up 591.21 points to close at 78,843.14 as the largest block of stocks gaining came from the main market.
Gains| The volume and last traded prices of stocks with gains, at the end of trading in the main market, are, Cable & Wireless with 84,600 shares, helping the price to gain 2 cents at 36 cents, but there was an offer to sell at 35 cents at the close of the market. Caribbean Cement with 11,635 units, gained 35 cents to $2.90, Desnoes & Geddes 3,312 shares helped to push the price up 40 cents, to $4.50, Jamaica Broilers in trading 1,411,047 shares was up 3 cents, at $4.60, Jamaica Money Market Brokers with 431,000 ordinary shares, gained 5 cents to end at $7, Jamaica Producers with 142,996 units changing hands, closed $1.39 higher at $16.99, Kingston Wharves had 178,451 units, trading 25 cents higher at $5.27, Mayberry Investments 9,690 shares went through the market with an 11 cents gain to $1.68, National Commercial Bank 145,579 units traded 5 cents higher at $18.05 and Pan Jamaican Investment with 1,539 shares, closed a cent higher at $48.51.
Firm| The stocks with volume and last traded prices in the main market to close without a change in price, are Berger Paints with 16,471 shares closing at $1.60, Grace Kennedy with 34,378 units and closed at $60, after trading as high as $61, Sagicor Real Estate Fund with 240,880 shares ended at $6.85, Sagicor Group traded 668,226 units at $9, Scotia Group with 77,239 units changing hands, closed at $18.76 and Scotia Investments with 42,405 shares closed at $21.28.
Declines| The volume and last traded prices of stocks with losses at the at the end of trading in the main market, are Carreras with 462,740 shares, to close with a loss of 70 cents at $34.30, Radio Jamaica a new Buy Rated stock, traded 2,058,222 shares while losing 10 cents to $1.10, a new 52 weeks low and Supreme Ventures 4,100 shares traded with a 14 cents loss to $1.86.
Preference| Jamaica Money Market Brokers 8.75% preference share traded 1,100,000 units at $3 and the company’s 7.50% preference share saw 300,000 units being traded at $2 and Proven Investments 8% preference share with 215,758 units at $5.
Junior Market| The JSE Junior Market Index rose 4.39 points to close at 647.37 as 9 stocks traded with 3 advancing and 2 declining.
Gains| Stocks recording gains at the end of trading in the junior market, are Dolphin Cove with 6,000 units and was up 15 cents to $7.75, General Accident with 559,921 shares gained 5 cents to $1.45 and Lasco Distributors with a mere 950 units, closed up a cent at $1.12.
Firm Trades| Stocks in the junior market that traded to close at the same price as the prior trading day are, Access Financial with 3,254 units at $10.18, Blue Power with 2,466 shares at $9.06, Consolidated Bakeries 200,000 shares at 80 cents, Derrimon Trading with 15,000 units at $2.15, Honey Bun 600 shares closed at $2.34 and Lasco Manufacturing with 5,000 units at 95 cents.
Declines| There were no stocks declining in the junior market at the end of trading,
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 7 stocks with bids higher than their last selling prices and 5 stocks with offers that were lower.
Revenue down at Kingston Wharves profit up
Revenues declined in the two quarters to June at Kingston Wharves by 19 percent, in the first quarter and 9 percent in the second, for an overall decline of 14 percent for the half year.
Revenues came in at $994 million for the June quarter, compared with $1.1 billion in 2013 and for the six months, $1.94 billion versus $2.26 billion. Decline was seen in both the regular revenue stream as well as for other operating income. “The reduced revenue was significantly influenced by the loss of business from a main shipping line and the overall decline in economic conditions” Grantley Stephenson Chairman and CEO, said.
Gross profit declined by 13.5 percent for the half year, better than the decline in revenues and 10 percent for the quarter, almost in line with the fall in revenue. Kingston Wharves picked up foreign exchange losses of $131 million in 2013 but only $68 million in 2014.
Administrative cost were down but at a slower pace than revenues at 11 percent for the half year and 8.5 percent for the quarter. Reduction in taxation provision from $85 million in the June quarter of 2013 to only $5 million in 2014 prevented profit after tax from falling below the $175 million earned in 2013 as well as the six months which ended at $353 million compared to $322 million excluding amounts due to minority shareholders. For the June 2014 quarter, Kinston Wharves made profit after tax and minority interest of $219 million. For the six months earnings per share is 25 cents. Return on equity is working out at 6 percent per annum, not great, but the funds acquired for investment in the port expansion and modernization is yet to be fully deployed, to generate profits and so improve the level of return.
Finances| The company boast equity of $13 billion, with loans amounting to $1.8 billion, cash and investments of $2.6 billion at the end of June. Net asset per share is $10 while the stock price is at $5 but there is need for strong growth in profit to help bridge the gap, this may have to await the completion of the expansion of the facility.
The real attraction here for investors, is the planned expansion of its facilities to take advantage of the Panama Canal expansion and the added traffic that is expected to flow form it.
Trinidad Cement hits new high
Trinidad Cement closed at a new 52 weeks high at the end of trading on the Trinidad Stock Exchange on Friday. The stock closed at $3 bettering the $2.94 reached last year August.
Elsewhere there was activity in 10 securities of which 5 advanced none declined and 5 traded firm, with 781,974 stock units changing hands with a value of $14,361,896. The Composite Index rose 1.63 points to close at 1,152.16, the All T&T Index rose 2.61 points to close at 1,987.86 and the Cross Listed Index increased by a mere 0.08 points to end at 41.43.
Gains| Stocks increasing in price at the close are First Citizens traded 2,597 shares to close at $36, up by 46 cents, Grace Kennedy at $3.55 for a gain of 9 cents while trading only 186 units, Massy Holdings contributed 85,000 shares valued at $5,821,899 to close at $68.51, with a I cent gain, National Flour with 10,000 shares closed at $1.16, with a 1 cent gain and Trinidad Cement traded 114,140 shares valued at $339,100, to close with a gain of 15 cents at $3, a new 52 weeks high.
Declines| No stock declined at the end of trading.
Firm Trades| Stocks closing with prices unchanged at the end of trading are Angostura Holdings with 70 shares valued at $12.75, Clico Investment Fund with 353,981 shares valued at $7,787,612 remained at $22, Guardian Holdings added 15,500 shares valued at $213,125 to end at $13.75, Jamaica Money Market Brokers contributed 200,000 shares with a value of $90,500, as the price closed unchanged at 45 cents and Sagicor Financial traded 500 units to close at $6.47.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 3 stocks with the bid higher than the last selling price and 1 stock with the offer lower.
Amounts bought & sold even on Thursday
In Thursday’s forex trading, authorized dealers bought the equivalent of US$28,845,903 versus US$32,241,775 on Wednesday, and sold the equivalent of US$28,790,439 compared to US$35,433,717 on Wednesday.
In US dollar trading, dealers bought US$24,514,855 compared to US$26,752,066 on Wednesday. The buying rate for the US dollar rose 8 cents to $112.38 and US$25,391,984 was sold versus US$32,372,395 on Wednesday, the selling rate was unchanged at $112.79.
The Canadian dollar buying rate gained 62 cents to $101.74 with dealers buying C$1,834,292 and selling C$1,561,395, the selling rate fell 35 cents to $102.94.
The rate for Pound eased back by 98 cents to $185.38, for the purchase of £1,422,602, while £897,913 was sold, as the rate fell 42 cents to $187.10. Other currencies bought, amounted to the equivalent of US$323,632 while selling was the equivalent of US$484,024.
Highs & Lows| The highest buying rates for the US dollar rose 90 cents to $114, the lowest buying rate and the highest selling rate remained unchanged $91.85 and $117.70 respectively, and the lowest selling rate rose $2.18 to end at $94.03. The highest buying rate for the Canadian dollar, recovered $1.05 to $104 and the lowest buying rate was down 29 cents to $81.59. The highest selling rate rose 6 cents to $105.56 and the lowest selling rate gained 30 cents to $98.30. The highest buying rate for the British Pound was up 12 cents to $187.90, the lowest buying rate increased by 17 cents to $150.23. The highest selling rate climbed $1.67 to $193.67 and lowest selling rate increased by 20 cents to $181.
Ja interest rates on slow downward drift
Rates on Government of Jamaica Treasury Bills, have been on a slow drift downwards from levels attained earlier this year. The trend is expected to continue while the rate of exchange for the local dollar, remains fairly stable and inflation is kept under control.
The Treasury bill for the period Friday, August 22 to maturity on Friday, November 21 this year, for the duration of 91 days, attracted bids of $639,068,500, (July $732,981,900) for the $400,000,000 on offer, to yield an average of 7.46767 percent, down from 7.63643 percent average rate out turn in July. The arte for the June issue was 7.65893 percent and in May, the rate was 8.2 percent for the Treasury bill of same duration.
The offer for 182 days duration, matures on February 20 next year and will generate an average interest rate yield of 8.11578 percent down from 8.21982 percent at the July’s auction and 8.36502 percent for the June issue of the same duration. At the May Treasury bill auction, the rate came out was 8.932 percent. $745,290,300 went after the $400 million offered for the latest issue.
New BOJ CDs| At the same time, Bank of Jamaica is offering both US dollar denominated medium term Certificate of deposit instruments and local Jamaica dollar instrument to the market. The US dollar bonds are for an unlimited amount and will pay interest semi-annually.
The offerings are, BOJ FR USD-CD 2018K is for a duration of 4-years at a fixed coupon of 4.50 percent per annum. (ii) The offer of BOJ FR USD-CD 2019G is for 5-years and offers a fixed coupon of 5 percent per annum. (iii) The offer of BOJ FR USD-CD 2021 is for an unlimited amount. The tenor of this instrument is 7-years and offers a fixed coupon of 5.50 percent per annum.
(iv) The offer of BOJ VR-CD 2015AE is for an unlimited amount. The tenor of this instrument is 364-days. The instrument re-prices semi-annually at 0.25 percentage point above the six month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first six months will therefore be the six month GOJ Treasury Bill rate of 8.12 per cent, plus 0.25 percentage point.
Board resignations at Carib Cement
News just out from the Jamaica Stock Exchange, now confirm that Caribbean Cement Company has advised that Brian Young – the company’s Chairman, Judith Robinson – Chairman – Board Audit Committee and Bevon Francis – Member of the Audit Committee have resigned from the Board of Directors of Caribbean Cement Company effective August 19, 2014.
No mention is made of Rollin Bertrand, the former CEO of Trinidad Cement in the release. IC Insider expects that at some time, his tenure will come to an end on the Jamaican board, as well. The release did not state who the replacements are but as indicated in an earlier story IC Insider expects Christopher Dehring to head that board. IC Insider expects that there will be changes at the executive level in keeping with the removal of Bertrand as CEO of the group. Persons seen to be loyal to him will most likely be shifted from key position.
Major management changes likely at Carib Cement
The shareholders revolt that effectively ousted directors and Chief Executive officer at Trinidad Cement, earlier this week, is likely to have far reaching impact at the company’s subsidiary, Caribbean Cement.
The changes in Trinidad, saw the non-appointment of Caribbean Cement chairman Brian Young, who seems unlikely to win the favours of the new board and is hardly likely to see the new board in Trinidad accommodating him in the critical chairmanship position in Jamaica. Bevan Francis and former CEO of the group Rollin Bertrand also serve of the Jamaican board and are not included in the new board composition at the group level. Christopher Dehring who is now on the TCL board, may well be the man tipped to head the local board, when the time comes for the changes locally. Such changes cannot be far off as the new management in Trinidad, try to unearth whatever facts they their mission to determine the true state of health of the group, may uncover. Judith Robinson who is a former partner of Brian Young at Price Waterhouse could well be getting the axe as well.
Shareholders’ revolt oust directors at Trinidad Cement
Shareholders revolt ousted directors and Chief Executive officer at Trinidad Cement, at a special meeting on August 19th called to make changes to the directorship.
The former directors of the company decided to fight a battle that they could not win in an attempt to stave off the appointment of some new directors and removal of others. In December last year, IC Insider in an article on the debacle between some disgruntled minority shareholders and Trinidad Cement Limited (TCL) indicated, that it’s a fight that the directors were not likely to win. The effect of their intransience is a costly legal battle in which has cost the company unnecessarily.
IC Insider went on to say “in a battle with some local shareholders who want representation on the company’s board of directors and requested that the annual general meeting that should have been held on Friday July 12, 2013 to be put off pending court hearing as to whether a resolution to nominate them should be put on the agenda for consideration. The request by the minority shareholders to seek to nominate directors and have their names included as such on the notice calling the annual general meeting is reasonable, but that would have to be done ahead of the notice period which is usually 21 days ahead of the meeting. Information from the Guardian newspaper suggest that the company was formally informed of the request well ahead of the deadline date and the shareholders seem well within their right to have sought to prevent the AGM from going ahead without their names being put on. In all probability, the minority shareholders will win their initial battle with the company but it’s left to be seen if they will succeed at the general meeting of 2013 which now seems likely to be held in 2014 instead.”
At the special meeting called to change directors following a failed attempt to get the courts to block such a meeting the disgruntled shareholders who managed to garner more than 50 percent of the votes ousted to dissident directors including the CEO. The changes are likely to have repercussion of the board of Caribbean Cement as subsidiary of TCL. Bryan Young Chairs that board and it would be hard to see the new board accommodating him in the critical chairmanship position in Jamaica, Francis and Bertrand also serves of the Jamaican board.
Prior to the meeting Andy Bhajan, Rollin Bertrand, Brian Yopung, Leonard, Carlos Hee Houngand Bevon Francis resinged. At the meeting Wilfred Espinet, Alsion Lewis, Christopher Drehring, Michael Glenn Hamlel-Smith, Francisco Aguilera Calos Alberto and Nigel Edwards wefre appointe ddirectors.
The move should no pave the way for the legal battle now in the courts to be withdrawn and put the company in a psoitioon to hold the general meetings for 2013 and 2014 which were postpone pending the outcome of the court action.
