Barita Investments profit after tax dropped 21 percent to $46 million for the quarter ending December 2014 compared to the similar period in 2013, from total revenues of $345 million and net operating revenues of $177 million. In 2013, the company that is involved in stockbroker and fund management reported net operating profit of $165 million but increase expenses helped to pull down profit for the quarter.
Interest Income contributed $230 million to revenues, 15 percent below the prior year, while related interest expense remained flat at $168 million.
Barita is suffering from a mixture of assets priced for shorter periods than the funds clients’ invest with them. According to Chairman Rita Humphreys, “in an environment where interest rates have decreased, our liability costs have been similarly reduced resulting in our interest expense decreasing to prior year levels. However, with our investment portfolio comprising of approximately fifty percent variable instruments, our interest income has decreased at a faster rate. This has resulted in a significant contraction in our margins resulting in a recorded net interest income of $62 million, approximately 36 percent down from prior year.”
Fees and Commission income rose 65 percent above prior year to $38 million, with improvement coming from the subsidiary Barita Unit Trusts. Additionally, trading gains were 600 percent above prior year at $48 million compared to only $8 million in 2013. Depreciation of the Jamaican resulted in translation gains of $21 million down from $29 million prior year.
“Staff and administrative expenses contributed to a 16 percent increase in operational costs when compared to the same period last year. Staff costs increased by 10 percent which was triggered primarily by additional human resources and remuneration adjustments. Administrative costs were 25 percent higher than last year, with the main contributors being financial support for our charity arm the Barita Education Foundation and client support expenses,” the report to shareholders stated.
Interest rate developments, with Treasury bill rates continuing to fall and the change in the method relating to the repo business could put further pressure on income for a while. At the end of the quarter fair value reserve amounted to $107 million which could be realised in subsequent quarters and thus boost earnings. Falling T-Bill rates should result in gains in longer term Jamaican fixed interest rates securities and pickup in interest now seen in the Jamaica stock exchange is likely to hand Barita increased fee income during the balance of 2014.
Carreras fetches $395m for property
Property that Carreras previously occupied, now sold for $395m
Shareholders who have been enjoying a bumper period of high returns on their shares since 2014, should see another pay out from the net proceeds of this sale.
C&WJ revenues up 27% in Q3
“In the Third Quarter we have continued to build momentum through our investment-led Project Marlin and we are continuing to deliver top line growth” Phil Bentley, Chief Executive of CW Communications, commented in a release of the group’s third quarter results today.
“Investments in our mobile networks have improved coverage and reliability and we saw mobile data grow a further 23 percent with traffic carried on our networks increasing by over 35 percent. Fibre investments have focussed on our Caribbean markets and are key to generating growth in the Broadband & TV segments. We continue to work with Governments and Regulators to gain the required approvals for completion of the Columbus acquisition and are on track to close before our fiscal year end” Bentley stated.
The groups CEO went on to say “Mobile revenue (53 percent of Group revenue) was up 4 percent in the Third Quarter driven by growth in LIME and Panama, up 10 percent and 4 percent respectively. LIME growth was driven by continued subscriber additions in Jamaica, 18 percent where investment in our 4G mobile network led to constant currency revenue growth of 27 percent and an NPS gain of 11 points, whilst in Barbados our “Upgrade Barbados” marketing campaign led to 6 percent revenue growth and our market-leading LTE service in Cayman drove revenue growth of 3 percent. Panama mobile growth followed a strong increase in subscribers, primarily within prepaid, as a result of increased promotions leading up to and through the holiday season.”
C&W to take one off hit
Cable & Wireless Jamaica (C&W) lost the case against Digicel for funds withheld for calls terminated on Digicel network over several years. C&W in losing the case and will have to fork out more than $1.5 billion to settle the matter.
“It was fully provided for in the books of CWC Plc our parent. Now that we have settled and intend to payout, exceptional charge will hit our numbers and amount due to the parent will be credited to the nearly, $42 billion in loans already due them.” Gary Sinclair the company’s Chief Executive stated in a response to IC Insider’s query about the amount already booked in the 2014 audited accounts.
A note in C&W 2014 financial statements states, “a suit was filed by Digicel against Cable and Wireless for $349.3 million plus $1.3067 billion claiming bad debt retained by the company under the interconnection and in respect of the company’s “homefone” service. This matter was consolidated with another claim filed by Digicel seeking an account of amounts charged and withheld under the interconnection agreement. The company counter claimed for $525.5 million being retention billed from 2003 to 2007. There are provisions with respect to the portions of this consolidated matter.”
The 2013 audited accounts note indicates that there is provision for the devaluation/retention portion of the consolidated claim, but this amounted to just $13 million.
Trading levels sink on JSE
New Scotia banking centre in Montego Bay
Main Market| The JSE Market Index lost 1,170.35 points to 77,950.30, the JSE All Jamaican Composite index fell 1,308.51 points to close at 85,870.36 and the JSE combined index declined by 1,104.31 points to close at 79,863.16.
IC bid-offer Indicator| At the end of trading, in the main and junior markets, the Investor’s Choice bid-offer indicator shows 12 stocks with bids higher than their last selling prices and 3 stocks with offers that were lower.
Gains| Stocks gaining with last traded prices, at the end of trading in the main market are, Jamaica Broilers trading 3,900 units and closed at with a gain of 4 cents to $4.19 and Pan Jamaican Investment with 20,227 share closed 95 cents higher at $53.
Firm| The stocks in the main market to close without a change in the last traded prices are, Carreras finished with 3,628 shares trading at $42, Proven Investments closed with 34,819 shares trading at 21.02 US cents and Sagicor Group finished with 41,010 shares changing hands at $10.25.
Declines| The last traded prices of stocks with losses at the end of trading in the main market are, Caribbean Cement closing with 34,514 shares changing hands, fell 5 cents to $2.25, Grace Kennedy ending trading with 2,100 shares, lost 5 cents at $59.95. Jamaica Money Market Brokers closing with 5,000 units as the price slipped 10 cents to $7, National Commercial Bank finished with 13,003 shares trading 10 cents lower to $20.40, Sagicor Real Estate Fund trading 76,845 shares and closed with a loss of 34 cents to $6.50 and Scotia Group closing with 18,990 units, to fall $1.49 to $20.50.Preference| Jamaica Money Market Brokers 8.75% preference share traded 35,400 units at $3.02.
J$ holds against US, gains v others
Buying of foreign currencies were exceeded the amounts sold on Monday by US$3 million. Purchases of all currencies by dealers, translated to US$44,929,592 compared with the US$29,168,659, on Friday and selling amounted the equivalent of US$41,948,561 versus US$30,094,413 sold on Friday.
In US dollar trading, dealers bought US$39,664,531 compared to US$25,360,133 on Friday. The buying rate for the US dollar rose 1 cent to $115.28 and US$39,600,050 was sold versus US$27,840,423 on Friday, the selling rate remained at $115.80. The Canadian dollar buying rate dropped 54 cents to $90 with dealers buying C$1,232,481, and selling C$637,313, at an average rate that dipped 27 cents, to $92.33. The rate for buying the British Pound fell $1.29 to $173.66 for the purchase of £2,659,571, while £983,934 was sold, at an average rate of $176.23, a fall of 31 cents. At the end of trading it took J$131.37 to purchase the Euro, 99 cents lower than on Friday, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$128.81 for a drop of $1.03 from Friday. Other currencies bought, amounted to the equivalent of US$296,630 while the equivalent of US$343,000, was sold.
Highs & Lows| The highest buying rate for the US dollar, the lowest buying and the highest selling rates were unchanged at $115.90, $94.36 and $120.91 respectively. The lowest selling rate dipped $17.15 to $94.35. The highest buying rate for the Canadian dollar rose by 50 cents to $93, the lowest buying rate was unchanged at $73.04. The highest selling rate eased 4 cents to $94.96 and the lowest selling rate was unchanged at $88. The highest buying rate for the British Pound, lost 10 cents to $176.60. The lowest buying rate was unchanged at $141.56, the highest selling rate rose 18 cents to $181.29 and the lowest selling rate declined 55 cents to $170.
Moderate junior market trading
Activity on the Junior Market closed with 6 securities trading, ending in 113,404 units changing hands, valued at $253,308. The JSE Junior Market Index declined 0.36 points to close at 702.75, no stock advanced and 1 declined in price.
At the close of the market, there were 5 stocks with bids higher than their last selling prices and 1 with the offer lower. The junior market ended with 5 securities closing with no bids to buy, there were 7 securities that had no stocks being offered for sale.
Stocks trading in the junior market are, Derrimon Trading ending with 16,550 units trading and fell by 1 cent to $2.04, for a 52 weeks’ low, Caribbean Producers closed with 585 shares changing hands at $2.20, Honey Bun ending with 1,850 units at $1.91, Lasco Financial finished with 20,513 units trading at $1.05, Eppley 9.5% preference share closed with 21,762 shares changing hands at $6 and Lasco Manufacturing ending with 52,144 shares trading at $1.20.
4 up 2 down on TTSE Monday
Trading on the Trinidad Stock Exchange was with 11 securities changing hands of which 4 advanced, 2 declined and 5 traded firm with a total of 363,622 units, valued at $2,765,193.
At the close of the market, the Composite Index lost 0.40 points to close at 1,146.16, the All T&T Index rose by just 0.03 points to close at 1,977.41 and the Cross Listed Index fell 0.11 points to end at 41.23.
Gains| Stocks increasing in price at the close are, Agostini’s gained 5 cents to $17.60, while trading 6,792 units, One Caribbean Media ending with a gain of 1 cent while trading 7,890 units to close $23.96. Prestige Holdings trading 1,000 shares to close with a gain of 5 cents to a new 52 weeks’ high of $9.66 and Trinidad Cement contributed 58,305 shares with a value of $136,050.65, while closing at $2.35.
Declines| The stocks declining at the end of trading are, Massy Holdings trading 100 shares to close with a loss of 6 cents, at a new 52 weeks’ low of $63.89 and Sagicor Financial with 156,210 shares changing hands for a value of $783,860 fell 15 cents to close at $5, for a new 52 weeks’ low.
Firm Trades| Stocks closing with prices unchanged at the end of trading are, First Citizens Bank trading 5,748 shares valued at $205,491, to close at $35.75. Clico Investment Fund with 51,620 shares valued at $1,161,498 remained at $22.50, Jamaica Money Market Brokers with a volume of 60,000 shares being traded at 43 cents, National Commercial Bank added 14,166 shares at $1.18 and Scotiabank traded 1,791 shares at $62.10.
IC bid-offer Indicator| At the end of trading the Investor’s Choice bid-offer indicator had 2 stocks with the bid higher than their last selling prices and 3 stocks with offers that were lower.
TT Repo Rate pushed to 3½%
The Trinidad Central Bank’s Monetary Policy Committee (MPC) agreed to a third consecutive increase in the ‘Repo’ rate by 25 basis points to 3 ½ per cent in early January. According to a release from the central bank, it based its decision on three factors.
The first and most influential factor was recent interest rate guidance from the US Federal Reserve about the future path of its monetary policy. The second factor related to signs the Trinidad and Tobago economy seems to be approaching full capacity, and the MPC considered the still positive growth outlook for the non-energy sector despite the steep decline in oil prices.
“The anticipated increase in US interest rates is expected to make US dollar assets even more attractive to investors than TT dollar assets, prompting additional portfolio capital flows out of Trinidad and Tobago in search of higher yields. Although the interest rate differential between TT- and US-dollar assets has widened somewhat over the past month, domestic interest rates must move from historic lows to maintain a comfortable enough position relative to US interest rates. By January 20th, the TT-US differential on benchmark 10-year Treasuries stood at 87 basis points, compared with 53 basis points at the end of December 2014.”
There are signs the Trinidad and Tobago economy seems to be approaching full capacity the central bank says. This is reflected in the movement of a number of economic indicators. Headline inflation is creeping up, reaching 8½ per cent in December 2014 from the 5½ per cent at the start of the year. The pickup in headline inflation is mainly due to food price inflation, which remained in double-digit territory
(almost 17 per cent) for the sixth successive month in December 2014. The acceleration in food prices largely reflects rising prices for locally produced vegetables and fruits. Unemployment is exceptionally low at a little over 3 per cent of the labour force, with the business community reporting shortages of skilled workers which could push up wages in the private sector. Consumer credit continues to expand at a strong pace, helping to finance substantial imports of consumer durables and contributing towards significant excess demand pressures in the foreign exchange market.
The release went on to state that “In the face of declining crude oil prices, the Government substantially revised downwards its energy price assumptions for the 2014/2015 Budget, but it intends to return to the original fiscal deficit target of roughly 2½ per cent of GDP. This suggests the Government is likely to maintain its expansionary fiscal stance that would further add to elevated liquidity levels (currently around $6 billion) and push up core inflation.”
“The positive momentum in the non-energy sector has delivered fairly respectable growth for 15 consecutive quarters to December 2014 and the near-term outlook is for continued steady performance in non-energy output. Boosted in part by strengthening growth in the United States and softer oil prices, the tourism-based economies of CARICOM should see some uptick in activity in 2015, providing further support to Trinidad and Tobago’s non-energy exports.”
“Central Bank has put in place a programme of intensified open market operations to aggressively remove excess liquidity from the banking system in coming months in order to support its Repo rate adjustments. Larger and more frequent foreign exchange interventions aimed at preventing systemic foreign exchange shortfalls will indirectly contribute to absorbing some of the excess liquidity.”
JPS new plant set for 2017 completion
JPS Rockfort power Plant
The Project is to be located at the existing Old Harbour site and is nominally rated at 190 MW under site conditions (197 MW – new and clean). JPS will also seek to convert the existing Bogue combined cycle project in Western Jamaica to gas fuel. The main receiving terminal will be located at the Old Harbour project. “JPS has initially determined that an onshore terminal is cost effective, compared to the larger capacity and productivity of larger FSRU-type terminals. Construction should begin on the Old Harbour Terminal and Power Plant before the end of the year, and commercial operation is expected by the end of 2017” JPS said.
“An Independent Engineer has been retained for the Bogue conversion. JPS will present its recommendation to proceed with the project to the Jamaican Regulator, the Office of Utilities Regulation (OUR), at the end of February 2015. Pending regulatory approval for the costs of the gas conversion, the Bogue project is expected to enter construction in second quarter of 2015 and would begin use of gas fuel by first quarter of 2016,” the company stated.
JPS said it “has employed various market intelligence services, which suggest that LNG is expected to provide the most stable cost to the Jamaican economy. However, Natural Gas Liquids present a short term opportunity, particularly Ethane or LPG. JPS is considering floating storage, fixed tank or mobile tank systems as well as a combination of each storage option which could accept these different fuels or switch fuels cost effectively.”
Jamaica Public Service Company Limited (JPS) is an integrated electric utility company and the sole distributor of electricity in Jamaica. The Company is engaged in the generation, transmission and distribution of electricity, and also purchases power from a number of Independent Power Producers. JPS currently serves over 603,000 customers through a workforce of 1,700 employees. The Company owns and operates 4 power stations, 9 renewable plants, 43 substations and approximately 14,000 kilometres of transmission and distribution lines.
