Is the end of king sugar nigh?

What is happening to the local sugar industry is a disaster, one made worse by the Chinese taking over the country’s two largest factories.

To read that the already ridiculously low forecast of just 100,000 tons of sugar is being lowered to 91,000, says eloquently, that the industry is in a major crisis and in urgent need of major surgery.
Frome Sugar Factory the report states, closed the crop with only 20,451 tons of sugar from 247,000 of canes, that is a yield of 12 tonnes of cane to a ton of sugar which can be considered poor. In the late 1970s and very early 1980s, Frome produced over 70,000 tonnes of sugar and Monymusk around 50,000 tonnes.
What is really happening in the industry? Long Pond in Trelawny, use to produce around 15,000 tonnes per crop and Dunkenfield just under that. Canes that went to Bernard Lodge that use to produce over 40,000 tonnes of sugar was going to Monymusk. What the data is indicating is that the three smaller factories are producing close to their historical norm, so what exactly is happening why the two big factories are dying.
Pricing maybe a problem but it appears that weak management with lack of experience is the major reason. The reality is that even if Frome continued production to the end of the crop, they cannot be profitable at roughly a third of capacity. Whatever, the factors, the government needs to pay urgent attention to the two large factories. In reality there are just not enough canes in the fields to make for a viable factory operation at either Frome or Monymusk and there are no signs that this critical aspect of the industry is being addressed in the areas close to these factories.

Where are the Main Event figures?

Three directors of Main Event, including the mentor who is responsible to ensure compliance with the JSE rules.

Main Event went to the market in January this year in its Initial Public offering. The prospectus reported figures up to September 2016, one months ahead of the year end.
The stock was listed in February but investors have not yet seen the  April quarterly report which is due by the 15th of June, not to speak of those for January quarter this year and the audited accounts for 2016, that is far too long between reports.
Players in the capital market ought to know that markets thrive on credible and timely information. In the absence of new financial data that in a normal market should be released at least for the January quarter, investors have been trading in the dark, not knowing what is happening financially.  That is not good enough.

There are not quarterly no audit accounts and no disclosure as to when these will be made available, with the March quarter results passed due from May 15.
One take the view that the Stock Exchange requires report post listing, that would require the April quarterly report only, those rules are old fashioned. the fact is that the company got the go ahead for the IPO before the end of the first quarter of 2017. All new listings should be required to file all financials, that cover the period since the last one included in the prospectus so that investors are adequately informed.
A check with the Jamaica Stock Exchange have so far not disclosed that the first report is for the April quarter which is due by mid-June. Regardless of what the JSE rules require good corporate governance suggest that the company should have released both the audited report as well as the January quarterly, nevertheless it is time the Stock Exchange change the rules in the interest of investors.

Pulse split should be 4 not 2

I sometimes wonder who advises company management. The decisions they often make, while seeming to be well intentioned, raise critical questions about what they expect the out turn to be.
Pulse Investments is a case in point. The directors propose to consider the splitting of the issued shares of the company into two units for each one currently issued.
Last year, in a hurriedly called extra ordinary general meeting, the company approved an increase in its authorised share capital and sanctioned the board proceed with a rights issue of share. This was after a resolution was belated inserted on the agenda of at the 2016 Annual General Meeting to approve a rights issue which was forced by shareholders into a postponement.
The company currently has 271,789,674 issued shares, the split would put the total up to 543,579,348 units. The company’s stock last traded on the Jamaica Stock Exchange at $8.05 and carries a PE of 6 compared to 13 for the main market.
From all indications, with the company’s PE ratio well below the general market, the company must be awaiting a greater uptick in stock price before going back to shareholders for more funds, a two for one split is not likely to do the work to get the price more in line with the market.
The problem is that Pulse is not a very liquid stock with just 271 million units issued. From my estimation the board should be considering a split in the order of 4 to 1 that would raise the issued shares to over 1 billion shares. Such a split would most likely excite the market and help move the stock upwards in price. The proposed 2 to 1 is not going to do it. With the Board Meeting is set to be held on Monday, May 22, it is not late for the directors to change their minds.

Thanks NCB but go further

This publication applauds Jamaica’s NCB Financial Group, in following the practice of some of the listed companies in Trinidad & Tobago in publishing dates for the release of regular but important information during the course of a year.
After all, the more information investors have, the more transparent and better the market in which they operate will be. The recent disclosure that Jamaica’s NCB Group made, to publish the dates in 2017, of the announcement of dividends, is a positive move for the Jamaican market, one hopes that other listed companies will follow the NCB’s lead.
While historically, the dates of dividend announcements, have usually been the same dates on which their interim results are released, investors should not have to be wondering when those dates should be, accordingly, we wish they would have gone further and also state the dates of the release of their quarterly reports for all to see.
The announcement is an enhancement of good corporate governance and good investor relations. We would however, suggest that the group restates for clarity, its dividend payment policy as well in furtherance of good governance.

Mitchell packs in CFF chair for FSC

H Mitchel 08-16Howard Mitchell has resigned from the Board of Directors and as Chairman of Caribbean Flavours and Fragrances (CFF). The only regret is that it has taken so long to be effective in light of his appointment and acceptance of a seat on the board of the Financial Services Commission. But it’s better late than never.
The question still arises though and it has to do with a matter where an investor has complained to the FSC about certain matters pertaining to CFF and its shareholdings and treatment pertaining to control of CFF by Derrimon Trading. How will the FSC handle this matter, to ensure that no one accuses it of an unfair ruling.
Back in 2008, I was approached to sit on the board of Financial Services Commission, it did not take me long to turn it down as I saw the potential for conflict. I was recently talking to two senior brokers and the issue of my recent appointment to the FSC came up. I advised them that I was not a member due to conflicts. But they indicated that they were of that view too and wondered why I was listed as a member, they never indicated if they accepted what I said but we never went much further with the issue. Suffice to say, that is indicated once I understood that I was to be appointed that is could not accept same, due to possible conflicts.
I was concerned about the late Emile George being chairman of a number of listed company boards and also chairman of the FSC. I wrote about it hoping that good sense would prevail but that was never the case.
I am aware that the issue of conflict or perceived conflict has been raised about the present FSC chair. I now note that Howard Mitchell has advised the Jamaica Stock Exchange that he resigned from the Board of Directors and as Chairman effective August 11, 2016 of Caribbean Flavours and Fragrances Limited (CFF) because of his appointment as Chairman of the Financial Services Commission and the possibility for there to be perceived a conflict of interest.
As a country we need to move to a place where such appointments should be seriously consider by both those who proposed and those of us who are asked to serve and so ensure a higher standard of governance.

No new taxes for Jamaicans

Collector of Taxes office, Constant Spring, Kingston.

Collector of Taxes office, Constant Spring, Kingston.

Earlier this year I stated that government’s $1.5 billion tax plan could be funded from ongoing revenues but others thought otherwise. 2016 fiscal data showed savings on the cost side particularly interest cost reduction and increase revenues that were running above budget.
Based on developments on the fiscal operations this fiscal year, it seems that government was well on the way to enjoying a bumper reaping in 2016/17 fiscal year of higher revenues and lower interest cost that seemed adequate to meet the proposed tax break of the tax free $1.5 billion.
With the first quarter revenues and expenditure in the data is confirming what I was saying and is indicating that the naysayers are far from as informed as some would want the public to believe. What the early data is suggesting is that the economy seems to be performing better than in recent past and more importantly, that there was no need for any new taxes for this fiscal year and none will be needed to fund the rest of the personal tax break to be effected in 2017/18.
The simple reason is, savings on interest cost, with lower interest rates on government debt and an 11 percent rise in revenues over the 2015 intake, equal to an 8 percent increase above budget for the current fiscal year, will translate to $46 billion in added revenues and interest savings over the planned amounts. That will be more than enough to fund the increase tax break to come and to do without the NHT special payment. But that is not all if positive economic growth continues into 2017 revenues will rise some more probably with an additional $30 billion.
What the data is showing, is that the country has been failing from lack of thinking outside familiar territory.

High return on time investment

Participants at the JEF session, being addressed on the benefits of the equity market in Jamaica by John Jackson in May.

Participants at the JEF session, being addressed on the benefits of the equity market in Jamaica by John Jackson in May.

I spent years attentively observing financial markets, but more so the local stock market. Nonetheless, when asked to speak on developments and opportunities in the markets, I still have to spend considerable time preparing the presentation and infusing it with new and updated information as well as historical data from many years past, to help make a point clear.
During the preparation process, one also has to be mindful of mandated time constraints, as well as the attention span of audiences or participants and so choices have to be made as to what’s in and whats out.
When I was asked by the Jamaica Employers’ Federation, JEF, to present an outline of a paper for their annual convention, I decided to suggest a topic that covered the capital market as a place for investors and entities seeking to woo investors to part with their money for a time, in exchange for the promise of future gains. Having achieved consensus and presentation prepared, my concern was, what was the interest of the attendees? I had no idea really. The JEF convention posed the problem that the session ran concurrently with others and covering two aspect of the market was challenging without knowing the audience’s interest. I decided from the start of the presentation to find out where the interest of the group laid. So although I did quite a bit on what it means for companies to go public, the bulk of an estimated 200 or so participants were interested in investing in the stock market. Many were either new to it, or fairly new and they wanted the information I had to offer. At the end of my presentation there were many questions and still more, after the session ended.
While I had a fair idea of how attendees felt, it is not always possible to categorically define the collective response. So when I received the comments below from the JEF, I felt that the many hours spent in preparation, delivered a great return on my investment.
JEFRE: JEF CONVENTION 2016
The Executive of the Jamaica Employers’ Federation and the Convention Director, use this medium to express sincere appreciation to you for your contribution to the success of JEF’s Thirty- fourth (34th) Annual Business & Workplace Convention and Exhibition 2016, which was held at the Montego Bay Convention Centre, in St. James, between May 26 and 29, 2016, under the theme: “Empower People …. Energize Business”.
From the feedback received, your presentation on the topic: “Personal & Business Enrichment: The Equity Capital way for a Richer Future”, at a Concurrent session, was very well received and from the feedback, your content, perspective and engaging delivery style enhanced our participants’ knowledge and surpassed their expectations.
Thank you for your invaluable support and we certainly hope that we will have the honour of working with you again in the staging of another World Class learning event.
Yours sincerely,
Brenda V. Cuthbert (Mrs.)
CHIEF EXECUTIVE OFFICER

Where are the 1834 Investments results?

Gleaner & RJR execs signing merger agreement earlier in 2015

Gleaner & RJR execs signing merger agreement earlier in 2015

The rules of the Jamaica Stock Exchange require, listed companies to submit quarterly interim financial report within 45 days of each quarter. In the case where a company opts to release an audited account within 60 days of the year-end, they can opt in lieu of a quarterly report within 45 days.
1834 Investments Limited (formerly The Gleaner Company Limited) did not release the usual December quarter report as such investors have been deprived of important information on the company. The stock exchange has fallen down badly on this one in not requesting it. No good reason has been given why it was not released.
Apparently the exchange regulatory arm expected that the 15 months report to March this would have been released to let the matter go away but it has not. First out of the block towards the end of May, 1834 Investments advised the Jamaica Stock Exchange that the Audited Annual Financial Accounts for March, 2016 will be late and unavailable for publication by May 30, 2016. 1834 anticipates that it should be available for publication on or before June 30, 2016. Bad news for investors and bad news for the capital market. The matter gets worse, the end of June has now gone and with July well advanced but there are no results released and no advisory on the JSE website or in the newspapers as to the new deadline. Nearly seven months have elapsed since the last report was released.
In the past several companies have changed their year end, as recently as late last year Desnoes & Geddes and Access changed their but provided investor with results for all relevant quarters, but the Gleaner Company who changed theirs to March from December did not do so.
It is well past the time for the Jamaica Stock Exchange act to protect the investing public.

$1m for 2016, $1.5m in 2017

Minister of Finance Audley Shaw should announce a $1m plan for 2016 and $1.5m for 2017 in his budget presentation today.

Minister of Finance Audley Shaw should announce a $1m plan for 2016 and $1.5m for 2017 in his budget presentation today.

The promise by the JLP to make earnings of PAYE individuals up $1.5 million, tax free has undergone much discussions as to the feasibility for it to be funded. Few commentaries have focused on the growing revenues of the government and the reality that revenues tend to increase in line with nominal GDP growth.
At the same time, interest cost on the government debt, will decline as interest rates fall, notwithstanding the increased amount in the budget this time around for interest. The increase is to accommodate the interest on the Petrocaribe Fund debt which will be recovered from the Fund.
Interestingly, former Prime Minister Bruce Golding and an active participant in the 2016 election campaign for the JLP gave a speech in April in which he suggested that the implementation should be done to maintain simplicity and equity in the system. He made two proposals. The more important one was for an across the board threshold of $1 million. It would appear that Golding was testing the waters for a modification in the $1.5 million plan at least initially, that would have affected only some on the PAYE system.
Jamaicans should get the news that for 2016 the PAYE threshold will be $1 million, with it going to $1.5 million during 2017. It is unclear if the $1.5 million will be across the board or not. But with tax reform to be implemented probably in 2017, it seems as if it will be an across the board threshold.

Where are Gleaner’s Q4 results?

Glnr 2IC Insider,
I get the impression that the Jamaica Stock Exchange (JSE) no longer balances shareholder interests with listed companies’ interests. Here’s what I mean.
1. Duke Corporation (PriceWaterHouse) failed to pay the Scotia Group’s dividend on April 15th, and claimed that they notified the public via print and electronic media on April 14th. They further claim that they notified the JSE at the same time. Up to today, no such notice has appeared on the JSE website.
2. Supreme Ventures announced a directors’ meeting for April 28th to consider a dividend payment. Despite the JSE rules requiring companies to inform the public of the result of such meetings, with 48 hours, so far, nothing has appeared on the JSE website about it.
3. Gleaner should have published 2015 results up to December, but chose to change their financial to March 31st (i.e. 5 quarters for 2015). No problem, but does that change eliminates their responsibility to publish information for the quarter ending December 2015? What could possibly justify shareholders being kept in the dark about the company’s financial information from October 2015 to March, 2016 – which will not be seen until the end of May, 2016?
A concerned investor.
IC Insider’s Comments
Your views are well founded. For example the issue of the non-reporting of Gleaners December quarterly result was discussed with the stock exchange. The RMOD department gave some flimsy excuse for not requiring it. The JSE rules require either audited accounts within 60 days of the year-end or quarterly report within 45 days of each quarter. Since Gleaner had shifted the year-end then the rules require that they must submit the quarterly to December within 45 days. Discussions were also held with the General Manager of the exchange who agreed that the quarterly is required. To date shareholders are still in the dark on the financial data. Why the Gleaner never saw it wise to keep their shareholders informed by releasing the data, is a big puzzle. After all, other companies in the past that changed year-ends have release the 4th quarter results. As recently as December, last year Access released theirs having changed their year-end to March.
There seems to be a failure in the system to appreciate that the maintenance of the integrity of the system is paramount to protecting investors while at the same time sending a clear message that the system works and can be relied on. Quite a bit of what is allowed to take place is inimical to the growth and development of the capital market.