Halting bank dividends to cut US$ demand

Investors in Jamaica will be hit hard by the Bank of Jamaica (BOJ) decision to halt the payment of dividends for 2020 by financial holding companies and deposit-taking institutions.

Shareholders at and banking groups will be hit hard by the BOJ decision to stop dividend payments for 2020.

Several Jamaicans who rely on dividends from financial institutions will find that their income will be slashed from a source they have come to rely on for decades and especially now that there are few other investments that can provide the same level of return with interest rates in the country so low currently.
According to Jamaica’s central bank, the decision is done ”with a view to conserving capital and further enhancing licensees’ lending and loss-absorption capacities.” “Bank of Jamaica, after consultation with the boards of financial holding companies (“FHC”) designates, wishes to confirm the mutual understanding that FHC designates and deposit-taking institutions (“DTI”) will suspend the distribution of profits by way of declaring dividends in any manner (cash or stock) for the 2020 financial year, until further notice. It is also our understanding that FHC designates and DTIs will similarly postpone the distribution of any unpaid dividends declared for the 2019 financial year.
What does this all mean? Sagicor Group declared a dividend of forty cents per share payable on May 6, 2020, to shareholders on record on April 24. With this latest development, this dividend cannot be paid out in 2020 or until the central bank lifts the restrictions.
The move, although not stated, is much more a foreign exchange control measure in disguise to halt the payments of dividends in US dollars to the majority shareholders who are overseas. The move will result in more than US$50 million not leaving the country for the rest of the year.
Scotia Group, Sagicor Group and NCB Financial Group are three of the country’s largest entities with deposit-taking subsidiaries. All three have large overseas majority shareholders with Scotia Group overseas holding at 73 percent. While the release is silent on is the matter of conserving foreign exchange.

Blue Power to split in two

Blue Power will split into two separate companies, the directors of the group decided on, to enhance prospects for growth of the two divisions.
The “Board of Directors considered the issue of growth of the two divisions of the Company and has reached the conclusion that having the Lumber Depot Division operate as a separate company will enhance its prospects for growth through acquisitions of and or mergers with other companies in related lines of business. The same considerations would apply to the growth of the Blue Power Soap division.”
In order to effect this move, an Extraordinary General Meeting will be held following the Annual General Meeting on August 14, to consider the matter.
Shareholders will be asked approve the issue or transfer of shares in a newly created subsidiary, Lumber Depot Limited, to the group’s shareholders on record as at August 1, with the intent that after such actions, shares in New Lumber Depot shall be held by the shareholders of the group in proportion to their existing holdings..
Blue Power shareholders will also vote to transfer the business, assets and relevant liabilities of the Lumber Depot Division to the new Company.
The directors approved the payment of a dividend of 2 cents per share on August 12. The record date is July 25 and the ex-dividend date, August 9, 2019.
The last audited financial statements, show the Lumber shop division with sales to April this year of $1.197 billion and profit of $74 million, while the Soap division recorded sales of $469 million and profit of $85 million. In the previous year, the Lumber division recorded sales of $1.07 billion and profit of $62 million and the Soap division had sales of $440 million and profit of $53 million.
The assets of the Lumber shop amounts to $222 million at the end of April with liabilities of $54 million. The soap division had assets of $761 million and liabilities of just $31 million.
The two divisions are involved in two completely different business with little synergies. The two companies should have their own management and boards, suited to move the separate companies to much higher levels of operations and profits.
The stock last traded at $6 on the Junior Market of the Jamaica Stock Exchange on Thursday.

Scotia Group to pay $7.6b in dividends

Scotia to make big payout.

Scotia Group will be paying a whopping $7.6 billion in dividend in July. According to the latest quarterly report by the banking group the directors approved an interim dividend of 51 cents per share and a special dividend of $1.94 per share.
The directors state that the special dividend is to payout years of accumulated surplus that has built up over the years. The payments comes against the drop ground of net profit for the April quarter coming in a $3.295 billion versus $3.3 billion in 2018 and $5.6 billion compared to $6.76 billion year to date in 2018 with the latter being boosted by one off gain from sale of a subsidiary of $753 million.
The group reports an eleven percent growth in its loan portfolio to reach $189 billion from $171 billion in April 2018, but just 3.4 percent since October last year.
The decision to make the special payment is not surprising with the sharp cut in cash reserves requirement at the country’s central bank and the low levels of interest rates that currently prevail in the economy.

Big jump in Witco profit

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West Indian Tobacco last closed at $110.

Profit before tax jumped a strong 37 percent at the Trinidad based West Indian Tobacco to TT$145 million for the three months period ended March 2019, up from $106 million in 2018.
After providing $45 million for corporate taxes profit rose 38 percent to $100 million.
The impressive results arose from a sharp 21 percent climb in revenues to $227 million and a decline in cost from 36 million in 2018 to $32.4 million in the latest quarter. Also contributing to the improved results, was an rise in gross profit margin to 77.8 percent from 75.3 per cent in 2018 that resulted in gross profit rising 25 percent to $177 million versus $141.5 million in 2018.
The Board approved the payment of a first interim dividend of 83 cents per share payable on June 11 to shareholders on record at the close of business on May 21. Earnings per share climbed to $1.19 from 86 cents in 2018. For the full year, earnings should hit $6.40. The stock that is listed on the Trinidad and Tobago Stock Exchange last traded at TT$110 at a PE of 17.

Twice a year dividend for Wisynco

Shareholders at Wisynco 2018 AGM.

Wisynco declared a dividend of 7 cents per share payable on February 26, 2019 to shareholders on record at February 12, 2019.
The company in its report to shareholders accompanying the half results, states, that “going forward dividends will be declared semi-annually, with the first interim dividend being in January and the final dividend in July of each year.”
Wisynco reported a 36 percent rise in net profit for the December quarter to $776 million and 30 percent for the half year to $1.54 billion.

NCB hikes dividend 29%

NCB hiked dividend to 90 cents from 70 cents in 2018.

NCB Financial hikes dividend 29 percent, to $2.2 billion or 90 cents per share, as profit from ongoing operations jumped 40 percent in the first quarter to December last year to $5.7 million before taxation.
Profit after taxation and one-time gains, resulted in net profit of $7.4 billion for the first quarter of the 2019 financial year, slightly lower than the prior year’s results that included a gain (negative goodwill) of $4.4 billion relating to the acquisition of Clarien Group. Profit for the latest quarter, includes a gain of $3.3 billion from the disposal of 326,277,325 JMMB Group shares at $28.25 per share.
The strong improved results climbed on the back of 24 percent in net income, to $20.7 billion from $16.7 billion in 2017, offset by a 21 percent increase in expenses. Included in expenses is loan loss provision of $1, up from just $146 million in 2017 and seems tied to the need to adjust loan provisioning in line with new Accounting Standards. Depreciation and amortization cost almost doubled to $1.3 billion, from $667 million in 2017. Other operating expenses jumped 29 percent to $6 billion from $4.7 billion in the prior year. The big improvement in revenues flowed from increases in net interest income from $7.55 billion to $9.85 billion, an increase of 30 percent, while exchange trading delivered a third more, at $4.2 billion.
Retail and Small Business Banking segment profit grew a strong 36 percent to $1.34 billion, but Payment Services fell just 2 percent to $1.2 billion. Corporate Banking jumped sharply by 76 percent to $1.25 billion, Treasury and Correspondent Banking was up by just 14 percent to $1.65 billion. Wealth, Asset Management and Investment Banking, grew attractively by 39 percent to $1.2 billion, Life Insurance & Pension Fund Management rose 29 percent to $1.3 billion while General Insurance moved from a loss of $107 million to a profit of $227 million.

NCB giving back to the community.


The Group’s loans and advances, net of provision for credit losses, rose 16 percent to $373.5 billion. NCB stated that “the growth was driven by our Jamaican that increased by 22 percent or $50.4 billion. Non-performing loans totalled $18.5 billion as at December 2018 (December 2017: $15 billion) and represented 4.9 percent of the gross loans compared to 4.6 percent as at December 2017.”  Customer deposits grew just 7 percent to $461 billion. The varied growth rate between loans and deposit is a strong positive for profit as the revenues climb faster than cost.
The group re-launched a revised take-over to acquire up to 32.01 percent of the outstanding shares of Guardian Holdings which, when combined with NCB’s existing 29.99 percent holding will bring the total to 62 percent. The profit of the group will get a further boost from this acquisition. IC Insider.com has updated the earnings per share for 2019 to $14 from continuing operations and with the stock price at $145, the PE is just over 10 times earning making the stock BUY RATED with a 2019 target price of $225.

JSE – directors cannot override AGM decision

Palace Multiplex in Montego Bay.

Palace Amusement shareholders approved a dividend of $2 per shares at the annual general meeting held in December last year with the record date of January 7 and payment to be made on January 18.
IC insider.com was informed that the Jamaica Stock Exchange stopped the payment. In discussion with the JSE they indicated that the company did not comply with the rules of the exchange to inform them of the dividend. Accordingly, the change in dividend payment was to allow for the public to have notice of the ex-dividend date.
That of course is only partially true, while the company did not advise the exchange when the directors were to meet to approve the dividend and what was the outcome of the meeting. The exchange had adequate notice of the payment from October 31. The exchange JSE staff did nothing about the information that they got and approved for posting on their website.
The company’s directors’ report clearly states that the dividend had an xd dividend date of January 4 with the payment to be made on January 18. The annual report was posted on the JSE website from October. The directors, report along with the audited report were put to the meeting for acceptance which was done.

Andre Tulloch, head of the JSE regulatory arm.

Shareholders after approving the directors’ report, approved the resolution for the payment of the dividend, effectively agreeing to ex dividend and payment dates as set out in the directors report.
In the wisdom of the Jamaica Stock Exchange, they ignored the supremacy of the AGM and forced the company to submit information to change all the dates relating to the dividend. They failed to understand that the directors have no powers to change what the shareholders approved, and if a change is to be made, then the directors would need to call a general meeting to get shareholders to make the change. The correct remedy would have been some reprimand not a call for a non-legal action.
The requirements of the JSE is that any meeting at which a dividend is to be consider should be communicated to the JSE no later than 7 days before the date of the meeting and within 48 days of the meeting the decision taken. This was not done by Palace, but the JSE who had notice of the declaration from the end of October, did nothing about it for more than two months.
On 17 January, a posting on the JSE website showed that the record date was changed to January 31. The posting stated the “Palace Amusement (PAL)  has advised that following decision made at their Annual General Meeting in December 2018, to pay a dividend of $2 per stock, the payment will be made on February 8, 2019, to the shareholders on record as at January 31, 2019,  The ex-dividend date is January 30, 2019.”
The added problem is that shares were traded in January after the xd date of January 4. The seller would have expected to collect the dividend that was approved. It also means that cheques already drawn, may have to be redone, to record the new record date.
The JSE has clearly, made a huge error in this matter and should immediately correct it, to prevent a messy situation from getting worse. You cannot correct a wrong by another wrong.

Scotia hikes dividend

David Noel new Scotia Group’s CEO.

Scotia Group delivered below par performance in that final quarter of the 2018 fiscal year, with profit falling to just $1.6 billion from $3.36 billion in 2017.
The quarterly results, however, is not an indication for what can be expected for the 2019 fiscal year as one time fall in revenues and in some cases, expenses are unlikely to be reflected for the full year to come. In keeping with expected pick up in profit the banking group hiked their dividend from the usual 48 cents per share to 51 cents in their latest announcement. Based on Scotia’s long held policy, when dividends are raised it is usually an indication that future dividend payments will continue at the elevated level for the ensuing period. Investors in the stock can therefore look forward to at least $2.04 cents for all of 2019. That will be a return on the latest stock price of $54.01 of 3.8 percent. Dividends paid in 2018 amounted to $1.92 per share. The total amount of dividends to be paid in January will be $1.59 billion which is alomost all the profit reported for teh quarter. The dividend will be paid on January 18, 2019, with the ex-dividend date set for December 24.

Freeport to distribute 40c per share

The former Jamaica Stock Exchange listing, Montego Freeport made $44 million in profit for the twelve months to March this year which is up strongly from nearly $11 million reported for 2017.
operating revenue was a mere $1.7 million while other income amounted to $101 million versus $36 million in 2017.  The financial data extract sent to shareholders does not break out the details of other income, but 2017, the category comprised interest income from investments and receivables for land sale and foreign exchange gains.
The statement of financial position shows shareholders equity at $710 million or $1.26 per share. Shareholders at the general meeting slated for November 30 will vote on a resolution to pay a capital distribution of 40 cents per share in December.

10 to 1 stock split for Blue Power

Blue Power 10 for 1 stock split coming.

Shareholders of Junior Market listed Blue Power, are set to see much more liquidity in the shares as the board is recommending a 10 to 1 stock split to be voted on at the upcoming general meeting in August.
Approval of shareholders will be sought, for the board’s recommendation to be put to the Annual General Meeting to be held on August 14, to increase the authorised share capital of the company from 90 million units to 900 million shares of no par value and to split each existing share of the company into 10 shares of no par value, thus increasing the issued share capital to 564,990,000 shares.

Blue Power Group will pay a dividend of 19 cents per share on July 30, to shareholders on record at July 16. The stock will start trading ex-dividend on July 13.