$11M missing from elite figures

$11 million are missing from the first quarter figures included in Elite Diagnostic prospectus to raise $141 million in an IPO.
While the 2017 audited accounts show depreciation and amortization of $28 million and administrative expenses of $81 million,the interim figures show no amount for depreciation, with administrative cost of $24 million which is just over 25 percent of the full years cost to June. Direct cost is $87 million for the fiscal year or just under $22 million per quarter, in line with $21.7 million in the September quarter. The conclusion is that the cost of depreciation is not included and would result in profits falling from $23 million reported to $14 million and would reduce the expected full year earnings below the annualized figure of $92 million down to a much lower amount, assuming that the new location at Old Hope Road just break even.

Elite Diagnostics is the first 2018 IPO out of 9, that is expected this year.

The intrigue does not end there. The movements in fixed assets show a missing $11 million, with fixed assets at June being $187 million and the cash flow statement showing additions of $71 million, that should result in a total of $257 million which would be reduced by approximately $9 million for depreciation for the quarter, bringing the net figure to $249 million but the interim figures have fixed assets at $238 million. For short, a material amount of $11 million is missing and it is unclear what items are under or over stated.
On the face of it, the reported profit for both years appear overstated, on that basis, IC Insider.com reduced earnings per share for the full year to 20 cents, with the stock being priced at 10 times earnings, but that still leaves the stock a buy.

NCB offer for Guardian extended

NCB Financial Group extended the closing date for its offer to buy up to 62 percent of the Trinidadian based, Guardian Holdings’ shares to February 2 instead of the original date of January 12.
According to a release by NCB “while the majority of the terms and conditions of the Offer have been satisfied or otherwise waived and the Offeror has received the sign-off from most of the relevant regulatory authorities in respect of the proposed acquisition, the Offeror has applied for and is awaiting certain other regulatory approvals required to be obtained by it before it may take-up and pay for any tendered Offer Shares. Such regulatory approvals are required as a result of the Offeror and GHL, along with several of GHL’s subsidiaries, being regulated in Trinidad and Tobago and elsewhere in the region. Given the foregoing, the Offeror has elected to extend the Closing Date to the 2nd day of February.”
In May 2016 an interest in 69,547,241 GHL Shares were acquired by NCBFG at US$3.24 per share. At the time of the acquisition, NCBFG entered into a shareholders agreement with Arthur Lok Jack and Imtiaz Ahamad and several of their affiliate entities. The shareholders’ agreement included a lock-up provision in relation to both NCBFG’s and the Key Shareholders’ GHL Shares by which the parties agreed to limit their rights to dispose of any GHL Shares until the expiry of three years from May 12, 2016. The agreement required NCBFG to make a take-over bid within three years to gain a minimum of 62% of the outstanding GHL shares and that the Key Shareholders agreed to tender all their GHL Shares (approximately 21.84 percent of the GHL shares) pursuant to such take-over bid. The price of the take-over bid would be, an offer up to May 12, 2017, a minimum price of TT$17, or an offer after May 2017 but up to May 2018, at TT$18 and TTS19 if made after May 2018 to May, 2019.
In November 2017, the shareholders agreement was amended to provide that should the offer be made by February 12, 2018, the price of the offer would be US$2.35 per share instead of TT$18 for an offer made up to May 12, 2018.

Mayberry restructuring

Mayberry to spin off 10 % of its subsidiary to shareholders.

Dogged by a share price that is bogged down mostly below $5, with a net asset value of $6.54, Mayberry’s directors are recommending distributing a portion of Mayberry West Indies Limited (MWIL), a wholly-owned subsidiary in the form of dividend to Mayberry Investments‘ shareholders.
MWIL is to list on the Jamaica Stock Exchange before the end of the first quarter of 2018 as a result of the move.
Arising from a Board meeting of the Company, on December 29, 2017, a dividend in specie equal to 10% of the Net Book value of its MWIL was declared. This dividend will be effected by the Company transferring, pro rata among its stockholders, shares in MWIL held by the Company and constituting 10% of MWIL’s issued share capital. The record date will be February 16, and shall be effected by transfer of the relevant MWIL shares on February 28 to stockholders. The Ex-dividend date will be February 15.
Based on MWIL’s book value as at November 30, 2017, the dividend in specie is equivalent to approximately $688 million, the Mayberry release said. Mayberry West Indies Limited name is to be changed to “Mayberry Jamaican Equities Limited”.
The Jamaica Stock Exchange requires a minimum of 20 percent of a listed company’s shares to be issued to the public, accordingly, it appears that the plans will be to raise around $700-800 million from the general market prior to listing.

Wisynco Group cut some prices

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Wisynco operates at two main locations situated in St. Catherine: White Marl and Lakes Pen.

Recent Jamaica Stock Exchange listed Wisynco Group, announced a reduction in the prices for the majority of its imported portfolio of products, effective January 2. The reduction that the company said is 3 percent, is due to a revaluation of the Jamaican dollar to the US dollar in recent months.
The adjustment is in line with the appreciation in the value of the local currency versus the US dollar since it peaked at $131 in September.
The company who shares were issued to the public for sale in December further advised that it has commenced distribution of the Unilever Portfolio of Food products throughout the island. The portfolio includes: Red Rose Tea, Lipton Tea, Knorr, Ben & Jerry’s, Breyers Ice Cream, Hellman’s, Blue Band, Flora, Country Crock, I Can’t Believe It’s Not Butter and several other popular items.
The company’s shares traded on the main market of the stock exchange at $12 at the close on Wednesday and is up from the IPO price of $7.87.

D&G new production line to push exports

Desnoes and Geddes producers of the world renown Red Stripe beer, is set to expand its export capabilities with the introduction of a new production line with the capacity to produce 40,000 bottles per hour and 26,000 cases of beer per day exclusively for its growing global markets, release from the company disclosed.
The new line will result in the brewery producing up to 1 million bottles of the Jamaican beer for the domestic and international markets. “Our 2020 Vision is a call to action to boost our target volume and we’ve invested close to US$18 million in this project. We firmly believe in the power of our brand and its appeal, so we are making a stronger push into international markets,” said Ricardo Nuncio, Managing Director, Desnoes and Geddes.
The company’s top export markets are the United States and Canada with two million and 700,000 cases in annual shipments, respectively the company stated. As at July 2017, there has been 15 percent growth in focus cities of Miami, Tampa, Orlando and Atlanta. Nuncio adds, “In early 2016, Red Stripe entered Australia, Dubai and Brazil and there’s robust brand building in those countries. We’re also moving to put down roots in Africa and Russia, following successful testing.”
The brewery’s new production line, referred to as ‘Line 8’, comes as the company adopted the use of liquefied natural gas (LNG) to power its operations. The brewer is now the first commercial company in Jamaica to be fully LNG-powered. Nuncio explained that the addition of Line 8 dovetails with the company’s mission to streamline its operation throughout the supply chain. Nuncio noted, “The Red Stripe team is guided by the growing importance of sustainability and the need to lessen the adverse environmental impact of our operation. By using LNG, we welcome estimated savings of US$336,000 annually.”
Line 8 now frees up the existing production line to focus solely on domestic volumes. The new line is specially designed for one-way or new Red Stripe bottles, but it is also able to produce new Red Stripe Local and Dragon Stout in six-pack cartons. The project, which took 12 months to complete, involved infrastructure changes and extensive training for employees to achieve a greater level of efficiency.

Management reshuffle at Grace

Grace Kennedy Head Office

Group Chief Executive Officer, Don Wehby.

Grace Kennedy senior management undergoes major changes at the start of 2018, a report from the Group stated.
Andrea Coy will be appointed CEO of GK Foods International Business a position previously held by Ryan Mack. Grace Kennedy’s manufacturing and distribution operations in the USA, Canada and the UK will fall under Coy’s remit as well as the Company’s continued expansion into West Africa and Europe. Andrea will also have responsibility for Grace Kennedy’s distribution operations in Latin America and the Caribbean.
“Andrea has had a series of achievements during her career at Grace Kennedy and has successfully led the transformation and growth of several companies within the Group. I am confident that she will do a tremendous job in ensuring Grace Kennedy continues to deliver on its mission to become a Global Consumer Group,” Wehby said.
Ryan Mack will take up the role of CEO of GK Foods Domestic Business and will be responsible for the Hi Lo Food Stores, GK’s Manufacturing Operations in Jamaica, GK’s local Distribution Operations which comprises of Grace Foods & Services, World Brands Services and Consumer Brands Limited. Ryan has held several senior roles across the Group and will bring key learnings gained from his years in the UK and the USA.

Andrea Coy

In making the announcements, Wehby indicated that “Ryan Mack is well respected internationally in the foods business and we are extremely happy to have him back in Jamaica to build on the significant growth that we have been experiencing in these core areas. I am very confident that these changes will improve efficiencies and further streamline the organisation allowing us to achieve the stated growth objectives for 2018 and beyond.”
Derrick Reckord will be appointed to act as President and CEO of Grace Kennedy Foods. During his time with the Company Reckord has been instrumental in developing and growing GK’s business in the US. Prior to his appointment in his current role as Senior Vice President of the US operations in 2014, Derrick led the Company’s development of its US and Caribbean export markets.
Margaret Campbell, currently Chief Financial Officer of GKMS, will be appointed Country Manager for the Jamaican operations. GKMS is the exclusive agent for Western Union in Jamaica and several Caribbean countries.
Steven Whittingham, will be appointed to the Company’s Executive Committee. The Executive Committee, which is chaired by the Group CEO, has executive leadership responsibility for overseeing the Group’s operations.
Whittingham will continue in his roles as Chief Investment Officer for the Grace Kennedy Group and Managing Director of GK Capital Management and GK Investments. Whittingham has significant experience in investments, mergers and acquisition and entrepreneurial management in the USA, Europe and the Caribbean.

NCB & LascoFin close acquisitions

NCB Financial and Lasco Financial are reporting conclusion of the acquisition of their new subsidiaries.
NCB Financial acquisition of the majority shares in Bermuda’s Clarien Bank that was subject to regulatory approval by the Bermudan authorities is concluded.
Clarien has assets just over U$1.16 billion and reported profit of US1.2 million for 2016 before incurring an overall loss when other comprehensive loss is factored in, netting a loss of US$572,000 for the year. Results were weighed down by impairment losses on loans amounting to US$8.6 million in the year compared to US$9.2 million in 2015.
Lasco Financial advised that Scotia Group Jamaica has completed the transfer of Scotia Jamaica Microfinance Company Limited to the company. No details of the purchase price is mentioned but Scotia Group reported on the balance sheet as of October, assets held for sale amounting to $664 million which most likely represent the assets of CrediScotia.

NCB Buying 50.1% of Bermudan bank

NCB Financial Group today announced the acquisition of majority shares in the Clarien Group, a Bermudan based financial group in which Portland Private Equity holds 17.92 percent interest.
Edmund Gibbons Ltd with retain 31.98 percent of the shares. The transaction has received approval from Bank of Jamaica and the Bermuda Monetary Authority provided a no objection letter, the release from NCB states but final approval is subject to the Ministry of Finance. James Gibbons a director of the group expresses the view that the linkage will enable expansion of their offering locally and globally.
In 2016, Portland Private Equity pumped in B$$12.6 million into Clarien to meet capital needs based on tighter regulatory capital requirements as well as a swelling bad debt position amounting to 14 percent of their loan portfolio. The bank is said to have made B$$500,000 profit in 2015.
According The Royal Gazette, Clarien said its loan portfolio had shrunk by $66.8 million in 2015 to $809.7 million by the end of the year. This was attributed to a trend of borrowers paying down mortgage debt.
Clarien has more than eight decades of banking history in Bermuda and is said to be the largest bank in the country.
NCB recently raised US$250 million on the local market for regional expansion, this acquisition seems to be one that was on their radar when the funds were being raised, but based on the amount Portland injected the acquisition by NCB could cost around US$40-50 million, a mere dent in the amount they raised in the summer of 2017, but with earnings of $500,000 in 2015, unless profits picked up considerably since, which seems unlikely with the acquisition by NCB, the amount paid is most likely considerably far less.
For the fiscal year to September NCB made profit of J$19.1 billion or US$146 million up from J$14.45 billion in 2016. Gross revenues for 2017 fiscal year amounted to J$75.7 billion.

Lasco Distributors shocker

Lasco Distributors awarded $273 million by the court.

The award for damages and interest granted to Lasco Distributors is a mere US$2 million or J$273,278,243 against Pfizer, Lasco Distributors announced, today.
The company advised that the formal order was signed by Justice Vivene Harris and filed on November 24, 2017. LASD has further advised of the Company’s intent to file an appeal.
The amount awarded for damages and interest up to November 3, 2017, is way below the US$311 million the company claimed plus interest.
At the time of the Initial Public Offering in 2010 the prospectus stated “no provisions have been made in the Company’s accounts for the impact of the outcome of this decision and the accounts contained in this prospectus do not take it into account. It is the expectation of the Company, based on legal advice it has received, that its lost sales of the product to date (estimated to be $400 million) are likely to be recovered in the event that it succeeds in this matter but it is difficult to quantify the amount of damages that could potentially be awarded to the Company as they will continue to accrue until the matter is decided.
The amount awarded which should be profit that would have be lost as a result of the loss of sales may not in reality be far from the profit lost to 2010 but there would be loss of sales thereafter.
Last week, Lasco Distributors advised the Jamaica Stock Exchange that a director sold 2,042,774 shares on November 11, and on November 24 that a directors sold 21,054 shares during the period November 13-14, 2017.

US$22.5m for Berger Caribbean

Ansa Coatings US$22.5 million in cash to acquire the holding company of holding the majority shares in Berger’s operations in Barbados, Jamaica, and Trinidad and Tobago in July 2017.
The amount was stated in the valuation report done by PriceWaterhouseCoopers for the Berger Trinidad. According to the report “ANSA represented to us that a total cash consideration paid for the investment in LBOH, of which US$2.976 million was allocated to the 3,613,011 BPTL ordinary shares (representing a value of TT$5.60 per share at a conversion rate of US$1 = TT$ 6.79). ASNA further represented that the purchase consideration was not derived based on an individual territory/ subsidiary basis but for the Caribbean operations as a whole.”
The payment places the consideration of shares in the Jamaican company, close to the price of  $10.88 that was offered to the Jamaican shareholders.
According to the report the PWC reports state that “we understand that the offeror also obtained a valuation from an independent valuator as at 31 March 2017. This report estimated that the value of 100% of BPTL’s issued share to be within the range of $4.41 to $5.00 per share, with the best estimate being the midpoint of $4.70 per share.”
ACI made an offer to acquire the remaining minority shares at $6.76 per share, the price it paid to Cham Ramlal ltd. for 9.69% of the shareholding a huge premium over the traded price around $4.05. The cost to acquire the remainder of Berger Trinidad will be just over US$720,000.
The Directors recommended that the shareholders accept the offer. In doing so they took account of the fact that ANSA McAL exercises control and direction over approximately 80.86 percent of the issued and outstanding share capital of the Company. Consequently, the remaining shareholders will, in effect, have limited power to challenge any decisions of the offeror and its affiliates. Further, where the offeror, pursuant to the offer, acquires 90 per cent of the offer shares, there are statutory provisions which empower the offeror to acquire the shares of those shareholders who do not accept the offer.
They also considered the fact that the offer was well ahead of the historical price the stock traded at in the past and the poor profit performance in the past with more expected to come as well as the fairness opinion by PWC. All of that was done without trying to frighten shareholders into giving up their shares and is in complete contrast to the recommendations of Jamaican directors, using false information and withholding others pertinent information from the local shareholders, in trying to bully hem into giving away their shares. Warren McDonald a director of Berger Jamaica is one of the directors of the Trinidad company.