Cable & Wireless (CWJ) nearly 5 months to report insider trades by it senior directors. What were they trying to hide must be the question? Most companies report trades by insiders, a few days after the event.
There can be little excuse for this to have happened, in the case of the CWJ trades. Are there more trades that have not been reported, is an obvious question? The situation in the case of Cable & Wireless is most important, in light of the increased interest in the stock since the start of 2014, with what appears to be a trend of improving revenues and gain in market share, in a number of its business segments.
On Thursday the Jamaica Stock Exchange was informed by Cable & Wireless that that Senior Directors purchased a total of 5,290,069 shares, during the period March 17, 2014 to April 3, 2014.
The trades involved more than one person and at a senior directors’ level. As directors they have a duty to ensure information as critical as this is reported promptly, within a reasonable time to the exchange. Five months after the trades, is not reasonable.
Mayberry Investments advised that related parties conducted trading activity of 122,500 of the company’s shares on August 11 and 12, 2014.
What were these directors hiding?
Another director jumps KLE
Craig Powell one of the directors and shareholder of KLE Group when the company had its IPO in 2012 finally gave up trying to turn the struggling entity around and resigned as a Director with effect from August 11, 2014, the Jamaica Stock Exchange was informed today. The signs were on the table for all to see when Powell in July, sold 7,181,043 units out of the 10,693,750 share he owned, at a huge discount to the IPO price.
Derrimon largest owners of Caribbean Flavours
Derrimon Trading Company Limited (Derrimon) acquired 49% of the issued shares of Caribbean Flavours and Fragrances (CFF) from its previous majority owners, Anand and Joan James.
The share transfers of two blocks of 22,030,408 shares each, were executed through the Jamaica Stock Exchange on August 5, to effect the transfer to Derrimon for J$121,167,244, at $2.75 per share. Mayberry Investments acted as the investment banker to the deal on behalf of Derrimon.
Established in 1998, Derrimon is now a major distributor of consumer goods to supermarkets and wholesalers island-wide as well as supermarket operators.
“We are looking forward to working with Anand James, who remains as Managing Director of CFF, to expand on the synergies provided by this unique business. We believe that this investment will also assist us to reach the next level in our evolution.” CEO and majority shareholder of Derrimon Derrick Cotterell said.
CFF is engaged in the manufacture and distribution of flavourings and water soluble colourings for the food, beverage, baking, confectionary and pharmaceutical industries. The Company also manufactures and supplies fragrances, which are used in production of household cleaning, body car, aroma therapy and air freshener products. The Company supplies its products predominantly to commercial concerns in Jamaica, and exports to Caricom countries including Trinidad, Barbados, Guyana, and St. Kitts.
Managing Director of CFF Anand James said “I am very pleased with the progress of CFF since its listing on the Junior Market last September. Less than one year later, the listing has assisted me to identify a
long term strategic partner who shares my values and overall strategic focus.”
The deal will result in some changes to the board of directors of CFF, which will now comprise two
executive directors from each of the two companies. The three non‐executive directors as well as CFF’s
mentor will remain unchanged.
Jamaica’s NIR passes US$2b
Jamaica’s Net International Reserves (NIR) now exceeds US$2 billion as it sits at US$2.18 billion, up by US$805 million during July. The increase reflects the US$800 million bond, the government raised recently on the international market.
The gross amount of the reserves is US$2.8 billion, up by US$793 million during July, of this amount US$606 million is due to the International Monetary Fund (IMF) and represents primarily, funds obtained from the IMF for liquidity support for the financial system, when the JLP government undertook the first debt exchange, back in 2010.
Reserves of Goods Imports amount to 28.13 weeks and 20.30 weeks of Rreserves of Goods & Services Imports.
Jamaica’s trade deficit falls, March’s better
Jamaica enjoyed a reduction in its trade for the first four months of this year, compared with the same period in 2013. The trade deficit amounted to US$1.34 billion, down from US$1.46 billion in 2013.
The country imported goods valued at US$1.86 billion for the January to April 2014 period, a decrease of US$199 million or 9.7 percent and exported US$77 million or 12.9 percent less for the January to April 2014 period, representing a big improvement over the change to March. Total exports for the 4 months came in at S$521 million, down from US$598 million in the similar period in 2013.
For the three months to March this year, imports fell by US$281 million and exports were down US$111 million to US$358 million, down from US$469 million in the 2013.
Pan-Jamaican Investment Trust refinances
The first tranche payment of J$600 million due on a $2.5 billion secured notes obtained by Pan-Jamaican Investment Trust in 2012, became payable on maturity on July 22, 2014.
Pan Jamaican indicates in a release to the Jamaica Stock Exchange, that arrangements have been made to refinance the amount with effect from July 23, 2014 for a further two years.
The proceed from the notes was obtained when the company acquired additional shares in Sagicor Life Jamaica (now Sagicor Group) in 2012 for a consideration of $3,055,100,542. The original funds were obtained from a private placement with maturities ranging from 2 years to 5 years.
Jamaica Money Market Brokers raise US$20M
Jamaica Money Market Brokers raised US$20,000,000 through the issue and private placement of unsecured extendible notes denominated in United States dollars. The offer was only available to Jamaican residents.
The private placement offer closed on July 18, 2014 and will mature on July 18, 2016. Note holders have an option to either redeem their notes on the Maturity Date or extend the maturity of their notes to July 18, 2019. The interest rate on the original note is 6.75% fixed for two years and 7.75% on the Extended Notes.
JMMB made profit due to the group’s shareholders of $2.83 billion for the year ending March 2014 and had total equity of $18.3 billion.
$100m of Scotia Group trade cancelled
In Mondays trading on the Jamaica Stock Exchange, MVL Stockbrokers purchased 5 million Scotia Group shares at $20 each, amounting to $100 million. Towards the end of the close in the market, the trades were no longer posted.
A check with the manager of the stock exchange Marlene Street Forrest, stated that “the matter of the trade was brought to my attention and on checking it was discovered that the broker incorrectly entered the order as 5 million units when it should have been 500,000 units. Based on the investigation done and the information gathered, all the selling brokers were contacted to get there approval about the cancellation. This is the norm is such cases, where cancellation is contemplated as such the trades were reversed”. Instructions were given to place orders for $5 million each of Carreras, National Commercial Bank and Scotia shares, Ed Mckie of head of MVL Stockbrokers informed IC Insider. The orders were on behalf of an institution not a pension fund, IC Insider was advised.
In early trading in the market today, there were three significant bids to buy 5 million units of each Carreras at $34, National Commercial Bank at $18 and Scotia at $20. Scotia trades were the only one executed, the other bids were withdrawn before any trade took place. At the end of trading none of the Scotia Shares were traded and the bid was removed. In all likelihood the bids for the smaller quantities will resurface shortly.
Scotia Group pushes All Jamaica Index by 1,786.85
Broker house Scotia Investments was the only buyer of the 875,724 Scotia Group shares that change hands in Friday’s trading on the Jamaica Stock Exchange. The prices of the stocks rose to close at $20, but traded as high as $20.99.
For the overall market, the prices of 11 stocks rose and 8 declined as 26 securities changed hands, resulting in 5,240,852 shares trading, valued at $35,553,505.
Main Market indices| The main indices closed sharply higher in Friday’s trading as heavily weighted Scotia Group, jumped to close at $20 by the end of trading. The JSE Market Index surged 1,598.01 points to 71,711.80 and the JSE All Jamaican Composite index exploded by 1,786.85 points to close at 78,895.01.
National Commercial Bank that released results after trading on Thursday, closed up by 6 cents to $18.06 while trading 51,599 shares and closed with a bid of $18.11 to buy 116,978 units.
Sweet River Abattoir & Supplies is not that sweet
Sweet River Abattoir & Supplies Company Limited is a company the majority of Jamaican are unlikely to know. Well their profile will get a lift, with the release of a prospectus offering up to 46,633,000 Ordinary Shares to the public, at the invitation price of $3.86 each.
The subscription will open on Tuesday 12th August and is scheduled to close on Tuesday 26th August 2014 .The Company is seeking to raise $180 million from the IPO, to be used in reduction of bank loans, construction completion of the new factory facility in Westmoreland, installation of a solar energy generation system, working capital; and payment of the expenses of the Invitation. The minimum amount to be raised to facilitate listing on the junior market of the Jamaica Stock Exchange, is $50 million
Up to 20,763,000 Reserved Shares in the Invitation are for priority applicants. Brokers and advisor for the deal are, MoneyMasters Limited and VM Wealth Management Limited.
The prospectus states that the majority of the shareholders of the Company are pig farmers, some with capacity to substantially increase through-put.
Sweet River in 2012, took a strategic decision to modernize the plant. The Company acquired lands in the Sweet River area of Westmoreland to establish a state of the art abattoir with expanded capacity along with administrative offices and warehousing facilities.
Sweet River planned factory facilities nearing completion in Westmoreland
The company indicates that they are the third largest supplier of pork within the market with approximately twenty-four percent (24%) market share. The Company’s main customers include Grace Food Processors Limited, Caribbean Producers Jamaica Limited, and Hamilton’s Smoke House (a subsidiary of Jamaica Broilers Group).
A pig has the capacity to provide between twelve and eighteen cuts. Currently Sweet River produces twelve cuts from each pig. The Company sources approximately 60 percent of its pigs from ten contract farmers with the remaining coming from some 395 small farmers across ten parishes in Jamaica.
Profit & revenues|In the first year of operations as at March 2010, Sweet River generated revenues of $239 million. For the financial year ending March 2011, revenues fell to $181 million, which is attributed to a shortage of pigs which affected the company’s ability to supply the market. By March 2012, the company enjoyed revenues of $207 million. Revenues rose to $311 million for the financial year to March, 2014.
Profit before taxes increased from $564,000 for the year ending March 2010 to $21 million at March 2014 and was flat with the $22.6 million generated in 2013.
With 51 million shares in issue currently earnings per share works out at 40 cents, placing a valuation of 9.4 times historical earnings. This is well above the junior market valuation. Value based on a book value works out at 3 times book, again a very high valuation. There are other weaknesses. The unknown company and the vast majority of the directors, a one man auditor that is unknown to the investing public and the absence of audited accounts for the March 2014. Serious investors are unlikely to be drawn to this issue for sometime.