General Business News

TCL likely to lose shareholder’s battle

December 13, 2013 by IC Insider.com

Trinidad Cement Limited (TCL) has been in a battle with some local shareholders who want representation on the company’s board of directors. This group of minority shareholders requested that the annual general meeting (AGM), which should have been held on Friday, July 12, 2013, to be put off pending a court hearing as to whether a resolution to nominate them should be put on the agenda for consideration.

The request by the minority shareholders to seek to nominate directors and have their names included as such on the notice calling the annual general meeting is reasonable, but that would have to be done ahead of the notice period, which is usually 21 days ahead of the meeting. Information from the Guardian suggest that the company was formally informed of the request well ahead of the deadline date and the shareholders seem well within their right to prevent the AGM from going ahead. In all probability, the minority shareholders will win their initial battle with the company but it’s left to be seen if they will succeed at the AGM which now seems likely to be held in 2014 instead.

TCL latest advisory | TCL has just advised that, further to its Notice to Shareholders and Employees dated October 22, 2013 in relation to TCL v. Wilnet Holdings Limited & Ors., the injunction, which restricted TCL from holding its 2012 Annual Meeting, was upheld by the Court of Appeal on November 20, 2013. The Case Management Conference for the substantive matter was held on December 2, 2013 and has been put to January 20, 2014 for directions.

Prior to this latest release, Trinidad Cement stated in a June release to the T&T Stock Exchange that “On 14th June, 2013 TCL received a Shareholders’ Proposal from a group of eleven shareholders holding 5.68% of TCL, and includes Wilnet Holdings Limited, Stephen Espinet, MASA Investments Limited, Brimont Limited, Kamal Ali, Alescon Readymix Limited, Bourne Investment Inc., Tatil Life Assurance Limited, Nicholas Development Limited, Helen Bhagwansingh and Issa Nicholas Holdings.”

The matter went to court and was put off for hearing to Friday, 4th October, 2013 in spite of various representations made to the court for a speedier hearing of the matter by both sides.

TCL stated that “Based on facts that have come to light in this matter including the statements and admissions made by Wilfred Espinet in his affidavit filed in Court, and having regard to the circumstances surrounding the involvement of Republic Bank, Ian De Souza and Wilfred Espinet in the orchestration of the Shareholders’ Proposal, TCL has lodged the following:

A complaint to the Central Bank, requesting that De Souza be disqualified from the status of being a fit and proper person to be concerned with the management of a financial institution, under the Financial Institutions Act, 2008; and
A complaint to the SEC against Republic Bank, Ian De Souza and Wilfred Espinet pursuant to Section 92 (b) of the Securities Act, 2012;
A request that the SEC undertake an investigation pursuant to Section 150 of the Securities Act into whether or not Messrs. De Souza and Espinet have contravened the insider trading provisions contained in Sections 100 to 101 of the Securities Act.”

There is no indication that any action have been taken against the persons mentioned above. The TCL board has been opposed to adding directors to the existing ones.

What happened | From information gleaned from the Guardian Newspaper, “According to their fix date claim form, which was obtained by the T&T Guardian, the group is challenging a decision by TCL directors to refuse to attach the group’s proposal and statement to the management proxy circular which accompanied the notice of the annual meeting. The proposal and statement related to the group’s proposed nomination of five directors to TCL’s board that were submitted on June 14. In the lawsuit, the group is seeking a declaration, which would render the board’s June 24 decision unlawful, null, void and of no effect. Before filing the lawsuit, it wrote to the board members on June 20, asking them to reconsider their decision. The group informed the board it was the perogative of the shareholders to decide and vote on the composition of the board. “Our nominees would have to be elected at the annual meeting by the shareholders and they are not automatic of the directors, who may wish to put themselves up for re-election and therefore the suggestion with respect to proportionality of board representation and contest for directorships seems misplaced,” the group said.

Included in the lawsuit, is a 12-page affidavit, sworn by Espinet, in which he detailed the dealings between the two parties which led to the legal action being filed. Espinet said he became concerned over TCL’s financial position after the company failed to declare a dividend between 2008 and 2012. “As a result of my concerns and the fact that I held investment in TCL as a shareholder, I had conversations with a number of people about the state of affairs at TCL,” Espinet said. He said the group joined together this year in an attempt to nominate five experienced persons to the board to replace five current board members whose terms were due to expire at the meeting. Espinet said after the meeting was first announced on May 18, the group submitted its proposal to TCL’s corporate secretary on June 14. He claimed that ten days later, TCL’s chairman Andy Bhajan communicated with the group and informed them of the board’s decision to refuse its proposal”.

Trinidad Cement Limited (TCL) is a IC Insider Buy Rated stock

Filed Under: Company News, General Business News Tagged With: Shareholders, TCL, TTSE

Cargo Handlers announces acquisition

December 10, 2013 by IC Insider.com

Cargo Handlers Limited advised that a resolution was passed by the Board of Directors at a meeting held on November 28, 2013 to invest in the Bulk Liquid Carrier Petroleum Limited. The company transports petroleum products across the island. CHL advised that this investment is expected to add $150 million in revenue.

Cargo Handlers just reported earnings of $85 million for the year ended September this year and ended up with cash of $131 million.

Filed Under: Company News, General Business News Tagged With: Cargo Handlers, JSE Company

C2W says it’s not dead

December 9, 2013 by IC Insider.com

A statement from C2W | “In light of the recent release of our financial statements for the nine months ending September, it is necessary to inform our shareholders what the plans for C2W are. The IPO funds raised in 2012 were mostly spent on operating expenses, with a significant percentage on the creation of the company’s valuable assets. To date we own a significant percentage of over 900 copyrights (our assets) that were co-written with some of the World’s most successful songwriters/producers. C2W executed agreements to sub-publish BMG Chrysalis and Warner Chappell within the region. We will collect their royalties derived from the active songs in their catalogues, while retaining a percentage of these revenues.

“As we are first of it’s kind in the region, we are working closely with the region’s performing rights societies (broadcast, live and other associated rights) to import our robust catalogues and decipher what our rightful earnings are. From an administration and reconciliation point of view, this is new and challenging ground for all involved, an action plan is in place and new systems will prove to be successful at collecting our royalties within the region.

“We expect revenue for the company from both the sub-publishing agreements and from our exploitation of our own catalogue to begin by the second quarter of 2014. While C2W has very low cash reserves, the Company does not require as much operating cash as it did in the past, as it now awaits expected earnings on its intangible portfolio of assets and sub-publishing agreements.

“As a way forward, and until revenues are recognized, we are in communication with various interested, and strategic, outside investors. Once we feel we have the right strategic partner, we will then go through the legal procedures in bringing a proposal to our current shareholders for consideration, via an Extraordinary General Meeting.”

Filed Under: Company News, General Business News Tagged With: C2W, JSE Company

Medical Disposables, OK not great

December 9, 2013 by IC Insider.com

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Companies are beating a hasty push to get listed ahead of the change in tax regime for junior market companies. The latest to do so is Medical Disposables & Supply Limited that hits the road with the opening of its IPO on December 13.

The Company invites Applications for up to 63,157,895 Shares in the Invitation. All Shares, including the Reserved Shares, are priced at $1.83 per Share. The Invitation will open at 9:00 a.m. on the Opening Date, Friday 13 December 2013 and will close at 4:00 p.m. on the Closing Date, Friday 20 December 2013. There are 18,096,060 Reserved Shares in the Invitation that are initially reserved for Priority Application from Staff and Key Partners 5,464,481 and Mayberry Clients 12,631,579.

Minimum fundraising | The minimum amount which, in the opinion of the Directors, must be received by the Company is $96.5 million. The offer looks interesting as there should be some initial price gains after listing even though not much is known of the company by the wider public.

Profits | The unaudited results for the first 7 months of the Company’s current financial year to October 2013, show an 18 percent increase in revenues over the same period in the prior year, increasing to $508 million. The Profit before tax outturn was $42 million, a 127 percent increase over the same period in 2012. This puts pretax earnings around 35 cents per share with 200 million shares outstanding and a PE of 5.3 times current year’s earnings. Adjusting for tax for the period before going public, the PE ratio is around 7 times but by the following year with all the profit being tax free the PE would drop to around 5 assuming earnings are basically flat that could result in a price appreciation in 2014 around 40-50 percent.

The new shares are likely to create some dilution in per share earnings initially, as the rate of return on equity is likely to be around 37 percent for the year ending March 2014. Paying off loans, which is one of the objectives for the funds being raised, will yield a lower return on the fresh capital.

Profit before tax declined by $11.8 million in financial year 2010. The Directors consider that the Company began to realise the benefits of an expansion that was executed, as well as its new pharmaceutical distribution relationships, in financial years 2011 and 2012 when Profit before tax increased by $23.5 million moving from $7.4 million to $31 million and $19 million to $50 million in 2012.

Revenues | Revenues moved from $289 million in 2010 to $506 million in 2011, a 75 percent increase and to $724 million in financial year 2012 and increase over 2011 of 43 percent. The rate of growth in sales has slowed and profit growth is also likely to slow down. The company needs strong and sustainable growth levels to justify investors picking these shares ahead of others that are better valued currently. From all indications based on the comparative valuation of other listed stocks, investors are likely to have to wait on the market rally to deliver above average growth in the stock price in the medium term.

Finances | High receivables of $186 million, just under 3 months of sales and inventories are spots of bother resulting in high borrowings of $153 million as of March, versus shareholders’ equity of $152 million.

The company | The Company is a distributor of pharmaceutical products and disposable medical supplies. When it began trading, the it specialised in medical and hospital supplies and disposable items, such as surgical masks, gloves, tubes, gauze, and adhesive and other bandages. Over the years it expanded into the distribution of pharmaceuticals and health and personal care items and other consumer goods. The Company is a co-distributor of the GlaxoSmithKline Jamaica, Dr. Reddy’s, and Bunny’s pharmaceutical and healthcare product lines. It also distributes general consumer items inclusive of complementary beauty, personal care and household products. In that regard, the Company is a sub distributor for Cari-Med Limited, Kirk Distributors Limited, Consumer Brands Limited, and Smith Russell and Company Limited, among others.

The Company is centrally located in a commercial complex in the mid-town industrial area of Kingston. It currently services over 1,100 customers across the island, including pharmacies, hospitals, medical practitioners, health centres, radiology units, nursing homes, medical laboratories, clinics, health food stores, bakeries, hotels, commercial institutions, schools, spas, sports teams and walk-in customers.

Directors | The Company was founded by the Boothe family 15 years ago in Kingston. Myrtis Boothe, Managing Director, provides the Company with its strategic direction and has than 20 years of sales and distribution experience in the pharmaceutical industry.

The directorship includes, Winston Boothe (Chairman), Myrtis Boothe (Chief Executive Officer), Kurt Boothe (General Manager), Nikeisha Boothe (Marketing), Dr. The Hon. Vincent M. Lawrence O.J., Dr. Dahlia McDaniel and Sandra Glasgow.

Use of proceeds | The proceeds of the offer is slated for expansion of the company’s existing product ranges, expansion into new product ranges and underserved niche markets, retirement of bank debt and directors’ loans and balances and pay for the expenses of the IPO, estimated not to exceed $9 million.

Short term gains are possible, but longer term growth and increased profits will come from the quality of management’s execution of the strategies and the maintenance of good relations with suppliers and customers. The suppliers, whom they represent, is critical as a loss of any major ones could negatively affect profitability in the short to medium term.

Image courtesy of DreamDesigns/FreeDigitalPhotos.net

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: JSE Company, Medical Disposables

Scotiabank named Bank of the Year

December 2, 2013 by IC Insider.com

Kingston, November 29, 2013 | Scotiabank was today named the Bank of the Year in Jamaica by The Banker magazine, a Financial Times publication. Scotia Bank is an IC Insider Buy Rated Stock.

“Scotiabank is pleased to be recognized as Bank of the Year for maintaining a strong track record of delivering superior results,” said Jacqueline Sharp, president and CEO. “This award is a testament to the hard work and dedication of our exceptional employees in helping our customers discover opportunities in a changing world.”
The Banker selects winners based on their ability to deliver shareholder returns and gain strategic advantage. The magazine is the world’s longest running international banking magazine, recognized as a leading source of information on finance and investment around the globe.
“Scotiabank has had a proud presence in the Caribbean for close to 125 years and today we have the largest presence of any financial services company in the region,” said Bruce Bowen, Scotiabank’s Senior Vice President for the Caribbean Region. “We have achieved our success by helping our customers discover what’s possible with their finances.”
Scotiabank’s Caribbean operations have been recognized with numerous awards year for their strength and stability as well as products and services, including:

Best Bank in Jamaica 2013 – Euromoney Magazine
Best Consumer Internet Bank 2013 – Global Finance
Best FX provider 2013 – Global Finance
Best Emerging Markets Bank – 2013
Bank of The Year in the Caribbean from LatinFinance;
And in 2012, The Banker named Scotiabank Global Bank of the Year and Bank of the Year in the Americas.

About Scotiabank | Scotiabank has been in Jamaica since 1889 and is the premier financial institution in the country with just over 2,000 employees and 34 Branches Island wide. Scotiabank is a subsidiary of Scotiabank Group which offers a diverse range of products and services including personal, commercial, and small business banking; wealth management; insurance; and mortgages. The Group is an award-winning institution having been named on numerous occasions as the Bank of the Year and Best Bank in Jamaica by international financial publications – the Banker, Latin Finance, Euromoney, and Global Finance magazines. The Scotiabank Group has $389 billion in assets (as at Oct 31, 2013). For more information please visitwww.jamaica.scotiabank.com.

Related post | Scotia reports record profit

Filed Under: Company News, General Business News Tagged With: JSE Company, Scotia

Eppley preference shares over

November 30, 2013 by IC Insider.com

30th November, 2013 | Eppley Limited announced that a total of 303 applications were received for the recent public offer of 50 million preference shares valued at approximately J$361.95 million.

As the Invitation was oversubscribed, the Company intends to exercise its right to issue further preference shares by allotting 60,325,600 to all applicants who will receive 100% of the amount of the Shares they applied for.

28th November, 2013 | Eppley’s Invitation for Subscription to 50 million Cumulative Redeemable 9.5% Preference Shares at J$6.00 each has been oversubscribed the company reported today.

The offer opened on Wednesday, 13th November 2013 and was closed on the closing date, Wednesday, 27 November 2013.

The Company had reserved the right to make available further Preference Shares prior to the Closing Date but IC Insider understands that this option was not exercised.

Related posts | Profit up 92% for Eppley

Filed Under: Company News, General Business News, JSE Main Market, Stock Market Tagged With: Eppley, JSE Company, Preference Shares

Derrimon Trading, high risk low returns

November 26, 2013 by IC Insider.com

Derrimon Trading Company is a name not known to the vast majority of Jamaicans but that may change if the company succeeds in raising just over $150 million from a public issue of shares in December.

A cursory look at the company’s finances quickly indicates why it needs the infusion of funds; margins are low at around 10 percent and working capital is weak with the current assets ratio at 1.2:1, which is considered very weak and well below a 2:1 ratio. Unfortunately, the new capital while it will improve the ratio, will not be enough to lift it to where it should be.

Cost continues to grow sharply with Admin up 30 percent to August this year and selling and distribution up 25 percent. These compare with revenue growth of just 13 percent. Quite a bit of profit is coming from other income including investment and rental amounting to $21.8 million in 2013 and $24 million in 2012 to August and $36 million for the 2012 calendar year to December. Before interest cost, the main operations reported a $9 million profit. Admittedly, this is after making provisions for inventory loss of $18 million and doubtful debt provision of $9 million.

In 2012, the supermarkets had gross profit around 20 percent but the distribution margin was only 7 percent and wholesale 11 percent. Revenues with low margins make up 92 percent of sales in 2012. The average number of persons employed full-time by the Company during the year was 135 (2011 – 96), while part time employees averaged 17 (2011 – 14). Cost relating to staff rose from $96.76 million in 2011 to $146.5 million an increase of 51 percent with the staff numbers going up by 38 percent.

Profits | Financial statements to August show profit of $51 million pretax and $35.7 million post tax or 18 cents per share, annualized around 25 cents. Gross profit margin is just over 10 percent for 2013 up from 8 percent in 2013 for similar period and 9.5 percent for all of 2012.

The company reports profit for 2008 to 2013 rising from $8.4 million pretax profit in 2008 to $8.1 million in 2009; $17.5 million in 2010; $36 million in 2011 and $25.3 million in 2012. While there was big foreign exchange gain in 2011 there was a big loss in 2012. Revenues have moved rapidly upwards from $807 million in 2008; it reached $1.48 billion in 2009; $2.46 billion in 2010; $3.35 billion in 2011 and $4.76 billion in 2012. The rapid rate of growth seems to have slowed in 2013 with sales of $3.756 billion to August, versus $3.32 billion for the same period in 2012, a 13 percent increase compared with 43 percent in 2012 and 36 percent in 2011.

Tax free | As a junior market prospect, profit will be tax free for 5 years if listed. Hence, the valuation should be based on pretax profits. For 2013 excluding tax, earnings would be in the order of 32 cents per share assuming no major negative development occurs in the last 4 months of the year to reduce the level of profitability. Using Lasco Distributors with a PE ratio around 7 as a guide, we would price the stock around $2 each, just about the issue price to the public. Paramount Trading may even be a better guide with a PE of 5 times earnings, which would place Derrimon stock price value at $1.80. These numbers suggest that investors should not be running for this one looking for any potential gains in the short term. At best, it will be in the future.

The 73,336,067 ordinary shares that are available will not see much going into the public’s hands with an allocation of just 8,568,486 shares. Board Reserved Shares amount to 25,693,590, which has been effectively taken up by the conversion of loans made to the Company amounting to $52.67 million. Others include Employee Reserved Shares: 4,878,049; Key Partners Reserved Shares: 12,195,122 and Mayberry Clients Reserved Shares: 22,000,820. The Invitation will open at 9:00am on Monday, 2nd December and is slated to close at 4:00pm on Monday 9th December 2013. Applications from the general public must request a minimum of 2,000 shares and be made in multiples of 1,000.

About the company | Derrimon Trading was founded in 1998 by Derrick and Monique Cotterell. The business began to grow in earnest in 2002, when the Company was appointed as a regional co-distributor of Nestlé Jamaica for Kingston & St Andrew, St Catherine and St Thomas. In 2009, the Company acquired the business of Sampars Cash and Carry, one of the largest wholesale businesses in Kingston in order to increase the portfolio of products and to extend its market reach. More recently, the Company has introduced a line of exclusive branded products under the ‘Delect’ name. The new range includes rice, canned mackerel, tomato ketchup, vegetable oil, cornmeal and other products.

Since 2009, the Company’s operations have been based at its principal premises at 235 Marcus Garvey Drive. This location provides the Company with 100,000 square feet of warehouse facilities including cold storage over some 3.5 acres of property, which is strategically located close to both Kingston Wharves and key distribution routes to the Company’s various markets. In support of its operations, the Company engages a contracted fleet of over 60 delivery trucks to deliver the Company’s products to customers.

Use of proceeds | The company says it intends to use the proceeds of the Invitation for the following purposes:

Expansion of Sampars business, with further wholesale and retail outlets;
Enhancement of the Company’s wholesale/retail business software platform;
Provision of working capital support to the Company’s distribution business;
Retirement of a portion of the Company’s debt, including certain Directors’ loan;
Pay the expenses of the Invitation out of the proceeds, estimated not exceed $9.5 million.

Directors | Executive Directors: Derek Cotterell (Chairman), I. Kelly (Finance), W. Thomas (General Manager). Non-Executive Directors: Monique Cotterell, Earl. A. Richards, Alexander Williams.

A number of the directors has had several years’ experience with Grace Kennedy in the distribution business.

IC Insider outlook | At the current state of the local stock market, this one seems to be better watched from the side lines than on the field of play.

Filed Under: Company News, General Business News, Initial Public Offers, JSE Main Market, Stock Market Tagged With: Derrimon Trading, Sampars

Jamaican Teas lists corporate bond

November 25, 2013 by IC Insider.com

Monday, 25th November 2013 | Tanisha Samuels, Assistant to CEO John Mahfood, inserts the Jamaican Teas fixed & variable rate banner in the slot on the Jamaica Stock Exchange board prior to the start of trading today. To her left is the John Mahfood, the company’s CEO.
In today’s trading 1,000 units traded at $99.50 per 100 units.

Related posts | Jamaican Teas raises over $100m

Filed Under: Company News, General Business News, JSE Main Market, Stock Market Tagged With: Jamaican Teas, JSE Company

KLE continued losses push Matalon

November 15, 2013 by IC Insider.com

The loss making KLE Group Limited advised that Joseph M. Matalon has resigned as Director and Chairman of the Board of Directors of the Company with effect on December 15, 2013 and Audrey Marks will assume Chairmanship of the Board of Directors effective the same day.

Joseph M. Matalon has also resigned as Chairman of the Audit Committee with effect from December 15, 2013. Matalon’s resignation from the Audit Committee was in no way related to any disagreement in respect of accounting principles, financial statement disclosure or any other material issue impacting the Audit Committee or its function, the company stated.

The resignation comes against the back drop of the company reporting another quarter of losses, which is worse than the same quarter last year despite the rise in revenues from $82 million in the 2012 quarter to $102 million in 2013. For the September quarter, losses climbed to $12.4 million up from a loss of $1 million in 2012 and for the nine months period the loss is $48 million versus $10.5 million in 2012. For the nine months, revenues climbed from $215 million to $249 million. Compounding the matter is that interest cost climbed to $9.75 million in the latest quarter from $6.58 million last year and $23 million year to date versus nearly $20 million last year.

Matalon, being a board member of Scotia Group, would have most likely paid a major role in the decision to exit the loss making company that in all probability will be struggling to turn things around.

Filed Under: Company News, General Business News Tagged With: JSE Company

Jamaican Teas raises over $100m

November 14, 2013 by IC Insider.com

Jamaican Teas went to the bond market in October to raise $200 million in an 8.5 percent bond issue. The offer, which closed on November 7, received over 80 applicants for just over J$100 million. The company plans to be employ the proceeds for capital projects. The note is a four year instrument fixed at 8.5 percent per annum for the first two years and variable thereafter.

“I want to congratulate the Stocks & Securities team on another successful offer. This one is significant because we were able to raise the funds needed by the client at a rate of 0.10% below the last GOJ Treasury auction. Jamaican Teas Limited is a strong company and we are happy for the opportunity to work with the organization and bring value to all who participated,” said Lamar Harris, Manager Investment Banking & Attorney-at-law.

Image courtesy of Praiseaeng/FreeDigitalPhotos.net

“I am happy that we were successful in raising over $100 Million in our corporate bond offer. This was achieved in an environment of extreme economic uncertainty when most investors tend to prefer investing for the short term. I feel that an important reason for our success was the decision to list the security on the Junior Stock Exchange so the investors had the confidence of being able to trade the securities if they needed to. I congratulate SSL for their hard work in making this a success.” John Mahfood, CEO.

Jamaican Teas Ltd distributes the renowned Tetley black tea as well as a Premium Blend of black tea, together with Earl Grey black tea, Green Tea, and Peppermint and Chamomile herbal teas. They are also proprietors of the Caribbean Dreams line of products which consists of herbal teas sourced by the company from Jamaica and other sources, as well as drinking cocoa, powdered natural coconut milk and a range of spring water.

Image courtesy of Praiseaeng/FreeDigitalPhotos.net