General Business News

Republic onto something good in Africa

July 10, 2013 by IC Insider.com

Republic Bank of Trinidad & Tobago (RBTT) acquired 8.79 percent of HFC Bank Ghana Limited in 2012 moving them into the fourth largest shareholder spot. Earlier this year, they increased to 32.02 percent making them the largest shareholder, above the Social Security & National Insurance Trust that held 77,588,794 shares or 26.18 percent.

The holding triggered the mandatory takeover requirement and resulted in an application to the Securities and Exchange Commission in Ghana for a waiver of the Code on Take Overs and Mergers. Republic Bank was informed by letter dated 24th June, 2013, that the Commission has denied its application for a waiver and has been advised to comply with the mandatory takeover requirement and make an offer for 42.98 percent of the shareholding in HFC Bank Ghana Limited.

A release from the Trinidadian bank states “Republic Bank is currently engaged in discussions with the Securities and Exchange Commission in Ghana and the Bank of Ghana regarding the next steps. Republic Bank looks forward to deepening its relationship with HFC Bank Ghana Limited and is committed to working with its management and staff to add value to its operations.”

Shares of HFC Bank Ghana Ltd (HFC) began the fourth quarter (Q4) of 2012 at a share price of GH¢0.45 (around J$23). The share price remained steady at GH¢0.45 to the end of December 2012, closing the quarter at its opening price. Thus, with a year-open price of GH¢0.45, the year 2012 closed with HFC shares registering no gain or loss on the share price. The price is now up to GH¢0.55 as of last Friday’s trading on the Ghana Stock Exchange.

HFC closed the year 2012 trading at a forward (annualised) Price-Earnings (P/E) multiple of 10.9 times, which was above the average of its peers which stood at 7.8 times as at December 31, 2012 and a Price-Book Value of 1.04 times. HFC Bank also paid interim dividends for the 2012 financial year and currently has a dividend yield of 5 percent, which compares favourably with its industry peers averaging at a dividend yield of 5.7 percent.

The fourth quarter of 2012 also saw the bank increase its stated capital by GH¢50 million through its private placement which was fully subscribed to. Consequently, the company issued additional shares of 112.42 million, and in addition to executive share options that were exercised in December 2012, the total issued shares for HFC bank stood at 296.36 million shares and a market capitalisation of GH¢133.36 million as at December 31, 2012.

In the year 2012 under review, the Group posted Net Interest Income of GH¢45.46 million up from GH¢39.74million, while profit after tax was GH¢15.42 million in 2012, up by 42.10 percent.

The Ghanaian bank is just the about a third the size of Sagicor Investments, with total assets of GH¢ 594.90 million, an increase of 36.74 percent and customer deposits increased by 35.6 percent to GH¢312.38 million up from last year’s figure of GH¢230.30 million.

Management’s Outlook | “The Bank is positioning itself to be a leading retail and SME focused financial institution in the country. We are therefore providing our staff with training and orientation to efficiently service the financial needs of the large SME market in Ghana. The Bank will also participate in financing of the oil and gas industry, infrastructural and residential real estate projects. Cocoa remains a major contributor to Ghana’s GDP, we will therefore strengthen our presence in the Country to respond to the needs of the industry.

The equity injection and the participation of strategic investors has among others, competitively repositioned the bank in the banking industry to take advantage of enormous opportunities within Ghana. HFC is poised to grow all aspects of its Universal Banking business to deliver value to its shareholders in the year 2013 and beyond. It is expected that these will impact positively on its share price performance. It is recommended that investors hold HFC shares to benefit fully.”

Ghana’s Economy | Ghana’s population is put at 25 million with a GDP per capita on a purchasing power parity basis is US$3,200, in comparison Jamaica’s is US$9,100 with a population of 2.7 million. The bank has a lot of room to grow based on size and the fact that the economy has been on a good growth path.

Country	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
Ghana	4.3	3	3	5.8	4.7	5.4	5.9	6	5.5	7.3	4.1	5.7	13.6

The Bank of Ghana Composite Index of Economic Activity (CIEA) grew by 6.8 percent in December 2012 compared to 14.9 percent growth in 2011. A provisional estimate of the real GDP growth, according to the Ghana Statistical Service (GSS), was 7.1 percent in 2012.

Inflationary pressures were subdued in 2012 as depicted by trends in consumer prices ending at 8.8 percent in December 2012. The Policy Rate was raised by 250 basis points to 15 percent in June and maintained for the rest of the year, but the benchmark 91-day Treasury Bill rate rose from 10.7 percent in December 2011 to 22.4 percent in December 2012. The average 3 month deposit rate went up to 12.5 percent in December 2012 from 7.8 percent in December 2011, while average lending rates declined marginally from 25.9 percent to 25.7 percent in the same period.

Tax revenue amounted to GH¢11.6 billion, about 3.7 percent lower than the budget target of GH¢12.1 billion, mainly on account of lower company taxes, especially from oil companies. Total expenditure was 14.7 percent higher than the budget target in 2012. The resulting developments in the fiscal operations resulted in a deficit of GH¢8.7 billion (12.1 percent of GDP) against 6.7 percent targeted.

The stock of total public debt stood at GH¢33.5 billion (46.7 percent of GDP) in 2012, compared with GH¢24.0 billion (42.6 percent of GDP) in 2011 with external debt amounting to US$8.0 billion, compared with US$7.8 billion during the corresponding periods. The overall balance of payments surplus of US$546.5 million in 2011 was reversed, recording a deficit of US$1.2 billion in 2012. Gross International Reserves (GIR) at the end of 2012 was US$5.4 billion (3 months import cover) compared to US$5.5 billion in 2011. Private inward transfers through the Banks amounted to US$18.7 billion in 2012, representing a 4.9 percent growth over 2011. During the second half of 2012, stability was restored in the foreign exchange market, following a heightened volatility in the first half of the year, with the cedi experiencing a year-to-date depreciation of 17.5 percent as at December 2012 compared with 5 percent depreciation in 2011.

Major industries | Ghana is involved mainly in mining, lumbering, light manufacturing, aluminum smelting, cocoa and other food processing and shipbuilding. The major exports are gold and other minerals, cocoa, timber, and tuna. Imports include capital equipment, petroleum, and foodstuffs. The Netherlands, Nigeria, Great Britain, the United States, and China are Ghana’s major trade partners.

Insider call | Republic Bank is an IC Insider Buy Rated stock.

JMMB’s rebranding

July 8, 2013 by IC Insider.com

Jamaica Money Market Brokers (JMMB) has announced a change in the name of Capital & Credit Merchant Bank. The new name is JMMB Merchant Bank Ltd. The change in name arises from the acquisition of Capital & Credit Group last year, which was the owner of the Merchant bank.

The name change means that the bank can be better associated with the new owners who have a much higher profile and are now put into a better position fully benefit from the group’s customer base. It will also mean more benefit from marketing the bank as the JMMB brand is established and easily recognised. The move is also in keeping with the group’s desire to obtain a commercial banking license locally and to expand its banking activities in Jamaica.

JMMB operates in Jamaica, Trinidad and Dominican Republic and is primarily involved in securities brokering, securities trading, merchant and commercial banking, dealing in money market instruments, operating a foreign exchange cambio and managing funds on behalf of clients.

For the year to March 2013, the group make profit of $3.9 billion and had assets of $167 billion.

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

JSE: Insiders’ trading

July 4, 2013 by IC Insider.com

Trade by insiders keep popping up — a development that investors should keep an eye on for buy or sell signals. When Mayberry insiders are buying, investors should pay keen attention as it usually means a big profit increase ahead. The same can’t be said about the others below, but pay attention to Consolidated Bakery.

A related party to Mayberry Investments Limited (MIL) has purchased 628,612 MIL shares between June 28, 2013 and July 3, 2013.
An Executive of Sagicor Life Jamaica sold 408,647 of the company’s shares on July 2, 2013
A director purchased 820,000 Consolidated Bakeries Jamaica Limited shares on June 28, 2013.
Scotia Group Jamaica Limited (SGJ) advised that sixteen senior employees will obtain a total of 182,763 SGJ shares which have matured by way of the Employee Share Ownership Plan.
A Jamaica Money Market Brokers Limited (JMMB) related party sold a total of 1,069,780 JMMB shares between June 25 and 26, 2013. Insiders have been making a few million share sales since the release of their March final year accounts.

Filed Under: Company News, General Business News Tagged With: Consolidated Bakeries, JMMB, JSE Company, Mayberry, Scotia

Jamaican Teas expands property arm

July 4, 2013 by IC Insider.com

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Jamaican Teas Limited (JAMT) has advised that an agreement has been signed to purchase Orchid Estates in Yallahs, St. Thomas. The property comprises eleven acres and has been approved for the construction of 71 individual housing solutions. The total cost of the purchase is $63,000,000 and construction should commence during 2013 with the first units being delivered in 2014. The low-income scheme, which was at an advanced stage of development before the acquisition by H Mahfood & Sons, requires completion of some units which require roofs and internals fittings, the full build-out of other units plus road works.

The development will be undertaken by H Mahfood & Sons Limited, a wholly owned subsidiary of JAMT.

The company successfully developed a 19 unit apartment complex at Kingsway in Kingston this year and the units should be handed over to prospective owners by the end of the company’s financial year in September.

Jamaican Teas reported profits of $51.2 million for the six months versus $43.2 million in the six months period of the prior year, an increase of 18.6 percent from improvement in sales of 44 percent to $528.2 million versus $365.9 million in the prior year.

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

Scotiabank wins Service Award

July 4, 2013 by IC Insider.com

Press Release, 3rd July 2013 | Scotiabank Jamaica scored high marks to cop this year’s PSOJ/Jamaica Customer Service Association’s (JaCSA) Service Excellence Award. The Bank emerged as one of three large companies with top scores in leadership strategy and governance, service standards, the existence of a service charter and its deployment throughout the organisation. The awards were held recently, in Kingston.

Rosemarie Voordouw, Director Customer Experience stated that customer insights and feedback; people; technology & processes; and governance are the pillars of Scotiabank’s customer service strategy. The judges’ report acknowledged this focus, noting that the company demonstrates world class practices in its delivery of customer service throughout its branches and contact centre, and that rich Service Excellence systems were “alive and integrated into the fabric of the organisation”.

The judges report also stated that “passion for service excellence is rife among leaders and other employees”. This shows up in Scotiabank’s practice of continuous customer feedback measurement which includes daily, monthly and quarterly monitoring via surveys. The survey results form the basis action planning to address service gaps. Scotiabank’s strategy of creating a team dedicated to monitoring customer service delivery, and the well-defined complaint resolution process, also came in for commendation by the PSOJ/JaCSA team the bank said.

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

$2.85 for JSE shares, is it worth it?

July 1, 2013 by IC Insider.com

The Jamaica Stock Exchange (JSE) prospectus to raise $107,865,000 is now released to the public for consideration with the issue scheduled to open at 9:00 am, Friday 5^th July 2013. The Invitation is scheduled to close at 4:00 pm, Friday 19th July, subject to the right of the Company to close the Invitation at any time after it opens. The total amount of shares being made available will be 38.25 million units comprising 28 million being issued directly by the Jamaica Stock Exchange and 10.2 million by JMMB. JMMB is selling the shares they acquired when they took over the Capital Group, which put their holding at 18.18 percent, well above the threshold of 10 percent any one investor is allowed to hold as stipulated by the JSE articles.

The issue price | IC Insider computes that the stock carries a value around 10 times 2013 earnings, based on the assumption that trading activity continues for the rest of the year at the rate experienced in June. For the 12 months to December last year, profit of $93 million was reported but that figure included revenue from the sale of a board seat to Proven Wealth Management for $60 million, as well as large fee income from the purchase of Lascelles’ shares that were acquired by Campari last year and to a lesser degree the shares traded when Capital & Credit was acquired.

Existing capital | There are currently 112,200,000 (formerly 28 million) ordinary shares in issue and the new shares will bring the issued capital to 140 million units. The shares have a book value of $5.52 but earnings per share based on 2012 profit will be just over $0.83 and that figure is inflated by the non-recurring income mentioned above.

Profit after tax amounted to $5.8 million compared to a loss of $6.1 million in 2012. For the quarter ending March, the JSE’s income rose 8 percent to reach $69.5m compared to $64.4m in 2012. Other Operating Income increased by $5.5m or 32% over the same period, primarily due to an increase of $5.3 million in revenue from the JSE regional conference. Investment income of $22 million jumped $14 million over 2012 due largely to the gains on US dollar investments as a result of devaluation of the Jamaican dollar.

Positives | The number of shares to be issued is relative small but shareholding is limited to 10 percent of issued shares. The preference shares which was a debt instrument was repaid and these funds replace the amounts paid out. The stock market is not at its most buoyant but with interest rates having declined below ten percent and government slashing the fiscal deficit, rates could go lower. This development ultimately makes stock market investments more attractive and drive up trading volumes and therefore fee income for the exchange. The stock exchange plans for more instruments to be traded on the exchange but there are no imminent new listings that are known. The stock exchange is showing signs of greater activity this year but it has not reached a level to ensure that the JSE makes an operating profit. The JSE will benefit from listing fee income if the value of shares rise, as the annual listing fees are tied to the value of each company’s shares that are outstanding at the start of each year.

Negatives | The number of shares to be issued will not ensure a good level of liquidity for the stock, which will keep bigger investors away. There are no rules preventing existing shareholders from selling their holdings in partially or in full thus increasing the volume that could become available to the wider public. Short term profit prospects are not exciting suggesting that the stock is not very attractively priced relative to the rest of the market. The company has an oversized board of 19, resulting in an unnecessary waste of funds and an unwieldy structure that makes it more difficult to properly run board meetings and by extension, the company.

Revenues | The Company derives its revenue from a range of sources including the JSE cess, calculated on the value of each market transaction, fees charged for listing companies at the initial stage, annually, as well as any supplementary listings, membership, transactions, the registrar and trustee fees paid to its subsidiary company JCSD, amongst others, income generated from the provision of conferences, seminars and the e-Campus. The JSE has recently entered into a Memorandum of Understanding with the Bank of Jamaica to work towards the development of a fixed income trading platform for Government of Jamaica securities and corporate bonds. It is also conducting research into the development of exchange-traded products and other exchange-related products.

In summary | Stock markets are cyclical in nature resulting in peaks and troughs in earnings flowing from bull and bear markets. At this juncture, the market is in the process of moving into a bull market. Investors who buy the shares now are essentially buying at the lower end of the market. The levels of trading currently are a fraction of what they have been in the past, so the potential is huge going forward. The change in interest rates and the focus of government on controlling the fiscal deficit will ultimately have a huge impact on the fortunes of the stock exchange. Investors should not be looking for any big pay day any time soon from this stock.

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

Major management changes at D&G

June 28, 2013 by IC Insider.com

Desnoes & Geddes Limited (DG) has advised that Jed Dryer, Finance Director, has come to the end of his three year rotation at Red Stripe and will be transitioning to a role in Miami as Finance Director for Projects commencing July 1, 2013. Dryer will remain on the boards of DG and Celebration Brands Limited.

Vernon Douglas, Group Financial Controller at Red Stripe will be Acting Finance Director effective July 1, 2013. As a result of the reorganisation of the operations in D&G, the role of Human Resources Director will no longer exist as of June 30, 2013. Lisa Lewis, Human Resources Director, Red Stripe will therefore no longer be working in this capacity as of June 30, 2013. Lisa will be resigning from the Board of Directors and Board of Trustees for the pension plan as at that date. She will be working as HR Director for Projects, Diageo WestLAC, from July 1, 2013 to September 30, 2013. After September 30, 2013 she will be leaving Diageo to pursue other interests.

Ali McLennan, former Diageo Global Beer, People and Talent Manager, will be Acting Head of HR for the company effective July 1, 2013. Marguerite Cremin Chung, Head of Corporate Relations will be taking the role of Head of Corporate Relations for Central America and the Caribbean effective July 1, 2013. Her replacement will be the subject of a future announcement. Daan De Kroon, Head of Red Stripe International & Licensed Brewing will be taking up the role of Export Director, Ypioca, Brazil. His replacement will be the subject of a future announcement.

Profit | Desnoes & Geddes reported improved results for the nine months to the end of March this year with profits after tax being up 30 percent to $1.050 billion, but in the latest quarter profits was down 18 percent to $243 million after tax. The company took a $152 million charge in the third quarter for making workers redundant, flowing from the decision to transfer the sales and distribution of its products to Celebration Brands, a joint venture company with Pepsi. The company’s management indicates that the amount written off in the quarter is 50 percent of the total separation cost.

Overseas production | The results reflect the decision last year to switch the production and sales of Red Stripe to the USA. Export sales are down as a result, but so is cost relating to exports. Local sales grew to $2.67 billion up from $2.56 billion in 2012 and for exports it was $564 million in the current fiscal year versus $450 million.

Filed Under: Company News, General Business News Tagged With: D&G, JSE Company

Scotia Insurance enters 15th year

June 28, 2013 by IC Insider.com

[Press release dated June 26, 2013] Scotia Jamaica Life Insurance Company Ltd (Scotia Insurance) marks its 15th year with more than 200,000 policy holders, assets in excess of J$50B, and in 2012, recorded over J$4.1billion in new premiums.

Hugh Reid, President of Scotia Insurance, attributed the company’s success over the last fifteen years to the dedication and commitment of its staff, loyalty of its customers and keen attention to developing products that respond to customers’ needs. “We did all the right things very early, including developing a world class team, listening carefully to our customers and investing heavily in research so that we were able to provide exactly what the market needed, “Mr. Reid said. But a major part of the success it the association with the original parent company, Bank of Nova Scotia, which provides a ready source of customers as well as a strong sense of sfability.

Scotia Insurance’s most well-known product is ScotiaMINT, an interest-sensitive universal life insurance policy and long term savings plan that includes tax-advantaged benefits when invested for five years or more. This product, which heralded the birth of the Company in June 1998, had $41 billion in assets as at December 2012.

Scotia Insurance now offers eight products including the market leading ScotiaBRIDGE, an approved retirement scheme (ARS). The company has been the ARS market leader every year since 2009 when ScotiaBRIDGE was launched and now has more than J$2.4 billion under management.

Other products offered by the Company include two new whole life products launched last year: Lifetime Security – designed to provide beneficiaries with financial support in the event of death, personal accident or terminal illness and its companion, Life Shelter, which provides coverage for final medical and funeral expenses.

One of the traditionally areas for Scotia Insurance is the provision of Credit Insurance to Scotiabank retail customers who have loans and credit cards. There has been consistent double digit growth in this area which Mr. Reid attributes to increasing awareness among consumers of the importance of a contingency plan their credit facilities, in the event of death or critical illness.

“As we look forward to the next fifteen years, Scotia Insurance will continue its aggressive product expansion which has seen six new products launched in the four years since 2009. The company has acquired a new core life insurance administration system and this platform will allow us to develop new products faster and more efficiently. We look forward to the future knowing that our work and contribution helps to make individuals and families more secure in planning and shaping their lives,” Mr Reid said.

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

Insider trades

June 27, 2013 by IC Insider.com

A director of Lasco Distributors Limited sold 200,000 of the company’s shares on June 14, 2013.

A director of Lasco Manufacturing Limited sold 200,000 of the company’s shares on June 13 & 14, 2013

Blue Power Group Limited advised that two senior managers sold a total of 159,995 shares during the period June 17 – 21, 2013.

Scotia Group Jamaica Limited advised that a senior manager purchased 2,792 SGJ shares on June 24, 2013.

A senior manager of Sagicor Investments Jamaica advised that they sold 20,000 S shares on June 21, 2013.

A related party to Honey Bun (1982) advised that they sold 5,000 Honey Bun shares on June 25, 2013.

Filed Under: Company News, General Business News Tagged With: Blue Power, Honey Bun, Sagicor, Scotia

CPJ denies major customs breach

June 21, 2013 by IC Insider.com

Statement released by Caribbean Producers Ltd | It has come to our attention that recent newspaper articles and press reports refer to breaches of the Customs Act by a major importer operating out of Western Jamaica that is listed on the Jamaica Stock Exchange.

While these reports do not name our Company, CARIBBEAN PRODUCERS (JAMAICA) LIMITED as the entity in question, we wish to advise our shareholders and the wider public that we consider such reports to be erroneous.

The Company is a leading food service company and hotel supplier in Jamaica. It sources its products from some 30 countries and imports thousands of unique items in up to 100 containers per month. The Company considers that it has worked closely with the Customs Department and the Ministry of Finance in establishing and growing its business during the course of the last 18 years.

Contrary to the press reports, the Company continues to have the status of ‘AUTHORISED ECONOMIC OPERATOR’ (AEO), which is granted by the Jamaica Customs Department. Changes to the AEO program were introduced by the Customs Department and the Company, along with other AEOs, will need to comply with certain requirements leading to security certification by 31 October 2013.

More recently, one of the suppliers of the Company mislabelled a relatively small number of cases of pork products that the Company inadvertently imported in a large container containing a total of approximately 500 cases of pork bellies. This matter is under discussion with the Customs Department and the relevant supplier has admitted its liability, which arose due to their error, and has offered to pay any fines on behalf of the Company, which the Company believes will not exceed J$1.1M.

Any other information published by the press in relation to the Company’s position as regards the Customs Act, including references to potential fines in the region of J$3 billion, is not correct. The Company is committed to being a good corporate citizen and responsible publicly traded company, operating within the law and with regard to the principles of good governance.