Jamaica, mobile subscribers grew by 125,000 during the April to September period, according to CWC Communications, the parent company for Cable & Wireless Jamaica.
At the end of March, Cable & Wireless Jamaica (CWJ) stated that they had 705,000 mobile customers. The increase since March, puts active mobile customers at roughly 830,000, by the end of September. At the end of June this year, Mobile subscriber base increased by 37 percent with revenue increasing by 34 percent, broadband base increased by 12 percent with revenue up 39 percent. The continued strong growth in mobile customers is resulting in increased revenues for the local company, moving them closer to a break-even point.
CWC Communications in their release of their September quarter’s report that “in our LIME Caribbean businesses, mobile revenue grew 6 percent on a reported basis and 8 percent at constant currency, with Jamaica up 24 percent and continuing to gain market share (5 ppts) as we invest to deliver improved services for our growing customer base. In Jamaica mobile traffic increased by 34 percent and mobile service revenue is up 38 percent at constant currency.”
The stock which traded as low as 25 cents on Wednesday traded 7,481,913 units between 28 cents and 32 cents by Mid day. The change in demand is most likely tied to the news that CWC acquired the Flow operations, which will be seen to have positive implications for CWJ going forward.
CWJ has been BUY RATED by IC Insider from early this year on strong mobile growth and reduced cost.
C&WJ strong mobile growth continues
Cable & Wireless Plc acquires Flow
Cable & Wireless Communications Plc (“CWC”) today announces that it has agreed terms to purchase 100 percent of the equity of Columbus International, a privately-owned fibre based telecommunications and technology services provider operating in the Caribbean, Central America and the Andean region, for USD1.85 billion.
“The move will significantly enhance CWC’s growth profile and accelerate the progress towards each of its strategic goals unveiled in May. CWC also announced the placing of new shares constituting approximately 9.99 percent of CWC’s outstanding share capital which will be used to finance in part the proposed acquisition. The Enlarged Group is expected to generate significant operating cost and capital expenditure synergies, with additional revenue benefits also available. The transaction will be earnings neutral in the first full year post-completion and materially earnings enhancing in subsequent years” CWC directors stated in their release.
Columbus is a privately-owned diversified telecommunications and technology services company, based in Barbados, with approximately 700,000 residential customers in the Caribbean, Central America and the Andean region. In the Caribbean, it is one of the leading providers of triple-play cable TV and broadband enabled services over its proprietary fibre optic network infrastructure. Through its wholly owned subsidiary, Columbus Networks, Columbus provides backhaul connectivity to 42 countries in the region, as well as capacity and IT services, corporate data solutions and data centre services throughout the Caribbean, Central America and the Andean region. Columbus also provides next generation connectivity and IT solutions, managed networking and cloud-based services under the brand Columbus Business Solutions.
For the year ended 31 December 2013, Columbus had revenue of USD505m with EBITDA of USD216m and total operating profit of USD104m. For the six months ended June 2014, Columbus had revenue of USD284m with EBITDA of USD118m and total operating profit of USD48 million.
BNS provides C$109m for Carib hotels’ debt
Bank of Nova Scotia decision to shed 1,500 workers globally and close a number of branches, within the Caribbean and Mexico, has led to other developments within the group, in an attempt to recognize areas of potential losses in the worldwide operations.
This had led the bank to record additional loan loss provisions of approximately C$109 million. The amount for “ losses relates, primarily to three existing net impaired loans, within the Caribbean region’s hospitality portfolio. Due to the prolonged economic recovery and continued uncertain outlook. These additional amounts, bring the net carrying value, in line with the expected net recoverable value,” the bankers said in their press release, on Tuesday. There is also an additional amount in the Canadian Banking related to a change in methodology in estimating loss parameters, on the unsecured lending portfolios.
Reports are that the bank plans to shutter 35 branches within the Caribbean region.
Guardian Holdings profit up
Profits for the nine months to September 2014 attributable to equity shareholders of Guardian Holdings grew 45 percent to TT$286 million or $88 million or over the comparable period last year. The 2014 results to date translate Earnings per share (EPS) of $1.23 compared to $0.85 for the same period last year.
For the September quarter, profit for Guardian shareholders was TT$103 million, an increase of 11.2 percent, from $91.38 million in 2013. The profit position flowed from a 29 percent increase in insurance underwriting activities, in the quarter and 15 percent year to date, but lower investment income for the latest quarter, pulled the grow of profit down.
The 2013 result was negatively impacted by an extra-ordinary loss of $31 million, resulting from the Government of Jamaica restructuring their debt. The 2013 results, when this loss is excluded, would end up with an increase of profits year-on-year of $58 million, or 25 percent.
”Investment opportunities continue to be a challenge and as a result, our investment income fell from $666 million to $602 million, a decline of $63 million. This decline was offset by a favourable movement in Fair Value gains of $100 million inclusive of the Jamaican NDX,” Management stated in their release accompanying the results.
Operating Expenses increased by $34 million or 5 percent, of which $19 million is related to the Pointe Simon project. In 2013, Pointe Simon expenses were capitalised as the project was in the construction stage. The Pointe Simon project consists of an office tower building, condominiums and a hotel. From 2014, in keeping with accounting regulation the expenses relating to the project is booked through the income statement since the project has entered the commercialisation phase. Without this change in treatment, our operating expenses would have increased 3 percent year on year.
Management stated that they “expect to conclude transactions for the disposal of the majority of our condominiums by year end. Demand continues to be good for retail space at Pointe Simon and we have begun the process of signing leases for this space. The sale of the hotel will be concluded by year-end and we look forward to its opening in the latter half of next year. We continue to close a number of small leases in our office tower and are in the process of negotiating two large leases.” The sales of this real estate project will inject funds into the group and provide income and increased profits in the last quarter of 2014 and beyond.
Guardian is listed on the Trinidad & Tobago Stock Exchange and is primarily involved in life underwriting, general insurance and investments management.
Guardian Holdings stocks remains IC Insider BUY RATED.
Eppley seeking up $350m
Nigel Clarke – Chairman of Eppley
Dividends will be paid monthly at the rate of 10% per annum for the first two years, 11% per annum for years 3 to 4 and 11.5% per annum for the final year. This issue will be the second preference share to be offered to the market, since last year by the company.
The Invitation will open at 9 am on the Opening Date, Tuesday 11 November 2014 and will close at 4 pm on the Closing Date, Tuesday 18 November 2014 subject to the right of the Company to: (a) close the Invitation at any time after it opens once applications for all Preference Shares in the Invitation are received; and (b) extend the Closing Date for any reason, provided that it does not extend beyond the expiration of 40 days after the publication of this Prospectus
The Company reserves the right to redeem the Preference Shares (in full or part) on any dividend payment date that is not less than three years from the issue date at the higher of: (a) the Invitation Price plus 1 percent; or (b) the average of the last 10 days’ closing market prices on the JSE, prior to the notification date, plus any accrued and unpaid dividends subject to 30 days notice.
Eppley’s directors stated in the prospectus that “since the company’s initial public offering, of ordinary shares in July 2013, the company invested over $600,000,000 in the expansion of its credit business. The Company has deployed most of the capital it raised in its 2018 Preference Share issue in November 2013.”
Eppley provides credit to clients, allowing policyholders to finance insurance premium payments for property and motor vehicles. It also provide lease and commercial loan financing to medium and large businesses.
The ordinary shares are held mainly by Musson Investments – 37.68 percent, General Accident – 9.17 percent, ATL Pension – 25.65 percent and Stony Hill Capital – 15.28 percent.
Jamaica money Market Brokers are the brokers to the issue.
For the six months to June profit of $30 million was achieved from revenues of $74 million. At the end of June the company’s equity is $336 million with debt capital of $428 million. The proposed offer will raise debt to at least $678 million putting the leveraging at a high level. It seems as if the company needs a dose of ordinary equity as well as debt funding.
Tax cut help boost D&G profit 30%
Desnoes & Geddes, brewers of the world famous Red Stripe beer, racked up a 30 percent increase in after tax profit, for the quarter to September this year, thanks partly to a reduction in tax, a 3 percent revenue increase and static to reducing cost. Profit before tax increased 14.5 percent to $640 million from $559 million in 2013. Revenues grew just 3 percent to $3.4 billion in the quarter but taxes fell from $192 million in the 2013 to $164 million as the tax rate for companies dropped to 25 percent form 30 percent for 2013.
Gross profit margin improved to 71.76 percent, in the latest quarter, from 69.25 percent last year. The improvement in the margin flowed in part from what management says are “efficiency gains from the investment in the brewery modernization such as the new combined heat and power plant.”
Gross profit improved by 14.7 percent to reach $1.156, as local sales grew 4.8 percent year over year, to reach $2.95 billion. Exports sales fell to $414 million from $465 million in 2013 leading to a fall in gross profit in the export segment to $226 from $291 million. Management stated that the reduction in exports is due to shift in the timing of a Shipment from the September quarter to the December quarter.
The company benefited from lower general, selling and administrative cost which fell to $261 million in the quarter, compared to $288 million in the 2013 quarter.
Cash funds at the end of the quarter, stood at $1.79 billion. The company declared a dividend of 27 cents per share, payable in December to cost $760 million and will be adequately funded by the earnings, for the December quarter. With the planned dividend, the company will pay 52 cents per share, in dividend for the 2014, providing a yield of just over 10 percent, based on the price of $5.10 at the end of 2013.
IC Insider is projecting earnings of 85 cents per share, for the year ending June 2015 and $1.05, for the following year. The stock which last sold at $4.95 remains an IC insider BUY RATED stock.
NCB wage award adds J$430M to cost
National Commercial Bank (NCBJ)has provided an update to the two Stock Exchange that its shares are listed on.
The bank has now stated that the total gross provision required to meet the total sum needed to satisfy the award, for the two year negotiating period, ending September 30th, 2014 is, approximately J$1.7 billion. The total amount to cover the award exceeds by approximately J$430 million, the amount that NCBJ had been providing for increased salaries and benefits, for the negotiating period. The amount is lower than the net sum of approximately $500 million IC insider suggested, would be the charge net of taxation. This shortfall, NCBJ says will be reflected in their income statement, for the year ended September 30th, 2014.
Scotiabank Canada to cut 1,500 jobs
Scotiabank Canada is to cut 1,500 positions worldwide and take a profit hit in fourth quarter of its 2014 fiscal year, ending in October. About two thirds of the cut will come from its Canadian operation and according to Yahoo.com will result in a charge of $340 million against 2014 profit.
Despite the charge, profit outlook remain good for 2014 and beyond, but the move is as a result of general weakness of Caribbean economies, sporadic use of branches, weekly and bi-weekly, instead of consistent daily use. The sporadic branch use will result in branch closures, mainly in Caribbean and Mexico. The bank’s foot print in Mexico are many, BNS management said, but the branches to be shuttered lack traffic, which means the bulk of the branch closure will occur in this country. The bank says they will be moving to use more ATMs and internet banking facilities, in place of the physical branches.
The BNS has written down its investment in the economically challenged Venezuela, reducing it to only $50 million.
What is known is that the Caribbean region has suffered considerably from the economic downturn experienced since 2008. The operations in Jamaica has seen profit stagnated in Jamaican dollars and slipped in Canadian dollars as the Jamaican dollar was devalued. Profits stagnated in Trinidad banking subsidiary, as well. Loan demand has not been robust within the region either, and the absence of a meaningful pick up in this critical area will result in a drag on profit growth, as long as that remains the case. The sharp fall in the price of oil is going to place pressure on the twin island state of Trinidad and Tobago and by extension some of the other territories that may be dependent somewhat on business out of Trinidad. This latest development could be negative for Scotia’s Trinidad operation. Compounding the problem for Scotia, is that Jamaica that has started enjoying moderate growth that could lead to increased private sector loan demand, is faced with lower demand for government funding, as the government moves from deficit financing to one of surplus.
More inside buying at Sagicor Group
Insider trade is often an important insight into the fortunes of companies. It is not always the case, but large buying or selling is usually a tell tail sign of where company profits are heading.
Executives have been buying into Sagicor Group in recent months. In October another purchase of shares took place. The company advised the Jamaica Stock Exchange that an executive purchased 417,016 of its shares on October 24, 2014 under the Executive Long Term Inventive Scheme.
Sagicor Group reported profit of $1.62 billion for it June quarter this year, versus $1.56 billion last year, and $2.7 billion in the six months to June, this year. Third quarter profit results which are scheduled for release shortly, should be hit with redundancy and other costs, related to the acquisition and rebranding of RBC Jamaica operation at the end of June.
Dividend for JPSCO shareholders
Jamaica Public Service Company has a series of preference shares listed on the Jamaica Stock Exchange.
The company announced a dividend for one of its recent listings, a US dollar based preference share. The company, the sole distributor of power through the national grid, approved a dividend payment of the Class F9.5% Preference Share of US$0.236849313 per share to be paid on October 31, to shareholders on record as at October 29, 2014.
Jamaica Public Service Company previously paid a dividend for these preference share amounting to a total of US$1,137,652.66 or US$0.463287757 per share on August 15, 2014.
