Republic makes bid for Cayman biggest bank

Demand rises for Republic Financial Holdings

Trinidad’s Republic Holdings has made an offer through its wholly-owned subsidiary of RBTT Barbados Republic Financial Holdings to acquire between 51 percent and 74.99 percent of the issued shares of Cayman National Bank.
The offer is priced between US$6 to US$6.75 per Cayman National share representing a premium between US$3 to US$3.75 per share as compared to the closing price of US$3 per Cayman National share on 3 August. The offer price is around 10 times earnings which is very attractive to republic as profit has been growing nicely for last year and the current year. The acquisition would allow Republic to merge Cayman National with Republic’s Cayman operations.
Cayman National has total assets of CI$1,558,692,523, up from $1,464,852,010 at June 2017. Total Comprehensive Income for nine months to June 2018 is CI$16,062,080 and is up from CI$10,841,267 in 2017.
The Offer remains subject to a number of conditions, including completion of due diligence by RBTTBL and recommendation by the Board of CNC for the Possible Offer.
Cayman National was Established in 1974 and is the largest financial services company based in the Cayman Islands, providing banking, trust and company management, fund administration, and wealth management services to clients locally and around the world, from the Cayman Islands, and the Isle of Man, with an office also in Dubai. Cayman National is publicly traded on the Cayman Islands Stock Exchange and comprises: Cayman National Bank Ltd., Cayman National Fund Services Ltd., Cayman National Securities Ltd., Cayman National Bank (Isle of Man) Limited and Cayman National Trust Company (Isle of Man) Limited and Cayman National (Dubai) Ltd.
RBTTBL was established in 1999 and is a licensed offshore international financial business operating pursuant to the International Financial Services Act, CAP. 325 of the Laws of Barbados which primarily conducts investment and investment management services. RBTTBL’s registered office is located at Republic Bank (Barbados) Limited, Independence Square, Bridgetown, Barbados. RBTTBL is a wholly-owned subsidiary of Republic Financial Holdings Limited. RBTTBL currently has wholly-owned subsidiary in the Cayman Islands, Republic Bank (Cayman Limited).
About Republic Bank (Cayman) Limited:
Republic Bank (Cayman) Limited was established on 13 January 1992 and currently holds a Trust License and an Unrestricted Class B Banking License under the Banks and Trust Companies Law of the Cayman Islands, as amended. Republic Bank (Cayman) Limited also holds a Mutual Funds License and is a registered Excluded Person for purposes of the Securities Investment Business Law of the Cayman Islands (SIBL-EP).
RFHL is listed on the Trinidad and Tobago Stock Exchange and has over US$10 billion of total assets. RFHL, along with its subsidiaries and associated companies, provides commercial banking and related services. These include investment banking, mortgage financing, securities trading and related activities, trustee services, credit card operations, foreign exchange and trade finance services as well as deposit taking and lending operations. Through its subsidiaries and associated companies, RFHL has operations domiciled in Barbados, Ghana, Suriname, Grenada, Guyana and St. Lucia in addition to Trinidad and Tobago.

JSE & FSC should explain Knutsford capital mess

Knutsford Express 2014 & 2015 audited accounts filled with errors & 2018 needs correcting.

Knutsford Express recently released full year audited results to May 2018 with s lightly higher profit of $178 million after taxation compared to $170 million in 2017. The profit resulted in earnings per share of 35.5 cents for the year versus 34 cents in 2017.
The initial release of the results had the 2017 earnings per share as $1.70, but that was incorrect as the incorrect number of shares were used. The company released an up dated report but that still reflects the error in computing the EPS. In June 2017 the shares were split in to 5 each raising the issue capital to 500 million units. But the revised report carried the error which was in the first report that the weighted number of shares in in issue was 498 million units, that is completely wrong.

JSE failed to have errors corrected in audited accounts.

Stock splits and bonus shares don’t give rise to weighted number of shares as no value is added to the company. As a result, all the issued share has to be used in computing the EPS for both periods.
The appropriate methodology is that the “Additional shares from the share split are incorporated in the calculation of EPS in full without any time apportionment so that the increase in number of shares in the current period, comparative prior periods and all subsequent periods is the same therefore resulting in EPS which is comparable over several accounting periods.”
Interestingly, the number of shares used to compute the interim report to February was correctly shown as 500 million units. As it now stands, the audited accounts and the interim reports have used different figures. What is the Jamaica Stock Exchange doing to correct this?
The first audited accounts, after listing, carried an even greater error was with no correction to date.
The audited accounts stated, “Earnings per share is computed as the net profit for the year divided by the weighted average number of ordinary shares in issue for the year as at the date of the statement of financial position of 46,857,114 (2013: 1,000). For comparative purposes, the earnings per share for 2013, using the weighted average number of ordinary shares at the end of the 2014 financial year, would be $0.74.”
The financial statements for 2014 stated, “During January 2014, the Company raised additional capital of $99,862,700 from its initial public offering of 99,999,003 shares for its enlistment on the Jamaica Stock Exchange Junior Market. Transaction costs of $5,374,140 were incurred for the initial public offering”. That is in conflict with the prospectus which stated, “The Company invites Applications on behalf of itself and the Founders (or the Selling Shareholders) for 20,000,000 Ordinary Shares in the Invitation of which 4,867,338 shares are newly issued shares for subscription and 15,132,662 shares are existing shares of the Selling Shareholders for sale”.

The FSC has down on the job in reviewing Knutsford prospectus & reports after IPO.

While the note is saying that $100 million was raised, the cash flow and shareholders’ equity show that only $25 million was raised.
Not only are the audited accounts for 2014 and 2015 in conflict with the information included in the prospectus, it is factually incorrect as the initial public offer of shares was never 99,999,003 units. There is no indication how the original three shareholders holdings moved to the above amounts when just 973 were issued in the prior year.
The prospectus stated that “as at December 18, 2013 the latest practicable date prior to publication of this Prospectus, the holdings of Shares in the capital of the Company (including legal and, where known to the Company, beneficial
holdings) were as follows: Oliver Townsend 41,858,371 or 44 percent, Anthony Copeland 30,442,452 Shares at 32 percent and
Gordon Townsend 22,831,839 or 24 percent for a total issued Share Capital before invitation is 95,132,662. After the issues, the total number of shares went to 100 million units with all three original shareholders reducing their holdings.
One of the objectives for mentorship, of Junior Market companies, is to prevent errors like these from occurring, but they still continue.
While these errors remain, investors are being deprived of pertinent information to assess profitability. The company should be showing expenses in the categories of direct expenses marketing and sales, administrative and finance. But investors continue to get just one lump sum figure to assess that is not good enough.
While revenues for the past year grew by 23 percent to $925 million while other income declined from $8.5 million to $1.5 million. Cost climbed faster at 25 percent for the year before finance cost, Finance costs rose to $21.7 million from $17.6 million. The company is not subject to taxation and should not have deferred taxation amounting to $3.7 million, while the tax credit of $5.7 million in the prior year should not have been booked.
The balance sheet shows shareholder’s equity at $630 million at the end of May current assets at $304 million including cash and equivalent of $230 million and current liabilities of $63 million. Borrowed funds stand at $78 million.

Medical Disposables Q1 profit jumps

Medical Disposables in IC TOP 10

Profit after tax at Medical Disposables and Supplies increased 22.7 percent to $19.2 million for first quarter to June, up from $15.7 million in the 2017 quarter.
Importantly, profit excluding foreign exchange loss of $4.2 million, rose a strong 49 percent to $23 million. The impressive increase in operating profit flowed from a 12.6 percent increase in sales in the quarter to $541 million, from $481 million in 2017. “This performance was mainly attributable to growth in the consumer business segment and price increases, Kirk Boothe, Managing Director, stated in commenting on the sales performance for the 2018 quarter. The increase is at a slower pace than sales for the December quarter of 21 percent and 19 percent for the 2018 fiscal year.
Gross profit increased $14.3 million or 14 percent to $117 million for the quarter, representing 23 percent of sales, up from 21 percent in 2017.
Sales and distribution cost slipped slightly from $33 million to $32 million, depreciation inched to $6.1 from $5.9 million while administrative expenses rose to $49 million from $41.4 million in 2017, as salaries and commissions increased by $3.35 million or 8 percent, General insurance rose by $800,000 or 47 percent following increased inventories and other assets and Professional fees and Information Technology Consultancy fees increased by $1.74 million or 36 percent for infrastructural improvements.
Cash flow generated $25 million and after changes in working capital, ended at $23 million with cash on hand ending at $29 million. Inventories fell to $421 million from $544 million at the end of March as a direct result of the increase in business opportunities, but receivables remained over $300 million at $318 million, a bit on the high side and trade payables fell to $292 million. Borrowed funds stood at $331 million. Shareholders’ equity rose $19 million to $692 million.
Earnings per share for the quarter was 7 cents, IC projects 65 cents for the full year on the basis that the loss of exchange will remain substantially at the June quarter level and $1 per share for the next fiscal year. The PE ratio based on forecast earnings, is 9 at Fridays’ closing price of $5.80.

Profit jumps 77% at Lasco Manufacturing

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Profit jumped a strong 77 percent at Lasco Manufacturing, in the June quarter to, $238 million from $134 million in 2017, from sales revenue that rose just 14.8 percent to $1.73 billion, up from $1.5 billion in 2017.
The results follow the 2018 fiscal year, when profit fell from $707 million to $560 million, after rising 73 percent in the December quarter, to $195 million from $113 million in 2016. For the nine months to December, profit fell 24 percent to $533 million from $700 million in 2016.
Profit margin climbed to 35 percent from 31.7 percent in the 2017, as input cost climbed much slower than revenues, with an increase of 9 percent, to $1.1 billion. The effect, operating profit rose an impressive 27 percent to $607 million, from $478 million.
Depreciation cost rose 5 percent to $55 million but administrative, marketing and sales expenses declined by 1 percent to $252 million from $256 million. Finance cost rose to $31 million from $30 million in 2017.
“The positive out turn reflects growth in volumes, improved operational efficiencies and streamlining and cost control”, Managing Director, James Rawle, stated in his report accompanying the quarterly.
Gross cash flow brought in $293 million but growth in receivables, inventories, addition to fixed assets offset by loan inflows and increased payables resulted in a decline in cash of $110 million, leaving cash on hand and bank at $261 million.
At the end of June,shareholders’ equity stands at $5.16 billion with borrowings at just $1.6 billion. Net current assets ended the period $1.7 billion well over payables of $937 million. The company has so far incurred $731 million on work in progress that includes 65,000 feet warehouse expansion, scheduled for completion in September. According to managing director, James Rawle, “the facility will help to simplify logistics and result in important cost savings.”
Earnings per share came out at 6 cents for the quarter and is projected to end the fiscal year ending to March 30 cents. The stock traded at $4 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 12 times 2019 earnings and is in line with the market average.
The company will pay a dividend of 3.8 cents per share on August 31, resulting a total payment of $155 million.

Record close for JSE – Thursday

The All Jamaican Composite Index of the Jamaica Stock Exchange surged to more than 345,000 points in the early morning session on Thursday but failed to hold on at that level but still managed to end at a new record close.
At the close, the All Jamaican Composite Index held on to just 119.17 points of the early gains to end at a record closing high of 344,070.11 and the JSE Index clung to 108.58 points to end at record closing high of 313,486.71.
Trading in the main market ended with 4,999,824 units valued at over $34,788,166 compared to 34,917,482 units valued at $108,176,982 on Tuesday.
Market activities resulted in 31 securities trading including 4 in the US dollar market compared to 29 securities trading on Tuesday. At the end of trading, the prices of 14 stocks rose, 8 declined and 9 traded unchanged.
The day’s volume was led by, Mayberry Investments trading 1,003,340 shares to close at $7, after it traded at an intraday 52 weeks’ high of $7.60 JMMB Group 7.5% preference share closing at $1, in trading 952,000 shares and Mayberry Equities closed trading at $8.50 with 522,731 shares trading.
Major price changes| Grace Kennedy traded at an intraday 52 weeks’ high of $56.70 but ended trading at a 52 weeks’ closing high of $56.01. Jamaica Producers rose 30 cents to $17, trading 5,988 stock units, Mayberry Equities lost 55 cents trading 522,731 shares to end at $8.60, PanJam Investment concluded trading 51,973 shares at $51, after falling $1.54, Sagicor Group shed 40 cents and settled at $38.10, with 21,574 shares trading, Scotia Group traded 13,284 units and rose $1.10 to end at $52.20 and Sterling jumped $1.50 and finished trading at $13.50, with 2,952 shares changing hands.
Trading in the US dollar market closed with 98,429 units valued at US$87,029 as JMMB Group 6 percent preference share completed trading 80,000 stock units at $1.05, Margaritaville ended trading 10,524 shares to close at 16.9 US cents and Proven Investments rose 1 cent to 19 US cents trading 5,105 shares. The JSE USD Equities Index rose 1.62 points to 155.14.
Trading resulted in an average of 185,179 units valued at an average of $1,288,451 for each security traded. In contrast to 1,342,980 units for an average of $4,160,653 on Tuesday. July closed with an average of 169,022 units valued at $3,514,756, for each security traded.
IC bid-offer Indicator| At the end of trading, the Investor’s Choice bid-offer indicator reading shows 7 stocks ended with bids higher than their last selling prices and 2 closing with lower offers.

Iron Rock improvement continues

IronRock Insurance reports vastly improved results for the second quarter and the six months period to June from rising revenues and stable administrative cost.
A loss of $4 million was incurred for the June quarter and $8.6 million for the half year compared to a loss of $19 million and $46 million in June quarter and half year in 2017 respectively.
The vastly improved bottom-line flowed from gross written premium for the half year rising 63 percent to $282 million, from $173 million in 2017 and net earned premium increasing 248 percent to $80 million, up from: $23 million in 2017. For the second quarter premium rose at a slower pace of 14 percent to $127 million and net premium income moved 213 percent from $13 million to $42 million.
Operating expenses rose to $74 million from $65 million in 2017 and moved from $33 million to $36 million in the June quarter. Insurance damages claimed $38 million for the half year, up from $21 million in 2017 and increased claims from $9 million in the June 2017 quarter to $21 million in 2018, leading to reduced underwriting loss of $30 million versus $61 million in the corresponding in 2017. Other income for the period rose to $22 million from $14 million for the 2017 period and for the June quarter, moved from $8 million to $11 million. Shareholders’ equity inched up from $512 million to $514 million helped by unrealised gains of $10 million in the equity portfolio. Total assets stood at $988 million and comprise cash and investments of $602 million, while liabilities include $360 million for claims provision.
The stock last traded at $3.10 and could enjoy some gains going forward as company extend the improvement in both the top and bottom-lines.

Financiers bullish on Carib tourism

Entities eyeing the Caribbean region and in need of financing should be encouraged by findings by top accounting firm KPMG included in their annual survey on financing for the sector amongst banks and non-banks.
“Confidence levels of banks increased yet again for an amazing ninth year in a row,” the survey stated and went on to indicate that “confidence levels of non-banks also increased.” “Overall non-banks remain more confident than banks registering 7.43 out of 10 in terms of their level of confidence versus 7.11 out of 10 for banks. For both banks and non-banks to exhibit these high levels of confidence would be very positive at any time but for them to do so following what can only be described as a catastrophic 2017 hurricane season for the region, represents very welcome, positive news,” the KPMG report stated.
“Canadian headquartered banks have for many years been the primary financiers of developments in the region’s tourism industry. However, it is now firmly established that the landscape has changed, although the Canadian banks remain very much part of that new landscape. The consensus view appears to be that they are “back in the market but more selective than before”. Other “players” are predominantly local banks who are increasingly participating in syndicated deals, U.S. funds, pension funds and insurance companies and development banks who are also active in the marketplace,” the survey finding went ion to say.

Profit up 19% at Lasco Distributors

Revenues at Lasco Distributors rose just 3.5 percent for the June quarter, to $4.28 billion from $4.13 billion in 2017 but profit before taxation climbed a much stronger 17 percent in the quarter to $254 million from $217 million in 2017.
The improved profit out turn was helped by modest improvement in gross profit of $50 million and improvement in other income from $18.4 million to $42.7 million. The improvement comes off a strong period in the last fiscal year with profit rising 65 percent to $1 billion from $610 million in 2017. the 2017 profit slipped below the $717 million for 2016.
Administrative and other expenses rose faster than revenues at 5 percent, to $630 million and depreciation increased 31 percent to $30 million.

Peter Chin – Lasco Distributors’ Managing Director

Taxation was flat at $20 million, leaving net profit for the quarter rising 19 percent to $234 million. Earnings per share rose to 7 cents, from 6 cents in 2017.
Gross cash flow brought in $263 million but growth in receivables, offset by reduced inventories and reduction in amount owed to creditors, resulted in negative cash flows of $222 million and left cash and equivalent with at reduced $1.33 billion.
At the end of December, shareholders’ equity stands at $4.8 billion with borrowings at just $233 million. Net current assets ended the period $3.3 billion almost equal to Payables of $3.4 billion.
The stock traded at $4 on the Junior Market of the Jamaica Stock Exchange with a PE ratio of 11 times 2019 estimated earnings. In April the company paid out $408 million in dividends.

$9.20 offered for 75% of Barita shares

Barita last traded on the JSE on Wednesday at $9.

The long awaited formal offer to acquire majority shares in Barita Investments has been released.
Cornerstone Investments Holdings is offering $9.20 per share for 334.4 million Barita shares to acquire no more and no less than 75 percent of the company. The intention is for the company to remain listed on the Jamaica Stock Exchange
The offer opens on July 26 will cost $3 billion. The company signed a lock up agreement with Rita Humphries-Lewin and Karl Lewin who have 77.5 percent of the shares to sell amounts to allow for the 75 percent acquisition as such the offer is all but done.
The company has 445.877 million shares issued contributing to shareholders’ equity of $2.86 billion or $6.40 per share.
For the March quarter comprehensive income was $165 million and $492 million for the half year or just over $1 per share and puts the purchase price at about 5 times earnings. But the acquisition is even more attractive to the buyers. Both Humphries will cease being executives that will result in cost savings. The new link up could see a more aggressive stance taken in increasing business and profit within a relatively short time frame from existing offerings as well as new ones. The Unit Trust business is a potential storehouse of huge income down the road while more can be eked out of the portfolio of investments. Investors who hold on to their shares will benefit from a promised 80 percent pay out of profit going forward.

Profit almost doubles for JSE

Profit at the Jamaica Stock Exchange (JSE) almost doubled for the half year to June with profit after tax jumping 97 percent in the June quarter to $90 million and up 88 percent for the half year to $191 million.
Revenues grew 34 percent for the quarter to $316 million and 39 percent to $666 million. Expenses rose 14 percent for the quarter to $191 million and is up 21 percent for the half year to $398 million. Earnings per share for the June quarter ended at 13 cents and 37 cents for the six months period and should end the year around 70 cents per share. The stock that trades around $7.50 is therefore attractive with eys focused on 2019 when business should increase with more listings and hopefully more business activities.
The JSE ended the quarter with total equity of $1.03 billion. Cash and investments stood at $420 million. Property and other fixed assets climbed to $410 million from $264 million.