Scotia investments (SIJL) has been in transition for a long time from their original business based substantially on repos, to one based on pool funds. In the latter half of 2016 the company showed strong signs returning to pathway of growth but the latest half year results have put that on hold, at least for the time being.
A big part of the investment banker’s problem is the strangulation the Scotia Culture has placed on clients that is driving business away. Examples of this is the length of time it takes to place stock brokerage orders and its execution, or the inability now to get statement of accounts.
The company’s half year report, shows profit of $451 million for the period ended April 2017 compared to $457 million for the prior period, in 2016 from revenues of $2.3 billion, a reduction of $64 million in the corresponding period in 2016. The net profit for the second quarter to April this year, ended at $302 million, down from $339 million for the same quarter in 2016 from revenues of $1.14 billion compared to $1.19 billion in 2016.
SIJL earned 71 cents per share in the April quarter, down from 80 cents in the 2016 period and $1.07 for the half year compared to $1.08 in 2016. At the rate of growth for the half year, it looks as if profit for the full year should hoover around the $3.19 earned in 2016.
Total Comprehensive Income for the half year amounted to $546 million, compared to $663 million reported for the same period last year and for the quarter $454 million versus $468 million.
Total revenues for the six months from pool management funds fees grew 18 percent in the half year over that of 2016 while fees from pension and portfolio management, increased year over year by 34 percent.
Net Interest Income after impairment losses for the period was $685 million, a reduction of $60 million from $745 million in the corresponding period last year.
Other Revenue, comprising fee income, securities trading gains and net foreign exchange trading income, rose by $32 million to $866 million for six month period, above the same period last year, but was down slightly for the quarter to $463 million from $481 million in the previous year’s quarter.
Operating Expenses for the 2017 half year ended at $889 million, compared to $913 million for the corresponding period last year and $385 million for the April quarter versus $395 million in 2016.
Total assets stood at $67 billion at the end of April while financial assets under administration not included in the financial statements, amount $193 billion versus $169 billion in 2016
A dividend of 45 cents per share was declared payable July 20, 2017, the same amount being paid for some time. The stock traded at $36.50 on the Jamaica Stock Exchange on Friday.
No progress for Scotia Investments
JSE stocks mostly fall on Friday
Salada Foods traded at a intraday high of $11 on Friday.
Trading in the main market of the Jamaica Stock Exchange was cut in half from the levels on Thursday at the close on Friday. The market indices trended lower as the All Jamaica Composite Index declined 315.07 points to close at 260,622.24, the JSE Market Index fell 287.07 points to 237,456.38 and the JSE US dollar market index dropped 13.20 points to 200.00.
At the close of trading, 26 securities changed hands in the main market with 1 trading in the US dollar market, leading to 8 stocks advancing and 13 declining. Trading in the main market ended with 3,645,879 units valued at $88,098,872 changing hands compared to 6,887,167 units valued at just $169,323,809 at the close on Thursday. Trading in the US dollar market accounted for 57,934 units valued at US$15,021.
IC bid-offer Indicator| At the end of trading in the main and US dollar markets, the Investor’s Choice bid-offer indicator reading shows 10 stocks with bids higher than their last selling prices and 1 with lower offers.
The main market ended trading with an average of 140,226 units valued at $3,388,418 for every security traded compared to an average of 255,080 units valued at $6,271,252 on Thursday. The average volume and value for the month to date ended at 139,772 units with an average value of $4,238,293 compared with an average of 139,696 units with an average value of $4,379,939 on the previous trading day. 
The average volume and value for May ended at 358,008 units and $9,037,303.
In market activity, Barita Investments closed at $7, losing 2 cents with trades of 10,000 units, Berger Paints exchanged 7,127 shares at $18.75, Cable and Wireless traded 242,780 stock units at $1.25, Caribbean Cement gained $1 to close at $28 trading 12,532 shares, Carreras advanced $4, in closing at $89, with 4,347 shares changing hands, Grace Kennedy closed at $43, gaining 3 cents with 47,920 units trading, Jamaica Broilers exchanged 83,960 shares at $17.65, Jamaica Producers closed at $16, with 84,225 units changing hands. Jamaica Stock Exchange rose 20 cents to close at $7.20 trading 64,439 shares, JMMB Group closed at $21, after climbing $2 in exchanging 38,443 units, Kingston Properties closed at $11.26, after losing 23 cents with an exchange of 4,977 units, Kingston Wharves closed at $30.50, with a loss of $1.50 trading 5,684 shares, Mayberry Investments lost 1 cent to close at $5.07, in trading 800 units, NCB Financial Group gained 50 cents to close at $71.50, after exchanging 886,407 shares, 1834 Investments lost 9 cents to close at $1.45, with 10,292 shares changing owners. PanJam Investment closed at $34, after losing 70 cents with an exchange of 31,750 shares,
Pulse Investments lost 50 cents, closing at $16.50 while trading 1,000 shares, Radio Jamaica closed at $1.66, with a loss of 4 cents, exchanging 793,322 shares, Sagicor Group gained 3 cents and closed at $34.38, with an exchange of 18,650 shares, Sagicor Real Estate Fund traded 40 cents lower to close at $10.40 with 28,250 shares traded. Salada Foods exchanged 101,650 shares to close at $10, after trading at a 52 weeks’ high of $11, Scotia Group closed at $42.01, with a loss of $1.79 exchanging 276,255 shares, but closed with the bid at $43.75 to buy just 100 shares, Seprod lost 40 cents to close at $29.50 trading 2,454 shares, Sterling Investments gained 40 cents to close at $15.50, with an exchange of 10,150 units while Supreme Ventures lost 1 cent to close at $7.49, with 27,681 shares changing hands. Proven Investments lost 0.04 US cents exchanging 57,934 ordinary shares to close at 24 US cents and JMMB Group 7.5% preference share closed at $1.15, with trades of 850,784 units.
16% rise in Scotia Group Q2 profit
Scotia Group reports a 14 percent increase in profit compared to the period in 2016. The banking group added $718 million more in profit to $5.7 billion for the six months to April 2017 over 2016.
Net income for the second quarter rose 16 percent to $3.4 billion, versus $2.94 billion in the same period in 2016. Total revenues for the April quarter amounted to $16.7 billion while in 2016 the group generated revenues of $11 billion while revenues for the six months ended at $23 billion versus $21 billion.
“The positive movement was achieved through increased loan and transaction volumes across our business lines,” the Group stated in a report accompanying the results. Net interest income after impairment losses for the six month period was $12.2 billion, $399 million or 3 percent above the same period in 2016
“Net fees and commission income amounted to $4.4 billion, driven by higher transaction volumes and the growth in our credit card, merchant services, and asset management business. Insurance revenue increased by 31% given the growth in core insurance business and actuarial reserve release from changes in assumptions on valuation of the portfolios. Net gains on foreign currency activities and financial assets amounted to $1.3 billion based on trading volumes,” the Group stated.
Operating Expenses amounted to $11.1 billion for the six month period, an increase of $300 million or 3 percent compared to prior year. Salaries and staff benefit costs increased by $201 million, which was offset by lower other operating expenses of $87 million. Asset tax increased by $112 million or 12% to $1.1 billion due to the increase in the Group’s assets.
Impairment losses on loans amounted to $975 million, up $367 million from last year as higher write-offs on unsecured retail loan portfolio grew by $7 billion or 4 percent year over year, with loans after allowance for impairment losses, increasing to $164.2 billion.
Express Catering heading for Junior Market
2017 is set to be the year with the most listing on the Jamaica Stock Exchange even as just four listings have made it to the market so far in 2017. At the end of 2016, eighteen new listings were expected based on feedback the stock exchange obtained from brokers and companies expressing an interest in listing.
Express Catering a company operating in the Montego Airport is being brokered by Mayberry Investments in a bid to raise funds for existing shareholders. The company shares are expected to be listed on the Junior Market of the Jamaica Stock Exchange. Existing shareholders plan to sell between 20 to 40 percent of the company to raise around $400 to $500 million at a price range between $1 and $2.50 per share, our source informs IC Insider.com.
The company would be valued around $1 billion and using a PE of 10 times earnings would put the profit at around $100 million. The bulk of passengers passing through the Montego Bay airport are tourist, with the continued increase in hotel rooms passenger traffic will keep growing for some time and provide the company with increased opportunity for growth.
Not much more has so far been disclosed, but an indication of the company’s size can be gleaned from the fact that Montego Bay Airport Ltd generated revenue from Express Catering for rental and commission on food and beverages sales of U$$2.7 million in for 2016, an increase from US$2.5 million in 2015.
In April this year The Gleaner reported that the company has annual revenues at US$14 million from being an exclusive provider of food and beverage products in the post-security lounge of the Sangster International Airport. The company has a diverse group of proprietary brands and international franchises to include such brands as Quiznos Subs and Salads, Aunt Annie’s Pretzels, Nathans Famous Hot Dogs, Cinnabon, Moe’s South Western Grill, Wendy’s, Dominos and Dairy Queen.
Elsewhere, the Musson’s subsidiary, Productive Business Solutions prospectus is said to be at the FSC for vetting, from about three weeks ago and should be close to being released to the public. Productive Business Solutions operates in the Caribbean, Central America and the USA and will come to the market with a US$41 million offer of ordinary shares. Stationery and Supplies Limited is also expected to be coming to the market anytime now.
Main Event flat profit before tax
Main Event Entertainment that went public with an IPO in January this year is reporting flat profit before tax and slightly lower net profit after tax of $3.3 million. Profit before tax for the year to October ended at $59.8 million com-pared to $60.3 million in 2015.
Profit after tax came in at $56.5 million versus $60 million in 2015, the out turn is lower than the $60 million the internal figures to September last year that was included in the prospectus showed. The net profit translates to earnings per share of just 23.5 cents with 240 million shares applicable at the date of the financials.
Return on average equity amounted to a strong 41 percent, with shareholders’ equity at the end of the period being $242 million.
The results emanated from a 9.5 percent rising in revenues to $1.13 billion, the growth was slowed b y a big drop in revenues from Digital Signage. With gross profit climbing 13 percent to $429 million. Expenses rose by 15.7 percent to $354 million. Revenue during the year was generated mostly by Entertainment promotion activities of $854.7 million in 2016 from $742.7 million in 2015. Audio and film contributed $189.5 million compared to $140 in 2015 and Digital signage of $88 million versus $151 million in 2015. The auditors signed off on their report on the 5th of June, an indication that all was not well with the financial reporting.
Main Event went public at $2 in January and now trades on the Junior Market of the Jamaica Stock Exchange at $6.50.
Access growing by acquisition
Access growing aggressively
Micro lender Access Financial (AFS) on 27 May 2016, entered into an agreement to purchase the business of Damark Limited as a going concern comprising mainly the loan portfolio, fixed assets, trademark and customer relationship for a consideration $180 million, notes to the 2017 audited financial statements show.
The principal activities of Damark Limited at the time of the acquisition of the assets was retail lending. Net assets acquired include, Customer relationships $21.8 million, Trademark and Trade name, $2.7 million, Loan portfolio of $148.7 million, Fixed assets of $2.17 million and Goodwill of $4.6 million.
Damark Limited previously operated out of Suite 13 at 11 1/2 Swallowfield Road in Kingston, Jamaica.
In 2015, Access acquired the loan portfolios of Asset Management Company Ltd formerly operated by Scotia Investments which was sold and ultimately purchased by Proven Investments before being sold to Access and Appliance Traders for just over $500 million. The acquisition helped in growing the net loan book at AFS above $1.5 billion or 35 per cent year-on-year.
Access which enjoyed strong growth in the 2017 fiscal year from ongoing business is not relying on geometric growth alone as information reaching IC Insider.com indicates that the micro lender is currently working on another acquisition. Our sources inform us that it is about the same size as the Damark acquisition and should be completed by the end of June.
The company made profit of $678 million from revenues of $1.5 billion dollars and had loans outstanding of $2.6 billion at the end of March. The stocks traded on the Junior Market of the Jamaica Stock Exchange at $50.
More profit for Proven
Proven Investments reported profit to owners of the company of US$8.721 million up from $2.344 million in 2016, but it is not as simple as it first appears. To get a good picture as to what is the true ongoing earnings investors have to dissect to numbers and add to and deduct to get the real picture.
First, there is an US$8 million gain from the difference in net value $20.63 million acquired from Bank of St. Lucia International, over the amount paid of $12.6 million. The managing director got shares in the new subsidiary which resulted in a charge to income of $3,244 million, adjusting for these two items would leave shareholders with profit of $4 million. Reversal of Impairment loss on investments resulted in profit being boosted by $921,000 in 2017 compared to a hit of $1.744 million in 2016 and realized gains on investment of $10.756 passed through other comprehensive income and not reflected in the regular profit.According to Proven Chief Executive Officer, Christopher Williams, there are expenses incurred in the acquisition of Bank of St. Lucia amounting to US$2 million and some of the preference share dividend was incurred as a result of the planned acquisition and would need to be adjusted for.
When all adjustments are factored in the investment company enjoyed earnings of $15.8 million from normal operations or earnings per share of 28.7 us cents. Stripped of all the one off type income and expenses, earnings come out at $5.04 million, excluding the added preference share dividend. The company has nearly $12 million of losses relating a fall in the value of investments and foreign exchange translation losses, not booked through normal profits.
Christopher Williams, Proven Investments CEO.
The foreign exchanges losses Williams states relates to the acquisition of Access has gone up in value but is on the books at cost of J$9 per share versus $50 currently. The regular profit statement shows earnings adjusted for one off items coming, in at 0.09 cents per share and puts the PE ratio at 2 times 2017 earnings, falling to 14 times estimated 2018 earnings.
Access Financial Services is playing an increasing role in the financial fortunes of the company with a 47 percent increased profit in Jamaican dollars, for the 2017 fiscal year, according to Williams Bank of St. Lucia which made US$3 million profit for 2017 is expected to deliver US$4 million in 2017. If Proven maintains the performance of its core business and delivers on the promise of Access and Bank of St. Lucia then earnings from ongoing operations should end up around US$12 million or 0.021 US cents per share. The stock traded at 28.5 US cents on Tuesday on the Jamaica Stock Exchange.
Cable Bahamas list on JSE Friday
This Friday June 2, will see the latest listing of a new company on the Jamaica Stock Exchange. The Bahamian based Cable Bahamas will see its shares available for trading on the local exchange for the first time.
Earlier this month the exchange approved the listing of the company’s shares. Information available to IC Insider.com is that the list will be on the US dollar exchange and will comprise ordinary and preference shares.
According to the company’s financials there are 43,884,754 ordinary shares and 8 different category of preference shares issued. The net asset value of the ordinary shares are around BH$2 each but the stock trades in the Bahamas at BH$4.05, with 1,000 units trading. Selling by investors is at $4.40 and above with buying interest at $4.05 and below. The 52 weeks high is $6.76 on June 9, 2016 and a low of $3.80, on the 9th of February, this year.
Revenue earned for the 2016 December quarter, was BH$47.887 million compared to BH$41.730 million and for the year to December BH$180.588 versus BH$165.678. The company reported losses of BH$9.2 million in the December quarter inclusive of a fixed asset write off of BH$5.8 million and $7.8 million for the year. Total shareholders’ equity stood at BH$91 million at the end of December 2016 and losses incurred in the March 2017 quarter of BH$7 million pushed shareholders’ equity down to BH$84 million at the end of March this year. Revenues in the March 2017 quarter rose 17 percent to $51 million up from $43.7 million in 2016 but operating cost jumped even faster by 60 percent to $46.6 million from $29 million with depreciation and amortization rising from $9 million to $16.8 million.
Two other listing should be heading to the market within weeks as Stationery and Supplies and the Musson subsidiary Productive Business Solutions with operations in the Caribbean, Central America and the USA come to the market with a US$41 million offer of ordinary shares.
Carreras pays $7B to government
Carreras grew profit by 27% in the fiscal year to March.
According to the last audited financials to March this year, Carreras will contribute $7 billion in taxes to the government of Jamaica coffers, excluding payroll taxes.
For the current fiscal year, the company is expected to contribute in excess of a billion more in taxes as government increased taxes on cigarettes earlier this year and profit grows thus contributing more in profit tax. The cigarette distributors paid 15 percent more in Special Consumption Tax during the fiscal year, than the year before, with $5.9 billion being paid while operating revenues grew 12.8 percent to $13.5 billion.
The financial results to March show profit for the year rising 27 percent to $3.8 billion or $7.84 per share with earnings versus $6.20 in 2016. Carreras incurred $1.2 billion in corporate taxes. In achieving the improved results the company not only increased revenues net of consumption taxes but cut operating cost as well. Administrative cost fell from 1.21 billion to $1.07 billion, as staff cost fell from $211 million down to $163 million and Business support services cost declined from $386 million to $302 million. Distribution cost from $723 million to $622 million as $81 restructuring cost incurred in 2016 was eliminated in 2017. Occupancy cost fell from $56 million to $45 million Security fell from $74 million to $57 million and other expenses declined by $23 million to just $4 million. Staff cost rose from $316 million to $332 million.
Cash funds stood at $2.58 billion compared to $2.6 billion in 2016 and shareholders’ equity at $2.1 billion. IC Insider.com is forecasting profit for the year to March 2018 of $4.4 billion with earnings per share of $9.
Dividends paid during the year to March 2017 amounted to $3.45 billion or 91 percent of profit. The stock traded at $84 on Tuesday on the Jamaica Stock Exchange.
47% surge in Access profit
Looking at the Access Financial results to March without dissecting it would lead to a conclusion that things have slowed with earnings per share of $2.49 versus $2.19 as the comparative reported in the audited financial statements for 2107.
Those numbers disguise the full impact of the 2017 fiscal performance that is up nearly 47 percent after tax, compared to the previous twelve months period. The company that made its name lending workers supported by employers making payroll deductions for repaying the loans, made profit after tax of $678 million versus $463 million when the 15 month period is adjusted for the extra 3 months. The growth continues the strong growth of the company as loans keeps on growing year after year and being up $514 million in the last twelve months to $$2.6 billion. Access has shareholders’ equity of $1.7 billion and should exceed the $2 billion mark during the current fiscal year as profit for the current fiscal year.
IC Insider.com is forecasting profit for the year to March 2018 to exceed $1 billion with earnings per share of $4 with $6 for the 2019 fiscal year.
Dividends paid during the year to March 2017 amounted to $178,431,396 or 26 percent of profit. The stock traded at a record high of $50 on Tuesday on the Junior Market of the Jamaica Stock Exchange.