Express Catering generated US$7.3 million in cash flow and paid interest of $2.5 million on borrowings used to fund loans to the parent company. The loan to the parent jumped US$7.7 million during the year to US$24.6 million or J$4 billion.
Ian Dear, Managing Director of Express Catering
The just-released audited accounts do not indicate the company’s ability to recover the debt, which has been rising for years and exceeds shareholders’ equity of US$13 million.
At the same time, minority shareholders bear the cost of the US$15 million loan borrowed to help fund the parent company, without a cent being passed on to the parent. This is very poor governance practice. The practice opens the company to tax charges for the loss of interest income, as the loan is not an arm’s-length transaction. Worse, it opens the company to legal action from minority shareholders for suppressing minority.
Shareholders get hit in a number of ways. The cost of lending the parent company reduces profits, resulting in a lower stock price and lower dividends, with the possibility that some or all of the debt may have to be written off.
During the year, the company suffered a reduction in revenues and profit, mostly caused by a drop in visitor arrivals through Sangster International Airport since November last year.
Revenues fell from US$25.9 million to US$18.9 million, while profit declined to US$2.68 million from US$3.76 million after interest costs of US$2.5 million, roughly the same as in 2025.
Starbucks is one of Express Catering brands.
Express Catering needs to regularise lending to the parent company, with a set date for repayment and compensation for interest at market rates, back to the inception of listing. It also needs to show, in future financials, the ability to recover the debt, with a charge being placed on the assets of the parent company.
Going forward, airport departures have been recovering and are now down around 20 percent from 2025 levels, with expectations that the numbers will continue improving into 2027 as most of the hotels that were closed reopen.