Friday, May 30, 2008

Investment banks show interest in the Caribbean

Published: Friday May 30, 2008

Global credit markets may be depressed, but the investment banking community continues to show strong interest in doing business in the Caribbean.

In one of the first indications that JPMorgan is committed to maintaining the close relationships which Bear Stearns enjoyed with many of the region's key institutions, JPMorgan recently confirmed that it is sending a senior delegation to the Euromoney/Latinfinance 2008 Caribbean Investment Forum. The delegation will be led by Joyce Chang, Global Head of Emerging Markets Strategy.

Chang confirmed JPMorgan's commitment to the region: "JPMorgan is strengthening and expanding its business in the Caribbean region. We were founded more than 200 years ago and have a proud history of, in the words of one of our founders, doing "only first-class business... in a first-class way'."

Merrill Lynch and Scotiabank will also be sending senior delegations. Heading Merrill Lynch's team will be Andrew Gray, managing director and COO for Latin American and the Caribbean. Acccompanying him are key Merrill executives such as Francisco Blanch, managing director and head of Global Commodity Research. He will provide delegates with an analysis of the current global commodities market as it relates to the Caribbean.

Luc Vanneste, Executive vice president and chief Financial Officer, is the senior Scotiabank representative at the Forum. He is joined by key executives such as Pablo Breard, vice president of International Research, whose macroeconomic workshop has become an annual fixture of the conference.

Collectively they join a stellar line-up of regional speakers which includes the prime ministers of Trinidad & Tobago and Barbados, and the ministers of finance of Jamaica and Trinidad & Tobago.

The Caribbean Investment Forum, which is co-hosted by the government of Trinidad & Tobago, and organised by Euromoney Conferences and LatinFinance, will take place in Port of Spain, on June 11-12. To date over 350 senior regional and international figures have confirmed their attendance.

Source: Jamaica Observer

Guardian continues to improve:Posts total revenues of TT$1.4 billion, producing a net profit of TT$50.6 million

Published: Friday May 30, 2008

A welcome recovery in 2007 followed through into a strong operational first quarter performance for Caribbean insurance giant Guardian Holdings Limited (GHL). For the first quarter ended March 31, 2008, the Group recorded an earnings per share diluted of TT$0.24, compared to a loss per share of TT$0.99 at the end of the first quarter (1Q) of 2007. Excluding fair value losses, GHL's earnings growth was up approximately 30 per cent from TT$0.26 to TT$0.34.

The chairman, Arthur Lok Jack, commented that all operating divisions in the various geographic regions produced positive returns during the first quarter.

The core revenue source, Net insurance premium Revenue grew by three per cent from TT$1 billion to TT$1.1 billion. With the exception of 'other Revenue', all other revenue, streams experienced meaningful growth, which led to a 3.9 per cent boost in Total Revenue from TT$1.3 billion to TT$1.4 billion.

A 0.7 per cent growth in Net insurance benefits & claims, and a 0.9 per cent reduction in expenses, led to a 66.5 per cent boost in operating profit before fair value losses to TT$122.4 million.

A modest resurgence in the local and regional equity markets during the first three months of 2008 translated into an encouraging improvement in the group's equity portfolio.

However, the gains experienced as a result of local equities were adversely affected by the declining market value of the group's holdings of international equities and Jamaican Government Bonds. As a result Fair Value losses were down TT$15.7 million, although still a significant improvement when compared to the TT$251.1 million loss in the first quarter of 2007.

After factoring in the increase in investments in associated companies, and finance charges, the Group closed the first quarter with a net profit of $50.6 million from a net loss of TT$205.2 million in the comparable period of 2007.

Gains from the sale of its holding of RBTT shares along with the Grupo Mundial of Panama investment should translate into a one-time gain of TT$2.24 per share.

It is anticipated that the cash injection of TT$2 billion from the RBTT deal will be used to reduce some of the group's debt burden and by extent finance charges. The majority of the cash however, may be used for further acquisitions or for investment in any viable investment opportunities that may arise.

At the current price of TT$30.75, this stock is trading at an attractive forward P/E multiple of 12.8 times. In considering the group's operational recovery which started at the end of 2007, and the opportunities arising for GHL out of the completion of the RBTT/RBC deal, BOURSE maintains a BUY recommendation on this stock.

Source: Jamaica Observer

Scotia nets over $200m in profit

Published: Friday May 30, 2008

Despite international bank woes and inflation worries at home, Scotiabank Trinidad and Tobago Limited has managed to make over $200 million in profit over the last six months.

In a statement yesterday, Scotiabank managing director, Richard Young, said the bank's board was pleased with the "impressive" results that the nationwide group of banks had delivered at the second quarter of its 2008 financial year.

In total, the group made a profit of $212.3 million for the six months ended April 30.

When compared to last year's profits for the same period, the bank's earnings increased by 19.7 per cent this year.

Young attributed the increase to "the commitment and dedication of its employees", whom he said have been relentless in improving the group's sales and service culture, as well as the implementation of the strategic initiatives which the group had planned.

He also said the buoyancy of T&T's economy helped Scotiabank's profits this year.

As a result of the bank's profit increases, the bank's directors have said they will be pay shareholders 23 cents on each ordinary share next month.

Source: Trinidad Express Newspapers

ANSA McAL reports $908m before tax profit

Published: Friday May 30, 2008

The ANSA McAL Group yesterday announced that its profit before tax increased by 28 per cent to $908 million for 2007.

The announcement was made by A Norman Sabga, group chairman and chief executive at the group’s annual general meeting at the ANSA McAL head offices, Tatil Building, Maraval Road, St Clair.

“We are on track to accomplish the mission we set forth which is the (Vision 2010) V10 mission and that was to double our revenues to eight billion dollars, to double our profits before tax to $1.24 billion and to achieve earnings per share of five dollars,” he said.

He said these successes show that the group is well on its way to achieve its objectives.

“Our 2007 results have demonstrated that we are well on our way to accomplishing those results and from this mission flows the other objectives that we have set for ourselves within the group,” he said.

He appealed to employees of the far-flung group of companies for loyalty to group products.

“Many of the products that we use on a day to day basis that you may not recognise are part of the products that your company represents or brand names that we represent outright.

“I would like to suggest to you that when you go to the marketplace that you utilise the products and services within our group,” he said.

Chief operating officer of the ANSA McAL Group Gerry Brooks, echoed Sabga’s call, urging shareholders, in addition to employees, to buy the group’s products.

“I want to endorse your call to shareholders to support the group by breathing the group, eating the group, driving the group, drinking the group and enjoying the value created from the group,” he said.

Speaking on the performance of the region’s economies, Brooks said the challenge for the region was trying to maintain growth.

“The big challenge for regional economies in 2007 was trying to maintain the growth trajectory in 2008, with what’s happening in the United States you are going to have some issues around remittance incomes and remittance flows from the United States.”

He said from a local point of view the problem is inflation.

Source: Trinidad Guardian Newspapers

Thursday, May 29, 2008


Published: Thursday May 29, 2008

TWO VICE-PRESIDENTS and four senior managers have been made redundant the local operation of Cable & Wireless (C&W).

Yesterday, the six senior staff at the British-owned telecommunications company were informed they would be leaving the company by weekend.

Less than a week ago, C&W publicly stated that jobs cuts were likely.

When the DAILY NATION tried yesterday evening to contact Donald Austin, president of C&W Barbados, he was in a meeting and could not
speak at the time.

It is expected however that Austin will soon give a detailed comment on the situation.

An official of C&W however confirmed to the DAILY NATION last night the cuts had indeed begun, but it was still unclear how many people
would be affected.

The official said the company had started "to examine the structure of its local business with a view of improving efficiency, and the restructuring process has impacted on six positions and these people have been notified.

"These take effect from June 1 and the company will make a more detailed statement at a later date," the official added.

Last Friday, Austin, along with Richard Dodd, chief executive officer of C&W's international Caribbean business, met with reporters during a Barbados-Jamaica TV link-up.

At that meeting it was announced that job cuts would be coming as the telecommunications company repositioned its business operations.

C&W plans to establish a pan-Caribbean business entity based on its existing operations in Barbados and Jamaica with a board of governors expected to be in place by September.

While the C&W operation in Barbados has been profitable, the same has not been true in Jamaica.

The C&W global operation recorded profits of US$341 million for the year ending March 31, down US$20 million on the previous year.

Source: Nation Newspapers

Wednesday, May 28, 2008

Financials drive the market

Published: Wednesday May 28, 2008

On the Jamaica Stock Exchange (JSE), financials are running the show. This is a common fact globally, where financials account for the bulk of exchange. Jamaican investors are shifting their attention from some manufacturing companies and conglomerates and placing it on financials. This comes as no surprise as the financial companies are posting outstanding earnings and as result, their stocks have piqued investor interest.

For starters, both National Commercial Bank Jamaica (JSE: NCBJ) and Scotia Group Jamaica (JSE: SGJ) wowed the market by releasing better than expected results.

NCB reported Earnings per Share (EPS) of J$1.83 for the 6M period ending March 31 which is a significant increase over the previous year when EPS was J$1.27. These results are exceptional due to the Visa Initial Public Offering which took place in March 2008. If we were to exclude this from earnings, EPS would be J$1.62 which is still a significant climb. Net Profit soared 44 per cent to J$4.5B from J$3.2B for the 6M period and 64 per cent to J$2.6B from J$1.6B for Q02 2007/2008. If we were to exclude the one off gain of J$517mm from the Visa IPO from the calculations, net profit for the 6M period would have increased 28 per cent, which is still a remarkable increase. NBCJ has a twelve month trailing EPS of J$3.25 and at current trading levels of J$23.94 the stock price is 7.37 times earnings - relatively cheap given their performance.

Scotia Group Jamaica (JSE: SGJ) also released stellar earnings results for the first six months of the financial year. The Company reported Earnings per Share of J$1.50 or J$4.6B which represents an increase of 44 per cent over the J$1.16 EPS it recorded last year. With a twelve month trailing EPS of J$2.81 and using the last traded price of J$26.01, the stock has a Price to Earnings ratio (P/E) of 9.26 times. Any P/E ratio of 10 or less for a financial company makes it cheaply priced.

Scotia DBG Investments Ltd (JSE: SDBG) was not about to be left behind. For the 6M period ended April 30, 2008, the Company's net income was J$637mm, doubling from the previous year when net income was J$319mm. EPS for the 6M period was J$1.51 compared to J$1.03 in the comparable period last year. However, we must bear in mind that during this time DBG was acquired by Scotia.

Undeniably, great earnings spark investor interest. The volumes of units traded on the Stock Exchange since the start of the year has been lead by financials, outside of Cable & Wireless (JSE: CWJA). NCBJ for one has seen 117,894,315 units trading hands since January 1, 2008. In one day of trading (May 21) the stock traded 49 million units, the highest trading volume of any stock since the start of the year.

Likewise, SGJ has traded 31,470,889 units since January 1, 2008. Immediately after the Company posted its tremendous earnings results last Friday, investors flocked heavily to the stock with over four million units being traded yesterday. There is now a situation of dwindling supply of SGJ shares on the market as buyers significantly outnumber sellers.

The chain reaction from excellent earnings to investor interest also has a parallel effect on the stock price. Investor emphasis on a stock usually results in a change in its price. Scotia's stock price has appreciated 15.6 per cent from J$23.01 at the beginning of April to J$26.01 on May 27.

NCBJ is an odd ball in this instance as its stock price does not follow the trend. Its stock price has been depressed due to heavy selling of shares by AIC (Barbados) and has not managed to break out of the J$22.00-24.00 range. Once this blows over, we expect the stock price to reflect its exceptional earnings.

Let's now compare the performance of financials with that of manufacturing companies. Berger (JSE: BRG) has traded only 3,020,541 units since January 1, 2008 and Carib Cement Co. (JSE: CCC) has traded 12,080,747 units - significantly less than NCBJ and SGJ.

Additionally, DG, Goodyear (JSE: GYR) and Berger have seen their stock prices stagnate since the start of the 2008. Jamaica Producers (JSE: JP) stock has plummeted 17.5 per cent from J$40.00 at the end of March to J$33.00 at the close of trading yesterday.

As many manufacturing companies are faced with adverse effects from economic conditions such as soaring oil, wheat and corn prices, and also confront natural disasters, Jamaican investors have limited confidence in these equities. Investors are putting their faith in financials where they feel more secure. If the global economic situation stabilises in the latter half of the year, as some analysts predict, we can expect interest in manufacturing to pick up. However, for now financials will continue to be in the limelight.

Michelle Hirst
Jamaica Observer

Guardian to sell stake in Panama company - Anticipates TT$450m profit from Mundial and RBTT share disposals

Published: Wednesday May 28, 2008

Financial conglomerate Guardian Holdings Limited (GHL) is to offload its 18 per cent stake in the Panamanian company Grupo Mundial Tenedora SA for US$27 per unit.

GHL Executive Director Douglas Camacho said the price sought was three times its initial investment in the company, when it acquired close to three million of Mundial's shares.

"GHL acquired shareholdings for US$9 per unit and we will be selling off these shares for US$27 per unit," said Camacho at an investors briefing in Kingston.

Guardian, two years ago, paid US$26.64 million for 2,960,645 shares in Mundial, equivalent to a 20.1 per cent stake in the financial services company, which is in the business of insurance, mortgage banking, trust and private banking services.

Building portfolio

Guardian, at the time, was building up its portfolio of investments in Central and Latin America.

Camacho did not say when the shares would be placed on the market.

Camacho also told investors the windfall of cash expected from the sale of its shares in RBTT Financial Holdings, under the merger deal with Royal Bank of Canada, would provide the group with additional resources to finance its current expansion plans.

"We expect to rebalance our portfolio and reorganise our balance sheet and improve our leverage," he said.

Guardian, whose core business is insurance, last year shook off several periods of losses to post net profit of TT$130 million.

Jamaican contribution

Jamaica's Guardian Life Limited contributed 12 per cent of revenues from the 20 per cent of Guardian Holdings assets it holds.

The group continued to perform well into the first quarter of 2008, ending the March period with TT$50 million of profit, relative to the TT$205 million loss in the comparative quarter of 2007.

Guardian is projecting net cash inflows of TT$1.5 billion from the RBTT/RBC payouts, and expects to make a profit of TT$150 million from the transaction, which it expects to be wrapped up by June 30.

The Mundial shares are to be sold within the same period, with Guardian expecting to book TT$300 million profit from the disposal and net cash inflows of TT$520 million.

The company, meantime, continues to hunt new opportunities in the Spanish-speaking countries of the region, according to chairman Arthur Lok Jack, who, in a statement appended to the March accounts, said Guardian was in discussions on "future collaborations" but gave no details.

Susan Gordon
Jamaica Gleaner

Scotia maintains its profit edge - To pay dividends of $996 million

Published: Wednesday May 28, 2008

Scotia Group Jamaica continues to maintain its profit edge over its top rival, reporting net income of $4.7 billion or earnings per share of $1.50 in its half-year results.

National Commercial Bank of Jamaica just weeks before, announced profit of $4.5 billion or $1.83 per share, well well within striking distance of Scotia Group.

But president Bill Clarke, despite urgings from investors to say how Scotia plans to maintain its dominance of the commercial banking sector, refused to be drawn, saying it was not the bank's practice to issue forward-looking statements.

Growth challenge

Clarke acknowledged, however, that a big challenge was maintaining growth at current levels during a briefing on the banking group's half-year earnings report.

Total revenues in the half year ending April climbed 33 per cent to $13.8 billion, while the bank also reported "strong" growth, year over year, of more than $9 billion in retail loans, mortgages and its credit-card portfolios.

The banking group's six-month after-tax profits also reflect a more than $1.2 billion improvement on the comparative results of 2007, or profit growth of 18 per cent, due in part to the addition of Scotia DBG Investments to the group in the current period.

The investment company's acquisition was finalised on May 1, 2007.

'Strongly positioned'

"With the rebranding of our investment management subsidiary to Scotia DBG during the quarter, Scotia Group is even more strongly positioned with the financial strength and flexibility to deliver the widest range of financial products in the industry," said Clarke, in a company-issued statement.

The group's assets also grew 14 per cent to $282 billion, while its shareholding equity rose to $37 billion, well ahead of NCB, whose comparative numbers were $237 billion of assets and $32 billion of equity.

For the April quarter, the banking group made $2.52 billion in profit, and will pay interim dividends of 32 cents per share - amounting to $995.7 billion - payable on July 3.

NCB's performance in its second-quarter ending March was marginally better at $2.65 billion of net profit. The number two bank declared dividends of 42 per cent per share that was paid this month.

Scotia plans to put renewed focus on business lines, such as its small-business market, and its life-insurance unit, while at the same time keeping a close eye on costs to generate savings.

"We want to take the leadership in small-business financing within the next 12 months," said Patsy Latchman-Atterbury, vice-president for small and medium enterprises.

That plan involves the provision of advisory services centred on financial and business manage-ment.

New initiatives

New initiatives to be undertaken by Scotia Jamaica Life Insurance Company (SJLIC) within the year includes the launch of a retirement scheme, pending approval from the Financial Services Commission, and a critical-illness plan.

For the six-month period ending April, SJLIC, which has appro-ximately 75,000 policyholders, reported gross premium income of $2.5 billion and contributed appro-ximately five per cent to the group's net income.

The Bank of Nova Scotia continues to be the main contributor, 64.62 per cent, to the group's net income.

For the three-month period, BNS recorded net profit of $2.3 billion, a 28 per cent increase compared to the similar quarter last year.

Sabrina Gordon
Jamaica Gleaner

C&WJ discards mobile assets - Company writes off $5 billion - New pan -Caribbean outfit - Sets sights on M&A targets

Published: Wednesday May 28, 2008

Cable and Wireless Jamaica (C&WJ) has written off a major chunk of its mobile infrastructure but is expected within a matter of months to unveil investments for replacement technology.

Phil Green, the listed company's new CEO, says the write-down of mobile assests was the principal component of a $5.14 billion impairment of the accounts for financial year that ended on March 31.

"The write-off relates principally to all of our mobile infrastructure assets, and let me say that it now allows us to invest in a new mobile infrastructure, details of which will be announced shortly," said Green.

Overall, Cable and Wireless posted a loss of $4.2 billion, but that was after it utilised $3 billion in tax credits to bolster the bottom line.

The accumulated losses erased a near $6 billion of the telecom's capital base, which closed the year with shareholder equity of $14.7 billion, down from $20.3 billion.

Stopped subscriptions

Apart from the big asset write-down, C&WJ in July 2007 stopped taking new subscribers to Homefone, the system which people could pre-pay on their fixed-line telephones, similar to the pay-as-go feature on cellphones.

More recently, Green retired the 10/8 plan for cheap mobile rates to cauterise the bleeding of company revenues which fell to $23 billion from $24.7 billion.

But it is not just in the roll-back of predecessor Rodney Davis's policies that Green's appointment has signalled something new and different at C&WJ. His arrival coincided with plans by parent company C&W plc to decentralise its hold on its Caribbean subsidiaries.

Green, in March was annointed the telecom's top man in the Caribbean, as chairman of Cable and Wireless Caribbean (C&WC), the holding company for the regional firms.

C&WC has its own CEO, Richard Dodd, who was appointed in April and reports to Green.

Push new model

In his role as C&WC chairman, Green gets to push through the new business model for the region that was unveiled last Friday, aimed at weaning the Caribbean from the London-based parent.

The plan, over the next two years, is to establish in the Caribbean a single autonomous outfit with its own corporate structure.

Within this arrangement, Green says, the new Jamaican mobile network will sychronise with other regional operations.

To reach its goal as a top-five pan-Caribbean outfit, C&WC will have to grow business and its customer base, which Green tells Wednesday Business, numbers approximately two million clients across business segments.

Not only will the telecoms be adding new services, including wireless broadband and subscriber television, but it is looking to expand its regional footprint - possibly beyond the 16 Caribbean countries in which it has a presence. Mergers and acquisitions are likely to be on the horizon, but exactly where, Green declines to say.

Expansion opportunities

"We will be looking for expansion opportunities on a case-by-case basis that truly complement the vision of a pan-Caribbean enterprise. That will be the preview of this new board," he said, referring to the new board of governors being created for C&WJ.

The transformation, which is to be backed by annual spend of US$140 million to US$180 million (J$10 billion to J$13 billion), will inte-grate networks through shared infrastructure, and the deployment of third-generation technology for mobile and Next Generation Network (NGN) for fixed-line customers in selected markets It is also expected to save on costs by amalgamating back-office operations and other business processes, including multiple customer information systems. The spending plan represents 12 per cent to 15 per cent of regional revenues, says Green, to be financed from internal cash flows.

Using his estimate as proxy, C&W Caribbean generates approximately US$1.2 billion of revenues, which amounts to about a third of group turnover of some US$6 billion (£3,152 million) in 2007-08.

Additional investment

The planned acquisitions would be additional investment. In fact, Green suggests that responsibility for big capital-investment decisions, under the new structure will reside in the Caribbean office headquartered in Barbados - architect of the seamless regional network.

Yet, even in this seamlessness, product development and service delivery will remain localised to avoid - as Green's second-in-command, Richard Dodd puts it - the creation of 'vanilla' services that ignores the peculiarities of each market.

The new board of governors for C&WC is to be fully constituted by November. Green says he is attempting to woo the top names in Caribbean business to be among the directors. Green and Dodd are also putting the finishing touches on a suite of 'full service' products they expect to roll out in coming months.

Jamaica last year was a big disappointment for C&W plc.

But London, in its forward-looking statement last week, says C&WJ is already showing signs of recovery, noting that six-month EBITDA in the second half of the financial year just ended was US$11 million higher than the first half, indicating, it said, "early progress" by the new management team.

Lavern Clarke
Jamaica Gleaner

Tuesday, May 27, 2008

Investment banks think Caribbean

Published: Tuesday May 27, 2008

Global credit markets may be depressed, but the investment banking community continues to show strong interest in doing business in the Caribbean.

In one of the first indications that JPMorgan is committed to maintaining the close relationships which Bear Stearns enjoyed with many of the region’s key institutions, JPMorgan recently confirmed that it is sending a senior delegation to the Euromoney/Latinfinance 2008 Caribbean Investment Forum.

The delegation will be led by Joyce Chang, global head of emerging markets strategy. Chang confirmed JPMorgan’s commitment to the region: “JPMorgan is strengthening and expanding its business in the Caribbean region.

We were founded more than 200 years ago and have a proud history of, in the words of one of our founders, doing “only first-class a first-class way.”

Merrill Lynch and Scotiabank will also be sending senior delegations.

Heading Merrill Lynch’s team will be Andrew Gray, managing director and chief operating officer for Latin American and the Caribbean.

Acccompanying him are key Merrill executives such as Francisco Blanch, managing director and head of global commodity research.

He will provide delegates with an analysis of the current global commodities market as it relates to the Caribbean.

Luc Vanneste, executive vice president and chief financial officer, is the senior Scotiabank representative at the forum.

He is joined by key executives such as Pablo Breard, vice president of international research, whose macroeconomic workshop has become an annual fixture of the conference.

Collectively they join a stellar line-up of regional speakers which includes the prime ministers of T&T and Barbados, and the Ministers of Finance of Jamaica and T&T.

The Caribbean Investment Forum, which is co-hosted by the government of T&T, and organised by Euromoney Conferences and LatinFinance, will take place in Port-of-Spain, on June 11-12.

Over 350 senior regional and international figures have so far confirmed their attendance.

Source: Trinidad Guardian Newspapers

Cable & Wireless: We can do better

Published: Tuesday May 27, 2008

The newly appointed chief executive officer of Cable & Wireless’ Caribbean companies, Richard Dodd, has said that the company’s operations in Barbados need tightening up although Barbados has been a star performer among Cable & Wireless (C&W) companies worldwide.

Dodd also rejected the suggestion that Barbados was being penalised for C&W’s failings in Jamaica, where a JAM$4.2 billion loss was recorded and it was struggling to regain market share lost to rival Digicel.

Dodd, who will be based in Barbados, said, “C&W Barbados is a profitable and effective business but it is not effective enough and we need to improve the quality of service.”

The news came at a press conference and live teleconference link with C&W Caribbean chairman Phil Green, hosted by Dodd and C&W Barbados president Donald Austin to announce a new corporate structure that would see the creation of a pan-Caribbean operation with a new board of governance headed by Green.

Dodd said Barbados would be the management hub for Caribbean business but staff cuts would be effected there and throughout the region as the telecoms company sought a leaner, nimbler business.

“We are not penalising Barbados; we are applying the same rules to Barbados as everywhere else.”

C&W Barbados turned an operating profit of $115.5 million for its financial year ended March 31, 2007, despite rising cost-of-sales and operating expenditure.

Revenue for the 12-month period reached $371.2 million—four per cent better than the $355.6 million realised over the same period in 2006.

Responding to queries on whether the new board of governance had been approved by the board of directors or shareholders of individual publicly listed C&W companies, Dodd admitted that C&W was still trying to determine how “the new structure will play from a legal and statutory perspective.”

Source: Trinidad Guardian Newspapers

Friday, May 23, 2008

Sagicor will list on the JSE in the second half of June

Published: Friday May 23, 2008

Jamaica's largest life insurance company, Life of Jamaica (LOJ), is to change its branding and assume that of its Barbadian parent Sagicor. LOJ will now become Sagicor Life Jamaica. This exercise is expected to be fully completed sometime next month when Sagicor will also be listed on the Jamaica Stock Exchange (JSE).

Life of Jamaica founded, by R Danny Williams has become one of the stellar brands on the Jamaican landscape for over three decades and there are those who view this latest decision as yet another case of a local corporate mainstay exiting the stage.

LOJ's president and CEO Richard Byles sought to explain: "We considered this decision very carefully and conducted a study which posed the question, would a customer prefer to be part of a great Jamaican company or a larger financial organisation where the risk is being spread all over the world?

"We concluded that people prefer international brands but I must add that the power of the Sagicor brand is very strong."

The Life of Jamaica boss also noted that when courting corporate clients, Sagicor provides a better sell as it has become a byword for confidence and comfort throughout the Caribbean.

The godfather of the Jamaican insurance industry, R Danny Williams founded life of Jamaica in 1970 as he sought to take on international players in the local market. Dennis Lalor took the helm during the late nineties with ambitions to turn the local life insurance giant into a Fortune 500 company. Unfortunately LOJ ran aground, ending up in the clutches of FINSAC as yet another distressed local financial company in need of a bail out.

A new century, indeed a new millennium saw a new owner with Barbadian insurance powerhouse Barbados Mutual riding to the rescue as a white knight. Former FINSAC executive Maxine McClure was appointed to guide LOJ out of choppy waters.

Having steered the ship for a few years, McClure was assigned to a top position at Sagicor's US operations and one of the leading lights of corporate Jamaica Richard Byles moved from Pan Jam to assume the top job at LOJ in 2004.

Byles has modernised Jamaica's leading life insurer and has driven revenue by rolling out a number of new products. He has also overseen the diversification into real estate projects such as Winchester and a growing investments portfolio without taking his eye off core business.Last year LOJ's total revenues increased by 15 per cent to J$11 billion. Individual life rose by 17 per cent, employee benefits by 10 per cent while investment income moved by 12 per cent.

Property and casualty income revenue rose by 32 per cent.

For 2007, net profit increased for the seventh consecutive year, with LOJ posting a figure of J$2.95 billion. It now manages a portfolio of J$130 billion of assets on behalf of clients."When you look at market share for the new business written in 2007, LOJ remains the leader in every business segment in which we participate which is individual life API market share, individual life policy count and individual life face amount. "People think of me as a numbers man, someone focused on profits and on operating efficiencies. Yes, I am that, for we must be profitable and we must be efficient, but also I know we must continue to be a great marketing organisation, for it is the balance between those objectives that makes Life of Jamaica a great company," said Byles at an awards ceremony earlier this year.

Perhaps one can view this rebranding exercise as yet another diminution of corporate Jamaica - the sun setting on a great Jamaican brand with one of the few savvy and tested Jamaican corporate leaders at the helm. The fit seems so perfect.

Byles takes a more sanguine approach. " Sagicor has a 60 per cent interest and Jamaicans hold the remain ding 40 per cent so there will still be strong input from Jamaicans.

Sagicor has significantly capitalised LOJ, which is a major contributory factor to its enduring success. It is because of Sagicor that we are rated A Excellent from AM Best. Jamaica as a country is rated B so that gives one some kind of perspective."

A pervading fear, however, is that Sagicor will dictate to the rebranded LOJ from on high with little consideration for local concerns.

Speaking with Caribbean Business Report, from LOJ's New Kingston headquarters, Byles said: "Sagicor will not change the recipe and we will continue to pursue the LOJ culture. We will be allowed to drive revenues and profits by the strategies that we have outlined but one has to be mindful that we have a parent company. In fact, Sagicor has learnt a thing or two from LOJ and has adopted some of our best practices, systems and so forth.

The president and CEO of Life of Jamaica further added that he conducted a study that revealed that his company leads his competitors in five out of six prescribed measures, with Scotia Mint only coming out ahead in total assets.

Source: Jamaica Observer

Scotia Jamaica's profit jumps 42% in the second quarter

Published: Friday May 23, 2008

Scotia Group Jamaica Limited yesterday reported J$2.5 billion in net income available to common shareholders for the second quarter ended April 30, reflecting a 42 per cent increase over the corresponding period in 2006.

The current year's net income includes the results of Dehring Bunting & Golding Limited (DB&G), now Scotia DBG Investments Limited, which was acquired by Scotia Group on May 1, 2007. Scotia Group's president and CEO William Clarke, cited strong growth in retail loan demand and strong repositioning in the market with the rebranding of DB&G during the quarter as contributors to the increased earnings.

During the quarter Scotia's total revenue, comprising net interest revenue and other income, was J$9.7 billion - an increase of J$2.6 billion or 37 per cent over the comparative period in 2006.

Net interest income was J$5.4 billion, up J$1.3 billion when compared to last year.

This was as a result of strong portfolio volume growth primarily in its retail portfolio, according to the banking group.

Interest income earned from securities also increased, due to improved interest margins and volume growth in the investment and repurchase agreement portfolios resulting from the acquisition of DB&G in May 2007.

Total assets increased year over year by J$66 billion or 31 per cent to J$282 Billion as at April 30, 2008. The consolidation of Scotia DBG contributed J$43 billion to the growth in assets.

The Group's performing loans were J$82 billion, up J$18 billion or 28 per cent over the previous year, as Scotia continues to experience significant growth in retail lending, and has seen an improvement in the demand for commercial loans.

Deposits grew to J$145.3 billion, up J$18 billion or 14.13 per cent from the previous year.

Scotia Group's capital base grew to J$37 billion, J$8 billion more than the prior year. This was due mainly to an increase of J$3.6 billion in the share capital of Scotia Group in May 2007 and J$3.5 billion in the retained earnings.

Source: Jamaica Observer

IMF eyes growth of unregulated investment schemes in Jamaica

Published: Friday May 23, 2008

The International Monetary Fund (IMF) has expressed concern about the growth of unregulated investmentschemes in Jamaica and has urged both national and regional responses to the situation.

At the recent conclusion of its Article IV consultation with the island, the executive board noted that while there were some positive indicators of "banking sector soundness", the increase in the particular investment schemes has been a worrisome financial development with potentially adverse macroeconomic consequences.

The IMF stressed that "continued vigilance over the financial sector is warranted, in particular with respect to the risks posed by the unregulated investment schemes promising implausibly high rates of return".

"Directors were encouraged by the authorities' intention to prevent unregulated investment schemes that are not in the public interest, while ensuring that legitimate investments can proceed. They supported the authorities' request for technical assistance in this regard," an IMF release said.

"Given the cross-border risks posed by such schemes, directors also encouraged enhanced regional cooperation among supervisors. They called on the authorities to broaden the collection of information on the formal financial system to allow for a more comprehensive assessment of systemic risks, including from changes in the global and domestic economic environments."

In its overall assessment of Jamaica, the IMF noted that the country's economic challenges have been compounded by a more difficult environment, with natural disasters, the global economic slowdown, and increases in global oil and food prices contributing to slower economic growth, rising inflation and a widening current account deficit.

"Strains in international financial markets have put further pressure on an economy reliant on external financing," it said, adding that the key imperatives now would be to address the economy's vulnerabilities, improve Jamaica's lacklustre growth performance, and strengthen its medium-term public debt dynamics.

"Against this background, directors welcomed the authorities' efforts at setting out an ambitious medium-term macroeconomic strategy that places high priority on the maintenance of macroeconomic stability, fiscal consolidation, and structural reforms. They encouraged the authorities to work expeditiously toward the implementation of their strategy and to build a broad domestic consensus in support of their reform initiatives," the release added.

The authorities' medium-term programme of fiscal adjustment, aimed at balancing the budget by the 2010/2011 financial year and at establishing a virtuous cycle of lower debt and higher growth, was also welcomed.Eva-Maria Hanfstaengl speaking with Caribbean Business Report, said: " If unchecked, unregulated schemes in Jamaica such as Cash Plus and Olint can severely damage Jamaica's reputation and lead the country into a calimitous situation. The rate of returns promised by these schemes is implausible and Jamaicans need to know this.

"These schemes must be made to comply with both local and international standards by registering their activities with the appropriate regulatory bodies and should issue timely audited financial statements in accordance with international practices."

Source: Jamaica Observer

C&WJ loses $4b - Parent profit dips

Published: Friday May 23, 2008

Telecommunications company Cable & Wireless Plc said it was considering a demerger of its business units after it posted a 5.7 per cent drop in full year net profit Thursday.

The Jamaican company also released results to the Jamaica Stock Exchange that were below expectations. Released after market close, C&WJ reported a $4.2b loss off lower revenues of $23 billion.

The stock dropped two cents to close at $0.76.

It was also announced in a stock market filing that Richard Dodd, the CEO of Cable and Wireless Caribbean, had joined C&WJ's board.

Cable & Wireless Plc reported a profit of £164 million (US$321 million; €206 million) for the year ending March 31, compared with £174 million a year earlier when the bottom line was boosted by the sale of its Bahrain unit.

Revenue fell 5.8 per cent to £3.15 billion (US$6.17 billion; €3.96 billion).

Chairman Richard Lapthorne said the move had "brought increased focus to both businesses," which sell voice, Internet and wireless networking services.

"We will look at all options," Finance Director Tony Rice said, adding that it could include a break-up, the sale of some businesses, or borrowing money to return capital to shareholders.
"We're talking about doing something in 2008 and 2009."

Shares tumbled

The company forecast in March that sales at its Europe, Asia and US division would increase 5 per cent to 8 per cent annually for the next five years, but its shares tumbled as analysts questioned whether the company would meet sales and cash-flow targets.

The stock rose 2.7 per cent Thursday to 156.6 pence (US$3.10; €1.97).

Collins Stewart analyst Mark James said he expected the shares to slip before a demerger announcement.

"The demerger is widely anticipated and these shares have already rallied from the lows post the March investor day disappointments," said James.

Earnings before interest, taxes, depreciation and amortisation in the international unit rose 2.7 per cent to £830 million (US$1.6 billion; €1.02 billion) from £808 million.

The company's Jamaica unit underperformed, but the company said it expected "further improvements" there.

Harris Jones unexpectedly stepped down as chief executive of the international division and as a director of the company in November.

John Pluthero was appointed executive chairman of the international division, while continuing in the same role in the Europe, Asia and U.S. division.

Earnings before interest, taxes, depreciation and amortisation at the company's Europe, Asia and U.S. unit more than doubled to £219 million (US$434.1 million; €275.5 million).

Last year, the company cut its global work force by nine per cent, bringing the total number of employees to around 5,000, as part of a wider cost-cutting strategy.

Source: Jamaica Gleaner

Hit by costly raw materials - GK Foods 'scours' the world for supplies

Published: Friday May 23, 2008

Leading food manufacturer and distributor, GK Foods, a division of GraceKennedy Limited, is scoping out new suppliers of raw materials in a fight to rein in operational costs, to keep shelf prices down and put profits back on track.

For the past six months, the company has failed to totally inure its market from the effects of higher global prices which continue to set new records in the grain and energy markets, announcing last week that prices on six of its basic food lines sold under the Grace brand, have spiked as high as 120 per cent.

Chief executive officer of GK Foods, Erwin Burton, said the company was facing direct increases on the price of raw material and the finished products it imports from overseas suppliers, and to a lesser degree, higher shipping costs.

There is no indication that the price hikes have affected volume sales.

10 per cent growth

In fact, GraceKennedy chairman Douglas Orane announced to shareholders at the release of the March quarter results that sales of the Grace-owned brand grew 10 per cent over the prior year period.

GK Foods, Orane said in a statement accompanying the earnings report, had also launched a range of Grace Cranberry Juices in the Caribbean markets and three new variants of flavoured corned beef in the Jamaican market.

But the changing market conditions havetaken toll on food profits, with GraceKennedy's first quarter results, while depicting a solid performance for the group, indicated lower earnings for food trading, whose pre-tax profit fell 15 per cent.

GK Foods has not said how much more it is costing the division to produce its brands, but the group, whose operations extend beyond food to banking and insurance, money services and retailing, added $3 billion to its production costs in the March quarter.

"Our supply chain managers are scouring the world looking for products and raw material which are competitive," Burton told the Financial Gleaner this week.

"Our main responsibility and concern is that we want to make sure the food we supply is available and at the most competitive prices."

GraceKennedy, he said, imports 40 to 45 per cent of its total range of products, either in the form of finished or packaged goods or raw materials.

In the first quarter ending March 2008, the group's cost of sales, which is used as a proxy for production costs, climbed by 31 per cent to $12.9 billion.

Slight decline

While the group's consolidated results for cost of sales are not stripped down according to business segments, GraceKennedy in the period saw a slight decline in gross profit margin from 6.7 per cent to 6.1 per cent.

Last Friday, at an investor's briefing that came in the wake of a lucrative first quarter for the conglomerate - the group reported a 30 per cent growth in revenues and 7.1 per cent hike in net profit to $695.7 million - Burton said over the past six months Grace branded corned beef had risen 70 to 120 per cent; rice rose 59 to 90 per cent; dairy products, mainly cheese, moved up by 70 per cent; mackerel, 59 per cent; and Vienna sausages, 13 per cent.

The level of pass-through of higher costs to shelf prices was not immediately clear.

"We absorbed some," said Burton.

"I cannot say how much right now, but not all of it was passed on to the consumer."

Across the board

The GK Foods head also said that the increases were not contained to six products, but occurred generally across the company's range of foods.

"For example, ketchup increased by about 22 per cent," he said.

GraceKennedy buys tomato paste from several places in Europe, where such commodities are subsidised, he adds.

But the conglomerate is now facing higher costs to acquire the paste as pressure mounts on countries in the European Union bloc and United States to cut subsidies, which are seen as a breach of international trade rules.

"The impact of the reduction is about a 30 per cent increase for us here," Burton said.

The company imports mackerel and rice as finished products, with rice being processed out of the United States and St Vincent.

Corned beef is processed and canned in South America.

The raw material for cheese is imported from New Zealand then processed and packaged locally, while the raw material for Vienna sausages is sourced in the US and the product manufactured domestically.

GK Foods operates four factories in Jamaica, which churn out 55 per cent to 60 per cent of the company's inventory of products, according to Burton.

Another 10 per cent is outsourced to third party factories.

Essentially, some 65 per cent of Grace products are made locally; the rest is done overseas and imported for distribution.

Record turnover

Last year, GraceKennedy, with its food division in the lead on revenues, reported a record turnover of $49 billion. Food continued to march forward in the first quarter of 2008, spiking 41 per cent to $8.3 billion, relative to Q1 2007, but also accounting for 60 per cent of total revenues, reported at $13.8 billion in the January to March 2008 period.

Profits for food trading, however, fell from $274 million to $234 million.

But Burton said it was a matter of timing, and that his division anticipated a recovery and higher profits over last year.

"There was a problem where we lost an agency and that has impacted us," said Burton, referring to the loss of a supplier in the United States.

One of the products lost was Eli's cheese cake supplied by an agent out of Ohio and distributed by GraceKennedy through its UK operation.

"We are looking at a replacement for these brands," said the GK Foods CEO, who adds that a new arrangement was to be finalised by the end of May.

Burton anticipates that by September, the end of the conglomerate's third quarter, GK Foods' performance will return to projected profit levels.

Sabrina Gordon
Jamaica Gleaner

Tuesday, May 20, 2008

No cash to pay - Cash Plus must recover funds on failed transactions - receivers' report

Published: Tuesday May 20, 2008

CASH PLUS lenders have received more bad news as the report of the receiver/manager for the failed entity found that the company will not be able to repay its depositors until it acquires a substantial portion of the real estate and recovers deposits it made on failed transactions.

According to the findings of a report, which was submitted to the Supreme Court last Tuesday, the alternative investment scheme currently has no available cash to repay its investors.

No documentation

The receivership team has found that Cash Plus was not operating as a growing, financially viable and diversified conglomerate.

The report states that the receivers were unable to find any documentation to support the scheme's management philosophy, methodology or financial plans.

Overall, the team found that there were poorly maintained accounting records, inadequate internal controls, inadequate financial planning and an unsustainable business model, including minimal revenue-generating activities.

Lack of due diligence

The report points out that, in several instances, Cash Plus entered into transactions to acquire companies, real estate and other tangible assets.

However, the majority of these transactions were never completed and often stalled after preliminary discussions and tendering of initial deposits.

In addition, a number of companies, land and other assets were bought above the reasonable market price, presumably because of a lack of due diligence and independent valuation.

Cash Plus Limited was incorporated on May 5, 2003 and, during the period 2004 to 2007, received lenders' funds totalling $22 billion.

The number of lenders affiliated with the company has been estimated at between 35,000 and 45,000. Further, the report states that, up to March 31, the company's cash and liquid assets amounted to less than $3 million.

The receivers say the money used for repayment appears mainly to have come directly from the funds received from lenders.

According to the report, Cash Plus did not appear to have had sufficient income-generating activities to support the interest payments and to pay staff. Cash Plus boss Carlos Hill, his brother, Bertram, and chief financial officer Peter Wilson, who are currently on bail following fraud-related charges, are to return to court on July 17.

Source: Jamaica Gleaner

Monday, May 19, 2008

ICB to roll out new line soon

Published: Monday May 19, 2008

THE INSURANCE CORPORATION (ICB) of Barbados has a new line of Secure options which it will soon roll out to its full customer base.

Peter Lamb, senior manager Life Division, said Secure products were being offered as the insurance company sought to become a niche player in the market.

Also, since were the only areas left for ICB to expand in, officials decided to bring a range which would satisfy their customers' needs.

"We are not looking to go out and beat the bushes with the big boys. We are looking at our own client base and specific segments of the market.

He said ICB had built the family of Secure products with SecureLife, SecureHealth and SecureCare.

SecureLife is a guaranteed product requiring no medical and there are four questions about one's health related to heart problems, dementia, HIV and cancer and if the person has had any of these in the last five years the policy will not be issued.

"We will sell this product up to age 85 which is unheard of in the industry but it is like everything else, if you price it properly it will sell," said Lamb.

Affordable premiums

The senior manager said ICB's intention was to offer affordable premiums all around.

"We have taken traditional premiums and compressed them into a three, a five and a ten-year premium paying period. You can purchase anything between $5 000 to $40 000 in $5 000 increments.

"So we'll take somebody aged 62, and they want to buy $20 000 over 10 years, they pay for ten years and then they are done, so at 72 there will be no more payments, and it will be a $123 a month," he said.

Lamb further explained that the policy was graded over three years and the reason for grading it was because there was no medical; if the person dies after three years all premiums paid will be refunded.

The SecureHealth plan is an individual health policy with almost all the features of a group plan but not as restrictive in some regards.

Lamb said the SecureCare which was strictly a hospital indemnity policy at home or abroad, was still in the early stages of market research and analysis.

The plans were offered to staff and longstanding clients so far but should soon roll out to the general public.

Source: Nation Newspapers

Friday, May 16, 2008

NFM records $42.1m loss

Published: Friday May 16, 2008

National Flour Mills has made a $42.1 million loss for the year 2007.

In the company's audited financial results for the year, company chairman Ganesh Sahadeo confirmed that the State-owned company's management team was now looking at methods by which it could "halt the decline and ensure the company returned to profitability in the shortest possible time frame".

While the company recorded an improvement from the previous year's loss of $53.7 million, Sahadeo said the company continued to face challenges and NFM's profitability was still suffering.

He said the high prices of raw materials (such as grain) plagued the company this year, as even with new product price increases the company could not keep up with the sky-rocketing costs of grain.

He said the closure of the company's Edible Oil Complex and the old flour mill also impacted negatively on NFM's earnings.

Sahadeo also said this year, "NFM was severely challenged in facing the (new) level of competition in both the flour and animal feed segments of the market."

He also said NFM is currently undergoing a systems change which will make financial reporting less challenging for the company throughout the new financial year.

Source: Trinidad Express Newspapers

FirstCaribbean revenues up 22 % in 2007

Published: Friday May 16, 2008

FirstCaribbean International Bank Jamaica has reported another year of solid performance with growth in total revenues of 22 per cent or J$3.28 billion.

Reporting to the Bank's Annual General Meeting (AGM) at the Jamaica Pegasus on Wednesday, Managing Director, Milton Brady said that the Bank's performance was all the more significant given the "increasingly competitive environment characterised by tight liquidity and shrinking interest spreads."

Mr Brady said that in response to deteriorating market conditions the Bank focussed on the high growth sectors of the economy and on containing costs.

Consequently, he noted, "our efficiency level as measured by the cost/income ratio has improved to 61.2% from 64.1% in 2006."

These and other measures, Mr. Brady said produced a 32 per cent growth in net income before tax which exceeded the J$1 billion mark for the first time. Net income after tax (NIAT) rose to J$771 million, an increase of 31 per cent over the prior year.

Total assets of FirstCaribbean International Bank Jamaica Limited increased in 2007 by 27 per cent to J$41.671 billion, mainly driven by the growth in loan portfolio which climbed by 31 per cent to J$31.410 billion.

Mr Brady told the annual general meeting that last year the Jamaica capital market gave the Bank "a vote of confidence" when its J$1.5 billion bond offer was oversubscribed and the proceeds were used to grow the Corporate and Retail banking business.

He also reported that expansion of the Bank's branch network is progressing with new Liguanea and Portmore branches scheduled to be opened this year and that the ABM network has increased from 11 to 17.Brady reported that in 2007 FirstCaribbean Jamaica was again rated number one in both "customer satisfaction" and giving customers "value for money" based on an independently conducted benchmarking of the Bank's customer service standards against its main competitors in Jamaica.

Of note too, he said, was the Bank's "consolidated gains in its Employee Satisfaction Index" which continues to exceed by far, the average for both regional and international "best practice" companies.

Through its Comtrust Foundation, Mr. Brady said, FirstCaribbean has been delivering on its pre-tax profits to community causes, exceeding this target in 2007 with donations totaling J$28.4 million or 3 per cent of 2006 pre-tax profits.

Source: Jamaica Observer

Capital&Credit looks to secondary listing later this year

Published: Friday May 16, 2008

The Capital & Credit Financial Group (CCFG) intends to list one or more of its subsidiaries by the third quarter, revamp its unit trust product and launch an individual retirement account with a view to energise the brand.

"Both in Jamaica, Trinidad and Tobago and elsewhere we will bring value to shareholders," said Ryland Campbell, chairman of CCFG. He made these remarks at yesterday's ceremony to de-listed their ordinary shares simultaneously from the Jamaica Stock Exchange (JSE) and the Trinidad & Tobago Stock Exchange (TTSE) while re-listing the CCFG ordinary shares and Capital & Credit Merchant Bank (CCMB) cumulative redeemable preference shares.

Campbell noted, "Competition has become more intensive and it became obvious that we need to reposition the group from how we started. It is important to rise above challenges." During the listing ceremony, general manager of the JSE, Marlene Street-Forrest congratulated the CCFG team.

"CCMB is one of Jamaica's success stories. We can truly say that as a listed company, the JSE is proud of this company which has, since its listing in May 2003, traded units valued at over J$3.5 billion, creating liquidity for the market and value for its shareholders. The company has also demonstrated that it knows the value of the market when in 2005, through a Rights Issue, it raised over J$1 billion. This stands as the third highest amount of capital raised in the market."

Chief regulatory officer, Wenthworth Graham added, "In repositioning the Group on the JSE, the company has shown leadership that is nimble and responsive to change."

Looking specifically at the changes to come, Campbell stated, " We make a commitment that we will return. We are looking now and seeing that we will return to put a new listing on the JSE board or even more than one new listing before the end of the year." Speaking after the ceremony, Campbell noted that the board of directors is currently considering listing CCFG preference shares first."We have discussed it but have not finalised the decision. However, we expect to be listing something before September."

Campbell acknowledged that in addition to the heighten competition in Jamaica, other competitors were leveraging their regional connections. "Others have family members stretched out over the Caribbean and we don't have that. Instead, we will form an alliance and build on that to make significant inroads to the Florida market."

Despite the concern that the Jamaican market is being saturated with new listings that do not offer the same returns as other alternatives, Campbell notes that traditional investments have an important place in portfolio planning. "As inflation increases and people settle down to understand that traditional investment products do not provide phenomenal investment returns but stable returns, then they will want quarterly returns that are a legitimate source of non-tax income."

Looking at the stockbrokerage subsidiary, Capital & Credit Securities Limited (CCSL) executives intend to reposition the company. According to Christopher Walker, acting general manager and vice president of CCSL, "We will be a more fee-based entity as our major focus is no longer the repo business. Our individual retirement account product is ready and waiting on Financial Services Commission approval. We will also launch a portfolio planning service and present an interesting offer to our corporate clients that will see them benefiting from short-term cash that normally earns small returns."

Based on the new scheme of arrangement, CCMB shareholders will get six CCFG ordinary shares in the group company for every five CCMB ordinary shares held and CCMB Cumulative Redeemable Preference Shares, valued at $2 per share, allotted at the ratio of one CCMB Preference Share for every fifteen CCMB Ordinary Shares held on both the JSE and TTSE.

Source: Jamaica Observer

Scotia launches $586m banking centre project

Published: Friday May 16, 2008

Scotia Group Jamaica, the number one banking group by capital base, will today roll out a half a billion dollar plan for a new branch that encapsulates its banking, investment and insurance services.

The company this week advised in a press notice that the new branch would cost $410 million to build, but has advised the Financial Gleaner that the total investment to be made will reach $586 million.

The other $176 million was invested in site preparation and infrastructure, the bank said ahead of last night's launch of the construction phase, which is expected to be finalised within a year.

Network growth

The branch, which should grow the group's network to 55, inclusive of Scotia DBG Investment offices islandwide, is to be constructed at Constant Spring Road, St Andrew on property that formerly housed a McDonald's fast food outlet.

Scotiabank in June 2006 acquired the property for US$1.56 million - then the equivalent of some $103 million.

The new branch will be built as a two-storey complex, with a red distinguishing tower similar to the Portmore branch.

The centre, measuring 16,976 square feet, is to house the wealth management arm of the company's operation comprising of the Scotia Private Clients Services, Scotia Jamaica Life Insurance Company (SJLIC) and Scotia DBG Investment office on the upper floor, while the banking branch will take up the ground floor.

The contractors are Tu-Stan Engineering Company Limited, while Hue Lyew Chin Engineers Limited have been hired as the structural engineers, Berkeley & Spence as quantity surveyors and Rivi Gardner, architectural services.

The mechanical and electrical engineers are Gartek Engineering Corporation, based in Miami.
Scotiabank expects to occupy the new building by April 2009.

Sabrina Gordon
Jamaica Gleaner

Gleaner takes steps to improve ownership transparency

Published: Friday May 16, 2008

Gleaner Company shareholders yesterday approved an amendment to the company's rules that would give directors the right to demand the identities of hidden stockholders, but the change requires approval from the Jamaica Stock Exchange before it can be implemented.

Oliver Clarke, the media company's chairman and managing director, told shareholders that the proposed replacement of the Gleaner's Article 26 was in the context of the growing global demand for transparency and concern about issues such as money laundering and other forms of corporate criminality.

"We believe the company has a right to know who are the beneficial owners of the shareholding," Clarke told stockholders at The Gleaner's annual general meeting at the company's headquarters in Kingston.

"If you have people buying into the company, you have to know who they are."

The move is similar to a provision previously implemented by GraceKennedy Limited, whose chairman and CEO, Douglas Orane, also sits on The Gleaner's board.

Modelled approach

Yesterday, Orane sought to assuage sceptical shareholders and analysts, who were uneasy that the shift could lead to undue prying or weaken the capacity of deal-makers to take strategic stakes in firms.

The GraceKennedy boss explained that his firm had modelled its approach on what exists among the top 20 companies on the London Stock Exchange and said the change had had "no material impact on the liquidity of the GraceKennedy stock."

"If anything it has increased the liquidity," he said, in that the move had built confidence in shareholders.

Under the existing article 26, Gleaner directors can decline to register any transfer of shares, or suspend registration for up to 30 days in any single year.

But with the proposed replacement, they would have the authority to demand from proxies the identities of beneficial owners of shares held in their names, or to whom those shares have been passed on.

Forfeiture of dividends

Failure to provide the infor-mation could lead to the forfeiture of dividends or other payments related to those shares and the suspension of voting rights.

"At the end of the day, you are giving shareholders the confidence of knowing who their fellow shareholders are," Clarke told the meeting.

The Gleaner recorded profit in 2007 of $98 million, down from $274 million in the prior year, resulting from impairment losses associated with its United Kingdom operation and reduction in employee benefit asset. Trading profit improved by $120 million.

The meeting yesterday retired and re-elected to the board deputy managing director Christopher Barnes, Lisa Johnston, Joseph M. Matalon and Morin Seymour.

Source: Jamaica Gleaner

Wednesday, May 14, 2008

DB&G, Gov't deal was guided by procurement guidelines, says Bunting

Published: Wednesday May 14, 2008

Peter Bunting yesterday dismissed claims, made by Finance Minister Audley Shaw, of "sweetheart deals" that benefited Dehring Bunting & Golding Ltd (DB&G), a financial institution once owned by the Opposition member of parliament.

In his explanation, pursuant to Standing Order number 18, Bunting sought to "show that (Shaw) misled this Honourable House and also breached Standing Order 35 (5) which states "No member shall impute improper motives to any other member of either chamber."

"I am requesting that the minister withdraw these statements and if he complies then it will be unnecessary to seek further sanctions."

The two deals referred to by Shaw in his closing budget presentation involved the sale by the government of cash flows owing by the Jamaica Redevelopment Foundation and the sale of future receivables from the sale of National Commercial Bank (NCB) to Michael Lee Chin's AIC.

Bunting contends that the former never took place."DB&G did communicate with the Government about the potential benefits of a transaction arising from the Government's ongoing dealings with the Jamaica Redevelopment Foundation. However, those discussions did not lead to any form of transaction," he said.

The second "deal", Bunting said, arose from his company approaching the government with an offer to purchase the receivables for its present value, which, according to him, assisted the government in meeting its 2003/2004 fiscal targets while the transaction fell under the ambits of the Government of Jamaica Handbook of Public Sector Procurement Procedures (May, 2001) of the National Contracts Commission.In particular, the Procedures provide that Sole Source or Direct Contracting may be justified in circumstances such as when the procuring entity receives an unsolicited proposal it considers meritorious; when there is an unusual and compelling urgency; or where it is otherwise in the public interest.

"It was a matter of public record that part of the price at which the Government had sold the National Commercial Bank (NCB) to AIC some time before, included a portion that would be paid over time with interest," said Bunting's statement. "As the 2003/4 fiscal year was drawing to a close, it was also well known in financial circles that the Government was facing a significant challenge in meeting its fiscal target. Failure to meet the target would have been damaging to the Jamaican economy, as it would result in expectations of higher public sector borrowings and higher interest rates in the coming year."

Bunting said his firm had conceptualised the transaction in which the Government would sell the future payments from AIC to yield their present value, applying current interest rates to determine the price of the sale of those cash flows.

By his reasoning, the government would have acted unethically if it had tendered out DB&G's idea to the public and the resultant benefit to the overall economy would have been "thwarted if the transaction did not proceed with urgency".

"It was a clear case in which the Sole Source or Direct Contracting approach was justified in the public interest," he said.

The AIC receivables transaction carried a return of 1.5-2.0 percentage points above six-month treasury bill rate and gave DB&G a one per cent fee for conceptualising and carrying out the entire transaction.

Bunting insisted in his statement yesterday that it would have been unfair to compare the negotiated fee to those Government pays for routine offerings of debt that do not involve any financial engineering or any continuing administrative role, as DB&G had a continuing obligation as registrar and paying agent for the transaction.

Source: Jamaica Observer

JP snack operation back on track

Published: Wednesday May 14, 2008

Jamaica Producers Group Limited's local snack business, which was nega-tively impacted by Hurricane Dean last year, is said to be fully back in operation.

The company's Annotto Bay factory in St Mary, which was forced to close temporarily because of the unavailability of bananas for its snack operation, went back into production four weeks ago, on April 17.

Steady supply

General Manager for Jamaica Producers Foods, David Martin, said the combination of the snack factories in the Dominican Republic and Jamaica was now allowing JP to more steadily supply the market.

"As far as snacks go, we are having a really good season," Martin told Wednesday Business, referring to the resumption of frying at the St Mary plant. "We are able to supply the market."

Immediately after Hurri-cane Dean struck last year August, most of the company's banana crop was destroyed.

Production at the St Mary factory ceased eight weeks later, as JP Foods was still able to harvest the felled bananas, which it used to continue the production of chips. Thereafter, the company started to rely on its snack factory in the Dominican Republic, to continue feeding snacks to Jamaica, with the overseas operation currently servicing 50 per cent of the local market.

That will change when the St Mary operation is back in full production.

JP normally exports about 85 per cent of its banana crop, but the company has been absent from that market since the storm.

No revenues

In fact, JP said in a stock market filing that its Jamaican snack business and bananas exports had earned no revenues for the group in the March quarter.

"When a hurricane strikes, the first thing to stop is exports and the last thing to go is domestic fresh bananas," Martin said.

It is now replanting its field, however, and is planning to begin exporting again by the third quarter. The other 15 per cent would go into snack production and supplies of ripe and green bananas on the local market.

Local market

Martin told Wednesday Business that JP is now using about two thirds of the crop for its snack business and is distributing the remaining one third into the local market.

"On a normal basis, factory frying has been twice as much as the company selling ripe and green locally. We are in a peculiar position because of the hurricane," said Martin.

The distribution of the food locally is being handled from JP's Retirement Road complex in Kingston.

Sabrina Gordon
Jamaica Gleaner

C&WJ bundles up for competition - Hunts 15-20% new market share

Published: Wednesday May 14, 2008

Cable and Wireless Jamaica Limited (CW&J), this week rolled out a suite of bundled services structured for both post- and pre-paid clients who want predictability in their spending on mobile phone services.

It is a 'first to market' innovation for Jamaica's largest and oldest telecoms, which, since the turn of the decade, has been battered by competition and has confessed to bad bets on recent creations.

For one flat rate per month, ranging from a low of $799 up to $7,499, for on-network, off-network and international calls and SMS texting, bmobile subscribers can buy packages of 280-3,800 minutes and 40-1,000 texts, from among eight structured plans.

First-time effort

"It's the first time that we're putting together comprehensive bundles," said chief commercial officer Mariano Doble, who joined the company last year.

C&WJ sees it as an opportunity to seize market share, saying the plan could "easily add 15 per cent to 20 per cent more to our customer base," according Doble, under its SupaPak prepaid and UltraPak post-paid bundles.

Its brochure matches the cost of each bundle against chief rival Digicel Jamaica's offerings, indicating prices that are 83 per cent to 400 per cent cheaper. For example, C&WJ's cheapest bundle, the SuperPak200, which allows 200 minutes of on-network calls, 40 minutes to other networks and 40 minutes of international calls to the United States, Canada and United Kingdom fixed lines, plus 40 text messages anywhere, is priced at $799 prepaid. Similar services at Digicel, said C&WJ, costs $3,238 - or 305 per cent more.

Less for individual products

But it is also a 250 per cent less than the $2,800 that bmobile subscribers now pay for the individual products, Wednesday Business calculations show.

C&WJ has just under 600,000 'active' mobile subscribers, which means the company is looking to grow its base to about 700,000 or more under this new marketing thrust.

More than 90 per cent of its customers are on pre-paid plans, said Doble.

The post-paid suite is $1,099 for the cheapest bundle of 420 minutes and 60 texts, but packages range up to $6,999 for 3,800 minutes and 1,000 texts. Cable and Wireless, it appears, is seeking to leverage new income from its smaller grouping of post-paid clients, who, since April, have been paying basic rates of $399-$1,499 per month.

C&WJ on Monday laid claim to close to a third of the Jamaican mobile market, but remains a distant second to the 1.9 million customers that Digicel has claimed. MiPhone remains at No 3, with an estimated 220,000 customers.

Doble on Monday exuded confidence in his dismissal of MiPhone, now owned by América Móvil, as a serious threat to C&WJ's market position.

"We have the right plans in place," he told Wednesday Business. "We have 30 per cent market share," he added. "They don't have anything close to that."

Already in place

Doble was cagey about the money being spent on the roll-out of the new plan, saying the infrastructure was already in place and was just being leveraged to deploy new products.

Still, with full-page teaser advertisements in the major newspapers, and promotions on the electronic media, plus glossy product brochures, all spelling a full-scale marketing campaign, the commercial director said the roll-out was a multimillion-dollar investment.

Over the past two to three years, Cable and Wireless Jamaica, backed by its parent C&W Plc, has been rolling out a $5-billion capital-expenditure programme to improve its network, including transmission via construction of new cell towers, topped by new product roll-outs.

Doble said some of the products have not been as lucrative as hoped, and while he gave no specifics, the company has in the past named Homefone and ICC cricket sponsorship as a drag on revenues, while also recently reshaping its Anyone mobile suite and dropping the $10/$8 plan on April 1, around which a massive promotional drive had been mounted two years before.

Source: Jamaica Gleaner

Tuesday, May 13, 2008

GHL continues to improve

Published: Tuesday May 13, 2008

Guardian Holdings Limited

A welcome recovery in 2007 followed through into a strong operational first quarter performance for Guardian Holdings Limited (GHL). For the first quarter ended March 31, 2008, the Group recorded an earnings per share diluted of $0.24, compared to a loss per share of $0.99 at the end of the first quarter (1Q) of 2007. Excluding fair value losses, GHL's earnings growth was up approximately 30 per cent from $0.26 to $0.34.

The chairman commented that all operating divisions in the various geographic regions produced positive returns during the first quarter.

The core revenue source, Net Insurance Premium Revenue grew by 3 per cent from $1B to $1.1B. With the exception of 'Other Revenue', all other revenue streams experienced meaningful growth, which led to 3.9 per cent boost in Total Revenue from $1.3B to $1.4B.

A 0.7 per cent growth in Net Insurance Benefits & Claims, and a 0.9 per cent reduction in Expenses, led to a 66.5 per cent boost in Operating Profit before fair value losses to $122.4M.

A modest resurgence in the local and regional equity markets during the first three months of 2008 translated into an encouraging improvement in the Group's equity portfolio. However, the gains experienced as a result of local equities were adversely affected by the declining market value of the Group's holdings of international equities and Jamaican Government Bonds. As a result Fair Value losses were down 15.7M, although still a significant improvement when compared to the 251.1M loss in the 1Q of 2007.

After factoring in the increase in investments in associated companies, and Finance Charges, the Group closed the first quarter with a Net Profit of $50.6M from a Net Loss of $205.2M in the comparable period if 2007.

Gains from the sale of its holding of RBTT shares along with the Grupo Mundial of Panama investment should translate into a one time gain of $2.24 per share.

It is anticipated that the cash injection of $2 billion from the RBTT deal will be used to reduce some of the Group's debt burden and by extent Finance Charges. The majority of the cash however, may be used for further acquisitions or for investment in any viable investment opportunities that may arise.

At the current price of $30.75, this stock is trading at an attractive forward P/E multiple of 12.8 times. In considering the Group's operational recovery which started at the end of 2007, and the opportunities arising for GHL out of the completion of the RBTT/RBC deal, BOURSE maintains a BUY recommendation on this stock.

Republic Bank Limited

For the first half of the financial year 2008, Republic Bank Limited (RBL) produced an EPS of $3.93, a 22.8 per cent decline from the $5.09 EPS of the comparable period of 2007. Both periods included one-off gains which if excluded would paint a different picture. The first half of 2007 included a $370M gain from the sale of the Bank's shareholding in FirstCaribbean International Bank, while the first half of 2008 included an after tax gain of $82M from the allocation of shares in VISA Inc. Excluding these non-recurring items, core earnings grew by 23 per cent from $443.8M to $547.6M. The board of directors has approved a half year dividend of $1.15 per share, a 22 per cent increase over the 2007 dividend, which will be paid to shareholders on May 29, 2008.

A brief review of the company's results will reveal a 12.7 per cent decline in Profit before taxation from $1B to $879.6M, while After tax profit fell 20.5 per cent from $859M to $683.4M.
The Bank's Total Assets increased over the comparative period by 9.5 per cent, while Total Shareholders' Equity improved by 15.9 per cent.

RBL continues to prove itself to be a very competitive contender in a very lucrative local economy and has remained unaffected by the ongoing financial crisis affecting the international financial institutions and the global economy.

At the current price of $100.00, shares of RBL are trading at a forward P/E multiple of 13.7 times based on core earnings. Consistency at achieving strong operational growth, and the expectation of yet another strong financial year resulted in the share price appreciating 25 per cent since the start of 2008. BOURSE revises its recommendation at this time to a HOLD.

Trinidad Cement Limited (TCL)

Within the past two weeks Trinidad Cement Limited (TCL) released results for both financial year 2007 and the first quarter of 2008. For the year ended December 31, 2007, the Group announced a 28 per cent growth in its EPS from $0.60 at the end of 2006, to $0.77. When Cement Claims incurred by the Group's Jamaican subsidiary, Caribbean Cement Company Limited (CCCL) in both 2006 and 2007 were excluded, a smaller growth in earnings was reflected, more in the range of 10 to 12 per cent. The board of directors approved a dividend of $0.07 (2006:$0.06), which will be paid on June 20, 2008 to shareholders on record at the close of business on June 6, 2008. The Group remains prudent in terms of its dividend for the financial year 2007 as a result of the various expansion and modernisation projects currently on the table.

A buoyant construction industry, increased revenues and operational efficiencies of one of the Group's subsidiaries, Readymix West Indies Limited (RML) in 2007, contributed to TCL's year end performance. The Group's Jamaican subsidiary, CCCL also recorded an increase in profitability for the year 2007.

Total Group Revenue increased by 11.9 per cent from $1.7B to $1.9B, the highest Revenue ever achieved by the Group. Operating Profit before Cement Claims experienced a 19.1 per cent increase while a 31.9 per cent increase in Operating Profit was achieved after Cement Claims were deducted. With Finance costs remaining relatively flat, Profit before Taxation increased 53.1 per cent to $245.7M, while Profit after Taxation was up 39.3 per cent from $151.8M to $211.4M.

The good performance of 2007 did not follow through into the new year as the Group's 2008 first quarter results revealed a relatively flat year on year growth in earnings. For the three months ended March 31, 2008, the TCL Group reported a 5 per cent decline in EPS from $0.20 to $0.19.

While the RML and CCCL subsidiaries continued to do well, the Arawak Cement Company Limited (ACCL) subsidiary encountered some hurdles during the first three months of 2008. These challenges were a result of the new fuel system, which the Group anticipates will be resolved by mid 2008.

For the first quarter of 2008, Group Revenue was up 8.7 per cent from $479.6M to $521.5M. An increase in operating costs resulted in a decline in Operating profit of 5.9 per cent. while at the bottom line, Net Profit diminished by 7.4 per cent from $56M to $51.9M. Recent and ongoing expansions have resulted in a relatively high debt to equity ratio of 91 per cent.

Looking forward, the Group anticipates that both domestic and export demand for cement will remain stable. The benefits of TCL's expanded production capacity, the commissioning of the new kiln at CCCL, along with the new fuel system at AACL, are expected to bear fruit for the Group by year end 2008. Should these benefits materialise during the year, the Group is well poised to deliver a good financial performance for the year 2008, despite its flat first quarter results.

On a fundamental basis, shares of TCL are trading at a current price of $10.25 and at a forward P/E multiple of 12.3 times, At a valuation of 14 times, BOURSE maintains a BUY recommendation on this stock.

Source: Trinidad Express Newspapers

Friday, May 9, 2008

Jamaica Stock Exchange (JSE) preference offer to open May 16

Published: Friday May 9, 2008

The Jamaica Stock Exchange (JSE) in one week will offer preference shares to the market, with the dual intent of raising capital while presenting investors with a clear sign that the organisation was now demutua-lised and serious about going public.

The offer, priced at $2 per share, is targeting take up of 33 million shares to raise $66 million of equity for the exchange.

The exchange is currently capitalised at $928 million, and has assets of $1 billion.

The placement on which NCB Capital Markets is lead broker and arranger, is on May 16 to 30.

The prefs taken up under the offer will be listed, said JSE General Manager Marlene Street-Forrest, adding that in two years, the exchange will head back to the market with another offer of common stock.

The exchange was formalised as a 'for profit' entity in April, when its regulatory functions were split off from its commercial arm.

Before that, the exchange had revised and adopted new articles of association and memorandum of understanding, created new share capital and distributed to its dedicated former owners.

Profitable entity

As a mutual company, the JSE was owned by its 11 member stockbrokerages, which had seats on the exchange.11 seats have been exchanged for issued shares.

The JSE is a profitable entity, reporting $44 million of profit in 2007 to recover some ground on the $8 million made in 2006. Still, the company has more ground to make up, to get back into striking distance of the $114 million net income made in 2005.

"The planned listing of the exchange's securities follows on a commitment made to the market," said Street-Forrest.

The JSE last month completed its reorganisation under which its commercial arm, now run by Street-Forrest, was divorced from its market regulatory division and placed under Wentworth Graham's supervision.

That reformulation, Street-Forrest said, finalised the process of demutualisation.

The JSE continues to oversee the market and listed companies - ensuring compliance with market rules and meting out sanctions when breached - but won't be allowed to regulate itself.

That job will fall to the Financial Services Commission (FSC) once the JSE prefs are publicly listed in June, deepening its watchdog role over the exchange.

"Oversight regulation for the exchange as a listed company will come from the FSC in the event that there is a conflict, whereby the exchange fails to comply with all the various requirement of a listed company," said Street-Forrest.

"Therefore, if the exchange fails to submit financials on a timely basis the market regulatory committee will refer this to the FSC to be dealt with."

The FSC already has oversight of the exchange, as an organisation operating within the securities industry, which it regulates.

The Securities Act gives the regulator various powers including, the right to object to a change in the exchange's rules, the right to approve persons appointed to the board of the exchange, the power to enforce the rules of the exchange and to suspend trading in a listed stock.

The exchange as a listed company will be guided by the same agreements and rules that govern all other public companies, including the reporting of quarterly and annual financial statements, and disclosure of information to the market on any material events.

Sabrina Gordon
Jamaica Gleaner