Presented at the Caribbean Growth Forum

Transcription

1 Presented at the Caribbean Growth Forum

2 Debt or Equity? Debt Fixed repayments; Clock starts at day 1; Whether Profit or Loss Cost of funding Prime rate 18+%? Collateral required Tax shield Equity Capital Expected return yes, fixed no; share losses if any Cost of funding effectively zero over the long term No collateral requirement To provide a fair, efficient and transparent stock market

3 There are over 80,000 companies registered in Jamaica Over 110 Company Categories, few examples Transport Services Agriculture Automobile Restaurant Business Real Estate Construction Medical Entertainment Manufacturing Financial Services Hotel General Merchandise To provide a fair, efficient and transparent stock market

4 Company Category Number Company Category Number Company Category Number Company Category Number Accountants 102 Chemicals 151 Grocers 23 Photographers 21 Advertising 379 Church 1015 Hardware 142 Photographic 213 Agriculture 2132 Cleaners 223 Health 17 Printing 22 Air Conditioning 13 Clothing / Fabric 725 Home 6 Publishers 283 Air Travel 28 Communication 578 Hotel 1421 Real Estate 5369 Animals 33Computers 692Industrial Equipment Restaurant Equipment & 279 Supplies 589 Appliances 62 Construction 3893 Insurance 379 Roofing 12 Architects 158 Consultants 321 Jewellers 16 Sanitation 41 Art 156 Data Processing 133 Legal and Law 11 School 434 Asphalt 1 Electrical 1730 Liquor 100 Security 981 Audio 55 Engineering 104 Locksmiths 176 Service Station 262 Automobile 3268 Entertainment 2673 Machine 132 Shipping 1174 Bathroom 14 Environmental 142 Manufacturing 3454 Sports 146 Batteries 9 Farming 154 Marine 3 Stationary /Office Supplies 497 Beauty 345Financial Services 2332Marketing 181Storage 49 Bedding 22Fire 2 Medical 1179Stores 786 Bee Keeping Services 9 Fish 145 Metal 148 Sugar Maufacturers 3 Beverage 35 Florists 306 Mining 225 Surveyors 10 Boat 3 Food 330 Motorcycles / Bicycles 34 Taxicabs 22 Book 11 Fruit 23 Music 73 Telecomunications 159 Bottlers 63Funeral 24Music Industry 12Television 32 Boutiques 34 Furniture 450 Nurse 45 Tool 1 Bridal Gardening & 27 Landscaping Office Furniture & 17 Equipment 432 Tourism 110 Broadcast Services 19 Gas 40 Oils 9 Transport Services 2542 Building 150 General Equipment 10 Other Services 567 Tyre 14 Business 7336 General Merchandise 9516 Packaging 19 Water 79 Charity 1856 Glass 1 Paper 8 Window 15 Undetermined 5327Pesticide Services 97

5 Become a publicly traded company Regulated under the Securities Act, JSE JM Rules Public Company - anyone may buy shares Public interest in profits, plans, mgmt, etc. Information disclosure requirements: Quarterly accounts; annual audits; Notice of mgmt changes, large investments, general meetings Dividends among other requirements To provide a fair, efficient and transparent stock market

6 1. Effective avenue for raising money 2. Lower cost of funds than loans, allow better use of leverage 3. Higher profile and market visibility 4. Wealth creation and distribution mechanism for shareholders: estate planning 5. Constant pricing mechanism for the company 6. No taxes on share transfer To provide a fair, efficient and transparent stock market

7 Mix of existing small & medium sized with some new companies (start-ups) None related to companies that are already listed Capital through Participating shares of between J$50M(US580k) and $500M(U$5.8M) each, raised largely on strength of prospectus via IPO JSE-approved Mentor for each Board of Directors Audit & Compensation Committees To provide a fair, efficient and transparent stock market

8 1. Only have to give up 20% stake (minimum) to 24 other persons 2. Better management/utilization of leverage 3. Reduced (fixed) cost loan interest 4. All the benefits of regular listing, plus 5. Reduced (50%) JSE listing fees 6. Tax holiday 7. Reduction in other costs for listing Standard prospectus and other documents No newspaper publishing requirement Negotiable lead-broker fees 8. Governance standards are good for business To provide a fair, efficient and transparent stock market

9 Public & Private Sector: Ministry of Finance/JSE Stimulation of economy through SMEs, using the capital market as growth catalyst. Enhanced SME profitability & long-term viability Improved corporate governance Increased employment Larger pool of compliant taxpayers Gains in payroll taxes, GCT & CIT collections Wider pool of investors/wealth creation & sharing Sustained economic growth

10 100+ companies canvassed since inception in 2009 MOU and joint promotions with JamPro, PSOJ, brokers 13 listings to date All compliant with JSE rules All show financial and other improvements Paying additional taxes 10+ companies ready for listing Many getting ready to be listed

11 Average increase in Pre-Tax Profit of 371% over the previous year. $ 1,400,000,000 Pre-Tax Profit 1,200,000,000 1,000,000, ,000, ,000, ,000, ,000,000 0 Post Listing Pre-tax Profit Pre Listing Pre-tax Profit

12 Average revenue increase of 200% over the previous financial year Junior Market Companies Year end Revenue Stated in Prospectus Revenue First year after Listing % Change in Revenue AMG Packaging & Paper Company Limited 231,846, ,921, % Access Financial Services Limited 220,840, ,869, % Blue Power Group Limited 647,744, ,455, % Cargo Handlers Limited 173,696, ,208, % Dolphin Cove Limited - Operating Revenue 688,827, ,633, % General Accident Insurance Company Limited 2,203,074,000 3,626,395, % Honey Bun (1982) Limited 448,561, ,847, % Jamaican Teas Limited 320,131, ,561, % Lasco Distributors Limited 5,842,917,000 6,756,555, % Lasco Financial Services Limited 51,627, ,994, % Lasco Manufacturing Limited 172,020,000 2,969,611, %

13 GCT Company Post listing Pre-listing % change Post listing PAYE Pre-listing % change AFS 6,787,207 5,442,376 25% 16,282,369 15,865,726 3% BPOW 16,518,868 9,587,552 72% 13,973,822 9,245,039 51% CHL ,338,179 13,558,387 13% DCOVE 62,368,682 34,106,917 83% 58,845,536 47,915,148 23% JAMT 84,256,260 52,122,877 62% 15,763,748 9,128,072 73% LASD 8,469,385 2,456, % 166,818, ,636,903 18% LASF 22,100,000 9,900, % 2,700,000 1,800,000 50% LASM 8,232,783 5,629,320 46% 34,053,634 18,147,641 88% 208,733, ,245,247 75% 323,775, ,296,916 26%

14 Junior Market companies have employed over 230 full time workers and 100 temporary workers since listing. New Junior Market Employees New Employees Since Listing Companies Since Listing Access Financial Services Access Financial Services AMG Packaging & Paper Blue Power Dolphin Cove New Employees 0 General Accident Ins 64 Honey Bun (1982) Limited* 25 5 Jamaican Teas Lasco Distributors Lasco Financial 7 Lasco Manufacturing 36 Acces Financial Services Ltd AMG Packaging & Paper Co Blue Power Group Ltd Dolphin Cove Ltd General Accident Insurance Honey Bun (1982) Ltd Jamaican Teas Ltd Lasco Distributors Ltd Lasco Financial Services Ltd Lasco Manufacturing Ltd

15 Financial Services Oct 2009: Listed on the JSE Junior Stock Market December 2009: Opened 3 new branches - Santa Cruz, Linstead & Portmore August 2010: Opened 2 new branches - Old Harbour & Brown's Town Feb 2012: Opened new branch in Downtown, Kingston. Total branches to 14. Has employed over 56 persons since listing on the Junior Market AMG Packaging and Paper Company July 2011: Listed on the JSE Junior Stock Market Purchased new property adjacent to the company s factory at a cost of J$58M the property will enable the company to expand production facility and house its inventory indoors Has hired 7 employees since listing

16 Blue Power Group April 2010: Listed on the JSE Junior Stock Market Expanded building complex to 8,500 square feet, new machines and mills. Increased manufacturing capacity by 50 per cent, launched new soaps Has employed 10 persons since listing Caribbean Producers July 2011: Listed on the JSE Junior Stock Market Opened its meet processing facility in February The construction of a 10,000 sq ft warehouse in Montego Freeport is almost completed. The CPJ Market facility in Kingston is expected to open in October A new distribution centre is set to open in St Lucia in the latter part of Has hired 25 workers since listing

17 Dolphin Cove Limited Dec 2010: Listed on the JSE Junior Market 2011: Opened a second marine park in Lucea, Hanover Dolphin Cove Negril 2011: Purchased additional 3 acres to the 7-acre Ocho Rios marine park facility to widen its attraction offerings. Over J$155M on capital expenditure. Has employed more than 100 persons since listing on the Junior Market Honey Bun (1982) Limited June 2011: Listed on the JSE Junior Market Purchased new equipment & vehicles improved manufacturing and distribution. efficiencies Expanded product line and marketing Has employed 10 permanent persons and 15 temporary workers since listing

18 July 2010: Listed on the JSE Junior Market Jamaican Teas Limited Nov 2010: Acquired 50% interest in Bay City Foods Limited. June 2011: Entered water bottling business 2011: Doubled warehouse, factory and admin office space Dec 2011: Purchased a supermarket in Kingston Feb 2012: Purchased assets of former Hilo supermarket in Savanna-La-Mar Now building 2,000 sq ft warehouse on Port Royal street in Kingston to expand productive capacity Purchase property in Kingston for the construction of 18 super studio apartments in Purchased additional Packaging and grinding machines. Has employed 71 persons employed since listing on the Junior Market Lasco Distributors Limited Oct 2010: Listed on the Junior Market Expanded its logistics business and technology platform In the process of expanding product lines as well as plant and machinery 29 employees hired since listing

19 Lasco Manufacturing Limited Oct 2010: Listed on JSE Junior Market Building modern manufacturing facility costing J$2.1B in White Marl, adding 100,000 sq ft. to: Significantly reduce imports and make use of more local resources Enable launch of new products, increases exports and double sales by 2014 Has employed 6 persons permanently since listing Factory expansion projected to provide 250 new jobs in the first phase alone Lasco Financial Services Limited Oct 2010: Listed on JSE Junior Market Expanded product range, e.g. education loans Acquired Supreme Ventures Money Gram business for J$38M Quadrupled payday loans since listing Incorporated Lasco Financial Services (Barbados) Ltd and has signed an international Transfer Agreement with MoneyGram International. Trading is expected by the end of the calendar year Has hired 7 persons since listing

20 Cargo Handlers Limited Dec 2010: Listed on JSE Junior Market Still working on major projects outlined in the companies prospectus. purchase of shore crane, 20 tonne heavy forklift and the lease of property at the Montego Bay port, alongside Berth 2. General Accident Insurance Company Limited Sep 2011: Listed on JSE Junior Market Embarked on marketing campaign Employed 4 new persons since listing (one of whom is a marketing manager). C2W Music Limited May 2012: Listed on JSE Junior Market

21 Access Financial Services Limited AMG Packaging & Paper Company Limited Blue Power Group Limited C2W Music Limited Dividend Policy: A payment of an annual dividend of not less than 20% of the annual after tax profits where such profits are available for distribution, subject to the Company s need for reinvestment of some or all of its profits from time to time in order to finance its growth and development. Dividend Policy: A payment of an annual dividend of not less than 20% of net profits available for distribution, subject to the need for reinvestment in the Company from time to time. Dividend Policy: A payment of an annual dividend of between 10% and 20% of the annual after tax profits where such profits are available for distribution, subject to the Company s need for reinvestment of some or all of its profits from time to time in order to finance its growth and development. Dividend Policy: A payment of an annual dividend of not less than 25% of the annual after tax profits available for distribution, subject to the need for reinvestment in the Company from time to time. Cargo Handlers Limited Dividend Policy: A payment of an annual dividend of not less than 25% of the annual after tax profits where such profits are available for distribution, subject to the Company's need for reinvestment of some or all of its profits from time to time in order to finance its growth and development. Caribbean Producers Jamaica Limited Dividend Policy: A payment of an annual dividend in US currency, of not less than 25% of net profits available for distribution, subject to the need for reinvestment in the Company from time to time.

22 Dolphin Cove Limited Dividend Policy: A payment of an annual dividend equivalent to not less than 25% of net profits available for distribution, subject to the need for reinvestment in the Group from time to time. General Accident Insurance Company Limited Dividend Policy: A payment of an annual dividend of not less than 25% of net profits available for distribution, subject to regulatory approval by the Insurance Division of the FSC and the need to maintain sufficient capital for both regulatory purposes and growth. Honey Bun (1982) Limited Dividend Policy: A payment of an annual dividend of not less than 20% of net profits available for distribution, subject to the need for reinvestment in the Company from time to time. Jamaican Teas Limited Dividend Policy: A payment of an annual dividend of not less than 15% of the annual after tax profits where such profits are available for distribution, subject to the Company's need for reinvestment of some or all of its profits from time to time in order to finance its growth and development. LASCO Distributors Limited LASCO Financial Services Limited LASCO Manufacturing Limited Dividend Policy: A payment of an annual dividend of not less than 15% of the annual after tax profits where such profits are available for distribution, subject to the Company's need for reinvestment of some or all of its profits from time to time in order to finance its growth and development so that the Company sustains and improves on its ability to compete in the markets in which it operates.

23 Promised Objectives Long term viability of SMEs Allow for a wider pool of investors & investment products Improved Compliance & Corporate Governance Larger pool and greater tax compliance Increase in employment through expansion Delivery The companies listed have recorded improvements in revenues and pre-tax profits All Invitations (Offers) to purchase shares were fully subscribed, and most were oversubscribed Since the creation of the Junior Market, over 5,000 new investors have registered. All Junior Market companies are compliant - Financials and material disclosures are published timely. The companies practice corporate governance. Increased payment in GCT and PAYE Overall 330 full-time and temporary workers have been employed by companies listed on the Junior market Net Gain in taxation after the first 5 years JSE providing an indirect service to tax authorities The companies listed on the Junior Market have used the funds raised to position themselves to be far more competitive and to achieve growth

24 Assumptions: No other JM companies listed Other JM Companies are similar to those reporting Same rate of growth of revenues & profits Current tax rates applicable throughout Capital allowances not factored in Additional GCT and payroll taxes will outstrip CIT waived within 5 years (1/2 rate) CIT collections in years 6 9 will exceed all taxes foregone in years 1 5

25 Listing on JJSE has added and will continue to add value for shareholders, the market and the economy Efficient, low-cost method of raising capital Reduced costs and greater ease in listing Public/Private Sector Partnership can work Is the avenue for economic growth through SMEs Market is driven by opportunities and confidence. Thank you for your time & attention To provide a fair, efficient and transparent stock market