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
Business
Restaurant
Construction
Real Estate
Medical
Entertainment
Financial Services
Manufacturing
Hotel
General
Merchandise
“To provide a fair, efficient and
transparent stock market”
4. Company Category
Accountants
Advertising
Agriculture
Air Conditioning
Air Travel
Animals
Appliances
Architects
Art
Asphalt
Audio
Automobile
Bathroom
Batteries
Beauty
Bedding
Bee Keeping Services
Beverage
Boat
Book
Bottlers
Boutiques
Bridal
Broadcast Services
Building
Business
Charity
Number Company Category
102 Chemicals
379 Church
2132 Cleaners
13 Clothing / Fabric
28 Communication
33 Computers
62 Construction
158 Consultants
156 Data Processing
1 Electrical
55 Engineering
3268 Entertainment
14 Environmental
9 Farming
345 Financial Services
22 Fire
9 Fish
35 Florists
3 Food
11 Fruit
63 Funeral
34 Furniture
Gardening &
27 Landscaping
19 Gas
150 General Equipment
7336 General Merchandise
1856 Glass
Undetermined
Number Company Category
151 Grocers
1015 Hardware
223 Health
725 Home
578 Hotel
692 Industrial Equipment
3893 Insurance
321 Jewellers
133 Legal and Law
1730 Liquor
104 Locksmiths
2673 Machine
142 Manufacturing
154 Marine
2332 Marketing
2 Medical
145 Metal
306 Mining
330 Motorcycles / Bicycles
23 Music
24 Music Industry
450 Nurse
Office Furniture &
17 Equipment
40 Oils
10 Other Services
9516 Packaging
1 Paper
5327 Pesticide Services
Number Company Category
23 Photographers
142 Photographic
17 Printing
6 Publishers
1421 Real Estate
Restaurant Equipment &
279 Supplies
379 Roofing
16 Sanitation
11 School
100 Security
176 Service Station
132 Shipping
3454 Sports
3 Stationary /Office Supplies
181 Storage
1179 Stores
148 Sugar Maufacturers
225 Surveyors
34 Taxicabs
73 Telecomunications
12 Television
45 Tool
432 Tourism
9 Transport Services
567 Tyre
19 Water
8 Window
97
Number
21
213
22
283
5369
589
12
41
434
981
262
1174
146
497
49
786
3
10
22
159
32
1
110
2542
14
79
15
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.
2.
3.
4.
5.
6.
Effective avenue for raising money
Lower cost of funds than loans, allow
better use of leverage
Higher profile and market visibility
Wealth creation and distribution
mechanism for shareholders: estate
planning
Constant pricing mechanism for the
company
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.
2.
3.
4.
5.
6.
7.
Only have to give up 20% stake (minimum) to 24
other persons
Better management/utilization of leverage
Reduced (fixed) cost – loan interest
All the benefits of regular listing, plus
Reduced (50%) JSE listing fees
Tax holiday
Reduction in other costs for listing
8.
Standard prospectus and other documents
No newspaper publishing requirement
Negotiable lead-broker fees
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
800,000,000
600,000,000
400,000,000
200,000,000
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
Revenue First % Change in
Stated in Prospectus year after Listing
Revenue
AMG Packaging & Paper Company Limited
231,846,328
308,921,086
33.24%
Access Financial Services Limited
220,840,881
382,869,382
73.37%
Blue Power Group Limited
647,744,268
696,455,723
7.52%
Cargo Handlers Limited
173,696,852
165,208,268
-4.89%
Dolphin Cove Limited - Operating Revenue
688,827,708
732,633,099
6.36%
2,203,074,000
3,626,395,000
64.61%
Honey Bun (1982) Limited
448,561,798
560,847,134
25.03%
Jamaican Teas Limited
320,131,121
448,561,798
40.12%
5,842,917,000
6,756,555,000
15.64%
51,627,864
219,994,000
326.11%
172,020,000
2,969,611,000
1626.32%
General Accident Insurance Company Limited
Lasco Distributors Limited
Lasco Financial Services Limited
Lasco Manufacturing Limited
14. 36
3
Lasco Manufacturing Ltd
Lasco Financial Services Ltd
Lasco Distributors Ltd
Jamaican Teas Ltd
Honey Bun (1982) Ltd
21
29
21
77
7
General Accident Insurance…
Lasco Financial
Lasco Financial
Lasco Manufacturing
Lasco Manufacturing
25
5
5
20
71
20
New Employees
Dolphin Cove Ltd
Jamaican Teas
Jamaican Teas
Lasco Distributors
Lasco Distributors
64
6
Blue Power Group Ltd
General Accident Ins
General Accident Ins
Honey Bun (1982)
Honey Bun (1982)
Limited
Limited*
Limited*
10
10
10
100
100
100
Acces Financial Services Ltd
Blue Power
Blue Power
Dolphin Cove
Dolphin Cove
50
40
30
20
10
0
AMG Packaging & Paper Co…
Junior Market companies have employed over 230 full time workers
and 100 temporary workers since listing.
New
New
New
Junior Market
Employees
Employees
Junior Market
Employees
New Employees Since Listing
Companies
Since Listing
Since Listing
Companies
Since Listing
100
Access Financial
Access Financial
90
Access Financial Services
Services
52
56
80
Services
52
70
AMG Packaging & Paper
77
60
AMG Packaging & Paper
7
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 2012. 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 2012. A new
distribution centre is set to open in St Lucia in the latter part of 2012.
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. Jamaican Teas Limited
July 2010: Listed on the JSE Junior Market
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 2012. 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 2012.
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
C2W Music Limited
‣ May 2012: Listed on JSE Junior Market
is a marketing manager).
21. Access Financial Services 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.
AMG Packaging & Paper Company
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.
Blue Power Group Limited
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.
C2W Music Limited
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
Jamaican Teas Limited
LASCO Distributors Limited
LASCO Financial Services Limited
LASCO Manufacturing 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.
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.
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
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
Allow for a wider pool of investors & investment
products
Since the creation of the Junior Market, over 5,000 new
investors have registered.
Improved Compliance & Corporate Governance
All Junior Market companies are compliant - Financials
and material disclosures are published timely. The
companies practice corporate governance.
Larger pool and greater tax compliance
Increased payment in GCT and PAYE
Increase in employment through expansion
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
The companies listed on the Junior Market have used the
funds raised to position themselves to be far more
JSE providing an indirect service to tax authorities 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”