The JSE Junior Market SME Funding Through The Stock Exchange :: Marlene Street

417 views

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
417
On SlideShare
0
From Embeds
0
Number of Embeds
11
Actions
Shares
0
Downloads
12
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

The JSE Junior Market SME Funding Through The Stock Exchange :: Marlene Street

  1. 1. Presented at the Caribbean Growth Forum
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
  13. 13. GCT Company AFS Post listing PAYE % change Post listing Pre-listing Pre-listing % change 6,787,207 5,442,376 25% 16,282,369 15,865,726 3% 16,518,868 9,587,552 72% 13,973,822 9,245,039 51% 0 0 0 15,338,179 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 2,456,205 245% 166,818,202 141,636,903 18% LASF 22,100,000 9,900,000 123% 2,700,000 1,800,000 50% LASM 8,232,783 5,629,320 46% 34,053,634 18,147,641 88% 75% 323,775,490 257,296,916 26% BPOW CHL 208,733,185 119,245,247
  14. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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”

×