Home' Trinidad and Tobago Guardian : June 14th 2015 Contents JUNE 14 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
Although based in
Jamaica, JMMB Group
Money Market Brokers
Ltd), has significant
operations in both the
and in T&T.
Despite achieving top-line growth, its profits
were restrained by significant one-off expenses
related to its expansion activities.
Issued less than nine weeks after the close
of its fiscal year on March 31, 2015, we will now
review JMMB Group s performance for that
Changes in financial position
Total assets advanced from J$206.7 billion
to J$217.7 billion last March, reflecting an increase
of 5.3 per cent.
The largest component, investment securities,
rose from J$145.8 billion to J$157.2 billion. Assets
described as available-for-sale securities
accounted for J$117.5 billion (2014: J$102.5 bil-
lion). Within this grouping, Government of
Jamaica paper, including guaranteed debt, com-
prised of J$78.3 billion (2014: J$69.6 billion).
Securities described as loans and receivables
fell to J$28.8 billion from 2014 s J$32.3 billion.
Here again, Government of Jamaica paper
accounted for the largest decline, moving to
J$28.5 billion from the previous level of J$32.1
Cash and cash equivalents fell to J$18.7 billion
from J$23.3 billion. There was a precipitous
drop in the cash component to J$7.5 billion
from J$13.7 billion.
On the other hand, cash equivalents rose to
J$11.1 billion from 2014 s J$9.6 billion. Included
in the 2015 balance were restricted sums totalling
almost J$551 million. The larger component, at
J$543.2 million, related to amounts held by a
broker as security for funding other securities.
The smaller element of J$7.7 million was
deposited at 2.5 per cent interest with a building
society to assist employees with home own-
Loans and notes receivable rose from J$26.6
billion to J$31.9 billion. Strong increases were
recorded in sums due from both corporate bor-
rowers and financial institutions. The former
rose to J$17.6 billion from J$14.8 billion while
the latter jumped to J$6.3 billion from a low
base of J$2.4 billion. On the other hand,
advances to individuals fell to almost J$9 billion
from J$10.2 billion in 2014. These amounts
represent gross values before impairment of
J$1.04 billion (2014: J$0.9 billion).
Marginally helped by the acquisition of AIC
Securities made in the current year, property
plant and equipment rose to J$2.03 billion from
J$1.84 billion. The major movements were addi-
tions of J$465 million and depreciation charges
of J$287 million.
Total liabilities rose from J$188 billion to
J$196 billion. Securities sold under agreements
to repurchase accounted for J$144.5 billion
(2014: J$143.3 billion). This category represented
73.7 per cent of total liabilities in 2015 and 76.2
per cent of total liabilities in 2014.
Out of this total, almost 62 per cent or J$89.25
billion is denominated in US dollars. A further
J$44 billion or 30.5 per cent is denominated in
Jamaican dollars with the remainder spread
over five other currencies.
As part of its fund-raising activities, the
group has both notes payable and redeemable
preference shares outstanding. The notes payable
were issued during the 2014/15 fiscal period.
Notes payable totalling J$3.64 billion com-
prises two portions. The larger quota is a senior
unsecured fixed note denominated in US dollars
with an outstanding value of J$2.3 billion. Inter-
est is at 6.75 per cent. If it is not redeemed at
its July 18, 2016 maturity, the noteholders may
extend its maturity to July 18, 2019, but at a
higher interest rate of 7.75 per cent.
The second component has a value of J$1.35
billion. This represents a subordinated debt of
TT$80 million, which has a maturity of March
28, 2022 and incurs an interest rate of 4.5 per
cent. This debt was issued by a Trinidad-based
subsidiary, probably, Intercommercial Bank Ltd.
The group has four tranches of redeemable
preference shares outstanding, totalling J$4.23
billion. Interest rates on these non-voting instru-
ments range from 7.25 to 8.75 per cent.
Customer deposits rose to J$38.5 billion from
J$35.9 billion, reflecting an improvement of 7.2
Stockholders equity advanced to J$20.96 bil-
lion from the previous level of J$18.33 billion.
Retained earnings improved by a net of J$1.39
billion to close 2015 at J$7.57 billion. The current
year s profit of J$1.9 billion boosted this figure
while dividends to shareholders of J$538 million
lowered the net result.
The investment valuation reserve improved
by J$1.4 billion to J$2.04 billion; this reflected
unrealised gains on available-for-sale securi-
Foreign exchange differences of J$165 million
more than wiped out the previous year s positive
balance causing the cumulative translation
reserve to end at a negative J$109 million.
With 1,630,552,530 ordinary shares outstand-
ing, each share has a book value of J$12.85 (2014:
Total interest income expanded by 8.6 per
cent to J$13.33 billion from 2014 s J$12.28 billion.
With the exception of investment securities, all
other streams of income advanced robustly.
Notably, interest from loans and receivables
climbed by 58 per cent to J$2.51 billion from
J$1.59 billion. Interest from resale agreements
jumped to J$812.8 million from J$11 million (or
by 7,216 per cent!) Even interest on cash balances
scored a robust improvement, moving to J$46.2
million from J$16 million.
While still being the major component, inter-
est on investment securities fell from J$10.66
billion to J$9.97 billion.
Total interest expenses climbed dispropor-
tionately by 15.1 per cent to J$8.07 billion from
Interest paid on repurchase agreements rose
by J$657 million or 10.5 per cent to J$6.92 billion
from J$6.26 billion. Meanwhile, interest on
notes payable jumped to J$806.8 million from
J$451.6 million, reflecting a 79 per cent increase.
The increase in interest on redeemable pref-
erence shares moved to J$353.4 million from
J$306.7 million; this reflects the interest on the
two new tranches of preference shares that
were issued in August 2013.
The net effect of these movements saw net
interest income being almost unchanged at
J$5.26 billion for both periods.
The group s other major sources of income
was its net gains on securities trading. This
component climbed by a solid 47.1 per cent to
J$3.42 billion from the previous year s J$2.33
Other significant contributors to income were
foreign exchange margins from cambio trading
(2015: J$936 million; 2014: J$588 million) and
fee and commission income (2015: J$546.3 mil-
lion; 2014: J$427 million). In addition, fees
earned from managing clients funds moved
from J$129.6 million to J$154.8 million. Other
miscellaneous income sources advanced to J$62
million from less than J$10 million in 2014.
The net effect of these changes saw total
income climb by 18.8 per cent to J$10.38 billion
from the 2014 level of J$8.74 billion.
Unfortunately, JMMB incurred staff costs
that were 36 per cent greater than in the previous
year and other expenses that climbed by 39
The combined effect of these changes pulled
down operating profit to J$2.59 billion from
The impairment loss on financial assets of
J$259.2 million, which related to its equity and
corporate bond portfolio, obscured the modest
J$19.3 million gain on the acquisition of AIC
After accounting for all these changes, JMMB s
after-tax profit registered at J$2.05 billion; this
was more than J$1 billion lower than the J$3.06
billion earned for 2014.
These results translated into 2015 EPS of
J$1.18 versus J$1.74 for 2014.
Both major operating units delivered strong
top-line gains, whether measured by external
revenues or interest income.
Unfortunately, both segments incurred
unusual one-off increases in expenses relating
to acquisitions of Trinidad-based companies.
JMMB s interest in Intercommercial Bank
Ltd moved from 50 per cent to 100 per cent.
This change impacted the banking segment s
expenses and results.
The financial segment s expenses were
squeezed by the integration of AIC Securities
Ltd (subsequently renamed JMMB Securities
(T&T) Ltd). Even so, in its first 11 months as
a JMMB subsidiary, the former AIC Securities
contributed J$38 million (TT$2.25 million) to
revenues and J$4.2 million (TT$249,000) to
Among other expenses that increased, the
assets tax (in Jamaica) jumped from J$194.8
million to J$374.2 million. In its third quarter
report, expenses associated with the two
Trinidad acquisitions were given as J$795.8
million. In addition, there was a further J$662.4
million that related to integration and other
Dividends and share price
Total dividends with respect to its 2014 fiscal
period was J$0.33. For the 2015 period, an inter-
im dividend of J$0.16 was previously paid on
December 16, 2014 and, on June 29, 2015, a
final dividend of J$0.16 will be paid.
Using the 2015 dividend of J$0.32 and a recent
price of J$7.80, investors in Jamaica enjoy a
yield of 4.1 per cent. This yield is almost on
par with the local market, where the dividend
is equivalent to almost TT$0.02 and its recent
share price was TT$0.45.
In its home market, the share price of the
predecessor company (JMMB) was traded at
J$7 last June. The successor company, JMMB
Group Ltd, peaked at J$10.00 on May 5, 2015.
With much of its integration expenses behind
it, the rebranded and restructured JMMB Group
Ltd can look forward to a brighter future in its
three major operating localities.
As an associate of NCBJ, which owns 26.3
per cent, it has access to many useful contacts.
When fresh funding is needed to finance
future growth or settle maturing obligations,
the lower rates available in Trinidad should
make it the preferred choice.
Despite huge gains in securities trading...
JMMB Group's results falter
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