Home' Trinidad and Tobago Guardian : November 22nd 2015 Contents SBG12 STOCKS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt NOVEMBER 22 • 2015
ollowing Sagicor Real Estate X
Fund’s rights issue in August,
Sagicor Group Jamaica Ltd (SJ)
participated in that exercise and
picked up 473.4 million addi-
tional shares in the X Fund.
This transaction was recorded in early Sep-
tember and represented a 21.1 per cent of the
X Fund’s capital. Consequently, Sagicor
Jamaica’s stake in that company rose to 29.3
per cent from 8.2 per cent previously.
Let us now further expand on these and
other developments that impacted on Sagicor
Group Jamaica’s third quarter results.
Changes in financial positions
Total assets rose by 3.6 per cent to J$294.3
billion (about TT$15.7 billion) from last Decem-
ber’s J$284.2 billion.
Financial investments, which accounted for
almost 68 per cent of the total, increased to
J$199.6 billion from last December’s J$179.5
Net loans and leases fell marginally to J$38.1
billion from J$38.8 billion.
Also declining were pledged assets and secu-
rities purchased under resale agreements; the
former moving down to J$3.2 billion from J$8.4
billion while the latter fell to J$1.1 billion from
Other assets climbed to J$23 billion from
J$13.7 billion previously.
Cash resources fell to J$15.7 billion from
J$26.6 billion. This reduction reflected a number
of transactions including the repayment of
repurchase agreements and purchase of invest-
ment securities. In addition, there were new
allocations to information technology and the
upgrading of some bank branches. There was
also the purchase of additional shares in the
X Fund (J$3.32 billion) and payment of a div-
idend of J$1.52 billion in March.
Total liabilities climbed from J$238.2 billion
to J$250.3 billion or by 5.1 per cent.
Policyholders’ funds increased to J$77 billion
from J$71.1 billion. The major component,
insurance contract liabilities, advanced to J$61.4
billion from J$55.8 billion, reflecting an improve-
ment of almost 10 per cent.
Securities sold under repurchase agreements
declined to J$64.8 billion from J$76 billion.
On the other hand, customers deposits
improved to J$63.3 billion from J$53.6 billion;
this reflects an increase of 18 per cent.
Sums due to banks and other financial insti-
tutions rose from J$19.7 billion to J$23.7 billion
or by 20.5 per cent. Meanwhile, other liabilities
advanced to J$17.7 billion from J$14.7 billion.
Total shareholders’ equity declined to J$44
billion from J$46 billion.
The major change was shown in equity
reserves, which fell to a negative J$1.1 billion
from last year-end’s J$6.4 billion. This decline
reflected unrealised losses on available-for-
sale investments of J$5.9 billion, gains recycled
and reported in profits of J$0.85 billion and
adjustments between regulatory loan provi-
sioning and IFRS of J$1.1 billion. The first item
was influenced by declines in its international
portfolio, which was triggered by global bond
price volatility and weaker growth in China.
The retained earnings component advanced
to J$35.9 billion from J$30.5 billion. The major
movement reflected a positive contribution
from comprehensive income of J$5.83 billion.
This sum was reduced by a dividend payment
of J$1.52 billion and then enhanced by the IFRS
adjustment of J$1.1 billion.
With 3,905,634,918 shares outstanding each
share has a book value of J$11.27 (December
Revenues and profit
Total revenues expanded by 16.1 per cent to
J$39.7 billion from J$34.2 billion. Of this sum,
net premium revenue improved marginally to
J$22.4 billion from J$22.1 billion. The 2014
figure included significant annuity contracts,
which was not the case in the current peri-
Net investment income expanded by a robust
47.7 per cent to J$12.98 billion from J$8.8 billion
in the 2014 period. This was helped by realised
capital gains from securities trades.
In addition, boosted by substantial com-
mercial banking activities, fees and other rev-
enues grew by 34.4 per cent, moving from
J$3.25 billion to J$4.37 billion.
Total benefits and expenses rose by 11.3 per
cent to J$32.9 billion from J$29.5 billion.
The largest increase, in both dollar and per-
centage terms, was recorded under adminis-
trative expenses, which climbed by 27.5 per
cent to J$9.6 billion from J$7.5 billion. Much
of this increase reflected the inclusion of the
RBC portfolio together with upgrading of the
technology platform at that subsidiary.
Net insurance benefits incurred rose by 10.4
per cent to J$14 billion from J$12.67 billion.
This reflected increases in all types of claims
and fund withdrawals.
Significantly, changes in insurance and annu-
ity liabilities declined to J$4.86 billion from
the previous period’s J$5.8 billion. This reduction
is related to the lower levels of large annuity
business when compared to the previous year.
The result from its joint venture moved from
a profit of J$12.9 million to a loss of J$14.1 mil-
lion. This reflects an improvement from the
half-year loss of J$27.1 million.
These changes allowed SJ to report pre-tax
profit of J$6.8 billion, reflecting an improvement
of 45.8 per cent over the J$4.7 billion recorded
for the comparative 2014 period.
After allowing for taxes and minority inter-
ests, the profit attributable to shareholders’
registered at J$5.83 billion; this was 42 per cent
greater than the comparative 2014 result of
J$4.1 billion. These results translated into EPS
of J$1.49 versus J$1.06.
Excluding employee benefits, all other seg-
ments registered top-line growth.
Notably, benefits and expenses for individual
lines were higher precipitating a lower profit.
In addition, despite lower benefits and expenses
at the employee benefits segment, that division’s
profit was also lower.
Both banking segments registered top-line
growth and pre-tax profit increases. This change
was more robust in the commercial banking
unit than in the investment banking segment.
The major reason for this was that, in 2014,
only three months of the acquired RBC bank
was included, while in 2015, SJ enjoyed the
benefit of the entire nine-month period.
Dividends and share price
SJ’s share price ended at J$10.15 on December
31, 2014. By the end of the third quarter, it
had reached J$13.03.
From this base, the price continued to appre-
ciate, moving up to J$14.00 on October 15,
2015 and then to J$15.00 on October 28, 2015.
The price then drifted down for a few days.
The release of this interim report on Novem-
ber 4 sparked renewed interest and the price
resumed its upward momentum. It closed at
a peak of J$16.55 on November 17, 2015,
although some trades were executed at J$17.99.
This suggests continuing strong demand.
The first dividend for the year of J$0.39 was
paid on April 10, 2015 and, on November 13,
shareholders received J$0.34, bringing the cur-
rent year’s total to J$0.73. This compares
favourably with the 2014 payment of J$0.63.
When we relate the current dividend to the
recent peak price of J$16.55, this would give
investors a yield of 4.4 per cent. Investors who
had shares last December would have enjoyed
a yield of 7.2 per cent on their holding.
What is the plan for the X Fund?
In August, the Sagicor Real Estate X Fund
had a rights issue totalling 747,668,375 new
shares at J$6.95 each. Of this amount, SJ was
able to acquire a disproportionate 473.4 million
or 63.3 per cent of the total number of shares
offered via the rights issue.
This means that Sagicor Pooled Pension
Funds Ltd, which previously owned more than
67 per cent of the X Fund did not participate
to the full extent of its entitlement to buy two
new shares for every five shares then held.
Consequently, that funds’ shareholding declined
to 52.3 per cent. The purpose of that rights
issue was to help finance the purchase of The
Double Tree Hilton in Orlando, Florida for
Now that SJ has acquired a 29.3 per cent
stake in the X Fund, what are its plans for
Starting this year, a new profit tax regime
for the life insurance sector will be implemented.
This will have a negative impact on the fourth
quarter results. Previously, tax was based on
gross premiums at a rate of three per cent and
on net investment income at a rate of 15 per
Now, those methods will be replaced by a
single tax of 25 per cent on income. At the
time of the presentation last March of the 2015
Budget, the Minister of Finance anticipated
that this would lead to a higher level of taxation
for life insurance companies.
This new measure is scheduled to take effect
in the current quarter.
Despite this challenge and combined with
the more competitive operating environment,
SJ directors are forecasting good results for the
final quarter of 2015.
Perhaps, one significant reason for this opti-
mism may be the huge profit that will be made
from the sale of Desnoes & Geddes shares to
Heineken at a substantial premium over cost.
It is very likely that many of its subsidiaries
hold this share in their portfolio. In addition,
the Sagicor Pooled Equity Fund owned
50,177,245 shares (1.79 per cent) of D&G.
(Note: In last week’s article, the name of
the company is Hardware & Lumber Ltd
NOT “hardware, lumber”).
Sagicor Jamaica picks up
additional shares in the X Fund
Links Archive November 21st 2015 November 23rd 2015 Navigation Previous Page Next Page