Issue: 10
Businessuite Weekly
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Contents Cover Story
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Don’t Fix What Isnt Broken: Why CIBC CEO Gary Brown Says He Has No Intention Of Changing Company Growth Strategy For Chief Executive Officer of CIBC First Caribbean Gary Brown, the concept of not fixing what isn’t broken runs deep.
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BUSINESSUITE EVENT CALENDAR
West Indies Petroleum Uses Preference Share Structure To Finance Acquistion of JB Terminal Port Esquivel Limited Wes Indies Petroluem last week used a JMMB facilitated J$750 million preference share offer to finanace its acquisition of Jamaica Broilers...
Editorial
INVESTMENT
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The Problem with Investors And Their Confidence In The Creative Industry
After several years in the pipeline, Evan Williams dream of a four star ‘Extended Stay Hotel’ has finally become a reality thanks to an investment...
“What do I do when the investor I approach does not value my business as a member of the creative sector?” “Why is it that despite the part I played...
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Businessman Joe Bogdanovich Helps Evan Williams Realize His Renfrew Dream
WEEK IN REVIEW
COMPANY REPORTS
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JPS And WIHCON Sign ‘Smart House’MOU The Jamaica Public Service Company ( JPS) last week signed an MOU with West Indies Home Contractors Limited (WIHCON) for ...
Trinidad Cement Limited’s Profits Hit By Restructuring Costs Wilfred Espinet’s Trinidad Cement Limited has reported a 6% jump in revenue for the second quarter of the year 2016 compared to the ...
Businessuite Weekly
Issue: 10
Contents Credits
SME ADVICE
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10 Things Angel Investors Look For Before Investing In Small Businesses For small businesses and entrepreneurs, the issue of financing is one that takes a toll despite the soundness of your business plan. For many ...
Content Director Kayla Wright
The Businessuite News Centre BNC
Publisher and Editor in Chief
Aldo Antonio aldo@blackslateholdings.com
Subscription and Distribution Advertising Sales
businessuitemagazine@gmail.com
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Graphic Design and Layout:
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Sagicor Financial Moves Headquarters to Bermuda, Changes Name
Photo credits
Sagicor Financial has officially moved its headquarters from Barbados to Bermuda, with the promised that operations will remain the...
CLICK Digital Agency
Bonito Thompson
Sourced from the internet and contributed
Social Media
St Lucian Prime Minister Allen Chastanet Wants Caribbean to Take New Approach to Correspondent Banking Crisis Prime Minister of St Lucia Allen Chastanet is calling on regional authorities to take a new approach to address the decision by foreign financial...
Businessuite News Weekly Digital
Published Every 2nd, 3rd and 4th Monday Morning More in-depth coverage and reporting of Business News and Features; practical, how to, hands on business information; content focused on Caribbean business leaders aggressively seeking out opportunities for growth and expansion. Today, SME business owners and Entrepreneurs are more interested in how to do something and Businessuite News Weekly is delivering content to hundreds of thousands of Caribbean SME decision makers to help them make better strategic decisions about purchasing products and services for their businesses.
PUBLISHERS:
Businessuite News Centre BNC A division of the Blackslate Media Group “Silicon Mountain” Mandeville Jamaica For all information 876-630-2216 (Kingston Office) 876- 342-9332 (Mobile) 876-630-2216 (Mandeville Office) 876-542-3719 (Mobile) aldo@blackslateholdings.com OR email blackslateholdings@gmail.com
Corporate Information:
Blackslate Media Group Ltd, “Silicon Mountain” Mandeville Jamaica 876-631-5418 (Kingston Office) 876-458-3253 (Mobile) 876-631-4505 (Mandeville Office) 876-280-9192 (Mobile) To learn more about Blackslate go to www.blackslateholdings.com aldo@blackslateholdings.com
ISBN Number
ISSN 0799-4427
Issue: 10
Businessuite Weekly
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Businessuite Event Calendar 5
Monday, July 25
Wednesday, July 27
JN School Leadership Summit Venue: Jamaica Pegasus Hotel
Jamaica Stock Exchange Corporate Secretary’s Workshop
Caribbean Association of Law Libraries Annual General Meeting & Conference Venue: Knutsford Court Hotel
Business Registration & Information Mobile
Venue: Jamaica Pegasus Hotel
Venue: Girl Guides Headquarters Broadcast & Allied Services Co-operative Credit Union AGM Venue: The Gleaner Company (Media) Limited Sports Club
Tuesday, Julu 26 PSOJ President’s Forum on Digital Disruption Venue: The Jamaica Pegasus Hotel JN School Leadership Summit Venue: Jamaica Pegasus Hotel
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thursday, July 28 Annual General Meeting - Victoria Mutual Building Society Venue: Knutsford Court Hotel - Blue Mountain Suite
Businessuite Weekly
Issue: 10
Editorial By Kayla Wright
The Problem with Investors And Their Confidence In The Creative Industry
“What do I do when the investor I approach does not value my business as a member of the creative sector?” “Why is it that despite the part I played in developing and marketing local companies through my work as a graphic artist, that when I needed help everyone refused to help me because they couldn’t calculate the ‘value of my contribution’?” “Why did I, as a member of the creative sector have to go abroad to get the investment I needed to improve my company?” The above represents some concerns raised by members of the creative sector during the recently held First Global Bank SME Summit. The creative industry refers to a range of economic activities which are concerned with the generation or exploitation of knowledge and information. The complaints about the lack of investor confidence in the sector come on the heels of the Planning Institute of Jamaica (PIOJ) Economic Social Survey Jamaica (ESSJ) which found that the creative industries generated less formal activity in 2015 as a result of curtailed capital expenditure. In a local paper on Sunday July 24, Independent Curator, Writer and Critic, Nicole Smythe Johnson said she is of the view that the focus on expenditure tends to fail in exposing the deeper, more structural issues. She is quoted as saying “money is less important than the structures that support film, visual art, music, etc….the industry doesn’t need money, it needs to not be stifled. Right now, its being stifled”. Even going beyond the usually recognized areas in the creative industry, professionals in the sector, including graphic artists etc, feel that they do not get the recognition they deserve for the work that they do. The summit was littered with creatives whose sole problem lied in their inability to get funding to expand their businesses, no matter how successful/ known they were for their work. The question must then be asked, if there is no confidence from investors, thus resulting in somewhat of a stifling of the creative industry, especially for those who are unable to raise the funds necessary to catapult their business to the next level, how can we expect any significant improvement in activity from the sector.
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The Week In Review JPS And WIHCON Sign ‘Smart House’ MOU
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he Jamaica Public Service Company (JPS) last week signed an MOU with West Indies Home Contractors Limited (WIHCON) for the development of smart homes in Meadows of Irwin, St James.
The term Smart Home refers to a residence where its contents, including electronic appliances and equipment, are remote controlled by computers and other mobile devices from any location. Speaking at the signing ceremony, President and CEO of JPS, Kelly Tomblin said her company has chosen the right partner in making the first home ready within the next five months. Meanwhile, General Manager of Development Division for WIHCON, Aisha Campbell said this is the second in a first partnership with JPS. And Mayor of Montego Bay Glendon Harris said the move with JPS fits well with plans by the St James Parish Council to develop Montego into a smart city. A model house that is to be retrofitted with the smart technology is expected to cost approximately $18.85 million.
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West Indies Petroleum
Uses Preference Share Structure
To Finance Acquistion of JB Terminal Port Esquivel Limited
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est Indies Petroluem last week used a JMMB facilitated J$750 million preference share offer to finanace its acquisition of Jamaica Broilers’ subsidiary JB Terminal Port Esquivel Limited as well as to retrofit the facility.
According to a release from JMMB, this move would allow WIPL to expand its operations and deepen its penetration of the local bunker market. Retrofitting of the newly acquired facilities at Port Esquivel is now underway, and could take up to five months. The preference shares, which have a maturity date of 2021, are cumulative, redeemable non-participating and pay a quarterly dividend of 11.50%. According to Chief Country Officer of JMMB Group Capital Market Unit, Karl Townsend, the fully subscribed issue, was offered solely to institutional investors and was taken up by pension funds. He says use of the preference share structure would allow WIPL “to raise capital more efficiently while managing its debt repayment in accordance with its expected expansion”. The acquisition is structured as a cash and debt deal with WIPL paying cash of US$4M and assuming US$18.5 million of debt owed to Jamaica Broilers by the ethanol business.
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The total acquisition price is US$22.5 million. 6
Businessuite Weekly
Issue: 10
Investment Businessman Joe Bogdanovich Helps Evan Williams Realize His Renfrew Dream
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fter several years in the pipeline, Evan Williams dream of a four star ‘Extended Stay Hotel’ has finally become a reality thanks to an investment by businessman, Joe Bogdanovich.
Scheduled to open in October of next year, the Renfrew Hotel will consist of 32 ‘exclusive high end units and 8 serviced, luxury apartments’ owned by local investors but leased and operated by Williams with prices ranging from US $135,000 to US$300,000. Speaking at the lauch last week, Williams said he believes The Renfrew will distinguish itself by providing patrons with an “uncommon level of personalized service”. For his part, Bogdanovich says his decision to invest in the project stems from problems he has faced in the past where clients would come to Kingston to do business but have no where to stay for an extended period of time that offers the necessary accommodation needs.
Evan Williams Vision for the Renfrew Hotel
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This move represents the latest in a series of investments by Bogdanovich as well as his “carefully timed and confidently taken” maiden step into the hospitality sector. He says with demand for hotel rooms in Kingston at an all time high due to the increase in airlift to the city in recent years and the completion of the North-South Highway, there will be adequate demand for the rooms at the Renfrew making it a viable investment.
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Cover Story
Don’t Fix What Isn’t Broken: a 7 a
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Businessuite Weekly
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Why CIBC CEO Gary Brown Says He Has No Intention Of Changing Company Growth Strategy
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or Chief Executive Officer of CIBC First Caribbean Gary Brown, the concept of not fixing what isn’t broken runs deep.
Speaking with Businessuite Magazine following his introduction to shareholders last week, the CEO said as far as he was concerned, there was no need to change the growth strategy that has worked so well for the company for so long.
“We have a very strong business here in the Caribbean and especially here in Jamaica so it’s not about changing our fundamental strategy, its about executing the strategy that we already have”. Brown says what he has done and intends to continue to do is to work on perfecting the execution of the strategy to maximize the company’s growth potential in the Caribbean region.
Brown’s Appointment Brown began his stint as CEO of CIBC in January of this year, when he replaced former CEO Rik Parkhill. Prior to this role, he was Global Head of Corporate Banking with the bank’s parent company, CIBC with responsibility for corporate and institutional banking activities at CIBC, including lending to large corporates, real estate finance, global banking, international lending and certain non-core portfolio activities. Upon his appointment, Brown had stated that he intended to build on the “strong recovery which the bank has been seeing over the past two quarters, with its highest net income in five years being recorded in the third quarter of 2015”. In his message to employees at the time, he had stated that his focus would be on the acceleration of growth across the bank’s regional footprint through an even stronger focus on the customer, adding: “We are a service business and serving our customers well is the only way we can distinguish ourselves from the competition and achieve success. I personally intend to stay focused by making contact with at least one customer every single day – either in person, in client meetings or by telephone.” Issue: 10
2015 Performance In his report to shareholders last year, former CEO Rik Parkhill had described it as a ‘year of recovery for CIBC”. However, he indicated that the bank continued to deliver “solid results against its strategic objectives of accelerating profitable revenue growth and improving operational efficiency recording net income of $10.9 million in the fourth quarter”. He said this strong close was due to higher revenue and lower loan loss impairment compared with the same period in the prior year. “For the fiscal year ending October 31, 2015, the Bank recorded net income of $97.9 million. Excluding restructuring costs, which include the sale of our Belize operations, and other non-core items the Bank generated normalized1 net income of $123.4 million”. This represented a significant improvement in performance when compared to the normalized1 net income of $82.5 million (reported net loss $148.4 million) in the prior year. Parkhill said CIBC believes that infrastructure development and renewal in the Caribbean would continue to play a pivotal role in its economic recovery.
2016 And Beyond Brown says one of the key areas he intends to focus on is regional growth and development through the enriching of customer relations. He says long with the optimization of the physical branch network, the Bank’s renewed emphasis on improving response and turnaround times to the customer should also position us to benefit from improved customer experiences throughout 2016 and beyond. “We have a strong base and frankly theres not much reason for us to be in business were it not for our clients. So what we need to and will be doing as an organization is build on that client base and the relationships that we have and try to do more for them, solve their problems, deal with their issues”. Brown says he has not seen anything in the company’s current strategy that needs to be changed, “the strategy is well grounded, its across 17 countries so theres a lot of complexity associated with that, but theres not anything that I would see needing to change strategically about what we’re doing.” Instead he says it is about “the execution of
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the strategy and keeping his focus on ensuring the clients are taken care of”. Focusing on the projects currently underway for 2016 and beyond, the CIBC CEO says the company will be working to develop its retail platform across the region, “We’re actually a stronger corporate throughout the Caribbean than we are a retail bank and our parent company, they’re a much larger retail bank than they are a retail bank, so we need to shift that mix a little bit and that’s one of the things that we’ll be focusing on”.
Correspondent Banking Crisis Meanwhile, as the Correspondent Banking crisis continues to loom over the Caribbean, Brown says CIBC will be doing its best to prevent or limit the adverse effects but it’s an issue that also requires intense government intervention. “It’s a developing matter that I don’t think there’s a clear solution for. But it will take a lot of government intervention collectively amongst the region to develop a strategy to deal with it”. Regional countries have warned that corresponding banks, which enable the provision of domestic and crossborder payments and terminated in some jurisdictions, could adversely affect their economic development and have been making representations to countries such as the United States in a bid to reverse the trend. Regional banking institutions rely on such relationships in order to allow residents to conduct international financial
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transactions. The issue has been occupying the attention of regional policymakers, following signals by international banks that they are unwilling to continue carrying the business of regional banks,” the statement said. At least eight financial institutions in Barbados, seven in Jamaica and five in Belize and others in Antigua and Barbuda, Montserrat and other member states have been affected by a termination or restriction of correspondent banking relationships.
To address the situation, the IDB has also loaned Jamaica another US$100 million to support reforms of the financial system aimed at improving regulation and supervision in the banking, securities, pension funds and insurance sectors. General Manager at the IDB Country office, Therese Turner Jones, says with the threats in the global financial markets, particularly as it pertains to the loss of correspondent banking relationships, it was urgent to implement reforms to make Jamaica’s financial system more resilient. Brown says for his and CIBC’s part, “we remain an important bank here in the VCaribbean and we’ll be doing everything possible to help make that transition to whatever this new approach to corresponding banking will be, successful.” He continued “we will in some way be a part of solving the issues the Caribbean is facing and so I don’t see a need to reflect on that. We are an important financial institution facing the market, it is a problem facing the market that we are involved in and so we have to do what we can to help solve it”.
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Company Reports Trinidad Cement Limited’s Profits Hit By Restructuring Costs Meanwhile, he says net cash for the period also reflected a decrease when compared to the same period last year. “Net cash generated by operating activities in Q2 2016 was $119 million, a decrease of 29% when compared to the same quarter of 2015” due to two major items of restructuring costs that had a negative impact on the income attributable to shareholders.
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ilfred Espinet’s Trinidad Cement Limited has reported a 6% jump in revenue for the second quarter of the year 2016 compared to the first quarter of the year. According to the group’s financial records, revenue for the period under review was $506.6 million, driven by an increase of domestic sales in Jamaica. However, in his statement to shareholders, Espinet said, the group revenue was “12% below the same period of 2015 due to lower volumes sold in Trinidad and Tobago, lower export volume of clinker sold to Venezuela and a 9% decrease in local prices mainly in Barbados and Guyana”.
Espinet says these costs included the “severance costs of $22.2 million due primarily to a manpower restructuring exercise in Jamaica” and the comprehensive review that was undertaken “of its inventory of spares and consumables and has determined the optimal stockholding and reorder levels for all companies in the Group”. He says together, these expenses resulted in a reduction in net income by $95.1 million. Espinet says going forward, TCL will continue to implement internationally competitive operating structures and procedures “to ensure a sustainable and competitive level of profitability, liquidity and cash flow in the face of challenges of current construction trends in Trinidad and Tobago and the competitive environment in Barbados and Guyana”.
SME Advice 10 Things Angel Investors Look For Before Investing In Small Businesses
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or small businesses and entrepreneurs, the issue of financing is one that takes a toll despite the soundness of your business plan. For many, the option of going to the bank is not even considered because of the requirement for collateral, which leaves you stuck wondering where or who would be willing to invest in your business and take you to the next level. One option you might want to consider is an Angel Investor. Angel Investors are individuals who make direct investments of personal funds into a venture, typically early-stage businesses. They act as investors, advisors and mentors, helping to grow entrepreneurial companies; contributing their wisdom and expertise in nurturing entrepreneurs and their companies.
Sandra Glasgow, Founding Member of FirstAngelsJA
Issue: 10
Before you approach an Angel or group of Angels however, there are several things you must take into account regarding the viability of your Businessuite Weekly
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company or idea. Speaking at the recently held First Global Bank SME Summit, founding Member of Jamaica’s first Angel Investor Network, FirstAngelsJA Sandra Glasgow indicated that there are ten things that she, as an angel investor looks out for when considering investing in a business: 1. Money Investors not only want to know how much you want, they also want to how much money you, as the entrepreneur, have invested and how much money, they as the investor, stand to lose if the business does not succeed. 2. Prospects Glasgow says investors are also interested in knowing the future of the business, this includes projections, and if the business is likely to grow rapidly over the next few years. 3. Exit Strategy Tied in with the need to know the prospects of the business, Glasgow says as Angel Investors, the involvement in the business follows a 5-10 year timeline. She says as such, they need to be aware of if and how they will get their money back.
business the entrepreneur is and how much of their own money has been invested into the project/ company. 6. How will the Angel’s investment Add Value Glasgow says simply put, the Angels want to know what role they will play and how their investment will be used to develop your business. 7. Team and Trust She says there is also an interest in knowing who is working with you. She says as Investors, Angels want to know that there is a team and that it is working well together. 8. Business Potential Also tied in with the prospects, Glasgow says the growth potential as well as the timeline of projections is also an important factor that investors take into account. 9. Competitve advantage What is your competitive advantage? How are you different? What new thing do you bring to the table that will allow you to stand out? 10. Business Model
4. Viability A business will always need assessments by more than one individual. The Angel Investor says there is always a need to find out who else thinks the business would make sense.
Glasgow says all these issues need to come together in a business model that is viable, believeable and clearly highlights the company’s plan for success.
5. Skin in the Game Tied in with the first question about money, Glasgow says as an investor, it is important to know how committed to the
Regional
Sagicor Financial Moves Headquarters to Bermuda, Changes Name
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Businessuite Weekly
Issue: 10
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agicor Financial has officially moved its headquarters from Barbados to Bermuda, with the promised that operations will remain the same for Barbadians.
& Poor’s downgrade of Sagicor Life’s rating from BB+ to BB-, and Sagicor Finance Limited’s US$150 million ten-year senior unsecured notes to B from BB-.
The move, which was finalized at the close of trading last Wednesday, comes a month and a half after shareholders voted in favor of the relocation and for it to cease to exist as a company incorporated under the laws of Barbados.
Bermuda was chosen as the new location from among three possible jurisdictions including Trinidad and Tobago and the United Kingdom.
On Thursday, Sagicor indicated that at the close of business on Wednesday, the company’s name had changed from Sagicor Financial Corporation to Sagicor Financial Corporation Limited as a result of the redomiciliation.
In a release following this vote, Sagicor said the continuance of the company under the laws of Bermuda “should have a positive impact on the credit rating of the company without affecting its operations in our various markets”.
Sagicor first announced its intention to relocate its headquarters in January last year, following Standard
St Lucian Prime Minister Allen Chastanet Wants Caribbean to Take New Approach to Correspondent Banking Crisis
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rime Minister of St Lucia Allen Chastanet is calling on regional authorities to take a new approach to address the decision by foreign financial insitutions to sever correspondent banking relationships with the caribbbean.
Chastanet says while correspondent banking wasn’t targeted towards the Caribbean but was aimed at eliminating money laundering and imposing huge penalties; he believes no consideration was given as to how that would have affected the Caribbean. “The region, economically, is so small that the banks have said that the risk of continuing to do business in the Caribbean makes it impossible for them to do so,” he stated. Indicating that the issue was discussed in detail at the recent CARICOM Heads of Government meeting held in Guyana, between prime ministers, many of whom are their countries’ finance ministers; he said the regional leaders have agreed to work more closely to address this issue in a holistic manner, protesting the issue and requesting an audience with the United States on the matter. Issue: 10
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