Business

JBG not going private declares director emeritus

No change in dividend policy amid calls for change

BY DURRANT PATE
Observer business writer

Friday, October 25, 2019

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The directors of Jamaica Broilers Group (JBG) sought to calm the fears of at least one minority shareholder that the company might be heading back into private hands owing to major shareholders purchasing large blocks of shares in recent times.


The shareholder in question, Orette Staple made his concerns known at the company's annual general meeting on Wednesday, held at JBG's Content, McCooks Pen, St Catherine corporate office.
The concerns became apparent when Director Emeritus, R Danny Williams, who chaired the meeting in the absence of JBG Chairman Robert Levy, admitted that he recently bought just over one million company shares.


This admission came in the midst of Staple expressing ambivalence regarding the management of the JBG buying back a large block of shares last year that became available for purchase when a major shareholder decided to sell. The buy-back was said to be a strategic decision taken by the group with the shares being vested in a Shareholders Trust, which serves to benefit all shareholders.
There have been notable gains during the 2019 financial year from the increase in value of JBG shares held by the Shareholders Trust, which is operated by three trustees, two local and an American connected party.

10 ENTITIES OWN 62% OF JBG SHARES


Staple observed that “of the 1.19 billion of the issued share capital in the company 62 per cent of that amount is held by 10 entities — but most of the shares being traded are done by the minority of the minority shareholders.”


He added, “Mr Chair Jamaica Broilers is buying back their shares so when the minority shareholders trade on the market, it goes back into (Jamaica) Broilers and what is happening is that over time. probably shortly, the possibility exist that (Jamaica) Broilers might very well say OK we have the required amount to delist because they have enough shares on the market.”


In reference to Williams' admission to recently buying just over a million shares recently, Staple retorted, “so you are buying shares and another big shareholder is buying, could it be… I don't want to go any further with that.”


Stable argued that minority shareholders are selling but the majority shareholders are holding their shares, expressing the fear that this may be an attempt at returning the company to private hands.
However, Williams sought to ease concerns about the company going private, declaring, “the major shareholders are not making any effort to buy back the shares and to take the company private. In fact the company will continue to expand and be held by thousands of shareholders and will go on like this long after you and I are dead. So I want to put your fears at rest.”

DIVIDEND POLICY


The acting chairman shrugged off demands from shareholders for a greater level of dividends, pointing to the company's long held dividend policy of allocating 20 per cent of the profits earned in dividends and reinvesting the remaining amount to grow the company. He was adamant that there would be no change in this policy.


He made the point that a 20 per cent dividend policy is common to most listed company in Jamaica, urging that the company needs the profits made to be ploughed back into the company for investment and expansion purposes.


Williams advised shareholders that if the company was to do otherwise, shareholders would not have been benefiting from the generous dividends they have been paid over the years, nor would they have benefited from the increase in share prices over the years.

FINANCIALS


JBG, which in the business of the production and distribution of poultry products, animal feeds and agricultural items, reported in its just approved 2019 annual report, “exceptionally well performance, receiving record profitability with group profit before tax at $3.01 billion. A first in our 60-year history.”
Revenues were $55.1 billion representing a 14 per cent increase over the prior year with gross margin of 25.9 per cent versus 26.6 per cent for the prior year. Total assets of $35.8 billion were 15 per cent above the prior year, while profit before taxation of $3 billion was 13 per cent above the prior year.
JBG closed the financial year with net profits of $2.4 billion, which represented an increase of 17 per cent above the prior year. Earnings per share are $2.30 compared to $1.64 in the prior year.
Stockholders' equity of $14.8 billion was a 17 per cent increase from prior year with return on assets of 7.1 per cent and return on equity of 17.3 per cent, a 0.2 per cent and 1.7 per cent increase ,respectively.
The Jamaican operations of the group continued to have a significant impact in the marketplace through its Best Dressed Chicken and Hi-Pro divisions.
Despite the appearance of advertisements in support of overseas poultry products during this fiscal year, the local market remained strong with Jamaica being 100 per cent self-sufficient in the production of poultry meat and eggs.

US MARKET GROWS


US operations had significant growth for the 2018- 2019 financial year through focus and alignment on strategic and integrated expansion. The company said it continued to establish and maintain a dominant position against other industry players through generating a unique space that supported its tactical growth plans and the evolution of its customers.
The company said that as US operations moved to further cement a stronghold and presence along the supply chain, key focus was placed on expenditure control and healthy workplace optimisation within the operations.

HAITI HIT BY DEVALUATION
As regards the Haitian subsidiary, sales for the year 2018-2019 increased by 20 per cent year over year from Haitian Gourdes (HTG) 1.15 billion to HTG 1.38 billion, despite the loss of 20 days sales due to intermittent social unrest throughout the year.


A 30 per cent devaluation of the HTG, however, resulted in foreign exchange losses of HTG 45 million in the year, which exceeded the year on year profit decline of HTG 38 Million or 38 per cent.
Growth in egg production (15 per cent) and sales (27 per cent) continued to increase, while egg sales accounted for a slightly higher portion of total sales. Operational efficiency continues to improve as revenue increases.


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