Caribbean Flavours and Fragrances considering 10 to one stock split

Caribbean Flavours and Fragrances considering 10 to one stock split

BY DURRANT PATE
Observer Business Reporter

Sunday, August 23, 2020

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Caribbean Flavours and Fragrances Limited is considering a 10 to one stock split as the company seeks to bolster trading in its shares on the Jamaica Stock Exchange (JSE) where it is listed.

The company's board of directors will convene a special meeting on August 27, 2020 to vote on two resolutions to facilitate the stock split. The first resolution seeks to increase Caribbean Flavours authorised share capital from 91.45 million shares to 2.6 billion shares by the creation of an additional 2.5 billion ordinary shares.

The second resolution calls for each of the issued ordinary shares in the company to be sub-divided into 10 ordinary shares with effect from the close of business on September 23, 2020. This will result in the total issued shares in Caribbean Flavours and Fragrances being increased from 89.92 million shares to 899.2 million shares.

In Friday's trading the company's stock lost $2.78 to close at $11.70 with 18 stocks traded. At the end of trading on Thursday some 11,274 shares exchanged hands, closing at $14.48, losing $0.02 in value.

REASONS FOR STOCK SPLIT

A stock split is a corporate action by a company's board of directors that increases the number of outstanding shares. This is done by dividing each share into multiple ones — diminishing its stock price.

A stock split, though, does nothing to the company's market capitalisation.

However, stock splits are often a bullish sign since valuations get so high that the stock may be out of reach for smaller investors trying to stay diversified. Investors who own a stock that splits may not make a lot of money immediately, but they shouldn't sell the stock since the split is likely a positive sign.

Caribbean Flavours and Fragrances provides flavours and fragrances to the major beverage manufacturers in Jamaica.

In addition, the company exports flavours and fragrances to the Caribbean region and Canada and provides fragrances to local manufacturers of household and personal care products.

Caribbean Flavours and Fragrances began operating in 2001 and became listed on the JSE in 2013. Since then the company has become part of the Derrimon Trading group of companies.

LATEST FINANCIALS

Caribbean Flavours and Fragrances gross profit for the six-month period ended June 30, 2020 was $98.75 million, an increase of $14.25 million over the $85.5 million reported for the same period in 2019. Gross profit for the June quarter was $50.91 million, representing a 7.8 per cent increase when compared with the $47.2 million achieved for the similar period in 2019.

Sales generated for the six-month period ended June 30, 2020 was $310.59 million or $84.26 million over the $226.33 million recorded for the said period in 2019. Sales for the June quarter was $161.19 million, representing an increase of $47.45 million from the $113.74 million recorded for June quarter in 2019.


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