Businessuite Markets April 2016

1 Businessuite Markets March 2016


ContentEDITORIALAt High Tide All Boats Rise

COVER FEATURE JSE Made US Millionaire Derrick Cotterell Says “The Devil Is In The Details”

COMMENTARYFeel Good MarketingCustomer Experience – “The Only Way for Small Businesses”

StocksTrading Using The Jamaica Stock Exchange’s Online Platform

COMPANY REPORTSBrian George’s Supreme Ventures: Making Shareholders Proud

STOCKS TO WATCHJSE Performance Less Than Impressive For March

INVESTINGUndercapitalization and Equity Investing EVENTSVenture Capital Conference Review And Highlights

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EDITORIAL

At High Tide All Boats Rise

As one version of John F Kennedy’s popular saying ‘A rising tide lifts all boats’, the concept of ‘At High Tide All Boats Rise’ stems from the belief that when the economy is performing well, all people will benefit from it.

Similarly, President and CEO of Supreme Ventures, Brian George believes that when you ‘create an opportunity and prosperity for anyone, you create it for everyone’. He says, “If you run a successful business it is a fact that the staff will get more money, the shareholders will get more money and thus the economy will get more money”.

However, while many entrepreneurs and small businesses strive for success, they are unable to adequately achieve this. Instead they are faced with failure and unachieved objectives.

What then are some of the things that need to be kept in mind when starting or maintaining a business? To help this process, here are some things

you should consider when running a successful business.

1. When starting a business, make sure it is something you believe in.

Before you start a business, take a step back and think…..is this really something I believe in? If I take on this task, will my conviction ensure the success of my business?

2. Find a balance between what people want to buy, and what you want to sell.

Too often, people jump into a business built around a product or service they think will be successful, rather than one that is already proven to have a market.

3. Don’t compromise on the big things

Compromise is necessary in every aspect of life, even business. Even if you find yourself failing to stand firmly

on the minor aspects of your business, vision, purpose and core values are critical to executing your company objectives.

4. “It’s a marathon, not a sprint.”

Like the story of the tortoise and the hare, building a business is neither for the faint of heart or the speedster. Build systems for the long-haul and focus on small-connected steps.

5. Build your business and brand as if it will be with you for a lifetime

You might think, why “would I want to build a business for forever when I plan to sell in 5 years?” The key is to remember that when you start and build a business based on passion and purpose, with a burning desire to solve the pain of your customer through the deliverance of monetizable value, you build a far more valuable enterprise.

By Kayla Wright

The Click philosophy……“Creating compelling conversations and experiences between Brands and consumers and helping clients shift from interruptive messages to immersive

experiences.”

www.blackslatehldings.com


Cover FEATURE

JSE Made US Millionaire Derrick Cotterell Says “The Devil Is In The Details”

Congregants at Fellowship Tabernacle in Kingston who view a humble deacon in service each week, may not know that the man who on week days wears the hat of Derrimon’s founder and Chief Executive Office, Derrick Cotterell –has on paper – stocks on his account valued at some US$4 million.

Fifty year old Cotterell who has spent to decades running the show in his own businesses tries to give yeoman service at home, at church and in his company. He is proud of all three.

He first ran a photography business at St. George’s high school in Kingston but his first real successes were Derrimons gas station and then Derrimon’s trading. Today He also has lots of advice to dispense both to aspiring entrepreneurs and those already astride their own operations.

“Over –reliance on persons and not enough on systems is one pitfall. You need good people but you also need good systems to ensure the assets of the business are fully protected.”

At the same time, he asserts that the success of wholesale and retail company Derrimon – the company which brought him more national attention – is due to the quality of staff.

Cotterell says the devil is in the details and he has had to keep very focussed on small matters, even while trying to achieve goals sought in the big picture.

He praises the Junior Market of the Jamaica Stock Exchange which assisted in raising much needed capital for Derrimon and also introduced corporate governance structures which have helped to keep the devil away.

“The stock exchange helps in sustaining the business,” he told Businessuite.

Derrimon stock traded on March 22, 2016 at J$4.80 each, bringing total market capitalisation to $1,312,013,122.00.

At the end of the last financial year, for the year ended December 31, 2015, the wholesaler posted revenue of $6.29

billion — an increase of 12 per cent or $684.401 over 2014’s $5.6 billion in sales.

Earnings grew 71 per cent to $88.13 million compared to net profit of $51.6 million in 2014. Meanwhile, earnings per share grew to 32 cents in 2015, compared to 19 cents reported in 2014.

The CEO is paying attention, something he said he learnt to do in the business world of Grace Kennedy where he cut his teeth on strategy.

With over 20 years’ experience in the fields of sales, marketing and general management during an extensive career at GraceKennedy Limited, the CEO offers kudos to the manufacturing and distributing giant lessons learnt while holding managerial positions such as Area Manager, Divisional Manger, and Business Unit Manager.

A graduate of the University of the West Indies with a Bachelor of Science Degree in Management Studies and a

Over –reliance on persons and not enough on systems is one pitfall.

You need good people but you also need good systems to ensure

the assets of the businessare fully protected.

Chief Executive Officer ofDerrimon Trading

Derrick Cotterell


Master of Business Administration from Florida International University, the manager said when he eventually started his own business from a single container, he chose foods because that was his background.

The company has grown since its December 2013 IPO in which 7 million shares were offered $2.05 each. The J$150.34 million that the company aimed to raise from the offer, was wanted to expand its Sampars Cash & Carry business, retire a portion of the company’s debt, and finance its working capital.

Back then Cotterell said Derrimon would be looking to establish other wholesale and retail outlets across the island. The CEO has kept true to the promise.

One key to growth has been diversification and forward integration, Cotterel explains. with the newer retail arm of Derrimon complementing the wholesale core.

Visit Businessuiteonline.com for the full length article

Derrimon stock traded on March 22, 2016 at J$4.80 each, bringing total market capitalisation

to $1,312,013,122.00.

We are a Caribbean B2B Branding and Creative Agency

“Striking business decision-makers at a more personal and memorable level.”

www.amkcomm.com


COMMENTARY

Feel Good MarketingIt is a common practice for both television stations in Jamaica to carry product promotion features in their morning shows. In most cases, the promotion is formatted as a regular interview feature with some incorporating product displays and demonstrations. On a general level it is a good idea to get one’s brand and product integrated in the morning shows the way it is done. On the other hand, I have serious doubt that the intended effect of the promotions is generally realized.

A regular approach of the brand representatives is to overwhelm the interviewer and by extension television

audience with their knowledge of the product. They make very strong points about what the products can do and how they are used. Very little is said about who the product is intended for and the precise problems that are being uniquely solved for this target market. Interestingly this has been the approach to product promotion in Jamaica for last thirty years.

The fact is, things and times have changed. There is presently an 18 to 34-year-old cohort that are behaving in ways distinctly different from that same age demography twenty years ago. Not only are they the largest generation by population size, which

has tremendous influence on their role as leading consumers today, but the environment in which they were raised has cultivated an entirely new approach to their values and way of life.

These 783,000 individuals grew up in an age of technology and global connections. They have an unlimited access to diverse knowledge, ideas and experiences. What is the relevance of this to the point of how products should be promoted to them? It matters in that this is a generation of ideas and personal choice. This generation of individuals is demonstrably independent and assertive. They relish making their own decisions

and customizing things to suit their values, and desires.

Local companies seem not to be taking note of the emergence of this highly influential consumer group. If they have, then their marketing strategies do not confirm it. It is very important that local marketers move quickly to acquaint themselves with their behaviour and interests. All this must take place in the context of the huge role that the Internet and social media play in their lives making them primarily about social status and sharing their personal information with others.


By Ronald Sutherland

By Yanique GrantCustomer Service Strategist

The growing power of the customer is intensifying the competition for every company and business. If small businesses want to keep up in this hyper-competitive environment, they’ll have to create life-long brand loyalty by focusing on the people who purchase their product and service. More than ever, companies must leverage the customer experience to succeed. “Positive customer experience creates higher value customers, more referrals and lower churn. For many, customer experience

has been largely overlooked in recent decades.

We have identified seven steps to building a successful customer experience programme:

1. Map the Customer Journey

Determine the most valuable metrics by identifying the most common type of customers and their personas. Consider how most customers’ experience the organization throughout

the customer journey, from first contact to final service or product delivery. Include touch points, potential roadblocks, and success gates; all of which provide an opportunity for measurement.

2. Identify Channels and Timeline

Identify what you need to know about each customer touch point and determine how to collect the feedback for each one. Consider how to get a mix of solicited (where

companies proactively seek customer feedback e.g. email surveys) and unsolicited (collecting feedback initiated by sources outside of a company’s control e.g. social media) feedback for a BIG picture.

3. Test and Iterate

Test survey questions against two key factors: reliability (when asking groups of questions relevant to a similar topic) and validity (how well survey items measure.

Customer Experience – “The Only Way for Small Businesses”


If small businesses want to keep up in this hyper-competitive environment, they’ll have to create life-long brand loyalty by focusing on the people who purchase their

product and service

Channel feedback performance also needs to be monitored through response rate and completion rate. Ideally, conventional surveys will achieve a 10% response rate and 5% completion rate. If rates dip below these levels, there may be something wrong with the

design or choice of feedback channel, he says. The most common issue that leads to poor response/completion rates is an inappropriately high number of questions.


Trading

Trading Using The Jamaica Stock Exchange’s Online PlatformThe first thought many have when they receive lump sums or any form of extra cash, is to invest. However, many persons who have this first thought aren’t sure where to go from there.

Based on this empty space, research and the information provided by the Jamaica Stock Exchange, the Businessuite Markets team has compiled “A Guide to the Stock Market and Trading” specifically for those who don’t know where to go or what to do. For this edition, we will focus specifically on using an online platform to trade. For many traders who are not familiar with online trading, the concerns rest on four things. They include: how to trade online, who to trade online with, the cost of online trading and the risks associated with this method.

The Jamaica Stock Exchange (JSE) launched its online trading platform in 2015 in an effort to attract greater interest from investors abroad as well as the youth demographic. The trading portal allows investors to buy and sell securities, view market performance, monitor their account balance and view statements. To use the platform, investors will first need an account with one of the authorized stock brokers,

a list of which is provided on the JSE website. Although investors have 24-hour access, each transaction must be settled by a broker and will be

executed only during business hours.

Although an investor may be interested in trading on his or

her own, the JSE warns that a broker is indeed necessary for participation in online trading. According to the JSE, the Broker must open the account and thereafter, the investor is free to enter the transactions online (which will be routed through the Broker).

Regarding set up and participation costs, the online trading platform offered by the JSE is currently free of charge. However, investors must be aware that there are applicable trading fees. These include the Broker’s commission as well as taxes which will be applied to each transaction.

One thing to note before heading into the world of online trading however; is the risk associated with the move. Yes there is risk associated with investing in securities regardless of the method used but online trading does bring its own unique risks. For instance, high internet traffic may impact the online investors’ ability to access their account or transmit their orders. The key is determining if the benefits of online trading outweigh the risks. If this is the case, the only thing you need to worry about is the research you need to do on each stock before investing.

GROWTHThe Jamaica Stock Exchange (JSE) launched its online trading

platform in 2015 in an effort to attract greater interest from investors abroad as well as the youth demographic.

The trading portal allows investors to buy and sell securities, view market performance, monitor their account

balance and view statements

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COMPANY REPORTS

Brian George’s Supreme Ventures:Making Shareholders ProudBrian George’s Supreme Ventures Limited (SVL) and the Government of Jamaica are now in negotiations following the announcement that SVL was selected as the preferred bidder for the purchase of the cash-bleeding Caymanas Track Ltd (CTL).

For a company focused on making stakeholders and shareholders happy, George says this achievement is a step in the right direction.

Speaking with Businessuite Magazine following last month’s Mayberry Investor Briefing, the SVL President and CEO said he is focused on making sure both investors in and workers of the company are proud to say they have stakes in SVL. “When you create opportunity

and prosperity for anyone, you create it for everyone and therefore if you are successful in business, it is a fact that the staff will benefit, shareholders will benefit and in the long run the economy benefits. And when an economy is performing well, all people will benefit from it”.

CTL was officially listed for divestment almost a year ago when the Development Bank of Jamaica (DBJ) had posted an advertisement saying the GOJ was “seeking investors with suitable financial and operational capacity to participate in the privatisation of CTL”.

The only other entity that expressed an interest and bid on the project was Caymanas

Racing and Entertainment, a group of investors headed by businessman Richard Lake. However this group was marred by doubt whether they could provide the level of investment needed to make it profitable and successful.

While refusing to address the financial aspects of the bid, George indicated that of the three options given for the divestment, SVL opted for the long term lease of the property- spanning 30 years- along with the purchase of the assets needed to operate the business. He sought to make it clear however, that SVL has not purchased the company whose debt still remains with the government. He says instead, all SVL has done is bought the rights to operate the business.

George says subject to the successful completion of the negotiations, SVL’s focus will be on the business’ inefficiencies, implementing product changes, improving the product being offered at Caymanas and further diversifying these product offerings with an aim of identifying new revenue sources.

For 2015, SVL saw revenue grow from $41.3 billion in 2014 to $43.8 billion, a $2.5 billion increase. Net Profit for the period also saw a jump from $929.9 million in 2014 to $1.18 billion. Earnings per share were $44.89 compared to $35.26 for the corresponding period.

Brian George says subject to the successful completion of the negotiations, SVL’s focus will be on the business’ inefficiencies, implementing product changes, improving the product being offered at Caymanas and further

diversifying these product offerings...


STOCKS TO WATCH

JSE Performance Less Than ImpressiveFor MarchAfter going through a brief period of uncertainty as to the future of the country’s leadership and who would become its next prime minister, investors in the Jamaican stock Market were able to make concrete decisions - with the outcome of Jamaica’s national elections finally complete on February 25, 2016. The then opposition, Jamaica Labour Party was successful in coming to power, renewing hopes that the Junior stock market would again see new life as one of their campaign promises was to retain the benefits of the Junior Market of the Jamaica Stock Exchange, which currently allows companies to list and pay no taxes for 5 years as long as they remain listed for 15 years.

Despite their ascendance to power, some companies were already making plans to list before the original cut-off time of March 31, 2016and decided that they would push through none-the-less. As a result we saw a few listings in the last month of its existence, before the removal of the benefits in their current state. IronRock Insurance (a startup general insurance company), lead by Mayberry Investments Ltd launched their IPO in the dead-heat of the elections, and this was followed a few days later by the offering for Jetcon, Jamaica’s first automotive listing (with lead brokers being JMMB securities Ltd). Not to be left out was the 9 year old primarily- unsecured loans issuing company ISP Finance Services Ltd (by Victoria Mutual Wealth Management Ltd); and coming in on the nick of time with its March 29th IPO was 30 year old general insurer Key Insurance company Ltd (also by JMMB Securities Ltd).

These 4 offerings were all heavily oversubscribed and continue to signal the overwhelming demand for aggressive investing options by the public. The companies were seeking to raise the following amounts

• Jetcon Corporation Ltd - $95.7m• ISP Finance Services Ltd - $98.0m

• Key Insurance Company Ltd - $119.0m to $250.9m

• IronRock Insurance - $315.0m

In at least 2 cases (IronRock and Key Insurance), the lead brokers have decided to purchase a 20% stake of the companies.

Despite the rush of new listings, March has been one of the less impressive months on the JSE and on the Junior market, with investors either seeming to take their profits from gains over the last few months or maintaining a wait-and-see mood with a change of government.

RJR (Radio Jamaica), JAMT (Jamaican Teas), SVL (Supreme Ventures), BRG (Berger Paints), SEP (Seprod) and CWJ (Cable & Wireless) were all down more than 20% during the month with the largest decliner RJR down 64%. RJR is currently in the final stages of merger with GLNR which is also down 9.1% in March but up 60.8% since January 2016.

Continued Growth in BarbadosDuring March over BB$6.0 million was traded on the Barbados Stock Exchange with BB$4.0m traded in BHL (Banks Holdings Ltd), BB$975.0k in OCM (One Caribbean Media) and almost another million split between ICBL (Insurance Corporation of Barbados Ltd), FCI (First Caribbean International) and SFC (Sagicor Financial Corporation). On the Barbados stock exchange, market capitalization (the value of the market in BB$) increased by BB$203.0 million since the start of March, over the BB$6.1 billion valuation at the start of February.

Trinidad & Tobago11 stocks advanced on the TTSE in March with 5 going up more than 4% over the month. The big 3 advancers were Grace Kennedy (GKC), National Flour Mills (NFM) and First Caribbean (FCI) and all 3 were up more than 10% for the month. Interestingly, on a year-to-date basis since the start of 2016 GKC and FCI are both up 28.4% and 29.7% respectively while NFM is down 25.9% (even with

its 11% increase in March).

17 securities were down since the start of March and as at the date of this writing (March 25th) , with the biggest decliners being NEL (down 37.8% for March, 45.1% YTD), TCL (down 7.7% in March, 9.8% YTD), MASSY (down 6.8% in March, 10.5% YTD) andRML (down 5.8% in March and YTD).

Cross Listed StocksIt is also interesting to note that for two of the cross-listed stocks Grace Kennedy and JMMBGL both for the month in review and also on a year-to-date basis

• Grace Kennedy was up 10.4% on the TTSE and down 1.9% on the JSE for March. On a year-to-date basis they were up 28.4% on the TTSE and but only 1.5% on the JSE.

• JMMBGL was down on both the TTSE and JSE for March - 1.67% and 13.5% respectively. The stock is however up by 7.27% on the TTSE since January 2016 while it is down by 2.72% on the JSE over the same period.

By Stephen Wildes


President and CEO of First Global Bank (FGB), Mariame McIntosh Robinson has expressed concern that local companies at any and every stage lack the knowledge about how to make themselves investor ready.

She says because of this, although businesses may be able to find a source of capital whose mandate is congruent with their own objectives, they remain undercapitalized and unfinanced.

Addressing the Jamaica Employers’ Federation CEO Breakfast Series last month on three major trends she has identified in the Jamaican business environment, Robinson said based on these findings; businesses need to learn to be investor ready. She says to that end, they should understand what equity investors are looking for in a business and the way to cement an investment.

Robinson says one of the first things companies need to understand is that equity investors are looking to fund a transformative growth strategy. “When you’re meeting with an equity investor you should think about what will be the use of the funds. Think about what you’ll be doing to take your business to the next level because the source of capital is very expensive.”

The First Global CEO says another thing equity investors look for is what is described as ‘Skin in the Game’. Skin in the game refers to a situation in which high-ranking insiders use their own money to buy stock in the company they are running. She says “equity

investors want to know that when you go to them, you are putting something in the business as well. Investors want to know that should anything go wrong, while the investor will suffer reputational damage; they want to know that you, the business owner will suffer some damage as well and not just bounce from idea to idea”.

Robinson says the other issue that needs to be addressed is the issue of valuation. She says it is common for entrepreneurs and investors to be at odds as it pertains to the value of the company. She says this is due to what many entrepreneurs believe is the potential of the company. However Robinson says this sometimes causes

INVESTING

Undercapitalization and Equity Investinga gap in negotiations as the actual scientific value of the company can be much less than the entrepreneur’s perceived value. Despite this, she says negotiations do not need to come to an end. Robinson says “a difference of opinion on valuation can still be structured away”.

The fourth thing to understand about equity investors and their investments is that they do, more often than not, require a board seat. Robinson says this is because of what she describes as the investors’ need to ensure that the terms of the investment are met. “What they want to do is ensure that the fund is doing a good job of finding deals and monitoring and managing those deals to exits. The best way to keep track of this is by taking a board seat to have a presence at the table and know what is happening so that they can influence the strategy of the organization, where possible”.

The other trends identified by Robinson include the need for a general improvement in the customer service being offered by local institutions and the need to integrate social media and the millennial workforce in your daily operations.

Robinson’s appointment was announced in January following the resignation of Courtney Campbell as CEO of FGB and Grace Kennedy Financial Group. Campbell had resigned as top brass of both companies for the position as President and CEO of Victoria Mutual Building Society (VMBS).

“When you’re meeting with an equity investor you should think about what will be the use of the funds. Think about what you’ll be doing to take your business to the next level because the source of

capital is very expensive.”

Mariame McIntosh RobinsonPresident and CEO of First Global Bank (FGB),


The five C’s of entrepreneurship: credibility, clarity, conviction, capital and concentration in execution are the major takeaways from the Development Bank of Jamaica’s third staging of the Venture Capital Conference and Entrepreneur’s Workshop 2016.

According to featured speaker, Tech entrepreneur as well as founder and CEO of Gigameet.com, Chinedu Echeruo,

Events

DBJ Venture Capital Conference 2016A Success

GovStrat Enterprise Risk Management ConferenceVenue: Jamaica Pegasus Hotel

April 8 Jamaica Alternative Energy ExpoVenue: Jamaica Pegasus Hotel

April 14-17JEA/ JMA Expo Jamaica 2016Venue: The National Arena and National Sports Centre

Businessuite Events CalendarApril 2016April 4 GovStrat Limited Workshop, ‘Taking and Writing Effective Minutes’Venue: The Jamaica Pegasus Hotel

April 7

‘Real Estate: Investments 2016 - Growing your Portfolio’Venue: New Kingston Conference Centre

Jamaica Alternative Energy ExpoVenue: Jamaica Pegasus Hotel

April 22 Trinidad Cement Limited (TCL) AGMVenue: Hilton Trinidad & Conference Centre

April 26- 27 Middle Mangers’ Conference 2016Venue: The Jamaica Pegasus Hotel

the final C: cconcentration in execution, is based on the entrepreneur’s conviction and self-belief. He says this cconcentration is what will sustain the entrepreneur through the cycles of prosperity and hard times. The serial entrepreneur indicated that persons should always remember their reason for embarking on the road to entrepreneurship and return to those core principles when times are hard or the going gets rough.

Echeru says these elements proved invaluable for him even up to the recent sale of two of the technology companies he created - Hopspot.com to Apple; and Tripology.com to Rand McNally and eventually, USA Today.

The three day event held under the theme “The Power of Smart Capital”. kicked off on March 7 with a think tank for public- and private-sector stakeholders and investors seeking to boost infrastructure development in Jamaica for economic growth. The

invitation-only event focused on global best practices worldwide and how to be best position Jamaica for economic growth through equity funding for infrastructure development.

Days two and three saw an entrepreneurs’ workshop dedicated to small businesses, entrepreneurs, and start-ups. It included discussions on global trends, with a focus on the pace of change for the business environment and what entrepreneurs need to know about positioning their brand.

Speakers for the event included DBJ Chairman Joseph Matalon; CEO and President of First Global Bank, Mariame McIntosh Robinson; noted futurist and author, David Houle; and several investors from local and international firms.

Businessuite Markets April 2016

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