Green light given at extra-ordinary general meeting
Shareholders of Jamaican Teas have given the green light for the three-to-one stock split to take place on November 30, having been pushed back for more than seven months.
The shareholders gave the nod of approval at the company’s extraordinary general meeting held November 17. The ex-stock split date has been set for November 27, 2020.
Earlier Jamaica Teas advised that, on October 7, 2020, the directors approved a resolution, setting November 30, 2020, as the new record date for its proposed three-to-one stock split.
The three-to-one stock split, when it happens, will result in the total issued shares in the company being increased from 695,083,459 ordinary shares of no par value to 2,085,250,377 ordinary shares of no par value.
REASON FOR STOCK SPLIT
The stock split is being executed to make the shares in Jamaican Teas more liquid, allowing them to trade more freely. When executed, this will be the third stock split by the company.
In April 2017, Jamaican Teas shareholders approved a two-to-one split of the stock. This followed another split in 2016 after which the price climbed close to $8 per share.
The John Jackson-led board of Jamaican Teas has become concerned that the company’s stock seems to have hit a wall of inactivity and market indifference. Jackson expressed the view that there seems to be market resistance whenever the stock hits the J$6 to J$7 margin.
Since April 2018, Jamaican Teas’ share price has meandered between J$4 and J$6, going close to the J$7 barrier only twice last year, on August 5 and September 9. The Jamaican Teas Group ended its 2020 financial year on a high in September, posting rising sales in the fourth quarter which countered the massive losses chalked up in the year by its investment subsidiary, QWI.
Total group revenues for the quarter increased by a robust $502 million from $285 million to $787 million. This increase includes $129 million generated in 2020 from its retail business. There was a 70 per cent increase in sales, including a 49 per cent increase in export sales and a seven per cent rise in domestic sales. These positive performances countered the reversal in investments and other income from $553 million in 2019 to a loss of $433 million in 2020.
HEAVY LOSSES FROM QWI
This primarily resulted from the heavy unrealised losses QWI experienced in its shareholdings in financial businesses during the second quarter, due to COVID-19 and its negative impact on many business operations. The increase in cost of sales for the quarter and full year largely matches the growth in revenues. However, lower administration expenses for the quarter were largely due to reduced expenses at QWI. The fall in interest expense during the quarter resulted from lower borrowings at QWI. For the full year, the increase in interest costs is mainly a result of higher borrowings at QWI in the first half of this period, compared with the first half of the prior year.
NET PROFIT DOWN 27%
Net profit attributable to Jamaican Teas for the quarter was $131 million, a decline of 27 per cent from the $180 million profit in the corresponding quarter of the previous year. This decline in profit arose from lower stock market gains in the investment portfolio in the 2020 fourth quarter versus that of the previous year, which was a very strong one.