The Tribune

By RICHARD COULSON

In writing its 2018 Annual Report, the board of directors of Cable Bahamas faced a challenging task: how to explain to shareholders that larger losses in net income and earnings per share should not obscure the strong prospects for long-term growth.

The key figures cannot be found from a quick review of the last two years’ income statements, since the 2018 accounts cover the 12-month fiscal year ended June 30, 2018, while 2017 covers the previous 18 months, making any direct comparisons irrelevant.

Instead, one must turn to Management Discussion and Analysis, a comprehensive review comprising almost the entire report before the audited financial statements. Scattered through this section, we see that total revenue increased to $224m in fiscal 2018, up from $194m in the previous 12 months. The largest increase was in the ALIV subsidiary, up 184 percent to $24m.

Management Discussion also provides interesting quarterly figures. In the eight quarters through June 30, 2018, revenue per quarter rose from $45m to $59m; however, net loss jumped from $4m to $9m, and loss per share rose from $0.09 to $0.13, leading to a negative $0.56 per share for fiscal 2018. Clearly, steady top-line growth in all segments of Cable’s business has been offset by continued heavy start-up, development and depreciation charges, primarily incurred by ALIV to achieve its extraordinary growth over only two years since receiving its licence. Rising EBITDA – basically cash flow from operations – has been the better metric of performance.

The crucial cross-over to profitability was forecast by ALIV boss Damian Blackburn to be reached in the summer of 2019. Given ALIV’s accomplishments to date, this appears a reasonable prediction; thereafter, with growing success in the Florida business of Summit Broadband, Cable as a group should soon return to profitability and resume long-awaited dividend payments. Management Discussion should be read closely for its wealth of informative detail about the basic three-pronged business known as REV and the plans for future initiatives. The section could have been better planned by providing a tabular consolidation of the financial information for readers to grasp more easily, but the basic message is clear.

It was essential the group bank debt be re-negotiated, as roughly $97m was about to come due this September 30, wiping out current assets. No doubt after long negotiations, the principal was extended to 2020, giving leeway for other adjustments if needed.

Before year-end, an Annual Meeting will be held giving further presentations to shareholders and opening questions to the management team led by the new CEO, well-known Bahamian business leader Franklyn Butler II, previously a Cable Director.

Bahamas Property Fund: BISX Enforcement?

As seen above, Cable Bahamas’ year-end financial statements dated June 30 were followed only four months later by publication of its tremendously detailed Annual Report.

By contrast, Bahamas Property Fund (BPF), also listed on BISX, produced its 2017 annual financial statements at the end of February and still, nine months later, shareholders have not seen an Annual Report. With no Management Discussion and Analysis, they are left in the dark about BPF’s business and its prospects for the future. It’s no wonder that there has been no share trading for over two years and that thousands of shares are lodged in brokers’ unfilled sell orders that do not attract buyers at any price, despite BISX recently lowering the minimum trading level.

Compared with Cable Bahamas, BPF is a minnow with a book net worth of $30m, whose assets consist solely of two business properties in downtown Nassau and one on Paradise Island, held for rental income. Yet the fund’s Manager, Royal Fidelity Merchant Bank, has been unable to produce an Annual Report in all this time. Apparently the appraisers and auditors cannot agree on a fair market value for these holdings, so nothing gets published.

Who gets hurt? 2.4 million ordinary shares are outstanding, registered in only 67 names.

Many of these names are pension funds and investment companies acting for their clients, so there must be hundreds if not thousands of beneficial owners. Fifty-six percent of the shares are registered to Royal Fidelity, who thus has legal control of BPF, acting for parties who may or may not agree with its management effectiveness.

BPF has no board of directors or administration of its own; all these functions are held by Royal Fidelity under its contract as fund manager, naturally receiving a management fee. Its close affiliate Fidelity Bank created and sponsored BPF over ten years ago, and handled the original offering to shareholders.

To avoid obvious conflicts of interest, it seems only normal that these arrangements should be reviewed by all beneficial owners. A vote should taken of all parties having a direct or an indirect equity stake in BFP. More immediately, an informative Annual Report should be issued by Royal Fidelity and made available to all interested parties, followed by an open meeting.

BISX is the obvious party to demand these measures and compel compliance, under ultimate sanction by our Securities Commission – which certainly should not be necessary.

What’s Happening to the Landfill?

On August 30, a press report about our infamous solid-state landfill announced that with Cabinet approval Environment Minister Ferreira had issued a letter of appointment to the Waste Resources Development Group (WRDG) consortium headed by financial firm Providence Advisors and including local companies experienced in waste collection and management. They were the winning bidders in a competition to clean up the dump and dispose of the garbage, in a way that could include a waste-to-energy facility producing electric power.

Providence CEO Ken Kerr was quoted as saying the current state of the landfill was a “nightmare” that would cost an estimated $130m to be put in proper condition. Then in mid-October the Minister disclosed that Government and WRDG were working “feverishly” to complete the contractual terms of the arrangement to meet a possible year- end deadline.

Nothing has been released about the proposed terms or the scope of the new contract, and clearly WRGD has been unable to commence serious remedial work.

Fortunately, we have not recently suffered any of the deep fires that turn the landfill into a pyre of toxic smoke that infects health in hundreds of homes and makes the Baha Mar golf course unplayable. But this emergency could recur at any time. We trust that the local experts, with or without a contract, will be ready to suppress the flames and fumes; If they can eventually generate a few megawatts of renewable electricity, that’s an added bonus.

Although the process has been in gestation for nearly a year, anything is better than the PLP solution that appointed the opaque Renew Bahamas, who did little before walking off the job amid a flurry of claims and counter-claims.

Next issue: How we might catch up with Singapore – more Immigration!