Docstoc

Settlement

Document Sample
Settlement Powered By Docstoc
					                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.




                                                           Dealing in Shares

                                                                     Patrick van Beek
                                                                    Director/Consultant
                                                                        5 July 2005

5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                    Introduction

•   What are Shares
•   Shareholders Rights and Obligations
•   How shares are traded
•   Benefits to Shareholders
•   Benefits to the Company of Issuing Shares


5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             What are Shares
• Ordinary Shares are also known as
  common stock or equities
• A security evidencing ownership interest in
  a company
• Literally a share in the ownership of a
  Company



5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             Shares - Example
• A company has                                                                                   Proportion of
  issued 1,000,000                                                                               Company owned
  shares
• Mr A owns 1,000
  shares
                                                                                                                  Mr A
• Mr B owns 10,000                                                                                                Mr B
  shares                                                                                                          Mr C
                                                                                                                  Others
• Mr C owns 100,000
  shares

5 July 2005                                                                  Dealing in Shares
                    GASCI Rights of Shareholders
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.




•   Entitled to vote at shareholder’s meetings
•   Typically one vote per share
•   Elect board of directors
•   Common shareholders also receive voting
    rights regarding other company matters
    such as stock splits and company
    objectives

5 July 2005                                                                  Dealing in Shares
                    GASCI Rights of Shareholders
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.




• Entitle the holder to a share of the
  company's success through dividends
  and/or capital appreciation.
• In the event of liquidation, common
  shareholder have rights to a company's
  assets only after bondholders, other debt
  holders, and preferred stockholders have
  been satisfied

5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             Pre-emptive Rights
• Shareholders sometimes enjoy "pre-emptive
  rights".
• Pre-emptive rights allow shareholders to
  maintain their proportional ownership in the
  company in the event that the company issues
  another offering of stock. This means that
  shareholders with pre-emptive rights have the
  right but not the obligation to purchase as many
  new shares of the stock as it would take to
  maintain their proportional ownership in the
  company
5 July 2005                                                                   Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                     Information
• Shareholders generally have the right to
  certain information
• Under Companies Act must receive
  annual return twenty-one days prior to
  annual general meeting (Section 155)
• The Securities Industry Act greatly
  expands on information which must be
  sent to shareholders of public companies
5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             SIA Information (1)
• Financial Statements as prescribed by the
  Council must be sent within 4 months to
  security holders
• Disclosure by Reporting Issuers
  Regulations
       – annual accounts, auditor’s report, director’s
         report within 6 months
       – Interim reports for first six months of year
         within 6 months
5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             SIA Information (2)
• Disclosure by Reporting Issuers
  Regulations – notify every holder of
  securities without delay
       – Major new developments
       – Significant acquisition/disposal of assets
       – Certain related party transactions
       – Substantial Shareholdings
• Other information to GSC and GASCI
5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                     Obligations
• Generally obligations of shareholders are
  limited
       – Must abide by articles and by-laws
       – Pay for shares which have been subscribed to
       – Agree to be abide by relevant laws and
         regulations




5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                 Share Trading
• Shares are traded in a variety of markets
       – Informal, private deals
       – Other the counter
       – Regulated exchange
• In Guyana regulated exchange is operated
  by GASCI
       – All public companies are eligible for trading
         provided they are registered with the GSC

5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             Types of Trading
• Quote driven
       – Prices are set with respect to the prices
         market makers are prepared to deal at
       – Market markers will quote bid (price they will
         buy) and offer or ask (price they will sell) as
         well as volumes they are prepared to deal at
• Order Driven
       – Prices are set with respect to trade prices

5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                      Disclaimer
• GASCI nor any of its affiliates or any of
  their officers, directors, employees or
  agents makes any recommendation
  regarding any securities issued by any of
  the companies identified nor the
  advisability of investing in securities
  generally for any particular individual


5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                     Benefits (2)
• Superior Returns
       – By way of Dividends
                       • Current dividend yields of regularly traded
                         companies range from 3.2% to 12.5%
       – Capital Returns
                       • Not known in advance – hence shares are a risky
                         investment
                       • Over long periods most stock markets have shown
                         positive real returns
                       • Caribbean Markets exceptional over last two years
5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                        Capital Returns

                                                 van Beek Index (vBI) - % change since inception

                               70.0%
                               60.0%
                               50.0%
                               40.0%
                               30.0%
                               20.0%
                               10.0%
                                0.0%
                                   Jul-03                        Oct-03      Jan-04     May-04   Aug-04   Nov-04   Feb-05   Jun-05
                              -10.0%
                              -20.0%
                                                                                          (C) CAFS 2005




5 July 2005                                                                           Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                             Information
Stock Symbol                                     Last                        EPS        P/E Ratio    Dividends paid   Dividend   Notes
                                                Trade                                                   in last 12      Yield
                                                                                                         months
        NBI                                      21.9                        2.1          10.4           0.83         3.80%       1
         BTI                                        40                       6.44          6.2            2.5         6.30%
        CBI                                      13.3                        5.7           2.3            0.9         6.80%       1
        DIH                                         11                       0.97         11.3           0.35         3.20%       1,3
        JPS                                                                  4.47                         1.5
        CCI                                                                  -2.23                         0

       DTC                                        175                        23.1          7.6           21.9         12.50%
        GSI                                         15                       1.56          9.6           0.68         4.50%       2
       SPL                                       46.5                        3.8          12.2            3.3         7.10%
       DBL                                            3                      0.36          8.3           0.12         4.00%       1
       DDL                                            8                      1.04          7.7           0.36         4.50%

        PHI                                           6                      -0.03                         1          16.70%
5 July 2005                                                                          Dealing in Shares
        GTI                                                                  5.38                          0
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             Issuing New Shares
• Companies may be reluctant to issue
  shares because
       – they may think that it dilutes the ownership
       – it requires them to disclose information about
        their business that they would not otherwise
        have to reveal




5 July 2005                                                                   Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                             Benefits of Issuing
• Obtain additional capital and increase the
  value of their business through public
  issue;
• May be able to issue new shares to merge
  with or acquire other businesses.
• Most important of all, they can reduce over
  dependence on bank borrowing which can
  be very risky
5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                 Market Ready
• Over 250 million Guyana Dollars traded on
  average each year in secondary market
• Investors are looking for opportunities to
  invest
• Companies are trading at between 6 and
  12 times earnings after tax
• Opportunity to unlock value to existing
  shareholders or raise new capital
5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.
                                                                                     Questions?




5 July 2005                                                                  Dealing in Shares
                    GASCI
    THE GUYANA ASSOCIATION OF SECURITIES COMPANIES AND INTERMEDIARIES INC.




                                                           Dealing in Shares

                                                                     Patrick van Beek
                                                                    Director/Consultant
                                                                        5 July 2005

5 July 2005                                                                  Dealing in Shares

				
DOCUMENT INFO