CS&Co Annual Report 2019 - Cave Shepherd & Co Ltd. Barbados

010ANNUAL REPORT & FINANCIAL STATEMENTSDIRECTORS’REPORTThe Cave Shepherd Group recorded anet profit attributable to shareholdersof 8.5 million for the year ended 31December 2019, compared to 7.5million in the prior year. This equatesto an Earnings per Share (EPS) of 0.47 compared to 0.41 in 2018.Total dividends of 0.20 cents perShare were paid in 2019 and the SharePrice showed a modest improvementending the year at 4.65.TheimprovedoverallGroupperformance was driven by betterresults from the Financial Servicescompanies offset by a downturn inthe performance of our main retailbusiness as it continued to strugglein an environment of dampeneddomestic demand.Managementremains focused on achieving furthergrowth in our Financial Servicesbusinesses while at the same timebringing our Duty Free Caribbeanoperations up to an acceptable levelof profitability.Sir Geoffrey Cave, K.A.Chairman andMr. John M. B. Williams,Chief Executive OfficerNet Assets of the Group at 31December 2019 were 117.3 millionrepresenting book value per shareof 6.40. The main changes to ourBalance Sheet are reflected in thegrowth of our Credit Card ReceivablesPortfolio which is in line with thecontinued growth of that businessunit and the return on our FinancialAssets Portfolio. As a consequence,our Fixed Income Unsecured Notesalso increased as we raised funds tofinance that expansion.FINANCIAL SERVICESFortress Fund Managers recorded anexcellent year both in terms of theperformance of its various mutualfunds as well as its own profitability.The flagship Fortress CaribbeanGrowth Fund recorded an annualreturn of 14.9% for its investors, aidedby the Fund’s two largest holdings inthe Fortress International Equity Fundand the Fortress Emerging MarketsFund. These two US funds were up25.7% and 18.9% respectively in 2019.In early 2019, the Growth Fund wasreopened to new subscriptions asthe outlook for Barbados’ economyimproved and the opportunities forinvestment became more positive.Towards the end of 2019, theGovernment of Barbados relaxed theregulations surrounding the holdingof Foreign Exchange bank accountsby Barbadians and therefore residentswho hold such accounts will now haveaccess to investing in the Fortress USDollar denominated Global Funds forthe first time.In November 2019, Fortress launchedits latest pension product, theFortress Multi-Employer Pension Plan.This Plan will greatly assist small andlarge companies in offering pensionsto their employees without the needfor each company to duplicate all theadministrative and regulatory burdensand costs of standalone pension plans.

011ANNUAL REPORT & FINANCIAL STATEMENTSFortress Fund Managers’new office in Radley Court ismore modern and providesa template for furthergrowth and expansion.

012ANNUAL REPORT & FINANCIAL STATEMENTSThe Cave Shepherd Card businessdelivered another year of excellentgrowth and performance. Overalltransaction growth was 24% andwith that our Portfolio grew by 7%.Notwithstanding the growth, ourdelinquency levels remain low and arebetter than industry norms.During the year, great focus wasplaced on our Cave Shepherd MobileApp which was launched in August2018, and by the end of the yeardownloads had tripled, reaching nearlytwenty thousand users. This Appallows for person-to-person (P2P)payments between Cave ShepherdCard holders as well as allowing usersto make purchases from registeredbusinesses. We also worked withGovernment Agencies during theyear to support the drive for digitalpayments for public services and werepleased to partner with the Trust LoanFund to allow for digital issue of funds,and also to partner with the BarbadosRevenue Authority (BRA) to allowpersons to pay their land tax bills viathe App without having to visit a BRAoffice. We recognize that adoptionof new technologies and new ways ofdoing business can take time but arevery confident that our innovativeapproaches are establishing a soundfoundation for the future of thisbusiness.SigniaGlobe Financial Group had a yearof solid performance as the integrationof the former Signia Financial andGlobe Finance businesses continuedduring 2019. As happens with mergers,there were some challenges but weare very pleased that these wereminimal and well managed. With thebusiness now running as a single unitour focus again turns to opportunitiesfor growth, particularly outside ofBarbados.DGM Financial Group turned in animproved performance as it continuedto build on the growth of recent years.Although some uncertainty continuesaround the International Businesssector, DGM is focused on providingexcellent service to businesses ofsubstance which has contributed totop line and bottom line growth, andpositions it well for the future.The SigniaGlobemerger waswell-managedwith minimaldisruption tobusiness andour focus turnsto growthopportunities,particularlyoutside ofBarbados

013ANNUAL REPORT & FINANCIAL STATEMENTSThe Cave Shepherd CardMobile App offers small businessowners a new digital method forcollecting customer payments.

014ANNUAL REPORT & FINANCIAL STATEMENTSRETAILExpansion of theCave Shepherdinbound store atthe Grantley AdamsInternational Airportwas completedand now offers animproved customerexperience.Duty Free Caribbean Holdings hadanother challenging year as subdueddomestic demand as well as newand one-off costs impacted itsprofitability. The latter included anadverse change to the VAT regime inBarbados which added considerableexpense to the operations ofapproximately 0.8 million in highercosts from April 2019 when it tookeffect. In addition, restructuring ofthe Colombian Emeralds Internationalbusinessmodelresultedinconsiderable write-offs of obsoleteinventory and receivables, costing thebusiness 5.8 million. In aggregatethe Cave Shepherd Group share ofthese expenses was 2.6 million. On apositive note, this restructuring has ledto a considerable reduction of assetinventory and a move to receivingmerchandise on consignment, whichin turn substantially reduces thepayables and risk, and improves thenet working capital position of thisbusiness.The business continued to developprofitable expansion opportunitiesand during 2019 a deal was finalizedto acquire a controlling interest in theColombian Emeralds Internationalfranchisee in the Bahamas, and alsoto open three new shops at the airportin Nassau. We also completed theexpansion of our inbound store atthe Grantley Adams InternationalAirport which now offers an improvedcustomer experience.GCS Limited (Ganzee) reportedanother year of solid performance asincreased sales contributed to a muchimproved bottom line. Regrettably, wewere unable to bring to fruition thefurther regional expansion that we hadhoped for in 2019, but continue oursearch for opportunities for growthwithin the Caribbean.

015ANNUAL REPORT & FINANCIAL STATEMENTSOTHER INVESTMENTSDuring the year, Bridgetown Cruise Terminals Inc.finalized the new agreement with the Barbados PortInc. which allows for continuation of operation ofthe Cruise Terminal through to 31 December 2021.As noted in last year’s Report, the share of Head Taxattributable to the Cruise Terminal will be graduallyreduced and finally eliminated in 2021, and so theprofitability of this entity will be affected as a resultof this.Our Property Investments; CS&C Joint Venture,Sunset Joint Venture and Emerald City Trust allperformed well and in line with expectations, withthe first two benefiting from valuation gains duringthe year.Our Investment Portfolio performed well in thefirst quarter of the year, at which time we tookthe decision to switch our investment profile fromEquities to Bonds, investing in Fortress Fixed IncomeFund to reduce the volatility which could impact ourGroup Earnings.CONCLUSIONOverall, we are pleased with the continuing trendof improved performance of the Group but aremindful that this has been driven by our FinancialServices businesses and there is work to be done inthe area of our Retail operations. Although we havenot yet seen a rebound of consumer spending in theBarbadian economy, we remain confident that weare on the right track to achieve this and so have alevel of cautious optimism for the future.New stores inDeparturesTerminals s.We take this opportunity to thank the public, whetherBarbadians or visitors to the Caribbean, for theirgreat support for our businesses and we also thankour Management and Staff for their commitmentand efforts in continuing the growth of our Group.Sir Geoffrey CaveChairmanMarch 5th 2020Mr. John M. B. WilliamsChief Executive Officer

016ANNUAL REPORT & FINANCIAL STATEMENTSCORPORATE SOCIAL RESPONSIBILITYCAVE SHEPHERD GROUP SERVICESTANDARDSDuring the year 2019, the CaveShepherd Group made great stridestowards fostering a culture of serviceexcellence. To date, we trained over700 team members on our desiredStandards to be adopted.OurService Standards Committee, whichcomprisesrepresentativesfromacross the Group, also presentedseveral Service Excellence Awards toreward and recognize our outstandingteam members who excelled inserving our valued customers. As wecontinue our efforts at hosting socialengagement activities across theGroup, our Team Members enjoyeda movie and karaoke evening at theBarbados Museum & Historical Societyin late September.RUN BARBADOS 2019The Cave Shepherd Group continuedits sponsorship of the annual RunBarbados Marathon Series whichtook place during the weekendof December 6th 2019.Overallparticipation was similar to 2018 withhigher local entries recorded than anyother year in its history. A wide rangeof countries were represented from asfar as New Zealand, Africa and Europe,and there was also participationfrom the Caribbean region includingAntigua, Aruba, Bahamas, Guadeloupe,Jamaica, Martinique, St. Vincent,Suriname and Trinidad & Tobago.Group CEO,Mr. John Williams withthe Service StandardsCommittee and ourService Championsfrom across theCave Shepherd Groupof Companies.

017ANNUAL REPORT & FINANCIAL STATEMENTSRun Barbados MarathonWeekend 2019 hadhigher local entriesrecorded than any otheryear in its history.

018ANNUAL REPORT & FINANCIAL STATEMENTSCORPORATE GOVERNANCEThe Board of Directors (the “Board”) of Cave Shepherd & Co. Limited (the “Company”) is committed to exercising strongcorporate governance practices that enhance all stakeholders’ value and promote the long-term growth and financialviability of the Company. The Company adheres to all legal and regulatory requirements, guidelines and recommendationsapplicable to it as outlined by the Barbados Stock Exchange and the Financial Services Commission.BOARD OF DIRECTORSThe Board is comprised of knowledgeable and experienced Directors. The maximum number of Directors permitted bythe Company’s revised by-Laws is ten (10) with a minimum of three (3). The Board currently consists of ten (10) members;six (6) of whom are non-executive (of whom three (3) are independent) and four (4) are executive.The following outlines the biographical details, experience and shareholdings of the Directors.NON-EXECUTIVE CHAIRMANCHIEF EXECUTIVE OFFICERSir Geoffrey Cave,K.A., C.B.E., B.C.H., Hon. LLD (UWI)Non-Executive ChairmanBorn 1942John M. B. Williams, FCAChief Executive OfficerBorn 1959NATIONALITY: BarbadianDATE OF FIRST ELECTION: 1970TERM OF OFFICE: 2020NATIONALITY: BarbadianDATE OF FIRST ELECTION: 2007TERM OF OFFICE: 2021Sir Geoffrey Cave is currently Non-Executive Chairman ofCave Shepherd & Co. Limited. He was first elected Chairmanof the Board of Directors in 1970. Sir Geoffrey chairs theBoards of associates, Duty Free Caribbean (Holdings) Ltdand SigniaGlobe Financial Group Inc. He also serves asChairman of subsidiaries, DGM Holdings Inc. and FortressFund Managers Limited.John Williams joined Cave Shepherd & Co. Limited as ChiefExecutive Officer in 2006 and was appointed to the Boardin 2007. Mr. Williams serves as a Director on the Boardsof Bridgetown Cruise Terminal Inc., Duty Free Caribbean(Holdings) Ltd, G.C.S. Limited and SigniaGlobe Financial GroupInc. associates of Cave Shepherd & Co. Limited. He is alsoa Director of subsidiaries, DGM Holdings Inc. and FortressFund Managers Limited.In November 2016, on the occasion of Barbados’ 50thAnniversary of Independence, he was awarded the honourof Knight of St. Andrew for his outstanding contribution tobusiness. Sir Geoffrey served as an Independent Senatorappointed by the Governor-General of Barbados during theperiod 2009 to 2013. In 2007, the University of the West Indiesconferred on him an Honorary Degree of Doctor of Laws(LLD) and in the Queen’s New Years’ Honour’s List in 2003,he was appointed Commander of the Most Excellent Orderof the British Empire. His distinguished career in businessin Barbados and the region was recognized in 2001 when hewas awarded a Caribbean Master Entrepreneur Award. At theturn of the century, Sir Geoffrey was awarded the BarbadosCentennial Honour.Sir Geoffrey holds a B. Comm. from McGill University inCanada.Mr. Williams has over 30 years’ experience in seniormanagement positions in both services and manufacturingindustries. In 2011, he was appointed Chairman of theBarbados Private Sector Association, a position he helduntil January 2014. Previously, he has served as Presidentof the Barbados Chamber of Commerce and Industry andDeputy President of the Institute of Chartered Accountantsof Barbados.Mr. Williams is a Mathematics graduate of ManchesterUniversity, UK. He is a fellow of the Institute of CharteredAccountants of England and Wales (FCA) and the Institute ofChartered Accountants of Barbados (FCA).

019ANNUAL REPORT & FINANCIAL STATEMENTSINDEPENDENT DIRECTOREXECUTIVE DIRECTORProf. The Most Honourable V. EudineBarriteau, PhD, FB, GCMPro-Vice Chancellor & Principal,University of the West Indies,Cave Hill CampusBorn 1954Roger M. Cave, CA, CFAInvestment Director,Fortress Fund Managers LimitedBorn 1966NATIONALITY: GrenadianDATE OF FIRST ELECTION: 2008TERM OF OFFICE: 2020NATIONALITY: BarbadianDATE OF FIRST ELECTION: 1997TERM OF OFFICE: 2021V. Eudine Barriteau was elected to serve on the Board ofCave Shepherd & Co. Limited in 2008. She is a member ofthe Corporate Governance & Nomination Committee.Roger Cave joined the Board of Cave Shepherd & Co.Limited in 1997. He is the Founder and Investment Directorof Fortress Fund Managers Limited (“Fortress”), a subsidiaryof Cave Shepherd & Co. Limited. Fortress manages a suiteof mutual funds, including Fortress Caribbean Growth Fund,Fortress Caribbean Pension Fund and Fortress CaribbeanHigh Interest Fund.Prof. The Most Honourable Barriteau is an academic withnumerous scholarly writings to her credit. She serveson a number of Boards and Committees regionally andinternationally.Prof. The Most Honourable Barriteau is currently the ProVice Chancellor & Principal of the University of the WestIndies (UWI), Cave Hill Campus. She has previously held thepositions of Pro-Vice Chancellor & Principal of UWI, OpenCampus and Deputy Principal, Cave Hill Campus as well asHead of the Centre for Gender and Development Studies,University of the West Indies, a position she held for fifteen(15) years.In November 2019 on the occasion of Barbados’ 53rdAnniversary of Independence, she was awarded Barbados’highest national honour – the Order of the Freedom ofBarbados for her outstanding contribution to tertiaryeducation and pioneering leadership in the development ofgender studies and the promotion of gender equality. In2013, Prof. The Most Honourable Barriteau was awardeda Gold Crown Merit for her contribution to gender anddevelopment.EXECUTIVE DIRECTORMaureen D. DavisChief Development Officer,Duty Free Caribbean (Holdings) Ltd.Born 1964NATIONALITY: BarbadianDATE OF FIRST ELECTION: 2007TERM OF OFFICE: 2020Maureen Davis joined the Board of Cave Shepherd & Co.Limited in 2007. She is currently the Chief DevelopmentOfficer of Duty Free Caribbean (Holdings) Ltd, a position shehas held since that company’s formation in the year 2000.Mrs. Davis also serves on the Board of the TourismDevelopment Corporation and is a Council member of theBarbados Museum and Historical Society.Mr. Cave serves as a Director on the Board of associate, DutyFree Caribbean (Holdings) Ltd and subsidiary, DGM HoldingsInc. He is also a board member of the Barbados StockExchange.Mr. Cave is a graduate of Bishop’s University, Canada wherehe obtained a BBA. He is a CFA charter holder as well asa Chartered Accountant. He is a fellow of the Institute ofChartered Accountants of Barbados (FCA).NON-EXECUTIVE DIRECTORRobert M. Harvey-Read, B. CommBusiness Executive,Banyan Air ServiceBorn 1964NATIONALITY: BarbadianDATE OF FIRST ELECTION: 2008TERM OF OFFICE: 2021Robert Harvey-Read was elected to the Board of CaveShepherd & Co. Limited in 2008. He is a member of the AuditCommittee.Mr. Harvey-Read works in the philanthropic division of BanyanAir Service – one of the leading private aircraft serviceoperators in the south-eastern United States.Prior to this, he worked for the United States RetailDivision of the Automotive Art Group managing sales andstore development. He has held other developmentaland leadership roles in business and Christian ministry inBarbados, Grenada, and the United States.Mr. Harvey-Read holds a Bachelor of Business Managementfrom Ryerson University in Canada.

020ANNUAL REPORT & FINANCIAL STATEMENTSNON-EXECUTIVE DIRECTORINDEPENDENT DIRECTOREdward J. L. Ince, BScBusiness ExecutiveBorn 1962Adrian H. PadmoreManaging Director,Bryden Stokes LimitedBorn 1967NATIONALITY: BarbadianDATE OF FIRST ELECTION: 2012TERM OF OFFICE: 2022NATIONALITY: BarbadianDATE OF FIRST ELECTION: 2016TERM OF OFFICE: 2020Edward Ince joined the Board of Cave Shepherd & Co.Limited in 2012.Adrian Padmore was elected to serve on the Board of CaveShepherd & Co. Limited in 2016. He is the Chairman of theCorporate Governance & Nomination Committee and amember of the Audit Committee.Mr. Ince has extensive experience in creating and managingbusinesses throughout the Caribbean and Central Americaregions. He co-founded Prism Services, a payments andoperations outsourcing company. He also serves on theBoards of Republic Bank Ltd and Productive BusinessSolutions Limited, a listed company on the Jamaica StockExchange.Mr. Ince is a graduate of York University, Canada where heobtained a BSc. (Hons) in Computer Science.Mr. Padmore is the Managing Director of Bryden StokesLimited and previously held the position of General Managerof the West India Biscuit Company Limited (WIBISCO) from2002 until 2017. His experience in the manufacturing, export,retail and the distribution sectors spans over 30 years,additionally, he has worked extensively in Barbados, theCaribbean and USA markets.Mr. Padmore is a graduate of Coventry University, UK wherehe obtained a HND in Mechanical Engineering.INDEPENDENT DIRECTORLyden J. RamdhannyBusiness Executive,L.L. Ramdhanny & Co.Born 1952NATIONALITY: GrenadianDATE OF FIRST ELECTION: 2008TERM OF OFFICE: 2022Lyden Ramdhanny was appointed to the Board of CaveShepherd & Co. Limited in 2008. He is the Chairman ofthe Audit Committee and a member of the CorporateGovernance & Nomination Committee. Mr. Ramdhannypreviously served as a Director on the Board of Duty FreeCaribbean (Holdings) Ltd an associate of the company for fiveyears from its inception in the year 2000.Mr. Ramdhanny is a prominent businessman in Grenadahaving held numerous Private Enterprise and Public Service/Governmental posts.EXECUTIVE DIRECTORRichard G. SimpsonDirector of Facilities & Liaison,Duty Free Caribbean (Holdings) Ltd.Born 1959NATIONALITY: BarbadianDATE OF FIRST ELECTION: 2007TERM

CO. LIMITED will be held at the Lloyd Erskine Sandiford Centre, Two Mile Hill, St. Michael, Barbados on Thursday April 23rd 2020 at 5:30 p.m. . Fortress Insurance Company Limited Equity 3,000,000 - 60% owned Barbados Loan Capital - Nil Fortress Staff Share Scheme Inc. Equity 1,000 - 60% owned Barbados