C&WJ share­hold­ers give nod to re­hire au­di­tor

Jamaica Gleaner - - BUSINESS - Steven.jack­son@glean­erjm.com

In this Septem­ber 11, 2016 photo, gen­eral man­ager of Caribbean Ce­ment Com­pany, Ale­jan­dro Vares (left), and di­rec­tor Par­ris Lyew-Ayee (right) es­cort Prime Min­is­ter An­drew Hol­ness on a tour of the new Sports Club and Well­ness Cen­tre at the Ja­maica Gyp­sum Com­pany prop­erty. Lyew-Ayee was named chair­man of Caribbean Ce­ment on Oc­to­ber 5, 2016. A RE­VOLT BY Cable & Wire­less Ja­maica (C&WJ) share­hold­ers ended last week when they voted via poll to re­hire the com­pany’s ex­ter­nal au­di­tors.

A month ago, at the an­nual gen­eral meet­ing, share­hold­ers had re­jected the res­o­lu­tion for di­rec­tors to fix the re­mu­ner­a­tion of the com­pany’s au­di­tors, KPMG, in what was re­ally a protest vote to reg­is­ter dis­sat­is­fac­tion with C&WJ’s board, which they ac­cused of not be­ing suf­fi­ciently ac­count­able to mi­nor­ity own­ers of the tele­coms stock.

“The poll was con­ducted and the res­o­lu­tion was passed,” said Kayon Wal­lace, head of com­mu­ni­ca­tion at C&WJ, ref­er­enc­ing the vote last Thurs­day.

The meet­ing at The Ja­maica Pe­ga­sus ho­tel in New Kingston lasted for over an hour, which in­cluded roughly 30 min­utes of vot­ing and 25 min­utes of cal­cu­lat­ing the votes, said Wal­lace.

At the an­nual meet­ing in Septem­ber, mi­nor­ity share­hold­ers of C&WJ de­fied the board of di­rec­tors and voted against the stan­dard res­o­lu­tion to make a wider point on trans­parency.

Res­o­lu­tions at AGM’s are usu­ally done by a show of hands, whereas in a poll shares are pro­por­tion­ately rep­re­sented.

In re­sponse to the vote against the mo­tion at the AGM, board mem­ber and at­tor­ney Rochelle Cameron said C&WJ would in­voke Ar­ti­cle 66 of the com­pany’s ar­ti­cles of in­cor­po­ra­tion to con­duct the poll 30 days later.

The share­hold­ers at the AGM de­manded in­de­pen­dent ver­i­fi­ca­tion of the heav­ily fluc­tu­at­ing multi­bil­lion-dol­lar non-cash charges, which led In this Septem­ber 9, 2015 file photo, man­ag­ing di­rec­tor of Cable & Wire­less Ja­maica, Garfield Sin­clair, ad­dresses the com­pany’s an­nual gen­eral meet­ing in New Kingston.

the com­pany into losses. While all other res­o­lu­tions at the Septem­ber meet­ing were passed without fan­fare, the fi­nal one — for KPMG to con­tinue as au­di­tors of the com­pany and to fix their fee — was re­sisted. It was a rare dis­play of mi­nor­ity share­hold­ers ex­er­cis­ing their vot­ing power at an AGM.

WIN FOR MI­NOR­ITY

At the time, out­spo­ken mi­nor­ity share­holder Orette Sta­ple de­clared the ‘no-vote’ as a win for mi­nor­ity share­hold­ers at that mo­ment. The ma­jor­ity of shares are held by over­seas-based Lib­erty Global which ear­lier this year ac­quired Cable & Wire­less Com­mu­ni­ca­tion, the par­ent com­pany of C&WJ, through its re­gional sub­sidiary Li­LAC Group,.

The au­di­tors re­ceived pay­ment of $53 mil­lion for the year end­ing March 2016, up from $50 mil­lion the pre­vi­ous, ac­cord­ing to dis­clo­sures in the an­nual re­port. But their fee was not the mat­ter of con­tention.

The non-cash charges booked by C&WJ re­late to im­pair­ment and de­pre­ci­a­tion at the com­pany, which op­er­ates in a heav­ily cap­i­tal-in­ten­sive

tele­coms in­dus­try. Es­sen­tially, the share­hold­ers were de­mand­ing that some other in­de­pen­dent body ver­ify th­ese non-cash ex­pense charges, which fluc­tu­ate sig­nif­i­cantly on an an­nual ba­sis. KPMG stood by its work. C&WJ, which trades as FLOW Ja­maica, posted its first an­nual profit in a decade at year end March 2016 due in part to non-cash im­pair­ment charges — bun­dled as ex­cep­tional items — ef­fec­tively shift­ing from an ex­pense of $6.9 bil­lion in 2014/15 to­wards in­come of $1.13 bil­lion in 2015/16.

Then in the June 2016 firstquar­ter non-cash im­pair­ments al­lowed the com­pany to post a net loss of $695 mil­lion, or more than dou­ble the net loss a year ear­lier, de­spite dou­bledigit growth in rev­enues and mo­bile sub­scribers.

In the fi­nan­cials, C&WJ ex­plained that dur­ing 2015/16, in con­nec­tion with the ac­qui­si­tion of Colum­bus In­ter­na­tional by Cable & Wire­less Com­mu­ni­ca­tions, the com­pany re-eval­u­ated the planned tim­ing of net­work in­te­gra­tion. Con­se­quently, it made a de­ci­sion to ac­cel­er­ate the de­pre­ci­a­tion on th­ese as­sets over an av­er­age four-year pe­riod.

FILE

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