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Access shareholders seek early assurances on life after tax breaks

Published:Thursday | September 14, 2017 | 12:00 AMAvia Collinder
Marcus James


Microfinance firm Access Financial Services Limited has two more years of corporate tax breaks in its quiver, but shareholders are already asking the company for assurances that a full return to the tax roll won’t have a big impact on the company’s financial performance and their returns.

The concerns raised at Access’ annual general meeting on Thursday centred on maintenance of the company’s profit performance and payment of dividends. The distributions to shareholders in the past two fiscal periods amounted to $178 million and $195 million, respectively.

Companies listing on the junior stock market of the Jamaica Stock Exchange get five years of full waiver from corporate taxes, and a 50 per cent break over the next five years – rounding out a decade of incentives. As the pioneer stock on the junior stock market in late 2009, Access is wrapping up its eighth year as a listed company.

Access founder and CEO Marcus James said that the impending loss of tax discounts was one reason the company was seeking to improve efficiencies and earnings overall, and would continue to seek opportunities to grow both organically and by acquisition.

At year ending March 2017, Access underperformed on revenues but reported a healthy boost in profit. Net revenue fell from $1.47 billion to $1.4 billion, while net profit rose from $600 million to $648 million. At 50 per cent waiver, the company paid $72 million in income tax, up from $68 in FY2016,

The microfinancier also grew its loan portfolio by half-billion dollars to $2.6 billion.

Access is already buying up rivals, one of which was the subject of discussion at the annual general meeting because of the focus it got from Access’ external auditors.

The acquisition of Damark, completed for $180 million in May 2016, was treated as a business combination, with goodwill of $4.6 million recognised by Access.

Chartered accountants BDO, while assuring shareholders there was no cause for concern, explained that they examined the deal to see whether it was indeed a business combination or an asset acquisition, and also looked at the assumptions used in valuing the combination.

“The potential for misstatement caused us to focus on the balances,” said the BDO representative. In doing so the auditors reviewed key sales documents and valuations and examined the management analysis which informed the deal.