JN values QuikCash takeover near J$1b, posts higher profit on asset disposals
Published:Friday | July 15, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Jamaica National Building Society acquired the QuikCash money transfer business from Delroy Howell for J$936 million, newly released financials from the mortgage and financial services group indicate.
More than half of the purchase price or J$589.2 million related to goodwill, and the remainder to intangible assets and property, plant and equipment.
Jamaica National's assistant general manager of finance, administration and planning, Carlton Barclay, said Tuesday that goodwill accounted for the bulk of the price due to the nature of remittance business. "What you are buying is the customer base. It has no real physical assets," he said.
JN announced the takeover last August without disclosing the purchase price, but which at the time was speculated to be about US$10 million.
The financial disclosure confirms a slightly higher price of just under US$11 million.
A subsidiary, JN Money Services Cayman Limited, was formed during the financial year to operate the group's remittance business in the Cayman Islands, according to the group audited annual results released this week.
"The performance of the business we bought is doing very well," added Barclay.
"The remittance business realises about 10 per cent return on investment."
The acquisition of QuikCash aided, however, in cutting JN's cashflow and cash equivalents by one-third to J$3.2 billion.
JN has incorporated QuikCash into its electronic money-transfer platform. The acquisition allows the branded JN Money Transfer locations in Jamaica and the Cayman Islands to disburse QuikCash transfers.
"This means that both QuikCash and JN Money Transfer customers may do money-transfer transactions faster, efficiently and more conveniently, using any of the two brands in Jamaica and Cayman," Gabriel Heron, JN Money Services marketing and business development manager, said last year at the time of the merger.
JN group recor-ded some J$1.3 billion in surplus after taxation at March 2011 yearend, which was about J$65 million more than a year earlier. The group booked a J$580.7-million gain on asset disposal but was hurt by a 24 per cent fall in revenues to J$10.5 billion.
"This disposal related to the disposal of investments in bonds and also shares on the Jamaica Stock Exchange," Barclay said Tuesday.
JN ended its financial year with a 10 per cent rise in total equity to J$22.3 billion.