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More light on Cash Plus
Wignall's World
Mark Wignall
Sunday, October 14, 2007
As the entity that has been presenting us with surprise after surprise and growth atop growth, Cash Plus, over the last five years, seems to have attracted more believers than detractors.
The argument supporting its existence, its business model, its financial attractiveness and its move to cement its place in Jamaica as a good corporate citizen has to be placed firmly alongside those who say it is a pleasant dream that we will soon wake up out of.
My e-mail inbox attracts on average, about one e-mail every 10 days from someone seeking advice on investing in Cash Plus. My response is always to direct them straight to Cash Plus where they will be free to ask questions and get answers. The latest one is from taken from my inbox of last Thursday:
"Upon doing some quick Internet searches on Cash Plus, I stumbled across your articles which I found very interesting and informative.
I have been trying to get more information on Cash Plus with some sense of urgency, primarily due to the fact that I have family members taking a trip to Jamaica in the next few days to go deposit their hard-earned money.
For what it's worth, I feel morally obligated to guide these people who happen to be an elderly retired couple.
I won't claim to be a financial wizard, but I've had a lot of exposure to the financial markets and various business sectors, and I still cannot comprehend how Cash Plus, with its current business model can consistently afford to pay a 10% return to their so-called lenders.
There is no other company in existence today, small, mid-size, or even the Fortune 500s, that can afford to do this consistently. The only way I can rationalise this business model is think that the company is using new funds (recently deposited funds) to pay back the previous lenders that have been in the system for at least three months. [It is my understanding that you don't earn the 10% until you've been invested for three months]. The additional surplus of funds is obviously used for the many acquisitions they've made and will continue to make.
This business model may very well sustain itself if the subsidiaries are profitable and spinning off more than 10% returns. But as we all know, there are no guarantees in any business when it comes to ROI. That said, it would seem as if the company is banking on a method of "borrowing from Peter to pay Paul", which is probably an unsafe bet in the long run.
It is not my intent to discredit anything that Cash Plus may be doing, especially since they've been holding up their end of the bargain with lenders so far. There exists the possibility that Cash Plus has an innovative business model that really works and defies the old-school economics of a company turning a profit and sharing some of it in the form of dividends with its investors. My goal is to simply understand the financial fundamentals behind this company so I can give some guidance with peace of mind.
Please share your thoughts."
In line with this, I spoke again with the management team behind Cash Plus to get an update on where the company is and where it is going.
Over the past five years, in a period when the economy experienced negligible growth, Cash Plus appeared, established 16 offices in Kingston, 30 distribution outlets islandwide, and acquired 80 businesses. It employs about 3,500 people.
Recently I spoke with Cash Plus' vice-president Christopher Goulbourne, and explained to him the situation regarding persons constantly asking me for information on his company.
I told him that I wanted some current information on the company, its viability and, more importantly, its profitability.
Said the VP: "As you know, our holdings are across numerous sectors, including distribution, gaming, hospitality, telecommunications, entertainment, security, real estate, construction and industrial services.
The company brings in a substantial profit to the group and greatly benefits the consumer whilst adhering to the best business practices. We have been doing business for the past five years, in a very transparent manner, and we will continue to do so, far into the future."
Mr Goulbourne was quick to point out that, "Our participants are local, and as such our profits remain in Jamaica. Our services are not outsourced and we do not hire from overseas."
I was anxious to hear about the company's position with the Financial Services Commission (FSC). The brain behind Cash Plus, chairman and head honcho Carlos Hill, said: "The company is currently having its financial statements audited by one of the big four accounting firms as we expect to have this published by November of this year. We are also in the process of putting its board of directors and executive management team in place to meet the fit and proper requirements and we expect that this will also be announced no later than November of this year."
When I asked Hill about the continued profitability of the company and its viability in terms of attracting new investment he said that, "... the company will continue to do business in the same manner as before. Building a brighter future for Jamaicans is our main mission, acquiring projects that provide a better opportunity for Jamaicans is our goal. Providing jobs for Jamaicans is our objective and as long as Jamaicans need good jobs, a better opportunity to earn income and a brighter future for their family, Cash Plus will continue."
Those who 'invest' in Cash Plus are in essence lenders to the company. When asked about the requirement its lenders have to meet in order to make a 'loan' to Cash Plus, and especially in light of some suggesting that the company may be accepting 'tainted funds', vice president Goulbourne stated: "It's quite simple. We require the name and address of an existing client who referred them, a reference letter from one of the following:
Justice of the peace, pastor, lawyer, bank manager, or police inspector. In addition, persons must show a valid identification such as passport/driver's licence/national identification, TRN, proof of address; utility bill (must be in applicant's name), or mail confirming address.
This is done in order to comply with the Anti-Money Laundering Act and, Cash Plus only accepts managers' cheques from its lenders."
As recently as September 12, Cash Plus officially announced a $150-million, three-year contract to become title sponsor of Jamaica's top football league, now known as the Cash Plus Premier League and according to Goulbourne, "We will be embarking upon a support series for charitable organisations, the needy, and for anyone else we believe needs and deserves assistance, Cash Plus is here to stay."
Really big talk from a company only five years old.
Said Carlos Hill as our conversation neared its end: "Mr Wignall, Cash Plus detractors are going to be amazed at the growth and accomplishments of Cash Plus in such a relatively short period of time, and the audited financial statements due in about November will once and for all put to rest its detractors."
I hope this answers some of the questions.
----
Wignall's World
Mark Wignall
Sunday, October 14, 2007
As the entity that has been presenting us with surprise after surprise and growth atop growth, Cash Plus, over the last five years, seems to have attracted more believers than detractors.
The argument supporting its existence, its business model, its financial attractiveness and its move to cement its place in Jamaica as a good corporate citizen has to be placed firmly alongside those who say it is a pleasant dream that we will soon wake up out of.
My e-mail inbox attracts on average, about one e-mail every 10 days from someone seeking advice on investing in Cash Plus. My response is always to direct them straight to Cash Plus where they will be free to ask questions and get answers. The latest one is from taken from my inbox of last Thursday:
"Upon doing some quick Internet searches on Cash Plus, I stumbled across your articles which I found very interesting and informative.
I have been trying to get more information on Cash Plus with some sense of urgency, primarily due to the fact that I have family members taking a trip to Jamaica in the next few days to go deposit their hard-earned money.
For what it's worth, I feel morally obligated to guide these people who happen to be an elderly retired couple.
I won't claim to be a financial wizard, but I've had a lot of exposure to the financial markets and various business sectors, and I still cannot comprehend how Cash Plus, with its current business model can consistently afford to pay a 10% return to their so-called lenders.
There is no other company in existence today, small, mid-size, or even the Fortune 500s, that can afford to do this consistently. The only way I can rationalise this business model is think that the company is using new funds (recently deposited funds) to pay back the previous lenders that have been in the system for at least three months. [It is my understanding that you don't earn the 10% until you've been invested for three months]. The additional surplus of funds is obviously used for the many acquisitions they've made and will continue to make.
This business model may very well sustain itself if the subsidiaries are profitable and spinning off more than 10% returns. But as we all know, there are no guarantees in any business when it comes to ROI. That said, it would seem as if the company is banking on a method of "borrowing from Peter to pay Paul", which is probably an unsafe bet in the long run.
It is not my intent to discredit anything that Cash Plus may be doing, especially since they've been holding up their end of the bargain with lenders so far. There exists the possibility that Cash Plus has an innovative business model that really works and defies the old-school economics of a company turning a profit and sharing some of it in the form of dividends with its investors. My goal is to simply understand the financial fundamentals behind this company so I can give some guidance with peace of mind.
Please share your thoughts."
In line with this, I spoke again with the management team behind Cash Plus to get an update on where the company is and where it is going.
Over the past five years, in a period when the economy experienced negligible growth, Cash Plus appeared, established 16 offices in Kingston, 30 distribution outlets islandwide, and acquired 80 businesses. It employs about 3,500 people.
Recently I spoke with Cash Plus' vice-president Christopher Goulbourne, and explained to him the situation regarding persons constantly asking me for information on his company.
I told him that I wanted some current information on the company, its viability and, more importantly, its profitability.
Said the VP: "As you know, our holdings are across numerous sectors, including distribution, gaming, hospitality, telecommunications, entertainment, security, real estate, construction and industrial services.
The company brings in a substantial profit to the group and greatly benefits the consumer whilst adhering to the best business practices. We have been doing business for the past five years, in a very transparent manner, and we will continue to do so, far into the future."
Mr Goulbourne was quick to point out that, "Our participants are local, and as such our profits remain in Jamaica. Our services are not outsourced and we do not hire from overseas."
I was anxious to hear about the company's position with the Financial Services Commission (FSC). The brain behind Cash Plus, chairman and head honcho Carlos Hill, said: "The company is currently having its financial statements audited by one of the big four accounting firms as we expect to have this published by November of this year. We are also in the process of putting its board of directors and executive management team in place to meet the fit and proper requirements and we expect that this will also be announced no later than November of this year."
When I asked Hill about the continued profitability of the company and its viability in terms of attracting new investment he said that, "... the company will continue to do business in the same manner as before. Building a brighter future for Jamaicans is our main mission, acquiring projects that provide a better opportunity for Jamaicans is our goal. Providing jobs for Jamaicans is our objective and as long as Jamaicans need good jobs, a better opportunity to earn income and a brighter future for their family, Cash Plus will continue."
Those who 'invest' in Cash Plus are in essence lenders to the company. When asked about the requirement its lenders have to meet in order to make a 'loan' to Cash Plus, and especially in light of some suggesting that the company may be accepting 'tainted funds', vice president Goulbourne stated: "It's quite simple. We require the name and address of an existing client who referred them, a reference letter from one of the following:
Justice of the peace, pastor, lawyer, bank manager, or police inspector. In addition, persons must show a valid identification such as passport/driver's licence/national identification, TRN, proof of address; utility bill (must be in applicant's name), or mail confirming address.
This is done in order to comply with the Anti-Money Laundering Act and, Cash Plus only accepts managers' cheques from its lenders."
As recently as September 12, Cash Plus officially announced a $150-million, three-year contract to become title sponsor of Jamaica's top football league, now known as the Cash Plus Premier League and according to Goulbourne, "We will be embarking upon a support series for charitable organisations, the needy, and for anyone else we believe needs and deserves assistance, Cash Plus is here to stay."
Really big talk from a company only five years old.
Said Carlos Hill as our conversation neared its end: "Mr Wignall, Cash Plus detractors are going to be amazed at the growth and accomplishments of Cash Plus in such a relatively short period of time, and the audited financial statements due in about November will once and for all put to rest its detractors."
I hope this answers some of the questions.
----
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