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RUNNING HEADER: LASCO MANUFACTURING LIMITED
University of Technology, Jamaica
College of Business Administration
AY 2020/21
Corporate Finance
Title of Project:
Lasco Manufacturing Limited
Group Members:
Tutor:
Tutorial Date and Time: Tuesdays, 2: 00 pm – 4:00 pm
This project was submitted to in partial fulfilment of the Bachelor of Business
Administration degree at the University of Technology, Jamaica.
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RUNNING HEADER: LASCO MANUFACTURING LIMITED
Table of Contents
Corporate Governance Analysis……………………………………………………3 – 4
Stockholder Analysis……………………………………………………………….5 – 6
Risk and Returns…………………………………………………………………6 – 10
Measuring Investment Returns………………………………………………….11 – 13
Capital Structure Choices……………………………………………………….14 – 15
Optimal Capital Structure……………………………………………………….16 – 17
Mechanics of Moving to the Optimal……………………………………………… 18
Dividend Policy…………………………………………………………………19 – 20
A Framework for Analyzing Dividends…………………………………………20 – 21
Valuation………………………………………………………………………...22 – 23
References………………………………………………………………………23 – 24
Appendices………………………………………………………………………25 – 40
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RUNNING HEADER: LASCO MANUFACTURING LIMITED
Corporate Governance
The Directors at Lasco Manufacturing Limited are directly responsible to effect good
governance and provide strategic guidance to the management of the Company in its affairs
and to ensure that all its stakeholders are protected. The Board strives to balance the interests
of the Company’s diverse constituencies, including its shareholders, customers, suppliers,
employees, creditors and communities in which it operates therefore balancing the interests
of its shareholders.
As at March 31, 2020, the composition of the Board of LML was nine (8) Directors,
of which two (2) was Executive Directors, six (6) Non-Executive directors. The Board of
Directors at Lasco Manufacturing meet on a quarterly basis and as required will hold special
meetings to deal with pertinent matters. Lascelles Chin is the founder, Executive Chairman
and Executive Director, and has a 30.12% stake in the company. Given so, management is
not separate from ownership. (Lasco Manufacturing, 2020)
The aim of the Company is to be transparent in its activities, all of which are
important, to increase shareholders’ confidence and maximize their value, therefore this
limits any potential conflict of interest. In carrying out its functions, the Board ensures that
the Company is compliant with the applicable laws of the land, regulations and codes of
ethical business conduct, the rules of the Jamaica Stock Exchange Junior Market, its Articles
of Incorporation, policies and procedures of the Company, Corporate Social Responsibility
and Sustainable Environment Practices. The Board may rely on the advice and report of its
Executive Management and other independent professionals. LML uses different means to
make information available to the public. The Annual Report of the company is published
yearly on the Jamaica Stock Exchange website and on their website listed
www.lascojamaica.com.
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RUNNING HEADER: LASCO MANUFACTURING LIMITED
Companies have social obligations where they engage in social actions due to certain
economic and legal responsibilities. Lasco Manufacturing Limited has participated in lots of
social events. In their 2020 annual report they stated that over the past two years, the LASCO
Chin Foundation (LCF) has worked steadily to expand its reach within its mandate of
assisting Jamaica’s most vulnerable citizens, in particular at–risk youth. One of the
Foundation’s flagship programs, the SSI Schooling Support Program, identified Mountain
View Primary and Clan Carthy High schools in east Kingston as the first beneficiaries (2020
Annual Report). They participate in different corporate runs where they provide water and
other essentials along with members of their team participate in these runs. They also
provided scholarships to students to fund their education. They sponsored other major events
and organizations. They also held various treats for different initiatives. They have made a lot
of donations to various institutions for the purchase of equipment and other expenses. They
have made numerous contributions to sports, health, security, education and environment
(Lasco Manufacturing, 2020)
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RUNNING HEADER: LASCO MANUFACTURING LIMITED
Stockholder Analysis
Stockholder analysis is a review function, that determines the groups and individuals
who own a portion of stock in a publicly held company. An analysis typically ranks the top
ten (10) (Vitez, 2021) At Lasco Manufacturing Limited, the board of directors consists of
eight (8) members, three (3) of which are females, and five (5) males. The board members
are as follows:
➢ Executive Directors
1. Hon. Lascelles Chin, O.J., C.D – Founder
2. Mr. James Rawle – Deputy Chairman & MD
➢ Non- Executive Directors
1. Dr. Eileen Chin, MBA
2. Professor Rosalea Hamilton, PH. D
3. Mrs. Jacinth Hall-Tracey, MBA
4. Mr. Vincent Chen – Company Director
5. Mr. Kenneth Sylvester – Independent Non-Executive
6. Mr. Compton Rodney, FCCA – Lead Independent Director
Lasco Manufacturing has an experienced board of directors, with an average tenure of 4.7
years.
Institutional Holdings
Institutional Ownership is the amount of a company’s available stocks that are owned
by mutual or pension funds, insurance companies, investment firms, private foundations,
endowments or other large entities that manage funds on behalf of others. (Kelton, 2020) The
graph below represents the number of institutional holders at Lasco Manufacturing:
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RUNNING HEADER: LASCO MANUFACTURING LIMITED
Individual and Insider Stockholders
Below, are the Individual and Insider Stockholdings at Lasco Manufacturing Limited
2,002,693,780
103,794,541
32,816,914
31,777,000
26,994,751
23,385,590
20,657,468
– 2,000,000,000
East West (St.Lucia) Ltd.
Sagicor Select Fund Ltd.
Mayberry Jamaican Equities Ltd.
JCSD Trustee Services Ltd.
Instututional Shareholders
Volume
Lascelles Chin,
1,244,428,470
Eilleen Chin,
16,000,000
Rosalea
Hamilton,
110,000
Robert Parkins,
2,812,132
–
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
Lascelles Chin Eilleen Chin Rosalea
Hamilton
Cleverick
Doughorty
Robert
Parkins
Insider Shareholders
Insider Sharaholders Volume
20,391,220
20,000,000
19,800,000
19,900,000
20,000,000
20,100,000
20,200,000
20,300,000
20,400,000
20,500,000
Yuan Liao Liudmila Gonzalez–Diaz
Individual Shareholders Volume
RUNNING HEADER: LASCO MANUFACTURING LIMITED
As shown in the graphs, institutional, insider and individual stockholders have a 54.27%,
30.72% and 0.97% holding respectively.
Risk and Return
The risk profile is an evaluation of a company’s willingness and ability to take risk
and it also refers to the threats which an organization is exposed to. A risk profile is important
for determining a proper investment asset allocation for a portfolio (Kindness, 2020).
Lasco Manufacturing is exposed to the following financial risks: Market Risk, Credit
Risk, Operational Risk and Liquidity Risk. To manage these risks the Board of Directors and
Senior Management have been trained to identify, analyse any risks the company may face
and have the overall responsibility for all those risks.
● Market Risk – Market risk is the risk of losses on financial investments caused by
adverse price movements (Risk, N.D.).Market risk arises from Lasco Manufacturing