Introduction And Strategic Profile

Published Date: 02 Nov 2017

Proven Investments Limited (PIL) is a St. Lucian International Business Company (IBC), incorporated on November 25, 2009 as a holding company. In February 2010, PIL lucratively raised US$20 million through the private placement of 200 million ordinary shares, and initiated operations in March 2010. In July 2010, PIL listed on the Jamaican Stock Exchange by way of introduction, that is, without dealing out additional shares or raising additional funds.

PIL consequently extended its capital base through a US$9.6m rights issue in August of 2010, follow by a J$1 billion five-year preference share issue in December 2011. As an IBC, PIL is not controlled by the Financial Services Commission (FSC). PIL also enthusiastically seeks lucrative private equity investments which have led to the purchase of a 100 per cent ownership of Guardian Asset Management Jamaica Limited which has been rebranded as Proven Wealth Limited (PWL); and Asset Management Company Limited (AMCL).

PWL, a securities dealer, is regularized by the FSC and partakes in the management of client portfolios; while AMCL, the owners of the 'Easy Own' brand, is a hire-purchase financing company. PIL also has an 85 per cent stake in Proven REIT Limited (PRL), a company established to facilitate real estate-related investments. Proven Kingsway Limited is a wholly owned subsidiary of PRL, and is the vehicle through which the sole property owned by PIL was purchased in February 2012.

PIL functions in a niche market, raising funds from local and international investors for investment in assorted asset classes. From its subsidiary, PIL has extended its business lines outside the financial industry; they are present in the real-estate market with additional plans to target healthcare, tourism and security industries.

PIL's chief challengers, based on its business model, are Sterling Investments Limited and BCW Capital Limited, both recently incorporated entities. The calculated realignment by PWL to switch from its repo-based business model is shared by many of its colleagues, given the regulatory push and the drive to move income generation off balance sheet.

The effect of the NDX has further curtailed investor assurance in the Government of Jamaica and will see dealers expanding their product offerings, eventually endangering PIL’s niche. These superior players, are expected to make encroach into Proven's market given that they are highly capitalized and have access to a wider branch network

Proven REIT has only one property in its portfolio. Locally, there has been enhanced demand for properties as a result of falling interest rates. In the United States, the properties sector remains dejected, providing occasion for Proven to attain economical properties outside the Caribbean. Even so, PREIT's capacity to purchase properties and seal private equity deals will be reliant on liquidity in the capital markets. AMCL has reasonable market presence, with services being accessible through seven retailers, whose operations extend across twenty two stores, to include Bashco and Mega Mart. Proven's CEO remarked that hire-purchase sales at participating retailers have been low, necessitating an expansion of their product reach.

Situation Analysis

Strategic Posture

Proven does not have a stated mission statement however their Core Values and Vision Statement have been explicitly stated.

PIL’s Vision is to be "the standard of success for Jamaica’s financial sector" and their core values are "Integrity, Respect, Teamwork and Performance"

From the research done and information gathered some of the firm’s objectives have been highlighted.

The primary business of PIL is the holding of tradable securities for investment purposes, but it also pursues wealth creation opportunities as they arise, provided they are consistent with the overall aims and objectives of the Company.

PIL intends to use the net offer proceeds to pursue acquisition opportunities and to build its investment portfolio. The objective is to provide above average returns over the medium to long term.

PIL intends to honour all cash outflow on a timely basis;

PIL aims to ensure that adequate levels of liquidity are maintained, while minimizing the impact on potential earnings; and to avoid the need for the forced sale of assets.

Business Strategy

PIL currently utilizes Porter’s differentiation strategy. A differentiation strategy is suitable where the target customer segment is not price-sensitive, the market is competitive, customers have very specific needs which are possibly under-served, and the firm has unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy

PIL targets viable high-quality fixed-income instruments and equity positions in companies which yield above-average return on investments. The ability to provide attractive returns is supported by its tax-efficient structure. Given the scope and risks associated with its investments, PIL targets the high net worth (HNW) market. PIL's investment strategy focuses primarily on three main revenue drivers: carry-trade, portfolio positioning, and private equity transactions.

General/Macro Environmental Analysis

A PEST analysis is an analysis of the external macro-environment that affects all firms. P.E.S.T. is an acronym for the Political, Economic, Social, and Technological factors of the external macro-environment. These external factors are beyond the firm's control and sometimes deemed as threats. For this reason, some say that "pest" is an appropriate term for these factors. However, changes in the external environment also create new opportunities and the letters sometimes are rearranged to construct the more optimistic term of STEP analysis.

Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. Most macro-environmental factors are specific to country and a PEST analysis will need to be performed for all countries which are interested.

Socio-Cultural

The aspects of culture come from people's values and their beliefs. People change their needs and requirements based on the changing trend, payroll, society, and all these things directly affect people's interest. Hence, the values and beliefs form the backbone of a society the attitudes and cultural values are undergoing possible changes from the start of the twenty first century. This involves changes to health care polices and workers changing attitudes towards work this is a global trend.

Proven has a team of directors which consist of expertise from a range of industries in the Caribbean this means that strategic leadership will be filtered into the organization over every segment Proven Investment Limited (PIL) operates in and areas it wishes to penetrate. The objective of diversifying is supported by the board of directors because of the wealth knowledge and experience brought from several Caribbean Territories.

Government/Legal

The political factors being new policies, regulations, and other new measurements, which will affect the decision making of an organization, since these regulations may bar certain ventures or new proposals which are analyzed by the strategist over the market. Changes in fiscal and monetary policies by the Government of Jamaica may create opportunities as well as challenges for PIL.

PIL may become subject to new accounting rules or standards that differ from those that are presently applicable. Such new accounting rules or standards could require changes in the way PIL reports its financial position, operating results or cash flows. Such changes could be applied retrospectively. PIL’s financial results may be adversely affected by international risks, such as:

• International political and economic conditions;

• Changes in Government regulations in various countries;

• Trade barriers;

• Adverse tax consequences

Economic

One of PIL major strengths is the management team which brings a wide array of knowledge and experience. That said, the company will need to intensify its marketing efforts in order to remain in the forefront of investor's minds. This will be critical in executing the firm’s strategy as maintaining a strong brand image is important especially in times of uncertainty.

The current environment should provide an opportunity for PIL to build on its private equity strategy as the weak economic environment is likely to present more opportunities for undervalued assets. Although, returns from this strategy are not always immediate and depend on management's ability to successfully identify attractive deals.

International (Global) Trends

The global trend presents firms with opportunities and threats or risks. Today’s firms are participating in Global –focusing. Firms increase their internationalization by focusing on niche markets this allows them to improve on and use their core competencies and resources while it minimizes their risk within the niche market. They also limit their risk by focusing their operations and sales in one region of the world this allow them to build stronger relationships in and knowledge of their market. To date PIL has acquired two (2) companies and operates in the Caribbean region specifically Jamaica, Trinidad, Cayman and Barbados.

PIL's major competitors, based on its business model, are Sterling Investments Limited and BCW Capital Limited, even though Proven may have a larger share of the market given first-mover advantage, these entities have aggressively increased their market presence, which may erode Proven's market share.

Technological

Technological changes affect the society and most of all in the workforce this occurs through producing new products, processes and materials. Due to the rapid change in technology firms need to effectively study the technological segment within the environment. Recent technological advances have several impacts on firms such as:

Technology's impact on product offering

Impact on cost structure

Impact on value chain structure

Rate of technological diffusion

Inspite of the rapid pace at which technology changes PIL subsidiary Proven Wealth Limited (PWL), Jamaica's newest investment house, has launched two new products in an effort to break new ground in its strategic targeting of high net worth clientele and stamp its name in the financial sector.

The number of macro-environmental factors is virtually unlimited hence there are opportunities and threats or risks which stem from the factors. Firm must prioritize and monitor those factors that influence the industry so that they cease the opportunities and are ready to counter attack the threats. It may be difficult to forecast future trends with an acceptable level of accuracy. The firm may resort to scenario planning techniques to deal with high levels of uncertainty in important macro-environmental variables.

Evaluate Environmental Threats & Opportunities - Task Environment

Task environment are sectors with which the organization interacts directly and have a direct impact on the organization's ability to achieve its business goals. The task environment typically includes the industry, competitors, customers, suppliers, stock market, raw materials, market sectors, and perhaps the human resources and international sectors.

An industry is a group of firms producing products that are close substitutes for each other. As they compete for market share, the strategies implemented by these companies influence each other and include a broad mix of competitive strategies as each company pursues strategic competiveness and above-average returns. It should be noted that, unlike the general environment which has an indirect effect on strategic competitiveness and firm profitability, the effect of the industry environment is direct. Industry and individual firm profitability and the intensity of an industry are a function of competitive forces.

a) Industry Structure

PIL has a five- member board, chaired by Hugh Hart. The expertise of these professionals spans a range of industries and they bring knowledge and experience from several Caribbean territories. In adherence with good corporate governance principle, PIL has an independent Chairman and is managed by CEO Christopher Williams. The Investment manager PML has a four-member board, chaired by Christopher Bicknell; he is the only member that holds dual roles in both PIL and PML. One of PML’s assets is its strong management team, which has a wealth of experience in the financial sector. The company strategy encompasses three main revenue drivers:

Carry-trade or spread income;

Portfolio positioning;

Private equity transaction.

b) Which of the five forces (Porter’s) in the immediate environment are currently affecting the level of competitive intensity within the industry?

The model of the Five Competitive Forces was developed by Michael E. Porter in his book "Competitive Strategy: Techniques for Analyzing Industries and Competitors" in 1980. Since that time the ‘five forces tool’ has become an important method for analyzing an organizations industry structure in strategic processes. They are as follows:

Threat of New Entrants

Threat of Substitute Products

Bargaining Power of Buyers (customers)

Bargaining Power of Suppliers

Rivalry Among Competing Firms in an industry

Michael Porter’s five forces model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment.

Based on the information derived from the Porter’s Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry. The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other’s profit potential. If rivalry is fierce, competitors are trying to steal profit and market share from one another. This reduces profit potential for all firms within the industry. According to Porter’s 5 forces framework, the intensity of rivalry among firms is the main force that shapes the competitive structure of the industry.

Porter's intensity of rivalry in the industry affects the competitive environment and influences the ability of existing firms to achieve profitability. High intensity of rivalry means competitors are aggressively targeting each other’s markets and aggressively pricing products. This represents potential costs to all competitors within the industry. High intensity of competitive rivalry can make an industry more competitive and decrease profit potential for the existing firms. On the other hand, low intensity of competitive rivalry makes an industry less competitive and increases profit potential for the existing firms.

c) Industry life-cycle

From information gained it can be agreed at the PIL’s board provides strategic leadership over the existing introductory segment in which they operate and is moving on to the growth stage. PIL is always expanding its capital base, as its business model is the first of its kind in Jamaica, its primary activities are holding of tradable securities for investment purposes.

d) Strategic groups within the primary industry

To date there are Guardian Asset Management (GAM), which was renamed Proven Wealth Limited and Asset Management Company Limited (AMCL) which is a hire purchase financing company. PIL has also formed an international business company, Proven REIT Limited (PRL), for real estate and related investments.

e) International competition

Based on PIL’s business model their major competitors are Sterling Investments Limited and BCW Capital Limited, both recently incorporated entities. Even though PIL may have a larger share of the market given first-mover advantage, these entities have aggressively increased their market presence.

Evaluation of industry threats and opportunities

It is very difficult to determine what is going to happen in PIL’s future and to evaluate what the real financial situation of the company will be. Every company evaluation consists of uncertainties, assumptions, and estimations. The stock market is the reflection of the economy and approximately depicts the absolute value of the companies. That is why it is understandable to look at the marketplace outcome for preliminary guidance, when something new is happening – new business phenomena, and technological evolutions. The market place shows the acceptance or rejection of the new trend.

Opportunities within the industry are:

Decline in asset values could mean more acquisition opportunities;

Opportunity to capitalize on the depressed nature of the markets and to acquire good long-term under-valued assets is provided by sluggish economic conditions;

Underserved markets with few investors with adequate capital;

Regulatory arbitrage from operating in different countries.

While threats of the industry are:

Exchange rate volatility could affect the company’s investment portfolio;

Changes in regulatory policy;

Slow growth economy;

Interest rate increases;

Uncertainties in local & global markets.

D. Evaluating the Firm Strengths and Weaknesses

The VRIO framework of any company forms the wider part of a strategic scheme. The basic strategy of any firm and Proven Investment starts with the vision and looks at all the other areas to include the objectives, internal and external analysis, strategies which incorporate both the business and corporate level and the strategic implementation. The acronym VRIO represents the Value, Rarity, Imitability and Organization of the company and is a good tool to examine the internal environment of a company. PIL’s Vision is to be "the standard of success for Jamaica’s financial sector" with the management team that the company has it is clear that they can achieve their vision.

The company is headed by CEO Chris Williams who led NCB Capital Markets to grow into one of the most successful investment houses in Jamaica. His second in command is Johann Heaven who was in charge of Strategic Planning, Projects and Product Development at Scotia DB&G as well as personnel from Guardian Asset Management Limited which they have now acquired. With such a strong team it is clear that they have the human resources necessary to examine their internal environment and to look at the opportunities of the market and to exploit these capabilities. The experience of the management team will lead the company to achieve its objectives and they have also diversified their Board of Director’s across the Caribbean to create a mix of independence and oversight. The company is built on a strong capital base and a success attitude as such investors can rest assured that their investment is in good hands.

One needs to focus on the rarity of the resources and capabilities and as such the question arises: Is the control of the resource capabilities in the hands of the relative few? For PIL we can safely say yes because we notice that they have analyzed their internal environment and have created the global mind-set which is the ability to analyze, understand and manage an internal organization in ways that are not dependent on the assumption of a single country, culture or context. PIL was the first to enter the US Market of the JSE. They also spread their human resources to capture the core competencies and to create the world class company. Proven has gone further to examine the firm’s portfolios of resources and the bundle of heterogeneous resources and capabilities managers created. PIL does not manage Client’s fund as an investment Management Company, instead assets are managed by a subsidiary Proven Wealth Limited which is registered in Jamaica. All employees are employed by an affiliate company Proven management. In terms of imitability it’s difficult for a competitor to imitate the capabilities of Proven because they have the best human resources and have already gotten the first mover advantage of entering the US market. They are located in St. Lucia which allow them a 1% corporate income tax rate which other companies do not benefit from and they have the Jamaican market’s finest human resource that has made their names in other companies. Finally one needs to know if the firm is organized, ready and able to exploit the resource capabilities. PIL‘s core values are Integrity, Respect, Teamwork and Performance. PIL is a registered company and its subsidiary PWL is regulated by the Financial Services Commission this proves that it has integrity. Its Management team is a respected team and they also show respect for all stakeholders of the company to include the environment in which they operate. They have been a part of many social activities which will bring awareness to the company as well as to enhance the existence. Teamwork is evident where each director brings the expertise of his own country which gives the company an advantage in targeting companies in those jurisdictions; and performance in terms of the increased net profit made in the year ended December 2012 when compared to a similar period in 2011.

Financial Analysis

Proven Investment Limited is a holding Company that derives most of its income from the wealth management subsidiary Proven Wealth Limited. Proven Wealth Limited’s income earning strategies involves income spreading and portfolio as well as earning income from private equity transaction through its real estate subsidiary Proven REIT Limited.

PIL has performed well over the two year period that they have been on the stock market. For the year ended December 2011 which was the first full year of its operation it gained earning amounting US$6.6 million of which US$5 million was from the purchase of Guardian Asset Management (GAM). PIL’s return on equity was similar to that of the larger players in the industry and amounted to 19.28%, however the net profit fell to US$3.3 million for the period ended March 31, 2012 which was a 50.1% decline from the previous period. PIL’s revenue for the period ended March 31, 2012 amounted to US$7.2 million of which net interest income amounted to the major portion followed by gains on securities. Net interest income increased to US$3.1 million which accounts for 54% of revenue while gains on security accounted for 41%. Those gains were mainly from investments of funds raised through private placement and preference share offer, unlike other security firms that raise funds primarily through repurchase agreements.

Only 7% of PIL’s assets are invested in government securities and as such the National Debt Exchange (NDX) will not significantly affect the company. Conversely PIL may be able to raise new capital at a lower cost with the low interest rate that comes with the NDX. There was an increase trading gains of 7.8% which brought the figure up to US$3.31 million. It must be noted that the company’s cost structure is in line with the international standards which is currently at a 50% benchmark.

A decline in the amount paid for preference share dividends saw operating expenses falling to 18.3% from 19% for a similar period in the previous year. There has been an increase in administrative cost which accounts for the greatest expense that the company faces. These increases resulted in a decrease in net income in December 2012. The company’s capital base fell by 3.3% relative to the same period in 2011 which brought it to US$33.1 million. It must be noted however, that return on capital to asset ratio held firm at 24%. PIL‘s liquidity has declined marginally which result in a reduction in the cash in hand. This is because of the marginal decline in the asset base. As a result free cash flow at the end of the period entered the negative territory which is common for new businesses during the first five years of their life. All of the group’s subsidiaries performed well for the month ended March 31, 2012.

Value Chain Analysis-Distinctive Competencies

The value chain analysis allows the firm to understand the part of its operations that creates value and those that do no. This is of utmost importance to any firm because these are what allow the firm to achieve above-average returns when the value created is greater than the costs incurred to create such value.

1. The management team has a solid reputation in the local market, the company has also inherited the personnel that worked at Guardian Asset management, as a result they have a strong team which is well known in the local market to execute task and bring forth successful results.

2. Proven Investment Limited has a first mover advantage with the new business model- They were the first to the market with the new business model. PIL is registered in St. Lucia where it enjoys a one percent (1%) corporate income tax rate and is the first company to be listed on the United States (US) Market of the Jamaica Stock Exchange ordinary shares. It also has preference shares listed on the main market in Jamaican dollars on the Jamaica Stock Exchange with a coupon of eight percent (8%)

3. Diversification of the Board of Directors for asset gain- The Company’s Board of directors comprises of professionals across the Caribbean who bring in a mix of independence and oversight. The diversification assists the company in achieving its objective of acquiring companies both internal and external to Jamaica.

Analysis of Corporate and Business Strategies

Proven Investment Limited business model manages a diverse number of businesses across the world and is similar to other international holding companies. Their main target is on viable high-quality fixed income instruments and equity in companies which yield above-average returns on investment. They have a tax-efficient structure which allows it to provide attractive returns to its shareholders and customers. Proven Investment strategy focus primarily on three revenue drivers which are:

Carry-Trade: Proven focuses on the investment of funds that they raised through the issuance of short to medium term debt instruments in a diversified portfolio of securities. It was through this that they raised US$2 million dollars with which they intend to fund private equity transactions in the Caribbean region. They fund their balance sheet through the issuance of secured structured notes and equity linked notes and also margin arrangements with brokers internationally. Such trade works best when there is low borrowing cost and undervalued asset. However the recent economic climate has been limiting the profitability of the carry-trade strategy.

Portfolio Positioning: PIL’s does this through diversification. The company is currently generating most of its revenue through the analysis of both global and regional markets to locate attractive investments opportunities. This could result in exposure to equity however because of the volatility in the equity market.

Private Equity: The Company targets equity positions in companies which have strong business models with potential for high levels of growth over the medium term. This strategy will be successful if management has the ability to identify them when they become available and have the necessary capital to purchase when they arise as well as the availability of the potential of the market environment in which the firm operates.

PIL has created a niche its experienced and knowledgeable management team is its major advantage, however the company will need to apply all the necessary marketing skills to become number one in the minds of investor’s. PIL has to realize that for any company to survive in a time of uncertainty they will need a strong brand and known image. The company should place its focus more on the private equity strategy to boost growth as the carry-trade and portfolio positioning could become risky and could expose the company in these economic climates. Finally the company is operating in weak economic environment and this can be advantageous because it provides an opportunity for the firm to purchase more under-value assets.

E. Problem Statement

The factors that drive the selection of alternatives are:

1. The company is faced with a reduced cash position- This is as a result of a decline in the cash in hand position of the company since 2011. The reduction could be because of the payments of both ordinary and preference dividends along with other short term debt obligations.

2. The company has insufficient brand awareness both locally and internationally- Because PIL is a relatively new company they are not well known and as such investors are reluctant to invest. The management needs to market the company both locally and internationally to create the brand and hence gain loyalty.

3. Limited access to capital market given weak global economy- The global inflation has made it extremely difficult for companies to survive. The weakening of the Jamaican dollar to the United States dollar has caused investors to be reluctant in investing especially in new companies.

4. Start-up company has low negotiating leverage. PIL is not losing market share currently; however they need to intensify their marketing efforts in order to remain the number one investment firm in the minds of investors. This is a very critical aspect in executing the strategy of diversification as having a strong brand image boosts above-average return especially in an uncertain economic climate.

The company already has plans to diversify their products across various industries and geographic location to include the tourism industry, education, health real estate and security to name a few as well as to get across the region in countries such as The Cayman Islands, Trinidad, Jamaica and Barbados. With proper marketing and the knowledgeable management team and diversified Board of Directors Proven Investment can remain the leader in the industry through the acquisition of assets such as equities and real estate which proves to be lucrative investment opportunities given current market trends.

F. Strategy Formulation: Alternatives and Evaluation

Strategic Alternatives

Proven Investment Ltd is currently faced with some problems which were identified in the previous section. These problems can be managed or contained if the following strategic alternatives are implemented.

Greater focus on Private-Equity

The company has stated that its primary business is the holding of tradable securities for investment purposes and that they will pursue private equity opportunities as they arise. However, the company needs to place a greater focus and adopt a more aggressive position towards its private equity strategies. The company as so far executed only three (3) private equity deals.

The company could consider looking at other private equity investments such as Infrastructure and Funds. Emerging markets are a lucrative place for this type of investment since there is a high demand for new infrastructure. Infrastructure private equity funds invest in public infrastructure (e.g. roads, bridges, airports, public transportation, etc.). Fund of Funds private equity allows for diversification since a fund of funds can invest in funds managed by the other top Private Equity firms across various sectors and geographies. The company should therefore allocate more resources towards this venture to boost the growth of the company

Diversification

The company recently ventured into the Real Estate industry with a company called Proven REIT Limited (PRL). However this company only has one property in its portfolio. PRL needs to move more aggressively to acquire more properties and build its portfolio. Recent trends in the local market such as falling interest rates have given rise to an increase demand for properties due to more affordable mortgages.

There is also an opportunity for the company to acquire properties in other regions especially the United States. These properties can be acquired at discounted rates due to the downturn the economy is currently facing. When the economy is back in full swing then the company will be able to benefit for the investments

Increased Marketing & Greater usage of its Human Resources

Proven Investment Limited currently has one of the most experienced set of managers in the industry. With this collection of experience the company needs to present itself to potential and current investors with innovative and attractive investment options to attract more customers. The management team needs to invest more in research. This research will enable the company to offer new products to investors with an opportunity to earn above average returns.

Alternative Evaluation

The alternatives presented above can provide the company with the opportunity to grow further. However, before these alternatives are implemented or adopted the benefits and risk associated with each must be examined.

The benefits to be derived from greater focus on Private-Equity include greater spread of risk, access to more investment. The drawback to this method is that private equity may not be able to maintain the level of returns as was forecasted and investments may take years to materialize.

The next alternative of diversification it provides the opportunity to explore new avenues of business. This can spread the risk allowing the organization to move into new and potentially profitable areas of operation there is also the potential to gain a foothold in an attractive industry and the reduction of overall business portfolio risk. On the other hand, however, it is associated with higher risks as it requires an organization to take on new experience and knowledge outside its existing markets and products. The organization may come across issues that it has never faced before. It may need additional investment or skills. The organization may also shift from its core function.

The final alternative which is increased marketing and greater usage of its human resources, the benefits to be derived from this alternative are that the company will be able to build a strong brand image for investors. Increased marketing will also increase the presence of the company in the marketplace. Consequently, if the managers are not able to use their expertise to attract new investment and provide above average returns investors will lose confidence in the company thus withdrawing their investments.

The most suitable strategy is that of increased focus on private equity investment. This strategy is the most suitable of the three because it is already a part of the company’s strategy but it is not focused on. The company already has the expertise in this area all they need is more diversification into other forms of private equity investments.

Strategy Implementation Recommendation

Proven Investment Limited (PIL) may experience some profit loss over the next five years due to the decisions being made by top level management. The company needs to re-strategize in order to prevent further losses and better use of its resources. The recommendations are stated in a timely manner of important changes that can be beneficial for the company.

Immediate Changes

Leadership Changes

Only having 5 directors may be cutting cost but it limits the possibility of new ideas, choosing better project options and the lengthy deliberation that is sometimes needed to make sure the better option is being chosen. Employing a few more Directors could bring the company fresh expertise advice that is needed.

Also they should form a nomination committee. As it stands the board has no policy that guides the directors and top management and this can be detrimental to company. Having accountability and knowing that there are repercussions for decisions and actions will help the board produce the best possible decisions for the benefit of not just themselves but for shareholders and customers.

Structural and cultural

With the acquisition of Guardian Asset Management (GAM), now Proven Wealth Limited (PWL), they inherited all staff members. GAM was in existence for many years and PIL is a fairly new company, therefore GAM employees would have developed their own culture of doing things. PIL needs to have temporary committee developed to align the strategies and knowhow of PIL with that of GAM employee body. This is imperative because the fact that PWL is where PIL generates most of its revenue and they are in direct contact with customers so strategies and goals must be prioritized and aligned.

PREIT which is the real estate division of PIL, could benefit from some structural changes. Since acquisition of this division only one property is owned and is generating income. PIL needs to invest in this division and explore the possible profitability of it. This division is being underutilized at the moment and needs a different management approach in order to acquire income generating properties.

Short Term Changes

Controls and Incentive

Forming the remuneration policy will benefit the company immensely. As it stands PIL does not have a policy and it is a requirement of the PSOJ Corporate Governance Code. Linking performance to incentives will aid it in producing the maximum performance for all employees, managers and directors. Setting quotas, performance evaluation and other performance based rewards are encouraged.

Functional Support Strategies

Developing support teams for the directors and VP’s can aid in the storming process of decision making. As it stands the Directors do not have teams. Assigning them to key areas, example Research and development, will give more insight in the decision process. VP Johann Heaven currently oversees R& D and Investment teams. He is the go to man for projects and investment for PIL but dividing the duties among others will give more diverse and clearer view in the options being decided upon.

Due to the competition that exists in the market PIL needs to identify public relations teams to get the campaign going to promote awareness of the company. Letting the public know its product offerings and contact information is key to PIL’s success and continued operation. There is a lack of knowledge about the company in the public and they need to get the team together so that strategies and execution plans can be implemented. Aggressive advertisement of their "Easy Own" brand has huge appeal to customers especially now where cash flow is limited for persons. They need to tailor the ad champagne to a younger customer base that is not able to afford cash purchases. This product is housed in the Asset Management Company Limited (AMCL) division and it allows customers to purchase furniture and appliances on hire purchase. It has the potential to generate much revenue for the division.

Long Term Changes

Resources Re-allocation

Since 50% of net profit goes to share holders dividends and 25% of net profit goes to Proven Management Limited’s (PML) management as performance remuneration, this only leaves about25% of net revenue as retained earnings. With this reduced earnings reinvestment needs to be precise and practical. Misuse of resource is not an option for PIL at this time as it is shown at year ending March 2012 that there is a reduction in net revenue of 15.4% and is experiencing a debt/equity ratio of 2:1.

The company wants to enter into new ventures but it is advised that they should utilize the divisions they already possess and see how they can maximize profits from each. With the limited resource opportunities currently being faced by PIL new ventures will deplete any leverage they currently have. As shown in the un-audited financial statements for period ended December 2012, AMCL had a 42% growth since period ended march 2012. This shows huge potential for the division and re-allocating resources here will only see further growth and huge profits. Advertisements, product packaging and lower interest rates than competing companies are the ways AMCL can utilize its resources to acquire top position in the market.

PREIT has also had revenue of US$ 21,562.00 for the same period. This revenue is just from a apartment complex in Kingston. There is huge growth potential in this division by branching out into other parishes. Retain Earnings and other resources can be allocated to this division where it can purchase low budget properties, refurbish and either sell at a profit or serve as rentals for long term income generators.

PIL prospects are great to grow and become a top competitor in the market place. They need to focus on the assets they currently have and use them efficient and effective to achieve the highest profit possible. Doing this will also let them see what they can what asset is not working in the best interest of the company and gives them a chance to get rid of them and make new acquisitions.