PanJam Investment Limited boasts a long track record of consistent and growing profits based on a diversified portfolio of investments.
The second quarter’s highlights are:
Net profit attributable to shareholders of $929 million (2016: $867 million) for the quarter and $1,759 million (2016: $1,589 million) for the six months
Return (annualized) on opening equity of 14% (2016: 15%)
Earnings per stock unit of $0.88 (2016: $0.83) for the quarter and $1.67 (2016: $1.50) for the six months
Book value per stock unit of $25.90 at June 30, 2017 (December 31, 2016: $24.43)
Ordinary dividends of $0.40 declared and paid through June 30, 2017 (2016: $0.30)
Our net profit for the six-month period ended June 30, 2017 is 11% higher than the comparable period last year, largely resulting from stronger share of results of associated and joint venture companies, led by Sagicor, and improved property results.
The Group has changed how it accounts for its 50% shareholding in Kingchurch Property Holdings Limited (“Kingchurch”) from a joint venture, which is on an equity accounting basis, to a joint operation, in which the group recognizes its proportional share of revenue, expenses, assets and liabilities. The comparative quarter of 2016 has been restated accordingly. This restatement does not affect either the net profit or the net book value of the group, though it changes the amounts appearing on some line items on both the consolidated income statement and the consolidated statement of financial position.
Net profit attributable to shareholders for the quarter ended June 30, 2017 amounted to $929 million (2016: $867 million), an increase of 7%. Earnings per stock unit were $0.88 (2016: $0.83). Net profit attributable to shareholders for the six months ended June 30, 2017 amounted to $1,759 million, compared to $1,589 million for 2016, an increase of 11%, equivalent to basic earnings per stock unit of $1.67 compared to $1.50 for 2016.
Performance for the quarter was influenced positively by increases of $175 million in our share of results of associated and joint venture companies and $66 million in property income, which offset declines of $95 million in investment income and $24 million in other income. Performance for the year to date was influenced positively by increases of $399 million in our share of results of associated and joint venture companies and $123 million in property income, which offset declines of $34 million in investment income and $19 million in other income. Prior year results also included a one-time gain of $185 million from the divestment of our stake in Hardware & Lumber Limited.
Group operating profit declined for the quarter and year to date by $105 million and $24 million respectively compared to 2016. The aforementioned improvement in property income was more than offset by lower investment and other income, as well as increases in operating expenses of $52 million for the quarter and $91 million for the year to date.
Property income improved during 2017 due to increases to rental income, net lease income and property revaluation gains. Investment income declined due to a shift from foreign exchange gains in 2016 to losses in the current year as well as lower unrealised gains, partially offset by improved realized gains and the absence of impairment charges during 2017. Other income is lower as 2016 included one-time fee income related to Kingchurch, our investment in the redevelopment of the former Oceana building. Operating expenses have increased due mainly to higher electricity rates and earlier accrual of certain staff-related expenses.
Associated and Joint Venture Companies
The results of associated companies consisted principally of our 32% investment in Sagicor. We also hold minority positions in New Castle Company Limited (“Newcastle”, owners of the Walkerswood and Busha Browne lines of sauces and seasonings), Caribe Hospitality of Jamaica Limited (“Caribe”, owners of the New Kingston Courtyard Marriott Hotel) and Chukka Caribbean Adventures (“Chukka”).
During 2016, our associated companies also included Hardware & Lumber Limited and Mavis Bank Coffee Factory, the former having been divested in the first quarter of 2016 and the latter in the third quarter.
Our share of results of associated and joint venture companies increased for the quarter by $175 million to $1,033 million (2016: $858 million) and for the six-month period by $399 million to $1,851 million (2016: $1,452 million). Our share of earnings from Sagicor for the period increased by $425 million (32%) to $1,766 million. Sagicor’s half year results reflect strong performances in its insurance and annuities businesses. Newcastle, Chukka and Caribe performed satisfactorily during the period.
Total assets at June 30, 2017 amounted to $36.1 billion, compared to $32.4 billion at December 31, 2016. Stockholders’ equity increased to $27.2 billion (December 31, 2016: $25.7 billion), which equates to a book value per stock unit of $25.90 (December 31, 2016: $24.43).
Underlying the continued improvement of our local stock market are corporate profits, which have generally shown consistent real improvement in recent years. This is tangible evidence of the positive shift in the economic landscape of Jamaica.
We are heartened by this and continue to seek additional opportunities to invest in Jamaica. It is our belief that the upward trend will continue, so long as our government maintains its commitment to meeting quantitative and structural targets while focusing even harder on solutions to the crime issue and the removal of inefficiency in our public institutions.