Mon | Feb 18, 2019

1834 Investments sees six-fold profit increase

Published:Monday | December 10, 2018 | 12:00 AM

1834 Investments Limited, the company into which The Gleaner Company Limited reconfigured itself after the 2016 spin-off of its media assets to Radio Jamaica Limited, returned a near six-fold increase in its profit, to J$81.9 million, or 6.76 cents a share, for the financial year that ended March 2018, the company told shareholders at its recently concluded annual general meeting on November 28. Its net profit for the previous year was J$12.3 million, or 1.02 cents a share.

The company paid a dividend of eight cents a share, or a total of J$97 million to shareholders, during the financial year, providing a dividend yield of seven per cent.

1834 has emerged as an investment management company, with a portfolio of over J$1.3 billion, of which 57 per cent is real estate and the remainder in bonds, equities, cash, and near liquid instruments. It has total assets of J$1.75 billion, almost all of which, given its near total absence of long-term debt, represents shareholders' equity.

The year's return was despite a J$38 million, or 19 per cent fall in revenue, to J$161 million, which its managers attributed to a decline in local interest rates, two early US dollar bond redemptions by the issuers, and a comparative reduction in gains from the sale of assets from the prior year.

At the same time, 1834's expenses increased by 12 per cent, to J$117 million, largely because of a one-off charge of $30 million for the early termination of a long-term agreement with Radio Jamaica Limited to provide office space to the media group in Toronto, Canada, and Montego Bay, where the associated buildings have either been sold or are up for sale.

The upshot was that its profit on operations, at J$44.1 million, represented a decline of 52 per cent but was bolstered by a $53 million, or more than 400 per cent jump in profit from its 50 per cent share of a real estate holding company ... . Additionally, 1834's tax obligation, at approximately $90 million in 2017, declined to J$15.2 million for the 2018 financial year.

Oliver Clarke, 1834's chairman, told shareholders at the company's recent annual general meeting that consequent upon the transfer of the media business to Radio Jamaica Limited, the company was continuing a clean-up of its balance sheet, including hard looks at properties that weren't delivering attractive returns.

"We're in the process of cleaning those up while looking for other opportunities," he said.

In the company's annual report, Clarke reported that the broad portfolio continued to perform well in part because of the quality and diversity of the assets that it holds.

"Your local investments benefited from the stable macroeconomic climate and improved business confidence despite the sharp drop in short-term interest rates. Overseas, capital markets provided favourable conditions for the growth of your US-denominated equities, and your fixed-income portfolio continued to generate stable cash flow."