Mayberry's subsidiary drags on consolidated profit
Company sheds further interest in St Lucian IBCWednesday, April 07, 2021
BY DAVID ROSE
Although Mayberry Investments Limited's (MIL's) stand-alone net profit rose by 84 per cent to $499.6 million, the US $8.1 million ($1.2 billion) net loss from its Mayberry Jamaican Equities Limited (MJE) subsidiary sent its $709.6 million consolidated net profit attributable to shareholders into a $352.9-million loss for the 2020 financial year (FY).
The 35-year-old brokerage firm fared generally better in 2020 as deal flow evaporated and a depressed equity market constrained opportunity usually available in a previously buoyant business environment.
Consulting fees and commissions which represent a large portion of the firm's general business dipped by 52 per cent to $350.7 million as several deals were delayed due to the COVID-19 pandemic. MIL was only able to list Caribbean Assurance Brokers (CAB) in the first quarter before its other publicly known clients decided on not going public.
Dividend income fell by 11 per cent to $338.6 million which reflects the decline from its major equity holdings including Supreme Ventures Limited (SVL) which reduced its third-quarter dividend drastically but still contributed US$2 million ($290 million) during the year. SVL paid out a $0.28 dividend this month with MJE expected to net $112.5 million in income from the payout.
Net trading gains, net interest income and unrealised gains on other assets all registered significant increases during the year with net foreign exchange gains and other income declining marginally.
Net unrealised losses from revaluation of assets through profit and loss was $1.15 billion compared to a gain of $890 million in the prior FY. The bulk of these losses can be attributed to MJE which had a US 8.5 million ($1.24 billion) revaluation loss while MIL as a company saw a $61.5-million gain in the year.
The Jamaican equity market declined by 22 per cent with its SVL holding which makes up 52 per cent of its equity holdings declining by 31 per cent.
Even with its employee base declining to 114 from 139 in the prior FY, MIL's staff costs only declined by 1 per cent to $652.1 million while other operating expenses fell by 26 per cent to $837.3 million as the company reducing costs across the business.
Due to a tax credit, MIL's consolidated net loss came up to $698.8 million with earnings per share closing out the period at negative $0.29 versus a positive $0.59 in the prior year. The group's net book value declined from $12.86 to $9.66 mainly from the reduced value of investment securities and reduction in reverse repurchase agreements.
Mayberry's asset base dropped by 13 per cent to $32.2 billion while total liabilities rose by 1 per cent to $16.8 billion. Equity attributable to shareholders declined by 25 per cent mainly due to the reduction in retained earnings and fair value reserves.
MIL REDUCED MJE STAKE
After listing its St Lucian International Business Company (IBC) in July 2018, MIL has continued to sell its MJE stake which decreased from 72 per cent to 68 per cent in the current FY. This move reduced its exposure and controlling interest for MJE's losses during the year. This was mainly done after MIL collected its dividend payout in June from the subsidiary.
MJE managed to keep its fair value coverage above the 1.75 mark for its $2.2-billion bond as its equities held up to give a value of 4.41. MJE expanded its holdings in 2020 which included GraceKennedy which has increased in price by 31 per cent since 2021 started.
The company has also been actively divesting its Derrimon Trading Limited stake as its builds up its cash reserves.
“The cash position of the group has increased substantially from $1.59 billion to $1.63 billion which positions the group to take advantage of market opportunities. It is anticipated that the general economic challenges caused by the impact of COVID-19 will continue in the near term until the vaccine is widely available in key source markets, which will significantly boost economic activity. The global outlook remains positive, as near-term expectations points to economic activity strengthening in the second half of 2021 and beyond. Despite the economic challenges for Jamaica in the near term, especially given our high dependence on tourism, we remain confident that the country is well poised for recovery and growth in the medium to long-term,” the shareholder report stated.
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