Eppley earns record profit of $157 million, declares largest dividend in its history

Business

Eppley earns record profit of $157 million, declares largest dividend in its history

BY RICHARD BROWNE
Business editor
browner@jamaicaobserver.com

Wednesday, February 19, 2020

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Eppley Limited's 2019 results have shown record earnings of $157.7 million for the year, a 20 per cent return on the company's opening equity. The company has declared the largest dividend in its history at $0.57 per share.

At the end of the quarter, Eppley owned a $3.8-billion investment portfolio consisting of loans, leases, receivables, and investments in real estate and asset management joint ventures and subsidiaries, according to the quarterly report. The average income yield of its portfolio was 13 per cent, and its capital-at-risk was less than one per cent of capital.

The $157.7 million after-tax profit was significantly above the $120.5 million the company earned in 2018. The net interest income on its proprietary investments and the management fees from its funds both increased significantly, highlighting the continued improvement in the quality of the company's underlying business.

Additionally, Eppley earned $13.8 million of other comprehensive income last year, not included in the $157.7 million figure, mostly reflecting increases in the fair value of its investments.

“Key wins for Eppley this year include fully deploying the Caribbean Mezzanine Fund two years ahead of schedule and more than doubling the size of the Eppley Caribbean Property Fund with our JSE listing,” Nicholas Scott, managing director of Eppley told the Business Observer.

Eppley was listed in 2013 with an investment strategy of producing attractive risk-adjusted returns by identifying inefficiencies in Caribbean financial markets.

“Initially, we did so by investing in private credit in Jamaica using funds on our account. In 2016 we launched the Caribbean's first mezzanine credit fund in partnership with NCB Capital Markets,” Scott said.

“In 2018 we became the first junior market listed company to graduate to the main market of the JSE. More recently, we purchased the Eppley Caribbean Property Fund and cross-listed it on the JSE this summer —creating the largest listed real estate fund in the Caribbean,” Scott said.

“Since our listing in 2013, we've produced a compounded average annual return for our shareholders in excess of 30 per cent, consistently, for over six years. We've also distributed the vast majority of our earnings to shareholders in the form of cash dividends. Today, we manage an investment platform that controls more than US$100 million of capital and vehicles that together generate annual net profits in excess of $850 million a year,” he told the Business Observer.

EPPLEY CARIBBEAN

Coming on the back of those results, the company has launched the Eppley Caribbean Property Fund (ECPF).

ECPF is a real estate fund that was cross listed on the JSE in the summer.

“Since that time, we've deployed most of the listing proceeds and closed on all the immediate acquisitions disclosed in our prospectus. We plan on investing the remaining proceeds in the coming months,” Scott said.

“ECPF now owns one of the largest and highest-quality commercial real estate portfolios in the region, totalling over 500,000 square feet,” Scott said.

The fund owns properties in Barbados and Jamaica, including the Cave Sheperd Building, 24 Broad Street, Emerald City Mall, Alamac Warehouse, Sunset Mall, Chattel Village, Carlisle House and Hastings Office Centre in Barbados; along with Empire Shopping Centre, Angels Industrial Estate and 227 Marcus Garvey Drive in Jamaica. A total of 64 per cent of the fund's portfolio is in Barbados and 36 per cent in Jamaica. Categorised by type of business, 30 per cent of the properties are industrial, nine per cent office and 61 per cent retail.

“In September, a few months after the JSE listing, we marked the first full year of Eppley's management of the fund, which was previously run by Fortress Fund Managers for over 20 years. We also reported the highest net profit in the fund's history,” Scott said.

“In December, we declared an annual dividend more than double the previous year. In today's results, which cover the quarter ended December 31, 2019, we produced over 80 per cent increases in net rental income, funds from operations, and earnings.”


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