Pan Jam near doubles profit

Pan Jam near doubles profit

Wednesday, May 28, 2014

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REAL-ESTATE conglomerate Pan-Jamaican Investment Trust Limited (Pan Jam) nearly doubled its Marchfirst-quarter net profit to $441 million due to currency gains and the performance of its associated company Sagicor Life Jamaica.

"Performance for the quarter was impacted most notably by an increase of $119 million in our share of results of associated and joint venture companies and lower finance costs of $51 million," stated president Stephen Facey in notes accompanying the financials released to the Jamaica Stock Exchange this week.

Pan-Jam holds shareholding in companies in property development, tourism, insurance, banking, manufacturing, retail, trade, financial services and investment. Revenues increased 12 per cent to $536 million in part due to currency investments.

"We remain in a net long position in US dollars to ensure that our stockholders' equity is appropriately protected against devaluation risk," stated Facey in the notes.

As such, foreign exchange gains on its US dollar investments and realised trading gains aided the 18 per cent increase in the group's operating profit to $273 million.

Concurrently, finance costs declined by $51 million to $143 million for the quarter, resulting from reduced devaluation against the US dollar year on year.

"Last year's first quarter devaluation of 6.0 per cent cost $108 million, compared to this year's first quarter devaluation of 3.0 per cent which cost $51 million," stated the financials.

Pan Jam's share of earnings from Sagicor increased by $155 million to $349 million. Sagicor's first quarter 2014 results reflected strong revenues, favourable benefits experience and containment of expenses, according to Pan Jam.

Hardware & Lumber, of which Pan Jam holds an interest, reported net earnings of $40 million for the 1st quarter, compared to $10 million for the same period last year,
"continuing their impressive turnaround".

"Weak results from Chukka, principally cost-related, and Mavis Bank, due to a significantly reduced coffee crop, partially offset the improved Sagicor and H&L results," stated Pan Jam.

Pan Jam holds 32.8 per cent of Sagicor; 20 per cent in Chukka Caribbean Adventures Limited, an attractions tour; 35 per cent stake in Caribe Hospitality Jamaica Limited, a property development company; and 50 per cent holding in Mavis Bank Coffee Factory Limited. The Mavis Bank operation is held under parent company New Castle (which includes sauce brands Walkerswood,Jamaica Joe and Busha Browne).

Pan-Jam's total assets amount to $23.5 billion with relatively minimal liabilities up to March 31, which resulted in total equity of J$18.6 billion.

The conglomerate enjoyed property occupancy levels exceeding 97 per cent for the first quarter, a slight increase compared to last year, while segment operating profit of $181 million for the quarter was in line with last year.

The company continues with its construction of its Courtyard/Marriott Hotel project in New Kingston. Facey previously criticised the Government for the delays in granting approval for the hotel.

"We note with interest the establishment of a centralised system to track building approval applications at the parish council level, which will hopefully remove some of the lengthy delays in approvals," stated Facey in
the financials.

Facey, however, expressed concern on the 381 megawatt (MW) liquefied natural gas project, deemed a necessary component in reducing the island's energy bill.

"We remain concerned with the continued uncertainty relative to the new 381 megawatt power plant, and look forward to a new, transparent and effective process for the execution of this crucial initiative,"
he stated.

Earlier this month, former technocrat Vin Lawrence resurfaced to head an enterprise team to oversee the power project. The project was taken from energy minister Philip Paulwell after sections of society called for his resignation following his handling of the bid and licensing phases of the power plant.

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