Mayberry Jamaican Equities Limited (MJE) recorded its best net profit on record of US$16.45 million ($2.55 billion) compared to the net loss of US$28.63 million in 2020, due to the performance of its associate company Caribbean Producers Jamaica Limited (CPJ), which rose by 405 per cent and contributed US$14.33 million to unrealised gains at fair value through profit or loss (FVTPL).

CPJ was one of the four companies that was reclassified as associates due to a change in MJE’s accounting policy. This was due to the company’s material proportion in the associates along with influence it exudes while not having control. Though associates are typically accounted for under the equity method as per International Accounting Standards (IAS) 28, MJE elected to be exempt from that requirement and measure the securities at FVTPL. This resulted in the last two financial years (2020 and 2019) being restated through their new auditors PricewaterhouseCoopers.

MJE is an investment company with an objective to achieve long-term capital appreciation and preserving capital by investing in stocks listed on the Jamaica Stock Exchange (JSE). The financial assets are held to collect contractual cash flow. The other three companies designated as associates included Lasco Financial Services Limited (LASF), IronRock Insurance Company Limited and Supreme Ventures Limited.

“Well, how we ended up owning CPJ was our research department did a slide on industries that consistently grow over time. What we discovered was that the tourism and hospitality industry in Jamaica is a consistent grower over the last 25 years, through thick and thin, they find a way to grow. Already, we’re hearing from the hoteliers that they expect to exceed 2019 numbers with some already passing that and others by this summer,” stated executive chairman of MJE Christopher Berry at the investor briefing on Monday.

MJE’s dividend income grew by 14 per cent to US$2.58 million with SVL contributing US$2.2 million of that income. MJE’s operating income amounted to US$18.47 million relative to the US$27.95 million operating loss in 2020 driven by the novel coronavirus pandemic. The company’s operating expenses nearly doubled to US$2.01 million due to contract termination fees and amortisation of the intangible assets arising from a computer application. Despite the positive improvements on the top line, the company’s other comprehensive income area declined due to the foreign currency translation adjustments line added with the change in accounting for its associates. This meant no incentive fees to its asset manager.

With the Government of Jamaica no longer imposing severe restrictions on businesses, CEO of Mayberry Investments Limited (MIL) Gary Peart believes that SVL will take off this year as the company’s various investments come to fruition. This includes the agreement with Carreras which will give it reach to an additional 10,000 distribution points and will allow the company to sell more products from manufacturers they will be partnering with in short order. This includes cigarettes, phone chargers and little solar panels.

“SVL right now probably has the potential to be one of the best-performing businesses in this hemisphere. You know when you have a coil spring which has been depressed and depressed; I think this is the year for SVL’s spring to pop out and we’ll see what happens. I think we’re going to be very surprised by Caymanas this year because we believe we have the code there. I think by October people will start to understand the potential of SVL,” said Peart, who is also the executive chairman of SVL.

MJE’s net asset value increased to US$0.08 ($12.46) which is still far from the closing price of $9.01 at the end of 2021. While the company’s discount continues to be evident, Berry believed now is the best time to be investing as MJE’s 34 company portfolio rebounds in the first four months of 2022. MJE’s investment portfolio stands at US$117.08 million ($18.16 billion).

To fund this additional growth, MJE received a 6.80 per cent promissory note from MIL for $1.2 billion (US$7.95 million) to invest in additional equities during the quarter. MJE prepaid US$1.33 million on the note which matures in September 2026 and has quarterly interest payments. MIL funded this promissory note through the sale of 10.73 per cent or $1.16 billion worth of MJE on August 20 to four connected parties. This resulted in MIL’s stake decreasing to 59.78 per cent by the end of 2021 relative to the 75 per cent stake they held at the end of 2018. MIL sold another 8.33 per cent or $900 million worth of MJE on Tuesday while the stock hit a 52-week high of $10.90.

While Berry didn’t pre-empt the audience about any upcoming purchases, he defended the decision to decrease MJE’s stake in Caribbean Cement Company Limited (CCC) during the fourth quarter (October – December) and reinvest the funs elsewhere. MJE sold 3,838,136 shares of CCC in Q4 which resulted in it no longer being the largest Jamaican entity in the Mexican-controlled business.