Home' Trinidad and Tobago Guardian : November 1st 2015 Contents NOVEMBER 1 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG11
Pan-Jamaican Investment Trust
Ltd (Pan-Jam) continues to rely
heavily on its ownership of 31.6
per cent of Sagicor Group
Jamaica Ltd to help it deliver
Let us examine how Pan-Jam performed
during the first half of 2015.
Changes in financial condition
Total assets advanced by 3.6 per cent to
J$27.37 billion from the December 2014 figure
of J$26.41 billion.
Cash and bank balances improved to J$64.8
million from J$44.3 million as at last Decem-
ber.The largest grouping, investments, expanded
to J$25.5 billion from J$24.87 billion. Here,
investments in associated companies rose to
J$17.67 billion from last December s J$17.13 bil-
lion. Investment properties advanced marginally
to J$5 billion from the previous level of J$4.91
billion. Meanwhile, investments in joint ventures
climbed to J$209.5 million from J$36.9 mil-
Financial assets at fair value through profit
and loss rose to J$529 million from J$452 million.
Available for sale securities increased to J$1.45
billion from J$1.42 billion.
Total of other assets climbed to J$1.8 billion
from J$1.5 billion. The major change was with
receivables and other assets, which advanced
to J$643.7 million from J$394.7 million.
Liabilities moved from J$5 billion to J$5.11
billion. Here we see payable and other liabilities
increasing to J$547.2 million from J$303.8 mil-
The largest component, bank and other
loans, fell marginally to J$4.27 billion from
Shareholders equity advanced to J$21.97
billion from the year-end figure of J$21.13 bil-
The largest component, retained earnings,
rose to J$13.13 billion from J$12.11 billion. This
reflects the period profit of J$1.39 billion, which
was then reduced by dividends paid of J$293.6
million and property revaluation gains of J$82
Investment and other reserves declined to
J$3.64 billion from J$3.93 billion. This decline
reflects negative comprehensive income of
With 213,231,978 shares outstanding, each
share had a book value of J$103.02 (December
Revenues and profits
Total income declined to J$1.02 billion from
J$1.08 billion for the six months to June 2014.
Three out of four income streams recorded
lower revenue levels.
Investments fell to J$192.8 million from last
year s J$258.5 million. The current quarter
exhibited growth, which moved from J$123.4
million to J$157.9 million. This was helped by
the conclusion of a real-estate investment in
The year-to-date period s lower results were
attributed to lower foreign exchange gains (half-
year 2015: J$31 million; half-year 2014: J$83
million) and reduced trading gains (half-year
2015: J$12 million; half-year 2014: J$37 mil-
Property income declined to J$677.4 million
from J$757.8 million. This reflects the fall of
occupancy levels to 85 per cent from 97 per
The decision of a large tenant to buy its lease
out negatively impacted the property segment
while it boosted the other segment; this resulted
in the latter s results moving from J$35.5 million
in 2014 to J$119.3 million in the current half-
Commissions declined to J$27.1 million from
Operating expenses rose by 5.3 per cent to
J$564.7 million from J$536.4 million for the
first half of 2014.
Finance costs were contained to J$200 million
and reflected a decline of J$74 million or 27
per cent from the J$274.1 million incurred for
the first six months of 2014.
This welcome reduction was helped by the
lower rate of devaluation of the Jamaican dollar
against the USA dollar together with the
reduced interest rates on a smaller average
principal balance outstanding. The first factor
helped the US$-denominated loan from the
International Finance Corporation (IFC).
This change helped shore up profits to J$251.9
million from 2014 s half-year J$270.2 million.
The largest contribution came from Pan-
Jam s share of results from associates and joint
ventures; this line item improved from 2014 s
J$911.9 million to J$1.23 billion in the current
half-year. This reflects an improvement of 35.3
The major contributor, Sagicor Jamaica, saw
its six-month results improve by J$289 million
or 31 per cent when compared with its 2014
contribution. In absolute terms, this represents
an improvement from J$905 million in 2014
to J$1.19 billion in the current half-year.
On the other hand, Hardware & Lumber s
half-year profits slipped to J$49 million from
J$69 million; although gross margins improved,
higher operating expenses and lower one-off
gains contributed to H&L s lower result.
Useful contributions were also made by New
Castle, Mavis Bank and Chukka Adventurers.
Resulting from these changes, pre-tax profit
rose to J$1.49 billion from J$1.18 billion recorded
for the first half of 2014.
After deducting tax of J$71.6 million and
allowing for minority interests of J$19.5 million,
profit attributable to shareholders registered
at J$1.39 billion; this represents an improvement
of 28.3 per cent or J$307.6 million over the
J$1.09 billion earned for half-year 2014.
This result translated into a current EPS of
J$6.54 versus J$5.10 for 2014.
The investment management segment
profit fell to J$40 million from last half-year s
J$136 million; this mainly reflects lower foreign
exchange and trading gains.
Boosting the investment segment s total
result was the share of results from associates
and joint ventures. Within this grouping is
lodged its ownership of Sagicor Jamaica,
which continues to be the major contributor
to its after-tax profits.
The fortunes of Pan-Jam continue to be
heavily dependent on Sagicor Jamaica s per-
formance, which have been good so far. In
the current half-year, the results of Sagicor
Jamaica alone accounted for more than 96
per cent of the share of results of associated
and joint venture companies.
Other useful, but less robust contributions
were made by New Castle (25 per cent own-
ership), Mavis Bank (50 per cent owned) and
Chukka Adventurers (20 per cent stake).
It is not clear if Pan-Jam will eventually
be able to make another investment of suf-
ficient magnitude that will mitigate its heavy
dependence on Sagicor Jamaica s fortunes
(both associate company profits and divi-
On the other hand, its primary source of
cash is the property management and rental
One of its associates, Caribe Hospitality Ltd,
is in the process of developing the planned
New Kingston Marriott Courtyard hotel.
Dividends and share price
During calendar 2014, Pan-Jam paid total
dividends of J$2.65. So far this year, they have
paid three dividends of J$0.70 each, totalling
J$2.10. It is a fair bet that the next dividend
will be higher and amount to at least J$0.75.
That would bring the total calendar 2015 div-
idend to J$2.85.
At that price and using the recent closing
price of J$79.91, the yield is 3.57 per cent.
Pan-Jam s share price closed at J$58.86 on
December 31, 2014. The price then fell to a
low of J$52.11 on February 2, 2015. By June 15,
2015, it has reached J$63.80, only to slip back
and drift for the next few months.
By October 12, 2015, the price closed at
J$62.61. And then, on October 19, 2015, it
seemed to have gained some life, closing at
J$70.57. By early last week, the price seemed
set to cross the J$80.00 barrier.
Is there any explanation for this sudden
surge in the share price?
Over the last couple of months, the Jamaican
Stock Exchange has moved up by almost 33
per cent as the main index soared from
107,676.10 on August 31, 2015 to 143,154.38 at
which it closed last Tuesday. This spurt has
been fuelled by the ongoing take-over activity
in relation to Desnoes & Geddes Ltd and, to
some extent, by the interest in the pending
change in ownership at H&L.
After June 30, 2015, Pan-Jam issued J$3 bil-
lion (about US$25 million) in secured bonds,
which are due in 2022. These funds were used
to pay off existing debt to the International
Finance Corporation (J$1,336 million) and
J$750 million of secured commercial notes,
which were due in July 2015.
With some extra funds at its disposal, is
Pan-Jam planning to make some new invest-
ments or simply improve its working capital?
Impact of change of majority
ownership at H&L Ltd
We recall that GraceKennedy Ltd is in the
final stages of selling its majority stake in
Hardware & Lumber Ltd, which, based on its
most recent advisory, should be completed by
the end of this year.
Does that move signal that other major
shareholders, like Pan-Jam, which has a 20.83
per cent stake, might also eventually be
approached to sell their shares?
At the very least, the new owners will prob-
ably want to streamline H&L s operations to
make it more consistently profitable. That
exercise should make Pan-Jam s stake (as well
as other shareholders ) more valuable.
Let us see how these events unfold in the
robust half-year results
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