Tuesday 10 December, 2019

1834 Investments gains from foreign currency assets

Oliver Clarke, Chairman of 1834 Investments.

Oliver Clarke, Chairman of 1834 Investments.

During the six months ended September 30, 2019, unaudited results indicate that 1834 investments Limited continued to earn more from foreign currency assets, disposal of investments and revaluation of investments, than from its core operations.

Net profits climbed 35 per cent, year over year.

1834 Investments is an investment management company which evolved as a result of the March 2016 merger of the media operations of the former Gleaner Company Limited with Radio Jamaica Limited (RJR). The Gleaner Company Limited officially changed its name to 1834 Investments Limited on March 10, 2016.

The company’s main activity is the management of its real estate, bond and equity portfolios, and the management of its joint venture and subsidiary companies.

It generates revenue from interest and dividends paid on corporate bond and equity holdings, as well as rent on commercial real estate assets, loans and other income-generating contracts.

In 2019, net profit for the first six months to September increased by 35 per cent to $34.88 million, compared to $25.68 million for the first six months in 2018.

Net profit for the second quarter was $16.54 million compared to $ 14.33 million in 2018.

While directors have noted the impact of the ongoing declines in interest rates, revenue from core operations of $12.65 million was one-third higher than the similar quarter ending September 2018.

Over the period under review, the company also received more from the foreign currency gains, sale and revaluation of investments, with this amounting to $63.91 million compared to $35.79 million in the similar period in 2018.

Currently, the company is disputing a Tax Administration Jamaica Assessment. It is noted in the report for the period that as of September 30, 2019, the company had a potential tax liability of $63 million arising from an assessment by the TAJ for the year of assessment 2010.

Notes to the financials stated, “The company has disputed the assessment. It is possible that the company's financial results could be impacted by the final outcome.”

Otherwise, directors disclosed that the company, since the start of the year has sold its NROCC bond and units in the Pension’s Property Investment Trust in order to settle funds owed as a result of the discontinuation of a defined benefit pension scheme.

The financial statements indicate that $75 million, which was due to the group arising from the discontinuation of the defined-benefit pension fund was used to settle the obligation.

As at March 31, 2019, four subsidiaries were legally dissolved. These included 1834 Investments (Canada) Inc., digjamaica.com Limited, Popular Printers Limited and Associated Enterprise Limited.

These subsidiaries were former media entities, which became dormant after the 2016 media amalgamation exercise.

The 2018/19 group financial results reflected a one-time gain of $59 million as a result of these closeouts.

The winding-up process for the remaining dormant subsidiary, Selectco Publications Limited is underway.

The group has a 50 per cent shareholding in a real estate investment company, Jamaica Joint Venture Investment Company Limited (JJVI). Share of profit from the company for the period was $4 million.

The annual report for the period ended June 2019 notes that the company is capitalised with over $500 million in cash and liquid investments and has zero long-term debt.

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