Stephen B. Facey Chairman For Pan Jamaica Group Limited Has Released The Following Chairman’s Statement For The Six Months Ended 30 June 2023
Pan Jamaica Group Limited (“PJG” or the “Group”) earned consolidated net profits of $1.4 billion for the three months ended 30 June, 2023 (the “Second Quarter”).
Second Quarter profit attributable to shareholders was $1.1 billion, a significant increase compared to $694 million during the same period in the previous year.
The Second Quarter result was generated from revenues of $9 billion relative to revenues of $489 million for the comparative period in the prior year.
The notable shift in the Group’s earnings trajectory in the Second Quarter can be attributed to the successful amalgamation of the operating businesses of Jamaica Producers Group Limited with PanJam Investment Limited (“PanJam”). PanJam has since been renamed the Pan Jamaica Group Limited.
The amalgamation became effective on 1 April 2023. As a result, the earnings profile in the Second Quarter is markedly different from the comparative period in the prior year. PJG, a multinational conglomerate boasting a diverse investment portfolio, has now strategically organized its operational structure into distinct segments, namely Property and Infrastructure, Financial Services, Speciality Foods, and Global Services.
For the six months ended 30 June 2023 (the “First Half”), PJG achieved net profits attributable to shareholders of $1.1 billion. This result reflects the additional income arising from the amalgamation but is partially offset by investment losses and significant transaction costs incurred by PanJam in connection with the amalgamation.
Property & Infrastructure
The Property & Infrastructure Division (the “P&I Division”) is one of the foremost commercial property owners in Jamaica and over its long history has developed and curated a premium real estate portfolio, primarily situated in Kingston.
In addition to Jamaica Property Limited, which handles commercial property rentals and management, the P&I Division encompasses an array of interests including ROK Hotel Kingston (Tapestry Collection by Hilton), Caribe (Courtyard by Marriott Hotel), Williams Offices (holder of the regional franchise for Regus), and Capital Infrastructure Group, which is engaged in regional infrastructure projects.
The P&I Division generated profit before finance cost and taxation of $608 million from revenues of $1.9 billion in the First Half, an increase of 217% relative to the comparable period in 2022. PJG property and infrastructure business is, in general, delivering attractive returns to shareholders under current economic conditions.
“Sagicor is the largest single investment within PJG”
Financial Services
The Financial Services Division (the “FS Division”) reported a profit before finance cost and taxation of $1.7 billion in the First Half, an increase of 66% relative to the restated comparable period in 2022. The division performed well but aspects of the portfolio were affected by weakness in certain financial asset markets arising from high interest rates and market volatility. Divisional performance reflected the change, effective this year, in the accounting treatment for insurance contracts under IFRS 17. This change also resulted in a prior year re-statement.
In addition to Sagicor Group Jamaica Limited (“Sagicor”), the FS Division also includes Term Finance (Jamaica) Limited. Sagicor is the largest single investment within PJG, with operations in Jamaica, Cayman Islands, and Costa Rica. Sagicor is the leading life and health insurer and pension fund manager in Jamaica. It also operates the largest local unit trust and has operations in investment banking, commercial banking, general insurance, and remittances.
“The Speciality Foods Division Is the largest contributor to the revenues of the Group”
Speciality Foods
The Speciality Foods Division (the “SF Division”) is the largest contributor to the revenues of the Group.
The SF Division earned revenues in the First Half of $9.5 billion with profit before finance cost and taxation for the Division of $223 million. The SF Division comprises our portfolio of subsidiaries that are engaged in farming and food processing. The SF Division operates modern food production sites in Europe and the Caribbean and a distribution centre in the United States. Our range of speciality food and drink products includes fresh juices in Europe (the “JP Juice Group”) and tropical snacks, fresh fruit, water products and Caribbean spirit-based baked goods in the Caribbean (the “Caribbean Food Group”).
The JP Juice Group, which comprises our juice production facilities in Holland, Spain and Belgium, is the largest contributor to the revenues and profits of the SF Division. This business is a market leader in fresh juice in Northern Europe, and through its subsidiaries, produces fresh juice for major supermarket and food service entities in the Netherlands, Belgium, Scandinavia, Switzerland and Italy, and operates a joint venture fresh juice manufacturer in Spain.
The Caribbean Food Group, the smaller part of the SF Division, is comprised of our food production and distribution entities in the Americas.
“The GS Division accounts for a significant share of the Group’s net assets and, in turn, its profits.”
Global Services
The Global Services Division (the “GS Division”) is a diversified, multinational logistics group with interests in business processing outsourcing and tourist attractions. The GS Division accounts for a significant share of the Group’s net assets and, in turn, its profits.
The GS Division includes our interests in port terminal operations, warehousing and third-party logistics services (Kingston Wharves), freight consolidation and freight forwarding from the UK and the USA (JP Logistics Solutions) and shipping line services to and from Europe, the Caribbean and South America (Geest Line). The Group’s logistics services all have a Caribbean connection but collectively serve a wide range of global markets.
The GS Division also includes associate company interests in Outsourcing Management Limited, better known as “itel” (a regional customer experience provider, with operations in Jamaica, Belize, Colombia, Guyana, Honduras, St. Lucia and the United States) and Chukka Caribbean Adventures Limited (regional operator of tourism attractions with facilities in Jamaica, the Turks and Caicos, Belize, the Dominican Republic and Barbados).
The GS Division earned profit before finance cost and taxation for the First Half of $1.9 billion, on divisional revenues of $5.6 billion. The major share of the earnings arose from businesses that were transferred to the Group in the Second Quarter, in connection with the amalgamation of PanJam with the businesses of JP.
Outlook
In November 2022, PanJam entered into an agreement with JP that resulted in JP transferring its core operating businesses to PanJam in exchange for a 34.5% interest in PanJam. The transaction was completed at the beginning of the Second Quarter, and the combined enterprise was renamed Pan Jamaica Group Limited.
We are convinced that the strength of the two business enterprises now operating as one will significantly enhance shareholder returns through growth within select major lines of business and a stronger platform and capital base for business development and acquisition-led growth.
2023 will naturally be a transition year in which the Pan Jamaica Group will combine and refocus the management and operations of the enterprise and account for transaction costs associated with the deal.
Looking forward, we expect that the combined entity will benefit from the diverse portfolio of businesses that now include food and drink and logistics and infrastructure alongside property and investments in market-leading firms in financial services, hotels and attractions, and business process outsourcing.
There will also be an important opportunity to rationalize the portfolio of interests over time, in order to focus our resources on those businesses that give us a competitive advantage and scale and can generate the highest returns for shareholders.
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