Business Objective
Mayberry Jamaican Equities Limited (MJE) is an investment Company whose objective is to achieve long term capital appreciation, while preserving capital, by investing in public equity securities in Jamaica (“Jamaican equities”). The Company employs a value – based approach to identifying and investing in high quality public businesses.
This approach is designed to compound book value per share over the long term. While the Company will seek attractive risk-adjusted returns, it will at all times seek downside protection and attempt to minimize loss of capital.
Performance Overview
The year was marked by high inflation, global conflicts and the tightening of monetary policies which resulted in increases in interest rates and a challenging financial landscape both locally and globally. Q4 2022 market conditions reflected continued moderate improvements and the local financial environment remained resilient compared to global counterparts.
For the year ended December 31, 2022, MJE reported profits of J$5.1 billion representing an increase of J$2.6 billion or 104% over the corresponding period in 2021. The pull back in the local equities market beginning in the third quarter of 2022 adversely impacted MJE’s half year results but several strategic stocks in the portfolio rebounded in the fourth quarter buttressing the full year’s solid performance with net unrealised gains on investments in associates increasing by J$2.7B or 105% to J$5.2 billion. This was complemented by dividend income increasing by 41% or J$160M to J$549
million. Full year earnings per share (EPS) was J$4.21 (2021: (EPS) J$2.06).
For the three months to December 31, 2022, the Company recorded a decline in net profits of J$921 million or 50% to J$911 million when compared to the J$1.8 billion earned in the similar quarter last year. This reduction is due primarily to the more significant uplift in the market and stock prices in 2021 arising from the recovery from the COVID-19 pandemic in 2020. Total operating expenses for the quarter ended December 31, 2022 increased by J$49 million to J$235 million when compared to the comparative period in the prior year. This resulted in earnings per share (EPS) of J$0.76 (2021: (EPS) J$1.52).
Total Comprehensive Income
MJE reported total comprehensive income of J$4.8 billion for the year ended December 31, 2022 representing an increase of 53% or J$1.7 billion due to solid overall performances on the managed Jamaican equities portfolio. The Company recorded total comprehensive income of J$891 million for the three-month period October to December 2022. This compares to a total comprehensive income of J$1.4 billion for the similar quarter in 2021.
The decrease noted was primarily attributable to unfavourable price movements on securities in the portfolio for the December 2022 quarter which can be attributable to increases in interest rates in the economy and a number of fixed income instruments coming to the market.
Total Revenues
Net revenues generated for the year ended December 31, 2022 increased by 99% or J$2.8 billion to J$5.5 billion attributed primarily to the significant appreciation in the market value of investments in associates.
For the quarter ended December 31, 2022, net revenues amounted to J$1.1 billion compared to net revenues of J$2 billion for the similar quarter in 2021.
This performance was primarily attributable to reduced unrealized gains on investments in associates of J$827 million. For the year ended December 31, 2022, dividend income grew by J$160M or 41% to J$549 million when compared to J$389 million for the 2021 comparative period. Dividend income of J$95.8 million was recorded in the quarter representing a marginal decline of 1.3% compared to J$97 million for the October to December 2021 quarter.
The largest contributors to the portfolio’s dividend revenues for the quarter were Supreme Ventures Limited, Jamaica Broilers Group Limited and General Accident Insurance Company Jamaica Limited with dividends of approximately J$83 million. For the year ended December 31, 2022, the major contributors to dividend revenues were Supreme Ventures Limited, GraceKennedy Limited, Jamaica Broilers Group Limited, Lasco Distributors Limited and Lumber Depot Limited.
Operating Expenses
Total operating expenses of J$492 million for the year ended December 31, 2022 increased by J$185 million or 61% over the corresponding 2021 period driven mainly by increased expenses incurred for management and incentive fees following the significant growth in the net asset value under management.
Total operating expenses for the Q4 2022 increased by J$49 million when compared to Q4 2021. This was mainly attributable to higher expenditure for broker fees, legal and professional fees and incentive fees. This was partially offset by reduced expenses for computer licensing fees and software impairment.
For more information click this link: Mayberry Jamaican Equities Limited (MJE) Unaudited Financial Results For The Twelve Months Ended December 31, 2022