Mon | Apr 23, 2018

JSE doubles earnings, adopts new valuation model for fixed assets

Published:Friday | July 22, 2016 | 12:00 AM

The earnings of Jamaica Stock Exchange Group (JSE Group) doubled in the June second quarter but the market discounted the stock by six per cent on the same day the results were released.

The group posted net profit of $32 million for the three months ending June 2016, or 113 per cent higher year on year. The profit for six months totalled $157.7 million, or $1.12 per share, which was 54 per cent higher year on year.

The stock trades at roughly $22 or about 10 times its earnings. The stock lost 6.57 per cent to close at $22.03 on Wednesday on trading volumes of roughly 29,500 units. The price was unchanged on Thursday.

"The JSE Group continues to reap the benefit for its diversification strategies as demonstrated in the group's second-quarter positive performance in which fee income increased by $44 million over the corresponding period in 2015," stated the financials released on Wednesday.

It signals continued growth of the market which led gains among 92 global markets in 2015. Additionally, the second half of the year remains favourable in outlook.

"The group will continue in the medium to long term to pursue a strategic path of growth through the promotion of new and existing markets, new product development and the continuous improvement of service delivery to the group's customers and stakeholders," stated the report.

JSE Group assets totalled $911 million up 11.6 per cent year on year. Its total equity increased six per cent to $708 million in the quarter.

On Thursday, the exchange reported that in the company period its total assets would increase by $141 million due to a switch in accounting policy from the 'cost model' to the 'revaluation model' to value land and buildings. The estimate is based on a valuation done in June.

The policy change was approved by the JSE board on July 20 and will be reflected in the next financial statements.

JSE Group said the cost and revaluation models are both compliant with IAS 16-Plant Property & Equipment, but that it chose to switch to the latter as it "is considered best practice for listed companies and will, in the board's opinion, present a more realistic view of the JSE's assets, liabilities and equity".

"A Revaluation Surplus Reserve, which will form a part of shareholders equity, will also be created in the same amount and both will be reflected in the JSE's financial statements for July 2016 onward and quarterly reports from September 2016 onward."