1834 posts small profit for period ended March 2016 ... completes divestment of Gleaner media operations
The successor to The Gleaner Company Limited, 1834 Investments Limited (1834), reported year-end profits of $7 million against the $181 million it returned in 2014 before the merger of its media assets with those of Radio Jamaica Limited (RJR).
1834 would have made a profit of $282 million were it not for a loss of $275 million incurred on its discontinued media operations for the 15-month period to March 2016.
In March of this year, 1834 closed on a historic media merger with RJR, which saw its former media subsidiary, The Gleaner Company (Media) Limited, acquired by RJR in exchange for RJR shares distributed to 1834 shareholders. 1834's remaining non-media operations generated revenues of approximately $205 million over the period, comprised almost entirely of investment income.
After operating and finance expenses of $41 million, 1834's continuing operations made an operating profit of $163 million. The combination of a one-off gain of $55 million from the disposal of subsidiary GV Media Group Limited in Britain, as well as a $45-million share of profit from its stake in commercial real-estate associate Jamaica Joint Venture Investment Company Limited (JJVI), and taxation, took 1834's final profits up to $282 million for the 15-month period.
The company's $275-million loss from discontinued operations was largely driven by one-off merger expenses, which erased most of 1834's after-tax profits. A return of 0.56 cents per share resulted for the 15 months to March, against 15 cents earned for the 12 months of 2014. On the basis of 1834's continuing operations, 23 cents per share were made over the period.
STRONG BALANCE SHEET
Importantly, 1834 has a strong balance sheet going forward, with assets of $2.2 billion, against $351 million in liabilities. Put another way, shareholders' equity in the company at March stood at $1.8 billion, or 84 per cent of assets, with a corresponding book value per share of $1.50.
The decline of $1.5 billion in total assets at March versus 2014 was attributed mainly to the media assets and cash of over $650 million, which 1834 transferred to RJR as part of the amalgamation agreement.
A large portion of 1834's assets, nearly $811 million, or 37 per cent, remains in income-generating real estate. Another $775 million or 36 per cent remains held in marketable securities, including listed equities and bonds. 1834's interest in JJVI accounted for $235 million or 11 per cent of the company's total assets.
In commenting on the results, Chairman Oliver F. Clarke said, "2015 was a year of significant change for the company, which saw the reorganisation of the Group structure, divestment of the media business to Radio Jamaica Limited, and a change in the financial year-end. Associated with this were several significant one-off charges or gains which impacted the financial accounts. Shareholders must take this into consideration when reviewing performance."
He went on to say, "What 1834's shareholders need to take away is that The Gleaner's media operations have now been successfully transferred into the RJR Group, where they will benefit from a more stable financial base resulting from the anticipated cost and revenue synergies of the expanded multi-platform media organisation. By virtue of the RJR shares received, 1834 shareholders are afforded continued ownership in the leading media institution in Jamaica, and those directors on this board, who are also directors of RJR, look forward to working with the board and management of RJR to extract the benefits of this merger on behalf of shareholders.
"Additionally, 1834's share-holders will have continued access to the financial benefits derived from the prudent investment decisions the directors make on their behalf. Your directors remain confident that the changes in 2015 were the best of the alternatives for maintaining and creating shareholder value."
In accordance with the amalgamation agreement, The Gleaner Company Limited changed its name to 1834 Investments Limited. The company remains traded on the Jamaica Stock Exchange with the core business of investments.
1834 has committed to a non-compete agreement with RJR in respect of media operations. 1834 continues to operate from its offices located at 7 North Street.
1834 shares closed at $1.40 per share in trading on July 27, 2016.