November 17, 2020
In Barbados dollars (except where it is indicated otherwise):
Eppley Caribbean Property Fund Limited (CPFV), for the year ended September 30, 2020 reported net rental income of $2.95 million (2019: $1.80 million), a 64% increase. In addition, share of loss of investments accounted for using the equity method amounted to $2.53 million relative to profit of $2.95 million in 2019. The Company stated that, “the decrease is mostly related to rent relief measures provided to tenants in Barbados whose businesses were directly impacted by a slowdown in tourism due to COVID 19.”
Fair value gain on investment property closed the year at $3.41 million versus gain of $2.02 million twelve months earlier. Management noted, “the Value Fund recorded a net fair value loss on its investment properties in 2020 compared to a large gain in 2019. The most significant declines were related to our retail assets in Barbados. While the Value Fund mostly has long-term leases in place at these buildings, these declines reflect our outlook on the rental market for tourism-related retail assets in Barbados over the medium-term. These charges are recorded in our share of profits using equity accounting since the Value Fund owns minority stakes in the buildings most impacted.”
Interest income amounted to $761,194 versus $149,714 booked for the previous year. Other income fell 64% to close at $666 versus $1,869 last year. No Gain on bargain purchase was recorded compared to $74,325 in 2019.
As such, total investment income surged to total $4.58 million (2019: $6.99 million).
Total operating expenses amounted to $2.53 million (2019: $3.11 million). Total operating expenses can be broken down as follows:
o Interest expenses totalled to $478,827 (2019: $634,125).
o Foreign exchange gain amounted to $201,410 (2019: $1.57 million).
o Fund management fees was $652,643 compared to $298,137 booked for 2019.
o Professional fees totalled $422,560 (2019: $187,339).
o Directors and subcommittee fees closed at $3,200 (2019: $2,560).
o Office and administrative fees went up to $62,173 (2019: $45,562).
o Impairment charge for receivables surged to $57,676 (2019: $76,317).
o Investment advisor fees closed the year at $652,643 (2019: $298,137).
The Company highlighted that, “the remainder of the Value Fund’s portfolio has been remarkably resilient. Since taking control of the Fund, Eppley’s strategy has been to scale and diversify its properties by geography and asset type. Our plan has been validated by recent developments. Our recently acquired portfolio of industrial and office properties continued to perform despite COVID 19, with some buildings increasing occupancy and operating cash flow during this period. All our Jamaican properties, including our Jamaican retail property, produced strong results underscoring the quality and durability of these assets. Consequently, we recorded fair value gains on our Jamaican portfolio and our Barbados industrial and office assets this year. These gains partially offset the reductions in our Barbados retail portfolio.”
Profit before tax amounted to $2.05 million (2019: $3.89 million) for the year under review.
Consequently, this resulted in net profit for the year of $1.89 million versus a net profit of $3.88 million booked in the previous year after a taxation charge of $162,814 (2019: $2,442). Profits attributable to cellular property fund shareholders amounted to $1.89 million compared to a profit of $3.85 million booked last year. For the quarter, profits attributable to cellular property fund shareholders amounted to $125,856 compared to a profit of $1.99 million in 2019.
Total comprehensive income for the year closed at $1.72 million compared to an income of $3.96 million twelve months earlier. Whereas, for the quarter, total comprehensive loss closed at $180,245 versus the total comprehensive income of $2.07 million booked in 2019.
Earnings per share for the year ended September 30, 2020 totalled $0.014 compared to EPS of $0.028 for the corresponding period in 2019. For the quarter, EPS amounted to $0.001 (2019: $0.015). The total amount of shares outstanding used for this calculation was 136,998,472 units. CPFV closed the trading period at J$43.80 on November 17, 2020 with a corresponding P/E ratio of 44.66 times.
CPFV mentioned that, “we expect the Value Fund’s performance to improve in subsequent quarters. We recently acquired two large industrial assets in Jamaica, one of which was acquired shortly before our financial year-end and the other acquired thereafter. The additional income from these new acquisitions will be reflected going forward. Rent relief measures will wane or stabilize. Finally, we expect to make additional acquisitions before the end of the calendar year.”
Balance Sheet Highlights:
As at September 30, 2020, total assets amounted to $108.90 million, 9% more than last year’s $99.73 million in 2019. This was attributed to a rise in Investment properties which closed the period at $62.82 million (2019: $39.33 million). This was partially tempered by a decline in ‘Cash and Cash equivalent’ closing at $23.89 million (2019: $34.25 million).
CPFV, as at September 2020, booked total shareholders’ funds of $94.85 million (2019: $88.09 million), which translated into a net asset value per share of $0.69 (2019: $0.64).
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