XFUND reports net loss of $573.34 million for the nine months ended September 2018

Date: November 14, 2018

Sagicor Real Estate XFUND Limited (XFUND) for the nine months ended September 2018 reported total revenue of $5.82 billion relative to $9.97 billion reported in 2017, a 42% decline year over year.

Hotel revenue for the nine months period increased to $3.97 billion relative to $3.43 billion in 2017, a 16% improvement year over year. Net investment expenses closed the period at $193.76 million (2017: $99.40 million) while net capital losses amounted to $674.40 million relative to net capital gains of $2.32 billion in the prior year.

Hotel revenue from discontinued operations slipped 37% to close at $2.71 billion versus $4.29 billion in the same period in 2017.

The Company mentioned that, “Effective 1 July 2018, the Group liquidated 91% of its Sigma Real Estate Portfolio (Sigma Portfolio) units in exchange for shares in Jamziv Limited, thereby increasing its holding of Playa shares indirectly.”

Furthermore, Management stated that, “As at September 30, 2018, the Group held 12,258,000 Playa shares, representing a 9.4% ownership stake in Playa, and 643 million units, or 5.4% interest in the Sigma Portfolio (down from 38% for the corresponding period and at December 2017).”

Operating expenses fell by 15% to $6.15 billion (2017: $7.24 billion). For the quarter, operating expenses amounted to $1.19 billion compared to $2.33 billion reported in the prior corresponding quarter. Of this:

Hotel expenses increased to $2.74 billion, up by 10% when compared to $2.48 billion in the prior comparable year.  For the quarter, hotel expenses closed at $860.81 million versus $771.82 million in the prior comparative quarter.

There was depreciation of $471.86 million (2017: $252.23 million) for the period under review. Depreciation for the quarter totaled $166.31 million (2017: $115.10 million).

Other operating expenses increased to $50.40 million (2017: $28.44 million). While for the quarter, other operating expenses declined by 22% to close at $12.33 million (2017: $15.77 million).

The company reported loss before tax of $329.49 million relative to profit before tax of $2.73 billion for the nine months. After incurring tax charges of $243.85 million (2017: $367.26 million), net loss of $573.34 million was recorded compared to a net profit of $2.36 billion 2017. However, for the third quarter, net loss amounted to $1.34 billion versus a net profit of $1.58 billion as at September 2017.

The loss per share (LPS) for the nine months closed at $0.26 relative to an EPS of $1.05 in 2017. While, the LPS for the quarter amounted to $0.60 (2017: EPS of $0.70). The trailing twelve-month LPS is $0.086.  The number of shares used in our calculations was 2,243,005,125. As at November 14, 2018, the stock traded at $12.48.

The Company indicated that, “The loss was mainly due to a $1.91 billion unrealized fair value loss, less $665 million in foreign currency gains, from our investment in Jamziv Limited.”

Additionally, it was mentioned that, “On 17 September 2018, Playa announced a strategic alliance with the Hilton group, where Playa will leverage their industry leading all-inclusive expertise with Hilton’s global portfolio of brands, and over 82 million participating members in Hilton Honors, Hilton’s award-winning loyalty program. Playa’s commitment to expansion through brand affiliations and strategic alliances, as well as through property acquisitions and developments is expected to produce strong growth over the medium to long term as our outlook remains positive for tourism in the region.”

Balance Sheet Highlights:

The Company, as at September 2018, recorded total assets of $36.84 billion, a decline of 21% when compared to $46.66 billion recorded as at September 2017. The decline was due to 48% and 94% decline in ‘Property, Plant & Equipment and ‘Investment in Sigma Global Fund’, respectively. ‘Property, Plant & Equipment’ closed the period at $13.44 billion (2017: $25.83 billion), while ‘Investment in Sigma Global Fund’ amounted to $855.04 million (2017: $14.97 billion).

Total Shareholders’ Equity as at September 30, 2018 closed at $23.02 billion, a 5% increase from the $22 billion reported for the corresponding period last year. This resulted in a book value per share of $10.26 (2017: $9.81).

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