Ashford W. Meikle, Staff Reporter
The CEO of Mayberry Investments, Gary Peart (left) listens to a point made by
the company's Chairman, Christopher Berry, to a shareholder at the company's annual general meeting on Monday at the Knutsford Court Hotel on Chelsea Avenue in New Kingston. Winston Sill/
Freelance Photographer
The sharp retreat in its profit and the downward
spiral in its share price since it went public 16 months ago, notwithstanding, it's not all bad at Mayberry Investments Limited (MIL).
That's the message rammed home by the company's chief
executive officer, Gary Peart, when he addressed Mayberry's annual general meeting on Monday.
Indeed, Peart wanted shareholders to see Mayberry as more than an equity company, one that merely trading in stocks and shares, but as a full service financial entity, with a broad income stream and one
worthy of investors holdings over the long term.
"A lot of people see Mayberry Investments as just an equity
company, but ... net interest income of the company has grown steadily, from $252 million in 2001 to $453 million in 2005," said Peart, making his point about the diversity of his firm's income stream.
financial performance
It is a case that Mayberry executives are keen to make in the face of the recent financial performance of the company and what has happened in the company's share price since listing.
For the financial year to last December, the company recorded a net profit of $88 million, compared to $378 million in the previous year. For the six months to the end of June of this year, the profit of $57 million for the six months represented a decline of 76 per cent over the corresponding period in 2005 when it earned $236 million.
Shareholders have not reacted particularly kindly to Mayberry's performance. It listed at $5.05 in April last year, and traded Friday at $1.95, having reached as low as $1.68 on July 28.
Mayberry, however, in the face of a broad market decline, which swiped 18 per cent off the value of equities in this year's first half, has been been changing business tact, and is now attempting to calm
skittish investors.
So it was not only on the growth interest income that Peart wanted shareholders to focus on Monday. He told them, too, about the company's other non-income, which includes earnings from areas outside the traditional streams. This climbed from $9 million in 2001 to $245 million in 2005. According to Peart, most of this income did not come from gains on the sale of equities.
"So, again, this flies in the face of what a lot people think - that Mayberry is just an equity-based company," he said.
Even as Peart highlighted the performance of the company's net interest earnings, it came on the back of declining gross interest income, which fell 20 per cent for the year to last December, to $1.8 billion from $2.3 billion, suggesting that Mayberry was able to squeeze more profit out of interest-bearing instruments.
Additionally, the company experienced growth for its other
revenue streams such as fees and dividend income. There was a 19 per cent gain on fees and commission, which climbed to $93 million and a 377 per cent increase in dividend income, which jumped to almost $48 million, compared to the $10 million earned in 2004.
reduction in the rates
But, reflecting the nine per cent decline of the main Jamaica Stock Exchange (JSE) Index last year, as well as a reduction in the rates paid on fixed income securities (such as debentures, repos, Treasury Bills), Mayberry experienced a 70 per cent decline in its net trading gains, which plunged to $35 million, compared to the $118 million from the previous year.
Based on its heavy investment in equities the investment company posted an unrealised loss of $193 million on investment revaluation.
The CEO stressed that the company was forced to rethink its
strategy after its less than satisfactory performance for its September 2005 quarter when it posted a loss of $118 million, chiefly as a result of the 12 per cent plunge in the main JSE Index during the quarter.
"The management of the company went on a retreat and we sat for about three days, going through the company to make a determination as to the way forward. We have found that it was necessary to reestablish our base."
As part of this strategy, the
company decided to diversify its
revenue lines.
"It showed that we had to refocus and continue diversification which is actually inherent in the business from the start," Peart told shareholders.
And, apparently, this strategy was successful.
"From the first quarter, 2005, as the JSE index declined, you will see where our pretax profit follows that trend," said the chief executive.
"But for the first quarter 2006, you will see where we have broken that trend. The JSE continues to decline but Mayberry was able to record a profit during the first quarter. And for the second quarter, the profit trend has continued while the JSE has continued to decline."
Outlining Mayberry's strategy going forward, Peart highlighted three points:
Forming alliances with CI Funds and GK Funds. "This allows us to derive revenue without actually using our capital," he said.
Cross-selling products to its customers, which Peart says has been successful. "We have been making strides in increasing business - using this strategy," he told shareholders.
Diversifying own account investment. Explaining the rationale behind this he said: "The majority of our capital was invested in the equities market - although over the last year the returns haven't been as great as expected but again this is the business that we operate in."
The Mayberry CEO also told shareholders that the company would expand its marketing channels, specifically through advertisements in the electronic media as well as establishing a call centre for clients.
