The reopening of Jamaica’s tourism sector has improved the outlook for Sagicor Real Estate X Fund Limited (X Fund or the Group), although the company remains cautious.
For the period ended June 2020, the X Fund generated net loss attributable to stockholders of $5.10 billion compared to a net profit of $0.69 billion in the prior year, directors said in the company’s six-month financial report.
The outbreak of COVID-19 globally led to a pause in business activities at Jewel Grande Montego Bay (JGM) and those owned by Playa Hotels & Resorts N.V. (Playa) since mid-March.
JGM resumed full operations on July 1 while Playa began re-opening on a phased basis.
The directors say non-cash impairment charge of $5.20 billion was recorded on the investment in associated company, Playa, due to uncertainty surrounding guests’ confidence in leisure and travel activities.
On June 12, Playa announced the issue of 4.88 million ordinary shares priced at U$4.10 per share and additional debt financing of US$204 million.
This transaction led to a 0.56 per cent reduction in X-Fund’s holdings and the Group recorded a loss on dilution of $0.38 billion.
The shareholders of X-Fund Group have recorded $3.40 billion in relation to the impairment charge and the dilution of interest.
Management of the company said notwithstanding these large non-cash adjustments, the Group continues to show a healthy liquidity position.
Cash resources at June 2020 was $1.80 billion.
Group CEO Christopher Zacca, in remarks attached to the report, said “We remain confident that our cash resources are sufficient to meet our forecasted needs.”
Earnings per stock unit (EPS) attributable to stockholders of X Fund was a loss of $2.28 compared to profit of $0.31 in June 2019.
The return on average Stockholders’ Equity (ROE) on an annualised basis was -43.20 per cent (June 2019: 5.35 per cent).
The book value of X-Fund Group is $9.68 per share compared to a share price of $7.75 at June 2020.
Total revenue was $1.65 billion, down 52 per cent or $1.76 billion compared to the same period last year.
The company noted that the improvement in international tourist arrivals will be more gradual than initially thought.
Management stated, “As global economic conditions may not improve in the coming months, we are carefully monitoring and assessing the overall impact.
“The Group remains cautiously optimistic about the future but feels it prudent to take a conservative view of the potential impact of COVID-19 and manage our businesses accordingly.”