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Durrant Pate/Contributor

Real estate investment company, First Rock has maintained profitability but seeded ground when profits nosedived during the first half if its 2023 financial year.

For the six-months ended June 30, 2023, operating profit declined 86 per cent to US$630,625 coming from US$4.57 million for the comparable period in 2022. During the half-year, there was no share of profit from investment in associate for the review period compared to US$18,969 in 2022.

Following a tax charge of US$2,781 (2022: US$13,859), net profit declined 86 per cent to US$627,844 compared to US$4.58 million in 2022. For the June quarter, net profit declined 83 per cent to US$422,869, down from US$2.42 million in 2022.

Net profit attributable to shareholders amounted to US$627,844, down from the 2022 posting of US$4.58 million. As a result earnings per share (EPS) amounted to US$0.002 (2022: US$0.016).

Solid first quarter performance

The half-year performance is coming off a strong second quarter returns in which First Rock delivered another profitable quarter, which saw an increase in the company’s assets base when compared to the comparative period in 2022. Net profit attributable to shareholders amounted to US$422,869, which yielded an EPS of US$0.002.

First Rock Jamaican dollar shares closed trading last week at J$9.23 with a corresponding P/E of 165.90x, while its American dollar shares closed at US$0.04 with a corresponding P/E of 111.17x

Better second half expected

However, the management is anticipating a better second quarter, particularly given the fact that its flagship development, Hambani Estate, a luxury residential development on Bamboo Avenue in the Kingston 6 area of Liguanea, is slated for completion by December of this year with 60 per cent of the project presold.

Handing over of the first set of units is slated to start this month-end. Hambani Estates will be a multi-family development, consisting of 12 single-family residences, each on its own subdivided quarter acre lot.

The exclusive residential project will be a low density, highly landscaped development with a total of seven five-bedroom residences and five four-bedroom residences. Additionally, First Rock’s second development project, Bonne Chance, is in its final stages of planning and development is slated to commence in the current third quarter.

Net income down 67%

Net operating income declined 67 per cent to US$2.74 million coming from US$8.26 million in 2022. For the quarter, net operating income declined 66 per cent to US$1.54 million, down from US$4.48 million in 2022

Of the six-month net operating income:

• Property income declined 47 per cent to US$2.92 million (2022: US$5.53 million)
• Net investment loss amounted to US$217,484 (2022: income of US$2.75 million)
• Other income amounted to US$39,409 (2022: loss of US$14,369)

On the positive side expenses were cut considerably. Total operating expenses declined 43 per cent to US$2.11 million (2022: US$3.69 million). Of this:

• Depreciation and amortisation declined 95 per cent to US$2,861 (2022: US$52,548)
• Performance based fee declined 87 per cent to US$194,695 (2022: US$1.52 million)
• Expected credit losses declined 81 per cent to US$40,544 (2022: US$217,014)
• Administrative & general expenses declined slightly to US$1.87 million (2022: US$1.90 million)

Balance sheet at a glance:

Total assets increased seven per cent to US$62.66 million (2022: US$58.64 million). This increase was due largely to a 243 per cent increase in ‘Investment Property held for Sale’, which amounted to US$5.91 million (2022: US$1.72 million) followed by a 25 per cent increase in ‘Current development in progress’, which amounted to US$19.25 million (2022: US$15.44 million).

However, the increase was tempered by a 19 per cent decline in ‘Investment Property’, which closed at US$23.23 million (2022: US$28.63 million). Shareholder’s equity declined slightly to US$36.77 million (2022: US$36.99 million) resulting in a book value of US$0.129 (2022: US$0.129).