So far 2013 is not proving to be a good one profit wise for Mayberry Investments. First government debt swapped earlier in the year hit $337 million from profits in the March quarter and vestiges of the debt swap measures still reverberate in the numbers to June. For the latest quarter, net profit was $48 million after the company benefited from a tax credit of $16 million which raised the bottom-line from $32 million. This compares to profits of $36 million for the similar period in 2012.

For the 6 months, profit after tax amounts to a loss of $20 million and $149 million in 2012. Pre-tax profit of $214.6 million compares favourably to $165 million in 2012.

Revenues | Gross revenue for the quarter of $386 million is down on the same quarter last year of $432 million. During the quarter, there was growth in gain on sale of investments of 119 percent to end at $54.4 million, net foreign exchange gains moved from a loss of $10.6 million to a surplus of $30 million. There was a reduction in fees and commissions from $40 million to $17 and net unrealized market loss of $62 million on trading portfolio. All of these, along with interest expenses contribute to a net income of $186 million versus $217 million in the 2012 quarter before expenses.

First quarter recap | Containment in expenses and a slight boost in income helped Mayberry to record an operating profit of $158 million over the $104 million generated in the first quarter of the prior year. A one-off hit to the profit of $337.3 million arising from the NDX debt exchange plunged the operations into a loss of $178 million, before a tax credit of $87 million and share of associated profits of $24 million resulted in an overall loss of $67.7 million compared to a profit of $113 million last year. Revenues net of revaluation gains or losses came in at $473 million in the quarter up from $452 million in 2012.

The company made increased profits from trading gains in the first quarter which rose to $117.9 million up from $36.4 million in the similar quarter of 2012. Mayberry sold 12 million shares in Access Financial Services for $69 million, reducing their shareholdings to 38 percent. The sale of Access would have contributed a large portion of the trading gains. Net foreign exchange gains helped too in boosting the top line with an increase from $9 million to $40 million. So did dividend income which moved from $15 million to $34 million, while fees and commission fell from $70.6 million to $19.4 million this year. Gains on investments fell to a loss of $11 million from nearly $3 million gain, the year before. For a full recap of the first quarter, read our post Mayberry profit bleeds from NDX

Second Quarter Expenses | Expenses for the quarter were $176 million compared to $194 million for the comparative period as loan loss provision fell from $40 million in 2012 to $9 million in 2013.  Other operating expenses rose from $69 million to $86 million, due mainly to a new asset tax imposed by the Government earlier this year. Year to June expenses are down from $354 million to $341 million due mainly to reduced loan losses which was partially offset by the asset tax.

Mayberry stock which was trading at $2.05 per share after the release of the first quarter results has since moved to $2.60 which it traded at for several weeks and closed at on Friday.

Financial Position | Assets on the balance sheet, declined from $23.7 billion at March 2012 and $20.77 billion in December, to $19.5 billion at the end of March but it is back up to $20.8 billion in the latest report. A decline in the investment portfolio of $5 billion countered by a decline of $4.5 billion on the liability side for securities sold under repurchase agreements accounted for the bulk of the change since March 2012. On the other hand promissory notes and loans increased over June last year by approximately $2 billion. The equity capital is holding steady at $3.7 billion.

Related posts | Mayberry profit bleeds from NDX

Mayberry Investments

Containment in expenses and a slight boost in income helped Mayberry to record an operating profit of $158 million over the $104 generated in the first quarter of 2012.

But a one-off hit to the profit of $337.3 million arising from the NDX debt exchange, plunged the operations into a loss of $178 million before a tax credit of $87 million and share of associated profits of $24 million rescued it somewhat. However, not even those credits could save it from an overall loss of $67.7 million compared to a profit last year of $113 million. Revenues net of revaluation gains or losses came in at $473 million in the quarter up from $452 in 2012 which includes the above trading gains.

The company made increased profits from trading gains which rose to $117.9 million up from $36.4 in the similar quarter of 2012. During the quarter Mayberry sold 12,073,214 units of shares in Access Financial Services Limited, for a total of $69 million, which reduced their total shareholdings to 38%. The sale of Access would have contributed a large portion of the trading gains. Net foreign exchange gains helped in boosting the top line with an increase from $9 million to $40 million. So did dividend income which moved up from $15 million to $34 million while fees and commission fell from $70.6 million to $19.4 million this year. Gains on investments fell to a loss of $11 million from nearly $3 million gain the year before.

NDX continuing effects | Mayberry will feel the effects, for a quarter or two of the lower interest rates that the new government bonds carry. The net interest income for the first quarter reflects some of the interest income compression. Although, the big write-off of investment gains is not expected to repeat any time soon, if at all, the boost in income of the gain on sale in investment and the FX gains may not recur to the same degree. This applies to the FX gains as the local currency has been revaluing since mid-April. Mayberry’s fair value reserves at the end of the quarter amounted to negative $326 million up from the $142 million at the end of December last year. The company, in a release accompanying the quarterly report, stated that $230 million of the amount is due to the fall in stocks prices on the local exchange. Some of this would have been reversed as some prices have rebound since the end of the quarter.

Financial Position | The balance sheet shows contraction in assets, which are down from $23.7 billion at March 2012 and $20.77 billion in December to $19.5 billion at the end of the 2013 quarter. A decline in the investment portfolio of $5.5 billion countered by a decline of $5 billion on the liability side for securities sold under repurchase agreements accounted for the bulk of the change since March 2012.

Mayberry stock traded last at $2.05 per share after the release of the results as investors seem to be focusing on the results excluding the impact of the one off NDX charge.

This one needs watching | The performance of the local stock market could change their fortune considerably both from a fee income and capital gains standpoint.