May 17, 2021
In United States dollars (except where it is indicated otherwise):
Sygnus Credit Investments Limited for the nine months ended March 31, 2021, reported Interest Income of US$5.62 million 45% increase on the US$3.88 million recorded in 2020. For the quarter, Interest Income rose 44% to US$2.02 million (2020: US$1.41 million). Interest expense for the nine months ended March 31, 2021 amounted to US$1.45 million (2020: US$472,002). While, for the quarter ended March 31, 2021, interest expense closed at US$475,745 (2020: US$355,266).
The Company also reported Fair Value Loss of US$44,229 for the nine months ended March 31, 2021 relative to a Fair Value Gain of US$159,053 for the comparable period in 2020. Management noted the performance of Fair Value Gains, “reflected relative adverse movements in the current period, specifically during September and December 2020. For Q3 2021, favorable movements in interest rates resulted in the gain relative to adverse movements at the start of Covid-19 in March 2020. Note that changes in interest rates may cause fluctuations in fair value losses or gains from period to period.”
Other income closed at US$101,311 (2020: US$30,892). For the quarter, other income totaled US$40,278 versus US$23,892 recorded in the same quarter last year.
As such, Sygnus reported nine months total revenue of US$4.23 million compared to US$3.60 million last year. For the quarter, Sygnus booked total revenue of US$1.71 million versus US$930,491 for the quarter ended March 31, 2020.
Total Expenses for the period amounted to US$1.94 million, a 17% decline relative to US$2.32 million recorded for the corresponding period in 2020. Total expenses for the quarter amounted to US$680,169 relative to US$1.29 million for the same quarter of 2020. Of expenses for the nine months ended March 31, 2021:
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- Management fees amounted to US$1.05 million (2020: US$716,837). SCI noted, “This outcome was driven primarily by higher management fees related to larger assets under management and corporate services fees which began accruing in Q3 2020.”
- Other expenses for the period amounted to US$389,769 (2020: US$264,687).
- Net foreign exchange loss closed at US$82,457 (2020: US$1.02 million). SCI noted, “The movement in foreign exchange losses reflected a combination of SCI’s net exposure to Jamaican dollar assets, which results in unrealized gains or losses, and realized gains or losses based on foreign currency bought or sold. SCI’s net balance sheet exposure to JMD at the end of March 2021 was negative 0.8% or US$702.8 thousand, vs positive 6.7% or US$4.07 million in Q3 2020. SCI does not have a foreign currency trading business.”
- Impairment allowance on financial assets amounted to US$224,019 (2020: US$302,873). Notably, Management stated, “SCI’s impairment allowance is a non-cash unrealized charge, and reverses if an investment is exited without any realized losses. The smaller increase in impairment allowance for 9 Month 2021 was reflective of an unknown and unprecedented economic backdrop at the start of Covid-19 in 2020 vs the current economic environment and trajectory. SCI’s non-performing investment rate (NPI) for Q3 2021 was 3.1% of portfolio company investments, the same as Q3 2020. This represented 2 Portfolio Company investments vs 1 Portfolio Company investment last year, with 1 new non-performing investment added during Q3 2021. The newly added non-performing Portfolio Company is expected to be removed from non-performing status in the short term. Both non-performing Portfolio Company investments are fully collateralized.”
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- Corporate service fees totalled US$193,017 (2020: US$19,192).
Net profit for the nine months ended March 31, 2021 amounted to US$2.29 million, relative to US$1.28 million in 2020, an 80% increase year over year. For the quarter, the Company booked a net profit of US$1.03 million compared to a net loss of US$355,846 for the same quarter of 2020.
Total comprehensive income for the nine months ended March 31, 2021 amounted to US$2.29 million, relative to US$1.28 million in 2020. For the quarter, total comprehensive profit closed at US$1.03 million compared to a total comprehensive loss of US$355,846 for the corresponding quarter of 2020.
As a result, Earnings per share (EPS) for the period amounted to US0.388 cent (2020: US0.216 cent). Earnings per share for the quarter amounted to US0.175 cent relative to an LPS of US0.060 cents in 2020. The twelve months trailing EPS amounted to US0.503 cent. The number of shares used in our calculations amounted to 590,975,463 units. Notably, SCIUSD and SCIJMD closed the trading period on May 14, 2021 at a price of J$13.06 and J$14.67, respectively. Both SCIJA and SCIUSD closed the trading period on May 14, 2021 at US$0.15 and US$0.15, respectively.
Management indicated, “SCI financed new investment commitments valued at US$11.20 million during Q3 2021, vs US$10.40 million for Q3 2020. Three quarters of the new investment commitments were used to finance acquisitions and business expansion, with the remainder used to finance working capital needs. More than 80% of new investment commitments were made to Portfolio Companies from Jamaica or controlled by Jamaican entrepreneurs, as demand for private credit financing remained robust from that territory. SCI continued to “season” its portfolio during Q3 2021, by successfully exiting three portfolio company investments valued at US$4.79 million. At the end of Q3 2021, the weighted average tenor of Portfolio Company investments declined to 2.1 years vs 2.3 years at the end of Q3 2020. The weighted average fair value yield on Portfolio Companies increased to 11.8% vs 11.3% last year. SCI’s Portfolio Companies were diversified across 11 major industries and 8 regions within the Caribbean in Q3 2021. Excluding Dry Powder, the top four industry allocations were Hospitality (18%), Financial (15%), Infrastructure (14%) and Manufacturing (12%). Industry allocation remains substantially below the 35% target concentration level but will likely increase as economic recovery within the Caribbean gathers pace.”
Management also stated, “SCI received US$25.78 million in net APO proceeds from its record capital raise of US$27.10 million during Q3 2021. Of this amount, US$12.6 million was used to repay a bridge note and the US dollar portion of a revolving credit line. The Company’s overall liquidity was US$10.20 million comprising of US$8.20 million in Dry Powder on the balance sheet plus US$2.00 million from revolving credit facilities. In addition to this liquidity, the Company has US$22.90 million in approved debt financing capacity from its Board approved US$50.00 million capital raising plan, of which US$27.1 million was raised via the APO.”
Balance Sheet Highlights
As at March 31, 2021, Sygnus’ total assets amounted to US$85.22 million, a 41% increase on 2020’s assets base of US$60.59 million. This was due to an increase in ‘Investments’ to US$71.56 million (2020: US$45.60 million) and an increase in ‘Cash at bank’ to US$8.20 million (2020: US$1.20 million). This was, however, tempered by a reduction in ‘Other receivables’ which closed at US$69,193 (2020: US$10.33 million). The company noted that, “The number of Portfolio Company investments was 30 vs from 21 in the previous year. Portfolio Company investments include finance lease receivables on the balance sheet.”
Total Stockholders’ equity as at March 31, 2021, closed at US$64 million, relative to US$36.98 million for the corresponding period last year. This resulted in a book value per share of US$0.108 compared to the value of US$0.063 as March 31, 2020.
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