May 19, 2022

ISP Finance Services Limited’s (ISP) Interest Income on loans amounted to $104.44 million compared to $90.10 million in Q1 of 2021, an increase of 16% year over year. ‘Interest Income Receivables’ amounted to $105,668 (2021: nil), after summing the two line items, Gross Interest Income for the quarter closed at $104.55 million (2021: $90.10 million).

The total value of loans issued by ISP Finance Services Ltd as at March 31, 2022 was $811.65 million (2021: $853.87 million). However, after deducting provisions for credit losses, ‘Loans net of provision for credit losses’ grew by 1% to $679.48 million from $675.94 million in Q1 of 2021.

Interest expense fell marginally to $7.12 million relative to $7.76 million in 2021 representing an 8% decline year over year. Because of the dip in interest expense, Net Interest Income rose by 18% to $97.43 million (2021: $82.34 million). Commission expense on loans in Q1 2022 amounted to $3.70 million (2021: $1.38 million).

Gross Profit for the quarter grew by 16% to $93.73 (2021: $80.96 million)

Operating Expenses also grew in Q1, up 23% from $68.13 million in 2021 to $83.50 million at the end of Q1 2022, with the growth largely due to a 70% increase in the company’s allowance for credit loss. The expenses for the quarter are broken down as follows:

• • Staff Costs – $29.73 million (2021: $27.72 million)

• • Allowance for Credit Losses – $24.00 million (2021: $14.10 million)

• • Depreciation – $1.94 million (2021: $1.92 million)

• • Other Operating Expenses – $27.83 million (2021: $24.39 million)

Given the disproportionately larger growth in expenses to revenue, ISP’s Profit before Taxes shrunk by 20% to $10.23 million (2021: $12.77 million). After paying $1.28 million in taxes (2021: nil), Net Profit for the quarter ended March 31, 2022, amounted to $8.95 million relative to the $12.77 million reported in 2021, a 30% decrease.

Despite the marginal dip, Cash generated from Operating Activities grew to $36.28 million (2021: $5.30 million). At the end of Q1 2021, ISP used $3.6 million more than they received which resulted in a reduction to their cash balances at the time to $28.74 million. Since ISP didn’t take on any new debt in this quarter, (though they spent $1.19 million acquiring PPE) their Cash Balance at the end of the reporting period increased by $35.08 million to $54.65 million.

Given their current earnings, ISP has an EPS of $0.085 (2021: EPS $0.122). On a 12-month trailing basis, ISP’s earnings per share is $0.48 (2021: $0.64). The number of shares used in our calculations is 105,000,000 units. Notably, ISP closed the trading period on May 18, 2022 at a price of $29.50 with a corresponding P/E of 61.89 times.

Balance Sheet Highlights:

At end of their first quarter ended March 31, 2022, ISP reported Total Assets of $773.81 million, a marginal 0.16% decrease relative to the $775.09 million reported a year prior. The slight decrease was attributable to a $26.52 million reduction in ‘Other Receivables’ to $16.98 million (2021: $43.50 million) moderated by a $25.91 million increase in ‘Cash & Cash Equivalent’ to $54.65 million (2021: $28.74 million).

Shareholders’ Equity as at March 31, 2022 was $472.09 million, 12% higher than $421.50 million reported at the end of Q1 2021. This results in a book value per share of $4.50 compared to $4.01 in Q1, 2021. A noteworthy fact, ISP’s book value per share at the end of Q1 of 2016 was $1.81. Total Equity on the balance sheet of ISP in Q1 of 2016 was $189.98 million and the company also had an Accumulated Deficit of $15.02 million. At the end of Q1 2022, ISP Finance Services Ltd had an Accumulated Surplus of $265.13 million (2021: $214.55 million). This represents an 148% growth in the equity of the company since 2016.

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