August 13, 2019
Reported in US$ (except where it is indicated otherwise)
Proven Investments Limited (PROVEN) for quarter ended June 30, 2019, reported interest income of $6.88 million, a 5% decrease when compared with the $7.21 million reported for the same period in 2018.
Interest expense for the first three months amounted to $2.63 million, 36% higher when compared to the $1.93 million booked for the prior year. As such, net interest income for the first quarter witnessed a decline of 19% to total $4.25 million relative to the $5.28 million reported for previous year. The company indicated, “the decline primarily reflects ongoing strategic efforts to diversify revenue stream which resulted in revenues derived from this line declining by 12 percentage points. This was supported by an expansion in other revenue lines matched by a reduction in interest bearing assets t facilitate optimal rebalancing of the portfolio. This enabled an optimal reallocation of capital to counter the narrowing spreads associated with a flattening yield curve.”
Dividend income amounted to $32,513, an 88% decrease from the $273,777 recorded in 2018, while fees & commission income notably increased by 15% to $804,516 relative to $701,092 in 2018. Management noted the increase in fees and commission was, “driven by fee income from acquisitions namely IFP and Access Limited’s acquisition of Embassy Loans Limited.”
Other income moved from $122,085 to total $998,477 million for the quarter, a growth of 718%. Proven booked a 44% decrease in pension management income to total $667,752, down from $1.20 million booked for the prior year’s corresponding period. Gains on securities trading closed at $642,055 compared to $41,087. According to PROVEN, “realized Gains from the Trading of Securities for the period amounted to US$0.64 million compared to a gain of US$0.04 million earned in the same period last year. This improvement was mostly due to the healthy bond market returns, which created a compelling case for profit taking. As a result, continued realignment of the portfolio was executed over the quarter to right size the portfolio while reducing the overall market and credit risk exposure.”
Consequently, net revenue increased by 27% to total $10.77 million compared to $8.51 million recorded for 2018. This performance according to the Company was attributed to, “a significant improvement in Fees and Commission, Trading Gains and Other Income.”
Operating expenses climbed by 52% for the year to total $8.44 million relative to $5.55 million in 2018. According to management, “the increase is mainly attributed to incremental administrative and general expense arising from new acquisitions and the rightsizing of existing portfolio firms to execute on organic growth strategies.” Of this, administrative and general expenses recorded a 71% increase to close at $7.56 million relative to $4.43 million documented for the first quarter of the prior year. ‘Depreciation and Amortization’ decreased 1% to $437,422 (2018: $442,640), while ‘Preference Share Dividend’ increased 69% to $450,491 (2018: $266,322). The Company booked a IFRS 9 provisioning loss of $6,597 compared to a gain off $408,224.
Consequently, Operating Profit for the quarter declined 21% to $2.33 million (2018: $2.96 million). Notably, share of profit of associate amounted to $1.46 million for the quarter relative to nil in 2018.
Profit before tax amounted to $3.79 million versus the $2.96 million booked in 2018. Taxation increased year over year by approximately 209% from $112,581 in 2018 to $348,209. As such, Net Profit amounted to $3.44 million, a 21% increase when compared to the $2.85 million in 2018.
Net profit attributable to shareholders for the quarter amounted to $2.44 million relative to $1.79 million documented in for 2018. Total comprehensive income for the quarter amounted to $4.31 million compared to a loss of $1.30 million reported for the prior financial year.
Earnings per share (EPS) for the quarter amounted to $0.0039 (2018: $0.0029), while the twelve months trailing EPS amounted to $0.0122. The number of shares used in our calculations is 625,307,963. Notably, the stock price for PROVEN and PROVENJA closed the trading period on August 12, 2019 at US$0.25 and $37.00 respectively.
Balance Sheet at a glance:
Total Assets as at June 30, 2019 amounted to $642.83 million (2018: $575.12 million), an increase of 12%. The growth resulted from the Company booking $82.42 million in ‘Investment in Associates’ relative to nil in 2018. The Company also recorded 79% increase in intangible assets which closed at $35.16 million (2018: $19.65 million).
Shareholders’ Equity totaled $94 million relative to $82.08 million in 2018; as such book value per share now amounts to $0.15 (2017: $0.13).
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