July 22, 2020
Reported in US$ (except where it is indicated otherwise)
Proven Investments Limited (PROVEN) for year ended March 31, 2020, reported interest income of $20.29 million, a 23% decrease when compared with the $26.21 million reported for the same period in 2019.
Interest expense for the year amounted to $9.11 million, 22% higher when compared to the $7.48 million booked for the prior year. As such, net interest income for the year witnessed a decline of 40% to total $11.18 million relative to the $18.73 million reported for previous year. Net interest income for the quarter amounted to $1.32 million reflecting a decrease of 50% relative to the $2.63 million achieved in the previous year.
Dividend income amounted to $34,000, a 90% decrease from the $342,000 recorded in 2019, while fees & commission income notably increased by 41% to $11.57 million relative to $8.20 million in 2019. Net foreign exchange gain amounted to $1.91 million relative to a gain of $1.63 million recorded in 2019. Net fair value adjustments and realized gains rose to $3.78 million versus $1.14 million booked in 2019. Gain on disposal of subsidiary amounted to $24.93 million (2019: nil).
Other income moved from $4.84 million in 2019 to total $13.39 million for the period under review, a growth of 177%. Proven booked a 21% increase in pension management income to total $3.43 million, up from $2.83 million booked in the same period last year.
Consequently, net revenue increased by 86% to total $70.23 million compared to $37.72 million recorded for 2019. For the quarter, net revenue amounted to $39.99 million relative to $8 million in 2019.
Operating expenses climbed by 45% for the year to total $37.92 million relative to $26.13 million in 2019. Of this, staff costs recorded an 11% increase to close at $12.88 million relative to $11.64 million documented for the prior comparable year. ‘Depreciation and Amortization’ increased 8% to $2 million (2019: $1.85 million). Property expense totaled $9.36 million compared to $116,000 for the prior financial year. Impairment loss on investments and impairment losses of loans and other assets amounted to $362,000 (2019 reversal: $476,000) and $1.46 million (2019: $1.09 million), respectively. Other operating expenses totaled $11.87 million (2019: $11.92 million).
Operating expenses for the quarter rose 118% to $15.95 million versus $7.31 million booked for the comparable quarter in 2019.
Consequently, operating profit for the year and the quarter rose to $32.31 million (2019: $11.59 million) and $24.04 million (2019: $688,998), respectively. Notably, share of profit of associate amounted to $10.44 million for 2020 relative to $1.31 million in 2019, while ‘Preference Share Dividend’ increased 568% to $8.61 million (2019: $1.29 million).
Profit before tax amounted to $34.14 million versus the $11.61 million booked in 2019. Taxation increased year over year by approximately 14% from $1.67 million in 2019 to $1.90 million. As such, net profit amounted to $32.42 million, a 224% increase when compared to the $9.94 million in 2019. Proven booked profit for the fourth quarter of $3.61 million compared to $1.16 million recorded for the comparable quarter in 2019.
Net profit attributable to shareholders for the year amounted to $29.98 million relative to $6.85 million documented in for 2019. Profit attributable to shareholders for the quarter totaled $3.53 million versus $945,323 booked in 2019.
Total comprehensive income for the year amounted to $18.32 million compared to $17.07 million reported for the prior financial year. Management stated that, “PIL experienced robust organic growth resulting from the disciplined execution of its Private Equity strategy which focused on optimizing and extracting value created by its Portfolio Assets through ongoing expansion, management and rebalancing of its holdings to deliver above average returns to its Shareholders.”
Earnings per share (EPS) for the quarter amounted to $0.0056 (2019: $0.0015), while the EPS for the year amounted to $0.0479 (2019: $0.0109). 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 July 21, 2020 at US$0.24 and $33 respectively.
PROVEN indicated the following:
o BOSLIL Bank Limited: Proven Investments Limited currently owns 75% of the equity of BOSLIL Bank Limited. BOSLIL experienced another successful year, as net profit totaled US$4.64 million (US$3.43 million attributable to PIL) was realized. Total assets of the Bank as at March 31, 2020 stood at US$274.98 million (2019: $245.35 million). Boslil’s performance was mainly driven by growth in its core business, reflecting optimal asset-liability management and cost synergies which resulted in the Bank posting an increase of 8.51% in Net Profits compared with the previous year.
o Access Financial Services Limited: As a result of reduced holdings from 49.72% to 24.72% in September 2019, AFSL is now recognised as an associate company resulting in the recognition of a share of its profits, instead of a consolidation of its results into PIL’s Consolidated performance. AFSL’s contribution for the financial year ended March 2020 amounted to US$0.850 million
o Dream Entertainment: In February 2019, PIL acquired a 20% equity stake in DREAM. The greater part of 2019 was spent on restructuring the Dream organisational structure to improve operating efficiency while realising some level of integration into the PIL structure. The Management of Dream remains optimistic and looks forward to the reopening of the Entertainment Sector. PIL continues to view this portfolio investment from its strategic lens as it aligns with PIL’s strategic thrust to identify, invest in and grow, viable real sector private companies. The objective is to create shareholders’ value through a clear exit strategy. DREAM has over the years provided enviable entertainment products that cater to a growing audience that is primarily beyond the Jamaican shores.
o International Financial Planning Limited: PROVEN Investments Limited acquired 100% interest in IFP in August 2018. IFP is a licensed securities dealer with offices in Cayman, Bermuda and the British Virgin Islands that caters to a variety of investors ranging from medium to high net worth individuals. IFP reported Revenues and Net Profit of US$5.66 million and US$0.73 million respectively. This resulted in a NPAO contribution to the Group of 2.45% for the year ended March 31, 2020. PIL is currently in the process of re-engineering this business and anticipates revenue enhancement and cost synergy measures to bear fruit in the medium to long term.
o Investment In Associated Companies- JMMB Group LimitedPIL acquired 20.01% of the participating voting shares in JMMB in December 2018 and thereafter opted to maintain its 20.01% equity stake through its participation in the additional public offering (APO) which closed in November 2019. JMMB is an associate company and contributed US$10.35 million in the form of Share of Profits for the year ended March 31, 2020. JMMB’s expanding presence in the on-shore banking and insurance sub-industry within the region is consistent with PIL’s ongoing strategy to diversify the portfolio of investments across the twenty four (24) countries of the Caribbean and Latin America.
o Real Properties Limited reported Profit Attributable to Equity Holders of US$2.38 million due to robust property sales which contributed $1.12M in income (the sales proceeds are represented in the Other Income line item while the cost of development is reflected in Property Expense line item). Moreover, this subsidiary continues to diversify its portfolio of real estate holdings which as at March 31, 2020, included three (3) rental income properties and six (6) developmental sales projects; all at various stages of the development cycle.
Balance Sheet at a glance:
Total Assets as at March 31, 2020 amounted to $612.98 million (2019: $623.32 million), a decrease of 2%. The decline resulted from the Company booking a 13% decline to $291.40 million in ‘Investment Securities’ (2019: $336.74 million). The Company also recorded 44% decrease in ‘Loan Receivable’ which closed at $28.86 million (2019: $51.33 million).
Shareholders’ Equity totaled $99.01 million relative to $90.73 million in 2019; resulting in a book value per share of $0.16 (2019: $0.15).
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