March 1, 2021

Sterling Investments Limited (SIL) for the year ended December 31, 2020 reported a 48% increase in total revenue to $219.76 million compared to $148.37 million recorded for the corresponding period in 2019. Of total revenue:

• Interest income closed the period at $120.29 million, up 22% from the $98.30 million for the comparable period in 2019.
• Foreign exchange gain amounted to $79.15 million compared to the gain of $43.87 million booked the prior year’s period.

The Company booked net gain on sale of debt investment securities at FVOCI increased by 343% of $19.23 million relative to $4.34 million in 2019.

The Company also booked net gain on sale of equity investment securities at FVTPL of $1.08 million a 42% decrease from $1.87 million in the prior comparable period.

Management noted that, “the Jamaican dollar depreciated against the US dollar by 7.6% for the twelvemonth period ended December 2020.”

The Company experienced a 59% increase in total expenses from total $39.78 million in 2019 to $63.33 million for the year ended December 31, 2020. Of this:

Interest expense totalled $11.41 million (2019: $12.87 million).

Other operating expenses totalled $37.83 million, a marginal increase of 0.23% (2019: $37.74 million).

SIL booked an impairment loss on available for sale securities of $2.92 million relative to gain of $1.18 million for the corresponding period in 2019.

Unrealized fair value loss on equity investments securities at FVTPL closed at $11.17 million versus a gain of $9.65 million booked in the prior corresponding period.

Operating profit recorded for the year closed at $156.42 million relative to $108.60 million booked for the prior year. Operating profit for the quarter closed at $45.31 million compared with the profit of $2.56 million booked for the prior year’s quarter.

Other income for the year increased from $423,958 booked in 2019 to $459,598 in 2020.

Preference dividend expense for the year ended December 31, 2020, totaled to $21.62 million, an increase of 199% relative to $7.23 million recorded last year.

Tax charges of $918,215 (2019: $629,229) was booked for the year and as such an 33% increase was recorded in net income, moving from $101.17 million in 2019 to $134.34 million for the period under review. Net profit for the quarter amounted to $39.95 million relative to the profit of $957,373 reported for the comparable quarter in 2019.

SIL mentioned that the increase in net profit, “was driven by the increases in interest income, the decline in interest expense and the increase in foreign exchange gains.”

Total comprehensive income for the year amounted to $138.26 million compared to total comprehensive income of $211.54 million booked for 2019.

This resulted in earnings per share of $0.36 relative to $0.27 in 2019. Earnings per share for the quarter amounted to $0.106 compared to an EPS of $0.003 in 2019. The numbers of shares used in the calculations are 375,703,483 units. SIL stock price closed the trading period on February 26, 2021 at a price of J$3.00 and a corresponding P/E of 8.39 times while SILUS closed the trading period at US$0.02 at a corresponding P/E of 7.98 times.

Management noted that, “Sterling Investments Limited (SIL) experienced strong growth in 2020.The company is generating more US dollar income post COVID-19 than it was before. SIL was also able to increase the US dollar dividends it pays to its shareholders during a time of great uncertainty.”

Balance Sheet Highlights:

As at December 31, 2020, the Company’s assets totaled $1.92 billion, 18% more than $1.63 billion a year ago. This resulted mainly from an increase in ‘Investment Securities’ which closed at $1.89 billion, 19% higher than the $1.59 billion booked as at December 31, 2019.

Shareholder’s equity as at December 31, 2020 stood at $1.34 billion compared to $1.23 billion in 2019. The book value per share amounted to $3.56 (2019: $3.27).

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