SIL reports 73% decline in year end net profit

Sterling Investments Limited (SIL) for the year ended December 31, 2022 reported a 58% decline in total revenue to $124.48 million compared to $293.49 million recorded for the corresponding period in 2021. Of total revenue:

Interest income closed the period at $148.18 million, up 2% from the $145.26 million for the comparable period in 2021.

Foreign exchange loss amounted to $30.27 million compared to the gain of $110.54 million booked the prior year’s period. SIL noted that this was “due to the appreciation in the Jamaican dollar against the U.S Dollar.”

The Company booked net gain on sale of debt investment securities at FVOCI of $6.58 million a 83% decline relative to $37.69 million in 2021.

Management highlighted that, “The company is prudently rotating into higher yielding securities. The company expects interest rates to move higher and is keeping funds liquid to take advantage of the rising yields.”

The Company experienced a 17% decrease in total expenses from total $99.93 million in 2021 to $82.50 million for the year ended December 31, 2022. Of this:

SIL booked an impairment loss on available for sale securities of $2.52 million relative to a loss of $14.78 million for the corresponding period in 2021.

Operating profit recorded for the year closed at $41.98 million relative to $193.56 million booked for the prior year.

Other income for the year increased from $282,686 booked in 2021 to $724,819 in 2022.

Preference dividend expense for the year ended December 31, 2022, amounted to nil, relative to $32.81 million recorded last year.

No tax charges were reported for the current period (2021: $1.22 million) and as such a 73% decrease was recorded in net income, moving from $159.81 million in 2021 to $42.71 million for the period under review.

SIL mentioned that, “The investment manager remains focused on managing duration and interest rate risks as well as positioning the portfolio to take advantage of future volatility that may arise.”

Total comprehensive loss for the year amounted to $252.68 million compared to total comprehensive income of $176.40 million booked for 2021.

This resulted in earnings per share of $0.10 relative to $0.37 in 2021. The numbers of shares used in the calculations are 429,642,151 units. SIL stock price closed the trading period on March 2, 2023 at a price of J$2.96 and a corresponding P/E of 29.78 times.

Management noted that, “Investors will continue to benefit from the US dollar income SIL’s portfolio generates through dividend payments. SIL’s exposure to the developed countries delivers a true source of diversification to shareholders.”

Balance Sheet Highlights:

As at December 31, 2022, the Company’s assets totaled $1.75 billion, 23% less than $2.28 billion a year ago. This resulted mainly from an fall in ‘Cash and Cash Equivalents’ which closed at $635,286, 54% lower than the $1.39 million booked as at December 31, 2021.

Shareholder’s equity as at December 31, 2022 stood at $1.27 billion compared to $1.57 billion in 2021. The book value per share amounted to $2.96 (2021: $3.65).


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