SIL to issue new ordinary shares

August 10, 2020

SIL had its most successful financial year in 2019, posting an 88% increase in net profit to $101.17 million (2018: $53.82 million). Additionally, SIL recorded a 91% increase in foreign exchange gains. The Company noted our, “portfolio benefited from the rise in global asset prices (in USD terms) which in turn led to a substantial increase in total comprehensive income from a loss of J$21.7 million in 2018 to J$211.5 million in 2019.”  Despite being hit by the negative impacts of the COVID-19 pandemic in mid-March 2020, the Company achieved a profit in the first quarter of 2020 and “has shown significant progress in the second quarter,” according to Mr. Michael Bernard, Director of Sterling Investment Limited.

Mr. Charles Ross, Director of Sterling Investment Limited, spoke on the 2019 financial year’s performance. There was a 34% increase in total revenue to US$148.37 million compared to US$110.45 million recorded for the corresponding period in 2018, which resulted in an 88% increase in net profit moving from US$53.82 million in 2018 to US$101.17 million. Notably, for the first quarter, there was a 2858% increase in total revenue to $49.33 million compared to $1.67 million in 2019, translating to a net profit of $4.59 million, relative to 2019’s first-quarter net loss of $7.21 million.

Sterling Investment Limited and shareholders approved “the issue of up to 1,000,000,000 ordinary shares (in this resolution “New Ordinary Shares”) as part of the authorised capital (or such greater amount as the Directors in their absolute discretion may approve) currently unissued for the purposes of raising capital for the benefit of the Company- the general public to be invited to subscribe for New Ordinary Shares on such terms (including the number of New Ordinary Shares and the price(s) per New Ordinary Share,) in each case as the Directors and/or any duly appointed Committee of Directors shall determine, in all such cases on terms and conditions as the Directors may consider expedient in their absolute discretion of ordinary shares as part of the authorised capital of up to 1,623,578,557 ordinary shares currently unissued, FURTHER that on issue, the New Ordinary Shares shall be converted and/or confirmed to be ordinary stock units, save that the same shall rank in all respects pari passu with the existing ordinary stock units of the Company.”

Mr. Charles Ross outlined the strategic plans and reasons for the issuance of new ordinary shares as follows:

  • SIL’s strategy of investing in high-quality bonds has paid big dividends for the Company
  • SIL plans to raise funds to increase the diversification of the portfolio and to take advantage of investment opportunities
  • The number of shareholders has doubled since 2018; SIL plans to continue to increase the retail shareholder base to increase the liquidity of the stock.

Furthermore, Mr. Bernard also highlighted that SIL’s strategy includes:

  • Holding mostly US denominated securities
  • Holding investment-grade securities and
  • Greater level of accountability of managers.

Impact of COVID-19: 

  • SIL posted a profit in March during the worst quarter since the Great Recession
  • Heightened uncertainty but many opportunities
  • Undervalued securities purchased to increase capital gains
  • Low-interest rates-flexibility to increase margin
  • Global securities are improving at a faster rate than local ones.
  • Securities denominated in US hedges against depreciation

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