April 19, 2022

Sygnus Real Estate Finance Ltd for the second quarter ended February 28, 2022, reported Interest Income of $58.85 million a 170% increase when compared to the $21.76 million reported in 2021. Interest expense amounted to $27.91 million, a 248% increase relative to the $8.01 million reported a year earlier. During the six months, SRF generated $94.18 million of interest income with $65.47 million deducted as Interest Expense. Net Interest Income for the period totaled $28.71 million. SRF noted, “The Company’s strategy to unlock value from real estate assets using flexible capital remains well positioned to navigate the volatility of the waning global pandemic and the new inflationary environment.”

Fair value gains from financial instruments at fair value through profit closed at $41.38 million 24% below the $54.67 million reported a year earlier. SRF reported $18.92 million of Foreign Exchange Losses for the period relative to Foreign Exchange Gains of $21.75 million in 2021. SRF saw Foreign Exchange Gains of $4.54 million in their second quarter, compared to a loss of $21.55 million documented for the similar quarter in the previous year.

SRF, for the six months, also reported $3.13 million attributable to ‘Other Income’ (2021: $3.19 million).

Operating Expenses for the 6-month period rose to $177.75 million, 63% up from the $109.18 million reported in 2021. Of this:

• Management fees amounted to $100.13 million (2021: $59.26 million)
• Corporate service fees totalled $18.34 million (2021: $12.17 million)
• Other expenses amounted to $46.79 million, 24% more than the $37.76 million accounted for during the comparable period in 2021.
• Performance fees amounted to $12.49 million (2021: nil).

For the six months ended February 28, 2022, the Company reported an Operating Loss worth $123.45 million compared to a profit of $1.01 billion during the same period in 2021. SRF experienced an operating loss for the quarter of $25.68 million versus an operating profit of $977.91 million booked for the same quarter in 2021, due primarily to fair value gains on investment properties held by the company.

The Company reported share of loss from a joint venture worth $1.28 million (2021: $6.76 million). Consequently, Net Loss for the period amounted to $124.74 million relative to Net Profit of $998.44 million at the end of February 2021.

Loss per share (LPS) for the period amounted to $0.38 (2020 EPS: $5.33) and the trailing twelve months earnings per share amounted to $3.67. The number of shares used in our calculations is 326,526,232. SRFJMD stock price closed the trading period at a price of J$15.53 with a corresponding P/E ratio of 4.23 times and SRFUSD closed at $0.15 on April 19, 2022.

SRF noted, “The global logistics and supply chain bottleneck has impacted nearly every industry, including real estate and construction. SRF has been encouraging the use of forward purchasing of price sensitive construction materials to lock in the costs to mitigate against volatile commodity prices occasioned by the global pandemic. This has resulted in substantial cost savings when this strategy has been deployed.”

Balance sheet at a glance:

As at February 28, 2022, total assets amounted to $10.25 billion, 79% up from the $5.71 billion booked in 2021. This was mainly attributed to the significant increase in the value of ‘Investment Property’ which rose from $3.54 billion in 2021 to $7.68 billion at the end of February 2022, representing a 117% increase.

Shareholders’ equity closed at $6.78 billion relative to shareholders’ equity of $3.60 billion recorded in the prior year’s corresponding period. Which was due to the issuance of additional US & JMD shares. This resulted in a book value per share $20.74 (2021: $19.19).

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