January 17, 2022

Sygnus Real Estate Finance Ltd for the first quarter ended November 30, 2021, reported interest income of $35.33 million a 56% increase when compared with the $22.58 million reported in 2020. Interest expense amounted to $37.56 million, a 52% increase relative to the $24.64 million reported a year earlier. SRF noted, “The Company remains fully focused on executing its strategy of unlocking value in real estate assets using flexible capital as it seeks to continue increasing shareholder value.”

Fair value gains from financial instruments at fair value through profit closed at $10.87 million (2020: $14.79 million). Foreign exchange loss ended at $23.46 million relative to the gain of $43.30 million documented for the similar quarter in the previous year.

No other income was reported (2020: $3.19 million). Operating expenses rose to $82.97 million, 160% up from the $31.93 million reported in 2020. Of this:

• Management fee amounted to $48.32 million (2020: 14.62 million)
• Corporate service fees totalled $9.24 million (2020: $3.29 million)
• Performance fees totalled $12.49 million (2020: nil)
• Other expenses amounted to $12.93 million, 8% less than the $14.02 million posted in November 2020.

Consequently, operating loss for the quarter closed at $97.79 million versus an operating profit of $27.30 million booked for the same quarter in 2020.

The Company recorded share of loss of joint venture of $2.16 million for the quarter relative to loss of $2.06 million for the prior year’s corresponding quarter. Consequently, net loss for the period amounted to $99.95 million relative to net profit of $25.24 million in November 2020. Following translation adjustment on consolidation of overseas subsidiary of $44,000, Total comprehensive loss totalled $99.99 million relative to total comprehensive income of $25.24 million booked in the prior year’s quarter.

Loss per share (LPS) for the quarter amounted to $0.53 (2020 EPS: $0.13). The trailing twelve months earnings per share amounted to $9.00. The number of shares used in our calculations is 187,392,532. SRFJMD and SRFUSD stock price closed the trading period at a price of $17.27 and $0.14 respectively on January 14, 2022, with a corresponding P/E ratio of 1.92 times.

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 November 30, 2021, total assets amounted to $9.97 million, 58% up from the $6.29 million booked in 2020. This was mainly attributed to ‘Investment Property’ which rose from $2.61 million in 2020 to $7.25 million at the end of November 2021, representing a 177% increase.

Shareholders’ equity closed at $6.80 million relative to shareholders’ equity of $2.62 million recorded in the prior year’s corresponding period. This resulted in a book value per share $0.04 (2020: $0.01).

Balance Sheet Highlights:

As of November 30, 2021, the company’s assets totalled $1.75 billion, $48.23 million more than the $1.70 billion quoted a year ago. The main contributor to this growth due to ‘Receivables’ which closed at $346.37 million a 38% growth relative to the $250.30 million recorded in 2020.

Shareholder’s equity as of November 30, 2021 stood at $843.83 million (2020: $814.08 million) resulting in a book value per share of $0.55 (2020: $0.53).

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