August 30, 2022
Sygnus Credit Investments Limited
In United States dollars (except where it is indicated otherwise):
Sygnus Credit Investments Limited, for the year ended June 30, 2022, reported Interest Income of US$10.22 million, a 24% increase on the US$8.22 million recorded in 2021. For the quarter, Interest Income rose 15% to US$2.97 million (2021: US$2.60 million). While Interest Expense amounted to US$3.11 million (2021: US$1.80 million).
The Company also reported Fair Value Gains of US$4.07 million (2021: US$1.42 million).
Fee income amounted to US$42,697 (2021: US$62,786) for the year under review. While Fair value adjustment on contingent consideration payable amount to a loss of US$92,580.
As such, Sygnus reported year end revenue of US$11.12 million compared to US$7.93 million. For the quarter, Sygnus booked revenue of US$6.40 million versus US$4.02 million for the quarter ended June 30, 2021.
Total Expenses for the year amounted to US$7.21 million, a 151% increase on the US$2.87 million recorded for the corresponding period in 2021. Total expenses for the quarter amounted to US$4.08 million relative to US$933,429 for the same quarter of 2021. The Company noted that this increase in expenses, “was driven primarily by higher management fees and higher corporate services fees related to larger assets under management and performance fees related to unadjusted amounts from the June 2021 audited financial year end results.” Of expenses:
- Management fees amounted to US$1.93 million (2021: US$1.46 million).
- Other expenses for the period rose to US$659,117 (2021: US$654,817).
- Performance fees amounted to US$50,939 for the period under review (2021: US$349,514).
- Net foreign exchange loss totalled US$405,221 (2021: US$72,988).
- Corporate services fee totalled US$336,363 (2021: US$265,663).
- Impairment Allowance on Financial Assets for the year amounted to US$3.82 million versus US$69,710 for 2021.
Pretax profit for the year of US$3.92 million was booked for 2022, relative to US$5.06 million in 2021, a 23% decline year over year. For the quarter the Company booked pretax profit of US$1.06 million compared to US$2.77 million for the same quarter of 2021.
After a taxation charge of US$96,373 (2021: US$30,010), Sygnus booked Profit for the year of US$3.82 million (2021: US$5.03 million). Whereas, for the quarter, net profits amounted to US$991,587 (2021: US$2.74 million). According to Sygnus, “this was driven primarily by the charge-off on 1 portfolio investment in the Cayman Islands of US$3.85 million, which more than offset fair value gains of US$2.88 million. The effective charge-off on this 1 portfolio investment represents SCI’s first charge-off since inception and amounts to an annualized loss rate of less than 0.4% on more than US$220.00 million of investment capital deployed over the last 5 years. In other words, despite the current charge-off, the Group’s annualized loss rate was extremely low by global standards. SCI’s annualized return on average equity for FYE Jun 2022 was 5.7%.”
As a result, earnings per share (EPS) for the year amounted to US$0.0066 (2021: USD$0.0086). EPS for the quarter amounted to US$0.0018 (2021: US$0.0047). The number of shares used in our calculations amounted to 590,975,463 units. Notably, SCIUSD and SCIJMD closed the trading period on August 29, 2022 at a price of $13.06 and $13.50 respectively. Both SCIJA and SCIUS closed the trading period on August 29, 2022 at US$0.13 and US$0.12.
Moreover, Sygnus highlighted its Portfolio Company Investment Commitments stating, “SCI financed new investment commitments valued at US$49.22 million for FYE Jun 2022 vs US$41.10 million for FYE Jun 2021. Excluding PRCF, new investments amounted to US$28.00 million. In Puerto Rico, AFC generated an all-time high semiannual volume of credit deployment, exceeding US$30.00 million in investment commitments for the first six months to June 2022, a portion of which represented true sales that to generate upfront gains. Overall, the Group continues to see great demand for private credit investments, especially with regards to acquisition financing, as recovery from the COVID-19 pandemic gathers pace with fully open borders across the English, Dutch and Spanish speaking Caribbean.”
Balance Sheet Highlights
As at June 30, 2022, Sygnus’ total assets amounted to US$136.79 million, a 56% increase on 2021’s assets base of US$87.87 million. This was due to an increase in ‘investments’ to US$120.91 million (2021: US$80.51 million). However, ‘Finance lease receivable’ declined to US$1.60 million (2021:US$2.29 million).
Total Stockholders’ equity as at June 30, 2022, closed at $67.46 million, relative to $66.74 million for the corresponding period last year. This resulted in a book value per share of US$0.114 compared to the value of $0.113 as at June 30, 2021.
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer(s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.