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Sygnus Credit Investments Limited team led by co-founder and Chief Investment Officer Jason Morrison, co-founder and CEO Berisford Grey, and co-founder and director Dr Ike Johnson (File photo)

Sygnus affected by Q3 events but management remains bullish

Sygnus Credit Investments Limited team led by co-founder and Chief Investment Officer Jason Morrison, co-founder and CEO Berisford Grey, and co-founder and director Dr Ike Johnson (File photo)

Sygnus Credit Investments (SCI) Ltd indicate that results were driven by a record origination of private credit investments across the Caribbean region for the year ended June 30, 2020.

The Sygnus Credit Investments management team pause for a frame at company’s annual general meeting, held at The Jamaica Pegasus in New Kingston, on November 27, 2019. (Photo: Christopher Lewinson)

SCI’s core revenues, or total investment income, grew by 39.8 per cent or US$1.28 million to US$4.50 million, for the financial year, up from US$3.22 million for corresponding period in 2019.

Net profit attributable to shareholders was US$1.97 million for FYE Jun 2020, marginally below US$2.05 million for FYE Jun 2019 by 3.8 per cent or US$77.8 thousand.

Earnings per share (EPS) was 0.56 US cents for FYE Jun 2020 compared to 0.59 US cents for FYE Jun 2019.

Total operating expenses increased by US$459.8 thousand or 45.5 per cent to US$1.47 million for FYE Jun 2020 versus US$1.01 million for FYE Jun 2019.

This increase was driven primarily by higher management fees which rose by US$298.8 thousand or 42.3 per cent, in accordance with a 60.0 per cent growth in assets under management.

Management, in its analysis attached to the period’s results, noted that results were partially adversely impacted by the one-off conversion of J$1.2 billion to USD,  being part proceeds of new JMD debt that was raised and part proceeds of JMD investments that were exited during the third quarter.

Sygnus Credit Investments Limited team led by co-founder and Chief Investment Officer Jason Morrison, co-founder and CEO Berisford Grey, and co-founder and director Dr Ike Johnson (File photo)

The results were also impacted by the one-off unscheduled investment exit of US$10.30 million during the third quarter, due to the onset of COVID-19.
The impact of the global Covid-19 pandemic on SCI’s business is an ongoing evaluation process as the crisis unfolds.

However, management said SCI remains well-positioned from a liquidity, funding profile and capital standpoint to play a major role in financing the recovery and growth of Caribbean middle-market firms, while proactively managing the risks of its diversified portfolio of investments.

Ninety-nine point eight per cent of core revenues were comprised of net interest income.

SCI’s core earnings, or net investment income, grew by 37.1 per cent or US$820.2 thousand to US$3.03 million for FYE Jun 2020, versus US$2.21 million for FYE Jun 2019.

SCI’s investment in Portfolio Companies grew by 57.8 per cent to a record US$53.60 million versus US$34.00 million in FYE Jun 2019.
The number of Portfolio Company investments increased to a 25 from 19 in the previous year.

Portfolio Company investments include finance lease receivables on the balance sheet and is included in all investment activity. * represents short term investment that was exited at maturity date, and later re-invested Portfolio Company Investment Commitments

SCI originated and financed new investment commitments valued at a record US$54.73 million during FYE Jun 2020 vs US$20.70 million in FYE Jun 2019, gross of investment exits, amortizations.

Management noted that it was in the third quarter of the financial year, that there was an unscheduled early exit valued at US$10.3 million. This large exit was primarily driven by COVID19 developments, which temporarily delayed the use of funds.

At the end of FYE Jun 2020, SCI had US$5.51 million in dry powder on its balance sheet. In addition, SCI had US$10.7 million in undrawn credit facilities, and thus had adequate available capital to finance new private credit investment opportunities.

Management state, “SCI has developed a number of sustainable competitive advantages and is thus well positioned to navigate the COVID-19 environment. In addition, SCI’s Portfolio across the Caribbean is primarily concentrated in industry leading middle-market firms and projects with excellent management teams, which are necessary pre-requisites for navigating through the COVID-19 pandemic.”