June 10, 2019

 

Reported in US$ (except where it is indicated otherwise)

Proven Investments Limited (PROVEN) for year ended March 31, 2019, reported interest income of $26.21 million, an 8% decrease when compared with the $28.49 million reported for the same period in 2018. Total interest income for the quarter amounted to $4.69 million reflecting a marginal decrease of 37% relative to the $7.50 million achieved in the previous year.

Interest expense for the year amounted to $7.48 million,  8% lower when compared to the $8.10 million booked for the prior year. As such, net interest income for the year witnessed a decline of 8% to total $18.73 million relative to the $20.39 million reported for previous year. The company indicated, “this decline was mainly due to the reduction in interest-bearing assets over the year to facilitate optimal rebalancing of the portfolio and reflects the contraction in spreads emanating from the rise in short term US interest rates.” PROVEN also highlighted, “spread income was a major contributor to revenue during the year, accounting for 50% of total revenues and reflects PIL’s core positioning in Financial Services.

Dividend income amounted to $342,000, a 58% decrease from the $807,000 recorded in 2018, while fees & commission income notably increased by 62% to $8.20 million relative to $5.08 million in 2018. Management noted the increase in fees and commission, “reflected the Group’s decision to diversify its income towards off balance sheet income sources.” Net foreign exchange gain amounted to $1.63 million relative to a loss of $444,000 million recorded in 2018. Net fair value adjustments and realized gains fell to $1.14 million versus $4.29 million booked in 2018. PROVEN acknowledged that, “this decline was mostly due to the fixed income environment which exerted an upward pressure on yields for the better part for the financial year. Additionally, continued realignment of the portfolio was executed over the year to reduce the overall market and credit risk exposure resulting in a rightsizing of the balance sheet to reflect a greater focus on the other core strategies, namely; Private Equity and Real Estate.”

Other income moved from $3.67 million to total $4.84 million for year, a growth of 32%. Proven booked a 20% increase in pension management income to total $2.83 million, up from $2.36 million booked last year for the same time period. According to management, “the financial results for the period reflect the net impact of accounting adjustments required under the new IFRS 9 Accounting  Standard which took effect from January 1, 2018.”

Consequently, net revenue increased by 4% to total $37.72 million compared to $36.15 million recorded for 2018. For the quarter, Net Revenue slipped 26% to $7.80 million relative to $10.51 million in 2018.

Operating expenses climbed by 11% for the year to total $27.18 million relative to $24.54 million in 2018. Of this, staff costs recorded a 35% increase to close at $11.64 million relative to $8.61 million documented for the prior year. ‘Depreciation and Amortization’ increased 11% to $1.85 million (2018: $1.66 million), while ‘Preference Share Dividend’ increased 32% to $1.29 million (2018: $976,000). Property expense fell 95% to $116,000 compared to $2.16 million for the prior financial year. Operating expenses for the quarter contracted 11% to $7.16 million versus $8.02 million booked for the comparable quarter in 2018.

Consequently, Operating Profit for the year and the quarter declined 9% and 74% respectively to $10.54 million (2018: $11.61 million) and $639,000 (2018: $2.49 million) respectively. Notably, share of profit of associate amounted to $1.31 million for 2019 relative to nil in 2018.

Profit before tax amounted to $11.85 million versus the $11.66 million booked in 2018. Taxation decreased year over year by approximately 23% from $2.15 million in 2018 to $1.67 million.  As such, Net Profit amounted to $10.19 million, a 7% increase when compared to the $9.51 million in 2018. Proven booked profit for the fourth quarter of $1.40 million compared to $1.74 million recorded for the comparable quarter in 2018.

Net profit attributable to shareholders for the year amounted to $6.97 million relative to $5.68 million documented in for 2018. Profit attributable to shareholders for the quarter totaled $1.07 million versus $448,000 booked in 2018. Total comprehensive income for the year amounted to $17.32 million compared to $6.30 million reported for the prior financial year.

Earnings per share (EPS) for the quarter amounted to $0.0111 (2018: $0.0091), while the EPS for the nine months amounted to $0.0017 (2018: $0.0007).The number of shares used in our calculations is 625,307,963. Notably, the stock price for PROVEN and PROVENJA closed the trading period on June 7, 2019 at US$0.26 and $34.14 respectively.

 

PROVEN indicated the following:

• • BOSLIL Bank Limited: Proven Investments Limited currently owns 75% of the equity of BOSLIL Bank Limited. BOSLIL experienced another successful year, as net profit totalled US$4.28 million (US$3.20 million attributable to PIL) was realized. Total Assets of the Bank as at March 31, 2019 stood at US$245.35 million. Boslil’s performance was mainly driven by growth in its core business, reflecting optimal asset liability management; which resulted in the Bank posting a 25.85% year over year increase in net interest income.
• • Access Fiancial Services Limited: Access Financial Services Limited produced a net profit of US$3.86 million and Net Income attributable to PIL was US$1.72 million for the year. The company’s loan portfolio was US$29.78 million as at March 2019, representing a 27.30% increase when compared to the balance as at March 2018. The significant increase in the company’s asset base reflects its acquisition of Embassy Loans Limited, a micro financing outfit with operations in the US.
• • Dream Entertainment: During the 4th quarter, PROVEN acquired a 20% equity stake in Dream Entertainment Limited for a total of J$75.28M. This is consistent with PROVEN’s strategic thrust to identify, invest in and grow, viable real sector private companies. Dream Entertainment Limited has over the years shown the ability to provide enviable entertainment products that cater to a growing audience that is primarily beyond the Jamaican shores. This acquisition not only aligns with PROVEN’s core Investment Strategy within the Real Sector but also its risk to reward objectives in achieving its financial goals.
• • International Financial Planning Limited: PROVEN Investments Limited completed the acquisition of 100% interest in IFP in August 2018. IFP is a licensed securities dealer with offices in Cayman, Bermuda and the British Virgin Islands that caters to a variety of investors ranging from medium to high net worth individuals. IFP contributed US$0.53 million to Net Profits on revenues of US$2.73 million over the period of August 2018 to March 2019.

• • Investment In Associated Companies– JMMB Group Limited: During the year PIL acquired 20.01% of the participating voting shares in JMMB Group Limited. This investment aligns with the company’s core Investment Strategy. JMMB’s expanding presence within the region is consistent with PROVEN’s ongoing strategy diversify the portfolio of investments across the 24 countries of the Caribbean and Latin America.

 

Balance Sheet at a glance:

Total Assets as at March 31, 2019 amounted to $625.91 million (2018: $576.92 million), an increase of 8%. The growth resulted from the Company booking $80.97 million in ‘Investment in Associates relative to nil in 2018. The Company also recorded 77% increase in intangible assets which closed at $35.42 million (2018: $20.01 million).

Shareholders’ Equity totaled $92.01 million relative to $85.10 million in 2018; as such book value per share now amounts to $0.19 (2017: $0.17).

 

 

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