Net profits more than doubled, surpassing a key milestone of US$5.0 million for the very first time

Sygnus Credit Investments (SCI) has achieved its highest net profits and earnings per share in its four-year history along with record core revenues and core earnings for the financial year ended June 30, 2021.

In particular, the alternative investment company’s net profits more than doubled, surpassing a key milestone of US$5.0 million for the very first time. The results were driven by new investment origination activity across the Caribbean at attractive yields, continued proactive credit risk management and growth in its private credit investment portfolio to a record US$82.80 million.

In its Audited Annual Financial Results for the Financial Year ended June 30, 2021, SCI reports that it has remained well ahead of schedule to deliver on its promise made to shareholders at the December 2020 annual general meeting to scale its private credit business beyond US$100 million and deliver at least US$8.00 million in core revenues over the next two to three years.

The results were facilitated by a record capital raise of US$27.1 million in an additional public offering of 249,887,900 ordinary shares in January 2021. Arising from the positive financial results, the Board of Directors will consider an interim dividend payment at a meeting to be held on September 10, 2021.

SCI well positioned to navigate through the pandemic

While the impact of the COVID-19 pandemic on Caribbean economies and on middle-market businesses is ongoing and the trajectory of the regional economic recovery remains uneven and unclear, SCI says it “remains well positioned to continue navigating the effects of the pandemic, given a robust balance sheet with very low leverage and nil realised credit losses or charge-offs since inception. SCI’s core revenues, or total investment income, grew by 44.2 per cent or US$1.99 million to a record US$6.49 million for financial year June 2021”.

This compares with US$4.50 million for the financial year ended June 30, 2020. Ninety-nine per cent of core revenues were comprised of net interest income. The growth of net interest income primarily reflected a record growth in net investment commitments to well managed middle-market Caribbean businesses, to meet their substantial demand for flexible debt capital.

This outcome was in keeping with SCI’s view that the greatest demand for flexible capital typically occurs during periods of economic crisis, as was discussed in SCI’s 2020 annual report and again in its Additional Public Offer prospectus in December 2020. It is also consistent with the growth trends seen in the more developed private credit markets across the globe.

SCI’s core earnings, or net investment income, grew by 24.1 per cent or US$731-thousand to a record US$3.76 million for the financial year in review versus US$3.03 million for financial year 2020.

Eclipsing a key milestone of US$5.0 million in only four years

Net profit attributable to shareholders grew by 154.9 per cent or US$3.06 million to a record US$5.03 million for the current financial year, eclipsing a key milestone of US$5.0 million in only four years. Net profit was US$1.97 million in financial year June 2020.

Total operating expenses increased by US$1.26 million or 45.5 per cent to US$2.73 million for the financial year in review versus US$1.47 million for 2020. This increase was driven primarily by higher management and corporate services fees related to higher assets under management, first time performance fees and some one-off expenses.

Management fees, corporate services fees and performance fees were a combined 76.0 per cent of operating expenses. Management fees were 53.4 per cent of operating expenses, amounting to US$1.46 million vs. US$1.00 million for 2020, growing in accordance with a 44.0 per cent growth in assets under management.

Management fees are charged at a rate of 1.9 per cent of assets under management. Corporate services fees were 9.7 per cent of operating expenses, amounting to US$265.7-thousand vs. US$75.9-thousand for 2020.

These fees only began accruing midway through FYE Jun 2020 and were thus substantially lower last year than the amounts reported for 2021, which now represents the normalised run rate.