SCI JSE Report - Q3 Mar 2020 Final Version 5€¦ · 3/31/2020 · Q3 Mar 2020 Q3 Mar 20199 Mth Mar 2020 9 Mth Mar 2019FY Jun 2019 Summary Results of Operations US$ US$ US$ US$ US$

QuarterlyReport

AS AT MARCH 31, 2020

Sygnus Credit Investments Limited

Unaudited Results for the 9 Months Ended March 31, 2020

Castries, St Lucia | Friday, May 15, 2020

The Board of Directors of Sygnus Credit Investments Ltd (“SCI” or ‘the Company”) is pleased to report its unaudited financial

results for the nine months ended March 31, 2020, along with the Management Discussion and Analysis. The Management

Discussion and Analysis should be read in conjunction with the unaudited financial statements for the 9 Months Ended March

31, 2020.

MANAGEMENT DISCUSSION AND ANALYSIS

Results of Operations

Sygnus Credit Investments Limited reported record nine-month core revenues and core earnings, but lower net profits for

the period ended March 31, 2020. The results were driven by a reported net loss in the third quarter ended March 2020, as

record investment origination was offset by a number of one-off items, including the conversion of J$1.2 billion to USD partly

from the proceeds of new JMD debt that was issued. SCI continues to evaluate the impact of COVID-19 on its business, but

has entered the crisis from an advantageous position with ample liquidity, very low debt, a portfolio of resilient Portfolio

Companies diversified across many regions, and an un-precedented market opportunity for the alternative financing channel,

including private credit, to play a major role in financing the recovery and growth of businesses, jobs and economies.

SCI’s core revenues, or total investment income, grew by 38.6% or US$957.5 thousand to a record US$3.43 million, in the

nine months ending March 31, 2020 (“9 Month 2020”). This compares with US$2.48 million for the nine months ended March

31, 2019 (“9 Month 2019”). For the third quarter ended March 31, 2020 (“Q3 2020”), total investment income grew by 8.9%

or US$88.0 thousand to US$1.08 million. This compares with US$988.6 thousand reported for the third quarter ended March

31, 2019 (“Q3 2019”). During Q3 ’20, growth in core revenues was adversely impacted by (i) temporary timing differences

between interest expense associated with new debt, and interest income generated from the deployment of that debt into

investments and (ii) early exit of a large investment, resulting in lower interest income due to a shorter investment period.

SCI’s core earnings, or net investment income, grew by 38.4% or

US$676.9 thousand to a record US$2.44 million for 9 Month

2020, vs US$1.76 million for 9 Month 2019. For Q3 2020, net

investment income fell by 6.7% or US$49.2 thousand to

US$685.1 thousand, vs US$734.3 thousand for Q3 2019,

primarily due to the aforementioned adverse impact on core

revenues.

Net profit attributable to shareholders was US$1.28 million for 9

Month 2020, or US$652.5K (33.8%) lower than the US$1.93

million for 9 Month 2019. For Q3 2020, net loss was US$355.8

thousand vs US$1.0 million net profit for Q3 Mar 2019. The lower profit outcomes were primarily driven by events in Q3

2020, namely; (i) a net foreign exchange loss of US$714.4 thousand relative to gains of US$185.5 thousand in the similar

period last year. This loss primarily reflected volatility in the JMD/USD exchange rate on one-off purchases of USD equivalent

to J$1.2 billion from JMD debt proceeds and other resources; (ii) the aforementioned adverse impact on core revenues and;

(iii) higher provision for expected credit losses of US$180.4 thousand vs US$13.3 thousand gains in Q3 Mar 2019.

327,278

988,580 1,076,629

827,846

2,481,408

3,438,956

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2018 2019 2020

SCI Total Investment Income (US$)

Q3 Mar 9 Mth Mar

Q3 Mar 2020 Q3 Mar 2019 9 Mth Mar 2020 9 Mth Mar 2019 FY Jun 2019

Summary Results of Operations US$ US$ US$ US$ US$

Interest Income 1,408,003 978,580 3,880,066 2,440,464 3,168,047

Interest Expense (355,266) - (472,002) - -

Net Interest Income 1,052,737 978,580 3,408,064 2,440,464 3,168,047

Participation Fees 23,892 10,000 30,892 40,944 50,944

Total Investment Income 1,076,629 988,580 3,438,956 2,481,408 3,218,991

Total Operating Expenses 391,493 254,278 1,000,716 720,082 1,010,133

Net Investment Income 685,136 734,302 2,438,240 1,761,326 2,208,858

Fair Value Gain (Loss) (146,138) 67,395 159,053 101,299 135,429

Net Foreign Exchange Gain (Loss) (714,427) 185,514 (1,018,292) 126,301 (219,011)

Provision for Expected Credit Losses (180,417) 13,256 (302,873) (60,257) (74,645)

Profit Attributable to Shareholders (355,846) 1,000,467 1,276,128 1,928,669 2,050,631

Earnings Per Share -0.10¢ 0.29¢ 0.36¢ 0.55¢ 0.59¢

Net Investment Income Per Share 0.20¢ 0.21¢ 0.70¢ 0.50¢ 0.63¢

Jason Morris

Page 1



Earnings per share (EPS) was 0.36 US cents for 9 Month 2020 vs 0.55 US cents for 9 Month 2019, and -0.10 US cents for Q3

2020 vs 0.29 US cents for Q3 2019. Net investment income per share (NIIPS) was a record 0.70 US cents for 9 Month 2020 vs

0.50 US cents for 9 Month 2019, and 0.20 US cents for Q3 2020 vs 0.21 US cents for Q3 2019.

Total Operating Expenses

Total operating expenses increased to US$1.0 million for 9 Month 2020 vs US$720.1 thousand for 9 Month 2019, and

US$391.5 thousand for Q3 2020 vs US$254.3 thousand for Q3 2019. The 9 Month 2020 and Q3 2020 reported numbers were

39.0% and 54.0% higher than 9 Month 2019 and Q3 2019 respectively, driven primarily by higher management fees from a

62.0% increase in assets under management. Management fees were 71.6% and 72.2% of 9 Month 2020 and Q3 2020

operating expenses respectively. Excluding management fees, SCI’s 9 Month 2020 operating expenses were US$283.9

thousand, an increase of 47.0% or US$90.8 thousand over 9 Month 2019. Q3 2020 was US$109.0 thousand, an increase of

42.3% or US$32.4 thousand over Q3 2019. These increases were primarily driven by one-off commitment fees relating to the

establishment of bank credit lines and higher fees relating to listing, registrar and software subscriptions. US$19.2 thousand

in Corporate Services Fees reflected accrual expenses for a new contract with a related party covering the provision of

accounting and other corporate services. These fees were accrued for the month of March 2020 and will be reflected going

forward.

Fair Value Gains/Losses

Fair value gains of US$159.1 thousand for 9 Month 2020 was higher than the US$101.3 thousand for 9 Month 2019. Q3 2020

reported a fair value unrealized loss of US$146.1 thousand vs a gain of US$67.4 thousand for Q3 2019. This was driven by

higher interest rates and widening credit spreads due to the corona virus pandemic (“COVID-19”).

Net Foreign Exchange Gain / Loss

Net foreign exchange losses of US$1.0 million for 9 Month 2020 compared with a net foreign exchange gain of US$126.3

thousand for 9 Month 2019. For Q3 2020, SCI reported a net loss of US$714.4 thousand vs gains of US$185.5 thousand for

Q3 2019. During Q3 2020, SCI converted a total of J$1.2 billion to USD, representing resources from a JMD debt issuance and

other sources, to finance new investments. This one-off set of transactions were primarily responsible for the loss during Q3

2020. The movement in foreign exchange gains and losses reflect SCI’s exposure to Jamaican dollar assets, which may

fluctuate based on movements in the JMD/USD exchange rates. SCI does not have a foreign currency trading business.

Provision for Expected Credit Losses (ECL) / Impairment Allowance on Financial Assets

The ECL for 9 Month 2020 was US$302.9 thousand vs US$60.3 thousand for 9 Month 2019, and US$180.4 thousand for Q3

2020 vs a gain of US$13.3 for Q3 2019. The higher ECL was partly driven by a much larger portfolio of private credit

investments, which grew by 51.7%. The Q3 2020 ECL primarily reflected a charge of US$131.2 thousand for 1 Portfolio

Company, whose private credit investment terms will be changed during Q4 2020, to better align its business prospects with

the current COVID-19 economic environment. This Portfolio Company has been placed on non-accrual until the restructured

terms have been agreed and finalized. The ECL charge taken during Q3 2020 or portions thereof, may be reversed in future

periods.

Total Revenues and Total Expenses

SCI’s total revenues are comprised of core revenues, or total investment income (net interest income plus participation fees),

plus the non-core revenue items of fair value gains and net foreign exchange gains. Total revenues were US$3.60 million and

US$930.5 thousand for 9 Month 2020 and Q3 2020 respectively, vs US$2.71 million and US$1.24 million for 9 Month 2019

and Q3 2019 respectively.

Similarly, SCI’s total expenses were comprised of core operating expenses, plus the non-core items of net foreign exchange

losses and ECL. Total expenses were US$2.32 million and US$1.29 million for 9 Month 2020 and Q3 2020 respectively, vs

US$780.3 thousand and US$241.0 thousand for 9 Month 2019 and Q3 2019 respectively. Non-core revenues and non-core

expenses may fluctuate significantly from time to time based on market conditions.

Efficiency Ratio

SCI’s core activities generated an efficiency ratio of 36.4% for Q3 2020, measured by total operating expenses to total

investment income.

Page 2



Private Credit Investment (PCI) Activity

SCI had a record third quarter of investment origination activity. At the end of Q3 2020, SCI’s investment in Portfolio

Companies grew by 51.7% to US$47.39 million vs US$31.24 million in Q3 2019. The number of Portfolio Company investments

increased to 21 in Q3 2020 from 16 in Q3 2019. Note: finance lease receivable on the balance sheet represents PCI activity in

Portfolio Companies and is included in all investment origination activity.

Portfolio Company Investment Commitments

SCI made new investment commitments valued at a record US$10.4 million for a third quarter during Q3 2020, which

exceeded the US$6.47 million for Q3 2019. Investments were originated in the Telecommunication Services, Construction,

Manufacturing and Entertainment industries, in leading firms with strong growth prospects and free cash flow generation.

Significant Exit: There were 4 Portfolio Companies exits during Q3 2020, three of which were regular scheduled exits, and one

of which was an unscheduled early exit valued at US$10.3 million. This large exit was primarily driven by COVID-19

developments, which temporarily delayed the use of funds by the Portfolio Company. The early exit was mutually agreed

between SCI and the Portfolio Company, and is an example of the type of flexible financing solution provided by SCI.

Weighted Average Investment Tenor and Investment Yield

At the end of Q3 2020, the weighted average tenor of Portfolio Company investments increased to 2.3 years vs 2.0 years at

the end of Q3 2019. The weighted average fair value yield on Portfolio Companies declined to 11.3% in Q3 2020 vs 12.3% in

Q3 2019, primarily due to exiting higher yielding investments during the quarter.

Allocation by Industry and Region

SCI’s Portfolio Companies were diversified across 9 major industries in Q3 Mar 2020, the same as the preceding quarter of

Q2 December 2019. Excluding Dry Powder, the top three industry allocations were Infrastructure (21%), Manufacturing

(21%), and Hospitality (12%).

SCI expanded its regional footprint to 7 Caribbean territories, up from 5 the prior quarter, with its first investment in the

Bahamas, and a repeat Portfolio Company transaction with a Barbadian Company with business interest in the

telecommunication services industry. Portfolio Companies from Jamaica accounted for the highest allocation of SCI’s Portfolio

maintained at 44%, followed by the SSS Islands (Saba, St Martin and St Eustatius) of the Dutch Caribbean with 22% and St

Lucia with 12%.

Liquidity and Capital Resources

At the end of Q3 Mar 2020, SCI had US$10.4 million equivalent in Dry Powder. US$10.3 million of this amount was held in

escrow relating to the large private credit investment that was exited early. Subsequent to the end of Q3 Mar 2020, these

proceeds were received. SCI had US$21.8 million in total debt, comprising US$15.09 million in Notes and US$6.70 million in

credit lines. As at Q3 Mar 2020, SCI’s debt to total assets was 0.36X (277% asset coverage ratio) and debt to equity was 0.59X

(excluding cash), both of which were substantially below industry norms locally and globally. In addition to the US$10.4 million

in Dry Powder, SCI has since negotiated an additional US$10 million in one-year financing (awaiting final documentation)

available for drawdown in tranches, and thus has ample liquidity to finance its private credit investment business activities.

Q3 Mar 2020 Q3 Mar 2019 FYE Jun 2019

Summary of Investment Activity US$ US$ US$

Fair Value of Investment in Portfolio Companies 47,390,349 31,238,210 33,966,572

New Portfolio Company Commitments During Period 10,400,000 6,466,800 18,230,520

Dry Powder to be Deployed 10,432,085* 6,467,692 3,142,620

Number of Portfolio Company Investments (#) 21 16 19

Average Investment per Portfolio Company 2,256,683 1,952,388 1,787,714

Weighted Average Term of Portfolio Company Investments (years) 2.3 2.0 1.9

Weighted Average Fair Value Yield on Portfolio Companies (%) 11.3% 12.3% 12.3%

Non-accruing Portfolio Company Investments 1** Nil Nil

Non-accrual rate 2.4%** Nil Nil

* Includes US$10.3 million in receivables on the balance sheet as at Q3 Mar '20, held in escrow, relating to 1 investment exit

**Will be restructuring the terms of 1 private credit investment in Q4' Jun 20 | See provision for ECL in MD&A

Page 3



Balance Sheet

At the end of Q3 2020, SCI had US$60.59 million in total assets, up US$22.44 million or 56.2% over the similar period last

year, mainly comprising of a record US$47.39 million in 21 Portfolio Companies, and US$10.32 million in receivables related

to a large investment exit held in escrow, and US$1.46 million in investment income receivable and US$1.20 million in cash

and cash equivalents.

Shareholders’ Equity

Total shareholders’ equity was US$36.98 million at the end of Q3 2020, vs US$37.46 million at the end of Q3 2019. SCI’s book

value per share was US$0.106 at the end of Q3 2020 based on 350,087,563 shares outstanding, vs US$0.107 at the end of Q3

2019.

COVID-19: Impact, Risk Management and Opportunities

Summary COVID-19 Impact

The following table summarizes the impact of COVID-19 on SCI which occurred during the month of March 2020, which

provides additional clarity on the impact already reported for the entire Q3 Mar 2020 quarter.

The economic disruption caused by the COVID-19 pandemic, is impacting individuals, businesses and economies across the

Caribbean where SCI has Portfolio Company investments. While the assessment of the overall impact of COVID-19 is ongoing,

SCI is relying on the deep knowledge, experienced team and proven investment philosophy that has been developed by its

Investment Advisor and Investment Manager. The uncertainty from COVID-19 is high and likely to persist for some time, but

we believe 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 quality projects with excellent management teams, which are necessary pre-requisites for navigating

through COVID-19.

As a private credit investment company, there are three key priorities for SCI during this COVID-19 period. Firstly, (i)

proactively managing the risk of SCI’s portfolio, that is, minimizing “realized” credit losses, versus “expected credit losses”, as

the latter will fluctuate based on market conditions but the former is permanent; (ii) having ample liquidity and a flexible

capital structure to support existing Portfolio Companies while playing offense on selective new investments with strong

Item March 2020 Comments

Fair Value Loss -US$172.9K COVID-19 spread widening and rise in interest rates lead to unrealized loss in fair values in the month of March 2020.

Expected Credit Losses

-US$133.2K ECL charge for the month of March 2020, largely reflecting the proactive amendment to the terms of a Portfolio Company investment that will occur in Q4 2020, precipitated by COVID-19. This charge may revers in future periods

Early Investment Exit -US$10.3M Early investment exit in March as COVID-19 temporarily delayed use of proceeds by Portfolio Company; Lower interest income due to the exit and lower total investment portfolio. However, early exit also mitigated against COVID-19 risks

Distribution

11%

Energy

7%

Hospitality

12%

Manufacturing

21%

Mining and Quarrying

6%

Entertainment

6%

Infrastructure

21%

Construction

10% Telecomunication

Services

6%

Portfolio Company Allocation by Industry Ex-Dry Powder: Mar 31, 2020

ABC Islands

3%

Jamaica

44%

St. Lucia

12%

Cayman Islands

6%

SSS Islands

22%Bahamas

7%

Barbados

6%

Portfolio Company Incorporation by Region: Mar 31, 2020

Page 4



downside protection and (iii) deepening current partnerships and building new relationships to grow the business beyond

the duration of COVID-19.

Proactive Risk Management

SCI has a three-phase risk management process to monitor and manage risk specifically dealing with COVID-19 for its private

credit portfolio. In the first phase, lines of communication with Portfolio Companies are opened to gather data and assess

COVID-19 risks. Portfolio Companies are then segmented into most affected and least affected and this monitoring process

continues throughout the duration of COVID-19.

In the second phase, short term game plans are developed for the Portfolio Companies most affected by COVID-19 to provide

them with assistance to get through the current environment. The implementation strategy of the game plans are prioritized

by pre-established criteria.

The third phase involves designing and executing longer-term plans for Portfolio Companies. This is done collaboratively with

the management teams, principals or sponsors of each Portfolio Company. In the majority of cases where the Portfolio

Companies are doing fine despite COVID-19, the game plan is business as usual. If there is a more challenging case, SCI will

focus on credit-enhancing amendments and new investments by principals or sponsors, or, on incremental investments on

attractive terms, where SCI may contribute to a solution alongside capital support from the principals or sponsors. While no

two transactions are the same, SCI’s flexibility and nimbleness allows for the structuring of win-win solutions.

As discussed earlier in the MD&A, one Portfolio Company falls into the third category where a longer-term game plan is

required. SCI is proactively amending the terms of this private credit investment, to provide a win-win solution for both SCI

and the affected Portfolio Company.

Ample Liquidity

The most important thing for a private credit company during stressed market conditions is liquidity, liquidity and more

liquidity. SCI has fortified its balance sheet with an additional US$10 million facility to complement the US$10.3 million in Dry

Powder available at the end of Q3 Mar 2020 to (i) support existing Portfolio Companies who are growing due to the current

environment, for example in distribution & telecommunication services (ii) make incremental credit enhanced investments

in existing Portfolio Companies where necessary and (iii) make selective new investments with strong downside protection

based on the current robust, albeit scaled back pipeline.

It’s a challenging environment, and SCI’s overall disposition is to be incredibly cautious in deploying capital. However, history

has shown that some of the most attractive opportunities exist during and after significant market dislocations. As the leader

in the private credit industry, SCI is prepared for this eventually during and post the COVID-19 environment.

Partnership Approach and Outlook

SCI is seeing an unprecedented opportunity to deepen existing relationships and forge new partnerships with industry leading

companies. This includes collaborating with a wide cross section of traditional financial firms, to support companies that will

survive the current environment and lead the economic recovery which will encompass emerging technologies, job creation

and overall economic growth.

Finally, we believe that middle market firms who are SCI’s core partners, will continue to play a critical economic role in the

post COVID-19 era.

Page 5

Page 6

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31-M-20

31-M-19

31-M-20

31-M-19

30-J-19

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1,408,003

978,580

3,880,066

2,440,464

3,168,047

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1,052,737

978,580

3,408,064

2,440,464

3,168,047

F

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67,395

159,053

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185,514

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126,301

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23,892

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30,892

40,944

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930,4911,241,489

3,598,0092,709,008

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13,359

36,308

22,358

37,323

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5,772

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19,705

3,127

5,317

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3,750

3,750

15,388

11,787

36,537

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3,230

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6,848

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2,669

3,289

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282,491

177,652

716,837

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Page 7

P 4SYGNUS CREDIT INVESTMENTS LIMITEDC S C FN M 31 M 2020

(E pre ed in Uni ed S a e Dollar )

U U AN N Y

31-M -20 31-M -19 30-J -19

Ca a acP 1,276,128 1,928,669 2,050,631 A :

N (3,408,064) (2,440,464) (3,168,047) I 302,873 60,257 74,645 A N 38,133 - - F (159,053) (101,299) (135,429)

(1,949,983) (552,837) (1,178,200) C :

O (10,307,333) 303,917 766,103 D (84,247) (92,540) (116,809)

C :A 64,025 984,088 175,605 D 161,845 (183,876) (122,980)

(12,115,693) 458,752 (476,281) I (419,586) - -

N ( ) / (12,535,279) 458,752 (476,281)

Ca acP (66,663,262) (18,117,761) (31,254,244) I 76 - (76) E 53,312,489 3,797,886 14,102,735 F , (216,824) (1,182,200) (1,079,011) P (7,002,302) (9,835,505) (12,675,881) E 8,046,536 24,839,555 31,534,748 I 3,315,982 2,158,834 2,500,145

N ( ) / (9,207,305) 1,660,809 3,128,416

Ca a c acD (905,137) (931,354) (954,008) L , 6,698,191 - - P 15,055,612 - -

N / ( ) 20,848,666 (931,354) (954,008)

N (d c a ) / c a ca a d ca a (893,918) 1,188,207 1,698,127

Ca a d ca a a b a 2,098,386 400,259 400,259

Ca a d ca a a d d 1,204,468 1,588,466 2,098,386

Page 8

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79,672

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Page 9

Page 5 SYGNUS CREDIT INVESTMENTS LIMITED Notes to the Financial Statements Nine months ended March 31, 2020

1. Id ca

S gnus Credit Investments Limited (the Compan ) as incorporated in Saint Lucia on Januar 13, 2017 under the International Business Companies Act as an International Business Compan ( IBC ). The Compan is domiciled in Saint Lucia ith its registered office at McNamara Corporate Services Inc., 20 Micoud Street, Castries, Saint Lucia. The Compan is a specialt credit investment compan , dedicated to providing non-traditional financing to medium-si ed firms across the Caribbean region. Non-traditional forms of credit are more customi ed and fle ible than traditional financing. The Compan offers an alternative channel through

hich medium-si ed firms, hich are t picall underserved b traditional forms of financing, can access capital to drive their e pansion and gro th. The investment portfolio of the Compan is managed and administered b S gnus Capital Management Limited ( SCM ), a related compan incorporated in the Ca man Islands under the Ca man Companies Act (the Act ) and registered ith the Ca man Islands Monetar Authorit ( CIMA ) as an E empt Investment Management Compan . The Compan has a holl o ned subsidiar S gnus Credit Investments Jamaica Limited, hich as incorporated in Jamaica on Ma 7, 2019 ith 100 shares at no par value. The Compan and its subsidiar are collectivel referred to as the Group in these financial statements.

2. S a c a c a d ba a a

(a) S a c a c

These financial statements have been prepared in accordance ith International Accounting Standards 34, In erim Financial Repor ing, and are to be read in conjunction ith the audited financial statements for the ear ended June 30, 2019. The notes to the interim financial statements provide an e planation of events and transactions that are significant to understanding the changes in the financial position and performance of the Group since its financial ear ended June 30, 2019. The significant accounting policies adopted are consistent ith those of the audited financial statements for the ear ended June 30, 2019 hich ere prepared in accordance ith International Financial Reporting Standards (IFRS). Ne standards effective in the current ear There are several ne standards and amendments to published standards that came into effect during the current financial ear. The standards, hich include IFRS 16, Lea e have been assessed. No signi cant impact to the nancial statements has been determined from the adoption of these standards.

Page 10


1. S a c a c a d ba a a (c d)

(b) Ba a a The interim financial statements have been prepared under the historical cost basis, e cept for certain financial instruments hich are measured at fair value. The interim financial statements are presented in United States dollars, hich is also the functional currenc of the Compan .

2. D d d On Februar 13, 2020 the Board of Directors approved the pa ment of an interim dividend of US$0.0029 per share amounting to $1,015,254, hich as paid on April 6, 2020 to shareholders on record as at March 16, 2020. For the nine-month period ended March 31, 2020 the dividend per share

as US$0.00539 (2019: US$0.0030708).

3. Ea a Earnings per stock unit is calculated b dividing the profit attributable to stockholders, b the

eighted average number of ordinar stock units in issue. 31-Mar-20 31-Mar-19 30-Jun-19

Profit attributable to stockholders ($) 1,276,128 1,928,669 2,050,631

Weighted average number of ordinar stock units in issue 350,087,563 350,087,563 350,087,563

Basic earnings per stock unit 0.36 0.55 0.59

The Group does not have an instrument that has a dilutive effect on its basic earnings per share.

4. N c a a a d The net foreign e change loss being reported for the quarter just ended as impacted b the conversion of J$1.2 Billion to USD over the period. For the nine-month period to March 31, 2020 there as an overall net foreign e change loss due to the depreciation of the Jamaican dollar over this period. The average foreign e change rate moved from J$130.5162 to US$1 at the end of the financial ear ended June 30, 2019 to J$133.9592 at the end of March 2020.

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5. L a a d b

This represents net borro ings hich include bank credit lines of $6,698,191 at 6.00% to 6.50% per annum.

6. N a ab This represents unsecured J$ and US$ fi ed rate debt issued in tranches and bearing interest rates of 6.00% to 6.25% per annum, pa able on a quarterl basis. The notes mature in December 2021 and December 2022.

7. S ca acc c (a) S c c a d d a a

Securities purchased under resale agreements are short-term transactions hereb securities are bought ith simultaneous agreements to resell the securities on a specified date at a specified price. Resale agreements are accounted for as short-term collaterali ed lending and measured at amortised cost.

(b) F a c a

A financial instrument is an contract that gives rise to a financial asset of one enterprise and a financial liabilit or equit instrument of another enterprise. (i) Classification and measurement

The classification of financial assets under IFRS 9 is generall based on the business model in hich a financial asset is managed and its contractual cash flo characteristics. In appl ing IFRS 9, the Group classified its financial assets as fair value through profit or loss (FVTPL) or amortised cost.

A financial asset is measured at amortised cost if it meets both the follo ing conditions and is not designated as FVPTL: - the asset is held ithin a business model hose objective is to hold assets to collect

contractual cash flo s; and - the contractual terms give rise on specified dates to cash flo s that are solel pa ments

of principal and interest on the principal amount outstanding (SPPI).

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8. S ca acc c (c d)

(b) F a c a (c d)

(ii) Impairment

The Group recogni es allo ances for e pected losses (ECLs) on the financial instruments measured at amortised cost. Under IFRS 9, there is a three-stage model for impairment based on changes in credit qualit since initial recognition: Stage 1 - financial instruments that are not credit impaired are included in Stage 1. The ECL is measured at an amount equal to the e pected credit losses that result from default events possible ithin the ne t 12 months. Stage 2 - hen there is a significant increase in credit risk since initial recognition, but the financial instrument is not considered to be in default, it is included in Stage 2. This requires the computation of ECL based on the probabilit of default over the remaining estimated life of the financial instrument.

Stage 3 - a financial asset is credit impaired and included in Stage 3 hen one or more events that have a detrimental impact on the estimated future cash flo s of the financial instrument has occurred. Similar to Stage 2, the allo ance for credit losses captures the lifetime e pected credit losses.

9. R a d a a ac The Compan is currentl in discussions ith a related compan to provide corporate and accounting services. The Board is in support of the Compan entering into the arrangement, ho ever, a definitive agreement ill be put in place upon the finali ation of the discussions. Pending the finali ing of the definitive agreement, an accrued e pense of $19,192 has been made in these financial statements in respect of services that have been provided under the proposed arrangement. Investment management services are also being provided to the Compan b a related compan under a separate Investment Management Agreement for hich the management fee as incurred.

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10. I ac A C a (COVID-19) During the period, the World Health Organi ation declared the Coronavirus (COVID-19) outbreak a pandemic due to its rapid spread across the globe. Caribbean countries have been affected b the outbreak hich has caused disruptions in business operations due to a do nturn in the econom and significantl increased economic uncertaint . Management is currentl assessing the impact on financial performance, primaril in the assessment of securit values and the probabilit of default in performing e pected credit loss calculations. The Compan maintains a ell-diversified portfolio of investments that is e pected to cushion the impact of the crisis, ho ever, Management continues to monitor the turn of events closel , and is activel

orking on implementing the necessar strategic actions to mitigate the effect on business activities.

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No Shareholders Shareholdings % Holdings

1 ATL GROUP PENSION FUND TRUSTEES NOMINEE LTD 27,500,000 7.9%

2 JCSD TRUSTEE SERVICES 27,249,466 7.8%

3 MF&G TRUST & FINANCE LTD 20,144,000 5.8%

4 NATIONAL INSURANCE FUND 20,000,000 5.7%

5 JMMB FUND MANAGERS LTD - T1 EQUITIES FUND 19,460,000 5.6%

6 HEART TRUST / NTA PENSION SCHEME 8,189,300 2.3%

7 MANDALA INC. 7,765,000 2.2%

8 GASSAN AZAN 7,285,700 2.1%

9 JAMAICA MONEY MARKET BROKERS LTD FM10 6,933,400 2.0%

10 WILDELLE LIMITED 5,500,000 1.6%

Subtotal 150,026,866 42.9%

Total 350,087,563 100.0%

Top Ten Shareholders

Shareholdings of Directors, Senior Managers & Connected Parties

No Director Shareholdings Connected Parties % Holdings

1 Clement “Wain” Iton 95,200 N/A 0.03%

2 Linval Freeman 10,000 Donna FreemanKristifer FreemanKimberly Freeman

0.003%

3 Ian Williams 1,000,000 Ladesa Williams 0.29%

4 Hope Fisher Nil N/A Nil

5 Damian Chin Nil N/A Nil

6 Peter Thompson Nil N/A Nil

7 Dr. Ike Johnson 95,300 N/A 0.03%

Shareholdings of Directors, Senior Managers & Connected Parties

No Senior Management Shareholdings Connected Parties % Holdings

1 Sygnus Capital Management 5,300,000 Dr. Ike Johnson 1.5%

2 McNamara Corporate Services Nil N/A Nil

Jason Morris

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Documents

SCI JSE Report - Q3 Mar 2020 Final Version 5€¦ · 3/31/2020 · Q3 Mar 2020 Q3 Mar 20199 Mth Mar 2020 9 Mth Mar 2019FY Jun 2019 Summary Results of Operations US$ US$ US$ US$ US$