Sygnus Credit Investments Limited (SCIJMD) Earnings Call Transcript & Summary

Good morning again, everyone. I am Rand Landey, Assistant Vice President at Sygnus Capital. I would like to give everyone a warm welcome this morning to our earnings call presentation for financial year ended June 2024. Just a reminder to everyone joining that you can submit your questions during the presentation. And those questions will be addressed in the Q&A section of the meeting. All the information that is presented here is to be ready in conjunction with the audited financial statements as well as the MD&A can be found on Sygnus Group's website. I would like to now welcome Mr. Jason Morris, Co-Founder, Executive Vice President and Chief Investment Officer, Sygnus Capital, would be guiding us through the presentation this morning. Over to you, Mr. Morris.

Ryan, thanks so much. Good morning, everyone. Today, first of October, I think this is the latest that we have ever had an earnings call, since we kind of started this process a couple of years back. So the first thing that I would like to do after saying good morning again to everyone, wherever you may be listening from is that, would really like to apologize profusely for the late release for audited financial statements, which was due at the end of August. And we released it a month later. I think if you ask me the latest release of audit financial by SEC, which is not a good thing. We don't take shareholders' communication -- communicating to shareholders lately. We tried everything in our board to get this out on time. Unfortunately, we were unable to. In my former life, I used to be a researcher, right? So I just made a quick look at the JC website. And I recognize that there were and it's first page, where you have the audited financials being reported. There are actually 23 notices of delayed audited financial statements, including about half a dozen of extended delay, meaning it was delayed for us and [indiscernible] again. I'm not pointing out that data as an excuse, right? I'm just saying if there are almost 2 dozen requests are posting us delayed audited financials then the -- there seems to be some underlying issue that is affecting the auditing of our financial statements. which I think is a very something to note. So with that preamble, an apology, I hope we are never in a situation, again, where our audited financials is delayed and it's a good thing is that we still got the financials [ all case ], because we chose to audit our financial in 60-day period rather than 90 days. So at least the information is getting to you in good time. And to make up for the fact that our financials were delayed, we are going to give you some additional information today, right. All right. So with that preamble [indiscernible] -- let's jump right into it by getting to the presentation. So the first thing I'd like to say is that SCI is a rated entity by CariCRIS and our ratings were affirmed by CariCRIS in July, which is jmBBB+, on Jamaican scale, a stable outlook and CariBBB- with a stable outlook. So we have a strong partnership with CariCRIS on the rating agency on a intent to meet a rated entity. [indiscernible]. Now into the preamble before we actually done being this [indiscernible] in terms of dashboard, there are 6 points I'd like to highlight. The first 1 is just the earnings of Sygnus Credit Investments would have generated record. Ryan, can you go to the slide please, would have generated record earnings per share, record net profit, and record total investment income. And therefore, across all the various ways that you look at our other financial statements in terms of earnings for I think SCI would have done reasonably well, during the period. [indiscernible] to be better, but not [indiscernible] in earnings per share and the profit and the top line revenue is good. And we'll give you a lot of additional information today on the earnings for SCI in terms of go forward basis as well. Second point I'd like to highlight is Puerto Rico and the transformation is taking place here -- last year this time, we would have been explaining to shareholders that we are doing a transformation and transformation was expected to be concluded -- we have reported that, we would have come through the transformation on July 1, 2023, right? And obviously, you would need time to show you the results of that transformation. And I'm happy to report, as I do later in the presentation that these earnings of reported business increased by 5.7x delivering, I think, a record USD 4.2 million. And I'll get into that a little bit later. So if you think about that net profit quarter of our business has generated. I recall that the Puerto Rico business is not consolidated in SCI to that $4.2 million you're not going to see it in SCI's income statement, right? You just going to see a fraction of that reported in terms of valuation gain. If you think about that, [ these ] trading of Puerto Rico, then as we would have indicated last year and maybe earlier than that as well. So we expect that the Puerto Rico business is likely to not only arrive on SCI, but perhaps the [indiscernible] on the SCI business in due course. And to see we are certainly on that, of course. Of course, there are a part of reported the transformation. Other than the financial performance, which was phenomenal, right, is the fact that we would have restructured the business and the business is now optimized in terms of how it originates and deploys capital and the cost structure of the business and the corporate structure in terms of taxation [indiscernible]. Third item is the original time platform. Its financial year, would have concluded with SCI's private credit platform, which is the English speaking Caribbean portion of the platform plus the Puerto Rico, which is probably [indiscernible] only Spanish speaking portion of the platform, for the time being the investors Puerto Rico would have delivered USD 150 million in the province in one single financial area, which is an incredible, incredible feat, right? And that incredible feat would have been substantially active by fact that from a funding point of view, SCI would have raised on the card $50 million from Jamaican [indiscernible] in our preference shoes, which was the largest. Not just the largest capital in SCI history. It actually was the largest risk -- it was the figure was bigger than the combined [indiscernible] capital was risen top market for all of 2023, which was just phenomenal. And I think the U.S. dollar portion of the capital was $40 million, which was also a record, I think that's the largest U.S. dollar capital [indiscernible] on the public market at JC, since FCI became a proposed company, if memory serves right, which would have been about trouble in June 2018. So those are really phenomenal sheets via a [indiscernible] company. Of course, not to be [ done ] if a raise capital in record amounts from shareholders. We would have returned [ a ] dividend to shareholders as well. I think, [ USD 3.15 ]. And before I left that market, I think the Puerto Rico platform would have also increased downward to the dry powder, it has a disposal by increasing its moving to increase this bank credit lines that it has it's partner in Puerto Rico. So our own funding on capital return to shareholders were record year. It was our record year. This [indiscernible] highlight is internal risk management is that SCI did not digitalize any losses during the financial year and 2 non-performing churn investment or order book would remain too. And I give more highlights on the risk management profile of the portfolio. And the last thing, and this may save the best for last, which would have occurred subsequent any financial year. And September 18 to be exact. We have been working diligently for 1 year trying to get international financing into SCI. In other words, trying to get capital from outside of the Caribbean to come into the Caribbean to deploy into Caribbean businesses and to affect the lives and livelihood of the Caribbean. And on September 18, we see the very good news from our partner, Oil Business Capital, we would have secured a USD 10 million long-term loan facility. And this is, we think, is the first, after many more that will be coming down the pike. The importance of this facility is that it is back in terms of our guarantee by the United States Development Finance Corporation or the DFC this would be the first time that US DFC was providing a guarantee both for our loan facility that is targeting business in Jamaica that has never been done before. So SCI basically brought new ground with its partner with [indiscernible] and having DFC there as a guarantee for the facility. And we see more about this later on. I think we have perhaps a press release. There's some kind of release that's going to go from the -- from the DFC 3 in airport later today, and [indiscernible] has gone out already. So this is kind of heart of [indiscernible] as we're delivering it. And not to be [indiscernible] obviously, because we have reported our financial late and then we apologize for that. I tried everything in our board. We will have the Board will meet in sharp [indiscernible] consider and if it fits a dividend based on the audited financials that would have been released yesterday. So now, we [ play ] accounted interim [indiscernible] -- in terms of the performance for the year, SCI recorded profit $6.03 million, up 17.3% versus last year. Total investment income, also a new milestone, crossing the $10 million threshold [indiscernible] it's down, and coming out $10.1 million or 13.6%. Net investment income, $5.28 million or 3.9%, earnings per share, USD 0.0103 USD or 1.03 US cents, which ever way you prefer, which is our new record and we spoke about $80 million [indiscernible] $3.15 million was the annual income. Now in terms of what would have contributed to record profit, there are 2 key items that I want to highlight and I drill down a lot into them, we would have obviously generated a lot of total investment income from a much bigger portfolio in net capital that would have been raised in the period. [indiscernible] in particular, would have increased its net profit by $5.4 million to $4.18 million following the first full year or restructuring and however, in SCI's financials, the only thing that you're going to see there is $1.3 million reflected in Porter investment income, which comes as part of total investment income. And that's because as we would have explained and more to the earnings call before that the 5% is not consolidated up into SCI doesn't need an accounting standards for consolidation. And so we have to use the valuation [indiscernible] utilizes, market multiples. And if they are unfavorable movement in market multiples, then what would happen is that the movement in value of [ absent ] will be adversely affected. And we would have seen this in the first 6 months of the financial year in the first quarter, when we reported would have had a big loss of, I think, 400,000 with the big in the relative scheme of SCIs profitability. And for the 6-month period, even though would have recovered some of that somewhat would have been reported a loss. By the end of the financial year, you would have -- you see we got upto $1.3 million. And so we're happy for that, which is higher than the figure that I would have reported last year, and I will delve a lot into this later. However, that $1.3 million obviously is not reflecting the true value that has been created in Puerto Rico business this year. So I just wanted to highlight that for context, right? The second thing is that if you look below the line, we would have had a tax credit of [ $632.6000 ] and a large part of that would have been driven by the record in spend of our deferred tax asset from the Puerto Rico business, the cause that a restructuring that would have been done. And I will delve a lot more into that, and I go for the [indiscernible] I want to highlight those 2 things for you. On the next slide as usual, I just want to give you some color. I don't want to go through all the numbers here, you already have the numbers and you can go through them in your own time, right? But obviously, I want to highlight the fact that interest income obviously went up substantially, but you can see the interest expense moved from $5.9 million to $10.3 million, right? And the jump in interest expense, which was substantial reflected 2 things: 1, obviously, would have increased our use of [indiscernible] funds, substantially to fund the growth in the balance sheet and deployment of capital, but second thing, obviously, we're in a high interest rate environment and the cost of capital would have been quite high. Fortunately, Jamaica, which is one of the primary markets that we raise capital from started cutting interest rates. They went down by 25 basis points in August, other move before US [indiscernible] and subsequent to that, of course, we know that the factor mobile continued with 50 basis points in September. So that's good. In terms of our interest expense. Obviously, our portfolio is structured in a manner, where we are starting problem for plants. So as interest rates go down, we expect that we will [ luck in ] before the overall asset sale at the portfolio the yield start to go down. The second thing I'd like to highlight, as I said before Puerto Rico credit for net income. And if you at, you can see that. First of last year, we reported 372,000 and report $1.3 million now. Okay. That's a big job, right? You're talking about 4x reported figure. But this doesn't tell the full story, all right. The cars, the price multiples that would have been IFRS. We have had adverse movement in those during Q1 and Q2 meant that the figure that you are seeing here, $1.3 million could have been substantially higher for part of the course. What we think will happen on a go-forward basis is that we still -- we will have a catch-up period, where we are getting the true underlying part of our this on a go forward basis. Just like we would have reported in Q1 and Q2 when we received a lot of questions. I mean during the AGM, if I recall, a lot of questions about the Puerto Rico credit for investment income. And I was explaining that the underlying business was the phenomena as well and you'll see this on the next time. So the business is seeing phenomenally well. It's just in the [indiscernible] which were recognized in the revenue, it is affected by market multiples. So the other thing I want to show you is okay, in parent allowance last year would have had a large allowance on [ 4.9% ] and was [ 845k ], and that would have been driven, of course, by the movement easier due to the write-off of [indiscernible]. And this year, we didn't have any write-offs. So this year, our ECL is just going back to the normal run rate. And that's the reason why the impairment allowance is substantially half of what it was last year. And a final point here is taxation credit that is that I'll give you some more color on when I get to the next slide. So the next 2 slides are brand new in terms of information that we're going to share. So this earnings call is going to be a little bit longer than perhaps normal, but I need you to understand [ call ] business. So next slide. So here, right, first, on the earnings for the Puerto Rico credit fund, which is the line item that we spoke to about [ $1 million 4,593 ] [Technical Difficulty] that you saw coming on a total investment -- it's important part we want to understand this. So effectively, if you look on the left most column first, right, starting from the bottom up. So you see Acrecent Financial LLC. And by the way, the name was changed effective July of 2023 from Acrecent Financial incorporation or corporation to Acrecent Financial LLC and a reason for the name change is to change the corporate structure to allow the company to become more tax efficient by taking advantage of the [indiscernible] reducing fees in Puerto Rico for certain types of the investment. So that's the reason why we changed the name. So you got the opportunity [indiscernible], right, which is a company that was acquired by SCI in 2022, February. That's owned 100% by Sygnus Credit Investments Puerto Rico fund, right? SCIPRF, so we use our company to effectively acquire shares of [indiscernible]. And so present is a operating entity and SCIPRF is a holding company. And then above that, you have Sygnus Credit Investment Puerto Rico incorporated inc, SCIPR, and that was 95.58% of the whole SCIPR, which then owns a percent, right? So that structure we used to do the acquisition. And so our stake in [indiscernible] effect with the 95.58%. So that's the less, [indiscernible] if you move to the second column, you will see, okay, the net profit of -- at financial limiting was $4.18 million, right? And the other company that was acquired in February 2022. And you can see that up is 5.7x greater than [ $733.8 ] that was reported a net profit for the previous financial year. Now I would also highlight that the financial year-end for [indiscernible] was changed and so to June to align with FCI and that change took effect [indiscernible] July 1, 2023. So this is the first full year of having finance as reported [indiscernible] in a year or 2. So what we did was to go back just look at [indiscernible] price and what would last year [indiscernible] will look like, which is why you are seeing on the [ 733k ]. So you see of note in the holdco, which is actually consolidated, right. There are some expenses that again in older so the $4.18 million gets translated to $3.69 million after taking expense into consideration. And there are some last year, there were some one-off revenues that caused the $733,000 net profit to be $1.47 million, right? But for our intent and purposes the profit that you see on Acrecent Financial LLC is watching concurrently up to holdco SCIPRF, when you normalize those for one-off expense. No, that's where the consolidation stops because when you get to SCIPRI, there is no consolidation that takes place. While you have in SCIPRI is a valuation of the investment in SCIPRF. Remember, so we spent $22.5 million, I thiAcrecent Financial LLCnk, on acquisition, then we would have another $2 million in earn-out. And then we would have increased our stake -- last year, we increased our stake by $3 million. I think we reported in December, we would have invested another $3 million buying additional shares in [indiscernible] by spending about $3 million, right? So all of that money that we invest either we do [indiscernible], we are valuing that. And fundamentally speaking, what should happen is that the book value up a percent is what we are looking at, right? So we are applying some valuation metrics. We are applying a discount, where we are applying a control premium, [indiscernible] to premium applying marketability, lack of marketability, discount and then a market price to book multiple. So the book value of Sygnus Credit Investment Puerto Rico Fund. So what we do is we take that value we started the financial year. So June 2020, will be watch the figure at the end of June 2023 and then watch the figure at the end of June 2024 in terms of book value and the difference between the 2 is what gets reported in SCIPRI. So that 1.3 million is what you see is what flows through to SCIs income statement. And obviously, if you price the book based on what's happening within market multiples from public solicited companies that we are using. If the market multiples go up down because the income that you see in SCIPRI to go off, right? So you can see that effectively, $4.18 million "that translated into $1.3 million" and $733.8k got translate [ $232k ]. That is why I'm going to give you the context for you to understand. Why is it important to understand as well when BP arrives when Acrecent Financial LLC start to pay dividends backup to SCI, obviously, the amount of dividend that SCI shareholders will be able to receive from [indiscernible] is not going to be dependent on the $1.3 million that you see in SCIPRI, it's going to be dependent upon $4.18 million that is made by [indiscernible] than we own 95.58%. So that's the reason why we don't want to give you the context so that you have to see 1.3 to 1.3 is 4x what the [indiscernible] we have reported last year. But the real earnings power that SCI has at its disposal is $4.18 million that you are seeing [indiscernible]. So if you move to the next slide, again, we're going to move column by column. So what we are showing here now is, okay, on the previous slide, I showed you kind of the corporate structure of the Puerto Rico business and the different holdco than the operating entity. So now, I'm driving down more into a Acrecent Financial LLC to operating entity. The kind of experience you, okay, what does -- what really happened in terms of the transformation? And what does this mean for the 2024 financial year that we just reported, what does it mean on a go-forward basis. So effectively, there are 3 main things that happened with the transformation, right? So the first thing that happened was that forming that happened on 3 effects. So the first meeting that happened was that we -- Acrecent was an internally managed private credit company, meaning the employees were part of the firm. So the firm had actually -- or the expenses related to operating our business, still lightening on our business. And we change that we would have made was to separate the company from the management, right? So similar to all us SCI, we only look at SCI's balance sheet an income statement is just a pure financial asset holding company. There are no employees in it. And there are no expenses related to employee the company of [indiscernible], our management fee to manage the firm. And so you get a clean balance sheet. We did the same thing 5%. So we extracted the management and so you now have a clean balance sheet with only assets related to investments. So what that meant in terms of -- from a total investment income on top line revenue, is that there are some income that was being earned by Acrecent that really is fees being earned by the manager of the business. From a [indiscernible] manager family business, effectively after sale go down with lost. And for last year, it was $688.8000 in revenue, right? So that's revenue total investment income went away. So you can in 2024 financial year that went to nil, because it will -- you all now take this, and it will never existent, it's gone forever. So that's a negative in terms of revenue that's last manage to check in our management company. Now on the expense side, when we support the management company, what would have happened is that as you can see there by internal management expenses in June -- in the financial year ended June 2023, you see that 3.48 million and in financial year in June 2024, you see nil. So we would have given up $688,000 in revenue, right? Is $690,000 in revenue, but we also would have got with us $3.48 million in internal management expenses. So if you take in account to those 2 numbers you realize that Acrecent is already ahead again because similar to our revenue will not have a return similar this $3.40 million in [indiscernible] never return. These are permanent removal, right? It's being replaced permanently or the replacement that was replacement sooner at the SCI management fee, right? So you can see that in financial June 2024, [indiscernible] fee amounted 1 million, but for financial year June 2023, there [indiscernible] management fee. And there was also a Corporate Services fee, 223k and for the previous year, it was none. So the $3.48 million in internal management expenses very pleased with [indiscernible] SCI Software management fee and our corporate services fee, and these are charged and are presented on the assets under management. So this will go up and down based on the volume of the assets under management just like SCI. And that now creates a clean and decent cost structure. So from 3% cost structure of point of view. We would have replaced $3.48 million in kind of recurring internal management expenses with $1.2 million for 2024 financial year. And this is a full year, right? I'm giving you data as not fully the full year car started July 1. And so we would have reduced expenses by $2.28 million. And the balance sheet remained exactly the same in 2025 financial year then basically this year [indiscernible] we will have made again in terms of if we -- if you have the old structure in place. That is that -- that is a permanent reduction in the cost footprint of the business. So that's the same thing for me, right? $2.28 million without [indiscernible] cost. All right. That is financing that would not happen are the second sort of fixed for us, the change that we made and it had 2 effects. One on the revenue, and one on the experience, but on a net basis, we save substantial will have probably the substantial financial benefit to shareholders. All right. So the second that we did or the change from a limited from a corporation structure to limited liability company structure. And the effect of that, you can see, was in June 2023, would have had taxes of $1.17 million, $1.17 million. In 2024, we tape -- and that's because of the up 60 structure that exist in Puerto Rico, you're making a new investment, then for next time by year, you can take advantage of tax credit. And so basically for 2024, absolutely not paying taxes, and there will not more taxes view and the ended up -- the only other taxes due on a go-forward basis. So if you take the net effect of what other said, the enhanced tax structure, the efficient cost structure and the revenue that would have been last then you see that we have created a $2.76 million positive financial impact in the first year, first full year of restructuring. And this is a permanent structure for Acrecent on a go forward basis, which means that the profitability that we showed for Acrecent on the previous slide is kind of the new steady state for Acrecent on a go forward basis. So we felt important to kind of spend a lot of time driving building into that so that you can understand why we kept saying that, for example, it made sense for us to increase our stake our shareholding in Acrecent in December when we made that increased investment. And while we will continue to support this business with additional investments as required in the future. So now we can get into our usual reporting, which I won't spend too much time on. So in terms of inter management expense ratio, DCF ratio almost above the 40% threshold coming on at 47.7%. Again, RMO exclusive, this would have been as a result after first 6 months of the financial year being adversely affected by lower than expected revenues primarily driven by the adverse price [indiscernible] multiple that affected Acrecent revenue that we reorient the financial statement and in the financial year with about $1.3 million in recognition, is we lower on what we were expecting. From a management expense ratio, however, 2.85% threshold we're at 2.4%, where we in the threshold-- and on age, I want to pause here for a second to just give you some more insight into the Puerto Rico business. So if you think about the Puerto Rico business in terms of Acrecent. Acrecent's efficiency ratio, right? Was 31% for the financial year ending June 2024. You know where it's coming from, it's coming from 59.1% in 2023. To have a keen double transformation that has occurred in the business. Business is way more efficient because that exchange ratio of 31% is the new kind of a steady state that you can expect kind of on a go forward basis -- our threshold is that we really thought to be below 40%. It is 31% last year in 2024, say that it's -- the business is we are more efficient. Now when it was way more efficient [indiscernible] in 2024, and it should achieve and maintain a below 40% efficiency ratio, that's for Acrecent, right? If you think about from a management expense ratio point of view, Acrecent in 2023 was 6.1%, which is way above kind of global best practice benchmark that we set for our third, right. So it can't be [indiscernible] 2.85% threshold, and we would have reported 2.4%. Well, the management expense ratio for Acrecent was 2.1%. So the business has been completely transformed in terms of SCI's research 31%, which is on par with the U.S. private credit companies, or U.S. BDCs, the core business development corporation in the U.S. and regulated by the SEC. If the final business data to be 31% efficiency ratio, it's top notch like [indiscernible] Capital, Blackstone secured lending, those guys are in that 30% and that's where Acrecent wants us, grow that best practice. And management expense ratio of 2.1%, again, similarly. So that's top not in terms of efficiency and management expense ratio, which means that when we get to mix the time, which may be sometime over the next couple of quarters, when Acrecent start to send dividends back up to SCI. You can know that we're doing so by not wasting the dollar. Is [indiscernible] revenue would that be generated is not being wasted unnecessarily by cost. And is trying our point here and Acrecent business that presented a generating ROE is about 26 or thereabout percent. I don't remember what is the -- it's a very high ROE, right? But in terms of return on invested capital and SCI generated from taking this capital and put into that business it's double digits, which is higher than even 0.5% of SCI except is generating on its own operations. So all day every day is a good investment that SCI has made. On to the balance sheet of SCI $72.1 million, which is a new record and this affords us to paying $2.15 million in dividends. So the shareholders' equity continues to increase total assets, $198.54 million. I know that would have been about $206 million, which was [indiscernible] financial year, but we would have paid out, paid down some debt as you restructured the composition of our liability profile by raising preference shares and replacing some of -- some debt that we had on the balance sheet to get a more flexible balance sheet structure. In terms of balance sheet KPIs again everything is leading the stretchable level, debt-to-total assets are 0.33x versus the 0.5x target threshold. Asset coverage ratio of 2.66x versus 1.5x threshold level net-debt-to-equity adjusted for the preferred EBITDA on the balance sheet is 0.9x versus the 1.25x threshhold target we want to reach, and of course, [indiscernible] of 2x. And our margin, which is 500 basis points would have been above that over the quarterly financial year. In terms of investment activity, we deployed -- SCI deployed [indiscernible] $65.28 million during the financial year, despite the fact that we will naturally really started really deploying January mine in 2024, right? Because if you recall, we tried to do, we want to do our capital early in September and the [indiscernible] hiccups with the regulator who experienced, I think, a cyber attack and that delayed our capital release all the way to November. I think we finally got the capital relase closed in December. But as far to normally favors those who are with a patient would have raised more capital than we would have perhaps anticipated. So we would have deployed out more than [ $60 million ] in December. So that accessed our capital, as I cited back in the December, and we would have effectively during this last 6 months of the year, deployed more than [ 60 million ]. So the other capital we deployed our other capital, right within the 6-month period. Within 6 months. $65.2 million it is our new record for SCI, phenomena capital raise in capabilities. So we will have an origination problem. And to give you some context on Puerto Rico business. The Puerto Rico business was on fire, right? They originated $89.3 million and it deploy $87.2 million, which, of course, are new records for the promise. So combined the private credit platform that SCI had across the region deployed a record of $152.5 million, which is simply staggering for a 7-year old company, right, and the Puerto Rico guys in Puerto Rico have been originated in lights out. So the peak year for us is really to get access to [indiscernible], to -- if we raise the capital we can deploy it. There are so many businesses across the agenda are seeking flexible debt finances. And we have the capabilities by having our team sitting in 3 different Caribbean countries and deprive capital to a dozen different territories, right? So obviously, our job is simply to raise additional financing to deploy across the region because we have the capability and a platform to do so. As you can see, the portfolio would have gone with the movement, I would have [indiscernible] in interest rates. Of course, the interest rates have started to come down. So we expect that this year, this is going to start coming back down. But we don't expect that, that will affect our profitability. If anything, we think that it will enhance our profitability over the first 2 quarters as we start to cycle through and raising new capital at lower rates, while the asset side of the balance sheet takes a little while to runoff. 1.5 years versus 3 years. As we overall, we're going to want to kind of lend the [indiscernible], obviously, the lucky in higher yields and we know have a lot of dry powder left, which means, obviously, that some stays during the fourth quarter -- well, the fourth quarter of the calendar year, which is our second quarter in the fiscal year, we'll be looking to raise additional capital because obviously, that whole business offers we need to -- as the business goes going to expand, we obviously need to contend [indiscernible] capital. So you can look out for that, and we obviously will be raising capital both in the Puerto Rico business as well as in the [indiscernible] Caribbean business. Of course, we would have spoken about the fact that we have started our new partnership with World Business Capital and getting a guarantee by the U.S. development finance corporation and the fact that the U.S. BFC would have been the first time in this history, provided a guarantee for [indiscernible] portfolio companies in Jamaica [indiscernible] in financing. And of course, the guarantee is for the fast SCI is taken from WBC because we expect to get access to that financing once all the documentation is completed. Of course, we continue to have discussions with some of our other multilateral financing partners to get the facility, expense that we have this growth facility. And we are also seeking additional reviving credit facilities. So we hope that we can strike of some additional partnerships as we go through time. We would have also done the largest transaction in the history of SCI in the new investment commitment for USD 22 million, which was Acrecent Financing and it was actually our syndication and would have spoken at length during the quarter financial year. During our different earnings call, that we wanted to start doing syndications, have syndication business where we underwrite a transaction, fund it and syndicated down to us, syndicated partners earn fee income on that. And we would have done this successfully by having one of the largest banks in the region, being a syndicate partner on the transaction as well as some pension funds. And this is something that we intend to do. As usual the private credit platform. And moving from strength to strength. And we think that by doing this, we are actually increasing the pie for everybody, right? Competing with banks. We are actually expanding the pie. In many instances, our capital fills that gap that the bank needs to see before they put their secure tier 1 capital to work. So it's a partnership and we utilize our partnership approach, and we hope to do many more such transactions. And what are also partnered and for us the largest transaction in SCI is a part of which that $25 million transaction for our Bahamas business, which would have been in the media a lot, and we would have deployed substantial capital into financing and the rural infrastructure Bahamas, where we have very strong partnerships and you guys might have seen is all over the news and Youtube et cetera. So that also is a very noteworthy transaction that would have been a part of and continue to really look to serve the Caribbean by putting off it to the capital to drive growth and to have an impact on less and live of the comments around us. In terms of profit risk management, this year, the [indiscernible] data after its annual report, we intend to continue showing also the key for is the early 1 in a restructured a refiling credit. In early one in [indiscernible] early one in assets would have been reduced as [indiscernible] course of the year from $5.2 million to $1.3 million. And then the restructured [indiscernible] transaction, missing 2 transactions, making up the Stage 3 assets, and you can see what the balance of those assets are and the fact that we would have increased our expected credit loss from $539,000 to $797,000 on those 2 assets. What this really want after that drive in the increase because the other one, hopefully, by the time we report the transaction we would have got repaid. Again, the court's system and how you clean back on companies that go into bankruptcy. It's a very lengthy process, but we are pretty confident that we will get repaid or investment. And so in short order, hopefully not [indiscernible], we should only have one before the transaction, which we are moving against to recoup our investment by moving the assets of our company. In terms of the MD that was written off. There are no new update. Nothing new has happened. We see pressing [indiscernible] a said, every single time I come in earnings cards. I'm not very hopeful, but I'm hopeful, right? If we get to get something back, and you can write back something, I'd be happy, but I would tell you that I'm not holding with a hope, what we see where that ends up. Overall, would have increased the size of the -- of the portfolio and so decided that the standard monitoring would have over $97 million to $138 million and this is for amortized cost on asset. Obviously, the assets that are carrying the fair value. Those are valued and carried to fair value on the balance sheet. So those are not a part of the expected period last month. This slide just shows you our balance sheet expected credit aside, which is reported as a percentage of the overall private credit portfolio. So as the percentage of the overall is portfolio and you can see that it remains steady at about 0.9% of the portfolio in financial year. In terms of portfolio allocation, very diversified. I think we are 19 industries now. We have deliberately taken the largest explorative financial sector. And financial sector here is really -- many of the market are actually financial holding companies. And so a lot of the exposures are really to the financial sector per se, but that's a classification and construction exposures primarily in Puerto Rico. Of course, Puerto Rico has over $50 billion in [indiscernible] capital for reconstruction and rebuilding after country. After more than a decade of being defiled. They have commotion, expect quarters is going to become an industry lead country into the [indiscernible] in due course. And so the construction industry is absolutely booming because they went about 1.5 decades ago added new construction. And because of the cash flow as well, the Puerto Rico people are in concentrate industry after trade tax credits, which is something that I think perhaps the Jamaican and the Caribbean Government can think about, right, to help stimulate your construction industry a little bit more. And Acrecent, is one of the pioneer one, it's Sygnus Credit Puerto Rico is one of the pioneers in kind of allowing portfolio companies to utilize tax credits in terms of how we structure transaction and financing for our companies, which we have seen a lot of people utilizing that. So -- again, we are pioneering and innovative -- innovating as we go along. So we are very happy with the higher levels of concentration in financial and in construction industry. In terms of allocation per region, obviously, Puerto Rico is 30% of the portfolio when you combine them, and Jamaica is close to kind of 25.2%, followed by St. Lucia and Bahamas. We expect this to remain thereabouts as we go through time. Final slide. Almost on time. Final slide in terms of strategic update, right? So 4 key items. The first one, I kind of went into a lot of detail on that. So the simple thing here is just to continue to scale the business. How we're going to do that? We need to just create additional dry powder and deploy the capital. That's it. I've given you all the juice and details on how that business has been expanded, and we are working on some additional dry powder facilities. So the key for Puerto Rico, get access to additional dry powder, additional capital. The team has the capability and the expertise and experience to deploy the capital. And that will filter down through to SCI. And at some point, when we start to talk about dividends coming from Puerto Rico, then SCI shareholders will get the benefit of that. Second thing in terms of strategic growth path, which obviously Puerto Rico is a big part of that. But outside of that, we want to be party to a $1 billion private credit transaction across the region. We are well on our way. We would have gone through $150 million in the first 12 months since announcing that we want to be a part of $1 billion, right? We expect this year to be another good year. Core revenues for SCI, we were targeting getting to $12.5 million. Well, we are well on our way at $10.1 million in 1 year. ROE need to be above 10% that's in progress. We're at 8.5%. We could have been about 9.5% or close to 10% if we didn't -- we weren't hit by unfavorable market multiples for the Puerto Rico investment. But "Hey, we are fine with that." We'll get to the 10% within the time frame that we have set. EPS, 20% annual growth, that's in progress. I think we did 18.4% for just concluded financial year. So we are getting to our targets on schedule. Dividend yield to be above 5% and the APO price, I think we are about there -- there or thereabout still at 5% thereabouts on the APO price. I think on the stock price, though, probably about closer to 6.5% or thereabout because the stock price is ridiculously cheap. I'm not sure if the market doesn't understand SCI's business model or not. Hopefully, this presentation will have given people a lot more understanding of what the business is. Business is only 7 years old. We are transforming the business. Transformation doesn't happen overnight. But as you can see, I hope everyone can see that the business is being transformed on 2 fronts: on the English Caribbean front as well as on the Spanish Caribbean front, which for the time being, the focus is just on Puerto Rico. We will expand beyond the shows of Puerto Rico once we achieve the objective that we had said last year, which was, we want to be the dominant force in Puerto Rico. We're on our way, but we're not quite there yet. We also said that we wanted to raise $100 million in facilities combined of quasi-debt and credit facilities. We would have raised $50 million in quasi-debt December. We just got approved $10 million World Business Capital facility with our U.S. Development Finance Corporation guarantee. We are looking to do a new capital raise, quasi-equity capital raise at some point during the quarter that we are in, obviously, because we need to raise capital to continue growing the business. We continue discussions with other international financing partners to get new capital in. And this is very important because what we're trying to do is to diversify our funding base by having Caribbean-based financing as well as international financing. Diversified structure of the financing because pretty much every financing that we get from international financing partners are variable rate. So as rates go down, obviously -- we are at peak rates in my view. So as rates go down, we actually get the benefit of lower cost of financing, right? And the third thing is that the international financing facilities are typically longer term than what local financing are willing to give us. And so that gives a more stable source of funding. And finally, it's very good to bring capital from outside the Caribbean region to bring it, for example, inside of Jamaica, right? So I know that each time we are raising capital, the FSC normally says to us, if you're trying to raise U.S. dollar financing, trying to ensure that we are not taking capital, for example, from Jamaica and sending it elsewhere. But in this instance, we are doing the reverse. We are raising capital from outside, and we are bringing it in, so we are adding to the pie. We are building and contributing to the pie, and we want to do a lot more of this. And we really want people to understand that's the philosophy that the manager has at Sygnus to raise -- to have all boats in the ocean making headway. Third item here is launching of New Business and our Impact Investing Strategy. So during the last day of the financial year, SCI would have sponsored a business impact fund in Puerto Rico by the name of Sygnus Credit Investment Puerto Rico Impact Fund. So SCI is a sponsor. And by being sponsor, SCI would have invested -- would have committed USD 2 million and invested so far 1.5 million and targeting double-digit return on its investment. And there are a lot of global impact investors that would have partnered to invest in that fund. I'll give more information on this in upcoming quarters. The fund would have had our first close at the end of June. What SCI is also doing to expand and grow is, we intend to launch a new financing product, which will be dedicated to a particular region of the Caribbean. We are moving through in terms of incorporation of the company and setting up of the financing architecture, and we'll give you more information on that as we move through the course of the financial year. So we are launching new businesses while we expand the current platform. Let me say that and say no more for the time being, which also is another reason why we need to raise more capital, right? And finally, share buyback program. 1 year into the share buyback program, we have bought back 10.4 million ordinary shares, which is equivalent to 1.8% of the float, which to me is a substantial amount of purchase in terms of purchase of the float. We continue to buy back the shares because if investors don't think that the shares are worth what they are worth, we will certainly buy them strategically once we feel that liquidity is there in terms of the amount of shares that we're trying to buy. We have mainly been buying back J$ shares because that's where, frankly, the arbitrage is. The J dollar shares are -- for SCI, J$ stock to be trading anywhere close to JMD 13 is just ridiculous, right? Because if we look at the book value of the firm and look at general shares and adjust for the FX rate, you're talking about 40% below book value, which is crazy. So we will continue to buy back the shares. And when we make those purchases, this is actually accretive to the investors who hold on to these shares because we are getting back way more shares per unit of dollar spent, which means that when we pay dividends, the dollar value of the dividend to the existing shareholders is going to be higher, right? The dividend per share that you get is going to be higher. And the earnings that the company makes is going to be higher because we have less number of shares to count against. So again, I hope we have given enough information to investors for them to feel comfortable about the company and the trajectory that the company is on, the partnerships that the company is forging. We have been talking about these international partnerships for a long time. But the due diligence process is very detailed and in depth. We took a year to complete this due diligence process, which involved both set of partners, both the World Business Capital and United States Development Financial Corporation taking a trip to Jamaica and to look under every table and chair in the investment mind of Sygnus Capital Limited, and to look at SCI itself as well. So we're happy that, that process has concluded, and we're looking forward to hopefully notching another international financial partnership as we look to build this business from strength to strength. Ideally, even though we did $150 million in deals last year, ideally, we want both legacy business, the English Caribbean and Spanish Caribbean ideally to be doing like $100 million in transaction per year on a steady-state basis. It's going to take us a little while to get there, right? But if the business is doing $200 million each year in terms of deployment, then I can relax a little bit because I would know that from a scaling of the business, we would have achieve substantial scale. That's kind of one of the objectives that we want to have and to do. And to do that, we need much larger financing facilities. We need much larger revolving credit facilities. I'm still trying to push to get regional financial institutions to give SCI like a $50 million or $75 million revolving credit line. I mean, in Puerto Rico, they have a $60 million revolving credit line and their business is smaller than ours. But anyway, I digress. We will get to that in due course. That's the end of the call. I'll take questions now. Thank you very much.

Yes, yes. Thank you for that detailed presentation, Jason. I'll jump directly into the questions with the first one being, it's regarding MV Cayman. I think you would have already answered this one, but just for everyone here, any recoveries expected from MV Cayman?

So my honest view is that I'm not expecting any, right? But if I get some, I'll be happy, right? And that's a line that I've held for a very long time. If somebody were to come and buy the asset at a value that would allow for us to get back something. then I will be happy. We would obviously write that back straight to the bottom line. That would be income that we will get back. But for the time being, I'm not seeing any buyers of worth that's coming to the table that would offer a price that would allow for that to happen. So unfortunately, I don't have a very positive overview on that, but I'm still hopeful and I'm not giving up hope.

Yes. Thank you for that, Jason. The next question, what actions are required to consolidate a higher percentage of the Acrecent net profit?

There's no action as required. We can't consolidate it. The accounting standard is accounting standard, so there's no action. And what I would say to investors is that you don't need to worry too much, right, because the proof of the pudding is going to be when we start flowing back dividends or you get the cash in your hand, right? One. Two, maybe I should explain that a little bit more. So one of the reasons why we are adversely being impacted is because we are using a 2-year look-back period of price-to-book multiple and averaging them. So we're taking an average of 2 years, daily average. So basically, all of last year, we would have had a period where we went into COVID and then we came out of COVID. And when we came out of COVID, the entire market went up aggressively. And so the price to book everything was way up in the sky. So now that market multiples are normalizing, it means that they are coming down from those lofty multiples, right? And what's been happening with U.S. BDCs, private credit companies, that we are using as the cohort of benchmarks to take the price-to-book multiple from is that the companies are reporting record profits, which means that their book values are going up skyrocketing, but the price of the stocks weren't going up as fast as the book value was going up, and so the price-to-book multiples were trailing, right? Now as we get into this interest rate cutting cycle, what is likely to happen or what we start to see happening is, okay, the book value of the firm might start to come regarding the yield on these companies are like 9.5%, 10%. So as rates start to get caught, those guys are going to maintain their core dividends, right? People are going to start, I guess, chasing dividend yields, which means that people are going to buy the stock, which is reduce the yield that you can get when you buy the stock because the dividend isn't going to cut, right? And so the price may go up and, therefore, the price to book will actually increase. But we are in a period where we would have rolled off very high price-to-book multiples, and we are normalized because I think the price-to-book right now is like 1.01. That's where it is now. Last year, June, it was like 1.12. So on a go-forward basis, if the price to book does fluctuate within like even say, 1 -- between, say, 0.98 and 1.05. The amount of profit that Acrecent is delivering might be enough to offset the adverse movement in the price book. And so we don't really need to do anything. It will cycle through. It will basically cycle out, and we will start to have basically a larger amount of the underlying profitability cycling through the PRCF as income. So we don't have to do anything to answer the question specifically. There's nothing that we can do. It's just a cycle where we have very, very high price books. I mean, when we came out of COVID, the price-to-book was at 1.25x, right? So you can understand that if we are cycling through that, and we are doing a comparison of last year versus this year. So last year, you had a higher price-to-book and this year, the price-to-book is lower, you're going to get hit. So we don't need to do anything, but I would say that in this financial year, next financial year, we are likely to see a much higher reported income flowing through because we are now at more normalized price-to-book levels.

Yes. Thank you for that response, Jason. The next question is a 2-part question. So I'll ask the first part. What are your thoughts on banks and private credit companies going from competition to collaboration with each other? Reference is being drawn here with the recent article being released where we see Citigroup and Apollo Global Management joining hands and agreeing to invest USD 25 billion over the next 5 years. What are your general thoughts on this?

So happy for that question, right? It means that there's an investor, there are shareholders, there is who is very keen on what Sygnus is trying to replicate, going at. We're not trying to recreate. So very good point, right? So -- and if you look at the international space, banks actually fund private credit companies. Like banks are the largest financier to the private credit companies. They give them huge revolving credit lines. They actually give them accordion -- what you call accordion facilities, which means that as the company grows, the salary facility automatically get upgraded or increased, one. Two, they also enter into a lot of joint venture partnerships with them. And that example that was raised is just one of many, many, many such partnerships that exist. And the message here for our regional banking partners, and we have regional banking partners, I'm not trying to cuss them or anything, is that the private credit segment of the financial industry, he's not a competitor. We're not competing with you, right? We're not trying to -- if a client can go to a bank and get -- a business can go to a bank and get 8% or 9% or 10% secured loan. We are never going to try to take that business from a bank. We try to do transactions that banks can't do and/or banks should not be doing, right, because maybe because they have depositors money. We don't have depositors money. We actually have more flexible capital that can navigate multiple economic environments, and we solve problems and we basically are very, very fast with the type of financing that we provide. And obviously, we increase the pie. There are so many transactions that we have done where banks are part of the transaction, but it is SCI's capital that made the transaction work. If you didn't have SCI's flexible debt or quasi-debt financing as part of the deal, the bank would not have committed their capital, right? So I'm looking forward to more and more partnerships with banks and for banks to take the page out of what's happening in the U.S. Too often, our local and regional banks are giving us a story that they are at their credit limits. But if you give SCI $3 million, SCI has a $200 million book. If you have given me $3 million, what kind of limit can you be at? You know what I mean? We have a $200 million book. So a $3 million revolving facility can't be any form of limits, right? Let's break the glass ceilings and push down the doors. It is better for you as a bank to deploy your capital to me and let me go and find facilities to deploy the capital, where at the back end, after that company has grown from a small business or a medium-sized business, it will now become a business for you to actually onboard or expand your facility with that business because it's now bigger and faster growing and the corporate structure of the business will be more refined because of all capital that did that. But you would have been departed that finance all capital to allow us to do that. And so as a bank, you can grow your pie much bigger and faster by deploying some of the capital through us and to our platform rather than you trying to go out and do it yourself. Because the expertise that we have, the specialized expertise and the things that we do is specialized, right? So I'm not cleaning out anything, right? I'm just saying it's incredible that in Puerto Rico, which is a developed market, they have 7x the revolving credit facility that SCI has. It's amazing. And our balance sheet is double this. But having that said, we are working on getting certain banking partnerships in place. If we can't get it in the Caribbean, we will simply get it from the U.S. market, right? Ultimately, this business is existing and it's here operating, it's doing well. And if we can't get banking partnerships locally, we will get it from overseas and bring capital from overseas into our local markets. If that's what we have to do, that's what we'll do. But I'm looking forward to a lot more banking partnership. And I know that Puerto Rico business has a huge banking relationship and partnership. And I hope that we can partner with a large financial institution who don't need to try and solve the things that we are solving, just partner with us and, yes, let's help the Caribbean to grow and expand and help businesses to go and expand. So thanks for your question.

Yes. Yes, Jason. Part 2 of that question would have been, do you see SCI partnering with any large banks or large private credit companies, but I think you would have inadvertently answered that as well.

Yes, yes. Yes, yes. We were looking forward. And as I said before, if it's not in the region, it's going to be in the U.S., right? Ultimately, we're not going to be knocking on the doors and the door remain close all day. We're going to find a way, right? Just like how we found a way to create a niche business that when it was the Haitian people, people probably thought that it would not have been successful. But here we are today.

Yes. All right. The next question. So in 2024, advertising expenses increased more than 100% over 2023. Are we expecting a decrease in 2025?

Good observation and good question. We took some strategic decision in 2024. There are certain things that we wanted to do in terms of branding. We would have done a lot on the branding front, which would have seen those costs increase as well as, generally speaking, the cost to host events like AGM, et cetera, would have skyrocketed because of inflation, right? For this year, we are looking to keep those costs under control and have a reduction in those marketing expenses. So to answer the question, we are looking to have that not increase, have 0 or a negative number in terms of the marketing spend. But we had to do some strategic expenditure in 2024. But to answer that question, yes.

Okay. Great. Next question. Can you provide any insight into the current pipeline value for SCI?

Good question. I mean, look, I think, on a constant basis, we have maybe like $100 million plus in pipeline. I mean, in Bahamas alone, and Jamaica. Bahamas and Jamaica, those 2 countries we can find $100 million in pipeline each, right? Obviously, we're not going to go out and push to originate pipeline when we don't have money, right? Puerto Rico, it has -- its pipeline is bigger than SCI's pipeline. So I would say, if you take Puerto Rico, Jamaica, Bahamas, that's like $100 million in each of those markets, right? The question is for us to get the capital to move the mandated transactions that we have to committee, to then move transactions that are not mandated to committee to then funding, right? But origination, we don't have a origination problem. We have so many partnerships. And half of our transactions are from repeat clients, meaning people who did business with us before are recommending or referring somebody else or bringing a different part of their business to us for financing. So we have a lot of that, that's happening. But obviously, we also have some new relationships that we get in new markets. But we don't have an origination problem. These are coming to us. Transactions are coming to us. At the moment, what we are hunkering down now is we need to do a capital raise to crystallize those pipeline opportunities into cash.

Yes. Thank you for that, Jason. Changing the tone a bit. When will SCI start to see dividends or a special dividend being declared from Acrecent?