Sygnus Credit Investments Limited ($SCIJMD)

[Operator Instructions] We have a discussion segment after the main presentation where you'll have the opportunity to have your questions answered. Now without further ado, over to you, Jason.

Good morning, everyone, and welcome to SCI's 9 months/third quarter financial results. As per usual, we'll start out by giving some context shaping the financial results. First thing I'd like to do is effectively highlight. This is a continuation from previous earnings call, which is the earnings call of Acrecent. Key thing here is that when we look at the 9 month results for Acrecent, net interest income was $7.34 million, which represented a growth rate of 46.3%, which is a substantial growth for the 9-month period. More so for the third quarter itself, net interest income was $2.84 million, with a growth rate of 71.4%. So what we are seeing is that net interest income is actually -- the rate of growth is actually increasing on a quarterly basis for Acrecent. And in turn [indiscernible] net profit, Acrecent reported $6.64 million in net profit for the 9-month period, which was up 47.6%. And if we look at the quarterly financial results, that would have come in to $3.37 million in net profit for the quarter for Acrecent, which was up 127.2%, again, reflecting acceleration in growth, which is something that we would -- we expect that to happen in terms of the continued growth path given the excess dry powder that Acrecent has and the fact that the Puerto Rican market is a $100 billion economy. So I mean maybe 1.5 years or so ago, we said that perhaps in 2 or 3 years' time, we'd expect that Acrecent would surpass SCI in terms of its raw earnings. And I think that that moment has kind of arrived. Because as you will see later, both the net profit and the net interest income for SCI is [indiscernible] well, Acrecent is now generating more net interest income, more total investment income -- total investment income for Acrecent for the months was actually 8.84 million. And as you'll see later on, that is higher than SCI total investment income. So we are in good stead and the rationale as to why SCI went and acquired majority stake in Acrecent in 2022 [indiscernible] to what I would say [indiscernible]. In terms of return that SCI has been generating on Acrecent, we are measuring this return since we did reorganization effective July 1, 2023, is now 24.2% [indiscernible] in terms of total platform deployments between Acrecent deployment and SCI deployment for the 9-month period [indiscernible] heading towards $100 million [indiscernible] $87.05 million. And these are transactions that would have been executed subsequent to the end of the quarter. We are [indiscernible] upon looking at how [indiscernible] substantial contribution to the Carribean region in just private credit space and what SCI is doing. [indiscernible] shareholders, what have been -- subsequent to the end of the quarter, another $1 million would have been paid in April. I think April 2nd, which is matching the $1 million dividend that was paid in last year, October. And if you recall, in October -- on the last earnings call when we were discussing that dividend payment, we had indicated that we had reduced the dividend relative to what it was the prior year out of an abundance of caution. And so we maintain that cautious approach with the dividend that was paid subsequent -- declared during the quarter and paid subsequent to the end of the quarter. Of course, as you can see based on the trajectory of how Acrecent is performing, how SCI is performing and just the general market environment that we are in globally and also Jamaica, which is like the largest portfolio exposure that [indiscernible] remains warranted. Of course, once we see clearer skies, we will adjust the dividend accordingly, especially given the fact that Acrecent has started to pay a semiannual dividend on a consistent basis, which we'll discuss later. Final thing here is that SCI [indiscernible] 16.02% over the 9 months on a quarterly basis. So on the next slide, just this graphical terms, you can see the net profit results for Acrecent both on a quarterly basis, which is on the lower bar chart, and on a 9-month basis, which is on the upper bar chart. And we are showing you pre reorganization and post reorganization. Now the acquisition was done in February 2022, right? And the company was making, from a net profit point of view, it was substantially lower than what you see. So we just [indiscernible] 1 year pre-reorganization because the financial year-end would have changed to June to March, that of SCI, effective July 1, 2022. So you can see that from the 9-month and 3-month results, it has been a consistent upward [indiscernible]. Now jumping into SCI's performance itself. Total investment income came in at $3.98 million, which was down 11.3%, versus $4.48 million last year. I want to pause there for a moment because total investment income would have been affected by 2 things. I think on the last earnings call, we would have highlighted the fact that, during the first 6 months of this financial year, we would have had roughly $20 million of exits, large portfolio investment that would have exited, and it took us some time to reaccelerate the deployment of that capital. So because of that, we actually had a drop in net interest income from the negative carry that we had where we had cash that wasn't [indiscernible] at portfolio [indiscernible] 13%, 14%, 15%, what we're earning 2%, 3%, 4%, right? So we would have repaired that situation by the deployment figure that we have in the third quarter, which would have been around $15 million plus. But in the third quarter, we also had a situation where we had a onetime adjustment of $1.24 million recalibration to net interest income, and that affected total investment income. If you exclude that $1.24 million onetime recalibration, obviously, would have surpassed last year's total investment income. The second point here is that the Puerto Rico investment income, which actually reported a new record of almost 100% and [ 8.9% ], $1.78 million to $3.58 million for the quarter, reflected the record profitability of Acrecent that we showed you before. However -- yes. So that's a great positive, which helped our total investment income. Net investment income was $2.54 million, down 15.8% because of all the aforementioned reasons that I spoke about. Our net profit, however, was $2.2 million, up 19.7%, primarily driven by record underlying performance at Acrecent, which translated into record [ ERCF ] investment income. Earnings per share, $0.00380 versus $0.00320 similar quarter last year. And the dividend per share that was declared was $0.0017, relative to $5.0028, as we spoke about before. So that was a $1 million cash payment versus $1 million. On the next slide, for the 9-month results, you see total investment income came at $12.03 million [indiscernible] versus $13.22 million. And again, the same thing that I highlighted before for the 9-month period. So in the quarter, we had a onetime adjustment of $1.24 million. And of course, we have been carrying forward lower net interest income from the fact that we had the $20 million exit during the 6-month period, that was the cash sitting on the balance sheet effectively, that was then -- obviously, it took us time to redeploy that. And we redeployed about $15 million in Q3. Of course, we don't start earning. That deployment, we're going to have the full effect of that in Q4, that would have gone 1 full quarter of earning that way, right? Similarly to the Q3 for the 9-month period, the Puerto Rico Credit Fund investment income [indiscernible] to $6.66 million, driven by the underlying performance of Acrecent. Of course, the $6.66 million is actually lower than it would otherwise have been because SCI would have received $1.01 million in dividend distribution from Acrecent in December. And therefore, this $1.01 million went to offset the actual value of Acrecent to SCI. So this figure, ceteris paribus, would have been closer to $7.66 million, right? Of course, because we didn't have any dividend paid in the prior year, then this represents a fall-off effectively from the prior year. But as we go into next financial year, this will normalize because next year, as Acrecent continues to pay dividend, ceteris paribus, we will have a dividend paying period [indiscernible] dividend paying period. So it will normalize as of next year. Of course, as Acrecent makes more and more profit, dividend will be higher, but the difference won't be that great, right? And of course, let's talk about the fact that Acrecent made $6.64 million for the 9-month period, or 47.6%. So net interest income, coming back to SCI, net interest income for SCI was $7.84 million, that was 17%, affected by all the things that I spoke about before for the quarter -- I'm sorry [indiscernible] in terms of interest income. Their profit was $4.86 million, down 30.4%, versus $6.97 million for the 9-month period last year. However, this $4.87 million is actually higher than the full year financial profit that SCI reported last year. Earnings per share, USD 0.0084 versus USD $0.0120. Then I spoke about dividends already. So moving to the next slide, which I won't go through in detail as I'd just highlight a few things. So the first thing I want to highlight is net interest income. You can see for the quarter, net interest income came in at $322,493, right? And the big reason for that, as I said before, was the $1.24 million downward onetime adjustment that was made. Because if we didn't have that, interest income would have been substantially higher. In addition to that, during the first 6 months, we would have been impacted by the $20.33 million of exits within a very short time period, which we weren't able to redeploy immediately after getting that cash back. As I said before, we have redeployed $60 million of that during Q3, and we'd have [indiscernible] Q2, already during Q2. So the full effect of [indiscernible] that $20 million, we expect to see in Q4. But of course, we are more than likely will catch up with all of the -- catch up with all of the lower net interest income for the first 9 months of the year, by the end of the financial year. But we're not really concerned about that because this will, as I said before on the last earnings call, will normalize as the [indiscernible] from the [indiscernible] that is redeployed. For the 9-month period, you can see $5.07 million, was down relative to $6.7 million. And that reflected all the things that I've just said, similarly. We can also the [indiscernible] credit funding where income -- where the quarterly figure of $3.58 million, substantially higher than $1.8 million for the similar period last year. And then 6.63 was higher than 6.23 for the similar period last year for the 9 months. But of course, both of these figures [indiscernible] last year $1.01 million lower, because of the [indiscernible] for the dividend that SCI received. So yes. Going down to impairment loans, you can see that for the Q3 figure, it's substantially lower than that $167.5 million versus $851 million in Q3 last year. But [indiscernible] see that was [indiscernible] versus $1.27 million. And that restricted new Stage 2 assets that would have been reclassified from Stage 1 to Stage 2 during the first half of the year these were, as well as preparation assessment for Hurricane Melissa at the end of Q1, and then so adding Hurricane Melissa exposures for Q2 and also a similar [ level ] from Q3. And final thing on the slide is you can see the net profit figure for the quarter, which is a new record. But for the 9 months, $4.85 million is down versus last year. We have seen the financial year June 2025 column, net profit was $4.28 million. So the 9 months figure has already eclipsed that. Now on the right side we are -- again, the next 2 slides or next 3 slides are really focused on Acrecent, and we continue [indiscernible] because I want everyone to understand [indiscernible] 2 years now we're saying that we expect Acrecent to really dominate once we exit [indiscernible] with Acrecent actually dominate the SCI earnings. And this pattern occurred. So what we are looking at here is the -- for the quarter, Acrecent made $3.37 million [indiscernible] $1.48 million last year and how that flows up to SCI, what is reported in SCI income statement. So the holding company which owns 100% of Acrecent, when you consolidate the $3.37 million into that holding company, with [indiscernible] in that company, net profit came [indiscernible] but then once we go up to the [indiscernible] holding company, which has [indiscernible] 95.9% ownership stake rise, which is [indiscernible] SCI's income statement, that figure, based on market multiples, came out to $2.58 million. And that is what is reported in SCI income statement. Similarly, for the 9 months, you can see $6.64 million net profit versus the $4.5 million last year, that consolidated up to this first HoldCo, translate to $6.1 million because [indiscernible] expenses, then from a market multiple valuation approach, that came out to $6.66 million. And that is what is reported in SCI's income statement. Of course, the $6.64 million [indiscernible] adjusted for $1 million in dividends that SCI received in the December quarter. In terms of the dividend distribution to SCI, Acrecent is now paying semiannual dividends to SCI, and it made one payment in December of $1.01 million. And subsequent to the quarter, Acrecent would have declared another dividend of $948,700. So the total dividend that Acrecent has declared would have been $2.13 million, and that's between the second quarter last year and this quarter that we are in now, right? We have declared $2.13 million in dividends. And of course, SCI share of that is expected to be $1.83 million. So we already got $1.01 million, the first dividend payment, and the second dividend payment we expect to receive $817,600 of the $948,700 that was declared. And that will amount to $1.83 million, and the second dividend, we expect to get that sometime this month, if not early next month. And of course, we would have highlighted many times before the fact that the figure that we are reporting in SCI income statement [indiscernible] will be when we start to get the dividend payment, because cash [indiscernible] right? So we are seeing already that in the first year of -- first financial year of paying dividends, Acrecent is already at a pretty steep dividend level. That's $2.13 million dividend declared. And this is the first dividend [indiscernible] clearing. And the growth trajectory, you can see what the growth trajectory of [indiscernible] is, right? That the Q3 results are even better. And the dividend that already cleared is not based on Q3 results, right? So we're able [indiscernible] as far as [indiscernible] and effect that it will have on SCI on a go-forward basis. Very quickly, moving to the efficiency ratio, we came in well within the 40% threshold, which is benchmark against global private credit expense ratios. So we have been within this ratio for the last 2 consecutive years in terms of March 2025, March 2026. So that's good news. It means that every dollar of revenue being generated, we are always to -- we are putting it back in the business or it gets paid out as dividend. Similarly, for management expense ratio, this came in at 2.3%, well below, substantially below the 2.85% threshold that we have promised to shareholders. From a balance sheet perspective, shareholder equity was at $76.02 million [indiscernible] margin of 0.2% relative to $75.86 million for similar period last year. When adjusted for [indiscernible] and total equity, is USD 108.93 million, which means SCI has a pretty substantial balance sheet, which will allow it to navigate any type of economic environment that the Carribean may be through. Total assets was $2.83 million, up 6.3%. And this total asset [indiscernible] does not include reported assets of Acrecent,which is around USD 150 million. So private credit platform, as I said, is pretty substantial and [indiscernible] intend to grow this substantially over the near to medium term. Of course, [indiscernible] the balance sheet figures, SCI will have raised $28.3 million in capital over the 9-month period [indiscernible] $7.91 million [indiscernible] and repay $6.29 million in [indiscernible] and would have also extended $26.99 million in [indiscernible] shares that matured in December 2025 for 3 years and we did so at lower interest rates. Balance sheet KPIs, everything is well within the portfolio managers' target thresholds. Our debt to total assets was 0.28% relative to the limit of 0.5% asset coverage ratio, which speaks to how much assets we have on the balance sheet that can be converted to cash quickly to repay debt in our worst case scenario. 3.5 related to the target of 1.5 higher is better. Net debt to equity was 0.62x relative to 1.25x target that we have for ourselves and relative to benchmark limits of 2x that the company is operating on. And nonperforming investments ratio of 0.3%, which is well within the 5% threshold level. Of course, we highlight the fact that we do have [indiscernible] assets that we're working with those clients to help them with their business background check. In terms of investment summary, industry portfolio companies now stands at $226.69 million, versus $214.63 million for the similar period last year. Forty-one investors versus 38 relative to last year. $15.33 million in investment commitments during the quarter versus $10.25 million fair value yield, reduced to 15% versus 16.3%, and would expect the fair value yield to continue trending down, notwithstanding the fact that interest rates will [indiscernible] up, but we think that based on conditions, we see quite a medium-term interest rates are going to -- the portfolio is going to continue to trend down. Interest rates may pick back up, obviously, based on inflation trends. But Jamaica inflation trends are coming down, which is a large part of our portfolio. But we think that over the medium term, things [indiscernible] interest rates may -- the portfolio yield will gradually come down. Average tenor, 1.1 years versus 1.4 years. Dry powder, $2.4 million versus $5.3 million. This does not include [indiscernible] credit facilities. In terms of [indiscernible] activity that we are currently doing, we are advancing discussion to international partners. One of them is substantially advanced, another one, which we expect that to -- we can [indiscernible] close another transaction [indiscernible] CP in the bank, working through a term sheet for the transaction [indiscernible] but it is what it is. These things take a tough time and [indiscernible]. But the fact that Acrecent would have deployed $55.72 million in the 9-month period, so the [indiscernible] deployment that we spoke about earlier on the first slide was due to Acrecent, which obviously is a much better economy [indiscernible]. We have $30 million in approved deals that are being documented to disburse. So obviously, we're working through those. For Hurricane Melissa updates, nothing much has changed really. Total affected portfolio is $25.23 million $10.65 million in the food distribution sector from 2 portfolio companies, $604,000 telecom from 1 portfolio company. Hospitality 2, $5.29 million. And manufacturing 1, $3.60 million. It's representing 11.1% of SCI portfolio and 6.8% of the platform include the Acrecent portfolio. From a balance sheet expected [indiscernible] point of view, you can see where the [ ECL ] charge would have increased after reclassification of Stage 1 assets to Stage 2. This work is Stage 1 assets, we use 1 year expected credit losses, actually is the amount of upfront credit impairment that you have to carry on the balance sheet, which can translate it as well through the income statement. It's using a probability of a 1-year period. Once you change the classification to Stage 2, [indiscernible] expected for [indiscernible]. And obviously, the expected amount of money that you can hold we are estimating something over the life of the investment is going to be larger than it would be over much shorter time period of 1 year. I think that is what would have given ECL to where it is now, as well as when [indiscernible] came, we would have had to make additional provisions for the company that would have [indiscernible]. As well as the fact that as the portfolio growth, obviously, as we put on new assets, you have to take additional provisions, right? That's par for the course. But the main driver is really around the reclassification of assets to Stage 2. We are renegotiating [indiscernible] those payment terms, as well as Melissa related charges, which we currently need to monitor as we would have done during COVID-19 pandemic, so we have a playbook that we are utilizing a similar playbook for the environment that we're in. In terms of allocation in the industry, not going through this. You can see that SCI is well levered across 20 different industries. The top industries account for about 90% of the portfolio. In terms of by region allocation, obviously, Puerto Rico is almost 40% at 38.3%. Next is Jamaica, 24.9%. And as we go through time, right, this ratio, we expect that it's going to swing in favor of Puerto Rico. But there are other Carribean islands who could also start to challenge Jamaica to some extent. But we also expect Jamaica to [indiscernible] because we are seeing tremendous amount of [indiscernible] opportunities from portfolio companies in Jamaica. Final slide, in terms of strategic updates. First, and I would say most important thing, is Acrecent in Puerto Rico is to continue to scale that business and still how the business requires fundraising, right? And that fundraising involves having equity/private equity capital, which will then unlock additional evolving credit facility, which has worked beautifully for Acrecent because when you have a revolving credit facility, this allows you to be very surgical and precise in deploying capital when you need to [indiscernible] and you pay it once [indiscernible]. So you don't have any negative -- you're not paying interest on capital when you're not using the capital. Of course, SCI has that huge problem, we are paying interest on capital [indiscernible]. We are obviously diligently working to get a credit line similar to what Acrecent has, but we have not crossed over that bridge yet. When we do, obviously, we don't substantially [indiscernible]. So we'll continue to do this because Acrecent return on investment to SCI is, I think the word phenomenon, is substantial, is very high double digits, right? And you can see the deployment machine that exists in Puerto Rico since reorganization. And you have already seen the level of profitability. And you're also seeing $2 million in dividends mainly clear, but which is actually more than the dividend that SCI declared, right? A lot of people ask that question. So you can see that this is company is coming into its own, expected to, that this is just the start, this is just the beginning, right? Yes. So we expect to expand the credit line and explore further partnerships, for new partnerships to grow Acrecent [indiscernible]. On the SCI [indiscernible] side, we're in progress in terms of trying to move from $500 million [indiscernible] $500 million and to $1 billion in transactions across the region. We're well on our way. Core revenues, which the threshold limit was $12.5 million, we're almost there in the 9-month period. So the [indiscernible] beat that target by the end of the financial year, which if we do, would ensure that the ROE of 10% that we are -- want to keep above each year, we'll get this. We'll have 8.5% at 9 months and hopefully we get there by the end of the financial year. We have 1 entire quarter to make up the year. EPS, [ 10% ] annual growth. We are down [indiscernible] at the 9 months market due to lack of 1/2 adjustments. But let's hope if we beat the core revenue figure and ROE, then we could also be in business for EPS. Let's see. Dividends, that would have -- the April price [indiscernible] 3% what the actual [indiscernible] got 5.6% as of March 13. Obviously, that one's affected by the $2 million in dividends for this financial versus $2.2 million for the [ previous ] financial year. But we have given justifiable reasons as to why we adopted a more cautious approach. And as you can see, based on the trajectory, we expect to [indiscernible] to adjust the dividend appropriately once financials support that. In terms of new business partnership [indiscernible] that we received business approval. So what we are doing now is moving through execution mode. We are a bit delayed in this. We're targeting the end of March to -- for the business to be up and running. I think we have to recalibrate by maybe a quarter -- by maybe 2 quarters in terms of when the business will actually be up and running. So [indiscernible] than anything else, but [indiscernible] might actually be very beneficial. Of course, we have to continue to manage portfolio risk within our environment where we have energy prices that are skyrocketing. Costs are going up. [indiscernible] Stage 2 portfolio companies that we are working with those principals to reorganize, restructure, help the business. We have helped quite a new more businesses through Hurricane Melissa in terms of new businesses that came on stream needing capital, to take advantage of opportunities from Melissa. And we did quite a lot of that financing over the last 2 quarters, as well as existing business on the platform already that needed assistance, working capital support, et cetera, et cetera. that we are also providing financial assistance to. So having SCI as an alternative financing channel for businesses, particularly those who were hit by Melissa, is a [indiscernible] for the entrepreneurs [indiscernible] businesses will need to access [indiscernible] to the capital. And financing and share buyback, given the state of period I just described in terms of caution with dividend payments, caution regarding to waiting to see how the [indiscernible] assets and the restructuring that we have are helping those companies to go through [indiscernible] those, obviously, we have not done any buyback so far. But the buyback program still remains intact. At renewal date, we will ask for renewal of the program. So that one is not going anywhere. It's just a matter of what's the best use capital. We actually purchased an additional $2 million in shares in Acrecent, right, during -- in March. And that would have reflected the fact that we are very confident in how the business is going. So rather [indiscernible] to say, hey, dividends are to do buybacks, we use that $2 million to invest in that business [indiscernible] 24.2% return on investment. Of course, at the appropriate time, we'll execute the buyback and continue buybacks as well as pay additional dividends to shareholders. But we do think that -- we are trying to set this company up for the long term. And we are at that critical path in the life cycle given the inflection point we are at Acrecent effectively is going to generate more net interest income, more total investment income and more net profit than SCI proper. I know SCI did have some one-off things that affected it, right? So not to say that we are confident in SCI itself [indiscernible] rolling backwards, we get [indiscernible]. What you can see, Acrecent is moving from strength to strength. So the combined private credit platform at SCI is when we think about what we are trying to do, we are holding in and starting to get behind in AUM. And we are looking -- the next stage would be projected to [indiscernible] right, and to get there, the annual margin that we need to do and those things really [indiscernible] capital financing, which have been diligently negotiating and speaking about for maybe a year, 2 years now. Once we get over that hurdle, we're going to unlock another level of growth [indiscernible]. That's it for the presentation. I think we can take questions.

All right. Thank you again, Jason, for another detailed walk-through. I'm sure listeners appreciate the clarity that you've actually brought to the performance and the context of which SCI delivered its performance.

Before we go to -- well, we move on to the question and answers. [Operator Instructions] So some folks joined late. They want you, Jason, to just go back over very quickly the reason for the interest income reduction and also some more clarity on the one-off adjustment in interest income that occurred during the period.

Okay. So for both the 9 months -- for the quarter, the interest income, maybe I can shift to the slide? I think it's Slide 7, right? So for the quarter, interest income would have been affected by $1.24 million adjustment in interest income, which would have been an accumulation over a number of quarters and we had to make all of the adjustments onetime in this Q3. And that is a one-off item that then would have substantially reduced net interest income because it would have brought down interest income from what would otherwise have been around $5.7 million relative to $6.1 million last year. However, in addition to that, if you recall, if -- well, let me just say, during the first 6 months of the year, in particular, during Q2, we would have exited $20 million from private credit portfolio companies that was generating a yield of around 15.5%, right? So if you take 15.5% and $20 million on average that basically turned into cash, then we would have lost that in interest income in the quarter in which it occurred, from the point in which it occurred, as well as partially in Q3. So we started redeploying that cash late in Q2. I think we deployed around $8 million or so of it. So we would have gotten interest income of about $8 million. But then for -- we deployed $15 million of that, in fact, various stages during Q3. However, obviously, we would not have deployed out the $20 million from the start of Q3 to earn the interest income on that amount of money for the entirety of Q3. So the Q3 interest income is lower by the fact that we had this large pile of cash that was earning 2%, 3% for the cash that was on the balance sheet, as well as the fact that when we deploy it, we don't have a full quarter to reshape. So those 2 items when you combine them, the $1.2 million one-off adjustment and the fact that we are working from a lower base in terms of the pool of assets that are generating on the asset side because of that large exit, which means that we need time, and so when we get to Q4 and then Q1 next year, right, it will normalize -- so by the time we get to a full 12-month cycle from the time that we would have redeployed the capital, it will normalize, right, which is normal for any portfolio that has a high asset that you exit. If you don't [indiscernible] then that's the effect. So that is what effectively affected net interest income both for the quarter as well as for the 9 months period.

Another question from [indiscernible]. SCI share buyback program ends in this current June -- this current quarter ended June 2026. However, SCI was far from hitting 1/10 for the program size. Even if the program is renewed, will SCI have available capital to deploy when the business is growing this fast and you are managing Stage 2 assets?

A good question, right? And the answer to that question is, yes, we will have enough capital. If you look at what we are doing and look at -- yes, we have Stage 2 assets that we are managing, obviously. This is not the first time that we are going to that rodeo. But what I would say is that based on where we are, even the pipeline that we have and the growth trajectory of the combined business, so when you look at SCI's private credit platform occurs both English and Spanish-speaking Caribbean, the trajectory for SCI is substantial. And so from a buyback perspective, obviously, the stock price remains depressed. There are multiple channels that we can use to solve that problem, right? But we don't want to do that in an environment where there is a substantial uncertainty, A, and B, in an environment where the clear obvious choice is still before things get too expensive, buying additional shares cheaply because [indiscernible] the market. So I don't think that there will be any issue with funding the buyback program. It's just a matter of choice, right? We are fund managers, we are alternative fund managers. And the question is, what's the choice that we want to make? Are making a choice for short term or medium term or long term? I think all the choices that we have made so far in terms of the long-term benefit for the company to ensure that we can sustainably [indiscernible] pay dividends, not just ordinary dividends, but also all other forms of dividend, right, SCI pays a substantial preference share dividends to preference share investors, substantial amount of interest to bondholders, et cetera, right? And so we have to put all of that in the mix. And I understand the anxiety around, okay, what's happening to the buyback? Because the stock price is depressed. But we have to make, as alternative investment, we have to make [indiscernible] make the right decision for the medium to long term. And at some point, that will also meet the short-term needs of, hey, let's execute a substantially bigger buyback than what we have done so far. Of course, we won't preannounce that, right? It does happen. So I don't have any doubt about buyback program being able to be executed once the Board approves the renewal. But as I said before, we have to ensure that we are being prudent around both risks and opportunities because we have both Stage 2, the risk [indiscernible] opportunity. So we have to be very prudent about both and internal use of capital.

Question from YouTube chat. Why hasn't the dividends from Acrecent resulted in increased dividend payout to SCI shareholders? So perhaps you can repeat that explanation.

Good question. I think I just went through it, which is we have to manage through what is a tough environment or what can become a tough environment, is what I should say, right? There are many risks on the horizon. Jamaica is almost 1/3 -- almost 1/4 of our portfolio [indiscernible] was hit with a Cat 5. We showed you that we have $20 million of exposure to companies that were severely hit, have some substantial degree of hit that we are working with those companies to get them back on their feet, right? So we are [indiscernible] for that. We also have Stage 2 restructurings that we are working to. And then we have the opportunity to use that same dividend that we get to buy more shares, for example -- as an example, right? So when we [indiscernible] those 3 things, on one hand, we have to prudently manage risk. On the other hand, we should prudently take advantage of the opportunity that's sitting in front of us. We know the company inside out. We own 95-point-something percent of it, almost 96%. We get that opportunity. And I think buying additional shares in the company using the proceeds of the cash that you get is very prudent, right, because shareholders will start to benefit substantially more than it had -- that money and paid it out in cash dividend. Of course, the time will come and, hopefully, that will be a long time in the future, right, the dividend [indiscernible] so that would mean that the dividend that SCI itself is paying, obviously, will be substantially [indiscernible] that they are basically declared in this financial year. [indiscernible] the question, I don't want to say I'm asking for patience. I'm just saying that as an alternative fund manager, paying out an extra $2 million in dividends, for example, versus our extra $1 million in dividend, versus reinvesting the money, and then compounding whatever dividend [indiscernible] we got on the 12-month, the financial yearend dividend [indiscernible] right, when it's paying dividends on the June 2026 financial statement, we would own more of the shares and, therefore, the dividend, that will ultimately be higher. So I think that means [indiscernible] dividend into the company as shares, and then [indiscernible] enhancing the dividend in the [indiscernible] shareholders from [indiscernible] alternative fund manager point of view, in truth, we think that method [indiscernible] for the long-term value creation of shareholders.

I think the next question we could take in 2 parts. So the first one is regarding some clarification and the second is mechanism/benefits. So the first clarifying question is, is the business approval related to the World Business Capital financing? Or is that license related to different items? And the second follow-up question to that would be, in terms of the SCI sponsored dedicated investment vehicle, what is the mechanism? Is it that SCI would effectively invest in this vehicle to better raise capital to deploy the portfolio companies?

Okay. Somebody is doing a lot of work, right? Two exceptional questions. Let me take the first one. So the business approval is not in relations to what the business capital. Business capital is [indiscernible] transaction we were working on where the [indiscernible] development would have been a guarantor. Another program which was [indiscernible] has now moved forward but it is -- there's just one [indiscernible] outstanding for it to be finalized, right? Yes. So it's not in relation to the business approved. Okay. So the sponsored dedicated investment vehicle, that is actually the business approval. And the questioner asking around what's the mechanism. So good question. The mechanism is, without giving away too much, SCI is the sponsor of vehicle, which means that SCI is investing in this vehicle, is doing so with a partner. And that partner is an internal financing partner. SCI will also look to bring other partners into the fold so that the business can scale rapidly. And by scaling, I mean when we are talking about scaling, we're really speaking in terms of substantial amount of money. Yes, let me leave it at that for the time being. And so the mechanism for SCI is similar to how SCI is invested in [indiscernible] Acrecent where we own kind of -- we are participating -- is not the same structure, right, but we are participating in a business. The underlying business can raise capital and grow and expand. And the net benefit of those [indiscernible] will flow back up to SCI. So it's not -- to answer the question about, is it a financing vehicle? It's not really a financing vehicle per se. Just in a sense, anything that SCI invests in ultimately ends up underlying investment is actually [indiscernible] investment. You could see that [indiscernible]. To answer the question, this is not like a special purpose vehicle that is just SCI [indiscernible] that is raising capital [indiscernible] capital in the SCI. This is a proper standalone entity that SCI is sponsoring. And there are other partners that are coming to the table. SCI of course is going to remain a major financing partner. And be assured, we'll get the main or a major [indiscernible] update of the net benefit or the returns that are generated from that investment vehicle. But [indiscernible] so it's not like SPV where we put [indiscernible] in the SPV and then SPV channel the money up to SCI. I mean SCI use the capital and deploy. No. It is the SPV [indiscernible] exists, SCI sponsors it, invests in it. Other people invest in it. And the net benefit, the net returns [indiscernible] net benefit return [indiscernible] a net benefit, a net return into SCI is similar net benefit [indiscernible] in exactly the same [indiscernible]. Slightly different but [indiscernible]. I hope I answered the question.

Flipping back to a Jamaica focus. So how much new capital has been deployed into post Hurricane Melissa demand? Also, with there being relative stress in the environment, do you expect to adjust more Jamaican portfolio -- adjust more into Jamaican portfolio assets going forward?

Understand -- oh, okay. Okay. So the total -- I think the majority of the capital that we have deployed, which is about $15 million about of $20-something million that SCI deployed over, say, the last 2 quarters, right, the vast majority of that is [indiscernible] Jamaica. Almost all of it is Jamaica [indiscernible] $30 million in these that are approved and going through various stages of whatever. All of that -- almost all of that -- majority of that is actually Jamaican entities. And the environment that we are in, I think for the 2, 3 years, there will be a lot of Jamaican opportunities ranging from companies who are taking advantage of new emerging opportunities that would have arisen based on the state and nature of what would come out of Hurricane Melissa. There were a ton of [indiscernible] work across multiple sectors, service industries that there aren't enough service providers to provide the services that are required, right? And so people need [indiscernible] working capital. And that's what we are here to provide. There are assets which businesses that need financing, right? They have the assets, they need cash because there is a strong demand for their businesses. And so somebody has to come and provide that cash. And of course, we collaborate with other persons to provide those cash. Jamaica has seen a lot of activity, occasioned by hurricane, but also occasioned by we are seeing where fuel prices are [indiscernible] and even though that's generally bad for one section of the economy, that represents opportunities for other segments of the economy, right, in terms of demand and supply. So all of these things we are seeing. And as I keep saying, our main challenge is effectively like $100 million [indiscernible]. That's [indiscernible] if you ask me what I go to my bed wishing for, that's what I wish for. If we get that, then we can solve some real problems because then we don't have this [indiscernible] we don't want to raise $100 million, we are paying interest of $100 million and it takes 18 months to deploy the $100 million, means that the trajectory in earnings per share is much muted relative to if I have a revolving credit line to fund it [indiscernible] 3 days before it's going to be funded [indiscernible]. Once I got back my capital, I pay it back and I repeat that process. So I hope I've answered the question that was asked.

As a follow-up, can you explain the plan for more funding to support SCI's intensive demand? Has the company drawn down on its remaining credit lines after the quarter-end?

Yes. Well, we have [indiscernible] we have exits that we are -- you would have seen additional exits subsequent to the end of the quarter, that we're obviously redeploying. So beauty about [indiscernible] cash when you have [indiscernible] quite ready to deploy, which is what happened in Q2, in the first half of the year, right? And then there are other times when [indiscernible] transaction already and -- approved and the documentation is almost perfect. And so by the time you get this cash, you basically can [indiscernible] almost instantly. So in this instance, that's what happened. So that's also providing [indiscernible]. But we are also constantly raising capital privately as well, right? Sometimes -- so when a capital is like a public raise, then we -- that's nice about that obviously because then in many other instances, we are doing private raise private negotiations. So we are doing a combination of private negotiations, which are ongoing. We have some of the international financing transactions which we spoke about, one of which is extremely close. It has been extremely close since January this year. There is this one [ CP ] that we have been waiting on, which I think it's fair to say we are -- say that we have -- the [ CP ] is pretty much in place. We are working on another term sheet [indiscernible] with another financing partner. So we basically have a very diversified financing plan where we are tapping [indiscernible] sources all at the same time. And that's how we intend to fund the transaction that we have on the balance sheet. We also expect to get additional payouts. And the payout that we got at the end of the quarter, we expect to also exit -- receive additional exit -- portfolio exit amounts perhaps before the end of the financial year, that will be substantial that we can use to redeploy for these new transactions. So that's how we are treating that movement. We just have to continue growing through until we get the financing over this financing hurdle where we can be in a comfortable situation similar to our quarter [indiscernible].

I have a few questions here from the YouTube chat, so I want to give them an opportunity to have their questions answered as well. [ Satish Sridha ] had a 2-part question. Notwithstanding you would have gone through many of these items already, however, given the negative cash drag and the lower dividend announcement amongst other announcements made recently, management fees are up. What is the explanation for this? And the follow-up would be, would you say or would it be fair to say that management incentives are not aligned with shareholders because management fees are higher regardless of net profit levels?

That's a very good question, and I'm happy that it was actually asked because it gives me an opportunity to provide clarity. So stepping back, right, management fees [indiscernible] management fees agreed between shareholders and the manager is we get a percentage of assets under management, right? That is 1.9%, and actually operate and to scale. So what I would call [indiscernible] with our costs are rising dramatically, our [indiscernible] are going down or flat, management fee is the management fee and it's based on AUM, right? So unlike other costs that you see in the management expense ratio, which are reflective of the inflationary environment, costs that you saw during COVID that obviously the manager has to face and bear, it doesn't matter. The agreement between the company and management is you get a fixed fee based on AUM. So your job is manage within that. So if the cost for the manager are skyrocketing, it doesn't matter, you have to [indiscernible] management. So that's the first point, right? The second point is if you recall, when SCI started to show the management's confidence in the structure of SCI, 3 things happened. First, the manager outlined for shareholders management expense ratio and benchmarked that management expense ratio based on global best practice. That management expense ratio was 2.85%. So this is total operating expenses, which include the management fee, and our other operating expenses shall not pass 2.85%. We need to keep it below that. That's the first one. The second one is, okay, efficiency ratio, which is the operating expenses divided by the revenue. That figure needs to be no more than 40%. And this is benchmarked against global private credit firms. That's two. Number three, the first 6 months of SCI's life, the manager actually did not charge any fee. Let me say it again. So the first 6 months, the manager waived its fee. So [indiscernible] full circle as well the manager is [indiscernible] shareholder. A, the manager gave away 6 months of its management fee when SCI started, just to demonstrate how confident it was, that SCI would actually work, at a time when this was the first time anybody hearing about alternative investments and private credit [indiscernible] all of those things, right? Give that [indiscernible]. So that shows that the manager is well aligned. Number two, the operating expense ratio. You can see that for the current quarter and current 9 months, that actually came within the boundary or the targeted threshold that the manager agreed and benchmarked against global metrics. The management expense ratio, third part, you can see for the quarter and the 9 months, again, it came within the threshold. So that is where we get alignment with the manager and the shareholders of SCI in terms of management fee. So obviously, if the portfolio value falls because of, let's say, the manager [indiscernible] and loses a lot of money, then obviously, the management fee naturally goes down. So the manager stands to lose if that happens, right? And because the manager doesn't want that to happen, the manager is incentivized to ensure that crystallized losses, realized losses are as low as possible. So since inception, what is the realized loss of SCI? It is 0.2%, which is, I would say that that's an extremely low and, knock on wood, that that remains so. So the manager has a job. It is paid for that job. There are going to be ups and downs, obviously, right? There are going to be times when SCI is delivering very, very high profitability. The management fee isn't very, very high. Why? Because, for example, SCI has all this balance sheet companies that are structured with additional upside like, okay, if a company at any time does an IPO, SCI structured [indiscernible] for SCI where if the company goes public, then SCI on top of the coupon that it's getting, gets an additional premium, 10%, 15%, whatever, which goes directly into shareholders' pockets as I guess whenever that happens. It can be an extraordinary dividend or dividend increase or what-have-you. So [indiscernible] situations that occur when the management fee don't jump, but the agreement that we have is the agreement that we have. And our job is to keep management expense ratio and keep efficiency ratio low, so that we can take that cash and redeploy it into the business, give it to shareholders as dividend, or invest it into another private credit such as Acrecent, right? [indiscernible] I mean what happens because we have fallen due to one-off instances, but in this reporting quarter, I think it's fair to say that given the crystallized loss ratio [indiscernible] below management expense ratio, given the low efficiency ratio and given the fact that other costs that you see in the management expense ratio, which aren't tied to anything, that is cost that exists [indiscernible] that costs 100%, it goes up, we have to [indiscernible] 100%. The manager has to bear whatever cost it needs to be, the operator [indiscernible] the management fee. So from my perspective, I think it's fair to say based on the track record of the manager, the sacrifices that the manager has made in the past and no doubt will make in the future, it's fair to say that management fee is very much aligned with shareholders.

I'm hoping that listener got a clear and concise answer in their opinion. I'm not seeing any further questions in the Q&A Teams chat nor am I seeing...

One more point since there are no more questions. One more point, right? So there are times as well when, just to show alignment, right? When SCI raises new capital, which is cash, let's say SCI raised $100 SCI has a portfolio, SCI portfolio is $100, right? Suppose SCI goes to companies $20 of new cash. In the period in which that new cash is raised and on the balance sheet, the money that [indiscernible] does not charge management fee on cash, even though the agreement says that we can, right? We have [indiscernible] to that calculation from the management fee because we want the cash actually be deployed, so to speak. So let's say, raised in the middle of the quarter and next quarter we start when that cash probably would have been substantially reduced. So there are many things that happen in terms of what the management does, that follows best practice to ensure that we are aligned with shareholders. So I hope I've given a few -- some response to that exceptionally good question, because maybe some other people were thinking I want to ask him, so thanks for that person that actually asked it.

Okay. Thanks again, Jason, for the clarity you provided. I would like to remind listeners on the call that the recording for this earnings call as well as the presentation deck will be available on both Sygnus Group's website and YouTube page. A special thanks to you, our attendees and listeners, thanks for the time -- thanks for taking the time, sorry, to listen to the presentation. If you have any lingering questions, we encourage you to reach out to us via [email protected] or [email protected]. And I'd like to wish everyone a productive rest of the week. Goodbye.