Hon. Hugh Hart Chairman of PROVEN Group Limited (“PROVEN”, the “Group”) has released the following report of their Unaudited Financial Statements for the nine months ended December 31, 2022.
Proven Group Limited registered Net revenue of US$42.91 million for the nine-month period ended December 31, 2022, an increase of 51.73% when compared to the US$28.28 million registered over the comparable period last year. This revenue increase is mainly attributable to the acquisitions of Robert’s Manufacturing, PROVEN Bank Cayman (“PBC”, previously named Fidelity Bank Cayman) and Heritage Education Fund International (“Heritage”), all of which closed at various points during the 2021/22 Financial Year and are now fully included in this financial year’s results to date.
Net Revenue
The main revenue lines contributing to the performance for the period included:
Net Interest Income which amounted to US$11.28 million compared to US$2.94 million in the previous year, benefited from the inclusion of US$9.58 million in net interest income from PBC in this year’s nine-month results.
There was also a notable widening of the net interest spreads across the Group’s other banking and wealth entities, as a result of the increased interest rate environment globally, which resulted in an aggregate 39.8% increase in net interest income from these entities. These gains were however partially offset by higher Group borrowing costs at increased refinancing rates in the market.
Fees & Commissions totalled US$8.48 million and was 23.25% higher than the similar prior year period, mainly due to the inclusion of both PBC and Heritage in this year’s results. This was however partially offset by a 20.31% decline in fees and commission income from the wealth management entities within the Group. Global recessionary fears led to a substantial contraction in demand for fee-based investment banking and other products.
Pension Fund Management Income was flat year over year, amounting to US$2.53 million for the period under review, as the growth in assets under management was tempered by the general weakness in market conditions and lower asset prices, both in the fixed income and equity markets, when compared to the similar period last year.
Gross Margin on Manufacturing Operations increased to US$13.89 million for the nine-month period compared to US$9.40 million last year. The current year’s results included the full nine-months from Roberts Manufacturing, while last year’s results only included the seven months from the closing of the acquisition.
Other Income increased by 24.83% to US$6.34 million for the nine-month period. This improvement over last year’s results of US$2.28 million was mainly attributable to the receipt of the proceeds of sale from the completion of two of PROVEN Properties’ major developments during the period. The net proceeds from these sales for the period amounted to US$2.40 million.
Share of Results of Associates amounted to US$6.29 million for this financial year to date, representing a decline of 47.76% when compared to the same period last year and contributing 13% to overall Net revenue compared to a 30% contribution last year.
For the period, JMMB Group, an associated company, contributed US$5.93 million compared to US$11.60 million recorded in the similar period ended December 2021.
JMMB’s performance, which notably did not include its share of Sagicor’s profits for the quarter, was also negatively affected by the adverse global market conditions’ impact on asset prices. The ongoing repositioning of its portfolio is however anticipated to result in a rebound over the upcoming quarters.
Operating Expenses
Total Operating Expenses for the period amounted to US$45.18 million, an increase of 81.54% over the same period last year and similar to the revenue growth, was mainly attributable to the inclusion of PBC, Heritage and Robert’s full results in this year’s financials to date. Excluding these companies would have resulted in a normalized increase in expenses of 10.56% year over year.
This increase in expenses includes some one-off costs related to the Group’s corporate restructuring, which is now complete, as well as transition expenses for the temporary services offered by the respective vendors of the acquired companies last year. The transition period for Heritage ended in October 2022 and for PBC will end in February 2024.
Additionally, the rebranding of the Group’s banking and wealth subsidiaries, which was completed on February 1, 2023, also contributed to the higher expenses during the period.
Net Profit & Outlook
Net profit attributable to shareholders for the first nine months of the current financial year amounted to US$3.28 million and represented a return on average equity of 3.09% for the period. This is a decline relative to the US$10.08 million earned in the same prior year period and primarily resulted from the reduction in the share of profits from associated companies.
Over the coming quarters, the Group expects a significant improvement in its efficiency ratio, from the current 91.26%. This improvement is expected in the context of the elimination of certain transitory expenses within the respective business units related to the transition and integration of the newly acquired companies.
Additionally, despite the current volatile economic and market conditions, the Group remains optimistic for the upcoming quarter and financial year. We expect to derive much more consistent performance from our diversified revenue base and; (a) the anticipated improvement in top line growth from the upward re-pricing of our marketable securities;
(b) normalization of gross margins in the manufacturing business; (c) continued growth in assets under management and wealth management activities;
(d) the completion of additional real estate development projects and;
(e) improved performance from the portfolio of associated companies.
Statement of Financial Position
The Group’s balance sheet expanded to US$1.09 billion as at December 31, 2022, with Assets growing by 44% from the US$754 million reported at December 30, 2021, while Liabilities increased by 63% to US$933 million as at December 31, 2022, from US$573 million as at December 31, 2021. The growth in both total assets and total liabilities resulted mainly from the acquisition of PBC. PROVEN Group’s off-balance sheet assets expanded to US$643 million, as of December 31, 2022.
Shareholders’ Equity
Total Equity attributable to shareholders of the company was reported at US$140.07 million as of December 31, 2022, down from US$164.26 million as of December 31, 2021. This was as a result of a US$34.36 million adverse shift in its investment revaluation reserves and that of its associated companies. This negative shift resulted from the impact of rising interest rates and market volatility on asset prices.
Dividend Declaration
The Board of Directors approved a quarterly dividend of US$0.0020 per share to all Ordinary Shareholders on record as of February 24, 2023, to be paid on March 13, 2023.
This represents a trailing twelve-month (TTM) tax-free dividend yield of 1.50% based on the average share price of US$0.206 for the twelve months ended December 31, 2022.
Hugh Hart retiring as a Director and Chairman of the Board
PROVEN Group Limited (“PROVEN” or “PGL”) wishes to advise that Dr. The Hon. Hugh Hart has notified the PROVEN Board of Directors in their meeting on February 9, 2023 that he will be retiring as a Director and Chairman of the Board effective March 31, 2023.
Mr. Hart, served in his capacity as a non-executive independent Director and Chairman of the Board since PROVEN’s inception 13 years ago and combined his vast legal and financial sector experience with deep humility, compassion and notable wisdom. Mr. Hart in his announcement addressed the PROVEN Directors with pride “I am truly thankful to have been a part of this stellar company and to have meaningfully contributed to the growth and development of what is now a formidable regional brand.”
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