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Proven Group Limited posted a loss after being pulled down by its associate company JMMB Group, which in turn was impacted by its associate Sagicor Financial Company.
“The board has decided not to declare a dividend for the first quarter, focusing instead on improving operational performance and cash flow to enhance shareholder returns,” stated Proven.
Proven Group Limited reported a net loss of US$1.8 million for the first quarter ending June 2024, a significant downturn from the US$3.9 million profit it achieved during the same period in 2023.
“The loss was primarily driven by our share of the loss from the associated company, JMMB Group Limited,” Proven Group said at the release of its financial results.
“With market expectations of monetary easing by central banks in the second half of 2024, yields on financial instruments have started to decline and there is expectation of an improvement in the balance sheet valuations of securities dealers as a result,” it said.
Proven Group acts largely as a holding entity for various companies that it partially or fully owns.
In December 2018 Proven acquired 20 per cent stake in JMMB for J$9.2 billion. Then in May 2019 in a separate transaction, JMMB announced plans to buy into Sagicor Financial for just above US$200 million.
Proven holds 20 per cent of JMMB and is it’s largest shareholder. JMMB Group, which is mainly in the business of investments and banking, owns 23 per cent of regional insurance conglomerate Sagicor Financial as its largest shareholder.
Last week, JMMB Group also reported a J$1.5 billion loss for its second-quarter, which it blamed on its associate Sagicor Financial, which posted a US$40 million loss for shareholders. Sagicor Financial blamed market conditions for its investments losing value.
“The market experience was due to differences in changes of our mark to market valuation of our assets and the calculated value of our liabilities, as dictated by IFRS 17. We view this experience as transitory and subject to reversal over time, and therefore view core earnings as a better representation of the performance of our business,” President and CEO of Sagicor Financial Company, Andre Mousseau, said in a statement.
Sagicor Financials’ local operation, Sagicor Group Jamaica Limited, posted a profit.
International Financial Reporting Standards are amended periodically with IFRS 17 standardising the treatment of client contracts.
The losses are largely non-cash and subject to further deterioration or restoration of value, based on market conditions.
Proven Group, which is mainly a financial company with holdings in real estate and manufacturing, as well, held US$153 million in cash amid US$1.08 billion in total assets at the end of June. Its capital stood at US$102.5 million, down marginally from US$103.3 million a year earlier.
Despite the negative bottom line, Proven Group’s net revenue for the quarter remained relatively stable at US$14.8 million, reflecting only a slight decrease of 1.13 per cent from a year earlier.
Proven’s manufacturing operations saw positive results, with gross profit increasing by 10.6 per cent to US$5.2 million. The improvement in margins was due to a decrease in commodity prices, which allowed the company to reduce Pinnacle’s livestock feed prices by 5.0 per cent.
However, the property segment recorded a loss of US$56,400, as no property sales were completed during the quarter. Proven Properties is involved in residential and commercial real estate development in Jamaica and the Cayman Islands.
Two of its current residential projects in Jamaica, Sol Harbour in Ocho Rios and Bahari in Runaway Bay, are expected to be completed in 2025 or 2026.
“The division is also expanding its industrial real estate portfolio with the Aashgo warehouses in Grand Cayman and the planned Kingston Gateway Warehouses in Jamaica,” Proven said.
Proven Group remains bullish on business, despite the interest rate headwinds it and other companies are facing.
“Despite a complex economic landscape, Proven Group remains positive,” the company said of its outlook.
“The securities dealers sector has been adversely impacted over the last two years by the rapid rise in interest rates to combat inflation, and the sustained higher rates. On balance sheet assets have not repriced as quickly as liabilities. In our results, this has significantly impacted Proven Wealth and our investment in JMMB. Markets anticipate gradual easing of rates over the next twelve months which should positively impact the performance of these operations,” Proven said.
English (US) ·