ItsMoneyMark Newsletter #104

FosRich Company Limited: 1st Quarter Earnings Head Lower by 23%

FosRich Company had a surprising downward quarter, for Q1, for the period ending March 31, 2023. 

The Company did register higher revenues, but they were not enough to offset, higher “cost of sales” and “admin & selling expenses” for Q1 2023. FosRich’s turnover registered was J$ 1.083 billion versus J$ 900 million, year over year, an increase of 20%. However, “cost of sales” ramped up to J$ 637.8 million from J$ 512.7 million, and the other major expense line item, “admin & selling expenses” increased to J$ 260.2 million from J$ 195.1 million. 

FosRich is a capital intensive, balance sheet heavy business to get to its earnings results. FosRich as of March 31, 2023, was carrying “inventories” of J$ 2.4 billion to generate if we annualize their turnover for the quarter, approximately J$ 4 billion or more in revenues (annually). To note, they did not carry their audited P&L as a comparative in their statement of comprehensive income. FosRich’s balance sheet, is financed with J$ 1.5 billion of long-term liabilities as of March 31, 2023. Utilizing just this line item, for debt-to-equity, FosRich’s debt-to-equity for the period was 80%. Close to 1 to 1 or 100%. 

Trade receivables versus Trade payables, accruals and advances tells an interesting story. Typically, and with most listed entities, you will see these line items matched as best as possible or somewhat close. In FosRich’s case for the close of the quarter:

  • Trade payables, accruals and advances were J$ 1.309 billion.
  • Trade receivables were J$ 656.9 million. 

FosRich recently reported a Director Resignation, effective April 30, 2023. Rosalyn Campbell resigned from FosRich’s Board of Directors, however, will remain as Chair of the FosRich Foundation. 

Market Moves:

  • Image Plus Consultants Limited (JSE: IPCL). The Company had a stellar year of earnings for 2022, more than rewarding, and justifying shareholders who participated in the IPO, initial public offering, led by JMMB. IPCL, better known as APEX radiology, may not be in the foodie sector or financial services, but based on their net profit reported for 2022 and their growth year over year % wise in net profit, for a newbie to the market they are one to watch as 2023 gets into earnings reports for Q1. 

Not enough companies on the JSE, Jamaica Stock Exchange publish MD&As with their quarterly or annual numbers, and we really commend IPCL for already getting into this positive behaviour by publishing a MD&A with their year-end numbers. 

IPCL’s year-end is not the calendar year, but it is February each year. As a result, February 28, 2023, saw the company, report by the numbers, revenue improving materially to J$ 1.09 billion from J$ 777 million, an improvement of 40%, year over year. The Company’s gross profit margin for the 2023 year-end was an impressive 66%. Earnings per share surged by a huge 155% to end the year, at J$ 23 cents with net profit of J$ 236.4 million. 

Total equity for IPCL nears the J$ 1 billion milestone number as of February 28, 2023. 

  • Portland JSX Limited (JSE: PJX). Well, we are not going to say it was only our last newsletter and/or earnings report, at ItsMoneyMark that led to this happening, but we always feel good about however we can assist the financial markets, financial literacy in any little way. We had written about that recently and that PJX should very importantly include a MD&A, Management, Discussion & Analysis with their results given that they are not as easy to understand financial results as other publicly traded companies. 

Well, dated April 27, 2023, PJX published a document titled “Investor Update”, which is essentially a MD&A. It described their financial results for the period, their businesses, underlying businesses, or portfolio holdings (this was a great read, and the market was really desiring this many moons ago, so this was a good look from PJX). It covered businesses such as, PBS Group, Liberty Latin America, Interlinc Group, Tropical Battery Company Limited, Diverze Assets Inc, Clarien Group and many more. Lastly, it included an outlook section. 

Interestingly, PJX at the end of this document, has announced an investor briefing. We cannot recall when last they did this, if ever, but it’s a good look. PJX would have had their virtual meeting earlier this week, on May 3, 2023, for the purposes of investors to ask questions, and to give a further update on the investor update posted on the JSE, Jamaica Stock Exchange website. 

  • EduFocal Limited (JSE: LEARN). The Company has made a major executive management announcement with the hiring of a COO, Chief Operations Officer, that was effective April 24, 2023. Mr. Mark Green was appointed as COO of LEARN and will report directly to the Company’s CEO, Mr. Gordon Swaby. Below is an excerpt from the corporate release about the appointment on the JSE, Jamaica Stock Exchange:

“In his new role as COO of EduFocal, Mark will be responsible for enhancing the operational efficiency and productivity of the team. He will work closely with the CEO and other senior leaders to develop and implement effective strategies for driving business growth, improving operational outcomes, and increasing revenue and profitability.”

Although the excerpt covers both operations and revenue in it, EduFocal has been having a few delays with its audited financial statements getting to the finish line to the JSE, Jamaica Stock Exchange. The latest corporate presser from LEARN on April 28, 2023, stated that the audited financials will now be ready by on or before May 12, 2023. 

While the buck stops with the CEO for these items, such as the audited statements, EduFocal is still a young firm in terms of being listed and we assume at ItsMoneyMark, that this move, is really a move to take some of the weight, admin, operations off the CEO’s shoulders, so that Mr. Gordon Swaby can focus on relationships, business development, revenue & earnings. 

  • Supreme Ventures Limited (JSE: SVL). The Gaming & Entertainment giant threw in a surprising lower 1st quarter. SVL reported earnings that were 29% lower for the period ended March 31, 2023. In looking at the numbers a bit deeper, what happened in the quarter at SVL, was “total gaming income” really slowed, which is uncharacteristic of SVL, and their “selling, general and administrative” expenses increased on the other hand. 

Total gaming income for the period, increased to J$ 12.86 billion versus, J$ 12.71 billion, + 1.2%, while selling, general and administrative expenses, increased to J$ 1.85 billion versus, J$ 1.63 billion, + 13.5%. Direct costs also increased for the period year over year impacting the results, as the % increase was higher than the revenue growth reported. 

On a positive note, SVL had some recent wins, which could be attributed to the expenses and perhaps where the focus has been on expansion. On April 28, 2023, SVL announced, and this must have taken a lot of effort, as it was not an overnight success, the following major achievement: 

Supreme Ventures Limited has advised that its Ghanaian subsidiary, Supreme Ventures Ghana Limited, has now signed the agreement for the exclusive provision of management and technical services to Game Park Limited.

The National Lottery Authority (NLA) in Ghana has signed on Game Park Limited as a Third-Party Collaborator to operate a lottery in that country. The Governing Board of the NLA issued the licence to be effective May 1, 2023, to Game Park Limited on Wednesday, April 26, 2023, at a brief ceremony at Holiday Inn, Accra.”

Additionally, SVL declared a dividend of J$ 23.94 cents, to be paid on August 15, 2023. 

  • Dolla Financial Services Limited (JSE: DOLLA). One of the micro-credit leaders in Jamaica, put out another phenomenal set of financial results, its 1st quarter, for the period ended March 31, 2023. DOLLA is now from our analysis, putting out consistently the fastest earnings reports on the JSE, Jamaica Stock Exchange, whether its quarterly reports or annual audited financial statements. To our re-collection this used to be NCB Financial Group Limited, who would publish their earnings the fastest. 

For the 3 months ended March 31, 2023, DOLLA reported total interest income of J$ 297.4 million, versus J$ 141.4 million in the previous year’s comparative quarter. Driving this line item, “loans, net of provisions for ECL”, grew from December 31, 2022, to March 31, 2023, from J$ 1.725 billion to J$ 2.273 billion. Therefore, just in the 3 months point to point period, or the 1st quarter alone, DOLLA grew, loans by 32%. DOLLA’s net profit for the 1st quarter was J$ 123 million with associated Earnings per Share (“EPS”) of J$ 6 cents. 

The Company’s subsidiaries that make up the “Group” are, (i) Dolla Guyana Inc and (ii) Ultra Financier Limited. For these unaudited financial results, DOLLA reports their results as “consolidated statement of comprehensive income”, however in the footnotes of the financials, it is to be noted, that DOLLA is not reporting (i) segment analysis, or (ii) geographic analysis for the results, that is we cannot determine and analyse the performance of the subsidiaries for the 1st quarter. 

It is to be noted, DOLLA and its Directors may be doing this for strategic reasons, whereby, their competitors cannot see and analyse their subsidiary and geography performance until they publish their audited numbers. 

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