2019 Annual

Report

Capital flows through channels. In every economy that does

well in the world there’s a capital market and there’s a bank
market, then you have the alternative or non-traditional markets,
such as private credit, private equity and venture capital… all
markets are complementary channels to help businesses grow.

Beris Grey C.E.O. | Sygnus Capital

Contents
02 07 10
Company Snapshot Notice of Annual Directors’ Report
General Meeting

11 14 16
Company Profile Corporate Structure Board of Directors

19 22 28
Chairman’s Report Management Risk Management
Discussion and
Analysis

30 35 38
Corporate Governance Corporate Data Shareholder
Information

40 91
Financials Form of Proxy
Sygnus Credit Investments Limited 2019 Annual Report

Snapshot
SCI Successes After
Second Year

Cayman Islands

Regional Footprint Jamaica

Spanning 5 Caribbean Territories

12.3%
Weighted Average
US$38.2m
Total Assets - largest listed private
Yield on Investment in
credit investor in the Caribbean
Portfolio Companies

Enhanced risk
US$1.5m
Total Dividends paid and declared
management culture on fiscal year results up 216%
and processes

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 2019 Annual Report Sygnus Credit Investments Limited

169.5% US$3.2m
Record Total Investment Income
up 169.5% to US$3.2 M

166.3% US$2.2m
Record Net Investment Income
up 166.3% to US$2.2M

St Lucia

Barbados

ABC Islands
(Aruba, Bonaire & Curacao)

116.3%
Portfolio Company
44.0%
Investments up Record Net Profit up
116.3% to US$34.0M 44.0% to US$2.1M

3
Mining &
Quarrying
SCI Investment: Medium-term
note to fund capital expenditure
and plant expansion
 “SCI was able to finance us at
a critical time in our growth
trajectory allowing us to expand
and take advantage of growth
opportunities in the mining and
quarrying sector, one of the fastest
areas of growth in Jamaica”
- Managing Director of a leading
mining and aggregates firm
Sygnus Credit Investments Limited 2019 Annual Report

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2019 Annual Report Sygnus Credit Investments Limited

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Sygnus Credit Investments Limited 2019 Annual Report

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 2019 Annual Report Sygnus Credit Investments Limited

Distribution
SCI Investment: To fund working
capital needs using an inventory
repurchase agreement

“Their innovative financing

structure monetized our
inventory, and improved
our cash flow, leverage
ratios and profitability”
- CFO, regional consumer
products distribution firm

9
Sygnus Credit Investments Limited 2019 Annual Report

DIRECTORS’
REPORT
The Directors of Sygnus Credit Investments Limited (“SCI” or the “Company”) are pleased to present their Annual
Report with the audited financial statements for the year ended June 30, 2019.

Financial Highlights FY June 2019 FY June 2018 % Change

US$ US$
Total Investment Income 3,218,991 1,194,330 170%
Net Investment Income 2,208,858 829,416 166%
Net Profit Attributable to Shareholders 2,050,631 1,423,747 44%
Total Shareholders' Equity 37,586,537 36,618,923 3%

Details of these results are set out in the Management Discussion and Analysis and the Financial Statements, which
are included as part of the report.

Dividends
Post the end of the financial year, the Company declared an interim dividend of US$0.00249 per share to all
shareholders on record as of September 30, 2019, and payable on October 18, 2019, subject to compliance with
applicable laws. The ex-dividend date was September 27, 2019.

Meeting of The Board of Directors

A total of six (6) board meetings took place during the financial year ended 30th June 2019. The names of members
of the Board and their attendance at the board meetings are as outlined on page 31 of the report.

Risk Management and Governance Committees

The Board of Directors of the Company is ultimately responsible for the risk management policies of SCI and
has delegated the management of credit risk to the Credit Risk and Investment Committee, a sub-committee of
the Board of Sygnus Capital Management Limited, the investment manager of SCI. More information on risk and
governance are outlined on pages 28-33.

Auditors
Our auditors, KPMG, who were appointed during the financial year, expressed a willingness to continue for the
next financial year.

Acknowledgement
The Directors would like to express their sincere appreciation to the shareholders and business partners of the
Company for their continued support and partnership.

Clement Wainwright Iton, [Link], M.B.A

Chairman, Sygnus Credit Investments Limited

On behalf of the Board of Directors.

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 2019 Annual Report Sygnus Credit Investments Limited

Company
Profile
Private Credit Pioneers Customised Financing for Medium-Sized Firms
Sygnus Credit Investments Ltd. (the “Company or “SCI”) Non-traditional forms of credit are more
is one of the largest specialty private credit investment customised and flexible than traditional financing.
(“PCI”) companies in the Caribbean. SCI had US$34 million Consequently, the Company offers an alternative
invested in 19 Portfolio Companies across 5 Caribbean channel through which medium-sized firms can
territories and eight industries during its second year of access capital to drive their expansion and growth.
operation. SCI successfully raised US$36 million in equity
capital during its first year in operation. This was achieved The investment objective of SCI is to generate
through a private sale of shares to institutional and high attractive risk-adjusted returns with an emphasis on
net worth investors in 2017 and an initial public offering principal protection by generating current income,
(“IPO”) in 2018. The Company’s ordinary shares are listed and to a lesser extent capital appreciation, through
on the main US dollar market and main JA dollar market investments primarily in Portfolio Companies using
of the Jamaica Stock Exchange. private credit instruments.

SCI is dedicated to providing non-traditional financing to The Company invests primarily in private credit
medium‑sized firms (“Portfolio Companies”) across the instruments including bilateral notes and bonds,
Caribbean region. These Portfolio Companies typically preference shares, asset-backed debt, mezzanine
have revenues of between US$5 million and US$25 million. debt, convertible debt and other forms of structured
private credit instruments. These forms of financing
are typically more aligned with the growth and
expansion plans of Portfolio Companies.

US$25million
Typical revenue of
Portfolio Companies
US$36million
Equity capital raised

11
Sygnus Credit Investments Limited 2019 Annual Report

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 2019 Annual Report Sygnus Credit Investments Limited

Energy
SCI Investment: Cumulative convertible
preference shares to refinance
debt, fund CAPEX expansion and
provide working capital support

Portfolio Company benefitted

from SCI’s ability to provide
large, flexible, fully committed
capital to assist with funding
the Company’s balance
sheet, at a critical stage
of their development.

13
Sygnus Credit Investments Limited 2019 Annual Report

CORPORATE
STRUCTURE
The assets and operations of Shareholders
the Company are managed J$Shares US$Shares
by its Investment Manager,
Sygnus Capital Management
Limited (SCM), and advised by
Sygnus Credit Investments Ltd
its Investment Advisor, Sygnus
Listed on Jamaica Stock Exchange
Capital Limited.

The Company has issued one

Special Share to the Investment Investment Manager
Manager, SCM. The Special
Share carries the right to 101% Sygnus Capital Management Ltd
of the votes on a poll in general Registered with Cayman Islands
meetings, otherwise on a show Monetary Authority (CIMA)
of hands, it has only one vote.
The holder of the Special Share Advisory Agreement
may demand a poll at a general
meeting. The special share has
no rights to dividends or any Sygnus Capital Ltd
distribution on a winding up. Licensed Securities Dealer;
Regulated By FSC Jamaica

Investment Advisor

Provides Advisory Services to Sygnus

Capital Management Ltd for SCI

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 2019 Annual Report Sygnus Credit Investments Limited

Investment Management Decisions Investment Recommendations

The Investment Manager has delegated investment The Investment Advisor, through a committee of
decisions to a Board sub-committee of experts, known specialists from its Investment Advisory Committee
as the Credit Risk and Investment Committee (CRIC). (IAC), provides recommendations to the CRIC for
The CRIC has extensive regional and international decision-making. The IAC has extensive expertise in the
experience and expertise spanning credit risk, corporate Caribbean region structuring and arranging corporate
and investment banking, investment management and credit transactions across a wide range of asset classes,
financial markets. including structured finance, securitization, mezzanine
finance, project finance and corporate & investment
The CRIC comprises: banking.
Chairman: Milton Brady
Milton currently works as a senior advisor with Pan The IAC comprises:
American Finance, where he uses his experience Chairman: Berisford Grey
to provide advice and counsel to businesses and Chief Executive Officer and Head of Investment Banking
governments in the Caribbean region. Previous roles at Sygnus Capital; former Managing Director of Corporate
held by Milton include: Director and Global Head of & Investment Banking at CIBC FirstCaribbean, largest
Credit at SEB Merchant Banking (Sweden); President of regional bank in the Caribbean; former SVP Origination
SEB, New York (USA); Managing Director, Corporate and and Capital Markets at Scotia Investments Jamaica,
Investment Banking at CIBC FirstCaribbean (Barbados); where he established the capital markets as a strategic
Managing Director, CIBC FirstCaribbean (Jamaica); business unit. Beris also has significant experience in
Chief Commercial Officer, LIME (formerly Cable & the European debt capital markets where he worked as
Wireless Caribbean); Chief Risk Officer, NCB Group an Associate Director in investment banking.
(Jamaica); and Director of Sygnus Capital Management.
Gregory Samuels, CFA
Simon Cawdery, CFA Executive Director and Head of Corporate Advisory
Non-Executive Director, HLX Management/IPAF Group at Sygnus Capital; former Assistant VP of Treasury
(Cayman); Founder/Director Helix Group (Cayman); and Trading at Scotia Investments; former Associate
former Head of Investment Strategy/Senior Portfolio Director, Client Solutions Group at CIBC FirstCaribbean,
Manager at EFG Bank (Cayman); former Head of where he provided structured products and derivative
Discretionary Investments/Senior Portfolio Manager hedging solutions to clients; former engineer with Royal
at Butterfield Bank (Cayman); former Credit Analyst Dutch Shell PLC.
at Barclays (UK); and Director of Sygnus Capital
Management. Ike Johnson, PhD, CFA
Managing Director of Sygnus Capital Management;
Jason Morris, CFA Chief Operating Officer and Head of M&A Advisory and
Chief Investment Officer and Head of Investment Strategy at Sygnus Capital Limited; former Assistant
Management at Sygnus Capital Ltd; former VP of VP of Business Analytics and Product Development at
Business Analytics, Portfolio Advisory & Product Scotia Investments Jamaica; former Senior Strategy
Development at Scotia Investments Jamaica; former Management Officer and former Market Risk Analyst at
Senior Investment Strategist & Portfolio Manager, and JMMB Group; Director of Sygnus Credit Investments.
former Sovereign Risk Analyst at JMMB Group; and
Director of Sygnus Capital Management.

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Sygnus Credit Investments Limited 2019 Annual Report

Board of
Directors
Chairman Directors
Clement Wainwright Iton, [Link], Nakita Edwards, CFA, FCCA, CPA
M.B.A Nakita Edwards is a Tax, Accounting, Audit, Finance and Development
Former Chief Executive Officer of the Specialist experienced in working throughout the Caribbean with a variety of
Trinidad and Tobago Securities and private sector companies, state corporations and statutory bodies in various
Exchange Commission (TTSEC); industries. She is also a director and co-founder of DCIC Professional Services.
former Chief Executive Officer of
the Trinidad and Tobago Stock Ian Williams, [Link]., M.B.A
Exchange (TTSE); former General Ian Williams is currently the President and CEO of ZNW Management and
Manager of the Jamaica Stock Consultancy Limited. Ian works with companies that do not have a presence
Exchange (JSE); former Project across the Caribbean market to help establish new relationships and sales in
Manager and Corporate Planning the region. Previously, Ian worked with CIBC FirstCaribbean International Bank
Analyst at Grace Kennedy. (FCIB) for 15 years primarily within Treasury. Prior to leaving FCIB, Ian was the
Director and Head of Foreign Exchange Sales.

Damian Chin, B.A., [Link].

Damian is currently Deputy Director, Finance and Planning at Sandals Resorts
International. Previously he was a consultant at Paul Chen Young & Associates
and a financial analyst at First Fidelity Bank in New Jersey.

Peter Thompson, CFA, [Link].

Peter is a Senior Investment Manager, Pension and Client Portfolios at JMMB
Ltd. where he is responsible for the build out of the process and structures for
the management and service delivery for client portfolios of JMMB. Previously,
he was Manager, Group Product Portfolio and Business Development at
JMMB Ltd.

Hope Fisher, [Link]

Hope Fisher is a civil servant with the Ministry of Labour & Social Security
where she is currently Director of the Bond Portfolio at the National Insurance
Fund (“NIF”). She has responsibility for monitoring the fixed income portfolio
and developing the strategy to capitalise on investment opportunities.

Ike Johnson, PhD, CFA

(See Corporate Structure: The IAC)

Ms. Edwards was due to retire from office by rotation at the 2019 AGM, however, she will not be
seeking re-election and has resigned from the board effective October 25, 2019.

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 2019 Annual Report Sygnus Credit Investments Limited

Board of
Directors
Chairman Directors
Walter H. Scott, Q.C. Clement Wainwright Iton, [Link], M.B.A
Senior Partner at Rattray Patterson (See Board of SCI)
Rattray; Crown Counsel, Office
of Director of Public Prosecution; Ike Johnson, PhD, CFA
former Partner of Messrs. Grant, (See Corporate Structure: The IAC)
Stewart, Phillips & Co., Attorneys-
at-Law; founding Partner of Jason Morris, CFA
Chancellor & Co, Attorneys-at- (See Corporate Structure: The CRIC)
Law; member of the Jamaican
Bar Association, Commonwealth Milton Brady, B.A., M.B.A.
Lawyers Association and Advocates (See Corporate Structure: The CRIC)
Association of Jamaica; Chairman
of Casino Gaming Commission; Simon Cawdery, CFA
Director of University Hospital of (See Corporate Structure: The CRIC)
the West Indies; former Chairman
of Betting Gaming & Lotteries Winston Connolly, LL.B (HONS), PGDL, BBA.
Commission; former Chairman Managing Partner of Lainston International Management (Cayman); former
of Private Security Regulations Member of Parliament of the Cayman Islands; former Equity Partner at HighWater
Authority; former Director of Ltd.; past Chairman of the Cayman Islands Financial Services Council; past
the Board of the Petroleum Secretary and Executive Board Member of Cayman Islands Bar Association.
Corporation of Jamaica; specializes
in commercial, civil and criminal
(white collar) litigation, mining, libel,
labour and gaming law.

Walter Scott, resigned from the

Board of Sygnus Capital Limited
and Sygnus Capital Management
Limited effective September
30, 2019.

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Sygnus Credit Investments Limited 2019 Annual Report

Board of
Directors
Chairman Directors
Walter H. Scott, Q.C. Gassan Azan, Jr.
(See Board of SCM) Founder, Chairman and Chief Executive Officer of Bashco Trading Company
Ltd. and MegaMart Wholesale Club; Chief Executive Officer of Sizzling Slots
and SMWS Games Ltd.; awarded Prime Minister’s Medal of Appreciation in
Jamaica; Justice of the Peace.

Berisford Grey
(See Corporate Structure: The IAC)

Jason Morris, CFA

(See Corporate Structure: The CRIC)

Milton Brady, B.A., M.B.A.

(See Corporate Structure: The CRIC)

Ike Johnson, PhD, CFA

(See Corporate Structure: The IAC)

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 2019 Annual Report Sygnus Credit Investments Limited

Chairman’s US$2.1 million

Report
A Record Year
Record net profit

We are pleased to submit the Annual Report for Sygnus

Credit Investments Ltd. for the year ended June 30,
2019. The Company reported a record net profit of
US$2.1 million and record net investment income US$34 million
of US$2.2 million, representing its core earnings. Total investments
Dividends paid and declared on the financial year
earnings were US$1.5 million, a 216% increase over
prior year. Earnings per share was 0.59 US cents, down
from 0.85 US cents, due to a substantially larger share
count, but net investment income per share was 0.63
US cents, up from 0.50 US cents prior year.

SCI’s positive second-year results continue to reflect

US$1.5 million
Dividends declared & paid
the execution against its goal to be the leader in the
regional private credit market by targeting the niche
medium-sized sector.
Leading the Way Forward
Key Highlights As a medium-risk investor, SCI continues to carefully
The Company achieved many key milestones during select and partner with Portfolio Companies that meet
its second year of operations, key among which was its risk appetite, and that can deliver appropriate risk-
the payment of its first interim dividend on October 19, adjusted returns for shareholders on a consistent basis.
2018. Since then, SCI has declared a second and a Credit risk and overall risk management remains a key
third interim dividend, which cumulatively represent a part of SCI’s DNA, which is monitored by constantly
return of capital to shareholders amounting to US$2.0 enhanced and robust risk and governance processes
million within a twelve-month time horizon from the first at different levels.
interim dividend since its IPO.
The Board approved the raising of up to US$15 million
This return of capital to shareholders, though quite in additional capital for SCI during the financial year.
unprecedented for a new company to achieve, speaks With this new capital, SCI is positioned to continue
to SCI’s differentiated business model that focuses providing leadership in the private credit space while
on generating sustainable core earnings from which pursuing robust revenue growth opportunities in existing
it is able to provide shareholders with dividends. It and new markets.
is also proof that the business model is viable over a
longer time horizon. At the same time, SCI also provides We wish to thank all the Directors of the Company,
shareholders with capital appreciation opportunities the Investment Manager and Investment Advisor, and
from movements in its underlying share price as the their teams for their hard work and leadership in the
Company executes its growth strategy over time. pursuit of SCI’s strategic objectives. Most importantly,
thank you to our shareholders and our various Portfolio
Another key achievement of SCI during the year was Companies as we look to grow together.
its ability to expand its Caribbean footprint from one
country to five territories while funding over US$18
million in additional net investments to medium-sized
firms, bringing total investments to US$34 million. This
was achieved while maintaining a 100% performing
portfolio of investments in a wider number of industries
funded - from five to eight, while generating a higher Clement Wainwright Iton, [Link], M.B.A
yield of 12.3%. Chairman, Sygnus Credit Investments Limited

19
Telecommunications
SCI Investment: Short-term
financing facility to fund
working capital needs

SCI’s short term facility

enabled Portfolio Company
to rapidly execute its
strategic objective and
increase shareholder value.
Sygnus Credit Investments Limited 2019 Annual Report

Management
Discussion
and Analysis

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 2019 Annual Report Sygnus Credit Investments Limited

The Management Discussion and Analysis (MD&A) should be SCI Total 3,218,991
read in conjunction with SCI’s audited financial statements. Investment
The MD&A was prepared by management to provide
shareholders with additional insights into the operations and
Income (US$)
financial performance of the Company. It may contain forward 1,194,328
looking statements based on assumptions and predictions
of the future, which may be materially different from those
projected.
FYE June 2018 FYE June 2019
Result of Operations
Sygnus Credit Investments Limited is pleased to report an
annual record for net profits, core revenues and core earnings, by US$120.41 thousand, or 66% to US$302.96
for the financial year ended June 30, 2019 (“FYE Jun 2019”). thousand, primarily driven by U$50.50 thousand
The record results were driven by an increase in the velocity of in Jamaica Stock Exchange listing fees post SCI’s
private credit investments in middle-market firms across the initial public offering, US$37.45 thousand in one-
Caribbean region, in keeping with SCI’s mandate to provide off consultancy fees relating to the adoption
firms with access to a non-traditional financing channel. of new accounting standards and US$16.56
thousand in one-off software setup costs for a
Core Operations credit management system.
The Company’s core revenues, or total investment income,
grew by 169.5% or US$2.02 million to a record US$3.22 SCI’s core activities generated an efficiency ratio
million. Ninety-eight percent of core revenues were comprised of 31.4% versus 30.6% for FYE Jun 2018. This
of interest income. ratio is computed as total operating expenses to
total investment income.
SCI’s core earnings, or net investment income, grew by
166.3% or US$1.38 million to a record US$2.21 million, while Non-Core Operations
net profit attributable to shareholders increased by 44.0% or Non-core activities were comprised of US$135.43
US$626.88 thousand to a record US$2.05 million. thousand in fair value gains, net foreign exchange
losses of US$219.01 thousand, less US$74.65
FY Jun 2019 FY Jun 2018 thousand in provision for expected credit losses
Summary Results of Operations US$ US$ (ECL). Net investment income plus non-core
activities comprise the reported net profits of
Total Investment Income 3,218,991 1,194,330 US$2.05 million.
Total Operating Expenses 1,010,133 364,914
Net Investment Income 2,208,858 829,416 Fair value gains were driven by investments
in two Portfolio Companies with profit sharing
Fair Value Gains 135,429 644,326 upside, net foreign exchange losses reflected
Net Foreign Exchange Gain (Loss) -219,011 -49,995 SCI’s exposure to Jamaican dollar assets which
Provision for Expected Credit Losses -74,645 0 fluctuate based on movements in the JMD/USD
exchange rate, and ECL reflected the adoption
Net Income / (Loss) before Tax 2,050,631 1,423,747
of international financial reporting standards 9
Taxation Charge - - (IFRS 9) at the start of the financial year.
Profit Attributable to Shareholders 2,050,631 1,423,747
Total Operations
Other Comprehensive Income: 0 0
Total revenues as reported on the audited
Unrealized Gains (Loss) 0 87,503 financial statements, were comprised of core
Total Comprehensive Income 2,050,631 1,511,250 revenues, or total investment income (interest
Earnings Per Share 0.59¢ 0.85¢ income plus participation fees), plus the non-core
revenue item of fair value gains. Total revenues
Net Investment Income Per Share 0.63¢ 0.50¢
were US$3.35 million versus US$1.84 million for
Total operating expenses were US$1.01 million versus FYE Jun 2018.
US$364.91 thousand for the financial year ended June 30,
Similarly, total expenses were comprised of core
2018 (“FYE Jun 2018”). The lower reported number for the
operating expenses, plus the non-core items
prior year was primarily due to zero management fees (1.9%
of net foreign exchange losses and provision
of assets under management) being charged during the first
for expected credit losses. Total expenses were
half of that year.
US$1.30 million versus US$414.91 thousand for
Excluding management fees, operating expenses increased the prior year.

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Sygnus Credit Investments Limited 2019 Annual Report

US$2.21 million
Record Core Earnings / Net Investment Income
up 166.3% or US$1.38 million

Investment Activity The number of Portfolio Company investments

FY Jun 2019 FY Jun 2018 increased to 19 from 7, with an average investment
of US$1.79 million per Portfolio Company, down
Summary of Investment Activity US$ US$
from US$2.24 million the prior year.
Fair Value of Investment in
33,966,572 15,702,924
Portfolio Companies The weighted average tenor of investment in
Number of Portfolio Company Portfolio Companies was 1.9 years with a
1* 1 weighted average yield of 12.3%, versus 3.0
Investments Exited During year
years and 10.2% weighted average yield for
Dry Powder to be Deployed 3,142,620 21,039,318
the prior year, respectively. There were zero
Number of Portfolio Company non‑performing Portfolio Company investments.
19 7
Investments (#)
Average Investment per Allocation by Industry and Region
1,787,714 2,243,275 SCI’s 19 Portfolio Companies were diversified
Portfolio Company
across 8 major industries, up from 5 the prior
Weighted Average Term of Portfolio year. Three new industries were added during
1.9 3.0
Company Investments (years) the year, namely Telecommunication Services,
Weighted Average Fair Value Yield Health & Lifestyle and Financial Services. The top
12.3% 10.2%
on Portfolio Companies (%) 3 industry allocations were Distribution (19%),
Non-performing Portfolio Telecommunication Services (17%) and jointly,
Nil Nil Energy (16%) and Hospitality (16%).
Company Investments
* Represents short-term investment that was exited at maturity date and SCI widened its Caribbean footprint during the
re-invested in the same Portfolio Company. year, making its first investments in some strong
market-leading Portfolio Companies incorporated
Velocity of Investments and Summary Statistics
in the Cayman Islands, St. Lucia, ABC Islands
SCI’s investment in Portfolio Companies grew by 116.3% to
(Aruba, Bonaire & Curacao) and Barbados,
US$33.97 million, driven by new investment commitments (net
bringing the total number of territories up to 5
of repayments) of US$18.23 million from the US$20.22 million
from 1. Companies incorporated in Jamaica
of new capital raised during its IPO in June 2018. Portfolio
accounted for 59% of SCI’s Portfolio, down from
Company investments include finance lease receivables
100% the prior year.
carried on SCI’s balance sheet.
Summary of Private Credit Instruments
The Company is a medium-risk investor and
uses a wide array of innovative private credit
instruments to execute its investments, while

US$33.97
providing a flexible financing solution to Portfolio
Companies. SCI’s main investment instruments
were customized medium-term notes (28%),

million
invested in 19 Portfolio
customized short-term notes (26%), preference
shares with profit sharing (22%) and commodity
repurchase agreements (13%).
Companies, up 116.3%

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 2019 Annual Report Sygnus Credit Investments Limited

Portfolio Manufacturing Mining and Quarrying 9% Portfolio Company Zero Coupon

Note 4% Receivables Financing 2%
Company 15% Allocation By
Allocation Telecommunication PCI Instrument Commodity
Repurchase
by Industry Services 17% Agreement
Preference Share with 13%
Profit Sharing 22%

Hospitality 16%
Finance Lease 5%

Health & Lifestyle 6% Distribution 19% Customized

Medium
Customized Short Term Note
Term Note 26% 28%
Financial Services 2% Energy 16%

Balance Sheet
SCI had US$38.15 million in total assets, up from
US$37.00 million the prior year. Of the US$33.97 million
Portfolio Company invested in Portfolio Companies, US$24.88 million
St. Lucia 10%
Incorporation (73%) was measured at amortized cost, US$1.58 million
by Region
(5%) in finance lease receivables, and US$7.51 million
Cayman Islands 9%
(22%) was carried at fair value through profit and loss.

ABC Islands 5%
The Company had liabilities of US$559.46 thousand
Jamaica 59%
versus US$385.66 thousand for FYE Jun 2018. These
liabilities were comprised of US$377.39 thousand in
accounts payables and accrued liabilities, US$121.18
Barbados 17% thousand in dividends not claimed by shareholders and
US$60.90 thousand in fees due to a related company.
SCI had zero debt.

Shareholders’ Equity and Book Value

Along with frequent monitoring of Portfolio Company
Total shareholders’ equity rose to US$37.59 million,
financial performance, SCI’s investments had limited
up 2.6% or US$967.61 thousand, versus US$36.62
downside risk through a variety of buffers, including
million in the prior period. This was driven by SCI’s
strong collateral packages, various protective
improved profitability. Book value per share increased
covenants, board observation rights and board seats
to US$0.1074 up from US$0.1046 in FYE Jun 2018.
for some of its investments.
The total number of shares outstanding remained
Similarly, some of SCI’s investments are structured unchanged at 350,087,563.
with additional upside potential, in terms of profit-
Liquidity and Capital Resources
sharing agreements, and equity convertibility in the
Dry Powder available to invest in new private credit
event of an IPO prior to the maturity of SCI’s private
opportunities was US$3.14 million, down from
credit investments. Together, these innovative structures
US$21.04 million at the end of the prior financial year. To
allow SCI to achieve an appropriate return for taking
facilitate the growth of SCI’s large pipeline of financing
medium risk.
opportunities across the region, the Board of Directors
authorized the raising of up to J$2.0 billion or US$15.0
million in additional debt capital at a meeting in May

Investments
2019 during the financial year.

in 5 Caribbean
territories US$38.15
across major
8
industries
25
million in Total Assets
Largest Listed Private Credit Investor In Caribbean
Sygnus Credit Investments Limited 2019 Annual Report

Since the end of the financial year, SCI has secured Jamaica
a portion of that financing via revolving credit lines The Jamaican economic backdrop remains among the
and other unsecured debt facilities, and will negotiate, best in the Caribbean region, albeit with a low growth
structure and raise additional financing as necessary trajectory of below 2.0%: debt/GDP trending below
to fund the growth of the business. 96% for the first time in nearly two decades, a fiscal
surplus of ~1.5% of GDP - the highest in more than a
Dividends decade, inflation hovering near 4.0% within an inflation
During the year, SCI paid its first two interim dividends targeting regime, a moderate current account deficit
since its IPO: US$0.0013358 on October 19, 2018 and below 5% of GDP and a move towards an independent
US$0.001735 on April 05, 2019, which was a 30% fiscal council. In addition, credit to the private sector
increase on the dividend paid on October 19, 2018. grew at a robust 15.8% with commercial bank non-
performing loans below 2.0%, reflecting a healthy credit
Subsequent to the FYE Jun 2019 audited financial
eco-system. The JMD/USD foreign exchange market
statements, SCI declared an interim dividend of
continues to experience significant two-way movement
US$0.00249 per share payable to shareholders of
within a wide band of ~JMD/USD 124:1 and 139:1.
record on September 30, 2019, with an ex-dividend
date of September 27, 2019 and payable on October ABC Islands
18, 2019. The ABC islands are a part of the Kingdom of the
Netherlands, although Aruba and Curacao are
The interim dividend of US$0.00249 per share represents
autonomous self-governing constituents while Bonaire
an increase of 43% over the April 05, 2019 dividend of
is actually a special municipality of the Netherlands.
US$0.00175, and 86% above the Oct 19, 2018 dividend
This relationship with the Netherlands, an investment
of US$0.0013358. Total dividends paid and declared
grade sovereign, provides the ABC islands with a strong
based on FYE 2019 financial results were US$1.48
economic backdrop to sustain the Portfolio Companies
million versus US$467.7 thousand for FYE Jun 2018, an
financed by SCI.
increase of 216%. In total, SCI has paid and declared
three dividends totaling US$1.95 million or US$0.00556 Cayman Islands
per share, in the twelve months since its first dividend Similar to the ABC Islands, the Cayman Islands are
payment on October 19, 2018. an autonomous British overseas territory, and are a
major world offshore financial center with a strong
Operating Environment
economic backdrop and an investment grade sovereign
During the financial year, SCI diversified its deployment
rating. The economy is estimated to have grown 3.3%
of capital in Portfolio Companies incorporated in five
in 2018, the highest growth rate since 2007, driven by
Caribbean territories, namely, Jamaica, ABC Islands
construction (8.3%), wholesale & retail (6.9%), hotel
(Aruba, Bonaire and Curacao), Cayman Islands, St.
& restaurants (5.1%), business activities (4.4%) and
Lucia, and Barbados. For the St. Lucian and Barbadian
government services (4.0%), with projections for 2.6%
Portfolio Companies, the economic exposure is mainly
growth in 2019. Inflation was 4.5% in the first quarter
to the Caribbean region, Latin America and Asia Pacific,
of 2019, down from a peak of 4.8% during the second
and is not concentrated domestically.
quarter of 2018, while the unemployment rate fell to a
12-year low of 2.8% during the second half of 2018.

Dividend US$0.00249

Per Share
US$0.001735

US$0.0013358

30%  43%  US$1.48m

216%
OCT 2018 APR 2019 OCT 2019* Dividends paid and
* Dividend declared to be paid declared for FYE 2019
26
 2019 Annual Report Sygnus Credit Investments Limited

Strategic Direction
The regional private credit industry remains
in an early stage of development with an
estimated US$100 million to US$200 million

Our goal is to
in dedicated capital, representing less than
1% of the non-government credit market.
As the largest listed private credit investor in
the region, SCI continues to see substantial
opportunities for the growth and development
of the private credit industry in the Caribbean.
SCI’s focus is to nurture long-term, win-win
understand,
measure, and
partnerships that inspire repeat business
from Portfolio Companies.

In the last annual report, SCI outlined three

strategic priorities over three years to build
its leadership in the regional private credit
industry:
monitor the
1. be a leading source of flexible and
innovative capital for medium-sized firms
and co-investing partners;
various risks
2. strive for geographic diversification by
investing in other Caribbean markets;
and
that may arise.
3. limit the risk of non-performing
investments among Portfolio Companies
to less than 5%.

After the completion of one year since setting

these strategic priorities, SCI remains firmly
on track to achieve and exceed them. A key
enabler to this over the remaining two years
will be efficiently raising and deploying new

We nurture
capital to maximize risk adjusted returns for
shareholders, while financing the growth of
medium-sized firms.

To achieve this, SCI will maintain its current

approach to:
āā Invest in leading, non-cyclical Caribbean
long‑term
firms with attractive growth prospects
and high free cash flows
āā Use the investment advisor’s direct
win‑win
origination for greater influence on
innovative investment structures
āā Seek board seats/board observation
partnerships
rights for investments structured with
equity upside
āā Proactively manage risk and use robust
that inspire
tools and processes to preserve capital
while creating value
āā Originate transactions from new
repeat
growth markets by forming new
strategic partnerships and leveraging
existing ones
business.
27
Sygnus Credit Investments Limited 2019 Annual Report

Risk
appointed as the Chairman of the IAC.

As a private credit investment company, SCI faces a

number of different risks associated with its investments,

Management
including credit risk, market risk and liquidity risk.

1. Credit Risk:
Credit risk is the risk of a financial loss arising from
a counter-party to a financial contract failing to
discharge its obligations. The Company’s credit risk is
Risk Management Policy concentrated primarily in private credit investments,
The Company’s goal in risk management is to ensure cash at bank balances, securities purchased under
that it understands, measures, and monitors the various resale agreements and other receivables.
risks that arise, and that it adheres strictly to the policies
and procedures that are established to address these To mitigate Credit Risk, the Company has several lines
potential risks. of defense:
a. Independent Decision-Making Process: The first line
The Company has developed and implemented a risk of defense is the separation of investment decisions
management policy that identifies major risks, which from deal origination. Investment decisions can only
may threaten the existence of the Company. Risk be made by the CRIC, which reviews each private
mitigation processes and measures are also formulated credit transaction on its own merit. The IAC, which
and clearly outlined in the policies and procedures. The recommends investments, has no decision-making
risk management policy of the Company also adopts authority.
best practice measures to address any perceived or
real conflicts of interest that may arise in the operations b. Screening, Approval and Documentation: SCI
and management of the business. only invests in Portfolio Companies that the CRIC
believes are financially sound investments. Each
The Board of Directors of the Company is ultimately investment goes through a screening, approval and
responsible for the risk management policies of SCI. documentation process to determine if it meets
SCI’s investment criteria.
Credit and Risk Management Committee
The Company has delegated the management c. Post-Investment Monitoring: After each investment
of credit risk to the Credit Risk and Investment is made, they are monitored to determine if there
Committee (“CRIC”), a sub-committee of the Board are any changes in the financial performance or
of the Investment Manager. The CRIC is responsible credit profile of each Portfolio Company. Part
for the overall risk management of the Company and of this monitoring process may include board
is responsible for all credit and investment decisions observation rights or board seats for certain types of
relating to the Company’s investment portfolio. investments. These are executed by the investment
advisor.
This committee consists of three members, two of d. Concentration Limits: SCI limits its investment
whom are independent of the Company, including exposure per sector/industry and per individual
the Chairman who was appointed by the Investment Portfolio Company or group of Portfolio Companies
Manager’s Board of Directors. The Committee reviews to mitigate credit risk. The Company also limits
and approves all investment recommendations and also the size of each individual transaction to reduce
determines the level conditions that will be attached to concentration risks.
each investment.
e. Delinquency and Recoveries Management:
Investment Advisory Committee SCI has no delinquent investments. However,
The Company’s Investment Advisor, Sygnus Capital through its Investment Manager, SCI has policies
Limited, is responsible for analyzing and recommending and procedures on delinquency and recoveries
all investment and credit proposals to the CRIC management, some of which will be outsourced
and monitoring the performance of the Company’s to third parties.
investment portfolio. The Investment Advisor executes
these functions through an Investment Advisory 2. Market Risk:
Committee (“IAC”). Market risk is the risk that the value or cash flows of a
financial instrument will fluctuate as a result of changes
This committee consists of three members who were in market prices, whether those changes are caused by
appointed by the Investment Advisor’s Board of factors specific to the individual security or its issuer,
Directors. The CEO of the Investment Advisor was or factors affecting all securities traded in the market.

28
 2019 Annual Report Sygnus Credit Investments Limited

Such risks arise from open positions in interest rate 3. Operational Risk:
and currency products, all of which are exposed to Operational risk is the risk arising from the execution
general and specific market movements and changes of SCI’s business functions, particularly the risk of loss
in the level of volatility of market rates or prices, such resulting from inadequate or failed internal processes,
as foreign exchange and interest rates. The market people and systems, or from external events, such as:
risk arising from investment activities is reviewed and a. Internal Fraud - misappropriation of assets, tax
assessed by the IAC and the CRIC. evasion, intentional mismarking of positions, and
The elements of market risk that affect the Company bribery;
are as follows: b. External Fraud - theft of information, hacking
damage, third-party theft and forgery;
a. Foreign Currency Risk: Foreign currency risk is
the risk that the fair value of, or future cash flows c. Business Practice - market manipulation, antitrust,
from, financial instruments will vary because of fiduciary breaches, account churning;
exchange rate fluctuations. The Company incurs d. Business Disruption & Systems Failures - utility
foreign currency risk on transactions that are disruptions, software failures, hardware failures; and
denominated in currency other than the United e. Execution, Delivery, & Process Management - data
States dollar. The main currency giving rise to this entry errors, accounting errors, failed mandatory
risk is the Jamaican dollar. reporting, negligent loss of client assets.
To mitigate foreign currency risk, the Company; Operational Risk is mitigated by delegation of authority
i. utilizes a value-at-risk tool to monitor the impact and operational procedures at different levels via the
of FX on its portfolio on an ongoing basis; Investment Manager, the Investment Advisor and other
ii. builds in a depreciation buffer into its non- third-party advisors.
USD investments with an annual return target 4. Liquidity Risk:
threshold. This buffer may take the form of Liquidity risk may result from an inability to sell a
higher interest income or additional upside financial asset quickly at, or close to, its fair value.
that is realized on successfully exiting the The Company generally makes investments in financial
investment; and instruments issued by private companies, substantially
iii. limit the amount of non-USD investment in all of which are otherwise less liquid than publicly traded
Portfolio Companies. securities. The illiquidity of these investments may make
it difficult for the Company to sell or dispose of such
b. Interest Rate Risk: Interest rate risk is the risk that investments in a timely manner at, or close to, fair value,
the value or cash flows of a financial instrument will if the need arises.
fluctuate due to changes in market interest rates.
The Company takes on exposure to the effects of In addition, the Company faces liquidity risk in the
fluctuations in the prevailing levels of market interest form of funding risk. This is the risk that the Company
rates on its financial position and cash flows. may encounter difficulty in raising funds to meet
commitments associated with its investments. Maturities
To mitigate interest rate risk, the Company; of assets and liabilities, and the ability to replace, at
an acceptable cost, interest bearing liabilities as they
i. monitors interest rates daily. Even though there
mature, are important factors in assessing the liquidity
is no formally predetermined gap limits, to the
of the Company and its exposure to changes in interest
extent judged appropriate, the maturity profile
rates and exchange rates.
of the financial assets is matched with that
of the financial liabilities. Where gaps occur, The Company mitigates liquidity risk by:
management expects that its monitoring will,
on a timely basis, identify the need to take quick a. not being subject to any externally imposed liquidity
action to close a gap, if it becomes necessary; requirements;

ii. invests primarily in instruments whose value b. maintaining an adequate amount of its financial
is carried at amortized cost, thus minimizing assets in liquid form to meet contractual obligations
the impact of any movement in market interest and other recurring payments.
rates on its portfolio; and

iii. maintains an appropriate mix of variable and

fixed rate instruments.

29
Sygnus Credit Investments Limited 2019 Annual Report

Corporate
Governance

30
 2019 Annual Report Sygnus Credit Investments Limited

BOARD OF DIRECTORS COMPOSITION OF THE BOARD

The Board of Directors plays an integral role in SCI’s growth The Articles of Association of SCI provides for
and success. The Board members constantly challenge a Board of Directors of not more than nine (9)
management to implement standards of governance that persons. At the date of this Statement, the Board
are consistent with regulatory expectations and evolving best consisted of seven (7) Directors, comprising:
practices. The Board has adopted a formal Mandate which
details its functions and responsibilities. āā Six (6) non-executive of which three (3)
were independent members and three (3)
BOARD RESPONSIBILITY represented anchor shareholders. Directors
The Investment Manager and the Investment Advisor undertake representing anchor shareholders are
the day-to-day Operations of the Company; however, it is the nominated by the anchor shareholder.
Board of Directors that remains ultimately accountable to the
Company’s stakeholders for the Company’s performance and āā One (1) non-executive director, being the
adherence to applicable laws and good corporate governance Chief Operating Officer of Sygnus Capital
practices. The Board of Directors firmly believes that strong Limited, an affiliate company.
governance is the way to ensure sustainable value and returns
The Directors have very diverse skill sets,
for shareholders; as a result, the company has established
experience levels and backgrounds, and are
a tradition of best practices in corporate governance and
recognized as strong leaders in their respective
is committed to internationally accepted standards and
fields of work.
practices. SCI recognizes the need to continuously upgrade its
standards of corporate governance through a review process COMMITTEES OF THE BOARD
and therefore intends to adopt new standards as they evolve. The Board has delegated certain responsibilities
to its Audit & Governance Committee and its
The Board is primarily responsible for:
Enterprise Risk Committee.
1. setting the strategic direction of SCI, which involves
setting its business objectives and the plans for achieving Audit & Governance Committee
them; The primary purpose of this Committee is
to assist the Board in fulfilling its oversight
2. evaluating the operating and financial results of the
responsibilities and monitoring the operational
Company against the Company’s business objectives,
and risk management processes of the company.
business strategy and plans, and monitoring financial
The Committee is also responsible for assisting
performance to ensure that financial results are reported
the Board of Directors and management in its
fairly and in accordance with IFRS and other standards;
compliance with regulatory requirements.
3. identifying principal risks of the company and ensuring
that Management has implemented appropriate systems, In performing its duties, the Committee
policies and processes to manage the risks identified; maintains effective working relationships with
the Board, the Enterprise Risk Committee, the
4. ensuring that the Company operates at all times within
Company’s management and the Company’s
applicable laws and regulations, including an effective
external auditors.
Code of Conduct, Anti-Money Laundering and Counter
Financing of Terrorism policies; and During the Financial Year 2019, some of the
5. establishing committees of the Board with appropriate primary functions undertaken by the Committee
responsibilities and Chairs for these Committees included:
and approve the Terms of Reference for each Board 1. Reviewing the quarterly Unaudited Financials
Committee. before their release to the Jamaica Stock
Exchange, in order to ensure that financial
The Directors are expected to exercise sound and independent
results are reported fairly and in accordance
judgment that is in the best interest of the Company and in
with IFRS and other standards;
the interests of various stakeholders. The Directors may rely
on the expertise of the Company’s management, external 2. Reviewing changes in International Financial
professional advisors and the auditors. Reporting Standards, including IFRS9, in
order to develop an understanding of the
impact on the financial statements and to help
guide management on their implementation.

31
Sygnus Credit Investments Limited 2019 Annual Report

The Committee consists of three (3) independent The Directors to retire in every year shall be those who
non‑executive Directors, namely: have been longest in office since their last election, but
āā Nakita Edwards (Chair) as between persons who became Directors on the same
day those to retire shall (unless they otherwise agree
āā Clement Wainwright Iton among themselves) be determined by lot. A retiring
āā Ian Williams Director shall be eligible for re-election.

Enterprise Risk Committee To balance the benefits of experience with the need
The Enterprise Risk Committee was established to for new perspectives, the Board has in place term
assist the Board in fulfilling its overall responsibility with limits that seek to achieve ongoing renewal. All non-
respect to oversight of the Company’s risk governance executive Directors will be appointed for an initial period
and framework, including the Company’s risk limits of up to three (3) years, subject to annual re-election by
and tolerances and other risks as determined from shareholders. After the initial three (3) years, a Director’s
time to time. In performing its duties, the Committee term may be renewed for a further period of up to three
has maintained effective working relationships with the (3) years. The shareholders may, however, choose to re-
Board and the Audit & Governance Committee. elect an independent Director who has already served
for six (6) years.
During the Financial Year 2019, some of the primary
functions undertaken by the Committee included: The Company may by resolution remove any
Director before the expiration of his period of office
1. operational risk reviews, which involved identifying
notwithstanding anything in these regulations or in any
risks associated with strategies and processes
agreement between the Company and such Director.
implemented, and compliance with risk limits
Such removal shall be without prejudice to any claim
and the controls implemented by management to
such Director may have for damages for breach of any
minimise the exposure to these risks;
contract of service between him and the Company.
2. examining the key credit and operational risk
indicators and highlighting to the Board areas of DIRECTOR COMPENSATION
risk that represent a higher degree of risk to the The Director’s compensation is based on market rates
Company and the portfolio of investments. and the level of responsibility and time commitment
required of each Board member. Directors who are
The members of the Enterprise Risk Committee are: employees of any of the subsidiaries or affiliate
āā Damian Chin (Chair) companies and those representing anchor shareholders
are not compensated in their capacity as Directors. The
āā Hope Fisher compensation structure for Directors includes an annual
āā Peter Thompson retainer fee and an attendance fee for each meeting.

APPOINTMENT, RE-ELECTION AND MEMBERS’ ATTENDANCE AT MEETINGS

TERM OF BOARD MEMBERS Directors are expected to prepare adequately for, attend
Each Director receives a letter of appointment, setting and actively participate in Board meetings and meetings
out the key terms and conditions of the appointment. of Board Committees. There were six (6) Board meetings
The process of election and re-election of Directors is held during the year. Audit and Governance Committee
carried out in accordance with the Company’s Articles Meetings had four (4) and the Enterprise Risk Committee
of Incorporation, which require that at the first Annual had one (1). The Board and the Committees held a
General Meeting (AGM) of the Company all Directors meeting subsequent to the year-end relating to the year
(except the Director(s) appointed by the Investment ended June 30, 2019.
Manager) shall retire and for each subsequent AGM,
one-third of the Directors are required to retire from
office and are eligible to stand for re-election and
election respectively.

32
 2019 Annual Report Sygnus Credit Investments Limited

Type of Meeting SHAREHOLDER ENGAGEMENT

AND COMMUNICATION
The Board is committed to maintaining dialogue with

Enterprise Risk
Board Meeting
shareholders. The Board sees the Annual General

Governance
Meeting as an opportunity to communicate with and

Audit &
engage with shareholders and to have open discussions
Attendance at Meetings on the Company’s strategy and outlook.
Number of Meetings 6 4 1 In addition, the Company uses email alerts and press
Clement 'Wainwright' Iton * 6 4 N/A releases to ensure consistent communication with
Nakita Edwards** 6 4 N/A shareholders. All quarterly and annual financial reports
are emailed to shareholders with email addresses
Ian Williams 6 4 N/A and are also published on the website for review by
Damian Chin*** 6 N/A 1 shareholders. As a means of enhancing shareholders
Peter Thompson 6 N/A 1 communication, the Company intends to take full
Hope Fisher 6 N/A 1 advantage of the provisions in the Articles of Association
and will be using electronic communication as the
Ike Johnson 6 4 1 main means of communication to shareholders. In
* Chairman of the Board light of this, all future annual reports will be emailed to
**Chairperson of the Audit & Governance Committee shareholders unless they have specifically requested
*** Chairman of the Enterprise & Risk Committee hard copy documents.

CODE OF CONDUCT Minutes of the Annual General Meeting are available

The Board of Directors are required to observe the to shareholders on request or at the subsequent AGM.
Director’s Code of Conduct. All Directors are given a Shareholders may also submit a request for a copy of
copy of the Code when they are elected and are required the minutes via email to sci@[Link] and
to acknowledge that they have received and read the a copy will be emailed to the email address provided.
Code. The Code describes the standards of conduct
required of each Director and is designed to maintain The Chairman of the Board and the Management
the highest standard of professional and business ethics of the Company is committed to having constant
and to serve as a set of guiding principles for Directors. dialogue with shareholders. In this regard, shareholders
Directors who also serve as officers or employees of are encouraged to share their views by emailing
affiliate companies must also comply with this Code. sci@[Link].

CONFLICT OF INTEREST In addition to its annual general meeting, SCI provided

Where the personal or business relationships or interests shareholder updates on SCI’s financial performance
of any Board Member are in conflict with those of SCI, and business highlights to shareholders via a number
the Director is required to disclose in writing, or by of different channels including:
requesting to have it entered in the minutes of the 1. SCI’s Investor Centre webpage located at:
meeting, the nature and extent of any interest they have [Link]/sci
in a material contract or material transaction with SCI. 2. The Investment Manager’s LinkedIn page located
The Director also recuses themselves from that portion at: sygnusgroup
of the meeting when the matter is being discussed.
The procedures for dealing with conflicts of interest are 3. The Jamaica Stock Exchange website
outlined in the Code of Conduct for Directors. 4. Direct emails to shareholders whose emails are
on file. Shareholders who wish to receive email
communication from SCI may send their email
addresses to sci@[Link] with the
heading “Add to Shareholder Mailing List” and
your JCSD account number in the body of the email.
5. General communication via the press.

33
Sygnus Credit Investments Limited 2019 Annual Report

The 3i’s Principle In taking a leadership role in

Ensures your interests the development of the regional
private credit market, SCI is

come first. driven by three core principles:

Innovation Independence In tegrity

We constantly We remain free We are honest,

develop new of influences that reliable and ethical
ideas to provide are not aligned in all interactions
medium‑sized with putting the with Portfolio
firms with financing interests of Portfolio Companies,
solutions that Companies and stakeholders
exceed their stakeholders first. and the wider
expectations. community.

34
 2019 Annual Report Sygnus Credit Investments Limited

Corporate
Data
BOARD OF DIRECTORS
Clement Wainwright Iton, [Link]., M.B.A Chairman
Nakita Edwards, CFA, FCCA, CPA Non-executive Director
Ian Williams, [Link]., M.B.A Non-executive Director
Peter Thompson, CFA, [Link]. Non-executive Director
Damian Chin, B.A., [Link]. Non-executive Director
Hope Fisher, [Link]. Non-executive Director
Ike Johnson, PhD, CFA Non-executive Director

SECRETARY BANKERS CONTACT US

MCSI Inc. CIBC FirstCaribbean Website: [Link]
20 Micoud Street International Bank Email: sci@[Link]
Castries (Jamaica) Limited Telephone Number: 876-634-5000
St. Lucia NEW KINGSTON BRANCH
23-27 Knutsford Blvd Mailing Address:
REGISTERED OFFICE Kingston 5 Sygnus Credit Investments Ltd
20 Micoud Street 20 Micoud Street
Castries CIBC FirstCaribbean Castries, St Lucia
St. Lucia International Bank
(Barbados) Limited
ATTORNEYS-AT-LAW BRIDGE STREET BRANCH
Patterson Mair Hamilton P.O. Box 335, 336, 350
Temple Court Bridge Street Castries
85 Hope Road
Kingston 6 National Commercial
Jamaica Bank Jamaica Limited
Corporate Banking Division
EXTERNAL AUDITORS 32 Trafalgar Road
KPMG Kingston 10
204 Johnsons Centre
No. 2 Bella Rosa Road Sagicor Bank Jamaica Limited
Gros-Islet Corporate Banking Division
Saint Lucia 17 Dominica Drive
Kingston 5
REGISTRAR
Jamaica Central Securities JN Bank Limited
Depository Limited Corporate Banking Division
40 Harbour Street 2-4 Constant Spring Road
Kingston Kingston 10, Jamaica W.I.
Jamaica

35
Manufacturing
SCI Investment: Preference shares
with profit sharing note to refinance
debt and fund expansion
 SCI became a strategic partner of
Portfolio Company, by providing
a financing structure that aligned
with the Company’s growth strategy,
thus increasing profitability from
higher cash flow reinvestment.
Sygnus Credit Investments Limited 2019 Annual Report

SHAREHOLDERS’
INFORMATION
Shareholders Shareholding Approx. % Issued Capital

Investment Manager (SCM) 1 Special Share 0.00%

Investment Manager (SCM) 5,400,000 Ordinary Shares 1.54%

Existing Shareholders 344,687,563 Ordinary Shares 98.46%

Total Issued Shares 350,087,563 Ordinary Shares 100%

Shareholdings of Directors, Senior

Management and Connected Parties Top Ten Shareholders

Connected Shareholders Shareholdings % Holdings

Director Shareholdings
Parties JCSD Trustee Services
28,220,766 8.1%
Clement Ltd - Sigma
95,200 N/A
Wainwright Iton ATL Group Pension Fund
27,500,000 7.9%
Nakita Edwards Nil N/A Trustees Nominee Ltd
Ian Williams 1,000,000 Ladesa Williams MF&G Trust & Finance Ltd 20,139,000 5.8%
Hope Fisher Nil N/A National Insurance Fund 20,000,000 5.7%
Damian Chin Nil N/A Equity Fund (JMD),
19,460,000 5.6%
JMMB T1
Peter Thompson Nil N/A
Heart Trust / NTA
Dr Ike J. Johnson 95,300 N/A 8,189,300 2.3%
Pension Scheme
Sygnus Capital
Dr Ike J. Johnson 5,400,000 Mandala Inc. 7,765,000 2.2%
Management Ltd
Gassan Azan 7,285,700 2.1%
Connected
Senior Management Shareholdings
Parties Yiyan Zhong 7,000,000 2.0%
Sygnus Capital Jamaica Money Market
5,400,000 Dr Ike J. Johnson 6,933,400 2.0%
Management Ltd Brokers Ltd FM10
McNamara Corporate Subtotal 152,493,166 43.6%
Nil N/A
Services Ltd Total 350,087,563 100%

The top ten largest shareholders own 43.6% of the

issued shares.

38
Hospitality
SCI investment: medium term
notes to finance equipment

SCI’s customized financing

provided Portfolio Company
with desired breathing
room to achieve targeted
return on invested capital.
Sygnus Credit Investments Limited 2019 Annual Report

2019 Financials
41 Independent Auditors’ Report

50 Statement of Financial Position

51 Statement of Profit or Loss and Other Comprehensive Income

52 Statement of Changes in Equity

53 Statement of Cash Flows

54 Notes to the Financial Statements

40
 2019 Financials Sygnus Credit Investments Limited

KPMG
204
KPMG Johnsons Centre
#2
204Bella Rosa Rd
Johnsons Centre
Gros Islet
#2 Bella Rosa Rd
St.
GrosLucia
Islet
St. Lucia
Telephone: (758) 453 2298
Email:
Telephone: ecinfo@[Link]
(758) 453 2298
Email: ecinfo@[Link]
INDEPENDENT AUDITORS’ REPORT
INDEPENDENT AUDITORS’ REPORT
To the Members of
SYGNUS CREDITof
To the Members INVESTMENTS LIMITED
SYGNUS CREDIT INVESTMENTS LIMITED
Opinion
Opinion
We have audited the separate financial statements of Sygnus Credit
Investments
We have auditedLimited the
(“theseparate
Company”), set out
financial on pagesof50Sygnus
statements to 89, which
Credit
comprise the separate statement of financial position
Investments Limited (“the Company”), set out on pages 50 to as at June 30, 89,
2019, the
which
separate statements of profit or loss and other comprehensive income,
comprise the separate statement of financial position as at June 30, 2019, the changes
in equity statements
separate and cash offlows
profitforor the
loss year then comprehensive
and other ended, and notes, comprising
income, changes
significant accounting policies and other explanatory information.
in equity and cash flows for the year then ended, and notes, comprising
significant accounting policies and other explanatory information.
In our opinion, the accompanying separate financial statements present fairly, in
all material
In our respects,
opinion, the unconsolidated
the accompanying financial
separate position
financial of thepresent
statements Company as at
fairly, in
all material respects, the unconsolidated financial position of the Company as its
June 30, 2019, and its unconsolidated financial performance and at
unconsolidated
June 30, 2019,cash andflows for the year then
its unconsolidated endedperformance
financial in accordanceand withits
International Financial Reporting Standards (IFRS).
unconsolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRS).
Basis for Opinion
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs).
We Our responsibilities
conducted under thosewith
our audit in accordance standards are further
International described
Standards in the
on Auditing
Auditors’ Responsibilities for the Audit of the Financial Statements
(ISAs). Our responsibilities under those standards are further described in section of the
our
report. We are independent of the Company in accordance with the International
Auditors’ Responsibilities for the Audit of the Financial Statements section of our
Ethics We
report. Standards Board for
are independent Accountants
of the Company inCode of Ethics
accordance with for Professional
the International
Accountants
Ethics (IESBA
Standards Code)fortogether
Board with the
Accountants Codeethical requirements
of Ethics that are
for Professional
Accountants (IESBA Code) together with the ethical requirements thathave
relevant to our audit of the financial statements in Saint Lucia, and we are
fulfilled our other ethical responsibilities in accordance with these
relevant to our audit of the financial statements in Saint Lucia, and we have requirements
and the our
fulfilled IESBAotherCode. Weresponsibilities
ethical believe that the audit evidence
in accordance withwe have
these obtained is
requirements
sufficient and appropriate to provide a basis for our opinion.
and the IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.

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41
Sygnus Credit Investments Limited 2019 Financials

Page 2

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period. These
matters were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.

1. Valuation of investments

The key audit matter How the matter was addressed in our
audit

The valuation of the Company’s Our procedures in this area included

investments amounting to the following:
US$7,507,015 (2018: US$7,257,211)
• Assessing and testing the design
includes significant assumptions and
and operating effectiveness of the
judgments about the performance of
Company’s control over the
the underlying portfolio companies
determination and computation of
over the tenure of the investments.
fair values.
Furthermore, the valuation
• Challenging the reasonableness of
methodology relies on unobservable
prices/fair values used by the
inputs which have a significant
Company by comparing to
impact on the resulting value of the
independent third party
investments.
information.
These judgements and assumptions
• Involving our own valuation
could result in estimated fair values
specialists to assess the
that are materially different from
reasonableness of the valuation
actual transaction values.
methodologies employed and the
fair value conclusions. We
[see notes 5(d),11 and 21 to the
considered the provisions of IFRS
financial statements]
13 Fair Value Measurement and
reviewed the sources of data and
underlying assumptions utilised to
value the investments.

42

 2019 Financials Sygnus Credit Investments Limited

Page 3

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED

Key Audit Matters (continued)

1. Valuation of investments (continued)

The key audit matter How the matter was addressed in our
audit

Our procedures in this area included the

following (continued):

• Assessing the adequacy of the

disclosures, including the degree of
estimation involved in determining
fair values.

• Evaluating the appropriateness of

classification of investment
components in accordance with
IFRS.

2. Measurement of expected credit losses on financial assets

The key audit matter How the matter was addressed in our
audit

IFRS 9 was implemented by the Our procedures in this area included the
Company on July 1, 2018. The following:
standard is new and complex and
requires the Company to • Obtaining an understanding of the
recognise expected credit losses model used by the Company for
(‘ECL’) on financial assets. The the calculation of expected credit
determination of ECL is highly losses, including governance over
subjective and requires the determination of key
management to make significant judgements and assumptions.
judgements and assumptions.

43

Sygnus Credit Investments Limited 2019 Financials

Page 4

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED

Key Audit Matters (continued)

2. Measurement of expected credit losses on financial assets (continued)

The key audit matter How the matter was addressed in our
audit

The key areas requiring greater Our procedures in this area included
management judgement include the following (continued):
the determination of significant
increase in credit risk (‘SICR’), the • Testing the design and operating
determination of probabilities of effectiveness of the key controls
default, losses given default, over the computation of the
exposures at default and the expected credit losses.
application of forward-looking
information. • Testing the completeness and
accuracy of the data used in the
The identification of a significant model to the underlying
increase in credit risk is a key area accounting records on a sample
of judgement, as the criteria basis.
determine whether a 12 -month or
lifetime loss allowance is • Involving our financial risk
recorded. modelling specialists to evaluate
the appropriateness of the
The incorporation of forward- Company’s impairment
looking information, reflects a methodologies, including the SICR
range of possible future economic criteria used and independently
conditions. Significant assessing the assumptions for
management judgement is used probabilities of default, losses
in determining the economic given default and exposures at
scenarios. default and the incorporation of
forward-looking information.

44

 2019 Financials Sygnus Credit Investments Limited

Page 5
Page 5
INDEPENDENT AUDITORS' REPORT (CONTINUED)
INDEPENDENT AUDITORS' REPORT (CONTINUED)
To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED
To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED
Key Audit Matters (continued)
Key Audit Matters (continued)
2. Measurement of expected credit losses on financial assets (continued)
2. Measurement of expected credit losses on financial assets (continued)
The key audit matter How the matter was addressed in our
audit
The key audit matter How the matter was addressed in our
audit
Significant management Our procedures in this area included
judgement and assumptions are the following (continued):
Significant management Our procedures in this area included
also used in determining the
judgement and assumptions are the following (continued):
• Assessing the adequacy of the
appropriate variables and
also used in determining the disclosures of the key
assumptions in an appropriate
appropriate variables and • Assessing the adequacy of the
model for measuring expected assumptions and judgements as
assumptions in an appropriate disclosures of the key
credit losses. well as the details of the transition
model for measuring expected assumptions and judgements as
adjustment for compliance with
The use
credit of these judgements and
losses. well as the details of the transition
the standard.
assumptions increases the risk of adjustment for compliance with
The use of these judgements and
material misstatement and is the standard.
assumptions increases the risk of
therefore an area of increased
material misstatement and is
audit focus.
therefore an area of increased
In addition,
audit [Link] regarding
the Company’s application of IFRS
In addition, disclosures regarding
9 are key to understanding the
the Company’s application of IFRS
change from IAS 39 as well as
9 are key to understanding the
explaining the key judgements
change from IAS 39 as well as
and material inputs to the IFRS 9
explaining the key judgements
expected credit loss results.
and material inputs to the IFRS 9
expected credit loss results.
[see notes 4, 5(c) and 22(b) to the
financial statements]
[see notes 4, 5(c) and 22(b) to the
financial statements]

Other Information
Other Information
Management is responsible for the other information. The other information
comprises the information included in the annual report, but does not include the
Management is responsible for the other information. The other information
financial statements and our auditors’ report thereon. The annual report is
comprises the information included in the annual report, but does not include the
expected to be made available to us after the date of this auditors’ report.
financial statements and our auditors’ report thereon. The annual report is
expected to be made available to us after the date of this auditors’ report.
Our opinion on the financial statements does not cover the other information and
we will not express any form of assurance conclusion thereon.
Our opinion on the financial statements does not cover the other information and
we will not express any form of
 45assurance conclusion thereon.


Sygnus Credit Investments Limited 2019 Financials

Page 6

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED

Other Information (continued)

In connection with our audit of the financial statements, our responsibility is to

read the other information identified above when it becomes available and, in
doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.

When we read the annual report, if we conclude that there is a material

misstatement therein, we are required to communicate the matter to those
charged with governance.

Responsibilities of Management and Those Charged with Governance for the

Financial Statements

Management is responsible for the preparation and fair presentation of the

financial statements in accordance with IFRS, and for such internal control as
management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error.

In preparing the financial statements, management is responsible for assessing

the Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s
financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial
statements.

46

 2019 Financials Sygnus Credit Investments Limited

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED

Auditors’ Responsibilities for the Audit of the Financial Statements (continued)

A further description of our responsibilities for the audit of the financial

statements is included in the Appendix to this auditors’ report.
This description, which is located at pages 48 - 49, forms part of our auditors’
report.

The engagement partner on the audit resulting in this independent auditors’ report
is Lisa Brathwaite.

Chartered Accountants
Saint Lucia

September 12, 2019

47
Sygnus Credit Investments Limited 2019 Financials

Page 8

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED

Appendix to the Independent Auditors’ report

As part of an audit in accordance with ISAs, we exercise professional judgement

and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial

statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company’s
internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management.
• Conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw
attention in our auditors’ report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our
auditors’ report. However, future events or conditions may cause the
Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.

48

 2019 Financials Sygnus Credit Investments Limited

Page 9

INDEPENDENT AUDITORS' REPORT (CONTINUED)

To the Members of
SYGNUS CREDIT INVESTMENTS LIMITED

Appendix to the Independent Auditors’ report (continued)

We communicate with those charged with governance regarding, among other

matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our
audit.

We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we

determine those matters that were of most significance in the audit of the financial
statements of the current period and are therefore the key audit matters. We
describe these matters in our auditors’ report unless law or regulation precludes
public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.

49

 10
Sygnus Credit Investments Limited 2019 Financials
SYGNUS CREDIT INVESTMENTS LIMITED

Statement of Financial
Statement Position Position
of Financial
June 30,
June 30, 2019
2019 (expressed in United States dollars)
(Expressed in United States dollars)

Notes 2019 2018

ASSETS
Cash and cash equivalents 6 2,098,386 400,259
Securities purchased under resale agreements 7 1,044,234 19,883,276
Interest receivable 897,396 229,494
Other receivables 8 22,522 788,625
Due from related companies 9 116,809 -
Finance lease receivables 10 1,577,971 498,960
Investments 11 32,388,601 15,203,964
Investment in subsidiary 12 76 -
Total Assets $38,145,995 37,004,578

LIABILITIES
Accounts payable and accrued liabilities 13 377,384 201,779
Dividends payable 14 121,178 -
Due to related companies 9 60,896 183,876
Total Liabilities 559,458 385,655

EQUITY
Share capital 15 35,107,673 35,107,673
Fair value reserve 16 - 87,503
Retained earnings 2,478,864 1,423,747
Total Equity 37,586,537 36,618,923
Total Liabilities and Equity $38,145,995 37,004,578

The financial statements on pages 10

50 to 49
89 were approved by the Board of Directors on September 12,
2019

Director
Dr. Ike Johnson

Director
Nakita Edwards

the accompanying notes form an integral part of the financial statements

The accompanying notes form an integral part of the financial statements.

50
 11
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Statement of Profit
Statement of orProfit
Loss and
orOther
Loss Comprehensive
and Other Income
Comprehensive Income
YearEnded
Year ended June
June 30,
30, 2019
2019 (Expressed in United States dollars)
(Expressed in United States dollars)

Notes 2019 2018

Income
Interest income calculated using the
effective interest method 17 3,168,047 1,170,917
Fair value gains from financial instruments
at FVTPL 21(b) 135,429 644,326
Participation fees 18 50,944 23,413
3,354,420 1,838,656
Expenses
Accounting fees 37,323 20,833
Advertising and promotion 5,317 5,343
Audit fees and expenses 36,537 48,435
Bank charges 6,005 3,098
Registration fees 9,310 15,581
Directors' fees and related expenses 9(c) 40,203 29,225
Irrecoverable withholding tax 39,239 25,317
Other expenses 68,415 2,142
Management fees 9(c) 707,175 182,368
Net foreign exchange loss 219,011 49,995
Impairment allowance on financial assets 22(b)(vi) 74,645 -
Professional fees 60,609 32,572
1,303,789 414,909
Profit for the year 2,050,631 1,423,747

Other comprehensive income

Item that is or may be subsequently
reclassified to profit or loss:
Unrealised gains on available-for-sale investments,
being total other comprehensive income 16 - 87,503
Total comprehensive income for the year $2,050,631 1,511,250

Earnings per stock unit 20 0.59¢ 0.85¢

the accompanying notes form an integral part of the financial statements

The accompanying notes form an integral part of the financial statements.

51
 12
Sygnus Credit Investments Limited 2019 Financials
SYGNUS CREDIT INVESTMENTS LIMITED

Statement of Changes
Statement in Equity in Equity
of Changes
Yearended
Year ended June
June 30,
30, 2019
2019 (Expressed in United States dollars)
(Expressed in United States dollars)

Share Retained Fair value

capital earnings reserve Total
(note 15) (note 16)

Total comprehensive income

Profit for the year - 1,423,747 - 1,423,747
Other comprehensive income:
Unrealised gains on available-
for-sale investments, being total
other comprehensive income - - 87,503 87,503
Total comprehensive income
for the year - 1,423,747 87,503 1,511,250
Transaction with owners
Issue of ordinary shares (note 15) 35,107,673 - - 35,107,673
Balances at June 30, 2018 35,107,673 1,423,747 87,503 36,618,923
Adjustment on initial application
of IFRS 9 [note 4(a)] - 79,672 ( 87,503) ( 7,831)
Adjusted balances at July 1, 2018 35,107,673 1,503,419 - 36,611,092
Profit for the year, being total
comprehensive income for the year - 2,050,631 - 2,050,631

Transaction with owners

Dividends declared (note 14) - (1,075,186) - ( 1,075,186)

Balances at June 30, 2019 $35,107,673 2,478,864 - 37,586,537

the accompanying notes form an integral part of the financial statements

The accompanying notes form an integral part of the financial statements.

52
 13
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Statement of Cash
Statement ofFlows
Cash Flows
Yearended
Year ended June
June 30,
30, 2019
2019 (Expressed in United States dollars)
(Expressed in United States dollars)

Notes 2019 2018

Cash flows from operating activities

Profit for the year 2,050,631 1,423,747
Adjustments for:
Interest income 17 ( 3,168,047) ( 1,170,917)
Impairment allowance on financial assets 22(b)(vi) 74,645 -
Fair value gains ( 135,429) ( 644,326)
( 1,178,200) ( 391,496)
Changes in operating assets:
Other receivables 766,103 ( 788,625)
Due from related companies ( 116,809) -
Changes in operating liabilities:
Accounts payable and accrued liabilities 175,605 201,779
Due to related companies ( 122,980) 183,876
Net cash used in operating activities ( 476,281) ( 794,466)
Cash flows from investing activities
Purchase of investments (31,254,244) (15,155,030)
Investment in subsidiary ( 76) -
Encashment of investments 14,102,735 682,895
Finance lease receivables, net ( 1,079,011) ( 498,960)
Purchase of securities purchased under
resale agreements (12,675,881) (31,388,356)
Encashment of securities purchased under
resale agreements 31,534,748 11,505,080
Interest income received 2,500,145 941,423
Net cash provided by/(used in) investing activities 3,128,416 (33,912,948)
Cash flows from financing activities
Dividends paid 14 ( 954,008) -
Proceeds from issuance of shares 15 - 36,196,607
Transaction costs associated with shares issued 15 - ( 1,088,934)
Net cash (used in)/provided by financing activities ( 954,008) 35,107,673
Net increase in cash and cash equivalents 1,698,127 400,259
Cash and cash equivalents at beginning of year 400,259 -
Cash and cash equivalents at end of year $ 2,098,386 400,259

the accompanying notes form an integral part of the financial statements

The accompanying notes form an integral part of the financial statements.

53
 14
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements

Year ended
Notes toJune
the30,Financial
2019 Statements
(Expressed in United States(Expressed
Year ended June 30, 2019 dollars) in United States dollars)

1. The Company

Sygnus Credit Investments Limited ("the Company") was incorporated in Saint Lucia on January
13, 2017 as an International Business Company ("IBC"). The Company’s registered office is located
at McNamara Corporate Services Inc., 20 Micoud Street, Castries, Saint Lucia.

The Company has a wholly owned subsidiary Sygnus Credit Investments Jamaica Limited (SCIJL),
which was incorporated in Jamaica on May 7, 2019 with 100 shares at no par value. SCIJL had no
activities during the reporting period.

The Company is a specialty credit investment company, dedicated to providing non-traditional

financing to medium-sized firms across the Caribbean region.

The Company has no employees and its investment portfolio of the Company is managed and
administered by Sygnus Capital Management Limited ("SCM"), a related company incorporated in
the Cayman Islands under the Cayman Companies Act (the "Act") and registered with the Cayman
Islands Monetary Authority ("CIMA") as an Exempt Investment Management Company.

The Company elected, under section 109 of the International Business Companies Act, to be liable
to income tax at a tax rate of 1% per annum (see note 19).

2. Statement of compliance and basis of preparation

(a) Statement of compliance

The financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”).

This is the first set of the Company’s annual financial statements in which IFRS 9 Financial
Instruments and IFRS 15 Revenue from Contracts with Customers have been applied.
Changes to significant accounting policies are described in note 4.

Certain new and amended standards and interpretations have been issued which are not yet
effective for the current year and which the Company has not early-adopted. The Company
has assessed them and determined that the following are relevant:

 IFRS 16 Leases replaces existing leases guidance, including IAS 17 Leases, IFRIC 4
Determining Whether an Arrangement Contains a Lease, SIC‑15 Operating Leases -
Incentives and SIC‑27 Evaluating the Substance of Transactions Involving the Legal
Form of a Lease.

IFRS 16 introduces a single, on‑balance sheet lease accounting model for lessees. A
lessee recognises a right‑of‑use asset representing its right to use the underlying asset
and a lease liability representing its obligation to make lease payments. There are
recognition exemptions for short‑term leases and leases of low‑value items of
US$5,000 or less. Lessor accounting remains similar to current practice as the lessor
will continue to classify leases as finance and operating leases.

54
 15
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

2. Statement of compliance and basis of preparation (continued)

(a) Statement of compliance (continued)

 IFRS 16 Leases (continued)

The Company is required to adopt IFRS 16 Leases from July 1, 2019. The Company has
assessed that the initial application of IFRS 16 will not have an impact on its financial
statements.

 Amendment to IAS 1 Presentation of Financial Statements and IAS 8 Accounting

Policies, Changes in Accounting Estimates and Errors is effective for annual reporting
periods beginning on or after January 1, 2020, and provides a definition of ‘material’
to guide preparers of financial statements in making judgements about information to
be included in financial statements. Information is material if omitting, misstating or
obscuring it could reasonably be expected to influence decisions that the primary users
of general purpose financial statements make on the basis of those financial statements,
which provide financial information about a specific reporting entity.

The Company does not expect the amendment to have a significant impact on its 2021
financial statements.

 Amendments to IFRS 9 Financial Instruments, effective retrospectively for annual

reporting periods beginning on or after January 1, 2019 clarifies the treatment of:

(i) Prepayment features with negative compensation:

Financial assets containing prepayment features with negative compensation can
now be measured at amortised cost or at fair value through other comprehensive
income (FVOCI) if they meet the other relevant requirements of IFRS 9.

(ii) Modifications to financial liabilities:

If the initial application of IFRS 9 results in a change in accounting policy arising
from modified or exchanged fixed rate financial liabilities, retrospective
application is required, subject to particular transitional reliefs. There is no
change to the accounting for costs and fees when a liability has been modified,
but not substantially. These are recognised as an adjustment to the carrying
amount of the liability and are amortised over the remaining term of the modified
liability.

The Company is assessing the impact that this amendment will have on its 2020
financial statements.

 Amendments to References to Conceptual Framework in IFRS Standards is effective

retrospectively for annual reporting periods beginning on or after January 1, 2020. The
revised framework covers all aspects of standard setting including the objective of
financial reporting.

55
 16
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

2. Statement of compliance and basis of preparation (continued)

(a) Statement of compliance (continued)

 Amendments to References to Conceptual Framework in IFRS Standards (continued)

The main change relates to how and when assets and liabilities are recognised and de-
recognised in the financial statements.

- New ‘bundle of rights’ approach to assets will mean that an entity may recognise
a right to use an asset rather than the asset itself;
- A liability will be recognised if a company has no practical ability to avoid it. This
may bring liabilities on balance sheet earlier than at present.
- A new control-based approach to de-recognition will allow an entity to
derecognise an asset when it loses control over all or part of it; the focus will no
longer be on the transfer of risks and rewards.

The Company is assessing the impact that the amendments will have on its 2021 financial
statements.

(b) Basis of preparation

The financial statements are prepared on the historical cost basis, except for certain financial
instruments which are measured at fair value.

(c) Functional and presentation currency

The financial statements are presented in United States dollars, which is the functional
currency of the Company.

(d) Use of estimates and judgement

The preparation of the financial statements in conformity with IFRS requires management to
make estimates and assumptions that affect the reported amounts of, and disclosures relating
to, assets, liabilities, contingent assets and contingent liabilities at the reporting date and the
reported amounts of income, expenses, gains and losses for the year then ended. Actual results
could differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and future
periods, if the revision affects both current and future periods.

Information about significant areas of estimation uncertainty and critical judgements in

applying accounting policies that have the most significant effect on the amounts recognised
in the financial statements are described in note 3.

56
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

2. Statement of compliance and basis of preparation (continued)

(e) Basis of non-consolidation

These separate financial statements are intended to show the results of the Company on a
stand-alone business. They are not intended to, and do not show the consolidated financial
position, results of operations, changes in equity and cash flows of the Company and its
subsidiary. Consolidated financial statements are not prepared as the subsidiary had no
operations during the reporting period and the financial results of the subsidiary is not material
to the Company.

3. Critical accounting judgements and key sources of estimation uncertainty

Estimates that can cause a significant adjustment to the carrying amounts of assets and liabilities in
the next financial year and judgements that have a significant effect on the amounts recognised in the
financial statements, include the following:

(a) Key sources of estimation uncertainty

(i) Impairment of financial assets

Policy applicable under IFRS 9 from July 1, 2018

The measurement of the expected credit loss allowance for financial assets measured at
amortised cost is an area that requires the use of complex models and significant
assumptions about future economic conditions and credit behaviour (e.g. the likelihood of
customers defaulting and the resulting losses).

A number of significant judgements are required in applying the accounting requirements

for measuring expected credit loss (ECL), such as:
• Determining criteria for significant increases in credit risk;
• Choosing appropriate models and assumptions for the measurement of ECL;
• Establishing the number and relative weightings of forward-looking scenarios for each
type of product/market and the associated ECL; and
• Establishing companies of similar financial assets for the purposes of measuring ECL.

Policy applicable under IAS 39 prior to July 1, 2018

In determining amounts recorded for allowance for losses in the financial statements,
management makes judgements regarding indicators of impairment, that is, whether there
are indicators that there may be a measurable decrease in the estimated future cash flows
from investments, securities purchased under resale agreements and other financial assets,
for example, repayment default and adverse economic conditions. The specific component
of the total allowances for impairment applies to financial assets evaluated individually for
impairment and is based on management’s best estimate of the present value of the cash
flows that are expected to be received. In estimating these cash flows, management makes
assumptions about a counterparty’s financial situation and the net realisable value of any
underlying collateral.

57
 18
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

3. Critical accounting judgements and key sources of estimation uncertainty (continued)

(a) Key sources of estimation uncertainty (continued)

(ii) Fair value of financial instruments

Management uses its judgement in selecting the appropriate valuation techniques to

determine fair value of financial instruments. The estimates of fair value arrived at may be
significantly different from the actual price of the instrument in an actual arm’s length
transaction.

(b) Critical accounting judgements in applying the Company’s accounting policies

The Company’s accounting policies which require the use of judgements in applying accounting
policies that have the most significant effects on the amounts recognised in the financial
statements include the following:

Policy applicable under IFRS 9 from July 1, 2018

Classification of financial assets:

The assessment of the business model within which the assets are held and assessment of whether
the contractual terms of the financial asset are solely payments of principal and interest (SPPI) on
the principal amount outstanding requires management to make certain judgements on its business
operations.

4. Changes in significant accounting policies

The Company applied IFRS 9 and IFRS 15 from July 1, 2018. A number of other new standards are
also effective from July 1, 2018, but they do not have a material effect on the Company’s financial
statements.

The effect of initially applying IFRS 9 mainly resulted in the following:

- an increase in impairment losses recognised on financial assets;
- reclassification of fair value measurement of certain investment securities; and
- additional disclosures related to IFRS 9.

IFRS 9 Financial Instruments

IFRS 9 sets out requirements for recognising and measuring financial assets, financial liabilities and
some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments:
Recognition and Measurement. IFRS 9 brings fundamental changes to the accounting for financial
assets and to certain aspects of the accounting for financial liabilities.

As permitted by the transitional provisions of IFRS 9, the Company elected not to restate comparative
figures. Any adjustments to the carrying amounts of financial assets and liabilities at the date of
transition were recognised in the opening retained earnings and fair value reserve of the current period.

58
 19
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

4. Changes in significant accounting policies (continued)

IFRS 9 Financial Instruments (continued)

The following assessments have been made on the basis of the facts and circumstances that existed at
the date of initial application:
- The determination of the business model within which a financial asset is held; and
- The designation and revocation of previous designations of certain financial assets and financial
liabilities as measured at FVTPL.

As a result of the adoption of IFRS 9, the Company has adopted consequential amendments to IAS 1
Presentation of Financial Statements, which require separate presentation in the statement of profit
or loss and other comprehensive income (OCI) of interest income calculated using the effective
interest method.

Additionally, the Company has adopted consequential amendments to IFRS 7 Financial Instruments:
Disclosures, that are applied to disclosures about 2019, but have not been applied to the comparative
information.

(a) The impact of transition to IFRS 9 on the opening retained earnings and fair value reserve is as
follows:
Retained Fair value
earnings reserve
$ $

Balance as at June 30, 2018 1,423,747 87,503

Reclassification of investments previously
classified as available-for-sale to FVTPL 87,503 (87,503)
Recognition of expected credit losses under IFRS 9:
Securities purchased under resale agreements ( 1,758) -
Investments ( 5,816) -
Finance lease receivables ( 257) -
79,672 (87,503)
Opening balance under IFRS 9 as at July 1, 2018 1,503,419 -

(b) Classification and measurement of financial instruments

IFRS 9 contains three principal classification categories for financial assets: measured at
amortised cost, fair value through other comprehensive income (FVOCI) and fair value through
profit or loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on
the business model in which a financial asset is managed and its contractual cash flow
characteristics.

The standard eliminates the existing IAS 39 categories of held-to-maturity, loans and
receivables and available-for-sale.

59
 20
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

4. Changes in significant accounting policies (continued)

IFRS 9 Financial Instruments (continued)

(b) Classification and measurement of financial instruments (continued)

The adoption of IFRS 9 has not had a significant effect on the Company’s accounting policies
related to financial liabilities as IFRS 9 largely retains the existing requirements in IAS 39 for
the classification and measurement of financial liabilities.

The following table and the accompanying notes explain the original measurement categories
under IAS 39 and the new measurement categories and amounts under IFRS 9 for each class of
the Company’s financial assets and financial liabilities as at July 1, 2018.

IAS 39 IFRS 9
Original New carrying carrying
classification classification amount at June Impairment amount at
under IAS 39 under IFRS 9 30, 2018 losses July 1, 2018
$ $ $
Financial assets
Cash and cash equivalents Loans and Amortised
receivables cost 400,259 - 400,259
Securities purchased Loans and Amortised
under resale agreements receivables cost 19,883,276 (1,758) 19,881,518
Other receivables Loans and Amortised
receivables cost 788,625 - 788,625
Loans and Amortised
Financial lease receivables receivables cost 498,960 ( 257) 498,703

Investments Available for FVTPL 6,612,885 6,612,885

-
sale

Investments FVTPL FVTPL 644,326 - 644,326

Amortised
Investments Held to maturity cost 7,946,753 (5,816) 7,940,937

Total financial assets 36,775,084 (7,831) 36,767,253

IFRS 15 Revenue from contracts with customers

The effect of initially applying IFRS 15 is mainly attributed to additional disclosures [see note
5(f)].

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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies

(a) Cash and cash equivalents

Cash comprises cash at banks and cash equivalents which are highly liquid financial assets that
are readily convertible to known amounts of cash (that is, with original maturities of less than
three months), are subject to insignificant risk of changes in value, and are used for the purpose
of meeting short-term commitments. Cash and cash equivalents are classified and measured at
amortised cost.

(b) Securities purchased under resale agreements

Securities purchased under resale agreements (“Resale agreements”) are short-term transactions
whereby securities are bought with simultaneous agreements to resell the securities on a specified
date and at a specified price. Resale agreements are accounted for as short-term collateralised
lending and are measured at amortised cost.

The difference between the purchase cost and resale consideration is recognised on the accrual
basis over the period of the agreement, using the effective interest method, and is included in
interest income.

(c) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one enterprise and a
financial liability or equity instrument of another enterprise. For the purpose of the financial
statements, financial assets have been determined to include cash and cash equivalents, securities
purchased under resale agreements, investments, other receivables, due from related companies
and finance lease receivable. Financial liabilities include accounts payable and accrued liabilities
and due to related companies.

Policy applicable from July 1, 2018

(i) Classification and subsequent measurement

In applying IFRS 9, the Company classified its financial assets in the following
measurement categories:
a. Fair value through profit or loss (FVTPL); or
b. Amortised cost.

A financial asset is measured at amortised cost if it meets both of the following conditions
and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect
contractual cash flows; and
- the contractual terms give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding (SPPI).

61
 22
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(c) Financial instruments (continued)

Policy applicable from July 1, 2018 (continued)

(i) Classification and subsequent measurement (continued)

Business model assessment:
In making an assessment of the objective of the business model in which a financial asset
is held, the Company considers all of the relevant information about how the business is
managed, including:
- the documented investment strategy and the execution of this strategy in practice.
This includes whether the investment strategy focuses on earning contractual
interest income, maintaining a particular interest rate profile, matching the duration
of the financial assets to the duration of any related liabilities or expected cash
outflows or realising cash flows through the sale of the assets; and
- the risks that affect the performance of the business model (and the financial assets
held within that business model) and its strategy for how those risks are managed.

Solely payments of principal and interest (SPPI):

Where the business model is to hold assets to collect contractual cash flows or to collect
contractual cash flows and sell, the Company assesses whether the financial instruments’
cash flows represent solely payments of principal and interest (the ‘SPPI test’). In making
this assessment, the Company considers whether the contractual cash flows are consistent
with a basic lending arrangement i.e. interest includes only consideration for the time
value of money, credit risk, other basic lending risks and a profit margin that is consistent
with a basic lending arrangement. Where the contractual terms introduce exposure to risk
or volatility that are inconsistent with a basic lending arrangement, the related financial
asset is classified and measured at fair value through profit or loss.

Financial assets with embedded derivatives are considered in their entirety when
determining whether their cash flows are solely payment of principal and interest.

The Company reclassifies debt instruments when and only when its business model for
managing those assets changes. The reclassification takes place from the start of the first
reporting period following the change. Such changes are expected to be very infrequent
and none occurred during the year.

Financial assets are classified as FVTPL when they are neither held to collect contractual
cash flows nor held both to collect contractual cash flows and to sell financial assets.

The Company does not have any instruments classified as fair value through other
comprehensive income. The instruments held are not marketable and or does not meet
the classification requirements under IFRS 9.

62
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(c) Financial instruments (continued)

Policy applicable from July 1, 2018 (continued)

(ii) Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risks and rewards of
ownership of the financial asset are transferred. Any interest in transferred financial
assets that is created or retained by the Company is recognised as a separate asset or
liability.

(iii) Measurement of gains and losses on financial assets

Gains and losses on financial assets at amortised cost and FVTPL are included in the
statement of profit or loss.

(iv) Impairment of financial assets

The Company recognises loss allowances for expected credit losses (ECL) on the
financial instruments measured at amortised cost.

IFRS 9 outlines a ‘three-stage’ model for impairment based on changes in credit quality
since initial recognition as summarised below:

 A financial instrument that is not credit-impaired on initial recognition is classified

in ‘Stage 1’.
 If a significant increase in credit risk (‘SICR’) since initial recognition is identified,
the financial instrument is moved to ‘Stage 2’ but is not yet deemed to be credit-
impaired.
 A financial asset is credit impaired (‘Stage 3’) when one or more events that has a
detrimental impact on the estimated future cash flows of the financial asset have
occurred.
 Financial instruments in Stage 1 have their ECL measured at an amount equal to the
expected credit losses that result from default events possible within the next 12
months. Instruments in Stages 2 and 3 have their ECL measured based on expected
credit losses on a lifetime basis.
 Purchased or originated credit-impaired financial assets (POCI) are those financial
assets that are credit-impaired on initial recognition. Their ECL is always measured
on a lifetime basis (Stage 3).

A pervasive concept in measuring ECL in accordance with IFRS 9 is that it should

consider forward-looking information.

63
 24
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(c) Financial instruments (continued)

Policy applicable from July 1, 2018 (continued)

(iv) Impairment of financial assets (continued)

Credit-impaired financial assets

At each reporting date, the Company assesses whether financial assets carried at amortised
costs are credit-impaired (referred to as ‘Stage 3 financial assets’). A financial asset is
‘credit-impaired’ when one or more events that have a detrimental impact on the estimated
future cash flows of the financial asset have occurred.

Evidence that a financial asset is credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or past due event;
- the restructuring of a loan or advance on terms that the Company would not consider
otherwise;
- it is becoming probable that the borrower will enter bankruptcy or other financial
reorganisation; or
- the disappearance of an active market for a security because of financial difficulties.

Measurement of ECL

The Company measures loss allowances at an amount equal to lifetime ECL, except for the
following, for which they are measured as 12-month ECL:
- instruments that are determined to have low credit risk at the reporting date; and
- other financial instruments (other than lease receivables) on which credit risk has not
increased significantly since their initial recognition.

The ECL is determined by using the probability of default (PD), loss given default (LGD)
and exposure at default (EAD). These three components are multiplied together and adjusted
for forward looking information and discount rates.

The discount rate used in the ECL calculation is the original effective interest rate or an
approximation thereof.

ECLs are a probability-weighted estimate of credit losses. They are measured as follows:
- financial assets that are not credit-impaired at the reporting date: as the present value of
all cash shortfalls (i.e. the difference between the cash flows due to the entity in
accordance with the contract and the cash flows that the Company expects to receive);
- financial assets that are credit-impaired at the reporting date: as the difference between
the gross carrying amount and the present value of estimated future cash flows; and
- Other and lease receivables are measured at an amount equal to lifetime ECL.

64
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(c) Financial instruments (continued)

Policy applicable to 2019 and 2019

(v) Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Company has a legal right to
offset the amounts and intends either to settle them on a net basis or to realise the asset and
settle the liabilities simultaneously.

Policies applicable before July 1, 2018

(vi) Classification:

Management determines the classification of investments at the time of acquisition and

takes account of the purpose for which the investments were acquired. Investments were
classified as available-for-sale and held-to-maturity.

Loans and receivables are those created or acquired by the Company, with fixed or
determinable payments and are not quoted in an active market. Loans and receivables
comprise cash and cash equivalents and securities purchased under resale agreements.

Held-to-maturity investments are financial assets with fixed or determinable payments and
fixed maturities that the Company has the positive intent and ability to hold to maturity.

Available-for-sale securities are financial assets that are so designated by the Company.

Non-derivative financial liabilities are classified as other financial liability.

(vii) Recognition:

The Company initially recognises securities purchased under resale agreements and debt
securities on the date that they are originated. All other financial assets are recognised
initially on the trade date, which is the date that the Company becomes a party to the
contractual terms of the instrument.

A financial asset or financial liability is measured initially at fair value, plus, for an item
not at fair value through profit or loss, transaction costs that are directly attributable to its
acquisition or issue.

(viii) Derecognition:

The Company derecognises a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risks and rewards of ownership
of the financial asset are transferred. Any interest in transferred financial assets that is
created or retained by the Company is recognised as a separate asset or liability.
65
 26
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(c) Financial instruments (continued)

Policies applicable before July 1, 2018 (continued)

(viii) Derecognition (continued):

The Company derecognises a financial liability when its contractual obligations are
discharged, cancelled or expired.

(ix) Measurement:

Financial assets classified as available-for-sale are initially recognised at fair value plus
any directly attributable transaction costs. Subsequent to initial measurement, they are
measured at fair value. Unrealised gains and losses arising from changes in fair value,
except for impairment losses and foreign currency differences on debt instruments, are
recognised in other comprehensive income and presented in fair value reserve in equity
(see note 16). Where fair value cannot be reliably determined, the securities are measured
at cost. Where these securities are disposed of or impaired, the related accumulated
unrealised gains or losses are reclassified to profit or loss.

On initial recognition, held-to-maturity investments are measured at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition, they are measured
at amortised cost, using the effective interest method, less impairment losses.

Any sale or reclassification of a significant amount of held-to-maturity investments that

are not close to their maturity would result in the reclassification of all held-to-maturity
investments as available-for-sale, and prevent the Company from classifying investment
securities as held-to-maturity for the financial year in which sale or reclassification occurs
and the following two financial years.

(x) Identification and measurement of impairment:

The carrying amounts of the Company’s financial assets are reviewed at each reporting
date to determine whether there is objective evidence that financial instruments not carried
at fair value through profit or loss are impaired. Financial assets are impaired when
objective evidence demonstrates that a loss event has occurred after the initial recognition
of the asset, and the loss event has an impact on the future cash flows of the asset that can
be estimated reliably. If any such indication exists, the asset’s recoverable amount is
estimated at each reporting date. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount.

Objective evidence that financial assets are impaired include default or delinquency by a
borrower, the disappearance of an active market for a security, adverse changes in the
payment status of the borrowers or issuers, indications that a debtor or issuer will enter
into bankruptcy or observable data indicating that there is measurable decrease in expected
cash flows from a group of financial assets.

66
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(c) Financial instruments (continued)

Policies applicable before July 1, 2018 (continued)

(x) Identification and measurement of impairment (continued):

The Company considers evidence of impairment at both a specific asset and collective
level. All individually significant financial assets are assessed for impairment. All
significant assets found not to be specifically impaired are then collectively assessed for
any impairment incurred but not yet identified.

Assets that are not individually significant are then collectively assessed for impairment
by grouping together financial assets (measured at amortised cost) with similar risks.

In assessing collective impairment, the Company uses historical information of the

probability of default, timing of recoveries and the amount of loss incurred, adjusted for
management’s judgement as to whether current economic and credit conditions are such
that the actual losses are likely to be greater or less than suggested by historical trends.

Impairment losses on assets measured at amortised cost are measured as the difference
between the carrying amount of the financial asset and the present value of estimated
future cash flows discounted at the asset’s original effective interest rate. Impairment
losses are recognised in profit or loss and reflected in an allowance account against
receivables. When a subsequent event causes the amount of impairment loss to decrease,
the decrease in impairment loss is reversed through profit or loss.

Impairment losses on available-for-sale investment securities are recognised by

reclassifying the cumulative loss that has been recognised in the fair value reserve to profit
or loss. The cumulative loss reclassified is the difference between the acquisition cost, net
of any principal repayment and amortisation, and the current fair value, less any
impairment loss previously recognised in profit or loss.

If, in a subsequent period, the fair value of an impaired available-for-sale debt security
increases and the increase can be objectively related to an event occurring after the
impairment loss was recognised in profit or loss, the impairment loss is reversed, with the
amount of the reversal recognised in profit or loss. However, any subsequent recovery in
the fair value of an impaired available-for-sale equity security is recognised in other
comprehensive income.

(d) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date in the principal or, in its
absence, the most advantageous market to which the Company has access at that date. The fair
value of a liability reflects its non-performance risk.

67
 28
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(d) Fair value measurement (continued)

When available, the Company measures the fair value of an instrument using the quoted price in
an active market for that instrument. A market is regarded as active if transactions for the asset
or liability take place with sufficient frequency and volume to provide pricing information on an
ongoing basis.

If there is no quoted price in an active market, then the Company uses valuation techniques.

The best evidence of the fair value of a financial instrument at initial recognition is normally the
transaction price - i.e. the fair value of the consideration given or received. If the Company
determines that the fair value at initial recognition differs from the transaction price and the fair
value is evidenced neither by a quoted price in an active market for an identical asset or liability
nor based on a valuation technique that uses only data from observable markets, then the financial
instrument is initially measured at fair value, adjusted to defer the difference between the fair
value at initial recognition and the transaction price.

Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life
of the instrument but no later than when the valuation is wholly supported by observable market
data or the transaction is closed out.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Company
measures assets and long positions at a bid price and liabilities and short positions at an ask price.

Portfolios of financial assets and financial liabilities that are exposed to market risk and credit
risk that are managed by the Company on the basis of the net exposure to either market or credit
risk are measured on the basis of a price that would be received to sell a net long position (or paid
to transfer a net short position) for a particular risk exposure. Those portfolio-level adjustments
are allocated to the individual assets and liabilities on the basis of the relative risk adjustment of
each of the individual instruments in the portfolio.

(e) Investment in subsidiary

Investment in subsidiary is measured in the financial statements at cost, less any impairment loss.

(f) Revenue recognition

(i) Interest income

Policy applicable from July 1, 2018

Interest income is calculated by applying the effective interest rate to the gross carrying
amount of financial assets, except for:
(a) Purchased or originated credit-impaired (POCI) financial assets, for which the
original credit-adjusted effective interest rate is applied to the amortised cost of the
financial asset.

68
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(f) Revenue recognition (continued)

(i) Interest income (continued)

Policy applicable from July 1, 2018 (continued)

(b) Financial assets that are not POCI but have subsequently become credit-impaired (or
‘stage 3’), for which interest revenue is calculated by applying the effective interest
rate to their amortised cost (i.e., net of the expected credit loss provision).

Policy applicable before July 1, 2018

Interest income is recognised in profit or loss for all interest-earning instruments on the
accrual basis using the effective interest method. The effective interest rate is the rate that
exactly discounts the estimated future cash receipts through the expected life of the
financial asset to the carrying amount of the financial asset. The effective interest rate is
established on initial recognition of the financial asset and is not revised subsequently.

(ii) Commission

Policy applicable to 2019 and 2018

Commission income is recognised on the accrual basis when the related services are
performed.

(g) Foreign currency transactions and balances

Assets and liabilities denominated in foreign currencies are translated at the exchange rates
prevailing at the reporting date.

Transactions in foreign currencies are converted at the rates of exchange ruling on the dates of
those transactions. Realised and unrealised gains and losses arising from fluctuations in
exchange rates are included in profit or loss.

(h) Other receivables and due from related companies

Other receivables and due from related companies are measured at amortised cost less any
impairment loss.

69
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SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(i) Leases

Finance lease:

Lessor

On initial recognition, the lease receivable is measured as the present value of the lease rentals
receivable. Initial direct costs are included in the initial measurement of the finance lease
receivable which reduces the amount of income recognised over the lease term.

Interest earned on finance leases are recognised based on a constant periodic rate of interest on
the finance lease receivable.

(j) Embedded derivatives

Derivatives may be embedded in another contractual arrangement (a host contract).

Policy applicable from July 1, 2018

Financial assets with embedded derivatives are considered in their entirety when determining
whether their cash flows are solely payments of principal and interest.

When an embedded derivative cannot be separated from the host contract, such as, the cash
flows are not solely payments of principal and interest, the entire contract is designated as fair
value through profit or loss.

Policy applicable before July 1, 2018

The Company accounts for an embedded derivative separately from the host contract when:
 The host contract is not itself carried at fair value through profit or loss;
 The terms of the embedded derivative would meet the definition of a derivative if they
were contained in a separate contract; and
 The economic characteristics and risks of the embedded derivative are not closely related
to the economic characteristics and risks of the host contract.

Separated embedded derivatives are measured at fair value, with changes in fair value
recognised in profit or loss unless they form part of a qualifying cash flow or net investment
hedging relationship. Separated embedded derivatives are presented in the statement of financial
position together with the host contract.

70
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(k) Taxation

The Company is subject to tax at 1% of its taxable income in Saint Lucia. Taxation on the profit
or loss for the period comprises current and deferred taxes. Current and deferred taxes are
recognised as tax expense or benefit in profit or loss.

(i) Current taxation

Current tax charges are based on the taxable profit for the period, which differs from the
profit before tax reported because they exclude items that are taxable or deductible in other
periods, and items that are never taxable or deductible. The current tax is calculated at tax
rates that have been enacted at the reporting date.

(ii) Deferred tax

Deferred tax liabilities are recognised for temporary differences between the carrying
amounts of assets and liabilities and their amounts as measured for tax purposes, which will
result in taxable amounts in future periods.

Deferred tax assets are recognised for temporary differences which will result in deductible
amounts in future periods, but only to the extent it is probable that sufficient taxable profits
will be available against which these differences can be utilised. Deferred tax assets are
reviewed at each reporting date to determine whether it is probable that the related tax
benefit will be realised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the asset will be realised or the liability will be settled based on enacted
rates.

(l) Accounts payable, accrued liabilities and due to related companies

Accounts payable, accrued liabilities and due to related companies are measured at amortised
cost.

(m) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares are shown in equity as a deduction from the proceeds.

(n) Dividends

Dividends to shareholders are recorded in the financial statements in the period in which they
are declared.

71
 32
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

5. Significant accounting policies (continued)

(o) Related parties

A related party is a person or entity that is related to the entity that is preparing its financial
statements (referred to in IAS 24, Related Party Disclosures, as the “reporting entity”, that is,
the Company).

(A) A person or a close member of that person’s family is related to the Company if that
person:
(i) has control or joint control over the Company;
(ii) has significant influence over the Company; or
(iii) is a member of the key management personnel of the Company.

(B) An entity is related to the Company if any of the following conditions applies:
(i) The entity and the Company are members of the same group of companies
(which means that each parent, subsidiary and fellow subsidiary is related to
the other).
(ii) One entity is an associate or joint venture of the other entity (or an associate or
joint venture of a member of a group of companies of which the other entity is
a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate
of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of
either the Company or an entity related to the Company.
(vi) The entity is controlled, or jointly controlled by a person identified in (A).
(vii) A person identified in (A)(i) has significant influence over the entity or is a
member of the key management personnel of the entity (or of a parent of the
entity).
(viii) The entity, or any member of a group of companies of which it is a part,
provides key management personnel services to the Company or to the parent
of the Company.

A related party transaction is a transfer of resources, services or obligations between related

parties, regardless of whether a price is charged.

6. Cash and cash equivalents

Cash and cash equivalents comprises savings accounts, non-interest bearing operating accounts and a
certificate of deposit held at commercial banks in Jamaica.

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 33
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

7. Securities purchased under resale agreements

2019 2018
Denominated in United States dollars (a) 1,044,234 9,068,443
Denominated in Jamaica dollars (b) - 10,814,833
$1,044,234 19,883,276

(a) These instruments earn interest between 2.5% and 4.4% (2018: 2% and 4.4%) and mature within
12 months from the reporting date.

(b) These instruments earned interest between 1.5% and 2.75% and matured during the year.

At June 30, 2019, the fair value of the underlying collateral of the resale agreements was $1,088,523
(2018: $20,845,492). The balance is shown net of impairment allowance of $210 (2018: $Nil) [see
note 22(b)(v)].

8. Other receivables
2019 2018
Prepaid expenses 22,522 32,843
Amounts due from IPO lead arranger - 755,782
$22,522 788,625

No impairment allowance was recognised on these balances in the current and prior year.

9. Related party balances and transactions

(a) Identity of related parties:

The Company has related party relationships with its directors, shareholders and related entities.

(b) The statement of financial position includes the following balances with related parties in the
ordinary course of business as follows:
2019 2018
Due from related companies:
Sygnus Capital Limited 114,637 -
Sygnus Credit Investments Jamaica Limited 2,172 -
$116,809 -
Due to related companies:
Sygnus Credit Investments Jamaica Limited 76 54,295
Sygnus Capital Management Limited 60,820 129,581
$ 60,896 183,876

Related party balances are unsecured, interest free and repayable on demand. Amounts due from
the related companies are considered low credit risk. No impairment allowance was recognised.

73
 34
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

9. Related party balances and transactions (continued)

(c) The statement of profit or loss and other comprehensive income includes expenses incurred in
transactions with related parties in the ordinary course of business as follows:

2019 2018
Management fees 707,175 182,368
Accounting fees 26,780 -
Directors’ fees and related expenses 40,203 29,225
$774,158 211,593

10. Finance lease receivables

2019 2018
Minimum lease payments receivable 2,034,259 626,547
Less: unearned income ( 454,293) (127,587)
1,579,966 498,960
Less: impairment allowance [see note 22(b)(v)] ( 1,995) -
$1,577,971 498,960
The lease payments are receivable as follows:
Within one year 500,755 164,454
Two – five years 1,533,504 462,093
$2,034,259 626,547

11. Investments

2019 2018
Fair value through profit or loss
Preference shares - profit participation and
conversion options (a) [see also note 21(b)] 7,507,015 644,326
Available-for-sale
Preference shares - host contract (a) - 6,612,885
Amortised cost (2018: Held-to-maturity)
Commodity resale agreements (b) 4,447,598 4,000,000
Short-term notes (b) 9,612,764 -
Medium-term notes (c) 10,901,495 3,946,753
24,961,857 7,946,753
Sub-total 32,468,872 15,203,964
Less: impairment allowance [see note 22(b)(v)] ( 80,271) -
$32,388,601 15,203,964

74
 35
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

11. Investments (continued)

(a) This represents two (2) convertible preference shares maturing within three to five years. These
investments were carried out with companies in the manufacturing and energy industries. The
terms and conditions of each preference share are as follows:
i. The Company has an equity conversion option to convert all or part of the shares into
common equity in the event of an Initial Public Offering or sale by the Issuer.
ii. The Company is entitled to receive a percentage of reported net profits of the Issuer.
iii. The Issuer has a redemption option whereby the preference shares can be redeemed prior to
the maturity date by paying a premium to the Company.

(b) The commodity resale agreement and short-term notes will mature within one year from the
reporting date.

(c) This represents medium-term notes maturing within two to five years. These notes can be repaid
on or after the contracted periods.

12. Investment in subsidiary

Investment in subsidiary represents shares at cost (see note 1). As at the reporting date, the subsidiary
had not started trading.

13. Accounts payable and accrued liabilities

2019 2018
Audit fees 36,000 26,500
Accounts payables 72,786 -
Other payables 14,036 11,647
Directors’ fees and related expenses 7,490 10,746
Security deposit* 129,389 103,355
Accrued expenses 117,683 49,531
$377,384 201,779

* This amount was withheld by the company as part of an investment transaction in the event of a
default in payments.

14. Dividends

On September 18, 2018 and March 11, 2019, the Board of Directors declared total dividends of
$1,075,186 (2018: $Nil). Of this amount, $121,178 (2018: $Nil) was unpaid at the reporting date.

75
 36
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

15. Share capital

2019 2018
Authorised capital:
(i) Unlimited ordinary shares
(ii) One (1) special rights redeemable share of US$1
Issued and fully paid:
350,087,563 ordinary stock unit and one (1) special share 36,196,607 36,196,607
Less: transaction costs of share issue ( 1,088,934) ( 1,088,934)
$35,107,673 35,107,673

Sygnus Capital Management Limited, a related company, holds 1 special rights share and 5.4 million
ordinary stock units in the Company. The special share carries no right to participate in dividends or
distribution of capital except on winding-up of the Company. At the annual general meeting, the
holder of the Special Share carries 101% of the aggregate votes, vested in all ordinary shares issued
by the Company. The remaining ordinary stock units are held by public and private investors.

There were two dividend payments during the year.

16. Fair value reserve

In the prior year, this represented unrealised gains on available-for-sale investments.

17. Interest income calculated using the effective interest method

2019 2018
Resale agreements 376,797 186,735
Investments 2,731,668 974,343
Finance leases 45,754 6,738
Cash and cash equivalents 13,828 3,101
$3,168,047 1,170,917

18 Participation fees

This represents fees arising from participating in the commodity resale agreement transaction.

19. Taxation

Income earned by the Company for the year is exempt from income tax as these transactions were
conducted with member states of CARICOM.

76
 37
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

19. Taxation (continued)

(a) The provision for income tax at 1% of the results for the year, adjusted for tax purposes, is Nil at
end of the reporting period.

(b) The actual taxation charge differs from the “expected” tax charge for the year as follows:

2019 2018
$ $

Profit before taxation 2,050,631 1,423,747

Computed “expected” tax charge of 1% 20,506 14,237
Tax effect of treating items differently for financial
statements and tax reporting purposes -
Net foreign exchange loss 2,190 500
Interest income from CARICOM member states ( 31,680) ( 11,709)
Fair value gains from investments in CARICOM
member states ( 1,354) ( 6,443)
Unused tax losses 10,338 3,415
Actual tax charge recognised - -

(c) No deferred tax was recognised in the financial statements as the differences between the
accounting and tax treatments are all permanent differences.

20. Earnings per share

Earnings per stock unit is calculated by dividing the profit attributable to stockholders by the weighted
average number of ordinary stock units in issue.

2019 2018
Profit attributable to stockholders $ 2,050,631 1,423,747
Weighted average number of ordinary stock units in issue 350,087,563 166,593,971
Basic earnings per stock unit 0.59¢ 0.85¢

The Company does not have any instrument that has a dilutive effect on its basic earnings per share.

21. Fair value of financial instruments

The amounts included in the financial statements for cash and cash equivalents, securities purchased
under resale agreements, due from related companies, other receivables, accounts payable and accrued
liabilities, and due to related companies reflect the approximate fair values because of short-term
maturity of these instruments.

The definition of fair value is described in note 5(d).

77
 38
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

21. Fair value of financial instruments (continued)

IFRS 13 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation
techniques are observable or unobservable. These two types of inputs have created the following fair
value hierarchy:

 Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical
instruments.

 Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly
(i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued
using quoted market prices in active markets that are considered less than active or other valuation
techniques in which all significant inputs are directly or indirectly observable from market data.

 Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation
technique includes inputs not based on observable data and those inputs have a significant effect
on the instrument valuation. This category includes instruments that are valued based on prices for
similar instruments for which significant adjustments or assumptions are made to reflect differences
between the instruments.

Accounting classification and fair values:

The Company’s investments measured at fair value are classified at Level 3 in the fair value hierarchy.
There were no transfers between levels during the year.

(a) The Company’s preference shares is measured at fair value and classified at Level 3. The
following table shows the valuation techniques used in measuring the fair value, as well as the
significant unobservable inputs used.

Inter-relationship
between key
unobservable
Significant Range of estimates inputs and fair
Valuation unobservable for unobservable value
techniques inputs inputs measurement

Discounted cash  Adjusted profit of  Probability of The estimated fair

flow method the issuer(s) achievement of value would
based on 45% -50% increase/(decrease)
probability of if:
achievement
 Adjusted profit
 Fixed income
 Risk-adjusted was higher/(lower)
discount rate of
discount rates  The cost of debt
5.8% - 7.9% and was
equity discount rate (higher)/lower
of 18.6% - 22.8%  Interest rates
changed

78
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

21. Fair value of financial instruments (continued)

(b) The following shows a reconciliation of the fair value measurements:

2019 2018
Opening balance 7,257,211 -
Purchases - 6,538,399
Gains/(losses):
Fair value gains in profit or loss 135,429 644,326
Fair value gains in other comprehensive income - 87,503
Foreign exchange adjustments 114,375 ( 13,017)
$7,507,015 7,257,211

22. Financial risk management

The Company has exposure to the following financial risks from its operations and the use of financial
instruments:

(i) Credit risk

(ii) Liquidity risk
(iii) Market risk

(a) Overview

The Company has developed and implemented a risk management policy that involves the
analysis, evaluation, acceptance and management of some degree of risk or combination of risks.
The Company's risk management policies are established to identify and analyze the risks faced
by the Company in order to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to reflect
changes in market conditions and the Company's activities.

The risk management policy of the Company also adopts best practice measures to address
perceived or real conflicts of interest that may arise in the operations and management of the
business.

The Board of Directors is ultimately responsible for the risk management policies of the
Company. The Board’s risk management mandate is carried out through the following
committees:

1. Audit and Governance Committee

The primary purpose of this Committee is to assist the Board in fulfilling its oversight
responsibilities. In performing its duties, the Committee maintains effective working
relationships with the Board, the Enterprise Risk Management Committee and the
Company’s external auditors.

79
 40
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(a) Overview (continued)

1. Audit and Governance Committee (continued)

The Committee plays a key role in corporate governance and internal controls. The
Committee is also responsible for assisting the Board of Directors in its compliance with
regulatory requirements.

2. Credit Risk and Investment Committee

The Company has delegated the management of credit risk to the Credit Risk and
Investment Committee (“CRIC”), a sub-committee of the Board of the Investment
Manager, Sygnus Capital Management Limited. The committee is responsible for the
overall risk management function of the Company and is responsible for all credit and
investment decisions relating to the Company’s investment portfolio.

This committee consists of three members, two of whom are independent of the Company,
including the Chairman, appointed by the Investment Manager’s Board of Directors.

The Committee reviews and approves all investment recommendations and also determines
the level conditions that will be attached to each investment.

3. Enterprise Risk Management Committee

In addition to CRIC, the Company has also established an Enterprise Risk Management
Committee, a sub-committee of the Board. This Committee assists the Board in providing
leadership, direction, and oversight pertaining to the Company’s risk governance and
framework, including the Company’s risk appetite statement and risk limits and tolerances
(“Risk Appetite Statement”). The Committee also assists the Board to foster a culture
within the Company that demonstrates the benefits of a risk-based approach to risk
management and internal controls. The Committee works closely with the Audit and
Governance Committee.

4. Investment Advisory Committee

The Company’s Investment Advisor, Sygnus Capital Limited, a related company, is

responsible for analysing and recommending all investment and credit proposals to the
Credit Risk and Investment Committee and supporting the Investment Manager with the
monitoring of the investment portfolio. The Investment Advisor executes these functions
through an Investment Advisory Committee (“IAC”).

The Company's risk management policies are established to identify and analyze the risks
faced by the Company in order to set appropriate risk limits and controls, and to monitor
risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Company's activities.

80
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(b) Credit risk

Credit risk is the risk of a financial loss arising from a counterparty to a financial contract failing
to discharge its obligations. The Company manages this risk by establishing policies for granting
credit and entering into financial contracts. The Company's credit risk is concentrated, primarily,
in securities purchased under resale agreements, finance lease receivables and investments.

Exposure to credit risk:

The maximum credit exposure, the total amount of loss the Company would suffer if every
counter-party to the Company's financial assets were to default at once, is represented by the
carrying amount of financial assets shown on the statement of financial position.

(i) Cash and cash equivalents are held with financial institutions and collateral is not required
for such accounts, as management regards the institutions as strong. The strength of these
financial institutions is continually reviewed by the CRIC and the Enterprise Risk
Management Committee.
(ii) The Company manages credit risk related to other receivables by limiting exposure to
specific counterparties and by monitoring settlements.
(iii) Securities purchased under resale agreements, finance lease receivable and investments
expose the Company to credit losses as there is a risk that the counterparty will fail to
fulfill its contractual obligations. The Company manages this risk by contracting only with
counterparties that management considers to be financially sound.

The estimation of credit exposure for risk management purposes is complex and requires the use
of models, as the exposure varies with changes in market conditions, expected cash flows and
the passage of time. The assessment of credit risk of a portfolio of assets entails further
estimations as to the likelihood of defaults occurring, of the associated loss ratios and of default
correlations between counterparties. The Company measures credit risk using probability of
default (PD), exposure at default (EAD) and loss given default (LGD).

An analysis of the concentration of credit risk from its investments, finance lease receivables
and resale agreements are as follows:
Industries 2019 2018
Distribution 6,522,619 4,000,000
Hospitality 5,368,903 1,198,960
Manufacturing 5,250,592 3,936,642
Mining and Quarrying 2,946,586 1,120,903
Energy 5,385,629 5,446,419
Telecommunications 6,000,000 -
Health and Lifestyle 2,000,000 -
Financial 1,618,953 19,883,276
35,093,282 35,586,200
Less: impairment allowance [see note 22(b)(vi)] ( 82,476) -
$35,010,806 35,586,200

81
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SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(b) Credit risk (continued)

Expected credit loss measurement:

IFRS 9 outlines a ‘three-stage’ model for impairment based on changes in credit quality since
initial recognition.

Change in credit quality since initial recognition

Stage 1 Stage 2 Stage 3

Initial recognition Significant increase in credit Credit-impaired assets
since initial recognition

12-month expected credit Lifetime expected credit Lifetime expected credit

losses losses losses

(i) Significant increase in credit risk (SICR)

When determining whether the risk of default on a financial instrument has increased
significantly since initial recognition, the Company considers reasonable and supportable
information that is relevant and available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on the Company’s historical
experience and third party policies including forward-looking information.

The objective of the assessment is to identify whether a significant increase in credit risk
has occurred for an exposure by comparing:
- the remaining lifetime PD as at the reporting date; with
- the remaining lifetime PD for this point in time that was estimated at the time of initial
recognition of the exposure (adjusted where relevant for changes in prepayment
expectations).

The Company uses three criteria for determining whether there has been a significant
increase in credit risk:
- quantitative test based on movement in PD;
- qualitative indicators; and
- a backstop of 30 days past due.

A backstop is applied and the financial instrument considered to have experienced a

significant increase in credit risk if the borrower is more than 30 days past due on its
contractual payments.

A financial instrument that is not credit-impaired on initial recognition is classified in

‘Stage 1’ and has its credit risk continuously monitored by the Company.

82
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(b) Credit risk (continued)

Expected credit loss measurement (continued):

(i) Significant increase in credit risk (SICR) (continued)

If a significant increase in credit risk (‘SICR’) since initial recognition is identified, the
financial instrument is moved to ‘Stage 2’ but is not yet deemed to be credit-impaired.

Purchased or originated credit-impaired financial assets are those financial assets that are
credit- impaired on initial recognition. Their ECL is always measured on a lifetime basis
(Stage 3).

Financial instruments in Stage 1 have their ECL measured at an amount equal to the
portion of lifetime expected credit losses that result from default events possible within
the next 12 months. Instruments in Stages 2 or 3 have their ECL measured based on
expected credit losses on a lifetime basis. A pervasive concept in measuring ECL in
accordance with IFRS 9 is that it should consider forward- looking information.

(ii) Definition of default

In assessing whether a borrower is in default, the Company considers indicators that are:
- qualitative: e.g. the counterparty is more than 90 days past due on its contractual
payments; and
- quantitative: e.g. the counterparty meets unlikeliness to pay criteria, which indicates
the borrower is in significant financial difficulty.

Inputs into the assessment of whether a financial instrument is in default and their
significance may vary over time to reflect changes in circumstances.

(iii) Incorporation of forward-looking information

The assessment of SICR and the calculation of ECL both incorporate forward-looking
information. The Company has performed historical analysis and identified the key
economic variables impacting credit risk and expected credit losses for each portfolio.

These economic variables and their associated impact on the PD, EAD and LGD vary by
financial instrument.

The Company uses a forward-looking score card model to estimate the potential of future
economic conditions.

External information considered includes economic data and forecasts published by

governmental bodies and monetary authorities in Jamaica, supranational organisations
and selected private-sector forecasters.

83
 44
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(b) Credit risk (continued)

Expected credit loss measurement (continued):

(iv) Credit risk grading

The Company assesses the probability of default using internal ratings. These are
segmented into rating classes. The Company’s rating scale is shown below.

Rating Description Definition Category

1 Exceptional Portfolio company is performing exceptional
2 Very Good Portfolio company is performing very good Standard
3 Good Portfolio company is performing good Monitoring
4 Average Portfolio company is performing average
5 Below average Portfolio company is performing below average Enhanced
Monitoring
6 Default Portfolio company has defaulted Default

(v) Credit quality analysis

The following table contains information about the credit quality of financial assets
measured at amortised cost and represents their carrying amounts at the reporting date.

Investments and resale agreements

at amortised cost

Stage 1
12-month
ECL
$

Standard monitoring 25,553,966

Enhanced monitoring 452,335
26,006,301
Impairment allowance – investments (see note 11) ( 80,271)
Impairment allowance – resale agreements (see note 7) ( 210)
25,925,820

84
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2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(b) Credit risk (continued)

Expected credit loss measurement (continued):

(v) Credit quality analysis (continued)

Other financial assets at amortised cost:

Stage 1
12-month
ECL
$
Standard monitoring 1,579,966
Impairment allowance (see note 10) ( 1,995)
1,577,971
(vi) Impairment allowance

The following tables show a reconciliation of the opening to the closing loss allowance.

Investments and resale agreements

at amortised cost
Stage 1
12-month
ECL
$

Balance at June 30, 2019 (IAS 39) -

Remeasurement on July 1, 2018 (IFRS 9) 7,574
Impairment recognised during the year 72,907
Impairment allowance as at June 30, 2019 80,481

Other financial assets at amortised cost:

Stage 1
12-month
ECL
$
Balance at June 30, 2019 (IAS 39) -
Remeasurement on July 1, 2018 (IFRS 9) 257
Impairment recognised during the year 1,738
Impairment allowance as at June 30, 2019 1,995
Total impairment allowance as at June 30, 2019 82,476

Total impairment loss recognised during the year amounted to $74,645 (2018: $Nil).

85
 46
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(c) Liquidity risk

Liquidity risk may result from an inability to sell a financial asset quickly at, or close to, its fair
value. The Company generally makes investments in financial instruments issued by private
companies, substantially all of which are otherwise less liquid than publicly traded securities.
The illiquidity of these investments may make it difficult for the Company to sell or dispose of
such investments in a timely manner at or close to fair value, if the need arises.

In addition, the Company faces liquidity risk in the form of funding risk. This is the risk that the
Company may encounter difficulty in raising funds to meet commitments associated with its
investments and obligations as they fall due. Maturities of assets and liabilities, and the ability
to replace, at an acceptable cost, interest bearing liabilities as they mature, are important factors
in assessing the liquidity of the Company and its exposure to changes in interest rates and
exchange rates.

The Company is not subject to any externally imposed liquidity requirements.

The Company maintains an adequate amount of its financial assets in liquid form to meet
contractual obligations and other recurring payments.

Financial liabilities, are due to be settled within three months of the reporting date at their
carrying values.

(d) Market risk

Market risk is the risk that the value or cash flows of a financial instrument will fluctuate as a
result of changes in market prices, whether those changes are caused by factors specific to the
individual security or its issuer or factors affecting all securities traded in the market.

Such risks arise from open positions in interest rates and currency products, all of which are
exposed to general and specific market movements and changes in the level of volatility of
market rates or prices, such as foreign exchange and interest rates. The market risk arising from
investment activities is reviewed and assessed by the Investment Advisory Committee and the
Credit Risk and Investment Committee. Investment transactions are monitored by the Board of
Directors.

The elements of market risk that affect the Company are as follows:

(a) Foreign currency risk

Foreign currency risk is the risk that the fair value of, or future cash flows from, financial
instruments will vary because of exchange rate fluctuations. The Company incurs foreign
currency risk on transactions that are denominated in currencies other than the United
States dollar. The currency giving rise to this risk is the Jamaica dollar.

86
 47
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(d) Market risk (continued)

(a) Foreign currency risk (continued)

The exposure to foreign currency risk at the reporting date was as follows:

2019 2018

J$ US$ equivalent J$ US$ equivalent

Foreign currency assets:

Cash and cash equivalents 226,686,278 1,736,844 18,840,122 145,641
Short- term notes 203,670,607 1,560,501 - -
Long- term notes 1,399,431,103 10,722,279 929,244,014 7,183,395
Securities purchased under
resale agreements - - 1,399,006,748 10,814,833
1,829,787,988 14,019,624 2,347,090,884 18,143,869

Foreign currency liabilities:

Security deposit 2,380,518 18,239 - -
Accrued expenses 10,011,309 76,705 - -
Trade payables 15,220,730 116,619 - -
27,612,557 211,564 - -
Net exposure 1,802,175,431 13,808,059 - -

Exchange rate for the US dollar to the Jamaica dollar was US$1 to J$130.52
(2018:J$129.36)

Sensitivity analysis

A 6% (2018: 4%) weakening of the Jamaica dollar against the United States dollar would
have decreased equity and profit by US$781,588 (2018: US$697,271), assuming all other
variables remained constant. A 4% (2018: 2%) strengthening of the Jamaica dollar against
the United States dollar would have increased equity and profit by US$575,336
(2018:US$370,692).

The analysis is done on the same basis as 2018.

(b) Interest rate risk

Interest rate risk is the risk that the value or cash flows of a financial instrument will
fluctuate due to changes in market interest rates. The Company takes on exposure to the
effects of fluctuations in the prevailing levels of market interest rates on its financial
position and cash flows. The Company manages this risk by monitoring interest rates daily.
Even though there is no formally predetermined gap limits, to the extent judged
appropriate, the maturity profile of the financial assets is matched with that of the financial
liabilities. Where gaps occur, management expects that its monitoring will, on a timely
basis, identify the need to take quick action to close a gap, if it becomes necessary.

87
 48
SygnusSYGNUS
Credit Investments Limited 2019LIMITED
CREDIT INVESTMENTS Financials

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

22. Financial risk management (continued)

(d) Market risk (continued)

(b) Interest rate risk (continued)

Management of interest rate risk (continued)

Management of interest rate risk

Interest rate risk exposure is measured using sensitivity analysis. Interest rate risk is
managed by maintaining an appropriate mix of variable and fixed rate instruments.

At the reporting date the interest rate profile of the Company’s interest bearing financial
instruments were:
Carrying value
2019 2018
$ $
Variable rate instruments:
Assets 135,643 74,084
Fixed rate instruments:
Assets $35,010,806 35,586,200

Interest rate sensitivity analysis

Interest rate sensitivity has been determined based on the exposure to interest rates. These
are substantially the interest sensitive instruments impacting the Company’s financial
results. For floating rate assets, the analysis assumes the amount of the asset outstanding at
the reporting date was outstanding for the whole period. A 100 (2018: 100) basis point
increase or decrease is used when reporting interest rate risk internally to key management
personnel and represents management’s assessment of the reasonable possible change in
interest rates.

If market interest rates had been 100 (2018: 100) basis points higher or lower and all other
variables were held constant, the effect on the Company’s profit would have been as
follows:
2019 2018
$ $
Effect on profit
Increase 100 (2018: 100) basis points 1,356 741
Effect on profit
Decrease 100 (2018: 100) basis points ( 1,356) ( 741)

The analysis is done on the same basis as 2018 and assumes that all other variables remain
constant.

88
 49
2019 Financials Sygnus Credit Investments Limited
SYGNUS CREDIT INVESTMENTS LIMITED

Notes to the Financial Statements (Continued)

Year ended June 30, 2019
Notes
(Expressedtointhe Financial
United Statements
States dollars)
Year ended June 30, 2019 (Expressed in United States dollars)

23. Capital management

The Company’s objective when managing capital is to safeguard the Company's ability to continue as
a going concern in order to provide benefits for its stakeholders and to maintain an optimal capital
structure to enable investments with additional companies. The Company may utilise leverage and
may borrow up to 50% of its total assets to fund investments in additional portfolio companies. There
are no externally imposed capital requirements.

The Company's approach to capital management is monitored by the Enterprise Risk Committee and
Board of Directors.

89
Sygnus Credit Investments Limited 2019 Financials

NOTES

90
Form of
Proxy
I/We ..................................... of ........................................ being a member(s) of the above company, HEREBY APPOINT the Chairperson of

the Meeting or failing him ............................... of ................................... or failing them ............................... of ..................................... as

my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at Cnr. Flamboyant Drive &
Almond Road, Rodney Bay Village, Gros Islet, St. Lucia, on Wednesday, November 27th, 2019 at 10:30 a.m. or at any adjournment thereof.
Please indicate by inserting a cross (X) in the appropriate box how you wish your votes to be cast. Unless otherwise instructed, the Proxy
will vote or abstain from voting as he/she thinks fit.
No. Resolutions For Against
No. 1 Audited Accounts
To receive the Audited Company Accounts and the Report of Auditors for the year
ended June 30, 2019 circulated with the Notice convening the meeting.
No. 2 Ratification of Dividends
To ratify interim dividend and declare them final
No. 3 Election of Directors
a) “THAT Director, Clement Wainwright Alban Iton, retiring pursuant to Article
101 of the Articles of Association be and is hereby re-elected.”
b) “THAT Director, Ian St. Ville Williams, retiring pursuant to Article 101 of
the Articles of Association be and is hereby re-elected.”
No. 4 Director’s Renumeration
To fix the remuneration of the Directors
No. 5 Appointment of Auditors
Appointment of KPMG as Auditors and to fix the remuneration of the Auditors

Signed this _______________day of________ 2019.

Print Name:_________________________________ Signature: _________________________________

Notes for completion of the Form of Proxy

1. If you wish to appoint a proxy other than the Chairperson of the Meeting, please insert the person’s name and address and delete (initialing the deletion) “the Chairperson of the Meeting”
2. To be valid this Form of Proxy must be lodged with the Secretary of the Company at Cnr. Flamboyant Drive & Almond Road, Rodney Bay, Gros Islet, St. Lucia, or emailed to sci@sygnusgroup.
com by Monday, 25th day of November 2019.
3. Any alterations made in this Form of Proxy should be initialed by the person who signs the Proxy Form.
4. In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy will be accepted to the exclusion of the votes of the other joint holders, and for this
purpose seniority will be determined by the order in which the names appear in the Register of Members.
5. The person to whom this Proxy is given need not be a member of the company but must attend the Meeting in person to represent you.
6. If a member appointing a Proxy is a company, this Form of Proxy must be executed under its common seal or executed on its behalf by a duly authorised officer of the company or an
attorney for the company.
7. To this Form of Proxy must be affixed a $100.00 stamp in payment of stamp duty.