FX gains & securities boost Proven

Increased gains from foreign exchange and securities trading helped Proven Investments to report higher profits than in 2012 in its latest release of its audited financial statements to March this year. The investment bank reported 26 percent higher profits than in the previous year.

While interest income grew from US$7.076 million to $7.36 million, net interest income fell to US$2.89 million from US$3.1 in 2012. However, dividend income grew from $900,000 in 2012 to US$1.26 million in the latest year. Net fair value adjustments and realised gains accounted for US$4.51 million versus US$3.31 million in 2012. But foreign exchange trades delivered US$1.57 million, a turnaround from a loss of US$417,000 in 2012.

Bad debt of US$637 million helped to move up other operating expenses from US$1.9 million to US$2.8 million. The earnings work out at US$0.0141 per share versus US$0.0112 in 2012. The stock closed up slightly at US$0.115 at the end of Monday’s trading before these results were released. There seems to be room for further gains in the stock price with the PE ratio of the stock being 7.7 times the latest earnings. Management will have to pull out all the stops and be creative to drive earnings in the immediate future to continue to make the stock attractive to a wide array of investors.

The company reported assets of US$144 million up from $140 million in 2012. Equity capital stood at US$35.8 million at the end of March 2013. The company is reporting that exchange movement reduced the value of the preference shares during the year from US$11.24 million down US$9.922 million.

Going forward, much will depend on the ability of management to extract more gains from foreign currency trade as well as how well they do in investing in other forms of securities. In this regard investors, who may be interested in the stock, would need to focus on the management’s track record as there is less predictability in the potential earnings in trading securities and currencies.