SSLVC board to discuss way forward next month
Published:Wednesday | October 7, 2020 | 12:06 AMKarena Bennett/Business Reporter
The directors of SSL Venture Capital Jamaica Limited, which reported a tripling of its annual losses to $152.8 million this year, will be discussing the way forward for the company at a board meeting scheduled for next month.
The reassessment of plans for SSL Ventures also comes amid a weakening of its balance sheet and dwindling revenue that plunged by nearly two-thirds to around $117 million at year ending June 2020.
The company now has accumulated deficits of $319.5 million, and its current liabilities or short-term obligations exceeded its current assets by $18.3 million.
With the doubling of its deficits, the company’s net worth, which was already negative, has sunk deeper into red – from $68 million to $207 million of negative equity.
The venture capital outfit, which started out with investments in three start-up companies, also ended the year with negative cash flow of $446,847, a year after $148 million was pumped into the business.
External auditor Baker Tilly again has noted concerns about the company’s health in the newly released audited financial report.
SSL Ventures, which went through a series of changes over the past year to resolve accounting issues, and reform its management, is being forced back to the drawing board, this time because of the impact of COVID-19 on its subsidiaries.
“Where we are now with SSLVC is we are reassessing how we want to move forward, and we will have some more news about that in the next month after we make some decisions in our board meeting,” Zachary Harding, Group CEO of SSL Growth Equity Limited, the parent company of SSL Ventures, told the Financial Gleaner.
SSL Ventures was created in 2018 after a reverse takeover of failed music publishing start-up, C2W Music Limited, in which parent Stocks & Securities had invested. Its revised business model as a venture capital firm is yet to deliver positive results.
In addition to devising a financial plan for the cash-strapped company, SSL Ventures will also be reassessing its investment strategy, following the sale of its stake in one of its better-performing holdings, Blue Dot Data Intelligence, in March.
Blue Dot, which was said to have held net liabilities prior to SSL Ventures’ acquisition, had doubled revenue last year and was initially forecasting an exceptional 2020 based on sales.
“However, once COVID hit, several of the potential sales opportunities were put on hold by clients. SSLVC continued to provide capital support in the interim until SSLVC met with the founder of Blue Dot and agreed on a share repurchase by the founder,” Harding said.
An agreement was reached for the sale of SSL Ventures 50 per cent on the end of March for $39.5m. SSL Ventures posted a loss of $13 million on the disposal of subsidiary.
“Although Blue Dot was one of the better-performing companies achieving profitability, we had not reached that inflection point yet. Bar Central was a very well-performing company in terms of revenue, it was by far the largest revenue earner within the group, but also had profitability challenges,” Harding said.
SSL Ventures continues to hold 75 per cent interest in distribution company Bar Central and 51 per cent interest in marketing company Muse 360.
Muse’s operation was shuttered in August 2019, following the departure of founder Andre Burnett.
Earlier this year, Bar Central’s founder Kevin Frith also parted ways with the company to focus on other business. Frith, however, still sits on the board.