The Tribune

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

A BISX-listed company’s top executive yesterday voiced delight it had avoided a “qualified opinion” on its annual financial results for a third consecutive year, saying: “Nobody wants that.”

Julian Brown, Benchmark (Bahamas) president and chief executive, told Tribune Business he had always been confident “we would get it done” as the investment, brokerage and real estate firm saw net comprehensive income for 2023 more than triple year-over-year to $1.675m.

PKF Bahamas in 2023 gave Benchmark (Bahamas) accounts a clean bill of health for the first time in three years, having ‘qualified’ its audit opinion on the annual financials for 2021 and 2022, and Mr Brown said the findings confirm all issues have been resolved and the company can now put the issue behind it.

“We thought we would get it done,” he told this newspaper of the unqualified audit opinion. “Like we said last year, we had a a transition over to a new piece of software... we had introduced new accounting software and, or course, the transition then didn’t work out as we thought it would.

“We’ve got it all resolved now. There’s no qualified opinion for this year. It was never a concern of ours. It was all to do with an intra-company transaction we were creating. We’re happy, glad it’s gone. No one likes a qualified opinion. Nobody wants that. Everybody is happy when it goes away. We’re just glad it’s done.”

The sum at the centre of the auditors’ verdict was reduced year-over-year from an initial $337369 in 2021 to $91,549 in the 2022 accounts.

Renee Lockhart, PKF Bahamas’ lead audit partner on the Benchmark (Bahamas) financials, last year flagged up a further issue relating to almost $1m in combined accounts receivables, payables and “other receivables and pre-payments” that were not referred to in the 2021 audited financials. Auditors were unable to obtain sufficient evidence to either “reconcile” or “verify” the sums in question.

Explaining the basis for PKF Bahamas’ “qualified opinion” in 2022, the accounting firm informed Benchmark (Bahamas) shareholders: “The group is carrying a balance in its due from customers account amounting to $1.85m, which is presented net of provision in the consolidated statement of financial position at December 31, 2022.

“We were unable to obtain sufficient appropriate audit evidence to reconcile this amount to the underlying accounts, specifically the subsidiary ledger. The unreconciled difference between the consolidated statement of financial position and the subsidiary ledger amounted to $91.549.”

These findings matched almost exactly those detailed in Benchmark (Bahamas) 2021 “qualified” audit opinion on the same topic, albeit the numbers were different. The “due from customers balance” referred to in the 2021 results was much higher at $18.44m, while the “unreconciled difference” was more than three times’ larger at $337,369.

However, Ms Lockhart in the 2023 annual financials signed-off on June 3, 2024, confirmed that Benchmark Bahamas has put these woes behind it. The company generated a 442 percent increase in net comprehensive income compared to the $378,0790 profit generated for the 12 months to end-December 2022 despite a more than eight-fold jump in operating losses to $948,251.

That compared to just a $98,484 operating loss the prior year. Benchmark’s 2023 profits, though, were driven by a $2m unrealised gain on the value of the securities in its investment portfolio, compared to just a $17746 increase in 2022 as well as a $761,779 gain on the value of its investment property holdings.

Besides its Carmichael and Old Fire Trail Road property, where Bank of The Bahamas is the ‘anchor’ tenant, Mr Brown disclosed that Benchmark had benefited from the full inclusion for the first time of other real estate investments.

“We have some other investments that are now closed so their valuation comes into the portfolio,” he explained. “Part and parcel of our real estate portfolio. We have an investment at GoldWynn and an investment at Per- pall Tract, so with those investments you can calculate them at their full market value.

“They are now being reported at their full market value. We don’t take them 100 percent until they’re fully paid. We have a unit at GoldWynn, and a unit at Villanova at Perpall Tract. Both of them are doing quite well.”

Mr Brown said the Carmichael and Old Fire Trail Road commercial complex is presently around 85 percent leased. “We have two units left on the upper floor, but the rest of the building is fully leased,” he added. “We’re always looking for opportunities in real estate because it is one of the stable and growth areas of the business. If we see something there we will certainly consider the opportunity.”

The Benchmark chief said shareholders and investors should not read too much into the fact its balance sheet showed it had zero cash at the bank when 2023 closed. Pointing out that this figure had been between $10m-$13m just three years ago, he added that the drop-off reflected increased client trading activity and money movements. As a broker, Mr Brown said not all assets belonged to the company.

The financials also reveal that Benchmark’s largest shareholder, Braun & Cie, which holds 47.1 percent and is owned by Mr Brown and his family, last year advanced a $100,000 short-term loan to the BISX-listed entity “to assist with its cash flow”. The loan carries no interest and is repayable by September 30, 2024.

“We advanced a small loan from Braun & Cie because we didn’t sell any of the assets in the portfolio,” Mr Brown said. “We didn’t want to liquidate any of the assets in the investment portfolio so we did a short-term loan. It was an investment that we made just to augment other investments the company was making. We didn’t want to sell any of the securities in the portfolio, so we made a short-term loan.

“Our portfolio has grown quite nicely since we became public. The overall business, the company’s asset base, has grown and we intend to keep doing that and adding value. We were only a $4m company, and now we’re a $17m company, so over the years I think we have done quite well.”