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TTO - Trustco Group Holdings Limited - Unaudited Condensed Consolidated
Interim Results for the 6 months ended 30 September 2011
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
NSX share code: TUC
JSE share code: TTO
ISIN Number: NA000A0RF067
("the Company" or "the Group" or "Trustco")
Unaudited Condensed Consolidated Interim Results for the 6 months ended 30
September 2011
NATURE OF THE BUSINESS
The Group invests and operates subsidiaries in three main sectors across
Southern Africa:
A) Micro-Insurance and Technology;
B) Micro-finance and Education; and
C) Property and Mortgage loans.
These investments have enabled the provision of financial services to
underserved communities in emerging markets efficiently and affordably.
FINANCIAL SUMMARY
The Group is proud to present its latest interim financial results,
especially in the light of an unsure global financial environment.
Group revenue for the first six months, in relation to the comparative
period, has increased by 38% from NAD 241 million to NAD 331 million. Profit
before taxation increased by 4%, from NAD 58 million to NAD 60 million. This
apparent modest increase should be seen in light of a once-off recognition of
damages awarded against the South African Broadcasting Corporation (SABC).
Profit after tax declined by 9%, from NAD 57 million to NAD 52 million, as a
result of a higher tax charge. Shareholders are advised that historically,
the second half of the financial year has materially exceeded the performance
of the first half, due to the cyclical nature of the business.
REVIEW OF OPERATIONS
Micro Insurance and Technology
As a segment, revenues increased by 19%, from NAD 191 million to NAD 228
million, in comparison to the comparative period, with a corresponding
increase in net profit after tax of 13%, from NAD 40 million to NAD 45
million.
Namibia
In Namibia the sub-segment showed growth in line with expectations with
revenue growing from NAD 51 million to NAD 60 million, an increase of 18%.
This sub-segment`s performance is exemplified by the corresponding growth of
20% in net profit after tax (from NAD 27 million to NAD 33 million).
South Africa
In contrast to the Namibian sub-segment, this technology provider to
Insurance Companies operates in a fiercely competitive market. During this
reporting period, revenues declined by 6% from NAD 140 million to NAD 131
million. The net profit after tax similarly, contracted to NAD 1.7 million, a
decrease from the prior year profit after tax of NAD 12.8 million.
Zimbabwe
The technology based mobile micro insurance concept of Trustco has been
deployed in the Zimbabwean market with resounding financial and operational
success. Revenue amounted to NAD 36 million and profit after tax was NAD 11
million.
It must be noted that only data received from the contracted parties until 31
May 2011 has been verified and accepted by Trustco. The data received after
31 May 2011 was incomplete. The process has commenced to receive all
outstanding data until 30 September 2011.
PROSPECTS
Micro Insurance and Technology
A wholly owned subsidiary of Trustco, Trustco Mobile (Pty) Limited is in
advanced negotiations with parties regarding a potential transaction,
shareholders are referred to the SENS announcements in this regard, the last
of which was released on 10 November 2011.
The African continent`s demand for micro insurance products has not been
exhausted and demand remains strong with low penetration rates, which should
provide further future growth in this segment.
Micro Finance and Education
The demand for loans for educational purposes should increase towards the
financial year-end as students register for the new academic year commencing
in January. The demand for loans for educational purposes remains strong in
Southern Africa.
Micro Finance and Education: Namibia
Revenue has grown from NAD 39 million to NAD 57 million, a comparative
increase of 45%. The micro finance loan book grew from NAD 177 million to NAD
231 million year-on-year, equating to a growth of 30%. However, due to a
higher interest rate expense incurred on external funding, net profit after
tax for the period increased by 9% when compared to the corresponding period
last year, reflecting an increase from NAD 21 million to NAD 23 million.
Provision for bad debts as a percentage of total loans was 7% compared to 8%
as at 31 March 2011.
Property & Mortgage Loans: Namibia
The demand remains high for serviced land in Namibia, in particular in the
Windhoek Basin. The Group expects the development and selling of its "Land
Bank" to gain momentum. The first phase comprising 6% of total available
land for sale is due for completion during the first half of 2012. The Group
has embarked on an accelerating program to monetize the "Land Bank".
Property & Mortgage Loans
Development has commenced on the "Land Bank" comprising a total of 3.7
million square meters that is available for sale, with the implementation of
bulk services on phase 1, and the continuation of sales of industrial plots.
Revenues of NAD 40 million and accompanying net profit after tax of NAD 19
million are reported during this period.
SUBSEQUENT EVENTS
On 21 October 2011 the Group entered into an agreement with a long time
shareholder, The Renaissance Africa Master Fund ("the Fund"), to repurchase
10.5% of the issued share capital of the Company through the exercise of a
put option by the Fund or the exercise of a call option by the Company ("the
share repurchase"). The implementation of the share repurchase remains
contingent on shareholder approval being obtained at a general meeting. A
circular, containing details of the proposed share repurchase, will be posted
to shareholders in due course. Shareholders are referred to the announcement
released on SENS on 28 October 2011 for further information in this regard.
The arbitration matter with the SABC has been concluded. At the time of
reporting the Group was expecting payment of the capital award and accrued
interest from the SABC. The award was NAD 24 million plus interest at 15.5%
per annum, from October 2004.
BASIS OF PREPARATION AND PRESENTATION
Statement of compliance
The interim results have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards ("IFRS") and the AC 500 standards as issued by
the Accounting Practices Board and containing the information required by
IAS34: Interim Financial Reporting, the Listings Requirements of the
Namibian Stock Exchange (NSX) and JSE Limited, and the Companies Act of
Namibia, 2004.
Basis of preparation
The unaudited condensed consolidated financial statements are prepared in
thousands of Namibian Dollars ("NAD`000"). The Group`s functional and
presentation currency is Namibian Dollars. At 30 September 2011, NAD 1 was
equal to ZAR 1.
These interim results are unaudited and have not been reviewed by the
auditors.
The unaudited results have been prepared in accordance with accounting
policies of the Group that comply with IFRS, the Listings Requirements of the
JSE Limited and the NSX and have been consistently applied throughout the
Group. The accounting policies applied are consistent with those of the
previous annual financial statements.
The preparation of the interim results has been supervised by the Financial
Director, Floors Abrahams (B.Com (UNAM)).
CHANGES IN DIRECTORATE AND COMPANY SECRETARY
On 22 August 2011, Mrs J Bazuin resigned as Company Secretary and on the same
day Mrs M Gebhardt was appointed as Company Secretary. There have been no
further changes in the Company Secretary. At the Annual General Meeting held
on the 19th of August 2011, Mrs Monica Nashandi retired by rotation as a
director and Mr Adrian Lee Bock was elected and appointed to the Board.
ACKNOWLEDGMENTS
The board of directors of Trustco (the "Board") acknowledge with gratitude
the efforts and commitment from stakeholders and staff.
REVIEWED PROVISIONAL CONSOLIDATED CONDENSED FINANCIAL INFORMATION FOR THE SIX
MONTHS ENDED 30 SEPTEMBER 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
% UNAUDITED UNAUDITED AUDITED year
6 months 6 months ended 31
ended 30 ended 30 March
September September
NAD `000 Change 2011 2010 2011
Insurance premium 18% 60 434 51 121 111 520
revenue
Revenue 43% 270 973 189 495 475 498
Total revenue 38% 331 407 240 616 587 018
Cost of sales (1%) ( 133 954) ( 133 181) ( 265 144)
Gross profit 84% 197 453 107 435 321 874
Investment income (91%) 2 951 34 643 29 306
Fair value gains and <(100%) - 329 63 514
losses
Other income (87%) 4 497 35 470 65 144
Insurance benefits (25%) ( 10 247) ( 8 221) ( 21 405)
and claims
Transfer to 25% ( 905) ( 1 205) ( 3 409)
policyholder
liabilities
Change in unearned <(100%) ( 149) ( 68) ( 629)
premium provision
Administrative (19%) ( 119 101) ( 99 806) ( 208 302)
expenses
Finance costs (35%) ( 14 299) ( 10 624) ( 22 139)
Profit before 4% 60 200 57 953 223 954
taxation
Taxation <(100%) ( 8 282) ( 743) ( 34 183)
Profit for the period (9%) 51 918 57 210 189 771
- -
Other comprehensive <(100%) ( 170) 1 885 ( 684)
income, net of tax
Revaluation of <(100%) ( 170) 1 885 ( 684)
property, plant and
equipment
Total comprehensive (12%) 51 748 59 095 189 087
income for the period
Earnings per shares:
Basic earnings per (9%) 7.67 8.45 28.02
share (cents)
Diluted earnings per (10%) 7.61 8.45 27.82
share (cents)
Dividends per share - 2.00 - 1.50
(cents)
EARNINGS & HEADLINE EARNINGS PER SHARE
% UNAUDITED UNAUDITED AUDITED year
6 months 6 months ended 31
ended 30 ended 30 March
September September
NAD `000 Change 2011 2010 2011
Profit attributable (9%) 51 918 57 210 189 771
to ordinary
shareholders
Adjustments net of 6% ( 4 447) ( 4 752) ( 57 831)
taxation:
(Profit)/Loss on - - - 353
disposal of property,
plant & equipment
Profit on disposal of 100% ( 4 447) - -
investment property
Fair value - - - ( 40 079)
adjustments on
investment properties
Impairment of - - - 381
intangible assets
Negative goodwill on 100% - ( 4 752) ( 18 486)
business acquisition
Headline earnings (10%) 47 471 52 458 131 940
Weighted number of - 677 240 677 240 677 240
ordinary shares for
basic earnings per
share
Contingently issuable 100% 4 789 - 4 789
shares as a result of
business acquisition
Weighted number of 1% 682 029 677 240 682 029
ordinary shares for
diluted earnings per
share
Basic earnings per (9%) 7.67 8.45 28.02
share (cents)
Diluted earnings per (10%) 7.61 8.45 27.82
share (cents)
Headline earnings per (10%) 7.01 7.75 19.48
share (cents)
Diluted headline (10%) 6.96 7.75 19.35
earnings per share
(cents)
SEGMENTAL ANALYSIS
% UNAUDITED UNAUDITED AUDITED year
6 months 6 months ended 31
ended 30 ended 30 March
September September
NAD `000 Change 2011 2010 2011
Total revenue 38% 331 407 240 616 587 018
Micro insurance and
technology solutions
Namibia 18% 60 434 51 121 111 520
South Africa (6%) 130 749 139 662 263 123
Zimbabwe 100% 36 453 - 45 317
Micro finance and
education
Namibia 45% 56 942 39 248 91 293
Property
Namibia >100% 39 864 456 59 949
South Africa 12% 119 106 174
Head office and
strategic business
Namibia (32%) 6 846 10 023 15 642
Net profit after tax (9%) 51 918 57 210 189 771
Micro insurance and
technology solutions
Namibia 20% 32 691 27 349 49 762
South Africa (87%) 1 724 12 784 16 284
Zimbabwe 100% 10 816 - 23 910
Micro finance and
education
Namibia 9% 22 808 20 967 34 203
Property
Namibia >100% 20 101 1 311 90 904
South Africa 46% (676) (1 261) 985
Head office and
strategic business
Namibia <100% (35 546) (3 940) (26 278)
Total assets 31% 1 333 403 1 016 229 1 222 347
Micro insurance and
technology solutions
Namibia 63% 67 389 41 306 59 631
South Africa 10% 238 101 216 939 216 843
Zimbabwe 100% 23 825 - 15 167
Micro finance and
education
Namibia 25% 246 358 196 885 220 824
Property
Namibia >100% 250 180 101 510 169 163
South Africa (2%) 13 275 13 518 13 275
Head office and
strategic business
Namibia 11% 494 275 446 071 527 444
Total liabilities 30% 622 671 478 489 549 807
Micro insurance and
technology solutions
Namibia 48% 40 113 27 061 30 638
South Africa 7% 134 774 126 170 128 804
Zimbabwe - - - -
Micro finance and
education
Namibia >100% 140 736 39 478 105 566
Property
Namibia (10%) 57 251 63 878 63 028
South Africa (18%) 6 978 8 518 7 219
Head office and
strategic business
Namibia 14% 242 819 213 384 214 552
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
% UNAUDITED UNAUDITED AUDITED year
6 months 6 months ended 31
ended 30 ended 30 March
September September
NAD `000 Change 2011 2010 2011
ASSETS
Non-current assets
Property, plant and (10%) 129 875 143 806 129 697
equipment
Investment properties 53% 219 935 143 861 232 829
Intangible assets 18% 246 390 208 894 240 922
Deferred income tax 2% 67 129 66 022 62 096
assets
Educational loans 28% 138 492 108 071 120 266
advanced
Other loans advanced 8% 24 405 22 694 24 164
Finance lease (48%) 457 872 457
receivable
Total non-current 19% 826 683 694 220 810 431
assets
Current assets
Assets at fair value 31% 28 240 21 514 25 699
through profit and
loss
Short-term portion of 33% 92 117 69 190 87 473
educational loans
advanced
Short-term portion of 31% 833 634 833
other loans advanced
Short-term portion of 8% 419 387 419
finance lease
receivables
Inventories (32%) 12 971 18 999 16 541
Trade and other >100% 279 407 114 302 197 500
receivables
Current income tax 66% 905 546 766
assets
Cash and cash (5%) 91 828 96 437 82 685
equivalents
Total current assets 57% 506 720 322 009 411 916
Total assets 31% 1 333 403 1 016 229 1 222 347
EQUITY AND
LIABILITIES
Capital and reserves
Share capital - 162 645 162 645 162 645
Deemed treasury - ( 18 731) ( 18 731) ( 18 731)
shares
Contingency reserves (6%) 2 361 2 522 2 361
Vendor shares 100% 14 976 - 14 976
Revaluation reserves (15%) 15 244 17 982 15 414
Distributable 43% 534 237 373 322 495 875
reserves
Attributable to 32% 710 732 537 740 672 540
equity holders of the
parent
Non-current
liabilities
Long-term liabilities 45% 153 456 105 836 151 435
Other liabilities (74%) 202 767 334
Deferred income tax 30% 90 333 69 567 87 834
liabilities
Policy holders` 51% 9 212 6 103 8 307
liability under
insurance contracts
Amounts due to (100%) - 9 297 -
related parties
Total non-current 32% 253 203 191 570 247 910
liabilities
Current liabilities
Current portion of 21% 74 481 61 353 55 288
long-term liabilities
Current portion of 10% 2 678 2 445 3 127
other liabilities
Trade and other 17% 198 103 168 754 167 261
payables
Technical provisions 8% 19 161 17 667 18 428
Amounts due to 100% 17 548 - 8 826
related parties
Current income tax >100% 13 948 4 083 7 778
liabilities
Bank overdraft 34% 43 549 32 617 41 189
Total current 29% 369 468 286 919 301 897
liabilities
Total equity and 31% 1 333 403 1 016 229 1 222 347
liabilities
CONSOLIDATED STATEMENT OF CASH FLOWS
% UNAUDITED UNAUDITED AUDITED year
6 months 6 months ended 31
ended 30 ended 30 March
September September
NAD `000 Change 2011 2010 2011
Cash flow from
operating activities
Cash generated by 20% 70 269 58 525 185 378
operations before
working capital
changes
Changes in working 64% ( 30 915) ( 86 894) ( 169 343)
capital
Interest received (91%) 2 951 34 643 29 306
Finance costs (35%) ( 14 299) ( 10 624) ( 22 139)
Net educational loans <(100%) ( 22 870) 1 042 ( 29 436)
advanced
Dividends paid (100%) ( 13 556) - ( 10 168)
Taxation paid (222%) ( 154) ( 48) ( 5 517)
Net cash flow from (155%) ( 8 574) ( 3 356) ( 21 919)
operating activities
-
Cash flow from -
investing activities
Additions to 44% ( 6 953) ( 12 524) ( 13 128)
property, plant and
equipment
Additions to 80% ( 59) ( 299) ( 6 411)
investment properties
Additions to 55% ( 6 750) ( 14 999) ( 39 700)
intangible assets
Acquisition of - - - ( 7 254)
subsidiary, net of
cash acquired
Acquisition of - - - ( 3 315)
business, net of cash
acquired
Additions to assets 22% ( 2 541) ( 3 240) ( 7 425)
at fair value through
profit and loss
Proceeds on sale of - - - 895
property, plant and
equipment
Net cash flow from 52% ( 14 903) ( 31 062) ( 76 338)
investing activities
Cash flow from
financing activities
Proceeds from / (48%) 21 214 40 732 80 266
(repayment of) long
term liabilities
(Repayment of) / 63% ( 581) ( 1 583) ( 1 334)
proceeds from other
liabilities
(Repayment of) / >100% 8 722 ( 11 536) ( 12 008)
proceeds from related
party loans
Decrease in policy (25%) 905 1 204 3 408
holder under
insurance contracts
Net cash flow from 5% 30 260 28 817 70 332
financing activities
Net change in cash >100% 6 783 ( 5 601) ( 27 925)
and cash equivalents
Cash and cash (40%) 41 496 69 421 69 421
equivalents at
beginning of period
Cash and cash (24%) 48 279 63 820 41 496
equivalents at end of
period
-
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
% UNAUDITED UNAUDITED AUDITED
6 months 6 months year
ended 30 ended 30 ended 31
September September March
NAD `000 Change 2011 2010 2011
Balance at beginning 41% 672 540 478 645 478 645
the period
Vendor shares settled - - - 14 976
Dividends for the (100%) (13 556) - (10 168)
period
Total comprehensive (12%) 51 748 59 095 189 087
income for the period
Balance at end of the 32% 710 732 537 740 672 540
period
Comprising of:
Share capital - 162 645 162 645 162 645
Deemed treasury - (18 731) (18 731) (18 731)
shares
Vendor shares - 14 976 - 14 976
Contingency reserve (6%) 2 361 2 522 2 361
Revaluation reserve (15%) 15 244 17 983 15 414
Retained earnings (43%) 534 237 373 321 495 875
32% 710 732 537 740 672 540
By order of the board
M Gebhardt
Company Secretary
25 November 2011
JSE Sponsor
QuestCo Sponsors (Pty) Ltd
NSX Sponsor
IJG Securities (Pty) Ltd
Date: 25/11/2011 10:06:17 Supplied by www.sharenet.co.za
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