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Interim result 6 months to 30 September 2012 and dividend declaration
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 2012 and Interim Dividend declaration
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 first six months of Trustco’s financial year demonstrate the
Group’s commitment in targeting core strategic business lines and
reducing dependencies on low-margin activities.
Trustco achieved Headline earnings of NAD 50 million for the six
months ended 30 September 2012, compared to NAD 47 million against
the comparative six months in 2011, showing an increase of 6%.
Group revenue for the first six months, in relation to the
comparative period, has decreased by 10% from NAD 331 million to NAD
297 million. This decrease is predominantly as a result of the
cessation in February 2012 of the contract relating to the provision
of Trustco mobile services in Zimbabwe.
Profit after tax experienced a marginal decrease of 3%, from NAD 52
million to NAD 50 million. This decline was driven by the decrease
in revenues as noted above, although partially offset by the
benefits gained from a favourable effective tax rate.
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
Segment revenues, excluding Zimbabwe, increased by 2% from NAD 191
million to NAD 194 million when compared to the comparative period.
Namibia
In Namibia, the sub-segment showed growth in line with expectations
with revenue growing from NAD 60 million to NAD 67 million, an
increase of 11%. This translated to an increase in net profit after
tax of 16%. The sub-segment continues to perform well and forms a
critical part of the Group’s core strategic focus.
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 3% from NAD 131
million to NAD 127 million. Net profit after tax increased to NAD 13
million as a result of the restructuring of the operations and
various cost saving initiatives in the sub-segment.
Micro Finance and Education
Educational micro loans grew by 16% on the back of a renewed effort
to provide financing for educational purposes to the market in the
Southern African region. Appetite and demand for these loans in the
region remains high, with the Group remaining firmly committed to
growing this loan book in the future.
Namibia
Revenue has grown to NAD 61 million from NAD 57 million, a
comparative increase of 8%. The micro finance loan book grew from
NAD 231 million to NAD 268 million compared to 30 September 2011,
demonstrating growth of 16%.
Net profit after tax increased by 10% from NAD 23 million to NAD 25
million, mainly due to increase in Net Interest margin and the
release of impairment provisions. Provision for bad debts as a
percentage of total loans was 5% compared to 7% as at 30 September
2011.
Property & Mortgage Loans
The demand remains high for serviced land in Namibia, in particular
in the Windhoek Basin. Net profit after tax in this segment
decreased by 26%. NAD 30 million of revenue was generated from the
sale of erven under the Phase 1 of Trustco’s "Land Bank" development
in Namibia.
PROSPECTS
Micro Insurance and Technology
Trustco and Shoprite Namibia entered into an agreement to provide
free life cover insurance to regular Shoprite customers in Namibia.
The Group is confident that this unique method of making life cover
free and accessible to thousands of Namibians who shop at Shoprite
and have no access to the traditional distribution channels for
insurance will provide generously to revenue in the future. The
product was launched in Namibia in October 2012.
The Namibian micro insurance model is to be rolled out to South
African clients in November 2012. This highly anticipated release
should boost revenues in the South Africa operations and demonstrate
an increased margin over the current product offerings.
The African continent’s demand for micro insurance products has not
been exhausted. Demand remains high and the current low penetration
rates should provide further future growth in this segment.
Property
Phase 1 of the Group’s "Land Bank" development, which in total
comprises 3.7 million square meters of industrial erven, has been
substantially completed.
Five erven out of 49 remain unsold from the Group’s Phase 1
operation. Transfers of properties already sold are expected to be
concluded in November 2012; this inflow of funds will result in a
decrease in Group’s debtors’ balances and improve the overall
cashflow position of the Group.
DIVIDENDS
The Directors of Trustco (“the Board”) are pleased to announce
that the Board has passed a resolution on 2 November 2012 to
pay an interim dividend of 1.90 cents per share for the 6
months ended 30 September 2012.
The following information is provided to shareholders in
respect of the new applicable Dividend Tax:
- The dividend has been declared from income reserves;
- The company has no secondary tax on companies’ credits
available;
- The dividend withholding tax rate for South Africa is 15%
resulting in a net dividend of 1.615 cents per share; and
- Trustco Group Holdings Limited’s Namibian Income Tax
Reference Number is 3356338011.
The salient dates for the payment of this dividend are set out
below:
Last day to trade cum-dividend Friday, 23 November 2012.
Trading ex dividend commences Monday, 26 November 2012.
Record Date Friday, 30 November 2012.
Payment Date Friday, 14 December 2012.
Share certificates may not be dematerialised or rematerialised
between Monday, 26 November 2012 and Friday, 30 November 2012
both days included. The dividend is declared in Namibia
Dollars and payable in the currencies of the Republics of
South Africa and Namibia which is pegged 1:1. Shareholders are
further advised that Namibian non-resident shareholders’ tax
of 15% on the declared dividend will be applicable to all
shareholders with addresses outside Namibia.
SUBSEQUENT EVENTS
The Group has, subsequent to negotiations, reached an in
principle agreement with the International Finance Corporation
(“IFC”)which if successfully concluded may have a material
effect on the price of Trustco’s securities.
i) The IFC will subscribe, pursuant to a specific new
share issue for cash, to between 15 and 20 % of
Trustco’s outstanding issued share capital, about ZAR
210 million, approximately USD 25 million; and
ii) The IFC will provide a partial credit guarantee of up
to ZAR 210 million, approximately USD 25 million, in
connection with Trustco’s issuance of ZAR denominated
bonds in the aggregate principal amount of up to ZAR350
million, approximately USD 41.7 million. This is the
envisaged first draw down from Trustco’s listed
domestic medium term note program totalling ZAR 1
billion.
The transactions are subject to a due diligence process to be
undertaken by the IFC, which commenced on 1 October 2012. The
transactions are further subject to both parties’ final
internal and Board approvals, regulatory approvals including
but not limited to the JSE Limited, the NSX and shareholders
approvals where required. The Group expects that the
transactions will be completed during Q1, 2013. Shareholders
are advised to refer to the SENS announcement released on 1
October 2012 for further information.
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. The
accounting policies applied are consistent with those of the
previous annual financial statements.
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 2012, NAD 1 was equal to ZAR 1.
These interim results are unaudited and have not been reviewed by
the auditors.
The preparation of the interim results has been supervised by the
Financial Director, Floors Abrahams (B.Com (UNAM)).
CHANGES IN DIRECTORATE AND COMPANY SECRETARY
Shareholders are advised that with effect from the 3rd December
2012, Mrs Margot Gebhardt will no longer occupy the post of Company
Secretary, Mr Dominic Steyn has been appointed to act as Company
Secretary effective on the same day.
Effective 5th July 2012, Mr Renier Jacobus Taljaard was appointed to
the Board of Directors of the Group as a Non-executive Director.
Effective 30th July 2012, Mr Ian Theodore Barnard resigned from his
position as director of Trustco Group International (Pty) Ltd RSA, a
major subsidiary of Trustco Group Holdings Ltd.
Effective 28th June 2012, Mr Ernest Cockcroft resigned from his
position as director of Trustco Intermediary Solutions (Pty) Ltd, a
significant subsidiary of the Group.
ACKNOWLEDGMENTS
The board of directors of Trustco (the "Board") acknowledge with
gratitude the efforts and commitment from stakeholders and staff.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR THE
SIX MONTHS ENDED 30 SEPTEMBER 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited 6 Unaudited 6
Audited
months months
year ended
ended 30 ended 30
31 March
% September September
N$ ‘000 Change 2012 2011 2012
Insurance premium 11% 66 786 60 434 126 302
revenue
Revenue (15%) 230 144 270 973 587 002
Total revenue (10%) 296 930 331 407 713 304
Cost of sales 13% ( 116 614) ( 133 954) ( 320 368)
Gross profit (9%) 180 316 197 453 392 936
Investment income (29%) 2 096 2 951 24 509
Fair value gains and - - - 97 101
losses
Other income (89%) 489 4 497 4 823
Insurance benefits and (7%) ( 10 929) ( 10 247) ( 18 872)
claims
Transfer to (81%) ( 1 638) ( 905) ( 2 377)
policyholder
liabilities
Change in unearned <(100%) ( 629) ( 149) ( 492)
premium provision
Administrative expenses 12% ( 105 343) ( 119 101) ( 202 743)
Finance costs 9% ( 13 053) ( 14 299) ( 30 092)
Profit before taxation (15%) 51 309 60 200 264 793
Taxation 89% ( 898) ( 8 282) ( 24 969)
Profit for the period (3%) 50 411 51 918 239 824
Other comprehensive >100% 467 ( 170) 1 392
income, net of tax
Revaluation of >100% 467 ( 170) 1 392
property, plant and
equipment
Total comprehensive (2%) 50 878 51 748 241 216
income for the period
Earnings per shares:
Basic earnings per (6%) 7.17 7.67 35.08
share (cents)
Diluted earnings per (6%) 7.12 7.61 34.84
share (cents)
Dividends per share 13% 2.25 2.00 20.27
(cents)
EARNINGS & HEADLINE EARNINGS PER SHARE
Unaudited 6 Unaudited 6
Audited
months months
year ended
ended 30 ended 30
31 March
% September September
N$ ‘000 Change 2012 2011 2012
Profit attributable to (3%) 50 411 51 918 239 824
ordinary shareholders
Adjustments: 95% ( 209) ( 4 447) ( 101 284)
(Profit)/Loss on (100%) ( 316) - ( 156)
disposal of property,
plant & equipment
Profit on disposal of 100% - (4,447) (4,447)
investment property
Fair value adjustments - - - ( 97 196)
on investment
properties
Impairment of - - - 700
intangible assets
Tax effect 100% 107 - ( 185)
-
Headline earnings 6% 50 202 47 471 138 540
Total number of 4% 737 142 707 142 707 142
ordinary shares ('000)
in issue
Weighted number of 4% 702 756 677 240 683 622
ordinary shares for
basic earnings per
share
Contingently issuable - 4 789 4 789 4 789
shares as a result of
business acquisition
Weighted number of 4% 707 545 682 029 688 411
ordinary shares for
diluted earnings per
share
For the period
Basic earnings per (6%) 7.17 7.67 35.08
share (cents)
Diluted earnings per (6%) 7.12 7.61 34.84
share (cents)
Headline earnings per 2% 7.14 7.01 20.27
share (cents)
Diluted headline 2% 7.10 6.96 20.12
earnings per share
(cents)
SEGMENTAL ANALYSIS
Unaudited
Unaudited 6 Audited
6 months
months ended year ended
ended 30
30 September 31 March
% September
N$ ‘000 Change
2012 2011 2012
Total revenue (10%) 296,930 331,407 713,304
Micro insurance and
technology solutions
Namibia 11% 66,786 60,434 126,302
South Africa (3%) 127,466 130,749 309,229
Zimbabwe (100%) - 36,453 29,076
Micro finance and
education
Namibia 8% 61,455 56,942 114,566
Property
Namibia (22%) 31,137 39,864 118,217
South Africa >100% 299 119 425
Head office and
strategic business
Namibia 43% 9,787 6,846 15,489
Net profit after tax (3%) 50,411 51,918 239,824
Micro insurance and
technology solutions
Namibia 16% 37,895 32,691 63,391
South Africa >100% 13,288 1,724 11,482
Zimbabwe <(100%) (3,134) 10,816 22,819
Micro finance and
education
Namibia 10% 25,089 22,808 29,536
Property
Namibia (20%) 16,033 20,101 130,400
South Africa <(100%) (1,677) (676) (3,054)
Head office and
strategic business
Namibia (4%) (37,083) (35,546) (14,750)
Total assets 16% 1,552,148 1,333,403 1,520,089
Micro insurance and
technology solutions
Namibia 31% 88,016 67,389 89,279
South Africa (15%) 203,261 238,101 252,474
Zimbabwe 38% 32,916 23,825 32,449
Micro finance and
education
Namibia 21% 297,217 246,358 271,964
Property
Namibia >100% 645,243 250,180 637,232
South Africa (6%) 12,441 13,275 11,233
Head office and
strategic business
Namibia (45%) 273,054 494,275 225,458
Total liabilities 1% 566,657 562,430 606,784
Micro insurance and
technology solutions
Namibia 9% 43,643 40,113 38,784
South Africa (63%) 50,350 134,774 118,020
Zimbabwe - - - -
Micro finance and
education
Namibia 1% 142,056 140,736 133,971
Property
Namibia 74% 99,745 57,251 64,330
South Africa (3%) 6,803 6,978 6,749
Head office and
strategic business
Namibia 23% 224,060 182,578 244,930
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Unaudited 6 Audited
6 months
months ended year ended
ended 30
30 September 31 March
% September
N$ ‘000 Change
2012 2011 2012
ASSETS
Non-current assets
Property, plant and 26% 163 419 129 875 160 502
equipment
Investment properties 46% 320 793 219 935 317 990
Intangible assets 10% 270 625 246 390 261 478
Deferred income tax 21% 81 080 67 129 73 136
assets
Educational loans 13% 156 261 138 492 150 115
advanced
Other loans advanced 5% 25 584 24 405 24 566
Finance lease (100%) - 457 -
receivable
Total non-current 23% 1 017 762 826 683 987 787
assets
-
Current assets
Assets at fair value (100%) - 28 240 -
through profit and loss
Short-term portion of 21% 111 301 92 117 99 804
educational loans
advanced
Short-term portion of (3%) 804 833 804
other loans advanced
Short-term portion of 9% 457 419 457
finance lease
receivables
Inventories 27% 16 440 12 971 12 623
Trade and other 28% 357 198 279 407 317 425
receivables
Current income tax 10% 996 905 189
assets
Cash and cash (49%) 47 190 91 828 101 000
equivalents
Total current assets 5% 534 386 506 720 532 302
Total assets 16% 1 552 148 1 333 403 1 520 089
-
EQUITY AND LIABILITIES
Capital and reserves
Share capital 4% 169 545 162 645 162 645
Share premium 100% 24 600 - -
Deemed treasury shares 100% - ( 18 731) ( 3 840)
Put options (100%) ( 52 832) - ( 52 832)
Contingency reserves 26% 2 970 2 361 2 970
Vendor shares - 14 976 14 976 14 976
Revaluation reserves 13% 17 273 15 244 16 806
Distributable reserves 36% 808 959 594 478 772 580
Attributable to equity 28% 985 491 770 973 913 305
holders of the parent
-
Non-current liabilities
Long-term liabilities 49% 228 771 153 456 211 931
Other liabilities >100% 2 042 202 257
Deferred income tax 17% 35 114 30 092 31 148
liabilities
Policy holders' 34% 12 322 9 212 10 684
liability under
insurance contracts
Total non-current 44% 278 249 192 962 254 020
liabilities
-
Current liabilities
Current portion of (43%) 42 161 74 481 34 117
long-term liabilities
Current portion of (2%) 2 622 2 678 2 622
other liabilities
Trade and other (10%) 178 082 198 103 256 323
payables
Technical provisions 2% 19 600 19 161 17 917
Amounts due to related (100%) 33 17 548 1 413
parties
Current income tax >100% 34 156 13 948 28 603
liabilities
Bank overdraft (73%) 11 754 43 549 11 769
Total current (22%) 288 408 369 468 352 764
liabilities
Total equity and 16% 1 552 148 1 333 403 1 520 089
liabilities
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited 6
Unaudited 6 Audited
months
months ended year ended
ended 30
30 September 31 March
% September
N$ ‘000 Change
2012 2011 2012
Cash flow from
operating activities
Cash generated by (3%) 68 357 70 269 178 114
operations before
working capital changes
Changes in working <(100%) ( 121 831) ( 30 915) ( 78 977)
capital
Interest received (29%) 2 096 2 951 24 509
Finance costs 9% ( 13 053) ( 14 299) ( 30 092)
Net educational loans 23% ( 17 643) ( 22 870) ( 42 180)
advanced
Taxation paid 93% ( 11) ( 154) ( 12 848)
Net cash flow from <(100%) ( 82 085) 4 982 38 526
operating activities
-
Cash flow from -
investing activities
Additions to property, (24%) ( 8 620) ( 6 953) ( 12 095)
plant and equipment
Additions to investment <(100%) ( 2 586) ( 59) ( 1 604)
properties
Additions to intangible (64%) ( 11 051) ( 6 750) ( 24 081)
assets
Proceeds on sale of - - - 32 300
assets at fair value
through profit and loss
Proceeds on sale of (100%) - 1 400 17 400
investment property
Additions to assets at 100% - ( 2 541) ( 4 223)
fair value through
profit and loss
Proceeds on sale of 100% 2 312 - 1 160
property, plant and
equipment
Net cash flow from (22%) ( 19 945) ( 14 903) ( 8 857)
investing activities
Cash flow from
financing activities
Proceeds of share issue 100% 31 500 - -
Proceeds on the sale of 100% 5 719 - 17 967
deemed treasury shares
Proceeds from long term 17% 24 884 21 214 13 830
liabilities
Repayment of other >100% 1 785 ( 581) ( 582)
liabilities
Repayment of related <(100%) ( 1 380) 8 722 ( 7 413)
party loans
Dividends paid (17%) ( 15 911) ( 13 556) ( 25 827)
Decrease in policy 81% 1 638 905 2 377
holder under insurance
contracts
Net cash flow from >100% 48 235 16 704 352
financing activities
Net change in cash and <(100%) ( 53 795) 6 783 47 735
cash equivalents
Cash and cash >100% 89 231 41 496 41 496
equivalents at
beginning of period
Cash and cash 38% 35 436 48 279 89 231
equivalents at end of
period
-
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited 6
Unaudited 6 Audited
months
months ended year ended
ended 30
30 September 31 March
% September
N$ ‘000 Change
2012 2011 2012
Balance at beginning 24.64% 913,305 732,781 732,781
the period
Issue of shares 100.00% 31,500 - -
Sale of deemed treasury 100.00% 5,719 - 17,967
shares
Put option issued 0.00% - - -52,832
Dividends for the 17.37% -15,911 -13,556 -25,827
period
Total comprehensive (1.68%) 50,878 51,748 241,216
income for the period
Balance at end of the 27.82% 985,491 770,973 913,305
period
Comprising of:
Share capital 4.24% 169,545 162,645 162,645
Share premium 100.00% 24,600 - -
Deemed treasury shares 100.00% - -18,731 -3,840
Vendor shares 0.00% 14,976 14,976 14,976
Put option issued (100.00%) -52,832 - -52,832
Contingency reserve 25.79% 2,970 2,361 2,970
Revaluation reserve 13.31% 17,273 15,244 16,806
Retained earnings 36.08% 808,959 594,478 772,580
27.82% 985,491 770,973 913,305
By order of the board
M Gebhardt
Company Secretary
8 November 2012
JSE Sponsor
Sasfin Capital (a division of Sasfin Bank Ltd)
NSX Sponsor
IJG Securities (Pty) Ltd
Date: 08/11/2012 01:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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