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TRUSTCO GROUP HOLDINGS LIMITED - Interim result 6 months to 30 September 2012 and dividend declaration

Release Date: 08/11/2012 13:08
Code(s): TTO     PDF:  
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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'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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