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Consolidated Audited Financial Results For The Year Ended 31 January 2013 - Debt Instruments LHL01, LHL02 and LHL03
LETSHEGO HOLDINGS LIMITED
Incorporated in the Republic of Botswana Co. 98/442
PRELIMINARY REPORT
The Board of Directors of Letshego Holdings Limited are pleased to present an extract from the consolidated audited financial results for the year ended 31 January 2013
FINANCIAL HIGHLIGHTS
* Profit after tax up 14%
* Advances up 10%
* Profit before tax up 18%
* Earnings per share up 12%
* Impairment of advances down 7%
* Dividend of 4.0 thebe per share
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 January 31 January
2013 2012
(Audited) (Audited) Change
P'000 P'000 %
ASSETS
Cash and cash equivalents 807 254 73 612
Short term investments 12 143 24 187
Advances to customers 3 336 204 3 034 639 10
Other receivables 26 206 18 730
Long term receivables 11 468 11 120
Property, plant and equipment 14 559 9 513
Intangible assets 12 457 3 291
Goodwill 49 948 27 824
Deferred taxation 8 939 9 809
Total assets 4 279 178 3 212 725 33
LIABILITIES AND EQUITY
Liabilities
Trade and other payables 78 828 70 732
Cash collateral 34 185 -
Income tax 28 327 14 275
Borrowings 1 277 395 802 864 59
Total liabilities 1 418 735 887 871
Shareholders' equity
Stated capital 689 243 669 876
Foreign currency translation reserve (45 982) (32 521)
Share based payment reserve 19 173 15 654
Retained earnings 2 112 485 1 617 969
Total equity attributable to equity holders of the parent
company 2 774 919 2 270 978 22
Minority interest 85 524 53 876
Total shareholders' equity 2 860 443 2 324 854
Total liabilities and equity 4 279 178 3 212 725 33
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 January 31 January
2013 2012
(Audited) (Audited) Change
P'000 P'000 %
Interest income 1 074 822 900 514 19
Interest expense (108 807) (65 395) 66
Net interest income 966 015 835 119 16
Premium income 86 992 64 243
Insurance fees (8 008) (5 708)
Net interest and insurance income 1 044 999 893 654
Fee and commission income 127 646 87 198
Other operating income 11 479 10 107
Operating income 1 184 124 990 959 19
Employee benefits (123 086) (100 297) 23
Other operating expenses (157 395) (113 367) 39
Insurance claim expense (25 853) (21 268)
Claim mitigation reserve movement (1 306) (686)
Net income before impairment and taxation 876 484 755 341 16
Impairment of advances (35 097) (44 109) (20)
Profit before taxation 841 387 711 232 18
Income taxation (181 750) (133 433)
Profit for the period 659 637 577 799 14
Attributable to:
Equity holders of the parent company 628 084 555 944
Minority interest 31 553 21 855
Profit for the period 659 637 577 799
Other comprehensive income, net of tax
Foreign currency translation differences arising from foreign operations (15 833) (27 160)
Total comprehensive income for the period 643 804 550 639
Attributable to:
Equity holders of the parent company 614 623 533 197
Minority interest 29 181 17 442
Total comprehensive income for the period 643 804 550 639 17
Weighted average number of shares in issue during the period (millions) 1 995 1 953
Dilution effect - number of shares (millions) 195 189
Number of shares in issue at the end of the period (millions) 1 999 1 985
Basic earnings per share (thebe) 33.1 29.6 12
Diluted earnings per share (thebe) 30.1 27.0
NOTE: The diluted EPS has been calculated based on shares that may vest in terms of
the Group's long term staff incentive scheme and a convertible loan in issue.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
31 January 31 January
2013 2012
(Audited) (Audited)
P'000 P'000
Operating activities
Profit before taxation 841 387 711 232
Add : Amortisation and depreciation 5 417 3 772
: Impairment of advances 1 670 (8 771)
: Loss on disposal of non current assets including
subsidiaries - 2
Movement in working capital and other changes (255 336) (782 565)
Cash from operations 593 138 (76 330)
Taxation paid (166 828) (178 775)
Net cash from/(used in) operating activities 426 310 (255 105)
Investing activities
Net cash used in investing activities (33 631) (20 821)
Financing activities
Dividends paid (133 568) -
Net receipts on borrowings 474 531 297 690
Net cash from financing activities 340 963 297 690
Net movement in cash and cash equivalents 733 642 21 764
Cash and cash equivalents at the beginning of the period 73 612 51 848
Cash and cash equivalent at the end of the period 807 254 73 612
RATIOS
31 January 31 January
2013 2012
(Audited) (Audited)
P'000 P'000
Annualised Return on average assets (%) 17.6 20.5
Annualised Return on average equity (%) 25.4 28.7
Cost to income ratio (%) 26.0 23.8
Debt to equity (%) 46.0 35.4
Foreign
Shared based exchange
payments translation Minority
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Stated capital Retained earnings reserve reserve interest Total
P'000 P'000 P'000 P'000 P'000 P'000
Balance at 1 February 2012
669 876 1 617 969 15 654 (32 521) 53 876 2 324 854
Total comprehensive income for the period
Profit for the period - 628 084 - - 31 553 659 637
Other comprehensive income, net of income tax
Foreign currency translation reserve - - - (13 461) (2 372) (15 833)
Transactions with owners, recorded directly in equity
New shares issued from long term incentive scheme 19 367 - (19 367) - - -
Allocation of subsidiary net assets to NCI at time of acquisition - - - - 2 467 2 467
Allocation to share based payment reserve - - 22 886 - - 22 886
Dividend to equity holders - (133 568) - - - (133 568)
Balance at 31 January 2013 689 243 2 112 485 19 173 (45 982) 85 524 2 860 443
Balance at 1 February 2011 412 814 1 334 016 12 545 (9 774) 38 155 1 787 756
Total comprehensive income for the period
Profit for the period - 555 944 - - 21 855 577 799
Other comprehensive income, net of income tax
Foreign currency translation reserve - - - (22 747) (4 413) (27 160)
Transactions with owners, recorded directly in equity
Sale of minority interest in subsidiaries - 1 656 - - 1 619 3 275
New shares issued from long term incentive scheme 19 744 - (19 744) - -
Allocation to share based payment reserve - - 22 853 - - 22 853
Dividend paid by subsidiary - - - - (3 340) (3 340)
Dividend to equity holders 237 318 (273 647) - - - (36 329)
Balance at 31 January 2012 669 876 1 617 969 15 654 (32 521) 53 876 2 324 854
SEGMENTAL REPORTING
Regional geographical segments
Southern Africa* East Africa** Elimination Group
31 Jan 31 Jan 31 Jan 31 Jan 31 Jan 31 Jan 31 Jan 31 Jan
2013 2012 2013 2012 2013 2012 2013 2012
P'000 P'000 P'000 P'000 P'000 P'000 P'000 P'000
Operating income 926 085 855 351 258 039 135 608 - - 1 184 124 990 959
Segment profit before tax (before management and
guarantee fees) 692 812 631 480 148 575 79 751 - - 841 387 711 231
Taxation - consolidated (181 750) (133 433)
Profit for the period - consolidated 659 637 577 798
Gross advances to customers 2 713 097 2 680 341 640 203 369 724 - - 3 353 300 3 050 065
Impairment provisions (7 937) (11 062) (9 159) (4 365) - - (17 096) (15 427)
Net advances 2 705 160 2 669 279 631 044 365 359 - - 3 336 204 3 034 638
Total segment assets 5 255 430 4 682 469 713 181 383 415 (1 689 433) (1 853 159) 4 279 178 3 212 725
Borrowings 1 092 101 680 222 185 293 122 642 - - 1 277 395 802 864
Total segment liabilities 2 575 759 2 425 600 532 409 315 430 (1 689 433) (1 853 159) 1 418 735 887 871
Ratio analysis on regional geographic segments
Southern Africa East Africa Group
2013 2012 2013 2012 2013 2012
Impairment charge to average advances (annualised) 0.9% 1.4% 3.4% 1.7% 1.3% 1.7%
Advances to total assets 51.5% 57.0% 88.5% 95.3% 78.0% 94.5%
% of book on deduction code model 95.3% 97.6% 78.1% 100.0% 97.8% 99.0%
Customers employed by government (%) 96.6% 96.5% 78.1% 100.0% 94.4% 96.0%
Customers employed by parastatal or private sector (%) 3.4% 3.5% 21.9% 0.0% 5.6% 4.0%
Debt to equity (%) (Includes intercompany borrowings) 42.4% 28.0% 34.8% 38.9% 46.0% 35.4%
Cost to income ratio (%) 24% 22% 36% 32% 26.0% 24.0%
* Southern Africa includes: Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zambia
** East Africa includes: Kenya, Rwanda, South Sudan, Tanzania and Uganda
COMMENTARY
Highlights
The Board of Directors is pleased to present an extract of the audited
consolidated financial results of the Letshego Holdings Limited Group ("the Group")
for the year ended 31 January 2013. Highlights for the year include:
- Advances to customers increased by 10% to P3.3 billion (2012: P3.0
billion)
- Profits before tax increased by 18% to P841.3 million (2012: P711.2
million)
- Impairment charges of 1.3% on the average advances book (2012: 1.6%)
- 40% of profits before tax generated outside of Botswana (2012: 35%)
- Micro Africa Limited ("MAL") acquisition completed and contributed P6.7
million to profit before tax for the seven months since acquisition
- ZAR700 million raised from the maiden issue of Letshego's JSE listed
medium term note programme in December 2012
- Dividend declared during the year equates to 25% of profit after tax.
Financial performance
During a challenging year, a satisfactory performance was still achieved in terms
of growth in the advances book. Despite the planned decline in Botswana assets
there was compensating growth from Mozambique and Tanzania and to a lesser
extent Namibia and Uganda. MAL contributed P146 million in net
advances to customers which also impacted on the overall increase of 10% on
2012 advances book.
The quality of the advances book was within target levels with an impairment
charge of 1.3% for the year as compared to 1.6% in the prior year.
The Group remains well capitalised and has cash resources of over P800 million
which are available to further growing the business.
Profitability was creditable with an 18% increase in profit before tax and a 12%
increase in earnings per share. Margins were consistent despite the competitive
environment and our average cost of borrowings also remaining unchanged
relative to prior years.
Operating and staff costs increased significantly (by 31% to P280 million) mainly
due to the higher cost structure and personnel levels brought about by the MAL
acquisition, new regulatory fees in Botswana for a full year, a full year
operating a larger branch network in Mozambique and costs associated with
Group-wide ICT projects and transformation activities. If these costs were
removed from the operating and staff costs, the attributable year on year
increase would have been 11%.
The increase in profit after tax is lower than the increase in profit before tax due
to the tax credit impact of the once off scrip dividend recorded in the prior year.
Regulatory environment
Central Registries continue to operate effectively in Botswana, Namibia,
Swaziland and Uganda. The Group strongly supports any efforts by regulators
and industry players to regularise lending practices, protect consumers and
ensure a sustainable industry. We continue to promote the establishment of
independent Central Registries in all countries where we have a presence.
Certain Group operations are regulated by Central Banks, either as a non-
deposit taking financial institution or a deposit taking one. This is in line with the
strategic objectives of the Group to transform into a broader financial services
entity and license applications have been submitted in certain territories in
this regard.
Funding
The Group has sufficient funding in place for existing operations for the year
ahead and continues to explore the most effective methods of funding
operations and growth.
Post year end developments
The remaining shares (37.48% of voting rights and ordinary shares) in Micro
Africa Limited were acquired during March 2013 for a consideration of USD1.9
million making MAL a 100% subsidiary of Letshego.
Rebranding of MAL to Letshego has commenced in Kenya with a change of the name to
Letshego Kenya.
Lending in Zambia was discontinued during February 2013 and efforts will be
directed at administering and collecting the remaining advances book.
Convertible Loan Note
In terms of the Convertible Loan Note Subscription Agreement entered into with
ADP I Holding 2 and which was approved by shareholders on 12 April 2010, notice
has been received from ADP I Holding 2 that they will convert the loan and
accrued interest of P252,969,373 into ordinary shares in the company using the
shareholder approved conversion price of P1.60 per share. The conversion is
expected to take place on or before 26 April 2013 and will result in 158,105,858
new ordinary shares being issued in terms of the agreement and bringing the total
number of ordinary shares in issue to 2,156,744,472 with a value of P942,213,373.
Prospects
- The Group continues to actively explore new regions in Africa, new
business streams, both through acquisitive and "green fields" methods
- Prospects in existing operations remain positive and we continue to take
a cautious approach to the market in Botswana and Swaziland as
previously communicated to Shareholders
- Applications for banking and/or deposit-taking licences are underway in
certain territories within the Group
Given prevailing economic conditions, the Directors expect continued growth in
the advances book during the financial year to 31 January 2014 and continued
profitability.
Dividends
Notice is hereby given that the board has declared a final dividend of 4.0 thebe
per share for the year ending 31 January 2013. This brings the total dividends
declared during the current financial period to 8.2 thebe (P170 million).
In terms of the Botswana Income Tax Act (Cap:50:01) as amended, withholding
tax at the rate of 7.5% or any other currently enacted tax rate will be deducted
from the final gross dividend for the year ended 31 January 2013.
Important dates pertaining to this dividend are:
Declaration date 17 April 2013
Last date to register 3 May 2013
Dividend payment date 10 May 2013
For and on behalf of the Board of Directors.
J A Burbidge J A Claassen
Chairman Managing Director
GABORONE, 18 April 2013
NON EXCUTIVE DIRECTORS: J A Burbidge (Chairman) (GB), M Dawes (RSA), G Hassam (Malawi), J de Kock (RSA), I M Mohammed (USA), S Price (GB), L E Serema (Botswana), R Thornton (USA)
R N Alam (alternate to I M Mohammed) (USA), Gerrit van Heerde (alternate to M Dawes) (RSA)
EXCUTIVE DIRECTORS: J A Claassen (Managing Director) (RSA), D Ndebele (Director: Risk and Compliance) (Botswana)
TRANSFER SECRETARIES: PricewaterhouseCoopers (Pty) Limited, Plot 50371, Fairground Office Park, Gaborone, Botswana
REGISTERED OFFICE: Plot 50371, Fairground Office Park, Gaborone, Botswana
www.letshego.com
Debt sponsor in South Africa
Rencap Securities (Pty) Ltd
Sponsoring broker in Botswana
Stockbrokers Botswana Limited
Date: 18/04/2013 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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