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unaudited interims for period ended 30 September 2013 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 2013 and Interim Dividend
declaration
NATURE OF THE BUSINESS
The Group operates subsidiaries in three main sectors across
Africa:
I) Micro insurance;
II) Microfinance; and
III) Property.
The Group’s core operational revenues are derived from the
above businesses in Namibia but its insurance products and
innovative delivery methods enable Trustco to offer micro-
financial services across the African continent in a variety
of ways.
FINANCIAL SUMMARY
The first six months of Trustco’s 2014 financial year show a
favourable financial improvement and cement the Group’s
resolve to achieve both a meaningful contribution to bottom
line and to further social development on the continent
through innovative financial offerings.
Trustco grew net profit after tax by 29% to record NAD 65
million for the six months ended 30 September 2013, compared
to NAD 50 million for the six months ended 30 September 2013.
Headline earnings of NAD 23 million for the six months ended
30 September 2013, compared to NAD 50 million against the
comparative six months, represents a decrease of 54%. This
decrease in earnings is a function of the cyclical behaviour
of the property segment wherein property sales are captured in
headline earnings, but revaluations of the remaining property,
albeit profitable from an accounting perspective, are excluded
from the headline earnings metric.
Group revenue for the first six months, in relation to the
comparative period, has increased by 6% from NAD 297 million
to NAD 315 million. This increase is supported by excellent
growth in the micro insurance sectors’ insurance revenue,
although partially offset by a decrease in other revenue due
to the scaling down of the legacy business in South Africa.
REVIEW OF OPERATIONS
Micro insurance (Namibia)
The micro insurance segment in Namibia showed stellar growth
in both revenues and profit for the period. In line with
management expectations revenue grew from NAD 70 million to
NAD 123 million, an increase of 75%. This also translated to
an increase in net profit after tax of 80%.
Since the previous interims were announced, Trustco has
launched a mobile product offering with a retail chain in
Namibia, a legal protection product in South Africa (Yambu
Legal) and a new term life product in Namibia (Yambu Life).
These new offerings have noticeably improved the profitability
of the segment and opened new opportunities for ordinary
citizens to benefit from insurance cover.
Microfinance
Gross educational loans grew by 80%, demonstrating that the
appetite and demand for these loans in the region remains
high. The Group, remaining firmly committed to growing this
loan book in the future, and to that end was able to raise NAD
145 million from external funders during the last six months
in order to continue the positive trend.
Revenue has grown to NAD 156 million from NAD 64 million, a
comparative increase of 142%. Gross educational loans of NAD
507 million (30 September 2012: NAD 282 million) is offset by
a provision for bad and doubtful debts of NAD 21 million which
represents an impairment ratio of 4.2% (30 September 2012:
5.3%).
Net profit after tax increased by 57% from NAD 14 million to
NAD 22 million, mainly due to increase in net interest margin
and the sales of educational courses and technology products
to students in Namibia.
Property
The demand remains high for serviced land in Namibia,
particularly in the Windhoek Basin. Net profit after tax in
this segment increased from NAD 8 million to NAD 47 million,
mainly due to the pre-tax fair value gains of NAD 45 million
on investment property. Phase 1 of Trustco’s "Land Bank"
development in Namibia was completed during the 2013 financial
year with Phase 2 of the development expected to begin selling
erven during the 2014 calendar year.
Rest of Africa
The South African insurance and rest of Africa insurance
operations were combined into a single reportable segment
during the first half of the 2014 financial year. Operations
in Zimbabwe have ceased; and the financial services back-
office insurance administration business previously operated
in South Africa was completely wound down during the current
period, resulting in a sizeable reduction in revenues.
Revenues declined 76% from NAD 129 million to NAD 31 million,
whilst losses due to the on-going effort by the Group to
establish a firm insurance presence in South Africa and in the
rest of Africa ended the period as a net loss after tax of NAD
49 million compared to a net profit after tax of NAD 3 million
for the six months ended 30 September 2012.
An impairment loss of NAD 3.8 million was recognised in the
South African insurance operations on the downward adjustment
of forecast licensing fees receivable from agents utilising
the software systems of the Group.
PROSPECTS
Rest of Africa
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. Trustco continues to pursue various
opportunities to roll out innovative products and delivery
mechanisms to these markets.
Effort to raise sufficient capital to continually grow the
educational loan book culminated with the approval and
subsequent issue of a Domestic Medium Term Note programme on
the JSE, in doing so, Trustco became the first private
Namibian entity to raise financing through a JSE approved debt
programme. A bond of ZAR 200 million was subscribed to by the
International Finance Corporation (‘IFC’) during the period
under review, with prospects that the remaining ZAR 800
million will be issued and the proceeds thereof deployed into
the business in the medium term.
EXPLANATORY NOTES TO THE INTERIM FINANCIAL RESULTS
Trustco Group Holdings Ltd issued 35 000 000 ordinary shares
on 29 August 2013 to the IFC. The shares were issued at par
value of NAD 0.23 cents per share and a premium of NAD 0.62
cents. The shares were listed on the JSE Limited (and the
Namibian Stock Exchange) in compliance with Schedule 6 of the
JSE listing requirements and were issued in terms of the
general authority of the directors of the company for cash.
The Group managing director, Quinton van Rooyen contracts his
services to the Group under a management agreement with Next
Investments (Pty) Ltd (‘Next’). During the 2013 financial year
due to a penalty clause on failure to achieve financial
targets, the management agreement required that some of the
amounts already paid to Mr van Rooyen were to be repaid to the
Group. This resulted in a receivable from Next of NAD 8.4
million. This amount is contractually required to be settled
during the current financial year.
On 20 September 2013, Dex Group's appeal was dismissed by the
Supreme Court of Appeal in South Africa. The process for
collection of amounts due is on-going. No penalty interest on
overdue funds has been raised. The total amount of shares to
be issued upon payment of the NAD 19.4 million (plus other
costs and interest), is 4.922 million shares. These amounts
are recorded separately in the statement of financial position
under other receivables and vendor shares, respectively.
Tranche 1, Series 1 of a private bond placement with the IFC
was transacted before the end of the financial period, with
settlement occurring in October 2013. An amount of NAD 100
million was therefore recognised as a financial liability in
the separate financial statements of Trustco Group Holdings
Ltd as the issuer of the bond.
Property, plant and equipment of NAD 13 million (2012: NAD 9
million) was acquired, and NAD 0.7 million (2012: NAD 2.5
million) was disposed of during the current period.
BASIS OF PREPARATION AND PRESENTATION
Statement of compliance
The unaudited interim results have been prepared in accordance
with framework concepts and measurement and recognition
criteria of International Financial Reporting Standards
(‘IFRS’) and comply with IAS 34 Interim Financial Reporting
and are in accordance with the SAICA Financial Reporting
Guides as issued by the Financial Reporting Standards Council,
the Namibian Companies Act, No 28 of 2004 (as amended) and the
Listings Requirements of the JSE Limited and the NSX.
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 2013, NAD 1 was equal to ZAR 1.
These interim results are unaudited and have not been reviewed
by the auditors. The accounting policies applied are in
accordance with IFRS and are consistent with those of the
previous annual financial statements.
The preparation of the interim results has been supervised by
the Financial Director, Ryan McDougall CA (SA), CA (Namibia).
DIVIDENDS
The Directors of Trustco (“the Board”) are pleased to announce
that the Board has passed a resolution on 31 October 2013 to
pay an interim dividend of 2 cents per share for the 6 months
ended 30 September 2013.
The following information is provided to shareholders in
respect of the new applicable Dividend Tax:
- The dividend has been declared from income reserves;
- Shareholders are advised that Namibian non-resident
shareholders’ tax of 15% on the declared dividend will be
applicable to all shareholders with addresses outside Namibia.
- The dividend withholding tax (“DWT”) rate for South Africa
is 15% resulting in a net dividend (whether they are exempt
from the DWT or not) of 1.7 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, 22 November 2013.
Trading exdividend commences Monday, 25 November 2013.
Record Date Friday, 29 November 2013.
Payment Date Monday, 9 December 2013.
Share certificates may not be dematerialised or rematerialised
between Monday, 25 November 2012 and Friday, 29 November 2013
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.
ACKNOWLEDGMENTS
The board of directors of Trustco (the "Board") acknowledge
with gratitude the efforts and commitment from stakeholders
and staff.
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 30 SEPTEMBER 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited
Audited
6 months 6 months
year ended
ended 30 ended 30
31 March
% September September
NAD ‘000 Change 2013 2012 2013
Insurance premium
revenue 75% 116 950 66 786 150 710
Revenue (14%) 197 611 230 144 444 529
Total revenue 6% 314 561 296 930 595 239
Cost of sales 35% ( 75 597) ( 116 614) ( 240 194)
Gross profit 33% 238 964 180 316 355 045
Investment income (85%) 321 2 096 3 849
Fair value gains and
losses 100% 45 330 - 26 304
Other income 674% 3 784 489 14 080
Insurance benefits
and claims (75%) ( 19 142) ( 10 929) ( 26 717)
Transfer to
policyholder
liabilities (363%) ( 7 579) ( 1 638) ( 5 903)
Change in unearned
premium provision (8%) ( 681) ( 629) ( 981)
Administrative
expenses (64%) ( 173 151) ( 105 343) ( 294 167)
Finance costs (49%) ( 19 439) ( 13 053) ( 27 814)
Profit before
taxation 33% 68 407 51 309 43 696
Taxation (275%) ( 3 364) ( 898) ( 4 312)
Profit for the period 29% 65 043 50 411 39 384
Other comprehensive
income, net of tax 593% 3 234 467 8 138
Items that will not
be subsequently
reclassified to
profit or loss
Revaluation of
property, plant and
equipment 428% 2 468 467 6 269
Items that may be
subsequently
reclassified to
profit or loss
Foreign currency
translation
adjustment 100% 766 - 1 869
Total comprehensive
income for the period 34% 68 277 50 878 47 522
Earnings per shares:
Basic earnings per
share (cents) 20% 8.59 7.17 5.41
Diluted earnings per
share (cents) 20% 8.53 7.12 5.38
Dividends per share (100%) - 2.25 4.15
(cents)
RECONCILIATION OF EARNINGS & HEADLINE EARNINGS PER SHARE
Unaudited Unaudited
Audited
6 months 6 months
year ended
ended 30 ended 30
31 March
% September September
NAD ‘000 Change 2013 2012 2013
Profit attributable
to ordinary
shareholders 29% 65 043 50 411 39 384
Adjustments: (20092%) ( 42 201) ( 209) ( 5 521)
Loss/(Profit on
disposal of property,
plant & equipment 285% 585 ( 316) 774
Profit on disposal of
investment property - - - ( 180)
Fair value
adjustments on
investment properties (100%) ( 45 330) - ( 26 304)
Impairment of
intangible assets 100% 3 801 - 28 406
Tax effect (1275%) ( 1 257) 107 ( 8 217)
-
Headline earnings (54%) 22 842 50 202 33 863
Total number of
ordinary shares
('000) in issue 5% 772 142 737 142 737 142
Weighted number of
ordinary shares for
basic earnings per
share 8% 757 559 702 756 727 652
Contingently issuable
shares as a result of
business acquisition 3% 4 922 4 789 4 789
Weighted number of
ordinary shares for
diluted earnings per
share 8% 762 481 707 545 732 441
For the period
Basic earnings per
share (cents) 20% 8.59 7.17 5.41
Diluted earnings per
share (cents) 20% 8.53 7.12 5.38
Headline earnings per
share (cents) (58%) 3.02 7.14 4.65
Diluted headline
earnings per share
(cents) (58%) 3.00 7.10 4.62
Dividends per share
(cents) (100%) - 2.25 4.15
SEGMENTAL ANALYSIS
Unaudited 6 Unaudited
Audited
months 6 months
year ended
ended 30 ended 30
31 March
% September September
NAD ‘000 Change 2013 2012 2013
Total Revenue 6% 314 561 296 930 595 239
Micro insurance
(Namibia) 75% 122 805 70 074 150 013
Micro finance 142% 156 052 64 430 141 642
Property (85%) 4 868 33 002 126 671
Rest of Africa (76%) 30 836 129 424 176 913
Net profit after tax 29% 65 043 50 411 39 384
Micro insurance
(Namibia) 80% 45 771 25 435 66 998
Micro finance 57% 21 639 13 816 27 778
Property 455% 46 745 8 423 18 691
Rest of Africa (1894%) ( 49 112) 2 737 ( 74 083)
Total assets 15% 1 780 647 1 552 148 1 532 927
Micro insurance
(Namibia) 38% 248 000 179 762 170 559
Micro finance 85% 705 287 380 225 455 649
Property (25%) 528 578 701 373 675 102
Rest of Africa 3% 298 782 290 788 231 617
Total liabilities 26% 715 496 566 657 564 797
39% 165 584 118 927 106 809
Micro insurance
(Namibia)
Micro finance 98% 416 739 210 170 307 898
Property (34%) 93 700 142 398 137 178
Rest of Africa (59%) 39 473 95 162 12 912
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited 6 Unaudited
Audited
months 6 months
year ended
ended 30 ended 30
31 March
% September September
NAD ‘000 Change 2013 2012 2013
ASSETS
Non-current assets
Property, plant and
equipment 16% 189 220 163 419 179 266
Investment properties 5% 337 255 320 793 344 247
Intangible assets (16%) 227 875 270 625 232 650
Deferred income tax
assets 6% 85 895 81 080 78 183
Mortgage loans
advanced 100% 30 602 - 20 070
Educational loans
advanced 114% 334 073 156 261 204 426
Other loans advanced (82%) 4 691 25 584 5 692
Total non-current
assets 19% 1 209 611 1 017 762 1 064 534
Current assets
Short-term portion of
mortgage loan book 100% 1 377 - 1 377
Short-term portion of
educational micro
loans advanced 37% 152 165 111 301 127 988
Short-term portion of
other loans advanced 44% 1 160 804 1 160
Short-term portion of
finance lease
receivable (100%) - 457 -
Amounts due by
related parties 100% 8 482 - 8 482
Inventories 283% 62 956 16 440 10 420
Trade and other
receivables (41%) 212 196 357 198 271 182
Current income tax
assets 8% 1 079 996 860
Cash and cash
equivalents 179% 131 621 47 190 46 924
Total current assets 7% 571 036 534 386 468 393
Total assets 15% 1 780 647 1 552 148 1 532 927
EQUITY AND
LIABILITIES
Capital and reserves
Share capital 5% 177 595 169 545 169 545
Share premium 88% 46 300 24 600 24 600
Put options - ( 52 832) ( 52 832) ( 52 832)
(100%) ( 1 006) - -
Deemed treasury
shares
Vendor shares - 14 976 14 976 14 976
Contingency reserve 55% 4 610 2 970 4 610
Revaluation reserves 40% 24 265 17 273 21 797
Foreign currency
translation reserve 100% 2 635 - 1 869
Distributable
reserves 5% 848 608 808 959 783 565
Attributable to
equity holders of the
parent 8% 1 065 151 985 491 968 130
-
Non-current
liabilities
Long-term liabilities 90% 433 958 228 771 288 717
Other liabilities (49%) 1 046 2 042 1 590
Deferred income tax
liabilities (9%) 31 951 35 114 33 231
Policy holders'
liability under
insurance contracts 96% 24 166 12 322 16 587
Total non-current
liabilities 77% 491 121 278 249 340 125
Current liabilities
Current portion of
long-term liabilities (8%) 38 819 42 161 40 764
Current portion of
other liabilities (5%) 2 500 2 622 4 516
Trade and other
payables (32%) 120 598 178 082 129 154
Technical provisions 12% 21 966 19 600 20 558
Current income tax
liabilities 19% 40 492 34 156 29 116
Amounts due to
related parties (100%) - 33 -
Bank overdraft (100%) - 11 754 564
Total current
liabilities (22%) 224 375 288 408 224 672
Total equity and
liabilities 16% 1 780 647 1 552 148 1 532 927
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited 6 Unaudited
Audited
months 6 months
year ended
ended 30 ended 30
31 March
% September September
NAD ‘000 Change 2013 2012 2013
Cash flow from
operating activities
Cash generated by
operations before
working capital
changes (11%) 60 501 68 357 96 917
Changes in working
capital 147% 58 160 ( 123 420) ( 76 332)
Interest received (85%) 321 2 096 3 849
Finance costs (49%) ( 19 439) ( 13 053) ( 27 814)
Finance lease assets - - - 457
Other loans advance - - - ( 346)
(100%) ( 12 376) - ( 6 008)
Mortgage loans
advance
Mortgage loans repaid 100% 1 844 - 2 097
Educational loans
advanced (215%) ( 246 381) ( 78 166) ( 212 861)
Educational loans
repaid 41% 87 814 62 112 129 222
Taxation paid (34155%) ( 3 768) ( 11) ( 13 600)
Net cash flow from
operating activities 11% ( 73 324) ( 82 085) ( 104 419)
-
Cash flow from -
investing activities
Additions to
property, plant and
equipment (54%) ( 13 247) ( 8 620) ( 23 250)
Additions to
investment properties 82% ( 478) ( 2 586) ( 3 364)
Additions to
intangible assets 55% ( 4 935) ( 11 051) ( 10 326)
Proceeds on sale of
investment property - - - 1 600
Proceeds on sale of
property, plant and
equipment (98%) 56 2 312 6 917
Proceeds on sale of
intangible assets 100% 130 - -
Net cash flow from
investing activities 7% ( 18 474) ( 19 945) ( 28 423)
Cash flow from
financing activities
(6%) 29 750 31 500 31 500
Proceeds of share
issue
Purchase of treasury
shares (100%) ( 1 006) - -
Proceeds on the sale
of deemed treasury
shares (100%) - 5 719 5 719
Proceeds from long
term liabilities 476% 143 296 24 884 83 433
Repayment of other
liabilities (243%) ( 2 560) 1 785 3 227
Repayment of related
party loans 100% - ( 1 380) ( 9 895)
Dividends paid 100% - ( 15 911) ( 29 916)
Increase in policy
holder under
insurance contracts 363% 7 579 1 638 5 903
Net cash flow from
financing activities 267% 177 059 48 235 89 971
Net change in cash
and cash equivalents 258% 85 261 ( 53 795) ( 42 871)
Cash and cash
equivalents at
beginning of period (48%) 46 360 89 231 89 231
Cash and cash
equivalents at end of
period 271% 131 621 35 436 46 360
-
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited 6 Unaudited
Audited
months 6 months
year ended
ended 30 ended 30
31 March
% September September
NAD ‘000 Change 2013 2012 2013
Balance at the
beginning of the
period 6% 968 130 913 305 913 305
Issue of shares (6%) 29 750 31 500 31 500
Sale of deemed
treasury shares (100%) - 5 719 5 719
Deemed treasury
shares purchased (100%) ( 1 006) - -
Dividends for the
period 100% - ( 15 911) ( 29 916)
Total comprehensive
income for the period 34% 68 277 50 878 47 522
Balance at the end of
the period 8% 1 065 151 985 491 968 130
Comprising of:
Share capital 5% 177 595 169 545 169 545
Share premium 88% 46 300 24 600 24 600
Deemed treasury
shares (100%) ( 1 006) - -
Put options - ( 52 832) ( 52 832) ( 52 832)
Vendor shares - 14 976 14 976 14 976
Contingency reserve 55% 4 610 2 970 4 610
Foreign currency
translation reserve 100% 2 635 - 1 869
Revaluation reserve 40% 24 265 17 273 21 797
Retained earnings 5% 848 608 808 959 783 565
8% 1 065 151 985 491 968 130
By order of the board
D J Steyn
Company Secretary
8 November 2013
JSE Sponsor
Sasfin Capital (a division of Sasfin Bank Ltd)
NSX Sponsor
IJG Securities (Pty) Ltd
Date: 04/11/2013 04:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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