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Letshego Holdings Limited - Year End Results
LETSHEGO HOLDINGS LIMITED
Incorporated in the Republic of Botswana Co. 98/442
PRELIMINARY REPORT
The Board of Directors of Letshego Holdings Limited is pleased to present an extract from the consolidated audited financial results for the year ended 31 January 2014
FINANCIAL HIGHLIGHTS
* Profit before tax increase of 1%
* Profit after tax decrease of 2%
* Advances increase of 33%
* Earnings per share decrease of 9%
* Final dividend of 3.2 thebe per share
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 January 31 January
2014 2013
(Audited) (Audited) Change
P’000 P’000 %
ASSETS
Cash and cash equivalents 310,525 807,254
Advances to customers 4,427,757 3,336,204 33
Other receivables 101,911 38,349
Long-term receivables - 11,468
Plant and equipment 53,988 14,559
Intangible assets 6,117 12,457
Goodwill 55,250 49,948
Deferred taxation 14,617 8,939
Total assets 4,970,165 4,279,178 16
LIABILITIES AND EQUITY
Liabilities
Trade and other payables 127,217 78,828
Cash collateral 42,293 34,185
Income tax 46,517 28,327
Borrowings 1,249,871 1,277,395
Total liabilities 1,465,898 1,418,735 3
Shareholders’ equity
Stated capital 959,554 689,243
Foreign currency translation reserve (94,827) (45,982)
Share based payment reserve 17,470 19,173
Legal reserve 2,696 -
Retained earnings 2,522,666 2,112,485 19
Total equity attributable to equity holders of the parent
company 3,407,559 2,774,919
Non-controlling interest 96,708 85,524
Total shareholders' equity 3,504,267 2,860,443
Total liabilities and equity 4,970,165 4,279,178 16
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 January 31 January
2014 2013
(Audited) (Audited) Change
P’000 P’000 %
Interest income 1,176,176 1,074,822 9
Interest expense (62,488) (108,807) (43)
Net interest income 1,113,688 966,015 15
Fee and commission income 134,236 132,907
Other operating income 122,202 58,043
Operating income 1,370,126 1,156,965 18
Employee benefits (199,658) (123,086)
Other operating expenses (255,772) (157,395)
Net income before impairment and taxation 914,696 876,484 4
Impairment of advances (64,495) (35,097) 84
Profit before taxation 850,201 841,387 1
Taxation (205,511) (181,750)
Profit from continuing operations 644,690 659,637 (2)
Discontinued operations
Loss on sale of subsidiary (1,060) -
Profit for the year 643,630 659,637 (2)
Attributable to:
Equity holders of the parent company 601,151 628,084
Non-controlling interest 42,479 31,553
Profit for the year 643,630 659,637
Other comprehensive income, net of tax
Foreign currency translation differences arising from foreign operations (55,303) (15,833)
Total comprehensive income for the year 588,327 643,804
Attributable to:
Equity holders of the parent company 552,636 614,623
Non-controlling interest 35,691 29,181
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Total comprehensive income for the year 588,327 643,804
Weighted average number of shares in issue during the year (millions) 2,129 1,995
Dilution effect - number of shares (millions) 27.6 195
Number of shares in issue at the end of the year (millions) 2,167 1,999
Basic earnings per share (thebe) 30.2 33.1 (9)
Diluted earnings per share (thebe) 29.8 30.1 (1)
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 in the prior financial year).
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
31 January 31 January
2014 2013
(Audited) (Audited)
P’000 P’000
Operating activities
Profit before taxation 850,201 841,387
Add: Amortisation and depreciation 8,251 5,417
:Impairment of advances 11,051 1,670
:Loss on disposal of subsidiaries 1,060 -
Movement in working capital and other changes (1,141,388) (243,292)
Cash (used in)/from operations (270,825) 605,182
Taxation paid (163,858) (166,828)
Net cash (used in)/from operating activities (434,683) 438,354
Investing activities
Net cash used in investing activities (109,753) (45,675)
Financing activities
Dividends paid (177,738) (133,568)
Net receipts on borrowings/equity raising 225,445 474,531
Net cash from financing activities 47,707 340,963
Net movement in cash and cash equivalents (496,729) 733,642
Cash and cash equivalents at the beginning of the year 807,254 73,612
Cash and cash equivalents at the end of the year 310,525 807,254
RATIOS
31 January 31 January
2014 2013
(Audited) (Audited)
Annualised return on average assets (%) 14 18
Annualised return on average equity (%) 20 26
Cost to income ratio (%) 33 24
Debt to equity (%) 36 45
Foreign
Share based Currency Non-
payment translation Legal controlling
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Stated capital Retained earnings reserve reserve reserve interest Total
P’000 P’000 P’000 P’000 P’000 P’000 P’000
Balance at 1 February 2013 689,243 2,112,485 19,173 (45,982) - 85,524 2,860,443
Total comprehensive income for the year
Profit for the period - 601,151 - - - 42,479 643,630
Other comprehensive income, net of income tax
Foreign currency translation reserve - - - (48,515) - (6,788) (55,303)
Transactions with owners, recorded directly in equity
Non - Controlling Interest in MAL acquired - (6,301) - - - (4,446) (10,747)
Allocation of shares to ADP I Holding 2 252,969 - - - - - 252,969
Allocation to Legal Reserve - (2,696) - - 2,696 - -
Disposal of Letshego Financial Services (Zambia) Proprietary Limited - (4,235) - (329) - - (4,564)
Allocation to share based payment reserve - - 15,639 - - - 15,639
New shares issued from long term incentive scheme 17,342 - (17,342) - - - -
Dividends to equity holders - (177,738) - - - (20,062) (197,800)
Balance at 31 January 2014
959,554 2,522,666 17,470 (94,826) 2,696 96,707 3,504,267
Balance at 1 February 2012 669,876 1,617,969 15,654 (32,521) - 53,876 2,324,854
Total comprehensive income for the year
Profit for the year - 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
Dividends 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
SEGMENTAL REPORTING
Regional geographical segments
Southern Africa* East Africa** Elimination Group
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31 Jan 31 Jan 31 Jan 31 Jan 31 Jan 31 Jan 31 Jan 31 Jan
2014 2013 2014 2013 2014 2013 2014 2013
P’000 P’000 P’000 P’000 P'000 P'000 P'000 P'000
Operating Income 1,020,282 898,927 349,844 258,039 - - 1,370,126 1,156,966
Segment profit before tax 660,126 692,812 189,015 148,575 - - 849,141 841,387
Taxation - consolidated (205,511) (181,750)
Profit for the period - consolidated 643,630 659,637
Gross advances to customers 3,753,459 2,713,097 702,445 640,203 - - 4,455,904 3,353,300
Impairment provisions (10,225) (7,937) (17,922) (9,159) - - (28,147) (17,096)
Net advances 3,743,234 2,705,160 684,523 631,044 - - 4,427,757 3,336,204
Total segment assets 5,479,895 5,255,430 905,940 713,181 (1,415,670) (1,689,433) 4,970,165 4,279,178
Borrowings 1,005,507 1,092,102 244,364 185,293 - - 1,249,871 1,277,395
Total segment liabilities 2,334,753 2,575,759 546,815 532,409 (1,415,670) (1,689,433) 1,465,898 1,418,735
Ratio analysis on regional geographic segments
Southern Africa East Africa Group
2014 2013 2014 2013 2014 2013
Impairment charge to average advances (annualised) (%) 1 1 5 3 2 1
Advances to total assets 68 51 76 89 89 78
Customers employed by government (%) 92 97 74 78 94 94
Customers employed by parastatal or private sector (%) 8 3 26 22 6 6
Debt to equity (%) (includes intercompany borrowings) 42 42 35 35 36 46
Cost to income ratio (%) 26 24 38 36 33 26
* Southern Africa includes: the Holding Company, Botswana, Lesotho, Mozambique, Namibia and Swaziland.
** 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 2014. Highlights for the year include:
- Advances to customers increased by 33% to P4.4 billion (2013: P3.3 billion)
- Impairment charges of 1.7% on average net advances (2013: 1.3%)
- 58% of profits before tax generated outside of Botswana (2013: 40%)
- BWP 350 million raised from the maiden issue of Letshego’s BSE listed medium term note programme in November 2013
- Sale of Zambia subsidiary concluded in December 2013
- Dividend declared during the year equates to 25% of profit after tax.
Financial performance
During a challenging year, a satisfactory performance was achieved in terms of growth in the advances book with the main contributions coming from our three largest
markets, Botswana, Namibia and Mozambique.
The quality of the advances book was within target levels with an impairment charge on the net portfolio of 1.7% for the year as compared to 1.3% in the prior year.
The Group remains well capitalised and has cash resources of over P300 million which are available to further grow the business.
Profit growth was flat year on year (increasing by 1% to P849 million on prior year) which was a result of the pressure on margins, various strategic investments in
technology and group expansion initiatives. Earnings per share are lower due to the conversion of a loan to equity earlier in the financial year.
Key features of the financial results include:
- Strong portfolio growth in Botswana, Namibia and Mozambique
- Continued investment in technology costs as part of strategic transformation
- Higher cost base of Micro Africa group of companies while scale is being developed
- Foreign exchange gains on open group positions
- Impairment costs remain within Group target levels
- Impairment charge taken against assets in South Sudan due to political uncertainty and contingent costs provided for against assets in Swaziland.
Funding
The Group has sufficient funding in place for existing operations in the immediate future and continues to explore the most effective methods of funding operations and
growth.
Board of Directors
During the year Mr J A Claassen retired as the Group Managing Director and was replaced by Mr A C M Low, who was also appointed to the board. Mr Claassen subsequently
resigned from the board during January 2014 and the board wishes to thank him for his contribution to the Group.
During the year Messer’s Josias de Kock, Hannington Karuhanga, Stephen Price and Robert Thornton were appointed to the board as independent non-executive directors.
Subsequent to the year end, Mrs Margaret Dawes resigned from the board and was replaced by her alternate director, Mr Gerrit van Heerde.
Change of year end
The board has decided to change the year end to 31 December to align the year end to the calendar year. Therefore, Letshego will prepare interim results for the six month
period to 31 July 2014 which will be published on or around mid-October 2014, and then prepare audited results for the 11 months ended 31 December 2014. These will be
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published on or around mid-March 2014.
Renewal of cautionary announcement
As announced to Shareholders on the 25th February 2014 the Board of Directors would like to inform Shareholders that the Group has entered into negotiations with a third
party in the East Africa region which, if successfully concluded, and subject to all regulatory approvals, may result in a transaction that could have an impact on the price of
the Company’s securities.
Accordingly, Shareholders are advised to continue to exercise caution when dealing in Letshego Holdings Limited’s securities until a further announcement is made.
Prospects
The Group continues to actively explore new regions in Africa, new business streams, both through acquisitive and "green fields" methods.
Given prevailing economic conditions, the Directors expect continued growth in the advances book during the financial period to 31 December 2014 and continued
profitability.
Dividends
Notice is hereby given that the board has declared a final dividend of 3.2 thebe per share for the year ending 31 January 2014. This brings the total dividends declared
during the current financial period to 7.4 thebe (P160 million).
In terms of the Botswana Income Tax Act (Cap50:01) 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 2014.
Important dates pertaining to this dividend are:
Declaration date 16 April 2014
Last date to register 2 May 2014
Dividend payment date on or about 9 May 2014
For and on behalf of the Board of Directors.
J A Burbidge A C M Low
Chairman Managing Director
GABORONE, 16 April 2014
NON EXECUTIVE DIRECTORS: J A Burbidge (Chairman) (GB), G Hassam (Malawi), J de Kock (RSA), H Karuhanga (Uganda), I M Mohammed (USA), S Price (GB), L E Serema (Botswana),
R Thornton (USA), Gerrit van Heerde (RSA), R N Alam (alternate to I M Mohammed) (USA)
EXECUTIVE DIRECTORS: A C M Low (Managing Director) (UK), 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
Debt sponsor in South Africa
The Standard Bank of South Africa Limited, acting through its Corporate
and Investment Banking division
Sponsoring broker in Botswana
Stockbrokers Botswana Limited
www.letshego.com
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