Sharenet Sites 
Sharenet Sites
Interim Financial Results - LHC01, LHC02, LHC03
LETSHEGO HOLDINGS LIMITED
Incorporated in the Republic of Botswana Co. 98/442
UNAUDITED INTERIM REPORT
The Directors have pleasure in announcing the unaudited reviewed summarised financial results of
Letshego Holdings Limited (the "Company") and its subsidiaries (the "Group")
for the half year ended 31 July 2014
FINANCIAL HIGHLIGHTS
Advances up 31%
Profit before tax up 11%
Profit after tax up 3%
Dividend per share up 8.5t
KEY PERFORMANCE INDICATORS
6 months ended 6 months ended 12 months ended
31 July 31 July 31 January
2014 2013 2014
(Reviewed) (Reviewed) (Audited)
P'000 P'000 P'000
Annualised return on average assets (%) 14% 18% 14%
Annualised return on average equity (%) 19% 24% 20%
Cost to income ratio (%) 28% 28% 33%
Debt to equity ratio (%) 39% 25% 36%
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note At 31 July At 31 July At 31 January
2014 2013 2014
(Reviewed) (Reviewed) Change (Audited)
P'000 P'000 % P'000
ASSETS
Cash and cash equivalents 1 383 033 433 157 310 525
Advances to customers 2 5 006 209 3 818 207 31 4 427 757
Other receivables 3 87 476 47 286 101 911
Plant and equipment 4 29 759 17 401 53 988
Intangible assets 5 40 461 32 567 6 117
Goodwill 6 55 250 55 250 55 250
Deferred taxation 11 873 9 115 14 617
Total assets 5 614 061 4 412 983 27 4 970 165
LIABILITIES AND EQUITY
Liabilities
Customer deposits 7 2 234 - -
Cash collateral 8 38 817 39 446 42 293
Trade and other payables 9 139 955 70 794 127 217
Income tax 40 907 29 168 46 517
Borrowings 10 1 501 124 858 830 75 1 249 871
Total liabilities 1 723 037 998 238 1 465 898
Shareholders' equity
Stated capital 11 973 347 959 554 959 554
Foreign currency translation reserve (24 771) (7 264) (94 826)
Legal reserve 5 108 2 696 2 696
Share based payment reserve 9 660 11 887 17 470
Retained earnings 2 801 570 2 359 142 2 522 666
Total equity attributable to equity holders of the parent
company 3 764 914 3 326 015 13 3 407 560
Non-controlling interests 126 110 88 730 96 707
Total shareholders' equity 3 891 024 3 414 745 3 504 267
Total liabilities and equity 5 614 061 4 412 983 27 4 970 165
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Note 6 months ended 6 months ended 12 months ended
31 July 31 July 31 January
2014 2013 2014
(Reviewed) (Reviewed) Change (Audited)
P'000 P'000 % P'000
Interest income 12 719 816 584 212 23 1 176 176
Interest expense 13 (90 204) (28 541) 216 (62 488)
Net interest income 629 612 555 671 13 1 113 688
Fee and commission income 74 542 64 338 16 134 236
Other operating income 57 679 58 461 122 202
Operating income 761 833 678 470 12 1 370 126
Employee costs 14 (100 617) (81 535) 23 (199 658)
Other operating expenses 15 (111 376) (99 405) 12 (255 772)
Net income before impairment and taxation 549 840 497 530 11 914 696
Impairment of advances (41 432) (37 964) 9 (64 495)
Profit before taxation 508 408 459 566 11 850 201
Share of net of tax profit of equity accounted associate - 344 -
Loss on sale of subsidiary (net of taxes) - - (1 060)
Taxation (135 320) (96 051) (205 511)
Profit for the period 373 088 363 859 3 643 630
Attributable to :
Equity holders of the parent company 350 963 342 356 601 151
Non-controlling interests 22 125 21 503 42 479
Profit for the period 373 088 363 859 3 643 630
Other comprehensive income, net of tax
Foreign currency translation differences arising from foreign
operations 80 207 44 180 (55 303)
Total comprehensive income for the period 453 295 408 039 11 588 327
Attributable to :
Equity holders of the parent company 421 018 381 074 552 636
Non-controlling interests 32 277 26 965 35 691
Total comprehensive income for the period 453 295 408 039 11 588 327
Weighted average number of shares in issue during the period
(millions) 2 131 2 088 2 129
Dilution effect - number of shares (millions) 32 42 28
Number of shares in issue at the end of the period (millions) 2 176 2 167 2 167
Basic earnings per share (thebe) 17.5 17.4 1 30.2
Fully diluted earnings per share (thebe) 17.2 17.0 29.8
NOTE: The diluted EPS has been calculated based on shares
that may vest in terms of the Group's long term staff incentive
scheme.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Note 6 months ended 6 months ended 12 months ended
31 July 31 July 31 January
2014 2013 2014
(Reviewed) (Reviewed) (Audited)
P'000 P'000 P'000
Operating activities
Profit before taxation 508 408 459 566 850 201
Add : Amortisation and depreciation 12 007 4 067 8 721
: Impairment of advances 13 549 10 683 11 051
Movement in working capital and other changes (479 880) (490 825) (1 149 398)
Cash generated from / (utilised in) operations 54 084 (16 509) (279 425)
Taxation paid (138 186) (94 296) (192 999)
Net cash utilised in operating activities (84 102) (110 805) (472 424)
Investing activities
Net cash used in investing activities (22 122) (28 338) (46 083)
Financing activities
Dividends paid to equity holders and subsidiary minorities (72 521) (86 702) (197 800)
Net receipts /(payments) on borrowings / equity raising 251 253 (148 252) 219 578
Net cash generated from / (utilised in) financing activities 178 732 (234 954) 21 778
Net movement in cash and cash equivalents 72 508 (374 097) (496 729)
Cash and cash equivalents at the beginning of the period 310 525 807 254 807 254
Cash and cash equivalents at the end of the period 1 383 033 433 157 310 525
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN Shared based Foreign exchange Legal Non-controlling
EQUITY Stated capital Retained earnings payments reserve translation 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 period
Profit for the period - 342 356 - - - 21 503 363 859
Other comprehensive income, net of income tax
Foreign currency translation reserve - - - 38 718 - 5 462 44 180
Transactions with owners, recorded directly in equity
Non - Controlling Interest in MAL acquired - (6 301) - - - (4 445) (10 746)
Allocation of additional shares to ADP I Holding 252 969 - - - - - 252 969
Allocation to share based payment reserve - - 10 056 - - - 10 056
Allocated to legal reserve - (2 696) - - 2 696 - -
New shares issued from long term incentive scheme 17 342 - (17 342) - - - -
Dividend paid by subsidiary to minority interests - - - - - (19 314) (19 314)
Dividends paid to equity holders - (86 702) - - - - (86 702)
Balance at 31 July 2013 959 554 2 359 142 11 887 (7 264) 2 696 88 730 3 414 745
Total comprehensive income for the period
Profit for the period - 258 795 - - - 20 976 279 771
Other comprehensive income, net of income tax
Foreign currency translation reserve - - - (87 233) - (12 250) (99 483)
Transactions with owners, recorded directly in equity
Disposal of Letshego Financial Services Zambia (Pty) Ltd - (4 235) - (329) - - (4 564)
Allocation to share based payment reserve - - 5 583 - - - 5 583
Dividends paid to equity holders - (91 036) - - - (749) (91 785)
Balance at 31 January 2014 959 554 2 522 666 17 470 (94 826) 2 696 96 707 3 504 267
Total comprehensive income for the period
Profit for the period - 350 963 - - - 22 125 373 088
Other comprehensive income, net of income tax
Foreign currency translation reserve - - - 70 055 - 10 152 80 207
Transactions with owners, recorded directly in equity
Allocation to share based payment reserve - - 5 983 - - - 5 983
Allocated to legal reserve - (2 412) - - 2 412 - -
New shares issued from long term incentive scheme 13 793 - (13 793) - - -
Dividend paid by subsidiary to minority interests - - - - - (2 874) (2 874)
Dividends paid to equity holders - (69 647) - - - - (69 647)
Balance at 31 July 2014 973 347 2 801 570 9 660 (24 771) 5 108 126 110 3 891 024
Notes to the statement of financial position and statement of comprehensive income
6 months 6 months 12 months
ended ended ended
31 July 31 July 31 January
2014 2013 2014
(Reviewed) (Reviewed) (Audited)
P'000 P'000 P'000
1 Cash and cash equivalents
Cash at bank and in hand 368 508 412 760 296 341
Short term deposits 14 525 20 397 14 184
383 033 433 157 310 525
2 Advances to customers
Gross advances to customers 5 047 905 3 845 986 4 455 904
Less : Specific impairment allowance (637) (796) (1 055)
: Portfolio impairment allowance (41 059) (26 983) (27 092)
5 006 209 3 818 207 4 427 757
3 Other receivables
Prepayments and deposits 25 536 16 020 13 383
Dividend receivable from cell captives 33 256 - 75 949
Withholding tax and value added tax refundable 17 474 14 860 9 411
Other receivables 11 210 16 406 3 168
87 476 47 286 101 911
4 Plant and equipment
Carrying Additions Transfers Disposal Depreciation Carrying
amount at 01 charge amount at 31
February 2014 July 2014
Motor vehicles 992 734 - - (419) 1 307
Computer equipment 4 365 16 651 2 927 - (6 346) 17 597
Office furniture and equipment 9 786 4 737 - - (4 442) 10 081
Work in progress 38 845 - (38 071) - - 774
53 988 22 122 (35 144) - (11 207) 29 759
5 Intangible assets
Carrying Additions Transfers Disposal Depreciation Carrying
amount at 01 from WIP charge amount at 31
February 2014 July 2014
Computer software 6 117 - 35 144 - (800) 40 461
6 months 6 months 12 months
ended ended ended
31 July 31 July 31 January
2014 2013 2014
(Reviewed) (Reviewed) (Audited)
P'000 P'000 P'000
6 Goodwill
Goodwill arose on the acquisition of:
Letshego Financial Services Namibia (Proprietary) Limited 25 760 25 760 25 760
Letshego Tanzania Limited 2 064 2 064 2 064
Letshego Kenya Limited 27 426 27 426 27 426
55 250 55 250 55 250
The Group assessed the recoverable amount of goodwill, and determined that it was not impaired in respect of all cash
generating units noted above.
7 Customer deposits
Fixed deposit accounts 2 234 - -
8 Cash collateral
Cash collateral on loans and advances 38 817 39 446 42 293
Cash collateral represents payments made by customers as security for loans taken. The amounts are refundable upon the successful repayment of loans by
customers or are utilised to cover loans in the event of default. This relates only to Letshego
Kenya,Rwanda,Uganda and South Sudan.
9 Trade and other payables
Audit fees 1 600 1 419 2 633
Insurance premium payable 18 314 11 497 15 917
Payroll related accruals 35 804 16 260 34 267
Other provisions 27 020 - 35 020
Trade and other payables 50 106 34 975 31 200
Value added tax / withholding tax 7 111 6 643 8 180
139 955 70 794 127 217
10 Borrowings
African Alliance Botswana Liquidity Fund 56 161 20 000 56 072
Banco Terra Mozambique 16 981 20 551 19 500
Capital Bank Limited Botswana 40 000 - 40 000
Chase Bank -Kenya 43 697 - 25 339
FNB Botswana 151 048 - -
Investec Asset Management Botswana (Proprietary) Limited - 55 000 -
Medium Term Note - BSE Listed Bond 360 525 - 360 477
Medium Term Note - JSE Listed Bond 589 486 607 225 573 573
Standard Bank Mozambique Limited 77 830 - -
Standard Chartered Bank Botswana Limited - 541 21 701
Standard Chartered Bank Uganda Limited 71 395 60 437 91 821
Others 94 001 95 076 61 388
Total borrowings 1 501 124 858 830 1 249 871
11 Stated capital
Issued: 2,176,475,705 ordinary shares of no par value (2013:
2,167,540,301) 973 347 959 554 959 554
12 Interest income
Advances to customers 716 854 583 313 1 172 553
Deposits with banks 2 962 899 3 623
719 816 584 212 1 176 176
13 Interest expense
Overdraft facilities and term loans 85 907 69 747 112 533
Foreign exchange loss / (gains) 4 297 (41 206) (50 045)
90 204 28 541 62 488
14 Employee costs
Salaries and wages 76 448 56 210 111 683
Staff incentive 12 910 9 181 21 515
Staff pension fund contribution 3 481 3 502 13 877
Directors' remuneration – for management services (executive) 1 795 2 609 36 816
Long term incentive plan 5 983 10 033 15 767
100 617 81 535 199 658
15 Other operating expenses
Accounting and secretarial fees 172 259 332
Advertising 7 318 6 164 16 021
Audit fees 1 600 1 580 2 431
Bank charges 1 870 1 782 3 632
Computer expenses 3 270 5 105 6 856
Consultancy fees 4 876 2 574 4 008
Depreciation and amortisation 12 007 4 067 8 721
Directors' fees – non executive 1 896 1 728 2 662
Direct costs and provisions 33 255 37 305 99 398
Operating lease rentals - property 11 213 9 717 18 076
Other operating expenses 11 131 6 413 54 058
Office expenses 3 501 5 753 6 063
Insurance 3 539 1 713 2 155
Payroll administration costs 431 647 1 428
Professional fees 2 119 3 385 7 514
Telephone and postage 4 356 4 900 8 801
Travel 8 822 6 313 13 616
111 376 99 405 255 772
SEGMENTAL REPORTING
Regional geographical segments
Southern Africa* East Africa** Elimination Group
31 July 31 July 31 July 31 July 31 July 31 July 31 July 31 July
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 569 420 491 962 192 413 186 508 - - 761 833 678 470
Segment profit before tax 411 951 350 890 96 457 108 676 - - 508 408 459 566
Share of results of associate - 344
Taxation - consolidated (135 320) (96 051)
Profit for the period - consolidated 373 088 363 859
Gross advances to customers 4 329 996 3 184 770 717 909 661 216 - - 5 047 905 3 845 986
Impairment provisions (18 201) (10 228) (23 495) (17 551) - - (41 696) (27 779)
Net advances 4 311 795 3 174 542 694 414 643 665 - - 5 006 209 3 818 207
Borrowings 2 671 319 2 078 693 316 195 271 735 (1 486 390) (1 4491 598) 1 501 124 858 830
* Southern Africa includes: Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zambia. Zambia was sold in November 2013.
** East Africa includes: Kenya, Rwanda, South Sudan and Uganda.
COMMENTARY
Highlights
The Board of Directors of Letshego Holdings Limited is pleased to present an extract from the consolidated,
reviewed but unaudited financial results for the six month period ended 31 July 2014.
The highlights for the period include:
Balance sheet
- Advances to customers increased by 31% to P5.0 billion (2013: P3.8 billion)
- Cash available for operations of P383 million (2013: 433 million)
- Debt to equity ratio increased to 39% (2013: 25%)
- Return on assets reduced to 14% (2013: 18%)
Income statement
- Profit before tax increased by 11% to P508 million (2013: P460 million)
- Cost to income ratio unchanged at 28% (2013: 28%)
- Impairment charge stable at 1.9% on the average advances book (2013: 2.0%)
- A higher tax charge resulted in profit after tax increasing by 3%
- Earnings per share increased by 1%
Dividends and returns
- Return on equity of 19% (2013: 24%)
- Interim dividend declared of 8.5 thebe (2013: 4.2 thebe)
Financial performance
Advances to customers increased by 31% from the prior period with the most significant contributions
continuing to come from Botswana, Mozambique and Namibia. Off a lower base, there was good growth recorded in Kenya,
Lesotho and Rwanda. Overall, all markets remain competitive and the Group has been able to maintain or grow
market share. Payroll lending accounts for 95% of total advances with traditional micro finance making up the remainder.
The quality of the advances book was within target levels with an impairment charge of 1.9% for the
period as compared to 2.0% in the prior period.
The Group remains well capitalised and has cash resources of over P383 million which are available for
future growth. However, strong growth in the markets noted above, during and after the review period,
requires new lines of credit to be introduced and a pipeline of new funding is at various stages of negotiation.
Interest income increased by 23% primarily driven by the increase in assets. This was partially offset by a reduction
in margins in certain countries, to ensure our pricing remains market related.
Interest expense increased due to higher debt levels in the business. Also foreign exchange losses / gains had a significant
impact period on period. However, the overall cost of borrowings remained consistent. Initiatives are at an advanced stage
to close out the more significant of the open positions that give rise to the foreign exchange volatility in interest expense.
The credit rating from Moody's Investor Services was reissued during June 2014 at Ba3 and there was no change to
the rating from the prior year.
Operating expenses and staff costs increased by 17% reflecting the ongoing investment in people,
technology and business development.
Overall, this has resulted in an increase in profit before tax of 11% with a cost to income
ratio of 28% (2013: 28%).
The increase in profit after tax was 3% due to a higher effective tax rate for the Group.
Diversification
Initiatives are on-going to execute the phased diversification strategy of the group to
become a more diversified financial service provider. As part of this strategy the Group commenced deposit taking
activities in Mozambique during February 2014. Other products are expected to be
rolled out in Mozambique over time.
Other deposit taking activities are planned to start in Rwanda in the current financial period.
In July 2014, the Central Bank of Namibia granted Letshego a provisional licence. We are engaging with
the Central Bank to comply with the conditions of this provisional licence.
Group structure
There were no changes to the group structure during the period. Looking ahead, the Group has entered discussions
to sell its 24% shareholding in its associate micro finance business in Tanzania – Tujijenge Tanzania Limited.
Also the Group has decided to exit its investment in South Sudan - all options around this are being explored.
Neither of these is expected to have a significant financial impact on the Group.
Dividend policy
The board has reviewed the current dividend policy and has decided to increase the dividend policy to a pay out ratio
of 50% from the current 25% pay out rate. This will be effective from the current financial period and is reflected in
the interim dividend declaration.
Board committee structures
A number of changes were made to the composition of board subcommittees post the period end so as to increase
independent non-executive directors' representation on these committees and to more closely align with
King III recommendations.
Change in financial year end
As previously communicated to shareholders, the Group is changing the financial year end to 31 December.
Therefore, the next financial results will be for the 11 month period ended 31 December 2014.
Prospects
If prevailing economic conditions continue, the Directors anticipate further growth in the advances book
during the financial period to 31 December 2014 and continued profitability. The impact of some once off
costs and provisions taken in the second half of the last financial year, are not expected to reoccur.
Auditors'review
The financial information set out in this announcement has been reviewed but not audited by KPMG,
the Letshego Group's external auditors. Their unqualified review report is available for inspection at
the company's registered office.
Dividend
Notice is hereby given that the Board has declared an interim dividend of 8.5 thebe per share for
the six month period ended 31 July 2014.
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 interim gross dividend for
the period ended 31 July 2014.
Important dates pertaining to this dividend are:
Declaration date: 23 September 2014
Last date to register: 10 October 2014
Dividend payment date: 24 October 2014
For and on behalf of the Board of Directors.
J A Burbidge A C M Low
Chairman Managing Director
GABORONE, 25 September 2014
NON EXECUTIVE DIRECTORS: J A Burbidge (Chairman) (GB), Gerrit van Heerde (RSA), G Hassam (Malawi), J de Kock (RSA), H Karuhanga (Uganda),
I M Mohammed (USA), S Price (GB), R Thornton (USA)
R N Alam (alternate to I M Mohammed) (USA)
EXECUTIVE DIRECTOR: A C M Low (Managing Director) (UK)
TRANSFER SECRETARIES: PricewaterhouseCoopers (Pty) Limited, Plot 50371, Fairground Office Park, Gaborone, Botswana
REGISTERED OFFICE: Plot 50371, Fairground Office Park, Gaborone, Botswana
www.letshego.com
Further information on the Note issue please contact: Standard Bank South Africa (Debt sponsor) Zoya Sisulu (011) 721 6032
Date: 25/09/2014 01:05:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
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.
