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Trustco September 2014 interim results 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: NA000AORF067
("the company", "the Group", or "Trustco")
Unaudited Condensed Consolidated Interim Results
for the six months ended 30 September 2014
and Interim Dividend Declaration
Nature of the business
Trustco is a banking and insurance group, operating in
Namibia and South Africa.
Business review
Trustco's 2015 interim results show an increase in net profit
after tax of 98% on the 2014 interim comparative. An increase
in the returns from investment portfolios, coupled with a
larger loan book generating higher net interest before
impairments contributed to most of the increase. The
increase was however offset by a reduction in insurance
premiums received as a result of the curtailment of the South
African legacy business in 1H2014 and an increase in the loan
provision charge when compared to the comparative period. Non-
performing loans measured 3.9% Gross Advances as at
30 September 2014 (2013: 4.3%)
Six months into the 2015 financial year and Trustco has already
seen some significant changes in its business. The acquisitions
resulting in Trustco securing its first banking licence and
the additional 2,600 hectares of land were the significant
highlights in the group's long term growth plans. The share
price has reflected Trustco's continued efforts in both local
and international markets and has improved from R1.19 as at
31 March 2014 to R1.95 as at 30 September 2014. Coupled
with the dividend stream this represents a 66% growth for
shareholders in only six months.
Insurance
The Insurance division remains on the cutting edge of
affordable insurance as various new products and ideas
are currently on trial or being launched in Africa and other
emerging markets.
The division benefitted from substantial gains in its investment
portfolio. NAD15.4 million of fair value gains was augmented
with realised gains of NAD258 million. The decline in insurance
premiums is predominantly due to the cessation of legacy
business in South Africa which operated a high premiums
receipting base, but very low margins in FY2014. In Namibia,
a decision was taken not to burden Insurance customers
with a premium increase in the FY2015. This decision was
made to demonstrate to our loyal policyholders that we
remain committed to being affordable – whilst still providing
the best value in the market.
Banking
The banking operations now run a portfolio of lending
assets and deposits across five branches in Namibia and
the group expects the bank to be one of the main areas for
growth in the Namibian operations.
Gross advances grew by 46% from the comparative interim,
predominantly due to the increased demand for student
loans, but also coupled with an increase in secured lending.
The group remains firmly committed to growing this
loan book in the future. As at the date of publicaton of this
announcement, NAD 455 million of approved facilities were made
available to the group by external funders, of these facilities,
NAD 130 million was drawn down upon by reporting date.
Explanatory notes to the interim
financial results
After a comprehensive restructure in the group, the
long-term insurer, Trustco Life Limited (a wholly owned
subsidiary of the group) acquired all the shares of
subsidiaries with investment property holdings in the
group and furthermore acquired all the shares of Farm
Herboths (Proprietary) Limited, which also included a large
holding of investment property (valuation of this land was
NAD52.2 million). The group has further consolidated all its
investment-type holdings under the insurance business to
support regulatory asset adequacy requirements. Shareholders
are advised that the Headline Earnings of the Insurers includes
re-measurement of Investment Properties, the re-measurement of
which are largely attributable to policy holders.
Trustco Bank Namibia Limited is in the process of acquiring
Trustco Finance (Proprietary) Limited. Once completed, and
approved by Bank of Namibia, all the group's lending and
banking subsidiaries will be housed in a single division,
supported by a robust legal structure falling under the
purview of the Bank of Namibia.
As a result of the above and in order to align the presentation
of the group's financial statements to similar financial service
enterprises, the group has chosen to present the statement
of financial position on a liquidity basis rather than the
traditional current vs non-current basis. Furthermore, the
presentation of the Statement of Profit and Loss and Other
Comprehensive Income has been presented to more
appropriately align with a financial services operation.
The above changes necessitated a revision to the IAS 8
Operating Segments disclosure to align reporting with
internal operational oversight by the Group Executive
Committee.
Basis of preparation and presentation
Statement of compliance
The unaudited interim results have been prepared in
accordance with the 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 2014, NAD1 was equal to
ZAR1.
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 a resolution was passed on 5 November 2014
to pay an interim dividend of 3 cents per share for the
six months ended 30 September 2014.
The following information is provided to shareholders in
respect of dividend tax:
- The dividend has been declared from income reserves;
- Shareholders are advised that Namibian non-resident
shareholders' tax ("NRST") of 20% on the declared
dividend will be applicable to all shareholders with
addresses outside Namibia (unless any specific rules
relating to double tax treaties apply);
- The Namibian NRST rate for South African residents is
15% resulting in a net dividend of 2.55 cents per share,
therefore no South African Dividend Withholding
Tax is applicable; and
- Trustco Group Holdings Limited's Namibian Income Tax
Reference Number is 3356338011.
The issued number of shares at declaration date is
772 142 090.
The salient dates for the payment of this dividend are set
out below:
Last day to trade cum-dividend Friday, 21 November 2014.
Trading ex-dividend commences Monday, 24 November 2014.
Record date Friday, 28 November 2014.
Payment date Tuesday, 9 December 2014.
Share certificates may not be dematerialised or
rematerialised between Monday, 1 December 2014
and Friday, 5 December 2014 both days included. The
dividend is declared in Namibia Dollars and payable in the
currencies of the Republics of South Africa and Namibia
which are pegged at an exchange rate of 1:1.
Acknowledgments
The Board of Directors of Trustco (the "Board") acknowledge
with gratitude the efforts and commitment from stakeholders
and staff.
Condensed Consolidated Statement of Financial Position
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
ASSETS Notes change NAD'000 NAD'000 NAD'000
Cash and cash equivalents (48%) 69 019 131 621 131 606
Advances 1 46% 763 719 524 068 699 932
Trade and other receivables >100% 491 850 212 196 293 626
Current tax assets >100% 3 693 1 079 4 716
Amounts due by related parties (100%) – 8 482 –
Inventories >100% 341 131 62 956 343 850
Property, plant and equipment 2 8% 204 563 189 220 203 111
Investment property 79% 605 014 337 255 537 330
Intangible assets (11%) 201 970 227 875 212 391
Deferred tax assets 71% 146 533 85 895 110 774
Total assets 59% 2 827 492 1 780 647 2 537 336
EQUITY AND LIABILITIES
Liabilities
Bank overdraft 100% 19 905 – –
Customer deposits 100% 13 401 – –
Borrowings 3 65% 778 187 472 777 730 369
Trade and other payables 33% 159 960 120 598 94 983
Current tax liabilities (72%) 11 511 40 492 5 561
Technical provisions (10%) 19 771 21 966 20 113
Amounts due to related parties 100% 1 367 – 265
Other liabilities 4 >100% 174 690 3 546 212 449
Deferred tax liabilities >100% 269 398 31 951 210 721
Policyholders' liability under
insurance contracts 88% 45 335 24 166 38 520
Total liabilities >100% 1 493 525 715 496 1 312 981
Capital and reserves
Share capital – 177 595 177 595 177 595
Share premium – 46 300 46 300 46 300
Put options 100% – (52 832) –
Deemed treasury shares >(100%) (69 026) (1 006) (69 026)
Shares for vendors – 14 976 14 976 14 976
Contingency reserve (35%) 2 983 4 610 2 983
Revaluation reserves 27% 30 857 24 265 30 641
Foreign currency translation
reserve >(100%) (2 164) 2 635 (2 075)
Distributable reserves 33% 1 132 446 848 608 1 022 961
Total capital and reserves 25% 1 333 967 1 065 151 1 224 355
Total equity and liabilities 59% 2 827 492 1 780 647 2 537 336
Condensed Consolidated Statement of Movements in Equity
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
Balance at the beginning
of the period 26% 1 224 355 968 130 968 130
Issue of shares (100%) – 29 750 29 750
Sale of deemed treasury shares – – – (16 194)
Deemed treasury shares purchased 100% – (1 006) –
Dividends for the period (100%) (19 146) – (15 412)
Total comprehensive income
for the period 89% 128 758 68 277 258 081
Balance at the end of the period 25% 1 333 967 1 065 151 1 224 355
Condensed Consolidated Statement of Comprehensive Income
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
Insurance premium revenue (17%) 96 162 116 269 225 037
Banking interest and similar income 64% 59 635 36 412 88 856
Fee and other income >100% 341 296 164 983 545 197
Total revenue 56% 497 093 317 664 859 090
Investment income (non-banking) (65%) 15 922 45 651 123 518
Income from operations 41% 513 015 363 315 982 608
Finance costs (note 6) >(100%) (49 747) (19 439) (57 095)
Insurance claims and benefits (12%) (23 516) (26 721) (54 947)
Operating expenses 5% (260 340) (248 748) (570 328)
Profit before taxation >100% 179 412 68 407 300 238
Taxation >(100%) (50 781) (3 364) (47 566)
Profit for the period 98% 128 631 65 043 252 672
Other comprehensive income,
net of tax (96%) 127 3 234 5 409
Items that will not be subsequently
reclassified to profit or loss
– Revaluation of property, plant and
equipment (91%) 216 2 468 9 353
Items that may be subsequently
reclassified to profit or loss
– Foreign currency translation
adjustment >(100%) (89) 766 (3 944)
Total comprehensive income
for the period 89% 128 758 68 277 258 081
Condensed Consolidated Statement of Cash Flows
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
Cash flow from operating activities
Cash generated by operations (31%) 87 192 126 240 183 508
Interest received 56% 501 321 3 095
Finance costs >(100%) (49 747) (19 439) (57 095)
Net loans advanced (56%) (73 841) (169 099) (278 454)
Proceeds from funding liabilities for
student advances 100% 50 000 – 240 000
Taxation paid (5%) (3 563) (3 768) (16 146)
Net cash flow from operating activities (116%) 10 542 (65 745) 74 908
Net cash flow from investing activities >100% 2 148 (18 474) (21 348)
Net cash flow from financing activities >(100%) (95 182) 169 480 31 686
Net change in cash and cash
equivalents (note 8) >(100%) (82 492) 85 261 85 246
Cash and cash equivalents at
beginning of period >100% 131 606 46 360 46 360
Cash and cash equivalents
at end of period (63%) 49 114 131 621 131 606
Condensed Segment Analysis
INSURANCE INSURANCE INSURANCE INSURANCE
TOTAL BANKING Rest of Investment
Namibia Total Namibia Africa Portfolio
NAD'000 NAD'000 NAD'000 NAD'000 NAD'000 NAD'000
6 months 30 September 2014
Revenue 455 761 62 103 393 658 88 574 9 201 295 883
External revenue 537 439 73 900 463 539 89 170 9 284 365 085
Internal revenue (81 678) (11 797) (69 881) (596) (83) (69 202)
Net profit after tax 128 631 34 006 94 625 48 188 (39 564) 86 001
Total assets 2 817 492 831 619 1 985 873 105 407 175 125 1 705 341
Total liabilities 1 483 525 293 200 1 190 325 70 723 21 671 1 097 931
6 months 30 September 2013
Revenue 325 734 47 676 278 058 113 160 25 229 139 669
External revenue 355 280 47 676 307 604 114 150 25 229 168 225
Internal revenue (29 546) – (29 546) (990) – (28 556)
Net profit after tax 65 043 19 610 45 433 65 600 (35 624) 15 457
Total assets 1 780 647 663 571 1 117 076 89 783 237 144 790 149
Total liabilities 715 496 262 730 452 766 52 463 22 303 378 000
12 months 31 March 2014
Revenue 892 435 108 640 783 795 223 659 43 787 516 349
External revenue 954 181 121 672 832 509 230 967 43 787 557 755
Internal revenue (61 746) (13 032) (48 714) (7 308) – (41 406)
Net profit after tax 252 672 47 009 205 663 103 120 (134 911) 237 454
Total assets 2 537 336 740 289 1 797 047 122 523 245 691 1 428 833
Total liabilities 1 312 981 282 912 1 030 069 59 787 96 089 874 193
Earnings and Headline Earnings per Share
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
Profit attributable to ordinary
shareholders 98% 128 631 65 043 252 672
Adjustments: (50%) (20 983) (42 201) (111 150)
Loss on disposal of property, plant
and equipment 56% 913 585 603
Loss on disposal of intangible assets – – – 1 336
Fair value adjustments on investment
properties (100%) – (45 330) (120 423)
Gain on bargain purchase (note 9) (100%) (21 595) – (3 000)
Impairment of intangible assets (100%) – 3 801 15 241
Tax effect (76%) (301) (1 257) (4 907)
Headline earnings >100% 107 648 22 842 141 522
Earnings per share:
Basic earnings per share (cents) >100% 18.48 8.59 33.57
Diluted earnings per share (cents) >100% 18.35 8.53 33.35
Headline earnings per share (cents) >100% 15.46 3.02 18.80
Diluted headline earnings per share (cents) >100% 15.35 3.00 18.68
Dividends per share (cents) 100% 2.75 – 4.15
Shares
Total number of ordinary shares in issue – 772 142 772 142 772 142
Weighted number of ordinary shares
in issue (9%) 696 236 757 559 752 771
Contingently issuable shares as a result
of business acquisition – 4 922 4 922 4 922
Weighted number of ordinary shares for
diluted earnings per share (8%) 701 158 762 481 757 693
Notes to the Condensed Financial Statements
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
1.1 Advances
Mortgage loan book >100% 139 055 31 979 104 465
Student advances 28% 621 150 486 238 591 953
Other loans advanced (40%) 3 514 5 851 3 514
46% 763 719 524 068 699 932
1.2 Total loans advanced 45% 794 955 547 587 752 853
Provision for bad debts (33%) (31 236) (23 519) (52 921)
46% 763 719 524 068 699 932
Less: Short-term portion (24%) (191 963) (154 702) (182 499)
55% 571 756 369 366 517 433
2 Property, plant and equipment
Property, plant and equipment of NAD8.98 million (2013: NAD13.247 million)
was acquired, and properties of NAD0.91 million (2013: NAD0.66 million) were
disposed of during the current period.
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
3 Borrowings
Borrowings 39% 603 548 433 958 596 670
Current portion of borrowings >100% 174 639 38 819 133 699
65% 778 187 472 777 730 369
Approved facilities of NAD300 million were available to the group as at 30 September
2014. NAD50 million of these facilities were drawn down upon as at the balance
sheet date. The new facility is repayable over 5 years at Namibian prime plus 1%.
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
4 Other liabilities
Other liabilities (100%) – 1 046 7
Vendors for acquisitions 100% 88 060 – 65 800
Current portion of other liabilities 0% 2 508 2 500 2 838
Current portion of vendors
for acquisitions 100% 84 122 – 143 804
>100% 174 690 3 546 212 449
5 Fair value hierarchy
Level 1
Financial assets – – –
Level 2
Investment property 79% 605 014 337 255 537 330
Aircrafts 7% 63 471 59 233 64 096
Level 3
Technical provisions 10% (19 771) (21 966) (20 113)
Policyholders' liability under
insurance contracts (88%) (45 335) (24 166) (38 520)
The valuation techniques and inputs used to develop measurements after above
items are consistent with the 2014 Annual Financial Statements.
6 months 6 months 12 months
30 Sep 30 Sep 31 Mar
2014 2013 2014
Unaudited Unaudited Audited
change NAD'000 NAD'000 NAD'000
6 Finance costs
Interest paid to depositors and
similar >100% 23 684 6 117 30 483
Finance costs on non-banking
portolio 96% 26 063 13 322 26 612
>100% 49 747 19 439 57 095
7 Transactions with related parties
Next Investments
(Proprietary) Limited <(100%) (14 468) (4 693) (29 178)
Northern Namibia Development
Company (Proprietary) Limited >100% 580 191 367
The above transactions with related parties arise as a result of management fees
and surety fees paid to Next Investments (Proprietary) Limited and charter income
received from Northern Namibia Development Company, both are subsidiaries in
which the Group Managing Director has significant shareholding.
8 Reclassification of 2014 cash flow statement
On the 6th of November 2014, the JSE notified Trustco that as a result of the JSE's
pro-active monitoring of annual financial statements it had identified
2 misclassifications on the statement of cash flows as reported in Trustco's 2014
Annual financial statments. These misclassifications, although considered
immaterial by Trustco due to the detailed nature of the dislosure in the 2014 Annual
financial statements, were deemed by the JSE to be individually and collectively
misleading to users of the financial statements, hence the JSE asked that Trustco
correct the classification in this set of interim results.
12 months 12 months
31 Mar 31 Mar
Extract of the condensed 2014 2014
consolidated statement of cash Restated Audited
flows: change NAD'000 NAD'000
Cash flows from operating
activities 41% 74 908 52 975
Cash generated by operations 14% 183 508 161 575
Included in the above restatement is the
effect of the increase in policyholders'
liabilties under insurance contracts >100% 21 933 –
Cash flows from Investing activities (76%) (21 348) (90 374)
Purchase of Deemed Treasury shares (100%) – (69 026)
Cash flows from financing activities (74%) 31 686 122 645
Purchase of Deemed Treasury shares <(100%) (69 026) –
Increase in policyholders' under insurance
contracts (100%) – 21 933
Net change in cash and cash equivalents – 85 246 85 246
9 Business combinations
During the period under review the group acquired control of the following
companies:
Share Date of
Name holding acquisition
Fides Bank Namibia Limited 100% 01-Sep-14
Farm Herboths (Proprietary) Limited 100% 30-Jun-14
The acquisition of Fides Bank Namibia Limited, now named Trustco Bank Namibia
Limited represents a natural progression of the group's strategy. The acquisition
offers a best fit strategic opportunity to complement the current student lending,
mortgage lending, property development and insurance businesses of the group.
The acquisition of Farm Herboths (Proprietary) Limited with its 2 600 hectares of
undeveloped land on the outskirts of Windhoek allows the group to extend its
current land development projects both by size and timeframe.
Gain on bargain purchase of NAD21.60 million was raised on purchase and
included in the profit for the period. This gain arose as a result of a combination of
recognising deferred tax assets in the entities as well as revaluation of identifiable
assets. In both cases the total fair value of the entity exceeded the purchase price.
The following table summarises the consideration paid, at fair value of assets
acquired and liabilities assumed at the acquisition date of all entities acquired.
Fair
Book value Fair
value adjust value
NAD'000 NAD'000 NAD'000
Investment property 47 424 4 800 52 224
Bank and cash 25 319 25 319
Other assets 2 352 2 352
Loan portfolio 10 212 10 212
Property, plant and equipment 2 155 2 155
Funding liabilities (34 436) (34 436)
Deferred tax asset – 16 670 16 670
Other liabilities (4 040) (4 040)
Net assets 48 986 21 470 70 456
Purchase consideration (48 861)
Gain on bargain purchase 21 595
Cash flow on acquisition
Cash and cash equivalents 25 319
Bank overdraft –
Net cash acquired 25 319
Consideration paid* (12 000)
Cash inflow on acquisition, net of net cash acquired 13 319
* A portion of the consideration for the purchase of Farm Herboths (Proprietary)
Limited was deferred. The purchase consideration is payable by the group in
18 monthly instalments of NAD2.222.222 beginning July 2014. The deferred
purchase consideration bears interest at 10.25%.
Acquisition-related costs of NAD525.641 have been charged to administrative
expenses in the consolidated income statement for the period ended
30 September 2014.
The revenue from these acqusitions included in the consolidated statement of
comprehensive income since acquisition was NAD0.52 million and a net loss of
NAD2.42 million was incurred during the same period.
Had the businesses been consolidated from 1 April 2014, the consolidated
statement of income would show pro forma revenue of NAD6.83 million and
pro forma loss of NAD6.19 million.
Sandra Miller
Company Secretery
10 November 2014
JSE Sponsor
Sasfin Capital
(a division of Sasfin Bank Ltd)
NSX Sponsor
IJG (Pty) Ltd
Date: 10/11/2014 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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