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Unaudited Reviewed Consolidated Results of the Letshego Holdings Limited Group
Letshego Holdings Limited
Incorporated in the Republic of Botswana
Registration number 98/442
(“Letshego Holdings” or “the Company”)
This announcement is being released on the Johannesburg Stock
Exchange for information purposes only in respect of Letshego
Holdings Limited’s Note Programme
The Board of Directors is pleased to present an extract of the
unaudited reviewed consolidated results of the Letshego Holdings
Limited Group (“the Group”) for the six month period ended 30
June 2015.
Delivering on strategic initiatives
Letshego’s strategic intent is to build a leading African
financial services group. Delivering the strategy is centred on
four key areas of execution:
Diversification: Letshego continues to diversify in terms of
geographic, customer and product mix as well as through
introducing new capabilities. This was progressed during the
period by way of good growth in all of our markets, in
particular Botswana and Kenya, and a number of new products
being launched or enhancements being made to existing products.
This diversification is expected to continue into the second
half of the year with some acceleration being achieved from
acquisitions in Tanzania and Nigeria.
Embracing financial inclusion: we continue to seek deposit-
taking licenses and this will facilitate our financial inclusion
agenda. This includes providing financial services access via
agents and mobile telephony – this has already commenced in
Kenya, Mozambique and Rwanda.
Delivering simple, appropriate and affordable solutions:
continued investments in people and systems have created a
platform to build upon with Mozambique planning to roll out a
number of new customer solutions in the second half of the year
in partnership with a local mobile operator. Similar
initiatives are being progressed in other countries.
Providing Access Anywhere Anytime: branch enhancements are in
the main complete and use of mobile money is well established in
Kenya. New developments include a dedicated Letshego short code
number in Namibia, Mozambique and Rwanda plus registration of
all Faidika customer access points in Tanzania as agents of the
acquisition target there.
Headline performance - Highlights:
Growth in loans to customers of 16% to P5.8 billion
Profit before tax increased by 3% to P522m
Profit after tax increased by 8% to P402 million
Cost to income ratio was stable at 28%
Impairment charges were 2.5% on average net advances
Interim dividend of P196 million - 9 thebe per share
Our underlying performance was good with interest income
increasing by 10% and strong growth in non-interest income.
Cost of borrowings remained consistent with prior periods;
however, interest expense includes foreign exchange losses on
open inter group positions of P50 million. Costs increased by
8% and due to using more conservative impairment estimates the
charge for the first six months was P70 million. A lower than
normal tax charge was recorded following the resolution of some
historical tax assessments from certain tax authorities.
Overall this resulted in an increase in profit before tax of 3%
and an increase in profit after tax of 8%. If the impact of the
foreign exchange losses were excluded, the underlying growth in
profit before tax would have been 13%.
The Group remains well capitalised with a capital adequacy ratio
of over 60% and cash resources of over P283 million. A number
of new credit lines were put in place post the period end.
Post period end progress has been made in closing out the net
foreign currency open position with the Mozambican Metical that
accounted for the majority of the foreign exchange losses. The
Group remains with an open position between the Botswana Pula
and the South African Rand.
Investments in human capital continued during and post the
period with a number of senior appointments made including Group
Heads of Customer Experience, Risk and Assurance, Treasury and
Credit Risk.
The quality of the advances book was within target levels with
an impairment charge on the net portfolio at 2.5%.
Growth indicators - Highlights:
The payroll portfolio increased by 14% to P5.4 billion, and the
microfinance portfolio increased 62% to P390 million
The customer base grew by 32% to 263,000
Total headcount has risen by 24% to 1,674 including 711 direct
sales agents
While the underlying growth in loans and advances to customers
was good it was impacted by the prevailing exchange rates as
generally emerging market currencies weakened in 2015. For
example the growth in our two largest markets outside of
Botswana, being Namibia and Mozambique were approximately 30% in
local currency terms; however, when translated into Pula, the
growth rates were 19% and 7% respectively.
Returns - Highlights:
Return on Assets was 13%
Return on Equity was 20%
Earnings per share increased by 6% to 18.5 thebe
Dividend declared during the period equates to 50% of profit
after tax
Return on assets and equity showed a slight decline on the prior
period but remain within target levels.
Exit - South Sudan
As previously communicated to Shareholders, the Board decided to
exit its investment in South Sudan and this was concluded during
March 2015. The business in South Sudan was sold to a European
based developmental financial institution as a going concern.
Acquisition - Tanzania
As disclosed by way of cautionary announcement on 27 April 2015
and updated on 10 June 2015, and 24 July 2015 Letshego has
agreed to become a 75% shareholder of a deposit taking financial
institution that specialises in micro finance by way of
subscription for new shares. Since the last notice to
Shareholders Central Bank of Tanzania approval has been obtained
leaving just one final regulatory approval needed.
Thereafter, once all other conditions precedent have been
completed this will add a further deposit taking entity to the
Letshego Group adding 5 customer access points and over 20,000
customers. This, when combined with Letshego’s existing
business in Tanzania will position Letshego to be one of the
leading financial services organisations in Tanzania over time.
Therefore, Shareholders are advised that exercising caution when
dealing in the securities of the Company is no longer required
for this transaction.
Acquisition – Nigeria
As disclosed to Shareholders on 24 July 2015 Letshego has agreed
to acquire a 100% shareholding in a deposit taking financial
institution that specialises in micro finance in Nigeria. The
transaction is subject to all relevant regulatory approvals that
once completed will give Letshego an additional deposit taking
license via a national micro finance license in Nigeria. It
will also add 28 customer access points and 80,000 customers and
will provide a strong platform to grow Letshego in Nigeria.
Therefore Shareholders are advised to continue to exercise
caution when dealing in the securities of the Company until a
further announcement is made.
Board of Directors
A new independent non-executive Director will be appointed to
the Board once all regulatory formalities have been completed.
This will bring the total number of Directors to ten of which
six are independent non-executive Directors.
Change of year end and comparative figures
In 2014 Letshego changed its year-end from 31 January to 31
December. Therefore the interim period is for the six months
ended 30 June 2015 and the comparatives are for the six month
period ended 31 July 2014.
Auditors’ review
The financial information set out in this announcement has been
reviewed but not audited by PwC, the Letshego Group’s external
auditors. Their unqualified review report is available for
inspection at the company’s registered office.
Prospects
The Board and management continue to seek and review potential
inorganic expansion options that offer opportunities to
accelerate Letshego’s strategy. The Board of Directors has a
positive outlook and expects sustained performance, growth and
returns.
Dividend notice
Notice is hereby given that the Board has declared an interim
dividend of 9 thebe per share for the period ending 30 June
2015.
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 interim gross
dividend for the period ended 30 June 2015.
Important dates pertaining to this dividend are:
Declaration date Tuesday, 8 September 2015
Last date to register Friday, 2 October 2015
Dividend payment date on or about Friday, 9 October 2015
For and on behalf of the Board of Directors
J A Burbidge A C M Low
Group Chairman Group Managing Director
GABORONE, Wednesday, 9 September 2015
An extract of the unaudited reviewed financial statements of the
group can be downloaded from
http://www.letshego.com/financial_results.php
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
Date: 09/09/2015 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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