Wrap Text
Unaudited Condensed Consolidated Interim Results For The Six Months Ended 30 September 2016
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
NSX Share code: TUC
JSE share code: TTO
ISIN Number: NA 000A0RF067
("the Group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2016
NATURE OF THE BUSINESS
Trustco is a diversified listed financial services group that invests and operates in sustainable high growth assets in
emerging markets.
BUSINESS REVIEW AND OUTLOOK
Trustco’s operations continue to demonstrate reliable performance and stable growth coupled with a solid resilience in
the face of adverse financial conditions.
Namibian inflation rose to 7.3% as at the end of October whilst GDP growth in the second quarter showed a decline of
1.2%.
Sluggish credit growth in Namibia, coupled with rising prices and interest rates precipitated Namibia’s first quarter of
GDP negative growth since early 2013. A weakened ZAR/USD exchange rate further impacted the growth of Namibia
given that the country remains a net importer. This exposure to a domestic economy where so many of its inputs, such as
exchange rate, food prices, drought and liquidity remain outside of the control of government, as well as private sector,
has led Trustco to pursue cross border expansion and US dollar revenues.
In 2015 the group announced the acquisition of the Huso group (a diamond mining, cutting and polishing consortium).
The expansion into mining and beneficiation of diamonds, both of which will result in USD based revenues, coupled
with a firm desire to expand on the African continent has led the group to investigate and ultimately decide to pursue
opportunities in Sierra Leone. This decision culminated in the group acquiring 51% of Meya Mining, a diamond
exploration and mining company based in the Kono district. Apart from expanding the USD based income flow,
establishing a successful mine in Sierra Leone will augment the flow of rough diamonds to the group’s Namibian based
polishing factory and also create a base from which the group could deploy other Trustco products.
The group has entered into an agreement with a shareholder, Buckley Capital, to re-acquire 5.4% of the listed shares held
by Buckley Capital at R4.80 on 31 January 2018. This buy-back, currently pending shareholder approval, forms part of
the group’s buyback scheme to re-acquire, what the board believes to be, an under-priced share and is simultaneously
accompanied by the group continuing to buy under-priced shares directly in the market.
In July 2016, Global Credit Ratings upgraded Trustco’s long-term national scale rating to BBB+ (NA) and maintained
the short term national scale rating of A2 (NA), furthermore the outlook was accorded as stable.
INSURANCE
Insurance premiums fell from previous period (down 36%) mostly due to a reduction in Credit Life premiums written.
The remaining short and life products continue slow but steady organic growth, however an increase in claims and
provisioning (9% increase from previous interim) has adversely affected the Insurance segment result. The higher claims
ratio, 35% compared to 20% as at the previous interim period, is still considered reasonable.
BANKING & FINANCE
The banking and finance segment targets three main asset classes, namely mortgage lending, student loans and SME
financing.
Trustco Bank is 60% through the work program to establish a fully-fledged digital and core banking solution enabling
cross border transactions, EFT and card capabilities. The premier offering of a full banking suite is expected to leverage
off Trustco’s core customer base to create a sustainable fee earning base as well as a stable deposit base. Meanwhile
capital raising efforts continue to progress to fund the residential mortgage and SME advances portfolio and have
culminated in a recent investment by the European Investment Bank of EUR7.5million.
Total advances have grown by 36.7% from 30 September 2015, whilst non-performing loans as a percentage of total
advances have decreased from 3.7% to 3.1% as at September 2015.
Trustco Bank Namibia Ltd continues to remain well capitalised with a Total Capital adequacy ratio of 38%, compared to
34% as at September 2015. This rising capital adequacy and prudent management of the Bank’s equity will provide a
stable platform to expand the balance sheet in the future. Tier 1 Capital as at 30 September was recorded at NAD
23.3million.
INVESTMENTS
In Namibia, increasing house prices and a contraction in credit extensions for mortgages has led to an overt impasse in
the Windhoek residential housing market. Whilst strong demand remains, especially in the middle income housing
market, the slowdown in development and access to finance for buyers has driven Trustco to re-engineer its premier
Windhoek housing estate, Elisenheim. Trustco will now increase its presence in the value chain by providing access to
finance for developers, mortgage loans for homeowners and the development of 40,000 square meters of commercial
property on the estate - as well as establishment of a primary and secondary schools. This will give new and existing
residents a convenient offering of prime retail and office space as well as access to quality education right on their
doorstep.
Strong sales continued in the residential division of the segment at the group’s Elisenheim estate, with the sale of phase 6
being fully completed in the first 6 months of the year. Revenue from property sales grew 20% from prior period and
whilst the division saw a decline in their gross profit ratio they remained ultimately profitable and improved on previous
interim result.
Occupation of fully erected housing has commensurately grown exponentially in the estate. As a result, this has
stimulated interest from retail, commercial and educational providers looking for property to occupy in the estate to
service an ever-growing suburb. By the end of 2017 the group expects in excess of 800 households to be resident in the
estate with limited retail and educational offerings to be provided by external vendors in the near future.
Rising interest rates, inflation and the declining exchange rate have all had a negative impact on the construction
industry; this has in turn led to a drastic increase in the cost of land servicing on all of the group’s properties currently
under development. The other investments of the group, which generate revenue from charter income, advertising
income and tuition fees showed an improvement in revenue generation, resulting in a 29% increase in revenues compared
to the interim period ended 30 September 2015. This growth in the other operating entities was offset by an increase in
operating costs and borrowing costs directly relating to rising inflation and interest rate increases.
RESOURCES
On 5 October 2015, Trustco announced the shareholders’ approval of the merger transaction between the Huso group,
owned by Dr Quinton van Rooyen, and Trustco. As of the date of publication of the interim results, the finalisation of the
Huso transaction was not yet completed due to an outstanding condition of acquisition, namely the issuance of the mining
licence. This delay arises from a backlog of mining licences pending approval from the Ministry of Mines and Energy.
The Huso group has taken the delay in the approval as an opportunity to upgrade certain elements of the mining plant at
the Kunene River Mouth mine. Once the capacity, which includes a new 50 tonne per hour DMS plant is installed and
regular mining results are being generated, shareholders can expect a full production brief. At the time of publication
shareholders and the board were contemplating amending the terms of the Huso Transaction to move away from
subsequent payments relating to future resources and rather issuing the remaining shares due and payable under the
transaction based directly and wholly on earnings. A full announcement will be published once the negotiations are
concluded.
On 17 October 2016, the Sierra Leone exploratory diamond drilling operations commenced. The phase 1 exploration
programme includes a 5 000 meters diamond drilling and 15 000 tons bulk sampling programme. To date, 1 000 meters
have been drilled and results are encouraging. The bulk sampling plant is designed, manufactured and constructed by
experts in this field and is expected to be commissioned in June 2017. Furthermore, a Canadian firm with a wealth of
international mining experience has been appointed to act as competent person and oversee the resource development
programme including the resource estimation and conceptual mine plan.
The exploration work programme is expected to be completed within the next 18 months, and once completed an
exclusive offtake agreement, established between Meya Mining and Morse Investments (a subsidiary of Huso), the
supply of rough diamonds to Trustco’s diamond cutting and polishing operation will further bolster the resources
segment’s performance.
Shareholders should be aware that Trustco Resources will be indemnified for any financial loss for a period of four years
and up to a maximum amount of twenty- five million United State Dollars, by Dr Quinton van Rooyen as the majority
shareholder, should the board consider the Sierra Leone acquisition to have caused an irrecoverable financial loss to the
group as a result of the purchase of Meya Mining.
DIVIDENDS
Given the near finalisation of Trustco Bank’s core banking system and the necessary organic capitalisation of the
resources segment, the board of directors has decided to defer the declaration and payment of any 2017 interim dividend
to coincide with publication of the 2017 integrated annual report.
An immediate cash injection into equity of the bank will enable Trustco Bank to grow its Tier 1 capital and assist in
recognising higher amounts relating to qualifying Tier 2 instruments as part of the total banking capital. This capital
injection will allow higher asset growth in the banking segment in accordance with the capital adequacy requirements of
the banking regulations.
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 IAS34 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 2016, 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).
INTERIM FINANCIAL RESULTS
The properties’ division growth has necessitated reporting of this division separately from other earnings in the
Investments segment. This has resulted in a change to the operating segments. All other segments remain the same.
Previous segmental comparatives have been reclassified to allow retrospective analysis.
ACKNOWLEDGEMENTS
The board of directors of Trustco acknowledge with gratitude the efforts and commitment from stakeholders and staff.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes 30 Sep 31 Mar 30 Sep
2016 2016 2015
Unaudited Audited Unaudited
NAD’000 NAD’000 NAD’000
ASSETS
Cash and cash equivalents 36 898 99 835 47 368
Advances 1 1 195 434 1 184 063 874 586
Trade and other receivables 2 1 081 95 1 765 949 852 617
Current income tax assets 7 494 7 496 4 195
Inventories 334 389 327 619 351 756
Property, plant and equipment 3 496 734 459 335 282 474
Investment property 843 894 816 180 728 017
Intangible assets 205 905 209 849 218 773
Deferred income tax assets 154 457 143 675 175 268
Total assets 4 357 156 4 014 001 3 535 054
EQUITY AND LIABILITIES
Liabilities
Overdraft 17 699 17 249 16 596
Borrowings 4 1 431 951 1 104 695 1 088 762
Trade and other payables 143 508 215 806 86 892
Current income tax liabilities 10 262 10 257 15 269
Amounts due to related parties 0 30 368 0
Other liabilities 22 066 42 038 23 187
Deferred income tax liabilities 323 943 329 159 357 350
Insurance contract liabilities 85 376 75 365 69 456
Total liabilities 2 034 805 1 824 937 1 657 512
Capital and reserves
Share capital 177 595 177 595 177 595
Share premium 46 300 46 300 46 300
Deemed treasury shares 5 (775) 0 0
Shares for vendors 14 976 14 976 14 976
Contingency reserve 2 683 2 683 2 250
Revaluation reserves 74 721 77 258 53 279
Foreign currency translation reserve (4 463) (7 635) (2 724)
Distributable reserves 2 011 314 1 877 887 1 585 866
Attributable to equity holders of the parent 2 322 351 2 189 064 1 877 542
Total equity and liabilities 4 357 156 4 014 001 3 535 054
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 6 months 6 months
ended ended Year ended
30 Sep 30 Sep 31 Mar
2016 2015 2016
Unaudited Unaudited Audited
NAD’000 NAD’000 NAD’000
Revenue 560 171 498 769 1 150 286
Investment income 34 436 35 847 153 167
Income from operations 594 607 534 616 1 303 453
Insurance benefits and claims (27 486) (24 955) (45 895)
Operating expenses (339 228) (262 412) (673 405)
Finance costs (78 171) (65 087) (134 279)
Profit before taxation 7 149 722 182 162 449 874
Taxation 16 796 (31 150) (30 076)
Profit for the period 166 518 151 012 419 798
Other comprehensive income, net of tax 635 4 408 24 115
Items that will not be subsequently reclassified to profit or loss
- Revaluation of property, plant and equipment (2 537) 1 197 25 814
Items that may be subsequently reclassified to profit or loss
- Foreign currency translation adjustment 3 172 3 211 (1 699)
Total comprehensive income for the period 167 153 155 420 443 913
CONSOLIDATED STATEMENT OF CASH FLOWS
Notes 6 months 6 months
ended ended Year ended
30 Sep 30 Sep 31 Mar
2016 2015 2016
Unaudited Unaudited Audited
NAD’000 NAD’000 NAD’000
Cash (utilised) /generated by operations (119 209) (62 894) 442 465
Finance costs (78 171) (65 087) (134 279)
Net advances disbursed (13 704) (67 621) (375 622)
Proceeds from funding liabilities 410 179 35 000 76 252
Other operational cash flows 2 835 (13 649) (4 093)
Net cash flow from operating activities 201 930 (174 251) 4 723
Purchase of PPE (79 102) (15 116) (126 846)
Other investing cash flows 18 213 (24 836) (13 887)
Net cash flow from investing activities (60 889) (39 952) (140 733)
Net repayment from long term borrowings (82 923) (39 676) (28 294)
Dividends paid (33 091) (26 624) (49 400)
(Purchase)/ Sale of deemed treasury shares (775) 194 362 244 384
Other financing activities (87 639) 13 233 (51 774)
Net cash flow from financing activities (204 428) 141 295 114 916
Net change in cash and cash equivalents (63 387) (72 908) (21 094)
Cash and cash equivalents at beginning of period 82 586 103 680 103 680
Cash and cash equivalents at end of period 19 199 30 772 82 586
CONDENSED CONSOLIDATED STATEMENT OF MOVEMENTS IN EQUITY
Notes 30 Sep 31 Mar 30 Sep
2016 2016 2015
Unaudited Audited Unaudited
NAD’000 NAD’000 NAD’000
Balance at the beginning of the period 2 189 064 1 550 166 1 550 166
Sale of deemed treasury shares 0 244 385 198 581
Deemed treasury shares purchased (775) 0 0
Dividends for the period (33 091) (49 400) (26 625)
Total comprehensive income for the period 167 153 443 913 155 420
Balance at the end of the period 2 322 351 2 189 064 1 877 542
CONDENSED SEGMENT ANALYSIS
Total Insurance Properties Investments Resources Banking
& Finance
NAD’000 NAD’000 NAD ’000 NAD’000 NAD’000 NAD’000
6 Months 30 September 2016 - unaudited
Revenue 671 317 84 852 354 933 132 635 0 98 897
External revenue 560 171 78 496 324 237 79 146 0 78 292
Intersegment revenue 111 146 6 356 30 696 53 489 0 20 605
Net profit after tax 166 518 14 722 164 328 (94 153) (3 072) 25 956
Total assets 4 357 156 228 290 2 174 050 263 411 187 1 637 686
Net Asset Value 2 322 351 125 844 1 149 542 195 397 92 792 738
6 Months 30 September 2016 - unaudited
Revenue 552 042 126 520 241 899 86 942 0 96 681
External revenue 498 769 126 079 233 217 61 320 0 78 153
Intersegment revenue 53 273 441 8 682 25 622 0 18 528
Net profit after tax 151 012 39 503 151 131 (74 439) 0 34 817
Total assets 3 535 054 331 447 1 981 876 286 289 0 935 442
Net Asset Value 1 877 542 247 629 958 487 198 570 0 472 856
Year ended 31 March 2016 - audited
Revenue 1 281 265 203 866 674 803 171 439 0 231 157
External revenue 1 150 286 201 286 624 253 103 254 0 221 493
Intersegment revenue 130 979 2 580 50 550 68 185 0 9 664
Net profit after tax 419 798 45 033 492 364 (174 922) (3) 57 326
Total assets 3 159 100 325 639 1 950 520 230 206 0 1 507 636
Net Asset Value 1 550 166 176 725 905 117 161 149 0 946 073
Note that the Investments segment also includes the head office shared services cost centre
HEADLINE EARNINGS PER SHARE
Notes 6 months 6 months
ended ended Year ended
30 Sep 30 Sep 31 Mar
2016 2015 2016
Unaudited Unaudited Audited
NAD’000 NAD’000 NAD’000
Profit attributable to ordinary shareholders 166 518 151 012 419 798
Adjustments: (172) (2 871) (366)
Loss on disposal of property, plant & equipment (253) (4 285) (221)
Fair value adjustments on investment properties 0 0 (300)
Tax effect 81 1 414 155
Headline earnings 166 346 148 141 419 432
EARNINGS PER SHARE
Earnings per shares:
Basic earnings per share (cents) 21.57 20.29 55.37
Diluted earnings per share (cents) 21.43 20.16 55.02
Headline earnings per share (cents) 21.54 19.91 55.32
Diluted headline earnings per share (cents) 21.41 19.78 54.97
Dividends per share (cents) 8.40 4.00 7.40
SHARES
Total number of ordinary shares in issue 772,142 772,142 772,142
Weighted number of ordinary shares in issue 772,100 744,107 758,124
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 777,022 749,029 763,046
NOTES TO THE CONDENSED INTERIM RESULTS
30 Sep 31 Mar 30 Sep
2016 2016 2015
Unaudited Audited Unaudited
NAD’000 NAD’000 NAD’000
1. Advances
Gross loans advanced 1 233 760 1 220 056 908 257
Provision for bad debts (38 326) (35 993) (33 671)
Net advances 1 195 434 1 184 063 874 586
Short-term portion 399 950 199 102 191 146
Long-term portion 795 484 984 961 683 440
2. Trade and other receivables
VAT receivables 55 501 29 076 0
Property sales receivables 930 183 690 785 763 391
Other receivables 96 267 46 088 89 226
1 081 951 765 949 852 617
3. Property, plant and equipment
Property acquired 79 102 181 749 40 065
Disposals (27 114) (7 953) (1 365)
4. Borrowings
Borrowings for Banking & Finance 814 249 454 166 417 445
Bonds issued 285 000 300 000 300 000
Mortgages and other borrowings 332 702 350 529 371 317
1 431 951 1 104 695 1 088 762
5 Deemed treasury shares
The carrying value of treasury shares as at 30 September 2016 is NAD 0.78 m (2015: NAD 69.0 m). The group
purchased 0.25 million shares (2015: 0 million shares) during the year. Disposals of 0 m shares (2015: 61.7 million
shares) were made.
30 Sep 31 Mar 30 Sep
2016 2016 2015
Unaudited Audited Unaudited
NAD’000 NAD’000 NAD’000
6. Fair value hierarchy
Level 1
No assets or liabilities are categorised as level 1 0 0 0
Level 2
Land and buildings 128 396 128 642 282 474
Aircraft 286 940 247 091 95 719
Investment property 843 894 816 180 728 017
Level 3
Advances 1 195 434 1 184 063 874 586
Trade and other receivables 1 081 951 765 949 852 617
Cash 36 898 99 835 47 368
Insurance contract liabilities (85 376) (75 365) (69 456)
Trade and other payables (143 508) (215 806) (86 892)
Other liabilities (22 066) (42 038) (23 187)
Borrowings (1 431 951) (1 104 695) (1 088 762)
The carrying value of financial assets held as loans and receivables and liabilities at amortized cost approximate their fair
values.
Advances, trade and other receivables, trade and other payables and borrowings are carried at amortized cost using the
effective interest method. The group applies market related discount rates where appropriate and hence all carrying
values approximate fair values.
NOTES TO THE CONDENSED INTERIM RESULTS CONT.
6. Fair value hierarchy continued.
Land and buildings, aircraft and investment property which are fair valued or revalued are valued either by independent
experts or by reference to quoted similar assets. The techniques and inputs used have not changed since the year end.
Technical provisions and policyholder liabilities under insurance contracts remain calculated on a forecast modelling
and/or pre- identified factor. Such factors have not been adjusted since financial year end.
Notes 6 months 6 months
ended ended Year ended
30 Sep 30 Sep 31 Mar
2016 2015 2016
Unaudited Unaudited Audited
NAD’000 NAD’000 NAD’000
7. Profit before taxation
This is arrived at after
taking the following into account:
Profit on FX differences 3 536 5 716 6 978
Salaries and directors remuneration (77 216) (82 595) (156 968)
Amortisation and depreciation (27 733) (37 906) (46 381)
Non-performing loan (charge) / reversal (2 333) 12 181 1 476
8. Transactions with related parties
Next Investments (Pty) Ltd
Management fees paid (546) (11 402) (28 287)
Surety fees paid (10 884) (1 711) (18 641)
Charter income received 1 267 336 498
Other transactions 0 (8 274) 0
Northern Namibia
Development Company (Pty) Ltd
Charter income received 1 117 257 842
Rental received 1 548 0 0
9. Post balance sheet events
On 26 October 2016 Trustco was successful in the plea to liquidate Dex Group to recover losses arising from the
purchase of the Dex Group of Companies in South Africa.
10. Changes to the board
On 15 June 2016, SW Pienaar, the deputy group financial director and alternate director to Ryan McDougall, resigned.
By order of the board
A Bruyns
Company Secretary
16 November 2016
JSE Sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)
NSX Sponsor
Simonis Storm Securities (Pty) Ltd
Date: 16/11/2016 11:06:00 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.
Sharenet Sites 
