Wrap Text
Reviewed condensed consolidated year end results
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia and registered as
an external company in South Africa
(Registration number 2003/058)
(External registration number 2009/002634/10)
NSX share code: TUC
JSE share code: TTO
ISIN Number: NA000A0RF067
(“Trustco” or “the Company”)
PROVISIONAL REVIEWED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018,
NOTICE OF AGM AND DIVIDEND DECLARATION
NATURE OF THE BUSINESS
Trustco is a diversified dual listed financial services group that invests and operates in sustainable high growth assets in
emerging markets. Trustco operates from three business segments being;
- Insurance and its investments;
- Resources and
- Banking and finance.
BUSINESS REVIEW
In the year under review the group managed to maintain its strategy to accelerate growth and development in its nascent
segments, while simultaneously increasing market capitalisation by 132%. The key component to this growth, which resulted
in the group’s share price climbing from 404 cents at the end of the prior financial year, to 875 cents at the end of the
current financial year, was the ground-breaking transaction with Riskowitz Value Fund, whereby 20% of the group’s
insurance segment was disposed of for NAD 1.2 billion.
This transaction enabled the group to diversify its revenue streams and operations to various geopolitical zones, reducing
Trustco’s exposure to adverse economic conditions. The group’s net asset value increased from 323 cents to 504 cents per
share translating into a substantial 56% increase. In particular, the group’s operations in Sierra Leone yielded encouraging
results. The new venture contributed NAD 275 million in revenue and NAD 139 million in profit.
With the group well capitalised, and management positive that the Namibian economy is poised for a recovery, the group is
well positioned to take advantage of said recovery in future. With operations in Sierra Leone set to intensify, the group
expects a full year of production that will see its success enabling the other segments to expand their reach into the
Namibian market. Banking and finance have systems readied to enable operations as a full commercial bank, while the
insurance segment is set to explore any and all synergies with its new minority partner.
SEGMENT PERFORMANCE
Insurance and its investments
The insurance business performed well in a harsher environment and was able to sustain its margins of profit and will be
pursuing new ways of leveraging off its unique position in the Namibian insurance market and grow revenue streams from a
more diversified product base.
Cash generated from the realisation of property debtors increased significantly from the previous year and the group
believes this trend to improve further into the 2019 financial year as the industrial land serviced during 2018 will also start to
transfer during this period. A tougher trading environment affected property sales, as fewer developers purchased
properties and a shift to a more sustainable first time buyers’ market started to emerge. Most developers were affected by
Bank of Namibia’s decision to impose more stringent terms of lending.
The City of Windhoek Municipality approved the establishment of a new industrial township for Windhoek, the capital city of
Namibia (refer to Lafrenz Update SENS of 16 February 2018). The increase in fair value of the Lafrenz Township, to a large
degree, compensated for the decrease in earnings during the financial period.
Trustco Construction Services has commenced the servicing of Phase IV at Elisenheim in order to continue with the steady
pace of transferring serviced land to a population still hungry to own their own piece of land. Construction of the first
commercial development at Elisenheim will also commence towards the end of 2018, thereby significantly enhancing the
lifestyle component of Elisenheim and ultimately property prices.
Banking and Finance
The banking and finance segment made significant progress in developing its capabilities by focusing on system
implementations and enhancing its electronic platform in preparation towards operating as a full commercial bank. The
group also injected new capital of NAD 80 million into Trustco Bank, which was successfully applied across a spectrum of
commercial and individual clients. Trustco Bank similarly increased its deposits through normal deposit raising efforts.
Although no new debt funding was raised for student finance lending during the year under review, management is in final
negotiations to raise funding for expanding the educational loan portfolio to cater for the enormous need for education in
Namibia. The performance of the segment is reflective of the liquidity constraints in Namibia.
Resources
Positive results were recorded in this segment. Revenue increased from zero to NAD 275 million on the backdrop of the
discovery of the Meya Prosperity Diamond (sold for USD 16.5 million cash). The segment sold 12 400 carats during the period
under review. The segment’s profit and assets increased by 1 351% and 60% respectively. The group has a contractual option
to increase its shareholding in Meya Mining from 51% to 60% after the large scale mining licence has been secured from the
Sierra Leone Ministry of Mineral Resources.
Shareholders are referred to the SENS announcement regarding the acquisition by Trustco Resources of 51% interest in
Meya Mining, dated 23 August 2016, specifically refer to the hurdle, which means:
“Hurdle” means the results from the Work Program as at the Completion Date proving any one of two components, namely, a
Resource Statement of at least 3 000 000 (three million) carats and/or a Resource Statement of at least USD 1 000 000 000
(one billion United States Dollars) valued at international market price”
Trustco received an internal preliminary exploration results and estimates report related to Meya’s resource from SRK
Consulting (Canada) Inc, on 29 June 2018, indicating that both the hurdle components have been achieved with the
exploration work done to date.
At the time of reporting, the Huso transaction had still not been concluded as the mining licence for Northern Namibia
Development Company (NNDC) was still outstanding. However, during the reporting period, the Ministry of Mines and
Energy of Namibia (MME) issued a notice of preparedness to grant a mining licence to NNDC subject to a revised
environmental clearance certificate from the Ministry of Environment and Tourism of Namibia (MET). A revised
environmental assessment and management plan together with an application for the environmental clearance certificate
for large scale mining was submitted to the MET in March 2018. Once the clearance certificate has been issued, the mining
licence shall follow and the transaction will be perfected.
DISPOSAL OF 20% INTEREST IN LEGAL SHIELD HOLDINGS (PTY) LTD (LEGAL SHIELD HOLDINGS) FOR NAD 1.2 BILLION
Trustco disposed of 20% of its shareholding in Legal Shield Holdings on 29 March 2018 for NAD 1.2 billion. The transaction is
in line with the group’s strategy to increase liquidity and at the same time deploy financial resources across the group in
order to accelerate growth in other segments. The proceeds received have been reinvested in the banking and finance and
resources segments.
At the reporting date, the group had already received 70% of the purchase consideration in cash. The disposal does not
constitute a change in control of Legal Shield Holdings.
TREASURY SHARES
During the period under review, the group purchased approximately 3 million treasury shares at an average price of NAD
7.58 per share. The settlement amount of NAD 22.4 million was paid in cash. The market value of all treasury shares held by
the group was NAD 400 million as at 31 March 2018.
DIVIDENDS
During the year under review, the board recommended that no dividend be declared for the financial period ended 31
March 2018.
GOING CONCERN
Management is fully aware of the need to continuously assess the going concern of the group throughout the year.
Subsequent to the reporting period, Trustco Group Holdings Limited (Trustco) and its longstanding institutional investors
(Lenders Group) engaged with one another to facilitate a potential consensual restructuring of the long term debt
arrangement offered by the Lenders Group. Management have received correspondence from the Lenders Group reserving
the rights currently in place, both in terms of the covenants set out as well as the repayment terms. During these discussions,
management has assessed and reconsidered the restrictive financial covenants, as certain of these are deemed to be
outdated as they were entered into as far back as ten years ago. Trustco along with the Lenders Group intend to replace the
original covenants entered into with a series of updated covenants. These covenants are more aligned to Trustco’s current
capital structure as well as development and dynamic nature of its operating segments. Management is confident that an
agreement will be entered into, but at the time of this report the parties are still in the discussion phase.
SUBSEQUENT EVENT
The directors are not aware of any material event which occurred after the reporting date and up to the date of this report.
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS), STANDARDS AND INTERPRETATIONS NOT YET EFFECTIVE
IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS
The standard is effective for years commencing on or after 1 January 2018. The standard will be adopted by the group for the
financial reporting period commencing 1 April 2018. IFRS 15 requires an entity to recognise revenue in such a manner as to
depict the transfer of the goods or services to customers, at an amount representing the consideration to which the entity
expects to be entitled in exchange for those goods or services.
The standard has a 5-step process which is required to be applied to all contracts with customers. The standard provides
guidance for identifying the contract with the customer, identification of the deliverables (performance obligations),
determination of the transaction price (including the treatment of variability in the transaction price and significant financing
components), how to allocate the transaction price and when to recognise revenue.
The group is in the process of assessing its significant revenue streams in line with the new standard. The group is in the
process of adopting the standard.
IFRS 16 LEASES
The standard is effective for years commencing on or after 1 January 2019. The standard will be adopted by the group for the
financial reporting period commencing 1 April 2019.
IFRS 16 requires a lessee to recognise a right of use asset and lease obligations for all leases except for short term leases, or
leases of low value assets which may be treated similarly to operating leases under the current standard IAS 17 if the
exceptions are applied.
A lessee measures its lease obligation at the present value of future lease payments, and recognises a right of use asset
initially measured at the same amount as the lease obligation including costs directly related to entering into the lease. Right
of use assets are subsequently treated in a similar way to other assets such as property, plant and equipment or intangible
assets dependent on the nature of the underlying item.
The group has a number of property rental agreements in place. In accordance with the standard, right of use assets and
lease obligations associated with these rentals would be recognised in the statement of financial position, the extent thereof
is yet to be determined.
The group is still to make a decision on the transition method to be applied or the application of exceptions related to short
term and low value asset leases.
IFRS 9 FINANCIAL INSTRUMENTS
The standard is effective for years commencing on or after 1 January 2018. The standard will be adopted by the group for the
financial reporting period commencing 1 April 2018. IFRS 9 provides guidance on the classification, measurement and
recognition of financial assets and financial liabilities and replaces IAS 39.
The standard establishes three measurement categories for financial assets: amortised cost, fair value through other
comprehensive income and fair value through profit and loss. Classification of financial assets into these categories is
dependent on the entity’s business model (which depicts its objectives with respect to the management of financial assets as
a whole) and the characteristics of the contractual cash flows of the specific financial asset. There were no significant
changes to the classification guidance for financial liabilities.
IFRS 9 introduces a new expected credit loss impairment model that replaces the incurred loss impairment model used in IAS
39.
The group will have to adjust its impairment models to incorporate new principles such as 12 months expected credit loss,
lifetime expected credit loss, forward looking information and time value of money in order to comply with expected credit
loss impairments under IFRS 9.
The group is in the process of adopting the standard.
IFRS 17 ‘INSURANCE CONTRACTS’
IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. The standard will be adopted by the
group for the financial reporting period commencing 1 April 2021.
IFRS 17 requires entities to identify portfolios of insurance contracts, which comprises contracts that are subject to similar
risks and are managed together. Each portfolio of insurance contracts issued shall be divided into a minimum of three
groups:
- A group of contracts that are onerous at initial recognition, if any;
- A group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if
any; and A group of the remaining contracts in the portfolio, if any.
- An entity is not permitted to include contracts issued more than one year apart in the same group. Furthermore, if a
portfolio would fall into different groups only because law or regulation constrains the entity’s practical ability to set
a different price or level of benefits for policyholders with different characteristics, the entity may include those
contracts in the same group.
The group is in the process of assessing the impact of the standard and the transitional provisions.
SALIENT FEATURES OF THE PROVISIONAL REVIEWED CONDENSED ANNUAL FINANCIAL STATEMENTS
Annual Financial Statements and Selected Notes
The reviewed condensed consolidated financial statements comprise the condensed consolidated Statements of Financial
Position at 31 March 2018, the condensed consolidated Statements of Profit or Loss and Other Comprehensive income,
Changes in Equity and Cash Flows and selected notes for the year then ended. When reference is made to the “group” in the
accounting policies, it should be interpreted as referring to Trustco Group Holdings Ltd and/or the company, where the
context requires, unless otherwise noted.
Responsibility for Annual Results
The board takes full responsibility for the preparation of this provisional report and confirms that the financial information
has been correctly extracted from the reviewed underlying consolidated annual financial statements.
Basis of Preparation
The reviewed condensed consolidated financial statements for the year ended 31 March 2018 have been prepared in
accordance with the group’s accounting policies under the supervision of the group financial director, Floors Abrahams,
BCom. The accounting policies adopted are consistent with those of annual financial statements for the year ended 31 March
2017 except for the revenue accounting policy applied for diamond sales. Revenue from diamond sales, during the
exploration and evaluation period, is recognised at the fair value of the consideration received or receivable in the statement
of profit or loss when significant risks and rewards of ownership have passed. The reviewed condensed consolidated financial
statements comply with IAS 34 Interim Financial Reporting, the framework concepts and the recognition and measurement
requirements of International Financial Reporting Standards (IFRS), SAICA Financial Reporting Guides as issued by the
Financial Reporting Standards Council, the Listings Requirements of the JSE Limited (JSE) and the Namibian Stock Exchange
(NSX) and the requirements of the Namibian Companies Act (Act 28 of 2004), as amended.
The reviewed condensed financial statements of the group are prepared as a going concern on the historical basis except for
certain financial instruments, property, plant and equipment and investment properties which are stated at fair value as
applicable.
Accounting Policies, Estimates and Judgements
The accounting policies, inclusive of reasonable judgements and assessments, applied in the reviewed condensed
consolidated financial statements, are consistent with those applied in the preparation of the audited consolidated financial
statements for the year ended 31 March 2017 except for the revenue accounting policy applied for diamond sales. The
accounting policies applied are consistent with the accounting policies applied by the group and comply with IFRS.
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values
of the assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and in any future periods affected.
Presentation Currency
The reviewed condensed financial statements are presented in Namibian Dollars (NAD), the functional currency of the group.
All amounts are rounded to the nearest thousand, except where another rounding measure has been indicated in the
condensed consolidated annual financial statements.
At 31 March 2018, NAD 1 was equal to ZAR 1.
New Standards and Interpretations
All new standards and interpretations that came into effect during the reporting period were assessed and adopted with no
material impact on the reviewed condensed consolidated financial statements.
Comparative Figures
Unless otherwise indicated, comparative figures refer to the 12 months ended 31 March 2017.
Review Opinion
The condensed consolidated financial statements and this provisional announcement have been reviewed by the company’s
auditors, Moore Stephens. The review has been conducted in terms of International Standards of Review Engagements. A
copy of the unmodified review report is available for inspection at the company’s registered office.
This auditors’ review report does not necessarily report on all information contained in this announcement. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditors’ engagement, they should obtain
a copy of this auditors’ review report together with the accompanying financial information from the company’s registered
office.
Any reference to future financial performance included in this announcement has not been reviewed nor reported on by the
company’s auditors.
Appreciation
With the success enjoyed by the group during the year, the board extends its gratitude for the tremendous effort from all
employees in order to achieve these results. The board would also like to express its thanks to its service providers, clients,
and all other stakeholders, without whom these results would not have been possible.
By order of the board
Adv Raymond Heathcote SC Dr Q van Rooyen
(Chairman) (Managing Director)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Figures in Namibia Dollar Thousand Notes 31 March 2018 31 March 2017
Reviewed Audited /
Restated*
ASSETS
Cash and cash equivalents 68 942 46 017
Advances 3 1 754 103 1 818 811
Trade and other receivables 4 684 845 762 225
Current tax assets 6 004 7 534
Amounts due by related parties 7 528 194 -
Inventories 370 205 339 278
Property, plant and equipment 5 591 515 609 416
Investment property 6 1 476 818 1 010 812
Intangible assets 462 452 526 791
Evaluation and exploration assets** 8 278 638 52 491
Deferred tax assets 150 656 94 718
Total assets 6 372 372 5 268 093
EQUITY AND LIABILITIES
Liabilities
Bank overdraft - 12 640
Borrowings 9 1 332 551 1 657 445
Trade and other payables 430 279 589 216
Current tax liabilities 8 938 28 018
Insurance liabilities 63 057 94 350
Amounts due to related parties - 2 678
Other liabilities 71 760 82 609
Deferred tax liabilities 299 566 308 687
Total liabilities 2 206 151 2 775 643
Capital and reserves
Share capital 13 190 245 177 595
Share premium 267 400 46 300
Deemed treasury shares 11 (200 804) (178 358)
Other reserves 44 933 47 875
Retained income 3 426 491 2 399 031
Total 3 728 265 2 492 443
Non-controlling interest 14 437 956
Total capital and reserves 4 166 221 2 492 450
Total equity and liabilities 6 372 372 5 268 093
*The provisional accounting of the acquisition of Meya Mining was finalised in the year under review and the provisional
numbers used in the 2017 financial year were restated. Goodwill and contingent consideration disclosed under intangible
assets and trade and other payables respectively, were increased by NAD 111.7 million. Restatement was done within the
business combinations measurement period.
** Evaluation and exploration assets were reclassified from intangible assets during the period under review to better reflect
the financial position of the group.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
Figures in Namibia Dollar Thousand Note 31 March 2018 31 March 2017
Reviewed Audited
Revenue 800 939 1 246 762
Cost of Sales (274 265) (208 896)
Gross Profit 526 674 1 037 866
Investment income 480 794 225 467
Operating expenses (542 489) (459 895)
Insurance benefits and claims (34 441) (48 292)
Finance costs (188 881) (173 669)
Profit before tax 17 241 657 581 477
Income Tax 31 971 (51 525)
Profit for the period 273 628 529 952
Other comprehensive income:
Total items that will not be
reclassified to profit
or loss – Revaluation of (5 129) (23 904)
property, plant and equipment
Total items that may be
reclassified to profit and loss –
Foreign currency translation (22 281) 8 780
adjustment
Total comprehensive income 246 218 514 828
for the period
Profit attributable to:
Owners of the company 178 830 529 952
Non-controlling interests 94 798 -
Total 273 628 529 952
Total comprehensive income
attributable to:
Owners of the company 160 144 514 828
Non-controlling interests 86 074 -
Total 246 218 514 828
Basic earnings per share (in cents) 23.74 69.11
Diluted earnings per share (in cents) 23.47 68.67
STATEMENT OF CHANGES IN EQUITY
Figures in Namibia Dollars
Thousands
Share Share Other Deemed Retained Non Controlling Total
Capital Premium Reserves Treasury Income Interest Equity
Shares
Balance at 1 April 2016 177 595 46 300 87 282 - 1 877 887 - 2 189 064
Profit for the year - - - - 529 952 - 529 952
Other comprehensive income - - (15 124) - - - (15 124)
Transfer between reserves - - (24 283) - 24 283 - -
Treasury Shared Purchased - - - (178 358) - - (178 358)
Dividends - - - - (33 091) - (33 091)
Non Controlling interest - - - - - 7 7
Balance at 31 March 2017 177 595 46 300 47 875 (178 358) 2 399 031 7 2 492 450
(AUDITED)
Balance at 1 April 2017
(AUDITED) 177 595 46 300 47 874 (178 358) 2 399 031 7 2 492 450
Profit for the year - - - - 178 830 94 798 273 628
Other comprehensive income - - (18 687) - - (8 724) (27 411)
Issue of shares 12 650 221 100 (233 750) - - - -
Equity loan advanced - - 250 000 - - - 250 000
Transfer between reserves - - (505) - 505 - -
Treasury shares purchased - - - (22 446) - - (22 446)
Sale of shared in subsidiary - - - - 848 125 351 875 1 200 000
Balance at 31 March 2018 190 245 267 400 44 933 (200 804) 3 426 491 437 956 4 166 221
(REVIEWED)
CONDENSED SEGMENTAL ANALYSIS
Total Banking & Finance Insurance and its Investments Resources
NAD ‘000 NAD ‘000 NAD ‘000 NAD ‘000
2018 (reviewed)
Revenue 800 939 151 555 373 976 275 408
Profit for the year 273 628 (12 218) 146 439 139 407
Segment total assets 6 372 372 1 924 420 3 675 251 772 701
2017 (audited)
Revenue 1 246 762 213 029 1 033 733 -
Profit for the year 529 952 60 593 480 501 (11 142)
Segment total assets 5 268 093 1 908 870 2 765 060 594 163
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Thousand in Namibia dollars For the year ended For the year ended
31 Mar 2018 31 Mar 2017
REVIEWED AUDITED / RECLASSIFIED
Cash flows from operating activities
Cash generated by operations
before working capital changes 32 998 651 326
Changes in working capital (53 671) (219 286)
Interest received 9 409 432
Finance costs (188 881) (170 456)
Net advances repaid/(disbursed) 47 323 (642 579)
Net funding from liabilities for student advances (128 618) 308 810
Tax paid (36 311) (861)
Net cash utilized in operating activities (317 751) (72 614)
Cash flow from investing activities
Additions to property plant and equipment (26 237) (27 790)
Proceeds from disposal of property plant and equipment 11 710 42 729
Additions to investment property (247) (212)
Advances to related parties * (180 788) (27 690)
Additions to intangible assets (17 896) (53 946)
Proceeds from disposal of intangible assets - 1 369
Acquisition of subsidiary, net of cash acquired - (14 146)
Additions to evaluations and exploration assets (226 147) -
Net cash used in investing activities (439 605) (79 686)
Cash flow from financing activities
Transactions with non-controlling interest 840 000 -
Proceeds of convertible equity loan 250 000 -
Proceeds from borrowings - 391 972
Repayment of borrowings (196 276) (202 636)
Repayment of other liabilities (78 357) (52 379)
Dividends paid 0 (33 091)
Purchase of deemed treasury shares (22 446) (775)
Net cash generated by financing activities 792 921 103 091
Net change in cash and cash equivalents 35 565 (49 209)
Cash and cash equivalents at beginning of year 33 377 82 586
Cash and cash equivalents at end of year 68 942 33 377
? * Advances to related parties in the previous year of NAD 27.7 million were reclassified from financing activities to
investing activities for more appropriate disclosure.
NOTES TO THE REVIEWED PROVISIONAL ANNUAL FINANCIAL STATEMENTS AS AT 31 MARCH 2018
1. Headline Earnings Reconciliation
For the year ended For the year ended
31 March 2018 31 March 2017
NAD ‘000 NAD ‘000
Reviewed Audited
Profit attributable to ordinary shareholders 178 830 529 952
Adjustments:
(Profit) Loss on disposals of property, plant
And equipment (1 832) 18 393
Fair value adjustments on investment
Properties * (1 964) 80
Impairment of property, plant and equipment 42 173 -
Tax effect (12 359) (5 908)
Headline earnings 204 848 542 517
Fair value gains on investment properties held by insurance companies are not deducted when calculating headline earnings.
2. Per Share Information
For the year ended For the year ended
31 March 2018 31 March 2017
NAD ‘000 NAD ‘000
Reviewed Audited
Earnings per share (cents) 23.74 69.11
Diluted earnings per share (cents) 23.47 68.67
Headline earnings per share (cents) 27.19 70.75
Diluted headline earnings per share (cents) 26.88 70.30
Dividends declared per share (cents) - -
Dividends paid per share (cents) - 5
WANOS 753 million (2017: 767million)
Diluted WANOS 762 million (2017: 772 million)
Shares in issue 827 million (2017: 772 million)
3. Advances 31 March 2018 31 March 2017
NAD ‘000 NAD ‘000
Reviewed Audited
Gross loans advanced 1 808 753 1859 635
Allowance for credit losses (54 650) (40 824)
Net advances 1 754 103 1 818 811
Current Assets 272 204 561 980
Non Current assets 1 481 899 1 256 831
Total advances 1 754 103 1 818 811
4. Trade and other receivables
Other receivables 57 822 39 283
Amounts due by related parties^ - 33 870
Property sales receivables 587 103 644 555
VAT 39 920 44 517
Total 684 845 762 225
Current Assets 186 447 389 915
Non Current Assets 498 398 372 310
Total Trade and other receivables 684 845 762 225
^Amounts due by related parties are amounts due by Next Investments (Pty) Ltd (Next). Mining equipment needs to be
purchased by Northern Namibia Development Company (Pty) Ltd (NNDC) from Next. NNDC is using the mining equipment
for its mining operations. In terms of the Huso transaction the group is required to maintain these assets. The assets will be
transferred to the group upon successful conclusion of the transaction.
5. Property, plant and equipment
Property acquired 93 745 275 041
Disposals (9 878) (61 122)
Impairment loss* 42 173 -
*The group’s aircraft fair value is directly linked to the USD. The movement of the exchange rate of the Namibia Dollar to
the USD from NAD 13.4 to NAD 11.8 resulted in the decrease in fair value. An amount was impaired as the carrying amount
of revaluation reserve was zero.
6. Investment Properties
Fair value gains* 465 759 194 420
Additions 247 212
*Increase is a result of the rezoning of the Lafrenz industrial township. Refer to commentary on insurance and its
investments.
7. Amounts due to related parties
31 March 2018 31 March 2017
Reviewed Audited
Riskowitz Value Fund LP 350 084 -
Next Investments (Pty) Ltd 178 110 -
528 194
Amounts due by Next includes an amount related to the Huso transaction. Mining equipment worth NAD 47.1 million needs
to be purchased by NNDC from Next. NNDC is using the mining equipment for its mining operations. In terms of the Huso
transaction the group is required to maintain these assets. The capitalised exploration cost of NNDC was NAD 69.5 million
(2017: NAD 29.0 million) and was financed by Next. These assets will be transferred to the group on successful conclusion of
the transaction which will happen when the environmental clearance certificate for large scale mining and the mining licence
are obtained.
Next is entitled to charge surety and management fees to Trustco in terms of a signed management agreement between
Next and Trustco. The directors of Next waived management and surety fees paid totalling NAD 61.5 million for the year
under review. The amount will be repaid in the next 12 months. Next repaid NAD 20 million of these fees after the year end.
The amount due by Riskowitz Value Fund is the outstanding balance of the 20% purchase of Legal Shield Holdings. The
balance bears interest at 11.50% p.a. and is repayable within the next 12 months.
8. Evaluation and exploration assets
Additions (reclassified) 226 147 52 491
Next repaid NAD 20 million of the management and surety fees after year end with the balance repayable within the next 12
months.
9. Borrowings
Term loans 1 011 303 1 186 020
Listed bonds 30 564 159 057
Mortgage and other borrowings 290 684 312 368
1 332 551 1 657 445
Current liabilities 790 407 444 126
Non-current liabilities 542 144 1 213 319
1 332 551 1 657 445
As at the end of the financial reporting period the company was in breach of certain covenant rations.
The loan terms had not yet been renegotiated. Negotiations however commenced subsequent to year end as described in
the cometary shown under the going concern paragraph.
10. Transaction with non-controlling interest
One 24 November 2017, Trustco entered into an agreement with the Riskowitz Value Fund LP in terms of which Trustco sold
of 20% of its interest in Legal Shield Holdings for a purchase price of NAD 1.2 billion (One Billion Two Hundred Million
Namibia Dollars).
The following table summarises the details of the transaction:
31 March 2018 31 March 2017
Reviewed Audited
Selling price 1 200 000
Net asset value 20% shareholding (351 875)
Transaction with non-controlling interest 848 125
As at year end the purchase consideration was partly settled, refer to note 5 for the balance outstanding.
11. Deemed Treasury shares
Opening balance 178 358 -
Purchase of shares 22 446 178 358
200 804 178 358
On 15 February 2017, the company acquired 41 806 778 treasury shares at price of NAD4.80. Settlement of the purchase
consideration of NAD 200 672 534 was deferred to 31 January 2018 on which date the purchase consideration was settled.
The group purchased 2 959 858 treasury shares at an average price of NAD 7.58 during the year under review.
At reporting date, the market value of treasury shares was NAD 400 million.
NOTES TO THE PROVISIONAL CONDESED CONSOLIDATED FINANCIAL RESULTS
31 March 2018 31 March 2017
Reviewed Audited/
Restated*
12. Fair value information
Fair value hierarchy
Level 3
Non- financial assets
Investment property 1 476 818 1 010 812
Land and buildings 162 924 133 981
Aircraft 169 352 217 707
Financial assets (Loans and
receivables at amortised cost)
Cash and cash equivalents 68 942 46 017
Advances 1 754 103 1 818 811
Trade and other receivables 644 925 678 425
Related party balances 528 194 39 283
Financial liabilities (Amortised cost)
Bank overdraft - (12 640)
Related party balances - (2 678)
Borrowings (1 332 551) (1 657 445)
Trade and other payables (422 066) (584 305)
Insurance contract liabilities (63 057) (94 350)
Other liabilities (71 760) (82 609)
Advances, trade and other receivables, trade and other payables and borrowings are measured at amortised cost using the
effective interest method. The group applies market related discount rates where appropriate and hence all carrying values
approximate fair value amounts owing to their short term nature.
Non-financial assets were moved out of level 2 into level 3 in the 2017 financial year as variables used to determine their fair
values are not observable by the public.
There were no transfers between level 1 and 2 in the reporting period.
The company’s policy for recognising transfers between levels is to recognise the transfer at the end of reporting period.
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 prior period
end. Technical provisions and policyholder liabilities under insurance contracts remain calculated on a forecast modelling
and/ pre-identified factor. Settlement of the employee fund resulted in a decrease in insurance liabilities. Such factors have
not been adjusted since the reporting date. Refer to note 4 for further information about increase in fair value.
13. Share capital
The company entered into a convertible equity loan agreement with Riskowitz Value Fund dated 6 July 2017. In terms of the
agreement, Riskowitz Value Fund advanced the company NAD 250 000 000 to be converted into 58 823 529 ordinary shares
of the company at a conversion price of NAD 4.25.
Trustco issued 55 000 000 ordinary shares on 30 October 2017 TO Riskowitz Value Fund. The shares were issued at par value
of NAD 0.23 per share and a premium of NAD 4.02. The shares were listed on the JSE in compliance with Schedule 6 of the
Listings Requirements and the issue was duly approved by the shareholders on 26 October 2017.
At the reporting date, Trustco is still to issue 3.9 million shares to Riskowitz Value Fund.
Equity instrument is any contract that evidences a residual interest in the assets of the group after deducting of its liability.
Equity instruments are recognised at the proceeds received.
Figures in Namibia Dollar Thousand 31 March 2018 21 March 2018
Reviewed Audited
14. Non-controlling interest
Opening balance 7 -
Total comprehensive income (Meya Mining) 86 074 -
Interest from purchase of Meya Mining - 7
Interest from sale of Legal Shield Holdings 351 875 -
437 956 7
As the effective date of sale of Legal Shield Holdings was 29 March 2018, the net profit was immaterial and no adjustment to
comprehensive income was made.
Profit or loss and each component of other comprehensive income attributable to the non-controlling interests is allocated
based on shareholding, even if the carrying amount of the non-controlling interests is in a deficit balance.
15. Rotation of auditors
The board on the recommendation of the audit and risk committee implemented a formal rotation policy for the
independent auditors of the group.
? Moore Stephens Johannesburg replaced BDO South Africa with Ms CA Whitefield being the designated partner; and
? Ms M Nel replaced Mr JSW de Vos as the designated partner for BDO Namibia.
16. Changes to the board
Mr J Mahlangu, an independent non-executive director, resigned on 22 April 2018.
On 26 April 2018, Prof LJ Weldon and Ms KN van Niekerk were appointed as independent non-executive directors.
17. Profit before tax
For the year ended For the year ended
31 March 2018 31 March 2017
Reviewed Audited
NAD ‘000 NAD ‘000
Operating profit for the year is stated after
accounting for the following:
Employee costs 179 927 151 130
Profit on foreign exchange differences 317 25 179
Auditors’ remuneration – audit fees 6,539 6 408
(Profit)/loss on disposal of property (1 832) 18 393
plant and equipment
Impairment of property, plant and 42,173 -
equipment*
Impairment of loans and receivables 3,559 3,000
Increase in allowance for credit losses
relating to student advances 13,826 4,831
*Refer to note 3 for further information
18. Related party transactions
Interest received from related parties
Riskowitz Value Fund LP 6,494 -
Sales to related parties
Next Investments (Pty) Ltd^ 2,715 1,367
Northern Namibia Development
Company (Pty) Ltd^ 2,527 2,001
Portsmut Hunting Safaris (Pty) Ltd^ 313 467
Morse Investments (Pty) Ltd^ 130 5
Management fees paid to related parties
Next Investments (Pty) Ltd^ - (14,407)
Guarantee fee paid to related parties
Next investments (Pty) Ltd^ - (21,694)
^-Common director: Q van Rooyen.
Refer to note 5 for balances due by/to related parties.
By order of the board
A Bruyns
Company Secretary
29 June 2018
JSE Sponsor
Sasfin Capital
(a member of the Sasfin group)
NSX Sponsor
Simonis Storm Securities (Pty) Limited
Date: 29/06/2018 04:57:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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