Reviewed Provisional Condensed Group Consolidated Annual Financial Statements For The Year Ending 31 March 2019
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
NSX share code: TUC
JSE share code: TTO
ISIN Number: NA000A0RF067
(“Trustco” or “the Company”)
TRUSTCO GROUP HOLDINGS LTD (“Trustco”, “TGH” and/or the ”group”) PROVISIONAL REVIEWED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DATED 31 MARCH 2019
NATURE OF THE BUSINESS
Trustco is a diversified dual listed majority family owned business, with the culture of creating long-term
sustainable growth for all stakeholders. Decisions are biased towards long-term value creation and short-term
hurdles are viewed as catalysts to drive success. Trustco operates from three business segments being:
• Insurance and its investments
• Resources and
• Banking and finance.
The group’s diversified business model, both in revenue streams, geographic regions and asset spread again
proved its worth, as group consolidated revenue increased by 85% to NAD 1.48 billion, with profit after tax
similarly increasing by 165% to NAD 725 million.
As a result, the group is proud to report that basic earnings per share has increased by 199% to 71c per share,
with headline earnings increasing by 157% per share, to 70c per share.
A detailed business overview will be contained in the Integrated Report of the group and in the individual
Integrated Report of each segment, due to be released on or about 28 June 2019.
INSURANCE AND ITS INVESTMENTS
Revenue for the segment increased to NAD 1.3 billion which represents growth of 241% compared to the
prior year. Profit after tax increased to NAD 292 million which represents growth of 99% from the prior year.
The segment contributed 35 cents per share to the consolidated group EPS and group HEPS. The group
owns 80% of this segment.
The resources segment reported an increase in after tax profits of NAD 486 million for the reporting period,
compared to NAD 139 million of the previous reporting year. At the time of reporting, an offer was made for
a diamond asset, two copper assets are being evaluated and one zinc asset has been identified. These assets
are all located in Namibia. This segment currently has three assets, Meya Mining, Northern Namibia
Development Company and Morse Investment.
Meya Mining is a world class Kimberlite deposit, situated in Sierra Leone. Meya Mining’s primary focus during
the reporting period was to conclude all the regulatory, technical, social and environmental studies in
preparation for the large scale mining licence application and the transitioning from exploration to commercial
production. The application was concluded and submitted to Sierra Leone Ministry of Mines and Mineral
Resources on 20 May 2019.
Northern Namibia Development Company
Northern Namibia Development Company (Pty) Ltd (NNDC) received ML152, a 15 year mining licence, from
the Namibian Ministry of Mines and Energy. The company is in the process of upgrading its mining fleet and
During the reporting period, Morse Investments obtained all the regulatory approvals to move its Export
Processing Zone (EPZ) status diamond cutting and polishing factory from an industrial to a commercial area
in Windhoek. EPZ status affords substantial tax free benefits.
BANKING AND FINANCE
The banking and finance segment continued its upward trajectory, which resulted in profit after tax of NAD 262
million for the reporting period on an individual segmental basis (loss after tax of NAD 52 million on a
consolidated basis), despite an additional NAD 41 million for credit impairment charges raised. The group owns
100% of this segment.
The initial adoption of IFRS 9 amounted to a provision of NAD 247 million that was accounted for through equity.
At March 2019 the segment had total assets of NAD2.7 billion on a stand alone basis. The segment has
optimised the structure of its statement of financial position, in order to improve liquidity and to provide
Trustco Bank with the opportunity to expand its lending operations through various avenues during the next
During the year under review, the board recommended that no dividend be declared for the financial period
ended 31 March 2019.
The group further broadened its lender and capital base during the year under review.
At the time of this report, the restructuring of the debt with the international lenders was partially completed,
with transactions concluded with five of the eleven lenders. It is expected that the remaining six lenders will
have restructuring terms concluded in due course. The remaining international debt to be restructured
represents 13% of the total capital structure (equity and liabilities) of the group. The group is confident that
the remaining international debt will be successfully restructured as the lenders indicated their willingness to
conclude the restructuring process when the standstill agreement expires on 15 June 2019.
The directors are not aware of any material event which occurred after the reporting period and to date of
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS), STANDARDS AND INTERPRETATIONS NOT YET
The group has decided not to early adopt the following standards and interpretations which have been
published and are mandatory for the group’s accounting periods beginning on or after 1 April 2019.
IFRS 16 LEASES
IFRS 16 was issued in January 2016. For lessees, almost all leases will be recognised in the statement of
financial position, as the distinction between operating and finance leases is removed. Under the new
standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised.
There are two exemptions, namely short-term and low-value leases.
The standard will affect primarily the accounting for the group’s operating leases. At the reporting date, the
group had non-cancellable operating lease commitments which were insignificant. The group does not expect
that these commitments will result in the recognition of an asset and a liability for future payments and this
will not affect the group’s profit and classification of cash flows. The group will apply a modified retrospective
The standard will effect the group for the financial reporting period commencing 1 April 2019.
IFRS 17 INSURANCE CONTRACTS
The standard is effective for years commencing 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 establishes the principles for the recognition, measurement, presentation and disclosure of insurance
contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant
information that faithfully represents those contracts. This information gives a basis for users of financial
statements to assess the effect that insurance contracts have on the entity’s financial position, financial
performance and cash flows.
The group is currently performing an assessment to determine the potential impact of the new standard on
the group’s statement of financial position and performance. The group is still considering the transitional
approach to be applied. The group expects that significant additional disclosures will be added to the financial
statements to meet the revised requirements of the standard.
SALIENT FEATURES OF THE PROVISIONAL REVIEWED CONDENSED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS AND SELECTED NOTES
The provisional reviewed condensed consolidated financial statements comprise the Condensed Consolidated
Statements of Financial Position at 31 March 2019, 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
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 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
BASIS OF PREPARATION
The provisional reviewed condensed consolidated financial statements for the year ended 31 March 2019
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
financial statements for the year ended 31 March 2018 except for the accounting policies applied for common
control transactions, mine properties, IFRS 15 and IFRS 9. Refer to notes 18 and 19 for further details. The
provisional 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 provisional reviewed condensed consolidated financial statements of the group are prepared as a going
concern on the historical basis except for certain financial instruments and investment properties which are
stated at fair value as applicable and property, plant and equipment which is stated using the revaluation
ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS
The preparation of the provisional reviewed condensed consolidated financial statements 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.
The provisional reviewed condensed consolidated 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 reviewed condensed consolidated financial statements.
At 31 March 2019, NAD 1 was equal to ZAR 1 and USD 14.20.
NEW STANDARDS AND INTERPRETATIONS
All new standards and interpretations that came into effect during the reporting period were assessed and
adopted. Refer to note 18 for the impact of new standards and interpretations on the provisional reviewed
condensed consolidated financial statements.
The provisional reviewed 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.
The board thanks all stakeholders for their continuous support.
By order of the board
Adv Raymond Heathcote SC Dr Q van Rooyen
(Chairman) (Chief Executive Officer)
13 June 2019
PROVISIONAL REVIEWED CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL POSITION AS AT
31 MARCH 2019
Figures in Namibia Dollar thousand Notes Reviewed Audited
Cash and cash equivalents 172 791 68 942
Advances 1 1 387 091 1 754 103
Trade and other receivables 520 556 684 845
Current tax assets 4 495 6 004
Amounts due by related parties 2 - 528 194
Inventories 281 977 370 205
Property, plant and equipment 3 670 256 591 515
Investment property 4 2 399 618 1 476 818
Intangible assets 5 452 521 462 452
Evaluation and exploration assets 6 530 275 278 638
Mine properties 7 164 875 -
Deferred tax assets 147 293 150 656
Total assets 6 731 748 6 372 372
EQUITY AND LIABILITIES
Borrowings 8 1 251 066 1 332 551
Trade and other payables 386 260 430 279
Current tax liabilities 10 243 8 938
Insurance contract liabilities 45 393 63 057
Amounts due to related parties 2 1 021 276 -
Other liabilities 63 447 71 760
Deferred tax liabilities 179 089 299 566
Total liabilities 2 956 774 2 206 151
CAPITAL AND RESERVES
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS PARENT
Share capital 9 224 084 190 245
OF 9 921 719 267 400
Deemed treasury shares 10 (197 959) (200 804)
Other reserves (869 002) 44 933
Retained income 3 158 490 3 426804)
Equity Attributable to shareholders of the parent 3 237 251 3 728 265
Non-controlling interest 537 723 437 956
Total capital and reserves 3 774 974 4 166 221
Total equity and liabilities 974985
6 731 748 6 372 372
PROVISIONAL REVIEWED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE
YEAR ENDED 31 MARCH
Figures in Namibia Dollar thousand Notes Reviewed Audited
Revenue 12 1 478 918 800 939
Cost of sales (500 317) (274) 265)
Gross profit 978 601 526 674
Investment and other income 554 792 480 794
Operating expenses (708 576) (542 489)
Insurance benefits and claims (16 784) (34 441)
Finance costs (202 144) (188 881)
Profit before tax 13 650 889 241 657
Income tax benefit 119 147 31 971
Profit for the year 725 036 273 628
Other comprehensive income:
Total items that will not be reclassified to profit or loss: revaluation
of property, plant and equipment net of tax (2 700) (5 129)
Total items that may be reclassified to profit or loss: exchange
differences on translating foreign operations net of tax 11 837 (22 281)
Total comprehensive income for the year 734 173 246 218
Profit attributable to:
Owners of the parent 608 232 178 830
Non-controlling interest 116 804 94 798
725 036 273 628
Total comprehensive income attributable to:
Owners of the parent 606 010 160 144
\ 128 163 86 074
734 173 246 218
Earningsof the parent
Owners per share
Basic earnings per share (cents) 70.99 23.74
Diluted earnings per share (cents) 40.81 23.47
Basic earnings per share (cents)
PROVISIONAL REVIEWED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH
Share Share Other Deemed Retained Equity Non- Total
capital premium reserves treasury income attributable to controlling equity
shares owners of interest
Audited Figures in Namibia Dollar thousand
Balance at 1 April 2017 177 595 46 300 47 875 (178 358) 2 399 031 2 492 443 7 2 492 450
Profit for the year - - - - 178 830 178 830 94 798 273 628
Other comprehensive income - - (18 687) - - (18 687) (8 724) (27 411)
Total comprehensive income - - (18 687) - 178 830 160 143 86 074 246 217
Issue of shares 12 650 221 100 (233 750) - - - - -
Convertible financial instrument - - 250 000 - - 250 000 - 250 000
Transfer between reserves - - (505) - 505 - - -
Deemed treasury shares acquired - - - (22 446) - (22 446) - (22 446)
Sale of shares in subsidiary - - - - 848 125 848 125 351 875 1 200 000
Balance at 31 March 2018 190 245 267 400 44 933 (200 804) 3 426 491 3 728 265 437 956 4 166 221
Reviewed (Figures in Namibia Dollar thousand)
Profit for the year - - - - 608 232 608 232 116 804 725 036
Other comprehensive income - - (2 222) - - (2 222) 11 359 9 137
Total comprehensive income - - (2 222) - 608 232 606 010 128 163 734 173
Issue of shares 33 839 654 319 (16 250) - - 671 908 - 671 908
Adjustment on initial application of IFRS9
(note 18) - - - - (247 531) (247 531) - (247 531)
Transfer between reserves - - 17 023 - (17 023) - - -
Common control transaction (note 16) - - (3 197 685) - - (3 197 685) - (3 197 685)
Shares for vendors (note 16) - - 2 285 199 - - 2 285 199 - 2 285 199
Deemed treasury shares sold - - - 4 806 3 465 8 271 - 8 271
Deemed treasury shares acquired - - - (1 961) - (1 961) - (1 961)
Transaction with non-controlling interest
(note 11) - - - - (615 225) (615 225) (28 396) (643 621)
Balance at 31 March 2019 224 084 921 719 (869 002) (197 959) 3 158 490 3 237 251 537 723 3 774 974
Notes 9 9 10
PROVISIONAL REVIEWED CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS FOR THE YEAR ENDED 31 MARCH
Figures in Namibia Dollar thousand Reviewed Audited
CASH FLOWS FROM OPERATING ACTIVITIES
(176 461) 32 998
Cash (absorbed)/ generated from operations before working capital changes
Changes in working capital 170 426 (53 671)
Cash used in operations (6 035) (20 673)
Finance income 18 243 9 409
Finance costs (202 144) (188 881)
Net advances received 58 577 47 323
Repayments of funding liabilities (18 337) (128 618)
Tax received/(paid) 546 (36 311)
Net cash from operating activities (149 150) (317 751)
CASH FLOWS FROM INVESTING ACTIVITIES
(86 184) (26 237)
Additions to property, plant and equipment
Disposal of property, plant and equipment 6 753 11 710
Additions to investment property - (247)
Additions to intangible assets (23 010) (17 896)
Disposal of intangible assets 566 -
Additions to mining properties (18 008) -
Additions to evaluation and exploration assets (163 853) (226 147)
Acquisition of subsidiary, net of cash acquired (note 16) 1577 -
Advances to related parties - (180 788)
Net cash from investing activities (283 579) (439 605)
CASH FLOWS FROM FINANCING ACTIVITIES
- 250 000
Proceeds from convertible financial instrument
Repayment of borrowings (note 14) (58 848) (196 276)
Repayment of other liabilities (note 14) (17 360) (78 357)
Disposal of deemed treasury shares 8 271 -
Purchase of deemed treasury shares (1 961) (22 446)
Transaction with non-controlling interests - 840 000
Proceeds from related parties 606 476 -
Net cash from financing activities 536 578 792 921
Net change in cash and cash equivalents 103 849 35 565
Cash and cash equivalents at the beginning of the period 68 942 33 377
Cash and cash equivalents at the end of the period 172 791 68 942
HEADLINE EARNINGS RECONCILIATION FOR THE YEAR ENDED 31 MARCH
Figures in Namibia Dollar thousand Reviewed Audited
Basic earnings per share
Profit for the period attributable to equity holders of the parent
608 232 178 830
Profit attributable to equity holders of the parent 608 232 178 830
1 141 (1 832)
Loss/(profit) on disposal of property, plant and equipment
Impairment of intangible assets 9 497 -
Fair value adjustments on investment properties* - (1 964)
Reversal of impairment of property, plant and equipment (23 243) -
Impairment of property, plant and equipment - 42 173
Tax effect thereon 4 034 (12 359)
Headline earnings 599 661 204 848
Reconciliation of weighted average number of ordinary shares used for
earnings per share to weighted average
number of ordinary shares used for diluted earnings per share
Weighted average number of ordinary
856 749 753 322
shares used for basic earnings per share (‘000)
- 3 824
Shares issuable as a result of convertible equity loan (‘000)
Contingently issuable shares as a result of business
combinations (‘000) (note 16) 633 722 4 922
Weighted number of ordinary shares for the purposes
of diluted earnings per share (’000) 1 490 471 762 068
Basic earnings per share (cents) 70.99 23.74
Diluted earnings per share (cents) 40.81 23.47
Headline earnings per share (cents) 69.99 27.19
Diluted headline earnings per share (cents) 40.23 26.88
**Fair value losses/gains on investment properties held by insurance companies are included in headline
CONDENSED SEGMENTAL ANALYSIS
Segment Inter- Revenue Profit for Depreciation Interest Interest Impairment of Income
2019 revenue segment from external the amortisation and income expense receivables tax
Reviewed revenue customers period impairment and loans expense
Banking and finance 151 618 (20 755) 130 863 (52 342) 4 063 2 129 64 140 68 022 2 690
Insurance and its investments * 1 474 495 (197 586) 1 276 909 291 772 54 318 53 450 114 314 32 759 (117 044)
Resources 144 458 (73 312) 71 146 485 606 587 - 23 690 - (4 793)
Total 1 770 571 (291 653) 1 478 918 725 036 58 968 55 579 202 144 100 781 (119 147)
Segment Inter Revenue Profit for Depreciation Interest Interest Impairment Income
2018 revenue segment from external the amortisation income expense of receivables tax
Audited revenue customers period and impairment and loans expense
Banking and finance 201 222 (49 668) 151 555 (12 218) 2 714 1 550 69 832 24 237 (24 471)
Insurance and its investments* 1 717 252 (1 343 276) 373 976 146 439 94 322 7 920 117 485 18 470 52 229
Resources 316 123 (40 715) 275 408 139 407 6 (60) 1 564 - 4 213
Total 2 234 597 (1 433 659) 800 939 273 628 97 042 9 410 188 881 42 707 31 971
Inter-segment sales are charged at prevailing market prices.
The accounting policies of the reportable segments are the same as the group’s accounting policies. This is the measure reported to the Chief Operating Decision
Maker (CODM) for the purpose of resource allocation and assessment of segment performance.
*Insurance and its investments above includes the insurance and its investment segment as well as the TGH company, and all subsidiaries allocated to the
CONDENSED SEGMENTAL ANALYSIS
Total assets (2019) Total assets (2018) Total liabilities (2019) Total liabilities (2018)
(figures in Namibia Dollar thousand) Reviewed Audited Reviewed Audited
Banking and finance 1 536 546 1 924 420 (478 589) (463 933)
Insurance and its investments 3 909 260 3 675 251 (2 282 692) (1 387 083)
Resources 1 285 942 772 701 (195 493) (355 135)
Total 6 731 748 6 372 372 (2 956 774) (2 206 151)
Geographic information Revenue Revenue Assets Assets
2019 2018 2019 2018
(Figures in Namibia Dollar thousand) Reviewed Audited Reviewed Audited
Namibia 1 407 773 525 494 5 679 196 5 567 986
Sierra Leone 71 145 275 445 1 052 552 804 386
Total 1 478 918 800 939 6 731 748 6 372 372
For the purposes of monitoring segment performance and allocating resources between segments the Group’s Chief Executive monitors the tangible,
intangible and financial assets attributable to each segment.
NOTES TO THE PROVISIONAL REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS
Throughout the notes 2019 2018
Figures in Namibia Dollar thousand Reviewed Audited
Advances 1 742 643 1 808 753
Allowance for credit loss (355 552) (54 650)
Reconciliation of credit loss allowance
Opening balance 54 650 40 824
Adjustment upon application of IFRS 9 (note 18) 247 531 -
Subtotal 302 181 40 824
Increase of credit loss allowance 53 371 13 826
Total 355 552 54 650
Refer to note 18 for IFRS 9 disclosures
2. AMOUNTS (DUE TO)/DUE BY RELATED PARTIES
Next Investments (Pty) Ltd (1 021 276) 178 110
Riskowitz Value Fund LP - 350 084
Total (1 021 276) 528 194
The amount due to Next Investments (Pty) Ltd arises from the NAD 1 billion loan transaction
announced on the 8th of October 2018 in terms of which Dr. Q van Rooyen together with his
investment vehicle, Next Investments (Pty) Ltd would lend to Trustco Group Holdings Ltd. The loan
is repayable on 31 March 2024 and bears interest at the Namibian prime lending rate of 10.50%.
The loan is convertible into Trustco’s shares at the option of the lender and is subordinated until
it is settled. No dilutive effect on headline earnings and earnings per share was calculated as the
average share price was lower during the year than the exercise price of the option.
During the period Next Investments (Pty) Ltd waived a portion of its loan. Refer to note 13 for
The amount due by Riskowitz Value Fund is the outstanding balance of the Legal Shield Holdings
transaction. The balance bore interest of 11.50% p.a. and was repaid during the period.
3. PROPERTY, PLANT AND EQUIPMENT
Property acquired 86 184 275 041
Additions through common control transactions (note 16) 10 841 -
Disposals (7 894) (9 878)
Reversal of impairment / (impairment) of property 23 243 (42 173)
Depreciation capitalized in evaluation and exploration assets 57 466 -
Capital commitments (not yet contracted for but authorized
by directors) 665 100 170 867
REVALUATION OF ASSETS
On an annual basis, an independent valuation of the group’s land and buildings and aircraft is
performed by independent valuers to determine the fair value of these assets. The revaluation
surplus and the applicable deferred taxes were recognised in other comprehensive income and
presented in ‘other reserves’ in equity.
VALUATION TECHNIQUES USED TO DETERMINE REVALUED AMOUNTS
Valuation of aircraft is based on the International Recognised Blue Book for aircraft which is the
accepted source for aircraft valuations worldwide. The effective date of revaluation was 31 March
2019 (2018: 31 March 2018). Valuation of the aircraft is based upon the current operating hour
and cycle readings of the aircraft. Values reflect prices to purchase similar aircraft in a similar
condition at that date, based on all available data such transactions in the market that would be
used to replace these assets. Management has considered that these valuations materially
represent revalued amounts as at 31 March 2019 (2018: 31 March 2018).
(b) Land and buildings
Land and buildings were valued by using the income capitalisation method. This method involves
the determination of the net income of the property that is capitalised at a rate sought by prudent
investors to determine the revalued amount of the subject property. The expected income of the
property is determined by the comparison of the market rentals of similar properties. Refer to
the statement of comprehensive income for revaluation loss for the year.
The properties fair value has been determined based on valuations performed by Gert Hamman
Property Valuers CC and CP Marais. The effective date of the revaluations was 31 March 2019
(2018: 31 March 2018). Gert Hamman Property Valuers CC and CP Marais are not connected to
the group, are qualified property valuators and have recent experience in location and category
of the property being valued.
The group aircraft’s revalued amount (reported in the group’s “Insurance and its investments”
segment) is directly linked to the US dollar. The exchange rate is one of the significant inputs. The
movement of the exchange rate of the Namibian dollar to the US dollar from NAD 11.8 to NAD
14.1 (from NAD 13.4 to NAD 11.8 in previous financial year) resulted in significant increase (2018:
decrease) in the revalued amount. The increase was recognised as a reversal of impairment loss
in profit or loss to the extent of impairment loss recognised in the previous financial period.
During the period the reversal of impairment loss of NAD 23.2 million (for 12 months period ended
31 March 2018: NAD 42.2 million impairment loss) was recognised in the “Insurance and its
investments” segment’s profit or loss. The recoverable amount of the aircraft is NAD 184 million
(2018: NAD 169 million) and is equal to its revalued amount less cost of disposal. Aircraft are
classified in level 3 of the fair value hierarchy.
4. INVESTMENT PROPERTY
Additions - 247
Fair value (losses) / gains (61 627) 465 759
Transfer from inventory 984 427 -
TRANSFER FROM INVENTORY TO INVESTMENT PROPERTY
In 2014 the group purchased a property development company (the developer), that owned
property assets. These properties were held with the intention of being developed and disposed of
in the ordinary course of business and therefore treated as inventory by the group. Due to the
decline in the property market, as evidenced by relatively low demand and a decline in property
prices, caused by the slowdown of the Namibian economy, management decided to review its plan
and developed a new strategy as regards the extraction of value from these property assets. The
revised strategy is to hold the properties for longer term capital appreciation and not for short term
development and sale. As a consequence the board decided that the planned imminent
development of the affected property assets be cancelled immediately. The strategy adopted for the
affected property assets is now aligned with that adopted for other similar property assets within
the property portfolio of the group which have been accounted for as investment properties.
Consequently, the group reclassified the affected properties from inventory to investment property
as required by IAS 40 Investment Property when there is a change in the intention and actions of an
entity under these circumstances. It is the group’s policy to measure investment properties at fair
value. Under such circumstances when an entity transfers items from inventories to investment
property that will be carried at fair value, IAS 40 requires that the transfer be treated in a manner
that “is consistent with the treatment of sales of inventories” and to “recognise any difference
between the fair value of the property at that date and its previous carrying amount in profit or
loss”. The group has applied these requirements by recognising as revenue from “deemed sales of
inventory” an amount of NAD 984 million, being the fair value of the property assets, and recognising
as “deemed cost of sales” an amount of NAD 291 million being the carrying amount property assets
(as inventory) at the date of transfer. A gain of NAD 693 million has therefore been recognised in
profit or loss as required.
5. INTANGIBLE ASSETS
Intangible assets acquired 23 058 17 896
Additions through common control transaction (note 16) 3 116 -
Impairment loss (9 497) -
CONSTRUCTION OPERATIONS – TRUSTCO CONSTRUCTION SERVICES (PTY) LTD
The goodwill associated with Trustco Construction Services (Pty) Ltd arose when the business was
acquired by the group in the 2016 financial year. An impairment loss was recognised during the
period under review as the recoverable amount of the business unit was significantly affected by a
depressed operating environment. The other assets within this cash generating unit were deployed
for use in other units within the group. The total amount recognised as an impairment loss in profit
or loss during the period was NAD 9.5 million. The impairment loss was accounted for in the
“Insurance and its investments” segment’s profit or loss. The carrying amount of goodwill is NAD Nill
million (2018: NAD 9.5 million).
6. EVALUATION AND EXPLORATION ASSETS
Additions 163 853 226 147
Depreciation capitalised 57 466 -
7. MINE PROPERTIES
Mine under development
Additions (note 19) 18 008 -
Additions through common control transactions (note 16) 146 867 -
Term loans 1 002 227 1 011 303
Listed bonds - 30 564
Asset backed financing arrangements 209 651 210 598
Mortgage bonds 39 188 80 086
Total 1 251 066 1 332 551
Refer to the going concern note in commentary section.
9. SHARE CAPITAL
Issued and fully paid
Ordinary 214 084 190 245
Share Premium 921 719 267 400
Total 1 145 803 457 645
The unissued shares are under the control of the directors for which renewed authority is to be
sought at the forthcoming annual general meeting. At the reporting date 974 265 619 (2018: 827
142 090) shares were issued and outstanding.
The following shares were issued during the period under review:
• The balance of the Riskowitz Value Fund shares of 3 823 529. The shares were issued at par
value of NAD 0.23 per share and a premium of NAD 4.02 per share. The share issue was settled
through conversion of an equity loan (previously reported under other reserves) entered into
by the group and Riskowitz Value Fund.
• The Huso transaction as amended was perfected during the period under review. The group
made a first payment of NAD 672 077 000 (refer to note 16), payable by way of an issue of 143
300 000 shares, as compensation for the purchase of Huso. The shares were issued at par value
of NAD 0.23 per share and a premium of NAD 4.46 per share to Dr. Q. van Rooyen who
nominated Next Investments (Pty) Ltd and Le-Hugo Investments as the beneficiaries of the
shares in terms of the Huso transaction.
The shares were listed on the Namibian Stock Exchange and the JSE Ltd in compliance with
Schedule 6 of the Listings Requirements and were duly approved by shareholders.
10. SHARE CAPITAL
Number of shares Cost of shares
Balance at the reporting date 44 586 197 959
At the reporting date, the market value of treasury shares was NAD 467 million (2018: NAD 400
11. ACQUISITION OF NON-CONTROLLING INTEREST
On 29 March 2019, Trustco entered into an agreement with Germinate SL Ltd in terms of which
the group acquired a further 14% of Meya Mining from Germinate for a purchase price of NAD
644 million (six hundred and forty four million Namibia Dollars) bringing in its total interest to
The following table summarises the details of the transaction:
Consideration paid 643 621
Net assets value 14% shareholding (28 396)
Total 615 225
The transaction was settled by a loan advanced from Next Investments (Pty) Ltd. Refer
to note 14 for movements in liabilities arising from financing.
Premium revenue 128 562 133 154
Property sales 100 115 166 750
Transfer of inventory to investment property* 984 427 -
Tuition and other related fees 44 749 52 668
Interest earned on student advances 122 287 148 810
Diamond sales 71 145 275 407
Other revenue 27 633 24 510
Total revenue 1 478 918 801 299
*Refer to note 4 on revenue received from transfer of inventory to investment property.
13. PROFIT BEFORE TAX
Operating profit for the year is stated after accounting for the following:
Employee costs 199 847 179 927
Loss / (Profit) on foreign exchange differences 86 637 (317)
Auditors’ remuneration - audit fees 10 462 6 539
Loss/(profit) on disposal of property, plant
and equipment 1 141 (1 832)
Reversal of impairment loss of property,
plant and equipment (23 243) -
Impairment loss of property, plant and equipment - 42 173
Impairment of goodwill 9 497 -
Impairment of other receivables 39 877 -
Impairment of advances 7 533 3 559
Increase in credit loss allowance
on advances (note 1) 53 371 13 826
Loan waiver* 545 601 -
*During the period under review Next Investments (Pty) Ltd waived NAD 546 million, a portion of
which was a short term working capital support facility previously provided to fund the operations
of Huso group (Huso). The waiver of the loan facility by Next resulted in the group being legally
released from its contractual obligation to settle the loan, and the financial liability was
derecognised. Owing to the fact that there was no consideration paid by the group, nor equity
instruments issued by the group in exchange for this release of debt, the gain has been recognised
in as was released to profit or loss.
14. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING
2019 Opening New Other non Cash flows Sub Cash flows Closin
Reviewed balance leases cash flow related to total related to balan
items operations financing -ce
Borrowings 1 332 551 - (4 300) (18 337) 1 309 914 (58 848) 1 251 066
Other liabilities 71 760 9 047 - - 80 807 (17 360) 63 447
parties (528 194) - 942 994 - 414 800 606 476 1 021 276
Total 876 117 9 047 938 694 (18 337) 1 805 521 530 268 2 335 789
2018 Opening New Other non Cash flows Sub Cash flows Closin
Audit balance leases cash flow related to total related to balan
items operations financing -ce
Borrowings 1 657 445 - - (128 618) 1 528 827 (196 276) 1 332 551
Other liabilities 82 609 67 508 - - 150 117 (78 357) 71 760
Total 1 740 054 67 508 - (128 618) 1 678 944 (274 633) 1 404 311
? Borrowings used to finance the operations of the student loan book are classified as
15. RELATED PARTY TRANSACTIONS
Riskowitz Value Fund LP**
Interest received 15 431 6 494
Next Investments (Pty) Ltd^
Sales 2 326 2 715
Management fees paid (35 478) -
Surety fees paid (43 567) -
Interest paid (9 903) -
Loan waiver (note 13) 545 601 -
Northern Namibia Development Company (Pty) Ltd^*
Sales 128 2 527
Portsmut Hunting Safaris (Pty) Ltd^
Sales - 313
Morse Investments (Pty) Ltd^*
Sales - 130
Refer to notes 2 and 14 for balances (due to)/due by related parties.
^*-Entity became an indirect subsidiary on 4 September 2018
^-Common shareholder: Q van Rooyen
16. COMMON CONTROL TRANSACTION
On 4 September 2018 the group acquired control of 100% of the voting equity interest of the Huso
group. Huso is the holding company of Northern Namibia Development Company (Pty) Ltd (NNDC) and
Morse Investments (Pty) Ltd (Morse). At the time of acquisition the Huso group was under the control
of Dr Q. Van Rooyen who is also the controlling shareholder of the Trustco group through his direct
and indirect interests. As such the transaction is deemed a common control transaction and as a result
IFRS 3 Business Combinations is not applicable to it.
As IFRS 3 is not applicable, the group has applied its own accounting policy for common control
transactions the summary of which is reflected in the table below:
Book value of assets acquired and liabilities assumed of Huso
Property, plant and equipment 10 842
Intangible assets 3 730
Evaluation and exploration assets 146 867
Related party balances 115
Inventories 1 400
Trade and other receivables 7 215
Cash and cash equivalents 157
Related party balances (401 407)
Trade and other payables (9 329)
Total identifiable net assets (240 410)
Common control reserve 3 197 685
Total 2 957 275
Acquisition date book value of consideration paid
Shares issued (note 9) 672 077
Contingent consideration arrangement 2 285 198
Total 2 957 275
CONTINGENT CONSIDERATION ARRANGEMENTS
A fixed number of shares will be payable to the seller at any time during the payment term (being
not later than nine years from 4 September 2018), upon the Resources Segment reaching the
following cumulative Earnings Before Interest, Tax, Depreciation, Amortisation and After Stock
Adjustments (EBITDAASA) targets:
EBITDAASA Number of
Event NAD’ million million
Upon reaching the first EBITDAASA target of 250 120.2
Upon reaching the second EBITDAASA target of 250 120.2
Upon reaching the third EBITDAASA target of 250 120.2
Upon reaching the fourth EBITDAASA target of 250 120.2
Upon reaching the fifth EBITDAASA target of 308.1 148.0
Total 1,308.1 628.8
The purchase consideration, accounted as cost adjusted for time value of money, is based on
significant inputs that are not observable in the market, key assumptions are a discount rate of
10.5% and an assumed probability of achieving the targets by the 2023 financial period. The
contingent consideration is included in shares for vendors. The contingent consideration was
classified as equity as it does not meet the definition of a financial liability.
ACQUISITION RELATED COSTS
No acquisition-related costs were incurred and charged to administrative expenses in profit or loss
for the current period ended.
GROUP REVENUE AND PROFIT OR LOSS FOR FULL YEAR
The acquired business contributed revenues of NAD Nil, other income of NAD 424.4 million and a
profit of NAD 419.5 million to the group for the period from 1 September 2018 to 31 March 2019.
Had the common control transaction taken place at the beginning of the reporting year, the revenue
for the group would have been NAD Nil, other income of NAD 424.4 million and the net profit would
have been NAD 415.3 million.
17. FAIR VALUE
The fair values of financial assets and liabilities are not materially different to their carrying
amounts, since the interest receivable/payable is either close to current market rates or the
instruments are short-term in nature.
18. NEW STANDARDS AND INTERPRETATIONS EFFECTIVE AND ADOPTED IN THE CURRENT YEAR
This note explains the impact of the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue
from Contracts with Customers on the group’s financial statements and also discloses the new
accounting policies that have been applied from 1 April 2018, where they are different to those
applied in prior periods.
a) IFRS 9 Financial Instruments
i) Impact on the financial statements
As explained below, IFRS 9 was adopted without restating comparative information. The
reclassifications and the adjustments arising from the new impairment rules are therefore not
reflected in the restated statement of financial position as at 31 March 2018, but are recognised
in the opening statement of financial position on 1 April 2018.
The group has adopted IFRS 9 with a date of transition of 1 April 2018, which resulted in changes in
accounting policies and adjustments to the amounts previously recognised in the financial
statements. The group did not early adopt IFRS 9 in previous periods.
ii) IFRS 9 Financial instruments – impact of adoption
IFRS 9 replaces the provisions of IAS 39 that relate to the recognition, classification and
measurement of financial assets and financial liabilities, derecognition of financial instruments and
impairment of financial assets.
The adoption of IFRS 9 Financial Instruments from 1 April 2018 resulted in changes in accounting
policies and adjustments to the amounts recognised in the financial statements. The new
accounting policies are set out below.
In accordance with the transitional provisions in IFRS 9, comparative figures have not been restated.
The total impact on the group’s retained earnings as at 1 April 2018 is as follows:
(Figures in Namibia Dollar thousand)
Closed retained earnings 31 March 2018 – IAS 39 3 426 491
Adjustment to retained earnings from adoption of IFRS 9 on 1 April 2018
Increase in expected credit loss for bank advances and loans at amortised cost (2 105)
Increase in expected credit loss for property advances (245 426)
Opening retained earnings 1 April 2018 – IFRS 9 3 178 960
iii) Classification and measurement
On 1 April 2018 (the date of initial application of IFRS 9), advances, loans and trade receivables
previously classified as loans and receivables are held to collect contractual cash flows and give rise
to cash flows representing solely payments of principal and interest. These are now classified and
measured as Debt instruments at amortised cost. There are no changes in classification and
measurement for the group’s financial liabilities.
iv) Impairment of financial assets
The adoption of IFRS 9 has fundamentally changed the group’s accounting for impairment losses
for financial assets by replacing IAS 39’s incurred loss approach with a forward-looking expected
credit loss (ECL) approach. IFRS 9 requires the group to recognise an allowance for ECLs for all debt
instruments not held at fair value through profit or loss and contract assets.
The group’s financial assets that are subject to IFRS 9’s expected credit loss model were:
• advances carried at amortised cost; and
• trade receivables carried at amortised cost.
The group was required to revise its impairment methodology under IFRS 9 for each of these classes
of assets. The impact of the change in impairment methodology on the group’s retained earnings
and equity is disclosed in the table in note ii) above.
While cash and cash equivalents are also subject to the impairment requirements of IFRS
9, the identified impairment loss was immaterial.
v) Accounting policy applied from 1 April 2018
Financial Assets at amortised cost
From 1 April 2018, the group classifies its financial assets as those measured at amortised
The classification depends on the entity’s business model for managing the financial assets and
the contractual terms of the cash flows. These assets are held for collection of contractual cash
flows where those cash flows represent solely payments of principal and interest.
Subsequently the group measures advances and trade receivables at amortised cost and
impairment is recognised on these assets.
Interest income from these financial assets is included in finance income using the effective
interest method. Any gain or loss arising on derecognition is recognised directly in profit or loss
and presented in other gains/(losses), together with foreign exchange gains and losses.
From 1 April 2018, the group assesses on a forward-looking basis the expected credit losses
associated with its advances and trade receivables carried at amortised cost. Lifetime expected
credit losses (ECL) are recognised when there has been a significant increase in credit risk since
initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased
significantly since initial recognition, the group measures the loss allowance for that financial
instrument at an amount equal to 12-month ECL. The assessment of whether lifetime ECL should
be recognised is based on significant increases in the likelihood or risk of a default occurring since
initial recognition instead of on evidence of a financial asset being credit-impaired at the reporting
date or an actual default occurring.
Lifetime ECL represents the expected credit losses that will result from all possible default events
over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion
of lifetime ECL that is expected to result from default events on a financial instrument that are
possible within 12 months after the reporting date.
» Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial
recognition, the group compares the risk of a default occurring on the financial instrument as at the
reporting date with the risk of a default occurring on the financial instrument as at the date of initial
recognition. In making this assessment, the group considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward-looking
information that is available without undue cost or effort.
The group presumes that the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due, unless the group has
reasonable and supportable information that demonstrates otherwise.
Financial assets with an objective evidence of impairment considering the rebuttable
presumption that default does not occur later than when a financial asset is 90 days past due are
assessed as being in default, unless the group has reasonable and supportable information that
The group regularly monitors the effectiveness of the criteria used to identify whether there has
been a significant increase in credit risk and revises them as appropriate to ensure that the criteria
are capable of identifying significant increase in credit risk before the amount becomes past due.
» Measurement and recognition of expected credit losses
The measurement of expected credit losses is a function of the probability of default, loss given
default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The
assessment of the probability of default and loss given default is based on historical data adjusted
by forward-looking information as described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying
amount at the reporting date.
Impairment losses are presented as separate line item in the statement of profit or loss.
» Write off policy
The group writes off a financial asset when there is information indicating that the counterparty
is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the
counterparty has been placed under liquidation or has entered into bankruptcy proceedings.
Financial assets written off may still be subject to
enforcement activities under the group’s recovery procedures, taking into account legal advice
where appropriate. Any recoveries made are recognised in profit or loss. The impairment
methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised for receivables.
b) IFRS 15 Revenue from contracts with customers
The group has adopted IFRS 15 Revenue from Contracts with Customers from 1 April 2018 which
resulted in a change in the accounting policy. There were no adjustments to the amounts recognised
in the financial statements. This accounting policy applied from 1 April 2018.
Revenue comprises the consideration received or receivable from contracts entered into with
customers in the ordinary course of the group’s activities. It is determined at an amount that
depicts the consideration to which the group expects to be entitled in exchange for transferring
the goods and services promised to the customer. Revenue is shown net of taxes and amounts
collected on behalf of third parties. Revenue is recognised at the amount of the transaction price
that is allocated to each distinct performance obligation, and is recognised when control of the
performance obligations is transferred to the customer.
Property sales revenue
In property sale transactions, the land is a distinct performance obligation. Revenue is recognised
when control of the land is transferred to the customer upon signature of the sales contract.
Revenue from servicing the land and revenue from construction contracts, each of which is
identified as a performance obligation, which is recognised over time according to the stage of
completion. Stage of completion is measured with reference to independently certified progress
certificates issued by the appointed project engineer.
Revenue from tuition services is recognised over time according to the stage of completion. Stage
of completion is measured as the amount of work completed, as a percentage of the agreed work
to be done.
Revenue is recognised when control (legal title) of the diamond is transferred to the customer.
19. NEW ACCOUNTING POLICIES
COMMON CONTROL TRANSACTIONS
Transactions in which combining entities are controlled by the same party or parties before and
after the transaction and where that control is not transitory are referred to as common control
As IFRS does not specifically govern the accounting treatment of common control transactions,
guidance was sought by investigating the treatment of similar transactions in other jurisdictions.
Guidance was obtained from US GAAP, specifically FRS 6.
The group’s accounting policy for the acquiring entity is to account for the transaction at book
value as reflected in the consolidated financial statements of the selling entity. The group accounts
for the merger prospectively, thus the acquired entity’s results are included in the acquirer’s
financial statements from the date of the business combination. There is no restatement of
For common control transactions, the group determines purchase consideration as the transaction
cost adjusted for time value of money where applicable.
The excess of the purchase consideration over the acquirer’s proportionate share of the net assets
value acquired in common control transactions, will be allocated to the common control reserve in
Expenditure is transferred from ’Exploration and evaluation assets’ to Mine under
development’ which is a sub- category of ’Mine properties’ once the exploration and evaluation
results supports the future development of a mining property and such development receives
After transfer of the exploration and evaluation assets, all subsequent expenditure on the
construction, installation or completion of infrastructure facilities is capitalised in ’Mines under
construction’. Any costs incurred in testing the assets to determine if they are functioning as
intended, are capitalised. After production starts, all assets included in ‘Mines under construction’
are then transferred to ’Producing mines’ which is a sub-category of ’Mine properties’.
Revenue from sale of mineral resources during the development phase is recognised in
profit or loss.
TRUSTCO GROUP HOLDINGS LTD
(Incorporated in the Republic of Namibia and registered as an external company in South
Africa) Company registration number: 2003/058
External company registration: Number 2009/002634/10
NSX Share code: TUC
JSE Share code: TTO
ISIN Number: NA000AORF067
F J Abrahams
Dr Q Van Rooyen
Adv R Heathcote
Prof L J Weldon (South African)
K N van Niekerk (South African)
Registered Accountants and Auditors Chartered Accountants (Namibia)
61 Bismarck Street Windhoek Namibia
AUDITORS: SOUTH AFRICA
50 Oxford Road
Bank Windhoek Ltd
First National Bank of Namibia
Standard Bank Namibia Ltd
BANKERS: SOUTH AFRICA
First National Bank South Africa
Standard Bank South Africa Ltd
JSE EQUITY SPONSOR
Vunani Limited through Vunani Corporate Finance Vunani House,
Vunani Office park
151 Katherine Street, Sandown, Sandton
JSE DEBT SPONSOR
Merchantec Proprietary Limited (Mechantec Capital)
13th floor Illovo Point
68 Melville Road, Illovo Sandton
PO Box 41480 Craighall 2024
Simonis Storm Securities
Proprietary Ltd (Registration
4 Koch Street, Klein Windhoek,
Namibia PO Box 3970
REGISTERED OFFICE: NAMIBIA
Trustco House 2 Keller Street
P.O Box 11363,
REGISTERED OFFICE: SOUTH AFRICA
Tuscany Office Park
First Floor, Block 9 6
TRANSFER SECRETARIES NAMIBIA
Transfer Secretaries (Pty) Ltd (Reg no: 93/713)
4 Robert Mugabe Avenue,
PO Box 2401
TRANSFER SECRETARIES SOUTH AFRICA
Computershare Investor Services (Pty) Ltd
(Reg no: 2004/003647/07)
Rosebank Towers, 15 Biermann
Avenue, Rosebank 2196 PO Box
Trustco is a diversified dual listed majority family owned business, with the culture of creating long-
term sustainable growth for all stakeholders. Decisions are biased towards long-term value creation
and short-term hurdles are viewed as catalysts to drive success. Trustco operates from three
business segments being:
• Insurance and its investments
• Resources and
• Banking and finance.
The provisional reviewed condensed consolidated financial statements is available online as
a pdf at www.tgh.na
13 June 2019
Company Secretary: Trustco Group Holdings Limited
Vunani Corporate Finance
Simonis Storm Securities Proprietary Limited
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