| Thu 28 May 2009, 8:30 | | TTO - Trustco Group Holdings Limited - Consolidated Reviewed Provisional |
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TTO
TTO - Trustco Group Holdings Limited - Consolidated Reviewed Provisional
Condensed Financial Results For The 12 Months Ended 31 March 2009 and small
related party transaction
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
NSX share code: TUC
JSE share code: TTO
ISIN Number: NA000A0RF067
("the Company" or "the Group" or "Trustco")
Consolidated Reviewed Provisional Condensed Financial Results For The 12
Months Ended 31 March 2009 and small related party transaction
Nature of Business
Trustco Group Holdings Ltd is a Namibian based company with its core focus on
micro insurance, micro finance and education which delivers products with a
strong social justice undertone. Trustco operates mainly from Namibia and
South Africa and is in the process of expanding its business into the rest of
Africa. Approximately half of Trustco`s revenue was generated from Trustco
Financial Services (Pty) Ltd (formerly Dex Financial Services (Pty) Ltd), the
South African subsidiary, although Namibia was the biggest contributor to
profit after tax. The Namibian operations also made a substantial
contribution to group sales, with growth in excess of 20% compared with the
previous financial year.
Financial Highlights
Trustco continued on its path of exceptional growth over the past five years
despite the current world-wide economic climate. Even though the second half
of the year has historically contributed approximately 70% of the group`s
annual profit, expectations were exceeded as the second half of the 2009
financial year contributed ZAR 72 million in profits after tax (77%). This was
mainly achieved through growth in revenue, improved spending measures and the
sale of non-core operations (also see "Property, Development and Media").
Attributable earnings increased by almost 20% from 2008. Headline earnings
increased by 54%. Distributable reserves increased by 80% from March 2008 to
ZAR 194 million while educational loans advanced increased by 45% to ZAR 133
million for the same period. Trustco divested from its restaurant operations
and increased its investments in the media segment by acquiring the remaining
50% of Printas (Pty) Ltd.
The current year is the first year in which Trustco Financial Services
(previously known as Dex Financial Services) was consolidated for a full 12
months (2008: 5 months as acquired 1 November 2007). This contributed to the
increases in revenue, cost of sales and administrative expenses.
Some selected ratios are:
PE Ratio 7.0 times (based on a 76c share price)
ROE 25%
Interest Cover 3.44 times
EBITDA 21% of revenue
The Group, through one of its subsidiaries, has a tax asset available for set
off against future taxable profit of ZAR 13.4 million. The deferred tax asset
recognized in the financial statements for the current year is ZAR 20.1
million. The deferred tax asset recognized is based on the probability of
future taxable profit being available in the distant future to set it off
against.
Africa Board Listing (JSE)
Trustco has supplemented its primary Namibian Stock Exchange listing (share
code: TUC), and made history by being the first African company to list on the
new Africa Board of the JSE Limited "JSE" (share code: TTO) on 19 February
2009 by means of a dual primary listing. (The listing criteria for the Africa
Board is the same as for the main board of the JSE.) In preparation for the
listing, a share split was approved by shareholders on 9 January 2009 and
registered by the Registrar of Companies on 20 January 2009. One ordinary no
par value share was converted into a par value share of ZAR 1.15 and
thereafter subdivided into 5 ordinary par value shares of 23c each.
The weighted number of shares used in the 2008 calculation of basic earnings,
diluted earnings, headline earnings and diluted headline earnings per share
has been restated based on the subdivision of 1 to 5 shares.
Review of Operations
Micro Insurance
Micro Insurance consists of micro short term and micro life insurance. Revenue
increased by 24% compared with the year ended 31 March 2008 and claims
expenses as a percentage of revenue decreased by 3% to 23% from 26%. This
sector managed to maintain its annual growth in a challenging market through
business synergies with other Trustco operations and very stringent expense
controls.
Micro Finance and Education
This sector achieved growth in revenue of 30% and net profits after tax of 31%
from the year ended 31 March 2008 to the year ended 31 March 2009. The current
course offerings produced better than expected growth in revenue. This is the
second year that floods hampered sales during the main period of registration
which runs from January to March. The Educational Loan book balance grew by
45% from ZAR 92 million at 31 March 2008 to ZAR 133 million at 31 March 2009.
Further, above average growth is expected in this sector as the demand for
education remains high. The launch of e-learning training and accredited short
courses will also be prominent in future sales and profits.
Property, Development & Media
Trustco restructured and merged these segments during the 2009 financial year
as part of the Group`s medium term strategy to be more versatile and to focus
on its core business. This will put Trustco in a better position to roll out
its core business into Africa through the launch of the exciting Trustco
Mobile product and other business initiatives in the new financial year. The
comparatives in the segment analysis have been restated accordingly.
Trustco acquired the remaining shares in Printas (Pty) Ltd for ZAR 1 million
and now has a 100% shareholding. It furthermore resulted in the write-off of
the ZAR 7.2 million related party loan from the counter-party and the creation
of a ZAR 6.1 million receivable to the same as well as ZAR 10 million other
income and ZAR 3.9 million in administrative expenses to the group.
Trustco Mobile
This innovative concept provides free life cover for mobile phone subscribers
upon the purchase of airtime from mobile operator partners. Trustco has
successfully implemented this product in Namibia and is in the process of
rolling it out to other African countries. Management expects Trustco Mobile
to significantly boost Micro Insurance revenue and profit for this segment in
the 2010 financial year and beyond.
Financial Services outside Namibia (South Africa)
Trustco Financial Services (Pty) Ltd ("TFS") contributed ZAR 19.6 million to
Group earnings which exceeded projections at the time of acquisition. Plans
are to expand this business in the new year through further acquisitions and
roll out of the renowned underwriting management software owned by TFS to
African countries.
Property holding and rental
Profit after tax in this segment was ZAR 3.5 million. The property portfolio
consists of local and foreign properties.
The Group is confident that this segment will continue to be a vital part of
the Group`s strategy to achieve above average earnings in future.
Small Related Party Transaction
Trustco has agreed to dispose of the Cafe Society Restaurant, located in
Windhoek, Namibia, to Rotisa Training and Recruitment CC ("Rotisa"), an entity
controlled by Wilhelm and Rolanda Grobler, for an amount of ZAR 2 million
("the disposal").
In addition, Trustco entered into a loan agreement with Rotisa for an amount
of ZAR 2 million at an interest rate of 10% per annum in order to facilitate
the disposal ("the loan agreement").
Mr Grobler is a director of Trustco Tourism (Pty) Limited, a subsidiary of
Trustco, and Rolanda is his wife. In terms of the JSE Limited Listings
Requirements, the disposal is accordingly a small related party transaction.
The Cafe Society Restaurant has not been a profitable part of Trustco`s
business and the board of directors believe that it is in the best interests
of the shareholders of Trustco to implement the disposal and to enter into the
loan agreement.
An independent adviser acceptable to the JSE will be appointed to advise
Trustco shareholders on whether the terms and conditions of the disposal are
fair to the Trustco shareholders.
The effective date of the disposal is 25 March 2009.
The financial effects of the disposal and the entering into of the loan
agreements are less than 3% on Trustco`s earnings and headline earnings per
share, asset value and tangible asset value per share based on the results
contained in this announcement.
The proceeds of the disposal are to be utilised in the ordinary course of the
company`s business.
Basis of preparation and accounting policies
The reviewed provisional condensed financial results (the report) of the Group
for the twelve months ended 31 March 2009 have been presented in accordance
with, and containing the information required by IAS34: Interim Financial
Reporting. The results have been prepared in accordance with accounting
policies of the Group that comply with International Financial Reporting
Standards and the listings requirements of the JSE Limited, the Namibian Stock
Exchange and the Companies Act of Namibia and have been consistently applied
throughout the Group, to all periods presented.
Basis of preparation of provisional results
The reviewed financial provisional condensed financial results of Trustco for
the year ended 31 March 2009 is provisional results as defined in paragraph
3.16 of the JSE Listings Requirements and Namibian Stock Exchange ("NSX")
Listing Requirements and has been prepared in accordance with paragraphs 3.15
and 8.57 to 8.61 of the JSE and NSX Listings Requirements and the Companies
Act of Namibia. BDO is in the process of finalising the audit of the
provisional annual financial statements. Trustco shareholders will be advised
on the outcome of the audit as required in terms of the JSE and NSX Listings
Requirements in due course.
Dividends Paid
The policy of the Group is to declare dividends of between four and five times
cover. In view of the financial results and growth prospects, during July 2009
the board will consider what dividend, if any, should be declared.
Subsequent events
SABC Legal Action
Trustco Group International (Pty) Ltd is currently in an arbitration process
with the South African Broadcasting Corporation (SABC) because of breach of
contract by the SABC. A ruling was made on 2 April 2007 in favour of TGI by an
independent arbitrator. The arbitration was scheduled to continue during the
week commencing 1 December 2008, to determine the amount of damages payable by
the SABC. However, the arbitrator issued a ruling on 6 November 2008 that the
matter will now proceed only from 27 July 2009 until 3 August 2009. The
preliminary amount claimed is ZAR 140 million. However, the amount to be
awarded is in the discretion of the arbitrator.
Funding
Trustco is in the process of obtaining further funding to support its Africa
expansion plans. The proposed transaction with Barclays Capital PLC (Barclays)
did not materialize as envisaged.
Micro Finance Government Deduction Code
The deduction code is renewable from time to time. The current code is valid
until 30 August 2009. On previous occasions it was renewed whenever it came up
for renewal. The Ministry of Finance undertook in writing on 15 April 2009
that should the deduction code expire, Trustco will be allowed to utilize the
code until the then current loans are repaid without loading new students onto
the system.
Future outlook
The Board remains optimistic about the future and expects the extraordinary
growth to continue. This growth will be a combination of organic new ventures
and acquisitions. Micro Insurance will remain an integral part of the group`s
strategy to achieve continued growth through the launch of new business
initiatives into Africa (i.e. Trustco Mobile). Future growth will further be
driven by Micro Finance and Education through new course offerings and the
Lafrenz housing project. Trustco expects that the group tax assets will be
fully utilized during the next financial year resulting in a potential tax
charge for the 2010 financial year.
Auditors review opinion
The condensed provisional financial results of the Group for the period ended
31 March 2009 have been reviewed by BDO Spencer Steward (Namibia) and BDO
Spencer Steward (Pretoria), who have expressed an unmodified review conclusion
on the results. A copy of their report is available for inspection at the
Company`s registered office.
Appreciation
The Board and management wish to thank service providers and clients who have
contributed to Trustco achieving exceptional results once again. In
particular, the staff is thanked for their continuing extraordinary efforts.
By order of the board
PJ Miller
Company Secretary
28 May 2009
Registered Office (Namibia)
Trustco House
2 Keller Street
P O Box 11363
Windhoek
Namibia
Registered Office (South Africa)
201 BP House
10 Junction Avenue
Parktown
2193
South Africa
Directors:
D Namwandi (Chairman), V De Klerk, M Nashandi, G Walters, AH
Toivo ya Toivo, FJ Abrahams, Q Van Rooyen (Managing Director)
NSX Sponsor
IJG Securities (Pty) Ltd
Registration No. 95/0080
Member of the NSX
100 Robert Mugabe Avenue
Windhoek
Namibia
(PO Box 186, Windhoek, Namibia)
Telephone: +264 61 383 500
Facsimile: +264 61 304 671
JSE Sponsor
QuestCo Sponsors (Pty) Ltd
Registration No. 2004/018276/07
The Campus
57 Sloane Street
1st Floor, Wrigley Field
Bryanston
South Africa
(PO Box 98956, Sloane Park, 2152, South Africa)
Telephone: +27 11 575 0088
Facsimile: +27 11 576 0088
Transfer Secretaries (South Africa)
Computershare Investor Services (Pty) Ltd
Registration number 2004/003647/07
Ground Floor
70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Telephone: +27 11 370 7700
Facsimile: +27 11 688 7716
Transfer Secretaries (Namibia)
Transfer Secretaries (Pty) Ltd
Registration number 93/713
Shop 8
Kaiser Krone Centre
Post Street Mall
(PO Box 2401, Windhoek, Namibia)
Telephone: +264 61 22 76 47
Facsimile: +264 61 24 85 31
CONSOLIDATED REVIEWED PROVISIONAL CONDENSED FINANCIAL INFORMATION FOR THE
YEAR ENDED 31 MARCH 2009
CONSOLIDATED INCOME
STATEMENTS
Reviewed year Audited year
ended 31 March ended 31 March
R `000 % 2009 2008
Change
Revenue 87.63 390 667 208 207
Insurance Revenue 23.83 93 745 75 704
Total Revenue 70.62 484 412 283 911
Cost of sales -116.24 (257 172) (118 928)
Gross profit 37.74 227 240 164 983
Claims & benefits paid -10.52 (21 760) (19 688)
Transfer to policyholder -71.90 ( 471) ( 274)
liabilities
Change in unearned premium 91.70 ( 63) ( 759)
provision
Other income -1.06 37 377 37 776
33.12 242 323 182 038
Administration expenses -43.87 (157 652) (109 581)
Profit before investment 16.86 84 671 72 457
income, fair value
adjustments and finance costs
Investment revenue -79.92 4 500 22 406
Profit before fair value -6.00 89 171 94 863
adjustments and finance costs
Fair value adjustments 44.52 2 730 1 889
Finance costs 33.58 (25 375) (38 201)
Profit before taxation 13.62 66 526 58 551
Taxation 38.67 26 852 19 364
Profit for the year 19.85 93 378 77 915
Minority interest -309.87 ( 955) ( 233)
Net profit for the period 18.98 92 423 77 682
Attributable to:
Equity holders of the parent 18.98 92 423 77 682
Minority interest 309.87 955 233
RECONCILIATION OF HEADLINE
EARNINGS TO EARNINGS
ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
% Reviewed year Audited year
ended 31 March ended 31 March
R `000 Change 2009 2008
Attributable earnings 18.98 92 423 77 682
Adjusted for:
Loss on sale of fixed assets 257.83 131 ( 83)
Profit on revaluation of -31.01 (1 682) (1 284)
investment property
Negative goodwill 100.00 - (27 702)
Disposal of intangible asset 100.00 - (2 230)
Gain on loan written off (7 216) -
Profit on disposal of non- (12 292) -
core divisions
Headline earnings 53.86 71 364 46 383
Weighted number of ordinary 10.55 660 197 597 202
shares for the purposes of
basic earnings per
share(`000)
Basic earnings per share 7.62 14.00 13.01
(cents)
Diluted earnings per share 9.39 13.49 12.33
(cents)
Headline earnings per share 39.18 10.81 7.77
(cents)
Diluted Headline earnings per 41.46 10.42 7.36
share (cents)
Dividends per share (cents) 100.00 1.00 0.50
SEGMENTAL ANALYSIS
% Reviewed year Audited year
ended 31 March ended 31 March
R `000 Change 2009 2008
Revenue
Micro Finance and Education 29.71 71 197 54 889
Financial services outside 158.56 267 843 103 589
Namibia
Property, Development and 3.82 51 627 49 729
media
87.63 390 667 208 207
Micro Insurance 23.83 93 745 75 704
70.62 484 412 283 911
Net profit/(loss) after tax
Micro Insurance 30.18 36 227 27 829
Micro Finance and Education 31.24 30 015 22 871
Financial services outside -7.55 19 561 21 159
Namibia
Property, Development and -5.02 3 139 3 305
media
18.33 88 942 75 164
Investment related services 38.24 3 481 2 518
18.98 92 423 77 682
CONSOLIDATED BALANCE SHEETS
% Reviewed year Audited year
ended 31 March ended 31 March
R `000 Change 2009 2008
ASSETS
Property, plant and equipment 8.20 154 210 142 529
Investment property -8.31 33 753 36 812
Intangible assets 7.07 186 942 174 605
Deferred income tax assets 146.76 45 147 18 296
Loans and receivables 69.65 104 467 61 579
Related party loans 3 002 -
Available-for-sale assets 59.51 10 035 6 291
Short-term portion of loans 68.95 54 747 32 404
advanced
Inventories -2.35 30 244 30 972
Trade and other receivables -7.01 31 018 33 358
Current income tax assets 57.49 263 167
Cash and cash equivalents 9.67 108 496 98 927
Total Assets 19.87 762 324 635 940
LIABILITIES AND SHAREHOLDERS`
EQUITY
LIABILITIES
Long term liabilities 8.13 119 422 110 439
Deferred income tax 6.27 27 062 25 466
liabilities
Policy holder liability under 23.54 2 472 2 001
insurance contracts
Amounts due to related -51.94 15 786 32 849
parties
Trade and other payables 11.61 177 846 159 353
Current portion of long term -0.64 16 828 16 937
debt
Technical provisions 43.71 15 834 11 018
Provision for share 11.83 1 522 1 361
appreciation rights
Current income tax -24.26 128 169
liabilities
Bank overdraft -3.64 14 947 15 511
Total liabilities 4.46 391 847 375 104
Shareholders` equity
Share/Stated capital 14.99 162 645 141 448
Deemed Treasury Shares due to 45.88 (19 137) (35 359)
management control
Shares to be issued as a -57.84 14 976 35 526
result of business
combination
Contingency reserves 339.60 726 ( 303)
Revaluation reserves 31.64 16 851 12 801
Distributable reserves 80.25 194 416 107 862
Total shareholders` equity 41.42 370 477 261 975
Minority interest 100.00 - (1 139)
Total liabilities and 19.87 762 324 635 940
shareholders` equity
CONSOLIDATED CASH FLOW
STATEMENTS
% Reviewed year Audited year
ended 31 March ended 31 March
R `000 Change 2009 2008
Cash flow from operating
activities
Cash generated from 38.07 96 325 69 766
operations
Interest received 12.84 4 500 3 988
Dividends received -100.00 - 18 418
Finance costs 33.58 (25 375) (38 201)
Net educational loans -45.31 (40 979) (28 201)
advanced
Dividends paid -124.31 (6 698) (2 986)
Taxation paid -490.16 ( 720) ( 122)
Net cash flow from operating 19.38 27 053 22 662
activities
Cash flow from investing
activities
Additions to property, plant 33.52 (13 694) (20 600)
and equipment
Additions to investment 97.07 ( 72) (2 461)
properties
Additions to intangible 44.67 (13 434) (24 280)
assets
Acquisition of subsidiary, -100.00 - 45 483
net of cash acquired
Additions to available-for- (3 744) -
sale financial assets
Acquisition of minority (1 000) -
interest in entity under
common control
Proceeds on sale of property, 21.25 1 324 1 092
plant and equipment
Proceeds on sale of -100.00 - 141
investment properties
Proceeds on sale of -100.00 - 1 270
intangible assets
Proceeds on sale of available- -100.00 - 131 249
for-sale financial assets
Net cash flow from investing -123.22 (30 620) 131 894
activities
Cash flow from financing
activities
Costs of share issue ( 49) -
VAT on listing costs 100.00 - ( 472)
Redemption of vendor shares (1 157) -
in cash
Sale of deemed treasury 19 266 -
shares
Proceeds from long term -72.91 9 175 33 874
liabilities
Repayment of other 82.34 ( 301) (1 704)
liabilities
(Repayment of)/proceeds from -152.38 (13 705) 26 167
related party loans
Decrease in policy holder 71.90 471 274
under insurance contracts
Repayment of term loan and 100.00 - (135 525)
unsecured long term
liabilites
Net cash flow from financing 117.70 13 700 (77 386)
activities
Net change in cash and cash -86.87 10 133 77 170
equivalents
Cash and cash equivalents at 1235.51 83 416 6 246
beginning of period
Cash and cash equivalents at 12.15 93 549 83 416
end of period
CONSOLIDATED STATEMENTS OF
MOVEMENT IN EQUITY
% Reviewed year Audited year
ended 31 March ended 31 March
R `000 Change 2009 2008
Balance at beginning of 91.97 260 836 135 873
period as restated
Profit for the period per the 19.85 93 378 77 915
income statement
Revaluation of property, -23.41 4 050 5 288
plant and equipment
Sale of deemed treasury 67.38 16 222 9 692
shares by Trustco Staff Share
Incentive Scheme Trust
Profit on sale of deemed 3 042 -
treasury shares
Shares issued 4 971 -
Listing costs -612.08 (3 361) ( 472)
Shares to be issued as a -100.00 - 35 526
result of business
combination
Vendor shares repaid in cash ( 914) -
Costs of share issue ( 49) -
Acquisition of minority (1 000) -
interest in entity under
common control
Dividends paid -124.31 (6 698) (2 986)
Balance at end of period 42.03 370 477 260 836
Comprising:
Share/Stated capital 14.99 162 645 141 448
Deemed Treasury Shares due to 45.88 (19 137) (35 359)
management control
Distributable reserves 80.25 194 416 107 862
Shares to be issued as a -57.84 14 976 35 526
result of business
combination
Other Reserves 40.64 17 577 12 498
Minority interest 100.00 - (1 139)
42.03 370 477 260 836
Date: 28/05/2009 08:30:03 Produced by the JSE SENS Department.
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