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TTO
TTO
TSO - Trustco Group Holdings Limited - Unaudited condensed consolidated interim
results for the 6 months ended 30 September 2009
TRUSTCO GROUP HOLDINGS LIMITED
Registration No. 2003/058
Registered in Namibia
ISIN Code: NA0000A0KE891
NSX Share Code: TSO
JSE Share Code: TTO
Unaudited Condensed Consolidated Interim Results for the 6 months ended 30
September 2009
Nature of Business
Trustco Group Holdings Ltd ("Trustco") has always been proud of its array of
social justice enabling products. With core business units focusing on micro-
insurance, micro finance and education, Trustco is a pioneer in making high
quality financial services accessible to that segment of the world that remains
largely unserviced. Trustco listed on the Namibian Stock Exchange (symbol: TUC)
on 27 September 2006, and supplemented that listing with a dual primary listing
on the new Africa Board of the JSE Limited (symbol: TTO) on 19 February 2009.
Trustco is proud of its Namibian roots. With the initial African expansion plans
now in motion, Trustco is pleased to present its interim results for the six
months ending 30 September 2009.
Financial Highlights
With approximately 70% of the Group`s profits customarily attributable during
the second half of the financial year, Trustco reports significant growth
compared to the previous comparative period. Profit after tax increased by 43.8%
to NAD 30.2M. Group revenue grew by 24% to NAD 275M, due to the outstanding
performance by all units. Earnings per share rose by 37.2% to 8.93c per share
and headline earnings per share grew by 43.3% to 9.13c per share.
Review of Operations
Micro Insurance
Micro short-term and micro life insurance are consolidated into this segment.
With revenue increasing 28.5% to NAD 55.7M, and profit after tax growing by
27.6% to NAD 27.4M compared to last year, Trustco`s commitment to its
policyholders in Namibia remains sound. This sector`s performance in challenging
market conditions, with its claims expenses as a percentage of revenue remaining
stable, is testimony to the effectiveness of expense controls.
Micro Finance and Education
With education being the "greatest equalizer", this segment managed to achieve
35.1% growth in net profit after tax compared to the previous year. Given the
interest rate declines during the past year, it nevertheless reported revenues
of NAD 46.9M, a 24% increase compared to the previous year. Given the
aforementioned interest rate drops, Trustco reports that the educational loan
book grew by 47.1% to NAD 167.9M.
Private Equity
The Group increased its focus on its core units which saw the disposal of the
printing press and related equipment in Printas (Pty) Ltd to DMH Holdings Ltd.
Trustco`s former segments of Property, Development & Media and Investment
Related Services are internally reported on as one component and have thus been
consolidated and renamed as "Private Equity" as part of the adoption of IFRS 8:
Operating Segments. This segment encompasses Trustco`s strategic development
projects which promise to yield significant returns over the short to medium
term, such as the property development project. Of the 3.5 million square meters
the Group initially bought, 0.4% have been sold to date. While this segment
recorded a 8% reduction in revenue (mainly due to the loss of revenue after the
sale of the printing press), loss after tax was only 2.1% more than the
comparative period.
Trustco Mobile
A large segment of individuals in Trustco`s target market possess no form of
life cover although more than half owns a mobile phone. Trustco Mobile`s
innovative concept of providing free life cover to mobile phone subscribers upon
the purchase of airtime from selected mobile operators uniquely caters for this
sector. A test phase agreement was entered into with PowerCom (Pty) Ltd (trading
as leo, a subsidiary of Telecel Globe Ltd). It was subsequently replaced by a
new agreement to cover prepaid leo subscribers in Namibia. Trustco Mobile is now
poised to roll out the concept in the rest of the world. Strategies with various
mobile operators and insurers are ongoing. Management believes that this product
will form the new core of Trustco`s expansion.
Financial Services outside Namibia (South Africa)
Trustco Financial Services (Pty) Ltd ("TFS") recorded a net profit after tax of
NAD 7.2M, and revenue increased by 32.4%, to NAD 149.9M. Continuing strategies
are underway in various countries for the roll-out of the highly successful
underwriting software that is TFS`s backbone. Profit before tax in this division
increased by 42% to NAD 5.5M compared to the previous period.
Dividends Paid
Given Trustco`s policy of four to five times dividend cover, the board
recommended a dividend of 2c per share to be approved by the shareholders during
the Annual General Meeting of 4 September 2009. This dividend was approved at
the meeting, and was paid out on 2 October 2009. No interim dividend has been
declared for the period.
Subsequent events
SABC Legal Action
Trustco Group International (Pty) Ltd ("TGI"), a subsidiary in the Group is
currently in an arbitration process with the South African Broadcasting
Corporation ("SABC") because of a breach of contract by the SABC. A ruling was
made on 2 April 2007 in favour of TGI by an independent arbitrator. The
arbitration is scheduled to continue during the week commencing 25 January 2010,
to determine the amount of damages payable by the SABC. The amount claimed is
NAD 140M. The amount to be awarded is in the discretion of the arbitrator.
Micro Finance Government Deduction Code
The government deduction code has been extended to 31 March 2010. Trustco has a
written undertaking from government that the current deduction code will remain
effective on all existing government loans. The deduction code grants Trustco
the right to collect monthly loan instalments directly from government payroll
for all government employees.
Future outlook
With signs that the world wide economic recovery is underway, Trustco expects
the growth path maintained during the past five years to continue. Given that
the Groups tax assets will be fully utilised during this financial year, it is
the Boards opinion that most of this growth will be realised via Trustco
Mobile`s expansion, as well as continued growth from Trustco`s resilient
Namibian operations and the property division.
Basis of preparation and presentation of interim financial statements
Statement of compliance
The unaudited condensed consolidated interim financial statements have been
prepared in accordance with the recognition and measurement criteria of IFRS,
its interpretations adopted by the IASB, the presentation and the disclosure
requirements of IAS 34: Interim Financial Reporting, the Listing Requirements of
the NSX and JSE, and the Companies Act of Namibia, 1973.
Basis of preparation
The unaudited condensed consolidated financial statements are prepared in
thousands of Namibian Dollar ("N$ `000") on the historical cost basis, except
for the measurement of investment properties and certain financial instruments
at fair value. The Group`s functional and presentation currency is Namibian
Dollar. At 30 September 2009, NAD 1 was equal to ZAR 1. These interim results
are unaudited and have not been reviewed by the auditors.
Other than IAS 1 and IFRS 8, the accounting policies are those presented in the
audited annual financial statements for the year ended 31 March 2009 and have
been applied consistently to the periods presented in these unaudited condensed
consolidated financial statements and by all Group entities. Consequently the
comparative information has been restated for the new disclosures as required in
IAS 1 and IFRS 8.
Adoption of IFRS 8
The Group has adopted IFRS 8: Operating Segments with effect from 1 April 2009.
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker in order to allocate resources to the segments and to
assess their performance. In contrast, the predecessor Standard (IAS 14: Segment
Reporting) required an entity to identify two sets of segments (business and
geographical). In prior years, segment information reported externally was
analysed on the basis of operating divisions. However, information reported to
the Group`s Executive Committee, its chief operating decision maker, for the
purposes of resource allocation and assessment of segment performance is more
specifically focused on type of industry and business risk. The Group`s
reportable segments under IFRS 8 are therefore as follows: Micro Insurance;
Micro Finance and Education; Financial Services outside Namibia; and Private
Equity.
Appreciation
With all the success enjoyed by the Group during the year, the Board expresses
its gratitude for the tremendous effort from all Trustco staff in order to
achieve these results. The Board would also like to extend its thanks to the
service providers and clients without whom this Company would not have prospered
as it did.
By order of the Board
PJ Miller
Company Secretary
Windhoek, 18 November 2009
Directorate and Administration
Directors:
Directors: Dr. D Namwandi (Chairman), Mr. A Toivo Ya Toivo (Non-Executive), Mrs.
V de Klerk (Non-Executive), Mrs. M Nashandi (Non-Executive), Mr. FJ Abrahams
(Financial Director), Mr. G Walters Director: New Business), Mr. Q van Rooyen
(Managing Director)
Registered office:
Namibia
2 Keller Street, PO Box 11363, Windhoek
Website: Http://www.tgi.na
Registration No. 2003/058
Transfer secretary (Namibia):
Transfer Secretaries (Pty) Ltd
Kaiserkrone Centre, Post Street Mall
P O Box 2401, Windhoek, Namibia
Registration No. 93/713
Telephone: +264 61 22 76 47
Facsimile: +264 61 24 85 31
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
Auditors:
Namibia - BDO
Registered Accountants and Auditors
Chartered Accountants (Namibia)
61 Bismarck Street, Windhoek, Namibia
South Africa - BDO
Registered Auditors
BDO Place 457, Rodericks Road
Lynnwood, 0081, Pretoria, South Africa
Sponsors:
Namibia
IJG Securities (Pty) Ltd
Member of the NSX
100 Robert Mugabe Avenue
P O Box 186, Windhoek, Namibia
Registration No. 95/505
South Africa
Questco
Member of the JSE
The Campus, 57 Sloane Street
1st Floor,
Wrigley Field
Bryanston
20121
Unaudited Condensed Consolidated Interim Results for the six months ended 30
September 2009
INCOME STATEMENT
% Unaudited6 Reviewed 6 Audited
months months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2009 2008 2009
Insurance premium revenue 25 54 246 43 416 93 847
Revenue 24 221 225 178 783 390 667
Total revenue 24 275 471 222 199 484 514
Cost of sales (30) (146 883) (113 211) (257 172)
Gross profit 18 128 588 108 988 227 342
Investment income 25 1 943 1 550 4 500
Fair value gains and losses (63) 382 1 024 2 730
Other income (50) 752 1 511 33 521
Insurance benefits and 7 (9 385) (10 053) (21 760)
claims
Transfer to policyholder (1 151) (3 391) ( 271) (471)
liabilities
Change in unearned premium (121) 99 (165)
provision (222)
Administrative expenses (6) (82 290) (77 457) (153 796)
Finance costs 12 (9 904) (11 278) (25 375)
Profit before taxation 88 26 574 14 113 66 526
Taxation (47) 3 674 6 923 26 852
Profit for the period 44 30 248 21 036 93 378
Attributable to:
Equity holders of the 48 30 248 20 474 92 423
parent
Non-controlling interest (100) - 562 955
44 30 248 21 036 93 378
STATEMENT OF COMPREHENSIVE
INCOME
% Unaudited6 Reviewed 6 Audited
months months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2009 2008 2009
Profit for the period 44 30 248 21 036 93 378
Other comprehensive income, 2 660 128 (5) 4 234
net of tax
Revaluation of property, 2 660 128 (5) 4050
plant and equipment, net of
deferred tax and release of
depreciation
Share of other - - - 184
comprehensive income of non-
controlling interest
Total comprehensive income 44 30 376 21 031 97 612
for the period
Attributable to:
Equity holders of the 48 30 376 20 469 96 473
parent
Non-controlling interest (100) - 562 1 139
44 30 376 21 031 97 612
EARNINGS AND HEADLINE
EARNINGS PER SHARE
% Unaudited6 Reviewed 6 Audited
months months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2009 2008 2009
Profit attributable to 48 30 248 20 474 92 423
ordinary shareholders
Adjustments net of 255 671 (434) (21 059)
taxation:
Loss on disposal of 419 892 172 131
property, plant and
equipment
Fair value adjustments on 64 (221) (606) (1 682)
investment properties
Gain on loan written off - - - (7 216)
Profit on disposal of non- - - - (12 292)
core divisions
Headline Earnings 54 30 919 20 040 71 364
Earnings per share:
Basic earnings per share 37 8.93 6.51 14.00
(cents)
Diluted earnings per share 37 8.93 6.51 13.49
(cents)
Headline earnings per share 43 9.13 6.37 10.81
(cents)
Weighted number of ordinary 8 677 240 629 408 660 197
shares in issue (`000)
SEGMENTAL ANALYSIS
% Unaudited Reviewed Audited
6 months 6 months year
ended 30 ended 30 ended 31
September September March
N$ `000 Change 2009 2008 2009
Total revenue
Micro Insurance 29 55 792 43 415 93 847
Micro Finance and 24 46 958 37 883 71 197
Education
Financial services 32 149 921 113 264 267 843
outside Namibia
"Private Equity" (8) 55 248 60 027 141 458
Elimination of - (32 448) (32 390) (89 831)
intersegment revenue
24 275 471 222 199 484 514
Net profit / (loss)
after tax
Micro Insurance 28 27 482 21 541 36 227
Micro Finance and 35 23 171 17 151 30 015
Education
Financial services (18) 7 166 8 780 19 561
outside Namibia
"Private Equity" (2) (27 571) (26 998) 6 620
48 30 248 20 474 92 423
Total assets
Micro Insurance 11 31 158 28 070 29 688
Micro Finance and 42 183 980 129 166 150 795
Education
Financial services 17 211 899 180 405 195 822
outside Namibia
"Private Equity" 13 372 720 330 439 386 019
20 799 757 668 080 762 324
Total liabilities
Micro Insurance 31 25 755 19 699 21 174
Micro Finance and 120 32 404 14 750 31 977
Education
Financial services 21 141 318 116 315 130 209
outside Namibia
"Private Equity" (5) 212 571 223 846 208 487
10 412 048 374 610 391 847
STATEMENT OF FINANCIAL
POSITION
% Unaudited Reviewed Audited
6 months 6 months year
ended 30 ended 30 ended 31
September September March
N$ `000 Change 2009 2008 2009
ASSETS
Non-current assets
Property, plant and 1 144 321 143 283 154 210
equipment
Investment properties (10) 34 192 37 794 33 753
Intangible assets 4 189 104 181 859 186 942
Deferred income tax 107 47 938 23 133 45 147
assets
Educational loans 53 106 708 69 878 79 003
advanced
Other loans advanced 100 24 284 - 24 188
Finance lease (20) 1 276 1 598 1 276
receivables
Total non-current 20 547 823 457 545 524 519
assets
Current assets
Available-for-sale 45 12 981 8 970 10 035
financial assets
Short-term portion of 38 61 277 44 300 54 024
educational loans
advanced
Short-term portion of 100 1 104 - 386
other loans advanced
Short-term portion of - 337 337 337
finance lease
receivables
Amounts due by related (13) 2 973 3 434 3 002
parties
Inventories 2 31 232 30 766 30 244
Trade and other 40 36 210 25 915 31 018
receivables
Current income tax 499 539 90 263
assets
Cash and cash 9 105 281 96 723 108 496
equivalents
Total current assets 20 251 934 210 535 237 805
Total Assets 20 799 757 668 080 762 324
EQUITY AND LIABILITIES
Capital and reserves
Share capital 100 162 645 - 162 645
Stated capital (100) - 161 035 -
Deemed treasury shares 5 (18 137) (19 137) (19 137)
Vendor shares - 14 976 14 976 14 976
Contingency reserve 544 1 346 (303) 726
Revaluation reserves 33 16 979 12 796 16 851
Retained earnings 68 209 900 124 680 194 416
Attributable to equity 32 387 709 294 047 370 477
holders of the parent
Non-controlling 100 - (577) -
interest
Total capital and 32 387 709 293 470 370 477
reserves
Non-current liabilities
Long term liabilities (11) 107 505 120 529 117 832
Other liabilities 221 2 615 815 1 590
Deferred income tax 15 26 690 23 123 27 062
liabilities
Policy holders` 150 5 691 2 272 2 472
liability under
insurance contracts
Amounts due to related (35) 12 037 18 588 15 786
parties
Total non-current (7) 154 538 165 327 164 742
liabilities
Current liabilities
Current portion of long- 42 14 524 10 208 15 700
term liabilities
Current portion of 39 2 178 1 571 1 128
other liabilities
Trade and other 22 192 128 157 689 179 368
payables
Technical provisions 16 17 140 14 820 15 834
Provision for share (100) - 2 272 -
appreciation rights
Current income tax 135 385 164 128
liabilities
Bank overdraft 38 31 155 22 559 14 947
Total current 23 257 510 209 283 227 105
liabilities
Total equity and 20 799 757 668 080 762 324
liabilities
CASH FLOW STATEMENT
% Unaudited Reviewed Audited
6 months 6 months year
ended 30 ended 30 ended 31
September September March
N$ `000 Change 2009 2008 2009
Cash flow from
operating activities
Cash generated from 56 60 715 38 971 95 744
operations
Interest received 25 1 943 1 550 4 500
Finance costs 12 (9 904) (11 278) (25 375)
Net educational loans (58) (34 958) (22 130) (40 979)
advanced
Dividends paid (111) (14 144) (6 698) (6 698)
Taxation paid 338 441 (185) (137)
Net cash flow from 1 680 4 093 230 27 055
operating activities
Cash flow from
investing activities
Additions to property, (51) (8 761) (5 816) (13 694)
plant and equipment
Additions to investment (98) (99) (50) (72)
properties
Additions to intangible 24 (5 889) (7 729) (13 434)
assets
Additions to available- (10) (2 946) (2 679) (3 744)
for-sale financial
assets
Acquisition of non- - - - (1 000)
controlling interest in
entity under common
control
Proceeds on sale of 766 3 108 359 1 324
property, plant and
equipment
Net cash flow from 8 (14 587) (15 915) (30 620)
investing activities
Cash flow from
financing activities
Costs of share issue - - - (49)
Redemption of vendor 100 - (1 157) (1 157)
shares in cash
Sale of deemed treasury (95) 1 000 19 266 19 264
shares
(Repayment of ) / (280) (11 503) 6 380 9 175
proceeds from long term
liabilities
Proceeds from / 428 2 075 (633) (301)
(repayment of) other
liabilities
Repayment of related 79 (3 720) (17 694) (13 705)
party loans
Decrease in policy 1 088 3 219 271 471
holder under insurance
contracts
Net cash flow from (239) (8 929) 6 433 13 698
financing activities
Net change in cash and (110) (19 423) (9 252) 10 133
cash equivalents
Cash and cash 12 93 549 83 416 83 416
equivalents at
beginning of period
Cash and cash - 74 126 74 164 93 549
equivalents at end of
period
STATEMENT OF CHANGES IN
EQUITY
% Unaudited Reviewed Audited
6 months 6 months year
ended 30 ended 30 ended 31
September September March
N$ `000 Change 2009 2008 2009
Balance at beginning 42 370 477 260 836 260 836
the period
Vendor shares repaid in 100 - (914) (914)
cash
Cost of share issue 100 - (49) (49)
Sale of deemed treasury (94) 1 000 16 222 16 222
shares by Trustco Staff
Share Incentive Scheme
Trust
Gain on sale of deemed (100) - 3 042 3 042
treasury shares
Dividends for the (111) (14 144) (6 698) (6 698)
period
Share issue - - - 4 971
Listing costs - - - (3 361)
Acquisition of non- - - - (1 184)
controlling interest in
entity under common
control
Total comprehensive 44 30 376 21 031 97 612
income for the period
Balance at end of the 32 387 709 293 470 370 477
period
Comprising of:
Stated capital (100) - 161 035 -
Share capital 100 162 645 - 162 645
Deemed treasury shares (5) (18 137) (19 137) (19 137)
Vendor shares - 14 976 14 976 14 976
Contingency reserve 544 1 346 (303) 726
Revaluation reserve 33 16 979 12 796 16 851
Retained earnings 68 209 900 124 680 194 416
Minority interest 100 - (577) -
32 387 709 293 470 370 477
Date: 17/11/2009 17:01:45 Produced by the JSE SENS Department.
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