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TTO
TTO
TTO/TUC - Trustco Group Holdings Limited - Reviewed provisional consolidated
condensed financial results for the 12 months ended 31 March 2010
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")
Reviewed Provisional Consolidated Condensed Financial Results For The 12 Months
Ended 31 March 2010
Nature of Business
Trustco Group Holdings Ltd ("Trustco") is a Namibian incorporated company with
its core focus on delivering financial services with a strong social justice
undertone. Trustco currently operates mainly from Namibia and South Africa with
expansion plans underway in other African countries.
In view of the fact that Trustco is a Namibian based company, these results set
out hereunder are reflected in Namibian Dollar ("NAD"). The NAD trades at an
exchange rate of NAD 1 (one) for 1 (one) South African Rand.
Financial Overview
2010 marked another impressive year for the Trustco Group, considering the
current economic climate. Group revenue increased by 14% and Group earnings
increased by 47% compared to the 2009 financial year. Headline earnings also
increased by 20% to NAD 85.3 million (2009: NAD 71.3 million). This was mainly
achieved through financial services, which showed exceptional organic growth and
the property (private equity)segment. The Group`s main focus for the financial
year under review was on cost savings and efficiency. Cash flow from operations
saw a decrease which is mainly attributable to a reduction in cash inflow
through the disposal of all printing and restaurant activities.
Review of Operations
Core Operations
Financial Services in Namibia
This segment consists of micro insurance and micro finance and showed solid
organic growth for 2010, detailed as follows:
Micro Insurance
Micro Insurance consists of micro short term and micro life insurance. Earnings
increased by 24% compared to the 2009 financial year which is a result of
revenue increasing by 15% through the launch of new products and the claims to
revenue ratio decreasing by 33%.
Trustco Mobile is another unique micro insurance offering that provides free
life cover for mobile subscribers upon the purchase of airtime from mobile
operator partners. Management expects this product to gain traction in
2011.Expansion in 2010 was rather muted given the focus of management on cost
savings and improved efficiencies. This product is aimed at the masses of non
insured individuals in emerging markets.
Micro Finance
This segment delivered outstanding results with the micro loan book growing by
34% to NAD 178.3 million at 31 March 2010. The loan book managed to achieve this
growth as a result of the impressive revenue growth in the Education segment
(refer to the Education segment below for more information). Interest received
on loans increased by 14% compared to 2009 whilst the average interest rate
charged on the loan book decreased from 2009 as a result of a reduced prime
rate. The provision for bad debts increased by N$ 9.6 million to N$ 14.3 million
which represents 8% of the loan book as at 31 March 2010. Trustco is currently
in the process of obtaining external funding from several development agencies
and announcements in this regard will be conveyed to shareholders in due course.
Financial Services outside Namibia (South Africa)
Trustco Financial Services (Pty) Ltd continued to deliver solid results by
contributing NAD 291.7 million to Group revenue (9% increase from 2009) whilst
earnings remained constant on NAD 19.9 million. This unit operates in the medium
to higher LSM levels and was affected by the current market conditions.
Strategic Operations
Properties (Private Equity)
The Lafrenz property was re-classified from "inventory" to "investment
properties". As the market permits, only municipal bulk services will be
installed and no construction of houses will be undertaken. Revaluations
increased by NAD 58.9 million. The future outlook for this segment remains
optimistic as the demand for serviced plots in Windhoek remains high.
Education
Education represents the Namibian incorporated company Institute for Open
Learning ("IOL"). IOL saw an increase in revenue of 71% compared to 2009 to NAD
70.1 million. This was achieved through organic growth. The demand for quality
education courses coupled with a financing option remains high.
Basis of preparation of provisional results
The reviewed consolidated condensed financial results of the Group for the 12
months ended 31 March 2010 are provisional as defined in paragraph 3.16 of the
JSE Limited ("JSE") Listing Requirements and the Namibian Stock Exchange ("NSX")
Listing Requirements and have been prepared in accordance with paragraphs 8.57
to 8.61 of the JSE and NSX Listing Requirements. The provisional results have
been prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Reporting Standards ("IFRS") and the
AC 500 standards as issued by the Accounting Practices Board and the
information required by IAS34: Interim Financial Reporting.
The provisional results have been prepared in accordance with accounting
policies of the Group that comply with IFRS and the Listing Requirements of the
JSE and the NSX and have been consistently applied throughout the Group, to all
periods presented. BDO Namibia and BDO South Africa Incorporated are in the
process of finalizing the audit of the 2010 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. The 2010 Annual Report is
expected to be released during the last week of July 2010.
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, the board will
consider during June 2010 what dividend, if any, should be recommended to the
AGM.
Subsequent Events
SABC Legal Action
Trustco is still involved in the arbitration proceedings against the SABC. The
arbitrator already found that the SABC are liable in damages to Trustco. The
hearing proceeded with regards to the amount of damages to be awarded (Trustco
contends that its damages amount to NAD 64 million excluding interest). The
evidence was concluded during January 2010 and the parties will make their final
submissions on 5 June 2010. The arbitrator is expected to make his award within
60 days thereafter.
Micro Finance Government Deduction Code
The deduction code is renewable from time to time. The current code is valid
until September 2010. 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 outstanding loans are repaid without the loading
of new students on the system. Two new deduction codes with a tenure of two
years were recently awarded to two financial institutions by the Government of
Namibia.
Future Outlook
The current organic growth is expected to continue especially in the core
segments in Namibia. Expansion by means of acquisitions will only commence if
the market conditions permit.
Auditors review opinion
The provisional condensed financial results of the Group for the period 31 March
2010 have been reviewed by BDO Namibia and BDO South Africa Incorporated, who
have expressed unmodified review conclusion on the results. A copy of these
reports are available for inspection at the Company`s registered office.
Appreciation
The Board and management wish to thank our customers, service providers and
especially the Trustco staff for contributing to yet another exceptional year.
Board Members
Consequent upon the resignation of the Chairman (SENS dated 24 March 2010). The
process of obtaining candidates suitable for nomination as new board members is
currently underway and includes public participation. The process will be
completed at the Annual General Meeting. Names of candidates can be submitted to
the Company Secretary.
REVIEWED PROVISIONAL CONSOLIDATED CONDENSED FINANCIAL INFORMATION FOR THE YEAR
ENDED 31 MARCH 2010
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
% Reviewed year Audited year
ended 31 March ended 31 March
N$ `000 Change 2010 2009
Revenue 13.16 442 083 390 667
Insurance Revenue 15.47 108 365 93 847
Total Revenue 13.61 550 448 484 514
Cost of sales 8.52 (279 087) (257 172)
Gross profit 19.36 271 361 227 342
Claims & benefits paid (22.23) (16 922) (21 760)
Transfer to policyholder 415.29 (2 427) ( 471)
liabilities
Change in unearned premium 122.42 (367) (165)
provision
Other income (29.14) 23 754 33 521
Administration expenses 23.25 (189 556) (153 796)
Profit before investment 1.38 85 843 84 671
income, fair value
adjustments and finance costs
Investment revenue 75.18 7 883 4 500
Profit before fair value 5.11 93 726 89 171
adjustments and finance costs
Fair value adjustments 3133.00 88 261 2 730
Finance costs (19.26) (20 489) (25 375)
Profit before taxation 142.76 161 498 66 526
Taxation (189.21) (23 954) 26 852
Net profit for the year 47.30 137 544 93 378
Attributable to:
Equity holders of the parent 48.82 137 544 92 423
Minority interest (100.00) - 955
Other comprehensive income,
net of tax:
Profit for the year 47.30 137 544 93 378
Revaluation of property, (118.59) (753) 4050
plant and equipment, net of
deferred tax and release of
depreciation
Share of other comprehensive (100.00) - 184
income of non-controlling
interest
Total comprehensive profit 40.14 136 791 97 612
for the period
RECONCILIATION OF HEADLINE
EARNINGS TO EARNINGS
ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
% Reviewed year Audited year
ended 31 March ended 31 March
N$ `000 Change 2010 2009
Attributable earnings 48.82 137 544 92 423
Adjusted for:
Loss on sale of fixed assets 2691.60 3 657 131
Revaluation of investment (3357.73) (58 159) (1 682)
property, net of tax
Impairment of intangible 100.00 2 290 -
asset
Gain on loan written off (100.00) - (7 216)
Profit on disposal of non- (100.00) - (12 292)
core divisions
Headline earnings 19.57 85 332 71 364
Weighted number of ordinary 2.58 677 240 660 197
shares for the purposes of
basic earnings per
share(`000)
Basic earnings per share 45.07 20.31 14.00
(cents)
Diluted earnings per share 50.56 20.31 13.49
(cents)
Headline earnings per share 16.56 12.60 10.81
(cents)
Diluted Headline earnings per 20.92 12.60 10.42
share (cents)
Dividends per share (cents) 100.00 2.00 1.00
CONSOLIDATED SEGMENTAL
ANALYSIS
% Reviewed year Audited year
ended 31 March ended 31 March
N$ `000 Change 2010 2009
Revenue
Micro Insurance 15.47 108 365 93 847
Micro Finance and Education 46.83 104 542 71 197
Financial services outside 8.91 291 699 267 843
Namibia
Private Equity (Property, (11.21) 45 842 51 627
Development and media)
13.61 550 448 484 514
Net profit after tax
Micro Insurance 24.18 44 985 36 227
Micro Finance and Education 31.07 39 342 30 015
Financial services outside 1.92 19 937 19 561
Namibia
Private Equity (Property, 402.72 33 280 6 620
Development and media &
Investment related services)
48.82 137 544 92 423
Total assets
Micro Insurance 28.75 38 222 29 688
Micro Finance and Education 28.35 193 547 150 795
Financial services outside 1.68 199 107 195 822
Namibia
Private Equity (Property, 27.00 490 228 386 019
Development and media &
Investment related services)
20.83 921 104 762 324
Total liabilities
Micro Insurance 33.27 28 219 21 174
Micro Finance and Education (11.96) 28 152 31 977
Financial services outside (0.84) 129 116 130 209
Namibia
Private Equity (Property, 23.26 256 972 208 487
Development and media &
Investment related services)
12.92 442 459 391 847
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
% Reviewed year Audited year
ended 31 March ended 31 March
N$ `000 Change 2010 2009
ASSETS
Property, plant and equipment (9.63) 139 366 154 210
Investment property 324.36 143 233 33 753
Intangible assets 4.16 194 718 186 942
Deferred income tax assets 12.64 50 855 45 147
Loans and receivables 38.68 144 875 104 467
Related party loans 0.00 - 3 002
Available-for-sale assets 82.10 18 274 10 035
Short-term portion of loans 32.90 72 758 54 747
advanced
Inventories (38.25) 18 677 30 244
Trade and other receivables 50.07 46 549 31 018
Current income tax assets 185.93 752 263
Cash and cash equivalents (16.08) 91 047 108 496
Total Assets 20.83 921 104 762 324
LIABILITIES AND SHAREHOLDERS`
EQUITY
LIABILITIES
Long term liabilities (4.34) 114 240 119 422
Deferred income tax 110.93 57 082 27 062
liabilities
Policy holder liability under 98.14 4 898 2 472
insurance contracts
Amounts due to related 31.98 20 834 15 786
parties
Trade and other payables 5.47 187 573 177 846
Current portion of long term 1.09 17 012 16 828
debt
Technical provisions 8.56 17 189 15 834
Provision for share (100.00) - 1 522
appreciation rights
Current income tax 1466.41 2 005 128
liabilities
Bank overdraft 44.68 21 626 14 947
Total liabilities 12.92 442 459 391 847
Shareholders` equity
Share capital 0.00 162 645 162 645
Deemed Treasury Shares due to (2.12) (18 731) (19 137)
management control
Vendor shares to be issued as (100.00) - 14 976
a result of business
combination
Contingency reserves 161.98 1 902 726
Revaluation reserves (4.47) 16 097 16 851
Distributable reserves 62.91 316 732 194 416
Total shareholders` equity 29.20 478 645 370 477
Total liabilities and 20.83 921 104 762 324
shareholders` equity
CONSOLIDATED CASH FLOW
STATEMENT
% Reviewed year Audited year
ended 31 March ended 31 March
N$ `000 Change 2010 2009
Cash flow from operating
activities
Cash generated from (23.11) 73 621 95 744
operations
Interest received 75.18 7 883 4 500
Finance costs (19.26) (20 489) (25 375)
Net educational loans 10.49 (45 276) (40 979)
advanced
Dividends paid 111.15 (14 143) (6 698)
Taxation paid 189.78 (397) ( 137)
Net cash flow from operating (95.57) 1 199 27 055
activities
Cash flow from investing
activities
Additions to property, plant 47.36 (20 180) (13 694)
and equipment
Additions to investment 155.56 (184) ( 72)
properties
Additions to intangible (12.62) (11 739) (13 434)
assets (computer software)
Additions to available-for- 120.06 (8 239) (3 744)
sale financial assets
Acquisition of minority (100.00) - (1 000)
interest in entity under
common control
Proceeds on sale of property, 582.85 9 041 1 324
plant and equipment
Net cash flow from investing 2.22 (31 301) (30 620)
activities
Cash flow from financing
activities
Costs of share issue (100.00) - ( 49)
Redemption of vendor shares (100.00) - (1 157)
in cash
Sale of deemed treasury (97.43) 496 19 264
shares
Proceeds from long term (177.11) (7 075) 9 175
liabilities
Repayment of other 790.03 2 077 ( 301)
liabilities
(Repayment of)/proceeds from (158.74) 8 050 (13 705)
related party loans
Decrease in policy holder 415.07 2 426 471
under insurance contracts
Net cash flow from financing (56.39) 5 974 13 698
activities
Net change in cash and cash (338.11) (24 128) 10 133
equivalents
Cash and cash equivalents at 12.15 93 549 83 416
beginning of period
Cash and cash equivalents at (25.79) 69 421 93 549
end of period
CONSOLIDATED STATEMENTS OF
MOVEMENT IN EQUITY
% Reviewed year Audited year
ended 31 March ended 31 March
N$ `000 Change 2010 2009
Balance at beginning of 42.03 370 477 260 836
period as restated
Profit for the period per the 47.30 137 544 93 378
income statement
Revaluation of property, (118.62) (753) 4 050
plant and equipment
Sale of deemed treasury (97.49) 406 16 222
shares by Trustco Staff Share
Incentive Scheme Trust
Profit on sale of deemed (97.04) 90 3 042
treasury shares
Shares issued (100.00) - 4 971
Listing costs (100.00) - (3 361)
Vendor shares settled 1538.51 (14 976) ( 914)
Costs of share issue (100.00) - ( 49)
Acquisition of minority (100.00) - (1 000)
interest in entity under
common control
Dividends paid 111.15 (14 143) (6 698)
Balance at end of period 29.20 478 645 370 477
Comprising:
Share/Stated capital 0.00 162 645 162 645
Deemed Treasury Shares due to (2.12) (18 731) (19 137)
management control
Distributable reserves 62.91 316 732 194 416
Vendor shares to be issued as (100.00) - 14 976
a result of business
combination
Other Reserves 2.40 17 999 17 577
29.20 478 645 370 477
By order of the board
PJ Miller
Company Secretary
02 June 2010
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:
M Nashandi (Acting Chairperson), V De Klerk, G Walters(*), AH
Toivo ya Toivo, FJ Abrahams(*), Q Van Rooyen (Managing Director) (*)
(*): Executive Directors
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 Agents (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 Agents (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
Date: 02/06/2010 16:42:04 Produced by the JSE SENS Department.
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