| Fri 3 Dec 2010, 16:09 | | TTO - Trustco Group Holdings Limited - Unaudited Condensed Consolidated |
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TTO - Trustco Group Holdings Limited - Unaudited Condensed Consolidated
Interim Results for the 6 months ended 30 September 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")
Unaudited Condensed Consolidated Interim Results for the 6 months ended 30
September 2010
Nature of Business
Trustco is a diversified financial services company specialising in the
provision of micro insurance and microloans to underserved communities in
emerging markets. Through the use of state of the art technology, Trustco is
able to offer microloans for education and micro insurance to the masses more
efficiently and affordably. Micro insurance products are easily accessed
through mobile telephony allowing rural communities access to insurance.
Trustco operates in Namibia and South Africa with the recent addition of
Zimbabwe as part of its Africa expansion strategy.
Financial Overview
Profit after tax increased by 89% to NAD 57.2 million and headline earnings
grew by 70% to NAD 52.5 million compared to the first six months of the 2010
financial year. Earnings were enhanced by a damages award in favour of
Trustco, which was recognised during this period. Revenue declined marginally
as new loans were subject to stricter credit criteria. Traditionally, up to
70% of earnings before interest, tax and amortisation is recorded during the
second half of the financial year.
Review of Operations
Micro Insurance
This segment comprises of micro short-term and micro life insurance. Revenue
was down by 8% and profit after tax remained flat compared to the comparative
period due to a tougher trading environment in Namibia.
Trustco Mobile
Trustco Mobile is a division of Micro Insurance. Trustco`s patented concept
brings micro-insurance to the mass market by using mobile telephony as a
delivery method. Although many people in Africa are in possession of a
cellular phone, the majority of them cannot afford basic insurance. Trustco
Mobile has developed a successful model that increases access to micro
insurance by providing insurance products to cellular phone users. In
September of this year, Trustco Mobile extended this offering outside of its
Namibian borders by concluding an agreement with Econet Wireless (Private)
Limited ("Econet") and First Mutual Life Assurance Co. in Zimbabwe. This
agreement provides life cover and other value added services to the 4.2
million subscriber base of Econet. The take-up of the product by the
Zimbabwean market was in line with expectations.
Micro Finance and Education
Although revenue remained strong in the first half of this financial year,
growth in revenue declined by 16%. Consequently, the micro finance loan book
remained relatively unchanged at NAD 177.3 million compared to the
comparative period while profit after tax declined by 10% compared to the
comparative period. Collections on the micro finance book remained strong
during the first half of this financial year. Provisioning for bad debt
amounted to 8%, which is up from 7% in the previous year.
Financial Services outside Namibia (South Africa)
Trustco Financial Services (Proprietary) Limited ("TFS") provides
administration facilities, systems and back office processing to corporate
brokers, Underwriting Management Agencies (UMA`s) and insurers. Net profit
after tax increased by 78% whilst revenue declined by 7%. This was mainly
achieved through cost saving measures and improved efficiencies. On 29
November 2010, the arbitrator in the arbitration between Dex Group
(Proprietary) Limited ("Dex Group") versus Trustco Group International
(Proprietary) Limited ("Trustco Group International") and others, delivered
his final award, which is not subject to appeal. In terms of the award, Dex
Group remains liable to Trustco Group International to repay the overdraft
facility of R19,449,883.80. Upon the discharge of this obligation, Dex Group
is entitled to the issue and transfer of ordinary shares in Trustco Group
Holdings Limited valued at R3.80 per share. The number of shares to be
issued is limited to the profit after tax of TFS as achieved as at 31 March
2009, which was N$ 18,199,500.48.
Dex Group must pay all the costs relating to the arbitration process.
Private Equity
This segment comprises mainly the head office support activities within the
Group, as well as Trustco`s property portfolio. Profit after tax grew by 86%
which is largely attributable to income recognised from the South African
Broadcasting Corporation ("SABC") legal action award in favour of Trustco.
The property portfolio consists of industrial, commercial and residential
property situated in Namibia and South Africa held for investment purposes
and with a carrying value of NAD 211.8 million (2010: NAD 209.9 million).
Dividends Paid
An interim dividend of 1.5 cents per share was declared on 1 December 2010
and will be paid on Thursday 27 January 2011.
Subsequent events
SABC Legal Action
Following the arbitration process between Trustco Group International and the
SABC as a result of breach of contract by the SABC, Trustco was awarded N$
24.7 million plus interest and costs. The award, which was made after the
parties final submissions during June 2010, has been accrued with interest in
these interim results. Trustco Group International has been advised by its
external legal council that there are good prospects that the amount of the
award made by the arbitrator could be increased by the Appeal Tribunal.
Acting on this advice, Trustco Group International resolved to file an appeal
against the award made, seeking an increase in the amount awarded. A notice
of appeal was served on the arbitrator and the SABC on 28 June 2010 and the
Group expects the appeal to be finalised before 31 March 2011. The SABC`s
initial written indication was that they would not appeal, however, a
purported cross appeal has been served on Trustco by the SABC, which was well
outside the prescribed time limits.
Future outlook
With the roll out of Trustco Mobile beyond Namibian borders now well
underway, Trustco expects this product to boost earnings from the second half
of the current financial year. Trustco Mobile will also provide a sound
platform to launch other financial services products into the African market,
such as micro finance for educational purposes which in Namibia has proven to
be a very unique business offering that supports social and economical
development
Share Buy-back
At the annual general meeting held on 29 September 2010, shareholders voted
in favour of a resolution for the Company to perform a general share buy-
back. The Trustco Board of Directors are currently implementing the share buy-
back scheme as approved by shareholders.
Basis of preparation and presentation of interim financial statements
Statement of compliance
The interim 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 containing the information required by IAS34:
Interim Financial Reporting, the Listing Requirements of the Namibian Stock
Exchange (NSX) and JSE Limited, and the Companies Act of Namibia, 2004.
Basis of preparation
The unaudited condensed consolidated financial statements are prepared in
thousands of Namibian Dollars ("NAD`000"). The Group`s functional and
presentation currency is NAD. At 30 September 2010, NAD 1 was equal to ZAR 1.
These interim results are unaudited and have not been reviewed by the
auditors.
The unaudited results have been prepared in accordance with accounting
policies of the Group that comply with IFRS, the JSE Limited Listings
Requirements and the NSX and have been consistently applied throughout the
Group, and are consistent with those of the previous annual financial
statements.
Appreciation
With all the success enjoyed by the Group during the year, the Board
expresses its gratitude towards the tremendous effort from all Trustco staff
in order to achieve these results. The Board would also like to extend a word
of thanks to our clients and service providers without whom Trustco would not
have prospered as it did.
REVIEWED PROVISIONAL CONSOLIDATED CONDENSEDFINANCIAL INFORMATION FOR THE YEAR
ENDED 31 MARCH 2010
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
% Unaudited Unaudited Audited
6 months 6 months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2010 2009 2010
Insurance premium revenue (6) 51 121 54 246 108 365
Revenue (14) 189 495 221 225 442 083
Total revenue (13) 240 616 275 471 550 448
Cost of sales 9 ( 133 181) ( 146 883) ( 279 087)
Gross profit (16) 107 435 128 588 271 361
Investment income >100 34 643 1 943 7 883
Fair value gains and losses (14) 329 382 88 261
Other income >100 35 470 752 23 754
Insurance benefits and 12 ( 8 221) ( 9 385) ( 16 922)
claims
Transfer to policyholder 64 ( 1 205) ( 3 391) ( 2 427)
liabilities
Change in unearned premium 44 ( 68) ( 121) ( 367)
provision
Administrative expenses (21) ( 99 806) ( 82 290) ( 189 556)
Finance costs (7) ( 10 624) ( 9 904) ( 20 489)
Profit before taxation >100 57 953 26 574 161 498
Taxation <100 ( 743) 3 674 ( 23 954)
Profit for the period 89 57 210 30 248 137 544
Attributable to:
Equity holders of the parent 89 57 210 30 248 137 544
Profit for the period 89 57 210 30 248 137 544
Other comprehensive income, >100 1 885 128 ( 753)
net of tax
Revaluation of property, >100 1 885 128 ( 753)
plant and equipment
Total comprehensive income 95 59 095 30 376 136 791
for the period
Attributable to:
Equity holders of the parent 95 59 095 30 376 136 791
EARNINGS & HEADLINE EARNINGS
PER SHARE
% Unaudited Unaudited Audited
6 months 6 months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2010 2009 2010
Profit attributable to 89 57 210 30 248 137 544
ordinary shareholders
Adjustments net of taxation: <100 (4 752) 671 (52 212)
Loss on disposal of (100) - 892 3 657
property, plant and
equipment
Fair value adjustments on 100 - (221) (58 159)
investment properties
Impairment of intangible - - - 2 290
assets
Negative goodwill on - (4 752) - -
business acquisition
Headline Earnings 70 52 458 30 919 85 332
Earnings per share:
Basic earnings per share 89 8.45 4.47 20.31
(cents)
Diluted earnings per share 89 8.45 4.47 20.31
(cents)
Headline earnings per share 70 7.75 4.57 12.60
(cents)
Weighted number of ordinary - 677 240 677 240 677 240
shares in issue (`000)
SEGMENTAL ANALYSIS
% Unaudited Unaudited 6 Audited
6 months months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2010 2009 2010
Total revenue
Micro insurance (8) 51 121 55 792 108 365
Micro finance and education (16) 39 248 46 958 104 542
Financial services outside (7) 139 662 149 921 291 699
Namibia
Private equity (54) 10 585 22 800 45 842
(13) 240 616 275 471 550 448
Net profit after tax
Micro insurance (0) 27 349 27 482 44 985
Micro finance and education (10) 20 967 23 171 39 342
Financial services outside 78 12 784 7 166 19 937
Namibia
Private equity 86 (3 890) ( 27 571) 33 280
89 57 210 30 248 137 544
- - -
Total assets
Micro insurance 33 41 306 31 158 38 222
Micro finance and education 7 196 885 183 980 193 547
Financial services outside 2 216 939 211 899 199 107
Namibia
Private equity 51 561 099 372 720 490 228
27 1 016 229 799 757 921 104
- - -
Total liabilities
Micro insurance 5 27 061 25 755 28 219
Micro finance and education 22 39 478 32 404 28 152
Financial services outside (11) 126 170 141 318 129 116
Namibia
Private equity 34 285 780 212 571 256 972
16 478 489 412 048 442 459
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
% Unaudited Unaudited 6 Audited
6 months months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2010 2009 2010
ASSETS
Non-current assets
Property, plant and (0) 143 806 144 321 139 366
equipment
Investment property >100 143 861 34 192 143 233
Intangible assets 10 208 894 189 104 194 718
Deferred income tax assets 38 66 022 47 938 50 855
Educational micro loans 1 108 071 106 708 106 840
advanced
Other loans advanced (7) 22 694 24 284 37 163
Finance lease receivable (32) 872 1 276 872
Total non-current assets 27 694 220 547 823 673 047
Current assets
Assets at fair value through 66 21 514 12 981 18 274
profit and loss
Short-term portion of 13 69 190 61 277 71 463
educational micro loans
advanced
Short-term portion of other (43) 634 1 104 908
loans advanced
Short-term portion of 15 387 337 387
finance lease receivable
Amounts due by related (100) - 2 973 -
parties
Inventories (39) 18 999 31 232 18 677
Trade and other receivables 100 114 302 36 210 46 549
Current income tax assets 1 546 539 752
Cash and cash equivalents (8) 96 437 105 281 91 047
Total current assets 28 322 009 251 934 248 057
Total assets 27 1 016 229 799 757 921 104
EQUITY AND LIABILITIES
Capital and reserves
Share capital - 162 645 162 645 162 645
Deemed treasury shares (3) ( 18 731) ( 18 137) ( 18 731)
Vendor shares (100) - 14 976 -
Contingency reserve 87 2 522 1 346 1 902
Revaluation reserves 6 17 982 16 979 16 098
Distributable reserves 78 373 322 209 900 316 731
Total capital and reserves 39 537 740 387 709 478 645
Non-current liabilities
Long term liabilities (2) 105 836 107 505 111 090
Other liabilities (71) 767 2 615 3 150
Deferred income tax >100 69 567 26 690 57 082
liabilities
Policy holders` liability 7 6 103 5 691 4 899
under insurance contracts
Amounts due to related (23) 9 297 12 037 20 834
parties
Total non-current 24 191 570 154 538 197 055
liabilities
Current liabilities
Current portion of long-term >100 61 353 14 524 15 367
liabilities
Current portion of other 12 2 445 2 178 1 645
liabilities
Trade and other payables (12) 168 754 192 128 187 572
Technical provisions 3 17 667 17 140 17 189
Current income tax >100 4 083 385 2 005
liabilities
Bank overdraft 5 32 617 31 155 21 626
Total current liabilities 11 286 919 257 510 245 404
Total equity and liabilities 1 016 229 799 757 921 104
CONSOLIDATED STATEMENT OF
CASH FLOW
% Unaudited Unaudited 6 Audited
6 months months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2010 2009 2010
Cash flow from operating
activities
Cash (absorbed) / generated <100 ( 28 369) 60 715 73 635
from operations
Interest received >100 34 643 1 943 7 883
Finance costs (7) ( 10 624) ( 9 904) ( 20 489)
Net educational loans >100 1 042 ( 34 958) ( 45 276)
advanced
Dividends paid 100 - ( 14 144) ( 14 143)
Taxation paid <100 ( 48) 441 ( 397)
Net cash flow from operating <100 ( 3 356) 4 093 1 213
activities
Cash flow from investing
activities
Additions to property, plant (43) ( 12 524) ( 8 761) ( 20 180)
and equipment
Additions to investment <100 ( 299) ( 99) ( 200)
properties
Additions to intangible <100 ( 14 999) ( 5 889) ( 11 739)
assets
Additions to assets at fair (10) ( 3 240) ( 2 946) ( 8 239)
value through profit and
loss
Proceeds on sale of (100) - 3 108 9 042
property, plant and
equipment
Net cash flow from investing <100 ( 31 062) ( 14 587) ( 31 316)
activities
Cash flow from financing
activities
Sale of deemed treasury (100) - 1 000 496
shares
Proceeds from / (repayment >100 40 732 ( 11 503) ( 7 075)
of) long term liabilities
(Repayment of) / proceeds <100 ( 1 583) 2 075 2 077
from other liabilities
(Advanced made) / received <100 ( 11 536) ( 3 720) 8 050
from related party loans
Decrease in policy holder (63) 1 204 3 219 2 427
under insurance contracts
Net cash flow from financing >100 28 817 ( 8 929) 5 975
activities
Net change in cash and cash 71 ( 5 601) ( 19 423) ( 24 128)
equivalents
Cash and cash equivalents at (26) 69 421 93 549 93 549
beginning of period
Cash and cash equivalents at (14) 63 820 74 126 69 421
end of period
-
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
% Unaudited Unaudited 6 Audited
6 months months year ended
ended 30 ended 30 31 March
September September
N$ `000 Change 2010 2009 2010
Balance at beginning the 29 478 645 370 477 370 477
period
Vendor shares settled - - - (14 976)
Sale of deemed treasury (100) - 1 000 406
shares by Trustco Staff
Share Incentive Scheme Trust
Gain on sale of deemed - - - 90
treasury shares
Dividends for the period 100 - (14 144) (14 143)
Total comprehensive income 95 59 095 30 376 136 791
for the period
Balance at end of the period 39 537 740 387 709 478 645
Comprising of:
Share capital - 162 645 162 645 162 645
Deemed treasury shares (3) (18 731) (18 137) (18 731)
Vendor shares (100) - 14 976 -
Contingency reserve 87 2 522 1 346 1 902
Revaluation reserve 6 17 982 16 979 16 098
Retained earnings 78 373 322 209 900 316 731
39 537 740 387 709 478 645
By order of the board
PJ Miller
Company Secretary
3 December 2010
JSE Sponsor
QuestCo Sponsors (Pty) Ltd
NSX Sponsor
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Date: 03/12/2010 16:09:02 Produced by the JSE SENS Department.
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