| Wed 21 Sep 2011, 16:01 | | BILETS - Letshego Holdings Limited - Communication to shareholders |
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BILETS
BILETS - Letshego Holdings Limited - Communication to shareholders
Letshego Holdings Limited
Incorporated in the Republic of Botswana
Registration number 98/442
("Letshego Holdings" or "the Company")
This announcement is being released on the Johannesburg Stock Exchange for
information purposes only in respect of Letshego Holdings Limited`s Note
Programme
Communication to shareholders
Letshego Holdings, a leading provider of unsecured consumer loans, is listed on
the Botswana Stock Exchange, is IFSC accredited and has operations in Botswana,
Mozambique, Namibia, Swaziland, Tanzania, Uganda and Zambia.
The Board of Directors of the Company issued a cautionary announcement to
shareholders on 1 September 2011 which was renewed on 21 September 2011
informing them that Letshego Financial Services (Pty) Limited (`Letshego
Botswana`), a material subsidiary of Letshego Holdings, became aware on 31
August 2011 of the intention of the Government of the Republic of Botswana to
cease facilitating the deduction of consumer lenders` loan repayments through
the Central Register effective from 1 December 2011.
The Board of Directors noted that should this revocation come into effect
Letshego Botswana will use alternative methods for the collection of monthly
loan repayments and that it is engaging with the relevant authorities to obtain
more clarity and a resolution to this matter. Dialog is continuing.
The Company would like to provide shareholders with additional information as
set out in this communication.
Communication to date
To date, the Office of the Accountant General has informed the two independent
Central Registers, through a letter dated 31 August 2011, a copy of which we
received from the Central Register with which we have an agreement, that loan
repayments will no longer be facilitated with effect from 1 December 2011.
What roles do the Central Registers play?
The role of each of the Central Registers is to ensure that loans granted by
lenders such as Letshego Holdings are only approved if the rules and
requirements regarding having one loan per Government employee borrower and
minimum take home pay are met. The Central Register acts as an independent
`validating entity` in this regard. The Central Register also facilitates loan
repayment collections between the Government and consumer lenders.
The Central Registers have agreements in place which facilitate deductions from
the Government payroll on behalf of consumer lenders. We understand that the
facility to request the repayments from the Government payroll will be
discontinued with effect from 1 December 2011. Letshego Holdings and other
consumer lenders have agreements in place with the respective Central Registers
which will therefore be terminated on that date.
How will Letshego Holdings collect its normal monthly loan repayments?
If Letshego Holdings is no longer able to collect the normal monthly loan
repayments via its agreement with the Central Register then Letshego Holdings
can collect loan repayments via electronic debit orders. All customers of
Letshego Botswana have already signed mandate forms as part of the normal loan
agreements.
This is also a normal part of Letshego Botswana business for customers that have
left the employ of an employer with whom Letshego Holdings has a salary
deduction arrangement. This collection methodology is sustainable.
What is happening now?
Consultations with the relevant authorities are continuing. However, the Board
is optimistic that an acceptable resolution can be reached or, if not,
alternative collection methodologies, as used by other similar lenders, should
result in acceptable loan recovery rates.
How does this impact on Letshego Holdings` overall strategy?
As set out in the annual report for the year ended 31 January 2011 Letshego
Holdings is in the process of transforming into a broader based financial
institution and various initiatives are underway regarding this e.g. a banking
system has been acquired, and a roll out implementation plan is being finalized,
in addition to the micro finance banking license that we hold in Mozambique we
are at difference stages of two banking license application processes. Internal
credit scoring methodologies are also being evaluated.
Trading update
The interim results for the six months period ended 31 July 2011 are expected to
be published on 14 October 2011. A trading update is being published on 21
September 2011 which shows the continued profitability and diversification of
the Letshego Group business.
Gaborone
21 September 2011
Debt sponsor in South Africa
Renaissance BJM Securities (Pty) Ltd
Sponsoring broker in Botswana
Stockbrokers Botswana Limited
Date: 21/09/2011 16:01:01 Produced by the JSE SENS Department.
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