TRUSTCO Group Holdings Managing Director (MD), Quinton van Rooyen says that for the first time the group plans to cash-in on one of its major foreign investments.
The group, he says, it wants to reduce its shareholding substantially to a minority interest in mining activities in Sierra Leone.
The value of that transaction is estimated to amount to USD150 million (N$2.3billion) which will be more than the group’s current market capitalisation or the value of all its stock.
This comes as the group posted losses in the past two financial years, totaling N$1.3 billion, since the start of the pandemic in April 2019.
Equity markets, including the Johannesburg Stock Exchange posted huge losses as a result of the Covid 19 pandemic, which caused a major disruption to in
ternational supply chains and continues to do so.
Trustco as a listed company on the JSE was not spared judging from a major downward slide in its share price.
Last year, Trustco’s after tax losses increased by 188 percent totalling close to one billion at N$988 million compared to N$343 million in 2020, which adds up to a combined loss of 1.3 billion Namibia dollars. This information is contained in the company’s Integrated Annual Report and Financial Statements for the period ending 31 August 2021, released today.
Van Rooyen, noted that despite these recorded losses the company managed to break a few records this year, as this marks the first year that the value of the group’s investments outside Namibia is greater than the value of its investments within Namibia’s borders, due to the re-evaluation of its real estate portfolio, and the fluctuations in the exchange rate pertaining to the group’s our substantial mining interests and assets.
Last year marked the fifth year that Trustco had not raised any borrowings locally, with all the funding coming from foreign sources. As a result, the group’s Namibian borrowings dropped below 6 percent of total debts, the lowest it has been since the group’s inception 29 years ago.
The group for instance raised USD20 million (N$310m) in foreign funds to deploy in Namibia via its student lending unit during the reporting period, amid the recession and the impact of the pandemic.
Since April 2019, Trustco’s staff complement has been reduced by 269 employees due to restructuring within the investing companies. “By the end of the reporting period, it had been five years since Trustco last made a major corporate acquisition, an indication of the economic environment surrounding us,” Van Rooyen continued.
For the 2021 financial year, Trustco reported a drop in revenues of 49 percent totalling N$313 million compared to a revenue of N$618 million the previous year. An increase in headline losses by 201 percent to a N$766 million compared to a headline loss of N$254 million the previous year as per the audited results for the 18 months ended 30 September 2020, is reflected (“Previous Results”).
Increase in basic losses of 228 percent translating into a N$872 million losses compared to the basic loss of N$266 million to the previous financial year were recorded as well. Van Rooyen noted that this has been one of the most challenging years for the group’s investee companies, specifically due to the COVID-19 pandemic, and the associated macroeconomic situation they found themselves in.
Chairman of the Board, Adv Raymond Heathcote, added that although the world has changed, Trustco’s place in it has not as their vision and value proposition remain relevant, in so far as the creation of wealth for all its stakeholders is concerned.
According to Adv Heathcote the nation and the world need to work towards recovering from the pandemic.
“With hardly any economic growth, we choose to remain focused on streamlining our investee companies to increase profitability, while contributing to the economy and the country. Although Trustco continues to trade at a sizable discount to its intrinsic value, the board remains focused on creating wealth for its stakeholders by growing its underlying investee companies and pursuing value-unlocking initiatives wherever possible. The world is changing, and Trustco must change with it, he concluded. Despite the difficult economic environment over the past two years recording historical losses for the company, the directors of the company believe that the group has adequate financial resources to continue in operation for the foreseeable future.
In its interim financial results for the six months ending March 2021, the directors commented that they are satisfied that the group is in a sound financial position to meet its foreseeable cash requirements.
“The directors are not aware of any new material changes that may adversely impact the group. The directors are also unaware of any material non-compliance with statutory or regulatory requirements or any pending changes to legislation that may affect the group,’’ they say in the above report.