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Trustco reports profit more than 10 times’ revenue

2022-07-01  Staff Reporter

Trustco reports profit more than 10 times’ revenue
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For the six months ended 28 February 2022, Trustco Group Holdings Limited reported revenue of N$51.6 million, and profit of close to N$580 million. This means the group’s profit was about 11 times more than reported revenue. These results are contained in Trustco’s release of its latest unaudited, condensed, consolidated interim results. 

The Trustco Group reported a profit for the six months ended 28 February 2022 of N$579 million, and headline earnings of N$27 million. 

“For the six months ended 28 February 2022, the group thus reported basic earnings of 36.63c per share, and headline earnings of 1.70c per share. By the end of February 2022, shareholder assets under management (or Net Asset Value) had built up to N$6.5 billion, with gross assets amounting to N$8.5 billion. Total liabilities stood at N$2 billion, or 24% of total assets,” a statement from Trustco reads. 

“Since I acquired Trustco back in 1992, the group has managed a compounded annual growth rate (CAGR) of 84% in capital and reserves until February 2022, and 34.1% since its first public listing on the NSX in 2006. If you invested N$100 in Trustco in 1992, your investment would have been worth N$6.5 billion now,” Quniton van Rooyen, Group MD, noted. 

“Yet, since its listing in 2006, the share price only managed a compound annual growth rate of 3.89% up to February 2022. Had the share price mirrored the growth in capital and reserves, a price of N$68.30 per share by the end of the reporting period would have been reached. This is an issue that needs to be addressed by the board as soon as possible,” he added. 

The statement continued that Trustco commenced with its IFRS (International Financial Reporting Standards) 10 transition in 2017 when it first sold a 20% stake to a US investment fund as part of its financial services portfolio. 

“As a result, the group transitioned from only managing fully-owned and operated businesses to evaluating each business portfolio for its investment returns to shareholders instead. During the Covid-19 pandemic, this process accelerated as each portfolio was assessed in terms of its returns, as well as when the group should exit each investment to maximise shareholder value,” they stated. 

This resulted in the Trustco Group, as an entity, having to value its portfolio of investments in terms of IFRS 13. 

The statement added: “Valuations were done via the income approach, with differing discount rates relative to the portfolio companies’ activities, all applied from market participants’ perspective. As an investment entity, Trustco evaluates investments in a financial services portfolio which covers investments in banking and financing, insurance, education and real estate, as well as its resources portfolio, with its high-profile international investment being the Meya mine in Sierra Leone. However, Trustco continues to consolidate its shared services subsidiaries. These entities provide investment-related services to Trustco’s investment portfolios”. 

“The socio-political stability of Namibia as a sovereign state remains a major drawcard to foreign direct investment as more and more global citizens see Namibia as a safe haven. This will ensure the growth of key industries in Namibia from agriculture, tourism, mining and fishing. Namibia must continue to develop its human capital to ensure sustainable growth in all these sectors. The Trustco Group, on its part, will continue to invest in its various portfolios to attract foreign investment and provide the returns its shareholders expect,” Van Rooyen commented. 

Trustco’s board remains cautiously optimistic about the group’s future growth prospects. This is “as its resources portfolio transitions into escalating positive operating cash flow generation, while providing an adequate exchange rate hedge and its financial services portfolio benefits from increased interest rate margins,” the statement reads.

2022-07-01  Staff Reporter

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