Trustco hit by massive loss
No dividend declared
Trustco Group Holdings' net asset value has fallen by more than a third in its year to end August.
Trustco Group Holdings’ board of directors has once again flagged the existence of a material uncertainty which may cast significant doubt on the ability of the company to continue as a going concern in the foreseeable future.The Namibian-based group yesterday released it latest financial results, reporting a total comprehensive loss of N$681 million for the year ended 31 August 2023. This is a massive plunge from a profit of N$1.399 billion in its previous financial year.
The group declared no dividend for its 2023 book-year.
Net asset value per share (NAVPS) decreased by 37% to 117 cents per share, compared to the NAVPS of 186 cents in respect of the 2022 financial year.
Basic loss per share (LPS) decreased by 147% to 69.14 cents per share, compared to the earnings per share (EPS) of 145.89 cents the previous financial year.
Headline loss per share (HLPS) decreased by 65% to 69.24 cents per share, compared to the headline loss per share of 195.13 cents a year ago.
Going concern
The board noted a decline in investments assessed at fair value through profit or loss for the past financial year amounting to N$554 million.
Trustco's current liabilities for the period under review exceeded current assets by N$1.564 billion. However, total assets surpassed total liabilities by N$1.312 billion.
The board also looked at Trustco’s cash utilised, its cash resources, pending litigation and existing economic conditions in its assessment of the company as a going concern.
“These conditions are considered to indicate that a material uncertainty exists which may cast significant doubt on the ability of the company to continue as a going concern in the foreseeable future. This is largely attributable to the short-term liquidity position of the company,” the board concluded.
Trustco’s ability to continue as a going concern is dependent on the successful implementation or conclusion of several matters, the board said. This includes raising US$25 million in borrowings required to bring the mining operations of Meya Mining into full commercial production within the next 24 months.
Property
Net asset value fell by more than a third in its year to end August, after a surge in interest rates hit its property-heavy portfolio, Trustco said.
The group's net asset value fell just over 37% to about N$1.15 billion to end August, with the value of its investment portfolio in Namibia slipping about N$484 million.
The company manages a diverse portfolio of investments spanning the insurance, real estate, commercial banking, micro-finance, education and mining sectors. It is 40% owned by its founder and CEO, Quinton van Rooyen.
Real estate makes up about 45% of the group's about N$3-billion portfolio, and mining 34%, with the group having interest Meya Mining, a Sierra Leone-based diamond mining company expected to reach commercial production in 2024. The mining interest saw a slight fair value gain of about N$1 million, but Trustco added this had been tempered by increased country risk.
Interest rates
Escalating interest rates have had a cooling effect on the property market, the group said, with property valuations having experienced a slight decrease of 4% when compared to the previous reporting period.
However, with the Namibian economy poised for a turnaround, there is a prevalent expectation that these devaluations will rectify, it added.
Trustco Properties owns an estimated 4 567 hectares of high-quality developable real estate, and it says its real estate portfolio witnessed a 42% decline in property values over the past few years due to Loan-to-Value (LTV) restrictions imposed by the Bank of Namibia (BoN).
However, post-financial year end, the BoN revised its LTV ratio prerequisites for prospective homebuyers, reducing mandatory deposits from up to 50% to a maximum of 10% for properties beyond the second.
"This strategic adjustment is anticipated to invigorate the property market by fostering amplified sales and expediting property development timelines," Trustco CFO Floors Abrahams said in the results.
Shares in Trusco were unchanged yesterday morning but have fallen by more than a third in the past year. - Additional reporting by Fin24