Trustco: An ongoing concern
Trustco operates from three business segments - insurance and investments, resources and banking and finance.
NDAMA NAKASHOLE
After warning of massive revenue drop last Wednesday, Trustco Group Holdings (Trustco) released its financial results for the year ended 31 March 2018, which reflect a huge drop in some major figures on its statements.
During the period under review Trustco’s revenue dropped massively by hundreds of millions, compared to the revenue the company recorded the previous year.
Not only did the company record a drop in revenue, the cost of sales went down. Gross profit dived massively by almost half compared to the previous year ended 31 March 2017.
At the end of the reporting period, the company was in breach of certain covenant rations, it said.
A loan covenant is a condition on a commercial loan or bond issue that requires the borrower to fulfil certain conditions or which forbids the borrower from undertaking certain actions, or which possibly restricts certain activities to circumstances when other conditions are met.
According to Trustco, the loan terms have not been renegotiated. The group said negotiations had, however, commenced subsequent to year-end.
“Management is confident that an agreement will be entered into, but at the time of this report the parties are still in the discussion phase,” the company said in its going concern paragraph.
Cash flow
According to the Trustco’s financial results, the company’s net cash flow generated by operations before working capital changes stood at N$32.9 million as compared to the N$651.3 million of the previous year. Changes in working capital was recorded as N$53.6 million, as compared to the previous year’s N$219.2 million. The net cash utilised in operating activities during the period under review was N$317.7 million, which is far higher than the N$72.6 million recorded during the previous year.
The company’s net cash used in investing activities was way higher at N$439.6 million during the period under review, as compared to N$79.6 million recorded the previous year.
Other notables
During the year under review, the board recommended that no dividend be declared for the financial period ended 31 March 2018.
Trustco purchased over N$2.9 million treasury shares at an average price of N$7.58 during the year under review, and at the reporting date, the market value of its treasury shares was N$400 million.
Trustco disposed of 20% of its shareholding in Legal Shield on 29 March 2018 for N$1.2 billion. At the reporting date, the group had already received 70% of the purchase consideration in cash.
‘Hope’
Trustco said in its business review: “With the group well capitalised and management positive that the Namibian economy is poised for a recovery, the group is well positioned to take advantage of said recovery in future.”
The company said its operations in Sierra Leone are expected to intensify and the group expects a full year of production “that will see its success enabling the other segments to expand their reach into the Namibian market”.
During the year under review, the group’s operations in the West African country contributed N$275 million in revenue and N$139 million in profit.
Trustco said banking and finance have systems readied to enable operations as a full commercial bank, while the insurance segment is apparently set to explore any and all synergies with its new minority partner.
After warning of massive revenue drop last Wednesday, Trustco Group Holdings (Trustco) released its financial results for the year ended 31 March 2018, which reflect a huge drop in some major figures on its statements.
During the period under review Trustco’s revenue dropped massively by hundreds of millions, compared to the revenue the company recorded the previous year.
Not only did the company record a drop in revenue, the cost of sales went down. Gross profit dived massively by almost half compared to the previous year ended 31 March 2017.
At the end of the reporting period, the company was in breach of certain covenant rations, it said.
A loan covenant is a condition on a commercial loan or bond issue that requires the borrower to fulfil certain conditions or which forbids the borrower from undertaking certain actions, or which possibly restricts certain activities to circumstances when other conditions are met.
According to Trustco, the loan terms have not been renegotiated. The group said negotiations had, however, commenced subsequent to year-end.
“Management is confident that an agreement will be entered into, but at the time of this report the parties are still in the discussion phase,” the company said in its going concern paragraph.
Cash flow
According to the Trustco’s financial results, the company’s net cash flow generated by operations before working capital changes stood at N$32.9 million as compared to the N$651.3 million of the previous year. Changes in working capital was recorded as N$53.6 million, as compared to the previous year’s N$219.2 million. The net cash utilised in operating activities during the period under review was N$317.7 million, which is far higher than the N$72.6 million recorded during the previous year.
The company’s net cash used in investing activities was way higher at N$439.6 million during the period under review, as compared to N$79.6 million recorded the previous year.
Other notables
During the year under review, the board recommended that no dividend be declared for the financial period ended 31 March 2018.
Trustco purchased over N$2.9 million treasury shares at an average price of N$7.58 during the year under review, and at the reporting date, the market value of its treasury shares was N$400 million.
Trustco disposed of 20% of its shareholding in Legal Shield on 29 March 2018 for N$1.2 billion. At the reporting date, the group had already received 70% of the purchase consideration in cash.
‘Hope’
Trustco said in its business review: “With the group well capitalised and management positive that the Namibian economy is poised for a recovery, the group is well positioned to take advantage of said recovery in future.”
The company said its operations in Sierra Leone are expected to intensify and the group expects a full year of production “that will see its success enabling the other segments to expand their reach into the Namibian market”.
During the year under review, the group’s operations in the West African country contributed N$275 million in revenue and N$139 million in profit.
Trustco said banking and finance have systems readied to enable operations as a full commercial bank, while the insurance segment is apparently set to explore any and all synergies with its new minority partner.
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