Trusco Group Limited has reported a loss of N$250 million for the six months ending February this year – a wild turn from a N$1,3 billion profit over the same period in 2022.
The company released the interim financials mid-week, with group chief executive Quinton van Rooyen saying despite the N$1,3 million daily loss, this kind of performance is just a dip in an economic cycle.
Headquartered in Windhoek, Trustco manages investments in the insurance, education, real estate, resources, and banking and finance sectors.
At the end of February this year Trustco had a balance sheet value of N$4,2 billion. Investments make up N$3,6 billion of the total balance sheet – against a substantial N$2,3 billion unnamed reserve.
A quick scan of the financial statement shows that Trustco only earned N$40 million – about N$28 million earned from interest revenue and N$12 million from other sources.
Operating expenses were reported to be at N$83 million, which downed the cash balance at the end of the period at just N$4 million at the end of February.
This thinning cash and losses at year end already had the company shaky on its ability to continue to operate as a going concern, but recent financial statements show that the board of directors concluded that the group would be able to continue its operations as a going concern.
The company said liquidity improvement initiatives have been developed and are being pursued, with the implementation thereof regularly monitored.
Although arrangements are made, the company has recognised that its in trouble, especially around the short-term liquidity position of the group.
The initiatives the board has considered to save the company include the completion of various technical, geological and financial milestones by the resources portfolio related to the mining operations in Sierra Leone in order to conclude a transaction with an international diamantaire of a debt and equity investment totalling US$75 million into Meya Mining.
“The additional funding will enable the resources investee to adequately scale production of its flagship asset, which will enable the group to recover its net debt and equity investment in the resources investee in the foreseeable future,” said the company.
Trustco also plans to recover US$6 million in working capital from its resources investee in the near future which will assist with the short-term liquidity requirements of the group.
It has also said it expects to recover US$42 million in interest bearing debt from its resources by the last quarter of 2023, once Meya Mining achieves the stated production targets.
Trustco’s recovery battle is also being hampered by an N$812 million borrowings figure of which N$7 million is corporate bonds, and N$805 million for term loans.
According to the financial statements, Trustco is in a dispute of N$476 million due to Helios Oryx Ltd.
Trustco has cases with Helios, the Bank of Namibia and also the Namibia Revenue Agency.
There is much confidence in the resources investment by the company which has been dressed as a saviour.
“Our resources portfolio, in particular, holds great potential for positive investment yields and acts as a hedge against exchange rate fluctuations. We are confident in our ability to leverage favourable economic conditions locally and continue delivering superior investment returns. Value investors understand that short-term fluctuations often serve as catalysts for future growth,” said the company.
The company said during the period under review, Trustco has seen a decrease in its net assets value by 13,6%, moving from N$1,8 billion to N$1,5 billion.
There were no interim dividends declared and shares were trading at N$0,42 per share yesterday morning.
On events recorded after the reporting period, during the annual general meeting conducted on 30 March 2023, a motion to approve the general authority to repurchase shares was passed.
As of the reporting date, Trustco’s previous management agreement with Next has come to an end.
The company is currently in the process of preparing a circular for a new management agreement with Next, which will be presented to the minority shareholders for approval. This is the management agreement through which Quinton van Rooyen manages the group and he is remunerated.
A copy of the interim financial statements is available on the company’s website.
Email: lazarus@namibian.com.na
Twitter: @Lasarus_A
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