Trustco increases dividends despite slump in profits

Trustco has announced an 11% increase in declared dividends for the financial year ended 31 March 2013 despite a huge slump in profits.
For the financial year under review, Trustco recorded a decrease in after tax profit to N$39 million compared to N$ 240 million in 2012 mainly attributed to the group’s aggressive strategy to develop the untapped micro finance and micro insurance markets in the southern African region.
Revenue for the group also declined 17% to 596 million compared to N$713 million in 2012, but despite the drop in revenue, the group increased its net asset value 6% to N$968 million up from N$913 million.
Headline earnings per share dropped 77% to 4.65 cents compared to 20.27 cents in 2012 while basic earnings per share also dropped 85% to 5.41 cents per share from 35.08 cents per share in the previous reporting period.
Trustco said it must be noted that in reconciling the headline earnings for 2013 to 2012, two non-recurring items were recognised in income in the 2012 financial year. “Specifically, the ending of a contract in the Zimbabwe micro insurance segment and a once-off legal settlement award,” the group said in a statement to shareholders.
Announcing the group’s results on Thursday, MD Quinton van Rooyen underscored that the group has completed a pioneering acquisition of 53 offices and staff in South Africa. He said this represents the group’s first phase of its envisaged African expansion for its unique and highly successful Namibian business model.
“The set-up cost, which accounted for the bulk of the losses recorded in South Africa, is a better alternative than the route of a more costly acquisition; which in any event had to be converted to a microfinance insurance operation at a significant cost. Micro insurance is still an unknown asset class in many parts of the world, not just Africa,” van Rooyen said.
He added that the move to an in-house short term insurance product offering for the South African market has set Trustco firmly on the path for African expansion, a route that has been steered by the group Board of Directors since 2012.
Van Rooyen singled out the expansion of the mobile insurance product to Shoprite customers in Namibia, where 150 000 new clients were enrolled in the first six months. He hailed this as a profound success story- something to build on for the future of the group of companies.