Atlas Mara Limited Interim Results ‐ Six Months Ended 30 June 2019
TORTOLA / ACCESSWIRE / September 30, 2019 / Atlas Mara Limited (LSE:ATMA)(“Atlas Mara” or the “Company” and, including its subsidiaries, the “Group”), the sub-Saharan African financial services group, today releases its reviewed results for the six months ended 30 June 2019.
Key highlights for the period:
- Adjusted profit after tax of $17.0 million for the six months ended June 2019 (H1 2018: $13.5 million) with adjusted earnings per share of $0.10 (H1 2018 $0.08).
- At 30 June 2019, book value per share was $2.96 (31 December 2018: $3.83) and tangible book value per share was $2.84 per share (31 December 2018: $3.00), primarily impacted by IFRS 5 adjustments as detailed below.
- On 6 February 2019, the Group announced that the Board was undertaking a review of strategic options to determine the key strategic priorities and actions for 2019 and beyond to drive shareholder value. The Company has since made substantial progress on the key strategic priorities identified, as follows:
- The Group now holds a 49.9% combined share of Union Bank of Nigeria (“UBN”) compared to 49.0% at year-end 2018 and is positioned to obtain the necessary additional shares in UBN to reach a majority position, pending regulatory engagements. This reflects strong progress on our stated strategic goal of obtaining a majority shareholding in and consolidating UBN. On a pro forma basis (as at 30 June 2019), consolidation of UBN would have resulted in total assets of $7.2 billion, loans and advances of $2.4 billion and $3.4 billion in deposits. Book value per share would have increased to $3.07 and tangible book value would have decreased marginally to $2.82 per share.
- Following the announcement of the proposed transaction with Equity Group Holdings (“EGH”) on 30 April 2019, the Group has made substantial progress to finalise definitive agreements for the share exchange strategic transaction involving Atlas Mara’s banks in Rwanda, Mozambique, Tanzania and Zambia. Confirmatory due diligence has been substantially concluded and the Group expects to announce the final terms of the transaction in due course.
- Following completion of the strategic transaction with EGH, the Group will be reoriented as a streamlined holding company without significant centralised cost structures. Accordingly, the Group’s holding companies will continue to be reoriented to reduce costs and focus on targeted avenues for value creation in the operating banks.
- UBN has shown strong progress and is well positioned to create value for its shareholders. UBN continues to deliver improving results, as evidenced by first half return on equity at 10.3% (FY 2018: 6.4%), solid loan book expansion, and growth across all digital channels, with good business momentum continuing in the second half of the year.
- UBN contributed $18.7 million (H1 2018: $17.4 million) of net income to Atlas Mara’s H1 2019 results. A notable improvement has been the positive reduction in the reported NPL ratio of the bank to 7.3% at 30 June 2019 from 8.1% at 31 December 2018 due to the ongoing efforts on loan recoveries and credit risk management.
- The Group’s franchises in Zimbabwe and Botswana remain resilient. Management teams are focused on strategies to grow the banks and enhance shareholder value. With our strategic review well underway we will continue to explore ways to grow value while mitigating the macro economic challenges the banking sector faces on the ground in Zimbabwe.
Financial highlights during the period
- On an adjusted profit basis, which excludes the impact of the IFRS 5 remeasurement loss explained below and other transaction and restructuring related gains or losses, profit after tax for the period was $17 million, an increase of 25.9% year-on-year (H1 2018: $13.5 million).
- As a result of the announcement of the strategic transaction with EGH, IFRS 5 requires the Group to reclassify the four subsidiaries included in the transaction as discontinued operations or non-current assets held for sale, which triggered the remeasurement of these assets to the lower of cost or fair value less cost to sell, resulting in a loss of $125.6 million. This remeasurement is required by IFRS 5 even though completion of the transaction has yet to occur. Primarily as a result of this remeasurement, the Group reported a net loss after tax for the first half of 2019 of $126.4 million compared to $28.6 million profit for the prior year period. The write down is primarily related to goodwill and other intangible assets allocated to the four subsidiaries.
- Other highlights from continuing operations (Botswana and Zimbabwe):
- Total expenses attributable to continuing operations declined by 15.9% demonstrating our focus on reducing costs and establishing a more efficient structure.
- Non‐interest income (NIR) increased by 36.0% demonstrating continued strong revenues from our Markets and Treasury business.
- Total loans and advances were $604.6 million at 30 June 2019, a decrease of 17.8% from $735.9 million at 30 June 2018. This decline is primarily due to the currency devaluation in Zimbabwe.
- Non-performing loans (NPLs) decreased to 9.6%, illustrating the improving credit quality of the loan book for these operations.
- Deposits were $684.0 million, a decrease of 31.3% from $996.5 million also as a result of the currency devaluation in Zimbabwe.
- UBN’s financial performance in H1 2019 improved across several key metrics compared to both the comparable period and FY 2018. Return on Equity was 10.3% for the first six months of 2019, supported by profit after tax growth and a substantial decline in NPLs.
- Equity attributable to shareholders as at June 2019 was $501.0 million (December 2018: $646.8 million), reflecting the net impact of the loss associated with IFRS 5 remeasurement of assets held for sale, and the negative FX translation impact from converting our investments from local currency into US dollars as reporting currency over H1 2019, which includes the significant devaluation of the Zimbabwe dollar since December 2018.
- Reflecting the above impacts, at 30 June 2019 our book value per share was $2.96 (31 December 2018: $3.83) and our tangible book value per share was $2.84 (31 December 2018: $ 3.00).
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SOURCE: Atlas Mara
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