Auditors worried about Trustco’s future
Trustco’s ability to continue as a going concern is dependent on the successful implementation or conclusion various matters to address the liquidity risk the group faces on an ongoing basis.
Jo-Maré Duddy – Trustco Group Holdings’ current liabilities at the end of August 2021 exceeded its current assets by N$664 million.
Nexia SAB&T, Trustco’s independent JSE-accredited auditors, in the group’s Integrated Annual Report (IAR), referred to material uncertainty regarding the group’s ability to continue as a going concern.
The Namibian-based group suffered a loss of N$988 million for the 11 months ended 31 August 2021, 188% more than the loss of N$343 million it reported for the 18 months ended 30 September 2020.
Citing notes in the IAR, released on Tuesday, the auditors said it “indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”.
Trustco’s predicament is “largely attributable to the short-term liquidity position of the group”, according to the IAR.
‘RECORDS REACHED’
“Trustco did manage to break a few records this year,” Quinton van Rooyen, group managing director and CEO, said in the IAR.
“For the first time, Trustco posted losses in two consecutive financial years,” Van Rooyen said.
Other “records” include the 269 employees who have lost their jobs since April 2019 “due to restructuring within the investee companies”. Trustco last made a major corporate acquisition five years ago, another milestone attributed to “the economic environment surrounding us”.
Another first is the fact that the value of Trustco’s investments outside Namibia are now greater than the value of its investments within the country. It is also the fifth year that Trustco had not raised any borrowings locally, with all funding coming from foreign sources, Van Rooyen said.
According to him: “For the first time, the group plans to monetise one of its major foreign investments, maintaining only a minority interest in its mining activities in Sierra Leone [Meya Mine]. The value of that transaction, amounting to US$150 million, will be more than the group’s current market capitalisation – another record!”
GOING CONCERN
Trustco’s ability to continue as a going concern is dependent on the successful implementation or conclusion various matters to address the liquidity risk the group faces on an ongoing basis, the IAR stated.
This includes the completion of the underground development of Meya Mine to 10 000 carats per month, as well as the completion of technical and geological due diligences related to the mine.
Following this, “a first tier global diamond producer will advance up to US$150 million as a debt facility to scale production at Meya Mine and acquire a proposed equity stake of up to 55% in Meya Mining at a nominal value, which will provide further cash flows for the group’s operations in the foreseeable future”.
Other plans include the recovery of US$50 million from Trustco’s investments to assist with the short-term liquidity requirements of the group. It also intends to implement “various collection strategies relating to the recovery of long outstanding advances owed to the group to increase available cash resources”.
According to the IAR, Trustco also hopes for “continuous financial support from its international lenders”, as well as the “successful resolution of various ongoing legal matters in order to mitigate the potential liquidity impact thereof”.
FIGURES
At the end of August 2021, Trustco had cash and cash equivalents of N$23.46 million compared to more than N$144 million at the end of September 2020.
Trustco’s total assets on 31 August 2021 exceeded its total liabilities by N$2.3 billion.
Other “highlights” Trustco released in a short-form announcement on the Namibian Stock Exchange (NSX) and the JSE include:
· An increase in headline losses by 201% to a N$766-million headline loss compared to the previous headline loss of N$254 million.
• Revenue decreased by 49% to N$313 million compared to revenue of N$618 million previously.
• Headline loss per share (HLPS) increased by 156% to a HLPS 48.81c compared to a HLPS of 19.06c previously.
• Basic loss per share (LPS) increased by 178% to a loss per share of 55.55c compared to an LPS of 19.95c previously.
Nexia SAB&T, Trustco’s independent JSE-accredited auditors, in the group’s Integrated Annual Report (IAR), referred to material uncertainty regarding the group’s ability to continue as a going concern.
The Namibian-based group suffered a loss of N$988 million for the 11 months ended 31 August 2021, 188% more than the loss of N$343 million it reported for the 18 months ended 30 September 2020.
Citing notes in the IAR, released on Tuesday, the auditors said it “indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”.
Trustco’s predicament is “largely attributable to the short-term liquidity position of the group”, according to the IAR.
‘RECORDS REACHED’
“Trustco did manage to break a few records this year,” Quinton van Rooyen, group managing director and CEO, said in the IAR.
“For the first time, Trustco posted losses in two consecutive financial years,” Van Rooyen said.
Other “records” include the 269 employees who have lost their jobs since April 2019 “due to restructuring within the investee companies”. Trustco last made a major corporate acquisition five years ago, another milestone attributed to “the economic environment surrounding us”.
Another first is the fact that the value of Trustco’s investments outside Namibia are now greater than the value of its investments within the country. It is also the fifth year that Trustco had not raised any borrowings locally, with all funding coming from foreign sources, Van Rooyen said.
According to him: “For the first time, the group plans to monetise one of its major foreign investments, maintaining only a minority interest in its mining activities in Sierra Leone [Meya Mine]. The value of that transaction, amounting to US$150 million, will be more than the group’s current market capitalisation – another record!”
GOING CONCERN
Trustco’s ability to continue as a going concern is dependent on the successful implementation or conclusion various matters to address the liquidity risk the group faces on an ongoing basis, the IAR stated.
This includes the completion of the underground development of Meya Mine to 10 000 carats per month, as well as the completion of technical and geological due diligences related to the mine.
Following this, “a first tier global diamond producer will advance up to US$150 million as a debt facility to scale production at Meya Mine and acquire a proposed equity stake of up to 55% in Meya Mining at a nominal value, which will provide further cash flows for the group’s operations in the foreseeable future”.
Other plans include the recovery of US$50 million from Trustco’s investments to assist with the short-term liquidity requirements of the group. It also intends to implement “various collection strategies relating to the recovery of long outstanding advances owed to the group to increase available cash resources”.
According to the IAR, Trustco also hopes for “continuous financial support from its international lenders”, as well as the “successful resolution of various ongoing legal matters in order to mitigate the potential liquidity impact thereof”.
FIGURES
At the end of August 2021, Trustco had cash and cash equivalents of N$23.46 million compared to more than N$144 million at the end of September 2020.
Trustco’s total assets on 31 August 2021 exceeded its total liabilities by N$2.3 billion.
Other “highlights” Trustco released in a short-form announcement on the Namibian Stock Exchange (NSX) and the JSE include:
· An increase in headline losses by 201% to a N$766-million headline loss compared to the previous headline loss of N$254 million.
• Revenue decreased by 49% to N$313 million compared to revenue of N$618 million previously.
• Headline loss per share (HLPS) increased by 156% to a HLPS 48.81c compared to a HLPS of 19.06c previously.
• Basic loss per share (LPS) increased by 178% to a loss per share of 55.55c compared to an LPS of 19.95c previously.
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