TORTOLA, BRITISH VIRGIN ISLANDS--(Marketwired - Apr 27, 2017) - ATLAS Mara Limited (
(
27 April 2017
Atlas Mara Limited Unaudited First Quarter Results - Three Months Ended 31 March 2017
Atlas Mara Limited ("Atlas Mara" or the "Company" including its subsidiaries, the "Group"), the sub-Saharan African financial services group, today releases unaudited summary first quarter results for the period ended 31 March 2017.
Key highlights
Commenting on the results, Bob Diamond, Chairman, said:
"I am very pleased with the results we have delivered in the first quarter including a record quarterly profit for Atlas Mara. We are substantially ahead of last year, but more importantly we are very much on track to deliver on the commitments we made to the market with our 2016 full year results announcement in March. We remain excited about the future and are positioned to benefit from the long-term growth in sub-Saharan Africa."
Key financial highlights during the period
Key operational highlights during the period
Outlook
We expect to deliver a significant improvement in earnings in 2017 as we execute on our cost savings and revenue growth plans. We also expect reported and adjusted earnings to continue to converge as one-off costs fall away. We are targeting reported earnings for 2017 of more than double the level achieved in 2016.
Investor Conference Call
Atlas Mara's senior management will today be holding a market update for investors at 10am EST / 3pm BST. There will be a presentation available in the Investor Relations section of the Company's website, http://atlasmara.com.
The Company will not be disclosing any new material information.
Dial-in details are as follows:
Participant PIN: 11268591#
Contact Details
Investors
John-Paul Crutchley, +971 4 275 6025
Kojo Dufu, +1 212 883 4330
Media
Teneo Blue Rubicon, +44 20 7420 3142
Anthony Silverman
About Atlas Mara
Atlas Mara was listed on the London Stock Exchange in December 2013. Atlas Mara's vision is to create sub-Saharan Africa's premier financial services institution through a combination of its experience, expertise and access to capital, liquidity and funding. Its goals are to combine the best of global institutional knowledge with extensive local insights and to support economic growth and financial inclusion in the countries in which the Company operates.
Summary of Results (Unaudited, unless otherwise noted)
Atlas Mara Limited | Reported Results |
Reported Comparative |
Constant Currency(1) | Audited Year End | ||||||||
31.03.17 | 31.03.16 | Variance | 31.12.16 | |||||||||
$'m | $'m | % | $'m | |||||||||
Adjusted operating profit and reconciliation to IFRS profit | ||||||||||||
Total income | 58.4 | 51.9 | 17.5 | 241.7 | ||||||||
Loan impairment charge | (3.0 | ) | (8.5 | ) | 61.5 | (15.4 | ) | |||||
Operating expenses | (49.8 | ) | (51.7 | ) | (10.5 | ) | (217.2 | ) | ||||
Share of profit of associates | 3.9 | 6.9 | (11.2 | ) | 17.9 | |||||||
Adjusted profit before tax | 9.5 | (1.4 | ) | N/A | 27.0 | |||||||
Adjusted profit attributable to ordinary shareholders | 5.2 | (2.0 | ) | N/A | 20.8 | |||||||
M&A transaction costs | 0.0 | (6.0 | ) | N/A | (8.8 | ) | ||||||
Reorganisation/Restructuring costs | (0.2 | ) | 0.1 | N/A | (8.9 | ) | ||||||
Reported profit before tax | 9.3 | (7.2 | ) | N/A | 9.4 | |||||||
Reported profit attributable to ordinary shareholders | 5.0 | (6.7 | ) | N/A | 8.4 | |||||||
Statement of financial position | ||||||||||||
Loans and advances | 1 304.0 | 1 339.4 | (1.0 | ) | 1 334.8 | |||||||
Total Assets | 2 771.4 | 2 677.8 | 11.2 | 2 757.1 | ||||||||
Total Equity | 547.7 | 661.7 | 8.8 | 526.1 | ||||||||
Total Liabilities | 2 223.7 | 2 016.1 | 12.3 | 2 231.0 | ||||||||
Total Deposits | 1 753.8 | 1 628.8 | 10.4 | 1 799.4 | ||||||||
Number of Shares Outstanding | 83 092 069 | 69 811 774 | 76 057 135 | |||||||||
Key Performance measures | ||||||||||||
Net interest margin - earning assets | 7.1 | % | 4.9 | % | 6.3 | % | ||||||
Credit loss ratio | 0.9 | % | 2.5 | % | 1.2 | % | ||||||
Adjusted cost to income ratio | 85.4 | % | 99.7 | % | 89.9 | % | ||||||
Reported cost to income ratio | 85.6 | % | 110.9 | % | 97.1 | % | ||||||
Adjusted return on equity | 3.8 | % | (0.3 | %) | 3.9 | % | ||||||
Reported return on equity | 3.7 | % | (4.1 | %) | 1.6 | % | ||||||
Adjusted return on assets | 0.8 | % | (0.1 | %) | 0.8 | % | ||||||
Reported return on assets | 0.7 | % | (1.0 | %) | 0.3 | % | ||||||
Loan to deposit ratio | 74.4 | % | 82.2 | % | 74.2 | % | ||||||
Book value per share ($) | 6.89 | 9.03 | 7.29 |
(1) Constant currency variances reflect the operational variance (either positive or (negative)) period-on-period excluding the impact of foreign currency translation, due to the U.S. Dollar strengthening/weakening against relevant African currencies. By way of example: Total Income for Q1 2017 would have reflected positive growth of 17.5% compared to the prior period had it not been for the impact of foreign exchange translation.
Atlas Mara Limited
Consolidated summary statement of financial position
FY 2016 | USD million | Q1 2017 | Q1 2016 | CC Var % | ||||
406.3 | Cash and short term funds | 422.4 | 345.0 | 25.8 | ||||
115.6 | Financial assets held for trading | 180.6 | 143.5 | 26.1 | ||||
1 334.8 | Loans & advances to customers | 1 304.0 | 1 339.4 | (1.0) | ||||
237.2 | Investments | 187.2 | 110.9 | 72.0 | ||||
294.0 | Investment in associates | 295.8 | 422.1 | 9.1 | ||||
168.3 | Intangible assets | 155.3 | 153.5 | 5.6 | ||||
200.9 | Other assets | 226.1 | 163.4 | 37.0 | ||||
2 757.1 | Total assets | 2 771.4 | 2 677.8 | 11.2 | ||||
1 799.4 | Customer deposits | 1 753.8 | 1 628.8 | 10.4 | ||||
322.6 | Borrowed funds | 367.3 | 298.3 | 25.4 | ||||
109.0 | Other liabilities | 102.6 | 89.0 | (2.8) | ||||
526.1 | Capital and reserves | 547.7 | 661.7 | 8.8 | ||||
2 757.1 | Total equity and liabilities | 2 771.4 | 2 677.8 | 11.2 | ||||
74.2% | Loan: Deposit ratio | 74.4% | 82.2% | |||||
Basis of Presentation
Overview
The term "Atlas Mara", "the Company" or "Group" refers to Atlas Mara Limited and its subsidiaries and associates. This release covers the unaudited consolidated results for the Group for the three months ended 31 March 2017.
Unless otherwise stated, the financial information for the three-month period ended 31 March 2017 is set out in this release on a basis consistent with International Financial Reporting Standards, as adopted by the EU (IFRS) and consistent with the group accounting policies as disclosed in the 2016 annual report.
Unaudited results for the three months ended 31 March 2017
Review of statement of comprehensive income
Net interest income
Q1 2017: | $37.1 million | |
Q1 2016: | $23.7 million | |
Net interest income grew by 64.9% on a constant currency basis. This increase is largely driven by growth in Mozambique where NII grew by 81.2% driven by higher yields on interest earning assets due to increase in interest rates in the market, and Zambia, due to consolidation of FBZ.
Net interest margin on earning assets was approximately 7.1% for Q1 2017, an increase from 4.9% for the comparative period on the same basis.
Despite the growth in income, cost of funds for Q1 2017 increased by 0.3% to 6% from Q4 2016 as liquidity constraints in Mozambique, Rwanda and Zambia resulted in increased borrowing in the interbank market, with higher cost of funds as a result. The continued focus on liability growth, in particular campaigns to increase the retail deposit base, will over time ensure sustainable improved margins across the group.
Non-interest income
Q1 2017: | $21.3 million | |
Q1 2016: | $28.2 million |
Non-interest income declined by 21.7% on a constant currency basis despite the acquisition of FBZ, mainly due to a decline in trade finance revenue in Botswana and Mozambique, and a decline in fees and commissions in most countries due to lower business volumes.
There was a notable uplift in markets trading revenues to $10.8 million from $8.1 million a year ago, reflecting the build out of our onshore treasury capability and diversification of revenue streams.
Operating expenses
Q1 2017: | $50.0 million | |
Q1 2016: | $57.5 million |
Expenses decreased by 13% year-on-year or by 10.6% on a constant currency basis. Notwithstanding the currency impact and inclusion of FBZ costs declined by $7.5 million. The overall cost reduction can be attributed to the significant reduction in SS&C staff costs of $4.5 million following the completion of the restructuring of the centre. Included in the above amount of $50 million is $0.2 million representing the net impact of restructuring and reorganization associated with the right-sizing of the SS&C.
Total M&A transaction expenses also decreased. This decline is consistent with previously communicated expectations that these expenses will decrease over time.
Income from associates
Q1 2017: | $3.9 million | |
Q1 2016: | $6.9 million |
Income from associates of $3.9 million (2016: $6.9 million) represents an estimated contribution of the equity-accounted earnings of Atlas Mara's 31.15% stake in UBN for the period ended, based on an average 2017 exchange rate. The lower contribution partly reflects the impact of the devaluation of the Naira year-on-year. UBN's Q1 results will be published on 27 April 2017.
Loan impairment charge
Q1 2017: | $3.0 million | |
Q1 2016: | $8.5 million |
The first quarter 2017 loan impairment charge of $3.0 million was largely driven by recoveries in Zimbabwe as a result of ZAMCO buying $29.5 million of loans, which had a $2.3 million positive impact on the impairment charge.
Review of statement of financial position
Total assets: | $2 771.4 million | |
Customer loans and advances: | $1 304.0 million | |
Total deposits: | $1 753.8 million |
Customer loans and advances contributed approximately 47.1% of the total asset base, with cash, short-term funds and marketable securities representing approximately 28.5%, Goodwill and intangible assets approximately 5.6% and the investment in associates (of which UBN is the largest) represented 10.7% of the asset base.
Credit Quality
In management's view, the customer loan book is adequately provided for, as reflected in the year-to-date 2017 provision coverage ratio of 51.3% (Q1 2016: 49.5%) which excludes 2014 IFRS adjustments). NPLs as a percentage of the loan book at 13.1% (Q1 2016: 15.5%) have been steadily improving. The Group remains focused on recovering as much as possible of the legacy or acquired non-performing loan book over the next few years, demonstrated by the positive impact of additional recoveries included in the Q1 2017 results, most notably the additional $2.3 million impact of recoveries as a result of ZAMCO acquiring an additional $29.5 million of non-performing loans in Zimbabwe
Goodwill and Intangibles
Following the acquisitions made during 2014/15 and 2016 and in compliance with IFRS 3: Business Combinations, the statement of financial position reflected a goodwill asset of $79.2 million and an intangible asset of $76.1 million. Intangible assets are amortized over a 10-year useful life. In aggregate these assets represented 5.6% of the Group's asset base at 31 March 2017, resulting in a tangible book value of $5.31 per share.
Investment in associate: UBN
The investment in UBN is equity accounted for in the statement of financial position as an investment in associate, with a closing balance of $293.7 million. The year-to-date results were based on an estimated first quarter results for UBN. The income from associate included in the first quarter profit was based on an estimated share of profit for the quarter based on the average quarterly USD performance based on UBN's results for 2017, adjusted for amortization of intangibles held at the Atlas Mara level, at the average NGN: USD exchange rate for the current 2017 quarter under review. Atlas Mara holds, directly and indirectly, an effective 31.15% shareholding in UBN.
Liabilities
Deposits due to customers: | $1 753.8 million | |
Borrowed funds: | $367.3 million |
Assets are funded mainly through corporate depositors, government-backed institutions and interbank funding lines (65.8% of total deposit base). The retail liability base of 34.2% of total deposits represents an improvement from 30.6% as at FY 2016 and is indicative of efforts to diversify the funding mix to support healthier margins in the longer term.
Deposits increased by 10.4% ccy on March 2016 levels boosted mainly by the acquisition of FBZ in Zambia. Growth in Rwanda and Tanzania were also positive, where deposit raising campaigns undertaken in the latter part of 2016 in the countries yielded positive results.
The renewed focus on attracting retail deposits has been coupled with an emphasis on accessing better priced Development Finance Institution ("DFI") funding through strong partnerships.
Capital and Liquidity
All operating banks are within prescribed local regulatory requirements for both liquidity ratios and capital adequacy. Atlas Mara remains vigilant in its focus on optimizing financial stability and attractive, sustainable returns on equity.
Capital Ratios | Q1 2017 | FY 2016 | Regulatory Minimum | |||
Botswana | 19.4% | 20.2% | 15.0% | |||
Mozambique | 23.4% | 24.0% | 8.0% | |||
Rwanda | 24.5% | 23.0% | 15.0% | |||
Tanzania | 14.4% | 14.2% | 12.0% | |||
Zambia (ABC) | - | 30.6% | 10.0% | |||
Zambia (FBZ) | - | 31.1% | 10.0% | |||
Zambia (Merge Co) | 12.7% | - | 10.0% | |||
Zimbabwe | 26.1% | 20.9% | 12.0% |
Segmental Information
The segmental results and statement of financial position information are representative of Atlas Mara's management of its underlying operations and consistent with the Group's emphasis on alignment of its operations with sub-Saharan Africa's key trading blocs. The business is managed on a geographic basis with an increased focus on underlying business line performance.
Segmental Results
Southern Segment
Southern Africa includes the operations of BancABC in Botswana, Mozambique, Zambia and Zimbabwe and BancABC's holding company, ABC Holdings Limited (incorporated in Botswana), Finance Bank Zambia and various affiliated non-bank group entities. The financial performance of the Southern region in the first quarter was supported by asset recoveries emanating from continued management efforts in Zimbabwe, particularly the increased focus on recoveries on non-performing loans and collections activities.
East Africa
East Africa consists of Rwanda and Tanzania.
The contribution from these geographies remained modest in the quarter with tight liquidity conditions and impairments driving our operations in Tanzania into a small loss-making position. The contribution from Rwanda also remained muted as it undergoes a period of restructuring.
West Segment
West Africa represents the investment made in UBN, adjusted for attributable equity earnings. Our investment in UBN is continuing to perform in line with expectations. Atlas Mara has reflected its associate income of $3.9 million in its first quarter 2017 results (2016: $6.9 million).
UBN management and its Board of Directors continue to monitor the implications of the economic headwinds, and the growth of risk assets within a revised credit risk appetite framework. Atlas Mara is represented through three seats on UBN's Board of Directors. We remain confident on the long-term growth potential for UBN irrespective of the near-term challenges in the macroeconomic environment.
Shared Services & Centre ("SSC")
SSC includes Atlas Mara Limited, the BVI incorporated holding company, operating through its Dubai management office, and all other intermediate group holding entities acquired in connection with acquisitions of ABCH and ADC in August 2014. The legal entity structure is in the process of being streamlined with the objective of driving further cost efficiencies.
M&A, ADC, Consol
This includes all merger and acquisition and ADC related items. Accounting consolidation adjustments are also presented within this segment.
BANKING OPERATIONS | OTHER | |||||||||||
Atlas Mara Limited Segmental Financial statements |
Reported | West | East | Southern | Atlas Mara Shared Services & Centre | M&A, ADC, Consol | ||||||
Statement of comprehensive income | 31.03.17 | 31.03.17 | 31.03.17 | 31.03.17 | 31.03.17 | 31.03.17 | ||||||
$'m | $'m | $'m | $'m | $'m | $'m | |||||||
Total income | 58.4 | - | 12.5 | 46.9 | 2.1 | (3.1) | ||||||
Loan impairment charge | (3.0) | - | (1.0) | (2.0) | - | - | ||||||
Net income from associates | 3.9 | 3.9 | - | - | - | - | ||||||
Total operating income | 59.3 | 3.9 | 11.5 | 44.9 | 2.1 | (3.1) | ||||||
Operating expenses | (50.0) | - | (11.3) | (37.8) | (3.7) | 2.8 | ||||||
Profit/(loss) before taxation | 9.3 | 3.9 | 0.2 | 7.1 | (1.6) | (0.3) | ||||||
Profit/(loss) after taxation and NCI | 5.0 | 3.9 | (0.2) | 3.8 | (1.6) | (0.9) | ||||||
Statement of financial position | ||||||||||||
Loans and advances | 1 304.0 | - | 278.7 | 1 022.1 | - | 3.2 | ||||||
Total assets | 2 771.4 | 293.7 | 478.5 | 1 861.7 | 700.5 | (563.0) | ||||||
Total liabilities | 2 223.7 | - | 413.5 | 1 762.6 | 66.8 | (19.2) | ||||||
Deposits | 1 753.8 | - | 375.9 | 1 377.9 | - | - | ||||||
Net interest margin - earning assets | 7.1% | 8.5% | 7.2% | |||||||||
Credit loss ratio | 0.9% | 0.3% | 0.2% | |||||||||
Loan to deposit ratio | 74.4% | 74.1% | 74.2% |
BANKING OPERATIONS | OTHER | |||||||||||
Atlas Mara Limited Segmental Financial statements |
Reported | West | East | Southern | Atlas Mara Shared Services & Centre | M&A, ADC, Consol | ||||||
Statement of comprehensive income | 31.03.16 | 31.03.16 | 31.03.16 | 31.03.16 | 31.03.16 | 31.03.16 | ||||||
$'m | $'m | $'m | $'m | $'m | $'m | |||||||
Total income | 51.9 | - | 13.0 | 32.9 | 3.7 | 2.3 | ||||||
Loan impairment charge | (8.5) | - | (0.8) | (7.3) | - | (0.4) | ||||||
Net income from associates | 6.9 | 6.9 | - | - | - | - | ||||||
Total operating income | 50.3 | 6.9 | 12.2 | 25.6 | 3.7 | 1.9 | ||||||
Operating expenses | (57.5) | - | (12.2) | (32.2) | (9.4) | (3.7) | ||||||
Profit/(loss) before taxation | (7.2) | 6.9 | - | (6.6) | (5.7) | (1.8) | ||||||
Profit/(loss) after taxation and NCI | (6.7) | 6.9 | - | (6.3) | (5.7) | (1.6) | ||||||
Statement of financial position | ||||||||||||
Loans and advances | 1 339.4 | - | 290.3 | 1 050.0 | - | (0.9) | ||||||
Total assets | 2 677.8 | 403.9 | 476.5 | 1 630.3 | 725.7 | (558.6) | ||||||
Total liabilities | 2 016.1 | - | 406.5 | 1 521.0 | 70.3 | 18.3 | ||||||
Deposits | 1 628.8 | - | 367.2 | 1 260.6 | - | 1.0 | ||||||
Net interest margin - earning assets | 4.9% | - | 9.0% | 4.8% | - | - | ||||||
Credit loss ratio | 2.5% | - | 1.1% | 2.8% | - | - | ||||||
Loan to deposit ratio | 82.2% | - | 79.1% | 83.3% | - | - |
Forward Looking Statement and Disclaimers
This announcement does not constitute or form part of any offer or invitation to purchase, otherwise acquire, issue, subscribe for, sell or otherwise dispose of any securities, nor any solicitation of any offer to purchase, otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any securities.
The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.
Certain statements in this announcement are forward-looking statements which are based on Atlas Mara's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts, including expectations regarding the future operating and financial performance of the Company. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.
Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements and the actual events or consequences may differ materially from those contained in or expressed by such forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law or regulation, Atlas Mara expressly disclaims any obligation or undertaking to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise.
Contact Information:
Contact Details
Investors
John-Paul Crutchley
+971 4 275 6025
Kojo Dufu
+1 212 883 4330
Media
Teneo Blue Rubicon
Anthony Silverman
+44 20 7420 3142