TIDMATMA
RNS Number : 6157Q
ATLAS Mara Limited
07 June 2018
7 June 2018
Atlas Mara Limited Unaudited First Quarter Results - Three
Months Ended 31 March 2018
Atlas Mara Limited ("Atlas Mara" or the "Company" including its
subsidiaries, the "Group"), the sub-Sahara African financial
services group, today releases its unaudited summary first quarter
results for the three months ended 31 March 2018.
Key financial highlights during the period
-- Reported profit after tax for the three months ended 31 March
2018 was $24.0 million (2017: $5.0 million). Profits in the quarter
benefitted from the inclusion of a one-off gain of $19.2 million
related to the acquisition of additional shares in Union Bank of
Nigeria ("UBN"). This gain arose as a result of the fair value
recognition of the shares acquired - which increased Atlas Mara's
shareholding from c. 45% to c. 48% - exceeding the purchase
consideration paid.
-- On an adjusted profit after-tax basis (excluding one-off
items accounted for in the first quarter of 2018, and with no
M&A transaction expenses incurred), Atlas Mara generated $5.5
million for the period (2017: $5.2 million).
-- UBN performance showed continued improvement compared to Q1
2017, as shown in the Q1 2018 earnings statement released by UBN on
10 May 2018. Associate income of $26.3 million for the period
(2017: $3.9 million) reflects Atlas Mara's 48% shareholding in UBN
on an equity accounted basis. This includes the impact of the $19.2
million gain related to the acquisition of additional shares during
the quarter. Excluding this gain, the contribution from UBN is $7.2
million, representing an 82.1% increase in the share of profits,
which accounts for both a 20% growth in the earnings from UBN (on a
USD basis) and the increased shareholding.
-- Expenses increased by 4.5% year-on-year and 1.9% on a
constant currency basis, mainly due to inflation related increases
across all markets. This, coupled with the reduced growth in total
income, led to an increase in the cost to income ratio to 97.8%.
Whilst we have remained focused on growing revenue and reducing
costs and have achieved this in most markets and the shared
services centre, Zambia has seen an increase in expenses as the
final stages of integration are still being concluded, while the
underlying business is still growing to scale, resulting in an
increase in the cost to income ratio. Management has dedicated
resources to drive growth and limit expenses for Zambia.
-- Despite the higher cost to income ratio, the expenses of the
Group for the quarter are still below the average quarterly
expenses run rate recorded in 2017. The Group continues to focus on
initiatives to sustainably manage costs and sensibly grow
revenues.
-- Group deposits excluding UBN increased by 5.7%, or 1.5% on a
constant currency basis, year-on-year, Cost of funds continued to
decrease in the period to 5.3%, from 5.9% reported at full year
2017 and 6.7% for Q1 2017, reflecting our ongoing focus on
acquiring longer-term and better priced deposits.
-- Excluding the impact of IFRS 9, loans and advances increased
by 4.9% or 0.3% on a constant currency basis year-on-year. The
growth has been somewhat muted by of the impact of domestic market
liquidity constraints and slower than anticipated economic
recovery.
-- This quarter represents the first time the Group is reporting
results based on IFRS 9 Financial Instruments. The Standard became
effective for all IFRS reports on 1 January 2018. The adoption of
IFRS 9 has reduced the Group's net assets at 1 January 2018 by an
estimated $70 million. As permitted by the transitional
requirements of IFRS 9 and in line with market practice,
comparative periods have not been restated. This estimated impact
is based on accounting policies, assumptions, judgements and
estimation techniques that remain subject to change until the Group
finalises its financial statements for the year ending 31 December
2018.
-- The non-performing loan ratio for the period stood at 11.6%
(Q4 2017: 11.8%; Q1 2017: 13.1%). Management is committed to
following this modest improvement with further reductions in
2018.
-- Total income excluding the income from associates decreased
by 8.4% (10.7% on a constant currency basis) year-on-year,
primarily driven by a 16.5% decrease in non-interest income, as
both fee and commission income and trading income growth have been
negatively impacted by a slower than expected economic recovery in
some markets, and by low foreign exchange trading volumes across
all markets.
-- Reported equity at period end, and after the impact of IFRS
9, was $756.3 million, a decrease of $56.9 million from 31 December
2017, reflecting the profit for the first quarter, and the impact
of the estimated $70 million decrease from IFRS 9. Book value per
share is $4.42 at 31 March 2018 (compared to $4.77 at 31 December
2017). Tangible book value per share is $3.54 at 31 March 2018
($3.87 at 31 December 2017).
Key ATMA operational highlights during the period
-- In our Markets and Treasury business, revenue has decreased
year-on-year mainly due to a slowdown in client fixed income
activity in Zambia, due to lower yields, and Zimbabwe, due to the
introduction of alternative savings products.
-- Despite Mozambique FX revenues continuing to contract due to
shrinking margins and the overall economic environment, client
foreign exchange revenue was marginally higher with a 3%
year-on-year growth.
-- Key hires in Finance, IT, Risk management, Credit and
Recovery Management, Operations and Digital have been made at
Group, Zambia, Zimbabwe, Botswana levels as we continues to
strengthen capacity in all functions.
-- We received strong positive feedback from regional clients on
the pan-African approach and centralized coordination. The regional
initiative aims to leverage Atlas Mara's regional presence to offer
value added services to corporates who have trans-regional
operations.
Commenting on the results, Bob Diamond, Chairman, said:
"We are pleased to report another profitable quarter, which
affirms our unrelenting focus on executing in our business lines.
As in the recent quarterly performance, we also see the increasing
impact of UBN on the Group's performance, thus validating our
Nigeria strategy. "Since the end of the period, we have appointed
John Staley to the position of Chief Executive Officer, effective 1
May 2018. John was previously Chief Operating Officer, Finance and
Innovation, with Equity Group Holdings, the parent company of
Equity Bank, until 2017. He brings with him strong experience in
banking in Africa and particularly valuable expertise in technology
and infrastructure. He joins us at an important stage of our
growth."
Contact Details
Investors
Kojo Dufu, +1 212 883 4330
Media
Teneo Blue Rubicon, +44 20 3757 9231
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 Reported Constant Audited
Results Comparative Currency(1) Year
End
31.03.18 31.03.17 Variance 31.12.17
$'m $'m % $'m
Adjusted operating
profit and reconciliation
to IFRS profit
Total income 53.7 58.4 (10.7) 260.5
Loan impairment
charge (1.5) (3.0) 53.1 (22.3)
Operating expenses (52.5) (49.8) (1.9) (213.5)
Share of profit
of associates 7.1 3.9 >100 17.8
Adjusted profit
before tax 6.8 9.5 >100 42.5
Adjusted profit
attributable to
ordinary shareholders 5.5 5.2 - 37.0
M&A transaction
costs 19.2 - >100 20.6
Reorganisation/Restructuring
costs - (0.2) >100 (10.0)
Reported profit
before tax 26.0 9.3 >100 53.1
Reported profit
attributable to
ordinary shareholders 24.0 5.0 >100 45.4
Statement of financial
position (excluding
the impact of
IFRS 9)
Loans and advances 1 367.7 1 304.0 0.3 1 330.0
Total Assets 3 101.6 2 771.4 8.6 3 140.4
Total Equity 826.3 547.7 47.7 813.2
Total Liabilities 2 275.4 2 223.7 12.3 2 327.2
Total Deposits 1 853.8 1 753.8 1.5 1 877.5
Number of Shares 172 258 83 092 172 258
Outstanding 735 069 735
Key Performance
measures
Net interest margin
- earning assets 6.5% 7.1% 6.8%
Credit loss ratio 0.4% 0.9% 1.7%
Adjusted cost
to income ratio 97.7% 84.8% 82.0%
Reported cost
to income ratio 97.7% 85.6% 85.8%
Adjusted return
on equity 2.7% 3.8% 4.5%
Reported return
on equity 11.9% 3.7% 5.6%
Adjusted return
on assets 0.7% 0.8% 1.2%
Reported return
on assets 3.1% 0.7% 1.4%
Loan to deposit
ratio 73.8% 74.4% 70.8%
Book value per
Share ($) (pre
IFRS 9) 4.84 6.89 4.77
------------------------------- --------- ------------- ------------- ---------
(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 against all of the relevant African currencies.
Atlas Mara Limited
Consolidated summary statement of financial position (excluding
the impact of IFRS 9)
FY USD million Q1 2018 Q1 2017 CC Var
2017 %
457.0 Cash and short term funds 302.9 422.4 (31.0)
95.9 Financial assets held for trading 82.0 180.6 (56.4)
1,330.0 Loans & advances to customers 1,367.7 1 304.0 0.3
355.0 Investments 429..5 187.2 >100
444.6 Investment in associates 515.6 295.8 76.2
174.6 Intangible assets 177.1 155.3 13.3
283.3 Other assets 226.8 226.1 2.0
------- --------------------------------- ------- -------------- ------
3,140.4 Total assets 3 101.6 2 771.4 8.6
------- --------------------------------- ------- -------------- ------
1,877.5 Customer deposits 1,853.9 1 753.8 1.5
346.2 Borrowed funds 350.5 367.3 (6.5)
103.5 Other liabilities 70.9 102.6 (24.2)
813.2 Capital and reserves 826.3 547.7 47.7
------- --------------
3,140.4 Total equity and liabilities 3,101.6 2 771.4 8.6
------- --------------------------------- ------- -------------- ------
70.8% Loan: Deposit ratio 73.8% 74.4%
------- --------------------------------- ------- -------------- ------
Basis of Presentation
Overview
The term "Atlas Mara", the "Company" or the "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 2018.
Unless otherwise stated, the financial information for the
three-month period ended 31 March 2018 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 2017 annual
report.
Unaudited results for the three months ended 31 March 2018
Review of statement of comprehensive income
Net interest income
Q1 2018: $35.7 million
Q1 2017: $37.1 million
Net interest income decreased by 6.7% on a constant currency
basis. This decrease follows due to slower results from growth
initiatives, a delay in the benefits from the macroeconomic
turnaround being seen and some liquidity pressures being
experienced across certain key markets. This specifically impacted
the higher yield retail portfolios across the network.
Net interest margin on earning assets was approximately 6.5% for
Q1 2018, a decrease from 7.1% for the comparative period on the
same basis.
Although this has not translated to a growth in income, the
average reported cost of funds for Q1 2018 of 5.3% represents a
decrease from the 6.7% reported in Q1 2017 and 5.5% reported at
year-end. This continues to demonstrate management's focus on
replacing more expensive term deposits with transactional
deposits.
Non-interest income
Q1 2018: $17.8 million
Q1 2017: $21.3 million
NIR declined by 17.8% on a constant currency basis due in part
to a decline in fees and commissions in most countries due to lower
transaction volumes in the retail banking business, a forex gain
related to the USD liabilities in Zambia not recurring in 2018 and
lower forex trading revenue.
Although the forex trading income remains lower due to reduced
demand across most subsidiaries, we have seen an increase in the
trading income in Zambia.
Operating expenses
Q1 2018: $52.3 million
Q1 2017: $50.0 million
Expenses increased by 4.5% year-on-year. On a constant currency
basis, operating expenses increased by 1.9%. While marginal and
mostly driven inflation related increases in most markets, the
Group continues to focus on the cost containment initiatives rolled
out during the latter part of the 2016 and 2017.
Total M&A transaction expenses continued to decrease. This
decline is consistent with previously communicated expectations
that these expenses will decrease over time.
Income from associates
Q1 2018: $26.3 million
Q1 2017: $3.9 million
Income from associates of $26.3 million represents the Group's
share of UBN's earnings for the three months ended 31 March 2018 as
disclosed in the results published by UBN on 10 May 2018. This
amount also includes the impact of the one off gain of $19.2
million associated with the acquisition of the additional share
acquired in UBN during the quarter.
Loan impairment charge
Q1 2018: $1.5 million
Q1 2017: $3.0 million
The three month 2018 loan impairment charge was $1.5 million and
represents the Group's first reporting period under IFRS 9. With
the estimated full impact of IFRS 9 remaining provisional until the
completion of the Groups financial statements for the 2018
financial year-end. The impairment charge includes the positive
impact additional asset recoveries in Tanzania during the
quarter.
Review of statement of financial position
Total assets: $3 101.6 million
Customer loans: $1 367.7 million
Total deposits: $1 853.8 million
Customer loans and advances comprise c.44.1% of the Group's
total asset base. Cash, short-term funds and marketable securities
represent c.26.3%, other assets represents 7.3%, the investment in
associate UBN accounts for 16.6% of the asset base, with goodwill
and intangible assets making up the remainder at c.5.7% of total
assets. Total asset growth was 11.9% (8.6% constant currency)
compared to Q1 2017, with the acquisition of additional shares in
UBN being the principal driver of this growth consistent with our
strategic focus to materially increase our shareholding in UBN.
Credit Quality
In management's view, the customer loan book is adequately
provisioned. NPLs as a percentage of the loan book at 11.6% (Q1
2017: 13.1%) 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
2018 results, most notably in Tanzania.
Goodwill and Intangibles
Following the acquisitions made during prior periods and in
compliance with IFRS 3: Business Combinations, the statement of
financial position reflected a goodwill asset of $88.7 million and
an intangible asset of $88.4 million. Intangible assets are
amortized over a 10-year useful life. In aggregate these assets
represented 5.7% of the Group's asset base at 31 March 2018,
resulting in a tangible book value of $3.54 per share (after the
impact of IFRS 9).
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 $513.8 million. This includes the impact of the share of
results for Q1 as reported by UBN on 10 May 2018, the additional
share acquired during the quarter and the impact of the gain on
acquisition of $19.2 million.
Liabilities
Deposits due to customers: $1 853.8 million
Borrowed funds: $350.5 million
Assets are funded mainly through corporate depositors,
government-backed institutions and interbank funding lines (73.2%
of total deposit base). The retail liability base of 26.8% of total
deposits represents an improvement from 26.1% as at FY 2017 and is
indicative of efforts to diversify the funding mix to support
healthier margins in the longer term.
Deposits grew marginally by 1.5% on a constant currency basis
most notably in Zimbabwe.
The continued focus on attracting retail deposits remains
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 2018 FY 2017 Regulatory Minimum
---------------- -------- -------- -------------------
Botswana 18.6% 19.7% 15.0%
---------------- -------- -------- -------------------
Mozambique 23.6% 24.4% 9.0%
---------------- -------- -------- -------------------
Rwanda 23.1% 22.6% 15.0%
---------------- -------- -------- -------------------
Tanzania 16.8% 17.7% 12.0%
---------------- -------- -------- -------------------
Zambia 15.2% 13.8% 10.0%
---------------- -------- -------- -------------------
Zimbabwe 35.5% 37.6% 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), and various affiliated
non-bank group entities. The financial performance of the Southern
region in the first quarter was impacted by lower asset recoveries
compared to the comparative period.
East Africa
East Africa consists of Rwanda and Tanzania.
The contribution from these geographies remained modest in the
quarter, however, is improving on the back of asset recoveries
reported in Tanzania and the improved profitably reported for
Rwanda as the fully integrated bank moves towards the Growth
focus.
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 $26.3 million in its first quarter 2018 results
(2017: $3.9 million).
Corporate
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.
BANKING OPERATIONS OTHER
--------- ------------------------------- ----------
Atlas Mara Limited Reported West East Southern Corporate
Segmental
Financial statements
--------- --------- --------- --------- ----------
Statement of 31.03.18 31.03.18 31.03.18 31.03.18 31.03.18
comprehensive
income
$'m $'m $'m $'m $'m
Total income 53.5 - 12.9 43.9 (3.3)
Impairments (1.5) - (0.9) (0.6) -
Net income from
associates 26.3 26.3 - - -
Total operating
income 78.3 26.3 12.0 43.3 (3.3)
Operating expenses (52.3) - (11.0) (40.2) (1.1)
Profit/(loss)
before taxation 26.0 26.3 1.0 3.1 (4.4)
Profit/(loss)
after taxation
and NCI 24.0 26.3 0.7 0.3 (3.3)
Statement of
financial position
Loans and advances 1,367.7 - 282.3 1,061.1 24.3
Total assets 3,101.6 513.8 451.8 1,952.2 183.8
Total liabilities 2,275.4 - 364.4 1,606.4 304.6
Deposits 1,853.9 - 370.5 1,469.1 14.3
Net interest
margin - earning
assets 6.5% 9.0% 6.3%
Credit loss ratio 0.4% 1.3% 1.0%
Loan to deposit
ratio 73.8% 76.2% 72.2%
BANKING OPERATIONS OTHER
--------- ------------------------------- ----------
Atlas Mara Limited Reported West East Southern Corporate
Segmental
Financial statements
--------- --------- --------- --------- ----------
Statement of 31.03.17 31.03.17 31.03.17 31.03.17 31.03.17
comprehensive
income
$'m $'m $'m $'m $'m
Total income 58.4 - 12.5 46.9 (1.0)
Impairments (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 (1.0)
Operating expenses (50.0) - (11.3) (37.8) (0.9)
Profit/(loss)
before taxation 9.3 3.9 0.2 7.1 (1.9)
Profit/(loss)
after taxation
and NCI 5.0 3.9 (0.2) 3.8 (1.9)
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 1 861.7 137.5
Total liabilities 2 223.8 - 413.5 1 762.6 47.7
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%
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
as a result of new information, future events or otherwise.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFUGUUWQUPRUQM
(END) Dow Jones Newswires
June 07, 2018 02:34 ET (06:34 GMT)
Atlas Mara (LSE:ATMA)
Historical Stock Chart
From Apr 2024 to May 2024
Atlas Mara (LSE:ATMA)
Historical Stock Chart
From May 2023 to May 2024