Trustco’s value decreases to N$1,1 billion

THE overall value of Trustco’s investments, properties and other holdings has seen a continuous decline, dropping to N$1,1 billion.

According to the company’s financial results for the financial year ended 31 August, the company’s net asset value dropped from N$1,8 billion to N$1,1 billion compared to the previous year.

A midyear review in June had already indicated a 13,6% decrease in net asset value, falling from N$1,8 billion to N$1,5 billion. Additionally, on a per-share basis, the value of Trustco’s assets also decreased from N$1,86 to N$1,17.

“This year presented headwinds from global dynamics and domestic policy changes impacting investment firms. However, Trustco has the fortitude to navigate challenges while creating superior value,” Trustco group chairman Raymond Heathcote said.

The investment portfolio, valued at N$3,1 billion as of 31 August, comprises unlisted African entities across various sectors, including short- and long-term insurance, real estate, commercial banking, micro-finance, education and mining.

Trustco spokesperson Neville Basson said during this financial year, the company’s portfolio experienced a decline in valuations largely due to the collective surge in discount rates totalling 11,68%, which is approximately N$650 million, or 66 cents per share.

“Forecasts suggest a potential moderation in these rates, hinting at their reduction in the coming years, which may reverse the valuation declines,” Basson said.

The company’s real estate portfolio also witnessed a 42% decline in property values over the past few years due to Loan-to-Value (LTV) restrictions imposed by the Bank of Namibia.

“However, post-financial year end, the Bank of Namibia revised its LTV ratio prerequisites for prospective homebuyers, reducing mandatory deposits from up to 50% to a maximum of 10% for properties beyond the second,” Basson said.

This was only effected after a High Court challenge by Trustco.

“This adjustment is expected to re-stimulate the historically buoyant property market, increase sales and expedite property development timelines, all leading to improved valuations in the future,” Basson said.

The mining portfolio, Meya Mining, achieved commercial production, bolstering the monetisation of Trustco’s US$116 million investment and moving anticipated dividend payments closer.

In commercial banking and micro-financing, higher interest rates have contributed to revenue growth.
However, Basson said the spectre of higher inflation poses risks of borrower defaults and credit demand contraction due to fiscal and monetary tightening. In the insurance portfolio, heightened inflation and monetary tightening produced mixed effects.

“Higher interest rates boosted investment returns, but they also raised liabilities and capital requirements, which lowered the value of the overall insurance portfolio,” Basson said.

Trustco’s managing director, Quinton van Rooyen, said Trustco is committed to long-term investment growth.

“It’s the audacious spirit of entrepreneurship that’s the true driver of economic success. We focus on creating long-term value for our investors by daring to challenge norms, innovate and steering towards a future of enduring growth and opportunity,” Van Rooyen said.