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Atlas Mara Limited 2017 Interim Results

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Atlas Mara Limited 2017 Interim Results

Atlas Mara Limited 2017 Interim Results

TORTOLA, THE BRITISH VIRGIN ISLANDS--(Marketwired - Sep 7, 2017) - ATLAS Mara Limited (LSE: ATMA)

7 September 2017 

Atlas Mara Limited Interim Results ‐ Six Months Ended 30 June 2017

Atlas Mara Limited ("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 2017.

Key highlights for the period:

  • Continued earnings progress in Q2 with reported year to date earnings of $11.5 million as at 30 June 2017 (2016: $1.2 million).
  • Cost efficiencies through restructuring and reducing the Shared Services & Centers' cost base, on track to deliver $20m savings target in 2017. 
  • Revenue growth from the Markets business and a noticeable increase in deployment and profitable use of Digital channels, now extended to all of our presence countries.
  • Since period end, successfully completed a $200m strategic financing (comprising a Mandatory Convertible Bond and a Firm Placing and Open Offer) to fund an increased interest in UBN and further investments in Markets and Treasury and Fintech business lines. 

Financial highlights during the period

  • Reported net profit after tax for the first half of 2017 was $11.5 million compared to a profit of $1.2 million reported for the prior year period, reflecting early successes in repositioning of business lines and cost reduction initiatives, implemented in late 2016 /early 2017. Q2 results of $6.4m is the strongest over the past four consecutive quarters. 
  • Net interest income (NII) increased by 79.0% year on year on a constant currency (ccy) basis mainly supported by the inclusion of the FBZ acquisition completed at the end of June 2016. On a pro forma basis, including FBZ on a like-for-like basis, NII would have still reflected an increase of 32.2% year on year. Our businesses benefitted from increased yields and further progress in the reduction of funding costs, following our continuous focus on raising less expensive transactional deposits. 
  • Non‐interest income (NIR) declined by 35.2% on a ccy basis, largely driven by a one off fair value gain of $15.4 million reported in H1 2016, which resulted from the depreciation of the Nigerian Naira in June 2016. This currency deprecation positively impacted the carrying value of our liabilities measured at fair value. Although we saw positive growth in the Markets and Treasury business, the growth for this period was lower than the comparative period growth as a result of lower trading volumes in Mozambique and Botswana, due to lower customer activity following the slow rate of recovery in those markets from macro headwinds experienced in 2016.
  • Notwithstanding such headwinds, the Markets business reported a 33% year on year revenue growth, reflecting the accelerated business focus to increase both volume and value of transaction flows in this business across all our operating banks.
  • Loan impairment charges of $10.0 million were broadly stable on the prior year net charge of $9.1 million with the NPL ratio decreasing year on year from 13.2% to 12.0%. The credit loss ratio of 1.5% at June 2017 (2016: 1.3%) was supported by improved credit processes and specific NPL recoveries, notably in Zambia and Zimbabwe totaling $10.8 million for the first half of 2017, versus $2.7 million of NPL asset recoveries recorded in the comparative prior period. This was somewhat offset by additional specific impairments in Zimbabwe and Rwanda taken on the corporate loan book of $6.3 million year to date.
  • Cost savings in the Shared Services & Centre, after staff rationalisation programs and the closure of the Johannesburg office in March 2017, further contributed to the noteworthy cost reduction visible in the more than 15% lower cost to income ratio reported year on year, now at 85.2%. The Centre reported a $8 million lower cost base recorded for the first half of 2017 compared to the Centre cost base reported as at June 2016.
  • Union Bank of Nigeria Plc (UBN) continued to demonstrate ongoing business improvements and contributed $8.7 million of net income to Atlas Mara's results. While this was 30.4% lower than in the comparable period, this was largely due to the year on year decline in the Naira with the contribution increasing by 7.5% in ccy terms.
  • Loans and advances were $1.33 billion at 30 June 2017. The loan book declined by 8.0% in ccy terms year on year reflecting a cautious risk appetite in certain markets coupled with a slower recovery of economic conditions prevalent in 2016, constraining demand for credit.
  • Deposits were $1.89 billion at 30 June 2017, this represented growth of 2.7% on a ccy basis since June 2016.
  • Equity as at June 2017 totals $573.1 million (December 2016: $ 526.1 million), reflecting the positive net impact of the profit contribution for the half year, the modest equity placing undertaken in February 2017 of $13.5 million, and the positive FX translation impact of $ 17.8 million from converting our African operations into US dollars as reporting currency over H1 2017, as some currencies have strengthened against a weaker dollar since year-end. 
  • At the end of June 2017 our book value was $7.18 per share (December 2016: $ 7.29) and our tangible book value was $ 5.31 per share (December 2016: $ 5.27). 

Key operational highlights during the period

  • The build-out of our onshore Markets and Treasury business continues to make excellent progress with an uplift in Markets revenues to $27.4 million from $20.6 million a year ago. This 33.0% increase year on year was achieved despite lower market volatility in some Markets especially in Mozambique and Botswana where the former enjoyed exceptionally strong revenues a year before. This reflects the improved scale of our markets business, with increased client numbers and business volumes supporting the diversification of our revenue streams. Fixed income and FX trading were particularly strong in Zambia and Zimbabwe. We remain focused on building out the offshore trading capability in Dubai.
  • Atlas Mara has been implementing a cost reduction program in its Shared Services & Centre operations with the intention of delivering net cost savings of $20 million for FY 2017. Progress towards this goal remains on track with a continued cost conscious mindset, amidst continued investment in our core businesses for longer term sustainable asset and income growth.
  • We continue to make good progress in the roll-out of our Fintech initiatives. Agency Banking services have gone live in Mozambique and Tanzania with 136 outlets already approved by the Bank of Tanzania. Rwanda's Agency Banking platform is expected to be live by the end of Q4. Since the launch of our Merchant Acquiring initiative in Q4 2016, we have increased the number of terminals deployed from 700 in the first quarter to 1000 by the end of Q2 2017. Zimbabwe, Mozambique and Zambia are operational with over 500 merchants using our service while Tanzania and Botswana will go live by end of Q4, mobilising over $23million in new low cost deposits and $0.4 million in transactional revenue during the period. We also have an agreement with Blue Marble Microinsurance (a consortium of eight international insurance companies collaborating as a for-profit social enterprise) to provide socially impactful, commercially viable insurance protection to the underserved in Sub Saharan Africa.
  • Collaboration with Fintech partners is a key driver for our Digital Reinvention Initiatives, and we are pleased to announce new partnerships that will deepen our activities in this area. Following approval by Banco de Mozambique, we executed an agreement with Vodacom Mozambique for the introduction of Mobile Savings and Micro Loans to over 1 million mPesa Mobile Money customers in Mozambique. We also executed an agreement with NetOne Zimbabwe for management of their Mobile Money Settlement Account and Sponsorship of companion cards for their over 500,000 customers.

Key events since period end

  • We have successfully completed a $200 million strategic financing that was announced to the market on June 21, 2017. This will be used to fund an increase in investment in our Nigerian associate investment, UBN, and subscribe to our share of the rights issue proposed by UBN which we expect will be completed later this year. The proceeds will also support further expansion of our Markets and Treasury and Fintech business lines.

Commenting on these results, Bob Diamond, Atlas Mara's Chairman, said:

"We are pleased to report our highest half-year net profit since inception of the company. Despite ongoing economic challenges across our markets, in the first half of 2017 we have begun to demonstrate the potential earnings power that Atlas Mara can deliver. We remain on track with our stated profit and cost savings goals announced earlier this year. With this performance momentum, and the support shown by both our existing and new investors, we can accelerate delivery on our strategy."

H1 Results Review ‐ Investor Conference Call

Atlas Mara's senior Management will today be holding a conference call 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.

Dial‐in details are as follows:

United States: +1 (718) 873 9077

United Kingdom: +44 (0) 203 1394830

Participant PIN Code: 54625275#

Contacts

Investors

Kojo Dufu, +1 212 883 4330

Media

Teneo Blue Rubicon, +44 (0)207 4203142

Anthony Silverman

Atlas Mara Limited
 
Consolidated Summary Statement of Comprehensive Income
Quarterly USD' million Six Months Ended 30 June
             
Reviewed Reviewed   Reviewed Unreviewed    
Q1 2017 Q2 2017     2017 2016 CC Var %  
37.1 41.5   Net interest income 78.6 45.2 79.0%  
21.3 22.3   Non-interest income 43.6 68.3 (35.2%)  
               
58.4 63.8   Total income 122.2 113.5 9.9%  
               
(3.0) (7.0)   Credit impairment (10.0) (9.1) (9.9%)  
55.4 56.8   Operating income 112.2 104.4 9.9%  
               
(50.0) (54.1)   Operating expenses (104.1) (115.5) 6.6%  
5.4 2.7   Net operating income 8.1 (11.1) >(100%)  
               
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