Wednesday, October 27, 2021

Letshego profits take further plunge

The Pan-African financial services Group, Letshego warned its shareholders through the Botswana Stock Exchange last week that the Company’s profit after tax for year ended December 31 2016 will be lower than the figure reported for the corresponding period in 2015. The Group in that regard advised its shareholders to deal cautiously with the company’s stock. 

The weak performance follows that of the half year financial results which the company released in September 2016 showing a flat profit growth, as was indicated by a decline of 4 percent compared to the same reporting period in 2015. The decline was attributed to the sluggish growth in the local market which is the Group’s largest contributor across its entire operations. The torpid growth was linked to the weak macroeconomic conditions in some markets, which as a result put the local market in a rut position. Specific to performance of the loan book, the Group recorded marginal growth of 9 percent in Pula terms, which was also described as a lower bottom line growth. 

The Group’s Chief Financial Officer Colm Patterson expressed at the time a forward looking outlook for the Group which involved bolstering revenue for it to surpass costs.  “We want to grow revenues faster than cost and will do that by new revenues and existing revenues,” he had said at the financial results briefing. This was said at the backdrop of significant costs which had been attributed to three key factors being the pricey acquisition of Nigerian operations; the once off tax expense that had been incurred in Rwanda and finally the staff costs. It is probable that the factors which were mentioned could have caused a lag in the recovery of the Group’s performance.   

At the start of the year however Letshego announced that it was expanding its western African footprint and further diversifying its franchise across sub-Saharan Africa through the acquisition of AFB in Ghana. It could perhaps be deduced that this acquisition could have also weighed on the Group’s cash reserves thus eating into the profit margin.   

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