Atlas Mara Provides Audited Results for the 14-month Period Ended 28 February 2021

Atlas Mara Limited (“Atlas Mara” or the “Company,” and including its subsidiaries, the “Group”), the sub-Saharan African financial services group, releases its summary financial highlights for the 14-month period ended 28 February 2021.  This represents an extract from the audited financial statements.

The full audited financial statements will be released shortly and published on our website.

Principal highlights:

  • On 29 June 2021, the Group announced that it had changed its accounting reference date and financial year end from 31 December to 28 February, effective for the 2020 financial year. As a result of this change, the results and prior year information presented herein on an IFRS basis are not comparable.
  • Adjusted net profit of $1.5 million(2019: $5.8 million) which excludes the impact of IFRS 5 remeasurement of subsidiaries held-for-sale and other transaction and restructuring related expenses.
  • Union Bank of Nigeria(“UBN”) contributed associate income of $25.5 million for the 14-month period (2019: $31.2 million). The associate income reported reflects the impact of the currency devaluation in 2020, being translated at an average US dollar FX rate of 4 compared to NGN306.4 in 2019.  This represents a 14-month pro-rated 30% decrease in US dollar terms (12.1% on a constant currency basis)
  • Despite the impact of the COVID-19 pandemic and related macro-economic challenges as well as government policy responses, UBN’s underlying performance for the 14-month period remained strong, with the NPL ratio decreasing to 4% compared to 5.8% in December 2019.
  • Capital adequacy remains strong with total CAR above 17% at period-end.
  • BVPS increased by NGN 0.41to 9.05 as at December 2020.
  • On 14 July 2021 the Group announced that it had successfully executed a binding and comprehensive debt restructuring agreement (the “Support and Override Agreement” or “restructuring agreement”)with the majority of the Company’s and its subsidiary ABC Holdings Limited’s (“ABCH’s”) creditors. This followed the initial announcement on 29 December 2020 that the Group had entered into a new secured facility agreement and a standstill agreement with certain creditors in respect of the Company’s and ABCH’s financing arrangements (the “Standstill”). Additional information related to the terms of this agreement are set out in the Company’s previous announcement.
  • Successful execution of the restructuring agreement enables the Company to continue its focus on its previously announced strategic priorities. In the period from September 2020 to date, the company has announced divestments in Mozambique, Rwanda, Tanzaniaand Botswana. The Group continues its efforts to streamline the holding company and centralised cost structures. Additionally, the Company continues to evaluate all options that could include a take-private or delisting of the Company and will keep the market apprised as appropriate.
  • Reported net loss to equity holders of $58.7 million(2019: loss of $143.2 million) or $0.35 per share (2019: loss of $0.84 per share).This result includes a loss from continuing operations of $46.6 million (2019: loss of $8.5 million) and a loss from discontinued operations of $12.0 million (2019: loss of $134.7 million). The loss from continuing operations includes a loss on the monetary position in Zimbabwe of $16.9 million and reflects the impact of the currency devaluation of >100% in Zimbabwe and 20% in Nigeria.
  • The Group’s operating businesses evolved in response to the challenges brought by the COVID-19 pandemic as well as the ever- increasing customer expectations, new technologies and a rapidly changing competitive environment. Key changes were implemented in health and safety of clients and employees, Information Technology systems and cyber security, capital and liquidity buffers, internal controls, and robust loan management systems.
  • All operating banks maintained adequate capital adequacy ratios, reflecting stable balance sheets. Continued focus on deposit growth, loan book quality, and growth business lines.

Commenting on these results, Chairman Michael Wilkerson said, “The past financial year was the most challenging in the Company’s history. Nonetheless, I am pleased to report that the Group was successful in working with its creditors to complete its debt restructuring.  The Company also achieved several milestones in the strategic review aimed at maximizing creditor and shareholder value in the context of extraordinary market disruptions and highly regulated banking environments. Despite the challenging macroeconomic environment in Africa, most of our banks generated positive recurring operating profit during the period.”

Events subsequent to year end

  • Debt Restructuring
  • On 14 July 2021 the Group announced the successful execution of the restructuring agreement. Creditors representing 88% of the aggregate amount of debt outstanding under the Company’s direct and contingent financial liabilities agreed to enter the Restructuring Agreement.
  • This agreement provides for a high level of support from the creditors to enable a long-term stable platform to allow the Company to complete its strategic review and divestiture program.
  • Update on strategic transactions
  • On 25 August 2021, the Group announced that after successfully securing the necessary regulatory approvals and consents, and fulfilling all other agreed closing conditions, the transaction for the sale of 62.06% shareholding in Banque Populaire du Rwanda Plc (“BPR”) had been completed.
  • On 19 May 2021, the Group announced the completion of the sale of its subsidiary African Banking Corporation Mozambique (“BancABC Mozambique”).  The transaction was initially announced on 29 September 2020.
  • On 19 April 2021, the Group announced that it had entered into definitive agreements for the sale of ABCH’s holdings in African Banking Corporation Botswana (“BancABC Botswana”). This transaction has received all requisite regulatory approvals and is expected to close by the end of 2021.
  • Classification of BancABC Botswana as a non-current asset held for sale
  • Following the announcement of the planned divestiture of BancABC Botswana, effective 31 August 2021, the Group will be required to classify its investment in BancABC Botswana as a non-current asset held for sale. As required by IFRS 5, this will result in the investment being deconsolidated and remeasured to the lower of its carrying value or fair value less cost to sell. The transaction is expected to result in a loss primarily due to the carrying value of goodwill and intangible assets associated with BancABC Botswana of c$25- 28 million.
  • At completion, this transaction will result in release of translation losses to P&L of c. $13.2 million.

Additional operational highlights during the period:

  • BancABC Botswana
  • Implemented a new Retail Digital Banking platform (SARUMoney) in 2020 before the introduction of mandatory COVID-19 related country-wide lockdowns.
  • Digital subscriptions increased by 60% during the year and monthly engagement levels exceed 80% on the platform. The Bank also introduced cardless cash withdrawal on its digital platform.  These innovations contributed to the Retail deposit book’s increase by over 16% by end of February 2021 compared to December 2019.
  • Aligned to the ambition to become a transactional bank for corporate clients, additional functionality was added to the Corporate Banking Online platform, which resulted in significant volume and subscription growth during the year.
  • Global Markets profit after tax recorded over 40% year on year increase, supported by a 176% increase in trading income driven by increased client relationships.
  • Extended repayment and interest moratoriums were offered to select impacted clients in both the retail and corporate business – mostly small exposures in the tourism sector.
  • Tools were provided to staff to enable them to work from home. Allowances were granted to employees to purchase office equipment and internet facilities to improve productivity. This ensured that employees were fully equipped to work during the pandemic.
  • BancABC Zimbabwe
  • Digital income contributed 9% to core revenue, a substantial increase from 2019.
  • A 348% increase in Visa card holders from 7.5 thousand as at February 2020 to 33.8 thousand as at February 2021. 11% increase between December 2020 (30.5k) and February 2021 (33.8 thousand).
  • A 33% increase in mobile banking subscribers from 107 thousand in February 2020 to 164 thousand in February 2021.
  • A 63% and 424% increase in mobile transaction volumes and values ($3.7 millionvs. $2.3 million) respectively.
  • The Bank NPL ratio improved to 1.35% as at February 2021 from 3.10% in February 2020.
  • Entered into partnership to open total of 28 kiosks which are a low-cost substitute to branches.
  • Launched the local remittance service in September 2020, $2 millionsent through the service between September 2020 and February 2021.
  • Launched the A360 mobile app in July, 33 thousand registrations by December 2020 and 45 thousand registrations by February 2021.
  • Added QR code payment functionality on the A360 mobile app.
  • Optimized KYC account opening through the website launched in October 2020.
  • As part of the annual #777 CSR Campaign, the Bank donated over 200 litres of sanitiser and detergent, 500 face masks and other PPE to 7 different medical and vulnerable health organisations including an Old Peoples Home, Antenatal Clinic, Children’s Hospital and Infectious Diseases Hospital.
  • UBN
  • Non-interest income increased by 4% for the 12 months ended 31 December 2020 compared to December 2019, with this trend continuing into Q1 and H1 2021 with UBN reporting a 9.5% and 22.3% increase respectively compared to the comparable period.
  • The NPL ratio decreased to 4% at 31 December 2020 compared to 5.8% reported in December 2019.  As at 30 June 2021, the NPL ratio has stabilized at 4.3%.
  • Active users on digital platforms grew 1.3x and new features were added such as end-to-end account opening and enhanced card services including home delivery of cards, boosting revenues from digital channels by 1.5x.
  • UnionDirect network was increased to over 18,000 agents, representing a 6x increase. Transaction volume and value grew 10x and 12x respectively delivering 14x revenue growth.
  • Relaunched UnionVibe, UnionLegend and UnionInfinity, a suite of products targeting the key youth and teen demographic; and disbursed over NGN9.4 billionloans with new credit propositions.
  • Core systems were upgraded to strengthen the performance, reliability, security and processing capacity of various platforms.
  • Measures to prioritize the health and safety of employees, customers and other stakeholders to help weather the challenges of the pandemic.
  • One of the first in the Nigerian banking industry to adopt the remote working model, with over 70% of workforce operating remotely at the height of the lockdowns, made possible due to pre-pandemic strategic investments made in digital technologies.
  • Investments as part of business continuity measures taken in the face of this crisis including additional tools, measures and investments to facilitate work from home and avoid reduced productivity.

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