Letshego profits dwindle
The company lost P380 million due to currency fluctuations in 2016
Botswana Stock Exchange listed financial service provider Letshego Holdings Limited has recorded low profits during the 2016 full financial year after losing around P380 million due to volatile currency markets in Africa.
According to the company’s financial results released last week, profit after tax declined by close to P100 million from around P768 million in 2015 to P669 million this year. The financial statements show that profit before tax was P948 million which is a 9% reduction from P1.3 billion profit recorded in 2015.
In the group’s primary markets, Botswana contributed P467, 153 to the profits, followed by Namibia (P350, 839), Mozambique (P106, 681) and Tanzania (P89, 797). Other Southern African markets being Lesotho and Swaziland contributed a total of P71, 941 while East African markets contributed P42, 566. Nigeria business recorded the lowest profits amounting to P8, 254.
Letshego management indicated that the depreciation of Mozambique’s currency when compared with Botswana Pula significantly impacted on the group results. “Translation losses arising on the conversion of the results of non Botswana operations had a significant impact on the group’s results for 2016 and the most notable was the impact of the depreciation of the Mozambique Metical versus the Botswana Pula which is the group’s functional and reporting currency,” states the company’s management . As a result of the 60 percent depreciation of Mozambique currency, Letshego lost P33 million, according to management. Letshego management indicated that currency exchange losses account for P338 million of the P380 million losses recorded in the statement of comprehensive income. Currency exchange losses increased from around P283 million in 2015 to P380 million in 2016.
The company stated that the difficult operating environment also resulted in modest growth in loans to customers. Lending to customers increased from P2.8 billion to P3.3 billion and the costs of borrowing also increased by 41%. The company has however indicated that it will continue to grow its financial products and intends to continue expanding into new markets. “The Board of Directors is confident that the Group is well positioned to benefit from the growing markets in which it is active and views inorganic expansion via acquisitions as important to the acceleration of Letshego’s strategy,” states the company.