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Preliminary financial results
Net profit of EUR 8.3 million / Webcast to discuss results scheduled for 3 pm CET today
- ADC reports excellent preliminary results for financial year 2011
- Net profit of EUR 8.3 million
- Shareholders equity grew to EUR 87.9 million, an increase of 33% over year-end 2010
- Webcast to discuss results scheduled for 3 pm CET today
ADC African Development Corporation (ADC), ISIN DE000A1E8NW9, a fast growing financial services group, focusing on the frontier markets in sub-Saharan Africa, today reports its preliminary 2011 results.
Preliminary financial results:
In 2011, ADC recognized EUR 14.5 million in fair valuation gains on its portfolio companies (FY 2010: EUR 11.3 million). Best performing asset was ABC Holdings Limited ('BancABC') which stock exchange listed price led to a fair valuation gain mark-to-market of EUR 12.5 million for ADC. Just nine months after entry, ADC has doubled the value in this asset and the operational outlook of the banking group is encouraging. Furthermore, ADC recognized dividend income streams of EUR 761k from two of its portfolio companies and realized revenue from the sale of its stake in Ecobank Zimbabwe of EUR 2.75 million.
These overall positive operational developments of ADC lead to a net profit of EUR 8.3 million in 2011 (FY 2010: EUR 6.6 million).
At year end, the company's total shareholders' equity was EUR 87.9 million (FY 2010: EUR 66.1 million), which reflects the very good development of its overall operations but also the capital increase of EUR 9.2 million in December 2011.
On December 31, 2011, ADC had EUR 49.3 million (FY 2010: EUR 18.6 million) of investments in associates on a consolidated basis. This amount relates mainly to ADC's five unconsolidated portfolio investments, BANGE (EUR 14.9 million), BancABC (EUR 25.3 million), Brainworks Capital (EUR 4.0 million), RHEAL (EUR 3.7 million) and iVeri (EUR 0.8 million).
At year end, ADC held EUR 22.1 million (FY 2010: EUR 44.0 million) in cash and cash equivalents on a consolidated basis and EUR 23.2 million in restricted cash on a separate account reserved for a potential acquisition of a bank in Nigeria of which EUR 15.5 million related to ADC and EUR 7.7 million to a consortium partner.
IFRS December 31, 2011 (in EUR m), FY 2011e FY 2010 Change unaudited
Revenue & other income 7.9 2.4 +229%
Profit from fair value valuations 14.5 11.3 +28%
Net profit 8.3 6.6 +26%
Investment in portfolio companies 49.3 18.6 +165%
Total shareholders' equity 87.9 66.1 +33%
Olaf Meier, Managing Director of ADC, commented on the financial results: '2011 was the first full-year on the stock exchange for ADC which resulted in a 26% increase of net profit. Although the stock was negatively affected by the general stock market lapse, the ADC share achieved an impressive rebound increasing by 114% at the end of 2011 since its low in August 2011. We believe that ADC has paved the way for many interesting and promising projects, which we expect to realize shortly to reap the rewards of our work. The development of our shareholding in BancABC has proven the potential for investments in financial services companies in the frontier markets of sub-Saharan Africa and also the quality of our team on the ground to invest at the right time into the right assets which are undervalued but bear high potential to become market leaders in their segments. The financial outlook for 2012 is very positive as all portfolio companies are roaring and as we will additionally monetize our network by providing Advisory Services to international corporates. We expect these advisory fees to contribute at least EUR 3.0 - 5.0 million in revenues in 2012. We also expect our current and soon to be closed portfolio investments to outperform their budgets. Taken all these effects in consideration, we expect a 2012 net profit of above EUR 10.0 million.'
ADC took a three pronged approach to the year by ensuring new investments, working on the operational development of ADC's portfolio companies and corporate strategy and also push for exits.
ADC became a strategic investor in a medium-sized pan-African banking group in 2011. We bought a 23.1% stake in BancABC, a commercial bank headquartered in Botswana with operational branches located in Zambia, Zimbabwe, Tanzania and Mozambique. BancABC is ADC's most successful investment to date, having already paid EUR 455k in dividend and has achieved an IRR of 179%, and a multiple of 2x after just nine months of investment. BancABC is in an ideal position to benefit from the forecasted boom in financial services provision across the continent over the next decade, having established itself across East and Southern Africa with plans for additional growth on the horizon. The business is growing fast. In Zimbabwe, BancABC is among the top six largest and most profitable banks. The banking group published excellent half-year 2011 results with net-operating income up by 48% and pre-tax profit up by 84%. Furthermore, Management gave a promising outlook for full year results.
ADC exited its shareholding in Ecobank Zimbabwe at the end of this year, bringing in a realized profit of EUR 2.75 million via a share swap deal whereby ADC swapped its shares in Ecobank Zimbabwe for a 28% shareholding in Brainworks Capital Management, a Zimbabwean investment company focusing on investments in banking, insurance, the mining and fuel sectors. After acquiring shares from ADC, Brainworks increased its total shareholding in Ecobank Zimbabwe to 36%. We view our investment in Brainworks as a way to actively invest in a country with abundant investment opportunities while also investing alongside with a majority of Zimbabwean investors and therefore compliant with indigenization laws.
BANGE, the national bank of Equatorial Guinea, increased its deposits by 82%, reaching above EUR 290 million at the end of the year while the total number of accounts also increased by 26%. Loans increased by a modest 15% to EUR 83.3 million and are expected to remain at this level in 2012. The management focused in the fiscal year 2011 on optimizing the lending operations and improved internal procedures and corporate governance structures to reduce the level of non-performing loans. BANGE will now look ahead to the next positive year after tiding up its balance sheet.
RHEAL, our health insurance operations in Kenya, is growing fastly despite the challenging macroeconomic environment with an inflation rate in Kenya at almost 20% in its peak. Nevertheless, the company managed to increase its customer base by 42% with net premiums growing by 36%.
Dirk Harbecke, Chief Executive Officer of ADC, commented: 'Institutional investors are increasing their positions on the continent and see Africa as the most promising of all frontier markets, ahead of both Asian and Latin American markets. Four of the five countries with the best prospects for future investment returns are located in Sub-Saharan Africa. The financial services sector is one of the three most promising sectors for investment and ADC is well positioned to benefit from the rise of Africa over the coming decade. We have an excellent team, a strong initial portfolio of investments and a pipeline that will ensure continued growth in the future. We look forward to the coming year and believe that 2012 will be ADC's best year yet.'
ADC will host a webcast today at 3.00 pm CET to discuss the full year 2011 results. Please dial-in at:
Europe: +49 6958 999 0805
UK: +44 207 153 2027
North America: +1 480 629 9870
South Africa: +27 800 99 1276
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