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ASA International Group PLC   -  ASAI   

Final Results

Released 07:00 16-Apr-2019

RNS Number : 2699W
ASA International Group PLC
16 April 2019
 

16 April 2019

 

ASA International Group plc reports full year results for the year ended 31 December 2018

Strong underlying performance, with good branch, client and high-quality portfolio growth

ASA International Group plc (LSE: ASAI), one of the world's largest international microfinance institutions, today announces its full year results for the twelve-month period from 1 January to 31 December 2018.

 

Key performance indicators

 

 

(Amounts in USD millions)

 

2018

2017

Δ 2017 - 2018

Δ Constant currency

 

 

 

 

 

 

 

 

Number of clients (m)

 

2.2

1.9

17%

 

 

Number of branches

 

1,665

1,387

20%

 

 

Net profit

 

24.5

29.3

 -17%

-7%

 

Normalised net profit (1)

 

32.4

26.9

20%

30%

 

Outstanding Loan Portfolio ("OLP") (2)

 

378.5

313.4

21%

34%

 

Dividend per share (in US¢) (3)

 

7.3

8.7

 

 

 

PAR > 30 days(4)

 

0.6%

0.6%

 

 

 

 

 

 

 

 

 

 

 (1) Adjusted for one-off items. For 2018, these mainly relate to IPO costs. For 2017, this mainly relates to incidental credit loss in India, provision for fees in Nigeria, and reversal of provision for work welfare expenses in Pakistan; and previous year tax expenses

(2) Includes off-book Business Correspondence loans and excludes interest receivable and the unamortized loan processing fee

(3) Number of shares in issue was adjusted to 100m in 2017 for comparison purposes. Actual number of shares outstanding was 3.7m pre- IPO.

(4) PAR>30 is the percentage of OLP that has one or more instalment of repayment of principal past due for more than 30 days divided by the total outstanding gross loan portfolio.

 

 

                 

Highlights

·    Number of clients up by 17% to 2.2m and number of branches up by 20% reaching 1,665

·    OLP grew to USD 378.5m up by 21% (34% up on constant currency basis)

·    OLP/client averaged USD 174, up by 3% despite substantial currency depreciation in Pakistan, India, Sri Lanka and Myanmar (OLP/client up 14% in constant currency)

·    Normalised net profit up by 20% at USD 32.4m (30% up on a constant currency basis), with reported net profit down by 17% at USD 24.5m, mainly due to one-off IPO costs

·    Asian operations delivered strong local currency operating and financial performance, however as previously noted USD loan growth and net profits were impacted by higher than previously expected currency depreciation

·    West and East Africa delivered higher than expected operational and financial performance in both local currency and USD, reaffirming our confidence in these regions and, in particular, in East Africa as a major future profit generator for the Group

·    Continued investment in the IT infrastructure in preparation for the gradual introduction of digital financial services and rollout of proprietary ASA Microfinance Banking System

·    Operations in Zambia started in January 2019, in-line with our strategy as we continue to assess new countries to expand into

·    Proposed dividend of US¢ 7.3 per share, in line with our dividend policy

Outlook

·    As stated in our Year-End Trading update on 26 February 2019, we continue to expect:

A strong underlying performance in 2019

Given the significant currency depreciation in some of the Company's major countries during the second half of 2018, 2019 USD earnings growth is expected to be materially below our medium-term target.

Over the medium term we continue to target earnings growth of 20-25% per annum in USD.

 

Dirk Brouwer, Chief Executive Officer of ASA International, commented:

"We made good progress during the year, with strong operating and underlying financial performance. In particular, we've seen continued strong branch, client and portfolio growth across almost all our markets in 2018. Encouragingly, West and East Africa performed ahead of expectations, in both local currency and USD. We also maintained a high portfolio quality with PAR>30 at 0.6%, demonstrating the ongoing strength of our responsible ASA business model.

 

While many of the Asian currencies impacted in 2018 appear more or less to have stabilised, the effect of the unprecedented level of currency depreciation in 2018 will be felt throughout 2019 as well, particularly because the bulk of the currency depreciation occurred during the second half of 2018. As previously stated, we expect 2019 USD earnings growth to be materially below our medium-term target of 20-25% per annum. However, due to our strong underlying growth rates, we continue to target earnings growth of 20-25% per annum in USD over the medium-term."

 

Webcast and Conference Call

Management will be hosting a live audio webcast and conference call today at 15:30 (BST).

To access the audio webcast, please use the following link: http://webcasting.brrmedia.co.uk/broadcast/5c9a4845ec650d01c34f4575

To dial into the conference call, please use the details below:

Dial in: +44 (0)330 336 9126

Confirmation Code: 6598662

If you have any further questions, please contact MHP Communications on 020 3128 8572 or ASAInternational@mhpc.com.

Enquiries:

 

ASA International Group plc                                                      +31 20 846 3554

Investor Relations                                                                          vschyns@asa-international.com

Véronique Schyns                                                                          

 

MHP Communications                                                                  +44 20 3128 8572

Charlie Barker                                                                                 ASAInternational@mhpc.com 

Simon Hockridge

Patrick Hanrahan

Florence Mayo

 

Cautionary statement

These Preliminary Results have been prepared solely to provide additional information to shareholders to assess the Group's performance in relation to its operations and growth potential. These Preliminary Results should not be relied upon by any other party or for any other reason. Any forward-looking statements made in this document are done so by the directors in good faith based on the information available to them up to the time of their approval of this report. However, such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.

 

The listing rules of the UK Listing Authority (LR 9.7A.1) require that preliminary statements of annual results must be agreed with the listed company's auditor prior to publication. In addition, the Listing Rules require such statements to give details of the nature of any likely modifications that may be contained in the auditor's report to be included with the Annual Report and whether any audit report has been issued on the statutory accounts. ASA International Group plc confirms that it has agreed with Ernst & Young LLP for the preliminary announcement to be notified to RNS. The audited financial statements will be delivered to the Registrar of Companies and a copy will also be available on the Company's website (www.asa-international.com) in due course. The financial information contained in this document does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. 

 

This constitutes regulated information for the purposes of the Disclosure and Transparency Rules.

 

About ASA International

ASA International is one of the world's largest international microfinance institutions, with a strong and well-established commitment to improving financial inclusion and enabling socioeconomic progress. The company does this by providing small, responsible loans to low-income, financially underserved entrepreneurs and business owners, most of whom are women, across its operations in South Asia, South East Asia, West and East Africa. 

 

 

CHIEF EXECUTIVE OFFICER'S REVIEW

 

I am pleased to report a strong underlying performance in our first year as a listed company, demonstrating the strength and adaptability of the proven and replicable ASA microfinance model.

 

Our listing on the premium segment of the London Stock Exchange main market in July 2018 was an important landmark in the Group's development and we continue to benefit from our rich heritage in the microfinance sector - lending at competitive rates, maintaining a strong risk discipline and a low-cost structure to enable us to generate attractive returns, while continuing to pursue our mission to enhance financial inclusion among predominantly female micro-entrepreneurs across Asia and Africa.

 

Regional performance

 

We have been particularly pleased with the strong performance of the three largest East African operations. This bodes well for the future and increases the geographic diversification of the Company's earnings stream. In 2019, we commenced operations in Zambia and continue to assess new countries.

 

In 2018, the Company experienced unprecedented currency headwinds, with most of our major Asian operating currencies substantially depreciating against the USD: PKR fell by 26%, INR fell by 9%, LKR fell by 19% and MMK fell by 14%. Most of the depreciation occurred during the second half of 2018.

 

Investment in operations

During the year, we further strengthened our operations through major investments in IT. We almost doubled our IT development team in Dhaka in order to further strengthen systems, so that we are ready for the gradual introduction of digital financial services to our clients.

We also completed the global roll-out of tablets for each of our loan officers. Currently, we are rolling out our proprietary ASA Microfinance Banking System (AMBS), which is our real-time core banking system, to all our operating entities. AMBS gives us the ability to gradually introduce a wide range of digital financial services for our clients, including, amongst others, doorstep banking and digital disbursements and collections. While the required telecom infrastructure and regulatory framework for our client base is not yet established in many of our operating markets, we expect that our clients will gradually replace cash with digital money.

Dividend

In line with our dividend policy of a pay-out ratio of 30 per cent of net income, the Board is proposing a dividend per share of US¢ 7.3 to be paid on 28 June 2019 to shareholders on the register on 7 June 2019.

 

GROUP FINANCIAL PERFORMANCE

 

(In USD thousands)

 

2018

2017

 Δ 2017 - 2018

 Δ Constant currency

 

 

 

 

 

 

 

 

Net profit

 

24,454

29,304

 -17%

-7%

 

Normalised net profit (1)

 

32,352

26,929

20%

30%

 

 

 

 

 

 

 

Cost/income ratio (1)

 

55%

54%

 

 

 

Return on average assets (TTM) (1)

 

7.3%

7.9%