Press Release
ASA International Group plc
announces the impact of IAS 29 accounting treatment of
hyperinflation in Ghana and Sierra Leone
Amsterdam, 25 March 2024 - ASA
International Group plc, ('ASA International', the 'Company' or the
'Group'), one of the world's largest international microfinance
institutions, today announces the impact of accounting for
hyperinflation on its operations in Ghana and Sierra Leone for the
fiscal year ended 31 December 2023 ('the Period').
The information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated by the Market Abuse Regulation (EU)
No.596/2014, as it forms part of UK law by virtue of the European
Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Accounting for hyperinflation in Ghana and Sierra
Leone
In 2023, the three-year cumulative
inflation in Ghana and Sierra Leone exceeded 100%. As a result,
hyperinflation accounting will be applied for the first time in the
consolidated financial statements of the Group. The IFRS
standard IAS 29 "Financial Reporting in
Hyperinflationary Economies" ('IAS 29') requires the Group to
adjust the 2023 financial information of the operating entities in
these countries so that all items are
presented to reflect the current purchasing power at the reporting
date. Since the trading update issued on 28 February 2024, and in
working towards finalising the Group's full year audited results
for the year ended 31 December 2023, the Group has been assessing
the impact of IAS 29 on the consolidated accounts for the
Group.
On the application of IAS 29 to ASA
Ghana, a cumulative inflation factor will be applied using the
consumer price index ('CPI') in Ghana, published by the Ghana
Statistical Services. The movement in the CPI for the Period was
25% (2022: 52%). On the application of IAS 29 to ASA Sierra Leone,
a cumulative inflation factor will be applied using the CPI in
Sierra Leone, published by Statistics Sierra Leone. The movement in
the CPI for the Period was 53% (2022: 36%).
The application of IAS 29 includes
the following adjustments:
- Adjustment of historical cost non-monetary assets, liabilities
and stated capital for the change in purchasing power caused by
inflation from the date of initial recognition to the balance sheet
date;
- Adjustment of the income statement for inflation during the
Period;
- The
income statement is translated at the period-end foreign exchange
rate instead of an average rate; and
- A net
monetary gain or loss adjustment, recognised in the income
statement, to reflect the impact of inflation and exchange rate
movement on holding monetary assets and liabilities in local
currency.
Impact on 2023 performance, equity, cash position and 2024
outlook
The application of IAS 29 results in
non-cash adjustments in the presentation of the financial
information of the Company. Total
comprehensive income remains similar and total equity increases due
to the IAS 29 adjustments. Having regard to the impact of IAS 29
and further audit adjustments, the Company
now expects to report pre-tax income in excess of USD 28.4m (the
consensus estimate for pre-tax income at the time of the update on
28 February 2024) and net income for 2023 of between USD 7.0
million and USD 9.0 million.
The unrestricted cash and cash
equivalents of the Company of USD 48 million as at 31 December 2023
remains strong.
The outlook on 2024 remains positive
with improved business performance of our operations compared to
2023 on the back of much stronger performance in H2 2023. However,
the reported net income for the Group will depend on which
countries will be classified as hyperinflationary at the end
2024. Based on current preliminary
inflation projections it is expected that the accounting for
hyperinflation will be applicable for Pakistan in 2024. Ghana,
Sierra Leone and Nigeria are on the watchlist.
Publication of statutory financial statements 2023 of ASA
Pakistan, ASA Ghana and ASA India
Some of the operating entities in
the Group need to publish their statutory financial statements on
their website and in a local nationwide newspaper in line with
regulatory requirements. ASA Pakistan will publish these for the
first time on 29 March 2024 because of obtaining the microfinance
bank license in 2023. ASA Ghana will report before the end of April
2024. ASA India publishes its statutory financial statements for
the year ended 31 March 2024 before the end of November
2024.
We note that these statutory
financial statements are prepared in line with local regulations
and are therefore materially different from the financial
information of these entities used for preparing the Group's
consolidated financial statements. The Group's consolidated
financial statements are entirely based on IFRS, whereas local
regulations require different treatment of certain elements.
Examples are different calculation of the expected credit loss
provision, use of exchange rates published by the local central
bank and the building up of statutory reserves. The statutory
financial statements of ASA Ghana are prepared under IFRS but will
not include the adjustments for IAS 29 that will be required in the
consolidated accounts for the Group as local authorities do not
recognize the economy as hyperinflationary.
Notice of Full Year Results and AGM
The Company will announce its full
year audited results for the year ended 31 December 2023
on 23 April 2024. The
Company's Annual General Meeting will be held on 20 June
2024.
Please note that the financial
information provided in this announcement is still subject to audit
and, therefore, subject to change.
The person responsible for the
release of this announcement on behalf of the Company for the
purposes of MAR is Tanwir Rahman, CFO.
Enquiries:
ASA
International Group plc
Investor
Relations
Mischa Assink
ir@asa-international.com
About ASA International Group plc
ASA International Group plc (ASAI:
LN) is one of the world's largest international microfinance
institutions, with a strong commitment to financial inclusion and
socioeconomic progress. The company provides small, socially
responsible loans to low-income, financially underserved
entrepreneurs, predominantly women, across South Asia, South East
Asia, West and East Africa.