Letshego Holdings Limited, the listed Pan-African financial services group, still has unresolved tax issues emanating from prior years that require audit attention – this, according to the group’s auditors, Ernst & Young Botswana.
In its latest financial results, the group, which has several subsidiaries across the continent, revealed it had a provision of P45 million in an East Africa subsidiary, P40 million in the West Africa subsidiary and P22 million for the Botswana subsidiary.
All three have potential current income tax liabilities arising from previous years.
Letshego’s auditor’s explained this was a result of ongoing tax revenue authority audits and tax health checks initiated by management across the group.
As of the reporting period, the group says it has recognised a deferred tax asset of P145 million, which comprises tax losses and other temporary differences identified between the carrying amounts of assets and liabilities for financial reporting purposes.
Letshego says the utilisation of these deferred tax assets is subject to the group generating sufficient taxable income in the future to offset these tax losses and temporary differences.
“This estimation uncertainty is further increased by the ongoing volatility in geographical sectors in respect of economic planning in which the group operates,” the group said in a statement.
Meanwhile, Letshego says at this stage it cannot predict the credit losses that could happen.
Loans and advances account for 83 percent of the group’s total assets and the group says the estimation of credit losses is ‘inherently uncertain’ and subject to significant judgment and estimates.
The situation is further compounded by the ongoing volatility created by the Covid-19 virus, which has caused much disruption to almost all geographical sectors in which the group operates.
Certain subsidiaries are said to have been experiencing losses for a period of 12 months now, resulting in an indication of impairment for both the investment in the subsidiary and the loans in the subsidiaries.
The group has also extended loans to subsidiaries amounting to P2.9 billion in 2019 compared to P3.2 billion in 2018.
