| Mon 30 Apr 2001, 0:00 | | Regal Treasury Bank Holdings Limited - Audited Res |
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REGAL TREASURY BANK HOLDINGS LIMITED
Audited results for the year ended 28 February 2001.
Analysis of non-interest income
Other 4.54%
Insurance 0.57%
Asset Management 2.44%
Property 3.10%
Corporate & Structured Finance 8.90%
Stockbroking 10.85%
Branding 28.14%
Financial Instruments 41.46%
financial highlights
Headline earnings +45.9%
Headline earnings per share +55.9%
Return on average assets 5.7%
Return on average equity 16.7%
Efficiency ratio 39.0%
Net asset value per share (cents) 465.6
Increase in total assets and liabilities 62.3%
Deposit growth 103.2%
Income statement audited audited Change % unaudited
28 Feb 01 28 Feb 00 31 Aug 00
R 000's R 000's R 000's
Interest and dividends
received 145 192 117 281 23.8 63 310
Interest paid (97 573) (59 445) 64.1 (28 627)
Net margin income 47 619 57 836 34 683
Less: Movement in provision
for bad and doubtful debts 3 169 399 694.3 1 258
44 450 57 437 33 425
Non-interest income 88 036 27 045 225.5 33 406
132 486 84 482 66 831
Expenditure 52 940 28 981 82.7 17 339
Net income from continuing
operations 79 546 55 501 49 492
Exceptional item 7 351 - -
Discontinued operation 657 - 657
Income before taxation 71 538 55 501 28.9 48 835
Provision for taxation 4 531 4 608 (1.7) 7 876
Retained income for
the period 67 007 50 893 31.7 40 959
Earnings per share 70.37 50.01 40.00
Headline earnings per share 77.99 50.01 40.65
Fully diluted earnings
per share 65.44 50.01 40.00
Fully diluted headline
earnings per share 72.53 50.01 40.65
Weighted average
number of shares 95 219 632 102 387 264 102 387 264
Fully diluted number
of shares 102 387 264 102 387 264 102 387 264
Balance sheet
Audited Audited Unaudited
28 Feb 01 28 Feb 00 31 Aug 00
R 000's R 000's R 000's
Assets
Cash and short-term
Assets 31 1 032 139
Money market
assets & funds 669 218 568 899 464 302
Advances 728 455 318 732 498 982
Less: Provision
for bad and doubtful
debts (11 178) (657) (1 915)
Net advances 717 277 318 075 497 067
Other receivables 21 239 41 725 22 126
Investments 90 360 26 415 192 196
Property and equipment 117 074 39 103 81 173
Deferred tax asset 4 867 2 826 4 326
Total assets 1 620 066 998 075 1 261 329
Liabilities
Deposits 1 133 003 557 614 789 774
Other liabilities 6 578 7 032 2 126
Shareholders for dividend - 13 310 -
Taxation 3 826 3 838 12 189
Total liabilities 1 143 407 581 794 804 089
Shareholder funds
Share capital 339 581 346 209 346 209
Reserves 137 078 70 072 111 031
Total shareholders funds 476 659 416 281 457 240
Total liabilities
and shareholder funds 1 620 066 998 075 1 261 329
Capital commitments
- in respect of expenditure approved and contracted for by the Board
47 685 5 598 67 000
Statement of changes in equity
Audited Audited Unaudited
28 Feb 01 28 Feb 00 31 Aug 00
R 000's R 000's R 000's
Share Capital
Balance at beginning
of period 346 209 335 123 346 209
Proceeds of share issue - 11 086 -
Write down to fair value
of share incentive scheme (6 628) - -
Balance at end of period 339 581 346 209 346 209
Reserves
Balance at beginning
of period 70 072 32 489 70 072
Net income for the period 67 007 50 893 40 959
137 079 83 382 111 031
Dividends paid - (13 310) -
Balance at end of period 137 079 70 072 111 031
Shareholders interest
at beginning of period 416 281 367 612 416 281
Movements
for the period 60 378 48 669 40 959
Shareholders interest
at end of period 476 659 416 281 457 240
cash flow statement
Audited Audited Unaudited
28 Feb 01 28 Feb 00 31 Aug 00
R 000's R 000's R 000's
Cash retained from operating activities
Cash generated by
operations 103 061 22 137 71 191
Taxation paid (6 584) (16 528) (1 025)
Net cash inflow from
continued operations 96 477 5 609 70 166
Discontinued operation (657) - (657)
Dividends paid (13 310) - (13 310)
Cash retained
from operations 82 510 5 609 56 199
Additions to fixed assets (82 793) (25 239) (43 218)
Proceeds on disposal
of fixed assets 664 33 21
Investments (66 647) 6 190 (165 495)
Cash utilised in
investing activities (148 776) (19 016) (208 692)
Cash flows from banking activities
Movement in deposits
and other liabilities 574 935 267 817 227 254
Movement in income
earning assets (509 670) (219 681) (75 654)
Net cash outflow from
banking activities 65 265 48 136 151 600
Cash flows from financing activities
Proceeds on issue
of ordinary shares - 11 085 -
Off set of debentures - (30 000) -
Long-term liabilities - (15 000) -
Net cash inflow from
financing activities - (33 915) -
Net (decrease)increase in
cash and short-term assets (1 001) 814 (893)
Cash and short-term assets
at beginning of period 1 032 218 1 032
Cash and short-term assets
at end of period 31 1 032 139
Discontinued operations
During the year a decision was taken to outsource private advisory services. As
a result a segment of the private banking division was discontinued. Closure
was completed by 1 August 2000. The results of the discontinued segment for the
year are set out below.
Prior to After 28 Feb
discontinuance date discontinuance 2001
(1/3/00 - 31/7/00)
R 000's R 000's R 000's
Revenues for the period - - -
Expenses for the period 958 657 1 683
Taxation (287) (197) (505)
Loss on discontinued
operation 671 460 1 178
Exceptional item
Regulatory increase in
general provision
Increase in general
provision 7 351 - -
Taxation (551) - -
6 800 - -
The Group has always maintained general provisions for bad and doubtful
advances to cover any unexpected losses in its advances book. The provision was
calculated at a fixed percentage on the advances book, based on the Group's
assessment of risk inherent in the book. Changes in the Banks Act require banks
to maintain provisions at minimum specified percentages. In order to align the
Group's provisions with the new requirements, the Group increased its general
provision by R7 351 105.
The past financial year has seen Regal achieving significant further progress
towards its goal of becoming one of South Africa's better performing banking
groups.
Justifiably, Regal can lay claim to being one of the country's premier banks in
terms of traditional ratios.
Thus, Regal's management is continuously refining the group's business model to
optimally reflect the dynamic changes occurring in the financial environment.
It is an adaptability that meets the strenuous challenges of the New World
Economy.
Results
The environment of the past year has been a difficult one for most banking
groups owing to the sluggish nature of the South African economy. However,
because of Regal's niched approach to "quality" banking, we remain relatively
immune to bad debt as a result of our pro active approach to credit management.
These factors, combined with optimum efficiency levels, have seen Regal
generate its best ever performance, with headline earnings up by 46% at R74,3
million and weighted headline earnings 56% higher at 77.99c a share.
The balance sheet has been further strengthened. The cost-to-revenue ratio, at
39%, is still significantly ahead of Regal's peers, while return on average
assets of 5.7% and return on average equity of 16.6% are among the highest in
an industry. Total assets have grown from R998 million to R1,6 billion and the
deposit book increased by 103% to R1,1 billion.
The bank's risk weighted capital adequacy ratio stood at 24%, compared to the
statutory minimum of 8%.
A year ago, the income earned from Regal's franchising structures was deferred
pending the establishment of a sustainable track record. Certain of these
structures have since achieved the required income levels and the realised fee
income has
accordingly been included in the financial year's figures.
Divisional overview
As an integral part of its long-term strategy of providing an extensive,
seamless, integrated banking and financial service to its clients, Regal is
ever alert to adding new options to its wide range of offerings.
During the past financial year, the service portfolio was expanded through the
introduction of short-term insurance broking and underwriting, life assurance
consulting, information technology-driven employee benefits administration,
property
instruments, and financial services to the medical profession and to
empowerment upliftment schemes.
The new opportunities being pursued in the "quality" banking market supplement
Regal's core asset management, stock broking and corporate and structured
finance operations, which continue to reflect strong growth.
Significant inroads continue to be made into the accounting, legal and medical
professions.
During the financial year under review, Regal identified the need for a
structured project in its portfolio. It accordingly sourced several prime
property sites - one adjacent to the group's Stone Manor head office premises
and the other in Sandton
at 93 Grayston Drive - for development. Progress on this front has been highly
satisfactory.
Other areas of new service offerings are at various stages of development. They
all conform to Regal's long-term approach to wealth creation for all
stakeholders.
Corporate governance
Much has been undertaken in the past financial year to ensure that a
significantly broadened constitutional and corporate governance framework
supports Regal's business model.
The board of directors has been restructured and enhanced, with Derek Cohen, a
well-known banker being appointed non-executive Chairman, with effect from 1
May 2001. Furthermore, Carel Oosthuizen, former deputy Registrar of Banks and
Hancke Scheepers, the retired Chairman of PricewaterhouseCoopers, have been
appointed as non-executive directors.
Further appointments will be made in due course.
The executive management has been bolstered with the appointment of Hector
Zarca as Financial Director and Malcolm Brown as Risk Manager. Both these
individuals have extensive banking experience and we look forward to the
benefits of their contributions.
It is anticipated that further managerial appointments will be made.
The risk management activities have been bolstered by the appointment of
PricewaterhouseCoopers to perform the internal audit function, while Deloitte &
Touche Human Capital Corporation has been appointed to monitor Regal's
human resources strategy.
Regal complies with the concept of best practise with regard to corporate
governance and related issues.
Dividend
A dividend of 18.13 cents per share will be paid on 22 June 2001, to
shareholders registered in the books of the company at 25 May 2001.
Outlook
Our franchising strategy was designed to ignite Regal's value chain. That goal
having now been achieved, profit flows have reached a stage at which they can
be sustained and developed without the ongoing support of brand income, though
this does
not preclude the possibility of applying variations of the brand theme to
change or accelerate the profit growth process.
Regal's business model and core product is premised on value chain criteria,
whereby net interest turn is designed to essentially cover all group
expenditure. Any additional Rand earned contributes to the marginal increase of
the income statement.
Against this background, Regal's cost-to-revenue ratio, well below industry
norms, will continue to improve, notwithstanding the early phase of the group's
critical mass life cycle.
Regal's quality and niche banking strategy remains paramount. The integration
of the lending division with the group's entire value chain will produce
ongoing positive results.
The final elements required to build Regal's diverse range of value-added
services are largely in place. Interactive relationships between these service
pillars provides the basis for consistent, rising and sustainable income flows.
Regal's primary key to ongoing success is a marketing and financial
architecture with the agility to change the mix of the income statement and
balance sheet in response to changed domestic or global circumstances as well
as an ability to shift operational emphasis expeditiously in a prudent manner.
Herein lies Regal's future, a future from which, the directors are confident,
all of the group's stakeholders will reap handsome rewards.
By order of the Board
TFT de Castro
Company Secretary
30 April 2001
Sandton
Transfer Secretaries:
Ultra Registrars (Pty) Limited, 11 Diagonal Street, Johannesburg, 2001
