| Wed 23 May 2001, 0:00 | | Unifer Financial Report |
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* HEADLINE EARNINGS INCREASES BY 25% TO R227M
* CONTINUING HEADLINE EPS UP 4%
* NET ADVANCES GROW 27% TO R4.3BN
* BROADENED PRODUCT BASE
* ACQUISITION OF MAJOR STAKE IN BLAKES
AUDITED CONSOLIDATED RESULTS
FOR THE YEAR ENDED 31 MARCH 2001
balance sheet
As at 31 March
Rand Thousands 2001 2000
ASSETS
Property and equipment 63 131 44 479
Investments and securities 58 579 49 188
Intangible assets 84 548 -
Deferred taxation 142 631 98 077
Advances (note 1,2) 4 338 885 3 412 339
Other assets 222 028 161 332
Negotiable securities 179 967 154 990
Cash and short-term funds 323 638 640 160
Total assets 5 413 407 4 560 565
EQUITY AND LIABILITIES
Ordinary shareholders' equity 984 237 859 023
Minority interest 2 497 11
Debentures 16 000 16 000
Total shareholders' interest 1 002 734 875 034
Deferred taxation 3 834 13 069
Deposit accounts (note 3) 3 806 154 3 249 400
Other liabilities 475 858 298 626
Taxation payable 112 568 63 546
Bank overdrafts 12 259 60 890
Total equity and liabilities 5 413 407 4 560 565
changes in shareholders' equity
Year ended 31 March
Rand Thousands 2001 2000
Ordinary shareholders' equity
at beginning of the year 859 023 190 480
Movement in share capital and premium
Share capital and premium raised 145 877 572
Intangible assets applied against
share premium - (383 026)
Share issue expenses applied against
share premium - (7 500)
Treasury shares arising from repurchase (31 837) -
(31 692) 487 046
Movement in non-distributable reserve
Insurance companies' transfer
from distributable reserve 4 523 690
Reversal of stamp duty previously
written off - 313
4 523 1 003
Movement in distributable
reserves
Attributable earnings for
the year as previously
reported 197 774
Prior year adjustment (note 5) (16 590)
Attributable earnings for the year 214 800 181 184
Transfer to non-distributable reserve (4 523) (690)
Dividends (57 894) -
152 383 180 494
Ordinary shareholders' equity
at end of the year 984 237 859 023
income statement
% Year ended 31 March
Rand Thousands Change 2001 2000*
Banking and distribution
Interest income 996 406 834 569
Interest expense (443 833) (401 428)
Net interest income 28 552 573 433 141
Provision for bad and doubtful
advances (note 2) 63 (313 062) (192 553)
Net interest income after provisions 239 511 240 588
Non-interest income 31 390 330 298 655
Operating income 629 841 539 243
Operating expenditure 20 (345 696) (288 602)
Income before taxation 284 145 250 641
Taxation (76 898) (67 961)
Net income after taxation 207 247 182 680
Minority interest (24) (4 654)
Attributable earnings 16 207 223 178 026
INSURANCE AND
CREDIT SERVICES
Income before taxation 41 849 4 298
Taxation (13 831) 1 120
Net income after taxation 28 018 5 418
Minority interest (2 493) -
Discontinued operations -
insurance (note 4) (17 948) (2 260)
Attributable earnings 140 7 577 3 158
Group attributable earnings 19 214 800 181 184
reconciliation of earnings and headline earnings
Group attributable earnings 19 214 800 181 184
Intangible assets amortisation 11 917 -
Headline earnings 25 226 717 181 184
Continuing operations 33 244 665 183 444
Discontinued operations (17 948) (2 260)
Weighted number of shares
in issue '000 28 1 284 234 1 002 740
Earnings per share (cents) (8) 16.7 18.1
Headline earnings per share (cents (2) 17.7 18.1
Continuing operations 4 19.1 18.3
Discontinued operations (1.4) (0.2)
* Comparative figures have been adjusted taking into account the prior year
adjustment and are regrouped where necessary in accordance with current year
classifications.
summarised cash flow statement
Year ended 31 March
Rand Thousands 2001 2000
Net cash utilised in
operating activities (94 714) (162 652)
Net cash utilised in investment
activities (141 484) 228 316
Net cash utilised in
financing activities (31 692) (69 670)
Net decrease in cash and
cash equivalents (267 890) (4 006)
financial notes
As at 31 March
Rand Thousands 2001 2000
1. Advances and loans
Category analysis:
Emerging market term loans 3 495 891 2 010 356
Personal loans 154 590 476 487
Mortgage bonds 282 821 341 636
Card activities 173 542 290 367
Asset based finance 651 942 549 589
Other 11 336 7 559
4 770 122 3 675 994
Provision for bad and
doubtful advances (431 237) (263 655)
Advances net of provisions 4 338 885 3 412 339
2. Provision for bad and doubtful advances
Balance at beginning of period 263 655 238 469
Provisions held by subsidiaries
at acquisition 7 004 15 686
Charged to the income
statement 313 062 192 553
Provision reversed - (28 800)
Amounts written off (net) (152 484) (316 491)
Net recovery under
insurance policy - 162 238
Provision, end of period 431 237 263 655
Analysis:
Specific provision 356 619 223 163
General provision 74 618 40 492
431 237 263 655
3. Deposit accounts
Call deposits 1 035 266 765 117
Term deposits 2 770 888 2 484 283
3 806 154 3 249 400
4. Discontinued operations - insurance
In January 2001, the board of
directors decided to close down a
substantial part of the operations of
Global Insurance Company Limited.
The income statement effect of
the discontinued operations of
Global for the years ended
31 March 2001 and 2000 is
as follows:
Net loss after tax (17 948) (2 260)
5. Prior year adjustment - insurance
Resulting from incorrect recognition
of income in Global Insurance
Company Limited, net of tax - (16 590)
UNIBANK
UNIQUE BANKING SOLUTIONS
UNIBANK GROUP LIMITED
(REGISTRATION NUMBER 1990/000004/06)
balance sheet
As at 31 March
Rand thousands 2001 2000
ASSETS
Property and equipment 42 273 23 390
Investments and securities 47 344 41 406
Intangible assets 56 684 -
Deferred taxation 130 834 87 217
Advances 4 344 512 3 278 997
Other assets 119 027 33 967
Negotiable securities 179 967 154 990
Cash and short-term funds 196 906 462 876
Total assets 5 117 547 4 082 843
EQUITY AND LIABILITIES
Ordinary shareholders' equity 884 999 727 206
Minority interest - 2
Total shareholders' interest 884 999 727 208
Deferred taxation 618 8 643
Deposit accounts 3 890 694 3 142 406
Other liabilities 341 236 204 586
Total equity and liabilities 5 117 547 4 082 843
income statement
Year ended 31 March
Rand thousands % Change 2001 2000
Interest income 949 902 765 283
Interest expense (434 332) (382 492)
Net interest income 35 515 570 382 791
Provision for bad and
doubtful advances 56 (295 118) (189 596)
Net interest income after
provisions 220 452 193 195
Non-interest income 55 320 782 206 380
Operating income 541 234 399 575
Operating expenditure 38 (266 052) (192 551)
Intangible asset amortisation (8 355) -
Income before taxation 266 827 207 024
Taxation (66 802) (59 058)
Net income after taxation 200 025 147 966
Minority interest - (4 572)
Net attributable earnings 40 200 025 143 394
commentary
OVERVIEW
BANKING AND DISTRIBUTION
The year was characterised by instability in the market in which we operate.
Profits of all players in the industry were impacted by government's stance
with regard to payroll deductions through the Persal system. For a period of
some four months advances growth was severely affected. UniFer has been
proactive in developing and utilising alternative collection mechanisms,
which have been highly effective. The successful use of the Visa Axtion Card
and the Absa Nupay System enhanced the growth of the personal loans book,
which grew from R2 billion at 31 March 2000 to R3.5 billion at the end of
the year under review. From December 2000 further penetration into the
private and corporate sector began to rebuild microloan advances to former
levels. This trend has accelerated into the current financial year.
In line with our strategy to provide a range of financial service products
and to underpin sustainable growth, we have broadened our range of product
offerings to the emerging market. These now include personal loan finance
("microloans"); retail credit services (given impetus by our recent
acquisition of Blakes); micro-enterprise finance (strongly endorsed by
government); and non-mortgage housing finance.
In addition, our niched operation in rental finance conducted through Union
Finance, has also broadened the range of office-based assets, which it
finances. New management is to be praised for achieving results in excess of
budget.
As reported in our general update to shareholders published in mid-March,
government was to have signed an agreement with microlenders along the lines
of regulations then published and discussions held. We are still awaiting
finality on this. The agreement formalises substantive and detailed
proposals covering loan consolidations with the concomitant continuance of
payroll deductions. It also calls for a rehabilitation programme for
distressed borrowers, an education process for all borrowers and limits on
interest and administration charges. UniFer is well positioned to benefit
from these new rules.
At the time of government's initial announcement that Persal deductions
would be halted, and, at the time of publication of our interim results, we
believed that this would not have a significant effect on provisioning or
the full year's results. In the event, unscrupulous "advisers", government's
misunderstood communication by employees and a laxity in allowing deductions
to be cancelled for no good cause, has led to provisions needing to be
substantially increased. This contributed to lower earnings than anticipated
at the interim stage. Following numerous representations to government, it
appears likely that deductions via payroll will be reinstated in many
instances. This should have a positive effect on our results. Nonetheless at
our reporting date, 31 March 2001, such debts have to be provided for
notwithstanding whether recovery is likely to be effected in the subsequent
period/s.
As reported at the interim stage, despite a major effort, Creditbuild
continued to perform well below expectations. The trading business will be
split from the financing activities in accordance with the new business
model, which incorporates the sale of stores to relevant management.
INSURANCE AND CREDIT SERVICES
Two of our three insurance business units, Constantia and MBI, performed in
line with expectations. However, Global materially disappointed. Not only
were significant underwriting losses incurred in the year under review but
errors of last year only came to light during the current year. The latter
necessitated a prior year adjustment resulting from incorrect recognition of
income amounting to R16.6 million after tax. The decision to close down a
substantial part of the operations of Global resulted in an after tax loss
of R17.9 million. No further losses are expected.
The field of credit services was entered into with the acquisition of a
majority (51%) stake in Blake & Associates (Pty) Ltd, a dominant player in
debt administration management. Credit services is an area of activity that
is complementary to our core lines of business and creates a profitable
niche for our group. Blakes' proven ability and track record, together with
its unique risk assessment and debt administration capabilities, will
enhance our credit granting and collection processes.
MANAGEMENT AND GROUP STRUCTURE
Resulting from a review of our operations and in anticipation of continued
growth into the future, the group structure has been streamlined. The
acquisitions made during the past year, together with Ferreiras and
Creditbuild, will be absorbed by Unibank. The consolidation onto one IT
platform will gain pace with the recent appointment of a senior IT Manager.
We are also looking to further expand our management team to assist our
thrust into new markets.
The co-signatory to this report, Joel Klotnick, advised directors some time
ago of his desire to take a less hands-on role so as to spend more time on
the group's strategic direction, by the 2002 financial year end. An
opportunity has arisen for the earlier appointment of a CEO to take office
from 1 June 2001. At the request of the organisation of which he is a senior
executive, his name will only be announced on that date. Joel will
thereafter assume the position of full-time deputy chairman.
FINANCIAL RATIOS
Year ended 31 March
2001 2000
UniFer
Tangible net asset value per share
in cents 71.9 67.5
Non-interest income as % of
operating income 45.9 44.5
Average net interest margin (%) 9.5 7.5
Return on average assets (%) 4.3 4.3
Return on average equity (%) 25.6 36.0
Provisions as % of advances 9.0 7.2
Unibank
Cost-to-income ratio (%) 31.8 32.7
Capital adequacy (%) 18.5 20.0
RESULTS AND PROSPECTS
Due to the poor performance of Global Insurance and the requirement to
substantially increase our provision for bad debts, results for the year
were below expectations.
As indicated in previous communications, our already strong Union
relationships have been enhanced through the recently announced agreement
with NACTU to supply funding for housing. Through NACTU's relationships with
employers, repayments of such loans will be effected via payroll deductions.
The deal with NACTU adds a 400 000 strong membership to UniFer's existing
portfolio of 1.1 million labour Union client base.
The budget for the coming year is predicated upon a stable regulatory
environment. With the substantially narrowed down operations of Global, the
remodeled Creditbuild and a return to previously anticipated levels of term
loan payouts, UniFer should produce a meaningful increase in earnings per
share.
DIVIDENDS
A final dividend of 5.0c (4.5c) in cash per share for the year ended 31
March 2001, is payable to shareholders registered at the close of business
on 8 June 2001. Dividend cheques will be posted on or about 22 June 2001.
The dividend is payable in the currency of The Republic of South Africa.
STRATE
UniFer is anticipated to convert to the STRATE system on 29 October 2001 as
part of the JSE's initiative to progress to an electronic settlement
environment for share transactions.
APPRECIATION
This has been an eventful year. Our appreciation goes to shareholders,
clients, as well as those directors, management and staff, who continue to
share the vision of making UniFer the leader in its field.
On behalf of the board
Dr L Lipschitz J Klotnick
Chairman Chief Executive Officer
23 May 2001
Registered office: 27 Impala Road, Chislehurston, Sandton, 2146
Private Bag X9941, Sandton, 2146. Tel +27 11 259 7030
Transfer secretaries: Mercantile Registrars Limited, 8th Floor, 11 Diagonal
Street, Johannesburg, 2001
PO Box 1053, Johannesburg, 2000
Directors: Dr L Lipschitz (Chairman), J Klotnick* (CEO), K Davies*
(British), C Ferreira*, G van der Merwe*, W D Nel*, R Ballentine, M Bloom, E
R Bosman, G Cohen (Zimbabwean), AM Griesel, L Johnston, A Maraney, E W
Tomlinson, F J du Toit.
Group Secretary: JREaglesham. *Executive
