| Tue 29 May 2001, 0:00 | | Thuthukani - Audited Results |
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Thuthukani Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/016991/06)
("Thuthukani" or "the Group")
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Headline Earnings per Share up 4,8%
Profit from Credit Collection Business up 50%
Branch Infrastructure Expanded by 31,5%
Net Asset Value per Share up 86,5%
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Announcement of Group Audited Results for the year ended 28 February 2001
Salient Features Audited % Audited
28 February change 29 February
2001 2000
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Number of shares in issue (`000) 305 421 25,2 243 978
Number of shares fully diluted (`000) 305 421 305 421
Attributable earnings (`000) 27 816 0,6 27 653
Headline earnings per share (cents) 9,48 4,8 9,05
Diluted earnings per share (cents) 9,11 0,7 9,05
Dividend per share (cents) - 4,5
Value of loans and advances (R'000) 301 460 76,5 170 840
Doubtful debt provisions (%) 10,5 114,3 4,9
Net asset value per share (cents) 19,30 86,5 10,35
Abbreviated Group Income Statements Audited % Audited
28 February change 29 February
2001 2000
R'000 R'000
Income 435 180 61,2 269 956
Credit collection income 197 414 31,8 149 834
Interest income 237 766 97,9 120 122
Less: Direct cost 82 495 23 315
Interest and finance cost 39 384 8 682
Bad and doubtful debts 43 111 14 633
Operating income 352 685 43,0 246 641
Goodwill amortised 1 152 -
Expenses 295 830 62,0 182 621
Profit before taxation 55 703 64 020
Taxation 18 135 22 403
Profit after taxation 37 568 41 617
Minority interest 9 752 13 964
Attributable profit 27 816 0,6 27 653
Dividend - 10 979
Retained earnings 27 816 66,8 16 674
Headline earnings:
Attributable profit 27 816 27 653
Goodwill amortised 1 152 -
Headline Earnings 28 968 4,8 27 653
Summarised Group Balance Sheets Audited Audited
28 February 29 February
2001 2000
R'000 R'000
Equity and Liabilities
Shareholders' funds 14 465 14 946
Retained earnings 44 490 16 674
Shareholders' interest 58 955 31 620
Long-term loans 176 101 116 528
Minority interest 15 376 14 134
Deferred taxation 4 038 -
Current liabilities 96 818 71 162
Total Equity and Liabilities 351 288 233 444
Assets
Fixed assets 15 559 10 629
Deferred taxation - 2 207
Goodwill 15 711 -
Investments 2 946 2 752
Current assets 317 072 217 856
Total Assets 351 288 233 444
Summarised CashF low Statements Audited Audited
28 February 29 February
2001 2000
R'000 R'000
Equity and Liabilities
Cash flows from operating profits
before changes in operating assets
and liabilities 63 026 89 138
Changes in operating assets and
Liabilities (120 949) (186 196)
Cash flows from investing activities (23 593) (71 021)
Cash flows from financing activities 51 064 116 528
Issue of ordinary shares - 100 000
Net increase in cash and cash
Equivalents (30 452) 48 449
Cash and cash equivalents at
beginning of year 48 449 -
Cash and cash equivalents at end
of year 17 997 48 449
Statement of
Changes in Equity Number of Share Share Retainted Total
Ordinary capital premium profit equity
Shares
R`000 R'000 R'000 R'000 R'000
Balance 1 March 2000 305 421 3 14 943 16 674 31 620
Adjustments on goodwill
written off against
share premium in
prior years (481) (481)
Retained profit for
the year 27 816 27 816
Balance
28 February 2001 305 421 3 14 462 44 490 58 955
Loans and Advances and Bad
Debt Provisions Audited
28 February
2001
R'000 %
Change Audited
29 February
2000
R'000
Long-term personal loans 284 824 144 281
Short-term personal loans 16 636 26 559
Total loans and advances 301 460 76,5 170 840
Bad debt provisions - Long-term
personal loans 30 675 7 075
Bad debt provisions -
Short-term personal loans 1 051 1 336
Total bad debt provisions 31 726 277,2 8 411
Bad debt provision % -
Long-term personal loans 10,8% 4,9%
Bad debt provision % -
Short-term personal loans 6,3% 5,0%
Total bad debt provision % 10,5% 114,3 4,9%
Financial Review
Comments
Thuthukani's strategy to diversify the Groups income streams in different
fast-growing financial services markets and thus enhancing the risk profile
of the Group, is bearing fruit. Profits of 49,2% came from the credit
collection business. The diversification is reflected by the following
analysis of the main income sources:
Source February
2001
% February
2000
%
Integrated credit services 49,2 33,5
Personal loans business 50,8 66,5
Total 100,0 100,0
Credit Collection and Outsourcing
Thuthukani through its subsidiaries, with 120 offices spread countrywide, is
the dominant player in the South African collection market. The credit
collection business experienced a very successful year and saw attributable
earnings increase by 50% during the year under review. The ability of the
Group to successfully collect instalments countrywide, is enhanced by highly
effective operational and financial systems and their unique database.
Continued focus to develop a comprehensive one-stop credit service to the
retail market will provide the platform for future growth to extend
Thuthukani's dominance in this market. The expansion of outsourcing
activities of the Group improved earnings and is part of providing
outsourcing back-office support services.
Personal Loan Business
Rationalisation
The integration of the separate loan business units into a single
controlling structure took longer than originally anticipated. The process
has now been successfully finalised. The result of the integration process
is that the profits of this entire Group of businesses is now being managed
and reported on as a single business unit.
Long-term Personal Loans
Government's decision to withdraw payroll deductions from the Persal system
resulted in a marked drop in the rate of new advances towards the latter
part of the year. The decline in business coincided with a general apathy in
the public sector of the market towards honouring debts. Immediate focus was
placed on securing the current exposure to this market. The focus of the
Group to install acceptable alternative electronic collection methods, and
to simultaneously increase the intake of non-Persal business in the private
sector market, has been costly and time-consuming.
Short-term Personal Loans
The short-term business experienced a decline in the extreme short-end of
the market. Regulations introduced by the Micro Finance Regulatory Council
("MFRC"), established to regulate the personal loans market, had an
important impact on the business. Alternative instalment collection methods
were introduced in the branch network. A change in emphasis towards longer
term products, marketed through the branch network, had a negative short-
term impact on the trading results of a number of the cash loan branches.
The contribution of the branches in delivering longer term products to the
private sector market has been valuable to the Group. The installation of
the new electronic collection facilities in the expanded branch network to
distribute long- and short-term personal loans, is expected to bear fruit in
the ensuing financial year.
Expenses
A strategic drive to increase the existing branch infrastructure by more
than 30%, placed a burden on direct and general overhead costs. Headline
earnings have been sacrificed to provide an improved base from which
Thuthukani can benefit in future. This is, however, in line with our
strategic positioning to build a footprint to serve the customer "face to
face".
Loans and Advances and Bad Debt Provisions
Loans financing to clients increased by R72,7 million during the first six
months, and by R57,9 million during the last six months, when the focus was
on the intake of non-Persal clients. The contribution from the joint finance
company with the National Council of Trade Unions has been satisfactory,
with loans financed at year-end of R38 million. Management's prudent
approach towards adequate provisions for doubtful debt is evident in the
increase in the levels of provisions from 4,9% to 10,5% during the current
financial year. The increase in the levels of provisions is a result of
collection conditions deteriorating as a result of Government's decision to
stop payroll deductions and the implementation of even stricter bad debt
policy than the provision guidelines set by the Reserve Bank. With the
focused collection strategy in place to ensure optimal collectability of
Persal and non-Persal loans, no major collection problems are anticipated.
The Government's extenuation on existing Persal payroll deductions and
successful consolidation of debtors on the Persal book will have a positive
effect on collections during the ensuing financial year.
Profit And Earnings
The Group's attributable earnings of R27,8 million represent an increase of
4,8% in headline earnings.
Saambou Offer
Saambou has acquired an additional stake in Thuthukani, resulting in a 49%
shareholding of Thuthukani. As a result of Saambou having acquired more than
35% of Thuthukani shareholding, in terms of the JSE Securities Exchange
South Africa ("JSE") requirements, Saambou is in the process of finalising
an obligatory offer at 65 cents per Thuthukani share to minority
shareholders.
Board Of Directors
Since the previous year-end, Mr W van Aardt and Adv A Booysen have resigned
as executive directors and have been replaced by Messrs PJ Buys and LJ
Kruger. Dr BP Botha replaced Mr GP Croeser, who stepped down as chairman.
Messrs AB Snyman and N Erasmus resigned as non-executive directors. Mr EE
Wessels was appointed during the year and resigned as a director before the
financial year-end. Mr AB Booysen senior has resigned as company secretary
and was replaced by Mr A Bester.
Declaration Of Dividend
No dividend has been declared.
Prospects
The Board of Directors look forward to a year where the Group's
restructuring strategies, the expansion of the branch network and the full
scope of the outsourcing activities will bear fruit.
By order of the Board
DR BP Botha JJ Howell Johannesburg
Chairman Chief Executive Officer 30 May 2001
Executive Directors
JJ Howell (Chief Executive Officer), PJ Buys, A Pienaar and LJ Kruger (Group
Financial Director)
Non-executive Directors
Dr BP Botha (Chairman), CM Edwards, Dr MDC Motlatla, SJ Rudd, E van Niekerk
and Ms HJ Wilken
Registered Office and Business Address
Level 1, Gallagher House, Gallager Estate, Gallager Road, Midrand 1685
Share Transfer Secretaries
Computershare Services Limited, 4th Floor, Edura, 41 Fox Street,
Johannesburg 2000, South Africa
PRESS RELEASE
29 MAY 2001
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THUTHUKANI GROUP LIMITED'S HEADLINE EARNINGS 4.8% UP
The THUTHUKANI GROUP LIMITED, a holding company listed in the financial
services sector, with investments in the credit collection market and the
mass market for term loans and short-term loans, today announced its results
for the year ending 28-2-2001.
Johan Howell, CEO said: "Satisfactory results were achieved In the very
difficult collection market that developed due to the suspension of
government payroll deductions and also taking into account the costs
incurred by the decision to invest in infrastructure for future returns".
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During the period under review Thuthukani Group Limited strengthened its
position in the high growth target markets of the financial services sector
to ensure above average sustainable future growth. This process resulted
from a number of significant developments since 1st of March 2000.
Thuthukani:
Strengthened their position as the dominant player with 120 countrywide
offices, in the massive, fast growing credit collection industry, worth
R12billion.
Added a company of successful liquidators to enhance the chain to supply a
one-stop approach to the debt collection market.
Although forfeiting income on the short term, reconfirmed their commitment
to grow the private sector side of the mass personal loan market, by
expanding their office network with more than 25%. The office "footprint"
is essential to the "face-to-face" strategy to service the mass-market
customer.
Long-term mass-market loans grew on the private business side away from the
government business.
Restructured the very successful support services of the group into an
outsourcing unit changing it from a cost to a profit centre. This will
unleash the quality of the information technology and support services, not
only in the group but also to expand the income stream already generated
from external users.
Integrated the various companies in the mass-market loan business into one
unit, which will assist in focussing and improve efficiencies and cost
effectiveness.
Strategic shareholder Saambou has increased its shareholding in the group
and is in the process to make an offer to acquire a controlling interest in
Thuthukani.
Saambou made additional funding facilities available to the Group.
The Joint finance company formed with trade unions in terms of which
Thuthukani has the exclusive rights to market its term loan products to
380,000 affiliated members in the largely untapped private sector market, is
now bearing fruit.
Further strengthened its alliance with ABSA by implementing the Nu-pay
electronic collection system on instalments in the mass loan market.
Strategy to diversify its income streams into two fast growing financial
services markets with exiting opportunities, for future growth, is paying
dividends and enhances the risk profile of the Group. By year-end the two
major income streams produced more or less 50% of profits.
Strengthened their management skills by appointing two experienced new
executive directors.
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Dr. BP Botha Chairman said: "Thuthukani's results were achieved during a
period of major restructuring, uncertainties and regulation in the market."
He added that Thuthukani's focus to develop diverse, fast growing, quality
income streams in the high growth financial services mass market is coming
to fruition. This is clear from the results achieved in the massive
R12billion credit collection market. The group, with its 120 offices
countrywide, is well positioned to remain the dominant player in the
integrated credit collection business.
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Thuthukani believes that the existing core operations will continue to
deliver quality organic growth and the Board consequently anticipates that
headline earnings for the new financial period will be higher than the
results achieved in the period to 28-2-2001.
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For more information please contact:
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JOHAN HOWELL CHIEF EXECUTIVE OFFICER CONTACT TEL: (011) 805-9919
CONTACT FAX: (011) 805-9920
E-mail jhowell@tgl.co.za
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