| Tue 23 Oct 2001, 0:00 | | Corpcapital Limited |
|
Audited 2001 Results Announcement
Deposits Up 117%
NTAV Per Share Up 33.5%
Headline Earnings Per Share Up 18.6%
Total Assets Up 33.5%
Highlights
* Net tangible assets of R1,3 billion
* Deposits exceed R1,1 billion
* Advances Grow to R756 million
* 5 Year CAGR in HEPS of 34%
* 5 Year CAGR in NTAV of 66%
* Return on equity 26.4%
* Annuity & Fee income increased by 40%
* Total assets under management of R10 billion
GROUP OPERATIONS
Corpcapital Limited
Investment Banking
Consolidated Proprietary Investments
Corporate Finance
Property Asset Management and Finance
Specialised Finance
Treasury, Trading and Arbitrage
Structured Finance
Structured Products
Capital
Group Support
Commentary
Significant Events
The group merger was completed on 1 October 2001. Consequently Corpcapital
Limited (formerly Corpgro Limited) is the sole remaining listed group
company. The results for the year include 100 percent of Corpcapital Limited
and Corpcapital Bank Controlling Company Limited with effect from 31 July
2001. The listings of Corpcapital Limited and Corpcapital Bank Controlling
Company Limited have been terminated. Much of our resources have been
dedicated to the fulfilment of this key strategic objective during the
period under review.
As a result of the merger the board has been reconstituted to include Neil
Lazarus and Barry Kalkhoven as executive directors, Wim Trengove SC as a non-
executive director and Eric Ellerine has been appointed as non-executive
chairman.
The group structure is now aligned with our seamless integrated investment
banking and financial services business model. It allows the group to apply
its capital and other resources to optimum capacity and to realize our
commitment to growing predictable income.
Review
Income
We are pleased to report an increase in headline earnings per share of 18.6%
to 71.5 cents per share.
In difficult market conditions, valuable contributions were made by
Investment Banking, Property Asset Management & Finance, Specialised
Finance, Financial Products and Corporate Finance. The Treasury Trading and
Arbitrage business underperformed in the period under review. Due to
prevailing volatility in world markets, a prudent approach to risk has
remained in force.
Profit before taxation and exceptional items increased by 10.5% to R387,7
million despite a decline of 24% in Corpcapital Bank. 85% of this growth was
organic.
Operating expenses increased by 66.3% to R149,5 million. Excluding M Factors
and Infinex operating expenses increased by 38%. A significant portion of
this increase reflects emphasis on internal systems and processes and the
continuing investment in the Corpcapital brand.
Corpcapital Bank's contribution to headline earnings declined to R82,6
million as a result of the lower interest rate environment, a conservative
approach to provisioning on the legacy corporate book, lower trading income
and further investment in processes and infrastructure that provide a solid
platform for future growth.
Establishment of Corpcapital Life enables us to provide effective long term
investment solutions through a linked cell life licence.
With effect from 1 April 2001, we acquired a controlling interest in M
Factors, a leader in the factoring market. Through M Factors and Infinex we
are developing insight and experience in niche lending markets which we will
continue to expand. The results of M Factors have been included for five
months.
The results of Infinex and Corpgro proprietary investments have been
consolidated in accordance with the requirements of AC132.
With effect from 1 July 2001, we have disposed of half our interest in
Corpcom Limited providing cash resources which will be directed into
investments with predictable earnings streams. Our remaining interest in
Corpcom comprises a partnership with Clear Channel Communications Inc and
Independent News, two of the world's leading media groups, and is coupled
with a right to put our shareholding
to our partners at a guaranteed minimum return over the next five years.
Our commitment to improving quality of income is increasingly showing
rewards. Annuity and fee income contributed 54% of total income before
provisions for the year compared to 48% in the previous year.
Our investment portfolio reflects increasing exposure to hard currency
earnings. This is a trend which we intend to expand.
Realised profits represent 68% of the total income for the period, the
remainder comprising unrealised revaluation of investments to fair value,
after taking account of prevailing economic uncertainty.
Balance Sheet
The balance sheet has grown significantly in the year under review, with
growth in short term trading assets accounting for 17.5% of the increase.
This component of the balance sheet can vary significantly according to
market conditions.
Growth in advances was largely a result of the acquisition of M Factors and
the consolidation of Infinex. We will continue to explore opportunities to
improve annuity income through growth in lending assets.
The reduction in the investment in associates resulted largely from the
repayment of loans by Redefine.
Total assets have increased by 33.5% and assets under management and joint
management are now R10 billion.
Corpcapital will issue 188,7 million shares at a price of R2,30 in
settlement of its obligations to minorities in respect of the merger,
accounting for the increase in share capital and premium to R598,3 million.
The bank's capital adequacy ratio remains comfortably in excess of statutory
requirements at 22%.
Corpcapital Bank has been successful in establishing a retail deposit base,
in a year where further shocks were delivered to the A2 banking sector. The
significant increase in total deposits and interest bearing accounts to R1,1
billion excluding term liabilities of Corpcapital Life represents a major
achievement for the bank's funding activities.
Net tangible assets per share increased by 33.5% to 307 cents per share.
Profits arising on the sale of Corpcom enabled us to adopt a cautious
approach to the valuation of group assets in light of global economic
uncertainty exacerbated by the events of September 11th. Net tangible assets
per share were also reduced by goodwill in respect of Infinex and M Factors.
The merged group now ranks as one of South Africa's top ten banking groups.
Prospects
Market conditions are challenging and it is too soon to predict the impact
of current global events.
Our corporate culture promotes responsiveness to change and willingness to
learn, qualities that are invaluable, especially in uncertain markets.
We will continue to focus on achieving a well balanced income model with an
increasing proportion of predictable earnings. We are confident that we are
able to deliver acceptable real returns to all stakeholders.
Dividend
The directors have resolved to pay a dividend of 12 cents per share (2000 -
10.5 cents per share) to ordinary shareholders registered at the close of
business on Friday 7th December 2001. The last date to trade cum dividend
will be Friday 30th of November 2001. The shares will trade ex dividend from
Monday 3rd December 2001. Payment will be made by cheque or electronic
transfer on or about Monday 10 December 2001.
By order of the board.
Eric Ellerine Jeff Liebesman
Chairman CEO
Tuesday 23rd October 2001
Consolidated income statement year ended 31 August
R'000s 2001 2000 %Change
Interest received 149 200 73 363 103.4
Interest paid 65 359 41 244 58.5
Net interest income 83 841 32 119 161.0
Investing, trading & fee income 461 655 367 861
Contribution from proprietary 71 337 95 195
consolidated investments
Equity accounted income 25 710 24 246
Non-interest income 558 702 487 302 14.7
Specific and general provisions 12 733 2 200
Convertible loan interest 92 505 76 354 21.2
Total income 537 305 440 867 21.9
Operating expenses 149 582 89 968 66.3
Profit before taxation and 387 723 350 899 10.5
exceptional item
Exceptional items 169 777 -
Profit after exceptional item 557 500 350 899 58.9
Taxation 74 405 72 490 2.6
Ordinary operations 77 405 72 490
Exceptional item (3 000)
Profit after taxation 483 095 278 409 73.5
Attributable to minority 108 420 126 695
shareholders
Attributable profit 374 675 151 714 147.0
Headline earnings adjustment (183 576) -
Headline earnings 191 099 151 714 26.0
Headline earnings per share (cents) 71.5 60.3 18.6
Earnings per share 140.2 60.3 132.5
Diluted headline earnings per share 71.5 60.3 18.6
Weighted average shares in issue and 267 311 251 588
to be issued
Headline earnings reconciliation
R'000s 2001 2000 % change
Regulatory increase in provisions 10 000 -
Recoupment of goodwill on disposal (41 909) -
of Corpcom
Goodwill amortised 74 948 -
Negative goodwill written off (212 816) -
Exceptional items (169 777) -
Tax on regulatory increase in (3 000) -
provisions
Outside shareholders share of (10 798) -
exceptional items
Total (183 576) -
Sources of income
R'000s 2001 2000 % Total
Annuity and fee income 294 278 210 885 54
Investing and trading income 255 760 232 182 46
Total income before provisions 550 038 443 067 100
Segmental analysis
R'000s Total Operating Profit
2001 income expenses before
tax
Proprietary investments 215 260 20 246 195 014
Proprietary consolidated investments 71 337 - 71 337
Corporate finance 38 215 20 880 17 335
Property asset management & finance 68 226 12 342 55 884
Treasury & trading 4 236 25 063 (20 827)
Financial products 33 460 12 000 21 460
Specialised finance 58 840 27 643 31 197
Capital & support services 47 731 31 408 16 323
Total group 537 305 149 582 387 723
R'000s
2000
Proprietary investments 133 442 10 877 122 565
Proprietary consolidated investments 95 195 - 95 195
Corporate finance 23 266 11 563 11 703
Property asset management & finance 95 433 6 249 89 184
Treasury & trading 27 518 18 094 9 424
Financial products 2 193 7 500 (5 307)
Specialised finance 11 107 974 10 133
Capital & support services 52 713 34 711 18 002
Total group 440 867 89 968 350 899
Consolidated Balance Sheet as at 31 August
R'000s 2001 2000
Assets
Cash and short term funds 435 911 460 548
Liquid & trading assets 1 863 854 1 184 009
Assets of proprietary consolidated 422 781 573 745
investments
Proprietary investments 817 463 470 308
Preference shares 522 729 443 422
Advances & other accounts 755 801 339 012
Investment in associated company 128 694 229 225
Intangible assets 6.809
Property & equipment 44 398 43 170
4 998 440 3 743 439
Equity
Share capital and premium 598 341 164 385
Retained earnings & reserves 759 538 413 860
Ordinary shareholder's equity 1 357 879 578 245
Minority shareholder's interest 6 861 639 435
Total capital employed 1 364 740 1 217 680
Policyholder's interests in
Corpcapital Life
Investments, interest bearing 1 654 958 -
securities & term deposits
Life fund 1 654 958 -
Liabilities
Compulsory convertible loan 304 114 304 114
Long term interest bearing debt 77 008 106 586
Deferred taxation 109 014 84 354
Convertible loan interest 219 845 127 340
Deposits & interest bearing accounts 1 100 175 506 813
Repurchase agreements & short 1 445 051 1 051 839
positions
Liabilities of proprietary 202 827 112 370
consolidated investments
Creditors, taxation & provisions 175 666 232 343
4 998 440 3 743 439
Net tangible assets per share 307 230
(cents)
Contingent liabilities as at 31 August
Bank guarantees and letters of 62 593 104 533
credit
Suretyship for loan to share trust 75 800 82 639
Suretyship for loan to investment - 22 344
Consolidated statement of changes in equity for year ended 31 August
R'000 2001 2000
Ordinary shareholder's equity 578 245 606 978
at beginning of period
Attributable profit 374 675 151 714
Dividend (26 417) -
Share issues 433 956 -
Goodwill and trademarks written off - (174 901)
Changes in holding in subsidiaries (3 428) ( 11 551)
Change in accounting policy and 848 6 005
other changes
1 357 879 578 245
Consolidated cash flow statement for year ended 31 August
R'000 2001 2000
Cash generated fromoperations 205 890 246 650
Movement in proprietary consolidated 73 528 (151 447)
investments
Taxation and dividends paid (83 943) (94 542)
Financial services activities (159 054) 47 269
Investing activities (61 058) (189 502)
Net movement in cash & short term (24 637) (141 572)
funds
Opening cash & short term funds 460 548 602 120
Closing cash & short terms funds 435 911 460 548
The accounting policies used in the preparation of financial statements for
the year ended 31 August 2001 comply with Statements of Generally Accepted
Accounting Practice and are consistent with those applied in the previous
year excepting for the provision of depreciation on the group's operating
premises and the adoption of AC131 which resulted in the recognition of
goodwill and the amortisation thereof over its estimated life. Corresponding
amounts have been regrouped where necessary.
CORPCAPITAL LIMITED (1983/011384/06)
2 ARNOLD ROAD ROSEBANK JOHANNESBURG 2196 PO BOX 471917 PARKLANDS 2121 SOUTH
AFRICA
TELEPHONE +27 11 283 0000 TELEFAX +27 11 283 0077
EMAIL info@corpcapital.com
INTERNET ADDRESS www.corpcapital.com
DIRECTORS: E ELLERINE* (CHAIRMAN) N J FRANGOS* J M LIEBESMAN (CEO) M H
SACKS (MD) E GROLMAN G B LIEBMANN N N LAZARUS W H TRENGOVE* B KALKHOVEN
(* NON-EXECUTIVE)
(Share code - CPA from 29 October ISIN - ZAE 000033965)
