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Corpcapital Limited
(Registration No. 1983/011384/06)
Incorporated in the Republic of South Africa
Share Code: CPA
ISIN Code: ZAE000034260
("Corpcapital")
Discontinuance Of Banking Activities And Trading Update
Discontinued Activities.
On 8 May 2002 Corpcapital announced its decision to discontinue its deposit
taking and related activities and its intention to relinquish its banking
licence. These decisions were made as a consequence of the prevailing crisis of
confidence in the small bank sector which resulted in extremely difficult
trading conditions.
The discontinuance of these activities has entailed the realisation of assets
and restructuring of the business. In this regard:
Cost savings in excess of initial expectations have been implemented.
All deposits have been repaid on due date.
As anticipated, direct closure costs are approximately R10 million and asset
impairments on realisation are approximately R25 million.
The group`s equity interest in Merchant Factors has been sold and its funding
thereof is to be replaced, subject to Competition Commission exemption or
approval, realizing approximately R300 million.
As a consequence the group is highly liquid and well able to meet its remaining
obligations to depositors as well as its ongoing working capital and new
investment programmes.
To ensure an orderly process of winding down the discontinued activities and
timeous repayment of deposits, Corpcapital has concentrated its efforts on
maintaining liquidity and preserving its capital. In the short term this has
impaired profitability. Losses were incurred by the discontinued activities in
the second half of financial 2002. These include provisions against micro
lending assets and losses incurred from the Bank`s capital structure which was
established in 1998 to enhance its banking capital. These losses and provisions
from discontinued activities will have an adverse impact on headline earnings.
Continuing Activities.
Of the group`s continuing activities, consolidated Proprietary Investments,
Property Asset Management & Consulting and Hedge Funds & Arbitrage had a
particularly good year, while the results of equity-accounted Proprietary
Investments, Corporate Finance, and Financial Products were satisfactory in
difficult trading circumstances.
Headline earnings per share from continuing operations could be marginally less
than last year`s pro forma headline earnings per share from continuing
operations.
The discontinuance of banking activities will continue to release significant
cash to expand the group`s investing activities. The group balance sheet
remains strong. The business has been streamlined operationally and is well
positioned to take advantage of available opportunities and grow its core
competencies.
It is anticipated that Corpcapital will publish its audited results for the
financial year ended 31 August 2002 on or about 22 October 2002.
Joint Sponsors
Corpcapital Corporate Finance PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
Date: 30/08/2002 03:27:00 PM Produced by the JSE SENS Department
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