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PSG Investment Bank - Unaudited interim results for the six months ended 31
August 2002
PSG INVESTMENT BANK
HIGHLIGHTS
*Turmoil in the A2 banking sector
*Focus on value and cash preservation
*Radical downsizing and restructuring
*ABSA to acquire 100% of PSGBH at 60 cents per share after unbundling of
Vestacor and distribution of 4 cents cash
FINANCIAL HIGHLIGHTS
Unaudited Unaudited Audited
6 months 6 months 12 months
31.8.2002 31.8.2001 28.2.2002
Income statement
Profit before 89,2 106,0 160,0
abnormal items (Rm)
Profit before 77,3 162,4 225,6
taxation (Rm)
Attributable earnings 54,7 139,0 316,2
(Rm)
Earnings per share 3,8 11,1 23,2
(cents)
Headline earnings per 3,4 7,4 22,2
share (cents)
Selected ratios
Return on average 8,9 16,0 21,4
shareholders' funds
(%)
Return on average 3,9 7,5 10,0
total assets (%)
Non-interest income 64,3 84,6 78,1
to total income (%)
Expense-to-income 27,7 30,8 27,7
ratio (%)
Capital
Ordinary share 1 284,2 1 793,1 1 589,9
capital and reserves
(Rm)
Total assets (Rm) 2 375,6 4 420,6 3 341,5
Capital adequacy (%) 52 45 54
Net asset value per 89,7 125,2 111,0
share (cents)
Share statistics
Share price (cents) 64,0 107,0 46,0
Number of shares in 1 431,9 1 431,9 1 431,9
issue (m)
Weighted average 1 431,9 1 252,2 1 360,1
number of shares (m)
Price earnings ratio 8,4 4,8 2,0
(historical)
Market capitalisation 916,4 1 532,1 658,7
(Rm)
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31.8.2002 31.8.2001 28.2.2002
R'000 R'000 R'000
Income
Revenue 349 898 - 394 239
Cost of sales 303 518 - 320 281
Gross profit 46 380 - 73 958
Net interest income 34 612 26 995 80 833
Non-interest income 71 930 128 447 214 179
TOTAL INCOME 152 922 155 442 368 970
Expenses
Bad debt provision (5 689) 4 698 21 428
Operating expenses 53 367 53 973 168 453
Operating expenditure
of proprietary
consolidated 24 484 - 38 734
investments
Profit from 80 760 96 771 140 355
operations
Income from 8 391 9 263 19 663
associates
PROFIT BEFORE 89 151 106 034 160 018
ABNORMAL ITEMS
Exchange rate (16 329) 10 621 50 982
(losses)/profit
Profit before non- 72 822 116 655 211 000
headline items
Non-headline items 4 455 45 699 14 629
NET INCOME BEFORE TAX 77 277 162 354 225 629
Taxation 18 553 23 408 (105 896)
NET INCOME AFTER TAX 58 724 138 946 331 525
Attributable to 4 049 (28) 15 314
outside shareholders
EARNINGS ATTRIBUTABLE
TO
SHAREHOLDERS 54 675 138 974 316 211
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
6 months 6 months 12 months
31.8.2002 31.8.2001 28.2.2002
R'000 R'000 R'000
EARNINGS ATTRIBUTABLE
TO
SHAREHOLDERS 54 675 138 974 316 211
Non-headline items 5 839 45 699 14 629
after tax
HEADLINE EARNINGS 48 836 93 275 301 582
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31.8.2002 31.8.2001 28.2.2002
R'000 R'000 R'000
Net cash generated
from/(utilised by)
operating activities 1 917 89 447 (71 170)
Net cash generated
by/(utilised from)
investing activities 135 940 (985) 86 470
Net cash utilised by (252 922) (104 603) (108 599)
financing activities
Net decrease in cash (115 065) (16 141) (93 299)
and near cash
Cash and near cash at 326 791 420 090 420 090
beginning of period
Cash and near cash at 211 726 403 949 326 791
end of period
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
31.8.2002 31.8.2001 28.2.2002
R'000 R'000 R'000
ASSETS
Property and 158 430 7 838 144 616
equipment
Net intangible assets (5 241) 17 462 (3 473)
Deferred taxation 178 020 7 918 175 540
Investment in 192 186 125 682 189 385
associates
Investments and 181 347 1 295 147 655 823
trading securities
Loans and advances 1 087 334 1 334 211 1 002 648
Short-term money 185 527 1 089 651 656 364
market assets
Other assets 186 260 138 782 193 819
Cash and near cash 211 726 403 949 326 791
TOTAL ASSETS 2 375 589 4 420 640 3 341 513
EQUITY AND
LIABILITIES
Ordinary share 1 284 232 1 793 134 1 589 889
capital and reserves
Outside shareholders 62 127 18 184 72 294
TOTAL EQUITY 1 346 359 1 811 318 1 662 183
Loans and deposits 799 217 2 211 426 1 383 306
Deferred taxation 15 014 22 137 15 337
Trade and other 134 056 - 107 724
payables
Other liabilities and 80 943 375 759 172 963
provisions
TOTAL EQUITY AND 2 375 589 4 420 640 3 341 513
LIABILITIES
RECONCILIATION OF THE EFFECT
OF THE ABSA OFFER
Unaudited Shares in NAV per
31.8.2002 issue share
R'000 R'000 cps
NET ASSET VALUE 1 284 232 1 431 929 89,7
Intangible assets (157 765)
TANGIBLE NET ASSET 1 126 467 1 431 929 78,7
VALUE
Dilution effect of
the Share Incentive
Trust shares 42 872 88 385
Book value of (158 183)
Vestacor to be
unbundled
Tangible NAV of
assets to be
distributed
to shareholders in (60 088)
cash
Tangible NAV of
excluded assets to be
treated as claims (55 895)
Other adjustments (11 843)
NET ASSETS TO BE 883 330 1 520 314 58,0
ACQUIRED BY ABSA
STATEMENT OF CHANGES IN OWNERS' EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
31.8.2002 31.8.2001 28.2.2002
R'000 R'000 R'000
ISSUED ORDINARY SHARE
CAPITAL
AND SHARE PREMIUM
Balance at the
beginning of
the period 913 720 1 234 356 1 234 356
Movements
Shares issued - 169 038 169 039
Capital distribution - (104 603) (104 603)
Unbundling of - - (385 000)
Capitec Bank Holdings
Restructuring cost
and share issue
expenses - - (72)
Balance at the end of 913 720 1 298 791 913 720
the period
NON-DISTRIBUTABLE
RESERVES
Balance at the 34 197 14 712 14 712
beginning of the
period
Movements
Exchange rate
differences on
translation of
financial (1 048) 8 058 11 877
statements of foreign
entities
Compulsory 5 605 6 838
convertible debenture
Other (1 302) - 770
Balance at the end of 37 452 22 770 34 197
the period
ACCUMULATED PROFITS
Balance at the
beginning of
the period 641 972 429 904 429 904
Movements
Net profit for the 54 675 138 974 316 211
period
Dividends (357 982) (97 305) (97 305)
Compulsory
convertible debenture
transferred to NDR (5 605) - (6 838)
Balance at the end of 333 060 471 573 641 972
the period
ORDINARY SHARE
CAPITAL AND
RESERVES AT THE END
OF THE PERIOD 1 284 232 1 793 134 1 589 889
Notes
1. The financial statements of the group are prepared in accordance with AC
127: Interim Financial Reporting. The accounting policies used at the interim
stage are consistent with those set out in the financial statements for the year
ended 28 February 2002. Assets held for resale are measured at fair value. No
account has been taken of the ABSA proposal and capital distribution
(unbundling) referred to below.
Unaudited Unaudited Audited
31.8.2002 31.8.2001 28.2.2002
R'000 R'000 R'000
2. Investment in
associates
Shares at cost 145 221 89 374 150 597
Share of 59 351 48 694 51 174
accumulated
retained earnings
204 572 138 068 201 771
Goodwill on (12 386) (12 386) (12 386)
acquisition
Carrying value 192 186 125 682 189 385
Listed shares 184 099 116 940 165 248
Unlisted shares 8 087 8 742 24 137
Carrying value 192 186 125 682 189 385
Market value
Listed shares at 98 312 122 263 126 534
market value
Unlisted shares at 8 087 8 742 24 137
directors'
valuation
Aggregate value 106 399 131 005 150 671
3. Investment and
trading securities
Carrying value 181 347 1 295 147 655 823
Listed securities 97 005 214 840 122 026
at market value
Unlisted securities 34 541 872 577 225 720
at valuation
Other securities at 49 801 207 730 308 077
valuation
Aggregate value 181 347 1 295 147 655 823
4. Short-term money
market assets
Carrying value 185 527 1 089 651 656 364
Fair value 185 527 1 097 413 656 927
The portfolio of
short-term money
market assets is of
a highly liquid and
marketable nature.
5. Related parties
Transactions with
related parties are
on an arms' length
basis and on the
same terms and
conditions as those
transacted with
third parties.
6. Commitments
Rental agreements
- within one year 8 852 11 794 20 912
- from one to five 18 099 39 102 14 928
years
- thereafter - 28 501 2 178
26 951 79 397 38 018
7. Contingent
liabilities
- Trade Finance 111 153 28 866 45 023
deals
- Proprietary 52 452 - 33 987
Consolidated
Investments
8. Non-headline items
Positive goodwill (475) (1 580) (982)
amortised
Negative goodwill - 98 878 103 360
on acquisition of
RAD
Positive goodwill 9 544 (51 599) (87 749)
recouped/(impaired)
Restructuring costs (4 614) - -
4 455 45 699 14 629
COMMENTARY ON RESULTS
Financial
* shareholders' funds R1,3 billion (Feb 2002: R1,6 billion) after a dividend
payment of R358 million # total assets reduced by R966 million since February
due to the dividend payment and reduction in deposit base by R584 million funded
by the realisation of assets # exchange rate losses due to strengthening of the
R/US$ rate since February # pressure on earnings due to turmoil in A2 banking
sector.
Operational
* PSGBH weathered A2 banking crisis without a bridging or standby facility #
radical downsizing and restructuring of operations # reduction in cost base
through the closure of Cape Town operation # staff reduced from 139 to 21.
ABSA proposal and unbundling
* scheme of arrangement to be proposed by ABSA to acquire all the shares in
PSGBH at 60 cents per share, after a capital distribution of 4 cents per share
and unbundling of Vestacor at a market value of 5,8 cents per PSGBH share (book
value 10,3 cents per share) # interest at 12% payable on 64 cents per share from
15 November 2002 to date of payment # ABSA due diligence concluded # only
outstanding conditions are regulatory and shareholder approvals # scheme
document and circulars to be distributed to shareholders in due course.
By order of the board
J F Mouton Chairman A B la Grange Group Chief Executive
17 October 2002
This information is also available on our internet site http://www.psgib.com
PSG Investment Bank Holdings Limited ("PSGBH") (Registration number
1998/017358/06) (Share code: PGH ISIN code: ZAE000018818)
Registered office: 160 Jan Smuts Avenue, Rosebank 2196 (PO Box 987, Parklands
2121)
Transfer secretaries: Computershare Investor Services Limited, 2nd Floor, Edura
House, 41 Fox Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
Directors: J F Mouton (Chairman), C F Turner* (Deputy chairman), A B la Grange*
(Chief executive), Prof P J du P le Roux, Dr M Mostert*, J Naidoo, C A Otto, G B
Rubenstein, Dr J van Zyl Smit * Executive directors
Company secretary: P W Bester
Date: 17/10/2002 05:23:54 PM Produced by the JSE SENS Department
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