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CAPITEC BANK HOLDINGS LIMITED
Registration number: 1999/025903/06
JSE share code: CPI
ISIN code: ZAE000035861
("CAPITEC BANK")
Audited financial results for the year ended 28 February 2003
At Capitec Bank we are pleased to have achieved our forecast profits of R30
million. Capitec Bank was listed on the JSE on 18 February 2002. Nine days
before that, on a Saturday morning, Saambou went belly up. The impact on us was
profound and everything had to be replanned to achieve the R29,42 million profit
forecast in our pre-listing statement.
All our profits for the year are derived from loans: mostly small, short-term
loans. During the year we granted 2,4 million loans of an average size of R618.
The value of loans granted during the year increased by 45%, compared to last
year, to R1,5 billion.
We earned a net margin of only 2,0% on our loans. All the same, price
aggression remains a fundamental part of our short-term strategy. We reduce
rates as we improve our efficiency and increase our throughput per branch.
The three most important aspects of managing bad debts are: administration,
administration and administration. The more we improve our systems and staff
quality, the less we write off as bad debts. We think what our people achieved
was remarkable: while our book was growing rapidly, we reduced our bad debts
from 3,5% a year ago to 2,6%.
We have continued our transformation programme to turn Capitec Bank into a mass
market retail bank. We moved 54 branches to new sites, merged 40 branches and
opened 6 new branches. We sold our operations in Botswana and Namibia because
we are not licensed as a bank in those countries. (Exceptional profits of R5,3
million were realised on these sales.) As a result, our total number of
branches declined from 316 to 266.
We have a competent and loyal workforce. We are creating an action-oriented,
customer-focused culture. We want to be more like a retailer than a bank.
The cost of running Capitec Bank skyrocketed during the past financial year.
Current expenditure increased by 36% to R243 million. Little of this was
unexpected, as it is expensive to implement what we"re doing. Strategically, we
support the cost of building a retail bank on the back of the small loans
business.
We manage our money cautiously. As a new business with limited access to funds,
we had to limit our capital expenditure. At the same time we had to improve our
branch network and train our people. We continued investing in our bank
platform and our first priority was obviously to fund the growth in our loan
book. At the end of the year our net cash balance was R78 million and we had
loans of R116 million due to us (after provisions).
Liquidity rules have changed permanently for all but the big banks. We know
that even if we manage our affairs prudently, bad news at another bank or in
another country can cause a crisis for us. We therefore plan our expenditure
and liabilities carefully so that we are never left vulnerable. We have access
to loan funds far greater than our current needs due to the support of our
shareholders.
We remain on track to build something unique: a low-cost, full-service mass
market bank.
Subject to shareholders" approval, the company will pay a dividend of 19 cents
per share on 17 June 2003 to shareholders recorded on the register on 13 June
2003. As an alternative a scrip dividend of 8.89 shares per 100 shares based on
a market price of 216,3 cents and a premium of 5% will be offered. A majority of
shareholders have already indicated that they plan to opt for this alternative.
As the company is in a high growth phase, we will increase the current dividend
cover in future years
The new financial year will again be tough. We budget for a further significant
rise in costs. Due to a planned increase in volumes and the introduction of new
products, we expect a substantial rise in the profits for the year to 29
February 2004.
Our annual general meeting of shareholders will take place at The House of JC le
Roux in Devon Valley on 15 May 2003 at 12:00.
GROUP BALANCE SHEET Audited Audited
February February
2003 2002
R"000 R"000
Assets
Cash and short-term funds 104 076 76 393
Net loans and advances 115 770 92 068
Other receivables and 5 663 4 668
prepayments
Group loans receivable 4 700 22 712
Fixed assets 135 773 127 463
Deferred taxation 68 448 85 573
434 430 408 877
Liabilities
Loans and deposits 25 837 -
Other liabilities and 22 660 17 629
provisions
48 497 17 629
Ordinary shareholders" funds 385 933 391 248
434 430 408 877
Net asset value per share 611 587
(cents)
Tangible net asset value per 502 459
share (cents)
Share price (cents) 260 117
GROUP INCOME STATEMENT
Audited Audited
Year ended Year ended
February February
2003 2002
R"000 R"000
Interest income 326 397 275 869
Interest expense 3 402 6 000
Net interest income 322 995 269 869
Provision for bad and doubtful debts 32 818 25 896
after recoveries
Net interest after provisions 290 177 243 973
Other operating income 54 1 000
Net income from operations 290 231 244 973
Operating expenses 243 088 178 333
Operating profit 47 143 66 640
Exceptional items (56) -
Income before taxation 47 087 66 640
Taxation 17 064 18 573
Net income 30 023 48 067
Attributable to outside shareholders - 79
Earnings attributable to ordinary 30 023 47 988
shareholders
Exceptional items after tax:
Profit on disposal of foreign (5 333) -
subsidiaries
Impairment of goodwill on revaluation 3 730 -
of tax loss
Impairment of goodwill on acquisition 1 171 -
Loss on disposal of other assets 713 -
Headline earnings 30 304 47 988
Earnings per share (cents)
- Attributable 45,6 80,2
- Headline 46,0 80,2
- Fully diluted attributable 44,3 78,3
- Fully diluted headline 44,8 78,3
Number of shares ("000)
- Issued 63 190 66 656
- Weighted average 65 808 59 868
- Fully diluted 67 709 66 656
Proposed dividend per share (cents) 19,0 28,5
STATEMENT OF CHANGES IN EQUITY
Audited Audited
Year ended Year ended
February February
2003 2002
R"000 R"000
Ordinary shareholders" funds at the 391 248 100 000
beginning of year
Net proceeds of shares issued - 245 400
Share buyback (16 339) -
Share issue and listing expenses written - (2 873)
off against equity
Exchange difference on translation of - 733
financial statements of foreign entity
Net income for the year 30 023 47 988
Dividend paid (18 999) -
Ordinary shareholders" funds at the end 385 933 391 248
of year
GROUP CASH FLOW STATEMENT
Audited Audited
Year ended Year ended
February February
2003 2002
R"000 R"000
Cash generated from operations 74 236 86 700
Increase in loans and advances (34 681) (25 030)
Increase /(decrease) in other (339)
liabilities and provisions & loans and 34 586
deposits
Taxation paid (5 101) (15 297)
Dividend paid (18 999) -
Net investment in fixed assets (31 111) (110 394)
Disposal of subsidiaries 8 252 -
Decrease / (increase) in other investing 501 (4 094)
activities
Cash flow from financing activities - 97 127
Net increase in cash and equivalents 27 683 28 673
Effects of exchange rate changes - 733
Cash and short-term funds at
beginning of year 76 393 46 987
Cash and short-term funds at the end of 104 076 76 393
year
Segmental Results
South Africa Rest of Total
southern
Africa
(Discon-
tinued)
Audited
Year ended February 2003
Revenues 282 726 7 505 290 231
Headline earnings 28 164 2 140 30 304
Assets 434 430 - 434 430
Audited
Year ended February 2002
Revenues 231 423 13 550 244 973
Headline earnings 43 974 4 014 47 988
Assets 398 625 10 252 408 877
COMMITMENTS Audited Audited
Year ended Year ended
February February
2003 2002
R"000 R"000
Guarantees
Issued to banking institutions 4 000 16 700
Issued other 3 848 6 843
Capital commitments
Approved by the board
Contracted for 12 530 3 030
Not contracted for 38 632 15 730
NOTES
1. ACCOUNTING POLICIES
The accounting policies applied in the preparation of these summarised
consolidated financial statements conform to South African Statements of
Generally Accepted Accounting Practice and are consistent with the accounting
policies applied in the prior year.
The financial results have been audited by PricewaterhouseCoopers Inc. A copy of
their audit opinion is available for inspection at the registered office of the
company.
2. EXCEPTIONAL ITEMS
The exceptional items relate to the profit on disposal of the company"s Botswana
and Namibian subsidiaries for a consideration of R13,1 million and a tax effect
of R0,6 million, the adjustment of the take-on balance of the tax loss of R3,7
million and the impairment of goodwill on acquisition of a debt collecting
company. The activities of the debt collecting company was incorporated in the
bank"s operations.
Loss on the disposal of other assets relate mainly to the scrapping of branch
fittings in order to upgrade branches to the standardised bank model.
3. SHARE REDUCTION
The share capital of the company was reduced by R16,3 million during the year as
a result of the buy-back of shares held by the share incentive trust. This was
required by the JSE as no enforceable agreements of sale had been concluded with
employees holding options over these shares. There was no cash flow effect and
the loan to the share incentive trust (included under group loans receivable)
was reduced correspondingly.
4. CASH DIVIDEND WITH ELECTION FOR SCRIP
The directors propose a dividend of 19,0 cents per share. Shareholders will have
the option to select a scrip dividend in lieu of a cash dividend. The scrip
ratio will be 9,25 shares for each 100 shares held.
To comply with the requirements of STRATE the following dates
are applicable: 2003
Annual general meeting to be held at 12:00 Thursday 15 May
Announcement of results of the annual general
meeting published
- on SENS Thursday 15 May
- in the press Friday 16 May
Last date to trade cum dividend Friday 6 June
Trading commences ex-dividend Monday 9 June
Final date for the election of cash or scrip Friday 13 June
(see note 1)
Record date Friday 13 June
Payment of dividend/issue of scrip Tuesday 17 June
Announcement of the results of the scrip Tuesday 17 June
dividend
Note 1
All dematerialised shareholders should, in accordance with their relevant
custody agreement, timeously inform their CSDPs or brokers of their choice.
Note 2
No dematerialisation or rematerialisation of Capitec share certificates will
take place between Monday, 9 June 2003, and Friday, 13 June 2003, both days
inclusive.
Note 3
Any change to the above dates and times will be advised by notification on SENS
and in the press.
On behalf of the board
JF Mouton
Chairman
MS du P le Roux
Chief executive officer
Stellenbosch
27 March 2003
Company secretary and registered office
Christian George van Schalkwyk
BComm, LLB, CA(SA)
10 Quantum Road
Techno Park
Stellenbosch 7600
PO Box 12451, Die Boord, Stellenbosch
7613)
Transfer secretaries
Computershare Investor Services Limited
Registration number: 1958/003546/06
Ground Floor
70 Marshall Street
Johannesburg 2001
(PO Box 1053, Johannesburg 2000)
Directors
JF Mouton (Chairman), CJ Borstlap*, AP du Plessis*,
MS du P le Roux*, MC Mehl, CA Otto, JG Solms, R Stassen*,
J van Zyl Smit
* Executive
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