|
Mercantile Lisbon Bank Holdings Ltd -
Mercantile Lisbon Bank Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1989/000164/06)
("Mercantile")
("MLBH")
Share Code: MTL
ISIN Code: ZAE000027082
RESULTS FOR THE NINE MONTHS ENDED 31 DECEMBER 2002
Summarised Group Income Statement
9 months ended 12 months
ended
31 December 31 March
2002 2002
R" 000 R"000
Notes Reviewed Audited
Interest income 188,072 353,815
Interest expense (128,175) (235,397)
Net interest income before 59,897 118,418
provision for
credit losses
Net reversal of/(provision for) (1) 247,764 (506,778)
credit losses
Net interest income/(expense) 307,661 (388,360)
Non-interest income 72,532 179,039
Net (loss)/profit on sale and revaluation (10,013) 67,929
of investments
Operating income/(loss) 370,180 (141,392)
Operating expenses (199,924) (489,643)
Income/(loss) after taxation 170,256 (631,035)
Share of profit/(loss) from associated 1,394 (3,530)
companies
Income/(loss) before taxation 171,650 (634,565)
Taxation (3,882) (12,198)
Attributable income/(loss) 167,768 (646,763)
Continuing operations 167,768 (479,784)
Discontinued operations - (166,979)
Determination of headline
earnings/(loss)
Attributable earnings/(loss) 167,768 (646,763)
Adjustment for: (5)
Profit on sale of discontinued - (73,716)
operations
Impairments and loss on sale of fixed 16,582 38,721
assets
Headline earnings/(loss) 184,350 (681,758)
Summarised Group Balance Sheet
31 December 31 March
2002 2002
R" 000 R" 000
Reviewed Audited
Assets
Cash and cash equivalents 454,778 212,047
Negotiable securities 155,588 242,997
Loans and advances 1,313,292 1,475,609
Interest in associated companies 1,879 3,246
Investments 7,302 19,560
Other assets 137,548 233,531
Property, equipment and 105,043 121,832
intangible assets
Total assets 2,175,430 2,308,822
Liabilities
Deposits 1,912,979 2,085,712
Other liabilities and 70,616 207,193
provisions
Long term liabilities 8,335 -
Total liabilities 1,991,930 2,292,905
Shareholders" funds
Share capital 866,865 866,865
Reserves (683,365) (850,948)
Total shareholders" funds 183,500 15,917
Total liabilities and 2,175,430 2,308,822
shareholders" funds
Contingent liabilities
31 December 31 March
2002 2002
Guarantees and letters of credit 133,075 186,829
Conditional buy-back obligation 225,446 375,231
Irrevocable unutilised facilities 350,574 869,191
Operating lease commitments: 13,419 21,506
- Due within one year 3,744 6,817
- Thereafter 9,675 14,689
Summarised Group Cash
Flow Statement
9 months ended 12 months
ended
31 December 31 March
2002 2002
R" 000 R" 000
Reviewed Audited
Cash flow from (38,982) (116,654)
operating activities
Cash flow from 292,679 (560,460)
operating funds
Taxation paid (9,524) (9,242)
Cash flow from (9,777) 581,302
investing activities
Cash flow from 8,335 119,079
financing activities
Net cash inflow 242,731 14,025
Cash and cash equivalents at beginning of 212,047 198,022
period
Cash and cash equivalents at end of 454,778 212,047
period
Summarised Group Statement of Change in Shareholders"
Funds
9 months 12 months
ended ended
31 December 31 March
2002 2002
R" 000 R" 000
Reviewed Audited
Opening balance 15,917 536,656
Movements in share capital and share - 119,079
premium
Movements in non-distributable reserves (185) 6,945
Movements in distributable reserves 167,768 (646,763)
Shareholders" interest 183,500 15,917
Summarised Group
Segmental Information
9 months 12 months
ended ended
31 December 31 March
2002 2002
R" 000 R" 000
Notes Reviewed Audited
Operating
income/(loss):
Banking services 103,036 (24,180)
Treasury 11,690 33,413
Alliance banking 7,050 (18,571)
Other services (3) (4) 248,404 (104,086)
Discontinuing operations - (27,968)
370,180 (141,392)
Attributable income/(loss):
Banking services (2) 38,729 (130,058)
Treasury (2) (7,366) 29
Alliance banking (2) (12,111) (41,526)
Other services (3) (4) 148,516 (308,229)
Discontinuing operations - (166,979)
167,768 (646,763)
Financial statistics
31 December 31 March
2002 2002
Number of ordinary shares in
issue:
- end of period (" 000) 855,585 855,585
- weighted average (" 000) 855,585 427,014
Attributable income/(loss) per share* 19.6 (151.5)
(cents)
Headline earnings/(loss) per ordinary 21.6 (159.7)
share* (cents)
Net asset value per ordinary 21.4 1.9
share (cents)
Capital adequacy ratio (%)
- Consolidated MLBH Group 10.7 0.7
- Mercantile Bank Limited 12.4 1.0
*Basic and fully diluted
(1) Mercantile has reversed, in the current reporting period,
provisions for credit losses in the amount of R265 million as
referred to in paragragh 3 of the text of this Announcement.
(2) Excludes the allocation of attributable support costs.
(3) "Other services" includes support divisions, collections,
specialised asset finance, insurance brokers and inter-group
eliminations.
(4) Included in "Other services" is the reversal, in the reporting
period, of provisions for credit losses in the amount of R265
million.
(5) The prior period adjustment to determine headline earnings has
been restated in order to comply with SAICA circular 7/2002.
(6) Depreciation amounted to R16,328,000 (12 months to 31 March
2002: R36,811,000) Capital expenditure incurred amounted to
R17,333,000 (12 months to 31 March 2002: R52,182,000).
1. INTRODUCTION
The nine months to 31 December 2002 has seen:
* A restructuring of the Board of Directors.
* The restoration of the capital of the Bank through a guarantee
provided by the controlling shareholder.
* The design of a clear plan of rehabilitation and substantial
progress on its implementation.
2. THE BOARD OF DIRECTORS
Changes to the board of directors were announced at the half-year
and the board remains unchanged at this stage. It is anticipated
that additional appointments will be made to the board at both an
executive and non-executive level and further announcements will be
made in due course. It was announced in December that Johnny
Symmonds would be leaving the group at the end of March 2003. In the
interests of the group, this has been extended to 30 June 2003.
3. THE RESTORATION OF CAPITAL
As was announced in July 2002, Caixa Geral de Depositos ("CGD") has
issued a guarantee in favour of Mercantile Bank Limited in the
amount of R265 million. The nature of the guarantee was that CGD
assumed financial responsibility for the repayment of certain non-
performing loans, thereby allowing Mercantile to release provisions
and re-establish capital adequacy. The impact of this guarantee has
been reflected in the results for this reporting period.
4. THE REHABILITION PROCESS
Given the turbulence experienced by the group in the year to 31
March 2002, it was necessary to undergo a period of rehabilitation.
The board formulated a plan in July 2002 and tasked management with
its implementation. The plan was to rebuild capacity and implement
best banking practice. Whilst there is more work to be undertaken,
substantial progress has been made. Particular areas of achievement
include:
* Improvements in the management of risk and internal control.
* An increased focus on human resource management.
* Improvements in efficiency through process rationalisation and
cost reduction.
* The improvement in managerial capabilities through the development
of internal resources and certain key new appointments.
Various restructuring initiatives have been concluded. The intention
of these initiatives is primarily to improve the way in which risk
is managed and controlled, whilst at the same time improving
efficiencies and reducing costs. These included:
* Centralising the back office processing areas of each aspect of
the business into one structure.
* Refocusing the front end of the retail banking business around the
branches and in so doing simplifying the structure and reporting
lines.
5. CHANGE OF YEAR END
The group has changed its year-end from 31 March to 31 December to
coincide with CGD"s reporting period. The financial results
therefore cover a nine-month reporting period to 31 December 2002.
6. RESULTS FOR THE NINE MONTHS ENDED 31 DECEMBER 2002
The results for the period are set out elsewhere in this report.
They have been prepared in accordance with South African Statements
of Generally Accepted Accounting Practice applicable to preliminary
financial reporting and the Companies" Act in South Africa. The
accounting policies are consistent with those adopted in the Annual
Financial Statements for the year ended 31 March 2002. The results
have been reviewed by the group"s independent auditors, Deloitte &
Touche, and a copy of their report is available for inspection at
the company"s registered office.
The group results for the period reflect a net attributable income
after taxation of R168 million (12 months to 31 March 2002: loss
R647 million). The positive result is predominantly due to the
reversal of provisions in the amount of R265 million, as a result of
the guarantee provided by CGD referred to above. Excluding the
guarantee, Mercantile"s result for the reporting period would have
reflected an attributable loss of R97 million.
The ongoing losses are largely a result of an unacceptably high cost
base and a deliberate delay in the relaunching of the commercial
activities, particularly in the retail bank. As referred to above,
the primary focus of the rehabilitation process is on the rebuilding
of capacity and implementation of best banking practice - and
therefore not on short-term profits.
Consistent with this policy, the Bank is deliberately carrying
excess liquidity and this also has a negative impact on
profitability.
7. OUTLOOK
The focus of the board and management will continue to be on the
rehabilitation of the Bank. The revenue earning activities of the
Bank remain:
a) Retail Banking The Bank will remain a broadly based South
African bank at all times conscious of its roots in the Portuguese
community.
b) Alliance Banking This business will focus mainly on card
processing.
c) Treasury This will be a treasury serving retail and alliance
banking customers and managing internal liquidity.
It is expected that the rehabilitation work will be largely
concluded in the second half of this year. There will be a continued
focus on cost reduction through improvements in systems and people
skills. Once the work on rehabilitation is complete and the board is
entirely comfortable with the risk management capabilities, growth
in the lending activities particularly in the retail bank will
recommence.
The establishment of CGD as the controlling shareholder and, more
importantly, its on-going support has brought stability and
confidence to the group. There remains much to be accomplished but
the board is happy with progress made to date and confident this
process will be successfully completed in the course of this year.
CGD has assured the board of their willingness to safeguard the
financial soundness and stability of Mercantile, including the
maintenance of capital adequacy.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
