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CAPITEC BANK HOLDINGS LIMITED -
CAPITEC BANK HOLDINGS LIMITED ("CAPITEC BANK")
Registration number: 1999/025903/06
JSE share code: CPI
ISIN code: ZAE000035861
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2003
GROUP BALANCE SHEET
Unaudited Audited
August August February
2003 2002 2003
R"000 R"000 R"000
Assets
Current assets
Cash and cash equivalents 102 760 49 886 104 076
Loans and advances 131 338 117 718 115 770
Inventory 6 891 - -
Other receivables 6 327 3 952 5 663
Group loans receivable 2 170 - -
Non-current assets
Group loans receivable 665 21 583 4 700
Fixed assets 149 096 134 694 135 773
Deferred tax 60 593 82 444 68 448
Total assets 459 840 410 277 434 430
Liabilities
Current liabilities
Deposits 24 902 11 956 18 077
Short-term borrowings - 3 144 -
Other liabilities (non- 23 278 9 643 17 527
interest bearing)
Provisions (non-interest 6 792 5 031 5 133
bearing)
Non-current liabilities
Deposits 2 657 606 7 760
Total liabilities 57 629 30 380 48 497
Shareholders" equity
Share capital and premium 326 878 343 217 326 878
Retained earnings 75 555 36 680 59 055
Cash flow hedge reserve (222) - -
(note 2)
Total shareholders" 402 211 379 897 385 933
equity
Total shareholders equity 459 840 410 277 434 430
and liabilities
Net asset value per share 584 570 611
(cents) (note 6)
Tangible net asset value 496 446 502
per share (cents)
Share price (cents) 395 180 260
GROUP INCOME STATEMENT
Unaudited Audited
Six months ended Year
ended
August August February
2003 2002 2003
R"000 R"000 R"000
Interest on loans 184 419 151 429 323 144
advanced
Interest on cash and 3 597 1 824 3 253
equivalents
Interest expense (2 274) (1 274) (3 402)
Net interest income 185 742 151 979 322 995
Net bad debts 14 593 19 875 32 818
Income from lending 171 149 132 104 290 177
activities
Other operating income 236 11 54
Non-banking income (note 44 042 - -
5)
Income from operations 215 427 132 115 290 231
Operating expenses (144 979) (120 883) (243
088)
Non-banking operating (44 581) - -
expenses (note 5)
Operating profit 25 867 11 232 47 143
Exceptional items (note (704) 3 204 (56)
4, 5)
Profit before tax 25 163 14 436 47 087
Tax (7 901) (6 788) (17 064)
Net profit attributable 17 262 7 648 30 023
to ordinary shareholders
RECONCILIATION OF
ATTRIBUTABLE EARNINGS TO
HEADLINE EARNINGS
Unaudited Audited
Six months ended Year
ended
August August February
2003 2002 2003
R"000 R"000 R"000
Net profit attributable 17 262 7 648 30 023
to ordinary shareholders
Exceptional items after
tax:
- Profit on disposal of (320) (2 628) (5 333)
foreign subsidiaries
(note 4)
- Impairment of goodwill - - 3 730
on revaluation of tax
loss
- Impairment of goodwill 600 - 1 171
on acquisition (note 4,
5)
- Loss on disposal of 297 - 713
other assets (note 4)
Headline earnings 17 839 5 020 30 304
Earnings per share
(cents)
- Basic attributable 26,3 11,5 45,6
- Basic headline 27,2 7,5 46,0
- Diluted attributable 24,6 11,4 44,3
(note 7)
- Diluted headline (note 25,4 7,5 44,8
7)
Number of shares ("000)
- Issued 68 837 66 656 63 190
- Weighted average 65 523 66 656 65 808
- Diluted (note 7) 70 283 67 049 67 709
Proposed dividend per - - 19,0
share (cents) (note 6)
GROUP STATEMENT OF
CHANGES IN EQUITY
Unaudited Audited
Six months ended Year
ended
August August February
2003 2002 2003
R"000 R"000 R"000
Ordinary shareholders" 385 933 391 248 391 248
funds at beginning of the
period
Change in accounting (355) - -
policy (note 2)
Restated balance at 385 578 391 248 391 248
beginning of period
Share buyback - - (16 339)
Net income for the period 17 262 7 648 30 023
Cash flow hedge (note 2) (222) - -
Dividend paid (note 6) (407) (18 999) (18 999)
Ordinary shareholders" 402 211 379 897 385 933
funds at end of the
period
GROUP CASH FLOW STATEMENT
Unaudited Audited
Six months ended Year
ended
August August February
2003 2002 2003
R"000 R"000 R"000
Cash flow from operating 26 017 (17 959) 50 041
activities
Cash generated from 28 202 20 314 74 236
operations
Increase in loans and (7 471) (26 741) (34 681)
advances
Increase in other 6 316 11 716 34 586
liabilities, provisions,
loans and deposits
Tax paid (623) (4 249) (5 101)
Dividends paid (407) (18 999) (18 999)
Cash flow from investing (27 333) (11 692) (22 358)
activities
Net investment in fixed (27 324) (16 408) (31 111)
assets
Disposal of subsidiaries 320 3 587 8 252
(Increase)/decrease in (329) 1 129 501
other investing
activities
(Decrease)/increase in (1 316) (29 651) 27 683
cash and cash equivalents
Cash and cash equivalents 104 076 76 393 76 393
at beginning of period
Cash and cash equivalents 102 760 46 742 104 076
at end of period
SEGMENTAL RESULTS
Banking Wholesale Total
distribution
(note 5)
Unaudited
Six months ended August
2003
Revenues 188 252 44 042 232 294
Headline earnings 18 378 (539) 17 839
Assets 451 915 7 925 459 840
Unaudited
Six months ended August
2002
Revenues 153 264 - 153 264
Headline earnings 5 020 - 5 020
Assets 410 277 - 410 277
Audited
Year ended February 2003
Revenues 326 451 - 326 451
Headline earnings 30 304 - 30 304
Assets 434 430 - 434 430
COMMITMENTS
Unaudited Audited
Six months ended Year
ended
August August February
2003 2002 2003
R"000 R"000 R"000
Guarantees
- Issued to banking - 4 000 4 000
institutions
- Other 1 815 6 077 3 848
Capital commitments
approved by the board
- Contracted for 7 491 586 12 530
- Not contracted for 16 550 5 880 38 632
Operating lease
commitments
< 1 year 27 351 25 613 25 312
1 to 5 years 31 189 35 969 33 820
NOTES
ACCOUNTING POLICIES
The interim consolidated financial statements are prepared in accordance with
AC127 - Interim Financial Reporting. The accounting policies applied in the
preparation of these interim 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, with the exception of
the implementation of AC133. The balance sheet was analysed between current and
non-current assets, and comparative figures for non-current loans and advances
net of provisions were disclosed separately.
EFFECT OF AC 133 ON RESULTS
The effect of implementing AC 133 on the results for the period is limited due
to the short-term nature of the loan book.
Comparative figures are not restated and opening adjustments are accounted for
directly to opening retained earnings in terms of AC 133, which is applied
prospectively. Interest free inter-group loans with a fixed maturity date were
revalued by R0,4 million at the beginning of the year as disclosed in the
statement of changes in equity, with corresponding interest income of R0,1
million amortised during the current period.
Losses on forward exchange contracts relating to cash flow hedges of R0,2
million have been accounted for directly to equity and relate mainly to the
planned import of equipment and systems development work.
RESULTS TO DATE
Results to date are in line with expectations. Advances increased by 35 % for
the six months to August compared with the same period last year.
Performance is primarily driven by client acquisition, our aggressive price
strategy, the conversion of our branches to bank branches and the improved
management of arrears. Management focus on arrears has resulted in a strong
decline in bad debt. The short term nature of our book allows for accurate
forecasting of bad debt provisions, which have reduced in relation to 2002. The
amount provided remains a conservative view of our outstanding book.
The branch conversion process to the new bank platform has progressed according
to plan. This is reflected in the substantial investment in infrastructure and
staff development.
EXCEPTIONAL ITEMS
Exceptional items include R0,3 million profit realised on the disposal of the
Namibian arrears book, after the company disposed of its Namibian subsidiaries
during the previous financial year. Fixed assets scrapped amounted to R0,4
million before tax and R0,6 million was impaired against goodwill on the
acquisition of Key Distributors, as noted under 5.
ACQUISITION OF KEY DISTRIBUTORS
The company acquired Key Distributors from PSG Group during the period. Key
Distributors is a wholesale distribution company and is considered of strategic
importance for market penetration in the provision of loans to small businesses.
Key Distributors is currently operating at a loss but is expected to break even
in the foreseeable future. Accordingly the goodwill on acquisition of Key
Distributors was impaired as stated in Note 4.
SCRIP DIVIDEND AND DIVIDEND POLICY
The scrip dividend option offered in June was accepted by 97% of shareholders.
The scrip dividend reduced the net asset value per share, as the market price
was lower than the net asset value per share. No interim dividend is proposed.
SHARE OPTIONS
The diluted number of shares and diluted earnings per share are calculated as if
all 8 747 484 outstanding options (8 213 358 in August 2002 and 8 079 205
in February 2003) were exercised at the average market price for the period.
No share options were granted to directors during the period under review.
FUNDING
The current market sentiment continues to restrict access to wholesale funding.
The company, however, at present is not dependent on wholesale or retail
deposits. Given recent occurrences in the industry, the conservative approach
to funding followed to date, will be maintained.
CAUTIONARY NOTICE
PSG Group Limited and Capitec Bank recently issued a cautionary notice regarding
possible transactions which could influence the share price of Capitec Bank.
Shareholders should continue to exercise caution in dealing in the shares of the
company.
PROSPECTS FOR REMAINDER OF THE YEAR
The company is in the process of rolling out its new bank technology to
branches, which enables it to offer savings accounts, debit cards and loan
facilities. By the end of August, 84 branches had been converted to the new
platform, with a further 66 planned for the remainder of the financial year.
Focus will remain to provide a technology driven, low cost bank infrastructure
which supports accessible and affordable banking on an inter-personal basis.
The profit growth for the six months to August 2003 must be placed in
perspective. Profit performance for the six months to August 2002 was strongly
influenced by price reductions over that period.
The percentage growth in profit for the full financial year (compared to last
year), will therefore be less than the percentage growth for the first six
months (compared to last year). The annual profit projection remains in line
with the original estimate of substantial growth as indicated in the annual
results announcement dated 27 March 2003.
On behalf of the board
Jannie Mouton Michiel le Roux Riaan Stassen
Chairman Chief executive officer Managing director
Stellenbosch 18 September 2003
ADMINISTRATIVE INFORMATION
Capitec Bank Holdings Limited
Registration number: 1999/025903/06
JSE share code: CPI ISIN code: ZAE000035861
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*,
Prof MC Mehl, CA Otto, JG Solms, R Stassen*, Dr J van Zyl Smit
*Executive
Sponsor
PSG Capital Limited
(Registration number 2002/017362/06)
Date: 18/09/2003 02:09:44 PM Produced by the JSE SENS Department
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