| Fri 26 Sep 2003, 17:37 | | Mercantile Lisbon Bank Holdings Limited - Unaudite |
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Mercantile Lisbon Bank Holdings Limited - Unaudited Results For The Six Months
Release Date: 26/09/2003 17:15:00 Code(s): MTL
MERCANTILE LISBON BANK HOLDINGS LIMITED - UNAUDITED RESULTS FOR THE SIX MONTHS
ENDED 30 JUNE 2003
Mercantile Lisbon Bank Holdings Limited
Reg. No. 1989/000164/06
Share code: MTL.
ISIN: ZAE000027082
("MLBH" or "the Group")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
Summarised Group Income Statement
9 months
Six months ended ended
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Interest income 122 587 133 582 188 072
Interest expense (86 818) (83 687) (128 175)
Net interest income before
provision for credit losses 35 769 49 895 59 897
Reversal of/(Provision for)
credit losses - note (1) 7 260 (229 262) 247 764
Net interest income/
(expense) 43 029 (179 367) 307 661
Non-interest income 43 238 45 992 72 532
Net profit/(loss) on sale
and revaluation of investments 238 99 039 (10 013)
Total operating income/
(loss) 86 505 (34 336) 370 180
Operating expenses (113 693) (218 299) (206 515)
Income/(Loss) before
associated companies (27 188) (252 635) 163 665
Share of profit from
associated companies 3 638 - 1 394
Income/(Loss) before
taxation (23 550) (252 635) 165 059
Taxation - note (3) (20) (1 502) 2 709
Attributable income/(loss) (23 570) (254 137) 167 768
Continuing operations (23 570) (121 191) 167 768
Discontinued operations - (132 946) -
Determination of headline
earnings/(loss)
Attributable earnings/(loss) (23 570) (254 137) 167 768
Adjustments for:
Impairment and loss on
sale of fixed assets - 32 202 16 582
Profit on sale of
discontinued operations - (76 638) -
Headline earnings/(loss) (23 570) (298 573) 184 350
Summarised Group Cash Flow Statement
9 months
Six months ended ended
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Cash flow from operating
activities (21 236) (101 260) (45 573)
Cash flow from operating
funds 87 002 70 397 292 679
Taxation paid - note (3) (837) - (2 933)
Cash flow from investing
activities (3 051) 164 173 (9 777)
Cash flow from financing
activities (1 480) 119 079 8 335
Aggregate of cash inflows
and outflows 60 398 252 389 242 731
Cash and cash equivalents
at beginning of period 454 778 279 383 212 047
Cash and cash equivalents
at end of period 515 176 531 772 454 778
Summarised Group Statement of Change in Shareholders" Interest
9 months
Six months ended ended
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Opening balance 183 500 132 531 15 917
Movements in share capital
and premium - 119 079 -
Movements in non-
distributable reserves 2 229 6 945 (185)
Movements in distributable
reserves (23 570) (254 137) 167 768
Shareholders" interest 162 159 4 418 183 500
Summarised Group Balance Sheet
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Assets
Cash and cash equivalents 515 176 531 772 454 778
Negotiable securities 248 303 238 833 155 588
Loans and advances 1 212 217 1 275 019 1 313 292
Interest in associated
companies 4 646 3 229 1 879
Investments 3 861 19 506 7 302
Other assets 123 072 134 814 137 548
Property, equipment
and intangible assets 101 424 116 974 105 043
Total assets 2 208 699 2 320 147 2 175 430
Liabilities
Deposit and credit balances 1 963 192 2 134 896 1 912 979
Other liabilities 76 493 180 833 70 616
Long-term liability 6 855 - 8 335
Total liabilities 2 046 540 2 315 729 1 991 930
Shareholders" funds
Share capital 866 865 866 865 866 865
Reserves (704 706) (862 447) (683 365)
Total shareholders" funds 162 159 4 418 183 500
Total liabilities 2 208 699 2 320 147 2 175 430
Summarised Group Off-Balance Sheet Exposures
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Guarantees and letters of
credit 127 754 144 041 133 075
Conditional buy-back
obligation 180 078 337 403 255 600
Contingent liabilities 244 823 573 100 350 574
Summarised Group Segmental Information
9 months
Six months ended ended
30 June 30 June 31 December
2003 2002 2002
R"000 R"000 R"000
Unaudited Unaudited Audited
Segment revenue
Banking services 44 156 (10 490) 103 036
Treasury 3 645 7 095 11 690
Alliance banking 10 204 (15 647) 7 050
Other services - note (2) 28 500 81 806 248 404
Discontinuing operations - (97 100) -
86 505 (34 336) 370 180
Segment results
Banking services 15 629 (53 184) 38 729
Treasury (2 843) (10 165) (7 366)
Alliance banking (1 607) (30 600) (12 111)
Other services - note (2) (34 749) (27 242) 148 516
Discontinuing operations - (132 946) -
(23 570) (254 137) 167 768
Financial Statistics
30 June 30 June 31 December
2003 2002 2002
Unaudited Unaudited Audited
Number of ordinary shares in
issue ("000)
- end of period 855 585 855 585 855 585
- weighted average 855 585 642 483 855 585
Attributable income/(loss)
per ordinary share (cents) (2,8) (39,6) 19,6
Headline earnings/(loss)
per ordinary share (cents) (2,8) (46,5) 21,5
Net asset value per
ordinary share (cents) 19,0 0,5 21,4
Capital adequacy ratio (%)
- Consolidated MLBH Group 10,72 0,01 10,67
- Mercantile Bank Limited 12,29 0,19 12,43
Note:
(1) Mercantile has reversed, in July 2002, provisions for credit losses in the
amount of R265 million as a result of the guarantee provided by CGD for the same
amount.
(2) "Other services" includes support divisions, collections, specialised
finance, insurance brokers and intergroup eliminations.
(3) Comparative figures are restated, where necessary, to afford a proper
comparison.
The indirect taxes were previously included in the taxation on the income and
cash flow statements, but has been reclassified as operating expenses. Taxation
per the income and cash flow statements reflects normal taxation.
Introduction
The first half of this year has seen:
* good progress on the rehabilitation of Mercantile Bank Limited ("MBL" or "the
Bank") with the support of the controlling shareholder Caixa Geral de Depositos
S.A. ("CGD").
* an improvement in the operating results.
* changes in the composition of the Board of Directors.
Rehabilitation of the bank
As previously reported, the Board has prioritised the rehabilitation of the Bank
through the implementation of best practice in terms of risk management,
internal control and human resources development, with a focus on cost reduction
and operational efficiency.
Significant improvements have been achieved and, overall, the Board is satisfied
with the level of control being exercised. The process is ongoing.
Ongoing support by cgd
In addition to the guarantee for R265 million issued in July 2002, to cover
the repayment of certain non-performing loans, during the reporting period CGD
issued additional guarantees in favour of the Bank in order to maintain the
capital adequacy ratio above the minimum prescribed by the Registrar of Banks.
The total amount of the new guarantees was R67 millions, of which R45 million
was to cover some additional potential exposures and R22 millions in respect of
certain single name promissory notes regarded as a large exposure for regulatory
purposes.
Furthermore, CGD has agreed to provide a subordinated loan facility in favour
of MLBH up to the value of R60 million, with the purpose of maintaining the
capital adequacy ratio of the Bank above the prescribed level, as further
operating losses are expected to be incurred until the completion of the
rehabilitation process. The implementation of this subordinated loan facility is
subject to the approval by the Registrar of Banks.
CGD has also agreed to provide a subordinated loan facility in favour of
MLBH, up to an amount of R8,2 million, to repay a loan from the Bank.
Results for the six months ended 30 June 2003
The results for the six months ended 30 June 2003 are set out elsewhere in this
report. They have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The accounting policies are consistent
with those used in the financial statements for the nine-month period ended 31
December 2002.
Progress has been made with the implementation of accounting standard AC 133
(Financial Instruments: Recognition and Measurement). It is anticipated that the
Group will be fully compliant by December 2003.
The attributable result for the reporting period was a loss of approximately
R24 million which compares with a loss of R254 million in the same period of the
previous year. The results for the six months ended
30 June 2002 were largely a consequence of the raising of provisions for credit
losses of R229 million.
In the six months ended 30 June 2003 there was a net release of provisions
for credit losses of R7,3 million as a consequence of the improvement in
collections.
The losses realised in the reporting period continue to reflect a high cost
base, non-recurrent expenses related to the restructuring actions and the
sacrifice of interest margin inherent in the maintenance of high levels of
liquid assets and interbank deposits. This excess liquidity is the result of a
deliberate slow down in lending activities, which will remain in place until the
completion of the rehabilitation process.
New agreements have been signed for the processing of third party card products.
This has already had a positive impact on the half-year results and is expected
to generate a substantial increase in fee income in the future.
Board of directors
Louis Hyne was appointed a non-executive director and Chairman of the Audit
Committee. Mr Hyne retired recently as Deputy Chairman of Deloitte
& Touche and has extensive experience in the auditing of Banks.
J Tubal Goncalves was appointed an executive director. He has extensive banking
experience, acquired whilst serving as a senior manager of CGD, both in Portugal
and internationally.
A Soares resigned from the Board as a non-executive director.
As previously announced, Johnny Symmonds left the Group at the end of July. The
Board is in the process of appointing a successor and is confident that an
announcement will be made soon. In the interim, R Ribas was appointed Acting
Chief Executive Officer.
The Board is now constituted as follows:
- Dr J A S de A Campos * (Chairman)
- Dr R M L de F N Ribas * (Acting Chief Executive Officer)
- G P de Kock
- Dr J M Tubal Goncalves * (Executive)
- L Hyne
- Dr J H Real Pereira *
(* Portuguese)
Outlook
The Board is confident that the correct steps are being taken to rehabilitate
the Bank. The process is well advanced and strategic options are being
considered to appropriately position the Group to return to profitability on a
sustainable basis over the medium term.
By order of the Board
J A S de A Campos R Ribas
Chairman Acting Chief Executive Officer
Sandton
26 September 2003
Directors: Dr J A S de A Campos * (Chairman),
Dr R M L de F N Ribas * (Acting Chief Executive Officer),
G P de Kock, Dr J M Tubal Goncalves * (Executive), L Hyne,
Dr J H Real Pereira *
Group Secretary: F Vicente Coelho * * Portuguese
Registered office: Mercantile Lisbon House
142 West Street
Sandown, 2196
Share code: MTL.
ISIN: ZAE000027082
Transfer Secretaries: Computershare Investor Services Limited
8th Floor
70 Marshall Street
Johannesburg, 2001.
Corporate advisor and sponsor to Mercantile
BRIDGE CAPITAL
Mercantile Lisbon Bank Holdings Limited
("MLBH" or "the Group")
Reg. No. 1989/000164/06
A Subsidiary Company of Caixa Geral de Depositos
www.mercantile.co.za
