| Mon 6 Sep 2004, 17:48 | | Mercantile Lisbon Bank Holdings Limited - Unaudite |
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Mercantile Lisbon Bank Holdings Limited - Unaudited Results For The Six Months
Release Date: 06/09/2004 17:45:01 Code(s): MTL
MERCANTILE LISBON BANK HOLDINGS LIMITED - UNAUDITED RESULTS FOR THE SIX MONTHS
ENDED 30 JUNE 2004
MERCANTILE LISBON BANK HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1989/000164/06)
Share code: MTL ISIN: ZAE000056537
(`Mercantile` or `the Group`)
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004
SUMMARISED GROUP BALANCE SHEET
30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Assets
Intangible assets 10 054 15 536 12 711
Property and equipment 83 456 85 088 84 651
Investment properties 800 800 800
Taxation 3 681 3 815 3 567
Other accounts receivable 75 787 110 559 82 430
Interest in associated companies 3 446 4 646 2 951
Other investments 3 439 3 878 3 965
Loans and advances 1 068 512 1 261 801 1 178 788
Derivative financial instruments 34 237 8 698 7 610
Negotiable securities 202 145 248 303 273 090
Cash and cash equivalents 873 684 515 176 574 930
Total assets 2 359 241 2 258 300 2 225 493
Equity and liabilities
Shareholders` equity 135 473 186 030 163 899
Share capital and share premium 866 607 866 865 866 865
Capital redemption reserve fund 3 788 3 788 3 788
General reserve 7 478 7 478 7 478
Property revaluation reserve 28 376 23 228 28 376
Available-for-sale reserve (1 267) (1 077) (742)
General risk reserve 19 588 23 688 31 212
Accumulated loss (789 097) (737 940) (773 078)
Liabilities 2 223 768 2 072 270 2 061 594
Long-term liabilities 3 626 6 855 5 287
Subordinated loan 60 436 - -
Deposits 2 050 143 1 970 046 1 946 752
Derivative financial instruments 28 938 31 969 32 115
Provisions 31 973 28 522 36 066
Other accounts payable 48 608 33 941 40 437
Taxation 44 937 937
Total equity and liabilities 2 359 241 2 258 300 2 225 493
SUMMARISED GROUP INCOME STATEMENT
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Interest income 91 143 122 587 226 970
Interest expense (52 213) (86 818) (161 152)
Net interest income before credit losses 38 930 35 769 65 818
Net (charges from)/recoveries of
credit losses (5 335) 2 281 19 840
Net interest income after credit losses 33 595 38 050 85 658
Net (loss)/profit on sale of investments - (3 232) 8
Non-interest income 43 733 43 984 91 025
Net interest and non-interest income 77 328 78 802 176 691
Operating expenditure (105 599) (113 693) (237 521)
Loss before associated companies (28 271) (34 891) (60 830)
Share of income from associated companies 495 3 638 1 942
Loss before taxation (27 776) (31 253) (58 888)
Taxation - (20) -
Attributable loss after taxation (27 776) (31 273) (58 888)
Reconciliation between attributable
loss after taxation and headline loss
Attributable loss after taxation (27 776) (31 273) (58 888)
Adjustment for:
Realisation of available-for-sale
reserve on sale of investments - 3 232 2 125
Impairment and profit/(loss) on sale
of property and equipment (202) - 292
Headline loss (27 978) (28 041) (56 471)
FINANCIAL STATISTICS
30 June 30 June 31 December
2004 2003 2003
Unaudited Unaudited Audited
Number of ordinary shares in issue:
- end of period (`000) 855 585 855 585 855 585
- weighted average (`000) 855 585 855 585 855 585
Loss per share* (cents) (3,2) (3,7) (6,9)
Headline loss per ordinary share (cents) (3,3) (3,3) (6,6)
Net asset value per ordinary share (cents) 15,8 21,7 19,2
* Basic and fully diluted
SUMMARISED GROUP CASH FLOW STATEMENT
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Net cash outflow from operating activities (26 951) (22 073) (42 561)
Net cash inflow from operating assets 272 703 87 002 168 153
Net cash outflow from investing activities (5 070) (3 051) (1 583)
Net cash inflow/(outflow)
from financing activities 58 072 (1 480) (3 857)
Net cash inflow for the period 298 754 60 398 120 152
Cash and cash equivalents
at beginning of period 574 930 454 778 454 778
Cash and cash equivalents
at end of period 873 684 515 176 574 930
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Balance at beginning of period 163 899 183 500 183 500
Transitional adjustments on
adoption of AC 133 - 28 246 28 246
Creation of general risk reserve - 28 811 28 811
Revaluation of held-for-trading
financial instruments - (565) (565)
Treasury shares on consolidation of share
incentive trust (4) (258) - -
Movements in reserves (12 148) 434 13 442
Revaluation of owner-occupied property - 2 231 7 379
Net transfer (from)/to general
risk reserve (3) (11 623) (5 123) 2 401
Net transfer (to)/from available-
for-sale reserve (525) 3 326 3 662
Movements in accumulated loss (16 020) (26 150) (61 289)
Loss after taxation (27 776) (31 273) (58 888)
Net transfer from/(to) general
risk reserve (3) 11 623 5 123 (2 401)
Accumulated loss on consolidation
of share incentive trust (4) 133 - -
Balance at end of period 135 473 186 030 163 899
SUMMARISED GROUP SEGMENTAL INFORMATION
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Segment revenue:
Retail banking 53 150 44 156 93 896
Treasury 8 220 3 645 8 843
Alliance banking, MBL credit card
and structured loans 20 089 10 204 33 829
Other services (1) (3 636) 24 435 42 065
77 823 82 440 178 633
Loss after tax:
Retail banking (2) 28 631 15 629 38 705
Treasury (2) 2 860 (2 843) (3 441)
Alliance banking, MBL credit card
and structured loans (2) 13 048 (1 607) 7 409
Other services (1) (72 315) (42 452) (101 561)
(27 776) (31 273) (58 888)
GROUP CONTINGENT LIABILITIES AND COMMITMENTS
30 June 30 June 31 December
2004 2003 2003
R`000 R`000 R`000
Unaudited Unaudited Audited
Guarantees and letters of credit 122 845 127 754 119 126
Irrevocable unutilised facilities 191 882 244 823 215 311
Conditional buy-back obligations 76 694 180 078 116 050
Operating lease commitments: 17 051 15 844 13 253
Due within one year 6 849 5 986 5 643
Due between one and five years 10 202 9 858 7 610
Total contingent liabilities
and commitments 408 472 568 499 463 740
(1) `Other services` includes support divisions, collections, specialised asset
finance, insurance brokers, inter-Group eliminations and AC 133 adjustments.
(2) Excludes the allocation of attributable support costs.
(3) This transfer arises from the difference between accounting and regulatory
provisions for credit losses.
(4) This adjustment arises from the consolidation of the share incentive trust.
INTRODUCTION
The period under review has seen:
* continuing progress on the rehabilitation of Mercantile with the support of
the controlling shareholder Caixa Geral de Depositos (`CGD`);
* a further improvement in the operating results;
* the finalisation of the recapitalisation process.
FINANCIAL OVERVIEW
The attributable loss for the reporting period was R27,8 million which compares
with a loss of R31,3 million for the same period of the previous year, an
improvement of 11%. This improvement is primarily attributable to a reduction in
operating costs, offset by a net increase in credit risk impairments.
Total assets increased by approximately R134 million over the period. Higher
levels of liquidity were evident, mainly as a result of the reduction in the
lending book, the inflow of the subordinated loan received from CGD and the
growth in the deposit book.
ACCOUNTING POLICIES
The results for the six months ended 30 June 2004 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 applied in the annual financial statements for the year ended 31
December 2003. The results have not been reviewed or reported on by the Group`s
auditors.
The results for the six months ended 30 June 2003 have been restated in terms of
the adoption of AC 133.
RECAPITALISATION OF THE GROUP
It was announced on 27 May 2004 that the recapitalisation of the Group would
take place through a rights offer in the aggregate amount of R555 million, at an
issue price of 18 cents per share. The results of the rights offer have been
published in a separate statement.
The recapitalisation will result in the Group`s capital adequacy ratio reaching
a level in excess of 30%, compared with the statutory minimum of 10%.
COMMITMENT BY CGD
After assuming control of the Group in March 2002 through the injection of R120
million of new capital, CGD gave an undertaking to the South African Reserve
Bank and the Directors of the Group that it would safeguard the financial
soundness and stability of the Group. In performance of that undertaking, CGD
has provided the following support to the Group:
* issued guarantees totalling R332 million in 2002/2003, which lapsed on
completion of the rights offer. The release of these guarantees will result in
the impairment of loans and write-offs totalling R172,7 million and a
simultaneous increase in the general risk reserve of R27,4 million;
* a subordinated loan facility of R60 million as an interim measure to maintain
the required capital adequacy levels of the Group, until the completion of the
rights offer;
* full underwriting of the rights offer which has just been completed.
BOARD OF DIRECTORS
Since the date of the publication of the annual report for the year ended 31
December 2003, M J M Figueira was appointed an executive director. He has
extensive banking experience, acquired whilst serving as a senior manager of CGD
and, since 1994, as executive director, both in Portugal and internationally.
The Board is now constituted as follows:
J A S de Andrade Campos* Chairman
D J Brown Chief Executive Officer
G P de Kock
M J M Figueira* Executive
L Hyne
A M Osman**
R M L de F N Ribas*
*Portuguese
**Mozambican
OUTLOOK
With the recapitalisation of Mercantile now concluded, it remains the Group`s
aim to start generating profits in 2005 by:
* continuing to focus on cost containment aided by the realisation of benefits
from the rehabilitation process that has been under way over the past two
years;
* increasing interest income through the development of the retail business in
the area of enterprise banking by growing market share in the small to medium-
sized business segments;
* increasing fee income through transaction volume growth with existing and
prospective joint venture partners in the area of card and payment products.
By order of the Board
J A S de Andrade Campos D J Brown
Chairman Chief Executive Officer
Sandton
6 September 2004
Directors: J A S de A Campos* (Chairman), D J Brown (Chief Executive Officer), G
P de Kock, M J M Figueira* (Executive), L Hyne, A M Osman**, R M L de F N Ribas*
*Portuguese **Mozambican
Group Secretary: F Vicente Coelho*
Registered office: Mercantile Lisbon House, 142 West Street, Sandown, 2196
Share code: MTL. ISIN: ZAE000056537
Transfer Secretaries: Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001.
Corporate advisor and sponsor:
Bridge Capital Services (Pty) Ltd,
1st Floor, Building 22A
The Woodlands, Woodlands Drive
Woodmead, Sandton, 2196.
www.mercantile.co.za
