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Mercantile - Audited Results For The Year Ended 31 December 2004
MERCANTILE LISBON BANK HOLDINGS LIMITED
A Subsidiary Company of Caixa Geral de Depositos S.A.
(Registration Number 1989/000164/06)
Share code: MTL.
ISIN: ZAE000056537
(`the Company` or `the Group`)
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004
Summarised Group Income Statement
2004 2003
R`000 R`000
Audited Audited
Interest income 192 138 226 970
Interest expense (107 036) (161 152)
Net interest income before credit losses 85 102 65 818
Net (charge for)/recovery of credit losses (4 367) 19 840
Net interest income after credit losses 80 735 85 658
Net profit on disposal and revaluation
of investments 1 891 8
Non-interest income 96 138 91 025
Net interest and non-interest income 178 764 176 691
Operating expenditure (219 834) (237 521)
Loss before associated companies (41 070) (60 830)
Share of income from associated companies 768 1 942
Loss before taxation and exceptional item (40 302) (58 888)
Impairment and provisions raised and
write-off on release of CGD guarantees (172 729) -
Loss before taxation (213 031) (58 888)
Taxation (50) -
Attributable loss after taxation (213 081) (58 888)
Reconciliation between attributable loss
after taxation and headline loss:
Attributable loss after taxation (213 081) (58 888)
Adjustment for:
Realisation of available-for-sale reserve on
disposal of investments (60) 2 125
(Profit)/Impairments and loss on disposal
of property and equipment (680) 292
Headline loss (213 821) (56 471)
Loss per ordinary share (cents) (11,6) (6,9)
Headline loss per ordinary share (cents) (11,7) (6,6)
Diluted attributable loss per ordinary
share (cents) (11,6) (6,9)
Diluted headline loss per ordinary
share (cents) (11,7) (6,6)
Dividend per share (cents) - -
Summarised Group Balance Sheet
2004 2003
R`000 R`000
Audited Audited
ASSETS
Intangible assets 6 801 12 711
Property and equipment 85 028 84 651
Investment properties 770 800
Taxation 3 616 3 567
Other accounts receivable 33 148 82 430
Interest in associated companies 3 236 2 951
Other investments 3 556 3 965
Loans and advances 975 611 1 178 788
Derivative financial instruments 90 162 7 610
Negotiable securities 370 279 273 090
Cash and cash equivalents 1 148 861 574 930
Total assets 2 721 068 2 225 493
EQUITY AND LIABILITIES
Shareholders` equity 500 939 163 899
Share capital and share premium 1 208 642 866 865
Capital redemption reserve fund 3 788 3 788
General reserve 7 478 7 478
Property revaluation reserve 31 461 28 376
Available-for-sale reserve (955) (742)
General risk reserve 31 668 31 212
Accumulated loss (781 143) (773 078)
Liabilities 2 220 129 2 061 594
Long-term liabilities - 5 287
Deposits 2 112 569 1 946 752
Derivative financial instruments 35 210 32 115
Provisions 32 768 36 066
Other accounts payable 39 538 40 437
Taxation 44 937
Total equity and liabilities 2 721 068 2 225 493
Group Contingent Liabilities and Commitments
2004 2003
R`000 R`000
Audited Audited
Guarantees and letters of credit 138 470 119 126
Irrevocable unutilised facilities 232 597 215 311
Conditional buy-back obligations 42 685 116 050
Operating lease commitments: 10 619 13 253
Due within one year 5 191 5 643
Due between one and five years 5 428 7 610
Summarised Group Cash Flow Statement
2004 2003
R`000 R`000
Audited Audited
Net cash outflow from operating
activities (9 134) (42 561)
Net cash inflow from operating funds 46 964 168 153
Net cash outflow from investing activities (6 774) (1 583)
Net cash inflow/(outflow) from financing
activities 542 875 (3 857)
Net cash inflow for the year 573 931 120 152
Cash and cash equivalents at beginning
of year 574 930 454 778
Cash and cash equivalents at end
of year 1 148 861 574 930
Summarised Group Statement of Changes in Equity
2004 2003
R`000 R`000
Audited Audited
Balance at beginning of year 163 899 183 500
Transitional adjustments on adoption of
AC133 - 28 246
Movements in reserves 3 328 13 442
Net transfer (to)/from available-for-sale
reserve (213) 3 662
Net transfer to general risk reserve 456 2 401
Revaluation of property 3 085 7 379
Movements in accumulated loss (8 065) (61 289)
Loss after taxation (213 081) (58 888)
Net transfer to general risk reserve (456) (2 401)
Transfer on subdivision of shares 205 340 -
Accumulated profit on consolidation
of share incentive trust 132 -
Movements in share capital and premium 341 777 -
Issue of shares 555 000 -
Share issue expenses (6 382) -
Transfer to distributable reserve on
subdivision of shares (205 340) -
Treasury shares on consolidation of
share incentive trust (1 501) -
Balance at end of year 500 939 163 899
Summarised Group Segmental Information
2004 2003
R`000 R`000
Audited Audited
Segment revenue:
Retail banking 116 342 93 896
Treasury 23 005 8 843
Alliance banking, MBL credit card
and structured loans 41 790 33 829
Other services (1) 2 762 42 065
183 899 178 633
Contribution/(loss) after tax:
Retail banking (2) 61 941 38 705
Treasury (2) (29 439) (3 441)
Alliance banking, MBL credit card
and structured loans (2) 23 529 7 409
Other services (1) (269 112) (101 561)
(213 081) (58 888)
Financial Statistics
2004 2003
Number of ordinary shares in issue:
- end of year/period (`000) 3 938 919 855 585
- weighted average (`000) 1 832 817 855 585
Net asset value per ordinary share (cents) 12,7 19,2
Capital adequacy ratio (%)
- Consolidated MLBH Group 37,2 9,8
- Mercantile Bank Limited 39,2 11,8
Introduction
The year under review has seen:
* The recapitalisation of the Group through the successful completion of the
rights offer of R555 million.
* Upgrade in credit rating.
* Headline loss, excluding the impact of the impairments and write-offs due to
the release of the CGD guarantees, reducing to 2,2 cents per share versus a
prior year comparable loss of 6,6 cents per share.
Recapitalisation
We are pleased to report that the recapitalisation of the Group was
successfully completed in September 2004, by way of an injection of primary
capital in an amount of R555 million through a rights offer priced at 18 cents
per share and fully under written by Caixa Geral de Depositos (`CGD`). This
resulted in CGD`s holding in the Company increasing from 64,8% to 91,75%.
Financial overview
As reported in our rights offer circular, dated 16 August 2004, and our interim
results announcement, dated 6 September 2004, the recapitalisation of the Group
through the rights offer of R555 million underwritten by CGD was conditional
upon the release of the CGD guarantees totalling R332 million. The release of
these guarantees resulted 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. Accordingly, the 2004 reported results are not directly
comparable to the prioryear.
On a directly comparable basis, by excluding the exceptional impairments raised
and write-offs realised through the release of the CGD guarantees, the Group`s
performance reveals a solid improvement:
2004 2003
R`000 R`000
Headline loss (213 821) (56 471)
Less: Impact of release of guarantees 172 729 -
Adjusted headline loss (41 092) (56 471)
Headline loss per ordinary share (cents) (11,7) (6,6)
Adjusted headline loss per ordinary share (cents) (2,2) (6,6)
Specific areas of improvement were:
* a reduction in the cost base; and
* funds benefit derived through the recapitalisation and better employment of
assets.
The benefits achieved in these areas have been partially offset, by a reduced
level of bad debt recoveries on legacy debt, net of impairments raised - whilst
cash recovered on non-performing loans increased, a more conservative approach
was applied to AC133 impairment estimates on fully provisioned legacy debt.
Accounting policies and audited financial statements
The results comply with South African Statements of Generally Accepted
Accounting Practice applicable to Interim Financial Reporting and the
accounting policies are consistent with those applied in the annual financial
statements for the year ended 31 December 2003.
The results for the year ended 31 December 2004 have been audited by Deloitte
and Touche and their unqualified opinion is available for inspection
at the Company`s registered office.
Rating
The Group received an upgrade in credit ratings by CA Ratings in December 2004,
as follows:
Short term zaA1 (previously zaA3)
Long term zaA (previously zaBBB -)
Directorate
Khanya Motshabi and Thebe Ikalafeng were appointed as independent non-executive
directors in November 2004 to improve the composition of the Board in terms of
diversity and skills.
Going concern
The financial statements have been prepared on the going concern basis.
Outlook
The positive outlook for the domestic economy is expected to provide good
opportunities to develop business. With the progress made to date by the Bank
and the positive developments that started to emerge on the business front
during the latter part of 2004, we expect to return to profitability during
2005.
J A S de Andrade Campos D J Brown
Chairman Chief Executive Officer
Sandton
18 February 2005
Directors: Dr 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 **,
A T Ikalafeng, K B Motshabi
Group Secretary: F Vicente Coelho * (* Portuguese ** Mozambican)
Registered office: Mercantile Lisbon House
142 West Street
Sandown, 2196
Transfer secretaries: Computershare Investor Services 2004 (Pty) Ltd
8th 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
Corporate advisor and sponsor to Mercantile
BRIDGE CAPITAL
www .mercantile.co.za
Date: 18/02/2005 03:29:51 PM
Produced by the JSE SENS Department
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