| Wed 30 Mar 2005, 14:15 | | FINANCIAL STATEMENTS - YEAR ENDED 28 FEBRUARY 2005 |
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Capitec - Extracts from the audited financial statements - year ended 28
February 2005
Capitec Bank Holdings Limited
Registration number: 1999/025903/06
Registered bank controlling company
JSE share code: CPI ISIN code: ZAE000035861
EXTRACTS FROM THE AUDITED FINANCIAL STATEMENTS - YEAR ENDED 28 FEBRUARY 2005
* Profit up 50%
* Headline earnings per share up 46%
* Dividend of 30 cents per share up 50%
* New savings accounts - 125 000
* Total branches - 251
February February Change February
2005 2004 % 2003
OPERATIONS
* Number of branches 251 265 (5) 266
* Number of employees 1 708 1 402 22 1 180
* Number of ATMs 180 75 140 58
SALES
Loans
* Value of loans advanced Rm 2 259 1 904 19 1 477
* Number of loans advanced `000 2 486 2 617 (5) 2 454
* Average loan amount R 909 728 25 602
* Interest from loans advanced Rm 534 393 36 323
* Net loan impairment expense Rm 39 29 34 33
* Net impairment % of repayments % 1,45 1,43 1 2,58
Deposits
* Number of savings accounts `000 143 18 -
* Value of savings deposits Rm 74 4 -
* Net fee income Rm 4 - -
PROFITABILITY
* Attributable earnings Rm 68 45 50 30
* Headline earnings Rm 70 47 49 30
* Attributable earnings per
share Cents 99 68 46 46
* Headline earnings per share Cents 102 70 46 46
* Diluted attributable earnings
per share Cents 92 63 46 44
* Diluted headline earnings
per share Cents 95 65 46 45
* Total expenditure Rm 391 306 28 249
* Cost to income ratio - banking
activities % 73 76 (4) 75
* Return on equity % 16 12 33 8
* Proposed dividend per share Cents 30 20 50 19
ASSETS
* Total assets Rm 804 510 58 434
* Net loans and advances Rm 208 135 54 116
* Cash and cash equivalents Rm 363 160 127 104
* Equipment to total assets % 22 29 (24) 31
* Capital expenditure Rm 84 44 91 31
LIABILITIES
* Total liabilities Rm 327 82 299 49
* Deposits Rm 281 49 473 26
EQUITY
* Shareholders` funds Rm 477 428 11 386
* Capital adequacy ratio % 84 98 (14) 99
* Net asset value per share Cents 676 623 9 611
* Tangible net asset value per
share Cents 643 552 16 502
* Share price at 28 February Cents 1 490 580 157 260
* Market capitalisation
at 28 February Rm 1 072 399 169 164
* Number of share options
outstanding `000 6 753 7 860 (14) 8 079
* Average share option strike
price Cents 271 153 77 144
* Average share option time to
maturity Months 25 22 14 30
* Deficit on settlement of share
options Rm 16 2 -
* World leader in card technology
* 79 additional bank branches
* 306 more bank staff
THE CAPITEC REVOLUTION
Capitec is fomenting a revolution. A revolution is needed to make banking
accessible to all South Africans. Our revolution is based on modern, low-cost
technology, which enables us to offer our clients dramatically lower fees and a
unique service.
The building phase of a revolutionary model can be precarious. We invested what
we consider to be huge amounts of money, we reduced prices and we hoped to see a
significant increase in client numbers. So far it has worked, but we remain
vulnerable to even small discrepancies between our projections and actual
trends. We trust that our shareholders will take sufficient comfort from the
good years to fortify them for the odd lean year that may befall us.
A UNIQUE BANKING EXPERIENCE
No client is ever required to fill in a form. Whether they open an account or
simply make a deposit, it is all done on-line by the consultant. We capture a
photograph and the ID of every new client on the system and this photograph
appears on the screen along with the account details whenever we deal with that
client. Every transaction is validated by biometrically recording a fingerprint
of the Capitec Bank consultant involved. Our system is easy to operate, very
secure and fast. A loan transaction takes an average of only 191 seconds.
Our branches are open from at least eight in the morning to five o`clock in the
afternoon, but often from seven to seven.
We offer the lowest bank fees in South Africa. Our ATM fees are fixed at R1.80
per transaction. We pay 10% interest per annum on the daily balances of savings
accounts (up to R25 000 per account) and have kept our rates at that level
during a year when all rates were heading south. We charge the lowest rates for
short-term cash loans and have reduced them further for clients who bank with
us.
PROFIT AND PROFITABILITY
Our profit margin increased from 2.4% of turnover in 2004 to 3% in 2005.
Most of our profit for the year was derived from small personal loans. We
increased our turnover to R2,3 billion, an increase of 19% over 2004. For the
second consecutive year, our attributable earnings increased by 50%. Bear in
mind, however, that we came off a very low base of R30 million in 2003. Our
return on equity is 16,0%. This is better than last year`s 11,6%, but short of
the 20% which we think is a decent return on our shareholders` money.
WORLD LEADER IN CARD TECHNOLOGY
We have developed the world`s first off-line card system based on the EMV
standard, through the use of microchip technology. EMV is the global standard
that ensures that smartcards issued in one country can be accepted by chip
terminals worldwide. The chip card carries an electronic `cash wallet` with
readily accessible money which is ideal for small transactions and is very
secure. Transactions are off-line, with no time delay, cost-free and suited to
remote areas. Best of all, when the card is lost or stolen, the money in the
`wallet` can be refunded. This card will bring about another revolution: the
introduction of electronic banking to remote areas. MasterCard has been highly
supportive as a partner in this project.
A SERIOUS INVESTMENT IN DISTRIBUTION AND PEOPLE
Our network has increased by a further 79 bank branches. During the year we
obtained access to low-cost transacting and cash withdrawals at major retailers
in South Africa. Our clients can now do purchases and cash withdrawals for only
55 cents at retailers such as Checkers, Shoprite and Pick `n Pay.
We appointed 555 new employees, resulting in a net increase of 306 people. We
invest heavily in our people: on average our branch employees attended three
training courses during the year. We spent R18 million on training, an unheard
of 12% of our salary bill.
SHARES, OPTIONS AND DIRECTORS
As approved by shareholders, we issued 1,4 million new shares at market price to
Arch Equity, a listed black company, which now holds 15,6% of Capitec`s shares.
Desmond Lockey, Arch Equity`s chief executive officer, joined our board in
December 2004. We also issued 1.6 million new shares at market price to 19
members of management (including two executive directors) and two black non-
executive directors.
In terms of our empowerment share scheme, the bank subsidises the purchase price
of Capitec shares bought by our employees by 10%. At the moment 191 people
participate in the scheme. Everybody is encouraged to participate and some
invest amounts as small as R20 per month. It is our dream that all our employees
will eventually own Capitec shares.
WE`RE OPTIMISTIC, BUT WARY
The past year has been a friendly one for any business serving the public. The
minister of finance contributed to our optimism by eliminating a tax of 20c per
debit transaction - a benefit which we immediately passed on to our clients. The
minister also reduced company tax for the new year to 29%.
More important is the outlook for the economy. For many decades a South African
boom inevitably ended in a crunch triggered by a lack of foreign currency. This
was usually manifested in rising interest rates. Although our country remains
vulnerable to a lack of external confidence, this time we believe that growth
will continue and will benefit all South Africans. In a benign climate Capitec
Bank will prosper.
As we build our bank, costs will continue to rise at a rapid rate. Our
shareholders can be assured that we do understand the value of money. We remain
conservative in spending money (nobody flies business class) and cautious in
ensuring that the bank always has enough of it (we ended the year with R363
million in cash and throughout the year our cash covered all current deposits).
We plan for a continued rise in revenue - fee income on our banking products
will start contributing for the first time - and we are budgeting for a rise in
headline earnings per share of 20% to 40%. This forecast has not been reviewed
or reported on by our auditors. Our bank is going through a continuous
revolution and, as with all revolutions, real risks remain.
PROPOSED DIVIDEND
The directors propose a dividend of 30 cents per share, subject to approval at
the annual general meeting on 25 May 2005.
To comply with the requirements of STRATE, the following dates are applicable:
Last day to trade cum dividend Friday 3 June 2005
Trading ex dividend commences Monday 6 June 2005
Record date Friday 10 June 2005
Date of payment Monday 13 June 2005
Share certificates may not be dematerialised or rematerialised between Monday 6
June 2005 and Friday 10 June 2005, both days inclusive.
On behalf of the board
Jannie Mouton Riaan Stassen
Chairman Chief executive officer
Stellenbosch 30 March 2005
SUMMARISED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2005
GROUP BALANCE SHEET
February 2005 2004
R`000 R`000
Assets
Current assets
Cash and cash equivalents 362 873 159 803
Investments at fair value 16 842 -
Loans and advances 197 483 134 878
Inventory 8 635 9 141
Other receivables 8 020 11 193
Current tax assets - 62
Non-current assets
Loans and advances 10 414 -
Equipment 176 413 146 755
Deferred tax 23 225 48 670
Total assets 803 905 510 502
Liabilities
Current liabilities
Deposits at amortised cost 84 001 11 897
Deposits held at fair value 2 185 -
Trade and other payables (non-interest
bearing) 45 700 31 709
Current tax liabilities 38 -
Provisions (non-interest bearing) 1 000 1 746
Non-current liabilities
Deposits at amortised cost 138 411 36 979
Deposits held at fair value 56 098 -
Total liabilities 327 433 82 331
Shareholders` equity
Share capital and premium 330 341 325 878
Reserves 700 745
Retained earnings 145 431 101 548
Total shareholders` funds 476 472 428 171
Total shareholders` funds and liabilities 803 905 510 502
Net asset value per share (cents) 676 623
Tangible net asset value per share
(cents) 643 552
Share price (cents) 1 490 580
GROUP INCOME STATEMENT
Year ended February 2005 2004
R`000 R`000
Interest on loans advanced 533 905 393 177
Interest on cash and cash equivalents 10 077 5 555
Interest expense (16 890) (3 518)
Net interest income 527 092 395 214
Net impairment charge on loans and
advances (39 249) (28 791)
Income from lending activities 487 843 366 423
Net fee income 4 423 201
Fee income 11 338 1 353
Fee expense (6 915) (1 152)
Dividend income 75 -
Net movement in financial instruments held at
fair value (6 001) -
Other income 6 396
Non-banking gross profit 4 464 4 057
Non-banking sales 118 039 92 206
Non-banking cost of sales (113 575) (88 149)
Income from operations 490 810 371 077
Banking operating expenses (385 808) (301 402)
Non-banking expenses (5 172) (4 831)
Operating profit 99 830 64 844
Tax (31 904) (19 505)
Net profit attributable to ordinary
shareholders 67 926 45 339
EARNINGS PER SHARE
Year ended February 2005 2004
Earnings per share (cents)
- Basic attributable 98,6 67,6
- Basic headline 101,7 70,1
- Diluted attributable (note 3) 92,4 63,1
- Diluted headline (note 3) 95,3 65,4
Number of shares (`000)
- Issued net of treasury shares 70 442 68 743
- Weighted average 68 860 67 028
- Diluted (note 3) 73 536 71 868
Proposed dividend per share (cents) 30,0 20,0
RECONCILIATION OF ATTRIBUTABLE EARNINGS TO HEADLINE EARNINGS
Year ended February 2005 2004
R`000 R`000
Net profit attributable to ordinary
shareholders 67 926 45 339
Exceptional items after tax:
- Profit on disposal of foreign
subsidiaries - (357)
- Impairment of goodwill on acquisition - 1 206
- Loss on disposal of other assets
(note 2) 2 132 801
Headline earnings 70 058 46 989
GROUP CASH FLOW STATEMENT
Year ended February 2005 2004
R`000 R`000
Cash flow from operating activities 315 354 100 403
Cash flow from operations 166 691 85 725
Increase in loans and advances (74 934) (15 440)
Increase in other liabilities, provisions, 238 966 31 148
and deposits
Tax paid (1 639) (623)
Dividend paid (13 730) (407)
Cash flow from investment activities (100 666) (41 529)
Net investment in equipment (83 921) (44 141)
Disposal of subsidiaries - 357
(Increase) decrease in other investing
activities (16 745) 2 255
Cash flow from financing activities (11 618) (3 147)
Shares issued 21 450 -
Shares acquired and options settled (note 3) (33 068) (3 147)
Increase in cash and cash equivalents 203 070 55 727
Cash and cash equivalents at beginning
of year 159 803 104 076
Cash and cash equivalents at end of
year 362 873 159 803
GROUP STATEMENT OF CHANGES IN EQUITY
Year ended February 2005 2004
R`000 R`000
Ordinary shareholders` funds at
beginning of year 428 171 385 933
Change in accounting policy (note 4) - 347
Restated balance at beginning of year 428 171 386 280
Hedges - fair value (losses) / gains net
of tax (45) 45
Net profit for the year 67 926 45 339
Shares issued 21 450 -
Loss on settlement of share options net of
share based staff costs (note 3) (14 598) (2 549)
Tax on settlement of share options 4 700 -
Loss on odd-lot offer (415) -
Share purchases (16 987) (537)
Dividend paid (13 730) (407)
Ordinary shareholders` funds at end of
year 476 472 428 171
SEGMENTAL RESULTS
Wholesale
Banking Distribution Total
R`000 R`000 R`000
Year ended February 2005
Revenues 555 401 118 039 673 440
Headline earnings 72 013 (1 955) 70 058
Assets 791 963 11 942 803 905
Year ended February 2004
Revenues 400 481 92 206 492 687
Headline earnings 48 489 (1 500) 46 989
Assets 499 804 10 698 510 502
COMMITMENTS
February 2005 2004
R`000 R`000
Guarantees
- Non-banking institutions 1 976 1 949
Capital commitments approved by the
board
- Contracted for 2 514 16 446
- Not contracted for 81 261 39 991
Operating lease commitments
< 1 year 39 877 34 874
1 to 5 years 74 894 50 704
> 5 years 6 215 -
NOTES
1. Accounting policies
The accounting policies applied in the preparation of these summarised audited
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
IFRS 2 - Share Based Payments and AC 501 - Accounting for Secondary Tax on
Companies.
The unmodified audit reports from PricewaterhouseCoopers Inc. on the annual
financial statements for the year ended 28 February 2005 and the summarised
audited consolidated financial statements contained herein are available for
inspection at the registered offices of the company.
2. Exceptional items
Exceptional items relates to the scrapping and disposal of fixed assets.
3. Share options
The diluted number of shares and diluted earnings per share are calculated as if
all 6 753 192 outstanding options with an average strike price of 271 cents (7
859 925 options at 153 cents in February 2004) were exercised at the average
market price for the year. The share repurchases relates to the settlement of
options for the share incentive scheme, as well as 1,5 million treasury shares
with a cost of R17,5 million held by the trust.
4. Change in accounting policies
The implementation of IFRS 2 reduced earnings and headline earnings by R747 000
for the year (R43 000 for 2004). The implementation of AC 501 increased
earnings and headline earnings by R120 000 for the year and had no effect on the
results for 2004. The prior year balance sheet has been restated and the loss
on settlement of share options of R2,1 million has been transferred from share
premium to retained income. The change in opening retained income of R347 000
for 2004 relates to the implementation of AC 133 in the 2004 financial year.
Annual general meeting
The annual general meeting will be held at the auditorium, The Spier Conference
Centre, Spier, Lynedoch Road, Stellenbosch, on Wednesday, 25 May 2005 at 12:00
www.capitecbank.co.za
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 2004 (Pty)Limited
Registration number: 2004/003647/07
Ground Floor
70 Marshall Street
Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Directors
JF Mouton (Chairman), R Stassen (CEO)*, AP du Plessis (CFO)*, MS du P le Roux,
D Lockey, Prof MC Mehl, Ms NS Mjoli-Mncube, CA Otto, JG Solms, Dr J van Zyl Smit
*Executive
Sponsor
PSG Capital Limited
(Registration number: 2002/017362/06)
Date: 30/03/2005 02:00:45 PM
Produced by the JSE SENS Department
