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Capitec - Unaudited financial results for the six months ended 31 August 2005
Capitec Bank Holdings Limited
Registration number: 1999/025903/06
Registered bank controlling company
JSE share code: CPI ISIN code: ZAE000035861
UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2005
* Attributable earnings up 40%
* Headline earnings per share up 34%
* Number of savings accounts - 244 000
* Total bank branches - 250
August August Change February
2005 2004 % 2005
OPERATIONS
* Number of branches 250 256 (2) 251
* Number of employees 1 771 1 586 12 1 708
* Number of ATMs 208 132 58 180
SALES
Loans
* Value of loans advanced Rm 1 319 1 102 20 2 259
* Number of loans advanced `000 1 245 1 277 (3) 2 486
* Average loan amount R 1 060 864 23 909
* Net impairment % of repayments % 1,56 1,28 22 1,45
Deposits
* Number of savings accounts `000 244 61 300 143
* Value of savings deposits Rm 175 21 733 74
PROFITABILITY
* Attributable earnings Rm 41,2 29,5 40 67
* Headline earnings Rm 41,0 29,6 39 70
* Cost to income ratio - banking
activities % 73 74 (1) 73
* Return on equity (annualised) % 17 13 31 16
ASSETS
* Equipment to total assets % 19 28 (32) 22
* Capital expenditure Rm 33 42 (21) 84
EQUITY
* Capital adequacy ratio % 61 83 (27) 84
* Net asset value per share Cents 683 630 8 672
* Share price Cents 1 750 740 136 1 490
* Market capitalisation Rm 1 259 507 148 1 072
* Number of share options
outstanding `000 7 465 7 740 (4) 6 753
* Shares held available for
settlement of options `000 1 697 354 379 1 486
* Average share option strike
price Cents 516 251 106 271
* Average share option time to
maturity Months 27 28 (4) 25
* Deficit share options settled Rm 8 9 (11) 16
EARNINGS PER SHARE
* Basic attributable Cents 58,4 43,1 36 97,8
* Basic headline Cents 58,1 43,3 34 100,9
* Diluted attributable Cents 54,5 40,4 35 91,6
* Diluted headline Cents 54,3 40,6 34 94,5
Number of shares
* Issued net of treasury shares `000 70 231 68 483 3 70 442
* Weighted average `000 70 501 68 376 3 68 860
* Diluted `000 75 536 72 946 4 73 536
Proposed dividend per share Cents - - 30,0
Service Platform
Over the past six months Capitec Bank has concluded its branch conversion and
relocation programme and now has a distribution platform of 250 bank branches
country wide.
Whilst this number of branches is equivalent to that of larger retailers,
further expansion of 50 new branches is planned between September 2005 and May
2006 to increase accessibility for clients in both urban and rural areas. ATM
numbers have grown from 132 to 208 in the period under review.
Our paperless, technology driven service model, has now been installed in all
branches and has proved successful in both efficiently serving large numbers of
clients and reducing costs.
New Products
During July and August three new products were introduced to the market: a pre-
approved loan, which clients can access at a Capitec Bank ATM, a 6-month loan
product and a 12-month loan product. These products will have the effect of
increasing revenue and decreasing month-end activity levels in branches. They
will further stimulate client acquisition, extend our balance sheet and result
in higher operational and financial gearing for the rest of the year.
Client Growth
The market acceptance of the banking offer by Capitec Bank, in the form of the
Global one Banking Facility, is reflected by the growth in the number of savings
clients experienced over the past six months. The number of Savings Clients has
risen by 100 000 to over 240 000 over this period.
Free Debit Card Purchases
Over the past six months Capitec Bank continued to reduce banking costs to the
market. We are the first bank to introduce zero transaction fees for all debit
card purchases at retailers, which encourages cashless transacting.
Access to cash for clients was also improved via agreements with Checkers,
Shoprite and Pick `n Pay for cash withdrawals at their tellers at a fixed rate
of 55 cents per transaction.
Funding
In addition to the cash on hand, we have secured an additional 3-year facility
of R60 million from Futuregrowth. This will enable us to grow our debtors book
over the shorter term.
Prospects
We forecast an increase in headline earnings per share of 30% to 50% for the
year to 28 February 2006. This forecast has not been reviewed or reported on by
our auditors.
On behalf of the board
Jannie Mouton Riaan Stassen
Chairman Chief executive officer
Stellenbosch 28 September 2005
GROUP BALANCE SHEET
Unaudited Unaudited Audited
August August February
2005 2004 2005
R`000 R`000 R`000
Assets
Current assets
Cash and cash equivalents 367 182 193 118 362 873
Investments at fair value 31 279 - 16 842
Loans and advances 322 076 184 209 197 483
Inventory 8056 7 768 8 635
Other receivables 10 057 4 733 8 020
Non-current assets
Loans and advances 10 549 10 000 10 414
Equipment 119 745 105 763 114 380
Intangible assets - banking system 59 646 61 673 62 033
Deferred tax 8 041 36 202 24 534
Total assets 936 631 603 466 805 214
Liabilities
Current liabilities
Deposits at amortised cost 207 486 30 871 84 001
Deposits held at fair value 2 221 2 293 2 185
Trade and other payables (non-interest
bearing) 45 588 37 740 45 700
Current tax liabilities 48 29 38
Provisions (non-interest bearing) 1 000 850 1 000
Non-current liabilities
Lease escalation accrual 5 030 3 701 4 363
Deposits at amortised cost 140 052 44 219 138 411
Deposits held at fair value 55 184 52 135 56 098
Total liabilities 456 609 171 838 331 796
Shareholders` equity
Share capital and premium 323 160 314 003 330 341
Reserves 700 728 700
Retained earnings 156 162 116 897 142 377
Total shareholders` funds 480 022 431 628 473 418
Total shareholders` funds and liabilities 936 631 603 466 805 214
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six Six Year
Months months ended
ended ended
August August February
2005 2004 2005
R`000 R`000 R`000
Interest on loans advanced 318 861 244 851 533 905
Interest on cash and cash equivalents 8 073 4 404 10 077
Interest expense (16 445) (6 157) (16 890)
Net interest income 310 489 243 098 527 092
Net impairment charge on loans and
advances (23 740) (15 970) (39 249)
Income from lending activities 286 749 227 128 487 843
Net fee income 6 919 951 4 423
Fee income 16 467 2 964 11 338
Fee expense (9 548) (2 013) (6 915)
Dividend income 1 047 - 75
Net movement in financial instruments
held at fair value 352 (2 135) (6 001)
Other income 258 - 6
Non-banking gross profit 3 223 2 158 4 464
Non-banking sales 64 238 52 557 118 039
Non-banking cost of sales (61 015) (50 399) (113 575)
Income from operations 298 548 228 102 490 810
Banking operating expenses (233 576) (180 714) (386 589)
Non-banking expenses (2 958) (2 595) (5 172)
Operating profit 62 014 44 793 99 049
Tax (20 841) (15 290) (31 670)
Net profit attributable to ordinary
shareholders 41 173 29 503 67 379
RECONCILIATION OF ATTRIBUTABLE EARNINGS TO HEADLINE EARNINGS
Unaudited Unaudited Audited
Six Six Year
months months Ended
ended ended
August August February
2005 2004 2005
R`000 R`000 R`000
Net profit attributable to ordinary
shareholders 41 173 29 503 67 379
Exceptional items after tax:
- (Profit) / loss on disposal of fixed
assets (182) 137 2 132
Headline earnings 40 991 29 640 69 511
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six Six Year
months Months Ended
ended Ended
August August February
2005 2004 2005
R`000 R`000 R`000
Cash flow from operating activities 67 473 84 695 315 354
Cash flow from operations 95 224 74 787 165 910
Increase in loans and advances (129 593) (61 495) (74 934)
Increase in other liabilities,
provisions, and deposits 125 717 86 792 239 747
Tax paid (2 558) (1 656) (1 639)
Dividend paid (21 317) (13 733) (13 730)
Cash flow from investment activities (48 152) (41 591) (100 666)
Net investment in equipment (33 153) (41 591) (83 921)
(Increase) / decrease in other investing
activities (14 999) - (16 745)
Cash flow from financing activities (15 012) (9 789) (11 618)
Shares issued - - 21 450
Shares acquired and options settled (15 012) (9 789) (33 068)
Increase in cash and cash equivalents 4 309 33 315 203 070
Cash and cash equivalents at beginning
of period 362 873 159 803 159 803
Cash and cash equivalents at end of
period 367 182 193 118 362 873
GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
Six Six Year
months months ended
ended ended
August August February
2005 2004 2005
R`000 R`000 R`000
Ordinary shareholders` funds at
beginning of period 473 418 428 171 428 171
Change in accounting policy (note 3) - (2 507) (2 507)
Restated balance at beginning of period 473 418 425 664 425 664
Hedges - fair value (losses) / gains net
of tax - (17) (45)
Net profit for the period 41 173 29 503 67 379
Shares issued - - 21 450
Loss on settlement of share options net
of share based staff costs (7 851) (9 377) (14 598)
Tax on settlement of share options 1 937 - 4 700
Tax rate change (157)
Loss on odd-lot offer - (415) (415)
Share purchases (7 181) - (16 987)
Dividend paid (21 317) (13 730) (13 730)
Ordinary shareholders` funds at end of
period 480 022 431 628 473 418
SEGMENTAL RESULTS
Wholesale
Banking Distribution Total
R`000 R`000 R`000
Unaudited
Six months ended August 2005
Revenues 345 058 64 238 409 296
Headline earnings 41 223 (232) 40 991
Assets 932 016 4 615 936 631
Unaudited
Six months ended August 2004
Revenues 252 219 52 557 304 776
Headline earnings 30 677 (1 037) 29 640
Assets 592 506 10 940 603 446
Audited
Year ended February 2005
Revenues 555 401 118 039 673 440
Headline earnings 71 466 (1 955) 69 511
Assets 793 272 11 942 805 214
COMMITMENTS
Unaudited Unaudited Audited
August August February
2005 2004 2005
R`000 R`000 R`000
Guarantees
- Non-banking institutions 2 740 1 815 1 976
Capital commitments approved by the
board
- Contracted for 2 999 7 491 2 514
- Not contracted for 48 497 16 550 81 261
Operating lease commitments
< 1 year 41 544 28 214 41 174
1 to 5 years 86 177 26 626 69 344
> 5 years 4 894 - 6 104
NOTES
1. IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
The group implemented IFRS during the year under review, the effective date of
transition being 1 March 2004. In preparing these abridged interim financial
statements in accordance with IFRS 1 (First Time Adoption of IFRS), the group
has applied the mandatory exceptions and elected the exemption relating to
business combinations (IFRS 3). The group early-adopted the standard on share
based payments (IFRS 2) for the year ended 28 February 2005, resulting in no
additional IFRS 2 adjustments with the adoption of IFRS 1. The conversion to
IFRS did not result in any material adjustments to profit and loss or equity and
no additional disclosure as stated in IFRS 1 and IAS 34 on first time adoption
is required.
2. INTERIM FINANCIAL REPORTS
The abridged interim consolidated financial statements are prepared in
accordance with IAS 34 - Interim Financial Reporting and the accounting policies
applied conform to IFRS.
3. ACCOUNTING FOR OPERATING LEASES
The group changed from accounting for operating leases on the contractual basis
to the straight-line basis during the period as required in the SAICA Circular
7/2005 released in July. The impact on results for the period (mainly on
property rentals) and the restated prior periods were as follows:
Reduction Increase Reduction Increase
in net in in in lease
profit deferred retained escalation
after tax tax asset income accrual
R`000 R`000 R`000 R`000
Six months to August 2005 473 1 458 3 571 5 029
Six months to August 2004 83 1 110 2 590 3 701
Year to February 2005 547 1 309 3 054 4 363
Prior to February 2004 2 507 1 075 2 507 3 582
4. SPECIAL PURPOSE AUDIT REPORT
The August 2005 results and August 2004 comparative information has not been
subject to an audit review by the external auditors. The 28 February 2005
preliminary IFRS financial information has been audited. A copy of the auditors`
special purpose audit report is available for inspection at the registered
office of the company.
www.capitecbank.co.za
Company secretary and registered office
Christian George van Schalkwyk
BComm LLB, CA(SA)
14 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)
Sponsor
PSG Capital Limited
(Registration number: 2002/017362/06)
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
Date: 28/09/2005 02:01:53 PM
Produced by the JSE SENS Department
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