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CPI CPIP
CPI
Capitec - Unaudited financial results for the six months ended 31 August 2006
and dividend declaration
Capitec Bank Holdings Limited
Registration number: 1999/025903/06
Registered bank controlling company
JSE ordinary share code: CPI & ISIN: ZAE000035861
JSE preference share code: CPIP & ISIN: ZAE000083838
UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2006
* Headline earnings per share up 78%
* Attributable earnings up 79%
* Return on equity 26%
* Total equity R747 million
* Interim dividend 20 cents
August August Change February
2006 2005 % 2006
OPERATIONS
* Number of branches 267 250 7 253
* Number of employees 2 000 1 771 13 1 901
* Number of active clients `000 852 565 51 706
* Number of ATMs 244 208 17 210
SALES
Loans
* Value of loans advanced Rm 1 586 1 319 20 2 863
* Number of loans advanced `000 1 486 1 245 19 2 650
* Average loan amount R 1 067 1 060 1 1 080
* Net impairment % of repayments % 4,07 1,56 161 2,85
Deposits
* Number of savings accounts `000 468 244 92 375
* Value of savings deposits Rm 446 175 155 314
PROFITABILITY
* Attributable earnings Rm 74 41 79 115
* Headline earnings Rm 74 41 82 116
* Cost to income ratio - banking
activities % 60 73 (18) 66
* Return on equity (annualised) % 26 17 53 23
ASSETS
* Total assets Rm 1 683 937 80 1 251
* Capital expenditure Rm 35 33 6 72
EQUITY
* Capital adequacy ratio % 77 61 26 56
* Net asset value per share Cents 824 683 21 784
* Share price Cents 3 050 1 750 74 3 105
* Market capitalisation Rm 2 194 1 259 74 2 233
* Number of share options
outstanding `000 6 320 7 465 (15) 5 841
* Average share option strike
price Cents 1 134 516 120 648
* Average share option time to
maturity Months 30 27 11 28
* Deficit on share options
settled Rm 19 8 138 31
EARNINGS PER SHARE
* Basic attributable Cents 102,3 58,4 75 163,4
* Basic headline Cents 103,6 58,1 78 165,0
* Diluted attributable Cents 96,9 54,5 78 154,7
* Diluted headline Cents 98,2 54,3 81 156,2
Number of shares
* Issued net of treasury shares `000 71 928 70 231 2 71 928
* Weighted average `000 71 928 70 501 2 70 555
* Diluted `000 75 897 75 536 - 74 534
Proposed dividend per share Cents 20 - - 45
ACCESSIBLE BANKING
We have increased our network to 267 branches during the six months to
August. Good retail space remains scarce and we have learnt the importance of
locating our branches conveniently for our clients. This slightly delayed our
roll-out plan, but we expect to have more than 290 branches by the end of
February 2007.
We introduced 60 mobile banks recently, which enabled us to take banking to
our clients" workplace. By combining a laptop, 3G communication, card reader,
fingerprint scanner and web camera we can do all non-cash transactions such
as opening accounts, issuing and replacing debit cards, dealing with account
enquiries, printing bank statements and activating loans, at a place and time
that suit our clients and their employers. This, combined with our
inexpensive salary transfer facility, will drive client growth through
employer sales.
CLIENT GROWTH
We currently have 852 000 active clients and are increasing our client base
by approximately 25 000 clients per month.
NEW PRODUCTS
During October we shall introduce 18 and 24 month loan products. We believe
in providing our clients with a one stop financial solution for saving,
transacting and borrowing. This is important to ensure a successful long term
relationship. In addition this will help utilise our capital more
efficiently.
ARREARS AND PROVISIONING
August August February
2006 2005 2006
Gross bad debts
One month loans % 1,8 1,2 1,2
Three month loans % 3,1 3,1 2,6
Six month loans % 8,2 - 17,3
Twelve month loans % 14,5 16,8 24,0
Weighted average % 4,64 2,17 3,47
Recoveries % (0,58) (0,61) (0,62)
Net bad debts % 4,07 1,56 2,85
During the 2006 financial year the short term products benefited from a
combination of lower arrears rates and the release of the provisions from
prior years. Although the recovery of the short term loans for the first half
of 2007 deteriorated slightly, we are satisfied with the performance, which
is still well within our risk appetite.
The term of our loan book continued to increase due to the introduction of 6
and 12 month loans during the latter half of the 2006 financial year. Our
provisioning policy is conservative and although we have adequate expertise
we do not have extensive historical statistics since rolling out these
products. This contributed to the higher overall impairment expense.
PERPETUAL PREFERENCE SHARE ISSUE
We are pleased with the successful perpetual preference share issue at 75% of
prime at the end of August, which raised R155 million (net of expenses). Our
capital base of R747 million will be used for possible international
expansion, expansion of infrastructure and branches locally, and to increase
Capitec"s capacity for book growth.
NATIONAL CREDIT ACT
We support the aims of the National Credit Act. It is important that credit
is provided to the market in a simplified, unambiguous way. The regulations
which the new Act provides for, however, do not necessarily support this and
create a significant administrative burden. This has forced us to divert the
attention of systems development staff to deal with these change
requirements, at the cost of innovation on product and service delivery.
PRICING AND PROSPECTS
In line with our ongoing policy of driving prices down, we will adjust prices
on our loan products during the second half of the financial year. A revised
pricing format will be simultaneously applied, which is in accordance with
the new Credit Act. Longer term products, which will be offered to clients
based on scorecard and affordability tests, will further enable us to drive
prices down.
Shareholders are advised that even though prospects for the remainder of the
financial year are sound, a similar level of earnings growth will not
necessarily be maintained for the full financial year.
INTERIM DIVIDEND
In view of the continued growth of the bank the directors approved an interim
dividend of 20 cents per share payable on Monday, 4 December 2006.
The following dates apply:
Last date to trade cum dividend Friday, 24 November 2006
Trading ex dividend commences Monday, 27 November 2006
Record date Friday, 1 December 2006
Date of payment Monday, 4 December 2006
Share certificates may not be dematerialised or rematerialised between
Monday, 27 November and Friday, 1 December 2006, both days inclusive.
On behalf of the board
Jannie Mouton Riaan Stassen
Chairman Chief executive officer
Stellenbosch
27 September 2006
GROUP BALANCE SHEET
Unaudited Unaudited Audited
August August February
2006 2005 2006
R"000 R"000 R"000
ASSETS
Current assets
Cash and cash equivalents 987 614 367 182 582 293
Investments at fair value 6 595 31 279 7 149
Loans and advances 465 003 322 076 443 504
Inventory 7 003 8 056 11 800
Other receivables 10 518 10 057 7 077
Non-current assets
Loans and advances 10 463 10 549 11 157
Property and equipment 142 853 119 745 133 956
Intangible assets - banking system 40 181 59 646 47 688
Deferred income tax assets 13 116 8 041 6 648
Total assets 1 683 346 936 631 1 251 272
LIABILITIES
Current liabilities
Deposits at amortised cost 483 252 207 486 337 067
Deposits held at fair value 2 239 2 221 2 149
Trade and other payables 78 901 45 588 63 696
Current income tax liabilities 55 412 48 22 493
Provisions 300 1 000 300
Non-current liabilities
Deposits at amortised cost 256 772 140 052 200 827
Deposits held at fair value 52 224 55 184 54 953
Trade and other payables 7 088 5 030 5 971
Total liabilities 936 188 456 609 687 456
EQUITY
Ordinary share capital and premium 347 865 323 160 347 865
Reserves 1 710 700 710
Retained earnings 242 977 156 162 215 241
Ordinary shareholders" equity 592 552 480 022 563 816
Perpetual preference share capital
and premium 154 606 - -
Total equity 747 158 480 022 563 816
Total equity and liabilities 1 683 346 936 631 1 251 272
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six Six Year
months months ended
ended ended
August August February
2006 2005 2006
R"000 R"000 R"000
Interest on loans advanced 484 068 318 861 767 624
Interest on cash and cash equivalents 17 032 8 073 16 278
Interest expense (32 219) (16 445) (40 079)
Net interest income 468 881 310 489 743 823
Net fee income 14 991 6 919 14 942
Fee income 39 831 16 467 44 314
Fee expense (24 840) (9 548) (29 372)
Net impairment charge on loans and
advances (81 946) (23 740) (95 625)
Dividend income 187 1 047 1 015
Net movement in financial instruments
held at fair value 2 220 352 1 431
Non-banking gross profit 4 016 3 223 6 563
Non-banking sales 65 751 64 238 131 368
Non-banking cost of sales (61 735) (61 015) (124 805)
Other income 11 258 4
Income from operations 408 360 298 548 672 153
Banking operating expenses (296 191) (233 576) (500 075)
Non-banking operating expenses (3 228) (2 958) (5 965)
Operating profit before tax 108 941 62 014 166 113
Tax (35 372) (20 841) (50 832)
Profit for the period 73 569 41 173 115 281
RECONCILIATION OF ATTRIBUTABLE EARNINGS TO HEADLINE EARNINGS
Unaudited Unaudited Audited
Six Six Year
months months ended
ended ended
August August February
2006 2005 2006
R"000 R"000 R"000
Profit for the period 73 569 41 173 115 281
Items excluded from headline earnings
after tax:
- Loss (profit) on disposal of fixed
assets 927 (182) 1 111
Headline earnings 74 496 40 991 116 392
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six Six Year
months months ended
ended ended
August August February
2006 2005 2006
R"000 R"000 R"000
Cash flow from operating activities 302 778 67 473 294 042
Cash flow from operations 149 197 95 225 291 614
Increase in loans and advances (26 038) (129 593) (308 745)
Increase in other liabilities,
provisions and deposits 215 813 125 717 335 051
Tax paid (3 826) (2 558) (2 560)
Dividend paid (32 368) (21 318) (21 318)
Cash flow from investing activities (34 503) (48 152) (61 523)
Net investment in equipment and (34 750) (33 153) (71 502)
software
Decrease (increase) in other investing
activities 247 (14 999) 9 979
Cash flow from financing activities 137 046 (15 012) (13 099)
Perpetual preference share issue
net of issuing expenses 154 606 - -
Shares acquired and options settled (17 560) (15 012) (13 099)
Increase in cash and cash equivalents 405 321 4 309 219 420
Cash and cash equivalents at beginning
of period 582 293 362 873 362 873
Cash and cash equivalents at end of
period 987 614 367 182 582 293
GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
Six Six Year
months months ended
ended ended
August August February
2006 2005 2006
R"000 R"000 R"000
Equity at beginning of period 563 816 473 418 473 418
Net profit for the period 73 569 41 173 115 281
Perpetual preference share issue
net of issuing expenses 154 606 - -
Loss on settlement of share options
net
of share based staff costs (17 560) (7 850) (29 020)
Tax on settlement of share options 5 095 1 780 7 931
Shares (purchased) utilised for - (7 181) 17 524
options
Dividend paid (32 368) (21 318) (21 318)
Equity at end of period 747 158 480 022 563 816
SEGMENTAL RESULTS
Wholesale
Banking Distribution Total
R"000 R"000 R"000
Unaudited
Six months ended August 2006
Revenues 551 532 65 751 617 283
Headline earnings 74 291 205 74 496
Assets 1 670 995 12 351 1 683 346
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
Audited
Year ended February 2006
Revenues 829 235 131 368 960 603
Headline earnings 116 860 (468) 116 392
Assets 1 237 114 14 158 1 251 272
COMMITMENTS
Unaudited Unaudited Audited
August August February
2006 2005 2006
R"000 R"000 R"000
Guarantees
- Non-banking institutions 8 139 2 740 10 206
Unutilised loan facilities to
clients 80 136 45 239 79 700
Capital commitments approved by the
board
- Contracted for 4 493 2 999 3 927
- Not contracted for 80 253 48 497 79 985
Operating lease commitments
< 1 year 46 851 41 544 47 378
1 to 5 years 116 182 86 177 118 850
> 5 years 1 681 4 894 4 203
NOTE
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. The accounting policies applied in the
preparation of the interim consolidated financial statements are consistent
with the policies applied in the previous year.
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)
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
#Resigned effective 1 September 2006
Date: 27/09/2006 12:00:17 PM Produced by the JSE SENS Department
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