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Case study #02 NAME: Ivy Moiloa OCCUPATION: Administration officer, Diepsloot “It was difficult for me to start again as a single parent of two. I was impressed with the African Bank offering and the service and advice from the bank’s helpful employees. I have now consolidated my debt and am working towards buying my own home next year – a dream come true for my family.”
Management discussion Overview Key features of this set of results include: Headline earnings increased to R680,1 million African Bank’s credit rating upgraded to zaA- (long-term) and zaA1 (short-term) A R1,0 billion ABL2-bond raised by African Bank Group capital adequacy increased from 38,1% to 44,5% Costs (excluding the Saambou PLB) lower than in 2002 Return of R863 million to shareholders through: – An ordinary dividend of 56 cents declared for the year, 86,7% higher than the 30 cents per share paid in 2002 – A special dividend of 100 cents per share declared – A R124 million share buy-back at 595 cents per share (ex dividend) in May 2003. Financial summary Headline earnings for the year ended 30 September 2003 increased to 140,4 cents per share (2002: 104,4 cents) or to R680,1 million (2002: R510,6 million). ABIL distinguishes between books on which lending takes place (“lending books”), and books that are merely collected and on which no new advances take place (“paydown books”). The performance for the group during the 12-month period for 2003 was mainly influenced by: a 14,5% increase in interest income on advances, as a result of the contribution from the Saambou PLB book, the lending books that grew by 12,5% on the back of a 15,4% growth in sales volumes and risk-adjusted yields that improved to 44,7% (2002: 38,4%). The latter was aided by a changing mix in the portfolio to higher margin retail debit order business and lower charges for bad debts as the effects of the credit bubble started to diminish; a 4,5% increase in the net financing costs, as interest-bearing liabilities and the cost thereof increased over the period. This was partially offset by the building up of significant cash balances. Average cash for the year was R1,2 billion (2002: R806 million); costs that have been contained, with year-on-year costs lower than in 2002 excluding the acquired Saambou PLB costs; and secondary tax on companies (STC) increasing to R33 million as a result of increased dividend payments. Looking ahead Sales on the lending books are expected to remain robust and should largely compensate for the decline in the paydown books over the coming year. Gross yields are expected to continue to increase as lower yielding paydown books are replaced with higher yielding debit order business. Bad debt charges to the income statement should remain steady at current levels and ABIL will continue to focus on reducing its operating costs. The outlook for both return on assets and return on equity is positive. Investors should note that the special dividend of 100 cents per share will attract R60,5 million of STC, which will likely be accounted for as a tax charge in the 2004 year. This will reduce potential earnings per share by 12,5 cents for the six months to 31 March 2004. The challenges and focus areas for the coming year will be: continued refining of credit underwriting with specific emphasis on the further development of behavioural scorecards to better differentiate the pricing to our clients; enhanced collection processes and progress on the rehabilitation of clients in financial distress; further cost reductions in both African Bank Retail and Specialised Lending; the harmonising of governance structures across the group; further progress in the employment equity objectives at executive and senior management levels; exploring new products and markets under the leadership of a dedicated innovation unit; and the integration of sustainability objectives and targets across the group. 19 African Bank Investments Limited
Page 1 and 2: African Bank Investments Limited AN
Page 3 and 4: 2,5 2,0 1,5 1,0 0,5 0 JSE statistic
Page 5 and 6: Five-year history Four-year compoun
Page 7 and 8: Features 35 30 25 20 15 10 5 0 Head
Page 9 and 10: Focus and strategy The focus of the
Page 11 and 12: Profile African Bank Investments Li
Page 13 and 14: 1994 Formation of investment trust
Page 15 and 16: Performance against key objectives
Page 17 and 18: Short to medium-term objectives OBJ
Page 19 and 20: African Bank Investments Limited We
Page 21 and 22: Letter to stakeholders ABIL believe
Page 23 and 24: Incwadi eya kwabanezabelo iqhutshiw
Page 35: Currency adjusted group balance she
Page 39 and 40: 12 months ended 12 months ended 30
Page 41 and 42: Capital adequacy model Non-performi
Page 43 and 44: 8 000 7 000 6 000 5 000 4 000 3 000
Page 45 and 46: Sales analysis - number and average
Page 47 and 48: excluding the Saambou PLB acquisiti
Page 49 and 50: The improved credit conditions are
Page 51 and 52: ook and the written-off book. To th
Page 53 and 54: Statement of average balances Weigh
Page 55 and 56: Divisional reports Operationally, A
Page 57 and 58: collection strike rates, which has
Page 59 and 60: ABIL also expanded its portfolio to
Page 61 and 62: Collections business unit. Its most
Page 63 and 64: Issue arising Corrective action req
Page 65 and 66: Skills and experience of the board
Page 67 and 68: Corporate governance continued regu
Page 69 and 70: from the committee responsible for
Page 71 and 72: that the risk policies and strategi
Page 73: Table 1: Remuneration and fees Serv
Page 76 and 77: Risk review ABIL views risk as an i
Page 79 and 80: Risk review continued Undesirable r
Page 81 and 82: Top ten risks Mitigating factors Ri
Page 83 and 84: Credit risk African Bank Retail Cre
Page 85 and 86: on a regular basis to ensure proper
Page 87 and 88:
Social commitment Given the nature
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Embarking on a journey The process
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The progress The corporate social c
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Shareholders’ information Number
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agreements, to ensure that the mate
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The interest rate charged is determ
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Continued effort and focus will go
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services of the best employees. The
Page 103 and 104:
The African Bank Foundation accepts
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Index to global reporting initiativ
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Directors’ responsibility The dir
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Directors’ report 30 September 20
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INTEREST OF THE DIRECTORS IN THE SH
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n4 The strike prices of the share o
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Income statement for the year ended
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Cash flow statement for the year en
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Equity accounted income, which is i
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1.9 Revenue recognition Interest in
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Group Company 2003 2002 2003 2002 R
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Group Company 2003 2002 2003 2002 R
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Group Company 2003 2002 2003 2002 R
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111 Group 2003 2002 R000 R000 12. L
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Group Company 2003 2002 2003 2002 R
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Group Company 2003 2002 2003 2002 R
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117 Group 2003 2002 R000 R000 25. R
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Group Company 2003 2002 2003 2002 R
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One to Four to Beyond Non-interest
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One to Four to Beyond Up to one thr
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125 Group 2003 2002 R000 R000 37. O
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Appendix B Investments in associate
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Appendix D Segmental advances and p
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Appendix F Group structure and prof
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3.4.4 ensure that a comprehensive s
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7.4.3 All directors are required to
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6.3 any general payment shall be ma
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13.6 Any repurchases shall comply w
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DIRECTORS’ CURRICULUM VITAES Anto
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6. Isinqumo esejwayelekile esinguno
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12.9.1 kuyokwenziwa ngokulandela uM
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16. Ukuvota nezithunywa Bonke abani
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Form of proxy AFRICAN BANK INVESTME
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Ifomu yokuqoka isithunywa esizokume
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Members of the ABIL board ASHLEY SE
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RAMANI NAIDOO (41) BA LLB Non-execu
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Corporate information COMPANY REGIS
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GRAPHICOR 30006
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