confidence - Investing In Africa

Directors’ Report to the ShareholdersThe Board of Directors of State Bank of Mauritius Ltd (SBM)is pleased to submit its thirty-third Annual Report for theGroup and the Bank for the year ended June 30, 2005.OPERATING RESULTSThe Group’s Net Income before Income Taxes registered a growth of 9.94%from Rs1,365.5M for 2004 to Rs1,501.3M for 2005. Net Income available toshareholders grew at a lower rate of 5.74% due to a higher effective tax rate.During the period under review, the Group changed its depreciation policy withrespect to Land and Buildings which are now stated at recent open marketvalue basis. The depreciation rate on the Core Banking IT System has beenrevised from 10% p.a. to 20% p.a. The Board is pleased to note that thesubsidiaries and associates made satisfactory contributions to the Group’s profits.The Group’s cost to income ratio improved marginally from 40.15% for2004 to 38.91% for 2005. The Board is pleased to report that its cost toincome ratio continues to be the lowest among the Mauritian banks andremains one of the best in the region as well as in the world.directors’ reportto the shareholdersThe Board of Directors is also happy toreport that despite the difficult marketenvironment, the Group addedeconomic value to the tune of Rs304Mfor the year ended June 30, 2005.14DIVIDENDS AND CAPITAL RESOURCESThe Board of Directors declared a final dividend of Rs1.30 per shareamounting to Rs422.6M for the financial year 2004/2005 which was paid onAugust 31, 2005. It reflects an increase of 8.33% from last year and a payoutratio of 2.8 times. The undistributed profits of Rs768.6M were transferred toReserves. A net amount of Rs1,197.8M arising from the valuation ofproperties and equity investments was also transferred to Reserves. Thus,Shareholders’ Funds increased from Rs6,134.7M at June 30, 2004 toRs8,182.8M at June 30, 2005.The buyback of shares approved by the shareholders at the AnnualMeeting held on October 28, 2003 lapsed on May 17, 2005. The Bankbought back only 72,700 shares out of the 40,000,000 approved for atotal cost of Rs1.5M.