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FPF - Finbond - Unaudited consolidated results for the six months ended

Release Date: 23/09/2010 17:45
Code(s): FGL
Wrap Text

FPF - Finbond - Unaudited consolidated results for the six months ended 31 August 2010 Finbond Property Finance Limited (Incorporated in the Republic of South Africa) (Registration number: 2001/015761/06) Share code: FPF ISIN: ZAE000097259 ("Finbond" or "the Company") UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2010 INTRODUCTION Against the backdrop of the post recessionary environment in South Africa, the directors are pleased to present the interim financial results of the Finbond Group for the six months ended 31 August 2010. During the six months under review Finbond made good progress despite continued extremely challenging market conditions. This process resulted in a number of achievements and significant developments for Finbond: * Microfinance portfolio yield - R87,4 million (up 23.7%) * Headline loss per share - 1.5 cents (up 83.1%) * Net cash from operating activities - R2,5 million (up 100%) * Operating expenses reduced from R 93,7 million (Aug 2009) to R71,4 million (Aug 2010) a saving of R 22,2 million (23.8%) * Attracted R77 million of funding facilities in the current challenging fund raising environment. * Centralised control and standardised operations, including improved credit vetting and collections practices, through 186 branches in Southern Africa. The Group continues to manage for the long term 5-10-15 years and to invest in infrastructure, people, training, information technology and systems, as well as in enhanced collection strategies and systems, to build a sustainable, professional business. We believe that doing the right things now, will allow us to reap the rewards in the medium and long term. MARKET CONDITIONS According the research from ABSA Capital South Africa`s recovery from last year`s recession continues to impress, as first quarter GDP came in at 4.6% q/q saar (1.6% y/y). Output in the mining sector jumped by about 15% q/q (6.5% y/y) as production in the diamonds, coal, nickel and non-metallic mineral products sub-sectors picked up on the back of stronger export demand. Similarly, manufacturing production growth remained firm at an annualised quarterly 8.4% in the first quarter as ongoing strong domestic and foreign demand for new vehicles boosted output in the motor vehicles, parts and accessories-sub sector. The strong growth observed in the primary and secondary sectors of the economy was not mirrored in the tertiary sector of the economy, however. Against first quarter annualised q/q growth rates of nearly 12% in the primary sector and 7% in the secondary sector, the tertiary sector grew at a relatively modest 2.7% in the first quarter. This shows that the further removed the sector is from the consumer, generally the stronger the cyclical recovery has been so far. According to ABSA Capital optimism over the consumer recovery is tempered somewhat when variables are considered in level rather than growth rate terms. Auto sales have been growing at a double-digit pace in the first half of the year, but in level terms they are still more than 30% down from their 2006 peaks. Private sector credit extension remains flat-lined, and outside some growth in mortgage extension, other components of consumer credit are actually still shrinking (marginally) on a y/y basis. Part of the explanation is the labour market where about one million jobs were lost since the beginning of 2009. Data recently released by Statistics South Africa indicate that employment dropped by another 0,5% quarter-on-quarter (q/q) in the second quarter of 2010, after employment has declined by 1,3% q/q in the first quarter. According to Fitch Ratings the financial performance of Micro Finance Institutions are coming under increased pressure from higher impairment charges, linked to a deterioration in asset quality, stagnant loan portfolio growth, higher funding cost and funding and refinancing risks due to current market conditions. In the wake of the recent economic crisis, microfinance industry is on the verge of a major transformation in 2010. Despite many assurances that the diversity of funding sources to microfinance institutions (MFIs) would shield them from the global economic downturn, it now appears that funding to MFIs could shrink by as much as $2.3 billion this year. "2010 is going to be a year of reckoning for the industry," says Neil Lightfoot, banking strategy engagement manager at consulting firm Genesis Analytics. "According to our analysis, microfinance funding - which amounted to $15 billion in 2009 - will contract by at least 15% during 2010." In addition funding from International Financial Institutions ("IFI`s") and Development Financial Institutions ("DFI`s") are also reaching its limits due to counterparty or country exposure limits. The fact that many MFI`s failed or are experiencing extreme liquidity constraints also contributes negatively to a very difficult fund raising environment. Funding constraints will have a significant funding and liquidity impact on many MFI`s and will contribute to increased levels of refinancing risks, particularly for non-deposit taking MFI`s dependant on local and international wholesale funding. Fitch Ratings further points out that MFI loan portfolios are very cash flow generative given their relatively short term nature, which is a big positive in the current environment, by providing an important source of internally generated liquidity. Faced with refinancing constraints MFI`s may need to look to their loan books as a source of liquidity to service maturing obligations. As a consequence lower growth scenarios for 2010 are very likely, falling from double digit growth to single digits or losses and where there are particular funding constraints shrinkage of the book is even possible. Micro Finance Total segment revenue from Micro Finance activities, made up of interest, fee and insurance income (portfolio yield) grew 23.7% to R87,4 million (2009: R70,7 million). Finbond Micro Finance achieved a net profit attributable to equity holders of R184k for the six months ended 31 August 2010, despite A) a significant increase in net loan impairment expenses due to job losses and consumer distress in the current market environment and B) opening 31 new branches and closing 12 unprofitable branches. Bad debts experienced during the period deteriorated by 41%, with the net impairment loss ratio totalling 22.1%% (2009: 15.7%). Portfolio at risk (PaR90 - outstanding loans with arrears over 90 days/ total gross loan portfolio) stands at 11.4%. This ratio has strengthened by 25% from 15.3% at 31 August 2009. Loan loss reserve, also referred to as the risk coverage ratio (Loan loss reserves (impairment provision)/ PaR90) stands at 89.3%, which is an indication of a Microfinance institution`s ability to cope with estimated loan losses. This ratio is within industry norms. Finbond`s debtors book remains geared at lower than one times, well below industry average. Finbond`s liquidity position at the end of August 2010 reflects R51,5 million cash in bank and R25 million in undrawn facilities. Funding facilities are three to five year facilities with the term of advances ranging between 30 days and twelve months (Finbond borrows long term and lends short term). During the period under review strategic funding partner Standard Chartered Bank extending Finbond a new term facility of R55 million as well as a new overdraft facility of R10 million after Finbond substantially paid down the previous Standard Chartered Bank facility. The tenor of the new term facility is three years. ABSA also extended Finbond an overdraft facility of R12 million. Strategic initiatives underway include: * Offering funeral insurance in addition to the credit life insurance at all branches, * Offering cell phone handsets, cell phone air time and pre paid electricity at all branches * Expanding the branch Network in Gauteng, Limpopo province, Southern Cape, Northern Cape, Free State, North West, Mpumalanga and Africa Subject to obtaining the required funding Finbond is well positioned for the implementation of its growth and expansion plans in the micro finance market in South Africa and Africa. Mortgage Origination and Property Investment For the period under review Mortgage Origination and Property Investment contributed less than 1 % to Finbond`s revenue. All Finbond`s mortgage origination activities have been out sourced and Finbond now mainly focus on Micro Finance business. EXECUTIVE OVERVIEW General Overview During the past six months, Finbond have continued the improvement and refinement of management structures, management information, upfront credit scoring, processes and pay date management and collection strategies at the back end. Finbond have also continued to invest management time and money in building the Finbond Micro Finance brand and a unified culture through:- Finbond branded clothing for personnel, marketing material, rebranding of branches, revamping of branches, branch infrastructure spend, taxi branding, training of personnel and customers. The result of these initiatives will take time before the effect thereof will be visible in the bottom line performance of the Company; however these improvements have already started to show their worth in respect of quality of management information systems, standardised operating procedures and internal control across the Group. There remain numerous challenges for Finbond in the short and medium term, not only in respect of the prevailing market conditions, but also relating to the ongoing process of improving the overall effectiveness of the Company to enable it to compete aggressively with its peers. In the six months under review strategic funding partner, The Netherlands Development Finance Company (FMO) have for the third time approved a Capacity Development Program for Finbond, which will allow the Group to further improve its core loan management system. Challenging Business Environment Despite the various challenges facing Finbond in the current business environment we remain committed to the Group`s principle objective of maximising shareholder value. According to ABSA research trends with regards to household credit extension show that the household sector is still experiencing a fair amount of financial pressure. Data recently released by Statistics South Africa indicate that employment dropped by another 0,5% quarter-on-quarter (q/q) in the second quarter of 2010, after employment has declined by 1,3% q/q in the first quarter. Consumers` ability to spend and take up and service debt will be dependent on the performance of the economy in general, employment, income growth, interest rates and the level of existing debt. Our major challenge remains to get our Net Impairments Loss Ratio ("NILR") to acceptable levels. At the end of August 2010 our NILR was at 22,1% compared to 15,7% the same period last year. We have taken a number of steps to further improve upfront credit scoring and collections that we believe will bear fruit in the short to medium term. Finbond is in the process of building a sound platform and strategic base from which to grow its Micro Finance operations in South-Africa. The focus for the remainder of the year will be on improving the quality of our loan portfolio, stricter lending criteria, decreasing arrears rates, accessing long term funding, optimal capital utilisation, reducing operational cost, tighter liquidity management, and improved operational efficiency. Prospects The challenging macro-economic environment, in the wake of the worldwide financial crisis and post recessionary environment in South Africa, as well as the adverse market conditions in the markets that Finbond operate in are not expected to abate in the short and medium term. Although the Group is confident that we have the required resources and depth in management to successfully confront the various significant challenges facing Finbond, market conditions in general, and specifically higher impairment charges, higher cost of funding, refinancing risks and the lack of availability of funding could have a negative impact on the performance of the Group in the remainder of the year ahead. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Figures in Rand Interim Interim Full year unaudited unaudited audited
31 August 2010 31 August 2009 28 Feb 2010 Assets Cash and cash equivalents 51 466 082 79 852 841 58 686 238 Other financial assets 10 005 455 11 367 730 6 489 872 Loans and advances 84 704 267 96 369 216 96 174 927 Maximum exposure to credit 116 887 914 137 511 848 131 710 861 risk (Gross book) Deferred future income (20 230 395) (21 275 906) (28 717 148) Allowance for impairment (11 953 252) (19 866 727) (6 818 786) to loans and advances Other receivables 10 232 263 18 837 594 9 107 028 Property, plant and 21 303 605 6 181 965 18 758 228 equipment Investment property 207 000 000 197 032 562 207 000 000 Intangible assets 22 071 601 40 175 658 25 224 686 Goodwill 61 332 358 63 596 582 61 332 358 Total Assets 468 115 631 513 414 149 482 773 337 Equity and liabilities Equity Share capital and premium 201 696 472 207 342 407 201 708 334 Reserves 6 182 424 5 004 282 - Accumulated profit 40 985 412 19 670 199 45 738 137 Non-controlling interest 213 133 142 455 - Total equity 248 864 308 227 225 739 252 593 208 Liabilities Trade and other payables 23 005 144 32 850 857 28 338 422 Current tax payable 2 623 424 12 370 813 5 415 620 Finance lease obligation 4 072 111 849 998 3 974 258 Other financial 170 176 454 212 557 738 164 562 060 liabilities Loans from group companies 7 921 248 8 591 951 13 473 281 Deferred tax 11 452 942 18 967 053 14 416 488 Total liabilities 219 251 323 286 188 410 230 180 129 Total equity and 468 115 631 513 414 149 482 773 337 liabilities CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Figures in Rand Interim Interim Full year unaudited unaudited audited 31 August 2010 31 August 2009 28 Feb 2010 Interest income 29 718 340 34 434 311 65 599 170 Interest expense (9 548 082) (8 293 275) (19 724 362) Net interest income 20 170 258 26 141 036 45 874 809 Fee income 47 345 258 32 393 443 72 618 652 Other microfinance income 10 866 995 10 329 017 15 917 543 Fair value adjustments 69 967 800 138 781 647 - Net commission income 1 175 838 1 809 475 1 392 910 Net impairment charge on (14 119 807) (11 216 362) (27 668 720) loans and advances Operating expenses (71 471 057) (93 757 559) (189 306 532) Operating (loss)/ profit (6 032 515) 35 666 850 57 610 309 Excess of acquirers` 432 409 2 957 700 3 738 160 interest in net assets (Loss)/ profit before (5 600 106) 38 624 550 61 348 468 taxation Taxation 571 852 (6 739 484) (3 150 464) (Loss)/ profit for the (5 028 254) 31 885 066 58 198 004 period (Loss)/ profit for the period attributable to: Owners of the company (4 885 799) 31 785 466 58 198 004 Non controlling interest (142 455) 99 600 - Other comprehensive income (1 894) 2 532 net of taxation - Foreign currency (1 894) 2 532 translation differences - for foreign operations Total comprehensive (5 030 148) 31 885 066 58 200 536 (loss)/ income for the period Total comprehensive (loss)/ income attributable to: Owners of the company (4 887 693) 31 785 466 58 200 536 Non controlling interest (142 455) 99 600 -
(Loss)/ earnings per share: Basic (loss)/ earnings per (1.4) 8.7 16.1 share Diluted (loss)/ earnings (1.4) 8.7 16.1 per share
Total number of ordinary 382 025 250 382 025 250 382 025 250 shares outstanding Weighted average number of 357 352 398 366 066 960 361 717 262 ordinary shares outstanding Reconciliation of headline loss per share: (Loss)/ profit (4 885 799) 31 785 466 58 198 004 attributable to owners of the company Adjusted for: Excess of acquirer (371 872) (2 957 700) (3 214 817) interest in net asset value Loss on disposal of 1 055 0 14 535 property, plant and equipment Revaluation of investment 0 (60 709 980) (119 352 216) properties Headline loss per share (5 256 616) (31 882 214) (64 354 494) (cents) Headline loss per share: Basic headline loss per (1.5) (8.7) (17.8) share Diluted headline loss per (1.5) (8.7) (17.8) share CONDENSED STATEMENT OF CHANGES IN EQUITY Figures in Rand Share Capital Share premium Treasury shares For the six months ended 31 August 2010 Balance at 1 March 2010 382 211 274 200 (9 566 248) Loss for the period - - -
Other comprehensive income - - - Total comprehensive income - for the period - - Transactions with owners, recorded directly in equity Contributions by and distributions to owners Share based payment - transactions - - Transfer to contingency - reserve - - Own shares purchased - (11 862) - Transactions with Joint - Venture, recorded directly - - in equity Total transactions with - (11 862) owners - Balance at 31 August 2010 382 211 274 200 (9 578 110) For the six months ended 31 August 2009 Balance at 1 March 2009 297 168 419 631 (2 302 716) Profit for the period - - - Other comprehensive income - - - Total comprehensive income - for the period - - Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares 85 43 846 190 - Shares reclaimed based on - (4 698 294) contingent consideration - Transactions with non- - controlling interest - - Share based payment - transactions - - Own shares purchased - (268 256) - Reclassification to - liabilities based on - - amended settlement Total transactions with 85 43 846 190 (4 966 550) owners Balance at 31 August 2009 382 212 265 821 (7 269 266) For the year ended 28 February 2010 Balance at 1 March 2009 297 168 419 631 (2 302 716) Profit for the period - - - Other comprehensive income - - -
Total comprehensive income - for the period - - Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares 85 43 846 258 - Share issue cost - (991 689) - Shares reclaimed based on - (6 826 445) contingent consideration - Transactions with non- - controlling interest - - Share based payment - transactions - - Transfer to contingency - reserve - - Own share purchased - (437 087) - Reclassification to - liabilities based on - - amended settlement Total transactions with 85 42 854 569 (7 263 532) owners Balance at 28 February 382 211 274 200 (9 566 248) 2010 CONDENSED STATEMENT OF CHANGES IN EQUITY (Continued) Figures in Rand Total Share Reserves Foreign Capital currency translation
reserve For the six months ended 31 August 2010 Balance at 1 March 2010 201 708 334 5 001 750 2 532 Loss for the period - - - Other comprehensive income (1 894) - -
Total comprehensive income (1 894) for the period - - Transactions with owners, recorded directly in equity Contributions by and distributions to owners Share based payment 464 200 transactions - - Transfer to contingency 715 836 reserve - - Own shares purchased (11 862) - - Transactions with Joint Venture, recorded directly - - - in equity Total transactions with (11 862) 1 180 036 owners - Balance at 31 August 2010 201 696 472 6 181 786 638
For the six months ended 31 August 2009 Balance at 1 March 2009 166 117 212 38 716 052 -
Profit for the period - - - Other comprehensive income - - -
Total comprehensive income for the period - - - Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares 43 846 275 (34 796 052) - Shares reclaimed based on (4 698 294) contingent consideration - - Transactions with non- controlling interest - - - Share based payment 2 345 470 transactions - - Own shares purchased (268 256) - - Reclassification to (3 920 000) liabilities based on - - amended settlement Total transactions with 38 879 725 (36 370 582) owners - Balance at 31 August 2009 204 996 937 2 345 470 -
For the year ended 28 February 2010 Balance at 1 March 2009 166 117 212 38 716 052 - Profit for the period - - - Other comprehensive income 2 532 - - Total comprehensive income 2 532 for the period - - Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary shares 43 846 343 (34 796 052) - Share issue cost (991 689) - -
Shares reclaimed based on (6 826 445) contingent consideration - - Transactions with non- controlling interest - - - Share based payment 3 686 011 transactions - - Transfer to contingency 1 315 739 reserve - - Own share purchased (437 087) - - Reclassification to (3 920 000) liabilities based on - - amended settlement Total transactions with 35 591 122 (33 714 302) owners - Balance at 28 February 201 708 334 5 001 750 2 532 2010 CONDENSED STATEMENT OF CHANGES IN EQUITY (Continued) Figures in Rand Accumulated Total Non- Total equity profit/ Attributable controlling
(loss) to equity interest holders of the company For the six months ended 31 August 2010 Balance at 1 March 45 738 137 252 450 753 142 455 252 593 208 2010 Loss for the period (4 885 799) (4 885 799) (142 455) (5 028 254) Other comprehensive (1 894) (1 894) income - - Total comprehensive (4 885 799) (4 887 693) (142 455) (5 030 148) income for the period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Share based payment 464 200 464 200 transactions - - Transfer to (715 836) 0 contingency reserve - - Own shares (11 862) (11 862) purchased - - Transactions with 848 910 848 910 848 910 Joint Venture, - recorded directly in equity Total transactions 133 074 1 301 248 1 301 248 with owners - Balance at 31 40 985 412 248 864 308 248 864 308 August 2010 - For the six months ended 31 August 2009 Balance at 1 March (11 144 193 689 136 20 196 152 213 885 288 2009 128) Profit for the 31 785 466 31 785 466 99 600 31 885 066 period Other comprehensive income - - - - Total comprehensive 31 785 466 31 785 466 99 600 31 885 066 income for the period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary 9 050 223 9 050 223 shares - - Shares reclaimed (4 698 294) (4 698 294) based on contingent - - consideration Transactions with (971 139) (971 139) (20 082 620) (21 053 759) non-controlling interest Share based payment 2 345 470 2 345 470 transactions - - Own shares (268 256) (268 256) purchased - - Reclassification to (3 920 000) (3 920 000) liabilities based - - on amended settlement Total transactions (971 139) 1 538 004 (20 082 620) (18 544 616) with owners Balance at 31 19 670 199 227 012 606 213 132 227 225 739 August 2009 For the year ended 28 February 2010 Balance at 1 March (11 144 193 689 136 20 196 152 213 885 288 2009 128) Profit for the 58 198 004 58 198 004 58 198 004 period - Other comprehensive 2 532 2 532 income - - Total comprehensive 58 198 004 58 200 536 58 200 536 income for the - period Transactions with owners, recorded directly in equity Contributions by and distributions to owners Issue of ordinary 9 050 291 9 050 291 shares - - Share issue cost (991 689) (991 689) - - Shares reclaimed (6 826 445) (6 826 445) based on contingent - - consideration Transactions with (20 053 697) (20 053 697) non-controlling - - interest Share based payment 3 686 011 3 686 011 transactions - - Transfer to (1 315 739) contingency reserve - - - Own share purchased (437 087) (437 087) - - Reclassification to (3 920 000) (3 920 000) liabilities based - - on amended settlement Total transactions (1 315 739) 561 081 (20 053 697) (19 492 616) with owners Balance at 28 45 738 137 252 450 753 142 455 252 593 208 February 2010 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Figures in Rand Interim Interim Full year unaudited unaudited audited 31 August 31 August 28 Feb 2010 2010 2009
Cash flows from operating activities Cash receipts from customers 81 216 336 90 346 403 144 882 495 Cash paid to suppliers and (56 450 558) (67 954 938) (115 723 386) employees Cash generated in operating 24 765 778 22 391 465 29 159 109 activities Increase in net loans and (8 781 247) (23 410 139) (33 335 184) advances Interest paid (9 548 082) (8 293 275) (17 765 039) Interest received on cash and 1 132 430 2 632 392 5 198 381 cash equivalents Taxation paid (5 046 927) 898 645 (4 987 675) Net cash from operating 2 521 952 (5 780 913) (21 730 408) activities Cash flows from investing activities Property, plant and equipment (5 156 888) (2 630 210) (8 863 211) acquired Proceeds on disposals of 257 513 property, plant and equipment - - Investment properties acquired (2 215 268) (23 707 161) -
(Decrease)/ increase in loans (5 552 032) 5 379 692 from/ (to) group companies - Increase in financial assets (3 515 583) (7 477 054) (6 484 302) Proceeds on loans to staff (15 997) members - - Expenditure to maintain and (14 224 503) (12 338 529) (33 417 469) expand operating capacity Contingent consideration settled in cash - - - Business combinations and 302 441 (3 757 074) (1 514 185) disposals Expenditure for expansion 302 441 (3 757 074) (1 514 185) Net cash from investing (13 922 062) (16 095 603) (34 931 654) activities Cash flows from financing activities Repurchase of own shares held (11 862) (437 087) as treasury shares - Finance lease payments (336 708) (160 979) (444 180) Funding (other financial 55 336 708 20 131 013 45 638 631 liabilities) raised Funding (other financial (50 808 184) (5 000 000) (15 176 698) liabilities) repaid Share premium expenses (991 689) - - Net cash from financing 4 179 954 14 970 034 28 588 977 activities Decrease in cash and cash (7 220 156) (6 906 482) (28 073 084) equivalents Cash and cash equivalents at 58 686 238 86 759 323 86 759 323 beginning of period Cash and cash equivalents at 51 466 082 79 852 841 58 686 238 end of the period Cash generated in operating activities (Loss)/ profit before taxation (5 600 106) 38 624 550 61 348 468 Adjustments for: Depreciation and amortisation 5 443 664 15 561 993 32 223 130 Loss on sale of assets 1 465 20 188 - Acquirer`s excess of net asset (432 409) (2 957 700) (3 738 160) purchased Interest received on cash and (1 132 430) (2 632 392) (5 088 488) cash equivalents Finance costs 9 548 082 8 293 275 19 724 362 Fair value adjustments (69 967 800) (138 781 647) -
Other non cash items (88 190) (99 166) - Movement in impairment charge 21 670 928 23 410 139 36 486 799 and bad debts written off Share option costs 464 200 2 345 470 3 686 011 Impairment of other financial 11 069 500 11 069 500 assets - Changes in working capital: Trade and other receivables 219 342 (401 439) 3 167 537 Trade and other payables (5 416 958) (865 942) 9 140 576 Cash generated in operating 24 765 778 22 391 465 29 159 109 activities SEGMENTAL ANALYSIS Figures in Rand Micro finance Property Mortgage Investment Origination Unaudited six months ended 31 August 2010 Interest income 29 271 418 0 21 351 Interest expense (7 922 861) (1 199 650) -
Net interest income 21 348 557 (1 199 650) 21 351 Fee income 47 345 258 - - Net commission income 649 886 - - Other microfinance income 10 810 384 56 611 - Net impairment charge on (14 119 807) loans and advances - - Operating expenses (66 117 131) (1 008 121) (251 670) Operating (loss)/ profit (732 739) (2 151 160) 419 567 Excess of acquirers` interest 432 409 in net assets - - (Loss)/ profit before (300 330) (2 151 160) 419 567 taxation Taxation 341 860 737 336 (134 932) (Loss)/ profit for the period 41 530 (1 413 824) 284 635 (Loss)/ profit for the period attributable to: Owners of the company 183 985 (1 413 824) 284 635 Non controlling interest (142 455) - - Segment assets 216 630 440 207 000 000 22 413 590 Investment property 207 000 000 - - Loans and advances 84 704 267 - - Cash and cash equivalents 49 288 700 2 177 382 -
Segment liabilities 188 612 464 24 458 811 - Unaudited six months ended 31 August 2009 Interest income 32 312 129 2 043 432 78 750 Interest expense (5 250 302) (3 042 973) -
Net interest income 27 061 827 (999 541) 78 750 Fee income 32 393 443 - - Net commission income 1 809 475 - - Other microfinance income 5 994 882 4 334 135 - Fair value adjustments 69 967 800 - - Net impairment charge on (11 216 362) loans and advances - - Operating expenses (81 030 233) (10 120 445) (2 606 881) Operating (loss)/ profit (26 796 443) 63 181 949 (718 656) Excess of acquirers` interest 2 957 700 in net assets - - (Loss)/ profit before (23 838 743) 63 181 949 (718 656) taxation Taxation 0 (6 953 391) 213 907 (Loss)/ profit for the period (23 838 743) 56 228 558 (504 749) (Loss)/ profit for the period attributable to: Owners of the company (23 938 343) 56 228 558 (504 749) Non controlling interest 99 600 - -
Segment assets 304 995 436 197 032 562 11 386 150 Investment property 197 032 562 - - Loans and advances 96 369 216 - - Cash and cash equivalents 77 412 065 2 440 776 - Segment liabilities 265 137 475 18 530 811 2 520 124
Audited year ended 28 February 2010 Interest income 61 538 590 - 95 820 Interest expense (6 514 755) (4 798 782) (8 893) Net interest income 55 023 835 (4 798 782) 86 927 Fee income 72 618 652 0 - Net commission income 1 392 910 - - Other microfinance income 15 917 543 - - Fair value adjustments 138 781 647 - - Net impairment charge on (27 668 720) loans and advances - - Operating expenses (112 094 352) (14 070 306) (6 860 650) Operating (loss)/ profit 3 796 958 119 912 559 (5 380 813) Excess of acquirers` interest 3 738 160 in net assets - - (Loss)/ profit before 7 535 118 119 912 559 (5 380 813) taxation Taxation (3 448 941) (14 146 086) 710 104 (Loss)/ profit for the period 4 086 177 105 766 473 (4 670 709) (Loss)/ profit for the period attributable to: - Owners of the company 4 086 177 105 766 473 (4 670 709) Non controlling interest - - -
Segment assets 220 870 423 207 000 000 23 727 125 Investment property 207 000 000 - - Loans and advances 96 174 927 - - Cash and cash equivalents 24 379 618 3 130 831 - Segment liabilities 172 262 346 5 878 343 2 645 359 SEGMENTAL ANALYSIS (Continued) Figures in Rand Reconciling Consolidated Unaudited six months ended 31 August 2010 Interest income 425 571 29 718 340 Interest expense (425 571) (9 548 082) Net interest income 20 170 258 - Fee income 47 345 258 -
Net commission income 525 952 1 175 838 Other microfinance income 10 866 995 - Net impairment charge on loans and advances (14 119 807) - Operating expenses (4 094 135) (71 471 057) Operating (loss)/ profit (3 568 183) (6 032 515) Excess of acquirers` interest in net assets 432 409 - (Loss)/ profit before taxation (3 568 183) (5 600 106) Taxation (372 412) 571 852 (Loss)/ profit for the period (3 940 595) (5 028 254) (Loss)/ profit for the period attributable to: Owners of the company (3 940 595) (4 885 799) Non controlling interest (142 455) - Segment assets 22 071 601 468 115 631
Investment property 207 000 000 - Loans and advances 84 704 267 -
Cash and cash equivalents 51 466 082 - Segment liabilities 6 180 048 219 251 323 Unaudited six months ended 31 August 2009 Interest income - 34 434 311 Interest expense (8 293 275) - Net interest income 26 141 036 - Fee income 32 393 443 - Net commission income 1 809 475 - Other microfinance income 10 329 017 - Fair value adjustments 69 967 800 - Net impairment charge on loans and advances (11 216 362) - Operating expenses (93 757 559) - Operating (loss)/ profit 35 666 850 - Excess of acquirers` interest in net assets 2 957 700 - (Loss)/ profit before taxation 38 624 550 - Taxation (6 739 484) - (Loss)/ profit for the period 31 885 066 - (Loss)/ profit for the period attributable to: Owners of the company 31 785 466 - Non controlling interest 99 600 -
Segment assets 513 414 149 - Investment property 197 032 562 - Loans and advances 96 369 216 - Cash and cash equivalents 79 852 841 - Segment liabilities 286 188 410 -
Audited year ended 28 February 2010 Interest income 3 964 760 65 599 170 Interest expense (8 401 932) (19 724 362) Net interest income (4 437 172) 45 874 808 Fee income 72 618 652 - Net commission income 1 392 910 - Other microfinance income 15 917 543 - Fair value adjustments 138 781 647 - Net impairment charge on loans and advances (27 668 720) - Operating expenses (56 281 224) (189 306 532) Operating (loss)/ profit (60 718 396) 57 610 308 Excess of acquirers` interest in net assets 3 738 160 - (Loss)/ profit before taxation (60 718 396) 61 348 468 Taxation 13 734 459 (3 150 464) (Loss)/ profit for the period (46 983 937) 58 198 004 (Loss)/ profit for the period attributable to: Owners of the company (46 983 937) 58 198 004 Non controlling interest - -
Segment assets 31 175 789 482 773 337 Investment property 207 000 000 -
Loans and advances 96 174 927 - Cash and cash equivalents 31 175 789 58 686 238
Segment liabilities 49 394 081 230 180 129 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Finbond Group Limited is a company domiciled in South Africa. The condensed consolidated interim financial statements of the Company as at and for the six months ended 31 August 2010 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group`s interests in associates and jointly controlled entities. The consolidated financial statements of the Group as at and for the year ended 28 February 2010 are available upon request from the Company`s registered office at Bank Forum Building, Cnr. Veale and Fehrsen Streets, Nieuw Muckleneuk, Brooklyn, Pretoria, 0181 or at www.finbondlimited.co.za. These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 28 February 2010. The Board acknowledges its responsibility for the preparation of the unaudited consolidated interim financial statements in accordance with International Accounting Standard 34 (IAS 34 - Interim Financial Reporting) and the Listings Requirements of the JSE Limited. These condensed consolidated interim financial statements are unaudited and prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and in compliance with the Listings Requirements of the JSE Limited and the South African Companies Act. These condensed consolidated interim financial statements were approved by the Board of Directors on 22 September 2010. Significant accounting policies The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 28 February 2010. Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group`s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 28 February 2010. Acquisition of additional interest in a Joint Venture resulting in the Joint Venture becoming a wholly owned Subsidiary The Group acquired the remaining shares in the Bondexcel (Pty) Ltd Joint Venture, effective 1 March 2010, resulting in Bondexcel becoming a wholly owned subsidiary. Dividend No Interim Dividend has been declared. For and on behalf of the Board Dr. Malesela Motlatla Dr. Willie van Aardt 24 September 2010 Directors Chairman: Dr. MDC Motlatla*(BA, D Com HC (Unisa)); Chief Executive Officer : Dr. W van Aardt (B- Proc (Cum Laude), LLM (UP),LLD (PU CHE) Admitted Attorney of The High Court of South Africa, Admitted Solicitor of The Supreme Court of England and Wales, QLTT (England and Wales UK); Chief Compliance Officer: H J Wilken (BCom Honss (UNISA); Chief Risk Officer: DC Pentz (B Comm Honns , CA SA), Chief Financial Officer: G Labuschagne (B. Com Fin Acc (Cum Laude) B Com Acc Honns/CTA (UP) CA SA); N Mapetla*.(BA (Lesotho) MBA(UK); Adv. J Noeth SC* (B Iuris LLB). * Non- Executive Transfer secretaries Link Market Services South Africa (Proprietary) Limited (Registration number 2000/007239/07) 11 Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000) Finbond Group Limited (Registration Number: 2001/015761/06) TA Finbond Property Finance TM 337 Veale Street, Brooklyn, Pretoria (PO Box 2127 Brooklyn Square, 0075) www.finbondlimited.co.za www.finbond.co.za Designated Advisor: Grindrod Bank Limited Date: 23/09/2010 17:45:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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