Wrap Text
Unaudited Consolidated Results for the Six Months ended 31 August 2013
FINBOND GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2001/015761/06)
Share code: “FGL” ISIN: ZAE00013895
(“Finbond” or “the Company” or “the Group")
UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST
2013
Executive Overview
The directors are pleased to present the financial results of Finbond
Group Limited for the six months ended 31 August 2013. During the
period under review, Finbond delivered another set of solid results
and made further progress with regards to the realization of its
vision “to be the leading Mutual Bank in South Africa improving the
quality of life of our clients, through their participation in saving
together, growing together and ownership of their own community
bank”. This included a number of achievements and significant
developments for Finbond:
* Operating profit from continuing operations increased by 51% to
R20.6 million. (Aug 2012: R13.6 million)
* Profit for the period attributable to owners of the company
Increased 49.2% to R13.8 million. (Aug 2012: R9.3 million)
* Earnings before interest, taxation, depreciation and amortization
(EBITDA) increased 47% to R38.8 million. (Aug 2012: R26.3 million)
* Revenue from continuing operations increased 33.6% to R138.5
million (Aug 2012: R103,1 million)
* Basic earnings per share increased 21.1% to 2.3c (Aug 2012: 1.9c)
* Headline earnings per share increased 15.0% to 2.3c (Aug 2012:
2.0c)
* Value of loans advanced increased by 25.8% to R255.4 million (Aug
2012: R203.1 million)
* Cash, cash equivalents and liquid investments increased by 614% to
R338.3 million (Aug 2012: R47.4 million);
* Gross loans and advances increased by 67.9% to R235.5 million (Aug
2012: R140.3 million
* Cash received from customers increased by 15.7% to R326.1 million
(Aug 2012: R281.9 million)
* Increased fixed term retail deposits to R492.1 million (Aug 2012:
R 0).
* Became a participant in the South African Multiple Settlement
Option System environment (SAMOS)
* Was granted full membership of the Payments Association of South
Africa (PASA) and its various Payment Clearing Houses.
* Was granted a principle Mastercard License by Mastercard
International
* Joined the Society for Worldwide Interbank Financial
Telecommunication (SWIFT)
Finbond continues to manage for the longer term and to invest in
people, training, information technology, banking systems, as well as
in enhanced collection strategies and systems, in order to build a
sustainable, professional business.
During the period under review we further expanded our Compliance,
Internal Audit, Information Technology, Human Capital Development and
Risk and Analysis Departments in order to effectively manage Finbond
Mutual Bank's Risk Management Framework. The bulk of the increased
expenses during the period under review relates to increasing
capacity and improving risk management functions and processes within
Finbond Mutual Bank.
We remain focused on executing on the Group’s strategy and top
business priorities namely optimal capital utilization, earnings
growth, strict upfront credit scoring, good quality sales, effective
collections, cost containment, conservative risk management and
training and development of staff members. This enabled us to achieve
overall strong operational results despite the challenging
environment.
Finbond Mutual Bank
A “Mutual Bank”, also known as a “Mutual Savings Bank”, is a bank
which is operated on a mutual bank model, with the specific goal of
encouraging savings and providing benefits to its depositors.
Finbond Mutual Bank, with its 535 staff compliment, specializes in
the design and delivery of unique value and solution based savings,
and credit solutions tailored around depositor and borrower
requirements rather than institutionalized policies and practices. We
exist to improve and transform the lives and livelihoods of our
clients by availing them of modern inclusive banking products and
services that benefit and empower them.
Finbond Mutual Bank conducts its business through two divisions
focused on:
1. Investment and Savings Products, and
2. Short and Medium Term Micro Credit Products
Capital Position
Our Capital position remains very strong. Finbond Mutual Bank is well
above its minimum regulatory capital requirements with an excess of
R118.2 million over and above the R 250 000 000 required by the
Registrar of Banks and an excess of R 290.5 million over and above
the normal DI 400 required minimum.
Although Finbond as a Mutual Bank are not subject to the Basel III
requirements, Finbond already complies with and significantly exceeds
all Basel III requirements set for 2018 and 2019. As at 31 August
2013 Finbond’s:
• liquidity coverage ratio % was 385% [285% more than required from
2019]
• net stable funding ratio % was 450% [350% more than required from
2019]
• capital adequacy ratio % was 47.4% [28.4% more than required from
2019].
Micro Credit Portfolio
The overall gross loan book reflected strong positive growth of 67.9%
ending the six month period at R 235,5 million (2012: R 140.3
million).
Total segment revenue from Finbond’s Micro Finance activities, made
up of interest, fee and insurance income (portfolio yield) increased
by 18.9% to R 85.1 million (2012: R71.6 million).
During the period under review Finbond offered 1 month – 6 month
micro loans from R 100 - R 7,000 with an average loan size of R 1567,
and an average tenure of about 3 months. Given the short term
nature of Finbond’s products, Finbond’s loan portfolio is very cash
flow generative and a good source of internally generated liquidity.
The whole loan portfolio turns 4 times a year. For the six months
ended August 2013, Finbond granted R 255,4 million worth of loans and
received cash payments of R 326,1 million from customers.
Finbond’s average loan period is significantly shorter than our
larger competitors and our average loan size significantly smaller.
Given this conservative approach, Finbond does not have any exposure
to the 36 – 84 month, R 30 000 – R 180 000 long term unsecured
lending market that saw disproportionate growth over the past 18 - 36
months and that caused significantly increased write offs and bad
debts elsewhere in the industry. Finbond’s historic data and vintage
curves indicate that the shorter the loan tenure, the lower the write
off and bad debt. Shorter term loans therefore offer lower risk as
consumers are more likely to pay them back as opposed to longer term
loans.
Finbond’s micro credit portfolio is also not exposed to any
concentration risk and does not have any significant exposure to any
specific employer or industry.
Liquidity
Finbond’s liquidity position at the end of August 2013 reflects
R134.2 million cash in bank, (2012: 26.6 million). Cash, cash
equivalents and liquid investments increased by 614% to R338.3
million (Aug 2012: R47.4 million);
Cash Received as a % of Cash Granted for the period of March 2013 –
August 2013 averaged 128%.
Finbond has been able to attract more than R 492 million in fixed
term deposits between the 21 September 2012 and 31 August 2013. By
the beginning of September 2013, the deposit book had grown to more
than R 500 million with an average deposit size of R 311 385 and
average term of 30 months at an average interest rate of 9.35%.
Finbond is not exposed to the uncertainty that accompanies the use of
corporate call deposits as a funding mechanism since Finbond only
accepts 6 – 60 month fixed term deposits. Given the long term nature
of Finbond’s liabilities [fixed term deposits with average term of 30
months] and short term nature of its assets [short term micro loans
with an average term of less than 3 months] Finbond possess a low
risk liquidity structure.
Bad Debts
Strict upfront credit scoring supported by robust collection
strategies and processes further improved default rates during the
period under review.
Finbond’s Net Impairment as a percentage of expected instalments
amounted to 5.3% and Net Impairment as a percentage of cash received
(which is more conservative than instalments due) stood at 6% at the
end of August 2013. The best measurement of arrears and impairments
on the short term products is against instalments due and not
outstanding balances, because a large part of a short term loan is
repaid before month-end/year-end and is therefore not reflected on
the balance sheet. Computations based on the outstanding balance
therefore distort this ratio on short term products.
Loan loss reserve, also referred to as the risk coverage ratio (Loan
loss reserves [impairment provision]/ PaR90) remains conservative at
97.0% (2012: 94.6%), which is an indication of a microfinance
institution’s ability to cope with estimated loan losses.
The write off vintages show that Finbond’s 1 to 6 month product range
write offs range between 6% and 12%.
Upfront Credit Scoring
Over the past 6 months Finbond continued to improve on and apply
strict upfront credit scoring and affordability criteria. The scores
on the various products are monitored on a monthly basis and adjusted
upwards or downwards. Detailed affordability calculations are also
done prior to extending any loans in order to determine whether the
client can in fact afford the loan repayments.
Rejection rates between March and August stood at between 43% and 56%
for our 3 – 6 month product range and 81% - 93% for our 12 – 24 month
product range.
Increasing Footprint
Finbond currently operates through 179 branches in South-Africa of
which 48 are located in Gauteng, 46 in Kwazulu Natal, 55 in the
Western and Eastern Cape and 30 in the Free State and North West.
We intend to open a further 15 – 25 branches in the current financial
year and thereafter approximately 40 branches per year for the next
five years.
Growing Market Share
Our share of the short term unsecured market [loans below R 8 000
with a tenure of between 30 days and 180 days] grew to approximately
10% and we have an insignificant share of the total, R 171 billion
unsecured lending market in South Africa.
Given that we are growing from a small base, we can keep on growing
for a long time.
Finbond is well positioned for the implementation of its strategic
growth plans in the micro credit market in South Africa has
significant growth opportunities over the next five to ten years.
Property Investments
Two Independent valuations by professional valuers registered with
the South African Institute of Valuers were again obtained as at 29
February 2013, as required by IAS 40.
The development properties on Finbond’s Balance sheet are held as
passive long term investments. The intention is to realize a profit
over the medium to long term and to invest the cash realized into the
Micro Finance Business. A portion of the Investment Property is
currently used as security to fund the micro finance operations.
Strategic Initiatives
Strategic initiatives under way include:
* Developing and rolling out Finbond Mutual Bank, transactional
bank accounts and savings accounts to all its micro credit
clients
* Developing and rolling out a Cellular Phone Banking Product and
Application
* Developing and rolling out an Internet Banking Product and
Application
* Developing and rolling out a Mastercard Debit Card product
* Growing market share through the increased sale of medium term
products, specifically 6 months and 12 – 24 month loans.
* Expansion of the branch network in high growth areas.
* Selective strategic acquisitions
Prospects
The challenging and difficult macro-economic environment as well as
the adverse market conditions in the markets within which Finbond
operates, are not expected to abate in the short and medium term.
However, we remain confident that we have the required resources and
depth in management to successfully confront and overcome the various
challenges facing Finbond.
We remain positive about our prospects for the future due to
Finbond’s:
• Improvement achieved in earnings and profitability,
• Improvement achieved in cash generated from operating
activities,
• Mutual Banking License and the growth and development of Finbond
Mutual Bank;
• Management expertise;
• Strong Cash Flow;
• Strong Liquidity position;
• Uniquely positioned 179 Branch Network;
• Access to funding; and
• Untapped potential in the Micro Finance and Mutual Banking
markets.
We believe that the evolution from a Micro Finance Institution to a
Mutual and Savings Bank in the implementation of our strategic action
plan will ensure that we achieve results in the medium and long term.
References to future financial performance included anywhere in this
announcement have not been reviewed or reported on by the group’s
external auditors.
Dividend
No interim dividend has been declared.
Board of Directors
During the period under review the Finbond Board was further
strengthened with the appointment of Mr. Danie Brits as an
Independent Non-Executive Director.
Mr. Danie Brits gained extensive experience in the Banking and
Financial Services Sector over the past 40 years, of which he spent
approximately 20 years at ABSA Group Limited where he started his
career as a Manager at Volkskas Merchant Bank in 1980, and was
appointed as Executive Risk in 1992 and as Executive Director of ABSA
Bank Limited in 1995. Danie inter alia served as:
• Executive Director and Board Member of ABSA Bank Limited, ABSA
Corporate and Merchant Bank and Bankfin.
• Member of the Absa Bank Limited Executive Committee, Asset and
Liability Committee, Operational Committee, EXCO Lending
Committee, Strategic Council Committee, Insurance Committee,
Management Committee, Investment Banking and Risk Committee,
• Executive ABSA Corporate Bank Division, consisting of: Corporate
and Merchant Bank, Group Treasury and Foreign Banking operations
where his responsibilities included: Business initiation and
client relationship management, group treasury, securities
trading and stock broking, international trade finance and
related activities, structured and project finance, corporate
finance and investment banking, financial management, corporate
banking, distressed account management international wholesale
banking operations (New York, London, Hamburg, Hong Kong,
Singapore, Shanghai) and risk management.
Mr. Danie Brits is currently also serving as:
• Board Member and Chairman of the Audit Committee of Barclays
Bank Mozambique
• Board Member of the National Bank of Tanzania
UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST
2013
Figures in Rand
Interim unaudited Interim unaudited Growth Full year audited
31 August 2013 31 August 2012 % 28 Feb 2013
Condensed
consolidated
statement of
financial
position
Assets
Cash and cash
equivalents
134 203 105 26 622 375 404.1% 63 595 201
Other financial
assets
204 171 064 20 744 474 884.2% 25 693 757
Loans and
advances
163 929 529 101 865 147 60.9% 122 434 015
Maximum exposure
to credit risk
(Gross book) 235 526 432 140 301 206 67.9% 166 458 994
Deferred future
income
(56 255 334) (26 655 326) 111.0% (30 725 095)
Allowance for
impairment to
loans and
advances (15 341 568) (11 780 732) 30.2% (13 299 884)
Other
receivables
14 404 756 12 342 974 16.7% 9 126 997
Property, plant
and equipment
18 821 344 15 984 631 17.7% 16 201 091
Investment
property
238 571 174 229 727 571 3.8% 233 005 882
Goodwill 61 262 303 61 262 303 0.0% 61 262 303
Deferred tax - - 0.0% 24 952 193
Total Assets 835 363 275 468 549 475 78.3% 556 271 439
Equity and
liabilities
Equity
Share capital
and premium 235 995 237 221 042 475 6.8% 239 162 377
Reserves 1 550 652 4 080 219 (62.0%) 4 221 575
Accumulated
profit 76 207 388 51 177 570 48.9% 62 373 552
Equity
attributable to
owners of the
Company 313 753 277 276 300 264 13.6% 305 757 504
Non-controlling
interest (824 052) (824 052) 0.0% (824 052)
Total equity 312 929 225 275 476 212 13.6% 304 933 452
Liabilities
Trade and other
payables 16 401 139 13 181 300 24.4% 21 884 883
Deposits 492 094 546 - 100.0% 164 037 998
Current tax
payable 5 833 315 3 683 692 58.4% 9 502 416
Finance lease
obligation
257 719 743 799 (65.4%) 240 192
Other financial
liabilities 8 272 159 390 642 (100.0%) 23 488 650
Shareholders
loans - 5 000 000 (100.0%) -
Deferred tax 7 839 059 11 073 830 (29.2) 32 183 849
Total
liabilities 522 434 050 193 073 263 170.6% 251 337 987
Total equity and
liabilities 835 363 275 468 549 475 78.3% 556 271 439
Condensed
Consolidated
Statement of
Comprehensive
Income
Interest income 39 390 188 25 263 895 55.9% 52 450 942
Interest expense (16 365 915) (10 322 406) 58.5% (20 841 795)
Net interest
income 23 024 273 14 941 489 54.1% 31 609 147
Fee income 61 130 667 47 411 324 28.9% 94 019 282
Other
microfinance
income 38 001 737 30 357 026 25.2% 62 051 268
Fair value
adjustments 61 779 5 100 3 077 499
Net commission
income (1 503 869) (280 724) 435.7% (1 370 910)
Net impairment
charge on loans
and advances (14 496 713) (14 771 323) (1.9%) (19 825 957)
Operating
expenses (85 624 314) (64 023 479) 33.7% (139 845 637)
Operating profit 20 593 560 13 639 413 51.0% 29 714 692
Profit before
taxation 20 593 560 13 639 413 51.0% 29 714 692
Taxation (6 759 724) (4 620 788) 46.3% (9 235 908)
Profit for the
period 13 833 836 9 018 625 53.4% 20 478 784
Other
comprehensive
income net of
taxation - - -
Total
comprehensive
income for the
period 13 833 836 9 018 625 53.4% 20 478 784
Total
comprehensive
income/(loss)
attributable to:
Owners of the
company 13 833 836 9 272 622 49.2% 20 732 781
Non-controlling
interest - (253 997) (100.0%) (253 997)
Profit/(loss)
for the period
attributable to:
Owners of the
company 13 833 836 9 272 622 49.2% 20 732 781
Non-controlling
interest - (253 997) (100.0%) (253 997)
Earnings per
share:
Basic earnings
per share
(cents) 2.3 1.9 21.1% 3.6
Diluted earnings
per share
(cents) 2.3 1.9 21.1% 3.6
Total number of
ordinary shares
outstanding 605 025 250 582 025 250 4.0% 605 025 250
Weighted average
number of
ordinary shares
outstanding 596 905 870 478 200 113 24.8% 581 504 702
Reconciliation
of headline
profit per
share:
Profit
attributable to
owners of the
company 13 833 836 9 272 622 49.2% 20 732 781
Adjusted for:
Profit on
disposal of
property, plant
and equipment (27 700) 140 800 (119.7%) (438 686)
Re-measurement
of items of a
capital nature: (2 421 333)
Fair value
adjustment of
investment
properties
included in
basic earnings - - (3 000 000)
Tax effect on
re-measurement
of items of a
capital nature - - 578 667
Headline profit 13 806 136 9 413 422 46.7% 17 872 762
Less changes in
tax rate: effect
on opening
deferred tax
balances related
to previously
recorded fair
value gains* - - -
Headline profit
per share:
Basic headline
earnings per
share (cents) 2.3 2.0 15.0% 3.1
Diluted headline
earnings per
share (cents) 2.3 2.0 15.0% 3.1
Condensed
consolidated
statement of
cash flows
Cash flows from
operating
activities
Cash receipts
from customers 713 749 398 66 814 627 968.3% 305 148 732
Cash paid to
suppliers and
employees (346 751 133) (22 375 793) 1449.7% (47 194 459)
Cash generated
in operating
activities 366 998 265 44 438 834 725.9% 257 954 273
Increase in net
loans and
advances (66 568 997) (34 734 388) 91.7% (69 455 541)
Interest paid (16 365 915) (10 322 406) 58.5% (20 325 191)
Interest
received on cash
and cash
equivalents 5 772 554 963 647 499.0% 2 206 483
Taxation paid (10 143 996) (4 085 460) 148.3% (6 970 681)
Net cash
from/(utilized
in) operating
activities 279 691 911 (3 739 773) (100%) 163 409 343
Cash flows
(utilized in)/
from investing
activities
Property, plant
and equipment
acquired (3 675 576) 244 199 (1605.2%) (3 068 663)
Proceeds on
disposals of
property, plant
and equipment - 3 351 891 100.0% 3 136 871
Increase in
financial assets (178 608 327) (12 137 101) 1371.6% (17 086 384)
Expenditure to
maintain and
expand operating
capacity (182 283 903) (8 541 011) 2034.2% (17 018 176)
Expenditure for
expansion - - 0.0% -
Net cash
utilized in
investing
activities (182 283 903) (8 541 011) 2034.2% (17 018 176)
Cash flows from
financing
activities
Shares issued - - 0.0% 18 151 535
Repurchase of
own shares held
as treasury
shares (3 167 140) - 100.0%
Finance lease
payments
(152 586) (1 958 280) (92.2%) (2 461 887)
Rights Issue - 20,000,000 100.0% -
Funding (other
financial
liabilities)
raised - (15 000 000) 0.0% 13 185 000
Funding (other
financial
liabilities)
repaid (23 480 378) (16 637 751) 41.1% (164 138 171)
Share premium
expenses
- (733 468) 100.0% (765 102)
Net cash
utilized in
financing
activities (26 800 104) (14 329 500) 87.0% (136 028 625)
Increase/
(Decrease) in
cash and cash
equivalents 70 607 904 (26 610 284) (365.3%) 10 362 542
Cash and cash
equivalents at
beginning of
period 63 595 201 53 232 659 19.5% 53 232 659
Cash and cash
equivalents at
end of the
period 134 203 105 26 622 375 404.1% 63 595 201
Cash generated
in operating
activities
Profit before
taxation
20 593 560 13 639 413 51.0% 29 714 692
Adjustments for:
Depreciation and
amortisation 1 277 650 1 911 653 (33.2%) 3 112 354
Profit/(Loss) on
sale of assets
27 700 (140 800) (119.7%) (609 286)
Interest
received on cash
and cash
equivalents (5 772 554) (963 647) 499.0% (2 206 483)
Finance costs 16 365 915 10 322 406 58.5% 20 841 795
Interest accrued
(non-cash item) (1 734 816) - (100.0%) (516 604)
Fair value
adjustments
(61 779) (5 100) 100.0% (3 077 499)
Other non-cash
items
(459 679) (702 892) (34.6%) 231 116
Movement in
impairment
charge and bad
debts written
off 25 073 481 22 417 856 11.8% 36 570 142
Share option
costs
162 487 - 100.0% -
Changes in
working capital:
Trade and other
receivables
(10 387 027) (2 309 975) 111.6% 882 547
Trade and other
payables
(5 447 362) 269 920 (2118.1%) 8 973 501
Deposits 327 360 689 - 100.0% 164 037 998
Cash generated
in operating
activities
366 998 265 44 438 834 725.9% 257 954 273
Condensed Share Share premium Treasury Total Share Reserves
consolidated Capital shares Capital
statement of
changes in
equity
For the six
months ended
31 August 2013
Balance at 1
March 2013
605 239 691 627 (529 855) 239 162 377 4 221 575
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
Share
incentive
costs
162 487
Costs related
to rights
issue
Transfer from
contingency
reserve
(2 833 410)
Own shares
purchased
- - (3 167 140) (3 167 140) -
Transactions
with Joint
Venture,
recorded
directly in
equity - - - - -
Total
transactions
with owners
- - (3 167 140) (3 167 140) (2 670 923)
Balance at 31
August 2013
605 239 691 627 (3 696 995) 235 995 237 1 550 652
For the six
months ended
31 August 2012
Balance at 1
March 2012
382 211 256 957 (9 481 395) 201 775 944 7 022 371
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
Rights issue - 20 000 000 - 20 000 000 -
Costs related
to rights
issue - (733 469) - (733 469) -
Transfer from
contingency
reserve
(2 942 152)
Own shares
purchased
- - - - -
Transactions
with Joint
Venture,
recorded
directly in
equity
- - - - -
Total
transactions
with owners
- 19 266 531 - 19 266 531 (2 942 152)
Balance at 31
August 2012
382 230 523 488 (9 481 395) 221 042 475 4 080 219
For the year
ended 28
February 2013
Balance at 1
March 2012
382 211 256 957 (9 481 395) 201 775 944 7 022 371
Profit for the
period
- - - - -
Other
comprehensive
income
- - - - -
Total
comprehensive
income for the
period
- - - - -
Contributions
by and
distributions
to owners:
- -
Rights issue
200 19 999 800 - 20 000 000 -
Transfer to
contingency
reserve
- - - - (2 800 796)
Costs
associated
with rights
issue - (765 102) - (765 102) -
Treasury
shares sold
- - 8 951 540 8 951 540 -
Share issue
23 9 199 972 - 9 199 995 -
Total
transactions
with owners
223 28 434 670 8 951 540 37 386 433 (2 800 796)
Balance at 28
February 2013
605 239 691 627 (529 855) 239 162 377 4 221 575
Condensed Foreign Accumulated Total Non- Total equity
consolidated currency profit/ Attributable controlling
statement of translation (loss) to equity interest
changes in reserve holders of
equity the company
For the six
months ended
31 August 2013
Balance at 1
March 2013
- 62 373 552 305 757 504 (824 052) 304 933 452
Profit for the
period
- 13 833 836 13 833 836 - 13 833 836
Other
comprehensive
income
- - - - -
Total
comprehensive
income for the
period
- 13 833 836 13 833 836 - 13 833 836
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Share
incentive
costs 162 487 162 487
Costs related
to rights
issue - - - - -
Transfer from
contingency
reserve - - (2 833 410) - (2 833 410)
Own shares
purchased - - (3 167 140) - (3 167 140)
Transactions
with Joint
Venture,
recorded
directly in
equity - - - - -
Total
transactions
with owners - - (5 838 063) - (5 838 063)
Balance at 31
August 2013
- 76 207 388 313 753 277 (824 052) 312 929 225
For the six
months ended
31 August 2012
Balance at 1
March 2012 - 38 839 975 247 638 290 (570 054) 247 068 236
Profit for the
period - 13 833 835 13 833 835 (253 997) 13 579 838
Other
comprehensive
income - - - - -
Total
comprehensive
income for the
period - 13 833 835 13 833 835 (253 997) 13 579 838
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Rights issue - - 20 000 000 - 20 000 000
Costs related
to rights
issue - - (733 469) - (733 469)
Transfer from
contingency
reserve 2 942 152
Own shares
purchased - - - - -
Transactions
with Joint
Venture,
recorded
directly in
equity - - - - -
Total
transactions
with owners - 2 942 152 19 266 531 - 19 266 531
Balance at 31
August 2012
- 55 615 962 280 738 656 (824 051) 279 914 606
For the year
ended 28
February 2013
Balance at 1
March 2012
- 38 839 975 247 638 290 (570 054) 247 068 235
Profit/(loss)
for the period
- 20 732 781 20 732 781 (253 997) 20 478 784
Other
comprehensive
income
- - - - -
Total
comprehensive
income/(loss)
for the period
- 20 732 781 20 732 781 (253 997) 20 478 784
Contributions
by and
distributions
to owners:
Rights issue - - 20 000 000 - 20 000 000
Transfer to
contingency
reserve
- 2 800 796 - - -
Costs
associated
with rights
issue
- - (765 102) - (765 102)
Treasury
shares sold
- - 8 951 540 - 8 951 540
Share issue - - 9 199 995 - 9 199 995
Total
transactions
with owners
- 2 800 796 37 386 433 - 37 386 433
Balance at 28
February 2013
- 62 373 552 305 757 504 (824 052) 304 933 452
Condensed
consolidated
segmental
analysis
Figures in Deposits Property
Rand Received Micro Finance Investment Reconciling Consolidated
Unaudited six
months ended
31 August 2013
Interest
income 3 675 739 34 700 883 13 634 999 933 39 390 188
Interest
expense (5 472 903) (10 782 979) - (110 033) (16 365 915)
Net interest
income (1 797 163) 23 917 903 13 634 889 900 23 024 273
Fee income - 51 944 657 - 9 186 010 61 130 667
Net commission
income - (1 535 671) 31 144 658 (1 503 869)
Other
microfinance
income - 37 905 640 115 836 (19 740) 38 001 737
Fair Value
adjustment 55 973 5 806 - - 61 779
Net impairment
charge on
loans and
advances - (14 496 713) - - (14 496 713)
Operating
expenses (1 121 584) (82 495 941) (52 582) (1 954 208) (85 624 314)
Operating
(loss)/ profit (2 862 774) 15 245 682 108 032 8 102 620 20 593 560
Excess of
acquirers'
interest in
net assets - - - - -
(Loss)/ profit
before
taxation (2 862 774) 15 245 682 108 032 8 102 620 20 593 560
Taxation - (4 142 309) (6 401) (2 611 014) (6 759 724)
(Loss)/ profit
for the period (2 862 774) 11 103 373 101 631 5 491 606 13 833 836
(Loss)/ profit
for the period
attributable
to:
Owners of the
company (2 862 774) 11 103 373 101 631 5 491 606 13 833 836
Non-
controlling
interest - - - - -
Segment assets 219 720 638 304 990 704 242 198 279 68 453 654 835 363 275
Investment
property - - 238 571 174 - 238 571 174
Loans and
advances - 163 929 531 - - 163 929 529
Cash and cash
equivalents 51 403 790 21 322 565 - 61 476 750 134 203 105
Other
Financial
Assets 166 024 848 38 146 216 - - 204 171 064
Segment
liabilities 492 094 546 154 115 797 96 234 (123 872 527) 522 434 050
Deposits
received from
customers 492 094 546 - - - 492 094 546
Unaudited six
months ended
31 August 2012
Interest
income - 24 926 076 15 236 322 583 25 263 895
Interest
expense - (8 537 538) (219 099) (1 565 769) (10 322 406)
Net interest
income - 16 388 538 (203 863) (1 243 186) 14 941 489
Fee income - 47 411 324 - - 47 411 324
Net commission
income - (713 207) 431 694 789 (280 724)
Other
microfinance
income - 26 873 674 - 3 483 352 30 357 026
Fair Value
adjustment - - - 5 100 5 100
Net impairment
charge on
loans and
advances - (14 771 323) - - (14 771 323)
Operating
expenses - (62 540 283) (737 561) (745 634) (64 023 479)
Operating
profit/(loss) - 12 648 722 (509 730) 1 500 421 13 639 413
Excess of
acquirers'
interest in
net assets - - - - -
Profit/(Loss)
before
taxation - 12 648 722 (509 730) 1 500 421 13 639 413
Taxation - (5 143 268) (124 206) 646 686 (4 620 788)
Profit/(Loss)
for the period - 7 505 454 (633 936) 2 147 107 9 018 625
Profit/(Loss)
for the period
attributable
to:
Owners of the
company - 7 759 452 (633 936) 2 147 107 9 272 622
Non-
controlling
interest - (253 997) - - (253 997)
Segment assets - 233 834 124 233 329 677 1 385 675 468 549 475
Investment
property - - 229 727 571 - 229 727 571
Loans and
advances - 101 865 148 - - 101 865 147
Cash and cash
equivalents - 25 698 650 923 725 - 26 622 375
Other
Financial
Assets - 20 744 474 - - 20 744 474
Segment
liabilities - 159 959 408 21 280 390 11 833 466 193 073 263
Audited year
ended 28
February 2013
Interest
income 41 404 51 724 698 28 717 656 123 52 450 942
Interest
expense (2 335 687) (11 712 485) (336 323) (6 457 300) (20 841 795)
Net interest
income (2 294 283) 40 012 213 (307 606) (5 801 177) 31 609 147
Fee income - 94 019 282 - - 94 019 282
Net commission
income - (2 012 163) 639 974 1 279 (1 370 910)
Other
microfinance
income - 62 051 268 - - 62 051 268
Fair value
adjustments - (22 501) 3 100 000 - 3 077 499
Net impairment
charge on
loans and
advances - (19 825 957) - - (19 825 957)
Operating
expenses 3 850 916 (142 699 579) (1 413 883) 416 909 (139 845 637)
Operating
profit/(loss) 1 556 633 31 522 563 2 018 485 (5 382 989) 29 714 692
Profit/(Loss)
before
taxation 1 556 633 31 522 563 2 018 485 (5 382 989) 29 714 692
Taxation - (9 053 495) (182 413) (9 235 908)
Profit/(Loss)
for the period 1 556 633 22 469 068 1 836 072 (5 382 989) 20 478 784
Profit/(Loss)
for the period
attributable
to:
Owners of the
company 1 556 633 22 723 065 1 836 072 (5 382 989) 20 732 781
Non-
controlling
interest (253 997) (253 997)
Segment assets 20 812 729 286 931 169 236 747 488 11 780 053 556 271 439
Investment
property - - 233 005 882 - 233 005 882
Loans and
advances 122 434 015 - - 122 434 015
Cash and cash
equivalents 19 612 729 32 426 027 919 380 10 637 065 63 595 201
Other
Financial
Assets - 25 693 757 - - 25 693 757
Segment
liabilities 168 353 141 59 693 034 1 049 273 22 242 539 251 337 987
Deposits
received from
customers 164 037 998 - - - 164 037 998
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 2013 comprise the Company
and its subsidiaries (together referred to as the “Group”) and the
Group’s interests in associates and jointly controlled entities.
These condensed consolidated interim financial statements have been
prepared in accordance with the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and the Financial
Pronouncements as issued by the Financial Reporting Standards
Council, IAS 34 Interim Financial Reporting, the Companies Act and
the JSE Listings Requirements. 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 2013.
These unaudited interim results have been prepared under the
supervision of GT Sayers, CA(SA).
These condensed consolidated interim financial statements were
approved by the Board of Directors on 18 September 2013.
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 2013.
Estimates
The preparation of interim financial statements requires management
to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets
and liabilities, income and expenses. Actual results may differ from
these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgments 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 2013.
For and on behalf of the Board
Dr. Malesela Motlatla Dr. Willie van Aardt
19 September 2013
--------------------------------------------------------------------
Directors
Chairman: Dr MDC Motlatla* (BA, DCom (Unisa)); Chief Executive
Officer: Dr W van Aardt (BProc (Cum Laude), LLM (UP), LLD (PU CHE)
Admitted Attorney of The High Court of South Africa, QLTT (England
and Wales), Solicitor of the Supreme Court of England and Wales); HJ
Wilken-Jonker* (BComHons (Unisa); Chief Financial Officer: GT Sayers
(CA (SA), BCom (Hons) (UNP), BCompt (Hons) (Unisa)); DC Pentz* (CA
(SA), BComHons); Adv J Noeth* (B Iuris LLB); Adv. N Melville* (B Law,
LLB(Natal) LLM(cum laude)(Natal)SEP(Harvard) RN Xaba* (CA (SA)
BCompt, BCompt (Hons) (Unisa))R Emslie* (B Comm Law, Hons Acc, CA
(SA)) D Brits* (B Com, MBA) (NW) *Non-Executive. Secretary: CD du
Plessis – Sekretari
Transfer secretaries
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
11 Diagonal Street, Johannesburg, 2001
(PO Box 4844, Johannesburg, 2000)
Designated Advisor: Grindrod Bank Limited
Date: 19/09/2013 10:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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