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FGL
FGL
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 Produced by the JSE SENS Department.
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