| Wed 14 Sep 2011, 10:00 | | SFN - Sasfin Holdings Limited - Audited Group results and dividend |
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SFN SFNP
SFN
SFN - Sasfin Holdings Limited - Audited Group results and dividend
declarations for the year ended 30 June 2011
Sasfin Holdings Limited
Incorporated in the Republic of South Africa
(Company registration number: 1987/002097/06)
("Sasfin" or "the Group" or "the Company")
(Ordinary share code: SFN
ISIN: ZAE000006565)
(Preference share code: SFNP
ISIN: ZAE000060273)
Audited Group results and dividend declarations
For the year ended 30 June 2011
Year ended Year ended
30 June 2011 30 June 2010
Headline earnings R96 million R107 million
Headline earnings per ordinary share 297 cents 355 cents
Total assets R4,4 billion R3,6 billion
Funds under management R45,3 billion R36,8 billion
Return on ordinary shareholders` average 11% 16%
equity
Earnings business banking R80 million R43 million
Funding base R2,8 billion R2,1 billion
Group capital adequacy ratio 32% 32%
Financial highlights
30 June 30 June
2011 2010
Change Audited Audited
Consolidated statement of financial position
Total assets (Rm) 23 4 373 3 552
Total gross loans and advances (Rm) 22 2 429 1 983
Non-performing loans and advances (Rm) 29 189 147
Income statement
Earnings attributable to ordinary
shareholders (Rm) (18) 98 120
Headline earnings (Rm) (11) 96 107
Financial performance
Return on ordinary shareholders` average
equity (pps) (5) 11 16
Return on total average assets (pps) (2) 2 4
Operating performance
Non-interest income to total income (pps) (2) 69 71
Efficiency ratio (pps) 2 72 70
Credit loss ratio (pps) 0,3 1,70 1,40
Non-performing advances to total gross loans
and advances (pps) 1 8 7
Share statistics
Earnings per ordinary share (cents) (23) 304 396
Headline earnings per ordinary share (cents) (16) 297 355
Diluted earnings per ordinary share (cents) (23) 304 396
Diluted headline earnings per ordinary share
(cents) (16) 297 355
Number of ordinary shares in issue at end of
the period (`000) 32 237 32 186
Weighted average number of ordinary shares
in issue (`000) 7 32 224 30 203
Diluted weighted average ordinary shares in
issue (`000) 7 32 229 30 233
Dividends per ordinary share relating to
profit for the period (cents) (11) 118 133
Preference share dividend number 14 (cents) 334,73 -
Preference share dividend number 13 (cents) 362,05 -
Preference share dividend number 12 (cents) - 380,55
Preference share dividend number 11 (cents) - 401,51
Net asset value per ordinary share (cents) 5 2 771 2 635
Capital adequacy (unaudited)
Group capital to risk weighted assets (pps) 32 32
Sasfin Bank Limited and its subsidiaries
capital to risk weighted assets (pps) 6 36 30
Employees
Permanent staff complement 4 583 563
Consolidated statement of financial position
% 30 June 30 June
Change 2011 2010
All figures in R`000 Audited Audited
Assets
Cash and cash balances 51 805 233 533 447
Short-term negotiable securities 72 405 58 000
Loans and advances to customers 23 2 332 986 1 902 500
Other receivables 370 925 292 989
Investment securities 405 176 396 017
Investment in associated companies 77 932 65 334
Property, plant and equipment 175 379 184 406
Investment property 51 038 51 038
Taxation 4 534 2 928
Intangible assets and goodwill 69 244 55 217
Deferred tax asset 8 412 9 646
Total assets 23 4 373 264 3 551 522
Liabilities
Interbank funding 60 453 52 094
Deposits from customers 33 1 215 446 911 559
Long-term loans 242 897 182 450
Other payables 374 922 338 187
Debt securities issued 40 1 297 614 924 436
Taxation 9 246 9 784
Deferred tax liability 63 815 69 112
Total liabilities 31 3 264 393 2 487 622
Equity
Ordinary share capital and share premium
162 732 161 341
Reserves 730 425 686 848
Preference share capital and share premium
199 278 199 278
Total equity attributable to equity holders
of the parent 4 1 092 435 1 047 467
Non-controlling interest 16 436 16 433
Total equity 4 1 108 871 1 063 900
Total liabilities and equity 23 4 373 264 3 551 522
Commitments and contingent liabilities 67 711 61 283
Consolidated income statement
% 30 June 30 June
Change 2011 2010
All figures in R`000 Audited Audited
Interest income 359 256 352 052
Interest expense 168 676 172 448
Net interest income 6 190 580 179 604
Non-interest income 420 218 446 134
Total income 610 798 625 738
Impairment charges on loans and advances 37 37 712 27 552
Net income after impairments 573 086 598 186
Operating costs 3 451 277 436 393
Staff costs 199 259 185 883
Other operating expenses 252 018 250 510
Profit from operations 121 809 161 793
Share of associated companies` income 12 205 8 093
Profit before income tax 134 014 169 886
Income tax expense 20 161 30 590
Profit for the year (18) 113 853 139 296
Profit attributable to:
Non-controlling interest 1 693 2 775
Preference shareholders 14 147 16 947
Equity holders of the parent 98 013 119 574
Profit for the year (18) 113 853 139 296
Earnings per ordinary share (cents) 304 396
Diluted earnings per ordinary share (cents) 304 396
Summarised consolidated statement of comprehensive income
% 30 June 30 June
Change 2011 2010
All figures in R`000 Audited Audited
Profit for the year (18) 113 853 139 296
Other comprehensive (loss)/income for the
year, net of income tax (10 396) 625
Foreign currency translation reserve (25 163) (853)
Net gains on remeasurement of available-for-
sale financial assets 335 198
Gains on remeasurement of available-for-sale
financial assets 575 230
Income tax effect (129) (32)
Non-controlling interest (111) -
Net gains on hedge of net investment in
foreign operations 14 432 1 280
Gains on hedge of net investment in foreign
operations 20 044 1 778
Income tax effect (5 612) (498)
Total comprehensive income for the year
(26) 103 457 139 921
Attributable to:
Non-controlling interest 1 804 2 775
Preference shareholders 14 147 16 947
Equity holders of the parent 87 506 120 199
Total comprehensive income for the year
(26) 103 457 139 921
Summarised consolidated statement of cash flows
30 June 30 June
2011 2010
All figures in R`000 Audited Audited
Cash flows from operating activities 61 320 89 269
Movement in operating assets and liabilities (200 395) (14 299)
Net cash flows from operating activities (139 075) 74 970
Net cash flows used in investing activities (30 628) (160 444)
Net cash flows from financing activities 435 019 217 613
Net increase in cash and cash equivalents 265 316 132 139
Cash and cash equivalents at beginning of the period 539 353 403 583
Effect of exchange rate fluctuations on cash held 12 516 3 631
Cash and cash equivalents at end of the period 817 185 539 353
Summarised consolidated statement of changes in equity
30 June 30 June
2011 2010
All figures in R`000 Audited Audited
Opening total shareholders` equity 1 063 900 930 734
Total comprehensive income for the year 103 457 139 921
Profit for the year 113 853 139 296
Other comprehensive income for the year
Foreign currency translation reserve (25 163) (853)
Hedging reserve 14 432 1 280
Available-for-sale reserve 335 198
Transactions with owners recorded directly in equity
Movement in non-controlling interest (1 579) (51 130)
Issue of ordinary shares 1 391 117 865
Share-based payments reserve movements (221) (411)
Preference share dividend (14 147) (16 947)
Ordinary share dividend (43 930) (56 132)
Closing balance 1 108 871 1 063 900
Summarised headline earnings reconciliation
% 30 June 30 June
Change 2011 2010
All figures in R`000 Audited Audited
Earnings are determined as follows:
Earnings attributable to equity holders of (18) 98 013 119 574
the parent
Headline adjustable items (2 402) (12 377)
Loss on sale of property and equipment 11 30
Gross 15 42
Tax impact (4) (12)
Revaluation of investment property (2 413) (12 407)
Gross - (17 232)
Tax impact (2 413) 4 825
Headline earnings (11) 95 611 107 197
Headline earnings per ordinary share (cents) (16) 297 355
Summarised segmental analysis
30 June 30 June
2011 2010
All figures in R`000 Audited Audited
Segment result
Business Banking 80 036 42 802
Capital 1 572 37 825
Treasury 3 172 15 480
Wealth Management 11 100 17 728
Logistics and Risk Management 6 174 6 205
Group 11 799 19 256
Profit for the year 113 853 139 296
Segment revenue
Business Banking 444 707 402 688
Capital 75 475 97 255
Treasury 133 252 142 500
Wealth Management 179 330 173 855
Logistics and Risk Management 69 789 65 771
Inter-group eliminations (110 874) (75 790)
Total segment revenue 791 679 806 279
Commentary
Nature of business
Sasfin is a bank-controlling company listed in the "Financials: Investment
Services" sector of the JSE Limited ("the JSE"). Sasfin`s subsidiaries provide
a wide range of complementary banking, financial and related services.
Business review: Group performance
Business environment
* The South African economy continued its recovery, albeit at a relatively
slow pace with uncertainty and volatility stemming from the global
economy where fears of sovereign credit default and recessionary concerns
exist.
* Locally, the banking sector remained resilient showing signs of stability
and a return of credit appetite in certain areas. In addition, the
changing regulatory environment has impacted growth opportunities and
significantly increased costs of compliance.
* In line with its growth strategies, Sasfin experienced strong asset
growth of 23% year on year, largely underpinned by good business activity
and momentum in the Business Banking segment. Total assets grew to R4,4
billion from R3,6 billion in 2010 on the back of a stabilised cost base.
Financial overview
* The Group`s operating performance was positively impacted by the strong
lending base in the Business Banking segment, which contributed
approximately 70% of the Group`s profit for the year. Business Banking
achieved a profit of R80 million for the period, an increase of 87% over
2010 on the back of impressive asset growth and higher margins. All other
segments traded profitably, although at lower levels when compared to
2010, with Sasfin Capital showing a sharp drop in profits.
* Headline earnings of R96 million (2010: R107 million) represents an 11%
decrease over 2010, whilst headline earnings per share decreased by 16%
due to the increase in the weighted average number of shares in issue.
* The Group`s results were affected by lower business volumes in its non-
banking activities. In particular, Private and Property Private Equity
results were negatively impacted through a combination of impairment
charges and fair value writedowns in its portfolio where certain of the
material investments failed to achieve their profit targets and generate
the resultant revaluation surpluses. The higher than expected impairment
charges on the loan portfolio in this asset class contributed materially
to the increase in the Group impairment charge of 37% over the
corresponding year and a credit loss ratio of 1,7% (2010: 1,4%) at Group
level.
* Notwithstanding the exceptionally strong asset growth in Business
Banking, the credit impairment losses in this division reflect a positive
downward trend in the credit loss ratio to 0,7% from 1,4% in 2010.
* Net interest income on interest-earning assets increased by 6% primarily
due to the larger lending book, with an average cost of funding in line
with the previous year.
* As a result of the various cost-containment initiatives deployed by the
Group, a below inflationary cost growth of 3% was achieved in the year.
Driving cost efficiencies remains an important management tool in an
environment where the outlook for revenue remains uncertain. The Group`s
cost-to-income ratio is still relatively high at 72% (2010: 70%), which
is a consequence of the lower revenue levels and lack of scale in non-
banking activities.
Statement of financial position and capital management review
* Deposits and funding showed growth across all channels, with the funding
book increasing to R1,5 billion from R1,1 billion. The deposit mix has
improved, reflecting a lengthening of the maturity profile of the deposit
book.
* Once again, the Group`s securitisation structure continued to perform
exceedingly well, and remains a leading vehicle in the industry. During
the year, the Group successfully refinanced a tranche of R351 million of
its maturing notes and issued a further R209 million of notes. This issue
was significantly oversubscribed, demonstrating the underlying asset
quality and performance of this class of assets.
* The Group remains well capitalised with a primary tier I equity ratio of
27% (2010: 26%), and a total capital adequacy ratio of 32% (2010: 32%),
well above the South African Reserve Bank`s ("SARB") minimum requirements
and the Group`s internal targets.
* The Group participated in the Basel III quantitative impact assessment as
required by SARB. Based on our internal assessment, the outcomes indicate
that the Group remains well capitalised and meets the new Basel III
liquidity requirements. Sasfin continues to monitor the impact of the
Basel III liquidity standards and ratios in anticipation of the final
regulations to be pronounced by SARB.
Strategic update
During the year, the Group formulated a refined growth strategy in response to
the changing banking and regulatory landscape post the global crises, with a
view to broadening its franchise value. In this regard, the Group has
implemented and embarked on the following initiatives:
* Changed the leadership in the Wealth Management division with greater
focus on asset management offering and more effective mining of its large
private client base
* Consolidated the Business Banking activities into a single unit,
targeting the corporate and SME market in a client centric manner.
* Refocused and downsized its Private and Property Private Equity
businesses in its target market. In addition, the Group will seek to
exit from its Property Private Equity portfolio and also from some of its
mature Private Equity investments, in terms of a clearly-defined
realisation strategy.
* Diversification of funding sources with a more favourable maturing
profile.
To this end, Sasfin Bank Limited ("the Bank") intends to launch a Corporate
Bond programme and has also secured a Euro35 million seven-year facility from
three European Development Funding Institutions which is being finalised with
disbursement expected in the near future.
* Subsequent to 30 June 2011, the Group acquired a 42,9% stake in IQUAD
Group Limited, a diversified group of specialist financial and business
services companies listed on the AltX of the JSE. The objective of this
acquisition is to broaden and expand the Group`s commercial services and
consolidate these activities in a unified structure and leverage off its
enlarged client base.
Prospects
* Sasfin is well positioned to grow its franchise, focusing on the
entrepreneurial market and private client base.
* Despite the prevailing level of global economic uncertainty, the Group
expects to see improved levels of business activity across all segments.
* Sasfin`s growth trajectory is indeed sustainable on the back of its
strong capital position, improved liquidity levels and diversified
funding and activity base.
Basis of preparation and presentation of annual financial statements
Basis of preparation
The summarised audited consolidated financial statements are prepared in
accordance with the recognition and measurement principles of International
Financial Reporting Standards and presented in accordance with the minimum
content, including disclosures, prescribed by IAS 34 Interim Financial
Reporting applied to year-end reporting, and South African Statements and
Interpretations of Statements of Generally Accepted Accounting Practice (AC
500 Standards).
These summarised audited results are a summary of the consolidated annual
financial statements that are prepared in thousands of South African Rand
("R`000") on the historical cost basis, in accordance with International
Financial Reporting Standards ("IFRS") and the Companies Act, except for
certain financial assets and liabilities which are recognised at fair value.
The accounting policies are those presented in the annual financial statements
for the year ended 30 June 2011 and have been applied consistently to the
periods presented in these audited summarised consolidated financial
statements and with those of the previous financial year, and by all Group
entities. The Group has early adopted the amendment to IAS 12 and this did not
have a significant impact on the Group.
The summarised audited consolidated financial statements comprise a
consolidated statement of financial position at 30 June 2011, and a
consolidated income statement, a consolidated statement of comprehensive
income, a summarised statement of changes in equity, a summarised cash flow
statement and summarised segmental analysis reports for the year ended 30 June
2011.
Reports of the independent auditors
The unmodified audit reports of KPMG Inc. and PKF (Jhb) Inc., the independent
auditors, on the annual financial statements and the summarised provisional
financial statements contained herein for the year ended 30 June 2011 dated 8
September 2011, are available for inspection at the Company`s registered
office.
Preference share cash dividend
Notice is hereby given that preference cash dividend number 14 amounting to
334,73 cents (2010: 380,55 cents) per preference share ("preference dividend")
has been declared for the period 1 January 2011 to 30 June 2011, on 1 000 000
preference shares issued at R100,00 each, and on 905 000 preference shares
issued at R110,49 each. The preference dividend is payable to holders of
preference shares recorded in the register of the Company at the close of
business of Friday, 7 October 2011.
The salient dates relating to the preference dividend are as follows:
Last day to trade cum the preference dividend Friday, 30 September
2011
Preference shares commence trading ex the
preference dividend Monday, 3 October 2011
Preference dividend record date Friday, 7 October 2011
Payment date of preference dividend Monday, 10 October 2011
Preference share certificates may not be dematerialised or rematerialised
between Monday, 3 October 2011 and Friday, 7 October 2011, both days
inclusive.
Final ordinary share cash dividend
Notice is hereby given that a final ordinary share cash dividend for the
financial year ended 30 June 2011, amounting to 69 cents per share (2010: 87
cents per share) ("ordinary dividend") has been declared. The ordinary
dividend is payable to holders of ordinary shares recorded in the register of
the Company at the close of business on Friday, 14 October 2011.
Together with the interim ordinary dividend of 49 cents declared on 2 March
2011, the total ordinary dividends for the financial year amount to 118 cents
per share (2010: 133 cents per share).
The salient dates relating to the ordinary dividend are as follows:
Last day to trade cum the ordinary dividend Friday, 7 October 2011
Ordinary shares commence trading ex the ordinary
dividend Monday, 10 October
2011
Ordinary dividend record date Friday, 14 October
2011
Payment date of ordinary dividend Monday, 17 October
2011
Ordinary share certificates may not be dematerialised or rematerialised
between Monday, 10 October 2011 and Friday, 14 October 2011, both days
inclusive.
The above dates and times are subject to amendment. Any such amendment will be
released on SENS and published in the press.
Directorate and changes to company secretariat
Following the retirement of Martin Glatt, Norman Axten was appointed as
non-executive Chairman of the Company and the Bank with effect from 26
November 2010.
Tyrone Soondarjee was appointed an executive director of the Company and the
Bank on 4 October 2010, and assumed the position of financial director of the
Group.
John Moses and Roy Andersen were appointed as non-executive directors of the
Company and the Bank on 21 December 2010 and 14 February 2011 respectively.
Marius Smith retired as non-executive director of the Company and the Bank on
31 March 2011.
Howard Brown was appointed as Company Secretary to the Group on 26 August
2011, following the resignation of Hannetjie Boshoff as Company Secretary due
to an extended period of illness.
Malcolm Segal will be retiring as an executive director of the Company and the
Bank with effect from 31 October 2011. Malcolm will, however, remain on both
boards as a non-executive director.
Notice of annual general meeting and posting of integrated report
The annual general meeting of Sasfin will be held at 29 Scott Street,
Waverley, Johannesburg, on Thursday, 24 November 2011 at 14:00.
The integrated report, incorporating the annual financial statements, will be
posted to shareholders on or about 26 October 2011.
For and on behalf of the Board
CN AXTEN RDEB SASSOON
Chairman Chief Executive
Officer
14 September 2011
This announcement and additional information is available on the website:
www.sasfin.com
Registered Office
29 Scott Street, Waverley, 2090, Johannesburg
Tel: +27 11 809 7500
Fax: +27 11 887 6167/2489
Website: www.sasfin.com
Independent Non-Executive Chairman
CN Axten
Executive Directors
RDEB Sassoon* (Chief Executive Officer), M Segal, TD Soondarjee (Financial
Director)
*British
Non-Executive Directors
R Andersen#, ETB Blight#, GC Dunnington#, DD Mokgatle#, J Moses#,
MS Rylands
# Independent
Group Company Secretary
H Brown
Transfer Secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Joint Auditors
KPMG Inc. and PKF (Jhb) Inc.
Lead Sponsor
KPMG Services (Pty) Limited
Joint Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 14/09/2011 10:00:01 Produced by the JSE SENS Department.
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