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FGL
FGL
FGL - Finbond Group Limited - Audited results for the 12 months ended 29
February 2012
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")
AUDITED RESULTS FOR THE 12 MONTHS ENDED 29 FEBRUARY 2012
STATEMENT OF COMPREHENSIVE INCOME
Figures in rand 2012 2011
Interest income 47 382 983 58 427 288
Interest expense (16 801 690) (15 949 026)
Net interest income/ margin 30 581 294 42 478 262
Fee income 92 305 545 96 150 062
Other microfinance income 30 707 775 21 661 411
Fair value adjustments 22 435 160 22 586
Net commission income (39 127) 1 381 319
Net impairment charge on loans and (23 719 091) (23 461 057)
advances
Operating expenses (127 042 (145 327 085)
430)
Operating profit/(loss) 28 229 125 (7 094 503)
Impairment of goodwill and - (19 444 029)
intangibles
Loss on sale of subsidiary - (115 697)
Gain on a bargain purchase - 167 383
Profit/ (loss) before taxation 28 229 125 (26 486 845)
Taxation (14 805 247) 6 143 136
Profit/ (loss) for the period 13 423 878 (20 343 709)
Other comprehensive income net of - -
taxation
Foreign currency translation - -
differences for foreign operations
Total comprehensive income/ (loss) 13 423 878 (20 343 709)
for the period
Owners of the company 13 552 177 (20 020 806)
Non controlling interest (128 298) (322 903)
Profit/ (loss) for the period
attributable to:
Owners of the company 13 552 177 (20 020 806)
Non controlling interest (128 298) (322 903)
Basic earnings/ (loss) per share 3.5 (5.6)
(cents)
Diluted earnings/ (loss) earnings per 3.5 (5.6)
share (cents)
RECONCILIATION OF HEADLINE LOSS PER SHARE
Figures in rand 2012 2011
Net profit/ (loss) 13 552 177 (20 020
attributable to ordinary 806)
equity holders of the
parent
Adjusted for:
Gain on a bargain - (143 949)
purchase
Loss on sale of -
subsidiary (99 499)
Loss/ (profit) on (131 774)
disposal of property, (46 841)
plant and equipment
Intangible -
impairment 13 999 701
Re-measurement of -
items of a capital (18 223 117)
nature
Fair value (22 435 160) -
adjustment of
investment
properties included
in basic earnings
Tax effect on re- 4 212 043 -
measurement of
items of a capital
nature
Headline loss (4 802 714) (6 311 395)
Less changes in tax 7 726 426 -
rate: effect on
opening deferred
tax balances
related to
previously recorded
fair value gains
Normalised Headline 2 923 712 (6 311 395)
earnings
Normalised Headline 0.8 (1.8)
earnings per share
(cents)
Headline loss per (1.3) (1.8)
share (cents)
Diluted normalised 0.8 (1.8)
headline earnings per
share (cents)
Diluted headline loss (1.3) (1.8)
per share (cents)
STATEMENT OF FINANCIAL POSITION
Figures in rand 2012 2011
Assets
Cash and cash equivalents 53 232 36 938
659 202
Other financial assets 8 607 6 292
373 302
Loans and advances 89 548 95 720
617 902
Other receivables 10 009 9 669
544 248
Property, plant and 19 058 22 540
equipment 249 764
Investment property 229 620 000 207 000 000
Goodwill 61 262 61 262
303 303
Deferred tax 5 783 928 4 632 372
Total Assets 77 122 673 444 056 093
Equity and liabilities
Equity
Share capital and premium 201 775 944 201 793 187
Reserves 7 022 7 439
371 436
Accumulated profit/ (loss) 38 839 26 303
975 854
Equity attributable to 247 638 290 235 536 477
owners of the Company
Non-controlling interest (570 054) (441 756)
Total equity 247 068 235 235 094 721
Liabilities
Trade and other payables 12 911 15 412
381 126
Current tax payable 3 053 2 580
422 031
Finance lease obligation 2 702 4 629
079 418
Other financial liabilities 174 441 821 170 427 271
Loans from shareholders/ 20 000 8 055
group companies 000 299
Deferred tax 16 945 7 857
735 227
Total liabilities 230 054 438 208 961 372
Total equity and 477 122 673 444 056 093
liabilities
STATEMENT OF CHANGES IN EQUITY
Figures in Rand Share Share premium Treasury Total Share
Capital shares Capital
Balance at 1 March 211 274 (9 566 201 708 334
2010 382 200 248)
Loss for the period
- - -
Other comprehensive
income - - - -
Total comprehensive
loss for the period - - - -
Contributions by
and distributions -
to owners:
Own shares - 265 026
transferred based - 265 026
on contingent
consideration
Share based payment
transactions - - - -
Transfer to
contingency reserve - - - -
Own shares (180 173)
purchased - - (180 173)
Disposal of - - - -
interest in
subsidiary
Derecognition of - - - -
non controlling
interest
Transaction with - - - -
Joint Venture,
recorded directly
in equity
Total transactions - - 84 853
with owners 84 853
Balance at 1 March 211 274 (9 481 201 793 187
2011 382 200 395)
Profit for the -
period - - -
Other comprehensive
income - - - -
Total comprehensive
loss for the period - - - -
Contributions by
and distributions
to owners:
Share based payment
transactions - - - -
Transfer to
contingency reserve - - - -
Costs associated - (17 243) - (17 243)
with Rights Issue
Total transactions
with owners - (17 243) - (17 243)
Balance at 29 211 256 201 775 944
February 2012 382 956 (9 481
395)
STATEMENT OF CHANGES IN EQUITY (continued)
Figures in Rand Reserves Foreign Accumulated
currency profit/ (loss)
translation
reserve
Group
Balance at 1 March 45 738 138
2010 5 001 750 2 532
Loss for the period (20 020
- - 806)
Other comprehensive -
income - (2 532)
Total comprehensive - (20 020
loss for the period (2 532) 806)
Contributions by and
distributions to
owners:
Own shares transferred - - -
based on contingent
consideration
Share based payment
transactions 1 660 448 - -
Transfer to
contingency reserve 777 238 - (777 238)
Own shares purchased -
- -
Disposal of interest - - 128 053
in subsidiary
Derecognition of non - - 386 798
controlling interest
Transaction with Joint - - 848 910
Venture, recorded
directly in equity
Total transactions 2 437 686 586 522
with owners -
Balance at 1 March 26 303
2011 7 439 436 - 854
Profit for the period 13 552 177
- -
Other comprehensive - -
income -
Total comprehensive - - 13 552 177
profit for the period
Contributions by and
distributions to -
owners:
Share based payment (1 432 120)
transactions - -
Transfer to (1 016 055)
contingency reserve 1 016 055 -
Costs associated with - - -
Rights Issue
Total transactions (416 055) (1 016 055)
with owners -
Balance at 29 February - 38 839
2012 7 022 371 976
STATEMENT OF CHANGES IN EQUITY (continued)
Figures in Rand Total Non controlling Total
Attributable to interest equity
equity holders
of the company
Group
Balance at 1 March 252 450 142 455 252 593 209
2010 753
Loss for the period (20 020 806) (20 343
(322 903) 709)
Other comprehensive
income (2 532) - (2 532)
Total comprehensive (20 023 (20 346
loss for the period 338) (322 903) 241)
Contributions by
and distributions
to owners:
Own shares 265 026 265 026
transferred based -
on contingent
consideration
Share based payment 1 660 448
transactions - 1 660 448
Transfer to
contingency reserve - - -
Own shares (180 173) (180 173)
purchased -
Disposal of 128 053 (104 322) 23 731
interest in
subsidiary
Derecognition of 386 798 (156 985) 229 812
non controlling
interest
Transaction with 848 910 - 848 910
Joint Venture,
recorded directly
in equity
Total transactions 3 109 061 (261 307) (2 847 754)
with owners
Balance at 1 March 235 536 (441
2011 477 756) 235 094 721
Profit for the 13 552 177 (128 298) 13 423 878
period
Other comprehensive - -
income -
Total comprehensive 13 552 177 (128 298) 13 423 878
profit for the
period
Contributions by
and distributions
to owners:
Share based payment (1 433 120)
transactions - (1 433 120)
Transfer to
contingency reserve - - -
Costs associated (17 243) - (17 243)
with Rights Issue
Total transactions (1 450 364) - (1 450 364)
with owners
Balance at 29 247 638 (570 054) 247 068 235
February 2012 289
STATEMENT OF CASH FLOW
Figures in rand 2012 2011
Cash flows from operating activities
Cash receipts from customers 143 238 735 144 492 513
Cash paid to suppliers and employees (85 221 785) (103 852 613)
Cash generated by operating 58 016 950 40 639 900
activities
Increase in net loans and advances (31 019 869) (33 985 158)
Interest paid (15 545 062) (15 029 746)
Interest received on cash and cash 1 356 862 2 007 976
equivalents
Taxation paid (6 396 638) (7 763 318)
Net cash inflow/(outflow) from 6 412 243 (14 130 346)
operating activities
Cash flows from investing activities
Property, plant and equipment (3 450 801) (7 027 972)
acquired
Proceeds on disposals of property, 1 257 330 596 115
plant and equipment
Investment properties acquired
- -
Dividends received
- -
Increase in loans from /(to) group 11 944 701 (5 417 982)
companies
Increase in financial assets (2 315 071) (634 299)
Expenditure to maintain and expand 7 436 158 (12 484 138)
operating capacity
Business combinations and - 134 147
divisionalisation
Expenditure for expansion - 134 147
Net cash from / (used in) investing 7 436 158 (12 349 990)
activities
Cash flows from financing activities
Repurchase of own shares held as - (63 168)
treasury shares
Finance lease payments (1 927 339) (1 112 161)
Funding/ other financial liabilities 42 000 000 67 654 835
raised
Funding/ other financial liabilities (37 609 360) (61 747 206)
(repaid)
Share premium expenses
(17 244) -
Net cash from financing activities 2 446 057 4 732 300
Increase/(Decrease) in cash and cash 16 294 458 (21 748 036)
equivalents
Cash and cash equivalents at 36 938 202 58 686 238
beginning of period
Cash and cash equivalents at end of 53 232 659 36 938 202
the period
SEGMENTAL REPORT
2012 Group Micro Property Mortgage
Figures in Finance Investmen Originati Reconcili Consolidat
rand t on ng ed
Interest 46 831
revenue 260 - 88 813 462 910 47 382 983
Interest (14 917 (375 847) (1 508 (16 801
expense 704) - 139) 690)
Net (375 847) (1 045
interest 31 913 88 813 228) 30 581 294
revenue 556
Fee income
92 305 - - - 92 305 545
545
Net
commission (899 409) - 886 456 (26 174) (39 127)
income
Other
microfinan 20 183 - - 13 524 33 707 775
ce income 457 318
Fair value 22 431
adjustment - 842 - 3 318 22 435 160
Net impairment (23 719 (23 719
charge on 091) - - - 091)
loans and
advances
Depreciati (5 037 - - - (5 037
on 717) 717)
Operating (125 270 (855 224) (457 499) (4 578 (122 004
expenses 320) 330) 713)
Operating 21 200 17 034 28 229 125
(loss)/ (10 523 771 517 770 564
profit 979)
Net impairment - -
charge on - - -
intangibles
Loss on - -
sale of - - -
subsidiary
Gain on a
bargain - - - - -
purchase
(Loss)/ 21 200 17 034 28 229 125
profit (10 523 771 517 770 564
before 979)
taxation
Taxation (6 771 - (171 950) (7 862 (14 805
097) 200) 247)
(Loss)/ 21 200 9 172 364 13 423 878
profit (17 295 771 345 820
for the 076)
year
129% -158% -3% -68% -100%
Attributab
le to:
Equity 21 200 345 820 9 172 364 13 552 177
holders of (17 166 771
the parent 778)
Non- (128 298) (128 298)
controllin - - -
g interest
Segment 198 862 471 338
assets 745 229 620 3 651 882 39 204 745
000 117
Investment
property - 229 620 - - 229 620
000 000
Loans and
advances 89 548 - - - 89 548 616
616
Cash & 53
cash 25 260 - 908 269 27 064 232 659
equivalent 249 141
s
-
Segment 224 270
liabilitie 204 132 - (225 939) 20 363 509
s 893 556
2011 Group Micro Property Mortgage
Figures in Finance Investmen Originati Reconcili Consolidat
rand t on ng ed
Interest
revenue 56 956 - 51 985 1 419 036 58 427 288
267
Interest (12 673 (45 922) (3 230 (15 949
expense 035) - 069) 026)
Net (45 922) (1 811
interest 44 283 51 985 033) 42 478 262
revenue 232
Fee income
96 150 - - - 96 150 062
062
Net
commission - - 1 312 513 68 806 1 381 319
income
Other
microfinan 21 661 - - - 21 661 411
ce income 411
Fair value
adjustment 22 586 - - 22 586
Net impairment (23 461 (23 461
charge on 057) - - - 057)
loans and
advances
Operating (130 983 (855 953) (416 429) (13 071 (145 327
expenses 651) 052) 085)
Operating (901 876) (14 813 (7 094
(loss)/ 7 672 583 948 069 278) 503)
profit
Net impairment (19 444 (19 444
charge on - - - 029) 029)
intangibles
Loss on (115 697) (115 697)
sale of - - -
subsidiary
Gain on a - -
bargain - 167 383 167 383
purchase
(Loss)/ (901 876) (34 205 (26 486
profit 7 672 583 948 069 621) 845)
before
taxation
Taxation (230 840)
101 382 - 6 272 594 6 143 136
(Loss)/ (901 876) (27 933 (20 343
profit 7 773 965 717 229 027) 709)
for the
year
38% -4% 4% -137% -100%
Attributab
le to:
Equity (901 876) 717 229 (27 933 (20 020
holders of 8 096 868 027) 806)
the parent
Non- (322 903) (322 903)
controllin - - -
g interest
Segment
assets 203 601 207 000 3 900 112 24 922 439 423
245 000 364 721
Investment
property - 207 000 - - 207 000
000 000
Loans and
advances 95 720 - - - 95 720 902
902
Cash &
cash 24 662 - 1 012 308 11 263 36 938 202
equivalent 140 754
s
-
Segment
liabilitie 185 885 - 898 194 17 545 204 329
s 621 185 000
The Group is primarily a financial services provider with significant
business interests in the microfinance environment. The Group is
organised into three major operating divisions, namely: microfinance,
property investment and mortgage origination. These divisions are the
basis on which the Group reports its segment information for internal
purposes. The Group`s operating divisions all operate in South Africa.
Normalised headline earnings per share is headline earnings adjusted for the
impact of changes in tax rates relating to investment properties. Headline
earnings are not affected by fair value adjustments to investment properties,
however effects of changes in tax rates are included in headline earnings in
terms of SAICA`s circular 3/2009 "Headline Earnings", regardless of whether or
not such tax effects are directly related to trading/operating activities. This
charge is included in the headline earnings per share calculation, but not
included in normalised headline earnings per share.
BASIS OF PREPARATION
These Finbond Group Limited ("the Group") financial results for the year ended
29 February 2012 constitute a summary (prepared in accordance with the JSE
Listing Requirements, the South African Companies Act (Act 71 of 2008) as
amended, and the recognition and measurement requirements of International
Financial Reporting Standards and the presentation and disclosure requirements
of International Accounting Standard 34 and the AC 500 interpretation as issued
by the Accounting Profession Council of SAICA) of the Group`s audited financial
statements.
These summarized consolidated financial statements 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 29 February 2012.
The accounting policies applied by the Group in these summarized consolidated
financial statements are consistent with those applied in the previous year.
Audit opinion
This announcement has been audited by the Company`s auditors, KPMG Inc., who
have expressed an unmodified opinion which is available for inspection at the
Company`s registered office.
Annual report
The Company`s annual report, together with a notice convening the annual general
meeting, will be mailed to Finbond shareholders before the end of May 2012, at
which time an announcement incorporating details of the annual general meeting
will be published on SENS.
Executive Overview
Against the backdrop of a challenging operating environment, the continued
worldwide debt crisis and severe retreat in global market liquidity, the
directors are pleased to present the financial results of the Finbond Group for
the twelve months ended 29 February 2012. During the twelve months under review,
Finbond made further progress despite continued challenging market conditions
and an adverse fundraising environment. This period included a number of
achievements and significant developments for Finbond:
* Operating profit from continuing operations: R 28.2 million (500%
improvement)
* Profit for the period attributable to owners of the company: R 13.6 (168%
improvement)
* Earnings before interest, taxation, depreciation and amortization (EBITDA):
R50,1 million(1014% improvement)
* Revenue from continuing operations: R 197 million(10% improvement
* Basic earnings per share: 3,5c (improvement of 164%)
* Normalised headline earnings per share: 0,8c (improvement of 144%)
* Value of loans advanced- R 378,6 million
* Cash received from customers R 536,3 million
* Net tangible asset value - R186 million (7% improvement);
* Operating expenses reduced from R 145,3 million (Feb 2011) to R 127,0
million (Feb 2012), a saving of R 18,3 million (12.6%)
* Received a BB flat Unsecured Credit Rating and BBB- Secured Credit Rating
(using the debtors book as security) from Global Credit Ratings.
The Group continues to manage for the longer term and to invest in people,
training, information technology and systems, as well as in enhanced collection
strategies and systems, in order to build a sustainable, professional business.
We continue to believe that our strategy will allow us to reap the rewards in
the medium and long term.
Micro Finance
Finbond Micro Finance is a leading Southern African micro-finance institution
(MFI) that specializes in the design and delivery of unique value and solution
based ethical finance solutions tailored around borrower requirements rather
than institutionalized lending policies.
Finbond focuses on assisting its clients to gain access to finance and credit
solutions. Finbond target`s the poor, unbanked and underserved market of more
than 40% of the adult population in South Africa actively seeking financial
services but remaining largely unattended and underserviced due to the
traditional bank`s focus on higher income brackets. Finbond operates through
166 branches in South-Africa of which 46 are located in Gauteng, 44 in Kwazulu
Natal, 48 in the Western and Eastern Cape and 28 in the Free State and North
West. Finbond has 460 employees and provides micro finance loans to its clients,
who typically fall into the LSM 1-7 category. Finbond`s overarching strategy is
to be "The best cash disbursing micro finance company in South Africa selling
short term micro finance products putting immediate cash in customers pockets"
Finbond offers micro loans from R 100 - R 7,000 with an average loan size of R
1,424 and an average tenure of about 2.1 months. Given the short term nature of
Finbond`s products, Finbond`s loan portfolio is very cash flow generative. The
whole loan portfolio turns 5,5 times a year. For the twelve months ended
February 2012 Finbond granted R 378,6 million worth of loans and received cash
payments of R 536,3m from customers.
Finbond`s Net Impairment as a percentage of expected instalments amounted to
5.6% and Net Impairment as a percentage of cash received (which is more
conservative than instalments due) stood at 6% at the end of February 2012. 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 88.2% (2011:
94.5%), which is an indication of a microfinance institution`s ability to cope
with estimated loan losses.
Finbond`s gross debtors book remains geared at less than one and half times,
well below industry average.
Finbond`s liquidity position at the end of February 2012 reflects R 53,2 million
cash in bank (2011: 36,9 million). Although the aforementioned liquidity
position seems favourable relative to Finbond`s operations and book size,
Finbond is not immune to the funding and refinancing risks that the Microfinance
market is currently experiencing. As a non-deposit taking MFI, dependent on
development funding from International Development Funders and wholesale funding
from International Banks, Finbond is particularly vulnerable to funding and
refinancing risks in the current environment. During the period under review
Finbond was unable to completely refinance existing funding lines, which placed
the business under liquidity pressure in the first half of the financial year,
given the capital repayments made to existing funders in order to meet maturing
debt obligations. In order to meet these maturing debt obligations, Finbond
shifted the debtor`s book into shorter term loans in order to release cash from
the book. Finbond`s loan portfolio is very cash flow generative given the short
term nature of our book, which is a big positive in the current environment,
providing an important source of internally generated liquidity.
Following the rating of Finbond by Global Credit Ratings, and their decision to
assign a BB flat unsecured rating and a BBB- secured rating (using the debtors
book as security) to Finbond Group Limited, Finbond raised R40million from the
South African debt capital markets in December 2012 thereby refinancing a
portion of existing maturing debt and raising additional funds for debtors book
growth. In addition to this Finbond raised R 20m in equity from shareholders
through a rights offer. In terms of the rights offer, 200,000,000 new Finbond
ordinary shares of 0.0001 cents each in the authorized, but unissued share
capital of Finbond, was offered for subscription to Finbond shareholders who
received the right to subscribe for the rights offer shares on the basis of 52
rights offer shares for every 100 Finbond ordinary shares held, at a
subscription price of 10 cents per rights offer share. Finbond two largest
shareholders, Kings Reign and Net 1 irrevocably undertook to follow their rights
and underwrote the balance of the rights offer in full. The process has been
finalised early in March 2012.
Due to shifting the book to the shorter terms, total segment revenue from
Finbond`s Micro Finance activities, made up of interest, fee and insurance
income (portfolio yield) declined 9% to R159,3 million (2011: R174 million).
Over the past 12 months Finbond continued to improve on and apply strict upfront
credit scoring criteria by implementing full Codix Credit Scores on all loan
products in 1 March 2011. The scores on the various products are monitored on a
monthly basis and adjusted upwards or downwards. This upfront credit scoring is
supported by robust collection strategies and processes to achieve improved
default rates going forward. 100% of Finbond`s book is collected by way of
advance debit orders on the Nupay system.
Subject to obtaining the required funding, Finbond is well positioned for the
implementation of its growth plans in the micro finance market in South Africa.
Mortgage Origination
For the period under review Mortgage Origination contributed less than 1% to
Finbond`s revenue. All of Finbond`s mortgage origination activities have been
outsourced and Finbond now mainly focuses on Micro Finance business.
Effective 1 March 2011, Finbond received 0,01% commission on all transactions
originated through its origination channels without having to spend any
management time, physical expense or effort on the various channels.
Property Investments
Two Independent valuations by professional valuers registered with the South
African Institute of Valuers were again obtained as at 29 February 2012, as
required by IAS 40.
The Independent Valuations revalued Finbond`s property portfolio at R229,6
million (2011: R 207m).
The R229 million of development properties on Finbond`s Balance sheet are held
as passive long term investments. There is no intention to develop the
properties rather to realize a profit over the medium to long term and to invest
the cash realized into the Micro Finance Business. Some of the Investment
Property is currently used as security to fund the micro finance operations.
General Overview
During the past twelve months, Finbond continued the improvement and refinement
of management structures, management information, upfront credit scoring, pay
date management and collection strategies in support of the branch distribution
network. Finbond also continued to invest resources in building the Finbond
Micro Finance brand and a unified culture through: Finbond branded clothing for
personnel, marketing material, revamping of branches, branch infrastructure
spend and training of personnel and customers. The result of these initiatives
will take time to become visible in the bottom line performance of the Company;
however these improvements have already started to show their worth in respect
of the quality of management information systems, standardized operating
procedures and internal control across the Group.
Strategic initiatives under way include:
* Establishing a Mutual Bank namely Finbond Mutual Bank in terms of the
Mutual Banks Act after receiving the necessary approval from the South
African Reserve Bank on 21 May 2012 in order to provide Finbond clients
with full range of low cost banking services through existing branch
infrastructure
* Further diversification of funding base
* Increased sale of short term products, specifically 30 day and 90 day
loans.
* Conservative expansion of branch network in high growth areas
Challenging Business Environment
The financial performance of Non- Bank Micro Finance Institutions in general is
coming under increased pressure due to higher funding costs, an adverse
fundraising environment, higher impairment charges, stagnant loan portfolio
growth and funding and refinancing risks due to current market conditions.
In addition, funding from International Financial Institutions ("IFI`s") and
Development Financial Institutions ("DFI`s) is also reaching its limits due to
counterparty or country exposure limits. European IFI`s (Banks) are also
deleveraging as they work towards higher core capital requirements which
could have a further negative impact on cross border financing. The fact
that many non-bank MFI`s worldwide are experiencing extreme liquidity
constraints also contributes negatively to a very difficult fund raising
environment. Funding constraints will have an adverse impact on many MFI`s
and will contribute to increased levels of refinancing risks, particularly for
non-deposit taking MFI`s dependent on international funding.
There remain numerous challenges for Finbond in the short and medium term, not
only in respect of the prevailing difficult fund raising environment and general
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 larger, better capitalized and funded peers.
Despite the various challenges facing Finbond in the current business
environment we remain committed to the Group`s principle objective of maximizing
shareholder value.
Our major challenge remains to secure significant long term funding in order to
grow our micro finance book. Finbond has built a sound platform and strategic
base from which to grow its Micro Finance operations in South-Africa over the
past two and a half years, but now needs to obtain the necessary funding to
leverage from this platform and reach the Group`s full potential.
The focus for the year ahead will be on accessing long term funding, stricter
lending criteria, decreasing arrears rates, optimal capital utilization, further
reducing operational cost, further improving collections, tighter liquidity
management, further profitability and improved operational efficiency.
Prospects
The challenging 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.
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, liquidity risk and the lack
of availability of funding could have a negative impact on the performance of
the Group in the year ahead.
Dividend
It is the Group`s policy to consider the declaration of a dividend annually.
Given the current economic climate and the need to protect the Group`s balance
sheet the Board of Directors have decided not to declare a dividend for the year
ended 29 February 2012.
For and on behalf of the Board
Dr. Malesela Motlatla Dr. Willie van Aardt
24 May 2012
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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); Chief Compliance Officer: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); RN
Xaba* (CA (SA) BCompt, BCompt (Hons) (Unisa)) *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)
Date: 24/05/2012 15:49:00 Produced by the JSE SENS Department.
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