Notes to the consolidated financials statements

for the year ended 30 June 2009

 

 

      2009         2008  
      R’000         R’000  

21.

PREFERENCE SHARE PREMIUM

                
  Balance at the end of the year   199 259         199 259  

22.

COMMITMENTS AND CONTINGENT LIABILITIES

                
  Commitments                
  Capital expenditure authorised and contracted for   1 661         24 637  
  Property under development   22 746         116 465  
  Contracted   22 746         90 131  
  Un-contracted   –         26 334  
  Non-cancellable operating lease rentals for premises are payable as follows:   11 636         10 997  
  One year   4 880         3 419  
  One to five years   6 756         7 578  
  Funds to meet these commitments will be provided from internal Group resources or external funding arrangements as deemed necessary.                
  Contingencies                
  Unutilised letters of credit established and confirmed orders placed on behalf of clients   23 954         40 118  
  Guarantees   14 858         23 924  
      74 855         216 141  

23.

CLASSIFICATION OF ASSETS AND LIABILITIES
  Accounting classifications and fair values
The table below sets out the Group’s classification of each class of financial assets and liabilities, their fair values and carrying amounts.
    Desig-
nated
at fair		 Held
at fair		 Held-to- Loans
and
recei-		 Available Other
amortised		 Other
non-
financial
assets and		 Total
carrying		 Fair
    value value maturity vables for-sale cost liabilities amount value
    R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
  2009                  
  Assets                  
  Cash and cash equivalents – – – 423 671 – – – 423 671 423 671
  Short-term negotiable securities – – 49 689 – – – – 49 689 49 689
  Loans and advances to customers – – – 1 801 485 – – – 1 801 485 1 807 731
  Investment securities 238 341 8 012 – – 14 858 – – 261 211 261 211
  Other receivables – 2 813 – 315 938 – – – 318 751 318 751
  Investments in associated companies – – – – – – 56 707 56 707 56 707
  Other non-financial assets – – – – – – 269 638 269 638  
    238 341 10 825 49 689 2 541 094 14 858 – 326 345 3 181 152  
  Liabilities                  
  Deposit from banks – – – – – 69 777 – 69 777 69 777
  Deposit from customers – – – – – 881 380 – 881 380 870 963
  Long-term borrowings – – – – – 100 000 – 100 000 100 000
  Debt securities issued – – – – – 873 735 – 873 735 883 211
  Other payables – 2 656 – – – 136 554 123 421 262 631 262 631
  Other non-financial liabilities – – – – – – 62 895 62 895  
    – 2 656 – – – 2 061 446 186 316 2 250 418  
  Carrying value has been used where it closely approximates fair value.                  
  2008                  
  Assets                  
  Cash and cash equivalents – – – 449 315 – – – 449 315 449 315
  Short-term negotiable securities – – 55 106 – – – – 55 106 55 106
  Loans and advances to customers – – – 1 803 516 – – – 1 803 516 1 811 577
  Investment securities 176 688 44 681 – – 11 408 – – 232 777 232 777
  Other receivables – 6 343 – 320 764 – – – 327 107 327 107
  Investments in associated companies – – – – – – 36 196 36 196 36 196
  Other non-financial assets – – – – – – 111 735 111 735  
    176 688 51 024 55 106 2 573 595 11 408 – 147 931 3 015 752  
  Liabilities                  
  Deposit from banks – – – – – 21 359 – 21 359 21 359
  Deposit from customers – – – – – 1 108 051 – 1 108 051 1 108 051
  Debt securities issued – – – – – 703 037 – 703 037 703 037
  Other payables – 2 546 – – – 154 295 129 251 286 092 286 092
  Other non-financial liabilities – – – – – – 56 294 56 294  
    – 2 546 – – – 1 986 742 185 545 2 174 833  
                     
  Carrying value has been used where it closely approximates fair value. Fair value estimates are generally subjective in nature, and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. Where available the most suitable measure for fair value is the quoted market price. In the absence of organised secondary markets for financial instruments such as loan deposits an unlisted derivatives, direct market prices are not always available. The fair value of such instruments was therefore calculated on the basis of well established valuation techniques using current market parameters. Changes in assumptions could affect these estimates and the resulting fair values. Derived fair value estimates can not necessarily be substantiated by comparison to independent markets and may not be realised in an immediate sale of the instruments. The discount rates used are the applicable JIBAR rates.

24.

FOREIGN SUBSIDIARY
  During the current year, Sasfin Asia Limited, a subsidiary within the Group, changed its functional currency from South African Rand to US Dollars with effect from 1 March 2009. The change in functional currency was required as the underlying transactions, events and modus operandi changed.
    2009 2008
    R'000 R'000

25.

SECURITISATION

    
  In the ordinary course of business, the Group enters into transactions that result in the transfer of financial assets to third parties or special purpose vehicles. The information below sets out the extent of such transfers, and the Group’s retained interest in transferred assets.    
       
  Transferred assets    
  South African Securitisation Programme (Pty) Limited (“SASP”)              928 351              735 282
       
  The Group has transferred office automation rental instalment contracts to SASP but has retained substantially all of the credit risk associated with the transferred assets, and continues to recognise these assets within loans and advances to customers. The Group securitised a further R200 million worth of finance leases on 17 November 2008.    
       

26.

FUNDS UNDER ADMINISTRATION

    
  Sasfin Securities (Pty) Limited, in a fiduciary capacity on behalf of clients, administers client funds in respect of the following:    
  On a discretionary basis    
  Unlisted equities 78 169 103 561
  Listed equities 23 344 788 27 400 594
  Gilts 135 043 110 538
  Unit trusts 1 205
  Funds held in money market accounts 1 715 757 1 914 630
  Included in Funds under Administration is an amount of R369 million (2008: R358 million) in respect of related parties as defined in note 36. 25 273 758 29 529 528

27.

CAPITALISATION OF BORROWING COSTS

    
  Borrowing costs incurred during the year 11 476 –
  Total borrowing costs capitalised during the year 11 476 –
  The borrowing costs relates to the funding obtained for the development of the new premises in Waverley. The building was ready for use on 30 June 2009 and on this date the Group ceased to capitalise borrowing costs.    
  The capitalisation rates for the two sources of funding used for the development are as follows:
  • Internal funding – 2% below the prime rate
  • External funding (mortgage bond) – 0,85% below the prime rate up until
    30 May 2009 and 10,9% for the month of June 2009.
    

28.

INTEREST INCOME

                
  Interbank   29 908       46 883    
  Short-term negotiable securities   5 728       4 473    
  Instalment finance   206 278       176 607    
  Capital equipment   27 753       21 339    
  Debtor finance   18 239       20 443    
  Trade finance   38 883       41 191    
  Commercial property finance   18 501       6 927    
  Other   25 782       18 191    
  Interest earned on financial assets held at amortised cost   371 072       336 054    

29.

INTEREST EXPENSE

                
  Interbank funding   4 697       1 645    
  Demand deposits   79 625       72 238    
  Notice deposits   602       648    
  Fixed deposits   27 217       23 789    
  Debt securities   96 392       82 586    
  Other   27 217       –    
  Interest paid on financial liabilities held at amortised cost   211 510       180 906    

30.

NON-INTEREST INCOME

                
  Fee and commission income   213 885       184 194    
  Agency revenue   61 870       50 344    
  Net brokerage income and asset management fees   94 656       129 248    
  Confirming fees   21 310       31 624    
  Dividend income   26 106       38 830    
  – on securities held at fair value through profit or loss   3 129       3 618    
  – on investments designated at fair value   22 977       32 168    
  – on other non-financial assets   –       3 044    
  Fair value adjustments on financial instruments held at fair value through                
  profit and loss   2 441       (1 625)    
  Net gains and losses on derivative instruments and foreign exchange transactions   51 515       (352)    
  Profit/(loss) on disposal of property, plant and equipment   19       (53)    
  Net loss on disposal of financial instruments held at fair value through profit and loss   (122)       –    
      471 680       432 210    

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