Full integrated annual report - African Bank - Investoreports

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48 Integrated report 2011 | African Bank Investments Limited “I am truly grateful to African Bank. When other fi nancial institutions ask for a million things, and also fi nd a million reasons not to give credit, African Bank is always there to help. I am at home here! I have tombstones unveiling for my late husband and his grandmother on 25 September. African Bank has made it possible for me to have this special ceremony. My experience at African Bank has been excellent. Khosi helped me even after the bank had closed, she waited for me to fetch documents from home and showed me compassion. Thank you for making me feel like I matter.” Sehume Rakhadli
Financial review How ABIL generates revenue ABIL generates revenue from sale of merchandise, interest income, assurance income and non-interest income. Sale of merchandise is sale of furniture and appliances on cash or credit. The risk faced by the group in terms of this activity is the over- reliance on suppliers to supply the goods and selling of merchandise before it becomes obsolete. This risk is mitigated by the fact that the group does not rely on a small group of suppliers and actively manages stock turnover to minimise obsolescence. Interest income is earned mainly on funds advanced to individual customers for unsecured personal loans, credit cards and credit to purchase furniture and appliances. The interest rates charged to customers are dependent on a risk rating of the customer which represents the credit risk. The risk relating to this is that the customer may not repay all or a portion of the funds advanced. Thus the group assesses the affordability of repayment and risk profi le of customers carefully. Arrear accounts are actively managed as soon as they are in default. The group fi nances the advances by raising funding through unsecured listed bonds, promissory notes, fi xed deposits and other short term money market deposits. Interest is paid on these funding instruments on a fi xed or fl oating rate basis. The group acquires interest rate risk through the issue of fl oating rate debt as well as currency risk through foreign currency dominated funding. All signifi cant interest rate risk is hedged by the group through interest rate swaps, except to the extent that the group has a natural hedge through its credit card lending portfolio which is at variable interest rates. All foreign currency risk is hedged through currency swaps. The group also faces liquidity risk in that deposits placed on call with African Bank could be withdrawn at any point without notice. This risk is managed through ensuring that it restricts its short term funding to a maximum of 20 percent of total funding and further maintaining both a positive maturity profi le at all times as well as minimum cash levels. The group also earns interest income on cash reserves placed on deposit with other banks in South Africa. This gives rise to counterparty risk in respect of these banks. To minimise this risk, the group limits exposure to any one fi nancial institution and also invests its cash reserves in the banks with the highest credit ratings within South Africa and major banks in foreign countries in which the group’s furniture retail and insurance businesses operate. Assurance income consists of premiums received by the group to insure various risks including death, disability, retrenchment, employer imposed reduction in working hours, loss and damage to goods. There In this section How ABIL generates revenue Financial results Economic profi t Capital management and dividends Group fi nancial statements Company fi nancial statements Banking business unit – results at a glance Retail business unit – results at a glance This is a condensed version of the fi nancial review. For more detailed information please refer to our web-based annual fi nancial statements at http://africanbank. investoreports.com/ africanbank_ar_2011/ fi nancials/ Integrated report 2011 | African Bank Investments Limited 49
Page 1 and 2: Integrated report 2011 Giving peopl
Page 3 and 4: Contents ABIL in perspective Page S
Page 5 and 6: Operating structure ABIL is a publi
Page 7 and 8: Our values These are the basic beli
Page 9 and 10: Eyomhlaba, ABIL’s fi rst R600 mil
Page 11 and 12: Shareholders’ snapshot Top fund m
Page 13 and 14: High level risks R1 R2 R3 R4 R5 R6
Page 15 and 16: 2011 2010 Customers Number of custo
Page 17 and 18: Stakeholders’ issues Link to mate
Page 19 and 20: Stakeholders’ issues Link to mate
Page 21 and 22: 2006 2005 2004 2003 Defi nition 1 1
Page 23 and 24: Mojankunyane Florence Gumbi (52) Po
Page 25 and 26: Samuel Sithole (38)* Position Indep
Page 27 and 28: Izincwadi zababambiqhaza Matseno Po
Page 29 and 30: Izincwadi zababambiqhaza tšwetšwa
Page 37 and 38: The selection of issues was informe
Page 39 and 40: Strategic issue covered Risks cover
Page 41 and 42: ABIL manages its regulatory environ
Page 43 and 44: Within the context of further build
Page 45 and 46: experiencing each other’s day-to-
Page 47 and 48: The Bank has made extensive headway
Page 49 and 50: Credit products EHL made good progr
Page 51: The rollout of this additional dist
Page 55 and 56: Financial review continued Economic
Page 57 and 58: African Bank Investments Limited Co
Page 61 and 62: African Bank Investments Limited Gr
Page 67 and 68: Banking business unit Results at a
Page 69 and 70: Retail business unit Results at a g
Page 71 and 72: Retail business unit Financial stat
Page 73 and 74: Composition of the board The compos
Page 75 and 76: Remuneration report This is a conde
Page 77 and 78: Sign-on bonuses Sign-on bonuses are
Page 79 and 80: Risk management report This is a co
Page 81 and 82: Risk management mechanisms ABIL bel
Page 83 and 84: Mitigation Further detail ABIL cons
Page 85 and 86: Mitigation Further detail This moni
Page 87 and 88: Mitigation Further detail ABIL acce
Page 89 and 90: Listings information Listings excha
Page 91 and 92: Shareholders’ profi le Top fund m
Page 93 and 94: Analysis of preference shareholders
Page 95 and 96: Findings Based on our review of the
Page 97 and 98: Explanatory note On 1 May 2011, bei
Page 99 and 100: Percentage of voting rights require
Page 101 and 102: 10. Special resolution 4 - amendmen
Page 103 and 104:
12. Special resolution 6 - amendmen
Page 105 and 106:
Percentage of voting rights require
Page 107 and 108:
16.6 the minimum funding return (al
Page 109 and 110:
c) the issued share capital and res
Page 111 and 112:
19.3 Directions for obtaining a cop
Page 113 and 114:
Jacobus Dorotheus Maria Gerardus In
Page 115 and 116:
Remuneration policy of African Bank
Page 117 and 118:
Annexure to the notice of AGM - Par
Page 119 and 120:
(v) Share capital of ABIL Ordinary
Page 121 and 122:
Application form: electronic partic
Page 123 and 124:
Form of proxy African Bank Investme
Page 125 and 126:
Summary of shareholders rights in r
Page 127 and 128:
This page has been left blank Integ
Page 129 and 130:
Corporate information Board of dire
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