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Audited Consolidated Annual Financial Statements for the Year ended 30 June 2024
SASFIN HOLDINGS LIMITED
(Incorporated in The Republic of South Africa)
(Registration Number 1987/002097/06)
Share code: SFN ISIN: ZAE000006565
("Sasfin" or "the Group")
AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
JUNE 2024 - SHORT FORM ANNOUNCEMENT
At Sasfin we contribute to society by going beyond a bank to enable growth in the businesses and the
global wealth of our clients.
Salient features – Aggregated Group Results#
Key indicators
2024 2023 %
Group Headline earnings (Rm) (58.678) 112.683 (152.07)
Group Headline earning per share (cents) (190.96) 366.18 (152.15)
Earnings per share (cents) (195.57) 353.65 (155.30)
Total Income (including associate income) (Rbn) 1.279 1.389 (7.92)
Group (loss) / profit (Rm) (60.10) 108.8 (155.24)
Cost to income ratio (%) 95.51 86.69 8.82
Return on equity (%) (3.68) 6.81 (154.04)
Net Asset Value per share (cents) 4 930 5 122 (3.75)
Total assets (Rbn) (Note 1) 12.861 14.031 (8.34)
Gross loans and advances (Rbn) 8.886 9.574 (7.19)
Deposits from customers (Rbn) (Note 1) 5.367 5.647 (4.95)
Capital adequacy ratio (%) 15.87 16.23 (Note 2) (2.22)
Group coverage ratio (%) (Note 1) 6.35 5.83 8.92
Credit loss ratio (bps)1 165 117 41.03
Notes:
1 Numbers have been restated for 2023
2 As published in Pillar III report for 30 June 2023
# Aggregated includes continuing and discontinued operations
Financial Performance
The Group posted a Headline Earnings loss of R58.68 million in 2024, compared to a profit of R112.68
million in 2023. Headline Earnings per share decreased from 366.18 cents to a loss of 190.96 cents per
share resulting in NAV per share dropping 3.75% to 4.930 cents.
The previously communicated strategic reset has resulted in a strengthened balance sheet, which has
enabled us to navigate the risks faced by the Group. In terms of the strategic reset and other risks faced
by the Group, once off costs were incurred and short-term lost revenue opportunities contributed to a loss
for the period.
This approach resulted in an increase in net available cash of 10.50% to R1.67 billion (2023: R1.51 billion).
The increase in cash was a result of an intentional decrease in Gross Loans and Advances of 7.19% to
R8.89 billion (2023: R9.57 billion), while Total Core Funding decreased by 1.63% to R9.67 billion (2023:
R9.83 billion). Sasfin Wealth has maintained Assets Under Management and Advice of R64.98 billion
(2023: R67.35 billion) during difficult economic conditions.
The loss was impacted by an increase in expected credit losses and a decline in non-interest income,
driven by negative fair value adjustments in the Private Equity portfolio, and a provision raised in respect
of the administrative sanctions received. The exiting of non-core activities also negatively impacted total
income, while core operating costs remained flat. In due course, in terms of the strategic reset, costs are
expected to reduce.
The Group's core businesses, Wealth and Rental Finance, continued to perform well, while increased
losses were incurred in the Business and Commercial Banking ("BCB") business, which the Group intends
exiting by the end of 2025. While earnings are likely to remain under pressure in the coming financial year,
the expectation is that, thereafter, the Group will be better positioned to generate healthy returns, supported
by the fundamental strengths of its core businesses.
Strategic update
In March 2023, Sasfin announced a strategic reset and has since then made meaningful progress,
including:
- disposing of its Specialised Finance and Commercial Solutions businesses;
- concluding the disposal of its Commercial Property Finance ("CPF") business to ABL, post year
end, and is in the final stages of implementing the disposal of its Capital Equipment Finance
("CEF") business to African Bank Limited ("ABL"), for an aggregate circa R3.14 billion (based on
the June 2024 book closing value);
- closing its Foreign Exchange ("Forex") business and providing its core clients with alternative Forex
solutions;
- progressing the exit of non-strategic private equity investments; and
- announcing its intended delisting from the JSE, subject to relevant approvals, which the Group
aims to conclude in the coming months.
Following the proposed delisting, the Group will continue its strategic reset, by divesting from non-core
activities, including BCB. This business has built strong capabilities over the years, holding significant
inherent value with the potential to thrive in a different environment. This strategy will enable us to focus
on our core Wealth and Rental Finance businesses. Significant progress has been made by exiting non-
core activities and navigating challenges, positioning us well to execute the remaining strategy in the
months ahead.
After due consideration and applying significant judgement, the CEF, CPF and Forex businesses were
classified as discontinued operations for International Financial Reporting Standards ("IFRS") presentation
and disclosure purposes. The presentation of a discontinued operation does not change the Group's
aggregate income earned, expenses incurred or the profit for the year; rather it requires the categorisation
of these items between continuing and discontinued operations. In terms of the IFRS requirements, only
directly attributable income (before the associated cost of funding), related expenses and related taxes are
considered as part of the discontinued operations.
From a commercial perspective, this treatment does not represent the true contribution of either the
discontinued or continuing operations in future periods, as no funding costs (except for the interest on
Series 2 securitised notes) were allocated to the discontinued operations and there is no assumed return
considered from the future cash that will be realised from the sale of these operations. In other words, the
disclosures relating to continuing operations (in terms of IFRS) show only the interest expenses associated
with the R0.5 billion worth of securitised notes directly linked to the sale, and do not consider that Sasfin,
in future periods, will receive R3.14 billion (before tax) and earn a return on the balance of R2.64 billion
(before tax) if it was assumed to settle only the securitised notes and no other liabilities.
Therefore, this treatment, when considered in commercial terms, significantly overstates the profit from
discontinued operations and overstates the loss of continuing operations.
For illustrative purposes, before considering any indirect costs, which will reduce post the disposal, if Sasfin
were to earn a conservative aggregate top-line return of 10% on the net proceeds on the cash received, its
annual continuing operations income would be c. R264 million (before tax) higher than what is presented
in terms of IFRS.
Segmental performance overview
Asset Finance
The business performed well in a highly strained and challenging trading environment, in which our clients
have shown remarkable resilience. Asset Finance continues to make a meaningful contribution to the
Group, achieving an operating profit of R158.7 million for the year (2023: R197.7 million). The decline is
primarily attributed to a 6% reduction in net-interest income and a 7% decrease in non-interest income.
More stringent credit criteria resulted in a decline in the loan book of 1%, but the benefits of this can be
seen in the 10.5% improvement in credit impairment charges. Credit losses and non-performing loans
remained closely managed, with non-performing loans improving from 8.53% to 8.34%. This has been
driven by our focus on enhancing collection systems and vendor management processes through
increased automation, benefiting both the business and our clients. We have also continued to strengthen
our operational, financial, and technological capabilities, improving efficiency and achieving a slight
reduction in operating costs.
Wealth
The year in review marked another phase of growth for the Wealth pillar, which delivered a strong financial
performance during 2024 achieving an operating profit (including associate income) of R139.8 million for
the year (2023: R117.3 million), while growing its client base and expanding its investment offering. This
was achieved in a year of market volatility and concentration of performance around global technology
companies, while assets under management and advice (AUM) of R65.0 billion (2023: R67.4 billion#) were
maintained. The offshore offering, continued on its strong growth trajectory, offset by some consolidation
in local AUM. Sasfin Wealth continues to attract and retain top talent in the industry. Furthermore,
investment in and development of our people has translated into various internal senior promotions over
the last year as well as the continued success of our graduate programme. Several once-off items relating
to prior periods boosted financial performance. These included the release of a provision relating to Land
Bank exposure in the fixed income broking business and the settlement of an insurance claim linked to a
previous operational loss in the stockbroking business.
#Restated
Business and Commercial Banking
BCB recorded an operating loss of R156.09 million (2023: R137.7 million loss) as a result of higher
impairments and lower total income. Net interest income reduced due to lower revenue generated by the
Trade and Debtor Finance business coupled with a deliberate reduction in the property and specialised
lending loan books. Non-interest revenue was negatively impacted by the closure of the foreign exchange
business in the current year. We implemented several strategic measures which included the closure,
disposal, and scaling back of non-core operations. These actions successfully reduced operating costs by
18%.
Dividend Declaration
As a result of the loss, the Board has resolved not to declare a dividend for 2024 (2023: 0.00 cents).
Short Form Announcement
This short-form announcement is the responsibility of the Directors of the Company and is a summary of
the information in the Company's audited annual financial statements for the year ended 30 June 2024
published on SENS on 21 October 2024 ("Annual Results"), and does not contain full or complete details
of the Annual Results, which are available for viewing on the following websites:
Company's website: https://www.sasfin.com/investor-relations
JSE website: https://senspdf.jse.co.za/documents/2024/jse/isse/sfn/sfn2024.pdf
While this announcement is not audited, the Annual Results from which the information in this
announcement is derived, were audited by the Company's auditors, PricewaterhouseCoopers Inc, who
expressed an unmodified opinion thereon. Their audit opinion can be viewed on the Company's website
(https://www.sasfin.com/investor-relations).
Any investment decision by investors and/or shareholders should be based on consideration of the
information contained in the Annual Results. Copies of the Annual Results are available for inspection at
our offices on weekdays during business hours (at no charge) or via a secure electronic location on request
from the Acting Company Secretary (by e-mail: howard.brown@sasfin.com).
Richard Buchholz Michael Sassoon
Chair Group Chief Executive Officer
Johannesburg
22 October 2024
Sponsor
Questco Corporate Advisory Proprietary Limited
Date: 22-10-2024 07:10:00
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