Page 1

136TH Annual Report For the year ended 31 March 2013


16 June 2013

Contents Board of Directors and Management Structure

4

Notice of AGM

4

Chairman’s Report to Shareholders

5

Directors’ Responsibility for Financial Statements 6 Independent Auditor’s Report Report of the Directors Five year review

7 8 11

financial statements Balance Sheet

12

Statement of Comprehensive Income

13

Statement of Changes in Equity

14

Statement of Cash Flows

15

Notes to the Annual Financial Statements

16

GBS Mutual Bank Head office Community Projects and Sponsorships

50

18–20 Hill Street, Grahamstown 6139 PO Box 114, Grahamstown 6140 Telephone: 046 622 7109 Fax: 046 622 8855 www.gbsbank.co.za

136th Annual Report 2012–2013

1


16 June 2013

Serving our communities since 1877

2

136th Annual Report 2012–2013

136th Annual Report 2012–2013

3


16 June 2013

GBS Mutual Bank Board of directors

management structure

 T C S Tagg, CHAIRman  G H Bloem  P G Clayton  H A Long  A M Marriner  K L Wiblin  A M Vorster, Managing  P Hornby, executive

 A M Vorster, Managing director  P Hornby, Executive director  J G Stapleton, general manager  W S Vallance, General manageR, Cape Town

Notice of the annual general meeting The hundred and thirty-sixth Annual General Meeting of Shareholders will be held at the Bank’s Head Office at 18 – 20 Hill Street, Grahamstown on 25 July 2013, at 17h00.

Agenda 1. To confirm the minutes of the last Annual General Meeting. 2. To receive and consider the report of the Board of Directors and the Annual Financial Statements for the year ended 31 March 2013. 3. To elect Directors in the place of Mesdames K.L. Wiblin and A.M. Marriner and Messrs T.C.S. Tagg and G.H. Bloem who retire in rotation. Being eligible, they offer themselves for re-election and have been duly nominated. 4. To appoint Auditors and fix their remuneration. PricewaterhouseCoopers Inc., Registered Accountants and Auditors, offer themselves for re-election and have been duly nominated. 5. To amend Article 10 (vii) in the GBS Mutual Bank’s Articles of Association by the deletion of the whole of the said Article and substitution thereof of the following:  “The Board may, on the application of the depositor, agree to the refund of a fixed deposit before its due date on such terms as it in its discretion may deem advisable and subject to the terms and conditions listed below;  Fixed deposits invested for a period less than eighteen (18) months: a refund will only be considered if a period of twelve (12) months has elapsed from the date on which the deposit was made or last reinvested with the Bank, provided that the depositor has given at least thirty (30) days’ notice of withdrawal  Fixed deposits invested for a period eighteen (18) months or longer: a refund will only be considered if a period of time, equivalent to 80% of the term of the particular investment, has elapsed from the date on

4

136th Annual Report 2012–2013

which the deposit was made or last reinvested with the Bank. The thirty (30) days’ notice period would apply.  Under certain circumstances as defined in the Act, the above time and notice periods shall not apply.” 6. To amend Article 25 in the GBS Mutual Bank’s Articles of Association by the deletion of the whole of the said Article and substitution thereof of the following:  “The Board shall establish an Investor’s Committee to represent the interest of persons who from time to time hold Fixed Deposits or Savings Deposits in the Bank which value shall equate to more than 2.5% of total deposits, or whose outstanding loans to the Bank are in excess of the 2.5% value as described above. Each person shall be entitled to appoint one person to the Investor’s Committee. Any Director of the Bank or any such person or a Director or member of any such person which is a corporate body or firm may be appointed to such Committee and the members of the Committee shall elect one of their numbers to be the Chairman of the Committee. The functions of and proceedings of members of the Committee shall be determined by the Committee. The Committee shall be entitled to receive all managerial reports which are furnished to the Directors and may require the Managing Director of the Bank or other executive of the Bank to attend any meeting of the Investor’s Committee at the Head Office of the Bank and report to it on the affairs of the Bank.” 7. To fix the remuneration of Directors in terms of Article 21 (vi). 8. To pass a resolution that donations for charitable purposes may be made as the Directors see fit out of available profits. 9. To transact such business as may be brought forward at the Annual General Meeting.

Chairman’s Report to Shareholders I am pleased to report to shareholders on the performance of our Mutual Bank for the year ended 31 March 2013. The year under review was another difficult one for the global economy. Europe, our largest trading partner, slipped into recession, China’s economy slowed while the US had to resolve political issues to avoid hitting a “fiscal cliff”. There are however some recent signs of a positive turnaround with encouraging US economic data now emerging, bond yields in Europe declining and China’s indicators improving. The global economic climate has entrenched the low interest rate environment of past years making this year yet another tough one for savers. This has prompted some investors to search for higher yields outside the traditional fixed interest savings market thereby intensifying competition among banks for retail investors.

Unsecured Credit Extension Unsecured lending has grown significantly in recent years, now topping R400 billion, leading to concerns of a credit bubble. While the Reserve Bank has assured us that this level of credit does not pose a risk to financial stability, it does illustrate that many households and small businesses are relying on unsecured credit to make ends meet. The GBS does not operate in this specialised segment of the market which is high margin and volume driven requiring an extensive retail network.

Strong Financial Performance In spite of competitive trading conditions, we have had a most satisfying year achieving a 6% growth in assets while profitability increased on the back of a slight widening in our margin and decrease in bad debt provisioning. This is a positive reflection on our strategy of steady and profitable balance sheet growth with assets now standing at R913 million and our bad debt ratio running at below the national average. Although the incidence of defaulting debtors is on the decline we remain committed to our conservative credit extension policies.

16 June 2013

industry is a gradual return to personalised customer service and care, probably the result of consumer frustration and increased competition. Over the years our reputation as a customer oriented Bank, our financial stability and performance has largely hinged on well trained and approachable staff. The year under review has been no different. The Managing Director, Anton Vorster, and the management team and staff are to be commended on their dedication to the highest level of customer service, one of our cornerstones that has remained consistent during all stages of the economic cycle.

Directorate Our Bank is most fortunate to have a dedicated, knowledgeable and committed Board of Directors. I record my appreciation and thanks to my Board colleagues for their contributions at Board and Committee levels, their insights and wise counsel. Our Board is a small one which creates greater demands on each member yet, just as in past years, I can report that we have upheld the highest level of corporate governance.

Outlook for 2013/14 Despite the recent sovereign bond downgrading, and the subdued state of our economy, South Africa has reasonable prospects for strong economic growth with the National Development Plan being a corner-stone. We face an exciting and challenging year in terms of information technology upgrades and growth of our depositor and asset bases and believe that, given an enabling economic environment in South Africa, our Bank will prosper along with the rest of our country.

T C S Tagg Chairman 20 May 2013

By order of the Board of Directors.

A M Vorster Managing Director

Management and staff An interesting and welcome development in the banking

136th Annual Report 2012–2013

5


Statement of Responsibility

16 June 2013

directors’ responsibility for financial statements The Directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial statements and the related information. The auditors are responsible for reporting on the fair presentation of the financial statements. The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Mutual Banks Act, 1993. The Directors are also responsible for the Bank’s systems of internal financial and operational controls. These systems are designed to provide reasonable, but not absolute assurance as to the reliability of the financial statements, and to adequately safeguard, verify and

T C S Tagg Chairman

maintain accountability of the assets, and to prevent and detect misstatement and loss. Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review. The financial statements have been prepared on the going concern basis, since the Directors have every reason to believe that the Bank has adequate resources in place to continue in operation for the foreseeable future. The attached annual financial statements set out on pages 8 to 49 were approved by the Board of Directors on 20 May 2013 and are signed on its behalf by:

A M Vorster Managing Director

16 June 2013

Auditor’s Report independent auditor’s report to the members of GBS Mutual bank We have audited the financial statements of GBS Mutual Bank set out on pages 8 to 49, which comprise the balance sheet as at 31 March 2013, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Financial Statements The Bank’s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Mutual Banks Act, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of GBS Mutual Bank as at 31 March 2013, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Mutual Banks Act.

PricewaterhouseCoopers Inc. Director: Chris Booysen Registered Auditor Port Elizabeth 20 May 2013

6

136th Annual Report 2012–2013

136th Annual Report 2012–2013

7


16 June 2013

16 June 2013

Report of the Directors Continued Nature of business  Mortgage Loans  Asset based Finance  savings and investments  short term insurance

economy Interest rates have remained flat at low levels for many months. While no change is expected in the medium term, there is a risk that interest rates may be lowered in an attempt to stimulate the economy. Inflation expectations have stabilised at around 6% which is at the upper limit of the inflation target range, and administered prices remain high. We believe the GBS is well placed to perform at an acceptable level.

Performance The Bank returned to a satisfactory level of profitability during the year with profit before tax more than double that of last year. The results exceeded expectations, particularly since the economic environment remains subdued. The improvement was as a result of better margins and returns on investments, low debt provisions and tight cost controls. Total share deposits declined marginally during the year but there was satisfactory growth in other deposits and in loans and advances. Advances and loans increased by 7,9% year on year with exceptional growth in instalment sales and rentals (21,5%) and some growth in mortgages. Cash and cash equivalents, and investments ended the year on R145 million. The Balance Sheet grew by 6% to R913 million. The Bank remains well capitalised with a capital adequacy ratio of 14,0% at year end against the minimum required ratio of 10%. The interest margin improved as a result of doing more asset based finance lending and ensuring a reasonable return on mortgages. Interest earned on mortgages was again enhanced by a number of development loans. We expect margin income to improve further as the last of the high yielding fixed period shares mature later in 2013.

8

136th Annual Report 2012–2013

Fair value adjustments provided a satisfactory return on the underlying investments. Conservative provisioning in 2011 and 2012 meant that the current year impairment provisions returned to a satisfactory level. While operating expenses were lower than budget, they include additional provision for postretirement benefits, a generous contribution to GADRA Education and a once off payment to our pensioners. The improvement in profit over last year is most satisfactory in a year when interest rates remained low.

corporate governance We recognise that the application of sound corporate governance practices is integral to our operations as a Bank. We do not consider governance to be merely a set of rules but a culture that permeates the Bank. We are committed to the King Code of Corporate Practices and Conduct and are in the process of aligning the Bank’s practices to the revised King III guidelines where possible and practical. In addition, the GBS Mutual Bank subscribes to the Code of Banking Practice and its underlying values. The Board of Directors The Board has the ultimate responsibility for the strategic direction of the GBS Mutual Bank and is committed to the ongoing implementation of a culture of good values and sound corporate governance. The Board is made up of eight Directors, six of whom are Non-Executive, including the Chairman. This ensures that independent thought is brought to bear on Board decisions. Effective control is maintained through a structure of well functioning Board Committees which provide in-depth focus on specific areas. Board meetings are held monthly with additional meetings scheduled to review the budget and determine strategy. This latter meeting is held with senior management. Audit Committee The primary role of the Audit Committee is to review and evaluate the Bank’s risk profile and internal controls, the

efficacy of our accounting and financial systems and both the internal and external audit processes. The Committee reviews the audit plans with the external and internal auditors and approves the scope of the internal auditor’s work programme.

Our approach to risk management, and in particular to credit and liquidity, has remained conservative in the current economic climate. While our arrear statistics have increased since a year ago, they remain below the industry norm.

The Committee also reviews all internal and external audit reports and monitors management’s response to the auditors’ recommendations. The Committee, which met three times during the year, is chaired by a NonExecutive Director, Tony Long.

Risk Management Committee

Remuneration Committee This Committee, chaired by Kerryn Wiblin, is responsible for recommending the Bank’s overall remuneration policy and provides advice to the Board on succession planning. The remuneration policy is designed to recognise the value of the staff and their role within the Bank and ensures competitive remuneration which is designed to attract, motivate and retain a talented staff complement. The Committee met once during the year. IT COMMITTEE This Committee has the responsibility of reviewing and monitoring the Bank’s information technology operations, needs and IT risk management. The Bank has made considerable progress in implementing the integration of the asset based finance module into the Bank’s Core Banking computer system. We plan to be live on the new system by September this year. The Committee, chaired by Angie Marriner, met five times during the year. Directors & Executives Affairs Committee This new Committee was formed during the year. The main objectives are to identify new Board Members, review Board Committee participants, and the performance of the Board and its members. The Committee met once during the year and is chaired by Angie Marriner.

RISK MANAGEMENT The effective management of risk is critical to the growth of the Bank. It encourages a sound credit decision making culture which adequately balances risk and reward. The risk management approach relies both on individual responsibility and collective oversight which is supported by strict and comprehensive reporting.

The Committee, which meets twice a year, ensures that the risk management policies and procedures are reviewed periodically and that banking risks are understood at all the relevant levels within the Bank. The main risks facing the Bank are:  credit risk, the risk that a counterparty will be unable to pay amounts in full on maturity date  liquidity risk arises if the Bank is unable to meet its payment obligations when they fall due  interest rate risk is the risk that the Bank’s financial condition may be adversely affected as a result of changes in interest rate levels  operational risk is the risk of loss suffered as a result of inadequacy of, or failure in internal processes, people, systems and external events  compliance risk refers to the risk of failure to comply with applicable laws, regulations and codes of conduct which may result in regulatory sanction, financial loss or damage to the Bank’s reputation  reputation risk results from damage to the Bank’s image which may impair its ability to operate effectively. Safeguarding the Bank’s reputation is paramount and is the responsibility of both the staff and the Board. These risks arise from social and ethical issues as well as the consequence of some operational risks. Many of these functions are delegated to the Risk Management Sub-Committee, chaired by a Non-Executive Director on a rotational basis and which meets weekly.

STAFF DEVELOPMENT In addition to the Workplace Skills Plan, we actively encourage staff to upgrade their knowledge and skills through incentives. All staff members who are required to, have met the educational requirements of the Financial Advisory and Intermediary Services Act. One new staff member is still to take the exam.

136th Annual Report 2012–2013

9


16 June 2013

16 June 2013

Report of the Directors Continued THANKS

five year review

We again say a warm thank you to our loyal clients and stakeholders who, despite a 30 year low in interest rates have continued to place their trust in “Your Local Bank”. The excellent results allow the Bank to build reserves and grow in the coming years. Sincere thanks go to our dedicated staff and the management team.

BALANCE SHEETS

Thanks also to the Board whose guidance, understanding and insight has been invaluable.

Year ended 31 march (R 000)

2012

2011

2010

2009

Reserves and Liabilities 73 099

67 770

64 975

63 720

61 972

Risk provisions

6 991

8 796

9 638

8 888

7 375

Share deposits

238 872

257 946

239 792

249 401

247 614

Fixed and other deposits

585 146

523 851

480 263

452 985

412 903

15 741

13 421

12 177

9 909

9 396

919 849

871 784

806 845

784 903

739 260

Cash & short term securities

91 206

102 510

119 883

116 948

89 220

Investments

53 350

47 185

30 110

49 732

101 073

Advances - mortgages

497 412

486 206

426 534

378 195

303 312

- Instalment sales, rentals & other

273 558

230 632

224 673

234 789

239 135

4 323

5 251

5 645

5 239

6 520

919 849

871 784

806 845

784 903

739 260

21 969

19 580

17 234

16 400

23 832

Other income

7 306

5 755

4 605

3 584

4 706

Total income

29 275

25 335

21 839

19 984

28 538

(880)

(2 982)

(2 725)

(2 639)

(2 678)

(21 317)

(19 045)

(17 842)

(15 992)

(17 393)

(1 490)

(486)

13

(323)

(1 731)

Profit for the year

5 588

2 822

1 285

1 030

6 736

Other comprehensive income /(loss)

(259 )

11

(30)

718

-

Comprehensive income

5 329

2 833

1 255

1 748

6 736

Capital adequacy at year end

14.0%

14.1%

15.1%

15.7%

16.2%

Bad debt provision: Advances

0.9%

1.2%

1.5%

1.4%

1.4%

72.8%

75.2%

81.7%

80.0%

60.9%

Reserves

Other liabilities

A M Vorster Managing Director 20 May 2013

2013

Assets

Other

Income Statements Net interest margin

Impairments & provisions Operating expenses Tax

Key Ratios

Expenses to total income

10

136th Annual Report 2012–2013

136th Annual Report 2012–2013

11


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

balance sheet at 31 March 2013

statement of comprehensive income For the Year ended 31 march 2013 Notes

2013 R’000

2012 R’000

ASSETS

Notes

2013 R’000

2012 R’000

Interest income

3

72 447

68 541

3

(50 478)

(48 961)

21 969

19 580

(880)

(2 982)

21 089

16 598

7 306

5 755

Cash and cash equivalents

8

91 206

102 510

Interest expense

Advances and loans

9

763 979

708 042

Net interest income

Investments

10

53 350

47 185

Investment in equity instrument

12

666

666

Property and equipment

13

1 367

1 512

51

772

Total non-interest income Fee and commission income

4

3 180

3 453

Fair value adjustments of investments

10

3 639

1 925

Dividend income

353

340

Other operating income

134

37

(21 317)

(19 045)

(20 410)

(18 128)

Commission expenses

(907)

(917)

Profit before income tax

7 078

3 308

(1 490)

(486)

5 588

2 822

(259)

11

10

(318)

13

15

59

(2)

5329

2 833

Current tax asset Other assets

14

191

263

Deferred income tax asset

15

2 048

2 038

912 858

862 988

Total assets LIABILITIES

Net impairment on advances Net interest income after impairment on advances

Share deposits

16

238 872

257 946

Total expenses

Other deposits

16

585 146

523 851

Operating expenses

Other liabilities

17

5 446

4 760

Retirement benefit obligations

18

9 606

8 113

Other long term employee benefits

19

689

548

839 759

795 218

73 099

67 770

912 858

862 988

Total liabilities RESERVES Total liabilities and reserves

6

Income tax expense

5

7

Profit for the year Other comprehensive income Movement in revaluation reserve Fair value (loss) / gain on investments arising during the year on available-for-sale investments Deferred tax Total comprehensive income for the year

12

136th Annual Report 2012–2013

136th Annual Report 2012–2013

13


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

statement of CHANGES IN EQUITY For the Year ended 31 march 2013

statement of CASH FLOWS For the Year ended 31 march 2013

retained earnings R’000 Balance at 1 April 2011

general revaluation reserve reserve R’000 R’000

statutory credit risk reserve R’000

total R’000

2013 R’000 Cash flows from operating activities 72 447

68 541

(50 478)

(48 961)

Fee and commission receipts

3 180

3 453

Fee and commission payments

(907)

(917)

Dividends received

353

340

Other income

134

37

(20 159)

(17 832)

(720)

(332)

3 850

4 329

(56 817)

(69 455)

72

(252)

42 221

61 742

827

324

1 493

1 025

(8 354)

(2 287)

(106)

(95)

-

146

Increase in investments

(2 844)

(15 137)

Net cash used in investing activities

(2 950)

(15 086)

Net decrease in cash and cash equivalents

(11 304)

(17 373)

Cash and cash equivalents at beginning of year

102 510

119 883

91 206

102 510

Interest receipts

750

59 770

688

3 767

64 975

2 822

-

-

-

2 822

Other comprehensive income for the year

-

-

11

-

11

Change in Capital Gains Tax inclusion rate

-

-

(38)

-

(38)

(417)

-

-

417

-

(2 405)

2 405

-

-

-

Balance at 31 March 2012

750

62 175

661

4 184

67 770

Balance at 1 April 2012

750

62 175

661

4 184

67 770

5 588

-

-

-

5 588

-

-

(259)

-

(259)

(467)

-

-

467

-

Changes in operating assets and liabilities:

(5 121)

5 121

-

-

-

Net increase in advances

750

67 296

402

4 651

73 099

Profit for the year

Transfer to statutory credit risk reserve Transfer to general reserves

Interest payments

Payments to employees and suppliers Income taxes paid

Profit for the year Other comprehensive income for the year Transfer to statutory credit risk reserve Transfer to general reserves Balance at 31 March 2013

Cash flows from operating activities before changes in operating assets and liabilities

Net decrease / (increase) in other assets Net increase in deposits Net increase in other liabilities and provisions

Notes  General reserve: represents profits which have been formally appropriated by the Board of Directors, as required by the Mutual Banks Act.  Revaluation reserve: relates to the accumulated unrealised gains and losses on available-for-sale investments.  Statutory credit risk reserve: separate reserve main– tained in terms of regulations to the Mutual Banks Act on all advances that have not specifically been provided for.

Increase in retirement benefit obligations Net cash used in operating activities Cash flows from investing activities Acquisition of property and equipment Proceeds from sale of property and equipment

Cash and cash equivalents at end of year (Note 8)

14

136th Annual Report 2012–2013

2012 R’000

136th Annual Report 2012–2013

15


16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

1. accounting policies

1. accounting policies (continued)

The principal accounting policies set out below are, in all material respects, consistent with those of the prior year. The preparation of financial statements in conformity with International Financial Reporting Standards (IFRS) requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Bank’s accounting policies (refer to note 2). 1.1 Basis of preparation The financial statements are prepared in accordance with and comply with IFRS. The financial statements are prepared under the historical cost convention, except for financial instruments which are accounted for in terms of the stated accounting policies. a) Standards and amendments to existing standards that are not yet effective and have not been early adopted by the Bank The following standards and amendments to existing standards have been published and are mandatory for the Bank’s accounting periods beginning on or after 1 April 2013 or later periods. These standards have not been early adopted. Amendment to IAS 1 Presentation of financial statements. The amendment changes the disclosure of items presented in other comprehensive income (OCI) in the statement of comprehensive income. The amendment requires entities to separate items presented in OCI into two groups, based on whether or not they may be recycled to profit or loss in the future. Items that will not be recycled such as revaluation gains on property, plant and equipment will be presented separately from items that may be recycled in the future, such as deferred gains and losses on cash flow hedges. The amendment does not address which items should be presented in OCI and the option to present items of OCI either before tax or net of tax has been retained. The amendment is effective for year ends commencing on or after 1 July 2012. As the amendment only impacts presentation aspects, there is no impact on the Bank’s reported profits.

16

16 June 2013

136th Annual Report 2012–2013

Amendment to IAS 1 Presentation of financial statements. The amendment clarifies the disclosure requirements for comparative information when an entity provides a third balance sheet either: as required by IAS 8, ‘Accounting policies, changes in accounting estimates and errors’; or voluntarily. The amendment is effective for year ends commencing on or after 1 January 2013. As the amendment only impacts presentation aspects, there is no impact on the Bank’s reported profits. Amendment to IAS 19 Employee Benefits. The amendment makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. The amendment is effective for year ends commencing on or after 1 January 2013. As the amendment only impacts presentation aspects, there is no impact on the Bank’s total reported equity. Amendment to IAS 32 Financial instruments: presentation. The IASB has issued amendments to the application guidance in IAS 32, ‘Financial instruments: Presentation’, that clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. However, the clarified offsetting requirements for amounts presented in the balance sheet continue to be different from US GAAP. The amendment is effective for year ends commencing on or after 1 January 2013. Amendment to IFRS 7 Financial Instruments – Disclosures – Asset and Liability Offsetting. The IASB has published an amendment to IFRS 7, ‘Financial instruments: Disclosures’, reflecting the joint requirements with the FASB to enhance current offsetting disclosures. These new disclosures are intended to facilitate comparison between those entities that prepare IFRS financial statements to those that prepare financial statements in accordance with US GAAP. The amendment is effective for year ends commencing on or after 1 January 2013. As the amendment only impacts presentation aspects, there is no impact on the Bank’s reported profits. IFRS 9 Financial Instruments. This IFRS is part of the IASB’s project to replace IAS 39. IFRS 9 addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value.

not expected to have a significant impact on the Bank’s reported profits.

1.1 Basis of preparation (continued) The IASB has also updated IFRS 9 to include guidance on financial liabilities and derecognition of financial instruments. The accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from IAS 39 without change, except for financial liabilities that are desig– nated at fair value through profit or loss. The IASB has also published an amendment to IFRS 9, that delays the effective date to annual periods beginning on or after 1 January 2015. The original effective date was for annual periods beginning on or after 1 January 2013. This amendment is a result of the Board extending its timeline for completing the remaining phases of its project to replace IAS 39 (for example, impairment and hedge accounting) beyond June 2011, as well as the delay in the insurance project. The amendment confirms the importance of allowing entities to apply the requirements of all the phases of the project to replace IAS 39 at the same time. The requirements to restate comparatives and the disclosures required on transition have also been modified. The Bank is still assessing the impact of this change in accounting policy on the Bank’s financial statements, but does not believe this to have a material impact. IFRS 12 Disclosure of Interests in Other Entities. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. The new standard is effective for year ends commencing on or after 1 January 2013. As the amendment only impacts presentation aspects, there is no impact on the Bank’s reported profits. IFRS 13 Fair value measurement. This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. The new standard is effective from 1 January 2013. The new standard is

1.2 Associated companies Associated companies are entities in which the Bank has significant influence over the financial and operating policies, but which it does not control. Significant influence usually accompanies a shareholding of between 20% and 50% of the associate’s share capital or representation on the associate’s Board of Directors. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Bank’s share of its associate’s profit or losses is recognised in the statement of comprehensive income, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Bank’s share of losses in an associate equals or exceeds its interest in the associate, the Bank does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Bank and its associates are eliminated to the extent of the Bank’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Investments in associates are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If the investment is impaired, provision is made to reduce the carrying amount of the investment to its estimated recoverable amount. Dilution gains and losses arising on investments in associates are recognised in the statement of com– prehensive income. 1.3 Cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents comprise cash on hand, cash held at the South African Reserve Bank, deposits held at call with banks, treasury bills and other short term highly liquid investments with maturity periods of less than 90 days.

136th Annual Report 2012–2013

17


16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

1. accounting policies (continued)

1. accounting policies (continued)

1.4 Advances and loans Advances and loans are financial assets with fixed or determinable payments and include purchased advances. Advances and loans are accounted for at amortised cost using the effective interest rate method. Transaction costs and origination fees received are capitalised to the value of the advance and expensed or taken to interest income over the estimated duration of the advance or loan.

historical experience, modified by the Bank’s historical experience where different. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that do not affect the period on which historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist. Increases in the provisions for advance impairments and any subsequent reversals thereof, or recoveries of amounts previously impaired, are reflected in the statement of comprehensive income.

Advances and loans include rental agreements and lease agreements where the Bank is acting as the lessor. The substance of these transactions is that they are financing arrangements by their nature.

When an advance is deemed uncollectable, it is written off against the related provision for impairments. Subsequent recoveries are credited to the statement of comprehensive income.

The Bank assesses at each balance sheet date whether there is objective evidence that the advances and loans are impaired. Impairment testing of advances is described in note 1.5.

In addition to impairment provisions, a statutory nondistributable credit risk reserve is maintained in terms of the regulations of the Mutual Banks Act on all advances that have not specifically been provided for.

1.5 Impairment of advances

1.6 Investments

Advances are stated net of provisions for impairments. Advances are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any impairment indicators show that it is probable that the Bank will be unable to collect all amounts due, a provision for impairment is made to reduce the carrying amount of the asset to the present value of expected future cash flows.

All financial assets are initially recognised at fair value plus, in the case of a financial asset or minus, in the case of a financial liability not at fair value through profit or loss, transaction costs. The Bank classifies its financial assets into the following categories on acquisition : Held-to-maturity Non-derivative financial assets with fixed or determinable payments and fixed maturity, where management has both the intent and the ability to hold the securities to maturity, are classified as held-to-maturity. Financial assets classified as held-to-maturity by the Bank are carried at amortised cost, using the effective interest rate method, less any provisions for impairment.

Provisions for non-performing advances, covering identified doubtful debts, are based on periodic evaluations of advances and take account of past loss experience, economic conditions and changes in the nature and level of risk exposure. Advances and loans are considered to be non-performing when amounts are due and unpaid for three months, or when specific circumstances are indicative of the advance being nonperforming. Portfolio provisions for the impairment of performing advances cover losses which, although not yet specifically identified, are present in any portfolio of bank advances. Portfolio provisions are calculated based on industry

18

16 June 2013

136th Annual Report 2012–2013

Interest on held-to-maturity investments is included in the statement of comprehensive income. Fair value through profit or loss Where the Bank has elected in terms of IAS 39 to designate financial assets as held at fair value through profit or loss or where financial instruments are held for trading, these financial assets are classified as assets held at fair value

1.6 Investments (continued) through profit or loss. All related realised and unrealised gains and losses arising from the change in fair value of these financial assets are included as a separate line item in the statement of comprehensive income. These gains and losses are recognised in the statement of comprehensive income in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income when the Bank’s right to receive payment is established. Available-for-sale Financial assets that are not held at fair value through profit or loss, originated by the Bank or held-to-maturity, are classified as available-for-sale assets. Unrealised gains or losses arising from the changes in the fair value of available-for-sale assets are recognised in a revaluation reserve in equity via other comprehensive income. On disposal of available-for-sale assets, the fair value adjustments accumulated in equity are recognised in the statement of comprehensive income. If available-forsale assets are considered to be impaired, the cumulative unrealised gain or loss previously recognised in equity is included in the statement of comprehensive income. Dividends on available-for-sale equity instruments are recognised in the statement of comprehensive income when the Bank’s right to receive payment is established. Fair value The fair value of a financial instrument is the amount at which the instrument could be exchanged between willing parties, other than in a forced or liquidation sale. Considering the nature of the Bank’s financial assets, the best evidence of fair value on initial recognition is the transaction price. Subsequent to initial recognition, fair values of financial assets are based on quoted prices excluding transaction costs. Where this is not available, fair value is determined using applicable valuation techniques.

Derecognition Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Bank has transferred substantially all risks and rewards of ownership. 1.7 Properties in possession Properties in possession comprise the amounts outstanding on advances where mortgagors have defaulted and the properties securing the advances have been bought in by the Bank. Until resale, all expenditure and income is allocated to the value of the relevant property in possession. An impairment provision is made where the amount of the property value, or a portion thereof, is considered to be not recoverable. 1.8 Property and equipment Land and buildings comprise banking halls and offices. All property and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Land is not depreciated as it is deemed to have an indefinite useful life. Except for computer mainframes and software, depreciation on other property and equipment is calculated on the reducing balance basis to write down the cost of assets to their residual values over their estimated useful lives as follows: Buildings Motor vehicles Furniture and equipment Computer equipment Computer mainframes & software Banking software

4% 20% 15% 33% 20% straight line 10% straight line

136th Annual Report 2012–2013

19


16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

1. accounting policies (continued)

1. accounting policies (continued)

1.8 Property and equipment (continued) The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of comprehensive income. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 1.9 Impairment of non-financial assets Assets that are subject to amortisation/depreciation are reviewed for impairment at each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use. 1.10 Shares and other deposits Financial liabilities are recognised initially at fair value, being their issue proceeds, minus transaction costs. They are subsequently stated at amortised cost and interest is recognised over the period of the borrowing using the effective interest rate method. No financial liabilities have been classified as financial liabilities through profit or loss. 1.11 Provisions Provisions are recognised when the Bank has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. 1.12 Current and Deferred income tax The tax expense for the period comprises current and deferred income tax. Tax is recognised in profit for the

20

16 June 2013

136th Annual Report 2012–2013

year, except to the extent that it relates to items recog– nised directly in other comprehensive income or equity. In this case, the tax is also recognised in other comprehensive income or equity, respectively. The current income tax charge is calculated on the basis of the tax laws enacted at the balance sheet date. The Bank periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

1.13 Retirement benefit obligations (continued) Pension benefits The Bank has an obligation to pay fixed pensions to certain retired employees. These payments are funded internally, and not through a formal pension fund. The post-retirement pension liability was measured at the present value of estimated future cash outflows based on the fixed pensions and the life expectancy of the pensioners. The valuation of the liability was performed internally based on actuarial life expectancy tables. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to income in the year in which they arise.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Provident fund benefits In accordance with the Bank’s terms of employment, all current employees are required to be members of the GBS Mutual Bank Provident Fund. This fund is a defined contribution plan. The Bank’s contributions to this plan are charged to the statement of comprehensive income in the year to which they relate.

1.13 Retirement benefit obligations

1.14 Revenue recognition

Healthcare benefits It is the policy of the Bank to provide post-retirement healthcare benefits to certain employees employed by the Bank prior to 2002 in the form of medical aid contributions. The entitlement to post-retirement healthcare benefits is based on the employee remaining in service up to retirement age. Valuations of these obligations are carried out by independent actuaries. The costs are assessed using the projected unit credit method.

Interest income and interest expenses are both recognised in the statement of comprehensive income on an accrual basis using the effective interest rate method.

Under this method the cost of providing post-retirement benefits is charged to the statement of comprehensive income to spread the regular cost over the service lives of employees in accordance with the advice of actuaries. The post-retirement healthcare obligation is measured at the present value of estimated future cash outflows. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are immediately charged or credited to income in the year that it arises.

classified as operating leases. Operating leases – where Bank is the lessee Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Operating leases – where Bank is the lessor Payments received under operating leases (net of any incentives granted to the lessee) are credited to the statement of comprehensive income on a straight-line basis over the period of the lease.

2. Key management assumptions In preparing the financial statements, estimates and assumptions are made that could affect the reported amounts of assets and liabilities within current and future financial years. Estimates and judgements are continually evaluated and are based on factors such as historical experience and current best estimates of future events. Key management assumptions are made and disclosed in the following areas: Impairment of advances – notes 1.5 and 6 Property and equipment – notes 1.8 and 13 Retirement benefit obligations – notes 1.13 and 18 Recoverability of deferred income tax assets – note 1.12 Impairment of non-financial assets – note 1.9

Fees and commissions, net of value added tax, are recognised on an accrual basis. Where fees are received in advance, the income is deferred and recognised over the period to which the fees relate. Dividends are recognised when the right to receive payment is established. 1.15 Leases A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are

136th Annual Report 2012–2013

21


16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

2013 R’000

2012 R’000

2013 R’000

2012 R’000

885

845

– prior year under / (over) provision

39

(47)

– fees for other services

45

50

969

848

251

284

-

12

Office rental expense

264

259

507

657

13 740

11 456

1 707

1 609

676

627

2 383

2 236

3. Interest

5. Operating expenses

Interest income

Operating expenses/(income) include the following items:

Mortgages General advances Instalment sales and rentals Investments Other

41 097

37 928

1 674

2 066

25 108

21 436

4 380

6 939

188

172

72 447

68 541

Auditor’s remuneration – audit fees

Depreciation

Interest expense

Loss on disposal of property and equipment

31 538

29 010

367

425

Indefinite period paid-up shares

6 520

7 360

Repairs and maintenance

Subscription shares

2 321

2 325

Staff remuneration and related personnel costs

Fixed period shares

9 732

9 838

-

3

50 478

48 961

Fixed deposits Savings deposits

Other

4. Fee and commission income Fee income Commission income

22

16 June 2013

136th Annual Report 2012–2013

Directors’ emoluments: Executive Directors – salaries and benefits Non-Executive Directors

739

618

2 441

2 835

3 180

3 453

– for services as Directors

136th Annual Report 2012–2013

23


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

2013 R’000

2012 R’000

7. Income tax (expense)/credit (continued) The tax on the Bank’s profit differs from the theoretical amount that would arise using the basic tax rate as follows:

6. Impairment provisions against advances and loans

2013 R’000 (8 796)

(9 638)

Amount utilised

2 685

3 824

Charge to statement of comprehensive income

(880)

(2 982)

468

512

Current year provision

(1 348)

(3 494)

Balance at end of year

(6 991)

(8 796)

Balance at beginning of year

Recovery of amounts previously written off

7 078

3 308

(1 982)

(926)

Income not subject to tax

553

449

Expenses not deductible for tax

(18)

(12)

86

26

(129)

-

Prior year current tax

-

545

Prior year deferred tax

-

(568)

(1 490)

(486)

Bank balances

10 771

6 811

Short-term deposits

19 139

37 068

South African Reserve Bank deposit

18 785

17 174

Treasury bills

41 759

40 727

Cash on hand

752

730

91 206

102 510

Profit before income tax Tax calculated thereon at 28% Tax effect of:

Tax effect of capital gains Analysis:

Recoupments of settled rental and leasing deals

Provisions against non-performing advances

(4 991)

(6 796)

Provision against performing advances

(2 000)

(2 000)

(6 991)

(8 796)

7. Income tax (expense)/credit Current tax

– prior year

(1 441)

-

-

545

Deferred tax – current year – prior year

Tax charge

8. Cash and cash equivalents

South African normal taxation

– current year

2012 R’000

(49)

(463)

-

(568)

(1 490)

(486)

The bank balances and short-term deposits were held with the following financial institutions at year end, who comply with the Bank’s internal risk management policies of only investing with sound, reputable institutions: First National Bank, ABSA Bank, Investec Bank, Grindrod Bank and Rand Merchant Bank. The Bank has an overdraft facility at First National Bank Ltd of R10 million (2012: R10 million). This facility is reviewed annually. Treasury bills are classified as “held-to-maturity” financial instruments. All other cash and cash equivalents are classified as “loans and receivables” financial instruments.

24

136th Annual Report 2012–2013

136th Annual Report 2012–2013

25


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

2013 R’000

2012 R’000

9 . Advances and loans Mortgages General Instalment sales and rentals

Impairment provisions (Note 6)

2013 R’000

2012 R’000

10 . Investments 497 412

486 206

14 736

17 658

258 822

212 974

770 970

716 838

(6 991)

(8 796)

763 979

708 042

Held-to-maturity investments 8 022

5 178

37 094

15 169

-

20 000

3 639

1 925

40 733

37 094

Opening balance

4 913

4 900

Fair value (loss) / gain

(318)

13

Closing balance

4 595

4 913

53 350

47 185

Fixed deposits The fixed deposits were held with Standard Bank and Grindrod (2012: Standard Bank). These financial institutions comply with the Bank’s risk management policies of investing with sound, reputable entities.

Financial instruments designated at fair value through profit or loss Opening balance

Advances and loans are classified as “loans and receivables” financial instruments.

Additions Fair value adjustment through profit or loss

The Bank’s recent experience with average loan repayment periods are as follows:

Closing balance Mortgages

8.1 years

7.7 years

Instalment sales and rentals

2.6 years

2.5 years

General

0.7 years

0.9 years

Commitment for the aggregate amount of advances and re-advances granted but not yet paid out: Instalment sales and rentals

19 328

14 826

Mortgages

22 547

37 114

41 875

51 940

The commitment for advances granted but not yet paid out will be funded out of cash and cash equivalents as well as deposits classified as investments in note 10. Gross amounts due under instalment sale and rental agreements

302 468

248 791

Less: Unearned finance income

(43 646)

(35 817)

258 822

212 974

Available-for-sale investments

Total investments

Financial instruments at fair value through profit or loss comprise an investment in an endowment policy with Momentum, investments in unit trust portfolios with Allan Gray and Momentum Collective Investments and an absolute yield fund with Cadiz Asset Management. The endowment policy is an undated instrument with a loan facility. The investments held with Allan Gray and Momentum Collective Investments are held to partially cover the post-retirement medical obligations in note 18. The absolute yield fund invests in a range of fixed interest instruments and listed property stock. It is a low risk fund which aims to preserve capital and maximise total return over the long term. Available-for-sale investments comprise Investec Bank Limited non-cumulative non-redeemable preference shares bearing dividends at 75% of the prime overdraft rate, carried at fair value of R4 595 000 (2012: R4 913 000). These instruments are classified as equity instruments.

Refer to note 21 for further disclosures regarding credit quality and collateral held.

26

136th Annual Report 2012–2013

136th Annual Report 2012–2013

27


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

11. Investment in associate

13. Property and equipmenT

The investment consists of a 8.65% (2012: 8.65%) interest in Cape Capital Investment and Finance Company Ltd (‘’Cape Capital’’), incorporated in South Africa. 2013 R’000

2012 R’000

-

500

beginning of year

-

166

Reclassification of investment

-

(666)

At end of year

-

-

Investment at cost Share of post-acquisition reserves in equity accounted associates at

At beginning of year

-

666

Reclassification of investment

-

(666)

At end of year

-

-

The investment consists of a 8.65% (2012: 8.65%) interest in Cape Capital Investment and Finance Company Ltd (‘’Cape Capital’’), incorporated in South Africa. Reconciliation of carrying amount of investment: 2013 R’000

At end of year

Total R’000

Year ended 31 March 2013 72

262

1 178

1 512

Additions

-

12

94

106

Depreciation

-

(49)

(202)

(251)

72

225

1 070

1 367

72

718

2 862

3 652

-

(493)

(1 792)

(2 285)

72

225

1 070

1 367

72

431

1 356

1 859

Additions

-

52

43

95

Disposals

-

(154)

(4)

(158)

Depreciation

-

(67)

(217)

(284)

72

262

1 178

1 512

72

729

2 867

3 668

-

(467)

(1 689)

(2 156)

72

262

1 178

1 512

Opening carrying amount

Closing carrying amount

Cost Accumulated depreciation Closing carrying amount

Year ended 31 March 2012

12. Investment in equity instrument

Reclassification of associate

Computer equipment & software R’000

At 31 March 2013

Reconciliation of carrying amount of equity accounted investment:

At beginning of year

Office premises R’000

Furniture, equipment & motor vehicles R’000

2012 R’000

666

-

-

666

666

666

Opening carrying amount

Closing carrying amount

At 31 March 2012 Cost Accumulated depreciation

Cape Capital has a loan at prime + 1% (2012: prime + 0.5%) from the Bank amounting to R773 420 (2012: R2 657 974). This amount has been included in advances.

Closing carrying amount

Office premises consist of land and buildings situated in Grahamstown, the details of which are available at the Bank’s registered office.

28

136th Annual Report 2012–2013

136th Annual Report 2012–2013

29


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

14. OTHER ASSETS

15. Deferred income tax asset (Continued)

Sundry debtors South African Revenue Services – VAT

2013 R’000

2012 R’000

16

26

175

237

191

263

15. Deferred income tax asset

Deferred income tax is attributable to the following items:

31 March 2012 R’000

The movement on the deferred income tax account is as follows: 2013 R’000 2 038

3 109

Charge to the profit and loss component of the statement of comprehensive income (note 7)

(49)

(1 031)

Credit/(charge) directly to other comprehensive income

59

(2)

-

(38)

2 048

2 038

At beginning of year

Change in Capital Gains Tax inclusion rate recognised in the Statement of Changes in Equity At end of year

30

2012 R’000

136th Annual Report 2012–2013

Credited to OCI A R’000

31 March 2013 R’000

Provisions against advances

550

(4)

-

546

Leave pay accrual

200

(16)

-

184

Deferred income

-

395

-

395

2 272

417

-

2 689

Other long term employee benefits

192

312

-

504

Assessed loss

190

(190)

-

-

Deferred income tax asset

3 404

914

-

4 318

Accelerated depreciation

(175)

(98)

-

(273)

Deferred capital gains tax

(264)

(171)

59

(376)

Rental deals

(927)

(694)

-

(1 621)

(1 366)

(963)

59

(2 270)

2 038

(49)

59

2 048

Retirement benefit obligations Deferred income taxes are calculated on all temporary differences under the liability method using the substantively enacted corporate tax rate of 28% (2012 : 28%).

(Charged) / credited to profit R’000

Deferred income tax liability

Net deferred income tax asset

A

– Other comprehensive income

136th Annual Report 2012–2013

31


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

2013 R’000

2012 R’000

2013 R’000

16 . deposits

18. Retirement benefit obligations

Share deposits

The Bank’s retirement obligations are summarised as follows: 102 674

118 797

Subscription shares

39 192

41 362

Fixed period shares

97 006

97 787

238 872

257 946

565 011

503 140

20 135

20 711

585 146

523 851

2 353

587

Indefinite period shares

Other deposits Fixed and call deposits Savings and transmission deposits

There is a net commitment for the approved redemption of shares amounting to:

Term

Interest method

Indefinite, minimum of 15 months

Variable

Subscription shares

36 months

Variable

Fixed period shares

60 months

Fixed

Ranges from 1 to 60 months

Variable

Demand

Variable

Fixed and call deposits Savings and transmission deposits

9 047

7 554

559

559

9 606

8 113

– Average investment returns

9.00%

9.40%

– Medical cost inflation

7.30%

7.25%

– In-service employees

17

17

– Retired members

17

17

34

34

– In-service employees

49

48

– Retired members

75

74

– interest cost

692

648

– current service cost

201

171

– actuarial loss

984

573

1 877

1 392

Benefits paid

(384)

(367)

Net increase in liability

1 493

1 025

Post-retirement healthcare obligation Pension liability

Post-retirement healthcare obligation The main actuarial assumptions used in the calculation of the healthcare obligation were:

Post-retirement mortality tables: PA90 (Retired members) and SA1956/62 (In-service employees) – Average number of members:

Details of the various deposits offered are as follows:

Indefinite period shares

2012 R’000

– Average age of members:

Increase in liability Amounts recognised in the statement of comprehensive income were:

2013 R’000

2012 R’000

17. Other liabilities

32

Sundry creditors

1 740

2 797

Accruals

2 294

1 563

Deferred income

1 412

400

5 446

4 760

136th Annual Report 2012–2013

136th Annual Report 2012–2013

33


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

18. Retirement benefit obligations (continued)

18. Retirement benefit obligations (continued)

Included in investments held at fair value (note 10) is an investment with a carrying amount of R4.2m (2012 : R3.6m) which the Directors of the Bank have designated to fund the post-retirement medical aid liability. This is not a specific plan asset as defined and has thus been disclosed separately. The movement on the investment account has been included in “fair value adjustments of investments” in the statement of comprehensive income. Expected contributions to the retirement benefit obligations for the year ended 31 March 2014 are anticipated to be R421 000.

As at 31 March

Present value of defined benefit obligation R’000

Experience adjustments on plan liabilities loss R’000

2013

9 047

504

2012

7 554

54

2011

6 529

244

2010

5 880

449

2009

5 070

100

2013 R’000

2012 R’000

Sensitivity analysis

Pension liability The main actuarial assumptions used to calculate the Bank’s liability in respect of unfunded pension obligations were a discount rate of 7% (2012: 8.19%) and life expectancies based on actuarial life expectancy tables (refer note 1.13). There are 6 former employees and spouses included in this plan, with an average age of 81 years. There was no movement in the pension liability.

At beginning and end of year

2013 R’000

2012 R’000

559

559

GBS Mutual Bank Provident Fund This plan is a defined contribution plan registered under the Pension Funds Act and is funded through contributions made by the Bank. The fund has 38 (2012: 38) members and total contributions for the year amounted to R 1 267 233 (2012: R1 151 454).

19. Other long term employee benefits 2013 R’000

2012 R’000

At beginning of year

548

355

Additional provision charged to statement of comprehensive income

171

193

Amount utilised against provision

(30)

-

At end of year

689

548

Service awards

A 1.0% increase in the medical cost inflation rate will result in the following: – increase in current service cost – increase in liability – increase in interest cost

42

37

1 285

1 047

101

88

The benefit relates to long-service awards. Employees are entitled to this benefit provided that: – they remain in service up to the date of retirement (normally about 60 years of age) or on death of the employee; – they have worked for the Bank for a minimum of 15 years (unless specifically agreed otherwise by the Board). Generally, the award is calculated on 3 months cost to company (the Board may however approve additional amounts in exceptional circumstances).

A 1.0% decrease in the medical cost inflation rate will result in the following: – decrease in current service cost – decrease in liability – decrease in interest cost

(34)

(30)

(1 058)

(865)

(84)

(74)

While in service, a staff member whose service to the Bank falls within the categories as listed below, will receive a long-service award from the Bank, as follows : – 35 years: R15 000 – 25 years: R10 000 – 15 years: R3 000 The Rand values are taxed in the hands of the recipients and may be adjusted for inflation. The following rates were used in the calculation for the provision: Discount rate: 7.37% Estimated salary increases: 7.50% The mortality / staff turnover assumption is expected to be 35% (2012: 27.7%)

34

136th Annual Report 2012–2013

136th Annual Report 2012–2013

35


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

20. Related party transactions

20. Related party transactions (continued)

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operating decisions. The Bank’s related parties are the Bank’s Directors, key management personnel and the Bank’s subsidiary. A number of banking transactions are entered into with related parties in the normal course of business. These include advances and deposits. These transactions were carried out on commercial terms and conditions and at market rates. Details of related party transactions, outstanding balances at the year end, and related expenses and income for the year are as follows: 2012 R’000

Directors and key management

– Short-term employee and consulting benefits

2 743

421

393

676

627

3 996

3 763

Non-Executive Directors' fees – for services as Directors

2 659

2 899

Compensation

Advances and loans Advances and loans outstanding at end of year

2012 R’000

Other expenses

– Post-employment benefits 2013 R’000

2013 R’000

3 024

No provision for impairment has been recognised in respect of advances and loans provided to related parties (2012: R Nil).

Related Entities Grahamstown Brokering Services (Subsidiary)

Deposits Deposits at end of year

5 067

6 472

Key management has been defined as the Board of Directors and other members of management who are considered to be key to the operation of the Bank. The definition of key management includes the close members of family of key management personnel. These are limited to their domestic partners.

21. Financial risk management 21.1 Strategy in using financial instruments

Other transactions – Sale of motor vehicle to key management personnel

-

140

– Loss on sale of vehicle

-

(4)

No amounts are outstanding on this transaction. The consideration received on the transaction was for cash.

36

136th Annual Report 2012–2013

In the prior year, a shelf company was acquired. The Bank holds all the issued share capital which was acquired at a cost of R100. As at balance sheet date, the company has not engaged in any trading activities. No provisions for impairment were recognised in the current financial year in respect of loans to related parties (2012 : Rnil).

By its nature, the Bank’s activities are principally related to the use of financial instruments. The Bank accepts deposits from customers at both fixed and floating rates and for various periods and seeks to earn above average interest rates by investing these funds in high quality assets. The Bank does not trade in derivative financial instruments. The Bank’s objectives, policies and processes for managing financial risks is consistent with that of the prior year.

136th Annual Report 2012–2013

37


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

21. Financial risk management (continued)

21. Financial risk management (continued)

21.2 Fair value estimation

21.4 Credit risk Credit risk is the risk that the counterparty will be unable to pay amounts in full on maturity date. The Bank manages the levels of credit risk by placing limits on the amount of risk accepted in relation to any one counterparty. In the management of credit risk, the Bank limits its lending to those products in which it has knowledge of the market and has the relevant expertise. New product approval is a high level management decision. Credit risk management is conducted in terms of documented policies and procedures which include credit granting, arrears management and management reporting systems.

The carrying amount less the impairment provision of all financial assets not carried at fair value, are assumed to approximate their fair values. The carrying amount of all financial liabilities not carried at fair value, are assumed to approximate their fair values, other than share and other deposits which have a fair value of R849 519 552, compared to a carrying value of R824 018 419, due to the fact that certain share and other deposits (note 16) are issued at a fixed rate which exceeds current market rates as they were issued in prior years (2012: fair value of R803 415 000, compared to a carrying value of R781 797 000).

Credit risk management is consistent to that of previous years.

IFRS 7 requires the disclosure of fair value measurements by level of the following fair value measurement hierarchy: – Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); – Inputs other than quoted prices included within level 1 that are observable for the assets or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and – Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

21.4.1 Maximum exposure to credit risk and collateral held For financial assets recognised on the balance sheet, the maximum exposure to credit risk equals the carrying amount. The Bank analyses its exposure to credit risk relating to advances based on past due and impaired advances, less collateral held or other credit enhancements. Past due and impaired advances are defined as those advances that are in arrears, or that have been specifically provided for.

The following table presents the Bank’s assets and liabilities that are measured at fair value at 31 March 2013: Level 1

Level 2

Level 3

The following table calculates the Bank’s exposure to credit risk in relation to advances:

Advances – Mortgage loans R’000

Advances – Instalment sales and rentals R’000

Advances – General R’000

Total R’000

Gross

497 412

258 822

14 736

770 970

Performing advances

469 758

251 399

14 689

735 846

Estimated value of collateral held

(469 758)

(234 472)

(14 689)

(718 919)

Estimated exposure to credit risk

-

16 927

-

16 927

Past due and impaired advances

27 654

7 423

47

35 124

Estimated value of collateral held

(26 481)

(2 985)

(47)

(29 513)

Estimated exposure to credit risk

1 173

4 438

-

5 611

Assets Financial assets at fair value through profit or loss – Investments (note 10)

-

40 733

-

Available-for-sale investments – Investments (note 10)

4 595

-

The fair value of financial assets at fair value through profit or loss are provided by the manager or the administrator of the respective funds, and are determined using observable inputs. The fair value of availablefor-sale financial assets are determined by reference to the quoted bid price, due to the fact that these investments are listed equities. 21.3 Capital adequacy The Bank’s capital requirement is made up of both first tier capital, the reserves, and second tier capital, being a portion of the fixed period share capital. The amount of second tier capital cannot exceed that of first tier capital. The capital adequacy ratio of all banks is monitored by the South African Reserve Bank.

-

2013

The Bank has a statutory capital requirement, in terms of the Mutual Banks Act, which sets a minimum amount of capital and reserves to be held. This amount, termed the capital adequacy ratio, is set at 10% of risk weighted assets. This ratio in effect determines the amount the Bank may lend out on advances. The average capital adequacy ratio for the year under review was 13.99% (2012: 14.89%).

38

136th Annual Report 2012–2013

136th Annual Report 2012–2013

39


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

21. Financial risk management (continued)

21. Financial risk management (continued)

21.4.1 Maximum exposure to credit risk and collateral held (continued)

21.4.2 Credit quality

2012 Gross Performing advances

The credit quality of advances is managed in terms of the Bank’s credit risk policies which include credit granting mandates. Each application is individually assessed, initially by management and thereafter, if needed in terms of mandates, by the Risk Management Sub-Committee and the Board.

Advances – Mortgage loans R’000

Advances – Instalment sales & rentals R’000

Advances – General R’000

Total R’000

486 206

212 974

17 658

716 838

The credit quality of advances can be summarised as follows:

455 385

203 451

17 476

676 312

Estimated value of collateral held

(455 385)

(184 805)

(17 476)

(657 666)

Estimated exposure to credit risk

-

18 646

-

18 646

Performing advances

Past due and impaired advances

30 821

9 523

182

40 526

Past due and impaired advances

Estimated value of collateral held

(30 250)

(2 666)

(169)

(33 085)

Estimated exposure to credit risk

571

6 857

13

7 441

In the 2013 and 2012 tables above, if the collateral held against an advance exceeded the outstanding amount, the value of the collateral was limited to the outstanding amount. The Bank holds the following types of collateral within the following classes: – Mortgages: First mortgage bonds and personal sureties. – Instalment sales and rentals: Assets financed, and personal and entity sureties. – General: Hard collateral, such as cession of bank deposits, and personal sureties. For most forms of security, the collateral given is valued only on origination of the advance or in the course of enforcement actions. The value of security is not updated except where an advance is individually assessed as impaired.

2013

Impaired advances Unimpaired advances: 0 – 3 months in arrears Unimpaired advances: more than 3 months in arrears Total Impaired advances (as above) Security against impaired advances Net impaired advances

Advances – Mortgage loans R’000

Advances – Instalment sales & rentals R’000

Advances – General R’000

Total R’000

469 758

251 399

14 689

735 846

27 654

7 423

47

35 124

2 899

4 185

-

7 084

20 770

3 097

47

23 914

3 985

141

-

4 126

497 412

258 822

14 736

770 970

2 899

4 185

-

7 084

(1 726)

( 367)

-

(2 093)

1 173

3 818

-

4 991

In cases where an advance is not individually assessed as impaired, the collateral value is determined as follows: – Mortgages: the original valuation of the property; – Instalment sales and rentals: the original cost of the asset is depreciated. In instances where the asset financed is a motor vehicle, the trade-in value, net of repossession costs, is used as the value of the security. The Bank is permitted to sell and repledge all collateral it holds as security against advances. During the 2013 and 2012 financial year, the Bank did not recognise any collateral it held as security against advances, as an asset of the Bank.

40

136th Annual Report 2012–2013

136th Annual Report 2012–2013

41


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

21. Financial risk management (continued)

21. Financial risk management (continued)

21.4.3 Geographical concentration of credit risk

21.4.2 Credit quality (continued)

2012 Performing advances Past due and impaired advances Impaired advances Unimpaired advances: 0 – 3 months in arrears Unimpaired advances: more than 3 months in arrears Total

Impaired advances (as above) Security against impaired advances Net impaired advances

Geographical sector risk concentrations within the customer advances portfolio were as follows:

Advances – Mortgage loans R’000

Advances – Instalment sales & rentals R’000

Advances – General R’000

Total R’000

455 385

203 451

17 476

676 312

30 821

9 523

182

40 526

2 412

7 222

13

9 647

23 575

1 854

169

25 598

4 834

486 206

447

212 974

-

17 658

5 281

716 838

2 412

7 222

13

9 647

(1 841)

(1 010)

-

(2 851)

571

6 212

13

6 796

Advances are defined as non-performing if they have a specific provision for loss, or are in arrears.

Eastern Cape %

Western Cape %

Other %

Total %

Mortgage loans

66

29

5

100

General

89

10

1

100

Instalment sales and rentals

27

40

33

100

Specific impairment provision

29

62

9

100

Eastern Cape %

Western Cape %

Other %

Total %

Mortgage loans

67

29

4

100

General

96

3

1

100

Instalment sales and rentals

30

61

9

100

Specific impairment provision

32

60

8

100

2013

2012

21.5 Market risk The Bank is exposed to market risk, which is the risk that the Bank’s earnings or capital, or its ability to meet business objectives, will be adversely affected by changes in the level or volatility of market rates or prices such as interest rates and equity prices. Market risk arises from the Bank’s holding of assets that are exposed to general and specific market movements. Essentially they comprise treasury bills, which are held to maturity and thus limit the Bank’s exposure, and an investment in preference shares, an endowment policy and unit trusts (note 10). 21.5.1 Interest rate risk Interest rate risk is the risk that the Bank’s financial condition may be adversely affected as a result of changes in interest rate levels. The Bank is exposed to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest rate margins are monitored as part of the Bank’s normal risk management processes. In order to preserve the Bank’s liquidity and provide an adequate second tier capital base, fixed period shares having a fixed interest rate and redemption date are issued, as considered necessary. In a declining or low interest rate environment, as is currently experienced, this has a negative impact on the Bank’s net interest margin. A 1% increase in the prime rate is expected to increase pre-tax net margins by R3.406m (2012: R2.788m) per annum and a 1% decrease is expected to reduce pre-tax net margins by R3.490m (2012: R2.887m) per annum. The following demonstrates the Bank’s interest rate repricing mismatch at 31 March 2013

42

136th Annual Report 2012–2013

136th Annual Report 2012–2013

43


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

21. Financial risk management (continued)

21. Financial risk management (continued)

21.5.1 Interest rate risk (continued)

2013 Assets Liabilities Other

2012 Assets Liabilities Other

21.5.2 Price risk (continued) 0 – 31 days R’000

32 – 90 days R’000

91 – 365 days R’000

Other R’000

807 463

30 000

8 022

45 995

(181 943)

(199 402)

(217 492)

(167 332)

-

-

-

(125 311)

625 520

(169 402)

(209 470)

(246 648)

0 – 31 days R’000

32 – 90 days R’000

91 – 365 days R’000

Other R’000

757 367

37 124

-

47 850

(160 668)

(214 551)

(276 258)

(77 144)

-

-

-

(113 720)

596 699

(177 427)

(276 258)

(143 014)

21.5.2 Price risk The table below lists financial instruments accounted for at fair value, the values of which fluctuate with a combination of changes in stock market indices, interest rate cycles and exchange rate fluctuations. As there are no published indices to benchmark these investments against, it is not possible to quantify possible gains or losses on these investments with the movement in the equity market, fixed interest market or currency fluctuations. 2013 R’000

2012 R’000

Absolute yield fund

16 836

15 338

Endowment Policy

19 714

18 155

Preference Shares

4 595

4 913

Medical Investment

4 183

3 601

45 328

42 007

Endowment Policy This is a tax free, liquid investment which is and has been held for the long term to enhance the yield on surplus cash. The investment is held in a policy of insurance whose assets are invested in equities, cash, bonds, property and offshore investments. The asset allocation largely resembles that of a balanced unit trust: 2013

2012

71%

66%

6%

5%

Bonds

10%

15%

Property

11%

12%

2%

2%

South African Equities Cash

Offshore assets

The policy is a smooth bonus investment declaring an interim bonus rate at the beginning of each year and a final bonus shortly after the year end. The year end of the policy is however not co-terminus with that of the Bank. The objective is to smooth out investment gains over a period of time thereby enabling bonus declarations in periods of poor or even negative returns. Preference Shares These preference shares are long term liquid investments held to enhance the yield on our surplus cash. The yield is set at 75% of the prime overdraft rate. As the rate attached to the preference shares is not a fixed coupon rate, the capital value should not react to rises and falls in interest rates in the same manner as bonds. Share price fluctuations rather reflect investor sentiment which could be driven by potential changes in tax or bank legislation, and/or other fixed interest investments available in the market. Medical Investment The medical investment was created as partial funding for the post-retirement healthcare obligation. This long term investment is made up of unit trust investments, spread over two asset managers, with the asset allocation largely reflecting a balanced portfolio of equities, cash, bonds, property and offshore investments. Their percentage allocations are similar to those reflected above in the Endowment Policy. Absolute yield fund The fund invests in a range of fixed interest instruments and listed property stock. It is a low risk fund which aims to preserve capital and maximise total return over the long term. The fund aims to provide investors with a return of three percent in excess of CPI inflation over a rolling three years and a positive return over any rolling twelve month period.

21.6 Liquidity risk Liquidity risk is the risk that the Bank is unable to meet its payment obligations when they fall due and to replace funds when they are withdrawn, the consequence of which may be the failure to meet obligations to repay depositors and fulfil commitments to lend. The risk that it will be unable to do so is inherent in all banking operations and can be impacted by a range of institution-specific and market-wide events.

44

136th Annual Report 2012–2013

136th Annual Report 2012–2013

45


16 June 2013

16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

21. Financial risk management (continued)

22. Commitments

21.6 Liquidity risk (continued)

(a) Operating lease commitments

The Bank is exposed to liquidity risk relating to daily calls on its cash resources from call accounts, savings accounts, maturing deposits and loan draw downs. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest bearing liabilities as they mature, are important factors in controlling the Bank’s exposure to liquidity risk. The Bank’s policy with respect to managing liquidity risk is one of extreme conservatism in that policies dictate that approximately twenty percent of deposits maturing within twelve months must be held in cash or liquid investments, which comfortably exceeds the statutory minimum liquid asset requirements. In addition we meet annually with our bankers to ensure our credit lines are in place. Liquidity is reviewed weekly by the Risk Management Sub-Committee. Liquidity risk management is consistent with that of the previous year.

With the Bank as lessee The Bank leases various offices under operating lease agreements. Below are the future minimum lease payments under these non-cancellable operating leases: 2013 R’000

2012 R’000

No later than 1 year

130

139

Later than 1 year and no later than 5 years

162

37

292

176

No assets of the Bank have been pledged as collateral for financial liabilities. The table in note 23 summarises the remaining contractual maturities of the Bank’s financial liabilities based on undiscounted cash flows, and the expected inflows, based on historical data, of the corresponding financial assets. Using the same principles for expected outflows on financial liabilities, short term liquidity mismatches would not occur. 21.7 Foreign exchange risk The Bank is not exposed to any foreign exchange risk.

With the Bank as lessor In the prior year, the Bank commenced leasing a portion of the head office building. Below are the future minimum lease receipts under this non-cancellable operating lease:

No later than 1 year Later than 1 year and no later than 5 years

2013 R’000

2012 R’000

36

40

-

36

36

76

335

335

(b) Guarantees The Bank has provided a guarantee in respect of SureGo Travel.

The guarantee is secured by a mortgage bond in favour of the Bank. No losses are thus expected in respect of this guarantee.

23. liquidity risk analysis The table on the next page summarises the remaining contractual maturities of the Bank’s financial liabilities based on undiscounted cash flows, and the expected inflows, based on historical data, of the corresponding financial assets:

46

136th Annual Report 2012–2013

136th Annual Report 2012–2013

47


16 June 2013

GBS Mutual Bank

GBS Mutual Bank

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

notes to the annual financial statements For the Year ended 31 march 2013 (continued)

23. liquidity risk analysis (continued)

2013

Redeemable on demand R’000

Maturing within 1 month R’000

23. liquidity risk analysis (continued) Maturing after 1 month but within 6 months R’000

Maturing after 6 months but within 12 months R’000

Maturing after 12 months R’000

Total R’000

Financial Assets

2012

Redeemable on demand R’000

Maturing within 1 month R’000

Maturing after 1 month but within 6 months R’000

Maturing after 6 months but within 12 months R’000

Maturing after 12 months R’000

Total R’000

Financial Assets

Cash: Bank balances & deposits

-

24 842

5 093

-

-

29 935

Cash: Bank balances & deposits

-

33 176

10 703

-

-

43 879

Cash: SA Reserve Bank balance

-

-

-

-

18 785

18 785

Cash: SA Reserve Bank balance

-

-

-

-

17 174

17 174

Cash: Treasury bills

-

12 000

30 000

-

-

42 000

Cash: Treasury bills

-

11 000

30 000

-

-

41 000

Cash: Cash on hand

752

-

-

-

-

752

Cash: Cash on hand

730

-

-

-

-

730

Advances: Mortgage

-

5 133

26 192

32 586

592 400

656 311

Advances: Mortgage

-

4 653

23 762

29 610

592 922

650 947

Advances: General

-

1 826

11 282

7 309

-

20 417

Advances: General

-

1 641

8 407

8 429

-

18 477

Advances: Instalment sales and rentals

-

9 686

48 428

58 113

185 962

302 189

Advances: Instalment sales and rentals

-

8 293

41 465

49 758

149 275

248 791

Investments: Fixed Deposits

-

-

8 252

-

-

8 252

Investments: Fixed Deposits

-

-

-

-

5 657

5 657

40 733

-

-

-

-

40 733

37 094

-

-

-

-

37 094

4 595

-

-

-

-

4 595

4 913

-

-

-

-

4 913

46 080

53 487

129 247

98 008

797 147

1123 969

42 737

58 763

114 337

87 797

765 028

1068 662

(17 266)

(150 493)

(174 173)

(208 342)

(268 219)

(818 493)

-

(2 527)

-

-

-

(2 527)

(17 266)

(153 020)

(174 173)

(208 342)

(268 219)

(821 020)

25 471

(94 257)

(59 836)

(120 545)

496 809

247 642

Financial guarantees

-

( 335)

-

-

-

( 335)

Investments: Other Investments: Investec Securities

Financial Liabilities

Investments: Other Investments: Investec Securities

Financial Liabilities (15 088)

(174 012)

(171 676)

(155 469)

(362 329)

(878 574)

-

(2 248)

-

-

-

(2 248)

(15 088)

(176 260)

(171 676)

(155 469)

(362 329)

(880 822)

30 992

(122 773)

(42 429)

(57 461)

434 818

243 147

Financial guarantees

-

(335)

-

-

-

(335)

Irrevocable unutilised facilities

-

(35 841)

-

(40 189)

-

(76 030)

Irrevocable unutilised facilities

-

(35 090)

-

(45 785)

-

(80 875)

Total unrecognised financial instruments

-

(36 176)

-

(40 189)

-

(76 365)

Total unrecognised financial instruments

-

(35 425)

-

(45 785)

-

(81 210)

30 992

(158 949)

(42 429)

(97 650)

434 818

166 782

Net inflow/(outflow)

25 471

(129 682)

(59 836)

(166 330)

496 809

166 432

Deposits Sundry Creditors

Total recognised financial instruments

Net inflow/(outflow)

48

16 June 2013

136th Annual Report 2012–2013

Deposits Sundry Creditors

Total recognised financial instruments

136th Annual Report 2012–2013

49


Community Projects and Sponsorships

16 June 2013

16 June 2013

Life Skills Over 800 people have attended the Financial Skills Programme that was introduced by GBS Mutual Bank to provide people with skills they require to manage their finances more effectively. This programme, now in its fifth year, is part of the Bank’s Social Responsibility Programme and was designed and implemented by the Bank, whose solid values and strong purpose are committed to building a society that takes care of its people and their needs. An employee of the Bank, Mr Mfuzo Dyira, presents and facilitates this course which consists of theoretical and practical modules covering the applications of saving, budgeting, managing and avoiding debt, setting financial goals and banking, as well as ATM practices. This programme goes to the heart of the community in these times of financial stress and we continue to receive positive feedback and are proud of the fact that we are able to make a difference in the lives of people by equipping them with these vital skills. The GBS Mutual Bank continues to support education within our community by donating to our local Schools and Institutions. This year we assisted the GADRA Matric School in particular and continued our partnership with Rhodes University on the Commerce Foundation Programme which has assisted in educating

With its headquarters in Grahamstown, GBS Mutual Bank has always been very supportive of educational institutions in this area. GBS has committed itself to offering financial support to GADRA Matric School, and has made this latest three-year commitment of R75 000 to mark Grahamstown’s 200th anniversary. It costs GADRA Matric School R2 500 each year per matric pupil, and it has now reached the stage where funding from other sources has become essential. GBS is delighted to be associated with this specific project given their stated commitment to education. RIGHT: At the announcement of the commitment are Anton Vorster, CEO of GBS Mutual Bank, and Dr Ashley Westaway, Manager of GADRA Education.

50

136th Annual Report 2012–2013

disadvantaged Grahamstown school leavers who have the potential to succeed at university. This course nurtures and develops the potential of students with additional support, and we are proud to be associated with the programme which has produced outstanding employees for the corporate world. TOP: The GBS continues to support schools and club sport throughout the community.

We support both academic and sporting events at our local schools and this is evident in the annual donations made to all the schools in Grahamstown. The Bank continues to support sport and charity tournaments within the community, and it has been encouraging to see the reciprocal support for the Bank which is received from these clubs and club members.

MIDDLE: GBS Mutual Bank management with Pam Stone and the Chairman of the Bank, Tom Tagg, at the 2012 annual dinner. From left to right – John Stapleton, Anton Vorster, Pam Stone, Tom Tagg and Patrick Hornby.

The Bank displays a caring and supportive role through its social responsibility programmes. We believe this investment will secure a better future for members of our community. We support the retirement homes within our area as well as Hospice and Child Welfare on an annual basis. The Bank continues to make a special effort in caring for the most vulnerable members of our community by supporting a wide range of organisations which care for and support children, the ill and the aged.

BOTTOM: Bill Vallance, General Manager of GBS Mutual Bank, Cape Town, receiving a Certificate of Appreciation, in recognition of outstanding service to CBA Konica Minolta Cape Town. From left to right – Simon Pott, Garry Owen, Paul Corbett and Bill Vallance.

136th Annual Report 2012–2013

51


16 June 2013

Notes

Offices, Branches and Agencies Head office Grahamstown

18 – 20 Hill Street, 6139 Grahamstown P.O. Box 114, 6140 Grahamstown

Tel: 046 622 7109 Fax: 046 622 8855

e-mail: gbs@gbsbank.co.za web page: www.gbsbank.co.za

Tel: 021 426 1013 Fax: 021 426 1214

e-mail: b.vallance@gbsbank.co.za General Manager: W.S. Vallance

Tel: 046 624 1390 Fax: 046 624 3766

e-mail: gbs.pa@gbsbank.co.za Manager: Bessie Mears

BRANCHES Cape Town

28A Wale Street, 8001 Cape Town P.O. Box 5086, 8000 Cape Town Port Alfred

14 Main Street, 6170 Port Alfred P.O. Box 100, 6170 Port Alfred Port Elizabeth

77 Pickering Street, Newton Park, 6045 Port Elizabeth Tel: 041 365 4062 P.O. Box 7648, Newton Park, 6055 Port Elizabeth 082 748 1061 Fax: 041 365 4486

e-mail: k.muller@gbsbank.co.za Manager: Karin Muller

AGENCIES EASTERN CAPE

Kenton-on-Sea: Pam Golding Properties, 45 Kenton Road, 6191 Kenton-on-Sea P.O. Box 179, 6191 Kenton-on-Sea

Tel: 046 648 1203 Fax: 046 648 1016

FREE STATE

Bloemfontein: Edric Trust (Pty) Ltd, Edric Building, 22 Elizabeth Street, 9300 Bloemfontein P.O. Box 300, 9300 Bloemfontein

Tel: 051 448 9431 Fax: 051 430 8815

GAUTENG

Vereeniging: Chase & Sons (Pty) Ltd, Chase House, 16 Leslie Street, 1930 Vereeniging P.O. Box 178, 1930 Vereeniging

Tel: 016 421 3170 Fax: 016 421 1101

Vanderbijlpark: Chase & Sons (Pty) Ltd, Colosseum Centre, Cnr Chopin & Delius Streets SW5, 1911 Vanderbijlpark Tel: 016 982 3750 P.O. Box 1033, 1900 Vanderbijlpark Fax: 016 982 3757 Three Rivers: Chase & Sons (Pty) Ltd, 11 Nile Gate, General Hertzog Road, 1929 Three Rivers P.O. Box 178, 1930 Vereeniging

Tel: 016 423 2009 Fax: 016 423 4998

KWAZULU-NATAL:

Tongaat: Vijay Agencies, Khandhai Building, 336E Main Road, 4400 Tongaat P.O. Box 70, 4380 Maidstone

52

136th Annual Report 2012–2013

Tel: 032 944 2729 Fax: 032 944 6447

136th Annual Report 2012–2013

53


Head office Physical address 18–20 Hill Street Grahamstown 6139 Postal address PO Box 114 Grahamstown 6140 Telephone 046 622 7109 Fax 046 622 8855 Email gbs@gbsbank.co.za Website www.gbsbank.co.za


136th Annual report  
Advertisement
Read more
Read more
Similar to
Popular now
Just for you