ANNUAL REPORT NIGERIA
2 0 1 2
Groupe PlaNet Finance
2
Table of contents
3
Presentation of MicroCred Group & its subsidiary in Nigeria
4
MicroCred Group in 2012 MicroCred Nigeria in figures Editorial, Shareholders & Governance
2012 Management Report Introduction Maturity and Liquidity Management Cost Control System
Financial Statements Auditor’s Report on Financial Statements Financial Statements Annex Main notes of the Financial Statements
Notes & Contact Notes Branches & Outlets Credits
MicroCred Nigeria / Annual Report 2012
4 6 8
10 11 13 13
14 15 16 18 20
24 24 27 27
3
Presentation of MicroCred Group & its subsidiary in Nigeria
MicroCred Group as of December 31st 2012
MicroCred Holding Shareholding structure
MicroCred’s mission is to provide qualitative financial services that are accessible and adapted to the needs of the individuals that are underserved and unserved by the financial sector, particularly the micro, small and medium entrepreneurs. Its objective is to improve the living conditions of clients and their families, and to contribute to the economic development of countries in wich it operates. MicroCred also committed to implementing a fair human resources policy while respecting the environment it operates in.
Axa Belgium
8%
Funds managed by DWM
8% MicroCred S.A.
51%
230,000,000 HKD
15%
18% KfW
4
IFC
MicroCred Group as of December 31st 2012 Operationnal Performance & Financial Results in full growth 178,581 clients a +40% EUR 122.8M of outstanding loan portfolio a +48% 1,4% PAR > 30 days 1 374 employees a +25% EUR 41M of outstanding savings portfolio a +46% 56 branches a +36% Since 2005, MicroCred has grown into a Group of 6 microfinance institutions around the world and provides about 180 000 clients an outstanding loan portfolio of more than EUR 122M.
a +37%
MicroCred Holding Since 2005
MicroCred Banque Madagascar Since 2006
MicroCred Sénégal Since 2007 EUR Net Result
Net Result ■■
■■
■■ ■■
■■
Located in Hong Kong MicroCred Holding owns 51% of the capital
Net Re su
■■
E
lt
EUR
2 M
lt
EUR M 2.2
Net Res u
MicroCred China Since 2009
15 branches and outlets 348 employees MicroCred Holding owns 51% of the capital
■■
■■ ■■
6 branches and outlets 209 employees MicroCred Holding owns 51% of the capital
217K
■■ ■■
■■
4 branches 212 employees MicroCred Holding owns 51% of the capital
9 branches and outlets 122 employees MicroCred China owns 100 % of the capital
MicroCred Sichuan Since 2011 ■■ ■■ ■■
MicroCred Nigeria / Annual Report 2012
■■
MicroCred Nanchong Since 2007
■■
UR
■■
.5M -1
■■
17 branches and outlets 382 employees MicroCred Holding owns 51% of the capital
EU R
8K -28
■■
3K 87
Located in Paris 27 employees
M 1.3
■■
MicroCred Côte d’Ivoire Since 2010
EU R
EU R
■■
MicroCred MFB Nigéria Since 2010
R Net esult
total consolidated balance
Net Result
EUR 148M
6 branches and outlets 75 employees MicroCred China owns 100 % of the capital
5
MicroCred Nigeria’s evolution in figures 2012 Balance Sheet
NGN
EUR
NGN
EUR
Total Assets
1,725,775,310
8,377,831
1,496,338,291
7,113,602
Gross Outstanding Loan Portfolio
1,081,510,949
5,250,229
1,072,311,259
5,097,775
Total Debts
1,110,867,197
5,392,740
821,903,724
3,907,335
Fixed Assets
73,508,080
356,847
54,627,440
259,699
NGN
EUR
NGN
EUR
Operating Income
712,918,316
3,476,182
332,936,286
1,558,860
Operating Expenses
510,557,220
2,489,471
360,988,260
1,690,204
Operating Profit Before Tax
(58,728,449)
(286,359)
(72,293,698)
(338,490)
Net Profit
(59,526,455)
(290,250)
(32,650,948)
(152,877)
Income Statement
Key Ratios
2012
2011
Cost / Income
108%
122%
Yield on Portfolio
62%
72%
Operating Expenses / Portfolio
48%
80%
Financial Cost / Portfolio
12%
6%
Provision Expense / Portfolio
12%
4%
Fixed Assets / Equity
12%
8%
Liquidity Ratio
154%
62%
Staff Cost to Total Operating Cost
37%
-1653%
Operational Statistics
2012
2011
Number of Active Loans
5,186
8,064
Number of Staff
209
151
Number of Loan Officers
102
73
6
3
Number of Branches and Outlets
6
2011
EUR 5.3M of outstanding loan portfolio
20,525 clients
EUR 1.1M
of outstanding savings portfolio
MicroCred Nigeria’s evolution in figures Gross Loan Portfolio (EUR) & Active Loans
PAR > 30 Days Evolution
6,000,000 5,000,000
1,400
8%
8,000
1,200
7%
1,000
6%
7,000
4,000,000
6,000
3,000,000 2,000,000
5,000
800
4,000
600
3,000
400
2,000
1,000,000 0
9,000
1,000
2010
2012
2011
5% 4% 3% 2%
200
1%
0
0
2010
2012
2011
0%
Number of loans in arrears > 30 days Gross Outstanding Portfolio
PAR > 30 days (%)
Number of active loans
Number of Savers & Outstanding Client Deposit 1,400,000
Net Results Versus OSS 0
25,000
1,200,000
20,000
1,000,000
15,000
800,000 600,000
10,000
400,000
5,000
200,000 0
2012
2011
80%
-400,000
70%
-600,000
60%
-800,000
50%
-1,000,000
40% 30%
-1,200,000
20%
-1,400,000
0
2010
100% 90%
-200,000
10%
-1,600,000
2010
2011
2012
0%
Net result before taxes and donations Net result after taxes and donations Outstanding clients deposits
Total number of clients
OSS
Profitability Structure
Total Number of Staff & Productivity
3,000%
80%
2,500%
70%
2,000%
60%
1,500% 1,000% 500% 0
2010
2011
Loan Loss Provision expense ratio Operating expenses / Average outstanding portfolio
MicroCred Nigeria / Annual Report 2012
2012
250
120
200
100 80
150
60
50%
100
40%
50
30%
0
40 20
2010
2011
2012
0
Funding expense ratio Total Yield (YTD)
Total number of Staff
Productivity per Staff
7
Editorial & Shareholding Arnaud Ventura Chairman of the Board of Directors of MicroCred Nigeria President of the Management Board and founder of MicroCred
"MicroCred Nigeria operated successfully in spite of the post election events." As Chairman of the Board of Directors of MicroCred Nigeria, it gives me great pleasure to share with you the results and highlight the key developments of the organization. In 2012, MicroCred Nigeria operated successfully in spite of the post election events. The company finished the year with 20,525 active clients and an outstanding loan portfolio of EUR 5.2M and an outstanding savings portfolio of EUR 1.1M. MicroCred Nigeria continued to extend its branch network with the opening of 3 new branches in 2012
and to gain in efficiency by large increase in productivity and reduction of operating expenses. MicroCred Nigeria emphasis on high quality customers service and being responsive to clients is something to which all MicroCred’s subsidiaries must be committed. On behalf of all Board members of MicroCred Nigeria, I would like to wish all our colleagues continued success in 2012.
Shareholders
Governance
Upon sales of 19.9% ordinary shares to Goodwell West Africa Microfinance Development Company Ltd (GWAMDC), MicroCred Nigeria had strengthen its corporate governance while the share capital remains N1,000,000,000 (One Billion Naira), split between MicroCred SA, IFC and PROPARCO. The shareholders of MicroCred Nigeria as at year end 2012 are; 1. MicroCred SA 2. IFC 3. PROPARCO 4. Goodwell
The Board of Directors of MicroCred Nigeria consists of five members namely; Arnaud Ventura Chairman of the Board and President MicroCred Isabelle Levard Non-Executive Director and Deputy CEO MicroCred Jeff Ferry Independent Non-Executive Director
The Shareholder Structure as of Dec. 31, 2012
Mark-George Olugbolahan Non-Executive Director Chief Executive Officer of MicroCred Nigeria
PROPARCO
15%
Hannah Siedek Non-Executive Director IFC
MicroCred S.A.
8
70%
15%
IFC
Editorial & Governance
"We will invest in the necessary infrastructure, technology platforms, staff and security systems needed to achieve (our) plans"
Jacques Lom Chief Executive Officer MicroCred Nigeria Nigeria economic growth weakened considerably during the year affected by the nationwide strike against removal of fuel subsidy and the water flooding. According to economists, the country may have lost several billions. Subsequently, the inflation rate has been negatively impacted. Kaduna State has not been immune to this and also recorded Religious troubles after church bombings and reprisals by Christian youths targeting Muslims. As a bank, our PAR 30 went up from 0.69% in 2011 to 8.02% at the end of the year, and our GLP has slightly increased by 0.8% from N 1.072Bns to N1.081Bns, while our active loans customers have seen a shortfall of 35% from 8.064 in 2011 to 5.186 at the end of the year.
MicroCred Nigeria / Annual Report 2012
Despite this challenging environment, the bank was able to strengthen its corporate governance with entry into capital of Goodwell West Africa Microfinance Development Company Ltd (GWAMDC).  Our focus in the coming years is the continued achievement of our vision & mission to exceed our customers’ expectations and continue to grow our bank in all aspects including; customers, branches, staff, investments, deposits, our operating income, in addition to
our leveraging on other channels to reach the unbanked. We will invest in the necessary infrastructure, technology platforms, staff and security systems needed to achieve these plans.
EUR 5.3M of outstanding loan portfolio
In concluding, I must express appreciation to the entire staff, management and the Board for their commitment and selfless services during last year difficult environment.
9
Management Report 2012
2012 Management Report
"MicroCred is the right boost for business growth and excellence "
10
2012 Management Report
Introduction
Gross Loan Portfolio
MAIN INTERNAL EVENTS:
PORTFOLIO BRIEF:
The year 2012 was stamped by 2 major events: the first one was the opening of two new branches while the secound one is the purchase of 19.9% MicroCred Nigeria ordinary shares by a new shareholder.
The bank closed the year with a Gross Loan Portfolio of NGN 1.081M a 45% achievement vs. NGN 2.409M as planned, and a 0.8% increase vs. 2011 (NGN 1.072M). The number of active borrowers decreased by 36% from 8,064 (2011) to 5,186 and the renewal rate increased from 49% to 77%. Disbursements achieved represent 50% of the volume forecasted, with NGN 2.646M (vs. NGN 5.313M).
ASSET MOBILIZATION Total Assets is 36% below budget and can be explained mainly by the lateness in Loan Portfolio growth (45% reached) due to exceptional year. Total liabilities has also been affected with cancelation of additional borrowing as plan, driven. The total liabilities increased from NGN 822M to NGN 1,111M (+35%) instead of NGN 2,012M as plan. Equity has experienced a decrease as a result of negative results in the year from NGN 674M in 2011 to NGN 615M in 2012. During 2012, the ratio of GLP/Total Asset evoluated from 53% to 69% as the following graph presents:
Asset Management
64%
63%
50%
63% 59%
60%
1st Quarter 2012
2nd Quarter 2012
3rd Quarter 2012
4th Quarter 2012
Outstanding loan portfolio / assets
MicroCred Nigeria / Annual Report 2012
PAR > 0 PAR > 30 days 20% 15% 10% 5% 0%
1st Quarter 2012
2nd Quarter 2012
PAR > 0
80%
70%
The SME loans as at December 2012 represents 51% of the Gross Loan Portfolio.
3rd Quarter 2012
4th Quarter 2012
PAR > 30
During the 4th quarter of 2012, Write-Offs and continuous recovery actions despite of challenges encountered has significantly reduce exposure. At the end of 4th quarter 2012, the PAR>0 day was at the level of 9.6% with the value of NGN 104M (EUR 504,512) and the number of loans in PAR>0 day was 1,464. The PAR>30 days at the end of 4th quarter 2012 was at 6.6% with the volume of NGN 72M (EUR 350,729) and the number of loans in PAR >30 days was 1,245.
11
2012 Management Report Cash collection in the business or residence of the clients was maintained by the management. This allows the COs together with their supervisors to collect payment on the spot from the delinquent clients. In 2012 Micrcocred wrote-off NGN 66M which represents 6% of outstanding loan portfolio. During the last quarter MicroCred Nigeria wrote-off NGN 49M representing 74.49% of the total for the year.
Write off (EUR), restructured (EUR) and % GLP 0.07
200,000
0.05 0.04
150,000
0.03
100,000
0.02
50,000
0.01
% provision
Provision expenses
3,681
968,010,311
1%
9,680,103
0
0
5%
0
PAR 8-30 days
185
26,717,771
5%
1,335,889
PAR 31-60 days
143
11,031,867
20%
2,206,373
PAR 61-90 days
175
10,284,303
50%
5,142,151
PAR 91-120 days
195
9,153,441
100%
9,153,441
PAR 121-180 days
418
21,399,566
100%
21,399,566
0
0
100%
0
Healthy portfolio, no arrears, no rescheduled loans PAR 1-7 days
PAR >180 days Subtotal : PAR > 30 days
931
51,869,177
Restructured loans
389
34,913,690
35,207,609
5,186
1,081,510,949
84,125,132
Total
1st Quarter 2012
2nd Quarter 2012
4th 3rd Quarter Quarter 2012 2012
The following graph represents the evolution of the leverage:
Leverage (Debt/Equity)
300% 250%
0
Write Off Write off /outstanding portfolio YTD Write off /outstanding portfolio
Other Assets Total Assets as at the end of the year was NGN 1,725,775,310 The asset breakdown is as follows: -- Total Cash, Banks and Investment 34% or EUR 2.8M; -- Net Outstanding Loan Portfolio is 58% or EUR 4.8M; -- Interest Receivables is 2% or EUR 0.2M; -- Accounts Receivables and Other Assets is 2% or EUR 0.2M; -- Net Fixed Assets is 4% or EUR 0.4M
Funding Structure Savings mobilization is still low, thus, MicroCred Nigeria rely mostly on two ways to finance its operation, i.e. equity capital and borrowing from bank.
12
Outstanding balance
37,901,532
250,000
0.06
0
Number
Maturity and Liquidity Management
200% 150% 100%
The Liability breakdown is as follows: Deposits (Demand & Client) is 22% or EUR 1.2M ■■ Interest Payable on Term Deposit 2% or EUR 1M ■■ Account Payable is 10% or EUR 0.5M ■■ Long Term Borrowings 66% or EUR 3.6M ■■
1st Quarter 2012
2nd Quarter 2012
3rd Quarter 2012
4th Quarter 2012
Actual Forecasted
The debt/equity ratio has increase from 122% in December 2011 to 180% in December 2012. Equity in 2012 is being impacted with negative net results, while Liabilities have increased due to borrowings. During the year, Goodwell acquired 19.9% shares what will diversify shareholders structure and increase value on good governance of the bank.
Other Liabilities In 2012, Total Liabilities balance increased by NGN 289MM as compared to December 2011. However, total liabilities were NGN 901M below than budget due to slow down of the activity: low saving level, no institutional saving low GLP level then cancellation of all the negotiated borrowings.
The bank is still very liquid; idle funds have been placed as short term treasury investments with banks. These investments have gone down from NGN 440M in Q3 to NGN 420M in Q4. The results are a monthly 32% reduction of the debt service and 24% on a yearly base (investments started in April 2012). Savings are driven by cash collateral deposit which represents nearly 61% of savings compare to 47% in Q3.
Institution Main P&L Items This year, MicroCred Nigeria is late by -33% on financial revenue of NGN -352M; out of which NGN -301M comes from shortfall in revenues from loan portfolio as shown by the gap in projected GLP the achievement for the year is 45% of the forecasts. Other shortfall is coming from fees & commissions on saving accounts with the 60% achievement.
2012 Management Report Operational challenges have significantly impacted YTD expenses with additional loan loss provisions recorded for restructured/refinanced loans since Q2; increase in Technical assistance fees to assist the bank and transportation costs. The bank management had also pay a hardship allowance to the entire staff in Q2 which was not plan as a mark of recognition of the arduous working conditions in Kaduna. Also, due to rising inflation linked to the fuel crisis of the beginning of the year, the cost of fund have been more significant than plan. Overall, the bank has spent 78% of its budget and saves 22%, hence a NGN 148M savings.
Operationnal Self Sufficiency 120%
100%
80%
1 Quarter 2012 st
2 Quarter 2012 nd
3 Quarter 2012 rd
4 Quarter 2012 th
Actual Forecasted
The above OSS graph is showing how postchurch bombing crisis have been the main crisis that have impacted the bank ability to perform from June to august ending.
Main cost items were highlighted in the following table: General Expenses
NGN
Overhead
47,852,017
Transportation and communication
25,664,779
Office supplies and materials
16,664,045
IT
16,514,858
Marketing, Advertising and Representation
1,397,360
Construction, renovation, repairs and maintenance
3,333,231
Insurances
6,646,240
Consultancy, Legal and Audit fees
123,570,134
Taxes (other than on profit) and licenses
(15,523,194)
Training and Development costs
7,518,986
Other administrative costs
22,524,785
Depreciation & Amortization
28,944,358
Total
510,557,220
The bank had not been able to reverse the negative loss trend from Q3. The bank is closing the year with NGN -59.5 M losses from which NGN -58.7 is coming from Q4. The GLP have not increased since then and the quality of the bad portfolio is still quite important.
Cost Control System Cost in HQ and service points were generally well controlled in 2012. Three items exceed the budget: Transportation and communication costs (+3%); Construction (+97%) and Consultancy (+293%). At the end of 2012, MicroCred Nigeria had 6 service points (5 branches and 1 outlet) which have the standard products.
MicroCred Nigeria / Annual Report 2012
13
14 Financial Statements
Auditor’s Report on Financial Statements To the members of MicroCred Microfinance Bank Nigeria Limited
I. REPORT ON THE SUMMARY FINANCIAL STATEMENTS The accompanying financial statements which comprise the summary balance sheet as at December 31, 2012, the summary incarne statement for the year then ended are derived from the audited financial statements of Microcred Microfinance Bank Nigeria limited for the year ended December 31, 2012. We expressed an unmodified audit opinion on those financial statements in our report dated February 28, 2013. Those financial statements and the summary financial statements do net reflect effects of events that occurred subsequent to the date of our report on those financial statements. The summary financial statements do not contain all disclosures required by the Companies and Allied Matters Act CAP C20 LFN 2004 and the Banks and Other Financial Institutions Act CAP B3 LFN 2004, applied in the preparation of the audited financial statements of Microcred Microfinance Bank Nigeria limited. Reading the summary financial statements, therefore is not a substitute for reading the audited financial statements of Microcred Microfinance Bank Nigeria Limited.
II. DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Directors are responsible for preparing and presenting an appropriate summary of the financial statements in accordance with section 355 of the Companies and Allied Matters Act CAP C20 LFN 2004 and the Banks and Other Financial Institutions Act CAP B3 LFN 2004.
MicroCred Nigeria / Annual Report 2012
III. AUDITORS’ RESPONSIBILITY
VI. CONTRAVENTIONS
Our responsibility is to express an opinion on the summarised financial statements based on our procedures which were conducted in accordance with International Standards on Auditing (ISA 810), «Engagement to report on Summary Financial Statements».
No contravention of any section of the Banks and Other Financial Institutions Act CAP B3 LFN 2004 and circulars of the Central Bank of Nigeria was brought to our notice during the year.
IV. OPINION ln our opinion, the accompanying summarised financial statements of Microcred Microfinance Bank Nigeria limited as at December 31, 2012 are consistent, in all material respects with the financial statements from which they were derived, in accordance with the Statements of Accounting Standards issued by the Financial Reporting Council of Nigeria and in a manner required by the Companies and Allied Matters Act of Nigeria and relevant circulars issued by the Central Bank of Nigeria.
V. OTHER MATTER The financial statements of Microcred Microfinance Bank Nigeria Limited for the year ended December 31, 2011 were audited by another auditor who expressed an unmodified opinion on those statements on April 11, 2012 Mazars Coker & Co. Partner : Olumuyiwa O.Cocker Chartered Accountants February 28, 2013 Lagos, Nigeria.
V. REPORT ON COMPLIANCE WITH BANKING REGULATIONS We confirm that our examinations of loans and advances was carrled out in accordance with the Companies and Allied Matters Act CAP C20 LFN 2004, the Banks and Other Financial Institutions Act CAP B3 LFN 2004 and the Regulatory and Supervisory framework for microfinance banks in Nigeria issued by the Central Bank of Nigeria. ln accordance with circular BSD/1/2004 issued by the Central Bank of Nigeria, details of insider-related credits are disclosed in note 34 of the detailed financial statements.
15
Financial Statements Balance Sheet in NGN
NGN 2012
NGN 2011
EUR 2012
EUR 2011
ASSETS
1,725,775,310
1,496,338,291
8,377,831
7,113,602
Short Term Assets
1,652,267,229
1,441,710,851
8,020,983
6,853,902
30,876,319
11,581,190
149,890
55,057
Due from banks
131,038,798
250,828,984
636,132
1,192,443
Short Term Investments
420,765,772
14,500,000
2,042,621
68,933
Short Term Net Loan Portfolio
997,385,817
1,053,843,731
4,841,841
5,009,980
1,081,510,949
1,072,311,259
5,250,229
5,097,775
Cash on hand
Short Term Gross Loan Portfolio (Loan Loss Reserve)
84,125,132
18,467,528
408,388
87,795
Interest Receivable
32,917,991
35,351,404
159,801
168,061
On loan portfolio
30,384,096
35,351,404
147,501
168,061
On investments
2,533,895
-
12,301
-
Accounts receivable and other assets
39,282,533
75,605,542
190,698
359,429
73,508,080
54,627,440
356,847
259,699
Long Term Net Investments
-
-
-
-
Long Term Gross Loan Portfolio
-
-
-
-
Long Term Assets
Net Fixed Assets
73,508,080
54,627,440
356,847
259,699
126,639,414
86,250,325
614,775
410,035
53,131,334
31,622,885
257,928
150,335
-
-
-
-
LIABILITIES AND EQUITY
1,725,775,310
1,496,338,291
8,377,831
7,113,602
Liabilities
Gross Fixed Assets (Depreciation and Amortization) Other Long Term Assets
1,110,867,197
821,903,724
5,392,740
3,907,335
Short Term Liabilities
377,729,115
447,889,074
1,833,698
2,129,267
Demand Deposits
94,027,404
120,365,114
456,459
572,217
-
-
-
-
Short Term Time Deposits
152,793,905
140,719,500
741,743
668,981
Clients Deposits
Compulsory Deposits
152,793,905
140,719,500
741,743
668,981
Institutional Deposits
-
-
-
-
Short Term Borrowings
-
-
-
-
Interest Payable
22,580,902
5,990,197
109,620
28,477
Accounts Payable / Other Short Term Liabilities
108,326,904
180,814,263
525,876
859,592
Long Term Liabilities
733,138,083
374,014,650
3,559,042
1,778,068
Long Term Time Deposits
-
-
-
-
Clients Deposits
-
-
-
-
Institutional Deposits
-
-
-
-
733,138,083
374,014,650
3,559,042
1,778,068
-
-
-
-
614,908,112
674,434,567
2,985,091
3,206,266
Paid-In Capital
1,000,000,000
1,000,000,000
4,854,532
4,754,006
Donated Equity
235,751,410
235,751,410
1,144,463
1,120,764
Retained earnings without donations, and reserves
(561,316,843)
(489,023,145)
(2,724,930)
(2,324,819)
Income Current Year
(59,526,455)
(72,293,698)
(288,973)
(343,685)
-
-
-
0
Long Term Borrowings Other Long Term Liabilities Equity
Other Equity Accounts
16
Financial Statements PROFIT & LOSS STATEMENT IN NGN
NGN 2012
NGN 2011
EUR 2012
EUR 2011
Financial Revenue
712,918,316
332,936,286
3,476,182
1,558,860
Financial Revenue from Loan Portfolio
667,147,364
328,312,369
3,253,003
1,537,210
Interest on Loan Portfolio
575,397,676
265,642,622
2,805,633
1,243,780
Fees and Commissions on Loan Portfolio
69,493,640
55,899,042
338,850
261,728
Penalty Revenue on Loan Portfolio
22,256,047
6,770,705
108,520
31,701
Revenues from other financial services than credit
15,598,038
2,850,387
76,056
13,346
Fees and Commissions on Saving products
1,039,191
209,277
5,067
980
Fees and Commissions on Flexo
1,581,828
592,939
7,713
2,776
Fees and Commissions on Safy
7,021,072
2,038,221
34,235
9,543
Fees and Commissions on TD, ATM cards & cheque books
5,955,947
9,950
29,041
47
29,546,545
1,134,840
144,069
5,313
626,370
638,690
3,054
2,990
131,121,290
27,353,785
639,346
128,075
Interest paid on deposits
3,402,652
2,763,147
16,591
12,937
Interests paid on clients deposits
3,402,652
2,763,147
16,591
12,937
-
-
-
-
122,082,726
13,505,104
595,274
63,233
-
-
-
-
5,635,912
11,085,533
27,481
51,904
Financial Revenue from Investments Other Operating Revenue Financial Expense
Interests paid on institutional deposits Interest paid on borrowings Net Inflation Adjustment Expense Other Financial Expenses Financial Income
581,797,027
305,582,501
2,836,836
1,430,785
Net Loan loss provision expense
129,968,255
16,887,939
633,724
79,072
Loan loss provision expense and write-off
131,173,677
16,889,759
639,601
79,080
1,205,422
1,820
5,878
9
Net Financial Income
451,828,772
288,694,562
2,203,112
1,351,713
Personnel Expense (includes fringe)
225,449,622
147,838,718
1,099,290
692,204
General Expenses
Recovery from Loans written off
256,163,240
196,005,567
1,249,049
917,729
Depreciation & Amortization
28,944,358
17,143,976
141,132
80,271
Total operational expenses
510,557,220
360,988,260
2,489,471
1,690,204
Net Operating Income Before Taxes and Donations
(58,728,449)
(72,293,698)
(286,359)
(338,490)
Income Taxes
798,006
-
3,891
-
(59,526,455)
(72,293,698)
(290,250)
(338,490)
Non Operating Revenue
-
-
-
-
Non Operating Expense (including related taxes)
-
-
-
-
(59,526,455)
(72,293,698)
(290,250)
(338,490)
Net Operating Income Before Donations
Net Income Before Donations Donations Net Income After Taxes and Donations
MicroCred Nigeria / Annual Report 2012
-
39,642,750
-
185,614
(59,526,455)
(32,650,948)
(290,250)
(152,877)
17
Financial Statements ANNEX Status and Nature of Business MicroCred Microfinance Bank Limited (the Bank) was incorporated in 2009 as a limited company under the CAMA, 199O and was granted a certificate of commencement of business in January 2010 and the operations started from March 2010. The Bank’s principal business is to provide microfinance services to the poor and underserved segment of the society as envisaged under the CBN Regulatory and Supervisory Framework for Microfinance Banks in Nigeria.
■■ Accounting year. The accounting year of the Company is from January 1, to December 31.
Basis of preparation and measurement basis. The financial statements of the Company have been prepared on an accrual basis. The measurement basis used is historical cost. ■■ Reporting currency. The Company’s reporting currency is the Naira. ■■ Translation of foreign currencies. Foreign currency transactions during the year are converted into Naira at the exchange rates quoted by the Central Bank of Nigeria and other exchange rates recognized by the state ruling at the transaction date.
BASIS OF PREPARATION
Monetary assets and liabilities denominated in foreign currencies are converted into Naira at the exchange rates quoted by the Central Bank of Nigeria and other exchange rates recognized by the state ruling at the balance sheet date.
STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with the approved accounting standards as applicable in Nigerian. The approved accounting standards comprise of the Nigerian Accounting Standard Board (NASB) and International Accounting Standard Board (IASB) as are notified under the requirements of the Company and Allied Matters Act (CAMA), 2004, CBN Regulatory and Supervisory Framework for Microfinance Banks in Nigeria. The CBN has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement and International Accounting Standard 40, Investment Property for banking companies till further instructions. Further, «Financial Instruments: Disclosures» has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified and valued in accordance with the requirement of various circulars issued by CBN.
■■ Fixed Assets. Fixed assets are tangible assets with comparatively high unit values held by the Company for use in the production of goods, for use in the supply of services, for rental purposes and for administrative purposes. They are expected to be used for more than one year.
■■
The Bank operates five branches and one CCP and is licensed to operate on a state level. The Bank’s registered office is situated at 17 Mogadishu Layout, Kaduna. The Bank is a subsidiary of MicroCred Group which holds 70 percent shares of the bank.
These financial statements have been presented in accordance with Nigerian Accounting Standard Board and International Accounting Standard Board.
18
SIGNIFICANT ACCOUNTING POLICIES
Cash equivalents. Cash equivalents represent short-term, highly liquid investments, which are readily convertible into known amounts of cash and are subject to an insignificant risk of change in value. ■■
■■ Loan loss provision. The loan loss provision is estimated by management based on the gross outstanding loan portfolio and a certain percentage.
% provision Healthy portfolio, no arrears, no rescheduled loans
1%
PAR 1-7 days
5%
PAR 8-30 days
5%
PAR 31-60 days
20%
Fixed assets are stated in the balance sheet at cost less accumulated depreciation and impairment. Fixed assets under construction are stated at cost less impairment losses. The incomes from the selling, ownership transferring or write-off of fixed assets are recognized in either non-operating revenue or non-profit expense after being deducted by book value and related taxes. Repairs and maintenance of fixed assets are expensed as incurred. Subsequent expenditures for major reconstruction, expansion, improvement and renovation are capitalized when it is probable that future economic benefits in excess of the original assessment of performance will flow to the Company. Capitalized expenditures arising from major reconstruction, expansion and improvement are depreciated using the straight-line method over the remaining useful lives of the fixed assets. Fixed assets are depreciated using the straight-line method over their estimated useful lives. The respective estimated useful lives and the estimated rate of residual values on cost for the Company’s fixed assets are as follows: Asset estimated Descripuseful life tion
estimated residual value
annual depreciation rate
Fittings
5 years
NGN10
20%
Furniture
5 years
NGN10
20%
IT
3 years
NGN10
33.30%
Office Equipment
5 years
NGN10
20%
5 years
NGN10
20%
5 years
NGN10
20%
PAR 61-90 days
50%
Plant, Machinery & Generator
PAR 91-120 days
100%
Vehicles
PAR 121-180 days
100%
PAR >180 days
100%
Subtotal : PAR > 30 days Restructured loans Total
Intangible assets. Intangible assets include but are not limited to the rights of using land, patent and proprietary technology. Intangible assets are recognized in the balance sheet as the actual ■■
Financial Statements cost less accumulated amortization and provision for depreciation. The cost of intangible assets will be amortized within 5 years using straight-line method. The respective amortization periods for the intangible assets are as follows: Software 5 years ■■ Pre-operate expense. Other than purchasing fixed assets, all initial costs are credited into long-term deferred expenses and will be recognized as revenue or loss in the month when the Company starts to operate.
■■ Taxation The types of tax applicable to the Company’s rendering of service include Business tax. The tax rates are as follows: -- Value Added Tax rate: 5%. -- Education: Tax 2% -- Withholding: Tax 5% -- Income tax rate applicable to the Company for year 2010: 30%.
■■ Provision for impairment. In addition to the recognition of provisions for impairment loss on receivables and inventories which have been described in their respective accounting policies, individual assets for which there are indications that the carrying values are higher than their recoverable amounts, arising from the occurrence of events or changes in circumstances, are reviewed for impairment. If the carrying value of such assets is higher than the recoverable amount, the excess is recognized as an impairment loss.
The recoverable amount of an individual asset is the higher of its net selling price and its value in use. The net selling price is the amount obtainable from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties, after deducting any incremental direct disposal costs. Value in use is the present value of estimated future cash flows expected to be derived from continuing use of the asset and from its disposal at the end of its useful life. When there is an indication that the need for an impairment provision recorded in a prior year no longer exists or has decreased the provision for impairment loss is reversed. The increased carrying amount of the assets should not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. ■■ --
--
MicroCred Nigeria / Annual Report 2012
Revenue recognition Interest income is recognized on a time proportion basis taking into account deposit balances and the effective yield. Commission is verified on accrual basis when the Company offers service.
19
Financial Statements Main notes of the Financial Statements Note 1 - Cash at Bank and in Hand
2012 NGN
Head office petty cash
238,794
Branch vaults
30,637,525
Accrued interest on Term deposit
Bank in NGN
130,878,971
Statutory deduction
Bank in Foreign Currency
159,826
NGN
EUR
65,027,654
315,679
744,920
3,616
24,568,291
119,268
Provision and accruals
9,300,619
45,150
Fixed Deposit
400,765,772
Prov for Audit fee
4,130,000
20,049
Treasury Bills
20,000,000
Staff pension liabilities
903,163
4,384
Suppliers
534,857
2,596
Other Liabilities
40,600
197
2,000,946
9,714
Total
582,680,889
Note 2 - Interest Receivable On loan portfolio
NGN
EUR
30,384,096
147,501
2,533,895
12,301
On investments
NGN
EUR
Inventories
1,156,123
5,612
Prepaid expenses Rent
18,987,910
92,177
Advances to employee
1,289,024
6,258
Other Assets
2,288,786
11,111
Prepaid expenses Insurance
5,556,300
26,973
387,937
1,883
Cash Security Advance
2,741,893
13,311
Net Staff Loan
6,874,560
33,373
39,282,533
190,698
Prepaid expenses Pastel software
Total Note 4 – Tangible Assets Fittings
NGN Book Value 18,332,905
Furniture
4,847,917
IT
15,108,178
Office equipment
12,653,087
Plant, Machinery & Generator
13,546,756
Vehicles
5,760,219
Total
70,249,062
Note 5 – Intangible Assets
NGN
IT/KD1/045
Pastel Payroll 1,550 USD
13,046
IT/KD1/049
Professional office licence, Microspeed computers
150,850
IT/KD1/062 Pastel Payroll upgrade (594.80 USD)-Softline
20,289
IT/KD1/073
Credit registry software-CR Services plc
106,944
Doubletake software
327,397
IT/KD1/076
Sage evolution software
182,325
IT/KD1/122
Windows 2008 Server
80,354
SUB TOTAL
3,259,018
IT/KD1/074
Industrial Training Fund Unearned interest on Treasury Bills
350,465
1,701
Monday Agbo Case
725,389
3,521
108,326,904
525,876
Total
Note 3 – Account receivables & Other Assets
20
Note 6 – Account payables MicroCred SA
Note 7 Long-Term Borrowings
Principal
EUR
Accrued interests
EUR
Long term borrowings
733,138,083
3,559,042
22,580,902
109,620
MicroCred SA
-
-
-
-
International
733,138,083
3,559,042
22,580,902
109,620
Local
-
-
-
-
Note 8 Paid-in Capital
NGN
EUR
Nb of shares
Paid in Equity 1,000,000,000 4,854,532 1,000,000,000
% 100%
of which MicroCred SA
700,000,000
3,398,172
700,000,000
70%
PROPARCO
150,000,000
728,180
150,000,000
15%
IFC
150,000,000
728,180
150,000,000
15%
Financial Statements Note 11 - Income Taxes Note 9 – Wages Payable
NGN
EUR
225,449,622
1,099,290
HQ Senior Management (CEO, CFO, COO...)
15,607,971
76,104
Gross salaries
Personnel Expense (includes fringe)
13,575,223
66,193
1,698,181
8,280
Social security contributions
334,567
1,631
Middle Management
57,745,094
281,564
Gross salaries
51,403,225
250,642
1,121,842
5,470
Bonuses Social security contributions
5,220,027
25,453
Loan Officer
88,320,396
430,649
Gross salaries
75,010,054
365,748
Bonuses
1,871,589
9,126
Social security contributions
11,438,753
55,775
Other Banking services
4,333,273
21,129
2,639,422
12,870
7,500
37
1,686,351
8,223
59,442,888
289,843
52,561,324
256,288
Social security contributionsBonusesGross salaries Other Assets Prepaid expenses Insurance Back office staff and internal control positions Gross salaries Bonuses Social security contributions
482,715
2,354
6,398,849
31,201
NGN
EUR
Overhead
Note 10 – General Expenses
47,852,017
233,326
Transportation and communication
25,664,779
125,141
Office supplies and materials
16,664,045
81,254
IT
16,514,858
80,526
Marketing, Advertising and Representation
1,397,360
6,814
Construction, renovation, repairs and maintenance
3,333,231
16,253
Insurances
6,646,240
32,407
Consultancy, Legal and Audit fees
123,570,134
602,527
Taxes (other than on profit) and licenses
(15,523,194)
(75691)
Training and Development costs
7,518,986
36,662
22,524,785
109,831
256,163,240
1,249,049
Other administrative costs Total General expenses
Note 12 - Provision for Loan Loss Loan loss reserve, beginning of month
Bonuses
MicroCred Nigeria / Annual Report 2012
NGN
EUR
Pending 2012 117,992,734
+ Loan loss provision expense for the month
4,509,993
+ Loan loss provision expense
122,502,727
- Provision reversal
117,992,734
- Loans written off during the month
38,377,595
Loan loss reserve, End of month
84,125,133
21
Financial Statements Note 13 - Cash Flows Cash Balance beginning of month
February
March
April
276,910,174
368,934,408
351,656,992
505,130,040
Disbursments of new loans
128,740,000
267,820,000
277,150,000
250,880,000
Repayments of loans
205,355,537
214,830,343
237,846,636
232,644,488
Cash needed to finance portfolio increase
-76,615,537
52,989,657
39,303,364
18,235,512
Operating expenses before depreciation
34,557,552
31,314,687
38,503,528
41,005,493
Revenues from loan portfolio
53,597,406
56,347,877
61,250,176
56,526,357
Commissions on other products
1,236,282
1,068,640
120,374
1,823,008
Other operating revenues Financial expenses Income tax Other non-operating revenues Other non-operating expenses Cash needed to finance operations Fixed Assets Acquisition Fixed Assets sales
182,753
257,825
221,137
1,257,703
5,148,102
6,200,491
11,595,837
10,128,457
0
0
0
0
19,075
0
0
32,795
0
0
0
0
-15,329,863
-20,159,165
-11,492,322
-8,505,913
391,125
2,670,436
493,949
0
0
0
-3,369,150
-2,606,179
391,125
2,670,436
3,863,099
2,606,179
New borrowings
0
0
156,500,000
1,132,500
Repayments of borrowings
0
0
0
0
Increase of savings
0
11,211,446
17,737,197
16,829,974
Decrease of savings
20,568,831
0
0
0
Increase of other LT assets
-39,139,486
3,868,645
797,954
8,257,953
-7,676,687
873,042
3,474,490
-2,458,111
Cash needed to finance CAPEX
Other assets Other receivables Other liabilities
-25,777,382
11,753,753
15,182 436
27,149,043
469,959
18,223,512
185,147,189
39,311,674
Increase of paid-in capital
0
0
0
0
Other equity increases
0
0
0
0
Cash from funding
Cash from equity Cash balance end of month
22
January
0
0
0
0
368,934,408
351,656,992
505,130,040
532,105,937
Financial Statements Note 13 - Cash Flows Cash Balance beginning of month
May
June
July
532,105,937
433,968,046
619,383,288
Disbursments of new loans
334,190,492
192,423,000
22,250,000
Repayments of loans
248,869,619
194,338,238
222,782,960
Cash needed to finance portfolio increase
85,320,873
-1,915,238
-200,532,960
Operating expenses before depreciation
46,644,879
10,941,695
42,215,394
Revenues from loan portfolio
69,232,504
54,690,016
56,799,313
Commissions on other products
1,789,477
1,290,429
866,699
Other operating revenues
3,162,091
2,837,076
2,439,472
Financial expenses
9,265,282
11,810,831
12,814,152
0
0
0
63,000
9,000
0
Income tax Other non-operating revenues Other non-operating expenses Cash needed to finance operations Fixed Assets Acquisition Fixed Assets sales Cash needed to finance CAPEX New borrowings Repayments of borrowings
0
0
0
-18,336,911
-36,073,996
-5,075,939
26,679,557
4,344,781
1,364,084
0
0
0
26,679,557
4,344,781
1,364,084
0
201,490,933
0
0
0
0
Increase of savings
2,855,279
0
0
Decrease of savings
0
27,029,836
36,741,689
-4,990,925
-2,043,045
2,218,030
5,134,895
-2,780,858
-2,173,610
Increase of other LT assets Other assets Other receivables Other liabilities
-7,185,681
-27,514,209
-178,766
-4,474,372
151,770,790
-36,964,875
Increase of paid-in capital
0
0
0
Other equity increases
0
0
0
Cash from funding
Cash from equity Cash balance end of month
MicroCred Nigeria / Annual Report 2012
0
0
0
433,968,046
619,383,288
786,663,228
23
Notes
24
MicroCred Nigeria / Annual Report 2012
25
Contact
26
Contact MicroCred Holding
MicroCred Nigeria
44 rue de prony 75017 Paris FRANCE
Plot 17 Mogadishu Layout Opposite Mangal Plaza Main Gate, Leventis Roundabout - Kaduna NIGERIA
Tel: 00 (33) 1 49 21 26 47 Fax: 00 (33) 1 49 21 26 27 www.microcredgroup.com
Tel : +234 709 821 18 50 www.microcred.ng
Branches & Outlets KACHIA 7A Kachia Road – Naira Roundabout Kaduna Sud - Kaduna - Nigeria Tél : +234 709 821 18 50
SABO CCP 30 Kachia Road – By Sabo Bridge Kaduna South – Sabo – Kaduna – Nigeria Tél : +234 709 821 18 50
TUDUN WADA M6 Polytechnic Road – Tudun Wada Kaduna - Nigeria Tél : +234 709 821 18 50
CENTRAL Plot 17 Mogadishu Layout - Opposite Mangal Plaza Main Gate Leventis Roundabout - Kaduna - Nigeria Tél : +234 709 821 18 50
KAWO RA2 Zaria Road - Hanyin Banki - Kawo Kaduna - Nigeria
ZARIA 3 Main Street - PZ - Zaria Kaduna - Nigeria
Credits Design & Production : Marion Ivars, Nadjat Ferradji Photos : Alexandre Coster
MicroCred Nigeria / Annual Report 2012
PEFC/10-31-1238
PEFC/10-31-1238
Imprimé sur papier provenant de forêts gérées durablement.
Imprimé sur papier provenant de forêts gérées durablement.
27
Groupe PlaNet Finance
ANNUAL REPORT 2012 MicroCred Nigeria Plot No. 17 Mogadishu layout Central Business District Kaduna, Nigeria Tel: 00 (234) 0709 821 18 50 www.microcred.ng www.microcredgroup.com