Pulse Financial Services Limited - Zambia licensed deposit ... Report PFSL 2010 Short version... · Report of Pulse Financial Services Limited ... published a comparison of borrowing

The Next Step For Your Business

2010 Annual Report

Pulse Financial Services Limited


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Contents


Mission and Vision 3

Chairman’s Message 4

Chief Executive Officer’s Message 7

Governance at PFSL 11

Branch Network 12

Staff 13

PFSL’s Shares 15

Client Share Ownership Programme (CSOP) 16

Partners 17

PFSL Customer Profiles 18

Financial Statements 19

Notes 25

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PFSL’S Mission

PFSL’S Vision

To increase peri-urban and urban MSMEs access

to specialized financial services

on a permanent basis while contributing to wealth creation,

improvement of living conditions and

development of the Zambian private sector.

Our vision is to become the preferred

Licensed Deposit-Taking Microfinance solution

for entrepreneurs in Zambia.

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Chairman’s Message


Mr. Nathan DeAssis

It’s my honour and privilege to present the 2010 Annual

Report of Pulse Financial Services Limited (PFSL).

Despite the economic challenges that preceded, our

establishment has continued to enjoy growth and

development. This is attributed to the determination of the

Management Team of PFSL, the Company’s Shareholders

and Board of Directors to live up to the Company vision of

becoming the “Preferred Deposit Taking Microfinance

Institution in Zambia”.

Generally in 2010, PFSL can be said to have continued on

its path of growth and expansion. Our vision continues to

shape the decisions of the Board of Directors,

Management and Shareholders. During the period under

review, PFSL opened four full service Branches and one

Business Loan Centre to meet the growing demand for

improved access to financial services. Our expansion plan

has seen the opening of one of these Branches in Kitwe,

on the Copperbelt.

The Market Environment

The global economy continues to recover from the recent

economic crisis. Global economic growth is now projected

to reach 4.8 per cent in 2010, well above the negative

growth of 0.6 per cent recorded in 2009. In 2011, the

global economy will continue expanding, although at a

marginally lower rate of 4.2 percent whereas, growth in

Sub-Saharan Africa is projected to be above 5 per cent in

2011. This growth is driven by strong demand for primary

commodities from emerging markets such as India, Brazil

and China, and by the overall recovery in international

trade.

In an effort to contribute to development and also ensure

that the growing population is not left behind, efforts to

increase access to financial services as a catalyst for

sustained economic growth are being pursued. However,

this access to financial services has continued to elude

economic players in the informal sector due to

unavailability of information as well as a lack of financial

education and understanding concerning financial

institutions services.

We are still working around the 60 per cent estimates for

people excluded from accessing financial services despite

some major improvements by players in the financial

sector. This in itself provides a large market opportunity

and PFSL has since managed to create competitive

financial products to increase access to financial services

for the marginalized Zambian entrepreneurs.

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While Zambia’s main economic activity is mining,

agriculture also factors as a major source of revenue.

The economy had been forecast to grow by a real gross

domestic product (GDP) growth rate of 6.6 per cent in

2010, driven by a record output of maize in the

agriculture sector, as well as strong growth in the mining

sector.

In an effort to provide public information on the cost of

financial services in order to facilitate increased access,

Bank of Zambia continued to play its regulatory role and

published a comparison of borrowing costs between the

Commercial Banks and Microfinance Institutions. This

information shows that we are delivering competitive

pricing to our clients in a market of 25 registered

Microfinance Institutions of which six are deposit taking.

General Information

Pulse Financial Services Limited (PFSL) is a Deposit-

Taking Microfinance Institution licensed and supervised

by Bank of Zambia with a share capital of ZMK9.2 billion.

The Company Shareholders are Développement

international Desjardins, CEP Trustee Corporation,

Africinvest, Blue Orchard and Zambian investors. During

the period under review PFSL implemented a Client

Share Ownership Programme (CSOP). The CSOP gives

clients an opportunity to participate in acquiring shares in

PFSL. As at the end of the year, 265 clients were

participating in the program.

In an effort to streamline product development and to

meet the demands of the market, a Home Improvement

product was introduced during the year. This product

meets the needs of the market segment for which it is

designed and contributes to the development of the

housing market and estates development.

The Year 2010

PFSL recorded a loss of ZMK232.8 million in 2010

considering the huge investment and expansion

programme in Branch network and Business Loan

Centres.

In 2010, savings grew from ZMK854.9 million to ZMK5.2

billion as more and more clients came to know and

appreciate our products and services.

The year 2010 has seen an increase in our asset base

from ZMK16.164 billion to ZMK22.1 billion and the loan

portfolio had moved from ZMK3.9 billion to ZMK12.4

billion. 2010 also recorded a portfolio at risk of about

1.40%.

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Shareholders and Partners

The PFSL Shareholders and Partners have continued

to support the growth and development of the

Company. DID have continued to provide management

and technical assistance to PFSL. During the year

however, Mr. Martin Villemure, who served as CEO in

the initial transformation, was transferred within the DID

Group. Our gratitude goes out to Mr. Villemure for his

energetic contribution. Mr. Claude Lafond was

appointed as CEO, Mrs Annick Michaud was appointed

as Advisor to the Chief Operation Officer and IT Officer

and Mr. Alain Comeau was appointed as Credit Advisor

within the terms of the management agreement with

DID .

PFSL’s success in its expansion program and

implementation is also attributed to international

partners that have included the Canadian International

Development Agency (CIDA), African Development

Bank (AfDB) and FMO (Netherlands).

Economic Outlook

Inflation for 2011 is forecast at 7.7% due to low food

prices resulting from a good harvest. Foreign exchange

levels are expected to improve relative to the previous

year, but will remain low. The Kwacha is expected to

depreciate marginally compared to the US Dollar in

2011. The economy is expected to register a GDP

growth of 6.8% in 2011, this well above the global

growth rates . In 2012 the economy is expected to

record a growth of 6%. There are fears that global oil

prices may soar above US$120/barrel in 2011. There is

a risk that the continued increase in global fuel prices

may result in an increase in local fuel prices.

PFSL In 2011

With growing competition within the financial sector,

evidenced by the increased number of Commercial

Banks and MFIs, PFSL will focus on its core business

which is to provide financing to the MSME’S, but PFSL

will also continue to develop products that will

compliment its core business operations.

Our aim for 2011 is to continue expanding the Branch

network as well as the product lines. It is anticipated

that we will open up additional outlets and this will bring

our total staffing levels to over 150 in 2011.

The use of technology through the Personal

Identification Card (ID card) has contributed to securing

client transactions and also enhances controls, security

and efficiency in the delivery of services.

With our current efforts I am confident that we will be the

Preferred Deposit-Taking Microfinance Institution with

the support of all our stakeholders.

Finally, I would like to again thank the Board,

Management and Staff for their assiduous effort and

hard work for this period under review.

Nathan DeAssis

Board Chairman

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Chief Executive Officer’s Message

Mr. Claude Lafond

During the year under review, the Company has seen an increase in the number of Branches, Business Loan Centers and employees. This growth and expansion has been facilitated by the expected increase in the number of clients. PFSL continued throughout the year to work diligently on strengthening internal capacity to effectively manage the expansion plan. Fiscal 2010 proved to be both challenging and brimming with opportunities as a Deposit Taking Micro-Finance Institution. I am pleased to present the PFSL 2010 Annual Report. Financial and Operational Performance As at December 2010, PFSL’s financial performance for the fiscal period reflects impressive growth as highlighted herein. At the end of the fourth quarter the Zambian banking sector’s total assets increased by ZMK1.2 trillion to ZMK23.0 trillion while capital adequacy declined modestly to 19.1%. Comparatively, PFSL recorded total asset growth of 36.5% or ZMK5.9 billion in 2010 ending the year at ZMK 22.1 billion. This result is primarily attributed to the considerable increase in the loan portfolio.

Total liabilities increased from ZMK7.0 billion to ZMK13.3 billion due to growth in savings and additional long term borrowings. Total equity at year end amounted to ZMK8.8 billion representing a year over year decrease of ZMK339.8 million. Based on international accounting standards, Preferred Shares are now classified as long term debt. As is our custom during this stage or our growth, a mid-year audit was conducted to facilitate the strengthening of financial controls within PFSL. Additionally, sound capitalization has ensured that PFSL continues to meet its short term obligations, Bank of Zambia regulations and prudential ratio requirements. Income and Expenses After its second year of operations, PFSL reported better than expected results as the recorded loss of ZMK232.8 million is four (4) times less than initially anticipated. Start-up investments should therefore be recovered sooner than originally budgeted. During the period under review, gross profit grew by 76% from the ZMK6.5 billion last year to ZMK11.4 billion. PFSL’s expenses increased to ZMK11.6 billion from ZMK6.5 billion in 2009. This amount includes administration expenses of ZMK7.9 billion in comparison to ZMK4.9 billion in 2009. Administration PFSL’s management team is strongly results oriented and the core of its organizational culture is risk management. Consequently, we have continued to strengthen internal controls and develop and reinforce policies and operating procedures. Throughout the year PFSL also ensured that it adhered to the Bank of Zambia regulations that required us to update and check with the Credit Reference Bureau for information pertaining to all loan applications.

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Branches, Business Loan Centers and Network

PFSL launched its expansion plan in 2010 by opening 4 new full services branches and one new Business Loan Center. This was based on identifying densely populated and high potential business areas in the Lusaka vicinity including Chawama, Kamwala, Kanyama and Kalingalinga, together with Kitwe in the Copperbelt. At the PFSL Unity House Headquarters, the branch banking hall was moved from the first floor to the ground floor during the first quarter of 2010, in order to accommodate further growth and expansion. In conformity with this expansion program, PFSL ended the year with five Branches and three Business Loan Centers. The branches are situated at Downtown, Chawama Market, Lumumba Market, Kanyama Shopping Center and Kitwe. The Business Loan Centers are in Lumumba Market, Soweto Market and Kalingalinga areas. PFSL’s key products include Commercial MSME Loans, Market Women Loans, Home Improvement Loans, Savings Accounts and Term Deposits.

Deposit Mobilization

PFSL closed the year with a total of ZMK5.2 billion in savings deposits. This has been achieved through targeted promotions to encourage individual savings in line with the overall objective of financial inclusion.

Thirty seven percent of PFSL’s deposits are constituted by Term Deposits and Premium Saving Accounts while 33% of the total savings portfolio comes from Regular Saving Accounts. From a gender based financial inclusion perspective, 46% of all depositors are women.

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Borrowers and Loan Portfolio

The PFSL loan book grew by 220% from ZMK3.9

billion to ZMK124 billion. The strengthening of the

internal capacity and the improvement of processes

and credit policies allowed PFSL to triple the monthly

loans disbursement and to double the average

outstanding loans compared to the previous year. In

December 2010, the monthly loan disbursements have

reached ZMK2.6 billion for a total of new loans

disbursed during the year of ZMK19.2 billion.

Meanwhile, the average of outstanding loans has

increased to ZMK10.9 million.

The portfolio at risk (PAR 30 days) was 1.40% as at

December 2010 in comparison with the previous year

at 1.99%.

Forty seven percent of the loans disbursed over the

past year were to women who represent 48.9% of the

total number of borrowers.

We have continued to rely on the Credit Reference

Bureau (CRB) as an important clearing process of

potential borrowing clients.

CSOP

In 2010, PFSL introduced the Client Share Ownership

Programme (CSOP) to give the opportunity to its

clients to participate in the ownership of PFSL. The

introduction of this innovative programme in the

Zambian microfinance sector is a first and PFSL is

proud of the results seen until now that exceeds its

expectations. The conditions of the programme

develop a healthy culture of credit and encourage the

clients to pay back their loan on time by giving them

back an incentive of 10% to 13% of the interest paid

on their loan. The clients recognize that this

investment can be held for several years and be used

as assets for future plans such as a retirement fund or

a child's education financing plan.

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In addition to the MSME Loan portfolio, a new product was introduced during the year. The Home Improvement Loan portfolio now represents 31.5% of the overall credit portfolio and responds well to the needs of clients relative to better housing. It also supports a healthy construction industry.

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That’s why more than 50% of borrowers have

invested in the plan and 70% of them have chosen the

gold plan that gives them 30% more in return. By

giving constantly more information to its clients about

this innovative programme, PFSL is confident to see

an important increase of the number of clients who will

adhere in the next months.

Information Technology

Following the implementation of SAF two years ago,

PFSL has continued to benefit from the operating

system in terms.

In order to provide enhanced security for our clients’

financial assets a Smart Card was introduced for all

transactions and 89% of all clients are now using their

card on a regular basis.

The website was upgraded in 2010 to include

information on PFSL products, services and profiles of

exceptional clients. The entire framework and design

of the website was reviewed to make it more

interactive and user friendly.

Human Resources

To effectively manage the increased numbers of staff,

a Human Resource Officer was engaged during the

year with the help of a DID technical assistance

mission.

A total of 46 new employees were recruited in 2010,

bringing the total number of employees to 95. As

PFSL is an equal opportunity employer, 41.1% of the

total staff members and 58.3% of the managers are

women.

We remain committed to provide ongoing training to

staff to ensure that all employees acquire the

necessary skills and competence to carry out their

duties.

Finally, I would like to express my gratitude to all

management team, members of staff, Directors of the

Board and cooperating partners.

Claude Lafond

Chief Executive Officer

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Governance at PFSL

Annual General Meeting

PFSL held its Annual General Meeting on April 22nd

2010.

Board of Directors

During the year, PFSL held 4 Board Meetings as per the

schedule agreed upon by the Board Members.

PFSL is governed by a Board of Directors with vast experience

in the financial sector. They oversee the effective

implementation of the mission of the institution and its policies.

They approve specific strategies and objectives and assure the

application of appropriate prudential standards for microfinance.

The members are:

Name Board Position

Mr. Nathan DeAssis Chairman

Mr. Claude Royer Director

Mr. George Odo Director

Mr. Mark VanderVort Director

Ms Zina Sanyoura Pending (Clearance BoZ)

Mr. Stephen Mbewe Pending (Clearance BoZ)

Proxfin 2010

Proxfin is an international network of thirty community finance

institutions and Développement international Desjardins

(DID) whose members have made a commitment to work

towards the dual objectives of financial performance and

social impact which they consider inseparable. Proxfin’s goal

is to foster communication among these institutions which

share the same values and approach to performance and

community involvement. In this manner, Proxfin intends to

help microfinance move forward so that access to financial

services soon becomes a reality for everyone.

Since its inception four years ago, 2010 was an important

turning point for the network in terms of consolidation and in

terms of visibility on the global stage with its involvement in

worldwide issues. Proxfin has impacted the international

scene in several ways. In October, Proxfin organized an

International Seminar on the topic of how microfinance can

contribute to providing food security. Rather than reserve

attendance for just its membership, Proxfin also invited fifty

outside participants to the seminar including microfinance

sector stakeholders, international experts on food security

and guests from Desjardins Group.

The PFSL Chairman also had the opportunity to attend this

general meeting held in Québec, Canada as a member of

the Proxfin’s Management Committee.

40th Anniversary of DID and Outstanding Partner of 2010

On October 7, 2010, DID hosted a special evening celebrating its 40th anniversary. Many DID partners attended this event,

including PFSL Chairperson Mr. Nathan DeAssis. Mrs Monique F. Leroux, President and CEO of Desjardins Group, was also

present.

It is pleasing to note as well that Mr. DeAssis has been chosen as one of four DID “Outstanding Partners” for 2010 . In the spirit of

Alphonse Desjardins, founder of the Desjardins Group, Mr. DeAssis has demonstrated a dynamic approach and sense of

cooperation that are admirable. His leadership and commitment to the development and expansion of Pulse Financial Services

Ltd. and to the Proxfin Management Committee have made real and effective improvement to the community finance sector

possible.

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PFSL’S Branch Network


DOWNTOWN BRANCH

Unity House

Corner of Freedom Way/

Katunjila Road

PO Box RW 51269, Lusaka

Tel: +260 211 233137/38

KAMWALA BRANCH

1ST Floor Brown Mall

Plot No. 237

Chilumbulu Road

Kamwala, Lusaka

Tel: +260 974 770987

KANYAMA BRANCH

Unit 2

Tafika Shopping Centre

Los Angeles Road

Kamwala Lusaka

Tel: +260 974 770985

KITWE BRANCH

Plot No. 1053

Freetown Road

Kitwe, Zambia

Tel: +260 974 770984

SOWETO BUSINESS LOAN CENTRE

Shop 540/541 Light Yellow Section

City Market

KAMWALA BUSINESS LOAN CENTRE

Kamwala Luburma Market

Council/ Market Master Offices

KALINGALINGA BUSINESS LOAN CENTRE

Stand 03/29/154

Alick Nkhata Road

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HEAD OFFICE

Unity House


Katunjila Road


Tel: +260 211 233137/38, Fax: +260 211 233136

Email: [email protected]

Website: www.pfsl.com.zm

CHAWAMA BRANCH

Nkombe Building

Plot No. 10 block 205

Chifundo Road

Chawama, Lusaka

Tel: +260 974 770986

mailto:[email protected]

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PFSL’S Staff

The Next Step For Your Business 13

DOWNTOWN BRANCH

Tamanda Banda

Hellen Jussy Banda

Eniah Cheela

Frank Chewe

Chizwe Chibolyo

Mwanakombo Danford

Bebina Jere

Christine Masialeti

Kapi Quintin Masuwa

Jane Mbuzi

Edward Mubanga

Davies Mukuka

Rejoice Mungazi

Luke Ngulube

Temwani Phiri

Simon Ziba

Alexander Zulu

HEAD OFFICE

Edna Banda, Sami Chalwa, Lloyd Chatontola Chupalesa, Chembe James Chipungu, Lukonde Chisopa,

Alain Comeau, Noah Halwiindi, Prisca Hampande, Cheelo Jiji, Peter Kabaso, Chishiba Kampilimba,

Sydney Kanyata, Sharon Bwalya Kasoma, Claude Lafond, Mubiana Ellen Lifumbo, Mbawemi Llunga Chihana,

Lulu Thandeka Lombe, Betty Lupunga, Elijah Mambwe, Sacheal Maseko, Annick Michaud, Simon Milisi,

Florence Mkandawire, Senzo Mkwananzi, Martha Msoni, Kevin Mtonga, , Moono Mudenda, Maureen Ngoma Mwanza, Pandwell Chibwe Mwila, Rabecca Nkhoma, Rhoda Nyimbiri,

Catherine Phiri, Jessie Nyirenda Seketa, Moses Serenje, Maureen Sikusho, Unikedy Tembo, Titus Zulu

CHAWAMA BRANCH

Safe Chanda, Shamu Chikatula, Bestern Hatyamba,

Akasiwa Inambao, John Kabwe , Given M. Kalamba,

Rodgers Kamocha, Petronella Madyabi, Kelvin M. Mayonga,

Dovies Mbola, Luyando Mweemba, Daniel Sakala,

Shaft Sibalwi, Melody Tilimboyi

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PFSL’S Staff

KANYAMA BRANCH

Kondwani Banda

Lois Boti

Hastings Chibambula

Justin Chitalu

Bester Chomba

Dorcas Dzata

Mweo Kondolo

Caleb Lumamba

Enala Chanda Mtaja

Mulenga Mwachilele

Japhet Mwale

Astone Mwale

Kenneth Ngambi

Enala Mweene Nyirenda

Olyn Simbao

KITWE BRANCH

Prisca Chileshe

Mumba Shamboko Chitindi

Alice Lubemba Daka

Lisa kapala Lubamba

Amukena Joseph Lubasi

Yvonne Matanda

David Mbewe

Owen Mumbe

Rodrick Musonda

Temwani C. Siwila

Ackson M Tembo


KAMWALA BRANCH

Francis Besa, Loveness Chiumya, Lemmy Chiyowa,

Esther Daka, Honson Kabinga, Joseph Kapampa,

Adel Mukemu, Mabvuto Mwanza, Melvin Mweemba,

Sangwani Mzumara, Emmanuel N. Mututwa, Stella Saidi,

Gabriel Tembo, Cynthia Tibalenji Miti

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PFSL’S Shares

Today, PFSL is stronger because various organizations and individuals entrusted their funds to the company owing to Zambia’s con-

ducive investment environment, the investment opportunities seen in PFSL and the market at large.

DID 30%

Développement international Desjardins (DID) is a subsidiary of Desjardins Group, the leading cooperative financial group in Canada

and the sixth largest in the world with assets of over US$ 175 billion and 5.8 million individual and corporate members and cli-

ents. Founded in 1970 with the goal of sharing the expertise and experience of Desjardins Group with emerging and developing

countries, DID celebrated 40 years of operations in 2010. A pioneer in the deployment and development of microfinance around the

world, DID today is a world leader in this sector. It makes a full range of specialized business solutions available to its partners thus

enabling them to provide their clients with accessible, secure and diversified financial products and services.

Website: http://www.did.qc.ca/

CEP Trustee Corporation 24%

CEP Trustee Corporation is the private sector development arm of CARE Canada and was created to support fledging social enter-

prises, promote widespread market-based development, and help entrepreneurs generate sustainable economic and social returns

for poor families and communities. CARE Canada is regarded as one of the premier development organizations in Canada, with a

vast global network of agencies including CARE Zambia.

Website: http://www.care.ca

BlueOrchard Private Equity Fund 22%

BlueOrchard is a leading commercial microfinance investment company. Their mission is to empower the poor worldwide and im-prove their quality of life by enabling them to participate in income-generating activities. They achieve this by developing and manag-ing innovative and attractive financial products and services that invest in microfinance institutions that support millions of promising small enterprises in low-income regions worldwide. At the same time, our investment products generate profitable returns for our investors.

Website: http://www.blueorchard.com

AfricInvest Capital Partners 22%

Tuninvest-Africinvest Group is one of the leading private equity houses in North and sub- Saharan Africa with over $500 million of assets under management across 10 PE funds sponsored by prestigious DFIs, private and institutional investors. The covered and targeted region evolved over the life of the Group from Tunisia with relatively small investments initially, to the Maghreb region (Maghreb Private Equity Funds I & II) and subsequently, Sub-Saharan Africa (Africinvest Funds I & II and Africinvest Financial Sector Fund) with significantly larger investments. Website: http://www.tuninvest.com

Individual Zambian Investors 2%

15

http://www.did.qc.ca/

http://www.care.ca

http://www.blueorchard.com

http://www.tuninvest.com

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Client Share Ownership Programme (CSOP)

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PFSL’S Parters

All this exciting transformation and growth that PFSL has undergone would not have been possible without the backing of important

international partners namely Canadian International Development Agency, African Development Bank and FMO. All these

International partners have one thing in common, the socio-economic benefit of the country (Zambia).

CIDA

The Canadian International Development Agency (CIDA) is Canada’s lead agency for development aid. CIDA’S aim is to manage Canada’s resource support effectively and with accountability in order to achieve meaningful, sustainable results and; engage in policy development in Canada and internationally, enabling Canada’s effort to realize its development objectives.

Website: http://www.acdi-cida.gc.ca/

African Development Bank

The African Development Bank (AfDB) Group’s mission is to help reduce poverty, improve living conditions for Africans and mob ilize resources for Africa’s economic and social development.

Website: http://www.afdb.org/

FMO

FMO’s mission is to provide capital, share knowledge and create partnerships. Their clients are ambitious entrepreneurs and

financial institutions - often in low-income countries. They partner with banks and other institutions with specific expertise. Together,

they create access to a full range of financial products, sector expertise and knowledge-based services.

FMO’s vision is that a thriving private sector will help support and grow lasting economic, environmental and social development. By

empowering people to employ their skills and improve their quality of life, current and future generations in emerging markets will

benefit from sustainable development.

Website: http://www.fmo.nl

Triple Jump

Triple Jump is a microfinance investment manager based in Amsterdam, the Netherlands. Triple Jump offers professional fund

management services to investors, and provides loans and equity investments to microfinance institutions (MFIs). Triple Jump

manages several MFI investment funds each with a specific target group and different risks and return objectives, which enables

them to serve MFIs throughout their life cycle. Triple Jump advisory services aide growing MFIs move to the next business level by

providing cost sharing grants and technical assistance. Triple Jump clients range from NGOs receiving their first non-subsidized

funding, to regulated banks with intermediate savings as well as hundreds of thousands of individual institutional borrowers. Triple

Jump currently has over 150 investments with 145 microfinance institutions in 52 countries, for a total invested capital of USD 260

million.

Website: http://www.triplejump.eu

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http://www.acdi-cida.gc.ca/

http://www.afdb.org/

http://www.fmo.nl

http://www.fmo.nl

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PFSL Customer Profiles

Stella Bulaya —

Aviary and pigsty

Ms. Bulaya remarks that since

the time she first dealt with PFSL

there is a difference in her life.

With the diversity of products

she is now able to sell, her

p ro f i t s hav e i nc reas ed.

Furthermore, the Mayeya family

also now enjoys the advantage

of good turnover on the

farm. With the profits made

over time, Mr. and Mrs. Mayeya

have bought a car and a truck for

transporting their animals to

market.

Today Stella Bulaya Mayeya is

proud of the progress which has

been accomplished with the help

of PFSL. When people are

surprised at the magnitude of

infrastructure on the farm and

the rapidity with which Stella

Bulaya Mayeya has expanded

the business, it encourages her

to work even harder.

“It does not matter if you are

small, you can believe, the sky is

the limit”, she says.

Jane Mwape —

Max Fashion Designers

In a few years, Jane would love to have a boutique stocking

wedding gowns and evening garments. She is convinced that

her business plans will be achieved thanks to the support of

PFSL. She had never thought that her enterprise could make it

this far and her creations would be

so successful.

“Now, I am capable of making my

family live well, I take care of them

myself”, she smiles with satisfaction.

“I would not have been here without

the help of PFSL”, she affirms.

Crispin & John —

Ermine Enterprise Limited

PFSL has influenced the daily

lives of these two young

entrepreneurs, but they have not

been the only beneficiaries. In

fact, the benefits of Crispin and

John’s efforts are felt throughout

the entire community.

Ermine Enterprise Limited

consists of 25 permanent

employees and depending on

the season, this number can

double.

“With PFSL, we will grow

because PFSL is expanding

and what I like about PFSL is

their business orientation and

their ability to bend to each

ent repreneur ’s bus iness

circumstances, which is an

added advantage”, says Crispin.

“When you have a fixed salary,

you know that you will be able to

pay for electricity and the school

fees on time”, smiles John.

“PFSL is not just any simple

financial institution. It has been

a partner for a long time now.”


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PFSL’S Financial Statements

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INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF PULSE FINANCIAL SERVICES LIMITED

Directors' responsibility for the financial statements

Auditor's responsibility

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for

our audit opinion.

Opinion

Report on other legal requirements

BDO W P Saunders

Chartered Accountants Partner

Date:

The Companies Act in Zambia requires that in carrying out our audit, we consider and report to you as to whether or

not the company has kept the accounting records and registers required by this Act. We confirm that in our opinion

from our examination of the records, the accounting records, other records, and registers required by this Act have

been properly kept by the company.

In our opinion, the financial statements present fairly in all material respects, the financial position of Pulse

Financial Services Limited as at 31 December 2010, and its financial performance and cashflows for the year then

ended in accordance with International Financial Reporting Standards and in the manner required by the Companies

Act in Zambia and the Banking and Financial Services Act.

We have audited the accompanying annual financial statements on pages 3 to 22 of Pulse Financial Services Limited,

which comprise of: the directors' report, the statement of financial position as at 31 December 2010, the statement

of comprehensive income, the statement of changes in equity, statement of cashflows for the year then ended and a

summary of significant accounting policies and other explanatory notes.

The company's directors are responsible for the preparation and fair presentation of the financial statements in

accordance with International Financial Reporting Standards and in the manner required by the Companies Act in

Zambia and the Banking and Financial Services Act. This responsibility includes: designing, implementing, and

maintaining internal control relevant to the preparation and fair presentation of financial statements that are free

from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;

and making accounting estimates that are reasonable in the circumstances.

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 that 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 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 estimates made by the directors, as well as evaluating the overall presentation of the

financial statements.

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20

PULSE FINANCIAL SERVICES LIMITED

STATEMENT OF FINANCIAL POSITION

As at 31 December 2010

2010 2009

ASSETS K'000 K'000

Cash and bank balances 1 373 572 11 362 121

Loans and advances 12 371 782 3 870 517

Other receivables 1 139 052 117 511

Investments 4 883 122 -

Inventory 138 193 -

Plant and equipment 2 153 509 814 341

Total assets 22 059 230 16 164 490

EQUITY AND LIABILITIES

Liabilities

Customer deposits 5 198 571 854 987

Other payables 1 495 112 1 997 891

Borrowings 2 253 720 -

Convertible redeemable preference share capital 4 316 499 4 176 513

13 263 902 7 029 391

Capital and reserves

Share capital 9 148 073 9 255 076

Accumulated loss (352 745) (119 977)

8 795 328 9 135 099

Total equity and liabilities 22 059 230 16 164 490

The financial statements were approved by the board of directors on ____________ 2011

and were signed on its behalf by:-

Director

Director

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STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2010

2010 2009

K'000 K'000

Interest and similar income 11 716 172 6 122 021

Interest expense on customer deposits / Other borrowings (672 752) (61 960)

Other financial income 360 516 405 698

Gross profit 11 403 936 6 465 759

Administrative expenses (7 919 316) (4 917 549)

Staff costs (2 688 800) (1 273 145)

Other operating expenses (994 160) (308 303)

Foreign exchange loss (34 428) -

Loss on disposal of property, plant and equipment - (11 959)

Comprehensive loss before tax (232 768) (45 197)

Income tax expense - -

Comprehensive loss for the year (232 768) (45 197)

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STATEMENT OF CHANGES IN EQUITY


Accumulated

Share capital losses Total

K'000 K'000 K'000

At 1 January 2009 1 894 700 (74 780) 1 819 920

Issue of shares 7 510 461 - 7 510 461

Stamp duty paid (150 085) (150 085)

Comprehensive loss for the year - (45 197) (45 197)

At 31 December 2009 9 255 076 (119 977) 9 135 099

Employee sale of shares (2 180) - (2 180)

Stamp duty paid (104 823) - (104 823)

Comprehensive loss for the year - (232 768) (232 768)

At 31 December 2010 9 148 073 (352 745) 8 795 328

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STATEMENT OF CASHFLOWS


2010 2009

K'000 K'000

Cashflows from operating activities:

Comprehensive loss before tax (232 768) (45 197)

Adjustments for:

Depreciation 440 442 151 504

Unrealised foreign exchange loss on preference shares 139 986 -

Gain on disposal of property, plant and equipment - 11 959

347 660 118 266

Movement in working capital:

(Increase)/decrease in other receivables (1 021 540) 20 629

(Increase) in loans and advances (8 501 265) (2 094 973)

(Increase) in inventory (138 193) -

Increase in customer deposits 4 343 583 547 312

(Decrease)/increase in other payables (502 779) 1 633 134

Cash generated from operations (5 472 534) 224 368

Taxation:

Income taxes paid - -

Net cash generated by operating activities (5 472 534) 224 368

Cashflows from investing activities:

Payments for acquisition of plant and equipment (1 779 610) (836 034)

Payments for investments (4 883 122) -

Net cash used in investing activities (12 135 266) (611 666)

Cashflows from financing activities:

Amounts due to related parties - (562 206)

Proceeds from borrowings 2 253 720 -

Proceeds from issue of convertible redeemable preference shares - 4 176 513

Stamp duty paid (104 823) (150 085)

(Share purchase)/proceeds from issue of ordinary shares (2 180) 7 510 461

Net increase in cash and cash equivalents (9 988 549) 10 363 017

Cash and cash equivalents at the beginning of the year 11 362 121 999 104

Cash and cash equivalents at the end of the year 1 373 572 11 362 121

Cash and cash equivalents comprise of:

Cash and bank balances 1 373 572 11 362 121

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25

Notes


26

Notes


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HEAD OFFICE

Unity House


Katunjila Road


Tel: +260 211 233137/38,

Fax: +260 211 233136

Email: [email protected]

Website: www.pfsl.com.zm

mailto:[email protected]

http://www.pfsl.com.zm

Pulse Financial Services Limited - Zambia licensed deposit ... Report PFSL 2010 Short version... · Report of Pulse Financial Services Limited ... published a comparison of borrowing

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