REG - ASA Intnl. Grp PLC - FY 2022 results
18/04/2023 07:00
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RNS Number : 5026W ASA International Group PLC 18 April 2023
Press Release
ASA International Group plc reports FY 2022 results
Amsterdam, The Netherlands, 18 April 2023 - ASA International Group plc ('ASA
International', the 'Company' or the 'Group'), one of the world's largest
international microfinance institutions, today announces its unaudited results
for the year ended 31 December 2022.
Key performance indicators
(UNAUDITED) FY2022 FY2021 FY 2020 YoY YoY % Change
(Amounts in USD millions) % Change (constant currency)
Number of clients (m) 2.3 2.4 2.4 -3%
Number of branches 2,028 2,044 1,965 -1%
Profit before tax 46.3 25.7 2.6 +80% +117%
Net profit 17.9 6.4 -1.4 +181% +269%
OLP((1)) 351.2 403.7 415.3 -13% +5%
Gross OLP 367.5 430.7 445.3 -15% +3%
PAR > 30 days((2)) 5.9% 5.2% 13.1%
((1)) Outstanding loan portfolio ('OLP') includes off-book Business
Correspondence ('BC') loans and Direct Assignment loans, excludes interest
receivable, unamortised loan processing fees, and deducts modification losses
and ECL reserves from Gross OLP.
((2)) PAR>30 is the percentage of on-book OLP that has one or more
instalment of repayment of principal past due for more than 30 days and less
than 365 days, divided by the Gross OLP.
FY 2022 highlights
· The Company's operational and financial results continued to improve
compared to 2021 with profit before tax increasing to USD 46.3 million in FY
2022 from USD 25.7 million in FY 2021.
· Net profit stood at USD 17.9 million for FY 2022, compared to USD 6.4
million in FY 2021.
· The improvement was led by the strong operational and financial
performance of Pakistan, the Philippines, Ghana and Tanzania microfinance
institutions ('MFI's), which delivered significant OLP growth and increased
profitability in constant currency terms.
· Nigeria, Kenya, and Uganda also made significant positive contributions
to the Group's net profitability.
· As portfolio quality improved or stabilised across most markets, the
Company significantly reduced expected credit losses ('ECL') charged to the
Income Statement to USD 0.6 million (FY 2021: USD 37.5 million). Reserves for
expected credit losses on OLP in the Balance Sheet, including the off-book BC
portfolio in India and interest receivables, reduced from USD 27.5 million in
FY 2021 to USD 16.9 million in FY 2022.
· PAR>30 for the Group's operating subsidiaries increased to 5.9% in
2022 from 5.2% in 2021, partially due to the decrease in portfolio quality in
India, combined with a shrinking OLP in USD terms in some of our other major
better performing countries due to substantial currency devaluation. PAR>30
for the Group excluding India is 3%.
· ASA India's collection efficiency continued to improve, reaching 87% in
December 2022. As of 31 December 2022, ASA India had collected USD 3.7 million
from a total of USD 22.9 million in written-off loans since 2020.
· The Group derecognised deferred tax assets amounting to USD 8 million
related to deductible temporary differences and past losses for mainly India
and Myanmar, in adherence to IFRS guidelines. This resulted in a substantial
increase in tax expenses and a high effective tax rate for FY 2022.
· The Group's cash and cash equivalents reduced from approximately USD 91
million as of 31 December 2021 to approximately USD 55 million as of 31
December 2022, following large debt settlements primarily in India. The
Company maintains a healthy cash position and has a significant funding
pipeline.
Outlook
Whilst inflation and the related foreign exchange ('FX') movements will
continue to impact the Group's operating subsidiaries' financial performance
in USD terms, based on the positive developments throughout 2022, the Company
expects the operating environment for its clients to continue to improve in
most of its operating markets.
As most of the Group's operating subsidiaries have returned to growth and
increased profitability, and subject to improved performance in India and
reduced currency devaluation in most of our operating countries, the Company
is confident of continued progress during 2023.
Dirk Brouwer, Chief Executive Officer of ASA International, commented:
"We are pleased that all but three of our operating subsidiaries reached or
exceeded pre-covid operating and financial performance on a constant currency
basis in 2022. The performance of most of our major operating subsidiaries,
particularly Pakistan, the Philippines, Ghana and Tanzania, was excellent in
terms of portfolio quality, growth and profitability. Though as expected, and
against the backdrop of global market volatility, FX movements have
significantly impacted the Group OLP and financial performance in USD terms,
most of our clients and their businesses in these countries have again proved
their resilience despite operating in an environment with high inflation.
As a result of the improved operating performance in 2022, profit before tax
and net profit of the Group for 2022 is substantially better than what was
achieved in 2021. The Group's profit before tax increased to USD 46.3 million
in FY 2022 from USD 25.7 million in FY 2021, and the Group's net profit
increased to USD 17.9 million in FY 2022 from USD 6.4 million in FY 2021.
Based on the positive developments throughout 2022 and despite the challenging
operating environment in some of our operating subsidiaries, overall, we
expect higher demand for our loans in 2023. This should lead to continued
progress as we continue to invest in the future with our digital strategy."
CHIEF EXECUTIVE OFFICER'S REVIEW
Business review 2022
The improvement in the operating environment in most of our markets saw demand
for our loan products increase as clients experienced an upturn in business
activity. Against the backdrop of the macroeconomic challenges faced in our
operating markets due to the global impact of food, commodities and energy
inflation, the high demand from clients contributed to the growth of our
operations.
Excluding India, Myanmar and Sri Lanka, the Group added 112 additional
branches and increased number of clients from 1.7 million to 1.9 million in
2022. On a constant currency basis, OLP, excluding India, Myanmar and Sri
Lanka, grew to USD 360 million in 2022 from USD 282 million in 2021. The
growth in OLP was combined with improved portfolio quality in these markets
with PAR>30 at 3% as of December 2022 in all markets excluding India.
To limit financial losses and, simultaneously, maintain sufficient capital in
India and Myanmar, the Group decided to downsize the operations in these two
countries for now.
In India, the Company maintained its strategy to reduce disbursements and
focus on the recovery of existing and overdue loans, which resulted in OLP
shrinking by USD 61 million in 2022. We do expect that the major change of the
regulatory environment in India, including the removal of the margin and
interest rate cap, should translate into a positive effect on the future
profitability of our operations in India.
In Myanmar, the operating environment remained challenging following the
military takeover of government in February 2021. This resulted in our
inability to operate in a few regions where the levels of civil unrest
remained high. We do not expect the operating environment to substantially
improve until a governmental settlement is reached.
In Sri Lanka, one of our smallest markets, the economic and political crisis
faced in 2022 resulted in disruptions to our operations. However, we expect a
gradual improvement of business and the operating environment in 2023 which
should allow our operations to start gradually reaching new clients.
I express my gratitude to all of our colleagues in our head offices and in the
field in all our countries for their commitment, hard work and for always
keeping their focus on supporting our clients in difficult operating
circumstances.
Financial performance
As a result of the improved operating performance in FY 2022, and the
significantly reduced expected credit losses charged to the Income Statement
from USD 37.5 million in FY 2021 to USD 0.6 million in FY 2022, the Group
realised net profits of USD 17.9 million, which was a substantial improvement
over the USD 6.4 million achieved in FY 2021. I am pleased that all but three
of our major operating subsidiaries exceeded pre-covid operating and financial
performance on a constant currency basis in 2022. The performance of most of
our operating countries, particularly Pakistan, the Philippines, Ghana and
Tanzania, was excellent in terms of portfolio quality, growth and
profitability.
The Group maintains a diversified risk profile with operations across thirteen
markets in Asia and Africa. As the impact of global market volatility,
inflation and adverse FX movements in our operating markets substantially
varies per country, the Company benefits from this relatively high level of
diversification.
Expected credit losses
The Company reduced its reserves in the Balance Sheet for expected credit
losses from USD 27.5 million in FY 2021 to USD 16.9 million in FY 2022, for
its OLP, including the off-book BC portfolio and interest receivables.
Following an additional write-off of the outstanding Covid affected portfolio
(USD 10.8 million in FY 2022 vs USD 32.9 million in FY 2021), the Company
maintained significant reserves, primarily due to the overdue loans in India
and Myanmar.
The USD 16.9 million ECL reserves on OLP is concentrated in India (57%) and
Myanmar (20%), with the remainder spread across the other countries as a
percentage of each country's outstanding loan portfolio or as an aggregate
amount. Further details on the ECL calculation, including the selected
assumptions, are provided in note 2.5.3 to the consolidated financial
statements.
Digital financial services
In anticipation of a rapidly digitising world, also in the segment of our
low-income clients, the Group made progress with the implementation of its
digital strategy to have a more attractive and competitive client proposition.
Our digital strategy entails the implementation of the newly acquired core
banking system, our digital financial services platform ('DFS App'), and our
route to embedded finance with the so-called Supplier Market Place ('SMP').
Along with the digitalisation of our client relationship, we will make
progress in further digitising our employee processes as well.
The implementation of the core banking system (T24) in Pakistan as the first
country in the Group continues as planned and is targeted to go live in the
second half of 2023.
The SMP app is currently being rolled out in Ghana. The first clients are
onboarded and placing their online orders. The DFS app, in combination with
the new core banking system (T24) in Ghana, will go live after the Pakistan
implementation.
Competitive environment
The competitive landscape has not changed much across the Group. Our strongest
competitors are in India, the Philippines, Nigeria, Tanzania and Uganda. In
most other markets, we face less competition from traditional microfinance
institutions. Up until now, we have not noticed significant competition from
pure digital lenders.
Dividend
After careful consideration, the Board has decided not to declare a dividend
in 2023 on the 2022 results. However, the Company looks to return to its
pre-Covid dividend policy in 2024 on the 2023 results, assuming the operating
and financial performance continues to improve and flows of dividends from
major operating subsidiaries return to normal.
Changes to the Board of Directors post 31 December 2022
On 24 February 2023, the Board has approved the following succession plan. Mr.
Brouwer will remain as CEO until the Annual General Meeting ('AGM') on
Thursday 15 June 2023, at which point Ms. Karin Kersten, currently Executive
Director, Corporate Development, will be appointed CEO. Ms. Kersten joined ASA
International from ABN AMRO Bank in October 2021 and became an Executive
Director in April 2022. In the Board's view she is very well qualified to lead
the Group going forward.
Webcast
Management will be hosting an audio webcast and conference call, with Q&A
today at 14:00 (BST).
To access the audio webcast and download the 2022 FY results presentation,
please go to the Investor section of the Company's website: Investors | Asa
(asa-international.com) (https://www.asa-international.com/investors/) or use
the following link:
https://stream.brrmedia.co.uk/broadcast/641c56bd2168855f70e653c7
The presentation can be downloaded before the start of the webcast.
In order to ask questions, analysts and investors are invited to submit
questions via the webcast.
2022 Statutory accounts
The financial information in this document do not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006 ('the
Act'). A copy of the accounts for the year ended 31 December 2021 was
delivered to the Registrar of Companies. The auditors' report on those
accounts was not qualified but made reference to a material uncertainty in
respect of going concern and did not contain statements under section 498 (2)
or 498 (3) of the Companies Act 2006. The audit of the statutory accounts for
the year ended 31 December 2022 is not yet complete. The Directors expect the
auditors' report to be unqualified and to make reference to a material
uncertainty in respect of going concern due to expected portfolio quality
covenant breaches in India and lack of waivers or no-action letters that cover
the entire going concern period under assessment, and expect not to contain a
statement under section 498 (2) or (3) of the Act. These accounts will be
finalised on the basis of the financial information presented by the Directors
in these preliminary results and will be delivered to the Registrar of
Companies following the Company's annual general meeting.
Full Year Annual Report and Accounts
On 24 April 2023, the Company will publish the Annual Report and Accounts for
the 12 months period ended 31 December 2022 on Investors | Asa
(asa-international.com) (https://www.asa-international.com/investors/) .
Annual General Meeting
The Annual General Meeting will be held on 15 June 2023.
Enquiries:
ASA International Group plc
Investor Relations
Mischa Assink
ir@asa-international.com (mailto:ir@asa-international.com)
GROUP FINANCIAL PERFORMANCE
(UNAUDITED) FY2022 FY2021 FY 2020 YoY YoY % Change
(Amounts in USD thousands)
% Change
(constant currency)
Profit before tax 46,281 25,705 2,578 +80% +117%
Net profit 17,887 6,358 -1,395 +181% +269%
Cost/income ratio 68% 77% 98%
Return on average assets (TTM)((1)) 3.4% 1.1% -0.2%
Return on average equity (TTM)((1)) 18.5% 6.0% -1.3%
Earnings growth (TTM)((1)) 181% 556% -104%
OLP 351,151 403,738 415,304 -13% +5%
Gross OLP 367,535 430,698 445,257 -15% +3%
Total assets 489,752 562,554 579,260 -13%
Client deposits ((2)) 84,111 87,812 80,174 -4%
Interest-bearing debt ((2)) 257,466 314,413 337,632 -18%
Share capital and reserves 89,661 103,443 107,073 -13%
Number of clients 2,299,558 2,380,690 2,380,685 -3%
Number of branches 2,028 2,044 1,965 -1%
Average Gross OLP per client (USD) 160 181 187 -12% +6%
PAR > 30 days 5.9% 5.2% 13.1%
Client deposits as % of loan portfolio 24% 22% 19%
((1)) TTM refers to the previous twelve months.
((2)) Excludes interest payable.
Regional performance
South Asia
(UNAUDITED) FY2022 FY2021 FY 2020 YoY YoY % Change
(Amounts in USD thousands)
% Change
(constant currency)
Profit before tax 12,395 -8,229 -5,537 +251% +273%
Net profit 3,103 -12,393 -4,360 +125% +128%
Cost/income ratio 64% 154% 134%
Return on average assets (TTM) 1.9% -5.5% -1.7%
Return on average equity (TTM) 8.8% -27.3% -7.8%
Earnings growth (TTM) 125% -184% -131%
OLP 118,590 182,329 217,843 -35% -19%
Gross OLP 128,460 201,405 238,738 -36% -21%
Total assets 133,894 198,393 253,360 -33%
Client deposits 1,345 2,464 2,610 -45%
Interest-bearing debt 85,878 146,522 183,756 -41%
Share capital and reserves 33,393 37,506 53,232 -11%
Number of clients 935,091 1,106,469 1,185,656 -15%
Number of branches 670 778 758 -14%
Average Gross OLP per client (USD) 137 182 201 -25% -7%
PAR > 30 days 11.1% 9.6% 21.3%
Client deposits as % of loan portfolio 1% 1% 1%
· Pakistan continued to maintain a strong portfolio quality throughout
2022.
· A shrinking OLP in India and significant currency depreciation in
Pakistan and Sri Lanka (PKR down 28% and LKR down 81% YoY against USD)
contributed to overall OLP reduction in 2022.
· South Asia recovered from a net loss of USD 12.4 million in 2021 and
posted a net profit of USD 3.1 million in 2022.
Pakistan
ASA Pakistan grew its operations over the past 12 months:
· Number of clients increased from 512k to 606k (up 18% YoY).
· Number of branches up from 325 to 345 (up 6% YoY).
· OLP up from PKR 13.8bn (USD 77.7m) to PKR 17.9bn (USD 79.1m) (up 30%
in PKR).
· Gross OLP/Client up from PKR 27.3K (USD 154) to PKR 29.8k (USD 131)
(up 9% YoY in PKR).
· PAR>30 increased from 0.2% to 0.7%.
India
ASA India intentionally shrank its operations over the past 12 months, as it
focused on recovery of overdue loans:
· Number of clients down from 541k to 284k (down 47% YoY).
· Number of branches down from 387 to 261 (down 33% YoY).
· OLP declined from INR 4.5bn (USD 61m) to INR 1.2bn (USD 14m) (down
74% YoY in INR).
· Off-book portfolio declined from INR 2.7bn (USD 35.7m) to INR 1.8bn
(USD 21.5m) (down 33% in INR).
· Gross OLP/Client down from INR 16K (USD 211) to INR 13K (USD 158)
(down 17% YoY in INR).
· PAR>30 increased from 19.7% to 49.0%, although PAR>30 amount
decreased from INR 1.1bn (USD 15.1m) to INR 903.4m (USD 10.9m).
*See note 13.1 to the consolidated financial statements for details on the
off-book portfolio.
Sri Lanka
Lak Jaya shrank its operations over the past 12 months as a result of the
political and economic crisis in Sri Lanka:
· Number of clients down from 53k to 45k (down 15% YoY).
· Number of branches decreased from 66 to 64 (down 3%).
· OLP decreased from LKR 1.6bn (USD 7.7m) to LKR 1.4bn (USD 3.8m) (down
11% YoY in LKR).
· Gross OLP/Client up from LKR 32.0K (USD 158) to 32.4k (USD 89) (up 1%
YoY in LKR).
· PAR>30 increased from 6.0% to 8.5%.
South East Asia
(UNAUDITED) FY2022 FY2021 FY 2020 YoY YoY % Change
(Amounts in USD thousands)
% Change
(constant currency)
Profit before tax 4,217 34 -4,348 +12173% +13660%
Net profit 1,910 -339 -3,366 +663% +713%
Cost/income ratio 82% 97% 135%
Return on average assets (TTM) 1.8% -0.3% -2.7%
Return on average equity (TTM) 12.0% -1.8% -16.1%
Earnings growth (TTM) 663% 90% -163%
OLP 63,316 62,328 74,214 +2% +13%
Gross OLP 66,955 66,784 80,832 +0.3% +12%
Total assets 102,917 105,872 119,152 -3%
Client deposits 22,069 20,956 24,000 +5%
Interest-bearing debt 58,416 60,392 66,412 -3%
Share capital and reserves 14,980 16,827 20,259 -11%
Number of clients 424,076 400,021 428,645 +6%
Number of branches 441 420 415 +5%
Average Gross OLP per client (USD) 158 167 189 -5% +5%
PAR > 30 days 6.5% 2.1% 4.1%
Client deposits as % of loan portfolio 35% 34% 32%
· South East Asia saw return to operational growth and profitability
led by improvement of operations in the Philippines.
The Philippines
Pagasa Philippines operations grew over the last 12 months:
· Number of clients up from 289k to 325k (up 13% YoY).
· Number of branches up from 324 to 345 (up 6% YoY).
· OLP up from PHP 2.3bn (USD 44.6m) to PHP 2.8bn (USD 49.6m) (up 21%
YoY in PHP).
· Gross OLP/Client increased from PHP 8.2K (USD 161) to PHP 8.6k (USD
153) (up 4% YoY in PHP).
· PAR>30 decreased from 2.5% to 1.7%.
Myanmar
ASA Myanmar saw a decline in clients and OLP over the last 12 months as a
result of the political situation and the related civil unrest halting
operations in certain regions:
· Number of clients down from 111k to 99k (down 11% YoY).
· Number of branches remained at 96.
· OLP down from MMK 31.5bn (USD 17.7m) to MMK 28.9bn (USD 13.8m) (down
8% YoY in MMK).
· Gross OLP/Client up from MMK 324k (USD 182) to MMK 362k (USD 172) (up
12% YoY in MMK).
· PAR>30 increased from 1.1% to 20.4%.
West Africa
(UNAUDITED) FY2022 FY2021 FY 2020 YoY YoY % Change
(Amounts in USD thousands)
% Change
(constant currency)
Profit before tax 27,799 35,583 19,268 -22% -2%
Net profit 19,215 25,019 13,443 -23% -4%
Cost/income ratio 43% 37% 49%
Return on average assets (TTM) 15.8% 20.6% 13.2%
Return on average equity (TTM) 33.2% 45.4% 31.1%
Earnings growth (TTM) -23% 86% -16%
OLP 82,380 94,201 77,835 -13% +22%
Gross OLP 84,853 95,879 79,499 -12% +23%
Total assets 108,395 134,719 107,748 -20%
Client deposits 39,544 46,548 39,788 -15%
Interest-bearing debt 4,326 7,100 10,255 -39%
Share capital and reserves 54,591 61,222 49,033 -11%
Number of clients 433,897 457,302 447,122 -5%
Number of branches 446 440 433 +1%
Average Gross OLP per client (USD) 196 210 178 -7% +30%
PAR > 30 days 4.2% 2.6% 2.7%
Client deposits as % of loan portfolio 48% 49% 51%
· West Africa saw a deterioration in operational performance and
profitability in USD terms due to the depreciation of GHS (65% down against
USD in FY 2022) and SLL (68% down against USD in FY 2022). In constant
currency, West Africa demonstrated an improvement in operational performance.
Ghana
ASA Savings & Loans operations improved with OLP above pre-Covid levels
with excellent portfolio quality:
· Number of clients up from 158k to 177k (up 12% YoY).
· Number of branches up from 133 to 137 (up 3% YoY).
· OLP up from GHS 301.7m (USD 48.9m) to GHS 416.3m (USD 40.8m) (up 38%
YoY in GHS).
· Gross OLP/Client up from GHS 1.9k (USD 310) to GHS 2.4K (USD 231) (up
24% YoY in GHS).
· PAR>30 increased from 0.3% to 0.6%.
Nigeria
ASA Nigeria saw an improvement of operations with OLP also above pre-Covid
levels in NGN:
· Number of clients down from 254k to 220K (down 13% YoY).
· Number of branches maintained at 263.
· OLP up from NGN 15.9bn (USD 38.5m) to NGN 16.7bn (USD 37.3m) (up 5%
YoY in NGN).
· Gross OLP/Client up from NGN 65k (USD 157) to NGN 80k (USD 179) (up
24% YoY in NGN).
· PAR>30 increased from 4.6% to 7.1%.
Sierra Leone
ASA Sierra Leone continued to successfully expand with branch and OLP growth:
· Number of clients down from 45k to 37k (down 18% YoY).
· Number of branches up from 44 to 46 (up 5% YoY).
· OLP up from SLL 76.1bn (USD 6.7m) to SLL 80.7bn (USD 4.3m) (up 6% YoY
in SLL).
· Gross OLP/Client up from SLL 1.7m (USD 154) to SLL 2.3m (USD 123) (up
34% YoY in SLL).
· PAR>30 increased from 7.5% to 10.7%.
East Africa
(UNAUDITED) FY2022 FY2021 FY 2020 YoY YoY % Change
(Amounts in USD thousands)
% Change
(constant currency)
Profit before tax 11,241 6,605 1,652 +70% +75%
Net profit 6,913 4,631 1,069 +49% +54%
Cost/income ratio 68% 75% 90%
Return on average assets (TTM) 7.0% 6.5% 1.8%
Return on average equity (TTM) 29.8% 25.5% 6.7%
Earnings growth (TTM) 49% 333% -83%
OLP 86,865 64,881 45,413 +34% +39%
Gross OLP 87,267 66,629 46,188 +31% +36%
Total assets 113,791 83,602 59,802 +36%
Client deposits 21,153 17,843 13,776 +19%
Interest-bearing debt 59,871 41,201 26,292 +45%
Share capital and reserves 26,445 19,973 16,313 +32%
Number of clients 506,494 416,898 319,262 +21%
Number of branches 471 406 359 +16%
Average Gross OLP per client (USD) 172 160 145 +8% +12%
PAR > 30 days 0.9% 1.3% 13.2%
Client deposits as % of loan portfolio 24% 28% 30%
· East Africa saw an improvement in operational performance and
profitability due to continued growth in Tanzania and Kenya and improvements
in the operating environment in Uganda, Rwanda and Zambia.
Tanzania
ASA Tanzania managed to significantly expand its operations over the last 12
months:
· Number of clients up from 174k to 217k (up 25% YoY).
· Number of branches up from 143 to 180 (up 26% YoY).
· OLP up from TZS 79.0bn (USD 34.3m) to TZS 119.5bn (USD 51.2m) (up 51%
YoY in TZS).
· Gross OLP/Client up from TZS 460k (USD 200) to TZS 553k (USD 237) (up
20% YoY in TZS).
· PAR>30 decreased from 0.5% to 0.4%.
Kenya
ASA Kenya expanded its operations over the 12 months period:
· Number of clients up from 119k to 141k (up 19% YoY).
· Number of branches up from 112 to 124 (up 11% YoY).
· OLP up from KES 1.8bn (USD 16.1m) to KES 2.1bn (USD 16.9m) (up 14%
YoY in KES).
· Gross OLP/Client down from KES 16K (USD 140) to KES 15K (USD 120)
(down 6% YoY in KES).
· PAR>30 decreased from 1.1% to 0.8%.
Uganda
ASA Uganda saw a growth in operations over the last 12 months:
· Number of clients up from 92k to 107k (up 16% YoY).
· Number of branches up from 103 to 110 (up 7% YoY).
· OLP up from UGX 31.8bn (USD 9.0m) to UGX 43.0bn (USD 11.6m) (up 35%
YoY in UGX).
· Gross OLP/Client up from UGX 378k (USD 107) to UGX 405k (USD 109) (up
7% YoY in UGX).
· PAR>30 decreased from 3.8% to 0.9%.
Rwanda
ASA Rwanda saw a growth in operations over the last 12 months:
· Number of clients up from 18k to 21k (up 17% YoY).
· Number of branches maintained at 30.
· OLP up from RWF 3.4bn (USD 3.3m) to RWF 4.6bn (USD 4.3m) (up 34% YoY
in RWF).
· Gross OLP/Client up from RWF 193k (USD 187) to RWF 220k (USD 207) (up
14% YoY in RWF).
· PAR>30 slightly increased from 4.5% to 4.6%.
Zambia
ASA Zambia managed to expand its operations:
· Number of clients increased from 15k to 21k (up 43% YoY).
· Number of branches increased from 18 to 27 (up 50% YoY).
· OLP up from ZMW 36.4m (USD 2.2m) to ZMW 51.7m (USD 2.9m) (up 42% YoY
in ZMW).
· Gross OLP/Client remained ZMW 2.5k (USD 139).
· PAR>30 increased from 0.3% to 5.0%.
Regulatory environment
The Company operates in a wide range of jurisdictions, each with their own
regulatory regimes applicable to microfinance institutions.
Key events 2022
Pakistan
· ASA Pakistan received the Microfinance Banking ('MFB') licence from
the State Bank of Pakistan ('SBP') on 24 May 2022 and is expected to receive a
formal certificate of commencement any time.
· ASA Pakistan approved the dividend declared in 2022, and it has
applied to the SBP for approval of the remittance. The approval is still
pending.
India
· Following the Reserve Bank of India ('RBI') announcement on 14 March
2022, new regulation is in place for the microfinance sector in India,
applicable to all banks, NBFC-MFIs and other participants in the microfinance
sector. The key changes include the removal of the interest rate cap and
margin cap which allowed the Company to raise the client rate, loans shall be
collateral-free (also for banks providing microfinance loans), and lenders
will be restricted to provide microfinance loans to clients up to a maximum of
50% of the client's household income. As a result of these changes, ASA India
increased interest rates on new loans from 1 April 2022.
Sri Lanka
· The interest cap of 35% in Sri Lanka was removed by the Central Bank
of Sri Lanka on 10 June 2022.
Myanmar
· Throughout 2022, the Central Bank of Myanmar prohibited or limited
the servicing of foreign loans due to controls on foreign reserves.
· The Central Bank of Myanmar issued a circular dated 13 July 2022
suspending interest and principal repayments on foreign loans and directed
companies to restructure the same. Subsequently, a new circular was issued on
16 August 2022 permitting certain transactions with approval from the Foreign
Currency Supervision Committee.
Ghana
· The application for Digital Financial Services submitted in 2021 was
still pending in 2022. In Q1 2023, the Bank of Ghana approved the application
for Digital Financial Services.
Nigeria
· In 2022, the Central Bank delayed the approval of payment of
dividends declared in the past. The 2021 dividend was approved in March 2023.
The dividend declared in 2022 is still pending for approval.
Kenya
· In 2022, the Digital Credit Providers Act took effect, which
prohibits credit-only MFIs to take collateral. MFIs are required to apply
for a Digital Credit Providers licence, Microfinance Bank licence or any other
suitable licence.
· ASA Kenya submitted a pro forma application for Digital Credit
Providers licence to ensure it is compliant with the law, but is desirous to
acquire a deposit taking license in the near future.
Regulatory capital
Many of the Group's operating subsidiaries are regulated and subject to
minimum regulatory capital requirements. As of 31 December 2022, the Group and
its subsidiaries were in full compliance with minimum regulatory capital
requirements.
Asset/liability and risk management
ASA International has strict policies and procedures for the management of its
assets and liabilities as well as various non-operational risks. In 2022, the
Group has established an Asset-Liability Committee ('ALCO'), and the Terms of
Reference of the ALCO has been approved by the Board. The ALCO will
continuously manage the Group's assets and liabilities to ensure that:
· The average tenor of loans to customers is substantially shorter than
the average tenor of debt provided by third-party banks and other third-party
lenders to the Group and any of its subsidiaries.
· Foreign exchange losses are minimised by having all loans to any of
the Group's operating subsidiaries denominated or duly hedged in the local
operating currency. All loans from the Group to any of its subsidiaries
denominated in local currency are also hedged in US Dollars.
· Foreign translation losses affecting the Group's balance sheet are
minimised by preventing over-capitalisation of any of the Group's subsidiaries
by distributing dividends and/or hedging capital.
Nevertheless, the Group will always remain exposed to currency movements in
both (i) the profit and loss statement, which will be affected by the
translation of profits in local currencies into USD, and (ii) the balance
sheet, due to the erosion of capital of each of its operating subsidiaries in
local currency when translated in USD, where the US Dollar strengthens against
the currency of any of its operating subsidiaries.
Funding
The funding profile of the Group has not materially changed during FY 2022:
In USD millions
31 Dec 22 31 Dec 21 31 Dec 20
Local deposits 84.1 87.8 80.2
Loans from financial institutions 216.6 249.8 274.1
Microfinance loan funds 21.5 36.5 23.5
Loans from dev. banks & foundations 19.4 28.1 40.0
Equity 89.7 103.4 107.1
Total funding 431.3 505.6 524.9
The Group maintains a favourable maturity profile with the average tenor of
all funding from third parties being substantially longer than the average
tenor at issuance of loans to customers which ranges from six to twelve months
for the most of the loans.
Cash and cash equivalents reduced to approximately USD 55 million as of 31
December 2022 following large debt settlements, primarily in India. The Group
maintains a healthy cash position. The Group managed to raise approximately
USD 157 million in new debt funding in 2022. In line with market developments,
funding costs have increased by approximately 100 bps, which will have limited
impact on our 2023 results. Also, the Group has a strong funding pipeline of
USD 201 million fresh loans, with over 88% having agreed terms and can be
accessed in the short to medium term as of 31 March 2023.
The Group and its subsidiaries have existing credit relationships with more
than 60 lenders throughout the world, which has provided reliable access to
competitively priced funding for the growth of its loan portfolio.
During 2022, a number of loan covenants were breached across the Group,
particularly related to the portfolio quality in India. As of 31 December
2022, the balance for credit lines with breached covenants and which does not
have waivers amounts to USD 65 million out of which waivers have been
subsequently received for USD 64 million .
The Group has also received temporary waivers, no-action and/or comfort
letters from some of its major lenders for expected portfolio quality covenant
breaches (primarily PAR>30) in 2023 caused primarily by the overdue loans
in India. The impact of these potential covenant breaches was further assessed
in the evaluation of the Group's going concern as disclosed in note 2.1.1 of
the Full Year Financial Report. As the waivers and no-action letters do not
cover the entire going concern period under assessment, and due to the
expected portfolio quality covenant breaches in India, the Directors have
concluded that there is a material uncertainty that may cast significant doubt
over the Group's ability to continue as a going concern. Nevertheless, given
the historical and continuing support received from lenders regarding these
particular covenant breaches and based on continued improved operating
performance in the other markets, the Group has a reasonable expectation that
it will have adequate resources to continue in operational existence
throughout the Going Concern assessment period.
Impact of foreign exchange rates
As a USD reporting company with operations in thirteen different currencies,
currency movements can have a major effect on the Group's USD financial
performance and reporting.
The effect of this is that generally (i) existing and future local currency
earnings translate into less US Dollar earnings, and (ii) local currency
capital of any of the operating subsidiaries will translate into less US
Dollar capital.
Countries FY 2022 FY 2021 FY 2020 Δ FY 2021 - FY 2022
Pakistan (PKR) 226.4 177.5 160.3 (28%)
India (INR) 82.7 74.4 73.0 (11%)
Sri Lanka (LKR) 366.3 202.9 185.3 (81%)
The Philippines (PHP) 55.7 51.1 48.0 (9%)
Myanmar (MMK) 2100.0 1778.5 1330.7 (18%)
Ghana (GHS) 10.2 6.2 5.9 (65%)
Nigeria (NGN) 448.1 411.5 384.6 (9%)
Sierra Leone (SLL) 18910.0 11289.0 10107.0 (68%)
Tanzania (TZS) 2332.5 2303.7 2317.2 (1%)
Kenya (KES) 123.5 113.2 109.0 (9%)
Uganda (UGX) 3717.6 3546.2 3647.7 (5%)
Rwanda (RWF) 1067.0 1031.8 986.4 (3%)
Zambia (ZMW) 18.1 16.7 21.1 (9%)
During FY 2022, the local currencies PKR -28%, GHS -65%, NGN -9% and LKR -81%
particularly weakened against US Dollar. This had an additional negative
impact on the USD earnings contribution of these subsidiaries to the Group and
also contributed to an increase in foreign exchange translation losses. The
total contribution to the foreign exchange translation loss reserve during FY
2022 amounted to USD 34.0 million of which USD 9.4 million related to the
depreciation of the PKR, USD 17.4 million related to the depreciation of the
GHS, USD 2.5 million related to the depreciation of the NGN, and USD 1.4
million to depreciation of the LKR.
High effective tax rate
The Group derecognised deferred tax assets amounting to USD 8.0 million, which
related to deductible temporary differences and past losses for mainly India
and Myanmar, as these entities failed to meet the future profitability
threshold required under IFRS. The Group will be able to recognise these
deferred tax assets provided these entities turn profitable again. This
resulted in a substantial increase in our tax expenses and effective tax rate
for the year. Further details are provided in note 11 to the consolidated
financial statements.
Transfer pricing
The South East Asia and East Africa regions are contributing intercompany
franchise fees and corporate service fees to the holding companies of the
Group, whereas approval for most of such intercompany charges are pending in
certain countries in South Asia and West Africa. The intercompany charges per
region are detailed in the Segment Information as included in note 3 to the
consolidated financial statements.
Forward-looking statement and disclaimers
This announcement does not constitute or form part of any offer or invitation
to purchase, otherwise acquire, issue, subscribe for, sell or otherwise
dispose of any securities, nor any solicitation of any offer to purchase,
otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any
securities. The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or
distributed should inform themselves about and observe such restriction.
ASA INTERNATIONAL GROUP PLC
UNAUDITED PRELIMINARY CONSOLIDATED INCOME STATEMENT AND STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Notes 2022 2021
USD'000 USD'000
(Restated)(1)
Interest income calculated using Effective Interest Rate (EIR) 4.1. 173,856 184,630
Other interest and similar income 4.2. 4,123 5,137
Interest and similar income 177,979 189,767
Interest and similar expense 5. (40,322) (42,439)
Net interest income 137,657 147,328
Other operating income 6. 10,351 10,518
Total operating income 148,008 157,846
Credit loss expense 7. (643) (37,509)
Net operating income 147,365 120,337
Personnel expenses
8. (60,475) (56,813)
Depreciation on property and equipment 16. (1,816) (1,985)
Depreciation on right-of-use assets 17. (3,931) (4,398)
Other operating expenses 9. (33,303) (29,904)
Exchange rate differences 10. (1,559) (1,532)
Total operating expenses (101,084) (94,632)
Profit before tax 46,281 25,705
Income tax expense 11. (27,174) (15,594)
Withholding tax expense 11.7. (1,220) (3,753)
Profit for the period 17,887 6,358
Profit for the period attributable to:
Equity holders of the parent 17,892 8,787
Non-controlling interest (5) (2,429)
17,887 6,358
Other comprehensive income:
Foreign currency exchange differences on translation of foreign operations (33,995) (11,583)
Movement in hedge accounting reserve 23. 3,004 1,381
Others (1,152) (365)
Total other comprehensive (loss) to be reclassified to profit or loss in (32,143) (10,567)
subsequent periods, net of tax
Gain/(loss) on revaluation of MFX investment 15. 7 (1)
Actuarial gains on defined benefit liabilities 8.1. 470 698
Total other comprehensive income not to be reclassified to profit or loss in 477 697
subsequent
periods, net of tax
Total comprehensive (loss) for the period, net of tax (13,779) (3,512)
Total comprehensive (loss) attributable to:
Equity holders of the parent (13,770) (1,096)
Non-controlling interest (9) (2,416)
(13,779) (3,512)
Earnings per share 39. USD USD
Equity shareholders of the parent for the period:
Basic earnings per share 0.18 0.09
Diluted earnings per share 0.18 0.09
The notes 1 to 39 form an integral part of these unaudited preliminary
financial statements.
(1)See note 2.1.2 for details
Company number: 11361159
ASA INTERNATIONAL GROUP PLC
UNAUDITED PRELIMINARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
Notes 2022 2021
USD'000 USD'000
ASSETS
Cash at bank and in hand 12. 83,117 87,951
Loans and advances to customers 13. 331,898 373,242
Due from banks 14. 38,900 65,259
Equity investments at Fair Value through Other Comprehensive Income 15. 244 237
(FVOCI)
Property and equipment 16. 3,513 4,085
Right-of-use assets 17. 4,589 5,031
Deferred tax assets 11.2. 4,625 13,362
Other assets 18. 9,970 8,939
Derivative assets 19. 7,855 3,966
Goodwill and intangible assets 20. 5,041 482
TOTAL ASSETS 489,752 562,554
EQUITY AND LIABILITIES
EQUITY
Issued capital 21. 1,310 1,310
Retained earnings 22. 173,297 155,405
Other reserves 23. 3,324 995
Foreign currency translation reserve 24. (88,123) (54,132)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 89,808 103,578
Total equity attributable to non-controlling interest 31.6 (147) (135)
TOTAL EQUITY 89,661 103,443
LIABILITIES
Debt issued and other borrowed funds 25. 261,301 318,674
Due to customers 26. 84,155 87,812
Retirement benefit liability 8.1. 4,593 5,391
Current tax liability 11.1. 8,873 6,265
Deferred tax liability 11.3. 2,184 2,296
Lease liabilities 17. 3,091 3,459
Derivative liabilities 19. 456 602
Other liabilities 27. 34,400 32,937
Provisions 28. 1,038 1,675
TOTAL LIABILITIES 400,091 459,111
TOTAL EQUITY AND LIABILITIES 489,752 562,554
The notes 1 to 39 form an integral part of these unaudited preliminary
financial statements.
ASA INTERNATIONAL GROUP PLC
UNAUDITED PRELIMINARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Issued capital Retained earnings Other reserves Foreign currency translation reserve Non-controlling interest Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2021 1,310 147,291 (718) (43,091) 2,281 107,073
Profit for the year - 8,787 - - (2,429) 6,358
Other comprehensive income:
Actuarial gains and losses on defined benefit liabilities - - 698 - - 698
Foreign currency translation of assets and liabilities of subsidiaries - - - (11,596) 13 (11,583)
Movement in hedge accounting reserve - - 1,381 - - 1,381
Other comprehensive income (net of tax) - - (366) - - (366)
Total comprehensive (loss)/ income for the period - 8,787 1,713 (11,596) (2,416) (3,512)
Disposal of ASA Consultancy limited and ASA Cambodia Holdings - (673) - 555 - (118)
Dividend - - - - - -
At 31 December 2021 1,310 155,405 995 (54,132) (135) 103,443
At 1 January 2022 1,310 155,405 995 (54,132) (135) 103,443
Profit for the year - 17,892 - - (5) 17,887
Other comprehensive income:
Actuarial gains and losses on defined benefit liabilities - - 470 - - 470
Foreign currency translation of assets and liabilities of subsidiaries - - - (33,991) (4) (33,995)
Movement in hedge accounting reserve - - 3,004 - - 3,004
Other comprehensive income (net of tax) - - (1,145) - (3) (1,148)
Total comprehensive (loss)/ income for the period - 17,892 2,329 (33,991) (12) (13,782)
Dividend - - - - - -
At 31 December 2022 1,310 173,297 3,324 (88,123) (147) 89,661
ASA INTERNATIONAL GROUP PLC
UNAUDITED PRELIMINARY CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Notes 2022 2021
USD'000 USD'000
(Restated)(1)
OPERATING ACTIVITIES
Profit before tax 46,281 25,705
Adjustment for movement in:
Operating assets 29.1. (19,297) (84,609)
Operating liabilities 29.2. 15,043 13,004
Non-cash items 29.3. 19,063 76,843
Income tax paid (17,972) (14,260)
Net cash flows used in operating activities 43,118 16,683
INVESTING ACTIVITIES
Purchase of property and equipment 16. (1,575) (1,713)
Proceeds from sale of property and equipment 333 652
Purchase of intangible assets (4,592) (452)
Net cash outflow from disposal of subsidiaries - (673)
Net cash flow used in investing activities (5,834) (2,186)
FINANCING ACTIVITIES
Proceeds from debt issued and other borrowed funds 167,394 181,053
Payments of debt issued and other borrowed funds (192,764) (188,787)
Payment of principal portion of lease liabilities (4,353) (4,680)
Net cash flow from financing activities (29,723) (12,414)
Cash and cash equivalents at 1 January
87,951 90,165
Net increase in cash and cash equivalents 7,561 2,083
Foreign exchange difference on cash and cash equivalents (12,395) (4,297)
Cash and cash equivalents as at 31 December 83,117 87,951
Operational cash flows from interest
Interest received 181,534 193,848
Interest paid 39,941 42,146
The notes 1 to 39 form an integral part of these unaudited preliminary
financial statements.
See note 2.1.2 for details
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
1. CORPORATE INFORMATION
ASA International Group plc ('ASA International', the 'Group') is a public
company limited by shares bearing registration number 11361159 in England and
Wales. The entity was incorporated by Catalyst Microfinance Investors ('CMI')
on 14 May 2018 for the purpose of the initial public offer of ASA
International Holding. ASA International Group plc acquired 100% of the shares
in ASA International Holding and all its subsidiaries on 13 July 2018 in
exchange for the issue of 100 million shares in ASA International Group plc
with a nominal value of GBP 1.00 each.
Investment strategy
ASA International is an international microfinance holding company with
operations in various countries throughout Asia and Africa.
Abbreviation list
Definitions Abbreviation
A1 Nigeria Consultancy Limited A1 Nigeria
ASA Consultancy Limited ASA Consultancy
ASA Cambodia Holdings Limited ASA Cambodia Holdings
ASA Dwaso Limited ASA Dwaso
ASA International Group plc ASAIG
ASA International Holding ASAIH
ASA International India Microfinance Limited ASA India
ASA International(Kenya) Limited (formerly 'ASA International Microfinance ASA Kenya
(Kenya) Limited')
ASA International N.V. ASAI NV
ASA Lanka Private Limited ASA Lanka
ASA Leasing Ltd ASA Leasing
ASA Microfinance (Myanmar) Ltd ASA Myanmar
ASA Microfinance (Rwanda) Limited ASA Rwanda
ASA Microfinance (Sierra Leone) ASA Sierra Leone
ASA Microfinance (Zanzibar) Ltd ASA Zanzibar
ASA Microfinance (Tanzania) Ltd ASA Tanzania
ASA Microfinance (Uganda) Limited ASA Uganda
ASA Microfinance Zambia Limited ASA Zambia
ASA NGO-MFI registered in Bangladesh ASA NGO Bangladesh
ASA Pakistan Limited ASA Pakistan
ASA Savings & Loans Limited ASA S&L
ASHA Microfinance Bank Limited ASA Nigeria (formerly "ASA MFB")
ASAI Investments & Management B.V ASAI I&M
ASAI Management Services Limited AMSL
Association for Social Improvement and Economic Advancement ASIEA
C.M.I. Lanka Holding (Private) Limited CMI Lanka
Catalyst Continuity Limited Catalyst Continuity
Catalyst Microfinance Investment Company CMIC
Catalyst Microfinance Investors CMI
Corporate Social Responsibility CSR
CMI International Holding CMII
Lak Jaya Micro Finance Limited Lak Jaya
Pagasa ng Masang Pinoy Microfinance, Inc Pagasa
PagASA ng Pinoy Mutual Benefit Association, Inc. MBA Philippines
Pagasa Consultancy Limited Pagasa Consultancy
Pagasa Philippines Finance Corporation PPFC
Pagasa Philippines Finance Corporation and Pagasa ng Masang Pinoy Pagasa Philippines
Microfinance, Inc
Pinoy Consultancy Limited Pinoy
PT PAGASA Consultancy PT PAGASA Consultancy
Microfinance Institution MFI
Reserve Bank of India RBI
State Bank of India SBI
Standard & Poor's S&P
Sequoia B.V. Sequoia
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES
2.1 General
The consolidated financial statements of ASA International Group plc have been
prepared on a historical cost basis, except for derivative and equity
instruments, which have been measured at fair value. The consolidated
financial statements are presented in USD and all values are rounded to the
nearest thousand (USD'000), except when otherwise indicated. The consolidated
financial statements for the year ended 31 December 2022 were authorised for
issue in accordance with a resolution of the Directors on 17 April 2023.
After the issue of the financial statements the Company's owners or others do
not have the power to amend the financial statements.
2.1.1 Basis of preparation
The 2022 consolidated financial statements have been prepared on a going
concern basis. It should be noted that in the 2021 Annual Report and Accounts,
approved on 29 April 2022, senior management and the Directors concluded that
the that the uncertainty relating to debt covenant breaches over the going
concern period, and potential actions to mitigate debt being called due,
represented a material uncertainty that may cast significant doubt over the
Group's ability to continue as a going concern. In performing the going
concern assessment for the 2022 consolidated financial statements the
Directors have considered the global economic challenges arising out of high
inflation in major operating markets and the strengthening of the USD against
operating currencies in major operating markets for the period up to 31 May
2024 (the 'Assessment Period'). The conclusion of this assessment remains
consistent with that of the 2021 Annual Report. Senior management and the
Directors have concluded that there is a material uncertainty that may cast
significant doubt over the Group's ability to continue as a going concern.
The Group has updated its detailed financial model for its budget and
projections (the 'Projections') in line with current market conditions. The
management team used the actual numbers up to December 2022 and updated the
operating projections for the Assessment Period. These Projections are based
on a detailed set of key operating and financial assumptions, including the
minimum required cash balances, capital and debt funding plan per operating
subsidiary, post-pandemic economic conditions of the countries, senior
management's estimation of increased credit and funding risks, and current
economic challenges faced by different operating subsidiaries resulting from
increased inflation, which has a possibility to reduce demand for new
microfinance loans. As a microfinance lender, the Group sees the service it
provides to clients as an important factor for them to continue their
businesses and their livelihoods as it provides resources and access to
capital to the financially underserved. Therefore, The Group expects that
rising inflation will not increase arrears materially based on historical
evidence, however, this remains a risk.
The Group remains well capitalised and in compliance with minimum capital
requirement in all markets. In terms of liquidity, the Group has USD 54.5
million of cash as of 31 December 2022. Also, the Group has a strong funding
pipeline of USD 194 million with over 63% having agreed terms and which can be
accessed in the short to medium term at the time of approval of the
consolidated financial statements. This continues to reaffirm the confidence
lenders have in the strength of the Group's business model and senior
management's ongoing strategies to steer the Group through the current
economic situation. It should be noted that the majority of this additional
funding contains loan covenants and there is a risk of covenant breaches in
certain stress scenarios, consistent with the risks detailed in the remainder
of the going concern assessment. The Group is confident it will generate
positive cash flows and will be able to fully fund the projected loan
portfolio throughout the assessment period.
The Group does not expect a significant increase in credit loss expenses
during the Assessment Period as in most of the entities, collections are back
to the high 90% range and the proportion of loans with outstanding payments
greater than 30 days (portfolio at risk greater than 30 days, or 'PAR>30')
have generally stabilised. However, the Group expects increased PAR>30 in
India, Myanmar and Sri Lanka as these entities are still struggling with
overdue loans, economic and political challenges, which are creating
operational and liquidity challenges for these entities. However, the Group
has curtailed its disbursement in those entities and their portfolio size is
expected to be much lower in comparison to the Group's Outstanding Loan
Portfolio ('OLP'). The management team is closely following up on the
developments.
Due to the above challenges, the Group expects further breaches of loan
covenants during the Assessment Period. These covenants would mainly relate to
arrears levels (portfolio at risk greater than 30 days, or 'PAR>30'), risk
coverage ratios, the cost to income ratio, and write-off ratios. These
breaches have not historically resulted in the immediate repayment request
from lenders and are further evidenced by the supportive attitude of lenders
in the last three years where the Group has been continuously able to raise
new funds from the lenders. Out of total loans of USD 257 million, USD 82.5
million had breached loan covenants. As of 31 December, the balance for credit
lines with breached covenants and which does not have waivers amounts to USD
65 million out of which waivers have been subsequently received for USD 64
million. Senior management is in constant communication with the other
lenders for the waivers. However, the waivers received do not cover all of the
Assessment Period. The international funders have been supportive of the Group
and the microfinance sector in general during the last three years. In the
absence of waivers, breaches of covenants that are not rectified within the
time specified in the respective agreements, as applicable, would cause an
event of default under the loan agreements. The Group is experiencing
restrictions on the movement of funds between certain countries, due to laws
or regulations, which could restrict the ability of the Group to support the
funding or debt repayment requirements in the countries in which it operates.
Unless the majority of the covenant breach waivers are obtained the debt may
be called due, which could materially impact the ability of the Group to meet
its debt obligations. Although the Group has a history of negotiating covenant
waivers, across particular locations, the current economic and market
conditions make it difficult to assess its likely scale of debt covenant
breaches and whether the waivers necessary to avoid the immediate repayment of
debt will be forthcoming. As a result, senior management and the Directors
have concluded that this represents a material uncertainty that may cast
significant doubt over the Group's ability to continue as a going concern.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES
2.1.1 Basis of preparation (continued)
In terms of mitigations, the Group is shrinking its exposure in certain
countries by focusing on the collection of existing loans and curtailing
disbursements. This is being applied to India, Myanmar and Sri Lanka. In
India, additional focus has been on off-book disbursements and finding new
business correspondent partners ('BC Partners') as this serves to increase the
available cash in the business. This is not a preferred action but can be
utilised to create liquidity in any country's operation when unexpected
repayments are requested by lenders. Further, the holding entities within the
Group did not provide parent guarantees to funders of the operating
subsidiaries, which protects the Group against cross defaults.
Senior management and the Board of Directors extensively challenged the
Projections and their underlying assumptions including the above
considerations and factors. They also considered the risks around economic
uncertainties resulting from high inflation, devaluation of local currencies,
delays in dividend repatriation, increased operational costs, and the risk of
not obtaining waivers for prospective covenant breaches. They also considered
that since the beginning of 2022 most of the operating subsidiaries are fully
operational, which has allowed the field operations to open new branches, with
collections and new disbursements gradually returning to pre-pandemic levels.
The Group also prepared stress and reverse stress scenarios for cash flows
including the mitigating actions which include repatriation of dividends and
short-term loan from subsidiaries which have sufficient cash reserves.
Senior management and the Directors have also assessed the probable impact of
any subsidiary failing to maintain its required regulatory ratios. Given the
level of arrears and challenge in India there is a probable risk of breaching
capital requirements of the Reserve Bank of India ('RBI') if the realisation
significantly declines. Should these requirements be breached then the
possible implications could be that the RBI provides management with a
remediation plan and/or further capital could be required. As stated earlier,
the Group did not provide parent guarantees to funders of the operating
subsidiaries and hence in case of dissolution, the Group's risk is limited to
its capital investment and any shareholder loans.
Nevertheless, having assessed the Projections, downtrend analysis and
mitigations described above, senior management and the Directors have a
reasonable expectation that the Group has adequate resources to continue in
operation existence for at least twelve months from the date of the
authorisation of these financial statements, and the going concern assessment
period through to 31 May 2024. For these reasons, they continue to adopt a
going concern basis for the preparation of the consolidated financial
statements. Accordingly, these financial statements do not include any
adjustments to the carrying amount or classification of assets and liabilities
that would result if the Group was unable to continue as a going concern.
2.1.2 Statement of compliance
The Group and Parent Company financial statements are prepared in accordance
with UK adopted International Accounting Standards ('IAS' or 'IFRS').
The preparation of the consolidated financial statements in conformity with
IFRS requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis.
Change in accounting policy
The Group has reassessed its accounting policy for restricted cash as cash and
cash equivalents following the release of IFRS Interpretations Committee
agenda decision in March 2022. The Group has concluded that the restricted
cash meets the definition of cash as the underlying terms and conditions do
not prevent the Group from accessing restricted cash on demand. Therefore, the
Group has concluded that restricted cash will be presented as a component of
cash and cash equivalents in the consolidated statement of cash flows. This
change in accounting policy has been applied retrospectively. The consolidated
statement of cash flows and related notes have been restated in the
consolidated financial report.
Correction of an error
The Group recognises interest income using effective interest rate method. The
calculation includes all amounts paid or received between parties to the
contract that are an integral part of the effective interest rate of a
financial instrument including transaction costs, and all other premiums or
discounts. Loan processing fees that is integral to the effective interest
rate was previously reported under other interest income instead of interest
income calculated using EIR.
The presentation error has been corrected by restating each of the affected
financial statement line items by USD 8.9 million for the prior periods, as
follows:
Restatement in the Consolidated income statement and statement of 2021 2021
comprehensive income (restated)
USD'000 USD'000
Interest income calculated using Effective Interest Rate (EIR) 175,732 184,630
Other interest and similar income 14,035 5,137
Interest and similar income 189,767 189,767
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.1.3 Consideration of climate change
In preparing these financial statements, the Group has given consideration to
the recommendations laid out by the Task Force on Climate-related Financial
Disclosures (TCFD). The relevant assessment of the climate-related risks
outlined in the Group's Annual Report on page 49 has been incorporated into
judgements associated with recognition, measurement, presentation and
disclosure, where so permitted by the UK adopted International Accounting
Standards. The accounting judgements relating to climate change are presented
in note 2.5.1.
While there is currently no significant impact expected from climate change,
the Directors are aware of the constant evolving risks attached to climate
change and will regularly assess these risks against judgements and estimates
made in preparation of the financial statement.
2.1.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Group and its subsidiaries as at 31 December for each year presented. The
financial statements of subsidiaries are similarly prepared for the year ended
31 December 2022 applying similar accounting policies. Two new subsidiaries,
ASA Zanzibar Limited and ASA Dwaso, were incorporated during the period. These
do not have any significant impact on the financial position and results of
the Group. All intra-Group balances, transactions, income and expenses and
profits and losses resulting from intercompany transactions are eliminated in
full. Subsidiaries are fully consolidated from the date on which control is
transferred to the Company. The Company has control over a subsidiary when it
is exposed, or has rights to variable returns from its involvement with the
subsidiary and has the ability to affect those returns through its power over
the subsidiary. The results of subsidiaries acquired or disposed of during the
year are included (if any) in the consolidated statement of comprehensive
income from the date of acquisition or up to the date of disposal, as
appropriate. Non-controlling interests represent the portion of profit or loss
and net assets not owned, directly or indirectly, by the Group and are
presented separately in the consolidated statement of comprehensive income and
within equity in the consolidated statement of financial position, separately
from the equity attributable to equity holders of the parent.
Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of the consideration
transferred measured at acquisition date fair value and the amount of any
non-controlling interest in the acquiree. Acquisition-related costs are
expensed as incurred and included in administrative expenses. When the Group
acquires a business, it assesses the financial assets and liabilities assumed
for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as at the
acquisition date. If the business combination is achieved in stages, the
previously held equity interest is remeasured at its acquisition date fair
value and any resulting gain or loss is recognised in profit or loss.
2.2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below:
2.2.1 Foreign currency translation
The consolidated financial statements are presented in USD, which is also the
Group's presentation currency. Each entity in the Group determines its own
functional currency and items included in the financial statements of each
entity are measured using that functional currency. The Group uses the direct
method of consolidation.
Transactions and balances -Transactions in foreign currencies are initially
recorded by the Group's entities at their respective functional currency at
the date the transaction first qualifies for recognition. Monetary assets and
liabilities denominated in foreign currencies are translated at the functional
currency spot rates of exchange at the reporting date. All differences are
taken to 'Exchange rate differences' in the statement of profit or loss and
other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the
initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair
value was determined.
Group companies - As at the reporting date, the assets and liabilities of
subsidiaries are translated into the Group's presentation currency (USD) at
the rate of exchange ruling at the reporting date except investments in
subsidiaries and issued capital, which are translated at historical rate, and
their statements of profit or loss and other comprehensive income are
translated at the weighted average exchange rates for the year. Currency
translation differences have been recorded in the Group's consolidated
statement of financial position as foreign currency translation reserve
through other comprehensive income.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.2.2 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
a) Financial assets - initial recognition and subsequent measurement
(1) Date of recognition
Purchases or sales of financial assets that require the delivery of assets
within the time frame generally established by regulation or convention in the
marketplace are recognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset.
(2) Initial recognition and measurement
The Group recognises a financial asset in its statement of financial position,
when, and only when, the entity becomes a party to the contractual provisions
of the instrument. Financial assets are classified, at initial recognition,
and measured at fair value. Subsequently they are measured at amortised cost,
fair value through Other Comprehensive Income ('OCI'), and Fair Value Through
Profit or Loss ('FVTPL'). The classification of financial assets at initial
recognition depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them.
In order for a financial asset to be classified and measured at amortised cost
or fair value through OCI, it needs to give rise to cash flows that are
'Solely Payments of Principal and Interest ('SPPI') on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level. The Group's business model for managing financial
assets refers to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the financial assets, or both.
Financial assets classified and measured at amortised cost are held within a
business model with the objective to hold financial assets in order to collect
contractual cash flows while financial assets classified and measured at fair
value through OCI are held within a business model with the objective of both
holding to collect contractual cash flows and selling.
(3) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in
three categories:
· Financial assets at amortised cost (loans and advances to customers,
other assets, cash at bank and in hand and due from banks);
· Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments); and
· Financial assets at FVTPL (derivative instruments).
Financial assets at amortised cost
Financial assets at amortised cost are subsequently measured using the
effective interest rate (EIR) method and are subject to impairment. Gains and
losses are recognised in profit or loss when the asset is derecognised,
modified or impaired. The Group's financial assets at amortised cost includes
Loans and advances to customers, Other loans and receivables, Cash and cash
equivalents and Due from banks.
Financial assets designated at fair value through OCI without recycling
Upon initial recognition, the Group can elect to classify irrevocably its
equity investments as equity instruments designated at fair value through OCI
when they meet the definition of equity under IAS 32 Financial Instruments:
Presentation and are not held for trading. The classification is determined on
an instrument-by-instrument basis. Investments at FVOCI are subsequently
measured at fair value with unrealised gains or losses recognised in OCI and
credited to the Investments at FVOCI reserve. Gains and losses on these
financial assets are never recycled to profit or loss. Equity instruments
designated at fair value through OCI are not subject to impairment assessment.
Derivatives are initially recognised at FVTPL. However, as the Group applies
cash flow hedge accounting the impact is later moved to FVOCI.
Derecognition
A financial asset (or, where applicable a part of a financial asset or part of
a group of similar financial assets) is derecognised where:
· the right to receive cash flows from the asset has expired; or
· the Group has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a 'pass-through' arrangement;
and
· either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Group has transferred its rights to receive cash flows from an asset
or has entered into a pass-through arrangement, and has neither transferred
nor retained substantially all the risks and rewards of the asset nor
transferred control of the asset, the asset is recognised to the extent of the
Group's continuing involvement in the asset (see note 2.5.4 to 2.5.6).
Continuing involvement that takes the form of a guarantee over the transferred
asset is measured at the lower of the original carrying amount of the asset
and the maximum amount of consideration that the Group could be required to
repay.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.2.3 Financial instruments (continued)
b) Impairment of financial assets
The Group recognises an allowance for Expected Credit Losses (ECLs) on Loans
and advances to customers, Related party receivables, Cash at bank and Due
from banks.
Loans and advances to customers
Given the nature of the Group's loan exposures (generally short-term
exposures, <12 months) no distinction has been made between stage 1 (12
months ECL) and stage 2 loans (lifetime ECL) for the ECL calculation. For
disclosure purposes normally stage 1 loans are defined as loans overdue
between 1-30 days. Stage 2 loans are overdue loans between 31-90 days. To
avoid the complexity of calculating separate probability of default and loss
given default, the Group uses a 'loss rate approach' for the measurement of
ECLs. The 'loss rates' are determined based on historical credit loss
experience, adjusted for forward-looking factors specific to economic
environment.
The Group considers significant increase in credit risk when contractual
payments are 31 days past due. In addition, loans and advances are treated as
credit impaired (stage 3) when contractual payments are greater than 90 days
past due. These thresholds have been determined based on the historical trend
and industry practice where the Group operates.
Write-off
The Group uses judgement to determine bad loans which are written off. Based
on management experience in the local market and the microfinance industry
practice, loans over 365 days past due are bracketed as bad, unless there are
specific circumstances that lead local management to believe that there is a
reasonable expectation of recovery. In Pakistan loans over 209 days are
treated as bad as per regulatory requirement. All bad loans are written off
for accounting purposes. The write-offs occur mainly two times in a year (June
and December). However, management (Group and/ or subsidiary) can write-off
loans earlier if loans are deemed unrecoverable or delay write-offs in case of
national calamity or any regulatory reasons subject to Board approval. From an
operational perspective all overdue loans are monitored for recovery up to two
years overdue.
Cash at bank, Due from banks and Related party
For Due from banks and Related party receivables, the Group used the S&P
matrix for default rates based on the most recent publicly made available
credit ratings of each counterparty. In the S&P matrix for default rates,
there is no specified default rate for each of our external counterparties.
Thus, the Group applied the default rate for all financial institutions. Then,
the Group calculated the adjusted Probability of Default ('PD')/default rates
by accommodating management estimates. However, for non-credit rated external
counterparties; the PD/default rate is determined by choosing the riskier one
between the mid-point of credit ratings of Banks the Group has business with
and a similar level rated entity. Management collects the credit ratings of
the banks where the funds are deposited and related parties (where applicable)
on a half-yearly basis and calculates the ECL on such items using the default
rate identified as above. The Group considers credit risk to have
significantly increased when the credit ratings of the bank and the related
parties have been down-graded which in turn increase the probability of
default. The Group considers that the closure of a counterparty bank,
dissolution of a related party or a significant liquidity crisis or any
objective evidence of impairment such as bankruptcy to be indicators for stage
3.
2.2.3 Financial liabilities-Initial recognition and subsequent measurement
(1) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial
liabilities at amortised cost. All financial liabilities are recognised
initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs. The Group's financial
liabilities include Debt issued and other borrowed funds, Due to customers,
Lease liabilities, Other liabilities, Provisions and Derivative financial
instruments.
(2) Subsequent measurement
For the purposes of subsequent measurement, financial liabilities are
classified in two categories:
· Financial liabilities at amortised cost (Debt issued and other
borrowed funds, Due to customers and Lease liabilities); and
· Financial liabilities at FVTPL (Derivative instruments).
Financial liabilities at amortised cost
Debt issued and other borrowed funds, Other liabilities and Due to customers
are classified as liabilities where the substance of the contractual
arrangement results in the Group having an obligation either to deliver cash
or another financial asset to the holder, or to satisfy the obligation other
than by the exchange of a fixed amount of cash or another financial asset for
a fixed number of own equity shares. After initial measurement, Debt issued
and other borrowed funds including Due to customers are subsequently measured
at amortised cost using the effective interest rate method. Amortised cost is
calculated by considering any discount or premium on the issue and costs that
are an integral part of the effective interest rate.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.2.3 Financial Liabilities (continued)
Derecognition
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is
reported in the consolidated statement of financial position only if there is
a currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, to realise the assets and settle the
liabilities simultaneously.
2.2.4 Derivative instruments and hedge accounting
The Group uses derivative financial instruments, such as forward currency
contracts and cross currency interest rate swaps to hedge its foreign currency
risks and interest rate risks. Such derivative financial instruments are
initially recognised at fair value on the date on which a derivative contract
is entered into and are subsequently remeasured at fair value at the end of
every reporting period. Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when the fair value is
negative.
For the purpose of hedge accounting, hedges are classified as cash flow hedges
when hedging the exposure to variability in cash flows that is either
attributable to a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction or the foreign currency
risk in an unrecognised firm commitment.
The effective portion of the gain or loss on the hedging instrument is
recognised in OCI in the cash flow hedge reserve, while any ineffective
portion is recognised immediately in the statement of profit or loss. The cash
flow hedge reserve is adjusted to the lower of the cumulative gain or loss on
the hedging instrument and the cumulative change in fair value of the hedged
item. The Group uses forward currency contracts and cross currency interest
rate swaps agreements as hedges of its exposure to foreign currency risk and
interest rate risk in forecast transactions and firm commitments.
The Group designates only the spot element of forward contracts as a hedging
instrument. The forward element and cross currency basis risk is recognised in
OCI and accumulated in a separate component of equity under cost of hedging
reserve. The forward points and foreign exchange basis spreads are amortised
throughout the contract tenure and reclassified out of OCI into P&L as
interest expenses.
2.2.5 Recognition of income and expenses
Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received or
receivable, considering contractually defined terms of payment and excluding
taxes or duties. The Group has concluded that it is principal in all of its
revenue arrangements except for loans under BC model where the Group works as
an agent.
The following specific recognition criteria must also be met before revenue is
recognised:
(1) Interest and similar income and expense
Interest income and expense are recognised in the statement of profit or loss
and other comprehensive income based on the effective interest rate method.
The effective interest rate is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of the financial
instrument or, when appropriate, a shorter period to the net carrying amount
of the financial asset or financial liability. When calculating the effective
interest rate, the Group shall estimate cash flows considering all contractual
terms of the financial instrument but shall not consider future credit losses.
The calculation includes all amounts paid or received between parties to the
contract that are an integral part of the effective interest rate of a
financial instrument including transaction costs, and all other premiums or
discounts. Interest income is presented net of modification loss (note-2.5.9).
The interest income also includes loan processing fees that are integral to
the interest rate.
The Group recognises interest income on the stage 3 loans on the net loan
balance.
(2) Dividend income
Revenue is recognised when the Group's right to receive the payment is
established.
(3) Other income
Other income includes group member's admission fees, document fees, sale of
passbook, income on death and multipurpose risk funds and service fees from
off-book loans under the BC model.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (continued)
2.2.5 Recognition of income and expenses (continued)
(4) Other income (continued)
Group member's admission fees, document fees and sale of passbook fees are
recognised on receipt as the then admission and sale constitutes as
satisfactory performance obligation.
The Group collects fees for the death risk fund or multipurpose risk fund in
the Philippines, Sri Lanka, Kenya and Uganda. These fees cover settlement of
the outstanding loan amount and other financial assistance if a borrower dies
or disabled. The collections are recognised upfront as income and a liability
is recognised in the statement of financial position for the claims resulting
from these funds. The judgement used to recognise the liability is disclosed
in note 2.5.3.
Service fees from off-book loans under the BC model are recognised on the
basis of loan disbursement as the amount is received only after completion of
the service.
2.2.6 Cash and cash equivalents and Cash at bank and in hand
Cash and cash equivalents as referred to in the statement of cash flows
comprises cash in hand, restricted cash relating to Loan Collateral Build Up
('LCBU') in the Philippines and against security deposits from clients in
Tanzania and Kenya, current accounts with various commercial banks and amounts
due from banks on demand or term deposits with an original maturity of three
months or less. The cash flows from operating activities are presented using
the indirect method, whereby the profit or loss is adjusted for the effects of
non-cash transactions, accruals and deferrals, and items of income or expense
associated with investing or financing cash flows.
Cash in hand and in bank as referred to the statement of financial position
comprises of cash and cash equivalents and restricted cash relating to Loan
Collateral Build Up ('LCBU') in the Philippines and against security deposit
from clients in Tanzania and Kenya.
2.2.7 Property and equipment
Property and equipment is stated at cost excluding the costs of day-to-day
servicing, less accumulated depreciation and accumulated impairment in value.
Changes in the expected useful life are accounted for by changing the
depreciation period or method, as appropriate, and are treated as changes in
accounting estimates.
Depreciation is calculated using the straight-line method to write down the
cost of property and equipment to their residual values over their estimated
useful lives.
The estimated useful lives are as follows:
Furniture & Fixtures: 5 Years
Vehicles: 5 Years
Office equipment including IT: 3 Years
Buildings: 50 years
An item of property and equipment is derecognised upon disposal or when no
future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the
asset) is recognised in 'Other operating income' or 'Other operating expenses'
in the statement of profit or loss and other comprehensive income in the year
the asset is derecognised.
2.2.8 Taxes
(1) Current tax
Current tax assets and liabilities for the current and prior years are
measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted at the reporting date in the
countries where the Group operates and generates taxable income. Management
periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation
and establishes provisions where appropriate.
(2) Deferred tax
Deferred tax is provided on temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred tax liabilities are recognised for all
taxable temporary differences, except: (i) where the deferred tax liability
arises from the initial recognition of goodwill or of an asset or liability in
a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss,
and (ii) in respect of taxable temporary differences associated with
investments in subsidiaries and associates, where the timing of the reversal
of the temporary differences can be controlled and it is probable that the
temporary differences will not reverse in the foreseeable future.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.2.8 Taxes (continued)
(2) Deferred tax (continued)
Deferred tax assets are recognised for all deductible temporary differences,
carry forward of unused tax credits and unused tax losses, to the extent that
it is probable that taxable profit will be available against which the
deductible temporary differences, and the carry forward of unused tax credits
and unused tax losses, can be set-off: (i) where the deferred tax asset
relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss, and (ii) in respect of
deductible temporary differences associated with investments in subsidiaries
and associates, deferred tax assets are recognised only to the extent that it
is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax
asset to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it becomes probable that
future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the year when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities can only be offset in the
statement of financial position if the Group has the legal right to settle
current tax amounts on a net basis and the deferred tax amounts are levied by
the same taxing authority on the same entity or different entities that intend
to realise the asset and settle the liability at the same time.
The Group started to recognise deferred tax on undistributed dividends from
2021. Reference is made to note 2.5.8 and note 11.7.
2.2.9 Dividend distribution on ordinary shares
Dividends on ordinary shares will be recognised as a liability and deducted
from equity when they are approved by the Group's shareholders. Interim
dividends are deducted from equity when they are declared and no longer at the
discretion of the Group. Dividends for the year that were approved after the
reporting date will be disclosed as an event after the reporting date.
2.2.10 Short-term employee benefits
Short-term benefits typically relate to the payment of salaries and wages.
These benefits are recorded on an accrual basis, so that at period end, if the
employee has provided service to the Group, but has not yet received payment
for that service, the unpaid amount is recorded as liability.
2.2.11 Post-employment benefits
2.2.11.1 Defined benefit plan
The Group maintains a defined benefit plan in some subsidiaries, which leads
to retirement benefit obligations. The defined benefit obligation and the
related charge for the year are determined using assumptions required under
actuarial valuation techniques. These benefits are unfunded.
Remeasurements, comprising actuarial gains and losses, the effect of the asset
ceiling, excluding an amount included in net interest on the net defined
benefit liability and the return on plan assets (excluding amounts included in
net interest on the net defined benefit liability) are recognised immediately
in the statement of financial position with a corresponding debit or credit to
retained earnings through OCI in the period in which they occur.
Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of (i) the
date of the plan amendment or curtailment, and (ii) the date that the Group
recognises related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined
benefit liability or asset. The Group recognises the following changes in the
net defined benefit obligation under operating expenses in the consolidated
statement of comprehensive income; (i) service costs comprising current
service costs, past-service costs, gains and losses on curtailments and
non-routine settlements and (ii) net interest expense or income. Reference is
made to note 2.5.2.
2.2.11.2 Defined contribution plan
Defined contribution plans are post-employment benefit plans under which an
entity pays fixed contributions into a separate entity (a fund) and will have
no legal or constructive obligation to pay further contributions if the fund
does not hold sufficient assets to pay all employee benefits relating to
employee service in the current and prior periods.
Similar to accounting for short-term employee benefits, defined contribution
employee benefits are expensed as they are paid, with an accrual recorded for
any benefits owed, but not yet paid. The expenses of the defined contribution
plan are incurred by the employer. The contributions are to be remitted by the
entities to the fund on a monthly basis. Employees are allowed to withdraw the
accumulated contribution in their accounts from this fund as per the terms and
conditions specified in the fund Acts.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.2.12 Goodwill
Goodwill is initially measured at cost (being the excess of the aggregate of
the consideration transferred and the amount recognised for non- controlling
interests and any previous interest held over the net identifiable assets
acquired and liabilities assumed). If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group
reassesses whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to measure the
amounts to be recognised at the acquisition date. If the reassessment still
results in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or
loss.
After initial recognition, the Group measures goodwill at cost less any
accumulated impairment losses. The Group tests goodwill for impairment
annually, or more frequently if events or changes in circumstances indicate
that it might be impaired. Impairment for goodwill is determined by assessing
the recoverable amount of the cash-generating unit (CGU) (or group of
cash-generating units) to which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an
impairment loss is recognised. Impairment losses relating to goodwill cannot
be reversed in future periods.
2.2.13 Intangible assets
The Group has adopted a strategy of enriching the offering to its clients with
product diversification by adding Digital Financial Services (DFS). The DFS
will be offered to its clients through a smartphone app, where clients will be
able to apply online for loans and other financial services like a current
account and a savings or deposit account. They will be able to see their loan
and account information and make payments including paying bills. The DFS app
will also include additional functions and services such as digital group
meetings and a chat function. As part of the DFS, the Group is also developing
a Supplier Market Place app ('SMP') where clients can purchase goods for their
businesses. SMP will be a separate app, but is part of the DFS model to retain
and attract loan and savings clients and generate payment transactions that
will generate commissions.
For the introduction of current accounts and savings and deposits accounts and
other digital services to our clients, the Group has procured license of a
Core Banking System ('CBS') to its IT infrastructure. The Group made upfront
payments to buy core banking software licence. The licence for the software is
granted for ten years.
Research and development costs
Research costs are expensed as incurred. Development expenditures on an
individual software project are recognised as an intangible asset when the
Group can demonstrate:
The technical feasibility of completing the intangible asset so that the asset
will be available for use
Its intention to complete and its ability to use it or sell it
How the asset will generate future economic benefits
The availability of resources to complete the asset and use or sell it
The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the
asset is carried at cost less any accumulated amortisation and accumulated
impairment losses. Amortisation of the asset begins when development is
complete, and the asset is available for use. It is amortised over the period
of expected future benefit. During the period of development, the asset is
tested for impairment annually. The break down is presented in note 20.
A summary of the policies applied to intangible asset is, as follows:
Initial licence and set up costs Development costs
Useful life Finite (5-10 years) Finite (5-10 years)
Amortisation starts After installation for use After installation for use
Amortisation method used Amortised on a straight line Amortised on a straight line basis
Internally generated or acquired basis over the period of licence over the period of expected usage
Acquired Internally generated
2.2.14 Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication
that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's
or CGU's fair value less costs of disposal and its value in use. The
recoverable amount is determined for an individual asset, unless the asset
does not generate cash inflows that are largely independent of those from
other assets or groups of assets. When the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. Impairment losses of continuing
operations are recognised in the statement of profit or loss in expense
categories. For assets excluding goodwill, an assessment is made at each
reporting date to determine whether there is an indication that previously
recognised impairment losses no longer exist or have decreased. If such
indication exists, the Group estimates the asset's or CGU's recoverable
amount. A previously recognised impairment loss is reversed only if there has
been a change in the assumptions used to determine the asset's recoverable
amount since the last impairment loss was recognised. For right of use assets
('ROU') the fair value is determined based on estimated rental payments using
the Incremental Borrowing Rate ('IBR') used for each country where such ROU
exists. If there is a significant change in discount rates, the fair value is
reviewed to see if there is impairment. The sensitivity analysis on account of
IBR changes is shown in note 17.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (continued)
2.2.15 Liability for death and multipurpose risk funds
The Group collects 1-2% of disbursed loan amounts for death risk funds or
multipurpose risk funds in certain markets (the Philippines, Uganda, Kenya and
Sri Lanka). These funds cover settlement of the outstanding loan amount and
other financial assistance when the borrower dies or is affected by natural
calamities. The collected amounts are recognised upfront as income and a
liability is recognised in the statement of financial position for the claims
resulting from these funds. Reference is made to note 2.5.3 on the key
judgement used.
2.2.16 Fair value measurement
The Group measures financial instruments such as derivatives, at fair value at
each balance sheet date. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either: (i) In the principal market for
the asset or liability; or (ii) In the absence of a principal market, in the
most advantageous market for the asset or liability. The principal or the most
advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
All assets and liabilities for which fair value is measured or disclosed in
the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical
assets or liabilities;
Level 2 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly
observable; and
Level 3 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable.
When the fair values of financial assets and financial liabilities recorded in
the statement of financial position cannot be measured based on quoted prices
in active markets, their fair value is measured using valuation techniques
including the discounted cash flow (DCF) model. The inputs to these models are
taken from observable markets where possible, but where this is not feasible,
a degree of judgement is required in establishing fair values. Judgements
include considerations of inputs such as liquidity risk, credit risk and
volatility.
2.2.17 Leases
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. The Group
determines the lease term as the non-cancellable term of the lease. Any
periods covered by an option to extend the lease is not considered unless it
is reasonably certain to be exercised.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease
(i.e., the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognised,
initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease term and
the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the
accounting policies in note 2.2.14 Impairment of non-financial assets.
Lease liabilities
(1) Initial measurement
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments less (if any) lease incentives
receivable, variable lease payments that depend on an index or a rate, and
amounts expected to be paid under residual value guarantees. There are no
obligatory extension clauses in the rental agreements. Although some lease
contracts comprise the optional extension clauses, these are not included on
initial recognition because it is not always reasonably certain that the Group
will take the option. In calculating the present value of lease payments, ASA
International uses the incremental borrowing rate at the lease commencement
date due to the reason that the interest rate implicit in the lease is not
available. The incremental borrowing rate is calculated using a reference rate
(derived as country specific risk-free rate) and adjusting it with company
specific financing spread and integrating lease specific factors. Refer to
note 2.5.7 on accounting estimates and assumptions used to determine the IBR
rates.
(2) Subsequent measurement
After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In
addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term or a change in the in-substance fixed
lease payments which also impacts similarly the right of use assets.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.2.18 Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. When the Group expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the reimbursement is
recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the statement of
comprehensive income net of any reimbursement.
If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
2.2.19 Share based payments
The Group has granted options ('Options') in the Group Company under its
long-term incentive plan (LTIP) to certain Executive Directors and Persons
Discharging Managerial Responsibilities ('PDMRs') on 28 October 2022 The
Company's LTIP is designed to incentivise and retain Directors and senior
staff, along with aligning them with shareholders' interest to create long
term value. The transaction is determined as an equity-settled transaction.
The cost of equity-settled transactions is determined by the fair value at the
date when the grant is made using an appropriate valuation model, further
details of which are given in Note 32.1.
That cost is recognised in employee benefits expense, together with a
corresponding increase in equity (other capital reserves), over the period in
which the service and, where applicable, the performance conditions are
fulfilled (the vesting period). The cumulative expense recognised for
equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group's
best estimate of the number of equity instruments that will ultimately vest.
The expense or credit in the statement of profit or loss for a period
represents the movement in cumulative expense recognised as at the beginning
and end of that period.
2.2.20 Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair value less
costs of disposal and its value in use. For Property and equipment, the fair
value less costs of disposal calculation is based on available data from
similar assets or observable market prices less incremental costs of disposing
of the asset. For "ROU" the fair value is determined based on estimated rental
payments using incremental borrowing rates used for each country where such
ROU exists. If there is a significant change in discount rates, the fair value
is reviewed to see if there is impairment.
The Group has identified the impairment of non-financial assets as one of the
areas in which it could be exposed to the financial impacts of climate change
risk, as a number of the Group's operating areas are prone to natural
disasters. However, as the Group manages a frugal cost operating model with
minimum investment in fixed assets and leases, the impact of climate related
financial loss is expected to be insignificant.
2.3. New standards, interpretations and amendments adopted by the Group
The Group applied for the first-time certain standards and amendments, which
are effective for annual periods beginning on or after 1 January 2022 (unless
otherwise stated). The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.
2.3.1 Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS
37
An onerous contract is a contract under which the unavoidable costs of meeting
the obligations under the contract costs (i.e., the costs that the Group
cannot avoid because it has the contract) exceed the economic benefits
expected to be received under it. The amendments specify that when assessing
whether a contract is onerous or loss-making, an entity needs to include costs
that relate directly to a contract to provide goods or services including both
incremental costs (e.g., the costs of direct labour and materials) and an
allocation of costs directly related to contract activities (e.g.,
depreciation of equipment used to fulfil the contract and costs of contract
management and supervision). General and administrative costs do not relate
directly to a contract and are excluded unless they are explicitly chargeable
to the counterparty under the contract.
These amendments had no impact on the consolidated financial statements of the
Group as there were no Onerous contracts within scope of these amendments.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.3. New standards, interpretations and amendments adopted by the Group
(continued)
2.3.2 Reference to the Conceptual Framework - Amendments to IFRS 3
The amendments replace a reference to a previous version of the IASB's
Conceptual Framework with a reference to the current version issued in March
2018 without significantly changing its requirements. The amendments add an
exception to the recognition principle of IFRS 3 Business Combinations to
avoid the issue of potential 'day 2' gains or losses arising for liabilities
and contingent liabilities that would be within the scope of IAS 37
Provisions, Contingent Liabilities and Contingent Assets or IFRIC 21 Levies,
if incurred separately. The exception requires entities to apply the criteria
in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to
determine whether a present obligation exists at the acquisition date. The
amendments also add a new paragraph to IFRS 3 to clarify that contingent
assets do not qualify for recognition at the acquisition date. In accordance
with the transitional provisions, the Group applies the amendments
prospectively, i.e., to business combinations occurring after the beginning of
the annual reporting period in which it first applies the amendments (the date
of initial application).
These amendments had no impact on the consolidated financial statements of the
Group as there were no contingent assets, liabilities or contingent
liabilities within the scope of these amendments that arose during the period.
2.3.3. Property, Plant and Equipment: Proceeds before Intended Use -
Amendments to IAS 16
The amendment prohibits entities from deducting from the cost of an item of
property, plant and equipment, any proceeds of the sale of items produced
while bringing that asset to the location and condition necessary for it to be
capable of operating in the manner intended by management. Instead, an entity
recognises the proceeds from selling such items, and the costs of producing
those items, in profit or loss.
In accordance with the transitional provisions, the Group applies the
amendments retrospectively only to items of PP&E made available for use on
or after the beginning of the earliest period presented when the entity first
applies the amendment (the date of initial application). These amendments had
no impact on the consolidated financial statements of the Group as there were
no sales of such items produced by property, plant and equipment made
available for use on or after the beginning of the earliest period presented.
2.3.4 IFRS 1 First-time Adoption of International Financial Reporting
Standards - Subsidiary as a first-time adopter
The amendment permits a subsidiary that elects to apply paragraph D16(a) of
IFRS 1 to measure cumulative translation differences using the amounts
reported in the parent's consolidated financial statements, based on the
parent's date of transition to IFRS, if no adjustments were made for
consolidation procedures and for the effects of the business combination in
which the parent acquired the subsidiary. This amendment is also applied to an
associate or joint venture that elects to apply paragraph D16(a) of IFRS 1.
These amendments had no impact on the consolidated financial statements of the
Group as it is not a first time adopter.
2.3.5 IFRS 9 Financial Instruments - Fees in the '10 per cent' test for
derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when assessing
whether the terms of a new or modified financial liability are substantially
different from the terms of the original financial liability. These fees
include only those paid or received between the borrower and the lender,
including fees paid or received by either the borrower or lender on the
other's behalf. There is no similar amendment proposed for IAS 39 Financial
Instruments: Recognition and Measurement. In accordance with the transitional
provisions, the Group applies the amendment to financial liabilities that are
modified or exchanged on or after the beginning of the annual reporting period
in which the entity first applies the amendment (the date of initial
application). These amendments had no impact on the consolidated financial
statements of the Group as there were no modifications of the Group's
financial instruments during the period.
2.4. Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Group's financial statements are
disclosed below. The Group intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.
2.4.1 IFRS 17 Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a
comprehensive new accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure. Once effective, IFRS
17 will replace IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005.
IFRS 17 applies to all types of insurance contracts (i.e., life, non-life,
direct insurance and re-insurance), regardless of the type of entities that
issue them, as well as to certain guarantees and financial instruments with
discretionary participation features. A few scope exceptions will apply. The
overall objective of IFRS 17 is to provide an accounting model for insurance
contracts that is more useful and consistent for insurers. In contrast to the
requirements in IFRS 4, which are largely based on grandfathering previous
local accounting policies, IFRS 17 provides a comprehensive model for
insurance contracts, covering all relevant accounting aspects. The core of
IFRS 17 is the general model, supplemented by:
· A specific adaptation for contracts with direct participation
features (the variable fee approach).
· A simplified approach (the premium allocation approach) mainly for
short-duration contracts.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACCOUNTING POLICIES (continued)
2.4. Standards issued but not yet effective (continued)
2.4.1 IFRS 17 Insurance Contracts (continued)
IFRS 17 is effective for reporting periods beginning on or after 1 January
2023, with comparative figures required. Early application is permitted,
provided the entity also applies IFRS 9 and IFRS 15 on or before the date it
first applies IFRS 17.
The Group charges a 1-2% upfront premium fee on its loans disbursed to
customers under the Death Risk Fund/Multipurpose Risk Fund (DRF/MRF) scheme in
certain subsidiaries. In return, outstanding loans (including interest
receivables) shall be exempted in case of customers' death (in a few cases
partial exemption is granted by ASAI in the event of disability).
Additionally, and independently, a certain amount of money is paid as a cash
subsidy for funeral/financial assistance to the customers and/or next kin.
These compensations (exemption of loans and/or cash subsidy) made by ASAI are
not a guaranteed payment to customer and/or next to kin if occurrences (death
and/or disability) do not happen. The Group is assessing the impact of
implementing IFRS 17.
2.4.2 Definition of Accounting Estimates - Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces
a definition of 'accounting estimates'. The amendments clarify the distinction
between changes in accounting estimates and changes in accounting policies and
the correction of errors. Also, they clarify how entities use measurement
techniques and inputs to develop accounting estimates. The amendments are
effective for annual reporting periods beginning on or after 1 January 2023
and apply to changes in accounting policies and changes in accounting
estimates that occur on or after the start of that period. Earlier application
is permitted as long as this fact is disclosed. The amendments are not
expected to have a material impact on the Group's financial statements.
2.4.3 Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
In May 2021, the Board issued amendments to IAS 12, which narrow the scope of
the initial recognition exception under IAS 12, so that it no longer applies
to transactions that give rise to equal taxable and deductible temporary
differences.
The amendments should be applied to transactions that occur on or after the
beginning of the earliest comparative period presented. In addition, at the
beginning of the earliest comparative period presented, a deferred tax asset
(provided that sufficient taxable profit is available) and a deferred tax
liability should also be recognised for all deductible and taxable temporary
differences associated with leases and decommissioning obligations. The Group
is currently assessing the impact of the amendments.
2.4.4 Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice
Statement 2 Making Materiality Judgements, in which it provides guidance and
examples to help entities apply materiality judgements to accounting policy
disclosures. The amendments aim to help entities provide accounting policy
disclosures that are more useful by replacing the requirement for entities to
disclose their 'significant' accounting policies with a requirement to
disclose their 'material' accounting policies and adding guidance on how
entities apply the concept of materiality in making decisions about accounting
policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or
after 1 January 2023 with earlier application permitted. Since the amendments
to the IFRS Practice Statement 2 provide non-mandatory guidance on the
application of the definition of material to accounting policy information, an
effective date for these amendments is not necessary. The Group is currently
assessing the impact of the amendments to determine the impact they will have
on the Group's accounting policy disclosures.
2.5 Significant accounting judgements and estimates
In the process of applying the Group's accounting policies, judgements and
estimates are applied in determining the amounts recognised in the financial
statements. Significant use of judgements and estimates are as follows:
2.5.1 Allowance for Expected Credit Loss (ECL) on loans and advances
The Group calculates the allowance for ECL in a three-step process as
described below under A to D. The Group reviews its loans at each reporting
date to assess the adequacy of the ECL as recorded in the financial
statements. In particular, judgement is required in the estimation of the
amount and timing of future cash flows when determining the level of allowance
required. Such estimates are based on certain assumptions such as the
financial situation of the borrowers, types of loan, maturity of the loans,
ageing of the portfolio, economic factors etc. The actual performance of loans
may differ from such estimates resulting in future changes to the allowance.
Due to the nature of the industry in which the Group operates, i.e. micro
credit to low income clients, the loan portfolio consists of a very high
number of individual customers with low value exposures. These characteristics
lead the Group to use a provisioning methodology based on a collective
assessment of similar loans. The Group's policy for calculating the allowance
for ECL is described below:
A) Determination of loan staging
The Group monitors the changes in credit risk in order to allocate the
exposure to the correct staging bucket. Given the nature of the Group's loan
exposures (generally short term exposures, <12 months) no distinction has
been made between stage 1 (12 months ECL) and stage 2 loans (lifetime ECL) for
calculating the ECL provision. During the Covid period (2020 and 2021), the
Group provided significant moratoriums to the clients. In addition, multiple
periodical moratoriums were provided to clients in Myanmar and Sri Lanka as
those entities faced multiple national and or local lockdowns.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (Continued)
2.5 Significant accounting judgements and estimates (continued)
2.5.1 Allowance for expected credit loss (ECL) on loans and advances
(continued)
Hence, in addition to the loans that were in arrears by more than 30 days and
less than 91 days, loans which were in arrears by less than 31 days but more
than 31 days passed since their last payment, were also classified as stage 2.
However, as no further moratoriums were provided in 2022 and all previous
moratoriums were expired six months before the balance sheet date, the Group
has returned to the standard criteria by using loan aging analysis to
determine the staging. Any loans overdue more than 31-90 days are recognised
as stage 2 loans. Loans overdue more than 90 days are recognised as stage 3
loans.
There are six branches in Myanmar which were closed during the year due to
insecurity. Although the management team is collecting some instalments, the
total loan amounts outstanding at those branches (USD 382K) were considered
bad and recognised as stage 3.
B) Calculating ECL for stage 1-2 loans
To avoid the complexity of calculating the separate probabilities of default
and loss-given default, the Group uses a 'loss rate approach' for the
measurement of ECLs under IFRS 9. Using this approach, the Group developed
loss-rate statistics on the basis of the net amounts written off over the last
five years (Gross write-off less subsequent recovery). The historical loss
rates include the impact of security deposits held by the Group, which is
adjusted with overdue amounts before loans are written off. ECL recorded
purely based on historical loss comes to USD 1.5 million (2021: USD 3.2
million). If a three year or four year time period was used to capture the net
written off balance then the resulting impact to the ECL would be USD 1.2
million and USD 374K respectively.
The forward-looking element of the ECL model is constructed through looking at
the trend in net write-off information from the prior three years and applying
a scaled loss rate in order to anticipate future loss events. ECL as per the
forward-looking element comes to USD 479K (2021: USD 7.2 million). The
write-offs in 2022 are considerably lower than those in 2021 which has
resulted in a lower forward looking ECL element.
Changing the write-off trend to two years, rather than three years for the
forward-looking assessment, would reduce ECL by USD 1.2 million.
C) Calculating ECL for stage 3 loans
The Group considers a loan to be credit impaired when it is overdue for more
than 90 days. The ECL applied to net stage 3 loans (after adjusting the
security deposit which is held as collateral in certain countries) is at a
rate below:
ECL for stage 3 loans
Loss %
Overdue age 2022 2021
91-180 days 50% 50%
181-365 days 70% 70%
Over 365 days 100% 100%
No change in the loss rate was made in 2022 except for India, Myanmar,
Nigeria, Sierra Leone and Sri Lanka operations, where management considered a
higher loss rate (80% for the loans bucketed between 91-180 days and 100% for
loans over 180 days overdue) in view of operating challenges faced in these
countries on account of high PAR, market challenges and political instability
which might led to reduction in recoveries.
Based on the above, ECL for stage 3 loans comes to USD 13.1 million (2021: USD
11.6 million). An alternative assessment of stage 3 provisions would be to
apply a 100% loss rate across the entire stage 3 population (net of security
deposit), being all loans more than 90 days past due. This would increase the
ECL on the stage 3 population to USD 15.3 million.
D) Management overlay
In prior periods and for 2022 interim financials, the Group considered
additional management overlay on account of significant loan amounts under
moratorium and under restructuring, the possible impact of a global economic
crisis sparked by the Russian invasion of Ukraine and the risks associated
with the price inflation of fuel, food, and other costs across the countries
where the Group operates. However, the Group has stopped providing any new
moratoriums in 2022 and the loans restructuring period in India have already
expired six months before the year end. In addition, the impact of the
economic crisis is being captured by loan ageing. Hence, no additional
management overlay is taken in 2022 to account for moratoria, whereas this was
a relevant factor in 2021.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (continued)
2.5.1 Allowance for expected credit loss (ECL) on loans and advances
(continued)
E) Impact of macro-economic indicators
The Group provides small loans to clients who are not employed but operate
their own small businesses in the informal sector and are less impacted by
macro-economic trends than other business sectors. In addition, the Group's
loans average 6 months until maturity at the year-end and so the impact of
macro-economic factors on the repayment of loans is inherently limited. Hence
the management concluded that changes in macro-economic indicators do not have
any direct correlation with the ASA business model and therefore, no
adjustment was made to consider forecasts for such macro-economic indicators
in the forward-looking element of its expected credit loss provision
calculation.
F) Impact of climate change
The Group and its customers are exposed to the physical risks from climate
change and risks of transitioning to a net-zero economy. Most climate-related
physical risks are expected to manifest over a term that is generally much
longer than the maturity of most of the outstanding exposures. The following
balances may be impacted by physical and transition risks.
The Group has identified the ECL provision as one of the main areas in which
it could be exposed to the financial impacts of climate change risk, as a
number of the Group's operating areas are prone to natural disasters such as
typhoons, flash floods or droughts. The Group's expected credit loss model
captures the expected impact of the climate related risks through the
historical loss data that feeds the model, which also includes write-offs due
to such natural disasters. In addition, management monitors the situation in
each of its operating territories post the balance sheet date for any factors
that should be considered in its year-end ECL calculations. As the Group's
loans are short-term, the impact of such events over the life of the loans
would naturally be limited. Hence, no additional changes have been made in the
existing model on account of climate related risks. However, given the
evolving risks associated with climate change, management will continue to
monitor whether adjustments to its ECL models are required for future periods.
G) Business Correspondence ('BC') portfolio, Direct Assignment ('DA')
Portfolio and Securitisation portfolio of ASA India
A similar assessment has been performed for the off-book Business
Correspondence ('BC') portfolio of ASA India (see note 13 for details on the
BC portfolio). The off-book BC portfolio consists of disbursements on behalf
of IDFC First Bank and Jana Small Finance Bank (JSFB). IDFC BC is subject to a
maximum provision of 5% of OLP, which is the maximum credit risk exposure for
ASA India as per the agreement with IDFC First Bank. There is no maximum risk
on BC from JSFB. Those portfolios are assessed in line with ASA India's own
OLP. ECL for the off-book BC portfolio comes to USD 1.04 million (2021: 1.7
million).
The portion of the DA portfolio of ASA India which is on-book has also been
treated the same as regular portfolio. No provision for the off-book portion
of the DA portfolio was made because, as per the agreement with the State Bank
of India, ASA India has no credit risk on this part of the DA portfolio.
The Securitisation portfolio of ASA India has been assessed in line with ASA
India's own portfolio.
H) ECL on interest receivable
ECL for Interest receivable is assessed in the same line as OLP. ECL for
interest receivable comes to USD 794K (2021: 1.7 million).
Based on the above assessment the total provision for expected credit losses
for loans and advances to customers can be summarised as follows:
2022 2021
Own Off-book Interest Own Off-book Interest
portfolio portfolio receivable portfolio portfolio receivable
Particulars USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
ECL as per historical default rate 1,521 400 75 3,204 339 148
Forward considerations 479 492 21 7,184 793 309
ECL under stage 3 loans 13,197 146 607 11,574 543 37
Management overlay - - - 2,136 - 1,202
15,197 1,038 703 24,098 1,675 1,696
2022 2021
Gross outstanding ECL Coverage Gross outstanding ECL Coverage
Allocated to: USD'000 USD'000 USD'000 USD'000
Own Portfolio (note 13.1 and 13.3) 344,985 15,197 4% 393,298 24,098 6%
Off-book BC portfolio (note 13.1 and note 28) 21,362 1,038 5% 35,583 1,675 5%
Interest receivable (note 13.1 and note 13.3) 7,265 703 10% 10,700 1,696 16%
373,612 16,938 5% 439,581 27,469 6%
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (Continued)
2.5 Significant accounting judgements and estimates (continued)
2.5.2 Defined benefit plans
The cost of the defined benefit plan is determined using actuarial valuations.
An actuarial valuation involves making various assumptions that may differ
from actual developments in the future. These include the determination of the
discount rate, future salary increases, staff turnover and retirement age. Due
to the complexities involved in the valuation and its long-term nature, a
defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date. The
assumptions used in December 2022 and December 2021 are as follows:
Assumptions defined benefit plan:
2022 2021
ASA Pagasa ASA Pagasa
Lak Jaya Pakistan ASA India ASA Nigeria Philippines Lak Jaya Pakistan ASA India ASA Nigeria Philippines
Discount rate 18.7% 14.5% 7.4% 14.3% 7.4% 11.2% 11.8% 7.2% 13.5% 5.1%
Salary increment 10.0% 13.5% 9.0% 12.0% 5.0% 10.0% 10.8% 9.5% 12.0% 4.0%
Staff turnover 15.7% 14.0% 22.0% 5.0% 38.1% 13.0% 15.9% 25.5% 5.0% 47.0%
Retirement age 60 Years 60 Years 60-62 Years 60 Years 60 Years 60 years 60 years 60-62 years 60 years 60 years
The parameter most subject to change is the discount rate. Management engages
third-party actuaries to conduct the valuation. The defined benefit costs have
been disclosed in note 8.2. The sensitivity analysis of the plan on account of
any change in discount rate and salary increment is disclosed in note 8.3.
Sensitivity analysis for changes in the other two assumptions were not done as
the effect is determined immaterial.
2.5.3 Liability for death and multipurpose risk funds
At the end of each period, management uses significant assumptions to reassess
the adequacy of the liability provided. These include estimating the number of
borrower deaths among the total number of borrowers by applying the local
mortality rates at the end of the period, outstanding loan amount per borrower
and other financial assistance to the family where applicable. The mortality
rate is based on historical mortality rates of the borrower for last three
years for the specific countries. As of December 2022, rates were 0.36 %
(2021: 0.40%) in Sri Lanka, 0.21% (2021: 0.20%) in Uganda, 0.43% (2021: 0.45%)
in the Philippines and 0.24% (2021: 0.21%) in Kenya. The liability is
disclosed under note 27. No sensitivity analysis is done as the amount is not
material.
2.5.4 Business Correspondence and partnership models
The portfolios under the Business correspondence and partnership models in ASA
India ('BC model') are recognised on the statement of financial position based
on whether the entity has the right to receive rewards. ASA India operates a
Business Correspondent and partnership model with IDFC First Bank ('IDFC') and
Jana Small Finance Bank ('JSFB') . ASA India operates as an agent, whereby ASA
India selects borrowers based on the selection criteria of the BC Partner.
After approval of the selected borrowers, the BC Partners
disburse the loans either through ASA India or directly to the clients and ASA
India collects the interest and repayments from the borrowers on behalf of the
BC Partners. In exchange for these services, ASA India receives service fees
and processing fees.
The loans to borrowers of IDFC and JSFB and related funding are not recognised
on the balance sheet since the loan agreements are made between the partners
and the borrowers. More information is available in note 13.
2.5.5 Securitisation agreements
ASA India has a securitisation agreement in place at the balance sheet date,
'Lily' which is managed by Vardhman Trusteeship Private Limited. The loans to
customers under the securitisation agreements do not qualify for derecognition
as ASA India provides cash collateral for credit losses and thereby the credit
risk is not substantially transferred. Hence, the loans to customers continue
to be recognised on the balance sheet of ASA India under Loans and advances to
customers and the purchase consideration is presented under borrowings.
Interest income from customers continues to be recognised as interest income
and the related portion of the interest which is transferred to the
counterparty is presented as interest expense. The outstanding loan portfolio
as per end of 2022 under the securitisation agreements amounts to USD 617K (31
December 2021: USD 747K) and the related liability amounts to USD 636K (31
December 2021: USD 1.2 million). The loan portfolio is disclosed under Gross
loan portfolio in note 13 'Loans and advances to customers' and the liability
is disclosed under Debt issued and other borrowed funds by operating
subsidiaries in note 25 'Debt issued and other borrowed funds'. The total pool
principal balance at the start date of the relevant securitisation agreement
amounts to USD 1.02 million (31 December 2021: USD 3.5 million) and the
related liability amounts to USD 1.02 million (31 December 2021: USD 3.5
million). The cash collateral provided under these agreements amounts to USD
102K (31 December 2021: USD 278K) and is disclosed under note 14 'Due from
banks'.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (Continued)
2.5 Significant accounting judgments and estimates (continued)
2.5.6 Direct Assignment
ASA India entered into two Direct Assignment agreements (DA) with State Bank
of India (SBI), through which the entity has sold a pool of customers' loans
amounting to USD 16.5 million against a purchase consideration of USD 14
million. The balance (15%) is kept as minimum retention as per guidelines
issued by Reserve Bank of India (RBI). Based on the agreements, 85% of the
loans are derecognised on the books on the grounds that the entity transferred
substantially all the risks and rewards of ownership of financial assets. 15%
remained on-book. Further information is available in note 13.
2.5.7 Leases - estimating the Incremental Borrowing Rate ('IBR')
The Group cannot readily determine the interest rate implicit in the lease,
therefore, it uses IBR to measure lease liabilities. The IBR is the rate of
interest that the Group would have to pay to borrow over a similar term, and
with a similar security, the funds necessary to obtain an asset of a similar
value to the right-of-use asset in a similar economic environment.
IFRS 16 describes the accounting for an individual lease and a discount rate
that should be determined on a lease-by-lease basis. However, as a practical
expedient, an entity may apply IFRS 16 to a portfolio of leases with similar
characteristics if the entity reasonably expects that the effects on the
financial statements of applying a portfolio approach instead of a
lease-by-lease basis would not differ materially from applying this standard
to the individual leases within that portfolio. If accounting for a portfolio,
an entity shall use estimates and assumptions that reflect the size and
composition of the portfolio.
The Group applied a discount rate per country based on leases with similar
characteristics applying a portfolio approach instead of a lease-by-lease
approach which had no material impact for the Group. The starting point for
estimating the reference rate is the local risk-free rate. The Group developed
an approach to determine IBR that is closely aligned with the definitions and
requirements prescribed in IFRS 16. In this approach the Group first
determined the country risk free rate and adjusted that with the Group
specific financing spread and lease specific adjustments to consider IBR
rates.
The Group used country sovereign rates to determine the risk-free rate. If no
sovereign risk-free rate is available, a build-up approach is applied that
adjusts the USD based United States Treasury bond for (i) the country risk
premium, to capture country specific risk, and (ii) the long-term inflation
differential, to capture any currency risk.
The Group specific financing spread is determined based on (i) the Group
specific perspective / credit rating, (ii) the credit rating of the legal
entities (lessees) of ASA International, and (iii) the market interest rates /
yields on industry specific bonds.
The lease specific adjustment depends on the type/nature of asset, and relates
to the fact that a secured bond will have a lower yield compared to an
unsecured bond. However, the yield difference varies based on the type /
nature of the asset that is used as collateral. The IBR used for different
entities in 2022 and 2021 are as follows:
2022 2021
Country Lease Currency Credit Rating Approach reference rate IBR at different lease duration (year) IBR at different lease duration (year)
Tenure of lease 1 2-4 5-6 7-9 1 2-4 5-6 7-9
Ghana GHS BBB+ Local 16.7% 20.3% 21.4% 22.3% 18.4% 19.3% 19.9% 20.3%
Nigeria NGN BBB+ Local 5.5% 9.0% 11.5% 12.5% 0.9% 2.8% 4.6% 5.8%
Sierra Leone SLL BB- Build-Up 14.8% 15.4% 15.8% 16.0% 22.0% 23.2% 24.2% 24.8%
Kenya KES BBB Local 9.3% 10.5% 12.1% 12.7% 9.6% 10.9% 11.9% 12.6%
Rwanda RWF BB Build-Up 10.1% 10.7% 11.2% 11.3% 12.0% 12.6% 13.4% 14.0%
Tanzania TZS BBB Build-Up 7.4% 8.3% 9.4% 10.5% 6.0% 6.6% 7.0% 7.4%
Uganda UGX BBB Local 10.5% 13.0% 15.2% 16.0% 8.0% 9.5% 10.0% 10.3%
Zambia ZMW BB- Local 25.0% 25.0% 25.0% 25.0% 35.0% 35.6% 36.1% 36.3%
Bangladesh BDT B+ Build-Up 3.4% 5.3% 6.7% 7.2% 6.0% 6.5% 7.1% 7.6%
India INR BBB Local 4.4% 5.4% 6.1% 6.4% 4.5% 5.2% 5.9% 6.5%
Pakistan PKR BBB+ Build-Up 7.9% 10.8% 11.5% 12.3% 11.7% 11.7% 12.0% 12.3%
Sri Lanka LKR BB+ Local 8.7% 9.8% 11.7% 12.1% 6.4% 6.6% 7.3% 7.9%
Myanmar MMK BB Build-Up 17.0% 17.7% 18.1% 18.3% 11.9% 13.3% 14.6% 15.5%
Philippines PHP BBB Build-Up 1.7% 3.0% 4.0% 4.5% 2.0% 2.3% 2.7% 2.9%
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2. ACCOUNTING POLICIES (Continued)
2.5 Significant accounting judgments and estimates (continued)
2.5.8 Taxes
Deferred Tax Assets
Deferred tax assets are recognised for unused tax losses to the extent that it
is probable that taxable profit will be available against which the losses can
be utilised. Significant management judgement is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely
timing and the level of future taxable profits, together with future tax
planning strategies.
In assessing the probability of recovery, the Group has used its five-year
business plan which is consistent with last year's assessment. This business
plan was also used for the Going concern and Viability assessment.
As at 31 December, the Gross amount and expiry dates of losses available for
carry forward are as follows:
2022
Expiring within 1 year Expiring within 2-5 years Expiring beyond 5 years Unlimited Total
Losses for which Deferred tax asset is recognised - - - - -
Losses for which Deferred tax asset is not recognised - 3,409 24,972 27,058 55,439
- 3,409 24,972 27,058 55,439
2021
Expiring within 1 year Expiring within 2-5 years Expiring beyond 5 years Unlimited Total
Losses for which Deferred tax asset is recognised 181 352 1,453 10,387 12,192
Losses for which Deferred tax asset is not recognised - 48 23,002 10,707 33,757
181 400 24,455 21,094 45,949
If the Group was able to recognise all unrecognised deferred tax assets,
profit and equity would have increased by USD 13.0 million (2021:
7.8 million).
Deferred Tax Liabilities
As of 31 December 2022, the Group has undistributed profits in its
subsidiaries amounting to USD 76.8 million. The Group recognised a deferred
tax liability amounting to USD 2.2 million (see note 11.3) on USD 25.5 million
of undistributed profits on the assessment that these will be distributed in
the foreseeable future. No deferred tax liability was recognised on the
balance 51.3 million due to regulatory uncertainty on when those can be
distributed. If the Group recognises a deferred tax liability on these
profits, profit and equity would decrease by USD 5.2 million.
2.5.9 Modification of loans
In 2020 and 2021, the Group provided moratoriums to its clients in certain
subsidiaries. The main objective of these payment holidays was to offer
clients a temporary relief due to disruption of their livelihoods on account
of Covid. Extending the loan term only is not considered as a substantial
modification and therefore does not result in derecognition and the original
effective interest rate is retained. The temporary catch-up adjustment or
modification gain/loss is then calculated as the difference between the
carrying amount of the loans and the discounted value of the modified cash
flows at the original effective interest rate. The modification gain/ loss is
an adjustment to the carrying value of the loans and advances to customers and
interest income. No additional moratoriums were given in 2022. Total loans
under moratorium at 31 December 2022 is Nil (2021: USD 48.9 million)
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
3. SEGMENT INFORMATION
For management purposes, the Group is organised into reportable segments based
on its geographical areas and has five reportable segments, as follows:
· West Africa, which includes Ghana, Nigeria and Sierra Leone.
· East Africa, which includes Kenya, Uganda, Tanzania, Rwanda and
Zambia.
· South Asia, which includes India, Pakistan and Sri Lanka.
· South East Asia, which includes Myanmar and the Philippines.
· Holding and other non-operating entities, which includes holding
entities and other entities without microfinance activities.
No operating segments have been aggregated to form the above reportable
operating segments. The Company primarily provides only one type of service to
its microfinance clients being small microfinance loans which are managed
under the same ASA Model in all countries. The reportable operating segments
have been identified on the basis of organisational overlap like common Board
members, regional management structure and cultural and political similarity
due to their geographical proximity to each other.
The Executive Committee is the Chief Operating Decision Maker (CODM) and
monitors the operating results of its reportable segments separately for the
purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operational profits and
losses and is measured consistently with profit or loss in the consolidated
financial statements. Transfer prices between operating and non-operating
segments are on an arm's length basis in a manner similar to transactions with
third parties and are based on the Group's transfer pricing framework.
Revenues and expenses as well as assets and liabilities of those entities that
are not assigned to the four reportable operating segments are reported under
'Non-operating entities'. Inter-segment revenues, expenses and balance sheet
items are eliminated on consolidation.
No revenue from transactions with a single external customer or counterparty
amounted to 10% or more of the Group's total revenue in 2022 or 2021.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
3. SEGMENT INFORMATION (continued)
The following table presents operating income and profit information for the
Group's operating segments for the year ended 31 December 2022
Holding and other
As at 31 December 2022 non-operating Adjustments and
West Africa East Africa South Asia South East Asia entities Total segments eliminations Consolidated
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
External interest and similar income 54,178 43,165 49,058 31,566 12 177,979 - 177,979
Inter-segment interest income - - - 19 774 793 (793) -
External interest expense (2,788) (8,761) (19,043) (5,393) (4,337) (40,322) - (40,322)
Inter-segment interest expense (276) (282) (70) (146) (19) (793) 793 -
Net interest income 51,114 34,122 29,945 26,046 (3,570) 137,657 - 137,657
External other operating income 548 2,837 2,554 4,369 43 10,351 - 10,351
Inter-segment other operating income 1 - - - - 44,273 44,273 (44,273) -
Other inter-segment expense (428) (2,246) (306) (1,943) 3 (4,920) 4,920 -
Total operating income 51,234 34,713 32,193 28,472 40,749 187,361 (39,353) 148,008
Credit loss expense (2,868) 501 2,876 (1,143) (9) (643) - (643)
Net operating income 48,366 35,214 35,069 27,329 40,740 186,718 (39,353) 147,365
Personnel expenses (13,332) (15,227) (15,616) (10,611) (5,689) (60,475) - (60,475)
Exchange rate differences 206 (37) (259) (614) (855) (1,559) - (1,559)
Depreciation of property and equipment (293) (741) (332) (288) (162) (1,816) - (1,816)
Amortisation of right-of-use assets (687) (1,126) (1,031) (1,011) (76) (3,931) - (3,931)
Other operating expenses (6,461) (6,842) (5,436) (10,588) (3,976) (33,303) - (33,303)
Tax expenses (8,584) (4,328) (9,292) (2,307) (3,883) (28,394) - (28,394)
Segment profit after tax 19,215 6,913 3,103 1,910 26,099 57,240 (39,353) 17,887
Total assets 108,395 113,791 133,894 102,917 199,363 658,360 (168,608) 489,752
Total liabilities 53,804 87,346 100,501 87,937 82,808 412,396 (12,305) 400,091
Explanation: Segment profit is net profit after tax
1 Inter-segment operating income includes intercompany dividends, management
fees and share in results of the subsidiaries.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
3. SEGMENT INFORMATION (continued)
The following table present operating income and profit information for the
Group's operating segments for the year ended 31 December 2021
As at 31 December 2021 Holding and Non- Adjustments and
West Africa East Africa South Asia South East Asia operating entities Total segments eliminations Consolidated
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
External interest and similar income 61,472 32,742 62,092 33,452 9 189,767 - 189,767
Inter-segment interest income - - - - 2,846 2,846 (2,846) -
External interest expense (3,891) (5,603) (22,453) (6,049) (4,443) (42,439) - (42,439)
Inter-segment interest expense (227) (521) (231) (389) (1,477) (2,845) 2,845 -
Net interest income 57,354 26,618 39,408 27,014 (3,065) 147,329 - 147,328
External other operating income 702 2,874 2,929 3,954 59 10,518 - 10,518
Inter-segment other operating income(1) - - - - 29,577 29,577 (29,577) -
Other inter-segment expense 220 (1,663) (206) (2,173) (3,373) (7,195) 7,195 -
Total operating income 58,276 27,829 42,131 28,795 23,198 180,229 (22,382) 157,846
Credit loss expense (1,655) (2,327) (27,622) (5,891) (14) (37,509) - (37,509)
Net operating income 56,621 25,502 14,509 22,904 23,184 142,720 (22,382) 120,337
Personnel expenses (13,630) (11,999) (14,810) (11,172) (5,202) (56,813) - (56,813)
Exchange rate differences (142) 151 (331) (562) (648) (1,532) - (1,532)
Depreciation of property and equipment (327) (458) (638) (346) (620) (2,389) 404 (1,985)
Amortisation of right-of-use assets (808) (1,033) (1,307) (1,167) (83) (4,398) - (4,398)
Other operating expenses (6,131) (5,558) (5,652) (9,623) (2,940) (29,904) - (29,904)
Tax expenses (10,564) (1,974) (4,164) (373) (2,272) (19,347) - (19,347)
Segment profit 25,019 4,631 (12,393) (339) 11,419 28,337 (21,979) 6,358
Total assets 134,719 83,602 198,393 105,872 396,864 919,450 (356,896) 562,554
Total liabilities 73,497 63,629 160,887 89,045 149,502 536,560 (77,449) 459,111
Explanation: Segment profit is net profit after tax
1 Inter-segment operating income includes intercompany dividends, management
fees and share in results of the subsidiaries.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
4. INTEREST AND SIMILAR INCOME
The interest and similar income consists of interest income on microfinance
loans to customers, and interest income on bank balances and fixed-term
deposits.
Notes 2022 2021
USD'000 USD'000
(Restated)
Interest income calculated using EIR 4.1. 173,856 184,630
Other interest and similar income 4.2. 4,123 5,137
177,979 189,767
2022 2021
USD'000 USD'000
(Restated)(1)
4.1. Interest income calculated using EIR
Interest income on loans and advances to customers 161,176 175,732
Loan processing fees 12,680 8,898
173,856 184,630
Interest income decreased from last year in USD terms mostly due to
devaluation of local currency against USD in most of the operating
subsidiaries. Loan processing fee increased mainly in Tanzania where an
additional transaction fee equivalent to 1% of disbursement is introduced in
2022.
2022 2021
USD'000 USD'000
(Restated)
4.2. Other interest and similar income
Interest income on short-term deposits 3,916 4,579
Other interest income 207 558
4,123 5,137
5. INTEREST AND SIMILAR EXPENSE
Included in interest and similar expense are accruals for interest payments to
customers and other charges from banks.
Notes 2022 2021
USD'000 USD'000
Interest expense on loans (31,565) (33,508)
Interest expense on security deposits and others (3,788) (4,631)
Interest expense on lease liability (299) (301)
Commitment and processing fees (274) (266)
Amortisation of forward points of forward contracts and currency basis spread 37. (4,396) (3,733)
of swap contracts
(40,322) (42,439)
6. OTHER OPERATING INCOME
2022 2021
USD'000 USD'000
Members' admission fees 1,875 1,881
Document fees 928 856
Proceeds from sale of pass-books 141 159
Income from death and multipurpose risk funds 3,743 3,867
Service fees income from off-book BC model (ASA India) 2,045 2,503
Distribution fee MBA Philippines 890 846
Other 729 406
10,351 10,518
Other includes a number of small items that are smaller than USD 150K on an
individual basis.
1 Refer to note 2.1.2
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
7. EXPECTED CREDIT LOSS EXPENSE
Notes 2022 2021
USD'000 USD'000
ECL on loans and advances to customers 13.2. (4,847) (28,227)
Impairment on bank and intercompany 13 (109)
ECL on interest receivable 368 (6,441)
Other expected credit loss expense (1,294) (3,000)
Recovery of previously written off loans 5,117 268
(643) (37,509)
The Group made large ECL provision in 2021 on account of increased credit risk
of the loan portfolio caused by the adverse impact of Covid on the businesses
of clients. The situation has improved significantly in 2022 as operating
performance in most the markets is back to pre-covid level. The key
assumptions applied for the expected credit loss provision and related expense
are explained in note 2.5.1.
Other expected credit loss includes loss allowance provided against off-book
portfolio in India and loan and interest exemptions for settlement of customer
loans in case of death or disability.
The Group was able to collect a significant amount of previously written off
loans, mainly in India and the Philippines.
8. PERSONNEL EXPENSES
Personnel expenses include total base salary expenses and employee benefit
plans:
Notes 2022 2021
USD'000 USD'000
Personnel expenses (55,253) (51,287)
Defined contribution plans (4,221) (3,951)
Defined benefit plans 8.2. (1,001) (1,575)
(60,475) (56,813)
Notes 2022 2021
USD'000 USD'000
8.1. Retirement benefit liability
Retirement benefit liability as at beginning of period 5,391 5,446
Payments made during the period (572) (592)
Charge for the period 8.2. 1,001 1,575
Actuarial gains and losses on defined benefit liabilities (OCI) (470) (698)
Foreign exchange differences (757) (340)
Retirement benefit liability as at end of the period 4,593 5,391
ASA India, ASA Pakistan, Lak Jaya, Pagasa Philippines, ASA Nigeria, ASA Kenya,
ASA Zambia, ASA Sierra Leone and AMSL are maintaining defined benefit pension
plans in the form of gratuity plans at retirement, death, incapacitation and
termination of employment for eligible employees. The funds for the plans in
ASA Pakistan, Pagasa Philippines, Lak Jaya, ASA Nigeria and AMSL are
maintained by the entity itself and no plan assets have been established
separately. The funds for the plan of ASA India are being maintained with Life
Insurance Corporation of India and the entity's obligation is determined by
actuarial valuation. There are no other post-retirement benefit plans
available to the employees of the Group.
2022 2021
USD'000 USD'000
8.2. Charge for the period
Current service cost for the period (504) (1,156)
Interest cost for the period (497) (419)
Impact from change in assumptions (see note 2.5.2) - -
(1,001) (1,575)
8.3. Sensitivity analysis
A quantitative sensitivity analysis for significant assumptions as at 31
December 2022 and 31 December 2021 is shown below.
Assumptions Discount rate Future salary increases
1% 1% 1% 1%
Sensitivity level Year increase decrease increase decrease
USD'000 USD'000 USD'000 USD'000
Impact on defined benefit obligation 2022 (180) 1,290 1,298 (197)
2021 (501) 1,384 1,379 (513)
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
9. OTHER OPERATING EXPENSES
The other operating expenses includes the following items:
Notes 2022 2021
USD'000 USD'000
Administrative expenses 9.1. (27,975) (24,758)(1)
Professional fees 9.2. (2,579) (2,707)
Audit fees 9.3. (1,527) (1,406)
International travel (646) (327)
CSR expenses (249) (337)
Other (327) (369)
(33,303) (29,904)
2022 2021
USD'000 USD'000
9.1. Administrative expenses
Office expenses (5,158) (3,557)
Transport and representation expenses (10,391) (9,405)
Gas, water and electricity (1,106) (1,079)
Telecommunications and internet expenses (3,119) (2,865)
VAT/ Output tax / Service tax (3,445) (3,414)
Bank charges (1,472) (1,747)
Insurance expenses (642) (489)
Other administrative expenses (2,642) (2,202)
(27,975) (24,758)
(1) CSR expenses have been separately disclosed.
Office and transport expenses increased compared to last year primarily due to
high inflation in most of the operating entities.
Other administrative expenses includes several small items that are smaller
than USD 150K on an individual basis.
2022 2021
USD'000 USD'000
9.2. Professional fees
Legal services fees (295) (378
Other professional fees (2,284) (2,329)
(2,579) (2,707)
Other professional fees includes fees for various consultants on tax, IT,
accounting and, actuary valuation services.
2022 2021
USD'000 USD'000
9.3. Fees payable to the Group's auditor is analysed as below:
Fees payable to the Group's auditor for the audit of the Group's annual (1,008) (940)
accounts
Fees payable to the Group's auditor for other services:
Audit of the accounts of subsidiaries (219) (269)
Audit related assurance services (295) (194)
Total audit and audit related assurance services (1,522) (1,403)
Other assurance services (5) (3)
(1,527) (1,406)
10. EXCHANGE RATE DIFFERENCES
The Group incurred certain foreign exchange losses on monetary assets
denominated in currencies other than the Group's functional currency.
2022 2021
USD'000 USD'000
Foreign currency losses (4,876) (7,530)
Foreign currency gains 3,317 5,998
(1,559) (1,532)
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
11. INCOME TAX AND WITHHOLDING TAX EXPENSE
2022 2021
USD'000 USD'000
Income tax expense
Current income tax (20,883) (18,844)
Income tax for previous period (7) 477
Changes in deferred income tax (6,284) 2,773
(27,174) (15,594)
2022 2021
USD'000 USD'000
11.1. Current tax liability
Balance as at beginning of period 6,265 2,502
Tax charge:
Current period 20,883 18,844
Previous period 7 (477)
Tax paid (16,643) (14,085)
Foreign exchange adjustment (1,639) (519)
Balance as at end of period 8,873 6,265
2022 2021
USD'000 USD'000
11.2. Deferred tax assets
Balance as at beginning of period 13,362 11,303
(Adjustment)/Addition during the period (7,436) 2,488
Foreign exchange adjustment (1,301) (429)
Balance as at end of period 4,625 13,362
Deferred tax assets are temporary differences recognised in accordance with
local tax regulations and with reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets can be
realised. In 2022, The Group derecognised deferred tax assets amounting to USD
8.0 million for India, Myanmar, Sri Lanka and ASAI NV as it was not reasonably
certain that sufficient taxable income will be available against which such
deferred tax assets can be realised.
2022 2021
USD'000 USD'000
11.3. Deferred tax liability
Balance as at beginning of period 2,296 -
(Adjustment)/Charge during the period (112) 2,296
Foreign exchange adjustment - -
Balance as at end of period 2,184 2,296
11.4. Deferred tax relates to:
2022 2021
Deferred tax relates to: Deferred tax Deferred tax Income Deferred tax Deferred tax Income
assets liabilities statement assets liabilities statement
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Allowance for ECL 1,321 - (4,759) 6,205 - 1,365
Provision for retirement liabilities 1,138 - (322) 1,505 - (95)
Provision on FX loss 51 - (21) - (97) 200
Unused tax losses - - (3,139) 3,244 - 1,803
Other temporary differences 3,177 (183) 2,407 1,682 310 254
IFRS 16 Lease - 183 8 - (213) (40)
Undistributed profit of subsidiary - 2,184 113 - 2,296 (2,296)
Modification loss 236 - (459) 812 - (715)
Other comprehensive (1,298) - (1,152) (86) - (284)
Income/Revaluation of cash flow
hedge
4,625 2,184 (7,324) 13,362 2,296 192
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
11. INCOME TAX AND WITHHOLDING TAX EXPENSE (continued)
11.5. Reconciliation of the total tax charge 2022 2021
USD'000 USD'000
Accounting result before tax 46,281 25,705
Income tax expense at nominal rate of consolidated entities (15,373) (9,565)
Over/ (under) provision for income tax previous year (7) 477
Net allowable /(non-allowable) expenses (1,114) (271)
Movement in unrecognised deferred taxes (11,285) (6,191)
Exempt income 74 185
Tax impact on elimination 531 (11)
Other permanent differences - (218)
Total income tax expense for the period (27,174) (15,594)
Weighted average nominal rate of consolidated entities 33% 37%
Consolidated effective tax rate 59% 61%
11.6. Income tax per region 2022 2021
USD'000 USD'000
Corporate income tax - West Africa (9,417) (10,564)
Corporate income tax - South Asia (9,292) (4,164)
Corporate income tax - East Africa (3,994) (1,974)
Corporate income tax - South East Asia (1,653) (344)
Corporate income tax - Holding and other non-operating entities (2,818) 1,452
Total income tax per region (27,174) (15,594)
11.7. Withholding tax expense 2022 2021
USD'000 USD'000
Withholding tax on interest income, dividend, royalties and service fees (1,332) (1,457)
Deferred tax on undistributed dividend 112 (2,296)
Total withholding tax expense (1,220) (3,753)
Interest income, dividends, royalties and service fees are subject to
withholding tax in certain jurisdictions. The applicable withholding tax rates
vary per country and per type of income.
12. CASH AT BANK AND IN HAND
2022 2021
USD'000 USD'000
Cash at bank 83,006 87,684
Cash in hand 111 267
83,117 87,951
An amount of USD 32.6 million (2021: USD 21.5 million) of cash at bank is
restricted and cannot be readily available. Out of this USD 17.1 million
(2021: USD 16.3 million) in the Philippines is restricted as per Securities
and Exchange Commission ('SEC') regulations as it relates to Loan Collateral
Build Up ('LCBU', the collection of security collateral from clients of a
lending company). LCBU is placed into a segregated account. In Tanzania USD
7.5 million (2021: 5.2 million) is restricted and maintained in a separate
account as per the Bank of Tanzania requirement for non-deposit-taking
microfinance institutions as it relates to security deposits from the clients.
In Kenya, the new 'Central bank of Kenya (AMENDMENT) ACT' restricted
non-deposit microfinance companies from taking cash collateral from clients.
ASA Kenya is repaying the collateral amount to the clients once the loan
matures. The year- end balance of USD 7.9 million is presented as restricted.
13. LOANS AND ADVANCES TO CUSTOMERS
Loans and advances to customers are net of allowance for expected credit loss.
2022 2021
Notes USD'000 USD'000
Gross loan portfolio 13.1. 344,985 393,298
Interest receivable on loans to customers 7,265 10,700
Unamortised processing fee (4,303) (3,775)
Net impact of modification loss (149) (1,187)
Gross loans 347,798 399,036
Allowance for expected credit loss 13.2. (15,900) (25,794)
Net loan portfolio 331,898 373,242
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
13. LOANS AND ADVANCES TO CUSTOMERS (continued)
13.1. Gross loan portfolio
As of 31 December 2022 is USD 345.0 million (31 December 2021: 393.3 million)
Interest receivable on loans to customers is realisable in line with the loan
repayment schedules.
ASA India operates a Business Correspondent and partnership model with IDFC
First Bank (IDFC) and Jana Small Finance Bank (JSFB). ASA India operates as an
agent, whereby ASA India selects borrowers based on the selection criteria of
the BC Partner. After approval of the selected borrowers, the BC Partners
disburse the loans through ASA India and ASA India collects the interest and
repayments from the borrowers on behalf of the BC Partners. In exchange for
these services, ASA India receives service fees and processing fees.
The loans to borrowers of IDFC and JSFB and related funding are not recognised
on the balance sheet since the loan agreements are made between the partners
and the borrowers. In case of IDFC, ASA India has a limited liability for the
non-performing loans under this agreement. The service fees received are
reported under 'Other operating income' in note 6.
Under the agreements with the BC Partners, ASA India is liable for payment of
non-performing loans, which is regarded as a financial guarantee. This
liability for BC partners is reported under 'Provisions' in note 28. This
liability is based on the Group's ECL policy as explained in note 2.5.1 taking
into account any limits in the liability towards the BC Partners, because it
is the best estimate for the expected outflow of cash at reporting date. The
related expense is reported under credit loss expenses in note 7.
ASA India provided security deposits to the BC partners as collateral for the
financial guarantees provided. These security deposits are reported under 'Due
from banks' in note 14. Other receivables and payables related to the BC model
are reported under 'Other assets' and 'Other liabilities'. More information is
available in note 2.5.
ASA India has entered into Direct Assignment ('DA') agreement with State Bank
of India ('SBI') Under the agreement the entity transferred a pool of its
loans to customers amounting to USD 16.5 million to the SBI against a purchase
consideration of USD 14 million which is 85% of the loan portfolio. 15% is
retained by ASA India as the Minimum Retention Rate ('MRR') as per the
guidance of RBI. ASA India will continue to collect the instalments from all
the borrowers and transfer the amount to the SBI where the SBI will retain
collections from 85% of the clients and adjust that with the purchase
consideration (borrowings) and repay collections from 15% of the customers to
ASA India. The 85% of the pool is hence not recognised in the books of ASA
India as the company transferred all significant risks and rewards of such
loans to the SBI.
The outstanding loans to borrowers under the BC model and DA model which are
not recognised on the balance sheet at 31 December 2022 amounted to USD 21.4
million and USD 1.2 million respectively (2021: USD 35.6 million and USD 1.8
million).
13.2. Allowance for expected credit loss Notes 2022 2021
USD'000 USD'000
Balance as at beginning of the period (25,794) (25,242)
ECL on loans and advances 7. (4,847) (28,227)
ECL on interest receivable 368 (6,441)
Write-off of loans and interest 10,828 32,770
Exchange rate differences 3,545 1,346
Balance at end of the period (15,900) (25,794)
The key assumptions applied for the expected credit loss provision are
explained in note 2.5.1.
Write-offs significantly decreased as most of the loans affected on account of
the Covid pandemic were written off in 2021.
Management expects the write-offs to further reduce in future years.
13.3. The breakdown of the allowance for expected credit loss is as
follows:
2022 2021
USD'000 USD'000
ECL on loans and advances (15,197) (24,098)
ECL on interest receivable (703) (1,696)
(15,900) (25,794)
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
13. LOANS AND ADVANCES TO CUSTOMERS (continued)
13.4. The following tables explain the movement of gross OLP and
Interest receivable and related provisions in stages
Stage 1 Stage 2 Stage 3 Total
USD'000 USD'000 USD'000 USD'000
Gross OLP Interest receivable Total ECL Gross OLP Interest receivable Total ECL Gross OLP Interest receivable Total ECL Gross OLP Interest receivable Total ECL
At 1 January 2022 361,956 7,540 369,496 (7,039) 17,181 3,090 20,271 (7,124) 14,161 70 14,231 (11,631) 393,298 10,700 403,998 (25,794)
New assets originated 951,003 - 951,003 - - - - - - - - - 951,003 - 951,003 -
Interest revenue - 119,101 119,101 - - 34,585 34,585 - - 7,490 7,490 - - 161,176 161,176 -
Assets realised (902,323) (118,290) (1,020,613) - (9,131) (35,596) (44,727) - (14,054) (10,433) (24,487) - (925,508) (164,319) (1,089,827) -
ECL (charges)/releases - - 5,202 - - 2,550 - - - (12,231) - - - (4,479)
Transfers: - - - - - - - - - -
Stage 1 to Stage 2 (3,975) (1,082) (5,057) 97 3,975 1,082 5,057 (97) - - - - - - - -
Stage 2 to Stage 1 402 (1,764) (1,362) (98) (402) - (402) 132 - 1,764 1,764 (34) - - - -
Stage 1 to Stage 3 (23,221) 232 (22,989) 326 - (232) (232) 112 23,221 - 23,221 (438) - - - -
Stage 2 to Stage 3 - - - - (7,098) (2,166) (9,264) 3,373 7,098 2,166 9,264 (3,373) - - - -
Stage 3 to Stage 1 1 2 3 (3) - - - - (1) (2) (3) 3 - - - -
Stage 3 to Stage 2 - - - - 1 - 1 (1) (1) - (1) 1 - - - -
Write off - - - - - - - - (10,535) (293) (10,828) 10,828 (10,535) (293) (10,828) 10,828
Fx impact (59,489) - (59,489) 280 (701) - (701) 196 (3,083) - (3,083) 3,069 (63,273) - (63,273) 3,545
At 31 December 2022 324,354 5,739 330,093 (1,235) 3,825 763 4,588 (859) 16,806 762 17,568 (13,806) 344,985 7,264 352,249 (15,900)
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Stage 1 Stage 2 Stage 3 Total
USD'000 USD'000 USD'000 USD'000
Gross OLP Interest receivable Total ECL Gross OLP Interest receivable Total ECL Gross OLP Interest receivable Total ECL Gross OLP Interest receivable Total ECL
At 1 January 2021 319,122 10,128 329,250 (1,961) 52,202 3,377 55,579 (8,613) 25,281 1,183 26,464 (14,668) 396,605 14,688 411,293 (25,242)
New assets originated 944,097 - 944,097 - - - - - - - - - 944,097 - 944,097 -
Interest revenue - 151,521 151,521 - - 15,436 15,436 - - 8,775 8,775 - - 175,732 175,732 -
Assets realised (832,248) (148,617) (980,865) - (39,701) (15,768) (55,469) - (22,788) (9,519) (32,307) - (894,737) (173,904) (1,068,641) -
ECL (charges)/releases - - - (5,694) - - - 2 - - - (28,976) - - - (34,668)
Transfers: - - - - - - - - - - - - - - - -
Stage 1 to Stage 2 (12,975) (2,028) (15,003) 89 12,975 2,028 15,003 (89) - - - - - - - -
Stage 2 to Stage 1 (32,714) (3,518) (36,232) 216 - - - - 32,714 3,518 36,232 (216) - - - -
Stage 1 to Stage 3 431 51 482 (68) (431) (51) (482) 68 - - - - - - - -
Stage 2 to Stage 3 - - - - (6,447) (1,949) (8,396) 1,225 6,447 1,949 8,396 (1,225) - - - -
Stage 3 to Stage 1 11 3 14 (6) - - - - (11) (3) (14) 6 - - - -
Stage 3 to Stage 2 - - - - 52 17 69 (31) (52) (17) (69) 31 - - - -
Write off - - - - - - - - (26,954) (5,816) (32,770) 32,770 (26,954) (5,816) (32,770) 32,770
Fx impact (23,768) - (23,768) 385 (1,469) - (1,469) 314 (476) - (476) 647 (25,713) - (25,713) 1,346
At 31 December 2021 361,956 7,540 369,496 (7,039) 17,181 3,090 20,271 (7,124) 14,161 70 14,231 (11,631) 393,298 10,700 403,998 (25,794)
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
14. DUE FROM BANKS
Notes 2022 2021
USD'000 USD'000
Due from banks 18,208 44,794
Escrow bank account at Citibank 14.1. 20,692 20,465
38,900 65,259
14.1. Escrow bank account at Citibank
In certain countries in which the Group operates, Non-Resident Capital Gains
Tax ('NRCGT') regimes have been enacted in recent years which may give rise to
an NRCGT liability if there is a change of control ('COC') of more than 50% of
the underlying ownership of a subsidiary of the Company resident in that
country as measured over a rolling three-year period. In each case, the
liability is payable by the local subsidiary. A COC of certain of the Group's
subsidiaries resulting from the offering to certain institutional and
professional investors in view of the admission of the Group to the London
Stock Exchange in 2018 (the 'Global Offer'), or thereafter, may trigger NRCGT
liabilities in certain jurisdictions for the affected subsidiaries. In
connection with the potential NRCGT liability, CMI, being the selling
shareholder at the time of the listing of the Group on 13 July 2018, agreed
upon admission to place USD 20 million (the 'Escrow Amount') of its net
proceeds from the sale of shares in the Global Offer in an escrow account for
the sole benefit of the Company (the 'Escrow Account'). The Escrow Amount may
be applied to fund NRCTG liabilities in accordance with the escrow deed dated
29 June 2018 between, inter alia, CMI and the Company. The Escrow Account is
established in the name of the Company and is therefore presented as part of
'Due from banks'. The beneficial ownership of these funds, including any
interest accrued thereon and less any expenses, rests with CMI because the
Company will need to return all remaining funds to CMI in accordance with the
terms of the escrow deed. Therefore, the same amount is presented as a
liability to CMI under 'Other liabilities'.
15. EQUITY INVESTMENTS AT FVOCI
2022 2021
USD'000 USD'000
MFX Solutions, LLC
Balance at the beginning of the period 237 238
Gain/(loss) on revaluation through OCI 7 (1)
Balance at the end of the period 244 237
The Group purchased 153,315 shares of MFX Solutions, LLC USA on 7 April 2017.
This represents 1% of the total number of issued shares of 15,331,330. The
purchase price per share was USD 1.3045. These unlisted equity investments
were irrevocably designated at initial recognition as held at FVOCI. Their
fair value has been classified as level 2
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
16. PROPERTY AND EQUIPMENT
Property and equipment consists of land and buildings, office furniture and
equipment. Depreciation policies are described in detail in the accounting
policies. The movements are as follows.
2022 2022 2022 2022 2022 2021 2021 2021 2021 2021
Furniture and Office Furniture and Office
Vehicles equipment Buildings Total Vehicles equipment Buildings Total
fixtures fixtures
including IT including IT
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Cost at the beginning of the period 1,683 320 9,483 1,229 12,715 1,999 400 8,621 1,306 12,326
Accumulated depreciation at the beginning of the period (1,166) (252) (7,055) (157) (8,630) (1,366) (298) (5,908) (137) (7,709)
Carrying value at the beginning of the period 517 68 2,428 1,072 4,085 633 102 2,713 1,169 4,617
Additions during the period at cost 219 210 1,146 - 1,575 168 6 1,539 - 1,713
Foreign currency adjustment (277) (100) (1,375) (102) (1,854) (107) (21) (467) (77) (672)
Disposal during the period (60) (25) (248) - (333) (377) (65) (210) - (652)
Depreciation during the period (242) (66) (1,485) (23) (1,816) (254) (39) (1,667) (25) (1,985)
Adjustment of depreciation for disposals 77 40 371 - 488 370 61 186 (4) 613
Foreign currency differences 211 60 1,084 13 1,368 84 24 334 9 451
Carrying value at the end of the period 445 187 1,921 960 3,513 517 68 2,428 1,072 4,085
Cost at the end of the period 1,565 405 9,006 1,127 12,103 1,683 320 9,483 1,229 12,715
Accumulated depreciation at the end of the period (1,120) (218) (7,085) (167) (8,590) (1,166) (252) (7,055) (157) (8,630)
Carrying value at the end of the period 445 187 1,921 960 3,513 517 68 2,428 1,072 4,085
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
17. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
2022 2021
USD'000 USD'000
Right-of-use assets at the beginning of the period 5,031 5,195
Additions during the period 3,815 4,265
Depreciation during the period (3,931) (4,398)
Exchange rate differences (326) (31)
Right-of-use assets at the end of the period 4,589 5,031
2022 2021
USD'000 USD'000
Lease liabilities at the beginning of the period 3,459 3,629
Interest expense of lease liabilities 299 301
Additions on lease liabilities during the period 3,815 4,265
Payment of lease liabilities (4,353) (4,680)
Exchange rate differences (129) (56)
Lease liabilities at the end of the period 3,091 3,459
The Group recognises leased office premises under Right of Use Assets ('ROU').
Between January and December 2022, the Group entered into 1,058 new contracts
and renewal contracts. This excludes the new/renewal contracts of Ghana,
Nigeria and Tanzania as they have fully prepaid contracts and are not impacted
by IBRs. A sensitivity analysis of a 50% increase in the IBR rates for those
contracts gives a total impact in the net asset of negative USD 22K and in net
profit of negative USD 22K, which is insignificant. Based on the above,
management concluded no impairment had occurred on the ROU as of 31 December
2022.
18. OTHER ASSETS
The other assets comprises of the following: 2022 2021
Notes USD'000 USD'000
Receivables from related parties 18.1. 249 70
Prepayments 2,874 2,157
Employee advances 2,296 1,856
Advance income tax 2,147 2,150
Security deposit 249 236
Receivables under off-book BC model (ASA India) 18.2. 569 762
Insurance claim receivable 109 260
Interest receivable on due from banks 337 457
Receivable against DA - 15
Other receivables 18.3. 1,140 976
9,970 8,939
Prepayments and employee advances are in line with security against housing
contracts, funding agreements and employee receivables.
Advance income tax will be set off against current tax payable after
completion of the tax assessment.
18.1. Receivables from related parties 2022 2021
USD'000 USD'000
Sequoia BV 145 53
MBA Philippines 86 5
Catalyst Investment Management services 18 12
249 70
The receivables from related parties are short term in nature and do not
accrue interest.
18.2. Receivables under off-book BC model is presented net of
impairment. Gross amount receivable under off book BC model is USD 2.2
million. (2021: 2.1 million)
18.3. Other receivables includes various advances in relation to
employee's insurance, receivable from VAT and service tax authorities etc.
Individually none of the advances are over USD 150K.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
19. DERIVATIVES 2022 2021
USD'000 USD'000
Forward contracts 7,131 3,143
Swap agreements 724 823
Derivative assets total 7,855 3,966
Forward contracts (456) (602)
Derivative liabilities total (456) (602)
Total derivatives at fair value 7,399 3,364
19.1. The Group is holding the following foreign exchange forward
contracts:
As of 31 December 2022 Maturity
<30 days 1-3 months 3-12 months >12 months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Pakistan
Notional amount (in USD) 2,900 7,952 29,391 - 40,243
Average forward rate (USD/PKR) 204 206 222 - 217
Carrying amount (in USD) 439 1,428 5,133 - 7,000
Myanmar
Notional amount (in USD) - 1,000 - - 1,000
Average forward rate (USD/KYAT) - 1,914 - - 1,941
Carrying amount (in USD) - 131 - - 131
Tanzania
Notional amount (in USD) - - - - -
Average forward rate (USD/TZS) - - - - -
Carrying amount (in USD) - - - - -
Sierra Leone
Notional amount (in USD) - - - - -
Average forward rate (USD/SLL) - - - - -
Carrying amount (in USD) - - - - -
Zambia
Notional amount (in USD) - 250 500 - 750
Average forward rate (USD/ZMW) - 33 31 - 32
Carrying amount (in USD) - (190) (266) - (456)
As of 31 December 2021 Maturity
<30 days 1-3 months 3-12 months >12 months Total
USD'000 USD'000 USD'000 USD'000 USD'000
Pakistan
Notional amount (in USD) 2,900 11,999 29,213 - 44,112
Average forward rate (USD/PKR) 171 168 180 - 173
Carrying amount (in USD) 104 838 2,201 - 3,143
Myanmar
Notional amount (in USD) 1,000 2,000 - - 3,000
Average forward rate (USD/KYAT) 1,947 1,942 - - 1,945
Carrying amount (in USD) (77) 56 - - (21)
Tanzania
Notional amount (in USD) 500 800 - - 1,300
Average forward rate (USD/TZS) 2,346 2,541 - - 2,444
Carrying amount (in USD) (5) (76) - - (81)
Sierra Leone
Notional amount (in USD) - - 2,000 - 2,000
Average forward rate (USD/SLL) - - 13,396 - 13,396
Carrying amount (in USD) - - (117) - (117)
Zambia
Notional amount (in USD) - - - 750 750
Average forward rate (USD/ZMW) - - - 32 32
Carrying amount (in USD) - - - (383) (383)
Please see note 36 and 37 for more information.
19.2. The Group also holds the below swap contracts:
2022 2021
USD'000 USD'000
Cross-currency interest rate swap Notional value 1,750 16,104
Carrying value 724 823
At 31 December 2022, the Group had three cross-currency interest rate swap
agreements in place.
A swap agreement with a notional amount of USD 1 million was entered on 7 July
2021 by ASA Sierra Leone whereby ASA Sierra Leone pays a fixed rate of
interest of 19.09% in SLL and receives interest at a fixed rate of 8% in USD
notional amount. The swap is being used to hedge the exposure to changes in
the cash flow of its 8% USD loan.
A swap agreement with a notional amount of USD 0.5 million was entered on 2
February 2022 by ASA Sierra Leone whereby the entity pays a fixed rate of
interest of 19.22% in SLL and receives interest at a fixed rate of 8% in USD
notional amount. The swap is being used to hedge the exposure to changes in
the cash flow of its 8% USD loan.
A swap agreement with a notional amount of USD 250K was entered on 3 February
2022 by ASA Zambia whereby ASA pays a fixed rate of interest of 24.8% in ZMW
and receives interest at a fixed rate of 8% in USD notional amount. The swap
is being used to hedge the exposure to changes in the cash flow of its 8% USD
loan.
The applied valuation techniques include forward pricing and swap models,
using present value calculations by estimating future cash flows using future
exchange rates and discounting them with the appropriate interest rate curves.
These derivative contracts are classified as Level 2 financial instruments.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
20. INTANGIBLE ASSETS AND GOODWILL
Goodwill Intangible assets Total
USD'000 USD'000 USD'000
Cost
At 1 January 2021 33 - 33
Additions - 452 452
Fx movement (3) - (3)
At 31 December 2021 30 452 482
Additions - 4,592 4,592
Impaired (17) - (17)
Fx movement (13) (3) (16)
At 31 December 2022 - 5,041 5,041
Goodwill arose from the acquisition of Lak Jaya by CMI Lanka in 2008.
For the year ended 31 December 2022, an impairment assessment on the remaining
goodwill was conducted and based on such the goodwill has been fully impaired.
Intangible assets includes initial investments on a new project to develop a
digital financial services (DFS) platform. A pilot is expected to take place
in Ghana in 2024 and, if successful and upon approval from regulator, this
will be followed by the launch of a range of digital financial and other
services to support the growth of small businesses. The platform will add a
digital channel to the existing branch model. The DFS will be offered to its
clients through a smartphone app, where clients will be able to apply online
for loans and other financial services like a current account and a savings or
deposit account. As part of the DFS, the Group is also developing a Supplier
Marketplace app ("SMP") where clients can purchase goods for their small
businesses. SMP will be a separate app but is part of the DFS model to retain
and attract loan and savings clients and generate payment transactions that
generate commissions.
For the introduction of current accounts and savings and deposits accounts and
other digital services to our clients, the Group decided to add a Core Banking
System ('CBS') to its IT infrastructure. The Group has procured a 10-year
license to the Temenos Financial Inclusion suite, which is an off-the-shelf
CBS system.
ASA India is procuring an additional core banking software "Craft Silicon" to
align the business recording with the Indian market. The procurement is
following a Software as a service (SAAS) model and the current agreement is
for three years. The software is expected to be implemented from Q2, 2023.
Total spent during the year against DFS and CBS are as follows:
2022 2021
USD'000 USD'000
Particulars Capitalised Charged to P&L Total Capitalised Charged to P&L Total
Development fees 1,032 - 1,032 83 - 83
License fees 1,906 588 2,494 - - -
Implementation cost 948 - 948 - -
Consultancy 180 - 180 213 - 213
Salary and travelling 526 218 744 156 - 156
4,592 806 5,398 452 - 452
21. ISSUED CAPITAL
2022 2021
USD'000 USD'000
ASA International Group plc 100 million shares of GBP 0.01 each 1,310 1,310
1,310 1,310
No movements in issued capital during 2022 and 2021.
22. RETAINED EARNINGS
Total retained earnings are calculated as follows: 2022 2021
USD'000 USD'000
Balance at the beginning of the period 155,405 147,291
Dividend declared - -
Disposal of ASA Consultancy Limited and ASA Cambodia Holdings - (673)
Result for the period 17,892 8,787
Balance at the end of the period 173,297 155,405
Profit for the period
Attributable to equity holders of the parent 17,892 8,787
Non-controlling interest (5) (2,429)
17,887 6,358
Part of retained earnings relates to NGOs which are consolidated in these
financial statements. The retained earnings of these NGOs cannot be
distributed to their respective members. Retained earnings relating to NGOs
amounted to USD 2.0 million at 31 December 2022 (2021: USD 1.7 million).
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
22. RETAINED EARNINGS (continued)
ASA S&L, ASA India, ASHA Nigeria and ASAI NV have statutory requirements
to add a percentage of the net profits to a legal reserve. Therefore, part of
retained earnings cannot be distributed to shareholders. Retained earnings
relating to these legal reserves amounted to USD 23.4 million in December 2022
(2021: USD 18.1 million).
No dividend was declared in 2022.
23. OTHER RESERVES Notes
2022 2021
Total other reserves are calculated as follows: USD'000 USD'000
Balance at the beginning of the period 995 (718)
Actuarial gains and losses on defined benefit liabilities 8.1. 470 698
Movement in hedge accounting reserve 3,004 1,381
Gain/ (loss) on revaluation of MFX investment 15. 7 (1)
Others net of tax (1,152) (365)
Balance at the end of the period 3,324 995
24. FOREIGN CURRENCY TRANSLATION RESERVE
The translation of the Company's subsidiaries and overseas branches from local
currency into the Group's presentation currency (USD) results in the following
currency translation differences:
2022 2021
USD'000 USD'000
Balance at the beginning of the period (54,132) (43,091)
Translation of assets and liabilities of subsidiaries to USD (33,991) (11,596)
Disposal of ASA Consultancy Limited and ASA Cambodia Holdings - 555
Balance at the end of the period (88,123) (54,132)
The entity wise breakdown of transaction adjustment is as follows:
2022 2021
USD'000 USD'000
Ghana (17,395) (1,936)
Pakistan (9,400) (3,779)
Nigeria (2,540) (1,484)
Sri Lanka (1,450) (334)
Philippines (978) (680)
Myanmar (766) (2,911)
Sierra Leone (685) (164)
Kenya (525) (206)
Others (252) (102)
(33,991) (11,596)
25. DEBT ISSUED AND OTHER BORROWED FUNDS
Notes 2022 2021
USD'000 USD'000
Debt issued and other borrowed funds by operating subsidiaries 25.1. 201,590 244,788
Symbiotics-managed funds (ASAIH/ASAI NV) 25.2. 14,000 29,000
Oikocredit (ASAIH) 25.3. 7,500 7,500
OPIC (ASAIH) - 5,000
BIO (ASAIH) 25.4. 10,000 10,000
OeEB (ASAIH) 25.5. 9,375 13,125
Citi (ASAI NV) 25.6. 5,000 5,000
Ninety one (ASAI NV) 25.7. 10,000 -
Interest payable on third-party loans 3,836 4,261
261,301 318,674
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
25. DEBT ISSUED AND OTHER BORROWED FUNDS (continued)
25.1. Break down of borrowings by operating subsidiaries are shown below:
2022 2021
USD'000 USD'000
ASA India 32,841 94,911
PPFC 44,512 45,042
ASA Pakistan 50,705 47,844
ASA Tanzania 39,596 23,815
ASA Kenya 13,246 8,580
ASA S&L - 2,929
ASA Myanmar 11,438 11,977
ASA Uganda 4,742 4,380
Lak Jaya 1,332 2,767
ASA Nigeria - -
Others 3,178 2,543
201,590 244,788
Most of the loan agreements are subject to covenant clauses, whereby the
subsidiary is required to meet certain key financial ratios. Some subsidiaries
did not fulfil some of the ratios as required in contracts. Out of total loans
of USD 257.0 million (2021: USD 314.0 million), USD 82.5 million (2021: USD
131.0 million) had breached loan covenants as at year end. As of 31 December,
the balance for credit lines with breached covenants and which does not have
waivers amounts to USD 65.0 million (2021: USD 111.0 million) out of which
waivers have been subsequently received for USD 64.0 million (2021: USD 36.7
million). Due to these breaches of covenant clauses, the lenders are
contractually entitled to request for immediate repayment of the outstanding
loan amounts. The outstanding balance is presented as on demand as at 31
December 2022. The lenders have not requested any early repayment of loans as
of the date when these financial statements were approved by the Board of
Directors. The management is in the process of renegotiating to obtain waivers
for the remaining balance.
25.2. Symbiotics-managed funds (ASAIH/ASAI NV)
ASAIH entered into loan agreements with three investment funds managed by
Symbiotics SA in November 2018 for a total amount of USD 5.0 million (the
'Symbiotics loans'). ASAIH took a new loan of USD 5.0 million on July 2019 at
6.25%. These loans are repaid during the year.
In October 2019, ASAI NV entered into a loan agreement with one investment
fund managed by Symbiotics SA. In November 2021 ASAI NV received USD 10.0
million at six months Libor plus 4.75% per annum. In April 2022 ASAI NV
received an additional USD 4.0 million at six months Libor plus 4.75% per
annum. All the loans will be repaid within three years of disbursement. ASAIH
is a guarantor for these loans
25.3. Oikocredit (ASAIH)
On 12 July 2018, ASAIH entered into a new agreement with Oikocredit for a
credit line of USD 7.5 million which has been fully drawn as of December 2019.
The term of this credit line is five years. Interest on the loans is six-month
LIBOR or 3.5% whichever is lower plus a margin of 3% for the direct loan and
2.5% for the credit line.
25.4. BIO (ASAIH)
ASAIH entered into a USD 10.0 million subordinated loan agreement with Belgian
Investment Company for Developing Countries SA/NV ('BIO') in December 2019.
The term of this loan is seven years. Interest amounts to LIBOR+ 5.9% per
annum.
25.5. OeEB (ASAIH)
ASAIH entered into a USD 15.0 million loan agreement with Oesterreichische
Entwicklungsbank Ag ('OeEB') in March 2020 of which USD 10.0 million is drawn
up to June 2020. The loan is repayable in eight equal instalments and the term
of this loan is five years. Interest amounts to LIBOR + 3.5% per annum. ASAI
NV is also a co-borrower of the loan.
25.6. Loan from Citi (ASAI NV)
ASAI NV entered into a USD 10.0 million loan agreement with CITIBANK, N.A.,
JERSEY BRANCH ('Citi') on October 2020. The term of this loan is 30 months.
Interest amounts to LIBOR +4.55% per annum. ASAIH is also a co-borrower of the
loan. USD 5.0 million has been drawn until December 22.
25.7. Ninety one (ASAI NV)
ASAI NV entered into a USD 10.0 million loan agreement with NINETY ONE SA
PROPRIETARY LIMITED on October 2022. The term of this loan is four years.
Interest amounts to three months term SOFR + 5.5% per annum. ASAIH is also a
co-borrower of the loan.
26. DUE TO CUSTOMERS
Clients of the Group's subsidiaries contribute to a 'security deposit fund'.
These deposits can be withdrawn partly by clients but not in the full amount
unless the client has fully repaid the outstanding loan balance.
2022 2021
USD'000 USD'000
Clients' security deposits 68,894 73,518
Clients' voluntary savings 15,217 14,294
Interest payable on deposits and savings 44 -
84,155 87,812
Clients can deposit voluntary savings where the subsidiary has a licence to do
so. The rate of interest on client security deposits and client voluntary
savings amount to 8% in Ghana and 7% in Nigeria. In ASA Myanmar the interest
rate on voluntary savings is 10% and for compulsory savings 14%. ASA Rwanda
provides 6% interest on voluntary savings.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
27. OTHER LIABILITIES Notes
Other liabilities are as follows: 2022 2021
USD'000 USD'000
Security deposits 2,530 2,630
Other deposits 426 418
Liability for death and multipurpose risk funds 146 211
Accrued expenses 1,533 921
Accrued audit fees 1,224 1,192
Taxes payable, other than corporate income tax 2,598 2,830
Amounts due to employees 1,356 1,111
Amounts due to related parties 27.1. 41 102
Liability to CMI regarding Escrow Account at Citibank 14.1. 20,692 20,465
Liabilities under off-book BC model (ASA India) 255 364
Liabilities under off-book DA model (ASA India) 38 133
Industrial training fund 189 191
Other sundry liabilities 27.2. 3,372 2,369
34,400 32,937
Security deposits mainly relate to deposits taken from employees as a form of
security. Other deposits relate to various smaller deposits in different
countries.
27.1. Amounts due to related parties 2022 2021
USD'000 USD'000
Sequoia BV 10 24
MBA Philippines 31 78
41 102
27.2. Other sundry liabilities include various smaller accruals and
provisions for various entities in the Company. Individually none of the
payables are over USD 150K.
2022 2021
USD'000 USD'000
28. PROVISIONS
Provision for financial guarantees under off-book BC model (ASA India) 1,038 1,675
1,038 1,675
Provision for financial guarantees include expected credit loss provision
against the off-book BC portfolio in India. The maximum credit loss under
financial guarantee is 5% of OLP. For details on the Group's ECL policy see
note-2.5.1. As at 31 December 2022, stage 3 loans under this portfolio amount
to USD 6.5 million (2021: USD 9.8 million).
29. ADDITIONAL CASH FLOW INFORMATION
2022 2021
USD'000 USD'000
(Restated)
29.1. Changes in operating assets
Loans and advances to customers (33,400) (89,112)
Movement in due from banks 18,952 5,500
Movement in right-of-use assets (3,815) (4,265)
Other assets excluding income tax advances (1,034) 3,268
(19,297) (84,609)
2022 2021
USD'000 USD'000
29.2. Changes in operating liabilities
Due to customers 15,332 13,024
Other liabilities (2,895) (2,925)
Retirement benefit (572) (592)
Movement in lease liability 3,815 4,265
Movement in provisions (637) (768)
15,043 13,004
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
29. ADDITIONAL CASH FLOW INFORMATION (continued)
2022 2021
USD'000 USD'000
29.3. Non-cash items
Depreciation on:
- Property and equipment 1,833 1,985
- Right-of-use assets 3,931 4,398
Interest expense on lease liability 299 301
Credit loss expense 643 37,509
Write-off of portfolio 10,828 32,965
Fair value movement of forward contracts (1,031) (3,422)
Charge against defined benefit plan 1,001 1,575
Foreign exchange result 1,559 1,532
19,063 76,843
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT
30.1 General
Risk is inherent in the Group's activities but it is managed through a process
of ongoing identification, measurement and monitoring, subject to certain risk
limits and other controls as described in the paragraphs below. This process
of risk management is critical to the Group's continuing profitability and
each individual within the Group is accountable for the risk exposures
relating to his or her responsibilities. The Group is, amongst others, exposed
to business risk, operational risk, IT risk, finance risk, and legal &
compliance risk.
The independent risk control process does not include business risks such as
changes in demand, technology and industry. These changes are monitored
through the Group's strategic planning process.
30.2 Risk management structure
The Company's risk management principles allow it to balance its risk and
reward effectively by aligning its risk appetite with its business strategy.
The Company's risk management framework is based on its three lines of defence
model, which has been adopted at both the Company level and at each of the
Company's microfinance institutions. The Company's objectives in using the
three lines of defence model include: identifying risk areas and minimising
loss; protecting its clients by minimising financial risk; protecting the
interests of its shareholders and investors; preserving its branches, data,
records and physical assets; maintaining its business and operational
structure; enforcing a standard operational procedure for managing risk; and
providing guidelines in line with internationally accepted risk management
principles. The first line of defence is the team, person or department that
is responsible for executing particular tasks/activities, as well as for
mitigating any related risks. The second line of defence is comprised of
management of the respective departments and personnel that oversee the first
line of defence and provide expertise in risk management to help develop
strategies, policies and procedures to mitigate risks and implement risk
control measures. The third line of defence is the Internal Audit department,
which evaluates and improves the effectiveness of the risk management, control
and governance processes through independent verification of risk control
measures. The Internal Audit department is based in the country head office of
each of the Company's microfinance institutions and audits each branch based
on their risk ratings but at least once a year.
30.3 Key Risk management areas and mitigation
The Group's key risk management areas are business risk, operational risk, IT
risk, finance risk, and legal and compliance risk.
Risk category Definition Risks Description
Business risk Business risk is an organisation's exposure to factors that will lower its Growth risk Risks and challenges associated with the Group's operational expansion.
profit or lead it to fail. Anything that threatens a company's ability to
achieve its financial and operational goals is considered a business risk.
Competition risk Risk that the Group might face for not responding to the competitive
environment or failing to meet customer needs.
Reputation risk Risk to earnings or capital arising from negative public opinion.
Climate-related risk Risk related to potential negative impact of climate change on the
Organisation.
Health & Environmental risk Risk arising from the threat of natural disasters and viral diseases.
Operational risk Operational risk refers to uncertainties a company faces when it attempts to Transaction risk Human or system errors within the Group's daily product delivery and services.
do its day-to-day business activities. It can result from breakdowns in
internal procedures, people and systems.
Human Resource risk Likelihood of negative results due to a failure within its human resource
department.
Fraud and Integrity risk Risk of incidents of fraud and misappropriation by staff or client.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued)
30.3 Key Risk management areas and mitigation (continued)
Risk category Definition Risks Description
IT risk Information technology risk is any threat to business data, critical systems Business continuity This risk refers to loss of data in case of a catastrophic event.
and business processes due to IT failure. It is the risk associated with the
use, ownership, operation, involvement, influence and adoption of IT within an
Organisation.
System vulnerability This risk refers to the vulnerability of our IT system to different type of
cyber-attacks.
Network availability Risk of inadequate internet connectivity for running real time branch
operations.
IT support Risk of delay in resolving IT related issues which may negatively impact the
operations.
System access control Risk of misuse of system access.
IT fraud risk Risk of fraud due to control gap in IT system and processes.
Data migration risk Risk of loss of data during the time of data migration.
Finance risk The Group experiences financial risks such as credit risk, liquidity risk, Credit risk Risk that the Group will incur a loss because its clients or counterparties
exchange rate/currency risk and interest rate risk which can adversely impact fail to discharge their contractual obligations.
the earnings.
Liquidity risk Risk that the Group will be unable to meet its payment obligations when they
fall due under normal and stress circumstances.
Exchange rate risk Possibility of financial loss to the Group arising from adverse movements in
foreign exchange rates.
Interest rate risk Risk arising from the possibility of change in the value of assets and
liabilities because of changes in market interest rates.
Legal & Compliance risk Financial and other losses the Group may suffer as a result of regulatory Local regulation Risk of non-compliance to local regulation.
changes or failure to comply with applicable laws and regulation.
Change of policy Risk of negative impact arising from change in policies by regulatory
authorities.
Product transparency Risk of negative public opinion for not ensuring product transparency.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued)
30.3 Key Risk management areas and mitigation (continued)
Business risk
The Group manages its business risks by adopting various mitigation strategies
at Group level as well as at subsidiary level. While setting growth targets
the Group remains prudent, as uncontrolled growth may lead to increased
overdue loans. Sites for new branches are selected after thorough assessment
as per the operational manual.
When it comes to competition, the Group continuously monitors client
satisfaction and focuses on tailoring its products according to client needs.
In order to safeguard its reputational risk, the Group ensures that staff meet
the highest standards in terms of client protection principles and business
transparency.
Climate change risk is thoroughly assessed by the Group. The Group has started
the process of collecting its carbon emission data to determine the major
emission sectors so a carbon management plan can be put in place to reduce
emissions. During the year, the Group's operations were adversely impacted by
the Covid pandemic; however, this was mitigated by proactively amending
operational procedures in order to adapt to changing conditions.
Operational risk
Transaction risk is mitigated by strictly following operational procedures and
ensuring thorough monitoring by supervisors. Human resource risk is mitigated
by attracting, retaining and developing staff by providing competitive
remuneration structures and long-term career opportunities, and by investing
in training and development of all staff. The Company evaluates its human
resource risk by observing the availability of skilled staff within its
compensation bands as well as compliance and regulatory issues that impact
staff, including visas or employment permits needed for its expatriate staff.
IT risk
The rise of the knowledge economy and the digital revolution has led to
organisations becoming increasingly dependent on information, information
processing and especially IT. The Group's IT business continuity is
safeguarded by maintaining secure data centres with disaster recovery sites,
either on premises or in the cloud. System vulnerability is regularly assessed
and virus guards, firewalls and other security measures are kept up to date.
Adequate internet connectivity is provided at all branches to ensure smooth
running of operations; proper internet connectivity is provided at head office
level. IT issues are addressed through the JIRA issue management software
based on priority. A strong password policy is in place to prevent
unauthorised system access and staff are made aware that password sharing is
prohibited.
Finance risk
Regarding credit risk, the Group adheres strictly to the operating procedures
of the ASA Model, which includes setting limits on the amount of risk it is
willing to accept for each individual borrower, taking a security deposit
where it is customary and allowed under the current licence, preventing
over-borrowing and preventing excessive geographic concentration. The Group
continuously monitors changes in the portfolio and will take immediate action
when changes occur.
As for liquidity risk, the Group is diversified across thirteen countries,
remains well funded and continues to have good access to a wide range of
funding sources, both at local and holding level. The Company maintains solid
relationships with its debt providers who continue to show strong interest in
funding its operations both locally and at the holding level.
The Group manages its currency risk through natural hedging, i.e. by matching
the relevant microfinance subsidiary's local currency assets with local
currency liabilities, and by obtaining funding denominated in local currency.
For USD funding to the subsidiaries the Company will continue to ensure that
close to 100% of its currency exposure is hedged.
The Group's strategy in evaluating and managing its interest rate risk is to
conduct a cost of funds analysis and to monitor interest rates in those
countries where there is a limit on the amount of interest it may charge.
Legal and Compliance risk
New changes are proactively discussed with regulators; new requirements (such
as minimum capital requirements) are timely implemented;
and the Company's ASA Model and digital strategy are proactively discussed
with different authorities in order to be well understood when
new regulations are being proposed and drafted. The Group closely monitors the
political developments in countries like India and
Myanmar.
.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued)
30.3 Key Risk management areas and mitigation (continued)
Risks are mitigated through standardised practices that are part of the ASA
Model of microfinance. These include
· Standardised loan products.
· Basic voluntary deposit services
· Effective and rigid procedures for cost-effective delivery of
microcredit and limited deposit services.
· Zero-tolerance on the late deposit of loan instalments by loan
officers.
· Group selection without joint liability.
· Loans granted exclusively for income generating activities.
· Full repayment via instalments before eligibility for new loan.
· No incentive or bonus payments for operating staff.
· Frequent client interactions through weekly collections.
· Ongoing assessment of client needs, benefits and satisfaction.
30.4 Financial risks
30.4.1 Credit risk
Credit risk is the risk that the Group will incur a loss because its
customers, clients or counterparties failed to discharge their contractual
obligations. The Group manages and controls credit risk by adhering strictly
to the operating procedures set forth in the operational manual which includes
setting limits on the amount of risk it is willing to accept for individual
counterparties and for geographical concentrations, and by monitoring
exposures in relation to such limits.
Maximum exposure to credit risk
The maximum credit exposure is equal to the carrying amounts of the financial
instruments on the Group's statement of financial position except the off-book
BC portfolio where the risk is determined as per contract with BC partners. As
mentioned above, the Group reduces its concentration risk by ensuring a widely
diverse portfolio, distributed amongst various countries and continents. At
present the Group invests in West Africa, East Africa, South Asia and South
East Asia.
Customer security deposits are cash collateral and are presented as part of
Due from customers in the statement of financial position. These security
deposits are considered as collateral for the loans to customers and therefore
reduce the credit risk on these loans.
There are no significant concentrations of credit risk through exposures to
individual customers, specific industry/sectors. However, Pakistan holds 24%
of the Group's credit exposure in 2022 (2021: 20%). Management regularly
monitors the concentration risk and manages loan distribution if required.
Maximum exposure to credit risk
2022 2021
USD'000 USD'000
Cash and cash equivalents
(excluding cash in hand) 83,006 87,684
Loans and advances to customers 331,898 373,242
Customer security deposit (68,894) (73,518)
Off-book portfolio (BC model)(1) 3,641 1,675
Due from banks 38,900 65,259
Other assets(2) 12,804 8,598
Maximum credit exposure 401,355 462,940
1 Credit risk on IDFC off-book BC model portfolio is restricted to 5% of the
outstanding portfolio
( )
2 Other assets includes net financial derivatives and excludes prepayments and
advance tax
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued)
Geographic distribution of maximum credit exposure as at 31 December 2022.
Cash and cash Loans and Customer Off-book
equivalents Due from Other
advances to security portfolio (BC Total
(excluding cash in banks assets
customers deposit model)
hand)
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
West Africa 16,712 82,586 (27,988) 3,791 1,499 - 76,600
East Africa 22,893 85,465 (20,087) 810 506 - 89,587
South Asia 11,272 99,717 (1,345) 8,606 9,163 3,641 131,054
South East Asia 29,261 64,130 (19,474) 5,000 1,069 - 79,986
Non-operating entities 2,868 - - 20,693 567 - 24,128
Maximum credit exposure 83,006 331,898 (68,894) 38,900 12,804 3,641 401,355
Geographic distribution of maximum credit exposure as at 31 December 2021.
Cash and cash Loans and Customer Off-book
equivalents Due from Other
advances to security portfolio (BC Total
(excluding cash in banks assets
customers deposit model)
hand)
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
West Africa 19,584 95,507 (34,731) 15,262 891 - 96,513
East Africa 13,167 64,188 (17,012) 2,500 341 - 63,184
South Asia 7,970 150,364 (2,464) 23,032 6,070 1,675 186,647
South East Asia 31,753 63,183 (19,311) 4,000 988 - 80,613
Non-operating entities 15,210 - - 20,465 308 - 35,983
Maximum credit exposure 87,684 373,242 (73,518) 65,259 8,598 1,675 462,940
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued) 30.4 Financial risk (continued)
30.4.1 Credit risk (continued)
The Group provides direct lending to customers through the MFIs (owned and
controlled by it). In addition, the Group accepts savings in the countries
where it has a deposit taking licence.
Credit risk from lending as at 31 December 2022
Total direct lending/IFRS 9 stages
Gross loans and
1 advances to Total lending Stage 1 Stage 2 Stage 3
Due from banks
Customer(2)
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
West Africa 3,791 85,885 89,676 82,270 1,061 2,554
East Africa 810 88,795 89,605 87,964 269 562
South Asia 8,607 109,591 118,198 96,234 2,943 10,414
South East Asia 5,000 67,978 72,978 63,625 315 4,038
Non-operating entities 20,692 - 20,692 - - -
Total 38,900 352,249 391,149 330,093 4,588 17,568
ECL provision - (15,900) (15,900) (1,235) (859) (13,806)
Coverage ratio 3 4.5% 4% 0.4% 18.7% 78.6%
1 Due from banks are neither past due nor credit impaired
2 Includes interest receivable
(3)Coverage ratio is calculated as the total ECL provision divided by the
underlying assets' gross carrying amount
Credit risk from lending as at 31 December 2021
Total direct lending/IFRS 9 stages
Gross loans and
Due from banks(1) advances to Total lending Stage 1 Stage 2 Stage 3
Customer(2)
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
West Africa 15,262 98,303 113,565 94,929 1,508 1,866
East Africa 2,500 67,755 70,255 66,036 222 1,497
South Asia 23,032 170,072 193,104 145,339 14,756 9,977
South East Asia 4,000 67,868 71,868 63,192 3,785 891
Non-operating entities 20,465 - 20,465 - - -
Total 65,259 403,998 469,257 369,496 20,271 14,231
ECL provision - (25,794) (25,794) (7,039) (7,124) (11,631)
Coverage Ratio (3) 6.4% 5.5% 1.9% 35.1% 81.7%
1 Due from banks are neither past due nor credit impaired
( 2 Includes interest receivable)
(3) Coverage ratio is calculated as the total ECL provision divided by the
underlying assets' gross carrying amount
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued)
30.4 Financial risk (continued)
30.4.2 Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its payment
obligations when they fall due under normal and stress circumstances. Most
subsidiaries of the Group are now able to attract third-party funding and
various local currency and USD loans are in place.
Liquidity management is evaluated at the microfinance institution level and on
a consolidated Group basis. Each of the Group's microfinance institutions are
required to meet the financial obligations of their internal and external
stakeholders. Failure to manage liquidity risks may cause the Group to lose
business, miss opportunities for growth, or experience legal or reputational
consequences. To mitigate its liquidity management risk, the Group has
established liquidity management policies, published in its operation manual,
finance manual and its treasury manual.
The Group is confident it will be able to meet the payment obligations under
the aforementioned loans for various reasons, including but not limited to:
· The main class of assets are loans to customers. Due to the nature of
the microfinance business the Group is engaged in these loans to customers
have short-term maturities, hence the Group is in a position to generate a
constant stream of cash inflows.
· The Group is in the position to accumulate sufficient funds to cover
its obligations, although this may entail limitations on new loan
disbursements.
· The Group has been able to receive most of the waivers against
covenant breaches from the lenders and no indication received from lenders
from any early repayment.
As at 31 December 2022 the Group had an unrestricted cash balance (including
short term deposits) of USD 55.0 million (2021: USD 91.0 million). The Group
is able to fund its operations and budgeted growth of its loan portfolio from
new loan facilities supplied by third parties, security collateral and/or
savings provided by its clients, and internally generated cash flows.
The table below shows undiscounted cash flow analysis of liabilities according
to when they are expected to be recovered or to be settled.
Liabilities Sub-total Sub-total No fixed
FY 2022 On demand <3 months 3-12 months 1-12 months 1-5 years Over 5 years >12 months maturity Total
in USD'000
Debt issued and other borrowed funds 68,077 (1) 33,918 69,177 171,172 90,129 - 90,129 - 261,301
Due to customers 15,098 32,704 36,344 84,146 9 - 9 - 84,155
Lease liability 142 150 690 982 2,089 20 2,109 - 3,091
Derivative liabilities - 190 266 456 - - - - 456
Other liabilities 395 4,518 5,410 10,323 662 132 794 23,283 34,400
Provisions - 285 682 967 71 - 71 - 1,038
83,712 71,765 112,569 268,046 92,960 152 93,112 23,283 384,441
(1)This includes loans amounting to USD 65.0 million on which waivers have not
received at the balance sheet date. Subsequently waivers for loans amounting
to USD 64.0 million has been received.
Liabilities Sub-total Sub-total No fixed
FY 2021 On demand <3 months 3-12 months 1-12 months 1-5 years Over 5 years >12 months maturity Total
in USD'000
Debt issued and other borrowed funds 112,475 (2) 51,434 60,132 224,041 94,633 - 94,633 - 318,674
Due to customers 19,850 28,857 38,534 87,241 571 - 571 - 87,812
Lease liability - 17 433 450 2,924 85 3,009 - 3,459
Derivative Liabilities - 102 117 219 383 - 383 - 602
Other liabilities 835 4,710 3,328 8,873 596 - 596 23,468 32,937
Provisions - 384 752 1,136 539 - 539 - 1,675
133,160 85,504 103,296 321,960 99,646 85 99,731 23,468 445,159
(2)This includes loans amounting to USD 111.0 million on which waivers have
not received at the balance sheet date. Subsequently waivers for loans
amounting to USD 36.7 million has been received. The 2021 table has been
restated to reflect the above.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued)
30.4 Financial Risk (continued)
30.4.2 Liquidity risk (continued)
The table below shows undiscounted cash flow analysis of assets according to
when they are expected to be recovered or to settled.
Assets Sub-total Sub-total No fixed
FY2022 On demand <3 months 3-12 months 1-12 months 1-5 years Over 5 years >12 months maturity Total
in USD'000
Cash at bank and in hand 48,666 1,459 32,992 83,117 - - - - 83,117
Loans and advances to customers 11,070 192,736 127,495 331,301 597 - 597 - 331,898
Due from banks - 3,896 12,717 16,613 1,595 - 1,595 20,692 38,900
Equity investments at FVOCI - - - - - - - 244 244
Derivative assets - 1,871 5,260 7,131 724 - 724 - 7,855
Other assets - 4,489 5,132 9,621 349 - 349 - 9,970
59,736 204,451 183,596 447,783 3,265 - 3,265 20,936 471,984
Assets Sub-total Sub-total No fixed
FY2021 On demand <3 months 3-12 months 1-12 months 1-5 years Over 5 years >12 months maturity Total
in USD'000
Cash at bank and in hand 62,440 3,854 21,657 87,951 - - - - 87,951
Loans and advances to customers 14,233 60,149 280,289 354,671 18,571 - 18,571 - 373,242
Due from banks - 27,066 7,228 34,294 10,499 - 10,499 20,466 65,259
Equity investments at FVOCI - - - - - - - 237 237
Derivative assets - 955 2,358 3,313 653 - 653 - 3,966
Other assets - 1,613 4,843 6,456 2,483 - 2,483 - 8,939
76,673 93,637 316,375 486,685 32,206 - 32,206 20,703 539,594
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued) 30.4 Financial Risk (continued)
4.2 Liquidity risk (continued)
Changes in liabilities arising from financing activities:
Foreign
1 January Non-cash exchange 31 December
FY 2022 2022 Cash flows movement movement 2022
USD'000 USD'000 USD'000 USD'000 USD'000
Debt issued and borrowed funds 318,674 (25,370) - (32,003) 261,301
Lease liabilities 3,459 (4,353) 4,114 (129) 3,091
Total liabilities from financing activities 322,133 (29,723) 4,114 (32,132) 264,392
Foreign
1 January Non-cash exchange 31 December
FY 2021 2021 Cash flows movement movement 2021
USD'000 USD'000 USD'000 USD'000 USD'000
Debt issued and borrowed funds 342,186 (7,734) - (15,778) 318,674
Lease liabilities 3,629 (4,680) 4,566 (56) 3,459
Total liabilities from financing activities 345,815 (12,414) 4,566 (15,834) 322,133
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued) 30.4 Financial Risk (continued)
30.4.3 Foreign exchange rate risk
Currency risk is the possibility of financial loss to the Group arising from
adverse movements in foreign exchange rates. Currency risk is a substantial
risk for the Group, as most loans to MFIs and borrowers are in local currency
in countries where currency depreciation against the USD is often considered
less predictable. At present the Group manages currency risk mainly through
natural hedging, i.e. by matching the MFI's local currency assets consisting
of the MFI's loan portfolio with local currency liabilities. The Group's risk
policy allows the Group treasurer the possibility of hedging with instruments
such as swaps and forward contracts if and when appropriate. In order to
mitigate the foreign exchange risk on foreign currency loans, ASA India, ASA
Pakistan, ASA Myanmar, ASA Sierra Leone and ASA Tanzania have entered into
hedging agreements. The Group applies hedge accounting to the foreign currency
loans and related hedge contracts. Reference is made to note 37.
While the Group faces significant translation exposure on its equity
investments in local MFIs (as the functional currency of the Group is USD),
the policy is not to hedge equity investments since the currency translation
gain and loss on the latter do not affect the net profit of the Group.
In summary, the Group takes a number of measures to manage its foreign
currency exposure:
· Investments are only made in countries that show a reasonable level
of macroeconomic stability. A detailed macroeconomic and socio-political
assessment is carried out before the Group decides to invest in a certain
country.
· The Group endeavours to procure its MFIs to secure local currency
loans (instead of foreign currency loans) to the extent possible or deemed
commercially advantageous.
Simulation: Foreign currency translation reserve
FX translation FX translation FX translation FX translation
reserve after Movement reserve after Movement
reserve actual reserve actual
-10% rate -10% rate
2022 2022 2022 2021 2021 2021
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
West Africa (46,638) (52,595) (5,957) (26,017) (31,553) (5,536)
East Africa (2,551) (5,038) (2,487) (1,485) (3,317) (1,832)
South Asia (33,324) (37,028) (3,703) (22,811) (26,288) (3,477)
South East Asia (5,197) (6,683) (1,486) (3,453) (4,977) (1,524)
Non-operating entities (413) (432) (19) (366) (391) (25)
Total (88,123) (101,776) (13,652) (54,132) (66,526) (12,394)
Analysis of the actual exchange rate fluctuations against the USD for the
period 2022 shows different trends for all the operating currencies. The
annual exchange rate fluctuations are between 81% and 1%, but most moved
within 3% to 15%. For the simulation of foreign currency effects the Company
has therefore assumed an additional 10% movement year on year in these
currencies as compared to USD.
The following overview shows the actual foreign currency exchange results by
country for 2022 as well as the simulation of the impact of a 10% downward
movement of the FX rates on the foreign exchange results.
As at 31 December 2022 a 10% downward movement of FX rates against the USD has
a positive impact on the foreign currency exchange result of USD 3K (2021: USD
-633K). The lower impact on the result of the Company results from the
decrease in short term intercompany USD loans, which cannot be hedged.
Simulation: Foreign exchange profit and loss
Foreign exchange Foreign exchange Foreign Foreign
exchange exchange profit
profit and loss profit and loss after Movement Movement
profit and loss and loss after
actual -10% rate
actual -10% rate
2022 2022 2022 2021 2021 2021
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
West Africa 350 182 (168) (142) 8 150
East Africa (37) 216 254 151 225 73
South Asia (259) (266) (6) (331) (342) (11)
South East Asia (614) (475) 139 (562) (436) 126
Non-operating entities (998) (1,212) (216) (648) (1,618) (969)
Total (1,558) (1,555) 3 (1,532) (2,163) (631)
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
RISK MANAGEMENT (continued) 30.4 Financial risk (continued)
30.4.4 Interest rate risk
Interest rate risk is the risk that profitability is affected by fluctuations
in interest rates. The greatest interest rate risk the Group experiences
occurs when the cost of funds increases faster than the Group can or is
willing to adjust its lending rates. The Group's strategy in evaluating and
managing its interest rate risk is to consider any risk at the pre-investment
stage, to conduct a cost of funds analysis and to consider interest rates in
particular, where there is a limit on the amount of interest it may charge,
such as in Myanmar and Tanzania.
The credit methodology of the MFIs determines that loans to microfinance
clients have short-term maturities of less than one year and at fixed interest
rates. Third-party loans to MFIs, sourced from both local and international
financial institutions, mostly have relative short terms between one and three
years. 37% (2021: 30%) of the consolidated debt has variable interest rates.
Depending on the extent of the exposure and hedging possibilities with regard
to availability of hedging instruments and related pricing, the Group might
actively hedge its positions to safeguard the Group's profits and to reduce
the volatility of interest rates by using forwards, futures and interest rate
swaps. The very short tenor of the loans provided to microfinance dampens the
effect of interest rate fluctuations. The following table demonstrates the
sensitivity to a reasonably possible change in interest rates on the loans and
borrowings affected. With all other variables held constant, the Group's
profit before tax is affected through the impact on floating rate borrowings,
as follows:
2022 2021
Increase in Decrease in Effect on profit Effect on profit before
basis points basis points before tax tax
USD'000 USD'000 USD'000 USD'000
USD +100 -100 806 (806) 622 (798)
PKR +100 -100 77 (77) 72 (72)
INR +100 -100 10 (10) 62 (62)
30.5 Managing interest rate benchmark reform and associated risks
Following the decision by global regulators to phase out IBORs and replace
them with alternative reference rates, the Group has established a project to
manage the transition for any of its contracts that could be affected. The
project is led by the Group Treasury. The project provides periodic updates to
senior management and the Board. The Group has already completed the
transition of a portion of its IBOR exposure to Risk free rates ('RFRs') and
is confident it will complete the remaining transitions to RFRs for those
interest rate benchmarks, including exposures to USD LIBOR of 3 and 12 months,
that will cease to be available after 30 June 2023. As of 31 December 2022,
the Group has loans amounting to USD 50.0 million which are based on USD
six-month LIBOR and will mature after 2023. For other benchmark interest rates
such as EURIBOR that have been reformed, financial instruments referencing
those rates will not need to transition provided the reformed rates continue
to meet regulators' stringent requirements to qualify as RFRs.
Derivatives
The Group holds forward and cross currency interest rate swaps for risk
management purposes which are designated in cash flow hedging relationships.
The interest rate swaps have floating legs that are indexed to either Euribor
or LIBOR. The Group's derivative instruments are governed by contracts based
on International Swaps and Derivatives Association ('ISDA') master agreements.
On 23 October 2020, the ISDA published its IBOR fall back protocol and
supplements, which are designed to address transition for those derivative
contracts still outstanding on the permanent cessation of an IBOR. The ISDA
fall back spread adjustments became fixed on 5 March 2021. The Group currently
plans to adhere to the protocol and to monitor whether its counterparties will
also adhere. The Group's current hedge contracts will mature before the
publication cessation date.
Hedge accounting
The Group has evaluated the extent to which its cash flow hedging
relationships are subject to uncertainty driven by IBOR reform as at 31
December 2022. The Group's hedged items and hedging instruments continue to be
indexed to Euribor or LIBOR. These benchmark rates are quoted each day and the
IBOR cash flows are exchanged with counterparties as usual. The calculation
methodology of Euribor changed during 2019. In July 2019, the Belgian
Financial Services and Markets Authority granted authorisation with respect to
Euribor under the European Union Benchmarks Regulation. This allows market
participants to continue to use Euribor for both existing and new contracts
and the Group expects that Euribor will continue to exist as a benchmark rate
for the foreseeable future.
In terms of the Group's LIBOR cash flow hedging relationships, all the
contracts will mature before the anticipated cessation date of June 2023. In
terms of non-hedged loans, the Group has loans linked to USD LIBOR which will
mature after the cessation date. The Group is in the process of amending
contracts of those affected loans.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
30. RISK MANAGEMENT (continued) 30.6 Climate related risks
The Group and its customers may face climate-related risks in the future.
These risks include the threat of financial loss and adverse non-financial
impacts that encompass the political, economic and environmental responses to
climate change. The key sources of climate risks have been identified as
physical and transition risks. Physical risks arise as the result of acute
weather events such as hurricanes, floods and droughts, and longer-term shifts
in climate patterns, such as sustained higher temperatures and rising sea
levels.
Transition risks may arise from the adjustments to a net-zero economy, e.g.,
changes to laws and regulations, litigation due to failure to mitigate or
adapt, and products and services due to changes in consumer behaviour and
investor demand. These risks are receiving increasing regulatory, political
and societal scrutiny, both within the operating country and internationally.
While certain physical risks may be predictable, there are significant
uncertainties as to the extent and timing of their manifestation. For
transition risks, uncertainties remain as to the impacts of the impending
regulatory and policy shifts, changes in consumer demands and supply chains.
The Group is making progress on embedding climate risk into its Risk
framework, including the development of appropriate risk appetite metrics and
the creation of a Sustainability Committee, which is responsible for
developing Group-wide policies, processes and controls to incorporate climate
risks into the management of principal risk categories, appointing a Climate
Officer for each operating subsidiary and setting up SMART targets to reduce
GHG emissions.
The impact of climate related risks has been assessed on a number of reported
amounts and the accompanying disclosures. Refer to page 49 for details in
relation to climate-related risks.
30.7 Legal and compliance risk
Legal and compliance risks in the countries that the subsidiaries or MFIs are
active in will be mitigated through continuous monitoring of the regulatory
and legal environment, through inter alia tier-one law firms and the local
corporate secretaries and compliance officers in certain countries. In most
countries the relevant microfinance subsidiary also maintains direct
relationships with the regulator, including central banks. In addition, the
Group believes it is, through its local and international network, well
positioned to identify any relevant changes in the law that will have a
material impact on any of the businesses it invests in. A number of
investments in the MFIs are made by ASAI NV in the Netherlands. The
Netherlands has entered into an extensive network of Bilateral Investment
Treaties that offer compensation in case any of such investments are
nationalised or expropriated by a country in which an investment is made.
Currently the investments in the Philippines, Sri Lanka, Uganda, Kenya and
Ghana are owned by ASAI NV, an indirectly owned but wholly controlled
subsidiary of the Group.
Product transparency is also key to the Group's strategy in mitigating its
legal and compliance risk. Because the education and knowledge levels of the
Group's target clients are low, the Group aims to be transparent in its
products and prices. The Group established a Legal and Compliance department
headed by the General Counsel. The General Counsel assigns and supervises all
legal matters involving the Group. The General Counsel, Deputy General Counsel
and Group Compliance Manager establish and maintain an operationally
independent Compliance function at the corporate level led by the Group.
Whilst the General Counsel bears overall responsibility for the Compliance
function, the General Counsel has delegated day-to-day responsibility for
managing the Compliance function to the Group Compliance Manager who performs
the compliance duties independently. The Group Compliance Manager is
responsible for overseeing and implementing the Group compliance framework,
including the Group compliance policy (the Compliance Policy). The Compliance
Policy sets out the principles and standards for compliance and management of
compliance risks in the Group. The Group seeks to reduce compliance risks
taking into account the nature, scale and complexity of the business and
ensures the policies are in alignment with the Group strategy and its core
values.
30.8 Strategic risk
Strategic risk is the current or prospective risk to earnings and capital
arising from changes in the business environment and from adverse business
decisions, improper implementation of decisions or lack of responsiveness to
changes in the environment. The Group evaluates its strategic risk by
analysing its cost reduction and growth, its liquidity management and its
competition and reputational risk.
Competition and reputational risk are frequent in the microfinance industry.
The Group defines reputational risk as the risk to earnings or capital arising
from negative public opinion. The Group believes that reputational risk may
impact its ability to sell products and services or may limit its access to
capital or cash funds. To mitigate any competition or reputational risk, the
Group evaluates the introduction of highly subsidised competitors, movements
in average borrowing rates, and information sharing with different agencies.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
31. COMMITMENTS
The Group agreed certain commitments to BC Partners under the BC model in ASA
India. Reference is made to note 13. As per the current model ASA India holds
5% risk on the portfolio managed on behalf of IDFC. As of 31 December 2022,
the risk of the Group on such BC portfolio stands at USD 0.9 million (2021:
USD 1.7 million).
The Group also entered into a contract with CSHARK Spółka z ograniczoną
odpowiedzialnością (Ltd.) on 14 October 2021, an IT company based in Poland,
to develop an android-based digital financial module for its clients. The
initial cost of the application is estimated at USD 1.3 million.
As at 31 December 2022 USD 1.0 million of the initial purchase price has
already been paid. There are no other contingent liabilities at the balance
sheet date except for the pending litigation claims disclosed in note 34.
RELATED PARTY DISCLOSURES 32.1 Key management personnel
The Dhaka office is managed by a team of experienced microfinance experts who
have previously held senior positions in ASA NGO Bangladesh, and have many
years of expertise in managing and supporting microfinance institutions across
Asia and Africa. In addition to supervising the performance of the Group's
local microfinance institutions, executive management in Dhaka is primarily
responsible for finance and accounts (including the Chief Financial Officer),
risk management, audit, IT, human resource management, and corporate
secretarial functions for the Group. All key management personnel stationed in
Dhaka are on the payroll of ASAI NV.
The Amsterdam office comprises key management personnel who provides support
on treasury, investor relations, legal, specialised accounting support and the
management of business development projects. They are on the payroll of ASAI
NV.
The experienced CEO's that are deployed in the countries are part of key
management personnel. They are paid by their respective entities.
The Group CEO, Executive Director, Corporate Development (based in Amsterdam)
and Executive Director Operations (based in Dhaka) are members of the Board
and are paid by ASA International Group plc.
Remuneration of Directors
In 2022, the Directors of the Group received total compensation of USD 1.12
million (2021: USD 1.05 million).
Total remuneration to key management personnel of the Group
2022 2021
USD'000 USD'000
Short-term employee benefits 2,273 2,110
Post-employment pension and medical benefits - -
Termination benefits - -
Share-based payment transaction - -
2,273 2,110
Total remuneration takes the form of short-term employee benefits for ASAI. In
2022, total remuneration paid to key management personnel of the Group
amounted to USD 2.3 million (2021: USD 2.1 million). No post-employment
pension and medical benefits are accruing to Directors under defined benefit
schemes. The aggregate of emoluments of the highest paid Director was USD 425K
(2021: USD 425K).
Long Term Incentive Plan
The Group has granted options ('Options') of over about 2,500,000 ordinary
shares of £0.01 each in the Group Company under its LTIP to certain Executive
Directors and Persons Discharging Managerial Responsibilities ('PDMRs') on 28
October 2022 The Company's LTIP is designed to incentivise and retain
Directors and senior staff, along with aligning them with shareholders'
interest to create long term value.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
32. RELATED PARTY DISCLOSURES (continued) 32.1 Key management personnel
(continued)
Long Term Incentive Plan (continued)
The Options will normally vest, subject to continued employment, on the
following schedule:
20% each year between the first and fifth anniversaries of the Grant Date; or
for Executive Directors only, 60% on the third anniversary and 20% on each of
the fourth and fifth anniversaries of the Grant Date.
To the extent they vest, the Options are exercisable at a price of 93 pence
per ordinary share, being the average share price for the three business days
before the Grant Date. The Group will issue certificates to the participants
to the plan. The Grant date will be achieved once participants accept the
offer.
None of the participants have accepted the offer as at the balance sheet date
and hence no expenses have been booked in 2022.
32.2 Subsidiaries
Country of Incorporation 2022 ownership 2021 ownership
ASAIH subsidiaries:
ASA India India 90.02% 90.02%
Pagasa Consultancy India 99.99% 99.99%
Pinoy India 99.99% 99.99%
Pagasa ng Masang Pinoy Microfinance, Inc The Philippines 1 N/A
N/A
PT PAGASA Consultancy Indonesia 99.00% 99.00%
A1 Nigeria Nigeria 100% 100%
ASHA MFB Nigeria 99.99% 99.99%
ASIEA Nigeria N/A N/A
ASA Pakistan Pakistan 99.99% 99.99%
ASA Tanzania Tanzania 99.99% 99.99%
ASA Zanzibar Tanzania 99.99% N/A
ASA Myanmar Myanmar 99.99% 99.99%
ASA Zambia Zambia 99.99% 99.99%
ASA Rwanda Rwanda 99.99% 99.99%
ASA Sierra Leone Sierra Leone 99.99% 99.99%
ASAI NV subsidiaries: The Netherlands N/A N/A
PPFC The Philippines 100% 100%
ASA S&L Ghana 100% 100%
CMI Lanka Sri Lanka 100% 100%
Lak Jaya Sri Lanka 97.14% 97.14%
ASA Lanka Sri Lanka 100% 100%
ASA Kenya Kenya 2 100%
100%
ASA Uganda Uganda 99.99% 99.99%
AMSL Bangladesh 95% 95%
ASAI I&M The Netherlands 100% 100%
ASA Dwaso Ghana 100% N/A
1 ASAI officials/representatives control the governing body and the Board.
2 ASAIH holds 0.5% of the shares.
32.3 Relationship agreement
Relationship agreement with the Controlling Shareholder Group
The Group, its founders and Catalyst Continuity (jointly the "Controlling
Shareholders") have entered into a relationship agreement (the 'Relationship
Agreement'), the principal purpose of which is to ensure that the Group will
be able, at all times, to carry out its business independently of the members
of the Controlling Shareholder Group and their respective associates. The
Relationship Agreement contains undertakings from each of the members of the
Controlling Shareholder Group that (i) transactions and relationships with it
and its associates will be conducted at arm's length and on normal commercial
terms, (ii) neither it nor any of its associates will take any action that
would have the effect of preventing the Company from complying with its
obligations under the Listing Rules, and (iii) neither it nor any of its
associates will propose or procure the proposal of a shareholder resolution
which is intended or appears to be intended to circumvent the proper
application of the Listing Rules. The Relationship Agreement also sets forth
the conditions for appointment of Non-Executive Directors by Controlling
Shareholders. For so long as the Group has a controlling shareholder, the UK
Listing Rules require the election of any independent Director to be approved
by majority votes of both (i) the shareholders as a whole and (ii) the
shareholders excluding any controlling shareholder.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
32. RELATED PARTY DISCLOSURES (continued)
32.4 Other related parties
A list of related parties with which the Group has transactions is presented
below. The transactions in 2022 and 2021 and the balances per the end of the
year 2022 and 2021 with related parties can be observed in notes below.
Related party transactions take place at arm's length conditions.
Name of related party Relationship
CMI Major shareholder (30.4%)
Sequoia Service provider to the Company
ASA NGO Bangladesh Service provider to the Company
MBA Philippines Business partner
IDFC Minority shareholder in ASA India
ASAICH and CMIIH Subsidiaries of CMI
CMIMC Holding company of founders CMI
CMIC Investment manager of CMI
CMIH Subsidiary of CMI
ASA Social Services Service provider to the Parent
CIMS BV Service provider to the Parent
Income from
related Expenses to Amount owed by Amount owed to
parties related parties related parties related parties
USD'000 USD'000 USD'000 USD'000
CMI 31 December 2022 - - - 20,692
31 December 2021 - - - 20,465
Sequoia 31 December 2022 117 47 145 10
31 December 2021 185 129 53 24
MBA Philippines 31 December 2022 890 - 86 31
31 December 2021 846 - 5 78
IDFC 31 December 2022 2,045 - 2,224 285
31 December 2021 2,503 - 2,350 630
CIMS BV 31 December 2022 - - 18 -
31 December 2021 - - 12 -
32.5 Reporting dates of subsidiaries
All of the Group's subsidiaries have reporting dates of 31 December, with the
exception of ASA India, Pinoy, Pagasa Consultancy and ASA Myanmar (where the
market standard reporting date is 31 March). These entities have provided
financial statements for consolidation purposes for the year ended 31
December.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
32. RELATED PARTY DISCLOSURES (continued)
32.6 Non-controlling interest
The Company reports non-controlling interest ('NCI') in its subsidiaries ASA
India and Lak Jaya. The NCI in ASA India, having its principal place of
business in India, amounts to 9.98%. ASA India did not pay any dividend in
2021 and 2022. The NCI in Lak Jaya, having its principal place of business in
Sri Lanka, amounts to 2.86%. Lak Jaya did not declare any dividend in 2021 and
2022.
The summarised financial information of Lak Jaya and ASA India as at 31
December 2022 is as follows:
31 December 2022 31 December 2021
Lak Jaya ASA India Lak Jaya ASA India
USD'000 USD'000 USD'000 USD'000
Current assets 5,317 27,079 9,834 92,360
Non-current assets 156 394 465 6,381
Current liabilities 4,074 34,965 6,862 98,913
Non-current liabilities 247 1,206 421 2,386
Net Operating Income 1,626 7,186 2,367 - 11,715
Net loss (564) (6,445) (392) (22,289)
Non-controlling interest 33 (868) 86 (221)
The following table summarises financial information for each subsidiary that
has material non-controlling interest to the Group. The voting rights are
similar to NCI's shareholding percentage in India but in the case of Lak Jaya
the Group holds 91.3% of the voting rights. The amounts disclosed for each
subsidiary are before inter-company eliminations:
31 December 2022 31 December 2021
Lak Jaya ASA India Lak Jaya ASA India
Total no. of shares 10,704,955 195,950 10,704,955 195,950
Shares held by ASAI Group 10,398,950 176,369 10,398,950 176,369
Shares held by NCI 306,005 19,581 306,005 19,581
NCI % 2.86% 9.98% 2.86% 9.98%
31 December 2022 31 December 2021
Lak Jaya ASA India Lak Jaya ASA India
USD'000 USD'000 USD'000 USD'000
Summarised statement of financial position:
Net assets 1,152 (8,698) 3,016 (2,556)
Net assets attributable to NCI 33 (868) 86 (221)
Summarised statement of profit or loss and other comprehensive income:
Net operating income 1,626 7,186 2,367 (11,715)
Net loss after tax (564) (6,445) (392) (22,289)
Loss allocated to NCI (16) (643) (11) (2,429)
Dividend paid to NCI - - - -
Summarised statement of cash flow:
Cash flow from operation activities 2,219 41,755 378 24,145
Cash flow from investing activities (10) (36) (15) (45)
Cash flow from financing activities (1,364) (47,522) 252 (38,141)
Net cash flow attributable to NCI 24 (579) 18 (1,401)
Reference to note 32.3, the remaining shares in Pagasa Consultancy, Pinoy, A1
Nigeria, ASHA Nigeria, ASA Pakistan, ASA Tanzania, PPFC, ASA Uganda, CMI Lanka
and AMSL are held either by employees nominated by the Group or by ASAI
I&M, CMI or CMII. Hence those are not treated as non-controlling shares.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
33. SUBSEQUENT EVENTS DISCLOSURE
In Myanmar, the Group signed a restructuring agreement with two international
lenders in 28 March 2023 pursuant to restrictions imposed by Central Bank of
Myanmar vide circular dated 13 July 2022 suspending interest and principal
repayments on foreign loans and directing companies to restructure the same
read with circular issued on 16 August 2022 permitting certain transactions
with approval from the Foreign Currency Supervision Committee.
Central Bank of Ghana approved ASA Ghana's Digital Financial Service (DFS)
application on 14 March 2023. The company expects to offer the digital
financial services from 2024.
These matters have been treated as post-balance sheet non-adjusting events.
C34. ONTINGENT LIABILITIES
ASA India
A demand was raised by income tax authorities after the disallowance of some
expenditures such as the misappropriation of funds, gratuity etc. for the
assessment years (AY) 2012-2013. The disallowance amount for AY 2011-2012 is
USD 177K and for AY 2012-2013 is USD 69K. The matters are pending before the
Commissioner of Taxes (Appeals). In addition, another demand has been raised
by the income tax authorities for USD 1.1 million for the AY 2012-13 in
December 2019 which has been challenged before the concerned assessing
officer. ASA India has also applied for a stay order of the demand.
In November 2022, the revenue authority adjusted USD 1.4 million against tax
refund for AY 13-14 to 22-23 for such demand. ASA India is preparing to file a
writ petition against such adjustment. The entity took a provision of USD 560K
against such demand.
ASA India breached its capital and qualifying assets requirements during the
year, however, remained in compliance with requirements subsequently. No
provision was created for such breach.
Lak Jaya
A demand was raised by the Department of Inland Revenue ('IRD') for 2016-2017
and 2017-2018 amounting to USD 332K and USD 412K respectively by disallowing
certain expenses. The Company has filed an appeal and submitted necessary
documentation. The matter is pending to the commissioner of IRD. The entity
took a provision of USD 36K against such demand.
ASA Pakistan
A demand was raised by Federal Board of Revenue in Pakistan for USD 390K by
disallowing certain expenses against the return of AY 2015-16. The management
team filed an appeal to the Commissioner FBR against such order and a stay
order was granted. No provision was created for such demand as management
concludes that the merit of the demand is low.
ASA Nigeria
ASA Nigeria is in breach of regulatory limit of PAR 30 ratio at the balance
sheet date. The matter was reported to Central Bank of Nigeria (CBN). No
provision was created in this regard as management concludes that any penalty
imposition by CBN in this regard is low.
35. CAPITAL MANAGEMENT
ASA International Group Plc is registered as a public limited company,
incorporated in England and Wales with the registered number 11361159 and with
its registered office situated at Highdown House, Yeoman Way, Worthing, West
Sussex BN99 3HH, United Kingdom. It had listed its shares on the premium
listing segment of the London Stock Exchange on 18 July 2018. The Group is not
subject to externally imposed capital requirements and has no restrictions on
the issue and re-purchase of ordinary shares.
Many of the Group's operating subsidiaries are regulated and subject to
minimum regulatory capital requirements. As of 31 December 2022, the Group and
its subsidiaries were in full compliance with minimum regulatory capital
requirements.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
36. FINANCIAL INSTRUMENTS
The table below shows the classification of financial instruments, as well as
the fair value of those instruments not carried at fair value.
Carrying values Fair values
31 December 31 December 31 December 31 December
2022 2021 2022 2021
USD'000 USD'000 USD'000 USD'000
ASSETS
Equity investments at FVOCI 244 237 244 237
Derivative assets 7,855 3,966 7,855 3,966
Loans and advances to customers 331,898 373,242 331,898 373,242
Due from banks 38,900 65,259 38,900 65,259
Other assets 4,840 4,357 4,840 4,357
Cash at bank and in hand 83,117 87,951 83,117 87,951
LIABILITIES AND EQUITY
Financial liabilities measured at amortised cost
Debt issued and borrowed funds 261,301 318,674 261,301 318,674
Due to customers 84,155 87,812 84,155 87,812
Derivative liabilities 456 602 456 602
Other liabilities 34,400 32,937 34,400 32,937
· The carrying amounts of Cash and cash equivalents, Due from banks,
Due to customers, Other assets and Other liabilities approximate the fair
value due to the short-term maturities of these items.
· Loans and advances to customers are carried at amortised cost net of
ECL. Furthermore, the term of the loans to the microfinance borrowers are
short (mostly 6 to 12 months). Due to these circumstances, the carrying amount
approximates fair value.
· Regarding the 'Debt issued and other borrowed funds', this amount
reflects the loans from third parties on a holding level as well as the loans
provided by third parties directly to the subsidiaries of ASA International.
The loans are held at amortised cost. The carrying amount is the best
approximation of the fair value.
37. HEDGE ACCOUNTING Forward contracts
The Group applies hedge accounting to USD and Euro loans provided to
subsidiaries reporting in foreign currencies and the related forward
contracts. The foreign currency risk exposure of the USD and Euro loans and
the potential negative impact on net result of the subsidiaries are being
mitigated by way of these forward contracts. Any positive impact is therefore
also limited. ASA International has only entered into non-deliverable forward
contracts. Management considers the hedges as cash flow hedges. The formal
designation and documentation of the hedging relationship and the entity's
risk management objective and strategy for undertaking the hedge are
documented in the individual files and memos for every forward contract.
Swaps
As at 31 December 2022, the Group had three cross-currency interest rate swap
agreements in place.
A swap agreement with a notional amount of USD 1.0 million was entered on 7
July 2021 by ASA Sierra Leone whereby ASA Sierra Leone pays a fixed rate of
interest of 19.09% in SLL and receives interest at a fixed rate of 8% in USD
notional amount. The swap is being used to hedge the exposure to changes in
the cash flow of its 8% USD loan.
A swap agreement with a notional amount of USD 0.5 million was entered on 2
February 2022 by ASA Sierra Leone whereby the entity pays a fixed rate of
interest of 19.22% in SLL and receives interest at a fixed rate of 8% in USD
notional amount. The swap is being used to hedge the exposure to changes in
the cash flow of its 8% USD loan.
A swap agreement with a notional amount of USD 250K was entered on 3 February
2022 by ASA Zambia whereby ASA pays a fixed rate of interest of 24.8% in ZMW
and receives interest at a fixed rate of 8% in USD notional amount. The swap
is being used to hedge the exposure to changes in the cash flow of its 8% USD
loan.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
37. HEDGE ACCOUNTING (continued)
The Group applies the qualitative approach for prospective testing
effectiveness because the critical terms of the hedged items and hedging
instruments are identical. The Group applies a rollover hedge strategy when no
forward instruments are available at reasonable pricing for the full term of
the hedged item. In those cases, the Group accepts a rollover risk.
Retrospective effectiveness is measured by comparing the change in the fair
value of the actual derivative designated as the hedging instrument and the
change in the fair value of a hypothetical derivative representing the hedged
item.
There is an economic relationship between the hedged item and the hedging
instrument as the terms of the forward contracts and swap match the terms of
the fixed rate loan (i.e., notional amount, maturity, payment and reset
dates). The Group has established a hedge ratio of 1:1 for the hedging
relationships as the underlying risk of the interest rate swap and forward
contracts are identical to the hedged risk component. To test the hedge
effectiveness, the Group uses the hypothetical derivative method and compares
the changes in the fair value of the hedging instrument against the changes in
fair value of the hedged item attributable to the hedged risk.
The hedge ineffectiveness can arise from:
· Different interest rate curve applied to discount the hedged item and
hedging instrument
· Differences in the timing of the cash flows of the hedged items and
the hedging instruments
The Group assessed it had no ineffectiveness during 2022 in relation to the
foreign currency hedges.
Reference is made to note 30.4.3 for the strategy for currency exchange risk.
Additional information on the hedged items and hedging instruments as per 31
December 2022 is provided below:
ASA Pakistan ASA Sierra Leone ASA Myanmar ASA Tanzania ASA India ASA Zambia Total
As at 31 December 2022
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Fair value of derivative assets 7,001 711 131 - - 12 7,855
Fair value of derivative liabilities - - - - - 456 456
Notional amount hedged foreign currency loans 40,243 1,500 1,000 - - 1,000 43,743
Period in which the cash flows are expected to occur:
cash flows in 2023 40,243 - 1,000 - - 750 41,993
cash flows in 2024 - 1,000 - - - 250 1,250
cash flows in 2025 - 500 - - - - 500
Total cash flows 40,243 1,500 1,000 - - 1,000 43,743
Expected period to enter into the determination of profit or loss:
amortisation of forward points in 2023 1,240 47 7 - - 113 1,407
amortisation of forward points in 2024 - 28 - - - 2 30
amortisation of forward points in 2025 - - - - - - -
Total amortisation of forward points 1,240 75 7 - - 115 1,437
Amounts recognised in OCI during the period:
for amortisation of forward points/currency basis spread 3,696 287 108 11 27 267 4,396
for adjustment of net interest on swap - 36 - - 837 22 895
for changes in fair value of the forward contracts/ swaps 10,175 1,184 (40) (2) (551) (174) 10,592
for recycling of FX result of foreign currency loans (10,612) (1,550) (157) (9) (504) (47) (12,879)
Total amounts recognised in OCI during the period 3,259 (43) (89) - (191) 68 3,004
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
37. HEDGE ACCOUNTING (continued)
ASA Pakistan ASA Sierra Leone ASA Myanmar ASA Tanzania ASA India ASA Zambia Total
As at 31 December 2021
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Fair value of derivative assets 3,143 170 - - 653 - 3,966
Fair value of derivative liabilities - 117 21 81 - 383 602
Notional amount hedged foreign currency loans 44,112 3,190 3,000 1,300 14,913 750 67,265
Period in which the cash flows are expected to occur: -
cash flows in 2022 44,112 2,081 2,000 1,300 14,913 - 64,406
cash flows in 2023 - 81 1,000 - - 750 1,831
cash flows in 2024 - 1,028 - - - - 1,028
Total cash flows 44,112 3,190 3,000 1,300 14,913 750 67,265
Expected period to enter into the determination of profit or loss:
amortisation of forward points in 2022 1,493 308 115 11 28 240 2,195
amortisation of forward points in 2023 - 49 8 - - 88 145
amortisation of forward points in 2024 - 17 - - - - 17
Total amortisation of forward points 1,493 374 123 11 28 328 2,357
Amounts recognised in OCI during the period:
for amortisation of forward points/currency basis spread 2,707 350 352 161 31 132 3,733
for adjustment of net interest on swap - 27 - - 1,047 - 1,074
for changes in fair value of the forward contracts/ swaps 2,502 41 662 (152) (1,131) (371) 1,551
for recycling of FX result of foreign currency loans (4,531) (322) (1,009) 7 663 215 (4,977)
Total amounts recognised in OCI during the period 678 96 5 16 610 (24) 1,381
Changes in fair value of hedging instruments
As at 31 December 2022 Effective portion: recognised Hedge ineffectiveness: recognised in income statement Total
in OCI
Cash flow hedge USD'000 USD'000 USD'000
Forward contracts 3,161 3,161
-
Cross-currency interest rate swaps (157) (157)
-
3,004 3,004
-
Changes in fair value of hedging instruments
As at 31 December 2021 Effective portion: recognised Hedge ineffectiveness: recognised in income statement Total
in OCI
Cash flow hedge USD'000 USD'000 USD'000
Forward contracts 691 691
-
Cross-currency interest rate swaps 690 690
-
1,381 1,381
-
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
38. MATURITY ANALYSIS OF ASSETS AND LIABILITIES
The table below shows an analysis of assets and liabilities according to when
they are expected to be recovered or settled. Loans and advances to customers
are based on the same expected repayment behaviour as used for estimating the
EIR. Debt issued and other borrowed funds reflect the contractual repayments
except for debts, where no waivers have been received against breached
covenants at the balance sheet date. Those borrowings are presented on demand.
The 2021 maturity table has been restated to reflect the above.
Within 12 After 12
As at 31 December 2022 months months Total
USD'000 USD'000 USD'000
Assets
Cash at bank and in hand 83,117 - 83,117
Loans and advances to customers 331,301 597 331,898
Due from banks 16,613 22,287 38,900
Equity investment at FVOCI - 244 244
Property and equipment - 3,513 3,513
Right-of-use assets 832 3,757 4,589
Deferred tax assets - 4,625 4,625
Derivative assets 7,131 724 7,855
Other assets 9,621 349 9,970
Goodwill and Intangible assets - 5,041 5,041
Total assets 448,615 41,137 489,752
Liabilities
Debt issued and other borrowed funds 171,172 90,129 261,301
Due to customers 84,146 9 84,155
Retirement benefit liability - 4,593 4,593
Current tax liability 8,873 - 8,873
Deferred tax liability 7 2,177 2,184
Lease liability 982 2,109 3,091
Derivative liabilities 456 - 456
Other liabilities 10,323 24,077 34,400
Provisions 967 71 1,038
Total liabilities 276,926 123,165 400,091
Net 171,689 (82,028) 89,661
Within 12 After 12
As at 31 December 2021 months months Total
USD'000 USD'000 USD'000
Assets
Cash at bank and in hand 87,951 - 87,951
Loans and advances to customers 354,671 18,571 373,242
Due from banks 34,294 30,965 65,259
Equity investment at FVOCI - 237 237
Property and equipment - 4,085 4,085
Right-of-use assets 1,013 4,018 5,031
Deferred tax assets - 13,362 13,362
Derivative assets 3,313 653 3,966
Other assets 6,456 2,483 8,939
Goodwill and Intangible assets - 482 482
Total assets 487,698 74,856 562,554
Liabilities
Debt issued and other borrowed funds 224,041 94,633 318,674
Due to customers 87,241 571 87,812
Retirement benefit liability 7 5,384 5,391
Current tax liability 6,265 - 6,265
Deferred tax liability - 2,296 2,296
Lease liability 450 3,009 3,459
Derivative liabilities 219 383 602
Other liabilities 8,873 24,064 32,937
Provisions 1,136 539 1,675
Total liabilities 328,232 130,879 459,111
Net 159,466 (56,023) 103,443
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
39. EARNINGS PER SHARE
Basic Earnings Per Share ('EPS') is calculated by dividing the net profit for
the year attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares outstanding during the year.
There are no share options which will have a dilutive effect on EPS.
Therefore, the Company does not have dilutive potential ordinary shares and
diluted earnings per share calculation is not applicable.
The following table shows the income and share data used in the basic and
diluted EPS calculations:
2022 2021
USD'000 USD'000
Net profit attributable to ordinary equity holders of the 17,892 8,787
parent
Weighted average number of ordinary shares for basic 100,000,000 100,000,000
earnings per share
Earnings per share USD USD
Equity shareholders of the parent for the year:
Basic earnings per share 0.18 0.09
Diluted earnings per share 0.18 0.09
The Company has applied the number of shares issued by ASA International Group
plc as at 31 December 2022 and 31 December 2021. There have been no
transactions involving ordinary shares or potential ordinary shares between
the reporting date and the date of the completion of financial statements
which would require the restatement of EPS. No dividend is declared for the
year 2022 (2021: nil).
The following table shows the dividend per share:
Dividend per
share
n/a n/a
ASA INTERNATIONAL GROUP PLC
UNAUDITED PRELIMINARY STATUTORY STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 December 2022
Notes 2022 2021
USD'000 USD'000
Interest and similar income - (29)
Dividend income 31,064 3,529
Net revenue
31,064 3,500
Personnel expenses 40. (1,192) (1,045)
Professional fees (1,936) (1,661)
Administrative expenses (976) (533)
Exchange rate differences (101) 10
Total operating expenses (4,205) (3,229)
Profit before tax 26,859 271
Profit/total comprehensive profit for the period, net of
26,859 271
tax
The notes 40 to 47 form an integral part of these unaudited preliminary
financial statements.
Company number: 11361159
ASA INTERNATIONAL GROUP PLC
UNAUDITED PRELIMINARY STATUTORY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
Notes 2022 2021
USD'000 USD'000
ASSETS
Cash at bank and in hand 778 383
Due from banks 14.1. 20,692 20,465
Investment in subsidiaries 41. 120,684 120,684
Other assets 42. 225 765
TOTAL ASSETS 142,379 142,297
EQUITY AND LIABILITIES
EQUITY
Issued capital 43. 1,310 1,310
Retained earnings 44. 119,638 92,779
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 120,948 94,089
LIABILITIES
Other liabilities 45. 21,431 48,208
TOTAL LIABILITIES 21,431 48,208
TOTAL EQUITY AND LIABILITIES
142,379 142,297
The notes 40 to 47 form an integral part of these unaudited preliminary
financial statements.
ASA INTERNATIONAL GROUP PLC
UNAUDITED PRELIMINARY STATUTORY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2022
Retained
Issued capital earnings Total
USD'000 USD'000 USD'000
At 1 January 2021 1,310 92,508 93,818
Profit for the period - 271 271
Total comprehensive loss for the period 1,310 92,779 94,089
Dividend - - -
At 31 December 2021 1,310 92,779 94,089
At 1 January 2022 1,310 92,779 94,089
Profit for the period - 26,859 26,859
Total comprehensive loss for the period 1,310 119,638 120,948
Dividend - -
At 31 December 2022 1,310 119,638 120,948
The notes 40 to 47 form an integral part of these unaudited preliminary
financial statements.
ASA INTERNATIONAL GROUP PLC
STATUTORY UNAUDITED PRELIMINARY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 December 2022
Notes
2022 2021
USD'000 USD'000
OPERATING ACTIVITIES
Profit before tax 26,859 271
Adjustment for movement in:
Operating assets 46. 313 (491)
Operating liabilities 46. (3,571) 744
Net cash flows used in operating activities 23,601 524
FINANCING ACTIVITIES
Loan (repaid)/ received (23,206) (500)
Net cash flows used in financing activities (23,206) (500)
Net increase in cash and cash equivalents
395 24
Cash and cash equivalents at the beginning of the period 383 359
Cash and cash equivalents as at 31 December 778 383
The notes 40 to 47 form an integral part of these unaudited preliminary
financial statements.
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY STATUATORY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2022
Separate financial statements
The accounting policies applied in the statutory financial statements are
similar to those used in the consolidated financial statements except for
investments in subsidiaries. Investments in subsidiaries are accounted in the
separate financial statements, using the cost method.
At each reporting date it is determined whether there is objective evidence
that the investment in the subsidiaries is impaired. If there is such
evidence, a calculation will be made for the impairment amount as the
difference between the recoverable amount of the subsidiaries and its carrying
value.
40. TOTAL OTHER OPERATING EXPENSES Notes
2022 2021
Total operating expenses include the following items: USD'000 USD'000
Personnel expenses (1,192) (1,045)
Professional fees (1,936) (1,661)
Administrative expenses (976) (533)
(4,104) (3,239)
41. INVESTMENTS IN SUBSIDIARIES 2022 2021
USD'000 USD'000
Investments in subsidiaries
ASA International Holding 75,195 75,195
ASA International NV 45,489 45,489
120,684 120,684
Name of company Country Nature of business 2022 2021
ownership ownership
ASA International Holding Mauritius MFI Holding Company 100% 100%
ASA International NV Netherlands MFI Holding Company 100% 100%
42. OTHER ASSETS 2022 2021
USD'000 USD'000
The other assets comprised the following:
Other receivables 145 482
Advances and prepayments 80 283
225 765
43. ISSUED CAPITAL
100 million ordinary shares of GBP 0.01 each. No movement occurred during 2022
and 2021.
44. RETAINED EARNINGS 2022 2021
USD'000 USD'000
Total retained earnings are calculated as follows:
Balance at the beginning of the period 92,779 92,508
Dividend - -
Result for the period 26,859 271
Balance at the end of the period 119,638 92,779
Profit for the period
Attributable to equity holders of the parent 26,859 271
ASA INTERNATIONAL GROUP PLC
NOTES TO THE UNAUDITED PRELIMINARY STATUATORY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2022
45. OTHER LIABILITIES Notes 2022 2021
USD'000 USD'000
Short-term liabilities
Accrued audit fees 563 557
Accrued cost 176 288
Other intercompany payables - 3,692
739 4,537
Long-term liabilities
Intercompany loan - -
Escrow liability to CMI 14.1. 20,692 20,465
Purchase price for ASAI NV to ASAIH - 23,206
20,692 43,671
21,431 48,208
46. ADDITIONAL CASH FLOW INFORMATION
2022 2021
USD'000 USD'000
Changes in operating assets
Due from banks (227) -
Other assets 540 (491)
313 (491)
Changes in operating liabilities
Other liabilities (3,571) 744
(3,571) 744
Changes in non-cash items
Foreign exchange result - -
- -
47. MATURITY ANALYSIS OF ASSETS AND LIABILITIES
The table below shows an analysis of assets and liabilities according to when
they are expected to be recovered or settled.
Within 12
As at 31 December 2022 months After 12 months Total
USD'000 USD'000 USD'000
Assets
Cash at bank and in hand 778 - 778
Due from banks - 20,692 20,692
Investment in subsidiaries - 120,684 120,684
Other assets 225 - 225
1,003 141,376 142,379
Liabilities
Other liabilities 739 20,692 21,431
Net
264 120,684 120,948
Within 12
As at 31 December 2021 months After 12 months Total
USD'000 USD'000 USD'000
Assets
Cash at bank and in hand 383 - 383
Due from banks - 20,465 20,465
Investment in subsidiaries - 120,684 120,684
Other assets 765 - 765
1,148 141,149 142,297
Liabilities
Other liabilities 4,537 43,671 48,208
Net
(3,389) 97,478 94,089
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