29th Mar 2010 08:00
NMBZ HOLDINGS LIMITED
Holding company of
NMB BANK LIMITED (Registered Commercial Bank)
AUDITED RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2009
HIGHLIGHTS
|
|
2009 |
|
|
|
|
Attributable profit (US$) |
2 278 287 |
|
Basic earnings per share (US cents) |
0.14 |
|
Total deposits (US$) |
28 720 120 |
|
Shareholders' funds (US$) |
8 363 889 |
|
|
|
Enquiries:
NMBZ HOLDINGS LIMITED Tel: +263-4-759 651/9
Benefit P Washaya, Chief Executive Officer [email protected]
Benson Ndachena, Chief Financial Officer [email protected]
Website: http://www.nmbz.co.zw
Email: [email protected]
NMBZ HOLDINGS LIMITED
CHAIRMAN'S STATEMENT
INTRODUCTION
In the first month of the year under review, the economic environment was characterised by hyperinflation, political uncertainty and a multiple exchange and interest rate regime. When the country adopted the multicurrency monetary system, the company changed its functional and reporting currency from the Zimbabwe dollar to the United States of America dollar with effect from 1 January 2009.
In view of the historical exigencies in respect of the economic, political and social environment prior to the multi currency regime and in light of the guidance provided by the Public Accountants and Auditors Board (PAAB), the Zimbabwe Accounting Practices Board (ZAPB) and the Institute of Chartered Accountants of Zimbabwe (ICAZ), prior year comparative information has not been provided as this would be misleading.
GROUP RESULTS
Compliance with International Financial Reporting Standards
The consolidated financial statements of the group have not been prepared in accordance with International Financial Reporting Standards (IFRS) in that the requirements of IAS 1, "Presentation of Financial Statements", IAS 21, "The Effects of Changes in Foreign Exchange Rates", and IAS 29, "Financial Reporting in Hyperinflationary Economies" have not been complied with. The financial statements have been prepared in compliance with the Companies Act (Chapter 24:03) and the Banking Act (Chapter 24:20).
An adverse audit opinion has been issued on all comparative information, statements of comprehensive income, statement of cash flows and the statement of changes in equity due to the non - compliance referred to above. An unqualified opinion has been issued on the statement of financial position as this has been prepared in accordance with International Financial Reporting Standards (IFRS).
Commentary on results
The profit before taxation was US$941 182 during the period under review. A historical cost attributable profit of US$2 278 287 was recorded for the year. Net interest income was US$803 096. Non-interest income amounted to US$7 236 949 and this was mainly as a result of fair value adjustments on investment properties, commissions and fee income and the debt write back as RBZ Forex Bond.
Operating expenses amounted to US$7 385 212 largely driven by administration, staff related expenditure and the impairment loss on land and buildings.
While a conservative approach has been taken with respect to impairment losses on loans and advances, the charge amounted to US$92 887 for the current year. This is reflective of the loans and advances which amounted to US$12 509 344 at 31 December 2009, as well as a prudent lending policy in a fairly uncertain environment.
Dividend
In light of the need to conserve cash in the business, the Board has proposed not to declare a dividend.
BALANCE SHEET
The Group's total asset base was US$39 433 027 and comprised mainly of financial assets at fair value through profit and loss (US$7 135 023), cash and short term funds (US$12 203 181), investment properties (US$3 219 600), property and equipment (US$3 582 387) and advances and other accounts (US$12 729 195).
NMBZ HOLDINGS LIMITED
Capital
The banking subsidiary's capital adequacy ratio at 31 December 2009 calculated in accordance with the guidelines of the Reserve Bank of Zimbabwe (RBZ) was 26.24% (31 December 2008 - 62%). The minimum required by the RBZ is 10%.
The Group will be undertaking a recapitalisation initiative in order to meet the statutory minimum paid up capital of US$12.5 million required by 31 March 2010.
OUTLOOK AND STRATEGY
The current economic landscape has ushered in a reasonably stable environment for business. The company will continually review the emerging business opportunities and reconfigure itself accordingly.
DIRECTORATE
There were no changes to the Company's directorate during the period.
CAUTIONARY STATEMENT
Negotiations regarding a strategic transaction referred to in a notice to shareholders dated 17 March 2010 are still in progress and updates on the developments will be provided to shareholders at regular intervals as required by the Zimbabwe Stock Exchange.
APPRECIATION
I would like to thank our clients for their continued support. I would also like to thank my fellow Board members, management and staff for their commitment and dedication in the period under review.
GIBSON MANYOWA MANDISHONA
CHAIRMAN
16 March 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
|
|
Note |
2009 |
|
|
|
US$ |
|
Interest income |
4 |
1 347 193 |
|
Interest expense |
|
(544 097) |
|
|
|
------------------ |
|
Net interest income |
|
803 096 |
|
Net foreign exchange gains |
|
379 236 |
|
Non-interest income |
5 |
7 236 949 |
|
|
|
----------------- |
|
Net operating income |
|
8 419 281 |
|
|
|
|
|
Operating expenditure |
6 |
(7 385 212) |
|
Impairment losses on loans and advances |
|
(92 887) |
|
|
|
---------------- |
|
Profit before taxation |
|
941 182 |
|
Taxation |
7 |
1 381 766 |
|
Financial institutions levy |
7 |
(44 661) |
|
|
|
---------------- |
|
Profit for the period |
|
2 278 287 |
|
|
|
|
|
Other comprehensive income/(loss):
|
|
|
|
General provision for doubtful debts RBZ grading |
9 |
(274 904) |
|
Tax relating to components of other comprehensive income |
10 |
70 788 |
|
|
|
------------------ |
|
Other comprehensive income for the period, net of tax |
|
(204 116) |
|
|
|
------------------ |
|
Total comprehensive income for the period |
|
2 074 171 |
|
|
|
=========== |
|
|
|
|
|
Earnings per share (US cents) |
|
|
|
- Basic |
11.3 |
0.14 |
|
- Headline |
11.3 |
0.10 |
|
- Diluted basic |
11.3 |
0.14 |
|
- Diluted headline |
11.3 |
0.10 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
|
|
|
2009 |
|
SHAREHOLDERS' FUNDS |
Note |
US$ |
|
|
|
|
|
Share capital |
12 |
- |
|
Capital reserves |
|
6 289 718 |
|
Revenue reserves |
|
2 074 171 |
|
|
|
--------------------- |
|
Total shareholders' funds |
|
8 363 889 |
|
|
|
|
|
LIABILITIES |
|
|
|
Deposits and other accounts |
13 |
23 649 725 |
|
Financial liabilities at fair value through profit and loss |
14 |
6 444 932 |
|
Provision for current taxation |
|
299 162 |
|
Deferred taxation |
|
675 319 |
|
|
|
------------------- |
|
Total equity and liabilities |
|
39 433 027 |
|
|
|
============ |
|
|
|
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
15 |
12 203 181 |
|
Financial assets at fair value through profit and loss |
14.2 |
7 135 023 |
|
Advances and other accounts |
16 |
12 729 195 |
|
Quoted and other investments |
|
563 641 |
|
Investment properties |
|
3 219 600 |
|
Property and equipment |
17 |
3 582 387 |
|
|
|
--------------------- |
|
Total assets |
|
39 433 027 |
|
|
|
============= |
|
|
|
|
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
|
|
|
|
|
Capital Reserve |
|
|
|
|
|
|
|
|
|
Share |
|
Non- |
|
|
|
|
Share |
Share |
Treasury |
Option |
Revaluation |
Distributable |
Accumulated |
|
|
|
Capital |
Premium |
Shares |
Reserve |
Reserve |
Reserve |
Profit |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
Deemed balances at 1 January 2009 |
- |
- |
- |
96 034 |
- |
6 201 909 |
- |
6 297 943 |
|
Total comprehensive income for the year |
- |
- |
- |
- |
- |
- |
2 074 171 |
2 074 171 |
|
Shares issued - share options exercised |
- |
34 822 |
- |
(34 822) |
- |
- |
- |
- |
|
Own equity instruments (note 12.3) |
- |
- |
(8 225) |
- |
- |
- |
|
(8 225) |
|
|
--------- |
------------- |
---------------- |
------------------ |
------------------ |
---------------- |
--------------- |
---------------- |
|
|
- |
34 822 |
(8 225) |
61 212 |
- |
6 201 909 |
2 074 171 |
8 363 889 |
|
|
===== |
======= |
========= |
=========== |
========== |
========= |
========== |
=========== |
CONSOLIDATED STATEMENT OF CASH FLOWSfor the year ended 31 December 2009
|
|
2009 |
|
|
US$ |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
Profit before taxation |
941 182 |
|
Non-cash items |
|
|
Depreciation |
209 680 |
|
Impairment losses on loans and advances |
92 887 |
|
Investment properties fair value adjustment |
(579 600) |
|
Quoted and other investments fair value adjustment |
(172 978) |
|
Profit on disposal of quoted and other investments |
(45 256) |
|
Profit on disposal of property and equipment |
(2 066) |
|
Loss on disposal of investment property |
460 000 |
|
Financial instruments fair value adjustments |
(32 371) |
|
Impairment loss on land and buildings |
1 050 000 |
|
Loss on derecognition of investment |
10 404 |
|
|
------------------- |
|
Operating cash flows before changes in operating assets and liabilities |
1 931 882 |
|
|
|
|
Changes in operating assets and liabilities |
|
|
Financial liabilities at fair value through profit and loss |
6 444 932 |
|
Deposits and other accounts |
19 715 785 |
|
Advances and other accounts |
(12 736 106) |
|
Financial assets at fair value through profit and loss |
(7 135 023) |
|
|
------------------- |
|
|
8 221 470 |
|
|
------------------- |
|
Taxation |
|
|
Capital gains tax paid |
(152 000) |
|
Corporate tax paid |
(10 520) |
|
|
------------------ |
|
Net cash inflow from operating activities |
8 058 950 |
|
|
------------------ |
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
Purchase of property and equipment |
(160 322) |
|
Purchase of quoted and other investments |
(134 676) |
|
Proceeds from disposal of investment property |
3 040 000 |
|
Proceeds from disposal of quoted and other investments |
109 788 |
|
|
------------------ |
|
Net cash inflow from investing activities |
2 854 790 |
|
|
----------------- |
|
Net cash inflow before financing activities |
10 913 740 |
|
|
----------------- |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
Dividends paid |
- |
|
|
------------------ |
|
Net cash inflow from financing activities |
- |
|
|
----------------- |
|
Net increase in cash and cash equivalents |
10 913 740 |
|
Cash and cash equivalents at the beginning of the period |
1 289 441 |
|
|
----------------- |
|
Cash and cash equivalents at the end of the period (note 15) |
12 203 181 |
|
|
========== |
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
1. REPORTING ENTITY
The Company is incorporated and domiciled in Zimbabwe and is an investment holding company. Its registered office is 64 Kwame Nkrumah Avenue, Harare. Its principal operating subsidiary is engaged in banking and other companies hold investments.
2. BASIS OF PREPARATION
Statement of compliance
The consolidated financial statements have not been prepared in accordance with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board in that the requirements of IAS 1, "Presentation of Financial Statements", IAS 21, "The Effects of Changes in Foreign Exchange Rates", and IAS 29, "Financial Reporting in Hyperinflationary Economies", have not been complied with.
The financial statements have been prepared in compliance with the Companies Act (Chapter 24:03) and the Banking Act (Chapter 24:20).
The financial statements were approved by the Board of Directors on 16 March 2010.
Historical cost convention
The financial statements are prepared under the historical cost convention except for quoted and other investments, properties, investment properties and financial instruments which are carried at fair value.
Functional and presentational currency
The Group changed its functional and reporting currency from the Zimbabwe dollar to the United States of America dollar with effect from 1 January 2009. These financial statements are reported in United States of America dollars and rounded to the nearest dollar.
As a result of the change in functional and reporting currency on 1 January 2009, the opening balances for the Group were re-established as of this date. The balances which were in foreign currency were taken at the recorded amounts, with cross rates applied as appropriate. The other balance sheet items which were not recorded in US$ but had a US$ equivalent were re-established using the first available evidence in 2009 of its US$ value.
The net effect of the re-establishment of the Group's assets and liabilities as at 1 January 2009 gave rise to a change in functional currency balance denoted in these financial statements as a non-distributable reserve. The non-distributable reserve will be utilized for the re-denomination of the Company's share capital after the requisite statutory and shareholder approvals.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
Use of estimates and judgments
The preparation of financial statements 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. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
2.4.1 Deferred tax liability
Provision for deferred taxation is made using the balance sheet liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences arising out of the initial recognition of assets or liabilities and temporary differences on initial recognition of business combinations that affect neither accounting nor taxable profit are not recognised. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred income 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 balance sheet date.
In determining the amounts used for taxation purposes the directors referred to applicable effective exchange rates at the date of acquisition of assets or incurring of liabilities. The Zimbabwe Revenue Authority (ZIMRA), announced provisional methods to account for the deferred tax arising on assets purchased in ZWD. These methods require the preparer to first estimate the equivalent USD value of those assets at the time of purchase. Since the measurement of transactions in Zimbabwe dollars in the prior periods is affected by several economic variables such as mode of payment and hyperinflation this is an area where the directors have had to apply their judgement and acknowledge there could be significant variations in the results achieved depending on assumptions made.
2.4.2 Land and buildings
The properties were valued by professional valuers. The valuer applied the rental yield method to assess fair value of land and buildings. The determined fair value of land and buildings is most sensitive to the estimated yield as well as the long term vacancy rate. In addition, the property market is currently not stable due to liquidity constraints and hence comparable values are also not stable.
2.4.3 Investment property and equipment
Investment property, motor vehicles, furniture and fittings were valued by the directors with assistance from professional valuers by reference to market values of similar assets.
The professional valuers considered comparable market evidence of recent sale transactions and those transactions where firm offers had been made but awaiting acceptance. In addition, the property market is currently not stable due to liquidity constraints and hence comparable values are also not stable
The directors adjusted market values for similar assets to take into account differences in ageing, size and location of the investment property, other property and equipment owned by the group. The directors exercised their judgement in determining the residual values of the other property and equipment which have been determined as nil.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
3. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these abridged financial statements are set out in Note 2 and 3. These policies have been consistently applied unless otherwise stated.
3.1 Financial instruments
3.1.1 Classification
Financial assets and liabilities at fair value through profit and loss include financial assets and liabilities held for trading i.e. those that the Group principally holds for the purpose of short-term profit taking as well as those that were, upon initial recognition, are designated by the entity as financial assets or liabilities at fair value through profit and loss. There is no reclassification into or out of this category as per IAS 39.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those classified as held-for-trading and the Group upon initial recognition designates as at fair value through profit or loss and those the Group upon initial recognition designates as available-for-sale.
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity.
Financial assets available-for-sale are non-derivative financial assets that are designated as available-for- sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.
3.1.2 Recognition
The Group recognises financial assets at fair value through profit and loss and available for sale assets on the date it commits to purchase the assets. From this date any gains and losses arising from changes in fair value of the assets are recognised in the income statement and other comprehensive income respectively.
Held-to-maturity investments and loans and receivables are recognised at cost which is the fair value of the consideration given on the day that they are transferred to the Group.
3.1.3 Measurement
Financial assets and liabilities are measured initially at fair value. Subsequent to initial recognition, financial assets and liabilities at fair value through profit and loss and available-for-sale financial assets are measured at fair value, except that any instrument that does not have a quoted market price in an active market and whose fair value cannot be reliably measured is stated at cost, less impairment losses.
Held-to-maturity investments and loans and receivables are measured at amortised cost less impairment losses. Amortised cost is calculated using the effective interest rate method. Premiums and discounts, including initial transaction costs, are included in the carrying amount of the related instrument and amortised based on the effective interest rate of the instrument.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
3.1.4 Fair value measurement principles
The fair value of financial instruments is based on their quoted market price at the balance sheet date without any deduction for transaction costs. If a quoted market price is not available, the fair value of the instrument is estimated using pricing models or discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future cash flows are based on management's best estimates and the discount rate is a market related rate at the balance sheet date for an instrument with similar terms and conditions. Where pricing models are used, inputs are based on market related measures at the balance sheet date.
3.2 Investment properties
Investment properties are stated at fair value. Gains and losses arising from a change in fair value of investment properties are recognized in the income statement.
3.3 Share - based payments
The Group issues share options to certain employees in terms of the Employee Share Option Scheme. Share options are measured at fair value at the date of grant. The fair value determined at the date of grant of the options is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured using the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and other behavioural considerations.
3.4 Property and equipment
International Accounting Standard 16 (IAS 16) stipulates that the residual value and the useful life of an asset must be reviewed at least each financial year-end. If the residual value of an asset increases by an amount equal to or greater than the asset's carrying amount, then the depreciation of the asset ceases. Depreciation will resume only when the residual value decreases to an amount below the asset's carrying amount.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
4. INTEREST INCOME
|
|
2009 |
|
|
US$ |
|
Cash and cash equivalents |
293 210 |
|
Loans and advances to banks |
16 158 |
|
Loans and advances to customers |
456 580 |
|
Investment securities |
581 181 |
|
Other |
64 |
|
|
------------------ |
|
|
1 347 193 |
|
|
=========== |
5. non-interest income
|
|
2009 |
|
|
US$ |
|
Net gains from quoted and other investments |
172 978 |
|
Net commission and fee income |
4 888 077 |
|
Fair value adjustment on investment properties |
579 600 |
|
Debt recovery write back as RBZ Forex Bonds |
1 789 836 |
|
Profit on disposal of quoted and other investments |
45 256 |
|
Fair value gain on financial instruments |
32 371 |
|
Loss on disposal of investment property |
(460 000) |
|
Profit on disposal of property and equipment |
2 066 |
|
Other net operating income |
186 765 |
|
|
--------------------- |
|
|
7 236 949 |
|
|
============= |
6. Operating EXPENDITURE
|
|
2009 |
|
|
US$ |
|
The operating profit is after charging the following:- |
|
|
Administration costs |
3 428 576 |
|
Audit fees |
117 875 |
|
Staff costs |
2 568 677 |
|
Depreciation |
209 680 |
|
Loss on derecognition of investment |
10 404 |
|
Impairment loss on land and building |
1 050 000 |
|
|
-------------------- |
|
|
7 385 212 |
|
|
============ |
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
7. taxation
|
|
2009 |
|
7.1 Tax Charge |
US$ |
|
|
|
|
Current taxation |
257 302 |
|
Aids levy |
7 719 |
|
Deferred tax origination and reversal of temporary differences |
(1 646 787) |
|
|
------------------- |
|
|
(1 381 766) |
|
Financial institutions levy |
44 661 |
|
|
-------------------- |
|
Total taxation |
(1 337 105) |
|
|
=========== |
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
8. IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Impairment losses are applied to write off advances in part or in whole when they are considered partly or wholly irrecoverable. The aggregate impairment losses which are made during the year are dealt with as per paragraph 8.3.
8.1 Specific provisions
Specific provisions are made where the repayment of identified advances is in doubt and reflect estimates of the loss. Advances are written off against specific provisions once the probability of recovering any significant amounts becomes remote.
8.2 Portfolio provisions
The portfolio provision relates to the inherent risk of losses which, although not separately identified, is known to be present in any loan portfolio.
8.3 Regulatory Guidelines and International Financial Reporting Standards Requirements
The Banking Regulations 2000 gives guidance on provisioning for doubtful debts and stipulates certain minimum percentages to be applied to the respective categories of the loan book.
International Accounting Standard 39, Financial Instruments Recognition and Measurement (IAS 39), prescribes the provisioning for impairment losses based on the actual loan losses incurred in the past applied to the sectoral analysis of book debts and the discounting of expected cash flows on specific problem accounts.
The two prescriptions are likely to give different results. The Group has taken the view that where the IAS 39 charge is less than the amount provided for in the Banking Regulations, the difference is charged to other comprehensive income and where it is more, the full amount will be charged to the income statement.
8.4 Non-performing loans
Interest on loans and advances is accrued to income until such time as reasonable doubt exists about its collectability, thereafter and until all or part of the loan is written off, interest continues to accrue on customers' accounts, but is not included in income. Such suspended interest is deducted from loans and advances in the balance sheet. This policy meets the requirements of the Banking Regulations 2000 issued by the RBZ.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
9. COMPONENTS OF OTHER COMPREHENSIVE INCOME
|
|
2009 |
|
|
US$ |
|
General provision for doubtful debts RBZ grading |
(274 904) |
|
Income tax relating to components of other comprehensive (loss)/income |
70 788 |
|
|
|
|
|
|
|
|
--------------- |
|
Other comprehensive loss for the period |
(204 116) |
|
|
========= |
10. TAX EFFECTS RELATING TO COMPONENTS OF OTHER COMPREHENSIVE INCOME/(LOSS)
|
|
|
2009 |
|
|
|
|
|
|
|
|
Before tax |
Tax (expense)/ |
Net of |
|
|
amount |
benefit |
tax amount |
|
|
US$ |
US$ |
US$ |
|
|
|
|
|
|
General provision for doubtful debts RBZ grading |
(274 904) |
70 788 |
(204 116) |
|
|
---------------- |
------------------ |
------------------ |
|
Other comprehensive (loss)/income |
(274 904) |
70 788 |
(204 116) |
|
|
========== |
========== |
=========== |
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
11. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary equity holders of NMBZ Holdings Limited by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity holders of NMBZ Holdings Limited by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares.
There have been no transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of the completion of these financial statements which would require the restatement of earnings per share
11.1 Earnings
|
|
2009 |
|
|
US$ |
|
Basic |
2 278 287 |
|
Headline (note 11.4) |
1 615 788 |
|
|
|
11.2 Number of shares (million)
|
|
2009 |
|
Weighted average number of ordinary shares for basic earnings per share* |
1 641 270 307 |
|
Effect of dilution: |
|
|
Shares options |
13 829 788 |
|
|
---------------------------- |
|
Weighted average number of ordinary shares adjusted for the effect of dilution* |
1 655 100 176 |
|
|
================= |
|
* excludes own equity instruments amounting to 1 028 172 shares. |
|
11.3 Earnings per share (US cents)
|
|
2009 |
|
Basic |
0.14 |
|
Headline |
0.10 |
|
Diluted basic |
0.14 |
|
Diluted headline |
0.10 |
|
|
|
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
11.4 Headline earnings
|
|
2009 |
|
|
US$ |
|
Profit attributable to shareholders |
2 278 287 |
|
Add/(deduct) non-recurring items: |
|
|
- Loss on theft of CIT cash |
170 063 |
|
-Impairment loss on land and buildings |
1 050 000 |
|
-Loss on derecognition of investment |
10 404 |
|
-Fair value gain adjustment on investment properties |
(579 600) |
|
-Debt recovery writeback as RBZ Forex Bonds |
(1 789 836) |
|
-Tax effect thereon |
476 470 |
|
|
------------- |
|
|
1 615 788 |
|
|
======== |
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
12. SHARE CAPITAL
|
|
GROUP AND COMPANY
|
GROUP AND COMPANY
|
|
|
2009 |
2008 |
|
|
Shares |
Shares |
|
|
million |
million |
|
12.1 Authorised |
|
|
|
Ordinary shares of Z$0.00025 each |
2 250 |
2 250 |
|
|
===== |
===== |
|
|
|
|
|
|
2009 |
2008 |
|
|
Shares |
Shares |
|
|
million |
million |
|
|
|
|
|
12.2 Issued and fully paid |
|
|
|
At 1 January |
1 641 |
1 608 |
|
Shares issued - share options |
7 |
33 |
|
|
-------------- |
---------------- |
|
At 31 December |
1 648 |
1 641 |
|
|
======== |
========= |
|
|
|
|
Of the 601 824 771 unissued ordinary shares, options which may be granted in terms of the NMBZ 2005 Employee Share Option Scheme (ESOS) amount to 85 360 962 and out of these 1 670 869 had not been issued. As at 31 December 2009, 12 159 000 share options out of the issued had not been exercised.
Subject to the provisions of section 183 of the Companies Act (Chapter 24:03), the unissued shares are under the control of the directors.
As at 31 December 2009, the nominal value of the shares has been reflected as nil in US$ whilst the Group awaits professional guidance on the matter. The share capital will be redenominated in US$ through resolutions to be presented to a General Meeting of shareholders, which will authorise the transfer from the non-distributable reserve to the respective components of capital.
12.3 Own equity instruments
Own equity instruments amounting to 1 028 172 shares at a cost of US$8 225 were held by the Company's subsidiary, Stewart Holdings (Private) Limited.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
13. DepositS and other accounts
|
|
2009 |
|
|
US$ |
|
13.1 Deposits and other accounts by type |
|
|
Deposits from other banks and other financial institutions |
3 009 704 |
|
Current and deposit accounts |
25 710 416 |
|
|
----------------- |
|
Total deposits |
28 720 120 |
|
Less: Financial liabilities at fair value through profit and loss (note 14.1) |
(6 444 932) |
|
|
----------------- |
|
|
22 275 188 |
|
Trade and other payables |
1 374 537 |
|
|
----------------- |
|
|
23 649 725 |
|
|
========== |
13.2 Maturity analysis
|
|
2009 |
|
|
US$ |
|
Less than one month |
25 992 595 |
|
1 to 3 months |
2 727 525 |
|
3 to 6 months |
- |
|
6 months to 1 year |
- |
|
1 to 5 years |
- |
|
Over 5 years |
- |
|
|
--------------- |
|
|
28 720 120 |
|
|
========== |
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
|
|
2009 |
|
|
|
US$ |
% |
|
13.3 Sectoral analysis of deposits |
|
|
|
|
|
|
|
Banks and other financial institutions |
3 009 704 |
10 |
|
Transport and telecommunications companies |
4 561 928 |
16 |
|
Mining companies |
2 044 130 |
7 |
|
Industrial companies |
6 790 495 |
24 |
|
Municipalities and parastatals |
3 154 762 |
11 |
|
Individuals |
4 379 292 |
15 |
|
Agriculture |
2 268 211 |
8 |
|
Other deposits |
2 511 598 |
9 |
|
|
--------------- |
---- |
|
|
28 720 120 |
100 |
|
|
========= |
=== |
14. FINANCIAL INSTRUMENTS
|
|
|
Fair |
|
|
Cost |
Value |
|
|
2009 |
2009 |
|
14.1Financial liabilities at fair value through profit and loss
|
US$ |
US$ |
|
Fixed term deposits |
88 481 |
88 481 |
|
Negotiable Certificates of Deposits |
6 356 451 |
6 356 451 |
|
|
------------- |
------------- |
|
Total financial liabilities at fair value through profit and loss |
6 444 932 |
6 444 932 |
|
|
======== |
======== |
|
|
|
Fair |
|
|
Cost |
Value |
|
|
2009 |
2009 |
|
14.2 Financial assets at fair value through profit and loss |
US$ |
US$ |
|
Government and public sector securities |
1 789 836 |
1 789 836 |
|
Treasury bills |
- |
- |
|
RBZ Forex Bond |
1 789 836 |
1 789 836 |
|
Bills-own acceptances |
5 234 839 |
5 345 187 |
|
|
--------------- |
------------- |
|
Total financial assets at fair value through profit and loss |
7 024 675 |
7 135 023 |
|
|
========= |
======== |
The RBZ Forex Bond is valued at cost as there is currently no market information to facilitate application of fair value principles.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
14.3 Financial liabilities at fair value through
profit and loss
|
|
2009 |
|
|
US$ |
|
|
|
|
Less than 1 month |
3 717 408 |
|
1 to 3 months |
2 727 524 |
|
3 to 6 months |
- |
|
6 months to 1 year |
- |
|
1 to 5 years |
- |
|
Over 5 years |
- |
|
|
-------------- |
|
|
6 444 932 |
|
|
======== |
14.4 Financial assets at fair value through profit and loss
|
|
2009 |
|
|
US$ |
|
|
|
|
Less than 1 month |
4 659 689 |
|
1 to 3 months |
590 860 |
|
3 to 6 months |
1 884 474 |
|
6 months to 1 year |
- |
|
1 to 5 years |
- |
|
Over 5 years |
- |
|
|
-------------- |
|
|
7 135 023 |
|
|
======== |
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
15. CASH AND CASH EQUIVALENTS
|
|
2009 |
|
|
US$ |
|
|
|
|
Statutory reserve |
2 746 957 |
|
Current, nostro accounts and cash |
9 456 224 |
|
|
-------------- |
|
Total cash and cash equivalents |
12 203 181 |
|
|
======== |
The statutory reserve balance with the Reserve Bank of Zimbabwe is non-interest bearing.
The balance is determined on the basis of deposits held and is not available to the Bank for daily use.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
16. ADVANCES AND OTHER ACCOUNTS
|
|
2009 |
|
16.1.1 Advances |
US$ |
|
|
|
|
Fixed term loans |
8 596 463 |
|
Local loans and overdrafts |
3 531 872 |
|
Other accounts |
600 860 |
|
|
-------------- |
|
|
12 729 195 |
|
|
======== |
|
|
2009 |
|
16.1.2 Maturity analysis |
US$ |
|
|
|
|
Less than one month |
11 560 300 |
|
1 to three months |
298 366 |
|
3 to 6 months |
147 925 |
|
6 months to 1 year |
120 665 |
|
1 to 5 years |
382 088 |
|
Over 5 years |
- |
|
|
------------- |
|
Total advances |
12 509 344 |
|
Provision for impairment losses on loans and advances |
(381 009) |
|
|
-------------- |
|
|
12 128 335 |
|
Other accounts |
600 860 |
|
|
------------- |
|
Total |
12 729 195 |
|
|
======== |
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
16.2 Sectoral analysis of utilisations
|
|
2009 |
|
|
|
US$ |
% |
|
|
|
|
|
Industrials |
8 068 093 |
64 |
|
Agriculture and horticulture |
691 914 |
6 |
|
Conglomerates |
273 288 |
2 |
|
Services |
2 072 971 |
17 |
|
Mining |
1 272 873 |
10 |
|
Food & beverages |
- |
- |
|
Other |
130 205 |
1 |
|
|
------------------ |
---- |
|
|
12 509 344 |
100 |
|
|
=========== |
=== |
|
|
|
|
The material concentration of loans and advances are in the industrial sector at 64%.
16.3 Provisions for losses on loans and advances
|
|
2009 |
||
|
|
Specific |
Portfolio |
Total |
|
|
US$ |
US$ |
US$ |
|
At 1 January |
13 218 |
- |
13 218 |
|
Charge against profits |
92 887 |
- |
92 887 |
|
Charge against retained earnings |
- |
274 904 |
274 904 |
|
|
------------- |
------------- |
----------- |
|
At 31 December |
106 105 |
274 904 |
381 009 |
|
|
======== |
======== |
======== |
16.4 Non-performing loans and advances
|
|
2009 |
|
|
US$ |
|
Total non-performing loans and advances |
106 105 |
|
Provision for impairment loss on loans and advances |
(106 105) |
|
|
------------- |
|
|
- |
|
|
======== |
The residue on these accounts, where applicable, represents recoverable portions covered by realisable security.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
17. PROPERTY AND EQUIPMENT
|
|
Land |
|
Furniture |
|
|
|
|
and |
Computer |
and |
Motor |
|
|
|
buildings |
equipment |
fittings |
vehicles |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
|
Deemed cost at 1 January 2009 |
3 760 000 |
447 772 |
911 127 |
116 830 |
5 235 729 |
|
Addition |
1 709 |
55 553 |
71 375 |
31 685 |
160 322 |
|
Revaluation loss/impairment |
(1 050 000) |
- |
- |
- |
(1 050 000) |
|
|
--------------- |
--------------- |
------------------ |
----------------- |
------------- |
|
|
2 711 709 |
503 325 |
982 502 |
148 515 |
4 346 051 |
|
|
--------------- |
--------------- |
------------------- |
------------------ |
-------------- |
|
|
|
|
|
|
|
|
Deemed accumulated depreciation at 1 January 2009 |
- |
114 262 |
413 812 |
25 910 |
553 984 |
|
Change for the year |
11 |
89 930 |
95 744 |
23 995 |
209 680 |
|
|
--------------- |
--------------- |
--------------- |
---------------- |
------------ |
|
|
11 |
204 192 |
509 556 |
49 905 |
763 664 |
|
|
---------------- |
------------- |
------------- |
---------------- |
------------- |
|
|
|
|
|
|
|
|
At 31 December 2009 deemed cost/valuation |
2 711 698 |
299 133 |
472 946 |
98 610 |
3 582 387 |
|
|
======== |
======== |
======== |
========= |
======= |
|
|
|
|
|
|
|
|
At 1 January 2009 deemed cost/valuation |
3 760 000 |
333 510 |
497 315 |
90 920 |
4 681 745 |
|
|
======== |
======== |
========= |
========= |
======= |
The land and buildings were valued by professional valuers for year end purposes and the open market value was US$2.71 million. Other items of property and equipment were valued by the directors with assistance from a professional valuer by reference to market values of similar assets adjusted for ageing.
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
18. CAPITAL COMMITMENTS
|
|
2009 |
|
|
US$ |
|
Capital expenditure contracted for |
- |
|
Capital expenditure authorised but not yet contracted for |
998 400 |
|
|
----------------- |
|
|
998 400 |
|
|
========= |
19. CONTINGENT LIABILITIES
|
|
2009 |
|
|
US$ |
|
Guarantees |
3 150 324 |
|
Commitments to lend |
6 638 259 |
|
|
----------------- |
|
|
9 788 583 |
|
|
========== |
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
20. EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States dollars at period end:-
|
|
|
Mid-rate |
|
|
|
31 December 2009 |
|
|
|
US$ |
|
British Pound Sterling |
GBP |
1.6076 |
|
South African Rand |
ZAR |
7.3975 |
|
|
|
|
|
|
|
|
NMB BANK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
|
|
|
2009 |
|
|
Note |
US$ |
|
|
|
|
|
Interest income |
|
1 347 193 |
|
Interest expense |
|
(544 271) |
|
|
|
----------------------- |
|
Net interest income |
|
802 922 |
|
|
|
|
|
Net foreign exchange gains |
|
379 236 |
|
Non-interest income |
a |
7 161 761 |
|
|
|
--------------------- |
|
Net operating income |
|
8 343 919 |
|
|
|
|
|
Operating expenditure |
b |
(7 357 808) |
|
Impairment losses on loans and advances |
|
(92 887) |
|
|
|
------------------- |
|
Profit before taxation |
|
893 224 |
|
|
|
|
|
|
|
|
|
Taxation |
|
1 395 178 |
|
Financial institutions levy |
|
(44 661) |
|
|
|
------------------- |
|
Profit for the period |
|
2 243 741 |
|
|
|
|
|
Other comprehensive income/(loss): |
|
|
|
|
|
|
|
General provision for doubtful debts RBZ grading |
|
(274 904) |
|
Tax relating to components of other comprehensive income |
|
70 788 |
|
|
|
------------------- |
|
Other comprehensive (loss)/income for the period, net of tax |
|
(204 116) |
|
|
|
------------------ |
|
Total comprehensive income for the period |
|
2 039 625 |
|
|
|
=========== |
|
Earnings per share (US cents): |
|
|
|
-Basic |
e |
13.60 |
|
-Headline |
e |
9.52 |
|
|
|
|
NMB BANK LIMITED
STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
|
|
|
2009 |
|
SHAREHOLDER'S FUNDS |
Note |
US$ |
|
|
|
|
|
Share capital |
f |
- |
|
Non-distributable reserves |
|
6 139 898 |
|
Revenue reserves |
|
2 039 625 |
|
|
|
----------------------- |
|
Total shareholder's funds |
|
8 179 523 |
|
|
|
|
|
LIABILITIES |
|
|
|
Deposits and other accounts |
|
23 683 605 |
|
Financial liabilities at fair value through profit and loss |
|
6 444 932 |
|
Provision for current taxation |
|
288 929 |
|
Deferred taxation |
|
670 576 |
|
|
|
------------------- |
|
|
|
39 267 565 |
|
|
|
============ |
|
|
|
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
g |
12 203 174 |
|
Financial assets at fair value through profit and loss |
|
7 135 023 |
|
Advances and other accounts |
|
12 729 195 |
|
Quoted and other investments |
|
398 186 |
|
Investment properties |
h |
3 219 600 |
|
Property and equipment |
3 582 387 |
|
|
|
|
---------------------- |
|
|
|
39 267 565 |
|
|
|
============= |
|
|
|
|
NMB BANK LIMITED
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
|
|
|
Capital Reserves |
|
|
|
|
|
|
|
|
|
Non |
|
|
|
|
|
Share |
Revaluation |
Distributable |
Retained |
|
|
|
Capital |
Premium |
Reserve |
Reserve |
Profit |
Total |
|
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
|
|
|
|
|
|
|
|
Deemed balances as at 1 January 2009 |
- |
- |
- |
6 139 898 |
- |
6 139 898 |
|
Total comprehensive income for the year |
- |
- |
- |
- |
2 039 625 |
2 039 625 |
|
|
------------- |
------------- |
------------ |
----------------- |
---------------- |
----------- |
|
Balances as at 31 December 2009 |
- |
- |
- |
6 139 898 |
2 039 625 |
8 179 523 |
|
|
======== |
========= |
======= |
=========== |
========= |
======= |
|
|
|
|
|
|
|
|
NMB BANK LIMITED
STATEMENT OF CASH FLOWS
for the year ended 31 December 2009
|
|
2009 |
|
|
US$ |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
Profit before taxation |
893 224 |
|
Non-cash items |
|
|
-Depreciation |
209 680 |
|
-Impairment losses on loans and advances |
92 887 |
|
-Impairment loss on land and buildings |
1 050 000 |
|
-Investment properties fair value adjustment |
(579 600) |
|
-Quoted and other investments fair value adjustment |
(130 733) |
|
-Profit on disposal of quoted and other investments |
(27 126) |
|
-Profit on disposal of property and equipment |
(2 066) |
|
-Loss on disposal of investment property |
460 000 |
|
-Financial instruments fair value adjustment |
(32 371) |
|
|
------------------- |
|
|
|
|
Operating cash flows before changes in operating assets and liabilities |
1 933 895 |
|
|
|
|
Changes in operating assets and liabilities |
|
|
Financial liabilities at fair value through profit and loss |
6 444 932 |
|
Deposits and other accounts |
19 653 631 |
|
Financial assets at fair value through profit and loss |
(7 135 023) |
|
Advances and other accounts |
(12 736 107) |
|
|
------------------- |
|
|
8 161 328 |
|
|
------------------- |
|
Taxation |
|
|
Capital gains tax paid |
(152 000) |
|
Corporate tax paid |
(10 520) |
|
|
------------------ |
|
Net cash inflow from operating activities |
7 998 808 |
|
|
------------------ |
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
Proceeds on disposal of investment property |
3 040 000 |
|
Proceeds on disposal of quoted and other investments |
109 789 |
|
Purchase of unquoted investments |
(7 542) |
|
Purchase of property and equipment |
(160 322) |
|
|
----------------- |
|
Net cash inflow from investing activities |
2 914 925 |
|
|
----------------- |
|
Net cash inflow before financing activities |
10 913 733 |
|
|
----------------- |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
Dividends paid |
- |
|
|
------------------ |
|
Net cash inflow from financing activities |
- |
|
|
----------------- |
|
Net increase in cash and cash equivalents |
10 913 733 |
|
Cash and cash equivalents at the beginning of the year |
1 289 441 |
|
|
----------------- |
|
Cash and cash equivalents at the end of the year (note g) |
12 203 174 |
|
|
========== |
|
|
|
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
NOTES TO THE FINANCIAL STATEMENTS
There are no material differences between the Bank and the Holding company as the Bank is the principal operating subsidiary of the Group. The notes to the financial statements under NMBZ Holdings Limited are therefore the same in every material respect.
a. NON-INTEREST income
|
|
2009 |
|
|
US$ |
|
Net gains from quoted and other investments |
130 733 |
|
Investment property fair value adjustment |
579 600 |
|
Net commission and fee income |
4 873 265 |
|
Debt recovery write back as RBZ Forex Bonds |
1 789 836 |
|
Profit on disposal of unquoted investments |
27 126 |
|
Profit on disposal of property |
2 066 |
|
Loss on disposal of investment property |
(460 000) |
|
Fair value gains on financial instruments |
32 371 |
|
Other net operating income |
186 764 |
|
|
--------------------- |
|
|
7 161 761 |
|
|
============= |
b. Operating EXPENDITURE
|
|
2009 |
|
|
US$ |
|
The operating profit is after charging the following:- |
|
|
Administration costs |
3 411 576 |
|
Audit fees |
117 875 |
|
Staff costs |
2 568 677 |
|
Depreciation |
209 680 |
|
Impairment loss on land and buildings |
1 050 000 |
|
|
-------------------- |
|
Total |
7 357 808 |
|
|
============ |
c. COMPONENTS OF OTHER COMPREHENSIVE INCOME
|
|
2009 |
|
|
US$ |
|
General provision for doubtful debts RBZ grading |
(274 904) |
|
Net income tax relating to components of other comprehensive income |
70 788 |
|
|
|
|
|
|
|
|
--------------- |
|
Other comprehensive income for the period |
(204 116) |
|
|
========= |
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
d. TAX EFFECTS RELATING TO COMPONENTS OF OTHER COMPREHENSIVE INCOME
|
|
|
2009 |
|
|
|
|
|
|
|
|
Before tax |
Tax (expense)/ |
Net of |
|
|
amount |
benefit |
tax amount |
|
|
US$ |
US$ |
US$ |
|
General provision for doubtful debts RBZ grading |
(274 904) |
70 788 |
(204 116) |
|
|
---------------- |
------------------ |
------------------ |
|
Other comprehensive (loss)/income |
(274 904) |
70 788 |
(204 116) |
|
|
========== |
========== |
=========== |
NMB BANK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
e. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:
e.1 Earnings
|
|
2009 |
|
|
US$ |
|
Basic |
2 243 741 |
|
Headline earnings (note e.4) |
1 571 358 |
e.2 Number of shares (million)
|
Weighted average shares in issue |
16 500 000 |
e.3 Earnings per share (US cents)
|
Basic |
13.60 |
|
Headline |
9.52 |
e.4 Headline earnings/(losses)
The adjustments are as follows:
|
|
2009 |
|
|
US$ |
|
Profit attributable to shareholders |
2 243 741 |
|
Add/(deduct) non-recurring items: |
|
|
-Loss on impairment of land and buildings |
1 050 000 |
|
-Loss on theft of CIT cash |
170 063 |
|
-Fair value adjustment on investment property |
(579 600) |
|
-Debt recovery writeback as RBZ Forex Bonds |
(1 789 836) |
|
-Tax effect thereon |
476 990 |
|
|
------------- |
|
|
1 571 358 |
|
|
======== |
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
f. SHARE CAPITAL
f.1 Authorised
The authorised ordinary share capital at 31 December 2009 is at the historical cost figure of US$ nil (2008 - US$ nil) comprising 25 million ordinary shares.
f.2 Issued and fully paid
The issued share capital at 31 December 2009 is at the historical cost figure of US$ nil (2008 - US$ nil) comprising 16.5 million ordinary shares.
The nominal share capital is reflected as nil in US$ at 31 December 2009. Appropriate resolutions will be passed to redenominate the Bank's share capital in US$ and an appropriate amount will be transferred from the non-distributable reserves to share capital and share premium.
g. CASH AND CASH EQUIVALENTS
|
|
2009 |
|
|
US$ |
|
Statutory reserve |
2 746 957 |
|
Current, nostro accounts and cash |
9 456 217 |
|
|
-------------- |
|
Total cash and cash equivalents |
12 203 174 |
|
|
======== |
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
h. INVESTMENT PROPERTIES
|
|
2009 |
|
|
US$ |
|
Investment property at deemed cost as at 1 January 2009 |
6 140 000 |
|
Disposal |
(3 500 000) |
|
Net gains from fair value adjustments |
579 600 |
|
|
-------------- |
|
Investment property at fair value as at 31 December |
3 219 600 |
|
|
======== |
|
|
|
Rental income amounting to US$2 700 was received and no operating expenses were incurred from investment properties in the current period.
The investment properties comprise two (2) sets of properties namely Borrowdale Road and various other properties. The Borrowdale Road property is also known as Stand Number 19207 Harare Township of Stand 19206 measures 4.4506 hectares in extent. The property was valued for year end purposes by professional valuers and the open market value was US$2.45 million.
The other properties comprise residential stands and houses and these were valued by the directors with the assistance of professional valuers for year end purposes and the open market value was US$769 600.
CORPORATE GOVERNANCE AND RISK MANAGEMENT
1. RESPONSIBILITY
These financial statements are the responsibility of the directors. This responsibility includes the setting up of internal control and risk management processes, which are monitored independently. The information contained in these financial statements has been prepared on the going concern basis and is in accordance with the provisions of the Companies Act (Chapter 24:03), the Banking Act (Chapter 24:20) and International Financial Reporting Standards, with the exception of IAS 1, IAS 21 and IAS 29.
2. CORPORATE GOVERNANCE
The Group adheres to principles of corporate governance derived from the King II Report, the United Kingdom Combined Code and RBZ corporate governance guidelines. The Group is cognisant of its duty to conduct business with due care and in good faith in order to safeguard all stakeholders' interests.
3. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and expertise on the Board. Non-executive directors are of such calibre as to provide independence to the Board. The Chairman of the Board is an independent non-executive director. The Board is supported by mandatory committees in executing its responsibilities. The Board meets at least quarterly to assess risk, review performance and provide guidance to management on both operational and policy issues.
The Board conducts an annual peer based evaluation on the effectiveness of its activities. The process involves the members evaluating each other collectively as a board and individually as members. The evaluation, as prescribed by the RBZ, takes into account the structure of the board, effectiveness of committees, strategic leadership, corporate social responsibility, attendance and participation of members and weaknesses noted. Remedial plans are invoked to address identified weaknesses with a view to continually improve the performance and effectiveness of the Board and its members.
4. RISK MANAGEMENT
In the ordinary course of business the Bank manages risks of all forms. The risks are identified and monitored through various channels and mechanisms.
The Board of Directors has overall responsibility for the establishment and oversight of the Bank's risk management framework. The Board has established the Asset and Liability Management Committee (ALCO) and Risk Committee, which are responsible for developing and monitoring Bank risk management policies in their specified areas. The Bank has a Risk Management department, which reports to the Chief Executive Officer and is responsible for the management of the overall risk profile.
The Bank's risk management policies are established to identify and analyse the risks faced by the Bank, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions, products and services offered.
The Bank Risk Committee which is responsible for monitoring compliance with the Banks risk management policies and procedures, and for reviewing the adequacy of the risk management framework in relation to the risks faced by the Bank, is assisted in these functions by Internal Audit. Internal Audit undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee and the Risk Committee.
The Bank's main objective is to contain the risk inherent within the financial services sector and to ensure that the Bank's various risk profiles are understood and appropriately managed to the benefit of customers, shareholders and other stakeholders.
4.1 Credit risk
Credit risk is the risk that a financial contract will not be honoured according to the original set of terms. The risk arises when borrowers or counterparties to a financial instrument fail to meet their contractual obligations. The Board has put in place sanctioning committees which operate according to the amount requested by an applicant. The Credit Risk Management department reviews all applications. This initial review allows only those applications that do not unduly expose the Bank to credit risk to be considered by the sanctioning committees.
4.1.1 Management of credit risk
The Board has delegated responsibility for the management of credit risk to its Loans Review Committee. The Credit Risk Management department which also reports to the Loan Review Committee is responsible for oversight of the Bank's credit risk, including:
·; Formulating credit policies in consultation with business units, covering collateral requirements, credit assessment, risk grading and reporting, documentary and legal procedures, and compliance with regulatory and statutory requirements
·; Establishing the authorization structure for the approval and renewal of credit facilities. Facilities require authorization by Head of Credit Risk, Executive directors, Loans Review Committee or the Board of Directors depending on amount as per set limits.
·; The Credit Risk department assesses all Credit exposures in excess of designated limits, prior to facilities being committed to clients by the business unit concerned. Renewals and reviews of facilities are subject to the same review process.
·; Limiting concentrations of exposure to counter parties and industry for loans and advances.
·; Maintaining and monitoring the risk gradings as per the RBZ requirement in order to categorise exposures according to the degree of risk of financial loss faced and to focus management on the attendant risks. The current risk grading framework consists of five grades reflecting varying degrees of risk of default and the availability of collateral or other credit risk mitigation.
·; Reviewing compliance of business units with agreed exposure limits, including those for selected industries.
·; Providing advice, guidance and specialist skills to business units to promote best practice throughout the Bank in the management of credit risk.
4.2 Market risk
This arises from adverse movements in the market place, which occur in the money market (interest rate risk), foreign exchange and equity markets in which the Bank operates. The Bank is currently developing VaR (Value at Risk) model which will be used to manage and monitor the market risk for the trading portfolio.
The Bank has in place an Asset and Liability Management Committee (ALCO), which comprises the departmental heads of Risk, Treasury, Corporate and Retail banking and Finance, in addition to executive directors. The committee monitors these risks and recommends the appropriate levels to which the Bank should be exposed at any time. The approval of all dealing limits ultimately rests with this committee.
The market risk for the non - trading portfolio is managed by monitoring the sensitivity of Bank's financial assets and liabilities to various interest rate scenarios. The bank monitors its Net Interest Margin as a primary measure of interest rate conditions. On foreign exchange risk, the bank monitors currency mismatches and make adjustments depending on exchange rate movement forecast. The mismatches are also contained within 10% of the bank's capital position.
NMB BANK LIMITED
4.3 Liquidity risk
Liquidity risk is the risk that operations cannot be funded and financial commitments cannot be met timeously. The risk arises when there is a maturity mismatch between assets and liabilities. The Bank identifies this risk through maturity profiling of assets and liabilities and assessment of expected cashflows and the availability of collateral which could be used additional funding if required.
The Bank maintains a portfolio of marketable assets that can be easily liquidated in the event of an unforeseen interruption of cash flow. The Bank maintains a statutory deposit with the Central Bank at stipulated rates. As at 31 December 2009 this rate was 10% for time and demand liabilities denominated in foreign currencies. The daily liquidity position is monitored and regular liquidity stress testing is conducted under a variety of scenarios covering both normal and more severe market conditions. All liquidity policies and procedures are subject to review and approval by ALCO.
The key measure used by the Bank for managing liquidity risk is the ratio of net liquid assets to deposits to customers. The Bank monitors its liquidity ratio in compliance with Banking Regulations to ensure that it is not less than 10% of the liabilities to the public. Liquid assets consist of cash and cash equivalents, short term bank deposits and liquid investment securities available for immediate sale.
4.4 Operational risk
This risk is inherent in all business activities and is the potential for loss arising from ineffective internal controls, poor operational procedures to support these controls, errors and deliberate acts of fraud. The mitigation of the risk and the cost incurred to reduce the risk is critical. The bank utilizes monthly Key Risk Indicators to monitor operational risk in all units. Further to this, the bank has an elaborate Incident Reporting Policy in which all incidents with a material impact on the well being of the bank are reported to risk management. The Board has a Risk Committee whose function is to ensure that this risk is minimised. The Risk Committee through the internal audit function and the Risk Management department assesses the adequacy of the internal controls and makes the necessary recommendations to the Board.
4.5 Legal and compliance risk
Legal risk is risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations. Legal risk may entail such issues as contract formation, capacity and contract frustration. Compliance risk is the risk arising from non - compliance with laws and regulations.
To manage this risk the Bank employs a legal practitioner who is responsible for the drafting, monitoring and executing all contracts. Permanent relationships are also maintained with firms of legal practitioners and access to legal advice is readily available to all departments. The compliance function is responsible for identifying and monitoring legal and compliance risks and ensuring that the Bank remains in compliance with all regulatory requirements.
4.6 Reputational risk
Reputational risk is the risk of loss of business as a result of negative publicity or negative perceptions by the market with regards to the way the Bank conducts its business.
To manage this risk, the Bank strictly monitors customers' complaints, continuously train staff at all levels, conducts market surveys and periodic reviews of business practices through its internal audit department.
The directors are satisfied with the risk management processes in the Bank as these have contributed to the minimisation of losses arising from risky exposures.
4.7 Strategic risk
This refers to current and prospective impact on the bank's earnings and capital arising from adverse business decisions or implementing strategies that are not consistent with the internal and external environment. To manage this risk, the bank is guided by a strategic plan that is set out by the board of directors. The attainment of strategic objectives by the various departments is monitored periodically at management level. There is an ALCO, Finance and Strategy Committee at board level responsible for monitoring overall progress towards attaining strategic objectives for the bank.
4.8 Risk Ratings
4.8.1 Camels* Ratings
|
CAMELS Component |
Latest RBS** Ratings 31/01/2008 |
Previous RBS Ratings 30/06/2007 |
Previous RBS Ratings 30/06/2006 |
|
Capital Adequacy |
4 |
4 |
3 |
|
Asset Quality |
2 |
3 |
4 |
|
Management |
3 |
4 |
4 |
|
Earnings |
3 |
3 |
4 |
|
Liquidity |
3 |
3 |
4 |
|
Sensitivity to Market Risk |
3 |
3 |
4 |
|
Composite Rating |
3 |
4 |
4 |
*CAMELS is an acronym for Capital Adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to Market Risk. CAMELS rating system uses a rating scale of 1-5, where '1' is Strong, '2' is Satisfactory, '3' is Fair, '4' is Weak and '5' is Critical.
**RBS stands for Risk-Based Supervision
4.8.2 Summary RAS ratings
|
RAS Component |
Latest RAS*** Ratings 31/01/2008 |
Previous RBS Ratings 30/06/2007 |
Previous RBS Ratings 30/06/2006 |
|
Overall Inherent Risk |
Moderate |
High |
High |
|
Overall Risk Management Systems |
Acceptable |
Weak |
Weak |
|
Overall Composite Risk |
Moderate |
High |
High |
|
Direction of Overall Composite Risk |
Stable |
Increasing |
Increasing |
*** RAS stands for Risk Assessment System.
4.8.3 Summary risk matrix -31 January 2008 on - site examination
|
Type of Risk |
Level of Inherent Risk |
Adequacy of Risk Management Systems |
Overall Composite Risk |
Direction of Overall Composite Risk |
|
Credit |
Moderate |
Weak |
Moderate |
Increasing |
|
Liquidity |
Moderate |
Acceptable |
Moderate |
Stable |
|
Interest Rate |
Moderate |
Acceptable |
Moderate |
Increasing |
|
Foreign Exchange |
High |
Weak |
Moderate |
Stable |
|
Strategic Risk |
Moderate |
Acceptable |
Moderate |
Stable |
|
Operational Risk |
Moderate |
Weak |
High |
Increasing |
|
Legal & Compliance |
High |
Acceptable |
Moderate |
Stable |
|
Reputation |
Moderate |
Acceptable |
Moderate |
Increasing |
|
Overall |
Moderate |
Acceptable |
Moderate |
Stable |
KEY
Level of Inherent Risk
Low - reflects a lower than average probability of an adverse impact on a banking institution's capital and earnings. Losses in a functional area with low inherent risk would have little negative impact on the banking institution's overall financial condition.
Moderate - could reasonably be expected to result in a loss which could be absorbed by a banking institution in the normal course of business.
High - reflects a higher than average probability of potential loss. High inherent risk could reasonably be expected to result in a significant and harmful loss to the banking institution.
Adequacy of Risk Management Systems
Weak - risk management systems are inadequate or inappropriate given the size, complexity and risk profile of the banking institution. Institution's risk management systems are lacking in important ways and therefore a cause of more than normal supervisory attention. The internal control systems will be lacking in important aspects particularly as indicated by continued control exceptions or by the failure to adhere to written policies and procedures.
Acceptable - management of risk is largely effective but lacking to some modest degree. While the institution might be having some minor risk management weaknesses, these have been recognized and are being addressed. Management information systems are generally adequate.
Strong - management effectively identifies and controls all types of risk posed by the relevant functional areas or per inherent risk. The board and senior management are active participants in managing risk and ensure appropriate policies and limits are put in place. The policies comprehensively define the bank's risk tolerance, responsibilities and accountabilities are effectively communicated.
Overall Composite Risk
Low - would be assigned to low inherent risk areas. Moderate risk areas may be assigned a low composite risk where internal controls and risk management systems are strong and effectively mitigate much of the risk.
Moderate - risk management systems appropriately mitigates inherent risk. For a given low risk area, significant weakneses in the risk management systems may result in a moderate composite risk assessment. On the other hand, a strong risk management system may reduce the risk so that any potential financial loss from the activity would have only a moderate negative impact on the financial condition of the organization.
High - risk management systems do not significantly mitigate the high inherent risk. Thus, the activity could potentially result in a financial loss that would have a significant impact on the bank's overall condition.
NMB BANK LIMITED
Direction of Overall Composite Risk
Increasing - based on the current information, risk is expected to increase in the next 12 months.
Decreasing - based on current information, risk is expected to decrease in the next 12 months.
Stable - based on the current information, risk is expected to be stable in the next 12 month
4.8.4 External Credit Ratings
The external credit ratings were given by Global Credit Rating (GCR), a credit rating agency accredited with the Reserve Bank of Zimbabwe.
Security class 2006 2007 2008
Short-term A3 NR NR
Long term BBB- BBB-* BB+
* the rating was withdrawn after the discovery of the US$6.4 million forex fraud (refer to Note 5).
NR - not rated.
4.9 Regulatory Compliance
The Corrective Order issued in 2007 relating to the matter covered in Note 5 was partially lifted in 2008 as the issue relating to the reimbursement of foreign currency accounts funds was still outstanding at the time. This issue has however since been resolved through the payment of all foreign currency account holders whose funds were misappropriated in the $6.4 million fraud. The bank shall engage the regulatory authorities with a view to having the Corrective Order uplifted, once the regulatory authorities are satisfied that all issues raised in the Corrective Order have been addressed.
A corrective order issued in December 2008 relating to managerial restructuring was lifted in February 2009. The Group remains committed to complying with and adhering to all regulatory requirements.
4.10 Capital Management
The primary objective of the Bank's capital management is to ensure that the Bank complies with the RBZ requirements. In implementing the current capital requirements, the RBZ requires the Bank to maintain a prescribed ratio of total capital to total risk weighted assets.
Regulatory capital consists of Tier 1 capital, which comprises share capital, share premium, retained earnings (including current year profit), statutory reserve and other equity reserves.
The other component of regulatory capital is Tier 2 capital, which includes subordinated term debt, revaluation reserves and portfolio provisions.
Tier 3 capital relates to an allocation of capital to market and operational risk.
Various limits are applied to elements of the capital base. The core capital (Tier 1) shall compromise not less than 50% of the capital base and portfolio provisions are limited to 1.25% of total risk weighted assets.
NMB BANK LIMITED
5 OUTSTANDING FOREIGN CURRENCY ACCOUNT BALANCES
Subsequent to the balance sheet date for the year ended 31 December 2006, a fraud involving about US$6.4 million was uncovered wherein foreign currency was disposed of by a bank official for Zimbabwe dollars at the then ruling official exchange rate, without authority. This subsequently resulted in the revocation of the bank's foreign currency dealership licence by the Reserve Bank of Zimbabwe with effect from 15 May 2007. The revocation did not affect the local currency banking operations. The foreign currency dealership licence was restored with effect from 1 June 2008.
An amount of US$2.6 million of the total funds defrauded belonged to the bank's clients and the balance was the bank's own funds. The fraud had no accounting effect on the financial statements for the year ended 31 December 2006 as value was received at the official exchange rate, the amount at which the asset was carried in the financial statements.
The US$2.6 million net liability was settled in the fourth quarter of 2009. The group realized the funds applied in settling the net liability from the realignment of its assets during the year.
The Bank's regulatory capital position at 31 December 2009 was as follows:
|
|
2009 |
|
|
US$ |
|
Share capital |
- |
|
Share premium |
- |
|
Non-distributable reserve |
6 139 898 |
|
Retained earnings |
2 039 625 |
|
|
------------- |
|
|
8 179 523 |
|
Less: capital allocated for market and operational risk |
(1 096 405) |
|
Credit to insiders |
- |
|
|
------------- |
|
Tier 1 capital |
7 083 118 |
|
Tier 2 capital (subject to limit as per Banking Regulations) |
274 904 |
|
|
|
|
Revaluation reserves |
- |
|
Subordinated debt |
- |
|
Portfolio provisions (limited to 1.25% of risk weighted assets) |
274 904 |
|
|
|
|
Total Tier 1 & 2 capital |
7 358 022 |
|
Tier 3 capital (sum of market and operational risk capital) |
1 096 405 |
|
|
------------- |
|
Total capital base |
8 454 427 |
|
|
======== |
|
Total risk weighted assets |
32 206 600 |
|
|
======== |
|
Tier 1 ratio |
21.99% |
|
Tier 3 ratio |
0.85% |
|
Tier 3 ratio |
3.40% |
|
Total capital adequacy ratio |
26.24% |
NMB BANK LIMITED
NOTICE TO MEMBERS
Notice is hereby given that the 15th Annual General Meeting of Members of NMBZ Holdings Limited will be held at the Registered Office of the Company at 4th Floor Unity Court, Cnr 1st Street/Kwame Nkrumah Avenue, Harare on Thursday, 24 June 2010 at 1430 hours for the following purposes:
ORDINARY BUSINESS
1. To receive and adopt the Financial Statements for the year ended 31 December 2009, together with the reports of the Directors and Auditors thereon.
2. To appoint Directors. In accordance with the Articles of Association, Dr J T Makoni, Mr J A Mushore, Mr B P Washaya and Mr C Chipato retire by rotation. Being eligible the retiring directors offer themselves for re-election.
3. To appoint Auditors for 2010 and to approve Messrs Ernst & Young's remuneration for the year ended 31 December 2009.
Note: A member of the company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend, speak and on a poll, vote in his stead. A proxy need not be a member of the company. Proxy forms should be forwarded to reach the office of the transfer secretaries at least 48 hours before the commencement of the meeting.
By Order of the Board
V Mutandwa
Company Secretary
16 March 2010
Registered Offices
1st Floor NMB Centre
Unity Court George Silundika Avenue/
Cnr 1st Street/Kwame Nkrumah Avenue Leopold Takawira Street
Harare Bulawayo
Zimbabwe Zimbabwe
Telephone +263 4 759651 +263 9 70169
Facsimile +263 4 759648 +263 9 68535
Website: http://www.nmbz.co.zw
Email: [email protected]
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Services PLC
4th Floor, Gold Bridge North 36 St Andrew Square
Eastgate Building Edinburgh
Cnr. Robert Mugabe/Second Street EH2 2YB
P O Box 11 UK
Harare
Zimbabwe
Related Shares:
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