NMBZ HOLDINGS LIMITED
GROUP
ANNUAL REPORT
31 DECEMBER 2009
CONTENTS
Financial Highlights
Group Profile
Chairman’s Statement
Report of The Directors
Statement of Directors’ Responsibility
Report of the Independent Auditors
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Accounting Policies
Notes to the Financial Statements
Historical Five Year Financial Summary
Notice to Members
Shareholders’ Analysis
Shareholders’ Information
Secretary and Registered Office
2
3
4 - 5
6 - 13
14 - 16
17 - 18
19
20
21
22
23 - 32
33 - 85
86 - 88
89
90 - 91
92
93
1
HIGHLIGHTS
Attributable profit (US$)
Basic earnings per share (US cents)
Total deposits (US$)
Shareholders’ funds (US$)
Enquiries:
2009
2 278 287
0.14
28 720 120
8 363 889
NMBZ HOLDINGS LIMITED
Tel: +263-4-759 651/9
Benefit Peter Washaya, Chief Executive Officer
benefitw@nmbz.co.zw
Benson Ndachena, Chief Financial Officer
bensonn@nmbz.co.zw
Website:
Email:
http://www.nmbz.co.zw
enquiries@nmbz.co.zw
2
NMBZ HOLDINGS LIMITED
GROUP PROFILE
year ended 31 December 2009
The NMBZ Holdings Group comprises the company plus the operating subsidiaries, NMB Bank Limited (the Bank) and
Stewart Holdings Limited (equity holdings).
The Bank was established in 1993 as a bank incorporated under the Companies Act (Chapter 24:03) and is registered as a
commercial bank in terms of the Banking Act (Chapter 24:20). It operates through a branch network in Harare,
Bulawayo, Mutare and Gweru. The Bank’s branch network is constantly growing to service customers and meet demands
in suitable and convenient locations. Set out below are the Bank’s locations:
Head Office – Unity Court, Corner Kwame Nkrumah Avenue/First Street, Harare
Angwa City - Corner Kwame Nkrumah Avenue/Angwa Street, Harare
Borrowdale – Shops 37 & 38, Sam Levy’s Village, Harare
Eastgate – Shop 24, Eastgate Mall, Corner Sam Nujoma Street/Robert Mugabe Road, Harare
Msasa – 77 Amby Drive, Harare
Southerton – 7 - 9 Plymouth Road, Harare
Bulawayo Corporate Banking – First Mutual Life Building, Corner Ninth Avenue/Main Street, Bulawayo
Bulawayo Retail – NMB Centre, Corner George Silundika Street/Leopold Takawira Street, Bulawayo
Mutare – Embassy Building, Corner Aerodrome Road/Second Street, Mutare
Gweru – 36 Robert Mugabe Road, Gweru
The Bank’s ATM network, which accepts VISA cards, covers the following locations:
•
•
•
•
Angwa City – Harare
Borrowdale – Harare
Card Centre – Harare
Eastgate – Harare
NMB Centre – Bulawayo
•
• Msasa - Harare
• Mutare
•
Gweru
3
NMBZ HOLDINGS LIMITED
CHAIRMAN’S STATEMENT
year ended 31 December 2009
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 financial statements have not been prepared in accordance with International Financial Reporting Standards (IFRS)
in that the requirements of IAS I, “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 the statements of comprehensive income, statement of cashflows and the
statements 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 IFRS.
Commentary on results
The profit before taxation was US$941 182 during the period under review. A 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).
4
NMBZ HOLDINGS LIMITED
CHAIRMAN’S STATEMENT
year ended 31 December 2009
Capital
The banking subsidiary’s capital adequacy ratio at 31 December 2009 calculated on the historical cost basis in accordance
with the guidelines of the Reserve Bank of Zimbabwe (RBZ) was 26.24% as per note 34.12 (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
5
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS
as at 31 December 2009
We have pleasure in presenting to shareholders our report and the audited financial statements of the Group for the year ended 31
December 2009.
1.
LIMITATONS OF FINANCIAL REPORTING
The uncertainties in the adverse Zimbabwean economic environment during the year have resulted in limitations in financial
reporting.
The inflation indices applicable to the Zimbabwe Dollar were not published from 31 July 2008. Estimates by economists, of
Zimbabwe Dollar inflation in the period post 31 July 2008 were wide ranging and extremely high (percentages in excess of
hundreds of trillions to quadrillions, in some cases). It was impossible to reliably measure inflation in Zimbabwe during this
period because the rate of change of inflation on a daily basis was extremely high. Any attempt to measure inflation was
subject to various limitations because reliable and timely price data was not available. The inability to reliably measure
inflation was also exacerbated by the existence of multiple exchange rates, the use of foreign currency for some transactions
and the existence of multiple pricing criteria for similar products based on the mode of settlement.
The authorization of the use of multiple foreign currencies for trading on 29 January 2009 by the Monetary and Fiscal
authorities resulted in a change in the functional currency for most entities reporting in Zimbabwe. In accordance with the
requirements of International Financial Reporting Standards, entities are required to convert their financial statements into the
new functional currency at the date of changeover. The Company has not been able to convert its Zimbabwe Dollar
transactions into the new functional currency for reasons explained in Note 37.
As a result of these uncertainties and inherent limitations, the directors advise caution on the use of all comparative
information, the statements of comprehensive income, statements of cash flows and statements of changes in equity for
decision making purposes. The Directors believe that the statement of financial position that has been presented is a fair
reflection of the assets and liabilities of the Company and therefore a fair reflection of the shareholder’s equity.
2.
SHARE CAPITAL
The authorised and issued share capital of the Company are as follows:-
1.1 Authorised: 2 250 000 000 ordinary shares of Z$0.00025 each.
1.2
Issued and fully paid: 1 648 175 229 ordinary shares of Z$0.00025 each.
A total of 6 917 000 share options were exercised by directors and managerial staff during the year.
3.
GROUP ACTIVITIES AND RESULTS
After providing for depreciation and taxation, the Group posted an attributable profit of US$2 278 287 for the year ended 31
December 2009.
4.
CAPITAL ADEQUACY
As at 31 December 2009, the Bank's capital adequacy ratio computed under Bank for International Settlements (BIS) rules was
26.24% (2008 – 62%).
6
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS
as at 31 December 2009
5. DIRECTORATE
5.1 Board of Directors
G M Mandishona
A M T Mutsonziwa
B P Washaya*
B Ndachena*
J A Mushore
J T Makoni
C Chipato
B W Madzivire
M Mudukuti
L Majonga (Ms)
T N Mundawarara
J Chigwedere
*Executive
(Chairman and Independent Non-executive director)
(Independent Non-executive director)
(Chief Executive Officer)
(Chief Financial Officer)
(Non-executive director)
(Non-executive director)
(Independent Non-executive director)
(Independent Non-executive director)
(Independent Non-executive director)
(Independent Non-executive director)
(Independent Non-executive director)
(Independent Non-executive director)
In accordance with the Articles of Association, Dr J T Makoni, Mr J A Mushore, Mr B P Washaya and Mr C Chipato will retire
by rotation at the forthcoming Annual General Meeting (AGM). All retiring directors being eligible, offer themselves for
re-election.
7
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont'd)
as at 31 December 2009
5.2
Directors’ Interests
As at 31 December 2009 the Directors held the following direct and indirect beneficial interests in the
shares of the Company:-
31 December 2009
Shares
31 December 2008
Shares
G M Mandishona
A M T Mutsonziwa
B P Washaya
B Ndachena
J A Mushore*
J T Makoni*
C Chipato
B W Madzivire
M Mudukuti
L Majonga (Ms)
T N Mundawarara
J. Chigwedere
-
32 760
6 506 819
5 048 174
-
6 447 904
-
-
-
-
5 824
-
---------------
18 041 481
=========
-
70 560
20 692
4 982 717
-
6 447 904
-
-
-
-
5 824
-
----------------
11 527 697
==========
*Dr J T Makoni and Mr J A Mushore hold non-beneficial interests in Cornerstone Trust and Alsace Trust
respectively.
5.3
Total share options granted to executive directors of the Holding Company and NMB Bank
Limited
B P Washaya
F S Mangozho
Share
Options
31 December 2009
Share
Options
31 December 2008
-
3 000 000
---------------
3 000 000
=========
6 000 000
3 000 000
-------------
9 000 000
=========
8
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
as at 31 December 2009
5.4 Directors’ attendance at meetings
5.4.1 Board of Directors
Name
Dr G M Mandishona
A M T Mutsonziwa
B P Washaya
B Ndachena
J A Mushore
C Chipato
B W Madzivire
M Mudukuti
L Majonga (Ms)
Dr J T Makoni
T N Mundawarara
J Chigwedere
Meetings
5
5
5
5
5
5
5
5
5
5
5
5
Attended
5
5
5
5
nil
4
5
4
4
nil
5
4
5.4.2 Audit Committee
Name
Mr B N Madzivire
Ms L Majonga
Mr A M T Mutsonziwa
Meetings
4
4
4
Attended
3
3
3
5.4.3 Risk Management Committee
Name
Mr T N Mundawarara
Mr J Chigwedere
Ms L Majonga
Mr B P Washaya
Meetings
5
5
5
5
Attended
5
5
5
5
5.4.4 Asset and Liability Management Committee (ALCO), Finance & Strategy Committe
Name
Mr C Chipato
Mr T N Mundawara
Mr B P Washaya
Mr B Ndachena
Meetings
4
4
4
4
Attended
4
4
4
3
9
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
as at 31 December 2009
5.4.5 Loans Review Committee
Name
Mr A M T Mutsonziwa
Mr M Mudukuti
Mr C Chipato
Meetings
4
4
4
Attended
4
4
3
5.4.6 Human Resources & Remuneration Committee
Name
Mr M Mudukuti
Dr G M Mandishona
Mr B P Washaya
Mr B Ndachena
Mr B Madzivire
Meetings
5
5
5
5
5
Attended
5
5
5
5
5
10
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont'd)
as at 31 December 2009
6.
CORPORATE GOVERNANCE
The Group follows international best practice with regards to corporate governance. In particular, the group emulates corporate
governance principles prescribed in the Combined Code of the United Kingdom, the King II report of South Africa and the
Reserve Bank of Zimbabwe (RBZ) Corporate Governance Guideline. To assist the board in the discharge of its duties and
responsibilities, the Board has set up the Audit Committee, Human Resources and Remuneration Committee, Asset and
Liability Management Committee (ALCO), Finance and Strategy Committee, Credit Committee, Loans Review Committee
and the Risk Management Committee.
6.1
The Board of Directors
The Group has twelve directors, comprised of ten non-executive directors, eight of whom are independent and two executive
directors. The Chairpersons of the board and all the board committees are independent non-executive directors. The board and
the board committees meet at least four times a year.
6.2 Audit Committee
The committee oversees the Group's financial reporting process, monitoring the integrity and appropriateness of the Group's
financial statements; evaluating the adequacy of the Group's financial, operational and compliance internal controls and risk
management processes and the selection, compensation, independence and performance of the Group's external and internal
auditors. The Committee meets at least four times a year. The Committee meets regularly with the company’s internal and
external auditors. Both the internal and external auditors have unrestricted access to the audit committee to ensure their
independence and objectivity.
Membership:
Mr B N Madzivire
Ms L Majonga
Mr A M T Mutsonziwa
(Chairperson - Independent Non-Executive Director)
(Independent Non-Executive Director)
(Independent Non-Executive Director)
6.3 Human Resources & Remuneration Committee
The committee is responsible for setting the group’s remuneration philosophy and reviews the overall remuneration structures
of the group, including all material remuneration proposals and packages for Executive Directors and senior personnel.
Membership:
(Chairman - Independent Non-Executive Director)
Mr M Mudukuti
(Independent Non-Executive Director)
Dr G M Mandishona
(Independent Non-Executive Director)
Mr B W Madzivire
Mr B P Washaya
(Chief Executive Officer)
Mr B Ndachena (Chief Financial Officer)
6.4
Loans Review Committee
The Loans Review Committee assists the board to discharge its responsibility with regards to the quality of the loan portfolio,
and assesses compliance of the loan book with the lending policy and the Banking Regulations. The committee conducts loan
reviews independent of any person or committee responsible for sanctioning credit.
Membership:
Mr A M T Mutsonziwa
Mr M Mudukuti
Mr C Chipato
(Chairman – Independent Non-Executive Director)
(Independent Non-executive director)
(Independent Non- executive director)
11
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont'd)
as at 31 December 2009
6.5 Credit Committee
The credit committee’s main responsibilities are to consider loan applications beyond the discretionary limits of management
and to direct the formulation of, review and monitor the credit principles and policies of the group.
Membership:
Mr T N Mundawarara
Dr G Mandishona
B P Washaya
B Ndachena
(Chairman Independent Non-Executive Director)
(Independent Non-Executive Director)
(Chief Executive Officer)
(Chief Financial Officer)
6.6 ALCO, Finance and Strategy Committee
This Committee is responsible for deriving the most appropriate strategy for the group in terms of the mix of assets and
liabilities given its expectations of the future and the potential consequences of interest-rate movements, liquidity constraints,
foreign exchange exposure and capital adequacy. The committee also ensures that such strategy is in line with the group’s risk
appetite. In addition, the committee monitors the business and financial strategies of the Company.
Membership:
Mr C Chipato
Mr T N Mundawarara
Mr B P Washaya
Mr B Ndachena
(Chairman - Independent Non-executive Director)
(Independent Non-Executive director)
(Chief Executive Officer)
(Chief Financial Officer)
6.7
Risk Management Committee
The Risk Management Committee oversees the quality, integrity and reliability of the group’s risk management systems and
reviews all group-wide risks confronting the company.
Membership:
Mr T N Mundawarara
Mr L Majonga
Mr J Chigwedere
Mr B P Washaya
(Chairman – Independent Non-Executive Director)
(Independent Non-executive director)
(Independent Non-executive director)
(Chief Executive Officer)
6.8
Professional Advice
The non-executive directors have access to independent professional advice at the Bank's expense.
12
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont'd)
as at 31 December 2009
7.
AUDITORS
At the forthcoming Annual General Meeting shareholders will be asked to authorise the directors to fix the auditor’s
remuneration for the year ended 31 December 2009 and to appoint auditors of the Company for the ensuing year.
By order of the Board
V Mutandwa
Company Secretary
Harare
16 March 2010
13
NMBZ HOLDINGS LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITY
for the year ended 31 December 2009
1.
RESPONSIBILITY
The Directors of the Company are mandated by the Companies Act to maintain adequate accounting records and to
prepare financial statements that present a true and fair view of the state of affairs of the Company at the end of
each financial year. 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].
2.
CORPORATE GOVERNANCE
In its operations, the Group is guided by principles of corporate governance derived from the King II Report, the
United Kingdom Combined Code and the Reserve Bank of Zimbabwe Corporate Governance Guideline. The
directors of the Group are cognisant of their responsibility to exercise the duty of care and act in good faith in order
to safeguard all stakeholders’ interests.
3.
BOARD OF DIRECTORS
Board appointments are made in a manner that ensures an adequate mix of skills and expertise on the board. The
majority of the group’s non-executive directors are independent and thus provide the necessary checks and balances
on the board and ensure that the interests of all stakeholders are taken into account in the decision making process.
The Chairman of the board is an independent non-executive director. The board is assisted by various committees
in executing its responsibilities. The board meets at least quarterly to assess risk, review financial performance, and
provide guidance to management on operational and policy issues.
The board conducts an annual evaluation to assess its effectiveness and develop remedial action plans to address
weaknesses noted from the evaluation. The evaluation involves an assessment of collective board performance, the
chairperson’s performance and individual directors’ performance.
4.
INTERNAL FINANCIAL CONTROL
The board is responsible for ensuring that effective internal control systems are implemented within the group. The
group maintains internal controls and systems designed to provide reasonable assurance of the integrity and
reliability of its records, safeguard the assets of group and prevent and detect fraud and errors. The Audit
Committee in conjunction with the internal auditors of the group reviews and assesses the internal control systems
of the group in key risk areas.
5. GOING CONCERN
The Directors have assessed the ability of the company to continue operating as a going concern and believe that
the preparation of these financial statements on a going concern basis is still appropriate. However, the Directors
believe that under the current economic environment a continuous assessment of the ability of the company to
continue to operate as a going concern will need to be performed to determine the continued appropriateness of the
going concern assumption that has been applied in the preparation of these financial statements.
14
NMBZ HOLDINGS LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITY (Cont’d)
for the year ended 31 December 2009
6.
INTERNAL AUDIT
The internal audit function has formally defined objectives, authority, and responsibilities enshrined in the Audit
Charter, which principles are consistent with those of the Institute of Internal Auditors. The function is guided by
the Internal Audit Manual in conducting its activities. The internal audit function is independent of business lines
and has unrestricted access to the Audit Committee. The internal audit functions include evaluating the
effectiveness of the risk management systems, reviewing the systems of internal controls including internal
financial controls and the conduct of the group’s operations.
7.
REMUNERATION
The Remuneration Committee determines the remuneration policy for the group. The remuneration policy is
designed to reward performance and retain highly skilled individuals. Accordingly, a discretionary performance
related bonus is offered in addition to a basic salary package whilst a discretionary share option scheme is available
to facilitate retention of senior executives.
8.
EMPLOYEE PARTICIPATION AND DEVELOPMENT
The group encourages active participation by its employees in its ownership. In line with this commitment,
managerial employees participate in the Company’s share option scheme. The group is also committed to
enhancing the skills of staff and sponsors attendance at courses at reputable local and international institutions.
.
9.
SOCIAL RESPONSIBILITY
The group recognises its responsibility in the society within which it operates. Pursuant to this, the group sponsors
the arts and sports and also donates to deserving charities from time to time.
10. REGULATION
The banking subsidiary of the group is subject to regulation and supervision by the Reserve Bank of Zimbabwe,
which conducts the functions of the Registrar of Banking Institutions and is also the supervisor of banking
institutions. Where appropriate, the group participates in industry-consultative meetings and discussion groups
aimed at enhancing the business environment.
11. ETHICS
As a Group, we aim to ensure that we adhere to the highest standards of responsible business practice. The Group
is committed to excellence and pursues outstanding performance in every activity. Underlying and supporting this
at the Group is the personal intergrity of each of our employees and the highest standards in their personal and
professional conduct. In this connection the Group ensured, through its anti-money laundering policies that it did
not conduct business with entities whose activities are harmful to the environment.
15
NMBZ HOLDINGS LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITY (Cont’d)
for the year ended 31 December 2009
12. FINANCIAL STATEMENTS
The company’s directors are responsible for the preparation and fair presentation of the financial statements,
comprising the statement of financial position at 31 December 2009, and the statement of comprehensive income,
the statement of changes in equity and statement of cashflows for the year then ended, and the notes to the financial
statements, which include a summary of significant accounting policies and other explanatory notes, in accordance
with International Financial Reporting Standards and legislative and regulatory requirements.
The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of these financial statements that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances.
Approval of the financial statements
The financial statements of the company and Group, appearing on pages 19 to 85, were approved by the board of
directors on 16 March 2010 and are signed on their behalf by:
………………………………….
G M Mandishona
Chairman
Date: 16 March 2010
………………………..
B P Washaya
Chief Executive Officer
Date: 16 March 2010
16
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
NMBZ HOLDINGS LIMITED
We have audited the accompanying company and group financial statements of NMBZ Holdings Limited as set out on
pages 19 to 85, which comprise the company and group statements of financial position at 31 December 2009, and the
group statement of comprehensive income, the company and group statements of changes in equity and group statement
of cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant
accounting policies and other explanatory notes.
Directors’ Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03) and the
Banking Act (Chapter 24.20). This responsibility also includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. The Directors’ have elected to comply with the guidance in the Joint Media Statement
On The Impact On Financial Reporting As A Consequence Of The Change In Functional Currency (‘the Financial
Reporting Guidance’) issued jointly by the Public Accountants and Auditors Board (“PAAB”), the Zimbabwe Accounting
Practices Board (“ZAPB”) and the Zimbabwe Stock Exchange (“ZSE”) in July 2009 (“the Financial Reporting
Guidance”).
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. International Auditing Standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation
of the financial statements.
Our audit report has been modified in a manner in which we report on the compliance of the financial statements with
provisions of the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (SI 33/99 and SI 62/96), as set
out in the guidance and recommendations on audit reports issued jointly by the Public Accountants and Auditors Board,
the Zimbabwe Stock Exchange and the Zimbabwe Accounting Practices Board in July 2009 (“the Guidance on Audit
Reports”).
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Basis for adverse opinion on all monetary comparative information; the statement of comprehensive income;
statement of cash flows and the statement of changes in equity
Non-compliance with International Accounting Standard (‘IAS’) 29 (Financial Reporting in Hyperinflationary
Economies) and International Accounting Standard (‘IAS’) 21 (The Effects of Changes in Foreign Exchange Rates)
For purposes of financial reporting, the group operated under a hyperinflationary economy in the prior year. The entity
changed its functional currency to United States Dollars with effect from 1 January 2009. All monetary comparative
information, the statement of comprehensive income; the statement of cash flows and the statement of changes in equity
have not been prepared in conformity with International Financial Reporting Standards in that the requirements of IAS 29
and IAS 21 have not been complied with in converting the financial information during the period of hyperinflation into
an applicable measurement base at the date of reporting for the following reasons:
17
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
NMBZ HOLDINGS LIMITED
•
•
the inability to reliably measure inflation because of the interaction of multiple economic factors which were
pervasive to the Zimbabwean economic environment as explained in note 35 and
the inability to adjust items that were recorded in Zimbabwe Dollars into United States Dollars at the date of change
of functional currency as more fully explained in note 37.2.
The impact of the above on the current year financial statements is more fully explained in Note 37.
Non-compliance with IAS 1: Presentation of financial statements
The Directors have not presented any comparative information for the statement of comprehensive income as required by
IAS 1 because they believe the information will be misleading for reasons stated in note 37.3.
Basis for qualified opinion on the statements of financial position
The directors were unable to present the composition of equity on the statement of financial position, as required by IAS
1. The non-distributable reserve balance was recognised as the residual of the group’s net assets as recommended in the
‘Financial Reporting Guidance’. The reasons for the non-compliance with IAS 1 are more fully explained in Note 37.3.
Adverse opinion on non-compliance with International Financial Reporting Standards on all monetary
comparative information, the statement of comprehensive income, the statement of cash flows and statement of
changes in equity
In our opinion, because of the significance of the matters described in the Basis for Adverse Opinion paragraph, all the
comparative information, the statement of comprehensive income; the statements of cash flows and the statement of
changes in equity do not give a true and fair view of the results of the group’s operations and cash flows for the year
ended 31 December 2009 in accordance with International Financial Reporting Standards.
Qualified opinion on the statements of financial position
In our opinion, except for the possible effects of the matter relating to the presentation of the composition of group equity,
the company and group statements of financial position, in all material respects, gives a true and fair view of the financial
position of NMBZ Holdings Limited and its subsidiaries at 31 December 2009 in accordance with International Financial
Reporting Standards.
Report on other legal and regulatory requirements
In our opinion, the company and group financial statements have not been properly prepared in compliance with the
disclosure requirements of the Companies Act (Chapter 24:03) and Statutory Instruments (SI 33/99 and SI 62/96) due to
the inability to comply with IAS 1 and IAS 21.
In our opinion, the group has complied, in all material respects with the Financial Reporting Guidance. This guidance was
issued jointly by the Public Accountants and Auditors Board, the Zimbabwe Stock Exchange and the Zimbabwe
Accounting Practices Board to assist preparers of financial statements in converting their financial statements from
Zimbabwe Dollars into their new functional currency in a manner that is consistent with the principles of International
Financial Reporting Standards, in as far as is practicable, in the Zimbabwean economic environment, at the date of the
change of functional currency.
ERNST & YOUNG
CHARTERED ACCOUNTANTS (ZIMBABWE)
Harare
16 April 2010
18
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
Note
GROUP
2009
US$
Interest income
Interest expense
3
(544 097)
1 347 193
Net interest income
Net foreign exchange gains 379 236
Non-interest income
----------------------
803 096
4 7 236 949
----------------------
8 419 281
(7 385 212)
5
Net operating income
Operating expenditure
Impairment losses on loans
and advances
(92 887)
----------------------
Profit before taxation
Taxation 6 1 381 766
Financial institutions levy
941 182
(44 661)
6
Profit for the year
----------------------
2 278 287
Other comprehensive income/(loss):
Additional impairment losses on
loans and advances per RBZ grading 7 (274 904)
Tax relating to components
of other comprehensive income
Other comprehensive (loss)
for the year net of tax
Total comprehensive income
for the year
8
70 788
-------------------
(204 116)
-------------------
2 074 171
===========
Earnings per share (US cents)
9
- Basic
- Diluted basic 9
0.14
0.14
19
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
as at 31 December 2009
GROUP COMPANY
SHAREHOLDERS' FUNDS
Share capital
Capital reserves
Retained earnings/
(accumulated loss)
Total shareholders’ funds
LIABILITIES
Deposits and other accounts
Financial liabilities at fair value
through profit and loss
Provision for current taxation
Deferred taxation
ASSETS
Cash and cash equivalents
Financial assets at fair value
through profit & loss
Advances and other accounts
Investments:-
Note
10
11
2009
US$
-
6 289 718
12
2 074 171
----------------------
8 363 889
13
23 649 725
14
6.4
15
6 444 932
299 162
675 319
----------------------
39 433 027
=============
16
14
17
12 203 181
7 135 023
12 729 195
Trade investment
Group companies
18
19
Quoted and other investments 20
21
Investment properties
22
Property and equipment
15
Deferred taxation
108 003
-
455 638
3 219 600
3 582 387
-
----------------------
39 433 027
=============
2009
US$
-
6 297 943
(18 796)
-------------------
6 279 147
-
-
-
-
--------------------
6 279 147
============
-
-
79 034
31 495
6 154 577
12 289
-
-
1 752
-------------------
6 279 147
============
……………………………………..
G M MANDISHONA
)
) Directors
……………………………………..
B P WASHAYA
)
16 March 2010
………………………….…
V Mutandwa
Company Secretary
16 March 2010
20
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2009
GROUP
Capital Reserve
Share
Capital
US$
Share
Premium
US$
Treasury
Shares
US$
Share
Option
Reserve
US$
Non-
distributable
Reserve
US$
Retained
Earnings
US$
Total
US$
Deemed balances at 1 January 2009*
Total comprehensive income for the year
Own equity instruments (note10.3)
Shares issued – share options exercised
-
-
-
-
------------
-
========
-
-
-
-
- (8 225)
34 822
-----------
-----------
34 822 (8 225)
======= =======
96 034
-
-
- (34 822)
---------
61 212
======
6 201 909
- 6 297 943
- 2 074 171 2 074 171
- (8 225)
-
-
-
-
------------
-------------
--------------
8 363 889
2 074 171
6 201 909
========
========
========
COMPANY
Capital Reserve
Share
Capital
US$
Share
Premium
US$
Share
Non-
Option distributable Accumulated
Loss
Reserve
US$
US$
Reserve
US$
Total
US$
Deemed balances at 1 January 2009*
Total comprehensive income for the year
Shares issued – share options exercised
-
-
-
------------
-
========
-
-
-
34 822 (34 822)
-----------
-----------
34 822
96 034 6 201 909
6 297 943
-
- (18 796) (18 796)
-
-
-------------
--------------
6 279 147
61 212 6 201 909 (18 796)
========
========
-
---------
======
======= =======
*Deemed balances were derived using the principles outlined in note 2.1.1
21
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
Non-cash items
2009
US$
941 182
92 887
-Impairment losses on loans and advances
(579 600)
-Investment properties fair value adjustment
(2 066)
-Profit on disposal of property and equipment
-Quoted and other investments fair value adjustment
(172 978)
-Loss on disposal of investment property 460 000
-Profit on disposal of quoted and other investments
(45 256)
-Impairment loss on land and buildings
1 050 000
-Loss on derecognition of investments 10 404
-Depreciation 209 680
-Fair value adjustment on financial instruments (32 371)
-------------------
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
Deposits and other accounts 19 715 785
Advances and other accounts
Financial assets at fair value through profit and loss
(12 736 106)
(7 135 023)
6 444 932
-------------------------
8 221 470
-------------------------
Taxation
Corporate tax paid (note 6.4)
Capital gains tax paid
(10 520)
(152 000)
-------------------------
Net cash inflow from operating activities 8 058 950
-------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of investment property
Purchase of property and equipment
Purchase of quoted investments
Purchase of unquoted investments
Proceeds from disposal of quoted and other investments
3 040 000
(160 322)
(60 134)
(74 542)
109 788
-------------------------
Net cash outflow from investing activities 2 854 790
-------------------------
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year (note 16)
10 913 740
1 289 441
---------------------------
12 203 181
================
Operational cash flows from interest and dividends
Interest paid
Interest received
(544 097)
1 347 193
22
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
The following paragraphs describe the main accounting policies applied consistently by the Group.
ACCOUNTING CONVENTION
As the banking subsidiary, NMB Bank Limited, constitutes the major part of the Group, the financial statements have been
presented in a form applicable to a Commercial Bank registered in terms of the Banking Act (Chapter 24:20). The financial
statements are based on accounting records maintained under the historical cost convention except for securities held for
trading, land, buildings and investment properties which are stated at fair value. The Group’s financial statements are
presented at least annually.
The accounting policies outlined below have been consistently applied by the Group.
BUSINESS COMBINATIONS
Business combinations are accounted for in accordance with the Purchase Method. This involves recognising identifiable
assets (including previously unrecognised intangible assets) and liabilities (including contingent liabilities and excluding
future restructuring) of the acquired business at fair value.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the company and its subsidiaries. All companies
in the Group have a December year end. Inter-group transactions and balances are eliminated on consolidation.
Subsidiaries
Subsidiaries are those enterprises controlled by the company. Control exists when the company has the power, directly or
indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The
financial statements of subsidiaries are included in the consolidated financial statements, using the Purchase Method, from
the date that control effectively commences until the date that control effectively ceases.
Goodwill
Goodwill acquired in a business combination is recognised as an asset and is measured initially at its cost, being the excess
of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities of the acquired entity. Subsequently, the goodwill is tested for impairment annually or more
frequently if events or changes in circumstances indicated that it might be impaired. Impairment losses on goodwill are not
reversed. If the cost of acquisition is less than the fair values of the identifiable net assets acquired, the discount on
acquisition is recognised directly in profit or loss in the year of acquisition.
FOREIGN CURRENCY TRANSACTIONS
The Group’s consolidated financial statements are presented in United States Dollars, which is also the parent company’s
functional currency.
Transactions in foreign currencies are translated at the foreign exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies, are translated at the closing rate at the reporting date.
Non-monetary assets and liabilities measured at historical cost denominated in foreign currencies are translated at the
exchange rates ruling at the transaction date. Foreign exchange differences arising on translation are recognised in profit or
loss.
23
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
TAXATION
Current taxation
Income tax on the statement of comprehensive income for the year comprises current and deferred tax. Income tax is
recognised in profit or loss except to the extent that it relates to items recognised in equity or other comprehensive income,
in which case the related tax.
Current tax is expected tax payable on the taxable income for the year, using rates enacted or substantially enacted at the
balance sheet date and any adjustment to tax payable in respect of previous years.
Deferred taxation
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.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• 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
In respect of taxable temporary differences associated with investments in subsidiaries, 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.
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 utilised except:
• 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
In respect of deductible temporary differences associated with investments in subsidiaries, 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 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.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are
recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be
recovered.
Financial institutions levy
Financial institutions levy is accrued at the prescribed rate, which is currently 5% on profit before taxation from the banking
subsidiary.
DIVIDEND DISTRIBUTION
Dividend distribution to the Company’s shareholders is recognised as a liability in the period in which the dividends are
approved by the Company’s shareholders.
24
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
IMPAIRMENT LOSSES ON LOANS AND ADVANCES
Impairment
A provision for loan impairment is established if there is objective evidence as a result of one or more events that has
occurred after the initial recognition of the asset (an incurred “loss event”) that the Group will not be able to collect all
amounts due according to the original contractual terms of loans. The amount of the provision is the difference between the
carrying amount and the recoverable amount, being the present value of expected cash flows, including amounts
recoverable from guarantees and collateral, discounted at the original effective interest rate of loans.
The loan loss provision also covers losses where there is objective evidence that incurred losses are present in components
of the loan portfolio at the reporting date. These have been estimated based upon historical patterns of losses in each
component, the credit ratings allocated to the borrowers and reflecting the current economic climate in which the borrowers
operate. When a loan is uncollectible, it is written off against the related provision for impairment; subsequent recoveries
are credited to the income statement.
If there is objective evidence that an impairment loss has been incurred, the carrying amount of the asset is reduced through
the use of an allowance account and the amount of the loss is recognised in profit or loss. If, in a subsequent year, the
amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was
recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a
future write-off is later recovered, the recovery is credited in profit or loss.
Regulatory Guidelines And International Financial Reporting Standards Requirements In Respect Of The
Group’s Banking Activities
The Banking Regulations 2000 issued by the RBZ give guidance on provisioning for doubtful debts and stipulate certain
minimum percentages to be applied to the respective categories of the loan book.
International Accounting Standard 39 (IAS 39), Financial Instruments: Recognition and Measurement (IAS39) 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 Board 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 against other comprehensive
income and where it is more, the full amount will be charged to profit or loss.
Non-Performing Loans
Interest on loans and advances is accrued to income until such time as reasonable doubt exists about its recoverbility,
thereafter and until all or part of the loan is written off, interest continues to accrue on customer’s 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.
Renegotiated Loans and Advances
Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve
extending the payment arrangements and the agreement of new loan conditions. Once the terms have been re-negotiated,
any impairment is measured using the original effective interest rate (EIR) as calculated before the modification of terms
and the loan is no longer considered past due. Management continuously renews re-negotiated loans to ensure that all
criteria are met and that future payments are likely to occur. The loans continue to be subject to an individual or collective
impairment assessment, calculated using the loans original EIR.
25
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
FINANCIAL INSTRUMENTS
Classification
Financial assets and financial 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. Management only designate an instrument at fair value through profit
and loss upon initial recognition when the following criteria are met, and designation is determined on an instrument by
instrument basis:
• the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the
assets or liabilities or recognising gains or losses on them on a different basis; or
• the assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their
performance evaluated on a fair value basis, in accordance with the documented risk management or investment strategy;
or
• the financial instrument contains one or more embedded derivatives which significantly modify the cash flows that
otherwise would be required by the contract.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market.
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. Equity investments
classified as available –for-sale are those which are neither classified as held for trading nor designated at fair value through profit
or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be
sold in response to needs for liquidity or in response to changes in the market conditions. The Group has not designated any loans
or receivables as available – for –sale.
Own equity instruments
Reacquired own instruments are measured at cost and are presented in the statement of financial position as a deduction from
equity. No gain or loss is recognised in the income statement on the sale, issuance or cancellation of these instruments.
Consideration received is presented in the financial statements as a change in equity.
Recognition
The Group recognises financial assets and financial liabilities at fair value through profit and loss and available for sale assets
on the date it becomes a party to the contractual provisions of the instrument. From this date any gains and losses arising from
changes in fair value of the assets are recognised in profit or loss 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
plus transaction costs on the day that they are transferred to the Group.
Measurement
Financial assets and financial liabilities are measured initially at fair value plus, in the case of investments not at fair value
through profit or loss, directly attributable transaction costs.
Subsequent to initial recognition, financial assets and financial 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.
26
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
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.
Effective interest rate method
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of
allocating the interest income or interest expense over the relevant period. 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.
Amortised cost measurement principles
Amortised cost is computed using the effective interest method. The calculation takes into account any premium or discount on
acquisition and includes transaction costs and fees that are an integral part of the effective interest.
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 reporting date for an instrument with similar terms and conditions. Where pricing
models are used, inputs are based on market related measures at the reporting date.
Gains and losses on subsequent measurement
Gains and losses arising from a change in the fair value of available for sale assets are recognised directly in other comprehensive
income. When the financial assets are sold, collected or otherwise disposed of the cumulative gain or loss recognised in other
comprehensive income is transferred to profit or loss.
Gains and losses arising from a change in the fair value of financial assets and liabilities through profit and loss are recognised in
profit or loss.
Derecognition
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is
derecognised when:
• The rights to receive cash flows from the asset have expired; or
• The Bank 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:
- the Bank has transferred substantially all the risks and rewards of the asset, or
- the Bank has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Bank 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 recognized to the extent of the Bank’s continuing involvement in the asset. In that case, the Bank also
recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the
rights and obligations that the Bank has retained.
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 Bank could be required to repay.
27
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where 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 a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit
or loss.
Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of
financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is
objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset
(an incurred “loss event”) and that the loss event has an impact on the estimated future cash flows from the financial asset
or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the
debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest and principal
payments, the probability that they will enter bankruptcy or other financial re-organisation and where observable data
indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults
SHARE - BASED PAYMENTS
The Group issues share options to certain employees in terms of the Employee Share Option Scheme which is an equity
settled share-based payment scheme. Share options are measured at fair value of the equity instruments at the grant date.
The fair value determined at the grant date 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 is adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and other behavioural considerations.
PROPERTY AND EQUIPMENT
Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes the cost
of replacing part of the equipment when that cost is incurred, if the recognition criteria are met. Likewise, when a major
inspection is performed, its cost is recognized in the carrying amount of the equipment as a replacement if the recognition
criteria are satisfied. The previous remaining carrying amount is derecognized. All other repair and maintenance costs are
recognized in the income statement as incurred.
Land and buildings are measured at revalued amount less accumulated depreciation on buildings and impairment losses
recognized after the date of the revaluation. Revaluation of property is done half yearly and at the end of each reporting
period, by a registered professional valuer.
28
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
Any revaluation surplus is credited to the assets revaluation reserve included in the equity section of the statement of
financial position, except to the extent that it reverses a revaluation decrease of the same asset previously recognized in
profit or loss, in which case the increase is recognized in profit or loss. A revaluation deficit is recognized in profit or loss,
except to the extent that it offsets an existing surplus on the same asset recognized in the asset revaluation reserve. Upon
disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.
An item of property, plant and equipment is derecognized 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 included in profit or loss in the year the asset is derecognized.
Residual values and the useful life of assets are reviewed at least at each financial year end. Where the residual value of an
asset increases to an amount that is equal to or exceeds its 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.
Owned Assets
The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of attributable
overheads which are directly attributable to the assets.
Depreciation
Depreciable amount is the cost of an asset or other amount substituted for cost less its residual value. Depreciation is
provided to write off the depreciable amount of property and equipment over their estimated useful lives to their estimated
residual values at the following rates per annum, on a straight-line basis.
Computers
Motor Vehicles
Furniture and Equipment
Buildings
20%
25%
20%
2%
Land and capital work-in-progress are not depreciated.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets.
All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
The Group capitalises borrowing costs for all eligible assets where construction was commenced on or after 1 January 2009.
The Group continues to expense borrowing costs relating to construction projects that commenced prior to 1 January 2009.
29
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
Leasing
The determination of whether an arrangement is a lease, or it contains a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
Group Company as a lessee
Leases which do not transfer to the Group substantially all the risks and benefits incidental to ownership of the leased items
are operating leases. Operating lease payments are recognised as an expense in profit or loss on a straight line basis over
the lease term. Contingent rentals payable are recognised as an expense in the period in which they are incurred.
Group Company as lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the assets are classified as
operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying amount of the leased
asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in
the period in which they are earned.
Impairment of non – financial assets
The carrying amounts of the Group’s non- financial assets other than consumables and deferred tax assets are reviewed at
each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the
assets’ recoverable amounts are estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. The recoverable amount of assets is the greater of their fair value less cost to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value
less costs to sell, an appropriate valuation model is used. Impairment losses of continuing operations are recognised in
profit or loss in those expense categories consistent with the functions of the impaired asset, except for property previously
revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in
equity up to the amount of any previous revaluation. An impairment loss is only reversed to the extent that the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation if no
impairment loss had been recognised. A reversal of an impairment loss is charged to profit or loss.
INVESTMENT PROPERTIES
Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of
replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met, and
excludes the costs of day to day servicing of an investment property. The previous remaining carrying amount is
derecognised. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market
conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are
included in profit or loss in the year in which they arise.
Investment properties are derecognised when either they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment
property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in
use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with
the policy stated under property, plant and equipment up to the date of change in use.
30
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
FINANCIAL GUARANTEES
In the ordinary course of business, the Group companies give financial guarantees, consisting of letters of credit, guarantees
and acceptances. Financial guarantees are initially recognised in the financial statements at fair value, being the premium
received. Subsequent to initial recognition, the Group’s liability under each guarantee is measured at the higher of the
amount initially recognised less, where appropriate, cumulative amortisation recognised in profit or loss, and the best
estimate of expenditure required to settle any financial obligation arising as a result of the guarantee.
Any increase in the liability relating to financial guarantees is recognised in the income statement. The premium received is
recognised in profit or loss on a straight line basis over the life of the guarantee, or in full, depending on the conditions
attached to the guarantee.
INTEREST INCOME
Interest income includes income arising out of the banking activities of lending and investing. Interest income is recognised
in profit or loss as it accrues taking into account the effective yield on the asset and where appropriate, premiums/discounts
on debt securities are amortised using the effective interest rate method.
INTEREST EXPENSE
Interest expense arises from deposit taking. The expense is recognised in profit or loss as it accrues, taking into account the
effective interest cost of the liability.
NON-INTEREST INCOME
Other income comprises of income such as revenue derived from service fees, commission, facility arrangement fees bad
debts recoveries, profit/losses on disposals of property and equipment and foreign exchange differences arising on
translation of foreign denominated balances. Commission income is brought to account on an accrual basis and bad debts
recoveries on a receipt basis. Fee income is recognised on settlement date, or where determinable, by stage of completion.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash and bank balances, and short term highly liquid investments with maturities of
three months or less when purchased. These are stated at amortised cost.
EMPLOYEE BENEFITS
Retirement benefits are provided for the Group’s employees through a defined contribution plan and the National Social
Security Authority Scheme.
Defined Contribution Plan
Obligations for contribution to the defined contribution pension plan are recognised as an expense in profit or loss as they
are incurred.
National Social Security Authority Scheme
The cost of retirement benefits applicable to the National Social Security Authority, which commenced operations on 1
October 1994 is determined by the systematic recognition of legislated contributions.
31
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2009
FUEL
Fuel is accounted for at acquisition cost.
PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and 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. The expense relating to any provision is presented in profit or loss
net of any reimbursements.
32
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
1.
REPORTING ENTITY
NMBZ Holdings Limited is an investment holding company domiciled in Zimbabwe, whose registered office is 64
Kwame Nkrumah Avenue, Harare. The consolidated financial statements of the Group as at and for the year ended
31 December 2009 comprise the company and its subsidiaries. The Group primarily is involved in corporate and
retail banking and investment.
2. ACCOUNTING MATTERS
2.1 MATTERS OF EMPHASIS
2.1.1 Functional and reporting currency
The company changed its functional and reporting currency from the Zimbabwe dollar to the United States dollar
with effect from 1 January 2009. These financial statements are reported in United States of America dollars and
rounded to the nearest dollar.
Following the guidance issued jointly by the PAAB, ZAPB and ZSE the balances as at 1 January 2009 were taken on
in United States of America dollars as follows:
• Land, buildings and investment properties valuations were based on the foreign currency valuation done by
the directors for the 2008 year end.
• Motor vehicles, office equipment, furniture and fittings valuation was done by the directors based on market
values obtained from the market taking into account the relative ages of the assets.
• Loans and advances were re-established by reference to the foreign currency amount where the repayment
was due and payable in foreign currency.
• Quoted investments were based on the equity prices ruling on 1 January 2009, and in the case of shares
traded on the Zimbabwe Stock Exchange (ZSE), the 30 day average prices from 19 February 2009 (the first
date of active trading in foreign currency on the Zimbabwe Stock Exchange (ZSE)) were used.
• Liabilities were re-established on the basis of the obligations which were due and payable in foreign
currency, or by reference to payments which were made after 1 January 2009 for an accrual at 31 December
2008.
• Other assets and liabilities were taken on by reference to the foreign currency amounts at 1 January 2009, or
at the first available foreign currency pricing subsequent to the change in functional currency
• The share option reserve was established using the Black-Scholes valuation model based on retrospective
application of the model with reference to parameters established subsequent to 19 February 2009, the first
date of active trading in foreign currency on the Zimbabwe Stock Exchange (ZSE).
• The net effect of the re-establishment of the Group’s assets and liabilities at 1 January 2009 resulted in a
functional currency reserve, the amount of which was credited to a non-distributable reserve. The non-
distributable reserve will be used, after the necessary statutory and shareholders approvals, for the re-
denomination of the capital of the Group’s subsidiaries.
The re-established amounts for the Group’s assets and liabilities at 1 January 2009 were taken as the deemed
costs/values at the date of change of the functional currency.
2.1.2 Inflation Indices
It is a requirement in terms of the International Financial Reporting Standards that inflation adjusted financial
statements should be prepared and converted to the new currency in accordance with IAS21, “The Effects of
Changes in Foreign Exchange Rates” and IAS29, “Financial Reporting in Hyperinflationary Economies”.
The company was unable to prepare inflation adjusted financial statements for the comparative period as a result of
the unavailability of inflation indices which were last published in July 2008.
33
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
2.1.3 Comparative information
Following the guidance issued by the Public Accountants and Auditors Board (PAAB), the Institute of Chartered
Accountants of Zimbabwe (ICAZ) and the Zimbabwe Accounting Practices Board (ZAPB), the company did not
include prior year comparatives as these would be misleading.
2.2 USE OF ESTIMATES, JUDGEMENTS AND ASSUMPTIONS
The preparation of the Group’s consolidated 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.
In the process of applying the Group’s accounting policies, management has made the following judgements which
have the most significant effect on the amounts recognised in the consolidated financial statements:
2.2.1 Deferred tax liability
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.
2.2.2 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.
2.2.3 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.
34
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
2.2.4 RBZ Forex Bond
The RBZ Forex Bond was valued at cost as there is currently no market information to facilitate the application of fair
value principles. There is currently no active market for these bonds.
2.2.5 Impairment losses on loans and advances
The Bank reviews its individually significant loans and advances at each statement of financial position date to assess
whether an impairment loss should be recorded in the income statement. In particular, judgement by management is
required in the estimation of the amount and timing of future cash flows when determining the impairment loss. In
estimating these cash flows, the Bank makes judgements about the borrower’s financial situation and the net
realisable value of collateral. These estimates are based on assumptions about a number of factors and actual results
may differ, resulting in future changes to the allowance. Loans and advances that have been assessed individually
and found not to be impaired and all individually insignificant loans and advances are then assessed collectively, in
groups of assets with similar risk characteristics, to determine whether provision should be made due to incurred loss
events for which there is objective evidence but whose effects are not yet evident. The collective assessment takes
account of data from the loan portfolio (such as credit quality, levels of arrears, credit utilisation, loan to collateral
ratios etc.), concentrations of risks and economic data.
The impairment loss on loans and advances is disclosed in more detail under Significant Accounting Policies –
Impairment losses on loans and advances.
2.2.6 Going concern
The Directors have assessed the ability of the group to continue operating as a going concern and believe that the
preparation of these financial statements on a going concern basis is still appropriate. However, the Directors believe
that under the current economic environment a continuous assessment of the ability of the group to continue to
operate as a going concern will need to be performed to determine the continued appropriateness of the going concern
assumption that has been applied in the preparation of these financial statements.
2.2.7 Fair value determination for transactions, assets and liabilities
The determination of fair values presented in the financial statements is affected by the prevailing economic
environment and may therefore be distorted. This may result in significant variations in fair values. The significant
assumptions and the estimation uncertainties are disclosed under Note 2.2.1 to Note 2.2.4.
2.3 STATEMENT OF COMPLIANCE
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, IAS 21 and IAS 29, have not been complied with.
The consolidated financial statements have been prepared in compliance with the Companies Act (Chapter 24:03)
and the Banking Act (Chapter 24:20).
The Bank presents its statement of financial position broadly in order of liquidity. An analysis regarding recovery
or settlement within 12 months after the statement of financial position date (current) and more than 12 months
after the statement of financial position date (non-current) is presented in note 23.
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial
position only when there is a legally enforceable right to offset the recognised amounts and there is an intention to
settle on a net basis, or to realise the assets and settle the liability simultaneously. Income and expense will not be
offset in the consolidated income statement unless required or permitted by any accounting standard or
interpretation, as specifically disclosed in the accounting policies of the Bank.
35
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
2.4 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
The accounting policies adopted are consistent with those of the previous financial year except as follows:
The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2009:
IFRS 2 Share-based Payment: Vesting Conditions and Cancellations effective 1 January 2009
IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements
•
•
(Amended) effective 1 July 2009 (early adopted) including consequential amendments to IFRS 7, IAS 21,
IAS 28, IAS 31 and IAS 39
•
•
•
•
•
•
IFRS 7 Financial Instruments: Disclosures effective 1 January 2009
IFRS 8 Operating Segments effective 1 January 2009
IAS 1 Presentation of Financial Statements effective 1 January 2009
IAS 23 Borrowing Costs (Revised) effective 1 January 2009
IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations
Arising on Liquidation effective 1 January 2009
IFRIC 9 Remeasurement of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and
Measurement effective for periods ending on or after 30 June 2009
•
•
•
IFRIC 13 Customer Loyalty Programmes effective 1 July 2008
IFRIC 16 Hedges of a Net Investment in a Foreign Operation effective 1 October 2008
Improvements to IFRSs (May 2008)
When the adoption of the standard or interpretation is deemed to have an impact on the financial statements or
performance of the Group, its impact is described below:
IFRS 2 Share-based Payment (Revised)
The IASB issued an amendment to IFRS 2 which clarifies the definition of vesting conditions and prescribes the
treatment for an award that is cancelled. The Group adopted this amendment as of 1 January 2009. It did not
have an impact on the financial position or performance of the Group.
The IASB issued an amendment to IFRS 2 that clarified the scope and the accounting for group cash-settled
share-based payment transactions. The Group adopted this amendment as of 1 January 2009. It did not have
an impact on the financial position or performance of the Group.
IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements
(Amended)
The Group adopted the revised from 1 January 2009. IFRS 3 (Revised) introduces significant changes in the
accounting for business combinations occurring after this date. Changes affect the valuation of non-controlling
interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent
consideration and business combinations achieved in stages. These changes will impact the amount of goodwill
recognised, the reported results in the period that an acquisition occurs and future reported results.
IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is
accounted for as a transaction with owners in their capacity as owners. Therefore, such transactions will no longer
give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting
for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes by IFRS 3 (Revised)
and IAS 27 (Amended) will affect future acquisitions or loss of control of subsidiaries and transactions with non-
controlling interests.
The change in accounting policy was applied prospectively and had no material impact on earnings per share.
36
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
IFRS 7 Financial Instruments: Disclosures
The amended standard requires additional disclosures about fair value measurement and liquidity risk. Fair value
measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair
value hierarchy, by class, for all financial instruments recognised at fair value. In addition, a reconciliation between
the beginning and ending balance for level 3 fair value measurements is now required, as well as significant transfers
between levels in the fair value hierarchy. The amendments also clarify the requirements for liquidity risk disclosures
with respect to derivative transactions and assets used for liquidity management. The fair value measurement
disclosures are presented in Note 14.
IFRS 8 Operating Segments
IFRS 8 replaced IAS 14 Segment Reporting upon its effective date. The Group concluded that the operating segments
determined in accordance with IFRS 8 are the same as the business segments previously identified under IAS 14.
IAS 1 Presentation of Financial Statements
The revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes
only details of transactions with owners, with non-owner changes in equity presented in a reconciliation of each
component of equity. In addition, the standard introduces the statement of comprehensive income: It presents all
items of recognised income and expense, either in one single statement, or in two linked statements. The Group has
elected to present one statement.
IAS 32 Financial Instruments: Presentation and IAS 1 Puttable Financial Instruments and Obligations
Arising on Liquidation
The standards have been amended to allow a limited scope exception for puttable financial instruments to be
classified as equity if they fulfil a number of specified criteria. The adoption of these amendments did not have any
impact on the financial position or the performance of the Group.
IFRIC 9 Reassessment of Embedded Derivatives and IAS 39 Financial Instruments: Recognition and
Measurement
This amendment to IFRIC 9 requires an entity to assess whether an embedded derivative must be separated from a
host contract when the entity reclassifies a hybrid financial asset out of the fair value through profit or loss category.
This assessment is to be made based on circumstances that existed on the later of the date the entity first became a
party to the contract and the date of any contract amendments that significantly change the cash flows of the contract.
IAS 39 now states that if an embedded derivative cannot be reliably measured, the entire hybrid instrument must
remain classified as at fair value through profit or loss.
IFRIC 13 Customer Loyalty Programmes
IFRIC 13 requires customer loyalty credits to be accounted for as a separate component of the sales transaction in
which they are granted. A portion of the fair value of the consideration received is allocated to the award credits and
deferred. This is then recognised as revenue over the period that the award credits are redeemed.
The Group does not maintain a loyalty points programme.
37
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
2.4 Changes in accounting policy and disclosures continued
IFRIC 16 Hedges of a Net Investment in a Foreign Operation
The Interpretation is to be applied prospectively. IFRIC 16 provides guidance on the accounting for a hedge of a net
investment. As such it provides guidance on identifying the foreign currency risks that qualify for hedge accounting
in the hedge of a net investment, where within the group the hedging instruments can be held in the hedge of a net
investment and how an entity should determine the amount of foreign currency gain or loss, relating to both the net
investment and the hedging instrument, to be recycled on disposal of the net investment.
Improvements to IFRSs
In May 2008 and April 2009 the IASB issued omnibus of amendments to its standards, primarily with a view to
removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard.
The adoption of the following amendments resulted in changes to accounting policies but did not have any
impact on the financial position or performance of the group.
•
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: clarifies that the disclosures required
in respect of non-current assets and disposal groups classified as held for sale or discontinued operations
are only those set out in IFRS 5. The disclosure requirements of other IFRSs only apply if specifically
required for such non-current assets or discontinued operations.
•
IFRS 8 Operating Segment Information: clarifies that segment assets and liabilities need only be reported
when those assets and liabilities are included in measures that are used by the chief operating decision
maker.
•
IAS 1 Presentation of Financial Statements: Assets and liabilities classified as held for trading in accordance
with IAS 39 Financial Instruments: Recognition and Measurement are not automatically classified as current
in the statement of financial position. The Group analysed whether the expected period of realisation of
financial assets and liabilities differed from the classification of the instrument. This did not result in any
reclassification of financial instruments between current and non-current in the statement of financial
position.
•
IAS 7 Statement of Cash Flows: Explicitly states that only expenditure that results in recognising an asset
can be classified as a cash flow from investing activities.
•
IAS 16 Property, Plant and Equipment: Replaces the term “net selling price” with “fair value less costs to
sell”. The Group amended its accounting policy accordingly, which did not result in any change in the
financial position.
•
IAS 18 Revenue: The Board has added guidance (which accompanies the standard) to determine whether
an entity is acting as a principal or as an agent. The features to consider are whether the entity:
Has primary responsibility for providing the goods or service
Has inventory risk
•
•
• Has discretion in establishing prices
•
Bears the credit risk
The Group has assessed its revenue arrangements against these criteria and concluded that it is acting as principal in
all arrangements. The revenue recognition accounting policy has been updated accordingly.
• IAS 20 Accounting for Government Grants and Disclosures of Government Assistance: Loans granted with
no or low interest will not be exempt from the requirement to impute interest. Interest is to be imputed on
loans granted with below-market interest rates. This amendment did not impact the Group as no
government ammitance has been received.
38
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
•
•
•
IAS 23 Borrowing Costs: The definition of borrowing costs is revised to consolidate the two types of items that
are considered components of ‘borrowing costs’ into one – the interest expense calculated using the effective
interest rate method calculated in accordance with IAS 39. The Group has amended its accounting policy
accordingly which did not result in any change in its financial position.
IAS 36 Impairment of Assets: When discounted cash flows are used to estimate ‘fair value less cost to sell’
additional disclosure is required about the discount rate, consistent with disclosures required when the discounted
cash flows are used to estimate ‘value in use’. This amendment had no immediate impact on the consolidated
financial statements of the Group because the recoverable amount of its cash generating units is currently estimated
using ‘value in use’.
The amendment clarified that the largest unit permitted for allocating goodwill, acquired in a business combination,
is the operating segment as defined in IFRS 8 before aggregation for reporting purposes. The amendment has no
impact on the Group as the annual impairment test is performed before aggregation.
IAS 38 Intangible Assets: Expenditure on advertising and promotional activities is recognised as an expense when
the Group either has the right to access the goods or has received the service. This amendment has no impact on the
Group because it does not enter into such promotional activities. The reference to there being rarely, if ever,
persuasive evidence to support an amortisation method of intangible assets other than a straight-line method has
been removed.
Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact on
the accounting policies, financial position or performance of the Group:
• IFRS 2 Share-based Payment
• IFRS 7 Financial Instruments: Disclosures
• IAS 8 Accounting Policies, Change in Accounting Estimates and Error
• IAS 10 Events after the Reporting Period
• IAS 19 Employee Benefit
• IAS 27 Consolidated and Separate Financial Statements
•
IAS 28 Investments in Associates
•
IAS 31 Interest in Joint Ventures
• IAS 34 Interim Financial Reporting
• IAS 38 Intangible Assets
•
• IAS 39 Financial Instruments: Recognition and Measurement
• IFRIC 9 Reassessment of Embedded Derivatives
• IFRIC 16 Hedge of a Net Investment in a Foreign Operation
IAS 40 Investment Properties
39
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
2.5 STANDARDS ISSUED BUT NOT YET EFFECTIVE
Standards issued but not yet effective up to the date of issuance of the Group’s consolidated financial statements are
listed below.
Standard
IFRS 3
IFRS 9
IAS 24
IAS 27
IFRIC 17
IFRIC 18
IFRIC 19
AC 504
Subject
Business combinations
Financial instruments
Related party disclosures
Consolidated and separate financial statements
Improvements to IFRS (April 2008)
Distribution of non-cash assets to owners
Transfer of assets from customers
Extinguishing financial liabilities with equity
instruments
IAS19 – The Limit on a defined benefit, minimum
funding requirements and their interaction in a
south African pension fund environment
Effective date*
1 July 2009
1 January 2013
1 January 2011
1 July 2009
Mostly 1 January 2010*
1 July 2009
1 July 2009
1 July 2010
Date issued
January 2008
November 2009
November 2009
January 2008
April 2009
November 2008
January 2009
November 2009
1April 2009
March 2009
The following accounting standards have been amended during the period:
Standard
IFRS 2
IAS 32
IAS 39
IFRIC 14
share
based
settled
Subject
Amendments to IFRS 2 – Share – based payments –
Group
payment
cash
arrangements
Classification of rights issues – Amendment to IAS
32
Amendment
instruments:
to IAS 39 Financial
Recognition and measurement – Eligible hedged
items
Prepayments of a minimum funding requirement –
Amendments to IFRIC 14
Effective date*
1 January 2010
Date issued
June 2009
1 February 2010
August 2009
1 July 2009
July 2008
1 January 2011
November 2009
These amendments are not expected to have a significant impact on the Group for the 31 December 2009 reporting
period.
40
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
3.
INTEREST INCOME
Cash and cash equivalents
Loans and advances to banks
Loans and advances to customers
Investment securities
Other
2009
US$
293 210
16 158
456 580
581 181
64
-------------------
1 347 193
============
4. NON-INTEREST INCOME
2009
US$
Quoted and other investments fair value
172 978
adjustment
Commission and fee income
4 888 077
Loss on disposal of investment property (460 000)
Profit on disposal of property and equipment
2 066
Fair value adjustment on
investment properties
Fair value adjustment on financial instruments
Profit on disposal of quoted and other investments
Debt recovery write back as RBZ Forex Bond
Other net operating income
579 600
32 371
45 256
1 789 836
186 765
---------------------
7 236 949
=============
41
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
5. OPERATING EXPENDITURE
The operating profit is after
charging the following:-
Administration costs
Loss on derecognition of investment
Audit fees
Impairment loss on land and buildings
Depreciation
Directors' remuneration
- Fees for services as directors
- Other emoluments
Staff costs
2009
US$
3 410 039
10 404
117 875
1 050 000
209 680
209 252
18 537
190 715
2 377 962
----------------------------
7 385 212
================
42
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
6.
TAXATION
6.1 Tax Charge
2009
US$
Current taxation
Aids levy
Deferred tax origination and reversal
of temporary differences (note 15) (1 646 787)
257 302
7 719
--------------------
(1 381 766)
Financial institutions levy 44 661
--------------------
Total taxation (1 337 105)
===========
6.2 Reconciliation of income tax charge
2009
US$
Based on results for the period at a rate of
30%
Arising due to:
282 355
Income not subject to tax (263)
Non-deductible expenses 1 519
Effect of opening deemed values (note2.1.1) (494 120)
--------------------
(210 509)
7 719
Aids levy
Tax adjustment due to change in tax rates (1 178 976)
----------------------
Taxation (1 381 766)
44 661
Financial institutions levy
----------------------
Total taxation (1 337 105)
=============
In 2009 the government enacted a change to the Capital Gains Tax rate from 20% to 5%. Proposed changes to the
corporate income tax rate from 30% to 25% are effective from 1 January 2010 and the effect of the future rate has
been applied in computing deferred tax as appropriate.
43
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
6.
TAXATION (Cont’d)
2009
US$
6.3 Total taxation charge/(credit)
analysed by company
Stewart Holdings (Private) Limited 15 970
NMB Bank Limited - Company (1 350 517)
NMBZ Holdings Limited (2 558)
--------------------
(1 337 105)
=============
6.4 Provision for current taxation (income tax, aids levy and financial institutions levy)
At 1 January
-
309 682
Charge for the year
Payments during the year (10 520)
-------------------
299 162
===========
7.
Components of other comprehensive income
2009
US$
Additional impairment losses on loans and
advances as per RBZ grading (274 904)
Income tax relating to components of
other comprehensive(loss)/ income 70 788
---------------
Other comprehensive income for the period (204 116)
=========
44
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
TAXATION (Cont’d)
8.
Tax effects relating to components of other comprehensive income
2009
Before tax Tax
benefit
US$
amount
US$
Net of
tax amount
US$
(274 904)
----------------
70 788 (204 116)
------------------
------------------
(274 904) 70 788 (204 116)
==========
==========
===========
Additional impairment losses
on loans and advances as
per RBZ grading
Other comprehensive (loss)
/income
9.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the 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 profit attributable to ordinary equity holders of NMBZ
Holdings Limited adjusted for the after tax effect of: (a) any dividends or other items related to dilutive potential
ordinary shares deducted in arriving at profit or loss attributable to ordinary equity holders of the parent entity; (b)
any interest recognised in the period related to dilute potential ordinary shares; (c) any other changes in income or
expense that would result from the conversion of the dilutive potential ordinary shares, 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 into ordinary shares.
Headline earnings per share is calculated by dividing the profit attributable to ordinary equity holders of NMBZ
Holdings Limited (excluding separately identifiable re-measurements, relating to any change in the carrying amount
of an asset or liability, net of related tax (both current and deferred), other than re-measurements specifically included
in headline earnings) by the weighted average number of ordinary shares outstanding during the year.
9.1 Earnings
2009
US$
Basic and Diluted
2 278 287
Headline (note 9.4)
2 735 051
45
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
9.2 Number of shares
2009
Weighted average shares in issue*
Diluted weighted average number of shares*
1 641 270 307
1 655 100 176
Weighted average shares in issue
Effects of dilution:
Share options granted but not exercised
Share options approved but not yet granted
Diluted weighted average number of shares
1 641 270 307
12 159 000
1 670 869
-------------------
1 655 100 176
============
* excludes own equity instruments amounting to 1 028 172 shares.
9.3 Earnings per share (US$ cents)
Basic
Headline
Diluted basic
Diluted headline
0.14
0.17
0.14
0.17
2009
9.4 Headline earnings
2009
US$
2 278 287
Profit attributable to shareholders
Add/(deduct) remeasurements:
- Fair value adjustment on
investment properties (579 600)
- Loss on derecognition of investment
10 404
- Impairment loss on land and buildings 1 050 000
- Tax effect (24 040)
----------------------
Headline earnings 2 735 051
=============
46
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
10. SHARE CAPITAL
GROUP AND COMPANY
10.1 Authorised
2009
Shares
million
2008
Shares
million
Ordinary shares of Z$0.00025
each
2 250
========
2 250
=========
10.2 Issued and fully paid
At 1 January
Shares issued – share options
At 31 December
2009
Shares
million
2008
Shares
million
1 641
7
---------------
1 648
=========
1 608
33
----------------
1 641
==========
Of the unissued ordinary shares of 601 824 771 (2008 – 608 741 771), options which may be granted in
terms of the NMBZ 2005 Employee Share Option Scheme (ESOS) amounted to 85 360 962 (2008 – 85
360 962) and out of these 1 670 869 (2008 – 1 670 869) had not been issued. As at 31 December 2009, 12
159 000 (2008 – 19 076 000) share options out of the issued had not been exercised.
Subject to the provisions of section 183 of the Companies Act (Chapter 24:03), the unissued shares are
under the control of the directors.
As at 31 December 2009, the nominal value of the shares has been reflected as nil in US$ 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.
10.3 Own equity instruments
Own equity instruments amounting to 1 028 172 shares at a cost of US$8 225 were held by the Company’s
subsidiary, Stewart Holdings (Private) Limited.
11. CAPITAL RESERVES
GROUP COMPANY
2009
US$
2009
US$
Share premium
34 822
Treasury shares (8 225)
61 212
Share option reserve
6 201 909
Non-distributable reserve
---------------------
6 289 718
=============
Total capital reserves
34 822
-
61 212
6 201 909
---------------
6 297 943
=========
47
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
Nature and purpose of reserves
Other capital reserves
Share premium
This reserve represents the increase in share capital attributable to the shares issued upon exercise of share options
by officers and key management personnel of the group.
Share option reserve
The share option reserve is used to recognise the value of equity – settled share based payment transactions provided
to employees, including key management personnel, as part of their remuneration. Refer to note 31.3 for further
details of these plans.
Treasury shares
This reserve represents the reduction in equity arising from the shareholding in the group company held by a
subsidiary. Refer to note 10.3 for further details of these own equity instruments.
Non – distributable reserve
The non-distributable reserve resulted from the net effect of the re-establishment of the Group’s assets and liabilities
at 1 January 2009. Refer to note 2.1.1 for further details of this reserve.
12.
REVENUE RESERVE
Analysis of retained profit/(accumulated loss) GROUP COMPANY
by company
2009
US$
2009
US$
NMBZ Holdings Limited (18 796) (18 796)
-
NMB Bank Limited
-
Stewart Holdings (Private) Limited
2 039 625
53 342
--------------------- -----------------
2 074 171 (18 796)
============= ===========
48
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
13. DEPOSITS AND OTHER ACCOUNTS
13.1 Deposits and other accounts by type
Deposits from other banks and other financial
institutions
Other money market deposits
Current and deposit accounts
Total deposits
Trade and other payables
2009
US$
3 009 704
6 444 932
19 265 484
----------------------
28 720 120
1 374 537
----------------------
30 094 657
Less: Financial liabilities disclosed
in note 14.1
(6 444 932)
----------------------
23 649 725
=============
The above are all financial liabilities at fair value through profit and loss. They are payable on demand, have variable
interest rates and varying security. The fair value of the above is the same as the cost.
13.2 Maturity analysis
Less than one month
1 to three months
3 to 6 months
6 months to 1 year
1 to 5 years
Over 5 years
2009
US$
25 992 595
2 727 525
-
-
-
-
----------------------
28 720 120
=============
49
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
13.3 Sectoral analysis of deposits
Banks and other financial institutions
Transport and telecommunications
companies
Mining companies
Industrial companies
Municipalities and parastatals
Individuals
Agriculture
Other deposits
14. FINANCIAL INSTRUMENTS
2009
US$
3 009 704
4 561 928
2 044 130
6 790 495
3 154 762
4 379 292
2 268 211
2 511 598
--------------------
28 720 120
============
%
10
16
7
24
11
15
8
9
---------
100
======
Cost
2009
US$
Fair
Value
2009
US$
14.1 Financial liabilities at fair value through
profit and loss*
Fixed term deposits
Negotiable Certificates of Deposits
Total financial liabilities at fair value
through profit and loss
88 481
6 356 451
----------------
88 481
6 356 451
----------------
6 444 932
=========
6 444 932
==========
All changes in the period to the fair value of the financial liabilities are attributable to changes in the related credit
risk.
*All financial liabilities at fair value through profit and loss were designated as such upon initial recognition.
50
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
14.2
Financial assets at fair value through profit and loss
Government and public sector
securities
Treasury bills
RBZ Forex Bond (1)
Mortgage bonds
Cost
2009
US$
Fair
Value
2009
US$
1 789 836
1 789 836
-
1 789 836
-
-
1 789 836
-
Bills-own acceptances (2)
Total financial assets at fair value
through profit and loss
5 234 839
----------------
5 345 187
-----------------
7 024 675
==========
7 135 023
==========
(1) Financial asset at fair value through profit and loss was classified as held for trading in accordance with
IAS 39.
(2) Financial asset at fair value through profit and loss was designated as such upon initial recognition.
The RBZ Forex Bond is valued at cost as there is no market information to facilitate application of fair value
principles.
All changes in the period to the fair value of the financial assets are attributable to changes in related credit risk.
MATURITY ANALYSIS OF FINANCIAL INSTRUMENTS
14.3 Financial liabilities at fair value through profit and loss
Less than 1 month
1 to 3 months
3 to 6 months
6 months to 1 year
1 to 5 years
Over 5 years
2009
US$
3 717 408
2 727 524
-
-
-
---------------
6 444 932
=========
51
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
14.4 Financial assets at fair value through profit and loss
Less than one month
1 to 3 months
3 to 6 months
6 months to 1 year
1 year to 5 years
Over 5 years
2009
US$
4 659 689
590 860
1 884 474
-
-
-
-----------------
7 135 023
==========
14.5 Other financial assets and financial liabilities summary
Fair value
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments
that are carried in the financial statements.
Financial assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Advances and other accounts
Trade investments
Quoted and other investments
Total
Financial liabilities
Deposits and other accounts
Financial liabilities at fair value
through profit and loss
Provision for taxation
Carrying
amount
2009
US$
Fair value
2009
US$
12 203 181
12 203 181
7 024 675
12 603 888
108 003
455 638
----------------
32 395 385
==========
7 135 023
12 523 188
108 003
455 638
---------------
32 425 033
=========
23 652 448
23 649 725
6 444 932
299 162
-------------
30 396 542
========
6 444 932
299 162
---------------
30 393 819
=========
The fair value of the financial assets and liabilities are included at the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following
methods and assumptions were used to estimate the fair values:
• Cash and cash equivalents, advances and other accounts, deposits and other accounts and provision for
taxation approximate their carrying amounts largely due to the short – term maturities of these instruments.
• Fair value of quoted and other investments is derived from quoted market prices in active markets if
available.
52
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
• Fair value of trade investments is derived from the Group’s proportionate share of the net asset value of
associate investments.
• Fair value of financial assets and liabilities at fair value through profit and loss is derived from quoted
market prices in active markets. If quoted market prices are not available the fair value is estimated using
pricing models or discounted cash flow techniques.
Fair value hierarchy
As at 31 December 2009, the Group held following financial instruments measured at fair value:
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by
valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are
observable, either directly or indirectly.
Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on
deservable market data
Assets measured at fair value
Financial assets at fair value through
profit and loss
Trade investments
Quoted and other investments
Liabilities measured at fair value
31 Dec
2009
US$
Level 1
US$
Level 2
US$
Level 3
US$
7 135 023
108 003
455 638
-
-
455 638
7 135 023
108 003
-
-
-
-
31 Dec
2009
US$
Level 1
US$
Level 2
US$
Level 3
US$
Financial liabilities of fair value through
profit and loss
6 444 932
-
6 444 932
-
During the reporting period ending 31 December 2009, there were no transfers between Level 1 and Level 2 fair
value measurements, and no transfers into and out of Level 3 fair value measurements.
14.6 Fair value adjustment to profit and loss
Fair value gain
2009
US$
32 371
=========
The fair value adjustment through profit and loss on financial instruments is calculated in accordance with the
principles disclosed in Significant Accounting Policies – Financial Instruments.
53
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
15. TAXATION GROUP COMPANY
2009
US$
Deferred Taxation
2009
US$
Provision for general doubtful debts (70 788)
29 313
Quoted and other investments
Investments:-trade investment
-
Investment properties 256 609
Property and equipment 363 183
8 007
Marking to market adjustments – IAS 39
Unrealised foreign exchange gains
97 653
Deferred income (4 717)
Loss to be assessed (3 941) (3 941)
-
615
1 575
-
-
-
-
-
---------------------- -----------------
Closing deferred tax liability/asset
675 319 (1 751)
Deferred tax liability at the beginning of the year (2 021 098) (807)
Deferred tax charged to other comprehensive
income 70 788 -
Deferred tax on disposal of investment
in subsidiary (note 19.2)
Effect of opening deemed values (note 2.1.1)
152 000 -
(523 797) -
--------------- ----------------
Current year credit (note 6.1) (1 646 787) (2 558)
========= ==========
54
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
16. CASH AND CASH EQUIVALENTS
16.1 Balances with Reserve Bank of Zimbabwe
Statutory reserve
16.2 Balances with other banks and cash
Current, nostro accounts and cash
Total cash and cash equivalents
2009
US$
2 746 957
9 456 224
--------------------
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.
55
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
17. ADVANCES AND OTHER ACCOUNTS
GROUP COMPANY
17.1 Advances
Fixed term loans
Local loans and overdrafts
Other accounts
17.1.1. Maturity analysis
Less than one month
1 to three months
3 to 6 months
6 months to 1 year
1 to 5 years
Over 5 years
Total advances
Provision for impairment losses
on loans and advances
Other accounts
Total
2009
US$
8 596 463
3 531 872
600 860
------------------
12 729 195
============
11 560 300
298 366
147 925
120 665
382 088
-
-------------------
12 509 344
(381 009)
-------------------
12 128 335
600 860
--------------------
12 729 195
============
2009
US$
-
-
79 034
-----------
79 034
========
-
-
-
-
-
-
------------
-
------------
-
79 034
--------------
79 034
========
17.2 Sectoral analysis of utilisations
Industrial
Agriculture and horticulture
Conglomerates
Services
Mining
Food & beverages
Other
2009
US$
8 068 093
691 914
273 288
2 072 971
1 272 873
-
130 205
------------------
12 509 344
===========
%
64
6
2
17
10
-
1
------
100
====
The material concentration of loans and advances are in the industrial sector at 64%.
56
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
17.3 Provisions for losses on loans and advances (including acceptances)
2009
Specific Portfolio Total
US$ US$ US$
13 218 - 13 218
92 887 - 92 887
At 1 January
Charge against profits
Charge against other
comprehensive income - 274 904 274 904
- - -
Bad debts written off
--------------- --------------- --------------
At 31 December 106 105 274 904 381 009
=========== =========== ==========
17.4 Non-performing loans and advances
2009
US$
Total non-performing loans and advances
Provision for impairment loss on loans and advances
Interest in suspense
106 105
(106 105)
-
----------------
-
==========
The residue on these accounts, where applicable, represents recoverable portions covered by realisable
security.
17.5 Other assets
2009
US$
Service deposits 112 167
Accrued income 97 295
Prepayments and stocks 317 565
Other receivables 133 833
--------------------
660 860
============
57
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
17.6 Loans to officers
Included in advances and other accounts (note 17.1)
are loans to officers:-
At 1 January
Net additions during the year
Balance at 31 December
Of which housing loans comprised:-
2009
US$
-
335 953
------------
335 953
=======
-
=======
Loans to officers are granted at a preferential rate of 6% per annum as part of their overall remuneration agreements.
17.7 The terms and conditions applicable to advances are as follows:
Tenure
Interest Rate
Overdraft Payable on demand
Minimum lending rate plus a margin
on unauthorised facility
Loans
period of 24 months
Loan payable over a maximum
Minimum lending rate plus a margin.
Loans to employees and directors are at
discounted interest rates.
Bankers Acceptances
period of 30 days
Loan payable over a minimum
Average rate of 44% per annum.
58
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
18. TRADE INVESTMENT
GROUP COMPANY
2009
US$
2009
US$
Unlisted
Takura Ventures (Private) Limited
Other
Directors’ valuation
31 495
76 508
----------
108 003
======
108 003
======
31 495
-
----------
31 495
======
31 495
======
The Takura Ventures (Private) Limited investment represents 3.1% shareholding in the company, whose principal
activity is venture capital finance. Other investment represents equity investment in SWIFT. The trade investment
was valued by directors at fair value at 31 December 2009.
19.
INVESTMENTS IN GROUP COMPANIES
19.1 Subsidiaries
Investments in subsidiaries
COMPANY
2009
US$
6 154 577
=========
59
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
19.
INVESTMENTS IN GROUP COMPANIES (Cont’d)
19.2 Shareholding
The subsidiaries, all of which are registered in Zimbabwe, and the extent of the group's beneficial interest therein and
their principal business activities are listed below:-
2009
2008
NMB Bank Limited
Brixtun (Private) Limited
NMB Fund Management (Private) Limited 100% (Dormant)
Stewart Holdings (Private) Limited 100% (Equity holdings) 100% (Equity Holdings)
Invariant (Private) Limited
Darksan (Private) Limited
Carey Farm (Private) Limited
100% (Banking)
100% (Banking)
100% (Dormant) 100% (Dormant)
100% (Dormant)
100% (Dormant) 100% (Dormant)
100% (Dormant)
100% (Dormant)
nil 100% (Property Holdings)
The consolidated financial statements include the financial statements of the subsidiaries listed above.
The Bank disposed off its equity holding in Carey Farm (Private) Limited on 17 August 2009.
20. QUOTED AND OTHER INVESTMENTS
GROUP COMPANY
Quoted investments
2009
US$
455 638
--------------------
455 638
============
2009
US$
12 289
-------------
12 289
========
The quoted investments comprise shares stated for year end purposes at the last trading date of 31 December 2009.
60
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
21.
INVESTMENT PROPERTIES
2009
US$
At 1 January
6 140 000
Sale of investment property (3 500 000)
579 600
Fair value adjustments
---------------------
3 219 600
=============
At 31 December
No rental income was received and no operating expenses were incurred on the investment properties in the current
year.
The investment properties comprise 2 sets of properties namely Borowdale Road and other investment properties. The
Borrowdale Road which is also known 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$2 450 000.
The other properties comprise residential stands and houses which were valued by the directors with the assistance of
professional valuers for year end purposes at US$769 600.
61
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
22. PROPERTY AND EQUIPMENT
Cost
At 1 January 2009
Additions
Impairment loss
Disposals
At 31 December 2009
Accumulated depreciation
At 1 January 2009
Charge for the year
Disposals
At 31 December 2009
Net book amount
At 31 December 2009
Net book amount
At 1 January 2009
HISTORICAL COST/ REVALUED AMOUNT
Computers
US$
Motor Furniture &
Vehicles Equipment
US$
US$
Freehold
Land &
Building
US$
Total
US$
911 127
71 375
447 772
55 553
116 830
31 685
3 760 000
1 709
5 235 729
160 322
- - - (1 050 000) (1 050 000)
-
-
------------------
----------
4 346 051
503 325
----------------------
-------------
-
---------- ------------ ----------
982 502 2 711 709
------------
148 515
----------
------------
-
-
114 262
89 930
-
----------
204 192
----------
25 910
23 995
-
---------
49 905
----------
413 812
95 744
-
------------
509 556
------------
-
11
-
----------
11
----------
553 984
209 680
-
-----------------------
763 664
-----------------------
299 133
======
98 610
======
472 946 2 711 698
======= =======
3 582 387
==============
333 510
======
90 920
======
497 315 3 760 000
=======
=======
4 681 745
==============
The land and buildings were valued by professional valuers for year end purposes and the open market value was US$2.71 million. The deemed balances at
1January 2009 were derived using the principles outlined in note 2.1.1.
Land and buildings’ original costs were in Zimbabwe Dollars. Following the Zimbabwe Dollar Currency reforms and subsequent change in functional currency it is
not practicable to determine the United States Dollars amounts for reasons given in note 37.
62
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
23.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Bank’s interest rate risk exposure on assets and liabilities. The financial assets and
liabilities are categorised by the earlier of contractual repricing or maturity dates.
23.1 Total position
At 31 December 2009
Up to 1
month
US$
1 month
to 3 months
US$
3 months
to 1 year
US$
Non-interest
1 year to
5 years bearing
US$
US$
Total
US$
Assets
Cash and cash
equivalents
Financial assets at fair value
through profit and loss
Advances and other
accounts
Quoted and other
investments
Investment properties
Property and equipment
12 203 181
4 659 689
11 560 300
-
-
-
-------------------
28 423 170
-------------------
-
590 860
298 366
-
1 884 474
-
-
-
-
12 203 181
7 135 023
268 591
382 088
219 851
12 729 195
-
-
-
----------------
889 226
----------------
-
-
-
------------------
2 153 065
------------------
-
-
-
----------------
382 088
----------------
563 641
3 219 600
3 582 387
----------------------
7 585 479
-----------------------
563 641
3 219 600
3 582 387
--------------------
39 433 027
--------------------
Liabilities and shareholders' funds
Financial liabilities at fair value
through profit and loss
Deposits and other accounts
Provision for current taxation
Deferred taxation
Shareholders’ funds
3 717 408
22 275 188
-
-
-
---------------------
25 992 596
---------------------
Interest rate repricing gap 2 430 574
--------------------
2 727 525
-
-
-
-
--------------------
2 727 525
--------------------
(1 838 299)
--------------------
-
-
-
-
-
-----------------
-
------------------
2 153 065
--------------------
Cumulative gap 2 430 574 592 275 2 745 340 3 127 428
==============
============= ============= =============
-
-
-
-
-
-------------------
-
--------------------
-
1 374 537
299 162
675 319
8 363 889
---------------------
10 712 907
---------------------
382 088 (3 127 428)
---------------------
-
=============
--------------------
6 444 932
23 649 725
299 162
675 319
8 363 889
---------------------
39 433 027
---------------------
-
----------------------
-
=============
63
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
24.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Bank’s interest rate risk exposure on assets and liabilities denominated in United States
Dollars only. The financial assets and liabilities are categorised by the earlier of contractual repricing or maturity
dates.
24.1 United States dollar
At 31 December 2009
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Advances and other accounts
Quoted and other investments
Investment properties
Property and equipment
Up to 1
month
US$
1 month
to 3 months
US$
3 months
to 1 year
US$
1 year to
5 years
Non-interest
bearing
US$
Total
US$
8 353 567
-
-
-
-
8 353 567
4 659 689
11 392 348
-
-
-
------------------
24 405 604
-------------------
590 860
298 366
-
-
-
1 884 474
268 591
-
-
-
--------------- ----------------
2 153 065
---------------- ----------------
889 226
-
382 088
-
-
-
-
219 851
487 133
3 219 600
3 582 387
7 135 023
12 561 243
487 133
3 219 600
3 582 387
-------------- ---------------------- ---------------------
35 338 953
-------------- ---------------------- ---------------------
7 508 971
382 088
Liabilities and shareholders' funds
Financial liabilities at fair value
through profit and loss
Deposits and other accounts
Provision for current taxation
Deferred taxation
Shareholders’ funds
3 275 040
19 074 551
-
-
-
------------------
22 349 591
-------------------
2 727 525
-
-
-
-
------------------
2 727 525
------------------
Interest rate repricing gap 2 056 013 (1 838 299)
6 002 564
20 449 088
299 162
675 319
8 363 889
--------------------- ---------------------
35 790 022
--------------------- ---------------------
382 088 (3 203 936) (451 069)
---------------------
-
=========== =========== ========== ========= ============= =============
-
-
-
-
-
------------ ----------------
-
------------ ----------------
2 153 065
---------------------
2 370 779 2 752 867 (451 069)
Cumulative gap 2 056 013 217 714
-
1 374 537
299 162
675 319
------------------ ---------------- ----------------
------------------
10 712 907
8 363 889
-
-
-
-
-
-
64
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
25.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Bank’s interest rate risk exposure on assets and liabilities denominated in currencies
other than United States Dollars. The amounts are shown at the equivalent values in United States Dollars, the
presentation currency. The financial assets and liabilities are categorised by the earlier of contractual repricing or
maturity dates.
25.1 Other Foreign currencies
At 31 December 2009
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Quoted and other investments
Advances and other accounts
Investment properties
Property and equipment
Up to 1
month
US$
1 month
to 3 months
US$
3 months
to 1 year
US$
1 year to
5 years
US$
Non-interest
bearing
US$
Total
US$
3 849 614
-
-
-
-
3 849 614
-
-
167 952
-
-
---------------------
4 017 566
---------------------
-
-
-
-
-
-----------------
-
-----------------
-
-
-
-
-
-----------------
-
-----------------
-
-
-
-
-
------------------
-
------------------
-
76 508
-
-
-
--------------------
76 508
--------------------
-
76 508
167 952
-
-
------------------
4 094 074
------------------
Liabilities and shareholders' funds
Financial liabilities at fair value
through profit and loss
Deferred taxation
Deposits and other accounts
Provision for current taxation
Shareholders’ funds
Interest rate repricing gap
Cumulative gap
442 368
-
3 200 637
-
-
-----------------------
3 643 005
-----------------------
-
-
-
-
-
-
-
-
-
-
------------
--------------
-
-
------------
--------------
-
-
============== ============ ============ ============
374 561
============== ============ ============ ============
-
-
-
-
-
-------------
-
-------------
-
374 561
374 561
374 561
374 561
-
-
-
-
-
---------------------
-
----------------------
76 508
=============
451 069
=============
442 368
-
3 200 637
-
-
---------------------
3 643 005
---------------------
451 069
============
451 069
============
65
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
26. FOREIGN EXCHANGE POSITIONS
The table below indicates the currencies to which the Group had significant exposure at 31 December on all its
assets and liabilities. The analysis reflects the mismatch by currency. The amounts are shown at the equivalent
values in United States Dollars, the presentation currency.
26.1 At 31 December 2009
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Advances and other accounts
Quoted and other investments
Investment properties
Property and equipment
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
8 353 567
1 296 591
95 540
2 389 271
68 212
12 203 181
7 135 023
12 561 243
487 133
3 219 600
3 582 387
-------------------
35 338 953
-------------------
-
167 716
-
-
-
--------------------
1 464 307
--------------------
-
128
-
-
-
-------------------
95 668
-------------------
-
88
76 508
-
-
------------------
2 465 867
------------------
-
21
-
-
-
---------------------
68 233
---------------------
7 135 023
12 729 195
563 641
3 219 600
3 582 387
------------------
39 433 027
===========
Liabilities and shareholders’ funds
Financial liabilities at fair value
through profit and loss
Deferred taxation
Deposits and other accounts
Provision for current taxation
Shareholders’ funds
6 002 564
675 319
20 449 088
299 162
8 363 889
-
-
1 145 520
-
-
--------------------- --------------------- ---------------------
35 790 022
1 145 520
---------------------- --------------------- ---------------------
Net foreign exchange position (451 069)
318 787
============= ============ ============ =========== ==========
- 442 368 -
- - -
46 693 1 958 063 50 361
- - -
- - -
------------------ ------------------
46 693 2 400 431 50 361
------------------ ------------------
17 872
48 975 65 436
6 444 932
675 319
23 649 725
299 162
8 363 889
------------------
39 433 027
===========
66
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
27. CONTINGEN T LIABILITIES
Guarantees
Commitments to lend
2009
US$
3 150 324
6 638 259
-----------------
9 788 583
==========
The Bank enters into various irrevocable commitments and contingent liabilities in its normal course of business in
order to meet financial needs of customers. These obligations are not recognised on the statement of financial
position, but contain credit risk and are therefore part of the overall risk of the bank.
Guarantees commit the Bank to make payments on behalf of clients in the event of a specified act. Guarantees carry
the same credit risk as loans.
Commitments to lend represent contractual commitments to advance loans and revolving credits. Commitments
have fixed expiry dates and may expire without being drawn upon, hence total contract amounts do not necessarily
represent future cash requirements.
28. CAPITAL COMMITMENTS
Capital expenditure contracted for
Capital expenditure authorised but
not yet contracted for
2009
US$
-
998 400
-------------
998 400
=======
Capital commitments, when they arise, will be financed from the Group’s own resources.
29. OPERATING LEASE COMMITMENTS
Lease commitments
Up to 1 year
1 – 5 years
2009
US$
2 292 335
458 467
1 833 868
Lease commitments relate to future rental commitments up to the expiry of the lease agreements.
67
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
30. RELATED PARTIES
As required by IAS 24, Related Parties Disclosures, the Board’s view is that non-executive and executive
directors constitute the key management of the Bank. Accordingly, key management remuneration is disclosed
below.
30.1 Compensation of key management personnel of the Bank
Short – term employee benefits
30.2 Key management interest in an employee share options
2009
US$
209 252
======
At 31 December 2009, key management held options to purchase ordinary shares of the Company as follows:
• 3 000 000 ordinary shares at a price of US$ nil exercisable between 12 March 2009 and 12 March 2013.
30.3 Balances of loans to directors, officers and others
Loans to directors and officers or their companies are included in advances and other accounts (note 17.1).
Non - executive directors
Executive directors
Officers (Note 18.6)
Directors' companies
Officers’ companies
Intra group loans
Provision for impairment losses
on loans
2009
US$
600
64 025
335 953
-
-
-
----------
400 578
-
------------
400 578
=======
68
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
30.4 Other related party disclosures
Entities with significant
influence over the Group
Interest from
Interest to
related parties related parties
US$
US$
Amounts owed by Amounts owed to
related parties
US$
related parties
US$
2009
-
-
400 578
-
30.5 BORROWING POWERS
Holding Company
In terms of the existing Articles of Association, Article 102, the directors may from time to time, at their discretion,
borrow or secure the payment of any sum or sums of money for the purposes of the company without any
limitation.
Banking subsidiary
In terms of the existing Articles of Association, Article 55, the directors may from time to time, at their discretion,
borrow or secure the payment of any sum or sums of money for the purposes of the company without any
limitation.
31. EMPLOYEE BENEFITS
31.1 Pension Fund
All eligible employees contribute to the NMB Bank Pension Fund, which is a defined contribution plan.
The assets of the Pension Fund are held separately from those of the Group in funds under the control of
Trustees. The pension fund assets include 389 068 shares in NMBZ Holdings Limited as at 31 December
2009.
69
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
31. EMPLOYEE BENEFITS (Cont’d)
31.2 Expense recognised in profit or loss
Defined Contribution Plan
2009
US$
62 878
========
The expense is recognised in profit or loss as part of staff costs under operating expenses (note 5).
31.3 Employee Share Option Scheme
In terms of the Employee Share Option Scheme, up to a maximum of 10% of the issued share capital may be
granted by the directors to senior employees by way of options. Each set of options is exercisable at any time
within a period of five years from the date the options are granted and the issue price is based on the higher of
nominal value of the shares and the middle market price derived from the Zimbabwe Stock Exchange prices for
the trading day immediately preceding the date of offer. The options vest immediately from date of issue and
the fair value of the options is estimated at the grant date using the Black – Scholes option pricing model, taking
into account the terms and conditions upon which the instruments were granted.
Movements in the year
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and
movements in share options during the year.
GROUP and COMPANY
Outstanding as at 1 January
Lapsed
Issued
Exercised (6 917)*
No
000’s
19 076
-
-
------------
12 159
=======
2009
WAEP$
0.005
-
-
0.005
0.005
*The weighted average share price at the date of exercise for the options exercised was $0.0082
70
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
31. EMPLOYEE BENEFITS (Cont’d)
Terms of options outstanding at 31 December 2009
GROUP & COMPANY
Expiry date
Exercise price
US$
5 September 2012
7 January 2013
12 March 2013
nil
nil
nil
2009
Shares
000’s
9 159
-
3 000
----------
12 159
======
31.4 National Social Security Authority Scheme
All employees of the group are members of the National Social Security Authority Scheme, a defined contribution
plan to which both the employer and the employees contribute.
Contributions by the employer are charged to the profit and loss account and during the period amounted to US$62
878.
31.5 Number of employees
The total number of employees of the Group at 31 December 2009 was 409 (2008 – 470).
32. SEGMENT REPORT
No segmental information is presented in respect of the Group as there are no distinguishable business segments.
33. EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States
dollars at year end:
British Sterling
South African Rand
European Euro
Botswana Pula
GBP
ZAR
EUR
BWP
31 December 2009
Mid-rate
US$
1.6076
7.3975
1.4371
6.6578
71
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34. RISK MANAGEMENT
In the ordinary course of business the Group manages risks of all forms especially operational, market, liquidity and
credit risks. These risks are identified and monitored through various channels and mechanisms.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The Board has established the Asset and Liability Management Committee (ALCO) and
operational risk committees, which are responsible for developing and monitoring Group risk management policies
in their specified areas. The Group has a Risk Management department, which reports to the Chief Executive
Officer and is responsible for the management of the overall risk profile.
The Group risk management policies are established to identify and analyse the risks faced by the Group, 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 Group Risk Committee which is responsible for monitoring compliance with the Group risk management
policies and procedures, and for reviewing the adequacy of the risk management framework in relation to the risks
faced by the Group, is assisted in these functions by Internal Audit and Risk Management. 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 Group main objective is to contain the risk inherent within the financial services sector and to ensure that the
Group various risk profiles are understood and appropriately managed to the benefit of customers, shareholders and
other stakeholders.
34.1 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 Group to credit risk to be considered by the sanctioning committees.
34.1.1Management 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 Group 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.
72
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
• 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
Group in the management of credit risk.
The table below shows the maximum exposure to credit for the components of the balance sheet. The maximum
exposure is shown as gross.
34.1.2 Maximum exposure to credit risk without taking account of any collateral
Note
14
17
27
27
Cash and cash equivalents (excluding
cash on hand)
Financial assets at fair value through
profit & loss
Advances and other accounts
Total
Guarantees
Commitments to lend
Total
Total credit risk exposure
2009
US$
9 052 698
7 135 023
12 729 195
-------------------
28 916 916
-------------------
3 150 324
6 638 259
-------------------
9 788 583
--------------------
38 705 499
============
73
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
Where financial instruments are recorded at fair value the amounts shown above represent the current risk exposure
but not the maximum risk exposure that could arise in the future as a result of changes in values. The effect of
collateral and other risk mitigation techniques is shown below.
An industry sector analysis of the Group’s financial assets, before and after taking into account collateral held or
other credit enhancements is as follows:
34.1.3 Risk concentrations of maximum exposure to credit risk
At 31 December 2009
Industrials
Agriculture and horticulture
Conglomerates
Services
Mining
Food and beverages
Other
Gross
Maximum
exposure
US$
Net
maximum
exposure
US$
8 068 093
691 914
273 288
2 072 971
1 272 873
-
130 205
------------------
12 509 344
===========
-
-
273 288
-
-
-
-
----------------
273 288
==========
34.1.4 Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of credit risk of the counterparty. There are
guidelines regarding the acceptability of types of collateral. The main types of collateral obtained are guarantees, cession
of debtors, mortgages over residential properties, equities, subordination of shareholder loans and promissory notes. The
fair value of all collateral held by the Group at the reporting date is US$22 567 686. The benefits on guarantees are not
included in the above table.
34.1.5 Credit quality per sector
At 31 December 2009
Industrials
Agriculture and horticulture
Conglomerates
Services
Mining
Food and beverages
Other
Total
Grade A
Pass
US$
Grade B
Special Grade C
Substandard
Mention
US$
US$
Grade D
Doubtful
US$
Grade E
Loss
US$
Total
US$
5 962 917
1 997 111
178 727
510 766
273 288
-
986 933
1 069 565
1 167 506 105 367
-
63 053
---------------
3 663 230
108 066
2 420
-
16 473
-
-
49 644
-----------------
176 603
=========== ========= ==========
-
-
------------------
8 652 003
-
-
-
-
-
-
1 582
--------------
1 582
========
-
-
-
-
-
-
15 926
8 068 093
691 914
273 288
2 072 971
1 272 873
-
130 205
------------- ------------------
12 509 344
======== ==========
15 926
74
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34.2 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 Group operates. The Group is currently developing VaR (Value
at Risk) model which will be used to manage and monitor the market risk for the trading portfolio.
The Group 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 Group’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 forecasts. The mismatches are also contained within 10%
of the bank’s capital position.
The following table demonstrates the sensitivity to a reasonable change in interest rates, with all other variables held
constant, of the Bank’s statement of comprehensive income.
The sensitivity of the statement of comprehensive income is the effect of the assumed changes in interest rates on
the profit or loss for the year, based on the variable and fixed interest rate financial assets and liabilities held at 31
December.
Sensitivity of net interest income
At 31 December 2009
Increase in
interest rates
%
0 to 1
months
US$
1 to 3
months
US$
3months
to 1 year
US$
1 year to
5 years
US$
Total
US$
USD
USD
USD
USD
USD
USD
+5 104 203 (77 140)
+3 62 522 (46 284)
+1 20 841 (15 428)
-1
-3
-5
33 433
20 060
6 687
15 428 (10 610) (6 687)
46 284 (31 831) (20 060)
77 140 (53 006) (33 433)
(20 841)
(62 522)
(104 203)
53 006
31 831
10 610
113 502
68 129
22 710
(22 710)
(68 129)
(113 502)
75
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34.3 Foreign currency exchange rate risk
The table below calculates the effect of a reasonable possible movement of the currency rate against the United
States Dollar, with all other variables held constant. A negative amount in the table reflects a potential net reduction
in the statement of comprehensive income or equity while a positive amount reflects a net potential increase.
At 31 December 2009
% Change in Effect on profit
before tax
US$
currency
rate
Effect on
equity
US$
Currency
USD
USD
5 568
USD
(5 568)
USD
(16 704)
USD
USD -5 (40 290) (27 840)
40 290
24 174 16 704
8 058
(8 058)
(24 174)
27 840
+5
+3
+1
-1
-3
76
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34.4 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 Group identifies this risk through
maturity profiling of assets and liabilities and assessment of excepted cashflows and the availability of collateral
which could be used additional funding if required.
The Group 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 these rates were 50% for time and demand liabilities. 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 Group for managing liquidity risk is the ratio of net liquid assets to deposits from
customers. Liquid assets consist of cash and cash equivalents, short term bank deposits and liquid investment
securities available for immediate sale.
Maturity profile for contingent liabilities
The table below shows the contractual expiry by maturity of the Bank’s contingent liabilities and commitments to
lend:
At 31 December 2009
Guarantees
Commitments to lend
On
Demand
US$
165 000
465 336
-------------------
630 336
===========
0 to 1
months
US$
16 500
36 810
-------------
53 310
========
1 year to
1 to 3 3 months
to 5 years
to 1 year
months
US$
US$
US$
-
2 944 824
24 000
34 727
5 276 042
825 344
-------------
-------------
-------------
34 727
8 220 866
849 344
======== ======== ========
Total
US$
3 150 324
6 638 259
-------------------
9 788 583
===========
The Bank expects that not all of the contingent liabilities or commitments will be drawn before expiry of the
commitments.
77
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34.5 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 utilises 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 department. The
Board has a Risk Committee whose function is to ensure that this risk is minimised. The Risk Committee through
the internal audit and Risk Management functions assesses the adequacy of the internal controls and makes the
necessary recommendations to the Board.
34.6 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.
To manage this risk the Group 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 also responsible for identifying and
monitoring legal risks and ensuring that the Group remains in compliance with all regulatory requirements.
34.7 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 Group 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 Group as these have contributed to the
minimisation of losses arising from risky exposures.
34.8 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.
78
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34.9 Risk Ratings
34.9.1 Camels* ratings
CAMELS Component
Capital Adequacy
Asset Quality
Management
Earnings
Liquidity
Sensitivity to Market Risk
Composite Rating
Latest RBS**
Ratings
31/01/2008
4
2
3
3
3
3
3
Previous RBS
Ratings
30/06/2007
4
3
4
3
3
3
4
Previous RBS
Ratings
30/06/2006
3
4
4
4
4
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
34.9.2 Summary of RAS ratings
RAS Component
Overall Inherent Risk
Overall Risk Management
Systems
Overall Composite Risk
Direction of Overall Composite
Risk
Latest RAS***
Ratings
31/01/2008
Moderate
Acceptable
Previous RBS
Ratings
30/06/2007
High
Weak
Previous RBS
Ratings
30/06/2006
High
Weak
Moderate
Stable
High
Increasing
High
Increasing
*** RAS stands for Risk Assessment System.
79
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34.9.3 Summary Risk Matrix – 31 January 2008 on-site examination
Type of Risk
Level of
Inherent Risk
Adequacy of Risk
Management
Systems
Overall
Composite Risk
Credit
Liquidity
Interest Rate
Foreign Exchange
Strategic Risk
Operational Risk
Legal & Compliance
Reputation
Overall
Moderate
Moderate
Moderate
High
Moderate
Moderate
High
Moderate
Moderate
Level of Inherent Risk
Weak
Acceptable
Acceptable
Weak
Acceptable
Weak
Acceptable
Acceptable
Acceptable
Moderate
Moderate
Moderate
Moderate
Moderate
High
Moderate
Moderate
Moderate
Direction of
Overall
Composite
Risk
Increasing
Stable
Increasing
Stable
Stable
Increasing
Stable
Increasing
Stable
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.
80
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
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
weaknesses 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.
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 months.
34.10 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
Short-term
Long term
2006
A3
BBB-
2007
NR
BBB-*
2008
NR
BB+
* the rating was withdrawn after the discovery of the US$6.4 million forex fraud (refer to Note 36)
NR – not rated.
34.11 Regulatory Compliance
The Corrective Order issued in 2007 relating to the matter covered in Note 36 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.
81
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
34.12 Capital Management
34.12.1 Holding Company
The capital allocation to the subsidiary units is in accordance with the regulatory requirements of the business
undertaken by the subsidiary.
34.12.2 Banking Subsidiary
The primary objective of the Group’s capital management is to ensure that the Group complies with the RBZ
requirements. In implementing the current capital requirements, the RBZ requires the Banking subsidiary 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.
82
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
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.
During the year, the Bank complied in full with the regulatory capital requirements of a minimum
capital level of US$6.25 million.
The Bank’s regulatory capital position at 31 December 2009 was as follows:
Share capital
Share premium
Non-distributable reserve
Retained earnings
Less: capital allocated for market
and operational risk
Credit to insiders
2009
US$
-
-
6 139 898
2 039 625
---------------------
8 179 523
(1 096 405)
---------------------
-
Tier 1 capital
Tier 2 capital (subject to limit as per Banking Regulations)
Revaluation reserves
Subordinated debt
Portfolio provisions (limited to 1.25% of risk weighted assets)
7 083 118
274 904
-
-
274 904
Total Tier 1 & 2 capital
Tier 3 capital (sum of market and
operational risk capital)
Total capital base
Total risk weighted assets
Tier 1 ratio
Tier 2 ratio
Tier 3 ratio
Total capital adequacy ratio
RBZ minimum required
7 358 022
1 096 405
---------------------
8 454 427
=============
32 206 600
=============
21.99%
0.85%
3.40%
26.24%
10.00%
83
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
35. Limitations of financial reporting
The uncertainties in the adverse Zimbabwean economic environment during the year have resulted in limitations in
financial reporting.
The inflation indices applicable to the Zimbabwe Dollar were not published from 31 July 2008. Estimates by
economists, of Zimbabwe Dollar inflation in the period post 31 July 2008 were wide ranging and extremely high
(percentages in excess of hundreds of trillions to quadrillions, in some cases). It was impossible to reliably measure
inflation in Zimbabwe during this period because of rate of change of inflation on a daily basis was extremely high.
Any attempt to measure inflation was subject to various limitations because reliable and timely price data was not
available. The inability to reliably measure inflation was also exacerbated by the existence of multiple exchange rates,
the use of foreign currency for some transactions and the existence of multiple pricing criteria for similar products
based on the mode of settlement.
The authorization of the use of multiple foreign currencies for trading on 29 January 2009 by the Monetary and Fiscal
authorities resulted in a change in the functional currency for most entities reporting in Zimbabwe. In accordance with
the requirements of International Financial Reporting Standards, entities are required to convert their financial
statements into the new functional currency at the date of changeover. The Company has not been able to convert its
Zimbabwe Dollar transactions into the new functional currency for reasons explained in Note 37.
As a result of these uncertainties and inherent limitations, the directors advise caution on the use of all comparative
information, the statements of comprehensive income, statements of cash flows and statements of changes in equity
for decision making purposes. The Directors believe that the statement of financial position that has been presented is
a fair reflection of the assets and liabilities of the Company and therefore a fair reflection of the shareholder’s equity.
36. FOREIGN CURRENCY ACCOUNT BALANCES
Subsequent to the reporting 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.
84
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2009
37.
NON COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
37.1 Non compliance with IAS 29 (Financial Reporting in Hyperinflationary Economies).
The financial statements have not been prepared in compliance with IAS 29, “Financial Reporting in
Hyperinflationary Economies” as the Consumer Price Indices for the months of August 2008 to January 2009
were not released by the Central Statistical Office. Accordingly, the Group has not been able to comply with the
requirements of IAS 21, “The Effects of Changes in Foreign Exchange Rates”. IAS 21 requires all transactions
that are in the currency of a hyperinflationary economy to be adjusted to a unit of measure current at the
measurement date, before conversion to an alternative currency.
37.2 Non-compliance with IAS 21 (The Effects of Changes in Exchange Rates) in respect of the measurement of
the statement of comprehensive income, statement of cash flows and statement of changes in shareholders
equity.
The Group’s functional currency changed on 1 January 2009 from Zimbabwe Dollars to United States Dollars.
The directors chose to report all transactions in United States Dollars because it is the functional currency
applicable in all the Group’s transactions.
IAS 21 requires that all the transactions that are in the currency of a hyperinflationary economy be adjusted to a
unit of measure current at the date before conversion to an alternative presentation currency. The Group has not
been able to adjust its Zimbabwe Dollar transactions to comply with IAS 21 and IAS 29.
37.3 Non-compliance with IAS 1 (Presentation of Financial Statements) in respect of comparative information
The Group could not present comparative information for the financial statements because these will be
misleading. As a result of the unavailability of inflation indices, it was not possible to convert financial
statements into United States Dollars in a manner consistent with the application of IAS 21 and IAS 29.
The Group could not present comparative information for the financial statements in compliance with IAS 1,
“Presentation of Financial Statements”. The Directors considered that in light of the prevailing economic
conditions and the subsequent change in the functional and reporting currency, such inclusion would be
misleading. As a result of the unavailability of inflation indices, it was not possible to convert financial
statements into United States Dollars in a manner consistent with the application of IAS 21, “The Effects of
Changes in Foreign Exchange Rates” and IAS 29, “Financial Reporting in Hyperinflationary Economies”.
38. POST – BALANCE SHEET EVENTS
As at the financial year end, the Group was in the process of undertaking a re-capitalisation exercise in order to
meet the statutory paid-up capital for the banking subsidiary of US$12.5 million required by 31 March 2010.
Subsequent to the year end, negotiations for a private placement of the holding company’s shares were
undertaken. If successful, the banking subsidiary’s paid-up capital will meet the statutory requirements.
85
NMBZ HOLDINGS LIMITED
HISTORICAL FIVE YEAR FINANCIAL SUMMARY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Interest expense
Interest from lending activities
Interest from investing activities
2009
US$
472 738
874 455
----------------------
1 347 193
(544 097)
-----------------------
Net interest income
803 096
Net foreign exchange gains 379 236
7 335 974
Non-interest income
----------------------
8 518 306
(7 484 237)
Net operating income
Operating expenditure
Impairment losses on loans
and advances
2008*
US$
-
-
-------------
-
-
-------------
-
-
-
-------------
-
-
2007*
US$
-
-
------------
-
-
-------------
-
-
-
------------
-
-
2006*
US$
-
-
------------
-
-
-------------
-
-
-
------------
-
-
2005*
US$
-
-
-----------
-
-
-----------
-
-
-
----------
-
-
Profit before taxation
(92 887)
--------------------
941 182
-
-------------
-
-
------------
-
-
------------
-
-
------------
-
Financial institutions levy
(44 661)
-
-
-
-
Taxation
Profit after taxation
1 381 766
-----------------------
2 278 287
-
------------
-
-
-------------
-
-
------------
-
-
-----------
-
Other comprehensive income/(loss) for
the year, net of tax (204 116)
---------------------------
-
-------------
-
------------
-
-----------
-
------------
Total comprehensive income
for the year
2 074 171
================
-
=========
-
========
-
=======
-
=======
*Comparative information is not presented for the reasons discussed in note 37.3.
86
NMBZ HOLDINGS LIMITED
HISTORICAL FIVE YEAR FINANCIAL SUMMARY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Share capital
Reserves
Total shareholders’ funds
Deferred taxation
Deposits and other accounts
Provision for current taxation
Financial liabilities at fair value
through profit and loss
Capital employed
ASSETS
Cash and cash equivalents
Advances and other accounts
Financial assets at fair value through
profit and loss
Quoted and other investments
Trade investments
Investment properties
Property and equipment
Employment of capital
2009
US$
-
8 363 889
---------------------
8 363 889
675 319
23 649 725
299 162
2008*
US$
-
-
------------
-
-
-
-
2007*
US$
-
-
------------
-
2006*
US$
-
-
------------
-
2005*
US$
-
-
-----------
-
-
-
-
-
-
-
-
-
-
6 444 932
---------------------
39 433 027
=============
-
--------------
-
========
-
--------------
-
========
-
--------------
-
-
-------------
-
======== ========
12 203 181
12 729 195
-
-
-
-
-
-
-
-
7 135 023
455 638
108 003
3 219 600
3 582 387
---------------------
39 433 027
=============
-
-
-
-
-
--------------
-
========
-
-
-
-
-
--------------
-
========
-
-
-
-
-
-------------
-
-
-
-
-
-
-------------
-
======== ========
*Comparative information is not presented for the reasons discussed in note 37.3.
87
NMBZ HOLDINGS LIMITED
HISTORICAL FIVE YEAR FINANCIAL SUMMARY (Cont’d)
CLOSING NUMBER OF SHARES* 1 647 147 057
1 641 225 424
1 608 159 059 1 569 339 001
853 609 624
2009
2008
2007
2006
2005
Share Performance
Net asset value per share (US cents)
Basic earnings per share (US cents)
Dividend per share (US cents)
Dividend cover (times)
Price/earnings ratio
0.51
0.14
-
-
5.71
Closing price per share (US cents)
Market capitalisation (US$)
0.80
13 185 402
Financial Performance
-
-
-
-
-
-
-
Return on shareholders’ funds (%)¹
Return on assets (%)
Cost/net income ratio (%)²
Non-interest income/total income (%)
Effective tax rate (%) (142) -
25
5
89
86
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- -
- -
-
-
1.
2.
The return on shareholders’ funds is based on shareholders’ funds at the end of the year.
Includes charge for impairment of losses on loans and advances.
* excludes own equity instruments amounting to 1 028 172 shares.
Comparative financial information is not presented for the reasons discussed in note 37.3.
88
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 14:30 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
89
NMBZ HOLDINGS LIMITED
SHAREHOLDERS’ ANALYSIS
Size of Shareholding
5 000
10 000
50 000
100 000
500 000
1 000 000
10 000 000
-
-
-
-
-
-
-
- And over
1
5 001
10 001
50 001
100 001
500 001
1 000 001
10 000 001
Total
Size of Shareholding
5 000
10 000
50 000
100 000
500 000
1 000 000
10 000 000
-
-
-
-
-
-
-
- And over
1
5 001
10 001
50 001
100 001
500 001
1 000 001
10 000 001
Total
Industry
Banks and nominees
Employees
Deceased estates
External companies
Insurance companies
Investment, trusts and property companies
Non-resident individuals
Other corporate holdings
Pension funds
Resident individual/trusts
2009
Number of
Shareholders
%
2009
Issued
Shares
%
2 529
671
725
154
194
32
40
20
---------
4 365
======
0.26
4 367 033
57.94
0.30
4 887 841
15.37
0.96
15 760 736
16.61
0.67
11 116 881
3.53
2.61
43 038 449
4.44
1.38
22 671 868
0.73
8.14
134 160 960
0.92
85.68
0.46 1 412 171 461
---------
--------
-----------------
100.00 1 648 175 229
100.00
===== ========== ======
2008
Number of
Shareholders
%
2008
Issued
Shares
%
1 972
488
610
153
178
38
44
20
---------
3 503
======
0.20
3 265 585
56.29
0.22
3 635 143
13.93
0.81
13 275 830
17.41
0.67
10 930 384
4.37
2.40
39 375 208
5.08
1.68
27 635 962
1.09
8.00
1.26
131 250 693
86.02
0.57 1 411 889 424
---------
--------
-----------------
100.00
100.00 1 641 258 229
===== ========== ======
2009
Shareholders
65
376
5
3
13
145
20
364
20
3 354
---------
4 365
%
1.49
8.61
0.11
0.07
0.30
3.32
0.46
8.34
0.46
76.84
2009
Shares
35 697 821
26 058 279
11 173 353
63 993 151
347 537 252
645 937 703
4 277 622
376 461 568
48 828 990
88 209 490
--------- ------------------ ---------
100.00
%
2.17
1.58
0.68
3.88
21.09
39.19
0.26
22.84
2.96
5.35
1 648 175 229
100.00
====== ===== =========== ======
90
NMBZ HOLDINGS LIMITED
SHAREHOLDERS’ ANALYSIS
Industry
Banks and nominees
Employees
Deceased estates
External companies
Insurance companies
Investment, trusts and property companies
Non-resident individuals
Other corporate holdings
Pension funds
Resident individual/trusts
TOP TEN SHAREHOLDERS
2008
Shareholders
78
60
5
4
9
340
16
171
19
2 801
---------
3 503
%
2.23
1.71
0.14
0.11
0.26
9.71
0.46
4.88
0.54
79.96
2008
Shares
53 370 329
23 490 037
11 173 353
64 066 761
346 512 511
817 101 442
2 096 864
203 646 669
48 976 962
70 823 301
--------- ------------------ ---------
100.00
%
3.25
1.43
0.68
3.90
21.11
49.79
0.13
12.41
2.98
4.32
1 641 258 229
100.00
====== ===== =========== ======
1
2
3
4
5
6
7
8
9
10
1
2
3
4
5
6
7
8
9
10
Old Mutual Life Assurance Company of Zimbabwe
Cornerstone Trust
Alsace Trust
Wamambo Investments Trust
M Lynton Edwards Stockbrokers (Pvt) Ltd
Drakmore Investments (Pvt) Ltd
Elsha Investments (Pvt) Ltd
Martcap Investments (Pvt) Ltd
Rayvonne Trust
Palisades Limited
Old Mutual Life Assurance Company of Zimbabwe
Cornerstone Trust
Alsace Trust
Wamambo Investments Trust
M Lynton Edwards Stockbrokers (Pvt) Ltd
Drakmore Investment (Pvt) Ltd
Elsha Investments (Pvt) Ltd
Martcap Investments (Pvt) Ltd
Rayyvonne Trust
Local Authorities Pension Fund
2009
Shares
346 774 054
168 755 799
168 755 795
142 260 092
119 217 935
109 627 112
53 435 939
51 090 385
46 137 727
42 164 274
2008
Shares
346 492 017
168 755 799
168 755 795
142 260 092
123 424 919
109 627 112
53 435 939
51 090 385
46 137 727
45 689 628
% of
Total
21.04
10.24
10.24
8.63
7.23
6.65
3.24
3.10
2.80
2.56
% of
Total
21.11
10.23
10.23
8.67
7.52
6.68
3.26
3.11
2.81
2.78
91
NMBZ HOLDINGS LIMITED
SHAREHOLDERS’ INFORMATION
MEMBERS’ DIARY
Financial year end
Reports:-
31 December 2009
- Announcement of annual results
31 March 2010
- Annual financial statements
posted May 2009
- Annual General Meeting
- Announcement of the 2010 half-year results
Dividend payments:
- Interim
- Final
24 June 2010
August 2010
n/a
n/a
92
NMBZ HOLDINGS LIMITED
SECRETARY AND REGISTERED OFFICE
Secretary
V Mutandwa
Registered Offices
1st Floor
Unity Court
Cnr 1st Street/Kwame Nkrumah Avenue
Harare
Zimbabwe
Telephone
Facsimile
+263 4 759651
+263 4 759648
Website:
http://www.nmbz.co.zw
Email:
enquiries@nmbz.co.zw
Auditors
Ernst & Young Chartered Accountants (Zimbabwe)
Angwa City
J Nyerere Way/Kwame Nkrumah Avenue
Harare
Zimbabwe
Transfer Secretaries
In Zimbabwe
First Transfer Secretaries
4th Floor, Gold Bridge North
Eastgate Building
Cnr. Robert Mugabe/Sam Munjoma Street
P O Box 11
Harare
Zimbabwe
Legal Practitioners to the Company
Gill, Godlonton & Gerrans
7th Floor
Beverly Court
100 Nelson Mandela Avenue
Harare
Zimbabwe
NMB Centre
George Silundika Avenue/
Leopold Takawira Street
Bulawayo
Zimbabwe
+263 9 70169
+263 9 68535
In UK
Computershare Services PLC
36 St Andrew Square
Edinburgh
EH2 2YB
UK
In UK
Dechert
2 Serjeants’ Inn
London EC4Y 1LT
UK
93
NMBZ HOLDINGS LIMITED
ANNUAL GENERAL MEETING
FORM OF PROXY
I/We, ……………………………………………………....………………..………………………………...….….
of ……………………………………..……………………………………………………………….……………..
being a member of the above company and entitled to vote, hereby appoint
……………………………………………………………………………………………..…………………………
of …………………………………………….…………………………………………………………...…………..
or failing him …………………………………………………………………………………………..…………….
of ……………………………………………………………………………………………………………………..
or failing him, the Chairman of the meeting as my/our proxy to vote
for me/us on my/our behalf at the ANNUAL GENERAL MEETING of
the Company to be held on 24 June 2010 at 14.30 hours and at any adjournment thereof.
Signed this …………..………………………….. day of …………………………………………………….2010
Signature of member ………………………………………………………………………………………………..
Note
(i)
In terms of Section 129 of the Companies Act (Chapter 24:03) a member of the company is
entitled to appoint one or more proxies to act in the alternative to attend, vote and speak in his
stead. A proxy need not be a member of the Company.
(ii) Sections 75 and 76 of the Company’s Articles of Association provide that instruments of proxy
must be signed and returned to reach the Registered Office of the Company not less than forty-
eight hours before the time for holding the meeting.
94