NMBZ HOLDINGS LIMITED
CONTENTS
Group Profile ........................................................................................ inside cover
Financial Highlights ............................................................................................... 1
Chairman’s Statement ...................................................................................... 2 - 3
Report of The Directors ................................................................................... 4 - 10
Statement of Directors’ Responsibility .......................................................... 11 - 13
Report of the Independent Auditors ................................................................ 14 -15
Consolidated Statements of Comprehensive Income .......................................... 16
Consolidated Statements of Financial Position ............................................. 17 - 18
Consolidated Statements of Changes in Equity ............................................ 19 - 20
Consolidated Statements of Cash Flows ............................................................ 21
Accounting Policies ..................................................................................... 22 - 33
Notes to the Financial Statements ................................................................ 34 - 80
Historical Five Year Financial Summary ..................................................... 81 - 83
Notice to Members ............................................................................................. 84
Shareholders’ Analysis ................................................................................ 85 - 86
Shareholders’ Information .................................................................................... 87
Secretary and Registered Office ......................................................................... 88
HIGHLIGHTS
Attributable profit
Basic earnings per share (US cents)
Total deposits
Total equity
Enquiries:
NMBZ HOLDINGS LIMITED
2010
US$
692 234
0.03
79 849 387
18 833 125
2009
US$
2 278 287
0.14
28 720 120
8 568 005
Tel: +263-4-759 651/9
James A Mushore, Group Chief Executive Officer, NMBZ Holdings Limited
Benefit Peter Washaya, Managing Director, NMB Bank Limited
jamesm@nmbz.co.zw
benefitw@nmbz.co.zw
Benson Ndachena, Chief Financial Officer
Website:
Email:
bensonn@nmbz.co.zw
http://www.nmbz.co.zw
enquiries@nmbz.co.zw
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
1
NMBZ HOLDINGS LIMITED
CHAIRMAN’S STATEMENT
for the year ended 31 December 2010
INTRODUCTION
The year witnessed a relatively stable economic environment which is attributable to the adoption of the multi – currency regime by the two year
old inclusive government. The relative political stability and the re-engagement of the international community resulted in some growth in business
activity in the period under review with some lines of credit trickling into the country.
GROUP RESULTS
Compliance with International Financial Reporting Standards
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS).
The financial statements have been prepared in compliance with the Companies Act (Chapter 24:03) and the Banking Act (Chapter 24:20).
Commentary on results
The profit before taxation was US$942 556 during the period under review. An attributable profit of US$692 234 was recorded for the period. Net
interest income was US$6 871 468 for the period. Non-interest income amounted to US$9 374 796 and this was mainly as a result of
commissions and fee income (US$9 691 069) which was partly offset by an unfavourable fair value adjustment on investment properties
(US$784 600).
Operating expenses amounted to US$15 365 768 and were driven largely by administration, staff related expenditure and an impairment loss on
land and buildings. Staff related expenditure includes an amount of US$3.1 million for the retrenchment exercise which was concluded in August
2010. The retrenchment of staff was necessary in order to streamline the Bank’s operations in line with business volumes in the dollarised
environment.
Impairment losses on loans and advances amounted to US$971 803 for the current period. This is commensurate with the loans and advances
which amounted to US$57 913 589 at 31 December 2010.
The second half of the year recorded an after tax profit of US$2.6 million which offset the loss recorded in the first half of the year. The result for
the first half was affected adversely by the provision for retrenchment costs (US$2.6 million), the fair value adjustment on investment properties
(US$584 600) and the impairment loss on land and buildings (US$585 000).
Dividend
In view of the need to retain cash in the business and to buttress the statutory capital requirements for the Bank, the Board has proposed not to
declare a dividend.
STATEMENT OF FINANCIAL POSITION
The Group’s total assets grew by 159% from US$39 707 931 as at 31 December 2009 to US$102 839 504 as at 31 December 2010 and
comprised mainly loans, advances and other accounts (US$60 315 397), financial assets at fair value through profit and loss (US$17 299 592),
cash and short term funds (US$18 346 939), investment properties (US$2 615 000) and property and equipment (US$3 697 893). Gross loans
and advances increased by 363% from US$12 509 344 as at 31 December 2009 to US$57 913 589 at 31December 2010 as a result of the
improved underwriting capacity from new capital raised during the period, an increase in onshore deposits and lines of credit of US$12 million
availed to the Bank.
2
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
Capital
The banking subsidiary’s capital adequacy ratio at 31 December 2010 calculated in accordance with the guidelines of the Reserve Bank of
Zimbabwe (RBZ) was 17.49% (31 December 2009 – 26.03%). The minimum required by the RBZ is 10%.
The Group’s equity increased by 120% from US$8 568 005 as at 31 December 2009 to US$18 833 125 as at 31 December 2010 as a result of
new capital raised and retained earnings.
The rights issue exercise which was undertaken during the year in order to meet the banking subsidiary’s statutory minimum paid up capital of
US$12.5 million raised gross proceeds of US$10.28 million. The amount raised has been used to recapitalise the Banking subsidiary and the
Holding company. In late 2010, the Holding company acquired an associate interest in a leasing business.
OUTLOOK AND STRATEGY
The Group will continue to underwrite more business and explore value adding opportunities in the market. The quest for lines of credit would be
an imperative in the outlook period in order to meet the growing funding requirements of our clients.
DIRECTORATE
Mr James Andrew Mushore was appointed the Group Chief Executive Officer on 23 April 2010. Messrs Jonathan Chenevix – Trench and
James de la Fargue were appointed to the Board on 16 June 2010. I welcome Messrs Mushore, Chenevix – Trench and de la Fargue to the
board and wish them a successful tenure in office.
Dr G M Mandishona and Mr C Chipato resigned from the board effective 17 August 2010. Mr B P Washaya resigned from the Holding Company
Board with effect from 16 June 2010. I would like to thank them all for their invaluable contribution to the Board over the years. In particular, I
would like to pay special tribute to Dr. Gibson Mandishona, my predecessor as Chairman, who led the Bank through its most difficult and
challenging days in a most exemplary manner. We shall miss his wise counsel in the board room. I was appointed Chairman of the Board on
17 August 2010.
APPRECIATION
I would like to express my utmost appreciation to our clients, shareholders and Regulatory Authorities for their continued support. I would also
like to thank my fellow Board members, management and staff for their steadfast commitment and dedication.
T N MUNDAWARARA
CHAIRMAN
15 March 2011
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
3
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS
for the year ended 31 December 2010
We have pleasure in presenting to shareholders our report and the audited financial statements of the Group for the year ended 31 December 2010.
1.
SHARE CAPITAL
The authorised and issued share capital of the Company are as follows:-
1.1
Authorised: 3 500 000 000 ordinary shares of US$0.000028 each.
1.2
Issued and fully paid: 2 807 107 289 ordinary shares of US$0.000028 each.
A total of 3 087 000 share options were exercised by directors and managerial staff during the year.
2.
GROUP ACTIVITIES AND RESULTS
After providing for depreciation and taxation, the Group posted an attributable profit of US$692 234 for the year ended 31 December 2010
(2009 – US$2 278 287).
3.
CAPITAL ADEQUACY
As at 31 December 2010, the Bank’s capital adequacy ratio computed under Bank for International Settlements (BIS) rules was 17.49%
(2009 – 26.03%).
4.
DIRECTORATE
4.1
Board of Directors
T N Mundawarara
A M T Mutsonziwa
J A Mushore*
B Ndachena*
J T Makoni
J de la Fargue
J Chenevix-Trench
B W Madzivire
M Mudukuti
L Majonga (Ms)
J Chigwedere
*Executive
(Chairman and Independent Non-executive Director)
(Independent Non-executive Director)
(Group Chief Executive Officer)
(Chief Financial Officer)
(Non-Executive Director)
(Non-Executive Director)
(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, Mr. M. Mudukuti, Mr. B. W. Madzivire and Ms. L. Majonga will retire by rotation at the
forthcoming Annual General Meeting (AGM). All retiring directors being eligible offer themselves for re-election.
4
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2010
4.2
Directors’ Interests
As at 31 December 2010 the Directors held the following direct and indirect beneficial interests in the shares of the Company:-
T N Mundawarara
A M T Mutsonziwa
B Ndachena
J A Mushore**
J T Makoni**
B W Madzivire
M Mudukuti
L Majonga (Ms)
J. Chigwedere
J de la Fargue
J Chenevix-Trench***
B P Washaya*
F S Mangozho*
L Chinyamutangira*
31 December 2010
Shares
31 December 2009
Shares
39 901
55 691
797 842
1 646 969
6 447 904
-
-
-
-
-
2 806 866
4 020 692
-
1 303 321
17 119 186
5 824
32 760
5 048 174
-
6 447 904
-
-
-
-
-
-
6 506 819
-
-
18 041 481
*B. P. Washaya, F.S. Mangozho and L. Chinyamutangira are NMB Bank Limited Executive Directors.
**Dr. J. Makoni and Mr. J. Mushore hold non-beneficial interests in Cornerstone Trust and Alsace Trust respectively.
***J Chenevix-Trench holds interests in African Century Financial Services LLP.
4.3
Total share options granted to executive directors of the Holding Company and NMB Bank
Limited
Share
Share
Options
31 December 2010
Options
31 December 2009
F S Mangozho
-
-
3 000 000
3 000 000
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
5
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2010
4.4
Directors’ attendance at meetings
4.4.1 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
J de la Fargue***
J Chenevix-Trench***
L Chinyamutangira****
F S Mangozho****
Meetings
Attended
3
4
2
4
4
3
4
4
4
4
4
4
2
2
nil
nil
3
4
2
4
4
2
4
4
3
3
4
4
2
2
nil
nil
*Dr. G. M. Mandishona and Mr. C. Chipato resigned from the NMBZ Holdings Limited and NMB Bank Limited boards with effect from 17
August 2010.
**B. P. Washaya resigned from the NMBZ Holdings Limited board with effect from 16 June 2010.
***Mr. J. de la Fargue and Mr. J. Chenevix –Trench joined the NMBZ Holdings Limited and the NMB Bank Limited boards on 16 June
2010.
****L Chinyamutangira and F S Mangozho are directors of NMB Bank Limited only.
4.4.2 Audit Committee
Name
Mr B W Madzivire
Mr A M T Mutsonziwa
Ms L Majonga
Mr J de la Fargue*
Meetings
Attended
5
5
5
1
5
3
3
1
*Mr. J. de la Fargue joined the Audit Committee with effect from 15 September 2010.
6
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2010
4.4.3 Risk Management Committee
Name
Mr T N Mundawarara
Mr J Chigwedere
Ms L Majonga
Mr B P Washaya
Mr J de la Fargue*
Mr J Mushore*
Mr F Mangozho
Meetings
Attended
4
4
4
4
1
1
4
4
4
1
4
nil
nil
4
*Mr. J. de la Fargue and Mr. J. Mushore joined the Risk Management Committee with effect from 15 September 2010.
4.4.4 Asset and Liability Management Committee (ALCO), Finance & Strategy Committee
Name
Mr C Chipato*
Mr T N Mundawarara
Mr B P Washaya
Mr B Ndachena
Mr J Mushore**
Mr J Chenevix-Trench
(alternate J de la Fargue)**
Mr J Chigwedere**
Mr F S Mangozho
Mr L Chinyamutangira
Meetings
Attended
3
4
4
4
1
1
1
4
4
3
4
4
3
1
1
1
4
4
*Mr. C. Chipato resigned from the Committee with effect from 17 August 2010.
** Mr. J. Mushore, Mr. J. Chenevix-Trench and Mr. J. Chigwedere became members of the Committee with effect from 15 September
2010.
4.4.5 Loans Review Committee
Name
Mr A M T Mutsonziwa
Mr M Mudukuti
Mr C Chipato*
Mr J de la Fargue**
Meetings
Attended
4
4
3
1
3
4
3
1
*Mr. C. Chipato resigned from the Committee with effect from 17 August 2010.
** Mr. J. de la Fargue became a member of the Committee with effect from 15 September 2010.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
7
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2010
4.4.6 Human Resources & Remuneration Committee
Name
Mr M Mudukuti
Dr G M Mandishona*
Mr B Madzivire
Mr T N Mundawarara**
Mr J Chenevix-Trench**
Dr J T Makoni**
Mr J Mushore***
Mr A M T Mutsonziwa**
Meetings
Attended
4
3
4
1
1
1
3
1
4
2
4
1
1
nil
3
nil
*Dr. G. M. Mandishona resigned from the Committee with effect from 17 August 2010.
** Messrs. T. N. Mundawarara, J. Chenevix-Trench, J. T. Makoni and A. M. T. Mutsonziwa became members of the Committee with
effect from 15 September 2010.
***Mr J Mushore became a member of the committee with effect from 25 March 2010.
5.
CORPORATE GOVERNANCE
NMBZ Holdings Limited adheres to 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 III report of South Africa and the
Reserve Bank of Zimbabwe (RBZ) Corporate Governance Guideline. 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 to assist in the discharge of its duties and responsibilities.
5.1
The Board of Directors
The NMBZ Holdings Limited board comprises of eleven directors while the NMB Bank board comprises of fourteen directors. The boards
of the holding company and the bank are almost identical as they share eleven directors. The Group obtained regulatory approval to have
similar boards for the Group and the banking subsidiary as the bank was the Group’s only operating subsidiary. The NMBZ Holdings board
comprises of two executive and nine non-executive directors while the NMB Bank board comprises of four executive and ten non-
executive directors. The Chairpersons of the board and all the board committees are independent non-executive directors. The boards and
the board committees meet at least four times a year.
5.2 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 W Madzivire
(Chairman - Independent Non-Executive Director)
Ms L Majonga
Mr A M T Mutsonziwa
Mr J de la Fargue
(Independent Non-Executive Director)
(Independent Non-Executive Director)
(Non-Executive Director)
8
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2010
5.3
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:
Mr M Mudukuti
(Chairman - Independent Non-Executive Director)
Mr T N Mundawarara
Mr B W Madzivire
Mr J A Mushore
Mr J Chenevix-Trench
Dr J Makoni
Mr A M T Mutsonziwa
(Independent Non-Executive Director)
(Independent Non-Executive Director)
(Group Chief Executive Officer)
(Non-Executive Director)
(Non-Executive Director)
(Independent Non – Executive Director)
5.4
Loans Review Committee
The Loans Review Committee 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 J de la Fargue
(Chairman – Independent Non-Executive Director)
(Independent Non-executive Director)
(Non- Executive Director)
5.5
Credit Committee
The credit committee’s main responsibilities are to consider loan applications beyond the discretionary limits of the management Credit
Committee and to direct the formulation of, review and monitor the credit principles and policies of the Group.
Membership:
Mr T N Mundawarara
Mr J A Mushore
(Chairman - Independent Non-Executive Director)
(Group Chief Executive Officer)
B P Washaya
B Ndachena
(Managing Director)
(Chief Financial Officer)
5.6 Asset and Liability Management Committee (ALCO), Finance and Strategy Committee
The Asset and Liability Management Committee (ALCO), Finance & Strategy 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 T N Mundawarara
M r J Chigwedere
Mr J A Mushore
Mr B P Washaya
Mr B Ndachena
Mr F S Mangozho
Mr L Chinyamutangira
Mr J Chenevix-Trench
(Chairman - Independent Non-Executive Director)
(Independent Non-Executive Director)
(Group Chief Executive Officer)
(Managing Director)
(Chief Financial Officer)
(Executive Director-Treasury)
(Executive Director-Banking)
(Non-Executive Director)
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
9
NMBZ HOLDINGS LIMITED
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2010
5.7
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.
Membership:
Mr J Chigwedere
(Chairman – Independent Non-Executive Director)
Mr J de la Fargue
Ms L Majonga
Mr J A Mushore
Mr B P Washaya
Mr F S Mangozho
Mr T N Mundawarara
(Non-Executve Director)
(Independent Non-executive Director)
(Group Chief Executive Officer)
(Managing Director)
(Executive Director - Treasury)
(Independent Non – executive Director)
5.8
Professional Advice
The non-executive directors have access to independent professional advice at the Group’s expense.
6.
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 2010 and to appoint auditors of the Company for the ensuing year.
By order of the Board
V Mutandwa
Company Secretary
Harare
15 March 2011
10
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITY
for the year ended 31 December 2010
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 a going concern basis and is in accordance with the provisions of the Companies Act
[Chapter 24:03], the Banking Act [Chapter 24:20] and International Financial Reporting Standards (IFRSs).
2.
CORPORATE GOVERNANCE
In its operations, the Group is guided by principles of corporate governance derived from the King III 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 CONTROLS
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 the
Group and prevent and detect fraud and errors. The Audit Committee in conjunction with the external 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.
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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
11
NMBZ HOLDINGS LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITY (Cont’d)
for the year ended 31 December 2010
7.
REMUNERATION
The Remuneration Committee determines the remuneration policy for the Group. The remuneration policy is designed to reward perfor-
mance and retain highly skilled individuals. Accordingly, a discretionary performance related bonus is offered in addition to a basic salary
package.
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. Activities and charities supported during the year ended 31 December 2010 included
the Kidzcan Foundation, a cancer organisation for children, Verandah Art Gallery, Mayor’s Christmas Cheer Fund dinner and the Good
Shepherd Charity Ball.
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. In this regard, the Group’s values
include integrity and excellence. All of the Group’s employees are thus expected to adhere to the highest standards of personal integrity and
professional conduct. The Group monitors its staff conduct through the code of conduct and ensured through its anti money-laundering
policies that it did not conduct business with entities whose activities are harmful to the environment.
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, the statement of comprehensive income, statement of changes in equity and the statement of cash flow as at 31 December
2010, together with 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 controls relevant to the preparation and fair presen-
tation 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.
12
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
STATEMENT OF DIRECTORS’ RESPONSIBILITY (Cont’d)
for the year ended 31 December 2010
The directors have satisfied themselves that the Company is in a sound financial position and that it has adequate resources to continue
operating in the foreseeable future. Accordingly, they are satisfied that it is appropriate to prepare the financial statements of the Company
on a going concern basis.
Approval of the financial statements
The financial statements of the Company and Group appearing on pages 16 to 80 were approved by the board of directors on 15 March
2011 and are signed on their behalf by:
……………………..........…..........………...
……………………..........…..........………...
T. N. Mundawarara
Chairman
J. A. Mushore
Group Chief Executive Officer
Date: 15 March 2011
Date: 15 March 2011
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
13
NMBZ HOLDINGS LIMITED
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
NMBZ HOLDINGS LIMITED
Report on the financial statements
We have audited the accompanying consolidated financial statements of NMBZ Holdings Limited and its subsidiaries as set out on page 16 to 80
which comprise the Company and Group statements of financial position as at 31 December 2010, and the group statement of comprehensive
income, the Company and Group statements of changes in equity and Group statement of cash flow for the year then ended, and a summary
of significant accounting policies and other explanatory information, and the directors’ report, as set out on pages 16 to 80 and 4 to 10 respectively.
Directors’ responsibility for the financial statements
The Company’s directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter 24:03), the Banking Act (Chapter
24:20)and the statutory instruments SI 33/99 and SI 62/96, and for such internal control as the directors determine necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about 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 consolidated financial statements. The
procedures selected depend on the auditor’s judgment, 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 the directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of NMBZ Holdings Limited and
its subsidiaries as at 31 December 2010, and its financial performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards.
14
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
Report on other legal and regulatory requirements
In our opinion, the consolidated financial statements have, in all material respects, been properly prepared in compliance with the disclosure
requirements of and in the manner required by the Companies Act (Chapter 24:03), the Banking Act (Chapter 24:20) and the statutory instruments
SI 33/99 and SI 62/96.
ERNST & YOUNG
CHARTERED ACCOUNTANTS (ZIMBABWE)
16 May 2011
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
15
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2010
Interest income
Interest expense
Net interest income
Net foreign exchange gains
Share of loss of associate
Non-interest income
Net operating income
Operating expenditure
Impairment losses on loans and advances
Profit before taxation
Taxation
Financial institutions levy
Profit for the year
Note
4
5
19
6
7
8
8
2010
US$
10 014 636
(3 143 168)
6 871 468
1 055 307
(21 444)
9 374 796
17 280 127
(15 365 768)
(971 803)
942 556
(250 322)
-
2009
US$
Restated*
1 526 722
(723 626)
803 096
379 236
-
7 236 949
8 419 281
(7 385 212)
(92 887)
941 182
1 381 766
(44 661)
692 234
2 278 287
Other comprehensive income
-
-
Total comprehensive income for the year
692 234
2 278 287
Attributable to:
Owners of the parent
Non – controlling interests
Earnings per share (US cents)
- Basic
- Diluted basic
692 234
-
692 234
0.03
0.03
2 278 287
-
2 278 287
0.14
0.14
9
9
*Certain amounts shown here do not correspond to the 2009 financial statements and reflect adjustments made as detailed in note 35.
16
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2010
EQUITY
Share capital
Capital reserves
Retained earnings
Total equity
LIABILITIES
Deposits and other accounts
Financial liabilities at fair value
through profit and loss
Current tax liabilities
Deferred tax liabilities
ASSETS
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans, advances and other accounts
Investments:-
Trade investment
Associate
Group companies
Quoted and other investments
Investment properties
Property and equipment
Note
10
11
12
13
14
8.4
15
16
14
17
18
19
20
21
22
23
GROUP
2009
US$
Restated*
-
6 564 622
2010
US$
78 598
16 666 633
2 087 894 2 003 383
8 568 005
18 833 125
Opening
2009
US$
-
6 297 943
-
6 297 943
65 979 335
23 649 725
3 979 536
17 177 109
641 969
207 966
102 839 504
6 444 932
299 162
746 107
39 707 931
-
-
2 544 896
12 822 375
18 346 939
12 203 181
1 289 441
17 299 592
60 315 397
201 666
228 556
-
134 461
2 615 000
3 697 893
102 839 504
7 135 023
13 004 099
-
372 285
108 003
32 000
-
-
455 638
3 219 600
3 582 387
39 707 931
-
-
306 904
6 140 000
4 681 745
12 822 375
*Certain amounts shown here do not correspond to the 2009 financial statements and reflect adjustments made as detailed in note 35.
…………………………………….. )
T N MUNDAWARARA
) Directors
…………………………………….. )
J A MUSHORE
15 March 2011
………………………….…
V MUTANDWA
Company Secretary
15 March 2011
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
17
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2010
EQUITY
Share capital
Capital reserves
Retained earnings/ (accumulated losses)
Note
10
11
12
2010
US$
78 598
15 783 219
95 244
COMPANY
2009
US$
-
6 297 943
(18 796)
Opening
2009
US$
-
6 297 943
-
Total equity
LIABILITIES
Deposits and other accounts
Financial liabilities at fair value through profit and loss
Current tax liabilities
Deferred tax liabilities
ASSETS
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans, advances and other accounts
Investments:-
Trade investment
Associate
Group companies
Quoted and other investments
Investment properties
Property and equipment
Deferred tax assets
15 957 061
6 279 147
6 297 943
129
-
400
7 533
-
-
-
-
-
-
-
807
15 965 123
6 279 147
6 298 750
-
-
1 842 363
122 794
250 000
13 722 112
27 854
-
-
-
-
-
79 034
31 495
-
6 154 577
12 290
-
-
1 751
-
-
96 034
32 000
-
6 154 577
16 139
-
-
-
15 965 123
6 279 147
6 298 750
15
17
18
19
20
21
15
…………………………………….. )
T N MUNDAWARARA
) Directors
…………………………………….. )
J A MUSHORE
15 March 2011
………………………….…
V MUTANDWA
Company Secretary
15 March 2011
18
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2010
GROUP
Share
Capital
US$
Deemed balances at 1 January 2009*
Total comprehensive income for the year – as
restated
Impairment allowance for loans and advances**
Own equity instruments (note10.3)
Shares issued – share options exercised
Balances at 31 December 2009 restated
Total comprehensive income for the year
Impairment allowance for loans and advances
Disposal proceeds of own equity
instruments (note10.3)
Surplus on treasury shares (note 10.3)
Redenomination of share capital (note 11)
Shares issued – share options exercised
Shares issued – rights issue
-
-
-
-
-
-
-
-
-
-
Capital Reserve
Share Treasury
Share
Option Regulatory distributable Retained
Non-
Premium Shares Reserve Reserve
US$
US$
US$
US$
-
-
-
-
-
-
-
(8 225)
96 034
-
-
-
-
-
274 904
-
34 822
-
(34 822)
-
Reserve Earnings
US$
US$
Total
US$
6 201 909
- 6 297 943
- 2 278 287
2 278 287
-
-
-
(274 904)
-
-
-
(8 225)
-
34 822
-
-
-
-
(8 225)
-
-
9 012
(787)
46 147
87
6 155 762
15 454
32 364
9 531 510
78 598 15 737 548
-
-
-
-
61 212
-
274 904
-
6 201 909 2 003 383
692 234
-
8 568 005
692 234
-
608 510
-
-
-
(6 201 909)
-
(608 510)
-
-
787
-
-
9 012
-
-
-
-
-
-
-
-
883 414
-
- 9 563 874
- 2 087 894 18 833 125
-
-
-
(15 541)
-
45 671
* Deemed balances were derived using the principles outlined in note 2.1.1
**These were previously accounted for in the statement of comprehensive income but have now been recognized as a transfer from retained
earnings to a regulatory reserve (note 35).
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
19
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2010
COMPANY
Capital Reserve
Share
Capital
US$
Share
Premium
US$
Share
Option
Reserve
US$
Non-
distributable
Reserve
US$
Retained
(Loss)/
Earnings
US$
Total
US$
-
-
-
-
-
46 147
87
32 364
78 598
-
96 034
6 201 909
-
6 297 943
-
-
34 822 (34 822)
-
-
(18 796)
-
(18 796)
-
34 822
-
6 155 762
15 454
9 531 510
15 737 548
61 212
-
-
(15 541)
-
45 671
6 201 909
-
(6 201 909)
-
-
-
(18 796)
6 279 147
114 040
-
-
-
114 040
-
-
9 563 874
95 244
15 957 061
Deemed balances at 1 January 2009*
Total comprehensive income for the year
Shares issued – share options exercised
Balances at 31 December 2009
Total comprehensive income for the year
Redenomination of share capital (note 11)
Shares issued – share options exercised
Share issued – rights issue
*Deemed balances were derived using the principles outlined in note 2.1.1
20
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation
Non-cash items
-Impairment losses on loans and advances
-Investment properties fair value adjustment
-Profit on disposal of property and equipment
-Quoted and other investments fair value adjustment
-Loss on disposal of investment property
-Profit on disposal of quoted and other investments
-Impairment loss on land and buildings
-Loss on derecognition of investments
-Depreciation
-Fair value adjustment on financial instruments
-Share of associate’s loss
Operating cash flows before changes in operating
assets and liabilities
Changes in operating assets and liabilities
Financial liabilities at fair value through profit and loss
Deposits and other accounts
Loans, advances and other accounts
Financial assets at fair value through profit and loss
Taxation
Corporate tax paid (note 8.4)
Capital gains tax paid
2010
US$
942 556
971 803
784 600
(64 527)
(94 139)
-
(13 232)
298 811
-
297 532
-
21 444
2009
US$
941 182
92 887
(579 600)
(2 066)
(172 978)
460 000
(45 256)
1 050 000
10 404
209 680
(32 371)
-
3 144 848
1 931 882
10 732 177
42 329 610
(48 283 101)
(10 164 569)
(2 241 035)
6 444 932
19 709 178
(12 729 499)
(7 135 023)
8 221 470
(445 657)
-
(10 520)
(152 000)
Net cash (outflow)/inflow from operating activities
(2 686 692)
8 058 950
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of investment property
Purchase of property and equipment
Improvements to investment property
Purchase of quoted investments
Purchase of unquoted investments
Proceeds from disposal of quoted and other investments
Net cash (outflow)/inflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from rights issue
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)
Operational cash flows from interest and dividends
Interest paid
Interest received
84 860
(732 183)
(180 000)
-
(250 000)
343 899
(733 424)
9 563 874
6 143 758
12 203 181
18 346 939
3 040 000
(160 322)
-
(60 134)
(74 542)
109 788
2 854 790
-
10 913 740
1 289 441
12 203 181
(3 143 168)
10 014 636
(723 626)
1 526 722
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
21
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2010
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 following paragraphs describe the main accounting policies applied consistently by the Group.
Basis of preparation
The Group is resuming presentation of IFRS financial statements after early adoption of Revised IFRS1 First-time adoption of International
Financial Reporting Standards issued on 20 December 2010. The Group failed to present IFRS financial statements for the financial year ended
31 December 2009 due to the effects of severe hyperinflation as defined in Revised IFRS1. The first amendment replaces reference to a fixed
date of ‘1 January 2004 ‘with ‘the date of transition to IFRS’, which eliminates the requirement to reconstruct transactions that occurred before the
date of transition to IFRS. These amendments provide guidance for entities emerging from severe hyperinflation to resume presenting IFRS
financial statements. An entity can elect to measure assets and liabilities at fair value and to use the fair value as the deemed costs in its opening
IFRS statement of financial position. The Group elected to use the severe hyper inflation exemption.
The effect of the application of this amendment is to render the opening statement of financial position, prepared on 1 January 2009 (date of transition
to IFRS) IFRS compliant. The opening statement of financial position was reported in the prior year as not being compliant with International
Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates and IAS 29, Financial Reporting in Hyperinflationary
Economies. The Group’s previous functional currency, the Zimbabwe dollar (ZW$),was subjected to severe hyperinflation before the date of
transition to IFRS because it had both of the following characteristics:
(a)
(b)
a reliable general price index was not available to all entities with transactions and balances in the ZW$ and
exchange ability between the ZW$ and a relatively stable foreign currency did not exist.
The Group changed its functional and presentation currency from the ZW$ to the United States dollar (US$) with effect from 1 January 2009.
Deemed cost exemption
The Group elected to measure certain items of property and equipment, loans and other receivables, inventories and deposits and other payables
at fair value and to use the fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial position.
Comparative financial information
The financial statements comprise three statements of financial position, two statements of comprehensive income, changes in equity and cash
flows as a result of the retrospective application of the Amendments to IFRS 1. The comparative statements of comprehensive income, changes
in equity and cash flows are for twelve months.
Reconciliation of previously prepared to IFRS compliant financial statements.
In preparing its opening IFRS statement of financial position, the Group had not adjusted amounts previously determined in accordance with the
Guidance on Change in Functional Currency 2009. As amounts have not changed, reconciliations have not been presented.
22
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
BUSINESS COMBINATIONS
Business combinations are accounted for in accordance with the Acquisition 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, balances, income and expenses 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 Acquisition Method, from the date that control effectively commences until the date that control
effectively ceases. Losses within a subsidiary are attributed to the non – controlling interest even if that results in a deficit balance.
In the Holding Company’s separate financial statements investments in subsidiaries are accounted for at cost.
Associates
The Group’s investment in its associate is accounted for using the equity method. An associate is an entity in which the Group has significant
influence. Under the equity method, the investment in the associate is carried in the statement of financial position at cost plus post acquisition
changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment
and is neither amortised nor individually tested for impairment.
The income statement reflects the share of the results of operations of the associate. Where there has been a change recognised directly in the
equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity.
Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the
associate. The share of profit of an associate is shown on the face of the income statement. This is the profit attributable to equity holders of the
associate and therefore is profit after tax and non-controlling interests in the subsidiaries of the associate. The financial statements of the associate
are prepared for the same reporting period as the Group.
Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. After application of the equity method,
the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associate. The Group
determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case the
Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and
recognises the amount in the ‘share of profit of an associate’ in the income statement. Upon loss of significant influence over the associate, the
Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss
of significant influence and the fair value of the retaining investment and proceeds from disposal is recognised in profit or loss.
Trade investments
Trade investments comprise interests in unquoted equities and are accounted for at fair value.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
23
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
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 consolidated financial statements are presented in United States Dollars (US$), 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.
Non – monetary items measured at fair value in foreign currency are translated using the exchange rates at the date when the fair value was
determined.
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 is also recognised
in equity or other comprehensive income.
Current tax is expected tax payable on the taxable income for the year, using rates enacted or substantially enacted at the reporting date and any
adjustment to tax payable in respect of previous years.
Deferred taxation
Provision for deferred taxation is made using the 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.
•
24
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
TAXATION (Cont’d)
Deferred taxation (Cont’d)
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 reporting 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 reporting 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 reporting 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 reporting 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.
Deferred 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 is also recognised in equity or other comprehensive income.
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.
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 profit or loss.
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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
25
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
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 recognised directly in equity as a transfer from retained earnings to a regulatory reserve
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 recoverability, 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 statement of financial position. 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.
FINANCIAL INSTRUMENTS
The classification of financial instruments at initial recognition depends on the purpose and the management’s intention for which the financial
instruments were acquired and their characteristics. All financial instruments are measured initially at their fair value plus transaction costs, except
in the case of financial assets and financial liabilities recorded at fair value through profit or loss.
All financial assets and liabilities are initially recognised on the trade date, i.e., the date that the bank becomes a party to the contractual provisions
of the instrument. This includes “regular way trades”: purchases or sales of financial assets that require delivery of assets within the time frame
generally established by regulation or convention in the market place.
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:
26
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
Classification (Cont’d)
•
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.
Deposits and other payables are non-trading financial liabilities payable on demand at variable interest rates.
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 profit or loss on the sale, issuance or cancellation of these instruments. Consideration received is presented in the
financial statements as a change in equity.
Measurement
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.
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.
Deposits and other payables are measured at amortised cost applying the effective interest.
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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
27
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
Fair value measurement principles
The fair value of financial instruments is based on their quoted market price at the reporting 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 and
accumulated in equity. When the financial assets are sold, collected or otherwise disposed of the cumulative gain or loss recognised in equity in
recycled through other comprehensive income into 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 Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in
full without material delay to a third party under a ‘pass-through’ arrangement; and either:
-
-
the Group has transferred substantially all the risks and rewards of the asset, or
the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent
of the Group’s continuing involvement in the asset. In that case, the Group 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 Group 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 Group could be required to repay.
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
28
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
Impairment of financial assets (Cont’d)
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.
Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been
incurred , the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash
flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (ie the effective
interest rate computed at initial recognition). The carrying amount of the asset shall be reduced either directly or through use of an allowance
account. The amount of the loss shall be recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after
the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss shall be
reversed either directly or by adjusting an allowance account. The reversal shall not result in a carrying amount of the financial asset that exceeds
what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the
reversal shall be recognised in profit or loss.
Financial assets carried at cost
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value because
its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity
instrument, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present
value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses shall not
be reversed.
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 profit or loss as incurred.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
29
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
PROPERTY AND EQUIPMENT (Cont’d)
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.
Any revaluation surplus is recognized in other comprehensive income and accumulated in 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, the decrease in other comprehensive income
reduces the amount accumulated in equity as the asset revaluation reserve, the decrease in other comprehensive income reduces the amount
accumulated in equity as 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.
30
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
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 reporting 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 other comprehensive income up to the amount of any previous revaluation. For assets excluding goodwill, an assessment is made at each
reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist, or may have decreased.
If such an indication exists the bank estimates the assets or CGU’s recoverable.
A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable
amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in profit or loss.
Impairment losses relating to goodwill cannot be reversed in future periods.
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. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
31
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
INVESTMENT PROPERTIES (Cont’d)
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 and equipment up to the date of
change in use.
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 profit or loss. 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 and
profit/losses on disposals of property and equipment. Commission income is brought to account on an accrual basis and bad debts recoveries
on a receipt basis. Service fee income is recognised on settlement date, or where determinable, by stage of completion. Arrangement fee income
is deferred and recognised over the tenure of the facility.
32
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2010
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.
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.
INVENTORY
Inventory is accounted for at weighted average 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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
33
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2010
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 2010 comprise the
company and its subsidiaries. The Group primarily is involved in corporate and retail banking and investments.
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 Janu-
ary 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 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.
In the year under review the non-distributable reserve was utilised in the redenomination of share capital after the requisite shareholder
approvals on 17 June 2010 and the subsequent regulatory approvals.
34
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
2.2
USE OF ESTIMATES, JUDGMENTS AND ASSUMPTIONS
The preparation of the Group’s consolidated financial statements requires management to make judgments, 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 for assets purchased (in ZWD) prior to 1 January 2009 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 was valued by professional valuers.
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 exercised their judgement in determining the residual values of the other property and equipment which have been determined
as nil.
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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
35
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
2.2.5 Impairment losses on loans and advances
The Bank reviews its individually significant loans and advances at each reporting date to assess whether an impairment loss should be
recorded in profit or loss. 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 RBZ Statutory reserves
The statutory reserves are stated at cost as IFRS principles of amortised cost could not be applied due to the significant uncertainty as to
the expected receipt date.
2.3
STATEMENT OF COMPLIANCE
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards
(IFRS), and the International Financial Reporting Interpretations, (IFRIC) interpretations as issued by the International Accounting Standards
Board (IASB). The financial statements are based on statutory records that are maintained under the historical cost convention as modified
by the revaluation of property, plant and equipment and investment property.
The consolidated financial statements have been prepared in compliance with the Companies Act (Chapter 24:03) and the Banking Act
(Chapter 24:20).
The Group presents its statement of financial position broadly in order of liquidity. An analysis regarding recovery or settlement within 12
months after the reporting date (current) and more than 12 months after the reporting 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 profit or loss unless required or permitted by any accounting
standard or interpretation, as specifically disclosed in the accounting policies of the Group.
36
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
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 2010:
•
IFRS 2 Share-based Payment: Group cash – settled share-based Payments Arrangements effective 1 January 2010.
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 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.
Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact of the accounting policies,
financial position or performance of the Group:
•
•
IFRIC 17 Distribution of Non-cash Assets to Owners
IFRIC 18 Transfer of assets from customers
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. This listing
is of standards and interpretations issued, which the bank reasonably expects to be applicable at a future date. The bank intends to adopt
those standards when they become effective.
IAS 24 Related Party Disclosures (Amendment)
The amended standard is effective for annual periods beginning on or after 2011. It clarified the definition of a related party to simplify the
identification of such relationships an d to eliminate inconsistencies in its application. The revised standard introduces a partial exemption
of disclosure requirements for government – related entities. The bank does not expect any impact on its financial position or performance.
Early adoption is permitted for either the partial exemption for government – related entities or for the entire standard.
IAS 32 Financial Instruments: Presentation – Classification of Rights Issues
The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial
liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro
rata to all of the existing owners of the same class of an entity’s non – derivative equity instruments, or to acquire a fixed number of the
entity’s own equity instruments for a fixed amount in any currency. This amendment will have no impact on the bank after initial application.
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measure-
ment of financial assets and liabilities as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013.
In subsequent phases, the Board will address impairment and hedge accounting. The completion of this project is expected in mid 2011.
The adoption of the first phase of IFRS 9 will primarily have an effect on the classification and measurement of the bank’s financial assets.
The Group is currently assessing the impact of adopting IFRS 9, however, the impact of adoption depends on the assets held by the Group
at the date of adoption, it is practical to quantify the effect.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
37
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
IFRIC 14 Prepayments of a minimum funding requirement (Amendment)
The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. The
amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the
prepayments of a minimum funding requirement as an asset. The amendment is expected to have no impact on the financial statements
of the bank.
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a
creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at the fair value. In case
this cannot be reliably measured, they are measured at the fair value of the liability extinguished. Any gain or loss is recognised imme-
diately in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the Group.
Improvements to IFRS (issued in May 2010)
The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted
as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011. The amendments are listed below.
•
•
•
•
•
IFRS 3 Business Combinations.
IFRS 7 Financial Instruments: Disclosures
IAS 1 Presentation of Financial Statements
IAS 27 Consolidated and Separate Financial Statements
IFRIC 13 Customer Loyalty Programmes
The Group, however, expects no impact from the adoption of the amendments on its financial position or performance.
3.
SEGMENT INFORMATION
For management purposes, the Group is organised into four operating segments based on products and services as follows:
Retail banking
-
Corporate banking -
Treasury
Individual customers deposits and consumer loans, overdrafts, credit card facilities and funds transfer facilities.
Loans and other credit facilities and deposit and current accounts for corporate and institutional customers.
- Money market investment, securities trading, accepting and discounting of instruments and
International banking -
foreign currency trading.
Handles the Group’s foreign currency denominated banking business and manages
relationships with correspondent banks
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation
and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects is measured
differently from operating profit or loss in the consolidated financial statements. Income taxes are managed on a Group basis and are not
allocated to operating segments.
Interest income is reported net as management primarily relies on net interest revenue as a performance measure, not the gross income
and expense.
Transfer prices between operating segments are on arm’s length basis in a manner similar to transactions with third parties.
No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the bank’s total revenue in 2010
or 2009.
38
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
3.
SEGMENT INFORMATION (Cont’d)
The following table presents income and profit and certain asset and liability information regarding the Group’s operating segments and
service units:
for the year ended 31 December 2010
Retail
Banking
US$
Corporate
Banking
International
Treasury
Banking Unallocated
US$
US$
US$
US$
Total
US$
Income
Third party
Inter - segment
6 344 836
-
12 508 781
-
1 371 284
-
695 863
-
(497 470)
-
20 423 294
-
Total operating income
6 344 836
12 508 781
1 371 284
695 863
(497 470)
20 423 294
Impairment losses on loans and advances
(87 941)
(883 862)
-
-
-
(971 803)
Net operating income
6 256 895
11 624 919
1 371 284
695 863
(497 470)
19 451 491
Results
Interest and similar income
Interest and similar expense
2 110 273
(669 134)
7 489 810
(2 339 207)
426 006
(135 080)
Net interest income
1 441 139
5 150 603
290 926
-
-
-
(11 453)
253
10 014 636
(3 143 168)
(11 200)
6 871 468
Fee and commission income
Fee and commission expense
4 234 563
4 929 796
-
-
Net fees and commission income
4 234 563
4 929 796
-
-
-
695 863
(169 153)
9 691 069
-
-
-
695 863
(169 153)
9 691 069
Depreciation of property and equipment
Segment profit/ (loss)
Income tax expense
139 376
496 672
-
18 583
5 854 649
5 807
1 075 705
16 261
(150 877)
117 505
(6 333 593)
297 532
942 556
-
-
-
-
(250 322)
Profit/(loss) for the year
496 672
5 854 649
1 075 705
(150 877)
(6 333 593)
692 234
Assets and Liabilities
Capital expenditure
Total assets
Total liabilities and equity
368 979
49 197
15 374
43 048
255 585
732 183
12 396 655
14 158 924
56 968 230
35 278 465
27 600 964
32 344 518
-
-
5 873 655
21 057 597
102 839 504
102 839 504
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
39
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
3.
SEGMENT INFORMATION (Cont’d)
The following table presents income and profit and certain asset and liability information regarding the Group’s operating segments and
service units:
for the year ended 31 December 2009
Income
Third party
Inter - segment
Retail
Banking
US$
Corporate
Banking
International
Treasury
Banking Unallocated
US$
US$
US$
US$
Total
US$
588 726
-
3 951 232
-
1 071 179
-
1 345 897
-
2 185 873
-
9 142 907
-
Total operating income
588 726
3 951 232
1 071 179
1 345 897
2 185 873
9 142 907
Impairment losses on loans and advances
(9 289)
(83 598)
-
-
-
(92 887)
Net operating income
579 437
3 867 634
1 071 179
1 345 897
2 185 873
9 050 020
Results
Interest and similar income
Interest and similar expense
Net interest income
-
-
-
1 414 934
(723 800)
102 804
-
691 134
102 804
-
-
-
8 984
174
1 526 722
(723 626)
9 158
803 096
Fee and commission income
Fee and commission expense
588 726
1 741 445
-
-
Net fees and commission income
588 726
1 741 445
-
-
-
1 345 897
1 212 009
4 888 077
-
-
-
1 345 897
1 212 009
4 888 077
Depreciation of property and equipment
Segment profit/ (loss)
Income tax expense
82 742
(1 862 889)
19 529
2 354 787
-
-
2 570
989 360
-
12 334
984 340
92 505
(1 524 416)
209 680
941 182
-
-
1 337 105
(Loss)/profit for the year
(1 862 889)
2 354 787
989 360
984 340
(1 524 416)
2 278 287
Assets and Liabilities
Capital expenditure
Total assets
Total liabilities and equity
-
-
-
5 625 382
4 161 792
19 848 533
17 956 535
6 267 521
6 601 793
-
-
-
160 322
160 322
7 966 495
10 987 811
39 707 931
39 707 931
3.1
GEOGRAPHICAL INFORMATION
The Group operates in one geographical market, Zimbabwe.
40
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
4.
INTEREST INCOME
Loans and advances to banks
Loans and advances to customers
Investment securities
Other operating income
5.
INTEREST AND SIMILAR EXPENSE
Due to banks
Due to customers
Other borrowed funds
Interest expense on financial liabilities designated at fair
value through profit or loss
6.
NON-INTEREST INCOME
Quoted and other investments fair value
adjustments
Commission and fee income
Loss on disposal of investment property
Profit on disposal of property and equipment
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 operating income*
*Mainly comprises insurance recoveries proceeds.
2010
US$
297 752
6 721 892
2 990 349
4 643
10 014 636
2010
US$
843 705
501 763
561
1 346 029
1 797 139
3 143 168
2010
US$
94 139
9 691 069
-
64 527
(784 600)
54 404
13 232
-
242 025
9 374 796
2009
US$
16 158
929 319
581 181
64
1 526 722
2009
US$
6
179 355
4 199
183 560
540 066
723 626
2009
US$
172 978
4 888 077
(460 000)
2 066
579 600
32 371
45 256
1 789 836
186 765
7 236 949
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
41
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
7.
OPERATING EXPENDITURE
2010
US$
2009
US$
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 – salaries, allowances and related costs
– retrenchment
8.
TAXATION
8.1
Income tax expense
Current tax
Aids levy
Deferred tax
Tax adjustment due to changes in tax law
Tax adjustment due to changes in tax rates
Financial institutions levy
Tax expense
8.2
Reconciliation of income tax charge
Based on results for the period at a rate of 25% (2009: 30%)
Arising due to:
Income not subject to tax
Non-deductible expenses
Tax adjustments
Effect of opening deemed values (note 2.1.1)
Aids levy
Tax adjustment due to change in tax rates
Taxation
Financial institutions levy
Tax expense
42
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
5 924 296
-
153 864
298 811
297 532
587 612
45 625
541 987
5 014 041
3 089 612
15 365 768
2010
US$
765 499
22 965
(514 224)
(23 918)
-
250 322
-
250 322
2010
US$
235 639
(158)
1 924
(10 048)
-
227 357
22 965
-
250 322
-
250 322
3 410 039
10 404
117 875
1 050 000
209 680
209 252
18 537
190 715
2 377 962
-
7 385 212
2009
US$
257 302
7 719
(467 811)
-
(1 178 976)
(1 381 766)
44 661
(1 337 105)
2009
US$
282 355
(263)
1 519
-
(494 120)
(210 509)
7 719
(1 178 976)
(1 381 766)
44 661
(1 337 105)
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
8.
TAXATION (Cont’d)
8.3
Total taxation charge/ (credit) analysed by company
2010
US$
2009
US$
Opening
2009
US$
Stewart Holdings (Private) Limited
(4 079)
NMB Bank Limited
NMBZ Holdings Limited
8.4
Current tax liabilities (income tax, aids levy and
financial institutions levy)
At 1 January
Charge for the year
Payments during the year
9.
EARNINGS PER SHARE
788 464
(445 657)
641 969
250 239
4 162
250 322
299 162
15 970
(1 350 517)
(2 558)
(1 337 105)
-
309 682
(10 520)
299 162
-
-
-
-
-
-
-
-
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
Basic and Diluted
Headline (note 9.4)
2010
$US
692 234
692 234
2009
$US
2 278 287
2 286 012
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
43
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
9.2
Number of shares
Weighted average shares in issue
Diluted weighted average number of shares
Weighted average shares in issue
Effects of dilution:
Share options granted but not exercised
Share options approved but not yet granted
2010
2009
2 228 151 974
2 238 894 843
1 641 270 307*
1 655 100 176*
2 228 151 974
1 641 270 307
9 072 000
1 670 869
12 159 000
1 670 869
Diluted weighted average number of shares
2 238 894 843
1 655 100 176
* excludes own equity instruments amounting to 1 028 172 shares.
9.3
Earnings per share (US cents)
Basic
Headline
Diluted basic
Diluted headline
9.4
Headline earnings
2010
0.03
0.03
0.03
0.03
2010
US$
2009
0.14
0.14
0.14
0.14
2009
US$
Profit attributable to shareholders
Add/(deduct) non-recurring items:
- Loss on derecognition of investment
- Tax effect
692 234
2 278 287
-
-
10 404
(2 679)
Headline earnings
692 234
2 286 012
10.
SHARE CAPITAL
10.1 Authorised
GROUP AND COMPANY
2010
Shares
million
2010
Shares
million
2010
US$
Opening
Cost
2009
US$
Cost
2009
US$
Ordinary shares of US$0.000028 each
3 500
2 250
98 000
-
-
44
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
10.2
Issued and fully paid
At 1 January
Redenomination of share capital
Shares issued – rights issue
Shares issued – share options
2010
Shares
million
1 648
-
1 156
3
2009
Shares
million
1 641
-
-
7
2010
US$
-
46 147
32 364
87
At 31 December
2 807
1 648
78 598
GROUP AND COMPANY
Opening
Cost
2009
US$
Cost
2009
US$
-
-
-
-
-
-
-
-
-
-
Of the unissued ordinary shares of 692 892 711 (2009 – 601 824 771), options which may be granted in terms of the NMBZ 2005 Employee
Share Option Scheme (ESOS) amounted to 85 360 962 (2009 – 85 360 962) and out of these 1 670 869 (2009 – 1 670 869) had not been
issued. As at 31 December 2010, 9 072 000 (2009 – 12 159 000) share options out of the issued had not been exercised.
Subject to the provisions of section 183 of the Companies Act (Chapter 24:03), the unissued shares are under the control of the directors.
The share capital was redenominated after the requisite shareholder approvals on 17 June 2010 and the subsequent regulatory approvals.
10.3 Own equity instruments
The own equity instruments amounting to 1 028 172 shares at a cost of US$8 225 which were held by the Company’s subsidiary (Stewart
Holdings (Private) Limited) in 2009 were disposed off in the year under review for a consideration of US$9 012.
11.
CAPITAL RESERVES
GROUP
2009
US$
34 822
(8 225)
61 212
274 904
Opening
2009
US$
2010
US$
-
-
15 737 387
-
96 034
-
45 832
-
COMPANY
2009
US$
34 822
-
61 212
-
Opening
2009
US$
-
-
96 034
-
2010
US$
15 737 548
-
45 671
883 414
Share premium
Treasury shares
Share option reserve
Regulatory reserve
Non – distributable reserve
-
6 201 909
6 201 909
-
6 201 909
6 201 909
Total capital reserves
16 666 633
6 564 622
6 297 943
15 783 219
6 297 943
6 297 943
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
45
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
Nature and purpose of reserves
Capital reserves
Share premium
This reserve represents the increase in share capital attributable to:
•
•
•
the shares issued to shareholders in terms of a right issue exercise concluded in August 2010
upon exercise of share options by officers and key management personnel of the group,
the excess reserves above the stated nominal price per share in terms of the redenomination of share capital during the year.
Share option reserve
The share option reserve is used to recognise the value of equity – settled share based payment transactions providedto employees, in-
cluding 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.
Regulatory reserve
This reserve represents the excess of the Banking Regulations allowance for impairment losses on loans and advances
amount compared to the IAS 39 allowance for impairment losses on loan and advances.
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. This reserve was applied during the year to the redenomination of share capital and share
premium reserve after the requisite shareholder approvals on 17 June 2010 and the subsequent regulatory approvals.
12.
RETAINED EARNINGS / (ACCUMULATED LOSSES)
Analyses of retained profit/ (accumulated loss) by company
GROUP
2009
US$
(18 796)
1 968 837
53 342
2 003 383
2010
US$
79 322
1 976 437
32 135
2 087 894
Opening
2009
US$
-
-
-
-
COMPANY
2009
US$
(18 796)
-
-
(18 796)
2010
US$
95 244
-
-
95 244
Opening
2009
US$
-
-
-
-
NMBZ Holdings Limited
NMB Bank Limited
Stewart Holdings (Private) Limited
Total
46
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
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**
2010
US$
26 598 041
17 177 109
36 074 237
79 849 387
3 307 057
83 156 444
2009
US$
3 009 704
6 444 932
Opening
2009
US$
-
-
19 265 484
2 950 017
28 720 120
1 374 537
30 094 657
2 950 017
1 029 519
3 979 536
-
3 979 536
Less: Financial liabilities disclosed* in note 14.1
(17 177 109)
65 979 335
(6 444 932)
23 649 725
*The above are all financial liabilities at fair value through profit and loss designated as such upon initial recognition. The fair value of the
above is the same as the cost. The deposits are payable on demand, have variable interest rates and varying security.
**Deposits and other payables approximate the related carrying amount due to their short term nature.
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
2010
US$
54 179 210
15 575 677
10 090 000
4 500
-
-
2009
US$
25 992 595
2 727 525
-
-
-
-
Opening
2009
US$
2 950 017
-
-
-
-
-
79 849 387
28 720 120
2 950 017
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
2010
US$
26 983 081
5 875 820
1 200 512
24 377 638
692 909
10 653 099
4 427 417
5 638 911
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
%
34
7
1
31
1
13
6
7
Opening
2009
US$
-
-
-
2 722 960
-
227 057
-
-
%
10
16
7
24
11
15
8
9
%
-
-
-
92
-
8
-
-
79 849 387
100
28 720 120
100
2 950 017
100
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
47
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
14.
FINANCIAL INSTRUMENTS
14.1 Financial liabilities of fair value through profit and loss*
Cost
2010
US$
Fair
Value
2010
US$
Fair
Value
2009
US$
Opening
Fair value
2009
US$
Opening
Cost
2009
US$
Cost
2009
US$
Fixed term deposits
Negotiable Certificates of Deposits
3 469 068
13 708 041
3 469 068
13 708 041
88 481
6 356 451
88 481
6 356 451
Total financial liabilities at fair
value through profit and loss
17 177 109
17 177 109
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.
14.2 Financial assets at fair value through profit and loss
Cost
2010
US$
Fair
Value*
2010
US$
Fair
Value
2009
US$
Opening
Opening
Fair value Cost
2009 2009
US$ US$
Cost
2009
US$
Government and
public sector securities
1 994 585
1 994 585
1 789 836
1 789 836
Treasury bills
RBZ Forex Bond (1)
Mortgage bonds
-
1 994 585
-
-
1 994 585
-
1 789 36
-
1 789 836
-
-
-
Bills-own acceptance (2)
Promissory Notes (2)
14 769 753
498 798
14 805 628
499 379
5 345 187
-
5 234 839
-
-
-
-
-
-
-
-
-
-
-
-
-
Total financial assets at fair value
through profit and loss
17 263 136
17 299 592
7 135 023
7 024 675
- -
(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.
48
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
14.
FINANCIAL INSTRUMENTS (Cont’d)
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
2010
US$
8 747 376
8 335 233
90 000
4 500
-
-
2009
US$
3 717 408
2 727 524
-
-
-
-
17 177 109
6 444 932
14.4 Financial assets at fair value through profit and loss
US$
Less than 1 month
1 to 3 months
3 to 6 months
6 months to 1 year
1 to 5 years
Over 5 years
2010
US$
7 707 188
6 884 042
2 708 362
-
-
-
2009
US$
4 659 689
590 860
1 884 474
-
-
-
17 299 592
7 135 023
Opening
2009
US$
-
-
-
-
-
-
-
Opening
2009
-
-
-
-
-
-
-
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
49
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
14.5 Other financial assets and financial liabilities summary (Cont’d)
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.
Carrying
amount
2010
US$
Fair
Value
2010
US$
Fair
Value
2009
US$
Carrying
amount
2009
US$
Opening
Fair value
2009
US$
Opening
Carrying
amount
2009
US$
18 346 939
18 346 939
12 203 181
12 203 181
1 289 441
1 289 441
17 263 136
59 474 284
17 299 592
59 492 813
7 135 023
12 500 534
7 024 675
12 581 234
201 666
134 461
201 666
134 461
108 333
455 638
108 003
455 638
-
19 781
32 000
306 904
-
19 781
32 000
306 904
Cash and cash equivalent
Financial assets at fair value
through profit and loss
Advances and other accounts
Trade investments
Quoted and other investments
Total
95 420 486
95 475 471
32 402 709
32 372 731
1 648 126
1 648 126
Financial liabilities
Deposits and other accounts
Financial liabilities at fair value
65 979 335
65 979 335
23 649 725
23 652 448
2 950 017
2 950 017
through profit and loss
17 177 109
17 177 109
6 444 932
6 444 932
-
-
83 156 444
83 156 444
30 094 657
30 097 380
2 950 017
2 950 017
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.
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 2010, the Group held the 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.
Techniques which use inputs which have a significant effect on the recorded fair value that are not based on desirable market
Level 3:
data.
50
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
14.5 Other financial assets and financial liabilities summary (Cont’d)
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
Financial liabilities of fair value through profit and loss
31 Dec
2010
US$
17 299 592
201 666
134 461
31 Dec
2010
US$
17 177 109
Level 1
Level 2
Level 3
US$
-
US$
17 299 592
-
134 461
201 666
-
US$
-
-
-
Level 1
Level 2
Level 3
US$
-
US$
17 177 109
US$
-
During the reporting period ending 31 December 2010, 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.
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
Financial liabilities of fair value through profit and loss
31 Dec
2009
US$
7 135 023
108 003
455 638
31 Dec
2009
US$
6 444 932
Level 1
US$
Level 2
US$
Level 3
US$
-
7 135 023
-
455 638
108 003
-
-
-
-
Level 1
Level 2
Level 3
US$
-
US$
6 444 932
US$
-
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
2010
US$
54 404
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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
51
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
15.
DEFERRED TAX
GROUP
COMPANY
Allowance for impairment
losses on loans and advances
Quoted and other investments
Investments:-trade investments
Investment properties
Property and equipment
Marking to market adjustments IAS 39
Unrealised foreign exchange gains
Suspended interest
Deferred income
Assessed loss
2010
US$
(272 429)
16 806
-
134 743
268 036
17 408
271 742
2009
US$
-
29 313
-
256 609
363 183
8 007
97 653
(161 703)
-
(58 601) (4 717)
Opening
2009
US$
(52)
56 681
-
1 585 000
1 042 189
-
-
-
-
(8 036)
(3 941)
(138 922)
Closing deferred tax liability/(asset)
Deferred tax liability at the beginning of the year
207 966
(746 107)
746 107
(2 544 896)
2 544 896
-
Deferred tax on disposal of investment in subsidiary
-
152 002
Current year credit (note 8.1)
(538 142)
(1 646 787)
-
-
2010
US$
-
1 393
6 140
-
-
-
-
-
-
-
7 533
1 751
-
2009
US$
-
615
1 575
-
-
-
-
-
-
(3 941)
(1 751)
(807)
-
9 284
(2 558)
Opening
2009
US$
-
807
-
-
-
-
-
-
-
-
807
-
-
-
16.
CASH AND CASH EQUIVALENTS
16.1 Balances with Reserve Bank of Zimbabwe
2010
US$
2009
US$
Opening
2009
US$
Statutory reserve
-
2 746 957
-
16.2 Balances with other banks and cash
Current, nostro accounts and cash
18 346 939
18 346 939
9 456 224
12 203 181
1 289 441
1 289 441
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. The current year amount is shown under “other accounts” in Note 17.
52
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
17.
LOANS, ADVANCES AND OTHER ACCOUNTS
17.1 Total loans, advances and other accounts
17.1.1 Advances
GROUP
COMPANY
2010
2009
US$
16 553 444
US$
8 596 463
39 674 193
3 806 776
4 087 760 600 860
Opening
2009
US$
-
2009
US$
-
19 781
-
352 504 1 842 363
Opening
2009
US$
-
96 034
2009
US$
-
-
79 034
60 315 397
13 004 099
372 285 1 842 363
79 034
96 034
Fixed term loans
Local loans and overdrafts
Other accounts
17.1.2 Maturity analysis
Less than one month
45 997 447
11 560 300
32 999
1 to three months
3 to 6 months
6 months to 1 year
1 to 5 years
Over 5 years
3 554 191
2 511 409
5 106 790
743 752
-
298 366
147 925
120 665
382 088
-
-
-
-
-
-
Total advances
57 913 589
12 509 344
32 999
Provision for impairment losses on loans
and advances
(1 057 977)
(106 105)
(13 218)
Provision for suspended interest
(627 975)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other accounts
56 227 637
4 087 760
12 403 239
600 860
19 781
-
352 504 1 842 363
-
79 034
-
96 034
60 315 397
13 004 099
372 285 1 842 363
79 034
96 034
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
53
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
17.2 Sectoral analysis of utilisations
Industrials
Agriculture and horticulture
Conglomerates
Services
Mining
Food & beverages
Other
2010
US$
34 198 907
5 079 399
3 151 309
8 876 982
1 120 858
-
5 486 134
57 913 589
2009
US$
8 068 093
691 914
273 288
2 072 971
1 272 873
-
130 205
12 509 344
%
59
9
6
15
2
-
9
100
Opening
2009
US$
-
-
-
-
-
-
-
-
%
64
6
2
17
10
-
1
100
The material concentration of loans and advances are in the industrial sector at 59% (2009 – 64%).
17.3 Allowance for impairment losses on loans and advances (including acceptances)
Specific
US$
106 105
971 803
(19 931)
1 057 977
2010
Portfolio
US$
Total
US$
Specific
US$
2009
Portfolio
US$
-
-
-
-
106 105
971 803
(19 931)
1 057 977
13 218
92 887
-
106 105
-
-
-
-
At 1 January
Charge against profits
Bad debts written off
At 31 December
17.4 Non-performing loans and advances
Total non-performing loans and advances
Provision for impairment loss on loans and advances
Interest in suspense
2010
US$
1 685 952
(1 057 977)
(627 975)
-
2009
US$
106 105
(106 105)
-
-
Opening
2009
US$
13 218
(13 218)
-
-
The residue on these accounts, where applicable, represents recoverable portions covered by realisable security.
%
-
-
-
-
-
-
-
-
Total
US$
13 218
92 887
-
106 105
17.5 Other assets
Service deposits
Statutory reserve
Accrued income
Prepayments and stocks
Other receivables
2010
US$
117 772
2009
US$
112 167
3 265 176
-
589 026
115 786
4 087 760
-
97 295
317 565
73 833
600 860
Opening
2009
US$
101 992
-
-
209 602
40 910
352 504
54
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
17.6 Loans to officers
2010
US$
2009
US$
2009
US$
Included in advances and other accounts (note 17.1)
are loans to officers:-
At 1 January
Net additions during the year
Fair value adjustment
335 953
511 891
(61 623)
-
335 953
-
Balance at 31 December
786 221
335 953
Of which housing loans comprised:-
-
-
-
-
-
-
-
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
on unauthorised facility
Minimum lending rate plus a margin
Loans
Loan payable over a maximum
Minimum lending rate plus a margin.
period of 24 months
Loans to employees and directors are
at discounted interest rates.
Bankers Acceptances
Loan payable over a minimum
Average rate of 30% per annum.
period of 30 days
18.
TRADE INVESTMENT
Unlisted
Takura Ventures (Private) Limited
Other
GROUP
COMPANY
2010
US$
2009
US$
32 788
31 495
168 878 76 508
201 666
108 003
Opening
2009
US$
32 000
-
32 000
2010
US$
32 788
90 006
122 794
2009
US$
31 495
-
31 495
Opening
2009
US$
32 000
-
32 000
Directors’ valuation
201 666
108 003
32 000
122 794
31 495
32 000
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 and Medical Investments (Private) Limited t/a Avenues Clinic. The
trade investment was valued by directors at fair value at 31 December 2010.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
55
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
19.
INVESTMENT IN ASSOCIATE
The Group has a 25% interest in African Century Limited, which is involved in the provision of lease finance.
African Century Limited is a company that is not listed on any public exchange. The following table illustrates summarised unaudited
financial information of the Group’s investment in African Century Limited.
Share of the associate’s
statement of financial position:
Current assets
Non-current assets
Current liabilities
Non – current liabilities
Equity
Share of the associate’s revenue and (loss)
Revenue
Loss
Carrying amount of the investment
GROUP
2009
US$
COMPANY
Opening
2009
US$
2010
US$
2009
US$
Opening
2009
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- -
- -
250 000
-
-
-
-
-
-
-
-
-
2010
US$
222 185
26 058
(19 687)
-
228 556
676
(21 444)
228 556
20.
INVESTMENTS IN GROUP COMPANIES
20.1 Subsidiaries
COMPANY
2010
US$
2009
US$
Opening
2009
US$
Investments in subsidiaries
13 722 112
6 154 577
6 154 577
56
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
20.
INVESTMENTS IN GROUP COMPANIES (Cont’d)
20.2
Shareholding
The subsidiaries and associates, 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:-
NMB Bank Limited
Brixtun (Private) Limited
2010
100% (Banking)
100% (Dormant)
2009
100% (Banking)
100% (Dormant)
NMB Fund Management (Private) Limited
Stewart Holdings (Private) Limited
100% (Dormant)
100% (Equity holdings)
100% (Dormant)
100% (Equity Holdings)
Invariant (Private) Limited
Darksan (Private) Limited
African Century Limited
100% (Dormant)
100% (Dormant)
25% (Leasing)
100% (Dormant)
100% (Dormant)
nil
The consolidated financial statements include the financial statements and results of the subsidiaries and associates listed above.
The Group acquired a 25% shareholding in African Century Limited on 30 November 2010.
21. QUOTED AND OTHER INVESTMENTS
Quoted investments
GROUP
2009
US$
455 638
455 638
Opening
2009
US$
306 904
306 904
COMPANY
2010
US$
27 854
27 854
2009
US$
12 290
12 290
Opening
2009
US$
16 139
16 139
2010
US$
134 461
134 461
The quoted investments comprise shares stated for year end purposes at the last trading date of 31 December 2010.
22.
INVESTMENT PROPERTIES
At 1 January
Improvements
Sale of investment property
Fair value adjustments
At 31 December
2010
US$
3 219 600
180 000
-
(784 600)
2 615 000
2009
US$
6 140 000
-
(3 500 000)
579 600
3 219 600
Opening
2009
US$
-
-
-
6 140 000
6 140 000
Rental income amounting to US$3 855 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 Borrowdale 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$2 050 000.
The other properties comprise residential stands and houses which were valued by professional valuers for year end purposes at
US$565 000.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
57
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
23.
PROPERTY AND EQUIPMENT
Cost
Deemed at 1 January 2009
Additions
Impairment loss
Disposals
At 31 December 2009
Additions
Impairment loss
Disposals
Motor
Furniture &
Computers
US$
Vehicles
US$
Equipment
US$
Freehold
Land &
Building
US$
Total
US$
447 772
116 830
911 127
3 760 000
5 235 729
55 553
-
-
503 325
214 274
-
-
31 685
-
-
148 515
108 804
-
(37 200)
71 375
-
-
982 502
407 003
-
-
1 709
(1 050 000)
160 322
(1 050 000)
-
-
2 711 709
2 102
(298 811)
-
4 346 051
732 183
(298 811)
(37 200)
At 31 December 2010
717 599
220 119
1 389 505
2 415 000
4 742 223
Accumulated depreciation
Deemed at 1 January 2009
Charge for the year
Disposals
At 31 December 2009
Charge for the year
Disposals
114 262
89 930
-
204 192
113 114
25 910
23 995
-
49 905
43 985
-
(16 866)
413 812
95 744
-
509 556
140 375
-
-
11
-
11
58
-
553 984
209 680
-
763 664
297 532
(16 866)
At 31 December 2010
317 306
77 024
649 931
69
1 044 330
Net book amount
At 1 January 2009
Net book amount
At 31 December 2009
Net book amount
At 31 December 2010
333 510
90 920
497 315
3 760 000
4 681 745
299 133
98 610
472 946
2 711 698
3 582 387
400 293
143 095
739 574
2 414 931
3 697 893
The land and buildings were valued by professional valuers as at 31December 2010 for year end purposes and the open market value was
US$2.41 million. The deemed balances at 1January 2009 were derived using the principles outlined in note 2.1.1.
58
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
24.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Group’s interest rate risk exposure on assets and liabilities. The financial assets and liabilities are categorised
by the earlier of contractual repricing or maturity dates.
24.1 Total position
At 31 December 2010
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans, advances and other accounts
Investment in associate
Quoted and other investments
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deposits and other accounts
Current tax liabilities
Deferred tax liabilities
Equity
Up to 1
1 month
3 months
1 year to
Non-interest
month to 3 months
US$
US$
to 1 year
US$
5 years
US$
bearing
US$
Total
US$
18 346 939
-
-
7 707 188
6 884 042
44 658 392
-
3 450 723
-
2 708 362
7 396 422
-
-
-
-
-
-
-
-
-
722 100
-
-
-
-
-
4 087 760
228 556
336 127
2 615 000
18 346 939
17 299 592
60 315 397
228 556
336 127
2 615 000
-
70 712 519
-
10 334 765
-
10 104 784
-
722 100
3 697 893
10 965 336
3 697 893
102 839 504
8 747 376
45 431 834
8 335 233
7 240 444
94 500
10 000 000
-
-
-
-
-
-
-
54 179 210
-
15 575 677
-
10 094 500
-
-
-
-
-
-
-
3 307 057
641 969
207 966
17 177 109
65 979 335
641 969
207 966
18 833 125
22 990 117
18 833 125
102 839 504
Interest rate repricing gap
16 533 309
(5 240 912)
10 284
722 100
(12 024 781)
Cumulative gap
16 533 309
11 292 397
11 302 681
12 024 781
-
-
-
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
59
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
24.
INTEREST RATE REPRICING AND GAP ANALYSIS (Cont’d)
The table below analyses the Group’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.
24.1 Total position (continued)
At 31 December 2009
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans, advances and other accounts
Quoted and other investments
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deposits and other accounts
Current tax liabilities
Deferred tax liabilities
Equity
Up to 1
1 month
3 months
1 year to
Non-interest
month
US$
to 3 months
US$
to 1 year
US$
5 years
US$
bearing
US$
Total
US$
12 203 181
-
-
4 659 689
11 835 204
-
590 860
298 365
-
1 884 474
268 591
-
-
-
-
-
-
-
-
-
382 088
-
-
-
-
-
219 851
563 641
3 219 600
3 582 387
12 203 181
7 135 023
13 004 099
563 641
3 219 600
3 582 387
28 698 074
889 225
2 153 065
382 088
7 585 479
39 707 931
3 717 408
2 727 524
22 275 188
-
-
-
-
-
-
-
25 992 596
2 727 524
-
-
-
-
-
-
-
-
-
-
-
-
-
6 444 932
1 374 537
299 162
746 107
8 568 005
23 649 725
299 162
746 107
8 568 005
10 987 811
39 707 931
Interest rate repricing gap
Cumulative gap
2 705 478
2 705 478
(1 838 299)
867 179
2 153 065
3 020 244
382 088
3 402 332
(3 402 332)
-
-
-
60
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
25.
INTEREST RATE REPRICING AND GAP ANALYSIS (Cont’d)
The table below analyses the Group’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.
25.1. United States dollar
At 31 December 2010
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans, advances and other accounts
Investment in associate
Quoted and other investments
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deposits and other accounts
Current tax liabilities
Deferred tax liabilities
Equity
Up to 1
1 month
3 months
1 year to
Non-interest
month
US$
to 3 months
US$
to 1 year
US$
5 years
US$
bearing
US$
Total
US$
14 435 521
-
-
7 707 188
6 884 042
44 274 497
-
3 450 723
-
2 708 362
7 396 422
-
-
-
-
-
-
-
-
-
722 100
-
-
-
-
66 417 206
-
10 334 765
-
10 104 784
-
722 100
-
-
4 087 760
228 556
257 255
2 615 000
3 697 893
10 886 464
14 435 521
17 299 592
59 931 502
228 556
257 255
2 615 000
3 697 893
98 465 319
8 747 376
43 121 883
8 171 759
7 240 444
94 500
10 000 000
-
-
-
-
-
-
-
51 869 259
-
15 412 203
-
10 094 500
-
-
-
-
-
-
-
3 307 057
641 969
207 966
17 013 635
63 669 384
641 969
207 966
18 833 125
22 990 117
18 833 125
100 366 079
Interest rate repricing gap
14 547 947
(5 077 438)
10 284 722 100
(12 103 653)
(1 900 760)
Cumulative gap
14 547 947
9 470 509
9 480 793
10 202 893
(1 900 760)
-
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
61
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
25.
INTEREST RATE REPRICING AND GAP ANALYSIS (Cont’d)
The table below analyses the Group’s interest rate risk exposure on assets and liabilities denominated in United StatesDollars only. The
financial assets and liabilities are categorised by the earlier of contractual repricing or maturity dates.
25.1 United States dollar (Cont’d)
At 31 December 2009
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans, advances and other accounts
Quoted and other investments
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deposits and other accounts
Current tax liabilities
Deferred tax liabilities
Equity
Up to 1
1 month
3 months
1 year to
Non-interest
month
US$
to 3 months
US$
to 1 year
US$
5 years
US$
bearing
US$
Total
US$
8 353 567
-
-
4 659 689
11 667 252
-
590 860
298 365
-
1 884 474
268 591
-
-
-
-
-
-
-
-
-
382 088
-
-
-
-
-
219 851
487 133
3 219 600
3 582 387
8 353 567
7 135 023
12 836 147
487 133
3 219 600
3 582 387
24 680 508
889 225
2 153 065
382 088
7 508 971
35 613 857
3 275 040
2 727 524
19 074 551
-
-
-
-
-
-
-
22 349 591
2 727 524
-
-
-
-
-
-
-
-
-
-
-
-
-
6 002 564
1 374 537
299 162
746 107
8 568 005
20 449 088
299 162
746 107
8 568 005
10 987 811
36 064 926
Interest rate repricing gap
Cumulative gap
2 330 917
2 330 917
(1 838 299)
492 618
2 153 065
2 645 683
382 088
3 027 771
(3 478 840)
(451 069)
(451 069)
-
62
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
26.
INTEREST RATE REPRICING AND GAP ANALYSIS (Cont’d)
The table below analyses the Group’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.
26.1. Other Foreign currencies
At 31 December 2010
Up to 1
1 month
month to 3 months
US$
US$
3 months
to 1 year
US$
1 year to
5 years
US$
Non-interest
bearing
US$
Total
US$
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Quoted and other investments
Loans, advances and other accounts
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deferred tax liabilities
Deposits and other accounts
Current tax liabilities
Equity
3 911 418
-
-
383 895
-
-
4 295 313
-
-
-
-
-
-
-
-
-
163 474
-
2 309 951
-
-
2 309 951
-
-
-
163 474
Interest rate repricing gap
1 985 362
(163 474)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3 911 418
-
78 872
-
-
-
78 872
383 895
-
-
78 872
-
4 374 185
-
-
-
-
-
-
163 474
-
2 309 951
-
-
2 473 425
78 872
1 900 760
Cumulative gap
1 985 362
1 821 888
1 821 888
1 821 888
1 900 760
-
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
63
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
26.
INTEREST RATE REPRICING AND GAP ANALYSIS (Cont’d)
The table below analyses the Group’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.
26.1 Other Foreign currencies (continued)
At 31 December 2009
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Quoted and other investments
Loans, advances and other accounts
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deferred tax liabilities
Deposits and other accounts
Current tax liabilities
Equity
Interest rate repricing gap
Cumulative gap
Up to 1
1 month
month to 3 months
US$
US$
3 months
to 1 year
US$
1 year to
5 years
US$
Non-interest
bearing
US$
Total
US$
3 849 614
-
-
167 952
-
-
4 017 566
442 368
-
3 200 637
-
-
3 643 005
374 561
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
374 561
374 561
374 561
374 561
-
3 849 614
-
76 508
-
-
-
76 508
167 952
-
-
76 508
-
4 094 074
-
-
-
-
-
-
442 368
-
3 200 637
-
-
3 643 005
76 508
451 069
451 069
451 069
64
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
27.
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.
27.1
At 31 December 2010
Assets
Cash and cash equivalents
Financial assets at fair value
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
14 435 521
2 573 026
125 456
1 136 318
76 618
18 346 939
through profit and loss
Loans, advances and other accounts
17 299 592
59 931 502
-
381 402
Investment in associate
Quoted and other investments
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deferred tax liabilities
Deposits and other accounts
Current tax liabilities
Equity
228 556
257 255
2 615 000
3 697 893
-
-
-
-
-
697
-
-
-
-
-
525
-
78 872
-
-
-
1 271
17 299 592
60 315 397
-
-
-
-
228 556
336 127
2 615 000
3 697 893
98 465 319
2 954 428
126 153
1 215 715
77 889
102 839 504
17 013 635
207 966
63 669 384
641 969
18 833 125
163 474
-
1 281 077
-
-
-
-
41 453
-
-
-
-
924 087
-
-
-
17 177 109
-
63 334
-
-
207 966
65 979 335
641 969
18 833 125
100 366 079
1 444 551
41 453
924 087
63 334
102 839 504
Net foreign exchange position
(1 900 760)
1 509 877
84 700
291 628
14 555
-
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
65
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
27.
FOREIGN EXCHANGE POSITIONS (Cont’d)
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.
27.1
At 31 December 2009 (Cont’d)
Assets
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans,advances and other accounts
Quoted and other investments
Investment properties
Property and equipment
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deferred tax liabilities
Deposits and other accounts
Current tax liabilities
Equity
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
12 836 147
487 133
3 219 600
3 582 387
35 613 857
6 002 564
746 107
20 449 088
299 162
8 568 005
36 064 926
-
167 716
-
-
-
128
-
-
-
88
76 508
-
-
20
-
-
-
1 464 307
-
95 668
-
2 465 867
-
68 232
-
-
1 145 520
-
-
1 145 520
-
-
46 693
-
-
46 693
442 368
-
1 958 063
-
-
2 400 431
-
-
50 361
-
-
50 361
7 135 023
13 004 099
563 641
3 219 600
3 582 387
39 707 931
6 444 932
746 107
23 649 725
299 162
8 568 005
39 707 931
Net foreign exchange position
(451 069)
318 787
48 975
65 436
17 871
-
28.
CONTINGENT LIABILITIES
Guarantees
Commitments to lend
At 31 December
2010
US$
5 002 123
13 417 179
18 419 302
2009
US$
3 150 324
6 638 259
Opening
2009
US$
-
-
9 788 583
-
The Group 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 Group.
Guarantees commit the Group 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.
66
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
29.
CAPITAL COMMITMENTS
Capital expenditure contracted for
Capital expenditure authorised but not yet contracted for
At 31 December
2010
US$
-
2 411 250
2 411 250
Opening
2009
US$
-
-
-
2009
US$
-
998 400
998 400
Capital commitments, when they arise, will be financed from the Group’s own resources.
30. OPERATING LEASE COMMITMENTS
2010
US$
2009
US$
Lease commitments
2 658 249
2 292 335
Up to 1 year
1 – 5 years
531 650
2 126 599
458 467
1 833 868
Lease commitments relate to future rental commitments up to the expiry of the lease agreements.
31.
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 Group. Accordingly, key management remuneration is disclosed below.
31.1 Compensation of key management personnel of the Group
Short – term employee benefits
Contribution to pension funds
2010
US$
569 169
18 443
587 612
2009
US$
209 252
-
209 252
31.2 Key management interest in an employee share options
At 31 December 2010, key management held no options to purchase ordinary shares of the Company.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
67
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
31.3 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).
2010
US$
-
140 683
786 221
115 772
-
-
1 042 676
-
1 042 676
2009
US$
600
64 025
335 953
-
-
-
400 578
-
400 578
Opening
2009
US$
-
-
-
-
-
-
-
-
-
Interest to
related parties
US$
Amounts owed by
related parties
Amounts owed to
related parties
US$
US$
-
-
-
1 042 676
400 578
-
-
-
-
Non - executive directors
Executive directors
Officers (Note 17.6)
Directors’ companies
Officers’ companies
Intra group loans
Provision for impairment losses on loans
31.4 Other related party disclosures
Entities with significant
influence over the Group
Interest from
related parties
US$
-
-
-
2010
2009
Opening 2009
31.5 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.
68
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
32. EMPLOYEE BENEFITS
32.1 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 661 416 shares in NMBZ Holdings Limited as at 31 December 2010.
32.2 Expense recognised in profit or loss
Defined Contribution Plan - NSSA
Defined Contribution Plan – NMB Bank Pension Fund
2010
US$
2009
US$
101 441
54 241
155 682
62 878
-
62 878
The expense is recognised in profit or loss as part of staff costs under operating expenses (note 7).
32.3 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
2010
WAEP$
No.
000’s
2009
WAEP$
No.
000’s
Opening
2009
WAEP$
No.
US$
Outstanding as at 1 January
12 159
0.005
19 076
0.005
19 076
Lapsed
Issued
-
-
Exercised
Outstanding as at 31 December
(3 087)*
9 072
-
-
0.005
0.005
-
-
(6 917)*
12 159
-
-
0.005
0.005
-
-
-
19 076
-
-
-
-
-
*The weighted average share price at the date of exercise for the options exercised was US$0.01 (2009: US$0.0082).
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
69
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
32.
EMPLOYEE BENEFITS (Cont’d)
Terms of options outstanding at 31 December 2010
GROUP & COMPANY
Expiry date
Exercise price
US$
5 September 2012
7 January 2013
12 March 2013
nil
nil
nil
2010
Shares
000’s
9 072
-
-
9 072
32.4 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$101 441 (2009 – US$62
878).
32.5 Number of employees
The total number of employees of the Group at 31 December 2010 was 258 (2009 – 409).
33.
EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States dollars at year end:
British Sterling
South African Rand
European Euro
Botswana Pula
31 December 2010
Mid - rate
31 December 2009
Mid - rate
US$
1.5442
6.6249
1.3305
6.4570
US$
1.6076
7.3975
1.4371
6.6578
GBP
ZAR
EUR
BWP
70
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
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.
34.1.1 Management of credit risk
The Board has delegated responsibility for the management of credit risk to its Loans Review Committee. The Credit Risk Management
department which also reports to the Loan review committee is responsible for oversight of the 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.
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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
71
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.
RISK MANAGEMENT (Cont’d)
The table below shows the maximum exposure to credit for the components of the statement of financial position. The maximum exposure
is shown as gross.
34.1.2 Maximum exposure to credit risk without taking account of any collateral
Cash and cash equivalents (excluding cash on hand)
Financial assets at fair value through profit and loss
Loans, advances and other accounts
Total
Guarantees
Commitments to lend
Total
Total credit risk exposure
Note
14
17
28
28
2010
US$
13 042 536
17 299 592
56 227 637
86 569 765
5 002 123
13 417 179
18 419 302
104 989 067
2009
US$
9 052 698
7 135 023
12 403 239
28 590 960
3 150 324
6 638 259
9 788 583
38 379 543
Opening
2009
US$
190 966
-
19 781
210 747
-
-
-
210 747
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
31 December
2010
Gross
Maximum
Exposure
US$
31 December
2010
Net
Maximum
Exposure
US$
31 December
2009
Gross
Maximum
Exposure
US$
31 December
2009
Net
Maximum
Exposure
US$
34 198 907
5 079 399
3 151 309
8 876 982
1 120 858
-
5 486 134
57 913 589
-
-
-
-
-
-
-
-
8 068 093
691 914
273 288
2 072 971
1 272 873
-
130 205
12 509 344
-
-
273 288
-
-
-
-
273 288
Industrials
Agriculture and horticulture
Conglomerates
Services
Mining
Food and beverages
Other
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$38 647 557 (2009: US$22 567 686). The benefits on guarantees are not included in the above table.
72
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.1.5 Credit quality per sector
At 31 December 2010
Industrials
Agriculture and horticulture
Conglomerates
Services
Mining
Food and beverages
Other
Total
At 31 December 2009
Industrials
Agriculture and horticulture
Conglomerates
Services
Mining
Food and beverages
Other
Total
Grade A
Pass
US$
Grade B
Grade C
Special Substandard
Mention
US$
US$
Grade D
Doubtful
Grade E
Loss
US$
US$
Total
US$
12 458 731
2 278 313
3 151 309
1 442 980
20 541 584
2 801 086
-
2 928 403
- 1 102 811
-
-
931 200
-
-
903 470
-
-
267 392
-
-
3 444 849
18 047
-
-
-
34 198 907
5 079 399
-
157 280
-
-
3 151 309
8 876 982
1 120 858
-
60 000
19 391 333
5 209 112
32 582 996
87 189
1 921 859
122 729
3 853 017
7 104
164 384
5 486 134
57 913 589
Grade A
Pass
US$
5 962 916
178 728
273 288
1 069 565
1 997 111
510 766
-
986 933
1 167 506 105 367
-
-
-
8 652 003
63 053
3 663 230
Grade B
Grade C
Special Substandard
Mention
US$
US$
Grade D
Doubtful
Grade E
Loss
Total
US$
US$
US$
108 066
2 420
-
16 473
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8 068 093
691 914
273 288
2 072 971
1 272 873
-
49 644
176 603
1 582
1 582
15 926
15 926
130 205
12 509 344
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
73
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.
RISK MANAGEMENT (Cont’d)
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 recom-
mends the appropriate levels to which the Group 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 vari-
ous 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.
At 31 December 2010
Sensitivity of net interest income
Currency
USD
USD
USD
USD
USD
USD
Increase in
interest rates
%
+5
+3
+1
-1
-3
-5
0 to 1
months
US$
1 025 954
615 573
205 191
(205 191)
(615 573)
(1 025 954)
1 to 3
months
US$
(265 046)
(159 028)
(53 009)
53 009
159 028
265 046
3months
to 1 year
US$
(4 758)
(2 855)
(952)
952
2 855
4 758
1 year to
5 years
US$
37 188
22 313
7 438
(7 438)
(22 313)
(37 188)
Total
US$
793 338
476 003
158 668
(158 668)
(476 003)
(793 338)
74
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.
RISK MANAGEMENT (Cont’d)
At 31 December 2009
Currency
USD
USD
USD
USD
USD
USD
Sensitivity of net interest income
Increase in
interest rates
%
+5
+3
+1
-1
-3
-5
0 to 1
months
US$
104 203
62 522
20 841
(20 841)
(62 522)
(104 203)
1 to 3
months
US$
(77 140)
(46 284)
(15 428)
15 428
46 284
77 140
3months
to 1 year
US$
1 year to
5 years
US$
53 006
31 831
10 610
(10 610)
(31 831)
(53 006)
33 433
20 060
6 687
(6 687)
(20 060)
(33 433)
Total
US$
113 502
68 129
22 710
(22 710)
(68 129)
(113 502)
For interest rate repricing and gap analysis refer note 24.1.
34.3 Foreign currency exchange rate risk
The table below calculates the effect of a reasonable possible movement of the significant 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 2010
% Change in
currency
rate
Effect on profit
before tax
US$
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
+5
+3
+1
-1
-3
-5
At 31 December 2009
91 094
54 657
18 219
(18 219)
(54 657)
(91 094)
% Change in
currency
rate
Effect on profit
before tax
US$
Effect on
equity
US$
67 638
40 583
13 528
(13 528)
(40 583)
(67 638)
Effect on
equity
US$
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
+5
+3
+1
-1
-3
-5
27 840
40 290
24 174 16 704
8 058
(8 058)
(24 174)
(40 290)
5 568
(5 568)
(16 704)
(27 840)
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
75
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.
RISK MANAGEMENT (Cont’d)
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 Group maintains a statutory deposit with the Central Bank which was accumulated since dollarisation at stipulated rates. During
2010, the Reserve Bank of Zimbabwe discontinued the payment of statutory reserves and the amounts accumulated to date had not been
refunded by 31 December 2010. 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 contractual maturities of undiscounted cash flows of financial assets and liabilities are disclosed in note 24.1.
The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. The Group
monitors its liquidity ratio in compliance with Banking Regulations to ensure that it is not less than 20% of the liabilities to the public Liquid
assets consist of cash and cash equivalents, short term bank deposits and liquid investment securities available for immediate sale.
Maturity profile for contingent liabilities
The table below shows the contractual expiry by maturity of the Group’s contingent liabilities and commitments to lend:
At 31 December 2010
Guarantees
Commitments to lend
At 31 December 2009
Guarantees
Commitments to lend
On
Demand
US$
321 236
3 957 730
4 278 966
On
Demand
US$
165 000
465 336
630 336
0 to 1
months
US$
592 918
1 641 889
2 234 807
1 to 3
months
US$
943 907
7 817 560
3 months
to 1 year
US$
3 144 062
-
8 761 467
3 144 062
1 year to
to 5 years
US$
Total
US$
-
-
-
5 002 123
13 417 179
18 419 302
0 to 1
months
US$
16 500
36 810
53 310
1 to 3
months
US$
24 000
825 344
849 344
3 months
to 1 year
US$
2 944 824
5 276 042
8 220 866
1 year to
to 5 years
US$
-
34 727
34 727
Total
US$
3 150 324
6 638 259
9 788 583
The Group expects that not all of the contingent liabilities or commitments will be drawn before expiry of the commitments.
76
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.
RISK MANAGEMENT (Cont’d)
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 Group 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.
34.8 Strategic risk
This refers to current and prospective impact on the Group’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 Group 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 to-
wards attaining strategic objectives for the Group.
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.
34.9 Regulatory Compliance
The Corrective Order issued on 15 May 2007 was lifted on 8 September 2010.
The Group remains committed to complying with and adhering to all regulatory requirements.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
77
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.
RISK MANAGEMENT (Cont’d)
34.10 Capital Management
34.10.1 Holding Company
The capital allocation to the subsidiary units is in accordance with the regulatory requirements of the business undertaken by the subsidiary.
34.10.2 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.
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$12.5 million.
78
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
34.
RISK MANAGEMENT (Cont’d)
34.10.2 Banking Subsidiary (Cont’d)
The Bank’s regulatory capital position at 31 December 2010 was as follows:
Share capital
Share premium
Non-distributable reserve
Retained earnings
Total equity
2010
US$
16 501
13 690 931
-
1 976 437
15 683 869
2009
US$
-
-
6 139 898
1 968 837
8 108 735
Less: capital allocated for market and operational risk
Credit to insiders
(1 580 551)
(1 096 405)
(115 772)
-
Tier 1 capital
Tier 2 capital (subject to limit as per Banking Regulation)
13 987 546
883 414
7 012 330
274 904
Revaluation reserves
Subordinated debt
-
-
-
-
Regulatory reserve (limited to 1.25 of risk weighted assets)
883 414
274 904
Total Tier 1 & 2 capital
Tier 3 capital (sum of market and operational risk capital)
14 870 960
1 580 551
7 287 234
1 096 405
Total capital base
Total risk weighted assets
Tier 1 ratio
Tier 2 ratio
Tier 3 ratio
Total capital adequacy ratio
RBZ minimum required
16 451 511
94 154 367
8 383 639
32 206 600
14.86%
0.94%
1.69%
17.49%
10.00%
21.77%
0.85%
3.41%
26.03%
10.00%
Opening
2009
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10.00%
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
79
NMBZ HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2010
35.
PRIOR PERIOD RESTATEMENT
The restatement arose as a result of the treatment of the excess allowance for impairment on loans and advances resulting from the
difference between the IAS 39 and the Regulatory allowance for impairment on loans and advances. In 2009, these were accounted for
under other comprehensive income and in 2010, these were recognised directly in equity as a transfer from retained earnings to a regulatory
reserve. The effect of this change on the 2009 results is summarized below (There is no effect in 2010).
Consolidated Statement of Comprehensive Income
Increase in other comprehensive income
Decrease in tax credit relating to other comprehensive income
Increase in total comprehensive income for the year
Consolidated Statement Of Financial Position
Decrease in allowance for impairment of loans and advances
Increase in deferred tax liabilities
Increase in total equity
2009
US$
274 904
(70 788)
204 116
2009
US$
274 904
(70 788)
204 116
80
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
HISTORICAL FIVE YEAR FINANCIAL SUMMARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2010
US$
Interest from lending activities
Interest from investing activities
7 024 287
2 990 349
2009
US$
Restated
652 267
874 455
Interest expense
Net interest income
Net foreign exchange gains
Share of loss associate
Non-interest income
Net operating income
Operating expenditure
Impairment losses on loans
and advances
10 014 636
(3 143 168)
1 526 722
(723 626)
6 871 468
1 055 307
(21 444)
9 374 796
803 096
379 236
-
7 236 949
17 280 127
(15 365 768)
8 419 281
(7 385 212)
(971 803)
(92 887)
Profit before taxation
942 556
941 182
Financial institutions levy
-
(44 661)
Taxation
(250 322)
1 381 766
Profit after taxation
692 234
2 278 287
Other comprehensive income/(loss)
for the year, net of tax
-
-
Total comprehensive income
for the year
692 234
2 278 287
2008
US$
2007
US$
2006
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
81
NMBZ HOLDINGS LIMITED
HISTORICAL FIVE YEAR FINANCIAL SUMMARY (Cont’d)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
EQUITY
Share capital
Reserves
Equity
LIABILITIES
Deposits and other accounts
Financial liabilities at fair value
through profit and loss
Current tax liabilities
Deferred tax liabilities
2010
US$
2009
US$
Restated
78 598
-
18 754 527
8 568 005
18 833 125
8 568 005
65 979 335
23 649 725
17 177 109
641 969
207 966
6 444 932
299 162
746 107
Capital employed
102 839 504
39 707 931
ASSETS
Cash and cash equivalents
Financial assets at fair value through
18 346 939
12 203 181
profit and loss
Quoted and other investments
17 299 592
134 461
Loans, advances and other accounts 60 315 397
201 666
Trade investments
Investment in associate
Investment properties
Property and equipment
228 556
2 615 000
3 697 893
7 135 023
455 638
13 004 099
108 003
-
3 219 600
3 582 387
Employment of capital
102 839 504
39 707 931
2008
US$
2007
US$
2006
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
82
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
HISTORICAL FIVE YEAR FINANCIAL SUMMARY (Cont’d)
CLOSING NUMBER OF SHARES
2 807 107 289
1 647 147 057*
1 641 225 424*
1 608 159 059
1 569 339 001
2010
2009
2008
2007
2006
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
0.67
0.02
-
-
55
0.52
0.14
-
-
5.71
Closing price per share (US cents)
Market capitalisation (US$)
1.1
30 878 180
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 (%)
3.7
0.70
95
46
26.6
26
6
89
79
(142)
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.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
83
NMBZ HOLDINGS LIMITED
NOTICE TO MEMBERS
Notice is hereby given that the 16th 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 Tuesday, 14 June 2011 at 10:00 hours for the following
purposes:
ORDINARY BUSINESS
1.
2.
To receive and adopt the Financial Statements for the year ended 31 December 2010 , together with the reports of the Directors and Auditors
thereon.
To appoint Directors.
In accordance with the Articles of Association, Mr M Mudukuti, Mr B W Madzivire and Ms L Majonga retire by rotation. Being eligible,
the retiring directors offer themselves for re-election.
3.
To appoint Auditors for 2011 and to approve Messrs Ernst & Young’s remuneration for the year ended 31 December 2010.
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
15 March 2011
84
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SHAREHOLDERS’ ANALYSIS
Size of Shareholding
1
5 001
10 001
50 001
100 001
500 001
-
-
-
-
-
-
-
1 000 001
10 000 001 -
Total
Size of Shareholding
1
5 001
10 001
50 001
100 001
500 001
1 000 001
-
-
-
-
-
-
-
10 000 001 -
Total
5 000
10 000
50 000
100 000
500 000
1 000 000
10 000 000
And over
5 000
10 000
50 000
100 000
500 000
1 000 000
10 000 000
And over
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
2010
Number of
Shareholders
2 485
671
792
124
191
40
35
24
2010
Issued
Shares
4 165 305
4 949 637
16 915 928
8 932 710
41 453 298
28 090 750
107 274 399
2 595 325 262
%
56.97
15.38
18.16
2.84
4.38
0.92
0.8
0.55
%
0.15
0.18
0.6
0.32
1.48
1
3.82
92.45
4 362
100
2 807 107 289
100
2009
Number of
Shareholders
2 529
671
725
154
194
32
40
20
2009
Issued
Shares
4 367 033
4 887 841
15 760 736
11 116 881
43 038 449
22 671 868
134 160 960
%
0.26
0.30
0.96
0.67
2.61
1.38
8.14
1 412 171 461
85.68
%
57.94
15.37
16.61
3.53
4.44
0.73
0.92
0.46
4 365
100.00
1 648 175 229
100.00
2010
Shareholders
16
378
5
5
15
127
29
397
20
3 370
4 362
2010
Shares
382 837
41 569 622
11 173 353
1 070 977 401
591 197 852
765 447 275
4 539 116
199 636 360
50 051 105
72 132 368
%
0.37
8.67
0.11
0.11
0.34
2.91
0.66
9.10
0.46
77.27
%
0.01
1.48
0.4
38.15
21.06
27.27
0.16
7.11
1.78
2.58
100
2 807 107 289
100
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
85
NMBZ HOLDINGS LIMITED
SHAREHOLDERS’ ANALYSIS (Cont’d)
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
1
2
3
4
5
6
7
8
9
African Century Financial Services Investment LLP
Old Mutual Life Assurance Co Zim Ltd
Lalibela Limited
Alsace Trust
Cornerstone Trust
Wamambo Investments Trust
Drakmore Investments (Pvt) Ltd
Martcap Investments (Pvt) Ltd
Elsha Investments (Pvt) Ltd
10
Local Authorities Pension Fund
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 Investment (Pvt) Ltd
Elsha Investments (Pvt) Ltd
Martcap Investments (Pvt) Ltd
Rayvonne Trust
Palisades Limited
2009
Shareholders
65
376
5
3
13
145
20
364
20
3 354
4 365
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
%
1.49
8.61
0.11
0.07
0.30
3.32
0.46
8.34
0.46
76.84
88 209 490
%
2.17
1.58
0.68
3.88
21.09
39.19
0.26
22.84
2.96
5.35
100.00
1 648 175 229
100.00
2010
Shares
791 915 548
589 521 823
215 266 942
168 853 795
168 755 799
142 260 092
109 627 112
77 282 178
53 435 939
43 686 048
2010
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
% of
Total
28.21
21.00
7.67
6.01
6.01
5.06
3.90
2.75
1.90
1.55
% of
Total
21.04
10.24
10.24
8.63
7.23
6.65
3.24
3.10
2.80
2.56
86
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
NMBZ HOLDINGS LIMITED
SHAREHOLDERS’ INFORMATION
MEMBERS’ DIARY
Financial year end
31 December 2010
Reports:-
- Announcement of annual results
31 March 2011
- Annual financial statements
posted May 2011
- Annual General Meeting
14 June 2011
- Announcement of the 2011 half-year results
August 2011
Dividend payments:
- Interim
- Final
n/a
n/a
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
87
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: +263 4 759651
Facsimile: +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
1 Armagh Avenue
(Off Enterprise Road)
Eastlea
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
88
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
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 14 June 2011 at 10.00 hours and at any adjournment thereof.
Signed this …………..……………….....………….. day of ………………………………..........…………………….2011
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.
NMBZ HOLDINGS LIMITED ANNUAL REPORT 2010
89