NMBZ Holdings Limited
1
Contents
Overview
Financial Highlights
Group Profile
Chairman’s Statement
Financial Statements
Report of the Directors
Statement of Directors’ Responsibility
Report of the Independent Auditors
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Accounting Policies
Notes to the Financial Statements
Historical Five Year Financial Summary
Shareholders Information
Notice to Members
Explanations regarding the Notice of the Annual General Meeting
Shareholders’ Analysis
Shareholders’ Information
Secretary and Registered Office
Secretary and Registered Office
2
3
4-5
6-9
10-11
13
14
15
16-17
18
19-33
34-86
87-89
90
91
92-93
94
95
www.nmbz.co.zw
NMBZ Holdings Limited
2
HIGHLIGHTS
Attributable profit (US$)
Basic earnings per share (US cents)
Total deposits (US$)
Shareholders' funds (US$)
Enquiries:
NMBZ HOLDINGS LIMITED
2011
2010
4 538 456
0.16
139 226 144
23 371 581
692 234
0.03
79 849 387
18 833 125
Tel: +263-4-759 651/9
James A Mushore, Group Chief Executive Officer, NMBZ Holdings Limited
jamesm@nmbz.co.zw
Francis Zimuto, Deputy Group Chief Executive Officer, NMBZ Holdings Limited
francisz@nmbz.co.zw
Benefit Peter Washaya, Managing Director, NMB Bank Limited
benefitw@nmbz.co.zw
Benson Ndachena, Chief Financial Officer, NMBZ Holdings Limited
bensonn@nmbz.co.zw
Website:
Email:
http://www.nmbz.co.zw
enquiries@nmbz.co.zw
We save trees and reduce our
carbon footprint by offering
online banking
NMBZ Holdings Limited
NMBZ Holdings Limited
GROUP PROFILE
3
3
Profile
Harare Branches
Country Branches
ATM Sites
The NMBZ Holdings
Head Office – Unity
Bulawayo Corporate and
The Bank's ATM
Group comprises the
Court, Corner Kwame
Retail Banking – NMB
network, which accepts
company and operating
Nkrumah Avenue/First
Centre, Corner George
VISA cards, has been
subsidiaries, NMB Bank
Street, Harare
Silundika Street/Leopold
expanded to cover the
Limited (the Bank), and
Stewart Holdings Limited
(equity holdings).
Angwa City - Corner
Kwame Nkrumah Avenue/
Angwa Street, Harare
Takawira Avenue,
following locations:
Bulawayo
Mutare – Embassy
• Angwa City – Harare
The Bank was established
Borrowdale – Shops 37
Building, Corner
• Borrowdale – Harare
in 1993 as a bank
& 38, Sam Levy's Village,
Aerodrome Road/Second
• Msasa – Harare
incorporated under the
Harare
Street, Mutare
• Card Centre – Harare
• Joina City – Harare
Gweru – 36 Robert
• Avondale - Harare
Mugabe Road, Gweru
• Eastgate – Harare
• Southerton – Harare
• NMB Centre – Bulawayo
• Mutare
• Gweru
Companies Act (Chapter
24:03) and is registered
as a commercial bank
in terms of the Banking
Act (Chapter 24:20).
It operates through
a branch network in
Harare, Bulawayo,
Mutare and Gweru. The
Bank's branch network
is constantly growing to
service customers and
meet demand in suitable
and convenient locations.
Set out aside are the
Bank's locations:
Eastgate – Shop 24,
Eastgate Mall, Corner
Sam Nujoma Street/
Robert Mugabe Road,
Harare
Msasa – 77 Amby Drive,
Harare
Southerton – 7 - 9
Plymouth Road, Harare
Avondale – 20 King
George Road, Avondale,
Harare
www.nmbz.co.zw NMBZ Holdings Limited
4
CHAIRMAN’S STATEMENT
for the year ended 31 December 2011
INTRODUCTION
The country continued to experience a relatively stable economic environment during the period under
review. A combination of the relative political stability and continued international re-engagement resulted
in considerable growth in business activity in the country. The financial sector experienced intermittent
liquidity constraints in the period under review and this constrained availability of credit to industry and
commerce.
GROUP RESULTS
Dividend
Compliance with International Financial
to strengthen the statutory capital requirements for
Reporting Standards
the banking subsidiary, the Board has proposed not to
In view of the need to retain cash in the business and
The consolidated financial statements of the Group
declare a dividend.
have been prepared in accordance with International
Financial Reporting Standards (IFRS). The financial
Statement of financial position
statements have been prepared in compliance with the
Companies Act (Chapter 24:03) and the Banking Act
(Chapter 24:20).
Commentary on operating results
The profit before taxation was US$6 193 653 during the
period under review and this gave rise to an attributable
profit of US$4 538 456 compared to $US692 234 from
the prior year. Net interest income was US$11 901 512
for the period. Non-interest income amounted to US$12
164 691 and this was mainly as a result of commissions
and fee income (US$11 958 029).
Operating expenses amounted to US$16 979 741 and
these were 11% up from prior year figure of US$15
365 768 and were driven or by administration and staff
related expenditure.
Impairment losses on loans and advances amounted to
US$2 296 111 for the current period from a prior year of
US$971 803. This is commensurate with the loans and
advances which amounted to US$97 138 048 at 31
December 2011 compared to US$57 913 589 as at 31
December 2010.
The Group’s total assets grew by 63% from US$102 839
504 as at 31 December 2010 to US$167 287 333 as at
31 December 2011. The assets comprised mainly
loans, advances and other accounts (US$99 802 065),
financial assets at fair value through profit and loss
(US$24 585 255), cash and short term funds (US$32
265 953), investment properties (US$2 510 000) and
property and equipment (US$6 801 982). Gross loans
and advances increased by 68% from US$57 913 589
as at 31 December 2010 to US$97 138 048 as at 31
December 2011. The Bank’s liquidity ratio closed the
period at 35.25% and this was above the statutory
requirement of 25% at 31 December 2011.
Capital
The banking subsidiary’s capital adequacy ratio at
31 December 2011 calculated in accordance with the
guidelines of the Reserve Bank of Zimbabwe (RBZ) was
14.37% (31 December 2010 – 17.49%). The minimum
required by the RBZ is 10%.
The Group’s equity increased by 24% from US$18 833
125 as at 31 December 2010 to US$ 23 371 581 as
at 31 December 2011 as a result of growth in retained
earnings.
NMBZ Holdings Limited
CHAIRMAN’S STATEMENT CONT’D
for the year ended 31 December 2011
5
CORPORATE SOCIAL INVESTMENTS
OUTLOOK AND STRATEGY
The Group is committed to improving the well-being
The Group has continued with its quest to access
of the communities where we work and live through
more lines of credit in order to underwrite more lending
our charitable giving. In 2011, the Group contributed
business for our clients. The Group has also continued
towards the support of charities, community fundraisers
to explore growth opportunities in the market.
and non-profit organizations that have a positive
influence on society. During the year we supported
DIRECTORATE
a diverse range of causes and we dedicated a large
portion of our community contributions towards areas of
During the year Mr Francis Zimuto was appointed the
education, health and social services, the environment
Deputy Group Chief Executive Officer. There were no
and the arts.
other changes to the composition of the Board.
CORPORATE DEVELOPMENTS
APPRECIATION
In line with our strategic thrust to offer service excellence,
I would like to express my appreciation to our valued
the Bank successfully upgraded its core banking system
clients, shareholders and Regulatory Authorities for
to the latest version of T24. In addition to enhancing the
their continued support in the period under review. I
efficiency of transaction processing, the new platform
would also like to thank my fellow Board members,
provides a solid base for a seamless integration to other
management and staff for their continued commitment
modern service delivery channels that bring convenience
and dedication which has underpinned the achievement
to our high net worth individual and business customers.
of these results.
Going forward, the Bank is looking at enhancing existing
electronic delivery channels through upgrades as well
as acquiring new channels in an endeavour to bring
more convenience to our valued clients.
A new branch was opened at the upmarket PaSangano
T N MUNDAWARARA
in the Avondale (Harare) area during the last quarter
CHAIRMAN
of 2011. The opening of the branch is in line with the
Bank’s strategic intent to be present in key markets and
it brings convenience to existing and potential clients in
20 March 2012
the Avondale and surrounding areas.
www.nmbz.co.zw NMBZ Holdings Limited
6
REPORT OF THE DIRECTORS
for the year ended 31 December 2011
We have pleasure in presenting to shareholders our report and the audited financial statements of the Group
for the year ended 31 December 2011.
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.
No share options were exercised either by directors or managerial staff during the year.
2.
GROUP ACTIVITIES AND RESULTS
After providing for depreciation and taxation, the Group posted an attributable profit of US$4 538 456 for the
year ended 31 December 2011 (2010 – US$692 234).
3. CAPITAL ADEQUACY
As at 31 December 2011, the Bank’s capital adequacy ratio computed under Bank for International
Settlements (BIS) rules was 14.37% (2010 – 17.49%).
4
DIRECTORATE
4.1 Board of Directors
T N Mundawarara
A M T Mutsonziwa
J A Mushore*
F Zimuto*
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)
(Deputy 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)
NMBZ Holdings Limited
8
REPORT OF THE DIRECTORS CONT’D
for the year ended 31 December 2011
5.
CORPORATE GOVERNANCE
NMBZ Holdings Limited adheres to international best practice with regards to corporate governance. In particular,
the group emulates corporate governance principles set out 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, 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 twelve 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 three 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 and operational processes,
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
Ms. L. Majonga
Mr. A. M. T. Mutsonziwa
Mr. J. de la Fargue
Chairperson- Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
5.3 Human Resources, Remuneration and Nominations 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
Mr. T. N. Mundawarara
Mr. B. W. Madzivire
Mr. J. A. Mushore
Mr. F. Zimuto
Mr. J. Chenevix –Trench
Dr. J. Makoni
Chairman - Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Group Chief Executive Officer
Deputy Group Chief Executive Officer
Non-Executive Director
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. B. Ndachena
Chairman Independent Non-Executive Director
Independent Non-Executive Director
Chief Finance Officer
NMBZ Holdings Limited
REPORT OF THE DIRECTORS CONT’D
for the year ended 31 December 2011
9
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
Mr. F. Zimuto
Mr. B. P. Washaya
Mr. L. Chinyamutangira
Mr. J. de la Fargue
Chairman - Independent Non-Executive Director
Group Chief Executive Officer
Deputy Group Chief Executive Officer
Managing Director
Executive Director –Banking
Non-Executive Director
5.6 Asset and Liability Management Committee (ALCO), Finance and Strategy Committee
The 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
Mr. J. Chigwedere
Mr. J. Mushore
Mr. F. Zimuto
Mr. B. P. Washaya
Mr. B. Ndachena
Mr. F. S. Mangozho
Mr. L. Chinyamutangira
Dr. J. Makoni
Mr. J. Chenevix-Trench
(alternate J. de la Fargue)
Chairman -Independent Non-Executive Director
Independent Non-Executive Director
Group Chief Executive Officer
Deputy Group Chief Executive Officer
Managing Director
Chief Finance Officer
Executive Director –Treasury
Executive Director – Banking
Non - Executive Director
Non – Executive Director
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
Mr. J. de la Fargue
Ms. L. Majonga
Mr. J. Mushore
Mr. B. P. Washaya
Mr. F. Mangozho
Chairman - Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Chief Executive Officer
Managing Director
Executive Director - Treasury
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 approve the
auditor’s remuneration for the year ended 31 December 2011 and to appoint auditors of the Company for the
ensuing year.
By order of the Board
V Mutandwa
Company Secretary
Harare
20 March 2012
www.nmbz.co.zw
NMBZ Holdings Limited
10
STATEMENT OF DIRECTORS’ RESPONSIBILITY
for the year ended 31 December 2011
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.
6.
INTERNAL AUDIT
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.
7.
REMUNERATION
The Remuneration Committee determines the remuneration policy for the Group. The remuneration policy is
designed to reward performance and retain highly skilled individuals. Accordingly, a discretionary performance
related bonus is offered in addition to a basic salary package.
NMBZ Holdings Limited
STATEMENT OF DIRECTORS’ RESPONSIBILITY
for the year ended 31 December 2011
11
8.
EMPLOYEE PARTICIPATION AND DEVELOPMENT
The group encourages active participation by its employees in its ownership. In line with this commitment,
managerial employees have in the past participated in the Company’s share option scheme. The group is working
on a new share option scheme for staff members. The group is also committed to enhancing the skills of staff and
sponsors attendance of courses at reputable local and international institutions.
9.
SOCIAL RESPONSIBILITY
The group recognises its responsibility in the society within which it operates. Pursuant to this, the group sponsors
the arts and sports and also donates to deserving charities from time to time.
10. REGULATION
The banking subsidiary of the Group is subject to regulation and supervision by the Reserve Bank of Zimbabwe,
which conducts the functions of the Registrar of Banking Institutions and is also the supervisor of banking
institutions. Where appropriate, the Group participates in industry-consultative meetings and discussion groups
aimed at enhancing the business environment.
11. ETHICS
As a Group, we aim to ensure that we adhere to the highest standards of responsible business practice. 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 ensures 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 consolidated statement of financial position, the consolidated statement of comprehensive income,
consolidated statement of changes in equity and the consolidated statement of cash flow as at 31 December 2011,
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, legislative and regulatory
requirements.
The directors’ responsibility includes designing, implementing and maintaining internal controls relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are
reasonable in the circumstances.
The directors have 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 consolidated 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 14 to 86 were approved by the board of
directors on 20 March 2012 and are signed on their behalf by:
………………………………….
T. N. Mundawarara
Chairman
………………………..
J.A. Mushore
Group Chief Executive Officer
Date: 20 March 2012
Date: 20 March 2012
www.nmbz.co.zw
NMBZ Holdings Limited
12
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF NMBZ HOLDINGS LIMITED
Report on the financial statements
We have audited the accompanying financial statements of NMBZ Holdings Limited as set out on page 14 to 86
which comprise the Group and Company statements of financial position as at 31 December 2011, and the Group
and Company statement of comprehensive income, the Group and Company statements of changes in equity and
the Group and Company statement of cash flows for the year then ended, and a summary of significant accounting
policies and other explanatory information.
Directors’ responsibility for the financial statements
The Company’s directors are responsible for the preparation and fair presentation of these 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 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
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 financial statements present fairly, in all material respects, the financial position of NMBZ Holdings
Limited and its subsidiaries as at 31 December 2011, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards.
Report on other legal and regulatory requirements
In our opinion, the 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)
REGISTERED PUBLIC AUDITORS
30 April 2012
NMBZ Holdings Limited
14
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2011
GROUP
COMPANY
Note
2011
US$
2010
US$
2011
US$
2010
US$
Interest income
Interest expense
4
20 158 766
10 014 636
5 (8 257 254) (3 143 168)
--------------
---------------
Net interest income
Net foreign exchange gains
Share of profit/(loss) of associate
Non-interest income
19
6
11 901 512
1 289 729
6 871 468
1 055 307
113 573 (21 444)
12 164 691
---------------
9 374 796
--------------
25 469 505
17 280 127
7 (16 979 741) (15 365 768)
(2 296 111) (971 803)
--------------
---------------
6 193 653
942 556
168 416
-
---------
168 416
-
-
77 162
----------
245 578
-
-
---------
245 578
-
-
-----------
-
-
-
123 864
-----------
123 864
(140)
-
----------
123 724
Net operating income
Operating expenditure
Impairment losses on loans
and advances
Profit before taxation
Taxation
Profit for the year
Other comprehensive income
for the year, net of tax
Total comprehensive income for
the year
Attributable to:
Owners of the parent
Non – controlling interests
8 (1 655 197) (250 322) (47 306) (9 684)
-----------
---------------
--------------
----------
4 538 456
---------------
692 234
--------------
198 272
----------
114 040
-----------
-
---------------
-
--------------
-
---------
-
----------
4 538 456
==========
692 234
==========
198 272
======
114 040
======
4 538 456
692 234
-
---------------
4 538 456
==========
-
--------------
692 234
==========
198 272
-
----------
198 272
=======
114 040
-
-----------
114 040
=======
Earnings per share (US cents)
-Basic
-Diluted basic
9
9
0.16
0.15
0.03
0.03
NMBZ Holdings Limited
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
as at 31 December 2011
15
GROUP
COMPANY
Note
2011
US$
2010
US$
2011
US$
2010
US$
78 598
10
11
16 806 650
12 6 486 333
---------------
23 371 581
78 598
16 666 633
2 087 894
---------------
18 833 125
78 598
15 783 219
293 516
-------------
16 155 333
78 598
15 783 219
95 244
--------------
15 957 061
EQUITY
Share capital
Capital reserves
Retained earnings
Total equity
LIABILITIES
Deposits and other liabilities
Financial liabilities at fair value
through profit and loss
Current tax liabilities
Deferred tax liabilities
Total liabilities
13
102 608 918
65 979 335
129
129
14
8.3
15
40 148 860
1 157 974
-
---------------
143 915 752
---------------
17 177 109
641 969
207 966
-------------
84 006 379
--------------
-
44 798
7 042
------------
51 969
------------
-
400
7 533
------------
8 062
------------
Total equity and liabilities
ASSETS
Cash and cash equivalents
Financial assets at fair value
through profit and loss
Loans, advances and other assets
Investments:-
Trade investment
Associate
Group companies
Quoted and other
investments
Investment properties
Property and equipment
Deferred tax assets
Total assets
167 287 333
==========
102 839 504
==========
16 207 302
========
15 965 123
========
16
14
17
18
19
20
21
22
23
15
32 265 953
18 346 939
95 631
-
24 585 255
99 802 065
17 299 592
60 315 397
-
1 749 172
-
1 842 363
190 980
591 667
-
201 666
228 556
-
109 702
499 538
13 722 112
122 794
250 000
13 722 112
118 048
2 510 000
6 801 982
421 383
---------------
167 287 333
==========
134 461
2 615 000
3 697 893
-
---------------
102 839 504
==========
31 147
-
-
-
--------------
16 207 302
=========
27 854
-
-
-
-------------
15 965 123
=========
……………………………………..
T N MUNDAWARARA
……………………………………..
J A MUSHORE
}
Directors
………………………….…
V MUTANDWA
Company Secretary
20 March 2012
20 March 2012
www.nmbz.co.zw
NMBZ Holdings Limited
16
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2011
GROUP Capital Reserve
Share
Non-
Share
Share Treasury Option Regulatory distributable Retained
Capital
Premium
Shares Reserve
Reserve
Reserve Earnings
US$
US$
US$
US$
US$
US$
US$
Total
US$
34 822 (8 225)
61 212
274 904
6 201 909 2 003 383 8 568 005
Balances at 1 January 2010
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)
-
-
-
-
-
-
-
-
-
-
9 012
- (787)
Redenomination of share capital
46 147
6 155 762
-
Shares issued – share options
-
-
- 692 234
692 234
- 608 510
-
(608 510)
-
-
-
-
-
-
-
-
- (6 201 909)
-
9 012
787
-
-
-
-
-
- 9 563 874
exercised
87
15 454
- (15 541)
Shares issued – rights issue
32 364
9 531 510
-
-
-
-
-
-
Balances at 31 December 2010
78 598 15 737 548 -
45 671
883 414
- 2 087 894 18 833 125
--------
------------
--------- ----------
------------
-------------
----------- -------------
Total comprehensive
income for the year
Impairment allowance for
loans and advances
Shares issued – share
options exercised
-
-
-
-
-
-
-
-
-
-
-
- 4 538 456 4 538 456
-
140 017
-
(140 017)
-
-
-
-
-
-
--------
------------
--------- ----------
-----------
-------------
----------- -------------
Balances at 31 December 2011
78 598 15 737 548
-
45 671
1 023 431
- 6 486 333 23 371 581
===== ========
====== ======
======= ======== ======= ========
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2011
17
NMBZ Holdings Limited
COMPANY
Capital Reserve
Share Non- Retained
Share
Share
Option distributable
(Loss)/
Capital
Premium
Reserve Reserve Earnings
US$
US$
US$ US$
US$
Total
US$
Balances at 1 January 2010
Total comprehensive income for the year
-
-
34 822
61 212
6 201 909
(18 796)
6 279 147
-
- - 114 040
114 040
Redenomination of share capital
46 147
6 155 762
- (6 201 909)
Shares issued – share options exercised
87
15 454
(15 541)
-
Share issued – rights issue
32 364
9 531 510
- -
-
-
-
-
-
9 563 874
---------
-------------
----------
-------------
----------
-------------
Balances at 31 December 2010
78 598
15 737 548
45 671
-
95 244 15 957 061
Total comprehensive income for the year
Shares issued – share options exercised
-
-
-
- -
198 272 198 272
-
- -
-
-
---------
-------------
---------- -------------
----------
-------------
Balances at 31 December 2011
78 598
15 737 548
45 671
-
293 516 16 155 333
======
=========
======= =========
======= =========
www.nmbz.co.zw
NMBZ Holdings Limited
18
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the year ended 31 December 2011
GROUP COMPANY
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before taxation
Non-cash items
-Impairment losses on loans and advances
-Investment properties fair value adjustment
-Loss/(profit) on disposal of property and equipment
-Quoted and other investments fair value adjustment
-Profit on disposal of quoted and other Investments
-Impairment (gain)/loss on land and buildings
-Depreciation
-Share of associate’s (profit)/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 liabilities
Loan advances and other assets
Finacial assets at fair value through profit and loss
Net cash inflow/(outflow) generated from operations
Taxation
Corporate tax paid (note 8.3)
Capital gains tax paid
Net cash inflow/(outflow) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of investment property
Purchase of property and equipment
Improvements to investment property
Purchase of unquoted investments
Increase in investment in subsidiary
Proceeds from disposal of quoted and other investments
Increase in investment in associate
2011
US$
2010
US$
2011
US$
2010
US$
6 193 653
942 556
245 578
123 724
2 296 111
40 000
18 046
(5 689)
(27 173)
(250 000)
756 191
(113 573)
-------------
971 803
784 600
(64 527)
(94 139)
(13 232)
298 811
297 532
21 444
------------
-
-
-
(22 989)
(27 173)
-
-
-
----------
-
-
-
(106 864)
-
-
-
-
------------
8 907 566
3 144 848
195 416
16 860
22 971 751
36 629 583
(41 782 779)
(7 285 663)
-------------
19 440 458
-------------
(1 765 544)
(2 998)
-------------
17 671 916
-------------
4 688
(3 568 013)
-
-
-
59 961
(249 538)
-------------
10 732 177
42 329 610
(48 283 101)
(10 164 569)
-------------
(2 241 035)
-------------
(445 657)
-
-------------
(2 686 692)
-------------
84 860
(732 183)
(180 000)
(250 000)
-
343 899
-
-------------
-
-
93 190
-
----------
288 606
----------
(400)
(2 998)
----------
285 208
----------
-
-
-
-
-
59 961
(249 538)
----------
129
-
(1 763 328)
-
------------
(1 746 339)
------------
-
-
------------
(1 746 339)
------------
-
-
-
(250 000)
(7 567 535)
-
-
------------
Net cash outflow from investing activities
(3 752 902)
-------------
(733 424)
-------------
(189 577)
----------
(7 817 535)
------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from rights issue
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
-
-------------
13 919 014
18 346 939
-------------
9 563 874
-------------
6 143 758
12 203 181
-------------
-
----------
95 631
-
----------
9 563 874
------------
-
-
------------
Cash and cash equivalents at the end of the year (note 16)
32 265 953
=========
18 346 939
=========
95 631
=======
-
========
NMBZ Holdings Limited
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2011
19
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 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 consolidated financial statements of the Group have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The consolidated financial statements have been prepared on a historical cost basis except for securities held for
trading and investment properties which are stated at fair value, loans and advances which are stated at amortised
cost and land, buildings which are stated at revalued amounts. The consolidated financial statements are reported
in United States of America dollars and rounded to the nearest dollar.
Comparative financial information
The financial statements comprise a statement of financial position, a statement of comprehensive income, a
statement of changes in equity and a statement of cash flows. The comparative statement of comprehensive
income and the comparative statements of changes in equity and cash flows are for twelve months.
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.
All intra –group balances, transactions, unrealised gains and losses resulting from intra – group transactions and
dividends are eliminated in full. Losses within a subsidiary are attributed to the non – controlling
interest even if that results in a deficit balance.
A change in the ownership interest of a subsidiary, without loss of control is accounted for as an equity transaction.
If the group loses control over a subsidiary it:
•
•
•
Derecognises the assets (including goodwill) and liabilities of the subsidiary
Derecognises the carrying amount of any non-controlling interest
Derecognises the fair value of the consideration received
www.nmbz.co.zw
NMBZ Holdings Limited
20
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
ACCOUNTING CONVENTION (Cont’d)
Subsidiaries(Cont’d)
•
•
•
•
Derecognises the cumulative transaction differences recorded in equity
Derecognises the fair value of any investment retained
Derecognises any surplus or deficit in profit or loss
Reclassifies the parent’s share of components previously recognised in other comprehensive income to
profit or loss or retained earnings as appropriate.
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.
Quoted and trade investments
Quoted investments comprise interests in equities listed on a public exchange and are accounted for at fair value.
The fair value is determined using quoted market prices in active markets.
Trade investments comprise interests in unquoted equities and are accounted for at fair value. The fair value is
determined using valuation techniques or pricing models.
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 indicate 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.
NMBZ Holdings Limited
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
21
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. Current
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 in the country where the Group operates and generates taxable income and any adjustment to
tax payable in respect of previous years.
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered
from or paid to the taxation authorities.
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.
www.nmbz.co.zw
NMBZ Holdings Limited
22
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
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.
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
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
23
IMPAIRMENT LOSSES ON LOANS AND ADVANCES (Cont’d)
Regulatory Guidelines And International Financial Reporting Standards Requirements
In Respect Of The Group’s Banking Activities
The Banking Regulations 2000 issued by the Reserve Bank of Zimbabwe (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
Financial instruments – initial recognition and subsequent measurement
(i) Date of recognition
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.
(ii) Initial measurement of financial instruments
The classification of financial instruments at initial recognition depends on their purpose and characteristics and
the management’s intention in acquiring them. 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.
www.nmbz.co.zw NMBZ Holdings Limited
24
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
FINANCIAL INSTRUMENTS (Cont’d)
(iii) Financial assets or financial liabilities held for trading
Financial assets or financial liabilities held for trading are recorded in the statement of financial position at fair value.
Changes in fair value are recognised in ‘Non-interest income’. Interest and dividend income or expense is recorded
in ‘Interest income or expense ’ and “Non-interest income” respectively according to the terms of the contract, or
when the right to the payment has been established.
Included in this classification are debt securities, equities and short positions and customer loans that have been
acquired principally for the purpose of selling or repurchasing in the near term.
(iv) Financial assets and financial liabilities designated at fair value through profit or loss
Financial assets and financial liabilities classified in this category are those that have been designated by
management upon initial recognition. Management may only designate an instrument at fair value through profit or
loss upon initial recognition when the following criteria are met, and designation is determined on an instrument-
by-instrument basis:
•
The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise
from measuring the assets or liabilities or recognising gains or losses on them on a different basis.
•
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 a documented risk
management or investment strategy.
•
The financial instrument contains one or more embedded derivatives, which significantly modify the cash
flows that would otherwise be required by the contract.
Financial assets and financial liabilities at fair value through profit or loss are recorded in the statement of financial
position at fair value. Changes in fair value are recorded in ‘Net gain or loss on financial assets and liabilities
designated at fair value through profit or loss’. Interest earned or incurred is accrued in ‘Interest income’ or ‘Interest
expense’, respectively, using the effective interest rate (EIR), while dividend income is recorded in ‘Non-interest
income’ when the right to the payment has been established.
(v) ‘Day 1’ profit or loss
When the transaction price differs from the fair value of other observable current market transactions in the same
instrument, or based on a valuation technique whose variables include only data from observable markets, the
Group immediately recognises the difference between the transaction price and fair value (a ‘Day 1’ profit or loss)
in ‘Net trading income’. In cases where fair value is determined using data which is not observable, the difference
between the transaction price and model value is only recognised in the income statement when the inputs become
observable, or when the instrument is derecognised.
vi) Due from banks and loans and advances to customers
‘Due from banks’ and ‘Loans and advances to customers’ include non–derivative financial assets with fixed or
determinable payments that are not quoted in an active market, other than:
•
Those that the Group intends to sell immediately or in the near term and those that the bank, upon initial
recognition,
designates as at fair value through profit or loss
•
Those that the Group, upon initial recognition, designates as available for sale
NMBZ Holdings Limited
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
25
vi) Due from banks and loans and advances to customers (Cont’d)
•
Those for which the Group may not recover substantially all of its initial investment, other than because
of credit deterioration
After initial measurement, amounts ‘Due from banks’ and ‘Loans and advances to customers’ are subsequently
measured at amortised cost using the EIR, less allowance for impairment. Amortised cost is calculated by taking
into account any discount or premium on acquisition and fees and costs that are an integral part of the EIR.
The amortisation is included in ‘Interest income’ in the income statement. The losses arising from impairment are
recognised in the income statement in ‘Impairment losses on loans and advances’.
The Group may enter into certain lending commitments where the loan, on drawdown, is expected to be classified
as held for trading because the intent is to sell the loans in the short term. These commitments to lend are recorded
as derivatives and measured at fair value through profit or loss.
Where the loan, on drawdown, is expected to be retained by the Group, and not sold in the short term, the
commitment is recorded only when it is an onerous contract that is likely to give rise to a loss (for example, due to
a counterparty credit event).
(vii) Deposits and other liabilities
Deposits and other liabilities are non-trading financial liabilities payable on demand and at variable interest rates.
Subsequent to initial measurement deposits and other liabilities are measured at amortised cost applying the
effective interest rate method.
(viii) Reclassification of financial assets
Effective from 1 July 2008, the Group was permitted to reclassify, in certain circumstances, non–derivative financial
assets out of the ‘held for trading’ category and into the ‘available for sale’, ‘loans and receivables’, or ’held to maturity’
categories. From this date, it was also permitted to reclassify, in certain circumstances, financial instruments out of
the ‘available for sale’ category and into the ’loans and receivables’ category.
Reclassifications are recorded at fair value at the date of reclassification, which becomes the new amortised cost.
For a financial asset reclassified out of the ’available for sale’ category, any previous gain or loss on that asset that
has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR.
Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining
life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in
equity is recycled to the income statement.
The Group may reclassify a non–derivative trading asset out of the ‘held for trading’ category and into the ‘loans and
receivables’ category if it meets the definition of loans and receivables and the Group has the intention and ability
to hold the financial asset for the foreseeable future or until maturity. If a financial asset is reclassified, and if the
Group subsequently increases its estimates of future cash receipts as a result of increased recoverability of those
cash receipts, the effect of that increase is recognised as an adjustment to the EIR from the date of the change in
estimate.
Reclassification is at the election of management, and is determined on an instrument by instrument basis. The
Group does not reclassify any financial instrument into the fair value through profit or loss category after initial
recognition. There were no reclassification of financial assets in the period.
www.nmbz.co.zw
NMBZ Holdings Limited
26
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
FINANCIAL INSTRUMENTS (Cont’d)
Derecognition of financial assets and financial liabilities
(i) 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
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 of the risks and rewards of the asset nor
transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in
the asset. In that case, the bank also recognises 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.
(ii) 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. The difference between the carrying value
of the original financial liability and the consideration paid is recognised in profit or loss.
Determination of fair value
The fair value for financial instruments traded in active markets at the reporting date is based on their quoted market
price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction
for transaction costs.
For all other financial instruments not traded in an active market, the fair value is determined by using appropriate
valuation techniques. Valuation techniques include the discounted cash flow method, comparison with similar
instruments for which market observable prices exist, options pricing models, credit models and other relevant
valuation models.
Certain financial instruments are recorded at fair value using valuation techniques in which current market
transactions or observable market data are not available. Their fair value is determined using a valuation model
that has been tested against prices or inputs to actual market transactions and using the bank’s best estimate of
the most appropriate model assumptions. Models are adjusted to reflect the spread for bid and ask prices to reflect
NMBZ Holdings Limited
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
27
FINANCIAL INSTRUMENTS (Cont’d)
costs to close out positions, credit and debit valuation adjustments, liquidity spread and limitations in the models.
Also, profit or loss calculated when such financial instruments are first recorded (‘Day 1’ profit or loss) is deferred
and recognised only when the inputs become observable or on derecognition of the instrument.
An analysis of fair values of financial instruments and further details as to how they are measured are provided in
Note 14.
Impairment of financial assets
The Group assesses at each reporting date, whether there is any objective evidence that a financial asset or a
group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and
only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial
recognition of the asset (an ‘incurred loss event’) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
Evidence of impairment may include: indications that the borrower or a group of borrowers is experiencing
significant financial difficulty; the probability that they will enter bankruptcy or other financial reorganisation; default
or delinquency in interest or principal payments; and where observable data indicates that there is a measurable
decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with
defaults.
(i) Financial assets carried at amortised cost
For financial assets carried at amortised cost (such as amounts due from banks, loans and advances to customers
as well as held to maturity investments), the Group first assesses individually whether objective evidence of
impairment exists for financial assets that are individually significant, or collectively for financial assets that are not
individually significant. If the Group determines that no objective evidence of impairment exists for an individually
assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics
and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which
an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss 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 expected credit losses that have not yet 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 the income statement. Interest income
continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount
the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of
‘Interest income’.
Loans together with the associated allowance are written off when there is no realistic prospect of future recovery
and all collateral has been realised or has been transferred to the Group. 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 to the ’Impairment losses on loans and advances
expense.
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28
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
FINANCIAL INSTRUMENTS (Cont’d)
The present value of the estimated future cash flows is discounted at the financial asset’s original EIR. If a loan has
a variable interest rate, the discount rate for measuring any impairment loss is the current EIR. If the Group has
reclassified trading assets to loans and advances, the discount rate for measuring any impairment loss is the new
EIR determined at the reclassification date. The calculation of the present value of the estimated future cash flows
of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and
selling the collateral, whether or not foreclosure is probable.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of the Group’s
internal credit grading system, that considers credit risk characteristics such as asset type, industry, geographical
location, collateral type, past–due status and other relevant factors.
Future cash flows on a group of financial assets that are collectively evaluated for impairment are estimated on the
basis of historical loss experience for assets with credit risk characteristics similar to those in the group. Historical
loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions on
which the historical loss experience is based and to remove the effects of conditions in the historical period that do
not exist currently. Estimates of changes in future cash flows reflect, and are directionally consistent with, changes
in related observable data from year to year (such as changes in unemployment rates, property prices, commodity
prices, payment status, or other factors that are indicative of incurred losses in the group and their magnitude). The
methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any
differences between loss estimates and actual loss experience.
See Note 17.3 for details of impairment losses on financial assets carried at amortised cost.
(ii) 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.
(iii) Collateral valuation
The Group seeks to use collateral, where possible, to mitigate its risks on financial assets. The collateral comes
in various forms such as cash, securities, letters of credit/guarantees, real estate, receivables, inventories, other
non-financial assets and credit enhancements such as netting agreements. The fair value of collateral is generally
assessed, at a minimum, at inception and based on the Group’s quarterly reporting schedule, however, some
collateral, for example, cash or securities relating to margining requirements, is valued daily. To the extent possible,
the Group uses active market data for valuing financial assets, held as collateral. Other financial assets which do
not have a readily determinable market value are valued using models. Non-financial collateral, such as real estate,
is valued based on data provided by third parties such as mortgage brokers, housing price indices, audited financial
statements, and other independent sources. (See note 34.1.4 for further analysis of collateral).
(iv) Collateral repossessed
The Group’s policy is to determine whether a repossessed asset is best used for its internal operations or should be
sold. Assets determined to be useful for the internal operations are transferred to their relevant asset category at
the lower of their repossessed value or the carrying value of the original secured asset. Assets that are determined
better to be sold, are immediately transferred to assets held for sale at their fair value at the repossession date in
line with the Group’s policy.
NMBZ Holdings Limited
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
29
FINANCIAL INSTRUMENTS (Cont’d)
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position
if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention
to settle on a net basis, or to realise the asset and settle the liability simultaneously. This is not generally the case
with master netting agreements, therefore, the related assets and liabilities are presented gross in the statement of
financial position.
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 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.
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 annual transfer from the asset revaluation reserve to retained earnings is made for the difference between
depreciation based on the revalued carrying amount of the assets and depreciation based on the assets original
cost. Additionally accumulated depreciation as at the revaluation date is eliminated against the gross carrying
amount of the asset and the net amount is restated to the revalued amount of the asset. 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.
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30
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
PROPERTY AND EQUIPMENT (Cont’d)
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.
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.
NMBZ Holdings Limited
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
31
PROPERTY AND EQUIPMENT (Cont’d)
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 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. Revaluation is done half yearly and at the end of each reporting period by a registered professional valuer.
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.
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32
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
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.
REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the
fair value of the consideration received or receivable, taking into account contractually defined terms of payment
and excluding taxes or duty. The specific recognition criteria described below must also be met before revenue is
recognised.
INTEREST INCOME
For all financial instruments measured amortised cost and financial instruments designated at fair value through
profit and loss, interest income or expense is recorded using the effective interest rate (EIR), which is the rate
that exactly discounts the estimated future cash payments or receipts through the expected life of the financial
instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability.
Interest income includes income arising out of the banking activities of lending and investing.
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.
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.
NMBZ Holdings Limited
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2011
33
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.
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34
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2011
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 2011 comprise the company and its subsidiaries. The Group primarily is
involved in corporate and retail banking and investments.
2.
ACCOUNTING MATTERS
2.1 Functional and reporting currency
The Company changed its functional and reporting currency from the Zimbabwe dollar to the United States
dollar with effect from 1 January 2009. These financial statements are reported in United States of America
dollars and rounded to the nearest dollar.
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 asset
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 methods to be used 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.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
35
ACCOUNTING MATTERS (Cont’d)
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.
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.
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 as at 31 December 2011. Subsequent to year end, the
Reserve Bank of Zimbabwe announced that these balances would be converted to tradeable interest bearing
instruments (refer to note 35).
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.
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NMBZ Holdings Limited
36
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
2.3 STATEMENT OF COMPLIANCE (Cont’d)
The consolidated financial statements have been prepared in compliance with the Companies Act (Chapter
24:03) and the Banking Act (Chapter 24:20) and Statutory Instruments SI 33/99 and SI 62/96.
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 24.
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.
2.4 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
The accounting policies adopted are consistent with those of the previous financial year, except for the following
new and amended IFRS and IFRIC interpretations effective as of 1 January 2011:
IAS 24 Related Party Disclosures (amendment) effective 1 January 2011
•
IAS 32 Financial Instruments: Presentation (amendment) effective 1 February 2010
•
IFRIC 14 Prepayments of a Minimum Funding Requirement (amendment) effective 1 January 2011
•
•
Improvements to IFRSs (May 2010)
The adoption of the standards or interpretations is described below.
IAS 24 Related Party Transactions (Amendment)
The IASB issued an amendment to IAS 24 that clarifies the definitions of a related party. The new definitions
emphasise a symmetrical view of related party relationships and clarifies the circumstances in which persons and
key management personnel affect related party relationships of an entity. In addition, the amendment introduces
an exemption from the general related party disclosure requirements for transactions with government and entities
that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The
adoption of the amendment did not have any impact on the financial position or performance of the Group.
IAS 32 Financial Instruments: Presentation (Amendment)
The IASB issued an amendment that alters the definition of a financial liability in IAS 32 to enable entities to classify
rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are
given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, to
acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment
has had no effect on the financial position or performance of the Group because the Group does not have these
type of instruments.
IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment)
The amendment removes an unintended consequence when an entity is subject to minimum funding requirements
and makes an early payment of contributions to cover such requirements. The amendment permits a prepayment of
future service cost by the entity to be recognised as a pension asset. The Group is not subject to minimum funding
requirements in Zimbabwe, therefore the amendment of the interpretation has no effect on the financial position nor
performance of the Group.
Improvements to IFRSs
In May 2010, the IASB issued its third omnibus of amendments to its standards, primarily with a view to removing
inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption
of the following amendments resulted in changes to accounting policies, but no impact on the financial position or
performance of the Group.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
37
Improvements to IFRSs (Cont’d)
•
IFRS 3 Business Combinations: The measurement options available for non-controlling interest (NCI) were
amended. Only components of NCI that constitute a present ownership interest that entitles their holder to a
proportionate share of the entity’s net assets in the event of liquidation should be measured at either fair value
or at the present ownership instruments’ proportionate share of the acquiree’s identifiable net assets. All other
components are to be measured at their acquisition date fair value.
•
•
•
•
•
•
The amendments to IFRS 3 are effective for annual periods beginning on or after 1 July 2011. The Group,
however, adopted these as of 1 January 2011 and changed its accounting policy accordingly as the amendment
was issued to eliminate unintended consequences that may arise from the adoption of IFRS 3.
IFRS 7 Financial Instruments — Disclosures: The amendment was intended to simplify the disclosures
provided by reducing the volume of disclosures around collateral held and improving disclosures by requiring
qualitative information to put the quantitative information in context. The Group reflects the revised disclosure
requirements in Note 14.
IAS 1 Presentation of Financial Statements: The amendment clarifies that an entity may present an analysis
of each component of other comprehensive income maybe either in the statement of changes in equity or in
the notes to the financial statements. The Group does not currently have any other comprehensive income.
Other amendments resulting from Improvements to IFRSs to the following standards did not have any impact
on the accounting policies, financial position or performance of the Group:
IFRS 3 Business Combinations (Contingent consideration arising from business combination prior to adoption
of IFRS 3 (as revised in 2008))
IFRS 3 Business Combinations (Un-replaced and voluntarily replaced share-based payment awards) IAS 27
Consolidated and Separate Financial Statements
IAS 34 Interim Financial Statements
The following interpretation and amendments to interpretations did not have any impact on the accounting policies,
financial position or performance of the Group:
•
•
IFRIC 13 Customer Loyalty Programmes (determining the fair value of award credits)
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
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 1 Financial Statement Presentation – Presentation of Items of Other Comprehensive Income42
The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or
‘recycled’) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be
presented separately from items that will never be reclassified. The amendment affects presentation only and has
therefore no impact on the Group’s financial position or performance. The amendment becomes effective for annual
periods beginning on or after 1 July 2012.
IAS 12 Income Taxes – Recovery of Underlying Assets
The amendment clarified the determination of deferred tax on investment property measured at fair value. The
amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair
value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale.
Furthermore, it introduces the requirement that deferred tax on non-depreciable assets that are measured using the
revaluation model in IAS 16 always be measured on a sale basis of the asset. The amendment becomes effective
for annual periods beginning on or after 1 January 2012.
www.nmbz.co.zw
NMBZ Holdings Limited
38
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
2.5 STANDARDS ISSUED BUT NOT YET EFFECTIVE (Cont’d)
IAS 19 Employee Benefits (Amendment)
The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing
the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording.
The group had made a voluntary change in accounting policy to recognise actuarial gains and losses in OCI in the
current period (see note 2.4). The Group is currently assessing the full impact of the remaining amendments. The
amendment becomes effective for annual periods beginning on or after 1 January 2013.
IAS 27 Separate Financial Statements (as revised in 2011)
As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries,
jointly controlled entities, and associates in separate financial statements. The Group does not present separate
financial statements. The amendment becomes effective for annual periods beginning on or after 1 January 2013.
IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)
As a consequence of the new IFRS 11 and IFRS 12. IAS 28 has been renamed IAS 28 Investments in Associates
and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition
to associates. The amendment becomes effective for annual periods beginning on or after 1 January 2013.
IAS 32 Financial Instruments: Presentation (Amendment) – Offsetting Financial Assets and Financial Liabilities
The IASB issued an amendment to clarify the meaning of “currently has a legally enforceable right to set off the
recognised amount”. This means that the right of set-off:
(i) Must not be contingent on a future event; and,
(ii) Must be legally enforceable in all of the following circumstances
-
-
-
the normal course of business
the event of default and
the event of insolvency or bankruptcy of the entity and all of the counterparties
The amendment is effective for annual periods beginning on or after 1 January 2014 and the Group is still in the
process of determining how it will impact the disclosures upon adoption.
IFRS 7 Financial Instruments: Disclosures — Enhanced Derecognition Disclosure Requirements
The amendment requires additional disclosure about financial assets that have been transferred but not
derecognised to enable the user of the Group’s financial statements to understand the relationship with those
assets that have not been derecognised and their associated liabilities. In addition, the amendment requires
disclosures about continuing involvement in derecognised assets to enable the user to evaluate the nature of, and
risks associated with the entity’s continuing involvement in those derecognised assets. The amendment becomes
effective for annual periods beginning on or after 1 July 2011. The amendment affects disclosure only and has no
impact on the Group’s financial position or performance.
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 measurement of financial assets and financial liabilities as defined in IAS 39. The standard is effective for annual
periods beginning on or after 1 January 2015. In subsequent phases, the IASB will address hedge accounting
and impairment of financial assets. The completion of this project is expected over the course of 2011 or the first
half of 2012. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement
of the Group’s financial assets, but will potentially have no impact on classification and measurements of
financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present
a comprehensive picture.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
39
2.5 STANDARDS ISSUED BUT NOT YET EFFECTIVE (Cont’d)
IFRS 10 Consolidated Financial Statements
IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the
accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consolidation —
Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special
purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to
determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with
the requirements that were in IAS 27. This standard becomes effective for annual periods beginning on or after 1
January 2013.
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities — Non-monetary
Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using
proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the
equity method. The application of this new standard will not impact the financial position of the Group. This standard
becomes effective for annual periods beginning on or after 1 January 2013.
IFRS 12 Disclosure of Involvement with Other Entities
IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial disclosures
relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of
new disclosures are also required. This standard becomes effective for annual periods beginning on or after 1
January 2013.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not
change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under
IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will
have on the financial position and performance. This standard becomes effective for annual periods beginning on
or after 1 January 2013.
www.nmbz.co.zw
NMBZ Holdings Limited
40
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
3.
SEGMENT INFORMATION
For management purposes, the Group is organised into four operating segments based on products and services
as follows:
Retail banking
-
Individual customer deposits and consumer loans, overdrafts, credit card
facilities and funds transfer facilities.
Corporate banking
-
Loans and other credit facilities and deposit and current accounts for corporate and
institutional customers.
Treasury
-
Money market investment, securities trading, accepting and discounting of
instruments and foreign currency trading.
International banking -
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 2011 or 2010.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
41
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 2011
Retail
Corporate
International
in
Investment
Banking
Banking
Treasury
Banking
Associate Unallocated
US$
US$
US$
US$
US$
US$
Total
US$
Income
Third party
12 122 517
17 608 301
2 521 784 1 190 962
-
283 255 33 726 819
-------------
-------------
------------
-----------
---------
------------- --------------
Total operating income
12 122 517
17 608 301
2 521 784 1 190 962
Impairment losses on
loans and advances
(284 178)
(2 011 933)
-
-
-
-
283 255 33 726 819
-
(2 296 111)
-------------
-------------
------------
-----------
---------
------------- --------------
Net operating income
11 838 339
15 596 368
2 521 784 1 190 962 -
283 255 31 430 708
-------------
-------------
------------
-----------
---------
------------- --------------
Results
Interest income
4 191 175
14 567 481
1 232 055
Interest expense
(1 496 919) (6 078 341) (681 994)
-
-
-
-
168 055 20 158 766
- (8 257 254)
-------------
-------------
------------
-----------
---------
------------- --------------
Net interest income
2 694 256
8 489 140
550 061
-
- 168 055 11 901 512
-------------
-------------
------------
-----------
---------
------------- --------------
Share of profit of associate
-
-
-
-
113 573
-
113 573
-------------
-------------
------------
-----------
---------
------------- --------------
Fee and commission
income
7 930 889
3 040 821
- 1 190 962
-
-
- -
-------------
-------------
------------
-----------
---------
------------- --------------
-
-
(204 643) 11 958 029
-
-
Fee and commission
expense
Net fees and
commission income
7 930 889
3 040 821
- 1 190 962
-
(204 643) 11 958 029
-------------
-------------
------------
-----------
---------
------------- --------------
Depreciation of property
and equipment
323 115
63 296
7 075
11 582
-
351 123
756 191
Segment profit/ (loss)
3 141 886
7 926 550
1 224 334
340 776
113 573
(6 553 466)
6 193 653
Income tax expense
-
-
-
-
-
- (1 655 197)
-------------
-------------
------------
-----------
---------
------------- --------------
Profit/(loss) for the year
3 141 886
7 926 550
1 224 334 340 776
113 573
(6 553 466)
4 538 456
=========
=========
======== ========
====== ========= =========
www.nmbz.co.zw
NMBZ Holdings Limited
42
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
3. SEGMENT INFORMATION (Cont’d)
for the year ended 31 December 2011
Retail Corporate
Banking
US$
Banking
US$
International
Investment
in
Treasury Banking Associate Unallocated
US$
US$
US$
US$
Total
US$
Assets and Liabilities
Capital expenditure
78 298
Total assets
37 333 931 99 879 097 14 815 783
Total liabilities and equity 23 340 594 51 995 615 63 092 803
1 618 558
157 634
49 038
49 038
-
-
3 568 013
1 664 485
591 667 14 617 817 167 287 333
- 28 858 321 167 287 333
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 Corporate
Banking
US$
Banking
US$
International
Investment
in
Treasury Banking Associate Unallocated
US$
US$ US$
US$
Total
US$
Income
Third party
Total operating income
Impairment losses on
loans and advances
6 344 836 12 508 781
------------ -------------
1 371 284
------------
695 863
-----------
-
----------
(497 470) 20 423 294
-------------
-------------
6 344 836 12 508 781
1 371 284
695 863
-
(497 470) 20 423 294
(883 862)
(87 941)
------------ -------------
-
------------
-
-----------
-
----------
-------------
- (971 803)
-------------
Net operating income
6 256 895 11 624 919
------------ -------------
1 371 284
------------
695 863
-----------
- (497 470) 19 451 491
-------------
-------------
----------
Results
Interest income
Interest expense
7 489 810
2 110 273
(669 134) (2 339 207)
------------ -------------
426 006
(135 080)
------------
-
-
-----------
-
-
----------
253
-------------
(11 453) 10 014 636
Net interest income
1 441 139
5 150 603
------------ -------------
290 926
------------
-
-----------
-
----------
(11 200)
-------------
(3 143 168)
-------------
6 871 468
-------------
Share of loss of associate
-
------------ -------------
-
-
------------
-
-----------
Fee and commission income 4 234 563
-
Fee and commission expense
4 929 796
-
------------ -------------
-
-
----- ------
695 863
-
-----------
(21 444)
----------
-
-
----------
-
-------------
(21 444)
-------------
(169 153)
-
-------------
9 691 069
-
-------------
Net fees and
commission income
Depreciation of property
and equipment
Segment profit/ (loss)
Income tax expense
4 234 563
4 929 796
------------ -------------
-
------------
695 863
-----------
-
----------
(169 153)
-------------
9 691 069
-------------
139 376 18 583
5 807
16 261 -
117 505
297 532
496 672
5 854 649
- -
------------ -------------
1 075 705 (150 877)
-
-----------
-
------------
(21 444)
-
(6 312 149)
-
---------- -------------
942 556
(250 322)
-------------
Profit/(loss) for the year
496 672 5 854 649
======== =========
1 075 705 (150 877)
=======
========
(21 444)
(6 312 149)
692 234
======= ========= =========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
43
3. SEGMENT INFORMATION (Cont’d)
for the year ended 31 December 2010
Retail Corporate
International
in
Investment
Banking Banking Treasury
Banking Associate Unallaocated
US$
US$
US$
US$
US$
US$
Total
US$
Assets and Liabilities
Capital expenditure
368 979
49 197
15 374
43 048
-
255 585
732 183
Total assets
12 396 655 56 968 230 27 600 964
Total liabilities
and equity
14 158 924 35 278 465 32 344 518
-
-
228 556
5 645 099 102 839 504
-
21 057 597 102 839 504
4.
INTEREST INCOME
GROUP
COMPANY
Loans and advances to banks
Loans and advances to customers
Investment securities
Other
5.
INTEREST AND SIMILAR EXPENSE
2011 2010
2011
2010
US$
US$
US$
US$
1 097 573
297 752
14 054 625
6 721 892
4 811 300
2 990 349
-
-
-
-
-
-
195 268
-------------
4 643
-------------
168 416
------------
-
------------
20 158 766 10 014 636
========= =========
168 416
-
======== ========
Due to banks
Due to customers
Other borrowed funds
Interest expense on financial liabilities
designated at fair value through
profit and loss
GROUP
2011
US$
2010
US$
2 750 670
843 705
912 697
501 763
595
561
--------------
--------------
3 663 962
1 346 029
4 593 292
1 797 139
--------------
--------------
8 257 254
3 143 168
======== ========
www.nmbz.co.zw
NMBZ Holdings Limited
44
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
6
NON-INTEREST INCOME AND NET FOREIGN EXCHANGE GAINS
6.1 Non – interest income
GROUP
COMPANY
Quoted and other investments fair
value adjustments
Commission and fee income
(Loss)/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
Other operating income
2011 2010
2011
2010
US$
US$
US$
US$
5 689
94 139
22 989
106 864
11 958 029
9 691 069
(18 046)
64 527
(40 000) (784 600)
180 118
27 173
54 404
13 232
-
-
-
-
27 173
-
-
-
-
-
51 728
--------------
242 025
------------
27 000
-----------
17 000
-----------
12 164 691
=========
9 374 796
========
77 162
123 864
======= =======
6.2 Net foreign exchange gains
Net foreign exchange gains
GROUP
2011
US$
2010
US$
1 289 729 1 055 307
======== ========
Net foreign exchange income includes gains and losses from spot and forward contracts and other currency
derivatives.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
45
7.
OPERATING EXPENDITURE
The operating profit is after charging
The following:-
Administration costs
Audit fees
Impairment (gain)/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
Capital gains tax
Deferred tax
Tax adjustment due to changes in tax law
GROUP
COMPANY
2011 2010
2011
2010
US$
US$
US$
US$
8 599 112
5 924 296
151 515
153 864
(250 000)
756 191
1 506 630
298 811
297 532
587 612
47 520
45 625
1 459 110
541 987
6 216 293
5 014 041
-
-------------
3 089 612
-------------
16 979 741 15 365 768
========= =========
140
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
---------
-
======
-
---------
140
======
GROUP
COMPANY
2011 2010
2011
2010
US$
US$
US$
US$
2 215 095
765 499
43 495
66 453
2 998
22 965
-
(629 349)
(514 224)
1 304
2 998
(491)
-
-------------
(23 918)
-------------
-
---------
1 655 197
250 322
========= =========
47 306
======
388
12
-
9 284
-
---------
9 684
======
www.nmbz.co.zw
NMBZ Holdings Limited
46
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
8.2 Reconciliation of income tax charge
GROUP COMPANY
2011
2010
2011
2010
US$
US$
US$
US$
Based on results for the period at a rate of 25%
1 548 413
235 639
61 395
30 931
Arising due to:
Income not subject to tax
Non-deductible expenses
Tax rate differential on capital gains
Aids levy
Tax expense
(44)
(10 206)
(9 958)
(21 259)
45 810
1 924
-
-
(5 435)
------------
-
-----------
(5 435)
---------
-
----------
1 588 744
227 357
46 002
9 672
66 453
-----------
1 655 197
=======
22 965
-----------
250 322
=======
1 304
---------
12
----------
47 306
9 684
====== =======
8.3 Total taxation charge/ (credit) analysed by company
Stewart Holdings (Private) Limited
NMB Bank Limited
NMBZ Holdings Limited
Current tax liabilities (income tax, aids levy)
At 1 January
Charge for the year
Payments during the year
GROUP
COMPANY
2011
2010
2011
2010
US$
US$
US$
US$
(1 024)
1 574 148
82 073
------------
1 655 197
========
(4 079)
250 239
4 162
-----------
250 322
=======
-
-
-
-
47 306
---------
9 684
----------
47 306
9 684
====== =======
GROUP
COMPANY
2011
2010
2011
2010
US$
US$
US$
US$
641 969
299 162
400
2 281 549
788 464
44 798
-
400
(1 765 544)
------------
1 157 974
========
(445 657) (400)
---------
-----------
-
----------
641 969
=======
44 798
400
====== =======
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
47
9.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of
NMBZ Holdings Limited by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the profit attributable to ordinary equity holders of NMBZ
Holdings Limited adjusted for the after tax effect of: (a) any dividends or other items related to dilutive potential
ordinary shares deducted in arriving at profit or loss attributable to ordinary equity holders of the parent entity; (b)
any interest recognised in the period related to dilute potential ordinary shares; (c) any other changes in income or
expense that would result from the conversion of the dilutive potential ordinary shares, by the weighted average
number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that
would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Headline earnings per share is calculated by dividing the profit attributable to ordinary equity holders of NMBZ
Holdings Limited (excluding separately identifiable re-measurements, relating to any change in the carrying amount
of an asset or liability, net of related tax (both current and deferred), other than re-measurements specifically
included in headline earnings) by the weighted average number of ordinary shares outstanding during the year.
9.1 Earnings
Basic
4 538 456
692 234
2011
US$
2010
US$
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
Diluted weighted average number of shares
9.3 Earnings per share (US cents)
Basic
2011
2010
2 807 107 289
2 228 151 974
2 817 850 158
2 238 894 843
2 807 107 289
2 228 151 974
9 072 000
9 072 000
1 670 869
-----------------
1 670 869
-----------------
2 817 850 158
2 238 894 843
===========
===========
2011
0.16
2010
0.03
www.nmbz.co.zw
NMBZ Holdings Limited
48
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
10. SHARE CAPITAL
10.1 Authorised
Ordinary shares of US$0.000028 each
10.2 Issued and fully paid
At 1 January
Redenomination of share capital
Shares issued – rights issue
Shares issued – share options
At 31 December
GROUP AND COMPANY
2011
Shares
million
2010
Shares
million
2011
US$
2010
US$
3 500
===== =====
3 500 98 000
======
98 000
======
GROUP AND COMPANY
2011
Shares
million
2010
Shares
million
2011
US$
2010
US$
2 807
-
-
-
-------
2 807
=====
1 648
-
1 156
3
-------
2 807
=====
78 598
-
-
-
---------
78 598
======
-
46 147
32 364
87
---------
78 598
======
Of the unissued ordinary shares of 692 892 711 (2010– 692 892 711), options which may be granted in terms of
the NMBZ 2005 Employee Share Option Scheme (ESOS) amounted to 85 360 962 (2010 – 85 360 962) and out of
these 1 670 869 (2010 – 1 670 869) had not been issued. As at 31 December 2011, 9 072 000 (2010 – 9 072 000)
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 2010 for a consideration
of US$9 012 resulting in a surplus on disposal of US$787. This surplus is included in the consolidated statement
of changes in equity.
11. CAPITAL RESERVES
GROUP
COMPANY
2011
US$
2010
US$
2011
US$
2010
US$
Share premium
Treasury shares
Share option reserve
Regulatory reserve
Total capital reserves
-
45 671
1 023 431
-------------
15 737 548 15 737 548 15 737 548 15 737 548
-
-
45 671
45 671
-
883 414
------------ ------------- ------------
16 806 650 16 666 633 15 783 219 15 783 219
========= ======== ========= ========
-
45 671
-
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
49
Nature and purpose of reserves
Capital reserves
Share premium
This reserve represents the increase in share capital attributable to:
•
•
•
during the year.
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
Share option reserve
The share option reserve is used to recognise the value of equity – settled share based payment transactions
provided to employees, including key management personnel, as part of their remuneration. Refer to note 32.3 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 in 2010
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
Analyses of retained profit by company
GROUP
COMPANY
2011
US$
2010
US$
2011
US$
2010
US$
NMBZ Holdings Limited
NMB Bank Limited
Stewart Holdings (Private) Limited
Total
79 322
1 976 437
13 536 32 135
------------
356 400
6 116 397
------------
6 486 333
========
2 087 894
========
293 516
-
-
----------
293 516
=======
95 244
-
-
----------
95 244
=======
www.nmbz.co.zw
NMBZ Holdings Limited
50
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
13. DEPOSITS AND OTHER LIABILITIES
13.1 Deposits and other liabilities by type
GROUP
COMPANY
2011 2010
2011
2010
US$
US$
US$
US$
Deposits from other banks and other financial institutions 43 009 970 26 598 041
-
-
Other money market deposits
Current and deposit accounts**
Total deposits
Trade and other payables**
40 148 860 17 177 109
56 067 314 36 074 237
-------------- --------------
139 226 144 79 849 387
3 307 057
-------------
3 531 634
--------------
142 757 778 83 156 444
Less: Financial liabilities disclosed*in note 14.1 (40 148 860) (17 177 109)
-
-
--------
-
129
--------
129
-
-
-
--------
-
129
--------
129
-
--------------
-------------
--------
---------
102 608 918 65 979 335
========
=========
129
=====
129
=====
*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 carrying amount. 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
GROUP
2011
US$
2010
US$
105 423 635 54 179 210
17 727 720 15 575 677
13 874 789 10 090 000
4 500
-
-
-------------
2 200 000
-
-
---------------
139 226 144 79 849 387
========== =========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
51
13.3 Sectoral analysis of deposits
Banks and other financial institutions
Transport and telecommunicationscompanies
Mining companies
Industrial companies
Municipalities and parastatals
Individuals
Agriculture
Other deposits
GROUP
2011
US$
%
2010
US$
43 009 970
5 297 087
1 144 080
38 536 164
19 879 203
21 438 755
3 180 921
6 739 964
---------------
139 226 144
==========
4
31 23 183 081
5 829 647
1 1 200 512
28 24 377 638
14
4 539 082
15 10 653 099
4 427 417
2
5
5 638 911
----- -------------
100 79 849 387
========
===
%
29
7
1
31
6
13
6
7
-----
100
===
14. FINANCIAL INSTRUMENTS
14.1 Financial liabilities at fair value through profit and loss*
Carrying
Amount
2011
US$
Fair
Value
2011
US$
Fair Carrying
Value Amount
2010
US$
2010
US$
Fixed term deposits
Negotiable Certificates of Deposits
8 910 353
8 910 353
3 469 068 3 469 068
31 238 507 31 238 507 13 708 041 13 708 041
------------- ------------
------------- -------------
Total financial liabilities at fair value through profit and loss
40 148 860 40 148 860 17 177 109 17 177 109
========= ========= ========= ========
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.
www.nmbz.co.zw
NMBZ Holdings Limited
52
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
14.2 Maturity analysis of 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
2011
US$
22 407 235
11 666 836
3 874 789
2 200 000
-
-
---------------
40 148 860
==========
2010
US$
8 747 376
8 335 233
90 000
4 500
-
-
-------------
17 177 109
=========
14.3 Financial assets at fair value through profit and loss
Carrying
Amount
2011
US$
Fair Fair
Carrying
Value*
Value
Amount
2011
US$
2010
US$
2010
US$
Government and public
sector securities
2 126 657
2 126 657
1 994 585
1 994 585
RBZ Forex Bond (1)
2 126 657
2 126 657
1 994 585
1 994 585
Bills-own acceptance (2)
22 196 067
22 401 174 14 805 628 14 769 753
Promissory Notes (2)
Total financial assets at fair value
through profit and loss
57 884
-------------
57 424
-------------
499 379
498 798
------------- -------------
24 380 608
=========
24 585 255 17 299 592 17 263 136
========= ========= =========
(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,
market rates of interest and assumptions regarding market liquidity, where relevant.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
53
14.4 Maturity analysis of financial assets 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
2011
US$
2010
US$
10 770 543
7 707 188
10 150 024
6 884 042
3 664 688
2 708 362
-
-
-
-
-
-------------
-
------------
24 585 255 17 299 592
========
=========
14.5 Other financial assets and financial liabilities summary
Fair value
Set out below is a comparison by class of the carrying amounts and fair value of the Group’s financial instruments
that are carried in the financial statements.
Cash and cash equivalent
Financial assets at fair value through
profit and loss
Advances and other assets
Trade investments
Quoted and other investments
Total
Financial liabilities
Deposits and other liabilities
Financial liabilities at fair value through
profit and loss
Carrying
amount
2011
US$
Fair
Value
2011
US$
Fair
Carrying
Value
amount
2010
US$
2010
US$
32 265 953 32 265 953 18 346 939 18 346 939
24 380 608 24 585 255 17 299 592 17 263 136
95 943 262 95 697 791 59 492 813 59 474 284
190 980
190 980
201 666
201 666
118 048
118 048
-------------- --------------
134 461
-------------
134 461
-------------
152 898 851 152 858 027 95 475 471 95 420 486
========= ========= ========= =========
102 608 918 102 608 918 65 979 335 65 979 335
40 148 860 40 148 860 17 177 109 17 177 109
------------- --------------
-------------- --------------
142 757 778 142 757 778 83 156 444 83 156 444
========= ========= ========= =========
www.nmbz.co.zw
NMBZ Holdings Limited
54
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
14.5 Other financial assets and financial liabilities summary (Cont’d)
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 assets, deposits and other liabilities approximate their
carrying amounts largely due to the short – term maturities of these instruments.
Fair value of quoted 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 2011, 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.
Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based
on observable market data.
Assets measured at fair value
Financial assets at fair value through
Profit and loss
Trade investments
Quoted investments
Liabilities measured at fair value
GROUP
31 Dec
2011
US$
Level 1
Level 2
Level 3
US$
US$
US$
24 585 255
- 22 458 598
2 126 657
190 980
118 048
-
190 980
118 048
-
-
-
31 Dec
2011
US$
Level 1
Level 2
Level 3
US$
US$
US$
Financial liabilities of fair value through
profit and loss
40 148 860
-
40 148 860
-
During the reporting period ending 31 December 2011, 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.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
55
14.5 Other financial assets and financial liabilities summary (Cont’d)
GROUP
31 Dec
2010
US$
Level 1
Level 2
Level 3
US$
US$
US$
Financial assets at fair value through profit and loss
17 299 592
- 15 305 007 1 994 585
Trade investments
Quoted investments
201 666
134 461
-
201 666
134 461
-
-
-
Liabilities measured at fair value
31 Dec
2010
US$
Level 1
Level 2
Level 3
US$
US$
US$
Financial liabilities at fair value through profit and loss
17 177 109
- 17 177 109
-
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.
14.6 Fair value adjustment to profit and loss
Fair value gain on financial assets designated at fair
value through profit and loss
2011
US$
2010
US$
180 118
----------
180 118
======
54 404
----------
54 404
======
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.
www.nmbz.co.zw
NMBZ Holdings Limited
56
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
15.
DEFERRED TAX
GROUP
COMPANY
Allowance for impairment
losses on loans and advances
(863 678)
(272 429)
-
2011
US$
2010
US$
2011
US$
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
7 014
16 806
1 557
5 485
129 493
412 667
33 514
-
5 485
134 743
268 036
17 408
-
-
-
332 105
271 742
-
(269 862) (161 703) - -
(208 121)
(58 601)
-
-
- (8 036)
-----------
-
----------
------------
-
----------
2010
US$
-
1 393
6 140
-
-
-
-
Closing deferred tax liability/ (asset)
(421 383)
207 966
7 042
7 533
Deferred tax liability at the beginning of the year
(746 108)
------------ -----------
( 207 966)
(7 533)
----------
Current year credit (note 8.1)
(629 349)
========
(538 142)
=======
(491)
=======
1 751
----------
9 284
=======
16. CASH AND CASH EQUIVALENTS
GROUP
COMPANY
16.1 Balances with Reserve Bank of Zimbabwe
US$
US$
US$
US$
2011 2010
2011
2010
Balances with the Central Bank
12 255 166
5 669 979
-
-
16.2 Balances with other banks and cash
Current, nostro accounts and cash
20 010 787 12 676 960
-------------- -------------
95 631
-----------
-
------------
32 265 953 18 346 939
========= =========
95 631
=======
-
========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
57
17. LOANS, ADVANCES AND OTHER ASSETS
17.1 Total loans, advances and other assets
17.1.1 Advances
GROUP COMPANY
Fixed term loans
Local loans and overdrafts
Statutory reserves*
Other assets
2011 2010
2011
2010
US$
US$
US$
US$
36 116 550 16 553 444
56 619 403 39 674 193
3 231 838
3 265 176
-
-
-
-
-
-
3 834 274
--------------
822 584
-------------
1 748 172
------------
99 802 065 60 315 397
========= =========
1 748 172
========
1 842 363
------------
1 842 363
========
*The statutory reserve balance with the Reserve Bank of Zimbabwe is non-interest bearing.
The balance was determined on the basis of deposits held and is not available to the Bank for daily use. The
Reserve Bank of Zimbabwe announced on 16 February 2012 that the balances owed to the banks would be
converted to tradable interest bearing instruments (refer note 35).
17.1.2 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
64 535 974 45 997 447
10 679 285
3 554 191
885 387
2 511 409
2 875 529
5 106 790
18 161 873
743 752
-
-
-
-
-
-
-
-
-
-
-
--------------
-
-------------
-
------------
-
-----------
Total advances
97 138 048 57 913 589
-
Provision for impairment losses
on loans and advances
Provision for suspended interest
Statutory reserves
Other assets (note 17.5)
-
-
(3 354 088)
(1 057 977) -
(1 048 007)
--------------
(627 975)
-------------
92 735 953 56 227 637
3 231 838
3 265 176
-----------
-----------
-
-
-
-
3 834 274
--------------
822 584
-------------
1 748 172
------------
99 802 065 60 315 397
========= =========
1 748 172
========
1 842 363
------------
1 842 363
========
www.nmbz.co.zw
NMBZ Holdings Limited
58
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
17.2 Sectoral analysis of utilisations
GROUP
2011
US$
%
2010
US$
%
Industrials
50 988 641
52
30 158 132
52
Agriculture and horticulture
6 526 499
Conglomerates
Services
Mining
Food & beverages
Individuals
222 088
12 800 879
2 449 213
5 747 287
18 403 441
-------------
97 138 048
=========
7
-
13
3
6
19
-----
100
===
5 079 399
3 151 309
8 876 982
1 120 858
2 153 130
7 373 779
-------------
57 913 589
=========
9
5
15
2
4
13
-----
100
===
The material concentration of loans and advances are in the industrial sector at 52% (2010 – 52%).
17.3 Allowance for impairment losses on loans and advances (including acceptances)
GROUP
2011
2010
Specific
Portfolio
US$
US$
Total
US$
Specific
Portfolio
US$
US$
Total
US$
At 1 January
1 057 977
Charge against profits
2 296 111
-
-
1 057 977
2 296 111
106 105
971 803
-
-
106 105
971 803
Bad debts written off -
------------
-
----------
-
------------
(19 931)
-----------
-
----------
(19 931)
------------
At 31 December
3 354 088
========
-
=======
3 354 088
========
1 057 977
========
- 1 057 977
======= ========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
59
17.4 Non-performing loans and advances
Total non-performing loans and advances
Provision for impairment loss on loans and advances
Interest in suspense
Residue
GROUP
2011
2010
US$
US$
8 983 037 5 939 359
(3 354 088)
(1 048 007)
-------------
4 580 942
=========
(1 057 977)
(627 975)
-------------
4 253 407
=========
The residue on these accounts represents recoverable portions covered by realisable security.
17.5 Other assets
Service deposits
Prepayments and stocks
Other receivables
GROUP
COMPANY
2011
2010
2011
2010
US$
US$
US$
US$
183 909
1 029 791
2 620 574
------------
3 834 274
========
117 772
589 026
115 786
----------
-
-
1 749 172
-----------
822 584
=======
1 749 172
========
-
-
1 842 363
-----------
1 842 363
========
www.nmbz.co.zw
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
61
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 audited financial information of the Group’s investment in African Century Limited.
Share of the associate’s
statement of financial position:
GROUP
COMPANY
2011
US$
2010
US$
2011
US$
2010
US$
Current assets
2 831 891
222 185
Non-current assets
68 577
26 058
Current liabilities
(133 823)
(19 687)
-
-
-
-
-
-
Non – current liabilities
(2 174 978)
-------------
-
-----------
- -
---------
-----------
Equity
591 667
=========
228 556
-
======= ======= ======
-
Share of the associate’s
revenue and profit/(loss)
Revenue
Profit/(loss)
571 617
=========
676
=======
113 573
=========
(21 444)
=======
Carrying amount of
the investment
591 667
228 556
=======
=========
-
=======
-
=======
499 538
=======
Reconciliation of carrying amount of investment in Associate:
Balance at 1 January
228 556
-
Increase in investment
249 538
250 000
250 000
249 538
Share of profit/(loss) in associate 113 573
-------------
(21 444)
-----------
-
----------
Balance at 31 December
591 667
=========
228 556
=======
499 538
=======
-
======
-
======
250 000
======
-
250 000
-
---------
250 000
======
www.nmbz.co.zw
NMBZ Holdings Limited
62
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
20. INVESTMENTS IN GROUP COMPANIES
20.1 Subsidiaries
COMPANY
2011
US$
2010
US$
13 707 432
14 680
-------------
13 707 432
14 680
-------------
13 722 112
=========
13 722 112
=========
Investments in subsidiaries:
- NMB Bank Limited
- Stewart Holdings Limited
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:-
2011
2010
NMB Bank Limited
Brixtun (Private) Limited
100% (Banking)
100% (Dormant)
NMB Fund Management (Private) Limited
100% (Dormant)
100% (Banking)
100% (Dormant)
100% (Dormant)
Stewart Holdings (Private) Limited
100% (Equity holdings)
100% (Equity Holdings)
Invariant (Private) Limited
Darksan (Private) Limited
African Century Limited
100% (Dormant)
100% (Dormant)
25% (Leasing)
100% (Dormant)
100% (Dormant)
25% (Leasing)
The consolidated financial statements include the financial statements and results of the subsidiaries and associates
listed above.
21. QUOTED AND OTHER INVESTMENTS
GROUP
COMPANY
Quoted investments
2011
US$
118 048
----------
118 048
======
2010
US$
2011
US$
134 461
----------
31 147
----------
2010
US$
27 854
---------
134 461 31 147
27 854
======
======
======
The quoted investments comprise shares stated for year end purposes at the last trading date of 31 December 2011.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
63
22. INVESTMENT PROPERTIES
GROUP
At 1 January
Improvements
Fair value adjustments
Net transfer to Property and Equipment
At 31 December
2011
US$
2 615 000
-
(40 000)
(65 000)
------------
2 510 000
========
2010
US$
3 219 600
180 000
(784 600)
-
-------------
2 615 000
=========
Rental income amounting to US$6 600 (2010 – US$3 855) was received and no operating expenses were
incurred on the investment properties in the current year.
Included in the investment properties is a property which is encumbered by the Reserve Bank of Zimba-
bwe. All liabilities in relation to this encumbrance have already been discharged and the Group is in the
process of cancelling this mortgage bond and it is the Group’s firm belief that the bond will be cancelled.
The Group has no restrictions on the realisability of all other investment properties and no contractual
obligations to either purchase, construct or develop the investment properties or for repairs, maintenance
and enhancements.
Investment properties are stated at fair value, which has been determined based on valuations performed
by professional valuers as at 31 December 2011. The professional valuers considered comparable market
evidence of recent sale transactions and those transactions where firm offers had been made but awaiting
acceptance.
www.nmbz.co.zw
NMBZ Holdings Limited
64
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
23. PROPERTY AND EQUIPMENT
GROUP
Computers
US$
Motor
Vehicles
US$
Freehold
Furniture & Land &
Buildings
Equipment
US$
US$
Total
US$
Cost
At 1 January 2010
Additions
Impairment loss
Disposals
148 515
503 325
108 804
214 274
-
-
- (37 200)
------------
-----------
982 502
407 003
2 711 709
2 102
- (298 811)
-
------------
------------
4 346 051
732 183
(298 811)
- (37 200)
-------------
1 389 505
220 119
At 31 December 2010
1 176 536
1 564 286
Additions
-
-
Revaluation gain
- (15 663)
Reclassifications
Transfer in from investment property
-
-
Disposals (27 930) (17 890) (71 677)
------------
-----------
2 478 701
1 524 271
------------
-----------
717 599
818 939
-
15 663
-
------------
1 766 515
------------
At 31 December 2011
2 415 000
8 252
250 000
-
65 000
-
------------
2 738 252
------------
4 742 223
3 568 013
250 000
-
65 000
(117 497)
-------------
8 507 739
-------------
Accumulated depreciation
At 1 January 2010
Charge for the year
Disposals
204 192
113 114
49 905
43 985
- (16 866)
------------
-----------
509 556
140 375
-
------------
11
58
763 664
297 532
- (16 866)
-------------
-----------
317 306
At 31 December 2010
Charge for the year
178 694
Disposals (29 157)
3 133
Reclassifications
-----------
469 976
-----------
At 31 December 2011
649 931
77 024
256 817
320 456
(10 640) (54 967)
- (3 133)
------------
912 287
------------
------------
323 201
------------
69
224
1 044 330
756 191
- (94 764)
-
-
-------------
------------
1 705 757
293
-------------
------------
Net book amount
At 1 January 2010
Net book amount
At 31 December 2010
Net book amount
At 31 December 2011
299 133
========
98 610
========
472 946
========
2 711 698
========
3 582 387
=========
400 293
========
143 095
========
739 574 2 414 931
========
========
3 697 893
=========
1 054 295 1 443 314
========
========
1 566 414
========
2 737 959
========
6 801 982
=========
The land and buildings were valued by professional valuers as at 31 December 2011 for year end purposes
and the open market value was US$2 730 000. The Group has four properties which are encumbered by the
Reserve Bank of Zimbabwe.
All liabilities in relation to the encumbrances have already been discharged and the Group is in the process of
cancelling these mortgage bonds and it is the Group’s firm belief that the bonds will be cancelled.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
65
24. INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Group’s interest rate risk exposure on assets and liabilities. The financial assets
and liabilities are categorised by the earlier of contractual repricing or maturity dates.
24.1 Total position
At 31 December 2011
Assets
Cash and cash
GROUP
Up to 1
1 month
3 months
1 year to Non-interest
month to 3 months
to 1 year
5 year
bearing
US$
US$
US$
US$
US$
Total
US$
equivalents
32 265 953
-
-
Financial assets at fair value
through profit and loss 10 770 543 10 150 024
3 664 688
-
-
-
-
32 265 953
24 585 255
Loans, advances and
other assets
61 611 338 10 195 322
3 590 479 17 338 815
7 066 111
99 802 065
Quoted and other investments
Investment properties
Property and equipment
Investment in associate
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
309 028
309 028
2 510 000
2 510 000
6 801 982
6 801 982
591 667
591 667
Deferred tax assets
-
--------------- -------------- --------------
-
-
421 383
------------- ---------------
-
421 383
--------------
104 647 834 20 345 346
--------------- -------------- --------------
7 255 167 17 338 815
17 700 171 167 287 333
--------------
------------- ---------------
Liabilities and equity
Financial liabilities at fair value
through profit and loss 22 407 236
11 666 836
6 074 789
Deposits and other
liabilities
83 016 399
6 060 884
10 000 000
Current tax liabilities
-
-
-
-
-
-
-
40 148 861
3 531 634 102 608 917
1 157 974
1 157 974
Equity
-
--------------- -------------- --------------
-
-
23 371 581
------------- ---------------
-
23 371 581
--------------
105 423 635 17 727 720
16 074 789
--------------- -------------- --------------
------------- ---------------
-
28 061 189 167 287 333
--------------
Interest rate
repricing gap
(775 801)
--------------- -------------- --------------
2 617 626 (8 819 622) 17 338 815
(10 361 018)
------------- ---------------
-
--------------
Cumulative gap
(775 801)
-
(6 977 797) 10 361 018
========== ========== ========= ========= ========== ==========
1 841 825
-
www.nmbz.co.zw
NMBZ Holdings Limited
66
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
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 (Cont’d)
GROUP
Up to 1
1 month
3 months 1 year to Non-interest
month
to 3 months
to 1 year 5 years
bearing
US$
US$
US$
US$
US$
Total
US$
Assets
Cash and cash
equivalents
18 346 939
-
-
Financial assets at fair value
through profit and loss
7 707 188
6 884 042
2 708 362
Loans, advances and
-
-
- 18 346 939
- 17 299 592
other assets
44 658 392
3 450 723
7 396 422
722 100
4 087 760 60 315 397
Investment in associate
Quoted and other investments
Investment properties
Property and equipment
-
-
-
-
-
-
-
-
-
-
-
-
-
--------------
-
--------------- ------------- -----------
-
-
228 556
336 127
228 556
336 127
2 615 000
2 615 000
3 697 893
3 697 893
-------------- --------------
70 712 519
--------------
722 100
10 334 765 10 104 784
-------------- ------------- -----------
10 965 336 102 839 504
-------------- --------------
Liabilities and equity
Financial liabilities at fair value
through profit and loss
8 747 376
8 335 233
94 500
Deposits and other
liabilities
45 431 834
7 240 444 10 000 000
-
-
-
-
-
-
-
-
-
-
- 17 177 109
3 307 057 65 979 335
641 969
207 966
641 969
207 966
Current tax liabilities
Deferred tax liabilities
Equity
Interest rate
repricing gap
Cumulative gap
-
---------------
-
--------------
-
-
------------ -----------
18 833 125 18 833 125
-------------- --------------
54 179 210
---------------
15 575 677 10 094 500
--------------
-
------------ -----------
22 990 117 102 839 504
-------------- --------------
16 533 309
---------------
(5 240 912)
--------------
10 284
722 100
------------ -----------
-
(12 024 781)
-------------- --------------
16 533 309
11 292 397 11 302 681 12 024 781
========== ========== ======== ========
-
========= =========
-
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
67
25. INTEREST RATE REPRICING AND GAP ANALYSIS
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 2011
Assets
Cash and cash
GROUP
Up to 1
1 month
3 months
1 year to Non-interest
month to 3 months
to 1 year
5 years
bearing
US$
US$
US$
US$
US$
Total
US$
equivalents
28 035 809
-
-
Financial assets at fair value
through profit and loss 10 770 543 10 150 024 3 664 688
-
-
-
-
28 035 809
24 585 255
Loans, advances and
other assets
61 174 178 10 195 322
3 590 479 17 338 815
7 066 111
99 364 905
Investment in associate
Quoted and other investments
Investment properties
Property and equipment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
591 667
227 750
591 667
227 750
2 510 000
2 510 000
6 801 982
6 801 982
Deferred tax assets
-
--------------
-
-------------
-
-------------
-
-------------
421 383
--------------
421 383
--------------
99 980 530 20 345 346
-------------
--------------
7 255 167 17 388 815
-------------
-------------
17 618 893 162 538 751
--------------
--------------
Liabilities and equity
Financial liabilities at fair value
through profit and loss 22 407 236
11 521 574
6 074 789
Deposits and other
liabilities
78 980 120
6 060 884
10 000 000
Current tax liabilities
-
-
-
-
-
-
-
40 003 599
3 531 634
98 572 638
1 157 974
1 157 974
Equity
-
--------------
-
------------- --------------
-
-
-------------
23 371 581
--------------
23 371 581
--------------
101 387 356 17 582 458
--------------
16 074 789
------------- --------------
-
-------------
28 061 189 163 105 792
--------------
--------------
Interest rate
repricing gap
Cumulative gap
(1 406 826)
---------------
2 762 888
------------- --------------
(8 819 622) 17 338 815 (10 442 296)
--------------
-------------
(567 041)
---------------
(1 406 826)
(7 463 560)
========== ========= ==========
1 356 062
9 875 255
(567 041)
======== ==========
-
=========
www.nmbz.co.zw
NMBZ Holdings Limited
68
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
25.
INTEREST RATE REPRICING AND GAP ANALYSIS
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 (Cont’d)
At 31 December 2010
GROUP
Up to 1
month to 3 months
1 month 3 months
to 1 year
US$
US$
US$
Assets
1 year to Non-interest
bearing
5 years
US$
US$
Total
US$
Cash and cash
equivalents
Financial assets at fair value
through profit and loss
Loans, advances and
other assets
Investment in associate
Quoted and other investments
Investment properties
Property and equipment
14 435 521
7 707 188
-
-
6 884 042 2 708 362
-
-
- 14 435 521
- 17 299 592
3 450 723 7 396 422
44 274 497
-
-
-
-
-
-
-
-
------------ ------------
--------------
66 417 206 10 334 765 10 104 784
------------ ------------
--------------
-
-
-
-
722 100
-
-
-
-
----------
722 100
----------
228 556
257 255
2 615 000
3 697 893
4 087 760 59 931 502
228 556
257 255
2 615 000
3 697 893
------------- --------------
10 886 464 98 465 319
------------- --------------
Liabilities and equity
Financial liabilities at fair value
through profit and loss
Deposits and other
liabilities
Current tax liabilities
Deferred tax liabilities
Equity
8 747 376
8 171 759
94 500
-
- 17 013 635
7 240 444 10 000 000
43 121 883
-
-
-
-
-
-
-
-
-
--------------
------------- ------------
51 869 259 15 412 203 10 094 500
------------- ------------
--------------
-
-
-
-
-----------
-
-----------
641 969
207 966
3 307 057 63 669 384
641 969
207 966
18 833 125 18 833 125
-------------
-------------
22 990 117 100 366 079
-------------
-------------
Interest rate
repricing gap
Cumulative gap
14 547 947
(5 077 438)
10 284
-------------- -------------- ------------
14 547 947
-----------
9 470 509 9 480 793 10 202 893
========== ========= ======== ========
722 100 (12 103 653) (1 900 760)
-------------
-
========
-------------
(1 900 760)
=========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
69
26. INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Group’s interest rate risk exposure on assets and liabilities denominated in cur-
rencies 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 con-
tractual repricing or maturity dates.
26.1 Other Foreign currencies
At 31 December 2011
GROUP
Up to 1
1 month
month to 3 months
3 months
to 1 year
1 year to Non-interest
bearing
5 years
US$
US$
US$
US$
US$
Total
US$
Assets
4 230 144
-
-
Cash and cash
equivalents
Financial assets at fair value
through profit and loss
Quoted and other investments
Loans, advances and
other assets
Investment properties
Property and equipment
437 160
-
-
------------
4 667 304
------------
Liabilities and equity
-
-
-
-
-
-
-
-
-
-
4 230 144
-
81 278
-
81 278
-
-
-
------------
-
------------
-
-
-
------------
-
------------
-
-
-
------------
-
------------
-
-
-
--------------
81 278
--------------
437 160
-
-
--------------
4 748 582
--------------
Financial liabilities at fair value
through profit and loss
Deferred tax liabilities
Deposits and other
liabilities
Current tax liabilities
Equity
-
-
145 262
-
-
-
-
-
-
-
145 262
-
4 036 279
-
-
-------------
4 036 279
-------------
-
-
-
------------
145 262
------------
-
-
-
------------
-
------------
-
-
-
------------
-
------------
-
-
-
--------------
-
--------------
4 036 279
-
-
-------------
4 181 541
-------------
Interest rate
repricing gap
631 025
=========
Cumulative gap 631 025
=========
(145 262)
========
485 763
========
-
========
485 763
========
-
========
485 763
========
81 278
========
567 041
========
567 041
========
-
========
www.nmbz.co.zw
NMBZ Holdings Limited
70
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
26.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Group’s interest rate risk exposure on assets and liabilities denominated in cur-
rencies 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 con-
tractual repricing or maturity dates.
26.1 Other Foreign currencies (Cont’d)
At 31 December 2010
GROUP
1 month
Up to 1
month to 3 months
3 months
to 1 year
1 year to Non-interest
bearing
5 years
US$
US$
US$
US$
US$
Total
US$
Assets
3 911 418
-
-
Cash and cash
equivalents
Financial assets at fair value
through profit and loss
Quoted and other investments
Loans, advances and
other assets
Investment properties
Property and equipment
383 895
-
-
------------
4 295 313
------------
Liabilities and equity
-
-
-
-
-
-
-
-
-
-
3 911 418
-
78 872
-
78 872
-
-
-
------------
-
------------
-
-
-
-----------
-
-----------
-
-
-
-----------
-
-----------
-
-
-
------------
78 872
------------
383 895
-
-
--------------
4 374 185
--------------
Financial liabilities at fair value
through profit and loss
Deferred tax liabilities
Deposits and other
liabilities
Current tax liabilities
Equity
-
-
163 474
-
-
-
-
-
-
-
163 474
-
2 309 951
-
-
------------
2 309 951
------------
-
-
-
------------
163 474
------------
-
-
-
-----------
-
-----------
-
-
-
------------
-
------------
-
-
-
------------
-
------------
2 309 951
-
-
--------------
2 473 425
--------------
Interest rate
repricing gap
1 985 362 (163 474)
========
========
1 821 888
Cumulative gap 1 985 362
========
========
-
=======
1 821 888
=======
-
========
1 821 888
========
78 872
========
1 900 760
========
1 900 760
=========
-
=========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
71
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 2011
GROUP
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
Assets
28 035 808
99 364 906
591 667
Cash and cash
equivalents
Financial assets at fair value
through profit and loss 24 585 255
Loans,advances and
other assets
Investment in associate
Quoted and other
227 750
investments
Investment properties
2 510 000
Property and equipment 6 801 982
421 383
Deferred tax assets
--------------
162 538 751
--------------
Liabilities and equity
Financial liabilities at fair value
through profit and loss 40 003 598
Deferred tax liabilities
-
Deposits and other
liabilities
Current tax liabilities
Equity
98 572 639
1 157 974
2 708 277
(5 017)
1 504 542
22 343
32 265 953
-
-
-
-
24 585 255
329 273
-
7 455
-
95 045
-
5 386
-
99 802 065
591 667
-
-
-
-
------------
3 037 550
------------
-
-
-
-
----------
2 438
----------
81 278
-
-
-
------------
1 680 865
------------
-
-
-
-
-----------
309 028
2 510 000
6 801 982
421 383
---------------
27 729 167 287 333
----------- ==========
145 262
-
-
-
-
- - -
40 148 860
-
17 830 1 774 705 17 013 102 608 918
2 226 732
- - - 1 157 974
-
23 371 581
-
-
------------
--------------
----------
2 371 994 17 830 1 774 705
17 013 167 287 333
------------ ----------- ==========
----------
------------
-
------------ -----------
-
23 371 581
--------------
163 105 792
--------------
Net foreign exchange
position
(567 041)
=========
665 556
========
(15 392)
=======
(93 840) 10 716
======== ========
www.nmbz.co.zw
NMBZ Holdings Limited
72
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
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
GROUP
Assets
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
14 435 521
Cash and cash
equivalents
Financial assets at fair value
through profit and loss 17 299 592
Loans,advances and
other assets
Investment in associate
Quoted and other
257 255
investments
Investment properties
2 615 000
Property and equipment 3 697 893
--------------
98 465 319
--------------
59 931 502
228 556
2 573 026
125 456
1 136 318
76 618
18 346 939
-
381 402
-
-
-
-
------------
2 954 428
------------
-
697
-
-
525
-
-
17 299 592
1 271
-
60 315 397
228 556
-
-
-
----------
126 153
----------
78 872
-
-
------------
1 215 715
------------
-
-
-
----------
336 127
2 615 000
3 697 893
--------------
77 889 102 839 504
---------- ==========
Liabilities and equity
Financial liabilities at fair value
through profit and loss 17 013 635
Deferred tax liabilities
207 966
Deposits and other
liabilities
Current tax liabilities
Equity
63 669 384
641 969
18 833 125
--------------
100 366 079
--------------
163 474
-
1 281 077
-
-
-----------
1 444 551
-----------
- -
-
- - -
17 177 109
207 966
41 453 924 087
- -
-
----------
------------
41 453 924 087
----------
------------
- -
----------
63 334
65 979 335
- 641 969
18 833 125
--------------
63 334 102 839 504
---------- ==========
Net foreign exchange
position
(1 900 760)
=========
1 509 877
========
84 700 291 628
=======
========
14 555
========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
73
28. CONTINGENT LIABILITIES
GROUP
2011
US$
2010
US$
Guarantees
6 374 815
5 002 123
Commitments to lend
20 385 351
13 417 179
At 31 December
--------------
26 760 166
=========
-------------
18 419 302
=========
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 state-
ment 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. Guar-
antees carry the same credit risk as loans.
Commitments to lend represent contractual commitments to advance loans and revolving credits. Commit-
ments have fixed expiry dates and may expire without being drawn upon, hence total contract amounts do
not necessarily represent future cash requirements.
29. CAPITAL COMMITMENTS
GROUP
Capital expenditure contracted for
2011
US$
45 107
2010
US$
-
Capital expenditure authorised but not yet contracted for
6 908 068
2 411 250
At 31 December
------------
6 953 175
========
------------
2 411 250
========
Capital commitments will be financed from the Group’s own resources.
30.
OPERATING LEASE COMMITMENTS
GROUP
2011
US$
2010
US$
Lease commitments
4 726 271
2 658 249
Up to 1 year
1 – 5 years
945 254
3 781 017
531 650
2 126 599
Lease commitments relate to future rental commitments up to the expiry of the lease agreements.
www.nmbz.co.zw
NMBZ Holdings Limited
74
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
31. RELATED PARTIES
As required by IAS 24, Related Parties Disclosures, the Board’s view is that non-executive and execu-
tive directors constitute the key management of the Bank. Accordingly, key management remuneration is
disclosed below.
31.1 Compensation of key management personnel of the Bank
GROUP
Short – term employee benefits
Contribution to pension funds
2011
US$
1 437 437
69 193
------------
1 506 630
========
2010
US$
569 162
18 443
----------
587 605
=======
31.2 Key management interest in an employee share options
At 31 December 2011, key management held no options to purchase ordinary shares of the Company.
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).
GROUP
2011
US$
Non - executive directors
Executive directors
Officers (Note 17.6)
Directors’ companies
Officers’ companies
Intra group loans
Fair value adjustment
2010
US$
-
140 683
847 844
115 772
-
-
26 848
176 832
1 141 375
892 862
-
-
------------
2 237 917
------------
1 104 299
(86 152) (61 623)
------------
1 042 676
========
2 151 765
========
------------
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
75
31.4 Other related party disclosures
Entities with significant
influence over the Group
2011
2010
31.5 BORROWING POWERS
Amounts owed by
related parties
US$
2 151 765
1 042 676
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.
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
2011.
32.2 Expense recognised in profit or loss
GROUP
Defined Contribution Plan - NSSA
Defined Contribution Plan – NMB Bank Pension Fund
2011
US$
74 255
376 174
----------
450 429
=======
2010
US$
101 441
54 241
---------
155 682
======
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.
www.nmbz.co.zw
NMBZ Holdings Limited
76
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
32.3 Employee Share Option Scheme (Cont’d)
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.
Outstanding as at 1 January
Lapsed
Issued
Exercised
Outstanding as at 31 December
GROUP and COMPANY
2011
2010
No.
WAEP$
No.
WAEP$
000’s
9 072
-
-
-
--------
9 072
--------
0.005
-
-
-
-
000’s
12 159
-
-
(3 087)*
----------
9 072
----------
0.005
-
-
0.005
0.005
*No share options were exercised during the year. The weighted average share price at the date of exer-
cise for the options exercised was US$0.01 in 2010.
Terms of options outstanding at 31 December 2011
GROUP & COMPANY
Expiry date
Exercise price
5 September 2012
7 January 2013
12 March 2013
US$
nil
nil
nil
2011
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 con-
tribution 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$74 255 (2010 – US$101 441).
32.5 Number of employees
The total number of employees of the Group at 31 December 2011 was 301 (2010– 258).
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
77
33. EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States
dollars at year end:
31 December 2011
31 December 2010
Mid - rate
Mid - rate
US$
1.5416
8.1852
1.2944
7.5301
US$
1.5442
6.6249
1.3305
6.4570
British Sterling
South African Rand
European Euro
Botswana Pula
GBP
ZAR
EUR
BWP
34. RISK MANAGEMENT
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk
management framework. The Board has established the Board Asset and Liability Management Com-
mittee (ALCO) and Board Risk Committee, which are responsible for defining the Bank’s risk universe,
developing policies and monitoring implementation. The Bank has a Risk Management department, which
reports to the Managing Director and is responsible for the management of the bank’s overall risk universe.
The Bank is working towards full implementation of Basel II requirements as set by the Reserve Bank of
Zimbabwe.
Risk management is linked logically from the level of individual transactions to the Bank level. Risk man-
agement activities broadly take place simultaneously at the following different hierarchy levels:
a) Strategic Level: This involves risk management functions performed by senior management and
the board of directors. It includes the definition of risk, ascertaining the Bank’s risk appetite, formulat-
ing strategy and policy for managing risk and establishes adequate systems and controls to ensure
overall risk remains within acceptable levels and is adequately compensated.
b) Macro Level: It encompasses risk management within a business area or across business lines.
These risk management functions are performed by middle management.
c) Micro Level: This involves “On-the-line” risk management where risks are actually created.
These are the risk management activities performed by individuals who assume risk on behalf of the
organization such as Treasury Front Office, Corporate Banking, Retail banking e.t.c. The risk manage-
ment in these areas is confined to operational procedures set by management.
Risk management is premised on four (4) mutually reinforcing pillars, namely:
a) adequate board and senior management oversight;
b) adequate strategy, policies, procedures and limits;
c) adequate risk identification, measurement, monitoring and information systems; and
d) comprehensive internal controls and independent reviews.
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 with specific credit approval limits. The
Credit Risk Management department does the initial review of all applications before passing them on to
the Executive Credit Committee and finally Board Credit Committee depending on the loan amount. The
bank has in place a Board Loans Review Committee responsible for reviewing the quality of the loan book.
www.nmbz.co.zw
NMBZ Holdings Limited
78
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
34.1 Credit risk (Cont’d)
The Credit Risk Management department is responsible for implementing the group’s credit risk policies
and standards and this includes:
• Formulating credit policies in consultation with business units, covering collateral requirements, credit
assessment, risk grading and reporting, documentary and legal procedures, and compliance with regu-
latory and statutory requirements ;
• Establishing the authorization structure for the approval and renewal of credit facilities. Facilities
require authorization by the Risk Management Committee, Executive Committee or the Board Credit
Committee depending on amount as per set limits;
• The Credit Risk Management department assesses all credit exposures in excess of designated lim-
its, 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 grading as per the RBZ requirement in order to categorize expo-
sures according to the degree of risk of financial loss faced and to focus management on the attendant
risks.
• Reviewing compliance of business units with agreed exposure limits, including those for selected
industries; and
• Providing advice, guidance and specialist skills to business units to promote best practice throughout
the Group in the management of credit risk.
The table below shows the maximum exposure to credit for the components of the 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
GROUP
Note
2011
2010
US$
US$
28 669 484 13 042 536
14 24 585 255 17 299 592
17 92 735 953 56 227 637
-------------- -------------
145 990 692 86 569 765
-------------- -------------
28
6 374 815
5 002 123
28 20 385 351 13 417 179
------------- -------------
26 760 166 18 419 302
------------- -------------
172 750 858 104 989 067
========= =========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
79
34.1.2 Maximum exposure to credit risk without taking account of any collateral (Cont’d)
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.
34.1.3 Risk concentrations of maximum exposure to credit risk
Industrials
Agriculture and horticulture
Conglomerates
Services
Mining
Food and beverages
Individuals
31 December
31 December
2011
Gross
Maximum
Exposure
US$
50 988 641
6 526 499
222 088
12 800 879
2 449 213
5 747 287
18 403 441
--------------
97 138 048
2010
Gross
Maximum
Exposure
US$
30 158 132
5 079 399
3 151 309
8 876 982
1 120 858
2 153 130
7 373 779
--------------
57 913 589
Provision for impairment losses on loans and advances (3 354 088)
(1 057 977)
Net exposure
--------------
---------------
93 783 960
56 855 612
==========
=========
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 Bank at the reporting
date is US$ 67 919 958 (2010 –US$38 647 557).
www.nmbz.co.zw
NMBZ Holdings Limited
80
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
34.1.5 Credit quality per sector
At 31 December 2011
Grade B
Grade A
Special
Grade C
Grade D
Grade E
Pass
Mention Substandard
Doubtful
US$
US$
US$
US$
Loss
US$
Total
US$
Industrials
38 141 089
6 244 589
1 109 211
2 833 817
2 659 935
50 988 641
Agriculture and horticulture
3 558 504
Conglomerates
222 088
-
-
-
-
2 967 995
-
-
-
6 526 499
222 088
Services
Mining
10 269 476
2 097 675
143 821
282 572
7 335
12 800 879
Food and beverages
1 395 821
4 332 908
2 430 446
-
-
-
18 767
18 558
-
-
2 449 213
5 747 287
Individuals
17 925 638
225 376
51 495
191 721
9 211
18 403 441
--------------
------------
------------
------------
------------
-------------
Total
73 943 062 12 900 548
1 304 527
6 313 430
2 676 481
97 138 048
========= =========
========
========
========
=========
At 31 December 2010
Grade B
Grade A
Special Grade C
Grade D
Grade E
Pass
Mention Substandard
Doubtful
US$
US$
US$
US$
Loss
US$
Total
US$
Industrials
10 571 086 18 388 454
931 200
267 392
Agriculture and horticulture
2 278 313
2 801 086
Conglomerates
3 151 309
-
-
-
-
-
-
-
-
30 158 132
5 079 399
3 151 309
Services
Mining
Food and beverages
1 442 980
2 928 403
903 470
3 444 849
157 280
8 876 982
- 1 102 811
-
2 153 130
-
-
18 047
-
-
-
1 120 858
2 153 130
Individuals
1 947 645
5 209 112
87 189
122 729
7 104
7 373 779
-------------
-------------
------------
------------
----------
-------------
Total
19 391 333 32 582 996
1 921 859
3 853 017
164 384
57 913 589
========= =========
========
========
=======
=========
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
81
34.2 Market risk
This is the exposure of the Bank’s on and off balace sheet positions to adverse movement in market prices
resulting in a loss in earnings and capital. The market prices will range from money market (interest rate risk),
foreign exchange and equity markets in which the bank operates. The Bank has in place a Management
Asset and Liability Committee (ALCO) which monitors market risk and recommends the appropriate levels to
which the bank should be exposed at any time. Net Interest Margin is the primary measure of interest rate
risk, supported by periodic stress tests to assess the bank’s ability to withstand stressed market conditions.
On foreign exchange risk, the bank monitors currency mismatches and make adjustments depending on
exchange rate movement forecast. The mismatches are also contained within 10% of the Bank’s capital
position
ALCO meets on a monthly basis and operates within the prudential guidelines and policies established by
the Board ALCO. The board ALCO is responsible for setting exposure thresholds and limits, and meets on
a quarterly basis.
The following table demonstrates the sensitivity to a reasonable change in interest rates, with all other
variables held constant, of the Bank’s statement of comprehensive income.
The sensitivity of the statement of comprehensive income is the effect of the assumed changes in interest
rates on the profit or loss for the year, based on the variable and fixed interest rate financial assets and
liabilities held at 31 December.
Sensitivity of net interest income
At 31 December 2011
Currency
interest rates
months
months
to 1 year
5 years
Increase in
0 to 1
1 to 3
3months
1 year to
US$
US$
US$
US$
Total
US$
USD
USD
USD
USD
USD
USD
%
5
3
1
-1
-3
-5
1 164 136
155 079
(432 006)
908 094
1 795 303
(698 481)
93 048
(259 203)
544 857
(319 779)
(232 827) 31 016
(86 401)
181 619
(106 593)
232 827
698 481
(31 016)
(93 048)
86 401
(181 619)
106 593
259 203
(544 857)
319 779
(1 164 136)
(155 079)
432 006
(908 094) (1 795 303)
Sensitivity of net interest income
At 31 December 2010
Currency
interest rates
months
months
to 1 year
5 years
Increase in
0 to 1
1 to 3
3months
1 year to
US$
US$
US$
US$
Total
US$
USD
USD
USD
USD
USD
USD
%
+5
+3
+1
-1
-3
-5
1 025 954
(265 046)
615 573
(159 028)
205 191
(53 009)
(205 191)
(615 573)
(1 025 954)
53 009
159 028
265 046
(4 758)
(2 855)
(952)
952
2 855
4 758
37 188
22 313
793 338
476 003
7 438
158 668
(7 438)
(158 668)
(22 313)
(476 003)
(37 188)
(793 338)
www.nmbz.co.zw
NMBZ Holdings Limited
82
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
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 re-
flects a potential net reduction in the statement of comprehensive income or equity while a positive amount
reflects a net potential increase.
At 31 December 2011
% Change in
Effect on profit
currency
rate
+5
+3
+1
-1
-3
-5
before tax
US$
Effect on
equity
US$
(33 278)
(24 709)
(19 967)
(6 656)
6 656
19 967
33 278
(14 825)
(4 942)
4 942
14 825
24 709
% Change in
Effect on profit
currency
rate
before tax
US$
Effect on
equity
US$
+5
+3
+1
-1
-3
-5
91 094
54 657
18 219
(18 219)
(54 657)
(91 094)
67 638
40 583
13 528
(13 528)
(40 583)
(67 638)
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
At 31 December 2010
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
83
34.4 Liquidity risk
Liquidity risk is the risk of financial loss arising from the inability of the Bank to fund asset increases or
meet obligations as they fall due without incurring unacceptable costs or losses. The bank identifies this
risk through maturity profiling of assets and liabilities and assessment of expected cashflows and the
availability of collateral which could be used if additional funding is required.
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 the Board ALCO.
The key measure used by the bank for managing liquidity risk is the ratio of net liquid assets to deposits
from customers. The bank also actively monitors its loans to deposit ratio against a set threshold in a
bid to monitor and limit funding risk. Liquidity risk is monitored through a daily treasury strategy meeting.
This is augmented by a monthly management ALCO and a quarterly board 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 Bank for managing liquidity risk is the ratio of net liquid assets to deposits
from customers. The Bank monitors its liquidity ratio in compliance with Banking Regulations to ensure that
it is not less than 25% 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 2011
On
Demand
US$
0 to 1
months
US$
1 to 3 3 months
to 1 year
months
US$
US$
1 year to
to 5 years
US$
Total
US$
Guarantees
Commitments to lend
804 213
443 734
222 811
2 141 902
- 17 489 137
------------
----------
-------------
804 213 17 711 948
2 585 636
======= ========= ========
-
4 904 057
-
754 312
------------
------------
5 658 369
-
======== ========
6 374 815
20 385 351
-------------
26 760 166
=========
At 31 December 2010
On
Demand
US$
0 to 1
months
US$
1 to 3 3 months
to 1 year
months
US$
US$
1 year to
to 5 years
US$
Total
US$
Guarantees
Commitments to lend
592 918
321 236
1 641 889
3 957 730
-------------
--------------
4 278 966
2 234 807
======== ========
5 002 123
943 907
13 417 179
7 817 560
--------------
-------------
18 419 302
8 761 467
======== ======== ======== =========
3 144 062
-
-------------
3 144 062
-
-
-------------
-
The Group expects that not all of the contingent liabilities or commitments will be drawn before expiry of
the commitments.
www.nmbz.co.zw
NMBZ Holdings Limited
84
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
34.5 Operational risk
This risk is inherent in all business activities and is the risk of loss arising from inadequate or failed internal
processes, people, systems or from external events. The Bank utilises monthly Key Risk Indicators to
monitor operational risk in all units. Further to this, the Bank has an elaborate Operational Loss reporting
system in which all incidents with a material impact on the well-being of the Bank are reported to risk man-
agement. The risk department conducts periodic risk assessments on all the units within the Bank aimed
at identifying the top risks and ways to minimise their impact. There is a Board Risk Committee whose
function is to ensure that this risk is minimized. The Risk Committee with the assistance of the internal
audit function and the Risk Management department 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. Compliance risk is the risk arising from non – compliance with laws and regulations. To
manage this risk permanent relationships are maintained with firms of legal practitioners and access to le-
gal advice is readily available to all departments. The Bank has an independent compliance function which
is responsible for identifying and monitoring all compliance issues and ensures the Bank complies with all
regulatory and statutory requirements.
34.7 Reputational risk
Reputation risk is the risk of loss of business as a result of negative publicity or negative perceptions by
the market with regards to the way the Bank conducts its business. To manage this risk, the Bank strictly
monitors customers’ complaints, continuously train staff at all levels, conducts market surveys and periodic
reviews of business practices through its internal audit department. The directors are satisfied with the risk
management processes in the bank as these have contributed to the minimization of losses arising from
risky exposures.
34.8 Strategic risk
This refers to current and prospective impact on a Bank’s earnings and capital arising from adverse busi-
ness decisions or implementing strategies that are not consistent with the internal and external environ-
ment. To manage this risk, the Bank always has a strategic plan that is adopted by the board of directors.
Further, attainment of strategic objectives by the various departments is monitored periodically at manage-
ment level. Further, there is an ALCO, Finance and Strategy Committee at board level responsible for
monitoring overall progress towards attaining strategic objectives for the Bank.
The directors are satisfied with the risk management processes in the Bank as these have contributed to
the minimisation of losses arising from risky exposures.
34.9 Regulatory Compliance
There were no instances of regulatory non – compliance in the period under review. The Bank remains
committed to complying with and adhering to all regulatory requirements.
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 busi-
ness undertaken by the subsidiary.
34.10.2 Banking Subsidiary
The primary objective of the Bank’s capital management is to ensure that the Bank complies with the RBZ
requirements. In implementing the current capital requirements, the RBZ requires the 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 earn-
ings (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, revalua-
tion reserves and portfolio provisions.
NMBZ Holdings Limited
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
85
34.10.2 Banking Subsidiary (Cont’d)
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 comprise 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$12.5 million.
The Bank’s regulatory capital position at 31 December 2011
was as follows:
Share capital
Share premium
Retained earnings
31 December
31 December
2011
US$
2010
US$
16 501
13 690 931
6 116 397
--------------
16 501
13 690 931
1 976 437
--------------
19 823 829
15 683 869
Less: capital allocated for market and operational risk
(571 954)
(1 580 551)
Credit to insiders
Tier 1 capital
Tier 2 capital (subject to limit as per Banking Regulations)
(892 862)
--------------
(115 772)
-------------
18 359 013
1 023 431
13 987 546
883 414
Subordinated debt
-
Regulatory reserve (limited to 1.25% of risk weighted assets)
1 023 431
Portfolio provisions (limited to 1.25% of risk weighted assets)
-
-
883 414
-
Total Tier 1 & 2 capital
Tier 3 capital (sum of market and operational risk capital)
Total capital base
Total risk weighted assets
Tier 1 ratio
Tier 2 ratio
Tier 3 ratio
Total capital adequacy ratio
RBZ minimum required
--------------
--------------
19 382 444
571 954
---------------
19 954 398
==========
14 870 960
1 580 551
-------------
16 451 511
=========
138 868 906
==========
94 154 367
=========
13.22%
0.74%
0.41%
14.37%
10.00%
14.9%
0.9%
1.7%
17.5%
10.0%
www.nmbz.co.zw
NMBZ Holdings Limited
86
NOTES TO THE FINANCIAL STATEMENTS (Cont’d)
for the year ended 31 December 2011
35. EVENTS AFTER REPORTING DATE
The Reserve Bank of Zimbabwe issued a statement on 16 February 2012 in which it stated that the Gov-
ernment of Zimbabwe would be issuing tradable and interest bearing instruments through the Reserve
Bank of Zimbabwe, in lieu of the statutory reserve balances owed to financial institutions. The instruments,
which will carry liquid asset status, will be issued effective 1 January 2012 as follows:
% of Total
Tenor
Interest Rate
30%
30%
40%
2 years
3 years
4 years
2.5% p.a
3.0% p.a
3.5% p.a
Financial institutions that are not willing to partake in the above would be accorded an option to take up a
15 year bond at an interest rate of 3% per annum.
The Bank awaits the receipt of the instruments at which point the maturity profile of the amount included on
note 17 would be re-profiled.
NMBZ Holdings Limited
HISTORICAL FIVE YEAR FINANCIAL SUMMARY
87
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Interest from lending activities
Interest from investing activities
Interest expense
2011
US$
2010
US$
2009
US$
2008
US$
2007
US$
Restated
14 222 680
7 024 287
652 267
-
-
5 936 086
--------------
2 990 349
--------------
874 455
-
----------- ----------
-
---------
20 158 766
10 014 636
1 526 722
-
-
(8 257 254) (3 143 168) (723 626)
--------------
--------------
-
----------- ----------
-
---------
Net interest income
11 901 512
6 871 468
803 096
Net foreign exchange gains
1 289 729
1 055 307
379 236
Share of profit/(loss) associate
113 573
(21 444)
-
-
-
-
-
-
-
Non-interest income
12 164 691
--------------
9 374 796
--------------
7 236 949
-
------------ ----------
-
---------
Net operating income
25 469 505
17 280 127
8 419 281
Operating expenditure
(16 979 741)
(15 365 768) (7 385 212)
-
-
-
-
Impairment losses on loans and advances (2 296 111)
--------------
(971 803)
--------------
(92 887)
-
------------ ----------
-
---------
Profit before taxation
6 193 653
942 556
941 182
Financial institutions levy
-
-
(44 661)
-
-
-
-
Taxation
(1 655 197)
--------------
(250 322)
-------------- ------------- ---------- -----------
1 381 766
-
-
Profit after taxation
4 538 456
692 234
2 278 287
-
-
Other comprehensive income/(loss)
for the year, net of tax
Total comprehensive income for the year
-
--------------
-
--------------
-
-
------------ ---------- ------------
-
4 538 456
-
========== ========== ======== ======= =======
2 278 287
692 234
-
www.nmbz.co.zw
NMBZ Holdings Limited
88
HISTORICAL FIVE YEAR FINANCIAL SUMMARY (Cont’d)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Deposits and other liabilities
102 608 918
65 979 335
23 649 725
Financial liabilities at fair value through
EQUITY
Share capital
Reserves
Equity
LIABILITIES
profit and loss
Current tax liabilities
Deferred tax liabilities
Capital employed
ASSETS
2011
US$
2010
US$
2009
US$
2008
US$
2007
US$
Restated
78 598
78 598
-
-
-
23 292 983
---------------
18 754 527
-------------
8 568 005
------------
-
---------
-
---------
23 371 581
18 833 125
8 568 005
40 148 860
17 177 109
6 444 932
1 157 974
641 969
299 162
-
---------------
167 287 333
==========
207 966
--------------
746 107
--------------
-
---------
-
---------
102 839 504
=========
39 707 931
========
-
-
====== ======
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cash and cash equivalents
32 265 953
18 346 939
12 203 181
Loans, advances and other assets
99 802 065
60 315 397
13 004 099
Financial assets at fair value through
profit and loss
Quoted and other investments
Trade investments
Investment in associate
Investment properties
Property and equipment
Deferred tax assets
Employment of capital
24 585 255
17 299 592
7 135 023
118 048
190 980
591 667
2 510 000
6 801 982
134 461
201 666
228 556
455 638
108 003
-
2 615 000
3 219 600
3 697 893
3 582 387
421 383
---------------
-
--------------
-
--------------
-
---------
-
---------
167 287 333
==========
102 839 504
=========
39 707 931
========
-
-
====== ======
NMBZ Holdings Limited
HISTORICAL FIVE YEAR FINANCIAL SUMMARY (Cont’d)
89
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
2011
2010
2009
2008
2007
CLOSING NUMBER OF SHARES
2 807 107 289 2 807 107 289 1 641 225 424* 1 608 159 059 1 569 339 001
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
0.83
0.16
-
-
7.19
0.67
0.03
-
-
37
0.52
0.14
-
-
5.71
Closing price per share (US cents)
1.15
1.1
0.80
Market capitalisation (US$)
32 281 734
30 878 180
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 (%)
19
3
76
48
27.1
3.7
0.70
95
46
26.6
26
6
89
79
(142)
-
-
1.
The return on shareholders’ funds is based on shareholders’ funds at the end of the year.
2.
Includes charge for impairment of losses on loans and advances.
* excludes own equity instruments amounting to 1 028 172 shares.
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www.nmbz.co.zw
NMBZ Holdings Limited
90
NOTICE TO MEMBERS
Notice is hereby given that the 17th Annual General Meeting of Members of NMBZ Holdings Limited will be held
at the Registered Office of the Company at 4th Floor, Unity Court, Corner 1st Street/ Kwame Nkrumah Avenue,
Harare on Tuesday 19 June 2012 at 10:00 hours for the following purposes:
ORDINARY BUSINESS
1.
2.
3.
4.
To receive and adopt the Financial Statements for the year ended 31 December 2011, together with the reports
of the Directors and Auditors thereon.
To appoint Directors. In accordance with the Articles of Association, Mr F. Zimuto, who was appointed subsequentto
the last Annual General Meeting (AGM) will retire at the forthcoming AGM and Mr. T. N. Mundawarara, Mr. J.
Chigwedere and Mr. A. M. T. Mutsonziwa retire by rotation. Being eligible, all the retiring directors offer themselves
for re-election.
To appoint Auditors for 2012.
To approve Messrs Ernst & Young’s remuneration for the year ended 31 December 2011.
SPECIAL BUSINESS
SPECIAL RESOLUTIONS
5.
6.
To consider and if deemed appropriate, to approve with or without amendment:
“That the 2012 Executive Share Option Scheme (“the Scheme”), setting aside for the Scheme ordinary shares
not exceeding 10% of the issued ordinary share capital of the Company at the time of implementing the scheme,
be and is hereby approved and adopted by the Members of the Company, subject to the Zimbabwe Stock
Exchange Listing Rules.”
To consider, and if deemed fit, to pass, with or without modification, the resolution set out below:
“That the Company, being duly authorised thereto by Article 10 of its Articles of Association, may undertake
general repurchases by way of open market transactions on the Zimbabwe Stock Exchange (“ZSE”) of any of its
own ordinary shares in such manner or on such terms as the directors may from time to time determine provided
that:
i. the maximum number of shares authorized to be acquired is no more than 10% of the Company’s ordinary
issued share capital.
ii. for each share, the minimum price shall not be lower than the nominal value of the Company’s shares and the
maximum price that may be paid is 5% above the weighted average market price for the ordinary shares in the
Company as derived from the Zimbabwe Stock Exchange (ZSE) Daily Price Sheet for the five business days
immediately preceding the date on which such ordinary shares are contracted to be purchased.
iii. the authority in terms of this special resolution shall unless renewed prior to such time, expire on the first
anniversary of this resolution or at the conclusion of the next Annual General Meeting of the Company, whichever
is later, save that the Company, may before such expiry, enter into a contract or contracts to purchase its
ordinary shares which would or might be completed wholly or partly after the expiry and may purchase its
ordinary shares in pursuance of such contract or contracts.’’
Notes:
1.
A Special Resolution is required to be passed by a majority of seventy five per cent of those present
and voting (including proxy votes), representing not less than twenty five per cent of the total number
of votes in the Company.
2.
3.
In terms of resolution 6, the directors are seeking authority to allow the use of the Company’s available
cash resources to purchase its own shares in the market in terms of the Companies Act and the
regulations of the ZSE. The directors will only exercise the authority if they believe that to do so would
be in the best interests of shareholders generally. In exercising this authority, the directors will duly take
into account following such repurchase for the next 12 months, the ability of the Company to pay its
debts in the ordinary course of business, the maintenance of an excess of assets over liabilities, and
for the Company and Group, the adequacy of ordinary capital and reserves as well as working capital.
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 the Registered Office of the company at least 48 hours before the commencement
of the meeting.
By Order of the Board
V. Mutandwa
Company Secretary
24 May 2012
EXPLANATIONS REGARDING THE NOTICE OF THE ANNUAL GENERAL MEETING
91
NMBZ Holdings Limited
Resolution 1
The Directors of the Company are obliged to present their Report and Accounts to shareholders of the Company at
an Annual General Meeting. This is a standard form of resolution common to all Annual General Meetings.
Resolution 2
The Company’s Articles of Association require a third of the Directors to stand down at each Annual General
Meeting and if they are eligible, they may offer themselves for re-election. The Directors standing down are Messrs
F. Zimuto, T. N. Mundawarara, J. Chigwedere and A. M. T. Mutsonziwa. All the retiring directors being eligible offer
themselves for re-election. Information about these directors is shown below:
Francis Zimuto - Certified Associate of the Institute of Bankers in South Africa, Associate of
the Institute of Bankers in Zimbabwe
Francis Zimuto (49) is a founding executive director of NMB Bank Limited with a wide range of experience at all
levels of retail and merchant banking. Francis was instrumental in the listing of NMBZ Holdings Limited on both the
Zimbabwe and the London Stock Exchanges. Francis resigned from the NMBZ Holdings board in 2004. He rejoined
the NMBZ Holdings Limited board in 2011.
Tendayi Nelson Mundawarara - MBF (Banking and Finance), (Milan, Italy), MPIA (Public and
International Affairs), (University of Pittsburgh), BA (Political Science), (George Washington
University)
Tendayi Nelson Mundawarara (53) is a banker by profession. He joined the NMBZ Holdings Limited Group as a
Non-Executive Director in February 2008 and was appointed Chairman in August 2010. Previously, he headed
the Corporate Banking Divisions of ZB Bank and Leasing Company of Zimbabwe, before heading UKI Limited,
an unquoted public investment company with interests in financial services, insurance, communications and
manufacturing. Tendayi was instrumental in the establishment of a stock broking company, UKI Securities (now
Genesis Securities), which he chaired; he also chaired the Boards of Fidelity Life Asset Management Company
(FLAM), Firstel Cellular and Schweppes Zimbabwe Limited, and was a Director of Nicoz Diamond Insurance,
Fidelity Life Assurance, Zimbabwe Insurance Brokers, First Banking Corporation, CFI Holdings, ZIMRE Limited and
CFX Bank. Tendayi is currently Chairman of Willdale Limited.
James Chigwedere - LLB (Leeds), Diploma in Public Administration (Glasgow)
James Chigwedere (79) is a lawyer by profession who has over 50 years’ experience in administration. In 1981 he
joined the Ministry of Home Affairs as the Deputy Registrar General and was subsequently promoted to the position
of Registrar General. He was promoted to become the Deputy Secretary in the Ministry of Home Affairs in 1983. He
left the Ministry of Home Affairs and joined International Trade Meridian (ITM) as the Managing Director and later
became the Executive Chairman. He currently manages his business ventures which include cattle ranching and
construction. James was appointed as a non-executive director of the Group in February 2008.
Arthur Morris Tendayi Mutsonziwa - BL (Hons), LLB (UZ)
Arthur Mutsonziwa (57) is a lawyer by profession, who joined the Group as a Non-Executive Director in 1998. He is a
senior partner at Atherstone & Cook, a firm of legal practitioners, where he specialises in insurance and commercial
law. Arthur is a non-executive director of Associated Newspapers of Zimbabwe (Private) Limited, Ruzawi Schools
(Private) Limited, Tunatemore (Private) Limited, Chairman of the Board of Governors of Ruzawi School and a
member of the Board of Governors and of the Executive Committee of the Peterhouse Group of Schools.
Resolution 3
All public companies are required to appoint Auditors at each Annual General Meeting at which financial statements
are presented, to hold office until the next such meeting in terms of section 150 (2) of the Companies Act [ Chapter
24:03]. This resolution therefore proposes the appointment of auditors in accordance with usual practice and the
Banking Act [Chapter 24:20].
Resolution 4
The remuneration of the auditors is required to be fixed by the Company in a General Meeting in terms of section
150 (6) of the Companies Act [Chapter 24:20]. Accordingly, Members will be requested to approve the remuneration
paid to the external auditors of the Group, Ernst & Young for the year ended 31 December 2011.
Resolution 5 – Special Resolution
The Company proposes the setting up of an Executive Share Option Scheme, not exceeding 10% of the issued
share capital of the company. The Articles of Association of the Company, require that such a scheme be sanctioned
by the Members of the Company through a Special Resolution. The Executive Share Option Scheme document,
detailing the scheme and initialled by the Chairman, will be available for inspection, at the registered office of the
Company, during normal business hours from the date of publication of the notice of the Annual General Meeting.
Resolution 6 – Special Resolution
In terms of this resolution, the Directors are seeking authority to allow the purchase of the Company’s own shares
in the market in terms of the Companies Act and the regulations of the ZSE. The Director’s will only exercise the
authority if they believe that to do so would be in the best interest of shareholders generally. In exercising this
authority, the Directors will duly take into account , following such repurchase for the next 12 months, the ability
of the Company to pay its debts in the ordinary course of business, the maintanace of an excess of assets over
liabilities and, for the Company and Group, the adequacy of ordinary capital and reserves as well as working
capital. The Director’s have no present intention of acquiring the Company’s own shares.
www.nmbz.co.zw NMBZ Holdings Limited
92
SHAREHOLDERS’ ANALYSIS
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
Size of Shareholding
-
-
-
-
-
-
-
-
5 000
10 000
50 000
100 000
500 000
1 000 000
10 000 000
And over
1
5 001
10 001
50 001
100 001
500 001
1 000 001
10 000 001
Total
2011
Number of
Shareholders
2 328
606
708
117
155
29
24
25
---------
3 992
======
2010
Number of
Shareholders
2 485
671
792
124
191
40
35
24
---------
4 362
======
2011
%
58.31
15.18
17.74
2.93
3.88
0.73
0.60
0.63
--------
100
=====
%
56.97
15.38
18.16
2.84
4.38
0.92
0.80
0.55
--------
100
=====
Industry
Shareholders
%
Banks and nominees
Employees
Deceased estates
External companies
Insurance companies
Investment, trusts and property companies
Other corporate holdings
Non-resident individuals
Pension funds
Resident individual/trusts
62
518
3
5
10
404
2
28
12
2 948
-------
3 992
=====
1.55
12.98
0.08
0.13
0.25
10.12
0.05
0.70
0.30
73.84
-------
100
=====
2011
Issued
Shares
3 865 246
4 470 512
14 930 904
8 413 516
33 874 789
21 143 052
83 774 024
2 636 635 246
----------------
2 807 107 289
===========
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
-----------------
2 807 107 289
============
%
0.14
0.16
0.53
0.30
1.21
0.75
2.98
93.93
---------
100
======
%
0.15
0.18
0.60
0.32
1.48
1.00
3.82
92.45
---------
100
======
2011
Shares
438 706 305
41 247 975
10 506 424
559 772 582
589 581 677
962 456 805
8 082
96 684 281
50 435 295
57 707 863
-----------------
2 807 107 289
============
%
15.63
1.47
0.37
19.94
21.00
34.29
-
3.44
1.80
2.06
-------
100
=====
NMBZ Holdings Limited
SHAREHOLDERS’ ANALYSIS (Cont’d)
93
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
Shareholders
16
378
5
5
15
127
29
397
20
%
0.37
8.67
0.11
0.11
0.34
2.91
0.66
9.10
0.46
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
%
0.01
1.48
0.40
38.15
21.06
27.27
0.16
7.11
1.78
3 370
---------
4 362
======
77.27
---------
72 132 368
-----------------
2.58
---------
100
=====
2 807 107 289
===========
100
======
TOP TEN SHAREHOLDERS
1
2
3
Old Mutual Life Assurance Company of Zimbabwe
LES Nominees (Pvt) Ltd
African Century Financial Services Investments LLP*
4 Lalibela Limited
5 Alsace Trust
6 Cornerstone Trust
7
8
9
Wamambo Investments Trust
Drakmore Investments (Private) Limited
Stanbic Nominees(Private) Limited
10 Martcap Investments (Private) Limited
2011
Shares
589 521 823
414 601 550
280 710 729
215 266 942
168 853 795
168 755 799
142 260 092
109 627 112
84 710 850
77 282 178
% of
Total
20.93
14.72
9.97
7.65
6.00
5.99
5.05
3.89
3.01
2.74
*African Century Financial Services Investments LLP also holds its shareholding through LES Nominees (Pvt) Ltd.
1
2
African Century Financial Services Investment LLP
Old Mutual Life Assurance Co Zim Ltd
3 Lalibela Limited
4 Alsace Trust
5 Cornerstone Trust
6
7
8
9
Wamambo Investments Trust
Drakmore Investments (Pvt) Ltd
Martcap Investments (Pvt) Ltd
Elsha Investments (Pvt) Ltd
10 Local Authorities Pension Fund
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
% of
Total
28.21
21.00
7.67
6.01
6.01
5.06
3.90
2.75
1.90
1.55
www.nmbz.co.zw
NMBZ Holdings Limited
94
SHAREHOLDERS’ INFORMATION
MEMBERS’ DIARY
Financial year end
Reports:-
31 December 2011
- Announcement of annual results
29 March 2012
- Annual financial statements
- Annual General Meeting
posted May 2012
19 June 2012
- Announcement of the 2012 half-year results
August 2012
Dividend payments:
- Interim
- Final
n/a
n/a
NMBZ Holdings Limited
SECRETARY AND REGISTERED OFFICE
95
Secretary
V Mutandwa
Registered Offices
4th Floor , Unity Court
Cnr 1st Street/Kwame Nkrumah Avenue
Harare
Zimbabwe
Telephone
Facsimile
+263 4 759651
+263 4 759648
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Auditors
Ernst & Young Chartered Accountants (Zimbabwe)
Angwa City
Julius 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 882068
In UK
Computershare Services PLC
36 St Andrew Square
Edinburgh
EH2 2YB
UK
In UK
Dechert
160 Queen Victoria Street
London
EC4 V4QQ
UK
www.nmbz.co.zw