CONTENTS
Financial Highlights
Group Profile
Chairman’s Statement
Report of the Directors
Statement of Directors’ Responsibility
Report of the Independent Auditors
Consolidated Statements of Comprehensive Income
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Accounting Policies
Notes to the Financial Statements
Historical Five Year Financial Summary
Notice to Members
Explanations regarding the Notice of the Annual General Meeting
Shareholders’ Analysis
Top Ten Shareholders
Members’ Diary
Secretary and Registered Office
2
3
4 - 5
7 - 13
14 - 16
17
19
20
21
22
23 - 36
37 - 80
81 - 83
84
85 - 86
87 - 88
89
90
91
1
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
HIGHLIGHTS
Attributable profit
Basic earnings per share (US cents)
Total deposits
Total equity
Enquiries:
Tel: +263-4-759 651/9
2012
US$
2011
US$
7 570 502
0.27
191 422 066
30 942 083
4 538 456
0.16
139 226 144
23 371 581
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 P Washaya, Managing Director, NMB Bank Limited
benefitw@nmbz.co.zw
Benson Ndachena, Chief Financial Officer, NMBZ Holdings Limited
bensonn@nmbz.co.zw
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
2
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
GROUP PROFILE
for the year ended 31 December 2012
The NMBZ Holdings Group (the Group) comprises the company (NMBZ Holdings Limited) and its subsidiaries, NMB
Bank Limited (the Bank), Stewart Holdings Limited (equity holdings) and a 24.79% shareholding in African Century
Limited (leasing).
The Bank was established in 1993 as a bank incorporated under the Companies Act (Chapter 24:03) and is registered
as a commercial bank in terms of the Banking Act (Chapter 24:20). It operates through a branch network in Harare,
Bulawayo, Mutare and Gweru. The Bank’s branch network is constantly growing to service customers and meet
demands in suitable and convenient locations. Set out below are the Bank’s locations:
Head Office - Unity Court, Corner Kwame Nkrumah Avenue/First Street, Harare
Angwa City - Corner Kwame Nkrumah Avenue/Angwa Street, Harare
Borrowdale - Shops 37 & 38, Sam Levy’s Village, Harare
Eastgate - Shop 24, Eastgate Mall, Corner Sam Nujoma Street/Robert Mugabe Road, Harare
Joina City - Corner Jason Moyo / Innez Terrace, Harare
Msasa - 77 Amby Drive, Harare
Southerton - 7 - 9 Plymouth Road, Harare
Avondale - 20 King George Road, Avondale, Harare
Bulawayo Corporate and Retail Banking - NMB Centre, Corner George Silundika Street/Leopold Takawira Street,
Bulawayo
Mutare - Embassy Building, Corner Aerodrome Road/Second Street, Mutare
Gweru - 36 Robert Mugabe Road, Gweru
The Bank’s ATM network, which accepts VISA cards, covers the following locations:
• Angwa City – Harare
• Borrowdale – Harare
• Card Centre – Harare
• Eastgate – Harare
• Joina City – Harare
• Avondale - Harare
• NMB Centre - Bulawayo
• Msasa - Harare
• Mutare
• Gweru
• Southerton – Harare
3
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 CHAIRMAN’S STATEMENT
for the year ended 31 December 2012
INTRODUCTION
Capital raising initiatives occupied a greater part of the year under review in a bid to meet the Reserve Bank of
Zimbabwe prescribed minimum capital requirement of US$25 million by 31 December 2012 and increases of US$25
million per each half year to 30 June 2014. Subsequent to year end, three strategic foreign investors will invest equity
capital amounting to US$14.8 million and this will bring your Bank into the top tier banks in terms of capitalisation.
GROUP RESULTS
Compliance with International Financial Reporting Standards
The consolidated financial statements of the Group have been prepared in accordance with International Financial
Reporting Standards (IFRS). The financial statements have been prepared in compliance with the Companies Act
(Chapter 24:03) and the Banking Act (Chapter 24:20).
Commentary on operating results
The profit before taxation was US$10 002 224 during the period under review and this gave rise to an attributable
profit of US$7 570 502. Net interest income was US$17 493 781 for the period. Non-interest income amounted to
US$15 609 630 and this was mainly as a result of net commissions and fee income (US$13 016 115).
Operating expenses amounted to US$21 452 714 and these were 26% up on prior year and were driven largely by
administration, depreciation and staff related expenditure.
Impairment losses on loans and advances amounted to US$3 985 062 for the current period from a prior year of
US$2 296 111. This is commensurate with the loans and advances which amounted to US$152 417 375 at 31
December 2012 compared to US$119 596 646 as at 31 December 2011.
On 31 January 2013, the Reserve Bank of Zimbabwe and participating members of the Bankers Association of
Zimbabwe (BAZ) signed a Memorandum of Understanding (MoU) which seeks to establish an understanding on:
1. Bank charges on accounts whose monthly deposits are less than US$800.
2. Interest rates on lending to a maximum of the Bank’s weighted average cost of funds plus a margin of 12.5%.
These measures took effect from 1 February 2013 and going forward these would have a pronounced effect on the
Bank’s profitability.
Dividend
In view of the need to retain cash in the business and to strengthen the statutory capital requirements for the banking
subsidiary, the Board has proposed not to declare a dividend.
Statement of financial position
The Group’s total assets grew by 35% from US$167 287 333 as at 31 December 2011 to US$226 533 682 as at
31 December 2012. The assets comprised mainly loans, advances and other assets (US$146 599 994), investment
securities held to maturity (US$5 501 963), cash and short term funds (US$58 171 045), investment properties
(US$3 115 300), non-current assets held for sale (US$2 225 300) and property and equipment (US$8 187 459).
Gross loans and advances increased by 27% from US$119 596 646 as at 31 December 2011 to US$152 417 375
as at 31 December 2012. The Bank’s liquidity ratio closed the period at 42% and this was above the statutory
requirement of 30% at 31 December 2012.
4
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
CHAIRMAN’S STATEMENT (Cont’d)
for the year ended 31 December 2012
Capital
The banking subsidiary’s capital adequacy ratio at 31 December 2012 calculated in accordance with the guidelines
of the Reserve Bank of Zimbabwe (RBZ) was 15.50% (31 December 2011 – 14.37%). The minimum required by the
RBZ is 12%.
The Group’s equity increased by 32% from US$23 371 581 as at 31 December 2011 to US$ 30 942 083 as at 31
December 2012 as a result of growth in retained earnings.
CORPORATE SOCIAL INVESTMENTS
The Group is committed to playing an active role in the communities it serves. Our community investments are
channelled into education, the disadvantaged, vulnerable groups, protection of the environment, wild life conservation,
the arts and various sporting disciplines. During the year the Group invested US$100 000 in cash and practical
resources for various deserving projects.
CORPORATE DEVELOPMENTS
In line with our corporate strategic thrust of enhancing service delivery and banking convenience to our valued
high net worth individuals and businesses, we successfully launched the Visa International Debit Card, SMS Alerts,
E-Statements, DSTV Payments Real-Time Integration and Real-Time Interface for ZIMRA obligation payments.
OUTLOOK AND STRATEGY
The Group secured lines of credit amounting to US$26 million in the year and these have allowed the Bank to
underwrite more lending business for our clients.
DIRECTORATE
Mr Mainos Mudukuti resigned from the Board on 22 May 2012. I would like to thank Mr Mudukuti for his invaluable
contributions to the Board over the years. There were no other changes to the composition of the Board during the
year under review.
APPRECIATION
I would like to express my gratitude to our valued clients, existing and new shareholders and the Regulatory Authorities
for their support during the period under review. I would also like to record my appreciation to my fellow Board
members, management and staff for their unwavering commitment and sterling dedication which gave rise to the
attainment of these results.
T N MUNDAWARARA
CHAIRMAN
27 March 2013
5
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 6
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 REPORT OF THE DIRECTORS
for the year ended 31 December 2012
We have pleasure in presenting to shareholders our report and the audited financial statements of the Group for the
year ended 31 December 2012.
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$7 570 502 for the
year ended 31 December 2012 (2011 – US$4 538 456).
3. CAPITAL ADEQUACY
As at 31 December 2012, the Bank’s capital adequacy ratio computed under Bank for International Settlements
(BIS) rules was 15.50% (2011 – 14.37 %).
4. DIRECTORATE
4.1 Board of Directors
Holding Company
T N Mundawarara
A M T Mutsonziwa
J A Mushore*
F Zimuto*
B Ndachena*
J T Makoni
B W Madzivire
L Majonga (Ms)
J Chigwedere
J de la Fargue
J Chenevix-Trench
*Executive
(Chairman and Independent Non-executive Director)
(Deputy Chairman and Independent Non-Executive Director)
(Group Chief Executive Officer)
(Deputy Group Chief Executive Officer)
(Chief Financial Officer)
(Non-Executive Director)
(Independent Non-Executive Director)
(Independent Non-Executive Director)
(Independent Non-Executive Director)
(Non-Executive Director)
(Non-Executive Director)
Mr. M. Mudukuti resigned from the board with effect from 22 May 2012.
In accordance with the Articles of Association, Mr B Ndachena, Mr J de la Fargue and Mr J Chenevix-Trench will
retire by rotation at the forthcoming Annual General Meeting (AGM). All retiring directors, being eligible, offer
themselves for re-election.
7
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2012
The NMBZ Holdings Limited board comprises of eleven directors while the NMB Bank Limited board comprises
of thirteen directors. The boards of the Holding company and the Bank are almost identical as they share
ten 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 following directors sit on the Bank’s Board only:
B P Washaya
F S Mangozho
L Chinyamutangira
4.2 Directors’ interests
As at 31 December 2012 the Directors of the Group (NMBZ Holdings Limited and the Bank) held the following
direct and indirect beneficial interests in the shares of the Company:
T N Mundawarara
A M T Mutsonziwa
B Ndachena
J A Mushore**
J T Makoni**
F Zimuto**
B W Madzivire
L Majonga (Ms)
J Chigwedere
J de la Fargue***
J Chenevix-Trench***
B P Washaya*
F S Mangozho*
L Chinyamutangira*
31 December
2012
Shares
31 December
2011
Shares
39 901
55 691
350 000
1 646 969
6 447 904
-
-
-
-
-
-
20 692
-
170 334
39 901
55 691
350 000
1 646 969
6 447 904
-
-
-
-
5 294 005
2 806 866
20 692
-
152 482
8 731 491
16 814 510
*B P Washaya, F S Mangozho and L Chinyamutangira are NMB Bank Limited Executive Directors.
**Dr. J Makoni, Mr J Mushore and Mr F Zimuto hold non-beneficial interests in Cornerstone Trust, Alsace Trust
and Wamambo Investments Trust, respectively.
***Mr J Chenevix-Trench and Mr J de la Fargue represent interests in African Century Financial Services
Investments.
8
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2012
4.4 Directors’ attendance at meetings
4.4.1 Board of Directors
Name
Mr T N Mundawarara
Mr A M T Mutsonziwa
Mr J A Mushore
Mr F Zimuto
Mr B Ndachena
Mr B W Madzivire
Mr L Majonga (Ms)
Dr J T Makoni
Mr J Chigwedere
Mr J de la Fargue
Mr J Chenevix-Trench
4.4.2 Audit Committee
Name
Mr B W Madzivire
Mr A M T Mutsonziwa
Ms L Majonga
4.4.3 Risk Management Committee
Name
Mr J Chigwedere
Ms L Majonga
Mr B P Washaya
Mr J de la Fargue
Mr J A Mushore
Mr F Zimuto
Mr F Mangozho
Meetings
held
4
4
4
4
4
4
4
4
4
4
4
Meetings
held
4
4
4
Meetings
held
4
4
4
4
4
4
4
Meetings
attended
4
3
4
4
4
4
4
3
4
4
4
Meetings
attended
4
3
4
Meetings
attended
4
4
4
3
3
4
4
9
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2012
4.4.4 Asset and Liability Management Committee (ALCO), Finance & Strategy Committee
Name
Mr T N Mundawarara
Mr B P Washaya
Mr B Ndachena
Mr J Mushore
Mr J Chenevix-Trench
(alternate J de la Fargue)
Mr J Chigwedere
Mr F Zimuto
Mr F S Mangozho
Mr L Chinyamutangira
4.4.5 Loans Review Committee
Name
Mr A M T Mutsonziwa
Ms L Majonga*
Mr B Ndachena
Meetings
held
4
4
4
4
Meetings
attended
4
4
4
3
4
4
4
4
4
4
3
4
4
4
Meetings
held
4
4
4
Meetings
attended
3
2
4
*Ms. L Majonga became a member of the committee with effect from 7 August 2012 and attended the two
meetings left in the year subsequent to her appointment.
4.4.6 Human Resources, Remuneration and Nominations Committee
Meetings
held
4
4
4
4
4
4
4
Meetings
held
5
5
5
5
5
5
Meetings
attended
3
4
3
4
4
4
4
Meetings
attended
4
5
3
5
5
5
Name
Mr A M T Mutsonziwa
Mr T N Mundawarara
Mr J Chenevix – Trench
Mr J A Mushore
Mr B Madzivire
Mr B P Washaya
Mr F Zimuto
4.4.7 Credit Committee
Name
Mr T N Mundawarara
Mr J de la Fargue
Mr J Mushore
Mr F Zimuto
B P Washaya
Mr L Chinyamutangira
10
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2012
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 three executive and eight non-executive directors while the
NMB Bank board comprises of four executive and nine 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
Chairperson - Independent Non-Executive Director
Independent Non-Executive Director
Independent 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:
Chairman - Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Group Chief Executive Officer
Deputy Group Chief Executive Officer
Mr A M T Mutsonziwa
Mr T N Mundawarara
Mr B W Madzivire
Mr J A Mushore
Mr F Zimuto
Mr J Chenevix –Trench Non-Executive Director
Non-Executive Director
Dr J T Makoni
Managing Director
Mr B P Washaya
11
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2012
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
Ms L Majonga
Mr B Ndachena
Chairman - Independent Non-Executive Director
Independent Non-Executive Director
Chief Finance Officer
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 J de la Fargue
Mr B P Washaya
Mr L Chinyamutangira Executive Director - Banking
Chairman - Independent Non-Executive Director
Group Chief Executive Officer
Deputy Group Chief Executive Officer
Non-Executive Director
Managing 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 Group.
Membership:
Chairman-Independent Non-Executive Director
Mr T N Mundawarara
Independent Non-Executive Director
Mr J Chigwedere
Group Chief Executive Officer
Mr J A Mushore
Deputy Group Chief Executive Officer
Mr F Zimuto
Managing Director
Mr B P Washaya
Chief Finance Officer
Mr B Ndachena
Mr F S Mangozho
Executive Director -Treasury
Mr L Chinyamutangira Executive Director - Banking
Mr J Chenevix-Trench Non - Executive Director
(alternate J de la Fargue)
Dr. J T Makoni
Non - Executive Director
12
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
REPORT OF THE DIRECTORS (Cont’d)
for the year ended 31 December 2012
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 A Mushore
Mr F Zimuto
Mr B P Washaya
Mr F Mangozho
Chairman - Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Chief Executive Officer
Deputy 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 2012 and to appoint auditors of the Company for the
ensuing year.
By order of the Board
V Mutandwa
Company Secretary
Harare
27 March 2013
13
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
STATEMENT OF DIRECTORS’ RESPONSIBILITY
for the year ended 31 December 2012
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.
During the current year under review the evaluation of the performance of the collective board, the chairperson’s
and the individual directors’ was done.
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.
The key procedures which the Board considers essential to provide effective control include:
i) An organisation structure with strong management, working within defined limits of responsibility and
authority;
ii) An annual budgeting process with re-forecasts to reflect changing circumstances, and the identification of
key risks and opportunities; and
iii) Detailed monthly management accounts with comparisons against budgets through comprehensive variance
analyses.
Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning
of these internal control procedures and systems has occurred during the year under review.
14
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
STATEMENT OF DIRECTORS’ RESPONSIBILITY (Cont’d)
for the year ended 31 December 2012
5. 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 is still appropriate.
6.
INTERNAL AUDIT
The internal audit function has formally defined objectives, authority, and responsibilities enshrined in the
Audit Charter, which principles are consistent with those of the Institute of Internal Auditors. The function
is guided by the Internal Audit Manual and the Reserve Bank of Zimbabwe’s Guideline on Minimum Internal
Audit Standards in Banking Institutions, in conducting its activities. The internal audit function is independent
of business lines and has unrestricted access to the Audit Committee. The internal audit functions include
evaluating the effectiveness of the risk management systems, reviewing the systems of internal controls
including internal financial controls and the conduct of the Group’s operations.
7. REMUNERATION
The Remuneration Committee determines the remuneration policy for the Group. The remuneration policy is
designed to reward performance and retain highly skilled individuals. Accordingly, a discretionary performance
related bonus is offered in addition to a basic salary package.
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 operationalizing a new share option scheme for staff members approved in the 2012 Annual
General Meeting. 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. Activities and charities
supported during the year ended 31 December 2012 included special education needs, health and social
services, the environment and the arts.
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 that
regard, the Group’s values include integrity and excellence. 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 does not conduct
business with entities whose activities are unethical.
15
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
STATEMENT OF DIRECTORS’ RESPONSIBILITY (Cont’d)
for the year ended 31 December 2012
12.
FINANCIAL STATEMENTS
The 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 other relevant regulations made thereunder 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.
The directors have satisfied themselves that the Group is in a sound financial position and that it has adequate
resources to continue operating in the foreseeable future. Accordingly, they are satisfied that it is appropriate
to prepare the financial statements of the Group on a going concern basis.
Approval of the financial statements
The financial statements of the Company and Group appearing on pages 19 to 80 were approved by the board of
directors on 27 March 2013 and are signed on their behalf by:
…………………………...................……….
T N Mundawarara
Chairman
………………….........................……..
J A Mushore
Group Chief Executive Officer
27 March 2013
27 March 2013
16
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
KPMG
Mutual Gardens
100 The Chase (West)
Emerald Hill
P. O. Box 6 Harare
Zimbabwe
Tel
Fax
+263 (4) 303700
+263 (4) 302600
+263 (4) 303699
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 (the Company) and its subsidiaries
(the Group), which comprise the consolidated and company statements of financial position as at 31 December
2012, the consolidated and company statements of comprehensive income, changes in equity and cash flows for the
year then ended and notes, comprising a summary of significant accounting policies and other explanatory notes to
the financial statements as set out on pages 23 to 36 and 37 to 80 respectively.
Directors’ responsibility for the financial statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance
with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter
24:03), the Banking Act (Chapter 24:20) and other relevant regulations made thereunder 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 a true and fair view of the financial position of the Group and
Company as at 31 December 2012, and of the Group’s and Company’s financial performance and cash flows for the
year then ended in accordance with International Financial Reporting Standards and in a manner required by the
Companies Act (Chapter 24:03), the Banking Act (Chapter 24:20) and relevant regulations made thereunder.
KPMG
CHARTERED ACCOUNTANTS (ZIMBABWE)
27 March 2013
KPMG, a Zimbabwean partnership and a member firm of the
KPMG network of independent member firms affliated with KMPG
International Corporative (“KPMG International”), a Swiss entity.
17
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
18
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the year ended 31 December 2012
Note
GROUP COMPANY
2011
2011
US$
US$
2012
US$
2012
US$
Interest income
Interest expense
Net interest income
Net foreign exchange gains
Non-interest income
Net operating income
Operating expenditure
Impairment losses on loans and advances
Share of profit of associate
Profit before taxation
Taxation
6
6
27 543 784
---------------
17 493 781
1 902 337
15 609 630
----------------
35 005 748
4
22 517 188
5 (10 050 003) (8 257 254)
---------------
14 259 934
1 289 729
9 830 798
--------------
25 380 461
240 740
–
---------
240 740
–
13 260
----------
254 000
7 (21 452 714) (17 004 270) (797 333)
–
–
(3 985 062) (2 296 111)
113 573
434 252
20
168 416
–
-----------
168 416
–
77 162
-----------
245 578
–
–
–
10 002 224
8 (2 431 722) (1 655 197)
6 193 653 (543 333) 245 578
21 199 (47 306)
Profit for the year
7 570 502
4 538 456 (522 134) 198 272
Other comprehensive income for the year, net of tax
–
–
–
–
Total comprehensive income for the year
7 570 502
4 538 456 (522 134) 198 272
Attributable to:
Owners of the parent
Non – controlling interests
7 570 502
–
4 538 456 (522 134) 198 272
–
–
–
Earnings per share (US cents)
-Basic
-Diluted basic
9
9
0.27
0.27
0.16
0.16
7 570 502
4 538 456 (522 134) 198 272
19
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
as at 31 December 2012
Note
GROUP COMPANY
2011
2011
US$
US$
2012
US$
2012
US$
EQUITY
Share capital
Capital reserves
Retained earnings
Total equity
LIABILITIES
10
11
12
78 598
18 084 902
12 778 583
78 598
78 598
16 806 650 15 783 219 15 783 219
293 516
6 486 333 (228 618)
78 598
30 942 083
23 371 581 15 633 199 16 155 333
Deposits and other liabilities
Current tax liabilities
Deferred tax liabilities
13
8.4
15
195 002 633
588 966
–
142 757 778
1 157 974
–
993 958
–
–
129
44 798
7 042
Total liabilities
195 591 599
143 915 752
993 958
51 969
Total equity and liabilities
226 533 682
167 287 333 16 627 157 16 207 302
ASSETS
Cash and cash equivalents
Current tax asset
Investment securities held to
maturity
Loans, advances and other
assets
Non-current assets held for sale
Investments:-
Trade investment
Associate
Subsidiaries
Quoted and other investments
Investment properties
Property and equipment
Deferred tax asset
16
8.4
58 171 045
–
32 265 953
–
51
179 129
95 631
–
14
5 501 963
2 126 657
–
–
17
18
19
20
21
22
23
24
15
146 599 994
2 225 300
122 260 663
–
177 486 1 749 172
–
–
195 790
1 025 919
–
130 316
3 115 300
8 187 459
1 380 596
190 980
591 667
118 048
2 510 000
6 801 982
421 383
113 277
499 538
109 702
499 538
– 15 609 111 13 722 112
31 147
–
–
–
34 408
–
–
14 157
Total assets
226 533 682
167 287 333 16 627 157 16 207 302
……………………………………..
T N MUNDAWARARA
)
) Directors
……………………………………..
J A MUSHORE
)
27 March 2013
20
………………………….…
V MUTANDWA
Company Secretary
27 March 2013
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2012
GROUP
Capital reserves
Share
Capital
US$
Share
Premium
US$
Share
Option Regulatory
Reserve
US$
Reserve
US$
Retained
Earnings
US$
Total
US$
78 598 15 737 548
45 671
883 414
2 087 894 18 833 125
–
–
–
–
–
–
–
4 538 456
4 538 456
140 017 (140 017)
–
Balances at 1 January 2011
Total comprehensive income
for the year
Impairment allowance for loans
and advances
Balances at 31 December 2011
78 598 15 737 548
45 671
1 023 431
6 486 333 23 371 581
Total comprehensive income
for the year
Impairment allowance for loans
and advances
–
–
–
–
–
–
–
7 570 502
7 570 502
1 278 252 (1 278 252)
–
Balances at 31 December 2012
78 598 15 737 548
45 671
2 301 683 12 778 583 30 942 083
COMPANY
Share
Share
Capital Premium
US$
US$
Share
Option
Reserve
US$
Retained
/(loss)
Earnings
US$
Total
US$
Balances at 1 January 2011
Total comprehensive income
for the year
Balances at 31 December 2011
Total comprehensive income
for the year
78 598 15 737 548
45 671
95 244 15 957 061
–
–
–
198 272
198 272
78 598 15 737 548
45 671
293 516 16 155 333
–
–
– (522 134) (522 134)
Balances at 31 December 2012
78 598 15 737 548
45 671 (228 618) 15 633 199
21
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the year ended 31 December 2012
GROUP COMPANY
2012
US$
2011
US$
2012
US$
2011
US$
10 002 224
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before taxation
Non-cash items
–
-Impairment losses on loans and advances
3 985 062
–
-Investment properties fair value adjustment (2 538 710)
-(Profit)/loss on disposal of property and equipment (725)
–
-Quoted and other investments fair value adjustment (17 078) (5 689) (6 837) (22 989)
– (27 173)
-Profit on disposal of quoted and other investments
– (27 173)
–
–
-Impairment reversal on land and buildings (77 472) (250 000)
–
–
-Depreciation
756 191
–
–
-Share of associate’s profit (434 252) (113 573)
2 296 111
40 000
18 046
6 193 653 (543 333) 245 578
1 430 956
–
–
–
Operating cash flows before changes in
operating assets and liabilities
12 350 005 8 907 566 (550 170) 195 416
Changes in operating assets and liabilities
Deposits and other liabilities
52 244 855 59 601 334
Loans, advances and other assets (28 324 393) (48 936 370)
Investment securities held to maturity (3 375 306) (132 072)
993 829
1 571 687
–
–
93 190
–
Net cash inflow generated from operations
32 895 161
19 440 458
2 015 346
288 606
Taxation
Corporate tax paid (note 8.4) (3 959 943) (1 765 544) (223 927)
–
Capital gains tax paid
(2 998)
–
(400)
(2 998)
Net cash inflow from operating activities
28 935 218
17 671 916
1 791 419
285 208
CASH FLOWS FROM INVESTING ACTIVITIES
–
4 688
Proceeds on disposal of property and equipment
–
Purchase of property and equipment (2 744 679) (3 568 013)
–
Improvements to investment property (291 890)
–
Increase in investment in subsidiary
– (1 886 999)
–
Proceeds from disposal of quoted and other
investments
Increase in investment in associate
–
59 961
– (249 538)
6 443
–
59 961
– (249 538)
–
–
–
–
Net cash outflow from investing activities (3 030 126) (3 752 902) (1 886 999) (189 577)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
–
–
–
–
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning
of the year
25 905 092
13 919 014 (95 580)
95 631
32 265 953
18 346 939
95 631
–
Cash and cash equivalents at the end of
the year (note 16)
58 171 045
32 265 953
51
95 631
22
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the year ended 31 December 2012
SIGNIFICANT ACCOUNTING POLICIES
for the year ended 31 December 2012
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;
• 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; and
•
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.
23
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
Associates (Cont’d)
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.
IAS 28 “Investment in associates” states that investments in associates by venture capital organisations, mutual
funds, unit trusts and similar organisations that are classified as available for sale and accounted for in accordance
with IAS 39 “Financial instruments: Recognition and Measurement” are exempt from equity accounting. The Group
measures such investments at cost.
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 indicated that it might be impaired. Impairment
losses on goodwill are not reversed. If the cost of acquisition is less than the fair values of the identifiable net assets
acquired, the discount on acquisition is recognised directly in profit or loss in the year of acquisition.
FOREIGN CURRENCY TRANSACTIONS
The consolidated financial statements are presented in United States Dollars (US$), which is also the parent Company’s
functional currency.
Transactions in foreign currencies are translated at the foreign exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies, are translated at the closing rate at the reporting
date. Non-monetary assets and liabilities measured at historical cost denominated in foreign currencies are
translated at the exchange rates ruling at the transaction date. Foreign exchange differences arising on translation
are recognised in profit or loss.
Non – monetary items measured at fair value in foreign currency are translated using the exchange rates at the date
when the fair value was determined.
24
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
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.
•
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.
25
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
SHARE CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction, net of tax from the proceeds.
Dividend distribution
Dividend distribution on ordinary shares are recognised in equity in the period in which they are declared by the
Company’s directors.
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.
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.
26
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
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.
(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.
27
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
FINANCIAL INSTRUMENTS (Cont’d)
Financial instruments – initial recognition and subsequent measurement (Cont’d)
(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;
•
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.
28
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
(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.
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.
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NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
(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 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.
30
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
(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.
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.
31
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
For the year ended 31 December 2012
(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 value at the
repossession date in line with the Group’s policy.
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.
32
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
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.
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.
33
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
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.
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.
As lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the assets are
classified as operating leases. Initial direct costs incurred in negotiating operating leases are added to the carrying
amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents
are recognised as revenue in the period in which they are earned.
Impairment of non – financial assets
The carrying amounts of the Group’s non- financial assets other than consumables 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 Cash Generating Unit’s (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.
34
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
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.
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 at 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.
35
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
for the year ended 31 December 2012
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.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash and bank balances, and short term highly liquid investments with maturities
of three months or less when purchased.
EMPLOYEE BENEFITS
Retirement benefits are provided for the Group’s employees through a defined contribution plan and the National
Social Security Authority Scheme.
Defined Contribution Plan
Obligations for contribution to the defined contribution pension plan are recognised as an expense in profit or loss as
they are incurred.
National Social Security Authority Scheme
The cost of retirement benefits applicable to the National Social Security Authority, which commenced operations on
1 October 1994 is determined by the systematic recognition of legislated contributions.
INVENTORY
Inventory is accounted for at weighted average cost.
PROVISIONS
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is
presented in profit or loss net of any reimbursements.
36
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2012
1. REPORTING ENTITY
The Holding Company is incorporated and domiciled in Zimbabwe and is an investment holding company.
Its registered office is 64 Kwame Nkrumah Avenue, Harare. Its principal operating subsidiary is engaged in
banking and other companies hold investments.
2. ACCOUNTING CONVENTION
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board.
The consolidated financial statements have been prepared in compliance with the Companies Act (Chapter
24:03) and the Banking Act (Chapter 24:20).
The consolidated financial statements were approved by the Board of Directors on 19 March 2013.
2.1 Basis of measurement
The consolidated financial statements have been prepared under the historical cost convention except for
quoted and other investments, investment properties and financial instruments which are carried at fair value
and land, buildings which are stated at revalued amount. These consolidated financial statements are reported
in United States of America dollars and rounded to the nearest dollar.
2.2 Basis of consolidation
The Group financial results incorporate the financial results of the Company, its subsidiaries and associate
company. Subsidiary undertakings are those companies in which the Group, directly or indirectly, has an
interest of more than one half of the voting rights and is able to exercise control of the operations. Control
exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of
an entity so as to obtain benefits from its activities. The financial results of the subsidiaries are prepared
for the same reporting period as the parent company, using consistent accounting policies. All intra-group
balances, transactions, income and expenses; profits and losses resulting from intra-group transactions that
are recognised in assets and liabilities are eliminated in full.
2.3 Comparative financial information
The consolidated financial statements comprise a consolidated statement of financial position, a consolidated
statement of comprehensive income, a consolidated statement of changes in equity and a consolidated
statement of cash flows. The comparative consolidated statement of comprehensive income and the
consolidated comparative statements of changes in equity and consolidated cash flows are for twelve months.
2.4 Use of estimates and judgements
The preparation of consolidated financial statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. 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:
37
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
2.4.1 Deferred tax liability/(asset)
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. Temporary differences arising out of the initial recognition of assets or liabilities and temporary
differences on initial recognition of business combinations that affect neither accounting nor taxable profit are not
recognised. The amount of deferred tax provided is based on the expected manner of realisation or settlement
of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the 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.
In determining the amounts used for taxation purposes the directors referred to applicable effective exchange
rates at the date of acquisition of assets or incurring of liabilities. The Zimbabwe Revenue Authority (ZIMRA),
announced methods to account for the deferred tax arising on assets purchased in ZWD. These methods require
the preparer to first estimate the equivalent USD value of those assets at the time of purchase. Since the
measurement of transactions in Zimbabwe dollars in the prior periods is affected by several economic variables
such as mode of payment and hyperinflation this is an area where the directors have had to apply their judgement
and acknowledge there could be significant variations in the results achieved depending on assumptions made.
2.4.2 Land and buildings
The properties were valued by professional valuers. The valuer applied the rental yield method and comparable
market evidence to assess fair value of land and buildings. The determined fair value of land and buildings is
most sensitive to the estimated yield as well as the long term vacancy rate. In addition, the property market is
currently not stable due to liquidity constraints and hence comparable values are also not stable.
2.4.3 Investment properties and property and equipment
Investment properties were 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 judgment in determining the residual values of the other property and equipment
which have been determined as nil.
2.4.4 RBZ Bond
The RBZ 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.
2.4.5 Impairment losses on loans and advances
The Group reviews all 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 Group 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 note 17.3 below.
38
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
2.4.6 Fair value adjustments of unquoted investments
Subject to contractual provisions, the fair value of unquoted investments is established with reference to the
net asset value and the earnings capacity of the business. Valuations on the earnings basis is calculated as
the sustainable earnings for the entity multiplied by discounted Price Earnings Ratio of a quoted Company with
similar operations in a similar environment.
The valuation of investment in unlisted companies has been carried in the statement of financial position of the
Group based on the audited net asset values of the investee companies.
2.4.7 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 consolidated financial statements on a going concern basis is still appropriate.
2.5 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2012, and have not been applied in preparing these consolidated financial statements.
Those which may be relevant to the Group are stated out below. The Group does not plan to adopt these standards
early.
(i) IFRS 9 Financial Instruments (2010) and IFRS 9 Financial Instruments (2009)(together IFRS 9)
IFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. IFRS
9 (2010) introduces additions relating to financial liabilities. The IASB currently has an active project to make
limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements
to address the impairment of financial assets and hedge accounting.
The IFRS 9 (2009) requirements represent a significant change from the existing requirements in IAS 39
in respect of financial assets. The standard contains two primary measurement categories of financial
assets: amortised cost and fair value. A financial asset would be measured at amortised cost if it is held
within a business model whose objective is to hold assets in order to collect contractual cash flows, and the
asset’s contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal outstanding. All other financial assets would be measured at fair value. The standard
eliminates the existing IAS 39 categories of held to maturity, available-for-sale and loans and receivables.
For an investment in an equity instrument which is not held for trading, the standard permits an irrevocable
election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the
investment in other comprehensive income. No amount recognised in other comprehensive income would ever
be reclassified to profit or loss at a later date. However, dividends on such investments are recognised in profit
or loss, rather than other comprehensive income unless they clearly represent a partial recovery of the cost
of the investment. Investments in equity instruments in respect of which an entity does not elect to present
fair value changes in other comprehensive income would be measured at fair value with changes in fair value
recognised in profit or loss.
The standard requires that derivatives embedded in contracts with a host that is a financial asset within the
scope of the standard are not separated; instead the hybrid financial instrument is assessed in its entirely as
to whether it should be measured at amortised cost or fair value.
39
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
(i) IFRS 9 Financial Instruments (2010), IFRS 9 Financial Instruments (2009)(Cont’d)
IFRS 9 (2010) introduces a new requirement in respect of financial liabilities designated under the fair
value option to generally present fair value changes that are attributable to the liability’s credit risk in other
comprehensive income rather than in profit or loss. Apart from this change, IFRS 9 (2010) largely carries
forward without substantive amendment the guidance on classification and measurement of financial liabilities
from IAS 39.
IFRS 9 is effective for annual periods beginning on or after 1 January 2015 with early adoption permitted.
The IASB decided to consider making limited amendments to IFRS 9 to address practice and other issues.
The Group has commenced the process of evaluating the potential effect of this standard but is awaiting
finalisation of the limited amendments before the evaluation can be completed. Given the nature of the
Group’s operations, this standard is expected to have a pervasive impact on the Group’s financial statements.
(ii) Amendments to IFRS 7 and IAS 32 on offsetting financial assets and financial liabilities (2011)
Disclosures – Offsetting Financial Assets and Financial Liabilities (amendments to IFRS 7) introduces disclosures
about the impact of netting arrangements on an entity’s financial position. The amendments are effective for
annual periods beginning on or after 1 January 2013 and interim periods within those annual periods. Based
on the new disclosure requirements the Group will have to provide information about what amounts have been
offset in the statement of financial position and the nature and extent of rights of set-off under master netting
arrangements or similar arrangements.
Offsetting Financial Assets and Financial Liabilities (amendments to IAS 32) clarify the offsetting criteria in IAS
32 by explaining when an entity currently has a legally enforceable right to set-off and when gross settlement is
equivalent to net settlement. The amendments are effective for annual periods beginning on or after 1 January
2014 and interim periods within those annual periods. Earlier application is permitted.
Based on management’s initial assessment, the Group is not expecting a significant impact from the adoption
of the amendments to IAS 32. However, the adoption of the amendments to IFRS 7 requires more extensive
disclosures about rights of set-off.
(iii) IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of interest
in Other Entities (2011)
IFRS 10 introduces a single control model to determine whether an investee should be consolidated. As a
result, the Group may need to change its consolidation conclusion in respect of its investees, which may lead
to changes in the current accounting for these investees.
IFRS 11 is not expected to have any impact on the Group because the Group does not have interests in joint
ventures.
IFRS 12 brings together into a single standard all the disclosure requirements about an entity’s interests in
subsidiaries, joint arrangements, associates and risks and financial effects of these interests. The Group is
currently assessing the disclosure requirement for interests in subsidiaries and unconsolidated structured
entities in comparison with the existing disclosures.
These standards are effective for annual periods beginning on or after 1 January 2013 with early adoption
permitted.
40
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
(i) IFRS 13 Fair Value Measurement
IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value
measurement guidance that is currently dispersed throughout IFRS. Subject to limited exceptions, IFRS 13
is applied when fair value measurements or disclosures are required or permitted by other IFRSs. The Group
is currently reviewing its methodologies for determining fair values. Although many of the IFRS 13 disclosure
requirements regarding financial assets and financial liabilities are already required, the adoption of IFRS 13
will require the Group to provide additional disclosures. These includes fair value hierarchy disclosures for non-
financial assets/liabilities and disclosures on fair value measurements that are categorised in Level 3. IFRS 13
is effective for annual periods beginning on or after 1 January 2013 with early adoption permitted.
(ii) IAS 19 Employee Benefits (2011)
IAS 19 (2011) changes the definition of short-term and other long-term employee benefits to clarify the
distinction between the two. For defined benefit plans, removal of accounting policy choice for recognition
of actuarial gains and losses will not have any impact on the Group. However, the group may need to assess
the impact of the change in measurement principles of the expected return on plan assets. IAS 19 (2011) is
effective for annual periods beginning on or after 1 January 2013 with early adoption permitted.
2. SEGMENT INFORMATION
For management purposes, the Group is organised into four operating segments based on products and services
as follows:
Retail banking
- Individual customers 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 2012 or 2011.
41
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
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 2012
Income
Third party
Impairment losses on
Retail
Corporate
International
in
Investment
Banking
Banking
Treasury
Banking
Associate
Unallocated
US$
US$
US$
US$
US$
US$
Total
US$
17 420 843 20 054 690 2 806 291 1 441 235
loans and advances
(631 814)
(3 353 248)
–
–
Net operating income
16 789 029 16 701 442 2 806 291 1 441 235
Results
Interest income
Interest expense
6 178 887 19 669 296 1 695 601
(1 921 638)
(7 335 899)
(792 466)
Net interest income
4 257 249 12 333 397
903 135
Share of profit of associate
–
–
–
–
–
–
–
–
–
–
–
–
–
434 252
3 766 943
45 490 003
–
(3 985 062)
3 766 943
41 504 941
–
–
–
–
–
27 543 784
(10 050 003)
17 493 781
434 252
13 038 151
Fee and commission income
11 136 085
450 746
– 1 429 285
22 036
Depreciation of property
and equipment
615 387
127 980
20 727
27 064
–
639 798
1 430 956
Segment profit/ (loss)
4 885 798
7 907 300 2 431 151
416 494
434 252
(5 072 771)
10 002 224
Income tax expense
–
–
–
–
(2 431 722)
(2 431 722)
Profit/(loss) for the year
4 885 798
7 907 300 2 431 151
416 494
434 252
(7 504 493)
7 570 502
Assets and liabilities
Capital expenditure
974 520
107 131
450
160 829
Total assets
41 315 622 116 785 290 48 849 157
Total liabilities and equity
75 893 282 76 327 413 40 146 035
160 829
–
–
–
–
1 501 749
2 744 679
19 422 784
226 533 682
34 166 957
226 533 682
42
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
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
Income
Third party
Impairment losses
Retail
Corporate
International
in
Investment
Banking
Banking
Treasury
Banking
Associate
Unallocated
US$
US$
US$
US$
US$
US$
Total
US$
12 122 517
17 608 301 2 521 784 1 190 962
on loans and advances
(284 178)
(2 011 933)
–
–
Net operating income
11 838 339
15 596 368 2 521 784 1 190 962
Results
Interest income
Interest expense
6 344 950
14 772 128 1 232 055
(1 496 919)
(6 078 341)
(681 994)
Net interest income
4 848 031
8 693 787
550 061
Share of profit of associate
–
–
–
–
–
–
–
Fee and commission income
5 777 114
3 040 821
– 1 190 962
Depreciation of property
and equipment
323 115
63 296
7 075
11 582
–
–
–
–
–
–
307 724
33 751 288
–
(2 296 111)
307 724
31 455 177
168 055
–
22 517 188
(8 257 254)
168 055
14 259 934
113 573
–
113 573
–
–
(204 643)
9 804 254
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)
(1 655 197)
Profit/(loss) for the year
3 141 886
7 926 550 1 224 334
340 776
113 573
(8 208 663)
4 538 456
Assets and liabilities
Capital expenditure
1 618 558
157 634
78 298
Total assets
Total liabilities and equity
37 333 931
23 340 594
99 879 097 14 815 783
51 995 615 63 092 803
49 038
49 038
-
-
1 664 485
3 568 013
591 667
-
14 617 817
28 858 321
167 287 333
167 287 333
43
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
4.
INTEREST INCOME
Loans and advances to banks
Loans and advances to customers
Investment securities
Other
5.
INTEREST AND SIMILAR EXPENSE
Due to banks
Due to customers
Other borrowed funds
GROUP COMPANY
2012
US$
2011
US$
2012
US$
2011
US$
1 448 696
25 554 697
246 905
293 486
27 543 784
1 097 573
21 089 867
134 480
195 268
22 517 188
–
–
–
240 740
240 740
–
–
–
168 416
168 416
3 168 308
6 731 855
149 840
10 050 003
2 750 670
5 505 989
595
8 257 254
6. NON-INTEREST INCOME AND NET FOREIGN EXCHANGE GAINS
6.1 Non – interest income
Quoted and other investments fair
value adjustments
Commission and fee income
Profit/(loss) on disposal of property
17 078
13 016 115
5 689
9 804 254
6 837
–
22 989
–
and equipment
725
(18 046)
Fair value adjustment on investment
properties
2 538 710
(40 000)
–
–
–
–
Profit on disposal of quoted and other
investments
Other operating income
6.2 Net foreign exchange gains
–
37 002
15 609 630
27 173
51 728
9 830 798
–
6 423
13 260
27 173
27 000
77 162
Net foreign exchange gains
1 902 237
1 289 729
Net foreign exchange income includes gains and losses from foreign currency switches.
44
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
7. OPERATING EXPENDITURE
The operating profit is after charging
the following:-
Administration costs
Audit fees:
– Current year
– Prior year
Impairment reversal on land and buildings
Depreciation
Directors’ remuneration
– Fees for services as directors
– Other emoluments
Staff costs – salaries, allowances and
related costs
8. TAXATION
Income tax expense
8.1
Current tax
Aids levy
Capital gains tax
Deferred tax (note 15)
8.2 Reconciliation of income tax charge
Based on results for the period at a
rate of 25.75%
Arising due to:
Income not subject to tax
Non-deductible expenses
Tax rate differential on capital gains
8.3 Total taxation charge/ (credit)
analysed by company
Stewart Holdings (Private) Limited
NMB Bank Limited
NMBZ Holdings Limited
GROUP COMPANY
2012
US$
2011
US$
2012
US$
2011
US$
9 540 865
8 599 112
51 885
199 356
(77 472)
1 430 956
1 734 980
64 990
1 669 990
31 290
120 225
(250 000)
756 191
1 506 630
47 520
1 459 110
–
–
–
–
–
–
–
–
8 572 144
21 452 714
6 240 822
17 004 270
797 333
797 333
–
–
–
–
–
–
–
–
–
–
3 292 170
98 765
–
(959 213)
2 431 722
2 215 095
66 453
2 998
(629 349)
1 655 197
–
–
–
(21 199)
(21 199)
43 495
1 304
2 998
(491)
47 306
2 575 573
1 594 866
(139 908)
63 236
–
385 258
(529 110)
2 431 722
(45)
65 811
(5 435)
1 655 197
–
118 760
(51)
(21 199)
(12 477)
1 982
(5 435)
47 306
598
2 452 323
(21 199)
2 431 722
(1 024)
1 574 148
82 073
1 655 197
–
–
(21 199)
(21 199)
8.4 Current tax liabilities (income tax and aids levy)
At 1 January
Charge for the year
Payments during the year
1 157 974
3 390 935
(3 959 943)
588 966
641 969
2 281 549
(1 765 544)
1 157 974
44 798
–
(223 927)
(179 129)
–
–
47 306
47 306
400
44 798
(400)
44 798
45
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
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.
9.1 Earnings
2012
US$
2011
US$
Attributable earnings
7 570 502
4 538 456
9.2 Number of shares
Weighted average number of 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 earnings per share
Diluted earnings per share
10. SHARE CAPITAL
2 807 107 289 2 807 107 289
2 817 850 158 2 817 850 158
2 807 107 289 2 807 107 289
9 072 000
1 670 869
9 072 000
1 670 869
2 817 850 158 2 817 850 158
0.27
0.27
0.16
0.16
2012
Shares
million
GROUP AND COMPANY
2011
2012
Shares
million
US$
2011
US$
10.1 Authorised
Ordinary shares of US$0.000028 each
3 500
3 500 98 000
98 000
10.2 Issued and fully paid
At 1 January
2 807
2 807
78 598 78 598
Shares issued
At 31 December
–
2 807
–
2 807
– –
78 598 78 598
46
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
10. SHARE CAPITAL (cont’d)
Of the unissued ordinary shares of 692 892 711 (2011– 692 892 711), options which may be granted in terms of
the NMBZ 2005 Employee Share Option Scheme (ESOS) amounted to 85 360 962 (2011 – 85 360 962) and out
of these 1 670 869 (2011 – 1 670 869) had not been issued. The unissued shares will expire and not be carried
over to the new scheme. As at 31 December 2012, 9 072 000 (2011 – 9 072 000) share options out of the issued
shares had not been exercised.
Share options which may be granted in terms of the 2012 ESOS amount to 280 710 729 and allocations in terms
of the scheme will only commence in 2013.
Subject to the provisions of section 183 of the Companies Act (Chapter 24:03), the unissued shares are under the
control of the directors.
11. CAPITAL RESERVES
GROUP
2012
US$
COMPANY
2011
US$
2012
US$
2011
US$
Share premium
Share option reserve
Regulatory reserve
15 737 548
45 671
2 301 683
15 737 548
45 671
1 023 431
15 737 548
45 671
–
15 737 548
45 671
–
Total capital reserves
18 084 902
16 806 650
15 783 219
15 783 219
Nature and purpose of reserves
Share premium
This reserve represents the excess amount paid for the shares over and above the nominal value of the shares.
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 33.3
for further details of these plans.
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.
12. RETAINED EARNINGS
GROUP COMPANY
2012
US$
2011
US$
2012
US$
2011
US$
Analysis of retained profit by company
NMBZ Holdings Limited
NMB Bank Limited
Stewart Holdings (Private) Limited
268 522
12 487 547
22 514
356 400
6 116 397
13 536
(228 618)
–
–
293 516
–
–
Total
12 778 583
6 486 333
(228 618)
293 516
47
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
GROUP COMPANY
2011
US$
2012
US$
2012
US$
2011
US$
13. DEPOSITS AND OTHER LIABILITIES
13.1 Deposits and other liabilities by type
Deposits from other banks and other
financial institutions
Current and deposit accounts*
from customers
Total deposits
Trade and other payables*
38 969 071
43 009 970
–
152 452 995
191 422 066
3 580 567
195 002 633
96 216 174
139 226 144
3 531 634
142 757 778
–
–
993 958
993 958
*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
13.3 Sectoral analysis of deposits
Banks and other financial institutions
Transport and telecommunications
Agriculture
Mining
Manufacturing
Distribution
Services
Individuals
Municipalities and parastatals
Other deposits
159 048 090
8 388 210
5 686 674
1 675 259
16 623 833
–
191 422 066
105 423 635
17 727 720
13 874 789
2 200 000
–
–
139 226 144
2012
US$
38 969 071
6 040 981
9 085 971
3 221 341
23 888 559
17 912 925
28 199 595
29 115 145
18 768 175
16 220 303
191 422 066
GROUP
%
2011
US$
20
3
5
2
12
9
15
15
10
9
43 009 970
5 297 087
3 180 921
1 144 080
16 811 439
8 046 243
13 678 483
21 438 755
19 879 203
6 739 963
100 139 226 144
–
–
–
129
129
%
31
4
2
1
12
6
10
15
14
5
100
48
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
14.
FINANCIAL INSTRUMENTS
14.1 Investment securities held to maturity
GROUP
Carrying
Amount
2012
US$
Fair
Value
2012
US$
Carrying
Amount
2011
US$
Fair
Value
2011
US$
Government and public sector securities
RBZ Bond (1)
Investment securities held to maturity
5 501 963
5 501 963
5 501 963
5 501 963
5 501 963
5 501 963
2 126 657
2 126 657
2 126 657
2 126 657
2 126 657
2 126 657
(1) Investment securities held to maturity were classified as such in accordance with IAS 39.
The RBZ Bond is valued at cost as there is no market information to facilitate application of fair value principles.
14.2 Maturity analysis of investment securities held to maturity
Less than one month
1 to 3 months
3 to 6 months
6 months to 1 year
1 year to 5 years
Over 5 years
GROUP
2012
US$
–
–
2 271 949
969 004
2 261 010
–
5 501 963
2011
US$
–
–
–
2 126 657
–
–
2 126 657
49
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
14.3 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.
GROUP
Financial assets
Cash and cash equivalents
Investment securities held to maturity
Advances and other assets
Trade investments
Quoted and other investments
Total
Financial liabilities
Deposits and other liabilities
Carrying
Amount
2012
US$
58 171 045
5 501 963
146 599 994
195 790
130 316
210 599 108
Fair
value
2012
US$
Fair
value
2011
US$
Carrying
amount
2011
US$
58 171 043
5 501 963
32 265 953
2 126 657
146 599 994 122 260 663
190 980
118 048
210 599 108 156 962 301
195 790
130 316
32 265 953
2 126 657
122 260 663
190 980
118 048
156 962 301
195 002 633
195 002 633
195 002 633 142 757 778
195 002 633 142 757 778
142 757 778
142 757 77
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 2012, 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.
50
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
14.3 Other financial assets and financial liabilities summary (cont’d)
Assets measured at fair value
GROUP
31 Dec
2012
US$
Level 1
US$
Level 2
US$
Level 3
US$
Trade investments
Quoted investments
195 790
130 316
–
130 316
–
–
195 790
–
During the reporting year ended 31 December 2012, 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.
GROUP
31 Dec
2011
US$
Level 1
US$
Level 2
US$
Level 3
US$
Trade investments
Quoted investments
190 980
118 048
–
118 048
–
–
190 980
–
During the year ended 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.
15. DEFERRED TAX
GROUP COMPANY
Allowance for impairment losses
on loans and advances
Quoted and other investments
Investments:-Trade investments
Non-current assets held for sale
Investment properties
Property and equipment
Marking to market adjustments
Unrealised foreign exchange gains
Suspended interest
Deferred income
Assessed losses
Closing deferred tax (asset)/liability
Deferred tax (asset)/liability at the
beginning of the year
Current year credit (note 8.1)
2012
US$
2011
US$
2012
US$
(1 871 973)
10 640
5 664
111 265
142 387
424 649
(45 583)
321 153
(145 613)
(308 840)
(24 345)
(863 678)
7 014
5 485
–
129 493
412 667
33 514
332 105
(269 862)
(208 121)
–
–
1 720
5 664
–
–
–
–
–
–
–
(21 541)
2011
US$
–
1 557
5 485
–
–
–
–
–
–
–
–
(1 380 596)
(421 383)
(14 157)
7 042
(421 383)
(959 213)
207 966
(629 349)
7 042
(21 199)
(7 533)
(491)
51
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
16.
CASH AND CASH EQUIVALENTS
GROUP COMPANY
2012
US$
2011
US$
2012
US$
2011
US$
16.1
Balances with Reserve Bank of Zimbabwe
Balances with the Central Bank
22 671 712
12 255 166
–
–
16.2
Balances with other banks and cash
Current, nostro accounts and cash
Interbank placements
14 999 333
20 500 000
58 171 045
13 231 912
6 778 875
32 265 953
51
–
51
95 631
–
95 631
17.
LOANS, ADVANCES AND OTHER ASSETS
17.1
Total loans, advances and other assets
17.1.1 Advances
Fixed term loans
Local loans and overdrafts
57 124 283
86 823 914
36 116 550
79 078 001
143 948 197 115 194 551
–
–
–
–
–
–
Statutory reserves*
Other assets
–
2 651 797
3 231 838
3 834 274
146 599 994 122 260 663
–
177 486
177 486
–
1 749 172
1 749 172
*The statutory reserves balance with the Reserve Bank of Zimbabwe was non-interest bearing. The balance
was determined on the basis of deposits held and was not available to the bank for daily use. The balances
owed to banks were converted to tradable interest bearing instruments on 16 February 2012. The amount was
reclassified to Investment securities held to maturity (note 14).
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
92 386 313
19 352 134
3 271 119
4 968 635
32 439 174
–
75 306 517
20 829 309
2 423 418
2 875 529
18 161 873
–
Total advances
152 417 375
119 596 646
Allowance for impairment losses
on loans and advances
Provision for suspended interest
(7 269 799)
(1 199 379)
143 948 197
(3 354 088)
(1 048 007)
115 194 551
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Statutory reserves
Other assets (note 17.5)
–
2 651 797
146 599 994
3 231 838
3 834 274
122 260 663
–
177 486
177 486
–
1 749 172
1 749 172
52
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
17.2 Sectoral analysis of utilisations
Manufacturing
Distribution
Agriculture and horticulture
Conglomerates
Services
Mining
Food & beverages
Individuals
2012
US$
GROUP
%
2011
US$
29 008 475
46 673 432
9 894 729
4 683 682
30 216 258
1 347 402
214 163
30 379 234
152 417 375
19
31
6
3
20
1
–
20
26 977 166
33 713 556
9 121 606
4 700 752
17 076 201
3 856 637
5 747 287
18 403 441
100 119 596 646
%
23
28
8
4
14
3
5
15
100
The material concentration of loans and advances are in the distribution sector at 31% (2011 – 28%).
17.3 Allowance for impairment losses on loans and advances
GROUP
Specific
US$
2012
Portfolio
US$
Total
US$
Specific
US$
2011
Portfolio
US$
Total
US$
At 1 January
Charge against profits
Bad debts written off
3 354 088
3 879 327
(69 351)
–
105 735
–
3 354 088
3 985 062
(69 351)
1 057 977
2 296 111
–
– 1 057 977
– 2 296 111
–
–
At 31 December
7 164 064
105 735
7 269 799
3 354 088
– 3 354 088
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
2012
US$
2011
US$
23 996 312
(7 164 064)
(1 199 379)
15 632 869
10 294 437
(3 354 088)
(1 048 007)
5 892 342
The residue on these accounts represents recoverable portions covered by realisable security which includes
guarantees, cessation of debtors, mortgages over residential properties, equities and promissory notes all fair
valued at US$15 916 654 (2011– US$4 142 500).
17.5 Other assets
Service deposits
Prepayments and stocks
Other receivables
GROUP
2012
US$
552 875
1 793 025
305 897
2 651 797
2011
US$
183 909
1 029 791
2 620 574
3 834 274
COMPANY
2012
US$
–
–
177 486
177 486
2011
US$
–
–
1 749 172
1 749 172
53
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
17.6 Loans to officers
Included in advances and other accounts (note 17.1)
are loans to officers:
At 1 January
Net additions during the year
Fair value adjustment
Balance at 31 December
GROUP
2012
US$
2011
US$
1 055 223
1 001 278
2 056 501
(177 022)
1 879 479
786 221
355 154
1 141 375
(86 152)
1 055 223
Of which housing loans comprised:
–
–
Loans to officers are granted at a preferential rate of 6% per annum as part of their overall remuneration
agreements.
17.7 The terms and conditions applicable to advances are as follows:
Overdraft
Tenure
Payable on demand
Loans
Loan payable over a maximum
period of 24 months
Bankers Acceptances
Loan payable over a minimum
period of 30 days
18. NON-CURRENT ASSETS HELD FOR SALE
Interest rate
Minimum lending rate plus a
margin on unauthorised facility
Minimum lending rate plus a
margin.
Loans to employees and directors
are at discounted interest rates.
Average rate of 19.5% per annum.
GROUP
COMPANY
2012
US$
2011
US$
2012
US$
2011
US$
Investment property
2 225 300
–
–
–
The Group is in possession of land with a fair value of US$2 225 300 at year end. During the last quarter of 2012
management decided to sell the property and have identified interested buyers. The disposal process is expected
to be completed in May 2013. The disposal will improve the Group’s cashflows. The fair value adjustment on
recognition as non-current asset held for sale is included under non-interest income (note 6).
54
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
19. TRADE INVESTMENTS
Unlisted
Other
GROUP
COMPANY
2012
US$
2011
US$
2012
US$
2011
US$
195 790
195 790
190 980
190 980
113 277
113 277
109 702
109 702
Directors’ valuation
195 790
190 980
113 277
109 702
Other investments represents equity investments in SWIFT and Medical Investments (Private) Limited t/a Avenues
Clinic. The trade investment was valued by directors at fair value at 31 December 2012.
20.
INVESTMENT IN ASSOCIATE
The Group has a 24.79% 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:
Current assets
Non-current assets
Current liabilities
Non – current liabilities
Equity
5 036 603
56 750
(457 427)
(3 610 007)
1 025 919
2 831 891
68 577
(133 823)
(2 174 978)
591 667
Share of the associate’s revenue and profit
Revenue
Profit
904 446
571 617
434 252
113 573
–
–
–
–
–
-
-
–
–
–
–
–
-
-
Carrying amount of the investment
1 025 919
591 667
499 538
499 538
Reconciliation of carrying amount of investment in Associate:
Balance at 1 January
Increase in investment
Share of profit in associate
591 667
-
434 252
228 556
249 538
113 573
499 538
-
-
250 000
249 538
-
Balance at 31 December
1 025 919
591 667
499 538
499 538
55
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
21.
INVESTMENTS IN GROUP COMPANIES
21.1 Subsidiaries
Investments in subsidiaries:
NMB Bank Limited
Stewart Holdings Limited
21.2 Shareholding
COMPANY
2012
US$
2011
US$
15 594 431
14 680
15 609 111
13 707 432
14 680
13 722 112
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:-
2012
2011
NMB Bank Limited
Brixtun (Private) Limited
NMB Fund Management (Private) Limited
Stewart Holdings (Private) Limited
Invariant (Private) Limited
Darksan (Private) Limited
African Century Limited
100% (Banking)
100% (Dormant)
100% (Dormant)
100% (Equity holdings)
100% (Dormant)
100% (Dormant)
24.79% (Leasing)
100% (Banking)
100% (Dormant)
100% (Dormant)
100% (Equity Holdings)
100% (Dormant)
100% (Dormant)
25% (Leasing)
The consolidated financial statements include the financial statements and results of the subsidiaries and
associates listed above.
22. QUOTED AND OTHER INVESTMENTS
GROUP COMPANY
2011
US$
2012
US$
2012
US$
2011
US$
Quoted investments
130 316
118 048
34 408
31 147
The quoted investments comprise shares stated for year-end purposes at the last trading date of 31 December
2012.
23.
INVESTMENT PROPERTIES
At 1 January
Improvements
Fair value adjustments
Net transfer to property and equipment
Transfer to Non-current assets held for
sale
At 31 December
2 510 000
291 890
2 538 710
–
2 615 000
–
(40 000)
(65 000)
(2 225 300)
3 115 300
–
2 510 000
56
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
23.
INVESTMENT PROPERTIES (cont’d)
The fair value of the Group’s investment properties as at 31 December 2012 has been arrived at on the basis of
valuations carried out by independent professional valuers, PMA Real Estate (Private) Limited. The valuation which
conforms to International Valuation Standards, was in terms of the policy as set out in the accounting policies
section and was derived with reference to market information close to the date of the valuation.
The values were arrived at by applying yield rates of between 9% – 11% on rental levels of between $5 – $8 per
square metre. The properties are leased out under operating lease to various tenants.
The Group has no restrictions on the realisability of all investment properties and no contractual obligations to
purchase, construct or develop the investment properties or for repairs, maintenance and enhancements.
Rental income amounting to US$12 408 (2011 – US$6 600) was received and no operating expenses were incurred
on the investment properties in the current year due to the net leasing arrangement on the properties.
57
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
24. PROPERTY AND EQUIPMENT
Motor Furniture &
Vehicles
US$
Computers
US$
GROUP
Freehold
Land &
Equipment
US$
Building
US$
Total
U S $
Cost
At 1 January 2011
Additions
Revaluation gain
Disposals
Reclassification
Transfer from Investment
property
At 1 January 2012
Additions
Revaluation gain
Reclassifications
Disposals
At 31 December 2012
Accumulated depreciation
At 1 January 2011
Charge for the year
Disposals
Reclassifications
At 1 January 2012
Charge for the year
Reclassifications
Disposals
717 599
818 939
–
(27 930)
15 663
220 119
1 564 286
–
(17 890)
–
1 389 505
1 176 536
–
(71 677)
(15 663)
2 415 000
8 252
250 000
–
–
4 742 223
3 568 013
250 000
(117 497)
–
–
–
–
65 000
65 000
1 524 271
920 559
–
251 703
–
2 696 533
1 766 515
1 556 092
–
–
(250)
3 322 357
2 478 701
268 028
–
(251 703)
(10 825)
2 484 201
2 738 252
–
77 472
–
–
2 815 724
8 507 739
2 744 679
77 472
–
(11 075)
11 318 815
317 306
178 694
(29 157)
3 133
469 976
310 381
65 826
–
77 024
256 817
(10 640)
–
323 201
662 445
–
(250)
649 931
320 456
(54 967)
(3 133)
912 287
412 700
(65 826)
(5 107)
69
224
–
–
293
45 430
–
–
1 044 330
756 191
(94 764)
–
1 705 757
1 430 956
–
(5 357)
At 31 December 2012
846 183
985 396
1 254 054
45 723
3 131 356
Net book amount
At 31 December 2012
1 850 350
2 336 961
1 230 147
2 770 001
8 187 459
At 1 January 2012
1 054 295
1 443 314
1 566 414
2 737 959
6 801 982
At 1 January 2011
400 293
143 095
739 574
2 414 931
3 697 893
58
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
24. PROPERTY AND EQUIPMENT (cont’d)
Immovable properties were revalued as at 31 December 2012 on the basis of valuations carried out by independent
professional valuers, PMA Real Estate (Private) Limited. The valuation which conforms to International Valuation
Standards, was in terms of the policy as set out in the accounting policies section. All movable assets are carried
at their carrying amounts which are arrived at by the application of a depreciation charge on their cost values over
the useful lives of the assets.
The valuation of land and buildings was arrived by applying yield rates of between 9% - 11% on rental levels of
between $5 – $8 per square metre.
It has not been possible to fully comply with the requirements of International Accounting Standards (IAS16:
Property, Plant and Equipment), as regards disclosure of the carrying cost less accumulated depreciation of
properties had revaluations not been performed. This information is not material in the context of the Group
financial statements.
59
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
25.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Group’s interest rate risk exposure on assets and liabilities. The financial assets and
liabilities are categorised by the earlier of contractual repricing or maturity dates.
25.1 Total position
At 31 December 2012
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Investment in associate
Quoted and other
investments
Loans, advances and
other assets
Non-current assets held
for sale
Property, plant and
equipment
Investment properties
Deferred tax
Liabilities and equity
Deposits and other
liabilities
Current tax liabilities
Equity
Interest rate repricing
gap
Up to 1
1 month
month to 3 months
US$
US$
GROUP
3 months
to 1 year
US$
1 year to Non-interest
bearing
5 years
US$
US$
Total
US$
58 171 045
–
–
–
–
–
–
–
–
–
–
58 171 045
3 240 953 2 261 010
–
–
–
1 025 919
5 501 963
1 025 919
–
–
326 106
326 106
83 917 136 19 352 134
8 239 754 32 439 173
2 651 797 146 599 994
–
–
–
–
2 225 300
2 225 300
–
–
–
142 088 181 19 352 134 11 480 707 34 700 183
–
–
–
–
–
–
–
–
–
8 187 459
3 115 300
1 380 596
8 187 459
3 115 300
1 380 596
18 912 477 226 533 682
159 048 090
–
–
159 048 090
8 388 210
–
–
8 388 210
7 361 933 16 623 833
–
–
7 361 933 16 623 833
–
–
3 580 567 195 002 633
588 966
588 966
30 942 083
30 942 083
35 111 616 226 533 682
(16 959 909) 10 963 924
4 118 774 18 076 350
(16 199 130)
Cumulative gap
(16 959 909)
(5 995 985)
(1 877 211) 16 199 139
–
60
–
–
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
25.1
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 date.
At 31 December 2011
GROUP
Up to 1
1 month
month to 3 months
US$
US$
3 months
to 1 year
US$
1 year to
5 years
US$
Non-interest
bearing
US$
Total
US$
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Investment in associate
Quoted and other
investments
Loans, advances and
other assets
Property, plant and
equipment
Investment properties
Deferred tax
Liabilities and equity
Deposits and other
liabilities
Current tax liabilities
Equity
Interest rate repricing
gap
32 265 953
–
–
–
–
–
–
–
–
2 126 657
–
–
–
–
–
–
– 32 265 953
–
591 667
2 126 657
591 667
309 028
309 028
72 381 881 20 345 346
5 128 510 17 338 815
7 066 111 122 260 663
–
–
–
–
–
–
104 647 834 20 345 346
–
–
–
7 255 167 17 338 815
–
–
–
6 801 982
2 510 000
421 383
6 801 982
2 510 000
421 383
17 700 171 167 287 333
105 423 635 17 727 720 16 074 789
–
–
105 423 635 17 727 720 16 074 789
–
–
–
–
–
–
–
–
3 531 634 142 757 778
1 157 974
1 157 974
23 371 581 23 371 581
28 061 189 167 287 333
(775 801) 2 617 626
(8 819 622) 17 338 815
(10 361 018)
Cumulative gap
(775 801) 1 841 825
(6 977 797) 10 361 018
–
–
–
61
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
26.
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.
26.1. United States dollar
At 31 December 2012
Up to 1
1 month
month to 3 months
US$
US$
GROUP
3 months 1 year to Non-interest
bearing
5 years
to 1 year
US$
US$
US$
Total
US$
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Investment in associate
Quoted and other
investments
Loans, advances and
other assets
Non-current assets held
for sale
Property, plant and
equipment
Investment properties
Deferred tax
Liabilities and equity
Deposits and other
liabilities
Current tax liabilities
Equity
Interest rate repricing
gap
54 256 160
–
–
–
–
–
–
–
–
–
– 54 256 160
3 240 953 2 261 010
–
–
–
1 025 919
5 501 963
1 025 919
–
–
243 593
243 593
83 736 075 19 352 134
8 239 754 32 439 173
2 651 797 146 418 933
–
–
–
–
2 225 300
2 225 300
8 187 459
–
3 115 300
–
1 380 596
–
137 992 235 19 352 134 11 480 707 34 700 183 18 329 964 222 355 223
8 187 459
3 115 300
1 380 596
–
–
–
–
–
–
–
–
–
155 270 761
–
–
155 270 761
8 388 210
–
–
8 388 210
3 580 567 191 225 304
7 361 933 16 623 833
–
588 966
– 30 942 083 30 942 083
7 361 933 16 623 833 35 111 616 222 756 353
588 966
–
–
(17 278 526) 10 963 924
4 118 774 18 076 350 (16 281 652)
(401 130)
Cumulative gap
(17 278 526)
(6 314 602)
(2 195 828) 15 880 522
(401 130)
–
62
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
26.
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.
26.1
United States dollar
At 31 December 2011
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Investment in associate
Quoted and other
investments
Loans, advances and
other assets
Property, plant and
equipment
Investment properties
Deferred tax
Liabilities and equity
Deposits and other
liabilities
Current tax liabilities
Equity
Interest rate repricing
gap
Up to 1
1 month
month to 3 months
US$
US$
GROUP
3 months 1 year to Non-interest
bearing
5 years
to 1 year
US$
US$
US$
Total
US$
28 035 809
–
–
–
–
–
– 2 126 657
–
–
–
–
–
–
–
–
– 28 035 809
–
591 667
2 126 657
591 667
227 750
227 750
71 944 721 20 345 346 5 128 510 17 338 815
7 066 111 121 823 503
6 801 982
2 510 000
421 383
99 980 530 20 345 346 7 255 167 17 338 815 17 618 893 162 538 751
6 801 982
2 510 000
421 383
–
–
–
–
–
–
–
-
–
–
-
–
101 387 356 17 582 458 16 074 789
–
–
101 387 356 17 582 458 16 074 789
–
–
–
–
3 531 634 138 576 237
–
1 157 974
1 157 974
–
– 23 371 581 23 371 581
– 28 061 189 163 105 792
(1 406 826) 2 762 888 (8 819 622) 17 338 815 (10 442 296)
(567 041)
Cumulative gap
(1 406 826) 1 356 062 (7 463 560) 9 875 255
(567 041)
–
63
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
27.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Group’s interest rate risk exposure on assets and liabilities denominated in
currencies other than United States Dollars. The amounts are shown at the equivalent values in United
States Dollars, the presentation currency. The financial assets and liabilities are categorised by the earlier of
contractual repricing or maturity dates.
27.1. Other foreign currencies
At 31 December 2012
Up to 1
1 month
month to 3 months
US$
US$
GROUP
3 months 1 year to Non-interest
bearing
5 years
to 1 year
US$
US$
US$
Total
US$
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Quoted and other
investments
Loans, advances and
other assets
Liabilities and equity
Deposits and other
liabilities
3 914 885
–
–
181 061
4 095 946
3 777 329
3 777 329
Interest rate repricing
gap
318 617
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3 914 885
–
82 513
82 513
–
82 513
181 061
4 178 459
–
–
3 777 329
3 777 329
82 513
401 130
Cumulative gap
318 617
318 617
318 617
318 617
401 130
–
64
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
28.
INTEREST RATE REPRICING AND GAP ANALYSIS
The table below analyses the Group’s interest rate risk exposure on assets and liabilities denominated in currencies
other than United States Dollars. The amounts are shown at the equivalent values in United States Dollars, the
presentation currency. The financial assets and liabilities are categorised by the earlier of contractual repricing
or maturity dates.
28.1 Other Foreign currencies
At 31 December 2011
Up to 1
1 month
month to 3 months
US$
US$
GROUP
3 months 1 year to Non-interest
bearing
5 years
to 1 year
US$
US$
US$
Total
US$
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Investment in associate
Quoted and other
investments
Loans, advances and
other assets
Liabilities and equity
Financial liabilities at
fair value
through profit and loss
Deposits and other
liabilities
4 230 144
–
–
–
437 160
4 667 304
–
–
–
–
–
–
–
–
4 036 279
4 036 279
145 262
145 262
–
–
–
–
–
–
–
–
–
Interest rate repricing
gap
631 025
–
(145 262)
–
–
–
–
–
–
–
–
–
–
–
–
–
4 230 144
–
–
81 278
81 278
–
81 278
437 160
4 748 582
–
–
–
–
4 181 541
4 181 541
81 278
567 041
Cumulative gap
631 025
485 763
485 763
485 763
567 041
–
65
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
28.
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.
28.1
At 31 December 2012
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Investment in associate
Quoted and other
investments
Loans, advances and
other assets
Non-current assets
held for sale
Property, plant and
equipment
Investment properties
Deferred tax
Liabilities and equity
Deposits and other
liabilities
Current tax liabilities
Equity
Net foreign exchange
Position
GROUP
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
54 256 160
2 363 652
62 750 1 466 870
21 613 58 171 045
5 501 963
1 025 919
243 593
–
–
–
–
–
–
–
–
82 513
–
–
–
5 501 963
1 025 919
326 106
146 418 933
173 952
2 742
1 213
3 154 146 599 994
2 225 300
–
–
–
–
2 225 300
8 187 459
3 115 300
1 380 596
222 355 223
–
–
–
2 537 604
–
–
–
–
–
–
65 492 1 550 596
–
–
–
8 187 459
3 115 300
1 380 596
24 967 226 533 682
191 225 304
588 966
30 942 083
222 756 353
2 483 554
–
–
2 483 554
48 090 1 239 777
–
–
48 090 1 239 777
–
–
5 908 195 002 633
–
588 966
– 30 942 083
5 908 226 533 682
(401 130)
54 050
17 402
310 819
18 859
–
66
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
28.
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.
28.1 At 31 December 2011
GROUP
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
28 035 808
2 708 277
(5 017) 1 504 542
22 343
32 265 953
2 126 657
591 667
227 750
–
–
–
–
–
–
–
–
81 278
–
–
–
2 126 657
591 667
309 028
Assets
Cash and cash
equivalents
Investment securities
held to maturity
Investment in associate
Quoted and other
investments
Advances and other
accounts
121 823 504
329 273
7 455
95 045
5 386
122 260 663
Property, plant and
equipment
Investment properties
Deferred tax
Liabilities and equity
Deposits and other
liabilities
Current tax liabilities
Equity
Net foreign exchange
6 801 982
2 510 000
421 383
162 538 751
–
–
–
3 037 550
–
–
–
–
–
–
2 438 1 680 865
–
–
–
27 729
6 801 982
2 510 000
421 383
167 287 333
138 576 237
1 157 974
23 371 581
163 105 792
2 371 994
–
–
2 371 994
17 830 1 774 704
–
–
17 830 1 774 704
–
–
17 013
–
–
17 013
142 757 778
1 157 974
23 371 581
167 287 333
position
(567 041)
665 556
(15 392)
(93 839)
10 716
–
29.
CONTINGENT LIABILITIES
Guarantees
Commitments to lend
At 31 December
GROUP
2012
US$
2011
US$
7 827 744
29 326 528
37 154 272
6 374 815
20 385 351
26 760 166
The Group enters into various irrevocable commitments and contingent liabilities in its normal course of
business in order to meet financial needs of customers. These obligations are not recognised on the statement
of financial position, but contain credit risk and are therefore part of the overall risk of the Group.
67
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
Guarantees commit the Group to make payments on behalf of clients in the event of a specified act.
Guarantees carry the same credit risk as loans.
Commitments to lend represent contractual commitments to advance loans and revolving credits.
Commitments have fixed expiry dates and may expire without being drawn upon, hence total contract
amounts do not necessarily represent future cash requirements.
30.
CAPITAL COMMITMENTS
Capital expenditure contracted for
Capital expenditure authorised but not yet
contracted for
At 31 December
Capital commitments will be financed from the Group’s own resources.
31.
OPERATING LEASE COMMITMENTS
Lease commitments
Up to 1 year
1 – 5 years
GROUP
2012
US$
-
2011
US$
45 107
5 739 655
5 739 655
6 908 068
6 953 175
4 923 042
984 608
3 938 434
4 726 271
945 254
3 781 017
Lease commitments relate to future rental commitments up to the expiry of the lease agreements.
32.
RELATED PARTIES
As required by IAS 24, Related Parties Disclosures, the Board’s view is that non-executive and executive
directors constitute the key management of the Group. Accordingly, key management remuneration is
disclosed below.
32.1
Compensation of key management personnel of the Group
Short – term employee benefits
Contribution to pension funds
32.2 Key management interest in an employee share options
1 658 807
94 314
1 753 121
1 437 437
69 193
1 506 630
At 31 December 2012, key management held no options to purchase ordinary shares of the Company.
32.3
Balances of loans to directors, officers and others
Loans to directors and officers or their companies are included in advances and other accounts (note 17.1).
Non - executive directors
Executive directors
Officers (Note 17.6)
Directors’ companies
Officers’ companies
Fair value adjustment
68
28 497
471 352
2 056 501
2 202 631
-
4 758 981
(177 022)
4 581 959
26 848
176 832
1 141 375
892 862
-
2 237 917
(86 152)
2 151 765
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
32.4
Other related party disclosures
Entities with significant
influence over the Group
2012
2011
Amounts owed by
related parties
US$
4 581 959
2 151 765
32.5
BORROWING POWERS
Holding Company
In terms of the existing Articles of Association, Article 102, the directors may from time to time, at their
discretion, borrow or secure the payment of any sum or sums of money for the purposes of the company
without any limitation.
Banking subsidiary
In terms of the existing Articles of Association, Article 55, the directors may from time to time, at their
discretion, borrow or secure the payment of any sum or sums of money for the purposes of the company
without any limitation.
33.
EMPLOYEE BENEFITS
33.1
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
2012.
33.2
Expense recognised in profit or loss
Defined Contribution Plan - NSSA
Defined Contribution Plan – NMB Bank Pension Fund
GROUP
2012
US$
98 045
575 594
673 639
2011
US$
74 255
376 174
450 429
The expense is recognised in profit or loss as part of staff costs under operating expenses (note 7).
33.3
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
69
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
33.3
Employee Share Option Scheme (cont’d)
any time within a period of five years from the date the options are granted and the issue price is based on
the higher of nominal value of the shares and the middle market price derived from the Zimbabwe Stock
Exchange prices for the trading day immediately preceding the date of offer. The options vest immediately
from date of issue and the fair value of the options is estimated at the grant date using the Black – Scholes
option pricing model, taking into account the terms and conditions upon which the instruments were
granted.
Movements in the year
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and
movements in share options during the year.
GROUP AND COMPANY
Outstanding as at 1 January
Lapsed
Issued
Exercised
Outstanding as at 31 December
2012
No.
000’s
9 072
–
–
–
9 072
WAEP$
0.005
–
–
–
0.005
Terms of options outstanding at 31 December 2012
GROUP AND COMPANY
Expiry date
7 January 2013
12 March 2013
Exercise price
US$
nil
nil
33.4
National Social Security Authority Scheme
WAEP$
0.005
–
–
–
0.005
2011
No.
000’s
9 072
–
–
–
9 072
2012
Shares
000’s
9 072
-
9 072
All employees of the Group are members of the National Social Security Authority Scheme, a defined
contribution plan to which both the employer and the employees contribute.
Contributions by the employer are charged to the profit and loss account and during the period amounted
to US$98 045 (2011 – US$74 255).
33.5
Number of employees
The total number of employees of the Group at 31 December 2012 was 303 (2011– 301).
70
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
34.
EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States
dollars at year end:
British Sterling GBP
South African Rand ZAR
European Euro EUR
Botswana Pula BWP
35.
RISK MANAGEMENT
31 December 2012
Mid - rate
US$
1.6156
8.4776
1.3200
7.7721
31 December 2011
Mid - rate
US$
1.5416
8.1852
1.2944
7.5301
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 Committee
(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
management 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, formulating
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)
c)
Macro Level: It encompasses risk management within a business area or across business lines. These
risk management functions are performed by middle management.
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 etc. The risk management in these
areas is confined to operational procedures set by management.
Risk management is premised on four (4) mutually reinforcing pillars, namely:
a)
b)
c)
d)
adequate board and senior management oversight;
adequate strategy, policies, procedures and limits;
adequate risk identification, measurement, monitoring and information systems; and
comprehensive internal controls and independent reviews.
35.1
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
71
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.1
Credit risk (cont’d)
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.
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
regulatory 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 limits,
prior to facilities being committed to clients by the business unit concerned. Renewals and reviews of
facilities are subject to the same review process;
Limiting concentrations of exposure to counter parties and industry for loans and advances;
Maintaining and monitoring the risk grading as per the RBZ requirement in order to categorize exposures
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.
35.1.2 Maximum exposure to credit risk without taking account of any collateral
Cash and cash equivalents (excluding cash on hand)
Investment securities held to maturity
Loans, advances and other accounts
Total
Guarantees
Commitments to lend
Total
GROUP
Note
2012
US$
2011
US$
47 966 102
14
5 501 963
17 143 948 197
197 416 262
28 669 484
2 126 657
115 194 551
145 990 692
29
29
7 827 744
29 326 528
37 154 272
6 374 815
20 385 351
26 760 166
Total credit risk exposure
234 570 534
172 750 858
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.
72
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.1.3 Risk concentrations of maximum exposure to credit risk
31 December
2012
Gross
Maximum
Exposure
US$
9 894 729
4 683 682
29 008475
46 673 432
30 216 258
1 347 402
214 163
30 379 234
152 417 375
31 December 31 December 31 December
2011
Net
Maximum
Exposure
US$
2011
Gross
Maximum
Exposure
US$
2012
Net
Maximum
Exposure
US$
9 121 606
1 386 729
4 700 752
4 683 682
26 977 166
4 581 975
33 713 556
18 241 682
17 076 201
4 869 704
3 856 637
297 402
5 747 287
176 663
26 021 587
18 403 441
60 259 454 119 596 646
3 308 817
4 700 752
1 267 557
15 856 566
5 151 471
1 870 743
5 094 937
14 425 810
51 676 653
(7 269 799)
(7 269 799)
(3 354 088)
(3 354 088)
Agriculture and horticulture
Conglomerates
Manufacturing
Distribution
Services
Mining
Food and beverages
Individuals
Provision for impairment losses
on loans and advances
Net exposure
145 147 576
52 989 655 116 242 558
48 322 565
35.1.4 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$92
157 951 (2011 –US$67 919 993).
73
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.1.5 Credit quality per sector
At 31 December
2012
Manufacturing
Distribution
Agriculture
and horticulture
Conglomerates
Services
Mining
Food and
beverages
Individuals
Total
At 31 December
2011
Manufacturing
Distribution
Agriculture
and horticulture
Conglomerates
Services
Mining
Food and
beverages
Individuals
Total
35.2
Market risk
Grade A
Pass
US$
Grade B
Grade C
Special
Mention Substandard
US$
US$
Grade D
Doubtful
US$
Grade E
Loss
US$
Total
US$
20 664 326
26 955 454
5 514 298
5 231 224
137 621
7 074 318
–
1 044 287
2 692 230
6 368 149
29 008 475
46 673 432
6 886 323
4 683 682
24 389 591
170 590
–
–
2 729 470
1 157 915
37 510
–
748 973
–
–
–
398 709
–
2 970 896
–
1 949 515
18 897
9 864 729
4 683 682
30 216 258
1 347 402
214 163
29 780 934
113 745 063
–
43 094
14 676 001
–
327 284
8 325 706
–
181 449
1 624 445
–
46 473
214 163
30 379 234
14 046 160 152 417 375
22 097 295
25 745 875
1 884 589
4 360 000
602 211
507 000
1 932 421
901 396
460 650
2 199 285
26 977 166
33 713 556
6 153 611
4 700 752
3 837 870
3 130 446
–
–
2 097 675
–
–
–
143 821
–
2 967 995
-
282 572
18 767
–
–
7 335
–
9 121 606
4 700 752
17 076 201
3 856 637
1 395 821
17 925 638
96 401 660
4 332 908
225 376
12 900 548
–
51 495
1 304 527
18 558
191 721
6 313 430
–
9 211
5 747 287
18 403 441
2 676 481 119 596 646
This is the exposure of the Bank’s on and off balance 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,
74
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.2
Market risk (cont’d)
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 2012
Currency
Increase/
(decrease) in
interest rates
%
0 to 1
months
US$
1 to 3
months
US$
USD
USD
USD
USD
USD
USD
5
3
1
(1)
(3)
(5)
(3 226 334)
(1 935 800)
(645 267)
645 267
1 935 800
3 226 334
548 196
328 918
109 639
(109 639)
(328 918)
(548 196)
For interest rate repricing and gap analysis refer note 24.1.
3months
to 1 year
US$
322 010
193 206
64 402
(64 402)
(193 206)
(322 010)
1 year to
5 years
US$
Total
US$
1 695 009
1 017 006
339 002
(339 002)
(1 017 006)
(1 695 009)
(661 119)
(396 670)
(132 224)
132 224
396 670
661 119
Sensitivity of net interest income
At 31 December 2011
Currency
Increase/
(decrease) in
interest rates
%
0 to 1
months
US$
1 to 3
months
US$
USD
USD
USD
USD
USD
USD
5
3
1
(1)
(3)
(5)
1 164 136
(698 481)
(232 827)
232 827
698 481
(1 164 136)
155 079
93 048
31 016
(31 016)
(93 048)
(155 079)
3months
to 1 year
US$
(432 006)
(259 203)
(86 401)
86 401
259 203
432 006
1 year to
5 years
US$
Total
US$
908 094
544 857
181 619
(181 619)
(544 857)
(908 094)
1 795 303
(319 779)
(106 593)
106 593
319 779
(1 795 303)
75
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.3
Foreign currency exchange rate risk
The table below calculates the effect of a reasonable possible movement of the significant currency rate
against the United States Dollar, with all other variables held constant. A negative amount in the table reflects
a potential net reduction in the statement of comprehensive income or equity while a positive amount reflects
a net potential increase.
At 31 December 2012
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
At 31 December 2011
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
34.4
Liquidity risk
% Change in Effect on profit
before tax
US$
currency
rate
5
3
1
(1)
(3)
(5)
17 183
10 310
3 437
(3 437)
(10 310)
(17 183)
% Change in Effect on profit
before tax
US$
currency
rate
5
3
1
(1)
(3)
(5)
(33 278)
(19 967)
(6 656)
6 656
19 967
33 278
Effect on
equity
US$
5 728
3 437
1 146
(1 146)
(3 437)
(5 728)
Effect on
equity
US$
(24 709)
(14 825)
(4 942)
4 942
14 825
24 709
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 cash flows 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
to 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.
76
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
34.4
Liquidity risk (cont’d)
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 2012
Guarantees
Commitments
to lend
At 31 December 2011
Guarantees
Commitments
to lend
On
Demand
US$
0 to 1
months
US$
1 to 3
months
US$
3 months
to 1 year
US$
1 year to
to 5 years
US$
Total
US$
–
4 001 505
–
–
–
4 001 505
–
–
–
3 826 239
–
7 827 744
15 526 528
19 352 767
13 800 000
13 800 000
29 326 528
37 154 272
804 213
222 811
443 734
4 904 057
– 17 489 137
804 213 17 711 948
2 141 902
2 585 636
754 312
5 658 369
–
–
–
6 374 815
20 385 351
26 760 166
The Group expects that not all of the contingent liabilities or commitments will be drawn before expiry of the
commitments.
35.5
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 management.
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.
35.6
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 legal 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.
77
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.7 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.
35.8
Strategic risk
This refers to current and prospective impact on a Bank’s earnings and capital arising from adverse business
decisions or implementing strategies that are not consistent with the internal and external environment. To
manage this risk, the Bank 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 management 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.
35.9
External credit ratings
The external trading ratings were given by Global Credit Rating (GCR), a credit rating agency accredited with
the Reserve Bank of Zimbabwe
Security class
Long term
2012
BBB-
35.10 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.
35.11 Capital Management
35.11.1 Holding Company
The capital allocation to the subsidiary units is in accordance with the regulatory requirements of the business
undertaken by the subsidiary.
35.11.2 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 earnings
(including current year profit), statutory reserve and other equity reserves.
78
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.11.2 Banking Subsidiary (cont’d)
The other component of regulatory capital is Tier 2 capital, which includes subordinated term debt, revaluation
reserves and portfolio provisions.
Tier 3 capital relates to an allocation of capital to market and operational risk.
Various limits are applied to elements of the capital base. The core capital (Tier 1) shall compromise not less
than 50% of the capital base and portfolio provisions are limited to 1.25% of total risk weighted assets.
The Bank’s regulatory capital position at 31 December 2012 was as follows:-
Share capital
Share premium
Retained earnings
Fair value gain on investment properties
Less: capital allocated for market
and operational risk
Credit to insiders
2012
US$
2011
US$
16 502
15 577 932
12 487 547
(2 411 775)
25 670 206
16 501
13 690 931
6 116 397
–
19 823 829
(1 198 520)
(2 231 128)
(571 954)
(892 862)
Tier 1 capital
Tier 2 capital (subject to limit as per Banking Regulations)
22 240 558
4 819 193
18 359 013
1 023 431
Revaluation reserve
Subordinated debt
Regulatory reserve (limited to 1.25% of risk weighted assets)
Portfolio provisions (limited to 1.25% of risk weighted assets)
2 411 775
–
2 301 683
105 735
–
–
1 023 431
–
Total Tier 1 & 2 capital
Tier 3 capital (sum of market and
operational risk capital)
Total capital base
27 059 751
19 382 444
1 198 520
571 954
28 258 271
19 954 398
Total risk weighted assets
182 361 802
138 868 906
Tier 1 ratio
Tier 2 ratio
Tier 3 ratio
Total capital adequacy ratio
RBZ minimum required
12.20%
2.64%
0.66%
15.50%
12.00%
13.22%
0.74%
0.41%
14.37%
10.00%
79
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
35.
EVENTS AFTER REPORTING DATE
35.1
Memorandum of understanding
On 31 January 2013, the Reserve Bank of Zimbabwe and participating members of the Bankers Association of
Zimbabwe (BAZ) signed a Memorandum of Understanding (MoU) which seeks to establish an understanding
on:
1. Bank charges on accounts whose monthly deposits are less than US$800.
2.
Interest rates on lending to a maximum of the Bank’s weighted average cost of funds plus a margin
of12.5%.
These measures took effect from 1 February 2013 and going forward these would have a pronounced effect on
the Bank’s profitability.
35.2 Recapitalisation
The shareholders of NMBZ Holdings Limited approved at an Extraordinary General Meeting held on 19 February
2013 an investment of US$14.8 million equity capital by three (3) strategic foreign investors. In addition, one
of the strategic foreign investors will provide a 7 year subordinated debt of US$1.4 million to the Bank. The
US$14.8 million equity will be invested as equity capital in the Bank by the holding company.
80
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Cont’d)for the year ended 31 December 2012
HISTORICAL FIVE YEAR FINANCIAL SUMMARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2012
US$
2011
US$
2010
US$
2009
US$
Restated
2008
US$
Interest from lending activities
Interest from investing activities
Interest expense
540 391
27 003 393 14 222 680
5 936 086
27 543 784 20 158 766
(8 257 254)
(10 050 003)
7 024 287
2 990 349
10 014 636
(3 143 168)
652 267
874 455
1 526 722
(723 626)
Net interest income
Net foreign exchange gains
Non-interest income
17 493 781 11 901 512
1 289 729
15 609 630 12 164 691
1 902 337
6 871 468
1 055 307
9 374 796
803 096
379 236
7 236 949
Net operating income
Operating expenditure
Impairment losses on loans
and advances
Share of profit/(loss) associate
35 005 748 25 355 932
(21 452 714) (16 979 741)
17 301 571
(15 365 768)
8 419 281
(7 385 212)
(3 985 062) (2 296 111)
113 573
434 252
(971 803)
(21 444)
(92 887)
–
Profit before taxation
Financial institutions levy
Taxation
10 002 224
–
(2 431 722)
6 193 653
–
(1 655 197)
942 556
–
(250 322)
941 182
(44 661)
1 381 766
Profit after taxation
7 570 502
4 538 456
692 234
2 278 287
Other comprehensive income
/(loss) for the year, net of tax
–
–
–
–
Total comprehensive income
for the year
7 570 502
4 538 456
692 234
2 278 287
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
81
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
HISTORICAL FIVE YEAR FINANCIAL SUMMARY(Cont’d)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
2012
US$
2011
US$
2010
US$
2009
US$
Restated
2008
US$
EQUITY
Share capital
Reserves
Equity
LIABILITIES
78 598
78 598
30 863 485 23 292 983
78 598
18 754 527
–
8 568 005
30 942 083 23 371 581
18 833 125
8 568 005
Deposits and other liabilities
Current tax liabilities
Deferred tax liabilities
195 002 633 142 757 778
1 157 974
–
588 966
–
83 156 444
641 969
207 966
30 094 657
299 162
746 107
Capital employed
226 533 682 167 287 333
102 839 504
39 707 931
ASSETS
Cash and cash equivalents
Loans, advances and other assets
Investments securities held to
maturity
Non-current assets held for sale
Quoted and other investments
Trade investments
Investment in associate
Investment properties
Property and equipment
Deferred tax assets
58 171 045 32 265 953
146 599 994 122 260 663
18 346 939
75 620 404
12 203 181
18 349 286
5 501 963
2 225 300
130 316
195 790
1 025 919
3 115 300
8 187 459
1 380 596
2 126 657
–
118 048
190 980
591 667
2 510 000
6 801 982
421 383
1 994 585
–
134 461
201 666
228 556
2 615 000
3 697 893
–
1 789 836
–
455 638
108 003
–
3 219 600
3 582 387
–
Employment of capital
226 533 682 167 287 333
102 839 504
39 707 931
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
82
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
HISTORICAL FIVE YEAR FINANCIAL SUMMARY(Cont’d)
CLOSING NUMBER OF SHARES
2 807 107 289 2 807 107 289 2 807 107 289 1 641 225 424*
1 608 159 059
2012
2011
2010
2009
2008
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
Closing price per share (US cents)
1.12
0.29
–
–
2.24
0.65
0.83
0.16
–
–
7.19
1.15
0.67
0.03
–
–
37
1.1
0.52
0.14
–
–
5.71
0.80
Market capitalisation (US$)
18 246 197
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 (%)
26
4
70
34
23
19
4
76
36
27.1
3.7
3
95
46
26.6
26
0.70
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.
–
–
–
–
–
–
–
–
6
–
–
–
83
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
NOTICE TO MEMBERS
Notice is hereby given that the 18th 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 18 June 2013 at 1000 hours for the following purposes:
ORDINARY BUSINESS
1. To receive and adopt the Financial Statements for the year ended 31 December 2012, together with the reports of
the Directors and Auditors thereon.
2. To appoint Directors. In accordance with the Articles of Association, Mr. B. Ndachena, Mr. J. Chenevix-Trench, and
Mr. J. de la Fargue retire by rotation. Being eligible, the retiring directors offer themselves for re-election.
3. To appoint Auditors for 2013.
4. To approve Messrs KPMG’s remuneration for the year ended 31 December 2012.
Note: A member of the company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend,
speak and on a poll, vote in his stead. A proxy need not be a member of the company. Proxy forms should be
forwarded to 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
28 March 2013
84
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 EXPLANATIONS REGARDING THE NOTICE OF THE ANNUAL GENERAL MEETING
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
B. Ndachena, J. Chenevix-Trench, and J. de la Fargue. All the retiring directors being eligible offer themselves for re-
election. Information about these directors is shown below:
Benson Ndachena - B. Acc (Hons) (UZ), CA(Z), ACMA, CGMA, MBL (Unisa).
Benson Ndachena, a Chartered Accountant by profession, joined the Group as the Senior Manager of Finance
and Administration on 1 July 2001. Prior to joining the Group, he held the position of Financial Controller of OK
Zimbabwe where he managed the Division’s Accounting Department. Benson commenced his career with Deloitte &
Touche Chartered Accountants (Zimbabwe) where he rose through the ranks to become an Audit Manager and Senior
Consultant and gained extensive experience in auditing, accounting, consultancy and taxation, over a period of eight
years. Benson is a Director of several private companies. He is the current Treasurer of the Mashonaland District
Society of Chartered Accountants.
Jonathan Chenevix-Trench - Literae Humaniores
Jonathan Chenevix-Trench graduated from Oxford University in 1984 with a degree in Classics (Classical History and
Philosophy), and joined the Investment banking Division of Morgan Stanley in London. After two years as an analyst
in Corporate Finance, he moved into the fixed income division, and spent the next 19 years in various trading and
management roles. From 2000 until 2005, Jonathan was responsible for the global Government, Interest Rate Derivative
and Foreign Exchange Trading Group, and in 2005 he became Chief Executive Officer of Morgan Stanley’s European
business, covering Fixed Income, Equities, Investment Banking, Asset Management and Wealth Management. In this
capacity, he also chaired the boards of Morgan Stanley’s regulated banks in the UK and in Russia. In August 2007,
Jonathan took on the role of Chief Operating Officer for the global Institutional Securities Group, and continued in this
position until resigning in December 2007. Jonathan now serves as Chairman of Ashdown Funding Ltd, and Chairman
of Elgeti Ashdown Advisers Ltd, both concerned with the real estate business in the UK and Germany. Jonathan is
also co-founder of African Century, which is building an agri-business across sub-Saharan East Africa. Jonathan has
served on the boards of both ISDA (International Swaps and Derivatives Association) and ICMA (International Capital
Markets Association), and is currently on the boards of the Royal Academy and of the Royal Ballet School in London,
as well as being a Trustee of the Chelsea Physics Garden.
James de la Fargue - BA Business Organisation (Herrit-Watt University), ACCA, Diplomas in Marketing & Marketing
Research, Certificate in General Agriculture
James de la Fargue is an accountant by profession. James has worked for a number of international organizations
including Touche Ross Management Consultants, Unilever PLC and Chargeurs SA. He is the former president of the
Zimbabwe Tobacco Association and worked at MBCA as a senior executive in charge of Corporate Finance. James
was a non- executive director of Tetrad Holdings Limited. From 1998 to date, James has been involved in business
consultancy work and management of an integrated farm in Centenary.
85
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 NOTICE TO MEMBERS
EXPLANATIONS REGARDING THE NOTICE OF THE ANNUAL GENERAL MEETING
(Cont’d)
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]. The current auditors of the Group are KPMG Chartered Accountants and it is proposed
that KPMG be re-appointed as auditors of the Group.
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, KPMG for the year ended 31 December 2012.
86
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012 SHAREHOLDERS’ ANALYSIS
Size of
Shareholding
0 - 5 000
5 001 - 10 000
10 001 - 50 000
50 001 - 100 000
100 001 - 500 000
500 001 - 1 000 000
1 000 001 - 10 000 000
10 000 001 and above
2012
Number of
shareholders
% of
Holders
2012
Issued
shares
%
shareholding
2 324
593
684
108
157
25
24
26
3 822 178
58.96
4 372 488
15.05
14 474 231
17.36
7 822 368
2.74
34 563 027
3.98
18 986 040
0.63
0.61
70 714 057
0.66 2 652 352 900
0.14
0.15
0.51
0.28
1.23
0.68
2.52
94.49
Total
3 941
100.00 2 807 107 289
100.00
Size of
Shareholding
0 - 5 000
5 001 - 10 000
10 001 - 50 000
50 001 - 100 000
100 001 - 500 000
500 001 - 1 000 000
1 000 001 - 10 000 000
10 000 001 and above
2011
Number of
shareholders
% of
Holders
2011
Issued
shares
%
shareholding
2 328
606
708
117
155
29
24
25
3 865 246
58.31
4 470 512
15.18
14 930 904
17.74
8 413 516
2.93
33 874 789
3.88
21 143 052
0.73
0.60
83 774 024
0.63 2 636 635 246
0.14
0.16
0.53
0.30
1.21
0.75
2.98
93.93
Total
3 992
100.00 2 807 107 289
100.00
87
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
SHAREHOLDERS’ ANALYSIS (cont’d)
Industry
Bank
Corporates
Employees
Deceased Estates
External Companies
Fund Managers
Insurance Companies
Investment Trusts and property
Local Residents
Local Nominees
Non Residents
Other Corporate Holdings
Pension Funds
2012
Holders
% of
Holders
2012
%
shares Shareholding
1
357
487
4
7
5
12
38
2 925
58
31
3
13
0.03
9.06
12.36
0.10
0.18
0.13
0.30
0.96
74.22
1.47
0.78
0.08
0.33
42 900
456 312 527
40 528 741
10 521 350
982 315 941
40 053
586 943 544
533 713 511
60 046 945
4 749 183
78 680 392
8 440
53 203 762
0.00
16.26
1.44
0.38
34.99
0.00
20.91
19.01
2.14
0.17
2.80
0.00
1.90
Total
3 941
100.00 2 807 107 289
100.00
Industry
Bank
Corporates
Employees
Deceased Estates
External Companies
Fund Managers
Insurance Companies
Investment Trusts and property
Local Residents
Local Nominees
Non Residents
Other Corporate Holdings
Pension Funds
2011
Holders
1
361
518
3
5
6
10
37
2 948
61
28
2
12
% of
Holders
0.03
9.04
12.98
0.08
0.13
0.15
0.25
0.93
73.85
2
0.7
0.05
0.3
2011
%
Shares Shareholding
0.00
42 900
15.29
430 472 797
1.46
41 247 975
0.37
10 506 424
19.88
559 772 582
0.00
34 297
20.94
589 581 677
18.89
531 949 711
2.05
57 707 863
16
438 663 405
3.43
96 684 281
0.00
8 082
1.79
50 435 295
Total
3 992
100.00 2 807 107 289
100.00
88
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
TOP TEN SHAREHOLDERS
2012 Number
%
of shares Shareholding
703 243 692
586 855 157
215 266 942
168 853 795
168 755 799
142 260 092
109 627 112
77 282 178
76 834 507
70 534 276
24.98
20.84
7.65
6.02
6.01
5.07
3.89
2.74
2.72
2.51
2011 Number
%
of shares Shareholding
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
20.93
14.72
9.97
7.65
6.02
6.01
5.07
3.89
3.01
2.74
1 African Century Financial Investments Limited
2 Old Mutual Zimbabwe Limited
3 Lalibela Limited
4 Alsace Trust
5 Cornerstone Trust
6 Wamambo Investments Trust
7 Drakmore Investments (Private) Limited
8 Martcap Investments (Private) Limited
9 Stanbic Nominees (Private) Limited
10 Tamlidge Investments (Private) Limited
1 Old Mutual Zimbabwe Limited
2 Les Nominees (Private) Limited
3 African Century Financial Investments Limited LLP*
4 Lalibela Limited
5 Alsace Trust
6 Cornerstone Trust
7 Wamambo Investments Trust
8 Drakmore Investments (Private) Limited
9 Stanbic Nominees (Private) Limited
10 Martcap Investments (Private) Limited
* African Century Financial Investments Limited LLP also held its shareholding through Les Nominees (Private)
Limited
TOP TEN SHAREHOLDERS
89
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
MEMBERS’ DIARY
Financial year end
31 December 2012
Reports:-
• Announcement of annual results
28 March 2013
• Annual financial statements posted to shareholders
May 2013
• Annual General Meeting
18 June 2013
• Announcement of the 2013 half-year results
August 2013
Dividend payments:
– Interim
– Final
n/a
n/a
90
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
Company Secretary V. Mutandwa
Registered Offices
4th Floor
Unity Court
Corner 1st/ Kwame Nkrumah Avenue
Harare
Zimbabwe
Telephone: +263 4 759651-9 / 759601-6
Facsimile +263 4 759648
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Auditors
KPMG
Mutual Gardens
100 The Chase (West)
Emerald Hill
Harare
Zimbabwe
Transfer Secretaries
In Zimbabwe
First Transfer Secretaries
1 Armagh Avenue, Eastlea
Harare
Zimbabwe
Legal Advisors
In Zimbabwe
Gill, Godlonton & Gerrans
7th Floor, Beverley Court
100 Nelson Mandela Avenue
Harare
Zimbabwe
SECRETARY AND REGISTERED OFFICE
NMB Centre
Corner George Silundika Avenue/
Leopold Takawira Street
Bulawayo
Zimbabwe
+263 9 70169
+263 9 68535
In UK
Computershare Investor Services PLC
The Pavilion
Bridgewater Road
Bristol
BS599 6ZZ
United Kingdom
In UK
Dechert
160 Queen Victoria Street
London
EC4 V4 QQ
UK
91
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
ANNUAL GENERAL MEETING FORM OF PROXY
I/We, ……………………………………………………....………………..………………………………...….…......................
of ……………………………………..……………………………………………………………….……………..
being a member of the above company and entitled to vote, hereby appoint
……………………………………………………………………………………………..…………………………
of …………………………………………….…………………………………………………………...…………..
or failing him …………………………………………………………………………………………..…………….
of ……………………………………………………………………………………………………………………..
or failing him, the Chairman of the meeting as my/our proxy to vote
for me/us on my/our behalf at the ANNUAL GENERAL MEETING of
the Company to be held on 18 June 2013 at 10:00 hours and at any adjournment thereof.
Signed this …………..………………………….. day of …………………………………………………….2013
Signature of member ………………………………………………………………………………………………..
Note: ( i)
In terms of Section 129 of the Companies Act (Chapter 24:03) a member of the company is entitled to
appoint one or more proxies to act in the alternative to attend, vote and speak in his stead. A proxy need
not be a member of the Company.
(ii) Sections 75 and 76 of the Company’s Articles of Association provide that instruments of proxy must
be signed and returned to reach the Registered Office of the Company not less than forty-eight hours
before the time for holding the meeting.
92
NMBZ HOLDINGS LIMITED | ANNUAL REPORT 2012
NMBZ Holdings Limited
4th Floor, Unity Court,
Cnr Kwame Nkrumah Ave/First Street,
Harare, Zimbabwe
Tel: (263-4) 759 651/9
Tel 2: (263-4) 759 601/6
Fax: (263-4) 798850