ANNUAL REPORT
2015
www.nmbz.co.zw
CONTENTS
Description
Financial Summary
Group Profile
Chairman’s Statement
Report of the Directors
Statement of Directors’ Responsibility
Report of the Independent Auditors
Statements of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Significant 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
Shareholders’ Information
Secretary and Registered Office
Annual General Meeting Form of Proxy
Page
3
4
5 - 6
7 - 13
14 - 15
16
17
18
19
20
21 - 29
30- 86
87 - 89
90
91 - 93
94 - 96
97
98
99
Financial Summary
Total income (US$)
Operating profit before impairment charge (US$)
Attributable profit (US$)
Basic earnings per share (US cents)
Total deposits (US$)
Total gross loans and advances (US$)
Total shareholders’ funds (US$)
Enquiries:
NMBZ HOLDINGS LIMITED
Benefit Peter Washaya, Group Chief Executive Officer, NMBZ Holdings Limited
Benson Ndachena, Chief Finance Officer, NMBZ Holdings Limited
Website:
Email:
Telephone:
31 December
2015
31 December
2014
59 396 619
17 405 739
5 490 068
1.43
277 216 769
243 241 018
50 543 864
48 078 454
7 442 884
1 667 247
0.43
235 362 677
217 463 319
45 047 616
benefitw@nmbz.co.zw
bensonn@nmbz.co.zw
http://www.nmbz.co.zw
enquiries@nmbz.co.zw
Tel: +263-4-759 651/9
3
Group Profile
The NMBZ Holdings Group (the Group) comprises the company (NMBZ Holdings Limited) and the wholly owned banking subsidiary, NMB Bank Limited
(the Bank), an equities holding company, Stewart Holdings Limited and dormant entities namely Brixton (Private) Limited, NMB Fund Management
(Private) Limited, Invariant (Private) Limited and Darksan (Private) Limited.
The Bank was established in 1993 as a merchant bank incorporated under the Companies Act (Chapter 24:03) and is now registered as a commercial
bank in terms of the Banking Act (Chapter 24:20). It operates through a branch network in Harare, Bulawayo, Masvingo, Kwekwe, 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 branch locations:-
Angwa City - Mezzanine Floor, Angwa City, Corner Kwame Nkrumah Avenue/Angwa Street, Harare
Avondale - 20 King George Road, Avondale, Harare
Borrowdale - Shops 37 & 38, Sam Levy’s Village, Borrowdale, Harare
Borrowdale Excellence Centre - Block 3 Suite F, Sam Levy Village, Borrowdale, Harare
Bulawayo - NMB Centre, Corner George Silundika Street/Leopold Takawira Street, Bulawayo
Eastgate - Shop 24, Eastgate Mall, Corner Sam Nujoma Street/Robert Mugabe Road, Harare
Gweru - 36 Robert Mugabe Road, Gweru
Head Office - Unity Court, Corner Kwame Nkrumah Avenue/First Street, Harare
Joina City - Shop 15, Upper Ground floor, Joina City Corner Jason Moyo / Innez Terrace, Harare
Kwekwe - 57A Robert Mugabe way, Kwekwe
Masvingo - Stand no. 377 Robert Mugabe Way, Masvingo
Msasa -77 Amby Drive, Harare
Mutare - Embassy Building, Corner Aerodrome Road/Second Street, Mutare
Southerton - 7 - 9 Plymouth Road, Harare
The Bank’s Automated Teller Machine (ATM) network, which accepts VISA cards, covers the following locations:
• Joina City - Harare
• Kwekwe
• Masvingo
• Msasa – Harare
• Mutare
• Southerton – Harare
• Angwa City - Harare
• Avondale - Harare
• Borrowdale - Harare
• Bulawayo
• Card Centre - Harare
• Eastgate
• Gweru
4
NMBZ HOLDINGS LIMITED Annual Report 2015 Chairman’s Statement
For the year ended 31 December 2015
GROUP RESULTS
Financial performance
The profit before taxation was US$7 909 138 during the period under
review and this gave rise to an attributable profit of US$5 490 068 which
translates to earnings per share of 1.43 cents (2014 – 0.43 cents).
Operating expenses amounted to US$26 872 649 and these were down
4% from a prior year of US$27 984 051 as a net result of cost cutting and
containment measures.
Impairment losses on loans and advances amounted to US$9 496 601
for the current period from a prior year of US$5 017 362 and the increase
was mainly due to increased provisioning as the economic environment
continues to deteriorate. The Board took a decision to write off loans and
advances amounting to US$11 704 157 during the year under review after
recovery efforts had not yielded the desired results.
Financial position
The Group’s total assets grew by 17% from US$286 049 034 as at 31
December 2014 to US$333 831 107 as at 31 December 2015.
B. A. CHIKWANHA
CHAIRMAN
INTRODUCTION
The Group has continued to make significant progress towards attaining its
Gross loans and advances increased by 12% from US$217 463 319 as at
short and medium term goals and recorded an attributable profit of US$5
31 December 2014 to US$243 241 018 as at 31 December 2015 mainly
490 068 in 2015 which was a material improvement from an attributable
due to an increase in loans advanced to the broader market segments.
profit of US$1 667 247 recorded in 2014. The significant improvement
The Bank’s non-performing loans ratio reduced to 13.19% at 31 December
in the operating results was largely underpinned by the bank’s decision
2015 from 17.74% at 31 December 2014.
to broaden its target market, stricter credit underwriting standards and
concerted efforts to contain non-performing loans.
The deposits increased by 18% from US$235 362 677 as at 31 December
2014 to US$277 216 769 as at 31 December 2015 as a result of a 22%
The deflationary pressures and the fall in aggregate demand, which
increase in current and deposit accounts.
accelerated in the last quarter of 2014, persisted into 2015. The economy
has continued to be characterised by shortage of liquidity, retrenchments
The Bank’s liquidity ratio closed the period at 30.37% and this was above
and company closures and these have further worsened default risk.
the statutory requirement of 30%.
STRATEGIC FOCUS
In line with our mission to provide premium financial services to high
networth individuals, businesses and uniquely branded technology
enabled products to SMEs and the broader market segments, the Board
has periodically reviewed this strategic focus in response to changes in the
global, regional and local operating environments. The Board is confident
that based on a number of probable scenarios considered, the Group is
firmly on course to attaining its short and medium term strategic targets.
Capital
The banking subsidiary’s capital adequacy ratio at 31 December 2015
calculated in accordance with the guidelines of the Reserve Bank of
Zimbabwe (RBZ) was 19.26% (31 December 2014 – 19.32%). The
minimum required by the RBZ is 12%. We consider the level of our
capitalisation to be adequate to support our underwriting pipeline business.
5
Chairman’s Statement (Cont’d)
For the year ended 31 December 2015
invaluable contributions they made to the boards over the years.
Capital (Cont’d)
The Group’s shareholders’ funds have increased by 12% from US$45 047
Ms. J. Maguranyanga, Mr. E. Sanderson, Mr. K. Qurashi and Mr. C.
616 as at 31 December 2014 to US$50 543 864 as at 31 December 2015
Chikaura were appointed to the boards of NMBZ Holdings Limited and
as a result of the current year’s attributable profit.
NMB Bank Limited with effect from 10 July 2015, 13 August 2015, 19
August 2015 and 24 December 2015 respectively. I would like to welcome
The Bank’s regulatory capital as at 31 December 2015 was US$42.1 million
the new board members and wish them a successful tenure.
and is in line with our target to meet the required minimum regulatory
capital of US$100 million for a Tier 1 bank by 31 December 2020 subject
to the projected improvement in the operating environment in the forecast
period.
DIVIDEND
In view of the need to retain cash in the business and to strengthen the
OUTLOOK AND STRATEGY
As initiated in September 2014, the Group continued to broaden the
market catchment segment for the banking subsidiary by tapping into
some segments of the mass market. The uptake of the mass market
products has been phenomenal and the Group will continue to focus on
growth opportunities available in this sector without compromising the
statutory capital requirements for the banking subsidiary, the Board has
service excellence which is synonymous with our flagship bank. Our key
proposed not to declare a dividend.
CORPORATE SOCIAL INVESTMENTS
We are committed to playing an active role in the communities we serve.
Our social investments during the year were channelled into the country’s
educational system, the disadvantaged, vulnerable groups, protection
of the environment, wildlife conservation, the arts and various sporting
disciplines. The activities and charities supported during the year included
Ruvarashe Trust, Nhaka Yevana Trust, Birdlife Zimbabwe, Island Hospice,
Manicaland Tennis tournament, Harare International Festival of the Arts
(HIFA), the Nomads Golf tournament and other charity golf tournaments.
In addition, we sponsored signage for 20 schools in Harare, Bulawayo and
Concession as our way of supporting the country’s educational system.
CORPORATE DEVELOPMENTS
Three new branches were opened in Kwekwe, Masvingo and Borrowdale
(Harare). The Borrowdale Excellence Centre caters for the bank’s high
networth customers and this service is also available at all our branches in
the major cities and towns.
DIRECTORATE
Mr. T. N. Mundawarara resigned as a director of NMBZ Holdings Limited and
NMB Bank Limited with effect from 19 March 2015. Mr. A.M.T. Mutsonziwa
and Mr. J. Chigwedere retired and did not seek re-election at the Annual
General Meeting held on 21 May 2015. Mr. R. Keighley resigned as a
director of the NMBZ Holdings Limited and NMB Bank Limited boards with
effect from 3 July 2015. Mr. B. W. Madzivire resigned as a director of both
NMBZ Holdings Limited and NMB Bank Limited boards with effect from
31 December 2015. I would like to thank them all for the immense and
6
differentiators in the financial services sector will continue to be service
excellence, technology leadership, agility and quick response times and all
these will be buttressed by our experienced and diversified human capital.
POST YEAR END DEVELOPMENTS
Following the decision by Commerzbank to cease the USD clearing
business for Zimbabwean banks by 31 March 2016, we changed our
correspondent bank. Consequently, our customers can now receive USDs
from offshore sources using our new accounts with Ecobank International,
France or Bank of China, South Africa. We are committed to a smooth
transition and sincerely apologise for any inconveniences caused to our
valued customers. Given the swift action taken by management, the
impact on the Bank’s operations has been minimal.
APPRECIATION
I would like to express my sincere gratitude and appreciation to our valued
clients who have continued to support us during this transition to become a
mass market bank, our shareholders and the regulatory authorities for their
valuable support during the period under review. My appreciation also goes
to my fellow board members, management and staff for their continued
dedication and commitment which has underpinned the achievement of
these results in the face of an increasingly difficult operating environment.
B. A. CHIKWANHA
CHAIRMAN
15 March 2016
NMBZ HOLDINGS LIMITED Annual Report 2015
Report Of The Directors
For the year ended 31 December 2015
We have pleasure in presenting to shareholders our report and the audited financial statements of the Group for the year ended 31 December 2015.
1.
SHARE CAPITAL
The authorised and issued share capital of the Company are as follows:-
1.1 Authorised: 600 000 000 ordinary shares of US$0.00028 each.
1.2
Issued and fully paid: 384 427 351 ordinary shares of US$0.00028 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$5 490 068 for the year ended 31 December 2015 (2014
-US$1 667 247).
3.
CAPITAL ADEQUACY
As at 31 December 2015, the Bank’s capital adequacy ratio computed under the Bank for International Settlements (BIS) rules was 19.26% (2014
- 19.32%).
4.
DIRECTORATE
4.1 During the year ended 31 December 2015, Messrs T. N. Mundawarara, A.M. T. Mutsonziwa, J. Chigwedere, R. Keighley and B. W. Madzivire retired
from the boards of NMBZ Holdings Limited and NMB Bank Limited.
4.2 BOARD OF DIRECTORS
Mr. B. A. Chikwanha
Mr. K. Qurashi*
Mr. B. P. Washaya
Ms. J. Maguranyanga**
Ms. M. Svova
Mr. C. Chikaura***
Mr. J. Chenevix-Trench
Mr. B. Zwinkels
Mr. C. Ndiaye
Mr. E. Sandersen****
Independent Non-Executive Director (Chairman)
Independent Non-Executive Director
Chief Executive Officer
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Non-Executive Director - (representing African Century)
Non-Executive Director - (representing AfricInvest)
Non-Executive Director - (representing FMO)
Non-Executive Director - (representing Norfund)
*Mr. K. Qurashi was appointed as a director of NMBZ Holdings Limited and NMB Bank Limited on 19 August 2015.
**Ms. J. Maguranyanga was appointed as a director of NMBZ Holdings Limited and NMB Bank Limited on 10 July 2015.
***Mr. C. Chikaura was appointed as a director of NMBZ Holdings Limited and NMB Bank Limited on 24 December 2015.
****Mr. E. Sandersen was appointed as a director of NMBZ Holdings Limited and NMB Bank Limited on 13 August 2015.
In accordance with the Articles of Association, all directors will retire by rotation at the forthcoming Annual General Meeting (AGM). All retiring directors,
being eligible, offer themselves for re-election.
7
Report Of The Directors (Cont’d)
For the year ended 31 December 2015
4.
DIRECTORATE (Cont’d)
4.2 Directors’ Interests
As at 31 December 2015 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:-
Mr. B. A. Chikwanha*
Mr. K. Qurashi
Ms. J. Maguranyanga
Mr. J. Chenevix-Trench**
Mr B. P. Washaya***
Mr.B.A.M Zwinkels****
Mr.E. Sandersen****
Mr. C. I. F Ndiaye****
Mr. C. Chikaura
Ms. M. Svova
31 December 2015
Shares
31 December 2014
Shares
10 000
-
600
71 207 639
2 070
-
-
-
-
-
-
-
600
71 207 639
2 070
-
-
-
-
-
71 220 309
71 210 309
*Mr. B. A. Chikwanha is the Chairman of the board of directors of NMBZ Holdings Limited and NMB Bank Limited.
**Mr. J. Chenevix-Trench represents African Century Financial Investments Limited.
***Mr. B. P. Washaya is the CEO of NMBZ Holdings Limited and NMB Bank Limited.
****Mr.B. Zwinkels, Mr. C. Ndiaye and Mr. E Sandersen represent AfricInvest (34 571 429 shares), FMO (34 571 429 shares) and Norfund (34 571 429 shares)
respectively on the board of directors of NMBZ Holdings Limited and NMB Bank Limited.
4.3 Total share options granted to executive directors
Mr. B. P. Washaya
31 December 2015
Share options
31 December 2014
Share options
275 873
275 873
275 873
275 873
8
NMBZ HOLDINGS LIMITED Annual Report 2015
Report Of The Directors (Cont’d)
For the year ended 31 December 2015
4.
DIRECTORATE (Cont’d)
4.4 Directors’ attendance at meetings
4.4.1 Board of Directors
Name
Mr. B. P. Washaya
Mr. B. A. Chikwanha
Mr. T. N. Mundawarara*
Mr. A. M. T. Mutsonziwa**
Mr. B. W. Madzivire*******
Mr. J. Chigwedere**
Mr. J. Chenevix Trench
Ms. M. R. Svova
Mr. R. Keighley***
Mr. B. A. M. Zwinkels
Mr. C. I. F. Ndiaye
Mr. E. Sandersen****
Ms. J. Maguranyanga*****
Mr. K. Qurashi******
Mr. C. Chikaura*******
Meetings held
Meetings attended
4
4
1
2
4
2
4
4
2
4
4
2
2
1
-
4
4
1
2
4
1
4
4
2
4
4
1
1
1
-
*Mr. T. N. Mundawarara resigned from the NMBZ Limited board with effect from 19 March 2015.
**Mr. A. M. T. Mutsonziwa and Mr. J. Chigwedere retired at the Annual General Meeting held on 21 May 2015.
***Mr. R. Keighley resigned from the NMBZ Holdings Limited board with effect from 3 July 2015.
****Mr. E. Sandersen was appointed to the NMBZ Holdings Limited board on 13 August 2015.
*****Ms. J. Maguranyanga was appointed to the NMBZ Holdings Limited board on 10 July 2015.
******Mr. K. Qurashi was appointed to the NMBZ Holdings Limited board on 19 August 2015.
*******Mr. B. W. Madzivire resigned from the NMBZ Holdings Limited board with effect from 31 December 2015.
********Mr. C. Chikaura became a member of the Committee with effect from 24 December 2015.
4.4.2 Audit Committee
Name
Ms. M. R. Svova
Mr. B. W. Madzivire***
Mr. A. M. T. Mutsonziwa*
Mr. K. Qurashi**
Mr. C. Chikaura****
Meetings held
4
4
2
2
-
Meetings attended
4
4
1
2
-
*Mr A. M. T. Mutsonziwa retired by rotation at the Annual General Meeting held on 21 May 2015.
**Mr. K. Qurashi became a member of the Committee with effect from 19 August 2015.
***Mr. B. W. Madzivire resigned from the Committee with effect from 31 December 2015.
****Mr. C. Chikaura became a member of the Committee with effect from 24 December 2015.
9
Report Of The Directors (Cont’d)
For the year ended 31 December 2015
4.
DIRECTORATE (Cont’d)
4.4.3 Risk Management Committee
Name
Mr. B. W. Madzivire*
Mr. B. P. Washaya
Mr. C. Ndiaye
Mr. R. Keighley**
Mr. E. Sandersen***
Ms. J. Maguranyanga****
Mr. K. Qurashi*****
Mr. B. A. Chikwanha******
Mr. C. Chikaura*******
Meetings held
Meetings attended
3
4
4
2
2
2
1
1
-
3
4
4
2
2
2
1
-
-
*Mr. B. W. Madzivire stepped down from the Committee with effect from 19 August 2015.
**Mr. R. Keighley resigned from the NMBZ Holdings Limited board with effect from 3 July 2015.
***Mr. E. Sandersen became a member of the Committee with effect from 13 August 2015.
****Ms. J. Maguranyanga became a member of the Committee with effect from 10 July 2015.
*****Mr. K. Qurashi became a member of the Committee with effect from 19 August 2015.
******Mr. B. A. Chikwanha became a member of the Committee with effect from 19 August 2015.
*******Mr. C. Chikaura became a member of the Committee with effect from 24 December 2015.
4.4.4 Asset and Liability Management (ALCO) & Finance Committee
Name
Mr. J. Chigwedere*
Mr. T. N. Mundawarara**
Mr. J. Chenevix-Trench
Mr. R. Keighley***
Mr. B. A. M. Zwinkels
Ms. M. R. Svova****
Mr. E. Sandersen*****
Mr. B. P. Washaya
Mr. B. A. Chikwanha******
Meetings held
Meetings attended
1
1
4
2
4
2
2
4
3
1
1
4
2
4
2
2
4
3
*Mr.J. Chigwedere retired by rotation at the Annual General Meeting held on 21 May 2015.
**Mr. T. N. Mundawarara resigned from the NMBZ Holdings Limited board with effect from 19 March 2015.
***Mr. R. Keighley resigned from the NMBZ Holdings Limited board with effect from 3 July 2015.
****Ms. M. R. Svova became a member of the Committee with effect from 16 August 2015.
***** E. Sandersen became a member of the Committee with effect from 13 August 2015.
******Mr. B. A. Chikwanha became a member of the Committee with effect form 17 March 2015, he stepped down from the committee with effect from 19
August 2015.
10
NMBZ HOLDINGS LIMITED Annual Report 2015
Report Of The Directors (Cont’d)
For the year ended 31 December 2015
4.
DIRECTORATE (Cont’d)
4.4.5 Loans Review Committee
Name
Mr. J. Chigwedere*
Mr.C. Ndiaye
Mr. B. A. M. Zwinkels
Mr. E. Sandersen**
Ms. J. Maguranyanga***
Mr. B. A. Chikwanha****
Mr.J.Chenevix-Trench
Meetings held
2
4
4
2
2
1
4
*Mr. J. Chigwedere retired by rotation at the Annual General Meeting held on 21 May 2015.
**Mr. E. Sandersen became member of the Committee with effect from 13 August 2015.
***Ms. J. Maguranyanga become member of the Committee with effect from 10 July 2015.
****Mr. B. A. Chikwanha stepped down from the Committee with effect from 18 March 2015.
4.4.6 Human Resources, Remuneration and Nominations Committee
Name
Mr. A. M. T. Mutsonziwa*
Mr. T. N. Mundawarara**
Mr. B. A. Chikwanha***
Mr. B. W. Madzivire****
Ms. J. Maguranyanga*****
Mr. C. Ndiaye
Mr. J. Chenevix-Trench
Mr. B. A. M. Zwinkels
Meetings held
2
1
4
3
3
5
5
5
Meeting attended
2
4
2
2
2
1
-
Meetings attended
2
1
4
3
3
5
5
5
*Mr. A. M. T. Mutsonziwa retired by rotation at the Annual General Meeting held on 21 May 2015.
**Mr. T. N. Mundawarara resigned from the NMBZ Holdings Limited board with effect from 19 March 2015.
***Mr. B. A. Chikwanha became a member of the Committee with effect from 19 March 2015.
****Mr. B. W. Madzivire became a member with effect from 19 August 2015, he then resigned from the committee with effect from 31 December 2015.
****Ms. J. Maguranyanga became a member of the Committee with effect from 10 July 2015.
4.4.7 Credit Committee
Name
Mr. T. N. Mundawarara*
Mr. B. A. Chikwanha**
Ms. M. R. Svova
Mr. R. Keighley ***
Mr. A. M. T. Mutsonziwa****
Mr. K. Qurashi *****
Mr. B. P. Washaya
Meetings held
2
9
11
5
3
4
11
Meetings attended
2
8
11
5
3
4
11
*Mr. T. N. Mundawarara resigned from the NMBZ Holdings Limited board with effect from 19 March 2015.
**Mr. B. A. Chikwanha became a member of the Committee with effect from 19 March 2015.
***Mr. R. Keighley resigned from the NMBZ Holdings Limited board with effect from 3 July 2015.
****Mr. A. M. T. Mutsonziwa retired by rotation at Annual General Meeting held on 21 May 2015.
*****Mr. K. Qurashi became a member of the Committee with effect from 19 August 2015.
11
Report Of The Directors (Cont’d)
For the year ended 31 December 2015
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. More recently, the National Code on Corporate Governance was launched and the Group is working on
adopting principles enunciated in this code as well. The Board has set up the Audit Committee, Human Resources and Remuneration Committee,
ALCO & Finance 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
Following the re-organisation of the Board, the NMBZ Holdings Limited and NMB Bank Limited boards comprise of ten directors each. The boards
of the holding company and the Bank are identical as the group obtained regulatory approval to have one board for the Group and the banking
subsidiary as the Bank is the group’s only operating subsidiary. The NMBZ Holdings and NMB Bank board comprises, of one executive and nine
non-executive directors. Of the nine non-executive directors, five are independent 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:
Ms. M. Svova
Mr. K. Qurashi
Mr. C. Chikaura
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:
Ms. J. Maguranyanga
Mr. J. Chenevix - Trench
Mr. B. A. M. Zwinkels
Mr. C. Chikaura
Mr. C. Ndiaye
Mr. B. A. Chikwanha
Chairperson - Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
5.4 Loans Review Committee
The Loans Review Committee assesses compliance of the loan book with the lending policy and the Banking Regulations. The Committee conducts
loan reviews independent of any person or Committee responsible for sanctioning credit.
Membership:
Ms. J. Maguranyanga
Mr. J. Chevenix-Trench
Mr. C. Ndiaye
Mr. B. A. M. Zwinkels
Mr. E. Sandersen
Chairperson - Independent Non-Executive Director
Non-Executive Director
Non - Executive Director
Non - Executive Director
Non-Executive Director
12
NMBZ HOLDINGS LIMITED Annual Report 2015
Report Of The Directors (Cont’d)
For the year ended 31 December 2015
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. B. A. Chikwanha
Mr. B. P. Washaya
Ms. M. Svova
Mr. K. Qurashi
Chairman - Independent Non-Executive Director
Chief Executive Officer
Independent Non-Executive Director
Independent Non-Executive Director
5.6 Asset and Liability Management & Finance Committee
The ALCO & Finance 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. In addition, the Committee monitors the business and financial strategies of the Company and keeps track of financial
performance vis a vis the budget.
Membership:
Ms. M. Svova
Mr. J. Chenevix - Trench
Mr. E. Sandersen
Mr. B. A. M. Zwinkels
Mr. B. P. Washaya
Chairperson-Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer
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. K. Qurashi
Ms. J. Maguranyanga
Mr. C. Ndiaye
Mr. E. Sandersen
Mr. C.Chikaura
Mr. B. A. Chikwanha
Mr. B. P. Washaya
Chairman-Independent Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Chief Executive Officer
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 2015 and to appoint auditors of the Company for the ensuing year.
By order of the Board
V MUTANDWA
COMPANY SECRETARY
Harare
15 March 2016
13
Statement Of Directors’ Responsibility
For the year ended 31 December 2015
1.
2.
3.
4.
RESPONSIBILITY
The Directors of the Company are mandated by the Companies Act (Chapter 24:03) 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).
CORPORATE GOVERNANCE
In its operations, the Group is guided by principles of corporate governance derived from the King III Report, the National Code on Corporate
Governance, 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.
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.
INTERNAL FINANCIAL CONTROLS
The board is responsible for ensuring that effective internal control systems are implemented within the Group. The Group maintains internal
controls and systems designed to provide reasonable assurance of the integrity and reliability of its records, safeguard the assets of the group and
prevent and detect fraud and errors. The Audit Committee in conjunction with the external auditors of the Group reviews and assesses the internal
control systems of the Group in key risk areas.
5. GOING CONCERN
The Directors have assessed the ability of the Group and its subsidiaries to continue operating as a going concern and believe that the preparation
of these financial statements on a going concern is still appropriate.
INTERNAL AUDIT
The internal audit function has formally defined objectives, authority, and responsibilities enshrined in the Internal 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 control including internal financial controls and the conduct of the Group’s operations.
REMUNERATION
The Human Resources, Remuneration and Nominations 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.
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 operationalising 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.
6.
7.
8.
14
NMBZ HOLDINGS LIMITED Annual Report 2015
Statement Of Directors’ Responsibility (Cont’d)
For the year ended 31 December 2015
9.
SOCIAL RESPONSIBILITY
The Group recognises its responsibility in the society within which it operates. The Group’s social investments were channelled into the country’s
educational system, the disadvantaged, vulnerable groups, protection of the environment, wildlife conservation, the arts and various sporting
disciplines.
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.
12. FINANCIAL STATEMENTS
The Company’s directors are responsible for the preparation and fair presentation of the financial statements, comprising the statement of financial
position, statement of comprehensive income, statement of changes in equity and the statement of cash flows as at 31 December 2015, together
with the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance
with International Financial Reporting Standards and legislative and regulatory requirements.
The directors’ responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies
and making accounting estimates that are reasonable in the circumstances.
Approval of the financial statements
The financial statements of the Company and Group appearing on pages 17 to 86 were approved by the board of directors on 15 March 2016 and
are signed on their behalf by:
B. A. CHIKWANHA
CHAIRMAN
Date: 15 March 2016
B. P. WASHAYA
GROUP CHIEF EXECUTIVE OFFICER
Date: 15 March 2016
15
KPMG
Mutual Gardens
100 The Chase (West)
Emerald Hill
P O Box 6 Harare
Zimbabwe
KPMG
Mutual Gardens
100 The Chase (West)
Emerald Hill
P.O. Box 6 Harare
Zimbabwe
Telephone:
Fax
Telephone +263 (4) 303700
+263 (4) 302600
(+263-4) 303700
+263 (4) 303699
(+263-4) 302600
:(+263-4) 303699
Fax:
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
NMBZ HOLDINGS LIMITED
Report on the Financial Statements
We have audited the consolidated and separate financial statements of NMBZ Holdings Limited, which comprise the statements of financial
position as at 31 December 2015, and the statements of comprehensive income, changes in equity and cash flows for the year then ended,
and the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes, as set out
on pages17 to 86.
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 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
International Standards on Auditing. 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, these financial statements present fairly, in all material respects, the consolidated and separate financial position of NMBZ
Holdings Limited as at 31 December 2015, and its consolidated and separate financial performance and cash flows for the year then ended
in accordance with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03) and the
Banking Act (Chapter 24:20).
KPMG CHARTERED ACCOUNTANTS (Zimbabwe)
HARARE
15 March 2016
16
KPMG, a Zimbabwean partnership and a member firm of the
KPMG network of independent member firms affiliated with KPMG
International Cooperative (”KPMG International”), a Swiss entity.
NMBZ HOLDINGS LIMITED Annual Report 2015
Statements Of Comprehensive Income
For the year ended 31 December 2015
Interest income
Interest expense
Net interest income
Net foreign exchange gains
Fee and commission income
Revenue
Non-interest income
Share of profit of associate
Operating expenditure
Impairment losses on loans
and advances
Profit/(loss) before taxation
Taxation (charge)/credit
Note
4
5
6.3
6.1
6.2
24
7
GROUP
COMPANY
2015
US$
2014
US$
2015
US$
2014
US$
35 761 355
(15 118 231)
31 072 461
(12 651 519)
20 643 124
18 420 942
1 416 445
20 984 694
1 822 432
15 121 536
43 044 263
35 364 910
-
-
-
-
-
-
1 234 125
-
62 025
-
(5 735)
-
(26 872 649)
(27 984 051)
21.3
(9 496 601)
(5 017 362)
-
-
8
7 909 138
(2 422 040)
2 425 522
(768 455)
(5 735)
289
1
-
1
-
-
1
430 690
-
(433 080)
-
(2 389)
(2 345)
(4 734)
Profit/(loss) for the year
5 487 098
1 657 067
(5 446)
Other comprehensive income
for the year, net of tax
6.4
2 970
10 180
-
-
Total comprehensive income/(loss) for the year
5 490 068
1 667 247
(5 446)
(4 734)
Attributable to:
Owners of the parent
Earnings per share (US cents)
-Basic
-Diluted basic
5 490 068
1 667 247
(5 446)
5 490 068
1 667 247
(5 446)
(4 734)
(4 734)
9.3
9.3
1.43
1.33
0.43
0.40
17
Statements Of Financial Position
As at 31 December 2015
SHAREHOLDERS’ FUNDS
Share capital
Capital reserves
Retained earnings
Total equity
Redeemable ordinary shares
Subordinated loan
Total shareholders’ funds
LIABILITIES
Deposits and other liabilities
GROUP
COMPANY
Note
2015
US$
2014
US$
2015
US$
2014
US$
10
11
12
13
14
15
78 598
19 546 840
15 169 029
34 794 467
14 335 253
1 414 144
78 598
19 093 810
10 131 991
29 304 399
14 335 253
1 407 964
78 598
15 800 111
742 814
16 621 523
14 335 253
-
78 598
15 800 111
748 260
16 626 969
14 335 253
-
50 543 864
45 047 616
30 956 776
30 962 222
16
283 287 243
241 001 418
656 568
656 572
Total shareholders’ funds and liabilities
333 831 107
286 049 034
31 613 344
31 618 794
ASSETS
Cash and cash equivalents
Current tax assets
Investment securities
Loans, advances and other assets
Investment in debentures
Non-current assets held for sale
Investments:-
Trade investments
Associates
Group companies
Quoted and other investments
Investment properties
Intangible assets
Property and equipment
Deferred tax assets
20
8.4
17.1
21
18
22
23
24
25
26
27
28
29
19
63 439 347
23 075
14 547 992
235 088 981
-
2 264 300
77 805
-
-
68 220
8 125 800
1 689 385
6 601 086
1 905 116
54 750 561
1 436 974
3 874 525
203 363 052
4 614 047
2 267 300
81 390
-
-
127 291
4 453 300
1 950 733
6 345 267
2 784 594
53
85 752
-
7 385
-
-
-
-
31 505 686
10 650
-
-
-
3 818
53
85 752
-
7 389
-
-
-
-
31 505 686
16 385
-
-
-
3 529
Total assets
333 831 107
286 049 034
31 613 344
31 618 794
……………………………………..
B. A. CHIKWANHA
……………………………………..
B. P. WASHAYA
15 March 2016
}
DIRECTORS
18
……………………………………..
V. MUTANDWA
COMPANY SECRETARY
15 March 2016
NMBZ HOLDINGS LIMITED Annual Report 2015
Statement Of Changes In Equity
For the year ended 31 December 2015
GROUP
Balances at 1 January 2014
Total comprehensive income for the year
Transfer to regulatory reserve
Share options issues
Balances at 31 December 2014
Total comprehensive income for the year
Transfer to regulatory reserve
Share
Capital
US$
Share Share Option Regulatory
Reserve
Reserve
US$
US$
Premium
US$
Retained
Earnings
US$
Total
US$
78 598
-
-
-
15 737 548
-
-
-
78 598
-
-
15 737 548
-
-
45 671
-
-
16 892
62 563
-
-
2 154 252
-
1 139 447
-
9 604 191
1 667 247
(1 139 447)
-
27 620 260
1 667 247
-
16 892
3 293 699
-
453 030
10 131 991
5 490 068
(453 030)
29 304 399
5 490 068
-
Balances at 31 December 2015
78 598
15 737 548
62 563
3 746 729
15 169 029
34 794 467
COMPANY
Balances at 1 January 2014
Total loss for the year
Share options issued
Balances at 31 December 2014
Total loss for the year
Share
capital
US$
78 598
-
-
Share Share option
reserve
US$
premium
US$
Retained
earnings
US$
Total
US$
15 737 548
-
-
78 598
-
15 737 548
-
45 671
-
16 892
62 563
-
752 994
(4 734)
-
16 614 811
(4 734)
16 892
748 260
(5 446)
16 626 969
(5 446)
Balances at 31 December 2015
78 598
15 737 548
62 563
742 814
16 621 523
19
GROUP
COMPANY
2015
US$
2014
US$
2015
US$
2014
US$
7 909 138
2 425 522
(5 735)
(2 389)
Statements Of Cash Flows
For the year ended 31 December 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before taxation
Non-cash items
-Impairment losses on loans and advances
-Investment properties fair value adjustment
-Profit on disposal of property and equipment
- Profit on disposal of investment properties
-Loss on disposal of property and equipment (included in staff costs)
-Quoted and other investments fair value adjustment
-Impairment/(impairment reversal) on land and buildings
-Depreciation
-Non-current assets held for sale fair value adjustment
-Amortisation of intangible asset
Operating cash flows before changes in
operating assets and liabilities
Changes in operating assets and liabilities
Deposits and other liabilities
Loans, advances and other assets
Investment in debentures
9 496 601
(118 278)
46 924
(635 500)
68 470
62 654
44 200
1 690 902
3 000
509 687
5 017 362
(37 800)
(6 274)
-
177 413
13 372
(46 900)
1 899 047
(3 000)
337 118
19 077 798
9 775 860
42 285 825
(41 222 530)
4 614 047
24 959 709
(27 064 142)
(629 324)
Net cash inflow/(outflow) generated from operations
24 755 140
7 042 103
Taxation
Corporate tax paid
Capital gains tax paid
(37 843)
(91 850)
(422 299)
(8 500)
Net cash inflow/(outflow) from operating activities
24 625 447
6 611 304
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property and equipment
Purchase of property and equipment
Acquisition of investment property
Proceeds on disposal of non-current assets held for sale
Acquisition of intangible asset
Increase in investment securities
Proceeds on disposal of investments propertites
101 767
(2 271 943)
(8 230 860)
-
(248 339)
(10 673 466)
5 380 000
10 177
(992 076)
(30 200)
39 000
(623 482)
810 946
-
Net cash outflow from investing activities
(15 942 841)
(785 635)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from subordinated loan
Interest capitalised on subordinated loan
Payment of interest on subordinated loan
Proceeds on disposal of unquoted investment
-
134 676
(128 496)
-
-
140 487
(218 413)
130 835
Net increase in cash and cash equivalents
8 688 786
5 878 578
Cash and cash equivalents at the beginning of the year
54 750 561
48 871 983
Cash and cash equivalents at the end of the year (note 20)
63 439 347
54 750 561
20
-
-
-
-
-
5 735
-
-
-
-
-
(4)
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53
53
-
-
-
-
-
6 559
-
-
-
-
4 170
(128 250)
(4)
-
(124 084)
-
(6 750)
(130 834)
-
-
-
-
-
-
-
(130 834)
-
-
-
130 835
1
52
53
NMBZ HOLDINGS LIMITED Annual Report 2015
Significant Accounting Policies
For the year ended 31 December 2015
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.
Unrealised gains resulting from transactions between the Group and the
associate are eliminated to the extent of the interest in the associate.
Unrealised losses are eliminated in the same way as unrealised gains,
but only to the extent that there is evidence of impairment. The financial
statements of the associate are prepared for the same reporting period as
the Group.
BUSINESS COMBINATIONS
Business combinations are accounted for using the acquisition method as
at the acquisition date – i.e. when control is transferred to the Group. The
consideration transferred in the acquisition is generally measured at fair
value, as are the identifiable net assets acquired.
Subsidiaries
Subsidiaries are those investees controlled by the Group. The Group
controls an investee if it is exposed to/or has rights to variable returns
from its involvement with the investee and has the ability to affect those
returns through its power over the subsidiary. 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.
In the holding company’s separate financial statements investment in
subsidiaries are accounted for at cost.
Any goodwill that arises is tested annually for impairment. Any gain on a
bargain purchase is recognised in profit or loss immediately. Transaction
costs are expensed as incurred, except if they are related to the issue of
debt or equity securities.
Any contingent consideration payable is measured at fair value at the
acquisition date. If the contigent consideration is classified as equity, then it
is not re-measured and settlement is accounted for within equity. Otherwise
subsequent changes in the fair value of the contingent consideration are
recognised in profit or loss.
Associates
An associate is an entity over which the Group has significant influence,
as evidenced by the Group holding directly or indirectly 20% or more of
the voting power of the investee representation on the Board and direct
involvement with the policy making processes of the investee. The Group’s
investment in its associate is accounted for using the equity method.
Under the equity method, the investment in the associate is measured in
the statement of financial position at cost plus post acquisition changes in
the Group’s share of the profit or loss and other comprehensive income
of the associate until the date on which significant influences ceases.
Goodwill relating to the associate is included in the carrying amount of the
investment and is neither amortised nor individually tested for impairment.
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.
Loss of control
When the Group loses control over a subsidiary, it derecognises the
assets and liabilities of the subsidiary, and any related non-controlling
interests (NCI) and other components of equity. Any resulting gain or loss
is recognised in profit or loss. Any interest retained in the former subsidiary
is measured at fair value when control is lost.
In the Holding Company’s separate financial statements investments in
subsidiaries are accounted for at cost.
Non-controlling interests
NCI are measured at their proportionate share of the acquiree’s identifiable
net assets at the acquisition date. Changes in the Group’s interest in a
subsidiary that do not result in a loss of control are accounted for as equity
transactions.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and
expenses (except for foreign currency transaction gains or losses) arising
from intra-group transactions, are eliminated in preparing the consolidated
financial statements. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no evidence of
impairment.
FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currencies are translated into United States Dollars
(US$), which is the respective functional currency of Group entities at the
21
Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
FOREIGN CURRENCY TRANSACTIONS (cont’d)
goodwill.
spot exchange rates at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies at
the reporting date are translated into the functional currency at the spot
exchange rate at that date. The foreign currency gain or loss on monetary
items is the difference between the amortised cost in the functional
currency at the beginning of the year, adjusted for effective interest and
payments during the year, and the amortised cost in the foreign currency
translated at the spot exchange rate at the end of the year.
Deferred tax assets are recognised for unused tax losses, unused tax
credits and deductible temporary differences to the extent that it is probable
that future taxable profits will be available against which they can be used.
Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will
be realised. Deferred tax is measured at the tax rates that are expected
to be applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date.
Non-monetary assets and liabilities that are measured at fair value in a
foreign currency are translated into the functional currency at the spot
exchange rate at the date on which the fair value is determined. Non-
monetary items that are measured based on historical cost in a foreign
currency are translated using the spot exchange rate at the date of the
transaction. Foreign currency differences arising on translation are
generally recognised in profit or loss.
TAXATION
Income tax
Income tax expenses comprise current, capital gains, deferred tax and
AIDS levy. It is recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or in other comprehensive
income.
Current tax
Current tax comprises expected tax payable or receivable on the taxable
income or loss for the year and any adjustment to the tax payable or
receivable in respect of previous years. It is measured using rates enacted
or substantively 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.
The measurement of deferred tax reflects the tax consequences that would
follow the manner in which the Group expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair
value is presumed to be recovered through sale, and the Group has not
rebutted this presumption.
Deferred tax assets and liabilities are offset if there is a legally enforceable
right to offset current tax liabilities and assets, and they relate to taxes
levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised simultaneously.
Additional taxes that arise from the distribution of dividends by the Bank
are recognised at the same time as the liability to pay the related dividend
is recognised. These amounts are generally recognised in profit or loss
because they generally relate to income arising from transactions that
were originally recognised in profit or loss.
DIVIDEND DISTRIBUTION
Dividend distribution to the Company’s shareholders is recognised as a
liability in the period in which the dividends are approved by the Company’s
shareholders.
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.
FINANCIAL INSTRUMENTS
Financial instruments – initial recognition and subsequent measurement
Deferred taxation
Deferred tax is recognised 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 is not
recognised for:
•
temporary differences on the initial recognition of assets or liabilities in
a transaction that is not a business combination and that affects neither
accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries to the
extent that it is probable that they will not reverse in the foreseeable
future; and
taxable temporary differences arising on the initial recognition of
•
•
22
(i) Date of recognition
All financial assets and financial liabilities are initially recognised on
the trade date, i.e., the date that the Group 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 management’s intention in
acquiring them. All financial instruments are measured initially at fair
NMBZ HOLDINGS LIMITED Annual Report 2015
Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
FINANCIAL INSTRUMENTS (Cont’d)
value plus transaction costs, except in the case of financial assets and
financial liabilities recognised 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 recognised 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, short
positions and customer loans that have been acquired principally for
the purpose of selling or repurchasing in the near term.
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 profit or loss 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 Group, 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
(iv) Financial assets and financial liabilities designated at fair value
investment, other than because of credit deterioration.
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 recognised in the statement of financial position at fair value. Changes
in fair value are recognised 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.
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 profit or loss. The
losses arising from impairment are recognised in the profit or loss 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 method.
(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
(viii) 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.
23
Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
FINANCIAL INSTRUMENTS (Cont’d)
arrangement; and either,
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.
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.
• The Group has transferred substantially all the risks and rewards of the
(ix)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.
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 Group 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.
Reclassifications are recognised 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 recognised in equity is recycled to the profit
and loss.
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’
24
Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that
the Group could be required to repay.
(ii) Financial liabilities
A financial liability is derecognised when the obligation under the
liability is discharged or cancelled or expires. Where an existing
financial liability is replaced by another from the same lender on
substantially different terms ,or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and the recognition of a new
liability. The difference between the carrying value of the original
financial liability and the consideration paid is recognised in profit or
loss.
FAIR VALUE MEASUREMENT
‘Fair value’ is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants
at the measurement date in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The fair
value of a liability reflects its non-performance risk.
When available, the Group measures the fair value of an instrument
using the quoted price in an active market for that instrument. A market
is regarded as active if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an
ongoing basis.
If there is no quoted price in an active market, then the Group uses
valuation techniques that maximise the use of relevant observable inputs
and minimise the use of unobservable inputs. The chosen valuation
technique incorporates all of the factors that market participants would take
into account in pricing a transaction.
The best evidence of the fair value of a financial instrument at initial
NMBZ HOLDINGS LIMITED Annual Report 2015
Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
FINANCIAL INSTRUMENTS (Cont’d)
recognition is normally the transaction price – i.e. the fair value of the
consideration given or received. If the Group determines that the fair value
at initial recognition differs from the transaction price and the fair value is
evidenced neither by a quoted price in an active market for an identical
asset or liability nor based on a valuation technique that uses only data
from observable markets, then the financial instrument is initially measured
at fair value, adjusted to defer the difference between the fair value at
initial recognition and the transaction price. Subsequently, that difference
is recognised in profit or loss on an appropriate basis over the life of the
instrument but no later than when the valuation is wholly supported by
observable market data or the transaction is closed out.
If an asset or a liability measured at fair value has a bid price and an ask
price, then the Group measures assets and long positions at a bid price
and liabilities and short positions at an ask price.
Portfolios of financial assets and financial liabilities that are exposed to
market risk and credit risk that are managed by the Group on the basis
of the net exposure to either market or credit risk are measured on the
basis of a price that would be received to sell a net long position (or paid to
transfer a net short position) for a particular risk exposure. Those portfolio-
level adjustments are allocated to the individual assets and liabilities on the
basis of the relative risk adjustment of each of the individual instruments
in the portfolio.
The fair value of a demand deposit is not less than the amount payable
on demand, discounted from the first date on which the amount could be
required to be paid.
The Group recognises transfers between levels of the fair value hierarchy
as of the end of the reporting period during which the change has occurred.
An analysis of fair values of financial instruments and further details as to
how they are measured are provided in Note 17.
Identification and measurement of impairment
At each reporting date, the Group assesses whether there is objective
evidence that financial assets not carried at fair value through profit or loss
are impaired. A financial asset or a group of financial assets is impaired
when objective evidence demonstrates that a loss event has occurred after
the initial recognition of the asset(s) and that the loss event has an impact
on the future cash flows of the asset(s) that can be estimated reliably.
Objective evidence that financial assets are impaired includes:
• significant financial difficulty of the borrower or issuer;
• default or delinquency by a borrower;
•
the restructuring of a loan or advance by the Group on terms that the
Bank would not consider otherwise;
indications that a borrower or issuer will enter bankruptcy;
the disappearance of an active market for a security; or
•
•
• observable data relating to a group of assets such as adverse changes
in the payment status of borrowers or issuers in the Group, or economic
conditions that correlate with defaults in the Group.
In addition, for an investment in an equity security, a significant or prolonged
decline in its fair value below its cost is objective evidence of impairment.
However, in specific circumstances a smaller decline or a shorter period
may be appropriate.
The Group considers evidence of impairment for loans and advances
and held-to-maturity investment securities at both a specific asset and a
collective level. All individually significant loans and advances and held-
to-maturity investment securities are assessed for specific impairment.
Those found not to be specifically impaired are then collectively assessed
for any impairment that has been incurred but not yet identified. Loans
and advances and held-to-maturity investment securities that are not
individually significant are collectively assessed for impairment by grouping
together loans and advances and held-to-maturity investment securities
with similar risk characteristics.
In assessing collective impairment, the Group uses statistical modelling of
historical trends of the probability of default, the timing of recoveries and
the amount of loss incurred, and makes an adjustment if current economic
and credit conditions are such that the actual losses are likely to be greater
or lesser than is suggested by historical trends. Default rates, loss rates
and the expected timing of future recoveries are regularly benchmarked
against actual outcomes to ensure that they remain appropriate.
Impairment losses on assets measured at amortised cost are calculated
as the difference between the carrying amount and the present value of
estimated future cash flows discounted at the asset’s original effective
interest rate.
If the terms of a financial asset are renegotiated or modified or an existing
financial asset is replaced with a new one due to financial difficulties of
the borrower, then an assessment is made of whether the financial asset
should be derecognised. If the cash flows of the renegotiated asset are
substantially different, then the contractual rights to cash flows from the
original financial asset are deemed to have expired. In this case, the original
financial asset is derecognised and the new financial asset is recognised
at fair value. The impairment loss before an expected restructuring is
measured as follows:
•
If the expected restructuring will not result in derecognition of the
existing asset, then the estimated cash flows arising from the modified
financial asset are included in the measurement of the existing asset
based on their expected timing and amounts discounted at the original
effective interest rate of the existing financial asset.
25
Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
FINANCIAL INSTRUMENTS (Cont’d)
• If the expected restructuring will result in derecognition of the existing
asset, then the expected fair value of the new asset is treated as
the final cash flow from the existing financial asset at the time of its
derecognition. This amount is discounted from the expected date of
derecognition to the reporting date using the original effective interest
rate of the existing financial asset.
Impairment losses are recognised in profit or loss and reflected in an
allowance account against loans and advances or held-to-maturity
investment securities. Interest on the impaired assets continues to be
recognised through the unwinding of the discount. If an event occurring
after the impairment was recognised causes the amount of impairment
loss to decrease, then the decrease in impairment loss is reversed through
profit or loss.
losses on available-for-sale
Impairment
investment securities are
recognised by reclassifying the losses accumulated in the fair value
reserve in equity to profit or loss. The cumulative loss that is reclassified
from equity to profit or loss is the difference between the acquisition cost,
net of any principal repayment and amortisation, and the current fair value,
less any impairment loss recognised previously in profit or loss. Changes
in impairment attributable to application of the effective interest method are
reflected as a component of interest income.
The Group writes off a loan or an investment debt security, either partially
or in full, and any related allowance for impairment losses, when the Bank
Credit Committee and the Board of Directors determines that there is no
realistic prospect of recovery.
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 allowance 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 allowance 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 recognised in profit
or loss.
26
Non-performing loans
Interest on loans and advances is accrued as income until such time as
reasonable doubt exists about its recoverability, thereafter and until all or part
of the loan is written off, interest continues to accrue on customer’s accounts
but is not included in income. Such suspended interest is deducted from
loans and advances in the statement of financial position. This policy meets
the requirements of the Banking Regulations, 2000.
Renegotiated loans and advances
Where possible, the Group seeks to restructure loans rather than to
take possession of collateral. This may involve extending the payment
arrangements and the agreement of new loan conditions. Once the terms
have been re-negotiated, any impairment is measured using the original
effective interest rate (EIR) as calculated before the modification of terms
and the loan is no longer considered past due. Management continuously
renews re-negotiated loans to ensure that all criteria are met and that future
payments are likely to occur. The loans continue to be subject to an individual
or collective impairment assessment, calculated using the loans original EIR.
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 41.1.4 for further analysis of collateral).
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
NMBZ HOLDINGS LIMITED Annual Report 2015 Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
FINANCIAL INSTRUMENTS (Cont’d)
agreements, therefore, the related assets and liabilities are presented
gross in the statement of financial position.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include notes and coins on hand, unrestricted
balances held with central banks and highly liquid financial assets with
original maturities of three months or less from the acquisition date that are
subject to an insignificant risk of changes in their fair value, and are used
by the Group in the management of its short term commitments.
Cash and cash equivalents are carried at amortised cost in the statement
of financial position.
is stated at cost
PROPERTY AND EQUIPMENT
less accumulated depreciation and
Equipment
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 recognised in
the profit or loss as incurred.
Land and buildings are measured at revalued amount less accumulated
depreciation on buildings and impairment losses recognised 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 recognised in other comprehensive income and
accumulated in the 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 recognised in profit or
loss, in which case the increase is recognised in profit or loss. A revaluation
deficit is recognised in profit or loss, except to the extent that it offsets an
existing surplus on the same asset recognised 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 derecognised 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 derecognised.
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.
20%
• Computers
• Motor Vehicles
25%
• Furniture & Equipment 20%
• Buildings
2%
Land and capital work-in-progress are not depreciated.
Amortisation of intangible assets:
The depreciable amount of an intangible asset with a finite useful life is
allocated on a straight line basis over its useful life. The amortisation rate
is as follows:
• Computer software
20%
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 qualifying 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
27
Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
PROPERTY AND EQUIPMENT (Cont’d)
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
rewards 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
rewards 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.
IMPAIRMENT OF NON FINANCIAL ASSETS
The carrying amounts of the Group’s non financial assets other than
consumables and deferred tax assets are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such
indication exists, the assets’ recoverable amounts are estimated.
An impairment loss is recognised whenever the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount. The
recoverable amount of assets is the greater of their fair value less cost
to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money
and the risks specific to the asset. In determining fair value less costs
to sell, an appropriate valuation model is used. Impairment losses of
continuing operations are recognised in profit or loss in those expense
categories consistent with the functions of the impaired asset, except for
property previously revalued where the revaluation was taken to other
comprehensive income. In this case, the impairment is also recognised in
other comprehensive income up to the amount of any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting
date as to whether there is any indication that previously recognised
impairment losses may no longer exist, or may have decreased. If such
an indication exists the bank estimates the assets or CGU’s recoverable.
A previously recognised impairment loss is reversed only if there has been
a change in the assumptions used to determine the assets recoverable
amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not
exceed its recoverable amount, nor exceeds the carrying amount that
would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is recognised
in profit or loss.
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 banking subsidiary 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.
28
NMBZ HOLDINGS LIMITED Annual Report 2015 Significant Accounting Policies (Cont’d)
For the year ended 31 December 2015
INTEREST INCOME
For all financial instruments measured at amortised cost and financial
instruments designated at fair value through profit or loss, interest income
or expense is recorded using the effective interest rate (EIR), which is the
rate that exactly discounts the estimated future cash payments or receipts
through the expected life of the financial instrument or a shorter period,
where appropriate, to the net carrying amount of the financial asset or
liability.
Interest income includes income arising out of the banking activities of
lending and investing.
INTEREST EXPENSE
Interest expense arises from deposit taking. The expense is recognised
in profit or loss as it accrues, taking into account the effective interest cost
of the liability.
NON-INTEREST INCOME
Other income comprises of income such as revenue derived from service
fees, commission, facility arrangement fees, bad debts recoveries and
profit/losses on disposals of property and equipment. Commission income
is brought to account on an accrual basis and bad debts recoveries on
a receipt basis. Service fee income is recognised on settlement date, or
where determinable, by stage of completion. Arrangement fee income is
deferred and recognised over the tenure of the facility.
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.
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.
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.
SHAREHOLDERS’ FUNDS
Shareholders’ funds refers to the total investment made by the
shareholders to the Group and it consists of share capital, share premium,
share options reserve, retained earnings, redeemable ordinary shares and
subordinated loans.
NON-CURRENT ASSETS HELD FOR SALE
Non-current assets or disposal groups are held for sale if their carrying
amount will be recovered principally through a sale transaction rather than
through continuing use. These are measured at the lower of the carrying
amount and fair value less costs to sell and they are not depreciated. If the
non-current asset or disposal group is scoped out of IFRS 5: Non-current
assets held for sale and discontinued operations then the measurement
principles of the relevant standard apply. Non-current assets are valued by
independent professional valuers.
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.
INVESTMENT SECURITIES
The Bank currently holds Reserve Bank of Zimbabwe Bonds and Treasury
Bills which were valued at amortised cost as there is currently no market
information to facilitate application of the fair value principles.
Short term employee benefits/and share based payments
Short term employee benefits are expensed as the related service is
provided. A liability is recognised for the amount expected to be paid if the
Group has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee and the obligation can
be estimated reliably.
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
29
Notes To The Financial Statements
For the year ended 31 December 2015
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 commercial and retail banking.
2. ACCOUNTING CONVENTION
Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and have been prepared in
compliance with the provisions of the Companies Act (Chapter 24:03) and the Banking Act (Chapter 24:20).
The financial statements were approved by the Board of Directors on 15 March 2016.
2.1 Basis of preparation
The financial statements have been prepared under the historical cost convention except for quoted and other investments, investment properties,
non-current assets held for sale and financial instruments which are carried at fair value and land and 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 Comparative financial information
The consolidated financial statements comprise consolidated statements of financial position, comprehensive income, changes in equity and cash
flows. The comparative consolidated statements of comprehensive income, changes in equity and cash flows are for twelve months.
2.3 Use of estimates, judgements and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised and in any future periods affected.
In the process of applying the Group’s accounting policies, management has made the following judgements which have the most significant effect
on the amounts recognised in the consolidated financial statements:
2.3.1 Deferred tax
Deferred taxation is recognised 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. Differed 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 for assets purchased (in ZWD) prior to 1 January 2009 the directors referred to applicable
effective exchange rates at the date of acquisition of assets or incurring of liabilities. The Zimbabwe Revenue Authority (ZIMRA), announced
methods to be used to account for the deferred tax arising on assets purchased in ZWD. These methods require the preparer to first estimate the
equivalent USD value of those assets at the time of purchase. Since the measurement of transactions in Zimbabwe dollars in the prior periods
is affected by several economic variables such as mode of payment and hyperinflation this is an area where the directors have had to apply their
judgement and acknowledge there could be significant variations in the results achieved depending on assumptions made.
30
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
2. ACCOUNTING CONVENTION (Cont’d)
2.3.2 Land and buildings
The properties were valued by an independent professional valuer. The valuer applied the rental yield method to assess fair value of land and
buildings. The determined fair value of land and buildings is most sensitive to the estimated yield as well as the long term vacancy rate. In addition,
the property market is currently not stable due to liquidity constraints and hence comparable values are also not stable.
2.3.3 Intangible assets
Intangible assets are initially recognised at cost. Subsequently the assets are measured at cost less accumulated amortisation and any accumulated
impairment loss.
2.3.4 Investment properties
Investment property were valued by an independent professional valuer. The professional valuers considered comparable market evidence of
recent sale transactions and those transactions where firm offers had been made but awaiting acceptance. In addition, the property market is
currently not stable due to liquidity constraints and hence comparable values are also not stable.
The directors exercised their judgement in determining the residual values of the other property and equipment which have been determined as nil.
2.3.5 Non-current assets held for sale
Non-current assets were valued by an independent professional valuer. All non-current assets held for sale are measured at their fair values. The
valuer applied the rental yield method to assess fair value of non-current assets held for sale. The determined fair value of non-current assets held
for sale 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.
2.3.6 Investment securities
2.3.6.1 Investment securities held to maturity
This relates to the RBZ Bond that was valued at amortised cost as there is no market information to facilitate the application of fair value principles
(refer to Note 17.1). There is currently no active market for these bonds.
2.3.6.2 Investment securities - loans and receivables
This relates to Treasury Bills which the Group currently holds which are valued at amortised cost (refer to Note 17.3) as there is currently no market
information to facilitate application of the fair value principles.
2.3.7 Impairment losses on loans and advances
The Group reviews its individually significant loans and advances at each reporting date to assess whether an impairment loss should be recorded in
profit or loss. In particular, judgement by management is required in the estimation of the amount and timing of future cash flows when determining
the impairment loss. In estimating these cash flows, the 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 Significant Accounting Policies – identification measurement of
impairment.
2.3.8 Fair value adjustments on unquoted investments
Fair value adjustment of unquoted investments is established with reference to the net asset value and the earnings capacity of the business.
31
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
2. ACCOUNTING CONVENTION (Cont’d)
2.3.8 Fair value adjustments on unquoted investments (Cont’d)
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.
2.3.9 Going concern
The Directors have assessed the ability of the Group to continue operating as a going concern and believe that the preparation of these financial
statements on a going concern basis is still appropriate.
2. 4 CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
2.4.1 STANDARDS, AMENDMENTS AND INTERPRETATIONS, EFFECTIVE ON OR AFTER 1 JANUARY 2016
The following standards, amendments and interpretations are effective for accounting periods beginning on or after 1 January 2016 and have not
been applied in preparing these consolidated financial statements. Those which are relevant to the Group are set below. The Group has no plan
to adopt these early but will adopt them as and when they become mandatory.
Standard/Interpretation
IAS 27
IAS 1
IFRS 15
IFRS 9
IAS 16 and IAS 38
Equity Method in Separate Financial Statements 1 January 2016
Effective date
Periods beginning on or after
Disclosure Initiative
Revenue from contracts with customers
Financial Instruments
Clarification of Acceptable Methods of
Depreciation and Amortisation
1 January 2016
1 January 2018
1 January 2018
1 January 2016
1 January 2019
IFRS 16
Leases
(i) IAS 27 Equity Method in Separate Financial Statements
The amendments in IAS 27 will allow an entity to apply the equity method in its separate financial statements to account for its investments in
subsidiaries, associates and joint ventures. The amendments are not anticipated to have a material impact on the financial statements of the Group.
The amendments apply retrospectively for annual periods beginning on or after 1 January 2016 and the Group has decided not to early adopt the
amendments.
(ii)
IAS 1 Disclosure Initiative
The amendments provide additional guidance on the application of materiality and aggregation when preparing financial statements. The
amendments are not anticipated to have a material impact on the financial statements of the Group.
The amendments apply for annual periods beginning on or after 1 January 2016.
(iii)
IFRS 15 Revenue from contracts with customers
This standard replaces IAS 11; Construction Contracts, IAS 18; Revenue, IFRIC 13; Customer Loyalty Programmes, IFRIC 15; Agreements for
the Construction of Real Estate, IFRIC 18; Transfer of Assets from Customers and SIC-31; Revenue – Barter of Transactions Involving Advertising
Services.
The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over
time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised. The
new standard is not anticipated to have a material impact on the financial statements of the Group.
32
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
STANDARDS, AMENDMENTS AND INTERPRETATIONS, EFFECTIVE ON OR AFTER 1 JANUARY 2016 (Cont’d)
(iv)
IFRS 9 Financial Instruments
The IASB issued the final IFRS 9 Financial Instruments Standard which replaces earlier version of IFRS 9. This standard will have a significant
impact on the Group, which will include changes in the measurement bases of the Group’s financial assets to amortised cost, fair value through
other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for
classification into these categories are significantly different. In addition, the IFRS 9 impairment model has been changed from an “incurred loss”
model from IAS 39 to an “expected credit loss” model, which is expected to increase the provision for bad debts recognised in the Group.
The standard is effective for annual periods beginning on or after 1 January 2018.
(v)
IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation
The amendments to IAS 16 Property Plant and Equipment states that revenue-based methods of depreciation cannot be used for property, plant
and equipment.
The amendment to IAS 38 Intangible assets introduces a rebuttable presumption that the use of revenue - based amortisation methods for intangible
assets is inappropriate. The presumption can only be overcome when revenue and consumption of economic benefits of the intangible asset are
highly correlated.
The amendments will not have an impact on the Group’s financial statements since the Group does not employ revenue-based methods of
depreciation or amortisation for its property and equity and intangible assets.
The amendment apply prospectively for annual periods beginning on or after 1 January 2016.
(vi)
IFRS 16 Leases
IFRS 16 is replacing the previous standard IAS 17 leases and it set out the principles of recognition, measurement, presentation and disclosure of leases
for both parties to a contract, the lessee and the lessor. IFRS 16 offers one model for lessees which will result in almost all leases being included on the
Statement of Financial Position. No significant changes have been included for lessors.
The new requirement will result in an increase of the Group’s lease assets and financial liabilities.
The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted only if the entity also adopts IFRS 15.
3.
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 2015 or 2014.
33
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
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 2015
Retail
Banking
US$
Corporate
Banking
US$
Treasury
US$
International
Banking
US$
Corporate
Finance Unallocated
US$
US$
Total
US$
Third party income
Impairment losses on loans and
advances
30 779 845 19 942 424
5 108 349
1 597 671
992 446
975 884
59 396 619
(2 551 763)
(6 944 838)
-
-
-
-
(9 496 601)
Net operating income
28 228 082 12 997 586
5 108 349
1 597 671
992 446
975 884
49 900 018
Results
Interest income
Interest expense
13 722 707 18 168 196
(7 523 511)
(5 246 473)
3 254 024
(2 059 002)
Net interest income
8 476 234 10 644 685
1 195 022
-
-
-
436 786
(289 245)
179 642
-
35 761 355
(15 118 231)
147 541
179 642
20 643 124
Fee and commission income
Depreciation of property and equipment
Amortisation of intangible assets
Segment profit/(loss) before tax
Income tax expense
Other comprehensive income for the
year net of tax
17 057 135
1 211 150
-
5 904 945
-
1 774 228
138 300
-
(243 837)
-
-
55 011
-
1 189 656
-
1 597 671
61 312
-
(193 878)
-
555 660
34 234
-
276 368
-
-
190 895
509 687
975 884
(2 422 040)
20 984 694
1 690 902
509 687
7 909 138
(2 422 040)
-
-
-
-
-
2 970
2 970
Profit/(loss) for the year
5 904 945
(243 837)
1 189 656
(193 878)
276 368
(1 443 186)
5 490 068
As at 31 December 2015
Assets and liabilities
Capital expenditure
Total assets
Total liabilities
1 251 784
1 178
45 811
126 097 301 120 542 673
66 724 913
76 966 500 83 704 208 117 254 881
2 200
95 275
-
-
3 183 641
-
1 219 309
2 520 282
17 187 304 333 381 107
6 775 798 284 701 387
34
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
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 2014
Retail
Banking
US$
Corporate
Banking
US$
Treasury
US$
International
Banking
US$
Corporate
Finance Unallocated
US$
US$
Total
US$
Third party income
Impairment losses on loans and
advances
21 813 485 19 173 640
3 940 624
1 755 909
986 037
408 758
48 078 453
(1 062 257)
(3 955 105)
-
-
-
-
(5 017 362)
Net operating income
20 751 228 15 218 535
3 940 624
1 755 909
986 037
408 758
43 061 091
Results
Interest income
Interest expense
9 645 130 18 806 056
(8 817 799)
(2 766 971)
2 118 193
(1 066 749)
Net interest income
6 878 159
9 988 257
1 051 444
-
-
-
156 389
-
346 693
-
31 072 461
(12 651 519)
156 389
346 693
18 420 942
Fee and commission income
Depreciation of property and equipment
Amortisation of intangible assets
Segment profit/ (loss) before tax
Income tax expense
Other comprehensive income for the
year net of tax
12 168 355
874 507
-
2 265 727
-
367 584
150 236
-
(2 944 200)
-
-
51 713
-
2 030 053
-
1 755 909
49 100
-
167 485
-
829 688
28 152
-
514 387
-
-
745 339
337 118
392 070
(768 455)
15 121 536
1 899 047
337 118
2 425 522
(768 455)
-
-
-
-
-
10 180
10 180
Profit/(loss) for the year
2 265 727
(2 944 200)
2 030 053
167 485
514 387
(366 205)
1 667 247
As at 31 December 2014
Assets and liabilities
Capital expenditure
Total assets
Total liabilities
536 358
2 636
73 534 753 148 614 532
71 428 790 73 143 586
4 957
46 786 313
90 995 763
13 306
95 275
-
-
1 526 165
-
1 058 301
1 615 558
15 491 996 286 049 034
6 841 243 242 409 382
35
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
4.
INTEREST INCOME
Loans and advances to banks
Loans and advances to customers
Investment securities
Other
5.
INTEREST EXPENSE
Due to banks
Due to customers
Other borrowed funds
GROUP
COMPANY
2015
US$
2 226 621
32 271 843
1 262 891
-
2014
US$
1 908 075
28 879 078
210 321
74 987
35 761 355
31 072 461
2015
US$
-
-
-
-
-
2014
US$
-
-
-
1
1
GROUP
2015
US$
4 443 681
10 378 937
295 613
2014
US$
4 144 427
8 029 421
477 671
15 118 231
12 651 519
6.
FEE AND COMMISSION INCOME, NON-INTEREST INCOME, NET FOREIGN EXCHANGE GAINS AND OTHER COMPREHENSIVE INCOME
6.1 Fee and commission income
Retail banking customer fees
Corporate banking credit related fees
Financial guarantee income
International banking commissions
Corporate finance fees
GROUP
COMPANY
2015
US$
17 057 135
1 567 808
206 420
1 597 671
555 660
2014
US$
12 168 355
227 064
140 520
1 755 909
829 688
20 984 694
15 121 536
2015
US$
2014
US$
-
-
-
-
-
-
-
-
-
-
-
-
36
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
6.
FEE AND COMMISSION INCOME, NON-INTEREST INCOME, NET FOREIGN EXCHANGE GAINS AND OTHER COMPREHENSIVE INCOME
(Cont’d)
6.2 Non - interest income
GROUP
COMPANY
2015
US$
(62 654)
(46 924)
118 278
635 500
(3 000)
49 523
430 851
112 551
2014
US$
(13 372)
6 274
37 800
-
3 000
36 160
1 502
(9 339)
2015
US$
(5 735)
-
-
-
-
-
-
-
2014
US$
(6 559)
-
-
-
-
-
-
437 249
1 234 125
62 025
(5 735)
430 690
Quoted and other investments fair value adjustments
(Loss)/profit on disposal of property and equipment
Fair value adjustment on investment properties
Profit on disposal on investment property
Fair value adjustment on non-current assets held for sale
Rental income
Bad debts recovered
Other operating income
6.3 Net foreign exchange gains
Net foreign exchange gains
Net foreign exchange income includes gains and losses from spot and forward contracts.
6.4 Other comprehensive income
Gross revaluation adjustment on land and buildings
Tax effect
Net revaluation adjustment
GROUP
2015
US$
2014
US$
1 416 445
1 822 432
2015
US$
4 000
(1 030)
2 970
2014
US$
13 710
(3 530)
10 180
37
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
7.
OPERATING EXPENDITURE
GROUP
COMPANY
2015
US$
2014
US$
2015
US$
2014
US$
The operating profit is after charging the following:-
Administration costs
Audit fees:
Current year
Prior year
Impairment/(impairment reversal) on land and buildings
Amortisation of intangible assets
Depreciation
Directors’ remuneration
- Fees for services as directors
- Other emoluments
12 702 704
11 798 556
85 557
109 325
44 200
509 687
1 690 902
499 024
232 705
266 319
74 014
140 433
(46 900)
337 118
1 899 047
996 571
316 255
680 316
Staff costs -salaries, allowances and related costs
-termination benefits
10 362 780
868 470
11 699 514
1 085 698
26 872 649
27 984 051
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
433 080
-
433 080
38
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
8.
TAXATION
8.1
Income tax expense/(credit)
Current tax
Aids levy
Capital gains tax
Deferred tax
8.2 Reconciliation of income tax charge/(credit)
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
Capital gains tax
GROUP
COMPANY
2015
US$
1 341 497
40 245
161 850
878 448
2014
US$
703 432
21 103
8 500
35 420
2 422 040
768 455
2015
US$
-
-
-
(289)
(289)
GROUP
COMPANY
2015
US$
2014
US$
2 036 603
624 572
(155 208)
392 950
(14 155)
161 850
(28 871)
213 715
(49 461)
8 500
2 422 040
768 455
2015
US$
(1 477)
-
3 398
(2 210)
-
(289)
2014
US$
5 796
174
6 750
(10 375)
2 345
2014
US$
(615)
(3 734)
3 678
(3 734)
6 750
2 345
39
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
8.
TAXATION (Cont’d)
8.3 Total taxation charge/(credit) analysed by company
Stewart Holdings (Private) Limited
NMB Bank Limited
NMBZ Holdings Limited
8.4 Current tax assets (income tax and aids levy)
At 1 January
Charge for the year
Payments during the year
9.
EARNINGS PER SHARE
GROUP
COMPANY
2015
US$
(2 720)
2 425 049
(289)
2014
US$
(1 112)
767 222
2 345
2 422 040
768 455
2015
US$
-
-
(289)
(289)
GROUP
COMPANY
2015
US$
(1 436 974)
1 543 592
(129 693)
2014
US$
(1 739 210)
733 035
(430 799)
2015
US$
(85 752)
-
-
2014
US$
-
-
2 345
2 345
2014
US$
(91 722)
12 720
(6 750)
(23 075)
(1 436 974)
(85 752)
(85 752)
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.
40
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
9.
EARNINGS PER SHARE (Cont’d)
9.1 Earnings
Attributable earnings
9.2 Number of shares
Weighted average shares in issue
Diluted weighted average number of shares
Number of shares at beginning of period
Effect of dilution:
Share options granted but not issued
Share options approved but not granted
9.3 Earnings per share (US cents)
Basic earnings per share
Diluted earnings per share
2015
US$
2014
US$
5 490 068
1 667 247
2015
384 427 351
384 427 351
2014
384 427 351
384 427 351
384 427 351
384 427 351
4 128 434
23 942 639
4 128 434
23 942 639
412 498 424
412 498 424
1.43
1.33
0.43
0.40
41
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
10. SHARE CAPITAL
10.1 Authorised
GROUP AND COMPANY
2015
Shares
million
2014
Shares
million
2015
US$
2014
US$
Ordinary shares of US$0.00028 each
600
600
168 000
168 000
10.2 Issued and fully paid
10.2.1 Ordinary shares
Ordinary shares
10.2.2 Redeemable ordinary shares
At 1 January
Shares issued (note 13)
GROUP AND COMPANY
31 December
2015
Shares
million
31 December
2014
Shares
million
31 December
2015
US$
31 December
2014
US$
281
281
281
281
78 598
78 598
78 598
78 598
31 December
2015
Shares
million
31 December
2014
Shares
million
31 December
2015
US$
31 December
2014
US$
104
-
104
104
-
104
29 040
-
29 040
29 040
-
29 040
Of the unissued ordinary shares of 215 million shares (2014 – 215 million), options which may be granted in terms of the NMBZ 2005 Employee Share
Option Scheme (ESOS) amounted to nil (2014 – nil).
Share options which may be granted in terms of the 2012 ESOS amount to 28 071 073 and as at 31 December 2015; 4 128 434 share options had been
allocated from the Scheme.
Subject to the provisions of section 183 of the Companies Act (Chapter 24:03), the unissued shares are under the control of the directors.
42
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements
For the year ended 31 December 2015
11. CAPITAL RESERVES
GROUP
Share premium
Share option reserve
Regulatory
Total capital reserve
11.1 Nature and purpose of reserves
11.1.1 Share premium
2015
US$
15 737 548
62 563
3 746 729
2014
US$
15 737 548
62 563
3 293 699
COMPANY
2015
US$
2014
US$
15 737 548
62 563
-
15 737 548
62 563
-
19 546 840
19 093 810
15 800 111
15 800 111
This reserve represents the excess amount paid for the shares over and above the nominal value of the shares.
11.1.2 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 39.3 for further details of these plans.
11.1.3 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
Analysis of retained profit by company
NMBZ Holdings Limited
NMB Bank Limited
Stewart Holdings (Private) Limited
GROUP
COMPANY
2015
US$
742 814
14 439 723
(13 508)
2014
US$
748 260
9 346 447
37 284
2015
US$
742 814
-
-
2014
US$
748 260
-
-
Total
15 169 029
10 131 991
742 814
748 260
43
Notes To The Financial Statements
For the year ended 31 December 2015
13. REDEEMABLE ORDINARY SHARES
Nominal value (note 10.2.2)
Transfer from share premium
31 December
2015
US$
31 December
2014
US$
29 040
14 306 213
29 040
14 306 213
14 335 253
14 335 253
On 30 June 2013 the Company received US$14 831 145 capital from Nederlandse Financierings-Maatschappij Voor Ontiwikkelingslanden N.V. (FMO),
Norwegian Investment Fund for Developing Countries (Norfund) and AfricInvest Financial Sector Holdings (AfricInvest) who were allocated 34 571 429
shares each (total 103 714 287) for individually investing US$4 943 715. This amount, net of share issue expenses, was used to recapitalise the Bank in
order to contribute towards the minimum capital requirements set by the Reserve Bank of Zimbabwe of US$100 million by 31 December 2020.
NMBZ Holdings Limited (NMBZ) entered into a share buy-back agreement with Norfund, FMO and AfricInvest, where these three strategic investors have a
right on their own discretion at any time after the 5th anniversary (30 June 2018) but before the 9th anniversary (30 June 2022) of its first subscription date,
to request NMBZ to buy back all or part of its NMBZ shares at a price to be determined using the agreed terms as entailed in the share buy-back agreement.
It is a condition precedent that at any point when the share buy-back is being considered, the proceeds used to finance the buy-back should come from the
distributable reserves which are over and above the minimum regulatory capital requirements. Further, no buy-back option can be exercised by any investor
after the 9th anniversary (30 June 2022) of the effective date.
The share buy-back agreement creates a potential obligation for NMBZ Holdings Limited to purchase its own instruments. The shares issued gave rise to
a potential financial liability and are classified as redeemable ordinary shares.
14. SUBORDINATED LOAN
Balance at 1 January
Interest capitalised
Interest paid
GROUP
2015
US$
1 407 964
134 676
(128 496)
2014
US$
1 485 890
140 487
(218 413)
1 414 144
1 407 964
In 2013, the Bank received a subordinated term loan amounting to US$1.4 million from a Development Financial Institution which attracts an interest rate of
LIBOR plus 10% and has a seven year maturity date (13 June 2020) from the first disbursement date.
The above liability would, in the event of the winding up of the issuer, be subordinated to the claims of depositors and all other creditors of the issuer. The
Group has not had any defaults on the principal and interest with respect to this subordinated loan during the year ended 31 December 2015. However,
there were breaches to the financial covenants regarding the open asset exposure ratio that stood at 41.5% instead of a maximum of 30% as well as the
aggregate un-hedged open foreign currency positions ratio that stood at 12.6% instead of a cap of 10%. The Bank will apply for a waiver of the non-compliant
ratios by 31 March 2016.
44
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements
For the year ended 31 December 2015
15. TOTAL SHAREHOLDERS’ FUNDS
GROUP
COMPANY
2015
US$
2014
US$
2015
US$
2014
US$
Shareholders’ funds
50 543 864
45 047 616
30 956 776
30 962 222
50 543 864
45 047 616
30 956 776
30 962 222
Shareholders’ funds refer to the total investments made by the shareholders into the Group and it consists of share capital (refer to Note 10), capital and
reserves (refer to Note 11), retained earnings (refer to Note12), redeemable ordinary shares (refer to Note 13) and the subordinated loan (refer to Note 14).
16. DEPOSITS AND OTHER LIABILITIES
16.1 Deposits and other liabilities by type
GROUP
COMPANY
Deposits from banks and other
financial institutions**
Current and deposit accounts
from customers*
Total deposits
Trade and other payables*
2015
US$
2014
US$
63 192 674
59 739 033
214 024 095
175 623 644
2015
US$
-
-
2014
US$
-
-
277 216 769
6 070 474
235 362 677
5 638 741
-
656 568
-
656 572
283 287 243
241 001 418
656 568
656 572
*The carrying amounts of Trade and other payables approximate the related fair value due to their short term nature.
**Included in deposits from banks and other financial institutions are loan balances of US$833 333 and US$7 368 421 due to Nederlandse Financierings-
Maatschappij Voor Ontiwikkelingslanden N.V. (FMO) and Societe de Promotion de Participation Pour la Cooperation Economique SA (Proparco) respectively.
The Group has not had any defaults on the principal and interest with respect to these loans during the year ended 31 December 2015. However, there were
breaches to the Proparco financial covenants regarding the following ratios:
• Open credit exposure – 41.5% (instead of a maximum of 25%)
• Non – performing loans ratio – 13.2% (instead of a maximum of 10%)
The Bank will apply for a waiver of the non-compliant ratios by 31 March 2016.
45
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
16. DEPOSITS AND OTHER LIABILITIES (Cont’d)
16.2 Maturity analysis
Less than 1 month
1 to 3 months
3 to 6 months
6 months to 1 year
1 to 5 years
Over 5 years
16.3 Sectoral analysis of deposits
Agriculture
Banks and other financial institutions
Distribution
Individuals
Manufacturing
Mining companies
Municipalities and parastatals
Other deposits
Services
Transport and telecommunications companies
17. FINANCIAL INSTRUMENTS
17.1 Investment securities
Government and public sector securities - RBZ Bonds held to maturity
Treasury Bills - loans and receivables
GROUP
2015
US$
2014
US$
184 324 981
66 129 516
3 241 887
14 969 876
8 550 509
-
172 324 494
32 017 300
4 887 371
8 890 799
17 242 713
-
277 216 769
235 362 677
2015
US$
7 959 554
63 192 674
28 153 680
30 782 718
37 633 942
6 268 507
11 833 310
34 054 452
47 908 714
9 429 218
GROUP
%
3
23
10
11
14
2
4
12
17
4
2014
US$
4 706 661
59 739 033
21 893 891
31 127 616
28 354 313
4 125 974
10 367 121
30 124 932
38 488 209
6 434 927
277 216 769
100
235 362 677
%
2
25
9
13
12
2
5
13
16
3
100
Cost
2015
US$
Cost
2014
US$
3 817 687
10 730 305
3 874 525
-
14 547 992
3 874 525
The Group holds Treasury Bills and Government bonds amounting to US$14 547 992 with interest rates ranging from 2.5% to 5%. Liquidity induced trades
have occurred in the secondary market and there is industry consensus that these trades do not represent free market activity. In light of the absence of an
active market for the Treasury Bills, the instruments are recorded at amortised cost. Of the total Treasury Bills balance, a total of US$6 136 716 has been
pledged as security on interbank borrowings.
46
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements
For the year ended 31 December 2015
17. FINANCIAL INSTRUMENTS (Cont’d)
17.2 Maturity analysis of investment securities held to maturity
Less than 1 month
1 to 3 months
3 to 6 months
6 months to 1 year
1 year to 5 years
Over 5 years
17.3 Maturity analysis of investment securities - loans and receivables
Less than 1 month
1 to 3 months
3 to 6 months
6 months to 1 year
1 year to 5 years
Over 5 years
2015
US$
-
1 314 802
2 502 885
-
-
-
2014
US$
-
-
2 582 519
1 292 006
-
-
3 817 687
3 874 525
2015
US$
-
-
-
6 329 114
3 400 415
1 000 776
10 730 305
2014
US$
-
-
-
-
-
-
-
17.4 Fair values of financial instruments
The fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For
all other financial instruments, the Group determines fair values using other valuation techniques.
For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgement
depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.
Valuation models
The Group measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements.
• Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments.
• Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices).
This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable
from market data.
• Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable
data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on
quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the
instruments.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to
transfer vthe liability in an orderly transaction between market participants at the measurement date.
47
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
17. FINANCIAL INSTRUMENTS (Cont’d)
17.4 FAIR VALUES OF FINANCIAL INSTRUMENTS (Cont’d)
Financial instruments measured at fair value – fair value hierarchy
Trade investments
Quoted investments
31 Dec
2015
US$
77 805
68 280
146 085
GROUP
Level 1
US$
-
68 280
68 280
Level 2
US$
-
-
-
Level 3
US$
77 805
-
77 805
During the reporting period ended 31 December 2015, 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.The trade investments were valued using the net asset value method.
Trade investments
Quoted investments
31 Dec
2014
US$
81 390
127 291
GROUP
Level 1
US$
-
127 291
208 681
127 291
Level 2
US$
-
-
-
Level 3
US$
81 390
-
81 390
During the reporting period ended 31 December 2014, 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.
48
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
17. FINANCIAL INSTRUMENTS (Cont’d)
17.4.1 Financial instruments not measured at fair value
The below table sets out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierarchy into
which each fair value measurement is categorised:
31 December 2015
GROUP
Assets
Cash and cash equivalents
Advances and other assets
Investment in debentures
Investment securities
Total
Liabilities
Deposits and other liabilities
Level 1
US$
-
-
-
-
-
-
-
Level 2
US$
63 439 347
-
-
-
Level 3
US$
-
235 088 981
-
14 547 992
Total carrying
amount
US$
63 439 347
235 088 981
-
14 547 992
63 439 347
249 636 973
313 076 320
283 287 243
283 287 243
-
-
283 287 243
283 287 243
31 December 2014
GROUP
Assets
Cash and cash equivalents
Advances and other assets
Investment in debentures
Investment securities held to
maturity
Total
Liabilities
Deposits and other liabilities
Level 1
US$
-
-
-
-
-
-
-
Level 2
US$
54 750 561
-
4 614 047
Level 3
US$
-
203 363 052
-
Total carrying
amount
US$
54 750 561
203 363 052
4 614 047
-
3 874 525
3 874 525
59 364 608
207 237 577
266 602 185
241 001 418
241 001 418
-
-
241 001 418
241 001 418
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:
• The fair values of cash and cash equivalents, advances and other assets and deposits and other liabilities carrying amounts approximate their fair values
largely due to the short - term maturities of these instruments.
• Fair value of financial assets and liabilities at fair value through profit or 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.
49
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
17. FINANCIAL INSTRUMENTS (Cont’d)
17.4 FAIR VALUES OF FINANCIAL INSTRUMENTS (Cont’d)
17.4.2 RECONCILIATION OF LEVEL 3 FAIR VALUE MEASUREMENTS
31 December 2015
Balance at 1 January
Movement
Balance at 31 December
31 December 2014
GROUP
Trade investments Advances and other assets
US$
US$
Investment securities
US$
Total
US$
81 390
(3 585)
77 805
203 363 052
31 725 929
3 874 525
10 673 467
207 318 967
42 395 811
235 088 981
14 547 992
249 714 778
GROUP
Trade investments Advances and other assets
US$
US$
Investment securities
US$
Total
US$
Balance at 1 January
Movement
190 148
(108 758)
181 316 271
22 046 781
4 685 781
(811 256)
186 192 200
21 126 767
Balance at 31 December
81 390
203 363 052
3 874 525
207 318 967
18.
INVESTMENT IN DEBENTURES
Debentures
Allowance for impairment loss
Redemption of debentures
During the period under review, the Group disposed its interest in debentures at face value.
GROUP
2015
US$
4 787 074
-
(4 787 074)
2014
US$
4 787 074
(173 027)
-
-
4 614 047
50
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
19. DEFERRED TAX
GROUP COMPANY
Allowance for impairment losses on loans and advances
Bad debts
Prepayments
Quoted and other investments
Investments:-Trade investments
Non-current assets held for sale
Investment properties
Property and equipment
Marking to market adjustments IAS 39
Unrealised foreign exchange gains
Suspended interest
Deferred income
Assessed losses
Provision for share based payments
Provision for leave pay
2015
US$
(2 210 029)
(201 922)
166 012
6 789
-
113 215
283 451
444 063
(75 544)
219 959
(106 365)
(463 111)
(8 150)
(4 350)
(69 134)
2014
US$
(3 058 971)
-
-
10 434
-
113 365
222 699
534 901
(46 451)
215 616
(610 275)
(156 499)
(5 063)
(4 350)
-
Closing deferred tax (asset)/liability
Deferred tax (asset)/liability at the beginning
of the year
(1 905 116)
(2 784 594)
(2 784 594)
(2 823 544)
Current year charge/(credit)
879 478
38 950
Income tax (note 8.1)
Relating to other comprehensive income (note 6.4)
878 448
1 030
35 420
3 530
2015
US$
-
-
-
532
-
-
-
-
-
-
-
-
-
-
(4 350)
(3 818)
(3 529)
(289)
(289)
-
2014
US$
821
-
-
-
-
-
-
-
-
-
-
-
-
(4 350)
-
(3 529)
6 846
(10 375)
(10 375)
-
51
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
20. CASH AND CASH EQUIVALENTS
GROUP
20.1 Balances with Reserve Bank of Zimbabwe
2015
US$
Balances with the Central Bank
26 238 681
11 408 222
20.2 Balances with other banks and cash
Current, nostro accounts and cash
Interbank placements
11 700 666
25 500 000
15 842 339
27 500 000
Interbank placements
63 439 347
54 750 561
COMPANY
2015
2014
US$
US$
-
53
-
53
Of the cash and cash equivalents balance an amount of US$1 214 932 was pledged to FMO and Proparco as collateral for offshore lines of credit.
21. LOANS, ADVANCES AND OTHER ASSETS
21.1 Total loans, advances and other assets
21.1.1 Advances
GROUP COMPANY
Fixed term loans
Local loans and overdrafts
Reclassification to debentures
Other assets
21.1.2. Maturity analysis
Less than 1 month
1 to 3 months
3 to 6 months
6 months to 1 year
1 to 5 years
Over 5 years
Total advances
Allowance for impairment losses
on loans and advances (note 21.3)
Provision for suspended interest
Reclassification to debentures
Other assets (note 21.5)
52
2015
US$
2014
US$
25 138 443
207 408 465
232 546 908
-
2 542 073
21 889 534
182 413 594
204 303 128
(4 614 047)
3 673 971
235 088 981
203 363 052
136 146 912
24 125 652
2 387 188
15 686 184
64 895 082
-
131 810 553
24 022 035
1 747 453
3 881 236
56 002 042
-
243 241 018
217 463 319
(8 582 636)
(2 111 474)
(10 790 192)
(2 369 999)
232 546 908
-
2 542 073
204 303 128
(4 614 047)
3 673 971
235 088 981
203 363 052
2015
US$
-
-
-
-
7 385
7 385
-
-
-
-
-
-
-
-
-
-
-
7 385
7 385
2014
US$
-
53
-
53
2014
US$
-
-
-
-
7 389
7 389
-
-
-
-
-
-
-
-
-
-
-
7 389
7 389
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
21. LOANS, ADVANCES AND OTHER ASSETS (Cont’d)
21.2 Sectoral analysis of utilisations
Agriculture and horticulture
Conglomerates
Distribution
Food & beverages
Individuals
Manufacturing
Mining
Services
2015
US$
13 907 259
11 348 334
37 364 138
5 692 742
101 585 312
29 774 899
1 067 328
42 501 006
GROUP
%
6
5
16
2
42
12
-
17
2014
US$
17 523 451
10 030 909
55 359 765
442 295
58 353 526
29 100 980
5 0444 850
41 607 543
%
8
5
26
-
27
13
2
19
243 241 018
100
217 463 319
100
The material concentration of loans and advances are with individuals 42% (2014 - 27%) and services sector at 17% (2014 – 19%).
21.3 Allowances for impairment losses on loans, advances and debentures
GROUP
Specific
US$
At 1 January
Recognised in profit or loss
Bad debts written off
10 626 997
8 651 949
(11 704 157)
2015
Portfolio
US$
163 195
844 652
-
Total
US$
Specific
US$
10 790 192
9 496 601
(11 704 157)
11 427 356
5 112 012
(5 912 371)
2014
Portfolio
US$
257 845
(94 650)
-
Total
US$
11 685 201
5 017 362
(5 912 371)
At 31 December
7 574 789
1 007 847
8 582 636
10 626 997
163 195
10 790 192
During the period under review, the Bank reviewed the basis and assumptions for recognising portfolio provision in view of the current macro and micro economic
conditions prevailing in Zimbabwe. The review resulted in an increase in the level of portfolio provisions recognised by the Bank in proportion to its loan book size.
21.4 Non-performing loans and advances
Total non-performing loans and advances
Allowance for impairment losses on loans and advances
Allowance for impairment losses on debentures (note 18)
Retail loans insurance
Interest in suspense
Residue
GROUP
2015
US$
2014
US$
32 092 184
(7 574 789)
-
(1 682 840)
(1 798 490)
38 581 699
(10 626 997)
173 027
-
(2 369 999)
21 036 065
25 757 730
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$22 797 088 (2014-US$23 465 162).
53
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
21. LOANS, ADVANCES AND OTHER ASSETS (Cont’d)
21.5 Other assets
Service deposits
Prepayments and stocks
Other receivables
21.6 Loans to officers
Included in advances and other accounts (note 21.1)
are loans to officers:-
At 1 January
Net additions during the year
Fair value adjustment
Balance at 31 December
GROUP
COMPANY
2015
US$
1 171 927
913 532
456 614
2014
US$
761 226
1 601 003
1 311 742
2 542 073
3 673 971
2015
US$
-
-
7 385
7 385
2014
US$
-
-
7 389
7 389
GROUP
2015
US$
2014
US$
3 135 666
2 043 080
5 178 746
(284 853)
2 513 143
802 917
3 316 060
(180 394)
4 893 893
3 135 666
Loans to officers amounting to US$2 697 065 were granted at a preferential rate of 6% per annum as part of their overall remuneration agreements, US$2
139 968 was granted at a commercial rate of 13% per annum and the balance amounting to US$341 731 being mortgage loans which were granted at a
commercial rate of 12% per annum.
21.7 The terms and conditions applicable to advances are as follows:
Product
Overdraft
Loan
Tenure
Payable on demand
Interest rate
Penalty interest rate of ten percentage points above
loan rate up to a maximum penalty rate of 18% per annum.
Loan payable over a maximum period
of 120 months (includes mortgage loans).
From 8% per annum up to a maximum of 18% per annum. Loans to
employees and executive directors are at a discounted interest rate.
Bankers Acceptances
Loan payable over a minimum period
of 30 days up to 90 days.
Average of 13% per annum.
54
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
22. NON-CURRENT ASSETS HELD FOR SALE
At 1 January 2014
Disposals
Fair value adjustment
GROUP
2015
US$
2 267 300
-
(3 000)
2014
US$
2 303 300
(39 000)
3 000
2 264 300
2 267 300
COMPANY
2015
US$
2014
US$
-
-
-
-
-
-
-
-
The Group is in possession of land with a fair value of US$2 225 300 at year end. The Group entered into a sale agreement for a portion of the land in 2012
(at a price of US$2 150 000), however the execution and finalisation of the sale under this contract has been pending since then. The buyer has expressed
commitment towards finalisation of the sale and the disposal process is now expected to be completed within the next twelve months. The disposal will
improve the Group’s cash flows. The fair value adjustment is included under non-interest income (note 6.2).
Measurement of fair value
Fair value hierarchy
The fair value of non-current assets held for sale was determined 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. All non-current assets held for sale are measured at their fair values.
The values were arrived at by applying weighted average rate of US$36.5 per square metre.
Level 2
The fair value of non-current assets held for sale of U$39 000 has been categorised under level 2 in the fair value hierarchy based on the inputs used for the
valuation technique highlighted above. (see note 2.3.5 use of judgement and estimates).
23. TRADE INVESTMENTS
Unlisted
Other
Directors’ valuation
GROUP
COMPANY
2015
US$
77 805
-
77 805
2014
US$
81 390
81 390
81 390
2015
US$
-
-
-
2014
US$
-
-
-
Other investments represent equity investment in SWIFT. The trade investments were valued using the net asset value method at 31 December 2015 (see
note 17.4 on fair value measurement).
55
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
24.
INVESTMENTS IN ASSOCIATES
Investment in Altiwave Investments (Private) Limited
The Bank had a 25.5 % interest in Altiwave Investments (Private) Limited which is the holding company of Lobels (Private) Limited. The investment arose
from a Scheme of Arrangement agreed to by Lobels Holdings (Private) Limited shareholders and creditors (banks, suppliers and employees). Lobels
Holdings (Private) Limited is in the bread and confectionery business. The investment was disposed off on 17 March 2015.
Altiwave Investments (Private) Limited is a company that is not listed on any public exchange. The following table illustrates the summarised unaudited
financial information of Altiwave (Private) Limited.
Summary of associate’s statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
GROUP
28 February
2015
31 December
2014
12 798 956
10 243 534
(5 212 870)
(30 857 918)
15 974 685
14 361 606
(12 993 517)
(32 385 340)
(13 028 298)
(15 042 566)
Share of associate’s equity (25.5%)
(3 322 216)
(3 835 854)
Associate’s revenue and profit
Revenue
Profit
Share of associate’s profit (25.5%)
Reconcilliation of carrying amount
1 January
Share of profit in associate
Allowance for impairment
5 251 729
87 153 020
422 251
5 348 411
107 674
1 363 845
-
107 674
(107 674)
-
1 363 845
(1 363 845)
-
-
The investment in Altiwave Investments (Private) Limited has been fully impaired as the company had negative equity as at date of sale, 17 March 2015.
56
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
25.
INVESTMENTS IN GROUP ENTITIES
25.1 Subsidiaries
Investments in subsidiaries:
-NMB Bank Limited
-Stewart Holdings Limited
25.2 Shareholding
COMPANY
2015
US$
2014
US$
31 491 006
14 680
31 491 006
14 680
31 505 686
31 505 686
The subsidiaries and associates, all of which are registered in Zimbabwe, and the extent of the Group’s beneficial interest therein and their principal business
activities are listed below:-
NMB Bank Limited
Brixtun (Private) Limited
NMB Fund Management (Private) Limited
Stewart Holdings (Private) Limited
Invariant (Private) Limited
Darksan (Private) Limited
Altiwave Investments (Private) Limited
2015
100% (Banking)
100% (Dormant)
100% (Dormant)
100% (Equity holdings)
100% (Dormant)
100% (Dormant)
0% (Baking)
2014
100% (Banking)
100% (Dormant)
100% (Dormant)
100% (Equity Holdings)
100% (Dormant)
100% (Dormant)
25.5% (Baking)
The consolidated financial statements include the financial information of the subsidiaries and associates listed above.
26. QUOTED AND OTHER INVESTMENTS
GROUP
COMPANY
2015
US$
2014
US$
2015
US$
2014
US$
Quoted investments
68 220
127 291
10 650
16 385
The quoted investments comprise shares stated for year end purposes at the last trading date of 31 December 2015. As these investments are trading on
an active market they have been classified as level 1 in the fair value hierarchy.
57
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
27.
INVESTMENT PROPERTIES
At 1 January
Improvements
Fair value adjustments
Transfer from property and equipment
Disposal
At 31 December
GROUP
2015
US$
4 453 300
8 230 860
118 278
67 862
(4 744 500)
2014
US$
4 385 300
30 200
37 800
-
-
8 125 800
4 453 300
Investment properties comprise a commercial property and residential properties that are leased out to third parties and land held for future development.
All investment properties of the Group were not encumbered.
Measurement of fair value
Fair value hierarchy
The fair value of the Group’s investment properties as at 31 December 2015 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 a weighted average market rate of US$36.5 per square metre. The commercial and residential properties are leased
out under operating lease to various tenants.
The Bank 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$49 523 (2014 - US$36 160) 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.
Level 2
The fair value for investment properties of US$2 816 800 (2014 - US$2 659 300) has been categorised under level 2 in the fair value hierarchy based on the
inputs used for the valuation technique described below.
58
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
27.
INVESTMENT PROPERTIES (Cont’d)
The following shows reconciliation between the opening and closing balances for level 2 fair values:
At 1 January
Improvements
Disposals
Fair value adjustments
Balance at 31 December
31 December
2015
US$
31 December
2014
US$
2 659 300
3 200 000
(3 200 000)
157 500
2 575 300
10 200
-
73 800
2 816 800
2 659 300
The values were arrived at by applying a market rate of US$36.50 per square metre.
Level 3
The fair value for investment properties of US$5 309 000 (2014 – US$1 794 000) has been categorised under level 3 in the fair value hierarchy based on
the inputs used for the valuation technique described below.
The following shows reconciliation between the opening and closing balances for level fair values:
At 1 January
Improvements
Transfer from Property and Equipment
Disposals
Fair value adjustments
Balance at 31 December
31 December 31 December
2014
US$
2015
US$
1 794 000
5 030 860
67 862
(1 544 500)
(39 222)
1 810 000
20 000
-
-
(36 000)
5 309 000
1 794 000
The values were arrived at by applying yield rates of 8% on rental values of between US$3 - US$7 per square metre. The properties are leased out under
operating lease to various tenants.
59
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
27.
INVESTMENT PROPERTIES (Cont’d)
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of investment properties, as well as the significant unobservable inputs
used.
Valuation technique
Significant unobservable inputs
• Expected market rental growth
(weighted average – negative 2%)
• Void period
(average 7 months after the end of each lease)
• Occupancy rate (20-30%), weighted average
25%
• Average market yield was 10.5%
• The Investment Method was applied on
all income producing properties. Market
capitalisation rates were derived from market
sales evidence and were determined
in
consultation with other investors and property
brokers in the market.
• The Direct Comparison Method was applied
on all residential properties, after PMA Real
Estate (Private) Limited identified various
properties that have been sold or which were
on sale and situated in comparable areas
using the Main Space Equivalent (MSE)
principle. The total (MSE) of comparable
areas was then used to determine the value
per square metre of (MSE).
inter-relationship between key unobservable
inputs and fair value measurement
The estimated fair value would increase /
(decrease) if:
• expected market rental growth were higher/
(lower);
• void periods were shorter/(longer);
• the occupancy rates were higher /(lower);
• the risk adjusted discount rates were lower/
(higher).
60
NMBZ HOLDINGS LIMITED Annual Report 2015 Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
28.
INTANGIBLE ASSETS
Cost
Balance at 1 January 2014
Acquisitions
Balance at 1 January 2015
Acquisitions
Work in
Progress
US$
Computer
Software
US$
-
208 673
208 673
19 922
1 911 483
414 809
2 326 292
228 417
Total
US$
1 911 483
623 482
2 534 965
248 339
Balance at 31 December 2015
228 595
2 554 709
2 783 304
Accumulated amortisation and impairment
Balance at 1 January 2014
Amortisation for the year
Balance at 1 January 2015
Amortisation for the year
Balance at 31 December 2015
Carrying amount
At 31 December 2015
At 1 January 2015
At 1 January 2014
-
-
-
-
-
247 114
337 118
584 232
509 687
247 114
337 118
584 232
509 687
1 093 919
1 093 919
228 595
1 460 790
1 689 385
208 673
1 742 060
1 950 733
-
1 664 369
1 664 369
The amortisation expense of intangible assets is included under operating expenditure (note 7).
61
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
29. PROPERTY AND EQUIPMENT
Cost
At 1 January 2014
Additions
Revaluation gain
Disposals
At 1 January 2015
Additions
Capitalisations
Reclassification to intangible assets
Revaluation loss
Disposals
Capital work
in progress
US$
Computers
US$
Motor
vehicles
US$
Furniture &
equipment
US$
-
101 375
-
-
101 375
585 511
(33 513)
(67 862)
-
-
2 286 662
319 048
-
(4)
2 605 706
334 338
33 513
-
-
(11 220)
4 003 128
392 366
-
(234 069)
4 161 425
418 383
-
-
-
(869 083)
2 914 364
179 287
-
(3)
3 093 648
540 202
-
-
-
-
Freehold
Land &
buildings
US$
2 843 908
-
60 610
-
2 904 518
393 509
-
-
(40 200)
-
Total
US$
12 048 062
992 076
60 610
(234 076)
12 866 672
2 271 943
-
(67 862)
(40 200)
(880 303)
At 31 December 2015
585 511
2 962 337
3 710 725
3 633 850
3 257 827
14 150 250
Accumulated depreciation
At 1 January 2014
Charge for the year
Disposals
1 January 2015
Charge for the year
Disposals
At 31 December 2015
Carrying amount
At 31 December 2015
At 1 January 2015
At 1 January 2014
-
-
-
-
-
-
-
1 029 312
356 749
(6)
1 386 055
392 601
(3 197)
1 894 424
1 030 894
(52 754)
2 872 564
775 381
(659 946)
1 664 551
456 604
(1)
2 121 154
464 885
-
86 832
54 800
-
141 632
58 035
-
4 675 119
1 899 047
(52 761)
6 521 405
1 690 902
(663 143)
1 775 459
2 987 999
2 586 039
199 667
7 549 164
585 511
1 186 878
722 726
1 047 811
3 058 161
6 601 086
101 375
1 219 651
1 288 861
972 494
2 762 886
6 345 267
-
1 257 350
2 108 704
1 249 813
2 757 076
7 372 943
62
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
29. PROPERTY AND EQUIPMENT (Cont’d)
Measurement of fair value
Fair value hierarchy
Immovable properties were revalued as at 31 December 2015 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 measured 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 8% on rental levels of between US$3 - US$7 per square metre.
The carrying cost less accumulated depreciation of the land and buildings had revaluations not been performed would be US$3 669 148 as at 31 December
2015 (2014 - US$3 343 677).
Level 3
The fair value of immovable properties of US$3 058 160 (2014 – US$2 762 886) has been categorised under level 3 in the fair value hierarchy based on the
inputs used for the valuation technique described below.
The following shows reconciliation between the opening and closing balances for level 3 fair values:
At 1 January
Additions
Revaluation (loss)/gain
Depreciation
Balance at 31 December
31 December
2015
US$
31 December
2014
US$
2 762 886
393 509
(40 200)
(58 035)
2 757 076
-
60 610
(54 800)
3 058 160
2 762 886
Valuation technique and significant unobservable inputs
The following table shows the valuation technique used in measuring the fair value of freehold land and buildings, as well as the significant
unobservable inputs used.
Valuation technique
Significant unobservable inputs
• Expected market rental growth
(weighted average – negative 2%)
• Average market yield was 10.5%
• The Direct Comparison Method was applied
on all properties, after PMA Real Estate
(Private) Limited identified various properties
that have been sold or which were on sale and
situated in comparable areas using the Main
Space Equivalent (MSE) principle. The total
(MSE) of comparable areas was then used
to determine the value per square metre of
(MSE).
Inter-relationship between key unobservable
inputs and fair value measurement
• The estimated fair value would increase/
(decrease) if the expected market rental growth
were higher/ (lower).
63
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
30.
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 financial liabilities are categorised by the
earlier of contractual repricing or maturity dates.
30.1 Total position
At 31 December 2015
Assets
Cash and cash equivalents
Current tax assets
Investment securities
Investment in debentures
Investments in quoted and other investments
Loans, advances and other assets
Deferred tax
Non-current assets held for sale
Intangible assets
Property, plant and equipment
Investment properties
Liabilities and equity
Deposits and other liabilities
Redeemable ordinary shares
Equity
Subordinated loan
Up to 1
month
US$
1 month
to 3 months
US$
63 439 347
-
-
-
-
125 452 802
-
-
-
-
-
188 892 149
-
-
1 314 802
-
-
24 125 652
-
-
-
-
-
25 440 454
GROUP
3 months
to 1 year
US$
-
-
8 831 999
-
-
18 073 372
-
-
-
-
-
26 905 371
1 year to Non-interest
bearing
US$
5 years
US$
Total
US$
-
-
4 401 191
-
-
64 895 082
-
-
-
-
-
69 296 273
-
23 075
-
-
146 025
2 542 073
1 905 116
2 264 300
1 689 385
6 601 086
8 125 800
23 296 860
63 439 347
23 075
14 547 992
-
146 025
235 088 981
1 905 116
2 264 300
1 689 385
6 601 086
8 125 800
333 831 107
184 324 981
-
-
-
66 129 516
-
-
-
18 211 763
-
-
-
8 550 509
-
-
1 414 144
6 070 474
14 335 253
34 794 467
-
283 287 243
14 335 253
34 794 467
1 414 144
184 324 981
66 129 516
18 211 763
9 964 653
55 200 194
333 831 107
Interest rate repricing gap
4 567 168
(40 689 062)
8 693 608
59 331 620
(31 903 334)
Cumulative gap
4 567 168
(36 121 894)
(27 428 286)
31 903 334
-
-
-
64
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
30.
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 financial liabilities are categorised by the
earlier of contractual repricing or maturity dates.
30.1 Total position
At 31 December 2014
Assets
Cash and cash equivalents
Current tax assets
Investment securities held to maturity
Investment in debentures
Investments quoted and other investments
Loans, advances and other assets
Deferred tax
Non-current assets held for sale
Intangible assets
Property, plant and equipment
Investment properties
Liabilities and equity
Deposits and other liabilities
Redeemable ordinary shares -
Equity
Subordinated loan
Up to 1
month
US$
1 month
to 3 months
US$
GROUP
3 months
to 1 year
US$
1 year to Non-interest
bearing
US$
5 years
US$
Total
US$
54 750 561
-
-
-
-
118 823 390
-
-
-
-
-
-
-
-
-
-
19 234 961
-
-
-
-
-
-
-
3 874 525
-
-
5 628 688
-
-
-
-
-
-
-
-
4 614 047
-
56 002 042
-
-
-
-
-
-
1 436 974
-
-
208 681
54 750 561
1 436 974
3 874 525
4 614 047
208 681
3 673 971 203 363 052
2 784 594
2 784 594
2 267 300
2 267 300
1 950 733
1 950 733
6 345 267
6 345 267
4 453 300
4 453 300
173 573 951
19 234 961
9 503 213
60 616 089
23 120 820 286 049 034
172 324 494
-
-
-
32 017 300
-
-
-
13 778 170
-
-
-
17 242 712
-
-
1 407 964
5 638 742 241 001 418
14 335 253
14 335 253
29 304 399
29 304 399
1 407 964
-
172 324 494
32 017 300
13 778 170
18 650 676
49 278 394 286 049 034
Interest rate repricing gap
1 249 457
(12 782 339)
(4 274 957)
41 965 413
(26 157 574)
Cumulative gap
1 249 457
(11 532 882)
(15 807 839)
26 157 574
-
-
-
65
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
31. 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.
31.1. United States dollar
At 31 December 2015
Assets
Cash and cash equivalents
Current tax assets
Investment securities
Investment in debentures
Investments quoted and other investments
Loans, advances and other assets
Deferred tax
Non-current assets held for sale
Intangible assets
Property, plant and equipment
Investment properties
Liabilities and equity
Deposits and other liabilities
Redeemable ordinary shares
Equity
Subordinated loan
Up to 1
month
US$
1 month
to 3 months
US$
GROUP
3 months
to 1 year
US$
1 year to Non-interest
bearing
US$
5 years
US$
Total
US$
58 375 898
-
-
-
-
124 949 290
-
-
-
-
-
-
-
1 314 802
-
-
24 125 652
-
-
-
-
-
-
-
8 831 999
-
-
18 073 372
-
-
-
-
-
-
-
4 401 191
-
-
64 895 082
-
-
-
-
-
-
23 075
-
-
68 220
58 375 898
23 075
14 547 992
-
68 220
2 542 073 234 585 469
1 905 116
1 905 116
2 264 300
2 264 300
1 689 385
1 689 385
6 601 086
6 601 086
8 125 800
8 125 800
183 325 188
25 440 454
26 905 371
69 296 273
23 219 055 328 186 341
172 295 815
-
-
-
66 129 516
-
-
-
18 211 763
-
-
-
8 550 509
-
-
1 414 144
6 070 474 271 258 077
14 335 253
14 335 253
34 794 467
34 794 467
1 414 144
-
172 295 815
66 129 516
18 211 763
9 964 653
55 200 194 321 801 941
Interest rate repricing gap
11 029 373
(40 689 062) 8 693 608 59 331 620
(31 981 139)
6 384 400
Cumulative gap
11 029 373
(29 659 689)
(20 966 081)
38 365 539
6 384 400
-
66
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
31.
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.
31.1. United States dollar
At 31 December 2014
Assets
Cash and cash equivalents
Investment securities held to maturity
Investment in debentures
Quoted and other investments
Loans, advances and other assets
Non-current assets held for sale
Property, plant and equipment
Investment properties
Current tax assets
Deferred tax
Intangible assets
Liabilities and equity
Deposits and other liabilities
Subordinated term loan
Redeemable Ordinary shares
Equity
GROUP
Up to 1
to 3 months
US$
month
US$
1 month
to 1 year
US$
3 months
5 years
US$
1 year to Non-interest
Total
US$
bearing
US$
53 208 157
-
-
-
118 542 586
-
-
-
-
-
-
171 750 743
-
-
-
-
19 234 961
-
-
-
-
-
-
19 234 961
-
3 874 525
-
-
5 628 688
-
-
-
-
-
-
9 503 213
-
-
4 614 047
-
56 002 042
-
-
-
-
-
-
60 616 089
-
-
-
127 291
53 208 157
3 874 525
4 614 047
127 291
3 673 971 203 082 248
2 267 300
2 267 300
6 345 267
6 345 267
4 453 300
4 453 300
1 436 974
1 436 974
2 784 594
2 784 594
1 950 733
1 950 733
23 039 430 284 144 436
170 924 080
-
-
-
32 017 300
-
-
-
13 778 170
-
-
-
17 242 712
1 407 964
-
-
5 638 742 239 601 004
1 407 964
14 335 253
29 304 399
-
14 335 253
29 304 399
170 924 080
32 017 300
13 778 170
18 650 676
49 278 394 284 648 620
Interest rate repricing gap
826 663
(12 782 339)
(4 274 957)
41 965 413
(26 238 964)
(504 184)
Cumulative gap
826 663
(11 955 676)
(16 230 633)
25 734 780
(504 184)
-
67
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
32. 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.
32.1. Other foreign currencies
At 31 December 2015
Assets
Cash and cash equivalents
Investment securities
Quoted and other instruments
Loans, advances and other assets
Liabilities and equity
Deposits and other liabilities
Interest rate repricing gap
Up to 1
month
US$
1 month
to 3 months
US$
GROUP
3 months
to 1 year
US$
1 year to Non-interest
5 years bearing
US$
US$
Total
US$
5 063 449
-
503 512
5 566 961
12 029 166
12 029 166
(6 462 205)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5 063 449
77 805
-
77 805
77 805
503 512
5 644 766
-
12 029 166
-
12 029 166
77 805
(6 384 400)
Cumulative gap
(6 462 205)
(6 462 205)
(6 462 205)
(6 462 205)
(6 384 400)
-
68
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
32. 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.
32.1. Other foreign currencies
At 31 December 2014
Assets
Cash and cash equivalents
Investment securities held to maturity
Loans, advances and othe assets
Liabilities and equity
Deposits and other liabilities
Interest rate repricing gap
Up to 1
month
US$
1 month
to 3 months
US$
GROUP
3 months
to 1 year
US$
1 year to Non-interest
bearing
5 years
US$
US$
Total
US$
1 542 404
-
280 804
1 823 208
1 400 414
1 400 414
422 794
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
81 390
-
1 542 404
81 390
280 804
81 390
1 904 598
-
-
1 400 414
1 400 414
81 390
504 184
Cumulative gap
422 794
422 794
422 794
422 794
504 184
-
69
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
33. 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.
33.1 At 31 December 2015
GROUP
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
Assets
Cash and cash equivalents
Investment securities
Investment in debentures
Quoted and other investments
Loans, advances and other assets
Non-current assets held for sale
Property, plant and equipment
Investment properties
Deferred tax
Current tax assets
Intangible assets
Liabilities and equity
Deposits and other liabilities
Subordinated term loan
Deferred tax liabilities
Redeemable Ordinary Shares
Equity
Net foreign exchange
Position
58 375 898
14 547 992
-
68 220
234 585 499
2 264 300
6 601 086
8 125 800
1 905 116
23 075
1 689 385
4 383 218
-
-
-
501 307
-
-
-
-
-
-
55 638
-
-
-
1 353
-
-
-
-
-
-
363 351
-
-
77 805
852
-
-
-
-
-
-
63 439 347
261 242
14 547 992
-
-
-
146 025
-
- 235 088 981
2 264 300
-
6 601 086
-
8 125 800
-
1 905 116
-
23 075
-
1 689 385
-
328 186 341
4 884 525
56 991
442 008
261 242 333 831 107
271 258 077
1 414 144
-
14 335 253
34 794 467
321 801 941
11 570 506
-
-
-
-
11 570 506
144 633
-
-
-
-
144 633
264 495
-
-
-
-
264 495
49 532 283 287 243
1 414 144
-
14 335 253
34 794 467
49 532 333 831 107
-
-
-
-
6 384 400
(6 685 981)
(87 642)
177 513
211 710
-
70
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
33. 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.
33.1 At 31 December 2014
GROUP
US$
US$
RAND
US$
GBP
US$
EUR
US$
BWP
US$
TOTAL
US$
Assets
Cash and cash equivalents
Investment securities held to maturity
Investment in debentures
Quoted and other investments
Loans, advances and other assets
Non-current assets held for sale
Property, plant and equipment
Investment properties
Deferred tax
Current tax assets
Intangible assets
Liabilities and equity
Deposits and other liabilities
Subordinated term loan
Deferred tax liabilities
Redeemable Ordinary Shares
Equity
Net foreign exchange
Position
53 208 157
3 874 525
4 614 047
127 291
203 082 248
2 267 300
6 345 267
4 453 300
2 784 594
1 436 974
1 950 733
679 043
-
-
-
133 874
-
-
-
-
-
-
73 501
-
-
-
1 913
-
-
-
-
-
-
769 628
-
-
81 390
143 493
-
-
-
-
-
-
20 232
-
-
-
54 750 561
3 874 525
4 614 047
208 681
1 524 203 363 052
2 267 300
6 345 267
4 453 300
2 784 594
1 436 974
1 950 733
-
-
-
-
-
-
284 144 436
812 917
75 414
994 511
21 756 286 049 034
239 601 004
1 407 964
-
14 335 253
29 304 399
284 648 620
1 137 328
-
-
-
-
1 137 328
77 755
-
-
-
-
77 755
179 999
-
-
-
-
179 999
5 332 241 001 418
1 407 964
-
14 335 253
29 304 399
5 332 286 049 034
-
-
-
-
(504 184)
(324 411)
(2 341)
814 512
16 424
-
71
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
34. CONTINGENT LIABILITIES
Guarantees
Facilities approved but not drawn down
Irrevocable Letters of Credit
GROUP
2015
US$
5 305 263
39 468 072
1 264 607
2014
US$
6 246 933
33 341 817
900 000
46 037 942
40 488 750
The Group enters into various irrevocable commitments and contingent liabilities in its normal course of business in order to meet financial needs of
customers. These obligations are not recognised on the statement of financial position, but contain credit risk and are therefore part of the overall risk of the
Group.
Guarantees commit the Group to make payments on behalf of clients in the event of a specified act. Guarantees carry the same credit risk as loans.
Facilities approved but not drawn down represent contractual commitments to advance loans and revolving credits. These have fixed expiry dates and may
expire without being drawn upon, hence total contract amounts do not necessarily represent future cash requirements.
35. 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.
36. ASSETS UNDER CUSTODY
GROUP
2015
US$
2014
US$
807 000
190 000
3 516 220
3 815 868
4 323 220
4 005 868
In 2014, the Bank received Treasury Bills from the Reserve Bank of Zimbabwe amounting to US$2 706 327 on behalf of its Tobacco Retention Scheme
customers. A third of the Treasury Bills mature in April 2017, April 2018 and April 2019. These Treasury Bills are currently held off balance sheet.
37. OPERATING LEASE COMMITMENTS
Lease commitments
Up to 1 year
1 – 5 years
GROUP
2015
US$
6 346 410
1 280 147
5 066 263
2014
US$
6 054 886
1 210 977
4 843 909
Lease commitments relate to future rental commitments up to the expiry of the lease agreements. The amount of operating lease expenses recognised in
profit or loss is USD$1 125 811.
72
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
38. RELATED PARTIES
As required by IAS 24, Related Party Disclosures, the Board’s view is that non-executive directors, executive directors and executive management constitute
the key management of the Group. Accordingly, key management remuneration is disclosed below.
38.1 Compensation of key management personnel of the Group
Short – term employee benefits
Post employment benefits
Termination benefits
38.2 Key management interest in employee share options
At 31 December 2015, key management held options to purchase 793 125 ordinary shares of the Company.
38.3 Balances of loans to directors, officers and others
Loans to directors and officers or their companies are included in advances and other accounts (note 21.1)
Non - executive directors
Executive directors
Officers (Note 21.6)
Directors’ companies
Officers’ companies
Fair value adjustment
38.4 Other related party disclosures
Entities with significant
influence over the Group
2015
2014
38.5 BORROWING POWERS
Holding Company
GROUP
2015
US$
873 038
57 406
868 470
2014
US$
1 637 393
113 903
1 085 698
1 798 914
2 836 994
GROUP
2015
US$
-
136 276
5 178 746
-
-
5 315 022
(293 377)
5 021 645
2014
US$
-
51 610
3 316 060
-
10 169
3 377 839
(180 394)
3 197 445
Amounts owed by
related parties
US$
-
-
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.
73
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
39. EMPLOYEE BENEFITS
39.1 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 included 661
416 shares in NMBZ Holdings Limited as at 31 December 2015.
39.2 Expense recognised in profit or loss
Defined Contribution Plan - NSSA
Defined Contribution Plan – NMB Bank Pension Fund
GROUP
2015
US$
182 568
659 921
2014
US$
183 552
683 091
842 489
866 643
The expense is recognised in profit or loss as part of staff costs under operating expenses (note 7).
39.3 Employee Share Option Scheme
In terms of the Employee Share Option Scheme, up to a maximum of 10% of the issued share capital may be granted by the directors to senior employees
by way of options. Each set of options is exercisable at any time within a period of five years from the date the options are granted and the issue price is
based on the higher of nominal value of the shares and the middle market price derived from the Zimbabwe Stock Exchange prices for the trading day
immediately preceding the date of offer. The options vest immediately from date of issue and the fair value of the options is estimated at the grant date
using the Black – Scholes option pricing model, taking into account the terms and conditions upon which the instruments were granted.
Movements in the year
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in share options during the year.
Outstanding as at 1 January
Lapsed
Issued
Exercised
Outstanding as at 31 December
Terms of options outstanding at 31 December 2015
GROUP and COMPANY
2015
2014
No.
000’s
4 128 434
-
-
-
4 128 434
WAEP$
0.04
-
-
-
0.04
No.
000’s
907 200
(907 200)
4 128 434
-
4 128 434
WAEP$
0.047
0.047
0.04
-
0.047
Expiry date
18 June 2022
74
GROUP & COMPANY
Exercise price
US$
0.04
2015
Shares
4 128 434
4 128 434
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
39. EMPLOYEE BENEFITS (Cont’d)
39.4 National Social Security Authority Scheme
All employees of the Group are members of the National Social Security Authority Scheme, a defined contribution plan to which both the employer and the
employees contribute.
Contributions by the employer are recognised in profit or loss account and during the period amounted to US$182 568 (2014 – US$183 552).
40. EXCHANGE RATES
The following exchange rates have been used to translate the foreign currency balances to United States dollars at year end:
British Sterling
South African Rand
European Euro
Botswana Pula
41.
RISK MANAGEMENT
31 December
2015
Mid - rate
US$
1.4800
15.5039
1.0882
11.1111
31 December
2014
Mid - rate
US$
1.5564
11.5764
1.2159
9.5057
GBP
ZAR
EUR
BWP
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 Group’s risk universe,
developing policies and monitoring implementation. The Group has complied with Basel II implementation timelines set by the Reserve Bank of Zimbabwe.
Risk management is linked logically from the level of individual transactions to the Group 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 Group’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) Macro Level: It encompasses risk management within a business area or across business lines. These risk management functions are performed by
middle management.
c) Micro Level: This involves “On-the-line” risk management where risks are actually created. These are the risk management activities performed by
individuals who assume risk on behalf of the organization such as Treasury Front Office, Corporate Banking, Retail banking 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) adequate board and senior management oversight;
b) adequate strategy, policies, procedures and limits;
c) adequate risk identification, measurement, monitoring and information systems; and
d) comprehensive internal controls and independent reviews.
75
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41.
RISK MANAGEMENT (Cont’d)
41.1 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 Group reviewed its credit risk management structures aimed at enhancing credit
risk and asset quality. The Group’s general credit strategies centre on sound credit granting process, diligent credit monitoring and strong loan collection
and recovery. There is a separation between loan collection and recovery. There is a separation between loan granting and credit monitoring to ensure
independency and effective management of the loan portfolio. The Board has put in place sanctioning committees with specific credit approval limits. The
Credit Management department does the initial review of all applications before recommending them to the Executive Credit Committee and finally the
Board Credit Committee depending on the loan amount. The Group has in place a Board Loans Review Committee responsible for reviewing the quality of
the loan book and adequacy or loan loss provisions.
The Group finalised the implementation of an end to end credit risk management solution. The system automated the bank’s credit process from loan
origination, appraisal, monitoring and collections. The system comes with a robust loan monitoring and reporting module which is critical in managing
credit risk. In view of the group’s move into the mass market, retail credit has become a key area of focus. The group has put in place robust personal loan
monitoring systems and structures to mitigate retail loan delinquencies. This includes a rigorous scheme assessment and a dedicated team pre-delinquency
team and a separate recoveries team.
Credit Management
• Responsible for evaluating & approving credit proposals from the business units.
• Together with business units, has primary responsibility on the quality of the loan book.
• Reviewing credit policy for approval by the Board Credit Committee.
• Reviewing business unit level credit portfolios to ascertain changes in the credit quality of individual customers or other counterparties as well as the
overall portfolio and detect unusual developments.
• Approve initial customer internal credit grades or recommend to the Credit Committees for approval.
• Setting the credit risk appetite parameters.
• Ensure the Group adheres to limits, mandates and its credit policy.
• Ensure adherence to facility covenants and conditions of sanction e.g. annual audits, gearing levels, management accounts.
• Manage trends in asset and portfolio composition, quality and growth and non-performing loans.
• Manage concentration risk both in terms of single borrowers or group as well as sector concentrations and the review of such limits.
Credit Monitoring and Financial Modelling
Independent Credit Risk Management.
Independent on-going monitoring of individual credit and portfolios.
•
•
• Triggers remedial actions to protect the interests of the Group, if appropriate (e.g. in relation to deteriorated credits).
• Monitors the on-going development and enhancement of credit risk management across the Group.
• Reviews the Internal Credit Rating System.
• On-going championing of the Basel II methodologies across the Group.
• Ensures consistency in the rating processes and performs independent review of credit grades to ensure they conform to the rating standards.
• Confirm the appropriateness of the credit risk strategy and policy or recommends necessary revisions in response to changes/trends identified.
Credit Administration
• Prepares and keeps custody of all facility letters.
• Security registration.
• Safe custody of security documents.
• Ensures all conditions of sanction are fulfilled before allowing drawdown or limit marking.
• Review of credit files for documentation compliance e.g. call reports, management accounts.
Recoveries
The recoveries unit is responsible for all collections and ensures that the Group maximizes recoveries from Non-Performing Loans (NPLs).
76
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41.
RISK MANAGEMENT (Cont’d
The table below shows the maximum exposure to credit for the components of the statement of financial position. The maximum exposure is shown as gross.
41.1.2 Maximum exposure to credit risk without taking account of any collateral
Cash and cash equivalents (excluding cash on hand)
Investment securities held to maturity
Investment in debentures
Loans, advances and other accounts
Total
Guarantees
Facilities approved but not drawn down
Total
Total credit risk exposure
Note
17
21
34
34
GROUP
2015
US$
53 471 405
14 547 992
-
232 546 908
300 566 305
5 305 263
39 468 072
44 773 335
2014
US$
42 784 235
3 874 525
4 614 047
204 303 128
255 575 935
6 246 933
33 341 817
39 588 750
345 339 640
295 164 685
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.
41.1.3 Risk concentrations of maximum exposure to credit risk
31 December
2015
Gross
Maximum
Exposure
US$
13 907 259
11 348 334
37 364 138
5 692 742
101 585 312
29 774 899
1 067 328
42 501 006
31 December
2015
Net
Maximum
Exposure
S$
-
11 348 334
-
1 655 242
97 343 706
12 624 048
-
-
31 December
2014
Gross
Maximum
Exposure
US$
31 December
2014
Net
Maximum
Exposure
US$
17 523 451
10 030 909
55 359 765
442 295
58 353 526
29 100 980
5 044 850
41 607 543
3 354 701
8 330 909
30 326 615
367 295
58 353 525
9 883 681
824 850
8 546 848
Agriculture and horticulture
Conglomerates
Distribution
Food and beverages
Individuals
Manufacturing
Mining
Services
Provision for impairment losses on loans and advances
243 241 018
(8 582 636)
122 971 330
(8 582 636)
217 463 319
(10 790 192)
119 988 424
(10 790 192)
Net exposure
234 658 382
114 388 694
206 673 127
109 198 232
77
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41.
RISK MANAGEMENT (Cont’d )
41.1.4 Collateral and other credit enhancements
The amount and type of collateral required depends on an assessment of credit risk of the counterparty. There are guidelines regarding the acceptability of
types of collateral. The main types of collateral obtained are guarantees, cession of debtors, mortgages over residential properties, equities, subordination
of shareholder loans and promissory notes. The fair value of all collateral held by the Group at the reporting date is US$118 433 389 (2014 –US$97 474
895).
41.1.5 Credit quality per sector
At 31 December 2015
Agriculture and horticulture
Conglomerates
Distribution
Food and Beverage
Individuals
Manufacturing
Mining
Services
Pass
US$
3 951 666
-
5 883 680
1 939 940
66 686 290
202 179
-
8 404 584
Special
Mention
US$
8 192 253
11 348 334
23 903 379
3 752 802
27 506 267
24 552 460
328 391
24 496 609
Substandard
US$
Doubtful
US$
Loss
US$
Total
US$
136 848
-
991 717
-
5 184 962
2 905 321
-
4 945 801
1 282 053
-
3 476 085
-
1 207 793
1 662 023
738 937
4 299 028
344 439
-
3 109 277
-
13 907 259
11 348 334
37 364 138
5 692 742
1 000 000 101 585 312
29 774 899
1 067 328
42 501 006
452 916
-
354 984
Total
87 068 339
124 080 495
14 164 649
12 665 919
5 261 616 243 241 018
At 31 December 2014
horticulture
Conglomerates
Distribution
Food and Beverage
Individuals
Manufacturing
Mining
Services
Total
Pass
US$
8 386 990
6 980 006
16 499 037
-
42 770 892
3 312 798
215 178
16 221 472
Special
Mention
US$
7 378 259
3 050 903
28 731 792
7 253
9 988 130
18 592 291
3 047 743
13 698 876
Substandard
US$
Doubtful
US$
Loss
US$
Total
US$
182 714
-
1 708 984
-
4 534 247
2 387 345
-
2 246 246
1 214 425
-
3 272 537
435 042
886 466
2 406 342
1 781 929
8 505 001
361 063
-
5 147 415
-
173 791
2 402 204
-
935 948
17 523 451
10 030 909
55 359 765
442 295
58 353 526
29 100 980
5 044 850
41 607 543
94 386 373
84 495 247
11 059 536
18 501 742
9 020 421 217 463 319
Pass:
Special Mention:
Substandard:
Doubtful:
Loss:
Refers to loans graded 1 to 3
Refers to loans graded 4 to 7
Refers to loans graded 8
Refers to loans graded 9
Refers to loans graded 10
78
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41.
RISK MANAGEMENT (Cont’d )
41.1.6 Credit quality analysis per grade
Loans and advances to customers
Carrying amount (note 21.1.1)
Assets at amortised cost
Individually impaired
Grade 8
Grade 9
Grade 10
Gross amount
Allowance for impairment
Impairment
Suspended interest
Carrying amount
Collectively impaired
1 to 5 low to fair risk
6 to 7 watch list
Gross amount
Allowance for impairment
Impairment
Suspended interest
Carrying amount
Total carrying amount at amortised cost
31 December
2015
US$
31 December
2014
US$
232 546 908
204 303 128
14 164 469
12 665 919
5 261 616
11 059 536
18 501 742
9 020 421
32 092 184
38 581 699
(7 574 789)
(1 798 490)
(10 453 970)
(2 369 999)
22 718 905
25 757 730
182 512 639
28 636 195
144 009 906
34 871 714
211 148 834
178 881 620
(1 007 847)
(312 984)
(336 222)
-
209 828 003
178 545 398
232 546 908
204 303 128
79
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41.
RISK MANAGEMENT (Cont’d )
41.2 Market risk
This is the exposure of the Group’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 Group has in
place a Management Asset and Liability Committee (ALCO) which monitors market risk and recommends the appropriate levels to which the Group should
be exposed at any time. Net Interest Margin is the primary measure of interest rate risk, supported by periodic stress tests to assess the Group’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 Group’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 downward revision of interest rates and the volatility of the South African
Rand were the major sources of market risk during the year under review.
The following table demonstrates the sensitivity to a reasonable change in interest rates, with all other variables held constant, of the Group’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
Increase in
interest rates
%
0 to 1
months
US$
1 to 3
months
US$
5
3
1
-1
-3
-5
551 470
330 882
110 294
(110 294)
(330 882)
(551 470)
(2 034 455)
(1 220 673)
(406 891)
406 891
1 220 673
2 034 455
3months
to 1 year
US$
434 680
260 808
86 936
(86 936)
(260 808)
(430 680)
1 year to
5 years
US$
Total
US$
2 966 580
1 779 948
593 316
(593 316)
(1 779 948)
(2 966 580)
1 918 275
1 150 965
383 655
(383 655)
(1 150 965)
(1 918 275)
Sensitivity of net interest income
Increase in
interest rates
%
0 to 1
months
US$
1 to 3
months
US$
3months
to 1 year
US$
1 year to
5 years
US$
5
3
1
-1
-3
-5
(1 201 696)
(721 018)
(240 339)
240 339
721 018
1 201 696
(1 029 873)
(617 924)
(205 975)
205 975
617 924
1 029 873
2 963 418
(68 021)
1 778 051
(40 813)
592 684
(13 604)
(592 684)
13 604
40 813 (1 778 051)
(2 963 418)
68 021
Total
US$
663 828
398 296
132 766
(132 766)
(398 296)
(663 828)
At 31 December 2015
Currency
USD
USD
USD
USD
USD
USD
At 31 December 2014
Currency
BUSD
USD
USD
USD
USD
USD
80
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41.
RISK MANAGEMENT (Cont’d )
41.3 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 2015
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
At 31 December 2014
Currency
ZAR
ZAR
ZAR
ZAR
ZAR
ZAR
41.4 Liquidity risk
% Change in
currency
rate
5
3
1
-1
-3
-5
% Change in
currency
rate
5
3
1
-1
-3
-5
Effect on profit
before tax
US$
(334 299)
(200 579)
(66 860)
66 860
200 579
334 299
Effect on profit
before tax
US$
(20 181)
(12 109)
(4 036)
4 036
12 109
20 181
Effect on
equity
US$
(248 217)
(148 930)
(49 643)
49 643
148 930
248 217
Effect on
equity
US$
(14 985)
(8 991)
(2 997)
2 997
8 991
14 985
Liquidity risk is the risk of financial loss arising from the inability of the Group to fund asset increases or meet obligations as they fall due without incurring
unacceptable costs or losses. The Group 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 Group also actively monitors its
loans to deposit ratio against a set threshold in a bid to monitor and limit funding risk. The group monitors funding concentration risk by reviewing the ratio
of top 20 depositors to the total funding. Funding mix is also monitored by monitoring the contribution of wholesale and demand deposits to the total funding
for the bank. Liquidity risk is monitored through a daily liquidity 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 30.1.
The key measure used by the Group for managing liquidity risk is the ratio of net liquid assets to deposits from customers. The Group monitors its liquidity
ratio in compliance with Banking Regulations to ensure that it is not less than 30% 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.
81
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41.
RISK MANAGEMENT (Cont’d )
41.4 LIQUIDITY RISK (Cont’d )
Maturity profile for contingent liabilities
The table below shows the contractual expiry by maturity of the Group’s contingent liabilities and facilities approved but not drawn down.
At 31 December 2015
Guarantees
Facilities approved but not drawn down
Irrevocable letters of credit
At 31 December 2014
Guarantees
Facilities approved but not drawn down
Irrevocable letters of credit
On
Demand
US$
-
-
-
0 to 1
months
US$
142 935
667 004
689 607
1 to 3
months
US$
850 139
5 559 624
575 000
3 months
to 1 year
US$
4 312 189
23 170 136
-
1 year to
to 5 years
US$
-
10 071 308
-
Total
US$
5 305 263
39 468 072
1 264 607
-
1 499 546
6 984 763
27 482 325
10 071 308
46 037 942
On
Demand
US$
-
-
-
0 to 1
months
US$
3 716 420
944 901
-
1 to 3
months
US$
275 000
5 605 940
500 000
3 months
to 1 year
US$
2 255 513
23 291 114
400 000
1 year to
to 5 years
US$
-
3 499 862
-
Total
US$
6 246 933
33 341 817
900 000
-
4 661 321
6 380 940
25 946 627
3 499 862
40 488 750
The Group expects that not all of the contingent liabilities or facilities approved but not drawn down will be drawn before expiry.
41.5 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 Group utilises monthly Key Risk Indicators to monitor operational risk in all units. Further to this, the Group has an elaborate Operational
Loss reporting system in which all incidents with a material impact on the well-being of the Group are reported to risk management. The risk department
conducts periodic risk assessments on all the units within the Group 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
41.6 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 Group has an independent compliance function which is responsible for identifying and monitoring all compliance issues and ensures the Group
complies with all regulatory and statutory requirements.
41.7 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 Group conducts its
business. To manage this risk, the Group strictly monitors customers’ complaints, continuously train staff at all levels, conducts market surveys
82
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41. RISK MANAGEMENT (Cont’d )
and periodic reviews of business practices through its Internal Audit department. The directors are satisfied with the risk management processes in the
Group as these have contributed to the minimisation of losses arising from risky exposures.
41.8 Strategic risk
This refers to current and prospective impact on a Group’s earnings and capital arising from adverse business decisions or implementing strategies that
are not consistent with the internal and external environment. To manage this risk, the Group 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.
41.9 Risk ratings
41.9.1 Reserve Bank of Zimbabwe ratings
The Reserve Bank of Zimbabwe did not undertake an onsite inspection on the Group’s banking subsidiary. An onsite inspection was last conducted in 2013
and a review was done in 2014 during which the RBZ indicated that the bank had attended to their satisfaction all matters raised in the 2013 inspection.
41.9.1.1 CAMELS* ratings
CAMELS Component
Latest RBS** Ratings
30/06/2013
Previous RBS Ratings
31/01/2008
Previous RBS Ratings
30/06/2007
Capital Adequacy
Asset Quality
Management
Earnings
Liquidity
Sensitivity to Market Risk
Composite Rating
2
4
3
2
2
2
3
4
2
3
3
3
3
3
4
3
3
3
3
3
4
*CAMELS is an acronym for Capital Adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to Market Risk. CAMELS rating system uses
a rating scale of 1-5, where ‘1’ is Strong, ‘2’ is Satisfactory, ‘3’ is Fair, ‘4’ is Weak and ‘5’ is Critical.
**RBS stands for Risk-Based Supervision.
41.9.1.2 Summary RAS ratings
RAS Component
Latest RAS***
30/06/2013
Ratings Previous
RBS Ratings 31/01/2008
Previous RBS Ratings
30/06/2007
Overall Inherent Risk
Moderate
Overall Risk Management Systems
Acceptable
Overall Composite Risk
Moderate
Direction of Overall Composite Risk
Stable
Moderate
Acceptable
Moderate
Stable
High
Weak
High
Increasing
***RAS stands for Risk Assessment System.
83
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41. RISK MANAGEMENT (Cont’d )
41.9 RISK RATINGS (Cont’d)
41.9.1.3 Summary risk matrix -30 June 2013 on – site examination
Type of Risk
Level of Inherent Risk
Credit
Liquidity
Interest Rate
Foreign Exchange
Strategic Risk
Operational Risk
Legal & Compliance
Reputation
Overall
KEY
High
Moderate
Moderate
Low
Moderate
Moderate
Moderate
Moderate
Moderate
Adequacy of Risk
Management
Systems
Overall Composite Risk
Direction of Overall
Composite Risk
Weak
Acceptable
Acceptable
Acceptable
Acceptable
Acceptable
Strong
Strong
Acceptable
High
Moderate
Moderate
Low
Moderate
Moderate
Moderate
Moderate
Moderate
Increasing
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Level of Inherent Risk
Low – reflects a lower than average probability of an adverse impact on a banking institution’s capital and earnings. Losses in a functional area with low
inherent risk would have little negative impact on the banking institution’s overall financial condition.
Moderate – could reasonably be expected to result in a loss which could be absorbed by a banking institution in the normal course of business.
High – reflects a higher than average probability of potential loss. High inherent risk could reasonably be expected to result in a significant and harmful loss
to the banking institution.
Adequacy of Risk Management Systems
Weak – risk management systems are inadequate or inappropriate given the size, complexity and risk profile of the banking institution. Institution’s risk
management systems are lacking in important ways and therefore a cause of more than normal supervisory attention. The internal control systems will be
lacking in important aspects particularly as indicated by continued control exceptions or by the failure to adhere to written policies and procedures.
Acceptable – management of risk is largely effective but lacking to some modest degree. While the institution might be having some minor risk management
weaknesses, these have been recognised and are being addressed. Management information systems are generally adequate.
Strong – management effectively identifies and controls all types of risk posed by the relevant functional areas or per inherent risk. The board and senior
management are active participants in managing risk and ensure appropriate policies and limits are put in place. The policies comprehensively define the
bank’s risk tolerance, responsibilities and accountabilities are effectively communicated.
Overall Composite Risk
Low – would be assigned to low inherent risk areas. Moderate risk areas may be assigned a low composite risk where internal controls and risk management
systems are strong and effectively mitigate much of the risk.
Moderate – risk management systems appropriately mitigates inherent risk. For a given low risk area, significant weaknesses in the risk management
systems may result in a moderate composite risk assessment.
On the other hand, a strong risk management system may reduce the risk so that any potential financial loss from the activity would have only a moderate
negative impact on the financial condition of the organisation.
84
NMBZ HOLDINGS LIMITED Annual Report 2015
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41. RISK MANAGEMENT (Cont’d)
41.9 RISK RATINGS (Cont’d)
High – risk management systems do not significantly mitigate the high inherent risk. Thus, the activity could potentially result in a financial loss that would
have a significant impact on the bank’s overall condition.
Direction of Overall Composite Risk
Increasing – based on the current information, risk is expected to increase in the next 12 months.
Decreasing – based on current information, risk is expected to decrease in the next 12 months.
Stable – based on the current information, risk is expected to be stable in the next 12 months.
41.9.2 External credit ratings
The external credit ratings were given by Global Credit Rating (GCR), a credit rating agency accredited with the Reserve Bank of Zimbabwe.
Security class
Long term
The current rating expires in August 2016.
41.10 Regulatory compliance
2015
BB+
2014
BB+
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.
41.11 Capital management
41.11.1 Holding company
The capital allocation to the subsidiary units is in accordance with the regulatory requirements of the business undertaken by the subsidiary.
41.11.2 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.
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.
85
Notes To The Financial Statements (Cont’d)
For the year ended 31 December 2015
41. RISK MANAGEMENT (Cont’d)
41.11 CAPITAL MANAGEMENT (Cont’d)
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 2015 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
Tier 1 capital
Tier 2 capital (subject to limit as per Banking Regulations)
Fair value gain on investment properties
Subordinated debt
Regulatory reserve (limited to 1.25% of risk weighted assets)
Portfolio provisions (limited to 1.25% of risk weighted assets)
Total Tier 1 & 2 capital
Tier 3 capital (sum of market and operational risk capital)
Total capital base
Total risk weighted assets
Tier 1 ratio
Tier 2 ratio
Tier 3 ratio
Total capital adequacy ratio
RBZ minimum required
42. EVENTS AFTER REPORTING DATE
2015
US$
16 506
31 474 502
14 439 723
(3 112 902)
2014
US$
16 506
31 474 502
9 346 446
(2 964 628)
42 817 829
37 872 826
(722 035)
-
42 095 794
7 812 084
3 112 902
1 414 144
3 128 792
156 246
49 907 878
722 035
(467 320)
(10 169)
37 395 337
7 294 677
2 964 628
1 407 964
2 636 938
285 147
44 690 014
467 320
50 629 913
45 157 334
262 803 080
233 766 816
16.02%
2.97%
0.27%
19.26%
12%
16.00%
3.12%
0.20%
19.32%
12.00%
Following the decision by Commerzbank AG to move out of the United States Dollars (USD) clearing business for Zimbabwean banks by 31 March 2016, the
Bank changed its correspondent banks. The decision taken by Commerzbank AG does not only affect NMB Bank Limited but affects all other Banks who were
using Commerzbank AG in Zimbabwe. Consequently, our customers can now receive USDs from offshore sources using our new accounts with Ecobank
International, France or Bank of China, South Africa. Given the swift action taken by management, the impact on the Bank’s operations has been minimal.
86
NMBZ HOLDINGS LIMITED Annual Report 2015
Historical Five Year Financial Summary
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
2015
US$
2014
US$
2013
US$
2012
US$
Restated
Interest income
Interest expense
36 501 764
(15 118 231)
31 072 461
(12 651 519)
33 181 704
(13 006 505)
27 543 784
(10 050 003)
2011
US$
20 158 766
(8 257 254)
11 901 512
1 289 729
11 958 029
25 149 270
(113 573)
(206 662)
-
(16 979 741)
(2 296 111)
18 420 942
1 822 432
15 121 536
35 364 910
-
62 025
-
(27 984 051)
(5 017 362)
20 175 199
1 502 044
14 673 834
36 351 077
217 768
777 720
580 136
(25 232 756)
(16 645 810)
17 493 781
1 902 337
13 016 115
32 412 233
434 252
2 593 515
-
(21 452 714)
(3 985 062)
21 383 533
1 416 445
20 244 285
43 044 263
-
1 234 125
-
(26 872 649)
(9 496 601)
7 909 138
(2 422 040)
Net interest income
Net foreign exchange gains
Fee and commission income
Revenue
Share of profit/(loss) of associate
Non-interest income
Profit on disposal of associate
Operating expenditure
Impairment losses on loans and advances
Profit /(loss) before taxation
Taxation (charge)/credit
Profit/(loss) after taxation
Other comprehensive income for
the year, net of tax
2 425 522
(768 455)
(3 951 865)
630 042
10 002 224
(2 431 722)
6 193 653
(1 655 197)
5 487 098
1 657 067
(3 321 823)
7 570 502
4 538 456
2 970
10 180
-
-
-
Total comprehensive income/(loss) for the year
5 490 068
1 667 247
(3 321 823)
7 570 502
4 538 456
87
Historical Five Year Financial Summary (Cont’d)
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SHAREHOLDERS’ FUNDS
Share capital
Reserves
Equity
Subordinated loan
Redeemable ordinary shares
2015
US$
2014
US$
2013
US$
2012
US$
Restated
78 598
34 715 869
34 794 467
1 414 144
14 335 253
78 598
29 225 801
29 304 399
1 407 964
14 335 253
78 598
27 541 622
27 620 260
1 485 890
14 335 253
78 598
30 863 485
30 942 083
-
-
2011
US$
78 598
23 292 983
23 371 581
-
-
Total shareholders’ funds
50 543 864
45 047 616
43 441 403
30 942 083
23 371 581
LIABILITIES
Deposits and other liabilities
Current tax liabilities
283 287 243
-
241 001 418
-
216 041 709
-
195 002 633
588 966
142 757 778
1 157 974
Capital employed
333 831 107
286 049 034
259 483 112
226 533 682
167 287 333
ASSETS
Cash and cash equivalents
Investments securities
Investments in debentures
Deferred tax assets
Current tax assets
Loans, advances and other assets
Non-current assets held for sale
Quoted and other investments
Trade investments
Investment in associate
Investment properties
Property and equipment
Intangible assets
63 439 347
14 547 992
-
1 905 116
23 075
235 088 981
2 264 300
68 220
77 805
-
8 125 800
6 601 087
1 689 385
54 750 561
3 874 525
4 614 047
2 784 594
1 436 974
203 363 052
2 267 300
127 291
81 390
-
4 453 300
6 345 267
1 950 733
48 871 983
4 685 471
3 984 723
2 823 544
1 739 210
181 316 271
2 303 300
145 850
190 148
-
4 385 300
7 372 943
1 664 369
58 171 045
5 501 963
-
1 380 596
-
146 599 994
2 225 300
130 316
195 790
1 025 919
3 115 300
8 187 459
-
32 265 953
2 126 657
-
421 383
-
122 260 663
-
118 048
190 980
591 667
2 510 000
6 801 982
-
Employment of capital
333 831 107
286 049 034
259 483 112
226 533 682
167 287 333
88
NMBZ HOLDINGS LIMITED Annual Report 2015
Historical Five Year Financial Summary (Cont’d)
2015
2014
2013
2012
2011
CLOSING NUMBER OF SHARES
384 427 351
384 427 351
384 427 351*
2 807 107 289
2 807 107 289
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
12.87
1.43
-
-
2.5
11.72
0.43
-
-
10.47
11.30
(1.00)
-
-
1.12
0.29
-
-
(6.50) 2.24 7.19
0.83
0.16
-
-
Closing price per share (US cents)
Market capitalisation (US$)
3.5
13 454 952
4.5
17 299 224
6.50
24 987 781
0.65
18 246 197
1.15
32 281 734
Financial performance
Return on shareholders’ funds (%)¹
Return on assets (%)
Cost/net income ratio (%)²
Non-interest income/total income (%)
Effective tax rate (%)
10.9
1.7
82.1
53.8
30.6
3.7
0.6
92.8
35.4
31.68
(8)
(1)
110
47
(16)
26
4
70
34
23
19
3
76
36
27.1
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.
* At an Extraordinary General Meeting held on 19 February 2014, the Company approved a share consolidation exercise at a ratio of 10:1 and consolidated
3 500 000 000 (3.5 billion) shares with a nominal value of US$0.000028 per share to 350 000 000 (350 million) shares with a nominal value of US$0.00028
per share. The Company also approved an increase in the authorized share capital from 350 000 000 shares with a nominal value of US$0.00028 per share
to 600 000 000 shares with a nominal value US$0.00028 per share.
89
Notice To Members
Notice is hereby given that the 21st 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 Thursday, 19 May 2016 at 1000 hours for the following purposes:
ORDINARY BUSINESS
1. To receive and adopt the Financial Statements for the year ended 31 December 2015, together with the reports of the Directors and Auditors thereon.
2. To appoint/re-appoint Directors.
In accordance with the Articles of Association, all the directors of the Company, being Mr. B. Chikwanha, Mr. B. Washaya, Ms. J. Maguranyanga, Ms.
M. Svova, Mr. K. Qurashi, Mr. C. Ndiaye, Mr B. Zwinkels, Mr. E. Sandersen and Mr C. Chikaura retire by rotation. Being eligible, all the directors of the
Company offer themselves for reelection.
3. To approve directors’ fees for the year ended 31 December 2015.
4. To approve Messrs KPMG’s remuneration for the year ended 31 December 2015.
5. To appoint KPMG as the Company’s Auditors for the year ending 31 December 2016.
SPECIAL BUSINESS
SPECIAL RESOLUTION
1. To consider, and if deemed fit, to pass, with or without modification, the resolution set out below:
“That the Company, being duly authorised thereto by Article 10 of its Articles of Association, may undertake general repurchases by way of open market
transactions on the Zimbabwe Stock Exchange (“ZSE”) of any of its own ordinary shares in such manner or on such terms as the directors may from
time to time determine provided that:
a. the maximum number of shares authorized to be acquired is no more than 10% of the Company’s ordinary issued share capital.
b. for each share, the minimum price shall not be lower than the nominal value of the Company’s shares and the maximum price that may be paid is 5%
above the weighted average market price for the ordinary shares in the Company as derived from the Zimbabwe Stock Exchange (ZSE) Daily Price
Sheet for the five business days immediately preceding the date on which such ordinary shares are contracted to be purchased.
c. the authority in terms of this special resolution shall unless renewed prior to such time, expire on the first anniversary of this resolution or at the conclusion
of the next Annual General Meeting of the Company, whichever is later, save that the Company, may before such expiry, enter into a contract or contracts
to purchase its ordinary shares which would or might be completed wholly or partly after the expiry and may purchase its ordinary shares in pursuance
of such contract or contracts.’’
Notes:
1. A 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.
2. A Special Resolution is required to be passed by a majority of seventy five per cent of those present and voting (including proxy votes), representing not less
than twenty five per cent of the total number of votes in the Company.
3.
In terms of special resolution 1, the directors are seeking authority to allow the use of the Company’s available cash resources to purchase its own shares
in the market in terms of the Companies Act and the regulations of the ZSE. The directors will only exercise the authority if they believe that to do so would
be in the best interests of shareholders generally. In exercising this authority, the directors will duly take into account following such repurchase for the next
12 months, the ability of the Company to pay its debts in the ordinary course of business, the maintenance of an excess of assets over liabilities, and for the
Company and Group, the adequacy of ordinary capital and reserves as well as working capital.
By Order of the Board
V. MUTANDWA
COMPANY SECRETARY
15 March 2016
90
NMBZ HOLDINGS LIMITED Annual Report 2015
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 all 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 Mr. B. Chikwanha, Mr. J. Chenevix-Trench, Mr. B. Washaya, Ms. J. Maguranyanga, Ms. M.
Svova, Mr. K. Qurashi, Mr. C. Ndiaye, Mr B. Zwinkels, Mr. E. Sandersen and Mr C. Chikaura. All the retiring directors being eligible offer themselves for
re-election. Information about these directors is shown below:
Benedict Chikwanha – Independent Non-Executive Director (Chairman)
Benedict Chikwanha was appointed as a non-executive director of NMB Bank Limited and NMBZ Holdings Limited on 31 January 2014. Mr. Chikwanha
is an experienced banker, with over forty years working experience in the banking sector, 32 of which were spent at Barclays Zimbabwe. Ben Chikwanha
has held various positions in Risk Management, Retail Banking, Human Resources, Corporate Banking and Corporate Finance. He has held various
management roles in the banking sector including being a Director Risk Management and Managing Director. Currently Ben Chikwanha is an Executive
Director of the Leonard Cheshire Disability Zimbabwe Trust.
Benefit P. Washaya - Chief Executive Officer
Benefit Washaya commenced his banking career with Barclays Bank in 1978 where he held general management positions including Director’s Assistant,
Risk Management and Business Centre Director. He left Barclays Bank in 1997 to join NMB Bank where he became Divisional Director, Risk Management
and was responsible for setting up the Risk Management systems in the bank. Benefit Washaya moved to Metropolitan Bank of Zimbabwe Limited in
March 2004 as Chief Executive Officer. He re-joined NMB Bank as Managing Director on 7 January 2008 during a very difficult period in the history of
the bank. He successfully presided over the change-over period from the ZWD to the multi-currency regime in 2009 when most bank balance sheets
started from a near zero base. In 2010, he was part of the team that successfully raised $10 million through a rights issue which broadened the bank’s
shareholder profile and again in 2013 he was part of the team that was involved in a private placement which raised close to $15 million and brought on
board three strategic institutional investors. Benefit Washaya is a Certified Member of the Institute of Bankers of South Africa ACIB (SA) and a Chartered
Secretary (ACIS). He holds a Masters’ Degree in Business Administration, specialising in Finance, from the University of Wales.
Ben Zwinkels – Non Executive Director
Ben Zwinkels represents AfricInvest on the board. He is currently the Executive Chairman of AfricInvest Capital Partners. He has over 35 years of
experience in Financial Sector Development in Africa of which 30 years were spent working for FMO (the Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden N.V. from the Netherlands) where he retired as of July 1st 2012. Mr. Zwinkels commenced his working career as an Assistant Auditor
and held the positions of Assistant Financial Controller, Branch Manager and Technical Advisor before joining FMO in 1982 as a Project Controller. Ben
held several positions with FMO including Senior Investment Officer- North and West Africa Division and Senior Investment Officer- Private Equity, until
his retirement.
Cheikh Ndiaye – Non-Executive Director
Cheikh Ndiaye represents the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO) on the board. He has over 30 years
of commercial banking experience of which 28 years were spent with Citibank. Mr. Ndiaye rose from a Credit Analyst position to Regional Director of
Operations and Technology for 12 countries in Africa and Middle East managing over 1500 people. At Ecobank, Cheikh Ndiaye managed Operations and
Technology in 30 countries with over 7 000 staff members. Cheikh Ndiaye has experience in various banking areas, including Financial Control, IT, Risk
Management, Financial Analysis and Operations. Currently Cheikh Ndiaye is an independent bank consultant.
Maureen Svova – Independent Non-Executive Director
Maureen Svova is one of the pioneer black female Chartered Accountants with over 25 years’ experience in Finance and Accounting. Maureen trained
for her articled clerkship with Coopers & Lybrand from 1982 to 1986 after graduating with a Bachelor of Accountancy and was promoted to Senior Audit
Manager a position she held until she left in 1990. She joined Trinidad Industries where she worked as a Finance Director from 1990 to 2000. Maureen
joined Deloitte & Touche Malawi as a Senior Audit Manager between the years 2000 and 2003. She left Deloitte to join Cottco as the Group Finance
Manager where she was employed between 2003 and 2005 after which she left to join Integrity Asset Management for a short period. Currently Ms. Svova
is managing a business consultancy company.
91
Explanations Regarding The Notice Of The Annual General Meeting (Cont’d)
Jean Maguranyanga – Independent Non-Executive Director
Jean Maguranyanga is a lawyer by profession with over 20 years’ experience. Jean commenced her career as a Prosecutor in the Ministry of Justice
Legal and Parliamentary affairs and moved after one year to Parliament. She worked as a Legal Advisor at the Parliament of Zimbabwe for three years
after which she left to study for her Master’s Degree in Corporate and Commercial Law. Following the completion of her Master’s degree Jean took up
a lectureship post with the University of Zimbabwe a position she held for two years. Thereafter, Jean joined the Reserve Bank of Zimbabwe where she
served as Legal Counsel and later as Division Chief Corporate Affairs / Bank Secretary for a total period of seventeen years. Currently Jean is a partner
at Chinamasa Mudimu and Maguranyanga Legal Practitioners.
Erik Sandersen – Non-Executive Director
Mr. Erik Sandersen represents Norfund on the board. Erik is a holder of an MSc in Engineering as well as a Master’s in Business Administration. Erik has
9 years’ experience in management and IT consultancy which he acquired at Anderson Consulting and Boston Consulting Group. Erik has an additional
five years’ experience in operational management. Of the five years that Erik was in operational management, two of these were served as CEO at Circle
Innovation AS and Hands ASA. From 2004 to 2014, Erik was involved in investments management, having co-founded a venture capital company called
Incitia Ventures AS. Currently Erik is an Investments Director with Norfund.
Khalid Qurashi – Independent Non-Executive Director
Khalid Qurashi is a recently retired banker with considerable international banking experience. He has worked for 38 years with a major US international
bank, where his area of expertise was in corporate risk management and profit centre/ franchise management. He was responsible for risk management
throughout the Middle East, Africa and Turkey. Key responsibilities included establishing overall risk appetite in the region and approving credit and
country/ cross border limits. Mr. Qurashi has been a board member at 2 affiliated large bank subsidiaries. He was Vice Chairman at one, and a board
member as well as Chairman of the credit committee, at the other local African subsidiary. His interests include international finance, private equity, the
SME business sector and alternative energy. Mr. Qurashi has a Master’s Degree in Administration and a Bachelor’s Degree in Bio Chemistry.
Charles Chikaura – Independent Non-Executive Director
Charles Chikaura is an independent non-executive director who was appointed to the NMBZ Holdings and NMB Bank Limited boards on 24 December
2015. Charles holds a Bachelor of Arts Honours degree and a Masters in Business Administration degree from the University of Zimbabwe as well as
an Institute of Bankers diploma. Charles has 35 years of banking experience, of which 23 of these were with the Reserve Bank of Zimbabwe where he
held several positions including Manager Exchange Control, General Manager Operations, Senior General Manager and Deputy Governor. Charles was
thereafter appointed Chief Executive Officer of the Infrastructure Development Bank of Zimbabwe a position he held for 12 years, until August 2015 when
he retired. Currently Charles is a full time farmer and holds several directorships.
Resolution 3
Shareholders are requested to approve director’s fees. The directors fees for 2015 amounted to $232 705.
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 2015, which audit fee has been disclosed in the Annual Report.
Resolution 5
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]. In addition section 41 of the Banking Act [Chapter 24:20] provides
that the term of external auditors is limited to five years within any eight year period. This resolution therefore proposes the appointment of KPMG as
the company’s auditors in accordance with the Companies Act [Chapter 24:03] and the Banking Act [Chapter 24:20]. KPMG have audited the company
for four years since the December 2012 year end audit and it is proposed that they be appointed as the company’s auditors for the fifth year ending 31
December 2016.
92
NMBZ HOLDINGS LIMITED Annual Report 2015
Explanations Regarding The Notice Of The Annual General Meeting (Cont’d)
Resolution 6 - Special Resolution
This resolution seeks to empower the Company to buy back its shares. The Company is authorised in terms of Article 10 of its Articles of Association to
buy back its shares. The Zimbabwe Stock Exchange has limited such buy backs to 10% of the Company’s issued share capital. The directors are seeking
authority to allow the use of the Company’s available cash resources to purchase its own shares in the market in terms of the Companies Act and the
regulations of the ZSE. The directors will only exercise the authority if they believe that to do so would be in the best interests of shareholders generally.
In exercising this authority, the directors will duly take into account following such repurchase for the next 12 months, the ability of the Company to pay its
debts in the ordinary course of business, the maintenance of an excess of assets over liabilities, and for the Company and Group, the adequacy of ordinary
capital and reserves as well as working capital. This resolution is required to be passed by a majority of seventy five percent of those present and voting
(including proxy votes) representing not less than twenty five per cent of the total number of votes in the Company.
93
Shareholders’ Analysis 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 -
Total
Size of shareholding
0 - 5000
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
Total
2015 Number of shareholders
3531
100
139
27
24
10
14
11
3,856
2014 Number of shareholders
3538
104
149
26
25
6
17
11
3,876
Holders
1
1
351
243
3
11
3
8
33
3091
47
6
31
11
16
3,856
2015
Industry
Bank
Bank And Nominees
Local Companies
Employee
Deceased Estates
External Companies
Fund Managers
Insurance Companies
Investment Trusts and Property
Local Residents
Nominees Local
Non Residents
Non Resident Individuals
Other Corporate Holdings
Pension Fund
Total
94
% of Holders
91.58%
2.59%
3.60%
0.70%
0.62%
0.26%
0.36%
0.29%
100.00%
% of Holders
91.30%
2.68%
3.84%
0.67%
0.64%
0.15%
0.44%
0.28%
100.00%
% of Holders
0.03%
0.03%
9.10%
6.30%
0.08%
0.28%
0.08%
0.21%
0.86%
80.15%
1.22%
0.16%
0.80%
0.29%
0.41%
100%
2015 Issued Shares
2,120,835
735,115
3,120,692
2,037,869
5,023,164
7,943,954
50,040,970
313,404,752
384,427,351
2014 Issued Shares
2, 143, 687
759,384
3,376,416
1,921,650
5,067,526
4,637,569
53,118,630
313,402,489
384,427,351
Shares
4,290
14,900
47,620,446
820,410
2,221
104,004,827
2,510
32,135,746
49,884,095
10,185,891
424,061
106,442,385
682,622
26,615,992
5,586,955
384,427,351
% Shareholding
0.55%
0.19%
0.81%
0.52%
1.31%
2.07%
13.02%
81.53%
100.00%
% Shareholding
0.55%
0.20%
0.88%
0.50%
1.32%
1.21%
13.82%
81.52%
100.00%
% of Shares
0.00%
0.00%
12.39%
0.21%
0.00%
27.05%
0.00%
8.36%
12.98%
2.65%
0.11%
27.69%
0.18%
6.93%
1.45%
100%
NMBZ HOLDINGS LIMITED Annual Report 2015
Shareholders’ Analysis Shareholders’ Analysis (Cont’d)
2014
Industry
Bank
Local companies
Employee
Deceased Estates
External Companies
Fund Managers
Insurance Companies
Investment Trusts and Property
Local Residents
Nominees Local
Non Residents
Non Resident Individuals
Other Corporate Holdings
Pension Fund
Total
Shareholders
2
350
247
3
7
4
10
34
3107
58
8
28
3
15
3,876
% of shareholders
0.05%
9.03%
6.37%
0.08%
0.18%
0.10%
0.26%
0.88%
80.15%
1.50%
0.21%
0.72%
0.08%
0.39%
100.00%
Shares
19,190
46,122,695
966,863
2,221
99,114,867
2,700
58,693,244
50,751,589
11,737,545
549,868
108,660,745
2,134,883
3,369
5,667,572
384,427,351
% of Shares
0.00%
12.00%
0.25%
0.00%
25.78%
0.00%
15.27%
13.20%
3.05%
0.14%
28.27%
0.56%
0.01%
1.47%
100.00%
95
2015 Number of Shares
71,207,639
34,571,429
34,571,429
34,571,429
32,128,043
26,557,498
21,526,695
16,885,381
16,875,582
13,545,247
302,440,372
% Shareholding
18.52%
8.99%
8.99%
8.99%
8.36%
6.91%
5.60%
4.39%
4.39%
3.52%
78.66%
2014 Number of Shares
71,207,639
34,571,429
34,571,429
34,571,429
32,128,043
26,557,498
21,526,695
16,885,381
16,875,582
13,545,247
302,440,372
% Shareholding
18.52%
8.99%
8.99%
8.99%
8.36%
6.91%
5.60%
4.39%
4.39%
3.52%
78.66%
Shareholders’ Analysis Shareholders’ Analysis (Cont’d)
Top Ten Shareholders
Rank Shareholder
1
2
African Century Financial Investments Ltd
Africinvest Financial Sector Holding
Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N V (Fmo)
Norwegian Investment Fund For Developing Countries
Old Mutual Life Assurance Company Of Zimbabwe Limited
Old Mutual Zimbabwe Limited
Lalibela Limited
Alsace Trust
Cornerstone Trust
4
5
6
7
8
9
10 Wamambo Investments Trust
TOTAL
Rank Shareholder
1
2
3
4
5
6
7
8
9
10 Wamambo Investments Trust
African Century Financial Investments Ltd
Africinvest Financial Sector Holding
Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N V
Norwegian Investment Fund For Developing Countries (Norfund)
Old Mutual Life Assurance Company of Zimbabwe Limited
Old Mutual Zimbabwe Limited
Lalibela Limited
Alsace Trust
Cornerstone Trust
TOTAL
96
NMBZ HOLDINGS LIMITED Annual Report 2015
Shareholders’ Information
MEMBERS’ DIARY
Financial year end
Reports:-
• Announcement of annual results
• Annual financial statements posted to shareholders
• Annual General Meeting
• Announcement of the 2016 half-year results
Dividend payments:
• Interim
• Final
31 December 2015
21 March 2016
April 2016
19 May 2016
August 2016
n/a
n/a
97
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
Secretary and Registered Office
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 Charted Accountants (Zimbabwe)
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
98
NMBZ HOLDINGS LIMITED Annual Report 2015
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 19 May 2016 at 10:00 hours and at any adjournment thereof.
Signed this
day of
2016
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.
99