Final Results
March 06 2003 - 2:01AM
UK Regulatory
RNS Number:3554I
NMBZ Holdings Ld
06 March 2003
NMBZ HOLDINGS LIMITED
Holding company of
NMB Bank Limited (Registered Commercial Bank)
and
Continental Securities Trading (Private) Limited
AUDITED INFLATION ADJUSTED AND HISTORICAL RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2002
HIGHLIGHTS
2002 2001
Z$ millions Z$ millions Change %
Inflation adjusted attributable profit 5 385 2 712 +99
Historical attributable profit 9 556 1 841 +419
Inflation adjusted net interest income 20 902 10 929 +91
Inflation adjusted non-interest income 6 768 5 998 +13
Inflation adjusted basic earnings per share (cents) 1 481 662 +124
Historical basic earnings per share (cents) 2 629 449 +486
Historical dividend per share (cents) 634 109 +482
Inflation adjusted cost to income ratio (%) 29 28 +4
Historical cost to income ratio (%) 21 28 -25
Mr Paddy Zhanda, Chairman of NMBZ Holdings, said:
"The Group has posted commendable results which exceeded expectations despite an
unfavourable macro-economic environment. The powerful combination of products
and services offered to clients during the year has yielded fruitful results as
reflected by the significant growth in attributable profit."
5 March 2003
Enquiries:
NMBZ HOLDINGS LIMITED Tel: +263-4-759 651/9
Dr Julius Makoni, Managing Director juliusm@nmbz.co.zw
James Mushore, Deputy Managing Director jamesm@nmbz.co.zw
Otto Chekeche, Finance Director ottoc@nmbz.co.zw
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
COLLEGE HILL - LONDON
Corinna Dorward/Matthew Gregorowski Tel: +44-207-457-2020
CHAIRMAN'S STATEMENT
Overview
The country ended 2002 in a severely weakened condition after experiencing a
fourth successive year of economic decline. The main challenges in 2002 were:-
* Declining Gross Domestic Product (GDP)
* Hyperinflation and high money supply growth
* High domestic debt
* Weak Balance of Payments (BOP) position
* Foreign currency shortages
ECONOMIC REVIEW
Declining GDP
Real GDP is estimated to have declined by 11.9% in 2002. Major declines are
expected in agriculture (20.8%), manufacturing (7.2%), construction (10.0%) and
mining (7.0%). With the current uncertain agricultural prospects, foreign
currency shortages and hyperinflation, the economy is forecast to decline
further in 2003.
Hyperinflation and High Money Supply Growth
The country's year-on-year inflation rose sharply from 116.7% in January 2002 to
198.9% in December 2002. The hyperinflationary trend is driven mainly by the
high money supply growth and the cost-push effects of the depreciating parallel
market exchange rate. The purchasing power of the Zimbabwe dollar fell by nearly
two thirds during 2002, with a dollar in 2003 now worth less than one cent of
its value in 1990.
Annual growth in broad money supply (M3), which started the year at 57%, surged
to 148.9% by November 2002 and is expected to end the year at a historic high of
around 170%. Excessive growth in money supply remains amongst the major causes
of the hyperinflation. Government's continued recourse to the banking system to
finance budget deficits and the access by banks to statutory reserves for
on-lending to exporters and other productive sectors at concessionary interest
rates, though favourable to the beneficiaries, has driven money supply growth.
High Domestic Debt
Domestic debt, which stood at $205 billion in December 2001, rose dramatically
to $346 billion by the end of December 2002. With 96% ($331 billion) of the
debt being Treasury bills, interest costs will continue to pose a significant
fiscal challenge. The domestic debt is expected to rise further in 2003, fueled
by the need to fund grain imports and financial support for the new farmers
under the current agrarian reforms.
Weak Balance of Payments (BOP) Position
The country's BOP position remains under severe stress, propelled largely by the
continued decline in export receipts and the absence of offshore lines of credit
and multilateral and bilateral support.
The current account has suffered from protracted shrinkage in export revenues.
Annual merchandise exports in 2002 are estimated to have fallen by 10.8% from
US$1.57 billion in 2001 to US$1.4 billion in 2002. Major declines were in gold
(25.0%), tobacco (17.1%)and pure manufactures (8.7%). The tourism sector, which
is one of the country's sectors with high potential to earn foreign currency,
remained subdued in 2002 registering inflows of US$42.6 million over the nine
months to September 2002 compared with US$59.3 million over the same period in
2001. Coupled with reduced current account inflows and higher import
requirements to fill the large cereal gap, the current account is estimated to
have ended 2002 with a deficit of US$800 million.
The country's capital account is estimated to have registered a deficit of
US$350 million in 2002 from a deficit of US$420 million in 2001. The deficit is
largely driven by the decline in foreign direct and portfolio investment
inflows, limited participation of the donor community as well as the lack of
much-needed BOP support.
The country's foreign payment arrears continued to build up during 2002 and are
forecast to have ended the year at US$1.5 billion up from US$700 million in
2001.
Foreign Exchange Market and Exchange Rate Policy
The balance of payments deficit during 2002 pushed the economy into foreign
exchange shortages. The official exchange rate has remained fixed at Z$55 to
the US$ since October 2000 and this, coupled with the 40% retention of export
proceeds by the Reserve Bank has substantially eroded export sector earnings as
Zimbabwe's inflation continued to surge while that of trading partners remained
generally subdued.
In a bid to rein in the parallel foreign exchange market, the Government,
through the Reserve Bank, centralised all foreign exchange transactions with
effect from 14 November 2002. Exporters are now required to surrender 50% of
their export proceeds at the official exchange rate for energy and fuel imports
and debt servicing with the remaining 50% being available to them over a 60-day
window for prioritised imports. Following the new exchange control regulations,
the foreign exchange trading has dwindled. Furthermore, the grain imports
required to avert mass starvation as a result of the cereal deficit in the
country, will result in increased pressure on the country's foreign exchange
reserves.
Agrarian Reforms
The year 2002 saw a greater resolve by the Government to redistribute land and
wind up the fast track phase of the programme by 31 August 2002. This was
intended to be in time for the 2002/2003 agricultural season. Government set
aside $8.5 billion for inputs to support the new farmers and $7.2 billion was
raised through agro-bills. The reforms have, however, been hampered by the
failure to take-up allocated land. The success of the agrarian reforms is
heavily dependent on a clearly defined tenure system, adequate technical and
financial support to the new farmers and a more systematic countrywide
infrastructural development. In the current agricultural season, returns from
the programme may be hampered by the uncertain weather conditions.
Concessionary Financing Schemes for Exporters and Producers
The Export and Productive Sector Financing Facilities, which saw the release in
January 2001 of banks' statutory reserves for on-lending to exporters and other
producers at rates of 15% and 30% per annum respectively, were improved in
November 2002. Rates applicable to the two facilities were reduced to 5% and 15%
respectively in order to stimulate export growth. Although this policy thrust
is commendable, it may not yield the desired results due to the simultaneous
introduction of restrictive exchange controls.
Economic Outlook
To salvage the economy from the current crisis and encourage growth, the
following key factors are necessary:
* Arresting money supply growth and the resultant runaway inflation.
* Formulation and implementation of an exchange rate policy that takes into
account demand and supply fundamentals.
* Synchronisation of disparate interest rate policies.
* Speedy adoption and implementation of economic blueprints presented to the
Government by the other stakeholders.
* Mending the country's relationships with the international community
including the IMF, World Bank and other multilateral lending agencies.
We remain confident that given the right economic policies and a resolve to
succeed, the economy could return to its previous levels of growth and
respectable levels of inflation.
GROUP INFLATION ADJUSTED RESULTS
Introduction
The economy continued to experience hyperinflation, an artificially managed
interest rate regime for the export and productive sectors, severe shortages of
foreign currency and an agricultural crisis. The acute fuel shortages have
adversely affected production and employee productivity due to the long hours
spent in fuel queues or in search of the scarce commodity. The closure of
bureaux de change resulted in a further decline of foreign currency inflows.
The authorities have acknowledged the problems bedevilling the economy, however
foreign direct investment has not been forthcoming as a result of the
uncompetitive investment environment and the negative publicity the country has
received. The local investing public have had to be more enterprising and
innovative. Faced with this situation the Bank has focused on growing
net-interest income through its commercial banking activities whilst maintaining
growth in non-interest income at levels well ahead of inflation.
Commercial Banking
The division continued to do well despite the unstable economic environment.
During the year under review, branches were opened at strategic locations to
capture the target market. Msasa, Borrowdale and Mutare branches were opened in
May, August and December 2002 respectively. Automated Teller Machines were
installed at these sites. The Bank continued to make significant investments in
new technology, laying a solid platform from which to launch a wide variety of
innovative products and services as well as improve operational efficiency. The
Bank will continue to seek investment opportunities and open new retail branches
where the need is identified.
The target market continues to remain medium and large corporate business
clients and selected high net worth individuals. A strategic service centre was
established in the reporting period to enhance further the quality service
rendered to the Bank's niche clientele.
The year 2003 represents the third year of operation for the commercial banking
division and the trend of deposit growth and profitability serves to justify the
investment.
Compliance with International Accounting Standards
The existence of hyperinflation as defined by International Accounting Standard
29 (IAS 29) was formally identified in Zimbabwe by the Zimbabwe Accounting
Practices Board, which decided that IAS 29 would be applied for financial
periods beginning on or after 1 January 2000. Consequently, these results have
been prepared in compliance with IAS 29, which requires the adjustment of the
financial statements on the basis of the inflation indices over the reporting
period, and a restatement of prior year comparative figures.
Profit before taxation
Inflation adjusted profit before taxation increased by 127% during the period
under review. Significant gains were made from a successful investment strategy
during the year.
Attributable profits
The Group achieved inflation adjusted attributable profits of Z$5 385 million,
an increase of 99% over the adjusted result for the same period last year as the
Group implemented ingenious investment strategies and continued to benefit from
investment in the retail banking sector. The return on shareholders' funds at
290% for the year from 33% last year reflects continued value creation for the
shareholders.
Net interest income
Net interest income increased by 91% to Z$20 902 million from Z$10 929 million.
The increase was primarily a result of increased deposits from the retail bank
for on lending at competitive rates. In addition, the volume of lending grew as
clients accessed the cheaper statutory reserve funds offered by the RBZ for the
export and productive sectors. Companies and individuals continued to borrow to
finance capital projects in the face of negative interest rates.
Non-interest income
Non-interest income increased by 13% and contributed 25% of the Groups' net
operating income.
Foreign exchange gains increased over the period with a 66% growth recorded from
this revenue base. The high return was as a result of innovative foreign
exchange strategies.
The stock broking and asset management subsidiary, Continental Securities
Trading (Private) Limited contributed negatively to Group attributable profit.
The two former executive directors of this subsidiary company, who were neither
directors nor employees of NMBZ Holdings or NMB Bank Limited, have been expelled
from the Zimbabwe Stock Exchange, which they are contesting. A replacement
broker has been appointed. No material impact on the Group financial position
is anticipated as a result of the temporary lapse in broking activities.
Operating expenses
Operating expenses increased by 75% over the same period last year. The bulk of
the increases were incurred in administration, staff costs and the increased
depreciation charge resulting from the commissioning of additional commercial
bank branches. Staff costs increased by 72% as a result of the increase in the
staff establishment from 334 at 31 December 2001 to 464 at 31 December 2002 and
salary increases driven by inflation.
Loss on net monetary position
The loss on net monetary position occurs as a result of the restatement of
amounts to current value. The adjustment of $5 902 million is based on the
inflation index as provided by the Central Statistical Office of Zimbabwe. The
loss has been charged to income in accordance with the International Accounting
Standard 29 "Reporting in Hyperinflationary Economies".
Bad and doubtful debts
The charge for bad and doubtful debts increased to Z$1 168 million from Z$869
million in the previous year. The exposure to the agricultural sector at 3.3%
of the total advances book is not material but management has been cautious and
adequate provisions have been made where appropriate.
Dividend
A final dividend of 560 cents per share has been proposed, bringing the total
historical dividend for the year to 634 cents per share, an increase of 482%
from the position at 31 December 2001. This is in line with the Group's
dividend policy to maximize returns to shareholders based on inflation adjusted
results.
Balance sheet
Growth in Asset Base
The Group's total asset base has increased by Z$3 750 million to Z$89 019
million as at 31 December 2002 from Z$85 269 million as at 31 December 2001.
The major increases were:-
* Balances with banks and cash (550%) to Z$19 039 million.
* Property plant and equipment (73%) to Z$8 591 million.
The movement is consistent with the Group's liquidity and expansion strategy
which is complemented by investment in technology.
These were partly offset by decreases in:-
* Quoted and other investments (17%) to Z$2 047 million.
* Customers' indebtedness for acceptances (42%) to Z$13 900 million.
Capital adequacy
The banking subsidiary's capital adequacy ratio at 31 December 2002 calculated
on the historic cost basis in accordance with the guidelines of the Reserve Bank
was 14.14%, (31 December 2001 - 13.44%). The minimum required by the Reserve
Bank of Zimbabwe is 10%.
Share buy back
The directors were authorised at the Annual General Meeting held on 28 May 2002
to repurchase up to 56 million shares for cancellation. No shares were
repurchased for cancellation for the period to 31 December 2002.
Own equity instruments
Own equity instruments amounting to 52 467 333 shares at a cost of Z$2 873
million arose from a debt for equity swap settlement of an amount owed to the
Banking subsidiary. These shares will be dealt with, inter alia, by way of
scrip dividend, disposal, consideration for acquisitions, cancellations and
exercise of share options.
THE STOCK MARKET
The number of listed companies was 77 as at the end of 2002. The total market
capitalisation during the period grew by 139% in Zimbabwe dollar terms to close
the year at Z$866.8 billion.
Sharp fluctuations in quoted stock prices saw managed portfolios weakened
intermittently. Notwithstanding these dips, the stock market performed strongly
during the year. The industrial index increased by 157% as investors responded
to the fall in interest rates by redirecting their funds to the stock market. A
number of initial public offerings brought increased activity to the bourse.
The continuing negative returns on the money market will continue to spur
activity on the stock market.
OUTLOOK AND STRATEGY
The continued isolation of the country from the international community is cause
for concern. The operating environment is likely to continue to be turbulent as
Government wrestles to contain runaway inflation, shortages and the lack of
foreign currency inflows and a deteriorating balance of payments (BOP) position.
Price controls appear to be the order of the day as more and more commodities
are put on the controlled price list as Government battles to cushion the
general populace.
The lack of longer term clarity on monetary and fiscal policy provides
significant risks in terms of strategy and planning and consequently we remain
conservative in our outlook. We will continue to expand the commercial banking
division with new retail branches in targeted areas as opportunities arise and
we will continue to pursue strategies to grow non-interest income.
DIRECTORS, MANAGEMENT AND STAFF
I would like to extend my gratitude to the non-executive directors, the Managing
Director, executive directors, management and staff for their consistent hard
work and dedication in achieving these results in this difficult environment.
PADDY TENDAYI ZHANDA
CHAIRMAN
5 March 2003
INFLATION ADJUSTED GROUP INCOME STATEMENT
year ended 31 December 2002
Restated
Note 2002 2001
Z$ million Z$million
Interest from lending activities 14 921 5 438
Charge for bad and doubtful debts (1 168) (869)
13 753 4 569
Income from investing activities 19 517 10 354
33 270 14 923
Interest expense 5 (12 368) (3 994)
Net interest income 20 902 10 929
Other income 6 6 768 5 998
Net operating income 27 670 16 927
Operating expenditure (8 150) (4 664)
Loss on net monetary position (5 902) (6 269)
Profit before taxation 13 618 5 994
Taxation (7 649) (2 732)
Financial institutions levy (711) (419)
Profit after taxation 5 258 2 843
Minority interest 127 (131)
Profit attributable to ordinary shareholders 5 385 2 712
Earnings per share (cents)
- Basic 9 1 481 662
- Headline 9 1 474 648
- Diluted basic 9 1 479 662
- Diluted headline 9 1 471 648
Weighted average number of issued shares (millions) 364 410
INFLATION ADJUSTED GROUP BALANCE SHEET
31 December 2002
Restated
Note 2002 2001
Shareholders' Funds Z$ million Z$ million
Share capital 11 2 659 2 633
Capital reserves 5 563 5 069
Revenue reserves 3 499 (5 846)
Total shareholders' funds 11 721 1 856
Minority Interest 88 271
11 809 2 127
Liabilities
Deferred tax liability 2 729 -
Provision for current taxation 4 538 4 767
Deposits and other other accounts 36 901 40 108
Financial liabilities held for trading 19 142 14 111
Acceptances 13 900 24 156
89 019 85 269
Assets
Balances with banks and cash 19 039 2 928
Financial assets held for trading 16 450 17 128
Advances and other accounts 28 816 32 326
Investments:-
Trade investment 176 176
Quoted and other investments 2 047 2 460
Property, plant & equipment 8 591 4 963
Deferred tax asset - 1 132
Customers' indebtedness
for acceptances 13 900 24 156
89 019 85 269
P T ZHANDA
O O CHEKECHE
Directors
M B NAROTAM
Secretary
5 March 2003
INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2002
At 31 December 2002
Capital Reserves
Revenue
Capital Reserves
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
1 January 2002 2 672 4 540 751 513 7 1 964 10 447
Net profit for the year - - - - - 5 385 5 385
Dividends paid - - - - - (1 238) (1 238)
2 672 4 540 751 513 7 6 111 14 594
Own equity instruments (39) (742) - - - (7 810) (8 591)
(note 11.4)
Monetary adjustment on 26 494 - - - 5 198 5 718
own equity instruments
Balances at 31 December 2 659 4 292 751 513 7 3 499 11 721
2002
At 31 December 2001 (Restated)
Capital Reserves
Revenue
Capital Reserve
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
1 January 2001 2 653 4 175 751 513 7 155 8 254
Effect of adopting IAS - - - - - (44) (44)
39
As restated at 1 2 653 4 175 751 513 7 111 8 210
January 2001
Shares issued 19 365 - - - - 384
Net profit for the year - - - - - 2 712 2 712
Dividends paid - - - - - (859) (859)
2 672 4 540 751 513 7 1 964 10 447
Own equity instruments (39) (742) - - - (7 810) (8 591)
(note 11.4)
Balances at 31 December 2 633 3 798 751 513 7 (5 846) 1 856
2001
INFLATION ADJUSTED GROUP CONSOLIDATED CASH FLOW STATEMENT
year ended 31 December 2002
Restated
CASH FLOWS FROM OPERATING ACTIVITIES 2002 2001
Z$ million Z$ million
Profit before taxation and monetary loss 19 520 12 263
Non-cash items
Profit on disposal of property, plant & equipment (37) (79)
Depreciation 1 749 564
Charge for bad and doubtful debts 1 168 869
Monetary loss (5 902) (6 269)
IAS 39 fair value adjustment - (45)
Operating cash flow before changes in operating
assets and liabilities 16 498 7 303
Changes in operating assets and liabilities
Financial liabilities held for trading 5 031 11 253
Deposits and other accounts 3 207 25 167
Advances and other accounts 2 342 (21 379)
Financial assets held for trading (508) (945)
Own equity instruments - (8 591)
26 570 12 808
Taxation
Corporate tax paid (4 548) (1 529)
Net cash inflows from operating activities 22 022 11 279
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property, plant & equipment 248 577
Purchase of property, plant & equipment (5 588) (2 097)
Purchase of quoted and other investments (462) (1 547)
Net cash outflows from investing activities (5 802) (3 067)
Net cash inflows before financing activities 16 220 8 212
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 384
Dividends paid (1 295) (865)
(1 295) (481)
Net increase in cash and cash equivalents 14 925 7 731
Cash and cash equivalents at the beginning of year 19 106 11 375
CASH AND CASH EQUIVALENTS AT THE END OF YEAR 34 031 19 106
Cash and cash equivalents are as per note 10.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2002
1. INCORPORATION AND ACTIVITIES
The company is incorporated in Zimbabwe and is an investment holding
company. Its subsidiaries are engaged in banking, stockbroking services and
fund management.
2. CURRENCY
These financial statements are expressed in Zimbabwe dollars.
3. BASIS OF PREPARATION
The financial statements are prepared under the historical cost convention
and adjusted to reflect the changes in general price levels in accordance
with IAS 29, Financial Reporting in Hyperinflationary Economies.
4. INFLATION ACCOUNTING
The economy of Zimbabwe is considered to be a hyperinflationary economy. In
order to comply with IAS 29, Financial Reporting in Hyperinflationary
Economies, financial statements need to be expressed in terms of the
measuring unit current at the balance sheet date. Accordingly, the
accompanying financial statements, including comparatives, have been
restated to account for changes in the general purchasing power of the
Zimbabwe dollar. The restatement is based on the consumer price index at
the balance sheet date. The indices and conversion factors are derived
from the inflation rates which are issued by the Central Statistical Office
of Zimbabwe. The indices and conversion factors used were as follows:
Dates Indices Conversion Factors
31 December 2000 550.40 6.3403
31 December 2001 1 167.40 2.9893
31 December 2002 3 489.70 1.0000
The indices have been applied to the historical costs of transactions and
balances as follows:-
* All comparative figures as of and for the year ended 31 December 2001 have
been restated by applying the change in the index to 31 December 2002;
* Income statement transactions have been restated by applying the change in
the index from the approximate date of the transactions to 31 December
2002;
* Gains and losses arising from the monetary asset or liability positions
have been included in the income statement;
* Non-monetary assets and liabilities have been restated by applying the
change in the index from the date of the transaction, to 31 December 2002;
* Fixed assets, current and accumulated depreciation have been restated by
applying the change in the index from the date of their purchase to 31
December 2002.
* Equity has been restated by applying the change in index from the date of
issue.
* All items in the cash flow statement are expressed in terms of the
measuring unit current at the balance sheet date.
IAS 29 discourages publication of historical results as a supplement to
inflation adjusted accounts. However, historical results have been published to
allow comparability of results during the transitional phase in applying the
standard in Zimbabwe. The Zimbabwe Accounting Practices Board and the Zimbabwe
Stock Exchange have permitted companies in Zimbabwe to publish historical
results in conjunction with inflation adjusted accounts for the first three
years ending 31 December 2002.
5. INTEREST EXPENSE
Restated
2002 2001
Z$ million Z$ million
Interest expense 12 487 3 994
Borrowing costs capitalised (119) -
12 368 3 994
6. OTHER INCOME
Gains less losses from quoted and other
investments (183) 750
Net commission and fee income:- 908 2 028
- Income 965 2 050
- Expenses (57) (22)
Foreign exchange gains 4 159 2 506
Broking income 536 548
Profit on disposal of assets 37 79
Other operating income 1 311 87
6 768 5 998
7. OPERATING EXPENDITURE
Restated
2002 2001
Z$ million Z$ million
The operating profit is after charging the following:-
Administration costs 1 972 1 301
Audit fees f. 21 26
Depreciation 1 749 564
- Fixed assets leased to customers - 6
- Own assets 1 749 558
Directors' remuneration 171 306
Paid by subsidiary companies
- fees for service as directors 5 6
- other emoluments 166 300
Staff costs 4 237 2 467
8 150 4 664
8. TAXATION
Restated
2002 2001
Z$ million Z$ million
Tax Charge
Charge based on historical profit for the year
Zimbabwe income tax 3 667 4 350
Aids levy 88 117
Deferred tax charge/(credit) 3 894 (1 735)
7 649 2 732
Financial institutions levy 711 419
Total taxation 8 360 3 151
The effective tax rate on inflation adjusted profits has increased to 61%
(historical 40%), from 53% (historical 36%) in the previous year.
9. EARNINGS PER SHARE
9.1 Inflation adjusted basic earnings per share
The calculation of inflation adjusted basic earnings per share for the year
ended 31 December 2002 of 1 481 cents (2001 - 662 cents) is based on profit
after taxation attributable to ordinary shareholders of Z$5 385 million
(2001 - Z$2 712 million) and the weighted average shares in issue of
363 523 767, per note 11, (2001 - 409 578 313).
9.2 Inflation adjusted headline earnings per share
The calculation of inflation adjusted headline earnings per share for the
year ended 31 December 2002 of 1 474 cents 2001 - 648 cents) is based on
adjusted profit after taxation attributable to ordinary shareholders of
Z$5 359 million (2001 - Z$2 656 million) and on the weighted average shares
in issue of 363 523 767, per note 11, (2001 - 409 578 313).
The adjustments were as follows:-
Restated
2002 2001
Z$ million Z$ million
Profit attributable to shareholders 5 385 2 712
Deduct non-recurring items:
Profit on disposal of property, plant & equipment (37) (79)
Tax effect 11 23
5 359 2 656
Weighted average number of shares 364 410
(millions)
This is calculated in accordance with Statement of Investment Practice No.1
issued by the Institute of Investment Management and Research to assist
users of accounts to identify earnings derived from trading activities.
9.3 Inflation adjusted diluted basic earnings per share
The inflation adjusted diluted basic earnings per share for the year ended
31 December 2002 is 1 479 cents (2001 - 662 cents). The calculation is
based on profit after taxation attributable to ordinary shareholders of
Z$5 385 million (2001 - Z$2 712 million) and on the diluted shares of
364 183 767 (2001 - 409 851 113).
The dilution in basic earnings per share arises from 660 000 share options
granted to senior employees, in terms of the Employee Share Option Scheme
outstanding at 31 December 2002.
9.4 Inflation adjusted diluted headline earnings per share
The inflation adjusted diluted headline earnings per share for the year
ended 31 December 2002 is 1 471 cents (2001 - 648 cents). The calculation
is based on adjusted profit after taxation of Z$5 359 million (2001 -
Z$2 656 million) and on diluted shares of 364 183 767 (2001 - 409 851 113).
10. CASH AND CASH EQUIVALENTS
Restated
2002 2001
Z$ million Z$ million
Balances with banks and cash 19 039 2 928
Governent and public sector securities 7 023 11 191
Bills receivables 7 969 4 987
Balances at 31 December 34 031 19 106
11. SHARE CAPITAL
Restated
2002 2001 2002 2001
11.1 Authorised Shares Shares Z$ million Z$ million
Ordinary shares of Z$0.25 each 560 000 000 560 000 000 140 140
11.2 Issued and fully paid
At 1 January 415 991 100 400 600 410 104 100
Shares issued during the year - 15 390 690 - 4
At 31 December 415 991 100 415 991 100 104 104
Effect of IAS 29 - - 2 568 2 568
At 31 December 415 991 100 415 991 100 2 672 2 672
Own equity instruments of Z$0.25 each (52 467 333) (52 467 333) (13) (13)
(note 11.4)
363 523 767 363 523 767 2 659 2 659
Monetary adjustment on own equity - - - (26)
instruments
At 31 December 363 523 767 363 523 767 2 659 2 633
The issued share capital did not change during the year as no share options
were exercised by managerial staff.
Of the unissued ordinary shares, 24 126 256 are reserved for options which
may be granted in terms of a share option scheme. As at 31 December 2002,
660 000 share options were outstanding (2001 - 660 000 share options).
11.3 Share Buy Back
At the Annual General Meeting held on 28 May 2002, shareholders authorised
the directors to purchase up to 56 000 000 fifty six million) of the
company's own shares. No shares were repurchased for the period to 31
December 2002.
11.4 Own Equity Instruments
Own equity instruments amounting to 52 467 333 shares at a cost of Z$2 873
million arose from a debt for equity swap in settlement of an amount owed
to the Bank.
DIVIDEND ANNOUNCEMENT
year ended 31 December 2002
The Board has proposed a final dividend of 560 cents per share on 363 523 767
shares payable to members registered in the books of the company on 14 March
2003. The transfer books and register of members will be closed from 22 March to
28 March 2003. Dividend cheques will be mailed to shareholders on or about 1
April 2003. The dividends payable to non-resident shareholders will be paid in
accordance with Exchange Control Regulations. With effect from 1 February 2000
exchange control approval is required for payment of dividends declared by banks
to non-resident shareholders. Resident and non-resident shareholders' tax of 15%
will be deducted where applicable.
By order of the Board
M B Narotam
Secretary
5 March 2003
DIRECTORS:
P T Zhanda (Chairman), Dr J T Makoni (Managing Director)*, O O Chekeche*,
Dr C J Constable, M L dos Remedios, J S Friedlander, J A Mushore*,
A M T Mutsonziwa, F Zimuto*
Executive
HISTORICAL GROUP INCOME STATEMENT
year ended 31 December 2002
Note 2002 2001
Z$ million Z$million
Interest from lending activities 9 911 1 406
Charge for bad and doubtful debts (1 168) (291)
8 743 1 115
Interest from investing activities 16 711 2 652
25 454 3 767
Interest expense b. (8 154) (999)
Net interest income 17 300 2 768
Other income c. 2 709 1 325
Net operating income 20 009 4 093
Operating expenditure d. (4 175) (1 140)
Profit before taxation 15 834 2 953
Taxation e. (5 654) (914)
Financial institutions levy e. (711) (140)
Profit after taxation 9 469 1 899
Minority interest 87 (58)
Profit attributable to ordinary shareholders 9 556 1 841
Earnings per share (cents)
- Basic f. 2 629 449
- Headline f. 2 625 445
- Diluted basic f. 2 624 449
- Diluted headline f. 2 620 445
Weighted average number of issued shares (millions) 364 410
HISTORICAL GROUP BALANCE SHEET
31 December 2002
Note 2002 2001
Shareholders' funds Z$ million Z$ million
Share capital 91 91
Capital reserves 51 51
Revenue reserves 8 778 (145)
Total shareholders' funds 8 920 (3)
Minority interest (59) 66
8 861 63
Liabilities
Deferred tax liability 1 487 -
Provision for current taxation 4 538 1 594
Deposits and other accounts 36 901 13 414
Financial liabilities held for trading 19 142 4 719
Acceptances 13 900 8 079
84 829 27 869
Assets
Balances with banks and cash 19 039 978
Financial assets held for trading 16 450 5 728
Advances and other accounts 28 816 10 812
Investments:-
Trade investment 3 3
Quoted and other investments 2 047 823
Property, plant & equipment 4 574 1 067
Deferred tax asset - 379
Customers' indebtedness
for acceptances 13 900 8 079
84 829 27 869
P T ZHANDA
O O CHEKECHE
Directors
M B NAROTAM
Secretary
5 March 2003
HISTORICAL STATEMENT OF CHANGES IN EQUITY
As at 31 December 2002
At 31 December 2002
Capital Reserves
Revenue
Capital Reserves
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
1 January 2002 104 248 23 27 1 2 467 2 870
Net profit for the year - - - - - 9 556 9 556
Dividends paid - - - - - (633) (633)
104 248 23 27 1 11 390 11 793
Own equity Instruments (13) (248) - - - (2 612) (2 873)
Balances at 31 December 91 - 23 27 1 8 778 8 920
2002
At 31 December 2001
Capital Reserves
Revenue
Capital Reserve
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
1 January 2001
As previously reported 100 174 23 27 1 845 1 170
Effect of adopting IAS - - - - - (15) (15)
39
Restated at 1 January 100 174 23 27 1 830 1 155
2001
Shares issued 4 74 - - - - 78
Net profit for the year - - - - - 1 841 1 841
Dividends paid - - - - - (204) (204)
104 248 23 27 1 2 467 2 870
Own equity Instruments (13) (248) - - - (2 612) (2 873)
Balances at 31 December 91 - 23 27 1 (145) (3)
2001
HISTORICAL GROUP CONSOLIDATED CASH FLOW STATEMENT
year ended 31 December 2002
CASH FLOWS FROM OPERATING ACTIVITIES 2002 2001
Z$ million Z$ million
Profit before taxation and monetary loss 15 834 2 953
Non-cash items
Profit on disposal of property, plant & equipment (21) (25)
Depreciation 291 127
Charge for bad and doubtful debts 1 168 291
Monetary loss - -
IAS 39 fair value adjustment - (15)
Operating cash flow before changes in operating
assets and liabilities 17 272 3 331
Changes in operating assets and liabilities
Financial liabilities held for trading 14 423 4 270
Deposits and other accounts 23 487 11 059
Advances and other accounts (19 172) (9 240)
Financial assets held for trading (1 156) (302)
Own equity instruments - (2 873)
34 854 6 245
Taxation
Corporate tax paid (1 555) (156)
Net cash inflows from operating activities 33 299 6 089
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property, plant & equipment 89 47
Purchase of property, plant & equipment (3 866) (733)
Purchase of quoted and other investments (1 223) (664)
Net cash outflows from investing activities (5 000) (1 350)
Net cash inflows before financing activities 28 299 4 739
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 78
Dividends paid (672) (206)
(672) (128)
Net increase in cash and cash equivalents 27 627 4 611
Cash and cash equivalents at the beginning of year 6 404 1 793
CASH AND CASH EQUIVALENTS AT THE END OF YEAR 34 031 6 404
Cash and cash equivalents are as per note g.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2002
a. BASIS OF PREPARATION
The financial statements are prepared under the historical cost convention.
b. INTEREST EXPENSE
2002 2001
Z$ million Z$ million
Interest expense 8 273 999
Borrowing costs capitalised (119) -
8 154 999
c. OTHER INCOME
Gains less losses from quoted and other
investments: 68 251
Net commission and fee income:- 561 247
- Income 594 252
- Expenses (33) (5)
Foreign exchange gains 1 016 590
Broking income 283 183
Profit on disposal of assets 21 25
Other operating income 760 29
2 709 1 325
d. OPERATING EXPENDITURE
2002 2001
Z$ million Z$ million
The operating profit is after charging the following:-
Administration costs 1 463 289
Audit fees 12 6
Depreciation 291 127
- Fixed assets leased to customers - 1
- Own assets 291 126
Directors' remuneration 128 67
Paid by subsidiary companies
- fees for service as directors 3 1
- other emoluments 125 66
Staff costs 2 281 651
4 175 1 140
e. TAXATION
2002 2001
Z$ million Z$ million
Tax Charge
Charge based on historical profit for the year
Zimbabwe income tax 3 667 1 455
Aids levy 88 39
Deferred tax charge/(credit) 1 899 (580)
5 654 914
Financial institutions levy 711 140
Total taxation 6 365 1 054
The effective tax rate on historical profits has increased to 40% from 36%
in the previous year.
f. EARNINGS PER SHARE
f.1 Historical basic earnings per share
The calculation of historical basic earnings per share for the year ended
31 December 2002 of 2 629 cents (2001 - 449 cents) is based on profit after
taxation attributable to ordinary shareholders of Z$9 556 million (2001 -
Z$1 841 million) and the weighted average shares in issue of 363 523 767,
(2001 - 409 578 313).
f.2 Historical headline earnings per share
The calculation of historical headline earnings per share for the year
ended 31 December 2002 of 2 625 cents (2001 - 445 cents) is based on
adjusted profit after taxation attributable to ordinary shareholders of
Z$9 541 million (2001 - Z$1 824 million) and on the weighted average shares
in issue of 363 523 767, (2001 - 409 578 313).
The adjustments were as follows:-
2002 2001
Z$ million Z$ million
Profit attributable to shareholders 9 556 1 841
Deduct non-recurring items:
Profit on disposal of property, plant & equipment (21) (25)
Tax effect 6 8
9 541 1 824
Weighted average number of shares (millions) 364 410
This is calculated in accordance with Statement of Investment Practice No.1
issued by the Institute of Investment Management and Research to assist
users of accounts to identify earnings derived from trading activities.
f.3 Historical diluted basic earnings per share
The historical diluted earnings per share for the year ended 31 December
2002 is 2 624 cents (2001 - 449 cents). The calculation is based on profit
after taxation attributable to ordinary shareholders of Z$9 556 million
(2001 - Z$1 841 million) and on the diluted shares of 364 183 767 (2001 -
409 851 113).
The dilution in basic earnings per share arises from 660 000 share options
granted to senior employees, in terms of the Employee Share Option Scheme
outstanding at 31 December 2002.
f.4 Historical diluted headline earnings per share
The historical diluted headline earnings per share for the year ended 31
December 2002 is 2 620 cents (2001 - 445 cents). The calculation is based
on adjusted profit after taxation of Z$9 541 million (2001 - Z$1 824
million) and on diluted shares of 364 183 767 (2001 - 409 851 113).
g. CASH AND CASH EQUIVALENTS
2002 2001
Z$ million Z$ million
Balances with banks and cash 19 039 978
Governent and public sector securities 7 023 3 721
Bills receivables 7 969 1 705
Balances at 31 December 34 031 6 404
This information is provided by RNS
The company news service from the London Stock Exchange
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