RNS Number:9135M
NMBZ Holdings Ld
31 May 2005
NMBZ HOLDINGS LIMITED
Holding company of
NMB Bank Limited (Registered Commercial Bank) and subsidiary
AUDITED INFLATION ADJUSTED AND HISTORICAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2004
HIGHLIGHTS
2004 2003
Historical Z$ million Z$ million Change %
Attributable (loss)/profit (9 636) 16 115 -160
Basic (loss)/earnings per share (cents) (2 258) 3 981 -157
Dividend per share (cents) - 943 -100
Inflation Adjusted
Attributable loss (42 778) (66 421) -36
Basic loss per share (cents) (10 023) (16 408) -39
Dividend per share (cents) - 3 063 -100
Dr Gibson Manyowa Mandishona, the acting Chairman of NMBZ Holdings, said:
"The Group's results reflect the liquidity constraints faced by the banking
subsidiary and the market as a whole in the last quarter of 2004, resulting in a
trading loss due mainly to substantially increased funding costs. Despite this,
the opportunity has been taken to prepare and position the Bank for a major
turnaround, which is on track. Initiatives are at an advanced stage to
recapitalise the Group in order to exploit emerging market opportunities".
Enquiries:
NMBZ HOLDINGS LIMITED Tel: +263-4-759 651/9
David T Hatendi, Chief Executive Officer davidh@nmbz.co.zw
Mario dos Remedios, Chief Financial Officer mariodosr@nmbz.co.zw
Website: www.nmbz.co.zw
Email: enquiriries@nmbz.co.zw
COLLEGE HILL - LONDON
Corinna Dorward Tel: +44-207-457-2020
CHAIRMAN'S STATEMENT
The economy started showing signs of recovery during the year under review,
after it had suffered a continuous downward spiral in the previous five years.
The year was characterised in summary by:
* Rapidly declining inflation and tight money supply
* A marked improvement in the level of domestic debt
* Increased formal foreign currency inflows
* Substantial concessionary financing for exporters and
producers
* Pragmatic monetary policy which set the pace for an
economic turnaround
* Decline in Gross Domestic Product (GDP)
* Deficit in the overall balance of payments position
Inflation and Money Supply Growth
The annualised rate of inflation, which peaked at a high of 622.8% in January
2004, declined to 132.7% by December 2004. At the ushering in of the Monetary
Policy for 2004, the December 2004 inflation target was set at 200% but by the
time of the third quarter Monetary Policy Review, it was clear that this target
would be surpassed leading to its revision to between 150% and 160%. Even this
revised target was beaten when the November 2004 figure came in at 149.3%.
Against a backdrop of inflation targeting and stringent liquidity control,
annual money supply growth declined from 490.9% in January 2004 to 219.4% by
November 2004. This was achieved through open market operations by the Central
Bank and more efficient statutory reserve collections at higher rates.
Domestic Debt
Between January and September 2004, government revenue totalled $4.899 trillion
against a target of $4.415 trillion, while expenditure totalled $6.250 trillion
against a target of $6.595 trillion. This translates to a deficit of $1.351
trillion against a target of $2.180 trillion. The deficit was wholly funded
through borrowing from the domestic market by way of long-term Treasury Bills.
The budget for 2005 envisages a 214% increase in expenditure to $27.5 trillion
and a deficit of $4.5 trillion, which translates to a budget deficit to GDP
ratio of 5%. The projected financing requirement for 2005 is $6 trillion,
comprising the deficit of $4.5 trillion and maturing domestic debt of $1.5
trillion.
Foreign Exchange Market and Exchange Rate Policy
The monetary policy statement for 2004 ushered in a controlled auction system to
manage foreign exchange, which began to operate on 12 January 2004. Inflows of
the foreign exchange into the formal sector improved significantly. Total
foreign currency receipts amounted to US$1.7 billion in 2004, compared to an
inflow of US$302 million during 2003. On 1 May 2004, the Central Bank put in
place swift means of remitting funds back home for Zimbabweans living abroad
under the Homelink trademark. Gold sales contributed US$210.7 million to foreign
exchange receipts in 2004, compared to US$152 million realised for the whole of
2003.
Concessionary Financing Facilities for Exporters and Producers
The Central Bank pursued the stance of concessionary lending to boost the export
and productive sectors through the Productive Sector Facility (PSF), funded by
banks' statutory reserves. Against total statutory reserve collections of $2.8
trillion, as at the end of the third quarter, a cumulative $2.057 trillion had
been disbursed to targeted sectors. The agricultural sector was the main
beneficiary, receiving 43.4% of the funds, followed by manufacturing at 40.4%.
The remaining 16.2% was distributed among mining, transport, tourism,
construction, distribution, communication and health sectors. The facility
reduced production costs in industry and increased capacity utilization, which
had fallen to as low as 30% in some sub-sectors and is now between 50% and 60%.
Monetary Policy and Interest Rates
The Monetary Policy Statement, issued in December 2003, was the biggest
contributing factor to the turnaround progress witnessed thus far in the
economy. Being primarily inflation targeted, the policy initiatives have been
successful in fighting the high money supply scourge and speculative activities,
which propelled year on year inflation to a peak of 622.8% in January 2004.
There was a high level of consistency between monetary policy and fiscal policy.
Owing to unsurpassed fiscal discipline, a supplementary budget, which undermined
the effectiveness of monetary policy initiatives in past years, was well avoided
in the year under review. The dual interest rate regime continued throughout
2004, necessitated by the need to encourage export and other productive sectors.
Decline in GDP
The decline in real GDP in 2004 is estimated to have slowed down to 2.5% from
8.5% recorded in 2003. The mining sector, which contributes about 4% of GDP, is
estimated to have grown by 11.6% in 2004, while agriculture, which contributes
about 16% of GDP, declined by 3.3%. The manufacturing sector, which contributes
18% to GDP, is forecast to have declined by 8.5% during the year. A positive
growth rate is forecast for the year 2005, effectively arresting the cumulative
decline of 28.4% over the years 1999 to 2003.
Balance of Payments Position
The overall balance of payments position worsened to US$523 million in 2004,
from a deficit of US$335 million in 2003. The current account deficit improved
from US$581 million in 2003 to US$338 million in 2004 due to the good
performance of exports in the agricultural, mining and manufacturing sectors.
The capital account recorded a deficit of US$185 million as a result of low
Foreign Direct Investment (FDI) and portfolio inflows against high scheduled
outflows.
Economic Outlook
The Reserve Bank of Zimbabwe and the National Treasury are expected to continue
to drive the economic revival programme introduced a year ago. It has been
instrumental in reducing the overall inflation rate and slowing the recession
through a combination of tighter monetary and fiscal policies on the one hand
and targeted interventions to raise output on the other hand. We are optimistic
that given the necessary commitment to fiscal and monetary restraints and
cooperation by all stakeholders, the economy will continue on a recovery path.
GROUP INFLATION ADJUSTED RESULTS
Introduction
In accordance with International Financial Reporting Standards (IFRS's)
promulgated by the International Accounting Standards Board (IASB), the Group
continues to prepare its results using hyperinflationary accounting with
historical results being provided as a supplement. Unless otherwise stated,
figures in this statement are inflation adjusted.
The hyperinflationary conditions affected earnings resulting in the Group
posting an inflation adjusted attributable loss of Z$42 778 million.
Compliance with International Financial Reporting Standards
The existence of hyperinflation as defined by International Accounting Standard
(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.
Loss before taxation
Inflation adjusted loss before taxation from continuing operations increased
from a loss of Z$29 650 million to a loss of Z$81 949 million during the period
under review, including Z$4.5 billion in respect of losses arising from
Continental Securities Trading (Private) Limited which was sold on 1 January
2004.
Attributable loss
The Group recorded an inflation adjusted attributable loss of Z$42 778 million
compared to the adjusted result for the same period last year of Z$66 421
million.
Net interest income
Net interest income from continuing operations decreased by 52% to Z$110 788
million from Z$230 133 million. The decrease was primarily a result of a
decrease in income from investing activities and an increase of 46% in interest
paid, including Z$51 billion paid to the RBZ for liquidity support in the last
quarter of 2004.
Non-interest income
Non-interest income from continuing operations increased by 64% and contributed
30% (2003 - 8%) of the net operating income from continuing operations. Fair
value adjustments of investment properties contributed Z$1 470 million to
non-interest income in the current year.
Operating expenses
Operating expenses from continuing operations increased by 21% over the same
period last year driven largely by the increase in staff costs.
Loss on net monetary position
The loss on net monetary position occurs as a result of the restatement of
amounts to current value. The loss of Z$41 348 million from continuing
operations 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
A conservative approach continues to be taken with respect to provisions for bad
and doubtful debts, which was considerably increased in the year. On an
inflation adjusted basis, an increase in the provisions from Z$12 056 million in
the previous year to Z$38 024 million was recorded. The high levels of
provisions are reflective of the constraints borrowers are facing in servicing
their obligations.
Dividend
In view of the historical attributable loss recorded, no dividend has been
proposed.
BALANCE SHEET
Growth in Asset Base
The Group's total asset base decreased by 16% from Z$773 824 million at 31
December 2003 to Z$649 279 million. The decrease was mainly caused by a
reduction in balance with banks and cash (18%), financial assets held for
trading (71%), quoted and other investments (59%) and property and equipment
(30%).
Capital
The banking subsidiary's capital adequacy ratio at 31 December 2004 calculated
on the historical cost basis in accordance with the guidelines of the Reserve
Bank was 1.36% (31 December 2003 - 14.51%). The minimum required by the Reserve
Bank of Zimbabwe is 10%. The current capitalization initiatives will ensure
that the Bank meets the minimum requirements of the Reserve Bank of Zimbabwe.
The Bank is in compliance with the Reserve Bank of Zimbabwe's requirement of a
minimum capital base of Z$10 billion.
Share buy back
The directors were authorised at the Annual General Meeting held on 1 June 2004
to repurchase up to 56 million shares for cancellation. No shares were
repurchased for cancellation for the period to 31 December 2004.
CONTINENTAL SECURITIES TRADING (PRIVATE) LIMITED
As previously advised, a decision was taken to dispose of the Group's interest
in Continental Securities Trading (Private) Limited (CST). The transfer of the
shareholding to the new owners was with effect from 1 January 2004.
OUTLOOK AND STRATEGY
The first three quarters showed a recovery trend with profitability being
rebuilt following the dramatic decline that started in the last half of 2003.
The roll out of the retail branch network culminated in the opening of a
spacious modern branch in Southerton during the year, establishing a critical
mass to service customer needs. The Group's results reflect the liquidity
constraints faced by the banking subsidiary and the market as a whole in the
last quarter of 2004, resulting in a trading loss due mainly to substantially
increased funding costs. Despite this, the opportunity has been taken to prepare
and position the Bank for a major turnaround, which is on track. Initiatives
are at an advanced stage to recapitalise the Group in order to exploit emerging
market opportunities.
The first half of 2005 will continue to be challenging as the economy, in
general, and the banking sector in particular, slowly recover from the upheavals
experienced in the last 5 years. Co-operation from all stakeholders will be
required in order to sustain the current economic turnaround momentum.
We will focus on the recapitalisation of the Group in order to create enhanced
capacity to buttress anticipated business growth.
LITIGATION
The Bank has been remanded to a date in May 2005 for trial in respect of five
(5) charges all of which relate to dealings in foreign currency, estimated to be
in the region of Z$12 billion, allegedly outside the regulations in force. Two
charges relate to the purchase of foreign currency at above the stipulated rates
and the third relates to the sale of foreign currency. Another charge relates
to alleged externalisation of foreign currency and the last charge relates to
the sale of currency to unauthorised dealers. These transactions were accounted
for and punitive action taken when the Bank's foreign exchange trading licence
was suspended in August 2003. The licence was reinstated after an appeal to the
Authorities in January 2004. Based on legal advice taken, the Bank will defend
the proceedings.
CAUTIONARY STATEMENT
Negotiations regarding a strategic transaction referred to in a notice to
shareholders on 14 February 2005 and subsequently, are still in progress and
updates on the developments will be provided to shareholders at regular
intervals as required by the Zimbabwe Stock Exchange.
GOING CONCERN
The banking crisis in the Zimbabwe financial sector that started in December
2003, and saw the placement of a number of locally owned financial institutions
under curatorship, resulted in a waning of confidence that did not spare NMB
Bank Limited. As mentioned in an announcement to shareholders in February 2005,
the market shortages and dysfunctions, compounded by irresponsible speculation
and rumours circulated in September 2004, unfortunately influenced certain
investors and depositors. This necessitated the access of temporary liquidity
support from the Reserve Bank of Zimbabwe (RBZ) in October 2004.
As disclosed in note 14, the principal amount outstanding on this support at 31
December 2004 was Z$92.9 billion, down from a peak of Z$147.0 billion, thanks to
tight liquidity management and the support of the Bank's loyal customer base,
returning and some new clients. The dichotomy created in the banking sector has
made it more challenging to access less expensive deposits as a source of
funding, and it is the Board's conviction that, once market confidence is
regained in the sector, further deposits will be reclaimed.
The recourse to this support from the RBZ has had an adverse impact on
profitability due to its high cost. The current negotiations to recapitalise the
Group, will, if successful, contribute to reduce significantly the cost of
funding and consequently improve profitability.
Were the RBZ to withdraw this support and if the negotiations to recapitalise
the Group prove unsuccessful this would have a significant effect on the ability
of the Bank and the Group to continue as a going concern. There is no indication
that either of these two circumstances is likely.
DIRECTORS, MANAGEMENT AND STAFF
In this particularly difficult year, management and staff have shown a high
level of agility and resilience to protecting and safeguarding erosion of
shareholder value. On behalf of the Board, and the company's shareholders, I
would like to convey my sincere appreciation to the non-executive directors, the
executive directors, management and staff for rising up to the challenges.
Dr. C J Constable resigned from the Board effective 1 January 2004 and Messrs
Francis Zimuto and Otto Chekeche resigned from the Board effective 1 June 2004.
Mr Paddy Zhanda and Mr Freeman Kembo also resigned from the Board effective 29
September 2004. I would like to place on record our appreciation to all the
former directors for their valuable contributions over the years.
The Board resolved to confirm Dr D T Hatendi and Mr M L dos Remedios
respectively as Chief Executive Officer and Chief Financial Officer of NMB Bank
Limited and NMBZ Holdings Limited effective 1 June 2004. I would like to thank
both gentlemen for their agreement to take on this task.
GIBSON MANYOWA MANDISHONA
ACTING CHAIRMAN
30 May 2005
1. RESPONSIBILITY
These financial statements are the responsibility of the directors. This
responsibility includes the setting up of internal control and risk management
processes, which are monitored independently.
2. CORPORATE GOVERNANCE
The Group adheres to principles of corporate governance derived from the King
Reports and the United Kingdom Combined Code. The group is cognisant of its
duty to conduct business with due care and in good faith in order to safeguard
all stakeholders' interests.
3. BOARD OF DIRECTORS
Board appointments are made to ensure a variety of skills and expertise on the
Board. Non-executive directors are of such calibre as to provide independence
to the Board. The Chairman of the Board is a non-executive director. The Board
is supported by various committees in executing its responsibilities. The Board
meets at least quarterly to assess risk, review performance and provide guidance
to management on both operational and policy issues.
4. GOING CONCERN
The Group financial statements are prepared on a going concern basis. The
banking crisis in the Zimbabwe financial sector that started in December 2003
did not spare NMB Bank Limited. This necessitated the access of temporary
liquidity support from the RBZ in October 2004. The recourse to this support
has had an adverse impact on profitability due to the high cost and current
negotiations to recapitalise the Group, will, if successful, contribute to
reduce the cost of funding and consequently improve profitability.
Were the RBZ to withdraw this support and if the negotiations to recapitalise
the Group prove unsuccessful, this would have a significant effect on the
ability of the Bank and the Group to continue as a going concern, there is no
indication that either of these two circumstances is likely.
5. RISK MANAGEMENT
In the ordinary course of business the group manages risks of all forms
especially operational, market, liquidity and credit risks. These risks are
identified and monitored through various channels and mechanisms. The risk
management department, headed by a General Manager reporting to the Chief
Executive Officer, is responsible for the management of the overall risk
profile.
The Group's main objective is to contain the risks inherent within the financial
services sector and to ensure that the Group's various risk profiles are
understood and appropriately managed to the benefit of customers, stakeholders
and shareholders.
5.1 Operational risk
This risk is inherent in all business activities and is the potential for loss
arising from ineffective internal controls, poor operational procedures to
support these controls, errors and deliberate acts of fraud. The balancing of
the risk and the cost incurred to reduce the risk is critical. The board has an
Audit Committee whose function is to ensure that this risk is minimised. The
Audit Committee through the internal audit function assesses the adequacy of the
internal controls and makes the necessary recommendations to the Board.
5.2 Market risk
This arises from adverse movements in the marketplace, which occur in the money
(interest rate risk), foreign exchange and equity markets in which the group
operates. The group has in place an Asset and Liability Management Committee
(ALCO), which comprises the departmental heads of Risk, Treasury, Corporate and
Retail Banking and Finance, in addition to executive directors. The committee
monitors these risks and recommends the appropriate levels to which the group
should be exposed at any time. The approval of all dealing limits ultimately
rests with this committee.
5.3 Liquidity risk
The management of liquidity in the group is primarily designed to ensure that
the group meets its obligations timeously. The Treasury department in
consultation with ALCO formulates and applies appropriate investment methods and
instruments to ensure that this is achieved. In pursuance of the management of
this risk, the Risk management department periodically reports on facility
utilisations and excesses that need management attention.
5.4 Credit risk
The Board has put in place sanctioning committees which operate according to the
amount requested by an applicant. The Risk management department reviews all
applications. This initial review allows only those applications that do not
unduly expose the group to be considered by the sanctioning committees.
The directors are satisfied with the risk management processes in the Bank as
these have contributed to the minimization of losses arising from risk exposures
6. REGULATORY COMPLIANCE
During the period under review, the Bank complied with the requirements of the
Monetary Authorities save for some instances when Productive Sector Funds were
for a variety of reasons not disbursed to the beneficiaries on time, although
any potential customer prejudice was appropriately recompensed. As a result of
the late disbursement, the Bank was levied a financial penalty of Z$788 million
by the RBZ.
The Bank was also fined Z$50 000 for the late submission of the first quarter
BSD1 form (Capital Adequacy Return).
We remain committed to complying with and adhering to all regulatory
requirements, including attending to current deficiencies in the capital
adequacy ratios and issues relating to the requisite number of non-executive
board members.
INFLATION ADJUSTED AND HISTORICAL CONSOLIDATED INCOME STATEMENTS
year ended 31 December 2004
INFLATION ADJUSTED HISTORICAL
Restated
Note 2004 2003 2004 2003
CONTINUING OPERATIONS Z$ million Z$ million Z$ million Z$ million
Interest from lending activities 236 803 215 489 151 206 49 127
Income from investing activities 84 339 158 461 56 477 33 010
321 142 373 950 207 683 82 137
Interest expense 5 (210 354) (143 817) (146 654) (38 221)
Net interest income 110 788 230 133 61 029 43 916
Net foreign exchange (losses)/gains (7 350) 37 251 (7 010) 5 646
Non-interest income 6 39 228 23 954 42 296 3 222
Loss on disposal of interest in subsidiary 7 (10 699) - (4 530) -
Net operating income 131 967 291 338 91 785 52 784
Operating expenditure 8 (134 544) (111 (72 632) (16 805)
351)
Charge for bad and doubtful debts (38 024) (12 056) (38 024) (5 180)
Loss on net monetary position (41 348) (197 581) - -
(Loss)/profit before taxation (81 949) (29 650) (18 871) 30 799
Taxation 9 39 251 (25 448) 9 315 (12 615)
Financial institutions levy 9 (80) (3 710) (80) (1 594)
(Loss)/profit from continuing operations (42 778) (58 808) (9 636) 16 590
DISCONTINUING OPERATIONS
Trading income 6 - 14 430 - 2 232
Operating expenditure 8 - (10 059) - (728)
Charge for bad and doubtful debts - (4 722) - (2 029)
Loss on net monetary position - (6 680) - -
Loss before taxation - (7 031 - (525)
Taxation 9 - (582) - 50
Loss from discontinuing operations - (7 613) - (475)
(Loss)/profit attributable to ordinary
shareholders
(42 778) (66 421) (9 636) 16 115
(Loss)/earnings per share (cents)
- Basic 12 (10 023) (16 408) (2 258) 3 981
- Headline 12 (8 048) (17 788) (1 477) 3 764
- Diluted basic 12 (9 909) (15 549) (2 232) 3 773
- Diluted headlines 12 (7 956) (16 857) (1 460) 3 567
Dividend per share (cents) - 3 063 - 943
INFLATION ADJUSTED AND HISTORICAL CONSOLIDATED BALANCE SHEETS
year ended 31 December 2004
INFLATION ADJUSTED HISTORICAL
Restated
Note 2004 2003 2004 2003
Shareholders' funds Z$ million Z$ million Z$ Z$
million million
Share capital 13 43 454 43 454 107 107
Capital reserves 13 118 342 87 927 25 248 683
Revenue reserves (84 751) (9 308) (13 23 028
112)
Total shareholders' funds 77 045 122 073 12 243 23 818
Minority interest - 1 431 - (59)
77 045 123 504 12 243 23 759
Liabilities
Deposits and other accounts 14 482 760 403 364 482 760 173 306
Financial liabilities held for 15 43 809 155 763 43 809 66 924
trading
Provision for current taxation 1 380 5 293 1 380 2 274
Acceptances 13 810 15 489 13 810 6 655
Deferred taxation 30 475 70 411 3 572 14 052
649 279 773 824 557 574 286 970
Assets
Balances with banks and cash 16 123 521 150 550 123 521 64 684
Financial assets held for trading 15 24 510 83 949 24 510 36 069
Advances and other accounts 17 329 539 348 594 329 539 149 774
Customers' indebtedness for 13 810 15 489 13 810 6 655
acceptances
Trade investment 529 3 029 529 48
Quoted and other investments 951 2 314 951 1 001
Investment properties 38 200 279 38 200 52
Property and equipment 118 219 169 620 26 514 28 687
649 279 773 824 557 574 286 970
CONSOLIDATED INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
At 31 December 2004
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 2004 43 454 73 834 5 514 8 344 235 (9 308) 122 073
Capitalisation of - 29 982 - - - (29 982) -
reserves
Revaluation of - - - - 433 - 433
properties
Net loss for the year - - - - - (42 778) (42 778)
Dividends paid - - - - - (2 683) (2 683)
--------------- ----------- ------------ ------------ ------------ ---------- --------------
Balances at 31 December 2003 43 454 103 816 5 514 8 344 668 (84 751) 77 045
--------------- ----------- ------------ ------------ ------------ ---------- --------------
CONSOLIDATED INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
At 31 December 2003
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
1 January 2003 - as previously 43 245 69 798 12 215 8 344 114 56 904 190 620
reported
Prior year restatements - - (6 701) - - (10 807) (17 508)
1 January 2003 - restated 43 245 69 798 5 514 8 344 114 46 097 173 112
Share issue 23 2 469 - - - - 2 492
Revaluation of properties - - - - 121 - 121
Net loss for the year - - - - - (66 421) (66 421)
Dividends paid - - - - - (29 442) (29 442)
Own equity instruments 633 4 036 - - - 25 181 29 850
Monetary adjustment on
own equity instruments (447) (2 469) - - - 15 277 12 361
------------ ---------- ----------- ------------ ---------- ---------- ------------
Balances at 31 December 2003 43 454 73 834 5 514 8 344 235 (9 308) 122 073
------------ ---------- ----------- ------------ ---------- ---------- ------------
The prior year restatements relate to re-indexation differences on the statutory
reserve (Z$6 701 million) and property and equipment (Z$17 508 million) opening
balances previously accounted for under loss on net monetary position.
CONSOLIDATED HISTORICAL STATEMENT OF CHANGES IN EQUITY
At 31 December 2004
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 2004 107 580 23 27 53 23 028 23 818
Capitalisation of - 24 327 - - - (24 327) -
reserves
Revaluation of - - - - 238 - 433
properties
Net loss for the year - - - - - (9 636) (9 636)
Dividends paid - - - - - (2 177) (2 177)
------------- -------------- ------------ ------------ ------------ ------------- -------------
Balances at 31 December 107 24 907 23 27 291 (13 112) 12 243
------------- -------------- ------------ ------------ ------------ ------------- -------------
CONSOLIDATED HISTORICAL STATEMENT OF CHANGES IN EQUITY
At 31 December 2003
Capital Reserves Revenue
Reserves
Capital
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
1 January 2003 91 - 23 27 1 8 778 8 920
Share issue - options 3 332 - - - - 335
Revaluation of properties - - - - 52 -
52
Net profit for the year - - - 16 115 16 115
Dividends paid - - - - - (3 884) (3 884)
94 332 23 27 53 21 009 21 538
Own equity instruments - proceeds 13 248 - - - 2 019 2 280
------------ ------------ ------------- -------------- ---------- ------------- ----------
Balances at 31 December 2003 107 580 23 27 53 23 028 23 818
------------ ------------ ------------- -------------- ---------- ------------- ----------
INFLATION ADJUSTED AND HISTORICAL CONSOLIDATED CASH FLOW STATEMENTS
year ended 31 December 2004
INFLATION ADJUSTED HISTORICAL
CONTINUING OPERATIONS Restated
2004 2003 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES Z$ million Z$ million Z$ million Z$ million
(Loss)/profit before taxation and monetary loss (40 601) 167 931 (18 871) 30 799
Non-cash items
(Loss)/profit on disposal of property and 1 501 (79) 294 (10)
equipment
Depreciation 38 979 30 264 3 782 977
Property and equipment write off 365 - 365 -
Investment properties fair value adjustment (1 470) - (23 040) -
Trade investment fair value adjustment 2 500 - (481) -
Charge for bad and doubtful debts 38 024 12 056 38 024 5 180
Minority interest written off (1 431) - 59 -
Loss on disposal of interest in subsidiary 10 699 - 4 530 -
Loss on net monetary position (41 348) (197 581) - -
Operating cash flows before changes in operating
assets and liabilities 7 218 12 591 4 662 36 946
Changes in operating assets and liabilities
Financial liabilities held for trading (111 954) (123 474) (23 115) 49 472
Deposits and other accounts 79 396 (188 662) 309 454 132 133
Advances and other accounts (18 968) 91 421 (217 790) (130 609)
Financial assets held for trading 6 037 17 675 2 594 (1 136)
Eliminating effect of net liabilities retained on
sale of interest in subsidiary (12 468) - (5 290) -
(50 739) (190 449) 70 515 86 806
Taxation
Corporate tax paid (4 678) (71 765) (2 140) (3 807)
Net cash (outflows)/inflows from operating (55 417) (262 214) 68 375 82 999
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property and equipment 5 838 105 539 13
Purchase of property and equipment (31 301) (93 892) (17 675) (25 914)
Proceeds from disposal of quoted and other 1 363 30 939 50 1 001
investments
Proceeds from disposal of interest in subsidiary 1 769 - 760 -
Net cash outflows from investing activities (22 331) (62 848) (16 326) (24 900)
Net cash (outflows)/inflows before financing (77 748) (325 062) 52 049 58 099
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares - 4 234 - 369
Proceeds from own equity instruments - 40 458 - 2 280
Dividends paid (2 683) (29 442) (2 177) (3 884)
(2 683) 15 250 (2 177 (1 235)
Net (decrease)/increase in cash and cash (80 431) (309 812) 49 872 56 864
equivalents from continuing operations
INFLATION ADJUSTED AND HISTORICAL CONSOLIDATED CASH FLOW STATEMENTS
year ended 31 December 2004
INFLATION ADJUSTED HISTORICAL
DISCONTINUING OPERATIONS Restated
CASH FLOWS FROM OPERATING ACTIVITIES 2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Loss before taxation and monetary position - (351) - (525)
Non-cash items
Profit on disposal of property and equipment - (7 899) - (1 225)
Depreciation - 11 456 - 77
Charge for bad and doubtful debts - 4 722 - 2 029
Loss on net monetary position - (6 680) - -
Operating cash flows before changes in operating
assets and liabilities - 1 248 - 356
Changes in operating assets and liabilities
Financial liabilities held for trading - (32 070) - (1 690)
Deposits and other accounts - (8 095) - 4 272
Advances and other accounts - 11 842 - 2 442
- (27 075) - 5 380
Taxation
Corporate tax paid - (454) - (51)
Net cash (outflows)/inflows from operating activities - (27 529) - 5 329
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal of property and equipment - 14 216 - 2 424
Purchase of property and equipment - (1 583) - (437)
Purchase of investments properties - (279) - (52)
Net cash outflows from investing activities - 12 354 - 1 935
Net cash (outflows)/inflows from investing activities - (15 175) - 7 264
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease)/increase in cash and cash equivalents
from discontinuing operations - (15 175) - 7 264
Net (decrease)/increase in cash and cash equivalents
from continuing operations (80 431) (309 812) 49 872 56 864
TOTAL NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (80 431) (324 987) 49 872 64 128
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 228 462 553 449 98 159 34 031
CASH AND CASH EQUIVALENTS AT THE END 148 031 228 462 148 031 98 159
OF THE YEAR
Cash and cash equivalents are as per note 16.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2004
1. INCORPORATION AND ACTIVITIES
The company is incorporated in Zimbabwe and is an investment holding company.
Its subsidiaries are engaged in banking and property holding.
2. CURRENCY
These financial statements are expressed in Zimbabwe dollars and are rounded to
the nearest million.
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. ACCOUNTING POLICIES
4.1 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 2004 56 753.20 1.0000
31 December 2003 24 384.10 2.3275
31 December 2002 3 489.70 16.2631
4.2 Financial instruments
The fair value of financial instruments is based on their quoted market price at
the balance sheet date without any deductions for transaction costs. If a
quoted market price is not available, the fair value of the instrument is
estimated using pricing models or discounted cash flow techniques.
Where discounted cash flow techniques are used, estimated future cash flows are
based on management's best estimates and the discount rate is a market related
rate at the balance sheet date for an instrument with similar terms and
conditions. Where pricing models are used, inputs are based on market related
measures at the balance sheet date.
4.3 Investment properties
Investment properties are stated at fair value. Gains and losses arising from a
change in fair value of investment properties are recognized in the income
statement.
5. INTEREST EXPENSE
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ Z$ Z$ million Z$ million
million million
RBZ Liquidity 54 019 - 50 758 -
Support
Trading 159 227 143 817 97 645 38 221
activities
Capitalised (2 892) - (1 749) -
interest
210 354 143 817 146 654 38 221
The RBZ Liquidity Support charge relates to interest incurred over the period
October 2004 to 31 December 2004. The balance outstanding in respect of this
temporary support is shown under note 14.
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
6. Z$ million Z$ million Z$ million Z$ million
NON-INTEREST INCOME
Gains less losses
from quoted and other
investments (385) 3 556 18 449
Net commission 39 737 16 979 18 524 1 228
and fee income:-
- Income 39 737 17 426 18 524 1 286
- Expenses - (447) - (58)
Fair value (2 500) - 481 -
adjustment on
trade investment
Fair value 1 470 - 23 040 -
adjustment on
investment
property
Broking income - 6 532 - 989
(Loss)/profit on (1 501) 7 978 (294) 1 253
disposal of
assets and
equipment
Other operating 2 407 3 339 527 1 535
income
39 228 38 384 42 296 5 454
Continuing 39 228 23 954 42 296 3 222
operations
Discontinuing - 14 430 - 2 232
operations
39 228 38 384 42 296 5 454
7. LOSS ON DISPOSAL OF INTEREST IN SUBSIDIARY
The loss relates to the disposal of the interest in Continental Securities
Trading (Private) Limited on 1 January 2004. At the date of disposal, the total
assets at historical cost amounted to Z$2 493 million (inflation adjusted - Z$4
130 million) and the total liabilities at historical cost amounted to Z$7 783
million (inflation adjusted - Z$16 598 million). The proceeds from the disposal
at historical cost amounted to Z$760 million (inflation adjusted - Z$1 769
million).
7. OPERATING EXPENDITURE
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
The operating profit is after charging the following:-
Administration costs 41 373 30 387 30 925 7 971
Audit fees 758 556 610 132
Depreciation 38 979 41 720 3 782 1 054
Directors' remuneration 2 597 4 785 1 831 622
Paid by subsidiary companies
- fees for service as directors 326 300 197 39
- other emoluments 2 271 4 485 1 634 583
Staff costs 50 837 43 962 35 484 7 754
134 544 121 410 72 632 16 805
Continuing operations 134 544 111 351 72 632 16 805
Discontinuing operations - 10 059 - 728
134 544 121 410 72 632 17 533
8. TAXATION
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Tax Charge Z$ Z$ million Z$ million Z$
million million
Current taxation 687 - 687 -
Prior year tax 466 - 466 -
adjustment
Aids levy 14 - 14 -
Deferred tax (credit)/ (40 26 030 (10 482) 12 565
charge 418)
(39 251 26 030 (9 315) 12 565
Financial institutions - 3 710 - 1 594
levy
Financial institutions 80 - 80 -
levy -
prior year under
provision
Total taxation (39 171) 29 740 (9 235) 14 159
Continuing operations -(39 251) 25 448 (9 315) 12 615
taxation
Continuing operations - 80 3 710 80 1 594
Financial
institutions levy
Discontinuing - 582 - (80)
operations - taxation
(39 171) 29 740 (9 235) 14 159
10. DISCONTINUING OPERATION
As previously advised, the Board decided to dispose of the Group's interest in
Continental Securities Trading (Private) Limited (CST). The shareholding in CST
of NMBZ Holdings Limited was transferred to the purchaser on 1 January 2004 in
terms of the Agreement of Sale.
The total assets taken over by the purchaser amounted to Z$290 million and total
liabilities to Z$37 million. All trade debtors and trade creditors were taken
over by the Group.
11. BAD AND DOUBTFUL DEBTS
Provisions are applied to write off advances in part or in whole when
they are considered wholly or partly unrecoverable. The aggregate provisions
which are made during the year are charged to income.
11.1 Specific provisions
Specific provisions are made where the repayment of identified
advances is in doubt and reflect estimates of the loss. Advances are written
off against specific provisions once the probability of recovering any
significant amounts becomes remote.
11.2 General provisions
The general doubtful debt provision relates to the inherent risk of
losses which, although not separately identified, is known to be present in any
loan portfolio.
11.3 Non-performing loans
Interest on loans and advances is accrued to income until such time as
reasonable doubt exists about its collectability, thereafter and until all or
part of the loan is written off, interest continues to accrue on customers'
accounts but is not included in income. Such suspended interest is deducted
from loans and advances in the balance sheet. This policy meets the
requirements of the Banking Regulations 2000 issued by the RBZ.
12. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:-
12.1 (Losses)/earnings
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Basic (42 778) (66 421) (9 636) 16 115
Headline earnings (note 12.4) (34 348) (72 007) (6 303) 15 238
INFLATION ADJUSTED HISTORICAL
12.2 Number of shares 2004 2003 2004 2003
Weighted average shares in issue 426 804 812 404 809 987 426 804 812 404 809 987
Diluted number of shares 431 722 412 427 162 412 431 722 412 427 162 412
12. 3 (Loss)/earnings per share (cents)
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Basic (10 023) (16 408) (2 258) 3 981
Headline (8 048) (17 788) (1 477) 3 764
Diluted basic (9 909) (15 549) (2 232) 3 773
Diluted headline (7 956) (16 857) (1 460) 3 567
12.4 Headline earnings
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
(Loss)/profit attributable to shareholders (42 778) (66 421) (9 636) 16 115
Deduct non-recurring items:
Loss/(profit) on disposal of property 1 501 (7 978) 294 (1 253)
and equipment
Loss on disposal of interest in subsidiary 10 699 - 4 530 -
Tax effect (3 770) 2 392 (1 491) 376
(34 348) (72 007) (6 303) 15 238
13. SHARE CAPITAL
INFLATION ADJUSTED
GROUP AND COMPANY
Restated
2004 2003 2004 2003
13.1 Authorised Shares Shares Z$ million Z$ million
Ordinary shares of Z$0.25 each 560 000 000 560 000 000 140 140
13.2 Issued and fully paid
At 1 January 426 804 812 363 523 767 107 104
Shares issued during the year - 10 813 712 - 3
At 31 December 426 804 812 374 337 479 107 107
Effect of IAS 29 - - 43 347 43 161
At 31 December 426 804 812 374 337 479 43 454 43 268
Own equity instruments of Z$0.25 each - 52 467 333 - 633
426 804 812 426 804 812 43 454 43 901
Monetary adjustment on own equity - - - (447)
instruments
At 31 December 426 804 812 426 804 812 43 454 43 454
Of the unissued ordinary shares, 2 155 077 are reserved for options which may be
granted in terms of a share option scheme. As at 31 December 2004, 4 917 600
share options were outstanding.
13.3 Share Buy Back
At the Annual General Meeting held on 1 June 2004, shareholders authorised the
directors to purchase up to 56 000 000 (fifty six million) of the company's own
shares. No shares were repurchased for the period to 31 December 2004.
13.4 Capital Reserves
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Statutory reserve fund 5 514 5 514 23 23
Share premium 103 816 73 834 24 907 580
Capital redemption reserve 8 344 8 344 27 27
Other 668 235 291 53
118 342 87 927 25 248 683
14 DEPOSITS AND OTHER ACCOUNTS
14.1 Deposits and other accounts by type
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
RBZ Temporary Liquidity Support 92 933 - 92 933 -
RBZ Productive Sector Facility 95 304 - 95 304 -
Deposits from other banks 23 354 215 084 23 354 92 411
Other money market deposits 15 666 38 894 15 666 16 711
Current and deposit accounts 160 138 237 146 160 138 101 890
Total deposits 387 395 491 124 387 395 211 012
Trade and other creditors 139 174 68 003 139 174 29 218
526 569 559 127 526 569 240 230
Less financial liabilities held for (43 809) (155 763) (43 809) (66 924)
trading (note 15.1)
482 760 403 364 482 760 173 306
14.2 Maturity analysis of deposits
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Withdrawals on demand 161 412 188 986 161 412 81 198
Maturing within one month 20 232 170 394 20 232 73 210
Maturing after one month but within 6 months 154 228 121 340 154 228 52 134
Maturing after 6 month but within 12 months 51 523 10 404 51 523 4 470
387 395 491 124 387 395 211 012
14.3 Sectoral analysis of deposits
INFLATION ADJUSTED
Restated
2004 2003
Z$ million % Z$ million %
Banks and other financial institutions 92 424 24 215 084 44
Reserve Bank of Zimbabwe 188 237 48 - -
Telecommunications companies 22 - 4 006 1
Mining companies 4 498 1 35 -
Industrial companies 18 331 5 234 767 48
Other deposits 83 686 22 37 232 7
Municipalities and parastatals 197 - - -
387 395 100.00 491 124 100.00
14.4 Sectoral analysis of deposits
HISTORICAL
2004 2003
Z$ million % Z$ million %
Banks and other financial institutions 92 424 24 92 411 44
Reserve Bank of Zimbabwe 188 237 48 - -
Telecommunications companies 22 - 1 721 1
Mining companies 4 498 1 15 -
Industrial companies 18 331 5 100 868 48
Other deposits 83 686 22 15 997 7
Municipalities and parastatals 197 - - -
387 395 100.00 211 012 100.00
15. FINANCIAL INSTRUMENTS HELD FOR TRADING
15.1 Financial liabilities held for trading
Fair
Cost Value Restated Historical
2004 2004 2003 2003
Z$ million Z$ million Z$ million Z$ million
Fixed term deposits 12 390 12 403 15 989 6 870
Negotiable Certificates of Deposits 13 344 14 341 139 774 60 054
Liabilities re-discounted 15 500 17 065 - -
Total financial liabilities held for trading 42 234 43 809 155 763 66 924
15.2 Financial assets held for trading
Fair
Cost Value Restated Historical
2004 2004 2003 2003
Z$ million Z$ million Z$ million Z$ million
Government and public sector securities 11 287 9 513 15 045 6464
Fuel bonds 20 - (95) (41)
Treasury bills 6 267 6 267 14 530 6 243
Government stock 5 000 3 246 - -
Zesa bonds - - 610 262
Bills receivable 14 533 14 997 62 867 27 011
Fixed term loans - - 6 037 2 594
Total financial assets held for trading 25 820 24 510 83 949 36 069
15.3.1 Financial liabilities held for trading
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Demand to 3 months 43 380 155 742 43 380 66 915
3 months to 1 year 429 21 429 9
43 809 155 763 43 809 66 924
15.3.2 Financial assets held for trading
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Demand to 3 months 11 867 62 939 11 867 27 042
3 months to 1 year 7 643 21 010 7 643 9 027
1 year to 5 years 5 000 - 5 000 -
24 510 83 949 24 510 36 069
16. CASH AND CASH EQUIVALENTS
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Balances with Reserve Bank of Zimbabwe
Statutory reserve 75 247 6 612 75 247 2 841
Balances with other banks and cash
Current, nostro accounts and cash 48 274 143 938 48 274 61 843
123 521 150 550 123 521 64 684
Other
Government and public sector securities 9 513 15 045 9 513 6 464
Bills receivable 14 997 62 867 14 997 27 011
24 510 77 912 24 510 33 475
Total cash and cash equivalents 148 031 228 462 148 031 98 159
Analysed as follows:
Cash and cash equivalents for continuing operations 148 031 226 998 148 031 97 530
Cash and cash equivalents for discontinuing operations - 1 464 - 629
Total cash and cash equivalents 148 031 228 462 148 031 98 159
The statutory reserve balance with the Reserve Bank of Zimbabwe is non-interest
bearing. The balance is determined on the basis of deposits held and is not
available to the Bank for daily use.
17. ADVANCES AND OTHER ACCOUNTS
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
17.1.1 Advances
Fixed term loans 106 112 - 106 112 -
Local loans and overdrafts 173 441 234 215 173 441 100 631
Other accounts 49 986 114 379 49 986 49 143
329 539 348 594 329 539 149 774
17.1.2 Maturity analysis
Demand to 3 months 167 860 175 421 167 860 75 370
3 months to 1 year 106 092 80 226 106 092 34 469
1 year to 5 years 78 713 13 371 78 713 5 745
Over 5 years - - - -
Total advances 352 665 269 018 352 665 115 584
Specific and general doubtful debt provisions (44 644) (20 391) (44 644) (8 761)
Suspended interest (28 468) (14 412) (28 468) (6 192)
279 553 234 215 279 553 100 631
Other accounts 49 986 114 379 49 986 49 143
Total 329 539 348 594 329 539 149 774
Included in other accounts on note 17 is the equivalent of an amount of US$1.8
million that was outstanding at 31 December 2003 recorded as a foreign currency
amount owing at the then market rate, which was the auction rate in January 2004
as reported in the financial statements at 31 December 2003. This amount was
recovered and remitted to the RBZ in December 2004. The receipt was translated
at Z$6 200 to the US$ as per an understanding with the RBZ at the time the
money was received. Subsequent to the remittance, the RBZ has offered settlement
at Z$824 to the US$, being the historical rate prior to the introduction of the
controlled foreign exchange auction system. Discussions with the Authorities
have been held and the Bank now awaits an appeal for a definitive position from
the RBZ.
In the event that the previously agreed rate of Z$6 200 to the US$ is not
confirmed and the rate of Z$824 is applied, a loss of Z$9.7 billion would be
recorded on this transaction.
17.2 Sectoral analysis of utilisation
INFLATION ADJUSTED
2004 2003
Restated
Z$ million % Z$ million %
Industrials 170 541 47 96 790 34
Agriculture and horticulture 45 788 12 50 373 18
Conglomerates 14 563 4 31 118 10
Services 7 307 2 16 399 6
Mining 17 209 5 15 692 6
Food & Beverages 12 985 3 22 032 8
Other 98 082 27 52 103 18
366 475 100 284 507 100
The above sectoral analysis comprises advances of Z$352 665 million (2003 -
Z$269 018 million) and customers' indebtedness for acceptances of Z$13 810
million (2003 - Z$15 489 million).
17.3 Sectoral analysis of utilisation
HISTORICAL
2004 2003
Z$ million % Z$ million %
Industrials 170 541 47 41 586 34
Agriculture and horticulture 45 788 12 21 643 18
Conglomerates 14 563 4 13 370 10
Services 7 307 2 7 046 6
Mining 17 209 5 6 742 6
Food & Beverages 12 985 3 9 466 8
Other 98 082 27 22 386 18
366 475 100 122 239 100
The above sectoral analysis comprises advances of Z$352 665 million (2003 -
Z$115 584 million) and customers' indebtedness for acceptances of Z$13 810
million (2003 - Z$6 655 million).
17.4 Risk concentrations
The material concentration of loans and advances are in the industrial sector
47% (2003 - 34%).
17.5 Provisions for doubtful debts including acceptances
INFLATION ADJUSTED
---------- 2004---------- --------Restated 2003-----------
Specific General Total Specific General Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 3 034 7 357 2 391 13 839 11 402 25 241
Charge against profits 35 656 2 368 38 024 11 051 5 726 16 777
Bad debts written off (2 141) - (2 141 2 - 2
Monetary adjustment (7 434) (4 196) (11 630) (11 858) (9 771) (21 629)
At 31 December 39 115 5 529 44 644 13 034 7 357 20 391
17.6 Provisions for doubtful debts including acceptances
HISTORICAL
-------- 2004 -------- -------- 2003 --------
Specific General Total Specific General Total
Z$ million Z$ million Z$ million Z$ million Z$ million Z$ million
At 1 January 5 600 3 161 8 761 851 701 1 552
Charge against profits 35 656 2 368 38 024 4 748 2 460 7 208
Bad debts written off (2 141) - (2 141 1 - 1
At 31 December 39 115 5 529 44 644 5 600 3 161 8 761
17.7 Non performing loans and advances
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Total non performing loans and advances 76 899 39 006 76 899 16 759
Specific provision for doubtful debts (39 115) (13 034) (39 115) (5 600)
Interest in suspense (28 468) (14 412) (28 468) (6 192)
9 316 11 560 9 316 4 967
The residue on these accounts represents recoverable portions covered by
realisable security
NMB BANK LIMITED
CONSOLIDATED INCOME STATEMENTS
year ended 31 December 2004
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Note Z$ million Z$ million Z$ million Z$ million
Interest from lending activities 236 803 215 489 151 206 49 127
Income from investing activities 84 340 158 461 56 475 33 010
321 1431 373 950 207 681 82 137
Interest expense (210 254) (143 817) (146 654) (38 221)
Net interest income 110 789 230 133 61 027 43 916
Net foreign exchange (losses)/gains (7 350) 37 251 (7 010) 5 646
Non-interest income a 25 851 33 874 35 064 4 294
Net operating income 129 290 301 258 89 081 53 856
Operating expenditure b (134 094) (111 309) (72 462) (16 800)
Charge for bad and doubtful debts (38 024) (12 056) (38 024) (5 180)
Loss on net monetary position (37 462) (193 813) - -
(Loss)/profit before taxation (80 290) (15 920) (21 405) 31 876
Taxation 39 587 (25 448) 9 651 (12 615)
Financial institutions levy (80) (3 710) (80) (1 594)
(Loss)/profit after taxation (40 783) (45 078) (11 834) 17 667
(Loss)/earnings per share (cents):
Basic c (263 116) (300 520) (76 348) 117 780
Headline c (256 426) (300 893) (75 038) 117 733
Diluted Basic c (263 116) (300 520) (76 348) 117 780
Diluted Headline c (256 426) (300 893) (75 038) 117 733
Dividend per share (cents): - 87 217 - 26 860
NMB BANK LIMITED
CONSOLIDATED BALANCE SHEETS
year ended 31 December 2004
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Shareholder's funds Z$ million Z$ million Z$ million Z$ million
Share capital 20 428 20 426 31 30
Capital reserves 133 183 102 768 25 208 643
Revenue reserves (83 578) (10 128) (15 134) 23 205
Total shareholder's 70 033 113 066 10 105 23 878
funds
Liabilities
Deposits and other 481 239 403 348 481 239 173 299
accounts
Financial liabilities 43 440 154 904 43 440 66 555
held for trading
Amount owing to holding 40 93 40 40
company
Provision for current 1 326 5 267 1 326 2 263
taxation
Acceptances 13 810 15 489 13 810 6 655
Deferred taxation 26 166 66 382 3 233 14 008
636 054 758 549 553 193 286 698
Assets
Balances with banks and 122 890 150 545 122 890 64 682
cash
Financial assets held 24 510 82 483 24 510 35 439
for trading
Advances and other 329 581 352 486 329 581 151 446
accounts
Customers' indebtedness 13 810 15 489 13 810 6 655
for acceptances
Quoted and other 9 129 9 55
investments
Investment properties 36 200 - 36 200 -
Property and equipment 109 054 157 417 26 193 28 421
636 054 758 549 553 193 286 698
NMB BANK LIMITED
INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
At 31 December 2004
Share Share Statutory Retained
Capital Premium Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 2004 20 426 97 254 5 514 - (10 128) 113 066
Revaluation of properties - - - 433 - 433
Net loss for the period - - - - (40 783) (40 783)
Shares issued 2 29 982 - - (29 984) -
Dividends paid - - - - (2 683) (2 683)
------------- ------------ ------------ ----------- -------------- -----------
Balances at 31 December 2004 20 428 127 236 5 514 433 (83 578) 70 033
------------- ------------ ------------ ----------- -------------- -----------
INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
At 31 December 2003 (Restated)
Share Share Statutory Retained
Capital Premium Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 2003 - as
previously reported 20 426 97 254 5 514 - 81 901 205 095
Prior year restatements - - - - (17 508) (17 508)
1 January 2003 - restated 20 426 97 254 5 514 - 64 393 187 587
Net loss for the period - - - - (45 078) (45 078)
Dividends paid - - - - (29 443) (29 443)
------------ ------------ ------------- ----------- ---------------- -----------
Balances at 31 December 2004 20 426 97 254 5 514 - (10 128) 113 066
------------ ------------ ------------- ----------- ---------------- -----------
The prior year restatements relate to re-indexation differences on the property
and equipment (Z$17 508 million) of opening balances previously accounted for
under loss on net monetary position.
NMB BANK LIMITED
HISTORICAL STATEMENT OF CHANGES IN EQUITY
At 31 December 2004
Share Share Statutory Retained
Capital Premium Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 2004 30 620 23 - 23 205 23 878
Revaluation of properties - - - 238 - 238
Net loss for the period - - - - (11 834) (11 834)
Shares issued 1 24 327 - - (24 328) -
Dividends paid - - - - (2 177) (2 177)
----------- ------------- ------------- ----------- ---------------- -----------
Balances at 31 December 2004 31 24 947 23 238 (15 134) 10 105
----------- ------------- ------------- ----------- ---------------- -----------
HISTORICAL STATEMENT OF CHANGES IN EQUITY
At 31 December 2003
Share Share Statutory Retained
Capital Premium Reserve Other Profit/(loss) Total
Z$ m Z$ m Z$ m Z$ m Z$ m Z$ m
Balances at 1 January 2003 30 620 23 - 9 422 10 095
Net profit for the period - - - - 17 667 17 667
Dividends paid - - - - (3 884) (3 884)
--------- ------------- ------------- ----------- ---------------- ------------
Balances at 31 December 2003 30 620 23 - 23 205 23 878
--------- ------------- ------------- ----------- ---------------- ------------
NMB BANK LIMITED
a. NON-INTEREST INCOME
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Net (losses)/gains from quoted and other (385) 3 556 18 449
investments
Investment property fair value and adjustment (251) - 21 092 -
Net commission and fee income 25 581 16 979 13 721 1 228
(Loss)/profit on disposal of property and (1 501) (294)
equipment 79 10
Other net operating income 2 407 13 260 527 2 607
25 851 33 874 35 064 4 294
b. OPERATING EXPENDITURE
INFLATION ADJUSTED HISTORICAL
Restated
The operating profit is after 2004 2003 2004 2003
charging the following: Z$ million Z$ million Z$ million Z$ million
Administration costs 41 332 34 889 30 851 7 433
Audit fees 758 473 610 102
Depreciation on property and equipment 38 570 30 264 3 686 977
Director's remuneration: 2 597 4 785 1 831 622
Fees for services as directors 326 300 197 39
Other emoluments 2 271 4 485 1 634 583
Staff costs 50 837 40 898 35 484 7 666
134 094 111 309 72 462 16 800
c. EARNINGS PER SHARE
The calculation of earnings per share is based on the following figures:
c.1 Earnings/(losses)
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
Basic (40 783) (45 078) (11 834) 17 667
Headline earnings (note c.4) (39 746) (45 134) (11 631) 17 660
c.2 Number of shares (million)
2004 2003 2004 2003
Weighted average shares in issue 15.5 15.0 15.5 15.0
Diluted number of shares 15.5 15.0 15.5 15.0
NMB BANK LIMITED
c. EARNINGS PER SHARE
c.3 (Loss)/earnings per share (cents)
INFLATION ADJUSTED HISTORICAL
Restated
2004 2003 2004 2003
Basic (263 116) (300 520) (76 348) 117 780
Headline (256 426) (300 893) (75 038) 117 733
Diluted basic (263 116) (300 520) (76 348) 117 780
Diluted headline (256 426) (300 893) (75 038) 117 733
c.4 Headline earnings
INFLATION ADJUSTED HISTORICAL
The adjustments are as follows Restated
2004 2003 2004 2003
Z$ million Z$ million Z$ million Z$ million
(Losses)/profit attributable to shareholders (40 783) (45 078) (11 834) 17 667
Deduct non-recurring items:
Loss/(profit) on disposal of property and equipment 1 501 (79) 294 (100
Tax effect (464) 23 (91) 3
(39 746) (45 134) (11 631) 17 660
d. SHARE CAPITAL
d.1 Authorised
The authorized ordinary share capital at 31 December 2004 is at the historical
cost figure of Z$50 million
(2003 - Z$50 million) comprising 25 million ordinary shares of Z$2.00 each.
d.2 Issued fully paid
The issued share capital at 31 December 2004 is at the historical cost figure of
Z$31 million
(2003 - Z$30 million) comprising 15.5 million (2003 - 15 million) ordinary
shares of Z$2.00 each.
e. INVESTMENT PROPERTIES
e.1 Borrowdale Estate property
One of the investment property is in the Bank's subsidiary, Carey Farm (Private)
Limited. The Bank's beneficial interest therein is 100%. The subsidiary's only
asset is a certain piece of land situated in the District of Harare, called The
Remainder of Lot H of Borrowdale Estate measuring 89.2623 hectares (223.16
acres) in extent. The beneficial interest in the subsidiary arose from
shareholding acquired in settlement of a debt owed to the Bank amounting to $10
008 million. This acquisition is in compliance with Section 34 of the Banking
Act (Chapter 24:20).
The land was valued by an independent and professional valuer for year end
purposes. The total value of the unencumbered freehold land and buildings was
Z$18 000 million. The land and buildings have been accounted for in investment
properties.
e.2 Borrowdale Race course property
The other investment property held by the Bank is Stand 19207 Harare Township of
Stand 19206 measuring 4.4506 hectares in extent. The land was valued by an
independent and professional valuer for year end purposes. The total value of
the unencumbered freehold land was Z$18 200 million. The land has been
accounted for in investment properties.
f. CAPITAL ADEQUACY - HISTORICAL
2004 2003
Z$ million Z$ million
Share capital 31 30
Share premium 24 970 643
Retained earnings (15 134) 23 205
9 867 23 878
Less: credit to insiders (7 810) (4 056)
Tier 1 capital 2 057 19 822
Tier 2
Subordinated Debt 40 40
Revaluation reserves 238 -
General provisions 3 614 3 161
Total capital base 5 949 23 023
Total risk weighted assets 437 358 158 670
Tier 1 capital adequacy ratio 0.47% 12.49%
Total capital adequacy ratio 1.36% 14.51%
NMBZ HOLDINGS LIMITED
NOTICE TO MEMBERS
Notice is hereby given that the Annual general Meeting of Members of NMBZ
Holdings Limited will be held at the Registered Office of the Company at 4th
Floor, Unity Court, Cnr 1st Street/Kwame Nkrumah Avenue, Harare on Thursday 30
June 2005 at 1430 hours for the following purposes:
1. To receive and adopt the Financial Statements for the year ended 31
December 2004 together with the reports of the directors and Auditors thereon.
2. To appoint Directors.
3. To appoint Auditors for the current year and to approve KPMG's
remuneration for the previous year.
Note: A member of the company entitled to attend and vote at this meeting is
entitled to appoint a proxy to attend, speak and on a poll, vote in his stead. A
proxy need not be a member of the company. Proxy forms should be forwarded to
reach the office of the transfer secretaries at least 48 hours before the
commencement of the meeting.
By order of the board
Company Secretary
M B Narotam
Registered Offices
1st Floor NMB Centre
Unity Court George Silundika Avenue/
Cnr 1st Street/Kwame Nkrumah Avenue Leopold Takawira Street
Harare Bulawayo
Zimbabwe Zimbabwe
Telephone +263 4 759651 +263 9 70169
Facsimile +263 4 759648 +263 9 68535
Website: http://www.nmbz.co.zw
Email: enquiries@nmbz.co.zw
Transfer Secretaries
In Zimbabwe In UK
First Transfer Secretaries Computershare Services PLC
4th Floor, Gold Bridge North 36 St Andrew Square
Eastgate Building Edinburgh
Cnr. Robert Mugabe/Second Street EH2 2YB
P O Box 11 UK
Harare
Zimbabwe
This information is provided by RNS
The company news service from the London Stock Exchange
END
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