RNS Number:6413Z
NMBZ Holdings Ld
28 February 2001
NMBZ HOLDINGS LIMITED
Holding company of NMB Bank Limited
and
Continental Securities Trading (Private) Limited
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2000
HIGHLIGHTS
* Inflation adjusted attributable profit up 12% to Z$352.4 million from
Z$315.2 million.
* Historical attributable profits up 55% to Z$626.8.million on previous
year's attributable profits of Z$404.9 million
* Headline earnings per share up 13% to 1,236.2 cents (1999-1 098.3 cents)
* Non-interest income up 83% to Z$871.3 million (1999 - Z$477.1 million)
Mr Paddy Zhanda, Chairman of NMBZ Holdings, said:
It is a pleasure for me to report continued good growth in the group's
attributable profits both on an inflation-adjusted basis and on a historical
basis despite the adverse economic conditions. With the successful launch of
commercial banking services and continuing focus on non-interest income, I am
confident that the group is well positioned maintain its comparative position
in the market in 2001.
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: ottoc@nmbz.co.zw
SG SECURITIES (LONDON) LTD Tel: +44 20 7638 5699
Andrew Dawber/James Harris
COLLEGE HILL - LONDON Tel: +44 20 788 457 2020
Corinna Dorward/Nicholas Williams
CHAIRMAN'S STATEMENT
year ended 31 December 2000
CHAIRMAN'S STATEMENT
The year 2000 was a difficult one for the business community and society at
large and was characterised by:
* Declining GDP
* Worsening balance of payments position
* Erratic exchange rate policy
* Escalating government domestic debt
* Civil unrest associated with the constitutional reform process,
parliamentary elections and the land redistribution exercise.
The Government, however, introduced new measures to deal with some of these
problems.
ECONOMIC REVIEW
Declining GDP
Real GDP is forecast to have declined by 4.2%, in real terms in 2000, much
worse than mid-year estimate of a 1.3% declined. The productive sectors
continued to be affected by a poor investment climate. Manufacturing and
mining are estimated to have shrunk by 10.5% and 14% respectively.
Annual inflation, which averaged 58.5% in 1999 decreased to 55.9% in 2000.
Inflationary pressures remained high, driven by high monetary growth,
increases in municipal tariffs and hospital fees, and the cost-push effects of
a depreciated Zimbabwe Dollar. Broad money supply growth increased from under
30% in December 1999, to 61.2% in October 2000. Excessive recourse to bank
financing to alleviate the fiscal deficit continues to be the main cause of
money supply growth.
The high inflationary environment forced the Reserve Bank of Zimbabwe (RBZ) to
pursue a tight monetary policy that led to high levels of interest rates. This
increased the borrowing cost to the productive sector and the government.
The Balance of Payments Position (BOP)
Exports are estimated to have fallen by 5.4% in 2000, leading to a current
account deficit of US$210 million, despite an estimated 9.3% decline in
imports. This is a sharp deterioration from the 1999 current account surplus
of US$29 million.
There was a marked decline in portfolio and direct foreign investment inflows.
This was a result of the country's poor relations with international
multilateral agencies and general apprehension on the land reform programme
and lawlessness. The capital account is estimated to have registered a deficit
of US$401 million, resulting in an estimated overall BOP deficit position of
US$611 million in 2000.
The country is finding it increasingly difficult to meet its foreign payment
obligations on time. Foreign payment arrears, which stood at US$109 million in
1999, are estimated to have soared to over US$500 million in 2000, further
affecting the country's creditworthiness. The estimated current account
deficit of US$259 million in 2001 and external payment arrears will require
financing requirements of over US$900 million. The prospects of addressing
this financing gap without multilateral financial support are poor.
Foreign exchange shortages persisted, reflecting poor performance by the
export sector. Weekly inflows, which during the tobacco-selling season
averaged above US$20 million, declined to under US$10 million by December
2000. These inflows fall far short of the economy's average requirements of at
least US$50 million per week.
Exchange Rate Policy and The Foreign Exchange Market (Cont'd)
As a result of rising shortages and declining export competitiveness, the
exchange rate was depreciated initially to a market mid-rate of Z$50 to the US
dollar in August 2000. It was further depreciated in October 2000 to the
current level of Z$55 against the US dollar. Pressure for further devaluation
continues.
Government Domestic Debt
A deficit of Z$46.3 billion (14% of GDP) was projected in the 2000 National
Budget. This was financed wholly from domestic borrowing. However, by
year-end, this had increased to about 24% of GDP.
In the 2001 National Budget a deficit of Z$83.6 billion, or 15.5% of GDP was
forecast. Failure by Government to remain within this framework will further
worsen the economy, through high inflation and interest rates and the crowding
out of the productive sectors.
The current public sector debt is Z$160 billion. At this level of
indebtedness, meeting targets will require a combination of creativity and
discipline by Government.
New Monetary Policy Measures Introduced
The RBZ maintained the tight monetary policy it adopted in 1997 at the peak of
the foreign exchange crisis. Through this, the RBZ sought to contain credit
expansion. However, the fiscal side did not complement the tight monetary
policy as growth in domestic credit continued to rise in spite of the punitive
interest rates.
In August 2000, the RBZ changed its monetary policy from a Treasury Bill (TB)
rate-led interest rate regime to an inflation-driven interest rate regime.
Under this arrangement the Bank rate was kept at a margin of 2 to 2.5
percentage points above inflation, and the effective TB yield maintained
within a range of 0.5 to 1 percentage points below the Bank rate. This
resulted in a reduction in lending interest rates from about 80% to around
65%.
The Reserve Bank released 50% of banks' statutory reserves for on lending to
exporters at a concessionary rate of 30%. The RBZ also extended the holding of
foreign currency accounts, (FCA's) to gold producers at a retention level of
20%.
ECONOMIC OUTLOOK
In January of 2001 the RBZ introduced a new set of measures aimed at
supporting the productive sector through affordable credit.
The following measures were adopted:
1. The Bank rate is now based on the moving average rate of inflation to
reflect recent and anticipated inflation trends.
2. The statutory reserve ratio on demand deposits was increased from 30% to
50% with effect from 1 February 2001 and the statutory reserve ratio on
time and savings deposits was lowered from 30% to 20%.
3. The interest rate on the export finance facility from statutory reserve
funds was reduced from 30% to 15%.
4. The Reserve Bank released the pool of commercial and merchant banks
statutory reserves for on lending to the productive sectors, namely
agriculture, manufacturing, mining and tourism.
Following these measures, money market interest rates declined sharply. The
effective TB yield, which opened the year at 54.43% has fallen to 15%. Call
and inter-bank rates have declined to levels between 0% and 8%. Minimum
lending rates have also fallen in tandem with the deposit rates.
Economic recovery in year 2001 will depend largely on the following key
factors:
* Resolution of the current public sector domestic debt trap
* Government's ability to stay within the framework of the announced
budget
* Containment of money supply growth rates to levels consistent with real
economic activity
* Restoration of orderliness in the land redistribution exercise.
* End of the Democratic Republic of Congo war.
Realisation of these key parameters would dampen inflationary pressures
significantly and propel the economy from a potential slump in real GDP of
over 7% in 2001 to modest recoveries in some sectors, such as manufacturing
and construction.
GROUP RESULTS
Introduction
The difficult economic environment characterised by high interest rates, high
inflation, shortages in foreign exchange and the withdrawal of offshore lines
of credit limited the scope for growth severely, especially in respect of
lending. The banking subsidiary sought to alleviate the effects of the above
negative factors by continuing to place emphasis on tighter risk management
processes and simultaneously growing non interest income.
APPLICATION OF IAS 29 "REPORTING IN HYPERINFLATIONARY ECONOMIES"
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. The interim results
for the period ended 30 June 2000 were published on this basis. Accordingly
these results have been prepared in accordance with IAS 29 which requires
restatement of the financial statements on the basis of the inflation indices
over the reporting period. The application of IAS 29 is likely to continue for
the next two to three years notwithstanding any effective measures that might
be taken immediately to reduce inflation.
RESULTS
The group achieved inflation adjusted attributable profits of Z$352.4 million,
an increase of 12% over the adjusted result for the same period last year. The
investment involved in setting up the commercial bank from internal resources,
reduced funds available for money market activities. In addition human
resources were diverted from the normal business activities. The return on
shareholders' funds was 27% (1999 - 28%).
NET INTEREST INCOME
As anticipated interest net income declined by 7% to Z$664.9 million from
Z$713.7 million as economic conditions made it difficult to expand lending.
Offshore lines of credit were either withdrawn or offered on more expensive
terms in line with the perception of the country risk. The disruption to
agriculture resulted in a reduction in lending to the agricultural/
horticultural sector. Interest expense also declined significantly as deposits
dropped in line with reduced lending. The money market contribution enjoyed in
1999 could not be matched as a result of the financing requirements of the
commercial bank.
NON-INTEREST INCOME
Non-interest income increased by 83% and contributed 57% of total income. This
was in line with the bank's strategy of focussing on fees and other
non-lending income until a more conducive lending environment is
re-established. The Zimbabwe Stock Exchange (ZSE) experienced a bull run in
the first and third quarters, resulting in substantial profits on the bank's
portfolio. The bank was able realise a significant element during the last
quarter.
The bank was also able to add to its profit as a result of several innovative
foreign exchange structures consummated during the year. Foreign exchange
earnings increased by 113% as a result of the bank's success in attracting
some large exporting clients. This enabled the bank to manage the constraints
arising from foreign currency shortages.
Continental Securities Trading (Private) Limited (CST) again contributed
positively to group results, despite the limited activity on the ZSE.
OPERATING EXPENSES
Operating expenses increased by 20% over the same period last year. The bulk
of the increases were incurred on administration costs and the increased
depreciation charge resulting from commissioning of the commercial bank. The
cost/income ratio at 36% was in line with that for the same period last year.
The staff complement for the group increased from 162 in 1999 to 230 at
year-end. This is due to the introduction of commercial banking services.
While the full impact of the increase in staff costs from the commercial bank
will be felt in 2001, the commercial bank will start to contribute favourably
to the group results.
GAIN OR 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 is based on the inflation index as
provided by the Central Statistical Office of Zimbabwe. The gain or 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 doubtful debts reduced to Z$77.9 million from Z$102.0 million
the previous year. Whilst the directors continue to take a conservative
approach to provisions, the quality of the group's loan book and limited
opportunities for growing the lending book resulted in a reduction in new
provisions made. The exposure to the agricultural sector at 7% is
insignificant, however, management has been cautious and adequate provisions
have been made where appropriate.
DIVIDEND
A final dividend of 356.33 cents per share has been declared, bringing the
total dividend for the year to 617.06 cents per share. This is in line with
the group's twice covere dividend policy.
BALANCE SHEET
Total assets reduced by 18% to Z$7,429.3 million from Z$8,787.7 million at 31
December 1999. The major influences on this movement were reductions in;
* Acceptances
* Loans and advances and
* Government and public sector securities.
SHARE BUY BACK
The directors were authorised to repurchase up to 4,000,000 shares for
cancellation. No shares were repurchased for the period to 31 December 2000.
THE STOCK MARKET
Market performance was affected adversely by the farm invasions and the
unprecedented political violence in the period leading up to the June 2000
parliamentary elections. This together with unfavourable macro economic
conditions saw record profit warnings and a number of companies being delisted
from the ZSE.
Trading in 2001 has, however, started on a high note due to the fall in
interest rates and the subsequent shift to equities. Should interest rates
remain low and government's privatisation plans be realised, CST is confident
of delivering real growth in 2001.
COMMERCIAL BANKING
Following the acquisition of the commercial banking licence in December 1999,
the Bank went on to launch its commercial banking division in August 2000.
During the year under review, the bank made significant investments in cutting
edge technology laying a solid platform from which to launch a wide variety of
innovative products and services as well as improve operational efficiency.
The increased product and service range, is expected to assist the bank to
lower its cost of funds as well as increase utilisation of the bank's
offerings, and broaden the revenue base.
The commercial banking division is targeting medium and large corporate
business clients and selected individuals. By year end the Bank had opened
commercial branches in the two main centres of Harare and Bulawayo, with plans
to open more branches and other delivery channels in future. Automated Teller
Machines and card products will be introduced in 2001. The division currently
accounts for a quarter of the bank's staff complement.
The year 2001 presents a full year of operation of these activities and the
board is confident that returns will justify the investment.
OUTLOOK AND STRATEGY
The continued perception of the country as lawless is a cause for concern.
This is likely to hinder any meaningful foreign investment in the country as
well as creating a difficult environment for some of our clients, particularly
in the agricultural sector.
The country has shown remarkable resilience in the face of such circumstances.
Interest income will decline further in 2001 as the statutory reserve ratio
has been increased to 50%. Money market activity gains will also be curtailed
on all discounted instruments, which are now subject to a withholding tax of
30%. In the year 2001 clients are likely to opt for more tax efficient
instruments, which might lead to a reduction in their money market activity.
Contribution from non-interest income continues to be central to the
operations of the group. Given the economic outlook management foresee this
trend maintained. The financial advisory services department continues to win
substantial mandates.
The group's performance is expected to remain strong in 2001.
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 to achieve these results. We look forward
to a year of consolidating our expansion.
PADDY TENDAYI ZHANDA
CHAIRMAN
26 February 2001
DIVIDEND ANNOUNCEMENT
year ended 31 December 2000
The Board has proposed a final dividend of 356.33 cents per share on
28,614,315 shares payable to members registered in the books of the company on
16 March 2001. The transfer books and register of members will be closed from
17 March to 23 March 2001. Dividend cheques will be mailed to shareholders on
or about 27 March 2001. 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. Resident and non-resident shareholders' tax of 15% will be
deducted where applicable.
By order of the Board
O O Chekeche
Secretary
26 February 2001
INFLATION ADJUSTED INCOME STATEMENTS
year ended 31 December 2000
Note 2000 1999
$'000 $'000
Interest from lending activities 374,680 565,945
Charge for bad and doubtful debts (77,895) (102,028)
296,785 463,917
Interest from investing activities 572,087 916,076
868,872 1,379,993
(203,969) (666,337)
Interest expense 664,903 713,656
Foreign exchange gains 312,706 147,072
Net dealing income form securities 408,612 167,443
Other income 5 149,960 162,577
1,536,181 1,190 748
Operating expenditure 6 (514,411) (430,437)
(Loss)gains on net monetary position (375,760) (312,377)
Profit before taxation 646,010 447,934
Taxation 7 (289,679) (123,906)
Profit after taxation 356,331 324,028
Minority interest (3,971) (8,808)
Priority attributable to ordinary shareholders 352,360 315,220
Dividends per share (cents) 617.0 1,102.2
Earnings per share (cents)
- Basic 8 1,237.6 1,107.4
- Headline 8 1,236.2 1,098.3
- Diluted 8 1,208.7 1,093.1
- Diluted headline 8 1,207.3 1,084.1
INFLATION ADJUSTED BALANCE SHEET
31 December 20000
SHAREHOLDER'S FUNDS Note 2000 1999
$'000 $'000
Share capital 9 418,422 417,902
Capital reserves 858,951 857,004
Revenue reserves 24,424 (3,529)
1,301,797 1,271,377
MINORITY INTEREST 23,093 21,006
1,324,890 1,292,383
LIABILITIES
Deferred taxation 201,706 15,909
Deposits and other accounts 2,805,051 3,224,457
Provision for current taxation 115,743 117,001
Acceptances 2,981,936 4,137,923
7,429,326 8,787,673
ASSETS
Balances with banks and cash 447,352 93,844
Government & public sector securities 959,878 2,005,848
Advance and other accounts 1,856,644 1,886,224
Investments:
Trade investment 12,313 12,313
Short term 392,236 157,829
Other 160,147 243,638
Tangible fixed assets 618,820 250,054
Customers' indebtedness for acceptances 2,981,936 4,137,923
7,429,326 8,787,673
INFLATION ADJUSTED STATEMENT OF CHANGES IN EQUITY
As at 31 December 2000
At 31 December 2000
Capital
Share Share Statutory Redemption Other Accumulated Total
Capital Premium Reserve Reserve Profit/
(Loss)
$'000 $'000 $'000 $'000 $'000 $'000 $'0000
1 January 2000
As previously 99,630 172,149 22,500 27,921 675 288,880 611,755
reported
Effect of adopting 318,272 484,255 95,936 53,008 560 (542,598) 409,433
IAS 29
Effect of adopting 250,189 250,189
IAS 10
As restated 417,902 656,404 118,436 80,929 1,235 (3,529) 1,271,377
Shares issued 520 1,947 - - - 2,467
Net profits for - - - - - 352,360 352,360
the year
Dividends - - - - (324,407) (324,407)
Balances at 31 418,422 658,351 118,436 80,929 1,235 24,424 1,301,797
December 2000
At 31 December
1999
Capital
Share Share Statutory Redemption Other Accumulated Total
Capital Premium Reserve Reserve Profit/
(Loss)
$'000 $'000 $'000 $'000 $'000 $'000 $'000
1 January 1999
As previously 99,630 172,149 22,500 27,921 - 86,825 409,025
reported
Effect of adopting 318,272 484,255 95,936 53,008 560 (341,229) 610,802
IAS 29
Effect of adopting 83,161 83,161
IAS 10
As restated 417,902 656,404 118,436 80,929 560 (171,243)1,102 988
Dilution of - - - - 675 (792) (117)
interest in
subsidiary
Net profit for the - - - - - 324,029 324,029
year
Dividends - - - - - (155,523) (155,523)
Balances at 31 417,902 656,404 118,436 80,929 1,235 (3,529) 1,271,377
December 1999
IAS 10 (revised) requires the inclusion of dividends in reserves and not in the
income statement.
INFLATION ADJUSTED CONSOLIDATED CASH FLOW STATEMENT
year ended 31 December 2000
CASH FLOW FROM OPERATING ACTIVITIES 2000 1999
$'000 $'000
Profit before taxation and interest on government and 982,874 751,033
public sector securities and monetary loss
Non cash items
Profit on disposal of fixed assets (393) (2,588)
Depreciation 87,666 44,786
Charge for bad and doubtful debts 77,895 102,028
Monetary Loss (375,760) (312,377)
Operating cash flow before changes in operating 772,282 582,882
assets and liabilities and loss on net monetary
position
Changes in operating assets and liabilities
Deposits and other accounts (419,406) (2,884,500)
Advances and other accounts (48,315) 3,112,458
304,561 810,840
Returns on investments and servicing of finance
Interest received on Government sector securities 38,897 9,278
Dividends paid (326,309) (150,794)
Taxation (287,412) (141,516)
Corporate tax paid (105,121) (54,371)
Net cash (outflow)/inflow from operating activities (87,972) 614,953
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of government & public sector securities (24,166) -
Proceeds on sale of government & public sector - 18,800
securities
Proceeds on disposal of fixed assets 6,635 5,809
Purchase of fixed assets (462,674) (158,611)
Proceeds of disposal of investments 83,491 -
Purchase of other investments - 10,326
Net cash outflow from investing activities (396,714) (123,676)
Net cash inflow before financing activities (484,686) 491,277
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of shares 2,467 -
Proceeds from issue of shares in subsidiary - 3,525
2,467 3,525
Net decreases in cash and cash equivalents (482,219) 494,802
Cash and cash equivalents at the beginning of the year 2,257,519 1,762,717
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,775,300 2,257,519
Cash and cash equivalents comprise cash and bank balances, treasury bills and
short term investments.
NOTES TO THE FINANCIAL STATEMENTS
year ended 31 December 2000
INCORORATION 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.
CURRENCY
These financial statements are expressed in Zimbabwe dollars.
ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
conversion. The historical results have been audited and re-stated to
reflect the changes in general price levels in accordance with IAS 29,
Financial Reporting in Hyperinflationary Economies.
BASIS OF PREPARATION
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 information, including comparatives, has been
restated to account for changes in the general purchasing power of the
Z$. The restatement is based on the consumer price index at the balance
sheet date. The indices are derived from the inflation rates which are
issued by the Central Statistical Office of Zimbabwe.
The indices used were as follows:
31 December 1998 757.33
31 December 1999 1, 188.20
31 December 2000 1, 844.20
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.
OTHER INCOME 2000 1999
$'000 $'000
Commission and fee income 107,150 92,924
Broking income 24,891 49,222
Profit on disposal of assets 393 2,588
Other operating income 17,526 17,843
149,960 162,577
NOTES TO THE FINANCIAL STATEMENTS
year ended 31 December 2000
OPERATING EXPENDITURE 2000 1999
$'000 $'000
The operating profit is after charging the
following:
Administration costs 142,192 114,994
Audit fees 3,485 1,978
Depreciation 87,666 44,786
- Fixed assets leased to customers 11,592 23,557
- Own assets 76,074 21,229
Directors' remuneration: 34,615 31,179
Paid by subsidiary companies:
Fees for services as directors 1,102 849
Other emoluments 33,513 30,330
Staff costs 246,453 237,500
514,411 430,437
7. TAXATION
The increase in the effective tax rate is as a result of a lower profit
before tax on an inflation adjusted basis whereas the taxation is based on
the higher historical profits. In addition the group has fully utilised
tax losses accumulated in prior years.
8. EARNINGS PER SHARE
8.1 Basic earnings per share
The calculation of basic earnings per share for the year ended 31 December
2000 of 1,237.6 cents (1999 - 1,107.4 cents) is based on profit after
taxation attributable to ordinary shareholders of Z$352,360,000 (1999 -
Z$315,220,000) and the weighted average shares in issue of 28,471,701
(1999 - 28,465,589).
8.2 Headline earnings per share
The calculation of headline earnings per share for the year ended 31
December 2000 of 1,236.2 cents (1999 - 1,098.3 cents) is based on adjusted
profit after taxation attributable to ordinary shareholders of
Z$351,967,000 (1999 - Z$312,632,000) and on the weighted average shares in
issue of 28,471,701 (1998 - weighted average of 28,465,589). The
adjustments were as follows:-
2000 1999
$'000 $'000
Profit attributable to shareholders 352,360 315,220
Deduct non recurring items:
Profit on disposal of fixed assets (393) (2,588)
351,967 312,632
Number of shares 28,472 28,466
NOTES TO THE FINANCIAL STATEMENTS
year ended 31 December 2000
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 identify earnings derived from trading activities.
8.3 Diluted earnings per share
The diluted earnings per share for the year ended 31 December 2000 is
1,208.7 cents (1999-1,093.1 cents). The calculation is based on profit
after taxation attributable to ordinary shareholders of $352,360,000 (1999
- $315,220,000) and on the diluted shares of 29,153,051 (1999 -
28,837,716).
The dilution in earnings per share arises from 1,169,147 share options
granted to senior employees and outstanding at 31 December 2000, in terms
of the Employee share Option Scheme.
8.4 Diluted headline earnings per share
The diluted headline earnings per share for the year ended 31 December
2000 is 1,207.3 cents
(1999 - 1,084.1 cents). The calculation is based on adjusted profit after
taxation of $351,967,000
(1999 - $312,632,000) and on diluted shares of 29,153,051 (1999 -
28,837,716).
9. SHARE CAPITAL
9.1 Issued Share Capital
The issued share capital has increased by Z$520,000 to Z$100,150,000 as a
result of options exercised and now comprises 28,614,315 ordinary shares
of Z$3.50 each. The amounts disclosed in the Balance Sheet are shown on
the Statement of Changes in Equity.
9.2 Purchase of own shares
Shareholders authorised the directors to purchase for cancellation 4
million of the companies own shares at the Annual General Meeting held on
30 May 2000. No shares were purchased for cancellation.
10. DIVIDENDS
2000 1999
$'000 $'000
Interim dividend
260.73 cents per share on 28,465,589 shares 63,553
(1999 - 223.20 cents per share on 28,465,589 74,218
shares)
Final proposed dividend
356.33 cents per share on 28,614,315 shares 101,961 250,189
(1999 - 879.00 cents per share on 28,465,589
shares)
176,179 313,742
11. EXCHANGE RATES
The official exchange rates were as follows:
ZIMBABWE DOLLAR EQUIVALENT
At 31 December 2000 At 31 December 1999
United States Dollar USD1.00 Z$55.00 Z$37.95
British Sterling GBP1.00 Z$82.07 Z$62.03
SHAREHOLDERS' INFORMATION
ZIMBABWE TAXATION
Under the terms of the double taxation treaty between Zimbabwe and the United
Kingdom, withholding tax will be charged at the rate of 20 per cent of the
gross amount of the dividend, or if the recipient is a company which controls
directly or indirectly at least 25 per cent of voting power, the rate is
reduced to 5 per cent of the gross dividend. Under Zimbabwe tax law, the rate
of withholding tax on dividends from securities listed on the Zimbabwe Stock
Exchange is 15 per cent of the gross dividend.
In addition, the UK paying agent will ordinarily be required to deduct United
Kingdom income tax at the lower rate of tax (20 per cent) from the gross
amount of the dividend payable. Under the terms of the double taxation
agreement credit will be given for any Zimbabwe tax against any United Kingdom
tax chargeable on the dividend income.
INCOME STATEMENTS
Year ended 31 December 2000
Note 2000 1999
$'000 $'000
Interest from lending activities 320,410 365,126
Charge for bad and doubtful debts (77,895) (61,485)
242,515 303,641
Interest from investing activities 461,604 591,017
704,119 894,658
Interest expense (173,949) (429,895)
Net interest income 530,170 464,763
Foreign exchange gains 217,578 108,028
Net dealing income from securities 456,950 94,885
Other income c 123,885 104,888
Net operating income 1,328,583 772,564
Operating expenditure d (408,790) (282,040)
Profit before taxation 919,793 490,524
Taxation e (289,679) (79,939)
Profit after taxation 630,114 410,585
Minority interest (3,352) (5,683)
Profit attributable to ordinary shareholders 626,762 404,902
Dividends per share (cents) 607.1 711.1
Earnings per share (cents)
-Basic g 2201.4 1422.4
-Headline g 2197.2 1417.5
-Diluted g 2149.9 1404.1
-Diluted headline g 2145.9 1399.2
BALANCE SHEETS
31 December 2000
Note 2000 1999
SHAREHOLDERS' FUNDS $'000 $'000
Share capital 100,150 99,630
Capital reserves 225,192 223,245
Revenue reserve 844,279 450,293
1,169,621 773,168
MINORITY INTEREST 9,781 7,996
1,179,402 781,164
LIABILITIES
Deferred taxation 201,706 10,264
Deposits and other accounts 2,805,051 2,080,294
Provision for current taxation 115,743 75,485
Acceptances 2,981,936 2,669,627
7,283,838 5,616,834
ASSETS
Balances with banks and cash 447,352 60,544
Government & public sector securities 959,878 1,294,095
Advances and other accounts 1,856,644 1,216,919
Investments:
Trade investment 2,718 2,718
Short term 392,236 101,825
Other 160,147 157,186
Tangible fixed assets 482,927 113,920
Customers' indebtedness for acceptances 2,981,936 2,669,627
7,283,838 5,616,834
STATEMENT OF CHANGES IN EQUITY
As at 31 December 2000
At 31 December 2000
Capital
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit/ Total
(loss)
$'000 $'000 $'000 $'000 $'000 $'000 $'000
As previously
reported
1 January 2000 99,630 172,149 22,500 27,921 675 288,880 611,755
Effect of - - - - - 161,413 161,413
adopting IAS 10
Restated at 1 99,630 172,149 22,500 27,921 675 450,293 773,168
January 2000
Shares issued 520 1,947 - - - - 2,467
Net profit for - - - - - 626,762 626,762
the year
Dividends - - - - - (232,776)(232,776)
Balances at 31 100,150 174,096 22,500 27,921 675 844,279 1,169,621
December 2000
At 31 December 1999
Capital
Share Share Statutory Redemption Accumulated
Capital Premium Reserve Reserve Other Profit/ Total
(loss)
$'000 $'000 $'000 $'000 $'000 $'000 $'000
As previously
reported
1 January 1999 99,630 172,149 22,500 27,921 - 86,825 409,025
Effect of adopting - - - - - 37,701 37,701
IAS 10
Restated at 1 99,630 172,149 22,500 27,921 - 124,526 446,726
January 1999
Dilution of - - - - 675 (433) 242
interest in
subsidiary
Net profit for the - - - - - 404,902 404,902
year
Dividends - - - - - (78,702)(78,702)
Balances at 31 99,630 172,149 22,500 27,921 675 450,293 773,168
December 1999
IAS 10 (revised) requires the inclusion of dividends in reserves and not in
the income statement.
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2000
CASH FLOW FROM OPERATING ACTIVITIES 2000 1999
$'000 $'000
Profit before taxation and interest on government 886,548 484,538
and public sector securities
Non-cash items
Profit on disposal of fixed assets (1,181) (1,414)
Depreciation 56,240 23,308
Charge for Bad and Doubtful debts 77,895 61,485
Operating cash flow before changes in
operating assets and 1,019,502 567,917
liabilities
Changes in operating assets and liabilities
Deposits and other accounts 724,757 (423,377)
Advances and other accounts (717,620) 812,052
1,026,639 956,592
Returns on investments and servicing of finance
Interest received 451,107 6,018
Interest paid (417,862) (32)
Dividends paid (234,344) (80,571)
(201,099) (74,585)
Taxation
Corporate tax paid (57,978) (20,164)
Net cash inflow from operating activities 767,562 861,843
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds on sale of government & public sector securities - 8,000
Proceeds on disposal of fixed assets 5,369 2,472
Purchase of fixed assets (429,435) (86,673)
Purchase of government and public sector securities (24,166) -
Purchase of other investments (2,961) (53,103)
Net cash outflow from investing activities (451,193) (129,304)
Net cash inflow before financing activities 316,369 732,539
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of share in subsidiaries - 1,500
Proceeds from share issue 2,467 -
Net increase in cash and cash equivalents 318,836 734,039
Cash and cash equivalents at the beginning of the year 1,456,464 722,425
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,775,300 1,456,464
Cash and cash equivalents comprise cash and bank balances, treasury
bills and short term investments.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2000
a. CURRENCY
These financial statements are expressed in Zimbabwe dollars
b. ACCOUNTING CONVENTION
The financial statements are prepared under the historical cost
conversion
c. OTHER INCOME
2000 1999
$'000 $'000
Commission and fee income 92,640 59,951
Dividends from subsidiaries - -
Broking income 20,887 23,676
Profit on disposal of assets 1,181 1,414
Other operating income 9,177 19,847
123,885 104,888
d. OPERATING EXPENDITURE
The operating profit is after charging the following:
Administration costs 150,393 77,149
Audit fees 3,485 1,327
Depreciation 56,240 23,308
-Fixed assets leased to customers 6,833 12,260
-Own assets 49,407 11,048
Directors' renumeration: 27,865 20,918
-Paid by subsidiary companies:
-Fees for services as directors 920 570
-Other emoluments 26,945 20,348
Staff costs 170,807 159,338
408,790 282,040
e. TAXATION
The effective tax rate for the year is 31.5% compared to 16.3% for the year
ended 31 December 1999.
f. DIVIDENDS
2000 1999
$'000 $'000
Interim dividend
250.7 cents per share on 28 465 589 shares
(1999-144.00 cents per share on 28 465 589 shares) 71,364 40,990
Final proposed dividend
356.4 cents per share on 28 614 315 shares
(1999-567.1 cents per share on 28 465 589 shares) 101,961 161,424
173,325 202,414
g. EARNINGS PER SHARE
g.1 Basic earnings per share
The basic earnings per share for the year ended 31 December 2000 of 2,201.4
cents (1999-1,422.4 cents) is based on profit after taxation attributable to
ordinary shareholders of Z$626,762,000
(1999-Z$404,902,000) and the weighted average shares in issue of 28,471,701
(1999-28,465,589).
g.2 Headline earnings per share
The headline earnings per share for the year end 31 December 2000 of 2,197.2
cents (1999-1,417.5 cents) is based on adjusted profit after taxation
attributable to ordinary shareholders of Z$625,581,000 (1999-Z$403,488,000)
and on the weighted average shares in issue of 28,471,701 (1999-weighted
average of 28,465,589). The adjustments were as follows:-
2000 1999
$'000 $'000
Profit attributable to shareholders 626,762 404,902
Deduct non recurring items:
Profit on disposal of fixed assets (1,181) (1,414)
625,581 403,488
Number of shares 28,472 28,466
This is calculated in accordance with Statement of Investment Practise No.1
issued by the Institute of Investment Management and Research to assist users
of accounts identify earnings derived from trading activities.
g.3 Diluted earnings per share
The diluted earnings per share for the year ended 31 December 2000 is 2,149.9
cents (1999-1,404.1 cents). The calculation is based on profit after taxation
attributable to ordinary shareholders of Z$626,762,000 (1999-Z$404,902,000)
and on the diluted shares in issue of 29,153,051 (1999-weighted average
28,837,716).
The dilution in earnings per share arises from 1,169,147 share options granted
to senior employees and outstanding at 31 December 2000, in terms of the
Employee Share Option Scheme.
g.4 Diluted headline earnings per share
The diluted headline earnings per share for the year ended 31 December 2000 is
2,145.9 cents (1999-1,399.2 cents). The calculation is based on adjusted
profit after taxation of Z$ 625,581,000 (1999-Z$403,488,000) and on the shares
in issue of 29,153,051 (1999-28,837,716).
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